1290 Avenue of the Americas
New York, NY 10104
Richard Goldberger
Senior Director & Counsel
201-743-7174 (Tel.)
212-314-3959 (Fax)
December 14, 2015
VIA EDGAR
Ms. Elisabeth Bentzinger
United States Securities and Exchange Commission
Office of Insurance Products
Division of Investment Management
Mail Stop 8629
Washington, DC 20549-8629
| Re: | AXA Equitable Life Insurance Company |
Separate Account FP of AXA Equitable Life Insurance Co.
Initial Registration Statement on Form N-6
File Nos. 333-207015; 811-04335
MONY Life Insurance Company of America
MONY America Variable Account K of MONY Life Insurance Co. of America
Initial Registration Statement on Form N-6
File Nos. 333-207014; 811-22886
(collectively, the “Registration Statements”)
Dear Ms. Bentzinger:
The purpose of this letter is to provide a response to follow-up staff comments received on the Registration Statements filed by AXA Equitable Life Insurance Company and MONY Life Insurance Company of America (together, “the Company”) on September 18, 2015, as provided by telephone on December 10, 2015. We first set forth each specific staff comment and then provide our response.
A. Prospectus
| 1. | Comment: Please fix references to the incorrectly named Disability Premium Waiver. |
Response 1:
These references have been corrected to reflect the new name of the rider.
| 2. | Comment: Please disclose in the fee table all fees and charges under the Policy, including all MSO rider charges. See Instruction 3(e) to Item 3 of Form N-6; see also Registration Form for Insurance Company Separate Accounts Registered as Unit Investment Trusts that Offer Variable Life Insurance Policies, Inv. Co. Act Rel. No. 25522 (Apr. 12, 2002). |
Response 2:
We continue to maintain that there is no requirement under the securities laws to include the MSO rider charges in the fee table in the IncentiveLife Optimizer III prospectus, and it would not be appropriate to do so, for the following reasons:
| • | The MSO is a distinct, standalone security that is separately registered on an S form. Accordingly, we created a separate prospectus and bridging supplement for the MSO to house all MSO-related information and limit the amount of MSO information contained in the N-6 registration statements. The SEC has not only previously approved this arrangement, it actively encouraged it. On this basis, we are surprised that the SEC would now insist that one discrete portion of the MSO prospectus – namely, fee information – must be added to the N-6 registration statement. |
| • | We are not aware of any precedent for requiring that the fees associated with investing in a separate security also be included in the prospectus for the underlying policy. |
| • | There is no likelihood of policyholder confusion by not including MSO fee information in the N-6 filing, because at the head of the fee table in the IncentiveLife Optimizer III prospectus we state explicitly that policyholders should refer to the fee table in the MSO prospectus (which is always bound together with the underlying policy prospectus) for MSO fee information. |
C. MSO Supplement
| 3. | Comment: For the references to transfers, withdrawals, loans, surrenders and policy cancellation, please make clear that the impact on these activities when amounts are allocated to the MSO vary significantly from those described in the IncentiveLife Optimizer III prospectus. |
Response 3:
This disclosure has been added.
Please contact the undersigned at (201) 743-7174 or Shane Daly at (212) 314-3912 if you have any questions or comments.
| Very truly yours, |
/s/ Richard Goldberger |
| Richard Goldberger |
AXA Equitable Life Insurance Company
1290 Avenue of the Americas, New York, NY 10104
IncentiveLife Optimizer(R) III
An individual flexible premium variable life insurance policy issued by MONY
Life Insurance Company of America ("MONY America") with variable investment
options offered under MONY America Variable Account K.
PROSPECTUS DATED DECEMBER 31, 2015
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT CONTAINS
IMPORTANT INFORMATION THAT YOU SHOULD KNOW BEFORE PURCHASING, OR TAKING ANY
OTHER ACTION UNDER A POLICY. ALSO, YOU SHOULD READ THE PROSPECTUSES FOR EACH
TRUST, WHICH CONTAIN IMPORTANT INFORMATION ABOUT THE PORTFOLIOS.
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This prospectus describes the IncentiveLife Optimizer(R) III policy, but is not
itself a policy. This prospectus is a disclosure document and describes all of
the policy's material features, benefits, rights and obligations, as well as
other information. The description of the policy's material provisions in this
prospectus is current as of the date of this prospectus. If certain material
provisions under the policy are changed after the date of this prospectus in
accordance with the policy, those changes will be described in a supplement to
this prospectus. You should carefully read this prospectus in conjunction with
any applicable supplements. Certain optional features and benefits described in
the prospectus may not be available at the time you purchase the policy. We
reserve the right to restrict availability of any optional feature or benefit.
In addition, not all optional features and benefits may be available in
combination with other optional features and benefits. To make this prospectus
easier to read, we sometimes use different words than the policy. MONY America
or your financial professional can provide any further explanation about your
policy.
For information about income, estate and gift taxes in connection with life
insurance policies as well as possible estate and gift tax consequences
associated with the death benefits, please see the Tax information section
later in this prospectus, including the information under "Estate, gift, and
generation-skipping taxes".
WHAT IS INCENTIVELIFE OPTIMIZER(R) III?
IncentiveLife Optimizer(R) III provides life insurance coverage, plus the
opportunity for you to earn a return in (i) our guaranteed interest option,
(ii) an investment option we refer to as the Market Stabilizer Option(R), which
is described in the separate Market Stabilizer Option(R) prospectus and/or
(iii) one or more of the following variable investment options:
VARIABLE INVESTMENT OPTIONS
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.. All Asset Aggressive-Alt 25
.. All Asset Growth-Alt 20
.. All Asset Moderate Growth-Alt 15
.. American Century VP Mid Cap Value
.. American Funds Insurance Series(R) Global Small Capitalization Fund/SM/
.. American Funds Insurance Series(R) New World Fund(R)
.. AXA Balanced Strategy/(1)/
.. AXA Conservative Growth Strategy/(1)/
.. AXA Conservative Strategy/(1)/
.. AXA 400 Managed Volatility
.. AXA 500 Managed Volatility
.. AXA 2000 Managed Volatility
.. AXA Global Equity Managed Volatility
.. AXA Growth Strategy/(1)/
.. AXA International Core Managed Volatility
.. AXA International Managed Volatility
.. AXA International Value Managed Volatility
.. AXA Large Cap Core Managed Volatility
.. AXA Large Cap Growth Managed Volatility
.. AXA Large Cap Value Managed Volatility
.. AXA Mid Cap Value Managed Volatility
.. AXA Moderate Growth Strategy/(1)/
.. Charter/SM/ Multi-Sector Bond
.. Charter/SM/ Small Cap Growth
.. Charter/SM/ Small Cap Value
.. AXA/AB Small Cap Growth
.. AXA/Loomis Sayles Growth
.. EQ/BlackRock Basic Value Equity
.. EQ/Boston Advisors Equity Income
.. EQ/Calvert Socially Responsible
.. EQ/Capital Guardian Research
.. EQ/Common Stock Index
.. EQ/Core Bond Index
.. EQ/Equity 500 Index
.. EQ/GAMCO Mergers and Acquisitions
.. EQ/GAMCO Small Company Value
.. EQ/Global Bond PLUS
.. EQ/Intermediate Government Bond
.. EQ/International Equity Index
.. EQ/Invesco Comstock
.. EQ/JPMorgan Value Opportunities
.. EQ/Large Cap Growth Index
.. EQ/Large Cap Value Index
.. EQ/MFS International Growth
.. EQ/Mid Cap Index
.. EQ/Money Market
.. EQ/Morgan Stanley Mid Cap Growth
VARIABLE INVESTMENT OPTIONS
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.. EQ/PIMCO Ultra Short Bond
.. EQ/Quality Bond PLUS
.. EQ/Small Company Index
.. EQ/T. Rowe Price Growth Stock
.. EQ/UBS Growth and Income
.. EQ/Wells Fargo Omega Growth
.. Fidelity(R) VIP Contrafund(R)
.. Fidelity(R) VIP Growth & Income
.. Fidelity(R) VIP Mid Cap
.. Franklin Mutual Shares VIP
.. Franklin Rising Dividends VIP
.. Franklin Small Cap Value VIP
.. Franklin Strategic Income VIP
.. Goldman Sachs VIT Mid Cap Value
.. Invesco V.I. Global Real Estate
.. Invesco V.I. International Growth
.. Invesco V.I. Mid Cap Core Equity
.. Invesco V.I. Small Cap Equity
.. Ivy Funds VIP Energy
.. Ivy Funds VIP High Income
.. Ivy Funds VIP Mid Cap Growth
.. Ivy Funds VIP Science and Technology
.. Ivy Funds VIP Small Cap Growth
.. Lazard Retirement Emerging Markets Equity
.. MFS(R) International Value
.. MFS(R) Investors Trust
.. MFS(R) Massachusetts Investors Growth Stock
.. Multimanager Aggressive Equity
.. Multimanager Core Bond
.. Multimanager Mid Cap Growth
.. Multimanager Mid Cap Value
.. Multimanager Technology
.. PIMCO CommodityRealReturn(R) Strategy
.. PIMCO Real Return
.. PIMCO Total Return
.. Target 2025 Allocation
.. Target 2035 Allocation
.. Target 2045 Allocation
.. Target 2055 Allocation
.. T.Rowe Price Equity Income II
.. Templeton Developing Markets VIP
.. Templeton Global Bond VIP
.. Templeton Growth VIP
.. Van Eck VIP Global Hard Assets
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(1)Also referred to as an "AXA Strategic Allocation investment option" in this
prospectus.
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ONE OF THE INVESTMENT OPTIONS AVAILABLE TO YOU UNDER YOUR INCENTIVELIFE
OPTIMIZER(R) III POLICY IS THE MARKET STABILIZER OPTION(R) ("MSO"). IF YOU ARE
INTERESTED IN ALLOCATING AMOUNTS TO THE MSO, PLEASE REFER TO THE SUPPLEMENT
ACCOMPANYING THIS PROSPECTUS AND THE SEPARATE MSO PROSPECTUS, WHICH CONTAIN
ADDITIONAL INFORMATION RELATING TO THE MSO. IF YOU DID NOT RECEIVE AN MSO
PROSPECTUS AND WISH TO OBTAIN ONE, PLEASE CALL US AT 1-800-777-6510 (FOR U.S.
RESIDENTS) OR 1-704-341-7000 (OUTSIDE OF THE U.S.).
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THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE POLICIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
#76541/AA & ADL
Amounts that you allocate under your policy to any of the variable investment options are invested in a corresponding "Portfolio" that is part of one of the trusts (the "Trusts"), which are mutual funds. Please see "About the Portfolios of the Trusts" for more detailed information about the Portfolios and the Trusts. Your investment results in a variable investment option will depend on those of the related Portfolio. Any gains will generally be tax deferred and the life insurance benefits we pay if the policy's insured person dies will generally be income tax free. If you are the policy's owner and the insured person, the death benefit will generally be includible in your estate for purposes of federal estate tax. OTHER CHOICES YOU HAVE. You have considerable flexibility to tailor the policy to meet your needs. For example, subject to our rules, you can (1) choose when and how much you contribute (as "premiums") to your policy, (2) pay certain premium amounts to guarantee that your insurance coverage will continue for at least a certain number of policy years, regardless of investment performance, (3) borrow or withdraw amounts you have accumulated, (4) choose between two life insurance death benefit options, (5) increase or decrease the amount of insurance coverage, (6) elect to receive an insurance benefit if the insured person becomes terminally ill, and (7) obtain certain optional benefits that we offer by "riders" to your policy. OTHER MONY AMERICA POLICIES. We offer a variety of fixed and variable life insurance policies which offer policy features, including investment options, that are different from those offered by this prospectus. Not every policy or feature is offered through your financial professional. Replacing existing insurance with IncentiveLife Optimizer(R) III or another policy may not be to your advantage. You can contact us to find out more about any other MONY America insurance policy.
Contents of this Prospectus
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Definitions of Key Terms 5
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1. RISK/BENEFIT SUMMARY: CHARGES AND EXPENSES YOU WILL PAY 7
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Tables of policy charges 7
How we allocate charges among your investment options 10
Changes in charges 10
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2. RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS 11
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How you can pay for and contribute to your policy 11
The minimum amount of premiums you must pay 11
You can guarantee that your policy will not terminate before a certain date 12
You can receive an accelerated death benefit under the Long-Term Care
Services/SM/ Rider 12
Investment options within your policy 13
About your life insurance benefit 13
Alternative higher death benefit in certain cases 14
You can increase or decrease your insurance coverage 15
Accessing your money 16
Risks of investing in a policy 16
How the IncentiveLife Optimizer(R) III variable life insurance policy is
available 17
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3. WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA? 18
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How to reach us 19
About our MONY America Variable Account K 19
Your voting privileges 20
About the Trusts 20
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4. ABOUT THE PORTFOLIOS OF THE TRUSTS 21
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Portfolios of the Trusts 22
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5. DETERMINING YOUR POLICY'S VALUE 30
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Your policy account value 30
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"We," "our" and "us" refer to MONY America. "Financial professional" means the
registered representative of either AXA Advisors or an unaffiliated broker
dealer which has entered into a selling agreement with AXA Distributors who is
offering you this policy.
When we address the reader of this Prospectus with words such as "you" and
"your," we mean the person or persons having the right or responsibility that
the prospectus is discussing at that point. This usually is the policy's owner.
If a policy has more than one owner, all owners must join in the exercise of
any rights an owner has under the policy, and the word "owner" therefore refers
to all owners.
When we use the word "state" we also mean any other local jurisdiction whose
laws or regulations affect a policy.
This prospectus does not offer IncentiveLife Optimizer(R) III anywhere such
offers are not lawful. MONY America does not authorize any information or
representation about the offering other than that contained or incorporated in
this prospectus, in any current supplements thereto, or in any related sales
materials authorized by MONY America.
3
CONTENTS OF THIS PROSPECTUS
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6. TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS 31
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Transfers you can make 31
How to make transfers 31
Our automatic transfer service 31
Our asset rebalancing service 32
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7. ACCESSING YOUR MONEY 33
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Borrowing from your policy 33
Loan extension (for guideline premium test policies only) 34
Making withdrawals from your policy 34
Surrendering your policy for its net cash surrender value 35
Your option to receive a terminal illness living benefit under the Living
Benefits Rider 35
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8. TAX INFORMATION 36
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Basic income tax treatment for you and your beneficiary 36
Tax treatment of distributions to you (loans, partial withdrawals, and full
surrender) 36
Tax treatment of Living Benefits Rider or Long-Term Care Services/SM/ Rider
under a policy with the applicable rider 37
Business and employer owned policies 38
Requirement that we diversify investments 38
Estate, gift, and generation-skipping taxes 39
Pension and profit-sharing plans 39
Split-dollar and other employee benefit programs 39
ERISA 39
3.8% Tax on Net Investment Income or "NII" 39
Our taxes 39
When we withhold taxes from distributions 40
Possibility of future tax changes and other tax information 40
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9. MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS 41
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Guarantee premium test for the no-lapse guarantee 41
Other benefits you can add by rider 41
Customer loyalty credit 45
Variations among IncentiveLife Optimizer(R) III policies 46
Your options for receiving policy proceeds 46
Your right to cancel within a certain number of days 46
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10. MORE INFORMATION ABOUT CERTAIN POLICY CHARGES 48
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Deducting policy charges 48
Charges that the Trusts deduct 51
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11. MORE INFORMATION ABOUT PROCEDURES THAT APPLY TO YOUR POLICY 52
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Dates and prices at which policy events occur 52
Policy issuance 53
Ways to make premium and loan payments 53
Assigning your policy 53
You can change your policy's insured person 53
Requirements for surrender requests 54
Gender-neutral policies 54
Future policy exchanges 54
Broker transaction authority 54
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12. MORE INFORMATION ABOUT OTHER MATTERS 55
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About our general account 55
Transfers of your policy account value 55
Telephone and Internet requests 56
Cybersecurity 57
Suicide and certain misstatements 57
When we pay policy proceeds 57
Changes we can make 57
Reports we will send you 58
Distribution of the policies 58
Legal proceedings 60
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13.FINANCIAL STATEMENTS OF MONY AMERICA VARIABLE ACCOUNT K AND MONY AMERICA 61
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14.PERSONALIZED ILLUSTRATIONS 62
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Illustrations of policy benefits 62
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APPENDICES
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I -- Hypothetical illustrations I-1
II -- Calculating the alternate death benefit II-1
III -- State policy availability and/or variations of certain
features and benefits III-1
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REQUESTING MORE INFORMATION
Statement of Additional Information
Table of contents
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4
CONTENTS OF THIS PROSPECTUS
Definitions of Key Terms
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ALTERNATIVE DEATH BENEFIT -- the alternate higher death benefit is based upon
the life insurance qualification test that you choose. We will automatically
pay an alternative death benefit if it is higher than the basic death benefit
option you have selected.
AMOUNT AT RISK -- our amount at risk on any date is the difference between
(a) the death benefit that would be payable if the insured person died on that
date and (b) the then total account value under the policy.
BENEFICIARY -- the person or entity you designate to receive the death benefit
payable at the death of the Insured.
BUSINESS DAY -- is generally any day the New York Stock Exchange ("NYSE") is
open for regular trading and generally ends at 4:00 p.m. Eastern Time (or as of
an earlier close of regular trading). A business day does not include a day on
which we are not open due to emergency conditions determined by the Securities
and Exchange Commission. We may also close early due to such emergency
conditions. Premium payments will be applied and any other transaction requests
will be processed when they are received along with all the required
information unless another date applies as indicated below.
.. If your premium payment, transfer or any other transaction request
containing all the required information reaches us on any of the following,
we will use the next business day:
-- on a non-business day;
-- after 4:00 p.m. Eastern Time on a business day; or
-- after an early close of regular trading on the NYSE on a business day.
CASH SURRENDER VALUE -- the cash surrender value is equal to the difference
between your policy account value and any surrender charges that are in effect
under your policy.
COST OF INSURANCE CHARGE -- the monthly cost of insurance charge is determined
by multiplying the cost of insurance rate that is then applicable to your
policy by the amount we have at risk under your policy divided by $1,000.
COST OF INSURANCE RATES -- the cost of insurance rates vary depending on a
number of factors, including, but not limited to, the individual
characteristics of the insured, the face amount and the policy year.
CUSTOMER LOYALTY CREDIT -- a customer loyalty credit is provided for policies
that have been in force for more than 8 years. This is added to your policy
account value each month.
FACE AMOUNT -- represents the amount of insurance coverage you want on the life
of the insured person.
GUARANTEED INTEREST ACCOUNT -- is a fixed account that is part of our General
Account.
GUARANTEE PREMIUM -- you can generally guarantee that your policy will not
terminate for a number of years by paying at least certain specified amounts of
premiums. We call these amounts "guarantee premiums" and they will be set forth
in your policy.
INSURED -- the person on whose life we base this policy.
LONG-TERM CARE SERVICES/SM/ RIDER -- subject to restrictions, this is an
optional rider that may be elected at issue that provides for the acceleration
of the policy death benefit as a payment of a portion of the policy's death
benefit each month as a result of the insured person being a chronically ill
individual who is receiving qualified long-term care services.
MARKET STABILIZER OPTION(R) ("MSO") -- the MSO is an optional rider that
provides you with the opportunity to earn interest that we will credit based in
part on the performance of the S&P 500 Price Return Index. Please see the
separate supplement accompanying this prospectus and the Market Stabilizer
Option(R) prospectus for more information.
NET CASH SURRENDER VALUE -- The net cash surrender value equals your policy
account value, minus any outstanding loan and unpaid loan interest, minus any
amount of your policy account value that is "restricted" as a result of
previously distributed terminal illness living benefits, and further reduced
for any monthly benefit payments under the Long-Term Care Services/SM/ Rider,
and minus any surrender charge that then remains applicable. If you have
transferred policy amounts to the MSO, please refer to the Market Stabilizer
Option(R) prospectus for information about how we determine the net cash
surrender value of that portion of your policy account value.
NET POLICY ACCOUNT VALUE -- your "net policy account value" is the total of (i)
your amounts in our variable investment options, (ii) your amounts in our
guaranteed interest option and (iii) any interest credited on loaned amounts,
MINUS any interest accrued on outstanding loans and MINUS any "restricted"
amounts that we hold in the guaranteed interest option as a result of any
payment received under a living benefits rider. The account value of any policy
amounts transferred to the Market Stabilizer Option(R) is also included in your
net policy account value, and is calculated as described in the separate Market
Stabilizer Option(R) prospectus.
NO-LAPSE GUARANTEE -- a rider we offer for no extra charge that provides you
with a guarantee against policy termination for a specific period of time.
OWNER -- the owner of the policy. "You" or "your" refers to the owner.
POLICY -- the policy with any attached application(s), any riders, and any
endorsements.
POLICY ACCOUNT VALUE -- your "policy account value" is the total of (i) your
amounts in our variable investment options, (ii) your amounts in our guaranteed
interest option (other than amounts included in (iii)) and (iii) any amounts
that we are holding to secure policy loans that you have taken (including any
interest on those amounts which has not yet been allocated to the investment
options). See "Borrowing from your policy" later in this prospectus.
5
DEFINITIONS OF KEY TERMS
The account value of any policy amounts transferred to the Market Stabilizer
Option(R) is also included in your policy account value, and is calculated as
described in the separate Market Stabilizer Option(R) prospectus.
PREMIUM PAYMENTS -- We call the amounts you contribute to your policy
"premiums" or "premium payments."
REGISTER DATE -- Your policy's "register date" will be shown in your policy and
is the date from which we measure the months, years and anniversaries of your
policy. Your register date is determined as described in "Policy issuance"
under "More information about procedures that apply to your policy" later in
this prospectus.
6
DEFINITIONS OF KEY TERMS
1. Risk/benefit summary: Charges and expenses you will pay
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TABLES OF POLICY CHARGES
The following tables describe the fees and expenses that you will pay when
buying, owning and surrendering the policy.
The first table shows the charges that we deduct under the terms of your policy
when you buy and each time you contribute to your policy, surrender the policy,
reduce the face amount or transfer policy account value among investment
options. ALL CHARGES ARE SHOWN ON A GUARANTEED MAXIMUM BASIS. THE CURRENT
CHARGES MAY BE LOWER THAN THE GUARANTEED MAXIMUM FOR CERTAIN CHARGES./(1)/
If you allocate policy amounts to the Market Stabilizer Option(R) ("MSO"),
please see the supplement accompanying this prospectus and the separate MSO
prospectus for information about MSO charges.
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TRANSACTION FEES
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CHARGE WHEN CHARGE IS DEDUCTED MAXIMUM AMOUNT THAT MAY BE DEDUCTED
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PREMIUM CHARGE From each premium 6% of each premium/(2)/
SURRENDER (TURNING IN) OF YOUR POLICY DURING ITS Upon surrender Initial surrender charge per $1,000
FIRST 10 YEARS OR THE FIRST 10 YEARS AFTER YOU of initial base policy face amount or
HAVE REQUESTED AN INCREASE IN YOUR POLICY'S per $1,000 of requested base policy
FACE AMOUNT/(3)(5)/ face amount increase:/(4)/
Highest: $46.17
Lowest: $9.45
Representative: $17.91/(6)/
REQUEST A DECREASE IN YOUR POLICY'S FACE AMOUNT Effective date of the decrease A pro rata portion of the charge that
DURING ITS FIRST 10 YEARS OR THE FIRST 10 YEARS would apply to a full surrender at
AFTER YOU HAVE REQUESTED AN INCREASE IN YOUR the time of the decrease.
POLICY'S FACE AMOUNT/(3)/
TRANSFERS AMONG INVESTMENT OPTIONS Upon transfer $25 per transfer./(7)/
SPECIAL SERVICES CHARGES At the time of the transaction Current and Maximum Charge: $90
.. Wire transfer charge/(8)/ At the time of the transaction Current and Maximum Charge: $35
.. Express mail charge/(8)/ At the time of the transaction Current and Maximum Charge: $25
.. Policy illustration charge/(9)/ At the time of the transaction Current and Maximum Charge: $35
.. Duplicate policy charge/(9)/ At the time of the transaction Current and Maximum Charge: $50
.. Policy history charge/(9)(10)/ At the time of the transaction Current and Maximum Charge: $25
.. Charge for returned payments/(9)/
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This table shows the fees and expenses that you will pay periodically during
the time that you own the Policy, not including underlying Trust portfolio fees
and expenses.
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PERIODIC CHARGES OTHER THAN UNDERLYING TRUST PORTFOLIO
OPERATING EXPENSES
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CHARGE WHEN CHARGE IS DEDUCTED MAXIMUM AMOUNT THAT MAY BE DEDUCTED
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ADMINISTRATIVE Monthly (1)Policy Year Amount deducted
CHARGE/(3)(11)/
1 $15/(12)/
2+ $10/(12)/
plus
(2)Charge per
$1,000 of the
initial base
policy face
amount and any
requested base
policy face
amount increase
that exceeds the
highest previous
face amount:
Highest: $0.34
Lowest: $0.06
Representative:
$0.11/(6)/
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COST OF INSURANCE CHARGE/(3)(11)(13)/ Monthly Charge per $1,000
of the amount for
which we are at
risk:/(14)/
Highest: $83.34
Lowest: $0.02
Representative:
$0.09/(15)/
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7
RISK/BENEFIT SUMMARY: CHARGES AND EXPENSES YOU WILL PAY
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PERIODIC CHARGES OTHER THAN UNDERLYING TRUST PORTFOLIO OPERATING EXPENSES
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CHARGE WHEN CHARGE IS DEDUCTED MAXIMUM AMOUNT THAT MAY BE DEDUCTED
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MORTALITY AND EXPENSE RISK CHARGE Monthly Annual % of your value in our variable
investment options and the MSO (if
Policy Year applicable)/(16)/
----------- --------------------------------------
1-10 1.00%
11+ 0.50%
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LOAN INTEREST SPREAD/(17)/ On each policy anniversary (or on 1% of loan amount.
loan termination, if earlier)
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OPTIONAL RIDER CHARGES// WHEN CHARGE IS DEDUCTED MAXIMUM AMOUNT THAT MAY BE DEDUCTED
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CHILDREN'S TERM INSURANCE Monthly (while the rider is in Charge per $1,000 of rider benefit amount:
effect)
$0.50
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DISABILITY DEDUCTION WAIVER/(3)/ Monthly (while the rider is in Percentage of all other monthly charges:
effect)
Highest: 132%
Lowest: 7%
Representative: 12%/(15)/
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DISABILITY WAIVER OF PREMIUM OR Monthly (while the rider is in Charge per $1,000 of benefit for which such rider
MONTHLY DEDUCTIONS/(3)/ effect) is purchased:/(18)/
(Initial base policy face
amount/(19)/) Highest: $0.60
Lowest: $0.01
Representative: $0.06/(15)/
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DISABILITY WAIVER OF PREMIUM OR Monthly (while the rider is in Charge per $1,000 of benefit for which such rider
MONTHLY DEDUCTIONS/(3)/ effect) is purchased:/(18)/
(Children's Term Insurance)
Highest: $0.03
Lowest: $0.01
Representative: $0.01/(15)/
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DISABILITY WAIVER OF PREMIUM OR Monthly (while the rider is in Charge per $1,000 of benefit for which such rider
MONTHLY DEDUCTIONS/(3)/ effect) is purchased:/(18)/
(Long-Term Care Services/SM /Rider)
Highest: $0.02
Lowest: $0.0009
Representative: $0.003/(15)/
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DISABILITY WAIVER OF PREMIUM OR Monthly (while the rider is in Charge per $1,000 of benefit for which such rider
MONTHLY DEDUCTIONS/(3)/ effect) is purchased:/(18)/
(Option To Purchase Additional
Insurance) Highest: $0.07
Lowest: $0.02
Representative: $0.03/(15)/
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LONG-TERM CARE SERVICES/SM/ Monthly Charge per $1,000 of the amount for which we are at
RIDER/(3)(11)/ risk:/(20)/
With the optional Nonforfeiture Benefit:
Highest: $2.94
Lowest: $0.25
Representative: $0.53/(21)/
Without the optional Nonforfeiture Benefit:
Highest: $2.67
Lowest: $0.22
Representative: $0.49/(21)/
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OPTION TO PURCHASE ADDITIONAL Monthly (while the rider is in Charge per $1,000 of rider benefit amount:
INSURANCE/(3)/ effect)
Highest: $0.17
Lowest: $0.04
Representative: $0.16/(21)/
---------------------------------------------------------------------------------------------------------------------------
LIQUIDITY RIDER Monthly (while the rider is in Charge per $1,000 of the initial base policy face
effect) amount:
$0.04
---------------------------------------------------------------------------------------------------------------------------
ADDING LIVING BENEFITS RIDER At the time of the transaction $100 (if elected after policy issue)
---------------------------------------------------------------------------------------------------------------------------
EXERCISING LIVING BENEFITS RIDER At the time of the transaction $250
---------------------------------------------------------------------------------------------------------------------------
-------------
+ There is no additional charge for the Charitable Legacy Rider.
8
RISK/BENEFIT SUMMARY: CHARGES AND EXPENSES YOU WILL PAY
(1)For more information about some of these charges, see "Deducting policy
charges" under "More information about certain policy charges" later in this
prospectus. The illustrations of Policy Benefits that your financial
professional will provide will show the impact of the actual current and
guaranteed maximum rates, if applicable, of the policy charges, based on
various assumptions (except for the loan interest spread, where we use
current rates in all cases).
(2)Currently, we reduce this charge to 4% after an amount equal to two sales
load "target premiums" has been paid. The "target premium" is actuarially
determined for each policy, based on that policy's specific characteristics,
and death benefit option, as well as the policy's face amount, among other
factors. A similar charge applies to premiums attributed to requested face
amount increases that are above your highest previous face amount. If your
policy includes the Liquidity Rider, a portion of the premium charge will be
refunded upon surrender within the first two policy years (see "Liquidity
Rider" in "More information about policy features and benefits" later in
this prospectus).
(3)This charge varies based on individual characteristics of the insured, and
for the Long-Term Care Services/SM/ Rider on the benefit percentage you
choose and may not be representative of the charge that you will pay. In
particular, the initial amount of the surrender charge depends on each
insured's specific characteristics. Your financial professional can provide
you with more information about these charges as they relate to the
insured's particular characteristics. See "Deducting policy charges" under
"More information about certain policy charges."
(4)If your policy includes the Liquidity Rider, the surrender charges are
waived for a full surrender (see "Liquidity Rider" in "More information
about policy features and benefits" later in this prospectus).
(5)The surrender charge attributable to each increase in your policy's face
amount is in addition to any remaining surrender charge attributable to the
policy's initial face amount.
(6)This representative amount is the rate we guarantee for a representative
insured male age 35 at issue or at the time of a requested face amount
increase, in the preferred elite non-tobacco user risk class.
(7)No charge, however, will ever apply to a transfer of all of your variable
investment option amounts to our guaranteed interest option, or to any
transfer pursuant to our automatic transfer service or asset rebalancing
service as discussed later in this prospectus.
(8)Unless you specify otherwise, this charge will be deducted from the amount
you request.
(9)The charge for this service must be paid using funds outside of your policy.
Please see "Deducting policy charges" under "More Information about certain
policy charges" for more information.
(10)The charge for this service may be less depending on the policy history you
request. Please see "Deducting policy charges" under "More Information
about certain policy charges" for more information.
(11)Not applicable after the insured person reaches age 121. If your policy
includes the Liquidity Rider, a portion of the Administrative charge will
be refunded upon surrender within the first six policy years (see
"Liquidity Rider" in "More information about policy features and benefits"
later in this prospectus).
(12)Not applicable if the minimum face amount stated in your policy is $10,000.
Please see "Your policy's face amount" under "About your life insurance
benefit" in "Risk/ benefit summary: Policy features, benefits and risks"
later in this prospectus.
(13)Insured persons who present particular health, occupational or vocational
risks may be charged other additional charges as specified in their
policies.
(14)Our amount "at risk" is the difference between the amount of death benefit
and the policy account value as of the deduction date.
(15)This representative amount is the rate we guarantee in the first policy
year for a representative insured male age 35 at issue in the preferred
elite non-tobacco user risk class.
(16)For more information about the MSO, please refer to the supplement
accompanying this prospectus and the separate MSO prospectus.
(17)We charge interest on policy loans but credit you with interest on the
amount of the policy account value we hold as collateral for the loan. The
rate is the greater of (a) 2.5% or (b) the "Monthly Average Corporate"
yield published by Moody's Corporate Bond Yield Averages for the month that
ends two months before the interest rate is set. The loan interest spread
is the excess of the interest rate we charge over the interest rate we
credit, which will not exceed 1%. For more information on the maximum rate
see "Borrowing from your policy -- Loan interest we charge" in "Accessing
your money" later in this prospectus.
<R>
(18)Amount charged equals the total sum of Disability Waiver of Premium or
Monthly Deductions rider charges corresponding to the base policy, any
Children's Term Insurance, Option To Purchase Additional Insurance and/or
any Long-Term Care Services/SM/ Rider that you have added to your policy
and to any base policy face amount increases.
</R>
(19)The monthly charges corresponding to the base policy will be adjusted
proportionately to any face amount reduction made at your request or
resulting from a partial withdrawal under death benefit Option A.
(20)Our amount "at risk" for this rider depends on the death benefit option
selected under the policy. See "More information about policy features and
benefits -- Long-Term Care Services/SM/ Rider" later in this prospectus.
(21)This representative amount is the rate we guarantee in any policy year
while the rider is in effect for a representative insured male age 35 at
issue in the preferred elite non-tobacco user risk class.
You also bear your proportionate share of all fees and expenses paid by a
Portfolio that corresponds to any variable investment option you are using.
This table shows the lowest and highest total operating expenses currently
charged by any of the Portfolios that you will pay periodically during the time
that you own the Policy. These fees and expenses are reflected in the
Portfolio's net asset value each day. Therefore, they reduce the investment
return of the Portfolio and the related variable investment option. Actual fees
and expenses are likely to fluctuate from year to year. MORE DETAIL CONCERNING
EACH PORTFOLIO'S FEES AND EXPENSES IS CONTAINED IN THE TRUST PROSPECTUS FOR
THAT PORTFOLIO.
-------------------------------------------------------------------------------------------------------------
PORTFOLIO OPERATING EXPENSES EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS
-------------------------------------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses for 2014 (expenses that are deducted from Portfolio Lowest Highest
assets including management fees, 12b-1 fees, service fees and/or other expenses)/(1)/ 0.62% 2.98%
-------------------------------------------------------------------------------------------------------------
(1)"Total Annual Portfolio Operating Expenses" are based, in part, on estimated
amounts for options added during the fiscal year 2014, if applicable, and
for the underlying Portfolios. Pursuant to a contract, AXA Equitable Funds
Management Group, LLC has agreed to make payments or waive its management,
administrative and other fees to limit the expenses of certain affiliated
Portfolios through April 30, 2016 ("Expense Limitation Arrangement") (unless
the Trust's Board of Trustees consents to an earlier revision or termination
of this agreement). The Expense Limitation Arrangement may be terminated by
AXA Equitable Funds Management Group, LLC at any time after April 30, 2016.
The range of expenses in the table above does not include the effect of any
Expense Limitation Arrangement. The Expense Limitation Arrangement does not
apply to unaffiliated Portfolios. The range of expense in the table below
includes the effect of the Expense Limitation Arrangements.
9
RISK/BENEFIT SUMMARY: CHARGES AND EXPENSES YOU WILL PAY
---------------------------------------------------------------------------
PORTFOLIO OPERATING EXPENSES EXPRESSED AS AN
ANNUAL PERCENTAGE OF DAILY NET ASSETS
---------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses for 2014 after Lowest Highest
the effect of Expense Limitation Arrangements/(/*/)/ 0.62% 1.61%
---------------------------------------------------------------------------
(*)"Total Annual Portfolio Operating Expenses" are based, in part, on
estimated amounts for the underlying portfolios. In addition, the
"Lowest" represents the total annual operating expenses of the EQ/Equity
500 Index Portfolio. The "Highest" represents the total annual operating
expenses of the Templeton Developing Markets VIP Fund.
HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
In your application for a policy, you tell us from which investment options you
want us to take the policy's monthly deductions as they fall due. You can
change these instructions at any time. If we cannot deduct the charge as your
most current instructions direct, we will allocate the deduction among your
investment options proportionately to your value in each.
CHANGES IN CHARGES
We reserve the right in the future to (1) make a charge for certain taxes or
reserves set aside for taxes (see "Our taxes" under "Tax information" later in
this prospectus) that might be imposed on us; (2) make a charge for the
operating expenses of our variable investment options (including, without
limitation, SEC registration fees and related legal counsel fees and auditing
fees); or (3) change our other current policy charges (in no event will they
exceed the maximum charges guaranteed in your policy).
Any changes that we make in our current charges or charge rates will be on a
basis that is equitable to all policies belonging to a given class, and will be
determined based on reasonable assumptions as to expenses, mortality,
investment income, lapses and policy and contract claims associated with
morbidity. These assumptions include taxes, longevity, surrenders, persistency,
conversions, disability, accident, illness, inability to perform activities of
daily living, and cognitive impairment, if applicable. Any changes in charges
may apply to then in force policies, as well as to new policies. You will be
notified in writing of any changes in charges under your policy.
10
RISK/BENEFIT SUMMARY: CHARGES AND EXPENSES YOU WILL PAY
2. Risk/benefit summary: Policy features, benefits and risks
--------------------------------------------------------------------------------
IncentiveLife Optimizer(R) III is a variable life insurance policy that
provides you with flexible premium payment plans and benefits to meet your
specific needs. The basic terms of the policy require you to make certain
payments in return for life insurance coverage. The payments you can make and
the coverage you can receive under this "base policy" are described below.
Riders to your base policy can increase the benefits you receive and affect the
amounts you pay in certain circumstances. Available riders are listed in "Other
benefits you can add by rider" under "More information about policy features
and benefits" later in this prospectus.
HOW YOU CAN PAY FOR AND CONTRIBUTE TO YOUR POLICY
PREMIUM PAYMENTS. We call the amounts you contribute to your policy "premiums"
or "premium payments." The amount we require as your first premium varies
depending on the specifics of your policy and the insured person. Each
subsequent premium payment must be at least $50, although we can increase this
minimum if we give you advance notice. Otherwise, with a few exceptions
mentioned below, you can make premium payments at any time and in any amount.
SECTION 1035 EXCHANGES OF POLICIES WITH OUTSTANDING LOANS. If we approve, you
may purchase an IncentiveLife Optimizer(R) III policy through an assignment and
exchange of another life insurance policy with a cash surrender value pursuant
to a valid Internal Revenue Code Section 1035 exchange. If such other policy is
subject to a policy loan, we may permit you to carry over all or a portion of
such loan to the IncentiveLife Optimizer(R) III policy, subject to our
administrative rules then in effect. In this case, we will treat any cash paid,
plus any loaned amount carried over to the IncentiveLife Optimizer(R) III
policy, as premium received in consideration of our issuing the policy. If we
allow you to carry over all or a portion of any such outstanding loan, then we
will hold amounts securing such loan in the same manner as the collateral for
any other policy loan, and your policy also will be subject to all our other
rules regarding loans (see "Borrowing from your policy" later in this
prospectus).
--------------------------------------------------------------------------------
YOU CAN GENERALLY PAY PREMIUMS AT SUCH TIMES AND IN SUCH AMOUNTS AS YOU LIKE
BEFORE THE POLICY ANNIVERSARY NEAREST TO THE INSURED'S 121ST BIRTHDAY, SO LONG
AS YOU DON'T EXCEED CERTAIN LIMITS DETERMINED BY THE FEDERAL INCOME TAX LAWS
APPLICABLE TO LIFE INSURANCE.
--------------------------------------------------------------------------------
YOUR CHOICE OF A LIFE INSURANCE QUALIFICATION TEST AND LIMITS ON PREMIUM
PAYMENTS. A policy must satisfy either of two testing methods to qualify as a
life insurance contract for tax purposes under Section 7702 of the Code. In
your application, you may choose either the guideline premium/cash value
corridor test ("guideline premium test") or the cash value accumulation test.
If you do not choose a life insurance qualification test, your policy will be
issued using the guideline premium test. Once your policy is issued, the
qualification method cannot be changed.
The qualification method you choose will depend upon your objective in
purchasing the policy. Generally, under the cash value accumulation test, you
have the flexibility to pay more premiums in the earlier years than under the
guideline premium test for the same face amount and still qualify as life
insurance for federal income tax purposes. Under the guideline premium test,
the federal tax law definition of "life insurance" limits your ability to pay
certain high levels of premiums (relative to your policy's insurance coverage)
but increases those limits over time. We will return any premium payments that
exceed these limits.
You should note, however, that the alternative death benefit under the cash
value accumulation test may be higher in earlier policy years than under the
guideline premium test, which will result in higher charges. Under either test,
if at any time your policy account value (as defined under "Determining your
policy's value," later in the prospectus) is high enough that the alternative
higher death benefit would apply, we reserve the right to limit the amount of
any premiums that you pay, unless the insured person provides us with evidence
of insurability satisfactory to us.
Regardless of which life insurance qualification test you choose, if your
premium payments exceed certain other amounts specified under the Code, your
policy will become a "modified endowment contract," which may subject you to
additional taxes and penalties on any distributions from your policy. See "Tax
information" later in this prospectus. We may return any premium payments that
would cause your policy to become a modified endowment contract if we have not
received a satisfactory modified endowment contract acknowledgment from you.
You can ask your financial professional to provide you with an illustration of
Policy Benefits that shows you the amount of premiums you can pay, based on
various assumptions, without exceeding applicable tax law limits. The tax law
limits can change as a result of certain changes you make to your policy. For
example, a reduction in the face amount of your policy may reduce the amount of
premiums that you can pay and may impact whether your policy is a modified
endowment contract.
You should discuss your choice of life insurance qualification test and
possible limitations on policy premiums with your financial professional and
tax advisor before purchasing the policy.
PLANNED PERIODIC PREMIUMS. Page 3 of your policy will specify a "planned
periodic premium." This is the amount that you request us to bill you. However,
payment of these or any other specific amounts of premiums is not mandatory.
You need to pay only the amount of premiums (if any) necessary to keep your
policy from lapsing and terminating as discussed below.
THE MINIMUM AMOUNT OF PREMIUMS YOU MUST PAY
POLICY "LAPSE" AND TERMINATION. Your policy will lapse (also referred to in
your policy as "default") if your "net policy account value" is not enough to
pay your policy's monthly charges when due unless:
.. you have paid sufficient premiums to keep the no-lapse guarantee in effect,
the no-lapse guarantee is still in effect and any outstanding loan and
accrued loan interest does not exceed the
11
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
policy account value (see "You can guarantee that your policy will not
terminate before a certain date" below);
.. you are receiving monthly benefit payments under the Long-Term Care
Services/SM/ Rider (see "Other benefits you can add by rider" under "More
information about policy features and benefits" later in this prospectus);
or
.. your policy has an outstanding loan that would qualify for "loan extension."
("Policy account value" and "net policy account value" are explained under
"Determining your policy's value" later in this prospectus.)
We will mail a notice to you at your last known address if your policy lapses.
You will have a 61-day grace period to pay at least an amount prescribed in
your policy which would be enough to keep your policy in force for
approximately three months (without regard to investment performance). You may
not make any transfers or request any other policy changes during a grace
period. If we receive the requested amount before the end of the grace period,
it will be treated as a loan repayment to the extent it is less than or equal
to any outstanding policy loan and accrued loan interest. The remainder of the
payment, if any, will be treated as a premium payment. If your policy account
value is still insufficient to cover total monthly deductions, we will send a
written notice that a new 61-day grace period has begun and request an
additional payment. If we do not receive your payment by the end of the grace
period, your policy (and all riders to the policy) will terminate without value
and all coverage under your policy will cease. We will mail an additional
notice to you if your policy terminates.
If the insured person dies during a grace period, we will pay the death
benefit, less any overdue charges (but not more than the guarantee premium
amount required to keep the no-lapse guarantee in effect), policy loans or
liens and accrued loan or lien interest, to the beneficiary you have named.
--------------------------------------------------------------------------------
YOUR POLICY WILL TERMINATE IF YOU DON'T PAY ENOUGH PREMIUMS (I) TO PAY THE
CHARGES WE DEDUCT, OR (II) TO MAINTAIN THE NO-LAPSE GUARANTEE THAT CAN KEEP
YOUR POLICY FROM TERMINATING. HOWEVER, WE WILL FIRST SEND YOU A NOTICE AND GIVE
YOU THE OPPORTUNITY TO PAY ANY SHORTFALL.
--------------------------------------------------------------------------------
You may owe taxes if your policy terminates while you have a loan outstanding,
even though you receive no additional money from your policy at that time. See
"Tax information," later in this prospectus.
RESTORING A TERMINATED POLICY. To have your policy "restored" (put back in
force), you must apply within three years after the date of termination. You
must also (i) present evidence of insurability satisfactory to us and (ii) pay
at least the amount of premium that we require. The amount of payment will not
be more than an amount sufficient to cover total monthly deductions for 3
months, calculated from the effective date of restoration, and the premium
charge. We will determine the amount of this required payment as if no interest
or investment performance were credited to or charged against your policy
account. Your policy contains additional information about the minimum amount
of this premium and about the values and terms of the policy after it is
restored and the effective date of such restoration. You may only restore your
policy if it has terminated without value. You may not restore a policy that
was given up for its net cash surrender value. Any no-lapse guarantee also
terminates and cannot be restored after the policy terminates.
YOU CAN GUARANTEE THAT YOUR POLICY WILL NOT TERMINATE BEFORE A CERTAIN DATE
NO-LAPSE GUARANTEE RIDER. You can generally guarantee that your policy will not
terminate for a number of years by paying at least certain specified amounts of
premiums, and as long as any outstanding policy loans and accrued loan interest
do not exceed your policy account value. We call these amounts "guarantee
premiums" and they will be set forth on page 3 of your policy. This guarantee
against termination is our No-Lapse Guarantee rider. The length of your
policy's guarantee period will range from 5 to 15 years depending on the
insured's age when we issue the policy. Under the No-Lapse Guarantee rider,
subject to the conditions below your policy is guaranteed not to lapse during a
no-lapse guarantee period of 15 years for issue ages 0-70, the number of years
until attained age 85 for issue ages 71-79, and 5 years for issue ages 80 and
over.
Your policy will not terminate, even if your net policy account value is not
sufficient to pay your monthly charges, as long as:
.. You have satisfied the "guarantee premium test" (discussed in "guarantee
premium test for the no-lapse guarantee" under "More information about
policy benefits" later in this prospectus); and
.. Any outstanding loan and accrued loan interest does not exceed the policy
account value.
There is no extra charge for this rider.
--------------------------------------------------------------------------------
THE NO-LAPSE GUARANTEE IS NOT IMPACTED BY YOUR CHOICE OF DEATH BENEFIT OPTION.
--------------------------------------------------------------------------------
YOU CAN RECEIVE AN ACCELERATED DEATH BENEFIT UNDER THE LONG-TERM CARE
SERVICES/SM/ RIDER
In states where approved and subject to our eligibility requirements, the
Long-Term Care Services/SM/ Rider may be added to your policy at issue. This
rider provides an acceleration of the policy's death benefit in the form of
monthly payments if the insured becomes chronically ill and is receiving
qualifying long-term care services in accordance with a plan of care. The
long-term care specified amount at issue must be at least $100,000. The monthly
rate for this rider varies based on the individual characteristics of the
insured and the benefit percentage you select and whether you select the rider
with or without the optional Nonforfeiture Benefit. You can terminate this
rider after your first policy year. For more information about this rider, see
"Other benefits you can add by rider" under "More information about policy
features and benefits" later in this prospectus.
YOU CAN RECEIVE A TERMINAL ILLNESS LIVING BENEFIT UNDER THE LIVING BENEFITS
RIDER. Subject to our insurance underwriting guidelines and availability in
your state, your policy will automatically include our Living Benefits Rider if
you apply for a face amount of at least $100,000 unless it is issued as a
result of an Option To Purchase Additional Insurance election or a conversion
from a term life policy or term rider. This feature enables you to receive a
portion (generally the lesser of 75% or $500,000) of the policy's death benefit
(excluding death benefits payable under certain other policy riders), if the
insured person has a terminal illness (as defined in the rider). The maximum
12
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
aggregate amount of payments that will be paid under this Living Benefits Rider
for all policies issued by MONY America or an affiliate company on the life of
the same insured person is $500,000. We make no additional charge for the
rider, but we will deduct a one-time administrative charge of up to $250 from
any living benefit we pay.
If you tell us that you do not wish to have the Living Benefits Rider added at
issue, but you later ask to add it, there will be a $100 administrative charge.
Also, we will need to evaluate the insurance risk at that time, and we may
decline to issue the rider.
For more information about that rider, see "Your option to receive a terminal
illness living benefit under the Living Benefits Rider" under
"Accessing your money" later in this prospectus.
INVESTMENT OPTIONS WITHIN YOUR POLICY
Except as set forth in the next paragraph, we will initially put all unloaned
amounts which you have allocated to variable investment options into such
options on the later of the business day that we receive the full minimum
initial premium at our Administrative Office or the register date of your
policy (the "Investment Start Date"). Before this date, your initial premium
will be held in a non-interest bearing account. See "Policy issuance" in "More
information about procedures that apply to your policy" later in this
prospectus.
In those states that require us to return your premium without adjustment for
investment performance within a certain number of days (see "Your right to
cancel within a certain number of days," later in this prospectus), we will
initially put all amounts which you have allocated to the variable investment
options into our EQ/Money Market investment option as of the later of
Investment Start Date and the issue date for 20 calendar days (the "Money
Market Lock-in Period"). On the first business day following the Money Market
Lock-in Period, we will reallocate that investment in accordance with your
premium allocation instructions then in effect. For policies issued in these
states, the "Allocation Date" is the first business day following the Money
Market Lock-in Period. For all other policies, the Allocation Date is the
Investment Start Date, and there is no automatic initial allocation to the
EQ/Money Market investment option.
You provide such allocation instructions in your application to purchase a
policy. You can change the premium allocation percentages at any time, but this
will not affect any prior allocations. The allocation percentages that you
specify must always be in whole numbers and total exactly 100%.
The policy is between you and MONY America. The policy is not an investment
advisory account, and MONY America is not providing any investment advice or
managing the allocations under your policy. In the absence of a specific
written arrangement to the contrary, you, as the owner of the policy, have the
sole authority to make investment allocations and other decisions under the
policy. Your AXA Advisors' financial professional is acting as a broker-dealer
registered representative, and is not authorized to act as an investment
advisor or to manage the allocations under your policy. If your financial
professional is a registered representative with a broker-dealer other than AXA
Advisors, you should speak with him/her regarding any different arrangements
that may apply.
--------------------------------------------------------------------------------
YOU CAN CHOOSE AMONG VARIABLE INVESTMENT OPTIONS.
--------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS. The available variable investment options are
listed on the front cover of this prospectus. (Your policy and other
supplemental materials may refer to these as "Investment Funds.") The
investment results you will achieve in any one of these options will depend on
the investment performance of the corresponding Portfolio that shares the same
name as that option. That Portfolio follows investment practices, policies and
objectives that are appropriate to the variable investment option you have
chosen. You can lose your principal when investing in the variable investment
options. In periods of poor market performance, the net return, after charges
and expenses, may result in negative yields, including for the EQ/Money Market
variable investment option.
The advisers who make the investment decisions for each Portfolio are set forth
later in the prospectus under "About the Portfolios of the Trusts."
You will find other important information about each Portfolio in the separate
prospectuses for each Trust which accompany this prospectus, including a
comprehensive discussion of the risks of investing in each Portfolio. TO OBTAIN
COPIES OF TRUST PROSPECTUSES THAT DO NOT ACCOMPANY THIS PROSPECTUS, YOU MAY
CALL ONE OF OUR CUSTOMER SERVICE REPRESENTATIVES AT 1-800-777-6510 (FOR U.S.
RESIDENTS) OR 1-704-341-7000 (OUTSIDE OF THE U.S.). We may add or delete
variable investment options or Portfolios at any time.
GUARANTEED INTEREST OPTION. You can also allocate some or all of your policy's
value to our guaranteed interest option. We, in turn, invest such amounts as
part of our general assets. Periodically, we declare a fixed rate of interest
(1.5% minimum) on amounts that you allocate to our guaranteed interest option.
We credit and compound the interest daily at an effective annual rate that
equals the declared rate. The rates we are declaring on existing policies at
any time may differ from the rates we are then declaring for newly issued
policies. (The guaranteed interest option is part of what your policy and other
supplemental material may refer to as the "Guaranteed Interest Account.")
--------------------------------------------------------------------------------
WE WILL PAY AT LEAST 1.5% ANNUAL INTEREST ON OUR GUARANTEED INTEREST OPTION.
--------------------------------------------------------------------------------
MARKET STABILIZER OPTION(R). The MSO rider, if available under your policy,
provides you with the opportunity to earn interest that we will credit based in
part on the performance of the S&P 500 Price Return Index. The S&P 500 Price
Return Index includes 500 companies in leading industries of the U.S. economy,
capturing 75% coverage of U.S. equities. The S&P 500 Price Return Index does
not include dividends declared by any of the companies included in this Index.
Please see the separate supplement accompanying this prospectus and the Market
Stabilizer Option(R) prospectus for more information.
ABOUT YOUR LIFE INSURANCE BENEFIT
YOUR POLICY'S FACE AMOUNT. In your application to buy an IncentiveLife
Optimizer(R) III policy, you tell us how much insurance coverage you want on
the life of the insured person. We call this the "face amount" of the base
policy. Generally, $100,000 is the minimum amount of coverage you can request.
If you have elected the Charitable Legacy Rider, the minimum face amount is $1
million. If
13
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
<R>
you have elected the Liquidity Rider, the minimum face amount is $250,000 per
life when one or two policies are purchased on the lives of members of an
insured group and $100,000 per life when policies are purchased on the lives of
three or more members. If you are exercising the Option To Purchase Additional
Insurance under another policy, or a conversion from certain term life policies
or term riders, the minimum face amount is $25,000. For: 1) policies that
exceed our Disability Deduction Waiver or Disability Waiver of Premium or
Monthly Deductions maximum coverage limit 2) face amount increases issued on a
less favorable underwriting basis than the base policy 3) policy owners of
certain discontinued variable life products where a requested increase in
coverage involves the issuance of an additional variable life policy or 4) face
amount increases on a 1980 CSO product issued on a less favorable underwriting
basis than the base policy, the minimum face amount is $10,000.
</R>
--------------------------------------------------------------------------------
IF THE INSURED PERSON DIES, WE PAY A LIFE INSURANCE BENEFIT TO THE
"BENEFICIARY" YOU HAVE NAMED. THE AMOUNT WE PAY DEPENDS ON WHETHER YOU HAVE
CHOSEN DEATH BENEFIT OPTION A OR DEATH BENEFIT OPTION B. (SEE "YOUR OPTIONS FOR
RECEIVING POLICY PROCEEDS" UNDER "MORE INFORMATION ABOUT POLICY FEATURES AND
BENEFITS" LATER IN THIS PROSPECTUS.)
--------------------------------------------------------------------------------
YOUR POLICY'S "DEATH BENEFIT" OPTIONS. In your policy application, you also
choose whether the basic amount (or "benefit") we will pay if the insured
person dies is:
.. Option A -- THE POLICY'S FACE AMOUNT on the date of the insured person's
death. The amount of this death benefit doesn't change over time, unless
you take any action that changes the policy face amount;
-or-
.. Option B -- THE FACE AMOUNT PLUS THE "POLICY ACCOUNT VALUE" on the date of
death. Under this option, the amount of the death benefit generally changes
from day to day, because many factors (including investment performance,
charges, premium payments and withdrawals) affect your policy account value.
Your "policy account value" is the total amount that at any time is earning
interest for you or being credited with investment gains and losses under your
policy. (Policy account value is discussed in more detail under "Determining
your policy's value" later in this prospectus.)
Under Option B, your policy's death benefit will tend to be higher than under
Option A, assuming the same policy face amount and policy account value. As a
result, the monthly insurance charge we deduct will also be higher to
compensate us for our additional risk. If your policy has been placed on loan
extension, the death benefit option will be Option A and must remain Option A
thereafter.
ALTERNATIVE HIGHER DEATH BENEFIT IN CERTAIN CASES
Your policy is designed to always provide a minimum level of insurance
protection relative to your policy account value, in part to meet the Code's
definition of "life insurance."
We will automatically pay an alternative death benefit if it is HIGHER than the
basic Option A or Option B death benefit you have selected. The alternate
higher death benefit is based upon the life insurance qualification test that
you choose. For the guideline premium test, this alternative death benefit is
computed by multiplying your policy account value on the insured person's date
of death by a percentage specified in your policy. Representative percentages
are as follows:
--------------------------------------------------------------------------------
IF THE ACCOUNT VALUE IN YOUR POLICY IS HIGH ENOUGH, RELATIVE TO THE FACE
AMOUNT, THE LIFE INSURANCE BENEFIT WILL AUTOMATICALLY BE GREATER THAN THE
OPTION A OR OPTION B DEATH BENEFIT YOU HAVE SELECTED.
--------------------------------------------------------------------------------
----------------------------------------------
AGE:* 40 AND UNDER 45 50 55 60 65
----------------------------------------------
%: 250% 215% 185% 150% 130% 120%
----------------------------------------------
AGE: 70 75-90 91 92 93 94- OVER
----------------------------------------------
%: 115% 105% 104% 103% 102% 101%
----------------------------------------------
* For the then-current policy year.
For example, if the guideline premium test is selected, if the insured is age
65 at the time of death and has a policy with the face amount of $100,000, an
account value of $85,000, and a death benefit percentage of 120%, then the
death benefit under Option A is the alternative death benefit of $102,000 and
the death benefit under Option B is the death benefit of $185,000. For more
details regarding how we calculate that death benefit under Option A and Option
B, please see "Appendix II: Calculating the alternate death benefit" later in
this prospectus.
For the cash value accumulation test, the alternate death benefit is the
greater of the minimum death benefit as determined under the Code under this
test or 101% of the policy account value. The death benefit must be large
enough to ensure that the policy's cash surrender value (as computed under
section 7702 of the Code) is never larger than the net single premium needed to
fund future policy benefits. The net single premium varies based upon the
insured's age, sex and risk class and is calculated using an interest rate of
4% and mortality charges based upon the 2001 Commissioner's Standard Ordinary
Mortality Tables.
For example, if the cash value accumulation test is selected, if the insured is
age 65 at the time of death and has a policy with the face amount of $100,000,
an account value of $85,000, and a death benefit percentage of 185.7%, then the
death benefit under Option A is the alternative death benefit of $157,845 and
the death benefit under Option B is the death benefit of $185,000. For more
details regarding how we calculate that death benefit under Option A and Option
B, please see "Appendix II: Calculating the alternate death benefit" later in
this prospectus.
These higher alternative death benefits expose us to greater insurance risk
than the regular Option A and B death benefit. Because the cost of insurance
charges we make under your policy are based in part on the amount of our risk,
you will pay more cost of insurance charges for any periods during which a
higher alternative death benefit is the operative one.
The operative period for the higher alternative death benefit is generally
determined in connection with the requirements of the Code. The calculation of
the death benefit is built into the monthly calculation of the cost of
insurance charge, which is based on the net amount at risk. The need for the
higher alternative death benefit is assessed on each monthly anniversary date,
and on the death of the insured. Each policy owner receives an annual statement
showing various policy values.
The annual statement shows the death benefit amount as of the policy
anniversary, and that amount would reflect the alternative
14
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
higher death benefit amount, if applicable at that time. This annual statement
also reflects the monthly cost of insurance charge for the policy year,
reflecting a higher net amount at risk in those months when the higher
alternative death benefit is in effect.
OTHER ADJUSTMENTS TO DEATH BENEFIT. We will increase the death benefit proceeds
by the amount of any other benefits we owe upon the insured person's death
under any optional riders which are in effect.
We will reduce the death benefit proceeds by the amount of any outstanding
policy loan and unpaid loan interest, as well as any amount of monthly charges
under the policy that remain unpaid because the insured person died during a
grace period. We also reduce the death benefit if we have already paid part of
it under a Living Benefits Rider. We reduce it by the amount of the living
benefits payment plus interest. See "Your option to receive a terminal illness
living benefit under the Living Benefits Rider" later in this prospectus. Under
the Long-Term Care Services/SM/ Rider, any monthly benefit payments will be
treated as a lien against the death benefit and reduce your death benefit,
unless benefits are being paid under the optional Nonforfeiture Benefit. Please
see "Long-Term Care Services/SM/ Rider" later in this prospectus.
DEATH BENEFIT IF YOUR POLICY IS ON LOAN EXTENSION. Your policy offers an
additional feature against policy termination due to an outstanding loan,
called "loan extension." Availability of this feature is subject to certain
terms and conditions, including that you must have elected the guideline
premium test and have had your policy in force for at least 20 years. If your
policy is on loan extension, the death benefit payable under the policy will be
determined differently. For more information on loan extension, see "Borrowing
from your policy" under "Accessing your money."
--------------------------------------------------------------------------------
YOU CAN REQUEST A CHANGE IN YOUR DEATH BENEFIT OPTION FROM OPTION B ANY TIME
AFTER THE FIFTH YEAR OF THE POLICY OR FROM OPTION A ANY TIME AFTER THE SECOND
YEAR OF THE POLICY AND BEFORE THE POLICY ANNIVERSARY NEAREST TO THE INSURED'S
121ST BIRTHDAY.
--------------------------------------------------------------------------------
CHANGE OF DEATH BENEFIT OPTION. If you change your death benefit option, we
will adjust your policy's face amount. The adjustment will be in the amount (up
or down) necessary so that your death benefit amount immediately after the
change is equal to your death benefit amount immediately before the change.
The following rules apply if the alternative death benefit (referenced above)
is NOT higher than the base policy's death benefit at the time of the change in
the death benefit option. If you change from Option B to Option A, we
automatically increase your base policy's face amount by an amount equal to
your policy account value at the time of the change. If you change from Option
A to Option B, we will automatically reduce your base policy's face amount by
an amount equal to your policy account value at the time of the change. You can
request a change from Option A to Option B any time after the second policy
year or from Option B to Option A any time after the fifth policy year. Any
request to change an Option must occur before the policy anniversary nearest
the insured's 121st birthday.
If the alternative death benefit (referenced above) is higher than the base
policy's death benefit at the time of the change in death benefit option, we
will determine the new base policy face amount somewhat differently from the
general procedures described above. See "Alternative higher death benefit in
certain cases" earlier in this section.
We may refuse a change from Option A to Option B if the policy's face amount
would be reduced below $100,000. A change from Option A to Option B is not
permitted (a) beyond the policy year in which the insured person reaches the
attained age 120 or (b) if your policy is on loan extension.
We will not deduct or establish any amount of surrender charge as a result of a
change in death benefit option. You may not request a change of the death
benefit option from Option A to Option B under the policy while the Long-Term
Care Services/SM/ Rider is in effect. You may request a change from Option B to
Option A. Please refer to "Tax information" later in this prospectus to learn
about certain possible income tax consequences that may result from a change in
death benefit option, including the effect of an automatic increase or decrease
in face amount.
YOU CAN INCREASE OR DECREASE YOUR INSURANCE COVERAGE
After the first policy year while this policy is in force, you may request an
increase in life insurance coverage under your policy. You may request a
decrease in your policy's face amount any time after the second year of your
policy but before the policy year in which the insured person reaches age 121.
The requested increase or decrease must be at least $10,000. Please refer to
"Tax information" for certain possible tax consequences and limitations of
changing the face amount of your policy.
We can refuse or limit any requested increase or decrease. We will not approve
any increase or decrease if (i) we are at that time being required to waive
charges or pay premiums under any optional disability waiver rider that is part
of the policy; (ii) your policy is on loan extension; or (iii) if your policy
is in a grace period. Also, we will not approve a face amount increase if
(i) the insured person has reached the maximum issue age for a face amount
increase as described in their policy; (ii) while the Liquidity Rider is in
effect; or (iii) while the Long-Term Care Services/SM /Rider is in effect,
unless coverage has been continued under the optional Nonforfeiture Benefit.
Further, if the underwriting class for the insured person is changed after
issue, the maximum age at which the insured person may apply for a face amount
increase will be the maximum issue age for the underwriting class for the
insured person at the time the increase is requested (which may be different
than it was previously). We will not accept a request for a face amount
decrease while you are receiving monthly benefit payments under the Long-Term
Care Services/SM/ Rider.
Certain policy changes, including increases and decreases in your insurance
coverage, may also affect the guarantee premiums under the policy.
The following additional conditions also apply:
FACE AMOUNT INCREASES. We treat an increase in face amount in many respects as
if it were the issuance of a new policy. For example, you must submit
satisfactory evidence that the insured person still meets our requirements for
coverage. Also, we establish additional amounts of surrender charge and
guarantee premiums under your policy for the face amount increase, reflecting
the additional amount of coverage.
In most states, you can cancel the face amount increase within 10 days after
you receive a new policy page showing the increase. If you
15
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
cancel, we will reverse any charges attributable to the increase and
recalculate all values under your policy to what they would have been had the
increase not taken place.
The monthly cost of insurance charge we make for the amount of the increase
will be based on the underwriting classification of the insured person when the
original policy was issued, provided the insured qualifies for the same
underwriting classification. An additional 10 year surrender charge and an
additional administrative charge will apply to the face amount that exceeds the
highest previous face amount. If the insured qualifies for a less favorable
underwriting classification than the base policy, we may offer to issue a
separate policy based on the rating class for the increase. See "Risk/benefit
summary: Charges and expenses you will pay."
FACE AMOUNT DECREASES. You may not reduce the face amount below the minimum
stated in your policy. Nor will we permit a decrease that would cause your
policy to fail the Internal Revenue Code's definition of life insurance.
Guarantee premiums, as well as our monthly deductions for the cost of insurance
coverage, will generally decrease from the time you reduce the face amount.
If you reduce the face amount during the first 10 years of your policy, or
during the first 10 years after a face amount increase you have requested, we
will deduct all or part of the remaining surrender charge from your policy
account. Assuming you have not previously changed the face amount, the amount
of the surrender charge we will deduct will be determined by dividing the
amount of the decrease by the initial face amount and multiplying that fraction
by the total amount of surrender charge that still remains applicable to your
policy. We deduct the charge from the same investment options as if it were
part of a regular monthly deduction under your policy.
In some cases, we may have to make a distribution to you from your policy at
the time we decrease your policy's face amount or change your death benefit
option. This may be necessary in order to preserve your policy's status as life
insurance under the Internal Revenue Code. We may also be required to make such
distribution to you in the future on account of a prior decrease in face amount
or change in death benefit option. The distribution may be taxable.
ACCESSING YOUR MONEY
You can access the money in your policy in different ways. You may borrow up to
90% of the cash surrender value, less any outstanding loan and accrued loan
interest before the policy year in which the insured reaches age 75 (100%
thereafter). In your policy, the cash surrender value is equal to the
difference between your policy account value and any surrender charges that are
in effect under your policy. However, the amount you can borrow will be reduced
by any amount that we hold on a "restricted" basis following your receipt of a
terminal illness living benefits payment, as well as by any other loans and
accrued loan interest you have outstanding. The cash surrender value available
for loans is also reduced on a pro rata basis for the portion of the policy
death benefit amount accelerated to date but not by more than the accumulated
benefit lien amount. See "More information about policy features and benefits:
Other benefits you can add by rider: Long-Term Care Services/SM/ Rider" later
in this prospectus. We will charge interest on the amount of the loan. See
"Borrowing from your policy" later in this prospectus for more information.
You can also make a partial withdrawal of $500 or more of your net cash
surrender value (defined later in this prospectus under "Surrendering your
policy for its net cash surrender value") at any time after the first year of
your policy and before the policy anniversary nearest to the insured's 121st
birthday. Partial withdrawals are not permitted if your policy is on loan
extension or you are receiving monthly benefit payments under the Long-Term
Care Services/SM/ Rider before coverage is continued under the optional
Nonforfeiture Benefit. See "Making withdrawals from your policy" later in this
prospectus for more information.
Finally, you can surrender (turn in) your policy for its net cash surrender
value at any time. You may have to pay surrender charges if you surrender your
policy. See "Surrendering your policy for its net cash surrender value" later
in this prospectus.
Policy loans, partial withdrawals and policy surrender may have tax
consequences. See "Tax information" later in this prospectus for the tax
treatment of the various ways in which you can access your money.
RISKS OF INVESTING IN A POLICY
The policy is unsuitable as a short-term savings vehicle. Some of the principal
risks of investing in a policy are as follows:
.. If the investment options you choose perform poorly, you could lose some or
all of the premiums you pay.
.. If the investment options you choose do not make enough money to pay for
the policy charges, except to the extent provided by any no-lapse guarantee
or loan extension feature, you may have to pay more premiums to keep your
policy from terminating.
.. If any policy loan and any accrued loan interest either equals or exceeds
the policy account value, your policy will terminate subject to the
policy's Grace Period provision and any Loan Extension Endorsement you may
have.
.. We can increase, without your consent and subject to any necessary
regulatory approvals, any charge that you currently pay at less than the
maximum amount. We will not increase any charge beyond the highest maximum
noted in the tables in "Tables of policy charges" under "Risk/benefit
summary: Charges and expenses you will pay" earlier in this prospectus.
.. There may be adverse tax consequences associated with taking a policy loan
or making a partial withdrawal from your policy.
.. You may have to pay a surrender charge and there may be adverse tax
consequences if you wish to discontinue some or all of your insurance
coverage under a policy.
.. Partial withdrawals from your policy are available only after the first
policy year and must be at least $500 and no more than the net cash
surrender value. Under certain circumstances, we will automatically reduce
your policy's face amount as a result of a partial withdrawal.
.. The guarantees we make to you under this policy are supported by MONY
America's general account and are subject to MONY America's claims paying
ability. You should look solely to the financial strength of MONY America
for its claims-paying ability.
16
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
Your policy permits other transactions that also have risks. These and other
risks and benefits of investing in a policy are discussed in detail throughout
this prospectus.
A comprehensive discussion of the risks of each investment option may be found
in the Trust prospectus for that investment option.
HOW THE INCENTIVELIFE OPTIMIZER(R) III VARIABLE LIFE INSURANCE POLICY IS
AVAILABLE
IncentiveLife Optimizer(R) III is primarily intended for purchasers other than
retirement plans. However, we do not place limitations on its use. Please see
"Tax information" for more information. IncentiveLife Optimizer(R) III is
available for issue ages 0 to 85.
17
RISK/BENEFIT SUMMARY: POLICY FEATURES, BENEFITS AND RISKS
3. Who is MONY Life Insurance Company of America?
--------------------------------------------------------------------------------
We are MONY Life Insurance Company of America (the "Company"), an Arizona stock
life insurance corporation organized in 1969. MONY Life Insurance Company of
America is an indirect wholly owned subsidiary of AXA Financial, Inc., which is
an indirect wholly owned subsidiary of AXA S.A. ("AXA"), a French holding
company for an international group of insurance and related financial services
companies. As the ultimate sole shareholder of the Company, AXA exercises
significant influence over the operations and capital structure of the Company.
No company other than the Company, however, has any legal responsibility to pay
amounts that the Company owes under the policies. The Company is solely
responsible for paying all amounts owed to you under your policy. The Company
is solely responsible for paying all amounts owed to you under your policy.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$577.7 billion in assets as of December 31, 2014. MONY America is licensed to
sell life insurance and annuities in forty-nine states (not including
New York), the District of Columbia, and Puerto Rico, and the U.S. Virgin
Islands. Our main administrative office is located at 525 Washington Boulevard,
Jersey City, NJ 07310.
18
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
HOW TO REACH US
To obtain (1) any forms you need for communicating with us, (2) unit values and
other values under your policy, and (3) any other information or materials that
we provide in connection with your policy or the Portfolios, you may
communicate with our Administrative Office as listed below for the purposes
described. Please refer to "Telephone and Internet requests" for effective
dates for processing telephone, Internet and fax requests, later in this
prospectus.
--------------------------------------------------------------------------------
BY MAIL:
AT THE POST OFFICE BOX FOR OUR ADMINISTRATIVE OFFICE:
MONY America -- AXA Life Operations Center
P.O. Box 1047
Charlotte, North Carolina 28201-1047
--------------------------------------------------------------------------------
BY EXPRESS DELIVERY ONLY:
AT THE STREET ADDRESS FOR OUR ADMINISTRATIVE OFFICE:
MONY America -- AXA Life Operations Center
8501 IBM Drive, Suite 150
Charlotte, North Carolina 28262-4333
1-704-341-7000 (for express delivery purposes only)
--------------------------------------------------------------------------------
BY PHONE:
Policy information, basic transactions, forms and statements are available 24
hours a day -- 7 days a week through AXA Equitable's Interactive Telephone
Service.
AXA Equitable's Interactive Telephone Service provides the gateway to personal
assisted service, Monday through Friday, 8 AM to 7 PM, Eastern Time:
1-800-777-6510 (for U.S. residents) or 1-704-341-7000 (outside of the U.S.).
--------------------------------------------------------------------------------
BY E-MAIL:
life-service@axa.us.com
--------------------------------------------------------------------------------
BY FAX:
1-855-268-6378
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BY INTERNET:
You may register for online account access at www.axa.com or us.axa.com for
those outside the U.S. Our website provides access to account information and
customer service. After registering, you can view account details, perform
certain transactions, print customer service forms and find answers to common
questions.
REQUIRED FORMS. We require that the following types of communications be on
specific forms we provide for that purpose:
(1)request for our automatic transfer service (our dollar cost averaging
service);
(2)request for our asset rebalancing service;
(3)transfers among investment options (if submitted by e-mail);
(4)designation of new policy owner(s);
(5)designation of new beneficiary(ies); and
(6)authorization for transfers by your financial professional.
OTHER REQUESTS. We also have specific forms that we recommend you use for the
following:
(a)policy surrenders;
(b)transfers among investment options (not submitted by e-mail); and
(c)changes in allocation percentages for premiums and deductions.
You can also change your allocation percentages, transfer among investment
options and/or change your address (1) by toll-free phone and assisted service,
(2) over the Internet, through axa.com or us.axa.com for those outside the
U.S., or (3) by writing our Administrative Office. For more information about
transaction requests you can make by phone or over the Internet, see "How to
make transfers" and "Telephone and Internet requests" later in this prospectus.
Certain methods of contacting us, such as by telephone or electronically, may
be unavailable or delayed (for example our fax service may not be available at
all times and/or we may be unavailable due to emergency closing). In addition,
the level and type of service available may be restricted based on criteria
established by us.
We reserve the right to limit access to these services if we determine that you
are engaged in a disruptive transfer activity, such as "market timing." (See
"Disruptive transfer activity" in "More information about other matters.")
FORMAL REQUIREMENTS. Except for properly authorized telephone or Internet
transactions, any notice or request that does not use our standard form must be
in writing. It must be dated and signed by you and should also specify your
name, the insured person's name (if different), your policy number and adequate
details about the notice you wish to give or other action you wish us to take.
We may require you to return your policy to us before we make certain policy
changes that you may request.
The proper person to sign forms, notices and requests would normally be the
owner or any other person that our procedures permit to exercise the right or
privilege in question. If there are joint owners all must sign. Any irrevocable
beneficiary or assignee that we have on our records also must sign certain
types of requests.
You should send all requests, notices and payments to our Administrative Office
at the addresses specified above. We will also accept requests and notices by
fax at the above number, if we believe them to be genuine. We reserve the
right, however, to require an original signature before acting on any faxed
item. You must send premium payments after the first one to our Administrative
Office at the above addresses; except that you should send any premiums for
which we have billed you to the address on the billing notice.
ABOUT OUR MONY AMERICA VARIABLE ACCOUNT K
Each variable investment option is a part (or "subaccount") of our MONY America
Variable Account K. We established MONY America Variable Account K under
Arizona Insurance Law in 2013. These provisions prevent creditors from any
other business we conduct from reaching the assets we hold in our variable
investment options for owners of our variable life insurance policies. We are
the legal owner of all of the assets in MONY America Variable Account K and may
withdraw any amounts that exceed our reserves and other liabilities with
respect to variable investment options under our policies. For
19
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
example, we may withdraw amounts from MONY America Variable Account K that
represent our investments in MONY America Variable Account K or that represent
fees and charges under the policies that we have earned. Income, gains and
losses credited to, or charged against MONY America Variable Account K reflect
its own investment experience and not the investment experience of MONY
America's other assets.
MONY America Variable Account K is registered with the SEC under the Investment
Company Act of 1940 and is registered and classified under that act as a "unit
investment trust." The SEC, however, does not manage or supervise MONY America
or MONY America Variable Account K. Although MONY America Variable Account K is
registered, the SEC does not monitor the activity of MONY America Variable
Account K on a daily basis. MONY America is not required to register, and is
not registered, as an investment company under the Investment Company Act of
1940.
Each subaccount (variable investment option) of MONY America Variable Account K
available under IncentiveLife Optimizer(R) III invests solely in the applicable
class of shares issued by the corresponding Portfolio of the applicable Trust.
MONY America Variable Account K immediately reinvests all dividends and other
distributions it receives from a Portfolio in additional shares of that class
in that Portfolio.
The Trusts sell their shares to MONY America variable accounts in connection
with MONY America's variable life insurance and/or annuity products, and to
separate accounts of insurance companies, both affiliated and unaffiliated with
MONY America. EQ Advisors Trust and AXA Premier VIP Trust also sell their
shares to the trustee of a qualified plan for AXA Equitable Life Insurance
Company ("AXA Equitable"), an affiliate of MONY America. We currently do not
foresee any disadvantages to our policy owners arising out of these
arrangements. However, the Board of Trustees or Directors of each Trust intends
to monitor events to identify any material irreconcilable conflicts that may
arise and to determine what action, if any, should be taken in response. If we
believe that a Board's response insufficiently protects our policy owners, we
will see to it that appropriate action is taken to do so.
YOUR VOTING PRIVILEGES
VOTING OF PORTFOLIO SHARES. As the legal owner of any Portfolio shares that
support a variable investment option, we will attend (and have the right to
vote at) any meeting of shareholders of the Portfolio (or the Trusts). To
satisfy currently-applicable legal requirements, however, we will give you the
opportunity to tell us how to vote the number of each Portfolio's shares that
are attributable to your policy. The number of full and fractional votes you
are entitled to will be determined by dividing the policy account value (minus
any policy indebtedness) allocable to an investment option by the net asset
value per unit for the Portfolio underlying that investment option. We will
vote shares attributable to policies for which we receive no instructions in
the same proportion as the instructions we do receive from all policies that
participate in our MONY America Variable Account K (discussed below). With
respect to any Portfolio shares that we are entitled to vote directly (because
we do not hold them in a separate account or because they are not attributable
to policies), we will vote in proportion to the instructions we have received
from all holders of variable annuity and variable life insurance policies who
are using that Portfolio. One effect of proportional voting is that a small
number of policy owners may control the outcome of a vote.
Under current legal requirements, we may disregard the voting instructions we
receive from policy owners only in certain narrow circumstances prescribed by
SEC regulations. If we do, we will advise you of the reasons in the next annual
or semiannual report we send to you.
VOTING AS POLICY OWNER. In addition to being able to instruct voting of
Portfolio shares as discussed above, policy owners that use our variable
investment options may in a few instances be called upon to vote on matters
that are not the subject of a shareholder vote being taken by any Portfolio. If
so, you will have one vote for each $100 of policy account value in any such
option; and we will vote our interest in MONY America Variable Account K in the
same proportion as the instructions we receive from holders of IncentiveLife
Optimizer(R) III and other policies that MONY America Variable Account K
supports.
ABOUT THE TRUSTS
The Trusts are registered under the Investment Company Act of 1940. They are
classified as "open-end management investment companies," more commonly called
mutual funds. Each Trust issues different shares relating to each Portfolio.
The Trusts do not impose sales charges or "loads" for buying and selling their
shares. All dividends and other distributions on the Trusts' shares are
reinvested in full. The Board of Trustees of each Trust serves for the benefit
of each Trust's shareholders. The Board of Trustees may take many actions
regarding the Portfolios (for example, the Board of Trustees can establish
additional Portfolios or eliminate existing Portfolios; change Portfolio
investment objectives; and change Portfolio investment policies and
strategies). In accordance with applicable law, certain of these changes may be
implemented without a shareholder vote and, in certain instances, without
advanced notice. More detailed information about certain actions subject to
notice and shareholder vote for each Trust, and other information about the
Portfolios, including portfolio investment objectives, policies, restrictions,
risks, expenses, its Rule 12b-1 plan and other aspects of its operations,
appears in the prospectuses for each Trust, which generally accompany this
prospectus, or in their respective SAIs, which are available upon request.
20
WHO IS MONY LIFE INSURANCE COMPANY OF AMERICA?
4. About the Portfolios of the Trusts
--------------------------------------------------------------------------------
We offer both affiliated and unaffiliated Trusts, which in turn offer one or
more Portfolios. AXA Equitable Funds Management Group, LLC ("AXA FMG"), a
wholly owned subsidiary of AXA Equitable, serves as the investment manager of
the Portfolios of AXA Premier VIP Trust and EQ Advisors Trust. For some
affiliated Portfolios, AXA FMG has entered into sub-advisory agreements with
one or more investment advisers (the "sub-advisers") to carry out the
day-to-day investment decisions for the Portfolios. As such, among other
responsibilities, AXA FMG oversees the activities of the sub-advisers with
respect to the Trusts and is responsible for retaining or discontinuing the
services of those sub-advisers. The chart below indicates the sub-adviser(s)
for each Portfolio, if any. The chart below also shows the currently available
Portfolios and their investment objectives.
You should be aware that AXA Advisors, LLC and AXA Distributors, LLC (together,
the "Distributors") directly or indirectly receive 12b-1 fees from affiliated
Portfolios for providing certain distribution and/or shareholder support
services. These fees will not exceed 0.25% of the Portfolios' average daily net
assets. The affiliated Portfolios' sub-advisers and/or their affiliates may
also contribute to the cost of expenses for sales meetings or seminar
sponsorships that may relate to the contracts and/or the sub-advisers'
respective Portfolios. In addition, AXA FMG, a wholly owned subsidiary of AXA
Equitable, receives management fees and administrative fees in connection with
the services it provides to the Portfolios. As such, it may be more profitable
for us to offer affiliated Portfolios than to offer unaffiliated Portfolios.
AXA Equitable or the Distributors may directly or indirectly receive 12b-1 fees
and additional payments from certain unaffiliated Portfolios, their advisers,
sub-advisers, distributors or affiliates, for providing certain administrative,
marketing, distribution and/or shareholder support services. These fees and
payments range from 0% to 0.60% of the unaffiliated Portfolios' average daily
net assets. The Distributors may also receive payments from the advisers or
sub-advisers of the unaffiliated Portfolios or their affiliates for certain
distribution services, including expenses for sales meetings or seminar
sponsorships that may relate to the contracts and/or the advisers' respective
Portfolios.
As a policy owner, you may bear the costs of some or all of these fees and
payments through your indirect investment in the Portfolios. (See the
Portfolios' prospectuses for more information.) These fees and payments, as
well as the Portfolios' investment management fees and administrative expenses,
will reduce the underlying Portfolios' investment returns. AXA Equitable may
profit from these fees and payments. AXA Equitable considers the availability
of these fees and payment arrangements during the selection process for the
underlying Portfolios. These fees and payment arrangements may create an
incentive for us to select Portfolios (and classes of shares of Portfolios)
that pay us higher amounts.
Some affiliated Portfolios invest in other affiliated Portfolios ("the AXA Fund
of Fund Portfolios"). The AXA Fund of Fund Portfolios offer policy owners a
convenient opportunity to invest in other Portfolios that are managed and have
been selected for inclusion in the AXA Fund of Fund Portfolios by AXA FMG. AXA
Advisors, LLC, an affiliated broker-dealer of AXA Equitable, may promote the
benefits of such Portfolios to policy owners and/or suggest that policy owners
consider whether allocating some or all of their account value to such
Portfolios is consistent with their desired investment objectives. In doing so,
AXA Equitable, and/or its affiliates, may be subject to conflicts of interest
insofar as AXA Equitable may derive greater revenues from the AXA Fund of Fund
Portfolios than certain other Portfolios available to you under your policy.
Please see "Allocating your contributions" later in this section for more
information about your role in managing your allocations.
As described in more detail in the Portfolio prospectuses, the AXA Managed
Volatility Portfolios may utilize a proprietary volatility management strategy
developed by AXA FMG (the "AXA volatility management strategy"), and, in
addition, certain AXA Fund of Fund Portfolios may invest in affiliated
Portfolios that utilize this strategy. The AXA volatility management strategy
uses futures and options, such as exchange-traded futures and options contracts
on securities indices, to reduce the Portfolio's equity exposure during periods
when certain market indicators indicate that market volatility is above
specific thresholds set for the Portfolio. When market volatility is increasing
above the specific thresholds set for a Portfolio utilizing the AXA volatility
management strategy, the manager of the Portfolio may reduce equity exposure.
Although this strategy is intended to reduce the overall risk of investing in
the Portfolio, it may not effectively protect the Portfolio from market
declines and may increase its losses. Further, during such times, the
Portfolio's exposure to equity securities may be less than that of a
traditional equity portfolio. This may limit the Portfolio's participation in
market gains and result in periods of underperformance, including those periods
when the specified benchmark index is appreciating, but market volatility is
high.
The AXA Managed Volatility Portfolios that include the AXA volatility
management strategy as part of their investment objective and/or principal
investment strategy, and the AXA Fund of Fund Portfolios that invest in other
Portfolios that use the AXA volatility management strategy, are identified
below in the chart by a "(check mark)" under the column entitled "Volatility
Management."
Portfolios that utilize the AXA volatility management strategy (or, in the case
of certain AXA Fund of Fund Portfolios, invest in other Portfolios that use the
AXA volatility management strategy) are designed to reduce the overall
volatility of your account value and provide you with risk-adjusted returns
over time. During rising markets, the AXA volatility management strategy,
however, could result in your account value rising less than would have been
the case had you been invested in a Portfolio that does not utilize the AXA
volatility management strategy or, in the case of the AXA Fund of Fund
Portfolios, that invest exclusively in other Portfolios that do not use the
volatility management strategy. Conversely, investing in investment options
that feature a managed-volatility strategy may be helpful in a declining market
when high market volatility triggers a reduction in the investment option's
equity exposure because during these periods of high volatility, the risk of
losses from investing in equity securities may increase. In these instances,
your account value may decline less than would have been the case had you not
been invested in investment options that feature a volatility management
strategy.
Please see the underlying Portfolio prospectuses for more information in
general, as well as more information about the AXA volatility management
strategy. Please further note that certain other affiliated Portfolios, as well
as unaffiliated Portfolios, may utilize volatility management techniques that
21
ABOUT THE PORTFOLIOS OF THE TRUSTS
differ from the AXA volatility management strategy. Any such Portfolio is not
identified under "Volatility Management" below in the chart. Such techniques
could also impact your account value in the same manner described above. Please
see the Portfolio prospectuses for more information about the Portfolios'
objective and strategies.
ASSET TRANSFER PROGRAM. Portfolio allocations in certain AXA variable annuity
contracts with guaranteed benefits are subject to our Asset Transfer Program
(ATP) feature. The ATP helps us manage our financial exposure in connection
with providing certain guaranteed benefits, by using predetermined mathematical
formulas to move account value between the AXA Ultra Conservative Strategy
Portfolio (an investment option utilized solely by the ATP) and the other
Portfolios offered under those contracts. You should be aware that operation of
the predetermined mathematical formulas underpinning the ATP has the potential
to adversely impact the Portfolios, including their performance, risk profile
and expenses. This means that Portfolio investments in contracts with no ATP
feature, such as yours, could still be adversely impacted. Particularly during
times of high market volatility, if the ATP triggers substantial asset flows
into and out of a Portfolio, it could have the following effects on all
contract owners invested in that Portfolio:
(a)By requiring a Portfolio sub-adviser to buy and sell large amounts of
securities at inopportune times, a Portfolio's investment performance and
the ability of the sub-adviser to fully implement the Portfolio's
investment strategy could be negatively affected; and
(b)By generating higher turnover in its securities or other assets than it
would have experienced without being impacted by the ATP, a Portfolio
could incur higher operating expense ratios and transaction costs than
comparable funds. In addition, even Portfolios structured as
funds-of-funds that are not available for investment by contract owners
who are subject to the ATP could also be impacted by the ATP if those
Portfolios invest in underlying funds that are themselves subject to
significant asset turnover caused by the ATP. Because the ATP formulas
generate unique results for each contract, not all contract owners who
are subject to the ATP will be affected by operation of the ATP in the
same way. On any particular day on which the ATP is activated, some
contract owners may have a portion of their account value transferred to
the AXA Ultra Conservative Strategy investment option and others may not.
If the ATP causes significant transfers of total account value out of one
or more Portfolios, any resulting negative effect on the performance of
those Portfolios will be experienced to a greater extent by a contract
owner (with or without the ATP) invested in those Portfolios whose
account value was not subject to the transfers.
PORTFOLIOS OF THE TRUSTS
-----------------------------------------------------------------------------------------------------------------------------
AXA PREMIER VIP
TRUST
CLASS B SHARES INVESTMENT MANAGER (OR VOLATILITY
PORTFOLIO NAME OBJECTIVE SUB-ADVISER(S), AS APPLICABLE) MANAGEMENT
-----------------------------------------------------------------------------------------------------------------------------
CHARTER/SM/ Seeks to achieve high total return through a combination . AXA Equitable Funds
MULTI-SECTOR BOND of current income and capital appreciation. Management Group, LLC
-----------------------------------------------------------------------------------------------------------------------------
CHARTER/SM/ SMALL Seeks to achieve long-term growth of capital. . AXA Equitable Funds
CAP GROWTH Management Group, LLC
-----------------------------------------------------------------------------------------------------------------------------
CHARTER/SM/ SMALL Seeks to achieve long-term growth of capital. . AXA Equitable Funds
CAP VALUE Management Group, LLC
-----------------------------------------------------------------------------------------------------------------------------
TARGET 2025 Seeks the highest total return over time consistent with its . AXA Equitable Funds
ALLOCATION asset mix. Total return includes capital growth and Management Group, LLC
income.
-----------------------------------------------------------------------------------------------------------------------------
TARGET 2035 Seeks the highest total return over time consistent with its . AXA Equitable Funds
ALLOCATION asset mix. Total return includes capital growth and Management Group, LLC
income.
-----------------------------------------------------------------------------------------------------------------------------
TARGET 2045 Seeks the highest total return over time consistent with its . AXA Equitable Funds
ALLOCATION asset mix. Total return includes capital growth and Management Group, LLC
income.
-----------------------------------------------------------------------------------------------------------------------------
TARGET 2055 Seeks the highest total return over time consistent with its . AXA Equitable Funds
ALLOCATION asset mix. Total return includes capital growth and Management Group, LLC
income.
-------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
-------------------------------------------------------------------------------------------------------------------------
ALL ASSET Seeks long-term capital appreciation and current income, . AXA Equitable Funds
AGGRESSIVE - ALT with a greater emphasis on capital appreciation. Management Group, LLC
25
-------------------------------------------------------------------------------------------------------------------------
ALL ASSET GROWTH - Seeks long-term capital appreciation and current income. . AXA Equitable Funds
ALT 20 Management Group, LLC
-------------------------------------------------------------------------------------------------------------------------
22
ABOUT THE PORTFOLIOS OF THE TRUSTS
----------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
----------------------------------------------------------------------------------------------------------------------------
ALL ASSET Seeks long-term capital appreciation and current income, . AXA Equitable Funds
MODERATE GROWTH - with a greater emphasis on current income. Management Group, LLC
ALT 15
----------------------------------------------------------------------------------------------------------------------------
AXA 400 MANAGED Seeks to achieve long-term growth of capital with an . AllianceBernstein L.P. (check mark)
VOLATILITY emphasis on risk-adjusted returns and managing volatility . AXA Equitable Funds
in the Portfolio. Management Group, LLC
. BlackRock Investment
Management, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA 500 MANAGED Seeks to achieve long-term growth of capital with an . AllianceBernstein L.P. (check mark)
VOLATILITY emphasis on risk-adjusted returns and managing volatility . AXA Equitable Funds
in the Portfolio. Management Group, LLC
. BlackRock Investment
Management, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA 2000 MANAGED Seeks to achieve long-term growth of capital with an . AllianceBernstein L.P. (check mark)
VOLATILITY emphasis on risk-adjusted returns and managing volatility . AXA Equitable Funds
in the Portfolio. Management Group, LLC
. BlackRock Investment
Management, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA BALANCED Seeks long-term capital appreciation and current income. . AXA Equitable Funds (check mark)
STRATEGY Management Group, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA CONSERVATIVE Seeks current income and growth of capital, with a . AXA Equitable Funds (check mark)
GROWTH STRATEGY greater emphasis on current income. Management Group, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA CONSERVATIVE Seeks a high level of current income. . AXA Equitable Funds (check mark)
STRATEGY Management Group, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA GLOBAL EQUITY Seeks to achieve long-term capital appreciation with an . AXA Equitable Funds (check mark)
MANAGED VOLATILITY emphasis on risk-adjusted returns and managing volatility Management Group, LLC
in the Portfolio. . BlackRock Investment
Management, LLC
. Morgan Stanley Investment
Management Inc.
. OppenheimerFunds, Inc.
----------------------------------------------------------------------------------------------------------------------------
AXA GROWTH STRATEGY Seeks long-term capital appreciation and current income, . AXA Equitable Funds (check mark)
with a greater emphasis on capital appreciation. Management Group, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA INTERNATIONAL Seeks to achieve long-term growth of capital with an . AXA Equitable Funds (check mark)
CORE MANAGED emphasis on risk-adjusted returns and managing volatility Management Group, LLC
VOLATILITY in the Portfolio. . BlackRock Investment
Management, LLC
. EARNEST Partners, LLC
. Massachusetts Financial
Services Company d/b/a
MFS Investment Management
. Hirayama Investments, LLC
. WHV Investments
----------------------------------------------------------------------------------------------------------------------------
23
ABOUT THE PORTFOLIOS OF THE TRUSTS
----------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
----------------------------------------------------------------------------------------------------------------------------
AXA INTERNATIONAL Seeks to achieve long-term growth of capital with an . AllianceBernstein L.P. (check mark)
MANAGED VOLATILITY emphasis on risk-adjusted returns and managing volatility . AXA Equitable Funds
in the Portfolio. Management Group, LLC
. BlackRock Investment
Management, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA INTERNATIONAL Seeks to provide current income and long-term growth of . AXA Equitable Funds (check mark)
VALUE MANAGED income, accompanied by growth of capital with an Management Group, LLC
VOLATILITY emphasis on risk-adjusted returns and managing volatility . BlackRock Investment
in the Portfolio. Management, LLC
. Northern Cross, LLC
----------------------------------------------------------------------------------------------------------------------------
AXA LARGE CAP CORE Seeks to achieve long-term growth of capital with an . AXA Equitable Funds (check mark)
MANAGED VOLATILITY emphasis on risk-adjusted returns and managing volatility Management Group, LLC
in the Portfolio. . BlackRock Investment
Management, LLC
. Capital Guardian Trust
Company
. Institutional Capital LLC
. Thornburg Investment
Management, Inc.
----------------------------------------------------------------------------------------------------------------------------
AXA LARGE CAP Seeks to provide long-term capital growth with an . AXA Equitable Funds (check mark)
GROWTH MANAGED emphasis on risk-adjusted returns and managing volatility Management Group, LLC
VOLATILITY in the Portfolio. . BlackRock Investment
Management, LLC
. Marsico Capital
Management, LLC
. T. Rowe Price Associates,
Inc.
. Wells Capital Management,
Inc.
----------------------------------------------------------------------------------------------------------------------------
AXA LARGE CAP VALUE Seeks to achieve long-term growth of capital with an . AllianceBernstein L.P. (check mark)
MANAGED VOLATILITY emphasis on risk-adjusted returns and managing volatility . AXA Equitable Funds
in the Portfolio. Management Group, LLC
. BlackRock Investment
Management, LLC
. Massachusetts Financial
Services Company d/b/a
MFS Investment Management
----------------------------------------------------------------------------------------------------------------------------
AXA MODERATE GROWTH Seeks long-term capital appreciation and current income, . AXA Equitable Funds (check mark)
STRATEGY with a greater emphasis on current income. Management Group, LLC
----------------------------------------------------------------------------------------------------------------------------
24
ABOUT THE PORTFOLIOS OF THE TRUSTS
-----------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
-----------------------------------------------------------------------------------------------------------------------------
AXA MID CAP VALUE Seeks to achieve long-term capital appreciation with an . AXA Equitable Funds (check mark)
MANAGED VOLATILITY emphasis on risk-adjusted returns and managing volatility Management Group, LLC
in the Portfolio. . BlackRock Investment
Management, LLC
. Diamond Hill Capital
Management, Inc.
. Wellington
Management Company,
LLP
-----------------------------------------------------------------------------------------------------------------------------
AXA/AB SMALL CAP Seeks to achieve long-term growth of capital. . AllianceBernstein
GROWTH L.P.
-----------------------------------------------------------------------------------------------------------------------------
AXA/LOOMIS SAYLES Seeks to achieve capital appreciation. . Loomis, Sayles &
GROWTH Company, L.P.
-----------------------------------------------------------------------------------------------------------------------------
EQ/BLACKROCK BASIC Seeks to achieve capital appreciation and secondarily, . BlackRock Investment
VALUE EQUITY income. Management, LLC
-----------------------------------------------------------------------------------------------------------------------------
EQ/BOSTON ADVISORS Seeks a combination of growth and income to achieve an . Boston Advisors, LLC
EQUITY INCOME above-average and consistent total return.
-----------------------------------------------------------------------------------------------------------------------------
EQ/CALVERT SOCIALLY Seeks to achieve long-term capital appreciation. . Calvert Investment
RESPONSIBLE Management Inc.
-----------------------------------------------------------------------------------------------------------------------------
EQ/CAPITAL GUARDIAN Seeks to achieve long-term growth of capital. . Capital Guardian
RESEARCH Trust Company
-----------------------------------------------------------------------------------------------------------------------------
EQ/COMMON STOCK Seeks to achieve a total return before expenses that . AllianceBernstein
INDEX approximates the total return performance of the Russell L.P.
3000(R) Index, including reinvestment of dividends, at a
risk level consistent with that of the Russell 3000(R) Index.
-----------------------------------------------------------------------------------------------------------------------------
EQ/CORE BOND INDEX Seeks to achieve a total return before expenses that . SSgA Funds
approximates the total return performance of the Barclays Management, Inc.
Intermediate U.S. Government/Credit Index, including
reinvestment of dividends, at a risk level consistent with that
of the Barclays Intermediate U.S. Government/Credit Index.
-----------------------------------------------------------------------------------------------------------------------------
EQ/EQUITY 500 INDEX Seeks to achieve a total return before expenses that . AllianceBernstein
approximates the total return performance of the L.P.
Standard & Poor's 500 Composite Stock Price Index,
including reinvestment of dividends, at a risk level
consistent with that of the Standard & Poor's 500
Composite Stock Price Index.
-----------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO MERGERS Seeks to achieve capital appreciation. . GAMCO Asset
AND ACQUISITIONS Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------
EQ/GAMCO SMALL Seeks to maximize capital appreciation. . GAMCO Asset
COMPANY VALUE Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------
EQ/GLOBAL BOND PLUS Seeks to achieve capital growth and current income. . AXA Equitable Funds
Management Group, LLC
. BlackRock Investment
Management, LLC
. First International
Advisors, LLC
. Wells Capital
Management, Inc.
-----------------------------------------------------------------------------------------------------------------------------
EQ/INTERMEDIATE Seeks to achieve a total return before expenses that . AXA Equitable Funds
GOVERNMENT BOND approximates the total return performance of the Barclays Management Group, LLC
Intermediate U.S. Government Bond Index, including . SSgA Funds
reinvestment of dividends, at a risk level consistent with that Management, Inc.
of the Barclays Intermediate U.S. Government Bond Index.
-----------------------------------------------------------------------------------------------------------------------------
25
ABOUT THE PORTFOLIOS OF THE TRUSTS
-------------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
-------------------------------------------------------------------------------------------------------------------------------
EQ/INTERNATIONAL Seeks to achieve a total return (before expenses) that . AllianceBernstein L.P.
EQUITY INDEX approximates the total return performance of a composite
index comprised of 40% DJ EURO STOXX 50 Index, 25%
FTSE 100 Index, 25% TOPIX Index, and 10% S&P/ASX
200 Index, including reinvestment of dividends, at a risk
level consistent with that of the composite index.
-------------------------------------------------------------------------------------------------------------------------------
EQ/INVESCO COMSTOCK Seeks to achieve capital growth and income. . Invesco Advisers, Inc.
-------------------------------------------------------------------------------------------------------------------------------
EQ/JPMORGAN VALUE Seeks to achieve long-term capital appreciation. . J.P. Morgan Investment
OPPORTUNITIES Management Inc.
-------------------------------------------------------------------------------------------------------------------------------
EQ/LARGE CAP GROWTH Seeks to achieve a total return before expenses that . AllianceBernstein L.P.
INDEX approximates the total return performance of the Russell
1000(R) Growth Index, including reinvestment of dividends
at a risk level consistent with that of the Russell 1000(R)
Growth Index.
-------------------------------------------------------------------------------------------------------------------------------
EQ/LARGE CAP VALUE Seeks to achieve a total return before expenses that . SSgA Funds Management,
INDEX approximates the total return performance of the Russell Inc.
1000(R) Value Index, including reinvestment of dividends, at a
risk level consistent with that of the Russell 1000(R) Value
Index.
-------------------------------------------------------------------------------------------------------------------------------
EQ/MFS Seeks to achieve capital appreciation. . Massachusetts Financial
INTERNATIONAL Services Company d/b/a
GROWTH MFS Investment Management
-------------------------------------------------------------------------------------------------------------------------------
EQ/MID CAP INDEX Seeks to achieve a total return before expenses that . SSgA Funds Management,
approximates the total return performance of the Inc.
Standard & Poor's Mid Cap 400 Index, including
reinvestment of dividends, at a risk level consistent with
that of the Standard & Poor's Mid Cap 400 Index.
-------------------------------------------------------------------------------------------------------------------------------
EQ/MONEY MARKET Seeks to obtain a high level of current income, preserve . The Dreyfus Corporation
its assets and maintain liquidity.
-------------------------------------------------------------------------------------------------------------------------------
EQ/MORGAN STANLEY Seeks to achieve capital growth. . Morgan Stanley Investment
MID CAP GROWTH Management Inc.
-------------------------------------------------------------------------------------------------------------------------------
EQ/PIMCO ULTRA Seeks to generate a return in excess of traditional money . Pacific Investment
SHORT BOND market products while maintaining an emphasis on Management Company LLC
preservation of capital and liquidity.
-------------------------------------------------------------------------------------------------------------------------------
EQ/QUALITY BOND PLUS Seeks to achieve high current income consistent with . AXA Equitable Funds
moderate risk to capital. Management Group, LLC
. AllianceBernstein L.P.
. Pacific Investment
Management Company LLC
-------------------------------------------------------------------------------------------------------------------------------
EQ/SMALL COMPANY Seeks to replicate as closely as possible (before expenses) . AllianceBernstein L.P.
INDEX the total return of the Russell 2000(R) Index.
-------------------------------------------------------------------------------------------------------------------------------
EQ/T. ROWE PRICE Seeks to achieve long-term capital appreciation and . T. Rowe Price Associates,
GROWTH STOCK secondarily, income. Inc.
-------------------------------------------------------------------------------------------------------------------------------
EQ/UBS GROWTH AND Seeks to achieve total return through capital appreciation . UBS Global Asset
INCOME with income as a secondary consideration. Management (Americas) Inc.
-------------------------------------------------------------------------------------------------------------------------------
EQ/WELLS FARGO Seeks to achieve long-term capital growth. . Wells Capital Management,
OMEGA GROWTH Inc.
-------------------------------------------------------------------------------------------------------------------------------
26
ABOUT THE PORTFOLIOS OF THE TRUSTS
-------------------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST INVESTMENT MANAGER
CLASS IB SHARES (OR SUB-ADVISER(S), AS VOLATILITY
PORTFOLIO NAME OBJECTIVE APPLICABLE) MANAGEMENT
-------------------------------------------------------------------------------------------------------------------------
MULTIMANAGER Seeks to achieve long-term growth of capital. . AXA Equitable Funds
AGGRESSIVE EQUITY Management Group, LLC
. Alliance Bernstein L.P.
. ClearBridge Investments,
LLC
. Marsico Capital
Management, LLC
. Scotia Institutional
Asset Management US, Ltd.
. T. Rowe Price Associates,
Inc.
. Westfield Capital
Management Company, L.P.
-------------------------------------------------------------------------------------------------------------------------
MULTIMANAGER CORE Seeks to achieve a balance of high current income and . AXA Equitable Funds
BOND capital appreciation, consistent with a prudent level of Management Group, LLC
risk. . BlackRock Financial
Management, Inc.
. DoubleLine Capital L.P.
. Pacific Investment
Management Company LLC
. SSgA Funds Management,
Inc.
-------------------------------------------------------------------------------------------------------------------------
MULTIMANAGER MID Seeks to achieve long-term growth of capital. . AXA Equitable Funds
CAP GROWTH Management Group, LLC
. Alliance Bernstein L.P.
. BlackRock Investment
Management, LLC
. Franklin Advisers, Inc.
. Wellington Management
Company, LLP
-------------------------------------------------------------------------------------------------------------------------
MULTIMANAGER MID Seeks to achieve long-term growth of capital. . AXA Equitable Funds
CAP VALUE Management Group, LLC
. Black Rock Investment
Management, LLC
. Diamond Hill Capital
Management, Inc.
. Knightsbridge Asset
Management, LLC
. Lord, Abbett & Co. LLC
-------------------------------------------------------------------------------------------------------------------------
MULTIMANAGER Seeks to achieve long-term growth of capital. . AXA Equitable Funds
TECHNOLOGY Management Group, LLC
. Allianz Global Investors
U.S. LLC
. SSgA Funds Management,
Inc.
. Wellington Management
Company, LLP
-------------------------------------------------------------------------------------------------------------------------
27
ABOUT THE PORTFOLIOS OF THE TRUSTS
------------------------------------------------------------------------------------------------------------
AIM VARIABLE
INSURANCE FUNDS
(INVESCO VARIABLE
INSURANCE
FUNDS) - SERIES II INVESTMENT MANAGER (OR
PORTFOLIO NAME OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL The fund's investment objective is total return through . Invesco Advisers, Inc.
REAL ESTATE FUND growth of capital and current income. . Invesco Asset Management
Limited
------------------------------------------------------------------------------------------------------------
INVESCO V.I. The fund's investment objective is long-term growth of . Invesco Advisers, Inc.
INTERNATIONAL capital.
GROWTH FUND
------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID The fund's investment objective is long-term growth of . Invesco Advisers, Inc.
CAP CORE EQUITY capital.
FUND
------------------------------------------------------------------------------------------------------------
INVESCO V.I. SMALL The fund's investment objective is long-term growth of . Invesco Advisers, Inc.
CAP EQUITY FUND capital.
---------------------------------------------------------------------------------------------------------
AMERICAN CENTURY
VARIABLE
PORTFOLIOS, INC. -
CLASS II INVESTMENT MANAGER (OR
PORTFOLIO NAME OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
---------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP The fund seeks long-term capital growth. Income is a . American Century
MID CAP VALUE FUND secondary objective. Investment Management,
Inc.
------------------------------------------------------------------------------------------------------------
AMERICAN FUNDS
INSURANCE SERIES(R)
PORTFOLIO NAME -- INVESTMENT MANAGER (OR
CLASS 4 SHARES OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
------------------------------------------------------------------------------------------------------------
GLOBAL SMALL The fund's investment objective is to provide you with . Capital Research and
CAPITALIZATION long-term growth of capital. Management Company
FUND/SM/
------------------------------------------------------------------------------------------------------------
NEW WORLD FUND(R) The fund's investment objective is long-term capital . Capital Research and
appreciation. Management Company
-------------------------------------------------------------------------------------------------------------
FIDELITY(R)
VARIABLE INSURANCE
PRODUCTS (VIP) -
SERVICE CLASS 2 INVESTMENT MANAGER (OR
PORTFOLIO NAME OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP Seeks long-term capital appreciation. . Fidelity Management &
CONTRAFUND(R) Research Company (FMR)
PORTFOLIO
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP Seeks high total return through a combination of current . Fidelity Management &
GROWTH & INCOME income and capital appreciation. Research Company (FMR)
PORTFOLIO
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID Seeks long-term growth of capital. . Fidelity Management &
CAP PORTFOLIO Research Company (FMR)
---------------------------------------------------------------------------------------------------------------
FRANKLIN TEMPLETON
VARIABLE
INSURANCE PRODUCTS INVESTMENT MANAGER
TRUST - CLASS 2 (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
---------------------------------------------------------------------------------------------------------------
FRANKLIN MUTUAL The Fund's principal investment goal is capital . Franklin Mutual Advisers,
SHARES VIP FUND appreciation. Its secondary goal is income. LLC
---------------------------------------------------------------------------------------------------------------
FRANKLIN RISING Seeks long-term capital appreciation, with preservation of . Franklin Advisory
DIVIDENDS VIP FUND capital as an important consideration. Services, LLC
---------------------------------------------------------------------------------------------------------------
FRANKLIN SMALL CAP Seeks long-term total return. . Franklin Advisory
VALUE VIP FUND Services, LLC
---------------------------------------------------------------------------------------------------------------
FRANKLIN STRATEGIC The Fund's principal investment goal is to seek a high . Franklin Advisers, Inc.
INCOME VIP FUND level of current income. Its secondary goal is capital
appreciation over long term.
---------------------------------------------------------------------------------------------------------------
TEMPLETON Seeks long-term capital appreciation. . Templeton Asset
DEVELOPING Management Ltd.
MARKETS VIP FUND
---------------------------------------------------------------------------------------------------------------
TEMPLETON GLOBAL Seeks high current income, consistent with preservation . Franklin Advisers, Inc.
BOND VIP FUND of capital. Capital appreciation is a secondary
consideration.
---------------------------------------------------------------------------------------------------------------
TEMPLETON GROWTH VIP Seeks long-term capital growth. . Templeton Global Advisors
FUND Limited
------------------------------------------------------------------------------------------
GOLDMAN SACHS
VARIABLE
INSURANCE TRUST - INVESTMENT MANAGER
SERVICE SHARES (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT Seeks long-term capital appreciation. . Goldman Sachs Asset
MID CAP VALUE FUND Management, L.P.
------------------------------------------------------------------------------------------
28
ABOUT THE PORTFOLIOS OF THE TRUSTS
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VARIABLE
INSURANCE INVESTMENT MANAGER
PORTFOLIOS (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VIP ENERGY To seek to provide capital growth and appreciation. . Waddell & Reed Investment
Management Company
(WRIMCO)
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VIP HIGH To seek to provide total return through a combination of . Waddell & Reed Investment
INCOME high current income and capital appreciation. Management Company
(WRIMCO)
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VIP MID To seek to provide growth of capital. . Waddell & Reed Investment
CAP GROWTH Management Company
(WRIMCO)
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VIP To seek to provide growth of capital. . Waddell & Reed Investment
SCIENCE AND Management Company
TECHNOLOGY (WRIMCO)
-------------------------------------------------------------------------------------------------------------
IVY FUNDS VIP SMALL To seek to provide growth of capital. . Waddell & Reed Investment
CAP GROWTH Management Company
(WRIMCO)
------------------------------------------------------------------------------------------
LAZARD RETIREMENT
SERIES, INC. - INVESTMENT MANAGER
SERVICE SHARES (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
------------------------------------------------------------------------------------------
LAZARD RETIREMENT Seeks long-term capital appreciation. . Lazard Asset Management
EMERGING MARKETS LLC
EQUITY PORTFOLIO
-------------------------------------------------------------------------------------------------------
MFS(R) VARIABLE
INSURANCE TRUSTS - INVESTMENT MANAGER
SERVICE CLASS (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
-------------------------------------------------------------------------------------------------------
MFS(R) The fund's investment objective is to seek capital . Massachusetts Financial
INTERNATIONAL appreciation. Services Company
VALUE PORTFOLIO
-------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS The fund's investment objective is to seek capital . Massachusetts Financial
TRUST SERIES appreciation. Services Company
-------------------------------------------------------------------------------------------------------
MFS(R) The fund's investment objective is to seek capital . Massachusetts Financial
MASSACHUSETTS appreciation. Services Company
INVESTORS GROWTH
STOCK PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
PIMCO VARIABLE
INSURANCE TRUST - INVESTMENT MANAGER
ADVISOR CLASS (OR SUB-ADVISER(S), AS
PORTFOLIO NAME OBJECTIVE APPLICABLE)
-----------------------------------------------------------------------------------------------------------------
PIMCO Seeks maximum real return consistent with prudent . Pacific Investment
COMMODITYREALRETURN(R) investment management. Management Company LLC
STRATEGY PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
PIMCO REAL RETURN Seeks maximum real return, consistent with preservation . Pacific Investment
PORTFOLIO of real capital and prudent investment management. Management Company LLC
-----------------------------------------------------------------------------------------------------------------
PIMCO TOTAL RETURN Seeks maximum total return, consistent with preservation . Pacific Investment
PORTFOLIO of capital and prudent investment management. Management Company LLC
-------------------------------------------------------------------------------------------------------------
T. ROWE PRICE
EQUITY SERIES, INC. INVESTMENT MANAGER (OR
PORTFOLIO NAME OBJECTIVE SUB-ADVISER(S), AS APPLICABLE)
-------------------------------------------------------------------------------------------------------------
T. ROWE PRICE Seeks a high level of dividend income and long-term . T. Rowe Price Associates,
EQUITY INCOME capital growth primarily through investments in stocks. Inc.
PORTFOLIO - II
-------------------------------------------------------------------------------------------------------------------
VAN ECK VIP TRUST
- S INVESTMENT MANAGER
CLASS PORTFOLIO (OR SUB-ADVISER(S), AS
NAME OBJECTIVE APPLICABLE)
-------------------------------------------------------------------------------------------------------------------
VAN ECK VIP GLOBAL Seeks long-term capital appreciation by investing primarily in . Van Eck Associates
HARD ASSETS FUND hard asset securities. Income is a secondary consideration. Corporation
-------------------------------------------------------------------------------------------------------------------
YOU SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, AND CHARGES AND EXPENSES
OF THE PORTFOLIOS CAREFULLY BEFORE INVESTING. THE PROSPECTUSES FOR THE TRUSTS
CONTAIN THIS AND OTHER IMPORTANT INFORMATION ABOUT THE PORTFOLIOS. THE
PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE INVESTING. IN ORDER TO OBTAIN
COPIES OF THE TRUST PROSPECTUSES THAT DO NOT ACCOMPANY THIS PROSPECTUS, YOU MAY
CALL ONE OF OUR CUSTOMER SERVICE REPRESENTATIVES AT 1-800-777-6510 (FOR U.S.
RESIDENTS) OR 1-704-341-7000 (OUTSIDE OF THE U.S.).
29
ABOUT THE PORTFOLIOS OF THE TRUSTS
5. Determining your policy's value
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YOUR POLICY ACCOUNT VALUE
As set forth earlier in this prospectus, we deduct certain charges from each
premium payment you make. We credit the rest of each premium payment to your
"policy account value." You instruct us to allocate your policy account value
to one or more of the policy's investment options indicated on the front cover
of this prospectus.
Your "policy account value" is the total of (i) your amounts in our variable
investment options, (ii) your amounts in our guaranteed interest option (other
than amounts included in (iii)) and (iii) any amounts that we are holding to
secure policy loans that you have taken (including any interest on those
amounts which has not yet been allocated to the investment options). See
"Borrowing from your policy" later in this prospectus. The account value of any
policy amounts transferred to the Market Stabilizer Option(R) ("MSO") is also
included in your policy account value, and is calculated as described in the
separate Market Stabilizer Option(R) prospectus.
(Your policy and other supplemental material may refer to the account that
holds the amounts in (ii) and (iii) above as our "Guaranteed Interest Account.")
Your "net policy account value is the total of (i) your amounts in our variable
investment options, (ii) your amounts in our guaranteed interest option and
(iii) any interest credited on loaned amounts, MINUS any interest accrued on
outstanding loans and MINUS any "restricted" amounts that we hold in the
guaranteed interest option as a result of any payment received under a living
benefits rider. The account value of any policy amounts transferred to the
Market Stabilizer Option(R) is also included in your net policy account value,
and is calculated as described in the separate Market Stabilizer Option(R)
prospectus.
Your policy account value is subject to certain charges discussed in
"Risk/benefit summary: Charges and expenses you will pay" earlier in this
prospectus.
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YOUR POLICY ACCOUNT VALUE WILL BE CREDITED WITH THE SAME RETURNS AS ARE
ACHIEVED BY THE PORTFOLIOS THAT YOU SELECT AND INTEREST CREDITED ON AMOUNTS IN
THE GUARANTEED INTEREST OPTION, AND IS REDUCED BY THE AMOUNT OF CHARGES WE
DEDUCT UNDER THE POLICY.
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YOUR POLICY'S VALUE IN OUR VARIABLE INVESTMENT OPTIONS. We invest the policy
account value that you have allocated to any variable investment option in
shares of the corresponding Portfolio. Your value in each variable investment
option is measured by "units."
The number of your units in any variable investment option does not change,
absent an event or transaction under your policy that involves moving assets
into or out of that option. Whenever any amount is withdrawn or otherwise
deducted from one of your policy's variable investment options, we "redeem"
(cancel) the number of units that has a value equal to that amount. This can
happen, for example, when all or a portion of monthly deductions and
transaction-based charges are allocated to that option, or when loans,
transfers, withdrawals and surrenders are made from that option. Similarly, you
"purchase" additional units having the same value as the amount of any premium
(after deduction of any premium charge), loan repayment, or transfer that you
allocate to that option.
The value of each unit will increase or decrease each business day, as though
you had invested in the corresponding Portfolio's shares directly (and
reinvested all dividends and distributions from the Portfolio in additional
Portfolio shares). On any day, your value in any variable investment option
equals the number of units credited to your policy under that option,
multiplied by that day's value for one such unit. The mortality and expense
risk charge mentioned earlier in this prospectus is calculated as a percentage
of the value you have in the variable investment options and MSO, if
applicable, and deducted monthly from your policy account based on your
deduction allocations. For more information on how we allocate charges, see
"How we allocate charges among your investment options" earlier in this
prospectus.
YOUR POLICY'S VALUE IN OUR GUARANTEED INTEREST OPTION. Your policy's value in
our guaranteed interest option includes: (i) any amounts that have been
allocated to that option, based on your request, and (ii) any "restricted"
amounts that we hold in that option as a result of your election to receive a
living benefit. See "Your option to receive a terminal illness living benefit
under the Living Benefits Rider," later in this prospectus. We credit all of
such amounts with interest at rates we declare from time to time. We guarantee
that these rates will not be less than a 1.5% effective annual rate.
Amounts may be allocated to or removed from your policy's value in our
guaranteed interest option for the same purposes as described earlier in this
prospectus for the variable investment options. We credit your policy with a
number of dollars in that option that equals any amount that is being allocated
to it. Similarly, if amounts are being removed from your guaranteed interest
option for any reason, we reduce the amount you have credited to that option on
a dollar-for-dollar basis.
30
DETERMINING YOUR POLICY'S VALUE
6. Transferring your money among our investment options
--------------------------------------------------------------------------------
TRANSFERS YOU CAN MAKE
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YOU CAN TRANSFER AMONG OUR VARIABLE INVESTMENT OPTIONS AND INTO OUR GUARANTEED
INTEREST OPTION. HOWEVER, CERTAIN RESTRICTIONS MAY APPLY.
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After your policy's Allocation Date, you can transfer amounts from one
investment option to another subject to certain restrictions discussed below.
Currently, the total of all transfers you make on the same day must be at least
$500; except that you may transfer your entire balance in an investment option,
even if it is less than $500. We reserve the right to restrict transfers among
variable investment options as described in your policy, including limitations
on the number, frequency, or dollar amount of transfers.
If your policy is placed on loan extension, we will transfer any remaining
policy account value in the variable investment options to the guaranteed
interest option. No transfers from the guaranteed interest option are permitted
thereafter.
Please see "Investment options within your policy" in "Risk/benefit summary:
Policy features, benefits and risks" for more information about your role in
managing your allocations.
RESTRICTIONS ON TRANSFERS INTO THE GUARANTEED INTEREST OPTION. After the first
two policy years and if the attained age of the insured is less than 65, we may
limit transfers you can make into the unloaned GIO if the current
(non-guaranteed) interest crediting rate on the unloaned GIO is equal to the
guaranteed minimum interest crediting rate of 1.5% (annual rate). In this
instance, the maximum amount that may be transferred from the variable
investment options to the unloaned GIO in a policy year is the greater of: (a)
$500 and (b) 25% of the total amount in the variable investment options at the
beginning of the policy year. If this amount is exceeded in any policy year
during which the transfer limit becomes effective, additional transfers into
the unloaned GIO will not be permitted during that policy year while the limit
remains in effect.
CURRENT UNRESTRICTED TRANSFERS OUT OF THE GUARANTEED INTEREST OPTION. We are
relaxing our policy rules so that, beginning on the business day after the
Allocation Date and thereafter, you may transfer any amount of unloaned policy
account value out of the guaranteed interest option to any other investment
option until further notice.
See the "How to make transfers" section below on how you can request a
transfer. In general, transfers take effect on the date the request is
received. However, any written, telephone, Internet or facsimile transaction
requests received after 4:00 p.m. (Eastern Time) take effect the next business
day.
Please note that the ability to make unresticted transfers from the guaranteed
interest option does not apply to any amounts that we are holding as collateral
for a policy loan or as "restricted" amounts as a result of your election to
receive a living benefit, if available under your policy.
If the policy is on loan extension, transfers out of the guaranteed interest
option are not permitted.
DISRUPTIVE TRANSFER ACTIVITY. We reserve the right to limit access to the
services described below if we determine that you are engaged in a disruptive
transfer activity, such as "market timing" (see "Disruptive transfer activity"
in "More information about other matters").
HOW TO MAKE TRANSFERS
INTERNET TRANSFERS. Generally, you can make transfers over the Internet if you
are the owner of the policy. You may do this by visiting our axa.com or
us.axa.com (for those outside the U.S.) websites and registering for online
account access. This service may not always be available. The restrictions
relating to transfers are described below.
ONLINE TRANSFERS. You can make online transfers by following one of two
procedures:
.. For individually owned policies for which you are the owner, by logging
onto our website, described under "By Internet" in "How to reach us"
earlier in this prospectus; or
.. For corporation and trust owned policies, we require a special
authorization form to obtain access. The form is available on our website
www.axa.us.com or us.axa.com for those outside the U.S., or by contacting
our Administrative office.
For more information, see "Telephone and Internet requests" later in this
prospectus. We allow only one request for transfers each day (although that
request can cover multiple transfers). If you are unable to reach us via our
website, you should send a written transfer request to our Administrative
Office.
TRANSFERS THROUGH OUR ADMINISTRATIVE OFFICE. You may submit a written request
for a transfer to our Administrative Office. We require a written request for
jointly owned policies.
OUR AUTOMATIC TRANSFER SERVICE
We offer an automatic transfer service. This service allows you to gradually
allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low, and fewer units if the unit's value is high. Therefore, you may
achieve a lower average cost per unit over the long-term.
--------------------------------------------------------------------------------
USING THE AUTOMATIC TRANSFER SERVICE DOES NOT GUARANTEE THAT YOU WILL EARN A
PROFIT OR BE PROTECTED AGAINST LOSSES.
--------------------------------------------------------------------------------
Our automatic transfer service (also referred to as our "dollar cost averaging
service") enables you to make automatic monthly transfers from the EQ/Money
Market option to our other variable investment options. You may elect the
automatic transfer service with your policy application or at any later time
(provided you are not using the asset rebalancing service described below). At
least $5,000 must be allocated to the EQ/Money Market option to begin using the
automatic transfer service. You can choose up to eight other variable
investment options to receive the automatic transfers, but each transfer to
each option must be at least $50.
31
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
This service terminates when the EQ/Money Market option is depleted. Also, this
service will automatically terminate if your policy is placed on loan
extension. You can also cancel the automatic transfer service at any time by
sending a written request to our Administrative office. You may not
simultaneously participate in the asset rebalancing service and the automatic
transfer service.
We will not deduct a transfer charge for any transfer made in connection with
our automatic transfer service.
OUR ASSET REBALANCING SERVICE
You may wish us to periodically redistribute the amounts you have in our
variable investment options so that the relative amount of your policy account
value in each variable option is restored to an asset allocation that you
select. You can accomplish this automatically through our asset rebalancing
service. The rebalancing may be at quarterly, semiannual, or annual intervals.
You may specify asset allocation percentages for all available variable
investment options up to a maximum of 50. The allocation percentage you specify
for each variable investment option selected must be at least 2% (whole
percentages only) of the total value you hold under the variable investment
options, and the sum of the percentages must equal 100%. You may not
simultaneously participate in the asset rebalancing service and the automatic
transfer service (discussed above).
You may request the asset rebalancing service in your policy application or at
any later time by completing our enrollment form. At any time, you may also
terminate the rebalancing program or make changes to your allocations under the
program. Once enrolled in the rebalancing service, it will remain in effect
until you instruct us in writing to terminate the service. Requesting an
investment option transfer while enrolled in our asset rebalancing service will
not automatically change your allocation instructions for rebalancing your
account value. This means that upon the next scheduled rebalancing, we will
transfer amounts among your investment options pursuant to the allocation
instructions previously on file for your rebalancing service. Changes to your
allocation instructions for the rebalancing service (or termination of your
enrollment in the service) must be in writing and sent to our Administrative
Office.
We will not deduct a transfer charge for any transfer made in connection with
our asset rebalancing service. Also, this service will automatically terminate
if your policy is placed on loan extension. Certain investment options, such as
the guaranteed interest option, are not available investment options with the
asset rebalancing service.
32
TRANSFERRING YOUR MONEY AMONG OUR INVESTMENT OPTIONS
7. Accessing your money
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BORROWING FROM YOUR POLICY
You may borrow up to 90% of the cash surrender value, less any outstanding loan
and accrued loan interest before the policy year in which the insured reaches
age 75 (100% thereafter). In your policy, the cash surrender value is equal to
the difference between your policy account value and any surrender charges that
are in effect under your policy. However, the amount you can borrow will be
reduced by any amount that we hold on a "restricted" basis following your
receipt of a terminal illness living benefits payment, as well as by any other
loans (and accrued loan interest) you have outstanding and reduced for any
monthly payments under the Long-Term Care Services/SM/ Rider. See "More
information about policy features and benefits: Other benefits you can add by
rider: Long-Term Care Services/SM /Rider" later in this prospectus. See "Your
option to receive a terminal illness living benefit under the Living Benefits
Rider" below. The minimum loan amount generally is $500.
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YOU CAN USE POLICY LOANS TO OBTAIN FUNDS FROM YOUR POLICY WITHOUT SURRENDER
CHARGES OR, IN MOST CASES, PAYING CURRENT INCOME TAXES. HOWEVER, THE BORROWED
AMOUNT IS NO LONGER CREDITED WITH THE INVESTMENT RESULTS OF ANY OF OUR
INVESTMENT OPTIONS UNDER THE POLICY.
--------------------------------------------------------------------------------
When you take a policy loan, we remove an amount equal to the loan from one or
more of your investment options and hold it as collateral for the loan's
repayment. We hold this loan collateral under the same terms and conditions as
apply to amounts supporting our guaranteed interest option, with several
exceptions:
.. you cannot make transfers or withdrawals of the collateral;
.. we expect to credit different rates of interest to loan collateral than we
credit under our guaranteed interest option;
.. we do not count the collateral when we compute our customer loyalty credit;
and
.. the collateral is not available to pay policy charges.
When you request a loan, you should tell us how much of the loan collateral you
wish to have taken from any amounts you have in each of our investment options.
If you do not give us directions (or if we are making the loan automatically to
cover unpaid loan interest), we will take the loan from your investment options
in the same proportion as we are taking monthly deductions for charges. If that
is not possible, we will take the loan from your investment options in
proportion to your value in each.
LOAN INTEREST WE CHARGE. The interest we charge on a policy loan accrues daily
at an adjustable interest rate. We determine the rate at the beginning of each
year of your policy and that rate applies to all policy loans that are
outstanding at any time during the year. The maximum rate is the greater of
(a) 2.5% or (b) the "Monthly Average Corporate" yield published in Moody's
Corporate Bond Yield Averages for the month that ends two months before the
interest rate is set. (If that average is no longer published, we will use
another average, as the policy provides.) Currently, the loan interest rate is
2.5% for the first ten policy years and 1.5% thereafter. We will notify you of
the current loan interest rate when you apply for a loan, and will notify you
in advance of any rate increase.
Loan interest payments are due on each policy anniversary. If not paid when
due, we automatically add the interest as a new policy loan.
INTEREST THAT WE CREDIT ON LOAN COLLATERAL. Under our current rules, the annual
interest rate we credit on your loan collateral during any of your policy's
first ten years will be 1% less than the rate we are then charging you for
policy loan interest, and, beginning in the policy's 11th year, equal to the
loan interest rate. The elimination of the rate differential is not guaranteed,
however. Accordingly, we have discretion to increase the rate differential for
any period, including under policies that are already in force (and may have an
outstanding loan). We do guarantee that the annual rate of interest credited on
your loan collateral will never be less than 1.5% and that the differential
will not exceed 1%.
We credit interest on your loan collateral daily. On each anniversary of your
policy (or when your policy loan is fully repaid) we transfer that interest to
your policy's investment options in the same proportions as if it were a
premium payment. If your policy is on loan extension, we transfer the interest
to the unloaned guaranteed interest option.
EFFECTS OF A POLICY LOAN. If not repaid, the aggregate amount of the
outstanding loan and any accrued loan interest will reduce your cash surrender
value and your life insurance benefit that might otherwise be payable. We will
deduct any outstanding policy loan and accrued loan interest from your policy's
proceeds if you do not pay it back. Also, a loan can reduce the length of time
that your insurance remains in force, because the amount we set aside as loan
collateral cannot be used to pay charges as they become due.
A policy loan, repaid or not, has a permanent effect on your cash surrender
value. This results because the investment results of each investment option
apply only to the amounts remaining in such investment options. The longer the
loan is outstanding, the greater the effect on your cash surrender value is
likely to be.
If your policy's no-lapse guarantee is in effect and is important to you, you
should ensure that the amount of any outstanding policy loans and accrued loan
interest does not exceed your policy account value. The no-lapse guarantee will
terminate if the amount of your outstanding policy loans and accrued loan
interest is greater than your policy account value.
Even if a loan is not taxable when made, it may later become taxable, for
example, upon termination or surrender. A policy loan can affect your policy
account value and death benefit, even if you have repaid the loan. See "Tax
information" below for a discussion of the tax consequences of a policy loan.
PAYING OFF YOUR LOAN. You can repay all or part of your loan at any time. We
normally assume that payments you send us are premium payments unless the
policy has lapsed and the payment is received
33
ACCESSING YOUR MONEY
during the 61-day grace period. See "Policy 'lapse' and termination" in "The
minimum amount of premiums you must pay" under "Risk/ benefit summary: Policy
features, benefits and risks" for more information. Therefore, you must submit
instructions with your payment indicating that it is a loan repayment. If you
send us more than all of the loan principal and interest you owe, we will treat
the excess as a premium payment. Any payment received while the policy is on
loan extension or you are receiving monthly payments under the Long-Term Care
Services/SM/ Rider will be applied as a loan repayment (or refunded if it is in
excess of the loan amount and outstanding interest).
When you send us a loan repayment, we will transfer an amount equal to such
repayment from your loan collateral back to the investment options under your
policy. First we will restore any amounts that, before being designated as loan
collateral, had been in the guaranteed interest option under your policy. We
will allocate any additional repayments among the investment options as you
instruct; or, if you don't instruct us, in the same proportion as if they were
premium payments.
If you are to receive monthly benefit payments under the Long-Term Care
Services/SM/ Rider, a pro rata portion of the loan and accrued loan interest to
that date will be deducted from the monthly benefit payment as a loan
repayment. This will reduce the monthly payment otherwise payable to you under
the rider.
Any portion of the loan repayment that we cannot allocate to the guaranteed
interest option will be allocated to the variable investment options in
proportion to any amounts that you specified for that particular loan
repayment. If you did not specify, we will allocate that portion of the loan
repayment in proportion to the premium allocation percentages for the variable
investment options on record.
LOAN EXTENSION (FOR GUIDELINE PREMIUM TEST POLICIES ONLY)
Loan extension will protect against lapse of your policy due to an outstanding
policy loan in certain circumstances. There is no additional charge for the
loan extension feature. Your policy will automatically be placed on "loan
extension," if at the beginning of any policy month on or following the policy
anniversary nearest the insured person's 75th birthday, but not earlier than
the 20th policy anniversary, all of the following conditions apply:
.. The net policy account value is not sufficient to cover the monthly
deductions then due;
.. The amount of any outstanding policy loan and accrued loan interest is
greater than the larger of (a) the current base policy face amount, or
(b) the initial base policy face amount;
.. You have selected death benefit option A;
.. You have not received a payment under either the Living Benefits Rider or
the Long-Term Care Services/SM/ Rider;
.. The policy is not in a grace period; and
.. No current or future distributions will be required to be paid from the
policy to maintain its qualification as "life insurance" under the Internal
Revenue Code.
When a policy goes on loan extension, all of the following will apply:
.. We will collect monthly deductions due under the policy up to the amount in
the unloaned policy account value.
.. Any policy account value that is invested in our variable investment
options will automatically be transferred to our guaranteed interest
option; and no transfers out of the guaranteed interest option may
thereafter be made into any of our variable investment options.
.. Loan interest will continue to accrue and we will send you a notice of any
loan interest due on or about each policy anniversary. If the loan interest
is not paid when due, it will be added to the outstanding loan balance.
.. No additional loans or partial withdrawals may be requested.
.. No changes in face amount or death benefit option may be requested.
.. No additional premium payments will be accepted. Any payments received will
be applied as loan repayments. If a loan repayment is made, the repaid
amount will become part of the unloaned guaranteed interest option. Any
payment in excess of the outstanding loan balance will be refunded to you.
.. All additional benefit riders and endorsements will terminate, including
the Long-Term Care Services/SM/ Rider.
.. No future allocations or transfers to the investment options will be
accepted.
.. The policy will not thereafter lapse for any reason.
On the policy anniversary when the insured attains age 75 and if such policy
has been in force for 20 years, and each month thereafter, we will determine
whether the policy is on loan extension. You will be sent a letter explaining
the transactions that are allowed and prohibited while a policy is on loan
extension. Once a policy is on loan extension, it will remain on loan extension
during the lifetime of the insured unless the policy is surrendered.
If your policy is on loan extension, the death benefit payable under the policy
is the greatest of (a), (b) and (c):
(a)The greater of the policy account value or the outstanding loan and accrued
loan interest on the date of the insured's death, multiplied by a percentage
shown in your policy;
(b)The outstanding loan and accrued loan interest, plus $10,000; or
(c)The base policy face amount on the date of death.
Other than as outlined above, all terms and conditions of your policy will
continue to apply as if your policy is not on loan extension.
MAKING WITHDRAWALS FROM YOUR POLICY
You may make a partial withdrawal of your net cash surrender value (defined
below) at any time after the first year of your policy and before the policy
anniversary nearest to the insured's attained age 121, provided the policy is
not on loan extension and you are not receiving monthly benefit payments under
the Long-Term Care Services/SM/ Rider. The request must be for at least $500,
however, and we have discretion to decline any request. If you do not tell us
from which investment options you wish us to take the withdrawal, we will use
the same allocation that then applies for the monthly deductions we
34
ACCESSING YOUR MONEY
make for charges; and, if that is not possible, we will take the withdrawal
from all of your investment options in proportion to your value in each. If you
elected the Long-Term Care Services/SM/ Rider and selected death benefit Option
A, a partial withdrawal will reduce the current long-term care specified amount
by the amount of the withdrawal, but not to less than the policy account value
minus the withdrawal amount. If you selected death benefit Option B, the
current long-term care specified amount will not be reduced. We will not deduct
a charge for making a partial withdrawal.
--------------------------------------------------------------------------------
YOU CAN WITHDRAW ALL OR PART OF YOUR POLICY'S NET CASH SURRENDER VALUE,
ALTHOUGH YOU MAY INCUR TAX CONSEQUENCES BY DOING SO.
--------------------------------------------------------------------------------
EFFECT OF PARTIAL WITHDRAWALS ON INSURANCE COVERAGE. If the Option A death
benefit is in effect, a partial withdrawal results in a dollar-for-dollar
automatic reduction in the policy's face amount (and, hence, an equal reduction
in the Option A death benefit). We will not permit a partial withdrawal that
would reduce the face amount below the minimum stated in your policy, or that
would cause the policy to no longer be treated as life insurance for federal
income tax purposes.
If death benefit Option B is in effect, a partial withdrawal reduces the death
benefit on a dollar for dollar basis, but does not affect the face amount.
The result is different, however, during any time when the alternative death
benefit (discussed later in this prospectus) would be higher than the Option A
or B death benefit you have selected. In that case, a partial withdrawal will
cause the death benefit to decrease by more than the amount of the withdrawal.
A partial withdrawal reduces the amount of your premium payments that counts
toward maintaining the no-lapse guarantee. A partial withdrawal may increase
the chance that your policy could lapse because of insufficient value to pay
policy charges as they fall due or failure to pass the guarantee premium test
for the no-lapse guarantee.
You should refer to "Tax information" below, for information about possible tax
consequences of partial withdrawals and any associated reduction in policy
benefits.
SURRENDERING YOUR POLICY FOR ITS NET CASH SURRENDER VALUE
Upon written request satisfactory to us, you can surrender (give us back) your
policy for its "net cash surrender value" at any time. The net cash surrender
value equals your policy account value, minus any outstanding loan and unpaid
loan interest, minus any amount of your policy account value that is
"restricted" as a result of previously distributed terminal illness living
benefits, and further reduced for any monthly benefit payments under the
Long-Term Care Services/SM/ Rider, and minus any surrender charge that then
remains applicable. The surrender charge is described in "Charges and expenses
you will pay" earlier in this prospectus.
Please refer to "Tax information" below for the possible tax consequences of
surrendering your policy.
YOUR OPTION TO RECEIVE A TERMINAL ILLNESS LIVING BENEFIT UNDER THE LIVING
BENEFITS RIDER
Subject to our insurance underwriting guidelines and availability in your
state, your policy will automatically include our Living Benefits Rider if you
apply for a face amount of at least $100,000 unless it is issued as a result of
an Option To Purchase Additional Insurance election or a conversion from a term
life policy or term rider. This feature enables you to receive a portion
(generally the lesser of 75% or $500,000) of the policy's death benefit
(excluding death benefits payable under certain other policy riders), if the
insured person has a terminal illness (as defined in the rider). The maximum
aggregate amount of payments that will be paid under this Living Benefits Rider
for all policies issued by MONY America or an affiliate company on the life of
the same insured person is $500,000. We make no additional charge for the
rider, but we will deduct a one-time administrative charge of up to $250 from
any living benefit we pay.
If you tell us that you do not wish to have the Living Benefits Rider added at
issue, but you later ask to add it, there will be a $100 administrative charge.
Also, we will need to evaluate the insurance risk at that time, and we may
decline to issue the rider.
If you receive a living benefit on account of terminal illness, the Long-Term
Care ServicesSM Rider for chronic illness benefits, if elected, and before
continuation of coverage under any Nonforfeiture Benefit, will terminate and no
further benefits will be payable under the Long-Term Care Services/SM/ Rider.
Long-Term Care Services/SM/ Rider charges will also stop. In addition, once you
receive a living benefit, your policy cannot be placed on loan extension. We
will deduct the amount of any living benefit we have paid, plus interest (as
specified in the rider), from the death benefit proceeds that become payable
under the policy if and when the insured person dies. (In your policy we refer
to this as a "lien" we establish against your policy.)
When we pay a living benefit, we automatically transfer a pro rata portion of
your policy's net cash surrender value to the policy's guaranteed interest
option regardless of any policy guaranteed interest option limitation in
effect. This amount, together with the interest we charge thereon, will be
"restricted"-- that is, it will not be available for any loans, transfers or
partial withdrawals that you may wish to make. In addition, it may not be used
to satisfy the charges we deduct from your policy's value. We also will deduct
these restricted amounts from any subsequent surrender proceeds that we pay.
The receipt of a living benefits payment may qualify for exclusion from income
tax. See "Tax information" below. Receipt of a living benefits payment may
affect your eligibility for certain government benefits or entitlements.
--------------------------------------------------------------------------------
YOU CAN ARRANGE TO RECEIVE A "LIVING BENEFIT" IF THE INSURED PERSON BECOMES
TERMINALLY ILL.
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35
ACCESSING YOUR MONEY
8. Tax information
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This discussion is based on current federal income tax law and interpretations.
It assumes that the policy owner is a natural person who is a U.S. citizen and
resident and has an insurable interest in the insured. The tax effects on
corporate taxpayers, non-U.S. residents or non-U.S. citizens may be different.
This discussion is general in nature, and should not be considered tax advice,
for which you should consult a qualified tax advisor.
BASIC INCOME TAX TREATMENT FOR YOU AND YOUR BENEFICIARY
An IncentiveLife Optimizer(R) III policy will be treated as "life insurance"
for federal income tax purposes (a) if it meets the definition of life
insurance under Section 7702 of the Internal Revenue Code (the "Code") and
(b) as long as the investments made by the underlying Portfolios satisfy
certain investment diversification requirements under Section 817(h) of the
Code. The following discussion assumes that the policies meet these
requirements and, therefore, that generally:
.. the death benefit received by the beneficiary under your policy generally
will not be subject to federal income tax; and
.. increases in your policy account value as a result of interest or
investment experience will not be subject to federal income tax, unless and
until there is a distribution from your policy, such as a surrender, a
partial withdrawal, loan or a payment to you.
The IRS, however, could disagree with our position such that certain tax
consequences could be other than as described. There may also be different tax
consequences if you assign your policy, transfer an interest therein or
designate a new owner. See "Assigning your policy" later in this prospectus.
See also special rules below for "Business and employer owned policies," and
for the discussion of insurable interest under "Other information."
TAX TREATMENT OF DISTRIBUTIONS TO YOU (LOANS, PARTIAL WITHDRAWALS, AND FULL
SURRENDER)
The federal income tax consequences of a distribution from your policy depend
on whether your policy is a "modified endowment contract" (sometimes also
referred to as a "MEC"). In all cases, however, the character of any income
described below as being taxable to the recipient will be ordinary income (as
opposed to capital gain).
TESTING FOR MODIFIED ENDOWMENT CONTRACT STATUS. Your policy will be a "modified
endowment contract" if, at any time during the first seven years of your
policy, you have paid a cumulative amount of premiums that exceeds the
cumulative seven-pay limit. The cumulative seven-pay limit is the amount of
premiums that you would have paid by that time under a similar fixed-benefit
insurance policy that was designed (based on certain assumptions mandated under
the Code) to provide for paid up future benefits after the payment of seven
equal annual premiums. ("Paid up" means that no future premiums would be
required.) This is called the "seven-pay" test.
Whenever there is a "material change" under a policy, the policy will generally
be (a) treated as a new contract for purposes of determining whether the policy
is a modified endowment contract and (b) subjected to a new seven-pay period
and a new seven-pay limit. The new seven-pay limit would be determined taking
into account, under a prescribed formula, the policy account value at the time
of such change.
A materially changed policy would be considered a modified endowment contract
if it failed to satisfy the new seven-pay limit at any time during the new
seven-pay period. A "material change" for these purposes could occur as a
result of a change in death benefit option, a requested increase in the
policy's face amount or certain other changes.
If your policy's benefits are reduced during its first seven years (or within
seven years after a material change), the seven-pay limit will be redetermined
based on the reduced level of benefits and applied retroactively for purposes
of the seven-pay test. (Such a reduction in benefits could include, for
example, a requested decrease in face amount, the termination of additional
benefits under a rider or, in some cases, a partial withdrawal or a change in
death benefit option.) If the premiums previously paid are greater than the
recalculated (lower) seven-pay limit, the policy will become a modified
endowment contract.
A life insurance policy that you receive in exchange for a modified endowment
contract will also be considered a modified endowment contract.
In addition to the above premium limits for testing for modified endowment
status, federal income tax rules must be complied with in order for it to
qualify as life insurance. Changes made to your policy, for example, a decrease
in face amount (including any decrease that may occur as a result of a partial
withdrawal), a change in death benefit option, or other decrease in benefits
may impact the maximum amount of premiums that can be paid, as well as the
maximum amount of policy account value that may be maintained under the policy.
If you have elected the cash value accumulation test, such changes may also
impact the maximum amount of cash surrender value that may be maintained under
the policy or your ability to pay additional premiums due to the maximum amount
of policy account value that may be maintained under the policy relative to the
policy face amount. We may also be required to provide a higher death benefit
notwithstanding the decrease in face amount in order to assure that your policy
continues to qualify as life insurance. Under either test, in some cases, this
may cause us to take current or future action in order to assure that your
policy continues to qualify as life insurance, including distribution of
amounts to you that may be includible as income. See "Changes we can make"
later in this prospectus.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT
CONTRACT. As long as your policy remains in force as a non-modified endowment
contract, policy loans will be treated as indebtedness, and no part of the loan
proceeds will be subject to current federal income tax. Interest on the loan
will generally not be tax deductible, although interest credited on loan
collateral may become taxable under the rules below if distributed. Also, see
below for taxation of loans upon surrender or termination of your policy.
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TAX INFORMATION
If you make a partial withdrawal after the first 15 years of your policy, the
proceeds will not be subject to federal income tax except to the extent such
proceeds exceed your "basis" in your policy. (Your basis generally will equal
the premiums you have paid, less the amount of any previous distributions from
your policy that were not taxable.) During the first 15 years, however, the
proceeds from a partial withdrawal could be subject to federal income tax,
under a complex formula, to the extent that your policy account value exceeds
your basis.
Upon full surrender, any amount by which the proceeds we pay (including amounts
we use to discharge any policy loan and unpaid loan interest) exceed your basis
in the policy will be subject to federal income tax. IN ADDITION, IF A POLICY
TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT OF ANY THEN-OUTSTANDING
POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED AS A DISTRIBUTION AND
COULD BE SUBJECT TO TAX UNDER THE FOREGOING RULES. Finally, if you make an
assignment of rights or benefits under your policy, you may be deemed to have
received a distribution from your policy, all or part of which may be taxable.
POLICY LOANS. Policy loans can cause taxable income upon the termination of a
policy with no cash payout. In the case of a surrender, the loan amount is
taken into account in determining any taxable amount and such income can also
exceed the payment received. These events can occur from potential situations
which include: (1) amount of outstanding policy debt (loans taken plus unpaid
interest amounts added to the outstanding loan) at or near the maximum loan
value; (2) unfavorable investment results affecting your policy account value;
(3) increasing monthly policy charges due to increasing attained ages of the
insured; (4) high or increasing amount of insurance risk, depending on death
benefit option and changing account value; and (5) increasing policy loan rates
if an adjustable policy loan rate is in effect.
Ideally a policy loan form will be paid from income tax free death benefit
proceeds if your policy is kept in force until the death of the insured. To
avoid policy terminations that may give rise to significant income tax
liability, you may need to make substantial premium payments or loan repayments
to keep your policy in force.
You can reduce the likelihood that these situations will occur by considering
these risks before taking a policy loan. If you take a policy loan, you should
monitor the status of your policy with your financial representative and your
tax advisor at least annually, and take appropriate preventative action. As
indicated above, in the case of a policy that is a modified endowment contract
("MEC"), any loan will be treated as a distribution when made, and thus may be
taxable at such time.
TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS A MODIFIED ENDOWMENT
CONTRACT. Any distribution from your policy will be taxed on an "income-first"
basis if your policy is a modified endowment contract. Distributions for this
purpose include a loan (including any increase in the loan amount to pay
interest on an existing loan or an assignment or a pledge to secure a loan) or
withdrawal. Any such distributions will be considered taxable income to you to
the extent your policy account value exceeds your basis in the policy. (For
modified endowment contracts, your basis is similar to the basis described
above for other policies, except that it also would be increased by the amount
of any prior loan under your policy that was considered taxable income to you.)
For purposes of determining the taxable portion of any distribution, all
modified endowment contracts issued by MONY America (or its affiliates) to the
same owner (excluding certain qualified plans) during any calendar year are
treated as if they were a single contract.
A 10% penalty tax also will apply to the taxable portion of most distributions
from a policy that is a modified endowment contract. The penalty tax will not,
however, apply to (i) taxpayers whose actual age is at least 59 1/2,
(ii) distributions in the case of a disability (as defined in the Code) or
(iii) distributions received as part of a series of substantially equal
periodic annuity payments for the life (or life expectancy) of the taxpayer or
the joint lives (or joint life expectancies) of the taxpayer and his or her
beneficiary. The exceptions generally do not apply to life insurance policies
owned by corporations or other entities.
IF YOUR POLICY TERMINATES AFTER A GRACE PERIOD, THE EXTINGUISHMENT OF ANY THEN
OUTSTANDING POLICY LOAN AND UNPAID LOAN INTEREST WILL BE TREATED AS A
DISTRIBUTION (to the extent the loan was not previously treated as such) and
could be subject to tax, including the 10% penalty tax, as described above. In
addition, upon a full surrender, any excess of the proceeds we pay (including
any amounts we use to discharge any loan) over your basis in the policy, will
be subject to federal income tax and, unless an exception applies, the 10%
penalty tax.
Distributions that occur during a year of your policy in which it becomes a
modified endowment contract, and during any subsequent years, will be taxed as
described in the four preceding paragraphs. In addition, distributions from a
policy within two years before it becomes a modified endowment contract also
will be subject to tax in this manner. This means that a distribution made from
a policy that is not a modified endowment contract could later become taxable
as a distribution from a modified endowment contract.
POLICY CHANGES. Changes made to a life insurance policy, for example, a
decrease in benefits, a death benefit option change, or the termination or
restoration of a terminated policy, may have other effects on your policy,
including impacting the maximum amount of premiums that can be paid under the
policy. In some cases, this may cause us to take action in order to assure your
policy continues to qualify as life insurance, including distribution of
amounts that may be includable as income. This action may be required under the
tax law even though the policy may not be sufficiently funded to keep it in
force for a desired duration. In some cases, premium payments for a policy year
could be limited to the amount needed to keep the policy in force until the end
of the policy year. You should carefully go over the implications of any policy
changes with your advisor before making a change.
RESTORATION OF A TERMINATED POLICY. For tax purposes, some restorations of a
policy that terminated after a grace period may be treated as the purchase of a
new policy. Since tax laws and regulations and their application may have
changed by such time, there can be no assurance that we can reinstate the
policy to qualify as life insurance under future tax rules.
TAX TREATMENT OF LIVING BENEFITS RIDER OR LONG-TERM CARE SERVICES/SM/ RIDER
UNDER A POLICY WITH THE APPLICABLE RIDER
LIVING BENEFITS RIDER. Amounts received under an insurance policy on the life
of an individual who is terminally ill, as defined by the tax law, are
generally excludable from gross income as an accelerated death benefit. We
believe that the benefits provided under our living benefits rider meet the tax
law's definition of terminally ill under section 101(g) of the Code and can
qualify for this income tax exclusion.
If the owner and the insured person are not the same, the exclusion for
accelerated death benefits for terminal illness or a chronic illness does not
apply if the owner (taxpayer) has an insurable interest with respect to the
life of the insured person by reason of the insured per-
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TAX INFORMATION
son being an officer, employee or director of the taxpayer or by reason of the
insured person being financially interested in any trade or business carried on
by the taxpayer.
LONG-TERM CARE SERVICES/SM/ RIDER. Benefits received under the Long-Term Care
Services/SM/ Rider are intended to be treated, for Federal income tax purposes,
as accelerated death benefits under the Code on the life of a chronically ill
insured person receiving qualified long-term care services within the meaning
of section 7702B of the Code. The benefits are intended to qualify for
exclusion from income subject to the limitations of the Code with respect to a
particular insured person. Receipt of these benefits may be taxable and may
reduce your investment in the policy. Generally income exclusion for all
long-term care type payments from all sources with respect to an insured person
will be limited to the higher of the Health Insurance Portability and
Accountability Act ("HIPAA") per day limit or actual costs incurred by the
taxpayer on behalf of the insured person.
The Long-Term Care Services/SM/ Rider is intended to be a qualified long-term
care insurance contract under section 7702B(b) of the Code. Charges for the
Long-Term Care Services/SM/ Rider are generally not considered deductible for
income tax purposes. Assuming the rider qualifies as intended, charges will
reduce your investment in the policy for income tax purposes (but not below
zero) but will not be taxable. Please see the "State policy availability and/or
variations of certain features and benefits" Appendix later in this prospectus
for more information on state variations.
Any adjustments made to your policy death benefit, face amount and other values
as a result of Long-Term Care Services/SM/ Rider benefits paid will also
generally cause us to make adjustments with respect to your policy under
federal income tax rules for testing premiums paid, your tax basis in your
policy, your overall premium limits and the seven-pay period and seven-pay
limit for testing modified endowment contract status.
It is not clear whether the exclusion for accelerated death benefits on account
of chronically-ill insureds applies to benefits under a qualified long-term
care insurance policy for owners whose insurable interests arise from
business-type policies. Please see the "State policy availability and/or
variations of certain features and benefits" Appendix later in this prospectus
for more information on state variations.
UNDER EITHER RIDER, if the owner and insured person are not the same, other tax
considerations may also arise in connection with a transfer of benefits
received to the insured person, for example, gift taxes in personal settings,
compensation income in the employment context and inclusion of life insurance
policy proceeds for estate tax purposes in certain trust owned situations.
Under certain conditions, a gift tax exclusion may be available for certain
amounts paid on behalf of a donee directly to their provider of medical care.
BUSINESS AND EMPLOYER OWNED POLICIES
Any employer owned life insurance arrangement on an employee or director as
well as any corporate, trade, or business use of a policy should be carefully
reviewed by your tax advisor with attention to the rules discussed below. Also,
careful consideration should be given to any other rules that may apply,
including other possible pending or recently enacted legislative proposals.
REQUIREMENTS FOR INCOME TAX FREE DEATH BENEFITS. Federal tax law imposes
additional requirements for employer owned life insurance policies. The
provisions can have broad application for contract owners engaged in a trade or
business or certain related persons. These requirements include detailed notice
and consent rules, annual tax reporting and recordkeeping requirements on the
employer and limitations on those employees (including directors) who can be
insured under the life insurance policy. Failure to satisfy applicable
requirements will result in death benefits in excess of premiums paid by the
owner being includible in the owner's income upon the death of the insured
employee. Notice and consent requirements must be satisfied before the issuance
of the life insurance policy or a material change to an existing life insurance
policy, otherwise benefits may lose their tax favored treatment.
The rules generally apply to life insurance policies issued after August 17,
2006. Note, however, that material increases in the death benefit or other
material changes will generally cause an existing policy to be treated as a new
policy and thus subject to the new requirements. The term "material" has not
yet been fully defined but is expected to not include automatic increases in
death benefits in order to maintain compliance of the life insurance policy tax
qualification rules under the Code. An exception for certain tax-free exchanges
of life insurance policies pursuant to Section 1035 of the Code may be
available but is not clearly defined.
LIMITATIONS ON INTEREST DEDUCTIBILITY FOR BUSINESS OWNED LIFE
INSURANCE. Ownership of a policy by a trade or business can limit the amount of
any interest on business borrowings that entity otherwise could deduct for
federal income tax purposes, even though such business borrowings may be
unrelated to the policy. To avoid the limit, the insured person must be an
officer, director, employee or 20% owner of the trade or business entity when
coverage on that person commences. Proposals, if enacted, could narrow the
exception unless the policy is grandfathered.
The limit does not generally apply for policies owned by natural persons (even
if those persons are conducting a trade or business as sole proprietorships),
unless a trade or business entity that is not a sole proprietorship is a direct
or indirect beneficiary under the policy. Entities commonly have such a
beneficial interest, for example, in so-called "split-dollar" arrangements. If
the trade or business entity has such an interest in a policy, it will be
treated the same as if it owned the policy for purposes of the limit on
deducting interest on unrelated business income.
The limit generally applies only to policies issued after June 8, 1997 in
taxable years ending after such date. However, for this purpose, any material
change in a policy will be treated as the issuance of a new policy.
In cases where the above-discussed limit on deductibility applies, the
non-deductible portion of unrelated interest on business loans is determined by
multiplying the total amount of such interest by a fraction. The numerator of
the fraction is the policy's average account value (excluding amounts we are
holding to secure any policy loans) for the year in question, and the
denominator is the average for the year of the aggregate tax bases of all the
entity's other assets. The above limitation is in addition to rules limiting
interest deductions on policy loans against business-owned life insurance.
Special rules apply to insurance company owners of policies which may be more
restrictive.
REQUIREMENT THAT WE DIVERSIFY INVESTMENTS
Under Section 817(h) of the Code, the Treasury Department has issued
regulations that implement investment diversification requirements. Failure to
comply with these regulations would disqualify your policy as a life insurance
policy under Section 7702 of the Code. If this were to occur, you would be
subject to federal income tax on any income and
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TAX INFORMATION
gains under the policy and the death benefit proceeds would lose their income
tax-free status. These consequences would continue for the period of the
disqualification and for subsequent periods. Through the Portfolios, we intend
to comply with the applicable diversification requirements, though no
assurances can be given in this regard.
ESTATE, GIFT, AND GENERATION-SKIPPING TAXES
If the policy's owner is the insured person, the death benefit will generally
be includable in the owner's estate for purposes of federal estate tax. If the
owner is not the insured person, and the owner dies before the insured person,
the value of the policy would be includable in the owner's estate. If the owner
is neither the insured person nor the beneficiary, the owner will be considered
to have made a gift to the beneficiary of the death benefit proceeds when they
become payable.
In general, a person will not owe estate or gift taxes until gifts made by such
person, plus that person's taxable estate, total at least $5 million indexed
for inflation ($5.430 million in 2015). A portability rule generally permits a
surviving spouse to elect to carryover the unused portion of their deceased
spouse's exclusion amount.
Certain amounts may be deductible or excludable, such as gifts and bequests to
a person's spouse or charitable institutions, as well as for certain gifts per
recipient per year ($14,000 for 2015, indexed for inflation).
As a general rule, if you make a "transfer" to a person two or more generations
younger than you, a generation-skipping tax may be payable. Generation-skipping
transactions would include, for example, a case where a grandparent "skips" his
or her children and names his or her grandchildren as a policy's beneficiaries.
In that case, the generation-skipping "transfer" would be deemed to occur when
the insurance proceeds are paid. The generation-skipping tax rates are similar
to the maximum estate tax rates in effect at the time. Individuals, are
generally allowed an aggregate generation-skipping tax exemption of the same $5
million amount discussed above for estate and gift taxes, but without
portability.
The particular situation of each policyowner, insured person or beneficiary
will determine how ownership or receipt of policy proceeds will be treated for
purposes of federal estate, gift and generation-skipping taxes, as well as
state and local estate, inheritance and other taxes. Because these rules are
complex, you should consult with a qualified tax adviser for specific
information, especially where benefits are passing to younger generations.
If this policy is used with estate and gift tax planning in mind, you should
consult with your tax advisor as to the most up-to-date information as to
federal estate, gift and generation skipping tax rules.
If this policy was purchased pursuant to a split-dollar arrangement, you should
also consult your tax advisor for advice concerning the effect of IRS Notice
2002-8 and recent proposed and final regulations regarding split-dollar
arrangements on your split-dollar arrangement. The transition and
grandfathering rules, among other items, should be carefully reviewed. A
material modification to an existing arrangement may result in a change in tax
treatment.
PENSION AND PROFIT-SHARING PLANS
There are special limits on the amount of insurance that may be purchased by a
trust or other entity that forms part of a pension or profit-sharing plan
qualified under Section 401(a) or 403 of the Code. In addition, the federal
income tax consequences will be different from those described in this
prospectus. These rules are complex, and you should consult a qualified tax
advisor.
SPLIT-DOLLAR AND OTHER EMPLOYEE BENEFIT PROGRAMS
Complex rules may also apply when a policy is held by an employer or a trust,
or acquired by an employee, in connection with the provision of other employee
benefits. Employees may have imputed income for the value of any economic
benefit provided by the employer. There may be other tax implications, as well.
It is possible that certain split-dollar arrangements may be considered to be a
form of deferred compensation under Section 409A of the Code, which broadens
the definition of deferred compensation plans, and subjects such plans to new
requirements. Further certain split-dollar arrangements may come within the
rules for business and employer owned policies. Among other issues,
policyowners must consider whether the policy was applied for by or issued to a
person having an insurable interest under applicable state law and with the
insured person's consent. The lack of an insurable interest or consent may,
among other things, affect the qualification of the policy as life insurance
for federal income tax purposes and the right of the beneficiary to receive a
death benefit. In 2002 the IRS issued Notice 2002-8 concerning the taxation of
split-dollar life insurance arrangements as well as regulations in both 2002
and 2003. They provide for taxation under one of two mutually exclusive regimes
depending upon the structure of the arrangement. These are a loan regime and an
economic benefit regime. Transition and grandfathering rules, among other
items, should be carefully reviewed when considering such arrangements. A
material modification to an existing arrangement may result in a change in tax
treatment. Further guidance is anticipated. In addition, public corporations
(generally publicly traded or publicly reporting companies) and their
subsidiaries should consider the possible implications on split-dollar
arrangements of the Securities Exchange Act of 1934 which generally prohibit
certain direct or indirect loans to executive officers or directors. At least
some split-dollar arrangements could be deemed to involve loans within the
purview of that section.
ERISA
Employers and employer-created trusts may be subject to reporting, disclosure
and fiduciary obligations under the Employee Retirement Income Security Act of
1974. There may also be other implications. You should consult a qualified
legal advisor.
3.8% TAX ON NET INVESTMENT INCOME OR "NII"
The 3.8% Medicare tax on certain unearned income of taxpayers whose adjusted
incomes exceed certain thresholds applies to all or part of a taxpayer's NII.
As currently interpreted under IRS guidelines, NII includes the taxable portion
of an annuitized payment from a life insurance contract. It has not been
defined to include taxable amounts from partial withdrawals, surrenders or
lapses of life insurance policies subject to loans. You should consult your tax
advisor as to the applicability of this tax to you.
OUR TAXES
The operations of our separate accounts are reported in our federal income tax
return. Separate account investment income and capital gains, however, are, for
tax purposes, reflected in our variable life insurance policy reserves.
Currently we pay no taxes on such income and gains and impose no charge for
such taxes. We reserve the right to impose a charge in the future for taxes
incurred by us that are allocable to the policies.
We are entitled to certain tax benefits related to the investment of company
assets, including assets of the separate accounts. These tax benefits, which
may include the foreign tax credit and the corporate dividends received
deduction, are not passed back to you, since we are the owner of the assets
from which tax benefits may be derived.
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TAX INFORMATION
WHEN WE WITHHOLD TAXES FROM DISTRIBUTIONS
Generally, unless you provide us with a satisfactory written election to the
contrary prior to the distribution, we are required to withhold income tax from
any proceeds we distribute as part of a taxable transaction under your policy.
If you do not wish us to withhold tax from the payment, or if we do not
withhold enough, you may have to pay later, and you may incur penalties under
the estimated income tax rules. In some cases, where generation skipping taxes
may apply, we may also be required to withhold for such taxes unless we are
provided satisfactory notification that no such taxes are due. States may also
require us to withhold tax on distributions to you and may not always follow
federal rules.
Special withholding rules apply to United States citizens residing outside of
the United States, foreign recipients, and certain U.S. entity recipients which
are treated as foreign because they fail to document their U.S. status before
payment is made. We do not discuss these rules here in detail. However, we may
require additional documentation in the case of payments made to United States
persons living abroad and non-United States persons (including U.S. entities
treated as foreign) prior to processing any requested transaction. For Puerto
Rico and other jurisdictions, income is considered U.S. - source income. We
anticipate requiring owners or beneficiaries in Puerto Rico which are not
individuals to document their status to avoid 30% FATCA withholding from U.S. -
source income beginning in 2014.
Even though this section in the prospectus discusses consequences to United
States individuals you should be aware that the Foreign Account Tax Compliance
Act ("FATCA") which applies beginning in 2014 to certain U.S.-source payments
require the Company and its affiliates to obtain specified documentation of an
entity's status before payment is made in order to avoid punitive 30% FATCA
withholding. The FATCA rules are initially directed at foreign entities, and
may presume that various U.S. entities are "foreign" unless the U.S. entity has
documented its U.S. status by providing Form W-9. Also, in future years FATCA
and related rules may require us to document the status of certain
policyholders, as well as report policy account values and other information
for such policyholders. For this reason the Company and its affiliates intend
to require appropriate status documentation at purchase, change of ownership,
and affected payment transactions including death benefit payments and
disbursements. FATCA and its related guidance are extraordinarily complex and
its effect varies considerably by type of payer, type of payee and type of
recipient.
POSSIBILITY OF FUTURE TAX CHANGES AND OTHER TAX INFORMATION
The U.S. Congress frequently considers legislation that, if enacted, could
change the tax treatment of life insurance policies or increase the taxes we
pay in connection with such policies. This could include special rules for
tax-exempt entities as well as for corporate or business use of policies.
Congress may also consider proposals to comprehensively reform or overhaul the
U.S. tax and retirement systems. For example, a President's Advisory Panel on
Federal Tax Reform announced its tax reform options several years ago. These
options make sweeping changes to many longstanding tax rules including certain
tax benefits currently available to newly purchased cash value life insurance
and deferred annuity products. More recently, in connection with deficit
reduction and tax reform, proposals have been considered to eliminate some or
all taxable expenditures or tax preferences together with some lowering of tax
rates. We cannot predict what if any, legislation will actually be proposed or
enacted based on these options or what type of grandfathering will be allowed
for existing life insurance policies. In addition, the Treasury Department may
amend existing regulations, issue regulations on the qualification of life
insurance and modified endowment contracts, or adopt new or clarifying
interpretations of existing law. Some areas of possible future guidance include
new rules for testing for policies issued on a special risk class basis. As a
result, there are areas of some uncertainty even under current laws, such that
future tax consequences of a policy could be other than as described herein.
State and local tax law or, if you are not a U.S. citizen and resident, foreign
tax law, may also affect the tax consequences to you, the insured person or
your beneficiary, and are subject to change or change in interpretation. Any
changes in federal, state, local or foreign tax law or interpretations could
have a retroactive effect both on our taxes and on the way your policy is taxed
or the tax benefit of life insurance policies.
OTHER INFORMATION
There are a number of tax benefits associated with variable life insurance
policies. For tax benefits to be available, the policyowner must have an
insurable interest in the life of the insured under applicable state laws.
Requirements may vary by state. A failure can, among other consequences, cause
the policyowner to lose anticipated favorable federal tax treatment generally
afforded life insurance.
For tax benefits to continue, the policy must continue to qualify as life
insurance. We reserve the right to restrict transactions that we determine
would cause your policy to fail to qualify as life insurance under federal tax
law. We also reserve the right to decline to make any change that may cause
your policy to lose its ability to be tested for federal income tax purposes
under the 2001 Commissioners Standard Ordinary Mortality Tables.
In addition to other requirements, federal tax law requires that the insurer,
and not the policyowner, have control of the underlying investment assets for
the policy to qualify as life insurance.
You may make transfers among Portfolios of MONY America Variable Account K, but
you may not direct the investments each Portfolio makes. If the IRS were to
conclude that you, as the investor, have control over these investments, then
the policy would no longer qualify as life insurance. You would be treated as
the owner of separate account assets and be currently taxed on any income or
gain the assets generate.
The IRS has provided some guidance on investor control, but many issues remain
unclear. One such issue is whether a policyowner can have too much investor
control if the variable life policy offers a large number of investment options
in which to invest policy account values and/or the ability to make frequent
transfers available under the policy. Although the Treasury Department
announced several years ago that it would provide formal guidance on this
issue, guidance as of the date of this prospectus has been limited. We do not
know if the IRS will provide any further guidance on the issue. If guidance is
provided, we do not know if it would apply retroactively to policies already in
force.
We believe that our variable life policies do not give policyowners investment
control over the investments underlying the various investment options;
however, the IRS could disagree with our position. The IRS could seek to treat
policyowners with a large number of investment options and/or the ability to
freely transfer among investment options as the owners of the underlying
Portfolio's shares. Accordingly, we reserve the right to modify your policy as
necessary to attempt to prevent you from being considered the owner of your
policy's proportionate share of the assets of MONY America Variable Account K.
40
TAX INFORMATION
9. More information about policy features and benefits
--------------------------------------------------------------------------------
GUARANTEE PREMIUM TEST FOR THE NO-LAPSE GUARANTEE
We offer a guarantee against policy lapse that depends on your having paid
specified amounts of premiums. This is our No-Lapse Guarantee rider and you can
read more about it in "You can guarantee that your policy will not terminate
before a certain date" in "Risk/benefit summary: Policy features, benefits and
risks," earlier in this prospectus. We offer the No-Lapse Guarantee rider free
of charge.
GUARANTEE PREMIUM TEST. If your net policy account value is not sufficient to
pay a monthly deduction that has become due, we check to see if the cumulative
amount of premiums that you have paid to date (less any partial withdrawals) at
least equals the cumulative guarantee premiums due to date for the no-lapse
guarantee including any cumulative guarantee premiums for any optional riders
that are then in effect. If it does, your policy will not lapse, provided that
any policy loan and accrued loan interest does not exceed the policy account
value, and provided that the guarantee is still in effect.
GUARANTEE PREMIUMS. The amount of the guarantee premiums for the no-lapse
guarantee are set forth in your policy on a monthly basis. The guarantee
premiums are actuarially determined at policy issuance and depend on the age
and other insurance risk characteristics of the insured person, as well as the
amount of the coverage and additional features you select. The guarantee
premiums may change if, for example, the face amount of the policy or the
long-term care specified amount changes, or a rider is eliminated, or if there
is a change in the insured person's risk characteristics. We will send you a
new policy page showing any change in your guarantee premiums. Any change will
be prospective only, and no change will extend the no-lapse guarantee period
beyond its original number of years.
OTHER BENEFITS YOU CAN ADD BY RIDER
When you purchase this policy, you could be eligible for the following other
optional benefits we currently make available by rider:
.. Long-Term Care Services/SM/ Rider -- Described below.
.. Liquidity Rider -- Described below.
.. Charitable Legacy Rider -- Described below.
.. Disability Deduction Waiver Rider -- This rider waives the monthly charges
from the policy account value if the insured is totally disabled, as
defined in the rider, for at least six consecutive months and the
disability began prior to the policy anniversary nearest the insured's 60th
birthday. If total disability begins on or after this date, the monthly
charges are waived to the earlier of the policy anniversary nearest the
insured's age 65 or termination of disability. Issue ages are 0-59.
However, coverage is not provided until the insured's fifth birthday. The
maximum amount of coverage is $3,000,000 for all MONY America and
affiliates' policies in-force and applied for.
.. Disability Waiver of Premium or Monthly Deductions Rider -- This rider pays
the specified premium or waives the monthly charges from the policy account
value, if that amount is greater, if the insured is totally disabled, as
defined in the rider, for at least six consecutive months and the
disability began prior to the policy anniversary nearest the insured's 60th
birthday. If total disability begins on or after this date, the specified
premium is paid (or the monthly charges, if greater, are waived) to the
earlier of the policy anniversary nearest the insured's age 65 or
termination of disability. Issue ages are 0-59. However, coverage is not
provided until the insured's fifth birthday. The maximum amount of coverage
is $3,000,000 for all MONY America and affiliates' policies in-force and
applied for.
.. Children's Term Insurance Rider -- This rider provides term insurance on
the lives of the insured's children, stepchildren and legally adopted
children who are between the ages of 15 days to 18 years. The insured under
the base policy must be between the ages of 17 and 55. The maximum amount
of coverage is $25,000 for all MONY America and affiliates' policies
in-force and applied for.
.. Option To Purchase Additional Insurance Rider -- This rider allows you to
purchase a new policy for the amount of the option, on specific dates,
without evidence of insurability. The minimum option amount is $25,000 and
the maximum amount is $100,000. Issue ages are 0-37. The maximum amount of
coverage is $100,000 for all MONY America and affiliates' policies inforce
and applied for.
We add the following benefits automatically at no charge to each eligible
policy:
.. Substitution Of Insured Person Rider (Available for policies with a minimum
face amount of $100,000 unless it is issued as a result of an Option To
Purchase Additional Insurance election or a conversion from a term life
policy. See "You can change your policy's insured person" under "More
information about procedures that apply to your policy.")
.. Living Benefits Rider (See "Your option to receive a terminal illness
living benefit under the Living Benefits Rider" under "Accessing your
money.")
.. Loan Extension Endorsement (See "Loan extension (for guideline premium test
policies only)" under "Accessing your money.")
MONY America or your financial professional can provide you with more
information about these riders. Some of these benefits may be selected only at
the time your policy is issued. Some benefits are not available in combination
with others or may not be available in your state. The riders provide
additional terms, conditions and limitations, and we will furnish samples of
them to you on request. We can add, delete, or modify the riders we are making
available, at any time before they become effective as part of your policy.
See also "Tax information" earlier in this prospectus for certain possible tax
consequences and limitations of deleting riders or changing the death benefits
under a rider.
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
LIQUIDITY RIDER
In states where approved, an optional rider may be elected at issue that waives
the surrender charge in full if the policy is surrendered for its Net Cash
Surrender Value in the first ten policy years. In order to elect the rider, the
policy must have a minimum face amount of $250,000 per life when one or two
policies are purchased on the lives of members of an insured group and $100,000
per life when policies are purchased on the lives of three or more members.
The rider works by refunding all or a portion of the premium and,
administrative charges, and waiving all of the surrender charge, if the policy
is surrendered in full in its early years. The percentage of charges refunded
or waived under the rider are as follows:
----------------------------------------------------------
PERCENT OF
PERCENT OF ADMINISTRATIVE PERCENT OF
SURRENDER IN PREMIUM CHARGE SURRENDER
POLICY YEAR CHARGE REFUNDED REFUNDED CHARGES WAIVED
----------------------------------------------------------
1 100% 100% 100%
----------------------------------------------------------
2 50% 100% 100%
----------------------------------------------------------
3 0% 100% 100%
----------------------------------------------------------
4 0% 80% 100%
----------------------------------------------------------
5 0% 60% 100%
----------------------------------------------------------
6 0% 40% 100%
----------------------------------------------------------
7 0% 0% 100%
----------------------------------------------------------
8 0% 0% 100%
----------------------------------------------------------
9 0% 0% 100%
----------------------------------------------------------
10 0% 0% 100%
----------------------------------------------------------
11 and later 0% 0% 0%
----------------------------------------------------------
The waiver of surrender charges does not apply if the policy is being exchanged
or replaced during the first ten policy years with another life insurance
policy or annuity contract on the insured person including (but not limited to)
a 1035 exchange, nor does it apply to a proportionate surrender charge
resulting from a face amount decrease. There is no refund of the premium charge
if during the first two policy years the policy terminates after a grace
period, is being exchanged or replaced with another life insurance policy or
annuity contract on the insured person including (but not limited to) a 1035
exchange, nor does it apply to a face amount decrease. There is no refund of
the administrative charges if during the first six policy years the policy
terminates after a grace period, is being exchanged or replaced with another
life insurance policy or annuity contract on the insured person including (but
not limited to) a 1035 exchange, nor does this refund apply to a face amount
decrease.
Amounts available under the policy for loans and partial withdrawals continue
to be calculated as if this rider was not part of the policy.
The premium and administrative charge refunds that would be applicable upon a
complete surrender of the policy may increase the death benefit that is
calculated when the claim is paid in the first 6 policy years in order for the
policy to satisfy the definition of a "life insurance contract" under
Section 7702 of the Code.
.. RESTORATION AFTER LAPSE. If your policy is restored after a lapse, the rider
will also be restored unless you made a written request to terminate the rider.
.. RIDER TERMINATION. The rider will terminate on the earliest of the following
dates: 1) The end of the tenth policy year; 2) The date the policy ends without
value at the end of the Grace Period or otherwise terminates; 3) After the
first policy anniversary, the effective date of a policy owner's written
request to terminate this rider; 4) The date the policyowner exercises the
Substitution of Insured Option; or 5) if you begin receiving payments under the
Long-Term Care Services/SM /Rider.
LONG-TERM CARE SERVICES/SM/ RIDER (This rider is available at issue for insured
persons aged between 20 and 70.) The rider provides for the acceleration of all
or part of the policy death benefit as a payment each month as a result of the
insured person being a chronically ill individual who is receiving qualified
long-term care services in accordance with a plan of care./(1)/ Benefits
accelerated under this rider will be treated as a lien against the policy death
benefit unless benefits are being paid under the optional Nonforfeiture
Benefit. While this rider is in force and before any continuation of coverage
under the optional Nonforfeiture Benefit, if elected, policy face amount
increases and death benefit option changes from Option A to Option B are not
permitted.
An individual qualifies as "chronically ill" if he has been certified by a
licensed health care practitioner as being unable to perform (without
substantial assistance from another person) at least two activities of daily
living for a period of at least 90 days due to a loss of functional capacity;
or requiring substantial supervision to protect such individual from threats to
health and safety due to cognitive impairment.
Benefits are payable once we receive: 1) a written certification from a U.S.
licensed health care practitioner that the insured person is a chronically ill
individual and is receiving qualified long-term care services in accordance
with a plan of care; 2) proof that the "elimination period," as discussed
below, has been satisfied; and 3) written notice of claim and proof of loss in
a form satisfactory to us. In order to continue monthly benefit payments, we
require recertification by a U.S. licensed health care practitioner every
twelve months from the date of the initial or subsequent certification that the
insured person is still a chronically ill individual receiving qualified
long-term care services in accordance with a plan of care. Otherwise, unless
earlier terminated due to a change in status of the insured or payout of the
maximum total benefit amount, benefit payments will terminate at the end of the
twelve month period. We also, at our own expense, may have the insured person
examined as often as we may reasonably require during a period of coverage.
This rider may not cover all of the costs associated with long-term care
services during the insured person's period of coverage.
The monthly rate charged for this rider varies based on the insured person's
sex, issue age, class of risk and tobacco user status, as well as the benefit
percentage selected and whether you selected the rider with or without the
optional Nonforfeiture Benefit. See "Risk/benefit summary: Charges and expenses
you will pay" earlier in this prospectus for more information on the charges we
deduct for this rider.
If the net policy value is insufficient to cover the total monthly deductions
for the base policy and any riders while benefits under this rider are being
paid, we will not lapse the policy. While monthly
-------------
(1)For a more complete description of the terms used in this section and
conditions of this rider, please consult your rider policy form.
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
benefits under the Long-Term Care Services/SM/ Rider are being paid, we will
waive the monthly charge for the Long-Term Care Services/SM/ Rider.
We will pay up to the maximum total benefit for qualified long-term care
services for the insured person for the duration of a period of coverage.
During any period of coverage, the maximum total benefit is determined as of
the first day of that period of coverage.
For policies with death benefit option A, the maximum total benefit is equal to
the current long-term care specified amount. For policies with death benefit
option A, the initial long term care specified amount is equal to the face
amount of the base policy at issue multiplied by the acceleration percentage.
You can select an acceleration percentage between 20% and 100%, subject to the
minimum initial long-term care specified amount of $100,000.
For policies with death benefit option B, the maximum total benefit is equal to
the current long-term care specified amount, plus the policy account value. For
policies with death benefit Option B, the initial long term care specified
amount is equal to the face amount of the base policy multiplied by 100%. You
do not select an acceleration percentage.
During any period of coverage (see below), the maximum Total Benefit is
determined as of the first day of that period of coverage.
The initial long-term care specified amount may change due to subsequent policy
transactions and will be reduced at the end of a period of coverage to reflect
benefits paid during that period of coverage. Any request for a decrease in the
policy face amount may reduce the current long-term care specified amount to an
amount equal to the lesser of: (a) the new policy face amount multiplied by the
acceleration percentage selected, or (b) the long-term care specified amount
immediately prior to the face amount decrease. If you selected death benefit
option A, any partial withdrawal will reduce the current long-term care
specified amount by the amount of the withdrawal, but not to less than the
policy account value minus the amount of the withdrawal. If you selected death
benefit option B, the current long-term care specified amount will not be
reduced.
The maximum monthly benefit is the maximum amount we or an affiliated company
will pay in a month for qualified long-term care services for the insured
person. Affiliates include AXA Equitable, AXA Equitable Life and Annuity
Company, and U.S. Financial Life Insurance Company. The maximum monthly benefit
payment amount that you can purchase from the issuer and its affiliates is
limited to $50,000 per month, per insured person. At issue, the maximum monthly
benefit is equal to the long-term care specified amount multiplied by the
benefit percentage selected. After that, the maximum monthly benefit is equal
to the maximum total benefit as of the first day of the first period of
coverage, or on the date coverage under the Nonforfeiture Benefit begins, if
earlier, multiplied by the benefit percentage selected.
Each month, the monthly benefit payment (a portion of which will be applied to
repay any outstanding policy loan) for qualified long-term care services for
the insured person is the lesser of:
1. the maximum monthly benefit (or lesser amount as requested, however, this
may not be less than $500); or
2. the monthly equivalent of 200% of the per day limit allowed by the Health
Insurance Portability and Accountability Act or "HIPAA." (We reserve the
right to increase this percentage.) To find out the current per day limit
allowed by HIPAA, go to www.irs.gov. We may also include this information in
your policy's annual report.
We will pay a proportionate amount of the monthly benefit payment for services
rendered for less than a full month.
When benefits are paid under this rider, we establish an accumulated benefit
lien. This accumulated benefit lien amount will equal the cumulative amount of
rider benefits paid (including any loan repayments) during a period of
coverage. We deduct the accumulated benefit lien amount from the base policy
death benefit if the insured person dies before the end of a period of
coverage. We also reduce the cash surrender value, as described below.
.. ELIMINATION PERIOD. The Long-Term Care Services/SM/ Rider has an elimination
period that is the required period of time while the rider is in force that
must elapse before any benefit is available to the insured person under this
rider. The elimination period is 90 days, beginning on the first day of any
qualified long-term care services that are provided to the insured person.
Generally, benefits under this rider will not be paid until the elimination
period is satisfied, and benefits will not be retroactively paid for the
elimination period. The elimination period can be satisfied by any combination
of days of a long-term care facility stay or days of home health care. The days
do not have to be continuous, but the elimination period must be satisfied
within a consecutive period of 24 months starting with the month in which such
services are first provided. If the elimination period is not satisfied within
this time period, you must submit a new claim for benefits under this rider.
This means that a new elimination period of 90 days must be satisfied within a
new 24 month period. The elimination period must be satisfied only once while
this rider is in effect.
.. PERIOD OF COVERAGE. The period of coverage is the period of time during which
the insured person receives services that are covered under the Long-Term Care
Services/SM/ Rider and for which benefits are payable. This begins on the first
day covered services are received after the end of the elimination period. A
period of coverage will end on the earliest of the following dates:
1. the date we receive the notice of release which must be sent to us when the
insured person is no longer receiving qualified long-term care services;
2. the date we discover the insured person is no longer receiving Qualified
Long-Term Care Services in accordance with the Plan of Care written for that
Period of Coverage;
3. the date you request that we terminate benefit payments under this rider;
4. the date the accumulated benefit lien amount equals the maximum total
benefit (or if your coverage is continued as a Nonforfeiture benefit, the
date the maximum total Nonforfeiture Benefit has been paid out);
5. the date you surrender the policy (except to the extent of any Nonforfeiture
Benefit you may have under the rider);
6. the date we make a payment under the living benefits rider (for terminal
illness) if it occurs before coverage is continued as a Nonforfeiture
Benefit; or
7. the date of death of the insured person.
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
During a period of coverage before coverage is continued as a Nonforfeiture
Benefit:
1. Partial withdrawals, face amount decreases and premium payments are not
permitted.
2. The policy death benefit will not be less than the maximum total benefit.
3. Each monthly benefit payment will increase the accumulated benefit lien
amount by the amount of the payment--including any loan repayment. The
accumulated benefit lien amount will be deducted from the policy death
benefit in determining the insurance benefit we pay.
4. For the purposes of determining the cash surrender value of this policy, the
policy face amount and the unloaned policy account value will be reduced by
a percentage. For policies with death benefit option A, the percentage will
be equal to the accumulated benefit lien amount divided by the policy face
amount. For policies with death benefit option B, the percentage will be
equal to the accumulated benefit lien amount divided by the policy face
amount plus the unloaned policy account value. For all policies, the
percentage will not be more than 100% and the unloaned policy account value
will not be reduced by more than the accumulated benefit lien amount. Any
applicable surrender charge will be reduced on a pro rata basis for the
reduction in the policy face amount.
5. If there is an outstanding policy loan (and accrued loan interest) at the
time we make a benefit payment, an amount equal to a percentage of the loan
and accrued loan interest will be deducted from the monthly benefit payment
and used as a loan repayment and will reduce the amount otherwise payable to
you. This percentage will equal the monthly benefit payment divided by the
portion of the maximum total benefit that we have not accelerated to date.
6. The loan extension endorsement will no longer be applicable at any time once
benefits are paid under this rider .
7. Transfers of any unloaned policy account value allocated to the guaranteed
interest option or to the variable investment options are permitted. We do,
however, reserve the right to restrict the variable investment options
available to you during a period of coverage. If we exercise this right, we
will notify you of such restrictions in advance.
After a period of coverage ends before coverage is continued as a Nonforfeiture
Benefit:
1. The base policy face amount and the unloaned policy account value will each
be reduced by a percentage. For policies with death benefit option A, the
percentage will be equal to the accumulated benefit lien amount divided by
the base policy face amount. For policies with death benefit option B, the
percentage will be equal to the accumulated benefit lien amount divided by
the base policy face amount plus the unloaned policy account value. For all
policies, the percentage will not be more than 100% and the unloaned policy
account value will not be reduced by more than the accumulated benefit lien
amount.
2. Any applicable surrender charges will be reduced on a pro rata basis for the
reduction in the policy face amount.
3. The long-term care specified amount will be reduced by a percentage equal to
the accumulated benefit lien amount, divided by the maximum total benefit.
If after this calculation, the long-term care specified amount would be
greater than the base policy face amount, the long-term care specified
amount will be further reduced to the base policy face amount.
4. For any subsequent period of coverage, the maximum monthly benefit will be
equal to the maximum monthly benefit during the initial period of coverage.
5. The premium fund values that are used by us to determine whether a guarantee
against policy lapse or a guarantee of death benefit protection is in effect
will also be reduced pro rata to the reduction in the base policy face
amount.
6. Any remaining balance for an outstanding loan and accrued loan interest will
not be reduced.
7. The accumulated benefit lien amount is reset to zero.
The reduction in your policy account value will reduce your unloaned value in
the guaranteed interest option and your values in the variable investment
options in accordance with your monthly deduction allocation percentages then
in effect. If we cannot make the reduction in this way, we will make the
reduction based on the proportion that your unloaned values in the guaranteed
interest option and your values in the variable investment options bear to the
total unloaned value in your policy account.
After the period of coverage has ended, we will provide you with notice of the
adjusted values.
If the entire maximum total benefit has been paid out, the period of coverage
will end, policy values will be adjusted as described above, and this rider
will terminate. If the net policy account value is insufficient to cover the
monthly deductions, the policy will terminate subject to the grace period
provision.
.. RIDER TERMINATION. This rider will terminate, and no further benefits will
be payable (except, where applicable, as may be provided under the
"Extension of Benefits" and the "Nonforfeiture Benefit" provisions of this
rider), on the earliest of the following:
1. at any time after the first policy year, on the next monthly anniversary on
or following the date we receive your written request to terminate this
rider;
2. upon termination or surrender of the policy;
3. the date of the insured person's death;
4. the date when the accumulated benefit lien amount equals the maximum total
benefit amount;
5. the date you request payment under a living benefits rider due to terminal
illness of the insured person (whether or not monthly benefit payments are
being made as of such date) if it occurs before coverage is continued as a
Nonforfeiture Benefit;
6. the date the policy goes on loan extension if it occurs before coverage is
continued as a Nonforfeiture Benefit; or
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
7. on the date that a new insured person is substituted for the original
insured person under the terms of any substitution of insured rider if it
occurs before coverage is continued as a Nonforfeiture Benefit.
If this rider does not terminate, it will remain in force as long as the policy
remains in force. This rider may be restored after termination if certain
qualifications for restoration of rider benefits are met.
.. EXTENSION OF BENEFITS. If your policy lapses, terminating this rider, while
the insured person is confined in a long-term care facility but before any
rider benefits have been paid for a current period of coverage, benefits
for that confinement may be payable provided that the confinement began
while this rider was in force and the confinement continues without
interruption after rider termination. Benefits may continue until the
earliest of the following dates: (a) the date the insured person is
discharged from such confinement (in this case, the maximum total benefit
will be reduced by rider benefits that have been paid out); (b) the date
the maximum total benefit has been paid; or (c) the date of death of the
insured person. If benefits are payable under this provision, there will be
no death benefit payable to the beneficiary or beneficiaries named in the
base policy.
NONFORFEITURE BENEFIT
For a higher monthly charge, you can elect the Long-Term Care Services/SM/
Rider with the Nonforfeiture Benefit. The Nonforfeiture Benefit may continue
coverage under the rider in a reduced benefit amount in situations where
(a) the Long-Term Care Services/SM/ Rider would otherwise terminate; (b) you
have not already received benefits (including any loan repayments) that equal
or exceed the total charges deducted for the rider; and (c) your policy and
Long-Term Care Services/SM/ Rider were inforce for at least three policy years.
While the Nonforfeiture Benefit is in effect, all of the provisions of the
Long-Term Care Services/SM/ Rider remain applicable to you. The maximum total
Nonforfeiture Benefit will be the greater of:
(a)One month's maximum monthly benefit and
(b)The sum of all charges deducted for the Long-Term Care Services/SM/ Rider
(with the Nonforfeiture Benefit). This amount excludes any charges that
may have previously been waived while rider benefits were being paid.
The maximum total Nonforfeiture Benefit will be reduced (but not below zero) by
all monthly benefit payments paid under the rider, including any loan
repayments and any payments made under the "Extension of Benefits" and
"Nonforfeiture Benefit" provisions. Also, the maximum total Nonforfeiture
Benefit will not exceed the maximum total benefit under the rider as of the
date coverage under the Nonforfeiture Benefit begins.
Coverage under the Nonforfeiture Benefit begins on the date the Long-Term Care
Services/SM/ Rider would otherwise terminate for one of the following reasons
(unless benefits are being continued under the "Extension of Benefits"
provision of the rider):
(1)We receive your written request to terminate the Long-Term Care Services/SM/
Rider;
(2)You surrender your policy; or
(3)Your policy terminates without value at the end of a grace period.
If benefits are being continued under the "Extension of Benefits" provision of
the rider and the maximum total benefit has not been paid out, coverage under
the Nonforfeiture Benefit begins on the date the insured is discharged from a
long-term care facility.
Once in effect, the Nonforfeiture benefit will continue long-term care coverage
under a paid-up status until the earliest of (a) the death of the insured, and
(b) the date the maximum total Nonforfeiture Benefit has been paid out and
reduced to zero during a period of coverage. If coverage is continued under the
Nonforfeiture benefit, you will receive additional information regarding the
benefit, including the maximum total Nonforfeiture Benefit amount.
For tax information concerning the Long-Term Care Services/SM/ Rider, see "Tax
information" earlier in this prospectus.
CHARITABLE LEGACY RIDER. An optional rider may be elected at issue that
provides an additional death benefit of 1% of the base policy face amount to
the qualified charitable organization(s) chosen by the policy owner at no
additional cost. This rider is only available at issue and an accredited
charitable beneficiary must be named at that time. The rider is available for
base policy face amounts of $1 million and above, where the minimum benefit
would be $10,000 and the maximum benefit would be $100,000 (i.e. for face
amounts of $10 million and above).
If the base policy face amount is reduced after issue for any reason, the
benefit will be payable on the face amount at the time of the insured's death,
provided the face amount is at least $1 million. If the face amount has been
decreased below $1 million at the time of death, then no benefit is payable.
The designated beneficiary of this rider must be an accredited 501(c)
organization under IRS Code 170. See www.IRS.gov for valid organizations.
.. RIDER TERMINATION. The charitable legacy rider will terminate and no
further benefits will be paid on the earliest of the following:
-- the termination of the policy;
-- the surrender of the policy;
-- the date we receive the policy owner's written request to terminate the
rider;
-- the date of the insured's death; or
-- the date the policy is placed on loan extension.
If the base policy lapses and is subsequently restored, the rider will be
reinstated. The rider will not be terminated if the policy owner executes the
Substitution Of Insured Person Rider.
CUSTOMER LOYALTY CREDIT
We provide a customer loyalty credit for policies that have been in force for
more than 8 years. If eligible, this credit is added to your policy account
value each month on your monthly anniversary date. The dollar amount of the
credit is a percentage of your unloaned policy account value, which is your
policy account value less any value we are holding as collateral for any policy
loans, as of your monthly anniversary date.
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
The credit begins in the policy's 9th year and consists of two components. The
first component applies to all policies and is guaranteed. It is calculated as
an annual rate of 0.25% multiplied by your unloaned policy account value.
The second component is not guaranteed. It is calculated as an annual
percentage of your unloaned policy account value that varies depending on (i)
the issue age of the insured, (ii) the death benefit option elected at issue,
(iii) the policy duration and (iv) the cumulative amount of premiums you have
paid to date (less any withdrawals).
To qualify for the second component of the customer loyalty credit, the
cumulative amount of premiums you have paid through the end of the first 7
policy years (less any withdrawals) must be at least be equal to the equivalent
amount of "target premiums" (explained below), as shown in the following chart:
-----------------------------------------------------------
ISSUE DEATH BENEFIT OPTION A DEATH BENEFIT OPTION B
AGE NUMBER OF TARGET PREMIUMS NUMBER OF TARGET PREMIUMS
-----------------------------------------------------------
0-17 11 11
-----------------------------------------------------------
18-58 13 12
-----------------------------------------------------------
59+ 11 11
-----------------------------------------------------------
If you qualify for the second component of the customer loyalty credit, the
applicable annual percentage rate that we will use to determine the total
amount of your credit (the sum of the two components) is shown below:
--------------------------------------------------------------------------------------------------------
ISSUE POLICY CREDIT CREDIT TOTAL
AGE DURATION PERCENTAGE PERCENTAGE
(GUARANTEED (NON-GUARANTEED
COMPONENT) COMPONENT)
--------------------------------------------------------------------------------------------------------
0-29 Policy years 9-27 0.25% 0.00% 0.25%
Policy years 28 + 0.25% 0.30% 0.55%
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30-39 Policy years 9-18 0.25% 0.00% 0.25%
Policy years 19 + 0.25% 0.30% 0.55%
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40-49 Policy years 9-14 0.25% 0.05% 0.30%
Policy years 15 + 0.25% 0.30% 0.55%
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50-59 Policy years 9-10 0.25% 0.05% 0.30%
Policy years 11 + 0.25% 0.30% 0.55%
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60 + Policy years 9 + 0.25% 0.05% 0.30%
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The "target premium" is actuarially determined for each policy, based on that
policy's characteristics, as well as the death benefit option at issue and the
policy's face amount. The illustrations of Policy Benefits that your financial
professional will provide will contain more information regarding the amount of
premiums that must be paid in order for the higher percentage credit to be
applicable to your policy.
Because IncentiveLife Optimizer(R) III is being first offered in 2015, no
customer loyalty credit has yet been made to an IncentiveLife Optimizer(R) III
policy.
VARIATIONS AMONG INCENTIVELIFE OPTIMIZER(R) III POLICIES
Time periods and other terms and conditions described in this prospectus may
vary due to legal requirements in your state. These variations will be
reflected in your policy.
MONY America also may vary or waive the charges (including surrender charges)
and other terms of IncentiveLife Optimizer(R) III where special circumstances
(including certain policy exchanges) result in sales or administrative expenses
or mortality risks that are different from those normally associated with
IncentiveLife Optimizer(R) III. We will make such variations only in accordance
with uniform rules that we establish.
MONY America or your financial professional can advise you about any variations
that may apply to your policy or see Appendix III later in this prospectus for
more information.
YOUR OPTIONS FOR RECEIVING POLICY PROCEEDS
BENEFICIARY OF DEATH BENEFIT. You designate your policy's beneficiary in your
policy application. You can change the beneficiary at any other time during the
insured person's life. If no beneficiary is living when the insured person
dies, we will pay the death benefit proceeds in equal shares to the insured
person's surviving children. If there are no surviving children, we will
instead pay the insured person's estate.
PAYMENT OF DEATH BENEFIT. We will pay any death benefit in a single sum. If the
beneficiary is a natural person (i.e., not an entity such as a corporation) and
so elects, death benefit proceeds can be paid through the "MONY America Access
Account", which is a draft account that works in certain respects like an
interest-bearing checking account. In that case, we will send the beneficiary a
draftbook, and the beneficiary will have immediate access to the proceeds by
writing a draft for all or part of the amount of the death benefit proceeds.
MONY America will retain the funds until a draft is presented for payment.
Interest on the MONY America Access Account is earned from the date we
establish the account until the account is closed by your beneficiary or by us
if the account balance falls below the minimum balance requirement, which is
currently $1,000. The MONY America Access Account is part of MONY America's
general account and is subject to the claims of our creditors. We will receive
any investment earnings during the period such amounts remain in the general
account. The MONY America Access Account is not a bank account or a checking
account and it is not insured by the FDIC. Funds held by insurance companies in
the general account are guaranteed by the respective state guaranty association.
If a financial professional has assisted the beneficiary in preparing the
documents that are required for payment of the death benefit and the
beneficiary so elects, we will send the MONY America Access Account checkbook
or check to the financial professional within the periods specified for death
benefit payments under "When we pay policy proceeds," later in this prospectus.
Our financial professionals will take reasonable steps to arrange for prompt
delivery to the beneficiary.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
You may cancel your policy by returning the policy along with a properly signed
and completed written request for cancellation to our Administrative Office or,
in some states, to the agent who sold it to you or any agent of MONY America,
by the 10th day after you receive it (or such longer period as required under
state law). Your coverage will terminate as of the earlier of the date you sign
your request to cancel form or the business day we receive your request at our
Administrative Office (or, in some states, as of the business day the agent
receives your request).
In most states, we will refund the policy account value calculated as of the
business day we receive your request for cancellation at our
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
Administrative Office (or, in some states, as of the business day the agent
receives your request), plus any charges that were deducted from premiums that
were paid and from the policy account value, less any outstanding loan and
accrued loan interest. In other states, we will refund the premiums that were
paid, less any outstanding loan and accrued loan interest. Your policy will set
forth the specific terms of your "Right to Examine" the policy.
In addition to the cancellation right described above, you have the right to
surrender your policy, rather than cancel it. Please see "Surrendering your
policy for its net cash surrender value," earlier in this prospectus.
Surrendering your policy may yield results different than canceling your
policy, including a greater potential for taxable income. In some cases, your
cash value upon surrender may be greater than your contributions to the policy.
Please see "Tax information," earlier in this prospectus for possible
consequences of cancelling your policy.
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MORE INFORMATION ABOUT POLICY FEATURES AND BENEFITS
10. More information about certain policy charges
--------------------------------------------------------------------------------
DEDUCTING POLICY CHARGES
PURPOSES OF POLICY CHARGES. The charges under the policies are designed to
cover, in the aggregate, our direct and indirect costs of selling,
administering and providing benefits under the policies. They are also
designed, in the aggregate, to compensate us for the risks of loss we assume
pursuant to the policies. If, as we expect, the charges that we collect from
the policies exceed our total costs in connection with the policies, we will
earn a profit. Otherwise, we will incur a loss. In addition to the charges
described below, there are also charges at the Portfolio level, which are
described in the prospectuses of the Portfolios in which the funds invest. For
additional information on all policy charges, see "Risk/benefit summary:
Charges and expenses you will pay."
TRANSACTION CHARGES
On the first day of each policy month, charges for cost of insurance and
certain other charges are deducted from your policy account value as specified
below (see "Periodic charges" below). In addition, charges may be deducted for
transactions such as premium payments, policy surrenders, requested decreases
in face amount, or transfers among investment options.
.. PREMIUM CHARGE. We deduct an amount not to exceed 6% from each premium
payment you send us. Currently, we reduce this charge to 4% after an amount
equal to two sales load "target premiums" has been paid. The "target premium"
is actuarially determined for each policy, based on that policy's specified
characteristics death benefit option, as well as the policy's face amount,
among other factors. In addition, if your policy includes the Liquidity Rider,
a portion of the deductions from premiums will be refunded upon surrender
within the first two policy years (see "Liquidity Rider" in "More information
about policy features and benefits" earlier in this prospectus). A similar
charge applies to premiums attributed to requested face amount increases that
are above your highest previous face amount. The premium charge is designed in
part to defray sales and tax expenses we incur that are based on premium
payments.
.. SURRENDER CHARGES. If you give up this policy for its net cash surrender
value before the end of the tenth policy year, or within the first ten years
after a face amount increase over the previous highest base policy face amount,
we will subtract a surrender charge from your policy account value. The
surrender charge in the first policy month of each policy year is shown in your
policy. The initial surrender charge will be between $9.45 and $46.17 per
$1,000 of initial base policy face amount, or base policy face amount increase.
The surrender charge declines uniformly in equal monthly amounts within each
policy year until it reaches zero in the twelfth month of policy year ten. The
initial amount of surrender charge depends on each policy's specific
characteristics. In addition, if your policy includes the Liquidity Rider, the
surrender charges are waived in full if you surrender your policy in full (see
"Liquidity Rider" in "More information about policy features and benefits"
earlier in this prospectus). Changes in the base policy face amount resulting
from a change in death benefit option will not be considered in computing the
previous highest face amount.
The surrender charge attributable to each increase in your policy's face amount
is in addition to any remaining surrender charge attributable to the policy's
initial face amount.
The surrender charges are contingent deferred sales charges. They are
contingent because you only pay them if you surrender your policy for its net
cash surrender value (or request a reduction in its face amount, as described
below). They are deferred because we do not deduct them from your premiums.
Because the surrender charges are contingent and deferred, the amount we
collect in a policy year is not related to actual expenses for that year.
The surrender charges assessed in connection with giving up this policy or with
reductions in policy face amount are intended, in part, to compensate us for
the fact that it takes us time to make a profit on your policy, and if you give
up or reduce the face amount of your policy in its early years, we do not have
the time to recoup our costs.
.. REQUEST A DECREASE IN YOUR POLICY'S FACE AMOUNT. If there is a requested base
policy face amount reduction within the first ten policy years or within ten
years following a face amount increase, a proportionate surrender charge will
be deducted from your policy account value.
Assuming you have not previously changed the base policy face amount, a
proportionate surrender charge will be determined by dividing the amount of the
reduction in base policy face amount by the initial base policy face amount of
insurance, and then multiplying that fraction by the surrender charge
immediately before the reduction. The proportionate surrender charge will not
exceed the unloaned policy account value at the time of the reduction. If a
proportionate surrender charge is made, the remaining surrender charge will be
reduced proportionately. We will not deduct a proportionate surrender charge if
the reduction resulted from a change in death benefit option or a partial
withdrawal.
If there have been prior increases in face amount, the decrease will be deemed
to cancel, first, each increase in reverse chronological order (beginning with
the most recent) and then the initial face amount. We will deduct from your
policy account value any surrender charge that is associated with any portion
of the face amount that is thus deemed to be canceled.
.. TRANSFERS AMONG INVESTMENT OPTIONS. Although we do not currently charge for
transfers among investment options, we reserve the right to make a transfer
charge up to $25 for each transfer of amounts among your investment options.
The transfer charge, if any, is deducted from the amounts transferred from your
policy's value in the variable investment options and in our guaranteed
interest option based on the proportion that the amount transferred from each
variable investment option and from our guaranteed interest option bears to the
total amount being transferred. Any such charge would be, in part, to
compensate us for our expenses in administering transfers. The charge will
never apply to a transfer of all of your variable investment option amounts to
our guaranteed interest option, or to any transfer pursuant to our automated
transfer service or asset rebalancing service.
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MORE INFORMATION ABOUT CERTAIN POLICY CHARGES
SPECIAL SERVICES CHARGES
We deduct a charge for providing the special services described below. These
charges compensate us for the expense of processing each special service.
Please note that we may discontinue some or all of these services without
notice.
.. WIRE TRANSFER CHARGE. We charge $90 for outgoing wire transfers. Unless you
specify otherwise, this charge will be deducted from the amount you request.
.. EXPRESS MAIL CHARGE. We charge $35 for sending you a check by express mail
delivery. This charge will be deducted from the amount you request.
.. POLICY ILLUSTRATION CHARGE. Currently, you are entitled to one free
illustration each policy year. For each additional illustration, we charge $25.
The charge for this service can be paid (i) using a credit card acceptable to
MONY America, (ii) by sending a check to our Administrative Office, or (iii) by
any other means we make available to you.
.. DUPLICATE POLICY CHARGE. We charge $35 for providing a copy of your policy.
The charge for this service can be paid (i) using a credit card acceptable to
MONY America, (ii) by sending a check to our Administrative Office, or (iii) by
any other means we make available to you.
.. POLICY HISTORY CHARGE. We charge a maximum of $50 for providing you a history
of policy transactions. If you request a policy history of less than 5 years
from the date of your request, there is no charge. If you request a policy
history of more than 5 years but less than 10 years from the date of your
request, the current charge is $25. For policy histories of 10 years or more,
the charge is $50. For all policy histories, we reserve the right to charge a
maximum of $50. The charge for this service can be paid (i) using a credit card
acceptable to MONY America, (ii) by sending a check to our Administrative
Office, or (iii) by any other means we make available to you.
.. CHARGE FOR RETURNED PAYMENTS. For each payment you make in connection with
your policy that is returned for insufficient funds, we will charge a maximum
of $25. The charge for this service can be paid (i) using a credit card
acceptable to MONY America, (ii) by sending a check to our Administrative
Office, or (iii) by any other means we make available to you.
PERIODIC CHARGES
On the first day of each month of the policy, charges for cost of insurance and
certain other charges are deducted from your policy account value as specified
below.
.. ADMINISTRATIVE CHARGE. In the first policy year, we deduct $15 from your
policy account value at the beginning of each policy month. Currently, in all
subsequent policy years we deduct $10 at the beginning of each policy month,
but not beyond the policy anniversary when the insured person is attained age
100. We reserve the right to increase or decrease this amount in the future,
although it will never exceed $10 and will never be deducted beyond the policy
anniversary when the insured person is attained age 121. In addition we
currently deduct between $0.06 and $0.34 per $1,000 of your initial base policy
face amount and any face amount increase above the previous highest face amount
at the beginning of each policy month in the first ten policy years and for ten
years following a face amount increase. We reserve the right to continue this
charge beyond the ten year period previously described, but it will never be
deducted beyond the policy anniversary when the insured person is attained age
121. The administrative charge is intended, in part, to compensate us for the
costs involved in administering the policy.
If your policy includes the Liquidity Rider, a portion of the administrative
charge will be refunded upon surrender within the first six policy years (see
"Liquidity Rider" in "More information about policy features and benefits"
earlier in this prospectus).
.. COST OF INSURANCE CHARGE. The cost of insurance rates vary depending on a
number of factors, including, but not limited to, the individual
characteristics of the insured, the face amount and the policy year. The
monthly cost of insurance charge is determined by multiplying the cost of
insurance rate that is then applicable to your policy by the amount we have at
risk under your policy divided by $1,000. Our amount at risk (also described in
your policy as "net amount at risk") on any date is the difference between
(a) the death benefit that would be payable if the insured person died on that
date and (b) the then total account value under the policy. A greater amount at
risk, or a higher cost of insurance rate, will result in a higher monthly
charge. The cost of insurance rates are intended, in part, to compensate us for
the cost of providing insurance to you under your policy.
Generally, the cost of insurance rate increases from one policy year to the
next. This happens automatically because of the insured person's increasing age.
On a guaranteed basis, we may deduct between $0.02 and $83.34 per $1,000 of the
amount for which we are at risk under your policy from your policy account
value each month (but not beyond the policy anniversary date when the insured
person is attained age 121). As the amount for which we are at risk at any time
is the death benefit (calculated as of that time) minus your policy account
value at that time, changes in your policy account value resulting from the
performance of your investment options can affect your amount at risk, and as a
result, your cost of insurance. In addition, our current non-guaranteed cost of
insurance rates are zero for policy years in which the insured person's
attained age is 100 or older. Our cost of insurance rates are guaranteed not to
exceed the maximum rates specified in your policy. For most insured persons at
most ages, our current (non-guaranteed) rates are lower than the maximum rates.
Subject to any necessary regulatory approvals, we have the ability to raise
these rates up to the guaranteed maximum at any time.
The guaranteed maximum cost of insurance rates for gender neutral IncentiveLife
Optimizer(R) III policies for insureds who are age 18 or above are based on the
2001 Commissioner's Standard Ordinary 80% Male, 20% Female, Smoker or Nonsmoker
Ultimate Age Nearest Birthday Mortality Table. The guaranteed maximum cost of
insurance rates for gender neutral IncentiveLife Optimizer(R) III policies for
insureds who are under age 18 are based on the 2001 Commissioner's Standard
Ordinary 80% Male, 20% Female Composite Ultimate Age Nearest Birthday Mortality
Tables. For all other policies, for insureds who are age 18 or above, the
guaranteed maximum cost of insurance rates are based on the 2001 Commissioner's
Standard Ordinary Male or Female, Smoker or Nonsmoker Ultimate Age Nearest
Birthday Mortality Tables. For insureds who are under age 18, the guaranteed
maximum cost of insurance rates are based on the 2001 Commissioner's Standard
Ordinary Male or Female Composite Ultimate Age Nearest Birthday Mortality
Tables.
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Our cost of insurance rates will generally be lower (except for gender-neutral
policies and in connection with certain employee benefit plans) if the insured
person is a female than if a male. They also will generally be lower for
non-tobacco users than tobacco users and lower for persons that have other
highly favorable health characteristics, as compared to those that do not. On
the other hand, insured persons who present particular health, occupational or
avocational risks may be charged higher cost of insurance rates and other
additional charges as specified in their policies. In addition, the current
(non-guaranteed) rates also vary depending on the duration of the policy (i.e.,
the length of time since the policy was issued).
For policies issued at ages 0-17, an insured person's cost of insurance rate is
not based on that person's status as a tobacco user or non-tobacco user.
Effective with the policy anniversary when that insured person reaches attained
age 18, non-tobacco user cost of insurance rates will be charged for that
person. That insured person may also be eligible for a more favorable rating,
subject to our underwriting rules.
We offer lower rates for non-tobacco users only if they are at least age 18.
You may generally ask us to review the tobacco habits of an insured person
issue age 18 or over in order to change the charge from tobacco user rates to
non-tobacco user rates. The change, if approved, may result in lower future
cost of insurance rates beginning on the effective date of the change to
non-tobacco user rates.
The change will be based upon our general underwriting rules in effect at the
time of application, and may include criteria other than tobacco use status as
well as a definition of tobacco use different from that applicable at the time
this policy was issued.
Similarly, after the first policy year, you may request us to review the
insured person's rating to see if they qualify for a reduction in future cost
of insurance rates. Any such change will be based upon our general underwriting
rules in effect at the time of application, and may include various criteria.
For information concerning possible limitations on any changes, please see
"Other information" in "Tax information" earlier in this prospectus.
The change in rates, if approved, will take effect at the beginning of the
policy month that coincides with or next follows the date we approve your
request. This change may have adverse tax consequences.
For policies with a minimum stated face amount of $25,000 which are issued as a
result of an Option to Purchase Additional Insurance election or a conversion
from a term life policy or rider, our cost of insurance rates also depend on
how large the face amount is at the time we deduct the charge. Generally, under
these circumstances, the current (non-guaranteed) cost of insurance rates are
lower for face amounts of $100,000 and higher. For this purpose, however, we
will take into account all face amount decreases, whatever their cause.
Therefore, a decrease in face amount may cause your cost of insurance rates to
go up.
.. MORTALITY AND EXPENSE RISK CHARGE. We will collect a monthly charge for
mortality and expense risk. We are committed to fulfilling our obligations
under the policy and providing service to you over the lifetime of your policy.
Despite the uncertainty of future events, we guarantee that monthly
administrative and cost of insurance deductions from your policy account value
will never be greater than the maximum amounts shown in your policy. In making
this guarantee, we assume the mortality risk that insured persons (as a group)
will live for shorter periods than we estimated. When this happens, we have to
pay a greater amount of death benefit than we expected to pay in relation to
the cost of insurance charges we received. We also assume the expense risks
that the cost of issuing and administering policies will be greater than we
expected. This charge is designed, in part, to compensate us for taking these
risks.
We deduct a monthly charge at an annual rate of 0.60% of the value in your
policy's variable investment options and the Market Stabilizer Option(R), if
applicable, during the first 8 policy years, with no charge in policy year 9
and thereafter. We reserve the right to increase or decrease this charge in the
future, although it will never exceed 1.00% during policy years 1 - 10, and
0.50% during policy years 11 and later. This charge will be calculated at the
beginning of each policy month as a percentage of the amount of the policy
account that is then allocated to the variable investment options.
.. LOAN INTEREST SPREAD. We charge interest on policy loans but credit you with
interest on the amount of the policy account we hold as collateral for the
loan. The loan interest spread is the excess of the interest rate we charge
over the interest rate we credit. The loan interest spread will not exceed 1%.
We deduct this charge on each policy anniversary date, or on loan termination,
if earlier. For more information on how this charge is deducted, see "Borrowing
from your policy" under "Accessing your money" earlier in this prospectus. As
with any loan, the interest we charge on the loans is intended, in part, to
compensate us for the time value of the money we are lending and the risk that
you will not repay the loan.
OPTIONAL RIDER CHARGES
If you elect the following riders, the charge for each rider is deducted from
your policy account value on the first day of each policy month that the rider
is in effect. The rider charges are designed to offset the cost of providing
the benefit under the rider. The costs of each of the riders below are
designed, in part, to compensate us for the additional insurance risk we take
on in providing each of these riders and the administrative costs involved in
administering them:
.. CHILDREN'S TERM INSURANCE. If you choose this rider, we deduct $0.50 per
$1,000 of rider benefit amount from your policy account value each month until
the insured under the base policy reaches age 65, while the rider is in effect.
The charge for this rider does not vary depending upon the specifics of your
policy. However, we will continue to charge you for the rider, even after all
of your children, stepchildren and legally adopted children have reached age 25
(when a child's coverage under the rider terminates), unless you notify us in
writing that you wish to cancel this rider.
.. DISABILITY DEDUCTION WAIVER. If you choose this rider, we deduct an amount
from your policy account value each month until the insured under the base
policy reaches age 65, while the rider is in effect. This amount is between 7%
and 132% (on a guaranteed basis) of the actual amounts of all the other monthly
charges (including charges for other riders you elected) deducted from your
policy account value, and depends on the individual insurance risk
characteristics of the insured person. The current monthly charges for this
rider may be lower than the maximum monthly charges.
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.. DISABILITY WAIVER OF PREMIUM OR MONTHLY DEDUCTIONS. If you choose this rider,
we deduct an amount from your policy account value each month until the insured
under the policy reaches age 65 and while the rider is in effect. This amount
is between $0.01 and $0.60 per $1,000 of initial base policy face amount on a
guaranteed basis. We will establish a similar charge for requested base policy
face amount increases. If you also select certain of the other optional riders
available under your policy, we will deduct additional amounts from your policy
account value per $1,000 of rider benefit amount each month while both the
other rider and this rider are in effect. These amounts are in addition to the
charges for the riders themselves. The current monthly charges for this rider
may be lower than the maximum monthly charges.
.. LONG-TERM CARE SERVICES/SM/ RIDER. If you choose this rider without the
Nonforfeiture Benefit, on a guaranteed basis, we may deduct between $0.22 and
$2.67 per $1,000 of the amount for which we are at risk under the rider from
your policy account value each month. If you choose this rider with the
Nonforfeiture Benefit, on a guaranteed basis, we may deduct between $0.25 and
$2.94 per $1,000 of the amount for which we are at risk under the rider. We
will deduct this charge until the insured reaches age 121 while the rider is in
effect, but not when rider benefits are being paid. The amount at risk under
the rider depends on the death benefit option selected under the policy. For
policies with death benefit option A, the amount at risk for the rider is the
lesser of (a) the current policy face amount, minus the policy account value
(but not less than zero); and (b) the current long-term care specified amount.
For policies with death benefit option B, the amount at risk for the rider is
the current long-term care specified amount. The current monthly charges for
this rider may be lower than the maximum monthly charges.
If you continue coverage under the Nonforfeiture Benefit, the charge for the
rider will no longer apply.
.. OPTION TO PURCHASE ADDITIONAL INSURANCE. If you choose this rider and while
it is in effect, we deduct between $0.04 and $0.17 per $1,000 of the face
amount of the additional insurance available for purchase from your policy
account value each month until the insured under the base policy reaches age 40.
.. CHARITABLE LEGACY RIDER. There is no additional charge if you choose this
rider.
.. LIQUIDITY RIDER. If you choose this rider, we deduct $0.04 per $1,000 of your
initial base policy face amount from your policy account value each month until
the earlier of the end of the tenth policy year or termination of the policy or
termination of the rider. In addition, we currently reduce this charge to $0.01
per $1000 of the initial base policy face amount for the first 2 policy years.
The charge for this rider does not vary depending upon the specifics of your
policy. You must notify us in writing if you wish to cancel this rider.
.. ADDING THE LIVING BENEFITS RIDER. If you elect the Living Benefits Rider
after the policy is issued, we will deduct $100 from your policy account value
at the time of the transaction. This fee is designed, in part, to compensate us
for the administrative costs involved in processing the request.
.. EXERCISE OF OPTION TO RECEIVE A TERMINAL ILLNESS "LIVING BENEFIT." If you
elect to receive a terminal illness "living benefit," we will deduct up to $250
from any living benefit we pay. This fee is designed, in part, to compensate us
for the administrative costs involved in processing the request.
CHARGES THAT THE TRUSTS DEDUCT
The Trusts deduct charges for the following types of fees and expenses:
.. Management fees.
.. 12b-1 fees.
.. Operating expenses, such as trustees' fees, independent public accounting
firms' fees, legal counsel fees, administrative service fees, custodian
fees and liability insurance.
.. Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each portfolio. Since
shares of each Trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. Certain portfolios available under the contract
in turn invest in shares of other portfolios of AXA Premier VIP Trust and EQ
Advisors Trust and/or shares of unaffiliated portfolios (collectively, the
"underlying portfolios"). The underlying portfolios each have their own fees
and expenses, including management fees, operating expenses, and investment
related expenses such as brokerage commissions. For more information about
these charges, please refer to the prospectuses for the Trusts.
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11. More information about procedures that apply to your policy
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This section provides further detail about certain subjects that are addressed
in the previous pages. The following discussion generally does not repeat the
information already contained in those pages.
DATES AND PRICES AT WHICH POLICY EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your policy will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
DATE OF RECEIPT. Where this prospectus refers to the day when we receive a
payment, request, election, notice, transfer or any other transaction request
from you, we usually mean the day on which that item (or the last thing
necessary for us to process that item) arrives in complete and proper form at
our Administrative Office or via the appropriate telephone or fax number if the
item is a type we accept by those means. There are two main exceptions: if the
item arrives (1) on a day that is not a business day or (2) after the close of
a business day, then, in each case, we are deemed to have received that item on
the next business day.
BUSINESS DAY. Our "business day" is generally any day the New York Stock
Exchange ("NYSE") is open for regular trading and generally ends at 4:00 p.m.
Eastern Time (or as of an earlier close of regular trading). A business day
does not include a day on which we are not open due to emergency conditions
determined by the Securities and Exchange Commission. We may also close early
due to such emergency conditions. We compute unit values for our variable
investment options as of the end of each business day.
THIRD PARTY AGREEMENTS. If we have entered into a prior written agreement that
authorizes your financial professional to submit transfer requests and/or
changes to allocation instructions on your behalf, any such transfer request or
change to allocation instructions will be considered received by us on the
business day it arrives from your financial professional in complete and proper
form at our Administrative Office, or via the appropriate telephone or fax
number if the item is of the type we accept by those means. We may terminate
any such agreement at any time without prior notice.
PAYMENTS YOU MAKE. The following are reflected in your policy as of the date we
receive them in complete and proper form:
.. premium payments received after the policy's investment start date
(discussed below)
.. loan repayments and interest payments
REQUESTS YOU MAKE. The following transactions occur as of the date we receive
your request in complete and proper form:
.. withdrawals
.. tax withholding elections
.. face amount decreases that result from a withdrawal
.. changes of allocation percentages for premium payments or monthly deductions
.. surrenders
.. changes of owner
.. changes of beneficiary
.. transfers from a variable investment option to the guaranteed interest
option
.. loans
.. transfers among variable investment options
.. assignments
.. policy cancellation
The following transactions occur on your policy's next monthly anniversary that
coincides with or follows the date we approve your request:
.. changes in face amount
.. changes in death benefit option
.. changes of insured person
.. restoration of terminated policies
.. termination of any additional benefit riders you have elected
AUTOMATIC TRANSFER SERVICE. Transfers pursuant to our automatic transfer
service (dollar-cost averaging) occur as of the first day of each policy month.
If you request the automatic transfer service in your original policy
application, the first transfer will occur as of the first day of the second
policy month after your policy's initial Allocation Date. If you request this
service at any later time, we make the first such transfer as of your policy's
first monthly anniversary that coincides with or follows the date we receive
your request.
ASSET REBALANCING SERVICE. If you request the asset rebalancing service, the
first redistribution will be on the date you specify or the date we receive
your request, if later. However, no rebalancing will occur before your policy's
Allocation Date. Subsequent periodic rebalancings occur quarterly, semiannually
or annually, as you have requested.
DELAY IN CERTAIN CASES. We may delay allocating any payment you make to our
variable investment options, or any transfer, for the same reasons stated in
"Delay of variable investment option proceeds" later in this prospectus. We may
also delay such transactions for any other legally permitted purpose.
PRICES APPLICABLE TO POLICY TRANSACTIONS. If a transaction will increase or
decrease the amount you have in a variable investment option as of a certain
date, we process the transaction using the unit values for that option computed
as of that day's close of business, unless that day is not a business day. In
that case, we use unit values computed as of the next business day's close.
EFFECT OF DEATH OR SURRENDER. You may not make any surrender or partial
withdrawal request after the insured person has died. Also, all insurance
coverage ends on the date as of which we process any request for a surrender.
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POLICY ISSUANCE
REGISTER DATE. When we issue a policy, we assign it a "register date," which
will be shown in the policy. We measure the months, years, and anniversaries of
your policy from your policy's register date.
.. If you submit the full minimum initial premium to your financial
professional at the time you sign the application and before the policy is
issued, and we issue the policy as it was applied for (or on a better risk
class than applied for), then the register date will be the later of
(a) the date you signed part I of the policy application or (b) the date a
medical professional signed part II of the policy application.
.. If we do not receive your full minimum initial premium at our
Administrative Office before the issue date or if we issue the policy on a
different (less favorable) basis than you applied for, the register date
initially will appear on your policy as the date the policy is issued;
however, we will move the register date to the date we deliver the policy
provided we receive your full minimum initial premium. This will ensure
that premiums and charges will commence on the same date as your insurance
coverage. If your policy was delivered on the 29th, 30th or 31st of the
month, we will move the register date to the 1st of the following month. We
will determine the interest rate applicable to the guaranteed interest
option based on the Register Date. This rate will be applied to funds
allocated to the guaranteed interest option as of the date we receive the
full minimum initial premium at our Administrative Office.
We may also permit an earlier than customary register date (a) for
employer-sponsored cases, to accommodate a common register date for all
employees or (b) to provide a younger age at issue. (A younger age at issue
reduces the monthly charges that we deduct under a policy.) The charges and
deductions commence as of the register date, even when we have permitted an
early register date. We may also permit policy owners to delay a register date
(up to three months) in employer-sponsored cases.
INVESTMENT START DATE. This is the business day your investment first begins to
earn a return for you. Generally, this is the later of: (1) the business day we
receive the full minimum initial premium at our Administrative Office; and
(2) the register date of your policy. Before this date, your initial premium
will be held in a non-interest bearing account.
COMMENCEMENT OF INSURANCE COVERAGE. You must give the full minimum initial
premium to your financial professional on or before the day the policy and all
amendments are delivered to you. No insurance under your policy will take
effect unless (1) the insured person is still living at the time such payment
and all delivery requirements are completed and (2) the information in the
application continues to be true and complete, without material change, as of
the date the policy and all amendments are delivered to you and all delivery
requirements have been completed and the full minimum initial premium is paid.
If you submit the full minimum initial premium with your application, we may,
subject to certain conditions, provide a limited amount of temporary insurance
on the proposed insured person. You may request and review a copy of our
temporary insurance agreement for more information about the terms and
conditions of that coverage.
NON-ISSUANCE. If, after considering your application, we decide not to issue a
policy, we will refund any premium you have paid, without interest.
AGE; AGE AT ISSUE. Unless the context in this prospectus requires otherwise, we
consider the insured person's "age" during any policy year to be his or her age
on his or her birthday nearest to the beginning of that policy year. For
example, the insured person's age for the first policy year ("age at issue") is
that person's age on whichever birthday is closer to (i.e., before or after)
the policy's register date.
WAYS TO MAKE PREMIUM AND LOAN PAYMENTS
CHECKS AND MONEY ORDERS. Premiums or loan payments generally must be paid by
check or money order drawn on a U.S. bank in U.S. dollars and made payable to
"MONY Life Insurance Company of America."
We prefer that you make each payment to us with a single check drawn on your
business or personal bank account. We also will accept a single money order,
bank draft or cashier's check payable directly to MONY Life Insurance Company
of America, although we must report such "cash equivalent" payments to the
Internal Revenue Service under certain circumstances. Cash and travelers'
checks, or any payments in foreign currency, are not acceptable. We will accept
third-party checks payable to someone other than MONY Life Insurance Company of
America and endorsed over to MONY Life Insurance Company of America only (1) as
a direct payment from a qualified retirement plan or (2) if they are made out
to a trustee who owns the policy and endorses the entire check (without any
refund) as a payment to the policy.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in a policy to someone else as collateral
for a loan, to effect a change of ownership or for some other reason.
Collateral assignments may also sometimes be used in connection with dividing
the benefits of the policy under a split-dollar arrangement, which will also
have its own tax consequences. A copy of the assignment must be forwarded to
our Administrative Office. We are not responsible for any payment we make or
any action we take before we receive notice of the assignment or for the
validity of the assignment. An absolute assignment is a change of ownership.
Certain transfers for value may subject you to income tax and penalties and
cause the death benefit to lose its income-tax free treatment. Further, a gift
of a policy that has a loan outstanding may be treated as part gift and part
transfer for value, which could result in both gift tax and income tax
consequences. The IRS issued regulations in both 2002 and 2003 concerning
split-dollar arrangements, including policies subject to collateral
assignments. The regulations provide both new and interim guidance as to the
taxation of such arrangements. These regulations address taxation issues in
connection with arrangements which are compensatory in nature, involve a
shareholder and corporation, or a donor and donee. See also discussion under
"Split-dollar and other employee benefit programs" and "Estate, gift, and
generation-skipping taxes" in the "Tax information" section of this prospectus.
You should consult your tax advisor prior to making a transfer or assignment.
YOU CAN CHANGE YOUR POLICY'S INSURED PERSON
Your policy has the Substitution of Insured Person Rider and after the policy's
second year, we will permit you to request that a new insured person replace
the existing one subject to our rules then in effect. This requires that you
provide us with adequate evidence that the proposed new insured person meets
our requirements for insurance. Other requirements are outlined in your policy.
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Upon making this change, the monthly insurance charges we deduct will be based
on the new insured person's insurance risk characteristics. In addition, any
no-lapse guarantee and Long-Term Care Services/SM/ Rider will terminate. The
change of insured person will not, however, affect the surrender charge
computation for the amount of coverage that is then in force.
Substituting the insured person is a taxable event and may, depending upon
individual circumstances, have other tax consequences as well. For example, the
change could cause the policy to be a "modified endowment contract" or to fail
the Internal Revenue Code's definition of "life insurance," or in some cases
require that we also distribute certain amounts to you from the policy. See
"Tax information" earlier in this prospectus. You should consult your tax
advisor prior to substituting the insured person. As a condition to
substituting the insured person we may require you to sign a form acknowledging
the potential tax consequences. In no event, however, will we permit a change
that we believe causes your policy to fail the definition of life insurance or
causes the policy to lose its ability to be tested under the 2001 CSO tables.
See "Other information" under "Tax information" earlier in this prospectus.
Also, if your policy is on loan extension, you may not request to substitute
the insured person.
REQUIREMENTS FOR SURRENDER REQUESTS
Your surrender request must include the policy number, your name, your taxpayer
identification number, the name of the insured person, and the address where
proceeds should be mailed. The request must be signed by you, as the owner, and
by any joint owner, collateral assignee or irrevocable beneficiary. We may also
require you to complete specific tax forms, other documentation we require, and
provide a representation that your policy is not being exchanged for another
life or annuity contract.
Finally, in order for your surrender request to be complete, you must return
your policy to us.
GENDER-NEUTRAL POLICIES
Congress and various states have from time to time considered legislation that
would require insurance rates to be the same for males and females. In
addition, employers and employee organizations should consider, in consultation
with counsel, the impact of Title VII of the Civil Rights Act of 1964 on the
purchase of IncentiveLife Optimizer(R) III in connection with an
employment-related insurance or benefit plan. In a 1983 decision, the United
States Supreme Court held that, under Title VII, optional annuity benefits
under a deferred compensation plan could not vary on the basis of sex.
There will be no distinctions based on sex in the cost of insurance rates for
IncentiveLife Optimizer(R) III policies sold in Montana. We will also make such
gender-neutral policies available on request in connection with certain
employee benefit plans. Cost of insurance rates applicable to a gender-neutral
policy will not be greater than the comparable male rates under a gender
specific IncentiveLife Optimizer(R) III policy.
FUTURE POLICY EXCHANGES
We may at some future time, under certain circumstances and subject to
applicable law, allow the current owner of this policy to exchange it for a
universal life policy we are then offering. The exchange may or may not be
advantageous to you, based on all of the circumstances, including a comparison
of contractual terms and conditions and charges and deductions. We will provide
additional information upon request at such time as exchanges may be permitted.
BROKER TRANSACTION AUTHORITY
After your policy has been issued, we may accept transfer requests and changes
to your premium allocation instructions or fund transfers by telephone, mail,
facsimile or electronically, and requests for automatic transfer service and
asset rebalancing service in writing, by mail or facsimile, from your financial
professional, provided that we have your prior written authorization to do so
on file. Accordingly, MONY America will rely on the stated identity of the
person placing instructions as authorized to do so on your behalf. MONY America
will not be liable for any claim, loss, liability or expenses that may arise
out of such instructions. MONY America will continue to rely on this
authorization until it receives your written notification at its processing
office that you have withdrawn this authorization. MONY America may change or
terminate telephone or electronic or overnight mail transfer procedures at any
time without prior notice and restrict facsimile, internet, telephone and other
electronic transfer services because of disruptive transfer activity. MONY
America may terminate any such authorization at any time without prior notice.
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12. More information about other matters
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ABOUT OUR GENERAL ACCOUNT
This policy is offered to customers through various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any liability with respect
to a policy's account value or any guaranteed benefits with which the policy
was issued. The Company is solely responsible to the policy owner for the
policy's account value and such guaranteed benefits. The general obligations
and any guaranteed benefits under the policy are supported by the Company's
general account and are subject to the Company's claims paying ability. An
owner should look to the financial strength of the Company for its claims
paying ability. Assets in the general account are not segregated for the
exclusive benefit of any particular policy or obligation. General account
assets are also available to the insurer's general creditors and the conduct of
its routine business activities, such as the payment of salaries, rent and
other ordinary business expenses. For more information about the Company's
financial strength, you may review its financial statements and/or check its
current rating with one or more of the independent sources that rate insurance
companies for their financial strength and stability. Such ratings are subject
to change and have no bearing on the performance of the variable investment
options. You may also speak with your financial representative.
The general account is subject to regulation and supervision by the Commisioner
of Insurance in the state of Arizona and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Interests under
the policies in the general account have not been registered and are not
required to be registered under the Securities Act of 1933 because of
exemptions and exclusionary provisions that apply. The general account is not
required to register as an investment company under the Investment Company Act
of 1940 and it is not registered as an investment company under the Investment
Company Act of 1940. The policy is a "covered security" under the federal
securities laws.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account. The disclosure with regard
to the general account, however, may be subject to certain provisions of the
federal securities law relating to the accuracy and completeness of statements
made in prospectuses.
TRANSFERS OF YOUR POLICY ACCOUNT VALUE
TRANSFERS NOT IMPLEMENTED. If a request cannot be fully administered, only the
part that is in good order will be processed. Any part of the request that
cannot be processed will be denied and an explanation will be provided to you.
This could occur, for example, where the request does not comply with our
transfer limitations, or where you request transfer of an amount greater than
that currently allocated to an investment option.
Similarly, the automatic transfer service will terminate immediately if:
(1) your amount in the EQ/Money Market option is insufficient to cover the
automatic transfer amount; (2) your policy is in a grace period; (3) we receive
notice of the insured person's death; or (4) your policy is placed on loan
extension. Similarly, the asset rebalancing program will terminate if either
(2), (3) or (4) occurs.
DISRUPTIVE TRANSFER ACTIVITY. You should note that the policy is not designed
for professional "market timing" organizations, or other organizations or
individuals engaging in a market timing strategy. The policy is not designed to
accommodate programmed transfers, frequent transfers or transfers that are
large in relation to the total assets of the underlying portfolio.
Frequent transfers, including market timing and other program trading or
short-term trading strategies, may be disruptive to the underlying portfolios
in which the variable investment options invest. Disruptive transfer activity
may adversely affect performance and the interests of long-term investors by
requiring a portfolio to maintain larger amounts of cash or to liquidate
portfolio holdings at a disadvantageous time or price. For example, when market
timing occurs, a portfolio may have to sell its holdings to have the cash
necessary to redeem the market timer's investment. This can happen when it is
not advantageous to sell any securities, so the portfolio's performance may be
hurt. When large dollar amounts are involved, market timing can also make it
difficult to use long-term investment strategies because a portfolio cannot
predict how much cash it will have to invest. In addition, disruptive transfers
or purchases and redemptions of portfolio investments may impede efficient
portfolio management and impose increased transaction costs, such as brokerage
costs, by requiring the portfolio manager to effect more frequent purchases and
sales of portfolio securities. Similarly, a portfolio may bear increased
administrative costs as a result of the asset level and investment volatility
that accompanies patterns of excessive or short-term trading. Portfolios that
invest a significant portion of their assets in foreign securities or the
securities of small- and mid-capitalization companies tend to be subject to the
risks associated with market timing and short-term trading strategies to a
greater extent than portfolios that do not. Securities trading in overseas
markets present time zone arbitrage opportunities when events affecting
portfolio securities values occur after the close of the overseas market but
prior to the close of the U.S. markets. Securities of small- and
mid-capitalization companies present arbitrage opportunities because the market
for such securities may be less liquid than the market for securities of larger
companies, which could result in pricing inefficiencies. Please see the
prospectuses for the underlying portfolios for more information on how
portfolio shares are priced.
We currently use the procedures described below to discourage disruptive
transfer activity. You should understand, however, that these procedures are
subject to the following limitations: (1) they primarily rely on the policies
and procedures implemented by the underlying portfolios; (2) they do not
eliminate the possibility that disruptive transfer activity, including market
timing, will occur or that portfolio performance will be affected by such
activity; and (3) the design of
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market timing procedures involves inherently subjective judgments, which we
seek to make in a fair and reasonable manner consistent with the interests of
all policy owners.
We offer investment options with underlying portfolios that are part of AXA
Premier VIP Trust and EQ Advisors Trust (together, the "affiliated trusts"), as
well as investment options with underlying portfolios of outside trusts with
which MONY America has entered participation agreements (the "unaffiliated
trusts" and, collectively with the affiliated trusts, the "trusts"). The
affiliated trusts have adopted policies and procedures regarding disruptive
transfer activity. They discourage frequent purchases and redemptions of
portfolio shares and will not make special arrangements to accommodate such
transactions. They aggregate inflows and outflows for each portfolio on a daily
basis. On any day when a portfolio's net inflows or outflows exceed an
established monitoring threshold, the affiliated trust obtains from us policy
owner trading activity. The affiliated trusts currently consider transfers into
and out of (or vice versa) the same variable investment option within a five
business day period as potentially disruptive transfer activity.
When a policy is identified in connection with potentially disruptive transfer
activity for the first time, a letter is sent to the policy owner explaining
that MONY America has a policy against disruptive transfer activity and that if
such activity continues, certain transfer privileges may be eliminated. If and
when the policy owner is identified a second time as engaged in potentially
disruptive transfer activity under the policy, we currently prohibit the use of
voice, fax and automated transaction services. We currently apply such action
for the remaining life of each affected policy. We or a trust may change the
definition of potentially disruptive transfer activity, the monitoring
procedures and thresholds, any notification procedures, and the procedures to
restrict this activity. Any new or revised policies and procedures will apply
to all policy owners uniformly. We do not permit exceptions to our policies
restricting disruptive transfer activity.
Each unaffiliated trust may have its own policies and procedures regarding
disruptive transfer activity. If an unaffiliated trust advises us that there
may be disruptive activity from one of our policy owners, we will work with the
unaffiliated trust to review policy owner trading activity. Each trust reserves
the right to reject a transfer that it believes, in its sole discretion, is
disruptive (or potentially disruptive) to the management of one of its
portfolios. Please see the prospectuses for the trusts for more information.
It is possible that a trust may impose a redemption fee designed to discourage
frequent or disruptive trading by policy owners. As of the date of this
prospectus, the trusts had not implemented such a fee. If a redemption fee is
implemented by a trust, that fee, like any other trust fee, will be borne by
the policy owner.
Policy owners should note that it is not always possible for us and the
underlying trusts to identify and prevent disruptive transfer activity. In
addition, because we do not monitor for all frequent trading at the separate
account level, policy owners may engage in frequent trading which may not be
detected, for example, due to low net inflows or outflows on the particular
day(s). Therefore, no assurance can be given that we or the trusts will
successfully impose restrictions on all potentially disruptive transfers.
Because there is no guarantee that disruptive trading will be stopped, some
policy owners may be treated differently than others, resulting in the risk
that some policy owners may be able to engage in frequent transfer activity
while others will bear the effect of that frequent transfer activity. The
potential effects of frequent transfer activity are discussed above.
TELEPHONE AND INTERNET REQUESTS
If you are a properly authorized person, you may make transfers between
investment options over the Internet as described earlier in this prospectus in
"How to make transfers" under "Transferring your money among our investment
options."
Also, you may make the following additional types of requests by calling the
number under "By Phone:" in "How to reach us" from a touch-tone phone, if the
policy is individually owned and you are the owner, or through axa.com or
us.axa.com for those outside the U.S. if you are the individual owner:
.. changes of premium allocation percentages
.. changes of address
.. request forms and statements
.. to request a policy loan (loan requests cannot be made online by corporate
policy owners)
.. enroll for electronic delivery and view statements/documents online
.. to pay your premium or make a loan repayment
.. change of beneficiary(ies)
For security purposes, all telephone requests are automatically tape-recorded
and are invalid if the information given is incomplete or any portion of the
request is inaudible. We have established procedures reasonably designed to
confirm that telephone instructions are genuine. These include requiring
personal identification information from the caller and providing subsequent
written confirmation of the instructions.
If you wish to enroll through axa.com or us.axa.com for those outside the U.S.
or use ACH payments via AXA Equitable's Interactive Telephone Service, you must
first agree to the terms and conditions set forth in our axa.com or us.axa.com
for those outside the U.S. Online Services Agreement or our AXA Equitable's
Interactive Telephone Service Terms and Conditions, which you can find at our
website or request via the automated telephone system, respectively. We will
send you a confirmation letter by first class mail. Additionally, you will be
required to use a password and protect it from unauthorized use. We will
provide subsequent written confirmation of any transactions. We will assume
that all instructions received through axa.com or us.axa.com for those outside
the U.S., or AXA Equitable's Interactive Telephone Service from anyone using
your password are given by you; however, we reserve the right to refuse to
process any transaction and/or block access to axa.com or us.axa.com for those
outside the U.S., or AXA Equitable's Interactive Telephone Service if we have
reason to believe the instructions given are unauthorized.
If we do not employ reasonable procedures to confirm the genuineness of
telephone or Internet instructions, we may be liable for any losses arising out
of any act or omission that constitutes negligence, lack of good faith, or
willful misconduct. In light of our procedures, we will not be liable for
following telephone or Internet instructions that we reasonably believe to be
genuine.
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We reserve the right to refuse to process any telephone or Internet
transactions if we have reason to believe that the request compromises the
general security and/or integrity of our automated systems (see discussion of
"Disruptive transfer activity" above).
Any telephone, Internet or fax transaction request that is not completed by the
close of a business day (which is usually 4:00 p.m. Eastern Time) will be
processed as of the next business day. During times of extreme market activity,
or for other reasons, you may be unable to contact us to make a telephone or
Internet request. If this occurs, you should submit a written transaction
request to our Administrative Office. We reserve the right to discontinue
telephone or Internet transactions, or modify the procedures and conditions for
such transactions, without notifying you, at any time.
CYBERSECURITY
Our variable life insurance product business is highly dependent upon the
effective operation of our computer systems and those of our business partners,
so our business is potentially susceptible to operational and information
security risks resulting from a cyber-attack. These risks include, among other
things, the theft, misuse, corruption and destruction of data maintained online
or digitally, denial of service attacks on websites and other operational
disruption and unauthorized release of confidential customer
information. Cyber-attacks affecting us, any third party administrator, the
underlying funds, intermediaries and other affiliated or third-party service
providers may adversely affect us and your policy account value. For instance,
cyber-attacks may interfere with our processing of policy transactions,
including the processing of orders from our website or with the underlying
funds, impact our ability to calculate your policy account value, cause the
release and possible destruction of confidential customer or business
information, impede order processing, subject us and/or our service providers
and intermediaries to regulatory fines and financial losses and/or cause
reputational damage. Cybersecurity risks may also impact the issuers of
securities in which the underlying funds invest, which may cause the funds
underlying your policy to lose policy account value. There can be no assurance
that we or the underlying funds or our service providers will avoid losses
affecting your policy due to cyber-attacks or information security breaches in
the future.
SUICIDE AND CERTAIN MISSTATEMENTS
If an insured person commits suicide within certain time periods, the amount of
death benefit we pay will be limited as described in the policy. Also, if an
application misstated the age or gender of an insured person, we will adjust
the amount of any death benefit (and certain rider benefits), as described in
the policy (or rider).
WHEN WE PAY POLICY PROCEEDS
GENERAL. We will generally pay any death benefit, surrender, withdrawal, or
loan within seven days after we receive the request and any other required
items.
CLEARANCE OF CHECKS. We reserve the right to defer payment of that portion of
your policy account value that is attributable to a premium payment or loan
repayment made by check for a reasonable period of time (not to exceed 15 days)
to allow the check to clear the banking system.
DELAY OF GUARANTEED INTEREST OPTION PROCEEDS. We also have the right to defer
payment or transfers of amounts out of our guaranteed interest option for up to
six months. If we delay more than 30 days in paying you such amounts, we will
pay interest of at least 3% per year from the date we receive your request.
DELAY OF VARIABLE INVESTMENT OPTION PROCEEDS. We reserve the right to defer
payment of any death benefit, transfer, loan or other distribution that is
derived from a variable investment option if (a) the New York Stock Exchange is
closed (other than customary weekend and holiday closings) or trading on that
exchange is restricted; (b) the SEC has declared that an emergency exists, as a
result of which disposal of securities is not reasonably practicable or it is
not reasonably practicable to fairly determine the policy account value; or
(c) the law permits the delay for the protection of owners. If we need to defer
calculation of values for any of the foregoing reasons, all delayed
transactions will be processed at the next available unit values.
DELAY TO CHALLENGE COVERAGE. We may challenge the validity of your insurance
policy or any rider based on any material misstatements in an application you
have made to us. We cannot make such challenges, however, beyond certain time
limits set forth in the policy or rider. If the insured person dies within one
of these limits, we may delay payment of any proceeds until we decide whether
to challenge the policy.
CHANGES WE CAN MAKE
In addition to any of the other changes described in this prospectus, we have
the right to modify how we or MONY America Variable Account K operate. For
example, we have the right to:
.. combine two or more variable investment options or withdraw assets relating
to IncentiveLife Optimizer(R) III from one investment option and put them
into another;
.. end the registration of, or re-register, MONY America Variable Account K
under the Investment Company Act of 1940;
.. operate MONY America Variable Account K under the direction of a
"committee" or discharge such a committee at any time;
.. restrict or eliminate any voting rights or privileges of policy owners (or
other persons) that affect MONY America Variable Account K;
.. operate MONY America Variable Account K, or one or more of the variable
investment options, in any other form the law allows. This includes any
form that allows us to make direct investments, in which case we may charge
MONY America Variable Account K an advisory fee. We may make any legal
investments we wish for MONY America Variable Account K. In addition, we
may disapprove any change in investment advisers or in investment policy
unless a law or regulation provides differently.
If we take any action that results in a material change in the underlying
investments of a variable investment option, we will notify you to the extent
required by law. We may, for example, cause the variable investment option to
invest in a mutual fund other than, or in addition to, the Trusts. If you then
wish to transfer the amount you have in that option to another investment
option, you may do so.
We may make any changes in the policy or its riders, require additional premium
payments, or make distributions from the policy to the extent we deem necessary
to ensure that your policy qualifies or continues to qualify as life insurance
for tax purposes. Any such change will apply uniformly to all policies that are
affected. We will give you written notice of such changes. Subject to all
applicable legal requirements, we also may make other changes in the policies
that do not reduce any net cash surrender value, death benefit, policy account
value, or other accrued rights or benefits.
Whether to make any of the above discussed changes is generally within our
discretion, although some such changes might require us to obtain
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regulatory or policy owner approval. Whether regulatory or policy owner
approval is required would depend on the nature of the change and, in many
cases, the manner in which the change is implemented. You should not assume,
therefore, that you necessarily will have an opportunity to approve or
disapprove any such changes. We will, of course, comply with applicable legal
requirements, including notice to or approval by policy owners where required
in particular cases.
It is not possible to foresee all of the circumstances under which we may find
it necessary or appropriate to exercise our right to make changes. Such
circumstances could, however, include changes in law, or interpretations
thereof; changes in financial or investment market conditions; changes in
accepted methods of conducting operations in the relevant market; or a desire
to achieve material operating economies or efficiencies.
REPORTS WE WILL SEND YOU
Shortly after the end of each year of your policy, we will send you a report
that includes information about your policy's current death benefit, policy
account value, cash surrender value (i.e., policy account value minus any
current surrender charge), policy loans, policy transactions and amounts of
charges deducted. We will send you individual notices to confirm your premium
payments, loan repayments, transfers and certain other policy transactions.
Please promptly review all statements and confirmations and notify us
immediately at 1-800-777-6510 (for U.S. residents) or 1-704-341-7000 (outside
of the U.S.) if there are any errors.
DISTRIBUTION OF THE POLICIES
The policies are distributed by both AXA Advisors, LLC ("AXA Advisors") and AXA
Distributors, LLC ("AXA Distributors") (together, the "Distributors"). The
Distributors serve as principal underwriters of MONY America Variable Account
K. The offering of the policies is intended to be continuous.
AXA Advisors is an affiliate of MONY America, and AXA Distributors is an
indirect wholly owned subsidiary of AXA Equitable. The Distributors are under
the common control of AXA Financial, Inc. Their principal business address is
1290 Avenue of the Americas, New York, NY 10104. The Distributors are
registered with the SEC as broker-dealers and are members of the Financial
Industry Regulatory Authority, Inc. ("FINRA"). Both broker-dealers also act as
distributors for other MONY America life and annuity products.
The policies are sold by financial professionals of AXA Advisors and its
affiliates. The policies are also sold by financial professionals of
unaffiliated broker-dealers that have entered into selling agreements with the
Distributors ("Selling broker-dealers").
MONY America pays compensation to both Distributors based on policies sold.
MONY America may also make additional payments to the Distributors and the
Distributors may, in turn, make additional payments to certain Selling
broker-dealers. All payments will be in compliance with all applicable FINRA
rules and other laws and regulations.
Although MONY America takes into account all of its distribution and other
costs in establishing the level of fees and charges under its policies, none of
the compensation paid to the Distributors or the Selling broker-dealers
discussed in this section of the prospectus are imposed as separate fees or
charges under your policy. MONY America, however, intends to recoup amounts it
pays for distribution and other services through the fees and charges of the
policy and payments it receives for providing administrative, distribution and
other services to the Portfolios. For information about the fees and charges
under the policy, see "Risk/benefit summary: Charges and expenses you will pay"
and "More information about certain policy charges" earlier in this prospectus.
As used below, the "target premium" is actuarially determined for each policy,
based on that policy's specific characteristics, as well as the policy's face
amount and Distributor, among other factors.
AXA ADVISORS COMPENSATION. MONY America pays compensation to AXA Advisors based
on premium payments made on the policies sold through AXA Advisors
("premium-based compensation") in combination with ongoing annual compensation
based on a percentage of the unloaned account value of the policy sold
("asset-based compensation"). AXA Advisors, in turn, may pay a portion of the
premium-based compensation received from AXA Equitable to the AXA Advisors
financial professional and/or the Selling broker-dealer making the sale.
Depending on the compensation schedule selected by your AXA Advisors financial
professional and/or the Selling broker-dealer from the three options specified
below, the premium- and asset-based compensation will generally not exceed:
(1)99% of the premiums you pay up to one target premium in your policy's first
year, plus 8.5% of all other premiums you pay in your policy's first year;
plus 5.8% of all other premiums you pay in policy years two through five;
plus 3.8% of all other premiums you pay in policy years six through ten, and
2.5% thereafter; plus asset-based compensation of up to 0.10% in policy
years eleven and later.
(2)58.7% of the premiums you pay up to one target premium in your policy's
first year, plus 8.5% of all other premiums you pay in your policy's first
year; plus 15% of premiums you pay up to one target premium in policy years
two through five, plus 7% of all other premiums you pay in policy years two
through five; plus 13% of premiums you pay up to one target premium in
policy years six through seven, plus 5% of all other premiums you pay in
policy years six through seven; plus 2% of all premiums you pay in policy
years eight through ten, and 1.5% thereafter; plus asset-based compensation
of up to 0.30% in policy years eight and later.
(3)36.7% of the premiums you pay up to one target premium in your policy's
first year, plus 8.5% of all other premiums you pay in your policy's first
year; plus 8% of premiums you pay up to one target premium in policy years
two through five, plus 7% of all other premiums you pay in policy years two
through five; plus 6% of premiums you pay up to one target premium in policy
years six through seven, plus 5% of all other premiums you pay in policy
years six through seven; plus 2% of all premiums you pay in policy years
eight through ten, and 1.5% thereafter; plus asset-based compensation of up
to 0.30% in policy years eight and later.
Total compensation paid to a financial professional or a Selling broker-dealer
electing to receive both premium-based and asset-based compensation could over
time exceed the total compensation that would otherwise be paid on the basis of
premiums alone. The compensation paid by AXA Advisors varies among financial
professionals and among Selling broker-dealers. AXA Advisors also pays a
portion of the compensation it receives to its managerial personnel. When a
policy is sold by a Selling broker-dealer, the Selling broker-dealer, not AXA
Advisors, determines the amount and type of compensation paid to the Selling
broker-dealer's financial professional for the sale of the policy. Therefore,
you should contact your financial professional for information about the
compensation he or she receives and any related incentives, as described below.
AXA Advisors may receive compensation, and, in turn, pay its financial
professionals a portion of such fee, from third party investment
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advisors to whom its financial professionals refer customers for professional
management of the assets within their policy.
AXA Advisors also pays its financial professionals and managerial personnel
other types of compensation including service fees, expense allowance payments
and health and retirement benefits. AXA Advisors also pays its financial
professionals, managerial personnel and Selling broker-dealers sales bonuses
(based on selling certain products during specified periods) and persistency
bonuses. AXA Advisors may offer sales incentive programs to financial
professionals and Selling broker-dealers who meet specified production levels
for the sales of both MONY America policies and policies offered by other
companies. These incentives provide non-cash compensation such as stock options
awards and/or stock appreciation rights, expense-paid trips, expense-paid
education seminars and merchandise.
DIFFERENTIAL COMPENSATION. In an effort to promote the sale of MONY America
products, AXA Advisors may pay its financial professionals and managerial
personnel a greater percentage of premium-based compensation and/or asset-based
compensation for the sale of a MONY America policy than it pays for the sale of
a policy or other financial product issued by a company other than MONY
America. AXA Advisors may pay higher compensation on certain products in a
class than others based on a group or sponsored arrangement, or between older
and newer versions or series of the same policy. This practice is known as
providing "differential compensation." Differential compensation may involve
other forms of compensation to AXA Advisors personnel. Certain components of
the compensation paid to managerial personnel are based on whether the sales
involve MONY America policies. Managers earn higher compensation (and credits
toward awards and bonuses) if the financial professionals they manage sell a
higher percentage of MONY America policies than products issued by other
companies. Other forms of compensation provided to its financial professionals
include health and retirement benefits, expense reimbursements, marketing
allowances and premium-based payments, known as "overrides." For tax reasons,
AXA Advisors financial professionals qualify for health and retirement benefits
based solely on their sales of MONY America policies and products sponsored by
affiliates.
The fact that AXA Advisors financial professionals receive differential
compensation and additional payments may provide an incentive for those
financial professionals to recommend an MONY America policy over a policy or
other financial product issued by a company not affiliated with MONY America.
However, under applicable rules of FINRA, AXA Advisors financial professionals
may only recommend to you products that they reasonably believe are suitable
for you based on the facts that you have disclosed as to your other security
holdings, financial situation and needs. In making any recommendation,
financial professionals of AXA Advisors may nonetheless face conflicts of
interest because of the differences in compensation from one product category
to another, and because of differences in compensation among products in the
same category. For more information, contact your financial professional.
AXA DISTRIBUTORS COMPENSATION. MONY America pays premium-based and asset-based
compensation (together, "compensation") to AXA Distributors. Premium-based
compensation is paid based on MONY America policies sold through AXA
Distributors' Selling broker-dealers. Asset-based compensation is paid based on
the unloaned account value of policies sold through certain of AXA
Distributor's Selling broker-dealers. AXA Distributors pays a portion of the
compensation it receives to the Selling broker-dealer making the sale.
Depending on the compensation schedule selected by the Selling broker-dealer
from the three options specified below, premium and asset-based compensation
will generally not exceed:
(1)135% of the premiums you pay up to one target premium in your policy's first
two years, plus 7% of all other premiums you pay in your policy's first
year; plus 2.8% of all other premiums you pay in policy years two through
ten; plus asset-based compensation of up to 0.10% in policy years 11 and
later.
(2)80% of the premiums you pay up to one target premium in your policy's first
two years, plus 7% of all other premiums you pay in your policy's first
year; plus 12% of all other premiums you pay up to one target premium in
policy years two through seven, plus 4% of all other premiums you pay in
policy years two through seven; plus asset-based compensation of up to 0.30%
in policy years eight and later.
(3)50% of the premiums you pay up to one target premium in your policy's first
two years, plus 7% of all other premiums you pay in your policy's first
year; plus 5% of all other premiums you pay up to one target premium in
policy years two through seven, plus 4% of all other premiums you pay in
policy years two through seven; plus asset-based compensation of up to 0.30%
in policy years eight and later.
The compensation paid by AXA Distributors varies among Selling broker-dealers.
The Selling broker-dealer, not AXA Distributors, determines the amount and type
of compensation paid to the Selling broker-dealer's financial professional for
the sale of the policy. Therefore, you should contact your financial
professional for information about the compensation he or she receives and any
related incentives, such as differential compensation paid for various products.
These payments above also include compensation to cover operating expenses and
marketing services under the terms of MONY America's distribution agreements
with AXA Distributors.
ADDITIONAL PAYMENTS BY AXA DISTRIBUTORS TO SELLING BROKER-DEALERS. AXA
Distributors may pay, out of its assets, certain Selling broker-dealers and
other financial intermediaries additional compensation in recognition of
services provided or expenses incurred. AXA Distributors may also pay certain
Selling broker-dealers or other financial intermediaries additional
compensation for enhanced marketing opportunities and other services (commonly
referred to as "marketing allowances"). Services for which such payments are
made may include, but are not limited to, the preferred placement of MONY
America products on a company and/or product list; sales personnel training;
product training; business reporting; technological support; due diligence and
related costs; advertising, marketing and related services; conference; and/or
other support services, including some that may benefit the policy owner.
Payments may be based on ongoing sales, on the aggregate account value
attributable to policies sold through a Selling broker-dealer or such payments
may be a fixed amount. For certain selling broker-dealers, AXA Distributors
increases the marketing allowance as certain sales thresholds are met. AXA
Distributors may also make fixed payments to Selling broker-dealers, for
example in connection with the initiation of a new relationship or the
introduction of a new product.
Additionally, as an incentive for the financial professionals of Selling
broker-dealers to promote the sale of MONY America products, AXA Distributors
may increase the sales compensation paid to the Selling broker-dealer for a
period of time (commonly referred to as "compensation enhancements"). AXA
Distributors also has entered
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MORE INFORMATION ABOUT OTHER MATTERS
into agreements with certain selling broker-dealers in which the selling
broker-dealer agrees to sell certain MONY America policies exclusively.
These additional payments may serve as an incentive for Selling broker-dealers
to promote the sale of MONY America policies over policies and other products
issued by other companies. Not all Selling broker-dealers receive additional
payments, and the payments vary among Selling broker-dealers. The list below
includes the names of Selling broker-dealers that we are aware (as of
December 31, 2014) received additional payments. These additional payments
ranged from $40.15 to $4,874,706.21. MONY America and its affiliates may also
have additional business arrangements with Selling broker-dealers. For more
information, ask your financial professional.
1st Global Capital Corporation
Allstate Financial Services, LLC
American Portfolios Financial Services
Ameriprise Financial Services
BBVA Compass Investment Solutions, Inc.
Cambridge Investment Research
Capital Investment Group
CCO Investment Services Corporation
Centaurus Financial, Inc.
Cetera Advisors, LLC
Cetera Advisors Networks, LLC
Cetera Financial Specialists, LLC
Cetera Investment Services, LLC
CFD Investments, Inc.
Citigroup Global Markets, Inc.
Commonwealth Financial Network
CUNA Brokerage Services
Cuso Financial Services, L.P.
Essex National Securities, Inc.
Farmer's Financial Solution
First Allied Securities Inc.
First Citizens Investor Services, Inc.
First Southeast Investor Services
First Tennessee Brokerage Inc.
Founders Financial Securities
FSC Securities Corporation
Geneos Wealth Management Inc.
GWN Securities, Inc.
H.D. Vest Investment Securities, Inc.
Harbour Investments
ICA/First Dakota, Inc.
IFC Holdings, Inc.
Independent Financial Group, LLC
Investacorp, Inc.
Investment Professionals, Inc.
Investors Capital Corporation
James T. Borello & Company
Janney Montgomery Scott LLC
JP Turner & Company, LLC
Key Investment Services LLC
Kovack Securities
Legend Equities
Lincoln Financial Advisors Corp.
Lincoln Financial Services Corp.
LPL Financial Corporation
Lucia Securities, LLC
Mercap Securities, LLC
Merrill Lynch Life Agency, Inc.
MetLife Securities, Inc.
Morgan Stanley Smith Barney
Mutual Service Corporation
National Planning Corporation
Navy Federal Brokerage Services
New England Securities, Inc.
Next Financial Group, Inc.
NFP Securities Inc.
PNC Investments
Prime Capital Services
Primerica Financial Services
Questar Capital Corporation
Raymond James & Associates
Raymond James Insurance Group
RBC Capital Markets Corporation
Robert W Baird & Company
Royal Alliance Associates, Inc.
Sage Point Financial, Inc.
Santander Securities Corporation
Securities America Inc.
Signator Financial Services
Signator Investors, Inc.
SII Investments
Sorrento Pacific Financial LLC
Southwest Securities, Inc.
Summit Brokerage Services, Inc.
SunTrust Investments
SWS Financial Services
Tavenner Group
Tower Squares Securities
TransAmerica Financial Advisors
Triad Advisors
U.S Bancorp Investments, Inc.
UBS Financial Services, Inc.
UVEST Financial Services Group
Valmark Securities, Inc.
Voya Financial Advisors
Walnut Street Services
Waterstone Financial Group
Wells Fargo Advisors Financial Network, LLC
Wells Fargo Advisors, LLC
Wells Fargo Investments, LLC
Wesom Financial Services, LLC
Woodbury Financial Services, Inc.
LEGAL PROCEEDINGS
MONY America and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings would be considered material with respect
to a policy owner's interest in MONY America Variable Account K, nor would any
of these proceedings be likely to have a material adverse effect on MONY
America Variable Account K, our ability to meet our obligations under the
policies, or the distribution of the policies.
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13. Financial statements of MONY America Variable Account K and MONY America
--------------------------------------------------------------------------------
The financial statements of MONY America Variable Account K, as well as the
consolidated financial statements of MONY America, are in the Statement of
Additional Information ("SAI").
The financial statements of MONY America have relevance for the policies only
to the extent that they bear upon the ability of MONY America to meet its
obligations under the policies. You may request an SAI by writing to our
Administrative Office or by calling 1-800-777-6510 (for U.S. residents) or
1-704-341-7000 (outside of the U.S.) and requesting to speak with a customer
service representative.
61
FINANCIAL STATEMENTS OF MONY AMERICA VARIABLE ACCOUNT K AND MONY AMERICA
14. Personalized illustrations
--------------------------------------------------------------------------------
ILLUSTRATIONS OF POLICY BENEFITS
HYPOTHETICAL AND PERSONALIZED ILLUSTRATIONS. Illustrations are intended to show
how different fees, charges and rates of return can affect the values available
under a policy. Illustrations are based upon characteristics of a hypothetical
insured person as well as other assumed factors. This type of illustration is
called a HYPOTHETICAL ILLUSTRATION. Illustrations can also be based upon some
of the characteristics of the insured person under your policy as well as some
other policy feature choices you make such as the face amount, death benefit
option, premium payment amounts and assumed rates of return (within limits).
This type of illustration is called a PERSONALIZED ILLUSTRATION. NO
ILLUSTRATION WILL EVER SHOW YOU THE ACTUAL VALUES AVAILABLE UNDER YOUR POLICY
AT ANY GIVEN POINT IN TIME. This is because many factors affect these values
including: (i) the insured person's characteristics; (ii) policy features you
choose; (iii) actual premium payments you make; (iv) loans or withdrawals you
make; and (v) actual rates of return (including the actual fees and expenses)
of the underlying portfolios in which your cash value is invested. Each
hypothetical or personalized illustration is accompanied by an explanation of
the assumptions on which that illustration is based. Because, as discussed
below, these assumptions may differ considerably, you should carefully review
all of the disclosure that accompanies each illustration.
DIFFERENT KINDS OF ILLUSTRATIONS. Both the hypothetical illustrations in this
prospectus and personalized illustrations can reflect the investment management
fees and expenses incurred in 2014 (or expected to be incurred in 2015, if such
amount is expected to be higher) of the available underlying portfolios in
different ways. An ARITHMETIC ILLUSTRATION uses the straight average of all of
the available underlying portfolios' investment management fees and expenses. A
WEIGHTED ILLUSTRATION computes the average of investment management fees and
expenses based upon the aggregate assets in the Portfolios at the end of 2014.
You may request a weighted illustration that computes the average of investment
management fees and expenses of just the EQ Advisors Trust portfolios, just the
AXA Strategic Allocation portfolios, or all portfolios. If you request, a
weighted illustration can also illustrate an assumed percentage allocation of
policy account values among the available underlying portfolios. A FUND
SPECIFIC ILLUSTRATION uses only the investment management fees and expenses of
a specific underlying portfolio. A HISTORICAL ILLUSTRATION reflects the actual
performance of one of the available underlying portfolios during a stated
period. When reviewing a weighted or fund specific illustration you should keep
in mind that the values shown may be higher than the values shown in other
illustrations because the fees and expenses that are assumed may be lower than
those assumed in other illustrations. When reviewing an historical illustration
you should keep in mind that values based upon past performance are no
indication of what the values will be based on future performance. You may also
request a personalized illustration of the guaranteed interest option that
assumes a portion of net premiums allocated to the guaranteed interest option.
THE EFFECT OF THE EXPENSE LIMITATION ARRANGEMENTS. The illustrations in this
prospectus do not reflect the expense limitation arrangements. Personalized
illustrations reflect the expense limitation arrangements that are in effect
with respect to certain of the Portfolios. If these fees and expenses were not
reduced to reflect the expense limitation arrangements, the values in the
personalized illustrations would be lower.
Currently, you are entitled to one free illustration each policy year. For each
additional illustration in a policy year, we charge $25. Appendix I to this
prospectus contains an arithmetic hypothetical illustration.
62
PERSONALIZED ILLUSTRATIONS
Appendix I: Hypothetical illustrations
--------------------------------------------------------------------------------
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES, NET CASH SURRENDER VALUES AND
ACCUMULATED PREMIUMS
The following tables illustrate the changes in death benefit, policy account
value and net cash surrender value of the policy under certain hypothetical
circumstances that we assume solely for this purpose. Each table illustrates
the operation of a policy for a specified issue age, premium payment schedule
and face amount under death benefit option A or death benefit option B. The
tables assume annual planned periodic premiums that are paid at the beginning
of each policy year for an insured person who is a 35-year-old preferred elite
risk male non-tobacco user when the policy is issued. The amounts shown are for
the end of each policy year and assume that all of the policy account value is
invested in Portfolios that achieve investment returns at constant hypothetical
gross annual rates of 0%, 6% and 12% (i.e., before any investment management
fees or other expenses are deducted from the underlying Portfolio assets).
These hypothetical investment return assumptions are not intended as estimates
of future performance of any investment fund. MONY America is not able to
predict the future performance of the investment options. Higher rates of
return used in these illustrations generally reflect rates of return for a
number of broad stock indices over long-term periods. Of course lower rates of
return will lower the values illustrated. For this reason, you should carefully
consider the illustrations at 0% and 6%. After the deduction of the arithmetic
average of the investment management fees and other expenses of all of the
underlying Portfolios (as described below), the corresponding net annual rates
of return would be (1.08)%, 4.86% and 10.79%. These net annual rates of return
do not reflect the mortality and expense risk charge, or other charges we
deduct from your policy's value each month. If the net annual rates of return
did reflect these charges, the rates shown would be lower; however, the values
shown in the following tables reflect all policy charges. Investment return
reflects investment income and all realized and unrealized capital gains and
losses.
Tables are provided for each of the two death benefit options. The tables
headed "Using Current Charges" assume that the current rates for the following
charges deducted by MONY America in each year illustrated: premium charge,
administrative charge, cost of insurance charge, mortality and expense risk
charge (including MONY America's currently planned reduction in the policy's
9th year). The tables headed "Using Guaranteed Charges" are the same, except
that the maximum permitted rates for all years are used for all charges. The
tables do not reflect any charge that we reserve the right to make but are not
currently making. The tables assume that (i) no optional rider benefits have
been elected, (ii) no loans or withdrawals are made, (iii) no changes in
coverage are requested and (iv) no change in the death benefit option is
requested.
With respect to fees and expenses deducted from assets of the underlying
Portfolios, the amounts shown in all tables reflect (1) investment management
fees equivalent to an effective annual rate of 0.54%, and (2) an assumed
average asset charge for all other expenses of the underlying Portfolios
equivalent to an effective annual rate of 0.54%. These rates are the arithmetic
average for all Portfolios that are available as investment options. In other
words, they are based on the hypothetical assumption that policy account values
are allocated equally among the variable investment options. THESE RATES DO NOT
REFLECT EXPENSE LIMITATION ARRANGEMENTS IN EFFECT WITH RESPECT TO CERTAIN OF
THE UNDERLYING PORTFOLIOS. IF THOSE ARRANGEMENTS HAD BEEN ASSUMED, THE POLICY
VALUES WOULD BE HIGHER THAN THOSE SHOWN IN THE FOLLOWING TABLES. The actual
rates associated with any policy will vary depending upon the actual allocation
of policy values among the investment options.
The second column of each table shows the amount you would have at the end of
each policy year if an amount equal to the assumed planned periodic premiums
were invested to earn interest, after taxes, at 5% annually. This is not a
policy value. It is included for comparison purposes only.
Because your circumstances will no doubt differ from those in the illustrations
that follow, values under your policy will differ, in most cases substantially.
Upon request, we will furnish you with a personalized illustration as described
under "Illustrations of policy benefits" in "Personalized illustrations"
earlier in this prospectus.
I-1
APPENDIX I: HYPOTHETICAL ILLUSTRATIONS
INCENTIVELIFE OPTIMIZER III
$600,000 FACE AMOUNT
MALE, ISSUE AGE 35, PREFERRED ELITE NON-TOBACCO USER UNDERWRITING RISK CLASS
INITIAL DEATH BENEFIT OPTION IS OPTION A
INITIAL ANNUAL PLANNED PERIODIC PREMIUM: $6,390*
USING CURRENT CHARGES
USING GUIDELINE PREMIUM TEST
---------------------------------------------------------------------------------------------------------------------
DEATH BENEFIT ACCOUNT VALUE NET CASH SURRENDER VALUE
------------- ------------- ------------------------
PREMIUMS
END OF ACCUMULATED
POLICY AT 5% INTEREST ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR PER YEAR ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF:
---------------------------------------------------------------------------------------------------------------------
0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
---------------------------------------------------------------------------------------------------------------------
1 $ 6,710 $600,000 $ 600,000 $ 600,000 $ 4,754 $ 5,072 $ 5,390 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------------------
2 $ 13,754 $600,000 $ 600,000 $ 600,000 $ 9,473 $ 10,404 $ 11,372 $ 0 $ 0 $ 800
---------------------------------------------------------------------------------------------------------------------
3 $ 21,152 $600,000 $ 600,000 $ 600,000 $ 14,228 $ 16,085 $ 18,091 $ 4,328 $ 6,185 $ 8,191
---------------------------------------------------------------------------------------------------------------------
4 $ 28,919 $600,000 $ 600,000 $ 600,000 $ 18,894 $ 21,996 $ 25,481 $ 9,762 $ 12,864 $ 16,349
---------------------------------------------------------------------------------------------------------------------
5 $ 37,074 $600,000 $ 600,000 $ 600,000 $ 23,467 $ 28,143 $ 33,605 $ 15,151 $ 19,827 $ 25,289
---------------------------------------------------------------------------------------------------------------------
6 $ 45,637 $600,000 $ 600,000 $ 600,000 $ 27,942 $ 34,529 $ 42,531 $ 20,700 $ 27,287 $ 35,289
---------------------------------------------------------------------------------------------------------------------
7 $ 54,629 $600,000 $ 600,000 $ 600,000 $ 32,328 $ 41,172 $ 52,349 $ 26,154 $ 34,998 $ 46,175
---------------------------------------------------------------------------------------------------------------------
8 $ 64,070 $600,000 $ 600,000 $ 600,000 $ 36,620 $ 48,076 $ 63,143 $ 31,514 $ 42,970 $ 58,037
---------------------------------------------------------------------------------------------------------------------
9 $ 73,983 $600,000 $ 600,000 $ 600,000 $ 41,174 $ 55,731 $ 75,660 $ 37,470 $ 52,027 $ 71,956
---------------------------------------------------------------------------------------------------------------------
10 $ 84,391 $600,000 $ 600,000 $ 600,000 $ 45,671 $ 63,761 $ 89,549 $ 45,671 $ 63,761 $ 89,549
---------------------------------------------------------------------------------------------------------------------
15 $ 144,781 $600,000 $ 600,000 $ 600,000 $ 71,089 $ 114,668 $ 190,722 $ 71,089 $ 114,668 $ 190,722
---------------------------------------------------------------------------------------------------------------------
20 $ 221,856 $600,000 $ 600,000 $ 600,000 $ 94,655 $ 179,352 $ 361,605 $ 94,655 $ 179,352 $ 361,605
---------------------------------------------------------------------------------------------------------------------
25 $ 320,225 $600,000 $ 600,000 $ 870,827 $114,643 $ 260,509 $ 649,871 $114,643 $ 260,509 $ 649,871
---------------------------------------------------------------------------------------------------------------------
30 $ 445,771 $600,000 $ 600,000 $ 1,382,581 $128,189 $ 361,804 $ 1,133,263 $128,189 $ 361,804 $ 1,133,263
---------------------------------------------------------------------------------------------------------------------
35 $ 606,004 $600,000 $ 600,000 $ 2,254,214 $134,010 $ 491,730 $ 1,943,288 $134,010 $ 491,730 $ 1,943,288
---------------------------------------------------------------------------------------------------------------------
40 $ 810,506 $600,000 $ 707,970 $ 3,534,901 $128,420 $ 661,655 $ 3,303,646 $128,420 $ 661,655 $ 3,303,646
---------------------------------------------------------------------------------------------------------------------
45 $1,071,508 $600,000 $ 923,700 $ 5,874,855 $101,395 $ 879,715 $ 5,595,100 $101,395 $ 879,715 $ 5,595,100
---------------------------------------------------------------------------------------------------------------------
50 $1,404,620 $600,000 $1,211,302 $ 9,880,475 $ 29,392 $1,153,621 $ 9,409,976 $ 29,392 $1,153,621 $ 9,409,976
---------------------------------------------------------------------------------------------------------------------
55 $1,829,765 ** $1,567,349 $16,484,618 ** $1,492,713 $15,699,636 ** $1,492,713 $15,699,636
---------------------------------------------------------------------------------------------------------------------
60 $2,372,370 ** $1,944,250 $26,477,935 ** $1,925,000 $26,215,777 ** $1,925,000 $26,215,777
---------------------------------------------------------------------------------------------------------------------
65 $3,064,886 ** $2,513,658 $44,480,760 ** $2,488,771 $44,040,356 ** $2,488,771 $44,040,356
---------------------------------------------------------------------------------------------------------------------
* The illustrations assume that planned periodic premiums are paid at the
start of each policy year. The death benefit, account value and net cash
surrender value will differ if premiums are paid in different amounts or
frequencies.
** Policy lapses unless additional payments are made.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE DEATH BENEFIT,
ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGED 0%, 6% OR
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THE AVERAGE FOR
INDIVIDUAL POLICY YEARS. WE CAN MAKE NO REPRESENTATION THAT THESE HYPOTHETICAL
INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE YEAR OR CONTINUED OVER ANY
PERIOD OF TIME. IN FACT, FOR ANY GIVEN PERIOD OF TIME, THE INVESTMENT RESULTS
COULD BE NEGATIVE.
I-2
APPENDIX I: HYPOTHETICAL ILLUSTRATIONS
INCENTIVELIFE OPTIMIZER III
$600,000 FACE AMOUNT
MALE, ISSUE AGE 35, PREFERRED ELITE NON-TOBACCO USER UNDERWRITING RISK CLASS
INITIAL DEATH BENEFIT OPTION IS OPTION A
INITIAL ANNUAL PLANNED PERIODIC PREMIUM: $6,390*
USING GUARANTEED CHARGES
USING GUIDELINE PREMIUM TEST
---------------------------------------------------------------------------------------------------------------
DEATH BENEFIT ACCOUNT VALUE NET CASH SURRENDER VALUE
------------- ------------- ------------------------
PREMIUMS
END OF ACCUMULATED
POLICY AT 5% INTEREST ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR PER YEAR ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF:
---------------------------------------------------------------------------------------------------------------
0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
---------------------------------------------------------------------------------------------------------------
1 $ 6,710 $600,000 $600,000 $ 600,000 $ 4,280 $ 4,582 $ 4,885 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------------
2 $ 13,754 $600,000 $600,000 $ 600,000 $ 8,501 $ 9,370 $ 10,274 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------------
3 $ 21,152 $600,000 $600,000 $ 600,000 $12,611 $ 14,316 $ 16,162 $ 2,711 $ 4,416 $ 6,262
---------------------------------------------------------------------------------------------------------------
4 $ 28,919 $600,000 $600,000 $ 600,000 $16,588 $ 19,403 $ 22,573 $ 7,456 $ 10,271 $ 13,441
---------------------------------------------------------------------------------------------------------------
5 $ 37,074 $600,000 $600,000 $ 600,000 $20,443 $ 24,645 $ 29,566 $12,127 $ 16,329 $ 21,250
---------------------------------------------------------------------------------------------------------------
6 $ 45,637 $600,000 $600,000 $ 600,000 $24,172 $ 30,042 $ 37,194 $16,930 $ 22,800 $ 29,952
---------------------------------------------------------------------------------------------------------------
7 $ 54,629 $600,000 $600,000 $ 600,000 $27,762 $ 35,583 $ 45,502 $21,588 $ 29,409 $ 39,329
---------------------------------------------------------------------------------------------------------------
8 $ 64,070 $600,000 $600,000 $ 600,000 $31,199 $ 41,260 $ 54,544 $26,093 $ 36,154 $ 49,438
---------------------------------------------------------------------------------------------------------------
9 $ 73,983 $600,000 $600,000 $ 600,000 $34,564 $ 47,188 $ 64,546 $30,860 $ 43,484 $ 60,842
---------------------------------------------------------------------------------------------------------------
10 $ 84,391 $600,000 $600,000 $ 600,000 $37,764 $ 53,257 $ 75,454 $37,764 $ 53,257 $ 75,454
---------------------------------------------------------------------------------------------------------------
15 $ 144,781 $600,000 $600,000 $ 600,000 $52,466 $ 87,949 $ 150,798 $52,466 $ 87,949 $ 150,798
---------------------------------------------------------------------------------------------------------------
20 $ 221,856 $600,000 $600,000 $ 600,000 $63,035 $128,492 $ 273,541 $63,035 $128,492 $ 273,541
---------------------------------------------------------------------------------------------------------------
25 $ 320,225 $600,000 $600,000 $ 637,423 $65,853 $173,276 $ 475,689 $65,853 $173,276 $ 475,689
---------------------------------------------------------------------------------------------------------------
30 $ 445,771 $600,000 $600,000 $ 985,193 $56,649 $221,116 $ 807,535 $56,649 $221,116 $ 807,535
---------------------------------------------------------------------------------------------------------------
35 $ 606,004 $600,000 $600,000 $ 1,558,642 $26,916 $269,330 $ 1,343,657 $26,916 $269,330 $ 1,343,657
---------------------------------------------------------------------------------------------------------------
40 $ 810,506 ** $600,000 $ 2,369,429 ** $315,472 $ 2,214,419 ** $315,472 $ 2,214,419
---------------------------------------------------------------------------------------------------------------
45 $1,071,508 ** $600,000 $ 3,820,882 ** $350,199 $ 3,638,935 ** $350,199 $ 3,638,935
---------------------------------------------------------------------------------------------------------------
50 $1,404,620 ** $600,000 $ 6,197,121 ** $348,499 $ 5,902,020 ** $348,499 $ 5,902,020
---------------------------------------------------------------------------------------------------------------
55 $1,829,765 ** $600,000 $ 9,873,115 ** $217,139 $ 9,402,967 ** $217,139 $ 9,402,967
---------------------------------------------------------------------------------------------------------------
60 $2,372,370 ** ** $15,162,979 ** ** $15,012,851 ** ** $15,012,851
---------------------------------------------------------------------------------------------------------------
65 $3,064,886 ** ** $24,589,658 ** ** $24,346,196 ** ** $24,346,196
---------------------------------------------------------------------------------------------------------------
* The illustrations assume that planned periodic premiums are paid at the
start of each policy year. The death benefit, account value and net cash
surrender value will differ if premiums are paid in different amounts or
frequencies.
** Policy lapses unless additional payments are made.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE DEATH BENEFIT,
ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGED 0%, 6% OR
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THE AVERAGE FOR
INDIVIDUAL POLICY YEARS. WE CAN MAKE NO REPRESENTATION THAT THESE HYPOTHETICAL
INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE YEAR OR CONTINUED OVER ANY
PERIOD OF TIME. IN FACT, FOR ANY GIVEN PERIOD OF TIME, THE INVESTMENT RESULTS
COULD BE NEGATIVE.
I-3
APPENDIX I: HYPOTHETICAL ILLUSTRATIONS
INCENTIVELIFE OPTIMIZER III
$600,000 FACE AMOUNT
MALE, ISSUE AGE 35, PREFERRED ELITE NON-TOBACCO USER UNDERWRITING RISK CLASS
INITIAL DEATH BENEFIT OPTION IS OPTION B
INITIAL ANNUAL PLANNED PERIODIC PREMIUM: $6,860*
USING CURRENT CHARGES
USING GUIDELINE PREMIUM TEST
-----------------------------------------------------------------------------------------------------------------
DEATH BENEFIT ACCOUNT VALUE NET CASH SURRENDER VALUE
------------- ------------- ------------------------
PREMIUMS
END OF ACCUMULATED
POLICY AT 5% INTEREST ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR PER YEAR ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF:
-----------------------------------------------------------------------------------------------------------------
0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
-----------------------------------------------------------------------------------------------------------------
1 $ 7,203 $605,187 $ 605,531 $ 605,874 $ 5,187 $ 5,531 $ 5,874 $ 0 $ 0 $ 0
-----------------------------------------------------------------------------------------------------------------
2 $ 14,766 $610,329 $ 611,339 $ 612,389 $ 10,329 $ 11,339 $ 12,389 $ 0 $ 767 $ 1,817
-----------------------------------------------------------------------------------------------------------------
3 $ 22,707 $615,509 $ 617,523 $ 619,700 $ 15,509 $ 17,523 $ 19,700 $ 5,609 $ 7,623 $ 9,800
-----------------------------------------------------------------------------------------------------------------
4 $ 31,046 $620,589 $ 623,957 $ 627,740 $ 20,589 $ 23,957 $ 27,740 $ 11,457 $ 14,825 $ 18,608
-----------------------------------------------------------------------------------------------------------------
5 $ 39,801 $625,567 $ 630,645 $ 636,575 $ 25,567 $ 30,645 $ 36,575 $ 17,251 $ 22,329 $ 28,259
-----------------------------------------------------------------------------------------------------------------
6 $ 48,994 $630,438 $ 637,592 $ 646,279 $ 30,438 $ 37,592 $ 46,279 $ 23,196 $ 30,349 $ 39,037
-----------------------------------------------------------------------------------------------------------------
7 $ 58,647 $635,209 $ 644,813 $ 656,947 $ 35,209 $ 44,813 $ 56,947 $ 29,036 $ 38,640 $ 50,773
-----------------------------------------------------------------------------------------------------------------
8 $ 68,782 $639,877 $ 652,317 $ 668,671 $ 39,877 $ 52,317 $ 68,671 $ 34,771 $ 47,211 $ 63,565
-----------------------------------------------------------------------------------------------------------------
9 $ 79,424 $644,828 $ 660,631 $ 682,257 $ 44,828 $ 60,631 $ 82,257 $ 41,124 $ 56,927 $ 78,553
-----------------------------------------------------------------------------------------------------------------
10 $ 90,599 $649,713 $ 669,346 $ 697,322 $ 49,713 $ 69,346 $ 97,322 $ 49,713 $ 69,346 $ 97,322
-----------------------------------------------------------------------------------------------------------------
15 $ 155,430 $676,930 $ 724,065 $ 806,295 $ 76,930 $124,065 $ 206,295 $ 76,930 $124,065 $ 206,295
-----------------------------------------------------------------------------------------------------------------
20 $ 238,174 $701,974 $ 793,088 $ 989,074 $101,974 $193,088 $ 389,074 $101,974 $193,088 $ 389,074
-----------------------------------------------------------------------------------------------------------------
25 $ 343,778 $722,642 $ 877,913 $ 1,293,733 $122,642 $277,913 $ 693,733 $122,642 $277,913 $ 693,733
-----------------------------------------------------------------------------------------------------------------
30 $ 478,559 $735,118 $ 978,342 $ 1,798,924 $135,118 $378,342 $ 1,198,924 $135,118 $378,342 $ 1,198,924
-----------------------------------------------------------------------------------------------------------------
35 $ 650,577 $737,541 $1,096,234 $ 2,640,052 $137,541 $496,234 $ 2,040,052 $137,541 $496,234 $ 2,040,052
-----------------------------------------------------------------------------------------------------------------
40 $ 870,121 $725,413 $1,231,029 $ 4,042,783 $125,413 $631,029 $ 3,442,783 $125,413 $631,029 $ 3,442,783
-----------------------------------------------------------------------------------------------------------------
45 $1,150,320 $687,993 $1,374,463 $ 6,379,701 $ 87,993 $774,463 $ 5,779,701 $ 87,993 $774,463 $ 5,779,701
-----------------------------------------------------------------------------------------------------------------
50 $1,507,934 $605,678 $1,505,252 $10,268,306 $ 5,678 $905,252 $ 9,668,306 $ 5,678 $905,252 $ 9,668,306
-----------------------------------------------------------------------------------------------------------------
55 $1,964,349 ** $1,588,838 $16,928,056 ** $988,838 $16,121,958 ** $988,838 $16,121,958
-----------------------------------------------------------------------------------------------------------------
60 $2,546,864 ** $1,582,028 $27,465,537 ** $982,028 $26,865,537 ** $982,028 $26,865,537
-----------------------------------------------------------------------------------------------------------------
65 $3,290,316 ** $1,422,042 $45,504,780 ** $822,042 $44,904,780 ** $822,042 $44,904,780
-----------------------------------------------------------------------------------------------------------------
* The illustrations assume that planned periodic premiums are paid at the
start of each policy year. The death benefit, account value and net cash
surrender value will differ if premiums are paid in different amounts or
frequencies.
** Policy lapses unless additional payments are made.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE DEATH BENEFIT,
ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGED 0%, 6% OR
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THE AVERAGE FOR
INDIVIDUAL POLICY YEARS. WE CAN MAKE NO REPRESENTATION THAT THESE HYPOTHETICAL
INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE YEAR OR CONTINUED OVER ANY
PERIOD OF TIME. IN FACT, FOR ANY GIVEN PERIOD OF TIME, THE INVESTMENT RESULTS
COULD BE NEGATIVE.
I-4
APPENDIX I: HYPOTHETICAL ILLUSTRATIONS
INCENTIVELIFE OPTIMIZER III
$600,000 FACE AMOUNT
MALE, ISSUE AGE 35, PREFERRED ELITE NON-TOBACCO USER UNDERWRITING RISK CLASS
INITIAL DEATH BENEFIT OPTION IS OPTION B
INITIAL ANNUAL PLANNED PERIODIC PREMIUM: $6,860*
USING GUARANTEED CHARGES
USING GUIDELINE PREMIUM TEST
---------------------------------------------------------------------------------------------------------------
DEATH BENEFIT ACCOUNT VALUE NET CASH SURRENDER VALUE
------------- ------------- ------------------------
PREMIUMS
END OF ACCUMULATED
POLICY AT 5% INTEREST ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
YEAR PER YEAR ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF: ANNUAL INVESTMENT RETURN OF:
---------------------------------------------------------------------------------------------------------------
0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS
---------------------------------------------------------------------------------------------------------------
1 $ 7,203 $604,708 $605,035 $ 605,363 $ 4,708 $ 5,035 $ 5,363 $ 0 $ 0 $ 0
---------------------------------------------------------------------------------------------------------------
2 $ 14,766 $609,342 $610,287 $ 611,271 $ 9,342 $ 10,287 $ 11,271 $ 0 $ 0 $ 699
---------------------------------------------------------------------------------------------------------------
3 $ 22,707 $613,850 $615,708 $ 617,719 $13,850 $ 15,708 $ 17,719 $ 3,950 $ 5,808 $ 7,819
---------------------------------------------------------------------------------------------------------------
4 $ 31,046 $618,213 $621,282 $ 624,736 $18,213 $ 21,282 $ 24,736 $ 9,081 $ 12,150 $ 15,604
---------------------------------------------------------------------------------------------------------------
5 $ 39,801 $622,437 $627,019 $ 632,381 $22,437 $ 27,019 $ 32,381 $14,121 $ 18,703 $ 24,065
---------------------------------------------------------------------------------------------------------------
6 $ 48,994 $626,521 $632,919 $ 640,710 $26,521 $ 32,919 $ 40,710 $19,279 $ 25,677 $ 33,468
---------------------------------------------------------------------------------------------------------------
7 $ 58,647 $630,450 $638,972 $ 649,771 $30,450 $ 38,972 $ 49,771 $24,276 $ 32,798 $ 43,597
---------------------------------------------------------------------------------------------------------------
8 $ 68,782 $634,208 $645,164 $ 659,615 $34,208 $ 45,164 $ 59,615 $29,102 $ 40,058 $ 54,509
---------------------------------------------------------------------------------------------------------------
9 $ 79,424 $637,885 $651,619 $ 670,483 $37,885 $ 51,619 $ 70,483 $34,181 $ 47,915 $ 66,779
---------------------------------------------------------------------------------------------------------------
10 $ 90,599 $641,377 $658,215 $ 682,308 $41,377 $ 58,215 $ 82,308 $41,377 $ 58,215 $ 82,308
---------------------------------------------------------------------------------------------------------------
15 $ 155,430 $657,320 $695,567 $ 763,142 $57,320 $ 95,567 $ 163,142 $57,320 $ 95,567 $ 163,142
---------------------------------------------------------------------------------------------------------------
20 $ 238,174 $668,493 $738,067 $ 891,528 $68,493 $138,067 $ 291,528 $68,493 $138,067 $ 291,528
---------------------------------------------------------------------------------------------------------------
25 $ 343,778 $670,821 $781,943 $ 1,092,454 $70,821 $181,943 $ 492,454 $70,821 $181,943 $ 492,454
---------------------------------------------------------------------------------------------------------------
30 $ 478,559 $659,823 $821,813 $ 1,406,465 $59,823 $221,813 $ 806,465 $59,823 $221,813 $ 806,465
---------------------------------------------------------------------------------------------------------------
35 $ 650,577 $627,822 $846,651 $ 1,895,177 $27,822 $246,651 $ 1,295,177 $27,822 $246,651 $ 1,295,177
---------------------------------------------------------------------------------------------------------------
40 $ 870,121 ** $839,628 $ 2,657,222 ** $239,628 $ 2,057,222 ** $239,628 $ 2,057,222
---------------------------------------------------------------------------------------------------------------
45 $1,150,320 ** $762,099 $ 3,834,681 ** $162,099 $ 3,234,681 ** $162,099 $ 3,234,681
---------------------------------------------------------------------------------------------------------------
50 $1,507,934 ** ** $ 5,632,307 ** ** $ 5,032,307 ** ** $ 5,032,307
---------------------------------------------------------------------------------------------------------------
55 $1,964,349 ** ** $ 8,356,065 ** ** $ 7,756,065 ** ** $ 7,756,065
---------------------------------------------------------------------------------------------------------------
60 $2,546,864 ** ** $12,494,923 ** ** $11,894,923 ** ** $11,894,923
---------------------------------------------------------------------------------------------------------------
65 $3,290,316 ** ** $18,875,687 ** ** $18,275,687 ** ** $18,275,687
---------------------------------------------------------------------------------------------------------------
* The illustrations assume that planned periodic premiums are paid at the
start of each policy year. The death benefit, account value and net cash
surrender value will differ if premiums are paid in different amounts or
frequencies.
** Policy lapses unless additional payments are made.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF
FACTORS, INCLUDING INVESTMENT ALLOCATIONS MADE BY THE OWNER. THE DEATH BENEFIT,
ACCOUNT VALUE AND NET CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL GROSS RATES OF INVESTMENT RETURN AVERAGED 0%, 6% OR
12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THE AVERAGE FOR
INDIVIDUAL POLICY YEARS. WE CAN MAKE NO REPRESENTATION THAT THESE HYPOTHETICAL
INVESTMENT RESULTS CAN BE ACHIEVED FOR ANY ONE YEAR OR CONTINUED OVER ANY
PERIOD OF TIME. IN FACT, FOR ANY GIVEN PERIOD OF TIME, THE INVESTMENT RESULTS
COULD BE NEGATIVE.
I-5
APPENDIX I: HYPOTHETICAL ILLUSTRATIONS
Appendix II: Calculating the alternate death benefit
--------------------------------------------------------------------------------
USING THE GUIDELINE PREMIUM TEST:
The following examples demonstrate how we calculate the death benefit under
Option A and Option B. The examples show an insured under two policies with the
same face amount, but account values vary as shown. We assume that each insured
is age 65 at the time of death and that there is no outstanding debt. We also
assume that the owner selected the guideline premium test. Policy 1 shows what
the death benefit would be for a policy with low account value. Policy 2 shows
what the death benefit would be for a policy with a higher account value.
The alternate death benefit is equal to the policy account value times the
death benefit percentage. If the account value in your policy is high enough,
relative to the face amount, the life insurance benefit will automatically be
greater than the Option A or Option B death benefit you have selected. In the
example below, the alternate death benefit for Policy 1 is $42,000 ($35,000 x
120%) and the alternate death benefit for Policy 2 is $102,000 ($85,000 x
120%). The basic death benefit under Option A is equal to the face amount
($100,000) on the date of death. If the owner of Policy 1 elected Option A, the
death benefit would equal the face amount, since the alternate death benefit
amount ($42,000) is less than the face amount ($100,000). If the owner of
Policy 2 elected Option A, the death benefit would be the alternate death
benefit ($102,000), since the alternate death benefit ($102,000) is greater
than the face amount ($100,000). The basic death benefit under Option B is
equal to the face amount plus the policy account value on the date of death.
Based on the example below, the basic death benefit under Option B is greater
than the alternate death benefit for both Policy 1 (since $135,000 is greater
than $42,000) and Policy 2 (since $185,000 is greater than $102,000).
------------------------------------------------------------
POLICY 1 POLICY 2
------------------------------------------------------------
Face Amount $100,000 $100,000
Policy Account Value on the Date of Death $ 35,000 $ 85,000
Death Benefit Percentage 120% 120%
Death Benefit under Option A $100,000 $102,000
Death Benefit under Option B $135,000 $185,000
------------------------------------------------------------
USING THE CASH VALUE ACCUMULATION TEST:
The following examples demonstrate how we calculate the death benefit under
Option A and Option B. The examples show an insured under two policies with the
same face amount, but account values vary as shown. We assume that each insured
is age 65 at the time of death, is a male preferred non-tobacco user, and that
there is no outstanding debt. We also assume that the owner selected the cash
value accumulation test. Policy 1 shows what the death benefit would be for a
policy with a low account value. Policy 2 shows what the death benefit would be
for a policy with a higher account value.
The alternate death benefit is equal to the policy account value times a death
benefit percentage which will be specified in your policy, and which varies
based upon the insured's attained age, sex and risk class. If the account value
in your policy is high enough, relative to the face amount, the life insurance
benefit will automatically be greater than the Option A or Option B death
benefit you have selected. In the example below, the alternate death benefit
for Policy 1 is $64,995 ($35,000 x 185.7%) and the alternate death benefit for
Policy 2 is $157,845 ($85,000 x 185.7%). The basic death benefit under Option A
is equal to the face amount on ($100,000) the date of death. If the owner of
Policy 1 elected Option A, the death benefit would equal the face amount, since
the alternate death benefit amount ($64,995) is less than the face amount
($100,000). If the owner of Policy 2 elected Option A, the death benefit would
be the alternate death benefit ($102,000), since the alternate death benefit
($157,845) is greater than the face amount ($100,000). The basic death benefit
under Option B is equal to the face amount plus the policy account value on the
date of death. Based on the example below, the basic death benefit under Option
B is greater than the alternate death benefit for both Policy 1 (since $135,000
is greater than $64,995) and Policy 2 (since $185,000 is greater than $157,845).
------------------------------------------------------------
POLICY 1 POLICY 2
------------------------------------------------------------
Face Amount $100,000 $100,000
Policy Account Value on the Date of Death $ 35,000 $ 85,000
Death Benefit Percentage 185.7% 185.7%
Death Benefit under Option A $100,000 $157,845
Death Benefit under Option B $135,000 $185,000
------------------------------------------------------------
II-1
APPENDIX II: CALCULATING THE ALTERNATE DEATH BENEFIT
Appendix III: State policy availability and/or variations of certain features
and benefits
--------------------------------------------------------------------------------
The following information is a summary of the states where certain policies or
certain features and/or benefits are either not available as of the date of
this prospectus or vary from the policy's features and benefits as previously
described in this prospectus. Certain features and/or benefits may have been
approved in your state after your policy was issued and cannot be added. Please
contact your financial professional for more information about availability in
your state.
STATES WHERE CERTAIN POLICIES FEATURES AND/OR BENEFITS ARE NOT AVAILABLE OR
VARY:
-------------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
-------------------------------------------------------------------------------
CALIFORNIA Long Term Care Services/SM/ Rider In California, we refer to this
rider as the "Comprehensive
Long-Term Care Rider" (Rider
Form No. R12-10CA).
See "Long Term Care Services/SM/ The following sentence replaces
Rider" under "Other benefits you the first sentence of the fourth
can add by rider" in "More paragraph of this section in its
information about policy entirety:
features and benefits"
"Benefits are payable once we
receive: 1) a written
certification from a U.S.
licensed health care
practitioner that the insured
person is a chronically ill
individual; 2) a plan of care
prescribed by a licensed health
care practitioner or a
multidisciplinary team under
medical direction which
describes the insured person's
needs and specifies the type and
frequency of qualified long-term
care services required by the
insured person; 3) proof that
the "elimination period," as
discussed below, has been
satisfied; and 4) written notice
of claim and proof of loss in a
form satisfactory to us.
NONFORFEITURE BENEFIT
The first two paragraphs of the
"Nonforfeiture Benefit"
subsection are replaced in their
entirety with the following:
For a higher monthly charge, you
can elect the Comprehensive
Long-Term Care Rider with the
Nonforfeiture Benefit. The
Nonforfeiture Benefit may
continue coverage under the
rider in a reduced benefit
amount in situations where (a)
the Comprehensive Long-Term Care
Rider would otherwise terminate;
(b) you have not already
received benefits (including any
loan repayments) that equal or
exceed the total charges
deducted for the rider; and (c)
your policy and Comprehensive
Long-Term Care Rider were
inforce for at least four policy
years.
While the Nonforfeiture Benefit
is in effect, all of the
provisions of the Comprehensive
Long-Term Care Rider remain
applicable to you. The maximum
total Nonforfeiture Benefit will
be the greater of:
(a) Three month's maximum
monthly benefit and
(b) The sum of all charges
deducted for the Comprehensive
Long-Term Care Rider (with the
Nonforfeiture Benefit). This
amount excludes any charges that
may have previously been waived
while rider benefits were being
paid.
-------------------------------------------------------------------------------
III-1
APPENDIX III: STATE POLICY AVAILABILITY AND/OR VARIATIONS OF CERTAIN FEATURES
AND BENEFITS
--------------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
--------------------------------------------------------------------------------
CONNECTICUT See "Long Term Care Services/SM/ THE FOLLOWING INFORMATION
Rider" under "Other benefits you REPLACES FIRST THREE PARAGRAPHS
can add by rider" in "More IN THIS SECTION:
information about policy
features and benefits"
The rider provides for the
acceleration of all or part of
the policy death benefit as a
payment of a portion of the
policy's death benefit each
month as a result of the insured
person being a chronically ill
individual who is receiving
qualified long-term care
services in accordance with a
plan of care and who will
require continuous care for the
remainder of his or her life.
Benefits accelerated under this
rider will be treated as a lien
against the policy death benefit
unless benefits are being paid
under the optional Nonforfeiture
Benefit. While this rider is in
force and before any
continuation of coverage under
the optional Nonforfeiture
Benefit, if elected, policy face
amount increases and death
benefit option changes from
Option A to Option B are not
permitted.
An individual qualifies as
"chronically ill" if they have
been certified by a licensed
health care practitioner as
being expected to require
lifetime confinement in a
long-term care facility or in a
home due to injury or sickness;
or requiring substantial
supervision to protect such
individual from threats to
health and safety due to
cognitive impairment.
Benefits are payable once we
receive: 1) a written
certification from a U.S.
licensed health care
practitioner that the insured
person is a chronically ill
individual who is receiving
qualified long-term care
services in accordance with a
plan of care and will require
continuous care for the rest of
his or her life; 2) proof that
the "elimination period," as
discussed below, has been
satisfied; and 3) written notice
of claim and proof of loss in a
form satisfactory to us. In
order to continue monthly
benefit payments, we require
recertification by a U.S.
licensed health care
practitioner every twelve months
from the date of the initial or
subsequent certification that
the insured person is still a
chronically ill individual
receiving qualified long-term
care services in accordance with
a plan of care and will require
continuous care for the
remainder of his or her life.
Otherwise, unless earlier
terminated due to a change in
status of the insured or payout
of the maximum total benefit
amount, benefit payments will
terminate at the end of the
twelve month period. This rider
may not cover all of the costs
associated with long-term care
services during the insured
person's period of coverage.
For a more complete description
of the terms used in this
section and conditions of this
rider, please consult your rider
policy form.
The "Extension of Benefits"
feature is not available.
--------------------------------------------------------------------------------
FLORIDA See "Liquidity Rider" under The waiver of surrender charges
"Other benefits you can add by applies even if the policy is
rider" in "More information exchanged or replaced in the
about policy features and first ten years in a 1035
benefits" exchange. The refund of premium
charges applies even if the
policy is exchanged or replaced
in the first two years in a 1035
exchange. The refund of the
administrative charges applies
even if the policy is exchanged
or replaced in the first six
years in a 1035 exchange.
--------------------------------------------------------------------------------
III-2
APPENDIX III: STATE POLICY AVAILABILITY AND/OR VARIATIONS OF CERTAIN FEATURES
AND BENEFITS
----------------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
----------------------------------------------------------------------------------
FLORIDA Long Term Care Services/SM/ Rider In Florida, we refer to this
(CONTINUED) rider as the "Long Term Care
Insurance Rider" (Rider Form No.
R12-10FL).
See "Long Term Care Services The monthly charge per $1,000 of
Rider/SM/" in "Risk/benefit the amount for which we are at
summary: Charges and expenses risk is as follows:
you will pay"
With the optional Nonforfeiture
benefit:
Highest: $1.19
Lowest: $0.07
Representative: $0.17
Without the optional
Nonforfeiture benefit:
Highest: $1.19
Lowest: $0.07
Representative: $0.17
See "Long Term Care Services/SM/ This rider is available at issue
Rider" under "Other benefits you for insured persons aged between
can add by rider" in "More 20 and 67.
information about policy
features and benefits"
ELIMINATION PERIOD
The "Elimination Period"
subsection is replaced in its
entirety with the following:
. Elimination Period. The
Long-Term Care Insurance Rider
has an elimination period that
is the required period of time
while the rider is in force that
must elapse before any benefit
is available to the insured
person under this rider. The
elimination period is 90 days,
beginning on the first day of
any qualified long-term care
services that are provided to
the insured person. Generally,
benefits under this rider will
not be paid until the
elimination period is satisfied,
and benefits will not be
retroactively paid for the
elimination period. The
elimination period can be
satisfied by any combination of
days of a long-term care
facility stay or days of home
health care, and the days do not
have to be continuous. There is
no requirement that the
elimination period must be
satisfied within a consecutive
period of 24 months starting
with the month in which such
services are first provided. The
elimination period must be
satisfied only once while this
rider is in effect.
See "Long Term Care Services/SM/ PERIOD OF COVERAGE
Rider" under "Other benefits you The first paragraph of the
can add by rider" in "More "Period of coverage" subsection
information about policy is replaced in its entirety with
features and benefits" the following:
. PERIOD OF COVERAGE. The
period of coverage is the period
of time during which the insured
receives services that are
covered under the Long-Term Care
Insurance Rider and for which
benefits are payable. This
begins on the first day covered
services are received after the
end of the elimination period. A
period of coverage will end on
the earliest of the following
dates:
1. the date we receive the
notice of release which must be
sent to us when the insured
person is no longer receiving
qualified long-term care
services;
2. the date we determine the
insured person is no longer
eligible to receive qualified
long-term care services under
this rider;
3. the date you request that we
terminate benefit payments under
this rider;
----------------------------------------------------------------------------------
III-3
APPENDIX III: STATE POLICY AVAILABILITY AND/OR VARIATIONS OF CERTAIN FEATURES
AND BENEFITS
--------------------------------------------------------------------------------
STATE FEATURES AND BENEFITS AVAILABILITY OR VARIATION
--------------------------------------------------------------------------------
FLORIDA 4. the date the accumulated
(CONTINUED) benefit lien amount equals the
maximum total benefit (or if
your coverage is continued as a
Nonforfeiture benefit, the date
the maximum total Nonforfeiture
Benefit has been paid out);
5. the date you surrender the
policy (except to the extent of
any Nonforfeiture Benefit you
may have under the rider);
6. the date we make a payment
under the living benefits rider
(for terminal illness) if it
occurs before coverage is
continued as a Nonforfeiture
Benefit; or
7. the date of death of the
insured person.
PREEXISTING CONDITION
No benefits will be provided
under this rider during the
first 180 days from the
effective date of the policy for
long-term care services received
by the insured person due to a
preexisting condition. However,
each day of services received by
the insured person for a
preexisting condition during the
first 180 days that this rider
is in force will count toward
satisfaction of the elimination
period.
See "Long Term Care Services/SM/ The following paragraph replaces
Rider" under "Optional rider the first paragraph in this
charges" in "More information section in its entirety:
about certain policy charges"
. LONG-TERM CARE INSURANCE
RIDER. If you choose this rider
without the Nonforfeiture
Benefit, on a guaranteed basis,
we may deduct between $0.07 and
$1.19 per $1,000 of the amount
for which we are at risk under
the rider from your policy
account value each month. If you
choose this rider with the
Nonforfeiture Benefit, on a
guaranteed basis, we may deduct
between $0.07 and $1.19 per
$1,000 of the amount for which
we are at risk under the rider.
We will deduct this charge until
the insured reaches age 121
while the rider is in effect,
but not when rider benefits are
being paid. The amount at risk
under the rider depends on the
death benefit option selected
under the policy. For policies
with death benefit Option A, the
amount at risk for the rider is
the lesser of (a) the current
policy face amount, minus the
policy account value (but not
less than zero); and (b) the
current long-term care specified
amount. For policies with death
benefit Option B, the amount at
risk for the rider is the
current long-term care specified
amount. The current monthly
charges for this rider may be
lower than the maximum monthly
charges.
--------------------------------------------------------------------------------
III-4
APPENDIX III: STATE POLICY AVAILABILITY AND/OR VARIATIONS OF CERTAIN FEATURES
AND BENEFITS
Requesting more information
--------------------------------------------------------------------------------
The Statement of Additional Information ("SAI"), dated December 31, 2015, is
incorporated into this prospectus by reference and is available upon request,
free of charge, by calling our toll free number at 1-800-777-6510 (for U.S.
residents) or 1-704-341-7000 (outside of the U.S.) and requesting to speak with
a customer service representative. You may also request one by writing to our
operations center at P.O. Box 1047, Charlotte, NC 28201-1047. The SAI includes
additional information about the registrant. You can make inquiries about your
policy and request personalized illustrations by calling our toll free number
at 1-800-777-6510 (for U.S. residents) or 1-704-341-7000 (outside of the U.S.),
or asking your financial professional.
You may visit the SEC's web site at www.sec.gov to view the SAI and other
information (including other parts of a registration statement) that relates to
MONY America Variable Account K and the policies. You can also review and copy
information about MONY America Variable Account K, including the SAI, at the
SEC's Public Reference Room in Washington, D.C. or by electronic request at
publicinfo@sec.gov or by writing the SEC's Public Reference Section, at 100 F
Street, N.E., Washington, D.C. 20549. You may have to pay a duplicating fee. To
find out more about the Public Reference Room, call the SEC at 1-202-551-8090.
SEC File Number: 811-22886
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
Who is MONY Life Insurance Company of America? 2
Ways we pay policy proceeds 2
Distribution of the policies 2
Underwriting a policy 2
Insurance regulation that applies to MONY America 2
Custodian and independent registered public accounting firm 2
Financial statements 2
#76323
MONY Life Insurance Company of America
SUPPLEMENT DATED DECEMBER 31, 2015 TO PROSPECTUS DATED DECEMBER 31, 2015 FOR
INCENTIVELIFE OPTIMIZER(R) III
--------------------------------------------------------------------------------
This Supplement concerns an additional investment option under our
IncentiveLife Optimizer(R) III policy ("your policy"). The additional
investment option is our Market Stabilizer Option(R) ("MSO"), which is
available to you, if you have received this Supplement. The MSO gives you the
opportunity to earn interest that we will credit based in part on the
performance of the S&P 500 Price Return Index, excluding dividends, over
approximately a one year period. Any amount that you decide to invest in the
MSO is allocated to a "Segment", each of which has a specific start date and a
limited duration. On the final day of the Segment, the index-linked return
associated with that Segment will be applied to your Segment Account Value (as
defined in the MSO Prospectus), and may be positive, zero or negative. Please
be aware that the possibility of a negative return on this investment at the
end of a Segment Term could result in a significant loss of principal.
The purpose of this Supplement is solely to add to the IncentiveLife
Optimizer(R) III Prospectus dated December 31, 2015 (the "Optimizer
Prospectus") a very limited amount of information about the MSO. Much more
complete information about the MSO is contained in a separate Market Stabilizer
Option(R) Prospectus ("MSO Prospectus") dated May 1, 2015. All of the
information in the Optimizer Prospectus also continues to remain applicable,
except as otherwise provided in this Supplement (or any other supplement to the
Optimizer Prospectus) or in the MSO Prospectus.
Accordingly, you should read this Supplement in conjunction with the Optimizer
Prospectus (and any other supplements thereto) and the MSO Prospectus. We will
send you another copy of any prospectus or supplement without charge upon
request. Please contact the customer service group referenced in the Optimizer
Prospectus.
GROWTH CAP RATE AVAILABLE DURING INITIAL YEAR
If you allocate policy account value to any Segment that commences during the
first year that the MSO is available to you under your policy, you are eligible
for a Growth Cap Rate that is at least 15%. Please see "Growth Cap Rate
Available During Initial Year" in the "Description of the Market Stabilizer
Option(R)" section of the MSO Prospectus for more details.
NO TRANSFER CHARGES IN CONNECTION WITH THE MSO
Although we generally reserve the right to impose up to a $25 charge for
transfers under your policy, we will never apply this charge for any transfers
into or out of the MSO.
Accordingly, the following language is added to footnote 7 on page 9 of the
Optimizer Prospectus (which appears in the section entitled "Tables of policy
charges"): Nor will this charge apply to any transfers to or from any Market
Stabilizer Option(R) ("MSO") that we make available as an investment option
under a Policy or any transfers to or from any MSO Holding Account. Please
refer to the MSO Prospectus for information about the MSO and the related
"Holding Account."
CHARGES FOR THE MSO
If you allocate any of your policy account value to the MSO, several types of
charges or deductions would or could result. To reflect these, the following
items are added to the chart entitled "Periodic charges other than underlying
trust portfolio operating expenses" on page 7 of the Optimizer Prospectus and
also replace in their entirety the items in the chart in the "Fee Table
Summary" section of the MSO Prospectus:
-----------------------------------------------------------------------------------------------------------
OPTIONAL RIDER CHARGES WHEN CHARGE IS DEDUCTED MAXIMUM AMOUNT THAT MAY BE DEDUCTED
-----------------------------------------------------------------------------------------------------------
MARKET STABILIZER OPTION(R)
(MSO)/(1)/
MSO VARIABLE INDEX BENEFIT On the MSO Segment Start Date 0.75% of policy account value
CHARGE allocated
MSO VARIABLE INDEX At the beginning of each policy month 1.65% calculated as an annual % of
SEGMENT ACCOUNT CHARGE during the MSO Segment Term your Segment Account Value/(2)/
MSO LOAN SPREAD/(3)/ FOR On each policy anniversary (or on loan 5%
AMOUNTS OF POLICY LOANS termination, if earlier)
ALLOCATED TO MSO SEGMENT
MSO EARLY DISTRIBUTION On surrender or other distribution 75% of Segment Account Value/(4)/
ADJUSTMENT (including loan) from an MSO Segment
prior to its Segment Maturity Date
-----------------------------------------------------------------------------------------------------------
(1)Please refer to the MSO Prospectus for information about the MSO and related
charges and deductions, as well as the meaning of special terms that are
relevant to the MSO (such as "Segment," "Segment Term," "Segment Start
Date," "Segment Account Value" and "Early Distribution Adjustment").
(2)Currently we deduct this charge at a 0.65% annual rate, rather than at the
maximum rate shown.
(3)We charge interest on policy loans but credit you with interest on the
amount of the policy account value we hold as collateral for the loan. The
"spread" is the difference between the interest rate we charge you on a
policy loan and the interest rate we credit to you on the amount of your
policy account value that we hold as collateral for the loan. Please refer
to the MSO Prospectus for more information.
(4)The actual amount of Early Distribution Adjustment is determined by a
formula that depends on, among other things, how a specified widely
published stock market index has performed since the Segment Start Date. The
maximum amount of the adjustment would occur if there is a total
distribution at a time when that index had declined to zero. Please refer to
the MSO prospectus for more information about the index and Early
Distribution Adjustment.
EVM 21 (1/16) #37899
NB/IF Cat #154172 (1/16)
TRANSFERS INTO AND OUT OF THE MSO
<R>
If you elect to transfer account value to the MSO, there must be sufficient
funds remaining in the guaranteed interest option to cover the Charge Reserve
Amount (as defined in the MSO Prospectus). There are also additional
restrictions that may apply. For more information about transfers into and out
of the MSO, see "Transfers" in the "Description of the Market Stabilizer
Option(R)" section of the MSO Prospectus.
</R>
NO PAID-UP DEATH BENEFIT GUARANTEE OR EXTENDED NO LAPSE GUARANTEE
The paid-up death benefit guarantee and extended no lapse guarantee are not
applicable to your policy. Accordingly, please ignore all references to the
paid-up death benefit guarantee and extended no lapse guarantee in the MSO
Prospectus.
HOW WE ALLOCATE CHARGES AMONG YOUR INVESTMENT OPTIONS
If you allocate any policy account value to the MSO, our procedures for
allocating the policy's monthly deductions among the investment options you are
using is significantly different than in the absence of the MSO. Accordingly,
the following text is added at the end of the section entitled "How we allocate
charges among your investment options" on page 10 of the Optimizer Prospectus:
Substantially different procedures apply, however, if you allocate any of your
policy account value to a Segment under the MSO investment option. In that
case, for example, you will be required to maintain a certain amount of policy
account value (the Charge Reserve Amount) in the policy's unloaned guaranteed
interest option. (You will not be subject to any Charge Reserve Amount
requirement, however, at any time when none of your policy account value is
invested in any MSO Segment.) The Charge Reserve Amount at the beginning of any
Segment is the estimated amount required to pay all monthly deductions under
your policy (including, but not limited to, charges for the MSO and any
optional riders) for the remainder of the Segment Term.
While any of your policy account value is invested in any Segment, we will take
all of your policy's monthly deductions (including, but not limited to, the
monthly deductions under the MSO and optional riders) solely from the unloaned
guaranteed interest option, rather than from the investment options from which
those charges otherwise would be deducted. If you have insufficient policy
account value in the unloaned guaranteed interest option to pay a monthly
deduction during any Segment Term, we will first take the balance of the
deduction proportionately from any variable investment options (other than any
Segments) that you are then using. But, if insufficient policy account value
remains in any such other investment options to cover the full balance of the
monthly deduction, we will take the remainder of the monthly deduction from any
MSO Segments in which you have account value invested. We will apply these
procedures for allocating deductions for policy charges automatically at any
time you have any amounts invested in a Segment, and no contrary instructions
from you would apply during the Segment Term.
If we have to make any distribution from an MSO Segment, including (among other
things) to pay any surrender or loan proceeds or any charge deduction from a
Segment, there will generally be negative consequences for you. Among other
things, an Early Distribution Adjustment would apply, which would usually
reduce your policy values, in many cases substantially. In some cases, such an
Early Distribution Adjustment may apply without any action on your part. This
could happen, for example, if the Charge Reserve Amount and funds you have
invested in options other than the MSO are insufficient to pay a monthly
deduction (i) due to poor investment performance of those options or (ii) due
to any permitted increases in charges that we have made above their current
rates.
Please refer to the MSO Prospectus for detailed information about the above
procedures.
MAKING WITHDRAWALS FROM YOUR POLICY
<R>
If you have allocated policy amounts to the MSO and plan to take a withdrawal
from your policy, significantly different procedures and additional
restrictions may apply. Please see "Withdrawals" in the "Description of the
Market Stabilizer Option(R)" section of the MSO Prospectus for more information.
</R>
BORROWING FROM YOUR POLICY
<R>
If you have allocated policy amounts to the MSO and plan to take a loan from
your policy, significantly different procedures and additional restrictions may
apply. Please see "Loans" in the "Description of the Market Stabilizer
Option(R)" section of the MSO Prospectus for more information.
</R>
SURRENDERING YOUR POLICY
<R>
If you have allocated policy amounts to the MSO and plan to surrender your
policy, significantly different procedures and additional restrictions may
apply. Please see "Cash Surrender Value, Net Cash Surrender Value and Loan
Value" in the "Description of the Market Stabilizer Option(R)" section of the
MSO Prospectus for more information.
</R>
CANCELING YOUR POLICY
<R>
If you have allocated policy amounts to the MSO, different procedures may
apply. Please see "Your right to cancel within a certain number of days" in the
"Description of the Market Stabilizer Option(R)" section of the MSO Prospectus
for more information about canceling your policy.
</R>
MONY Life Insurance of America
525 Washington Boulevard
Jersey City, NJ 07310
Copyright 2016 MONY Life Insurance Company of America. All rights reserved.
IncentiveLife Optimizer(R) III is issued by MONY Life Insurance Company of
America
and is a registered trademark of AXA Equitable Life Insurance Company.
2