1933 Act File No. 2-98441
1940 Act File No. 811-4327
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 19
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact Name of Trust: Sentry Variable Life Account I
B. Name of Depositor: Sentry Life Insurance Company
C. Complete Address of Depositor's Principal Executive Offices:
1800 North Point Drive, Stevens Point, WI 54481
D. Name and Address of Agent for Service:
William M. O'Reilly, Esq.
Sentry Life Insurance Company
1800 North Point Drive
Stevens Point, WI 54481
It is proposed that this filing will become effective
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[x] on May 1, 2001, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
E. Title and Amount of Securities Being Registered: Individual Flexible
Premium Variable Life Insurance Policies
F. Approximate date of proposed public offering:
[ ] Check box if it is proposed that this filing will become effective on (date)
at (time) pursuant to Rule 487.
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-8B-2
N-8B-2 Item Caption in Prospectus
1 ................................ The Company, The Variable Life Account
2 ................................ The Company
3 ................................ Not Applicable
4 ................................ Distribution of the Policy
5 ................................ The Variable Life Account
6(a) ............................. Not Applicable
(b) .............................. Not Applicable
9 ................................ Legal Proceedings
10 ............................... The Policy
11 ............................... Investments of the Variable Life Account
12 ............................... Investments of the Variable Life Account
13 ............................... Charges and Deductions
14 ............................... The Policy
15 ............................... The Variable Life Account
16 ............................... Investments of the Variable Life Account
17 ............................... Policy Benefits and Rights
18 ............................... The Policy
19 ............................... Not Applicable
20 ............................... Not Applicable
21 ............................... Not Applicable
22 ............................... Not Applicable
23 ............................... Not Applicable
24 ............................... Not Applicable
25 ............................... The Company
26 ............................... Management of the Company
27 ............................... The Company
28 ............................... The Company, Management of the Company
29 ............................... The Company
30 ............................... The Company
31 ............................... Not Applicable
32 ............................... Not Applicable
33 ............................... Not Applicable
34 ............................... Not Applicable
35 ............................... The Company
37 ............................... Not Applicable
38 ............................... Distribution of the Policy
39 ............................... Distribution of the Policy
40(a) ............................ Distribution of the Policy
41(a) ............................ Distribution of the Policy
42 ............................... Not Applicable
43 ............................... Distribution of the Policy
44 ............................... The Policy
45 ............................... Not Applicable
46 ............................... Policy Benefits and Rights
47 ............................... Not Applicable
48 ............................... Not Applicable
49 ............................... Not Applicable
50 ............................... Not Applicable
51 ............................... The Company, The Policy
52 ............................... Investments of the Variable Life Account
53 ............................... Federal Tax Status
54 ............................... Financial Statements
55 ............................... Not Applicable
PART I
SELF-DIRECTED LIFE
A FLEXIBLE LIFE INSURANCE POLICY
PROSPECTUS
MAY 1, 2001
Funded by T. Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity Series,
Inc., T. Rowe Price International Series, Inc., and Janus Aspen Series
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Issued by
SENTRY VARIABLE LIFE ACCOUNT I
and
SENTRY LIFE INSURANCE COMPANY
The life insurance policy described in this Prospectus is a flexible premium
variable life insurance policy (the "Policy") offered by Sentry Life Insurance
Company and designed for individuals. The Policy provides life insurance
protection until the Policy Anniversary Date on or after your 95th birthday.
The Cash Value of the Policy is allocated to the Sentry Variable Life Account I
(the "Variable Life Account"), which is a segregated investment account of
Sentry Life Insurance Company. The Variable Life Account invests in shares of T.
Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity Series, Inc., T. Rowe
Price International Series, Inc., and Janus Aspen Series Institutional Shares
("Janus Aspen Series"), each an open-end management investment company. Through
the Variable Life Account, you may invest in the following Portfolios:
T. ROWE PRICE FIXED INCOME SERIES, INC.
o T. Rowe Price Prime Reserve Portfolio
o T. Rowe Price Limited-Term Bond Portfolio
T. ROWE PRICE EQUITY SERIES, INC.
o T. Rowe Price Personal Strategy Balanced Portfolio
o T. Rowe Price Equity Income Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
o T. Rowe Price International Stock Portfolio
Janus Aspen Series
o Balanced Portfolio
o Growth Portfolio
o Aggressive Growth Portfolio
o Capital Appreciation Portfolio
o Worldwide Growth Portfolio
As the owner of the Policy, you may choose one or more Portfolios in
which to invest; however, you bear the complete investment risk for the amount
you allocate to the Variable Life Account. The Cash Value of your Policy, and
under certain circumstances, the death benefit, may increase or decrease
depending on the investment experience of the Variable Life Account.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectuses for T. Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity
Series, Inc., T. Rowe Price International Series, Inc., and Janus Aspen Series
accompany this Prospectus.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
SENTRY LIFE INSURANCE COMPANY
1800 North Point Drive
Stevens Point, WI 54481
Telephone (800)533-7827
The date of this Prospectus is May 1, 2001
TABLE OF CONTENTS
PAGE
Definitions 04
Summary 05
The Company 07
The Variable Life Account 08
Investments of the Variable Life Account 08
Initial Investment Selection 08
Transfers 08
Telephone Transfers 09
T. Rowe Price Fixed Income Series, Inc., T. Rowe
Price Equity Series, Inc., T. Rowe Price
International Series, Inc., and Janus
Aspen Series 09
Substitution of Securities 11
The Policy 11
General 11
How to Purchase a Policy 11
Free Look 11
Medical Examination 11
Right to Exchange the Policy 12
Illustrations 12
Premiums 12
Maximum Premium Limitation 13
Death Benefit Guarantee 13
Grace Period 14
Reinstatement 14
Charges and Deductions 14
Deductions from Premiums 14
Deductions from the Variable Life Account 14
Deductions from Cash Value 15
Deductions from Surrendered Values 15
Annual Expenses of Portfolios of T. Rowe Price Fixed
Income Series, Inc., T. Rowe Price Equity Series,
Inc., T. Rowe Price International Series, Inc.,
and Janus Aspen Series 17
Group Arrangements 17
Policy Benefits and Rights 18
Death Benefit 18
Death Benefit Options 18
Corridor Percentages 18
Changing Death Benefit Options 19
Changing the Specified Amount 19
Effects of Changing the Specified Amount 19
Policy Maturity 20
Cash Value 20
Determination of Accumulation Unit 20
Policy Surrender 21
Partial Surrender 21
Full Surrender 21
Policy Loans 22
Allocation of Loans 22
Interest Charged 22
Interest Credited 22
Lapse Due to Loan 22
Loan Repayment 22
Other Policy Provisions 23
Policy Owner 23
Contingent Policy Owner 23
Changing the Policy Owner or Contingent Policy Owner 23
Beneficiary 23
Changing the Beneficiary 23
Assignment 23
Incontestability 23
Misstatement of Age or Sex 23
No Dividends 23
Optional Settlement Plans 24
Suspension of Payments 24
Federal Tax Status 24
Introduction 24
Modified Endowment Contract 25
Diversification 26
Tax Treatment of the Policy 26
Tax Treatment of Settlement Options 27
Policy Proceeds 27
Multiple Policies 27
Tax Treatment of Assignments 27
Qualified Plans 27
Income Tax Withholding 27
Variable Life Account Voting Rights 27
Voting Instructions Disregarded 28
Management of the Company 28
Directors and Officers 28
Distribution of the Policy 29
State Regulation 29
Reports to Policy Owners 29
Legal Proceedings 30
Experts 30
Legal Opinions 30
Financial Statements 30
Appendix A - Illustration of Benefits 62
DEFINITIONS
Following are definitions of certain terms used in this Prospectus.
Anniversary Date or The same day and month each year calculated from the
Policy Anniversary Date date the Policy was first issued (Policy Date).
Beneficiary The person named in the application, unless changed,
entitled to receive the Death benefit when it
becomes payable.
Cash Surrender Value The amount available in cash, after deducting any
outstanding policy loans and the full surrender
charge, if you voluntarily terminate the Policy
before it matures or before the death benefit is
paid.
Cash Value The amount available in cash, without deducting any
outstanding policy loans or surrender charges, if
you voluntarily terminate the Policy before it
matures or before the death benefit is paid.
It is equal to the sum of all Subaccount Cash Value
and any Cash Value held in the General Account to
secure a policy loan.
Company Sentry Life Insurance Company at its home office
located at 1800 North Point Drive, Stevens Point,
WI 54481, telephone (800)533-7827.
Mutual Fund(s) The Mutual Funds designated in the Policy as
investment options of the Variable Life Account.
General Account The General Account of the Company. The Variable
Life Account is separate from the General Account.
Initial Investment The 25-day period immediately following the date
Period the Policy is issued.
Insured The person whose life is covered under the Policy.
It is assumed the Insured and the Policy Owner are
the same person and both are referred to as "you"
in this Prospectus.
Maturity Date The date on which you will be paid the Cash Value
of the Policy, less any outstanding Policy
indebtedness, PROVIDED the Policy is in effect on
that date. The Maturity Date is the anniversary
date of the Policy on or after your 95th birthday.
Monthly Processing Day The day each month when charges under the Policy are
deducted from the Variable Life Account.
Net Premiums Gross premiums less any amounts deducted for front-
end sales charges and premium taxes.
Policy Date The day, month and year that the Policy becomes
effective and from which the Policy Anniversary Date
is determined.
Policy Issue Date The day, month and year that underwriting is
completed and the Company issues the Policy.
Policy Month The period of time starting on one Monthly
Processing Day and ending the day before the next
Monthly Processing Day.
Policy Owner The person named as the owner of the Policy on the
application, unless subsequently changed. It is
assumed the Insured and the Policy Owner are the
same person and both are referred to as "you" in
this Prospectus.
Policy Year The period of time from one Policy Anniversary Date
to the day before the next Policy Anniversary Date.
Portfolio An investment option that is a segment of a Mutual
Fund constituting a separate and distinct class of
shares.
Specified Amount The amount of the initial death benefit payable
under the Policy, plus or minus any subsequent
changes to that amount.
Subaccount A segment of the Variable Life Account that invests
in a Mutual Fund or Portfolio.
Target Surrender The premium, which is shown on the specification
Premium page of your Policy, that is used to calculate the
deferred sales charge. The Target Surrender Premium
is based on the guideline annual premium pursuant to
rules adopted under the Investment Company Act of
1940.
Valuation Date The date on which the Cash Value of the Policy is
determined. The Valuation Date is each day that the
New York Stock Exchange is open for trading.
Valuation Period The period from 4:00 p.m. Eastern Time on each
Valuation Date to 4:00 p.m. Eastern Time on the next
succeeding Valuation Date.
SUMMARY
The Policy described in this Prospectus is a flexible premium individual
variable life insurance policy. Net premiums, are allocated to the Variable Life
Account for investment. The Variable Life Account is a separate account
established by Sentry Life Insurance Company (the "Company"). Through the
Variable Life Account, you can invest in one or more of the following
Portfolios:
T. ROWE PRICE FIXED INCOME SERIES, INC. JANUS ASPEN SERIES
o T. Rowe Price Prime Reserve Portfolio o Balanced Portfolio
o T. Rowe Price Limited-Term Bond Portfolio o Growth Portfolio
o Aggressive Growth Portfolio
T. ROWE PRICE EQUITY SERIES, INC. o Capital Appreciation Portfolio
o T. Rowe Price Personal Strategy o Worldwide Growth Portfolio
Balanced Portfolio
o T. Rowe Price Equity Income Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
o T. Rowe Price International Stock Portfolio
POLICY FEATURES
The Policy offers the following features:
FLEXIBLE PREMIUM PAYMENTS - The frequency and amount of premium payments can
vary, subject to certain minimum requirements. Premium payment plans are
available.
CASH VALUE - The Policy's Cash Value can be used to obtain a Policy loan, and,
if the Policy is surrendered, determines the surrender value. Depending on the
investment experience of the Variable Life Account, the Cash Value of your
Policy may increase or decrease. The Cash Value will vary with the amount of
monthly charges deducted. There is no minimum guaranteed Cash Value.
POLICY LOANS - The Policy may be used to secure a loan from the Company. The
maximum loan amount is 90% of (a) MINUS (b), where: (a) is the Policy's Cash
Value, and (b) is the full surrender charge.
SURRENDER - The Policy can be partially surrendered or completely surrendered
for the full Cash Surrender Value. The Company will deduct any applicable
surrender charges.
DEATH BENEFIT - There are two death benefit options available under the Policy.
The amount of the death benefit will depend on three factors: o the death
benefit option selected; o the Specified Amount of death benefit; and o the Cash
Value of the policy.
Under certain circumstances, the death benefit may increase or decrease
depending on the investment experience of the Variable Life Account.
GUARANTEED DEATH BENEFIT - Provided you have met certain minimum premium payment
requirements and certain other requirements, the Policy will not lapse and the
Company guarantees a death benefit.
POLICY MATURITY - If the Policy is in effect on the Policy Anniversary Date on
or after your 95th birthday, the Company will pay you the Cash Value of the
Policy, less any amounts owed for policy loans.
EXCHANGE RIGHT - Within 24 months after the Policy is issued, you may exchange
it for a life insurance policy on the life of the Insured offered by the Company
that has a fixed premium and a fixed death benefit. Any outstanding Policy loans
must be repaid before an exchange will be made.
INVESTMENT OPTIONS - You may select from among the ten available Portfolios in
which to invest the assets underlying the Policy. Subject to certain conditions
and charges, you may make transfers among the Portfolios.
FREE-LOOK PROVISION - Subject to varying state law and certain time
restrictions, the Policy may be returned to the Company if you change your mind
about purchasing it. The Policy will be canceled as if it had never been issued
and the Company will refund any premiums you paid.
GRACE PERIOD - Provided certain conditions are met, there is a 61-day grace
period in which the Policy will remain in effect even if a premium payment or
loan repayment is not made.
CHARGES AND DEDUCTIONS
Below is a summary of the charges and deductions that are applied to the Policy
described in this Prospectus. For a more complete explanation of these charges
and deductions, see the sections titled "Charges and Deductions" and "Appendix
A-Illustrations of Benefits."
FROM PREMIUM
Front-end Sales Expense Charge - 5% of each premium payment.
(There is also a deferred sales charge of 25% of the Target Surrender
Premium or 25% of the actual premium paid in the first Policy Year, if
less. Together these charges total 30%.)
Premium Taxes - Premium taxes are assessed by the state in which you reside
and currently vary by state from 0% to 3.5%.
FROM THE VARIABLE LIFE ACCOUNT
Mortality and Expense Risk Premium - Equal on an annual basis to 0.90% of
the daily net asset value of the Variable Life Account.
Death Benefit Guarantee Risk Charge - Equal on an annual basis to .15% of
the daily net asset value of the Variable Life Account.
Taxes - The Company is not currently making a deduction for income taxes
resulting from the investment operation of any Subaccount; however, it
reserves the right to do so at any time.
FROM CASH VALUE
Monthly Deduction - Deducted from Cash Value at the beginning of each
Policy Month and consists of:
Cost of Insurance for the Policy and any additional benefits provided
by rider for the Policy Month; and
Monthly Administrative Fee - $5 per Policy Month.
FROM SURRENDER VALUES
Partial Surrender Charge - A percentage of the full surrender charge.
Partial Surrender Administrative Fee - The lesser of 2% of the amount
surrendered or $25.
Full Surrender Charge - If there is no increase in the Specified Amount, it
remains the same for the first 5 Policy Years and declines in policy years
6 through 9 until it is zero. It is the sum of the following:
Contingent Deferred Administrative Expense Charge - $3.50 per $1,000
on the first $100,000 of Specified Amount, plus $1.50 per $1,000 on
the excess above the first $100,000 of Specified Amount. The maximum
contingent deferred administrative expense charge is $750;
Deferred Sales Charge - 25% of the Target Surrender Premium or of the
actual premium paid in the first Policy Year, if less; and
Additional Contingent Deferred Administrative Expense Charge and
Deferred Sales Charge which result from an increase in the Specified
Amount.
OTHER CHARGES AND FEES
Maximum Transfer Fee - $25
Maximum Service Fee for Additional Projections - $25
T. ROWE PRICE FIXED INCOME SERIES, INC., T. ROWE PRICE EQUITY SERIES, INC., T.
ROWE PRICE INTERNATIONAL SERIES, INC., AND JANUS ASPEN SERIES
There are annual operating expenses (including investment management and
administrative fees) paid out of the assets of the Portfolios.
RISK FACTORS
Following is a summary of the risks associated with the Policy:
INVESTMENT RISK - You will bear the complete investment risk for all Net
Premiums you allocate to the Variable Life Account. If the invested assets of
the Variable Life Account experience poor investment performance, the Cash Value
and, under certain circumstances, the death benefit of the Policy may decrease.
The Policy is not intended to be, nor is it suitable as, a short-term savings
vehicle.
POLICY LAPSE - Certain charges are deducted monthly from the Cash Value of the
Policy. If the guaranteed death benefit is not in effect and if the Cash Value
is insufficient to cover the monthly charges, and sufficient premiums are not
made during the 61-day grace period, the Policy will lapse and all coverage will
terminate without value.
LIMITATIONS ON CASH VALUE - The Cash Value of the Policy will vary and is not
guaranteed. The investment performance of the Variable Life Account and the
amount of monthly charges deducted affect the Cash Value.
ADVERSE TAX CONSEQUENCES - Your Policy has been designed to comply with the
definition of life insurance in the Internal Revenue Code. As a result, the
death benefit paid under the Policy should be excludable from the gross income
of your Beneficiary. Any earnings in your Policy are not taxed until you take
them out. The tax treatment of the loan proceeds and surrender proceeds will
depend on whether the Policy is considered a Modified Endowment Contract (MEC).
Proceeds taken out of a MEC are considered to come from earnings first and are
includable in taxable income. If you are younger than 591/2 when you take money
out of a MEC, you may also be subject to a 10% federal tax penalty on the
earnings withdrawn. Neither the Company nor the Company's registered sales
representatives can provide tax advice. You should consult your own tax adviser
before purchasing or making any changes to the Policy, or before exchanging,
surrendering or taking loans from the Policy.
THE COMPANY
Sentry Life Insurance Company (the "Company") is a life insurance company formed
on October 23, 1958 under the laws of the state of Wisconsin. Its home office is
located at 1800 North Point Drive, Stevens Point, Wisconsin. The Company is
authorized to write life insurance and annuity contracts in the District of
Columbia and in all states except New York. The Company is owned by Sentry
Insurance a Mutual Company ("SIAMCO"). SIAMCO is also a Wisconsin insurance
company and shares its home office with the Company at 1800 North Point Drive,
Stevens Point, Wisconsin. SIAMCO writes property and casualty insurance
nationwide. In addition to the Company, SIAMCO owns and controls, either
directly or indirectly, a group of insurance and related companies, including
Sentry Life Insurance Company of New York and Sentry Equity Services, Inc., a
securities broker-dealer.
THE VARIABLE LIFE ACCOUNT
Sentry Variable Life Account I (the "Variable Life Account") was established by
the Company's Board of Directors on February 12, 1985, under the insurance laws
of Wisconsin. The Variable Life Account is registered with the Securities and
Exchange Commission as a unit investment trust pursuant to the Investment
Company Act of 1940. However, this does not mean that the Securities and
Exchange Commission supervises the management of the Variable Life Account or
the Company.
The Variable Life Account is a "segregated asset account." This means:
o The assets of the Variable Life Account are segregated from the assets of
the Company's General Account, but remain the property of the Company.
o Other than liabilities connected with the Variable Life Account business,
the assets of Variable Life Account cannot be charged with liabilities
incurred by the Company in connection with its other business.
o The Company does not guarantee the investment performance of the Variable
Life Account.
o The income, gains, and losses, whether realized or unrealized, associated
with the investments made with the Variable Life Account's assets are
credited to or charged against the Variable Life Account without regard to
the Company's other income, gains or losses.
o Company obligations in connection with the Policy are general corporate
obligations of the Company.
INVESTMENTS OF THE VARIABLE LIFE ACCOUNT
Net Premiums (premiums paid, less applicable deductions) are allocated to the
Variable Life Account, which invests in one or more investment Portfolios of T.
Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity Series, Inc., T. Rowe
Price International Series, Inc., and Janus Aspen Series at net asset value. The
assets of the Variable Life Account are divided by investment portfolio. This
creates a series of Subaccounts within the Variable Life Account. The Company
may, from time to time, add new investment options.
As the Policy Owner, you may direct the investment of your Net Premiums into one
or more of the available investment options, subject to certain conditions, when
you complete the Policy application. You may change your selection prospectively
without cost by notifying the Company in writing. The change becomes effective
for Net Premiums received after the Company receives your written notice.
INITIAL INVESTMENT SELECTION
Prior to and during the Initial Investment Period (a 25-day period starting on
the date the Company issues the Policy, which corresponds to the 20-day free
look period, plus mailing time), your Net Premiums are invested in the T. Rowe
Price Prime Reserve Portfolio even if you selected one or more other investment
portfolios on the application. At the end of the 25-day Initial Investment
Period, your Cash Value in the T. Rowe Price Prime Reserve Portfolio will be
transferred to the investment selection or selections you chose. The Company
will automatically make this transfer without cost to you.
After the Initial Investment Period has expired, the Company will allocate your
Net Premiums to the Variable Life Account in accordance with your investment
selections.
TRANSFERS
Your Net Premiums will continue to be allocated to the Variable Life Account
Subaccounts according to the investment selection you made on the application
unless you request a transfer. You may transfer all or part of the Subaccount
Cash Values between Portfolio(s) subject to the following conditions:
1. You must request a transfer in writing and you must clearly specify three
things:
o the amount to be transferred
o the Portfolio the transfer is being made from, and
o the Portfolio the transfer is being made to.
2. The minimum amount that can be transferred is $250, or if the Cash Value in
the Subaccount is less than $250, the entire Cash Value will be
transferred.
3. You can only make four transfers in any Policy Year. The Company must
approve additional transfer requests. A request for a transfer from one
Portfolio to two Portfolios, or from two Portfolios to one Portfolio, will
count as one transfer.
4. Transfers will become effective during the next Valuation Period following
receipt of the written request, provided the written request contains all
the necessary information.
5. A fee of $25 per transfer may be deducted from the amount transferred.
Currently, the Company does not deduct the transfer fee, but reserves the
right to do so in the future.
The Company reserves the right to terminate, suspend or modify the transfer
privilege at any time and without notice.
The Company may add new investment options from time to time, and you may have
the opportunity to select the added investments subject to limitations imposed
by the Company.
TELEPHONE TRANSFERS
Transfers by telephone are permitted if you follow these steps:
(1) Check the "Yes" box in the telephone transfer section of the Policy
application form.
(2) Telephone the Company at (800)533-7827. Be prepared to give the customer
service representative specific information about the Policy, including the
Policy number, and your social security number and/or birth date. You may
be required to provide additional information concerning the Policy in
order to verify that the request is genuine.
(3) Specific detail must be given to the customer service representative as to
the amount to be transferred, the Portfolio the transfer is being made
from, and the Portfolio the transfer is being made to.
Transfers requested before 3 p.m. Central Time will take effect
that day. Transfers requests received after 3 p.m. Central Time will take effect
on the next business day after the request is received.
To prevent losses due to unauthorized or fraudulent transfer instructions, the
Company will use reasonable procedures to ensure that a telephone transfer
request is genuine. The Company will not be liable for losses incurred in
complying with a telephone transfer request it believes is genuine if reasonable
procedures were followed to confirm the legitimacy of the request.
The Company has the right to reject any telephone transfer request.
T. ROWE PRICE FIXED INCOME SERIES, INC. AND T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE INTERNATIONAL SERIES, INC., AND JANUS ASPEN SERIES
Each Subaccount of the Variable Life Account invests in one Portfolio of T. Rowe
Price Fixed Income Series, Inc., T. Rowe Price Equity Series, Inc., T. Rowe
Price International Series, Inc., or Janus Aspen Series (collectively, the
Funds).
Shares of the Funds may be offered in connection with certain variable annuity
contracts and variable life insurance policies of various insurance companies
that may or may not be affiliated with the Company. Certain Funds may also be
sold directly to qualified plans. The Funds believe that offering their shares
in this manner will not be disadvantageous to you.
The Company may enter into certain arrangements under which it is reimbursed by
the Funds' advisers, distributors and/or affiliates for the administrative
services which it provides to the Portfolios.
The investment objective and policies of certain Portfolios are similar to the
investment objectives and policies of other mutual funds that certain of the
same investment advisers manage. Although the objectives and policies may be
similar, the investment results of the Portfolios may be higher or lower than
the results of such other mutual funds. The investment advisers cannot
guarantee, and make no representation, that the investment results of similar
funds will be comparable even though the Portfolios have the same investment
advisers.
A Portfolio's performance may be affected by risks specific to certain types of
investments, such as foreign securities, derivative investments, non-investment
grade debt securities, initial public offerings (IPOs) or companies with
relatively small market capitalizations. IPOs and other investment techniques
may have a magnified performance impact on a Portfolio with a small asset base.
A Portfolio may not experience similar performance as its assets grow.
T. Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity Series, Inc., and
T. Rowe Price International Series, Inc., are diversified open-end management
investment companies of the series type. All are registered with the Securities
and Exchange Commission under the Investment Company Act of 1940.
T. Rowe Price Associates, Inc., located at 100 East Pratt Street, Baltimore
Maryland, 21202, is registered with the Securities and Exchange Commission as an
investment adviser and serves as investment adviser for T. Rowe Price Fixed
Income Series, Inc. and T. Rowe Price Equity Series, Inc. As the investment
adviser, T. Rowe Price Associates, Inc. is responsible for selection and
management of the Portfolio investments. T. Rowe Price Associates, Inc. is not
affiliated with the Company, and the Company has no legal responsibility for the
management or operation of the Portfolios.
T. Rowe Price International, Inc., the investment adviser for T. Rowe Price
International Series, Inc., is a wholly-owned subsidiary of T. Rowe Price
Associates, Inc. Its offices are located at 100 East Pratt Street, Baltimore,
Maryland 21202.
A summary of the investment objective of each Portfolio is set forth below.
There is no assurance that any Portfolio will achieve its objective. More
detailed information is contained in each Portfolio's prospectus, including the
risks associated with the investments and the investment techniques of each
Portfolio.
T. Rowe Price Prime Reserve Portfolio. The investment objectives of the T. Rowe
Price Prime Reserve Portfolio are preservation of capital, liquidity, and
consistent with these, the highest possible current income. It seeks to attain
these objectives by investing in high-quality, U.S. dollar-denominated money
market securities.
T. Rowe Price Limited-Term Bond Portfolio. The investment objective of the T.
Rowe Price Limited-Term Bond Portfolio is to seek a high level of income
consistent with moderate fluctuations in principal value by investing primarily
in short- and intermediate-term investment-grade debt securities.
T. Rowe Price Personal Strategy Balanced Portfolio. The investment objective of
the T. Rowe Price Personal Strategy Balanced Portfolio is to seek the highest
total return over time consistent with an emphasis on both capital appreciation
and income. It seeks to attain these objectives by investing in a diversified
Portfolio typically consisting of approximately 60% stocks, 30% bonds, and 10%
money market securities.
T. Rowe Price Equity Income Portfolio. The investment objective of the T. Rowe
Price Equity Income Portfolio is to seek substantial dividend income as well as
long-term growth of capital by investing in stocks of large, established
companies with higher than average market dividend yields and below average
levels of valuation.
T. Rowe Price International Stock Portfolio. The investment objective of the T.
Rowe Price International Stock Portfolio is to seek long-term growth of capital
through investments primarily in common stocks of established non-United States
companies.
Janus Aspen Series is a non-diversified open-end management company series.
Janus Aspen Series is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940. Janus Aspen Series offers multiple
Portfolios, five of which are currently offered in connection with the Policy.
Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado, 80206-4928,
registered with the Securities and Exchange Commission as an investment adviser,
is the investment adviser to Janus Aspen Series and is responsible for the
day-to-day management of the investment portfolios and other business affairs.
Janus Capital Corporation is not affiliated with the Company, and the Company
has no responsibility for the management or operations of Janus Aspen Series.
A summary of the investment objectives of the Janus Aspen Series Portfolios are
set forth below. There is no assurance that the Portfolios will achieve their
objectives. More detailed information is contained in each Portfolio's
prospectus, including the risks associated with the investments and the
investment techniques of the Portfolios.
Balanced Portfolio. The investment objective of the Balanced Portfolio is to
seek long-term growth of capital balanced by current income. The Portfolio
normally invests 40% to 60% of its assets in securities selected primarily for
their growth potential, and 40% to 60% of its assets in securities selected
primarily for their income potential. The Portfolio normally invests at least
25% of its assets in fixed income securities.
Growth Portfolio. The investment objective of the Growth Portfolio is to seek
long-term growth of capital in a manner consistent with preservation of capital.
The Portfolio pursues its objectives by investing primarily in common stocks
selected for their growth potential. Although the Portfolio can invest in
companies of any size, it generally invests in larger, more established
companies.
Capital Appreciation Portfolio. The investment objective of the Capital
Appreciation Portfolio is to seek long-term growth of capital through a
non-diversified Portfolio that pursues its objective by investing primarily in
common stocks selected for their growth potential. The Portfolio may invest in
companies of any size, from larger, well-established companies to smaller,
emerging growth companies.
Aggressive Growth Portfolio. The investment objective of the Aggressive Growth
Portfolio is to seek long-term growth of capital through a non-diversified
Portfolio that invests primarily in common stocks of domestic companies and some
foreign companies selected for their growth potential. As a non-diversified
Portfolio, it may hold larger positions in a smaller number of securities than a
diversified Portfolio. The Portfolio normally invests at least 50% of its equity
assets in medium-sized companies.
Worldwide Growth Portfolio. The investment objective of the Worldwide Growth
Portfolio is to seek long-term growth of capital in a manner consistent with
preservation of capital. The Portfolio pursues its investment objective by
investing primarily in common stocks of companies of any size throughout the
world. The Portfolio normally invests in issuers from at least five different
countries, including the United States. The Portfolio may at times invest in
fewer than five countries or even a single country.
SUBSTITUTION OF SECURITIES
If a Subaccount is no longer available for investment by the Variable Life
Account, or if the Company's Board of Directors determines that further
investment in a Subaccount becomes inappropriate in view of the Variable Life
Account's purposes, the Company may substitute another Subaccount already
available or that will become available for investment by the Variable Life
Account. No substitution of securities in any Subaccount may take place without
the prior approval of and subject to the requirements of the Securities and
Exchange Commission.
THE POLICY
GENERAL
The Policy described in this Prospectus is an individual flexible premium
variable life insurance policy. The Policy is designed to provide you with
insurance protection and flexibility in determining your premium payments and
death benefit. As long as there is sufficient Cash Surrender Value to pay the
monthly charges, or as long as the guaranteed death benefit is in effect, the
Policy will not lapse.
HOW TO PURCHASE A POLICY
Complete an application form and give it to your sales representative or send it
to:
Sentry Life Insurance Company
1800 North Point Drive
Stevens Point, WI 54481
The first premium payment is due on or before the date the Policy is issued. You
should send your first premium payment with the application.
Restrictions:
o The Company will not accept your application for the Policy if you are
older than age 75.
o All applications are subject to the Company's underwriting standards, and
the Company may, in its sole discretion, reject any application for any
reason.
o The initial Specified Amount of the death benefit is subject to the
Company's administrative rules. Currently, the initial Specified Amount
must be at least $50,000.
FREE LOOK
If you change your mind about purchasing the Policy, you can return it to the
Company at the address given on page 1, or to your sales representative. You
must return the Policy within 20 days (or longer in states where required) from
the date you receive it. When the Company receives the returned Policy, it will
be canceled as if it had never been issued and any premiums you paid will be
refunded. During the underwriting process and during the free look period, your
initial premium payment is allocated to the T. Rowe Price Prime Reserve
Portfolio. See "Initial Investment Selection" on page 8.
MEDICAL EXAMINATION
Insurance underwriting is designed to group applicants of the same age and sex
into categories that can be expected to produce mortality experience consistent
with that class. Based on the Company's underwriting practices, you may be
required to obtain a medical examination. Your sales representative will advise
you if it is necessary. The cost of insurance, which is deducted monthly from
Cash Value, is determined in part on your age, sex, and risk class. There are
four risk classes:
o standard non-smoker
o standard smoker
o special non-smoker
o special smoker
RIGHT TO EXCHANGE POLICY
Within 24 months after the Policy Issue Date, you may exchange the Policy for a
permanent fixed premium, fixed benefit life insurance policy issued by the
Company, subject to the following conditions:
(1) The person insured cannot be changed.
(2) Any outstanding Policy loans must be repaid and any other charges or fees
due must be paid.
(3) The new policy will have the same Policy Issue Date, issue age, and risk
classification as the original Policy.
(4) The Policy Owner and the
Beneficiary of the new policy will be the same as the Policy Owner and
Beneficiary of the original Policy
(5) You may select the amount of the
death benefit under the new policy, but it must be equal to either:
a) the initial Specified Amount of the original Policy, OR
b) the net amount at risk under the original Policy on the date of
exchange.
"Net amount at risk" means the difference between the death benefit
and the Cash Value of the Policy.
In order to exchange the Policy, you must take the following action:
o send a written request for exchange to the Company,
o return the original Policy to the Company, and
o pay any outstanding loan amounts or other charges due under the
original Policy.
If the Policy's Specified Amount is increased from the initial Specified Amount,
and the increase is not due to a change in the death benefit option, the amount
of the increase can be exchanged for a permanent fixed premium, fixed benefit
life insurance policy issued by the Company. The death benefit payable under the
new policy will equal the Specified Amount increase. You may be able to transfer
the Cash Value attributable to the Specified Amount increase under the original
Policy to the new policy. The Cash Value attributable to the increase is the
amount by which total premiums paid exceed the maximum premium limitation (see
"Maximum Premium Limitation" on page 13) for the original Policy calculated as
if the increase had not occurred. However, the Cash Value of the Specified
Amount increase will not be transferred if it would cause the Cash Surrender
Value of the original Policy to become negative.
ILLUSTRATIONS
Appendix A of this Prospectus contains illustrations of both projected Cash
Values and death benefits based on assumed returns of the Variable Life Account.
The illustrations may be helpful in understanding how the Policy works. For
illustrations not shown, contact your sales representative.
You may also request a projection of illustrative future death benefits and
policy values at any time. You must request illustrations in writing and send it
to the Company. You may be charged a maximum fee of $25 for the projection. The
illustration will be based on assumptions as to the Specified Amount of the
death benefit, anticipated earnings and future premium payments, along with
other assumptions that may be appropriate or agreed to by you and the Company.
PREMIUMS
Initial Premium The initial premium is due on or before the Policy
Date and must be paid to the Company at its home office.
Coverage will not take effect until the initial premium
has been paid and the Policy has been issued during your
lifetime.
First Year The initial premium, together with the first-year planned
Minimum Premium premiums, must be sufficient to meet the minimum premium
requirement under the death benefit guarantee provision
for the first year.
Planned Premiums Although you have the option of making flexible premium
payments, you can establish a planned premium payment
plan. This will allow you to make premium payments
annually, semi-annually, quarterly, or monthly by
automatic withdrawal from your checking account. Planned
premiums must be in the following minimum amounts, unless
the Company specifies a lower amount:
Planned Premium
Frequency of Payment Minimum Amount
Annual $200
Semi-Annual $125
Quarterly $ 75
Monthly
(Automatic Bank Withdrawal Only) $ 15
You may change the frequency and amount of planned
premiums by notifying the Company in writing. The Company
has the right to limit the amount of any increase in
planned premiums. If the Company receives any premium
payment that exceeds the planned premium specified, it
will be considered an additional premium, subject to the
"Additional Premiums" provision of the Policy, which is
discussed below.
Payment of planned premiums does not guarantee that the
Policy will not lapse. This is because even if you make a
premium payment, if the Cash Surrender Value is
insufficient to pay the monthly charges, and the grace
period expires without payment of a sufficient premium
payment or loan repayment, the Policy will lapse. How-
ever, the death benefit guarantee may be in effect, which
will guarantee payment of a death benefit even if the
Cash Surrender Value is insufficient, provided certain
conditions are met. These conditions are discussed below.
Additional You may make additional premium payments of at least $50
Premiums at any time prior to the Maturity Date of the Policy.
The Company reserves the right to limit the amount of
additional premium payments in order to meet the
requirements and restrictions of federal tax law and
related regulations. Premium limitations are set out on
the specifications page of the Policy.
Unless you instruct otherwise, all payments the Company receives will be
considered premium payments, even if there is a loan outstanding. If you are
making a loan repayment, you must state that the payment is to be applied to the
outstanding Policy loan.
MAXIMUM PREMIUM LIMITATION
In order to comply with federal tax law, the Company will limit the total amount
of premiums, both planned and additional, that may be paid during each Policy
Year. This is the "maximum premium limitation." Because the maximum premium
limitation is dependent in part on the Policy's Specified Amount, changes in the
Specified Amount may affect this limitation. In the event you pay a premium
which causes the maximum premium limitation to be exceeded, the Company will
accept only that portion of the premium up to the maximum limitation and return
the excess to you. Thereafter, no premiums will be accepted until they do not
exceed the maximum premium limitation.
DEATH BENEFIT GUARANTEE
If the minimum premium requirement described below is met, the Policy will not
lapse, even if the Cash Surrender Value is insufficient to cover the monthly
deductions when due.
The minimum premium requirement is met when the sum of all premiums paid is not
less than:
(1) the sum of all monthly death benefit guarantee premiums as shown on the
specifications page of the Policy, PLUS
(2) the current Policy indebtedness, PLUS
(3) the sum of all partial surrenders, partial surrender charges, and partial
surrender administrative fees, PLUS
(4) the sum of all monthly deductions for any additional benefits provided by a
rider to the Policy.
All sums in the minimum premium requirement include values for the current
Policy Month.
The initial monthly death benefit guarantee premium is shown on the
specifications page of your Policy. This premium will change if you increase or
decrease the Specified Amount or if you change the death benefit option. At the
time of the change, the Company will recalculate the monthly death benefit
guarantee premium based on your age, the death benefit option you have chosen,
and the new Specified Amount. Any change in the amount of the death benefit
guarantee premium will be shown on a Policy amendment which the Company will
send to you.
GRACE PERIOD
If the death benefit guarantee is not in effect, and if the Cash Surrender Value
is not sufficient to cover the monthly deduction when due, a grace period of 61
days will be allowed for you to make a premium payment or a loan repayment which
is sufficient to cover the monthly deduction. The grace period begins on the
Monthly Processing Day during which there is insufficient Cash Surrender Value.
The Company will mail a notice to your last known address that the grace period
is in effect.
The Policy will not lapse during the grace period. During the grace period, the
death benefit will equal the amount of death benefit in effect immediately prior
to the grace period, less any outstanding Policy loans and unpaid charges.
Under certain circumstances, even if there is insufficient Cash Surrender Value
to cover the monthly deduction, the Policy will not lapse if the death benefit
guarantee is in effect.
REINSTATEMENT
After a lapse, you may request that the Policy be reinstated. Policy
reinstatement is subject to the following conditions:
o You must request reinstatement in writing and it must be received by
the Company's home office within three years from the date of lapse;
AND
o The Company must receive proof that you, or if you were not the
Insured, the person whose life was insured under the Policy, is still
insurable; AND
o You must make a premium payment that is sufficient to cover the
monthly deductions for the first two Policy Months following
reinstatement.
The Policy will be reinstated on the next Valuation Date following the date that
all of the above conditions have been met. If you surrender the Policy for its
full Cash Surrender Value, the Company will not reinstate the Policy.
CHARGES AND DEDUCTIONS
The following section describes the fees and expenses that you will pay when
purchasing, owning, and surrendering the Policy.
DEDUCTIONS FROM PREMIUMS
Sales Charge The Company deducts a front-end sales expense charge, or
sales load, of 5% from each premium payment you make. The
amount of the sales load deducted in any one Policy Year
may not be specifically related to the actual sales
expenses incurred in that year. To the extent that the
amount deducted does not cover the Company's actual sales
expenses, these expenses may be recovered from the charges
for mortality and expense risks, the deferred sales
charge and from mortality gains.
Premium Tax The Company deducts the amount of any premium tax owed to
any state or other governmental entity. Premium taxes
currently vary from state to state and range from 0% to
3.5%.
DEDUCTIONS FROM THE VARIABLE LIFE ACCOUNT
Mortality and The Company deducts a mortality and expense risk premium
Expense Risk equal on an annual basis, to 0.90% of the daily net asset
Premium value of the Variable Life Account. This premium
compensates the Company for the mortality and expense
risks it assumes under the Policy. Mortality risk is the
possibility that all Insured persons, as a group, may not
live as long as expected. Expense risk is the possibility
that the Company's actual expenses may be greater than
anticipated.
Death Benefit The Company deducts a death benefit guarantee risk charge
Guarantee Risk which is equal, on an annual basis, to 0.15% of the daily
Charge net asset value of the Variable Life Account. This charge
compensates the Company for assuming risks associated
with the death benefit guarantee.
Taxes The Company reserves the right to deduct any amount due
for income taxes resulting from the investment operation
of any Subaccount. The Company does not currently make a
deduction for income taxes.
DEDUCTIONS FROM CASH VALUE
Monthly The Company takes a monthly deduction from the Cash Value
Deduction of the Policy at the beginning of each Policy Month
totaling the sum of:
(1) the cost of insurance for the Policy and any additional
benefits provided by rider to the Policy; PLUS
(2) a $5 monthly administrative fee to reimburse the
Company for administering the Policy and the Variable
Life Account. This includes issuing policies,
underwriting, maintaining policy records, policy
service, billing and collecting premium, preparing
reports to Policy Owners, accounting, calculating
reserves, meeting regulatory reporting requirements,
and auditing the Variable Life Account.
How the Charge is Deducted: The monthly deduction is made by canceling
accumulation units from each applicable Subaccount in the ratio that the Cash
Value of the Subaccount bears to the total of Subaccount Cash Values.
The cost of insurance for the Policy is determined on a Policy Month basis. The
amount will vary from month-to-month and depends on the death benefit option in
effect, the Cash Value, your age, sex and risk classification. The cost of
insurance is calculated by multiplying the difference between the death benefit
in effect divided by 1.0040741 and the Cash Value by the monthly mortality
charge. Because the investment performance of the Variable Life Account or the
level of premium payments will affect the death benefit or the Cash Value, they
will also affect the cost of insurance. The Company calculates the cost of
insurance for any rider separately.
The mortality charge is based on the Company's current mortality rates, which in
turn are based on the Insured person's age, sex and risk class. The risk class
will be determined separately for the initial Specified Amount and for any
subsequent increase in the Specified Amount that requires evidence of
insurability. The Company determines the current mortality rates according to
expectations of future mortality experience. These rates are not guaranteed and
may be changed from time to time, but will never exceed the maximum rates shown
in the "Table of Guaranteed Maximum Mortality Rates" which is included in the
Policy. Any change the Company makes in mortality rates will apply to all
Insured persons of the same sex, age and risk class. The guaranteed rates for
standard risks are based on the 1980 Commissioner's Standard Ordinary Mortality
Table, Age Last Birthday. The guaranteed rates for Insured persons classified as
smokers or medically substandard are based on a multiple of the 1980 CSO Table.
A multiple could be as high as five times the 1980 CSO Table.
Transfer Fee At its option, the Company may deduct a fee, not to exceed
$25, for each transfer. The deduction will be made from
the amount transferred.
DEDUCTIONS FROM SURRENDERED VALUES
Full Surrender If you totally surrender the Policy prior to the Maturity
Charge Date, the Company may impose a full surrender charge. If
you totally surrender the Policy during the first nine
Policy Years after it is issued, or if you increase the
Specified Amount, the Company will impose the full
surrender charge. The amount of the full surrender charge
will be the total of the four charges outlined below, or a
percentage of the total of the four charges, depending on
the number of years the Policy, or the increase in
Specified Amount, has been in effect. The full surrender
charge will remain constant from the date of issue or
increase through the 4th Policy Year, and then it is
reduced each year until it reaches zero in the 10th year.
The amount of the full surrender charge is determined by
multiplying the total of the four charges by the
applicable percentage. The applicable percentages are
shown below where the year is the number of full Policy
Years from the date the Policy was issued, or from the
Policy Anniversary Date on or preceding the date of each
increase in the Specified Amount, to the date of
surrender.
Completed Policy Years Applicable Percentages
0-4 100
5 80
6 60
7 40
8 20
9+ 0
The four charges used to calculate the full surrender
charge are:
(1) Contingent Deferred Administrative Expense Charge.
This charge is calculated as $3.50 per $1,000 of the
first $100,000 of the Specified Amount, plus $1.50
per $1,000 of the excess above $100,000. The maximum
contingent deferred administrative charge is $750.
This charge covers the administrative expenses in
connection with issuing the Policy.
(2) Deferred Sales Charge. This charge is calculated as
25% of the Target Surrender Premium, or 25% of the
actual premiums you paid in the first Policy Year, if
less. The amount of the Target Surrender Premium is
shown on the specifications page of your Policy and is
calculated to be less than or equal to the guideline
annual premium as defined in the applicable rules and
regulations under the Investment Company Act of 1940.
(3) Additional Contingent Deferred Administrative Expense
Charge. This charge may result from an increase in
the Specified Amount. The maximum charge is calculated
as $3.50 per $1,000 of the first $100,000 of the
Specified Amount increase, plus $1.50 per $1,000
above $100,000. The maximum charge is $750 for each
increase in the Specified Amount.
(4) Additional Deferred Sales Charge. This charge may
result from an increase in the Specified Amount and is
25% of the lesser of:
a) the Target Surrender Premium for the increase
in the Specified Amount as shown on the
Policy amendment; or
b) the portion of the actual premiums paid in
the first 12 Policy Months following the
effective date of the increase in the
Specified Amount that exceeds the Target
Surrender Premium for the Policy that was in
effect prior to the increase in the Specified
Amount.
Explanations: The Target Surrender Premium is based on
your age and sex on the date an increase in the Specified
Amount is effective. The Company reserves the right to
require a minimum premium payment during the first 12
months following the effective date of an increase in the
Specified Amount.
The full surrender charge as calculated above will be
reduced by the total of all partial surrender charges
previously deducted. In no event will the full surrender
charge be less than zero. There are five factors that
contribute to the maximum surrender charge you could
pay. These factors are your age, your sex, your risk
category, the Specified Amount, and the premium paid
during the first Policy Year or in the year following an
increase in Specified Amount.
Examples: Age 35, male, non-smoker, $6.46 per $1,000
death benefit option 1 of Specified Amount
Age 55, male, smoker, $14.22 per $1,000
death benefit option 2 of Specified Amount
Age 75, male, smoker, $40.38 per $1,000
death benefit option 2 of Specified Amount
A decrease in the Specified Amount will not change any
existing surrender charges.
Partial Surrender The Company may impose this charge when the Policy is
Charge partially surrendered; that is, when you withdraw a
portion of the Cash Value. The partial surrender charge is
a percentage of the full surrender charge equal to the
percentage of Cash Surrender Value being withdrawn. For
example, if the partial withdrawal is 20% of the Policy's
Cash Surrender Value, then 20% of the full surrender
charge will be imposed.
Partial Surrender The Company imposes this charge to compensate it for
Administrative processing the partial surrender. It is the lesser of 2%
Charge of the amount surrendered or $25.
Explanation: The partial surrender charge and the
partial surrender administrative charge are in addition
to the amount surrendered. The charges will be deducted
proportionately from all the Subaccounts in which the
Policy is invested unless you designate a specific
Subaccount; however, the deduction for these charges is
not subject to the surrender charge.
ANNUAL EXPENSES OF T. ROWE PRICE FIXED INCOME SERIES, INC., T. ROWE PRICE
EQUITY SERIES, INC., T. ROWE PRICE INTERNATIONAL SERIES, INC., AND JANUS ASPEN
SERIES.
There are deductions from and expenses paid out of the assets of the available
Portfolios, which are summarized below. See the accompanying prospectuses for a
complete description.
Investment Management Other Total Annual
Portfolio and Administration Fees Expenses Expenses
T. Rowe Price Fixed Income Series, Inc.
o T. Rowe Price Prime Reserve Portfolio 0.55% 0.00% 0.55%
o T. Rowe Price Limited-Term Bond Portfolio 0.70% 0.00% 0.70%
T. Rowe Price Equity Series, Inc.
o T. Rowe Price Personal Strategy Balanced Portfolio 0.90% 0.00% 0.90%
o T. Rowe Price Equity Income Portfolio 0.85% 0.00% 0.85%
T. Rowe Price International Series, Inc.
o T. Rowe Price International Stock Portfolio 1.05% 0.00% 1.05%
Janus Aspen Series
o Balanced Portfolio 0.65% 0.01% 0.66%
o Growth Portfolio 0.65% 0.02% 0.67%
o Aggressive Growth Portfolio 0.65% 0.01% 0.66%
o Capital Appreciation Portfolio 0.65% 0.02% 0.67%
o Worldwide Growth Portfolio 0.65% 0.04% 0.69%
Portfolios of T. Rowe Price Fixed Income Series, Inc., T. Rowe Price Equity
Series, Inc. and T. Rowe Price International Series, Inc. have an annual
all-inclusive Investment Management and Administrative Fee based on their
average daily net assets, which includes all expenses related to the Portfolios.
The Portfolios calculate and accrue the fees daily. Expenses for the Janus Aspen
Series Portfolios are based on expenses for the fiscal year ended December 31,
2000, restated to reflect a reduction in the management fee.
GROUP ARRANGEMENTS
The following charges and minimum amounts may be reduced or eliminated when the
Policy is issued to individuals or a group of individuals resulting in sales or
administrative expense savings:
o front-end sales charge
o monthly administrative charge
o deferred sales charge
o deferred administrative expense charge
o minimum premium
o minimum amount of insurance
The Company will determine if a group is entitled to have the charges and
minimum amounts reduced or eliminated based on these four factors:
(1) The size and type of group. Generally, sales expenses for larger groups are
less than for small groups because more policies can be issued to a large
group with fewer sales contacts.
(2) The total amount of premium that will be received. Per-policy sales
expenses are likely to be less on larger premiums payments than on smaller
ones.
(3) Any prior or existing relationship with the Company. Per-policy sales and
administrative expenses are likely to be less when an established
relationship exists.
(4) Other group factors may come to light that warrant a reduction or
elimination of the charges and minimum amounts.
From time to time, the Company may modify both the amounts of reductions and the
criteria for qualification, but in no event will reduction or elimination of
these charges or of any other provision of the Policy be permitted if it will be
unfairly discriminatory to any person.
POLICY BENEFITS AND RIGHTS
DEATH BENEFIT
A death benefit will be payable as long as the Policy is in effect. The death
benefit will be reduced by any outstanding Policy loans and any unpaid charges
applicable to the Policy. If you are the Insured, when you die, the death
benefit will be paid to the named Beneficiary. All or part of the death benefit
may be paid in cash or applied under one or more of the optional settlement
plans.
DEATH BENEFIT OPTIONS
There are two death benefit options available, and the amount of the death
benefit will depend on the death benefit option in effect at the time of your
death. You may elect one of two options to determine the amount of the death
benefit.
Option 1 The death benefit equals the greater of the Specified
Amount or the Cash Value multiplied by the applicable
corridor percentage.
Option 2 The death benefit is the greater of
(a) the Specified Amount PLUS the Cash Value; or
(b) the Cash Value multiplied by a corridor percentage.
The Specified Amount and the Cash Value used to determine the death benefit will
be calculated at the end of the Valuation Period next following the date of your
death.
Corridor Percentages
Age % Age % Age %
40 or less 250 55 150 70 115
41 243 56 146 71 113
42 236 57 142 72 111
43 229 58 138 73 109
44 222 59 134 74 107
45 215 60 130 75 105
46 209 61 128 76 105
47 203 62 126 77 105
48 197 63 124 78 105
49 191 64 122 79-90 105
50 185 65 120 91 104
51 178 66 119 92 103
52 171 67 118 93 102
53 164 68 117 94 101
54 157 69 116 95+ 100
Under both Option 1 and Option 2, premium payments and favorable investment
results will increase the Cash Value. However, increased Cash Value has a
different effect on each option.
Effect of Increased Cash Value on Death Benefit Options
Option 1 Option 2
Decreases amount of the monthly Increases the Policy's death benefit
deductions and the amount of premium
necessary to keep the Policy in effect.
Increases the amounts available for Increases the amounts available for
Policy loans and surrenders. for Policy loans and surrenders.
Your insurance goals should determine the death benefit option you choose.
Choose Option 1 if you are satisfied with the amount of your life
insurance coverage and prefer to have premium payments and favorable
investment results reflect an increase in Cash Value.
Choose Option 2 if you prefer to have favorable investment results
partly reflect an increase in the death benefit.
CHANGING DEATH BENEFIT OPTIONS
You may change the death benefit option you have selected by sending a written
request to the Company. When the Company approves the request, the change will
take effect on the Monthly Processing Day next following the date the Company
receives the request. A change may result in a new Specified Amount and you may
be asked to provide evidence of insurability satisfactory to the Company before
the change will be made.
A change from Option 2 to Option 1
will increase the Specified Amount by the Policy's Cash Value
calculated at the end of the Valuation Period next following the
effective date of the change. When Option 2 is changed to Option 1,
the Company may require evidence of insurability.
A change from Option 1 to Option 2
will decrease the Specified Amount by the Policy's Cash Value
calculated at the end of the Valuation Period next following the
effective date of the change.
Changing the death benefit option will also change the cost-of-insurance charge
for the duration of the Policy. The mortality charge is the same under both
options, but the difference between the death benefit and the Cash Value varies
directly with the Cash Value under Option 1, but is constant under Option 2,
unless the death benefit is determined by applying a corridor percentage.
CHANGING THE SPECIFIED AMOUNT
You may increase or decrease the Specified Amount of the death benefit by
sending a written request to the Company. Any change is subject to the following
conditions:
o The Specified Amount cannot be changed during the first Policy Year.
o The Specified Amount can only be changed once during any subsequent
Policy Year.
o The Specified Amount cannot be less than the minimum Specified Amount,
which is currently $50,000, unless the Company's current rules allow a
lower amount.
A decrease will become effective on the Monthly Processing Day following the
date the Company receives a request and will be effected on a last-in-first-out
basis. That is, for purposes of determining the cost of insurance charge, a
decrease will apply to the Specified Amount provided by the most recent
increase; then the next most recent increase successively; then the initial
Specified Amount. The Company will not permit a decrease in the Specified Amount
if the decrease causes the Policy to violate the maximum premium limitation (see
"Maximum Premium Limitation" on page 13). The Company will impose a deferred
sales charge when the Specified Amount is decreased.
You must submit a supplemental application to request an increase in the
Specified Amount. You will be required to provide satisfactory evidence of
insurability. Any increase approved by the Company will become effective on the
Monthly Processing Day next following the Company's approval. An increase will
not become effective if the Policy's Cash Surrender Value is insufficient to
cover the monthly deduction for the Policy Month following the increase. When
the Specified Amount is increased, you have the right to the free-look and
Policy exchange privileges.
EFFECTS OF CHANGING THE SPECIFIED AMOUNT
Changing the Specified Amount will result in a change in the cost of insurance
charge because the amount of the cost of insurance charge depends on the
difference between the death benefit option in effect and the Cash Value.
In addition, changing the Specified Amount may affect the premium requirement
for the minimum death benefit guarantee.
Whenever the Specified Amount is
increased, a separate full surrender charge will be calculated based on the
amount of the increase, unless the increase is due to a change from death
benefit Option 2 to death benefit Option 1. No increase will be allowed if the
Policy does not have sufficient Cash Surrender Value to support the additional
deferred charges. As a condition following an increase, the Company may require
payment of additional premium equal to the first year minimum premium that would
be charged based on the then-age and risk class for a newly-issued policy with a
Specified Amount equal to the amount of increase. Because the cost of insurance
varies directly with the difference between the death benefit and the Cash
Value, an increase in the Specified Amount will generally require higher premium
payments to support the Policy.
Example: Assume a 40-year-old non-smoker buys a $100,000 policy and chooses
death benefit Option 1. Also assume that all policy charges and deductions are
made and that the net investment return after all asset-based charges are
deducted is 6% (7.98% gross investment return). The following table shows the
effect on Cash Values and Cash Surrender Values under three alternatives:
(1) the Specified Amount is not changed
(2) the Specified Amount is increased to $250,000
(3) the Specified Amount is decreased to $50,000
The changes occur five years after the policy is issued.
No change in Increase in Specified Decrease in Specified
Specified Amount Amount to $250,000 Amount to $50,000
Sum of Cash Sum of Cash Sum of Cash
End of Premiums Cash Surrender Premiums Cash Surrender Premium Cash Surrender
Policy Year Paid Value Value Paid Value Value Paid Value Value
5 $7,563 $ 6,582 $ 6,000 $ 7,563 $ 6,582 $ 6,000 $ 7,563 $ 6,582 $ 6,000
6 9,076 8,097 7,660 11,931 10,522 8,947 8,121 7,296 6,859
7 10,589 9,683 9,391 16,299 14,652 13,223 8,679 8,042 7,751
10 15,127 14,894 14,894 29,403 28,289 27,379 10,353 10,490 10,490
20 30,253 38,036 38,036 73,084 90,226 90,226 15,934 21,350 21,350
Age 65 57,817 53,891 53,891 94,924 134,196 134,196 18,724 28,929 28,929
Explanation: The premium paid in all cases assumed to be equal to the minimum
death benefit guarantee premium, which would be $1,513 at issue, increases to
$4,368 when the Specified Amount is increased to $250,000, and decreases to $558
when the Specified Amount is decreased to $50,000.
POLICY MATURITY
If the Policy is in effect on the Policy Anniversary Date on or after your 95th
birthday, the Policy will mature and the Cash Value, less any amounts owed for
Policy loans calculated at the end of the Valuation Period following the
Maturity Date, will be paid to you. You may take the Cash Value in a lump sum or
payment can be made under a settlement option acceptable to the Company.
CASH VALUE
The Policy's Cash Value is the sum of the Subaccount Cash Values and any Cash
Value held in the Company's General Account to secure a Policy loan. Cash values
will be determined at the end of every Valuation Period and may change on each
Valuation Date. The Cash Value will vary with the investment performance of the
underlying Portfolios and in relation to the charges deducted and the premiums
paid. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
DETERMINATION OF ACCUMULATION UNIT
An accumulation unit is an accounting unit of measure used to calculate Policy
values. The value of an accumulation unit may vary from Valuation Period to
Valuation Period. Net premiums allocated to a Subaccount are credited in
accumulation units. Charges deducted from a Subaccount, including monthly
deductions, result in cancellation of accumulation units. The number of
accumulation units credited to or canceled from a Subaccount is determined by
dividing the dollar value of the credit or cancellation by the value of one
accumulation unit.
Example: Dollar value of credit (net premium payment) = $100
Value of one Subaccount accumulation unit = $ 10
$100 / $10 = 10 accumulation units credited to Subaccount
The Subaccount Cash Value is determined by multiplying the number of
accumulation units attributable to the Subaccount by the value of one
accumulation unit for the Subaccount.
Example: Number of Policy Owner accumulation units
in Subaccount = 250
Value of one Subaccount accumulation unit = $10
250 x $10 = $2,500 Cash Value
Initially, the value of one accumulation unit was set at $10. For each
subsequent Valuation Period, the Company determines the accumulation unit value.
It does this by
(1) determining the total amount of money invested in the particular
Subaccount;
(2) subtracting from that amount the mortality and expense risk premium, the
death benefit guarantee risk charge and any other charges, such as taxes,
the Company has deducted; and
(3) dividing this amount by the number of outstanding accumulation units.
POLICY SURRENDER
While the Policy is in effect, you may request a partial or full surrender of
the Policy. Your request for a surrender must meet the following requirements:
o it must be in writing
o it must made while the Policy is in effect
o it must be made during your lifetime
o it must be made prior to the Maturity Date
PARTIAL SURRENDER
A partial surrender is treated as a withdrawal of part of the Policy's Cash
Value. The amount of the surrender will be taken from the Cash Value of the
Subaccount or Subaccounts you designate and will result in cancellation of
Subaccount accumulation units. Unless you specify otherwise, accumulation units
will be canceled from each applicable Subaccount in the ratio that the Cash
Value of each Subaccount bears to the total of all Subaccount Cash Values.
The Company will deduct a partial surrender administrative charge equal to 2% of
the amount surrendered or $25, whichever is less. The Company may also deduct a
partial surrender charge.
The Policy's Cash Value and death benefit will be reduced by the sum of (
1) the amount of the partial surrender, PLUS
(2) the partial surrender administrative charge, PLUS
(3) the partial surrender charge.
If you have selected death benefit Option 1, a partial surrender will cause the
Specified Amount to decrease by the sum of
(1) the amount of the partial surrender, PLUS
(2) the partial surrender administrative charge, PLUS
(3) the partial surrender charge.
While there currently is no limit to the number of partial surrenders that you
can make during a Policy Year, the Company reserves the right to impose a limit.
You should consult your tax adviser as to the possible tax consequences if the
amount of the partial surrender exceeds premiums paid. It may be more
advantageous for you to take out a Policy loan if the need for cash is
temporary.
FULL SURRENDER
Under a full surrender, the Company will pay you the entire Cash Surrender Value
of the Policy and the Policy will terminate. The full Cash Surrender Value is
equal to the Cash Value calculated at the end of the Valuation Period next
following the date on which the Company receives the request for full surrender,
less any outstanding Policy loans and less the full surrender charge. The full
surrender charge is calculated as of the end of the Valuation Period next
following the date on which the Company receives the request for a full
surrender.
POLICY LOANS
As long as the Policy is in effect, you may obtain a loan from the Company using
the Policy as the only security, subject to the following restrictions:
o You cannot make a request before the first Anniversary Date of the
Policy.
o You must make the request in writing.
o The maximum loan amount is 90% of (a) MINUS (b), where:
(a) is the Policy's Cash Value, and
(b) is the full surrender charge at the end of the Valuation Period
during which the loan request is received.
o The maximum amount you can borrow at any one time is the maximum loan
amount, less any outstanding Policy indebtedness, including any other
outstanding Policy loans.
o If the loan is approved, the Company will send a check within seven
days after it receives the loan request.
o Payment of any loan proceeds may be suspended under certain
circumstances as detailed in the section entitled "Suspension of
Payments."
o Loan proceeds may be taxable if the Policy is a modified endowment
contract. See "Federal Tax Status."
ALLOCATION OF LOANS
At the end of the Valuation Period during which the loan is made, a portion of
the Cash Value equal to the loan amount will be transferred from the Subaccounts
of the Variable Life Account into the General Account of the Company. The amount
transferred to the General Account does not participate in the investment
experience of the Variable Life Account. The amount of any interest due on the
loan that remains unpaid is also transferred to the General Account. These
transfers result in the cancellation of accumulation units within the
Subaccounts of the Variable Life Account. Unless you specify otherwise,
accumulation units will be canceled from each applicable Subaccount in the ratio
that the Cash Value of each Subaccount bears to the total of all Subaccount Cash
Values.
INTEREST CHARGED
The Company will charge an annual effective interest rate of 8% on Policy loans.
Interest is due at the end of each Policy Year. Unpaid interest will be added to
the existing Policy loan and charged interest at 8%.
INTEREST CREDITED
Interest will accrue daily on the Cash Value held in the General Account at an
annual rate of 6% and will be credited at the end of each Policy Year. Credited
interest will be transferred to the Variable Life Account and allocated to the
Subaccounts in the same manner that premium payments are allocated to the
Subaccounts.
LAPSE DUE TO LOAN
Policy indebtedness is the sum of all outstanding Policy loans and accrued
interest. If Policy indebtedness causes the Cash Surrender Value of the Policy
to equal zero or become negative, and the death benefit guarantee is not in
effect, the Company will notify you, along with any collateral assignee of
record, that the Policy will lapse and terminate without value. In order to
prevent the Policy from lapsing and terminating without value, you must make a
payment to the Company within 61 days from the date the notice is sent. The
payment must at least equal the amount by which the Policy indebtedness exceeds
the Cash Value less any remaining surrender charges. Policy indebtedness will
affect the applicability of the death benefit guarantee.
LOAN REPAYMENT
You may repay Policy loans in full or in part at any time while the Policy is in
effect. Outstanding Policy loans and accrued interest are subtracted from final
payments made under the Policy. These are:
o the death benefit paid on your death
o the Cash Value when there is a full surrender of the Policy
o the Cash Value payable at the Maturity Date
When you make a Policy loan payment, an amount equal to the payment is
transferred from the Cash Value in the General Account securing the loan to the
Variable Life Account and is allocated to the Subaccounts in the same manner
that premium payments are allocated to the Subaccounts. If you send a loan
payment to the Company, you must indicate that it is a loan repayment.
Otherwise, the payment will be treated as a premium payment.
OTHER POLICY PROVISIONS
POLICY OWNER
It is assumed that the Policy Owner is the Insured, unless otherwise specified
in the Policy application. The Policy Owner may exercise all rights and
privileges granted under the Policy without the consent of any revocable
Beneficiary.
CONTINGENT POLICY OWNER
If you are the Policy Owner, but not the Insured, you may name a Contingent
Policy Owner. In that situation, if you die before the Insured, the Contingent
Policy Owner you have named in the application becomes the Policy Owner and
possesses all rights of the Policy Owner. At your death, if the Contingent
Policy Owner is deceased, or if you have not named a Contingent Policy Owner,
ownership of the Policy passes to your estate.
CHANGING THE POLICY OWNER OR CONTINGENT POLICY OWNER
By providing the Company with a dated and signed written notice, you may change
the Policy Owner or the Contingent Policy Owner if you are not also the Insured.
After the Company records the change, it becomes effective as of the date of the
written notice. The Insured does not have to be living when the Company records
a change in Policy Owner in order for the change to be effective. You do not
have to be living when the Company records a change of Contingent Policy Owner
in order for it to be effective. The Company will not be responsible for any
payment made or any other action taken before it records a change.
BENEFICIARY
The Beneficiary is named in the application. If, for whatever reason, there is
no Beneficiary when the Insured dies, the Company will pay the death benefit to
you as the Policy Owner, or to your estate if you are deceased when the Insured
dies. If the Beneficiary dies at the same time or within 10 days of the Insured,
the death benefit will be paid as though the Beneficiary died before the
Insured.
CHANGING THE BENEFICIARY
By providing the Company with a dated and signed written notice, you may change
the Beneficiary. After the Company records the change, it becomes effective as
of the date of the written notice. The Insured does not have to be living when
the Company records a change in Beneficiary in order for it to be effective. The
Company will not be responsible for any payment made or any other action taken
before it records the change.
ASSIGNMENT
As the Policy Owner, you may assign the Policy as collateral. The Company is not
responsible for the validity or effect of any collateral assignment. The
interest of any revocable Beneficiary will be subject to the terms of the
assignment. The Company will not be responsible for knowledge of any assignment
until it receives written notice of the assignment and records the assignment.
INCONTESTABILITY
Except if you fail to pay premiums, the Company will not contest the validity of
the Policy after it has been in effect during the Insured's lifetime for two
years from the date the Policy was issued. This will not apply to any riders to
the Policy. Any increase in the Specified Amount after the date the Policy is
issued will be incontestable only after the increase has been in effect during
the Insured's lifetime for two years after the effective date of the increase.
MISSTATEMENT OF AGE OR SEX
If your age or sex has been misstated in the application, the death benefit will
be adjusted by the difference between the monthly charges actually deducted and
the monthly charges that would have been deducted at the correct age and sex.
The adjustment will be accumulated based on investment returns that were
credited to the Cash Value.
NO DIVIDENDS
The Policy is non-participating, which means you will not receive dividends or
share in the Company's profits or surplus.
OPTIONAL SETTLEMENT PLANS
The Company will pay benefits under the Policy in one lump sum unless you choose
an optional settlement plan. The following provisions apply:
o You may choose a settlement plan while the Policy is in effect and
while the Insured is living.
o If you have not chosen a settlement plan, your Beneficiary may choose
one after your death.
o In order to choose a settlement plan, you must send a dated and signed
written notice to the Company.
o If approved by the Company, the plan you choose will be effective from
the date the notice was signed.
o The Company will not be responsible for any payment made or other
action taken before the selection has been recorded by the Company.
You can choose from the following settlement plans:
Plan 1 The Company will hold the Policy proceeds in the General
Proceeds Held Account and make payments at the times and in the amounts
at Interest that you and the Company agree on, as long as the Policy
remains in effect. Payments can be made monthly,
quarterly, annually, or in a lump sum, or any other mode
that you and the Company may agree on. The Company will
credit the Policy proceeds held with an effective annual
interest rate of at least 4%. When the payee dies, any
remaining Policy proceeds will be paid to his or her
estate, unless otherwise specified.
Plan 2 The Company will make monthly payments in a fixed amount
Lifetime Payments as long as the payee lives. A guaranteed number of
with a Guarantee payments maybe chosen. If the payee dies before the
guaranteed number of payments has been made, the Company
will continue the payments until the guaranteed number of
payments has been made.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone any payment under the
Policy when:
(1) the New York Stock Exchange is closed (on other than customary weekend and
holiday closings);
(2) trading on the New York Stock Exchange is restricted;
(3) an emergency exists and it is not reasonably practicable to dispose of the
securities held in the Variable Life Account, or it is not reasonably
practicable to determine the net asset value of the Variable Life Account;
or
(4) during any other period when the Securities and Exchange Commission permits
suspension of payments.
The applicable rules and regulations of the Securities and Exchange Commission
will control as to whether conditions (2) or (3) exist.
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DISCUSSION IS BASED ON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL TAX LAWS APPLICABLE TO LIFE INSURANCE IN GENERAL. THE COMPANY
CANNOT PREDICT IF THESE LAWS WILL CHANGE. SECTION 7702 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), DEFINES THE TERM "LIFE INSURANCE
CONTRACT" FOR PURPOSES OF APPLYING THE TAX LAWS TO LIFE INSURANCE POLICIES. THE
COMPANY BELIEVES THAT THE POLICY QUALIFIES AS A LIFE INSURANCE CONTRACT UNDER
SECTION 7702; HOWEVER, THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF THE
POLICY. YOU BEAR THE COMPLETE RISK THAT THE POLICY MAY NOT BE DEEMED A LIFE
INSURANCE CONTRACT BY THE INTERNAL REVENUE SERVICE ("IRS"). THE FOLLOWING
DISCUSSION IS NOT EXHAUSTIVE AND YOU SHOULD UNDERSTAND THAT THERE MAY BE SPECIAL
FEDERAL TAX RULES NOT DISCUSSED IN THIS PROSPECTUS THAT ARE APPLICABLE IN
CERTAIN SITUATIONS. YOU ARE CAUTIONED TO CONSULT YOUR OWN TAX ADVISER REGARDING
HOW FEDERAL TAX LAWS MAY APPLY TO THE POLICY.
INTRODUCTION
This discussion of federal tax status is general in nature and is not intended
to provide you with tax advice. You should discuss the applicability of federal
tax laws on the Policy with your tax adviser. No attempt has been made to
consider any state tax laws or any other tax laws. The Company is not making any
representations or guarantees that current federal tax laws will not be changed
or that current interpretations of the federal tax laws will not be changed. The
Company is taxed as a life insurance company under federal tax laws. For federal
income tax purposes, the Variable Life Account is not a separate entity from the
Company and its operations form a part of the Company.
MODIFIED ENDOWMENT CONTRACTS
Federal tax laws alter the treatment accorded to loans and certain distributions
from life insurance policies that are considered to be modified endowment
contracts. Generally, the variable life insurance policy described in this
Prospectus will not be considered a modified endowment contract.
A modified endowment contract is a contract which is entered into or materially
changed on or after June 21, 1988, and fails to meet the 7-pay test. A policy
fails to meet the 7-pay test when the cumulative amount paid under a contract at
any time during the first 7 years of the contract exceeds the sum of the net
level premiums that would have been paid on or before such time if the contract
provided for paid-up future benefits after the payment of 7 level annual
premiums. A material change includes any increase in the future benefits or
addition of qualified additional benefits provided under a contract unless the
increase is due to
o the payment of premiums necessary to fund the lowest death benefit and
qualified additional benefits payable in the first 7 years of the contract;
or
o the crediting of interest or other earnings (including dividends) with
respect to such premiums.
Additionally, any policy issued in exchange for a policy classified as a
modified endowment contract will be treated as a modified endowment contract
regardless of whether it meets the 7-pay test. However, an exchange under
Section 1035 of the Code of a life insurance policy entered into before June 21,
1988 for the Policy will not cause the Policy to be treated as a modified
endowment contract if no additional premiums are paid. Due to the flexible
premium feature of a variable life insurance policy, the circumstances of each
policy will be considered individually in determining whether it will be treated
as a modified endowment contract.
If a policy is determined to be a modified endowment contract, partial or full
surrenders and/or loan proceeds are taxable to the extent of income in the
policy. Such distributions are deemed to be on a last-in-first-out basis, which
means that the taxable income is distributed first. Loan proceeds and/or
surrender payments, including those resulting from the lapse of the Policy, may
also be subject to an additional 10% federal income tax penalty applied to the
income portion of loans or surrenders. The penalty will not apply to any
distribution:
o made to a taxpayer who is at least age 591/2 on the date of the
distribution;
o made to a taxpayer who is disabled as defined in Section 72(m)(7) of
the Code; or
o made as part of a series of substantially equal periodic payments (not
less frequently than annually) made 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.
If a policy is not classified as a modified endowment contract, then any
surrenders will be treated first as a recovery of the investment in the policy
which would not be received as taxable income. However, if a distribution is the
result of a reduction in benefits under the policy within the first 15 years
after the policy is issued in order to comply with Section 7702, such
distribution will, under rules set forth in Section 7702, be taxed as ordinary
income to the extent of income in the policy.
Any loan from a policy that is not classified as a modified endowment contract
will be treated as indebtedness of the Policy Owner and not as a distribution.
Upon complete surrender ( or lapse of the Policy) or when maturity benefits are
paid, if the amount received plus loan indebtedness exceeds the total premiums
paid that are not treated as previously surrendered by the Policy Owner, the
excess generally will be treated as ordinary income.
Interest paid on a policy loan is generally not deductible. Furthermore, no
deduction will be allowed for interest on a loan under a policy covering the
life of any employee or officer of the taxpayer or any person financially
interested in the business carried on by the taxpayer to the extent the
indebtedness for such employee, officer or financially interested person exceeds
$50,000. The deductibility of interest payable on policy loans may be subject to
further rules and limitations under Sections 163 and 264 of the Code.
YOU SHOULD CONSULT YOUR OWN TAX ADVISER REGARDING THE TREATMENT OF YOUR POLICY
AND THE POSSIBLE TAX CONSEQUENCES OF TAKING LOANS OR SURRENDERS FROM YOUR
POLICY.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable life insurance policies. The Code provides that a
variable life insurance policy will not be treated as life insurance for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the U.S. Treasury
Department. If it is determined that your variable life insurance policy does
not qualify as a life insurance contract, you will be liable for federal income
taxes on the earnings portion of the Policy prior to receiving any pay-outs from
the policy. The Code has a safe harbor provision which provides that life
insurance policies, such as your variable life Policy, meet the diversification
requirements if, as of the close of each calendar quarter, the underlying assets
meet the diversification standards for a regulated investment company and no
more than 55% of the total assets consist of cash, cash items, U.S. Government
securities and securities of other regulated investment companies. There is an
exception for securities issued by the U.S. Treasury in connection with variable
life insurance policies.
In 1989, the Treasury Department issued regulations which amplify the
diversification requirements for variable contracts and provide an alternative
to the safe harbor provision described above. Under the regulations, an
investment portfolio will be deemed adequately diversified if
o no more than 55% of the value of the total assets of the
portfolio is represented by any one investment;
o no more than 70% of the value of the total assets of the
portfolio is represented by any two investments;
o no more than 80% of the total assets of the portfolio is
represented by any three investments;
o no more than 90% of the total assets of the portfolio is
represented by any four investments.
For purposes of the regulations, all securities of the same issuer are treated
as a single investment and each U.S. government agency or instrumentality is
treated as a separate issuer.
The Company intends that all underlying assets of the Variable Life Account will
be managed in order to comply with these diversification requirements.
Currently, there is no official guidance as to whether, or under what
circumstances, control of the investments of the Variable Life Account by the
owners of variable life policies will cause the owners to be treated as owners
of the assets of the Variable Life Account, thereby causing the variable life
policy to lose its favorable tax treatment.
The amount of Policy Owner control which may be exercised under the Policy is
different in some respect from the situations addressed in published rulings
issued by the IRS in which it was held that a policy owner was not the owner of
the assets of a separate account. It is unknown whether these differences, such
as the Policy Owner's ability to transfer among investment choices or the number
and type of investment choices available, would cause the Policy Owner to be
considered the owner of the assets of the Variable Life Account.
In the event any forthcoming guidance or ruling sets forth a new position, the
guidance or ruling will generally be applied only prospectively. However, if the
ruling or guidance does not set forth a new position, it may be applied
retroactively, resulting in the Policy Owner being retroactively determined to
be the owner of the assets of the Variable Life Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Policy in an attempt to maintain favorable tax treatment.
TAX TREATMENT OF THE POLICY
The Policy has been designed to comply with the definition of a life insurance
contract contained in Section 7702 of the Code. Although some interim guidance
has been provided and proposed regulations have been issued, final regulations
have not been adopted. Section 7702 of the Code requires that mortality and
other expense charges be reasonable. In establishing these charges, the Company
has relied on the interim guidance provided in IRS Notice 88-128 and proposed
regulations issued on July 5, 1991. Currently, there is even less guidance as to
a policy issued on a substandard risk basis and thus it is even less clear
whether a Policy issued on such basis would meet the requirements of Section
7702 of the Code.
While every attempt has been made by the Company to comply with Section 7702,
the law in this area is very complex and unclear. There is a risk, therefore,
that the IRS will not concur with the Company's interpretations of Section
7702 that were made in determining such compliance. In the event the Policy is
determined not to comply, it would not qualify for the favorable tax treatment
usually accorded life insurance policies. You should consult a tax adviser
regarding the tax consequences of purchasing the Policy.
TAX TREATMENT OF SETTLEMENT OPTIONS
Under the Code, a portion of the settlement option payments which are in excess
of the death benefit proceeds are included in the beneficiary's taxable income.
Under a settlement option payable for the lifetime of the beneficiary, the death
benefit proceeds are divided by the beneficiary's life expectancy (or joint life
expectancy in the case of a joint and survivor option) and proceeds received in
excess of these prorated amounts are included in taxable income. The value of
the death benefit proceeds is reduced by the value of any period certain or
refund guarantee. Under a fixed payment or fixed period option, the death
benefit proceeds are prorated by dividing the proceeds over the payment period
under the option. Any payments in excess of the prorated amount will be included
in taxable income.
POLICY PROCEEDS
The tax treatment accorded to loan proceeds and/or surrender payments from the
Policy will depend on whether the Policy is considered to be a modified
endowment contract. Otherwise, the Policy should receive the same federal income
tax treatment as any other type of life insurance. As such, the death benefit is
excluded from the gross income of the Beneficiary under Section 101(a) of the
Code. Also, you, as the Policy Owner are not deemed to be in constructive
receipt of the Cash Value or Cash Surrender Value, including increments thereon,
under the Policy until there is a distribution of such amounts.
If death benefit proceeds are held by the Company at interest, any interest
credited is included in the Beneficiary's taxable income for the year in which
the interest is credited. If the Policy death proceeds are paid under the
lifetime payments with a guarantee plan, the payments will be prorated between
the amount attributable to the death benefit, which is excluded from the
Beneficiary's income, and the amount attributable to interest, which is included
in the Beneficiary's income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership, or receipt of Policy proceeds depend on the
circumstances of each Policy Owner or Beneficiary.
MULTIPLE POLICIES
Federal tax laws provide that multiple modified endowment contracts which are
issued within a calendar year period to the same Policy owner by one company or
its affiliates are treated as one modified endowment contract for purposes of
determining the taxable portion of any loans or distributions. Such treatment
may result in adverse tax consequences including more rapid taxation of the
loans or distributed amounts from the combination of contracts. You should
consult a tax adviser prior to purchasing more than one modified endowment
contract in any calendar year period.
TAX TREATMENT OF ASSIGNMENTS
Assigning or pledging the Policy may be a taxable event. You should consult a
tax adviser before assigning or pledging the Policy.
QUALIFIED PLANS
The Policy may be used in conjunction with certain qualified retirement plans.
Because the rules governing such use are complex, you should consult with a
pension consultant before purchasing the Policy.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includable in gross income of
the Policy Owner are subject to federal income tax withholding. However, in most
cases, you may elect not to have taxes withheld. You may be required to pay
penalties under the estimated tax rules, if withholding and estimated tax
payments are insufficient.
VARIABLE LIFE ACCOUNT VOTING RIGHTS
The Company is the legal owner (shareholder) of the Portfolio shares. However,
the Company believes that when a Mutual Fund solicits proxies in connection with
a vote of shareholders, it is required to obtain from you, and other affected
Policy Owners, instructions as to how to vote those shares.
For purposes of voting the Mutual Fund shares held in the Variable Life Account
at a shareholder meeting of the Mutual Fund, your voting interest will be
determined as follows: you may cast one vote for each $100 of Cash Value of your
Policy allocated to the Subaccount on the record date for the shareholder
meeting of the Mutual Fund. If, however, you have a Policy loan outstanding, any
amount transferred from the Variable Life Account to the General Account in
connection with the loan will not be considered in determining your voting
interest.
If a Mutual Fund holds a shareholder meeting at which you are entitled
to vote, you will receive periodic reports, proxy material, and a form on which
you can give voting instructions.
The Company will determine the number of shares that you will have a right to
vote as of a date chosen by it, which will not be more than 60 days prior to the
shareholder meeting. The Company will send you proxy material and a form for
giving voting instructions at least 14 days prior to the shareholder meeting.
In accordance with its view of present law, the Company will vote the shares of
the applicable Mutual Fund held in the Variable Life Account in accordance with
instructions received from all persons having a voting interest in that
particular Mutual Fund. The Company will vote shares for which it has not
received instructions in the same proportion as it votes shares for which it has
received instructions. The Company will vote its own shares in the same
proportion as it votes shares for which it has received instructions.
If the applicable law with respect to voting rights is amended or if the
interpretation of the law changes, and it is determined that the Company has
authority to vote the shares of the Mutual Fund in its own right, it may elect
to do so.
VOTING INSTRUCTIONS DISREGARDED
The Company may, when required to do so by state insurance authorities, vote
shares of the applicable Mutual Fund without regard to instructions from persons
having a voting interest if the voting instructions would cause the Mutual Fund
to make (or refrain from making) investments that would result in changes in the
sub-classifications or investment objectives of the Mutual Fund. The Company may
also disapprove changes in the investment policy initiated by the persons having
a voting interest or by the directors or trustees of the Mutual Fund if the
Company's disapproval is reasonable and based on a good faith determination that
the change would violate state law or the change would not be consistent with
the investment objective of the Mutual Fund, or varies from the general quality
and nature of investments and investment techniques used by other Mutual Funds
with similar investment objectives underlying other separate accounts of the
Company or of an affiliated life insurance company.
In the event the Company does disregard voting instructions, it will provide a
summary of its reasons for doing so in the next semi-annual report to Policy
Owners.
MANAGEMENT OF THE COMPANY
The following table lists the officers and directors of the Company, along with
their principal occupations.
NAME POSITION WITH COMPANY PRINCIPAL OCCUPATION
Dale R. Schuh Chairman of the Board, Chairman of the Board, Chief
President, and Director Executive Officer and President of
Sentry Insurance a Mutual Company
Wallace D. Vice President Vice President, Life, Health and
Taylor Annuities of Sentry Insurance a
Mutual Company
William M. Secretary and Director Vice President, General Counsel and
O'Reilly Corporate Secretary of Sentry
Insurance a Mutual Company
William J. Treasurer and Director Vice President and Treasurer of
Lohr Sentry Insurance a Mutual Company
Janet L. Director Vice President and Chief Actuary of
Fagan Sentry Insurance a Mutual Company
James J. Director Vice President, Investments of
Weishan Sentry Insurance a Mutual Company
DISTRIBUTION OF THE POLICY
Sentry Equity Services, Inc. ("SESI"), a wholly owned subsidiary of Sentry
Insurance a Mutual Company, serves as principal underwriter of the Policy. The
Policy is sold by sales representatives who, in addition to being licensed as
life insurance agents for the Company, are also NASD registered representatives
for SESI. SESI may also enter into written sales agreements with other
broker-dealers.
The following persons are the officers and directors of SESI.
The business address for each person is 1800 North Point Drive, Stevens Point,
WI 54481.
Name Positions and Offices With SESI
Dale Schuh Director and Chairman of the Board
Wallace D. Taylor President
Glen E. Scott Jr. Vice President
William M. O'Reilly Director and Secretary
William J. Lohr Director and Treasurer
Registered representatives are compensated on a commission and service fee basis
by SESI. The Company reimburses SESI for the compensation it pays to registered
representatives and for other direct and indirect expenses SESI incurs in
marketing and selling the Policy. These expenses include advertising and
promotion, field management compensation, and deferred compensation and
insurance benefits for registered representatives and field managers. The amount
of brokerage commission and expense reimbursement received by SESI as of
December 31, 2000, for distributing the Policy was $107,685.
The following chart shows the levels of compensation paid by SESI to registered
representatives.
First-Year Commissions 50% to 55% of the first-year premium paid; the
commission may be higher under certain circumstances,
but will not exceed 80% of the first-year premium paid.
Renewal Commissions An amount not exceeding 2% of renewal premium paid.
Service Fee An amount not exceeding .25% of the Cash Value of the
policies attributable to the registered representative
Additional May be paid to registered representatives who meet
Compensation certain production and persistency requirements.
STATE REGULATION
The Company is subject to the insurance laws of the state of Wisconsin and is
regulated by the Wisconsin Insurance Department. It is also subject to the
insurance laws of each state in which it is authorized to do business. Each
year, the Company files an annual statement with the various state insurance
departments which contains information about the operation of the Company and
its financial condition as of the most recent year-end. The Wisconsin Insurance
Department periodically examines the Company's books and records in order to
certify that the Company has correctly stated its policy liabilities and
reserves. Any regulation or examination of the Company does not involve
supervision of the Company's management or its investment practices or policies.
REPORTS TO POLICY OWNERS
As a Policy Owner, you will receive confirmation of the following transactions:
o receipt of any premiums (except premiums received before the date the Policy
is issued and those received via an automatic premium payment plan)
o any change in the allocation of premiums
o any transfer between Subaccounts
o any loan, interest repayment, or loan repayment
o any partial surrenders
o any return of premium necessary to comply with applicable maximum premium
limitations.
If you have chosen an automatic premium payment plan, you will receive an annual
statement showing the dates and amounts of premiums paid. You will be entitled
to a receipt for any premium payment upon request.
You will receive confirmation of the following transactions within 7 days:
o exercise of the free-look privilege
o exchange of the Policy
o full surrender of the Policy
o payment of the death benefit
Within 30 days after each Policy Anniversary, you will receive
an annual statement containing the following information:
o the current amount of death benefit
o the current Cash Value
o the current Cash Surrender Value
o current Policy indebtedness
o all premiums paid and charges deducted for the previous Policy Year
o all transactions confirmed during the previous Policy Year
Semi-annually, you will receive a report for T. Rowe Price Fixed Income Series,
Inc., T. Rowe Price Equity Series, Inc., T. Rowe Price International Series,
Inc., and Janus Aspen Series which will contain all applicable information and
financial statements required by federal securities laws and regulations.
LEGAL PROCEEDINGS
Neither the Variable Life Account nor SESI are parties to any legal proceedings.
The Company is engaged in various kinds of routine litigation which, in the
opinion of the Company, are not material to the operation of the Company or to
its financial condition.
EXPERTS
The statutory financial statements of the Company as of December 31, 2000 and
1999, and for the years then ended, and the financial statements of the Variable
Life Account as of December 31, 2000, and for each of the three years in the
period then ended or for the period indicated, included in this Prospectus and
in the registration statement filed with the Securities and Exchange Commission
have been audited by PricewaterhouseCoopers LLP, independent accountants. The
audit reports are included in this Prospectus.
LEGAL OPINIONS
Blazzard, Grodd & Hasenauer, P.C., Westport, Connecticut, has provided advice on
certain matters relating to the federal securities and income tax laws in
connection with the Policy.
FINANCIAL STATEMENTS
The Company's financial statements included in this Prospectus should only be
considered in relation to the Company's ability to meet its obligations in
connection with the Policy. The Company's most current audited financial
statements are as of December 31, 2000 and are included in this Prospectus.
SENTRY LIFE INSURANCE COMPANY
SENTRY VARIABLE LIFE ACCOUNT I
Report on Audits of Financial Statements
For the Years Ended 2000, 1999 and 1998
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Sentry Life Insurance Company
and
The Contract Owners of
Sentry Variable Life Account I:
In our opinion, the accompanying combined statement of assets and liabilities
and the related separate statements of operations and of changes in net assets
present fairly, in all material respects, the financial position of the Sentry
Variable Life Account I, and the Janus Aspen Growth Portfolio, Janus Aspen
Aggressive Growth Portfolio, Janus Aspen Capital Appreciation Portfolio, Janus
Aspen Worldwide Growth Portfolio, Janus Aspen Balanced Portfolio, T. Rowe Price
Prime Reserve Portfolio, T. Rowe Price Equity Income Portfolio, T. Rowe Price
Limited Term Bond Portfolio, T. Rowe Price Personal Strategy Balanced Portfolio,
and T. Rowe Price International Stock Portfolio thereof, at December 31, 2000,
and the results of each of their operations and changes in each of their net
assets for each of the three years in the period then ended, or for the period
May 1, 2000 (commencement of operations) through December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of Sentry Life
Insurance Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2000, by
correspondence with the custodian, provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 9, 2001
SENTRY LIFE INSURANCE COMPANY
Sentry Variable Life Account I
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
Assets:
Investments at market value:
Janus Aspen Series:
Aspen Growth Portfolio, 1,136 shares (cost $36,263) $ 30,088
Aspen Aggressive Growth Portfolio, 144,744 shares (cost
$8,163,091) 5,254,210
Aspen Capital Appreciation Portfolio, 1,646 shares (cost $49,021) 44,090
Aspen Worldwide Growth Portfolio, 1,103 shares (cost $47,984) 40,805
Aspen Balanced Portfolio, 1,081 shares (cost $26,635) 26,272
T. Rowe Price Fixed Income Series, Inc.:
Prime Reserve Portfolio, 195,340 shares (cost $195,340) 195,340
Limited Term Bond Portfolio, 28,346 shares (cost $135,727) 139,744
T. Rowe Price Equity Series, Inc.:
Equity Income Portfolio, 150 shares (cost $2,808) 2,940
Personal Strategy Balanced Portfolio, 123,338 shares (cost $1,950,832) 1,916,678
T. Rowe Price International Series, Inc.:
International Stock Portfolio, 147 shares (cost $2,423) 2,216
-----
Total assets 7,652,383
---------
Liabilities:
Dividends payable 221
Accrued expenses 2,320
-----
Net Assets $7,649,842
==========
The accompanying notes are an integral part of these financial statements
SENTRY LIFE INSURANCE COMPANY
Sentry Variable Life Account I
STATEMENTS OF OPERATIONS
For the Years ended December 31,
T. Rowe Price Prime Reserve* T. Rowe Price Limited Term Bond*
2000 1999 1998 2000 1999 1998
Investment Income:
Dividends $11,256 $7,204 $7,551 $ 7,413 $ 9,279 $ 10,093
Expenses:
Mortality and expense risk charges 1,738 1,794 1,740 1,164 1,826 1,731
----- ----- ----- ----- ----- -----
Net investment income (loss) 9,518 5,410 5,811 6,249 7,453 8,362
----- ----- ----- ----- ----- -----
Realized gains (losses) on investments:
Realized net investment gain (loss) -- -- -- (4,932) (1,292) (290)
Capital gain distributions received -- -- -- -- -- --
Realized gain (loss) on investments and
capital gain distributions, net -- -- -- (4,932) (1,292) (290)
Unrealized appreciation (depreciation), net -- -- -- 8,796 (5,431) (2,702)
Net increase (decrease) in net assets
from operations $ 9,518 $5,410 $5,811 $10,113 $ 730 $ 5,370
======= ====== ====== ======= ====== =======
For the Years ended December 31,
Janus Aspen Aggressive Growth* T. Rowe Price Personal Strategy Balanced*
2000 1999 1998 2000 1999 1998
Investment Income:
Dividends $ 405,984 $ -- $ -- $56,562 $23,533 $ 28,603
Expenses:
Mortality and expense risk charges 66,925 55,295 45,238 16,958 15,401 13,274
------ ------ ------ ------ ------ ------
Net investment income (loss) 339,059 (55,295) (45,238) 39,604 8,132 15,329
------- ------- ------- ------ ----- ------
Realized gains (losses) on investments:
Realized net investment gain (loss) 2,038,383 100,296 130,456 377,941 9,272 14,003
Capital gain distributions received 409,918 263,051 1,138,697 96,211 34,863 200,904
------- ------- --------- ------ ------ -------
Realized gain (loss) on investments and
capital gain distributions, net 2,448,301 363,347 1,269,153 474,152 44,135 214,907
Unrealized appreciation (depreciation), net(5,276,823) 2,185,546 (607,832) (468,953) 394,033 (86,499)
---------- --------- -------- -------- ------- -------
Net increase (decrease) in net assets
from operations $(2,489,463) $2,493,598 $ 616,083 $ 44,803 $446,300 $143,737
=========== ========== ========= ======== ======== ========
SENTRY LIFE INSURANCE COMPANY
Sentry Variable Life Account I
STATEMENTS OF OPERATIONS
For the Period May 1, 2000
through December 31, 2000
T. Rowe Price T. Rowe Price
Equity International Janus Aspen
Income Stock Growth
2000 2000 2000
Investment Income:
Dividends $ 23 $ 12 $ 399
Expenses:
Mortality and expense risk charges 9 7 114
- - ---
Net investment income (loss) 14 5 285
-- - ---
Realized gains (losses) on investments:
Realized net investment gain (loss) 4 (8) (572)
Capital gain distributions received 106 59 911
--- -- ---
Realized gain (loss) on investments and
capital gain distributions, net 110 51 339
Unrealized appreciation (depreciation), net 132 (207) (6,175)
--- ---- ------
Net increase (decrease) in net assets
from operations $ 256 $(151) $(5,551)
===== ===== =======
For the Period May 1, 2000
through December 31, 2000
Janus Aspen Janus Aspen
Capital Worldwide Janus Aspen
Appreciation Growth Balanced
2000 2000 2000
Investment Income:
Dividends $ 248 $ 424 $ 312
Expenses:
Mortality and expense risk charges 84 148 57
Net investment income (loss) 164 276 255
Realized gains (losses) on investments:
Realized net investment gain (loss) (123) ( 1,382) (412)
Capital gain distributions received 1 1,273 71
Realized gain (loss) on investments and
capital gain distributions, net (122) (109) (341)
Unrealized appreciation (depreciation), net (4,931) (7,179) (363)
Net increase (decrease) in net assets
from operations $(4,889) $(7,012) $ (449)
*Portfolios were substituted on January 7, 2000. See Note 1 to the financial
statements.
The accompanying notes are an integral part of these financial statements
SENTRY LIFE INSURANCE COMPANY
Sentry Variable Life Account I
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended December 31,
T. Rowe Price Prime Reserve* T. Rowe Price Limited Term Bond*
2000 1999 1998 2000 1999 1998
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 9,518 $ 5,410 $ 5,811 $ 6,249 $ 7,453 $ 8,362
Realized gains (losses) -- -- -- (4,932) (1,292) (290)
Unrealized appreciation (depreciation), net -- -- -- 8,796 (5,431) (2,702)
Net increase (decrease) in net assets
from operations 9,518 5,410 5,811 10,113 730 5,370
----- ----- ----- ------ --- -----
Contract transactions:
Purchase payments 244,736 246,966 229,539 24,279 28,494 24,332
Transfers between subaccounts, net (246,676) (183,953) (200,831) (59,964) 1,011 (2,103)
Withdrawals and surrenders (20,399) (4,075) (2,093) (13,465) (6,359) (10,939)
Monthly deductions (134) (19,814) (18,659) (113) (11,956) (11,050)
Policy loans (1,400) (142) (282) (1,682) (115) (551)
Death benefits -- -- -- -- -- --
Net increase (decrease) in net assets
derived from contract transactions (23,873) 38,982 7,674 (50,945) 11,075 (311)
------- ------ ----- ------- ------ ----
Total increase (decrease) in net assets (14,355) 44,392 13,485 (40,832) 11,805 5,059
Net assets at beginning of year 208,866 164,474 150,989 180,361 168,556 163,497
------- ------- ------- ------- ------- -------
Net assets at end of year $194,511 $208,866 $164,474 $139,529 $180,361 $168,556
======== ======== ======== ======== ======== ========
For the Years ended December 31,
Janus Aspen Aggressive Growth* T. Rowe Price Personal Strategy Balanced*
2000 1999 1998 2000 1999 1998
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 339,059 $ (55,295) $ (45,238) $ 39,604 $ 8,132 $ 15,329
Realized gains (losses) 2,448,301 363,347 1,269,153 474,152 44,135 214,907
Unrealized appreciation (depreciation), net (5,276,823) 2,185,546 (607,832) (468,953) 394,033 (86,499)
---------- --------- -------- -------- ------- -------
Net increase (decrease) in net assets
from operations (2,489,463) 2,493,598 616,083 44,803 446,300 143,737
---------- --------- ------- ------ ------- -------
Contract transactions:
Purchase payments 895,034 922,776 690,677 346,837 275,290 222,905
Transfers between subaccounts, net 297,947 141,942 134,665 (74,688) 41,000 68,269
Withdrawals and surrenders (817,572) (400,076) (460,042) (206,133) (204,024) (98,008)
Monthly deductions (7,850) (347,478) (291,193) (1,741) (112,051) (109,415)
Policy loans (1,243) (232,500) (27,406) (49,738) (3,742) (1,098)
Death benefits (5,801) (29,589) - - (4,163) -
Net increase (decrease) in net assets
derived from contract transactions 360,515 55,075 46,701 14,537 (7,690) 82,653
------- ------ ------ ------ ------ ------
Total increase (decrease) in net assets (2,128,948) 2,548,673 62,784 59,340 438,610 226,390
Net assets at beginning of year 7,382,672 4,833,999 4,171,215 1,856,745 1,418,135 1,191,745
--------- --------- --------- --------- --------- ---------
Net assets at end of year $ 5,253,724 $7,382,672 $4,833,999 $1,916,085 $1,856,745 $1,418,135
=========== ========== ========== ========== ========== ==========
*Portfolios were substituted on January 7, 2000. See Note 1 to the financial
statements.
The accompanying notes are an integral part of these financial statements
SENTRY LIFE INSURANCE COMPANY
Sentry Variable Life Account I
STATEMENTS OF CHANGES IN NET ASSETS
For the Period May 1, 2000
through December 31, 2000
T. Rowe Price T. Rowe Price
Equity International Janus Aspen
Income Stock Growth
2000 2000 2000
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 14 $ 5 $ 285
Realized gains (losses) 110 51 339
Unrealized appreciation (depreciation), net 132 (207) (6,175)
Net increase (decrease) in net assets
from operations 256 (151) (5,551)
Contract transactions:
Purchase payments 1,324 1,297 13,591
Transfers between subaccounts, net 1,413 1,112 23,241
Withdrawals and surrenders (62) (49) (1,306)
Monthly deductions - - -
Policy loans - - -
Death benefits - - -
Net increase (decrease) in net assets
derived from contract transactions 2,675 2,360 35,526
Total increase (decrease) in net assets 2,931 2,209 29,975
Net assets at beginning of year - - -
Net assets at end of year $ 2,931 $ 2,209 $29,975
For the Period May 1, 2000
through December 31, 2000
Janus Aspen Janus Aspen
Capital Worldwide Janus Aspen
Appreciation Growth Balanced
2000 2000 2000
Increase (decrease) in net assets from operations:
Net Investment Income $ 164 $ 276 $ 255
Realized gains (losses) (122) (109) (341)
Unrealized appreciation (depreciation), net (4,931) (7,179) (363)
Net increase (decrease) in net assets from operations (4,889) (7,012) (449)
Contract transactions:
Purchase payments 24,072 22,212 22,954
Transfers between subaccounts, net 25,901 26,476 5,238
Withdrawals and surrenders (1,078) (1,019) (1,528)
Monthly deductions - - -
Policy loans - - -
Death benefits - - -
Net increase (decrease) in net assets
derived from contract transactions 48,895 47,669 26,664
Net assets at beginning of year 44,006 40,657 26,215
Net assets at end of year $ 44,006 $ 40,657 $ 26,215
*Portfolios were substituted on January 7, 2000. See Note 1 to the financial
statements.
The accompanying notes are an integral part of these financial statements
Notes to Financial Statements
December 31, 2000, 1999 and 1998
1. Organization and Contracts
The Sentry Variable Life Account I (the Variable Life Account) is a
segregated investment account of the Sentry Life Insurance Company (the
Company) and is registered with the Securities and Exchange Commission
as a unit investment trust pursuant to the provisions of the Investment
Company Act of 1940. The Variable Life Account was established by the
Company on February 12, 1985 and commenced operations on January 13,
1987. Accordingly, it is an accounting entity wherein all segregated
account transactions are reflected. The financial statements have been
prepared in conformity with accounting principles generally accepted in
the United States of America which permit management to make certain
estimates and assumptions at the date of the financial statements.
Actual results could differ from those estimates.
Prior to January 7, 2000, all assets of each subaccount of the
Variable Life Account were invested in shares of corresponding
portfolios of the Neuberger Berman Advisers Management Trust (Trust).
On January 7, 2000, the Company substituted shares of certain
Portfolios of T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed
Income Series, Inc., and Janus Aspen Series for shares of certain
Portfolios of the Trust (the "Substitution") as follows:
From these Portfolios: Into these Portfolios:
AMT Liquid Asset Portfolio T. Rowe Price Prime Reserve
Portfolio
AMT Limited Maturity Portfolio T. Rowe Price Limited Term Bond
Portfolio
AMT Balanced Portfolio T. Rowe Price Personal Strategy
Balanced Portfolio
AMT Growth Portfolio Janus Aspen Series Aggressive
Growth Portfolio
The substitution had no effect on a subaccount's unit value or number of
units outstanding. The new subaccount name is reflected in the
Statements of Operations and Statements of Changes in Net Assets for
periods prior to the substitution, although the investment activity
relates to the Portfolios in place during these periods.
On May 1, 2000, the Company began offering six additional
subaccounts with related Portfolios as investment options in
connection with the Contract. The additional Portfolios are as
follows:
T. Rowe Price Equity Series, Inc.
T. Rowe Price Equity Income Portfolio
T. Rowe Price International Series, Inc.
T. Rowe Price International Stock Portfolio
Janus Aspen Series
Balanced Portfolio
Growth Portfolio
Capital Appreciation Portfolio
Worldwide Growth Portfolio
The Trust and the Portfolios (collectively the Funds) are diversified open-end
management companies registered under the Investment Company Act of 1940. A copy
of the Funds' annual reports are included in the Variable Life Account's Annual
Report.
2. Significant Accounting Policies
Valuation of Investments
Investments in shares of the Funds are valued at the Funds' offering and
redemption price per share.
Securities Transactions and Investment Income
Transactions in shares of the Funds are recorded on the trade date (the
date the order to buy and sell is executed). Dividend income is recorded
on the ex-dividend date. The cost of Fund shares sold and the
corresponding investment gains and losses are determined on a specific
identification basis.
Federal Income Taxes
The Company is taxed as a life insurance company under the
provisions of the Internal Revenue Code. The operations of the
Variable Life Account are part of the total operations of the Company
and are not taxed as a separate entity. Under Federal income tax law,
net investment income and net realized investment gains of the
Variable Life Account which are applied to increase net assets are not
taxed.
Notes to Financial Statements (Continued)
December 31, 2000, 1999 and 1998
3. Expenses
A mortality and expense risk premium and a death benefit guarantee risk
charge are deducted by the Company from the Variable Life Account on a
daily basis which is equal, on an annual basis, to 1.05% (.90% mortality
and expense risk and .15% death benefit guarantee risk charge) of the
daily net asset value of the Variable Life Account. These charges
compensate the Company for assuming these risks under the variable life
contract. The liability for accrued mortality and expense risk premium
and death benefit guarantee risk charge amounted to $2,320 at December
31, 2000.
At the beginning of each policy month, the Company makes a
deduction, per contract holder, from the cash value of the policy by
canceling accumulation units. This deduction consists of the cost of
insurance for the policy and any additional benefits provided by rider,
if any, for the policy month and a $5 monthly administrative fee. The
administrative fee reimburses the Company for administrative expenses
relating to the issuance and maintenance of the contract.
The Company deducts a front-end sales expense charge of 5.0% from
each premium payment. A surrender charge may be deducted in the event
of a surrender to reimburse the Company for expenses incurred in
connection with issuing a policy. The full surrender charge will be
reduced during the first nine contract years until it reaches zero in
the tenth contract year.
The Company deducts from each premium payment the amount of
premium taxes levied by any state or government entity. Premium taxes
up to 4% are imposed by certain states.
4. Net Assets
At December 31, 2000 ownership of the Variable Life Account was represented by
the following accumulation units and accumulation unit values:
Accumulation Accumulation
Units Unit Value Value
Janus Aspen Growth Portfolio 3,695 $ 8.11 $ 29,975
Janus Aspen Aggressive Growth Portfolio 155,831 33.71 5,253,724
Janus Aspen Capital Appreciation Portfolio 5,571 7.90 44,006
Janus Aspen Worldwide Growth Portfolio 5,065 8.03 40,657
Janus Aspen Balanced Portfolio 2,715 9.66 26,215
T. Rowe Price Prime Reserve Portfolio 11,116 17.50 194,511
T. Rowe Price Equity Income Portfolio 258 11.38 2,931
T. Rowe Price Limited Term Bond Portfolio 7,096 19.66 139,529
T. Rowe Price Personal Strategy Balanced Portfolio 61,244 31.29 1,916,085
T. Rowe Price International Stock Portfolio 256 8.62 2,209
-----
Total net assets $7,649,842
==========
At December 31, 2000 significant concentrations of ownership were as follows:
Number of
Contract Owners Percentage Owned
Janus Aspen Growth Portfolio 2 59.4
Janus Aspen Capital Appreciation Portfolio 2 87.1
Janus Aspen Worldwide Growth Portfolio 2 86.3
Janus Aspen Balanced Portfolio 1 80.5
T. Rowe Price Prime Reserve Portfolio 4 53.6
T. Rowe Price Equity Income Portfolio 2 99.4
T. Rowe Price Limited Term Bond Portfolio 1 10.1
T. Rowe Price International Stock Portfolio 1 99.7
Notes to Financial Statements (Continued)
December 31, 2000, 1999 and 1998
5. Purchases and Sales of Securities
In 2000, purchases and proceeds on sales of the Funds' shares were as follows:
Proceeds
Purchases on Sales
Janus Aspen Growth Portfolio $ 41,268 $ 4,434
Janus Aspen Aggressive Growth Portfolio 9,437,244 8,328,139
Janus Aspen Capital Appreciation Portfolio 53,382 4,238
Janus Aspen Worldwide Growth Portfolio 55,737 6,370
Janus Aspen Balanced Portfolio 34,215 7,168
T. Rowe Price Prime Reserve Portfolio 529,674 542,873
T. Rowe Price Equity Income Portfolio 2,866 62
T. Rowe Price Limited Term Bond Portfolio 217,553 262,138
T. Rowe Price Personal Strategy Balanced Portfolio 2,362,038 2,211,535
T. Rowe Price International Stock Portfolio 2,480 49
----- --
Total $12,736,457 $11,367,006
=========== ===========
In 1999, purchases and proceeds on sales of the Trust's shares were as follows:
Proceeds
Purchases on Sales
Neuberger Berman Advisers Management Trust:
Liquid Asset Portfolio $ 318,521 $ 274,587
Growth Portfolio 1,391,451 1,128,326
Limited Maturity Bond Portfolio 40,920 22,563
Balanced Portfolio 436,890 401,184
------- -------
Total $2,187,782 $1,826,660
========== ==========
In 1998, purchases and proceeds on sales of the Trust's shares were as follows:
Proceeds
Purchases on Sales
Neuberger Berman Advisers Management Trust:
Liquid Asset Portfolio $ 272,325 $ 258,175
Growth Portfolio 2,009,596 869,198
Limited Maturity Bond Portfolio 35,610 27,828
Balanced Portfolio 522,127 223,966
------- -------
Total $2,839,658 $1,379,167
========== ==========
SENTRY LIFE INSURANCE COMPANY
Report on Audits of Statutory-Basis Financial Statements
For the Years Ended December 31, 2000 and 1999
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder
Sentry Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of Sentry Life
Insurance Company (the Company) as of December 31, 2000, and 1999, and the
related statutory-basis statements of operations, changes in capital stock and
surplus, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the State of Wisconsin Office of the Commissioner of Insurance,
which practices differ from accounting principles generally accepted in the
United States of America (GAAP). We have only been engaged by the Company to
audit the accompanying statutory-basis financial statements. The Company is not
required to prepare GAAP financial statements and does not prepare GAAP
financial statements. The effects on the financial statements of the variances
between the statutory basis of accounting and GAAP, although not reasonably
determinable, are presumed to be material. We are therefore required in the
following paragraph to issue an adverse opinion as to the conformity of these
financial statements with GAAP.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States of
America, the financial position of Sentry Life Insurance Company as of December
31, 2000 and 1999, or the results of its operations or its cash flows for the
years then ended. In our opinion, the financial statements referred to above do
present fairly, in all material respects, the admitted assets, liabilities, and
capital stock and surplus of Sentry Life Insurance Company as of December 31,
2000 and 1999, and the results of its operations and its cash flows for the
years then ended, on the basis of accounting described in Note 1.
Our audit was conducted for the purpose of forming an opinion on the basic
statutory-basis financial statements taken as a whole. The accompanying
Supplemental Schedule of Assets and Liabilities of Sentry Life Insurance Company
as of December 31, 2000, and for the year then ended is presented for purposes
of additional analysis and is not a required part of the basic statutory-basis
financial statements. Such information has been subjected to the auditing
procedures applied in our audit of the basic statutory-basis financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic statutory-basis financial statements taken as a whole.
/s/PricewaterhouseCoopers LLP
February 16, 2001
SENTRY LIFE INSURANCE COMPANY
Statutory-Basis Balance Sheets
December 31, 2000 and 1999
ASSETS 2000 1999
Investments:
Bonds ......................... $1,144,554,736 $1,145,721,207
Investment in subsidiary ...... 10,092,789 9,869,910
Policy loans .................. 23,400,410 23,284,247
Cash and short-term investments 20,076,150 20,833,999
Total investments .......... 1,198,124,085 1,199,709,363
Accrued investment income ............. 20,323,113 19,954,174
---------- ----------
Premiums deferred and uncollected ..... 5,582,212 5,060,644
Other assets .......................... 1,912,840 717,462
Assets held in separate accounts ...... 660,799,928 645,899,120
----------- -----------
Total admitted assets ...... $1,886,742,178 $1,871,340,763
============== ==============
The accompanying notes are an integral part of these statutory-basis financial
statements.
SENTRY LIFE INSURANCE COMPANY
Statutory-Basis Balance Sheets (continued)
December 31, 2000 and 1999
LIABILITIES 2000 1999
Future policy benefits:
Life ........................... $ 257,520,248 $ 257,989,084
Accident and health ............ 15,353,595 15,254,702
Annuity ........................ 123,736,511 131,069,441
Policy and contract claims:
Life ........................... 4,268,395 3,856,456
Accident and health ............ 1,100,764 615,738
Premium and other deposit funds ........ 645,446,384 650,107,483
Other policyholder funds ............... 4,411,342 3,495,677
Accounts payable and other liabilities . 4,478,030 5,047,521
Federal income taxes accrued ........... 7,841,776 9,689,197
Asset valuation reserve ................ 5,214,838 5,725,552
Interest maintenance reserve ........... 3,649,316 5,970,750
Liabilities related to separate accounts 659,414,762 645,025,463
----------- -----------
Total liabilities ........... 1,732,435,961 1,733,847,064
============= =============
CAPITAL STOCK AND SURPLUS
Capital stock, $10 par value;
authorized 400,000 shares; issued and
outstanding 316,178 shares .................... 3,161,780 3,161,780
Paid-in surplus ....................................... 43,719,081 43,719,081
Earned surplus, unappropriated ........................ 107,425,356 90,612,838
----------- ----------
Total capital stock and surplus ............ 154,306,217 137,493,699
----------- -----------
Total liabilities, capital stock and surplus $1,886,742,178 $1,871,340,763
============== ==============
The accompanying notes are an integral part of these statutory-basis financial
statements.
SENTRY LIFE INSURANCE COMPANY
Statutory-Basis Statements of Operations
For The Years Ended December 31, 2000 and 1999
2000 1999
Premiums and other income:
Premiums and annuity considerations .......... $ 81,121,745 $ 78,163,778
Other fund deposits .......................... 109,850,406 84,714,318
Commissions and expense allowances on
reinsurance ceded ........................... 9,530,745 10,490,120
Net investment income ........................ 92,570,130 92,047,182
Other income ................................. 8,716,283 7,975,913
--------- ---------
Total premiums and other income ........... 301,789,309 273,391,311
----------- -----------
Benefits and expenses:
Policyholder benefits and fund withdrawals ... 197,743,500 183,564,804
(Decrease) increase in future policy benefits
and other reserves .......................... (11,843,392) 17,245,042
Commissions .................................. 7,579,857 7,641,402
Other expenses ............................... 28,398,543 28,531,247
Transfers to separate accounts, net .......... 53,983,031 10,947,327
Total benefits and expenses ............... 275,861,539 247,929,822
----------- -----------
Income before federal income tax expense and
net realized losses on investments .................. 25,927,770 25,461,489
Federal income tax expense, less tax on net
realized losses and transfers to the IMR 7,977,424 8,599,925
--------- ---------
Income before net realized losses on
investments ......................................... 17,950,346 16,861,564
Net realized losses on investments ........ (1,879,847) (835,531)
---------- --------
Net income ........................................... $ 16,070,499 $ 16,026,033
============= =============
The accompanying notes are an integral part of these statutory-basis financial
statements.
SENTRY LIFE INSURANCE COMPANY
Statutory-Basis Statements of Changes in Capital Stock and Surplus
For The Years Ended December 31, 2000 and 1999
2000 1999
Capital stock, beginning and end of year ..................... $ 3,161,780 $ 3,161,780
------------ -------------
Paid-in surplus, beginning and end of year ................... 43,719,081 43,719,081
---------- ----------
Earned surplus, unappropriated:
Balance at beginning of year ......................... 90,612,838 81,771,668
Net income ........................................... 16,070,499 16,026,033
Change in non-admitted assets ........................ 846 (5,597)
Change in liability for reinsurance .................. 10,000 --
Change in asset valuation reserve .................... 510,714
Dividend to stockholder .............................. -- (7,500,000)
Change in net unrealized gains (losses) on investments 220,459 339,299
------- -------
Balance at end of year ............................... 107,425,356 90,612,838
----------- ----------
Total capital stock and surplus .............................. $154,306,217 $ 137,493,699
============ =============
The accompanying notes are an integral part of these statutory-basis financial
statements.
SENTRY LIFE INSURANCE COMPANY
Statutory-Basis Statements of Cash Flows
For The Years Ended December 31, 2000 and 1999
2000 1999
Premiums and annuity considerations .................... $ 80,782,247 $ 77,982,959
Other fund deposits .................................... 109,850,406 84,714,318
Other premiums, considerations and deposits ............ 317,836 158,698
Allowances and reserve adjustments received on
reinsurance ceded ..................................... 9,333,545 10,531,483
Investment income received (excluding realized gains
and losses and net of investment expenses) ............ 90,505,071 89,005,861
Other income received .................................. 8,397,637 7,812,904
Life and accident and health claims paid ............... (30,635,524) (26,702,540)
Surrender benefits ..................................... (114,017,700) (105,735,114)
Other benefits to policyholders paid ................... (52,414,843) (50,813,480)
Commissions, other expenses, and taxes paid
(excluding federal income taxes) ...................... (35,473,943) (35,554,121)
Net transfers to separate accounts ..................... (54,296,148) (10,834,702)
Dividends to policyholders paid ........................ (308,716) (318,735)
Federal income taxes paid .............................. (8,545,346) (6,615,383)
Net cash from operations .................... 3,494,522 33,632,148
--------- ----------
Proceeds from investments sold, matured, or repaid:
Bonds .......................................... 88,143,099 137,065,217
Mortgage loans ................................. -- 18,723
Tax on net capital losses (gains) .............. 104,925
-------
Total investment proceeds ................... 88,248,024 135,475,693
---------- -----------
Other cash provided .................................... 2,345,435 2,492,931
Net decrease in policy loans ........................... (116,164) 752,251
-------- -------
Total cash provided ......................... 93,971,817 172,353,023
---------- -----------
Cost of investments acquired ........................... 90,866,213 164,883,237
Other cash applied:
Dividend to stockholder ........................ -- 7,500,000
Other applications, net ........................ 3,863,453 9,012,803
--------- ---------
Total cash applied .......................... 94,729,666 181,396,040
---------- -----------
Net change in cash and short-term investments (757,849) (9,043,017)
Cash and short-term investments:
Beginning of year .............................. 20,833,999 29,877,016
---------- ----------
End of year .................................... $ 20,076,150 $ 20,833,999
============= =============
The accompanying notes are an integral part of these statutory-basis financial
statements.
SENTRY LIFE INSURANCE COMPANY
Notes to Statutory-Basis Financial Statements
(1) BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Sentry Life Insurance Company (the Company) is a wholly-owned subsidiary of
Sentry Insurance a Mutual Company (SIAMCO). The Company writes insurance
products in all states except New York primarily through direct writers who
market the Company's individual life insurance, annuities and group health and
pension products. The Company also uses direct mail and third party
administrators for the marketing of its group life and health products.
The accompanying financial statements of the Company have been prepared in
conformity with accounting practices prescribed or permitted by the State of
Wisconsin, Office of the Commissioner of Insurance. Prescribed statutory
accounting principles include a variety of publications of the National
Association of Insurance Commissioners (NAIC), as well as state laws,
regulations, and general administrative rules. Permitted statutory accounting
practices encompass all accounting practices not so prescribed. The Company does
not employ any material permitted practices in the preparation of its
statutory-basis financial statements.
Presentation of financial statements in accordance with statutory accounting
practices requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from these estimates.
SIGNIFICANT ACCOUNTING POLICIES
A. INVESTMENT SECURITIES
Investments are valued in accordance with the requirements of the NAIC. Bonds
which qualify for amortization are stated at amortized cost; bonds not
qualifying are carried at the lesser of amortized cost or NAIC market values.
Under GAAP, bonds would be classified as either trading, available for sale, or
held-to-maturity. Bonds classified as trading or as available for sale would be
carried at market with unrealized gains and losses, net of applicable taxes,
recognized as net income (trading securities) or as a direct surplus adjustment
(available for sale). Common stock of the Company's unconsolidated subsidiary is
carried at its underlying statutory capital and surplus. The change in the
subsidiary's underlying equity between years is reflected as a change in
unrealized gains (losses). Under GAAP, this entity's balance sheet and results
of operations would be consolidated with the Company. Policy loans are carried
at the aggregate of unpaid principal balances plus accrued interest and are not
in excess of cash surrender values of the related policies. Short-term
investments are carried at amortized cost, which approximates market value.
Investment income is recorded when earned. Market value adjustments on
investments carried at market are reflected in earned surplus as unrealized
gains (losses) on investments. Realized gains and losses are determined on the
specific identification method and are recorded directly in the statements of
operations, net of federal income taxes and after transfers to the Interest
Maintenance Reserve, as prescribed by the NAIC.
Income on mortgage-backed securities is recognized using an effective yield
based on anticipated prepayments and the estimated economic life of the
securities. When actual prepayments differ significantly from anticipated
prepayments, the effective yield is recalculated to reflect actual payments to
date and anticipated future payments. The net investment in the securities is
adjusted to the amount that would have existed had the new effective yield been
applied since the acquisition of the securities. This adjustment is reflected in
net investment income.
B. SEPARATE ACCOUNT BUSINESS AND LIABILITY FOR PREMIUM AND OTHER DEPOSIT FUNDS
The Company issues group annuity contracts both to affiliated companies and
others, which include the option of placing deposits received in connection with
these contracts in separate accounts. The Company also issues variable annuity
contracts and variable universal life contracts, which require deposits to be
placed in separate accounts. A separate account is an accounting entity
segregated as a discrete operation within an insurance company. The stockholder
of the Company and its other policyholders have no claim to assets held in the
separate accounts. The contractholders are the only persons having rights to any
assets in the separate accounts or to income arising from these assets. All
contracts held by the Company in separate accounts are non-guaranteed and
represent funds where the benefit is determined by the performance of the
investments held in the separate account. Assets are carried at market value and
reserves are calculated using the cash value of the contract. All reserves fall
into the category allowing discretionary withdrawals at market value. For the
variable annuity contract, if it has been in effect at least six years, there is
no surrender charge. For the variable universal life contract, there is a
surrender charge through the ninth year. The admitted asset value of separate
accounts consists primarily of common stock.
C. NON-ADMITTED ASSETS
For statutory accounting purposes, certain assets designated as "non-admitted"
(principally certain receivables) have been excluded from the balance sheets and
charged to earned surplus. Under GAAP, such assets would be recognized at net
realizable value. Non-admitted assets totaled $9,502 and $10,348 at December 31,
2000 and 1999, respectively.
D. POLICY BENEFITS
Liabilities for traditional life and limited-payment life contracts are computed
using methods, mortality and morbidity tables and interest rates which conform
to the valuation laws of the State of Wisconsin. The liabilities are primarily
calculated on a modified reserve basis. The effect of using a modified reserve
basis partially offsets the effect of immediately expensing acquisition costs by
providing a policy benefit reserve increase in the first policy year which is
less than the reserve increase in renewal years.
Future policy benefits for life policies and contracts were primarily determined
using the Commissioner's reserve valuation method with interest rates ranging
from 2.5% to 6%. Additional statutory policy deficiency reserves have been
provided where the valuation net premium exceeds the gross premium.
Future policy benefits for annuity contracts, primarily for individual and group
deferred annuities, were primarily determined using the Commissioner's annuity
reserve valuation method with interest rates ranging from 2.5% to 11.25%. Group
health reserves consist predominantly of long-term disability reserves
representing the present value of amounts not yet due calculated using standard
disability tables and various interest rates.
Reserves for universal life-type and investment contracts are based on the
contract account balance, if future benefit payments in excess of the account
balance are not guaranteed, or on the present value of future benefit payments
when such payments are guaranteed.
Under GAAP, traditional life reserves would be computed using mortality,
withdrawal and interest rate assumptions that are based on Company experience,
including a provision for adverse deviation. Reserves for universal life-type
and investment contracts would generally be based on the contract account value
less any withdrawal charges.
E. INTEREST MAINTENANCE RESERVE (IMR)
Realized investment gains and losses on bonds attributable to
interest rate changes are deferred in the IMR account. The IMR is recorded as a
liability and amortized into investment income over the approximate remaining
maturities of the bonds sold. This policy for recognition of such realized gains
and losses is prescribed by the NAIC in order to smooth the impact of such
activity on the Company's earned surplus. For GAAP purposes, there is no such
reserve.
F. ASSET VALUATION RESERVE (AVR)
The AVR mitigates fluctuations in the values of invested assets including bonds,
stocks, mortgage loans, real estate and other invested assets. Changes in the
AVR are included in policyholders' surplus. For GAAP purposes, a writedown, for
other than temporary declines in value, is recognized as a realized loss on an
individual asset basis.
G. Revenue and Expense Recognition
Premiums for traditional life insurance policies and
limited-payment contracts are taken into income when due. For investment
contracts without mortality risk (such as deferred annuities and immediate
annuities with benefits paid for a period certain) and contracts that permit the
insured to make changes in the contract terms (such as universal life products),
deposits are recorded as revenue when received. Under GAAP, deposits are
recorded as increases to liabilities and revenue is recognized as mortality and
other assessments are charged to policyholders.
The Company has no direct
employees and does not own equipment, it utilizes services provided by employees
and equipment of SIAMCO and occupies space in SIAMCO's office building.
Accordingly, the Company participates in an expense allocation system with
certain affiliated companies. Expenses of the Company consist of direct charges
incurred and an allocation of expenses (principally salaries, salary-related
items, rent, and data processing services) between certain affiliated companies.
The Company recognized expenses of $30,435,958 and $30,266,743 for 2000 and
1999, respectively, under this allocation agreement.
H. ACQUISITION COSTS
Costs directly related to the acquisition of insurance premiums, such as
commissions and premium taxes, are charged to operations as incurred. Under
GAAP, such acquisition costs would be capitalized and amortized over the policy
periods.
I. FEDERAL INCOME TAX
The Company is included in the consolidated federal income tax return of SIAMCO.
Income taxes payable or recoverable are determined on a separate return basis by
the Company in accordance with a written tax allocation agreement. Deferred
federal income taxes are not provided for temporary differences between tax and
financial reporting as they would be under GAAP. Additionally, federal income
taxes are not provided for unrealized gains (losses) on investments.
J. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
The Company participates with SIAMCO and certain other affiliated companies in a
defined benefit pension plan which covers substantially all of their employees.
Generally, the companies' funding and accounting policies are to make the
maximum contribution required under applicable regulations and to charge such
contributions to expense in the year they are deductible for tax purposes. GAAP
periodic net pension expense is based on the cost of incremental benefits for
employee service during the period, interest on the projected benefit
obligation, actual return on plan assets and amortization of actuarial gains and
losses.
In addition to providing pension benefits, the Company, with SIAMCO and its
affiliated subsidiaries, provides certain health care, dental and life insurance
benefits to retired employees and their dependents. Substantially all of the
employees may become eligible for those benefits if they reach normal retirement
age while working for the Companies. The expected costs of providing those
benefits to employees and the employees' beneficiaries and covered dependents
are accounted for on an accrual basis during the years that employees render
service in accordance with NAIC policy. SIAMCO is amortizing its transition
obligation, created upon the initial valuation of postretirement benefits, over
a period of twenty years and a portion of the annual expense is allocated to the
Company.
K. CODIFICATION
In 1998, the NAIC adopted the Codification of Statutory Accounting Principles
guidance, which will replace the current Accounting Practices and Procedures
manual as the NAIC's primary guidance on statutory accounting. Codification
provides guidance for areas where statutory accounting has been silent and
changes current statutory accounting in some areas.
The Wisconsin Insurance Department will adopt the Codification guidance,
effective January 1, 2001. The effect of Codification on the Company's financial
statements has not yet been determined.
(2) Investments
The book value and estimated market value of bonds are as follows:
Gross Gross Estimated
Book Unrealized Unrealized Market
At December 31, 2000 Value Gains Losses Value
US Treasury securities and
obligations of US government
corporations and agencies $ 43,186,244 $ 2,508,132 $ 44,357 $ 45,650,019
Obligations of states and
political subdivisions 446,374 66,943 -- 513,317
Corporate securities 885,948,956 26,952,126 39,049,135 873,851,947
Mortgage-backed securities 214,973,162 9,242,119 209,494 224,005,787
----------- --------- ------- -----------
Total $1,144,554,736 $38,769,320 $39,302,986 $ 1,144,021,070
============== =========== =========== ==============
Gross Gross Estimated
Book Unrealized Unrealized Market
At December 31, 1999 Value Gains Losses Value
US Treasury securities and
obligations of US government
corporations and agencies $ 44,861,293 $ 999,252 $ (772,215) $ 45,088,330
Obligations of states and
political subdivisions 443,994 27,721 -- 471,715
Corporate securities 876,015,612 10,437,319 (40,424,102) 846,028,829
Mortgage-backed securities 224,400,308 4,532,599 (2,314,104) 226,618,803
----------- --------- ---------- -----------
Total $1,145,721,207 $15,996,891 $(43,510,421) $1,118,207,677
============== =========== ============ ==============
Book value and estimated market value of bonds at December 31, 2000, by
contractual maturity, are shown below. Actual maturities may differ from
contractual maturities because certain issuers have the right to call or prepay
obligations with or without call or prepayment penalties. Because most
mortgage-backed securities provide for periodic payments throughout their lives,
they are listed below in a separate category.
Estimated
Book Market
Value Value
Due in one year or less $ 14,770,869 $ 14,910,812
Due after one year through five years 91,756,401 91,417,026
Due after five years through ten years 167,346,952 170,229,986
Due after ten years 655,707,352 643,457,459
Sub-total 929,581,574 920,015,283
----------- -----------
Mortgage-backed securities 214,973,162 224,005,787
Total $1,144,554,736 $1,144,021,070
============== ==============
The bond portfolio distribution by quality rating (primarily Moody's) at
December 31, 2000 is summarized as follows:
Aaa 24.11%
Aa 8.18%
A 43.24%
Baa 21.19%
Ba & below and not rated 3.28%
----
100.00%
======
Generally, bonds with ratings Baa and above are considered to be investment
grade.
Proceeds from sales of bonds during 2000 and 1999 were $62,908,479 and
$68,266,744, respectively. In 2000 and 1999, respectively, gross gains of
$656,058 and $631,750 and gross losses of $5,410,850 and $2,290,497 were
realized on these sales before transfer to the IMR liability. Other dispositions
of bonds during 2000 and 1999 resulted in gross gains of $218,719 and $792,956
and gross losses of $41,736 and $53,609, respectively.
At December 31, 2000 and 1999, investments carried at $4,228,997 and $4,283,967,
respectively, were on deposit with various governmental agencies as required by
law.
(3) UNCONSOLIDATED SUBSIDIARY
The Company wholly owned Sentry Life Insurance Company of New York (SLONY)
during 2000 and 1999. Condensed financial information regarding SLONY is as
follows:
SLONY
2000 1999
Investments $31,299,738 $31,349,369
Total assets 39,393,882 37,511,889
Policy reserves and benefits 17,695,419 18,263,957
Total liabilities 29,301,093 27,641,979
Statutory capital and surplus 10,092,789 9,869,910
Premium income 8,317,069 6,164,053
Net investment income 2,369,669 2,436,476
Benefits and expenses 9,011,697 7,044,649
Net income 1,064,801 1,019,134
(4) NET INVESTMENT INCOME AND NET REALIZED AND UNREALIZED GAINS (LOSSES)
Sources of net investment income for 2000 and 1999 are as follows:
2000 1999
Dividends received from subsidiary $ 880,000 $ 850,000
Interest:
Bonds 88,606,154 87,460,887
Short-term investments 792,012 1,140,773
Other investments 1,628,646 1,815,616
Amortization of IMR 1,007,896 1,138,005
--------- ---------
Gross investment income 92,914,708 92,405,281
Investment expense 344,578 358,099
------- -------
Net investment income $92,570,130 $92,047,182
=========== ===========
The components of net realized gains (losses) and changes in net unrealized
gains (losses) on investments which are reflected in the accompanying
statutory-basis financial statements are as follows:
Realized Unrealized
2000 1999 2000 1999
Common stock of
unconsolidated subsidiary $ -- $ -- $222,879 $336,970
Bonds (4,577,809) (919,400) -- --
Stocks (2,420) 2,329
Capital gains tax 1,384,424 104,925 -- --
--------- -------
Pre-IMR capital gains (losses),
net of tax (3,193,385) (814,475) 220,459 339,299
IMR capital gains transferred into
the reserve, net of taxes 1,313,538 (21,056) -- --
--------- -------
$(1,879,847) $(835,531) $220,459 $339,299
=========== ========= ======== ========
(5) INCOME TAXES
Federal income tax expense in the statutory-basis statements of operations
differs from that computed based on the federal corporate income tax rate of
35%. The reasons for these differences are as follows:
2000 1999
Federal income tax calculated at statutory rate
of 35% of income before federal income
taxes and net realized gains on investments $ 9,074,719 $ 8,911,521
Accrual of bond discount (634,740) (566,045)
Adjustment for deferred acquisition costs (44,006) (59,256)
Dividends received from subsidiaries (308,000) (297,500)
Different basis used to compute future policy benefits 16,856 506,516
Amortization of interest maintenance reserve (352,764) (398,302)
Other, net 225,359 502,991
------- -------
Total $ 7,977,424 $ 8,599,925
=========== ===========
Under pre-1984 life insurance company income tax laws, a portion of a life
insurance company's "gain from operations" was not subject to current income
taxation but was accumulated, for tax purposes, in a memorandum account
designated as the "policyholders' surplus account." The amounts included in this
account are includable in taxable income of later years at rates then in effect
if the life insurance company elects to distribute tax basis policyholders'
surplus to stockholders as dividends or takes certain other actions. Any
distributions are first made from another tax memorandum account known as the
"stockholders' surplus account." The accumulation in the tax policyholders'
surplus and stockholders' surplus accounts of the Company were $5,605,476 and
$106,936,392, respectively, at December 31, 2000.
Federal income tax returns of SIAMCO have been examined through 1996, and SIAMCO
and the Internal Revenue Service have reached agreement on all issues relating
to 1996 and prior years. In the opinion of management, the Company has
adequately provided for the possible effect of future assessments related to
prior years.
(6) DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 (SFAS 107), "Disclosures
about Fair Values of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheets, for which it is practicable to estimate those values. SFAS 107
defines fair values of a financial instrument as the amount at which that
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidated sale.
The fair values presented on the next page represent management's best estimates
and may not be substantiated by comparisons to independent markets and, in many
cases, could not be realized in immediate settlement of the instruments. Certain
financial instruments and all nonfinancial instruments are exempt from the
disclosure requirements of SFAS 107. Financial instruments which are exempt
include life policy benefits with mortality or morbidity risk. Therefore, the
aggregate fair value amounts presented do not represent the underlying value of
the Company.
For cash and short-term investments and accrued investment income, the carrying
amount approximates fair value.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Bonds
Estimated fair value is generally based on quotes provided by
independent pricing services. If a quoted market price is not available,
fair value is estimated by management based on the quoted market price of
comparable instruments.
Policy Loans
Policy loans have no stated maturity dates; therefore, no reasonable
estimate of fair value can be made. Interest rates range from 5 to 8
percent.
Separate Accounts
The fair value of the assets held in separate
accounts is based on quoted market prices. The fair value of liabilities
relating to separate accounts is the amount payable on demand.
Aggregate Reserves for Investment-Type Contracts
The fair value of investment-type insurance contracts is estimated by
reducing the policyholder liability for applicable surrender charges.
Structured Settlements
The fair value of the liability for structured settlements is
estimated by discounting future cash flows using the current rates being
offered for similar settlements.
Liability for Premium and Other Deposit Funds
The fair value for contracts with stated maturities is estimated by
discounting future cash flows using current rates being offered for similar
contracts. For those contracts with no stated maturity, the fair value is
estimated by calculating the surrender value.
The estimated fair values of the Company's significant financial instruments are
as follows:
Statement Estimated
At December 31, 2000 Value Fair Value
Assets:
Bonds $1,144,554,736 $1,144,021,070
Assets held in separate accounts 660,799,928 660,799,928
Liabilities:
Aggregate reserves for investment-type contracts 65,918,143 64,782,796
Structured settlements 53,708,045 59,700,532
Liability for premium and other deposit funds 645,446,384 636,532,801
Liabilities related to separate accounts 659,414,762 659,414,762
Statement Estimated
Value Fair Value
At December 31, 1999
Assets:
Bonds $1,145,721,207 $1,118,207,677
Assets held in separate accounts 645,899,120 645,899,120
Liabilities:
Aggregate reserves for investment-type contracts 71,802,052 71,619,440
Structured settlements 54,073,885 64,055,048
Liability for premium and other deposit funds 650,107,483 641,978,933
Liabilities related to separate accounts 645,025,463 645,025,463
(7) PENSION AND 401K PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company participates with SIAMCO and certain other affiliated companies in a
defined benefit pension plan which covers substantially all of their employees.
The benefits are based on years of service, the average of the three highest of
the last fifteen years of an employee's compensation and primary social security
benefits, as defined in the plan. The Company is not a separately assignable
entity for purposes of allocation of accumulated plan benefits or assets. The
Company was not allocated pension expense by SIAMCO in 2000 and 1999.
The Company participates with SIAMCO and its affiliated subsidiaries in a
qualified 401k Plan. Employees who meet certain eligibility requirements may
elect to participate in the Plan. Participants must contribute at least one
percent but no more than 16 percent of base compensation. Highly compensated
employees may contribute a maximum of 10 percent on a pre-tax basis. For
non-highly compensated employees, the entire 16% may be deposited on a pre-tax
basis. The Company matches up to 25% of employee contributions up to the first 6
percent of base salary deposited by an employee. The Company may make additional
annual contributions to the Plan based on operating profit. The Company was
allocated approximately $311,000 and $373,000 by SIAMCO for 401k Plan benefits
in 2000 and 1999, respectively.
In addition to the above-mentioned benefits, the Company, with SIAMCO and its
affiliated subsidiaries, provides certain health care, dental and life insurance
benefits to retired employees and their covered dependents. The retiree health
care benefits allocated to the Company by SIAMCO were approximately $413,000 for
2000 and $516,000 for 1999.
(8) REINSURANCE
The Company has entered into assumed reinsurance contracts for participation in
reinsurance pools and to provide surplus protection for its wholly-owned
subsidiary. Assumed life in-force amounted to approximately 29% and 32% of total
in-force (before ceded reinsurance) at December 31, 2000 and 1999, respectively.
The Company has entered into reinsurance ceded contracts to limit the net loss
potential arising from large risks. Generally, life benefits in excess of
$250,000 and all group health liabilities, except for liabilities relating to
SIAMCO's employee benefit plans, are ceded to reinsurers. The group health
liabilities are ceded to SIAMCO.
The Company cedes insurance to other insurers under various contracts which
cover individual risks or entire classes of business. Although the ceding of
insurance does not discharge the Company from its primary liability to
policyholders in the event any reinsurer might be unable to meet the obligations
assumed under the reinsurance agreements, it is the practice of insurers to
reduce their balances for amounts ceded. The amounts included in the
accompanying statutory-basis financial statements for reinsurance were as
follows:
2000
(000's omitted)
Affiliated Unaffiliated
Assumed Ceded Assumed Ceded
Premiums $ 250 $19,210 $ 7,880 $ 4,071
Benefits 94 47,440 7,967 1,553
Commissions 4 8,219 -- 1,311
Future policy benefits:
Life & annuities 63 -- 18 1,583
Accident & health -- 191,886 -- 68
Intercompany receivable -- 2,660 -- --
1999
(000's omitted)
Affiliated Unaffiliated
Assumed Ceded Assumed Ceded
Premiums $ 295 $24,993 $ 7,399 $ 3,488
Benefits 138 54,854 7,236 1,854
Commissions 8 10,050 (3) 440
Future policy benefits:
Life & annuities 31 -- 13 1,303
Accident & health -- 213,850 16 70
Intercompany receivable -- 3,620 -- --
(9) COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are various legal actions and
proceedings pending against the Company. In the opinion of management and legal
counsel, the ultimate resolution of these matters will not have a material
adverse impact on the Company's statutory-basis financial statements.
State guaranty funds can assess the Company for losses of insolvent or
rehabilitated companies. Mandatory assessments may be partially recovered
through a reduction in future premium taxes in some states. The Company believes
that its ultimate cost for these assessments will not have a material adverse
effect on the financial statements.
(10) OTHER RELATED PARTY TRANSACTIONS
The Company is the direct writer of certain employee benefit plans for SIAMCO.
Premiums included in the accompanying statutory-basis statements of operations
(net of ceded premiums) are approximately $33,641,000 and $33,022,000 in 2000
and 1999, respectively. The Company has provided coverage in the form of annuity
contracts as structured settlements for SIAMCO workers' compensation claims.
Reserves for future policy benefits at December 31, 2000 and 1999 included
$53,708,045 and $54,073,885, respectively, relating to these contracts. Also,
see Notes 7 and 8 for other related party transactions.
(11) WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES
Annuity reserves and deposits of approximately $1,349.0 million and $1,342.0
million in 2000 and 1999, respectively, are subject to withdrawal at the
discretion of the annuity contract holders. Approximately 96% of these balances
carry surrender charges.
(12) LIABILITY FOR ACCIDENT AND HEALTH BENEFITS
Activity in the liability for accident and health benefits is summarized as
follows:
2000 1999
Balance January 1 $11,929,284 $12,504,278
Incurred related to:
Current year 6,420,025 4,599,820
Prior years 905,192
Total incurred 7,325,217 3,662,811
Paid related to:
Current year 3,016,518 2,587,769
Prior years 1,849,622 1,650,036
Total paid 4,866,140 4,237,805
Balance at December 31 14,388,361 11,929,284
Reserves not subject to development 2,065,998 3,941,156
Total accident and health reserves $16,454,359 $15,870,440
SENTRY LIFE INSURANCE COMPANY
Supplemental Schedule of Assets and Liabilities
As of and for the year ended December 31, 2000
SENTRY LIFE INSURANCE COMPANY
Supplemental Schedule of Assets and Liabilities
For The Year Ended December 31, 2000
Schedule 1 - Selected Financial Data
The following is a summary of certain financial data included in other exhibits
and schedules subjected to audit procedures by independent auditors and utilized
by actuaries in the determination of reserves.
Investment Income Earned:
Government Bonds ............................................ $ 320,275
Other bonds (unaffiliated) .................................. 88,285,879
Common stocks of affiliates ................................. 880,000
Premium notes, policy loans and liens ....................... 1,590,961
Short-term investments ...................................... 792,012
Aggregate write-ins for investment income ................... 37,685
------
Gross investment income ..................................... $ 91,906,812
==============
Bonds and Stocks of Parents, Subsidiaries and Affiliates - Book Value
Common stocks ............................................... $ 10,092,789
==============
Bonds and Short-Term Investments by Class and Maturity:
Bonds by Maturity - Statement Value
Due within one year or less ......................... $ 37,802,605
Over 1 year through 5 years ......................... 169,224,251
Over 5 years through 10 years ....................... 259,643,011
Over 10 years through 20 years ...................... 304,390,520
Over 20 years ....................................... 373,494,349
-- -----------
Total by Maturity ................................... $1,144,554,736
==============
Bonds by Class - Statement Value
Class 1 ............................................. $ 827,538,452
Class 2 ............................................. 282,789,236
Class 3 ............................................. 24,510,121
Class 4 ............................................. 9,716,927
Class 5 ............................................. --
Class 6 ............................................. --
Total by Class ...................................... $1,144,554,736
==============
Total Bonds Publicly Traded ......................... $1,114,879,176
==============
Total Bonds Privately Placed ........................ $ 29,675,560
==============
Short-Term Investments - Book Value ................................. $ 20,076,150
==============
Cash on Deposit ..................................................... --
Life Insurance In Force (000's omitted):
Ordinary .................................................................... $ 4,363,406
==============
Group Life .................................................................. $ 4,118,472
==============
Amount of Accidental Death Insurance In Force Under Ordinary
Policies (000's omitted) $ 102,689
==============
Life Insurance Policies and Certificates with Disability Provisions In Force:
Ordinary Policies ........................................................... $ 1+,207
========= ====
Group Life Certificates ..................................................... $ 79,849
==============
Supplementary Contracts In Force:
Ordinary - Not Involving Life Contingencies
Amount on Deposit ................................................... $ 268,760
==============
Income Payable ...................................................... $ 190,524
==============
Ordinary - Involving Life Contingencies
Income Payable ...................................................... $ 78,124
==============
Annuities:
Ordinary
Immediate - Amount of Income Payable ................................ $ 1,758,099
==============
Deferred - Fully paid account balance ............................... $ 16,633,815
==============
Deferred - Not fully paid account balance ........................... $ 89,028,302
==============
Group
Immediate - Amount of income payable ................................ $ 4,526,072
==============
Deferred - Fully paid account balance ............................... $ 27,477,852
==============
Deferred - Not fully paid account balance ........................... $1,249,205,314
==============
Accident and Health Insurance - Premiums In Force:
Ordinary .................................................................... $ 105,816
==============
Group ....................................................................... $ 21,186,564
==============
Deposit Funds and Dividend Accumulations:
Dividend Accumulations - Account Balance .................................... $ 389,235
==============
Claim Payments 2000:
Group Accident and Health Year - Ended December 31,
2000 ................................................................ $ 3,001,351
==============
1999 ................................................................ $ 462,500
==============
1998 ................................................................ $ 181,871
==============
1997 ................................................................ $ 66,841
==============
1996 & prior ........................................................ $ 1,045,152
==============
Other Accident & Health
2000 ............................................................... $ 15,167
==============
1999 .............................................................. $ 8,843
==============
1998 .............................................................. $ 20,020
==============
1997 ............................................................... $ 10,321
==============
1996 & prior ........................................................ $ 54,075
==============
APPENDIX A
ILLUSTRATIONS OF BENEFITS
Customized computer generated proposal illustrations tailored to the unique life
insurance needs of an individual will play a major role in the sales process.
The tables in Appendix A illustrate the way in which the Policy operates. They
show how the death benefit, Cash Value and Cash Surrender Value for an Insured
of a given age and annual premium may vary over an extended period of time. The
tables are based on a standard male age 35 with a specified Amount of $100,000.
The annual premium illustrated is the minimum first year premium for the death
benefit option indicated. The tables illustrate values that would result
assuming the premiums are paid as indicated, no loans, partial surrenders, or
transfers are made, and the Policy Owner has not requested any changes in the
Specified Amount, or illustration of future Policy values. Under these
assumptions, the premium illustrated will meet the premium requirement under the
death benefit guarantee provision for the Policy illustrated.
The tables illustrate Policy values assuming current mortality charges are
deducted. The tables also illustrate Policy values assuming guaranteed maximum
mortality charges are deducted. Guaranteed maximum mortality charges are based
on the 1980 CSO-ALB mortality tables.
Gross investment returns of 0%, 6%, and 12% are assumed to be level for all
years shown. The values would be different if rates of return averaged 0%, 6%,
and 12% over the period of years, but fluctuated above and below those averages
during individual years.
The Cash Values, Cash Surrender Values and death benefits in the tables take
into account all charges and deductions against the Policy (see "Charges and
Deductions").
The amounts shown for the death benefits and Cash Surrender Values reflect the
fact that the net investment return of the Subaccounts is lower than the gross
investment return on the assets held in the Portfolios because of the charges
levied against the Subaccounts. The daily investment management and
administration fees are assumed to be equivalent to an annual rate of 0.73% of
the average daily net assets of T. Rowe Price Fixed Income Series, Inc., T. Rowe
Price Equity Series, Inc., T. Rowe Price International Series, Inc., and Janus
Aspen Series. The values also assume that T. Rowe Price Fixed Income Series,
Inc., T. Rowe Price Equity Series, Inc., T. Rowe Price International Series,
Inc., and Janus Aspen Series will incur other expenses annually which are
assumed to be .01% of the average daily net assets. These assumptions are based
on the fee schedules in effect as of May 1, 2001, and are arithmetic averages of
the fees and expenses for all Portfolios.
The Variable Life Account will be assessed for mortality and expense risks at an
annual rate of .90% of the net asset value of the Variable Life Account. The
Variable Life Account will also be assessed for the death benefit guarantee risk
at an annual rate of .15% of the net asset value of the Variable Life Account.
After taking these expenses and charges into consideration, the illustrated
gross annual investment rates of 0%, 6%, and 12% are equivalent to net rates of
(1.79%), 4.21% and 10.21%.
The hypothetical values shown in the tables do not reflect any charges for
federal income taxes against the Variable Life Account, since the Company is not
currently making such charges. However, such charges may be made in the future
and, in that event, the gross annual investment rate of return would have to
exceed 0%, 6% or 12% by an amount sufficient to cover the tax charge in order to
produce the values illustrated.
Sentry Life Insurance Company Table 1
SELF-DIRECTED LIFE A Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 1
Annual Premium: 1168.
State: WI
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 1168 1226 957 315 100000
37 2 2336 2514 2003 1361 100000
38 3 3504 3866 3145 2505 100000
39 4 4672 5286 4398 3756 100000
40 5 5840 6777 5766 5252 100000
41 6 7008 8342 7260 6875 100000
42 7 8176 9985 8994 8637 100000
43 8 9344 11711 10682 10554 100000
44 9 10512 13523 12639 12639 100000
45 10 11680 15426 14783 14783 100000
55 20 23360 40552 51663 51663 100000
65 30 35040 81481 147809 147809 180327
75 40 46720 148149 390359 390359 417684
95 60 70080 433635 2486604 2486604 2511470
Summary of end of year values assuming a 12.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 1168 1226 908 266 100000
37 2 2336 2514 1896 1254 100000
38 3 3504 3866 2970 2328 100000
39 4 4672 5286 4137 3495 100000
40 5 5840 6777 5405 4891 100000
41 6 7008 8342 6782 6397 100000
42 7 8176 9985 8278 8021 100000
43 8 9344 11711 9905 9777 100000
44 9 10512 13523 11675 11675 100000
45 10 11680 15426 13602 13602 100000
55 20 23360 40552 46205 46205 100000
65 30 35040 81481 131747 131747 160731
75 40 46720 148149 347168 347168 371470
95 60 70080 433635 2179571 2179521 2201367
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
Sentry Life Insurance Company Table 2
SELF-DIRECTED LIFE A Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 1
Annual Premium: 1168.
State: WI
Summary of end of year values assuming a 6.00% gross rate of return
This illustration is based on current mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 01 1168 1226 899 257 100000
37 02 2336 2514 1827 1185 100000
38 03 3504 3866 2786 2144 100000
39 04 4672 5286 3775 3132 100000
40 05 5840 6777 4794 4280 100000
41 06 7008 8342 5843 5458 100000
42 07 8176 9985 6922 6665 100000
43 08 9344 11711 8033 7905 100000
44 09 10512 13523 9175 9175 100000
45 10 11680 15426 10350 10350 100000
55 20 23360 40552 23728 23728 100000
65 30 35040 81481 38552 38552 100000
75 40 46720 148149 48653 48653 100000
95 60 70080 433635 0 0 100000
Summary of end of year values assuming a 6.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 1168 1226 852 210 100000
37 2 2336 2514 1727 1085 100000
38 3 3504 3866 2624 1982 100000
39 4 4672 5286 3542 2900 100000
40 5 5840 6777 4480 3966 100000
41 6 7008 8342 5436 5051 100000
42 7 8176 9985 6410 6153 100000
43 8 9344 11711 7401 7273 100000
44 9 10512 13523 8408 8408 100000
45 10 11680 15426 9430 9430 100000
55 20 23360 40552 20148 20148 100000
65 30 35040 81481 28519 28519 100000
75 40 46720 148149 20068 20068 100000
95 60 70080 433635 0 0 100000
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
Sentry Life Insurance Company Table 3
SELF-DIRECTED LIFE A Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 1
Annual Premium: 1168.
State: WI
Summary of end of year values assuming a 0.00% gross rate of return
This illustration is based on current mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 1168 1226 841 199 100000
37 2 2336 2514 1659 1017 100000
38 3 3504 3866 2453 1812 100000
39 4 4672 5286 3224 2582 100000
40 5 5840 6777 3969 3455 100000
41 6 7008 8342 4686 4301 100000
42 7 8176 9985 5377 5121 100000
43 8 9344 11711 6042 5914 100000
44 9 10512 13523 6678 6678 100000
45 10 11680 15426 7287 7287 100000
55 20 23360 40552 11379 11379 100000
65 30 35040 81481 9081 9081 100000
75 40 46720 148149 0 0 100000
95 60 70080 433635 0 0 100000
Summary of end of year values assuming a 0.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 1168 1226 795 153 100000
37 2 2336 2514 1563 921 100000
38 3 3504 3866 2303 1661 100000
39 4 4672 5286 3013 2371 100000
40 5 5840 6777 3692 3178 100000
41 6 7008 8342 4337 3952 100000
42 7 8176 9985 4947 4690 100000
43 8 9344 11711 5521 5393 100000
44 9 10512 13523 6057 6057 100000
45 10 11680 15426 6555 6555 100000
55 20 23360 40552 8902 8902 100000
65 30 35040 81481 2337 2337 100000
75 40 46720 148149 0 100000
95 60 70080 433635 0 0 100000
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
Sentry Life Insurance Company Table 4
SELF-DIRECTED LIFE A Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 2
Annual Premium: 2281.
State: WI
Summary of end of year values assuming a 12.00% gross rate of return
This illustration is based on current mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 2096 1450 102096
37 2 4562 4910 4396 3750 104396
38 3 6843 7550 6920 6274 106920
39 4 9124 10323 9689 9043 109689
40 5 11405 16291 16060 15672 116060
42 7 15967 19501 19715 19457 119715
43 8 18248 22871 23726 23597 123726
44 9 20529 26409 28127 28127 128127
45 10 22810 30125 32959 32957 132957
55 20 45620 79195 116249 116249 216249
65 30 68430 159124 325847 325847 425847
75 40 91240 289321 852232 852232 952232
95 60 136860 846851 5430004 5430004 5530004
Summary of end of year values assuming a 12.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 2047 1401 102047
37 2 4562 4910 4287 3641 104287
38 3 6843 7550 6738 6092 106738
39 4 9124 10323 9419 8773 109419
40 5 11405 13234 12351 1183 112351
41 6 13686 16291 15556 15168 115556
42 7 15967 19501 19060 18802 119060
43 8 18248 22871 22891 22762 122891
44 9 20529 26409 27080 27080 127080
45 10 22810 30125 31661 31661 131661
55 20 45620 79195 109283 109283 209283
65 30 68430 159124 299336 299336 399336
75 40 91240 289321 764115 764115 864115
95 60 136860 846851 4643115 4643115 4743115
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
Sentry Life Insurance Company Table 5
SELF-DIRECTED LIFE Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 2
Annual Premium: 2281.
State: WI
Summary of end of year values assuming a 6.00% gross rate of return
This illustration is based on current mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 1976 330 101976
37 2 4562 4910 4025 379 104025
38 3 6843 7550 6151 505 106151
39 4 9124 10323 8354 7708 108354
40 5 11405 13234 10636 10119 110636
41 6 13686 16291 12998 12610 112998
42 7 15967 19501 15443 15185 115443
43 8 18248 22871 17975 17846 117975
44 9 20529 26409 20594 20594 120594
45 10 22810 30125 23303 23303 123303
55 20 45620 79195 55560 55560 155560
65 30 68430 159124 96133 96133 196133
75 40 91240 289321 135790 135790 235790
95 60 136860 846851 25741 025741 125741
Summary of end of year values assuming a 6.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 1928 3276 103922
38 3 6843 7550 5983 5337 105983
39 4 9124 10323 8111 7465 108111
40 5 11405 13234 10306 9789 110306
41 6 13686 16291 12568 12180 112568
42 7 15967 19501 14898 14640 114898
43 8 18248 22871 17297 17168 117297
44 9 20529 26409 19764 19764 119764
45 10 22810 30125 22301 22301 122301
55 20 45620 79195 51358 51358 151358
65 30 68430 159124 83614 83614 183614
75 40 91240 289321 102893 102893 202893
95 60 136860 846851 0 0 100000
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
Sentry Life Insurance Company Table 6
SELF-DIRECTED LIFE A Flexible Premium Variable Life Insurance Policy
Designed for: MARK SENTRY Prepared By: ANN AGENT
Issue Age: 35 MALE Initial Specified Amount: 100000.
Rating Class: STD. NON SMOKER Death Benefit Option 2
Annual Premium: 2281.
State: WI
Summary of end of year values assuming a 0.00% gross rate of return
This illustration is based on current mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 1856 1211 101857
37 2 4562 4910 3670 3024 103670
38 3 6843 7550 5441 4795 105441
39 4 9124 10323 7169 6523 107169
40 5 11405 13234 8853 8336 108853
41 6 13686 16291 10491 10103 110491
42 7 15967 19501 12084 11825 112084
43 8 18248 22871 13632 13503 113632
44 9 20529 26409 15134 15134 115134
45 10 22810 30125 16589 16589 116589
55 20 45620 79195 28159 28159 128159
65 30 68430 159124 31503 31503 131503
75 40 91240 289321 17500 17500 117500
95 60 136860 846851 0 0 100000
Summary of end of year values assuming a 0.00% gross rate of return
This illustration is based on guaranteed mortality costs
Premiums
Sum of Accum.
Age Year Premiums Paid @ 5% Cash Value Surrender Value Death Benefit
36 1 2281 2395 1810 1164 101810
37 2 4562 4910 3573 2927 103573
38 3 6843 7550 5287 4641 105287
39 4 9124 10323 6952 6306 106952
40 5 11405 13234 8566 8049 108566
41 6 13686 16291 10126 9738 110126
42 7 15967 19501 11632 11374 111632
43 8 8248 22871 13082 12953 113082
44 9 20529 26409 14475 14475 114475
45 10 22810 30125 15809 15809 115809
55 20 45620 79195 25440 25440 125440
65 30 68430 159124 24492 24492 124492
75 40 91240 289321 865 865 100865
95 60 136860 846851 0 0 100000
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF
RETURN. ACTUAL INVESTMENT RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
PART II
UNDERTAKING TO FILE REPORTS
a. Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission theretofore or hereafter duly adopted pursuant
to authority conferred in that section.
b. Pursuant to Investment Company Act Section 26(e), Sentry Life Insurance
Company ("Company") hereby represents that the fees and charges deducted
under the Policy described in the Prospectus, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by the Company.
INDEMNIFICATION
The Bylaws of the Company and resolutions adopted by SIAMCO provide that any
person who at any time serves as a director or officer of the Company or any
majority-owned ultimate subsidiary of SIAMCO shall be indemnified or reimbursed
against and for any and all claims for which they become subject by reason of
such service.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
REPRESENTATIONS
1. Registrant represents that Section (b)(13)(iii)(F) of Rule 6e-3(T) is being
relied on.
2. Registrant represents that the level of the risk charge is reasonable in
relation to the risks assumed by the life insurer under the Policies.
3. Registrant represents that it has analyzed the risk charge taking into
consideration such facts as current charge levels, potential adverse
mortality, the manner in which charges are imposed, the markets in which
the Policy will be offered, anticipated sales and lapse rates.
4. Registrant represents that the Company has concluded that there is a
reasonable likelihood that the distribution financing arrangement of the
Variable Life Account will benefit the Variable Life Account and
policyholders and will keep and make available to the Commission, on
request, a memorandum setting forth the basis for this representation.
5. Registrant represents that the Variable Life Account will invest only in
management investment companies undertaking to have a Board, a majority of
whom are not interested persons of the Company, which formulates and
approves any plan under Rule 12b-1 to finance distribution expenses.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Prospectus consisting of 68 pages.
The undertaking to file reports.
The signatures.
Written consents of the following persons:
Dean A. Klingenberg, FSA, MAAA
PricewaterhouseCoopers LLP, Independent Accountant
Blazzard, Grodd & Hasenauer, P.C.
The following exhibits:
A. Copies of all exhibits required by paragraph A of instructions for
exhibits in Form N-8B-2.
1. Resolutions of the Board of Directors of Sentry Life Insurance
Company*
2. None
3a. Principal Underwriter's Agreement*
3b. Registered Representatives Agreement*
3c. General Agent Agreement*
4. Not Applicable
5. Flexible Premium Variable Life Insurance Policy*
Amendatory Riders for Various States*
6a. Articles of Incorporation of the Company*
6b. Bylaws of the Company*
7. Not Applicable
8. Not Applicable
9a. Fund Participation Agreement with T. Rowe Price Fixed Income
Series, Inc., T. Rowe Price Equity Series, Inc., and T. Rowe Price
International Series, Inc.**
9b. Fund Participation Agreement with Janus Aspen Series**
10. Application Form***
11. Memorandum of Exchange Right*
27. Not Applicable
B. Opinion and Consent of Counsel
C. Consent of Independent Accountants
D. Consent of Actuary
* Incorporated herein by reference to Registrant's Post Effective Amendment
No. 13 filed electronically on or about April 30, 1997.
** Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 17 filed electronically on or about January 7, 2000.
*** Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 18 filed electronically on or about April 28, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
SENTRY VARIABLE LIFE ACCOUNT I and SENTRY LIFE INSURANCE COMPANY have duly
caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Stevens Point, State of Wisconsin, on the 20th day
of April, 2001. The Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Registration Statement.
Sentry Variable Life Account I, Registrant
BY: Sentry Life Insurance Company
BY: s/Dale R. Schuh
-----------------------------------------------
Dale R. Schuh, Chairman of the Board
and President
Sentry Life Insurance Company, Depositor
BY: s/Dale R. Schuh
-----------------------------------------------
Dale R. Schuh, Chairman of the Board
and President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
s/Dale R. Schuh April 20, 2001
- ---------------------------------------------------
Dale R. Schuh, Chairman of the Board,
President and Director
s/Wallace D. Taylor April 20, 2001
- ---------------------------------------------------
Wallace D. Taylor, Vice President
s/William M. O'Reilly April 20, 2001
- ---------------------------------------------------
William M. O'Reilly, Secretary and Director
s/William J. Lohr April 20, 2001
- ---------------------------------------------------
William J. Lohr, Treasurer and Director
s/Janet L. Fagan April 20, 2001
- ---------------------------------------------------
Janet L. Fagan, Director
s/James J. Weishan April 20, 2001
- ---------------------------------------------------
James J. Weishan, Director