SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured.
NON-PARTICIPATING.
This policy is a legal contract between You, as owner, and Us, Principal Life
Insurance Company. Your policy is issued based on the information in the
application and payment of premiums as shown on the current Data Pages. We will
pay the benefits of this policy in accordance with its provisions.
YOUR NET PREMIUMS ARE ADDED TO YOUR POLICY VALUE. YOU MAY ALLOCATE THEM TO ONE
OR MORE OF THE SEPARATE ACCOUNT DIVISIONS AND TO THE FIXED ACCOUNT.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE SEPARATE ACCOUNT WILL VARY FROM
DAY TO DAY. THE AMOUNT IS NOT GUARANTEED. IT MAY INCREASE OR DECREASE DEPENDING
ON THE INVESTMENT EXPERIENCE OF THE UNDERLYING DIVISIONS THAT YOU HAVE CHOSEN.
THERE ARE NO MINIMUM GUARANTEES AS TO SUCH PORTION OF YOUR POLICY VALUE.
THE PORTION OF YOUR POLICY VALUE THAT IS IN THE FIXED ACCOUNT WILL ACCUMULATE,
AFTER DEDUCTIONS, AT RATES OF INTEREST WE DETERMINE. SUCH RATES WILL NOT BE LESS
THAN 3% A YEAR, COMPOUNDED ANNUALLY.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE VARIABLE OR FIXED AS
DESCRIBED IN THIS POLICY.
10-DAY EXAMINATION OFFER. IT IS IMPORTANT TO US THAT YOU ARE SATISFIED WITH THIS
POLICY. IF YOU ARE NOT SATISFIED, YOU MAY RETURN YOUR POLICY TO EITHER YOUR
AGENT OR OUR HOME OFFICE BEFORE THE LATTER OF: (1) 10 DAYS OF ITS RECEIPT; (2)
45 DAYS AFTER THE APPLICATION WAS SIGNED; (3) 10 DAYS FROM THE DELIVERY OF THE
NOTICE OF THE RIGHT TO CANCEL; OR (4) SUCH LATER DATE AS PROVIDED BY APPLICABLE
STATE LAW. WE WILL REFUND ANY PREMIUM PAID AND YOUR POLICY WILL BE CONSIDERED
VOID FROM ITS INCEPTION. PLEASE READ YOUR POLICY CAREFULLY SO YOU MAY BETTER USE
ITS MANY BENEFITS.
The terms of this policy start on the Policy Date and will stay in force until
the maturity date shown on the Data Pages so long as You satisfy the
requirements as outlined in Your policy.
/s/ Joyce N. Hoffman /s/ David J. Drury
Vice President and Corporate Secretary Chairman and Chief Executive Officer
SF 523
TABLE OF CONTENTS
SUBJECT PAGE
DEFINITIONS IN THIS POLICY.............................................4
PURCHASING AND KEEPING THE CONTRACT IN FORCE...........................5
PLANNED PERIODIC PREMIUMS..............................................6
PREMIUM PAYMENT LIMITS.................................................6
GRACE PERIOD...........................................................6
TERMINATION............................................................7
REINSTATEMENT..........................................................7
PREMIUM INVESTMENT OPTIONS.............................................7
FIXED ACCOUNT..........................................................8
INVESTMENT ACCOUNTS....................................................8
VARIABLE LIFE SEPARATE ACCOUNT.........................................8
BENEFITS WHILE POLICY IS IN FORCE......................................8
YOUR POLICY VALUE......................................................8
TRANSFERS.............................................................10
POLICY LOANS..........................................................12
LOAN INTEREST CHARGE..................................................13
REPAYMENT.............................................................13
SURRENDER OF THE POLICY...............................................13
SURRENDER VALUE.......................................................13
POLICY EXPENSES.......................................................14
COST OF INSURANCE RATES...............................................15
YOUR DEATH PROCEEDS...................................................16
DEATH BENEFIT OPTIONS.................................................16
CHANGES IN DEATH BENEFIT OPTIONS......................................17
YOUR ADJUSTMENT OPTIONS...............................................17
ADJUSTING THE FACE AMOUNT.............................................17
RIGHT TO EXCHANGE POLICY..............................................18
OWNER, BENEFICIARY, ASSIGNMENT........................................18
CHANGES OF OWNER OR BENEFICIARY.......................................19
ASSIGNMENT............................................................19
GENERAL INFORMATION...................................................19
THE CONTRACT..........................................................19
ALTERATIONS...........................................................19
INCONTESTABILITY......................................................19
AGE AND SEX...........................................................19
SUICIDE...............................................................20
STATEMENT OF VALUE....................................................21
A copy of the application and any additional benefits provided by rider follow
the last page of this policy.
(LOGO) Principal Life
Insurance Company
Des Moines, Iowa 50392-0001
DATA PAGE
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Survivorship Flexible Premium Variable Universal Life
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POLICY DATA
Policy Number: Sample
Owner: John Doe
Joint Owner: Jane Doe
Policy Date: July 1, 2000
Policy Maturity Date: June 30, 2065
Death Benefit Option: Option 1
Face Amount: $100,000.00
Insured's Name: John Doe
Insured's Age and Sex: 35 - Male
Insured's Risk Class: Standard Nonsmoker
Insured's Name: Jane Doe
Insured's Age and Sex: 35 - Female
Insured's Risk Class: Standard Nonsmoker
PLANNED PERIODIC PREMIUM: $500.00
Planned Premium Mode: Annual
Target Premium: $407.00
Minimum Monthly Premium* $26.75
Death Benefit Guarantee Monthly Premium $71.25
*Applicable during the first 5 Policy Years only.
This policy is adjustable. If it is adjusted, we will send you new Data Pages.
The Data Pages are to be attached to and made a part of this policy.
This policy contains a fixed loan interest rate of 8.0%
Interest on borrowed funds is credited at 6% through Policy Year ten.
Thereafter, it is credited at 7.75%.
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RIDER DATA
SF 531 Death Benefit Guarantee Rider
Effective Date: July 1, 2000
Expiration Date: June 30, 2065
SF 530 Extended Coverage Rider
Effective Date: July 1, 2000
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ACCOUNT DATA
Monthly Policy
Premium Allocations Charge Allocations
------------------- ------------------
FIXED ACCOUNT 00% 00%
SEPARATE ACCOUNT DIVISIONS
Aggressive Growth 00% 00%
Asset Allocation 00% 00%
Balanced 20% 20%
Bond 20% 20%
Capital Value 00% 00%
Fidelity Contrafund 20% 20%
Fidelity Equity-Income 00% 00%
Fidelity High Income 00% 00%
Government Securities 00% 00%
Growth 20% 20%
International 00% 00%
International SmallCap 00% 00%
MicroCap 00% 00%
MidCap 00% 00%
MidCap Growth 00% 00%
Money Market 20% 20%
Putnam Global Asset Allocation 00% 00%
Putnam Vista 00% 00%
Putnam Voyager 00% 00%
Real Estate 00% 00%
SmallCap 00% 00%
SmallCap Growth 00% 00%
SmallCap Value 00% 00%
Stock Index 500 00% 00%
Utilities 00% 00%
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TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
Monthly Rates Per $1,000.00 of Net Amount of Risk
Duration Monthly Rate Duration Monthly Rate
1 0.00033 34 0.88717
2 0.00100 35 1.02242
3 0.00183 36 1.18133
4 0.00292 37 1.37208
5 0.00425 38 1.60392
6 0.00583 39 1.88208
7 0.00775 40 2.20842
8 0.01008 41 2.58142
9 0.01292 42 2.99925
10 0.01617 43 3.45992
11 0.02000 44 3.96725
12 0.02442 45 4.53425
13 0.02958 46 5.17808
14 0.03567 47 5.91625
15 0.04267 48 6.76592
16 0.05100 49 7.72767
17 0.06083 50 8.78858
18 0.07258 51 9.93475
19 0.08650 52 11.15292
20 0.10275 53 12.43533
21 0.12133 54 13.77792
22 0.14242 55 15.18550
23 0.16592 56 16.67150
24 0.19225 57 18.26417
25 0.22242 58 20.01800
26 0.25775 59 22.06433
27 0.30000 60 24.69400
28 0.35133 61 28.48125
29 0.41308 62 34.52242
30 0.48600 63 44.77867
31 0.56975 64 61.99675
32 0.66442 65 83.33333
33 0.76967
Basis of Values: Guaranteed maximum cost of insurance rates are based on 1980
CSO Mortality Table, age last birthday, with distinction for the insured's sex.
The rates will reflect the Insured's risk class(es).
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CHARGES and LIMITS
o The maximum monthly administration charge is $8.00 per month, plus $.08
per $1000 of face amount. The charge of $.08 per $1000 of face amount is
increased by $.005 per $1000 for each Insured that is classified as a
smoker.
o The maximum annual mortality and expense risks charge is .80% of the
portion of the Policy Value in the Separate Account for the first nine
Policy Years. Thereafter, the charge is .30% of the portion of the Policy
Value in the Separate Account.
o The partial surrender transaction charge is the lesser of $25, or 2% of
the amount surrendered.
o During the first ten Policy Years, and for any premiums attributable to
any face increases, the premium expense charge is 5.00% of each premium
received for premium payments less than or equal to the Target Premium
(2.00% of premiums received in excess of Target Premium); plus a charge for
state and local taxes of 2.20% of each premium received; and a federal tax
charge of 1.25% of each premium received. After the first ten Policy Years,
the premium expense charge is 2.00% of each premium received; plus a charge
for state and local taxes of 2.20% of each premium received; and a federal
tax charge of 1.25% of each premium received.
o The first 12 account transfers in a Policy Year are free. Thereafter, we
reserve the right to charge a $25 transaction charge for each transfer.
o The minimum face amount allowed is $100,000.
o The minimum transfer value for scheduled transfers is $2,500.
o The minimum face amount increase allowed is $100,000.
o The minimum partial surrender or loan amount allowed is $500.
o The minimum unscheduled transfer amount allowed is the lesser of $100, or
the balance of the Investment Account from which funds are being
transferred.
o The minimum scheduled transfer amount allowed is $100 from the
Investment Accounts and $50 from the Fixed Account.
A surrender charge will be deducted from your Policy Value if this policy is
surrendered for its net surrender value or if this policy terminates within the
first ten years. The maximum charge for each Policy Year is shown in the table
below.
The table assumes the policy face amount is never increased, and the policy has
not been reinstated.
Table of Maximum Surrender Charges Per Policy
Policy Year Amount
1 $407.00
2 407.00
3 407.00
4 407.00
5 407.00
6 387.63
7 348.84
8 290.72
9 213.19
10 116.28
11 and later 0.00
DEFINITIONS IN THIS POLICY
ADJUSTMENT DATE means the Monthly Date on or next following Our approval of a
requested adjustment.
ATTAINED AGE for each Insured means the Insured's age on the birthday on or
preceding the last Policy Anniversary.
DIVISION is the part of the Separate Account to which Net Premiums may be
allocated which invests in shares of a Mutual Fund. The value of an investment
in a Division is variable and is not guaranteed.
EFFECTIVE DATE is the date on which all requirements for issuance of a policy
have been satisfied.
FIXED ACCOUNT is that part of the Policy Value that reflects the value You have
in Our general account.
INSUREDS means the persons named as the Insureds on the current Data Pages of
this policy. The Insureds may or may not be the owner(s).
INVESTMENT ACCOUNT is that part of the Policy Value that reflects the value You
have in one of the Divisions of the Separate Account.
LOAN ACCOUNT is that part of the Policy Value that reflects the value You have
transferred from the Fixed Account and/or Separate Account as collateral for a
policy loan.
MONTHLY DATE means the day of the month which is the same as the day of the
Policy Date. The Monthly Date will never be the 29th, 30th, or 31st of any
month.
MONTHLY POLICY CHARGE is the amount subtracted from Your Policy Value on each
Monthly Date equal to the sum of the cost of insurance and the cost of
additional benefits provided by any rider plus the monthly administration charge
and mortality and expense risks charge in effect on the Monthly Date.
MUTUAL FUND means a registered open-end investment company, or a separate
investment account or portfolio thereof, in which a Division of the Separate
Account invests.
NET PREMIUM is the gross premium less the deductions for the Premium Expense
Charge as shown on the current Data Pages. It is the amount of premium allocated
to the Fixed Account and/or Investment Accounts.
NET SURRENDER VALUE is the Surrender Value less any policy loans and unpaid loan
interest.
NOTICE means any form of communication We receive in Our home office providing
the information We need, either in writing or another manner that We approve in
advance.
POLICY DATE is the date shown on the current Data Pages. The Policy Date will
never be the 29th, 30th, or 31st of any month.
POLICY VALUE is the sum of the values in the Loan Account, Fixed Account, and
Investment Accounts.
POLICY YEARS AND ANNIVERSARIES means the Policy Years and Anniversaries computed
from the Policy Date.
PREMIUM EXPENSE CHARGE is the charge deducted from premium payments to cover a
sales charge, state and local premium taxes and the federal tax charge as shown
on the current Data Pages. PRORATED BASIS means the proportion that the value of
a particular Investment Account or the Fixed Account bears to the total value of
all Investment Accounts and the Fixed Account.
SEPARATE ACCOUNT means Principal Life Insurance Company Variable Life Separate
Account, a registered unit investment trust with Divisions and segregated
assets, to which Net Premiums may be allocated under this policy and others We
issue.
SURRENDER VALUE is the Policy Value less the surrender charges.
SURVIVING INSURED means the Insured who is living upon the death of the other
Insured. If both Insureds die simultaneously, then the term "Surviving Insured"
shall mean the younger of the two Insureds.
TARGET PREMIUM is a premium amount used to determine the maximum sales charge
that is included as part of the Premium Expense Charge and any applicable
surrender charge under a policy. Your Target Premium is shown on Your current
Data Pages.
UNIT is the accounting measure used to calculate the Separate Account value.
VALUATION DAY is any day that the New York Stock Exchange is open for trading,
and trading is not restricted. We will deem each Valuation Day to end at the
time We determine the net asset value of the underlying Mutual Fund shares held
by the Division of the Separate Account. When We need to determine a Policy
Value or an amount after the end of a Valuation Day, or on a day that is not a
Valuation Day, We will do so at the end of the next Valuation Day.
VALUATION PERIOD means the period between the time as of which the net asset
value of a Mutual Fund is determined on one Valuation Day and the time as of
which such value is determined on the next following Valuation Day.
WE, OUR, US means Principal Life Insurance Company.
WRITTEN REQUEST means a form satisfactory to Us, signed and dated by You, and
received at Our home office.
YOU, YOUR means the owner(s) of this policy.
PURCHASING AND KEEPING THE CONTRACT IN FORCE
PREMIUM PAYMENTS
Your first premium is due on the Policy Date. After that, premiums may be paid
at any time while this policy is in force. The amount of Your premiums is
subject to the Premium Payment Limits provision. We will give a receipt to the
premium payor on request.
Your initial Net Premium will be allocated to the Money Market Division of the
Separate Account. Net Premiums will continue to be allocated to the Money Market
Division until 20 days after the Effective Date. After the 20-day period has
expired, Your policy's Policy Value will be transferred to the Divisions and/or
the Fixed Account indicated by Your initial premium allocation percentage(s)
request. If the purchase of this policy falls within the definition of a
replacement under state law, We reserve the right to allocate the initial Net
Premium (or any premium that may result from a replacement) to the Money Market
Division beyond the 20 days as may be necessary.
The initial premium allocation percentages are shown on the Data Pages. Unless
You change them, these percentages apply to future allocations of premiums. For
each Division and the Fixed Account, the allocation percentages must be zero or
a whole number not less than ten nor greater than 100. The sum of the
percentages for all Divisions and the Fixed Account must equal 100.
PLANNED PERIODIC PREMIUMS
You may preauthorize automatic monthly planned periodic premium payments. If You
do not elect to pay automatically, We will send You reminder notices of the
amount and frequency of Your planned periodic premiums as selected in Your
application. These notices serve only as a reminder of Your preference. Premiums
are to be sent to the address We provide in the reminder notices. You may change
the amount and frequency of Your planned periodic premiums by providing Notice
to Us.
The Grace Period provision may apply whether or not You make a planned periodic
premium payment or additional premium payments.
PREMIUM PAYMENT LIMITS
To keep this policy in force You must satisfy the requirements described in the
Grace Period provision.
You may choose to make premium payments that are greater than the planned
periodic premium. However, We will refund any premiums that would disqualify
this policy as "life insurance" as defined in the Internal Revenue Code, as
amended.
If any payment increases the policy's death benefit by more than it increases
the Policy Value, We reserve the right to refund the premium payment. If the
premium payment is not refunded, We may require satisfactory evidence of
insurability.
PAID UP BENEFIT
If You do not make a planned periodic premium payment or additional premium
payments, then this policy will not terminate unless the Net Surrender Value is
not sufficient to pay the Monthly Policy Charge which is due on the Monthly Date
and the Grace Period provision will then apply.
GRACE PERIOD
If the Net Surrender Value on any Monthly Date is less than the Monthly Policy
Charge, a 61 day grace period will begin. However, We guarantee this policy will
stay in force during the first 5 policy years when (A-B) is greater than or
equal to (C), where:
A. Is the sum of premiums paid;
B. Is the sum of all existing loans, loan interest, partial surrenders,
and transaction charges; and
C. Is the sum of the minimum monthly premiums since the Policy Date to the
most recent Monthly Date.
The current minimum monthly premium is shown on the current Data Pages.
The grace period begins when We mail a notice of impending policy termination to
You. This notice will be sent to Your last post office address known to Us.
If by the end of the grace period We do not receive a payment, as calculated in
number 5 of the Reinstatement provision, Your policy terminates as of the date
the first unpaid Monthly Policy Charge was due.
If the Surviving Insured dies during a grace period, We will pay the death
proceeds to the beneficiary(ies).
TERMINATION
All policy privileges and rights of the owner(s) under this policy end:
1. When You surrender Your policy for cash;
2. When the death proceeds are paid;
3. When the policy maturity proceeds are paid; or
4. When the grace period ends as described in the Grace Period provision. In
this case, the privileges and rights of the owner(s) terminate as of the
Monthly Date on which the grace period begins.
REINSTATEMENT
If this policy ends as described in the Grace Period provision and You have not
surrendered Your policy for cash, You may reinstate it provided:
1. Such reinstatement is prior to the maturity date;
2. Not more than three years have elapsed since the policy terminated;
3. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect;
4. You either repay or reinstate any policy loans and unpaid loan interest
on this policy existing at termination; and
5. You make a payment of at least (A plus B divided by C) where:
A. Is the amount by which the surrender charge is more than the Policy
Value on the Monthly Date at the start of the grace period before the
Monthly Policy Charge is deducted;
B. Is three Monthly Policy Charges; and
C. Is 1 minus the maximum Premium Expense Charge.
Reinstatement will be effective on the Monthly Date on or next following the
date We approve it. The Policy Date will remain the original Policy Date and
will not be changed at reinstatement, although Surrender Charges for total
surrender following reinstatement will resume at the rate charged at the time of
the policy's termination, as adjusted for the payment of past due premiums, if
any.
PREMIUM INVESTMENT OPTIONS
ALLOCATIONS
You may allocate Net Premiums to the Fixed Account and/or any of the Investment
Accounts. Allocation percentages must be zero or a whole number not less than
ten nor greater than 100. The sum of the allocation percentages must equal 100.
You may change the allocation percentages by providing Us Notice. Unless You
change the initial premium allocation specified in Your application for this
policy, it will continue to apply to subsequent premium payments. FIXED ACCOUNT
Net Premiums allocated to the Fixed Account will earn interest at rates We
determine at Our discretion. In no event will the guaranteed interest rate be
less than 3% compounded annually.
INVESTMENT ACCOUNTS
The Separate Account is comprised of Divisions shown on the current Data Pages.
Each Division invests in a Mutual Fund with a different investment objective.
You may allocate amounts to one or more of the Divisions. An Investment Account
will be established for You corresponding to each Division of the Separate
Account to which amounts are allocated or transferred under this policy. We will
maintain each of these Investment Accounts for You to keep track of Your values
in each Division. Income, gains and losses, whether or not realized, from each
Division's assets are credited to or charged against that Division without
regard to income, gains or losses of other Divisions or Our other income, gains
or losses.
VARIABLE LIFE SEPARATE ACCOUNT
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940, as amended.
Assets are put into the Separate Account to support this policy and to support
other variable life insurance policies We may offer. We own the assets of the
Separate Account. These assets are not part of Our general account. Income,
gains and losses of the Separate Account, whether or not realized, are credited
to or charged against the Separate Account assets, without regard to Our other
income, gains or losses. The assets of the Separate Account will be available to
cover the liabilities of Our general account only to the extent that the assets
of the Separate Account exceed the liabilities of the Separate Account arising
under the variable life insurance policies supported by the Separate Account.
We reserve the right to add other Divisions, eliminate or combine existing
Divisions, or transfer assets in one Division to another. If shares of a Mutual
Fund are no longer available for investment, or in Our judgment investment in a
Mutual Fund becomes inappropriate considering the purpose of the Separate
Account, We may eliminate the shares of a Mutual Fund and substitute shares of
another. Substitution may be made with respect to both existing investments and
the investment of future Net Premium payments. However, no such changes will be
made without notifying You and getting any required approval from the
appropriate state and/or federal regulatory authorities. We will notify You of
any such change.
If We eliminate or combine existing Divisions, or transfer assets in one
Division to another, You may then change Your allocation percentages and
transfer any value in that Division to another Investment Account(s) and/or the
Fixed Account without charge. You may exercise this right until the latter of 60
days after, 1) the effective date of such change or, 2) the date You receive
notice of this right. You may only exercise this right if You have an interest
in the affected Division(s).
BENEFITS WHILE POLICY IS IN FORCE
YOUR POLICY VALUES
Your Policy Value at any time is equal to the sum of the values You have in the
Loan Account, the Fixed Account and the Investment Accounts.
LOAN ACCOUNT VALUE
You can get a loan on this policy under certain conditions. When You take out a
loan, We transfer the amount of the loan from the Fixed Account and/or one or
more of the Investment Accounts, into the Loan Account. For details of the Loan
Account see the Policy Loans provision.
FIXED ACCOUNT VALUE
The amount You have in the Fixed Account at any time equals:
1. Net Premiums allocated to it,
PLUS
2. Amounts transferred to it,
PLUS
3. Interest credited to it,
LESS
4. Amounts deducted from it,
LESS
5. Amounts transferred from it,
LESS
6. Amounts surrendered from it.
INVESTMENT ACCOUNT VALUE
Your Investment Account value for each Division is equal to the number of Units
in that Investment Account multiplied by that Division's Unit value. The number
of Units in an Investment Account at any time equals A minus B, where:
A. Is the number of Units credited to the Investment Account because of:
1. Net Premiums allocated to it, and
2. Amounts transferred to it; and
B. Is the number of Units canceled from the Investment Account because of:
1. Amounts deducted from it,
2. Amounts transferred from it, and
3. Amounts surrendered from it.
The number of Units credited or canceled for a given transaction is equal to the
dollar amount of the transaction, divided by the Unit value on the Valuation Day
of the transaction.
UNIT VALUES
We will determine the Unit value for each Division of the Separate Account at
the end of each Valuation Day.
The Unit value for each Division was arbitrarily set at $10 as of the Valuation
Day that the Division first purchased Mutual Fund shares. For any subsequent
Valuation Day, the Unit value for that Division is obtained by multiplying the
Unit value for the immediately preceding Valuation Day by the net investment
factor for the particular Division on that subsequent Valuation Day.
NET INVESTMENT FACTOR
The net investment factor for a Division on any Valuation Day is equal to A
divided by B where:
A. Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of such Valuation Day before any policy
transactions are made on that day; and
B. Is the net asset value of the underlying Mutual Fund shares held by that
Division at the end of the immediately preceding Valuation Day after
all policy transactions were made for that day.
We reserve the right to adjust the above formula for any taxes determined by Us
to be attributable to the operations of the Division.
TRANSFERS
TRANSFERS ALLOWED
You may transfer amounts between the Fixed Account and the Investment Accounts
as provided below. To request a transfer, You must provide Us Notice. All
transfers with the same effective dates count as one transfer. If Your request
is received prior to the close of the New York Stock Exchange, the transfer is
made and value is determined as of that day. Requests received after the close
of the New York Stock Exchange will be processed and values determined as of the
next Valuation Day. We reserve the right to not accept transfer requests from
someone requesting them for multiple contracts. We also reserve the right to
modify or revoke transfer privileges and charges.
TRANSFERS FROM FIXED ACCOUNT
You may transfer amounts from the Fixed Account to an Investment Account by
making either a scheduled or unscheduled Fixed Account transfer, subject to the
following conditions:
Either unscheduled transfers or scheduled transfers (not both) may occur during
the same Policy Year.
UNSCHEDULED FIXED ACCOUNT TRANSFERS - You may make one unscheduled transfer
from the Fixed Account each Policy Year, as follows:
1. You must provide Us Notice within 30 days following either the
Policy Date or any Policy Anniversary.
2. You must specify the dollar amount or percentage to be
transferred, and the resulting amount must not exceed 25% of Your
Fixed Account value as of the latter of the Policy Date or the
last Policy Anniversary. However, You may transfer up to 100% of
Your Fixed Account value within 30 days after the first and
following Policy Anniversaries if Your Fixed Account value is less
than $1,000.
SCHEDULED FIXED ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You may make
scheduled transfers on a monthly basis from the Fixed Account as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. Your Fixed Account value must equal or exceed the minimum transfer
value shown on the current Data Pages. We reserve the right to
change this amount but it will never exceed $10,000.
3. The monthly transfer will be the dollar amount or percentage You
specify, and that amount must equal or exceed the minimum
scheduled transfer amount shown on the current Data Pages. The
monthly amount transferred cannot exceed 2% of Your Fixed Account
value as of the latter of the Policy Date, last Policy
Anniversary, or date request is received by Us.
4. The transfers will continue until Your Fixed Account value
is exhausted or We receive Notice to stop them.
5. The amount of these scheduled transfers can be changed by You once
each Policy Year, by Written Request or by telephone.
6. If You stop the scheduled transfers, You may not start them again
until six months after the date of the last scheduled transfer.
TRANSFERS FROM INVESTMENT ACCOUNTS
You may transfer amounts from an Investment Account to either the Fixed Account
or another Investment Account by making either a scheduled or unscheduled
Investment Account transfer, subject to the following conditions:
Transfers to the Fixed Account are allowed only if:
1. You have not transferred any amount from the Fixed Account for at
least six months; and
2. Your Fixed Account value immediately after the transfer does not
exceed $1,000,000, except with Our prior approval.
UNSCHEDULED INVESTMENT ACCOUNT TRANSFERS - You may make unscheduled transfers
from an Investment Account, as follows:
1. You must specify the dollar amount or percentage to transfer from
each Investment Account, and the resulting amount must equal or
exceed the lesser of the value of Your Investment Account or the
minimum unscheduled transfer amount shown on the current Data
Pages.
2. We reserve the right to charge a transaction charge as shown on
the current Data Pages for each unscheduled transfer after the
twelfth transfer in a Policy Year.
SCHEDULED INVESTMENT ACCOUNT TRANSFERS - (Dollar Cost Averaging) - You
may make scheduled transfers from an Investment Account, as follows:
1. Transfers will begin on a monthly basis on the date (other than the
29th, 30th or 31st) specified by You.
2. You must specify how often the transfers will occur
(annually, semi-annually, quarterly or monthly).
3. You must specify the dollar amount or percentage to transfer from
each Investment Account, and that amount must equal or exceed the
lesser of the value of Your Investment Account or the minimum
scheduled transfer amount shown on the current Data Pages.
4. The value of each Investment Account from which transfers are made
must equal or exceed the minimum transfer value shown on the
current Data Pages.
The transfers will continue until Your interest in the Investment
Account is exhausted or We receive Notice to stop them.
5. We reserve the right to limit the number of Investment Accounts
from which transfers will be made at the same time. In no event
will the limit ever be less than two.
AUTOMATIC PORTFOLIO REBALANCING
Automatic portfolio rebalancing (APR), allows You to maintain a specific
percentage of Your Policy Value in Your Investment Accounts over time.
APR transfers:
1. Do not begin until the expiration of the Examination Offer (See
Examination Offer on the front cover of Your policy).
2. Are made without a charge and are not counted as unscheduled
transfers when determining any transfer fee.
3. May be made on the frequency You specify, subject to the following:
A. Quarterly APR transfers may be made on a calendar year or
Policy Year basis.
B. Semiannual or annual APR transfers may only be done on a
Policy Year basis.
4. May be made upon Your Written Request or by telephone.
Transfers are made at the end of the next Valuation Period after We receive Your
instructions. APR is not available if You have scheduled transfers from the same
Investment Account, or for values You have in the Fixed Account.
POLICY LOANS
You may obtain a policy loan from Us with this policy as sole security. You may
borrow up to A minus B where:
A. Is 90% of the Surrender Value; and
B. Is any outstanding policy loan and unpaid loan interest at the
time the loan request is processed at the home office.
The minimum loan amount is shown on the current Data Pages.
YOUR LOAN ACCOUNT
If You take a policy loan, a portion of Your Policy Value equal to the loan will
be transferred from the Fixed Account and/or the Investment Accounts to Your
Loan Account until the loan is repaid. The effective date of the transfer is the
date of the loan.
The loan will result in a reduction in the value of the Fixed Account to the
extent amounts are transferred from the Fixed Account to the Loan Account, or in
the cancellation of Units in the Investment Account or Accounts from which the
loan was withdrawn. For each Investment Account, the number of Units canceled
will be equal to the portion of the loan withdrawn divided by the Unit value for
the Valuation Period in which the loan is taken.
You may tell Us the amount of the policy loan to be withdrawn from the Fixed
Account and/or each Investment Account. If You do not tell Us, the loan amount
will be withdrawn in the same proportion as the allocation used for Your Monthly
Policy Charge. Amounts held in Your Loan Account will be part of Our general
account and will be credited with interest from the date of transfer. The
difference between the policy loan rate and the rate credited on the Loan
Account will not exceed 2%.
On each Policy Anniversary, if there has been a loan repayment, this credit is
transferred from the Loan Account to the Fixed Account and the Investment
Accounts. It is allocated among the Fixed Account and the Investment Accounts in
the same manner used to allocate premium payments.
All interest rates stated are effective annual rates. We apply these rates to
properly reflect the actual date We receive any repayments and any changes You
make in loan amounts during a policy month.
LOAN INTEREST CHARGE
Interest charges accrue daily at the annual loan interest rate shown on the
current Data Pages. Interest is due and payable at the end of each Policy Year.
Any interest not paid when due is added to the loan principal and bears interest
at the same rate. The adding of unpaid interest charges to the loan principal
will cause additional amounts to be withdrawn from the Divisions in the same
manner as described above for loans.
REPAYMENT
You may repay all or part of a policy loan as long as the policy is in force.
Any policy loans and unpaid loan interest charges not repaid at the death of the
Surviving Insured or at maturity are deducted from the death or maturity
proceeds.
YOU SHOULD IDENTIFY THE PURPOSE OF EACH PAYMENT. IF WE CANNOT IDENTIFY ITS
PURPOSE, WE WILL CONSIDER IT TO BE A LOAN REPAYMENT IF A LOAN IS OUTSTANDING.
The amount repaid is transferred from Your Loan Account to the Fixed Account
and/or the Investment Accounts in the same manner used to allocate premium
payments.
SURRENDER OF THE POLICY
SURRENDER VALUE AND NET SURRENDER VALUE
The Surrender Value of Your policy equals the Policy Value less the surrender
charges (described in the Surrender Charges provision).
The Net Surrender Value of Your policy is the Surrender Value less any policy
loans and unpaid loan interest. As long as Your policy is in force, You may
surrender it for its Net Surrender Value by sending Us a Written Request.
SURRENDER CHARGES
The Table of Maximum Surrender Charges is shown on the current Data Pages.
Surrender charges vary based on the Target Premium of the policy and will apply
only during the first 10 Policy Years unless changed due to a face amount
increase. A face amount increase has its own surrender charge period which
begins on the Adjustment Date. The total surrender charge on the policy will be
a composite of the surrender charges for the face amount at issue and each
subsequent face amount increase.
Decreases in face amount do not decrease surrender charges on the policy.
PARTIAL SURRENDERS
Each Policy Year after the second Policy Year, You may make up to two partial
surrenders from the Net Surrender Value, subject to the following:
1. Each partial surrender must be in an amount not less than the
minimum amount shown on the current Data Pages; and
2. In the aggregate the total amount surrendered in a Policy Year
will not exceed an amount equal to 75% of the Net Surrender Value
as of the date of the first surrender in a Policy Year.
The transaction charge is shown on the current Data Pages. You may tell Us in
what proportion to allocate the amount of the partial surrender and transaction
charge to be withdrawn from the Fixed Account and/or each Investment Account. If
You do not tell Us, the partial surrender and the transaction charge will be
withdrawn from the Fixed Account and each Investment Account in the same
proportion as the allocations used for Your current Monthly Policy Charge.
Partial surrenders from the Fixed Account will be taken from the most recent
premium payments first (last in, first out).
The amount of the partial surrender plus the transaction charge will result in
the cancellation of Units in the Investment Account from which the partial
surrender occurs. The number of Units canceled will be equal to the amount of
the partial surrender plus the transaction charge divided by the Unit value of
the Division or Divisions for the Valuation Period in which the partial
surrender is effective.
Your Policy Value is reduced by the amount of the partial surrender plus the
amount of the transaction charge.
If Option 1 death benefit is in effect, the face amount is reduced by the amount
of the partial surrender and the transaction charge.
POLICY EXPENSES
MONTHLY POLICY CHARGES
On the Policy Date, and each Monthly Date thereafter, We will deduct a Monthly
Policy Charge.
The deduction for the Monthly Policy Charge is the sum of the following amounts:
1. The cost of insurance (described below) and the cost of additional
benefits provided by any rider in force for the policy month;
2. The current monthly administration charge, which will not exceed
the maximum shown on the current Data Pages; and
3. The current mortality and expense risks charge imposed on the
Investment Account value, which will not exceed the maximum shown
on the current Data Pages.
The Monthly Policy Charge will be withdrawn from the Investment Accounts and/or
The Fixed Account according to the allocation percentages You have chosen.
Your choice for the Monthly Policy Charge allocation may be:
1. The same as the allocation percentages You have chosen for Your
premiums; or
2. Determined on a Prorated Basis; or
3. Any other allocation which We mutually agree upon.
If the amount in an Investment Account and/or The Fixed Account is insufficient
to allow the allocation You have chosen, Your Monthly Policy Charge will be
allocated on a Prorated Basis.
For each Investment Account and/or the Fixed Account, the allocation percentages
must be zero or a whole number not less than ten nor greater than 100. The sum
of the percentages for all the Investment Accounts and the Fixed Account must
equal 100. Changes in allocation percentages may be made by providing Notice to
Us. Once approved by Us, they are effective as of the next Monthly Date.
COST OF INSURANCE
The cost of insurance on each Monthly Date is A multiplied by the result of B
minus C, where:
A. Is the cost of insurance rate as described in the Cost Of Insurance
Rates provision divided by 1,000;
B. Is the death benefit as described in the Your Death Proceeds
provision of this policy at the beginning of the Policy Month,
divided by 1.0024663 (the sum of 1 plus the monthly guaranteed
fixed account interest rate); and
C. Is the Policy Value at the beginning of the policy month calculated
as if the Monthly Policy Charge was zero.
COST OF INSURANCE RATES
The monthly cost of insurance rates are based on the sex, issue age, duration
since issue, risk classification, and smoking status of each Insured. We
determine these rates based on Our expectations as to Our future mortality
experience. Any change in these rates applies to all individuals of the same
class as each Insured. The cost of insurance rates will never be greater than
shown in the Table of Guaranteed Maximum Cost of Insurance Rates on the current
Data Pages. However, different cost of insurance rates may apply to any
underwritten face amount increase. Cost of insurance rates for a face amount
increase are based on the sex, age at time of adjustment, duration since
adjustment, risk classification, and smoking status of each Insured.
PREMIUM EXPENSE CHARGE
We will deduct a Premium Expense Charge as shown on the current Data Pages from
each premium payment. The result will be the Net Premium payment.
OTHER CHARGES
We will charge a surrender charge as described in the Surrender Of The Policy
provision if any of the following occurs during the surrender charge period:
1. You request the Net Surrender Value of Your policy; or
2. You do not pay an amount due at the end of a grace period, and the policy
terminates.
If You take a partial surrender of the Net Surrender Value of Your policy, We
will charge a transaction charge as shown on Your current Data Pages.
YOUR DEATH PROCEEDS
We will pay the death proceeds to the beneficiary(ies) subject to the provisions
of the policy, when We receive proof that both of the Insureds died before the
maturity date. We require notification of the first death as soon as it occurs
or as soon thereafter as is reasonably possible, even though the death proceeds
are not payable until the second death. The death proceeds, determined as of the
date of the Surviving Insured's death, are A minus B where:
A. Is the death benefit described below plus any proceeds from any benefit
rider on the Surviving Insured's life; and
B. Is any policy loans and unpaid loan interest and, if the Surviving
Insured's death occurs during a grace period, any overdue Monthly
Policy Charges.
We will pay interest on death proceeds from the date of the Surviving Insured's
death until date of payment or until applied under a benefit option. It will be
at a rate We determine, but not less than required by state law.
DEATH BENEFIT OPTIONS
This policy provides two death benefit options. The option in effect is shown on
the current Data Pages.
Option 1.
Under Option 1, the death benefit equals the greater of:
1. The policy's face amount; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
Option 2.
Under Option 2, the death benefit equals the greater of:
1. The policy's face amount plus its Policy Value; or
2. The amount found by multiplying the Policy Value by the applicable percentage
shown below.
TABLE OF APPLICABLE PERCENTAGES*
(For ages not shown, the applicable percentages shall decrease by a pro rata
portion for each full year.)
YOUNGER INSURED'S ATTAINED AGE %
40 and under 250
45 215
50 185
55 150
60 130
65 120
70 115
75 thru 90 105
95+ 101
* These percentages will be updated as required by revisions to the Internal
Revenue Code.
CHANGES IN DEATH BENEFIT OPTIONS
You may change the death benefit option on or after the second Policy
Anniversary. To request a change in the death benefit option, You must send Us a
Written Request. A change approved on a Monthly Date will be effective on that
Monthly Date. A change approved on other than a Monthly Date will be effective
on the next following Monthly Date. Changes in options are limited to two per
Policy Year and are subject to the following conditions:
1. If the change is from Option 1 to Option 2, We will reduce the face amount.
The reduction will be equal to the Policy Value on the effective date of
the change. The face amount after any reduction must be at least the
minimum face amount required by Our then current underwriting guidelines.
We may require proof of insurability which satisfies Us.
2. If the change is from Option 2 to Option 1, We will increase the face
amount. The increase will be equal to the Policy Value on the effective
date of change. No proof of insurability is required.
YOUR MATURITY PROCEEDS
If either Insured is living on the policy's maturity date, We will pay You the
policy's maturity proceeds, which is equal to the death proceeds described in
Your Death Proceeds provision.
YOUR ADJUSTMENT OPTIONS
ADJUSTING THE FACE AMOUNT
While Your policy is in force (but not in a grace period) and both Insureds are
living, You may request an increase in the face amount. While Your policy is in
force (but not in a grace period) You may request a decrease in the face amount.
Decreases may not be made during the first two Policy Years. Any adjustment is
subject to Our approval.
APPROVAL OF AN ADJUSTMENT
Any increase in face amount will be in a risk classification We determine, and
will be approved if:
1. The Attained Age of the oldest Insured is 90 or less, and the Attained Age
of the youngest Insured is 85 or less, and the amount of the increase is at
least the minimum increase shown on the current Data Pages; and
2. You supply evidence which satisfies Us that at least one of the Insureds is
insurable under Our underwriting guidelines then in effect.
No adjustment will be approved if:
1. The face amount after adjustment would be less than the minimum amount shown
on the current Data Pages; or
2. Your Monthly Policy Charges are being waived under any rider.
REQUESTING AN ADJUSTMENT
You must send Us a Written Request for an adjustment. A request for a face
amount increase must be signed by the Insureds and owner(s). It must show the
face amount desired after adjustment. An adjustment is effective on the
Adjustment Date.
RIGHT TO EXCHANGE POLICY
You may at any time within the first 24 months from the Effective Date, upon
Written Request, make an irrevocable, one time election to transfer all of Your
Investment Account values to the Fixed Account.
OWNER, BENEFICIARY, ASSIGNMENT
OWNERSHIP
The owner(s) is as named in the application unless You change ownership as
provided below. As owner(s), You may exercise every right and enjoy every
privilege provided by Your policy, subject to the rights of any irrevocable
beneficiary(ies). These rights and privileges continue while Your policy is in
force, and end at the Surviving Insured's death. If an owner dies before the
policy terminates, the surviving owner(s), if any, shall succeed to that
person's ownership interest, unless otherwise specified. If all owners die
before the policy terminates, the policy will pass to the estate of the last
surviving owner. With Our consent, You may specify a different arrangement for
contingent ownership.
BENEFICIARY
The beneficiary(ies) named in the application will receive the death proceeds
unless You change the beneficiary designation as provided below. Any death
proceeds payable to a beneficiary(ies) who dies before the Surviving Insured's
death will be paid equally to the surviving beneficiaries named in the
application, unless We have approved another Written Request. If no
beneficiary(ies) survives the Surviving Insured's death, the death proceeds will
be paid to the owner(s) or to the owner's estate in equal percentages unless
otherwise specified.
CHANGE OF OWNER OR BENEFICIARY
You may change the owner(s) or beneficiary(ies) of this policy by Written
Request. Our approval is needed and no change is effective until We approve it.
Once approved, the change is effective as of the date You signed the request. We
have the right to require that You send Us this policy so We can record the
change.
BENEFIT INSTRUCTIONS
While either Insured is alive, You may file instructions for the payment of the
death proceeds. Such instructions, or change of instructions, must be in a
format We specify. When the Surviving Insured's death occurs, the
beneficiary(ies) may choose the arrangement under which death proceeds will be
paid. We must approve the arrangement chosen before any payment is made.
If You change beneficiary(ies), prior benefit instructions are revoked.
ASSIGNMENT
You may assign Your policy as collateral for a loan. The assignment must be in
writing and filed in Our home office. We assume no responsibility for any
assignment's validity. An assignment as collateral does not change the owner(s).
The rights of beneficiaries, whenever named, except irrevocable beneficiaries,
become subordinate to those of the assignee.
GENERAL INFORMATION
THE CONTRACT
This policy, the attached application(s) and riders, any amendments to the
application(s), any adjustment and reinstatement application(s), and the current
Data Pages make up the entire contract. Any statements made in the
application(s), an adjustment application(s) or any amendments to the
application(s) will be considered representations and not warranties. No
statement, unless made in an application(s), or amendments thereto, will be used
to void Your policy (or void an adjustment in case of an adjustment
application(s)) or to defend against a claim.
ALTERATIONS
This policy may be altered by mutual agreement, but any alterations must be in
writing and signed by one of Our corporate officers. No one else, including the
agent, may change the contract or waive any provisions.
INCONTESTABILITY
With respect to statements made in the initial application(s) for this policy,
We will not contest this policy after either Insured has been alive for two
years after the Policy Date. With respect to statements made in any subsequent
application(s) for additional coverage or reinstatement application(s), We will
not contest the additional coverage or reinstated coverage resulting from such
application(s) after either Insured has been alive for two years after the date
of the adjustment or reinstatement. The time limits in this Incontestability
provision do not apply to fraudulent misrepresentations.
AGE AND SEX
If the age or sex of either or both of the Insureds has been misstated, the
death benefit will be that which would be purchased by the most recent mortality
charge at the correct age or sex of the Insureds.
DEFERMENT
We will usually pay surrenders, partial surrenders, or policy loans within 5
Valuation Days after We receive a Written Request. We will usually pay any death
benefit within 5 Valuation Days after We receive 1) proof at Our home office of
both Insured's deaths, and 2) any other forms We may require to be completed.
However, We may not be able to determine the value of the assets of Our Separate
Account if:
1. The New York Stock Exchange is closed on other than customary weekend and
holiday closings, or trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission;
2. The Securities and Exchange Commission by order permits postponement for
the protection of policyowners; or
3. The Securities and Exchange Commission requires that trading be restricted
or declares an emergency, as a result of which disposal of securities is
not reasonably practicable or it is not reasonably practicable to determine
the net asset values of the Mutual Funds.
If any of the above events occur, We reserve the right to defer:
1. Determination and payment of any surrender, partial surrenders, or death
proceeds;
2. Payment of any policy loans;
3. Determination of the Unit values of the Divisions;
4. Any requested transfer between the Divisions; and
5. Application of Your death proceeds or surrender proceeds under Your
Benefit Options.
If payments are delayed and Your request for total surrender, partial surrender,
transfer or policy loan is not canceled by Your written instructions, the amount
of the surrender, transfer or policy loan will be determined the first Valuation
Date following the expiration of the permitted delay. The death proceeds,
surrender or policy loan will be paid, or transfers made, within 5 Valuation
Days thereafter.
SUICIDE
This policy's death proceeds will not be paid if either Insured dies by suicide,
while sane or insane, within 2 years of the Policy Date. Instead, We will return
all premiums paid, less any policy loans and unpaid loan interest. If the
suicide occurs at the death of the first Insured, this amount will be paid to
the owner(s) of the policy. If the suicide occurs at the death of the Surviving
Insured, this amount will be paid to the beneficiary(ies).
Any face amount increase made under the adjustment options will not be paid if
either Insured dies by suicide, while sane or insane, within 2 years of the
Adjustment Date. Instead, We will return the sum of the cost of insurance
charges for the increased amount of protection. If the suicide occurs at the
death of the first Insured, this amount will be paid to the owner(s) of the
policy. If the suicide occurs at the death of the Surviving Insured, this amount
will be paid to the beneficiary(ies).
BASIS OF VALUES
Guaranteed maximum cost of insurance rates are based on the mortality table
referred to on the current Data Pages.
A detailed statement of the method of calculating values and benefits has been
filed with the insurance department of the state in which this policy is
written. The guaranteed values are greater than or equal to those required by
any state law.
STATEMENT OF VALUE
You will receive a statement once each Policy Year until the policy terminates.
The statement will show:
1. The current death benefit;
2. The current Policy and Surrender Values;
3. All premiums paid since the last statement;
4. Any investment gain or loss since the last statement;
5. All charges since the last statement;
6. Any policy loans and unpaid loan interest;
7. Any partial surrenders since the last statement; and
8. The total value of each of Your Investment Accounts and the Fixed Account.
SF 523
SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY.
Adjustable death benefit. Benefits payable at death of Surviving Insured or
earlier maturity date. Flexible premiums payable until maturity date or death of
Surviving Insured. NON-PARTICIPATING.
SF 523