DESCRIPTION OF PRINCIPAL LIFE INSURANCE COMPANY'S ISSUANCE,
TRANSFER AND REDEMPTION PROCEDURES FOR POLICIES PURSUANT TO RULE
6e-3(T)(b)(12)(iii) UNDER THE INVESTMENT COMPANY ACT OF 1940
This document sets forth the information called for under Rule
6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940 (1940 Act). Rule
6e-3(T)(b)(12)(iii) provides exemptions from sections 22(c), 22(d), 22(e) and
27(c)(1) of the 1940 Act, and Rule 22c-1 thereunder, for issuance (including
face amount increase), transfer and redemption procedures under Principal
Variable Universal Life Accumulator (the Policy). To qualify for the exemptions,
procedures must be reasonable, fair and not discriminatory (i) to the interests
of the affected policyowners and (ii) for all other holders of policies of the
same class or series funded by the Separate Account, and (iii) the procedures
must be disclosed in the registration statement filed by the Separate Account.
Principal Life Insurance Company believes its procedures meet the requirements
of Rule 6e-3(T)(b)(12)(iii), as described below.
1. Purchases and Related Transactions
Set out below is a summary of the major contract provisions and
administrative procedures relating to purchase transactions. Because of the
insurance nature of the policy, the purchase procedures differ in certain
significant respects from the purchase procedures for mutual funds and
variable annuity contracts.
(a) Application and Policy
To purchase a Policy, a completed application, including any required
supplements, must be submitted to the Company through the agent or broker
selling the Policy. The Company generally will not issue policies to
persons over age 85 for regularly underwritten Policies. Applicants must
furnish satisfactory evidence of insurability. Acceptance is subject to the
Company's insurance underwriting guidelines and suitability rules and
procedures. The Company reserves the right to reject any application or
related premium if, in its view, its insurance underwriting guidelines and
suitability rules and procedures are not satisfied.
The minimum face amount for issue of a Policy is $100,000. The Company
reserves the right to revise its rules from time to time to specify either
a higher or lower minimum face amount.
The "Policy Date" is the date the Company issues a Policy. Policy years and
anniversaries will be determined from the Policy Date regardless of when a
Policy is delivered. Each Policy also has an Effective Date. The Policy
Date and the Effective Date will be the same unless (i) a backdated Policy
Date is requested, (ii) the Policy is applied for on a cash on delivery
basis (the effective date is the date on which at least the monthly poilicy
charge is received), or (iii) additional premiums or application amendments
are required (the effective date is the date on which any application
amendments have been received, reviewed, and accepted in the Company's home
office). The Company does not date Policies on the 29th, 30th or 31st day
of any month of the year. Policies which would otherwise be dated on these
days will be dated on the 28th of the month. The Policy Date is shown on
the data pages for the Policy.
Upon specific written request of the applicant in the application and
subject to the Company's approval, a Policy may be issued with a backdated
Policy Date. The Policy Date may not be more than six months prior to the
date of the application or such shorter backdating period as required by
state law. Payment of at least the monthly policy charges is required for
the period the Policy is backdated.
If a payment in at least the required minimum initial premium (as shown on
the policy illustration provided to the applicant) amount is submitted with
the completed application, then the selling agent or broker will deliver a
conditional receipt to the applicant acknowledging receipt of the initial
payment and describing any interim insurance coverage and conditions. No
insurance is in effect under a Policy until the Policy is physically
delivered to the applicant and applicant has accepted the Policy. If the
proposed insured dies before actual physical delivery to and acceptance of
a Policy by the applicant, no insurance coverage exists under the Policy;
insurance coverage, if any, will be provided solely under the terms of the
conditional receipt, if any, given to the applicant.
If the Company rejects an application or a policyowner chooses to cancel
the Policy during the free-look period, the Company will refund all amounts
paid under the application or Policy. For Policies issued in California to
persons over age 60, the Company will return accumulated value (also known
as Policy Value) upon exercise of the free-look privilege. The postmark
dates on the envelopes delivering the Policy and the written request for
cancellation determine whether a Policy has been cancelled within the
designated free-look period. Refunds will ordinarily be made within five
business days after the Company receives a Policy returned under the free-
look provisions. If the Policy is issued and the policyowner does not
exercise the free-look privilege, the Policy Value will reflect investment
performance from the Policy Date, including the free-look period.
(b) Payment of Premiums
Premiums must be paid to the Company at its home office. There is no fixed
schedule of premium payments on a Policy either as to the amount or timing
of the payments. A Policy will remain in force as long as the Policy Value,
less any loans and unpaid loan interest, is sufficient to pay the Monthly
Policy Charges (defined in section (d) below) on the Policy.
A policyowner may select a planned periodic premium schedule, within the
limits set forth below, to fit the policyowner's insurance needs and
financial abilities. Planned Periodic Premium schedules may provide for
annual, semiannual, quarterly or monthly payments. A pre-authorized
withdrawal allows the company to deduct premiums, on a monthly basis, from
the policyowner's checking or other financial institution account. The
Company will send premium reminder notices in accordance with planned
periodic premium schedules to policyowners who are on annual, semi-annual
or quarterly premium payment schedules. Policyowners may also make
unscheduled premium payments to the Company at its home office, or pay by
payroll deduction where allowed by law and approved by the Company.
(i) Initial Premiums
To apply for a Policy, a completed application, including any required
supplements, must be submitted to the Company through the agent or
broker selling the Policy. If interim coverage is desired, a payment of
at least the required minimum initial premium must be submitted along
with the completed application and any required supplements. The
required minimum initial premium amount is shown on the policy
illustration provided to the applicant.
(ii) Maximum Premiums
We will refund premiums paid that would disqualify the Policy as "life
insurance" under Internal Revenue Code Section 7702, as amended. Unless
the policyowner directs otherwise, we will refund any premiums that
would make the Policy a modified endowment contract as defined in
Internal Revenue Code Section 7702A, as amended.
(iii) Evidence of Insurability
If any premium payment would increase a Policy death benefit by more
than it increases the Policy Value, the Company reserves the right to
refund the premium payment. If the premium payment is not refunded, the
Company may require satisfactory evidence of insurability under the
Company's current underwriting guidelines before accepting any such
premium.
(c) Allocation of Premiums
The first premium is due on the Policy Date. This initial premium, net of
deductions for the premium expense charge (the charge for any sales charge,
state and local premium taxes and federal taxes), is allocated to the Money
Market Division of the Separate Account at the end of the Valuation Period
during which the Company receives the premium payment. Any additional
premium payments received during the period ending 20 days after the
Effective Date, less premium expense charge, will be allocated to the Money
Market Division at the end of the Valuation Period during which such
premiums are received. On the 21st day after the Effective Date, Policy
Value held in the Money Market Division is automatically transferred to the
Divisions of the Separate Account or to the Fixed Account, or both, in
accordance with the policyowner's direction for allocation of premium
payments.
The allocation percentages for each Division and the Fixed Account must be
zero or a whole number, with the sum of the percentages equal to 100. The
policyowner may change the allocation upon delivery to the Company of
written notice or other notice approved by the Company in advance. No fee
or penalty is charged for changes of allocation. New allocation percentages
will be effective as of the end of the Valuation Period in which the
Company receives the policyowner's request in proper form.
(d) Monthly Policy Charges
The Company deducts a Monthly Policy Charge from the Policy Value. The
monthly Policy charge is equal to the cost of insurance plus the cost of
additional benefits provided by riders, if any, plus the monthly
administration charge plus the current asset based charge in effect on the
Monthly Date (the day of the month which is the same as the day of the
Policy Date). The cost of insurance charge, which is calculated on each
Monthly Date, is based on age at issue and adjustment, duration since issue
and adjustment, smoking status and risk classification of the insured. The
monthly cost of insurance may also be based on gender of the insured except
for policies issued in states which require unisex pricing or in connection
with employment insurance and benefit plans not based on the gender of the
insured. Current monthly cost of insurance rates will be determined by the
Company based on its expectations as to future investment earnings,
expenses, mortality and persistency experience. Cost of insurance rates
will never be greater than the maximum charge based on the 1980 Smoker and
Nonsmoker Commissioners Standard Ordinary Mortality Tables, age last
birthday. The cost of insurance rate for an underwritten face amount
increase is based on the same factors described in this paragraph.
(e) Change in Face Amount
A policyowner may make a written request to increase the face amount of a
Policy at any time, so long as the Policy is not in a grace period and
premiums are not being waived under a rider. A policyowner may make a
written request to decrease the face amount at any time on or after the
second Policy anniversary so long as the Policy is not in a grace period
and premiums are not being waived under a rider. Any written request for
adjustment of face amount is subject to these additional conditions:
(i) Any request for an increase in face amount must be applied for by a
supplemental application and an adjustment application, signed by the
policyowner and the insured, and shall be subject to evidence of
insurability satisfactory to the Company under its underwriting
guidelines then in effect. The minimum increase in face amount is
$50,000. The age of the insured must be 85 or less at the time of the
request.
(ii) A request for a decrease in face amount must be applied for by an
adjustment application, signed by the policyowner and the insured, and
may not reduce the face amount of the Policy below $100,000.
(iii) Any increase in face amount will be in a risk classification the
Company determines.
(iv) Any adjustment approved by the Company will become effective on
the Monthly Date that coincides with or next follows the Company's
approval of the request.
If a payment in an amount equal to or greater than the conditional receipt
premium deposit is submitted with the adjustment application, then a
conditional receipt is given to the policyowner reflecting receipt of the
payment and outlining any interim insurance coverage provided by the
conditional receipt. The payment submitted with the adjustment application
will be considered a premium payment for the Policy and will be allocated
as set out in paragraph (c) above.
Any increase in face amount will carry its own free-look period and
exchange right, which will apply only to the increase in face amount, not
the entire Policy. If a face amount increase is canceled during its
free-look period, the Company will restore to the Policy Value an amount
equal to all Monthly Policy Charges attributable to the increase in face
amount (including rider costs arising from the increase). The amount
restored will be allocated among the Divisions of the Separate Account or
the Fixed Account, or both, as if it were a Net Premium. This restoration
will be made within five business days after the Company receives timely
request for cancellation on the appropriate form. In addition, the
surrender charge will be adjusted, if necessary, so that it will be as
though no increase in face amount had occurred.
(f) Exchange Right
During the first 24 months following any Effective Date on a Policy, the
policyowner may exercise the exchange right provided that the Policy is not
in a grace period. Exercise of the exchange right means the policyowner
makes an irrevocable, one-time election to transfer all value from the
Divisions of the Separate Account to the Fixed Account.
(g) Reinstatement
If the Policy lapses, the policyowner may reinstate the Policy subject to
certain conditions.
If the policy terminates due to expiration of the grace period but has not
been surrendered, the policyowner may apply for reinstatement any time
within three years of termination. Conditions for reinstatement are:
(i) Reinstatement is prior to the maturity date;
(ii) Not more than three years have elapsed since the policy terminated;
(iii) The insured is alive;
(iv) Company receives satisfactory proof of insurability based upon the
Company's current insurance underwriting guidelines;
(v) Payment of any policy loans and unpaid loan interest existing at
termination;
(vi) Payment as defined in (A) or (B) below.
A. If the policy lapses in the first five Policy years, payment of the
greater of:
(1) Three monthly Policy charges divided by (1 minus the maximum
Premium Expense Charge); or
(2) Three no lapse guarantee monthly premiums.
B. If the Policy lapses after the first five policy years, payment of an
amount not less than 1 plus 2 where:
(1) Is the amount by which the surrender charge is more than the Policy
Value on the Monthly Date on or preceding the grace period, and
(2) Three monthly Policy Charges divided by (1 minus the maximum premium
or Expense Charge).
Reinstatement will be effective on the Monthly Date next following the Company's
approval of the reinstatement application.
The Policy Date of the Policy will remain the original Policy Date. Surrender
Charges following reinstatement will resume at the rate charged at the time of
the Policy's termination. Upon reinstatement, new Data Pages are delivered to
the policyowner.
(h) Repayment of Loan and Loan Interest
A policy loan may be repaid in whole or in part at any time while the
Policy is in force. Loan repayments will be applied at the end of the
Valuation Date that payment is received in the home office. If the
policyowner does not designate a payment as a premium payment, or if the
Company cannot identify it as a premium payment, the Company will apply
payments received as loan repayments if a loan is outstanding. When a loan
repayment is made, Policy Value equal to the loan repayment will be
allocated among the Divisions of the Separate Account and the Fixed Account
in the proportion currently designated by policyowner for allocation of
premium payments. Unless the Company is instructed otherwise, the balance
of a payment not needed to repay a loan, less the Premium Expense Charge,
will be applied to the Divisions of the Separate Account and the Fixed
Account according to the premium allocation then in effect.
(i) Misstatements of Age or Gender
If the age or gender of the insured has been misstated in an application,
the death benefit under the Policy will be the Policy Value plus the amount
which would be purchased by the most recent mortality charge at the correct
age and gender, if applicable.
2. Redemptions and Related Transactions
Set out below is a summary of the major contract provisions and
administrative procedures relating to redemption transactions. Because of
the insurance nature of the contract, the procedures differ in certain
significant respects from procedures for mutual funds and annuity contract
plans.
(a) Surrenders
So long as the Policy is in effect, a policyowner may elect to surrender
the Policy and receive its net surrender value. Net surrender value is
determined by the Company as of the date it receives the policyowner's
written surrender request.
After the first Policy Year and so long as a Policy is in effect,
policyowner may request a partial surrender from the net surrender value.
No more than two surrender requests are permitted in any Policy Year. The
minimum partial surrender is shown on current Data Pages for a Policy; the
maximum partial surrender amount in a Policy Year is 75 percent of the net
surrender value as of the date of the first partial surrender in any Policy
Year. There is a surrender charge as shown on the Data Pages. A partial
surrender will be processed effective the date written request is received
in the home office of the Company.
The Policy Value is reduced by the amount of the partial surrender plus any
surrender charges. If the Option 1 death benefit is in effect at the time
of a partial surrender, then the Policy's Face Amount is reduced by the
amount of the partial surrender and the transaction charge total. If Option
3 death benefit has been selected, the total Face Amount may be reduced by
the amount of the partial surrender if the total partial surrenders (in a
Policy Year) exceed the premiums paid. Any reduction of Total Face Amount
will be made on a last in, first out basis. The resulting Policy Face
Amount must be not less than the greater of $100,000, or the minimum Policy
Face Amount shown on the current Data Pages. The minimum amount of a
partial surrender is $500. Proceeds will ordinarily be paid within five
business days from the date of receipt of a written request at the
Company's home office.
A policyowner may designate the amount of the partial surrender to be
withdrawn from each of the Divisions and the Fixed Account. If no
designation is made, the amount of the partial surrender and the surrender
charge will be withdrawn in the same proportion as allocation instruction
in effect for the Monthly Policy Charge.
During the first ten years of a Policy, a surrender charge will be assessed
in connection with total surrender or termination of a Policy. In addition,
each Policy face increase carries it own set of ten-year surrender charges,
causing any total surrender made after an adjustment date to be subject to
a composite surrender charge. Surrender charges following a Policy's
reinstatement commence at the rate in effect at the time of the Policy's
termination. A policyowner will not be assessed the surrender charge if
total surrender or termination of the Policy occurs after the first ten
Policy years or ten years following an adjustment date.
(b) Benefit Claims
(i) Death Proceeds
The Company will pay death proceeds to the named beneficiary(ies)
after it receives notice and proof that the insured died before the
maturity date shown on the current Data Pages. The amount of death
proceeds is
(i) death benefit under a death benefit option described below plus
(ii) proceeds from any benefit rider to the Policy, minus
(iii)any policy loan or unpaid loan interest and overdue Monthly
Policy Charge
Death benefit proceeds are determined as of the insured's date of death, or
on the next following Valuation Date if the date of death is not a
Valuation Date. Benefit claims will ordinarily be paid within five business
days after all necessary claim requirements are received.
The Company will pay interest from the date of the insured's death to the
date of payment or application under a benefit option at a rate determined
by the Company, but not less than required by state law. The Company offers
beneficiaries and policyowners a wide variety of settlement options.
(ii) Death Benefit Options
The Policy provides three death benefit options the policyowner designates
the death benefit option in the application.
(A) Death Benefit Option 1: The death benefit is the greater
of the Policy's Total Face Amount or the Policy Value on the
date of death multiplied by the applicable percentage as
determined by the then effective tax corridor percentage table
as shown in the Policy.
(B) Death Benefit Option 2: Death benefit is the greater of
the Policy's Total Face Amount plus its Policy Value on the
date of death, or the amount of the Policy Value on date of
death multiplied by the applicable percentage in the tax
corridor table as shown in the Policy.
(C) Death Benefit Option 3: The death benefit equals the
greater of (1) the Total Face Amount plus premiums paid less
partial surrenders, or (2) the amount found by multiplying the
Policy Value by the applicable percentages.
(iii)The amount of the benefit payable at maturity is the Policy Value
less any policy loans and unpaid loan interest on the maturity date.
This benefit will only be paid if the insured is living on the policy
maturity date. The Policy will mature on the policy anniversary
following the birthday on which the insured reaches age 100.
(c) Policy Loans
As long as the Policy remains in force and the Policy has net surrender
value, a policyowner may borrow money from the Company using the Policy as
the only security for the loan. The maximum amount that may be borrowed is
90 percent of the net surrender value of the Policy as of the date a loan
request is processed at the Company's home office. The minimum loan amount
is $500.
Proceeds of policy loans ordinarily will be disbursed within five business
days from the date of written request for a loan at the Company's home
office.
When a policy loan is taken, a portion of the Policy Value equal to the
amount of the loan will be transferred to the Loan Account from the
Divisions and the Fixed Account in the proportions requested by the
policyowner. The Loan Account is that part of the Policy Value that
reflects the value transferred to the General Account from the Fixed
Account, Separate Account, or both, as collateral for a Policy Loan. A
Policy's Loan Account is part of the Company's General Account. If no
request for allocation of the loaned amount is made by the policyowner, the
loan amount will be withdrawn from the Divisions and the Fixed Account in
the same proportion as the allocation used for the most recent Monthly
Policy Charge.
Any loan interest that is due and unpaid will be transferred in the same
manner as described above for policy loans. The Loan Account will earn
interest at four (4) percent per year. On each Policy Anniversary, if there
has been a loan repayment, this credited interest is transferred from the
Loan Account to the Divisions of the Separate Account and the Fixed Account
in the proportion currently designated by a policyowner for the allocation
of premium payments.
Loan Interest Charges
The Company will charge interest on any unpaid policy loan. Interest
accrues daily at an effective annual interest rate of 5.5 percent during
the first 10 Policy Years and 3.8 percent thereafter. 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 rate then in effect
on the Policy. Adding unpaid interest charges to loan principal will cause
additional amounts to be redeemed from the Divisions and/or the Fixed
Account in the same manner as described above for loans.
Repayment of Loans
Policy loans may be repaid in part or in full as long as the policy is in
force. Upon repayment, the Policy Value securing the repaid portion of the
loan in the Loan Account will be transferred to the Divisions of the
Separate Account and the Fixed Account, applying the same percentages
currently in effect for the allocation of premium payments.
Any unpaid policy loans and loan interest charges are subtracted from death
or maturity proceeds. Any payment sent to the Company without directions as
to application will be applied first to repay any outstanding policy loans.
(d) No Lapse Guarantee, Policy Termination and Grace Period
(i) No Lapse Guarantee
If the Net Surrender Value on any Monthly Date is less than the
Monthly Policy Charge, the Company will notify the policyowner and a
61-day grace period will begin. The Company guarantees the policy will
stay in force during the first 5 Policy Years when (1 minus 2) is
greater than or equal to 3, where:
1. Is the sum of premiums paid;
2. Is the sum of all existing loans, loan interest accrued and not
paid, and partial surrenders; and
3. Is the sum of the no lapse guarantee monthly premiums since the
Policy Date to the most recent Monthly Date.
The no lapse guarantee monthly premium is shown on the current Data
Pages.
(ii) Grace Period
The 61-day grace period begins when the Company mails a notice of
impending policy termination to the policyowner at his or her last
known post office address.
If sufficient payment per the notice is not made by the end of the
grace period, the policy terminates as of the date the first unpaid
Monthly Policy Charge was due.
If the Insured dies during a grace period, the Company will pay the
death proceeds to the beneficiary(ies).
(iii) Termination
All policy privileges and rights of the owner under this policy end:
1. When the policy is surrendered in full;
2. When the death proceeds are paid;
3. When the 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
terminates as of the Monthly Date on which the grace period
began.
(e) Suicide
The Policy's death proceeds will not be paid if the insured dies by
suicide, while sane or insane, within two years from the Policy Date or two
years from the date of any increase in face amount. In the event of suicide
within the two-year period, the only liability of the Company will be a
refund of premiums paid, without interest, less any policy loans, any
partial surrenders, and any surrender charges. This amount will be paid to
the beneficiary(ies).
(f) Payments; Deferment
The Company usually pays total or partial surrenders, policy loans, or
maturity proceeds within five Valuation Days after it receives notice. The
Company will pay death benefits within five Valuation Days after it
receives proof at its home office of the insured's death and its completed
death claim forms. The Company reserves the right to delay payment of the
Fixed Account Value for up to six months after it receives notice of any
surrender.
The Company may not be able to determine the value of the Divisions of its
Separate Account if:
(i) 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;
(ii) The Securities and Exchange Commission by order permits
postponement for the protection of policyowners; or
(iii) 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 Separate Account
assets.
If any of the three above events occur, the Company has the right to
defer:
1. Determination and payment of any surrenders, maturity or death
proceeds;
2. Payment of any Policy Loans;
3. Determination of the Unit Values of the Divisions;
4. Any requested transfers between the Divisions; and
5. Application of death proceeds or surrender proceeds under a Death
Benefit option.
In the event of such deferment, the amount of surrender, transfer or
policy loan will be determined the first Valuation Date following
expiration of the permitted deferment. The death or maturity proceeds,
surrender or policy loan will be made within five Valuation Days
thereafter.
3. Transfers
(a) Transfers Allowed
A policyowner may transfer amounts between the Fixed Account and the
Divisions as provided below. To request a transfer, Notice must be
given to the Company. If the Company receives Notice prior to the
close of the New York Stock Exchange, the transfer is made a 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. The Company reserves the right to not accept
transfer requests from someone requesting them for multiple contracts
for which they are not the owner and to modify or revoke transfer
privileges.
(b) Transfers From Fixed Account
A policyowner may transfer amounts from the Fixed Account to a
Division by making either scheduled or unscheduled transfers (not
both) during the same Policy Year, subject to the following
conditions:
UNSCHEDULED FIXED ACCOUNT TRANSFERS - One unscheduled transfer may be
made from the Fixed Account each Policy Year, as follows:
1. Notice must be delivered to the Company within 30 days following
either the Policy Date or any policy anniversary.
2. The Notice must specify the dollar amount or percentage to be
transferred, which must be at least the minimum unscheduled
transfer amount shown on the current Data Pages and may not
exceed 25 percent of the Policy's Fixed Account value as of the
later of the Policy Date or the last policy anniversary. However,
if the Fixed Account Value is less than $1,000, 100 percent of
the Fixed Account Value may be transferred within 30 days after
the first and following policy anniversaries.
SCHEDULED FIXED ACCOUNT TRANSFER - (Dollar Cost Averaging) - Scheduled
transfers may be made 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 the policyowner.
2. The Policy Fixed Account value must equal or exceed the minimum
scheduled transfer value shown on the current Data Pages, which
amount may be changed by the Company but will never exceed
$10,000.
3. The monthly transfer will be the dollar amount or percentage
specified by policyowner 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 percent of
the Fixed Account Value as of the latest of the Policy Date, last
policy anniversary, or date request is received by the Company.
4. The transfers will continue until the Fixed Account value is zero
or the policyowner directs the Company.
5. The dollar amount or percentage of the scheduled transfers may be
changed once each Policy Year by providing Notice to the Company.
6. If the scheduled transfers are stopped, they may not start again
until six months after the date of the last scheduled transfer.
(c) Transfers from Divisions
Transfers may be made from a Division to either the Fixed Account
or another Division by making either a scheduled or unscheduled
Division transfer, subject to the following conditions.
Transfers to the Fixed Account are allowed only if:
1. No transfer has been made from the Fixed Account for at
least six months; and
2. The Fixed Account value immediately after the transfer does
not exceed $1,000,000, except with the Company's prior
approval.
UNSCHEDULED DIVISION TRANSFERS - Unscheduled transfers may be made
from a Division provided the policyowner specifies the dollar amount
or percentage to transfer from each Division, and the amount of the
transfer must equal or exceed the lesser of the value of the Division
or the minimum scheduled transfer amount shown on the current Data
Pages.
SCHEDULED DIVISION TRANSFERS - (Dollar Cost Averaging) - Scheduled
transfers from a Division are permitted as follows:
1. Transfers will begin on the date specified, other than the 29th,
30th or 31st.
2. The policyowner must specify how often the transfers will occur
(annually, semi-annually, quarterly or monthly).
3. The policyowner must specify the dollar amount or percentage to
transfer from each Division and that amount must equal or exceed
the lesser of the value of those Divisions or the minimum
scheduled transfer amount shown on the current Data Pages.
4. The value of each Division from which transfers are made must
equal or exceed the minimum Division value for scheduled
transfers shown on the current Data Pages.
5. The transfers will continue until the value in the Division(s) is
zero or the Company receives Notice to stop making the transfers.
6. The Company reserves the right to limit the number of Divisions
from which transfers may be made at the same time. In no event
will the limit ever be less than two.
(d) Automatic Portfolio Rebalancing
Automatic portfolio rebalancing (APR) permits maintenance of a
specific percentage of Policy Value in the Divisions.
APR transfers:
1. Do not begin until the expiration of the free-look period.
2. May be made on the frequency specified by the policyowner,
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.
3. Do not begin until the Company receives Notice from the
policyowner.
Transfers are not effective until the end of the Valuation Period
during which the Company receives Notice. APR is not available if
scheduled transfers (dollar cost averaging) from the same Division or
from the Fixed Account is selected.
4. Right to Exchange Policy and Adjustment Computation Required by Rule 6e-
3(T)(b)(13)(v)(B)
During the first 24 months following any Effective Date on a Policy, the
policyowner may exercise the exchange right provided that the Policy is not
in a grace period. Exercise of the exchange right means the policyowner
makes an irrevocable, one-time election to transfer all value from the
Divisions of the Separate Account to the Fixed Account.
5. Statement of Value
Each year a statement will be sent to the policyowner which shows the
following:
1. the current death benefit;
2. the current Policy Value and surrender value;
3. all premiums paid since the last statement;
4. all charges since the last statement;
5. any Policy loans and loan interest;
6. any partial surrenders since the last statement;
7. any investment gain or loss since the last statement; and
8. the total value of each of the policyowner's Divisions and Fixed
Account.
The Company will also send the policyowner the reports required by the
Investment Company Act of 1940.