1
EXHIBIT 10.6
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into effective the 6th day of April,
1994, by and between UNION FEDERAL BANK, a federal savings bank (hereinafter
the "Corporation"), UNIONFED FINANCIAL CORPORATION, a Delaware corporation
(hereinafter the "Guarantor"), and DAVID S. ENGELMAN and SHERRY B. ENGELMAN as
Trustees (hereinafter collectively referred to as the "Trustee") under that
certain Declaration of Trust (Engelman Family Trust) dated May 7, 1992, between
DAVID S. ENGELMAN and SHERRY B. ENGELMAN as Trustors (hereinafter the
"Trustors"), and DAVID S. ENGELMAN and SHERRY B. ENGELMAN as Trustees.
WITNESSETH:
WHEREAS, DAVID S. ENGELMAN is a valued employee of the
Corporation and of the Guarantor, and the Corporation and the Guarantor desire
to retain him in that capacity; and
WHEREAS, as an additional inducement to DAVID S. ENGELMAN's
continued employment, the Corporation and the Guarantor desire to assist the
DAVID S. ENGELMAN with his life insurance program by entering into this
Agreement with the Trustee; and
WHEREAS, the Corporation is willing to assist the Trustee in
the payment of premiums on the life insurance policy which the Trustee proposes
to purchase for the benefit of DAVID S. ENGELMAN; in exchange for such premium
assistance, the Trustee is willing to return to the Corporation the amount of
the premiums advanced by the Corporation and certain additional amounts, if
any, as described below.
NOW, THEREFORE, in consideration of the premises, and the
agreements hereinafter set forth, the Corporation, the Guarantor and the
Trustee hereby agree as follows:
1. (a) Trustee has applied to Security Life of
Denver Insurance Company ("Security Life") for a Flexible Premium Adjustable
Life Insurance Policy with an initial death benefit of $516,347. The life
insurance policy with which this Agreement deals is the policy listed on
Exhibit "A" attached hereto and made a part hereof, insuring the life of DAVID
S. ENGELMAN (hereinafter the "Insured") as so designated on Exhibit "A." In
addition to the stated death benefit, the policy provides for the annual
purchase of term insurance riders insuring the life of the Insured, which
riders shall have death benefits in an amount sufficient to ensure that the
Corporation can recover from the Trustee the amount of the premiums paid by the
Corporation under this Agreement. Such policy, including the term insurance
riders, shall hereinafter be referred to as the "Policy."
(b) The parties hereto agree that they will take
any further action which may be necessary to cause the Policy to conform to the
provisions of this Agreement. The parties hereto agree that the Policy shall
be subject to the terms and
2
conditions of this Agreement and of the collateral assignment filed with
Security Life relating to the Policy.
2. The Trustee shall be the owner of the Policy, and may
exercise all ownership rights granted to the owner thereof by the terms of the
Policy. Notwithstanding any other provision hereof, it is the express
intention of the parties to reserve to the Trustee all rights in and to the
Policy granted to the owner thereof by the terms of the Policy, including, but
not limited to, the right to assign the Trustee's interest in the Policy
subject to the provisions of Section 12, the right to change the beneficiary of
the Policy, the right to exercise settlement options, the right to borrow
against the cash value of the Policy through policy loans subject to the
provisions of Section 11, and the right to surrender or cancel the Policy (in
whole or in part). The Corporation shall not have or exercise any right in or
to the Policy which could, in any way, endanger, defeat or impair any of the
rights of the Trustee in the Policy.
3. (a) On or before the due date of each Policy
premium, or within the grace period provided therein, the Corporation shall pay
the full amount of the Policy premium to Security Life, and shall, upon
request, promptly furnish the Trustee evidence of timely payment of such
premium. The Corporation shall annually furnish Trustors a statement of the
amount of income reportable by Trustors for federal and state income tax
purposes, if any, as a result of its payment of the premium. All amounts paid
by the Corporation toward the premiums on the Policy are hereinafter
collectively referred to as the "Amounts."
(b) Subject to the other provisions of this
Agreement, the Corporation's obligation to pay the premium on the Policy
pursuant to Section 3(a) shall continue until the Policy dividends are
sufficient to pay the full amount of the annual premium on the Policy. At any
time thereafter when the Policy dividends are insufficient to pay said full
amount of the annual premium, the Corporation's obligation to pay said premium
pursuant to Section 3(a) shall recommence. The Corporation's obligation to
make premium payments hereunder shall be limited to an amount of premiums
necessary to maintain the death benefit to the Trustee under the Policy at an
amount equal to Five Hundred Thousand Dollars ($500,000.00) plus the Amounts
paid from time to time.
(c) The Guarantor, as parent of the Corporation,
hereby unconditionally guarantees each and all of the obligations of the
Corporation under this Agreement.
(d) So long as DAVID S. ENGELMAN remains an
employee of the Corporation, the Corporation agrees to pay an annual bonus to
DAVID S. ENGELMAN in the amount necessary to reimburse the Insured for the
federal and state income tax liabilities of DAVID S. ENGELMAN which are
attributable to the premium payments made pursuant to this Section 3 and to the
bonus payments made pursuant to this Section 3(d). Bonus payments made
pursuant to this Section 3(d) shall not be included in the Amounts defined in
Section 3(a). The Corporation's obligation to pay annual bonuses to DAVID S.
ENGELMAN pursuant to this Section 3(d) shall cease upon the termination of
DAVID S. ENGELMAN's employment with the Corporation.
2
3
4. In exchange for the Corporation's payment of the
Amounts under Section 3 and to secure the repayment of said Amounts, the
Trustee has, contemporaneously herewith, assigned an interest in the Policy to
the Corporation as collateral, under the form of Collateral Assignment
("Assignment") attached hereto as Exhibit "B." Said Assignment gives the
Corporation the limited power to enforce its right to be repaid the Amounts by
realizing on the cash value of the Policy, as therein defined, or on a portion
of the death benefit of the Policy, as the case may be. The interest of the
Corporation in and to the Policy shall be specifically limited to the following
rights in and to the cash value and to a portion of the death benefit:
(a) The right to be repaid the Amounts and any
remaining cash surrender value of the Policy in the event the Policy is totally
surrendered or canceled by the Trustee, or the right to receive the surrender
proceeds, to the extent of the Amounts, in the event the Policy is partially
surrendered or canceled by the Trustee, as provided in Section 6 below.
(b) The right to be repaid the Amounts at such
time as life insurance proceeds become payable under the Policy as a result of
the death of the Insured thereunder, as provided in Section 7 below.
(c) The right to be repaid the Amounts and any
remaining cash surrender value of the Policy or to receive ownership of the
Policy, in the event of the termination of this Agreement, as provided in
Sections 9 and 10 below.
(d) The right to be repaid the Amounts to the
extent a Policy loan made by the Trustee in any year exceeds the premium for
that year, as provided in Section 11.
5. Policy dividends (if any) shall be applied to
purchase paid-up additional insurance protection.
6. The Trustee shall have the sole right to surrender or
cancel the Policy (in whole or in part), and the Corporation shall have no
right to surrender or cancel the Policy (in whole or in part). In the event of
a total surrender or cancellation of the Policy by the Trustee, the Corporation
shall be entitled to receive the Amounts and any remaining cash surrender value
of the Policy. In the event of a partial surrender or cancellation of the
Policy by the Trustee, the Corporation shall be entitled to receive the
surrender proceeds of the Policy, to the extent of the Amounts, which surrender
proceeds shall be applied against the Corporation's Amounts.
7. Upon the death of the Insured under the Policy, the
Trustee shall promptly take all action necessary to obtain the death benefits
under the Policy. The Corporation shall be entitled to receive a portion of
the death benefit provided, if any, as follows:
(a) The Corporation shall first receive a portion
of the death benefit provided, if any, under the Policy equal to the Amounts,
or, if less, the life insurance proceeds then payable as a result of such
death. In the event the death benefit provided under the Policy is less than
the Amounts, neither the Trustee, the
3
4
Insured nor his heirs or assigns shall be liable to pay the Corporation any
portion of the Amounts which the Corporation has not yet received.
(b) A portion of the death benefit provided, if
any, under the Policy equal to Five Hundred Thousand Dollars ($500,000) shall
be paid directly to the beneficiary or beneficiaries designated by the Trustee,
in the manner and in the amounts provided by the beneficiary designation
endorsed on the Policy.
(c) The balance of the death benefit provided
under the Policy, if any, shall be paid to the Corporation.
8. (a) This Agreement may be terminated, subject to
the provisions of Section 9 below, by the Trustee, without consent of the
Corporation, by the Trustee giving written notice of such termination, and
specifying the date of such termination, to the Corporation.
(b) This Agreement shall terminate upon the
termination of DAVID S. ENGELMAN's employment status by the Corporation or the
Guarantor for cause, as defined in Section 5(c) of that certain Employment
Agreement by and between the Corporation, the Guarantor and the Insured dated
as of April 1, 1991, as such Employment Agreement may be amended from time to
time.
9. In the event of termination of this Agreement as
provided in Section 8 above, Trustee shall have the obligation to repay to the
Corporation, within ninety (90) days of the date of termination, the Amounts
and any remaining cash surrender value of the Policy or to transfer Trustee's
entire interest in the Policy to the Corporation.
10. If the Trustee fails to repay to the Corporation the
amount specified in Section 9 above within ninety (90) days of the date of
termination of this Agreement, the Trustee shall execute any and all
instruments that may be required to vest ownership of the Policy in the
Corporation. Thereafter, Trustee shall have no further interest in the Policy
or any rights under this Agreement and the Corporation shall have no further
claims against Trustee under this Agreement.
11. The Trustee shall have the sole right to borrow
against the Policy, and the Corporation shall have no right to obtain loans
against the Policy, directly or indirectly, from the insurer or any other
person, or to pledge or assign the Policy, or the Corporation's rights in the
Policy, as security for any loan; provided, however, the Trustee shall not
borrow from the Policy any amount which would cause in the remaining cash
surrender value of the Policy to be less than the Amounts. If the Trustee in
any policy year borrows from the Policy an amount in excess of the premium for
that year, the Corporation shall be entitled to receive such excess amount, to
the extent of the Amounts, which excess amount shall be applied against the
Amounts. The Trustee shall pay any interest due on any Policy loans it
obtains.
12. Trustee and the Corporation may each transfer or
assign its respective rights in the Policy without the consent of the other.
In the event the Trustee shall transfer all of the Trustee's interest in the
Policy to a transferee, then all of the Trustee's interest in the Policy and in
this Agreement shall be vested in the transferee,
4
5
who shall be substituted as a party hereunder, and the Trustee shall have no
further interest in the Policy or in this Agreement.
13. (a) The Trustee is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement.
(b) The funding policy under this Plan is that
all premiums on the Policy shall be remitted to the Insurer when due.
(c) The Trustee shall make all determinations
concerning rights to benefits under this Agreement. Any decision by the
Trustee denying a claim by a beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to such beneficiary. Such
decision shall set forth the specific reasons for the denial, written to the
best of the Trustee's ability in a manner that may be understood without legal
or actuarial counsel. In addition, the Trustee shall afford a reasonable
opportunity to such beneficiary for a full and fair review of the decision
denying such claims.
(d) The provisions of Section 13(a) and 13(b)
shall not apply to any dispute between the Corporation and the Trustee
regarding their respective rights and duties under this Agreement. In the
event such a dispute arises, the Corporation and the Trustee shall each be
entitled to take whatever measures necessary to resolve such dispute.
14. This Agreement may not be amended, altered or
modified, except by a written instrument signed by each of the parties hereto.
15. This Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns, and the Trustee, and
their respective successors, assigns, heirs, executors, administrators and
beneficiaries.
16. All notices and other communications hereunder shall
be in writing and shall be delivered personally or mailed postage prepaid by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Corporation:
Union Federal Bank
330 East Lambert Road
Brea, CA 92621
(b) if to Insured:
David S. Engelman
P.O. Box 648
Rancho Santa Fe, CA 92067
5
6
(c) if to Trustee:
David S. Engelman and Sherry B. Engelman
P.O. Box 648
Rancho Santa Fe, CA 92067
(d) if to the Guarantor:
UnionFed Financial Corporation
330 East Lambert Road
Brea, CA 92621
In the case of mailing, any notice shall be deemed given on
the second business day following the date of such mailing.
17. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed pursuant to the laws of the State
of California.
18. It is the intention of all of the parties hereto that
the arrangement established hereunder between the Corporation and the Trustee
shall be considered a "split-dollar" arrangement as such arrangement is defined
and described in Internal Revenue Service Rev. Rul. 64-328. In the event,
however, that this Agreement shall not meet all of the requirements of such a
"split-dollar" arrangement as so described, then the parties hereto agree that
they shall amend this Agreement so as to qualify the arrangement created
hereunder as such a "split-dollar" arrangement.
19. This Agreement does not and shall not be construed to
give the Insured the right to be retained in the employ of the Corporation, nor
shall this Agreement interfere with or be construed to interfere with the
employer-employee relation between the Corporation and the Insured.
IN WITNESS WHEREOF, the parties have executed this Agreement
in duplicate originals as of the day and year first above written.
"CORPORATION"
UNION FEDERAL BANK ATTEST:
By: /s/ RONALD M. GRIFFITH /s/ RHONDA NEWCOMER
----------------------------- --------------------------------
Ronald M. Griffith Rhonda NewComer
Senior Vice President Assistant Secretary
Its Duly Authorized Officer
6
7
"TRUSTEE"
By: /s/ DAVID S. ENGELMAN By: /s/ SHERRY B. ENGELMAN
-------------------------------- ------------------------------
David S. Engelman, Sherry B. Engelman,
Trustee of the Trustee of the
Engelman Family Trust Engelman Family Trust
U/D/T dated 5/7/92. U/D/T dated 5/7/92.
"GUARANTOR"
UNIONFED FINANCIAL CORPORATION ATTEST:
By: /s/ RONALD M. GRIFFITH /s/ RHONDA NEWcOMER
-------------------------------- ----------------------------------
Ronald M. Griffith Rhonda NewComer
Senior Vice President Assistant Secretary
Its Duly Authorized Officer
I consent to this Agreement and the insurance covering my life.
"INSURED"
/s/ DAVID S. ENGELMAN
----------------------------------
David S. Engelman
7
8
EXHIBIT "A"
Life Insurance Policy
Security Life of Denver
Flexible Premium Adjustable Life Insurance Policy No. 1532560, attached hereto.
9
[LOGO]
SECURITY LIFE
DENVER, COLORADO
NAME: DAVID S ENGELMAN
POLICY DATE: APRIL 06, 1994
POLICY NUMBER: 1532560
STATED DEATH BENEFIT: 516347
WE AGREE TO PAY the stated death benefit as a death benefit to the beneficiary
on the death of the insured, subject to the provisions of the policy. The
insured is named in the policy Schedule.
WE AGREE TO PAY the surrender value to you on the maturity date if the insured
is living on that date.
WE ALSO AGREE to provide the other rights and benefits of the policy. These
agreements are subject to the provisions of the policy.
20 DAY RIGHT TO EXAMINE POLICY. You may return the policy within 20 days after
receipt. It may be returned by delivering or mailing it to us or to our agent.
Immediately upon return, it will be deemed void from the start. Any premium
paid will be refunded.
In this policy "you" and "your" refer to the owner of the policy. "We", "us"
and "our" refer to Security Life of Denver Insurance Company.
/s/ E. L. COPELAND /s/ V. S. BEUFELL
Secretary President
This policy is a FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY
Death benefit payable at death prior to maturity date--Surrender value, if any,
payable on maturity date--Adjustable death benefit--Flexible premiums payable
during lifetime of insured until maturity date--Nonparticipating
Criswell Ins. Ser., Inc.
4275 Executive Sq., #900
La Jolla, CA 92037
(819) 546-8150
SECURITY LIFE OF DENVER INSURANCE COMPANY
A Stock Company
Security Life Center, 1290 Broadway, Denver, Colorado 80203-5699
10
TABLE OF CONTENTS
This Policy is a legal contract between you and us. READ IT CAREFULLY.
GUIDE TO KEY PROVISIONS
PROVISION PAGE
Additional Interest 8
Age 11
Annual Report 12
Basis of Computations 9
Beneficiaries 12
Change in Existing Insurance Coverage 7
Collateral Assignment 12
Cost of Insurance 8
Death Benefit 6
Deferment 12
Effective Date of Coverage 6
Grace Period 9
Illustration of Benefits and Values 13
Incontestability 12
Interest Rate 8
Misstatement of Age or Sex 12
Monthly Deduction 8
Ownership 12
Payouts Other Than as One Sum 13
Policy Loans 11
Policy Values 8
Premiums 7
Procedures 11
Proceeds 6
Reinstatement 9
Scheduled Premiums 7
Special Continuation Period 9
Suicide Exclusion 12
Surrender and Surrender Value 10
Termination 9
Unscheduled Premiums 7
Additional benefits or riders, if any, will be listed in the Schedule.
The additional provisions will be inserted in the Policy.
11
Signature instructions:
Please sign on page 5 for
Duplicate Policy or Change of
Ownership Requests.
Check appropriate Insurer: / / SECURITY LIFE OF DENVER INSURANCE COMPANY
/ / MIDWESTERN UNITED LIFE INSURANCE COMPANY
INSURED DAVID S. ENGELMAN POLICY NO. 153 2560
--------------------------- ---------------------------
CLIENT SERVICE APPLICATION
______________________________________________________________________________
/ / LOST POLICY CERTIFICATION AND REQUEST FOR DUPLICATE POLICY OR CERTIFICATE
OF INSURANCE
______________________________________________________________________________
My policy or certificate has been lost or misplaced. Issue a duplicate policy
or certificate of insurance, or grant the benefits under this policy that
have been requested without requiring the surrender of the original policy. If
the original policy is found, I will return the duplicate policy or certificate
of insurance to the Home Office.
SIGN BELOW
______________________________________________________________________________
/X/ CHANGE OF OWNERSHIP OF POLICY OR CERTIFICATE OF INSURANCE*
______________________________________________________________________________
I transfer all my rights, title and interest as owner of the above policy or
certificate to:
SOCIAL SECURITY NUMBER OR
NEW OWNER Name and Address DATE OF BIRTH TAX IDENTIFICATION NUMBER
- - - - ------------------------------------------------------------------------------
David S. Engelman & Sherry B. Engelman or such successor Trustee as may
- - - - ------------------------------------------------------------------------------
be hereafter appointed Trustees of the Engelman Family Trust dated 5-7-92,
- - - - ------------------------------------------------------------------------------
subject to Split Dollar Agreement.
- - - - ------------------------------------------------------------------------------
ABOUT THE NEW OWNERSHIP
If more than one owner is named, the ownership of the policy or certificate
of insurance will be held jointly by them with right of survivorship, unless
elected otherwise. Upon the death of one of the owners, the surviving
owner(s) will own the policy or certificate of insurance. If a contingent owner
is named and if the owner(s) shall predecease the insured, the living contingent
owner(s) shall own the policy or certificate of insurance.
The transfer of ownership is subject to any policy loan, and any assignment on
file at the Home Office.
The new owner(s) may exercise all the rights and receive all the benefits of
this policy during the insured's lifetime. The change of ownership will not
change any beneficiary designation or any method of optional settlement
previously elected.
This change will be effective as of the date the change of ownership is
signed, but it will not apply to any payment made or action taken before this
form is received at the Home Office. The policy may be required to be sent to
the Home Office.
MAIL NOTICES TO: DAVID S. ENGELMAN, TRUSTEE P.O. BOX 648 RANCHO SANTA FE CA 92067
-----------------------------------------------------------------------
Name Street City State Zip Code
PRESENT AND NEW OWNER SIGN BELOW
_____________________________________________________________________________
*If this policy is part of a qualified pension, profit-sharing, or HR-10
plan, we may require additional forms and the law may restrict the form
of distribution.
Signature of
Insured /s/ DAVID S. ENGLEMAN
-------------------------------------
(If below age 15, signature of parent
or guardian required)
Spouse
(If Applicable) /s/ SHERRY B. ENGELMAN
-----------------------------
DATE: 6/10/94 Present Owner (if Not
-------------------- the Insured) /s/ DAVID S. ENGELMAN
--------------------------------
The New Owner DAVID S. ENGLEMAN, TRUSTEE
-------------------------------
SHERRY B. ENGELMAN, TRUSTEE
-------------------------------
WITNESS: /s/ ROBERT D. CRISWELL Assignee (if Applicable) ____________
----------------------------
_____________________________________
AGENT: /s/ ROBERT D. CRISWELL NO.
---------------------- --- _____________________________________
_____________________________________________________________________________
HOME OFFICE USE ONLY
Form Endorsed This Date: ________________ By: ____________________________
Vice President
PLEASE READ REVERSE SIDE
Page 5
12
S C H E D U L E
MINIMUM ANNUAL PREMIUM $ 6,805.92
SCHEDULED PREMIUM $15,750.00
PAYABLE ANNUALLY
INITIAL UNTIL POLICY INFORMATION
BENEFIT INSUREDS
DESCRIPTION AMOUNT AGE INSURED DAVID S ENGELMAN
AGE AT ISSUE 56
BASIC COVERAGE $258,174 95 POLICY DATE APR 6, 1994
SUPPLEMENTAL COVERAGE $258,173 95
MATURITY DATE APR 6, 2033
MONTHLY ANNIVERSARY DATE 6
POLICY NUMBER 1532560
STATED DEATH
BENEFIT $516,347
OPTION 1 - INCLUDES THE
POLICY VALUE
THE GUARANTEED MINIMUM INTEREST RATE IS
4.00%. THE PREMIUM EXPENSE CHARGE IS 7.00% MINIMUM STATED
OF THE PREMIUM. THE MONTHLY EXPENSE CHARGES DEATH BENEFIT $25,000
ARE $7.00 PER POLICY PER MONTH IN ALL YEARS
AND $0.420 PER $1,000 OF STATED DEATH STANDARD RATE CLASS
BENEFIT PER MONTH DURING THE FIRST FIVE
POLICY YEARS.
THE SPECIAL CONTINUATION PERIOD IS NINE
YEARS. MINIMUM PARTIAL SURRENDER IS $300.
LOAN INTEREST RATE IS 6.0% DURING THE FIRST
NINE POLICY YEARS AND 4.25% THEREAFTER,
PAYABLE IN ARREARS. COVERAGE WILL EXPIRE
PRIOR TO THE MATURITY DATE IF PREMIUMS ARE
INSUFFICIENT TO CONTINUE COVERAGE TO SUCH
DATE. COVERAGE WILL ALSO BE AFFECTED BY
PARTIAL SURRENDERS, POLICY LOANS, AND BY
CHANGES IN THE ACTUAL CREDITED INTEREST
RATES AND CURRENT COST OF INSURANCE RATES.
* SCHEDULE CONTINUED NEXT PAGE*
13
S C H E D U L E
CONTINUED FROM PRECEDING PAGE
POLICY NUMBER 1532560
INSURED DAVID S ENGELMAN POLICY DATE APR 06, 1994
TABLE OF SURRENDER CHARGES
POLICY YEAR SURRENDER CHARGE
1 11,294.84
2 10,165.24
3 8,908.86
4 7,652.49
5 6,396.11
6 5,139.73
7 3,883.35
8 2,626.97
9 1,370.59
10 .00
A SURRENDER CHARGE WILL NOT APPLY IF THE POLICY HAS BEEN IN FORCE FOR FIVE
YEARS FROM THE LATER OF THE POLICY DATE OR THE DATE OF THE LAST INCREASE IN
COVERAGE AND THE SURRENDER VALUE IS USED TO PROVIDE AN ANNUITY PAYOUT OF NOT
LESS THAN FIVE YEARS THROUGH THE SETTLEMENT PROVISIONS OF THIS POLICY.
14
TABLE OF GUARANTEED RATES
Guaranteed Maximum Cost of Insurance Rates Per $1,000--Standard Nonsmoker,
Smoker or Juvenile Rate Classification
Monthly Cost of Monthly Cost of Monthly Cost of Monthly Cost of
Insurance Rate Insurance Rate Insurance Rate Insurance Rate
Attained --------------- Attained --------------- Attained ---------------- Attained -------------------
Age Male Female Age Male Female Age Male Female Age Male Female
- - - - -------- ------ ------ -------- ------ ------ -------- ------- ------ -------- -------- --------
0 .34845 .24089 25 .14752 .09668 50 .55948 .41350 75 5.37793 3.19685
1 .08917 .07251 26 .14419 .09918 51 .60870 .44270 76 5.91225 3.59370
2 .08251 .06750 27 .14252 .10168 52 .66377 .47523 77 6.46824 4.01942
3 .08167 .06584 28 .14169 .10501 53 .72636 .51276 78 7.04089 4.47410
4 .07917 .06417 29 .14252 .10835 54 .79730 .55114 79 7.64551 4.97042
5 .07501 .06334 30 .14419 .11251 55 .87326 .59118 80 8.30507 5.52957
6 .07167 .06084 31 .14836 .11668 56 .95591 .63123 81 9.03761 6.17118
7 .06667 .06000 32 .15252 .12085 57 1.04192 .66961 82 9.86724 6.91114
8 .06334 .05834 33 .15919 .12502 58 1.13378 .70633 83 10.80381 7.77075
9 .06167 .05750 34 .16669 .13168 59 1.23235 .74556 84 11.82571 8.72632
10 .06084 .05667 35 .17586 .13752 60 1.34180 .78979 85 12.91039 9.76952
11 .06417 .05750 36 .18670 .14669 61 1.46381 .84488 86 14.03509 10.89151
12 .07084 .06000 37 .20004 .15752 62 1.60173 .91417 87 15.18978 12.08770
13 .08251 .06250 38 .21505 .17003 63 1.75809 1.00267 88 16.36948 13.35774
14 .09584 .06667 39 .23255 .18503 64 1.93206 1.10539 89 17.57781 14.70820
15 .11085 .07084 40 .25173 .20171 65 2.12283 1.21731 90 18.82881 16.15259
16 .12585 .07501 41 .27424 .22005 66 2.32623 1.33511 91 20.14619 17.71416
17 .13919 .07917 42 .29675 .23922 67 2.54312 1.45461 92 21.57655 19.43814
18 .14836 .08167 43 .32260 .25757 68 2.77350 1.57247 93 23.20196 21.40786
19 .15502 .08501 44 .34929 .27674 69 3.02328 1.69955 94 25.28174 23.83051
20 .15836 .08751 45 .37931 .29675 70 3.30338 1.84590
21 .15919 .08917 46 .41017 .31677 71 3.62140 2.02325
22 .15752 .09084 47 .44353 .33761 72 3.98666 2.24419
23 .15502 .09251 48 .47856 .36096 73 4.40599 2.51548
24 .15169 .09501 49 .51777 .38598 74 4.87280 2.83552
The rates shown are for a standard nonsmoker, smoker or juvenile rate
class. If the policy is based on a special rate class (other than standard
nonsmoker, smoker or juvenile), the maximum cost of insurance rates will be
adjusted using the rating factor shown in the Schedule for the special class. If
the special rate class is a stated percentage increase, the maximum cost of
insurance rates will be determined by multiplying the rates for a standard
nonsmoker, smoker or juvenile rate class shown above by the rating factor shown
on the Schedule. If the special rate class is a flat amount per $1,000, the
maximum cost of insurance rates will be determined by adding the flat amount per
$1,000 shown in the Schedule to the rate per $1,000 for the standard nonsmoker,
smoker or juvenile rate class shown above. The rates shown above are based on
the 1980 Commissioners Standard Ordinary Mortality Table, age nearest birthday.
4
15
INSURANCE COVERAGE PROVISIONS
EFFECTIVE DATE OF COVERAGE
The policy date shown in the Schedule is the effective date for all coverage
provided in the original application. This is subject to the payment of the
first premium and the acceptance of the policy by you, during the continued
insurability of all persons insured by this policy. The policy date is the
date from which we measure policy months and policy years. A policy month
occurs each month on the same day as the policy date. A monthly anniversary is
the first day of a policy month. A policy anniversary occurs each year on the
same month and day as the policy date. The effective date for increases and
additional benefits is described in the applicable provision or rider.
PROCEEDS
Proceeds means the amount we will pay on the maturity date, upon the surrender
of the policy before the maturity date, or upon the death of the insured.
Proceeds we will pay on the maturity date, or upon surrender of this policy
prior to the maturity date will be the surrender value. The maturity date is
the policy anniversary nearest the insured's 95th birthday. Proceeds we will
pay upon the death of the insured will be the death benefit; plus any amounts
payable from any additional benefits provided by rider; minus any outstanding
policy loan including accrued but unpaid interest; minus any unpaid monthly
deduction prior to the date of death. Any proceeds we pay are subject to
adjustments as provided in the Misstatement of Age & Sex, Suicide Exclusion
and Incontestability provisions of this policy.
We will pay proceeds in one sum unless you request an alternate form of
payment. There are many possible methods of payments. The available
settlement options are described in the Payouts Other Than As One Sum provision
in the policy. Contact us or your agent for additional information. Interest
will be paid on the one sum death proceeds from the date of death to the date
of payment, or until a settlement option is selected. Interest is at the rate
we declare, or any higher rate required by law, but not less than 3 1/2%.
DEATH BENEFIT
The stated death benefit is the sum of the basic coverage and the supplemental
coverage. The stated death benefit and the option that apply to this policy
are shown on the Schedule. Subject to the provisions of the policy, the
insured's death benefit at any time under the policy will be as follows:
Under option 1 (level), the death benefit is the greater of:
(a) the stated death benefit on the date of the insured's death; or
(b) a percentage, as determined below, of the policy value on the date of
death.
Under option 2 (increasing), the death benefit is the greater of:
(a) the stated death benefit plus the policy value on the date of insured's
death; or
(b) a percentage, as determined below, of the policy value on the date of
death.
Under either option the death benefit shall not be less than a percentage, as
determined below, of the policy value on the date of death.
POLICY POLICY POLICY POLICY
ATTAINED VALUE ATTAINED VALUE ATTAINED VALUE ATTAINED VALUE
AGE % AGE % AGE % AGE %
-------- ------ -------- ------ -------- ------ -------- ------
49 And
Younger 250 54 157 68 117 82 105
41 243 55 150 69 116 83 105
42 236 56 146 70 115 84 105
43 229 57 142 71 113 85 105
44 222 58 138 72 111 86 105
45 215 59 134 73 109 87 105
46 209 60 130 74 107 88 105
47 203 61 128 75 105 89 105
48 197 62 126 76 105 90 105
49 191 63 124 77 105 91 104
50 185 64 122 78 105 92 103
51 178 65 120 79 105 93 102
52 171 66 119 80 105 94 101
53 164 67 118 81 105 95 100
This policy is designed to qualify as a life insurance contract under the
Internal Revenue Code. All terms and provisions of the policy shall be
construed in a manner consistent with that design. The amount of insurance in
force at any time under the policy shall not be less than the amount of
insurance necessary to achieve such qualification under the applicable
provisions of the Internal Revenue Code in existence at the time the policy is
issued. We reserve the right to amend the policy and adjust the death benefit
when required. We will send you a copy of any such amendment.
5 & 6
16
CHANGE IN EXISTING INSURANCE COVERAGE
At any time after the first policy year, you may request that the insurance
coverage be changed. The change may be an increase or decrease in coverage. A
change will be prorated between the basic coverage and the supplemental
coverage so that the ratio of the supplemental coverage to the stated death
benefit will be the same after the change as it was prior to the change. You
may change the coverge only once every policy year. The change in coverage may
not be for an amount less than $5,000. The effective date of the change will be
the monthly anniversary date on or next following the date the written
application is approved by us. Such change is subject to the following
conditions:
(a) The stated death benefit in effect after any change may not be less than
the minimum stated death benefit shown in the Schedule or the amount
required to qualify as a life insurance contract under the Internal Revenue
Code.
(b) Any decrease in the stated death benefit will be prorated against coverage
provided under the original application and any increases. The surrender
charge will be reduced. The surrender charge that remains will be the
surrender charge applicable to the remaining stated death benefit. We will
deduct from your policy value an amount equal to the reduction in the
surrender charge.
(c) For us to approve an increase or a change in the death benefit option from
option 1 to option 2, you must submit evidence satisfactory to us that
the insured is insurable according to our normal rules for this type of
policy. If the stated death benefit is increased, a new surrender charge
will be created for the increase as described in the Surrender and Surrender
Value provision. The existing surrender charges at the time of the increase
will not change.
(d) If the death benefit option is changed from option 1 to option 2, the stated
death benefit after such change will be equal to the stated death benefit
prior to such change less the policy value as of the effective date of
change.
(e) If the death benefit option is changed from option 2 to option 1, the stated
death benefit after such change will be equal to the stated death benefit
prior to such change plus the policy value as of the effective date of the
change.
(f) You may apply for additional insurance on the insured or the life of the
insured's spouse or child. The addition of this insurance is subject to
evidence satisfactory to us that the insured or the insured's spouse or
child is insurable according to our normal rules for this type of policy.
The new insurance will be provided by rider and subject to the terms
provided in the rider. The effective date of this new insurance will be the
monthly anniversary date that falls on or next following the date the
application is approved by us.
PREMIUM PROVISIONS
SCHEDULED PREMIUMS
The scheduled premium may be paid as shown in the Schedule while this policy is
in force, during the insured's life. You may increase or decrease the amount of
the scheduled premium, subject to limits we may set. Under conditions provided
in the Grace Period Provision, you may be required to make payments to keep the
policy in force.
We will send scheduled premium reminder notices to you in the amount and
frequency that you selected. The notice will be sent either annually,
semiannually or quarterly. We will also arrange for payment of such premiums on
a monthly basis, which will be under an authorized special payment facility. All
payment modes are subject to our minimum requirements for the payment mode
selected. Receipts will be furnished upon request.
UNSCHEDULED PREMIUMS
You may make unscheduled premium payments at any time the policy is in force. An
unscheduled premium is an additional premium in excess of the scheduled premium
paid. Unless you tell us otherwise, these premium payments will first be applied
to reduce or pay off any existing policy loan. We may limit the amount of such
unscheduled premiums if the payment would result in an increase in the death
benefit. If the net amount at risk is increased as the result of an unscheduled
premium, we will require evidence of insurability satisfactory to us that the
insured is insurable according to our normal rules for this type of policy.
7
17
POLICY VALUES PROVISIONS
NET PREMIUM
The net premium equals the premium paid less the percent of premium expense
charge shown in the Schedule.
POLICY VALUE
The policy value on the policy date will be the first net premium for this
policy, less the monthly deduction for the first policy month.
On any monthly anniversary date other than the policy date, the policy value is
equal to:
(a) the policy value on the first day of the previous policy month; plus
(b) one month's interest on item (a); plus
(c) any net premium received since the most recent monthly anniversary date
with interest from the date of receipt to the date of calculation; minus
(d) the monthly deduction for the current month; minus
(e) the amount of any partial surrender on the monthly anniversary date and a
service charge of $25 for such partial surrender.
The policy value on any other day is calculated in a consistent manner.
MONTHLY DEDUCTION
The monthly deduction for a policy month will be the cost of insurance, plus
the monthly expense charges, plus the cost of additional benefits provided by
rider for the policy month. The monthly expense charges are the per policy and
per unit expenses shown in the Schedule.
COST OF INSURANCE
The cost of insurance is determined on a monthly basis. Such cost is the
monthly cost of insurance rate times the net amount of risk plus any additional
charge for the insured's premium class. The net amount of risk is (a) minus
(b) where:
(a) is the death benefit at the beginning of the policy month, divided by
1.00327374; and
(b) is the policy value after the monthly deduction excluding the cost of
insurance on the monthly anniversary date.
The cost of insurance rates will be determined by us from time to time. They
will be based on the sex and age nearest birthday on the effective date of
coverage, the duration since the coverage starts and the premium class. Any
change in rates will apply to all individuals of the same premium class and
whose policies have been in effect for the same length of time. The rates will
never exceed those rates shown in the applicable Table of Guaranteed Rates.
Each time there is an increase in the net amount of risk due to a requested
increase, the net amount of risk will be segregated into the risk prior to the
increase and the amount of the increase. Different rates will apply to each
segment depending upon the premium class, the age nearest birthday on the
effective date of increase and the duration since the increase. To determine
the amount of risk in each segment, the above formula is used with the policy
value being allocated among the original death benefit, and any subsequent
increases in the death benefit.
INTEREST RATE
The guaranteed interest rate applied in the calculation of policy values is
shown in the Schedule. The unborrowed excess interest rate may be applied in
the calculation of policy values at such rates and in such manner as may be
determined by us from time to time. A different excess interest rate will be
credited to any portion of the policy value which is used to secure a loan
balance as may be determined by us from time to time.
ADDITIONAL INTEREST
Your policy will be eligible for "Additional Interest" for each policy month
after the fourth policy anniversary if the excess interest rate on the
unborrowed portion of the policy value has exceeded 1.50% per year for all
prior crediting periods after the policy date.
8
18
After the fourth policy anniversary, for each month in which the above
condition is met, the excess interest rate for the unborrowed portion will be
increased by the additional interest factor. The additional interest factor is
added to the sum of the excess interest rate and the guaranteed interest rate.
The result is then converted to an effective daily ratio to determine the
enhanced interest rate used to calculate your policy values. The enhanced
interest ratio will apply only to the unborrowed policy values. The additional
interest factor will be .50% per year for all eligible policy months after the
fourth policy year.
BASIS OF COMPUTATIONS
The surrender values and reserves under the policy are not less than the
minimums required on the policy date by the state in which the policy was
delivered. A detailed statement of the method of computation of policy values
under the policy has been filed with the insurance department of the state in
which the policy was delivered. Surrender values are not less than those
required by the Standard Nonforfeiture Law using interest of 4% per year. The
Commissioners 1980 Standard Ordinary Mortality Table will be used for insureds
on an age nearest birthday basis. The above mortality rates will be adjusted
for insureds in a special rate class.
GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS
GRACE PERIOD
If the following two conditions occur on a monthly anniversary date, the
policy will enter into the 61 day grace period:
(a) The surrender value is zero or less, and;
(b) the policy does not meet the requirements of the Special Continuation
Period provision.
We will give you a 61 day grace period from the premium due date to make
the required payment. The required premium then due must be paid to keep
the policy in force. If this amount is not received in full by the end of this
grace period, the policy will lapse without value.
Notice of the amount of the required premium will be mailed to you or any
assignee at the last known address at least 30 days before the end of the
Grace Period. If the insured dies during the grace period, we will deduct any
overdue monthly deductions from the death proceeds of the policy.
SPECIAL CONTINUATION PERIOD
The policy will not be terminated during the special continuation period
if on a monthly anniversary date: (1) the policy value less any policy
loan is positive; and (2) the sum of the premiums paid, less any policy loan
and less the sum of all partial surrenderers, is not less than the sum of the
minimum monthly premiums applicable on each monthly anniversary date from issue
to and including the current date. The minimum annual premium and special
continuation period are shown on the Schedule. The minimum monthly premium is
one-twelfth of the minimum annual premium. If there is an increase, the special
continuation period will start as of the effective date of the increase and
continue for the period shown on the Schedule. The policy will not lapse during
this new period if on a monthly anniversary date: (1) the policy value less any
policy loan is positive; and (2) the sum of the premium paid, less any policy
loan and less the sum of all partial surrenders is not less than the sum of the
minimum monthly premium applicable on each monthly anniversary date from the
effective date of the increase up to and including the current date.
TERMINATION
All coverage provided by this policy will end on the earliest of: (1) the
date the policy is surrendered; (2) the date of death of the insured; (3) the
maturity date of the policy; and (4) the date the grace period ends without
payment of the required premium.
REINSTATEMENT
The policy may be reinstated within five years after it has lapsed because
sufficient premium was not paid before the end of the grace period. The
reinstatement will be effective on the monthly anniversary date on or next
following the date we approve your written application.
We will reinstate the policy and any riders if the following conditions are met:
(a) You have not surrendered the policy for its surrender value.
9
19
(b) You submit evidence satisfactory to us that the insured and those insured
under any riders are still insurable according to our normal rules for this
type of policy.
(c) We receive payment of the amount of premium sufficient to keep the policy
and any riders in force from the date of lapse to the date of reinstatement
and for 2 months thereafter. We will let you know at the time you request
reinstatement of the amount of premium needed for this purpose.
We will reinstate any policy loan which existed when coverage ended, with
accrued loan interest.
SURRENDER PROVISION
SURRENDER AND SURRENDER VALUE
The surrender value of the policy on any date will be the policy value, less
any applicable surrender charge and less any policy loan including accrued
but unpaid interest. If the surrender value is less than zero, no payment is
required from policyowner, if the policy is surrendered.
The total surrender charges for this policy consist of: (1) the surrender
charge shown in the Schedule and; (2) an excess interest surrender charge
that applies only if the policy is surrendered in the first nine policy
years. The excess interest surrender charge is the excess interest earned in
the previous twelve policy months. The excess interest earned equals the
interest earned in excess of the guaranteed interest rate plus; any additional
interest earned as described in the Additional Interest provision.
Each time there is a requested increase in the stated death benefit, the
stated death benefit will be divided into the amount prior to the increase
and the amount of the increase. A new surrender charge will apply to each
increase depending upon the age nearest birthday on the effective date of
increase and the duration since the increase. A decrease in the stated death
benefit will reduce the surrender charge. The surrender charge that remains
will be the surrender charge applicable to the remaining stated death benefit.
We will deduct from your policy value an amount equal to the reduction in the
surrender charge.
You may surrender or apply for a partial surrender of the policy on any
monthly anniversary date during the lifetime of the insured and prior to the
maturity date. The amount payable on surrender of the policy will be the
surrender value. If a surrender is requested within 30 days after the policy
anniversary, the surrender value will not be less than the surrender value on
that anniversary, plus any net premiums paid, and less any policy loan or
partial surrenders (including the service charge) made after such anniversary.
No insurance will be in force once we receive a request to surrender.
The minimum partial surrender amount is $300. When a partial surrender is
made, the amount of the partial surrender plus a service fee of $25 will be
deducted from the policy value immediately before the partial surrender is
made. We may limit the number of partial surrenders in a policy year to one.
If the death benefit option is option 1 on the date a partial surrender
is made, the stated death benefit will be reduced by an amount equal to the
excess of the amount of the partial surrender over the special corridor amount.
The special corridor amount is equal to the greater of (1) or (2), where:
(1) is the excess, if any, of (a) over (b) where:
(a) is the policy value immediately before the partial surrender is made; and
(b) is the stated death benefit at that time divided by the "factor" for the
Insured's attained age as follows:
ATTAINED FAC- ATTAINED FAC- ATTAINED FAC- ATTAINED FAC-
AGE TOR AGE TOR AGE TOR AGE TOR
- - - - -------- ---- -------- ---- -------- ---- -------- ----
40 And
Younger 2.50 54 1.57 68 1.17 82 1.05
41 2.43 55 1.50 69 1.16 83 1.05
42 2.35 56 1.45 70 1.15 84 1.05
43 2.29 57 1.42 71 1.13 85 1.05
44 2.22 58 1.38 72 1.11 86 1.05
45 2.15 59 1.34 73 1.09 87 1.05
46 2.09 60 1.30 74 1.07 88 1.05
47 2.03 61 1.28 75 1.06 89 1.05
48 1.97 62 1.26 76 1.05 90 1.05
49 1.91 63 1.24 77 1.05 91 1.04
50 1.85 64 1.22 78 1.05 92 1.03
51 1.78 65 1.20 79 1.05 93 1.02
52 1.71 66 1.19 80 1.05 94 1.01
53 1.64 67 1.18 81 1.05 95 1.00
and
10
20
(2) is either:
(a) 5% of stated death benefit immediately before the partial surrender if:
(i) the date of partial surrender is less than sixteen (16) years after
the policy date; and
(ii) the insured is less than attained age 81; and
(iii) there were no prior partial surrenders in the current policy year;
or
(b) zero (0) if one or more of the conditions set out in (a) are not met.
Any reduction will be prorated between the basic coverage and the supplemental
coverage. Any reduction will occur on the date the partial surrender occurs. No
partial surrender will be allowed if the stated death benefit remaining in
force after any such partial surrender would reduce the stated death benefit
below the minimum stated death benefit shown in the Schedule.
LOAN PROVISIONS
POLICY LOANS
You may obtain a policy loan after the first policy year. The maximum loan
value at any time equals the surrender value less the monthly deduction to the
next policy anniversary. The policy loan is a first lien on your policy.
LOAN INTEREST
The annual policy loan interest rate is shown in the Schedule. If a loan is
made, interest is due in arrears and payable at the end of the current policy
year. Thereafter, interest on the loan amount is due annually at the end of
each policy year until the loan is repaid. If interest is not paid when due, it
is added to the loan.
If the loan balance equals or exceeds the surrender value, premium sufficient
to keep this policy in force must be paid as provided in the Grace Period
Provision.
GENERAL CONTRACT PROVISIONS
THE CONTRACT
The policy, including the original application and any applications for an
increase, riders, endorsements, and any reinstatement applications make up the
entire contract between us. A copy of the original application will be attached
to the policy at issue. A copy of any application for any increase will be
attached or furnished to you for attachment to the policy at the time of any
increase in coverage. In absence of fraud, all statements made in any
application will be considered representations and not warranties. No statement
will be used to deny a claim unless it is in an application.
AGE
The policy is issued at the age shown in the Schedule. This is the insured's
age nearest birthday on the policy date. The insured's attained age is the age
shown in the Schedule increased by the number of computed policy years.
PROCEDURES
We must receive in writing any election, designation, change, assignment or
request you make. It must be on a form acceptable to us. We may require the
policy for any policy change or for its surrender value. We are not liable for
any action we take before we receive and record the written notice.
In the event of an insured's death while the policy is in force, please let us
or our agent know as soon as possible. Claim procedure instructions will be
sent to you immediately. We may require proof of age and a certified copy of a
death certificate. We may require the beneficiary and the insured's next of kin
sign authorizations as part of due proof. These authorization forms allow us to
obtain information about the insured, including, but not limited to, medical
records of physicians and hospitals used by the insured.
11
21
OWNERSHIP
The original owner of this policy is the person named as the owner in the
application. You, as the owner, can exercise all rights and receive the
benefits of this policy during the insured's life. This includes the right to
change the owner, beneficiaries, and methods for the payment of proceeds. All
rights of the owner are subject to the rights of any assignee and any
irrevocable beneficiary.
You may name a new owner by written notice to us. The effective date of the
change to the new owner will be the date you sign the notice.
BENEFICIARIES
The primary beneficiary surviving the insured will receive the death proceeds.
Surviving contingent beneficiaries are paid death proceeds only if no primary
beneficiary has survived the insured. If more than one beneficiary in a class
survives the insured, they will share the death proceeds equally, unless your
designation provides otherwise. If there is no designated beneficiary
surviving, you or your estate will be paid the death proceeds. The beneficiary
designation will be on file with us or at a location designated by us. While the
insured is living, you may name a new beneficiary. The effective date of the
change will be the date the request was signed. We will pay proceeds to the
most recent beneficiary designation on file. We will not be subject to multiple
payments.
COLLATERAL ASSIGNMENT
You may assign this policy as collateral security by written notice to us. Once
it is recorded with us, the rights of the owner and beneficiary are subject to
the assignment. It is your responsibility to make sure the assignment is valid.
INCONTESTABILITY
After this policy has been in force during the insured's life for two years
from the policy date, we will not contest the statements in the application
attached at issue.
After this policy has been in force during the insured's life for two years
from the effective date of any increase in any benefit with respect to the
insured, we will not contest the statements in the application for such change.
After this policy has been in force during the insured's life for two years
from the effective date of any reinstatement, we will not contest the
statements in the application for such reinstatement.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the insured has been misstated, the death beneft will be
adjusted. The death benefit will be that which the cost of insurance which was
deducted from the policy value on the last monthly anniversary date prior to
the death of the insured would have purchased for the insured's correct age and
sex.
SUICIDE EXCLUSION
If the insured commits suicide, while sane or insane, within two years of the
policy date, we will make a limited payment to the beneficiary. We will pay in
one sum the amount of all premiums paid to us during that time, less any
outstanding policy loans and partial surrenders. If the insured commits
suicide, while sane or insane, within two years of the effective date of an
increase in the stated death benefit, we will make a limited payment to the
beneficiary for the increase. This payment will equal the cost of insurance and
any applicable monthly expense charges deducted for such increase.
DEFERMENT
Death proceeds are not subject to deferment. As required by law, we may defer
up to six months the payment of surrender proceeds (including partial
surrenders) and policy loans.
ANNUAL REPORT
We will send to you at least once each year a report which shows the current
policy value, surrender value, premiums paid, charges made since the last
report, and any outstanding policy loan, while your policy is in force.
12
22
ILLUSTRATION OF BENEFITS AND VALUES
We will send to you upon request in writing, an illustration of future death
benefits and policy values. This illustration will include the information as
required by the laws or regulations where this policy is delivered. If you
request more than one illustration during a policy year, we will charge a
reasonable fee for each additional illustration, not to exceed $25 per report.
NONPARTICIPATING
The policy does not participate in our surplus earnings.
HOME OFFICE
Our home office is at 1290 Broadway, Denver, Colorado, 80203-5699. All
requests and payments should be sent to us at the home office, unless you are
otherwise notified.
PAYOUTS OTHER THAN AS ONE SUM
1. ELECTION. During the insured's lifetime, you may elect that the
beneficiary receive the proceeds other than in one sum. If you have not
made an election, the beneficiary may do so within 60 days after the
insured's death. You may also elect to take the surrender value of the
policy upon its surrender other than in one sum. Satisfactory written
request must be received at our home office or another location as
designated by us in writing before payment can be made. A payee that is
not a natural person may not be named without our consent. The various
methods of settlement are shown below.
2. SETTLEMENT OPTIONS.
OPTION 1. PAYMENTS FOR A DESIGNATED PERIOD. As elected, payments will be made
in 1, 2, 4 or 12 equal installments per year. They may be received for a
designated period not to exceed 30 years. The monthly payment for each $1,000
applied is shown in Settlment Table 1.
OPTION II. LIFE INCOME WITH PAYMENTS GUARANTEED FOR DESIGNATED PERIOD. As
elected, payments will be made in 1, 2, 4 or 12 equal installments per year
throughout the payee's lifetime. If the payee dies before the end of the
period certain elected, payments will be continued to the contingent payee
until the end of the period certain. The period certain, as elected, may be 5,
10, 15 or 20 years. The amopunt of each payment will depend upon the payee's
sex and age nearest birthday at the time the first payment is due. The amount
of each monthly payment for each $1,000 applied is shown in Settlement Table
II. This option is not available for ages not shown in the Table.
OPTION III. HOLD AT INTEREST. Amounts may be left on deposit with us to be
paid upon the death of the payee or at any earlier date elected. Interest on
any unpaid balance will not be less than 3 1/2% a year, compounded annually. As
elected, interest may be accumulated or paid in 1, 2, 4 or 12 installments per
year. Money may not be left on deposit for more than 30 years.
OPTION IV. PAYMENTS OF A DESIGNATED AMOUNT. Payments will be made until
proceeds, together with interest at a rate not less than 3 1/2% a year
compounded annually, are exhausted. As elected, payments will be made in 1, 2,
4 or 12 equal installments per year.
OPTION V. CURRENT ANNUITY. Settlement will be made during the lifetime of the
payee in accordance with any single premium annuity payout which we agree to.
The amount of each payment will be 104% of the payment which the proceeds would
otherwise provide at our annuity rates in use on such dates.
OPTION VI. OTHER. Settlement may be made in any other manner as agreed upon
in writing between you or the beneficiary and us.
3. CHANGE AND WITHDRAWAL. You may change an election at any time before the
death of the insured or maturity of the policy. If you have given the
beneficiary the right to make changes or withdrawals, or if the
beneficiary has elected the option, the beneficiary (as primary payee)
may take the actions below.
a. Changes may be made from Options I, III, and IV to another option.
b. Full withdrawals may be made under Option III or IV. Partial
withdrawals of not less than $300 may be made under Option III.
13
23
c. Remaining installments under Option I may be commuted at 3 1/2%
interest and received in one sum.
d. Changes in any contingent payee designation may be made.
A written request must be sent to our home office or another location as
designated by us in writing to make a change or withdrawal. We also may
require that you send in the supplemental contract. We may defer payments of
commuted and withdrawable amounts for a period up to 6 months.
4. EXCESS INTEREST. If we declare that settlement options are to be credited
with an interest rate above that guaranteed, it will apply to Options I,
III, and IV. The crediting of excess interest for one period does not
guarantee the higher rate for other periods.
5. MINIMUM AMOUNTS. The minimum amount which may be applied under any option
is $2,000. If the payments to the payee are ever less than $20, we may
change the frequency of payments so as to result in payments of at least
that amount.
6. SUPPLEMENTARY CONTRACT. When an option becomes effective, the policy will
be surrendered in exchange for a supplementary contract. It will provide
for the manner of settlement and rights of the payees. The contract
effective date will be the date of the insured's death or the date of
other settlement. The first payment under Options I, II, and IV will be
payable as of the effective date. The first interest payment under
Option III will be made at the end of the interest payment period elected.
Subsequent payments will be made in accordance with the frequency of
payment elected. The contract may not be assigned or payments made to
another without our consent.
7. INCOME PROTECTION. Unless otherwise provided in the election, a payee does
not have the right to commute, transfer, or encumber amounts held or
installments to become payable. To the extent provided by law, the
proceeds, amount retained, and installments are not subject to any payee's
debts, contracts, or engagements.
8. DEATH OF PRIMARY PAYEE. Upon the primary payee's death, any payments
certain under Option I or II, interest payments under Option III, or
payments under Option IV will be continued to the contingent payee.
Or, amounts may be released in one sum if permitted by the contract.
The final payee will be the estate of the last to die of the primary payee
and any contingent payee.
9. PAYMENTS OTHER THAN MONTHLY. The tables which follow show monthly
installments for Options I and II. To arrive at annual, semiannual, or
quarterly payments, multiply the appropriate figures by 11.813, 5.957, or
2.991, respectively. Factors for other periods certain or for other
options which may be provided by mutual agreement will be provided upon
reasonable request.
14
24
SETTLEMENT TABLE I
(PER $1,000 OF NET PROCEEDS)
NO. OF YEARS MONTHLY
PAYABLE INSTALLMENTS
------------ ------------
1 $84.65
2 43.05
3 29.19
4 22.27
5 18.12
6 15.35
7 13.38
8 11.90
9 10.75
10 9.83
11 9.09
12 8.46
13 7.94
14 7.49
15 7.10
16 6.76
17 6.47
18 6.20
19 5.97
20 5.75
21 5.56
22 5.39
23 5.24
24 5.09
25 4.96
26 4.84
27 4.73
28 4.63
29 4.53
30 4.45
16
25
SETTLEMENT TABLE II
(PER $1,000 OF NET PROCEEDS)
AGE OF PAYEE AGE OF PAYEE
NEAREST BIRTHDAY NEAREST BIRTHDAY
WHEN FIRST MONTHLY INSTALLMENT WHEN FIRST MONTHLY INSTALLMENT
INSTALLMENT --------------------------------------- INSTALLMENT ----------------------------------------
IS PAYABLE 5 10 15 20 IS PAYABLE 5 10 15 20
------------- YEARS YEARS YEARS YEARS -------------- YEARS YEARS YEARS YEARS
MALE FEMALE CERTAIN CERTAIN CERTAIN CERTAIN MALE FEMALE CERTAIN CERTAIN CERTAIN CERTAIN
---- ------ ------- ------- ------- ------- ---- ------ ------- ------- ------- -------
15 20 3.31 3.31 3.31 3.31 50 55 4.77 4.71 4.62 4.50
16 21 3.33 3.33 3.33 3.32 51 56 4.85 4.79 4.69 4.55
17 22 3.35 3.35 3.34 3.34 52 57 4.94 4.87 4.76 4.61
18 23 3.37 3.37 3.36 3.36 53 58 5.04 4.96 4.84 4.67
19 24 3.39 3.38 3.38 3.38 54 59 5.14 5.05 4.91 4.73
20 25 3.41 3.40 3.40 3.40 55 60 5.24 5.14 4.99 4.79
21 26 3.43 3.43 3.42 3.42 56 61 5.35 5.24 5.07 4.85
22 27 3.45 3.45 3.44 3.44 57 62 5.47 5.34 5.15 4.91
23 28 3.47 3.47 3.47 3.46 58 63 5.59 5.45 5.24 4.97
24 29 3.50 3.49 3.49 3.48 59 64 5.71 5.56 5.33 5.03
25 30 3.52 3.52 3.51 3.51 60 65 5.85 5.68 5.42 5.10
26 31 3.55 3.54 3.54 3.53 61 66 5.99 5.80 5.51 5.16
27 32 3.58 3.57 3.57 3.56 62 67 6.15 5.93 5.61 5.21
28 33 3.60 3.60 3.59 3.58 63 68 6.31 6.07 5.70 5.27
29 34 3.64 3.63 3.62 3.61 64 69 6.48 6.21 5.80 5.33
30 35 3.67 3.66 3.65 3.64 65 70 6.66 6.35 5.90 5.38
31 36 3.70 3.70 3.69 3.67 66 71 6.86 6.50 6.00 5.43
32 37 3.74 3.73 3.72 3.70 67 72 7.07 6.66 6.10 5.48
33 38 3.77 3.77 3.75 3.74 68 73 7.29 6.83 6.19 5.52
34 39 3.81 3.80 3.79 3.77 69 74 7.52 7.00 6.29 5.56
35 40 3.85 3.84 3.83 3.81 70 75 7.77 7.17 6.38 5.60
36 41 3.89 3.88 3.87 3.84 71 76 8.04 7.35 6.47 5.63
37 42 3.94 3.93 3.91 3.88 72 77 8.32 7.53 6.55 5.66
38 43 3.89 3.97 3.95 3.92 73 78 8.62 7.71 6.63 5.68
39 44 4.03 4.02 4.00 3.96 74 79 8.94 7.89 6.71 5.70
40 45 4.09 4.07 4.05 4.00 75 80 9.20 8.07 6.70 5.72
41 46 4.14 4.13 4.09 4.05 76 81 9.63 8.25 6.84 6.73
42 47 4.20 4.18 4.14 4.09 77 82 10.00 8.43 6.89 5.74
43 48 4.26 4.24 4.20 4.14 78 83 10.39 8.60 6.94 5.74
44 49 4.32 4.30 4.25 4.18 79 84 10.80 8.77 6.98 5.75
45 50 4.39 4.36 4.31 4.23 80 85 11.22 8.93 7.01 5.75
46 51 4.46 4.43 4.37 4.28 81 11.66 9.08 7.04 5.75
47 52 4.53 4.49 4.43 4.34 82 12.12 9.21 7.06 5.75
48 53 4.61 4.56 4.49 4.39 83 12.60 9.34 7.07 5.75
49 54 4.69 4.64 4.55 4.44 84 13.09 9.44 7.08 5.75
85 13.59 9.54 7.09 5.75
17
26
BENEFIT ADVANCE RIDER
BENEFITS PAID UNDER THIS RIDER MAY BE TAXABLE. IF SO, YOU AND YOUR BENEFICIARY
MAY INCUR A TAX OBLIGATION. AS WITH ALL TAX MATTERS, YOU SHOULD CONSULT YOUR
PERSONAL TAX ADVISOR TO ASSESS THE IMPACT OF THIS BENEFIT.
The rider is a part of the policy to which it is attached. It must be read
with all policy provisions. This rider does not participate in our surplus
earnings. This rider has no loan or surrender value. This rider provides a
benefit with respect to coverage on the person named as the insured under the
basic policy.
BENEFIT
We will allow the owner to convert all or part of the eligible coverage to the
benefit amount if the insured satisfies the benefit conditions of being
terminally ill or being permanently confined to an eligible nursing home. (See
below for definitions of these terms.)
The minimum converted amount must be at least $25,000. We will not convert
more than $500,000. Amounts converted under this rider and any similar rider
covering the insured will count toward the maximum limit. The remaining face
amount (or stated death benefit, if applicable) must be at least $25,000. If
the remaining face amount is less than $25,000, the entire face amount must be
converted.
If all the eligible coverage is converted, your policy will no longer provide
any benefits or value, except for riders on persons other than the insured
under the basic policy. Any other insurance provided by the policy on someone
other than this insured will be processed as if the original policy was
terminated due to the death of the insured. If not all of the eligible
coverage is converted, your policy will continue in force with reduced benefits
and values. The converted amount divided by the eligible coverage is the
conversion percentage. (We reserve the right to refuse to process any request
where any remaining policy would not qualify as a life insurance contract under
the Internal Revenue Code.) (See Effect on Your Policy.)
ELIGIBLE COVERAGE
The eligible coverage is the amount we would pay under the policy, including
any riders, if the insured were to die on the conversion date. If the policy is
in force under an extended term option or reduced paid up option, none of the
coverage is eligible for this conversion.
BENEFIT AMOUNT
To determine the benefit amount, we will discount the converted amount to its
present value with deductions for: (a) the present value of any expected future
premiums; (b) the conversion percentage times any current policy loan and
accrued interest; and (c) a processing charge of up to a maximum of $300. The
present values will be determined according to our rules and assumptions in
effect at the time of the calculations. We may change those rules and
assumptions from time to time.
The benefit amount will be at least the amount of the net surrender value times
the percentage of the eligible coverage that is converted under this rider.
We will pay the benefit amount in one lump sum or any annuity payout offered by
us at the time of conversion.
BENEFIT CONDITIONS
Terminally Ill
To be terminally ill under this rider, you must give us evidence that satisfies
us that the insured's life expectancy is six months or less. Part of that
evidence must be a certification by a licensed physician.
Permanently Confined
To be permanently confined under this rider, you must give us evidence that
satisfies us that: (1) the insured is confined to an eligible nursing home and
has been confined there for all the preceding six months; and (2) the insured is
expected to stay in the nursing home until death. Part of that evidence must
be a certification by a licensed physician.
27
Under this rider, an eligible nursing home is an institution or special nursing
unit of a hospital which either provides Medicare approved skilled nursing care
service or provides licensed skilled nursing care of intermediate care services
in the state in which it is located. The facility must provide continuous room
and board accommodations to 3 or more persons. It must be under the supervision
of a registered nurse (RN) or licensed practical nurse (LPN). It must regulate
and record all medications distributed and maintain a daily medical record for
each patient.
EFFECT ON YOUR POLICY
If not all the eligible coverage is converted, the policy will stay in force at
a reduced amount. The face amount (or stated death benefit, if applicable),
policy and surrender values, any policy loan and accrued interest will be
reduced by the percentage of eligible coverage that is converted (the
conversion percentage). Any rider on the insured under the basic policy will
also be reduced in the same manner. For example, if the conversion percentage
is 75%, the new face amount will be 25% of the amount just prior to the
conversion. If you elect to convert all the eligible coverage, all other
benefits under the policy on the insured under the basic policy will terminate.
For any other insurance provided by the policy on someone other than this
insured, we will continue such insurance as if the policy ended due to the
insured's death.
PROCEDURES
To obtain any benefit provided by this rider, we must receive written notice,
in a form acceptable to us, that you want to receive this rider benefit. The
appropriate claim forms and procedures will be forwarded to you immediately. We
will require the policy to be sent to us. If the policy is assigned, the
assignee must consent to any exercise of any rights pursuant to this rider.
You are not eligible for this rider benefit if you are required by law or a
government agency to obtain this benefit due to bankruptcy, creditor claims, or
government benefit qualification.
TERMINATION
This rider will end on the earliest of the following dates:
1. the expiration date shown on the Schedule for this rider;
2. the termination of this policy;
3. the date the benefit under this rider is elected;
4. the monthly anniversary on or next following the receipt of your written
request; or
5. the date the policy is in force under extended term option or a reduced
paid-up option.
SECURITY LIFE OF DENVER INSURANCE COMPANY
/s/ E. L. COPELAND
SECRETARY
28
SECURITY LIFE OF DENVER INSURANCE COMPANY
Denver, Colorado 80203
REQUIRED PROCEDURE FOR CONSUMER COMPLAINT NOTIFICATION
CALIFORNIA INSURANCE CODE SECTION 510
This notice is to advise you that should any complaints arise regarding this
insurance, you may contact the following:
Department of Insurance
Consumer Services Division
3450 Wilshire Boulevard
Los Angeles, CA 90010
1-800-927-HELP
29
SECURITY LIFE OF DENVER INSURANCE COMPANY
Denver, Colorado 80203
ENDORSEMENT
This Endorsement is a part of the Policy to which it is attached.
DEATH BENEFIT. of the Insurance Coverage Provisions is changed to read:
1. DEATH BENEFIT. The Stated Death Benefit is the sum of the Basic Coverage
and the Supplemental Coverage. The Stated Death Benefit and the option
that apply to this policy are shown on the Schedule. Subject to the other
provisions of the Policy, the Insured's Death Benefit at any time under
the Policy will be as follows:
Option 1 - If the Stated Death Benefit includes the policy value, as shown in
the Schedule, the Death Benefit will equal the greater of:
a. the Stated Death Benefit on the date of death; or
b. the policy value divided by a net single premium rate for the
Insured's sex, premium classification, and attained age, which
is calculated using the interest rate guaranteed in the Policy and
the mortality rates specified below, in accordance with the Internal
Revenue Code Section 7702(b)(2), in effect at the time this Policy is
issued, and the regulations under it. The net single premium will
remain level during the Policy year and equal the rate at the
beginning of the Policy year. The net single premium will be
calculated assuming a level death benefit endowment at age 95.
Option 2 - If the Stated Death Benefit is in addition to the policy value, as
shown in the Schedule, the Death Benefit will equal the greater of:
a. the Stated Death Benefit plus the policy value on the date of death;
or
b. the policy value divided by a net single premium rate for the
Insured's sex, premium classification, and attained age, which
is calculated using the interest rate guaranteed in the Policy and
mortality rates specified below, in accordance with the Internal
Revenue Code Section 7702(b)(2), in effect at the time this Policy is
issued, and the regulations under it. The net single premium rate will
remain level during the Policy year and equal the rate at the
beginning of the Policy year. The net single premium will be
calculated assuming a level death benefit endowment at age 95.
The Commissioners 1980 Standard Ordinary Mortality Table will be used.
This Policy is designed to qualify as a life insurance contract for
purposes of the Internal Revenue Code. All terms and provisions of the Policy
shall be construed in a manner consistent with that design. The amount of
insurance in force at any time under the Policy shall not be less than the
amount of insurance necessary to achieve such qualification under the
applicable provisions of the Internal Revenue Code in existence at the time
the Policy is issued.
SURRENDER AND SURRENDER VALUE. (1)(b) of the Surrender Provision is changed to
read:
(b) is the Stated Death Benefit at that time multipled by the net
single premium rate for the insured's sex, premium classification, and
attained age. The net single premium will be calculated as described in the
Death Benefit section of the Insurance Coverage Provisions.
SECURITY LIFE OF DENVER INSURANCE COMPANY
/s/ E. L. Copeland
SECRETARY
30
Security Life of Denver Insurance Company
Denver, Colorado 80203
CALIFORNIA LIFE INSURANCE
GUARANTY ASSOCIATION ACT
NOTICE CONCERNING GENERAL PURPOSES
AND COVERAGE LIMITATIONS
Residents of California who purchase life insurance and annuities should know
that the insurance companies licensed in this state to write these types of
insurance are members of the California Life Insurance Guaranty Association.
The purpose of this association is to assure that policyholders will be
protected, within limits, in the unlikely event that a member insurer becomes
financially unable to meet its obligations. If this should happen, the Guaranty
Association will assess its other member insurance companies for the money to
pay the claims of insured persons who live in this state and, in some cases, to
keep coverage in force. The valuable extra protection provided by those insurers
through the Guaranty Association is not unlimited, however, as noted in the box
below.
THE CALIFORNIA LIFE INSURANCE GUARANTY ASSOCIATION MAY NOT PROVIDE COVERAGE FOR
THIS POLICY. IF COVERAGE IS PROVIDED, IT MAY BE SUBJECT TO SUBSTANTIAL
LIMITATIONS OR EXCLUSIONS, AND REQUIRE CONTINUED RESIDENCY IN CALIFORNIA. YOU
SHOULD NOT RELY ON COVERAGE BY THE CALIFORNIA LIFE INSURANCE GUARANTY
ASSOCIATION IN SELECTING AN INSURANCE COMPANY OR IN SELECTING AN INSURANCE
POLICY.
COVERAGE IS NOT PROVIDED FOR YOUR POLICY OR ANY PORTION OF IT THAT IS
NOT GUARANTEED BY THE INSURER OR FOR WHICH YOU HAVE ASSUMED THE RISK, SUCH AS A
VARIABLE CONTRACT SOLD BY PROSPECTUS.
INSURANCE COMPANIES OR THEIR AGENTS ARE REQUIRED BY LAW TO GIVE OR SEND
YOU THIS NOTICE. HOWEVER, INSURANCE COMPANIES AND THEIR AGENTS ARE PROHIBITED
BY LAW FROM USING THE EXISTENCE OF THE GUARANTY ASSOCIATION TO INDUCE YOU TO
PURCHASE ANY KIND OF INSURANCE POLICY.
POLICYHOLDERS WITH ADDITIONAL QUESTIONS MAY CONTACT:
THE CALIFORNIA LIFE INSURANCE GUARANTY ASSOCIATION
P.O. BOX 70068
LOS ANGELES, CA 90070
CALIFORNIA DEPARTMENT OF INSURANCE
100 VAN NESS AVENUE - 17TH FLOOR
SAN FRANCISCO, CALIFORNIA 94102
(PLEASE TURN TO BACK OF PAGE)
31
The state law that provides for this safety-net coverage is called the
California Life Insurance Guaranty Association Act. Below is a brief summary of
this law's coverages, exclusions and limits. This summary does not cover all
provisions of the law; nor does it in any way change anyone's rights or
obligations under the act or the rights or obligations of the association.
COVERAGE
Generally, individuals will be protected by the California Life Insurance
Guaranty Association if they live in this state and hold a life insurance
contract, or an annuity, or if they are insured under a group insurance
contract, issued by a member insurer. The beneficiaries, payees or assignees of
insured persons are protected as well, even if they live in another state.
EXCLUSIONS FROM COVERAGE
However, persons holding such policies are not protected by this Association
if:
o they are eligible for protection under the laws of another state (this may
occur when the insolvent insurer was incorporated in another state whose
guaranty association protects insureds who live outside that state);
o the insurer was not authorized to do business in this state;
o their policy was issued by a charitable organization, a fraternal benefit
society, a mandatory state pooling plan, a mutual assessment company, an
insurance exchange, or a grants and annuities society holding a certificate
of authority under Section 11520.
The Association also does not provide coverage for:
o any policy or portion of a policy which is not guaranteed by the insurer or
for which the individual has assumed the risk, such as a variable contract
sold by prospectus;
o any policy of reinsurance (unless an assumption certificate was issued);
o interest rate yields that exceed an average rate;
o dividends;
o credits given in connection with the administration of a policy by a group
contract holder;
o unallocated annuity contracts;
o any plan or program of an employer or association that provides life or
annuity benefits to its employees or members to the extent the plan is
self-funded or uninsured.
LIMITS ON AMOUNT OF COVERAGE
The act also limits the amount the Association is obligated to pay out. The
Association cannot pay more than 80% of what the insurance company would owe
under a policy or contract. Also, for any one insured life, the Association
will pay a maximum of $250,000--no matter how many policies and contracts there
were with the same company, even if they provided different types of coverages.
Within this overall $250,000 limit, the Association will not pay more than
$100,000 in cash surrender values, $100,000 in present value of annuities, or
$250,000 in life insurance death benefits--again, no matter how many policies
and contracts there were with the same company, and no matter how many
different types of coverages.
32
SECURITY LIFE OF DENVER INSURANCE COMPANY
Security Life Center
1290 Broadway
Denver, Colorado 80203-5699
AMENDMENT TO APPLICATION NO. 23607
This is an amendment to the Application for Policy 1532560, with Policy Date of
04-06-94.
Part I, Section E-3b; Stated Death Benefit is $516,347.00 of which $258,174.00
is Basic Coverage and $258,173.00 is Supplemental Coverage.
I acknowledge that the Policy was delivered to me, the policyowner, on the date
indicated below.
SIGNATURES NEEDED Signature DAVID S. ENGELMAN
--------------------------
David S. Engelman, Ins/Own
Proposed Insured [X] DAVID S. ENGELMAN
--------------------------
Applicant-Owner [ ] DAVID S. ENGELMAN
--------------------------
File No. 1532560/7sdan Date 6/10/91
-------
WHITE COPY TO REMAIN IN POLICY CONTRACT - YELLOW COPY TO BE
RETURNED TO HOME OFFICE
33
SECURITY LIFE Security Life Center
DENVER, COLORADO 1290 Broadway
Denver, CO 80203-5699
(303) 860-1290
APPLICATION FOR LIFE INSURANCE TO SECURITY LIFE OF DENVER INSURANCE COMPANY
Please Print All Information Using Dark Ink 911532560 ENGLEMAN, DAVID S
___________________________________________ 10/07/37
4/29/94 #276300/236 DIV: 7 CWA:
SECTION A -- GENERAL INFORMATION (Complete for all cases)
A-1 / / Check here if insurance is for PENSION or similar tax qualified ERISA
plan.
A-2 If above statement checked, list plan type _______________________________
(Example: Profit-Sharing;
Defined Contribution; etc.)
A-3 / / Exercise Right of Exchange Rider A-4 Employer Sponsored Plans check one:
Name of Insured under Policy to be Exchanged Policy Number Employee Owned? / / Yes / / No
____________________________________________/______________
_______________________________________________________________________________
SECTION B -- PROPOSED INSURED (Complete for all cases. To apply for additional
insureds complete Section G)
B-1 Name (Print full name, include suffix -- if name to appear differently on
policy, indicate in Section M)
(First, Middle, Last, Suffix)
DAVID S. ENGELMAN
---------------------------------------------------------------------------
B-2 Sex B-3 Birthdate B-4 Insurance Age B-5 Birthplace
/X/ Male Month Day Year (Age Nearest Birthday) (State)
/ / Female 10 07 1937 EVANSTON, IL
---- -- ---- ----- -------------
B-6 Social Security Number B-7 Telephone Number B-8 Height
558 - 44 - 8395 714 - 255 - 8100 ------
--- -- ---- --- --- ---- B-9 Weight
-------
B-10 Address
(Street, Apt. No.)
P.O. BOX 648
-------------------------------------------------------------------------
(City) (State) (Zip Code)
RANCHO SANTA FE CA 92067 -
------------------------------------ -- ----- ----
B-11 Occupation B-12 Describe duties
CHIEF EXECUTIVE OFFICER
------------------------------------ --------------------------------
B-13 Employer Name Month Year
UNION FEDERAL BANK B-14 Employment date: 03 91
------------------------------------ -- --
_______________________________________________________________________________
SECTION C -- OWNER (Complete only if other than Proposed Insured)
C-1 Owner Name (Print full name, include suffix -- if name to appear
differently on policy, indicate in Section M)
(First, Middle, Last, Suffix)
DAVID S. ENGELMAN, SUBJECT TO SPLIT DOLLAR AGREEMENT
--------------------------------------------------------------------------
C-2 Relationship to Proposed Insured C-3 Social Security Number or Tax
I.D. No. (Include any hyphens)
SELF 558 - 44 - 8395
------------------------------- --- -- ----
C-4 Owner Address
(Street, Apt. No.)
P.O. BOX 648
--------------------------------------------------------------------------
(City) (State) (Zip Code)
RANCHO SANTA FE CA 92067 -
------------------------------------ -- ----- ----
_______________________________________________________________________________
SECTION D -- BENEFICIARIES (Complete for all cases)
D-1 Primary Beneficiary(ies) Relationship to Proposed Insured Birthdate
(Print Full Names)
DAVID S. ENGELMAN & SHERRY B. ENGELMAN OR SUCH SUCCESSOR TRUSTEES AS MAY BE
HEREAFTER APPOINTED TRUSTEES OF THE ENGELMAN FAMILY TRUST DTD 5-7-92,
SUBJECT TO SPLIT DOLLAR AGREEMENT
- - - - --------------------------------------------------------------------------------
Contingent Beneficiary(ies) Relationship to Proposed Insured Birthdate
(Print Full Names)
- - - - --------------------------------------------------------------------------------
34
SECTION E -- PLAN INFORMATION (Complete for all cases)
E-1 Check type of insurance
/ / Fixed Premium (Complete Question E-2)
/x/ Flexible Premium (Complete Question E-3)
E-2 FIXED PREMIUM POLICY
a. Product Plan Name b. Base Face Amount
______________________________________________________________________ $_______________________
c. Death Benefit Option (If Applicable)
/ / Option 1 / / Option 2 (If no option selected, Option 1 will apply)
d. Plus Units (State type and premium amounts requested)
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
e. Accumulation Units (State type and premium amounts requested)
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
Type (For example "A," "B," "C") ______ Premium Amount $_________________._____
f. Lump Sum Pour in $___________________________________________
g. Purchase Lump Sum Death Benefit / / Yes / / No
(If neither option selected, the policy will not include lump sum death benefit)
h. / / Quick Pay at Issue i. / / Quick Pay at First Policy Anniversary
j. Riders
/ / Premium Waiver (any occupation) / / Right to Exchange
/ / Super Premium Waiver (own occupation for Corporate / / Accidental Death $______________________
Owned only) / / Child Insurance Rider # of Units _______
(Complete Section H)
/ / Premium Waiver on Owner's Death/Disability (Juvenile)
/ / Scheduled Term Rider Benefit (Attach Schedule)
/ / Other ___________________________________________________________________________________________________________
E-3 FLEXIBLE PREMIUM POLICY
a. Product Plan Name
__ULTRA UL______________________________________________________________
b. Stated Death Benefit
Basic $ ___516,347______________
Supplemental $__258,173_________________
c. First year Pour-In (if any) $________________________
d. / / Option 1 (Stated Death Benefit. If no option selected, Option 1 will apply)
/ / Option 2 (Stated Death Benefit plus Cash Value.)
e. Scheduled Periodic Premium $ ___________________________________ (If premium varies from year to year attach schedule)
f. Riders
/x/ Term to Age 95 $__0_____________________________ / / Additional Insured $ ____________________________________
(Attach Schedule) SEE SCHEDULE (Complete section G)
/ / Accidental Death $______________________________ / / Children's Insurance Rider (# of Units) _________________
/ / Right to Exchange (Complete section H)
/ / Waiver of Cost of Insurance
/ / Waiver of Specified Premium $______________________________
/ / Other ____________________________________________________________________________________________________________
2
35
_______________________________________________________________________________
SECTION F--SPECIAL DATING REQUESTED (If neither box checked below, policy will
be issued at age nearest birthday as of
issue date.)
F-1 / / Date to Save Age Specify Requested Age / /
Mo Day Year
F-2 / / Specific Date / / / / / / / / / / /
_______________________________________________________________________________
SECTION G--ADDITIONAL INSURED RIDER
G-1 Name of Proposed Additional Insured (If more than one additional insured,
specify details in special
instructions, Section M)
(First, Middle, Last, Suffix)
___________________________________________________________________________
G-2 Relationship to proposed insured___________________________________________
Month Day Year
G-3 Birthdate / / / / / / / / / / / G-4 Height________________
G-5 Weight______________
G-6 Show beneficiary for additional insured if different from
beneficiary named in Section D.
Name: Relationship Birthdate:
__________________________ _______________________ __________________
G-7 Insurance Age (Age nearest birthday) / / /
_______________________________________________________________________________
SECTION H--CHILD RIDER
Birthdate Mo/Day/Yr Height Weight
H-1 Child / / /
---------------------------------------------------------------------------
H-2 Child / / /
---------------------------------------------------------------------------
H-3 Child / / /
---------------------------------------------------------------------------
H-4 Child / / /
_______________________________________________________________________________
SECTION I--PREMIUM INFORMATION
I-1 Premium Mode (If no option selected--Premium I-1 Payment Method
mode will be quarterly) /X/ Direct Bill (not available for monthly)
/X/ Annual / / Single Premium
/ / Quarterly / / List Bill Existing List Bill Number___________________
/ / Semi-Annual / / Government Allotment (Complete and attach form)
/ / Monthly (only available for List Bill / / Authorized Withdrawal (Complete Authorized
and Authorized Withdrawal/EFT) Withdrawal/EFT Form)
I-3 Automatic Premium Loans (if available)
/X/ Yes / / No (If no option selected policy will include automatic
premium loan provision)
I-4 Dividends, if any, are to be used to purchase paid up additions unless
another choice is specified below.
___________________________________________________________________________
I-5 Premium collected with application
NOTE: The agent is not authorized to collect any premium (including
Authorized Withdrawal/EFT Form and Government Allotment forms) before
delivering a policy unless the Binding Limited Life Insurance Coverage
form has been completed and signed by the agent, applicant and proposed
insured and a copy given to the applicant. THERE IS NO COVERAGE BEFORE
DELIVERY OF THE POLICY EXCEPT AS PROVIDED BY THAT FORM.
Yes No
/ / /X/ a. Has agent collected any premium (including any Authorized Withdrawal/EFT Form or Government Allotment Form) with
this application? If yes, total premium (including any pour-in) collected $______________________
/ / / / b. If answer to (a) is "Yes", has agent complied with the Binding Limited Life Insurance Coverage requirements?
/ / / / c. Has the applicant signed and received a Binding Limited Life Insurance Coverage form in connection with this
application? Attach signed copy of Binding Limited Life Insurance Coverage form.
3
36
________________________________________________________________________________
SECTION J--PERSONAL INFORMATION
J-1 List life insurance policies on all persons proposed for coverage (1) now
in force or (2) applied for within the last 12 months, or (3) pending now.
IF NONE, CHECK THIS BOX [ ]
- - - - ------------------------------------------------------------------------------------------------------
Increase if
Name of In force, Applied
Proposed Year A.D. Business or for, or
Insured Company Issued Amount Amount Personal Pending
- - - - ------------------------------------------------------------------------------------------------------
David S. Engelman Sun Life of Canada 1990 250,000 Personal In Force
- - - - ------------------------------------------------------------------------------------------------------
David S. Engelman North American 1990 250,000 Personal In Force
- - - - ------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------
YES NO
J-2 Has any proposed insured ever been declined for insurance
(or reinstatement) or been offered insurance with restricted
benefits or at other than standard rates? (DO NOT ANSWER
THIS QUESTION IF YOU RESIDE IN MISSOURI.) (If "Yes" give
details in Section J-12) [ ] [X]
J-3 Is this insurance to replace, or will it cause any change
in, any insurance or annuity or any person proposed for
coverage? (If "Yes" submit a completed replacement form
with this application.) [ ] [X]
J-4 a. Is this insurance intended to be a tax free exchange--
1035 Exchange? [ ] [X]
b. If "Yes" will any policy loan be carried over? [ ] [ ]
J-5 Has any person proposed for coverage:
a. ever smoked cigarettes? (If "Yes", give name and
details in section J-12) [ ] [X]
b. ever used tobacco in any form other than cigarettes?
(If "Yes" give name and details in section J-12) [ ] [X]
c. ever stopped smoking cigarettes? (If "Yes" give name
and date last smoked in section J-12) [ ] [ ]
d. every stopped using tobacco in any form other than
cigarettes. (If "Yes" give name, type and date last
used in section J-12) [ ] [ ]
J-6 Within the last 3 years or within the next 12 months, has
any person proposed for coverage:
a. flown (or planned to fly) other than as a passenger on
a regularly scheduled airline? (If "Yes" complete
Aviation Supplement.) Not a licensed pilot! Occasionally
fly charter flights or short business trips as passenger.
Not as pilot. [X] [ ]
b. had a drivers license denied, revoked, or suspended;
had three or more moving violations; been convicted
of an alcohol or drug related driving offense; been
involved in two or more auto accidents? (If "Yes" give
details in Section J-12) [ ] [X]
c. participated in (or intend to participate in) vehicle
racing (on land or water), ballooning, bobsledding,
hang-gliding, ultralight aviation, horse racing,
mountaineering, rodeo, scuba/skin diving, skydiving/
parachuting, or bungee cord jumping? (If "Yes" complete
Avocation Supplement) Have participated in recreational
rock climbing and scuba (not in last 5 years). [X] [ ]
J-7 List Driver's License No. here: D 0 0 5 9 6 7 2 State CA
_________________ __
J-8 Does any person proposed for coverage contemplate traveling
or residing outside the U.S.A. or Canada within the next 12
months? (If "Yes" give details in Section J-12) [ ] [X]
J-9 Has any person proposed for coverage been convicted of a
felony within the last 5 years? (If "Yes" give details
in Section J-12) [ ] [X]
J-10 Has any person proposed for coverage:
a. ever had, or now have, any type of heart disease,
cancer, leukemia, or malignant tumor? (If "Yes" give
details in Section J-12) Skin carcinomas excised see
B-1h. explanation. [X] [ ]
b. ever been diagnosed by a licensed member of the medical
profession as having Acquired Immune Deficiency Syndrome
(AIDS) or any immune deficiency or disorder? (DO NOT
ANSWER THIS QUESTION IF YOU RESIDE IN NEVADA.) (If "Yes"
give details in Section J-12) [ ] [X]
4
37
- - - - -------------------------------------------------------------------------------
SECTION J -- PERSONAL INFORMATION (Continued)
Yes No
J-1 Does any person proposed for coverage now participate
in any regular physical exercise program? [X] [ ]
J-2 Details of "YES" Answers to Questions J-2 through J-11
Walking; Tennis, Swimming
- - - - -------------------------------------------------------------------------------
SECTION K -- MEDICAL EXAM CERTIFICATE (Complete when submitting medical
examination of another insurance company.)
K-1 The attached examination is on the life of:
K-2 Name of insurance company for which examination was made and date of
examination:
Company Date of Examination
Yes No
K-3 To the best of the proposed insured's knowledge
and belief, are the statements in the examination
true as of today? (If "No", explain in "REMARKS") [ ] [ ]
K-4 Has the proposed insured consulted a doctor or
other practitioner or received medical or surgical
advice since the date of the examination?
(If "Yes", explain in "REMARKS") [ ] [ ]
Remarks to No. K-3 and K-4
- - - - -------------------------------------------------------------------------------
SECTION L -- FINANCIAL INFORMATION (Must be completed where the face amount
exceeds [1] $200,000 for business insurance, [2] $300,000 for an
insured 65 and under, or [3] $100,000 for an insured over 65.)
L-1 What is the purpose of the insurance applied for? Collateral assignment
split dollar
If the insurance applied for is personal, what is the proposed insured's:
Annual Earned Income $300,000.00 Total Assets $2,181,502
Annual Interest & Total Liabilities $ 444,598
Other Income $130,000.00
Total Net Worth $1,736,904
L-2 If Business Insurance:
Last Year 2 Years Ago
a. Annual net profit (before
taxes, past two years) $ $
b. Business reason for insurance (check at least one box and
furnish details)
[ ] Key Person [ ] Stock Redemption/Buy and Sell
[ ] Other
Yes No
c. If Key Person insurance:
(1) Are all partners or key people to be covered? [ ] [ ]
(If "No", explain)
(2) Does proposed insured have an ownership
interest in the business? [ ] [ ]
If "Yes", what is proposed insured's
percent of ownership? %
(3) What is proposed insured's annual income? $
38
SECTION L - FINANCIAL INFORMATION-(Continued) (Complete for all cases where the
face amount exceeds (1) $200,000 for business insurance, (2) $300,000 for an
insured 65 and under or (3) $100,000 for an insured over 65)
d. If to fund stock redemption, is there a written agreement?
___ Yes ___ No
(1) What is the book value of the business? $_____________
(2) What is the market value of the business? $_____________
(3) How was the value determined? _________________________
Yes No
L-3 Is this insurance to guarantee a loan? [ ] [X]
a. If "Yes", is the lender requiring this insurance? [ ] [ ]
b. Is the loan finalized? [ ] [ ]
c. What is the term of the loan (Months) _________________________
d. Name of lender: _______________________________________________
e. Amount of loan: _______________________________________________
f. Purpose of loan: ______________________________________________
g. Are others being insured for the same purpose? [ ] [ ]
If Yes, who and for what amount?
_________________________________________ Amount $____________
_________________________________________ Amount $____________
L-4 Additional remarks about purpose of the insurance and how the amount of
insurance was determined.
Remarks to Section L
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
SECTION M - SPECIAL INSTRUCTIONS
Date policy to sale age 56
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
39
Please Print All Information Using Dark Ink
Part II must be completed for each person proposed for coverage unless the
person is medically examined.
SECTION A -PERSONAL PHYSICIANS
A-1 For each person proposed for coverage, give the name and address of
the personal physicians and the date and reason the physician was
last seen.
If NONE, check here ___
Name and Address
Proposed Insured's Name of Physician Date and Reason Last Seen
- - - - --------------------------------------------------------------------------------
David S. Engelman Scripps Clinic 1/27/94 Annual Physical
10666 N. Torrey Pines Rd.
La Jolla, CA 92037
- - - - --------------------------------------------------------------------------------
David S. Engelman M.D.--Dermatology 3/11/94 Treatment For
310 Santa Fe Dr. Keratoses and Fungus
Suite 111 In Right Great Toe
Encinitas, CA 92024
- - - - --------------------------------------------------------------------------------
David S. Engelman Craig Cedarhurst, D.C. 4/15/94 Skoletec
235 W. 5th Ave. Adjustment
Escondido, CA 92023 Routine Maintenance
- - - - --------------------------------------------------------------------------------
SECTION B - MEDICAL INFORMATION (Complete for each person proposed for
coverage). (For all of Section B, circle each specific condition and give
details to all "Yes" answers in the Details Section following question B-11.
Give name of disease, symptoms, etc; the date of onset; the duration; number of
attacks; and name and addresses of medical professional or hospital providing
services.)
B-1 Has any person proposed for coverage, ever been treated for, or been
told, by a member of the medical profession that the person has:
Yes No
a. pain, pressure, or discomfort in the chest or arms; high
blood pressure; heart murmur, irregular heartbeat; or
any other disease or disorder of the heart? [ ] [X]
b. anemia; leukemia; or any other disorder of the blood,
veins or arteries? [ ] [X]
c. asthma; bronchitis; pneumonia; tuberculosis; emphysema;
shortness of breath; chronic cough, or any other disorder
of the lungs or respiratory system? [ ] [X]
d. mental or emotional disorder, nervous breakdown;
epilepsy; convulsions; chronic fatigue; fainting spells;
paralysis; stroke; or any other disorder of the brain
or nervous system? [ ] [X]
e. significant weight loss; ulcer; colitis; diverticulitis;
hepatitis; cirrhosis; persistent diarrhea; or other
disease of the liver, gall bladder, pancreas, stomach
or intestines? [ ] [X]
f. diabetes; thyroid; recurrent enlarged glands; or other
glandular disease or disorder? [ ] [X]
g. arthritis; gout; or any bone, joint, muscle, or
skin disorder? [X] [ ]
h. polyp, tumor or cancer? [X] [ ]
i. disorder of the urinary tract or kidneys; urethritis;
cystitis; sugar, albumin, or blood in the urine? [ ] [X]
j. prostate or testicular disease; venereal disease; herpes;
or disease of the uterus, ovaries or breasts? [ ] [X]
k. any disorder of the eyes; ears; nose; or throat? [ ] [X]
l. any other health impairment or medically or surgically
treated condition within the last 5 years not mentioned
above? [ ] [X]
40
Yes No
B-2 Has any person proposed for coverage even been treated
for, or been told, by a licensed member of the medical
profession that the person has Acquired Immune
Deficiency Syndrome (AIDS) or any disorder or deficiency
of the Immune System? (DO NOT ANSWER THIS QUESTION IF
YOU RESIDE IN NEVADA.) [ ] [X]
B-3 Within the past 10 years, has any person proposed for
coverage:
a. tested positive in a test to detect antibodies
to the AIDS virus (Human T-Cell Lymphotrophic
virus type III; HTLV-III, Human Immunodeficiency
Virus (HIV)? (DO NOT ANSWER THIS QUESTION IF
YOU RESIDE IN CONNECTICUT OR MAINE.) [ ] [X]
b. had a blood transfussion? [ ] [X]
B-4 Within the past 5 years, has any person proposed for
coverage been a patient in or had treatment at a
hospital, clinic, sanitarium or other medical facility? [X] [ ]
B-5 Is any person proposed for coverage now under regular
medical observation by, or taking treatment from, a
member of the medical profession? [ ] [X]
B-6 Other than as stated in the answers above, has any
person proposed for coverage, within the last 5 years:
a. had a checkup or consultation with a member of
the medical profession? [X] [ ]
b. had an electrocardiogram, x-ray, blood test or
other test? [X] [ ]
c. been advised by a member of the medical
profession to have any diagnostic test,
hospitalization, or surgery which was not
completed? [ ] [X]
B-7 Does any person proposed for coverage have a deformity
or an amputation? [ ] [X]
B-8 Does any person proposed for coverage now take any
medication prescribed by a member of the medical
profession? [X]
B-9 Except as legally prescribed by a physician, has any
person proposed for coverage ever used narcotics,
cocaine, marijuana, or any hallucinatory or mind
altering substances in the past 10 years? [ ] [X]
B-10 In the last 5 years, has any person proposed for
coverage received treatment for or joined an
organization because of the alcoholism or drug
addiction of that person? [ ] [X]
B-11 Has any parent, brother, or sister of any person
proposed for coverage ever had cancer; diabetes;
high blood pressure; heart or kidney disease;
nervous or mental disorder; tuberculosis; or
hereditary disorder? [ ] [X]
Details of "Yes" answer to questions B-1 through B-11
- - - - ------------------------------------------------------------------------------
Ques. Name of
No. Proposed Insured Complete Details
- - - - ------------------------------------------------------------------------------
B-1g David Engelman Lower Back Pain; Craig Warhurst, St D.C.--
Keratoses; H.R. McDonald, M.D., 310 Santa Fe Dr.
Ste. 111, Encinitas, CA 92024
- - - - ------------------------------------------------------------------------------
B-1h David Engelman Admexal Carcinoma (Forehead) Dr. McDonald 1/90
Basil Cell Carcinoma (Forehead) Carson Lewis, M.D.,
La Scela 1985 & 1983--All Excised
- - - - ------------------------------------------------------------------------------
B-4 David Engelman Scrips Clinic LaIella--ER--Stomach Cramps
- - - - ------------------------------------------------------------------------------
B-6 David Engelman Annual Physical--Scrips Clinic, Edmond Keeney, M.D.
- - - - ------------------------------------------------------------------------------
SECTION C--Family History
- - - - ------------------------------------------------------------------------------
Living Deceased
Family Member Age State of Health Age at Death/Cause
- - - - ------------------------------------------------------------------------------
Father 91+ Excellent
- - - - ------------------------------------------------------------------------------
Mother 90+
- - - - ------------------------------------------------------------------------------
Brothers None
- - - - ------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------
Sisters None
- - - - ------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------
8
41
AGREEMENTS
All statements and answers in this application (which includes Part I, Part II,
and supplements and amendments) are true and complete to the best of my
knowledge and belief. I also agree that:
1. The statements and answers in this application will be relied upon and
form the basis of any insurance.
2. No information will be considered as having been given to Security Life
unless it is written in this application. (This paragraph does not apply in
the states of Maine, Maryland, Oregon, South Carolina, and South Dakota.)
3. No agent or any other unauthorized person can make or change any
insurance contract or give up any of Security Life's rights or requirements.
Any change must be in writing and signed by an officer of Security Life.
4. Security Life may amend this application by an appropriate notation in
the space designated "Home Office Corrections" in order to correct errors or
omissions or to conform the application with any policy that may be issued.
The acceptance of the policy consititutes a ratification of such
amendments.
In those states where change in amount, classification, plan, premium,
or benefit requires the written consent of the applicant, no change may be
ratified except by a written acceptance. We reserve the right to make any
changes required by law.
5. Insurance Under Policy Applied For--Except as may be provided in any
Binding Limited Life Insurance Coverage, no policy of insurance will be in
force until (1) the first policy premium is paid and (2) the policy is
delivered while the facts and health condition of the proposed insured(s)
are as represented in this application. When these conditions are satisfied,
the policy as delivered will then take effect.
6. Binding Limited Life Insurance Coverage--Any pre-delivery insurance
coverage is provided in the Binding Limited Life Insurance Coverage form.
That coverage is available only if: a premium is accepted by the agent; the
agent has authority to accept premium as set out in that form; and the form
is completed and signed by the agent, applicant, and proposed insured.
7. If the contract applied for is for a pension, profit-sharing, HR10, or
other tax qualified plan, any policy issued shall not be transferable
other than to the Insurer, except as directed by the Plan Administrator.
Other applicable provisions may be added to the contract.
8. I certify, under penalty of perjury, that my social security/tax
identification number(s) is shown and is correct and that I am not subject
to back up withholding.
AUTHORIZATION TO OBTAIN AND DISCLOSE INFORMATION
Security Life of Denver Insurance Company ("Security Life") may obtain
information about me or my minor children from: any physicians; medical
practitioner; hospital; clinic or other medical facility; employer; other
insurance companies or institutions; consumer reporting agency; or Medical
Information Bureau, Inc. (MIB, Inc.). The purpose is to evaluate my application
for insurance or benefits. Security Life may obtain an investigative consumer
report and any records or other information available as to diagnosis,
treatment and prognosis of any physical or mental condition.
Security Life may obtain any drug, physical and mental health, and
alcohol-related information which may be protected by federal or state laws and
regulations. As it pertains to alcohol and drug information covered by federal
regulation, this authorization may be revoked at any time by written notice to
Security Life. But any action taken before my written revocation is received by
Security Life will not be affected.
Security Life may make a brief report about me or my children to MIB. Inc.
Security Life may disclose information to: its reinsurers; those who perform
services for Security Life on my application for insurance or benefits; or
those companies to which I have applied or may apply for life or health
insurance or benefits. Disclosure may be made when required or permitted by
law.
This is valid for two and one-half years from the date below. An original or
copy may be used by Security Life or its authorized representatives to obtain
information. I have read and received a copy of this authorization. I also have
a copy of the Notice of Information Procedures. It includes the MIB, Inc., and
Fair Credit Reporting Notices.
DAVID A. ENGELMAN 4-26-94
Signature of Proposed Insured ___________________________ Date ________________
(If below age 15, signature of parent or guardian)
RANCHO SANTA FE, CALIF.
Signed at _____________________________________
City State
Signature of Spouse/ _____________________________________
Additional Insured(s)
(If proposed for coverage) _____________________________________
Owner Signature
(If other than proposed insured)
OR (if applicable)
Corporate Owner Signature _____________________________________
(If a firm or corporation is to be owner, the signature and title of an officer
other than the proposed insured is required.)
Except for any medical exam form, I certify that I have asked and recorded
completely and accurately the answers to all questions on this application. I
know of nothing else affecting the risk.
ROBERT D. CRISWELL
Signature of Agent _____________________________________
- - - - --------------------------------------------------------------------------------
HOME OFFICE PART I, SECTION B-4, INSURANCE AGE IS: 56.
CORRECTIONS
(FOR HOME OFFICE
USE ONLY)
- - - - --------------------------------------------------------------------------------
9
42
911532560 ENGELMAN, DAVID S 10/07/37
4/29/94 #276300/236 DIV:7 CWA:
PART II CONTINUATION OF ALL APPLICATIONS FOR INSURANCE TO:
(Check /X/ SECURITY LIFE OF DENVER INSURANCE COMPANY
Appropriate / / MIDWESTERN UNITED LIFE INSURANCE COMPANY
Insurer)
1. a. Full name of person to be insured ("You"): (Please Print)
DAVID SYDNEY ENGELMAN
---------------------------------------------------------
First Middle Last
b. Birthdate: Month 10 Day 7 Year 37
----- ------ -------
2. FAMILY LIVING DEAD
HISTORY Age State of Health Age Cause of Death
- - - - --------------------------------------------------------------------
Father 91 GOOD
Mother 90 NATURAL CAUSES
- - - - --------------------------------------------------------------------
Brothers
Sisters
- - - - --------------------------------------------------------------------
YES NO
3. Have you ever been treated or been told you had:
a. high blood pressure? ......................................... / / /X/
b. pain, pressure or discomfort in the chest or arms, palpitation,
heart murmur, rheumatic fever or any heart disorder? ......... / / /X/
c. anemia, varicose veins or any disorder of the blood or
blood vessels? ............................................... / / /X/
d. asthma, pleurisy, tuberculosis, shortness of breath, pneumonia,
or any disorder of the lungs or respiratory system? .......... / / /X/
e. epilepsy, convulsions, dizziness, fainting spells, paralysis,
mental illness, nervous breakdown, or any disorder of the brain
or nervous system? ........................................... / / /X/
f. hernia, ulcer, or any disorder of the stomach, gallbladder,
liver, pancreas, spleen, intestines, or rectum? .............. / / /X/
g. diabetes, thyroid, or any glandular disorder? ................ / / /X/
h. arthritis, back trouble, gout, or any disorder of the skin,
bones, or joints? ............................................ /X/ / /
i. a polyp, tumor, or cancer .................................... /X/ / /
j. sugar, albumin, or blood in the urine? ....................... / / /X/
k. cystitis, nephritis, kidney stones, urethritis, or any
disorder of the urinary tract? ............................... / / /X/
l. mastitis, prostatitis, venereal disease, herpes, or any
disorder of the genital or reproductive organs? .............. / / /X/
m. any disorder of eyes, ears, nose, or throat? ................. / / /X/
n. any disease, illness, injury, or impairment within
the last 5 years not mentioned above? ........................ / / /X/
4. Within the last 10 years, have you been treated for, had any
reason to know, or been told that you have a chronic cough,
significant weight loss, recurrent enlarged glands, persistent
diarrhea, or yeast infections of the mouth and throat? .......... / / /X/
5. Have you ever been:
a. Diagnosed by a member of the medical profession as having
AIDS (Acquired Immune Deficiency Syndrome) or ARC (AIDS
Related Complex)? ............................................ / / /X/
b. Treated by a member of the medical profession for AIDS
(Acquired Immune Deficiency Syndrome) or ARC (AIDS Related
Complex)? .................................................... / / /X/
6. Within the last 5 years have you ever had or been advised to have:
a. a surgical operation? ........................................ / / /X/
b. an x-ray, electrocardiogram, or any other test? BLOOD......... /X/ / /
c. a consultation with or an examination by a physician or
medical examiner, or an examination or treatment in a
hospital or medical facility? (Give names of physicians,
dates, and reasons for all exams and consultations)........... /X/ / /
7. Do you have a deformity or amputation? .......................... / / /X/
8. Do you now take any kind of medication? ......................... / / /X/
9. In the last 10 years have you:
a. used alcohol? (If "Yes", how much? How often?) ............... /X/ / /
b. used narcotics, cocaine, marijuana, or any hallucinatory or
mind altering substances not prescribed by a physician? ...... / / /X/
c. received advice about or been treated for use of alcohol
or drugs? .................................................... / / /X/
10. Has any parent, brother, or sister of yours ever had cancer,
diabetes, high blood pressure, heart or kidney disease, nervous
or mental disorder, tuberculosis, or hereditary disorder? ....... / / /X/
11. NAMES AND ADDRESSES OF REGULAR ATTENDING PHYSICIANS:
IF NONE, STATE "NONE"
EDMOND KEENEY, SCRIPPS CLINIC
-----------------------------------------------------------------
10666 N. TORREY PINES RD., LA JOLLA
-----------------------------------------------------------------
JAN. 94
-----------------------------------------------------------------
Date and reason last seen: (See #6B)
---------------------------------------
===============================================================================
FULL DETAILS OF EACH "YES" ANSWER (Include dates, duration, results, and names
and addresses of physicians and hospitals -- Identify answer by its number)
(3h) LOWER BACK PAIN SPORADICALLY LAST 17 YEARS CRAIG WARHURST
DUE TO EXERCISING RX -- CHIROPRACTIC CARE 235 WINSON AVE
NO CURRENT PROBLEMS PHYSICAL THERAPY ESCONDIDO, CA 92025
(3i) SKIN CANCERS REMOVED FROM FACE (3) TIMES IN DR. HARRISON MCDONALD
THE LAST 5 TO 10 YEARS. 1087 DEVONSHIRE
ENCINITAS, CA 92024
NO PROBLEMS SINCE 1989
(6b) ANNUAL PHYSICAL EXAM JAN. 94 EKG, X-RAY, BLOOD TEST DR. EDMOND KEENEY
RESULTS ALL NORMAL 10666 N. TORREY PINES RD.
LA JOLLA, CA 92037
(6c) STOMACH DISCOMFORT AUG. 92 RX -- E.R. SCRIPPS CLINIC
DX -- FLU RX -- ANTIBIOTICS FULL RECOVERY 10666 N. TORREY PINES RD.
LA JOLLA, CA 92037
(9a) 1-2 GLASSES BEER OR WINE/WEEK
============================================================================
I declare all of the above statements and answers are complete and true to the
best of my knowledge and belief. They can be relied upon and form the basis of
any insurance. They will be made part of the application for any insurance
applied for.
DAVID S. ENGELMAN
- - - - --------------------------------------------- -------------------------------------------------------------------
Signature of person or insured (If under 15, Signature of Applicant-Owner if other than proposed insured
signature of parent or guardian required) (If firm or corporation, print name and sign as authorized officer)
Witness: EDWARD G. GALT 9190 Date MAY 2 , 1994
------------------------------------ ------------------------------------------- -----
M/S 110A
43
FLEXIBLE PREMIUM ADJUSTABLE LIFE INSURANCE POLICY
Death Benefit Payable at Death Prior to Maturity Date -- Surrender Value, if
any, Payable on Maturity Date -- Adjustable Death Benefit -- Flexible Premiums
Payable During Lifetime of Insured Until Maturity Date -- Nonparticipating.
44
EXHIBIT "B"
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made and entered into effective the 6th day
of April, 1994, by the undersigned as owner (the "Owner") of that certain
Flexible Premium Adjustable Life Insurance Policy No. 1532560 issued by
Security Life of Denver Life Insurance Company ("Insurer"), and any
supplementary contracts issued in connection therewith (said Policy and
contracts being herein called the "Policy"), upon the life of DAVID S. ENGELMAN
("Insured") to Union Federal Bank, a federal savings bank (the "Assignee").
WHEREAS, DAVID S. ENGELMAN is an employee of the Assignee, and
Assignee wishes to retain him in such capacity, and
WHEREAS, as an inducement to DAVID S. ENGELMAN continuing in
such capacity and for the benefit of the Assignee, Assignee desires to assist
DAVID S. ENGELMAN with his personal life insurance program by providing the
premiums due on the Policy, as more specifically provided for in that certain
Split-Dollar Insurance Agreement of even date herewith, entered into between
the Owner and the Assignee (the "Agreement"), and
WHEREAS, in consideration of the Assignee making such payments
(all amounts so paid to the Assignee toward the premiums on the Policy being
hereinafter collectively referred to as the "Amounts"), the Owner agrees to
grant the Assignee a security interest in said Policy as collateral security
for the payment of a portion of the Policy proceeds to the Assignee pursuant to
the terms of the Agreement.
NOW, THEREFORE, the undersigned Owner hereby assigns,
transfers and sets over to the Assignee the following specific rights in the
Policy, subject to the following terms and conditions:
1. This Assignment is made, and the Policy is to be
held, as collateral security for all liabilities of the Owner to the Assignee,
either now existing or that may hereafter arise, pursuant to the terms of the
Agreement.
2. The Assignee's rights shall be limited to the right
to pledge or assign the Policy as collateral security to the extent of its
interest in the Policy and to receive from the owner an amount equal to such
interest upon the death of the Insured, and its rights under the Agreement and
the other provisions of this Assignment.
3. The Owner shall retain all incidents of ownership in
the Policy, including, but not limited to, the sole and exclusive rights to:
borrow against the Policy, subject to the limitations set forth in the
Agreement; assign the Owner's interest in the Policy with the consent of the
Assignee; change the beneficiary of the Policy; exercise settlement options;
and surrender or cancel the Policy (in whole or in part). All of such
incidents of ownership shall be exercisable by the Owner unilaterally and
without the consent of any other person, except as provided herein.
45
4. The Assignee shall, upon request, if the Policy is in
the possession of the Assignee, forward the Policy to the Insurer, without
unreasonable delay, for endorsement of any designation or change of
beneficiary, any election of optional mode of settlement, or the exercise of
any other right reserved by the Owner.
5. The Insurer is hereby authorized to recognize the
Assignee's claims to rights hereunder without investigating the reason for any
action taken by the Assignee, the validity or the amount of any of the
liabilities of the Owner to the Assignee under the Agreement, the existence of
any default therein, the giving of any notice required herein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The receipt of the Assignee for any sums received by it shall be a
full discharge and release therefor to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the Policy, in whole
or in part, or in recognizing a request made by the Owner for any loans against
the Policy permitted by the terms of the Policy. In the event of any such
request, the Insurer shall pay the proceeds of such surrender, cancellation, or
loan to the joint order of the Owner and the Assignee, as their interests
appear.
7. Upon the full payment of the liabilities of the Owner
to the Assignee pursuant to the Agreement, the Assignee shall execute an
appropriate release of this Collateral Assignment.
IN WITNESS WHEREOF, the Owner has executed this Assignment
effective the day and year first above written.
OWNER:
By: /s/ DAVID S. ENGELMAN By: /s/ SHERRY B. ENGELMAN
-------------------------------- -------------------------------
David S. Engelman Sherry B. Engelman,
Trustee of the Trustee of the
Engelman Family Trust Engelman Family Trust
U/D/T dated 5/7/92. U/D/T dated 5/7/92.
RECEIVED AND ACCEPTED:
INSURER:
By: ______________________________
Its Duly Authorized Agent
2
46
5. The Insurer is hereby authorized to recognize the
Assignee's claims to rights hereunder without investigating the reason for any
action taken by the Assignee, the validity or the amount of any of the
liabilities of the Owner to the Assignee under the Agreement, the existence of
any default therein, the giving of any notice required herein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The receipt of the Assignee for any sums received by it shall be a
full discharge and release therefor to the Insurer.
6. The Insurer shall be fully protected in recognizing a
request made by the Owner for surrender or cancellation of the Policy, in whole
or in part, or in recognizing a request made by the Owner for any loans against
the Policy permitted by the terms of the Policy. In the event of any such
request, the Insurer shall pay the proceeds of such surrender, cancellation, or
loan to the joint order of the Owner and the Assignee, as their interests
appear.
7. Upon the full payment of the liabilities of the Owner
to the Assignee pursuant to the Agreement, the Assignee shall execute an
appropriate release of this Collateral Assignment.
IN WITNESS WHEREOF, the Owner has executed this Assignment
effective the day and year first above written.
OWNER:
By: /s/ DAVID S. ENGELMAN By: /s/ SHERRY B. ENGELMAN
-------------------------------- -------------------------------
David S. Engelman Sherry B. Engelman,
Trustee of the Trustee of the
Engelman Family Trust Engelman Family Trust
U/D/T dated 5/7/92. U/D/T dated 5/7/92.
RECEIVED AND ACCEPTED:
INSURER:
By: ______________________________
Its Duly Authorized Agent
Filed at the Home Office of the Insurer this 20th day of June 1994.
Security Life assumes no responsibility for the validity of this document.
/s/ JUAN C. GALLAGHER
2