AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 2000
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INITIAL FILING
ON
FORM S-6
FOR REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
-----------------
SELECT*LIFE VARIABLE ACCOUNT
(Exact Name of Unit Investment Trust)
RELIASTAR LIFE INSURANCE COMPANY
(Name of Depositor)
Stewart D. Gregg
Counsel
ReliaStar Life Insurance Company
20 Washington Avenue South
Minneapolis, Minnesota 55401
-----------------
It is proposed that this filing will become effective
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
Title of securities being registered: Variable life insurance contracts issued
by a registered separate account.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SELECT*LIFE VARIABLE ACCOUNT
CROSS REFERENCE SHEET
(RECONCILIATION AND TIE SHEET)
ITEM NUMBER OF
FORM N-8B-2 HEADING IN THE PROSPECTUS
- --------------- ----------------------------------------------------
1 Cover Page
2 Cover Page
3 Not Applicable
4 Distribution of the Policies
5 ReliaStar Life Insurance
Company and the Variable Account
6 The Variable Account
7 Not Applicable
8 Not Applicable
9 Not Applicable
10 Summary; Death Benefit; Payment and Allocation of Premiums;
Death Benefit Guarantee; Accumulation Value; Policy Lapse and
Reinstatement; Surrender Benefits; Investments of the Variable
Account; Transfers; Policy Loans; Free Look and Conversion
Rights; Voting Rights; General Provisions; Appendix B
11 Deductions and Charges; Investments of the
Variable Account
12 Investments of the Variable Account
13 Deductions and Charges
14 The Policies; General Provisions; Distribution of
the Policies
15 Payment and Allocation of Premiums; Investments
of the Variable Account
16 Payment and Allocation of Premiums; Surrender
Benefits; Investments of the Variable Account
17 Surrender Benefits; Policy Loans; Free Look and
Conversion Rights; General Provisions
18 The Variable Account; Investments of the Variable
Account; Payment and Allocation of Premiums
19 Voting Rights; General Provisions
20 Not Applicable
21 Policy Loans
22 Not Applicable
23 Bonding Arrangements
24 Definitions; General Provisions
i
ITEM NUMBER OF
FORM N-8B-2 HEADING IN THE PROSPECTUS
- --------------- -------------------------------------------------
25 ReliaStar Life Insurance Company
26 Not Applicable
27 ReliaStar Life Insurance Company; Other
Contracts Issued by Us
28 Management
29 ReliaStar Life Insurance Company
30 Not Applicable
31 Not Applicable
32 Not Applicable
33 Not Applicable
34 Not Applicable
35 Not Applicable
36 Not Applicable
37 Not Applicable
38 Distribution of the Policies
39 Distribution of the Policies
40 Distribution of the Policies
41 Distribution of the Policies
42 Management
43 Not Applicable
44 Investments of the Variable Account; Payment
and Allocation of Premiums; Deductions and
Charges
45 Not Applicable
46 Investments of the Variable Account; Deductions
and Charges
47 Investments of the Variable Account
48 ReliaStar Life Insurance Company; State
Regulation
49 Not Applicable
50 The Variable Account
51 Cover Page; The Policies; Death Benefit; Payment
and Allocation of Premiums; Deductions and
Charges; Policy Lapse and Reinstatement; General
Provisions; Free Look and Conversion Rights
52 Investments of the Variable Account
53 Federal Tax Matters
54 Not Applicable
55 Not Applicable
ii
ITEM NUMBER OF
FORM N-8B-2 HEADING IN THE PROSPECTUS
- --------------- --------------------------
56 Not Applicable
57 Not Applicable
58 Not Applicable
59 Financial Statements
iii
[LOGO] RELIASTAR
20 Washington Avenue South
Minneapolis, Minnesota 55401
---------------------------
ACCUMULATION SVUL
ISSUED BY
SELECT*LIFE VARIABLE ACCOUNT
OF
RELIASTAR LIFE INSURANCE COMPANY
ReliaStar Life Insurance Company is offering a survivorship flexible
premium variable life insurance policy (the "Policy") described in this
prospectus. ReliaStar designed the Policy to provide (1) a death benefit payable
at the Surviving Joint Insured's death; and (2) maximum flexibility regarding
premium payments and death benefits. Subject to certain restrictions, Policy
owners may:
o vary the frequency and amount of premium payments;
o increase or decrease the level of death benefits payable under the
Policy; and
o allocate premiums to:
-- the Fixed Account, an account that provides a minimum specified rate
of interest; and
-- Sub-Accounts of Select*Life Variable Account, a variable account
allowing you to invest in certain portfolios of the following Funds:
AIM Variable Insurance Funds Neuberger Berman Advisers Management Trust
The Alger American Fund Pilgrim Variable Products Trust
Fidelity Variable Insurance Products Fund OCC Accumulation Trust
Fidelity Variable Insurance Products Fund II Putnam Variable Trust
Janus Aspen Series
If you allocate net premiums to Sub-Accounts of Select*Life Variable
Account, the amount of the Policy's death benefit may, and the total value
attributed to a Policy will, vary to reflect the investment performance of the
Sub-Accounts you select.
The Policy's primary purpose is to provide insurance protection for the
beneficiary. ReliaStar does not claim that investing in the Policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
Generally, the Policy will remain in force as long as the cash surrender
value (that is, the amount that ReliaStar would pay if you surrender the Policy)
is sufficient to pay certain monthly charges. However, under certain
circumstances the Policy provides a death benefit guarantee that allows the
Policy to remain in force without regard to the cash surrender value (See "Death
Benefit Guarantee").
INTERESTS IN THE POLICIES AND SHARES OF THE FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF OR GUARANTEED BY A BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THESE SECURITIES OR
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this prospectus carefully and keep it for future reference.
Call 1-800-456-6965 to obtain a current prospectus for any of the Funds. A
current prospectus for each of the Funds must accompany this prospectus and
should be read in conjunction with this prospectus.
THE DATE OF THIS PROSPECTUS IS ________, 2000
1
TABLE OF CONTENTS
DEFINITIONS.............................................................. 5
PART 1. SUMMARY
The Policy............................................................... 7
Free Look Rights......................................................... 8
Premium Payments......................................................... 8
The Variable Account..................................................... 8
The Fixed Account........................................................ 8
The Funds................................................................ 8
Charges Against the Accumulation Value.................................. 11
Charge Upon Lapse or Total Surrender of the Policy...................... 12
Surrenders.............................................................. 12
Partial Withdrawals..................................................... 12
Loans................................................................... 12
Transfers............................................................... 12
Death Benefit Overview.................................................. 13
Adjusting the Death Benefit............................................. 13
Death Benefit Guarantee................................................. 13
Lapse................................................................... 13
Taxation of Death Benefit Proceeds...................................... 13
Taxation of the Policy.................................................. 13
PART 2. DETAILED INFORMATION
ReliaStar Life Insurance Company........................................ 14
The Policies............................................................ 14
Deductions and Charges.................................................. 14
Premium Expense Charge.................................................. 14
Monthly Deduction....................................................... 14
Cost of Insurance...................................................... 15
Monthly Administrative Charge.......................................... 15
Monthly Amount Charge.................................................. 15
Monthly Mortality and Expense Risk Charge.............................. 15
Optional Insurance Benefit Charges..................................... 16
Surrender Charge........................................................ 16
General................................................................ 16
Surrender Charge....................................................... 16
Surrender Charge Calculation........................................... 16
Partial Withdrawal and Transfer Charges................................. 17
Modification of Charges................................................. 17
Investment Advisory Fees and Other Fund Other Expenses.................. 17
Fund Expenses (Before Reimbursements)................................... 18
The Variable Account.................................................... 19
Investments of the Variable Account..................................... 20
Performance Information................................................. 20
Death Benefit........................................................... 21
Death Benefit Qualification Tests....................................... 21
Guideline Premium Test................................................. 21
Cash Value Accumulation Test........................................... 21
Which Death Benefit Qualification Test to Choose........................ 21
Death Benefit Options................................................... 22
Option A (Level Amount Option)......................................... 22
Option B (Variable Amount Option)...................................... 22
Option C (Face Amount Plus Premium Amount Option)...................... 22
Which Death Benefit Option to Choose.................................... 22
Requested Changes in Face Amount........................................ 22
Increases.............................................................. 22
2
Decreases.............................................................. 23
Effect of Requested Changes in Face Amount............................. 23
Insurance Protection.................................................... 23
Changing the Death Benefit Option....................................... 24
Payment and Allocation of Premiums...................................... 25
Issuing the Policy...................................................... 25
Coverage............................................................... 25
Minimum Initial Premium................................................ 25
Temporary Insurance.................................................... 25
Allocating Premiums..................................................... 25
Crediting Net Premiums................................................. 26
Refunding Premiums..................................................... 26
Amount and Timing of Premiums........................................... 26
Planned Periodic Premiums............................................... 27
Paying Premiums by Mail................................................. 27
Death Benefit Guarantee................................................. 27
Requirements............................................................ 28
Accumulation Value...................................................... 28
Illustration of Policy Benefits......................................... 29
Specialized Uses of the Policy.......................................... 29
Policy Lapse and Reinstatement.......................................... 30
Lapse.................................................................. 30
Reinstatement.......................................................... 30
Surrender Benefits...................................................... 30
Total Surrender......................................................... 30
Partial Withdrawal...................................................... 31
Effect of Partial Withdrawals.......................................... 31
Transfers............................................................... 31
Telephone/Fax Instructions............................................. 32
Dollar Cost Averaging Service.......................................... 32
Portfolio Rebalancing Service.......................................... 33
Transfer Limits........................................................ 33
Transfer Charges....................................................... 33
Policy Loans............................................................ 33
General................................................................ 33
Immediate Effect of Policy Loans....................................... 34
Effect on Investment Performance....................................... 34
Effect on Policy Coverage.............................................. 34
Interest............................................................... 35
Repayment of Loan Amount............................................... 35
Tax Considerations..................................................... 35
Free Look and Conversion Rights......................................... 35
Free Look Rights........................................................ 35
Conversion Rights....................................................... 35
General Option......................................................... 35
Additional Information on the Investments of the Variable Account....... 36
Investment Limits....................................................... 36
Addition, Deletion, or Substitution of Investments...................... 36
Voting Rights........................................................... 37
Disregarding Voting Instructions....................................... 37
General Provisions...................................................... 38
Benefits After Age 100.................................................. 38
Ownership............................................................... 38
Proceeds................................................................ 38
Beneficiary............................................................. 38
Postponement of Payments................................................ 38
Settlement Options...................................................... 38
Interest on Settlement Options......................................... 39
3
Incontestability........................................................ 39
Misstatement of Age and Sex............................................. 39
Suicide................................................................. 39
Termination............................................................. 40
Amendment............................................................... 40
Reports................................................................. 40
Annual Statement....................................................... 40
Projection Report...................................................... 40
Other Reports.......................................................... 40
Dividends............................................................... 40
Collateral Assignment................................................... 40
Optional Insurance Benefits............................................. 40
Four Year Term Rider (FTR)............................................. 40
Survivorship Term Rider (STR).......................................... 40
Policy Split Option Rider (PSO)........................................ 41
Additional Insured Rider (AIR)......................................... 41
Full Death Benefit Rider (FDB)......................................... 41
Federal Tax Matters..................................................... 41
Introduction............................................................ 41
Tax Status of the Policy................................................ 41
Tax Treatment of Policy Benefits........................................ 42
In General............................................................. 42
Modified Endowment Contracts........................................... 42
Distributions from Modified Endowment Contracts........................ 42
Distributions from Policies That Are Not Modified Endowment Contracts.. 42
Policy Loans........................................................... 43
Multiple Policies...................................................... 43
Taxation of ReliaStar Life Insurance Company............................ 43
Possible Changes in Taxation............................................ 43
Other Considerations.................................................... 43
Legal Developments Regarding Employment-Related Benefit Plans........... 43
Distribution of the Policies............................................ 44
Management.............................................................. 44
Directors and Officers.................................................. 44
State Regulation........................................................ 48
Montana Residents....................................................... 48
Legal Proceedings....................................................... 48
Bonding Arrangements.................................................... 48
Legal Matters........................................................... 48
Experts................................................................. 49
Registration Statement Contains Further Information..................... 49
Financial Statements.................................................... 49
Appendices.............................................................. A-1
THE POLICY MAY NOT BE AVAILABLE IN ALL JURISDICTIONS. THIS PROSPECTUS
CONSTITUTES AN OFFERING OR SOLICITATION ONLY IN THOSE JURISDICTIONS WHERE SUCH
OFFERING OR SOLICITATION MAY LAWFULLY BE MADE.
RELIASTAR HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS REGARDING THE POLICY OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR THE ACCOMPANYING FUND PROSPECTUSES. DO NOT RELY ON ANY SUCH
INFORMATION OR REPRESENTATIONS.
4
DEFINITIONS
ACCUMULATION VALUE. The total value attributable to a specific Policy, which
equals the sum of the Variable Accumulation Value (the total of the values in
each Sub-Account of the Variable Account) and the Fixed Accumulation Value
(the value in the Fixed Account). See "Accumulation Value" at page 28, and
Appendix B.
AVERAGE AGE. The sum of the ages of the Joint Insureds divided by two and
rounded to the higher age.
CASH SURRENDER VALUE. The Accumulation Value less any Surrender Charge, Loan
Amount and unpaid Monthly Deductions.
CASH VALUE. The Accumulation Value less any Surrender Charge.
CODE. Internal Revenue Code of 1986, as amended.
DEATH BENEFIT. The amount determined under the applicable Death Benefit Option.
The proceeds payable to the beneficiary of the Policy upon the death of the
Surviving Joint Insured will be reduced by any Loan Amount and any unpaid
Monthly Deductions. See "Death Benefit" at page 21.
DEATH BENEFIT GUARANTEE. A feature guaranteeing that the Policy will not lapse
during the Death Benefit Guarantee Period specified in your Policy if, on
each Monthly Anniversary, the total premiums paid on the Policy, less any
partial withdrawals and any Loan Amount, equals or exceeds the total required
Minimum Monthly Premium payments specified in your Policy. See "Death Benefit
Guarantee" at page 27.
DEATH BENEFIT OPTIONS. One of three death benefit options available under the
Policy (the Level Amount Option, the Variable Amount Option, and the Face
Amount Plus Premium Amount Option). See "Death Benefit -- Death Benefit
Options" at page 22.
FACE AMOUNT. The minimum Death Benefit under the Policy to age 100 of the
Younger Joint Insured as long as the Policy remains in force except for Death
Benefit Option C when withdrawals exceed premiums. See "Death Benefit" at
page 21.
FIXED ACCOUNT. ReliaStar Life Insurance Company's assets other than those
allocated to the Variable Account or any other separate account. See
Appendix A.
FIXED ACCUMULATION VALUE. The value attributable to a specific Policy based on
amounts in the Fixed Account. Unlike the Variable Accumulation Value, the
Fixed Accumulation Value will not reflect the investment performance of the
Funds. See "Accumulation Value" at page 28 and Appendix B.
FUNDS. Any open-end management investment company (or portfolio thereof) or unit
investment trust (or series thereof) in which a Sub-Account invests. See
"Summary" at page 7 and "Fund Expenses" at page 18.
INITIAL PREMIUM TRANSFER DATE. The Initial Premium Transfer Date shown in the
Policy. It is generally 16 days after the print date of the Policy or if
later the date we receive from you final material required to put the
Policy in force.
ISSUE DATE. The date insurance coverage under a Policy begins.
JOINT INSUREDS. The persons upon whose lives this Policy is based.
LOAN AMOUNT. The sum of all unpaid Policy loans including unpaid interest due
thereon. See "Policy Loans" at page 33.
MINIMUM FACE AMOUNT. The minimum Face Amount shown in the Policy (currently
$250,000).
MINIMUM MONTHLY PREMIUM. A monthly premium amount that we determine when we
issue the Policy. Your Policy will specify this amount. See "Death Benefit
Guarantee" at page 27.
MONTHLY ANNIVERSARY. The same date in each succeeding month as the Policy Date.
If the Monthly Anniversary falls on a date other than a Valuation Date, then
the Monthly Anniversary will be the next Valuation Date. The first Monthly
Anniversary is on the Policy Date.
MONTHLY DEDUCTION. A monthly charge we deduct from the Accumulation Value of
the Policy. See "Deductions and Charges -- Monthly Deduction" at page 14.
5
NET PREMIUM. The premium you pay less a Premium Expense Charge.
PLANNED PERIODIC PREMIUM. The scheduled premium you select of a level amount
at a fixed interval. The Policy will show the initial Planned Periodic
Premium you select. See "Payment and Allocation of Premiums -- Planned
Periodic Premiums" at page 27.
POLICY. The survivorship flexible premium variable life insurance policy
described in this prospectus.
POLICY ANNIVERSARY. The same date in each succeeding year as the Policy Date. If
the Policy Anniversary falls on a date other than a Valuation Date, the
Policy Anniversary will be the next Valuation Date.
POLICY DATE. The date shown on your Policy that ReliaStar uses to determine
Policy Years, Policy Months, Monthly Anniversaries, and Policy Anniversaries.
POLICY MONTH. A one-month period beginning on a Monthly Anniversary.
POLICY YEAR. A 12-month period beginning on a Policy Anniversary.
PREMIUM EXPENSE CHARGE. An amount not to exceed 6.25% in Policy Years 1-10 and
currently 3.75% (guaranteed not to exceed 6.25%) thereafter ReliaStar deducts
from each premium payment resulting in the Net Premium. See "Deductions and
Charges -- Premium Expense Charge" at page 14.
RATE CLASS. A group of Insureds we determine based on our expectation that
they will have similar mortality experience.
SEC. Securities and Exchange Commission.
SIGNATURE GUARANTEE. A guarantee of your signature by a member firm of the New
York, American, Boston, Midwest, Philadelphia, or Pacific Stock Exchange, or
by a commercial bank which is a member of the Federal Deposit Insurance
Corporation, or, in certain cases, by a member firm of the National
Association of Securities Dealers, Inc. that has entered into an appropriate
agreement with us.
SUB-ACCOUNT. A sub-division of the Variable Account that invests exclusively
in the shares of a specified Fund.
SURRENDER CHARGE. A charge imposed upon total surrender or lapse of the Policy
during the first 15 Policy Years and the first 15 years following any
requested increase in Face Amount. See "Deduction and Charges -- Surrender
Charge" at page 16.
SURVIVING JOINT INSURED. The Joint Insured who remains alive after the other
Joint Insured has died.
UNIT VALUE. The unit measure by which we determine the value of the Policy's
interest in each Sub-Account. See Appendix B.
VALUATION DATE. Each day the New York Stock Exchange is open for business
except for days that a Sub-Account's corresponding Fund does not value its
shares. The New York Stock Exchange is currently closed on weekends and on
the following holidays: New Year's Day; Rev. Dr. Martin Luther King, Jr.
Day; Presidents' Day; Good Friday; Memorial Day; July Fourth; Labor Day;
Thanksgiving Day; and Christmas Day. See Appendix B.
VALUATION PERIOD. The period beginning at the close of business on a Valuation
Date and ending at the close of business on the next Valuation Date. See
Appendix B.
VARIABLE ACCOUNT. Select*Life Variable Account, a separate investment account we
established to receive and invest Net Premiums paid under the Policy and
other variable life insurance policies we issue. See "The Variable Account"
at page 8.
VARIABLE ACCUMULATION VALUE. The value attributable to a specific Policy based
on amounts in the Variable Account. See "Accumulation Value" at page 28 and
Appendix B.
WE, US, OUR, THE COMPANY, OR RELIASTAR. ReliaStar Life Insurance Company.
YOU, YOUR. The Policy owners as designated in the application for the Policy
or as subsequently changed. If a Policy has been absolutely assigned, the
assignee is the Policy owner. A collateral assignee is not the Policy
owner.
6
PART 1. SUMMARY
This is a brief summary of the Policy's features. Please read the entire
Prospectus and the Policy for more detailed information.
THE POLICY
The Accumulation SVUL is a survivorship flexible premium variable life
insurance contract with death benefits, cash values, and other features of
traditional life insurance contracts. The Policies are:
o "SURVIVORSHIP" because the death benefit is paid at the Surviving Joint
Insured's death;
o "FLEXIBLE PREMIUM" because you do not have to pay premiums according to a
fixed schedule; and
o "VARIABLE" because Accumulation Values and, under certain circumstances,
the Death Benefit will increase and decrease based on the investment
performance of the Funds corresponding to the Sub-Accounts to which you
allocate your premium payments.
Under current Federal tax law, as long as the Policy qualifies as life
insurance, Accumulation Value increases will be subject to the same Federal
income tax treatment as traditional life insurance cash values. Therefore, any
increases should accumulate on a tax deferred basis until you request a
distribution. See "Federal Tax Matters -- Tax Status of the Policy." The
following chart outlines the various features, charges, and expenses of the
Policies. Additional detailed information pertaining to charges and expenses is
contained in this Summary and in "Deductions and Charges."
HOW ACCUMULATION SVUL WORKS
[FLOW CHART]
PREMIUM PAYMENTS
MINUS
PREMIUM EXPENSE CHARGES
Invested in Variable Sub-Accounts
or Fixed Account
Variable Sub-Accounts Fixed Account
AIM Alger Fidelity(R) Janus
Neuberger Berman OpCap Pilgrim Putnam
PLUS
INVESTMENT RETURN
(Net of Fund Expenses)
MINUS
MONTHLY DEDUCTIONS
* Monthly Amount Charge
* Monthly Administrative Charge * Mortality and Expense Risk Charge
* Cost of Insurance * Optional Benefit Charges
MINUS
PARTIAL WITHDRAWALS
EQUALS
ACCUMULATION VALUE
(Provides Living Benefits
and Death Benefits)
LIVING BENEFITS DEATH BENEFITS
ACCUMULATION VALUE ACCUMULATION VALUE
MINUS PLUS
SURRENDER CHARGE NET AMOUNT AT RISK
EQUALS EQUALS
CASH VALUE DEATH BENEFIT
MINUS MINUS
POLICY LOAN POLICY LOAN
EQUALS EQUALS
CASH SURRENDER VALUE DEATH BENEFIT PROCEEDS
7
FREE LOOK RIGHTS o If you return the Policy to us by midnight of the 10th
day after you receive it, we will send you a refund of
all premiums paid unless otherwise stipulated by state
law. See "Free Look and Conversion Rights -- Free Look
Rights."
o Certain states may require a longer period of time for
the free look period and refund a different amount.
PREMIUM PAYMENTS o You choose when to pay and how much to pay. o We may
refuse to accept any premium less than $25.
o You cannot pay additional premiums after Age 100 of the
younger Joint Insured except as needed to keep your
Policy in force for the remainder of the current Policy
Year.
o We may refuse any premium that would disqualify your
Policy as life insurance under Section 7702 of the Code.
o You may pay enough premiums to maintain the Death
Benefit Guarantee in order to keep the Policy in force
during at least the first several Policy Years. See
"Death Benefit Guarantee" and "Payment and Allocation of
Premiums -- Amount and Timing of Premiums."
o We deduct a Premium Expense Charge (currently 6.25% of
each premium payment in Policy Years 1-10 and 3.75%
(guaranteed not to exceed 6.25%) of each premium after
the tenth Policy Year) and credit the remaining premium
(the Net Premium) to the Variable Account or the Fixed
Account according to your instructions. See "Deductions
and Charges -- Premium Expense Charge."
THE VARIABLE ACCOUNT o Select*Life Variable Account is one of our separate
(Select*Life Variable accounts and consists of several Sub-Accounts. We only
Account) invest premiums from our variable life insurance
policies in the Variable Account.
o We invest any Net Premiums you allocate to each
Sub-Account in shares of the Fund related to that
Sub-Account.
o Variable Accumulation Value will vary with the
investment performance of the Funds and the charges
deducted from the Variable Accumulation Value. See
"Accumulation Value."
THE FIXED ACCOUNT o Consists of all of our assets other than those in our
separate accounts (including the Variable Account).
o We credit interest of at least 3% per year on any
amounts you allocate to the Fixed Account.
o We may, in our sole discretion, credit interest in
excess of 3%. See Appendix A, "The Fixed Account."
THE FUNDS o You can instruct ReliaStar to place your Net Premium in,
or transfer to, the following investment portfolios.
8
The following chart lists the currently available Funds and outlines
certain of their important characteristics.
INVESTMENT FUNDS
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
=================== ================== ========================== ============== ============== =================
AIM AIM V.I. Dent A I M
Variable Demographic Advisors, Inc./
Insurance Funds Trends Fund H.S. Dent Advisors, Inc.
Houston, TX
=================================================================================================================
Alger Alger American Fred Alger
American Growth Management, Inc.
Portfolio
New York, N.Y.
---------------------------------------------------------------------------------------------
Alger American Fred Alger
Leveraged Management, Inc.
All Cap Portfolio
---------------------------------------------------------------------------------------------
Alger American Fred Alger
MidCap Management, Inc.
Growth
Portfolio
---------------------------------------------------------------------------------------------
Alger American Fred Alger
Small Management, Inc.
Capitalization
Portfolio
=================================================================================================================
Fidelity VIP Fidelity Management X
Investments(R) Equity-Income & Research Company
Portfolio
Boston, Mass.
---------------------------------------------------------------------------------------------
VIP Growth Fidelity Management
Portfolio & Research Company
---------------------------------------------------------------------------------------------
VIP Fidelity Management X
High Income & Research Company
Portfolio
---------------------------------------------------------------------------------------------
VIP Fidelity Management X
Money Market & Research Company
Portfolio
---------------------------------------------------------------------------------------------
VIP II Fidelity Management
Contrafund(R) & Research Company
Portfolio
---------------------------------------------------------------------------------------------
VIP II Fidelity Management X
Index 500 & Research Company
Fidelity Portfolio
Investments(R) ---------------------------------------------------------------------------------------------
is a registered VIP II Fidelity Management X
trademark of Investment & Research Company
FMR Corp. Grade Bond
Portfolio
=================================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
=================== =============== ========== ======== ================== ========================== ===========================
AIM X Long-term growth Securities of companies
Variable of capital that are likely to benefit
Insurance Funds from changing
demographic, economic
and lifestyle trends
Houston, TX
=================================================================================================================================
Alger X Long-term capital Equity securities of
American appreciation large companies
New York, N.Y.
-------------------------------------------------------------------------------------------------------------
X Long-term capital Equity securities of
appreciation companies of any size
-------------------------------------------------------------------------------------------------------------
X Long-term capital Equity securities
appreciation within the range of
S&P(R) MidCap 400
Index
-------------------------------------------------------------------------------------------------------------
X Long-term capital Equity securities
appreciation within the range of
Russell(R) 2000 Growth
and S&P(R) SmallCap 600
Indexes
=================================================================================================================================
Fidelity Reasonable income; Income-producing
Investments(R) also considers potential equity securities and
for capital appreciation debt obligations
Boston, Mass.
-------------------------------------------------------------------------------------------------------------
X Capital appreciation Common stocks
-------------------------------------------------------------------------------------------------------------
High current income Income-producing
debt securities,
preferred stocks and
convertible securities,
with an emphasis
on lower-quality
debt securities
-------------------------------------------------------------------------------------------------------------
High current income U.S. dollar-denominated
consistent with money market
preservation of capital securities
and liquidity
-------------------------------------------------------------------------------------------------------------
X Capital appreciation Securities of
companies whose
value the adviser
believes is not
fully recognized
by the public
-------------------------------------------------------------------------------------------------------------
Total return that Common stocks of
corresponds to that of S&P 500
Fidelity S&P 500 Index
Investments(R) -------------------------------------------------------------------------------------------------------------
is a registered High current income Investment-grade
trademark of consistent with intermediate fixed
FMR Corp. preservation of capital income securities
=================================================================================================================================
9
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
================= ================== =================== ============== ============== =================
Janus Aspen Series Janus
Aggressive Capital
Denver, Co. Growth Corporation
Portfolio
--------------------------------------------------------------------------------------
Aspen Series Janus
Growth Capital
Portfolio Corporation
--------------------------------------------------------------------------------------
Aspen Series Janus
International Capital
Growth Corporation
Portfolio
--------------------------------------------------------------------------------------
Aspen Series Janus
Worldwide Capital
Growth Corporation
Portfolio
======================================================================================
Neuberger Advisers Neuberger Berman X
Berman Management Management/
Trust Limited Neuberger Berman,
Maturity Bond LLC
Portfolio
--------------------------------------------------------------------------------------
New York, N.Y. Advisers Neuberger Berman
Management Management/
Trust Partners Neuberger Berman,
Portfolio LLC
--------------------------------------------------------------------------------------
Advisers Neuberger Berman
Management Management/
Trust Socially Neuberger Berman,
Responsive LLC
Portfolio
=========================================================================================================
OCC OCC Accumulation OpCap
Trust Equity Advisors
New York, N.Y. Portfolio
--------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Global Advisors
Equity Portfolio
--------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Managed Advisors
Portfolio
--------------------------------------------------------------------------------------
OCC Accumulation OpCap
Trust Small Advisors
Cap Portfolio
=========================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
================= =============== ========== ======== ================== ======================= =========================
Janus X Long-term growth of Nondiversified portfolio
capital of common stocks
Denver, Co.
--------------------------------------------------------------------------------------------------------
Long-term capital Diversified common
X growth stocks
--------------------------------------------------------------------------------------------------------
X Long-term capital Foreign issuers of
growth common stocks
--------------------------------------------------------------------------------------------------------
X Long-term capital Foreign and domestic
growth common stocks
==========================================================================================================================
Neuberger High current income Short to
Berman consistent with low intermediate term
risk to principal and investment-grade debt
liquidity and securities
secondarily total
return
--------------------------------------------------------------------------------------------------------
New York, N.Y. X Capital growth Common stocks of
medium- and large-
capitalization
companies
--------------------------------------------------------------------------------------------------------
X Long-term Common stocks of
capital growth companies that meet
both financial and
social criteria
==========================================================================================================================
OCC X Long-term capital Securities of
appreciation undervalued
New York, N.Y. companies
--------------------------------------------------------------------------------------------------------
X Long-term capital Global investments in
appreciation equity securities
--------------------------------------------------------------------------------------------------------
X Growth of capital Common stocks,
bonds and cash
equivalents
--------------------------------------------------------------------------------------------------------
X Capital appreciation Equity securities of
companies under
$1 billion
==========================================================================================================================
10
ADVISER/
FUND GROUP FUND SUBADVISER MONEY MARKET FIXED INCOME GROWTH & INCOME
==================== ================= ====================== ============== ============== =================
Pilgrim Pilgrim VP Pilgrim
Growth Investments, Inc.
Scottsdale, AZ Opportunities
Portfolio
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim Investments,
Growth + Value Inc./Navellier Fund
Portfolio Management, Inc.
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim X
High Yield Investments, Inc.
Portfolio
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim Investments,
International Inc./Brandes
Value Portfolio Investment
Partners
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim
MagnaCap Investments, Inc. X
Portfolio
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim
MidCap Investments, Inc.
Opportunities
Portfolio
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim Investments,
Research Inc./J.P. Morgan
Enhanced Investment
Index Portfolio Management Inc.
---------------------------------------------------------------------------------------
Pilgrim VP Pilgrim
SmallCap Investments, Inc.
Opportunities
Portfolio
============================================================================================================
Putnam Putnam Putnam Investment X
Investments, Inc. VT Growth and Management, Inc.
Income Fund --
Class IA Shares
---------------------------------------------------------------------------------------
Boston, Mass. Putnam Putnam Investment
VT New Management, Inc.
Opportunities
Fund -- Class IA
Shares
---------------------------------------------------------------------------------------
Putnam VT Putnam Investment
Voyager Fund -- Management, Inc.
Class IA Shares
============================================================================================================
[WIDE TABLE CONTINUED FROM ABOVE]
PRIMARY
FUND GROUP INTERNATIONAL BALANCED GROWTH AGGRESSIVE GROWTH OBJECTIVE(S) INVESTMENTS
==================== =============== ========== ======== ================== ======================== =======================
Pilgrim X Long-term capital Common stocks
growth
Scottsdale, AZ
-------------------------------------------------------------------------------------------------------
X Capital appreciation Equity securities
-------------------------------------------------------------------------------------------------------
High current yield and High-yield bonds
capital appreciation
-------------------------------------------------------------------------------------------------------
X Long-term capital International equities
appreciation
-------------------------------------------------------------------------------------------------------
Capital growth Common stocks
-------------------------------------------------------------------------------------------------------
X Long-term capital Common stocks of
appreciation mid-sized
U.S. companies
-------------------------------------------------------------------------------------------------------
X Capital Common stocks
appreciation
-------------------------------------------------------------------------------------------------------
X Capital Common stocks
appreciation of smaller
lesser known
U.S. companies
============================================================================================================================
Putnam Capital growth & Value stocks
Investments, Inc. current income
Boston, Mass.
-------------------------------------------------------------------------------------------------------
X Long-term capital Growth stocks
appreciation
-------------------------------------------------------------------------------------------------------
X Capital appreciation Growth stocks
============================================================================================================================
For each Fund's expenses, see page 18 of this Prospectus and the Prospectus
for the Funds.
CHARGES AGAINST THE ACCUMULATION VALUE
The Accumulation Value of the Policy is subject to the Monthly Deduction
charges. We will deduct the Monthly Deduction each month from both the Fixed
Accumulation Value and the Variable Accumulation Value on a proportionate basis
depending on their relative Accumulation Values at that time. See "Deductions
and Charges -- Monthly Deduction".
The Monthly Deduction includes:
o A charge for the cost of insurance -- varies based on each Joint Insured's
sex, Issue Age, Policy Year, Rate Class and Face Amount.
o Monthly Administrative Charge -- currently $8.25 per month and guaranteed
not to exceed $12.00 per month.
o Monthly Mortality and Expense Risk Charge -- during the first 10 Policy
Years it is equal to 1/12 of .90% of the Variable Accumulation Value. Each
month thereafter it is 1/12 of .25% of the Variable Accumulation Value but
guaranteed not to exceed 1/12 of .90% of the Variable Accumulation Value.
11
o Monthly Amount Charge -- a monthly charge that varies by the Issue Age and
Rate Class of each Joint Insured and the Face Amount, and is assessed
during the first 20 Policy Years (and first 20 years after a Face Amount
increase).
o Any charges for optional insurance benefits -- vary depending upon the
benefit(s) selected.
CHARGE UPON LAPSE OR TOTAL SURRENDER OF THE POLICY
o We assess a Surrender Charge if your Policy lapses or if you surrender the
Policy during the first 15 Policy Years (or during the first 15 years
following a Face Amount increase).
o We will determine the maximum Surrender Charge for the initial Face Amount
and any requested increases in Face Amount on the Policy Date and on the
effective date of any such requested increase.
o The maximum Surrender Charge for the initial Face Amount will depend on
the initial Face Amount, and the Issue Age, Sex and Rate Class of each
Joint Insured.
o You do not pay this charge if the Policy remains in force during the
entire relevant 15-year period. See "Deductions and Charges -- Surrender
Charge".
SURRENDERS o In general, you will receive the Cash Surrender Value if
you surrender the Policy.
o To determine the Cash Surrender Value, we reduce your
Accumulation Value by the Surrender Charge (applicable
for 15 years from Policy Issue Date and increase in Face
Amount), and any Loan Amount and unpaid Monthly
Deductions. See "Surrender Benefits -- Total Surrender".
o The maximum Surrender Charge on the Initial Face Amount
and any subsequent Face Amount increases will be
calculated for each Policy and will be shown in your
Policy. This maximum charge then remains level during
the first five years (adjusted for increases in the
first three years) in the relevant 15 year period, and
then reduces in equal monthly increments until it
becomes zero at the end of 15 years.
PARTIAL WITHDRAWALS o Once each Policy Year, you can withdraw part of your
Cash Surrender Value.
o You will not incur a Surrender Charge, but partial
withdrawals are subject to a processing charge
(currently $10, guaranteed not to exceed $25). See
"Surrender Benefits -- Partial Withdrawal".
LOANS o Depending on your state of residence, you can borrow up
to 90% of your Policy's Cash Value less any existing
Loan Amount.
o Interest is payable in advance for each Policy Year and
accrues daily at an effective annual rate that will not
exceed 4.762%.
o After the 10th Policy Year, we currently charge interest
at an annual rate of 2.913% (guaranteed not to exceed
3.382%) on the portion of your Loan Amount that is not
in excess of (1) the Accumulation Value, less (2) the
total of all premiums paid net of all partial
withdrawals.
o We reserve the right to limit borrowing during the first
Policy Year. See "Policy Loans".
TRANSFERS o Currently, you can transfer all or part of your
Accumulation Value among the investment options.
o We currently do not limit the number of transfers per
Policy Year. We reserve the right to limit you to 12
transfers per policy year.
o There are certain restrictions on transfers from the
Fixed Account.
o We currently make no charge for the first 24 transfers
in a Policy Year. We make a $25 charge for each
subsequent transfer. We reserve the right to make a
maximum charge of $25 for each transfer. See
"Transfers".
12
DEATH BENEFIT OVERVIEW
You may choose one of two Death Benefit Qualification Tests for compliance
with Code Section 7702(s) definition of "life insurance": (1) the Guideline
Premium Test; and (2) the Cash Value Accumulation Test.
You also can choose one of three Death Benefit Options:
o Level Amount Option -- whereby the Death Benefit before Age 100 of the
younger Joint Insured is the greater of the Face Amount or the corridor
percentage of Accumulation Value;
o Variable Amount Option -- whereby the Death Benefit before Age 100 of the
younger Joint Insured is equal to the greater of the Face Amount plus the
Accumulation Value, or the corridor percentage of Accumulation Value; or
o Face Plus Premium Amount Option -- whereby the Death Benefit before Age
100 of the younger Joint Insured is the greater of the Face Amount plus
premiums less withdrawals, or the corridor percentage of the Accumulation
Value. See "Death Benefit".
The Death Benefit before Age 100 of the younger Joint Insured under the
Level Amount Option and the Variable Amount Option will never be less than the
Face Amount as long as the Policy is in force and there is no Loan Amount or
unpaid Monthly Deduction. The Death Benefit before Age 100 of the younger Joint
Insured under the Face Plus Premium Amount Option may be less than the Face
Amount if cumulative withdrawals exceed cumulative premiums paid. After Age 100
of the younger Joint Insured, the Death Benefit under all Death Benefit Options
will be the Accumulation Value.
We will reduce the proceeds payable upon the death of the Surviving Joint
Insured under any Death Benefit Option by any Loan Amount and any unpaid Monthly
Deductions.
ADJUSTING THE DEATH BENEFIT
After the first four Policy Years, you have flexibility to adjust the Death
Benefit by increasing or decreasing the Face Amount. You cannot decrease the
Face Amount below the Minimum Face Amount shown in the Policy. Any increase in
the Face Amount may require additional evidence of insurability satisfactory to
us and will result in additional charges. See "Death Benefit -- Requested
Changes in Face Amount".
Generally, you may also change the Death Benefit Option at any time after
the fourth Policy Year. See "Death Benefit -- Change in Death Benefit Option".
See "Death Benefit -- Insurance Protection" for a discussion of available
techniques to adjust the amount of insurance protection to satisfy changing
insurance needs.
DEATH BENEFIT GUARANTEE
If you meet the requirements for the Death Benefit Guarantee, we will not
lapse your Policy during the Death Benefit Guarantee Period even if the Cash
Surrender Value is not sufficient to cover the Monthly Deduction that is due.
See "Death Benefit Guarantee".
LAPSE
If the Death Benefit Guarantee is not in effect, the Policy will lapse if
the Cash Surrender Value is less than the Monthly Deduction due and if you do
not make a sufficient payment during the grace period of 61 days. See "Policy
Lapse and Reinstatement".
TAXATION OF DEATH BENEFIT PROCEEDS
Under current Federal tax law, as long as the Policy qualifies as life
insurance the Death Benefit under the Policy will be subject to the same Federal
income tax treatment as proceeds of traditional life insurance. Therefore, the
Death Benefit should not be taxable income to the beneficiary. See "Federal Tax
Matters -- Tax Status of the Policy".
TAXATION OF THE POLICY
The Company intends for the Policy to satisfy the definition of a life
insurance contract under Section 7702 of the Code. Under certain circumstances,
a Policy could be treated as a "modified endowment contract." The Company will
monitor Policies and will attempt to notify an owner on a timely basis if his
or her Policy is in jeopardy of becoming a modified endowment contract. See
"Federal
13
Tax Matters" for further discussion of the tax status of a Policy and the tax
consequences of being treated as a life insurance contract or a modified
endowment contract.
A Policy lapse, surrender, partial withdrawal or loan may have adverse tax
consequences in certain circumstances. See "Federal Tax Matters."
PART 2. DETAILED INFORMATION
RELIASTAR LIFE INSURANCE COMPANY
ReliaStar Life Insurance Company is a stock life insurance company
organized in 1885 and incorporated under the laws of the State of Minnesota. We
offer individual life insurance and annuities, employee benefits and retirement
contracts. Our Home Office is at 20 Washington Avenue South, Minneapolis,
Minnesota 55401 (telephone 612-372-5507). We are an indirect, wholly owned
subsidiary of ING Groep, N.V. ING is a global financial institution active in
the field of insurance, banking, and asset management in more than 60 countries,
with almost 90,000 employees.
From time to time, we may publish in advertisements, sales literature, and
reports, the ratings and other information assigned to us by one or more
independent rating organizations such as A.M. Best Company, Standard & Poor's,
Moody's, and Duff & Phelps. The purpose of the ratings is to reflect our
financial strength and/or claims-paying ability and should not be considered as
bearing on the investment performance of assets held in the Variable Account.
Each year the A.M. Best Company reviews the financial status of many insurers,
culminating in the assignment of Best's Ratings. These ratings reflect their
current opinion of the relative financial strength and operating performance of
an insurance company in comparison to the norms of the life/health insurance
industry. We have been assigned a rating of A+ by A.M. Best, which is a rating
assigned to companies demonstrating superior overall performance and a very
strong ability to meet obligations to policyholders over a long period. Such
ratings do not reflect the investment in the Variable Account.
ReliaStar is a charter member of the Insurance Marketplace Standard
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.
THE POLICIES
The Policies are survivorship flexible premium variable life insurance
contracts with death benefits, cash values, and other features of traditional
life insurance contracts.
DEDUCTIONS AND CHARGES
We deduct certain charges in connection with the Policy to compensate us
for (1) providing the insurance benefits of the Policy (including any riders),
(2) administering the Policy, (3) assuming certain risks in connection with the
Policy, and (4) incurring expenses in distributing the Policy.
We deduct some charges from each premium payment. We deduct certain other
charges monthly from both the Fixed Account and the Variable Account. We also
assess a charge for each partial withdrawal and we may assess a charge for each
transfer.
We may realize a profit on one or more of these charges, such as the
mortality and expense risk charge. We may use any such profits for any proper
corporate purpose, including, among other things, payments of sales expenses.
PREMIUM EXPENSE CHARGE
We deduct the Premium Expense Charge from each premium payment. The Premium
Expense Charge is guaranteed not to exceed 6.25% of each premium payment. The
charge is currently 6.25% of each premium payment in Policy Years 1-10 and 3.75%
of each premium after the tenth Policy Year. The amount remaining after we
deduct the Premium Expense Charge is called the Net Premium.
MONTHLY DEDUCTION
We deduct the charges described below from the Accumulation Value of the
Policy on a monthly basis. The total of these charges is called the Monthly
Deduction.
14
We will deduct the Monthly Deduction on each Monthly Anniversary from the
Fixed Account and the Sub-Accounts of the Variable Account on a proportionate
basis depending on their relative Accumulation Values at that time. For purposes
of determining these proportions, we reduce the Fixed Accumulation Value by the
Loan Amount. Because the cost of insurance portion of the Monthly Deduction can
vary from month to month, the Monthly Deduction itself will vary in amount from
month to month.
If the Cash Surrender Value is not sufficient to cover the Monthly
Deduction on a Monthly Anniversary, the Policy may lapse. See "Death Benefit
Guarantee" and "Policy Lapse and Reinstatement".
COST OF INSURANCE. We will determine the monthly cost of insurance by
multiplying the applicable cost of insurance rate or rates by the net amount at
risk under the Policy. The net amount at risk under the Policy for a Policy
Month is (1) the Death Benefit at the beginning of the Policy Month divided by
1.00002466 (which reduces the net amount at risk, solely for purposes of
computing the cost of insurance, by taking into account assumed monthly earnings
at an annual rate of 3%), less (2) the Accumulation Value at the beginning of
the Policy Month (reduced by any charges for rider benefits). As a result, the
net amount at risk may be affected by changes in the Accumulation Value or in
the Death Benefit.
The Rate Class of any Joint Insured may affect the cost of insurance. A
Rate Class is a group of Insureds we determine based upon our expectation that
they will have similar mortality experience. We currently place Insureds into
standard Rate Classes or into substandard Rate Classes that involve a higher
mortality risk. In an otherwise identical Policy, an Insured in the standard
Rate Class will have a lower cost of insurance than an Insured in a Rate Class
with higher mortality risks.
If there is an increase in the Face Amount and the Rate Class applicable to
the increase is different from that for the initial Face Amount or any prior
requested increases in Face Amount, the net amount at risk will be calculated
separately for each Rate Class. For purposes of determining the net amount at
risk for each Rate Class, we will first assume the Accumulation Value to be part
of the initial Face Amount. If the Accumulation Value is greater than the
initial Face Amount, it will then be assumed to be part of each increase in
order, starting with the first increase.
We base cost of insurance rates on the sex, Issue Age, Policy Year and Rate
Class(es) of each Joint Insured. The actual monthly cost of insurance rates will
reflect our expectations as to future experience. They will not, however, be
greater than the guaranteed cost of insurance rates shown in the Policy, which
are based on the Commissioner's 1980 Standard Ordinary Mortality Tables for
smokers or nonsmokers, respectively.
MONTHLY ADMINISTRATIVE CHARGE. Each month we deduct an administrative
charge of $8.25 which is guaranteed not to exceed $12.00 each month.
MONTHLY AMOUNT CHARGE. Each month during the first 20 Policy Years (and for
20 years following any requested increase in Face Amount) we will deduct a
monthly charge per $1,000 of Face Amount. For a Policy issued in New Jersey, the
reduction of these charges after the first 20 Policy Years is not guaranteed,
and these charges may be assessed for the duration of the Policy. The amount of
this charge will vary by the Face Amount and the sex, Rate Class and Issue Age
of each Joint Insured on the Policy Date (or on the effective date of any Face
Amount increase). These Monthly Amount Charges are shown in Appendix . Any
decreases in Face Amount or any change in Face Amount resulting from a change in
the Death Benefit Option will not affect the Monthly Amount Charge. The maximum
amount of this charge is $0.70 per $1,000 of Face Amount for a two male Joint
Insureds both Issue Age 85. Most Policies will have a lower Monthly Amount
Charge. This charge compensates us for expenses relating to the distribution of
the Policy, including agents' commissions, advertising, and the printing of the
prospectus and sales literature for new sales of the Policy. A portion of this
charge may also contribute to Company profits.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE. Each month during the first 10
Policy Years we will deduct a charge at an annual rate of .90% of the Variable
Accumulation Value of the Policy. Each month thereafter, it is currently
anticipated that we will deduct this charge at an annual rate of .25% of the
Variable Accumulation Value but in no event will it exceed .90% for the duration
of the Policy. The mortality risk assumed is that Joint Insureds may live for a
shorter period of time than we estimated and that, as a result, we would have to
pay a greater amount in Death Benefits than we collect in premium payments. The
expense risk assumed is that expenses incurred in issuing and administering the
Policy will be greater than we estimated.
15
OPTIONAL INSURANCE BENEFIT CHARGES. Each month we deduct charges for any
optional insurance benefits added to the Policy by rider. See "General
Provisions -- Optional Insurance Benefits".
SURRENDER CHARGE
GENERAL. During the first 15 Policy years and during the first 15 years
following any requested increase in Face Amount, we make a Surrender Charge if
you surrender the Policy or the Policy lapses. The Surrender Charge will not be
affected by any decrease in Face Amount or by any change in Face Amount
resulting from a change in the Death Benefit Option.
The Surrender Charge imposed upon early surrender or lapse will be
significant. For example, if you make premium payments no greater than the
Minimum Monthly payments specified in your Policy, you can expect that during at
least the early Policy Years, all or substantially all of your premium payments
will be required to pay the Surrender Charge and other charges associated with
the Policy. As a result, you should purchase a Policy only if you have the
financial capability to keep it in force for a substantial period of time.
SURRENDER CHARGE. The maximum Surrender Charge for the Initial Face Amount
or any requested increase in Face Amount will be determined on the Policy Date
or on the effective date of any requested increase respectively. This Surrender
Charge for the Initial Face Amount remains level and is equal to the maximum
Surrender Charge during the first five Policy Years and then reduces in equal
monthly increments until it becomes zero at the end of 15 years. The Surrender
Charge for any requested increase in Face Amount follows a similar pattern
except that the Surrender Charge is reduced in the first three Policy Years
following the effective date of the increase. Thus if the Policy remains in
force during the entire relevant 15-year period, you do not pay the Surrender
Charge.
The maximum Surrender Charge for the Initial Face Amount or any requested
increase in Face Amount will be shown in your Policy and will vary depending on
the Face Amount, and the Issue Age, sex, and Rate Class of each Joint Insured on
the Policy Date or on the effective date of an increase in Face Amount. The
maximum amount of the Surrender Charge is $60 per thousand if both Joint
Insureds are male Issue Age 85. Most Policies will have a much lower maximum
Surrender Charge.
SURRENDER CHARGE CALCULATION. The Surrender Charge for the Initial Face
Amount or any requested increase in Face Amount is determined by multiplying (i)
the maximum Surrender Charge shown in your policy by (ii) the applicable
percentage from the Surrender Charge Percentage Table below, and then dividing
this amount by 1,000. For example, $250,000 Face Amount Policy issued to two
males, both Issue Age 55, would have a maximum Surrender Charge of $7,250
($7,250 x 100%) during the first five years of the Policy, and decline during
the next 10 years as indicated by the Table below. For the Initial Face Amount,
a Surrender Charge is measured from the Issue Date and applies for 15 years from
that Date. An increase in Face Amount of $100,000 in year 5 of the Policy would
have its own (additional) Surrender Charge of $2,500 at the end of the first
year ($7,500 x 33%), and vary according to the Table below. The applicable
Surrender Charge for each increase applies for 15 years from the increase Date.
In this example, all Surrender Charges would cease to apply after 15 Policy
Years.
SURRENDER CHARGE PERCENTAGE TABLE
IF SURRENDER OR LAPSE OCCURS IN
THE LAST MONTH OF POLICY YEAR: INITIAL FACE AMOUNT FACE AMOUNT INCREASES
1 100% 33%
2 100% 67%
3 100% 100%
4 100% 100%
5 100% 100%
6 90% 90%
7 80% 80%
8 70% 70%
9 60% 60%
10 50% 50%
11 40% 40%
12 30% 30%
13 20% 20%
14 10% 10%
15 and later 0% 0%
For requested increases, years are measured from the date of the increase.
16
The percentages reduce equally for each Policy Month during the years
shown. For example, during the eleventh Policy Year, the percentage reduces
equally each month from 50% at the end of the tenth Policy Year to 40% at the
end of the eleventh Policy Year.
PARTIAL WITHDRAWAL AND TRANSFER CHARGES
We currently make no charge for the first 24 transfers in a Policy Year. We
make a $25 charge for each subsequent transfer. We currently make a $10.00
charge for each partial withdrawal. These charges are guaranteed not to exceed
$25.00 per transfer or partial withdrawal for the duration of the Policy. The
transfer charge will not be imposed on transfers that occur as a result of
Policy loans or the exercise of conversion rights.
MODIFICATION OF CHARGES
ReliaStar may modify any of the charges under the Policy, as well as the
minimum Face Amount set forth in this Prospectus, because of special
circumstances that result in lower sales, administrative, or mortality expenses.
For example, special circumstances may exist in connection with group or
sponsored arrangements, sales to our policyholders or those of affiliated
insurance companies, or sales to employees or clients of members of our
affiliated group of insurance companies. The amount of any reductions will
reflect the reduced sales effort and administrative costs resulting from, or the
different mortality experience expected as a result of, the special
circumstances. Modification will not be unfairly discriminatory against any
person, including the affected Policy owners and owners of all other policies
funded by the Variable Account.
INVESTMENT ADVISORY FEES AND OTHER FUND EXPENSES
Because the Variable Account purchases shares of the Funds, the net asset
value of the Variable Account's investments will reflect the investment advisory
fees and other expenses incurred by the Funds. Set forth below is information
provided by each Fund on its total 1999 annual expenses as a percentage of the
Fund's average net assets. See the prospectuses for the Funds for more
information concerning these expenses.
17
FUND EXPENSES (BEFORE REIMBURSEMENTS)
TOTAL INVESTMENT
MANAGEMENT OTHER FUND AMOUNT
FUND FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------- ------------ ---------- -----------------
AIM V.I. Dent Demographic Trends Fund (a) ............................ 0.85% 0.55% 1.40%
Alger American Growth Portfolio (a) .................................. 0.75% 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (a) ........................ 0.85% 0.08% 0.93%
Alger American MidCap Growth Portfolio (a) ........................... 0.80% 0.05% 0.85%
Alger American Small Capitalization Portfolio (a) .................... 0.85% 0.05% 0.90%
Fidelity VIP Equity-Income Portfolio -- Initial Class (a) (b) ........ 0.48% 0.09% 0.57%
Fidelity VIP Growth Portfolio -- Initial Class (a) (b) ............... 0.58% 0.08% 0.66%
Fidelity VIP High Income Portfolio -- Initial Class (a) .............. 0.58% 0.11% 0.69%
Fidelity VIP Money Market Portfolio -- Initial Class ................. 0.18% 0.09% 0.27%
Fidelity VIP II Contrafund(R) Portfolio -- Initial Class (a) (b) ..... 0.58% 0.09% 0.67%
Fidelity VIP II Index 500 Portfolio -- Initial Class (a) (b) ......... 0.24% 0.10% 0.34%
Fidelity VIP II Investment Grade Bond Portfolio -- Initial
Class (a) ........................................................... 0.43% 0.11% 0.54%
Janus Aspen Aggressive Growth Portfolio (a) (c) ...................... 0.65% 0.02% 0.67%
Janus Aspen Growth Portfolio (a) (c) ................................. 0.65% 0.02% 0.67%
Janus Aspen International Growth Portfolio (a) (c) ................... 0.65% 0.11% 0.76%
Janus Aspen Worldwide Growth Portfolio (a) (c) ....................... 0.65% 0.05% 0.70%
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio (a) ......................................... 0.65% 0.11% 0.76%
Neuberger Berman Advisers Management Trust Partners
Portfolio (a) ....................................................... 0.80% 0.07% 0.87%
Neuberger Berman Advisers Management Trust Socially
Responsive Portfolio (a) (d) ........................................ 0.85% 8.19% 9.04%
OCC Equity Portfolio (a) (e) ......................................... 0.80% 0.11% 0.91%
OCC Global Equity Portfolio (a) (e) .................................. 0.80% 0.30% 1.10%
OCC Managed Portfolio (a) (e) ........................................ 0.77% 0.06% 0.83%
OCC Small Cap Portfolio (a) (e) ...................................... 0.80% 0.09% 0.89%
Pilgrim VP Trust Growth Opportunities Portfolio (f) (g) .............. 0.75% 0.34% 1.09%
Pilgrim VP Trust Growth + Value Portfolio (f) ........................ 0.75% 0.22% 0.97%
Pilgrim VP Trust High Yield Bond Portfolio (f) ....................... 0.75% 0.36% 1.11%
Pilgrim VP Trust International Value Portfolio (f) ................... 1.00% 0.52% 1.52%
Pilgrim VP Trust MagnaCap Portfolio (f) (g) .......................... 0.75% 0.34% 1.09%
Pilgrim VP Trust MidCap Opportunities Portfolio (f) (g) .............. 0.75% 0.34% 1.09%
Pilgrim VP Trust Research Enhanced Index Portfolio (f) ............... 0.75% 0.51% 1.26%
Pilgrim VP Trust SmallCap Opportunities Portfolio (f) ................ 0.75% 0.34% 1.09%
Putnam VT Growth and Income Fund -- Class IA Shares .................. 0.46% 0.04% 0.50%
Putnam VT New Opportunities Fund -- Class IA Shares .................. 0.54% 0.05% 0.59%
Putnam VT Voyager Fund -- Class IA Shares ............................ 0.53% 0.04% 0.57%
(a) The Company or its affiliates may receive compensation from an affiliate
or affiliates of certain of the Funds based upon an annual percentage of
the average net assets held in that Fund by the Company and by certain
of the Company's insurance company affiliates. These amounts are
intended to compensate the Company or the Company's affiliates for
administrative, record keeping, and in some cases distribution, and
other services provided by the Company and its affiliates to Funds
and/or the Funds' affiliates. Payments of such amounts by an affiliate
or affiliates of the Funds do not increase the fees paid by the Funds or
their shareholders. The percentage paid may vary from one Fund company
to another.
18
(b) A portion of the brokerage commissions that certain portfolios pay was
used to reduce Portfolio expenses. In addition, certain Portfolios have
entered into arrangements with their custodian whereby credits realized
as a result of uninvested cash balances are used to reduce custodian
expenses. Including these reductions, the total operating expenses
presented in the table would have been: 0.56% for Fidelity VIP
Equity-Income Portfolio; 0.65% for Fidelity VIP Growth Portfolio; 0.28%
for Fidelity VIP II Index 500 Portfolio; and 0.65% for Fidelity VIP II
Contrafund(R) Portfolio.
(c) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Aggressive Growth, International Growth and Worldwide Growth Portfolios.
All expenses are stated without the effect of expense offset
arrangements.
(d) Neuberger Berman Management Inc. ("NBMI") has undertaken to reimburse
the Socially Responsive Portfolio for certain operating expenses,
including the compensation of Neuberger Berman Advisers Management Trust
and excluding taxes, interest, extraordinary expenses, brokerage
commissions and transaction costs, that exceed in the aggregate, 1.50%
of the average daily net asset value of the Socially Responsive
Portfolio. Expenses were 1.53% for the fiscal period ending December 31,
1999, after the reimbursement. There can be no assurance that this
policy will be continued after May 1, 2001. See "Expense Limitation" in
the Socially Responsive Portfolio prospectus for further information.
(e) Management Fees reflect effective management fees before taking into
effect any waiver. Other Expenses are shown before expense offsets
afforded the Portfolios. Total Portfolio Expenses for the Equity, Small
Cap and Managed Portfolios are limited by OpCap Advisors so that their
respective annualized operating expenses (net of expense offsets) do not
exceed 1.00% of average daily net assets. Total Portfolio Expenses for
the Global Equity Portfolio are limited to 1.25% of average daily net
assets (net of expense offsets).
(f) The investment adviser to the Pilgrim Variable Products Trust has
agreed to reimburse the Growth + Value Portfolio and High Yield Bond
Portfolio for any expenses in excess of 0.80% of each Portfolio's
average daily net assets. It has also agreed to reimburse the SmallCap
Opportunities Portfolio, Research Enhanced Index Portfolio, Growth
Opportunities Portfolio, MagnaCap Portfolio, and MidCap Opportunities
Portfolio for amounts in excess of 0.90%. It has agreed to reimburse
International Value Portfolio for amounts in excess of 1.00%. After the
investment adviser's expense reimbursements, the Total Fund Annual
Expenses that were paid by each Portfolio during its fiscal year ended
December 31, 1999 were: Growth + Value Portfolio: 0.80%; High Yield
Bond Portfolio: 0.80%; International Value Portfolio: 1.00%; Research
Enhanced Index Portfolio: 0.89%; SmallCap Opportunities Portfolio:
0.90%. Expense reimbursements are voluntary. There is no assurance of
ongoing reimbursement.
(g) This portfolio had not commenced operations as of December 31, 1999, and
therefore these expenses are estimated.
THE VARIABLE ACCOUNT
On October 11, 1984, we established the Select*Life Variable Account as
one of our separate accounts pursuant to the laws of the State of Minnesota.
The Variable Account:
o will receive and invest the Net Premiums paid and allocated to it under
this Policy;
o currently receives and invests net premiums for other classes of flexible
premium variable life insurance policies we issue and may do so for
additional classes in the future;
o meets the definition of a "separate account" under the federal securities
laws; and
o is registered with the SEC as a unit investment trust under the Investment
Company Act of 1940 ("1940 Act"). Such registration does not involve
supervision by the SEC of the management or investment policies or
practices of the Variable Account, us, or the Funds.
We own the Variable Account's assets. However, Minnesota law provides that
we cannot charge the Variable Account with liabilities arising out of any other
business we may conduct. We are required to
19
maintain assets which are at least equal to the reserves and other liabilities
of the Variable Account. We may transfer assets which exceed these reserves and
liabilities to our general account (the Fixed Account).
INVESTMENTS OF THE VARIABLE ACCOUNT
There are currently 34 investment options (Funds) available under the
Variable Account. You also should read the Funds' prospectuses for more detailed
information, particularly because several of the Funds and portfolios may have
objectives that are quite similar. Please call the telephone number listed on
the first page of this Prospectus to request a Fund's prospectus. THERE IS NO
ASSURANCE THAT ANY FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE(S).
PERFORMANCE INFORMATION
Performance information for the Sub-Accounts of the Variable Account and
the Funds available for investment by the Variable Account may appear in
advertisements, sales literature, or reports to Policy owners or prospective
purchasers. Such performance information for the Sub-Accounts will reflect
deductions of Fund expenses and be adjusted to reflect the Mortality and Expense
Risk Charge, but will not reflect deductions for the cost of insurance or the
Surrender Charge. We will accompany quotations of performance information for
the Funds by performance information for the Sub-Accounts. Performance
information for the Funds will take into account all fees and charges at the
Fund level, but will not reflect any deductions from the Variable Account.
Performance information reflects only the performance of a hypothetical
investment during a particular time period in which the calculations are based.
We may provide performance information showing total returns and average annual
total returns for periods prior to the date a Sub-Account commenced operation.
We will calculate such performance information based on the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
Funds, with the level of charges at the Variable Account level that were in
effect at the inception of the Sub-Accounts.
We may also provide individualized hypothetical illustrations of
Accumulation Value, Cash Surrender Value and Death Benefit based on hypothetical
investment returns of the Funds not to exceed 12.00%. These illustrations will
reflect deductions for Fund expenses and Policy and Variable Account charges,
including the Monthly Deduction, Premium Expense Charge and the Surrender
Charge. We may base these hypothetical illustrations on either the arithmatic or
the weighted average of Fund expenses, reflecting the Fund expenses for the year
ending December 31, 1999 and the Sub-Account assets as of December 31, 1999.
We may also provide individualized hypothetical illustrations of
Accumulation Value, Cash Surrender Value and Death Benefit based on historical
investment returns of the Funds. These illustrations will reflect deductions for
Fund expenses and Policy and Variable Account charges, including the Monthly
Deduction, Premium Expense Charge and the Surrender Charge. We will base these
hypothetical illustrations on the actual historical experience of the Funds as
if the Sub-Accounts had been in existence and a Policy issued for the same
periods as those indicated for the Funds.
We may compare performance of the Sub-Accounts and/or the Funds in
advertisements and sales literature:
o to other variable life insurance issuers in general
o to the performance of particular types of variable life insurance policies
investing in mutual funds
o to investment series of mutual funds with investment objectives similar to
each of the Sub-Accounts, whose performance is reported by Lipper
Analytical Services, Inc. and Morningstar, Inc. (independent services that
monitor and rank the performances of variable life insurance issuers in
each of the major categories of investment objectives on an industry-wide
basis), or reported by other series, companies, individuals or other
industry or financial publications of general interest, such as FORBES,
MONEY, THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S, KIPLINGER'S, and
FORTUNE
o to the Standard & Poor's Index of 500 common stocks and the Dow Jones
Industrials, which are widely used measures of stock market performance
20
We may also compare the performance of each Sub-Account to other widely
recognized indices. Unmanaged indices may assume the reinvestment of dividends,
but typically do not reflect any "deduction" for the expense of operating or
managing an investment portfolio.
DEATH BENEFIT
The proceeds payable upon the death of the Surviving Joint Insured, while
the Policy is in force, will be the Death Benefit reduced by any Loan Amount and
unpaid Monthly Deductions. All or part of the proceeds may be paid in cash to
your beneficiaries or under one or more of the settlement options we offer (see
"General Provisions -- Settlement Options").
DEATH BENEFIT QUALIFICATION TESTS
You choose one of the two Death Benefit Qualification Tests for compliance
with the Code Section 7702 definition of life insurance. These tests are the
Cash Value Accumulation Test and the Guideline Premium Test. You cannot change
this choice after issue.
GUIDELINE PREMIUM TEST. The Death Benefit will be determined with reference
to the requirements for the Guideline Premium test for qualifying a Policy as a
life insurance contract under Code Section 7702(a) (2). Under these
requirements, the sum of the premiums paid under a Policy may not exceed the
"guideline premium limitations", as defined in Code Section 7702(a). The Death
Benefit at any time is not less than the Accumulation Value multiplied by the
Corridor Percentages (as defined in Code Section 7702(d), which vary according
to the Age of the younger Joint Insured.
GUIDELINE PREMIUM TEST
CORRIDOR PERCENTAGE TABLE
YOUNGER JOINT CORRIDOR YOUNGER JOINT CORRIDOR YOUNGER JOINT CORRIDOR
INSURED'S AGE PERCENTAGE INSURED'S AGE PERCENTAGE INSURED'S AGE PERCENTAGE
ON PREVIOUS OF ON PREVIOUS OF ON PREVIOUS OF
POLICY ACCUMULATION POLICY ACCUMULATION POLICY ACCUMULATION
ANNIVERSARY VALUE ANNIVERSARY VALUE ANNIVERSARY VALUE
- --------------- ------------- --------------- ------------- --------------- -------------
40 or
younger 250% 54 157 68 117
41 243 55 150 69 116
42 236 56 146 70 115
43 229 57 142 71 114
44 222 58 138 72 113
45 215 59 134 73 111
46 209 60 130 74 109
47 203 61 128 75-90 105
48 197 62 126 91 104
49 191 63 124 92 103
50 185 64 122 93 102
51 178 65 120 94 101
52 171 66 119 95 or 100
53 164 67 118 older
CASH VALUE ACCUMULATION TEST. The Death Benefit is never less than the
amount required for this Policy to be deemed "life insurance" based on the Cash
Value Accumulation Test as defined in Code Section 7702(b). Generally, the Cash
Value Accumulation Test requires that under the terms of a life insurance
policy, the Death Benefit must be sufficient so that the AccumulationValue does
not at any time exceed the net single premium required to fund the future
benefits under the Policy. The net single premiums under the Policy vary
according to the Age, sex, and Rate Class of each Joint Insured. The net single
premium is calculated using a 4% interest rate and using the guaranteed
mortality charges as of the time the Policy is issued. The corridor percentage
for the Cash Value Accumulation Test is then equal to 100% divided by the net
single premium for the Issue Age, sex, and Rate Class of each Joint Insured and
the Policy Year.
WHICH DEATH BENEFIT QUALIFICATION TEST TO CHOOSE
The Cash Value Accumulation Test does not limit the amount of premium that
may be paid into a Policy. If you desire to pay premiums in excess of the
guideline premium test limitations you should elect
21
the Cash Value Accumulation Test. However, any premium that would increase the
net amount at risk is subject to evidence of insurability satisfactory to us.
Required increases in the minimum death benefit due to growth in Accumulation
Value will generally be greater under the Cash Value Accumulation Test than
under the Guideline Premium Test.
The Guideline Premium Test limits the amount of premium that may be paid
into a Policy. If you do not desire to pay premiums in excess of the Guideline
Premium Test limitations, you should consider the Guideline Premium Test.
DEATH BENEFIT OPTIONS
The Policy provides three Death Benefit Options as shown below. You choose
the Death Benefit Option on the application for the Policy. Subject to certain
limitations, you can change the Death Benefit Option after issuance of the
Policy. See "Death Benefit -- Change in Death Benefit Option".
The Death Benefit prior to Age 100 of the younger Joint Insured depends on
the Death Benefit Option chosen as described below regardless of the Death
Benefit Option chosen. The Death Benefit after Age 100 of the younger Joint
Insured is the Accumulation Value.
OPTION A (LEVEL AMOUNT OPTION). Prior to Age 100 of the younger Joint
Insured, the Death Benefit is the greater of the current Face Amount of the
Policy or the Corridor Percentage of Accumulation Value on the Valuation Date on
or next following the date of the Insured's death. Under Option A, the Death
Benefits will remain level unless the corridor percentage of Accumulation Value
exceeds the current Face Amount, in which case the amount of the Death Benefit
will vary as the Accumulation Value varies.
OPTION B (VARIABLE AMOUNT OPTION). Prior to Age 100 of the younger Joint
Insured, the Death Benefit is equal to the greater of the current Face Amount
plus the Accumulation Value of the Policy, or the corridor percentage of the
Accumulation Value on the Valuation Date on or next following the date of the
Insured's death. Under Option B, the amount of the Death Benefit will always
vary as the AccumulationValue varies.
OPTION C (FACE AMOUNT PLUS PREMIUM AMOUNT OPTION). Prior to Age 100 of the
younger Joint Insured, the Death Benefit is the greater of the Face Amount plus
cumulative premiums less cumulative withdrawals, or the Corridor Percentage of
the Accumulation Value on the Valuation Date following the date of the Insured's
death. Under Option C, the amount of the Death Benefit will vary as the premiums
are paid or withdrawals are made, or if the Corridor Percentage of the
Accumulation Value exceeds the current Face Amount.
WHICH DEATH BENEFIT OPTION TO CHOOSE
If you prefer to have premium payments and favorable investment performance
reflected partly in the form of an increasing Death Benefit, you should choose
the Variable Amount Option. If you are satisfied with the amount of your
existing insurance coverage and prefer to have premium payments and favorable
investment performance reflected to the maximum extent in the Accumulation Value
and lower cost of insurance charges, you should choose the Level Amount Option.
If you require a specific Death Benefit which would include a return of the
premium paid, such as under an employer sponsored benefit plan, Option C may
meet your needs.
REQUESTED CHANGES IN FACE AMOUNT
Subject to certain limitations, you may request an increase or decrease in
the Face Amount. We will not permit increases and decreases in the Face Amount
during the first four Policy Years.
INCREASES. For an increase in the Face Amount, you must submit a written
request to us. We may also require additional evidence of insurability
satisfactory to us. The effective date of the increase will be the Monthly
Anniversary on or next following our approval of the increase. The increase may
not be less than $5,000. We will currently permit increases up to any Joint
Insured Age 85, if our requirements are met. We will deduct any charges
associated with the increase (the increases in the cost of insurance and the
Surrender Charge upon lapse or total surrender -- see "Effect of Requested
Changes in Face Amount" below) from the Accumulation Value, whether or not you
pay an additional premium in connection with the increase. You will be entitled
to limited free look rights with respect to requested increases in Face Amount.
See "Free Look Rights".
22
DECREASES. For a decrease in the Face Amount, you must submit a written
request to us. Any decrease in the Face Amount will be effective on the Monthly
Anniversary on or next following our receipt of a written request. You cannot
request a decrease in the Face Amount more frequently than once every six
months. The Face Amount remaining in force after any requested decrease may not
be less than the Minimum Face Amount shown in the Policy. Under our current
rules, the Minimum Face Amount is $250,000, but we reserve the right to
establish a different Minimum Face Amount in the future. The Minimum Face Amount
in New Jersey is $500,000. If, following a decrease in Face Amount, the Policy
would no longer qualify as life insurance under Federal tax law (see "Federal
Tax Matters -- Tax Status of the Policy"), we will limit the decrease to the
extent necessary to meet these requirements.
For purposes of determining the cost of insurance, we will apply decreases
in the Face Amount to reduce the current Face Amount in the following order:
(1) The Face Amount provided by the most recent increase;
(2) The next most recent increases successively; and
(3) The Face Amount when the Policy was issued.
By reducing the current Face Amount in this manner, the Rate Class
applicable to the most recent increase in Face Amount will be eliminated first,
then the Rate Class applicable to the next most recent increase, and so on, for
the purposes of calculating the cost of insurance. This assumption will affect
the cost of insurance under the Policy only if different Rate Classes have been
applied to the current Face Amount. A Rate Class is a group of Insureds we
determine based upon our expectation that they will have similar mortality
experience. We currently place Insureds into standard Rate Classes or into
substandard Rate Classes that involve a higher mortality risk (for example, a
200% Rate Class or a 300% Rate Class). In an otherwise identical Policy, an
Insured in the standard Rate Class will have a lower cost of insurance than an
Insured in a substandard Rate Class with higher mortality risks. See "Deductions
and Charges -- Monthly Deduction".
For example, assume that the initial Face Amount was $50,000 with a
standard Rate Class, and that successive increases of $25,000 (at a Rate Class
of 200%) and $50,000 (at a Rate Class of 300%) were added. If a decrease of
$50,000 or less is requested, the amount of insurance at a 300% Rate Class will
be reduced first. If a decrease of more than $50,000 is requested, the amount at
a 300% Rate Class will be eliminated, and the excess over $50,000 will next
reduce the amount of insurance at a 200% Rate Class.
EFFECT OF REQUESTED CHANGES IN FACE AMOUNT. An increase or decrease in Face
Amount will affect the Monthly Deduction because the cost of insurance depends
upon the Face Amount. The charge for certain optional insurance benefits may
also be affected. See "Deductions and Charges -- Monthly Deduction". An increase
in the Face Amount will increase the Surrender Charge and Monthly Amount Charge,
but a decrease in the Face Amount will not reduce the Surrender Charge or the
Monthly Amount Charge. The Surrender Charge is, however, imposed only upon lapse
or total surrender of the Policy and not upon a requested decrease in Face
Amount. See "Deductions and Charges -- Surrender Charge".
An increase in the Face Amount will increase the Minimum Monthly Premium as
of the effective date of the increase. Therefore, additional premium payments
may be required to maintain the Death Benefit Guarantee. A decrease in the Face
Amount will reduce the Minimum Monthly Premium as of the effective date of the
decrease. A Face Amount decrease may also shorten the Death Benefit Guarantee
Period if a term insurance rider is attached. See "Death Benefit Guarantee".
The additional Surrender Charge on a requested increase in the Face Amount
will reduce the Cash Surrender Value (which is the Accumulation Value less any
Surrender Charge, Loan Amount and unpaid Monthly Deductions). If the resulting
Cash Surrender Value is not sufficient to cover the Monthly Deduction, the
Policy may lapse unless the Death Benefit Guarantee is in effect. See "Policy
Lapse and Reinstatement -- Lapse" and "Death Benefit Guarantee".
INSURANCE PROTECTION
As your insurance needs change, you may increase or decrease the pure
insurance protection provided by the Policy (that is, the difference between the
Death Benefit and the Accumulation Value) in one of several ways. These ways
include:
o increasing or decreasing the Face Amount of insurance, changing the level
of premium payments, and,
23
o making a partial withdrawal under the Policy.
Although the consequences of each of these methods will depend upon the
individual circumstances, they may be generally summarized as follows:
o AN INCREASE IN THE FACE AMOUNT (which is generally subject to underwriting
approval -- see "Death Benefit -- Requested Changes in Face Amount") will
likely increase the amount of pure insurance protection, depending on the
amount of Accumulation Value and the resultant corridor percentage
limitation. If the insurance protection is increased, the Policy charges
generally will increase as well.
o A DECREASE IN THE FACE AMOUNT will, subject to the corridor percentage
limitations (see "Death Benefit -- Death Benefit Options"), decrease the
pure insurance protection without reducing the Accumulation Value. If the
Face Amount is decreased, the Cost of Insurance charges generally will
decrease as well. (Note that the Surrender Charge will not be reduced. See
"Deductions and Charges -- Surrender Charge".)
o A CHANGE IN THE LEVEL OF PREMIUM can have a variety of effects, as
follows.
Under the Level Amount Option, until the corridor percentage of
Accumulation Value exceeds the Face Amount, (a) an increased level of
premium payments will reduce the amount of pure insurance protection,
and (b) a reduced level of premium payments will increase the amount
of pure insurance protection.
Under the Variable Amount Option, until the corridor percentage of
Accumulation Value exceeds the Face Amount plus the Accumulation
Value, the level of premium payments will not affect the amount of
pure insurance protection. (However, both the Accumulation Value and
the Death Benefit will be increased if premium payments are increased,
and reduced if premium payments are reduced.)
Under the Face Plus Premium Amount Option, until the corridor
percentage of Accumulation Value exceeds the Face Amount, the level of
premium payments will affect the amount of pure insurance protection.
Under any Death Benefit Option, if the Death Benefit is the corridor
percentage of Accumulation Value, then (a) an increased level of
premium payments will increase the amount of pure insurance protection
(subject to underwriting approval -- see "Payment and Allocation of
Premiums -- Amount and Timing of Premiums"), and (b) a reduced level
of premium payments will reduce the pure insurance protection.
o A PARTIAL WITHDRAWAL will reduce the Death Benefit. See "Surrender
Benefits -- Partial Withdrawal". However, it has a limited effect on the
amount of pure insurance protection and charges under the Policy, because
the decrease in the Death Benefit is usually equal to the amount of
Accumulation Value withdrawn. The primary use of a partial withdrawal is
to withdraw Accumulation Value. Furthermore, it results in a reduced
amount of Accumulation Value and increases the possibility that the Policy
will lapse.
YOU SHOULD CONSIDER THE TECHNIQUES DESCRIBED IN THIS SECTION FOR CHANGING
THE AMOUNT OF PURE INSURANCE PROTECTION UNDER THE POLICY (FOR EXAMPLE, CHANGING
THE FACE AMOUNT, MAKING A PARTIAL WITHDRAWAL, AND CHANGING THE AMOUNT OF PREMIUM
PAYMENTS) TOGETHER WITH THE OTHER RESTRICTIONS AND CONSIDERATIONS DESCRIBED
ELSEWHERE IN THIS PROSPECTUS.
CHANGING THE DEATH BENEFIT OPTION
After the fourth Policy Year, you may change the Death Benefit Option. We
allow changes from Option A to Option B, from Option B to Option A, and,
currently, from Option C to Option A. We will not allow changes to Option C
after issue. You must submit a written request to change the Death Benefit
Option. A change in the Death Benefit Option will also change the Face Amount.
If the Death Benefit Option is changed from the Level Amount Option to the
Variable Amount Option, the Face Amount will be decreased by an amount equal to
the Accumulation Value on the effective date of the change. You cannot change
from the Level Amount Option to the Variable Amount Option if the resulting Face
Amount would fall below the minimum Face Amount (currently $250,000).
If you change the Death Benefit Option from the Variable Amount Option to
the Level Amount Option, we will increase the Face Amount by an amount equal to
the Policy's Accumulation Value on the
24
effective date of the change. If you change from Option C to Option A, we will
increase the Face Amount by an amount equal to cumulative premiums less
cumulative withdrawals taken.
An increase or decrease in Face Amount resulting from a change in the Death
Benefit Option will affect the future Monthly Deductions because the cost of
insurance depends upon the Face Amount. A change in the Face Amount resulting
from a change in the Death Benefit Option may also affect the charge for certain
optional insurance benefits. See "Deductions and Charges -- Monthly Deduction".
However, a Face Amount change resulting from a Death Benefit Option change will
not affect the Surrender Charge or the Monthly Amount Charge.
Unless prohibited by state law, changes in the Death Benefit Option do not
currently require additional evidence of insurability.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUING THE POLICY
An individual applying for a Policy must complete an application and
personally deliver it to our licensed agent. We will only issue a Policy to an
applicant where both Joint Insureds' ages are 85 or less and both supply
evidence of insurability satisfactory to us. The minimum Face Amount is
currently $250,000 ($500,000 for a Policy issued in New Jersey), but we reserve
the right to specify a different minimum Face Amount for issuing a new Policy.
Acceptance is subject to our underwriting rules and we reserve the right to
reject an application for any reason permitted by law.
COVERAGE. Coverage under a Policy begins on the later of the Issue Date or
the date we receive at least the minimum initial premium (see immediately
following section). In general, if the applicant pays at least the minimum
initial premium with the application, the Issue Date will be the later of the
date of the application or the date of any medical examination required by our
underwriting procedures. However, if underwriting approval has not occurred
within 45 days after we receive the application or if you authorize premiums to
be paid by bank account monthly deduction, the Issue Date will be the date of
underwriting approval.
If you authorize premiums to be paid by government allotment, the Issue
Date generally will be, subject to our underwriting approval, the first day of
the month in which we receive the first Minimum Monthly Premium through
government allotment, whether or not a Minimum Monthly Premium is collected with
the application. If a Minimum Monthly Premium is collected with the application,
it will be allocated to the Sub-Accounts of the Variable Account and the Fixed
Account on the Valuation Date next following the Issue Date.
MINIMUM INITIAL PREMIUM. The minimum initial premium is three Minimum
Monthly Premiums (see "Death Benefit Guarantee"). If, however, you authorize
premiums to be paid by bank account monthly deduction or government allotment,
we will accept one Minimum Monthly Premium together with the required
authorization forms. The Minimum Monthly Premium is specified in the Policy and
determines the payments required to maintain the Death Benefit Guarantee.
TEMPORARY INSURANCE. At the time the application is taken, the applicant
can receive temporary insurance coverage by paying a premium equal to 10% of
annualized Minimum Monthly Premium. The temporary insurance will be for the Face
Amount specified in the premium receipt and will be effective until the earliest
of the following:
o The date the coverage under the Policy is effective.
o The date the applicant receives an offer for an alternative policy, a
notice of termination of temporary insurance coverage, or notice that we
have rejected the application.
o The date of death of the proposed Surviving Joint Insured, any proposed
additional Insured's, or any proposed additional Joint Insured.
o The 180th day after the date of the receipt for the temporary insurance.
ALLOCATING PREMIUMS
We will credit the initial Net Premium and any premiums received prior to
the Initial Premium Transfer Date to the Fidelity VIP Money Market Sub-Account
on the later of the Policy Date or the date we receive your premium. On the
Initial Premium Transfer Date, we will transfer the Variable Accumulation Value
in the Fidelity VIP Money Market Sub-Account to the Fixed Account and the
25
Sub-Accounts of the Variable Account as you designated on the Policy
application. After the Initial Premium Transfer Date, we credit premiums to the
Fixed Account and the Sub-Accounts of the Variable Account as you designated on
the Policy application.
You may change the premium allocation at any time by notifying us in
writing. Changes will not be effective until the date we receive your request
and will only affect premiums we receive on or after that date. The new premium
allocation may be 100% to any Account or divided in whole percentage points
totaling 100%. We reserve the right to adjust any allocation to eliminate
fractional percentages. Changing the current premium allocation will not affect
the allocation of existing Accumulation Value.
CREDITING NET PREMIUMS. We will credit Net Premiums on the latest of the
following dates:
o The Valuation Date following the date of underwriting approval.
o The Valuation Date on or next following the Policy Date.
o The Valuation Date on or next following the date we receive at least the
required minimum initial premium payment.
o In the case of Policies issued under government allotment programs, the
Valuation Date next following the Issue Date.
REFUNDING PREMIUMS. We will return all premiums paid without interest if
any of the following occur:
o We send notice to the applicant that the insurance is declined.
o The applicant refuses an offer for an alternative policy.
o The applicant does not supply required medical exams or tests within 30
days of the date of the application.
o The applicant returns the Policy under the limited free look right. See
"Free Look and Conversion Rights -- Free Look Rights".
AMOUNT AND TIMING OF PREMIUMS
The amount and frequency of premium payments will affect the Accumulation
Value, the Cash Surrender Value, and how long the Policy will remain in force
(including affecting whether the Death Benefit Guarantee is in effect -- see
"Death Benefit Guarantee"). After the initial premium, you may determine the
amount and timing of subsequent premium payments within the following
restrictions:
o In most cases, we will require that you pay cumulative premiums sufficient
to maintain the Death Benefit Guarantee to keep the Policy in force during
at least the first several Policy Years. See "Death Benefit Guarantee."
o We may choose not to accept any premium less than $25.
o We reserve the right to limit the amount of any premium payment. In
general, during the first Policy Year we will not accept total premium
payments in excess of $250,000 on the lives of the Joint Insureds, whether
such payments are received on a Policy or on any other insurance policy
issued by us or our affiliates. Also, we will not accept any premium
payment in excess of $50,000 on any Policy after the first Policy Year. We
may waive any of these premium limitations.
o We may require additional evidence of insurability satisfactory to us if
any premium would increase the difference between the Death Benefit and
the Accumulation Value (that is, the net amount at risk). A premium
payment would increase the net amount at risk if at the time of payment
the Death Benefit would be based upon the applicable corridor percentage
of Accumulation Value. See "Death Benefit -- Death Benefit Options".
o In no event may the total of all premiums paid, both scheduled and
unscheduled, exceed the current maximum premium payments allowed for life
insurance under Section 7702 of the Code. If at any time you pay a premium
that would result in total premiums exceeding the current maximum premiums
allowed, we will only accept that portion of the premium which would make
total premiums equal the maximum. We will return any part of the premium
in excess of that amount, and we will not accept further premiums until
allowed by the current maximum premium limitations.
26
o You may pay additional premiums (other than Planned Periodic Premiums) at
any time while the Policy is in force before Age 100 of the younger Joint
Insured. We may limit the number and amount of these additional payments.
However you may always pay premiums if needed to keep your Policy in force
for the remainder of the current Policy Year.
o If you want to make a large premium payment under this Policy, and you
wish to avoid Modified Endowment Contract classification, you may contact
us in writing before making the payment and we will tell you the maximum
amount which you can pay into the Policy. See "Federal Tax Matters -- Tax
Status of the Policy".
PLANNED PERIODIC PREMIUMS
You may choose a Planned Periodic Premium schedule which indicates a
preference as to future amounts and frequency of payment. You may pay Planned
Periodic Premiums annually, semi-annually, quarterly or, if you choose, you can
pay the Planned Periodic Premiums by bank account monthly deduction or
government allotment.
Your Policy will show the amount and frequency of your initial Planned
Periodic Premium. You may change the Planned Periodic Premium at any time by
written request. We may limit the amount of any increase. Failure to make any
Planned Periodic Premium payment will not, however, necessarily result in lapse
of the Policy. On the other hand, making Planned Periodic Premium payments will
not guarantee that the Policy remains in force. See "Death Benefit Guarantee"
and "Policy Lapse and Reinstatement".
PAYING PREMIUMS BY MAIL
You may pay Planned Periodic Premiums and Unscheduled Additional Premiums
to the Company by mailing the payments to:
ReliaStar Life Insurance Company
P.O. Box 1880
Minneapolis, Minnesota 55480-1880
DEATH BENEFIT GUARANTEE
If you meet the requirements described below, we guarantee that we will not
lapse the Policy even if the Cash Surrender Value is not sufficient to cover the
Monthly Deduction that is due. This feature of the Policy is called the "Death
Benefit Guarantee". (In Maryland, this feature is referred to as the "No Lapse
Guarantee.") The length of the Death Benefit Guarantee Period is specified in
your Policy and is uniquely determined on a Policy by Policy basis. The Death
Benefit Guarantee Period depends on the issue ages and premium classes of the
Joint Insureds, Death Benefit Option, and any Optional Insurance Benefits.
Certain Policy changes may also change the Death Benefit Guarantee Period.
Following is a table of typical Death Benefit Guarantee Periods. The examples
assume that the Joint Insureds are a male and a female, both of the same issue
age, both with no substandard ratings, a $1,000,000 Face Amount, and no Optional
Insurance Benefits. Policies with substandard ratings and Optional Insurance
Benefits will typically have a shorter Death Benefit Guarantee Period.
DEATH BENEFIT DEATH BENEFIT
AGE AND CLASS OF JOINT INSUREDS OPTION GUARANTEE PERIOD
- --------------------------------- ----------------------- -----------------
45 Non-Tobacco ............... A (Level) 45 Years
45 Non-Tobacco ............... B (Variable) 42 Years
45 Non-Tobacco ............... C (Face Plus Premium) 40 Years
65 Non-Tobacco ............... A (Level) 25 Years
65 Non-Tobacco ............... B (Variable) 22 Years
65 Non-Tobacco ............... C (Face Plus Premium) 20 Years
45 Tobacco ................... A (Level) 45 Years
45 Tobacco ................... B (Variable) 42 Years
45 Tobacco ................... C (Face Plus Premium) 40 Years
65 Tobacco ................... A (Level) 25 Years
65 Tobacco ................... B (Variable) 22 Years
65 Tobacco ................... C (Face Plus Premium) 20 Years
In general, the two most significant benefits from the Death Benefit
Guarantee are as follows. First, during the early Policy Years, the Cash
Surrender Value may not be sufficient to cover the Monthly
27
Deduction, so that the Death Benefit Guarantee will be necessary to avoid lapse
of the Policy. See "Policy Lapse and Reinstatement". This occurs when the
Surrender Charge exceeds the Accumulation Value in these years. In this regard,
you should consider that if you request an increase in Face Amount, an
additional Surrender Charge would apply for the fifteen years following the
increase, which could create a similar possibility of lapse as exists during the
early Policy Years. Second, to the extent the Cash Surrender Value declines due
to poor investment performance, or due to an additional Surrender Charge after a
requested increase, the Cash Surrender Value may not be sufficient even in later
Policy Years to cover the Monthly Deduction, so that the Death Benefit Guarantee
may also be necessary in later Policy Years to avoid lapse of the Policy. THUS,
EVEN THOUGH THE POLICY PERMITS PREMIUM PAYMENTS THAT ARE LESS THAN THE MINIMUM
MONTHLY PREMIUMS, YOU MAY LOSE THE SIGNIFICANT PROTECTION PROVIDED BY THE DEATH
BENEFIT GUARANTEE BY PAYING LESS THAN THE MINIMUM MONTHLY PREMIUMS.
REQUIREMENTS
The Death Benefit Guarantee will be in effect during the specified Death
Benefit Guarantee Period if the sum of all premiums paid minus any partial
withdrawals and any loans are equal to or greater than the sum of the Minimum
Monthly Premiums since the Policy Date, including the Minimum Monthly Premium
for the current Monthly Anniversary.
The requirements for the Death Benefit Guarantee must be satisfied as of
each Monthly Anniversary, even though you do not have to pay premiums monthly.
EXAMPLE: The Policy Date is January 1, 2000. The Minimum Monthly Premium
is $1000 per month. No Policy loans or partial withdrawals are taken and no
Face Amount changes have occurred.
Case 1. You pay $1000 each month. The Death Benefit Guarantee is
maintained.
Case 2. You pay $10,000 on January 1, 2000. The $10,000 maintains the Death
Benefit Guarantee without your paying any additional premiums for the
next 10 months (through October 31, 2000). However, you must pay at
least $1000 by November 1, 2000 to maintain the Death Benefit
Guarantee through November 30, 2000.
The amount of the initial Minimum Monthly Premium will be determined by us
at issuance of the Policy and will be shown in the Policy. The initial Minimum
Monthly Premium will depend upon each Joint Insured's sex, age at issue, Rate
Class, optional insurance benefits added by rider, and the Initial Face Amount.
The following Policy changes may change the Minimum Monthly Premium and the
Death Benefit Guarantee Period:
o A requested increase or decrease in the Face Amount (see "Death Benefit
Requested Changes in Face Amount").
o A change in the Death Benefit Option (see "Death Benefit -- Change in
Death Benefit Option").
o The addition or termination of a Policy rider (see "General Provisions --
Optional Insurance Benefits").
We will notify you in writing of any changes in the Minimum Monthly Premium
or the Death Benefit Guarantee Period.
If you have not made sufficient premium payments to maintain the Death
Benefit Guarantee as of any Monthly Anniversary, we will send you notice of the
premium payment required to maintain the Death Benefit Guarantee. If we do not
receive the required premium payment within 61 days from the date of our notice,
the Death Benefit Guarantee will terminate. You can reinstate the Death Benefit
Guarantee within the first five Policy Years by paying any past due Minimum
Monthly Premiums. After the first five Policy Years, a lapsed Death Benefit
Guarantee cannot be reinstated.
Even if the Death Benefit Guarantee terminates, the Policy will not
necessarily lapse. For a discussion of the circumstances under which the Policy
may lapse. See "Policy Lapse and Reinstatement".
ACCUMULATION VALUE
The Accumulation Value of the Policy (that is, the total value attributable
to a specific Policy in the Variable Account and the Fixed Account) is equal to
the sum of the Variable Accumulation Value (the
28
value attributable to the Variable Account) plus the Fixed Accumulation Value
(the value attributable to the Fixed Account). You should distinguish the
Accumulation Value from the Cash Surrender Value that would actually be paid to
you upon total surrender of the Policy, which is the Accumulation Value less any
Surrender Charge, Loan Amount and unpaid Monthly Deductions. See "Surrender
Benefits -- Total Surrender". You should also distinguish the Accumulation Value
from the Cash Value, which determines the amount available for Policy loans, and
is the Accumulation Value less any Surrender Charge. See "Policy Loans."
The Variable Accumulation Value will generally vary daily and will increase
or decrease to reflect the investment performance of the Funds in which
Sub-Accounts of the Variable Account have been invested.
We will increase the Variable Accumulation Value by:
o any Net Premiums credited to the Variable Account, and
o any transfers from the Fixed Account.
We will reduce the Variable Accumulation Value by:
o the Monthly Deduction attributable to the Variable Account,
o partial withdrawals from the Variable Account,
o any transfer and partial withdrawal charges attributable to the Variable
Account, and
o any amounts transferred from the Variable Account to the Fixed Account
(including amounts transferred from the Variable Account to the Fixed
Account as security for Policy loans -- see "Policy Loans").
We will increase the Fixed Accumulation Value by:
o any Net Premiums credited to the Fixed Account,
o any interest credited to the Fixed Account (determined at our discretion,
but guaranteed not to be less than 3%), and
o any amounts transferred from the Variable Account to the Fixed Account
(including amounts transferred to the Fixed Account as security for Policy
loans -- see "Policy Loans").
We will reduce the Fixed Accumulation Value by:
o the Monthly Deduction attributable to the Fixed Account,
o partial withdrawals from the Fixed Account,
o any transfer and partial withdrawal charges attributable to the Fixed
Account, and
o any amounts transferred from the Fixed Account to the Variable Account.
See Appendix B for a detailed discussion of the calculation of Accumulation
Value.
ILLUSTRATION OF POLICY BENEFITS
In order to help you understand how your Policy values would vary over time
under different sets of assumptions, we will provide you with certain
personalized illustrations upon request. These will be based on the age and
insurance risk characteristics of the Insured under your Policy and such factors
as the specified face amount, death benefit option, premium payment amounts and
rates of return (within limits) that you request. You can request such
illustrations at any time.
We have filed an example of such an illustration as an exhibit to the
Registration Statement as referred to on page 49 of this prospectus. This form
of illustration is available to you upon request and is incorporated herein by
reference. There may be state specific product features that make the
illustrations applicable to you different from the form of illustration shown in
the exhibit. In addition, personalized illustrations may be based upon a
weighted average rather than an arithmatic average of Fund expenses.
SPECIALIZED USES OF THE POLICY
Because the Policy provides for an accumulation of Cash Surrender Value as
well as a Death Benefit, the Policy can be used for various individual and
business financial planning purposes. Purchasing the Policy in part for such
purposes entails certain risks. For example, if the investment
29
performance of the Sub-Accounts to which Accumulation Value is allocated is
poorer than expected or if sufficient premiums are not paid, the Policy may
lapse or may not accumulate sufficient Accumulation Value or Cash Surrender
Value to fund the purpose for which the Policy was purchased. Withdrawals and
Policy loans may significantly affect current and future Accumulation Value,
Cash Surrender Value, or Death Benefit proceeds. Depending upon Sub-Account
investment performance and the amount of a Policy loan, the loan may cause a
Policy to lapse. Because the Policy is designed to provide benefits on a
long-term basis, before purchasing a Policy for a specialized purpose a
purchaser should consider whether the long-term nature of the Policy is
consistent with the purpose for which it is being considered. Using a Policy for
a specialized purpose may have tax consequences. See "Federal Tax Matters".
POLICY LAPSE AND REINSTATEMENT
LAPSE. Unlike traditional life insurance policies, the failure to make a
Planned Periodic Payment will not by itself cause the Policy to lapse
(terminate). If the Death Benefit Guarantee is not in effect, the Policy will
lapse only if, as of any Monthly Anniversary, the Cash Surrender Value is less
than the Monthly Deduction due, and a grace period of 61 days expires without a
sufficient payment.
During the early Policy Years, the Cash Surrender Value will generally not
be sufficient to cover the Monthly Deduction, so that premium payments
sufficient to maintain the Death Benefit Guarantee will be required to avoid
lapse. See "Death Benefit Guarantee".
The Policy does not lapse, and the insurance coverage continues, until the
expiration of a 61-day grace period which begins on the date we send you written
notice indicating that the Cash Surrender Value is less than the Monthly
Deduction due. Our written notice will indicate the amount of the payment
required to avoid lapse. If you do not make a sufficient payment within the
grace period, then the Policy will lapse without value.
If the Surviving Joint Insured dies during the grace period, the proceeds
payable will equal the amount of the Death Benefit on the Valuation Date on or
next following the date of the Surviving Joint Insured's death, reduced by any
Loan Amount and any unpaid Monthly Deductions.
If the Death Benefit Guarantee is in effect, we will not lapse the Policy.
See "Death Benefit Guarantee".
REINSTATEMENT. Reinstatement means putting a lapsed Policy back in force.
You may reinstate a lapsed Policy by written request any time within five years
after it has lapsed if it has not been surrendered for its Cash Surrender Value.
To reinstate the Policy and any riders you must submit evidence of
insurability satisfactory to us that each Joint Insured is still insurable, or
if the policy lapsed after the first death of the Joint Insured, then evidence
of insurability for the Surviving Joint Insured. You must pay a premium large
enough such that the Net Premium is as large as the sum of the Surrender Charge
after reinstatement, plus the Monthly Deductions for the date of reinstatement
and the following Monthly Anniversary.
A lapsed Death Benefit Guarantee cannot be reinstated after the fifth
Policy Year.
SURRENDER BENEFITS
Subject to certain limitations, you may make a total surrender of the
Policy or a partial withdrawal of the Policy's Cash Surrender Value by sending
us a written request. We will determine the amount available for a total
surrender or partial withdrawal at the end of the Valuation Period when we
receive your written request. Generally, we will pay any amounts from the
Variable Account upon total surrender or partial withdrawal within seven days
after we receive your written request. We may postpone payments, however, in
certain circumstances. See "General Provisions -- Postponement of Payments".
TOTAL SURRENDER
You may surrender the Policy at any time for its Cash Surrender Value by
making a written request. The Cash Surrender Value is the Accumulation Value of
the Policy reduced by any Surrender Charge, Loan Amount and unpaid Monthly
Deductions. If the Cash Surrender Value at the time of a surrender exceeds
$25,000, the written request must include a Signature Guarantee. Appendix C
shows an
30
illustration of Accumulation Values, Cash Surrender Values, and Death Benefits
assuming different levels of premium payments and investment returns for
selected Ages and Face Amounts.
PARTIAL WITHDRAWAL
After the first Policy Year, you may withdraw part of the Cash Surrender
Value by sending us a written request. If the amount being withdrawn exceeds
$25,000, then the written request must include a Signature Guarantee. We
currently allow only one partial withdrawal in any Policy Year. We currently
make a $10 charge for each partial withdrawal. We guarantee that this charge
will not exceed $25 for each partial withdrawal. See "Deductions and Charges --
Partial Withdrawal and Transfer Charges". The amount of any partial withdrawal
must be at least $500 and, during the first 15 Policy Years, may not be more
than 20% of the Cash Surrender Value on the date we receive your written
request.
Unless you specify a different allocation, we make partial withdrawals from
the Fixed Account and the Sub-Accounts of the Variable Account on a
proportionate basis based upon the Accumulation Value. We will determine these
proportions at the end of the Valuation Period during which we receive your
written request. For purposes of determining these proportions, we first
subtract any outstanding Loan Amount from the Fixed Accumulation Value.
EFFECT OF PARTIAL WITHDRAWALS. We will reduce the Accumulation Value by the
amount of any partial withdrawal. We will also reduce the Death Benefit by the
amount of the withdrawal, or, if the Death Benefit is based on the corridor
percentage of Accumulation Value (see "Death Benefit -- Death Benefit Options"),
by an amount equal to the corridor percentage times the amount of the partial
withdrawal.
If the Level Amount Option is in effect, we will reduce the Face Amount by
the amount of the partial withdrawal. When increases in the Face Amount have
occurred previously, we reduce the current Face Amount by the amount of the
partial withdrawal in the following order:
(1) The Face Amount provided by the most recent increase;
(2) The next most recent increases successively; and
(3) The Face Amount when the Policy was issued.
(This assumption also applies to requested decreases in Face Amount -- see
"Death Benefit -- Requested Changes in Face Amount".) Thus, partial withdrawals
may affect the way in which the cost of insurance is calculated and the amount
of pure insurance protection under the Policy. See "Death Benefit -- Requested
Changes in Face Amount", "Deductions and Charges -- Monthly Deduction" and
"Death Benefit -- Insurance Protection".
We do not allow a partial withdrawal if the Face Amount after a partial
withdrawal would be less than the Minimum Face Amount.
If the Variable Amount Option or the Face Plus Premium Amount Option is in
effect, a partial withdrawal does not affect the Face Amount.
A partial withdrawal may also cause the termination of the Death Benefit
Guarantee because we deduct the amount of the partial withdrawal from the total
premiums paid in calculating whether you have paid sufficient premiums in order
to maintain the Death Benefit Guarantee.
Like partial withdrawals, Policy loans are a means of withdrawing money
from the Policy. See "Policy Loans". A partial withdrawal or a Policy loan may
have tax consequences depending on the circumstances of such withdrawal or loan.
See "Federal Tax Matters -- Tax Status of the Policy".
TRANSFERS
You may transfer all or part of the Variable Accumulation Value between the
Sub-Accounts or to the Fixed Account subject to any conditions the Funds whose
shares are involved may impose. You must make your transfer request in writing
unless you have completed a telephone transfer authorization form. You may also
direct us to automatically make periodic transfers under the Dollar Cost
Averaging or Portfolio Rebalancing services as described below.
To transfer all or part of the Variable Accumulation Value from a
Sub-Account, we redeem Accumulation Units and reinvest their values in other
Sub-Accounts, or the Fixed Account, as you direct
31
in your request. We will effect transfers, and determine all values in
connection with transfers, at the end of the Valuation Period during which we
receive your request, except as otherwise specified for the Dollar Cost
Averaging or Portfolio Rebalancing services. With respect to future Net Premium
payments, however, your current premium allocation will remain in effect unless
(1) you have requested the Portfolio Rebalancing service, or (2) you are
transferring all of the Variable Accumulation Value from the Variable Account to
the Fixed Account in exercise of conversion rights. See "Free Look and
Conversion Rights -- Conversion Rights".
Transfers from the Fixed Account to the Variable Account are subject to the
following additional restrictions:
o your transfer request must be postmarked no more than 30 days before or
after the Policy Anniversary in any year, and only one transfer is
permitted during this period,
o you may only transfer up to 50% of the Fixed Accumulation Value, less any
Loan Amount, unless the balance, after the transfer, would be less than
$1,000, in which event you may transfer the full Fixed Accumulation Value,
less any Loan Amount, and
o you must transfer at least the lesser of $500 or the total Fixed
Accumulation Value, less any Loan Amount.
Some of these restrictions may be waived for transfers due to the Portfolio
Rebalancing service.
TELEPHONE/FAX INSTRUCTIONS. You are allowed to enter certain types of
instructions either by telephone or by fax if you complete a telephone/fax
instruction authorization form. If you complete the form, you can enter the
following types of instructions by telephone or fax:
o transfers between Sub-Accounts
o changes of allocations among fund options
By completing the telephone/fax form, you agree that we will not be liable for
any loss, liability, cost or expense when we act in accordance with the
telephone/fax transfer instructions that we receive or are recorded on voice
recording equipment. If we later determine that you did not make a telephone/fax
transfer request or the request was made without your authorization, and loss
results from such unauthorized transfer, you bear the risk of this loss. We
consider any requests made via fax as telephone requests and such requests are
bound by the conditions in the telephone/fax transfer authorization form you
sign. Any fax request should include your name, daytime telephone number, Policy
number and, in the case of transfers, the names of the Sub-Accounts from which
and to which money will be transferred and the allocation percentage. ReliaStar
will employ reasonable procedures to confirm that instructions communicated by
telephone/fax are genuine. If we do not employ such procedures, we may be liable
for any losses due to unauthorized or fraudulent instructions. Such procedures
may include, among others, requiring forms of personal identification prior to
acting upon telephone/fax instructions, providing written confirmation of such
instructions, and/or tape recording telephone instructions.
DOLLAR COST AVERAGING SERVICE. You may request this service if your
Accumulation Value, less any Loan Amount, is at least $5,000. If you request
this service, you direct us to automatically make specific periodic transfers of
a fixed dollar amount from any of the Sub-Accounts to one or more of the
Sub-Accounts or to the Fixed Account. We do not permit transfers from the Fixed
Account under this service. You may request that we make transfers of this type
on a monthly, quarterly, semi-annual, or annual basis. This service is intended
to allow you to use "Dollar Cost Averaging", a long term investment method which
provides for regular investments over time. We make no guarantees that Dollar
Cost Averaging will result in a profit or protect against loss. You may
discontinue this service at any time by notifying us in writing.
If you are interested in the Dollar Cost Averaging service, you may obtain
a separate application form and full information concerning this service and its
restrictions from us or our registered representative.
We will discontinue the Dollar Cost Averaging service immediately (1) on
receipt of any request to begin a Portfolio Rebalancing service, (2) if the
Policy is in the grace period on any date when Dollar Cost Averaging transfers
are scheduled, or (3) if the specified transfer amount from any Sub-Account is
more than the Accumulation Value in that Sub-Account.
32
We reserve the right to discontinue, modify, or suspend this service. For a
Policy issued in New Jersey, we may not discontinue this service, but reserve
the right to charge up to $50 per transfer. Any such modification or
discontinuation would not affect any Dollar Cost Averaging service requests
already commenced.
PORTFOLIO REBALANCING SERVICE. You may request this service if your
Accumulation Value, less any Loan Amount, is at least $10,000. If you request
this service, you direct us to automatically make periodic transfers to maintain
your specified percentage allocation of Accumulation Value, less any Loan
Amount, among the Sub-Accounts of the Variable Account and the Fixed Account. We
will also change your allocation of future Net Premium payments to be equal to
this specified percentage allocation. You may request that we make transfers
under this service on a quarterly, semi-annual, or annual basis. This service is
intended to maintain the allocation you have selected consistent with your
personal objectives.
The Accumulation Value in each Sub-Account of the Variable Account and the
Fixed Account will grow or decline at different rates over time. Portfolio
Rebalancing will periodically transfer Accumulation Values from those accounts
that have increased in value to those accounts that have increased at a slower
rate or declined in value. If all accounts decline in value, it will transfer
Accumulation Values from those that have decreased less in value to those that
have decreased more in value. We make no guarantees that Portfolio Rebalancing
will result in a profit or protect against loss. You may discontinue this
service at any time by notifying us in writing.
If you are interested in the Portfolio Rebalancing service you may obtain a
separate application form and full information concerning this service and its
restrictions from us or our registered representative.
If you are using the Portfolio Rebalancing service, we will discontinue
this service immediately (1) on receipt of any request to change the allocation
of premiums to the Fixed Account and Sub-Account of the Variable Account, (2) on
receipt of any request to begin a Dollar Cost Averaging service, (3) upon
receipt of any request to transfer Accumulation Value among the accounts, or (4)
if the policy is in the grace period or the Accumulation Value, less any Loan
Amount, is less than $7,500 on any Valuation Date when Portfolio Rebalancing
transfers are scheduled.
We reserve the right to discontinue, modify, or suspend this service. For a
Policy issued in New Jersey, we may not discontinue this service, but reserve
the right to charge up to $50 per transfer. Any such modification or
discontinuation could affect Portfolio Rebalancing services currently in effect,
but only after 30 days notice to affected Policy owners.
TRANSFER LIMITS. We currently do not limit the number of transfers,
although we reserve the right to limit you to no more than 12 transfers per
Policy Year. All transfers that are effective on the same Valuation Date will be
treated as one transfer transaction. Transfers made due to the Dollar Cost
Averaging or Portfolio Rebalancing services do not currently count toward the
limit on number of transfers.
TRANSFER CHARGES. We currently make no charge for the first 24 transfers
during a Policy Year. We make a $25 charge for each subsequent transfer. We
reserve the right to make a charge not to exceed $25 for each transfer for the
duration of the Policy. Further, no charge currently is made for transfers to
implement Dollar Cost Averaging and Portfolio Rebalancing. See "Deductions and
Charges -- Partial Withdrawal and Transfer Charges". In no event, however, will
we impose any charge in connection with the exercise of a conversion right or
transfers occurring as the result of Policy Loans. All transfers are also
subject to any charges and conditions imposed by the Fund whose shares are
involved. We will treat all transfers that are effective on the same Valuation
Date as one transfer transaction for the purpose of assessing any transfer
charge.
POLICY LOANS
GENERAL. As long as the Policy remains in effect, you may borrow money from
us using the Policy as security for the loan. We reserve the right to limit
loans during the first Policy year (except that persons in Indiana and New
Jersey may take loans during the first Policy year if there is a Loan Amount).
The maximum amount you may borrow at any time is equal to the loan value of the
Policy, which is equal to 90% of the Cash Value less the existing Loan Amount,
except that under Policies issued in Texas the percentage is 100%. Each Policy
loan must be at least $500, except in Connecticut it
33
must be at least $200. After the older Joint Insured reaches age 65, we
currently allow 100% of the Cash Surrender Value to be borrowed.
You can make loan requests in writing or by telephoning us on any Valuation
Date. Any loan request in excess of $25,000 will require a Signature Guarantee.
Telephone loan requests cannot exceed $10,000. We currently do not require any
election form to make telephone loan requests. We will employ reasonable
procedures to confirm that loan requests made by telephone are genuine. In the
event we do not employ such procedures, we may be liable for any losses due to
unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmations of such instructions
and/or tape recording telephone instructions.
Policy loans have priority over the claims of any assignee or other person.
You may repay a Policy loan in whole or in part at any time while any Joint
Insured is alive.
We will normally pay the loan proceeds to you within seven days after we
receive your request. We may postpone payment of loan proceeds to you under
certain circumstances. See "General Provisions -- Postponement of Payments".
Payments you make generally will be treated as premium payments, rather
than Policy loan repayments, unless you indicate that we should treat the
payment otherwise or unless we decide, at our discretion, to apply the payment
as a Policy loan repayment. As a result, unless you indicate that a payment is a
loan repayment, all payments you make to the Policy will generally be subject to
the Premium Expense Charge. See "Deductions and Charges -- Premium Expense
Charge".
IMMEDIATE EFFECT OF POLICY LOANS. When we make a Policy loan, we will
segregate an amount equal to the Policy loan (which includes interest payable in
advance) within the Accumulation Value of your Policy and hold it in the Fixed
Account as security for the loan. As described below, you will pay interest to
us on the Policy loan, but we will also credit interest to you on the amount
held in the Fixed Account as security for the loan. We will include the amount
segregated in the Fixed Account as security for the Policy loan as part of the
Fixed Accumulation Value under the Policy, but we will credit that amount with
interest on a basis different from other amounts in the Fixed Account.
Unless you specify differently, amounts held as security for the Policy
loan will come proportionately from the Fixed Accumulation Value and the
Variable Accumulation Value (with the proportions being determined as described
below). We will transfer assets equal to the portion of the Policy loan coming
from the Variable Accumulation Value from the Sub-Accounts of the Variable
Account to the Fixed Account, THEREBY REDUCING THE POLICY VALUE HELD IN THE
SUB-ACCOUNTS. We do not treat these transfers as transfers for the purposes of
assessing the transfer charge or calculating the limit on the number of
transfers.
EFFECT ON INVESTMENT PERFORMANCE. Amounts coming from the Variable Account
as security for Policy loans will no longer participate in the investment
performance of the Variable Account. We will credit all amounts held in the
Fixed Account as security for Policy loans (that is, the Loan Amount) with
interest at an effective annual rate equal to 3.00%. WE WILL NOT CREDIT
ADDITIONAL INTEREST TO THESE AMOUNTS. On the Policy Anniversary, we will
allocate any interest credited on these amounts to the Fixed Account and the
Variable Account according to the premium allocation then in effect (see
"Payment and Allocation of Premiums -- Allocating Premiums").
Although you may repay Policy loans in whole or in part at any time, Policy
loans will permanently affect the Policy's potential Accumulation Value. As a
result, to the extent that the Death Benefit depends upon the Accumulation Value
(see "Death Benefit -- Death Benefit Options"), Policy loans will also affect
the Death Benefit under the Policy. This effect could be favorable or
unfavorable depending on whether the investment performance of the assets
allocated to the Sub-Account(s) is less than or greater than the interest being
credited on the assets transferred to the Fixed Account while the loan is
outstanding. Compared to a Policy under which no loan is made, values under the
Policy will be lower when such interest credited is less than the investment
performance of assets held in the Sub-Account(s).
EFFECT ON POLICY COVERAGE. We will notify you if, on any Monthly
Anniversary, the Loan Amount is greater than the Accumulation Value, less the
then applicable Surrender Charge. If we do not receive sufficient payment within
61 days from the date we send notice to you, the Policy will lapse and
34
terminate without value. Our written notice to you will indicate the amount of
the payment required to avoid lapse. The Policy may, however, later be
reinstated. See "Policy Lapse and Reinstatement".
A Policy loan may also cause termination of the Death Benefit Guarantee,
because we deduct the Loan Amount from the total premiums paid in calculating
whether you have paid sufficient premiums in order to maintain the Death Benefit
Guarantee. See "Death Benefit Guarantee".
We will reduce proceeds payable upon the death of the Insured by any Loan
Amount.
INTEREST. The interest rate charged on Policy loans will be an annual rate
of 4.762%, payable in advance. After the 10th Policy Year, we currently charge
interest at an annual rate of 2.913% (guaranteed not to exceed 3.382%), payable
in advance, on that portion of your Loan Amount that is not in excess of (1) the
Accumulation Value, less (2) the total of all premiums paid less all partial
withdrawals. We will charge interest on any excess of this amount at the annual
rate of 4.762%, payable in advance.
Interest is payable in advance (for the rest of the Policy Year) at the
time any Policy loan is made and at the beginning of each Policy Year thereafter
(for that entire Policy Year). If you do not pay interest when due, we will
deduct it from the Cash Surrender Value as an additional Policy loan (see
"Immediate Effect of Policy Loans" above) and we will add it to the existing
Loan Amount.
Because we charge interest in advance, we will refund any interest that we
have not earned to you upon lapse or surrender of the Policy or repayment of the
Policy Loan.
REPAYMENT OF LOAN AMOUNT. You may repay the Loan Amount any time. If not
repaid, we will deduct the Loan Amount from any amount payable under the Policy.
As described above, unless you provide us with notice to the contrary, we
generally will treat any payments on the Policy as premium payments, which are
subject to the Premium Expense Charge, rather than repayments on the Loan
Amount. Any repayments on the Loan Amount will result in amounts being
reallocated from the Fixed Account and to the Sub-Accounts of the Variable
Account according to your current premium allocation.
TAX CONSIDERATIONS. A Policy loan may have tax consequences depending on
the circumstances of the loan. See "Federal Tax Matters -- Tax Status of the
Policy".
FREE LOOK AND CONVERSION RIGHTS
FREE LOOK RIGHTS
The Policy provides for a "free look" period after application for and
issuance of the Policy. The Policy also provides for a "free look" period after
any requested increase in Face Amount.
During the free look period after application for and issuance of the
Policy, you have a right to return the Policy for cancellation. You must return
the Policy to your agent or us and ask us to cancel the Policy by midnight of
the 10th day after receiving the Policy. Upon cancellation of the Policy, you
will receive a refund of premiums paid for the Policy.
During the free look period after a requested increase in Face Amount, you
have the right to cancel the increase. You must request cancellation of the
increase by midnight of the 10th day after receiving the new Policy Data Page
reflecting the increase. Upon requesting cancellation of the increase, you will
receive a refund, if you so request, or otherwise a restoration to the Policy's
Accumulation Value (allocated among the Fixed Account and the Sub-Accounts of
the Variable Account as if it were a Net Premium payment), in an amount equal to
all Monthly Deductions attributable to the increase in Face Amount, including
rider cost arising from the increase.
CONVERSION RIGHTS
During the first two Policy Years and the first two years following a
requested increase in Face Amount, we provide you with an option to convert the
Policy or any requested increase in Face Amount to a life insurance policy under
which the benefits do not vary with the investment experience of the Variable
Account. We make this option available by permitting you to transfer all or a
part of your Variable Accumulation Value to the Fixed Account. Conversion rights
are discussed below.
GENERAL OPTION. You may exercise your conversion right by transferring all
or any part of your Variable Accumulation Value to the Fixed Account. If, at
any time during the first two Policy Years or
35
the first two years following a requested increase in Face Amount, you request
transfer from the Variable Account to the Fixed Account and indicate that you
are making the transfer in exercise of your conversion right, we will not assess
any transfer charge on the transfer, and the transfer will not count against the
limit on the number of transfers. At the time of such transfer, there is no
effect on the Policy's Death Benefit, Face Amount, net amount at risk, Rate
Class(es) or Issue Age -- only the method of funding the Accumulation Value
under the Policy will be affected. See "Death Benefit", "Accumulation Value" and
Appendix A, "The Fixed Account".
If you transfer all of the Variable Accumulation Value from the Variable
Account to the Fixed Account and indicate that you are making this transfer in
exercise of your Conversion Right, we will automatically credit all future
premium payments on the policy to the Fixed Account unless you request a
different allocation.
ADDITIONAL INFORMATION ON THE INVESTMENTS OF THE VARIABLE ACCOUNT
INVESTMENT LIMITS
The Variable Account currently consists of 34 investment options.
The Fund shares may be available to fund benefits under both variable
annuity and variable life contracts and policies. This could result in an
irreconcilable conflict between the interests of the holders of the different
types of variable contracts. The Funds have advised us that they will monitor
for such conflicts and will promptly provide us with information regarding any
such conflicts should they arise or become imminent, and we will promptly advise
the Funds if we become aware of any such conflicts. If any such material
irreconcilable conflict arises, we will arrange to eliminate and remedy such
conflict up to and including establishing a new management investment company
and segregating the assets underlying the variable policies and contracts at no
cost to the holders of the policies and contracts.
There also is a possibility that one Fund might become liable for any
misstatement, inaccuracy or incomplete disclosure in another Fund's prospectus.
The Funds distribute dividends and capital gains. However, we automatically
reinvest distributions in additional Fund shares, at net asset value. The
Sub-Account receives the distributions which are then reflected in the Unit
Value of that Sub-Account. See "Accumulation Value".
ReliaStar has entered into service arrangements with the managers or
distributors of certain of the Funds. Under these arrangements, ReliaStar or its
affiliates may receive compensation from affiliates of the Funds. This
compensation is for providing administrative, recordkeeping, distribution and
other services to the Funds or their affiliates. Such compensation is paid based
upon assets invested in the particular Funds, or based on the aggregated net
asset goals. Payments of such amounts by an affiliate or affiliates of the Funds
do not increase the fees paid by the Funds or their shareholders. The percentage
paid may vary from one Fund to another.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to compliance with applicable law, to make
additions to, deletions from, or substitutions for the shares that are held by
the Variable Account or that the Variable Account may purchase.
o We reserve the right to establish additional Sub-Accounts of the Variable
Account, each of which would invest in a new Fund, or in shares of another
investment company, with a specified investment objective. We may
establish new Sub-Accounts when, in our sole discretion, marketing needs
or investment conditions warrant, and we will make any new Sub-Accounts
available to existing Policy owners on a basis we determine.
o We may eliminate one or more Sub-Accounts, or prohibit additional new
premium or transfers into a Sub-Account, if, in our sole discretion,
marketing, tax, regulatory requirements or investment conditions warrant.
o We reserve the right to eliminate the shares of any of the Funds and to
substitute shares of another Fund or of another open-end, registered
investment company. We will not substitute any shares attributable to your
interest in a Sub-Account of the Variable Account without notice and prior
approval of the SEC, to the extent required by the Investment Company Act
of 1940 or other applicable law.
36
Nothing contained herein shall prevent the Variable Account from:
o Purchasing other securities of other Funds or classes of policies,
o Permitting a conversion between Funds or classes of policies on the basis
of requests made by Policy owners, or
o Substituting the shares of one fund for shares of another fund in the
event of a merger of funds or similar transaction.
In the event of any such substitution, deletion or change, we may make
appropriate changes in this and other policies to reflect such substitution,
deletion or change. If you allocated all or a portion of your investments to any
of the current funds that are being substituted for or deleted, you may transfer
the portion of the Accumulation Value affected without paying a transfer charge.
If we deem it to be in the best interests of persons having voting rights
under the Policies, we may:
o operate the Variable Account as a management company under the 1940 Act,
o deregister the Variable Account under the 1940 Act in the event such
registration is no longer required, or
o combine the Variable Account with our other separate accounts.
VOTING RIGHTS
You have the right to instruct us how to vote the Fund shares attributable
to the Policy at regular meetings and special meetings of the Funds. We will
vote the Fund shares held in Sub-Accounts according to the instructions
received, as long as:
o The Variable Account is registered as a unit investment trust under the
Investment Company Act of 1940; and
o The Variable Account's assets are invested in Fund shares.
If we determine that, because of applicable law or regulation, we do not
have to vote according to the voting instructions received, we will vote the
Fund shares at our discretion.
All persons entitled to voting rights and the number of votes they may cast
are determined as of a record date, selected by us, not more than 90 days before
the meeting of the Fund. All Fund proxy materials and appropriate forms used to
give voting instructions will be sent to persons having voting interests.
We will vote any Fund shares held in the Variable Account for which we do
not receive timely voting instructions, or which are not attributable to Policy
owners, in proportion to the instructions received from all Policy owners having
a voting interest in the Fund. Any Fund shares held by us or any of our
affiliates in general accounts will, for voting purposes, be allocated to all
separate accounts having voting interests in the Fund in proportion to each
account's voting interest in the respective Fund, and will be voted in the same
manner as are the respective account's votes.
Owning the Policy does not give you the right to vote at meetings of our
stockholders.
DISREGARDING VOTING INSTRUCTIONS. We may, when required by state insurance
regulatory authorities, disregard voting instructions if the instructions
require that the shares be voted so as to cause a change in the
subclassification or investment objective of any Fund or to approve or
disapprove an investment advisory contract for any Fund. In addition, we may
disregard voting instructions in favor of changes initiated by a Policy owner in
the investment policy or the investment adviser of any Fund if we reasonably
disapprove of such changes. We would disapprove a change only if the proposed
change is contrary to state law or prohibited by state regulatory authorities,
or we determine that the change would have an adverse effect on the Variable
Account in that the proposed investment policy for a Fund may result in
speculative or unsound investments. In the event we do disregard voting
instructions, we will include a summary of that action and the reasons for such
action in the next annual report to owners.
37
GENERAL PROVISIONS
BENEFITS AFTER AGE 100
If either of the Joint Insureds is living after age 100 of the younger
Joint Insured and the Policy is in force, the Death Benefit will be the
Accumulation Value.
OWNERSHIP
While the Surviving Joint Insured is alive, subject to the Policy's
provisions you may:
o Change the amount and frequency of premium payments.
o Change the allocation of premiums.
o Make transfers between accounts.
o Surrender the Policy for cash.
o Make a partial withdrawal for cash.
o Receive a cash loan.
o Assign the Policy as collateral.
o Change the beneficiary.
o Transfer ownership of the Policy.
o Enjoy any other rights the Policy allows.
While both Joint Insureds are alive, subject to this policy's provisions, you
may:
o Change the Death Benefit Option.
o Change the Face Amount.
PROCEEDS
At the Surviving Joint Insured's death, the proceeds payable include the
Death Benefit then in force:
o Plus any additional amounts provided by rider on the life of the Surviving
Joint Insured;
o Plus any Policy loan interest that we have collected but not earned;
o Minus any Loan Amount; and
o Minus any unpaid Monthly Deductions.
BENEFICIARY
You may name one or more beneficiaries on the application when you apply
for the Policy. You may later change beneficiaries by written request. You may
also name a beneficiary whom you cannot change without his or her consent
(irrevocable beneficiary). If no beneficiary is surviving when the Surviving
Joint Insured dies, we will pay the Death Benefit to you, if surviving, or
otherwise to your estate.
POSTPONEMENT OF PAYMENTS
We generally make payments from the Variable Account for Death Benefits,
cash surrender, partial withdrawal, or loans within seven days after we receive
all the documents required for the payments.
We may, however, delay making a payment when we are not able to determine
the Variable Accumulation Value because (1) the New York Stock Exchange is
closed, other than customary weekend or holiday closings, or the SEC restricts
trading on the New York Stock Exchange, (2) the SEC by order permits
postponement for the protection of Policyholders, or (3) the SEC determines that
an emergency exists which makes disposing of securities not reasonably
practicable, or which makes it not reasonably practicable to determine the value
of the Variable Account's net assets. We may also postpone transfers and
allocations to and from any Sub-Account of the Variable Account under these
circumstances.
We may delay any of the payments that we make from the Fixed Account for up
to six months from the date we receive the documents required. We will pay
interest at an effective annual rate of 3.50% if we delay payment more than 30
days. We will not credit any additional interest to any delayed payments. The
time a payment from the Fixed Account may be delayed and the rate of interest
paid on such amounts may vary among states.
SETTLEMENT OPTIONS
Settlement Options are ways you can choose to have the Policy's proceeds
paid. These Settlement Options apply to proceeds paid:
o At the Surviving Joint Insured's death.
38
o On total surrender of the Policy.
We pay the proceeds to one or more payees. We may pay the proceeds in a
lump sum or we may apply the proceeds to one of the following Settlement
Options. You may request that we use a combination of Options. You must apply at
least $2,500 to any Option for each payee under that Option. Under an
installment Option, each payment must be at least $25.00. We may adjust the
interval to make each payment at least $25.00.
Proceeds applied to any Option no longer earn interest at the rate applied
to the Fixed Account or participate in the investment performance of the Funds.
Option 1 -- Proceeds are left with us to earn interest. Withdrawals and
any changes are subject to our approval.
Option 2 -- Proceeds and interest are paid in equal installments of a
specified amount until the proceeds and interest are all paid.
Option 3 -- Proceeds and interest are paid in equal installments for a
specified period until the proceeds and interest are all paid.
Option 4 -- The proceeds provide an annuity payment with a specified
number of months "certain". The payments are continued for the
life of the primary payee. If the primary payee dies before the
certain period is over, the remaining payments are paid to a
contingent payee.
Option 5 -- The proceeds provide a life income for two payees. When one
payee dies, the surviving payee receives two-thirds of the amount
of the joint monthly payment for life.
INTEREST ON SETTLEMENT OPTIONS. We base the interest rate for proceeds
applied under Options 1 and 2 on the interest rate we declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors. The interest rate will never be less than an
effective annual rate of 2.00%.
In determining amounts we pay under Options 3, 4,and 5, we assume interest
at an effective annual rate of 2.00%. Also, for Option 3 and "certain" periods
under Option 4, we credit any excess interest we may declare on funds that we
consider to be in the same classification based on the Option, restrictions on
withdrawal, and other factors.
INCONTESTABILITY
After the Policy has been in force during both Joint Insured's lifetime for
two years from the Policy's Issue Date, we cannot claim the Policy is void or
refuse to pay any proceeds unless the Policy has lapsed.
If you make a Face Amount increase or a premium payment which requires
proof of insurability, the corresponding Death Benefit increase has its own
two-year contestable period measured from the effective date of the increase.
If the Policy is reinstated, we measure the contestable period from the
date of reinstatement with respect to statements made on the application for
reinstatement.
MISSTATEMENT OF AGE AND SEX
If any Joint Insured's Age or sex or both are misstated (except where
unisex rates apply), the Death Benefit will be the amount that the most recent
cost of insurance would purchase using the current cost of insurance rate for
the correct Age and sex.
SUICIDE
If any Joint Insured commits suicide, whether sane or insane, within two
years of the Policy's Issue Date (one year in Colorado and North Dakota), we do
not pay the Death Benefit. Instead, we refund all premiums paid for the Policy
and any attached riders, minus any Loan Amounts and partial withdrawals.
If you make a Face Amount increase or a premium payment which requires
proof of insurability, the corresponding Death Benefit increase has its own
two-year suicide limitation for the proceeds associated with that increase. If
any Joint Insured commits suicide, whether sane or insane, within two years of
the effective date of the increase, we pay the Death Benefit prior to the
increase and refund the cost of insurance for that increase.
39
TERMINATION
The Policy terminates when any of the following occurs:
o The Policy lapses. See "Policy Lapse and Reinstatement".
o The Surviving Joint Insured dies.
o You surrender the Policy for its Cash Surrender Value.
o We amend the Policy according to the amendment provision described below
and you do not accept the amendment.
AMENDMENT
We reserve the right to amend the Policy in order to include any future
changes relating to the following:
o Any SEC rulings and regulations.
o The Policy's qualification for treatment as a life insurance policy
under the following:
-- The Code as amended.
-- Internal Revenue Service rulings and regulations.
-- Any requirements imposed by the Internal Revenue Service.
REPORTS
ANNUAL STATEMENT. We will send you an Annual Statement once each year,
showing the Face Amount, Death Benefit, Accumulation Value, Cash Surrender
Value, Loan Amount, premiums paid, Planned Periodic Premiums, interest credits,
partial withdrawals, transfers, and charges since the last statement.
Additional statements are available upon request. We may make a charge not
to exceed $50 for each additional Annual Statement you request.
PROJECTION REPORT. Upon request, we will provide you a report projecting
future results based on the Death Benefit Option you specify, the Planned
Periodic Premiums you specify, and the Accumulation Value of your Policy at the
end of the prior Policy Year. We may make a charge not to exceed $50 for each
Projection Report you request after the first report and after the first report
in a Policy Year.
OTHER REPORTS. The Company will mail to you at your last known address of
record at least annually a report containing such information as may be required
by any applicable law. To reduce expenses, only one copy of most financial
reports and prospectuses will be mailed to your household, even if you or other
persons in your household have more than one Policy. Call 1-800-456-6965 if you
need copies of financial reports, prospectuses, annual and semi-annual reports,
or historical account information.
DIVIDENDS
The Policy does not entitle you to participate in our surplus. We do not
pay you dividends under the Policy.
The Sub-Account receives any dividends paid by the related Fund. Any such
dividend is credited to you through the calculation of the Sub-Account's daily
Unit Value.
COLLATERAL ASSIGNMENT
You may assign the benefits of the Policy as collateral for a debt. This
limits your rights to the Cash Surrender Value and the beneficiary's rights to
the proceeds. An assignment is not binding on us until we receive written
notice.
OPTIONAL INSURANCE BENEFITS
The Policy can include additional benefits, in the form of riders to the
Policy, if our requirements for issuing such benefits are met. We currently
offer the following benefit riders, although some riders may not be available in
some states.
FOUR YEAR TERM RIDER (FTR) -- Provides a four year, level term benefit if
the Surviving Joint Insured dies during the first four Policy Years.
SURVIVORSHIP TERM RIDER (STR) -- Provides a level term insurance benefit
payable on the death of the Surviving Joint Insured if death occurs prior to age
100 of the younger Joint Insured. The current cost of insurance rates for the
rider are expected to be lower than for the base Policy. In addition, the
40
base policy's Monthly Amount Charge per $1,000 and Surrender Charge do not apply
to coverage under the rider. However, the STR will cause the Death Benefit
Guarantee Period of the base Policy to be shortened.
After the tenth policy year, if the base Death Benefit is equal to the
Accumulation Value multiplied by the corridor percentage (see "Death Benefit"),
the STR amount may be replaced with base coverage without providing evidence of
insurability. The entire rider amount must be replaced if any amount is
replaced. Neither Surrender Charges nor Monthly Amount Charges will apply to the
new additional base coverage. Cost of insurance rates on this new additional
base coverage will be equal to the cost of insurance rates for the original base
coverage.
There may be times in which it will be to your economic advantage to
include a significant portion of your insurance coverage under a term rider. In
some other circumstances, it may be in your interest to obtain a Policy without
term rider coverage. These circumstances depend on many factors, including the
premium levels and amount and duration of coverage you choose, as well as the
ages, sexes, and premium classes of the Joint Insureds.
POLICY SPLIT OPTION RIDER (PSO) -- Allows the policyowner to split the
Policy into two individual permanent life insurance policies in the event of a
divorce of the Joint Insureds, dissolution of a business partnership of the
Joint Insureds, or if there is a change in the federal estate tax laws that
would eliminate the unlimited marital deduction or reduce by at least 50% the
estate taxes payable at death. Evidence of insurability on each Joint Insured
may be required to exercise this option. There is no cost for this rider.
ADDITIONAL INSURED RIDER -- Provides level term coverage to Age 100 on
either of the Joint Insureds.
FULL DEATH BENEFIT RIDER -- Changes the calculation of the Death Benefit
after Age 100 of the younger Joint Insured. Without the rider, the Death Benefit
after Age 100 of the younger Joint Insured is the Accumulation Value. With the
rider, the Death Benefit after Age 100 of the younger Joint Insured will
continue to be calculated reflecting the chosen Death Benefit Option. At Age 100
of the younger Joint Insured, all of the Variable Accumulation Value will be
transferred to the Fixed Account and subsequent transfers will not be allowed.
There will be no cost of insurance charges assessed after age 100 of the younger
Joint Insured.
FEDERAL TAX MATTERS
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon the Company's understanding
of the present Federal income tax laws. No representation is made as to the
likelihood of continuation of the present Federal income tax laws or as to how
they may be interpreted by the Internal Revenue Service (the "IRS").
Any qualified plan contemplating the purchase of a life policy should
consult a tax advisor.
TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited, especially for policies issued on a
last survivor basis. Nevertheless, the Company believes that a Policy issued on
the basis of a standard risk class should satisfy the applicable requirements.
There is less guidance with respect to Policies issued on a substandard basis
(i.e., a premium class involving higher than standard mortality risk), and it is
not clear whether such a Policy would satisfy the applicable requirements,
particularly if the owner pays the full amount of premiums permitted under the
Policy. If it is subsequently determined that a Policy does not satisfy the
applicable requirements, the Company may take appropriate steps to bring the
Policy into compliance with such requirements and reserves the right to restrict
Policy transactions in order to do so.
41
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the variable account supporting their policies due to their ability to
exercise investment control over these assets. Where this is the case, the
policy owners have been currently taxed on income and gains attributable to the
variable account assets. There is little guidance in this area, and some
features of the Policies, such as the flexibility of an owner to allocate
premium payments and Policy Accumulation Values, have not been explicitly
addressed in published rulings. While the Company believes that the Policies do
not give owners investment control over Variable Account assets, the Company
reserves the right to modify the Policies as necessary to prevent an owner from
being treated as the owner of the Variable Account assets supporting the Policy.
In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Variable Account, through the Funds, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. The Company believes that the Death Benefit under a Policy
should be excludible from the gross income of the Beneficiary. Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each owner or beneficiary. A tax advisor
should be consulted on these consequences.
Generally, the owner will not be deemed to be in constructive receipt of
the Policy Accumulation Value until there is a distribution. When distributions
from a Policy occur, including payments arising from any maturity benefits, or
when loans are taken out from or secured by (e.g., by assignment), a Policy, the
tax consequences depend on whether the Policy is classified as a "Modified
Endowment Contract."
MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life
insurance contracts are classified as "Modified Endowment Contracts," with less
favorable tax treatment than other life insurance contracts. Due to the
flexibility of the Policies as to premiums and benefits, the individual
circumstances of each Policy will determine whether it is classified as a
Modified Endowment Contract. The rules are too complex to be summarized here,
but generally depend on the amount of premiums paid during the first seven
Policy Years. Certain changes in a Policy after it is issued could also cause it
to be classified as a Modified Endowment Contract. A current or prospective
owner should consult with a competent advisor to determine whether a Policy
transaction will cause the Policy to be classified as a Modified Endowment
Contract. The Company will monitor the Policies, however, and will attempt to
notify an owner on a timely basis if it believes that such owner's Policy is in
jeopardy of becoming a Modified Endowment Contract.
DISTRIBUTIONS FROM MODIFIED ENDOWMENT CONTRACTS. POLICIES CLASSIFIED AS
MODIFIED ENDOWMENT CONTRACTS ARE SUBJECT TO THE FOLLOWING TAX RULES:
(1) All distributions, including distributions upon surrender and
withdrawals, will be treated as ordinary income subject to tax up to an
amount equal to the excess (if any) of the unloaned Policy Accumulation
Value (Cash Surrender Value for surrenders) immediately before the
distribution plus prior distributions over the owner's total investment
in the Policy at that time. "Total investment in the Policy" means the
aggregate amount of any premiums or other considerations paid for a
Policy, plus any previously taxed distributions, minus any credited
dividends.
(2) Loans taken from or secured by (e.g., by assignment) such a Policy are
treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount included in
income except where distribution or loan is made when the owner has
attained age 591/2 or is disabled, or where the distribution is part of
a series of substantially equal periodic payments for the life (or life
expectancy) of the owner or the joint lives (or joint life expectancies)
of the owner and the owner's beneficiary or designated beneficiary.
DISTRIBUTIONS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT
CONTRACTS. Distributions from a Policy that is not a Modified Endowment
Contract are generally treated first as a recovery of an owner's
42
investment in the Policy and only after the recovery of all investment in the
Policy as taxable income. However, certain distributions which must be made in
order to enable the Policy to continue to qualify as a life insurance contract
for Federal income tax purposes if Policy benefits are reduced during the first
15 Policy Years may be treated in whole or in part as ordinary income subject to
tax.
Loans from or secured by a Policy that is not a Modified Endowment Contract
are not treated as distributions, except that upon lapse of a Policy any
outstanding Policy loan will be deemed to be distributed.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a Modified Endowment Contract are subject to the 10 percent
additional tax.
POLICY LOANS. In general, interest on a loan from a Policy will not be
deductible. Before taking out a Policy loan, you should consult a tax advisor
as to the tax consequences.
MULTIPLE POLICIES. All Modified Endowment Contracts that we (or our
affiliates) issue to the same owner during any calendar year are treated as one
Modified Endowment Contract for purposes of determining the amount includible in
the owner's income when a taxable distribution occurs.
TAXATION OF RELIASTAR LIFE INSURANCE COMPANY
We do not initially expect to incur any income tax burden upon the earnings
or the realized capital gains attributable to the Variable Account. Based on
this expectation, we currently make no charge to the Variable Account for
Federal income taxes which may be attributable to the Account. If, however, we
determine that we may incur such tax burden, we may assess a charge for such
burden from the Variable Account.
We may also incur state and local taxes, in addition to premium taxes, in
several states. At present these taxes are not significant. If there is a
material change in state or local tax laws, we may make charges for such taxes,
if any, attributable to the Variable Account.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Policy could change by
legislation or other means. Moreover, it is also possible that any change could
be retroactive (that is, effective prior to the date of the change). You should
consult a tax adviser with respect to legislative developments and their effect
on the Policy.
OTHER CONSIDERATIONS
The foregoing discussion is general and is not intended as tax advice. Any
person concerned about these tax implications should consult a competent tax
advisor. This discussion is based on our understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. We make no representations as to the likelihood of continuation of
these current laws and interpretations. In addition, the foregoing discussion is
not exhaustive and special rules not described in this Prospectus may be
applicable in certain situations. Moreover, we have made no attempt to consider
any applicable state or other tax laws.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
The Policy is based on actuarial tables which distinguish between men and
women and therefore provide different benefits to men and women of the same Age.
Employers and employee organizations should consider, in consultation with legal
counsel, the impact of the Supreme Court decision of July 6, 1983 in ARIZONA
GOVERNING COMMITTEE V. NORRIS. That decision stated that optional annuity
benefits provided under an employee's deferred compensation plan could not,
under Title VII of the Civil Rights Act of 1964, vary between men and women on
the basis of sex. Employers and employee organizations should also consider, in
consultation with legal counsel, the impact of Title VII generally, and
comparable state laws that may be applicable, on any employment-related
insurance or benefit plan for which a Policy may be purchased.
Because of the NORRIS decision, the charges under the Policy that vary
depending on sex may in some cases not vary on the basis of the Insured's sex.
Unisex rates to be provided by us will apply, if requested on the application,
for tax-qualified plans and those plans where an employer believes that the
NORRIS decision applies. In this case, references made to the mortality tables
applicable to this Policy are to be disregarded and substituted with an 80% male
20% female blend of the 1980 Commissioner's Standard Ordinary Smoker and
Non-Smoker Mortality Tables, Age Last Birthday.
43
DISTRIBUTION OF THE POLICIES
We intend to sell the Policies in all jurisdictions where we are licensed.
The Policies will be distributed by the general distributor, Washington
Square Securities, Inc., (WSSI), a Minnesota corporation, which is an affiliate
of ours. WSSI is a securities broker-dealer registered with the SEC and is a
member of the National Association of Securities Dealers, Inc. It is primarily a
mutual funds dealer and has dealer agreements under which it markets shares of
many mutual funds. It also markets limited partnerships and other tax-sheltered
or tax-deferred investments, and acts as general distributor (principal
underwriter) for variable annuity and variable life insurance products issued by
us. The Policies will be sold by licensed insurance agents who are also
registered representatives of WSSI or of other broker-dealers registered with
the SEC under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. The Policies may also be sold
through other broker-dealers authorized by WSSI and applicable law to do so.
Registered representatives of such broker-dealers may be paid on a different
basis than described below.
The Policies will be sold by licensed insurance agents who are also
registered representatives of broker-dealers registered with the SEC under the
Securities Exchange Act of 1934 who are members of the National Association of
Securities Dealers, Inc. Registered representatives who sell the Policies will
receive commissions based on a commission schedule. In the first Policy Year,
commissions generally will be no more than 50% of the premiums paid up to the
annualized Minimum Monthly Premium, plus 2% of additional premiums. In any
subsequent Policy Years 2 through 10, commissions generally will be 2% of
premiums paid in that year. Corresponding commissions will be paid upon a
requested increase in Face Amount. In addition, a commission of .10% of the
average monthly Accumulation Value excluding any Loan Amount during each Policy
Year may be paid after Policy Year 10. Further, registered representatives may
be eligible to receive certain overrides and other benefits based on the amount
of earned commissions.
For all Policies issued by the Select*Life Variable Account, the aggregate
amounts paid to WSSI under our Distribution Agreement was $51,164,472 in 1999,
$46,485,880 in 1998, and $34,572,698 in 1997.
MANAGEMENT
The following is a list of the current directors and executive officers of
the Company, their principal occupation and business experience.
PRINCIPAL OCCUPATION
DIRECTORS AND OFFICERS AND BUSINESS EXPERIENCE
- ------------------------ -------------------------------------------------------------------------
Richard R. Crowl(2) Senior Vice President, General Counsel and Secretary of ReliaStar
Financial Corp. since 1996; Senior Vice President and General Counsel
of Security-Connecticut Life Insurance Company since 1997; Senior
Vice President, General Counsel, and Assistant Secretary of Northern
Life Insurance Company since 1996; Senior Vice President and General
Counsel of ReliaStar Life Insurance Company and ReliaStar Life
Insurance Company of New York since 1996; Senior Vice President and
General Counsel of ReliaStar United Services Life Insurance Company
from 1996 to 1998 at which time this company merged into ReliaStar
Life Insurance Company; Senior Vice President and General Counsel
of ReliaStar Investment Research, Inc. (formerly known as Washington
Square Advisers, Inc.) since 1986; Vice President and Associate General
Counsel of ReliaStar Financial Corp. from 1989 to 1996; Vice President
and Associate General Counsel of ReliaStar Life Insurance Company
from 1985 to 1996; Director and Senior Vice President of various
subsidiaries of ReliaStar Financial Corp.
Michael J. Dubes(2) President and Chief Executive Officer of Northern Life Insurance
Company since 1994; Senior Vice President of ReliaStar Life Insurance
Company since 1987; Senior Vice President of Security-Connecticut
Life Insurance Company since 1999; Chairman of Washington Square
Securities, Inc. from 1987 to 1994; Senior Vice President of ReliaStar
Financial Corp. since 1997; Director and Officer of various subsidiaries
of ReliaStar Financial Corp.
44
PRINCIPAL OCCUPATION
DIRECTORS AND OFFICERS AND BUSINESS EXPERIENCE
- ------------------------ --------------------------------------------------------------------------
Wayne R. Huneke(2) Senior Executive Vice President of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company since 1999; Senior Vice President of
ReliaStar Financial Corp. and ReliaStar Life Insurance Company from
1994 to 1999; Chief Financial Officer and Treasurer of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company from 1994 to
1997; Director and Officer of various subsidiaries of ReliaStar Financial
Corp.
Dewette Ingham, Jr.(1) Senior Vice President of ReliaStar Financial Corp. since 1998; Corporate
Vice President of R.R. Donnelley & Sons Company from 1993 to 1998;
Director of ReliaStar Life Insurance Company.
Mark S. Jordahl(2) President and Chief Executive Officer of ReliaStar Investment Research,
Inc. since 1998; Senior Vice President and Chief Investment Officer of
Security-Connecticut Life Insurance Company since 2000; Senior Vice
President and Chief Investment Officer of ReliaStar Life Insurance
Company and ReliaStar Financial Corp. since 1998; Senior Vice President
of Security-Connecticut Life Insurance Company since 1998; Vice
President of ReliaStar Life Insurance Company and ReliaStar Financial
Corp. from 1987 to 1998; Director and Officer of various subsidiaries of
ReliaStar Financial Corp.
Kenneth U. Kuk(2) Executive Vice President of ReliaStar Financial Corp. and ReliaStar
Life Insurance Company since 1999; Senior Vice President of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company from 1996 to
1999; Vice President of ReliaStar Life Insurance Company from 1996
to 1998; Vice President of ReliaStar Financial Corp. from 1991 to
1998; President of Washington Square Advisers, Inc. from 1995 to
1998; Chairman of ReliaStar Mortgage Corporation from 1988 to
1998; Director and Officer of various subsidiaries of ReliaStar Financial
Corp.
Susan W. A. Mead(2) Vice President of ReliaStar Financial Corp. and ReliaStar Life Insurance
Company since 1996; Second Vice President of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company from 1992 to 1996;
Director and Officer of various subsidiaries of ReliaStar Financial
Corp.
James R. Miller(2) Senior Vice President and Chief Financial Officer of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company since 2000; Senior Vice
President, Chief Financial Officer and Treasurer of ReliaStar Financial
Corp. and ReliaStar Life Insurance Company from 1997 to 2000;
Executive Vice President and Chief Operating Officer of Northern Life
Insurance Company from 1992 to 1997; Vice President of ReliaStar
Financial Corp. from 1985 to 1992; Director and Officer of various
subsidiaries of ReliaStar Financial Corp.
Robert C. Salipante(2) Chairman of Security-Connecticut Life Insurance Company since 2000;
President and Chief Operating Officer of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company since 1999; Senior Vice President of
ReliaStar Financial Corp. and ReliaStar Life Insurance Company from
1996 to 1999; Vice Chairman of ReliaStar Life Insurance Company of
New York since 1999; President and Chief Executive Officer of ReliaStar
Life Insurance Company of New York from 1998 to 1999; Senior Vice
President of ReliaStar Financial Corp. from 1994 to 1996; Senior Vice
President and Chief Financial Officer of ReliaStar Financial Corp. from
1992 to 1994; Director and Officer of various subsidiaries of ReliaStar
Financial Corp.
45
PRINCIPAL OCCUPATION
DIRECTORS AND OFFICERS AND BUSINESS EXPERIENCE
- ------------------------ ----------------------------------------------------------------------
John G. Turner(2) Chairman and Chief Executive Officer of ReliaStar Financial Corp. and
ReliaStar Life Insurance Company since 1993; Chairman of ReliaStar
United Services Life Insurance Company from 1995 until its merger
with ReliaStar Life Insurance Company in 1998; Chairman of ReliaStar
Life Insurance Company of New York since 1995; Chairman of Northern
Life Insurance Company since 1991; Director and Officer of various
subsidiaries of ReliaStar Financial Corp.
James R. Gelder(3) President and Chief Executive Officer of ReliaStar Life Insurance
Company of New York since 1999; Senior Vice President of ReliaStar
Life Insurance Company since 1999; Executive Vice President of
ReliaStar Life Insurance Company of New York from 1997 to 1999;
President and Chief Executive Officer of Security-Connecticut Life
Insurance Company since 1998; Executive Vice President and Chief
Operating Officer of Security-Connecticut Life Insurance Company
from 1997 to 1998; Vice President of ReliaStar Life Insurance Company
from 1994 to 1999; Director and Officer of various subsidiaries of
ReliaStar Financial Corp.
PaulH. Gulstrand(3) Senior Vice President of ReliaStar Life Insurance Company since 1999;
Vice President of ReliaStar Life Insurance Company from 1996 to 1999;
Second Vice President of ReliaStar Life Insurance Company from 1995 to
1996; Regional Vice President of ReliaStar Life Insurance Company from
1994 to 1995.
Blake W. Mohr(3) Senior Vice President of ReliaStar Life Insurance Company since 1999;
Vice President of ReliaStar Life Insurance Company of New York since
1997; Vice President of ReliaStar Life Insurance Company from 1997 to
1999; Second Vice President of ReliaStar Life Insurance Company from
1993 to 1997.
Roger A. Weber(3) Senior Vice President of ReliaStar Life Insurance Company since 1999;
Vice President of ReliaStar Life Insurance Company of New York since
1996; Vice President of ReliaStar United Services Life Insurance
Company from 1996 to 1998 at which time this company merged into
ReliaStar Life Insurance Company; Vice President of ReliaStar Life
Insurance Company from 1996 to 1999; Vice President and Chief
Auditor of ReliaStar Financial Corp. and ReliaStar Life Insurance
Company in 1996; Second Vice President and Auditor of ReliaStar
Financial Corp. and ReliaStar Life Insurance Company from 1989 to
1996.
Theresa A. Wurst(3) Senior Vice President of ReliaStar Life Insurance Company since 1999;
Vice President of ReliaStar Life Insurance Company of New York since
2000; Vice President of ReliaStar Life Insurance Company from 1993 to
1999.
- ------------------
(1) Director of ReliaStar Life Insurance Company
(2) Director and Officer of ReliaStar Life Insurance Company
(3) Officer of ReliaStar Life Insurance Company
The Executive Committee of our Board of Directors consists of Directors
Salipante, Crowl and Turner.
46
The following is a list of the current directors and executive officers of
the principal underwriter and their business addresses.
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES
- --------------------------- -------------------------------------------------------
Wayne R. Huneke* Director
Robert C. Salipante* Chairman, Director
Jeffrey A. Montgomery* President and Chief Executive Officer, Director
Kenneth S. Cameranesi* Executive Vice President and Chief Operations Officer
Gene Grayson* Executive Vice President, National Sales and Marketing
Seth Schwartz Vice President
Daniel S. Kuntz* Assistant Vice President and Treasurer
David A. Sheridan
20 Security Drive
Avon, Connecticut 06001 Vice President
Susan M. Bergen* Secretary
Margaret B. Wall* Vice President
Loralee A. Renelt* Assistant Secretary
Allen Kidd
222 North Arch Road
Richmond, Virginia 23236 Assistant Secretary
- ------------------
* 20 Washington Avenue South
Minneapolis, Minnesota 55401
47
STATE REGULATION
We are subject to the laws of the State of Minnesota governing insurance
companies and to regulation and supervision by the Insurance Division of the
State of Minnesota. We file an annual statement in a prescribed form with the
Insurance Division each year, and in each state we do business, covering our
operations for the preceding year and our financial condition as of the end of
that year. Our books and accounts are subject to review by the Insurance
Division and a full examination of our operations is conducted periodically
(usually every three years) by the National Association of Insurance
Commissioners. This regulation does not, however, involve supervision or
management of our investment practices or policies.
In addition, we are subject to regulation under the insurance laws of other
jurisdictions in which we operate.
We are also subject to supervision and verification by the State of
Minnesota regarding participating business allocated to the Participation Fund
Account, which was established in connection with the reorganization and
demutualization of the Company in 1989. The Participation Fund Account was
established for the purpose of maintaining the dividend practices relative to
certain policies previously issued by the Company's former Mutual Department.
The Participation Fund Account is not a separate account as described under
Minnesota Statutes Chapter 61A. An annual examination of the Participation Fund
Account is made by independent consulting actuaries representing the Insurance
Division of the State of Minnesota.
MONTANA RESIDENTS
If you are a resident of Montana, you should disregard all Policy
provisions described in the prospectus that are based on the sex of the Insured.
We will issue this Policy in Montana on a unisex basis. You also should
disregard references made to the mortality tables applicable to this Policy and
substitute these references with an 80% male 20% female blend of the 1980
Commissioner's Standard Ordinary Smoker and Non-Smoker Mortality Tables, Age
Last Birthday. You should also be aware that the Illustration of Policy Values
that are included as an exhibit to the registration statement are sex distinct
and therefore, you should request a unisex illustration.
LEGAL PROCEEDINGS
The Variable Account is not a party to any pending legal proceedings. The
Company is a defendant in various lawsuits in connection with the normal conduct
of its insurance operations. Some of the claims seek to be granted class action
status and many of the claims seek both compensatory and punitive damages. In
the opinion of management, the ultimate resolution of such litigation will not
have a material adverse impact to the financial position of the Company. It
should be noted, however, that a number of financial services companies have
been subjected to significant awards in connection with punitive damages claims
and the Company can make no assurances that it will not be subjected to such an
award. The defense of the putative class actions pending against the Company may
require the commitment of substantial internal resources and the retention of
legal counsel and expert advisors.
BONDING ARRANGEMENTS
The Company maintains a blanket bond is maintained providing $25,000,000
coverage for our officers and employees and those of Washington Square
Securities, Inc., (WSSI), subject to a $500,000 deductible.
LEGAL MATTERS
Legal matters in connection with the Variable Account and the Policy
described in this Prospectus have been passed upon by Stewart D. Gregg, Esquire,
Attorney for the Company.
48
EXPERTS
The financial statements of ReliaStar's Select*Life Variable Account as
of December 31, 1999 and for each of the three years then ended and the
consolidated financial statements of ReliaStar Life Insurance Company and
subsidiaries as of and for December 31, 1999 and for the two years then ended
included in this Prospectus have been audited by _______________, independent
auditors, as stated in their reports which are included herein, and have been so
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing. The June 30, 2000 financial statements are
unaudited.
Actuarial matters included in this Prospectus have been examined by Craig
A. Krogstad, F.S.A., M.A.A.A., as stated in the opinion filed as an exhibit to
the Registration Statement.
REGISTRATION STATEMENT CONTAINS FURTHER INFORMATION
A Registration Statement has been filed with the SEC under the Securities
Act of 1933 with respect to the Policies. This Prospectus does not contain all
information included in the Registration Statement, its amendments and exhibits.
For further information concerning the Variable Account, the Funds, the Policies
and us, please refer to the Registration Statement.
Statements in this Prospectus concerning provisions of the Policy and other
legal documents are summaries. Please refer to the documents as filed with the
SEC for a complete statement of the provisions of those documents.
Information may be obtained from the SEC's principal office in Washington,
D.C., for a fee it prescribes, or examined there without charge.
FINANCIAL STATEMENTS
The financial statements for the Variable Account reflect the operations of
the Variable Account and its Sub-Accounts as of and for the six months ended
June 30, 2000; and as of December 31, 1999 and for each of the three years in
the period then ended. The December 31, 1999 financial statements are audited.
The June 30, 2000 financial statements are unaudited. The periods covered are
not necessarily indicative of the longer term performance of the assets held in
the Variable Account.
The financial statements of ReliaStar Life Insurance Company and
subsidiaries which are included in this Prospectus should be distinguished from
the financial statements of the Variable Account and should be considered only
as bearing upon the ability of ReliaStar Life Insurance Company to meet its
obligations under the Policies. They should not be considered as bearing on the
investment performance of the assets held in the Variable Account. These
financial statements are as of and for the six months ended June 30, 2000; and
as of December 31, 1999 and for each of the two years in the period ended
December 31, 1999. The financial statements of December 31, 2000 are audited.
The June 30, 2000 financial statements are unaudited. The periods covered are
not necessarily indicative of the longer term performance of the Company.
49
APPENDIX A
THE FIXED ACCOUNT
The Fixed Account consists of all of our assets other than those in our
separate accounts. We have complete ownership and control of all of the assets
of the Fixed Account.
Because of exemptions and exclusions contained in the Securities Act of
1933 and the Investment Company Act of 1940, the Fixed Account has not been
registered under these acts. Neither the Fixed Account nor any interest in it is
subject to the provisions of these acts and as a result the SEC has not reviewed
the disclosures in this Prospectus relating to the Fixed Account. However,
disclosures relating to the Fixed Account are subject to generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
We guarantee both principal and interest on amounts credited to the Fixed
Account. We credit interest at an effective annual rate of at least 3%,
independent of the investment experience of the Fixed Account. From time to
time, we may guarantee interest at a rate higher than 3%.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS
OF 3% PER YEAR WILL BE DETERMINED AT OUR SOLE DISCRETION. YOU ASSUME THE RISK
THAT INTEREST CREDITED TO THE FIXED ACCOUNT MAY NOT EXCEED THE MINIMUM GUARANTEE
OF 3% FOR A GIVEN YEAR.
We do not use a specific formula for determining excess interest credits.
However, we consider the following:
o General economic trends,
o Rates of return currently available on our investments,
o Rates of return anticipated in our investments, regulatory and tax
factors, and
o Competitive factors.
We are not aware of any statutory limitations to the maximum amount of
interest we may credit and our Board of Directors has not set any limitations.
The Fixed Accumulation Value of the Policy is the sum of the Net Premiums
credited to the Fixed Account. It is increased by transfers and Loan Amounts
from the Variable Account, and interest credits. It is decreased by Monthly
Deductions and partial withdrawals taken from the Fixed Account and transfers to
the Variable Account. The Fixed Accumulation Value will be calculated at least
monthly on the monthly anniversary date.
You may transfer all or part of your Fixed Accumulation Value to the
Sub-Accounts of the Variable Account, subject to the following transfer
limitations:
o The request to transfer must be postmarked no more than 30 days before the
Policy Anniversary and no later than 30 days after the Policy Anniversary.
Only one transfer is allowed during this period.
o The Fixed Accumulation Value after the transfer must be at least equal to
the Loan Amount.
o No more than 50% of the Fixed Accumulation Value (minus any Loan Amount)
may be transferred unless the balance, after the transfer, would be less
than $1,000. If the balance would be less than $1,000, the full Fixed
Accumulation Value (minus any Loan Amount) may be transferred.
o You must transfer at least:
-- $500, or
-- the total Fixed Accumulation Value (minus any Loan Amount) if less
than $500.
We make the Monthly Deduction from your Fixed Accumulation Value in
proportion to the total Accumulation Value of the Policy.
The Surrender Charge described in the Prospectus applies to the total
Accumulation Value, which includes the Fixed Accumulation Value. If the Owner
surrenders the Policy for its Cash Surrender Value, the Fixed Accumulation Value
will be reduced by any applicable Surrender Charge, any Loan Amount and unpaid
Monthly Deductions applicable to the Fixed Account.
A-1
APPENDIX B
CALCULATION OF ACCUMULATION VALUE
The Accumulation Value of the Policy is equal to the sum of the Variable
Accumulation Value plus the Fixed Accumulation Value.
VARIABLE ACCUMULATION VALUE
The Variable Accumulation Value is the total of your values in each
Sub-Account. The value for each Sub-Account is equal to:
1 multiplied by 2, where:
1
Is your current number of Accumulation Units (described below).
2
Is the current Unit Value (described below).
The Variable Accumulation Value will vary from Valuation Date to Valuation
Date (described below) reflecting changes in 1 and 2 above.
ACCUMULATION UNITS. When transactions are made which affect the Variable
Accumulation Value, dollar amounts are converted to Accumulation Units. The
number of Accumulation Units for a transaction is found by dividing the dollar
amount of the transaction by the current Unit Value.
The number of Accumulation Units for a Sub-Account increases when:
o Net Premiums are credited to that Sub-Account; or
o Transfers from the Fixed Account or other Sub-Accounts are credited to
that Sub-Account.
The number of Accumulation Units for a Sub-Account decreases when:
o You take out a Policy loan from that Sub-Account;
o You take a partial withdrawal from that Sub-Account;
o We take a portion of the Monthly Deduction from that Sub-Account; or
o Transfers are made from that Sub-Account to the Fixed Account or other
Sub-Accounts.
UNIT VALUE. The Unit Value for a Sub-Account on any Valuation Date is equal
to the previous Unit Value times the Net Investment Factor for that Sub-Account
(described below) for the Valuation Period (described below) ending on that
Valuation Date. The Unit Value was initially set at $10 when the Sub-Account
first purchased Fund shares.
NET INVESTMENT FACTOR. The Net Investment Factor is a number that reflects
charges to the Policy and the investment performance during a Valuation Period
of the Fund in which a Sub-Account is invested. If the Net Investment Factor is
greater than one, the Unit Value is increased. If the Net Investment Factor is
less than one, the Unit Value is decreased. The Net Investment Factor for a
Sub-Account is determined by dividing 1 by 2.
(1 divided by 2), where:
1
Is the result of:
o The net asset value per share of the Fund shares in which the Sub-Account
invests, determined at the end of the current Valuation Period;
o Plus the per share amount of any dividend or capital gain distributions
made on the Fund shares in which the Sub-Account invests during the
current Valuation Period;
o Plus or minus a per share charge or credit for any taxes reserved which we
determine has resulted from the investment operations of the Sub-Account
and to be applicable to the Policy.
B-1
2
Is the result of:
o The net asset value per share of the Fund shares held in the Sub-Account,
determined at the end of the last prior Valuation Period;
o Plus or minus a per share charge or credit for any taxes reserved for
during the last prior Valuation Period which we determine resulted from
the investment operations of the Sub-Account and was applicable to the
Policy.
VALUATION DATE; VALUATION PERIOD. A Valuation Date is each day the New York
Stock Exchange is open for trading. A Valuation Period is the period between two
successive Valuation Dates, commencing at the close of business of a Valuation
Date and ending at the close of business on the next Valuation Date.
FIXED ACCUMULATION VALUE
The Fixed Accumulation Value on the Policy Date is your Net Premium
credited to the Fixed Account on that date minus the Monthly Deduction
applicable to the Fixed Accumulation Value for the first Policy Month.
After the Policy Date, the Fixed Accumulation Value is calculated as:
1 + 2 + 3 + 4 - 5 - 6, where:
1
Is the Fixed Accumulation Value on the preceding Monthly Anniversary, plus
interest from the Monthly Anniversary to the date of the calculation.
2
Is the total of your Net Premiums credited to the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date premiums are credited
to the date of the calculation.
3
Is the total of your transfers from the Variable Account to the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
4
Is the total of your Loan Amounts transferred from the Variable Account since
the preceding Monthly Anniversary.
5
Is the total of your transfers to the Variable Account from the Fixed Account
since the preceding Monthly Anniversary, plus interest from the date of transfer
to the date of the calculation.
6
Is the total of your partial withdrawals from the Fixed Account since the
preceding Monthly Anniversary, plus interest from the date of withdrawal to the
date of the calculation.
If the date of the calculation is a Monthly Anniversary, we also reduce the
Fixed Accumulation Value by the applicable Monthly Deduction for the Policy
Month following the Monthly Anniversary.
The minimum interest rate applied in the calculation of the Fixed
Accumulation Value is an effective annual rate of 4%. Interest in excess of the
minimum rate may be applied in the calculation of your Fixed Accumulation Value
in a manner which our Board of Directors determines.
B-2
APPENDIX C
MONTHLY AMOUNT CHARGE
PER $1,000 OF FACE AMOUNT
The following table provides the factors that are used in determining the
Monthly Amount Charge which is deducted each Policy Month during the first 20
Policy Years (and for 20 Policy Years after any requested increase in Face
Amount relative to the increased amount). For a Policy issued in New Jersey, the
reduction of these charges after the first 20 Policy Years is not guaranteed and
may be assessed for the duration of the Policy. The Monthly Amount Charge per
$1,000 is based on the average age of the Joint Insureds on the Policy Date (or
on the effective date of any requested increase in Face Amount, as appropriate).
AVERAGE AGE OF MONTHLY AMOUNT CHARGE PER AVERAGE AGE OF MONTHLY AMOUNT CHARGE PER
JOINT INSUREDS $1,000 OF FACE AMOUNT JOINT INSUREDS $1,000 OF FACE AMOUNT
- -------------------- --------------------------- ------------------- ---------------------------
C-1
UNDERTAKINGS TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
"REASONABLENESS" REPRESENTATION PURSUANT TO 26(e)(2)(A)
OF THE INVESTMENT COMPANY ACT OF 1940
Depositor represents that the fees and charges deducted under the flexible
premium variable life insurance policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by ReliaStar Life Insurance Company.
II-1
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant has caused this Form S-6 Registration Statement to be signed on
its behalf, in the City of Minneapolis and State of Minnesota, on this 29th day
of September, 2000.
SELECT*LIFE VARIABLE ACCOUNT
(Registrant)
By: RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /s/ JOHN G. TURNER
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, Depositor has caused this S-6
Registration Statement to be signed on its behalf, in the City of Minneapolis
and State of Minnesota, on this 29th day of September, 2000.
RELIASTAR LIFE INSURANCE COMPANY
(Depositor)
By /s/ JOHN G. TURNER
John G. Turner, Chairman
and Chief Executive Officer
As required by the Securities Act of 1933, this S-6 Registration Statement has
been signed on this 29th day of September, 2000 by the following directors and
officers of Depositor in the capacities indicated:
SIGNATURE TITLE
- --------------------------------------- --------------------------------------------------
/S/ JOHN G. TURNER Chairman and Chief Executive Officer
-------------------------------------
John G. Turner
/S/ JAMES R. MILLER Senior Vice President and Chief Financial Officer
-------------------------------------
James R. Miller
*Richard R. Crowl *Mark S. Jordahl *Robert C. Salipante
*Michael J. Dubes *Kenneth U. Kuk *John G. Turner
*Wayne R. Huneke *Susan W. A. Mead
*Dewette Ingham, Jr. *James R. Miller
A majority of the Board of Directors
Stewart D. Gregg, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of ReliaStar Life Insurance Company
pursuant to powers of attorney duly executed by such persons.
/s/ STEWART D. GREGG
Stewart D. Gregg, Attorney-In-Fact
II-2
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The Facing Sheet.
The general form of Prospectus, consisting of ___ pages.
Undertakings to file reports.
Rule 484 Undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written consents of the following persons:
1. Stewart D. Gregg, Esquire -- (To be filed by Pre-Effective Amendment.)
2. Craig A. Krogstad, FSA, MAAA -- (To be filed by Pre-Effective
Amendment.)
3. Independent Auditors' Consent -- (To be filed by Pre-Effective
Amendment.)
The following exhibits:
1. The following exhibits correspond to those required by Paragraph A of
the instructions as to exhibits in Form N-8B-2:
A. (1) Resolutions of Board of Directors of Northwestern National Life
Insurance Company ("NWNL") establishing the Select*Life Variable
Account. (Filed as an Exhibit in S-6EL24 on December 23, 1996,
Accession Number 0000897899-96-000017, CIK 0000897899 and
incorporated herein by reference.)
(2) Not applicable.
(3) (a) General Distributor Agreement between Washington Square
Securities, Inc. and ReliaStar Life. (Filed as part of
Select*Life Variable Account S-6EL24 on 12-23-96,
Accession Number 0000897899-96-000017, CIK 0000897899 and
incorporated herein by reference.)
(3) (b) Specimens of Selling Agreements. (Filed as part of
Select*Life Variable Account S-6EL24 on 12-23-96, Accession
Number 0000897899-96-000017, CIK 0000897899 and
incorporated herein by reference.)
(4) Not applicable.
(5) (a) Form of Policy
(5) (b) Four Year Term Rider.
(5) (c) Full Death Benefit Rider.
(5) (d) Survivorship Term Rider.
(5) (e) Additional Insured Rider.
(5) (f) Policy Split Option Rider. (Filed as part of Select*Life
Variable Account S-6 on August 8, 1997, File No.
333-18517, and incorporated herein by reference.)
(5) (g) Form of personalized illustration. (To be filed by
Pre-Effective Amendment.)
(6) (a) Amended Articles of Incorporation of ReliaStar Life.
(Filed as part of Select*Life Variable Account S-6EL24 on
12-23-96, Accession Number 0000897899-96-000017, CIK
0000897899 and incorporated herein by reference.)
(6) (b) Amended By-Laws of ReliaStar Life. (Filed as part of
Select*Life Variable Account S-6EL24 on 12-23-96, Accession
Number 0000897899-96-000017, CIK 0000897899 and
incorporated herein by reference.)
(7) Not applicable.
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(8) (a) Participation Agreement with Fidelity's Variable Insurance
Products Fund and Fidelity Distributors Corporation and
Amendments Nos. 1-8. (Filed as part of Select*Life
Variable Account S-6EL24 on 12-23-96, Accession Number
0000897899-96-000017, CIK 0000897899 and incorporated
herein by reference.)
(8) (b) Form of Amendment No. 10 to Participation Agreement with
Fidelity's Variable Insurance Products Fund and Fidelity
Distributors Corporation. (Filed in S6-A on April 5, 1999,
File No. 333-69431 and incorporated herein by reference.)
(8) (c) Form of Amendments No. 11 and 12 to Participation Agreement
with Fidelity's Variable Insurance Products Fund and
Fidelity Distributors Corporation.
(8) (d) Participation Agreement with Fidelity's Variable
Insurance Products Fund II and Fidelity Distributors
Corporation and Amendments Nos. 1-7. (Filed as part of
Select*Life Variable Account S-6EL24 on 12-23-96, Accession
Number 0000897899-96-000017, CIK 0000897899 and
incorporated herein by reference.)
(8) (e) Form of Amendment No. 9 to Participation Agreement with
Fidelity's Variable Insurance Products Fund II and
Fidelity Distributors Corporation. (Filed in S6-A on April
5, 1999, File No. 333-69431 and incorporated herein by
reference).
(8) (f) Form of Amendments No. 10 and 11 to Participation Agreement
with Fidelity's Variable Insurance Products Fund II and
Fidelity Distributors Corporation.
(8) (g) Form of Service Agreement and Contract between
ReliaStar Life Insurance Company, WSSI, and Fidelity
Investments Institutional Operations Company and
Distributors Corporation dated January 1, 1997. (Filed in
S-6EL24/A on March 31, 1997, File No. 333-18517, and
incorporated herein by reference.)
(8) (h) Participation Agreement with Putnam Capital Manager Trust and
Putnam Mutual Funds Corp. and Amendments Nos. 1-2. (Filed
in S-6EL24 on December 23, 1996, File No. 333-18517, and
incorporated herein by reference.)
(8) (i) Form of Amendments No. 3 and 4 to Participation Agreement with
Putnam Capital Manager Trust and Putnam Mutual Funds
Corporation.
(8) (j) Form of Service Agreement by and between ReliaStar Life
Insurance Company and Janus Capital Corporation. (Filed in
Form S-6 on August 4, 1997, File No. 2-95392 and
incorporated herein by reference.)
(8) (k) Form of Service Agreement by and between ReliaStar Life
Insurance Company and Fred Alger Management, Inc. (Filed
in Form S-6 on August 4, 1997, File No. 2-95392 and
incorporated herein by reference.)
(8) (l) Form of Service Agreement by and between ReliaStar Life
Insurance Company and OpCap Advisors. (Filed in Form S-6
on August 4, 1997, File No. 2-95392 and incorporated
herein by reference.)
(8) (m) Form of Service Agreement by and between ReliaStar Life
Insurance Company and Neuberger Berman Management
Incorporated. (Filed in Form S-6 on August 4, 1997, File
No. 2-95392 and incorporated herein by reference.)
(8) (n) Form of Participation Agreement by and among ReliaStar
Life Insurance Company, Neuberger Berman Advisers
Management Trust, Advisers Managers Trust and Neuberger
Berman Management, Inc. (Filed in 485BPOS on August 4,
1997, File No. 2-95392 and incorporated herein by
reference.)
(8) (o) Form of Amendment No. 1 to Participation Agreement by and
among ReliaStar Life Insurance Company, Neuberger Berman
Advisers Management Trust, Advisers Managers Trust and
Neuberger Berman Management, Inc. (Filed in S6/A on April
5, 1999, File No. 333-69431 and incorporated herein by
reference.)
(8) (p) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and Janus Aspen Series. (Filed in Form
S-6 on August 4, 1997, File No. 2-95392 and incorporated
herein by reference.)
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(8) (q) Form of Participation Agreement by and between ReliaStar Life
Insurance Company and Fred Alger Management, Inc., (Filed
in Form S-6 on August 4, 1997, File No. 2-95392 and
incorporated herein by reference.)
Exhibit to Participation Agreement (Filed in 485BPOS on
March 31, 2000, File No. 33-57244 and incorporated herein by
reference.)
(8) (r) Form of Amendment dated September 29, 2000, to the
Participation Agreement by and between ReliaStar Life
Insurance Company and Fred Alger Management, Inc.
(8) (s) Form of Amendment to Participation Agreement Form of
Participation Agreement by and between ReliaStar Life
Insurance Company and OpCap Advisors. (Filed in Form S-6 on
August 4, 1997, File No. 2-95392 and incorporated herein by
reference.)
(8) (t) Form of Participation Agreement by and among ReliaStar Life
Insurance Company, AIM Variable Insurance Products Fund,
Inc., AIM Distributors, Inc. and Washington Square
Securities, Inc. ("WSSI") (Filed in Form 485 BPOS on March
31, 2000, File No. 33-57244 and incorporated herein by
reference.)
(8) (u) Form of Amendment No. 1 to Participation Agreement by and
among ReliaStar Life Insurance Company, AIM Variable
Insurance Products Fund, Inc., AIM Distributors, Inc. and
WSSI.
(8) (v) Form of Administrative Services Agreement by and among
ReliaStar Life Insurance Company, Northern Life Insurance
Company, ReliaStar Life Insurance Company of New York, and
A I M Advisors, Inc. (Filed in Form 485BPOS on March 31,
2000, File No. 33-57244 and incorporated herein and by
reference.)
(9) Not applicable.
(10) (a) Policy Application Form.
(b) Supplement to Policy Application Form.
2. Opinion and consent of Stewart D. Gregg, Esquire, as to the legality of
the Securities being registered. (To be filed by Pre-Effective
Amendment.)
3. Not applicable.
4. Not applicable.
EX-99.C1. Independent Auditors' Consent. (To be filed by Pre-Effective
Amendment.)
EX-99.C2. Not applicable.
EX-99.C3. Not applicable.
EX-99.C4. See EX-99.2.
EX-99.C5. Not applicable.
EX-99.C6. Actuarial Opinion and Consent. (To be filed by Pre-Effective
Amendment.)
EX-24. Powers of Attorney. (Filed as an Exhibit to Form N-4 on
February 17, 2000, File No. 333-30614 and incorporated
herein and by reference)
Powers of Attorney.
Richard R. Crowl
Michael J. Dubes
Wayne R. Huneke
Dewette Ingham, Jr.
Mark S. Jordahl
Kenneth U. Kuk
Susan W. A. Mead
James R. Miller
Robert C. Salipante
John G. Turner
II-5