Registration No. 333-
As filed with the Securities and Exchange Commission on May 29, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUST REGISTERED ON FORM N-8B-2
AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
(Exact Name of Trust)
AMERICAN GENERAL LIFE INSURANCE COMPANY
(Exact Name of Depositor)
2727-A Allen Parkway
Houston, Texas 77019-2191
(Complete Address of Depositor's Principal Executive Offices)
Pauletta P. Cohn, Esq.
Associate General Counsel
American General Independent Producer Division
2727-A Allen Parkway
Houston, Texas 77019-2191
(Name and Complete Address of Agent for Service)
Please send copies of all communications to:
Diane E. Ambler, Esq.
Mayer, Brown & Platt
2000 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Securities Being Offered: Flexible Premium Variable Life Insurance Policies.
AMERICAN GENERAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL-R
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM
N-8B-2 AND THE PROSPECTUS
(PURSUANT TO INSTRUCTION 4 OF FORM S-6)
CROSS REFERENCE SHEET
ITEM NO. OF FORM N-8B-2* PROSPECTUS CAPTION
- ----------------------- ------------------
1 Additional Information : Separate Account VL-R
2 Additional Information: AGL.
3 Inapplicable.
4 Additional Information: Distribution of Policies.
5, 6 Additional Information: Separate Account VL-R.
7 Inapplicable.**
8 Inapplicable.**
9 Additional Information: Legal Matters.
10(a) Additional Information: Your Beneficiary, Assigning
Your Policy.
10(b) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
10(c)(d) Basic Questions You May Have: How can I change
my Policy's insurance coverage? How can I access
my investment in a Policy? Can I choose the form
in which AGL pays out any proceeds from my
Policy? Additional Information: Payment of Policy
Proceeds.
10(e) Basic Questions You May Have: Must I invest any
minimum amount in a policy?
10(f) Additional Information: Voting Privileges.
10(g)(1), 10(g)(4), 10(h)(3), 10(h)(2) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policies
in particular cases? Additional Information: Voting
Privileges; Additional Rights That We Have.
10(g)(3), 10(g)(4), 10(h)(3), 10(h)(4) Inapplicable.**
10(i) Additional Information: Separate Account VL-R;Tax
Effects.
11 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
Additional Information: Separate Account VL-R.
12(a) Additional Information: Separate Account VL-R;
Front Cover.
12(b) Inapplicable.
12(c), 12(d) Inapplicable.**
12(e) Inapplicable, because the Separate Account did not
commence operations until 1998.
13(a) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy? What
charges and expenses will the Mutual Funds deduct
from the amounts I invest through my Policy?
Additional Information: More About Policy
Charges.
13(b) Illustrations of Hypothetical Policy Benefits.
13(c) Inapplicable.**
13(d) Basic Questions You May Have: To what extent will
AGL vary the terms and conditions of the Policy in
particular cases?
13(e), 13(f), 13(g) None.
14 Basic Questions You May Have: How can I invest
money in a Policy?
15 Basic Questions You May Have: How can I invest
money in a Policy? How do I communicate with
AGL?
16 Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
ITEM NO. ADDITIONAL INFORMATION
- -------- ----------------------
17(a), 17(b) Captions referenced under Items 10(c), 10(d), and 10(e).
17(c) Inapplicable.
18(a) Captions referred to under Item 16.
18(b), 18(d) Inapplicable.
18(c) Additional Information: Separate Account VL-R.
19 Additional Information: Separate Account VL-R;
Our Reports to Policy Owners.
20(a), 20(b), 20(c), 20(d), 20(e), 20(f) Inapplicable.
21(a), 21(b) Basic Questions You May Have: How can I access
my investment in a Policy? Additional Information:
Payment of Policy Proceeds.
21(c) Inapplicable.**
22 Additional Information: Payment of Policy Proceeds-
Delay to Challenge Coverage.
23 Inapplicable.**
24 Basic Questions You May Have; Additional
Information.
25 Additional Information: AGL.
26 Inapplicable, because the Separate Account did not
commence operations until 1998.
27 Additional Information: AGL.
28 Additional Information: AGL's Management.
29 Additional Information: AGL.
30, 31, 32, 33, 34 Inapplicable, because the Separate Account did not
commence operations until 1998.
35 Inapplicable.**
36 Inapplicable.**
37 None.
38, 39 Additional Information: Distribution of the Policies.
40 Inapplicable, because the Separate Account did not
commence operations until 1998.
41(a) Additional Information: Distribution of the Policies.
41(b), 41(c) Inapplicable.**
42, 43 Inapplicable, because the Separate Account did not
commence operations or issue any securities until
1998.
44(a)(1), 44(a)(2), 44(a)(3) Basic Questions You May Have: How will the value
of my investment in a Policy change over time?
44(a)(4) Additional Information: Tax Effects--Our taxes.
44(a)(5), 44(a)(6) Basic Questions You May Have: What charges will
AGL deduct from my investment in a Policy?
44(b) Inapplicable.**
44(c) Caption referenced in 13(d) above.
45 Inapplicable, because the Separate Account did not
commence operations until 1998.
46(a) Captions referenced in 44(a) above.
46(b) Inapplicable.**
47, 48, 49 None.
50 Inapplicable.
51 Inapplicable.
52(a), 52(c) Basic Questions You May Have: To what extent can
AGL vary the terms and conditions of the Policy
in particular cases? Additional Information:
Additional Rights That We Have.
52(b), 52(d) None.
53(a) Additional Information: Tax Effects--Our taxes.
53(b), 54 Inapplicable.
55 Illustrations of Hypothetical Policy Benefits.
56-59 Inapplicable.**
* Registrant includes this Reconciliation and Tie in its Registration
Statement in compliance with Instruction 4 as to the Prospectus as set out
in Form S-6. Separate Account VL-R (Account) has previously filed a notice
of registration as an investment company on Form N-8A under the Investment
Company Act of 1940 (Act), and a Form N-8B-2 Registration Statement.
Pursuant to Sections 8 and 30(b)(1) of the Act, Rule 30a-1 under the Act,
and Forms N-8B-2 and N-SAR under that Act, the Account will keep its
Form N-8B-2 Registration Statement current through the filing of periodic
reports required by the Securities and Exchange Commission (Commission).
** Not required pursuant to either Instruction 1(a) as to the Prospectus as
set out in Form S-6 or the administrative practice of the Commission and
its staff of adapting the disclosure requirements of the Commission's
registration statement forms in recognition of the differences between
variable life insurance policies and other periodic payment plan
certificates issued by investment companies and between separate accounts
organized as management companies and unit investment trusts.
LEGACY ENHANCER
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY (THE "POLICY")
ISSUED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY ("AGL")
HOME OFFICE:
(Express Delivery) (US Mail)
2727-A Allen Parkway Variable Universal Life
Houston, Texas 77019-2191 Administration
PHONE: 1-888-325-9315 P.O. Box 4880
or 1-713-831-3443 Houston, Texas 77210-4880
FAX: 1-713-620-3857
Investment options. You may invest in the following variable investment
options and change your selections from time to time:
BT INSURANCE FUNDS TRUST MORGAN STANLEY UNIVERSAL AMERICAN GENERAL SERIES
FUNDS, INC. PORTFOLIO COMPANY
. Equity 500 Index . Equity Growth . Money Market
. EAFE Equity Index
- ----------------------------------------------------------------------------
AIM VARIABLE INSURANCE ROYCE CAPITAL FUND
FUNDS, INC.
. AIM V.I. Value . Royce Total Return
SEPARATE PROSPECTUSES CONTAIN MORE INFORMATION ABOUT THE MUTUAL FUNDS
("FUNDS" OR "MUTUAL FUNDS") IN WHICH WE INVEST THE ACCUMULATION VALUE THAT YOU
ALLOCATE TO ANY OF THE ABOVE-LISTED INVESTMENT OPTIONS. THE FORMAL NAME OF
EACH SUCH FUND IS SET FORTH IN THE CHART THAT APPEARS ON PAGE . YOUR
INVESTMENT RESULTS IN ANY SUCH OPTION WILL DEPEND ON THOSE OF THE RELATED
FUND. THEREFORE, YOU SHOULD BE SURE YOU ALSO READ THE PROSPECTUS OF THE MUTUAL
FUND FOR ANY SUCH INVESTMENT OPTION YOU MAY BE INTERESTED IN. YOU CAN REQUEST
FREE COPIES OF ANY OR ALL OF THE MUTUAL FUND PROSPECTUSES FROM YOUR AGL
REPRESENTATIVE OR FROM US AT OUR HOME OFFICE LISTED ABOVE.
Other choices you have. During the insured person's lifetime, you can (1)
change the amount of insurance, (2) borrow or withdraw amounts you have
invested, (3) choose, within limits, when and how much you invest, and (4)
choose whether the amount you have invested under your Policy, upon the
insured person's death, will be added to the insurance proceeds we otherwise
will pay to the beneficiary.
Charges and expenses. We deduct charges and expenses from the amounts you
invest. These are described beginning on page .
Right to return. If for any reason you are not satisfied with your Policy,
you may return it to us and we will refund any premiums paid adjusted to
reflect investment experience. (In some states, we will return premiums paid
as required by state law.) To exercise your right to return your Policy, you
must mail it directly to the Home Office address shown on the first page of
this prospectus or return it to the AGL representative through whom you
purchased the Policy within 10 days after you receive it. In a few states,
this period may be longer. Because you have this right, we will invest your
initial premium payment in the money market investment option from the date
your investment performance begins until the first business day that is at
least 15 days later. Then we will automatically allocate your investment among
the above-listed investment options as you have chosen. Any
additional premium we receive during the 15-day period will also be invested
in the money market division and allocated to the investment options at the
same time as your initial premium.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. THIS
PROSPECTUS CONTAINS INFORMATION THAT YOU SHOULD KNOW BEFORE INVESTING IN A
POLICY. THE POLICIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION ("SEC"). NOR HAS THE SEC PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE POLICIES ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY
ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
THIS BOOKLET IS CALLED A "PROSPECTUS." ITS DATE IS , 1998
2
GUIDE TO THIS PROSPECTUS
This booklet (which is called a "prospectus") contains information that you
should know before you purchase a Legacy Enhancer policy ("Policy") or
exercise any of your rights or privileges under a Policy.
Basic Information. Here are the page numbers in this prospectus where you
may find answers to most of your questions:
PAGE TO SEE
BASIC QUESTIONS YOU MAY HAVE IN THIS PROSPECTUS
---------------------------- ------------------
. What is the Policy?.......................................
. How can I invest money in a Policy?.......................
. How will the value of my investment in a Policy change
over time?................................................
. What is the basic amount of insurance ("death benefit")
that AGL pays when the insured person dies?...............
. What charges will AGL deduct from my investment in a
Policy?...................................................
. What charges and expenses will the Mutual Funds deduct
from amounts I invest through my Policy?..................
. Must I invest any minimum amount in a Policy?.............
. How can I change my Policy's investment options?..........
. How can I change my Policy's insurance coverage?..........
. What additional rider benefits might I select?............
. How can I access my investment in a Policy?...............
. Can I choose the form in which AGL pays out proceeds from
my Policy?................................................
. To what extent can AGL vary the terms and conditions of
the Policy in particular cases?...........................
. How will my Policy be treated for income tax purposes?....
. How do I communicate with AGL?............................
Illustrations of a hypothetical policy. Starting on page , we have
included some illustrations of how the values of a hypothetical Policy would
change over time, based on certain assumptions we have made. Because your
circumstances may vary considerably from our assumptions, your AGL
representative will also provide you with a similar hypothetical illustration
that is more tailored to your own circumstances and wishes.
Additional information. You may find the answers to any other questions you
have under "Additional Information" beginning on page or in the form of
our Policy. A table of contents for the "Additional Information" portion of
this prospectus also appears on page . You can obtain copies of our Policy
form from (and direct any other questions to) your AGL representative or our
Home Office (shown on the first page of this Prospectus).
AGL's financial statements. We have included our financial statements in
this prospectus. These begin on page .
Special words and phrases. If you want more information about any words or
phrases that you read in this prospectus, you may wish to refer to the Index
of Words and Phrases that appears at the back of this prospectus. That index
will tell you on what page you can read more about many of the words and
phrases that we use.
3
BASIC QUESTIONS YOU MAY HAVE
HOW CAN I INVEST MONEY IN A POLICY?
Premium payments. We call the investments you make in a Policy "premiums" or
"premium payments." The amount we require as your first premium varies
depending on the specifics of your Policy and the insured person. We can
refuse to accept a subsequent premium payment that is less than $50.
Otherwise, with a few exceptions mentioned below, you can make premium
payments at any time and in any amount.
Limits on premium payments. In certain circumstances, we may refuse to
accept an additional premium if the insured person does not provide us with
adequate evidence that he/she continues to meet our requirements for issuing
insurance or if the additional premium would cause the "net amount at risk" to
exceed the Maximum Net Amount at Risk, as set out in your Policy. The net
amount at risk is the difference between (a) the death benefit that would be
payable before reduction by policy loans if the insured person died on that
date and (b) the then total accumulation value under the Policy. The term
"accumulation value" is described on page .
Checks and money orders. Premiums must be by check or money order drawn on a
U.S. bank in U.S. dollars and made payable to "American General Life Insurance
Company," or "AGL." Premiums after the first premium must be sent directly to
our Home Office at the appropriate address shown on the first page of this
prospectus.
Other ways to pay premiums. We also accept premium payments by bank draft,
wire, or by exchange from another insurance company. You may obtain further
information about how to make premium payments by any of these methods from
your AGL representative or from our Home Office shown on the front page of
this prospectus.
Dollar cost averaging. Dollar cost averaging is an investment strategy
designed to reduce the risks that result from market fluctuations. The
strategy spreads the allocation of your accumulation value over a period of
time. This allows you to reduce the risk of investing most of your funds at a
time when prices are high. The success of this strategy depends on market
trends and is not guaranteed.
Under dollar cost averaging, we automatically make transfers of your
accumulation value from the money market investment option to one or more of
the other investment options that you choose. You tell us whether you want
these transfers to be made monthly, quarterly, semi-annually or annually; and
we make the transfers as of the end of the valuation period that contains the
day of the month that you select other than the 29th, 30th or 31st day of the
month. The term "valuation period" is described on page . You must have at
least $100,000 of accumulation value to start dollar cost averaging and each
transfer under the program must be at least $5,000. You cannot participate in
dollar cost averaging while also using automatic rebalancing (discussed
below). Dollar cost averaging ceases upon your request, or if your
accumulation value in the money market option becomes exhausted.
Automatic rebalancing. This feature automatically rebalances the proportion
of your accumulation value in each investment option under your Policy to
correspond to your then current premium allocation designation. You tell us
whether you want us to do the rebalancing quarterly, semi-annually or
annually. The date automatic rebalancing occurs will be based on the date of
issue of your Policy. For example, if your Policy is dated January 17, and you
have requested automatic rebalancing on a quarterly basis, automatic
rebalancing will start on April 17, and will occur quarterly thereafter.
Automatic rebalancing will occur as of the end of the valuation period that
contains the date of the month your policy was issued. You must have a total
accumulation value of at least $100,000 to begin automatic rebalancing. You
cannot participate in this program while also participating in dollar cost
averaging (discussed above). Rebalancing terminates upon your request.
4
HOW WILL THE VALUE OF MY INVESTMENT IN A POLICY CHANGE OVER TIME?
Your accumulation value. From each premium payment you make, we deduct the
charges that we describe on page under "Deductions from each premium
payment." We invest the rest in one or more of the investment options listed
on the first page of this prospectus. We call the amount that is at any time
invested under your Policy (including any loan collateral we are holding for
your Policy loans) your "accumulation value."
Your investment options. We invest the accumulation value that you have
allocated to any investment option in shares of a Mutual Fund that follows
investment practices, policies and objectives that are appropriate to that
option. Over time, your accumulation value in any investment option will
increase or decrease by the same amount as if you had invested in the related
Fund's shares directly (and reinvested all dividends and distributions from
the Fund in additional Fund shares); except that your accumulation value will
be reduced by certain charges that we deduct. We describe these charges
beginning on page under "What charges will AGL deduct from my investment
in a Policy?"
Other important information about the Mutual Funds that you can choose is
included in the separate prospectuses for those Funds. This includes
information about the investment performance that each Fund's investment
manager has achieved. Additional free copies of these prospectuses are
available from your AGL representative or from our Home Office shown on the
first page of this prospectus.
Policies are "non-participating." The Policies are not "participating."
Therefore, you will not be entitled to any dividends from AGL.
WHAT IS THE BASIC AMOUNT OF INSURANCE ("DEATH BENEFIT") THAT AGL PAYS WHEN THE
INSURED PERSON DIES?
Your specified amount of insurance. In your application to buy a Legacy
Enhancer Policy, you will tell us how much life insurance coverage you want on
the life of the insured person. We call this the "specified amount" of
insurance.
Your death benefit. The basic death benefit we will pay is reduced by any
outstanding Policy loans. You also choose whether the basic death benefit we
will pay is
. Option 1-The specified amount on the date of the insured person's death
- or -
. Option 2-The specified amount plus the Policy's accumulation value on the
date of death.
Under Option 2, your death benefit will tend to be higher than under Option
1. However, the monthly insurance charge we deduct will also be higher to
compensate us for our additional risk. Because of this, your accumulation
value will tend to be higher under Option 1 than under Option 2.
We will automatically pay an alternative basic death benefit if it is higher
than the basic Option 1 or Option 2 death benefit (whichever you have
selected). The alternative basic death benefit is computed by multiplying your
Policy's accumulation value on the insured person's date of death by the
following percentages:
5
TABLE OF ALTERNATIVE BASIC DEATH BENEFITS AS A PERCENTAGE MULTIPLE OF POLICY
ACCUMULATION VALUE
CASH VALUE ACCUMULATION TEST
% OF ACCUMULATION % OF ACCUMULATION
INSURED'S AGE ON VALUE VALUE
POLICY ------------------ ------------------
ANNIVERSARY* MALE FEMALE UNISEX INSURED'S AGE ON POLICY ANNIVERSARY* MALE FEMALE UNISEX
- ---------------- ---- ------ ------ ------------------------------------ ---- ------ ------
18 691 830 715 59 196 226 202
19 671 804 694 60 191 220 196
20 652 778 674 61 186 214 191
21 633 753 654 62 182 208 187
22 615 729 635 63 177 202 182
23 597 706 616 64 173 197 178
24 579 683 597 65 169 191 173
25 561 661 579 66 165 186 169
26 544 640 561 67 162 181 166
27 527 619 543 68 158 177 162
28 510 597 526 69 155 172 158
29 494 579 509 70 152 168 155
30 478 560 492 71 149 164 152
31 463 542 477 72 146 160 149
32 448 524 461 73 143 156 146
33 433 507 446 74 141 152 143
34 419 490 431 75 138 149 141
35 405 474 417 76 136 146 138
36 392 459 404 77 134 143 136
37 380 444 391 78 132 140 134
38 367 429 378 79 130 137 132
39 355 415 366 80 128 134 130
40 344 402 354 81 126 132 128
41 333 389 343 82 125 130 126
42 323 377 332 83 123 128 124
43 312 365 322 84 122 126 123
44 303 354 312 85 120 124 121
45 294 343 302 86 119 122 120
46 285 333 293 87 118 121 119
47 276 323 284 88 117 119 118
48 268 313 276 89 116 118 117
49 260 303 268 90 115 116 115
50 252 294 260 91 114 115 114
51 245 286 252 92 113 114 113
52 238 277 245 93 112 112 112
53 231 269 238 94 111 111 111
54 225 261 231 95 110 110 110
55 218 254 225 96 108 108 108
56 212 247 219 97 107 107 107
57 208 240 213 98 105 105 105
58 201 233 207 99 104 104 104
- --------
* Nearest birthday at the beginning of the Policy year in which the insured
person dies.
6
WHAT CHARGES WILL AGL DEDUCT FROM MY INVESTMENT IN A POLICY?
Deductions from each premium payment. There is currently no deduction from
each premium payment you make. However, We have the right at any time to
assess a charge not to exceed more than 1.5% on all future premium payments.
Daily charge. We make a daily deduction at an annual effective rate of .75%
of your accumulation value that is then being invested in any of the
investment options. After a Policy has been in effect for 30 years, we intend
to reduce the rate of this charge by .35%. Because the Policies were first
offered in 1998, however, this decrease has not yet occurred for any
outstanding Policy. Neither this decrease nor the current rate of .75% is
guaranteed. Rather, we have the right at any time to raise this charge under
your Policy to not more than .90%; except that in Texas and Oregon, until a
Policy has been in effect for 30 years, this maximum is .35% higher.
Monthly insurance charge. Every month we will deduct from your accumulation
value a charge based on the cost of insurance rates applicable to your Policy
on the date of the deduction and our "amount at risk" on that date. Our amount
at risk is the difference between (a) the death benefit that would be payable
before reduction by policy loans if the insured person died on that date and
(b) the then total accumulation value under the Policy. For otherwise
identical Policies, a greater amount at risk results in a higher monthly
insurance charge.
For otherwise identical Policies, a higher cost of insurance rate also
results in a higher monthly insurance charge. Our cost of insurance rates are
guaranteed not to exceed those that will be specified in your Policy.
In general, our cost of insurance rates increase with the insured person's
age. Therefore, the longer you own your Policy, the higher the cost of
insurance rate will be. Also our cost of insurance rates will generally be
lower (except in Montana) if the insured person is a female than if a male.
Similarly, our current cost of insurance rates are generally lower for non-
smokers than smokers. Insured persons who present particular health,
occupational or avocational risks may be charged higher cost of insurance
rates and other additional charges based on the specified amount of insurance
coverage under their Policy.
Our cost of insurance rates also are generally higher under a Policy that
has been in force for some period of time than they would be under an
otherwise identical Policy purchased more recently on the same insured person.
Transaction Fee. We will charge a $25 transaction fee for each partial
surrender you make. This fee will be deducted pro-rata from all of the funds
you then have in each investment option.
Charge for taxes. We can make a charge in the future for taxes we incur or
reserves we set aside for taxes in connection with the Policies. This would
reduce the investment experience of your accumulation value.
Allocation of charges. You may choose from which of your investment options
we deduct all monthly charges. If you do not have enough accumulation value in
any investment option to comply with your selection, we will deduct these
charges in proportion to the amount of accumulation value you then have in
each investment option.
7
WHAT CHARGES AND EXPENSES WILL THE MUTUAL FUNDS DEDUCT FROM AMOUNTS I INVEST
THROUGH MY POLICY?
Each Mutual Fund pays its investment management fees and other operating
expenses. Because they reduce the investment return of a Fund, these fees and
expenses also will reduce indirectly the return you will earn on any
accumulation value that you have invested in that Fund. These charges and
expenses currently are as follows:
THE MUTUAL FUNDS' ANNUAL EXPENSES (1) (as a percentage of average net assets)
OTHER FUND TOTAL FUND
FUND MANAGEMENT OPERATING OPERATING
FEES AFTER EXPENSES AFTER EXPENSES AFTER
EXPENSE EXPENSE EXPENSE
NAME OF FUND REIMBURSEMENT(2) REIMBURSEMENT(2) REIMBURSEMENT(2)
------------ ---------------- ---------------- ----------------
The following funds of
BT INSURANCE FUNDS TRUST:
Equity 500 Index.......... 0.00% 0.30% 0.30%
EAFE Equity Index......... 0.02% 0.63% 0.65%
The following fund of
MORGAN STANLEY UNIVERSAL
FUNDS, INC.:
Equity Growth............. 0.55% 0.30% 0.85%
The following fund of
AMERICAN GENERAL SERIES
PORTFOLIO COMPANY:
Money Market.............. 0.50% 0.07% 0.57%
The following fund of
ROYCE CAPITAL FUND:
Royce Total Return........ 0.00% 1.35% 1.35%
The following fund of
AIM VARIABLE INSURANCE
FUNDS, INC.:
AIM V.I. Value............ 0.62% 0.08% 0.70%
- --------
(1) The annual expenses are estimated for the current fiscal year for the
Equity 500 Index and EAFE Equity Index Funds, because neither of these
Funds has financial statements covering a period of at least ten months.
(2) If certain voluntary expense reimbursements from the investment adviser
were terminated, management fees and other expenses for the fiscal year
ended in 1997 would have been as set out in the following table.
Information about annual expenses excluding voluntary expense
reimbursements is estimated for the Equity 500 Index and EAFE Equity Index
Funds since neither of these Funds has financial statements covering a
period of at least ten months.
FUND OTHER FUND TOTAL FUND
MANAGEMENT OPERATING OPERATING
NAME OF FUND FEES EXPENSES EXPENSES
------------ ---------- ---------- ----------
Equity 500 Index............................... 0.20% 2.58% 2.78%
EAFE Equity Index.............................. 0.45% 2.30% 2.75%
Royce Total Return............................. 1.00% 1.99% 2.99%
MUST I INVEST ANY MINIMUM AMOUNT IN A POLICY?
Planned periodic premiums. Page 3 of your Policy will specify a "Planned
Periodic Premium." This is the amount that you (within limits) choose to have
us bill you. Our current practice is to bill quarterly, semi-annually or
annually. However, payment of these or any other specific amounts of premiums
is not mandatory. After payment of your initial minimum premium, you need only
invest enough to ensure your Policy's cash surrender value stays above zero.
The less you invest, the more likely it is that your Policy's cash surrender
value could fall to zero, as a result of the deductions we periodically make
from your accumulation value.
8
Policy lapse and reinstatement. If your Policy's cash surrender value does
fall to zero, we will notify you and give you a grace period to pay at least
the amount we estimate is necessary to keep your Policy in force for a
reasonable time. If we don't receive your payment by the end of the grace
period, your Policy will terminate without value and all coverage under your
Policy will cease. Although you can apply to have your Policy "reinstated,"
you must do this within 5 years (or, if earlier, before the Policy's maturity
date), and you must present evidence that the insured person still meets our
requirements for issuing coverage. Also, you would have to pay certain extra
amounts that we require. In the Policy form itself, you will find additional
information about the values and terms of a Policy after it is reinstated.
HOW CAN I CHANGE MY POLICY'S INVESTMENT OPTIONS?
Future premium payments. You may at any time change the investment options
in which future premiums you pay will be invested. Your allocation must,
however, be in whole percentages that total 100%.
Transfers of existing accumulation value. You may also transfer your
existing accumulation value from one investment option under the Policy to
another. You may make transfers at any time. Unless you are transferring the
entire amount you have in an investment option, each transfer must be at least
$5,000. See "Additional Rights That We Have" on page .
Transaction Fee. We will charge a $25 transaction fee for each transfer you
make in excess of 12 per policy year.
Maximum number of investment options. We can at any time limit the number of
investment options you may use.
HOW CAN I CHANGE MY POLICY'S INSURANCE COVERAGE?
Increase in coverage. You may at any time request an increase in the
specified amount of coverage under your Policy. You must, however, provide us
with satisfactory evidence that the insured person continues to meet our
requirements for issuing insurance coverage.
We treat an increase in specified amount in many respects as if it were the
issuance of a new Policy. For example, the monthly insurance charge for the
increase will be based on the age and risk class of the insured person at the
time of the increase.
Change of death benefit option. You may at any time request us to change
your coverage from death benefit Option 1 to 2 or vice-versa. If you change
from Option 1 to 2, we also automatically reduce your Policy's specified
amount of insurance by the amount of your Policy's accumulation value (but not
below zero) at the time of the change. If you change from Option 2 to 1, we
automatically increase your Policy's specified amount by the amount of your
Policy's accumulation value.
Tax consequences of changes in insurance coverage. Please read "Tax Effects"
starting on page of this prospectus to learn about possible tax
consequences of changing your insurance coverage under your Policy.
WHAT ADDITIONAL RIDER BENEFITS MIGHT I SELECT?
Under the terms of your Policy, there are currently no additional rider
benefits available.
HOW CAN I ACCESS MY INVESTMENT IN A POLICY?
Full surrender. You may at any time surrender your Policy in full. If you
do, we will pay you the accumulation value, less any Policy loans. We call
this amount your "cash surrender value".
Partial surrender. You may, at any time after the first Policy year, make a
partial surrender of your Policy's cash surrender value. A partial surrender
must be at least $5,000. If the Option 1 death benefit is then in effect,
9
we will also automatically reduce your Policy's specified amount of insurance
by the amount of your withdrawal and any related charges. We will not permit a
partial surrender if it would cause your accumulation value to fall below
$100,000 or your death benefit to fall below the minimum specified in your
Policy.
You may choose the investment option or options from which money that you
withdraw will be taken. Otherwise, we will allocate the withdrawal in the same
proportions as then apply for deducting monthly charges under your Policy or,
if that is not possible, in proportion to the amount of accumulation value you
then have in each investment option.
Transaction Fee. We will charge a $25 transaction fee for each partial
surrender you make. This fee will be deducted pro-rata from all of the funds
you then have in each investment option.
Policy loans. You may at any time borrow from us an amount equal to your
Policy's cash surrender value (less $100,000, less our estimate of three
months' charges and less the interest that will be payable on your loan
through your next Policy anniversary; this rule is not applicable in all
states). The minimum amount of each loan is $5,000 or, if less, the entire
remaining loan value.
We remove from your investment options an amount equal to your loan and hold
that amount as additional collateral for the loan. We will credit your Policy
with interest on this collateral amount at an effective annual rate of 4%
(rather than any amount you could otherwise earn in one of our investment
options), and we will charge you interest on your loan at an effective annual
rate of 4.75%. Loan interest is payable annually, on the Policy anniversary,
in advance, at a rate of 4.54%. Any amount not paid by its due date will
automatically be added to the loan balance as an additional loan. Interest you
pay on Policy loans will not, in most cases, be deductible on your tax
returns.
You may choose which of your investment options the loan will be taken from.
If you do not so specify, we will allocate the loan in the same way that
charges under your Policy are being allocated. If this is not possible, we
will make the loan pro-rata from each investment option that you then are
using.
You may repay all or part (but not less than $5,000) of your loan at any
time prior to the death of the Insured while the Policy is in force. You must
designate any loan repayment as such. Otherwise, we will treat it as a premium
payment instead. We will invest any additional loan repayments you make in the
investment options you request. In the absence of such a request we will
invest the repayment in the same proportion as you then have selected for
premium payments that we receive from you. Any unpaid loan will be deducted
from the proceeds we pay following the insured person's death.
Preferred loan interest rate. We will credit a higher interest rate, but not
more than 4.75%, on an amount of the collateral securing Policy loans taken
out after the first 10 Policy years. The maximum amount of new loans that will
receive this preferred loan interest rate for any year is (a) 10% of your
Policy's accumulation value (including any loan collateral we are holding for
your Policy loans) at the beginning of the Policy year or (b) if less, your
Policy's maximum remaining loan value at that anniversary. We intend to set
the rate of interest we credit to your preferred collateral amount equal to
the loan interest rate you are paying, resulting in a zero net cost of
borrowing for that amount. We have full discretion to vary the preferred rate,
however, provided that it will always be greater than the rate we are then
crediting in connection with regular Policy loans. Because we first offered
the Policies in 1998, we have not yet applied the preferred loan interest rate
to any Policy loan amounts.
Maturity of your Policy. If the insured person is still living on the
"Maturity Date" shown on page 3 of your Policy, we will automatically pay you
the cash surrender value of the Policy, and the Policy will terminate. The
maturity date is the Policy anniversary nearest the insured person's 100th
birthday.
10
CAN I CHOOSE THE FORM IN WHICH AGL PAYS OUT THE PROCEEDS FROM MY POLICY?
Choosing a payment option. You may choose to receive the full proceeds from
the Policy as a single sum. This includes proceeds that become payable upon
the death of the insured person, full surrender or the maturity date.
Alternatively, you may elect that all or part of such proceeds be applied to
one or more of the following payment options:
.Option 1 - Equal monthly payments for a specified period of time.
.Option 2 - Equal monthly payments of a specified amount until all amounts
are paid out.
.Option 3 - Equal monthly payments for the payee's life, but with payments
guaranteed for a specified number of years. These payments are
based on annuity rates that are set forth in the Policy or, at
the payee's request, the annuity rates that we then are using.
.Option 4 - Proceeds left to accumulate with interest.
Additional payment options may also be available with our consent. We have
the right to veto any payment option, if the payee is a corporation or other
entity. You can read more about each of these options in our Policy form and
in the separate form of payment contract that we issue when any such option
takes effect.
Within 60 days after the insured person's death, any payee entitled to
receive proceeds as a single sum may elect one or more payment options.
Interest rates that we credit under each option will be at least 3%.
Change of payment option. You may change any payment option you have elected
at any time while the Policy is in force and before the start date of the
payment option.
Tax impact. If a payment option is chosen, you or your beneficiary may have
tax consequences. You therefore should consult with a qualified tax adviser
before deciding whether to elect one or more payment options.
TO WHAT EXTENT CAN AGL VARY THE TERMS AND CONDITIONS OF THE POLICIES IN
PARTICULAR CASES?
Listed below are some variations we may make in the terms of a Policy. Any
variations will be made only in accordance with uniform rules that we
establish.
Policies purchased through "internal rollovers." We maintain published rules
that describe the procedures necessary to replace the other life insurance we
issue with one of the Policies. Not all types of other insurance we issue are
eligible to be replaced with one of the Policies. Our published rules may be
changed from time to time, but are evenly applied to all our customers.
Policies purchased through term life conversions. Also, we maintain rules
about how to convert term insurance to a Legacy Enhancer Policy. This is
referred to as a term conversion. Term conversions are available to owners of
term life insurance we have issued. Any right to a term conversion is stated
in the term life insurance policy. Again, our published rules about term
conversions may be changed from time to time, but are evenly applied to all
our customers.
State law requirements. AGL is subject to the insurance laws and regulations
in every jurisdiction in which Legacy Enhancer Policies are sold. As a result,
various time periods and other terms and conditions described in this
prospectus may vary depending on where you reside. These variations will be
reflected in your Policy and related endorsements.
Variations in expenses or risks. AGL may vary the charges and other terms of
the Policies where special circumstances result in sales, administrative or
other expenses, mortality risks or other risks that are different from those
normally associated with the Policies.
11
HOW WILL MY POLICY BE TREATED FOR INCOME TAX PURPOSES?
Generally, death benefits paid under a Policy are not subject to income tax,
and earnings on your accumulation value are not subject to income tax as long
as we do not pay them out to you. If we do pay any amount of your Policy's
accumulation value upon surrender, partial surrender, or maturity of your
Policy, all or part of that distribution may be treated as a return of the
premiums you paid, and therefore not subject to income tax.
Amounts you receive as Policy loans are not taxable to you, unless you have
paid such a large amount of premiums that your Policy becomes what the tax law
calls a "modified endowment contract." In that case, the loan will be taxed as
if it were a partial surrender. Furthermore, loans, partial surrenders and
other distributions from a modified endowment contract may require you to pay
additional taxes and penalties that otherwise would not apply.
For further information about the tax consequences of owning a Policy,
please read "Tax Effects" starting on page .
HOW DO I COMMUNICATE WITH AGL?
When we refer to "you," we mean the person who is duly authorized to take
any contemplated action with respect to a Policy. Generally, this is the owner
named in the Policy. Where a Policy has more than one owner, each owner
generally must join in any requested action, except for transfers and changes
in the allocation of future premiums or charges among the investment options.
General. You should mail or express checks and money orders for premium
payments and loan repayments directly to our Home Office at the appropriate
address shown on the first page of this prospectus.
The following requests must be made in writing and signed by you: transfer
of accumulation value; loan; full surrender; partial surrender; change of
beneficiary or contingent beneficiary; change of allocation percentages for
premium payments, loan repayments or charges; change of death benefit option
or manner of death benefit payment; increase in specified insurance amount;
addition or cancellation of, or other action with respect to, election of a
payment option for Policy proceeds; tax withholding elections; and telephone
transaction privileges. You should mail or express these requests to our Home
Office at the appropriate address shown on the first page of this prospectus.
You should also communicate notice of the insured person's death, and related
documentation, to our Home Office.
We have special forms which should be used for loans, assignments, partial
and full surrenders, changes of owner or beneficiary, and all other
contractual changes. A Service Request form covering many of these
transactions is attached to the back of this prospectus. You will be asked to
return your Policy when you request a full surrender. You may also obtain
these forms from our Home Office or from your AGL representative. Each
communication must include your name, Policy number and, if you are not the
insured person, that person's name. We cannot process any requested action
that does not include all required information.
Telephone transactions. If you have a completed telephone authorization form
on file with us, you may make transfers, or change the allocation of future
premium payments or deduction of charges, by telephone, subject to the terms
of the form. We will honor telephone instructions from any person who provides
the correct information, so there is a risk of possible loss to you if
unauthorized persons use this service in your name. Our current procedure is
that only the owner or your AGL representative may make a transfer request by
phone. We are not liable for any acts or omissions based upon instructions
that we reasonably believe to be genuine. Our procedures include verification
of the Policy number, the identity of the caller, both the insured person's
and owner's names, and a form of personal identification from the caller. We
will mail you a prompt written confirmation of the transaction. If many people
seek to make telephone requests at or about the same time, or if our recording
equipment malfunctions, it may be impossible for you to make a telephone
request at the time you wish. If this occurs, you should submit a written
request. Also, if, due to malfunction or other circumstances, the
12
recording of your telephone request is incomplete or not fully comprehensible,
we will not process the transaction. The phone number for telephone requests
is 1-888-325-9315.
The Policies are not designed for professional market timing organizations
or other entities utilizing programmed and frequent transfers. We reserve the
right at any time and without prior notice to any party to terminate, suspend,
or modify our policies or procedures regarding telephone requests or to cease
permitting telephone requests altogether.
ILLUSTRATIONS OF HYPOTHETICAL POLICY BENEFITS
To help clarify how our Policies work, we have prepared the following
tables:
PAGE TO SEE IN
TABLE THIS PROSPECTUS
----- ---------------
Death Benefit Option 1-Current Charges....................
Guaranteed Maximum Charges..............................
The tables show how death benefits, accumulation values, and cash surrender
values ("Policy benefits") under a hypothetical Legacy Enhancer Policies would
vary over time if the investment options had constant hypothetical gross
annual investment returns of 0%, 6% or 12% over the years covered by each
table. The tables are for a 45 year-old male non-tobacco user. A single
premium payment of $250,000 for an initial $733,762 of specified amount of
coverage is assumed to be paid at issue. The illustrations assume no Policy
loan has been taken.
Although the tables below do not include illustrations of a Policy with an
Option 2 death benefit, such a Policy would have higher death benefits, lower
cash values, and a greater risk of lapse.
Separate tables are included to illustrate both current and guaranteed
maximum charges. The charges assumed in the current charge tables include a
daily charge at an annual effective rate of .75% for the first 30 Policy years
and .40% thereafter and current monthly insurance charges. The guaranteed
maximum charge tables assume that these charges will include a daily charge at
an .90% and an additional charge of 1.5% of every premium and guaranteed
maximum insurance charges. In Texas and Oregon, the guaranteed maximum daily
charge is .35% per annum higher for certain periods of time than the daily
charges assumed in the maximum charge tables below. Therefore, an identical
Policy sold in those states would have values less than those illustrated if
we deducted the maximum charges.
The charges assumed by both the current and guaranteed maximum charge tables
also include 0.74% for expenses of the Mutual Funds, which is the unweighted
average of the advisory fees payable with respect to each Mutual Fund, after
all reimbursements, as reflected on page of this prospectus, plus the
weighted average of all other operating expenses of each such Fund after all
reimbursements, as reflected on page of this prospectus.
The second column of each table shows the effect of an amount equal to the
premiums invested to earn interest, after taxes, of 5% compounded annually.
Individual illustrations. On request, we will furnish you with a comparable
illustration based on your Policy's characteristics. If you request
illustrations more than once in any Policy year, we may charge $25 for the
illustration.
13
LEGACY ENHANCER
SINGLE PREMIUM $250,000.00 INITIAL SPECIFIED AMOUNT $733,762
DEATH BENEFIT OPTION 1
MALE AGE 45
NONSMOKER
ASSUMING CURRENT CHARGES
ACCUMULATION VALUE CASH SURRENDER VALUE
DEATH BENEFIT ASSUMING ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
HYPOTHETICAL GROSS ANNUAL ANNUAL INVESTMENT RETURN GROSS ANNUAL INVESTMENT
END OF INVESTMENT RETURN OF OF RETURN OF
POLICY ACCUMULATED ------------------------- ------------------------- -------------------------
YEAR PREMIUMS(1) 0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
- ------ ----------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
1 262,500 733,762 750,345 793,107 245,497 260,359 275,197 245,497 260,359 275,197
2 275,625 733,762 757,097 845,847 240,791 270,936 302,696 240,791 270,936 302,696
3 289,406 733,762 764,515 902,804 236,235 282,092 333,118 236,235 282,092 333,118
4 303,877 733,762 771,851 963,403 231,539 293,571 366,427 231,539 293,571 366,427
5 319,070 733,762 779,209 1,028,006 226,735 305,423 402,944 226,735 305,423 402,944
6 335,024 733,762 786,695 1,097,023 221,843 317,691 443,010 221,843 317,691 443,010
7 351,775 733,762 794,360 1,170,830 216,873 330,407 486,996 216,873 330,407 486,996
8 369,364 733,762 802,262 1,249,856 211,814 343,587 535,279 211,814 343,587 535,279
9 387,832 733,762 810,397 1,334,470 206,634 357,229 588,244 206,634 357,229 588,244
10 407,224 733,762 818,701 1,424,964 201,261 371,298 646,250 201,261 371,298 646,250
15 519,732 733,762 865,100 1,986,467 171,680 449,252 1,031,586 171,680 449,252 1,031,586
20 663,324 733,762 920,054 2,787,179 134,926 541,269 1,639,699 134,926 541,269 1,639,699
- --------
(1) Assumes net interest of 5% compounded annually.
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN.
14
LEGACY ENHANCER
SINGLE PREMIUM $250,000.00 INITIAL SPECIFIED AMOUNT $733,762
DEATH BENEFIT OPTION 1
MALE AGE 45
NONSMOKER
ASSUMING GUARANTEED CHARGES
ACCUMULATION VALUE CASH SURRENDER VALUE
DEATH BENEFIT ASSUMING ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
HYPOTHETICAL GROSS ANNUAL ANNUAL INVESTMENT RETURN GROSS ANNUAL INVESTMENT
INVESTMENT RETURN OF OF RETURN OF
END OF ACCUMULATED ------------------------- ------------------------- -------------------------
POLICY YEAR PREMIUMS(1) 0.0% 6.0% 12.0% 0.0% 6.0% 12.0% 0.0% 6.0% 12.0%
- ----------- ----------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
1 262,500 733,762 745,411 787,907 243,836 258,647 273,393 243,836 258,647 273,393
2 275,625 733,762 747,571 835,247 237,561 267,527 298,902 237,561 267,527 298,902
3 289,406 733,762 749,737 885,418 231,157 276,639 326,703 231,157 276,639 326,703
4 303,877 733,762 751,923 938,609 224,610 285,992 356,997 224,610 285,992 356,997
5 319,070 733,762 754,092 994,957 217,890 295,579 389,989 217,890 295,579 389,989
6 335,024 733,762 756,268 1,054,685 210,977 305,403 425,913 210,977 305,403 425,913
7 351,775 733,762 758,386 1,117,906 203,818 315,444 464,983 203,818 315,444 464,983
8 369,364 733,762 760,476 1,184,862 196,369 325,691 507,444 196,369 325,691 507,444
9 387,832 733,762 762,525 1,255,750 188,575 336,126 553,543 188,575 336,126 553,543
10 407,224 733,762 764,529 1,330,795 180,370 346,730 603,543 180,370 346,730 603,543
15 519,732 733,762 774,572 1,778,753 131,423 402,241 923,718 131,423 402,241 923,718
20 663,324 733,762 784,027 2,375,316 61,323 461,243 1,397,400 61,323 461,243 1,397,400
- --------
(1) Assumes net interest of 5% compounded annually.
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE
DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL
INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN.
15
ADDITIONAL INFORMATION
A general overview of the Policies appears at pages -- . The additional
information that follows gives more details, but generally does not repeat
what is set forth above.
PAGE TO
SEE IN
THIS
CONTENTS OF ADDITIONAL INFORMATION PROSPECTUS
---------------------------------- ----------
AGL..................................................................
Separate Account VL-R................................................
Tax Effects..........................................................
Voting Privileges....................................................
Your Beneficiary.....................................................
Assigning Your Policy................................................
More About Policy Charges............................................
Effective Date of Policy and Related Transactions....................
Distribution of the Policies.........................................
Payment of Policy Proceeds...........................................
Adjustments to Death Benefit.........................................
Additional Rights That We Have.......................................
Our Reports to Policy Owners.........................................
AGL's Management.....................................................
Legal Matters........................................................
Accounting and Actuarial Experts.....................................
Certain Potential Conflicts..........................................
Special words and phrases. If you want more information about any words or
phrases that you read in this prospectus, you may wish to refer to the Index
of Words and Phrases that appears at the end of the back cover of this
prospectus. That index will tell you on what page you can read more about many
of the words and phrases that we use.
AGL
We are American General Life Insurance Company ("AGL"). AGL is a stock life
insurance company organized under the laws of Texas. AGL is a successor in
interest to a company originally organized under the laws of Delaware in 1917.
AGL is a indirect, wholly-owned subsidiary of American General Corporation
(formerly American General Insurance Company), a diversified financial
services holding company engaged primarily in the insurance business. The
commitments under the Contracts are AGL's, and American General Corporation
has no legal obligation to back those commitments.
SEPARATE ACCOUNT VL-R
We hold the Mutual Fund shares in which any of your accumulation value is
invested in our Separate Account VL-R. Separate Account VL-R is a "separate
account," as defined by the SEC and is registered as a unit investment trust
with the SEC under the Investment Company Act of 1940. We created the separate
account on May 6, 1997.
For record keeping and financial reporting purposes, Separate Account VL-R
is divided into 22 separate "divisions", 6 of which correspond to one of the 6
available investment options. The remaining 16 divisions represent investment
options available under another variable life Policy we offer. We hold the
Mutual Fund shares in which we invest your accumulation value for an
investment option in the division that corresponds to that investment option.
The assets in the Separate Account VL-R are our property. Nevertheless, the
assets in the Separate Account VL-R would be available only to satisfy the
claims of owners of the Policies, to the extent they have allocated
16
their accumulation value to the Separate Account VL-R. Our other creditors
could reach only those Separate Account VL-R assets (if any) that are in
excess of the amount of our reserves and liabilities under the Policies with
respect to the Separate Account VL-R.
TAX EFFECTS
This discussion is based on current federal income tax law and
interpretations. It assumes that the Policy owner is a natural person who is a
U.S. citizen and resident. The tax effects on corporate taxpayers, non-U.S.
residents or non-U.S. citizens, may be different. This discussion is general
in nature, and should not be considered tax advice, for which you should
consult a qualified tax adviser.
General. A Legacy Enhancer Policy will be treated as "life insurance" for
federal income tax purposes (a) if it meets the definition of life insurance
under Section 7702 of the Internal Revenue Code of 1986 ("the Code") and (b)
for as long as the investments made by the underlying Mutual Funds satisfy
certain investment diversification requirements under Section 817(h) of the
Code. We believe that the Policies will meet these requirements and that:
. the death benefit received by the beneficiary under your Policy will not
be subject to federal income tax; and
. increases in your Policy's accumulation value as a result of interest or
investment experience will not be subject to federal income tax unless
and until there is a distribution from your Policy, such as a surrender
or a partial surrender.
The federal income tax consequences of a distribution from your Policy can
be affected by whether your Policy is determined to be a "modified endowment
contract" (which is discussed below). In all cases, however, the character of
all income that is described below as taxable to the payee will be ordinary
income (as opposed to capital gain).
Testing for modified endowment contract status. Your Policy will be a
"modified endowment contract" if, at any time during the first seven Policy
years, you have paid a cumulative amount of premiums that exceeds the premiums
that would have been paid by that time under a similar fixed-benefit insurance
policy that was designed (based on certain assumptions mandated under the
Code) to provide for paid-up future benefits after the payment of seven level
annual premiums. This is called the "seven-pay" test.
Whenever there is a "material change" under a Policy, the Policy will
generally be (a) treated as a new contract for purposes of determining whether
the Policy is a modified endowment contract and (b) subjected to a new seven-
pay period and a new seven-pay limit. The new seven-pay limit would be
determined taking into account, under a prescribed formula, the accumulation
value of the Policy at the time of such change. A materially changed Policy
would be considered a modified endowment if it failed to satisfy the new
seven-pay limit. A material change for these purposes could occur as a result
of a change in death benefit option. A material change will occur as a result
of an increase in your Policy's specified amount of coverage, and certain
other changes.
If your Policy's benefits are reduced during the first seven Policy years
(or within seven years after a material change), the calculated seven-pay
premium limit will be redetermined based on the reduced level of benefits and
applied retroactively for purposes of the seven-pay test. (Such a reduction in
benefits could include, for example, a decrease in the specified amount
resulting from a partial surrender). If the premiums previously paid are
greater than the recalculated seven-payment premium level limit, the Policy
will become a modified endowment contract. A life insurance policy that is
received in exchange for a modified endowment contract will also be considered
a modified endowment contract.
Other effects of Policy changes. Changes made to your Policy (for example, a
decrease in benefits or a lapse or reinstatement of your Policy) may also have
other effects on your Policy. Such effects may include impacting
17
the maximum amount of premiums that can be paid under your Policy, as well as
the maximum amount of accumulation value that may be maintained under your
Policy.
Taxation of pre-death distributions if your Policy is not a modified
endowment contract. As long as your Policy remains in force during the insured
person's lifetime, as a non-modified endowment contract, a Policy loan will be
treated as indebtedness, and no part of the loan proceeds will be subject to
current federal income tax. Interest on the loan generally will not be tax
deductible.
After the first 15 Policy years, the proceeds from a partial surrender will
not be subject to federal income tax except to the extent such proceeds exceed
your "basis" in your Policy. (Your basis generally will equal the premiums you
have paid, less the amount of any previous distributions from your Policy that
were not taxable.) During the first 15 Policy years, the proceeds from a
partial surrender could be subject to federal income tax, under a complex
formula, to the extent that your accumulation value exceeds your basis in your
Policy.
On the maturity date or upon full surrender, any excess in the amount of
proceeds we pay (including amounts we use to discharge any Policy loan) over
your basis in the Policy, will be subject to federal income tax. In addition,
if a Policy terminates after a grace period while there is a policy loan, the
cancellation of such loan and accrued loan interest will be treated as a
distribution and could be subject to tax under the above rules. Finally, if
you make an assignment of rights or benefits under your Policy you may be
deemed to have received a distribution from your Policy, all or part of which
may be taxable.
Taxation of pre-death distributions if your Policy is a modified endowment
contract. If your Policy is a modified endowment contract, any distribution
from your Policy during the insured person's lifetime will be taxed on an
"income-first" basis. Distributions for this purpose include a loan (including
any increase in the loan amount to pay interest on an existing loan or an
assignment or a pledge to secure a loan) or partial surrender. Any such
distributions will be considered taxable income to you to the extent your
accumulation value exceeds your basis in the Policy. For modified endowment
contracts, your basis is similar to the basis described above for other
Policies, except that it also would be increased by the amount of any prior
loan under your Policy that was considered taxable income to you. For purposes
of determining the taxable portion of any distribution, all modified endowment
contracts issued by the same insurer (or its affiliate) to the same owner
(excluding certain qualified plans) during any calendar year are aggregated.
The U.S. Treasury Department has authority to prescribe additional rules to
prevent avoidance of "income-first" taxation on distributions from modified
endowment contracts.
A 10% penalty tax also will apply to the taxable portion of most
distributions from a Policy that is a modified endowment contract. The penalty
tax will not, however, apply to distributions (i) to taxpayers 59 years of age
or older, (ii) in the case of a disability (as defined in the Code) or (iii)
received as part of a series of substantially equal periodic annuity payments
for the life (or life expectancy) of the taxpayer or the joint lives (or joint
life expectancies) of the taxpayer and his or her beneficiary. If your Policy
terminates after a grace period while there is a Policy loan, the cancellation
of such loan will be treated as a distribution to the extent not previously
treated as such and could be subject to tax, including the 10% penalty tax, as
described above. In addition, on the maturity date or upon a full surrender,
any excess of the proceeds we pay (including any amounts we use to discharge
any loan) over your basis in the Policy, will be subject to federal income tax
and, unless an exception applies, the 10% penalty tax.
Distributions that occur during a Policy year in which your Policy becomes a
modified endowment contract, and during any subsequent Policy years, will be
taxed as described in the two preceding paragraphs. In addition, distributions
from a Policy within two years before it becomes a modified endowment contract
also will be subject to tax in this manner. This means that a distribution
made from a Policy that is not a modified endowment contract could later
become taxable as a distribution from a modified endowment contract. The
Treasury Department has been authorized to prescribe rules which would treat
similarly other distributions made in anticipation of a policy becoming a
modified endowment contract.
18
Policy lapses and reinstatements. A Policy which has lapsed may have the tax
consequences described above, even though you may be able to reinstate that
Policy. For tax purposes, some reinstatements may be treated as the purchase
of a new insurance contract.
Diversification. Under Section 817(h) of the Code, the Treasury Department
has issued regulations that implement investment diversification requirements.
Failure by us to comply with these regulations would disqualify your Policy as
a life insurance policy under Section 7702 of the Code. If this were to occur,
you would be subject to federal income tax on the income under the Policy for
the period of the disqualification and for subsequent periods. Our Separate
Account VL-R, through the Mutual Funds, intends to comply with these
requirements. Although the Company does not have direct control over the
investments or activities of the Mutual Funds, it will enter into agreements
with them requiring the Mutual Funds to comply with the diversification
requirements of the Section 817(h) Treasury Regulations.
In connection with the issuance of then temporary diversification
regulations, the Treasury Department stated that it anticipated the issuance
of guidelines prescribing the circumstances in which the ability of a policy
owner to direct his or her investment to particular Mutual Funds within a
Separate Account VL-R may cause the policy owner, rather than the insurance
company, to be treated as the owner of the assets in the account. If you were
considered the owner of the assets of the Separate Account VL-R, income and
gains from the account would be included in your gross income for federal
income tax purposes. Under current law, however, we believe that AGL, and not
the owner of a Policy, would be considered the owner of the assets of our
Separate Account VL-R.
Estate and generation skipping taxes. If the insured person is the Policy's
owner, the death benefit under a Legacy Enhancer Policy will generally be
includable in the owner's estate for purposes of federal estate tax. If the
owner is not the insured person, under certain conditions, only an amount
approximately equal to the cash surrender value of the Policy would be
includable. Federal estate tax is integrated with federal gift tax under a
unified rate schedule. In general, estates less than $625,000 (or larger
amounts specified in the Code to commence in certain future years) will not
incur a federal estate tax liability. In addition, an unlimited marital
deduction may be available for federal estate tax purposes.
As a general rule, if a "transfer" is made to a person two or more
generations younger than the Policy's owner, a generation skipping tax may be
payable at rates similar to the maximum estate tax rate in effect at the time.
The generation skipping tax provisions generally apply to "transfers" that
would be subject to the gift and estate tax rules. Individuals are generally
allowed an aggregate generation skipping tax exemption of $1 million. Because
these rules are complex, you should consult with a qualified tax adviser for
specific information, especially where benefits are passing to younger
generations.
The particular situation of each Policy owner, insured person or beneficiary
will determine how ownership or receipt of Policy proceeds will be treated for
purposes of federal estate and generation skipping taxes, as well as state and
local estate, inheritance and other taxes.
Pension and profit-sharing plans. If a life insurance policy is purchased by
a trust or other entity that forms part of a pension or profit-sharing plan
qualified under Section 401(a) of the Code for the benefit of participants
covered under the plan, the federal income tax treatment of such policies will
be somewhat different from that described above.
If purchased as part of a pension or profit-sharing plan, the reasonable net
premium cost for such amount of insurance is required to be included annually
in the plan participant's gross income. This cost (generally referred to as
the "P.S. 58" cost) is reported to the participant annually. If the plan
participant dies while covered by the plan and the policy proceeds are paid to
the participant's beneficiary, then the excess of the death benefit over the
policy's accumulation value will not be subject to federal income tax.
However, the policy's accumulation value will generally be taxable to the
extent it exceeds the participant's cost basis in the policy. The
participant's cost basis will generally include the costs of insurance
previously reported as income to the participant. Special rules may apply if
the participant had borrowed from the policy or was an owner-employee under
the plan.
19
There are limits on the amounts of life insurance that may be purchased on
behalf of a participant in a pension or profit-sharing plan. Complex rules, in
addition to those discussed above, apply whenever life insurance is purchased
by a tax qualified plan. You should consult a qualified tax adviser.
Other employee benefit programs. Complex rules may also apply when a policy
is held by an employer or a trust, or acquired by an employee, in connection
with the provision of other employee benefits. These policy owners must
consider whether the policy was applied for by or issued to a person having an
insurable interest under applicable state law and with the insured person's
consent. The lack of an insurable interest or consent may, among other things,
affect the qualification of the policy as life insurance for federal income
tax purposes and the right of the beneficiary to receive a death benefit.
ERISA. Employers and employer-created trusts may be subject to reporting,
disclosure and fiduciary obligations under the Employee Retirement Income
Security Act of 1974. You should consult a qualified legal adviser.
Our taxes. The operations of our Separate Account VL-R are reported in our
federal income tax return, but we currently pay no income tax on the Separate
Account VL-R's investment income and capital gains, because these items are,
for tax purposes, reflected in our variable life insurance policy reserves.
Therefore, no charge is currently being made to any Separate Account VL-R
division for taxes. We reserve the right to make a charge in the future for
taxes incurred; for example, a charge to the Separate Account VL-R for income
taxes incurred by us that are allocable to the Policies.
We may have to pay state, local or other taxes in addition to applicable
taxes based on premiums. At present, these taxes are not substantial. If they
increase, charges may be made for such taxes when they are attributable to our
Separate Account VL-R or allocable to the Policies.
Certain Mutual Funds in which your accumulation value is invested may elect
to pass through to AGL taxes withheld by foreign taxing jurisdictions on
foreign source income. Such an election will result in additional taxable
income and income tax to AGL. The amount of additional income tax, however,
may be more than offset by credits for the foreign taxes withheld which are
also passed through. These credits may provide a benefit to AGL.
When we withhold income taxes. Generally, unless you provide us with an
election to the contrary before we make the distribution, we are required to
withhold income tax from any proceeds we distribute as part of a taxable
transaction under your Policy. In some cases, where generation skipping taxes
may apply, we may also be required to withhold for such taxes unless we are
provided satisfactory written notification that no such taxes are due.
Tax changes. The U.S. Congress frequently considers legislation that, if
enacted, could change the tax treatment of life insurance policies. In
addition, the Treasury Department may amend existing regulations, issue
regulations on the qualification of life insurance and modified endowment
contracts, or adopt new interpretations of existing law. State and local tax
law or, if you are not a U.S. citizen and resident, foreign tax law, may also
affect the tax consequences to you, the insured person or your beneficiary,
and are subject to change. Any changes in federal, state, local or foreign tax
law or interpretation could have a retroactive effect. We suggest you consult
a qualified tax adviser.
VOTING PRIVILEGES
You will be entitled to instruct us how to vote Mutual Fund shares held in
the divisions of Separate Account VL-R and attributable to your Policy at
meetings of shareholders of the Funds. The number of votes for which you may
give directions will be determined as of the record date for the meeting. The
number of votes you are entitled to direct with respect to a particular Mutual
Fund is equal to (a) your accumulation value invested in that Fund divided by
(b) the net asset value of one share of that Fund. Fractional votes will be
recognized.
20
Separate Account VL-R will vote all shares of each Fund that it holds of
record in the same proportions as those shares for which we have received
instructions from owners participating in that Fund through the Separate
Account VL-R.
If you are entitled to give us voting instructions, we will send you proxy
material and a form for providing such instructions. In certain cases, we may
disregard instructions relating to changes in a Fund's investment manager or
its investment policies. We will advise you if we do and detail the reasons in
our next report to Policy owners.
AGL reserves the right to modify these procedures in any manner consistent
with applicable legal requirements and interpretations as in effect from time
to time.
YOUR BENEFICIARY
You name your beneficiary when you apply for a Policy. The beneficiary is
entitled to the insurance benefits of the Policy. You may change the
beneficiary during the insured person's lifetime. We also require the consent
of any irrevocably named beneficiary. A new beneficiary designation is
effective as of the date you sign it, but will not affect any payments we may
make before we receive it. If no beneficiary is living when the insured person
dies, we will pay the insurance proceeds to the owner or the owner's estate.
ASSIGNING YOUR POLICY
You may assign (transfer) your rights in a Policy to someone else as
collateral for a loan or for some other reason. We will not be bound by an
assignment unless it is received in writing. Two copies of the assignment must
be forwarded to us. We are not responsible for any payment we make or any
action taken before we receive due and complete notice of the assignment in
good order. Nor are we responsible for the validity of the assignment. An
absolute assignment is a change of ownership. Because there may be unfavorable
tax consequences, including recognition of taxable income and the loss of
income tax-free treatment for any death benefit payable to the beneficiary,
you should consult a qualified tax adviser prior to making an assignment.
MORE ABOUT POLICY CHARGES
Purpose of our charges. The charges under the Policies are designed to
cover, in the aggregate, our direct and indirect costs of selling,
administering and providing benefits under the Policies. They are also
designed, in the aggregate, to compensate us for the risks we assume and
services that we provide under the Policies. These include mortality risks
(such as the risk that insured persons will, on average, die before we expect,
thereby increasing the amount of claims we must pay); investment risks (such
as the risk that adverse investment performance will make it more difficult
for us to reduce the amount of our daily charge for revenues below what we
anticipate); sales risks (such as the risk that the number of Policies we sell
and the premiums we receive net of withdrawals, are less than we expect,
thereby depriving us of expected economies of scale); regulatory risks (such
as the risk that tax or other regulations may be changed in ways adverse to
issuers of variable life insurance policies); and expense risks (such as the
risk that the costs of administrative services that the Policies require us to
provide will exceed what we currently project).
If the charges that we collect from the Policies exceed our total costs in
connection with the Policies, we will earn a profit. Otherwise we will incur a
loss.
The current monthly insurance charge has been designed primarily to provide
funds out of which we can make payments of death benefits under the Policies
as insured persons die.
Any excess from the charges discussed in the preceding paragraph, are
primarily intended (a) to defray other expenses in connection with the
Policies (such as the costs of processing applications for Policies and other
unreimbursed administrative expenses, costs of paying marketing and
distribution expenses for the Policies, and
21
costs of paying death claims for the mortality experience of insured persons
is worse than we expect), (b) to compensate us for the risk we assume under
the Policies, or (c) otherwise to be retained by us as profit.
Although the preceding paragraphs describe the primary purposes for which
charges under the Policies have been designed, these distinctions are
imprecise and subject to considerable change over the life of a Policy. We
have full discretion to retain or use the revenues from any charge or charge
increase for any purpose, whether or not related to the Policies.
Change of tobacco use. If the person insured under your Policy is a tobacco
user, you may apply to us for an improved risk class if the insured person
meets our then applicable requirements for demonstrating that he or she has
ceased tobacco use for a sufficient period.
Gender neutral Policies. Our cost of insurance charge rates in Montana will
not be greater than the comparable male rates illustrated in this prospectus.
Congress and the legislatures of various states have from time to time
considered legislation that would require insurance rates to be the same for
males and females of the same age, rating class and tobacco user status. In
addition, employers and employee organizations should consider, in
consultation with counsel, the impact of Title VII of the Civil Rights Act of
1964 on the purchase of life insurance policies in connection with an
employment-related insurance or benefit plan. In a 1983 decision, the United
States Supreme Court held that, under Title VII, optional annuity benefits
under a deferred compensation plan could not vary on the basis of sex.
Cost of insurance rates. Because of specified amount increases, different
cost of insurance rates may apply to different increments of specified amount
under your Policy. If so, we attribute your accumulation value first to the
oldest increments of specified amount in order to compute our net amount at
risk at each cost of insurance rate. See "Monthly Insurance Charge" beginning
on page .
Miscellaneous. Each of the distributors or advisers of the Mutual Funds
listed on page 1 of this prospectus reimburses us, on a quarterly basis, for
certain administrative, Policy, and Policy owner support expenses. These
reimbursements will be reasonable in relation to the services performed and
are not designed to result in a profit. These reimbursements are paid by the
distributors or the advisers, and will not be paid by the Mutual Funds, the
divisions or the owners. No payments have yet been made under these
arrangements, because no Policies have yet been issued.
EFFECTIVE DATE OF POLICY AND RELATED TRANSACTIONS
Valuation dates, times, and periods. We generally compute values under
Policies on each day that we are open for business except, with respect to any
investment option, days on which the related Mutual Fund does not value its
shares. We call each such day a "valuation date."
We compute policy values as of 3:00 p.m., Central time, on each valuation
date. We call this our "close of business." We call the time from the close of
business on one valuation date to the close of business of the next valuation
date a "valuation period."
Date of receipt. Generally we consider that we have received a premium
payment or another communication from you on the day we actually receive it in
full and proper order at our Home Office (shown on the first page of this
prospectus). If we receive it after the close of business on any valuation
date, however, we consider that we have received it on the day following that
valuation date.
Commencement of insurance coverage. After you apply for a Policy, it can
sometimes take up to several weeks for us to gather and evaluate all the
information we need to decide whether to issue a Policy to you and, if so,
what the insured person's insurance rate class should be. We will not pay a
death benefit under a Policy unless (a) it has been delivered to and accepted
by the owner and at least the minimum first premium has been
22
paid, and (b) at the time of such delivery and payment, there have been no
adverse developments in the insured person's health or risk of death.
Date of issue; Policy months and years. After we approve an application for
a Policy and assign an appropriate insurance rate class, we prepare the
Policy. The day we begin to deduct charges will appear on page 3 of your
Policy and is called the "date of issue." Policy months and years are measured
from the date of issue. In order to preserve a younger age at issue for the
insured person, we may assign a date of issue to a Policy that is up to 6
months earlier than otherwise would apply.
Monthly deduction days. Each charge that we deduct monthly is assessed
against your accumulation value at the close of business on the date of issue
and at the end of each subsequent valuation period that includes the first day
of a Policy month. We call these "monthly deduction days."
Commencement of investment performance. We begin to credit an investment
return to the accumulation value resulting from your initial premium payment
on the later of (a) the date of issue, or (b) the date all requirements needed
to place the Policy in force have been satisfied, including underwriting
approval and receipt in the Home Office of the necessary premium, or (c) in
the case of a back-dated policy, the date we approve the Policy for insurance.
Effective date of other premium payments and requests that you make. Premium
payments (after the first) and transactions implemented in response to
requests and elections made by you are generally effected at the end of the
valuation period in which we receive the payment, request or election and
based on prices and values computed as of that same time. Exceptions to this
general rule are as follows:
. Increases you request in the specified amount of insurance, and
reinstatements of Policies that have lapsed take effect on the Policy's
monthly deduction day on or next following our approval of the
transaction;
. We may return premium payments if we determine that such premiums would
cause your Policy to become a modified endowment contract or to cease to
qualify as life insurance under federal income tax law or exceed the
maximum net amount at risk;
. If you exercise the right to return your Policy described on the first
page of this prospectus, your coverage will end when you mail us your
Policy or deliver it to your AGL representative; and
. If you pay a premium in connection with a request which requires our
approval, your payment will be applied when received rather than
following the effective date of the change requested so long as your
coverage is in force and the amount paid will not cause you to exceed
premium limitations under the Code. If we do not approve your request, no
premium will be refunded to you except to the extent necessary to cure
any violation of the maximum premium limitations under the Code. This
procedure will not apply to premiums remitted in connection with
reinstatement requests.
DISTRIBUTION OF THE POLICIES
American General Securities Incorporated ("AGSI") is the principal
underwriter of the Policies. AGSI is a wholly-owned subsidiary of AGL, a
wholly-owned subsidiary of American General Corporation ("American General"),
and its principal office is 2727 Allen Parkway, Houston, Texas, 77019. AGSI
was organized as a Texas corporation on March 8, 1983 and is a registered
broker-dealer under the Securities Exchange Act of 1934 ("1934 Act") and is a
member of the National Association of Securities Dealers, Inc. ("NASD"). AGSI
is also the principal underwriter for AGL's Separate Accounts A and D, and
Separate Account E of American General Life Insurance Company of New York,
which is a wholly-owned subsidiary of AGL. These separate accounts are
registered investment companies.
AGL has entered into a distribution agreement with AGSI which acts as the
principal distributor of the Policies and provides certain marketing support
services for which it is compensated by AGL. Pursuant to the
23
agreement, AGL pays AGSI a distribution fee of .20% of each Policy's average
annual cash value. AGSI may enter into other agreements with broker-dealers
registered under the 1934 Act. AGSI has also entered into an agreement with
Independent Advantage Financial and Insurance Services, Inc., a licensed
insurance agency and another indirect wholly-owned subsidiary of American
General, to provide certain additional marketing support services.
PAYMENT OF POLICY PROCEEDS
General. We will pay any death benefit, maturity benefit, cash surrender
value or loan proceeds within seven days after we receive the last required
form or request (and any other documents that may be required for payment of
death benefit). If we do not have information about the desired manner of
payment within 60 days after the date of notification of the insured person's
death, we will pay the proceeds as a single sum, normally within seven days
thereafter.
Delay for check clearance. We reserve the right to defer payment of that
portion of your accumulation value that is attributable to a premium payment
made by check for a reasonable period of time (not to exceed 15 days) to allow
the check to clear the banking system.
Delay of Separate Account VL-R proceeds. We reserve the right to defer
payment of any death benefit, loan or other distribution that is derived from
that portion of your accumulation value that is allocated to Separate Account
VL-R, if (a) the New York Stock Exchange is closed other than customary
weekend and holiday closings, or trading on the New York Stock Exchange is
restricted; (b) an emergency exists, as a result of which disposal of
securities is not reasonably practicable or it is not reasonably practicable
to fairly determine the accumulation value; or (c) the SEC by order permits
the delay for the protection of owners. Transfers and allocations of
accumulation value among the investment options may also be postponed under
these circumstances. If we need to defer calculation of Separate Account VL-R
values for any of the foregoing reasons, all delayed transactions will be
processed at the next values that we do compute.
Delay to challenge coverage. We may challenge the validity of your insurance
Policy based on any material misstatements in your application and any
application for a change in coverage. However,
. We cannot challenge the Policy after it has been in effect, during the
insured person's lifetime, for two years from the date the Policy was
issued or restored after termination. (Some states may require that we
measure this time in some other way.)
. We cannot challenge any Policy change that requires evidence of
insurability (such as an increase in specified amount) after the change
has been in effect for two years during the insured person's lifetime.
ADJUSTMENTS TO DEATH BENEFIT
Suicide. If the insured person commits suicide within two years after the
date on which the Policy was issued, the death benefit will be limited to the
total of all premiums that have been paid to the time of death minus any
outstanding Policy loan and any partial surrenders. If the insured person
commits suicide within two years after the effective date of an increase in
specified amount that you requested, we will pay the death benefit based on
the specified amount which was in effect before the increase, plus the monthly
insurance deductions for the increase. Some states require that we compute
differently these periods for non-contestability following a suicide.
Wrong age or sex. If the age or gender of the insured person was misstated
on your application for a Policy (or for any increase in benefits), we will
adjust any death benefit to be what the monthly insurance charge deducted for
the current month would have purchased based on the correct information.
Death during grace period. If the insured person dies during the Policy's
grace period, we will deduct any overdue monthly charges from the insurance
proceeds.
24
ADDITIONAL RIGHTS THAT WE HAVE
We have the right at any time to:
. transfer the entire balance in an investment option in accordance with
any transfer request you make that would reduce your accumulation value
for that option to below $5,000;
. transfer the entire balance in proportion to any other investment options
you then are using, if the accumulation value in an investment option is
below $5,000 for any other reason;
. terminate the automatic rebalancing feature if your accumulation value
falls below $100,000;
. change the underlying Mutual Fund that any investment option uses;
. add or delete investment options, combine two or more investment options,
or withdraw assets relating to Legacy Enhancer from one investment option
and put them into another;
. operate Separate Account VL-R under the direction of a committee or
discharge such a committee at any time;
. operate the Separate Account VL-R, or one or more investment options, in
any other form the law allows, including a form that allows us to make
direct investments. Our Separate Account VL-R may be charged an advisory
fee if its investments are made directly rather than through another
investment company. In that case, we may make any legal investments we
wish; or
. make other changes in the Policies that in our judgment are necessary or
appropriate to ensure that the Policies continue to qualify for tax
treatment as life insurance, or that do not reduce any cash surrender
value, death benefit, accumulation value, or other accrued rights or
benefits.
If there are any material changes in the underlying investments of an
investment option that you are using, you will be notified as required by law.
We intend to comply with applicable law in making any changes and, if
necessary, we will seek Policy owner approval.
PERFORMANCE INFORMATION
From time to time, we may quote performance information for the divisions of
the Separate Account VL-R in advertisements, sales literature, or reports to
owners or prospective investors.
We may quote performance information in any manner permitted under
applicable law. We may, for example, present such information as a change in a
hypothetical owner's cash value or death benefit. We also may present the
yield or total return of the division based on a hypothetical investment in a
Policy. The performance information shown may cover various periods of time,
including periods beginning with the commencement of the operations of the
division or the Mutual Funds in which it invests. The performance information
shown may reflect the deduction of one or more charges, such as the premium
charge or surrender charge, and we generally expect to exclude costs of
insurance charges because of the individual nature of these charges.
OUR REPORTS TO POLICY OWNERS
Shortly after the end of each Policy year, we will mail you a report that
includes information about your Policy's current death benefit, accumulation
value, cash surrender value and policy loans. Notices will be sent to you to
confirm premium payments, transfers and certain other Policy transactions. We
will mail to you at your last known address of record, these and any other
reports and communications required by law. You should therefore give us
prompt written notice of any address change.
25
AGL'S MANAGEMENT
The directors, executive officers, and (to the extent responsible for
variable life operations) the other principal officers of AGL are listed below.
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ----------------------------------------------------
James S. D'Agostino, Jr. Director and Vice Chairman of American General Life
Insurance Company since May 1997. Director and
President American General Corporation since 1996
and Senior Vice President (February 1993-August
1993). Officer positions with other American General
Companies since July 1986.
Jon P. Newton........... Director and Vice Chairman of American General Life
Insurance Company since February 1996. Director of
American General Corporation since October 1995 and
Vice Chairman since April 1997; Vice Chairman and
General Counsel (October 1995-April 1997). Director
of other American General affiliates since October
1994. Prior thereto, Partner with Clark, Thomas,
Winter & Newton, Austin, Texas (February 1979-
February 1993). Directorships with Houston Museum of
Natural Science Board of Trustees since 1997;
University of Texas Law School Foundation Board of
Trustees, Austin, Texas since 1997; University of
Texas-Houston Health Science Center Development
Board, Houston, Texas since 1996; Texas Commerce
Bancshares, Houston, Texas (1985-1993); Texas
Commerce Bank, Austin, Texas (1979-1993); Lomas
Financial Corporation, Dallas, Texas (1983-1993);
Vista Properties, Inc., Dallas, Texas (1992-1993).
Rodney O. Martin, Jr. .. Director, President and CEO of American General Life
Insurance Company since August 1996. Chairman of the
Board since April, 1998. President of American
General Life Insurance Company of New York (November
1995-August 1996). Vice President Agencies, with
Connecticut Mutual Life Insurance Company (1990-
1995).
David A. Fravel......... Director and Senior Vice President of American
General Life Insurance Company since November 1996.
Elected Executive Vice President in April, 1998.
Senior Vice President Massachusetts Mutual,
Springfield, Missouri (March 1996-June 1996); Vice
President, New Business, Connecticut Mutual Life,
Hartford, Connecticut (December 1978-March 1996).
Robert F. Herbert, Jr... Director and Senior Vice President, Chief Financial
Officer of American General Life Insurance Company
since May 1996, and Controller, Actuary from June
1988 to May 1996.
Royce G. Imhoff, II..... Director, Senior Vice President and Chief Marketing
Officer for American General Life Insurance Company
since November 1997, Vice President (August 1996-
August 1997), and Regional Director (1992-1996).
John V. LaGrasse........ Director, Senior Vice President and Chief Systems
Officer since August 1996. Prior thereto, Director
Citicorp Insurance Services, Inc., Dover, Delaware
(1986-1996).
26
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ----------------------------------------------------
Gary D. Reddick............ Executive Vice President of American General Life
Insurance Company since April 1998. Vice Chairman
since July 1997 and Executive Vice President-
Administration of The Franklin Life Insurance
Company since February 1995. Senior Vice President-
Administration of American General Corporation
(October 1994-February 1995). Senior Vice President
for American General Life Insurance Company
(September 1986-October 1994).
Philip K. Polkinghorn...... Director of American General Life Insurance Company
since February 1997. Senior Vice President-Product
Development Center since April, 1998. Senior Vice
President and Chief Marketing Officer (December
1996-September 1997). Prior thereto, Chief Financial
Officer, Connecticut Mutual Life Insurance Company
(March 1995-March 1996); Senior Vice President First
Colony Life Insurance Company, Lynchburg, Virginia
(March 1996-December 1996), and Chief Marketing
Officer, Allmerica Financial, Worchester, MA (March
1993-April 1994).
Wayne A. Barnard........... Senior Vice President and Chief Actuary of American
General Life Insurance Company since November 1997
and Vice President since February, 1991 and Chief
Actuary since February, 1993.
B. Shelby Baetz............ Senior Vice President, General Counsel and Secretary
of American General Life Insurance Company since
April 1998. From 1986 through 1997, held various
attorney positions at American General Corporation
with the last title being Associate General Counsel.
F. Paul Kovach Jr.......... Senior Vice President-Broker Dealers and FIMG for
American General Life Insurance Company since August
1997. Since October 1994, President and Director of
American General Securities, Inc. Vice President of
Chubb Securities Corporation, Concord, New
Hampshire, (February 1990-October 1994).
Simon J. Leech............. In July 1997 named as Senior Vice President-Houston
Service Center for American General Life Insurance
Company. Various positions with American General
Life Company since 1981, including Director of POS
in 1993, and Vice President-Policy Administration in
1995.
Brian D. Murphy............ In April 1998 named as Senior Vice President-
Insurance Operations of American General Life
Insurance Company. Vice President-Sales, Phoenix
Home Life, Hartford, CT (January 1997-April 1998).
Vice President of Underwriting and Issue, Phoenix
Home Life (July 1994-January 1997). Various
positions with Mutual New York, Syracuse, NY,
including Agent, Agency Manager, Marketing Life and
DI Underwriting Management, (1978-July 1994).
27
NAME BUSINESS EXPERIENCE WITHIN PAST FIVE YEARS
---- ----------------------------------------------------
Robert A. Slepicka......... In September, 1997 named as President of the
Corporate Markets Group of American General Life
Insurance Company. Senior Vice President-American
General Life Insurance Company, American General
Life Insurance Company of New York, and the United
States Life Insurance Company, New York. President-
American General Life Insurance Company of New York
(December 1996). President-United States Life
Insurance Company, New York (June 1997). Senior Vice
President of New York Life Insurance Company, New
York, NY (1987-October 1996).
Don M. Ward................ In February 1998 named as Senior Vice President-
Variable Products-Marketing of American General Life
Insurance Company. Vice President of Pacific Life
Insurance Company, Newport Beach, CA (1991-February
1998).
Larry M. Robinson.......... In April 1998 named as Vice President-Variable
Products-Marketing of American General Life
Insurance Company. From July 1996 Vice President of
American General Life Insurance Company. Vice
President of Business Development of Allmerica
Financial, Worcester, MA (1994-1996). Vice President
of Life Marketing at Nationwide Insurance
Enterprise, Columbus, Ohio (1991-1994).
The principal business address of each person listed above is our Home
Office; except that the street number for Messrs. D'Agostino and Newton, is
2929 Allen Parkway and the street address for Mr. Reddick is #1 Franklin
Square, Springfield, IL 62713.
LEGAL MATTERS
We are not involved in any legal proceedings that would be considered
material with respect to a Policy owner's interest in Separate Account VL-R.
Pauletta P. Cohn, Esquire, Associate General Counsel of the American General
Independent Producer Division, an affiliate of AGL, has opined as to the
validity of the Policies. Mayer, Brown & Platt has advised AGL about certain
federal securities and tax law matters in connection with the Policies.
ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of AGL included in this prospectus have been
audited by Ernest & Young, LLP, as stated in their reports. The financial
statements of AGL have been included in reliance on the reports of Ernest &
Young, LLP, independent accountants, given on the authority of such firm as
experts in accounting and auditing.
Actuarial matters in this prospectus have been examined by Wayne A. Barnard,
who is Senior Vice President and Chief Actuary of AGL. His opinion on
actuarial matters is filed as an exhibit to the registration statement we have
filed with the SEC in connection with the Policies.
SERVICES AGREEMENT
American General Independent Producer Division ("AGIPD") is party to an
existing general services agreement with AGL. AGIPD, an affiliate of AGL, is a
corporation incorporated in Delaware on November 24, 1997. Pursuant to this
agreement, AGIPD provides services to AGL, including most of the
administration, data
28
processing, systems, customer services, product development, actuarial,
auditing, accounting and legal services for AGL and the Legacy Enhancer
Policies.
CERTAIN POTENTIAL CONFLICTS
The Mutual Funds sell shares to separate accounts of insurance companies,
both affiliated and not affiliated with AGL. We currently do not foresee any
disadvantages to you arising out of this process. Nevertheless, differences in
treatment under tax and other laws, as well as other considerations, could
cause the interests of various owners to conflict. For example, violation of
the federal tax laws by one separate account investing in the Funds could
cause the contracts funded through another separate account to lose their tax-
deferred status, unless remedial action were taken. However, each mutual Fund
has advised us that its board of trustees (or directors) intends to monitor
events in order to identify any material irreconcilable conflicts that
possibly may arise and to determine what action, if any, should be taken in
response. If we believe that a Fund's response to any such event
insufficiently protects our Policy owners, we will see to it that appropriate
action is taken to do so. If it becomes necessary for any separate account to
replace shares of any Mutual Fund in which it invests, that Fund may have to
liquidate securities in its portfolio on a disadvantageous basis.
YEAR 2000
AGL and its affiliates are in the process of modifying its computer systems
to be Year 2000 compliant. During 1997, AGL and its affiliates incurred and
expensed $15 million (pretax) related to this project. AGL and its affiliates
estimate that it will incur futures costs in excess of $45 million (pretax)
for additional internal staff, third-party vendors, and other expenses to
render its systems Year 2000 compliant.
AGL and its affiliates expect to substantially complete this project during
1998. However, risks and uncertainties exist in most significant systems
development projects. If conversion of AGL and its affiliates' systems is not
completed on a timely basis, due to non-performance by third-party vendors or
other unforeseen circumstances, the Year 2000 issue could have a material
adverse impact on the operations of AGL and its affiliates.
29
FINANCIAL STATEMENTS
The financial statements of AGL contained in this prospectus should be
considered to bear only upon the ability of AGL to meet its obligations under
the Legacy Enhancer Policies. They should not be considered as bearing upon
the investment experience of the Separate Account VL-R. No financial
statements of Separate Account VL-R are included because, as of December 31,
1997, the Separate Account VL-R had not yet commenced operations and has no
assets or liabilities.
PAGE TO
SEE IN
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN GENERAL LIFE INSURANCE THIS
COMPANY PROSPECTUS
- -------------------------------------------------------------------- ----------
Report of Ernest & Young, LLP, Independent Auditors.................
Consolidated Balance Sheets as of December 31, 1997 and 1996........
Consolidated Statements of Income for the years ended December 31,
1997, 1996 and 1995................................................
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997, 1996 and 1995...................................
Consolidated Statements of Cash Flows for the years, ended December
31, 1997, 1996 and 1995............................................
Notes to Consolidated Financial Statements..........................
[Financial Statements to be filed by pre-effective amendment]
30
INDEX OF WORDS AND PHRASES
This index should help you to locate more information about some of the
terms and phrases used in this prospectus.
PAGE TO
SEE IN
THIS
DEFINED TERM PROSPECTUS
------------ ----------
accumulation value........
AGIPD.....................
AGL.......................
amount at risk............
automatic rebalancing.....
basis.....................
beneficiary...............
cash surrender value......
close of business.........
Code......................
cost of insurance rates...
daily charge..............
date of issue.............
death benefit.............
division..................
dollar cost averaging.....
full surrender............
Fund......................
grace period..............
insured person............
investment option.........
lapse.....................
Legacy Enhancer...........
loan, loan interest.......
maturity, maturity date...
monthly deduction day.....
Mutual Fund...............
monthly insurance charge..
PAGE TO
SEE IN
THIS
DEFINED TERM PROSPECTUS
------------ ----------
Option 1, 2.....................................................
our.............................................................
owner...........................................................
partial surrender...............................................
payment option..................................................
planned periodic premium........................................
Policy..........................................................
Policy anniversary..............................................
Policy loan.....................................................
Policy month, year..............................................
preferred loan interest.........................................
premium payments................................................
premiums........................................................
prospectus......................................................
reinstate, reinstatement........................................
SEC.............................................................
Separate Account VL-R...........................................
separate account................................................
seven-pay test..................................................
specified amount................................................
surrender.......................................................
target..........................................................
telephone transfer..............................................
transfers.......................................................
valuation date, period..........................................
we..............................................................
you, your.......................................................
We have filed a registration statement relating to Separate Account VL-R and
the Policies with the SEC. The registration statement, which is required by
the Securities Act of 1933, includes additional information that is not
required in this prospectus. If you would like the additional information, you
may obtain it from the SEC's main office in Washington, D.C. You will have to
pay a fee for the material.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS (OR ANY SALES
LITERATURE APPROVED BY AGL) IN CONNECTION WITH THE OFFER OF THE POLICIES, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THE POLICIES ARE NOT AVAILABLE IN ALL
JURISDICTIONS, AND THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL THEREIN.
31
PART II
(OTHER INFORMATION)
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
American General Life Insurance Company's Bylaws provide in Article VII,
Section 1 for indemnification of directors, officers and employees of the
Company.
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.
REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT COMPANY ACT OF
1940
American General Life Insurance Company ("AGL") hereby represents that the
fees and charges deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
risks assumed by AGL.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
The facing sheet.
Cross-Reference Table.
Prospectus, consisting of ____ pages.
The undertaking to file reports.
The Rule 484 undertaking.
Representation pursuant to Section 26(e)(2)(A).
The signatures.
Written Consents of the following persons:
(a) Pauletta P. Cohn, Associate General Counsel of the American
General Independent Producer Division.
(b) Mayer, Brown & Platt.
(c) AGL's actuary.
(d) Independent Auditors.
The following exhibits:
1. Exhibits required by Article IX, paragraph A of Form N-8B-2:
(1)(a) Resolutions of Board of Directors of AGL authorizing the
establishment of Separate Account VL-R. (3)
(1)(b) Resolutions of Board of Directors of AGL authorizing the
establishment of variable life insurance standards of
suitability and conduct. (1)
(2) Not applicable.
(3)(a)(i) Distribution Agreement dated October 3, 1991, between
American General Securities Incorporated and American
General Life Insurance Company. (2)
(3)(a)(ii) Form of First Amendment to Distribution Agreement. (5)
(3)(b) Form of Selling Group Agreement. (5)
(3)(c) Not applicable.
(4) Not applicable.
2
(5)(a)(i) Specimen form of the Lockwood Flexible Premium Variable
Life Insurance Policy (Policy Form No. 98615). (Filed
herewith)
(6)(a) Amended and Restated Articles of Incorporation of American
General Life Insurance Company, effective December 31,
1991. (2)
(6)(b) Bylaws of American General Life Insurance Company,
adopted January 22, 1992. (3)
(6)(c) Amendment to the Amended and Restated Articles of
Incorporation of American General Life Insurance Company,
effective July 13, 1995 (6).
(7) Not applicable.
(8)(a) Form of Participation Agreement by and between BT
Insurance Funds Trust and American General Life Insurance
Company. (Filed herewith)
(8)(b) Amendment No. 3 to the Participation Agreement by and
between Morgan Stanley Universal Funds, Inc. and American
General Life Insurance Company. (6)
(8)(c) Participation Agreement by and between American General
Life Insurance Company and American General Series
Portfolio Company. (6)
(8)(d) Participation Agreement by and between AIM Variable
Insurance Funds, Inc. and American General Life Insurance
Company. (6)
(8)(e) Participation Agreement by and between Royce Capital Fund
and American General Life Insurance Company. (6)
(8)(f) Form of Administrative Services Agreement between AGL and
fund distributor. (5)
(9) All other material contracts not entered into in the
ordinary course of business of the trust or of the
depositor concerning the trust.
Not applicable.
(10)(a) Specimen form of application for life insurance issued by
AGL. (6)
3
(10)(b) Specimen form of supplemental application for variable life
insurance issued by AGL on Policy Form No. 98615. (6)
Other Exhibits
2(a) Opinion and Consent of Pauletta P. Cohn, Associate General
Counsel of American General Independent Producer Division.
(6)
2(b) Consent of Mayer, Brown & Platt. (6)
2(c) Opinion and Consent of AGL's actuary. (6)
3 Not applicable.
4 Not applicable.
6 Consent of Independent Auditors. (6)
7 Powers of Attorney. (Filed herewith)
27 Financial Data Schedule. Not applicable.
(1) Incorporated herein by reference to the initial filing of the Form S-6
Registration Statement (File No. 333-42567) of American General Life
Insurance Company Separate Account VL-R on December 18, 1997.
(2) Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 33-43390) of Separate Account D of AGL on
October 16, 1991.
(3) Incorporated herein by reference to the filing of Post-Effective
Amendment No. 1 of the Form N-4 Registration Statement (File No.
33-43390) of Separate Account D of AGL on April 30, 1992.
(4) Incorporated by reference to the filing of Pre-Effective Amendment No. 1
of the Form N-4 Registration Statement (File No. 333-40637) of Separate
Account D of AGL on February 12, 1998.
(5) Incorporated by reference to the filing of Pre-Effective Amendment No. 1 of
the Form S-6 Registration Statement (File No. 333-42567) of American
General Life Insurance Company Separate Account VL-R on March 23, 1998.
(6) To be filed by amendment.
4
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Robert F.
Herbert, Jr., B. Shelby Baetz, and Pauletta P. Cohn and each of them, any one of
whom may act without joinder of the others, as his/her attorney-in-fact to sign
on his/her behalf and in the capacity stated below and to file all amendments to
this Registration Statement, which amendment or amendments may make such changes
and additions to this Registration Statement as such attorney-in-fact may deem
necessary or appropriate.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
American General Life Insurance Company Separate Account VL-R, has duly caused
this amended registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Houston, and State of Texas, on the 29th day of
May, 1998.
AMERICAN GENERAL LIFE INSURANCE
COMPANY SEPARATE ACCOUNT VL-R
(Registrant)
BY: AMERICAN GENERAL LIFE
INSURANCE COMPANY
(On behalf of the Registrant and itself)
BY: ROBERT F. HERBERT, JR.
------------------------------
Robert F. Herbert, Jr.
Senior Vice President
[SEAL]
ATTEST: PAULETTA P. COHN
------------------------
Pauletta P. Cohn
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
RODNEY O. MARTIN, JR. Principal Executive Officer May 29, 1998
- ------------------------
(Rodney O. Martin, Jr.)
ROBERT F. HERBERT, JR. Principal Financial and May 29, 1998
- ------------------------- Accounting Officer
(Robert F. Herbert, Jr.)
5
Directors
- ---------
________________________ May , 1998
(James S. D'Agostino, Jr.)
DAVID A. FRAVEL May 29, 1998
- ------------------------
(David A. Fravel)
ROBERT F. HERBERT, JR. May 29, 1998
- ------------------------
(Robert F. Herbert, Jr.)
May , 1998
- ------------------------
(Royce G. Imhoff, II)
JOHN V. LAGRASSE May 29, 1998
- ------------------------
(John V. LaGrasse)
RODNEY O. MARTIN, JR. May 29, 1998
- ------------------------
(Rodney O. Martin, Jr.)
- ------------------------ May , 1998
(Jon P. Newton)
PHILIP K. POLKINGHORN May 29, 1998
- ------------------------
(Philip K. Polkinghorn)
6
EXHIBIT INDEX
(1)(a) Resolutions of Board of Directors of AGL authorizing the
establishment of Separate Account VL-R. (3)
(1)(b) Resolutions of Board of Directors of AGL authorizing the
establishment of variable life insurance standards of
suitability and conduct. (1)
(2) Not applicable.
(3)(a)(i) Distribution Agreement dated October 3, 1991, between
American General Securities Incorporated and American
General Life Insurance Company. (2)
(3)(a)(ii) Form of First Amendment to Distribution Agreement. (5)
(3)(b) Form of Selling Group Agreement. (5)
(3)(c) Not applicable.
(4) Not applicable.
(5)(a)(i) Specimen form of the Lockwood Flexible Premium Variable
Life Insurance Policy (Policy Form No. 98615). (Filed
herewith)
(6)(a) Amended and Restated Articles of Incorporation of American
General Life Insurance Company, effective December 31,
1991. (2)
(6)(b) Bylaws of American General Life Insurance Company,
adopted January 22, 1992. (3)
(6)(c) Amendment to the Amended and Restated Articles of
Incorporation of American General Life Insurance Company,
effective July 13, 1995 (6).
(7) Not applicable.
(8)(a) Form of Participation Agreement by and between BT
Insurance Funds Trust and American General Life Insurance
Company. (Filed herewith)
(8)(b) Amendment No. 3 to the Participation Agreement by and
between Morgan Stanley Universal Funds, Inc. and American
General Life Insurance Company. (6)
(8)(c) Participation Agreement by and between American General
Life Insurance Company and American General Series
Portfolio Company. (6)
(8)(d) Participation Agreement by and between AIM Variable
Insurance Funds, Inc. and American General Life Insurance
Company. (6)
(8)(e) Participation Agreement by and between Royce Capital Fund
and American General Life Insurance Company. (6)
(8)(f) Form of Administrative Services Agreement between AGL and
fund distributor. (5)
(9) All other material contracts not entered into in the
ordinary course of business of the trust or of the
depositor concerning the trust.
Not applicable.
(10)(a) Specimen form of application for life insurance issued by
AGL. (6)
(10)(b) Specimen form of supplemental application for variable life
insurance issued by AGL on Policy Form No. 98615. (6)
Other Exhibits
2(a) Opinion and Consent of Pauletta P. Cohn, Associate General
Counsel of American General Independent Producer Division.
(6)
2(b) Consent of Mayer, Brown & Platt. (6)
2(c) Opinion and Consent of AGL's actuary. (6)
3 Not applicable.
4 Not applicable.
6 Consent of Independent Auditors. (6)
7 Powers of Attorney. (Filed herewith)
27 Financial Data Schedule. Not applicable.
(1) Incorporated herein by reference to the initial filing of the Form S-6
Registration Statement (File No. 333-42567) of American General Life
Insurance Company Separate Account VL-R on December 18, 1997.
(2) Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 33-43390) of Separate Account D of AGL on
October 16, 1991.
(3) Incorporated herein by reference to the filing of Post-Effective
Amendment No. 1 of the Form N-4 Registration Statement (File No.
33-43390) of Separate Account D of AGL on April 30, 1992.
(4) Incorporated by reference to the filing of Pre-Effective Amendment No. 1
of the Form N-4 Registration Statement (File No. 333-40637) of Separate
Account D of AGL on February 12, 1998.
(5) Incorporated by reference to the filing of Pre-Effective Amendment No. 1 of
the Form S-6 Registration Statement (File No. 333-42567) of American
General Life Insurance Company Separate Account VL-R on March 23, 1998.
(6) To be filed by amendment.
2