Registration No. 333-______
As filed with the Securities and Exchange Commission on December 18, 1997
-------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURIITES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS 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)
Steven A, Glover, Esq.
Associate General Counsel and Assistant Secretary
American General Life Insurance Company
2727-A Allen Parkway
Houston, Texas 77019-2191
(Name and Complete Address of Agent for Service)
Please send copies of all communications
to:
Gary O. Cohen, Esq. and Thomas C. Lauerman, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W., Suite 825
Washington, D.C. 20036
Title and Amount of Securities Being Registered:
An Indefinite Amount of Units of Interest in
American General Life Insurance Company
Separate Account VL-R
Under Variable Life Insurance Policies
Amount of Filing Fee: None required.
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(I)(A) under the
Investment Company Act of 1940, with respect to the Variable Life Insurance
Policies described in the Prospectus.
ii
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)
ITEMS OF FORM N-8B-2* CAPTIONS IN PROSPECTUS
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), 10(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?
ITEMS OF FORM N-8B-2 CAPTIONS IN PROSPECTUS
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), Basic Questions You May Have: To what extent
10(h)(3), 10(h)(2) will AGL vary the terms and conditions of the
Policies in particular cases? Additional
Information: Voting Privileges; Additional
Rights That We Have.
iii
10(g)(3), 10(g)(4), Inapplicable.**
10(h)(3), 10(h)(4)
10(i) Additional information: Separate Account VL-R;
Tax Effects.
11 Basic Questions You May Have: How will the
value of my investments change over time?
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 has
not yet commenced operations.
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 amount 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
Policies in particular cases?
13(e), 13(f) 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? Additional Information: Separate Account
VL-R.
17(a), 17(b) Captions referenced under Items 10(c), 10(d),
and 10(e).
iv
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: Voting Privileges; Our
Reports to Policy Owners.
20(a) Captions referenced under Items 10(g)(1),
10(g)(2), 10(h)(1), and 10(h)(2).
20(b), 20(c), 20(d), Inapplicable.
20(e), 20(f)
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: American General Life
Insurance Company.
26 Inapplicable, because the Separate Account has
not yet commenced operations.
27 Additional Information: American General Life
Insurance Company.
28 Additional Information: AGL; AGL's Management.
29 Additional Information: AGL.
v
30, 31, 32, 33, 34 Inapplicable, because the Separate Account has
not yet commenced operations.
35 Inapplicable.**
36 Inapplicable.**
37 None.
38, 39 Additional Information: Distribution of the
Policies.
40 Inapplicable, because the Separate Account has
not yet commenced operations.
41(a) Additional Information: Distribution of the
Policies.
41(b), 41(c) Inapplicable.**
42, 43 Inapplicable, because the Separate Account has
not yet commenced operations or issued any
securities.
44(a)(1), 44(a)(2), Basic Questions You May Have: How will the
44(a)(3) 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 has
not yet commenced operations.
46(a) Captions referenced in 44(a) above.
46(b) Inapplicable.**
47, 48, 49 None.
50 Additional Information: Separate Account VL-R.
vi
51 Inapplicable.
52(a), 52(c) Basic Questions You May Have: To what extent
will AGL vary the terms and conditions of the
Policies 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.**
<FN>
* 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 has, simultaneously herewith, filed a notice
of registration as an investment company on Form N-8A under the Investment
Company Act of 1940, and it intends to file a Form N-8B-2 Registration
Statement within the next several weeks. Pursuant to Sections 8 and 30(b)(1)
of the Investment Company Act of 1940, 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.
** 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.
</FN>
vii
PLATINUM INVESTOR I (SM) AND
PLATINUM INVESTOR II (SM)
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (THE "POLICIES")
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. The AGL Declared Fixed Interest Account is the fixed
investment option for these policies. You can also invest in the
following variable investment options. You may change your selections
from time to time:
--------------------------------------------------------------------------------------------------------------------------------
AIM VARIABLE INSURANCE AMERICAN GENERAL SERIES DREYFUS VARIABLE MFS VARIABLE INSURANCE
FUNDS, INC. PORTFOLIO COMPANY INVESTMENT FUND TRUST
o AIM V.I. International o International Equities o Quality Bond Portfolio o MFS Emerging Growth
Equity Fund Fund (1) o Small Cap Portfolio Series
o AIM V.I. Value Fund o MidCap Index Fund (1,2)
o Money Market Fund (1)
o Stock Index Fund (1,2)
(1) Variable Annuity Life
Insurance Company * Massachusetts Financial
AIM Advisors, Inc.* (2) Bankers Trust Company(+) The Dreyfus Corporation* Services Company*
--------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY PUTNAM VARIABLE TRUST SAFECO RESOURCE VAN KAMPEN AMERICAN
UNIVERSAL FUNDS, INC. o Putnam VT Diversified SERIES TRUST CAPITAL LIFE INVESTMENT
o Equity Growth Portfolio (1) Income Fund o Equity Portfolio TRUST
o High Yield Portfolio (2) o Putnam VT Growth o Growth Portfolio o Strategic Stock Portfolio
o Putnam VT Growth
and Income Fund
o Putnam VT International
Growth and Income Fund
(1) Morgan Stanley Asset Mgmt,
Inc.* SAFECO Asset Management Van Kampen American Capital
(2) Miller Anderson Sherrerd, LLP* Putnam Management, Inc.* Company* Asset Management, Inc.*
--------------------------------------------------------------------------------------------------------------------------------
<FN>
* The Investment Adviser of the investment option
(+) The Investment Sub-Adviser of the investment option
</FN>
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 (OTHER THAN OUR
DECLARED FIXED INTEREST ACCOUNT OPTION). THE FORMAL NAME OF EACH SUCH FUND IS
SET FORTH IN THE CHART THAT APPEARS ON PAGE 1, ABOVE. 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
also (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 8, below.
RIGHT TO RETURN. If for any reason you are not satisfied with your
Policy, you may return it to us for a full refund. (In some states, we will
adjust this amount for any investment performance you have earned.) To
exercise your right to return your Policy, you must mail it directly to the
Home Office address shown on the cover 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.
THIS BOOKLET IS CALLED A "PROSPECTUS." ITS DATE IS _____________, 1998
2
GUIDE TO THIS PROSPECTUS
This booklet (which we call a prospectus) contains information that you
should know before you purchase a Platinum InvestorSM variable life policy
("Policy") or exercise any of your rights or privileges under a Policy.
This prospectus describes two versions of the Platinum Investor
Policies: the Platinum Investor I and the Platinum Investor II Policies. Your
AGL representative can advise you which version of the Policy he or she offers
or whether he or she offers both. You cannot change to a different version
once your coverage takes effect. The Platinum Investor I and Platinum Investor
II Policies are identical, except for the differences that are discussed
beginning on page 13, below.
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
o What are the Policies?.............................................. Front Cover
Page
o How can I invest money in a Policy?.................................
o How will the value of my investment in a Policy change over time?...
o What is the basic amount of insurance ("death benefit") that AGL
pays if the insured person dies?....................................
o What charges will AGL deduct from my investment in a Policy?........
o What charges and expenses will the Mutual Funds deduct from the
amount I invest through my Policy?..................................
o Must I invest any minimum amount in a Policy?.......................
o What are the differences between Platinum Investor I and Platinum
Investor II?........................................................
o How can I change my Policy's investment options?....................
o How can I change my Policy's insurance coverage?....................
o What additional rider benefits might I select?......................
3
o How can I access my investment in a Policy?.........................
o Can I choose the form in which AGL pays out any proceeds from my
Policy?.............................................................
o To what extent will AGL vary the terms and conditions of the
Policies in particular cases?.......................................
o How will my Policy be treated for income tax purposes?..............
o How do I communicate with AGL?......................................
ILLUSTRATIONS OF A HYPOTHETICAL POLICY. Starting on page 22, below, 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 24, below or in the
forms of our Policy and riders. A table of contents for the "Additional
Information" portion of this prospectus also appears on page 24, below. You
can obtain copies of our Policy and rider forms from (and direct any other
questions to) your AGL representative or our Home Office (shown on the cover
of this Prospectus).
AGL'S FINANCIAL STATEMENTS. We have included our financial statements in
this prospectus. These begin on page 40, below.
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 on the inside 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.
4
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.
(Policies issued in some states or automatic premium payment plans may have
different minimums.) Otherwise, with a few exceptions mentioned below, you can
make premium payments at any time and in any amount.
LIMITS ON PREMIUM PAYMENTS. Federal tax law limits your ability to make
certain very large amounts of premium payments (relative to the amount of your
Policy's insurance coverage) and may impose penalties on amounts you take out
of your Policy if you do not observe certain additional requirements. These
tax law requirements are summarized further under "Tax Effects" beginning on
page 25, below. We will monitor your premium payments, however, to
be sure that you do not exceed permitted amounts or inadvertently incur any
tax penalties. Also, in certain limited 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.
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 front
cover 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 cover
of this prospectus. Premium payments from salary deduction plans may be made
only if we agree.
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 (but not to our declared fixed
interest account option). 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. You must have at least $5,000 of accumulation value to start
dollar cost averaging and each transfer under the program must be at least
5
$100. You cannot participate in dollar cost averaging while also using
automatic portfolio rebalancing (discussed below). Dollar cost averaging
ceases upon your request, or if your accumulation value in the money market
option becomes exhausted.
AUTOMATIC PORTFOLIO REBALANCING. This feature automatically rebalances
the proportion of your accumulation value in each investment option under your
Policy (other than our declared fixed interest account option) 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; and we
make transfers to rebalance your accumulation value on the first business day
in the appropriate Policy months. You must have a total accumulation value of
at least $5,000 to begin automatic rebalancing. You cannot participate in this
program while also participating in dollar cost averaging (discussed above).
Rebalancing terminates upon your request.
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 8 below under "Deductions from each
premium payment." We invest the rest in one or more of the investment options
listed on the front cover of this prospectus. We call the amount that is at
any time invested under your Policy your "accumulation value."
YOUR INVESTMENT OPTIONS. We invest the accumulation value that you have
allocated to any investment option (except our declared fixed interest account
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 8 below
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
front cover of this prospectus.
We invest any accumulation value you have allocated to our declared
fixed interest account option as part of our general assets. We credit a fixed
rate of interest on that accumulation value, which we declare from time to
time. We guarantee that this will be at an effective annual rate of at least
4%. Although this interest increases the amount of any accumulation value that
you have in our declared fixed interest account option, such accumulation
value will also be reduced by any charges that are allocated to this option
under the procedures described under "Allocation of Charges" on page 10 below.
6
The "daily charge" described below on page 8 and the charges and expenses of
the Mutual Funds discussed on pages 10-12 below do NOT apply to our declared
fixed interest account option.
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
Platinum Investor 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. You also choose whether the basic death benefit we
will pay is
o Option 1 - The specified amount on the date of the insured
person's death
- or -
o 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.
If higher than the basic Option 1 or Option 2 death benefit (whichever
you have selected), we will automatically pay an alternative basic death
benefit computed by multiplying your Policy's accumulation value on the
insured person's date of death by the following percentages:
TABLE OF ALTERNATIVE BASIC DEATH BENEFITS AS A PERCENTAGE
MULTIPLE OF POLICY ACCUMULATION VALUE
INSURED
PERSON'S 40 or
AGE*: Under 45 50 55 60 65 70 75 to 95 100
%: 250% 215% 185% 150% 130% 120% 115% 105% 100%
<FN>
* Nearest birthday at the beginning of the Policy year in which the insured
person dies. The percentages are interpolated for ages that are not shown
here.
</FN>
7
WHAT CHARGES WILL AGL DEDUCT FROM MY INVESTMENT IN A POLICY?
DEDUCTIONS FROM EACH PREMIUM PAYMENT. We deduct from each premium a
charge for the tax that is then applicable to us in your state or other
jurisdiction. These taxes currently range from 2% to 3.5%. Please let us know
if you move to another jurisdiction, so we can adjust this charge if required.
You are not permitted to deduct the amount of these taxes on your income tax
return. We also currently deduct an additional 2.5% from each after-tax
premium payment. We have the right at any time to increase this additional
charge to not more than 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 (other than our declared fixed interest option). After a
Policy has been in effect for a certain number of years, we intend to reduce
the rate of this charge by .25%. The number of years depends on whether you
have version I or version II of the Policy and is discussed on page 13, below,
under "What are the differences between the Platinum Investor I and Platinum
Investor II Policies." 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% are 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 a certain number of years, this maximum is .25% higher.
FLAT MONTHLY CHARGE. We will deduct $6 per month from your accumulation
value. Also, we have the right to raise this charge at any time to not more
than $12 per month.
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 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. The cost
of insurance rates are generally lower under the Platinum Investor II Policy
than under the Platinum Investor I Policy.
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. Our
current rates are lower, although we have the right at any time to raise them
to not more than the guaranteed maximum.
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.
8
Similarly, our current cost of insurance rates are lower for non-smokers
than smokers, and lower for persons that have other highly favorable health
characteristics, as compared to those that do not. On the other hand, 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.
Finally, our current cost of insurance rates are lower for Policies
having a specified amount of at least $1,000,000 on the day the charge is
deducted. This means that if your specified amount for any reason decreases
from $1,000,000 or more to less than $1,000,000, your future cost of insurance
rates will be higher under your Policy than they otherwise would be. The
reverse is also true. 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.
MONTHLY CHARGES FOR ADDITIONAL BENEFIT RIDERS. We will deduct charges
monthly from your accumulation value, if you select certain additional benefit
riders. These are described beginning on page 15, below, under "What
additional rider benefits can I elect?"
ADDITIONAL MONTHLY CHARGE FOR PLATINUM INVESTOR II POLICIES DURING THE
FIRST TWO YEARS. This charge is described on page 13 below under "What are the
differences between the Platinum Investor I and Platinum Investor II
Policies?"
SURRENDER CHARGE FOR PLATINUM INVESTOR I POLICIES. The Platinum Investor
I Policies have a surrender charge that applies for the first 10 Policy years
(and the first 10 years after any requested increase in the Policy's specified
amount). The amount of the surrender charge depends on the age and other
insurance characteristics of the insured person. The maximum amount of the
surrender charge will be shown on pages [23 and 24] of the Policy. It may
initially be as high as $________ per $1,000 of specified amount or as low as
$__________ per $1,000 of specified amount (or increase therein). Any amount
of surrender charge decreases automatically by a constant amount each year
beginning in the fourth year of its 10 year period referred to above until, in
the eleventh year, it is zero.
We will deduct the entire amount of any then applicable surrender charge
from the accumulation value at the time of a full surrender of a Platinum
Investor I Policy. Upon a requested decrease in such a Policy's specified
amount of coverage, we will deduct any remaining amount of the surrender
charge that was associated with the specified amount that is cancelled. This
includes any specified amount decrease that, as described under "Partial
surrender" on page 17, below, results from any requested partial surrender.
For this purpose, we deem the most recent increases of specified amount to
have been cancelled first.
TRANSACTION FEE. We will also charge a $25 transaction fee for each
partial surrender you make.
9
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 proportionately to the amount of accumulation value you then
have in each investment option. Any surrender charge upon a decrease in
specified amount that is requested under a Platinum Investor I Policy will be
allocated in the same manner as if it were a monthly deduction.
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 Management Operation Expenses Fund
Fees After Expense After Expense Operating
Name Of Fund Reimbursement(2) Reimbursement(2) Expenses(2)
------------ ------------------ ------------------ -----------
The following funds of AMERICAN GENERAL
SERIES PORTFOLIO COMPANY ("AGSPC"):
Money Market Fund
International Equities Fund
MidCap Index Fund
Stock Index Fund
The following funds of AIM VARIABLE
INSURANCE FUNDS, INC.:
V.I. International Equity Fund
V.I. Value Fund
The following funds of DREYFUS VARIABLE
INVESTMENT FUND:
Small Cap Portfolio
Quality Bond Portfolio
10
The following series of MFS VARIABLE
INSURANCE TRUST:
MFS Emerging Growth Series
The following portfolios of MORGAN
STANLEY UNIVERSAL FUNDS, INC.:
Equity Growth Portfolio
High Yield Portfolio
The following portfolios of PUTNAM
VARIABLE TRUST:
Putnam VT Growth and Income Fund
Putnam VT Diversified Income Fund
Putnam VT International Growth
and Income Fund
The following portfolios of SAFECO
RESOURCES SERIES TRUST:
Equity Portfolio
Growth Portfolio
The following portfolio of VAN KAMPEN
AMERICAN CAPITAL LIFE INVESTMENT TRUST:
Strategic Stock Portfolio
<FN>
(1) The annual expenses are estimated for the current fiscal year for the
______________, __________ and __________ Funds, because none 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 would have been as
set out in the following table. Information about annual expenses
excluding voluntary expense reimbursements is not available for the other
Funds since none of the other Funds has financial statements covering a
period of at least ten months.
</FN>
Total
Other Fund Fund
Fund Management Operating Operating
Name Of Fund Fees Expenses Expenses
------------ --------------- ----------- ---------
[copy to come]
11
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. Payment of these or any other specific amounts of premiums is not
mandatory, however. Rather, you need only invest enough to ensure either that
your Policy's cash surrender value stays above zero or that your 5 year
no-lapse guarantee (discussed below) remains in effect. ("Cash surrender
value" is explained under "Full surrender" on page 17, below.) 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.
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 and all riders 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.
MONTHLY GUARANTEE PREMIUMS UNDER THE PLATINUM INVESTOR I POLICIES. Page
3 of a Platinum Investor I Policy will specify a "Monthly Guarantee Premium."
On the first day of each Policy month that the cash surrender value is not
sufficient to pay the monthly deduction, we check to see if the cumulative
amount of premiums paid under such a Policy is at least equal to the sum of
the monthly guarantee premiums for all Policy months to date, including the
Policy month then starting. (Policy months are measured from the "Date of
Issue" that will also be shown on page 3 of the Policy.) So long as at least
this amount of premium payments has been paid by the beginning of that Policy
month, a Platinum Investor I Policy will not enter a grace period or terminate
(I.E., lapse) because of insufficient cash surrender value during the first 5
Policy years. If this test is not met on the monthly deduction day at the
beginning of any Policy month, the Policy enters the grace period. If a
sufficient premium is not paid before the end of the grace period, the Policy
and the 5-year no-lapse guarantee terminate. If the Policy is later
reinstated, the 5-year no-lapse guarantee may also be reinstated if sufficient
Premiums are paid, although the reinvested guarantee will in no case extend
beyond the date that originally marked the end of the maximum 5-year duration.
The amount of premiums that must be paid to maintain the 5 year no-lapse
guarantee will be increased by the cumulative amount of any loans (including
any loan increases to pay interest) and partial surrenders you have taken from
your Policy. Such monthly guarantee premiums also will be higher following any
requested increase in the specified amount of insurance coverage, or following
a requested addition of (or increase in) certain rider benefits. On the other
hand, the monthly guaranteed premium will be lower following any requested
decrease in the specified amount of insurance coverage, or following a
requested cancellation of (or decrease in) certain riders. If your Policy is
12
the Platinum Investor I version, we will send you an endorsement to your
Policy that will tell you what your new monthly guarantee premium is. However,
none of the above-mentioned changes extends the no-lapse period beyond 5 years
or establishes a new no lapse guarantee.
Although we will bill you for planned premiums, we will not send any
specific bills for the amount of any monthly guarantee premium that is due.
WHAT ARE THE DIFFERENCES BETWEEN THE PLATINUM INVESTOR I AND THE
PLATINUM INVESTOR II POLICIES?
Depending on your own financial circumstances and goals, and the uses to
which you intend to put a Platinum Investor Policy, either version of the
Policy may be appropriate for you. You should consult carefully with your AGL
representative about this. Relevant factors may include how much accumulation
value you intend to maintain in the Policy relative to the amount of the
Policy's death benefit and how likely it is that you may choose to surrender
your Policy or otherwise reduce your Policy's specified amount in the
foreseeable future.
The differences between the two versions of Platinum Investor are:
Platinum Investor II is available only for specified amounts of $500,000
or more. You may not request a specified amount decrease (or a partial
surrender) under a Platinum Investor II Policy that would reduce the specified
amount to less than $500,000.
o Platinum Investor II is not available for insured persons who are
below age 18.
o The Platinum Investor II version of the Policy DOES not have a
surrender charge.
o The Platinum Investor II version of the Policy DOES not have a 5
year no-lapse guarantee.
o The planned reduction in the current daily charge by .25% per
annum of separate account accumulation value is scheduled to occur
after year 10 for Platinum Investor II and after year 20 for
Platinum Investor I. These are also the same periods after which
the guaranteed maximum daily charge under Policies sold in Texas
and Oregon will decrease by .25% per annum.
o The two versions of Platinum Investor have different current cost
of insurance rates. Since this difference results in differing
accumulation values, you should carefully review the Policy
illustrations that are available to you.
o The Platinum Investor II version of the Policy has a monthly
expense charge during the first two Policy years (and the first
two years after any requested increase in the Policy's specified
13
amount). The amount of this charge depends on the age and other
insurance characteristics of the insured person. The amount of
this charge will be shown on page __ of a Platinum Investor II
Policy. It may initially be as much as $_______ per $1,000 of
specified amount (or increase therein), or as low as $_______ per
$1,000 of specified amount (or increase therein). (After the
two-year periods mentioned above, this charge is zero.) This
additional monthly charge does not apply to the Platinum Investor
I version of the Policies.
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. Unless you are transferring the entire amount you have in an
investment option, each transfer must be at least $500. See "Additional rights
that we have," beginning on page 37, below. Also, you may not in any one
Policy year make transfers out of our declared fixed interest account option
that aggregate more than 25% of the accumulation value you had invested in
that option at the beginning of that Policy year.
You may make transfers at any time, except that transfers out of our
declared fixed interest account option must be made within 60 days after a
Policy anniversary. We will not honor any request received outside that
period.
MAXIMUM NUMBER OF INVESTMENT OPTIONS. We can at any time limit the
number of investment options you may use. Our current rule is that you cannot
use more than 18 different options over the life of your Policy.
HOW CAN I CHANGE MY 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. Also, if you have the Platinum Investor I version of
the Policy, a new amount of surrender charge and monthly guarantee premium
apply to the specified amount increase; and these amounts are the same as they
would be if we were instead issuing the same amount of additional coverage as
a new Platinum Investor I Policy. On the other hand, if you have the Platinum
Investor II version of the Policy, an additional monthly expense charge
14
applies for the first two years following the request for an increase in
specified amount. This amount is also the same as it would be if we were
instead issuing the same amount of additional coverage as a new Platinum
Investor II Policy.
DECREASE IN COVERAGE. After the first Policy year, you may request a
reduction in the specified amount of coverage, but not below certain minimums.
The minimum for a Platinum Investor I Policy is $100,000 (or, if greater, the
minimum amount that the tax law requires relative to the amount of premium
payments you have made). At the time of a decrease under such a Policy, we
will deduct from the Policy's accumulation value an amount of any remaining
surrender charge. We compute the amount we deduct in the manner described on
page 32, below, "Decreases in the specified amount of a Platinum Investor I
Policy."
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
also 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 26 of this prospectus to learn about possible tax
consequences of changing your insurance coverage under your Policy.
WHAT ADDITIONAL RIDER BENEFITS MIGHT I SELECT?
You can request that your Policy include the additional rider benefits
described below. For most of the riders that you choose, a charge, which will
be shown on page 3 of your Policy, will be deducted from your accumulation
value on each monthly deduction date. Eligibility for and changes in these
benefits are subject to our rules and procedures as in effect from time to
time. More details are included in the form of each rider, which we suggest
that you review if you choose any of these benefits.
o ACCIDENTAL DEATH BENEFIT RIDER, which pays an additional death
benefit if the insured person dies from certain accidental causes.
o AUTOMATIC INCREASE RIDER, which provides for automatic increases
in your Policy's specified amount of insurance at certain
specified dates and based on a specified index. These increases do
not require that evidence be provided to us about whether the
insured person continues to meet our requirements for insurance
coverage. These automatic increases are on the same terms
(including additional charges) as any other specified amount
increase you request (as described under "Increase in coverage" on
page 14, above). There is no additional charge for the rider
15
itself, although the automatic increases in the specified amount
will increase the monthly insurance charge deducted from your
accumulation value, to compensate us for the additional coverage.
o CHILDREN'S INSURANCE BENEFIT RIDER, which provides term life
insurance coverage on the eligible children of the person insured
under Policy. This rider is convertible into any other insurance
(except for term coverage) available for conversions, under our
published rules at the time of conversion.
o MATURITY EXTENSION RIDER, which permits you to extend the Policy's
maturity date beyond what it otherwise would be, has two versions
from which to choose.
One version provides for a death benefit after the original
maturity date that is equal to the accumulation value on the date
of death. With this version, all accumulation value that is in the
separate account can remain there. There is no charge for this
version.
The other version provides for a death benefit after the original
maturity date equal to the base policy death benefit on the
original maturity date. With this version, if you elect to extend
your maturity date, all accumulation value that is in the separate
account will be automatically transferred to the declared fixed
interest option. There is a monthly charge for this version of the
rider during the first nine Policy years immediately preceding the
Policy's original maturity date. Therefore, this rider may not be
added to a Policy during that 9 year period.
In both versions, any other riders associated with the base policy
will expire at the original maturity date. No additional premium
payments, new loans, monthly insurance charge, or changes in
specified amount will be allowed after the original maturity date.
There is a flat monthly charge of no more than $10 each month
after the original maturity date. Extension of the maturity date
beyond the insured person's age 100 may cause your Policy to cease
to be taxed as a life insurance policy. You should consult a
qualified tax adviser before making such an extension.
o RETURN OF PREMIUM DEATH BENEFIT RIDER, which provides additional
term life insurance coverage on the person insured under the
Policy. The amount of additional insurance varies so that it
always equals the cumulative amount of premiums paid under the
Policy (subject to certain adjustments).
o SPOUSE TERM RIDER, which provides term life insurance on the life
of the spouse of the Policy's insured person. This rider is
convertible into any other insurance (except for term coverage)
available for conversions, under our published rules at the time
of conversion.
16
o TERMINAL ILLNESS RIDER, which provides for a benefit to be
requested if the Policy's insured person is diagnosed as having a
terminal illness (as defined in the rider) and less than 12 months
to live. This rider is not available in all states. The maximum
amount you may receive under this rider prior to the insured
person's death is 50% of the death benefit payable under the
Policy (excluding any rider benefits) or, if less, $250,000. The
amount of benefits paid under the rider, plus an administrative
fee (not to exceed $250), plus interest on these amounts to the
next Policy anniversary becomes a "lien" against all future Policy
benefits. We will continue to charge interest in advance on the
total amount of the lien and will add any unpaid interest to the
total amount of the lien each year. Any time the total lien, plus
any other Policy loans, exceed the Policy's then current death
benefit, the Policy will terminate without further value. The cash
surrender value of the Policy also will be reduced by the amount
of the lien.
o WAIVER OF MONTHLY DEDUCTION RIDER, under which we will waive all
monthly charges under your Policy and riders that we otherwise
would deduct from your accumulation value, so long as the insured
person is totally disabled (as defined in the rider). While we are
paying benefits under this rider we will not permit you to request
any increase in the specified amount of your Policy's coverage.
However, loan interest will not be paid for you under this rider,
and the Policy could, under certain circumstances, lapse for
nonpayment of loan interest.
TAX CONSEQUENCES OF ADDITIONAL RIDER BENEFITS. Adding or deleting
riders, or increasing or decreasing coverage under existing riders can have
tax consequences. See "Tax Effects" starting on page 26, below. You should
consult a qualified tax adviser.
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, and, if
you have the Platinum Investor I version of the Policy, less any surrender
charge that then applies. We call this your "cash surrender value." Because of
the surrender charge, it is unlikely that a Platinum Investor I Policy will
have any cash surrender value during at least the first year unless you pay
significantly more than the monthly guarantee premiums.
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 $500. If the Option 1 death benefit is then in
effect, we will also automatically reduce your Policy's specified amount of
insurance by the amount of your withdrawal and any related charges. If you
have the Platinum Investor I version of the Policy, and we reduce your
Policy's specified amount because you have requested a partial withdrawal
while the Option 1 death benefit is in effect, we will deduct the same amount
of surrender charge, if any, that would have applied if you had requested such
17
face amount decrease directly. See "Decrease in the specified amount of a
Platinum Investor I Policy," on page 32, below. We will not permit a partial
surrender if it would cause your Policy to fail to qualify as life insurance
under the tax laws or if it would cause your specified amount to fall below
the minimum allowed.
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, proportionally to the amount of accumulation
value 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 our estimate of three months' charges and
less the interest that will be payable on your loan through your next Policy
anniversary). The minimum amount of each loan is $500 or, if less, the entire
remaining borrowable amount under your Policy.
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 4.51%. 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 $100) of your loan at any
time. You must designate any loan repayment as such. Otherwise, we will treat
it as a premium payment instead. Any loan repayments go first to repay all
loans that were taken from our declared fixed interest account investment
option. 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 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
18
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 95th
birthday.
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 (and any riders) 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:
o Option 1 - Equal monthly payments for a specified period of time.
o Option 2 - Equal monthly payments of a specified amount until all
amounts are paid out.
o 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.
o 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.
19
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 is 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 make a premium payment to a Policy by what 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 Platinum Investor is 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 riders, or related endorsements.
VARIATIONS IN EXPENSES OR RISKS. AGL may vary the charges and other
terms of the Policies where special circumstances result in sales or
administrative expenses or mortality risks that are different from those
normally associated with the Policies.
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.
20
For further information about the tax consequences of owning a Policy,
please read "Tax Effects" starting on page 26, below.
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 cover of this prospectus.
The following requests must be made in writing signed and dated 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 or decrease in
specified insurance amount; addition or cancellation of, or other action with
respect to, any rider benefits; 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 cover 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
21
request at the time you wish. If this occurs, you should submit a written
request. Also, if, due to malfunction or other circumstances, the 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 this
Prospectus
----------
Table Platinum Platinum
----- Investor I Investor II
---------- -----------
Death Benefit Option 1 - Current Charges...................
Maximum Charges..................
The tables show how death benefits, accumulation values, and cash
surrender values ("Policy benefits") under hypothetical Platinum Investor
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 __ year-old male non-tobacco user
and who is a better-than-average mortality risk in other respects as well.
Planned premium payments of $_______ for an initial $_______ of specified
amount coverage are assumed to be paid at the beginning of each Policy year.
The illustrations assume no Policy loan has been taken. The differences
between the accumulation values and the cash surrender values for the first 10
years in the tables for the Platinum Investor I version are that version's
surrender charges.
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 for both Platinum Investor I and Platinum Investor II. The
charges assumed in the current charge tables include a daily charge at an
annual rate of .75% for the first 20 Policy years (for Platinum Investor I) or
10 years (for Platinum Investor II), and .50% thereafter, and a flat monthly
charge of $6. The guaranteed maximum charge tables assume that these charges
will be .90% and $12, respectively, in all years. In Texas and Oregon, the
guaranteed maximum daily charge is .25% per annum higher for certain periods
of time than the daily charges assumed in the maximum charge tables below.
22
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 __% 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 pages 11 and 12, above, plus
the weighted average of all other operating expenses of each such Fund after
all reimbursements, as reflected on pages 11 and 12, above. The total assumed
tax charges for all of the tables are 2.5% of premiums.
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 for the
illustration.
PLATINUM INVESTOR I POLICY ILLUSTRATION
PLANNED PREMIUM $_________ INITIAL SPECIFIED
AMOUNT $_______ DEATH BENEFIT OPTION 1
MALE AGE __
PREFERRED RISK NON-TOBACCO USER
ASSUMING CURRENT CHARGES
DEATH BENEFIT ACCUMULATION VALUE CASH SURRENDER VALUE
ASSUMING ASSUMING ASSUMING
HYPOTHETICAL GROSS HYPOTHETICAL GROSS HYPOTHETICAL GROSS
ANNUAL INVESTMENT ANNUAL INVESTMENT ANNUAL INVESTMENT
RETURN OF RETURN OF RETURN OF
END OF
POLICY ACCUMULATED
YEAR PREMIUMS 0% 6% 12% 0% 6% 12% 0% 6% 12%
(1)
1
2
3
4
5
6
7
8
9
10
15
20
<FN>
(1) Assumes net interest of 5% compounded annually.
</FN>
THE VALUES WILL DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR
FREQUENCIES. THE MONTHLY GUARANTEE PREMIUM FOR THIS POLICY WOULD BE $________.
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.
[Comparable tables for other configurations
are to be inserted.]
23
ADDITIONAL INFORMATION
A general overview of the Policies appears at pages 1 to 23, above. The
additional information that follows gives more details, but generally does NOT
repeat what is set forth above.
Contents of Additional Information Page to see in this
Prospectus
AGL...................................................................................
Separate Account VL-R.................................................................
Tax Effects...........................................................................
Voting Privileges.....................................................................
Your Beneficiary......................................................................
Assigning Your Policy.................................................................
More About Policy Charges.............................................................
Effective Date of Policy and Transactions Thereunder..................................
More About Our Declared Interest Option...............................................
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 on the inside 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.
24
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 recordkeeping and financial reporting purposes, Separate Account
VL-R is divided into 17 separate "divisions" each corresponding to one of the
17 available investment options (other than our declared fixed interest
option). 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 are our property. Nevertheless, the
assets in the separate account would be available only to satisfy the claims
of owners of the Policies, to the extent they have allocated their
accumulation value to the separate account. Our other creditors could reach
only those separate account assets (if any) that are in excess of the amount
of our reserves and liabilities under the Policies with respect to the
separate account.
AGL also issues variable annuity contracts through its Separate Accounts
A and D, which also are registered investment companies.
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 Platinum Investor 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:
o the death benefit received by the beneficiary under your Policy
will not be subject to federal income tax; and
o 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.
25
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, the selection of additional rider
benefits, 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 specified
amount you request or, in some cases, a partial surrender or termination of
additional benefits under a rider.) 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
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.
26
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 1/2 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 and 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,
27
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.
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.
TERMINAL ILLNESS RIDER. Amounts received under an insurance policy on
the life of an individual who is terminally ill, as defined by the tax law,
are generally excludable from the payee's gross income. We believe that the
benefits provided under our terminal illness rider meet the law's definition
of terminally ill and can qualify for this income tax exclusion. This
exclusion does not apply, however, to amounts paid to someone other than the
insured person, if the payee has an insurable interest in the insured person's
life because the insured is a director, officer or employee of the payee or by
reason of the insured person being financially interested in any trade or
business carried on by the payee.
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, through the Mutual Funds, intends to comply with these
requirements.
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 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, 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.
ESTATE AND GENERATION SKIPPING TAXES. If the insured person is the
Policy's owner, the death benefit under a Platinum Investor 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
28
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 Platinum Investor Policies are
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.
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.
29
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'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
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 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 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
30
recognized. 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.
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, if we agree. 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. All collateral
assignees of record must consent to any full surrender, partial surrender,
loan or payment from a Policy under a terminal illness rider. 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 costly for
us to provide the 5-year no-lapse guarantee under the Platinum Investor I
31
Policies or reduce the amount of our daily charge fee 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.
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 Platinum Investor 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 8, above.
DECREASES IN THE SPECIFIED AMOUNT OF A PLATINUM INVESTOR I POLICY. An
amount of any remaining surrender charge will be deducted upon a decrease in
specified amount under a Platinum Investor I Policy. If there have been no
previous specified amount increases, the amount we deduct will bear the same
proportion to the total surrender charge then applicable as the amount of the
specified amount decrease bears to the Policy's total specified amount. The
remaining amount of surrender charge that we could impose at a future time,
however, will also be reduced proportionally. If there have been increases in
specified amount, we decrease first those portions of specified amount that
were most recently established. We also deduct any remaining amount of the
surrender charge that was established with that portion of specified amount
(which we pro-rate if less than that entire portion of specified amount is
being cancelled).
32
EFFECTIVE DATE OF POLICY AND TRANSACTIONS THEREUNDER
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 cover 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 the owner and
at least the minimum first premium has been 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. However, if you pay at least the minimum
first premium payment with your application for a Policy, we will provide
temporary coverage of up to $300,000 if the insured person meets certain
medical and risk requirements. The terms and conditions of this coverage are
described in our "Limited Temporary Life Insurance Agreement." You can obtain
a copy from our Home Office by writing to the address shown on the cover of
this prospectus or from your AGL representative.
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, the date we receive your full minimum
33
first premium at our Home Office, 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:
o Increases or decreases 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.
o 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.
o If you exercise the right to return your Policy described on the
cover of this prospectus, your coverage will end when you mail us
your Policy or deliver it to your AGL representative.
o 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.
MORE ABOUT OUR DECLARED FIXED INTEREST ACCOUNT OPTION
OUR GENERAL ACCOUNT. Our general account assets are all of our assets
that we do not hold in legally segregated separate accounts. Our general
account supports our obligations to you under your Policy's declared fixed
interest account investment option. Because of applicable exemptive
provisions, no interest in this option has been registered under the
Securities Act of 1933; nor is our general account or our declared fixed
interest account an investment company under the Investment Company Act of
1940. We have been advised that the staff of the SEC has not reviewed the
disclosures that are included in this prospectus for your information about
our general account or our declared fixed interest account option. Those
disclosures, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
34
HOW WE DECLARE INTEREST. We can at any time change the rate of interest
we are paying on any accumulation value allocated to our declared fixed
interest account option, but it will always be at an effective annual rate of
at least 4%.
Under these procedures, it is likely that at any time different interest
rates will apply to different portions of your accumulation value, depending
on when each portion was allocated to our declared fixed interest account
option. Any charges, partial surrenders, or loans that we take from any
accumulation value that you have in our declared fixed interest account option
will be taken from each portion in reverse chronological order based on the
date that accumulation value was allocated to this option.
DISTRIBUTION OF THE POLICIES
American General Securities Incorporated ("AGSI") is the principal
underwriter of the Policies. AGSI is a wholly-owned subsidiary of AGL, and its
principal office is the same as AGL's Home Office. AGSI is registered with the
SEC as a broker-dealer under the Securities Exchange Act of 1934 (1934 Act)
and is a member of the National Associated 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.
We sell our Policies through agents who are licensed by state insurance
officials to sell our variable life policies. These agents are also registered
representatives of AGSI or another firm that is registered with the SEC as a
broker-dealer and is an NASD member. The agent who sells you this Policy
receives sales commissions. We pay these commissions from our own resources
and they do not result in any additional charge to you that is not described
on pages 7-10, above.
The commission we pay for selling the Platinum Investor I Policies is up
to 95% of the premiums paid in the first Policy year up to a "target" amount,
4% of the premiums not in excess of the target amount paid in each of Policy
years 2 through 10, 2.5% of all premiums in excess of the target amount
received in any of Policy years 1 through 10, and .25% annually of the
Policy's accumulation value in our investment options thereafter. (The target
amount is an amount of level annual premium that would be necessary to support
the benefits under your Policy, based on certain assumptions that we believe
are reasonable.) The commission for the Platinum Investor II Policies is up to
25% of premiums paid in the first Policy year up to the target amount, 12% of
the premiums not in excess of the target amount paid in each of Policy years 2
through 7, 2.5% on all premiums in excess of the target amount received in any
of Policy years 1 through 7, and .25% of the Policy's accumulation value in
our investment options thereafter.
We pay a comparable amount of commissions with respect to any increase
in the specified amount of coverage that you request. Commissions must be
returned for any premium that we refund to you for any reason.
35
We pay the commissions directly to AGSI or any other selling
broker-dealer firm.
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 the insured person's death, we will
pay the proceeds as a single sum, normally within seven days thereafter.
DELAY OF DECLARED FIXED INTEREST ACCOUNT OPTION PROCEEDS. We have the
right, however, to defer payment or transfers of amounts out of our declared
fixed interest account option for up to six months. If we delay more than 30
days in paying you such amounts, we will pay interest of at least 3% a year
from the date we receive all items we require to make the payment.
DELAY FOR CHECK CLEARANCE. Also, 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 PROCEEDS. Finally, 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 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,
o 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.)
36
o 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.
o We cannot challenge an additional benefit rider that provides
benefits in the event that the insured person becomes totally
disabled, after two years from the later of the Policy's date of
issue or the date as of which the additional benefit rider becomes
effective.
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.
ADDITIONAL RIGHTS THAT WE HAVE
We have the right at any time to
o 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 $500;
o transfer the entire balance proportionately to any other
investment options you then are using, if the accumulation value
in an investment option is below $500 for any other reason;
o terminate the automatic rebalancing feature if your accumulation
value falls below $5,000;
37
o change the underlying mutual Fund that any investment option uses;
o add or delete investment options, combine two or more investment
options, or withdraw assets relating to Platinum Investor from one
investment option and put them into another;
o operate Separate Account VL-R under the direction of a committee
or discharge such a committee at any time;
o operate the separate account, 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 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;
o do any of the following, if in our judgment necessary or
appropriate to ensure that the Policies continue to qualify for
tax treatment as life insurance: decline to change death benefit
options or the specified amount of insurance, refuse a partial
surrender request, require you to pay additional premiums, make
distributions from your Policy (which could require payment of
taxes and penalties), or make any other changes in your Policy; or
o make other changes in the Policies 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.
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.
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.
38
Name Positions and Offices with AGL
---- ------------------------------
Robert M. Devlin Chairman
Jon P. Newton Vice Chairman
Rodney O. Martin, Jr. Director, President & Chief
Executive Officer
David A. Fravel Director & Senior Vice President,
Insurance Operations
Robert F. Herbert, Jr. Director, Senior Vice President
Chief Financial Officer,
Treasurer & Controller
Royce G. Imhoff, II Director, Senior Vice President &
Chief Marketing Officer
John V. LaGrasse Director, Senior Vice President &
Chief Systems Officer
Peter V. Tuters Director, Vice President &
Chief Investment Officer
Philip K. Polkinghorn Director
Wayne A. Barnard Vice President & Chief Actuary
The principal business address of each person listed above is our Home
Office; except that the street number for Messrs. Devlin, Newton, and
Tuters is 2929 Allen Parkway.
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.
Steven A. Glover, Esquire, Associate General Counsel of AGL, has opined as to
the validity of the Policies. Freedman, Levy, Kroll & Simonds, Washington,
D.C., has advised AGL about certain federal securities and tax law matters in
connection with the Policies.
39
ACCOUNTING AND ACTUARIAL EXPERTS
The financial statements of AGL included in this prospectus have been audited
by __________ LLP, as stated in their reports. The financial statements of AGL
have been included in reliance on the reports of __________ 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 __________,
__________, who is _______ of AGL. [His/Her] opinion on actuarial matters is
filed as an exhibit to the registration statement we have filed with the SEC
in connection with the 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. 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.
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
Platinum Investor Policies. They should not be considered as bearing upon the
investment experience of the separate account. No financial statements of
Separate Account VL-R are included because, at the date of this prospectus,
the separate account had not yet commenced operations and had no assets or
liabilities.
Consolidated Financial Statements Of Page to see in
American General Life Insurance Company this Prospectus
--------------------------------------- ---------------
Report of __________ LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 1996 and 1995
40
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years, ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
[Financial Statements to be filed by pre-effective amendment]
41
[NOTE: The following information is to appear on the inside of the back cover
of the prospectus.]
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 PAGE TO SEE
DEFINED TERM IN DEFINED TERM IN
THIS THIS
PROSPECTUS PROSPECTUS
accumulation value Option 1, 2
AGL our
AGSPC owner
amount at risk partial surrender
automatic rebalancing payment option
basis planned periodic premium
beneficiary Platinum Accumulator
cash surrender value Platinum Investor
close of business Platinum Provider
code Policy
cost of insurance rate Policy anniversary
daily charge Policy loan
date of issue Policy month, year
death benefit preferred loan interest
declared interest option premiums
division premium payments
dollar cost averaging prospectus
5 year no-lapse guarantee reinstate, reinstatement
Fund rider
full surrender SEC
grace period separate account
guarantee premiums Separate Account VL-R
insured person seven payment test
investment option specified amount
lapse surrender
loan, loan interest surrender charge
maturity, maturity date target telephone transfers
modified endowment transfers
monthly deduction day valuation date, period
monthly guarantee premiums we
monthly insurance charge you, your
Mutual Fund
42
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
PROSPECTUS, 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.
43
PART II
(INFORMATION NOT REQUIRED TO BE FILED IN A PROSPECTUS)
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.
UNDERTAKING PURSUANT TO RULE 484(b)(i)
UNDER THE SECURITIES ACT OF 1933
Article VII, section 1, of the AGL's By-laws provides, in part, that AGL
shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of AGL) by reason of the fact that such person is or was serving at
the request of AGL, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with such proceeding if
such person acted in good faith and in a manner such person reasonably
believed to be in the best interest of AGL and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of such person was
unlawful.
Article VII, section 1 (in part), section 2 a, and section 3, provide
that AGL shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
by or in the right of AGL to procure a judgment in its favor by reason of the
fact that such person is or was acting in behalf of AGL, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of such action if such person acted in good faith, in a manner
such person believed to be in the best interests of AGL, and with such care,
including reasonable inquiry, as an ordinarily prudent person in a like
position would use under similar circumstances. No indemnification shall be
made under section 1: (a) in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to AGL, unless and
only to the extent that the court in which such action was brought shall
determine upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for the expenses
which such court shall determine; (b) of amounts paid in settling or otherwise
disposing of a threatened or pending action with or without court approval; or
(c) of expenses incurred in defending a threatened or pending action which is
settled or otherwise disposed of without court approval.
S-1
Article VII, section 3, provides that, with certain exceptions, any
indemnification under Article VII shall be made by AGL only if authorized in
the specific case, upon a determination that indemnification of the person is
proper in the circumstances because the person has met the applicable standard
of conduct set forth in section 1 of Article VII by (a) a majority vote of a
quorum consisting of directors who are not parties to such proceeding; (b)
approval of the shareholders, with the shares owned by the person to be
indemnified not being entitled to vote thereon; or (c) the court in which such
proceeding is or was pending upon application made by AGL or the indemnified
person or the attorney or other persons rendering services in connection with
the defense, whether or not such application by the attorney or indemnified
person is opposed by AGL.
Article VII, section 7, provides that for purposes of Article VII, those
persons subject to indemnification include any person who is or was a
director, officer, or employee of AGL, or is or was serving at the request of
AGL as a director, officer, or employee of another foreign or domestic
corporation which was a predecessor corporation of AGL or of another
enterprise at the request of such predecessor corporation.
Insofar as indemnification for liability arising under the Securities
Act of 1933 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 REGARDING THE REASONABLENESS OF AGGREGATE FEES AND CHARGES
DEDUCTED UNDER THE POLICIES PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT
COMPANY ACT OF 1940
AGL represents that the fees and charges deducted under the Policies, in
the aggregate, are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by AGL under the
Policies. AGL bases its representation on its assessment of all of the facts
and circumstances, including such relevant factors, as: the nature and extent
of such services, expenses and risks; the need for AGL to earn a profit; the
degree to which the Policies include innovative features; and the regulatory
standards for exemptive relief under the Investment Company Act of 1940 used
S-2
prior to October 1996, including the range of industry practice. This
representation applies to all Policies sold pursuant to this Registration
Statement, including those sold on the terms specifically described in the
prospectus contained herein, or any variations therein, based on supplements,
endorsements, or riders to any Policies or prospectus, or otherwise.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
The facing sheet.
Cross-Reference Table.
Prospectus, consisting of _____ pages.
Undertaking to file reports.
Undertaking pursuant to Rule 484(b)(1) under the Securities Act of 1933.
Representation with respect to fees and charges.
The signatures.
Written Consents of the following persons:
Steven A. Glover,
Associate General Counsel and Assistant Security of AGL (see Exhibit
2(a)). (To be filed by pre-effective amendment.)
AGL's actuary (see Exhibit 2(b)). (To be filed by pre-effective
amendment.)
Independent Auditors (see Exhibit 6). (To be filed by pre-effective
amendment.)
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. (Filed
herewith.)
(1)(b) Resolutions of Board of Directors of AGL authorizing
the establishment of variable life insurance standards
of suitability and conduct. (Filed herewith.)
S-3
(2) Inapplicable.
(3)(a) Form of Distribution Agreement. (To be filed by
pre-effective amendment.)
(3)(b) Form of Selling Group Agreement. (To be filed by
pre-effective amendment.)
(3)(c) Schedule of Commissions (included under the heading
"Distribution of the Policies" in the prospectus that
is filed as part of this Registration Statement).
(4) Inapplicable.
(5)(a)(i) Specimen form of the "Platinum Investor I" Variable
Universal Life Insurance Policy (Policy Form No.
97600). (Filed herewith.)
5(a)(ii) Specimen form of the "Platinum Investor II" Variable
Universal Life Insurance Policy (Policy Form No.
97610). (Filed herewith.)
(5)(b)(i) Specimen form of application for life insurance issued
by AGL. (Filed herewith.)
(5)(b)(ii) Specimen form of supplemental application for variable
life insurance issued by AGL on Policy Form No. 97600
and Policy Form No. 97610. (Filed herewith.)
(6)(a) Amended and Restated Articles of Incorporation of
American General Life Insurance Company, effective
December 31, 1991. (1)
(6)(b) Bylaws of American General Life Insurance Company,
adopted January 22, 1992. (2)
(7) Inapplicable.
(8)(a) Form of Participation Agreement with Adviser for AIM
Variable Insurance Funds, Inc. (To be filed by
pre-effective amendment.)
(8)(b) Form of Participation Agreement with Adviser for
American General Series Portfolio Company. (To be
filed by pre-effective amendment.)
(8)(c) Form of Participation Agreement with Adviser for
Dreyfus Variable Investment Fund. (To be filed by
pre-effective amendment.)
S-4
(8)(d) Form of Participation Agreement with Adviser for MFS
Variable Insurance Trust. (To be filed by
pre-effective amendment.)
(8)(e) Amended Form of Participation Agreement with Adviser
for Morgan Stanley Series Universal Funds., Inc. (To
be filed by pre-effective amendment.)
(8)(f) Form of Participation Agreement with Adviser for
Putnam. (To be filed by pre-effective amendment.)
(8)(g) Form of Participation Agreement with Adviser for
Safeco Resources Series Trust. (To be filed by
pre-effective amendment.)
(8)(h) Amended Form of Participation Agreement with Adviser
for Van Kampen American Capital Life Investment Trust.
(To be filed by pre-effective amendment.)
(10) Specimen Form of Application (filed herewith).
Other Exhibits
2(a) Opinion and Consent of Steven A. Glover, Associate
General Counsel and Assistant Secretary of AGL. (To be
filed by pre-effective amendment.)
2(b) Opinion and Consent of AGL's actuary. (To be filed by
pre-effective amendment.)
3 Inapplicable.
4 Inapplicable.
5 Financial Data Schedule. (See Exhibit 27 below.)
6 Consent of Independent Auditors. (To be filed by
pre-effective amendment.)
7 Powers of Attorney. (Filed herewith.)
S-5
27 Financial Data Schedule. (Inapplicable, because no
financial statements of the Separate Account are being
filed herewith)
<FN>
(1) 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.
(2) Incorporated herein by reference to the 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.
</FN>
S-6
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 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 12th day of December, 1997.
AMERICAN GENERAL LIFE INSURANCE
COMPANY SEPARATE ACCOUNT VL-R
(Registrant)
BY: AMERICAN GENERAL LIFE
INSURANCE COMPANY
(On behalf of the Registrant and itself)
/s/ROBERT F. HERBERT, JR.
BY:----------------------------
Robert F. Herbert, Jr.
Senior Vice President
[SEAL]
/s/STEVEN A. GLOVER
ATTEST: ----------------------
Steven A. Glover
Associate General Counsel
and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title
RODNEY O. MARTIN, JR.*
-------------------------- Principal Executive Officer
(Rodney O. Martin, Jr.)
ROBERT F. HERBERT, JR.*
-------------------------- Principal Financial and
(Robert F. Herbert, Jr.) Accounting Officer
Directors
JOHN V. LaGRASSE*
-------------------------- --------------------------
(Robert M. Devlin) (John V. LaGrasse)
JAMES S. D'AGOSTINO, JR.* RODNEY O. MARTIN, JR.*
-------------------------- --------------------------
(James S. D'Agostino, Jr.) (Rodney O. Martin, Jr.)
DAVID A. FRAVEL* JON P. NEWTON*
-------------------------- --------------------------
(David A. Fravel) (Jon P. Newton)
ROBERT F. HERBERT, JR.* PHILIP K. POLKINGHORN*
-------------------------- --------------------------
(Robert F. Herbert, Jr.) (Philip K. Polkinghorn)
ROYCE G. IMHOFF, II* PETER V. TUTERS*
-------------------------- --------------------------
(Royce G. Imhoff, II) (Peter V. Tuters)
/s/ Steven A. Glover
--------------------------
* By Steven A. Glover, Attorney-in-Fact December 12, 1997