EXHIBIT 6
PROCEDURES MEMORANDUM
PURSUANT TO RULE 6e-3(T)(b)(12)(iii)
PROCEDURES MEMORANDUM
PURSUANT TO RULE 6e-3(T)(b)(12)(iii)
DESCRIPTION OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY'S
REDEMPTION AND TRANSFER PROCEDURES FOR FLEXIBLE PREMIUM VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
This document sets forth the administrative procedures that will be followed by
Great-West Life & Annuity Insurance Company ("GWLA") in connection with the
issuance of its flexible premium variable universal life insurance policy
("Policy") described in this Registration Statement, the transfer of assets held
thereunder, and the redemption by Policyowners of their interest in the
Policies.
Set out below is a summary of the principal Policy provisions and administrative
procedures which might be deemed to constitute, either directly or indirectly,
issuance, transfer, and redemption procedures under flexible premium variable
life insurance policies to the extent necessary to comply with Rule 6e-3(T),
state administrative law or established administrative procedures of the life
insurance company. The summary shows that, because of the insurance nature of
the Policies, the procedures involved necessarily differ in certain significant
respects from the procedures for mutual funds and contractual plans. The
summary, while comprehensive, does not attempt to address each and every
procedure or variation which might occur. In certain states, the Policies may be
offered as group contracts with individual ownership represented by
certificates. The discussion of Policies in this document applies equally to
certificates under group contracts, unless the context specifies otherwise.
1. "PUBLIC OFFERING PRICE:" PURCHASE AND RELATED TRANSACTIONS
A. PREMIUM SCHEDULES AND UNDERWRITING STANDARDS
Premiums for the Policies will not be the same for all Policyowners. GWLA will
require the Policyowner to pay a required premium for the first Policy Year.
Policyowners may also select a planned periodic Premium payment schedule that
provides a level premium payable at a fixed interval for a specified period of
time. Payment of premium in accordance with this schedule is not, however,
mandatory and failure to make such payments will not of itself cause the Policy
to lapse. Instead, Policyowners may make premium payments in any amount in any
frequency, subject only to the maximum premium limitation. If at any time a
premium is paid which would result in total premiums exceeding the current
maximum premium limitation, GWLA will accept only that portion of the premium
which will make total premiums equal that amount. Any portion of the premium in
excess of that amount will be returned to the Policyowner and no further
premiums will be accepted until allowed by the current maximum premium
limitation or unless the Policyowner increases the face amount of the Policy.
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The Policy will remain in force so long as the Policy's Account Value, less any
Policy Debt, is sufficient to pay the monthly deduction for that Policy Month.
The amount of a premium, if any, that must be paid to keep the Policy in force
depends upon the Cash Surrender Value, which in turn depends on such factors as
investment experience, cost of insurance charges, administrative charges, and
Policy Debt. The Monthly Risk Rate utilized in computing the cost of insurance
charge will not be the same for each Insured. The chief reason is that the
principle of pooling and distribution of mortality risks is based upon the
assumption that each Insured incurs an insurance rate commensurate with his or
her mortality risk which is actuarially determined based upon factors such as
issue age, sex, duration, risk classification and face amount of the Policy.
Accordingly, while not all Insured persons will be subject to the same Monthly
Risk Rate, there will be a single "rate" for all Insured persons in a given
actuarial category.
The Policies will be offered and sold pursuant to established underwriting
standards and in accordance with state insurance laws. State insurance laws
prohibit unfair discrimination among Policyowners, but recognize that premiums
and charges must be based upon factors such as age, sex, health, and occupation.
The Policy offered by GWLA contains an exchange of policy provision under which
the Policyowner can exchange the Policy for a policy that does not provide for
variable benefits. This exchange will be implemented by transferring the
Policy's Account Value to GWLA's general account and terminating the
Policyowner's future right to allocate funds to the Series Account.
The exchange shall be subject to the following rules:
(1) The exchange must be made within 24 months after the issuance of the
existing Policy.
(2) GWLA may require the Policyowner to return the Policy before the
exchange will be processed.
(3) No transfer fee will be assessed to complete the exchange.
(4) Premiums for the new policy will be based on the same issue age and
risk classification of the Insured as the existing Policy.
(5) No evidence of insurability will be required at the time of the
exchange.
(6) The conversion will be subject to an equitable adjustment as required
by Rule 6e-3(T) to reflect variances, if any, in the payments and
values under the new policy.
(7) All Policy Debt must be repaid before the exchange will be effected.
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B. APPLICATION AND INITIAL PREMIUM PROCESSING
To purchase a Policy, the Policyowner must submit an application to GWLA's
Principal Office. GWLA will then follow underwriting procedures designed to
determine the insurability of the proposed Insured. GWLA may require full
underwriting, which includes a medical examination and further information,
before the application is approved. GWLA also may offer the Policy on a
simplified underwriting or guaranteed issue basis. Proposed Insureds must be
acceptable risks based on GWLA's applicable underwriting limits and standards.
GWLA will not issue a Policy until the underwriting process has been completed
to GWLA's satisfaction. GWLA reserves the right to reject an application for any
lawful reason or to "rate" an Insured as a sub-standard risk, which will result
in increased Monthly Risk Charges. The Monthly Risk Charge also may vary
depending on the type of underwriting GWLA uses.
The applicant must specify certain information in the application, including the
Total Face Amount, the death benefit option and supplemental benefits, if any.
Upon approval of the application, GWLA will issue to the Policyowner a Policy on
the life of the Insured. A specified Initial Premium must be paid before GWLA
will issue the Policy. The effective date of coverage for the Policy (which GWLA
calls the "Policy Date") will be the date GWLA receives a premium equal to or in
excess of the specified Initial Premium after GWLA has approved the
Policyowner's application. If the Policyowner's premium payment is received on
the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that
month.
GWLA generally does not accept premium payments before approval of an
application. However, GWLA may elect to do so in its sole discretion. If GWLA
accepts a premium payment before approval of an application, GWLA will provide
the applicant with temporary insurance coverage in accordance with the terms of
GWLA's temporary insurance agreement. In its sole discretion, GWLA may limit the
amount of premium GWLA will accept and the amount of temporary coverage GWLA
will provide. If GWLA approves the Policyowner's application, GWLA will allocate
the Policyowner's premium to the Series Account on the Policy Date, as described
below. Otherwise, GWLA will promptly return the payment to the Policyowner. GWLA
will not credit interest to the Policyowner's premium payment for the period
while the Policyowner's application is in underwriting, unless interest is
required to be credited under state law.
If the applicant is not satisfied with the Policy, it may be returned by
delivering or mailing it to GWLA's Principal Office or to the representative
from whom the Policy was purchased within 10 days from the date the applicant
received it (unless a longer period is required under applicable state insurance
law) (the "Free Look Period"). A Policy returned under this provision will be
deemed void. The applicant will receive a refund equal to the greater of the sum
of all premium payments made (less any withdrawals) or the Policy's Account
Value.
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During the Policyowner's Free Look Period, GWLA will allocate net premium
payments to the Division of the Series Account that invests in the Maxim Money
Market Portfolio. GWLA will transfer the Account Value in that Division to the
other divisions of the Series Account in accordance with the Policyowner's
allocation instructions five days after the end of the Free Look Period. GWLA
may delay the transfer of Account Value from the Maxim Money Market Division to
the Policyowner's chosen Division(s) until after GWLA receives all outstanding
documentation delivered with the Policy that is required to completed by the
Policyowner.
C. PREMIUM ALLOCATION
Premium payments are subject to a guaranteed maximum expense charge of 10%. This
charge compensates GWLA for sales and promotional expenses and covers premium
taxes and certain federal income tax obligations resulting from receipt of
premiums. The amount of premium remaining after the deduction of the expense
charge (i.e., the net premium) is allocated to the Divisions in accordance with
the Policyowner's instructions.
In the application for a Policy, the Policyowner must specify instructions for
the allocation of premiums among the Divisions of the Series Account.
Percentages must be in whole numbers.
Premiums received prior to the end of the Free Look Period will initially be
credited to the Maxim Money Market Portfolio Division. The Policyowner's initial
allocation instructions will take effect five days after the end of the Free
Look Period.
The Policyowner may change allocation instructions at any time by Request.
Telephone Requests will be honored if GWLA has a properly completed telephone
authorization on file. An allocation will be effective as of the Business Day
GWLA receives the Request for that change if received before 4:00 p.m. E.T.
Otherwise, the Request will be effective on the next Business Day. GWLA, our
affiliates and the representatives from whom the Policyowner purchased the
Policy will not be responsible for losses resulting from acting upon telephone
Requests reasonably believed to be genuine.
D. REINSTATEMENT
A Policyowner may reinstate a lapsed Policy any time within three years after
the date of lapse by submitting the following items to GWLA:
(1) A written request for reinstatement;
(2) Evidence of insurability satisfactory to GWLA;
(3) An amount equal to the Policy charges which were due and unpaid at the
end of the Grace Period;
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(4) A premium equal to four times the monthly deduction applicable on the
date of reinstatement; and
(5) An amount to repay or a Request to reinstate any Policy loan that was
outstanding on the date coverage ceased, including interest at 6.00%
per year compounded annually from the date coverage ceased to the date
of reinstatement of the Policy.
A reinstated Policy's Total Face Amount may not exceed the Total Face Amount at
the time of termination. The Policy's Account Value on the reinstatement date
will reflect: the Account Value at the time of termination; plus net premiums
attributable to premiums paid to reinstate the Policy; less the Monthly Expense
Charge; less the Monthly Cost of Insurance charge applicable on the date of
reinstatement.
The effective date of reinstatement will be the date the reinstatement request
is approved by GWLA. The suicide and incontestability provisions will apply from
the effective date of the reinstatement.
E. REPAYMENT OF INDEBTEDNESS
All payments GWLA receives from the Policyowner will be treated as premium
payments unless GWLA has received satisfactory notice, as determined by GWLA,
that the funds are for Policy loan repayment. Loan repayments will first reduce
the outstanding balance of the Policy loan and then accrued but unpaid interest
on such loans. GWLA will accept repayment of any Policy loan at any time while
the Policy is in force. Amounts paid to repay a Policy loan will be allocated in
accordance with then current premium allocation instructions.
F. CORRECTION OF MISSTATEMENT OF AGE OR SEX
If the Insured's age and/or sex on the Policy Date has been misstated, the
benefits payable under the Policy will be the amount of insurance that the cost
of insurance (deducted from the Policy's Account Value at the beginning of the
Policy Month in which death occurred) would have purchased for the correct age
and/or sex on the Policy Date.
If the age and/or sex of the Insured or any other person covered under a rider
has been misstated on the Policy Date, the benefits payable under the rider will
be the benefit that the amount charged would have purchased for the correct age
and/or sex on the Policy Date.
If the age is misstated in such a way that the Insured was not eligible for
coverage under the Policy, GWLA's liability will be limited to a return of the
premiums paid, less any partial withdrawals and outstanding loans and accrued
loan interest and the cost for riders.
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2. REDEMPTION PROCEDURES: SURRENDER AND OTHER TRANSACTIONS
This section outlines those procedures which might be deemed to constitute
redemptions under the Policy. These procedures differ in certain significant
respects from the redemption procedures for mutual funds and contractual plans.
A. SURRENDER
The Policyowner may surrender the Policy for its Cash Surrender Value at any
time while the Insured is living. If the Policyowner surrenders the Policy, the
insurance coverage and all other benefits under the Policy will terminate. The
Cash Surrender Value is the Policy's Account Value less the sum of: the
outstanding balance of any Policy Debt and any other accrued and unpaid Policy
charges. GWLA will determine the Policyowner's Cash Surrender Value as of the
end of the first Valuation Date after GWLA receives the Policyowner's request
for surrender. Surrenders from the Series Account will generally be paid within
seven days of GWLA's receipt of a Policyowner's request to surrender. Payment of
any amount payable from the Series Account upon surrender may be postponed
whenever:
(i) the New York Stock Exchange is closed other than
customary weekend and holiday closing, or trading on
the NYSE is otherwise restricted;
(ii) the Securities and Exchange Commission, by order,
permits postponement for the protection of
Policyowners; or
(iii) an emergency exists as determined by the Securities
and Exchange Commission, as a result of which
disposal of securities is not reasonably practicable,
or it is not reasonably practicable to determine the
value of the assets of the Series Account.
GWLA is not required to and, hence, will not withhold the amount of any tax due
on that portion of a surrender which is taxable. However, as a service to
Policyowners, GWLA will withhold and remit to the federal government such
amounts if directed to do so in writing at or before the time of surrender by
the Policyowner.
B. PARTIAL WITHDRAWAL
The Policyowner can request a portion of the Cash Surrender Value by making a
partial withdrawal from the Policy.
The amount of any partial withdrawal must be at least $500 and may not exceed
90% of the Policy's Account Value less the value of the Loan Account. An
administrative fee will be deducted from the Policyowner's Account Value for all
partial withdrawals after the first made during the same Policy Year. The
administrative fee is guaranteed to be no greater than $25.
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If the Policyowner has chosen either Death Benefit Option 1 ("Option 1") or
Death Benefit Option 3 ("Option 3"), described below, then the death benefit
payable will be reduced by the amount of any partial withdrawals. The Total Face
Amount remaining after a partial withdrawal may not be less than $100,000. If
increases in the Total Face Amount previously have occurred, a partial
withdrawal will first reduce the amount of the most recent increase, then the
most recent increases successively, then the original Total Face Amount under
the Policy.
Under Death Benefit Option 2 ("Option 2"), described below, which provides for
life insurance proceeds equal to the Total Face Amount plus the Policy's Account
Value, a reduction in the Policy's Account Value as a result of a partial
withdrawal will typically result in a dollar per dollar reduction in the life
insurance proceeds payable under the Policy.
A Policy's Account Value will be reduced by the amount of a partial withdrawal.
The amount of a partial withdrawal will be withdrawn from the Divisions in the
proportion the amounts in the Divisions bear to the Policy's Account Value. The
Policyowner cannot repay amounts taken as a partial withdrawal. Any subsequent
payments received by GWLA will be treated as additional premium payments and
will be subject to GWLA's limitations on premiums.
Partial withdrawals from the Series Account will generally be paid within seven
days of GWLA's receipt of a Policyowner's request for a partial withdrawal.
Payment of any amount payable from the Series Account upon a partial withdrawal
may be postponed whenever:
(i) the New York Stock Exchange is closed other than
customary weekend and holiday closing, or trading on
the NYSE is otherwise restricted;
(ii) the Securities and Exchange Commission, by order,
permits postponement for the protection of
Policyowners; or
(iii) an emergency exists as determined by the Securities
and Exchange Commission, as a result of which
disposal of securities is not reasonably practicable,
or it is not reasonably practicable to determine the
value of the assets of the Series Account.
GWLA is not required to and, hence, will not withhold the amount of any tax due
on that portion of a partial withdrawal which is taxable. However, as a service
to Policyowners, GWLA will withhold and remit to the federal government such
amounts if directed to do so in writing at or before the time of the partial
withdrawal by the Policyowner.
C. DEATH BENEFITS
If the Policy is in force at the time of the Insured's death, GWLA will pay the
beneficiary an amount based on the death benefit option in effect at the
Insured's date of death, once GWLA has received Due Proof of the Insured's
death. The amount payable will be:
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o the amount of the selected death benefit option, plus
o any amounts payable under any supplemental benefit riders
added to the Policy, less
o the value of any Policy Debt on the date of the Insured's
death, less
o any accrued and unpaid Policy charges.
GWLA will pay this amount to the beneficiary in one lump sum, unless GWLA and
the beneficiary agree on another form of settlement. GWLA will pay interest, at
a rate not less than that required by law, on the amount of Policy Proceeds, if
payable in one lump sum, from the date of the Insured's death to the date of
payment.
Policy Proceeds from the Series Account will generally be paid within seven days
of GWLA's receipt of Due Proof of the Insured's death (if payable in a lump
sum). Due Proof of the Insured's death consists of such evidence of death GWLA
may reasonably require including, but not limited to, a certified death
certificate. Generally, death benefit proceeds are payable from GWLA's general
account. When GWLA receives Due Proof of the Insured's death, the death benefit
will be calculated as of the actual date of death. Units in the Series Account
attributable to the Policy will be redeemed on the date that Due Proof of the
Insured's death is received by GWLA and GWLA may use the proceeds thereof to pay
part or all of the death benefit. Payment of any amount from the Series Account
resulting from the death of the Insured may be postponed whenever:
(i) the New York Stock Exchange is closed other than
customary weekend and holiday closing, or trading on
the NYSE is otherwise restricted;
(ii) the Securities and Exchange Commission, by order,
permits postponement for the protection of
Policyowners; or
(iii) an emergency exists as determined by the Securities
and Exchange Commission, as a result of which
disposal of securities is not reasonably practicable,
or it is not reasonably practicable to determine the
value of the assets of the Series Account.
In its sole discretion, GWLA may delay payment of a death benefit while it is
contesting or investigating a death claim.
1. DEATH BENEFIT OPTIONS
While the insured is alive, the Policyowner may choose between three death
benefit options:
If Option 1 ("Level Death") is selected, the Death Benefit is:
o the Policy's Total Face Amount on the date of the Insured's
death less any partial withdrawals; or, if greater,
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o the Policy's Account Value on the date of death multiplied by
the applicable factor as described in the Policy.
If Option 2 ("Coverage Plus") is selected, the Death Benefit is:
o the sum of the Total Face Amount and Account Value of the
Policy on the date of the Insured's death; or, if greater,
o the Policy's Account Value on the date of death multiplied by
the applicable factor as described in the Policy.
If Option 3 ("Premium Accumulation") is selected, the Death Benefit is:
o the sum of the Total Face Amount and premiums paid under the
Policy plus interest at the rate specified in the Policy less
any partial withdrawals; or, if greater,
o the Policy's Account Value on the date of death multiplied by
the applicable factor as described in the Policy.
2. INCREASES AND DECREASES IN TOTAL FACE AMOUNT
Subject to certain limitations, a Policyowner may increase or decrease the face
amount of a Policy. A change in face amount may affect the cost of insurance
rate and the net amount at risk, both of which may affect a Policyowner's cost
of insurance charge.
For a decrease in Total Face Amount:
o GWLA must receive a Request in writing.
o The decrease will become effective on the first Business Day
of the Policy Month following approval of the Request.
o The decrease will apply first to the most recent increase or
increases in Total Face Amount for purposes of the
Incontestability Provision.
o The minimum decrease amount will be $25,000 and the Total Face
Amount may not be decreased below $100,000 unless prior
approval is obtained from GWLA.
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o If following the decrease in Total Face Amount, the Policy
would not comply with the maximum premium limitations required
by Federal tax law, the decrease may be limited (or, if the
Policyowner so elects, Account Value may be returned to the
Policyowner, subject to taxation) to the extent necessary to
meet these requirements. When GWLA returns Account Value to
the Policyowner under these circumstances, GWLA will redeem
Units in each Division of the Series Account to which the
Policyowner has allocated Account Value. The amount of Account
Value to be returned will be withdrawn from the Divisions in
the proportion the amounts in the Divisions bear to the
Policyowner's Account Value. Such return of Account Value will
generally be paid within seven days of GWLA's receipt of a
Policyowner's request. Payment of any amount from the Series
Account under these circumstances may be postponed whenever:
(i) the New York Stock Exchange is closed other than
customary weekend and holiday closing, or trading on
the NYSE is otherwise restricted;
(ii) the Securities and Exchange Commission, by order,
permits postponement for the protection of
Policyowners; or
(iii) an emergency exists as determined by the Securities
and Exchange Commission, as a result of which
disposal of securities is not reasonably practicable,
or it is not reasonably practicable to determine the
value of the assets of the Series Account.
For an increase in Total Face Amount:
o GWLA must receive a written Request.
o The increase will be subject to evidence of insurability
satisfactory to GWLA.
o The increase will be effective on the Policy Anniversary
following the approval of the Request for the increase,
subject to the deduction of the first Policy Month's Monthly
Risk Charge, Service Charge, any extra risk charge if the
Insured is in a rated class and the cost of any riders.
o The minimum increase amount will be $25,000.
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3. CHANGES IN DEATH BENEFIT OPTION
After the first Policy Year, but not more than once each Policy Year, the
Policyowner may change the death benefit option by Request. Any change will be
effective on the first day of the Policy Month following the date GWLA approves
the Policyowner's Request. A maximum administrative fee of $100 will be deducted
from the Policyowner's Account Value each time the Policyowner changes the death
benefit option.
A change in the death benefit option will not change the amount payable upon the
death of the Insured. Any change is subject to the following conditions.
o If the change is from Option 1 to Option 2, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount less the Policy's Account Value. Evidence of
insurability may be required.
o If the change is from Option 1 to Option 3, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount less the accumulated value of all premiums at the
interest rate shown in the Policy. Evidence of insurability
may be required.
o If the change is from Option 2 to Option 1, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount plus the Policy's Account Value.
o If the change is from Option 2 to Option 3, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount plus the Policy's Account Value less the
accumulated value of all premiums at the interest rate shown
in the Policy.
o If the change is from Option 3 to Option 1, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount plus the accumulated value of all premiums at the
interest rate shown in the Policy.
o If the change is from Option 3 to Option 2, the new Total Face
Amount, at the time of the change, will equal the prior Total
Face Amount less the Policy's Account Value plus the
accumulated value of all premiums at the interest rate shown
in the Policy.
D. PREMIUM REFUNDS
GWLA will not normally refund premium payments unless one of the following
situations occurs:
1. The Policyowner exercises the Free Look privilege in accordance with
state regulations.
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2. The premium payment would disqualify the Policy as life insurance
coverage as defined under the Internal Revenue Code.
3. The Policy would become a Modified Endowment Contract and the
Policyowner has not elected to accept the Policy as such.
4. A premium was paid before underwriting was completed and the
underwriting risk is not accepted by either GWLA or the Policyowner.
Amounts payable upon a Policyowner's exercise of the free look right will be
paid as described in this memorandum at section 1.B. "Application and Initial
Premium Processing." GWLA will not pay interest on amounts paid as a refund of
premium, except as required by state law. Premium refunds will be paid within
the time frame required by state law.
E. POLICY LOANS
The Policyowner may request a Policy loan of up to 90% of the Policy's Account
Value, decreased by the amount of any outstanding Policy Debt on the date the
Policy loan is made. When a Policy loan is made, a portion of the Policyowner's
Account Value equal to the amount of the Policy loan will be allocated to the
Loan Account as collateral for the loan. This amount will not be affected by the
investment experience of the Series Account while the loan is outstanding and
will be subtracted from the Divisions in the proportion the amounts in the
Divisions bear to the Policy's Account Value. The minimum Policy loan amount is
$500.
The interest rate on the Policy loan will be determined annually at the
beginning of each Policy Year. That interest rate will be guaranteed for that
Policy Year and will apply to all Policy loans outstanding during that Policy
Year. Interest is due and payable on each Policy Anniversary. Interest not paid
when due will be added to the principal amount of the loan and will bear
interest at the loan interest rate.
Currently, the maximum interest rate for Policy loans is The Moody's Corporate
Bond Yield Average - Monthly Average Corporates, which is published by Moody's
Investors Service, Inc. If that Average ceases to be published, the maximum
interest rate for Policy loans will be derived from a substantially similar
average established by state regulation.
GWLA must reduce the Policy loan interest rate if the maximum loan interest rate
is lower than the loan interest rate for the previous Policy Year by one-half of
one percent or more.
GWLA may increase the Policy loan interest rate but such increase must be at
least one-half of one percent. No increase may be made if the Policy loan
interest rate would exceed the maximum loan interest rate. GWLA will send the
Policyowner advance notice of any increase in the Policy loan rate.
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Interest will be credited to amounts held in the Loan Account. The rate will be
no less than the Policy loan interest rate then in effect less a maximum of
0.90%. This rate may change at any time but will not change more frequently than
once annually.
All payments GWLA receives from the Policyowner will be treated as premium
payments unless GWLA has received notice, in form satisfactory to GWLA, that the
funds are for loan repayment. Loan repayments will first reduce the outstanding
balance of the Policy loan and then accrued but unpaid interest on such loans.
GWLA will accept repayment of any Policy loan at any time while the Policy is in
force. Amounts paid to repay a loan will be allocated in accordance with current
premium allocation instructions.
Policy Debt may not exceed the Cash Surrender Value. If Policy Debt would
otherwise exceed the Cash Surrender Value, the Policy will enter the Grace
Period and, if sufficient payment is not received within the Grace Period, the
Policy will lapse and terminate without value (see "Grace Period" below). The
Policy may, however, later be reinstated (see "Reinstatement" above).
GWLA permits loans at issue only in the case of an exchange under Section 1035
of the Internal Revenue Code of 1986, as amended. GWLA will accept outstanding
loans that are not greater than 80 percent of the total account value exchanged.
GWLA reserves the right to change the loan at issue limits at its discretion.
Changes will be applied uniformly to all applicants.
F. GRACE PERIOD- POLICY LAPSE
After the first premium is paid, if the Policy's Account Value, less any
outstanding Policy loans and less any accrued loan interest, on the last day of
a Policy Month is not sufficient to cover the monthly deduction for the next
Policy Month, a Grace Period of 61 days (commencing on the first day of that
next Policy Month) will be allowed for the payment of an amount sufficient to
cover the monthly deduction for 2 Policy Months.
Coverage will remain in force during the Grace Period. If the premium due is not
paid within the Grace Period, all coverage under the Policy will cease at the
end of the 61 day period.
Notice of such premium due will be mailed to the last known address of the
Policyowner and any assignee of record at least 31 days prior to the date
coverage will cease.
If the Insured dies during the Grace Period, any due and unpaid Policy charges
will be deducted from the Policy Proceeds.
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3. TRANSFERS
The Policyowner may at any time transfer to another Division or Divisions all or
a portion of the Account Value allocated to a Division. GWLA will make transfers
pursuant to a Request. A Request to transfer will be effective on the Business
Day it is received by GWLA if received before 4:00 pm. E.T. Otherwise, the
Request to transfer will be effected on the next Business Day. Telephone
Requests will be honored only if GWLA has a properly completed telephone
authorization form for the Policyowner on file. GWLA, our affiliates and the
representative from whom the Policyowner purchased the Policy will not be
responsible for losses resulting from acting upon telephone Requests reasonably
believed to be genuine. GWLA will use reasonable procedures to confirm that
instructions communicated by telephone are genuine. For transactions initiated
by telephone, the Policyowner will be required to identify himself by name and a
personal identification number. However, if GWLA does not take reasonable steps
to help ensure that a telephone authorization is valid, GWLA may be liable for
such losses. GWLA may suspend, modify or terminate the telephone transfer
privilege at any time without notice.
Transfers may be Requested by indicating the transfer of either a specified
dollar amount or a specified percentage of the Division's value from which the
transfer will be made.
Transfer privileges are subject to GWLA's consent. GWLA reserves the right to
impose limitations on transfers, including, but not limited to: (1) the minimum
amount that may be transferred; and (2) the minimum amount that may remain in a
Division following a transfer from that Division.
Transfers may be postponed whenever:
(i) the New York Stock Exchange is closed other than customary
weekend and holiday closing, or trading on the NYSE is otherwise
restricted;
(ii) the Securities and Exchange Commission, by order, permits
postponement for the protection of Policyowners; or
(iii) an emergency exists as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not
reasonably practicable, or it is not reasonably practicable to
determine the value of the assets of the Series Account.
In addition, a Transfer may be delayed for up to seven days if an underlying
portfolio delays the payment of redemption proceeds.
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An administrative charge of $10 per transfer will apply for all transfers in
excess of 12 made in a calendar year. GWLA may increase or decrease the transfer
charge; however, it is guaranteed to never exceed $10 per transfer. All
transfers made in a single day will count as only one transfer toward the 12
free transfers. The transfer of the Policyowner's Initial Premium from the Maxim
Money Market Portfolio Division to the Policyowner's selected Divisions does not
count toward the twelve free transfers. Likewise, any transfers under Dollar
Cost Averaging or periodic rebalancing of the Policyowner's Account Value under
the Rebalancer Option do not count toward the twelve free transfers (a one time
rebalancing, however, will be counted as one transfer).
A. TRANSFERS - DOLLAR COST AVERAGING
By Request, a Policyowner may elect Dollar Cost Averaging in order to
purchase Units of the Divisions over a period of time. There is no charge for
this service. Dollar Cost Averaging permits a Policyowner to automatically
transfer a predetermined dollar amount, subject to GWLA's minimum, currently set
at $1000, at regular intervals from any one or more designated Divisions to one
or more of the remaining, then available Divisions. The Unit Value will be
determined on the dates of the transfers. The Policyowner must specify the
percentage to be transferred into each designated Division. Transfers may be set
up on any one of the following frequency periods: monthly, quarterly,
semiannually, or annually. The transfer will be initiated one frequency period
following the date of the Policyowner's request. GWLA will provide a list of
Divisions eligible for Dollar Cost Averaging which may be modified from time to
time. Amounts transferred through Dollar Cost Averaging are not counted against
the twelve free transfers allowed in a calendar year. A Policyowner may not
participate in Dollar Cost Averaging and the Rebalancer Option (described below)
at the same time. GWLA reserves the right to modify, suspend, or terminate
Dollar Cost Averaging at any time.
B. TRANSFERS - THE REBALANCER OPTION
By Request, a Policyowner may elect the Rebalancer Option in order to
automatically transfer Account Value among the Divisions on a periodic basis.
There is no charge for this service. This type of transfer program automatically
reallocates a Policyowner's Account Value so as to maintain a particular
percentage allocation among Divisions chosen by the Policyowner. A Policyowner
may Request that rebalancing occur one time only, in which case the transfer
will take place on the date of the Request. This transfer will count as one
transfer towards the twelve free transfers allowed in a calendar year. A
Policyowner may also choose to rebalance Account Value on a quarterly,
semiannual, or annual basis, in which case the first transfer will be initiated
one frequency period following the date of the request. On that date, the
Policy's Account Value will be automatically reallocated to the selected
Divisions. Thereafter, Account Value will be rebalanced once each frequency
period. In order to participate in the Rebalancer Option, the entire Account
Value must be included. Transfers made with these frequencies will not count
against the twelve free transfers allowed in a calendar year. The Policyowner
must specify the percentage of Account Value to be allocated to each Division
and the frequency of rebalancing. The Rebalancer Option may be terminated at any
time by Request. A Policyowner may not participate in the Rebalancer Option and
Dollar Cost Averaging at the same time. GWLA reserves the right to modify,
suspend, or terminate the Rebalancer Option at any time.
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