As filed with the Securities and Exchange Commission on July 12, 2000
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
(Exact Name of Trust)
LINCOLN BENEFIT LIFE COMPANY
(Name of Depositor)
2940 South 84th Street
Lincoln, Nebraska 68506
(Complete Address of Depositor's Principal Executive Offices)
Carol Watson
LINCOLN BENEFIT LIFE COMPANY
2940 South 84th Street
Lincoln, Nebraska 68506
(Name and Complete Address of Agent for Service)
Copy to:
Joan E. Boros, Esquire
Jorden Burt Boros Cicchetti Berenson & Johnson
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007-5201
Securities being offered - flexible premium variable universal life insurance
policies.
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Approximate date of proposed public offering: as soon as practicable after the
effective date of this registration statement.
The registrant hereby declares that it is registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940. The
registrant hereby amends this registration statement on such dates as may be
necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a) may determine.
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CROSS REFERENCE SHEET TO PROSPECTUS
Cross reference sheet pursuant to Rule 404(c) showing location in Prospectus of
information required by Items of Form N-8B-2.
Item Number in Form N-8B-2 Caption in Prospectus
- -------------------------------------- -----------------------------
ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust. . . . . . . . . . . . . . . . . . . . . . . . Cover, Definitions
(b) Title of each class of securities issued . . . . . . . . . .Cover, Purchase of Policy and Allocation of Premiums
2. Name & address of each depositor. . . . . . . . . . . . . . . . . Cover, Lincoln Benefit Life Company
3. Name & address of custodian. . . . . . . . . . . . . . . . . . . .Separate Account
4. Name & address of principal underwriter. . . . . . . . . . . . . .Distribution of Policies
5. State in which organized. . . . . . . . . . . . . . . . . . . . . Separate Account
6. Date of organization. . . . . . . . . . . . . . . . . . . . . . . Separate Account
9. Material Litigation. . . . . . . . . . . . . . . . . . . . . . . .Legal Proceedings
GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING SECURITIES AND RIGHTS OF HOLDERS
10. (a), (b) Type of Securities. . . . . . . . . . . . . . . . . . . . Cover, Purchase of Policy and
Allocation of Premiums
(c) Rights of securityholders. . . . . . . . . . . . . . . . . . .Cover, Amount Payable on Surrender of the Policy, Policy
re: withdrawal or redemption Loans, Cancellation and Exchange Rights
(d) Rights of securityholders. . . . . . . . . . . . . . . . . . .Cover, Cancellation and Exchange
re: conversion, transfer or partial withdrawal Rights, Amount Payable on
Surrender of the Policy, Partial
Withdrawals, Allocation of
Premiums, Transfer of Policy Value
(e) Rights of securityholders. . . . . . . . . . . . . . . . . . .Lapse and Reinstatement
re: lapses, default, & reinstatement
(f) Provisions re: voting rights. . . . . . . . . . . . . . . . .Voting Rights
(g) Notice to securityholders. . . . . . . . . . . . . . . . . . .Statements to Policy Owners
(h) Consent of securityholders. . . . . . . . . . . . . . . . . . Additions, Deletions, and
Substitutions of Securities,
Allocation of Premiums
(i) Other principal features. . . . . . . . . . . . . . . . . . . Deductions and Charges, Policy
Benefits and Rights, Policy Value
INFORMATION CONCERNING SECURITIES UNDERLYING TRUST'S SECURITIES
13. (a) With respect to each load, fee, charge & expense. . . . . . . Deductions and Charges
(b) Deductions for sales charges. . . . . . . . . . . . . . . . . Deductions and Charges
(c) Sales load as percentage of amount invested. . . . . . . . . .Not Applicable
(d)-(g) Other loads, fees & expenses. . . . . . . . . . . . . . . Monthly Deduction, Mortality and
Expense Risk Charge, Transfer
Fee, Policy Fee, Portfolio
Expenses
INFORMATION CONCERNING OPERATION OF TRUST
14. Procedure for applications for & issuance of trust's securities. . .Application for a Policy,
Allocation of Premiums,
Distribution of Policies
15. Procedure for receipt of payments from purchases of
trust's securities. . . . . . . . . . . . . . . . . . . . . . . . . Application for a Policy,
Allocation of Premiums,
Safety Net Premium,
Transfer of Policy Value
16. Acquisition and disposition of underlying securities. . . . . . . . Cover, Portfolios
17. (a) Procedure for withdrawal. . . . . . . . . . . . . . . . . . . .Cover, Amount Payable on
Surrender of the Policy, Partial
Withdrawals, Cancellation and Exchange Rights
(b) Redemption or repurchase. . . . . . . . . . . . . . . . . . . .Cover, Amount Payable on
Surrender of the Policy, Partial
Withdrawals, Cancellation and Exchange
Rights
(c) Cancellation or resale. . . . . . . . . . . . . . . . . . . . Not Applicable
18. (a) Income of the Trust. . . . . . . . . . . . . . . . . . . . . .Portfolios, Allocation of
Premiums
19. Procedure for keeping records & furnishing information
to securityholders. . . . . . . . . . . . . . . . . . . . . . . . .Portfolios, Statements to
Policy Owners
21. (a) & (b) Loans to securityholders. . . . . . . . . . . . . . . . .Policy Loans
23. Bonding arrangements for depositor. . . . . . . . . . . . . . . . .Safekeeping of the
Separate Account's Assets
24. Other material provisions. . . . . . . . . . . . . . . . . . . . . General Policy Provisions
ORGANIZATION, PERSONNEL & AFFILIATED PERSONS OF DEPOSITOR
ORGANIZATION & OPERATIONS OF DEPOSITOR
25. Form, state & date of organization of depositor. . . . . . . . . . .Lincoln Benefit Life Company
27. General character of business of depositor. . . . . . . . . . . . . Lincoln Benefit Life Company
28. (a) Officials and affiliates of the depositor. . . . . . . . . . . .Lincoln Benefit Life
Company, Executive
Officers and Directors
of Lincoln Benefit
(b) Business experience of officers and directors of
depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . .Executive Officers and
Directors of Lincoln
Benefit
COMPANIES OWNING SECURITIES OF DEPOSITORS
29. Each company owning 5% of voting securities of depositors. . . . . .Lincoln Benefit Life Company
CONTROLLING PERSONS
30. Control of depositor. . . . . . . . . . . . . . . . . . . . . . . . Lincoln Benefit Life Company
DISTRIBUTION & REDEMPTIONS OF SECURITIES
DISTRIBUTION OF SECURITIES
35. Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . Lincoln Benefit Life Company,
Distribution of Policies
38. (a) General description of method of distribution of
securities . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution of Policies
(b) Selling agreement between trust or depositor & underwriter. . Distribution of Policies
(c) Substance of current agreements . . . . . . . . . . . . . . . .Distribution of Policies
PRINCIPAL UNDERWRITER
39. (a) & (b) Principal Underwriter . . . . . . . . . . . . . . . . . .Distribution of Policies
41. Character of Underwriter's business . . . . . . . . . . . . . . . . Distribution of Policies
OFFERING PRICE OR ACQUISITION VALUE OF SECURITIES OF TRUST
44. Information concerning offering price or acquisition valuation
of securities of trust. (All underlying securities are share in registered
investment companies.) . . . . . . . . . . . . . . . . . . . . . . .Portfolios, Policy Value
REDEMPTION VALUATION OF SECURITIES OF TRUST
46. Information concerning redemption valuation of securities of trust. Portfolios, Policy Value
(All underlying securities are shares in a registered investment
PURCHASE & SALE OF INTEESTS IN UNDERLYING SECURITIES
47. Maintenance of Position . . . . . . . . . . . . . . . . . . . . . . Cover, Separate Account,
Portfolios, Allocation of
Premiums
INFORMATION CONCERNING TRUSTEE OR CUSTODIAN
48. Custodian of trust . . . . . . . . . . . . . . . . . . . . . . . . .Separate Account
50. Lien on trust assets . . . . . . . . . . . . . . . . . . . . . . . .Separate Account
INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. (a) Name and Address of Insurer . . . . . . . . . . . . . . . . . .Cover, Lincoln Benefit Life Company
(b) Types of policies . . . . . . . . . . . . . . . . . . . . . . .Cover, Purchase of Policy
and Allocation of
Premiums, Tax Matters
(c) Risks insured & excluded . . . . . . . . . . . . . . . . . . . Death Benefit,
Misstatement of Age or
Sex, Suicide
(d) Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, Purchase of Policy
and Allocation of Premiums
(e) Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . Death Benefit, Beneficiary
(f) Terms of cancellations & reinstatement. . . . . . . . . . . . .Lapse and Reinstatement
(g) Method of determining amount of premium paid by holder. . . . .Purchase of Policy and
Allocation of Premiums
POLICY OF REGISTRANT
52. (a) & (c) Selection of Portfolios securities. . . . . . . . . . . Additions, Deletions and
Substitutions of Securities
REGULATED INVESTMENT COMPANY
53. (a) Taxable status of trust. . . . . . . . . . . . . . . . . . . . Taxation of the Company and the
Separate Account
FINANCIAL AND STATISTICAL INFORMATION
59. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
* Items not listed are not applicable to this Registration Statement.
PROSPECTUS
FLEXIBLE PREMIUM
VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
ISSUED BY
LINCOLN BENEFIT LIFE COMPANY
IN CONNECTION WITH
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
Street Address: 2940 South 84th Street, Lincoln, NE
68506-4142
Mailing Address: P. O. Box 82532, Lincoln, NE 68501-2532
Telephone Number: 1-800-525-9287
The Policy is designed to provide both life insurance protection and flexibility
in connection with premium payments and death benefits. The Policy is designed
for prospective insured persons age 0-80. Subject to certain restrictions, you
may vary the frequency and amount of the premium payments and increase or
decrease the level of life insurance benefits payable under the Policy.
When the Insured dies, we will pay a Death Benefit to a Beneficiary specified by
you. We will reduce the amount of the Death Benefit payment by any unpaid Policy
loans and any unpaid Policy charges. You may choose one of two Death Benefit
options: (1) a level amount, which generally equals the Face Amount of the
Policy; or (2) a variable amount, which generally equals the Face Amount plus
the Policy Value. While the Policy remains in force, the Death Benefit will not
be less than the maximum of the current Face Amount of the Policy or the Policy
Value multiplied by the applicable corridor percentage specified in the Policy.
The minimum Face Amount of the Policy is $250,000.
We allocate your Premium to the investment options under the Policy in the
proportions that you choose. The Policy currently offers thirty-seven investment
options, each of which is a Subaccount of the Lincoln Benefit Life Variable Life
Account (the "Separate Account"). You may allocate your Policy Value to up to
twenty-one options. Each Subaccount invests exclusively in shares of one of the
following Portfolios:
Janus Aspen Series: Flexible Income Portfolio, Balanced Portfolio, Growth
Portfolio, Aggressive Growth Portfolio, Worldwide Growth Portfolio
Federated Insurance Management Series: Utility Fund II, Fund for U.S. Government
Securities II, High Income Bond Fund II
Fidelity Variable Insurance Products Fund: Money Market Portfolio, Equity-Income
Portfolio, Growth Portfolio, Overseas Portfolio
Fidelity Variable Insurance Products Fund Ii: Asset Manager Portfolio,
Contrafund Portfolio, Index 500 Portfolio
The Alger American Fund: Income and Growth Portfolio, Small Capitalization
Portfolio, Growth Portfolio, MidCap Growth Portfolio, Leveraged AllCap Portfolio
Scudder Variable Life Investment Fund: Bond Portfolio, Balanced Portfolio,
Growth and Income Portfolio, Global Discovery Portfolio, International Portfolio
Strong Variable Insurance Funds, Inc.: Discovery Fund II, MidCap Growth Fund II,
Strong Opportunity Fund II, Inc.
T. Rowe Price International Series, Inc.: T. Rowe Price International Stock
Portfolio
T. Rowe Price Equity Series, Inc.: New America Growth Portfolio, T. Rowe Price
Mid-Cap Growth Portfolio, T. Rowe Price Equity Income Portfolio
MFS Variable Insurance Trust: Growth with Income Series, Research Series,
Emerging Growth Series, Total Return Series, New Discovery Series
Some of the Portfolios described in this Prospectus may not be available in your
Policy. We may make other investment options available in the future.
The Policy does not have a guaranteed minimum Policy Value. Your Policy Value
will rise and fall, depending on the investment performance of the Portfolios
underlying the Subaccounts to which you allocate your Premiums. You bear the
entire investment risk on amounts allocated to the Subaccounts. The investment
policies and risks of each Portfolio are described in the accompanying
prospectus for the Portfolios. The Policy Value will also reflect Premiums,
amounts withdrawn, and any insurance or other charges.
The Policy will remain in force as long as the Surrender Value is sufficient to
pay the monthly charges under the Policy. In addition, during the first five
Policy Years, or until the Policy Anniversary after the Insured's 80th birthday,
if earlier, we guarantee that the Policy will remain in effect regardless of
changes in the Policy Value, as long as your total Premiums (less partial
withdrawals and Policy Debt) at least equal the applicable Safety Net Premiums,
as described on page [ ].
We will not accept any Premium which would cause the Policy not to qualify as a
life insurance contract under the Internal Revenue Code of 1986 (the "Tax
Code").
You may cancel the Policy by returning it to us within 10 days after you receive
it, or after whatever longer period may be permitted by state law. We will
refund the Policy Value as of the date we receive your Policy, plus any charges
previously deducted, unless your state requires a refund of Premium.
It may not be advantageous for you to replace existing insurance coverage or buy
additional insurance if you already own a variable life insurance policy.
You should read this prospectus with the current prospectuses for the Portfolios
listed above. If any of the prospectuses are missing or outdated, please contact
us and we will send you the prospectus you need.
Please read this prospectus carefully and retain it for your future reference.
This Policy may not be available in all states.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
Variable life insurance policies involve risks, including possible loss of
principal. They are not a deposit of any bank or insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
The date of this prospectus is ____________, 2000.
TABLE OF CONTENTS
Page
DEFINITIONS..................................................................
QUESTIONS AND ANSWERS ABOUT YOUR POLICY......................................
PURCHASE OF POLICY AND ALLOCATION OF PREMIUMS................................
Application for a Policy................................................
Premiums................................................................
Premium Limits..........................................................
Modified Endowment Contracts............................................
Safety Net Premium......................................................
Allocation of Premiums..................................................
Policy Value............................................................
Accumulation Unit Value.................................................
Transfer of Policy Value................................................
Transfers Authorized by Telephone.......................................
Dollar Cost Averaging...................................................
Portfolio Rebalancing...................................................
Specialized Uses of the Policy..........................................
THE SUBACCOUNTS AND PORTFOLIOS...............................................
Subaccounts.............................................................
Portfolios..............................................................
Other Information About the Portfolios..................................
Voting Rights...........................................................
Additions, Deletions, and Substitutions of Securities...................
POLICY BENEFITS AND RIGHTS...................................................
Death Benefit...........................................................
Death Benefit Options...................................................
Change in Face Amount...................................................
Optional Insurance Benefits.............................................
Policy Loans............................................................
Amount Payable on Surrender of the Policy...............................
Partial Withdrawals.....................................................
Settlement Options......................................................
Maturity................................................................
Lapse and Reinstatement.................................................
Cancellation and Exchange Rights........................................
Postponement of Payments................................................
DEDUCTIONS AND CHARGES.......................................................
Monthly Deduction.......................................................
Policy Fee..............................................................
Distribution Expense Charge.............................................
Mortality and Expense Risk Charge.......................................
Cost of Insurance Charge................................................
Deduction for Separate Account Income Taxes.............................
Portfolio Expenses......................................................
Transfer Fee............................................................
GENERAL POLICY PROVISIONS....................................................
Statements to Policy Owners.............................................
Limit on Right to Contest...............................................
Suicide.................................................................
Misstatement of Age or Sex..............................................
Beneficiary.............................................................
Assignment..............................................................
Dividends...............................................................
TAX MATTERS..................................................................
Taxation of the Company and the Separate Account........................
Taxation of Policy Benefits.............................................
Modified Endowment Contracts............................................
Diversification Requirements............................................
Ownership Treatment.....................................................
DESCRIPTION OF LINCOLN BENEFIT LIFE COMPANY AND THE SEPARATE ACCOUNT.........
Lincoln Benefit Life Company............................................
Executive Officers and Directors of Lincoln Benefit.....................
Separate Account........................................................
Safekeeping of the Separate Account's Assets............................
State Regulation of Lincoln Benefit.....................................
MARKET TIMING AND ASSET ALLOCATION SERVICES..................................
DISTRIBUTION OF POLICIES.....................................................
LEGAL PROCEEDINGS............................................................
LEGAL MATTERS................................................................
REGISTRATION STATEMENT.......................................................
EXPERTS......................................................................
FINANCIAL STATEMENTS.........................................................
APPENDIX.....................................................................
This Prospectus does not constitute an offering in any jurisdiction in which
such offering may not be lawfully made. Lincoln Benefit does not authorize any
information or representations regarding the offering described in this
Prospectus other than as contained in this Prospectus.
DEFINITIONS
Please refer to this list for the meaning of the following terms:
Accumulation Unit - An accounting unit of measurement which we use to calculate
the value of a Subaccount.
Age - The Insured's age at his or her last birthday.
Beneficiary(ies) - The person(s) you name to receive the Death Benefit under the
Policy.
Death Benefit - The amount payable to the Beneficiary under the Policy upon the
death of the Insured, before payment of any Policy Debt or unpaid Policy
Charges.
Face Amount - The initial amount of insurance under your Policy, adjusted for
any changes in accordance with the terms of your Policy.
Grace Period - A 61-day period during which the Policy will remain in force to
permit you to pay sufficient additional Premium to keep the Policy from lapsing.
Insured - The person whose life is insured under the Policy.
Issue Date - The date on which the Policy is issued. It is used to determine
Policy Anniversaries, Policy Years and Policy Months.
Loan Account - An account established in our general account for amounts
transferred from the Subaccounts as security for outstanding Policy loans.
Monthly Automatic Payment - A method of paying a Premium each month
automatically, for example by bank draft or salary deduction.
Monthly Deduction - The amount deducted from Policy Value on each Monthly
Deduction Day for the policy fee, mortality and expense risk charge, cost of
insurance charge, and the cost of any benefit riders.
Monthly Deduction Day - The same day in each month as the Issue Date. The day of
the month on which Monthly Deductions are taken from your Policy Value.
Net Death Benefit - The Death Benefit, less any Policy Debt and Unpaid Policy
Charges.
Net Investment Factor - The factor we use to determine the change in value of an
Accumulation Unit in any Valuation Period. We determine the Net Investment
Factor separately for each Subaccount.
Policy Anniversary - The same day and month as the Issue Date for each
subsequent year the Policy remains in force.
Policy Debt - The sum of all unpaid Policy loans and accrued loan interest.
Policy Owner ("You") - The person(s) having the privileges of ownership defined
in the Policy. The Policy Owner may or may not be the same person as the
Insured. If your Policy is issued pursuant to a retirement plan, your ownership
privileges may be modified by the plan.
Policy Value - The sum of the values of your interests in the Subaccounts of the
Separate Account and the Loan Account. The amount from which the Monthly
Deductions are made and the Death Benefit is determined.
Policy Year - Each twelve-month period beginning on the Issue Date and each
Policy Anniversary.
Portfolio(s) - The underlying mutual funds in which the Subaccounts invest. Each
Portfolio is an investment company registered with the SEC or a separate
investment series of a registered investment company.
Premium - Amounts paid to us as premium for the Policy by you or on your behalf.
Qualified Plan - A pension or profit-sharing plan established by a corporation,
partnership, sole proprietor, or other eligible organization that is qualified
for favorable tax treatment under Section 401(a) or 403(b) of the Tax Code.
Separate Account - The Lincoln Benefit Life Variable Life Account, which is a
segregated investment account of Lincoln Benefit.
Subaccount - A subdivision of the Separate Account, which invests wholly in
shares of one of the Portfolios.
Surrender Value - The Policy Value less any Policy Debt. The Surrender Value
must be positive for the Policy to remain in effect, unless the Safety Net
Premium feature is in effect.
Tax Code - The Internal Revenue Code of 1986, as amended.
Valuation Date - Each day the New York Stock Exchange is open for business.
Valuation Period - The period of time over which we determine the change in the
value of the Subaccounts in order to price Accumulation Units. Each Valuation
Period begins at the close of normal trading on the New York Stock Exchange
("NYSE"), currently 4:00 p.m. Eastern time, on each Valuation Date and ends at
the close of the NYSE on the next Valuation Date.
QUESTIONS AND ANSWERS
ABOUT YOUR POLICY
These are answers to questions that you may have about some of the most
important features of your Policy. The Policy is more fully described in the
remainder of the Prospectus. Please read the Prospectus carefully.
1. What Is A Flexible Premium Variable Universal Life Insurance Policy?
The Policy has a Death Benefit, Policy Value, and other features of life
insurance providing fixed benefits. It is a "flexible premium" policy because
you have a great amount of flexibility in determining when and how much premium
you want to pay. It is a "variable" policy because the Death Benefit and Policy
Value vary according to the investment performance of the Portfolios to which
you have allocated your Premiums. The Policy Value is not guaranteed. Payment of
the Death Benefit may be guaranteed under the Safety Net Premium provision. This
Policy gives you the opportunity to take advantage of any increase in your
Policy Value, but you also bear the risk of any decrease.
2. What Are The Death Benefit Options?
While the Policy is in force, we will pay a Death Benefit to the Beneficiary
upon the death of the Insured. The Policy provides for two Death Benefit
options. Under Option 1, the Death Benefit is equal to the greater of your
Policy's Face Amount and the Policy Value multiplied by a specified percentage.
Under Option 2, the Death Benefit is equal to the greater of your Policy's Face
Amount plus the Policy Value on the Insured's date of death or the Policy Value
multiplied by a specified percentage. Decreases in the Policy Value will never
cause the Death Benefit to be less than the Face Amount. Before we pay the Death
Benefit to the Beneficiary, however, we will subtract an amount sufficient to
repay any outstanding Policy Debt and to pay any due and unpaid charges.
3. What Is The Safety Net Premium Feature?
Unless otherwise required by your state, we agree to keep the Policy in force
for a specified period, regardless of the investment performance of the
Portfolios, as long as your total Premiums paid (as reduced to reflect
withdrawals and Policy Debt) at least equals the cumulative Safety Net Premium
amount shown in your Policy. If the Insured is age 75 or less at the Issue Date,
the specified period will be the first five Policy Years. Otherwise, it will run
from the Issue Date until the next Policy Anniversary after the Insured's 80
birthday.
To keep the Safety Net Premium feature in effect, on each Monthly Deduction Day
your total Premiums (less withdrawals and Policy Debt) must at least equal the
total amount you would have paid if you had paid the Safety Net Premium each
month. If you have not paid sufficient Premiums, we will notify you and give you
61 days to remedy the shortfall. If you do not pay enough additional Premium
within this 61-day period, the Safety Net Premium feature will terminate and may
not be reinstated, even if you make up the shortfall after the end of the 61-day
period.
When the Safety Net Premium feature is not in effect, your Policy will remain in
force as long as the Surrender Value is large enough to pay the Monthly
Deductions on your Policy as they come due. If on any Monthly Deduction Day the
Surrender Value is less than the Monthly Deduction due, your Policy will enter
the Grace Period. If you do not pay sufficient additional Premium, at the end of
the Grace Period your Policy will terminate.
4. How Will My Policy Value Be Determined?
Your Premiums are invested in one or more of the Subaccounts of the Separate
Account, as you instruct us. Your Policy Value is the sum of the values of your
interests in the Subaccounts of the Separate Account, plus the value in the Loan
Account. Your Policy Value will depend on the investment performance of the
Subaccounts, as well as the Premiums paid, partial withdrawals, and charges
assessed. We do not guarantee a minimum Policy Value.
5. What Are The Premiums For This Policy?
You have considerable flexibility as to the timing and amount of your Premiums.
You have a required Premium in your Policy, which is based on your Policy's Face
Amount and the Insured's age, sex, and risk class. You do not have to pay the
required Premium after the first Policy Year. To take advantage of the Safety
Net Premium feature, you must pay the cumulative Safety Net Premiums due.
Otherwise, you may pay any level of Premium, as long as the Premium would not
cause your Policy to lose its status as a life insurance contract under the Tax
Code. Your Policy also has a planned periodic Premium. You establish a planned
periodic Premium when you purchase a Policy. You are not required to pay the
planned periodic Premium, and we will not terminate your Policy merely because
you did not pay a planned periodic Premium.
6. Can I Increase Or Decrease My Policy's Face Amount?
Yes, you have considerable flexibility to increase or decrease your Policy's
Face Amount. You may request an increase and/or a decrease after the first
Policy Year by sending us a written request. Your requested increase must be at
least $10,000. If you request an increase in Face Amount, you must provide us
with evidence of insurability that meets our underwriting standards. An increase
in the Face Amount of your Policy will increase the charges deducted from your
Policy Value. We will not decrease the Face Amount of your Policy below
$250,000. For more detail, see "Change in Face Amount," on page [ ].
7. How Are My Premiums Allocated?
100% of your Premiums are allocated to the Policy Value.
When you apply for the Policy, you specify in your application how to allocate
your Premiums among the Subaccounts. You must use whole number percentages and
the total allocations must equal 100%. You may change your allocation
percentages at any time by notifying us in writing.
Generally, we will allocate your Premiums to the Subaccounts as of the date we
review them in our home office. If a Premium requires an underwriting, the
Premium will not be allocated nor will it earn interest prior to the Issue Date.
Once underwriting approval and Premium are received, we will allocate that
Premium in accordance with your most recent instructions. If there are
outstanding requirements when we issue the Policy which prevent us from placing
your Policy in force, your Premiums will not be allocated until all requirements
are satisfied.
In some states, we are required to return at least your Premium if you cancel
your Policy during the "free-look" period. In those states, currently we
allocate any Premium received before the end of the free-look period as
described above. In the future, however, if you live in one of those states, we
reserve the right to delay allocating your Premiums to the Subaccounts you have
selected until 20 days after the Issue Date or, if your state's free look period
is longer than ten days, for ten days plus the period required by state law. We
will allocate Premiums received during that time to the Fidelity Money Market
Sub-Account.
You may transfer Policy Value among the Subaccounts while the Policy is in
force, by writing to us or calling us at 1-800-865-5237. While we currently are
not charging a transfer fee, the Policy gives us the right to impose a transfer
fee of up to $10 upon the second and each subsequent transfer in a single
calendar month. For more detail, see "Transfer of Policy Value" and "Transfers
Authorized by Telephone," on page [ ]. You may also use our automatic Dollar
Cost
Averaging program or our Portfolio Rebalancing program. You may not use both
programs at the same time.
Under the Dollar Cost Averaging program, amounts are automatically transferred
at regular intervals from a Subaccount of your choosing. Transfers may be made
monthly, quarterly, or annually. For more detail, see "Dollar Cost Averaging,"
on page [ ].
Under the Portfolio Rebalancing program, you can maintain the percentage of your
Policy Value allocated to each Subaccount at a pre-set level. Investment results
will shift the balance of your Policy Value allocations. If you elect
rebalancing, we will automatically transfer your Policy Value back to the
specified percentages at the frequency (monthly, quarterly, semiannually,
annually) that you specify. We will automatically terminate this program if you
request a transfer outside the program. For more detail, see "Portfolio
Rebalancing," on page [ ]6.
8. What Are My Investment Choices Under The Policy?
You can allocate and reallocate your Policy Value among the Subaccounts, each of
which in turn invests in a single Portfolio. Under the Policy, the Separate
Account currently invests in the following Portfolios:
Fund Portfolio(s)
- ---------------------------------------------- -----------------------------------------
Janus Aspen Series Flexible Income Portfolio
Balanced Portfolio
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
Federated Insurance Management Series Utility Fund II
Fund for U.S. Government Securities II
High Income Bond Fund II
Fidelity Variable Insurance Products Fund Money Market Portfolio
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity Variable Insurance Products Fund II Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
The Alger American Fund Income and Growth Portfolio
Small Capitalization Portfolio
Growth Portfolio
MidCap Growth Portfolio
Leveraged AllCap Portfolio
Scudder Variable Life Investment Fund Bond Portfolio
Balanced Portfolio
Growth and Income Portfolio
Global Discovery Portfolio
International Portfolio
Strong Variable Insurance Funds, Inc. Discovery Fund II
MidCap Growth Fund II
Strong Opportunity Fund II, Inc. Opportunity Fund II
T. Rowe Price International Series, Inc. T. Rowe Price International Stock Portfolio
T. Rowe Price Equity Series T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price New America Growth Portfolio Inc.
T. Rowe Price Equity Income Portfolio
MFS Variable Insurance Trust Growth with Income Series
Research Series
Emerging Growth Series
Total Return Series
New Discovery Series
Each Portfolio holds its assets separately from the assets of the other
Portfolios. Each Portfolio has distinct investment objectives and policies,
which are described in the Prospectuses for the Portfolios.
9. May I Take Out A Policy Loan?
Yes, you may borrow money from us using your Policy as security for the loan.
The maximum loan amount is equal to 90% of the Surrender Value. Other
restrictions may apply if your Policy is issued in connection with a Qualified
Plan. For more detail, see "Policy Loans," on page [ ].
10. What Charges Are Deducted From My Policy Value?
We will take a Monthly Deduction from your Policy Value. The Monthly Deduction
consists of the following charges:
(a) A monthly policy fee of $7.50;
(b) A monthly mortality and expense risk charge;
(c) A distribution expense charge;
(d) A cost of insurance charge; and
(e) The cost of any additional benefits provided to you by rider.
The mortality and expense risk charge for the first fifteen Policy Years will be
0.60% (on an annual basis) of the Policy Value allocated to the Subaccounts.
Thereafter, we intend to charge an annual rate of 0.40%, and we guarantee that
we never charge more than 0.60%.
The cost of insurance charge covers our anticipated mortality costs. We
determine it separately for the initial Face Amount of your Policy and each
subsequent increase in Face Amount.
The distribution expense charge of 1.00% (on an annual basis) of the Policy
Value allocated to the Subaccounts, for the first 20 Policy Years, covers a
portion of the sales expenses we incur in distributing the Policies. Sales and
distribution expenses include agents' commissions, advertising, and the printing
of Prospectuses.
The Monthly Deduction is deducted pro rata from your interest in the
Subaccounts. The mortality and expense risk and distribution expense charges,
while expressed as an annual percentage of average daily Policy Value are
computed and deducted monthly by canceling units credited to your Policy.
The charges assessed under the Policy are described in more detail in
"Deductions and Charges," beginning on page [ ].
In addition to our charges under the Policy, each Portfolio deducts amounts from
its assets to pay its investment advisory fee and other expenses.
11. Do I Have Access To The Value Of My Policy?
While the Policy is in force, you may surrender your Policy for the Surrender
Value. Upon surrender, life insurance coverage under the Policy will end. You
may also withdraw part of your Policy Value through a partial withdrawal. A
partial withdrawal must equal at least $500. For more detail, see "Amount
Payable on Surrender of the Policy" and "Partial Withdrawals," on page [ ]. Each
time you take a partial withdrawal, we may deduct a partial withdrawal service
fee of $10 from the amount withdrawn.
12. What Are The Tax Consequences Of Buying This Policy?
Your Policy is structured to meet the definition of a life insurance contract
under the Tax Code. We may need to limit the amount of Premiums you pay under
the Policy to ensure that your Policy continues to meet that definition.
Current federal tax law generally excludes all death benefits from the gross
income of the beneficiary of a life insurance policy. In addition, you generally
are not subject to taxation on any increase in the Policy Value until it is
withdrawn. Generally, you will be taxed on surrender proceeds and the proceeds
of any partial withdrawals only if those amounts, when added to all previous
distributions, exceed the total Premiums paid. Amounts received upon surrender
or withdrawal in excess of Premiums paid will be treated as ordinary income.
Special rules govern the tax treatment of life insurance policies which meet the
federal definition of modified endowment contracts. Depending on the amount and
timing of your Premiums, your Policy may meet that definition. Under current tax
law, death benefit payments under modified endowment contracts, like death
benefit payments under life insurance contracts, generally are excluded from the
gross income of the beneficiary. Withdrawals and policy loans, however, are
treated differently. Amounts withdrawn and policy loans are treated first as
income, to the extent of any gain, and then as a return of premium. The income
portion of the distribution is includable in your taxable income. Also, an
additional 10% penalty tax is generally imposed on the taxable portion of
amounts received before age 59 1/2. For more information on the tax treatment of
the Policy, see "Tax Matters," beginning on page [ ].
13. Can I Return This Policy After It Has Been Delivered?
You may cancel your Policy by returning it to us within ten days after you
receive it, or after whatever longer period may be permitted by state law. If
you return your Policy, the Policy terminates and, in most states, we will pay
you an amount equal to your Policy Value on the date we receive the Policy from
you, plus any charges previously deducted. In some states, we are required to
send you the amount of your Premiums. In those states, we currently are
allocating your initial Premium as described in the answer to question 7 above.
In the future, however, if you live in one of those states, we reserve the right
to delay allocating your Premiums to the Subaccounts you have selected until 20
days after the Issue Date or, if your state's free look period is longer than
ten days, for ten days plus the period required by state law. During that time,
we will allocate your Premiums to the Fidelity Money Market Sub-Account. Your
Policy will contain specific information about your free-look rights in your
state.
In addition, during the first two Policy Years or the first two years after an
increase in the Face Amount, if the Policy is in force you may convert it into a
non-variable universal life insurance policy.
PURCHASE OF POLICY AND ALLOCATION OF PREMIUMS
Application For A Policy. You may apply to purchase a Policy by submitting a
written application to us at our home office. We generally will not issue
Policies to insure people who are older than age 80. The minimum Face Amount for
a Policy is $250,000. Before we issue a Policy, we will require you to submit
evidence of insurability satisfactory to us. Acceptance of your application is
subject to our underwriting rules. We reserve the right to reject your
application for any lawful reason. If we do not issue a Policy to you, we will
return your Premium to you. We reserve the right to change the terms or
conditions of your Policy to comply with changes in the applicable law.
We will issue your Policy when we have determined that your application meets
our underwriting requirements. We will apply our customary underwriting
standards to the proposed Insured. If on the Issue Date there are outstanding
requirements that prevent us from placing your policy in force, we will allocate
your Premium when all requirements have been met. An example of an outstanding
requirement is an amendment to your application that requires your signature.
We will commence coverage of the Insured under the Policy, on the later of:
o the Issue Date,
o the date that we receive your first Premium, or
o the date that all requirements have been met.
If you pay a Premium with your application and your requested Face Amount is
less than $500,000, we will provide the Insured with temporary conditional
insurance only if you meet all of the terms of a conditional receipt. The
temporary conditional insurance provides coverage during the underwriting of
your application but only if you are ultimately approved for coverage on the
same basis as the risk classification and Face Amount of coverage for which you
applied. This temporary conditional coverage starts when you complete your
application and pay the first Premium, unless a medical exam or lab test results
are required. In that event, temporary conditional coverage starts when all
medical exams and lab tests have been completed. The Issue Date determines
Monthly Deduction Days, Policy months, and Policy Years.
Premiums. During the first Policy Year, you must pay an amount at least equal to
the required Premium shown in your Policy. We will send you a reminder notice if
you pay annually, semi-annually, or quarterly. You may also make a Monthly
Automatic Payment.
After the first Policy Year, you may pay additional Premium at any time, and in
any amount, as long as your Premium would not cause your Policy to lose its
status as a life insurance contract under the Tax Code, as explained below.
While your Policy also will show a planned periodic Premium amount, you are not
required to pay planned periodic Premiums. You set your planned periodic Premium
when you purchase your Policy. Your Policy will not lapse, however, merely
because you did not pay a planned periodic Premium.
Even if you pay all of the planned periodic Premiums, however, your Policy
nevertheless may enter the Grace Period and thereafter lapse if you have not
paid the required Safety Net Premium amount and the Surrender Value is no longer
enough to pay the Monthly Deductions. However, paying planned periodic Premiums
will generally provide greater benefits than if a lower amount of Premium is
paid. Paying planned periodic Premiums can also help to keep your Policy in
force if your payments are greater than the Safety Net Premium amount.
Premiums must be sent to us at our home office. Unless you request otherwise in
writing, we will treat all payments received while a Policy loan exists as new
Premium.
Premium Limits. Before we will accept any Premium that would require an increase
in the net amount at risk under the Policy, you first must provide us with
evidence of insurability. The Tax Code imposes limits on the amount of Premium
that can be contributed under a life insurance contract. If you exceed this
limit, your Policy would lose its favorable federal income tax treatment under
the Tax Code. Accordingly, we will not accept any Premium which would cause your
Policy to exceed this limit, unless you increase the Face Amount of your Policy
appropriately. To obtain this increase, you must submit a written request to us
and provide evidence of insurability meeting our then current underwriting
standards. Otherwise, we will only accept the portion of your Premium that would
cause your total Premiums to equal the maximum permitted amount and we will
return the excess to you. In addition, we will not accept any additional Premium
from you until we can do so without exceeding the limit set by the Tax Code.
Modified Endowment Contracts. Under certain circumstances, a Policy could be
classified as a "modified endowment contract," a category of life insurance
contract defined in the Tax Code. If your Policy were to become a modified
endowment contract, distributions and loans from the Policy could result in
current taxable income for you, as well as other adverse tax consequences. These
tax consequences are described in more detail in "Tax Matters--Modified
Endowment Contracts," on page [ ]6.
Your Policy could be deemed to be a modified endowment contract if, among other
things, you pay too much Premium or the Death Benefit is reduced. We will
monitor the status of your Policy and advise you if you need to take action to
prevent the Policy from being deemed to be a modified endowment contract. If you
pay a Premium that would result in your Policy being deemed a modified endowment
contract, we will notify you and allow you to request a refund of the excess
Premium, or other action, to avoid having your Policy being deemed a modified
endowment contract. If, however, you choose to have your Policy deemed a
modified endowment contract, we will not refund the Premium.
If you replace a modified endowment contract issued by another insurer with a
Policy, your Policy will also be deemed to be a modified endowment contract. Our
ability to determine whether a replaced policy issued by another insurer is a
modified endowment contract is based solely on the sufficiency of the policy
data we receive from the other insurer. We do not consider ourselves to be
liable to you if that data is insufficient to accurately determine whether the
replaced policy is a modified endowment contract. You should discuss this issue
with your tax adviser if it pertains to your situation. Based on the information
provided to us, we will notify you as to whether you can contribute more Premium
to your Policy without causing it to become a modified endowment contract.
Safety Net Premium. The Safety Net Premium feature is intended to enable you to
ensure that your Policy will remain in force during a specified period
regardless of changes in the Policy Value. If the Insured is age 75 or under at
the Issue Date, the specified period is the first five Policy Years. For issue
ages 76-79, the specified period is to the policy anniversary following the
insured's 80th birthday. Please check with your local representative on the
Safety Net period approved in your state.
As a general rule, your Policy will enter the Grace Period, and may lapse, if
the Surrender Value is not sufficient to pay a Monthly Deduction when it is due.
Under the Safety Net Premium feature, however, we guarantee that regardless of
declines in your Policy Value, your Policy will not enter the Grace Period as
long as your total Premiums paid since the Issue Date, less partial withdrawals
and outstanding Policy loans, are greater than the monthly Safety Net Premium
amount times the number of months since the Issue Date.
During the first Policy Year, the Safety Net Premium amount will equal the
required Premium. As a result, if you pay your required Premium on a timely
basis, the Safety Net Premium feature will remain in effect.
If at any time your total Premiums, less partial withdrawals and Policy Debt,
are less than the product of the monthly Safety Net Premium times the number of
Policy Months since the Issue Date, we will let you know and you will have 61
days to satisfy the shortfall. If you do not, the Safety Net Premium guarantee
will end and it cannot be reinstated. After the Safety Net Premium guarantee is
no longer in effect, the Policy will stay in force only as long as the Surrender
Value is sufficient to pay the Monthly Deductions. For more detail about the
circumstances in which the Policy will lapse, see "Lapse and Reinstatement," on
page [ ].
Allocation Of Premiums. Your Premiums are allocated to the Subaccount(s) in the
proportions that you have selected. You must specify your allocation percentages
in your Policy application. Percentages must be in whole numbers and the total
allocation must equal 100%.
We will allocate your subsequent Premiums in those percentages, until you give
us new allocation instructions.
You initially may allocate your Policy Value to up to twenty-one of the 37
available options, counting each Subaccount as one option. You may add or delete
Subaccounts from your allocation instructions, but we will not execute
instructions that would cause you to have Policy Value in more than twenty-one
options. In the future we may waive this limit.
Usually, we will allocate your initial Premium to the Subaccounts, as you have
instructed us, on the Issue Date. If you do not pay your first Premium until
after the Issue Date, we will allocate your initial Premium to the Subaccounts
on the date we receive it. If there are outstanding requirements when we issue
the Policy which prevent us from placing your Policy in force, your Premiums
will not be allocated until all requirements are satisfied. No earnings or
interest will be credited before the Issue Date.
In some states, we are required to return at least your Premium if you cancel
your Policy during the "free-look" period. In those states, currently we
allocate any Premium received before the end of the free-look period as
described above. In the future, however, if you live in one of those states, we
reserve the right to delay allocating your Premiums to the Subaccounts you have
selected until 20 days after the Issue Date or, if your state's free look period
is longer than ten days, for ten days plus the period required by state law.
During that time, we will allocate your Premiums to the Fidelity Money Market
Sub-Account.
We will make all valuations in connection with the Policy on the date a Premium
is received or your request for other action is received, if that date is a
Valuation Date and a date that we are open for business. Otherwise we will make
that determination on the next succeeding day which is a Valuation Date and a
date on which we are open for business.
Policy Value. Your Policy Value is the sum of the value of your Accumulation
Units in the Subaccounts you have chosen plus your Loan Account. Your Policy
Value will change daily to reflect the performance of the Subaccounts you have
chosen, the addition of Premiums, and the subtraction of partial withdrawals and
charges assessed. There is no minimum guaranteed Policy Value.
On the Issue Date or, if later, the date your first Premium is received, your
Policy Value will equal the Premium less the Monthly Deduction for the first
Policy Month.
On each Valuation Date, the portion of your Policy Value in a particular
Subaccount will equal:
o The total value of your Accumulation Units in the Subaccount;
plus
o Any Premium received from you and allocated to the Subaccount
during the current Valuation Period; plus
o Any Policy Value transferred to the Subaccount during the
current Valuation Period; minus
o Any Policy Value transferred from the Subaccount during the
current Valuation Period; minus
o Any amounts withdrawn by you (plus the applicable withdrawal
charge) from the Subaccount during the current Valuation
Period; minus
o The portion of any Monthly Deduction allocated to the
Subaccount during the current Valuation Period for the Policy
Month following the Monthly Deduction Day.
All Policy Values equal or exceed those required by law. Detailed explanations
of methods of calculation are on file with the appropriate regulatory
authorities.
Accumulation Unit Value. The Accumulation Unit Value for each Subaccount will
vary to reflect the investment experience of the corresponding Portfolio. We
will determine the Accumulation Unit Value for each Subaccount on each Valuation
Day. A Subaccount's Accumulation Unit Value for a particular Valuation Day will
equal the Subaccount's Accumulation Unit Value on the preceding Valuation Day
multiplied by the Net Investment Factor for that Subaccount for the Valuation
Period then ended. The Net Investment Factor for each Subaccount is (x) divided
by (y), where:
(x) is the sum of:
o the asset value per share of the corresponding Portfolio at
the end of the current Valuation Period and
o the per share amount of any dividend or capital gains
distribution by that Portfolio if the ex-dividend date
occurs in that Valuation Period; and
(y) is the net asset value per share of the corresponding
Portfolio at the end of the immediately preceding Valuation
Period.
You should refer to the Prospectuses for the Portfolios for a description of how
the assets of each Portfolio are valued, since that determination has a direct
bearing on the Net Investment Factor of the corresponding Subaccount and,
therefore, your Policy Value. For more detail, see "Policy Value," on page [ ].
Transfer Of Policy Value. While the Policy is in force, you may transfer Policy
Value among the Subaccounts in writing or by telephone. Currently, there is no
minimum transfer amount, except in states where a minimum transfer amount is
required by law. We may set a minimum transfer amount in the future.
You currently may not have Policy Value in more than twenty-one Subaccounts.
Accordingly, we will not perform a transfer that would cause your Policy to
exceed that limit. We may waive this limit in the future.
As a general rule, we only make transfers on days when we and the NYSE are open
for business. If we receive your request on one of those days, we will make the
transfer that day. We close our offices for business on certain days immediately
preceding or following certain national holidays when the NYSE is open for
business. For calendar year 2000, our offices will be closed on November 24th.
For transfers requested on this day, we will make the transfer on the first
subsequent day on which we and the NYSE are open.
Transfers Authorized By Telephone. You may make transfers by telephone, if you
first send us a completed authorization form. The cut off time for telephone
transfer requests is 4:00 p.m. Eastern time. Calls completed before 4:00 p.m.
will be effected on that day at that day's price. Calls completed after 4:00
p.m. will be effected on the next day on which we and the NYSE are open for
business, at that day's price.
In the future, we may charge you the transfer fee described on page [ ],
although currently we are waiving it. In addition, we may suspend, modify or
terminate the telephone transfer privilege at any time without notice.
We use procedures that we believe provide reasonable assurance that telephone
authorized transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
Dollar Cost Averaging. Under our Dollar Cost Averaging program, while the Policy
is in force you may authorize us to transfer a fixed dollar amount at fixed
intervals from a Subaccount of your choosing. The interval between transfers may
be monthly, quarterly, or annually, at your option. The transfers will be made
at the Accumulation Unit Value on the date of the transfer. The transfers will
continue until you instruct us otherwise, or until your chosen source of
transfer payments is exhausted. Currently, the minimum transfer amount is $100
per transfer. We may change this minimum or grant exceptions. If you elect this
program, the first transfer will occur one interval after your Issue Date.
Your request to participate in this program will be effective when we receive
your completed application at the P.O. Box given on the first page of this
Prospectus. Call or write us for a copy of the application. You may elect to
increase, decrease or change the frequency or amount of Purchase Payments under
a Dollar Cost Averaging program.
The theory of Dollar Cost Averaging is that by spreading your investment over
time, you may be able to reduce the effect of transitory market conditions on
your investment. In addition, because a given dollar amount purchases more units
when the unit prices are relatively low rather than when the prices are higher,
in a fluctuating market, the average cost per unit may be less than the average
of the unit prices on the purchase dates. However, participation in this program
does not assure you of a greater profit from your purchases under the program,
nor will it prevent or necessarily reduce losses in a declining market.
While we refer to this program of periodic transfers generally as Dollar Cost
Averaging, periodic transfers from a Subaccount other than a Subaccount such as
the Fidelity Money Market Subaccount, which maintains a stable net asset value,
are less likely to produce the desired effects of Dollar Cost Averaging. You may
not use Dollar Cost Averaging and Portfolio Rebalancing at the same time.
Portfolio Rebalancing. Portfolio Rebalancing allows you to maintain the
percentage of your Policy Value allocated to each Subaccount at a pre-set level.
For example, you could specify that 30% of your Policy Value should be in the
Balanced Portfolio, 40% in the Growth Portfolio-Janus Aspen Series and 30% in
the Fidelity VIP II Contrafund Portfolio. Over time, the variations in each
Subaccount's investment results will shift the balance of your Policy Value
allocations. Under the Portfolio Rebalancing feature, we will automatically
transfer your Policy Value, including new Premiums (unless you specify
otherwise), back to the percentages you specify. Portfolio Rebalancing is
consistent with maintaining your allocation of investments among market
segments, although it is accomplished by reducing your Policy Value allocated to
the better performing segments.
You may choose to have rebalances made monthly, quarterly, semi-annually, or
annually. We will not charge a transfer fee for Portfolio Rebalancing. No more
than eight Subaccounts can be included in a Portfolio Rebalancing program at one
time. We will automatically terminate this option if you request any transfers
outside the Portfolio Rebalancing program. If you wish to resume the Portfolio
Rebalancing after it has been canceled, then you must complete a new Portfolio
Rebalancing form and send it to our home office.
You may request Portfolio Rebalancing at any time by submitting a completed
written request to us at the address given on the first page of this Prospectus.
Please call or write us for a copy of the request form. If you stop Portfolio
Rebalancing, you must wait 30 days to begin again. The date of your rebalancing
must coincide with the same day of the month as your Issue Date. If you request
rebalancing on your Policy application but do not specify a date for your first
rebalancing, it will occur one period after the Issue Date. Otherwise, your
first rebalancing will occur one period after we receive your completed request
form. All subsequent rebalancing will occur at the intervals you have specified
on the day of the month that coincides with the same day of the month as your
Issue Date.
Generally, you may change the allocation percentages, frequency, or choice of
Subaccounts at any time. If your total Policy Value subject to rebalancing falls
below any minimum value that we may establish, we may prohibit or limit your use
of Portfolio Rebalancing. You may not use Dollar Cost Averaging and Portfolio
Rebalancing at the same time. We may change, terminate, limit, or suspend
Portfolio Rebalancing at any time.
Specialized Uses Of The Policy. Because the Policy provides for an accumulation
of Policy Value as well as a Death Benefit, you may wish to use it for various
individual and business financial planning purposes. Purchasing the Policy in
part for such purposes involves certain risks. For example, if the investment
performance of the Subaccounts is poorer than expected or if sufficient Premiums
are not paid, the Policy may lapse or may not accumulate sufficient Policy Value
to fund the purpose for which you purchased the Policy. Withdrawals and Policy
loans may significantly affect current and future Policy Value, Surrender Value,
or Death Benefit proceeds. Depending upon the investment performance of the
Portfolios in which the Subaccounts invest and the amount of a Policy loan, a
Policy loan may cause your Policy to lapse. Because the Policy is designed to
provide benefits on a long-term basis, before purchasing a Policy for a
specialized purpose, you should consider whether the long-term nature of the
Policy is consistent with the purpose for which it is being considered. In
addition, using a Policy for a specialized purpose may have tax consequences.
(See "Tax Matters," beginning on page [ ].)
THE SUBACCOUNTS AND PORTFOLIOS
Subaccounts. The Separate Account is divided into Subaccounts. The assets of
each Subaccount are invested in the shares of one of the Portfolios. We do not
guarantee the investment performance of the Separate Account, its Subaccounts or
the Portfolios. Values allocated to the Separate Account will rise and fall with
the values of shares of the Portfolios and are also reduced by Policy charges.
We use the Separate Account to fund our other variable universal life insurance
policies.
Portfolios. Each of the Subaccounts of the Separate Account invests in the
shares of one of the Portfolios. Each Portfolio is either an open-end management
investment company registered under the Investment Company Act of 1940 or a
separate investment series of an open-end management investment company. We have
briefly described the Portfolios below. You should read the current Prospectuses
for the Portfolios for more detailed and complete information concerning the
Portfolios, their investment objectives and strategies, and the investment risks
associated with the Portfolios. If you do not have a Prospectus for a Portfolio,
contact us and we will send you a copy.
Each Portfolio holds its assets separate from the assets of the other
Portfolios, and each Portfolio has its own distinct investment objective and
policies. Each Portfolio operates as a separate investment fund, and the income,
gains, and losses of one Portfolio generally have no effect on the investment
performance of any other Portfolio.
We do not promise that the Portfolios will meet their investment objectives.
Amounts you have allocated to Subaccounts may grow in value, decline in value,
or grow less than you expect, depending on the investment performance of the
Portfolios in which those Subaccounts invest. You bear the investment risk that
those Portfolios possibly will not meet their investment objectives. You should
carefully review the Portfolios' prospectuses before allocating amounts to the
Subaccounts.
Janus Aspen Series (investment adviser: Janus Capital Corporation)
Flexible Income Portfolio seeks to maximize total return from a combination of
current income and capital appreciation, with an emphasis on current income.
This Portfolio invests in all types of income-producing securities. This
Portfolio may have substantial holdings of debt securities rated below
investment grade. Investments in such securities present special risks; you are
urged to carefully read the risk disclosure in the accompanying Prospectus for
the Portfolio before allocating amounts to the Janus Flexible Income Subaccount.
Balanced Portfolio seeks both growth of capital and current income. This
Portfolio usually invests 40-60% of its assets in securities selected primarily
for their growth potential and 40-60% of its assets in securities selected
primarily for their income potential.
Growth Portfolio seeks long-term growth of capital by investing primarily in a
diversified portfolio of common stocks of a large number of issuers of any size.
Generally, this Portfolio emphasizes issuers with larger market capitalizations.
Aggressive Growth Portfolio seeks long-term growth of capital. It is a
non-diversified fund. It usually invests at least 50% of its equity assets in
securities issued by medium-sized companies, which are companies whose market
capitalizations at the time of purchase by the Portfolio fall within the same
range as companies in the S&P MidCap 400 Index. This range is expected to change
on a regular basis. This Portfolio may invest its remaining assets in smaller or
larger issuers.
Worldwide Growth Portfolio seeks long-term growth of capital by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of any
size. This Portfolio usually invests in issuers from at least five different
countries including the United States.
Federated Insurance Management Series (investment adviser: Federated Advisers).
Federated Utility Fund II's investment objective is to achieve high current
income and moderate capital appreciation. The Fund pursues its investment
objective by investing, under normal market conditions, at least 65% of its
assets in equity securities (including convertible securities) of companies that
derive at least 50% of their revenues from the provision of electricity, gas and
telecommunications related services.
Federated Fund For U.S. Government Securities II's investment objective is to
provide current income. The Fund pursues its objective by investing primarily in
U.S. government securities which include agency mortgage (FHLMC, FNMA, GNMA),
U.S. Treasury and agency debenture securities.
Federated High Income Bond Fund II's investment objective is to seek high
current income by investing primarily in a professionally managed, diversified
portfolio of fixed income securities. The Fund provides exposure to the
high-yield, lower-rated corporate bond market. At least 65 percent of the Fund's
assets are invested in corporate bonds rated BBB or lower. The adviser actively
manages the Fund's portfolio seeking to realize the potentially higher returns
of high-yield bonds compared to returns of high-grade securities by seeking to
minimize default risk and other risks through careful security selection and
diversification.
Fidelity Variable Insurance Products Fund (investment adviser: Fidelity
Management & Research Company)
Money Market Portfolio seeks to obtain as high a level of current income as is
consistent with preserving capital and providing liquidity. This Portfolio will
invest in U.S. dollar-denominated money market securities of domestic and
foreign insurers, including U.S. government securities and repurchase
agreements.
Equity-Income Portfolio seeks reasonable income by investing normally in
income-producing equity securities. The goal is to achieve a yield which exceeds
the composite yield on the securities comprising the S&P 500 Composite Stock
Price Index. At least 65% of this Portfolio's assets is normally invested in
income-producing common or preferred stock. The Portfolio, however, has the
flexibility to invest the balance in other types of domestic and foreign
securities, including bonds.
Growth Portfolio seeks to achieve capital appreciation. This Portfolio normally
invests primarily in common stocks which are believed to have above average
growth potential.
Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. At least 65% of this Portfolio's assets is
normally invested in securities of issuers outside of the United States. The
Portfolio normally diversifies its investments across countries and regions.
Fidelity Variable Insurance Products Fund II (investment adviser: Fidelity
Management & Research Company)
Asset Manager Portfolio seeks to obtain high total return with reduced risk over
the long term by allocating its assets among domestic and foreign stocks, bonds,
and short-term/money market securities. Usually, this Portfolio's assets will be
allocated within the following guidelines: 50% in stocks (can range from
30-70%); 40% in bonds (can range from 20-60%); and 10% in short-term/money
market instruments (can range from 0-50%).
Contrafund Portfolio seeks capital appreciation by investing mainly in equity
securities of companies whose value the Portfolio's adviser believes is not
fully recognized by the public. This Portfolio usually invests primarily in
common stock of domestic and foreign issuers.
Index 500 Portfolio seeks investment results that correspond to the total return
of common stocks publicly traded in the U.S. as represented by the S&P 500 while
keeping transaction costs and other expenses low.
The Alger American Fund (investment adviser: Fred Alger Management)
Income And Growth Portfolio primarily seeks to provide a high level of dividend
income; its secondary goal is to provide capital appreciation. The Portfolio
invests in dividend paying equity securities, such as common or preferred
stocks, preferably those which the Manager believes also offer opportunities for
capital appreciation.
Small Capitalization Portfolio seeks long-term capital appreciation. It focuses
on small, fast-growing companies that offer innovative products, services or
technologies to a rapidly expanding marketplace. Under normal circumstances, the
Portfolio invests primarily in the equity securities of small capitalization
companies. A small capitalization company is one that has a market
capitalization within the range of the Russell 2000 Growth Index or the S&P
SmallCap 600 Index.
Growth Portfolio seeks long-term capital appreciation. It focuses on growing
companies that generally have broad product lines, markets, financial resources
and depth of management. Under normal circumstances, the Portfolio invests
primarily in the equity securities of large companies. The portfolio considers a
large company to have a market capitalization of $1 billion or greater.
Midcap Growth Portfolio seeks long-term capital appreciation. It focuses on
midsize companies with promising growth potential. Under normal circumstances,
the Portfolio invests primarily in the equity securities of companies having a
market capitalization within the range of companies in the S&P MidCap 400 Index.
Leveraged Allcap Portfolio seeks long-term capital appreciation. Under normal
circumstances, the portfolio invests in the equity securities of companies of
any size which demonstrate promising growth potential. The Portfolio can
leverage, that is, borrow money, up to one-third of its total assets to buy
additional securities. By borrowing money, the Portfolio has the potential to
increase its returns if the increase in the value of the securities purchased
exceeds the cost of borrowing, including interest paid on the money borrowed.
Scudder Variable Life Investment Fund (investment adviser: Scudder, Stevens &
Clark, Inc.) The Scudder Variable Life Investment Fund has two classes of
shares. The Subaccounts invest in Class A shares, which do not impose
distribution fees.
Bond Portfolio seeks high level of income consistent with a high quality
portfolio of debt securities. Under normal circumstances, this Portfolio invests
at least 65% of its assets in bonds including those of the U.S. Government and
its agencies and those of corporations and other notes and bonds paying high
current income. This Portfolio can invest in a broad range of short,
intermediate and long-term securities.
Balanced Portfolio seeks a balance of growth and income from a diversified
portfolio of equity and fixed income securities. The Portfolio also seeks
long-term preservation of capital through a quality-oriented investment approach
that is designed to reduce risk. The Portfolio will invest its assets in equity
securities, debt securities with maturities generally exceeding one year, and
money market instruments and other debt securities with maturities generally not
exceeding thirteen months. Generally, 25%-50% of the Portfolio's net assets are
invested in bonds.
Growth And Income Portfolio seeks long-term growth of capital, current income
and growth of income. In pursuing these three objectives, the Portfolio invests
primarily in common stocks, preferred stocks, and securities convertible into
common stocks of companies which offer the prospect for growth of earnings while
paying higher than average current dividends. The Portfolio allocates its
investments among different industries and companies, and changes its portfolio
securities for investments considerations and not for trading purposes.
Global Discovery Portfolio seeks above-average capital appreciation over the
long term by investing primarily in the equity securities of small companies
located throughout the world. The Portfolio generally invests in small, rapidly
growing companies that offer the potential for above-average returns relative to
larger companies, yet are frequently overlooked and thus undervalued by the
market.
International Portfolio seeks long-term growth of capital primarily through
diversified holdings of marketable foreign equity investments. The Portfolio
invests in companies, wherever organized, which do business primarily outside
the United States. The Portfolio intends to diversify investments among several
countries and to have represented in its holdings business activities in not
less than three different countries, excluding the United States. The Portfolio
invests primarily in equity securities of established companies, listed on
foreign exchanges, which the adviser believes have favorable characteristics. It
may also invest in fixed income securities of foreign governments and companies.
Strong Variable Insurance Funds, Inc. (investment adviser: Strong Capital
Management, Inc.)
Discovery Fund II seeks to provide investors with capital growth, a goal they
pursue by investing in a diversified portfolio of small, medium and larger sized
companies. The adviser's investment approach combines numbercrunching analysis
with direct research, including on-site visits. Through frequent discussions
with management, suppliers, customers and competitors, the advisor believes they
can identify vital aspects of companies that are not reflected in their
historical financial statements or their stock prices.
Midcap Growth Fund II seeks long-term capital growth by investing in
well-managed growth companies. The majority of the Fund's holdings will be in
companies having market capitalizations between $800 million and $8 billion at
the time of purchase.
Strong Opportunity Fund II Inc. (investment adviser: Strong Capital Management,
Inc.)
Opportunity Fund II focuses on stocks of medium-size companies that offer strong
growth potential, but are underpriced. Rather than rely on traditional Wall
Street research, the adviser applies a proprietary private market value approach
to find stocks for the Fund. The adviser first considers companies (and
industries) that are out of favor. Then they determine the price they believe an
investor would be willing to pay for an entire company - its private market
value. A company whose stock price is lower than its private market value may be
added to the Portfolio.
T. Rowe Price International Series, Inc. (investment adviser: Rowe Price-Fleming
International, Inc., a joint venture between T. Rowe Price Associates, Inc. and
Robert Fleming Holdings, Ltd.)
T. Rowe Price International Stock Portfolio seeks long-term growth of capital
through investments primarily in common stocks of established, non-U.S.
companies. The Portfolio invests substantially all of its assets outside the
United States and broadly diversifies its investments among developed and
emerging countries throughout the world.
T. Rowe Price Equity Series, Inc. (investment adviser: T. Rowe Price Associates,
Inc.)
T. Rowe Price New America Growth Portfolio seeks long-term growth of capital
through investment primarily in the common stocks of U.S. growth companies
operating in service industries. The Portfolio will invest most of its assets in
service companies, regardless of size, that the adviser believes to be
above-average performers in their fields. The Portfolio may invest up to 25% of
its assets in growth companies outside the service sector.
T. Rowe Price Mid-Cap Growth Portfolio seeks long-term capital appreciation by
investing primarily mid-cap stocks with the potential for above-average earnings
growth. The adviser will invest at least 65% of the Portfolio's assets in a
diversified portfolio of common stocks of mid-cap companies whose earnings the
adviser expects to grow at a faster rate than the average company. The adviser
defines mid-cap companies as those with market capitalizations within the range
of companies in the S&P 400 Mid-Cap Index. However, the Portfolio will not
automatically sell or cease to purchase stock of a company it already owns just
because the company's market cap grows or falls outside this range. The
Portfolio also may invest in other types of securities, such as foreign
securities, convertible stocks and bonds, and warrants, when consistent with the
Portfolio's investment objective.
T. Rowe Price Equity Income Portfolio seeks to provide substantial dividend
income as well as long-term growth of capital by investing primarily in common
stocks of established companies. Under normal circumstances, the Portfolio
usually will invest at least 65% of its total assets in common stocks of
established companies paying above-average dividends which are expected to have
favorable prospects for dividend growth and capital appreciation. The Portfolio
may also invest in other securities such as foreign securities, convertible
stocks and bonds, and warrants when consistent with the Portfolio's investment
objective.
MFS Variable Insurance Trust (investment adviser: Massachusetts Financial
Services)
Growth With Income Series seeks reasonable current income, as well as long-term
growth of capital and income. The Portfolio invests in stocks of companies that
the adviser considers to be of high or improving investment quality. The
Portfolio has the flexibility to invest in derivative securities when its
managers believe such securities can provide better value relative to direct
investments in stocks and bonds. The series will also seek to provide income
equal to approximately 90% of the dividend yield on the Standard & Poor's 500
Composite Index. The series may invest in foreign equity securities through
which it may have exposure to foreign currencies.
Research Series seeks long-term growth of capital and future income. The series
may invest in foreign equity securities (including emerging market securities)
through which it may have exposure to foreign currencies. The series is
permitted to do "Short Sales Against the Box."
Emerging Growth Series seeks to provide long-term growth of capital. The
Portfolio invests primarily in common stocks of companies that are early in
their life cycles but which have the potential to become major enterprises. The
Portfolio may also invest in more established companies whose earnings growth
the adviser expects to accelerate because of special factors. Investing in
emerging growth companies involves greater risk than is customarily associated
with more established companies. The Portfolio also may invest up to 25% of its
net assets in foreign and emerging market securities. The Portfolio has the
flexibility to invest in derivative securities when its adviser believes such
securities can provide better value relative to direct investments in stocks or
bonds.
Total Return Series seeks to provide above-average current income (compared to a
portfolio invested entirely in equity securities) consistent with the prudent
employment of capital. The Portfolio secondarily seeks to provide reasonable
opportunity for growth of capital and income. The Portfolio invests in both
equities and fixed income securities. The equity segment is actively managed
with a value-oriented style of investing. The fixed income segment is actively
managed through shifts in maturity, duration, and sector components. The
Portfolio may invest up to 20% of its assets in foreign and emerging market
securities. The Portfolio has the flexibility to invest in derivative securities
when its adviser believes such securities can provide better value relative to
direct investments in stocks or bonds. Consistent with the series' principal
investment policies the series may invest in foreign securities, and may have
exposure to foreign currencies through its investment in these securities.
New Discovery Series seeks capital appreciation. This Portfolio seeks to achieve
its objective by investing under normal market conditions at least 65% of its
total assets in companies that its adviser believes offer superior prospects for
growth. Those securities may either be listed on securities exchanges or traded
in the over-the-counter markets and may be U.S. or foreign companies.
Other Information About the Portfolios
Each Portfolio is subject to certain investment restrictions and policies which
may not be changed without the approval of a majority of the shareholders of the
Portfolio. See the Prospectuses of the Portfolios for further information.
We automatically reinvest all dividends and capital gains distributions from the
Portfolios in shares of the distributing Portfolio at their net asset value. The
income and realized and unrealized gains or losses on the assets of each
Subaccount are separate and are credited to or charged against the particular
Subaccount without regard to income, gains or losses from any other Subaccount
or from any other part of our business. We will use the Premiums you allocate to
a Subaccount to purchase shares in the corresponding Portfolio and will redeem
shares in the Portfolios to meet Policy obligations or make adjustments in
reserves. The Portfolios are required to redeem their shares at net asset value
and to make payment within seven days.
Some of the Portfolios have been established by investment advisers which manage
publicly traded mutual funds having similar names and investment objectives.
While some of the Portfolios may be similar to, and may in fact be modeled after
publicly traded mutual funds, you should understand that the Portfolios are not
otherwise directly related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any similarly named
Portfolio may differ substantially.
Certain of the Portfolios sell their shares to Separate Accounts underlying both
variable life insurance and variable annuity contacts. It is conceivable that in
the future it may be unfavorable for variable life insurance separate accounts
and variable annuity separate accounts to invest in the same Portfolio. Although
neither we nor any of the Portfolios currently foresees any such disadvantages
either to variable life insurance or variable annuity contract owners, each
Portfolio's Board of Directors intends to monitor events in order to identify
any material conflicts between variable life and variable annuity contract
owners and to determine what action, if any, should be taken in response
thereto. If a Board of Directors were to conclude that separate investment funds
should be established for variable life and variable annuity separate accounts,
Lincoln Benefit will bear the attendant expenses.
Voting Rights. As a general matter, you do not have a direct right to vote the
shares of the Portfolios held by the Subaccounts to which you have allocated
your Policy Value. Under current interpretations, however, you are entitled to
instruct us on how to vote those shares on certain matters. We will notify you
when we need your instructions and will provide proxy materials or other
information to assist you in understanding the matter at issue. We will
determine the number of votes for which you may give voting instructions as of
the record date set by the relevant Portfolio for the shareholder meeting at
which the vote will occur.
As a general rule, you are the person entitled to give voting instructions.
However, if you assign your Policy, the assignee may be entitled to give voting
instructions. Retirement plans may have different rules for voting by plan
participants.
If you send us written voting instructions, we will follow your instructions in
voting the Portfolio shares attributable to your Policy. If you do not send us
written instructions, we will vote the shares attributable to your Policy in the
same proportions as we vote the shares for which we have received instructions
from other Policy owners. We will vote shares that we hold in the same
proportions as we vote the shares for which we have received instructions from
other Policy owners.
We may, when required by state insurance regulatory authorities, disregard
Policy owner voting instructions if the instructions require that the shares be
voted to cause a change in the sub-classification or investment objective of one
or more of the Portfolios or to approve or disapprove an investment advisory
contract for one or more of the Portfolios.
In addition, we may disregard voting instructions in favor of changes initiated
by Policy owners in the investment objectives or the investment adviser of the
Portfolios if we reasonably disapprove of the proposed change. We would
disapprove a proposed change only if the proposed change is contrary to state
law or prohibited by state regulatory authorities or we reasonably conclude that
the proposed change would not be consistent with the investment objectives of
the Portfolio or would result in the purchase of securities for the Portfolio
which vary from the general quality and nature of investments and investment
techniques utilized by the Portfolio. If we disregard voting instructions, we
will include a summary of that action and our reasons for that action in the
next semi-annual financial report to you.
This description reflects our view of currently applicable law. If the law
changes or our interpretation of the law changes, we may decide that we are
permitted to vote the Portfolio shares without obtaining instructions from our
Policy owners, and we may choose to do so.
Additions, Deletions, And Substitutions Of Securities. If the shares of any of
the Portfolios are no longer available for investment by the Separate Account or
if, in the judgment of our Board of Directors, further investment in the shares
of a Portfolio is no longer appropriate in view of the purposes of the Policy,
we may add or substitute shares of another Portfolio or mutual fund for
Portfolio shares already purchased or to be purchased in the future by Premiums
under the Policy. Any substitution of securities will comply with applicable
legal requirements.
We also reserve the right to make the following changes in the operation of the
Separate Account and the Subaccounts:
o to operate the Separate Account in any form permitted by law;
o to take any action necessary to comply with applicable law or
obtain and continue any exemption from applicable laws;
o to transfer assets from one Subaccount to another, or from any
Subaccount to our general account;
o to add, combine or remove Subaccounts in the Separate Account;
and
o to assess a charge for taxes attributable to the operations of
the Separate Account or for other taxes, as described in
"Deductions and Charges - Deduction for Separate Account
Income Taxes" on page [ ] below.
o to change the way in which we assess other charges, as long as
the total other charges do not exceed the amount currently
charged the Separate Account and the Portfolios in connection
with the Policies.
If we take any of these actions, we will comply with the then applicable legal
requirements.
POLICY BENEFITS AND RIGHTS
Death Benefit. While your Policy is in force, we will pay the Death Benefit
proceeds upon the death of the Insured. We will pay the Death Benefit proceeds
to the named Beneficiary(ies) or contingent Beneficiary(ies). As described below
in "Settlement Options," on page [ ], we will pay the Death Benefit proceeds in
a lump sum or under an optional payment plan.
The Death Benefit proceeds payable to the Beneficiary equal the applicable Death
Benefit, less any Policy Debt and less any due and unpaid charges. The proceeds
may be increased, if you have added a rider that provides an additional benefit.
We will determine the amount of the Death Benefit proceeds as of the end of the
Valuation Period during which the Insured dies. We will usually pay the Death
Benefit proceeds within seven days after we have received due proof of death and
all other requirements we deem necessary have been satisfied.
The amount of the Death Benefit will be based on the Death Benefit Option you
have selected, any increases or decreases in the Face Amount, and in some
instances your Policy Value.
Death Benefit Options. You may choose one of two Death Benefit Options:
If you select Option 1, the Death Benefit will be the greater of: (a) the Face
Amount of the Policy or (b) the Policy Value multiplied by the applicable
corridor percentage as described below.
If you select Option 2, the Death Benefit will be the greater of: (a) the Face
Amount plus the Policy Value, or (b) the Policy Value multiplied by the
applicable corridor percentage as described below.
While your Policy remains in force, we guarantee that the Death Benefit will not
be less than the greater of the current Face Amount of the Policy or the Policy
Value multiplied by the applicable corridor percentage. We have set forth the
applicable corridor percentages in the Policy. They vary according to the age of
the Insured. We set the corridor percentages to seek to ensure that the Policies
will qualify for favorable federal income tax treatment. An increase in Policy
Value due to favorable investment experience may therefore increase the Death
Benefit above the Face Amount, and a decrease in Policy Value due to unfavorable
investment experience may decrease the Death Benefit (but not below the Face
Amount).
EXAMPLES:
Example A Example B
-------- --------
Face Amount
$250,000 $250,000
Death Benefit Option 1 1
Insured's Age 45 45
Policy Value on Date of Death $120,000 $85,000
Applicable Corridor Percentage 215% 215%
Death Benefit $258,000 $250,000
In Example A, the Death Benefit equals $258,000, i.e., the greater of $250,000
(the Face Amount) and $258,000 (the Policy Value at the Date of Death of
$120,000, multiplied by the corridor percentage of 215%). This amount, less any
Policy Debt and unpaid charges, constitutes the Death Benefit proceeds that we
would pay to the Beneficiary.
In Example B, the Death Benefit is $250,000, i.e., the greater of $250,000 (the
Face Amount) or $182,750 (the Policy Value of $85,000 multiplied by the corridor
percentage of 215%).
Option 1 is designed to provide a specific amount of Death Benefit that does not
vary with changes in the Policy Value. Therefore, under Option 1, as your Policy
Value increases, the net amount at risk under your Policy will decrease. Under
Option 2, on the other hand, the amount of the Death Benefit generally increases
to reflect increases in the Policy Value. Therefore, if you select Option 2,
your Policy generally will involve a constant net amount at risk. Since the cost
of insurance charge on your Policy is based upon the net amount at risk, the
cost of insurance charge will generally be less under a Policy with an Option 1
Death Benefit than under a similar Policy with an Option 2 Death Benefit. As a
result, if the Subaccounts you select experience favorable investment results,
your Policy Value will tend to increase faster under Option 1 than under Option
2, but the total Death Benefit under Option 2 will increase or decrease directly
with changes in Policy Value. Thus, you may prefer Option 1 if you are more
interested in the possibility of increasing your Policy Value based upon
favorable investment experience, while you may prefer Option 2 if you are
seeking to increase total Death Benefits.
You may change the Death Benefit option by writing to us at the address given on
the first page of this Prospectus. If you ask to change from Option 2 to Option
1, we will increase the Face Amount of your Policy by the amount of the Policy
Value. If you ask to change from Option 1 to Option 2, we will decrease the Face
Amount of your Policy by the amount of the Policy Value. The change will take
effect on the Monthly Deduction Day on or immediately following the date we
receive your written request.
We do not currently require you to prove insurability for a change in Death
Benefit options. We will not permit you to change the Death Benefit option under
your Policy if afterward the Face Amount remaining in force would be less than
$250,000.
Change In Face Amount. You may change the Face Amount after the first Policy
Year. You may request the change by writing to us at the address shown on the
first page of this Prospectus. You should be aware that a change in the Face
Amount will change the net amount at risk and, therefore, the cost of insurance
charges on your Policy. The change will take effect on the Monthly Deduction Day
after we approve the request.
If you request a decrease in Face Amount, we will first apply it to coverage
provided by the most recent increase in Face Amount, then to the next most
recent increase successively and finally to the coverage under the original
application. We will not permit a decrease in the Face Amount of your Policy if
afterward the Face Amount remaining in force would be less than $250,000. A
decrease in the Face Amount will not affect the Safety Net Premium.
To apply for an increase in the Face Amount, you must submit to us a
supplemental application, accompanied by satisfactory evidence that the Insured
is insurable. We will not permit any increase in Face Amount after the Insured's
80th birthday. The minimum amount of a Face Amount increase is $10,000. You may
not increase the Face Amount of your Policy more often than once every twelve
months.
An increase in the Face Amount of your Policy will affect your cost of insurance
charges. As noted above, we will deduct a larger amount of cost of insurance
charges, because an increase in the Face Amount also will increase the net
amount at risk under your Policy. We will not approve a request for a Face
Amount increase if the Surrender Value is too small to pay the Monthly Deduction
for the Policy Month following the increase. Finally, increases in the Face
Amount of your Policy will also increase the Safety Net Premium amount.
Optional Insurance Benefits. You may ask to add one or more riders to your
Policy to provide additional optional insurance benefits. We will require
evidence of insurability before we issue a rider to you. We will deduct the cost
of any riders as part of the Monthly Deduction. The riders we currently offer
are described below. In our discretion we may offer additional riders or stop
offering a rider.
Children's Level Term Rider: This rider provides for level term insurance on the
Insured's children, as defined in the rider. We will provide coverage until the
earlier of the child's 25th birthday or the Insured's age 65. We will pay the
Death Benefit to the person you designate. If the Insured dies while the rider
is in effect, we will convert the coverage on each child to paid-up term
insurance that will remain in force until the child reaches age 25. The rider
may be exchanged for a new Policy on the earlier of each child's 25th birthday,
or the Insured's age 65. We will not require evidence of insurability to
exchange the rider.
Accidental Death Benefit: Under this rider, we will provide additional insurance
if the Insured dies from accidental bodily injury as defined in the rider. This
rider ends when one of the following occurs:
o the Policy terminates;
o the next Policy Anniversary after the Insured's 70th birthday;
or
o you ask to end the rider.
Continuation Of Premium: Under this rider, we will contribute a monthly amount
to the Policy Value if the Insured becomes totally disabled as defined in the
rider. This rider ends when one of the following occurs:
o the Policy terminates;
o the Insured reaches age 60; or
o you ask to end the rider.
Additional Insured Rider: This rider provides life insurance coverage on an
Additional Insured. We will pay the Face Amount of the rider to the named
Beneficiary when we receive due proof that the additional Insured died while the
rider was in force. You may renew the coverage until the Additional Insured
reaches age 99 or the Insured reaches 99, if earlier. Until the Additional
Insured's 75th birthday, you may exchange the rider for a new Policy on the
Additional Insured's life, subject to certain conditions as defined in the
rider. We will not require evidence of insurability to exchange the rider.
If your Policy was issued in connection with a Qualified Plan, we may not be
able to offer you some of the benefits provided by these riders.
Policy Loans. While the Policy is in force, you may borrow money from us using
the Policy as the only security for your loan. Loans have priority over the
claims of any assignee or any other person. The maximum amount available for a
loan is 90% of the Surrender Value of your Policy at the end of the Valuation
Period in which we receive your loan request. Other restrictions may apply if
your Policy was issued in connection with a Qualified Plan. In addition, if you
have named an irrevocable Beneficiary, you must also obtain his or her written
consent before we make a Policy Loan to you.
We will ordinarily disburse your loan to you within seven days after we receive
your loan request at our home office. We may, however, postpone payment in the
circumstances described in "Postponement of Payments" on page [ ]. While the
Policy remains in force, you may repay the loan in whole or in part without any
penalty at any time while the Insured is living.
When we make a Policy Loan to you, we will transfer to the Loan Account a
portion of the Policy Value equal to the loan amount. We will also transfer in
this manner Policy Value equal to any due and unpaid loan interest. We will
usually take the transfers from the Subaccounts pro rata based upon the balances
of each Subaccount. The amounts allocated to the Loan Account will be credited
with interest at the Loan Credited Rate stated in your Policy.
You may borrow an amount equal to your Policy Value, less all Premiums paid, as
a Preferred Loan. The interest rate charged for Preferred Loans is 4.0% per
year. We will treat any other loan as a Standard Loan. The interest rate on
Standard Loans is 6.0% per year.
Interest on Policy Loans accrues daily and is due at the end of each Policy
Year. If you do not pay the interest on a Policy Loan when due, the unpaid
interest will become part of the Policy Loan and will accrue interest at the
same rate. In addition, we will transfer the difference between the value of the
Loan Account and the Policy Debt on a pro-rata basis from the Subaccounts to the
Loan Account.
If you have a loan with another insurance company, and you are terminating that
policy to buy one from us, usually you would repay the old loan during the
process of surrendering the old policy. Income taxes on the interest earned may
be due. We permit you to carry this old loan over to your new Policy through a
Tax Code Section 1035 tax-free exchange, up to certain limits. The use of a
Section 1035 tax-free exchange may avoid any income tax liability that would be
due if the old loan was extinguished.
If you transfer a Policy Loan from another insurer as part of Section 1035
tax-free exchange, we will treat a loan of up to 20% of your Policy Value as a
Preferred Loan. If the amount due is more than 20% of your Policy Value, we will
treat the excess as a Standard Loan. The treatment of transferred Policy Loans
is illustrated in the following example:
Transferred Policy Value $ 190,000
Transferred Policy Loan 40,000
---------
Surrender Value $ 150,000
20% of Policy Value $ 38,000
Preferred Loan $ 38,000
Standard Loan $ 2,000
If the total outstanding loan(s) and loan interest exceeds the surrender value
of your Policy, we will notify you and any assignee in writing. To keep the
Policy in force, we will require you to pay a Premium sufficient to keep the
Policy in force for at least three more months. If you do not pay us sufficient
Premium within the 61-day Grace Period, your Policy will lapse and terminate
without value. As explained in the section entitled "Lapse and Reinstatement" on
page [ ], however, you may subsequently reinstate the Policy. Before we will
permit you to reinstate the Policy, we will require either repayment or
reimbursement of any Policy Debt that was outstanding at the end of the Grace
Period. If your Policy lapses while a Policy Loan is outstanding, you may owe
taxes or suffer other adverse tax consequences. Please consult a tax adviser for
details.
All or any part of any Policy Loan may be repaid while the Policy is still in
effect. If you have a Policy Loan outstanding, we will assume that any payment
we receive from you is to be applied as Premium to your Policy Value, unless you
tell us to treat your payment as a loan repayment. If you designate a payment as
a loan repayment or interest payments, your payment will be allocated among the
Subaccounts using the same percentages used to allocate Premiums. An amount
equal to the payment will be deducted from the Loan Account.
A Policy Loan, whether or not repaid, will have a permanent effect on the Policy
Value because the investment results of each Subaccount will apply only to the
amount remaining in that Subaccount. The longer a loan is outstanding, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Subaccounts earn more than the annual interest rate for
amounts held in the Loan Account, your Policy Value will not increase as rapidly
as it would if you had not taken a Policy Loan. If the Subaccounts earn less
than that rate, then your Policy Value will be greater than it would have been
if you had not taken a Policy Loan. Also, if your do not repay a Policy Loan,
total outstanding Policy Debt will be subtracted from the Death Benefit and
Surrender Value otherwise payable.
Amount Payable On Surrender Of The Policy. While your Policy is in force, you
may fully surrender your Policy. Upon surrender, we will pay you the Surrender
Value determined as of the day we receive your written request. Your Policy will
terminate on the day we receive your written request, or the date requested by
you, whichever is later. We may require that you give us your Policy document
before we pay you the surrender proceeds.
The Surrender Value equals the Policy Value, minus any Policy Debt. We will
determine the Surrender Value as of the end of the Valuation Period during which
we received your request for surrender. We will pay you the Surrender Value of
the Policy within seven days of our receiving your complete written request or
on the effective surrender date you have requested, whichever is later.
You may receive the surrender proceeds in a lump sum or under any of the
settlement options described in "Settlement Options" on page [ ].
The tax consequences of surrendering the Policy are discussed in "Tax Matters,"
beginning on page [ ].
Partial Withdrawals. While the Policy is in force after the first Policy Year,
you may receive a portion of the Surrender Value by making a partial withdrawal
from your Policy. You must request the partial withdrawal in writing. Your
request will be effective on the date received. Before we pay any partial
withdrawal, you must provide us with a completed withholding form.
The minimum partial withdrawal amount is $500. We will subtract the partial
withdrawal service fee of $10 from your withdrawal proceeds. You may not make a
partial withdrawal that would reduce the Surrender Value to less than $500. You
may specify how much of your partial withdrawal you wish taken from each
Subaccount.
If you have selected Death Benefit Option 1, a partial withdrawal will reduce
the Face Amount of your Policy as well as the Policy Value. We will reduce the
Face Amount by the amount of the partial withdrawal. The Face Amount after a
partial withdrawal may not be less than $250,000. If you have previously
increased the Face Amount of your Policy, your partial withdrawals will first
reduce the Face Amount of the most recent increase, then the most recent
increases successively, then the coverage under the original Policy.
Under Option 2, a reduction in Policy Value as a result of a partial withdrawal
will typically result in a dollar for dollar reduction in the life insurance
proceeds payable under the Policy.
The tax consequences of partial withdrawals are discussed in "Tax Matters"
beginning page [ ].
Settlement Options. We will pay the surrender proceeds or Death Benefit proceeds
under the Policy in a lump sum or under one of the Settlement Options that we
then offer. You may request a Settlement Option by notifying us in writing at
the address given on the first page of this Prospectus. We will transfer to our
general account any amount placed under a Settlement Option and it will not be
affected by the investment performance of the Separate Account.
You may request that the proceeds of the Policy be paid under a Settlement
Option by submitting a request to us in writing before the death of the Insured.
If at the time of the Insured's death no Settlement Option is in effect, the
Beneficiary may choose a Settlement Option not more than 12 months after the
Death Benefit is payable and before it is paid. If you change the Beneficiary,
the existing choice of Settlement Option will become invalid and you may either
notify us that you wish to continue the pre-existing choice of Settlement Option
or select a new one.
The amount applied to a Settlement Option must include at least $5,000 of Policy
Value and result in installment payments of not less than $50. We will not
permit surrenders or partial withdrawals after payments under a Settlement
Option commence.
We currently offer the five Settlement Options described below:
Option a - Interest. We will hold the proceeds, credit interest to them, and pay
out the funds when the person entitled to them requests.
Option b - Fixed Payments. We will pay a selected monthly income until the
proceeds, and any interest credits, are exhausted.
Option c - Life Income. Guaranteed Period Certain. We will pay the proceeds in a
monthly income for as long as the payee lives. You may also select a guarantee
period of between five and twenty years. If a guarantee period is selected, we
will make monthly payments at least until the payee dies. If the payee dies
before the end of the guarantee period, we will continue payments to a successor
payee until the end of the guarantee period. If no guarantee period is selected
or if the payee dies after the end of the guarantee period, we will stop
payments when the payee dies. It is possible for the payee to receive only one
payment under this option, if the payee dies before the second payment is due
and you did not choose a guarantee period.
Option d - Joint And Survivor. We will pay the proceeds in a monthly income to
two payees for as long as either payee is alive. Payments will stop when both
payees have died. It is possible for the payees to receive only one payment, if
both payees die before the second payment is due.
Option e - Period Certain. We will pay the proceeds in monthly installments for
a specified number of years, from five to twenty-five years. If the payee dies
before the end of the specified period, we will pay the remaining guaranteed
payments to a successor payee.
In addition, we may agree to other Settlement Option plans. Write or call us to
obtain information about them.
When the proceeds are payable, we will inform you concerning the rate of
interest we will credit to funds left with us. We guarantee that the rate of
interest will be at least 3.5%. We may pay interest in excess of the guaranteed
rate.
Maturity. The Policies have no maturity date. Your Policy will continue as long
as Surrender Value is sufficient to cover Monthly Deductions.
Lapse And Reinstatement. If the Surrender Value is less than the Monthly
Deduction due on a Monthly Deduction Day and the Safety Net Premium feature is
not in effect, your Policy may lapse. You will be given a 61-day Grace Period in
which to pay enough additional Premium to keep the Policy in force after the end
of the Grace Period.
At least 30 days before the end of the Grace Period, we will send you a notice
telling you that you must pay the amount shown in the notice by the end of the
Grace Period to prevent your Policy from terminating. The amount shown in the
notice will be sufficient to cover the Monthly Deduction(s) due and unpaid. You
may pay additional Premium if you wish.
The Policy will continue in effect through the Grace Period. If the Insured dies
during the Grace Period, we will pay a Death Benefit in accordance with your
instructions. However, we will reduce the proceeds by an amount equal to Monthly
Deduction(s) due and unpaid. See "Death Benefit," on page [ ]. If you do not pay
us the amount shown in the notice before the end of the Grace Period, your
Policy will terminate at the end of the Grace Period.
If the Policy lapses, you may apply for reinstatement of the Policy by paying us
the reinstatement Premium and any applicable charges required under the Policy.
You must request reinstatement within five years of the date the Policy entered
a Grace Period. The reinstatement Premium is equal to an amount sufficient to:
o cover all unpaid Monthly Deductions for the Grace Period, and
o keep your Policy in force for three months.
If a Policy Loan was outstanding at the time of lapse, you must either repay or
reinstate the loan before we will reinstate your Policy. In addition, we may
require you to provide evidence of insurability satisfactory to us. The Face
Amount upon reinstatement cannot exceed the Face Amount of your Policy at its
lapse. The Policy Value on the reinstatement date will reflect the Policy Value
at the time of termination of the Policy plus the Premium paid at the time of
reinstatement. All Policy charges will continue to be based on your original
Issue Date.
Cancellation And Exchange Rights. You may cancel your Policy by returning it to
us within ten days after you receive it, or after whatever longer period may be
permitted by state law. If you return your Policy, the Policy terminates and, in
most states, we will pay you an amount equal to your Policy Value on the date we
receive the Policy from you, plus any charges previously deducted. Your Policy
Value usually will reflect the investment experience of the Subaccounts to which
you have allocated your Premium. In some states, however, we are required to
send you the amount of your Premiums. In those states, currently we allocate any
Premium received before the end of the free-look period as described in
"Allocation of Premiums" on page [ ] above. In the future, however, if you live
in one of those states, we reserve the right to delay allocating your Premiums
to the Subaccounts you have selected until 20 days after the Issue Date or, if
your state's free look period is longer than ten days, for ten days plus the
period required by state law. During that time, we will allocate your Premiums
to the Fidelity Money Market Sub-Account. Since state laws differ as to the
consequences of returning a Policy, you should refer to your Policy for specific
information about your circumstances.
In addition, during the first two Policy Years or the first two years after an
increase in the Face Amount, if the Policy is in force you may amend the Policy
to convert it into a non-variable universal life insurance policy. We will not
require evidence of insurability. We will not charge you to perform this
amendment.
The net amount at risk (i.e., the difference between the Death Benefit and the
Policy Value) under the amended policy will be equal to or less than the net
amount at risk under the previous coverage. Premiums and charges under the
amended policy will be based on the same risk classification as the previous
coverage.
Postponement Of Payments. We may defer for up to fifteen days the payment of any
amount attributable to a Premium paid by check to allow the check a reasonable
time to clear. We may postpone paying any amount for a total surrender or a
partial withdrawal, the disbursement of a Policy loan, or the payment of the
Death Benefit Proceeds, in the following circumstances:
o whenever the New York Stock Exchange ("NYSE") is closed (other
than customary weekend and holiday closings);
o when trading on the NYSE is restricted or an emergency exists,
as determined by the SEC, so that disposal of the Separate
Account's investments or determination of the value of its net
assets is not reasonably practicable; or
o at any other time permitted by the SEC for your protection.
In addition, we may delay payment of the Surrender Value for up to six months or
a shorter period if required by law. If we defer payment for more than 30 days
we will add interest at our current rate from the time you asked for the
Surrender Value.
DEDUCTIONS AND CHARGES
Monthly Deduction. On each Monthly Deduction Day, we will deduct from your
Policy Value a Monthly Deduction to cover certain charges and expenses in
connection with the Policy. The Monthly Deduction is intended to compensate us
for expenses incurred in connection with the distribution and issuance of a
Policy, the cost of life insurance, the cost of any optional insurance benefits
and certain administrative expenses. The administrative expenses include
salaries, postage, telephone, office equipment and periodic reports.
The Monthly Deduction is the sum of the following five items:
o the policy fee;
o the distribution expense charge;
o the mortality and expense risk charge;
o the cost of insurance charge; and
o the cost of any benefit rider.
We will allocate the monthly deduction pro rata among the Subaccounts in
proportion to the amount of your Policy Value in each Subaccount. The mortality
and expense risk and distribution expense charges, while expressed as annual
percentages of Policy Value are computed and deducted monthly by canceling units
credited to your Policy.
Policy Fee. The monthly policy fee will be $7.50 per month. This charge
compensates us for administrative expenses such as salaries, postage, telephone,
office equipment and periodic reports.
Distribution Expense Charge. For the first twenty Policy Years, the distribution
expense charge will be deducted as part of the monthly deduction at an annual
rate of 1.00% of the Policy Value allocated to the Subaccounts.
The distribution expense charge is imposed to cover our actual sales and
distribution expenses, which include agents' sales commissions and other sales
and distribution expenses. We expect to recover total sales expenses of the
Policies over the life of the Policies. However, the distribution expense charge
paid with respect to a particular Policy may be higher or lower than the sales
and distribution expenses we incurred in connection with that Policy. To the
extent sales and distribution costs are not recovered by this charge, we may
make up any shortfall from the assets of our general account, which includes
funds derived from the mortality and expense risk charge on the Separate Account
assets.
In states where approved, we will not impose the distribution expense charge for
Policies under which the insured is an employee, or an immediate family member
of an employee, of the Allstate Corporation, its subsidiaries, or an
organization that distributes Policies underwritten by the Allstate Corporation,
or one of its subsidiaries, at the time of application.
Mortality And Expense Risk Charge. For the first fifteen Policy Years, the
monthly mortality and expense risk charge will be calculated at an annual rate
equivalent to 0.60% of the net Policy Value allocated to the Subaccounts.
Thereafter, we intend to charge an annual rate of 0.40%, and we guarantee that
we will not charge more than 0.60%. This charge compensates us for the mortality
and expense risks that we assume in relation to the Policies. The mortality risk
assumed includes the risk that the cost of insurance charges specified in the
Policy will be insufficient to meet claims. We also assume a risk that the Death
Benefit will exceed the amount on which the cost of insurance charges were
based. The expense risk assumed is that expenses incurred in issuing and
administering the Policies will exceed the administrative charges set in the
Policy.
Cost Of Insurance Charge. The cost of insurance is determined monthly. The cost
of insurance charge is determined by multiplying the applicable current cost of
insurance rate per $1,000 by the net amount at risk for each Policy Month. The
net amount at risk is (a) - (b), where: (a) is the Death Benefit as of the prior
Monthly Deduction Day; and (b) is the Policy Value as of the prior Monthly
Deduction Day.
EXAMPLE:
Face Amount $250,000
Death Benefit Option 1
Policy Value on the Prior Monthly Deduction Day $75,000
Insured's Attained Age 45
Corridor Percentage 215%
Death Benefit $250,000
On the Monthly Deduction Day in this example, the Death Benefit as then computed
would be $250,000, because the Face Amount ($250,000) is greater than the Policy
Value multiplied by the applicable corridor percentage ($75,000 x 215% =
$161,250). Since the Policy Value on that date is $75,000, the cost of insurance
charges per $1000 are applied to the difference in the net amount at risk of
$175,000 ($250,000 - $75,000).
Assume that the Policy Value in the above example was $125,000. The Death
Benefit would then be $268,750 (215% x $125,000), since this is greater than the
Face Amount ($250,000). The cost of insurance rates in this case would be
applied to the net amount at risk of $143,750 ($268,750 - $125,000).
Because the Policy Value and, as a result, the amount for which we are at risk
under your Policy may vary monthly, your cost of insurance charge probably will
be different each month.
We determine the cost of insurance charge separately for the initial Face Amount
and each subsequent increase. The cost of insurance charge covers our
anticipated mortality costs for standard and substandard risks. We determine the
current cost of insurance rates, but we guarantee that we will never charge you
a cost of insurance rate higher than the guaranteed cost of insurance rates
shown in the Policy. We base the cost of insurance rate on the sex, issue age,
Policy Year, and premium rating class of the Insured. However, we issue unisex
policies in Montana and in connection with Qualified Plans. Although we will
base the current cost of insurance rate on our expectations as to future
mortality experience, that rate will never exceed a maximum cost of insurance
rate based on the 1980 Commissioners Standard Ordinary ("1980 CSO") Smoker and
Non-Smoker Mortality Table based on the Insured's sex and age last birthday. Our
cost of insurance rates for unisex Policies will never exceed a maximum based on
the 1980 CSO Table B assuming a blend of 80% male and 20% female lives.
On the Policy Anniversary following the Insured's 100th birthday, we will waive
all cost of insurance charges and monthly policy fees.
Deduction For Separate Account Income Taxes. We are not currently maintaining a
provision for taxes. In the future, however, we may establish a provision for
taxes if we determine, in our sole discretion, that we will incur a tax as a
result of the operation of the Separate Account. We will deduct for any taxes we
incur as a result of the operation of the Separate Account, whether or not we
previously made a provision for taxes and whether or not it was sufficient. Our
status under the Tax Code is briefly described on page [ ] below.
Portfolio Expenses. You indirectly bear the charges and expenses of the
Portfolios whose shares are held by the Subaccounts to which you allocate your
Policy Value. The table below contains a summary of current estimates of those
charges and expenses. For more detailed information about those charges and
expenses, please refer to the Prospectuses for the appropriate Portfolios. We
may receive compensation from the investment advisers or administrators of the
Portfolios in connection with administrative service and cost savings
experienced by the investment advisers or administrators.
PORTFOLIO COMPANY ANNUAL EXPENSES
A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
MANAGEMENT FEE OTHER EXPENSES TOTAL
JANUS ASPEN SERIES -------------- -------------- -----
Flexible Income (1) 0.65% 0.07% 0.72%
Balanced 0.65% 0.02% 0.67%
Growth (1) 0.65% 0.02% 0.67%
Aggressive Growth (1) 0.65% 0.02% 0.67%
Worldwide Growth (1) 0.65% 0.05% 0.70%
FEDERATED INSURANCE MANAGEMENT SERIES
Utility II (2) (after fee waiver or 0.75% 0.19% 0.94%
expense reimbursement)
U.S. Government Securities 0.60% 0.18% 0.78%
II (2) (after fee waiver or expense reimbursement)
High Income Bond II (after fee waiver or 0.60% 0.19% 0.79%
Expense reimbursement)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Money Market 0.18% 0.09% 0.27%
Equity-Income (3a) (after expense reduction) 0.48% 0.08% 0.56%
Growth (3a) (after expense reduction) 0.58% 0.07% 0.65%
Overseas (3a)(after expense reduction) 0.73% 0.14% 0.87%
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager (3a)(after expense reduction) 0.53% 0.09% 0.62%
Contrafund (3a)(after expense reduction) 0.58% 0.07% 0.65%
Index 500 (3b)(after expense reimbursement) 0.24% 0.04% 0.28%
THE ALGER AMERICAN FUND
Income and Growth 0.625% 0.075% 0.70%
Small Capitalization 0.85% 0.05% 0.90%
Growth 0.75% 0.04% 0.79%
Midcap Growth 0.80% 0.05% 0.85%
Leveraged Allcap (4) 0.85% 0.08% 0.93%
SCUDDER VARIABLE LIFE INVESTMENT FUND
Bond 0.475% 0.09% 0.57%
Balanced 0.475% 0.08% 0.55%
Growth and Income 0.475% 0.08% 0.55%
Global Discovery 0.975% 0.65% 1.63%
International 0.853% 0.18% 1.03%
STRONG VARIABLE INSURANCE FUNDS, INC.
Discovery II 1.00% 0.14% 1.14%
Mid Cap Growth II 1.00% 0.17% 1.17%
STRONG OPPORTUNITY FUND II, INC.
Opportunity II 1.00% 0.14% 1.14%
T. ROWE PRICE INTERNATIONAL SERIES, INC. (7)
T. Rowe Price 1.05% 0.00% 1.05%
International Stock
T. ROWE PRICE EQUITY SERIES, INC. (7)
T. Rowe Price New America Growth 0.85% 0.00% 0.85%
T. Rowe Price Mid-Cap Growth 0.85% 0.00% 0.85%
T. Rowe Price Equity Income 0.85% 0.00% 0.85%
MFS VARIABLE INSURANCE TRUST (5)
Growth with Income 0.75% 0.13% 0.88%
Research 0.75% 0.11% 0.86%
Emerging Growth 0.75% 0.09% 0.84%
Total Return (6) 0.75% 0.15% 0.90%
New Discovery (6) 0.90% 0.17% 1.07%
- --------------------------
(1) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Growth,
Aggressive Growth, Worldwide Growth, and Balanced Portfolios. All expenses are
shown without the effect of expense offset arrangements.
(2) The expense figures shown reflect the voluntary waiver of all or a portion
of the Management Fee. The maximum Management Fees for the indicated Portfolios
and the Total Portfolio Expenses absent the voluntary waiver are as follows:
0.75% and 1.19%, respectively, for the Utility Fund II; 0.60% and 1.03%,
respectively, for the U.S. Government Securities II; and 0.60% and 1.04%
respectively for the High Income Bond Fund II.
(3)(a) A portion of the brokerage commissions these Portfolios paid was used to
reduce their expenses. Additionally, a portion of certain of these funds'
expenses was reduced as a result of credits earned on uninvested cash balances
through arrangements with or on behalf of the funds' custodian. Without these
reductions, total operating expenses for the following Portfolios would have
been: Equity Income -- 0.57%; Growth -- 0.66%; Overseas -- 0.91%; Asset Manager
- -- 0.63%; and Contrafund -- 0.67%.
(b) The Fund's Investment Adviser agreed to reimburse a portion of the Index 500
Portfolio's expenses during the period. Without this reimbursement, the total
operating expenses for the Index 500 Portfolio would have been 0.34%.
(4) Included in the Other Expenses of this Portfolio is 0.01% of interest
expense.
(5) Each Portfolio has an expense offset arrangement which reduces the
Portfolio's custodian fee based upon the amount of cash maintained by the
Portfolio with its custodian and dividend disbursing agent, and may enter into
other such arrangements and directed brokerage arrangements (which would also
have the effect of reducing the Portfolio's expenses). Any such fee reductions
are not reflected under "Other Expenses."
(6) The Adviser has agreed to bear expenses for this Portfolio, subject to
reimbursement by this Portfolio, such that this Portfolio's "Other Expenses"
shall not exceed 0.15% of the average daily net assets of the Portfolio during
the current fiscal year. Otherwise, "Other Expenses" and "Total Expenses" for
New Discovery would be Other Expenses 1.59% and Total Expenses 2.49%.
(7) Management fees include operating expenses.
Transfer Fee. We currently are not charging a transfer fee. The Policy, however,
permits us to charge a transfer fee of $10 on the second and each subsequent
transaction in each calendar month in which transfer(s) are effected between
Subaccount(s). We will notify you if we begin to charge this fee.
The transfer fee will be deducted from the Policy Value that remains in the
Subaccount(s) from which the transfer was made. If that amount is insufficient
to pay the transfer fee, we will deduct the fee from the transferred amount.
GENERAL POLICY PROVISIONS
Statements To Policy Owners. We will maintain all records relating to the
Separate Account and the Subaccounts. Each year we will send you a report
showing information concerning your Policy transactions in the past year and the
current status of your Policy. The report will include information such as the
Policy Value as of the end of the current and the prior year, the current Death
Benefit, Surrender Value, Policy Debt, partial withdrawals, earnings, Premiums
paid, and deductions made since the last annual report. We will also include any
information required by state law or regulation. If you ask us, we will send you
an additional report at any time. We may charge you up to $25 for this extra
report. We will tell you the current charge before we send you the report.
In addition, we will mail you the reports, confirmation notices or other
appropriate notices of Policy transactions quarterly or more frequently if
required by law. You should therefore give us prompt written notice of any
address change. You should read your statements and confirmations carefully and
verify their accuracy. You should contact us promptly with any questions.
Limit On Right To Contest. We may not contest the insurance coverage under the
Policy after the Policy has been in force for two years while the Insured is
alive. If the Policy has lapsed and been reinstated, we may not contest the
reinstatement after two years from the date of the reinstatement while the
Insured is alive. We may not contest any increase in the Face Amount of the
Policy after the increase has been in effect for two years while the Insured is
alive.
Suicide. If the Insured commits suicide while sane or kills him or herself while
insane within two years of the Issue Date or within two years of any increase in
the Face Amount, we are not required to pay the full Death Benefit that would
otherwise be payable. Instead, we will pay an amount equal to the Policy Value
less any Policy Debt and the Policy will stop. If within two years of the
effective date of any increase in the Face Amount the Insured commits suicide
while sane or kills him or herself while insane, we will pay a Death Benefit for
the increase equal to the total cost of insurance charges.
Misstatement Of Age Or Sex. If the age or sex of the Insured is incorrectly
stated in the application, we will adjust the Death Benefit appropriately as
specified in the Policy.
Beneficiary. You name the original Beneficiary(ies) and Contingent
Beneficiary(ies) in your application for the Policy. You may change the
Beneficiary or Contingent Beneficiary at any time, except irrevocable
Beneficiaries and Contingent Beneficiaries may not be changed without their
consent.
You must request a change of Beneficiary in writing. We will provide a form to
be signed and filed with us. Your request for a change in Beneficiary or
Contingent Beneficiary will take effect when we receive it, effective as of the
date you signed the form. Until we receive your change instructions, we are
entitled to rely on your most recent instructions in our files. Accordingly, we
are not liable for making a payment to the person shown in our files as the
Beneficiary or treating that person in any other respect as the Beneficiary,
even if instructions that we subsequently receive from you seek to change your
Beneficiaries effective as of a date before we made the payment or took the
action in question.
If you name more than one Beneficiary, we will divide the Death Benefit among
your Beneficiaries according to your most recent written instructions. If you
have not given us written instructions, we will pay the Death Benefit in equal
shares to the Beneficiaries. If one of the Beneficiaries dies before you, we
will divide the Death Benefit among the surviving Beneficiaries.
Different rules may apply if your Policy was issued in connection with a
Qualified Plan.
Assignment. You may assign your Policy as collateral security, unless it was
issued in connection with a Qualified Plan. You must notify us in writing if you
assign the Policy. Until we receive notice from you, we are not liable for any
action we may take or payments we may make that may be contrary to the terms of
your assignment. We are not responsible for the validity of an assignment. Your
rights and the rights of the Beneficiary may be affected by an assignment.
Dividends. We will not pay any dividend under the Policies.
TAX MATTERS
Introduction
The following discussion is general and is not intended as tax advice. Lincoln
Benefit makes no guarantee regarding the tax treatment of any Policy or
transaction involving a Policy. Federal, state, local and other tax consequences
of ownership or purchase of a life insurance policy depend upon your
circumstances. This discussion addresses the tax treatment of Policies that are
not owned by Qualified Plans. Policies may also be used in connection with
Qualified Plans. The income on Qualified Plan investments is tax deferred and
Policies held by such plans do not receive any additional tax deferral. You
should review the Policy features, including all benefits and expenses, prior to
purchasing a Policy in a Qualified Plan. In the case of a Policy held by a
Qualified Plan, the terms of the plan may govern the right to benefits,
regardless of the terms of the Policy. If you are concerned about any tax
consequences with regard to your individual circumstances, you should consult a
qualified tax advisor.
Taxation Of The Company And The Separate Account
Lincoln Benefit is taxed as a life insurance company under Part I of Subchapter
L of the Internal Revenue Code. The Separate Account is not an entity separate
from Lincoln Benefit and its operations form a part of Lincoln Benefit. As a
consequence, the Separate Account will not be taxed separately as a "Regulated
Investment Company" under Subchapter M of the Code. Investment income and
realized capital gains are automatically applied to increase reserves under the
Policies. Under current federal tax law, Lincoln Benefit believes that the
Separate Account investment income and realized net capital gains will not be
taxed to the extent that such income and gains are applied to increase the
reserves under the Policies. Generally, reserves are amounts that Lincoln
Benefit is legally required to accumulate and maintain in order to meet future
obligations under the Policies. Lincoln Benefit does not anticipate that it will
incur any federal income tax liability attributable to the Separate Account.
Therefore, we do not intend to make provisions for any such taxes. If we are
taxed on investment income or capital gains of the Separate Account, then we may
impose a charge against the Separate Account in order to make provisions for any
such taxes.
Taxation Of Policy Benefits
In order to qualify as a life insurance policy for federal income tax purposes,
the Policy must meet the definition of a life insurance policy set forth in
Section 7702 of the Code. Section 7702 limits the amount of premiums that may be
invested in a Policy that qualifies as life insurance. The Policy is structured
to meet the Section 7702 definition of a life insurance policy. This means that
the Death Benefit is excluded from the beneficiary's gross income under Section
101(a) of the Tax Code and you are not taxed on increases in the Policy Value
until a distribution occurs.
If a Policy fails to qualify as life insurance under Section 7702, the Policy
will not provide most of the tax advantages normally provided by life insurance.
Lincoln Benefit has the right to amend the Policies to comply with any future
changes in the Tax Code, any regulations or rulings under the Tax Code and any
other requirements imposed by the Internal Revenue Service.
If you surrender the Policy, you are subject to income tax on the portion of the
distribution that exceeds the investment in the contract. The investment in the
contract is the gross premium paid for the Policy minus any amounts previously
received from the Policy if such amounts were properly excluded from your gross
income. Policy loans are generally not treated as taxable distributions.
Interest paid on a Policy loan is generally not deductible. You are generally
taxed on partial withdrawals only to the extent the amount distributed exceeds
the investment in the contract. In certain situations, partial withdrawals or
reduction in benefits during the first fifteen years of the Policy may result in
a taxable distribution before the investment in the contract is recovered.
Withdrawals and loans from modified endowment contracts are subject to less
favorable tax treatment.
If you are Owner and Insured under the Policy, the Death Benefit will be
included in your gross estate for federal estate tax purposes if the proceeds
are payable to your estate. If the beneficiary is not your estate, but you
retain incidents of ownership in the Policy, the Death Benefit will also be
included in your gross estate. Examples of incidents of ownership include:
o the right to change beneficiaries,
o to revoke an assignment,
o to pledge the Policy, or
o to obtain a Policy loan.
If you are Owner and Insured under the Policy, and you transfer all incidents of
ownership in the Policy, the Death Benefit will be included in your gross estate
if you die within three years from the date of the ownership transfer. State and
local estate and inheritance taxes may also apply. In addition, certain
transfers of the Policy or Death Benefit, either during life or at death, to
individuals two or more generations below the transferor may be subject to the
federal generation skipping transfer tax. This rule also applies if the transfer
is to a trust for the benefit of individuals two or more generations below the
transferor.
The Policy may be used in various arrangements, including Qualified Plans,
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary depending on the particular
facts and circumstances of each individual arrangement. If you are contemplating
the use of a Policy in any of these arrangements, you should consult a qualified
tax advisor regarding the tax attributes of the particular arrangement.
Modified Endowment Contracts
A life insurance policy is treated as a "modified endowment contract" under
Section 7702A of the Tax Code if it meets the definition of life insurance in
Section 7702, but fails the "seven-pay" test of Section 7702A. The seven-pay
test provides that premiums cannot be paid at a rate more rapidly than that
allowed by the payment of seven annual premiums using specified computational
rules provided in Section 7702A. We will not accept any premiums that cause the
Policy to become a modified endowment contract unless we receive from you a
written acknowledgment that the Policy will become a modified endowment
contract. An exchange under Section 1035 of the Tax Code of a life insurance
policy that is not a modified endowment contract will not cause the new policy
to be a modified endowment contract if no additional premiums are paid. An
exchange under Section 1035 of the Code of a life insurance policy that is a
modified endowment contract for a new life insurance policy will always cause
the new policy to be a modified endowment contract.
A Policy that is classified as a modified endowment contract is eligible for
some of the beneficial tax treatment accorded to life insurance. The death
benefit is excluded from income and increases in Policy Value are not subject to
current taxation. If you receive any amount as a Policy loan from a modified
endowment contract, or assign or pledge any part of the value of the Policy,
such amount is treated as a distribution. Unlike other life insurance policies,
withdrawals and distributions made before the insured's death are treated as
taxable income first, then as recovery of investment in the contract. The
taxable portion of any distribution from a modified endowment contract is
subject to a 10% penalty tax, except as follows:
o distributions made on or after the date on which the taxpayer
attains age 59 1/2;
o distributions attributable to the taxpayer's becoming disabled
(within the meaning of Section 72(m)(7) of the Code);
o or any distribution that is part of a series of substantially
equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the taxpayer or the
joint lives (or joint life expectancies) of such taxpayer and
his or her beneficiary.
All modified endowment contracts that are issued within any calendar year to the
same owner by one company or its affiliates shall be treated as one modified
endowment contract in determining the taxable portion of any distributions.
Diversification Requirements
For a Policy to qualify as a variable life insurance policy for federal tax
purposes, the investments in the Separate Account must be "adequately
diversified" consistent with standards under Treasury Department regulations. If
the investments in the Separate Account are not adequately diversified, the
Policy will not be treated as a variable life insurance policy for federal
income tax purposes. As a result, you will be taxed on the excess of the Policy
Value over the investment in the contract. Although Lincoln Benefit does not
have control over the Portfolios or their investments, we expect the Portfolios
to meet the diversification requirements.
Ownership Treatment
The IRS has stated that you will be considered the owner of Separate Account
assets if you possess incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, the Treasury Department announced that
the regulations do not provide guidance concerning circumstances in which
investor control of the Separate Account investments may cause an investor to be
treated as the owner of the Separate Account. The Treasury Department also
stated that future guidance would be issued regarding the extent that owners
could direct sub-account investments without being treated as owners of the
underlying assets of the Separate Account.
Your rights under this Policy are different than those described by the IRS in
rulings in which it found that contract owners were not owners of Separate
Account assets. For example, you have the choice to allocate premiums and Policy
values among more investment options. Also, you may be able to transfer among
investment options more frequently than in such rulings. These differences could
result in you being treated as the owner of the Separate Account. If this
occurs, income and gain from the Separate Account assets would be includable in
your gross income. Lincoln Benefit does not know what standards will be set
forth in any regulations or rulings which the Treasury Department may issue. It
is possible that future standards announced by the Treasury Department could
adversely affect the tax treatment of your contract. We reserve the right to
modify the Policy as necessary to attempt to prevent you from being considered
the federal tax owner of the assets of the Separate Account. However, we make no
guarantee that such modification to the Policy will be successful.
DESCRIPTION OF LINCOLN
BENEFIT LIFE COMPANY AND THE
SEPARATE ACCOUNT
Lincoln Benefit Life Company. Lincoln Benefit Life Company is a stock life
insurance company organized under the laws of the state of Nebraska in 1938. Our
legal domicile and principal business address is 2940 South 84th Street,
Lincoln, Nebraska 68506-4142. Lincoln Benefit is a wholly-owned subsidiary of
Allstate Life Insurance Company ("Allstate Life"), a stock life insurance
company incorporated under the laws of the State of Illinois. Allstate Life is a
wholly-owned subsidiary of Allstate Insurance Company ("Allstate"), a stock
property-liability insurance company incorporated under the laws of Illinois.
All outstanding capital stock of Allstate is owned by the Allstate Corporation.
We are authorized to conduct life insurance and annuity business in the District
of Columbia, Guam, U.S. Virgin Islands and all states except New York. We intend
to market the Policy everywhere we conduct variable life insurance business. The
Policies offered by this Prospectus are issued by us and will be funded in the
Separate Account.
Through our reinsurance agreement with Allstate Life, substantially all of the
assets backing our reinsured liabilities are owned by Allstate Life. These
assets represent our general account and are invested and managed by Allstate
Life. While the reinsurance agreement provides us with financial backing from
Allstate Life, it does not create a direct contractual relationship between
Allstate Life and you.
Under our reinsurance agreements with Allstate Life, we reinsure all reserve
liabilities with Allstate Life except for variable contracts. Our variable
contract assets and liabilities are held in legally-segregated unitized separate
accounts and are retained by us. However, the transactions related to such
variable contracts such as premiums, expenses and benefits are transferred to
Allstate Life.
Lincoln Benefit is highly rated by independent agencies, including A.M. Best,
Moody's, and Standard & Poor's. These ratings are based on our reinsurance
agreement with Allstate Life, and reflect financial soundness and strong
operating performance. The ratings are not intended to reflect the financial
strength or investment experience of the Separate Account. We may from time to
time advertise these ratings in our sales literature.
We also act as the sponsor for one other of our Separate Accounts that is a
registered investment company: Lincoln Benefit Life Variable Annuity Account.
Our officers and employees are covered by a fidelity bond in the amount of
$5,000,000. No person beneficially owns more than 5% of the outstanding voting
stock of The Allstate Corporation, of which we are an indirect wholly-owned
subsidiary.
Executive Officers And Directors Of Lincoln Benefit. Our directors and executive
officers are listed below, together with information about their dates of
election and principal business occupations during the last five years (if other
than their present occupation). The principal business address of each of the
officers and directors listed below is 2940 South 84th St., Lincoln, Nebraska
68506-4142.
Thomas R. Ashley, Senior Vice President & Medical Director 1998, Director 1999,
Vice President and Medical Director 10/96-5/98, Lincoln Benefit Life Company;
Director 10/99-present, Senior Vice President & Medical Director 5/98-present,
Vice President and Medical Director 1/97-5/98, Surety Life Insurance Company.
Thomas J. Berney, Senior Vice President 1998, Director 1999, Vice President
1982-1998 Lincoln Benefit Life Company.
John H. Coleman, III, Senior Vice President, Director 1998-present, Vice
President 4/94-5/98, Lincoln Benefit Life Company; Senior Vice President,
Director 5/98-present, Vice President 9/96-5/98, Surety Life Insurance Company.
Lawrence W. Dahl, Executive Vice President, Director 1999, Lincoln Benefit Life
Company; Tax Director, 2/87-5/99, Allstate Life Insurance Company.
Marvin P. Ehly, Senior Vice President, Treasurer And Controller, Director 1999;
Vice President 6/93-12/98, Lincoln Benefit Life Company; Senior Vice President,
Treasurer and Controller, Director 1/99-present, Surety Life Insurance Company.
Douglas F. Gaer, Executive Vice President 1997, Director 1981, Senior Vice
President, 4/95-2/97, Lincoln Benefit Life Company; Executive Vice President
1/97-present, Senior Vice President and Treasurer, 1/94-12/96, Director
1/94-present, Surety Life Insurance Company; Director 5/93-1/99, Lincoln Benefit
Financial Services, Inc.
Rodger A. Hergenrader, Senior Vice President, Director 1999, Vice President
1995-1998, Underwriter 1988-1995, Lincoln Benefit Life Company; Senior Vice
President 1999-present, Director 10/99-present, Surety Life Insurance Company.
Robert E. Rich, Executive Vice President 1996, Director 1987, Senior Vice
President/Chief Actuary and Treasurer, 4/95-5/96; Vice President/Assistant
Secretary 1/84-5/96, Lincoln Benefit Life Company; Executive Vice President
5/96-present, Senior Vice President and Chief Actuary 1/94-5/96, Director
9/93-present, Surety Life Insurance Company; Director 5/93-1/99, Lincoln Benefit
Financial Services, Inc.
Kevin R. Slawin, Director 1996, Lincoln Benefit Life Company; Director and Vice
President-Finance and Planning 1996-present, Allstate Life Insurance Company;
Director 8/96-present, Allstate Life Insurance Company of New York; Director
8/96-present, Laughlin Group Holdings, Inc.; Director 8/96-present, Northbrook
Life Insurance Company; Director 8/96-present, Surety Life Insurance Company;
Director 8/96-present, Glenbrook Life Insurance Company; Assistant Vice
President, Assistant Treasurer 1/95-8/96, Allstate Insurance Company.
J. Scott Taylor, Senior Vice President, 1999, Director 10/99-present, Vice
President 9/98-3/99, Director of Sales Management 1/97-9/98, Lincoln Benefit
Life Company; Director of Marketing Development 1984-1997, Ameritas Life
Insurance Corp.
Michael J. Velotta, Director 1992, Lincoln Benefit Life Company; Vice President,
Secretary & General Counsel 1/93-present, Director 12/92-present, Allstate Life
Insurance Company; Vice President, Secretary & General Counsel 1/93-present,
Director 12/92-present, Glenbrook Life Insurance Company; Vice President,
Secretary & General Counsel 1/93-present, Director 12/92-present, Glenbrook Life
& Annuity Company; Vice President, Secretary & General Counsel 1/93-present,
Director 12/92-present, Allstate Life Insurance Company of New York; Vice
President, Secretary & General Counsel 1/93-present, Director 12/92-present,
Northbrook Life Insurance Company; Assistant Secretary, Director 6/95-present,
Surety Life Insurance Company.
Carol S. Watson, Senior Vice President, General Counsel, Director 1992,
Secretary 1999, Assistant Secretary 1994-9/99. Senior Vice President, General
Counsel & Corporate Secretary, Lincoln Benefit Life Company 1/98-present, Senior
Vice President, General Counsel and Assistant Secretary, 1/94-12/97, Director
6/95-present, Surety Life Insurance Company; President, 1996-1/99, Director
5/93-1/99, Vice President and General Counsel 1993-1995, Lincoln Benefit
Financial Services, Inc.
Dean M. Way, Senior Vice President And Actuary, Director 1998, Vice President
and Actuary 5/92-5/98, Lincoln Benefit Life Company; Senior Vice President and
Actuary, Director, 5/98-present, Vice President and Actuary 9/96-5/98, Surety
Life Insurance Company.
Thomas J. Wilson, II, Chairman Of The Board 1999, Lincoln Benefit Life Company;
Director 1/99-present, Surety Life Insurance Company; Senior Vice President,
Director 6/95-present, Vice President 1/95-6/95, Allstate Insurance Company;
Senior Vice President, Director 7/96-present, Allstate Holdings, Inc.; President
1/99-present, Director 9/95-present, Allstate Life Insurance Company; President
12/98-present, Director 1/99-present, Allstate Life Insurance Company of New
York; Senior Vice President 6/95-present, Director 7/95-present, Allstate
Property and Casualty Insurance Company; Vice President 1/95-1/99, The Allstate
Corporation; Vice President 1993-1995, Sears, Roebuck & Company.
Patricia W. Wilson, Director 1997, Lincoln Benefit Life Company; Assistant Vice
President/Assistant Secretary/Assistant Treasurer, 7/97-present, Assistant Vice
President 1/93-7/97, Allstate Life Insurance Company; Assistant Vice President
6/91-present, Director 6/97-present, Allstate Life Insurance Company of New
York; Assistant Treasurer 7/97-present, Glenbrook Life Insurance Company;
Assistant Treasurer 7/97-present, Glenbrook Life Annuity Company; Assistant Vice
President/Assistant Secretary/Assistant Treasurer 7/97-present, Northbrook Life
Insurance Company; Director 7/97-present, Surety Life Insurance Company.
B. Eugene Wraith, President, Chief Operating Officer 1996, Director 1984,
President and Chief Operating Officer 3/96-present, Senior Vice President
4/94-3/96, Lincoln Benefit Life Company; President and Chief Operating Officer
3/96-present, Executive Vice President 1/94-3/96, Director 9/93-present, Surety
Life Insurance Company; Chairman of the Board, Director 1993-1/99, President
5/93-11/96, Lincoln Benefit Financial Services, Inc.; Vice President
1/99-present, Allstate Insurance Company; Vice President 3/96-present, Allstate
Life Insurance Company.
Separate Account. Lincoln Benefit Life Variable Life Account was originally
established in 1990 in the State of Nebraska, as a segregated asset account of
Lincoln Benefit. The Separate Account meets the definition of a "separate
account" under the federal securities laws and is registered with the SEC as a
unit investment trust under the Investment Company Act of 1940. The SEC does not
supervise the management of the Separate Account or Lincoln Benefit.
We own the assets of the Separate Account, but we hold them separate from our
other assets. To the extent that these assets are attributable to the Policy
Value of the Policies offered by this Prospectus, these assets are not
chargeable with liabilities arising out of any other business we may conduct.
Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account are credited to or charged against the Separate Account without
regard to our other income, gains, or losses. Our obligations arising under the
Policies are general corporate obligations of Lincoln Benefit.
We will account separately for each type of variable life insurance policy
funded by the Separate Account.
Safekeeping Of The Separate Account's Assets. We hold the assets of the Separate
Account. We keep those assets physically segregated and held separate and apart
from our general account assets. We maintain records of all purchases and
redemptions of shares of the Portfolios.
State Regulation Of Lincoln Benefit. We are subject to the laws of Nebraska and
regulated by the Nebraska Department of Insurance. Every year we file an annual
statement with the Department of Insurance covering our operations for the
previous year and our financial condition as of the end of the year. We are
inspected periodically by the Department of Insurance to verify our contract
liabilities and reserves. We also are examined periodically by the National
Association of Insurance Commissioners. Our books and records are subject to
review by the Department of Insurance at all times. We are also subject to
regulation under the insurance laws of every jurisdiction in which we operate.
MARKET TIMING AND ASSET ALLOCATION SERVICES
Certain third parties offer market timing and asset allocation services in
connection with the Policies. In certain situations, Lincoln Benefit will honor
transfer instructions from such third parties provided such market timing and
asset allocation services comply with our administrative systems, rules and
procedures, which may be modified by us at any time. PLEASE NOTE that fees and
charges assessed for such market timing and asset allocation services are
separate and distinct from the Policy fees and charges set forth herein. We
neither recommend nor discourage such market timing and asset allocation
services.
DISTRIBUTION OF POLICIES
The Policies described in this Prospectus are sold by registered representatives
of broker-dealers who are our licensed insurance agents, either individually or
through an incorporated insurance agency.
ALFS, Inc. ("ALFS") located at 3100 Sanders Road, Northbrook, IL 60062-7154
serves as principal underwriter of the Policies. ALFS is a wholly owned
subsidiary of Allstate Life Insurance Company. It is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended, and is
a member of the National Association of Securities Dealers, Inc.
Registered representatives who sell the policy will be paid a maximum sales
commission of approximately 70% of cost of insurance charges in the first year,
plus 0.70% of the Policy Value in the first 20 Policy years. In addition,
certain bonuses and managerial compensation may be paid. We pay all such
commissions and incentives.
During 1998, Lincoln Benefit paid to its former principal underwriter of the
Policies, Lincoln Benefit Financial Services ("LBFS"), gross commissions for the
sale of Policies of approximately $263,332.99. LBFS, as principal underwriter,
retained $5,587.83. The amounts not retained by LBFS were paid to other
independent broker/dealers and registered representatives of LBFS for
distribution of the Policies.
Lincoln Benefit does not pay ALFS a commission for distribution of the
Contracts. The underwriting agreement with ALFS provides that we will reimburse
ALFS for expenses incurred in distributing the Policies, including any liability
arising out of the Services we provide on the Policies.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account. Lincoln
Benefit and its subsidiaries are engaged in routine lawsuits which, in our
management's judgment, are not of material importance to their respective total
assets or material with respect to the Separate Account.
LEGAL MATTERS
All matters of Nebraska law pertaining to the Policy, including the validity of
the Policy and our right to issue the Policy under Nebraska law, have been
passed upon Carol S. Watson, Senior Vice President, General Counsel and
Secretary of Lincoln Benefit. Legal matters relating to the federal securities
laws in connection with the Policies described in this prospectus are being
passed upon by the law firm of Jordan Burt Boros Cicchetti Berenson & Johnson,
1025 Thomas Jefferson St., East Lobby, Washington, D.C. 20007-5201.
REGISTRATION STATEMENT
We have filed a registration statement with the SEC, Washington, D.C., under the
Securities Act of 1933 as amended, with respect to the Policies offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the registration statement and the exhibits filed as part of the registration
statement. You should refer to the registration statement and the exhibits for
further information concerning the Separate Account, Lincoln Benefit, and the
Policies. The descriptions in this Prospectus of the Policies and other legal
instruments are summaries. You should refer to those instruments as filed for
their precise terms. You may read the registration statement and other reports
that we file at the SEC's public reference room in Washington, D.C. You can
request copies of these documents upon payment of a duplicating fee, by writing
to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of its public reference room. Our SEC filings are also available to
the public on the SEC Internet site (http:\\www.sec.gov).
EXPERTS
The financial statements of the Lincoln Benefit Life Variable Life Account as of
December 31, 1999, and for each of the periods ended December 31, 1999, December
31, 1998, and December 31, 1997 and the consolidated financial statements of
Lincoln Benefit Life Company and subsidiary as of December 31, 1999 and 1998,
and for each of the three years in the period ended December 31, 1999, included
in this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein, and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
Actuarial matters included in this Prospectus, including the hypothetical Policy
illustrations, have been examined by Mathew A. Monson, Vice President and
Actuary of the Company, and are included in reliance upon his opinion as to
their reasonableness.
FINANCIAL STATEMENTS*
The financial statements of the Separate Account provide information on some
Subaccounts which are not available under the Policy. Those Subaccounts are only
available to Policies other than described in this Prospectus that are offered
by the Company. The consolidated financial statements of Lincoln Benefit that
are included should be considered only as bearing on Lincoln Benefit's ability
to meet its contractual obligations under the Policy. Lincoln Benefit's
financial statements do not bear on the investment experience of the assets held
in the Separate Account.
*To be filed by Pre-Effective Amendment.
APPENDIX
ILLUSTRATIONS OF SURRENDER VALUES AND DEATH BENEFITS
The following tables illustrate how the Surrender Values and Death Benefits of a
Policy change with the investment experience of the Portfolios. The tables show
how the Surrender Values and Death Benefits of a Policy issued to an Insured of
a given age and underwriting risk classification who pays the specified annual
Premium would vary over time if the investments return on the assets held in the
underlying Portfolio(s) was a uniform, gross, after-tax annual rate of 0%, 6%,
or 12%. The tables on page [ ] illustrate a Policy issued to a male, age 45,
$250,000 Face Amount, under a preferred nonsmoker risk classification and Death
Benefit Option 1. The illustrations assume annual payment of $2,500.
The illustration on page [ ] assumes current charges and cost of insurance
rates, while the illustration on page [ ] assumes maximum guaranteed charges and
cost of insurance rates (based on the 1980 Commissioners Standard Ordinary
Mortality Table).
The amounts shown for the Death Benefit, Policy Value and Surrender Value
reflect the fact that the net investment return of the Subaccounts is lower than
the gross, after-tax return on the assets held in the Portfolios as a result of
expenses paid by the Portfolios and charges levied against the Subaccounts. The
values shown take into account the average daily investment advisory fees paid
by the Portfolios, which is equivalent to an average annual rate of .71% of the
average daily net assets of the Funds, and the average of other daily Portfolio
expenses, which is equivalent to an average annual rate of .10% of the average
daily net assets of the Funds. Also reflected is our monthly charge to the
Policy Value for assuming mortality and expense risks. The current charge for
the first fifteen Policy Years is an annual rate of 0.60% of the average net
assets of the Subaccounts, with a maximum charge of 0.60% of average daily net
assets thereafter. The illustrations also reflect the deduction of the
distribution expense charge at an annual rate of 1.00% of the average net assets
of the Subaccounts for the first twenty years and the monthly Policy fee of
$7.50. After deduction of these amounts, the illustrated gross annual investment
rates of return of 0%, 6%, and 12%, "Assuming Current Costs" correspond to
approximate net annual rates of -.81, 5.19, and 11.19% respectively. The
illustrated gross annual investment rates of return of 0%, 6%, and 12%,
"Assuming Guaranteed Costs" correspond to approximate net annual rates of return
of -.81%, 5.19%, and 11.19%, respectively.
The hypothetical values shown in the tables do not reflect any charges for
Federal income taxes against the Separate Account, since we are not currently
making this charge. However, this charge may be made in the future and, in that
event, the gross annual investment rate of return would have to exceed 0%, 6%,
and 12% by an amount sufficient to cover the tax charge in order to produce the
Death Benefits, Policy Values and Surrender Values illustrated (see "Tax
Matters," page [ ]).
The tables illustrate the Policy Values, Surrender Values and Death Benefits
that would result based upon the hypothetical investment rates of return if
Premiums are paid as indicated, if all net Premiums are allocated to the
Separate Account, and if no Policy loans are taken. The tables also assume that
you have not requested an increase or decrease in the face amount of the Policy
and that no partial surrenders or transfers have been made.
Upon request, we will provide a comparable illustration based upon the proposed
Insured's actual age, sex and underwriting classification, the Face Amount,
Death Benefit option, the proposed amount and frequency of Premiums paid and any
available riders requested.
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 45
Face Amount $250,000
Annual Premium $2,500
Preferred Non-Smoker Class
Death Benefit Option 1
Current Cost of Insurance Rates
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross
Year -.81 Net 5.19 Net 11.19 Net
1 250,000 250,000 250,000
2 250,000 250,000 250,000
3 250,000 250,000 250,000
4 250,000 250,000 250,000
5 250,000 250,000 250,000
6 250,000 250,000 250,000
7 250,000 250,000 250,000
8 250,000 250,000 250,000
9 250,000 250,000 250,000
10 250,000 250,000 250,000
15 250,000 250,000 250,000
20 (age 65) 250,000 250,000 250,000
30 (age 75) 250,000 250,000 319,276
40 (age 85) 250,000 250,000 897,554
55 (age 100) 250,000 250,000 3,880,519
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -.81 Net 5.19 Net 11.19 Net -.81 Net 5.19 Net 11.19 Net
1 1,906 2,037 2,168 1,906 2,037 2,168
2 3,618 3,991 4,381 3,618 3,991 4,381
3 5,179 5,903 6,689 5,179 5,903 6,689
4 6,676 7,855 9,189 6,676 7,855 9,189
5 8,092 9,831 11,881 8,092 9,831 11,881
6 9,452 11,857 14,808 9,452 11,857 14,808
7 10,759 13,934 17,995 10,759 13,934 17,995
8 12,013 16,065 21,468 12,013 16,065 21,468
9 13,199 18,237 25,240 13,199 18,237 25,240
10 14,362 20,494 29,382 14,362 20,494 29,382
15 19,446 32,787 56,699 19,446 32,787 56,699
20(age 65) 21,113 44,832 98,281 21,113 44,832 98,281
30(age 75) 12,583 72,661 300,895 12,583 72,661 300,895
40(age 85) - 61,362 861,876 - 61,362 861,876
55(age 100) - - 3,874,220 - - 3,874,220
Assumes the Premium shown is paid at the beginning of each Policy Year. Values
would be different if Premiums are paid with a different frequency or in
different amounts.
Assumes that no Policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional Premium.
The hypothetical investment rates of return shown above and elsewhere in this
Prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the Policy owner and different
investment rates of return for the Portfolios. The Death Benefit, Policy Value,
and surrender value for a Policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual Policy
Years. No representation can be made by the Company or any Portfolio that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
LINCOLN BENEFIT LIFE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 45
Face Amount $250,000
Annual Premium $2,500
Preferred Non-Smoker Class
Death Benefit Option 1
Guaranteed Cost of Insurance Rates
DEATH BENEFIT
Assuming Hypothetical Gross and
Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross
Year -.81 Net 5.19 Net 11.19 Net
1 250,000 250,000 250,000
2 250,000 250,000 250,000
3 250,000 250,000 250,000
4 250,000 250,000 250,000
5 250,000 250,000 250,000
6 250,000 250,000 250,000
7 250,000 250,000 250,000
8 250,000 250,000 250,000
9 250,000 250,000 250,000
10 250,000 250,000 250,000
15 250,000 250,000 250,000
20 (age 65) 250,000 250,000 250,000
30 (age 75) 250,000 250,000 250,000
40 (age 85) 250,000 250,000 250,000
55 (age 100) 250,000 250,000 250,000
POLICY VALUE SURRENDER VALUE
Assuming Hypothetical Gross and Assuming Hypothetical Gross and
Net Annual Investment Return of Net Annual Investment Return of
Policy 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year -.81 Net 5.19 Net 11.19 Net -.81 Net 5.19 Net 11.19 Net
1 1,507 1,625 1,743 1,507 1,625 1,743
2 2,915 3,242 3,584 2,915 3,242 3,584
3 4,222 4,848 5,530 4,222 4,848 5,530
4 5,423 6,435 7,583 5,423 6,435 7,583
5 6,515 7,996 9,748 6,515 7,996 9,748
6 7,487 9,520 12,026 7,487 9,520 12,026
7 8,329 10,990 14,416 8,329 10,990 14,416
8 9,028 12,391 16,912 9,028 12,391 16,912
9 9,566 13,700 19,510 9,566 13,700 19,510
10 9,933 14,899 22,206 9,933 14,899 22,206
15 8,669 18,476 37,052 8,669 18,476 37,052
20(age 65) - 14,900 53,810 - 14,900 53,810
30(age 75) - - 90,794 - - 90,794
40(age 85) - - 38,682 - - 38,682
55(age 100) - - - - - -
Assumes the Premium shown is paid at the beginning of each Policy Year. Values
would be different if Premiums are paid with a different frequency or in
different amounts.
Assumes that no Policy loans or withdrawals have been made. An * indicates lapse
in the absence of additional Premium.
The hypothetical investment rates of return shown above and elsewhere in this
Prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of different
factors, including the investment allocations by the Policy owner and different
investment rates of return for the Portfolios. The Death Benefit, Policy Value,
and surrender value for a Policy would be different from those shown if the
actual investment rates of return averaged the rates shown above over a period
of years, but fluctuated above or below those averages for individual Policy
Years. No representation can be made by the Company or any Portfolio that this
assumed investment rate of return can be achieved for any one year or sustained
over a period of time.
PART II - OTHER INFORMATION
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, as amended, 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.
REPRESENTATION AS TO FEES AND CHARGES
Lincoln Benefit Life Company hereby represents that the fees and charges
deducted under the Flexible Premium Variable Universal Life Insurance Policy
hereby registered by this Registration Statement in the aggregate are reasonable
in relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by Lincoln Benefit Life Company.
REPRESENTATION PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rule 6e-3(T) under the Investment Company Act of
1940, as amended (the "1940 Act").
UNDERTAKING AS TO INDEMNIFICATION
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Securities Act"), may be permitted to directors, officers
and controlling persons of the Registrant, 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
CONTENTS OF THIS REGISTRATION STATEMENT
This Registration Statement consists of the following papers and documents:
Facing Sheet
Cross-Reference Sheet
Prospectus consisting of [ ] pages
Undertaking to File Reports
Undertaking As To Indemnification
Representation As To Fees and Charges
Representation Pursuant to Rule 6e-3(T)
Signature Pages
Exhibits
EXHIBIT LIST
1. Exhibits required by paragraph A of the instructions as to Exhibits of
Form N-8B-2.
(1) Resolution of the Board of Directors of Lincoln Benefit Life Company
authorizing establishment of the Lincoln Benefit Life Variable Life
Account(1)
(2) Custodian Agreement (not applicable)
(3) (a) Form of Principal Underwriting Agreement(2)
(b) Form of Selling Agreement (1)
(c) Schedule of Sales Commissions (1)
(4) Other Agreements between the depositor, principal underwriter, and
custodian with respect to Registrant or its securities (not
applicable).
(5) Specimen Policy and Application
(6) (a) Articles of Incorporation of Lincoln Benefit Life Company, as
amended (1)
(b) By-laws of Lincoln benefit Life Company (1)
(7) Insurance Company Blanket Bond(1)
(8) Participation Agreements
(a) Fund Participation Agreement between Janus Aspen Series and
Lincoln Benefit Life Company (1)
(b) Participation Agreement among Lincoln Benefit Life Company and
Variable Insurance Products Fund II and Fidelity Distributors
Corporation (1)
(c) Participation Agreement among Lincoln Benefit Life Company and
Variable Insurance Products Fund II and Fidelity Distributors
Corporation (1)
(d) (1) Participation Agreement among The Alger American Fund,
Lincoln Benefit Life Company and Fred Alger and Company,
Incorporated (1)
(2) Service Agreement between Fred Alger Management, Inc. and
Lincoln Benefit Life Company(1)
(e) (1) Participation Agreement between Scudder Variable Life
Investment Fund and Lincoln Benefit Life Company(1)
(2) Reimbursement Agreement by and between Scudder, Stevens &
Clark, Inc. and Lincoln Benefit Life Company(1)
(3) Participating Contract and Policy Agreement between Scudder
Investor Services, Inc. and Lincoln Benefit Financial
Services(1)
(f) Form of Participation Agreement among Lincoln Benefit Life
Company, Strong Variable Insurance Funds, Inc., Strong
Opportunity Fund II, Inc., Strong Capital Management, Inc., and
Strong Funds Distributors, Inc.(1)
(g) Form of Participation Agreement among Lincoln Benefit Life
Company, Strong Variable Insurance Funds, Inc., Strong
Opportunity Fund II, Inc., Strong Capital Management, Inc., and
Strong Funds Distributors, Inc.(1)
(h) Form of Participation Agreement among MFS Variable Insurance
Trust, Lincoln Benefit Life Company, and Massachusetts Financial
Services Company(1)
(i) Fund Participation Agreement between Lincoln Benefit Life
Company, Insurance Management Series and Federated Securities
Corp.(1)
(9) Other Material Contracts (not applicable)
(10) Form of Application for Policy(1)
2. Opinion and Consent of Counsel (filed herewith)
3. All financial statements omitted from the prospectus (not applicable)
4. Not applicable
5. Financial Data Schedule (not applicable)
6. Procedures memorandum pursuant to Rule 6e-3(T)(b)(12)(ii) (2)
7. Actuarial Opinion and Consent(2)
8. (a) Consent of Independent Auditors - to be filed by pre-effective
amendment
(b) Consent of Attorneys (filed herewith)
9. Table of Surrender Charge Factors and Percentages(2)
(1) Incorporated by reference from Form S-6 Registration Statement of
Lincoln Benefit Life Variable Life Account, filed March 11, 1998 (File
No. 33-47717).
(2) Incorporated by reference from Post-Effective Amendment No. 1 to Form
S-6 of Lincoln Benefit Life Variable Life Account, filed January 22,
1999 (File No. 33-47717).
II-3
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the registrant has duly caused this Registration Statement to be signed on
its behalf in the City of Lincoln, State of Nebraska, on the 12th day of July,
2000.
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
(Registrant)
BY: LINCOLN BENEFIT LIFE COMPANY
(Depositor)
By: / s / B. Eugene Wraith
------------------------------------
B. Eugene Wraith
President and Chief Operating Officer
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated:
/ s / B. Eugene Wraith
- ------------------------------------
B. Eugene Wraith President, Chief Operating Officer, July 12, 2000
and Director
/ s / Robert E. Rich
- ------------------------------------
Robert E. Rich Executive Vice President and Director July 12, 2000
/ s / Marvin P. Ehly
- ------------------------------------
Marvin P. Ehly Senior Vice President, Treasurer, July 12, 2000
and Director
/ s / Janet P. Anderbery
- ------------------------------------
Janet P. Anderbery Vice President and Controller July 12, 2000
(Principal Accounting Officer)
/ s / John H. Coleman
- ------------------------------------
John H. Coleman , III Director July 12, 2000
/ s / Douglas F. Gaer
- ------------------------------------
Douglas F. Gaer Director July 12, 2000
/ s / Kevin Slawin
- ------------------------------------
Kevin Slawin Director July 12, 2000
/ s / Michael J. Velotta
- ------------------------------------
Michael J. Velotta Director July 12, 2000
/ s / Dean M. Way
- ------------------------------------
Dean M. Way Director July 12, 2000
/ s / Carol S. Watson
- ------------------------------------
Carol S. Watson Director July 12, 2000
/s/ Patricia W. Wilson
- ------------------------------------
Patricia W. Wilson Director July 12, 2000
/ s / Thomas J. Wilson, II
- ------------------------------------
Thomas J. Wilson, II Director July 12, 2000
INDEX TO EXHIBITS
FOR REGISTRATION STATEMENT ON FORM S-6
LINCOLN BENEFIT LIFE VARIABLE LIFE ACCOUNT
EXHIBIT NO. SEQUENTIAL PAGE NO.
- ------------------- ------------------------------------
1(5) Specimen Policy
2 Opinion and Consent of Counsel
8(b) Consent of Attorneys