<Page>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 2002
1933 ACT REGISTRATION NO. 333-XXXXX
1940 ACT REGISTRATION NO. 811-21028
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE
ACCOUNT Y
(EXACT NAME OF REGISTRANT)
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
1300 South Clinton Street, Fort Wayne, Indiana 46802
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
Depositor's Telephone Number, including Area Code
(260) 455-2000
<Table>
Elizabeth Frederick, Esquire COPY TO:
The Lincoln National Life Insurance Company Jeremy Sachs, Esquire
1300 South Clinton Street The Lincoln National Life Insurance Company
P.O. Box 1110 350 Church St.
Fort Wayne, Indiana 46802 Hartford, CT 06103
(NAME AND ADDRESS OF AGENT FOR SERVICE)
</Table>
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable
after the effective date of the Registration Statement, and continuously
thereafter.
INDEFINITE NUMBER OF UNITS OF INTEREST IN VARIABLE LIFE INSURANCE CONTRACTS
(TITLE OF SECURITIES BEING REGISTERED)
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
<Page>
CROSS REFERENCE SHEET
(RECONCILIATION AND TIE)
REQUIRED BY INSTRUCTION 4 TO FORM S-6
<Table>
<Caption>
ITEM OF FORM N-8B-2 LOCATION IN PROSPECTUS
- ------------------- ----------------------
1 Cover Page; Highlights
2 Cover Page
3 *
4 Distribution of Policies
5 Lincoln Life, the Separate Account and the
General Account
6(a) Lincoln Life, the Separate Account and the
General Account
6(b) *
9 Legal Proceedings
10(a)-(c) Right-to-Examine Period; Policy Liquidity; Policy
Values Reports to Owners; Registration Statement
10(d) Policy Liquidity; Policy Values, Transfers and
Allocation Among Accounts
10(e) Lapse and Reinstatement
10(f) Funds -- Voting Rights
10(g)-(h) Lincoln Life, the Separate Account and the
General Account; Funds -- Substitution of
Securities
10(i) Premium Features; Transfers and Allocation Among
Accounts; Death Benefits; Policy Values; Tax
Issues; Payment of Death Benefit Proceeds
11 Cover Page; Funds
12 Funds; Financial Statements
13 Highlights; Charges and Fees
14 Application; Right-to-Examine Period; The Policy
15 Premium Features; Right-to Examine Period;
Transfers and Allocation Among Accounts
16 Lincoln Life, the Separate Account and the
General Account; Funds
17 Policy Liquidity; Tranfers and Allocation Among
Accounts
18 Lincoln Life, the Separate Account and the
General Account; Policy Values; Financial
Statements
19 Reports to Owners
20 *
21 Policy Liquidity -- Policy Loans
22 Lincoln Life, the Separate Account and the
General Account
23 State Regulation
24 Other Policy Provisions
</Table>
<Page>
<Table>
<Caption>
ITEM OF FORM N-8B-2 LOCATION IN PROSPECTUS
- ------------------- ----------------------
25 Lincoln Life, the Separate Account and the
General Account
26 Highlights; Charges and Fees; Financial
Statements
27 Lincoln Life, the Separate Account and the
General Account
28 Directors and Officers of Lincoln Life
29 Lincoln Life, the Separate Account and the
General Account
30 *
31 *
32 *
33 *
34 *
35 Distribution of Policies
36 *
37 *
38 Distribution of Policies
39 Distribution of Policies
40 *
41(a) Distribution of Policies
42 *
43 *
44 Funds; Premium Features; Policy Values;
Highlights; Financial Statements
45 *
46 Policy Liquidity; Policy Values; Charges and
Fees; Transfers and Allocation Among Accounts
47 Lincoln Life, the Separate Account and the
General Account; Funds; Policy Values; Transfers
and Allocation Among Accounts
48 *
49 *
50 Lincoln Life, the Separate Account and the
General Account
51 Cover Page; Highlights; Death Benefits;
Beneficiary; Lapse and Reinstatement; Premium
Features; Financial Statements; Transfers and
Allocation Among Accounts
52 Funds
53 Tax Issues
54 *
55 *
</Table>
* Not Applicable
<Page>
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE LIFE ACCOUNT Y
HOME OFFICE LOCATION:
1300 SOUTH CLINTON STREET
P.O. BOX 1110
FORT WAYNE, INDIANA 46802
(800) 454-6265
ADMINISTRATIVE OFFICE
PERSONAL SERVICE CENTER MVLI
350 CHURCH STREET
HARTFORD, CT 06103-1106
(877)896-6206
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A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
BENEFITS PAYABLE ON DEATH OF SECOND OF TWO INSUREDS
- --------------------------------------------------------------------------------
This Prospectus describes American Legacy SVUL-II, a flexible premium
variable life insurance contract (the "Policy"), offered by The Lincoln National
Life Insurance Company ("Lincoln Life", "Company", "we", "us", "our"). The
Policy provides death benefits when the second of the two named Insureds dies (a
"Second Death Policy").
The Policy features:
- flexible premium payments;
- a choice of one of three death benefit options; and
- a choice of underlying investment options.
It may not be advantageous to replace existing insurance or supplement an
existing flexible premium variable life insurance contract with the Policy. You
should carefully read this Prospectus and the Prospectuses of the Funds
furnished with this Prospectus, to understand the Policy being offered.
You may allocate net premiums to the Sub-Accounts of our Flexible Premium
Variable Life Account Y ("Separate Account"). Each Sub-Account invests in one of
the Funds listed below:
AMERICAN FUNDS INSURANCE SERIES (AFIS)
AFIS Asset Allocation Fund (Class 2)
AFIS Blue Chip Income and Growth Fund (Class2)
AFIS Bond Fund (Class 2)
AFIS Cash Management Fund (Class 2)
AFIS Global Discovery Fund (Class 2)
AFIS Global Growth Fund (Class 2)
AFIS Global Small Capitalization Fund (Class 2)
AFIS Growth Fund (Class 2)
AFIS Growth-Income Fund (Class 2)
AFIS High-Yield Bond Fund (Class 2)
AFIS International Fund (Class 2)
AFIS New World Fund (Class 2)
AFIS U.S. Government/AAA-Rated Securities Fund (Class 2)
TO BE VALID, THIS PROSPECTUS MUST HAVE THE CURRENT MUTUAL FUNDS' PROSPECTUSES
WITH IT. KEEP ALL FOR FUTURE REFERENCE.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS A
CRIMINAL OFFENSE TO STATE OTHERWISE.
THIS POLICY MAY NOT BE AVAILABLE IN ALL STATES, AND THIS PROSPECTUS ONLY OFFERS
THE POLICY FOR SALE IN JURISDICTIONS WHERE SUCH OFFER AND SALE ARE LAWFUL.
PROSPECTUS DATED:
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
CONTENTS PAGE
- -------- --------
HIGHLIGHTS............................ 3
Initial Choices To Be Made.......... 3
Death Benefit....................... 4
Amount of Premium Payment........... 4
Selection of Funding Vehicles....... 5
Charges and Fees.................... 5
Fund Expenses....................... 6
Changes in Specified Amount......... 7
LINCOLN LIFE, THE SEPARATE ACCOUNT AND
THE GENERAL ACCOUNT.................. 7
BUYING VARIABLE LIFE INSURANCE........ 8
Replacements........................ 9
APPLICATION........................... 10
OWNERSHIP............................. 10
BENEFICIARY........................... 10
INSUREDS.............................. 11
THE POLICY............................ 11
Policy Specifications............... 11
PREMIUM FEATURES...................... 11
Planned Premiums; Additional
Premiums........................... 12
Limits on Right to Make Payments
of Additional and Planned
Premiums......................... 12
Premium Load; Net Premium
Payment.......................... 12
RIGHT-TO-EXAMINE PERIOD............... 13
TRANSFERS AND ALLOCATION AMONG
ACCOUNTS............................. 13
Allocation of Net Premium
Payments........................... 13
Transfers........................... 13
Optional Sub-Account Allocation
Programs........................... 14
Dollar Cost Averaging............. 14
Automatic Rebalancing............. 14
POLICY VALUES......................... 15
Accumulation Value.................. 15
Separate Account Value.............. 15
Variable Accumulation Unit
Value............................ 15
Variable Accumulation Units....... 16
Fixed Account and Loan Account
Value.............................. 16
Net Accumulation Value.............. 16
FUNDS................................. 16
Substitution of Securities.......... 18
Voting Rights....................... 19
Fund Participation Agreements....... 19
CHARGES AND FEES...................... 19
Premium Load; Net Premium Payment... 20
Deductions Made Monthly............. 20
Monthly Deduction................. 20
Cost of Insurance Charge.......... 20
Mortality and Expense Risk Charge... 21
Surrender Charges................... 21
Transaction Fee for Excess
Transfers.......................... 22
DEATH BENEFITS........................ 22
Death Benefit Options............... 22
Changes in Death Benefit Options and
Specified Amount................... 23
</Table>
<Table>
<Caption>
CONTENTS PAGE
- -------- --------
Federal Income Tax Definition of
Life Insurance..................... 24
NOTICE OF DEATH OF INSUREDS........... 25
PAYMENT OF DEATH BENEFIT PROCEEDS..... 25
Settlement Options.................. 25
POLICY LIQUIDITY...................... 26
Policy Loans........................ 26
Partial Surrender................... 26
Surrender of the Policy............. 27
Surrender Value................... 27
Deferral of Payment and Transfers... 28
ASSIGNMENT; CHANGE OF OWNERSHIP....... 28
LAPSE AND REINSTATEMENT............... 28
Lapse of a Policy................... 28
No Lapse Provision.................. 29
Reinstatement of a Lapsed Policy.... 30
COMMUNICATIONS WITH LINCOLN LIFE...... 30
Proper Written Form................. 30
Telephone Transaction Privileges.... 30
OTHER POLICY PROVISIONS............... 30
Issuance............................ 30
Date of Coverage.................... 31
Right to Exchange the Policy........ 31
Incontestability.................... 31
Misstatement of Age or Gender....... 31
Suicide............................. 32
Nonparticipating Policies........... 32
Riders.............................. 32
TAX ISSUES............................ 33
Taxation of Life Insurance Contracts
in General......................... 33
Policies which are MECS............. 34
Policies which are not MECS......... 35
Last Survivor Contract.............. 35
Other Considerations................ 36
Tax Status of Lincoln Life.......... 36
FAIR VALUE OF THE POLICY.............. 37
DIRECTORS AND OFFICERS OF LINCOLN
LIFE................................. 37
DISTRIBUTION OF POLICIES.............. 39
CHANGES OF INVESTMENT POLICY.......... 39
STATE REGULATION...................... 40
REPORTS TO OWNERS..................... 40
ADVERTISING........................... 40
LEGAL PROCEEDINGS..................... 41
EXPERTS............................... 41
REGISTRATION STATEMENT................ 41
APPENDIX 1............................ 42
CORRIDOR PERCENTAGES................ 42
APPENDIX 2............................ 43
ILLUSTRATION OF ACCUMULATION VALUES,
SURRENDER VALUES, AND DEATH BENEFIT
PROCEEDS........................... 43
FINANCIAL STATEMENTS..................
LINCOLN LIFE 12/31/01............... S-1
</Table>
2
<Page>
HIGHLIGHTS
This section is an overview of key Policy features. Your
Policy is a flexible premium variable life insurance policy.
Your Policy insures two Insureds. If one of the Insureds
dies, the Policy pays no death benefit. Your Policy will pay
the death benefit only when the second Insured dies. A
"second-to-die" policy might be suitable when both of the
Insureds have income of their own and only want to provide
financial support for their dependents if both of them
should die, or to provide liquidity to heirs when the Second
Insured dies. If replacement income or immediate cash
liquidity is needed upon the death of one Insured, this type
of policy may not be suitable.
The Policy's value may change on a:
1) fixed basis;
2) variable basis; or a
3) combination of both fixed and variable bases.
Review your personal financial objectives and discuss them
with a qualified financial counselor before you buy a
"second-to-die" variable life insurance policy. As a death
benefit is only paid upon the second Insured's death, this
Policy may, or may not, be appropriate for your financial
goals. If you are already entitled to favorable financial
tax treatment, you should satisfy yourself that this Policy
meets your other financial goals before you buy it. The
value of the Policy and, under one option, the death benefit
amount, depends on the investment results of the funding
options you select.
At all times, your Policy must qualify as life insurance
under the Internal Revenue Code of 1986 (the "Code") to
receive favorable tax treatment under Federal law. If these
requirements are met, you may benefit from such tax
treatment. Lincoln Life reserves the right to return your
premium payments if they result in your Policy failing to
meet Code requirements.
We offer other variable life insurance policies and variable
annuity contracts with different features, benefits and
charges. These policies also provide values that vary in
accordance with the investment experience of a separate
account of Lincoln Life.
The state in which your policy is issued will govern whether
or not certain features, charges and fees will be allowed in
your Policy. You should refer to your Policy contract for
these state specific provisions.
INITIAL CHOICES TO BE MADE
The Policy Owner (the "Owner" or "you") is the person named
in the "Policy Specifications" who has all of the Policy
ownership rights. You, as the Owner, have three important
choices to make when the Policy is first purchased. You need
to choose:
1) one of the three Death Benefit Options;
2) the amount of premium you want to pay; and
3) the amount of your Net Premium Payment to be placed in
each of the funding options you select. The Net Premium
Payment is the balance of your Premium Payment that
remains after certain charges are deducted from it.
You may also choose No Lapse Provisions and Riders offered
for this Policy. These may alter the benefits or charges in
the Policy. They also may vary by issue state, and may have
tax consequences to you. See page 32.
3
<Page>
DEATH BENEFIT
The Death Benefit is the amount Lincoln pays to the
Beneficiary(ies) when the second Insured dies. Before we pay
the Beneficiary(ies), any outstanding loan account balances
or outstanding amounts due are subtracted from the Death
Benefit. We calculate the Death Benefit payable as of the
date of the second Insured's death.
When you purchase your Policy, you must choose one of three
Death Benefit Options:
1) the Specified Amount (as explained in the Death Benefits
Section) found on the Policy's Specification Page; or
2) the sum of the Specified Amount and the Net Accumulation
Value (as explained in the Policy Values Section); or
3) the sum of Specified Amount and the Accumulated Premiums
(all premiums paid minus the Cumulative Policy Factor (as
defined in the Death Benefits Options Section), if that
Factor is elected).
If you choose Death Benefit Option 1 or 2, you may also
choose a "No Lapse Provision" at the time of application.
This means that the Policy will not lapse regardless of the
gains or losses of the Funds you select as long as you pay
the No Lapse Premium shown in the Policy Specifications.
There are 3 levels of No Lapse Protection for which you may
qualify:
1) a guarantee to maturity (younger insured age 100), or
2) a guarantee for the first 20 Policy Years, or
3) a guarantee for the first 10 Policy Years.
The level of protection will depend upon the actual premium
paid. Within these periods, the Initial Death Benefit under
your Policy will be guaranteed even though your Net
Accumulation Value is insufficient to pay your current
Monthly Deductions. The No Lapse Provision is available for
no additional charge. Availability of the No Lapse Provision
may vary in some states. Loans or partial surrenders may
jeopardize the No Lapse Provision. See page 29.
AMOUNT OF PREMIUM PAYMENT
When you apply for your Policy, you must decide how much
premium to pay. Premium payments may be changed within the
limits described on page 12.
You may use the value of the Policy to pay the premiums due
and continue the Policy in force if sufficient values are
available for premium payments. Be careful; if the
investment options you choose do not do as well as you
expect, there may not be enough value to continue the Policy
in force without more premium payments. Charges against
Policy values for the cost of insurance (see page 20)
increase as the Insureds get older.
If your Policy lapses because your Monthly Premium Deduction
is larger than the Net Accumulation Value, you may reinstate
your Policy. More information is on page 28.
When you first receive your Policy you will have 10 days to
look it over, unless state law requires a greater time. This
is called the "Right-to-Examine" time period. Use this time
to review your Policy and make sure that it meets your
needs. During this time period, your Initial Premium Payment
will be deposited in the Money Market Sub-Account. If you
then decide you do not want your Policy, we will return all
Premium Payments to you with no interest paid. See page 13.
4
<Page>
SELECTION OF FUNDING VEHICLES
VARIABLE ACCOUNT
This Prospectus focuses on the Separate Account investment
information that makes up the "variable" part of the Policy.
If you put money into the variable funds, you take all the
investment risk on that money. This means that if the mutual
funds(s) you select go up in value, the value of your
Policy, net of charges and expenses, also goes up. If they
lose value, so does your Policy. Each fund has its own
investment objective. You should review each fund's
Prospectus before making your decision.
You must choose the Fund(s) in which you want to place each
Net Premium Payment. These "Sub-Accounts" make up the
Separate Account. Each Sub-Account invests in shares of a
certain Fund. A Sub-Account is not guaranteed and will
increase or decrease in value according to the particular
Fund's investment performance. See page 16.
FIXED ACCOUNT
You may also use Lincoln Life's Fixed Account to fund your
Policy. Net Premium Payments made into the Fixed Account:
- become part of Lincoln Life's General Account;
- do not share the investment experience of the Separate
Account; and
- have a guaranteed minimum interest rate of 4% per year.
Interest beyond 4% is credited at Lincoln Life's discretion.
For additional information, see page 8.
CHARGES AND FEES
We deduct charges in connection with the Policy to
compensate us for providing the Policy's insurance benefit,
administering the Policy, assuming certain risks under the
Policy and for sales-related expenses we incur. Lincoln Life
may profit from any of these charges, including the
mortality and expense risk and cost of insurance charges,
and may use the profit for any purpose, including covering
shortfalls from other charges.
You will be charged:
- A premium load of no more than 8% from each Premium
Payment during the first 15 Policy Years, and no more
than 5% thereafter.
- A $10 monthly deduction for administrative purposes.
- A monthly maximum charge of $0.15 per $1000 of initial
Specified Amount for distribution associated expenses for
the first 120 months from issue date or from the date of
an increase in Specified Amount. If an increase occurs,
your current insurance age will be your issue age for the
new coverage.
- A Cost of Insurance charge based on sex, issue age,
duration and premium class of each Insured.
- A daily mortality and expense risk charge which is at an
annual rate of 0.80% and is guaranteed not to exceed
that.
Each Fund has its own management fee charge, also deducted
daily. Each Fund's expense levels will affect its investment
results. The table on page 6 shows you the current expense
levels for each Fund.
Each Policy Year you will be allowed to make 12 transfers
between funding options. Beyond 12, a $25 fee may apply. See
page 13.
5
<Page>
SURRENDER IN FULL. You may surrender the Policy in full. If
you do so during the first 15 policy years we retain a
certain amount as a Surrender Charge, and deduct it from the
amount due you. In the event of a full surrender of the
Policy, the maximum surrender charge per $1,000 of Specified
Amount will not exceed $37.40. Also, if you surrender in
full during the first 15 years of any increase in Specified
Amount, we retain a certain amount as a Surrender Charge for
surrendering the increase, in addition to any existing
surrender charge for the original Policy. PARTIAL SURRENDER.
Each time you request a partial surrender of your Policy, we
charge you 2% of the amount withdrawn not to exceed $25.
(See page 26.)
If you select the Estate Tax Repeal Rider, and if you
satisfy its special conditions (See "Riders"), you will have
a one-time right to cancel your Policy without being subject
to Surrender Charges. This is a limited benefit, and it is
subject to our specific definition of Estate Tax Repeal.
Upon issue, there is a one-time administrative charge of not
more than $250 for this Rider. See page 32.
You may borrow within described limits against the Policy.
If you borrow against your Policy, interest will be charged
to the Loan Account at an annual interest rate of 8%. For
the first ten Policy Years interest will be credited to the
Loan Account Value at the annual rate of interest charged
for a loan minus 1%. For Policy Years eleven and beyond,
interest will be credited at an annual rate equal to the
current interest charged. See page 26.
FUND EXPENSES
The investment advisor for each of the Funds deducts a daily
charge as a percent of the net assets in each fund as an
asset management charge. The charge reflects asset
management fees of the investment advisor (Management Fees),
and other expenses incurred by the funds (including 12b-1
fees for Class 2 shares and Other Expenses). The charge has
the effect of reducing the investment results credited to
the Sub-Accounts. Future Fund expenses will vary.
PORTFOLIO EXPENSE TABLE (UPDATE TO BE FILED BY AMENDMENT)
<Table>
<Caption>
TOTAL FUND
TOTAL ANNUAL FUND OPERATING
OPERATING EXPENSES EXPENSES WITH
MANAGEMENT 12B-1 OTHER WITHOUT WAIVERS OR TOTAL WAIVERS WAIVERS AND
FUND FEES(1) FEES EXPENSES REDUCTIONS AND REDUCTIONS REIMBURSEMENTS
- -------------------------------------- ----------- --------- -------- ------------------ -------------- --------------
AFIS Asset Allocation Fund
(Class 2)........................... 0.44% 0.25% 0.01% 0.70% N/A 0.70%
AFIS Blue Chip Income and Growth Fund
(Class 2)........................... 0.50 0.25 0.01 0.76 N/A 0.76
AFIS Bond Fund (Class 2).............. 0.48 0.25 0.03 0.76 N/A 0.76
AFIS Cash Management Fund
(Class 2)........................... 0.45 0.25 0.01 0.71 N/A 0.71
AFIS Global Discovery Fund
(Class 2)........................... 0.58 0.25 0.03 0.86 N/A 0.86
AFIS Global Growth Fund (Class 2)..... 0.66 0.25 0.04 0.95 N/A 0.95
AFIS Global Small Capitalization Fund
(Class 2)........................... 0.80 0.25 0.06 1.11 N/A 1.11
AFIS Growth Fund (Class 2)............ 0.36 0.25 0.02 0.63 N/A 0.63
AFIS Growth-Income Fund (Class 2)..... 0.34 0.25 0.01 0.60 N/A 0.60
AFIS High-Yield Bond Fund
(Class 2)........................... 0.50 0.25 0.02 0.77 N/A 0.77
AFIS International Fund (Class 2)..... 0.54 0.25 0.05 0.84 N/A 0.84
AFIS New World Fund (Class 2)......... 0.85 0.25 0.07 1.17 N/A 1.17
AFIS U.S. Government/AAA-Rated
Securities Fund (Class 2)........... 0.46 0.25 0.03 0.74 N/A 0.74
</Table>
- ------------------------------
(1) Certain of the Portfolio advisers reimburse the company for administrative
costs incurred in connection with administering the Portfolios as variable
funding options under the Policy. These reimbursements are generally paid
for by the advisers from their revenues and are not charged to investors.
6
<Page>
CHANGES IN SPECIFIED AMOUNT
The Initial Specified Amount is the amount originally chosen
by the Policy Owner and is equal to the Death Benefit.
Within certain limits, you may decrease or, with
satisfactory evidence of insurability, increase the
Specified Amount. The minimum specified amount is currently
$250,000. Such changes will affect other aspects of your
Policy. See page 29.
LINCOLN LIFE, THE SEPARATE ACCOUNT AND
THE GENERAL ACCOUNT
The Lincoln National Life Insurance Company (Lincoln Life)
(EIN 35-0472300), organized under Indiana Law in 1905, is
one of the largest stock life insurance companies in the
United States. Lincoln Life is engaged primarily in the
direct issuance of life and health insurance contracts and
annuities. Lincoln Life is wholly owned by Lincoln National
Corporation (LNC), a publicly held insurance and financial
services holding company domiciled in Indiana.
On December 7, 2001, LNC sold its life reinsurance business
to Swiss Re Life & Health America Inc. (Swiss Re). This sale
included the indemnity reinsurance by Swiss Re of a block of
reinsurance business written on Lincoln Life paper. The
transaction also included a sale by Lincoln Life to Swiss Re
of four wholly-owned subsidiaries: Lincoln National
Reassurance Company and Lincoln National Health & Casualty
Insurance Company, Indiana Insurance companies; Special
Pooled Risk Administrators, Inc., a New Jersey company; and
Lincoln Re S.A., an Argentinean corporation.
Lincoln Financial Group is the marketing name for Lincoln
National Corporation (NYSE:LNC) and its affiliates. With
headquarters in Philadelphia, Lincoln Financial Group has
consolidated assets in excess of $96 billion and annual
consolidated revenues of over $6.8 billion. Through its
wealth accumulation and protection businesses, the company
provides annuities, life insurance, 401(k) plans, mutual
funds, institutional investment management and financial
planning and advisory services.
Lincoln Life Flexible Premium Variable Life Account Y
("Account Y") is a "separate account" of the company
established on December 17, 2001. Under Indiana law, the
assets of Account Y attributable to the Policies, though our
property, are not chargeable with liabilities of any other
business of Lincoln Life and are available first to satisfy
our obligations under the Policies. Account Y income, gains,
and losses are credited to or charged against Account Y
without regard to our other income, gains, or losses. Its
values and investment performance are not guaranteed. It is
registered with the Securities and Exchange Commission
("Commission") as a "unit investment trust" under the 1940
Act and meets the 1940 Act's definition of "separate
account". Such registration does not involve supervision by
the Commission of Account Y's or our management, investment
practices, or policies. We have numerous other registered
separate accounts which fund our variable life insurance
policies and variable annuity contracts.
Account Y is divided into Sub-Accounts, each of which is
invested solely in the shares of one of the Funds available
as funding vehicles under the Policies. On each Valuation
Day (any day on which the New York Stock Exchange is open),
Net Premium Payments allocated to Account Y will be invested
in Fund shares at net asset value, and monies necessary to
pay for deductions, charges, transfers and surrenders from
Account Y are raised by selling Fund shares at net asset
value.
7
<Page>
The Funds and their investment objectives, which they may or
may not achieve, are described in "Funds". More Fund
information is in the Funds' prospectuses, which must
accompany or precede this prospectus and should be read
carefully. Some Funds have investment objectives and
policies similar to those of other funds managed by the same
investment adviser. Their investment results may be higher
or lower than those of the other funds, and there can be no
assurance, and no representation is made, that a Fund's
investment results will be comparable to the investment
results of any other fund.
We reserve the right to add, withdraw or substitute Funds,
subject to the conditions of the Policy in compliance with
regulatory requirements if, in our sole discretion, legal,
regulatory, marketing, tax or investment considerations so
warrant or in the event a particular Fund is no longer
available for investment by the Sub-Accounts. No
substitution will take place without prior approval of the
Commission, to the extent required by law.
Shares of the Funds may be used by us and other insurance
companies to fund both variable annuity contracts and
variable life insurance policies. While this is not
perceived as problematic, the Funds' governing bodies
(Boards of Directors/Trustees) have agreed to monitor events
to identify any material irreconcilable conflicts which
might arise and to decide what responsive action might be
appropriate. If a Sub-Account were to withdraw its
investment in a Fund because of a conflict, a Fund might
have to sell portfolio securities at unfavorable prices.
A Policy may also be funded in whole or in part through the
"Fixed Account", part of Lincoln Life's General Account
supporting its insurance and annuity obligations. We will
credit interest on amounts held in the Fixed Account as we
determine from time to time, but not less than 4% per year.
Interest, once credited, and Fixed Account principal are
guaranteed. Interests in the Fixed Account have not been
registered under the 1933 Act in reliance on exemptive
provisions. The Commission has not reviewed Fixed Account
disclosures, but they are subject to securities law
provisions relating to accuracy and completeness.
BUYING VARIABLE LIFE INSURANCE
The Policies this Prospectus offers are variable life
insurance policies which provide death benefit protection.
Investors not needing death benefit protection should
consider other forms of investment, as there are extra costs
and expenses of providing the insurance feature. Further,
life insurance purchasers who are risk-averse or want more
predictable premium levels and benefits may be more
comfortable buying more traditional, non-variable life
insurance. However, variable life insurance is a flexible
tool for financial and investment planning for persons
needing death benefit protection and willing to assume
investment risk and to monitor investment choices they have
made.
Flexibility starts with the ability to make differing levels
of premium payments. A young family just starting out may
only be able to pay modest premiums initially but hope to
increase premium payments over time. At first, this family
would be paying primarily for the insurance feature (perhaps
at ages where the insurance cost is relatively low) and
later use a Policy more as a savings vehicle. A customer at
peak earning capacity may wish to pay substantial premiums
for a limited number of years prior to retirement, after
which Policy values may suffice, based on future expected
return results, though not guaranteed, to keep the Policy
inforce for the expected lifetime and to provide, through
loans, supplemental retirement income. A customer may be
able to pay a large single premium, using the Policy
primarily as a savings and investment vehicle for potential
tax advantages.
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Sufficient premiums must always be paid to keep a policy
inforce, and there is a risk of lapse if premiums are too
low in relation to the insurance amount and if investment
results are less favorable than anticipated. The No Lapse
Provision, if elected, may help to assure a death benefit
even if investment results are unfavorable.
Flexibility also results from being able to select, monitor
and change investment choices within a Policy. With the wide
variety of fund options available, it is possible to
finetune an investment mix and change it to meet changing
personal objectives or investment conditions. Policy owners
should be prepared to monitor their investment choices on an
ongoing basis.
Variable life insurance has significant tax advantages under
current tax law. A transfer of values from one fund to
another within the Policy generates no taxable gain or loss.
And any investment income and realized capital gains within
a fund are automatically reinvested without being taxed to
the Policy owners. Policy values therefore accumulate on a
tax-deferred basis. These situations would normally result
in immediate tax liabilities in the case of direct
investment in mutual funds.
While these tax deferral features also apply to variable
annuities, liquidity (the ability of Policy owners to access
Policy values) is normally more easily achieved with
variable life insurance. Unless a policy has become a
"modified endowment contract" (see TAX ISSUES), an Owner can
borrow Policy values tax-free, without surrender charges and
at very low net interest cost. Policy loans can be a source
of retirement income. Variable annuity withdrawals are
generally taxable to the extent of accumulated income, may
be subject to surrender charges, and will result in penalty
tax if made before age 59 1/2.
Depending on the death benefit option chosen, accumulated
Policy values may also be part of the eventual death benefit
payable. If a Policy is heavily funded and investment
performance is very favorable, the death benefit may
increase even further because of tax law requirements that
the death benefit be a certain multiple of Policy value,
depending on the Insureds' ages (see DEATH BENEFITS). The
death benefit is income-tax free and may, with proper estate
planning, be estate-tax free. A tax advisor should be
consulted.
Certain costs and expenses of variable life insurance
ownership which are directly related to Policy values (i.e.
asset based costs) are not unlike those incurred through
investment in mutual funds or variable annuities. A
significant additional cost of variable life insurance is
the "cost of insurance" charge which is imposed on the
"amount at risk" (the death benefit less Policy value) and
increases as the insured grows older. This charge varies by
age, underwriting classification, smoking status and in most
states by gender. The effect of its increase can be seen in
illustrations in this Prospectus (see Appendix 2) or in
personalized illustrations available upon request. Surrender
Charges, which decrease over time, are another significant
additional cost if the Policy is not retained.
REPLACEMENTS
Before purchasing the Policy to replace, or to be funded
with proceeds borrowed or withdrawn from, an existing life
insurance policy, a number of matters should be considered
by the applicant. Will any commission be paid to an agent or
any other person with respect to the replacement? Are
coverages and comparable values available from the Policy,
as compared to his or her existing policy? For example, the
Insureds may no longer be insurable, or the contestability
period may have elapsed with respect
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to the existing policy, while the Policy could be contested.
The Owner should consider similar matters before deciding to
replace the Policy or withdraw funds from the Policy for the
purchase of funding a new policy of life insurance.
APPLICATION
Any person who wants to buy a Policy must first complete an
application on a form provided by Lincoln Life.
A complete application identifies the prospective Insureds
and provides sufficient information about them to permit
Lincoln Life to begin underwriting the risks under the
Policy. We require a medical history and examination of each
of the Insureds. Lincoln Life may decline to provide
insurance on the lives of the Insureds or, if it agrees to
provide insurance, it may place one or both Insureds into a
special underwriting category (these include preferred,
non-smoker standard, smoker standard, non-smoker substandard
and smoker substandard). The amount of the Cost of Insurance
deducted monthly from the Policy value after issue varies
among the underwriting categories as well as by Age and, in
most states, gender of the Insureds.
The applicant will select the Beneficiary or Beneficiaries
who are to receive Death Benefit Proceeds payable on the
Second Death, the initial face amount (the "Initial
Specified Amount") of the Death Benefit and which of three
methods of computing the Death Benefit is to be used. (See
DEATH BENEFITS, DEATH BENEFIT OPTIONS). The applicant will
also indicate both the frequency and amount of Premium
Payments. (See PREMIUM FEATURES). The applicant must also
determine how Policy values are initially to be allocated
among the available funding options following the expiration
of the Right-to-Examine Period. (See RIGHT-TO-EXAMINE
PERIOD).
OWNERSHIP
The Owner is the person or persons named as "Owner" in the
application, and on the Date of Issue will usually be
identified as " Owner" in the Policy Specifications. If no
person is identified as Owner in the Policy Specifications,
then the Insureds are the Owner. The person or persons
designated to be Owner of the Policy must have, or hold
legal title for the sole benefit of a person who has, an
"insurable interest" in the lives of each of the Insureds
under applicable state law. The Owner may be either or both
of the Insureds, or any other natural person or non-natural
entity. The Owner owns and exercises the rights under the
Policy prior to the Second Death.
The Owner is the person who is ordinarily entitled to
exercise the rights under the Policy so long as either of
the Insureds is living. These rights include the power to
select the Beneficiary and the Death Benefit Option. The
Owner generally also has the right to request policy loans,
make partial surrenders or surrender the Policy. The Owner
may also name a new owner, assign the Policy or agree not to
exercise all of the Owner's rights under the Policy.
If the Owner is a person other than the last surviving
Insured, and that Owner dies before the Second Death, the
Owner's rights in the Policy will belong to the Owner's
estate, unless otherwise specified to Lincoln Life.
BENEFICIARY
The Beneficiary is designated by the Owner or the Applicant
and is the person who will receive the Death Benefit
proceeds payable under the Policy. The person or persons
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named in the application as "Beneficiary" are the
Beneficiaries of the Death Beneift under the Policy.
Multiple Beneficiaries will be paid in equal shares, unless
otherwise specified to Lincoln Life.
Except when Lincoln Life has acknowledged an assignment of
the Policy or an agreement not to change the Beneficiary,
the Owner may change the Beneficiary at any time while
either of the Insureds is living. Any request for a change
in the Beneficiary must be in a written form satisfactory to
Lincoln Life and submitted to Lincoln Life. Unless the Owner
has reserved the right to change the Beneficiary, such a
request must be signed by both the Owner and the
Beneficiary. On recordation, the change of Beneficiary will
be effective as of the date of signature or, if there is no
such date, the date recorded. No change of Beneficiary will
affect, or prejudice Lincoln Life as to, any payment made or
action taken by Lincoln Life before it was recorded.
If any Beneficiary dies before the Second Death, the
Beneficiary's potential interest shall pass to any surviving
Beneficiaries, unless otherwise specified to Lincoln Life.
If no named Beneficiary survives the Second Death, any Death
Benefit Proceeds will be paid to the Owner or the Owner's
executor, administrator or assignee.
INSUREDS
There are two Insureds under the Policy. At the Date of
Issue of the Policy the Owner must have an insurable
interest in each of the Insureds. On the Second Death, a
Death Benefit is payable under the Policy.
THE POLICY
The Policy is the life insurance contract described in the
Prospectus. The Date of Issue is the date on which we begin
life insurance coverage under a Policy. A Policy Year is the
twelve month period, beginning on the date of issue, during
which the Policy is in effect. The Policy Anniversary is the
day of the year the Policy was issued.
On issuance, a Policy will be delivered to the Owner. The
Policy sets forth the terms of the Policy, as applicable to
the Owner, and should be reviewed by the Owner on receipt to
confirm that it sets forth the features specified in the
application. The ownership and other options set forth in
the Policy are registered, and may be transferred, solely on
the books and records of Lincoln Life. Possession of the
Policy does not represent ownership or the right to exercise
the incidents of ownership with respect to the Policy. If
the Owner loses the form of Policy, Lincoln Life will issue
a replacement on request. Lincoln Life may impose a Policy
replacement fee.
POLICY SPECIFICATIONS
The Policy includes a "Policy Specifications" page, with
supporting schedules, in which is set forth certain
information applicable to the specific Policy. This
information includes the identity of the Owner, the Date of
Issue, the Initial Specified Amount, the Death Benefit
Option selected, the Insureds, the issue Ages, the
Beneficiary, the initial Premium Payment, the Surrender
Charges, Expense Charges and Fees, Guarantee Maximum Cost of
Insurance Rates, and the No Lapse Premium if the No Lapse
Provision has been selected.
PREMIUM FEATURES
The Policy permits flexible Premium Payments, meaning that
the frequency and the amount of Premium Payments may be
selected by the Owner. After the Initial Premium Payment is
paid there is no minimum premium required, unless to
maintain the No
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Lapse Provision. (See LAPSE AND REINSTATEMENT No Lapse
Provision). The initial Premium Payment is due on the
Effective Date (the date on which the initial premium is
applied to the Policy) and must be equal to or exceed the
amount necessary to provide for two Monthly Deductions or,
if selected, the No Lapse Premium.
If at least one of the Insureds is still living when the
younger Insured attains or would have attained Age 100, and
the Policy has not been surrendered, there are certain
changes under the Policy. We will no longer accept Premium
Payments, and will make no further monthly deductions.
Policy Values held in the Separate Account will be
transferred to the Fixed Account. We will no longer transfer
amounts to Sub-Accounts. The Policy will remain in force
until surrender or the Second Death.
PLANNED PREMIUMS; ADDITIONAL PREMIUMS
"Planned Premiums" are the amount of premium (as shown in
the Policy Specifications) the applicant chooses to pay
Lincoln Life on a scheduled basis. This is the amount for
which we send a premium reminder notice.
Any subsequent Premium Payments ("Additional Premiums") must
be sent directly to the Administrative Office. Additional
Premiums will be credited only when actually received by
Lincoln Life. Premium Payments may be billed with an annual,
semiannual, or quarterly frequency. Pre-authorized automatic
Additional Premium Payments can also be arranged at any
time.
Unless specifically otherwise directed, any payment received
(other than any Premium Payment necessary to prevent, or
cure, Policy Lapse) will be applied first to reduce Policy
indebtedness. There is no premium load on such payments to
the extent applied to reduce indebtedness.
LIMITS ON RIGHT TO MAKE PAYMENTS OF ADDITIONAL AND PLANNED
PREMIUMS
The Owner may increase Planned Premiums, or pay Additional
Premiums, subject to the following limitations and Lincoln
Life's right to limit the amount or frequency of Additional
Premiums.
Lincoln Life may require evidence of insurability if any
payment of Additional Premium (including Planned Premium)
would increase the difference between the Death Benefit and
the Accumulation Value. If Lincoln Life is unwilling to
accept the risk, the increase in premium will be refunded
without interest and without participation of such amounts
in any underlying investment.
Lincoln Life may also decline any Additional Premium
(including Planned Premium) or a portion thereof that would
result in total Premium Payments exceeding the maximum
limitation for life insurance under federal tax laws. The
excess amount would be returned.
PREMIUM LOAD; NET PREMIUM PAYMENT
We deduct a maximum of 8% up-front from each premium payment
during the first 15 years and a maximum of 5% up-front
thereafter. This amount, sometimes referred to as "premium
load," covers certain Policy-related state tax and federal
income tax liabilities and a portion of the sales expenses
incurred by Lincoln Life. The Premium Payment, net of the
premium load, is called the "Net Premium Payment."
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RIGHT-TO-EXAMINE PERIOD
A Policy may be returned to Lincoln Life for cancellation on
or before 10 days after delivery to the Owner (or a greater
number of days if required by your state). This is called
the Right-to-Examine Period. If the Policy is returned for
cancellation within the Right-To-Examine Period, we will
return any Premium Payments. However, if a Premium Payment
was made by check, there may be a delay until the check
clears. Any Premium Payments we receive before the end of
the Right-to-Examine Period will be held in the Money Market
Sub-Account.
TRANSFERS AND ALLOCATION AMONG ACCOUNTS
ALLOCATION OF NET PREMIUM PAYMENTS
The allocation of Net Premium Payments among the Fixed
Account and Sub-Accounts may be set forth in the
application. An Owner may change the allocation of future
Net Premium Payments at any time. In any allocation, the
amount allocated to any Sub-Account must be in whole
percentages. No allocation can be made which would result in
a Sub-Account Value of less than $50 or a Fixed Account
Value of less than $2,500. Lincoln Life, at its sole
discretion, may waive minimum balance requirements on the
Sub-Accounts.
TRANSFERS
The Owner may make transfers among the Sub-Accounts, on the
terms set forth below, at any time before the younger
Insured reaches or would have reached Age 100. The Owner
should carefully consider current market conditions and each
Sub-Account's investment policies and related risks before
allocating money to the Sub-Accounts.
Transfer of amounts of at least $500 from one Sub-Account to
another or from the Sub-Accounts to the Fixed Account are
possible at any time. Within 30 days after each anniversary
of the Date of Issue, the Owner may transfer up to 20% of
the Fixed Account Value (as of the preceding anniversary of
the Date of Issue) to one or more Sub-Accounts. Up to
12 transfer requests (a request may involve more than a
single transfer) may be made in any Policy Year without
charge, and any value remaining in a Sub-Account after a
transfer must be at least $500. Lincoln Life reserves the
right to impose a charge for each transfer request in excess
of 12 requests in any Policy Year. Lincoln Life may further
limit transfers from the Fixed Account at any time.
Transfers must be made in proper written form, unless the
Owner has given written authorization to Lincoln Life to
accept telephone transactions. Authorization to engage in
telephone transactions and permitted telephone transactions
must be made in accordance with the procedures described in
COMMUNICATIONS WITH LINCOLN LIFE, Telephone Transaction
Privileges. You may also send your request by facsimile to
the Administrative Office. Written transfer requests or
adequately authenticated telephone transfer requests
received at the Administrative Office by the close of the
New York Stock Exchange (usually 4:00 PM Eastern Time) on a
Valuation Day will be effected as of that day. Otherwise,
requests will be effective as of the next Valuation Day.
Any transfer among the Sub-Accounts or to the Fixed Account
will result in the crediting and cancellation of
Accumulation Units based on the Accumulation Unit values
next determined after the Administrative Office receives a
request in proper written form or adequately authenticated
telephone transfer requests. Any transfer made which causes
the remaining value of Accumulation Units for a Sub-Account
or the Fixed Account to be
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less than $500 will result in those remaining Accumulation
Units being canceled and their aggregate value reallocated
proportionately among the other Sub-Accounts and the Fixed
Account to which Policy values are then allocated.
OPTIONAL SUB-ACCOUNT ALLOCATION PROGRAMS
The Owner may elect to participate in programs providing for
Dollar Cost Averaging or Automatic Rebalancing, but may
participate in only one program at any time.
DOLLAR COST AVERAGING
Dollar Cost Averaging systematically transfers specified
dollar amounts from the Money Market Sub-Account. Transfer
allocations may be made to one or more of the Sub-Accounts
on a monthly or quarterly basis. These transfers do not
count against the free transfers available. By making
allocations on a regularly scheduled basis, instead of on a
lump sum basis, an Owner may reduce exposure to market
volatility. Dollar Cost Averaging will not assure a profit
or protect against a declining market.
If the Owner elects Dollar Cost Averaging, the value in the
Money Market Sub-Account must be at least $1,000 initially.
The minimum amount that may be allocated is $50 monthly.
An election for Dollar Cost Averaging is effective after the
Administrative Office receives a request from the Owner in
proper written form or by telephone, if adequately
authenticated. An election is effective within ten business
days, but only if there is sufficient value in the Money
Market Sub-Account. Lincoln Life may, in its sole
discretion, waive Dollar Cost Averaging minimum deposit and
transfer requirements.
Dollar Cost Averaging terminates automatically: (1) if the
number of designated transfers has been completed; (2) if
the value in the Money Market Sub-Account is insufficient to
complete the next transfer; (3) within one week after the
Administrative Office receives a request for termination in
proper written form or by telephone, if adequately
authenticated; or (4) if the Policy is surrendered.
Currently, there is no charge for Dollar Cost Averaging, but
Lincoln Life reserves the right to impose a charge.
AUTOMATIC REBALANCING
Automatic Rebalancing periodically restores to a
pre-determined level the percentage of Policy value
allocated to each Sub-Account (e.g. 20% Money Market,
50% Growth, 30% Utilities). The Fixed Account is not subject
to rebalancing. The pre-determined level is the allocation
initially selected on the application, until changed by the
Owner. If Automatic Rebalancing is elected, all Net Premium
Payments allocated to the Sub-Accounts will be subject to
Automatic Rebalancing.
The Owner may select Automatic Rebalancing on a quarterly,
semi-annual or annual basis. Automatic Rebalancing may be
elected, terminated or the allocation may be changed at any
time, effective within ten business days upon receipt by the
Administrative Office of a request in proper written form or
by telephone, if adequately authenticated.
Currently, there is no charge for Automatic Rebalancing, but
Lincoln Life reserves the right to impose a charge.
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POLICY VALUES
The "Accumulation Value" is the sum of the Fixed Account
Value, Separate Account Value and the Loan Account Value.
The Accumulation Value of the Policy depends on the
performance of the underlying investments. Policy values are
used to fund Policy fees and expenses, including the Cost of
Insurance. Premium Payments to meet your objectives will
vary based on the investment performance of the underlying
investments. A market downturn, affecting the Sub-Accounts
upon which the Accumulation Value of a particular Policy
depends, may require Additional Premium Payments beyond
those expected (unless the No Lapse Provision requirements
have been satisfied) to maintain the level of coverage or to
avoid lapse of the Policy. We strongly suggest you review
periodic statements to determine if Additional Premium
Payments may be necessary to avoid lapse of the Policy.
We will tell you at least annually the Accumulation Value,
the number of Accumulation Units which remain credited to
the Policy, the current Accumulation Unit values, the
Sub-Account values, the Fixed Account Value and the Loan
Account Value.
ACCUMULATION VALUE
The portion of a Premium Payment remaining after the
deduction for the premium load is the "Net Premium Payment."
It is the Net Premium Payment that is available for
allocation to the Fixed Account or the Sub-Accounts.
We credit Net Premium Payments to the Policy as of the end
of the Valuation Period in which it is received at the
Administrative Office. The "Valuation Period" is the time
between Valuation Days, and a "Valuation Day" is every day
on which the New York Stock Exchange is open and trading is
unrestricted. Accumulation Units are valued on every
Valuation Day.
The "Accumulation Value" of a Policy is determined by:
(1) multiplying the total number of Variable Accumulation
Units credited to the Policy for each Sub-Account by its
appropriate current Variable Accumulation Unit Value;
(2) if a combination of Sub-Accounts is elected, totaling
the resulting values; and (3) adding any values attributable
to the Fixed Account and the Loan Account. The Accumulation
Value will be affected by Monthly Deductions.
SEPARATE ACCOUNT VALUE
The "Separate Account Value" is the portion of the
Accumulation Value attributable to the Separate Account.
VARIABLE ACCUMULATION UNIT VALUE
All or a part of a Net Premium Payment allocated to a
Sub-Account is converted into Variable Accumulation Units by
dividing the amount allocated by the value of the Variable
Accumulation Unit for the Sub-Account next calculated after
it is received at the Administrative Office. The Variable
Accumulation Unit value for each Sub-Account was initially
established at $10.00. It may thereafter increase or
decrease from one Valuation Period to the next. Allocations
to Sub-Accounts are made only as of the end of a Valuation
Day.
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VARIABLE ACCUMULATION UNITS
A "Variable Accumulation Unit" is a unit of measure used in
the calculation of the value of each Sub-Account. The
Variable Accumulation Unit value will be as determined for
the Valuation Period during which a Premium Payment or
request for transfer is received by Lincoln Life. The
Variable Accumulation Unit value for a Sub-Account for any
later Valuation Period is determined as follows:
1.The total value of Fund shares held in the Sub-Account
is calculated by multiplying the number of Fund shares
owned by the Sub-Account at the beginning of the
Valuation Period by the net asset value per share of
the Fund at the end of the Valuation Period, and adding
any dividend or other distribution of the Fund if an
ex-dividend date occurs during the Valuation Period;
minus
2.The liabilities of the Sub-Account at the end of the
Valuation Period; such liabilities include daily
charges imposed on the Sub-Account, and may include a
charge or credit with respect to any taxes paid or
reserved for by Lincoln Life that Lincoln Life
determines result from the operations of the Separate
Account; and
3.The result of (2) is divided by the number of Variable
Accumulation Units outstanding at the beginning of the
Valuation Period.
The daily charges imposed on a Sub-Account for any Valuation
Period are equal to the daily mortality and expense risk
charge multiplied by the number of calendar days in the
Valuation Period. The amount of Monthly Deduction allocated
to each Sub-Account will result in the cancellation of
Variable Accumulation Units that have an aggregate value on
the date of such deduction equal to the total amount by
which the Sub-Account is reduced.
The number of Variable Accumulation Units credited to a
Policy will not be changed by any subsequent change in the
value of a Variable Accumulation Unit. Such value may vary
from Valuation Period to Valuation Period to reflect the
investment experience of the Fund used in a particular
Sub-Account and fees and charges under the Policy.
FIXED ACCOUNT AND LOAN ACCOUNT VALUE
The Fixed Account Value and the Loan Account Value reflect
amounts allocated to Lincoln Life's general account through
payment of premiums or through transfers from the Separate
Account. Lincoln Life guarantees the Fixed Account Value.
NET ACCUMULATION VALUE
The "Net Accumulation Value" is the Accumulation Value less
the Loan Account Value. The Net Accumulation Value
represents the net value of the Policy and is the basis for
calculating the Surrender Value.
FUNDS
Each of the Sub-Accounts of the Separate Account is invested
solely in the shares of one of the Funds available under the
Policies. Each of the Funds, in turn, is an investment
portfolio of the American Funds Insurance Series (AFIS). A
given Fund may have a similar investment objective and
principal investment strategy to those for another mutual
fund managed by the same investment advisor or subadvisor.
However, because of timing of investments and other
variables, there will be no correlation between the two
investments. Even though the management strategy and the
objectives of the Funds are similar, investment results may
vary.
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The portfolios, their investment advisors and objectives,
and the Funds within each that are available under the
Policies are listed below. Additional information is
available in each Funds prospectus.
AMERICAN FUNDS INSURANCE SERIES is advised by Capital
Research and Management Company. (update to be filed by
amendment)
ASSET ALLOCATION FUND (CLASS 2): The fund seeks to
provide you with high total return (including income and
capital gains) consistent with preservation of capital
over the long-term by investing in a diversified
portfolio of common stocks and other equity securities;
bonds and other intermediate and long-term debt
securities, and money market instruments (debt
securities maturing in one year or less).
BLUE CHIP INCOME AND GROWTH FUND (CLASS 2): The fund
seeks to produce income substantially exceeding the
average yield on U.S. stocks generally and to provide an
opportunity for growth of principal consistent with
sound common stock investing. The fund invests primarily
in common stocks of larger, more established companies
in the U.S.
BOND FUND (CLASS 2): The fund seeks to maximize your
level of current income and preserve your capital by
investing primarily in bonds. The fund is designed for
investors seeking income and more price stability than
stocks, and capital preservation over the long-term.
CASH MANAGEMENT FUND (CLASS 2): The fund seeks to
provide you an opportunity to earn income on your cash
reserves while preserving the value of your investment
and maintaining liquidity by investing in a diversified
selection of high quality money market instruments.
GLOBAL DISCOVERY FUND (CLASS 2): The fund seeks to make
your investment grow over time by investing primarily in
stocks of companies in the services and information area
of the global economy. Companies in there service and
information area include, for example, those involved in
the fields of telecommunications, computer systems and
software, the Internet, broadcasting and publishing,
health care, advertising, leisure, tourism, financial
services, distribution and transportation. Providing you
with current income is a secondary consideration.
GLOBAL GROWTH FUND (CLASS 2): The fund seeks to make
your investment grow over time by investing primarily in
common stocks of companies located around the world. The
fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund
should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.
GLOBAL SMALL CAPITALIZATION FUND (CLASS 2): The fund
seeks to make your investment grow over time by
investing primarily in stocks of smaller companies
located around the world that typically have market
capitalizations of $50 million to $1.5 billion. The fund
is designed for investors seeking capital appreciation
through stocks. Investors in the fund should have a
long-term perspective and be able to tolerate
potentially wide price fluctuations.
GROWTH FUND (CLASS 2): The fund seeks to make your
investment grow by investing primarily in common stocks
of companies that appear to offer superior opportunities
for growth of capital. The fund is designed for
investors seeking capital appreciation through stocks.
Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide
price fluctuations.
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GROWTH-INCOME FUND (CLASS 2): The fund seeks to make
your investment grow and provide you with income over
time by investing primarily in common stocks or other
securities which demonstrate the potential for
appreciation and/or dividends. The fund is designed for
investors seeking both capital appreciation and income.
HIGH-YIELD BOND FUND (CLASS 2): The fund seeks to
provide you with a high level of current income and
secondarily capital appreciation by investing primarily
in lower quality debt securities (rated Ba or BB or
below by Moody's Investors Service, Inc. or Standard &
Poor's Corporation), including those of non-U.S.
issuers. The fund may also invest in equity securities
that provide an opportunity for capital appreciation.
INTERNATIONAL FUND (CLASS 2): The fund seeks to make
your investment grow over time by investing primarily in
common stocks of companies located outside the United
States. The fund is designed for investors seeking
capital appreciation through stocks. Investors in the
fund should have a long-term perspective and be able to
tolerate potentially wide price fluctuations.
NEW WORLD FUND (CLASS 2): The fund seeks to make your
investment grow over time by investing primarily in
stocks of companies with significant exposure to
countries which have developing economies and/or
markets. The fund may also invest in debt securities of
issuers, including issuers of high-yield, high-risk
bonds, in these countries. Investors in the fund should
have a long-term perspective and be able to tolerate
potentially wide price fluctuations.
U.S. GOVERNMENT/AAA-RATED SECURITIES FUND (CLASS 2): The
fund seeks to provide you with a high level of current
income, as well as preserve your investment. The fund
invests primarily in securities that are guaranteed by
the "full faith and credit" pledge of the U.S.
Government and securities that are rated AAA or Aaa by
Moody's Investors Service, Inc. or Standard & Poor's
Corporation or unrated but determined to be of
equivalent quality.
Several of the Funds may invest in non-investment grade,
high-yield, high-risk debt securities (commonly referred to
as "junk bonds"), as detailed in the individual Fund
Prospectuses. Please review the Fund Prospectuses carefully.
There is no assurance that the investment objective of any
of the Funds will be met. You assume all of the investment
performance risk for the Sub-Accounts you select. There is
investment performance risk in each of the Sub-Accounts,
although the amount of such risk varies significantly among
the Sub-Accounts. Owners should read each Fund's prospectus
carefully and understand the risks before making or changing
investment choices. Additional Funds may, from time to time,
be made available as underlying investments. The right to
select among Funds will be limited by the terms and
conditions imposed by Lincoln Life (SEE Allocation of Net
Premium Payments). Lincoln Life may make changes (including
substitutions) for some or all classes of Policy Owners.
SUBSTITUTION OF SECURITIES
If the shares of any Fund should no longer be available for
investment by the Separate Account, or if, in our judgment,
further investment in such shares should cease to be
appropriate in view of the purpose of the Separate Account
or in view of legal, regulatory or federal income tax
restrictions, or for any other reason in our sole
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discretion; we may substitute shares of another Fund. There
will be no substitution of securities in any Sub-Account
without prior approval of the Commission. Substitute funds
may have higher charges than the funds being replaced.
Substitutions may be made with respect to existing
investments or the investment of future premium payments, or
both. We may close Sub-Accounts to allocations of premium
payments or contract value, or both, at any time in our sole
discretion. The funds, which sell their shares to the
Sub-Accounts pursuant to participation agreements, also may
terminate these agreements and discontinue offering their
shares to the Sub-Accounts.
VOTING RIGHTS
Lincoln Life will vote the shares of each Fund held in the
Separate Account at special meetings of the shareholders of
the particular Fund in accordance with instructions received
by the Administrative Office in proper written form from
persons having a voting interest in the Separate Account.
Lincoln Life will vote shares for which it has not received
instructions in the same proportion as it votes shares in
the Separate Account for which it has received instructions.
The Funds do not hold regular meetings of shareholders.
The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the appropriate
Trust not more than sixty (60) days prior to the meeting of
the particular Fund. Voting instructions will be solicited
by written communication at least fourteen (14) days prior
to the meeting.
To determine how many votes each Policy owner is entitled to
direct with respect to a Fund, first Lincoln Life will
calculate the dollar amount of your account value
attributable to that Fund. Second we will divide that amount
by $100.00. The result is the number of votes you may
direct.
FUND PARTICIPATION AGREEMENTS
In order to make the Funds available, Lincoln Life has
entered into agreements with the trusts or corporations and
their advisors or distributors. In some of these agreements,
Lincoln Life must perform certain administrative services
for the Fund advisors or the distributor. For these
administrative functions, Lincoln Life may be compensated by
the Fund at an annual rate of .25% of the assets
attributable to the Policies.
CHARGES AND FEES
We deduct charges in connection with the Policy to
compensate us for providing the Policy's insurance benefit,
administering the Policy, assuming certain risks under the
Policy and for sales related expenses we incur. Lincoln Life
may profit from any of these charges. The profit from any
charges, including mortality and expense risk and cost of
insurance charges, may be used for any purpose, including
covering shortfalls from other charges.
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The nature and amount of these charges are as follows:
PREMIUM LOAD; NET PREMIUM PAYMENT
We deduct a maximum of 8% up-front from each premium payment
during the first 15 years and a maximum of 5% up-front
thereafter. This amount, sometimes referred to as "premium
load," covers certain Policy-related state tax and federal
income tax liabilities and a portion of the sales expenses
incurred by Lincoln Life. The Premium Payment, net of the
premium load, is called the "Net Premium Payment."
DEDUCTIONS MADE MONTHLY
We make various expense deductions monthly. The Monthly
Deduction, including the Cost of Insurance Charge is made
from the Net Accumulation Value.
The Monthly Deductions are deducted proportionately from the
value of each underlying investment subject to the charge.
For Sub-Accounts, Variable Accumulation Units are canceled
and the value of the canceled Variable Accumulation Units is
withdrawn in the same proportion as their respective values
have to the Net Accumulation Value. The Monthly Deductions
are made on the Monthly Anniversary Day, the Date of Issue,
and the same day of each month thereafter, or if there is no
such date in a given month, the first Valuation Day of the
next month. If the day that would otherwise be a Monthly
Anniversary Day is not a Valuation Day, then the Monthly
Anniversary Day is the next Valuation Day.
If the Net Accumulation Value is insufficient to cover the
current Monthly Deduction, you have a 61-day period ("Grace
Period"), to make a payment sufficient to cover that
deduction. (See Lapse and Reinstatement: Lapse of a Policy).
If either Insured is still living when the younger Insured
would have attained Age 100 and the Policy has not been
surrendered, no further Monthly Deductions will be made and
the Separate Account Value will be transferred to the Fixed
Account. The Policy will then remain in force until
surrender or the Second Death.
MONTHLY DEDUCTION
You will be charged a monthly maximum charge of 0.15 per
$1,000 of initial Specified Amount for the first 120 months
from Issue Date or from the date of an increase in Specified
Amount. If an increase occurs, your current insurance age
will be your issue age for the new coverage. You will be
charged a $10 monthly fee for administrative purposes.
These charges compensate Lincoln Life for administrative
expenses associated with Policy issue and ongoing Policy
maintenance including premium billing and collection, policy
value calculation, confirmations, periodic reports and other
similar matters.
If you select the Estate Tax Repeal Rider, there is a
one-time administrative charge of not more than $250.
COST OF INSURANCE CHARGE
The "Cost of Insurance" charge is the portion of the Monthly
Deduction designed to compensate Lincoln Life for the
anticipated cost of paying Death Benefits in excess of the
Accumulation Value, not including riders, supplementary
benefits or monthly expense charges.
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The Cost of Insurance charge depends on the Age,
underwriting category and gender (in accordance with state
law) of both Insureds and the current "Net Amount at Risk"
(Death Benefit minus the Accumulated Value). The rate on
which the Monthly Deduction for the Cost of Insurance is
based will generally increase as the Insureds age, although
the Cost of Insurance charge could decline if the Net Amount
at Risk drops relatively faster than the Cost of Insurance
Rate increases.
The Cost of Insurance charge is determined by dividing the
Death Benefit at the previous Monthly Anniversary Day by
1.0032737 (the monthly equivalent of an annual rate of 4%),
subtracting the Accumulation Value at the previous Monthly
Anniversary Day, and multiplying the result (the Net Amount
at Risk) by the applicable Cost of Insurance Rate as
determined by Lincoln Life. The Guaranteed Maximum Cost of
Insurance Rates, per $1,000 of Net Amount at Risk, for
standard risks are based on the 1980 Commissioners Standard
Ordinary Mortality Tables, Age Nearest Birthday (1980 CSO,
Male or Female); or, for unisex rates, on the 1980 CSO-B
Table.
MORTALITY AND EXPENSE RISK CHARGE
Lincoln Life deducts a daily charge as a percentage of the
assets of the Separate Account as a mortality and expense
risk charge. The mortality risk assumed is that insureds may
live for a shorter period than estimated, and therefore, a
greater amount of death benefit will be payable. The expense
risk assumed is that expenses incurred is issuing and
administering the policies will be greater than estimated.
The mortality and expense risk charge is currently at an
annual rate of .80% and guaranteed not to exceed that.
SURRENDER CHARGES
A generally declining Surrender Charge will apply if the
Policy is totally surrendered or lapses during the first
fifteen years following the Date of Issue or the first
fifteen years following an increase in Specified Amount. The
Surrender Charge varies by Age of the Insureds, the number
of years since the Date of Issue, and Specified Amount. The
charge is in part a deferred sales charge and in part a
recovery of certain first year administrative costs. The
maximum Surrender Charge is included in each Policy and is
in compliance with each state's nonforfeiture law. Examples
of the Surrender Charge can be seen in Appendix 2 by
subtracting "Surrender Value" from "Total Accumulation
Value" on any chosen set of investment return assumptions.
The surrender charge under a Policy is proportional to the
face amount of the Policy. Expressed as a percentage of face
amount, it is higher for older than for younger issue ages.
For example, assuming issue ages 80, the first year
surrender charge is $37.40 per $1000 of face amount. At
issue ages 65 it is $25.10 per $1000 of face amount, at
issue ages 55 it is $13.68 per $1000 of face amount, and at
issue ages 25 it is $2.87 per $1000 of face amount. These
calculations assume both insureds are the same age. The
surrender charge cannot exceed Policy value but may equal
Policy value, especially during the first two Policy years.
All surrender charges decline to zero over the 15 years
following issuance of the Policy. See, for example, the
illustrations in Appendix 2 for issue ages 55 and 65.
If the Specified Amount is increased, a new Surrender Charge
will be applicable, in addition to any existing Surrender
Charge. The Surrender Charge applicable to the increase
would be equal to the Surrender Charge on a new Policy whose
Specified Amount was equal to the amount of the increase.
Supplemental Policy Specifications
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will be sent to the Owner upon an increase in Specified
Amount reflecting the maximum additional Surrender Charge in
the Table of Surrender Charges. The minimum allowable
increase in Specified Amount is $1,000. Lincoln Life may
change this at any time.
If the Specified Amount is decreased while the Surrender
Charge applies, the Surrender Charge will remain the same.
No Surrender Charge is imposed on a partial surrender, but
an administrative fee of $25 (not to exceed 2% of the amount
surrendered) is imposed, allocated pro-rata among the
Sub-Accounts from which the partial surrender proceeds are
taken.
Any surrenders, full or partial, may result in tax
implications. SEE TAX ISSUES.
Based on its actuarial determination, Lincoln Life does not
anticipate that the Surrender Charge, together with the
portion of the premium load attributable to sales expense,
will cover all sales and administrative expenses which
Lincoln Life will incur in connection with the Policy. Any
such shortfall, including but not limited to payment of
sales and distribution expenses, would be available for
recovery from the general account of Lincoln Life, which
supports insurance and annuity obligations.
If you select the Estate Tax Repeal Rider, and if you
satisfy its special conditions (See "Riders"), you will have
a one-time right to cancel your Policy without being subject
to Surrender Charges. This is a limited benefit, and it is
subject to our specific definition of Estate Tax Repeal as
defined in the Riders section of this Prospectus. All
surrenders of your Policy (as distinguished from the
cancellation provision in this Rider) are subject to the
Policy's normal surrender requirements.
TRANSACTION FEE FOR EXCESS TRANSFERS
A $25 fee may apply for each transfer request in excess of
12 in any Policy Year. A single transfer request, either in
writing or by telephone, may consist of multiple
transactions.
DEATH BENEFITS
The Death Benefit Proceeds is the amount payable to the
Beneficiary upon the Second Death (the death of the second
of the two Insureds to die), in accordance with the Death
Benefit Option elected. Loans (if any) and overdue
deductions are deducted from the Death Benefit Proceeds
prior to payment.
The Specified Amount, which may not be less than $250,000,
is the amount requested by the Policy Owner at the time of
application for insurance. This amount, in combination with
a death benefit option, will define the death benefit. The
Specified Amount is a field on the Policy Specification
Page. The three Death Benefit Options are described below.
The applicant must consider a number of factors in selecting
the Specified Amount, including the amount of proceeds
required on the Second Death and the Owner's ability to make
Premium Payments. In evaluating this decision, the applicant
should consider that the greater the Net Amount at Risk, the
greater the monthly deductions for the Cost of Insurance.
DEATH BENEFIT OPTIONS
Three different Death Benefit Options are available under
the Policy. Regardless of which Death Benefit Option you
choose, the Death Benefit Proceeds payable under the Policy
is the greater of (a) the amount determined under the Death
Benefit Option in effect on the date of the second Insured's
Death, less (in each case) any indebtedness under the
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Policy or (b) an amount determined by Lincoln Life equal to
that required by the Internal Revenue Code to maintain the
Policy as a life insurance policy, also referred to as the
"Corridor Death Benefit."
The "Corridor Death Benefit" is the applicable percentage
(the "Corridor Percentage") of the Accumulation Value
(rather than by reference to the Specified Amount) required
to maintain the Policy as a "life insurance contract" for
Federal income tax purposes. The Corridor Percentage is 250%
through the time the younger insured reaches Age 40 and
decreases in accordance with the table in Appendix 1 to 100%
when the younger Insured reaches Age 95.
Death Benefit Option 1 provides Death Benefit Proceeds equal
to the Specified Amount (a minimum of $250,000). If
Option 1 is selected, the Policy pays level Death Benefit
Proceeds unless the Minimum Death Benefit exceeds the
Specified Amount. (See DEATH BENEFITS, Federal Income Tax
Definition of Life Insurance). See the effect of Partial
Withdrawals Section on page 26.
Death Benefit Option 2 provides Death Benefit Proceeds equal
to the sum of the Specified Amount plus the Net Accumulation
Value as of the date of the Second Death. If Option 2 is
selected, the Death Benefit Proceeds increase or decrease
over time, depending on the amount of premium paid and the
investment performance of the underlying Sub-Accounts. See
the effect of Partial Withdrawals Section on page 26.
Death Benefit Option 3 provides Death Benefit Proceeds equal
to the sum of the Specified Amount plus the Accumulated
Premiums (all premiums paid minus the Cumulative Policy
Factor, if that Factor is elected) up to the limit shown in
the Policy Specifications. Any premium paid that will cause
the Death Benefit Proceeds to exceed this limit will be
applied to the Policy, but will not increase the Death
Benefit. The Cumulative Policy Factor, normally used in
business situations, is calculated as the applicable monthly
rate then used by the Internal Revenue Service (IRS) to
determine the economic benefit attributable to life
insurance coverage, or an alternate table permitted by the
IRS, multiplied by the Specified Amount divided by 1000. If
Option 3 is selected, the Death Benefit Proceeds will
generally increase, depending on the amount of premium paid.
See the effect of Partial Withdrawals Section on page 26.
If for any reason the applicant fails to affirmatively elect
a particular Death Benefit Option, Death Benefit Option 1
shall apply until changed as provided below. The ability of
the Owner to support the Policy is an important factor in
selecting between the Death Benefit Options, because the
greater the Net Amount at Risk at any time, the more that
will be deducted from the value of the Policy to pay the
Cost of Insurance.
Owners who prefer insurance coverage that generally does not
vary in amount and generally has lower Cost of Insurance
Charges should elect Option 1. Owners who prefer to have
favorable investment experience reflected in increased
insurance coverage should select Option 2. Owners who have a
need to recover at death the amount of premiums paid should
select Option 3. Under Options 1 and 3, any Surrender Value
at the time of the Insured's Death will revert to Lincoln
Life.
CHANGES IN DEATH BENEFIT OPTIONS AND SPECIFIED AMOUNT
All requests for changes between Death Benefit Options and
changes in the Specified Amount must be submitted in proper
written form to the Administrative Office. The minimum
increase in Specified Amount currently permitted is $1,000.
If requested, a
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supplemental application and evidence of insurability must
also be submitted to Lincoln Life. Any increase in the
Specified Amount will increase the amount of the Surrender
Charge applicable to the policy.
In a change from Death Benefit Option 1 to Death Benefit
Option 2, the Specified Amount will be reduced by the
Accumulation Value as of the effective date of change. In a
change from Death Benefit Option 2 to Death Benefit
Option 1, the Specified Amount will be increased by the
Accumulation Value as of the effective date of change.
In a change from Death Benefit Option 1 to Death Benefit
Option 3, the Specified Amount will remain the same. In a
change from Death Benefit Option 3 to Death Benefit Option
1, the Specified Amount will be increased by Accumulated
Premiums (less the Cumulative Policy Factor if that Factor
is elected) as of the effective date of change.
In a change from Death Benefit Option 2 to Death Benefit
Option 3, the Specified Amount will be increased by the
Accumulation Value as of the effective date of change. In a
change from Death Benefit Option 3 to Death Benefit Option
2, if the Accumulation Values is greater than the
Accumulated Premium (less Cumulative Policy Factor if that
Factor elected), the Specified Amount will be reduced by the
Accumulation Value less Accumulated Premium (plus Cumulative
Policy Factor if that Factor is elected) as of the effective
date of change; if the Accumulation Values is less than the
Accumulated Premium (less the Cumulative Policy Factor if
elected), the Specified Amount will be increased by the
Accumulated Premium (less the Cumulative Policy Factor if
that Factor is elected) less the Accumulation Value as of
the effective date of change.
Any reductions in Specified Amount will be made against the
initial Specified Amount and any later increase in the
Specified Amount on a last in, first out basis. A
transaction Fee of 2% of the amount surrendered (not to
exceed $25) is charged for each partial surrender. Any
increase in the Specified Amount will increase the amount of
the Surrender Charge applicable to the Policy.
Lincoln Life may at its discretion decline any request for a
change between Death Benefit Options or increase in the
Specified Amount. Lincoln Life may at its discretion decline
any request for change of the Death Benefit Option or
reduction of the Specified Amount if, after the change, the
Specified Amount would be less than the minimum Specified
Amount or would reduce the Specified Amount below the level
required to maintain the Policy as life insurance for
purposes of Federal income tax law.
Any change is effective on the first Monthly Anniversary Day
on or after the date of approval of the request by Lincoln
Life, unless the Monthly Deduction Amount would increase as
a result of the change. In that case, the change is
effective on the first Monthly Anniversary Day on which the
Accumulation Value is equal to or greater than the Monthly
Deduction Amount, as increased.
FEDERAL INCOME TAX DEFINITION OF LIFE INSURANCE
The amount of the Death Benefit must satisfy certain
requirements under the Code if the policy is to qualify as
insurance for federal income tax purposes. The amount of the
Death Benefit Proceeds required to be paid under the Code to
maintain the Policy as life insurance under each of the
Death Benefit Options (see INSURANCE COVERAGE PROVISIONS,
Death Benefit) is equal to the product of the Accumulation
Value and the applicable Corridor Percentage. A table of
Corridor Percentages is in Appendix I.
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NOTICE OF DEATH OF INSUREDS
Due Proof of Death must be furnished to Lincoln Life at the
Administrative Office as soon as reasonably practicable
after the death of each Insured. "Due Proof of Death" must
be in proper written form and includes a certified copy of
an official death certificate, a certified copy of a decree
of a court of competent jurisdiction as to the finding of
death, or any other proof of death satisfactory to Lincoln
Life.
PAYMENT OF DEATH BENEFIT PROCEEDS
The Death Benefit Proceeds under the Policy will ordinarily
be paid within seven days, if in a lump sum, or in
accordance with any Settlement Option selected by the Owner
or the Beneficiary after receipt at the Administrative
Office of Due Proof of Death of both Insureds. SEE
SETTLEMENT OPTIONS. The amount of the Death Benefit Proceeds
under Option 2 and Option 3 will be determined as of the
date of the Second Death. Payment of the Death Benefit
Proceeds may be delayed if the Policy is contested or if
Separate Account values cannot be determined.
SETTLEMENT OPTIONS
There are several ways in which the Beneficiary may receive
the Death Benefit Proceeds, or in which the Owner may choose
to receive payments upon surrender of the Policy.
The Owner may elect a Settlement Option before the Second
Death; after the Second Death, if the Owner has not
irrevocably selected a Settlement Option, the Beneficiary
may elect one of the Settlement Options. If no Settlement
Option is selected, the Death Benefit Proceeds will be paid
in a lump sum.
If the Policy is assigned as collateral security, Lincoln
Life will pay any amount due the assignee in one lump sum.
Any remaining Death Benefit Proceeds will be paid as
elected.
A request to elect, change, or revoke a Settlement Option
must be received in proper written form by the
Administrative Office before payment of the lump sum or
under any Settlement Option. The first payment under the
Settlement Option selected will become payable on the date
proceeds are settled under the option. Payments after the
first payment will be made on the first day of each month.
Once payments have begun, the Policy cannot be surrendered
and neither the payee nor the Settlement Option may be
changed.
There are at least four Settlement Options:
The first Settlement Option is an annuity for the
lifetime of the payee.
The second Settlement Option is an annuity for the
lifetime of the payee, with monthly payments guaranteed
for 60, 120, 180, or 240 months.
Under the third Settlement Option, Lincoln Life makes
monthly payments for a stated number of years, at least
five but no more than thirty.
The fourth Settlement Option, provides that Lincoln Life
pays interest annually on the sum left with Lincoln Life
at a rate of at least 3% per year, and pays the amount
on deposit on the payee's death.
Any other Settlement Option offered by Lincoln Life at the
time of election may also be selected.
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POLICY LIQUIDITY
The Policy provides only limited liquidity. Subject to
certain limitations, however, the Owner may borrow against
the Surrender Value of the Policy, may make a partial
surrender of some of the Surrender Value of the Policy and
may fully surrender the Policy for its Surrender Value.
POLICY LOANS
The Owner may at any time contract for Policy Loans up to an
aggregate amount not to exceed 90% of the Surrender Value at
the time a Policy Loan is made. It is a condition to
securing a Policy Loan that the Owner execute a loan
agreement and that the Policy be assigned to Lincoln Life
free of any other assignments. The Loan Account is the
account in which Policy indebtedness (outstanding Loans and
interest) accrues once it is transferred out of the Fixed
Account or Sub-Accounts. Interest on Policy Loans accrues at
an annual rate of 8%, and loan interest is payable to
Lincoln Life (for its account) once a year in arrears on
each Policy Anniversary, or earlier upon full surrender or
other payment of proceeds of a Policy.
The amount of a loan, plus any accrued but unpaid interest,
is added to the outstanding Policy Loan balance. Unless paid
in advance, any loan interest due will be transferred from
the values in the Fixed Account and each Sub-Account, and
treated as an additional Policy Loan, and added to the Loan
Account Value.
We pay interest to your Loan Account value, during the first
ten Policy Years, at an annual rate equal to the interest
rate you must pay on your loan, minus one percent. This is
the "loan spread", and we guarantee it will not exceed 2%
per year for Policy Years one through ten. For the eleventh
and subsequent Policy Years our current practice is to
credit interest at an annual rate equal to your loan rate.
We guarantee the loan spread in Policy Years eleven and
thereafter will never exceed 1%.
If the Net Accumulation Value is distributed among more than
one of the Sub-Accounts, transfers from each for loans and
loan interest will be made in proportion to the assets in
each Sub-Account at that time, unless Lincoln Life is
instructed otherwise in proper written form at the
Administrative Office. Repayments on the loan and interest
credited on the Loan Account Value will be allocated
according to the most recent Premium Payment allocation at
the time of the repayment.
A Policy Loan, whether or not repaid, affects the proceeds
payable upon the Second Death and the Accumulation Value.
The longer a Policy Loan is outstanding, the greater the
effect is likely to be. While an outstanding Policy Loan
reduces the amount of assets invested, depending on the
investment results of the Sub-Accounts, the effect could be
favorable or unfavorable.
If at any time the total indebtedness against the Policy,
including interest accrued but not due, equals or exceeds
the then current Accumulation Value less Surrender Charges,
the Policy will terminate without value subject to the
conditions in the Grace Period Provision, unless the No
Lapse Provision is in effect. (SEE LAPSE AND REINSTATEMENT,
Lapse of a Policy)
If a Policy lapses while a loan is outstanding, adverse tax
consequences may result.
PARTIAL SURRENDER
You may make a partial surrender at any time before the
Second Death by request to the Administrative Office in
proper written form or by telephone, if telephone
transactions
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have been authorized by the Owner. Each time you request a
partial surrender of your Policy, we charge you 2% of the
amount withdrawn not to exceed $25. Total partial surrenders
may not exceed 90% of the Surrender Value of the Policy.
Each partial surrender may not be less than $500. Partial
surrenders are subject to other limitations as described
below.
Partial surrenders may reduce the Specified Amount and, in
each case, reduce the Death Benefit Proceeds. To the extent
that a requested partial surrender would cause the Specified
Amount to be less than $250,000, the partial surrender will
not be permitted by Lincoln Life. In addition, if following
a partial surrender and the corresponding decrease in the
Specified Amount, the Policy would not comply with the
maximum premium limitations required by federal tax law, the
surrender may be limited to the extent necessary to meet the
federal tax law requirements.
The effect of partial surrenders on the Death Benefit
Proceeds depends on the Death Benefit Option elected under
the Policy. If Death Benefit Option 1 has been elected, a
partial surrender would reduce the Accumulation Value and
the Specified Amount. The reduction in the Specified Amount,
which would reduce any past increases on a last in, first
out basis, reduces the amount of the Death Benefit Proceeds.
If Death Benefit Option 2 has been elected, a partial
surrender would reduce the Accumulation Value, but would not
reduce the Specified Amount. The reduction in the
Accumulation Value reduces the amount of the Death Benefit
Proceeds.
If Death Benefit Option 3 is in effect, a partial surrender
will reduce the Accumulated Premiums, the Death Benefit, and
the Death Benefit Option 3 limit by the amount of the
partial surrender. If the amount of the partial surrender
exceeds the Accumulated Premiums, the Specified Amount will
be reduced by the excess amount.
If the Net Accumulation Value is distributed among more than
one of the Sub-Accounts, surrenders from each will be made
in proportion to the assets in each Sub-Account at the time
of the surrender, unless Lincoln Life is instructed
otherwise in proper written form at the Administrative
Office. Lincoln Life may at its discretion decline any
request for a partial surrender.
SURRENDER OF THE POLICY
You may surrender the Policy at any time. On surrender of
the Policy, Lincoln Life will pay you, or assignee, the
Surrender Value next computed after receipt of the request
in proper written form at the Administrative Office. All
coverage under the Policy will automatically terminate if
the Owner makes a full surrender.
SURRENDER VALUE
The "Surrender Value" of a Policy is the amount the Owner
can receive in a lump sum by surrendering the Policy. The
Surrender Value is the Net Accumulation Value less the
Surrender Charge (SEE CHARGES AND FEES, Surrender Charge).
All or part of the Surrender Value may be applied to one or
more of the Settlement Options. Surrender Values are
illustrated in Appendix 2.
If you select the Estate Tax Repeal Rider, and if you
satisfy its special conditions (See "Riders"), you will have
a one-time right to cancel your Policy without being subject
to Surrender Charges. This is a limited benefit, and it is
subject to our specific definition of
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Estate Tax Repeal as defined in the Riders section of this
Prospectus. All surrenders of your Policy (as distinguished
from the cancellation provision in this Rider) are subject
to the Policy's normal surrender requirements.
DEFERRAL OF PAYMENT AND TRANSFERS
Payment of loans or of the Surrender Value from any
Sub-Accounts will be made within 7 days. Payment or transfer
from the Fixed Account may be deferred up to six months at
Lincoln Life's option. If Lincoln Life exercises its right
to defer any payment from the Fixed Account, interest will
accrue and be paid as required by law from the date the
recipient would otherwise have been entitled to receive the
payment.
ASSIGNMENT; CHANGE OF OWNERSHIP
While either Insured is living, the Owner may assign the
Owner's rights in the Policy, including the right to change
the beneficiary designation. The assignment must be in
proper written form, signed by the Owner and recorded at the
Administrative Office. No assignment will affect, or
prejudice Lincoln Life as to, any payment made or action
taken by Lincoln Life before it was recorded. Lincoln Life
is not responsible for any assignment not submitted for
recording, nor is Lincoln Life responsible for the
sufficiency or validity of any assignment. Any assignment is
subject to any indebtedness owed to Lincoln Life at the time
the assignment is recorded and any interest accrued on such
indebtedness after recordation of any assignment.
Once recorded, the assignment remains effective until
released by the assignee in proper written form. So long as
an effective assignment remains outstanding, the Owner will
not be permitted to take any action with respect to the
Policy without the consent of the assignee in proper written
form.
So long as either Insured is living, the Owner may name a
new Owner by recording a change in ownership in proper
written form at the Administrative Office. On recordation,
the change will be effective as of the date of execution of
the document of transfer or, if there is no such date, the
date of recordation. No such change of ownership will
affect, or prejudice Lincoln Life as to, any payment made or
action taken by Lincoln Life before it was recorded. Lincoln
Life may require that the Policy be submitted to it for
endorsement before making a change.
LAPSE AND REINSTATEMENT
LAPSE OF A POLICY
Except as provided by the No Lapse Provision, if at any time
the Net Accumulation Value is insufficient to pay the
Monthly Deduction, the Policy is subject to lapse and
automatic termination of all coverage under the Policy. The
Net Accumulation Value may be insufficient (1) because it
has been exhausted by earlier deductions, (2) due to poor
investment performance, (3) due to partial surrenders, (4)
due to indebtedness for Policy Loans, or (5) because of some
combination of the foregoing factors.
If Lincoln Life has not received a Premium Payment or
payment of indebtedness on Policy Loans necessary so that
the Net Accumulation Value is sufficient to pay the Monthly
Deduction Amount on a Monthly Anniversary Day, Lincoln Life
will send a written notice to the Owner and any assignee of
record. The notice will state the amount of the Premium
Payment or of indebtedness on Policy Loans necessary such
that the Net Accumulation Value is at least equal to two
times the Monthly Deduction Amount. If the minimum required
amount set forth in the notice is not paid to Lincoln Life
on or
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before the day that is the later of (a) 31 days after the
date of mailing of the notice, and (b) 61 days after the
date of the Monthly Anniversary Day with respect to which
such notice was sent (together the "Grace Period"), then the
policy shall terminate and all coverage under the policy
shall lapse without value. If the Second Death occurs during
the Grace Period, Death Benefit Proceeds will be paid, but
will be reduced, in addition to any other reductions, by any
unpaid Monthly Deductions. If the Second Death occurs after
the Policy has lapsed, no Death Benefit Proceeds will be
paid.
NO LAPSE PROVISION
Availability of the No Lapse Provision may vary in some
states. Where available, there is no charge for this
feature. This provision must be selected at the time of
Policy application, and is only available with Death Benefit
Options 1 and 2.
The No Lapse Premium is the cumulative premium required to
have been paid by each Monthly Anniversary Day to prevent
the Policy from lapsing. There are three levels of No Lapse
protection:
1) a guarantee to maturity (younger insured age 100), or
2) a guarantee for the first 20 Policy Years, or
3) a guarantee for the first 10 Policy Years.
The guarantee for your policy depends on the actual premium
that you pay. If your Policy has a No Lapse Premium shown on
the specifications page, this policy will not lapse if, at
each Monthly Anniversary Day, the sum of all Premium
Payments, less any policy loans (including any accrued loan
interest) and partial surrenders is a least equal to the sum
of the No Lapse Premiums (as shown in the Policy
Specifications) due since the Date of Issue of the Policy. A
grace period will be allotted after each Monthly Anniversary
Day on which insufficient premiums have been paid. This is a
separate grace period from that discussed above under Lapse
of Policy, but is for the same time period, the later of
(a) 31 days after the date of mailing of the notice (as
explained above), and (b) 61 days after the date of the
Monthly Anniversary Day with respect to which such notice
was sent. The payment of sufficient additional premiums
during the grace period will keep the No Lapse Provision in
force.
The No Lapse Premium for the guarantee to maturity is higher
than that required for the 20 year protection, and the No
Lapse Premium for the 20 year protection is higher than that
required for the 10 year protection. If the sum of the
premiums paid drops below the level required for the
guarantee to maturity, the Policy may still be eligible for
the guarantee for the first 20 Policy Years, but will no
longer qualify for a guarantee to maturity. If the sum of
the premiums paid drops below the level required for the
guarantee for the first 20 Policy Years, the Policy may
still be eligible for the guarantee for the first 10 Policy
Years. If the sum of the premiums paid drops below the level
required for the guarantee for the first 10 Policy Years,
the No Lapse Provision will terminate. The No Lapse
Provision will also terminate on the earliest of:
1) age 100 of the younger insured, or
2) at the beginning of the 11th year for the 10 year level,
or
3) at the beginning of the 21st year for the 20 year level,
and
4) if there is an increase in Specified Amount or if you
change your Death Benefit Option.
Once the No Lapse Provision terminates, it cannot be
reinstated. Continuing to pay the No Lapse Premium amount
beyond the termination of the No Lapse Provision does not
guarantee that the Policy will not lapse.
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REINSTATEMENT OF A LAPSED POLICY
After the Policy has lapsed due to the failure to make a
necessary payment before the end of an applicable Grace
Period, and assuming the No Lapse Provision does not apply,
it may be reinstated provided (a) it has not been
surrendered, (b) there is an application for reinstatement
in proper written form, (c) evidence of insurability of both
insureds is furnished to Lincoln Life and it agrees to
accept the risk, (d) Lincoln Life receives a payment
sufficient to keep the Policy in force for at least two
months, and (e) any accrued loan interest is paid. The
effective date of Lincoln Life approves the application for
reinstatement, Surrender Charge will be reinstated as of the
Policy Year in which the Policy lapsed.
If the Policy is reinstated, such reinstatement is effective
on the Monthly Anniversary Day following Lincoln Life
approval. The Accumulation Value at reinstatement will be
the Net Premium Payment then made less all Monthly
Deductions due.
If the Surrender Value is not sufficient to cover the full
Surrender Charge at the time of lapse, the remaining portion
of the Surrender Charge will also be reinstated at the time
of Policy reinstatement.
COMMUNICATIONS WITH LINCOLN LIFE
PROPER WRITTEN FORM
When ever this Prospectus refers to a communication "in
proper written form," it means in writing, in form and
substance reasonably satisfactory to Lincoln Life, received
at the Administrative Office. You may also send your
communication by facsimile to the Administrative Office.
TELEPHONE TRANSACTION PRIVILEGES
Telephone transactions are permitted only if authorized in
proper written form by the applicant or Owner. To effect a
permitted telephone transaction, the Owner or his or her
authorized representative must call the Administrative
Office and provide, as identification, his or her policy
number, a requested portion of his or her Social Security
number, and such other information as Lincoln Life may
require to authenticate the authority of the caller. If
permitted and adequately authenticated, a customer service
representative will accept the telephone transaction
request. Lincoln Life disclaims all liability for losses
resulting from unauthorized or fraudulent telephone
transactions, but acknowledges that if it does not follow
these procedures, which it believes to be reasonable, it may
be liable for such losses.
Please note that the telephone and/or facsimile may not
always be available. Any telephone or facsimile, whether it
is yours, your service provider's or your agent's, can
experience outages or slowdowns for a variety of reasons.
These outages or slowdowns may delay or prevent our
processing of your request. Although we have taken
precautions to help our systems handle heavy use, we cannot
promise complete reliability under all circumstances. If you
are experiencing problems, you should make your request by
writing to our Administrative Office.
OTHER POLICY PROVISIONS
ISSUANCE
A Policy may only be issued upon receipt of satisfactory
evidence of insurability, and generally only when both
Insureds are at least Age 18 but are less than Age 85.
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DATE OF COVERAGE
The date of coverage will be the Date of Issue, provided the
initial premium has been paid and the Policy has been
accepted by the Owner (1) while both Insureds are alive and
(2) prior to any change in the health and insurability of
the Insureds as represented in the application.
RIGHT TO EXCHANGE THE POLICY
The Owner may exchange the policy for separate single life
policies on each of the Insureds under any of the following
circumstances; 1) a change in the Internal Revenue Code
(IRC) that would result in a less favorable tax treatment of
the Insurance provided under the policy, 2) the Insureds are
legally divorced while the policy is in force, or 3) the
Insureds' business is legally dissolved while the policy is
in force.
Such a policy split is subject to all of the following
conditions; 1) both insureds are alive and the policy is
inforce at the time of the change in circumstances noted
above, 2) evidence of insurability satisfactory to Lincoln
Life is furnished, unless a) the exchange is applied for
within twelve months of the enactment of the change in the
IRC, or b) the exchange is applied for within 24 months of
the date of legal divorce with the split to become effective
after twenty-four months following the date of legal
divorce, 3) the amount of insurance of each new policy is
not larger than one half the Amount of Insurance then in
force under the policy, 4) the premium for each new policy
is determined according to Lincoln Life's rates then in
effect for that policy based on each Insured's then attained
age and sex, and 5) any other requirements as determined by
Lincoln Life are met.
The new policies will not take effect until the date all
such requirements are met. There will be no surrender charge
under the existing Policy when it is split into two new
policies. However, the two new policies will incur new
premium loads, surrender and other charges from their
effective date.
INCONTESTABILITY
Lincoln Life will not contest payment of the Death Benefit
Proceeds based on the initial Specified Amount after the
Policy has been in force for two years from the Date of
Issue so long as both Insureds were alive during those two
years. For any increase in Specified Amount requiring
evidence of insurability, Lincoln Life will not contest
payment of the Death Benefit Proceeds based on such an
increase after it has been in force for two years from its
effective date so long as both Insureds were alive during
those two years.
MISSTATEMENT OF AGE OR GENDER
If the Age or gender of either of the Insureds has been
misstated, the affected benefits will be adjusted. The
amount of the Death Benefit Proceeds will be 1. multiplied
by 2. and then the result added to 3. where:
1. is the Net Amount at Risk at the time of the Second
Death;
2. is the ratio of the monthly Cost of Insurance applied
in the Policy month of death to the monthly Cost of
Insurance that should have been applied at the true
Age and gender in the Policy month of death; and
3. is the Accumulation Value at the time of the Second
Death.
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SUICIDE
If the Second Death is by suicide, while sane or insane,
within two years from the Date of Issue, Lincoln Life will
upon the Second Death pay no more than the sum of the
premiums paid, less any indebtedness and the amount of any
partial surrenders. If the Second Death is by suicide, while
sane or insane, within two years from the date an
application is accepted for an increase in the Specified
Amount, Lincoln Life will upon the Second Death pay no more
than a refund of the monthly charges for the cost of such
additional benefit.
NONPARTICIPATING POLICIES
These are nonparticipating Policies on which no dividends
are payable. These Policies do not share in the profits or
surplus earnings of Lincoln Life.
RIDERS
Riders may be offered to you which alter the benefit or
charges in the Policy. The Riders offered vary by issue
state, and may have tax consequences to you.
ESTATE TAX REPEAL RIDER
This Rider, if desired, must be selected at the time of
application. It may be added to existing Policies, subject
to state availability. Under this Rider, in the event of
Estate Tax Repeal as defined below, you may elect to cancel
your Policy for an amount equal to the Surrender Value of
the Policy plus the applicable Surrender Charge. This amount
is determined as of the date of cancellation, and no
surrender charge is applied. The amount you receive is
called the Cancellation Refund Amount. Any Policy loan or
indebtedness that exists at the time you request
cancellation of your Policy is subtracted from this
Cancellation Refund Amount.
For purposes of this Rider, Estate Tax Repeal will be deemed
to have occurred if federal legislation is enacted into law
that extends the estate tax repeal provisions set forth in
the Economic Growth and Tax Relief Reconciliation Act of
2001 (H.R. 1836) at least two years beyond January 1, 2011.
This new legislation must be in effect on January 1, 2010 or
must be enacted during the calendar year 2010. The Start
Date for this Rider (the date that begins the 12-month
"window" for you to exercise the Rider) is the later of
1) January 1, 2010 or 2) the date in 2010 upon which
legislation is enacted that triggers Estate Tax Repeal, but
no later than December 31, 2010.
Upon issue, there is a one-time administrative charge of not
more than $250 for this Rider.
This Rider terminates on the earliest of:
1) one year from the Start Date;
2) December 31, 2010, provided no Estate Tax Repeal, as
defined above, has been enacted;
3) the date you request to terminate the Rider;
4) termination of the Policy; or
5) full surrender of the Policy prior to the Start Date.
If the Policy lapses but is reinstated, the Rider will
likewise be reinstated, provided such reinstatement occurs
before 1) or 2) above.
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TAX ISSUES
INTRODUCTION. The Federal income tax treatment of the policy
is complex and sometimes uncertain. The Federal income tax
rules may vary with your particular circumstances. This
discussion does not include all the Federal income tax
rules that may affect you and your policy, and is not
intended as tax advice. This discussion also does not
address other Federal tax consequences, such as estate,
gift,and generation skipping transfer taxes, or any state
and local income, estate, and inheritance tax consequences,
associated with the policy. As a result, you should always
consult a tax adviser about the application of tax rules to
your individual situation.
TAXATION OF LIFE INSURANCE CONTRACTS IN GENERAL
TAX STATUS OF THE POLICY. Section 7702 of the Code
establishes a statutory definition of life insurance for
Federal tax purposes. We believe that the policy will meet
the statutory definition of life insurance, which places
limitations on the amount of premium payments that may be
made and the contract values that can accumulate relative to
the death benefit. As a result, the death benefit payable
under the policy will generally be excludable from the
beneficiary's gross income, and interest and other income
credited under the policy will not be taxable unless certain
withdrawals are made (or are deemed to be made) from the
policy prior to the insured's death, as discussed below.
This tax treatment will only apply, however, if (1) the
investments of the Separate Account are "adequately
diversified" in accordance with Treasury Department
regulations, and (2) we, rather than you, are considered the
owner of the assets of the Separate Account for Federal
income tax purposes.
INVESTMENTS IN THE SEPARATE ACCOUNT MUST BE DIVERSIFIED. For
a policy to be treated as a life insurance contract for
Federal income tax purposes, the investments of the Separate
Account must be "adequately diversified." IRS regulations
define standards for determining whether the investments of
the Separate Account are adequately diversified. If the
Separate Account fails to comply with these diversification
standards, you could be required to pay tax currently on the
excess of the contract value over the contract premium
payments. Although we do not control the investments of the
subaccounts, we expect that the subaccounts will comply with
the IRS regulations so that the Separate Account will be
considered "adequately diversified."
RESTRICTION ON INVESTMENT OPTIONS. Federal income tax law
limits your right to choose particular investments for the
policy. Because the IRS has not issued guidance specifying
those limits, the limits are uncertain and your right to
allocate contract values among the subaccounts may exceed
those limits. If so, you would be treated as the owner of
the assets of the Separate Account and thus subject to
current taxation on the income and gains from those assets.
We do not know what limits may be set by the IRS in any
guidance that it may issue and whether any such limits will
apply to existing policies. We reserve the right to modify
the policy without your consent to try to prevent the tax
law from considering you as the owner of the assets of the
Separate Account.
NO GUARANTEES REGARDING TAX TREATMENT. We make no guarantee
regarding the tax treatment of any policy or of any
transaction involving a policy. However, the remainder of
this discussion assumes that your policy will be treated as
a life insurance contract for Federal income tax purposes
and that the tax law will not impose tax on any increase in
your contract value until there is a distribution from your
policy.
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TAX TREATMENT OF LIFE INSURANCE DEATH BENEFIT PROCEEDS. In
general, the amount of the death benefit payable from a
policy because of the death of the insured is excludable
from gross income. Certain transfers of the policy for
valuable consideration, however, may result in a portion of
the death benefit being taxable.
If the death benefit is not received in a lump sum and is,
instead, applied under one of the settlement options,
payments generally will be prorated between amounts
attributable to the death benefit which will be excludable
from the beneficiary's income and amounts attributable to
interest (accruing after the insured's death) which will be
includible in the beneficiary's income.
TAX DEFERRAL DURING ACCUMULATION PERIOD. Under existing
provisions of the Code, except as described below, any
increase in your contract value is generally not taxable to
you unless amounts are received (or are deemed to be
received) from the policy prior to the insured's death. If
there is a total withdrawal from the policy, the surrender
value will be includible in your income to the extent the
amount received exceeds the "investment in the contract."
(If there is any debt at the time of a total withdrawal,
such debt will be treated as an amount received by the
owner.) The "investment in the contract" generally is the
aggregate amount of premium payments and other consideration
paid for the policy, less the aggregate amount received
under the policy previously to the extent such amounts
received were excludable from gross income. Whether partial
withdrawals (or other amounts deemed to be distributed) from
the policy constitute income to you depends, in part, upon
whether the policy is considered a "modified endowment
contract" (a "MEC") for Federal income tax purposes.
POLICIES WHICH ARE MECS
CHARACTERIZATION OF A POLICY AS A MEC. A policy will be
classified as a MEC if premiums are paid more rapidly than
allowed by a "7-pay test" under the tax law or if the policy
is received in exchange for another policy that is a MEC. In
addition, even if the policy initially is not a MEC, it may
in certain circumstances become a MEC. These circumstances
would include a later increase in benefits, any other
material change of the policy (within the meaning of the tax
law), and a withdrawal or reduction in the death benefit
during the first seven contract years.
TAX TREATMENT OF WITHDRAWALS, LOANS, ASSIGNMENTS AND PLEDGES
UNDER MECS. If the policy is a MEC, withdrawals from the
policy will be treated first as withdrawals of income and
then as a recovery of premium payments. Thus, withdrawals
will be includible in income to the extent the contract
value exceeds the investment in the policy. The Code treats
any amount received as a loan under a policy, and any
assignment or pledge (or agreement to assign or pledge) any
portion of your contract value, as a withdrawal of such
amount or portion. Your investment in the policy is
increased by the amount includible in income with respect to
such assignment, pledge, or loan.
PENALTY TAXES PAYABLE ON WITHDRAWALS. A 10% penalty tax may
be imposed on any withdrawal (or any deemed distribution)
from your MEC which you must include in your gross income.
The 10% penalty tax does not apply if one of several
exceptions exists. These exceptions include withdrawals or
surrenders that: you receive on or after you reach age
59 1/2, you receive because you became disabled (as defined
in the tax law), or you receive as a series of substantially
equal periodic payments for your life (or life expectancy).
SPECIAL RULES IF YOU OWN MORE THAN ONE MEC. In certain
circumstances, you must combine some or all of the life
insurance contracts which are MECs that you own in
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order to determine the amount of withdrawal (including a
deemed withdrawal) that you must include in income. For
example, if you purchase two or more MECs from the same life
insurance company (or its affiliates) during any calendar
year, the Code treats all such policies as one contract.
Treating two or more policies as one contract could affect
the amount of a withdrawal (or a deemed withdrawal) that you
must include in income and the amount that might be subject
to the 10% penalty tax described above.
POLICIES WHICH ARE NOT MECS
TAX TREATMENT OF WITHDRAWALS. If the policy is not a MEC,
the amount of any withdrawal from the policy will generally
be treated first as a non-taxable recovery of premium
payments and then as income from the policy. Thus, a
withdrawal from a policy that is not a MEC will not be
includible in income except to the extent it exceeds the
investment in the policy immediately before the withdrawal.
CERTAIN DISTRIBUTIONS REQUIRED BY THE TAX LAW IN THE FIRST
15 POLICY YEARS. Section 7702 places limitations on the
amount of premium payments that may be made and the contract
values that can accumulate relative to the death benefit.
Where cash distributions are required under Section 7702 in
connection with a reduction in benefits during the first 15
years after the policy is issued (or if withdrawals are made
in anticipation of a reduction in benefits, within the
meaning of the tax law, during this period), some or all of
such amounts may be includible in income. A reduction in
benefits may occur when the face amount is decreased,
withdrawals are made, and in certain other instances.
TAX TREATMENT OF LOANS. If your policy is not a MEC, a loan
you receive under the policy is generally treated as your
indebtedness. As a result, no part of any loan under such a
policy constitutes income to you so long as the policy
remains in force. Nevertheless, in those situations where
the interest rate credited to the loan account equals the
interest rate charged to you for the loan, it is possible
that some or all of the loan proceeds may be includible in
your income. If a policy lapses (or if all contract value is
withdrawn) when a loan is outstanding, the amount of the
loan outstanding will be treated as withdrawal proceeds for
purposes of determining whether any amounts are includible
in your income.
LAST SURVIVOR CONTRACT
Although we believe that the policy, when issued as a last
survivor contract, complies with Section 7702 of the Code,
the manner in which Section 7702 should be applied to last
survivor contracts is not directly addressed by Section
7702. In the absence of final regulations or other guidance
issued under Section 7702 regarding this form of contract,
there is necessarily some uncertainty whether a last
survivor contract will meet the Section 7702 definition of a
life insurance contract. As a result, we may need to return
a portion of your premium (with earnings) and impose higher
cost of insurance charges in the future.
Due to the coverage of more than one insured under the
policy, there are special considerations in applying the
7-pay test. For example, a reduction in the death benefit at
any time, such as may occur upon a partial surrender, may
cause the policy to be a MEC. Also and more generally, the
manner of applying the 7-pay test is somewhat uncertain in
the case of policies covering more than one insured.
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OTHER CONSIDERATIONS
INSURED LIVES PAST AGE 100. If the insured survives beyond
the end of the mortality table used to measure charges under
the policy, which ends at age 100, we believe the policy
will continue to qualify as life insurance for Federal tax
purposes. However, there is some uncertainty regarding this
treatment, and it is possible that you would be viewed as
constructively receiving the cash value in the year the
insured attains age 100.
COMPLIANCE WITH THE TAX LAW. We believe that the maximum
amount of premium payments we have determined for the
policies will comply with the Federal tax definition of life
insurance. We will monitor the amount of premium payments,
and, if the premium payments during a contract year exceed
those permitted by the tax law, we will refund the excess
premiums within 60 days of the end of the policy year and
will pay interest and other earnings (which will be
includible in income subject to tax) as required by law on
the amount refunded. We also reserve the right to increase
the death benefit (which may result in larger charges under
a policy) or to take any other action deemed necessary to
maintain compliance of the policy with the Federal tax
definition of life insurance.
DISALLOWANCE OF INTEREST DEDUCTIONS. If an entity (such as a
corporation or a trust, not an individual) purchases a
policy or is the beneficiary of a policy issued after June
8, 1997, a portion of the interest on indebtedness unrelated
to the policy may not be deductible by the entity. However,
this rule does not apply to a policy owned by an entity
engaged in a trade or business which covers the life of an
individual who is a 20-percent owner of the entity, or an
officer, director, or employee of the trade or business, at
the time first covered by the policy. This rule also does
not apply to a policy owned by an entity engaged in a trade
or business which covers the joint lives of the 20% owner of
the entity and the owner's spouse at the time first covered
by the policy.
FEDERAL INCOME TAX WITHHOLDING. We will withhold and remit
to the IRS a part of the taxable portion of each
distribution made under a policy unless you notify us in
writing at or before the time of the distribution that tax
is not to be withheld. Regardless of whether you request
that no taxes be withheld or whether the Company withholds a
sufficient amount of taxes, you will be responsible for the
payment of any taxes and early distribution penalties that
may be due on the amounts received. You may also be required
to pay penalties under the estimated tax rules, if your
withholding and estimated tax payments are insufficient to
satisfy your total tax liability.
CHANGES IN THE POLICY OR CHANGES IN THE LAW. Changing the
owner, exchanging the contract, and other changes under the
policy may have tax consequences (in addition to those
discussed herein) depending on the circumstances of such
change. The above discussion is based on the Code, IRS
regulations, and interpretations existing on the date of
this Prospectus. However, Congress, the IRS, and the courts
may modify these authorities, sometimes retroactively.
TAX STATUS OF LINCOLN LIFE
Under existing Federal income tax laws, Lincoln Life does
not pay tax on investment income and realized capital gains
of the Separate Account. Lincoln Life does not expect that
it will incur any Federal income tax liability on the income
and gains earned by the Separate Account. We, therefore, do
not impose a charge for Federal income taxes. If
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Federal income tax law changes and we must pay tax on some
or all of the income and gains earned by the Separate
Account, we may impose a charge against the Separate Account
to pay the taxes.
FAIR VALUE OF THE POLICY
It is sometimes necessary for tax and other reasons to
determine the "fair value" of the Policy. The fair value of
the Policy is measured differently for different purposes.
It is not necessarily the same as the Accumulation Value or
the Net Accumulation Value, although the amount of the Net
Accumulation Value will typically be important in valuing
the Policy for this purpose. For some but not all purposes,
the fair value of the Policy may be the Surrender Value of
the Policy. The fair value of the Policy may be impacted by
developments other than the performance of the underlying
investments. For example, without regard to any other
factor, it increases as the Insureds grow older. Moreover,
on the death of the first of the Insureds to die, it tends
to increase significantly. The Owner should consult with his
or her advisors for guidance as to the appropriate
methodology for determining the fair value of the Policy for
a particular purpose.
DIRECTORS AND OFFICERS OF LINCOLN LIFE
The following persons are Directors and Officers of Lincoln
Life. Except as indicated below, the address of each is
1300 South Clinton Street, Fort Wayne, Indiana 46802 and
each has been employed by Lincoln Life or its affiliates for
more than five years.
<Table>
<Caption>
NAME, ADDRESS AND
POSITION(S) WITH REGISTRANT* PRINCIPAL OCCUPATIONS LAST FIVE YEARS
---------------------------------- ------------------------------------------
JON A. BOSCIA Chief Executive Officer and Chairman of
PRESIDENT AND DIRECTOR the Board of Directors
1500 Market Street [3/01-present]Lincoln National
Suite 3900 Corporation; President and Director
Philadelphia, PA 19102 [12/99-present] The Lincoln National Life
Insurance Company. Formerly: President,
Chief Executive Officer and Director
[1/98-3/01], Lincoln National Corporation;
President, Chief Executive Officer and
Director [10/96-1/98], The Lincoln
National Life Insurance Company.
JANET CHRZAN Senior Vice President and Chief Financial
SENIOR VICE PRESIDENT AND CHIEF Officer [4/00-present]. Formerly: Vice
FINANCIAL OFFICER President and Treasurer [8/95-4/00], The
Lincoln National Life Insurance Company.
JOHN H. GOTTA Chief Executive Officer of Life Insurance,
CHIEF EXECUTIVE OFFICER OF LIFE Executive Vice President, Assistant
INSURANCE, EXECUTIVE VICE Secretary and Director [12/99-present].
PRESIDENT, ASSISTANT SECRETARY AND Formerly: Senior Vice President and and
DIRECTOR Assistant Secretary [4/98-12/99], Senior
350 Church Street Vice President [2/98-4/98, Vice President
Hartford, CT 06103 and General Manager [1/98-2/98], The
Lincoln National Life Insurance Company;
Senior Vice President [3/96-12/97],
Connecticut General Life Insurance
Company.
</Table>
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<Page>
<Table>
<Caption>
NAME, ADDRESS AND
POSITION(S) WITH REGISTRANT* PRINCIPAL OCCUPATIONS LAST FIVE YEARS
---------------------------------- ------------------------------------------
CHARLES E. HALDEMAN, JR. Director [7/00-present], The Lincoln
DIRECTOR National Life Insurance Company;
One Commerce President, Chief Executive Officer and
2005 Market Street Director [1/00-present], Lincoln National
Philadelphia, PA 19103 Investment Companies, Incorporated;
President, Chief Executive Officer and
Director [1/00-present], Delaware
Management Holdings, Incorporated;
President and Director [7/00-present],
Lincoln Investment Management,
Incorporated. Formerly: President and
Chief Operating Officer [2/98-1/00],
United Asset Management Corporation;
Director and Partner 1/85-12/99], Cooke &
Bieler, Incorporated.
J. MICHAEL HEMP President and Director [7/97-present],
SENIOR VICE PRESIDENT Lincoln Financial Advisors Incorporated;
350 Church Street Senior Vice President [formerly Vice
Hartford, CT 06103 President] [10/95-present], The Lincoln
National Life Insurance Company.
BARBARA S. KOWALCZYK Senior Vice President, Corporation
DIRECTOR Planning [5/94-present], Lincoln National
Centre Square Corporation; Director and Member of the
West Tower Investment Committee [12/01-present], The
1500 Market Street Lincoln National Life Insurance Company,
Suite 3900 Senior Vice President and Director
Philadelphia, PA 19102 [present] Lincoln National Management
Corporation; Director [present], Lincoln
Life & Annuity Company of New York.
GARY W. PARKER Senior Vice President and Chief Product
SENIOR VICE PRESIDENT AND CHIEF Officer [3/00-present], Vice President,
PRODUCT OFFICER Product Management [7/98-3/00], The
350 Church Street Lincoln National Life Insurance Company.
Hartford, CT 06103 Formerly: Senior Vice President, Life
Products [10/97-6/98], Vice President,
Marketing Services [9/89-10/97], Life of
Virginia.
SEE YENG QUEK Chief Investment Officer and Director
CHIEF INVESTMENT OFFICER AND [5/01-present], The Lincoln National Life
DIRECTOR Insurance Company; Senior Vice President
One Commerce Square [8/00-present], Delaware Investments.
Philadelphia, PA 19103 Formerly: Vice President [2/93-7/00],
Conseco Capital Management, Incorporated.
LORRY J. STENSRUD Chief Executive Officer of Annuities,
CHIEF EXECUTIVE OFFICER OF Executive Vice President and Director
ANNUITIES, EXECUTIVE VICE [6/00-present], The Lincoln National Life
PRESIDENT AND DIRECTOR Insurance Company. Formerly: President and
Chief Executive Officer [6/95-6/00], Cova
Life Insurance (Xerox Life).
</Table>
38
<Page>
<Table>
<Caption>
NAME, ADDRESS AND
POSITION(S) WITH REGISTRANT* PRINCIPAL OCCUPATIONS LAST FIVE YEARS
---------------------------------- ------------------------------------------
TODD R. STEPHENSON Senior Vice President and Treasurer
SENIOR VICE PRESIDENT AND [4/00-present], The Lincoln National Life
TREASURER Insurance Company. Formerly: Senior Vice
President, Chief Financial Officer and
Assistant Treasurer [3/99-4/00], The
Lincoln National Life Insurance Company;
Senior Vice President and Chief Operating
Officer [1/98-3/99], Lincoln Life &
Annuity Distributors, Inc.; Senior Vice
President and Chief Operating Officer
[1/98-3/99], Lincoln Financial Advisors
Corporation; Senior Vice President,
Treasurer, Chief Financial Officer and
Director [2/95-12/97], American States
Insurance Company.
RICHARD C. VAUGHAN Executive Vice President and Chief
DIRECTOR Financial Officer [1/95-present].
Centre Square
West Tower
1500 Market Street
Suite 3900
Philadelphia, PA 19102
</Table>
DISTRIBUTION OF POLICIES
Lincoln Life intends to offer the Policy in all
jurisdictions where it is licensed to do business. American
Fund Distributors, Inc. ("AFD"), a California corporation
and the principal underwriter for the Policies, is
registered with the Commission under the Securities Exchange
Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers ("NASD"). The
principal underwriter has responsibility for establishing a
selling plan for the Policies. The principal business
address of AFD is 333 S. Hope Street, 52nd Floor,
Los Angeles, CA 90071 (EIN 95-2769620).
The Policy will be sold by individuals who, in addition to
being appointed as life insurance agents for Lincoln, are
also registered representatives of registered broker-
dealers [who may be affiliated with AFD or Lincoln] who
maintain selling agreements with AFD and Lincoln. Registered
representatives may receive commission and service fees up
to 60% of the first year premium, plus up to 5% of all other
premiums paid. In lieu of premium-based commission, Lincoln
Life may pay equivalent amounts over time based on
Accumulation Value. Selling representatives are also
eligible for cash bonuses and "non-cash compensation." The
latter (as defined in NASD Rule 2820) is represented by such
things as office space, computers, club credit, newsletters,
and training.
The selling office receives additional compensation on the
first year premium and all additional premiums. In some
situations the selling office may elect to share its
commission with the registered representative. Depending on
particular selling arrangements there may be others whom
Lincoln compensates for distribution activities. (For
example, Lincoln Life may compensate certain "wholesalers,"
who control access to certain selling offices, for access to
those offices.)
All compensation is paid from Lincoln Life's resources,
which include sales charges made under this Policy.
CHANGES OF INVESTMENT POLICY
Lincoln Life may materially change the investment policy of
the Separate Account. Lincoln Life must inform the Owners
and obtain all necessary regulatory approvals. Any change
must be submitted to the various state insurance departments
which shall disapprove it if deemed detrimental to the
interests of the Owners or if it renders Lincoln
39
<Page>
Life's operations hazardous to the public. If an Owner
objects, the Policy may be converted to a substantially
comparable fixed benefit life insurance policy offered by
Lincoln Life on the life of the Insureds. The Owner has the
later of 60 days (6 months in Pennsylvania) from the date of
the investment policy change or 60 days (6 months in
Pennsylvania) from being informed of such change to make
this conversion. Lincoln Life will not require evidence of
insurability for this conversion.
The new policy will not be affected by the investment
experience of any separate account. The new policy will be
for an amount of insurance not exceeding the Death Benefit
of the Policy converted on the date of such conversion.
STATE REGULATION
Lincoln Life is subject to the laws of Indiana governing
insurance companies and to regulation by the Indiana
Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year
covering the operation of Lincoln Life for the preceding
year and its financial condition as of the end of such year.
Regulation by the Insurance Department includes periodic
examination to determine Lincoln Life's contract liabilities
and reserves so that the Insurance Department may certify
the items are correct. Lincoln Life's books and accounts are
subject to review by the Insurance Department at all times
and a full examination of its operations is conducted
periodically by the Indiana Department of Insurance. Such
regulation does not, however, involve any supervision of
management or investment practices or policies.
A blanket bond with a per event limit of $25 million and an
annual policy aggregate limit of $50 million covers all of
the officers and employees of the Company. The directors,
officers and employees of the Principal Underwriter are
covered under blanket fidelity bonds which provide coverage
of up to $25,000,000 per occurrence and $65,000,000 in the
aggregate.
REPORTS TO OWNERS
Lincoln Life maintains Policy records and will mail to each
Owner, at the last known address of record, an annual
statement showing the amount of the current Death Benefit,
the Accumulation Value, and Surrender Value, premiums paid
and monthly charges deducted since the last report, the
amounts invested in each Sub-Account and any Loan Account
Value.
Owners will also be sent annual reports containing financial
statements for the Separate Account and annual and
semi-annual reports of the Funds as required by the 1940
Act.
Policy Owners will receive statements of significant
transactions such as: changes in Specified Amount or Death
Benefit Option; transfers among Sub-Accounts; Premium
Payments; loans and repayment of loans; reinstatement; and
termination.
ADVERTISING
We are also ranked and rated by independent financial rating
services, including Moody's, Standard & Poor's, Duff &
Phelps and A.M. Best Company. The purpose of these ratings
is to reflect our financial strength or claims-paying
ability. The ratings are not intended to reflect the
investment experience or financial strength of the Variable
Account. We may advertise these ratings from time to time.
In addition, we may include in certain advertisements,
endorsements in the form of a list of organizations,
individuals or other parties which recommend Lincoln Life or
the Policies. Furthermore, we may occasionally include in
advertisements comparisons of currently taxable and tax
deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles
and general economic conditions.
We are a member of the Insurance Marketplace Standards
Association ("IMSA") and may include the IMSA logo and
information about IMSA membership in our
40
<Page>
advertisement. Companies that belong to IMSA subscribe to a
set of ethical standards covering the various aspects of
sales and services for individually sold life insurance and
annuities.
LEGAL PROCEEDINGS
Lincoln Life is involved in various pending or threatened
legal proceedings arising from the conduct of its business.
Most of these proceedings are routine and in the ordinary
course of business. In some instances they include claims
for unspecified or substantial punitive damages and similar
types of relief in addition to amounts for equitable relief.
Lincoln Life reached an agreement to resolve its potential
liability from the sale of interest sensitive universal and
participating whole life insurance policies alleged in class
action lawsuits against it. The agreement received court
approval and has become final. The owners of approximately
4,300 policies (approximately 1% of the class) excluded
themselves (opted-out) from the settlement and will not be
bound by the settlement.
After consultation with legal counsel and review of
available facts, it is management's opinion that the
ultimate liability, if any, under the suits and settlement
described above will not have a material adverse effect on
the financial position of Lincoln Life.
EXPERTS
The financial statements will be filed by amendment.
The opinion on Legal matters will be filed by amendment.
The opinion on Actuarial matters will be filed by amendment.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Commission
under the Securities Act of 1933, as amended, with respect
to the Policies offered hereby. This Prospectus does not
contain all the information set forth in the Registration
Statement and amendments thereto and exhibits filed as a
part thereof, to all of which reference is hereby made for
further information concerning the Separate Account, Lincoln
Life, and the Policies offered hereby. Statements contained
in this Prospectus as to the content of Policies and other
legal instruments are summaries. For a complete statement of
the terms thereof, reference is made to such instruments as
filed.
41
<Page>
APPENDIX 1
CORRIDOR PERCENTAGES
<Table>
<Caption>
ATTAINED AGE OF THE YOUNGER
INSURED (NEAREST BIRTHDAY) CORRIDOR PERCENTAGE
- ---------------------------- -------------------
0-40 250%
41 243
42 236
43 229
44 222
45 215
46 209
47 203
48 197
49 191
50 185
51 178
52 171
53 164
54 157
55 150
56 146
57 142
58 138
59 134
60 130
61 128
62 126
63 124
64 122
65 120
66 119
67 118
68 117
69 116
70 115
71 113
72 111
73 109
74 107
75-90 105
91 104
92 103
93 102
94 101
95-99 100
</Table>
42
<Page>
APPENDIX 2
ILLUSTRATIONS OF ACCUMULATION VALUES, SURRENDER VALUES, AND
DEATH BENEFIT PROCEEDS
The illustrations in this Prospectus have been prepared to
help show how values under the Policies change with
investment performance. The illustrations show how
Accumulation Values, Surrender Values and Death Benefit
Proceeds under a Policy would vary over time if the
hypothetical gross investment rates of return were a uniform
annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%,
6%, or 12% over a period of years, but fluctuates above or
below those averages for individual years, the Accumulation
Values, Surrender Values and Death Benefit Proceeds may be
different. The illustrations also assume there are no Policy
Loans or Partial Surrenders, no additional Premium Payments
are made other than shown, no Accumulation Values are
allocated to the Fixed Account, and there are no changes in
the Specified Amount or Death Benefit Option, and that the
No-Lapse Provision is not selected.
The amounts shown for the Accumulation Value, Surrender
Value and Death Benefit Proceeds as of each Policy
Anniversary reflect the fact that charges are made and
expenses applied which lower investment return on the assets
held in the Sub-Accounts. Daily charges are made against the
assets of the Sub-Accounts for assuming mortality and
expense risks. The current mortality and expense risk
charges are equivalent to an annual effective rate of 0.80%
of the daily net asset value of the Separate Account. The
mortality and expense risk charge is guaranteed never to
exceed an annual effective rate of 0.80% of the daily net
asset value of the Separate Account. In addition, the
amounts shown also reflect the deduction of Fund investment
advisory fees and other expenses which will vary depending
on which funding vehicle is chosen but which are assumed for
purposes of these illustrations to be equivalent to an
annual effective rate of 0.82% of the daily net asset value
of the Separate Account. This rate reflects an arithmetic
average of total Fund portfolio annual expenses for the year
ending December 31, 2000.
Considering charges for mortality and expense risks and the
assumed Fund expenses, gross annual rates of 0%, 6% and 12%
correspond to net investment experience at annual rates of
-1.61%, 4.35% and 10.30%.
The illustrations also reflect the fact that the Company
makes monthly charges for providing insurance protection.
Current values reflect current Cost of Insurance charges and
guaranteed values reflect the maximum Cost of Insurance
charges guaranteed in the Policy. The values shown are for
Policies which are issued as preferred and standard.
Policies issued on a substandard basis would result in lower
Accumulation Values and Death Benefit Proceeds than those
illustrated.
The illustrations also reflect the fact that the Company
deducts a premium load of 8.0% from each Premium Payment.
The Surrender Values shown in the illustrations reflect the
fact that the Company will deduct a Surrender Charge from
the Policy's Accumulation Value for any Policy surrendered
in full during the first fifteen Policy Years. Surrender
Charges reflect, in part, age and Specified Amount, and are
shown in the illustrations.
In addition, the illustrations reflect the fact that the
Company deducts a monthly administrative charge at the
beginning of each Policy Month. This monthly administrative
expense charge is a flat dollar charge per month for all
years. Current values reflect a current flat dollar monthly
administrative expense charge of $10.
Upon request, the Company will furnish a comparable
illustration based on the proposed insureds' ages, gender
classification, smoking classification, risk classification
and premium payment requested.
The one-time administrative charge of not more than $250 for
the Estate Tax Repeal Rider is not reflected in the
Illustrations.
43
<Page>
MALE AGE 55/FEMALE AGE 55 NONSMOKER
STANDARD -- $13,500 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
GUARANTEED BASIS
<Table>
<Caption>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE SURRENDER VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ ----------- --------- --------- --------- -------- -------- ---------- -------- -------- ---------- ---------
1 14,175 1,000,000 1,000,000 1,000,000 10,433 11,115 11,797 0 0 0 13,680
2 29,059 1,000,000 1,000,000 1,000,000 20,588 22,598 24,692 6,908 8,918 11,012 13,680
3 44,687 1,000,000 1,000,000 1,000,000 30,392 34,388 38,716 17,132 21,128 25,456 13,260
4 61,096 1,000,000 1,000,000 1,000,000 39,820 46,466 53,956 27,060 33,706 41,196 12,760
5 78,326 1,000,000 1,000,000 1,000,000 48,845 58,813 70,507 36,645 46,613 58,307 12,200
6 96,417 1,000,000 1,000,000 1,000,000 57,432 71,402 88,467 45,712 59,682 76,747 11,720
7 115,413 1,000,000 1,000,000 1,000,000 65,536 84,193 107,935 54,416 73,073 96,815 11,120
8 135,359 1,000,000 1,000,000 1,000,000 73,094 97,128 129,011 63,214 87,248 119,131 9,880
9 156,302 1,000,000 1,000,000 1,000,000 80,022 110,128 151,784 71,382 101,488 143,144 8,640
10 178,292 1,000,000 1,000,000 1,000,000 86,222 123,097 176,352 78,822 115,697 168,952 7,400
11 201,381 1,000,000 1,000,000 1,000,000 93,259 137,655 204,603 87,079 131,475 198,423 6,180
12 225,625 1,000,000 1,000,000 1,000,000 99,339 152,056 235,090 94,399 147,116 230,150 4,940
13 251,082 1,000,000 1,000,000 1,000,000 104,356 166,197 268,005 100,656 162,497 264,305 3,700
14 277,811 1,000,000 1,000,000 1,000,000 108,205 179,978 303,587 105,745 177,518 301,127 2,460
15 305,876 1,000,000 1,000,000 1,000,000 110,746 193,264 342,097 109,506 192,024 340,857 1,240
20 468,710 1,000,000 1,000,000 1,000,000 95,784 245,373 592,952 95,784 245,373 592,952 0
25 676,532 0 1,000,000 1,056,354 0 224,995 1,006,051 0 224,995 1,006,051 0
30 941,771 0 0 1,783,597 0 0 1,698,663 0 0 1,698,663 0
</Table>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of guaranteed
mortality and expense risk charges and
(2) assumed Fund total expenses of 0.82% per
year. See "Fund Expenses" at page 6 of this
Prospectus.
44
<Page>
MALE AGE 55/FEMALE AGE 55 NONSMOKER
STANDARD -- $13,500 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
CURRENT BASIS
<Table>
<Caption>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE SURRENDER VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ ----------- --------- --------- --------- -------- -------- ---------- -------- -------- ---------- ---------
1 14,175 1,000,000 1,000,000 1,000,000 10,433 11,115 11,797 0 0 0 13,680
2 29,059 1,000,000 1,000,000 1,000,000 20,693 22,707 24,803 7,013 9,027 11,123 13,680
3 44,687 1,000,000 1,000,000 1,000,000 30,782 34,795 39,141 17,522 21,535 25,881 13,260
4 61,096 1,000,000 1,000,000 1,000,000 40,700 47,402 54,946 27,940 34,642 42,188 12,760
5 78,326 1,000,000 1,000,000 1,000,000 50,451 60,547 72,375 38,251 48,347 60,175 12,200
6 96,417 1,000,000 1,000,000 1,000,000 60,036 74,254 91,586 48,316 62,534 79,866 11,720
7 115,413 1,000,000 1,000,000 1,000,000 69,455 88,546 112,764 58,335 77,426 101,644 11,120
8 135,359 1,000,000 1,000,000 1,000,000 78,710 103,445 136,110 68,830 93,565 126,230 9,880
9 156,302 1,000,000 1,000,000 1,000,000 87,799 118,976 161,846 79,159 110,336 153,206 8,640
10 178,292 1,000,000 1,000,000 1,000,000 96,723 135,163 190,215 89,323 127,763 182,815 7,400
11 201,381 1,000,000 1,000,000 1,000,000 107,134 153,740 223,249 100,954 147,560 217,069 6,180
12 225,625 1,000,000 1,000,000 1,000,000 117,339 173,087 259,652 112,399 168,147 254,712 4,940
13 251,082 1,000,000 1,000,000 1,000,000 127,333 193,233 299,769 123,633 189,533 296,069 3,700
14 277,811 1,000,000 1,000,000 1,000,000 137,111 214,204 343,981 134,651 211,744 341,521 2,460
15 305,876 1,000,000 1,000,000 1,000,000 146,665 236,029 392,707 145,425 234,789 391,467 1,240
20 468,710 1,000,000 1,000,000 1,000,000 190,819 359,617 723,928 190,819 359,617 723,928 0
25 676,532 1,000,000 1,000,000 1,328,511 220,286 504,116 1,265,249 220,286 504,116 1,265,249 0
30 941,771 1,000,000 1,000,000 2,252,080 213,377 666,407 2,144,839 213,377 666,407 2,144,839 0
</Table>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.82% per year. See "Fund
Expenses" at page 6 of this Prospectus.
45
<Page>
MALE AGE 65/FEMALE AGE 65 NONSMOKER
STANDARD -- $21,500 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
GUARANTEED BASIS
<Table>
<Caption>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE SURRENDER VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- ---------
1 22,575 1,000,000 1,000,000 1,000,000 17,508 18,622 19,737 0 0 0 25,100
2 46,279 1,000,000 1,000,000 1,000,000 34,005 37,302 40,734 8,905 12,202 15,634 25,100
3 71,168 1,000,000 1,000,000 1,000,000 49,292 55,825 62,904 25,232 31,765 38,844 24,060
4 97,301 1,000,000 1,000,000 1,000,000 63,250 74,053 86,243 40,250 51,053 63,243 23,000
5 124,741 1,000,000 1,000,000 1,000,000 75,745 91,828 110,744 53,785 69,868 88,784 21,960
6 153,553 1,000,000 1,000,000 1,000,000 86,603 108,953 136,376 65,723 88,073 115,496 20,880
7 183,806 1,000,000 1,000,000 1,000,000 95,591 125,165 163,068 75,751 105,325 143,228 19,840
8 215,571 1,000,000 1,000,000 1,000,000 102,382 140,108 190,684 84,742 122,468 173,044 17,640
9 248,925 1,000,000 1,000,000 1,000,000 106,548 153,323 219,025 91,108 137,883 203,585 15,440
10 283,946 1,000,000 1,000,000 1,000,000 107,586 164,270 247,863 94,346 151,030 234,623 13,240
11 320,718 1,000,000 1,000,000 1,000,000 106,681 174,148 278,837 95,661 163,128 267,817 11,020
12 359,329 1,000,000 1,000,000 1,000,000 101,494 180,626 310,157 92,674 171,806 301,337 8,820
13 399,871 1,000,000 1,000,000 1,000,000 91,379 183,010 341,752 84,759 176,390 335,132 6,620
14 442,439 1,000,000 1,000,000 1,000,000 75,600 180,509 373,621 71,180 176,089 369,201 4,420
15 487,136 1,000,000 1,000,000 1,000,000 53,199 172,098 405,773 50,999 169,898 403,573 2,200
20 746,464 0 0 1,000,000 0 0 575,481 0 0 575,481 0
25 1,077,439 0 0 1,000,000 0 0 800,133 0 0 800,133 0
30 1,499,857 0 0 1,373,234 0 0 1,359,638 0 0 1,359,638 0
</Table>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Guaranteed cost of insurance
rates assumed. Guaranteed mortality and
expense risk charges, administrative fees and
premium load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of guaranteed
mortality and expense risk charges and
(2) assumed Fund total expenses of 0.82% per
year. See "Fund Expenses" at page 6 of this
Prospectus.
46
<Page>
MALE AGE 65/FEMALE AGE 65 NONSMOKER
STANDARD -- $21,500 ANNUAL PREMIUM
FACE AMOUNT $1,000,000
DEATH BENEFIT OPTION 1
CURRENT BASIS
<Table>
<Caption>
PREMIUMS
ACCUMULATED
END OF AT DEATH BENEFIT PROCEEDS TOTAL ACCUMULATION VALUE SURRENDER VALUE
POLICY 5% INTEREST ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF SURRENDER
YEAR PER YEAR GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% GROSS 0% GROSS 6% GROSS 12% CHARGE
- ------ ----------- ---------- ---------- ---------- -------- -------- ---------- -------- -------- ---------- ---------
1 22,575 1,000,000 1,000,000 1,000,000 17,508 18,622 19,737 0 0 0 25,100
2 46,279 1,000,000 1,000,000 1,000,000 34,515 37,827 41,275 9,415 12,727 16,175 25,100
3 71,168 1,000,000 1,000,000 1,000,000 51,028 57,641 64,800 26,968 33,581 40,740 24,060
4 97,301 1,000,000 1,000,000 1,000,000 67,055 78,094 90,524 44,055 55,094 67,524 23,000
5 124,741 1,000,000 1,000,000 1,000,000 82,606 99,217 118,681 60,646 77,257 96,721 21,960
6 153,553 1,000,000 1,000,000 1,000,000 97,689 121,044 149,533 76,809 100,164 128,653 20,880
7 183,806 1,000,000 1,000,000 1,000,000 112,312 143,614 183,374 92,472 123,774 163,534 19,840
8 215,571 1,000,000 1,000,000 1,000,000 126,486 166,967 220,531 108,846 149,327 202,891 17,640
9 248,925 1,000,000 1,000,000 1,000,000 140,217 191,145 261,368 124,777 175,705 245,928 15,440
10 283,946 1,000,000 1,000,000 1,000,000 153,515 216,197 306,293 140,275 202,957 293,053 13,240
11 320,718 1,000,000 1,000,000 1,000,000 168,117 243,956 357,600 157,097 232,936 346,580 11,020
12 359,329 1,000,000 1,000,000 1,000,000 182,222 272,721 414,109 173,402 263,901 405,289 8,820
13 399,871 1,000,000 1,000,000 1,000,000 195,728 302,454 476,333 189,108 295,834 469,713 6,620
14 442,439 1,000,000 1,000,000 1,000,000 208,459 333,059 544,822 204,039 328,639 540,402 4,420
15 487,136 1,000,000 1,000,000 1,000,000 220,285 364,489 620,277 218,085 362,289 618,077 2,200
20 746,464 1,000,000 1,000,000 1,196,731 259,407 533,557 1,139,744 259,407 533,557 1,139,744 0
25 1,077,439 1,000,000 1,000,000 2,081,538 211,881 708,558 1,982,417 211,881 708,558 1,982,417 0
30 1,499,857 0 1,000,000 3,378,845 0 925,140 3,345,391 0 925,140 3,345,391 0
</Table>
All Amounts are in Dollars
If Premiums are paid more frequently than
annually, the Death Benefit Proceeds,
Accumulation Values and Surrender Values would
be less than those illustrated.
Assumes no policy loans or partial surrenders
have been made. Current cost of insurance
rates assumed. Current mortality and expense
risk charges, administrative fees and premium
load assumed.
These investment results are illustrative only
and should not be considered a representation
of past or future investment results. Actual
investment results may be more or less than
those shown and will depend on a number of
factors, including the Policy Owner's
allocations and the Funds' rates of return.
Accumulation Values and Surrender Values for a
Policy would be different from those shown if
the actual investment rates of return averaged
0%, 6% and 12% over a period of years, but
fluctuated above or below those averages for
individual Policy Years. No representations
can be made that these rates of return will in
fact be achieved for any one year or sustained
over a period of time.
The amounts shown in these illustrations
reflect (1) the deduction of current mortality
and expense risk charges and (2) assumed Fund
total expenses of 0.82% per year. See "Fund
Expenses" at page 6 of this Prospectus.
47
<Page>
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
12/31/01 STATUTORY FINANCIALS
(TO BE FILED BY AMENDMENT)
S-1
<Page>
PART II
FEES AND CHARGES REPRESENTATION
Lincoln Life represents that the fees and charges deducted
under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by Lincoln Life.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned registrant
hereby undertakes to file with the Securities and Exchange
Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly
adopted pursuant to authority conferred in that section.
INDEMNIFICATION
(a)Brief description of indemnification provisions.
In general, Article VII of the By-Laws of The Lincoln
National Life Insurance Company (LNL) provides that LNL
will indemnify certain persons against expenses,
judgments and certain other specified costs incurred by
any such person if he/she is made a party or is
threatened to be made a party to a suit or proceeding
because he/she was a director, officer, or employee of
LNL, as long as he/she acted in good faith and in a
manner he/she reasonably believed to be in the best
interests of, or not opposed to the best interests of,
LNL. Certain additional conditions apply to
indemnification in criminal proceedings.
In particular, separate conditions govern indemnification
of directors, officers, and employees of LNL in
connection with suits by, or in the right of, LNL.
Please refer to Article VII of the By-Laws of LNL
(Exhibit No. 6(b) hereto) for the full text of the
indemnification provisions. Indemnification is permitted
by, and is subject to the requirements of, Indiana law.
(b)Undertaking pursuant to Rule 484 of Regulation C under
the Securities Act of 1933.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the provisions described in Item 28(a) above
or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any
such action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This Initial Registration Statement comprises the following
papers and documents:
The facing sheet; A cross-reference sheet (reconciliation
and tie); The Prospectus consisting of 48 pages; The fees
and charges representation; The undertaking to file reports;
Statements regarding indemnification; Contents of
Registration Statement; Exhibit List; The signatures; Power
of Attorney.
The written consents of the following persons: (to be filed
by amendment)
Robert A. Picarello, Esq.
Vaughn W. Robbins, FSA
Ernst & Young LLP, Independent Auditors
Other Exhibits (to be filed by amendment)
<Page>
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
(1) Resolution of the Board of Directors of The Lincoln National Life
Insurance Company and related documents authorizing establishment of
the Account.(1)
(2) Not applicable.
(3) (a) Form of Principal Underwriting Agreement - Incorporated by
Reference to Exhibit 1.(3)(a) of Pre-Effective Amendment No. 1
to Registration Statement No. 333-40745 (811-05164) (Account
F-ALEB) on Form S-6, filed April 28, 1998, EXCEPT THAT the
following sections are not incorporated by Reference: Paragraph
9, Paragraph 15, the Schedule of Commissions to Dealers and
Remuneration to AFD, and Exhibit 1(3)(c ).
(b) Form of Selling Group Agreement.*
(c) Commission Schedule for Variable Life Policies.*
(4) Not applicable.
(5) (a) Form of Policy and Application.(1)
(b) Riders.(1)
(c) Form of Contract LN 655, Form of Application B10409(3)
(d) Coverage Protection Rider, Form LN655.(4)
(e) Death Benefit Option 3 Amendment, Form B10425.(4)
(6) (a) Articles of Incorporation of The Lincoln National Life Insurance
Company.(2)
(b) Bylaws of The Lincoln National Life Insurance Company.(2)
(7) Not applicable.
(8) Form of Fund Participation Agreement - Incorporated by Reference
to Exhibit 1.(8) of Pre-Effective Amendment No. 1 to Registration
Statement No. 333-40745 (811-05164) (Account F) on Form S-6,
filed April 28, 1998.
(9) (a) Form of Service Agreement Between Delaware Management
Company, Inc., Delaware Service Company, and Lincoln National
Life Insurance Company - Incorporated by Reference to the Initial
Registration Statement for Reg. No. 333-40745 (811-05164)
(Account F - ALEB) on Form S-6, filed November 21, 1997.
(b.) Form of Indemnification Agreement between Capital Research and
Management Company and The Lincoln National Life Insurance
Company - Incorporated by Reference to Exhibit 1.(9)(b) of
Pre-Effective Amendment No. 1 to Registration Statement No.
333-40745 (811-05164) (Account F) on Form S-6, filed April 28,
1998.
(10) See Exhibit 1(3).
2. See Exhibit 1(3).
3. Opinion and Consent of Counsel.*
4. Not applicable.
5. Not applicable.
6. Opinion and consent of Actuary.*
7. Consent of Ernst & Young LLP, Independent Auditors*.
8. Not applicable.
* to be filed by amendment
- --------------------------
(1) Incorporated by reference to Registrant's registration statement on
Form S-6 (File No. 333-43107) (811-08579) filed on December 23, 1997
(2) Incorporated by reference to Registration Statement on Form N-4 (File No.
33-27783) (811-05721) filed on December 5, 1996.
(3) Incorporated by Reference to Registration Statement on Form S-6
(File 333-33782) (811-08579) filed on March 30, 2000.
(4) Incorporated by reference to Post-Effective Amendment No. 2 on Form S-6
(File No. 333-33782) (811-08579) filed on April 17, 2001.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Lincoln Life Flexible Premium Variable Life Account Y, has caused this Initial
Registration Statement on Form S-6 to be signed on its behalf by the undersigned
duly authorized, in the City of Hartford and State of Connecticut on the 31st
day of January, 2002.
LINCOLN LIFE FLEXIBLE PREMIUM VARIABLE
LIFE ACCOUNT Y (Registrant)
By: /s/ GARY W. PARKER
-----------------------------------
Gary W. Parker
SENIOR VICE PRESIDENT, THE LINCOLN
NATIONAL LIFE INSURANCE COMPANY
By: THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
(DEPOSITOR)
By: /s/ GARY W. PARKER
-----------------------------------
Gary W. Parker
SENIOR VICE PRESIDENT
<Page>
Pursuant to the requirements of the Securities Act of 1933, this Initial
Registration Statement on Form S-6 has been signed below on January 31, 2002 by
the following persons, as officers and directors of the Depositor, in the
capacities indicated:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ JON A. BOSCIA* President and Director (Principal Executive
-------------------------------------- Officer)
Jon A. Boscia
/s/ JOHN H. GOTTA* Chief Executive Officer of Life Insurance,
-------------------------------------- Executive Vice President, Assistant Secretary, and
John H. Gotta Director
/s/ LORRY J. STENSRUD* Chief Executive Officer of Annuities, Executive
-------------------------------------- Vice President and Director
Lorry J. Stensrud
/s/ JANET CHRZAN* Senior Vice President, Chief Financial Officer and
-------------------------------------- Director (Principal Financial Officer and
Janet Chrzan Principal Accounting Officer)
/s/ SEE YENG QUEK*
-------------------------------------- Chief Investment Officer and Director
See Yeng Quek
/s/ C.E. HALDEMAN, JR.*
-------------------------------------- Director
Charles E. Haldeman, Jr.
/s/ RICHARD C. VAUGHAN*
-------------------------------------- Director
Richard C. Vaughan
/s/ BARBARA S. KOWALCZYK*
-------------------------------------- Director
Barbara S. Kowalczyk
</Table>
*By: /s/ GARY W. PARKER
----------------------------------
Gary W. Parker, pursuant to a
Power of Attorney filed with this
Initial Registration Statement.
<Page>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 28th day of January, 2000.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ JON A. BOSCIA*
-------------------------------------- President and Director
Jon A. Boscia
/s/ RICHARD C. VAUGHAN*
-------------------------------------- Director
Richard C. Vaughan
</Table>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 9th day of August, 2000.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ C. E. HALDEMAN, JR.*
-------------------------------------- Director
Charles E. Haldeman, Jr.
</Table>
<Page>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 11th day of August, 2000.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ LORRY J. STENSRUD* Chief Executive Officer of Annuities,
-------------------------------------- Executive Vice President and Director
Lorry J. Stensrud
</Table>
<Table>
STATE OF )
INDIANA
)SS:
COUNTY OF ALLEN )
Subscribed and sworn to before me this
11th day of August, 2000
/s/ SHARLENE K. GEER
-------------------------------
Notary Public
Commission Expires 2/29/08
</Table>
<Table>
/s/ JANET CHRZAN* Senior Vice President, Chief Financial Officer
-------------------------------------- and Director
Janet Chrzan
</Table>
<Table>
STATE OF )
INDIANA
)SS:
COUNTY OF ALLEN )
Subscribed and sworn to before me this
11th day of August, 2000
/s/ JANET L. LINDENBERG
-------------------------------
Notary Public
Commission Expires 7/10/01
</Table>
<Page>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 3rd day of August, 2001.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ SEE YENG QUEK*
-------------------------------------- Chief Investment Officer and Director
See Yeng Quek
</Table>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 4th day of January, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ BARBARA S. KOWALCZYK*
-------------------------------------- Director
Barbara S. Kowalczyk
</Table>
POWER OF ATTORNEY
We, the undersigned directors and officers of The Lincoln National Life
Insurance Company, hereby severally constitute and appoint John H. Gotta, Robert
A. Picarello and Gary W. Parker, individually, our true and lawful
attorneys-in-fact, with full power to each of them to sign for us, in our names
and in the capacities indicated below, any and all Registration Statements on
Form S-6, Form N-8B-2 and/or Form N-6, or any successors to these Forms, and
amendments thereto, filed with the Securities and Exchange Commission under the
Securities Act of 1933, on behalf of the Company in its own name or in the name
of one of its Separate Accounts, hereby ratifying and confirming our signatures
as they may be signed by any of our attorneys-in-fact to any such Registration
Statement or amendment to said Registration Statement. The execution of this
document by each of the undersigned hereby revokes any and all Powers of
Attorney previously executed by said individual for this specific purpose.
WITNESS our hands and common seal on this 18th day of January, 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ JOHN H. GOTTA* Executive Vice President, Chief Executive Officer
-------------------------------------- of Life Insurance, Assistant Secretary, and
John H. Gotta Director
</Table>