Description of Issuance, Transfer and Redemption Procedures for
INDIVIDUAL SURVIVORSHIP FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
Offered by the Separate Account IMO ("Variable Account")
of Allmerica Financial Life Insurance and Annuity Company
Pursuant to Rule 6e-3(T)(b)(12)(ii)
under the Investment Company Act of 1940
The IMO Separate Account ("Variable Account") of Allmerica Financial Life
Insurance and Annuity Company ("Company") is registered under the Investment
Company Act of 1940 ("1940 Act") as a unit investment trust. There are
currently 15 Sub-Accounts within the Variable Account. Procedures apply
equally to each Sub-Account and for purposes of this description are defined
in terms of the Variable Account, except where a discussion of both the
Variable Account and the individual Sub-Accounts is necessary. Each
Sub-Account invests in shares of a corresponding investment division of the
Allmerica Investment Trust ("Trust"), Variable Insurance Products Fund
("Fidelity VIP"), or T. Rowe Price International Series, Inc. ("T. Rowe
Price"), each of which is a "series" type of mutual fund registered under the
1940 Act. The investment experience of a Sub-Account of the Variable Account
depends on the market performance of its corresponding investment division of
the Trust, Fidelity VIP or T. Rowe Price. Although individual survivorship
flexible premium variable life insurance policies funded through the Variable
Account may also provide for fixed benefits supported by the Company's
General Account, this description assumes that net premiums are allocated
exclusively to the Variable Account and that all transactions involve only
the Sub-Accounts of the Variable Account, except as otherwise explicitly
stated herein.
I. "PUBLIC OFFERING PRICE": PURCHASE AND RELATED TRANSACTIONS -- SECTION
22(d) AND RULE 22c-l
This section outlines Policy provisions and administrative procedures
which might be deemed to constitute, either directly or indirectly, a
"purchase" transaction. Because of the insurance nature of the
policies, the procedures involved necessarily differ in certain
significant respects from the purchase procedures for mutual funds and
annuity plans. The chief differences revolve around the structure of
the cost of insurance charges and the insurance underwriting process.
Certain Policy provisions, such as reinstatement and loan repayment, do
not result in the issuance of a Policy but require certain payments by
the Policy Owner and involve a transfer of assets supporting Policy
reserve into the Variable Account.
a. INSURANCE CHARGES AND UNDERWRITING STANDARDS
Premium payments are not limited as to frequency and number, but
there are limitations as to amount. No premium payment may be less
than $250 without the Company's consent, and the total of all
premiums paid can never exceed the then current maximum premiums
determined by Internal Revenue Service rules. If at any time a
premium is paid which would result in total premiums exceeding the
current maximum premium limitations, the Company will return the
amount in excess of such maximums to the Policy Owner.
The Policy will remain in force so long as the Policy value exceeds
outstanding loans and is sufficient to cover loan interest accrued
and certain monthly charges imposed in connection with the Policy.
Cost of insurance charges for the policies will not be the same for
all Policy Owners. The insurance principle of pooling and
distribution of mortality risks is based upon the assumption that
each Policy Owner pays a cost of insurance charge commensurate with
the Insured's mortality risk, which is actuarially determined based
upon factors such as age, health and occupation. In the context of
life insurance, a uniform mortality charge (the "cost of insurance
charge") for all Insured's would discriminate unfairly in favor of
those Insured's representing greater mortality risks to the
disadvantage of those representing lesser risks. Accordingly,
there will be a different "price" for each actuarial
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category of Policy Owners because different cost of insurance rates will
apply. While not all Policy Owners will be subject to the same cost of
insurance rate, there will be a single "rate" for all Policy Owners
in a given actuarial category. The Policies will be offered and
sold pursuant to the Company's underwriting standards and in
accordance with state insurance laws. Such laws prohibit unfair
discrimination among Insureds, but recognize that premiums must be
based upon factors such as age, health and occupation. Tables
showing the maximum cost of insurance charges will be delivered as
part of the Policy.
b. APPLICATION AND INITIAL PREMIUM PROCESSING
Upon receipt of a completed application from a prospective Policy
Owner, the Company will follow certain insurance underwriting
procedures designed to determine whether the proposed Insured is
insurable. This process may involve such verification procedures
as medical examinations and may require that further information be
provided by the proposed Policy Owner before a determination can be
made. A Policy cannot be issued until this underwriting procedure
has been completed.
If at the time of Application a prospective Policy Owner makes a
payment equal to at least one monthly deduction for the Policy as
applied for, the Company will provide fixed conditional insurance
in the amount of insurance applied for, up to a maximum of
$500,000, pending underwriting approval. This coverage will
continue for a maximum of 90 days from the date of the application
or enrollment form or, if required, the completed medical exam. If
the application is approved, the Policy will be issued as of the
date the terms of the Conditional Insurance Agreement were met. If
the prospective Policy Owner does not wish to make any payment
until the Policy is issued, upon delivery of the Policy the Company
will require payment of sufficient premium to place the insurance
in-force.
Pending completion of insurance underwriting and Policy issuance
procedures, the initial premium will be held in the Company's
General Account. If the application is approved and the Policy is
issued and accepted, the initial premium held in the General
Account will be credited with interest not later than the date of
receipt of the premium at the Company's Principal Office. If a
Policy is not issued, the premiums will be returned to the
Applicant without interest.
If the application or enrollment form is approved and the Policy is
issued and accepted, upon issuance and acceptance of the Policy the
Company generally allocates Policy Value according to the Policy
Owner's instructions. However, if the Policy provides for a full
refund of payments under its "Right to Examine Policy" provision as
required in certain states and described below under Section II(g),
the Company will initially allocate sub-account investments to the
Money Market Fund. The allocation to the Money Market Fund will be
for four days after the expiration of the "Right to Examine"
provision of the Policy. Generally, this will be for 14 days from
issuance and acceptance of the Policy (based on a 10 day "Right to
Examine" period).
These processing procedures are designed to provide insurance,
starting with the date of the application, to the proposed Policy
Owner in connection with payment of the initial premium and will
not dilute any benefit it payable to any existing Policy Owner.
Although a Policy cannot be issued until the underwriting process
has been completed, the proposed Policy Owner will receive
immediate insurance coverage, if he has paid an initial premium and
proves to be insurable.
The Company will require that the Policy be delivered within a
specific delivery period to protect itself against anti-selection
by the prospective Policy Owner resulting from a deterioration of
the health of the proposed Insured. Generally, the period will not
exceed the shorter of 30 days from the date the Policy is issued
and 75 days from the date of Part 2 of the Application.
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c. PREMIUM ALLOCATION
"Net premiums" are credited to the Policy as of the date the
premium payments are received by the Company, with the possible
exception of the first net premium. Net premiums are equal to the
gross premiums minus the payment expense charge. The payment
expense charge compensates the Company for applicable state and
local taxes on premiums paid for the Policy, and for federal taxes
imposed for deferred acquisition costs ("DAC taxes"), and to
partially compensate for sales expenses. It will be adjusted to
reflect any increase or decrease in the applicable state or local
premium tax rate.
The Policy Owner may allocate net premiums among the Company's
General Account and up to fifteen Sub-Accounts of the Variable
Account. The Policy Owner may change the allocation of net
premiums without charge at any time by providing written notice to
the Principal Office. The change will be effective as of the date
of receipt of the notice at the Principal Office. The Policy Owner
may transfer amounts among all of the Sub-Accounts and the General
Account, subject to certain restrictions, but at no time may have
allocations in more than twenty Sub-Aaccounts.
d. REPAYMENT OF LOAN
A loan made under this Policy may be repaid with an amount equal to
the original loan plus loan interest.
When a loan is made, the Company will transfer from each
Sub-Account of the Variable Account to the General Account an
amount of that Sub-Account's Policy value equal to the loan amount
allocated to the Sub-Account. Since the Company will credit such
assets with current annual interest at 4.00%, which is below the
interest rate charged on the loan (currently 4.8%, and guaranteed
not to exceed 6.0%), the Company will retain the difference between
these rates in order to cover certain expenses and contingencies.
Upon repayment of debt, the Company will reduce the Policy value in
the general account attributable to the loan and transfer assets
supporting corresponding reserves to the Sub-Accounts according to
either Policy Owner's instruction or, if none, the premium payment
allocation percentages then in effect. Loan repayments allocated
to the Variable Account cannot exceed Policy Value previously
transferred from the Variable Account to secure the debt.
A preferred loan option is automatically available, unless the
Policy Owner requests otherwise. The preferred loan option is
available on that part of an outstanding loan that is attributable
to policy earnings. The term "policy earnings" means that portion
of the Policy Value that exceeds the sum of the payments made less
all partial withdrawals and withdrawal charges. The guaranteed
annual interest rate credited to the policy value securing a
preferred loan is 4.0%. The interest rate charged on a preferred
loan is currently 4.0% (guaranteed not to exceed 4.5%).
e. POLICY TERMINATION AND REINSTATEMENT
If the surrender value is insufficient to cover the next monthly
deduction plus loan interest accrued, or if Policy debt exceeds the
Policy value, the Company will notify the Policy Owner and any
assignee of record. The Policy Owner will then have a grace period
of 62 days, measured from the date the notice is mailed, to make
sufficient payments to prevent termination.
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Failure to make a sufficient payment within the grace period will
result in termination of the Policy without any Policy value. The
death benefit payable during the grace period will be reduced by
any overdue charges. If the Insured dies during the grace period,
the death proceeds will still be payable, but any monthly
deductions due and unpaid through the Policy month in which the
Insured dies will be deducted from the death proceeds.
If the Policy has not been surrendered and the Insured is alive,
the terminated Policy may be reinstated anytime within three years
after the date of default by submitting the following to the
Company: (1) a written application for reinstatement; (2) evidence
of insurability satisfactory to the Company; and (3) a premium
that, after the deduction of the monthly charges, is large enough
to cover the minimum amount payable, as described below.
If reinstatement is requested the Policy Owner must pay the monthly
deduction for the three-month period beginning on he date of
reinstatement. The surrender charge on the date of reinstatement
is the surrender charge that was in effect on the date of
termination. The Policy Value on the date of reinstatement is:
- The net payment made to reinstate the Policy and interest earned
from the date the payment was received at our Principal Office PLUS
- The Policy Value less any outstanding loan on the date of default
(not to exceed the surrender charge on the date of reinstatement)
MINUS
- The Monthly Deductions due on the date of reinstatement.
f. CORRECTION OF MISSTATEMENT OF AGE
If the Company discovers that the age of the Insured has been
misstated, the death benefit and any rider benefits will be those
which would be purchased by the most recent deduction for the cost
of insurance and the cost of rider benefits at the correct age.
g. CONTESTABILITY
A Policy is contestable for two years, measured from the issue
date, for material misrepresentations made in the initial
application for the Policy. The Company cannot challenge the
validity of a Policy of both Insured were alive after the Policy
had been in force for two years from the Date of Issue. Policy
changes may not be contested for two years after the effective date
of a change, and a reinstatement may not be contested for two years
after the effective date of reinstatement, if both Insureds were
alive for two years after the effective date or reinstatement date.
No statement will be used to contest a Policy unless it is
contained in an application.
h. REDUCTION IN COST OF INSURANCE RATE CLASSIFICATION
By administrative practice, the Company will reduce the cost of
insurance rate classification for an outstanding Policy if new
evidence of insurability demonstrates that the Insured qualify for
a lower classification. After the reduced rating is determined, the
Policy Owner will pay a lower monthly cost of insurance charge each
month. If new evidence of insurability provided in connection with
an increase in Face Amount demonstrates that the Insured are in a
higher risk classification, the higher cost of insurance rate will
apply only to the increase in Face Amount.
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II. "REDEMPTION PROCEDURE": SURRENDER AND RELATED TRANSACTIONS
The policies provide for the payment of monies to a Policy Owner or
beneficiary upon presentation of a Policy. Generally, except for the
payments of death proceeds, the imposition of cost of insurance and
administrative charges, and the possible effect of a contingent
surrender charge, the payee will receive a pro rata or proportionate
share of the Variable Account's assets, within the meaning of the 1940
Act, in any transaction involving "redemption procedures". The amount
received by the payee will depend-upon the particular benefit for which
the Policy is presented, including, for example, the cash surrender
value or death benefit. There are also certain Policy provisions (e.g.,
partial withdrawals or the loan privilege) under which the Policy will
not be presented to the Company but which will affect the Policy Owner's
benefits and may involve a transfer of the assets supporting the Policy
reserve out of the Variable Account. Any combined transactions on the
same day which counteract the effect of each other will be allowed. The
Company will assume the Policy Owner is aware of the possible
conflicting nature of the transactions and desires their combined
result. If a transaction is requested which the Company will not allow
(e.g., a request for a decrease in Face Amount which lowers the Face
Amount below the stated minimum) the Company will reject the whole
transaction and not just the portion which causes the disallowance. The
Policy Owner will be informed of the rejection and will have an
opportunity to give new instructions.
a. SURRENDER FOR CASH VALUES
The Company will pay the net cash surrender value within seven days
after receipt, at its Principal Office, of the Policy and a signed
request for surrender. Computations with respect to the investment
experience of each Sub-Account will be made at the close of trading
of the New York Stock Exchange on each day in which the degree of
trading in the corresponding portfolio might materially affect the
net return of the Sub-Account and on which the Company is open.
This will enable the Company to pay a net cash value on surrender
based on the next computed value after the surrender request is
received. For valuation purposes, the surrender is effective on
the date the Company receives the request at its Principal Office
(although insurance coverage ends the day the request is mailed).
The Policy value (equal to the value of all accumulations in the
Variable Account) may increase or decrease from day to day
depending on the investment experience of the Variable Account.
Calculation of the Policy value for any given day will reflect the
actual premiums paid, expenses charged and deductions taken. The
Company will deduct a charge for premium taxes, DAC taxes, and a
5.0% sales load from each premium payment. The balance (net
premium) is allocated to the Variable Account according to Policy
Owner's instructions. The Company will also make monthly
deductions from a Policy to cover the cost of insurance, including
optional benefits provided by rider. Other possible deductions
from the Policy (which will occur on a Policy-specific basis)
include a charge for partial withdrawals, a charge for increases in
Face Amount and a charge for certain transfers.
A surrender charge on a withdrawal exceeding the "Free 10%
Withdrawal" deducted from Policy Value for up to 9 years from Date
of Issue of the Policy or from the date of increase in Face Amount.
This charge applies only on a full surrender or decrease in Face
Amount within nine years of the date of issue or of an increase in
Face Amount. The maximum Surrender Charge is equal to a specified
amount that varies with the age, sex, and underwriting class of the
Insured for each $1,000 of the Policy's Face Amount. The amount of
the Surrender Charges decreases annually to 0% by the 10th Contract
year.
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If there are increases in the Face Amount, each increase will have
a corresponding surrender charge. These charges will be specified
in a supplemental schedule of benefits at the time of the increase.
The Company will make the payment of net cash surrender value out
of its General Account and, at the same time, transfer assets from
the Variable Account to the General Account in an amount equal to
the Policy reserves in the Variable Account. If the Policy is
surrendered in the first Policy year, any unpaid first year monthly
administrative charges will be deducted at surrender, in addition
to any contingent surrender charges which may be applicable.
For purposes of calculating actual Surrender Charges, premium and
Policy value will be allocated to the initial Face Amount and
subsequent increases in Face Amount according to the ratio of the
respective Guideline Annual Premiums.
A Surrender Charge may be made on a decrease in the Face Amount. A
surrender charge may be deducted on a decrease in the Face Amount.
On a decrease, the surrender charge deducted is a fraction of the
charge that would apply to a full surrender. The fraction is the
product of the decrease divided by the current Face Amount times
the surrender charge. Where a decrease causes a partial reduction
in an increase or in the initial Face Amount, the Company will
deduct a proportionate share of the surrender charge for that
increase or for the initial Face Amount.
b. CHARGES ON PARTIAL WITHDRAWAL
For each partial withdrawal, The Company deducts a transaction fee
of 2.0% of the amount withdrawn, not to exceed $25. This fee is
intended to reimburse us for the cost of processing the withdrawal.
A partial withdrawal charge may also be deducted from Policy Value.
However, in any Policy year, the Policy Owner may withdraw,
without a partial withdrawal charge, up to 10% of the policy value
minus the total of any prior free withdrawals in the same Policy
year ("Free 10% Withdrawal"). The right to make the Free 10%
Withdrawal is not cumulative from Policy year to Policy year.
The Company imposes the partial withdrawal charge on any
withdrawal greater than the Free 10% Withdrawal. The charge is of
5.0% of the excess withdrawal up to the surrender charge. If no
surrender charge applies on withdrawal, no partial withdrawal
charge will apply. The Company will reduce the Policy's outstanding
surrender charge by the partial withdrawal charge deducted,
proportionately reducing the deferred sales and administrative
charges. The partial withdrawal charge deducted will decrease
existing surrender charges in inverse order.
c. DEATH BENEFIT
The Company will normally pay a death benefit to the beneficiary
within seven days after receipt, at its Principal Office, of the
Policy, due proof of death of the Insured, and all other
requirements necessary to make payment.
The death proceeds payable will depend on the option in effect at
the time of death. Federal tax law requires a Guideline Minimum
Death Benefit in relation to Policy Value for a Contract to qualify
as life insurance. Under current Federal tax law, either the
Guideline Premium Test or the Cash Value Accumulation Test can be
used to determine if the Contract complies with the definition of
"life insurance" under the Code. At the time of application, the
Policy Owner may elect either of the
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tests. If the Policy Owner elects the Guideline Premium Test, the
Policy Owner will have the choice of electing the Death Benefit
Option 1 or the Death Benefit Option 2. If the Policy Owner elect
the Cash Value Accumulation Test, the Death Benefit Option 3
will apply.
GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST -- There
are two main differences between the Guideline Premium Test and the
Cash Value Accumulation Test. First, the Guideline Premium Test
limits the amount of premium that may be paid into a Contract,
while no such limits apply under the Cash Value Accumulation Test.
Second, the factors that determine the Guideline Minimum Death
Benefit relative to the Policy Value are different.
The Guideline Premium Test limits the amount of premiums payable
under a Contract to a certain amount for an Insured of a particular
age and sex. Under the Guideline Premium Test, the Policy Owner
may choose between the Death Benefit Option 1 or the Death Benefit
Option 2. After issuance of the Contract, the Policy Owner may
change the selection from the Death Benefit Option 1 to the Death
Benefit Option 2, or vice versa.
The Cash Value Accumulation Test requires that the Death Benefit
must be sufficient so that the cash Surrender Value does not at any
time exceed the net single premium required to fund the future
benefits under the Contract. Under the Cash Value Accumulation
Test, required increases in the Guideline Minimum Death Benefit
(due to growth in Policy Value) will generally be greater than
under the Guideline Premium Test. If the Policy Owner chooses the
Cash Value Accumulation Test, ONLY the Death Benefit Option 3 is
available.
Under the Death Benefit Option 1, the death benefit is the greater
of either the Face Amount of insurance or the Guideline Minimum Sum
Insured. Under the Death Benefit Option 2, the death benefit is
the greater of either (a) the Face Amount of insurance PLUS Policy
value or (b) the guideline minimum sum Insured. The guideline
minimum sum Insured is calculated by multiplying the applicable
percentage from the following table for the Insured person's age
(nearest birthday) at the beginning of the Policy year of
determination to the-policy value.
GUIDELINE MINIMUM DEATH BENEFIT FACTORS
Age of Insured Percentage of
on Date of Death Policy Value
---------------- ------------
40 and under ......................... 250%
45 ................................... 215%
50 ................................... 185%
55 ................................... 150%
60 ................................... 130%
65 ................................... 120%
70 ................................... 115%
75 ................................... 105%
80 ................................... 105%
85 ................................... 105%
90 ................................... 105%
95 and above ......................... 100%
For the ages not listed, the progression between the listed ages is
linear.
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Death Benefit Option 3 (Cash Value Accumulation Test). Under
Option 3, the Death Benefit will equal the greater of (1) the Face
Amount or (2) the Policy Value multiplied by the applicable factor,
as set forth in the Policy. The applicable factor depends upon the
Underwriting Class, sex (unisex if required by law), and
then-attained age of the Insured. The factors decrease slightly
from year to year as the attained age of the Insured increases.
The Company will make payment of the death proceeds out of its
general account, and will transfer assets from the Variable Account
to the general account in an amount equal to the reserve in the
Variable Account attributable to the Policy. The excess, if any,
of the death proceeds over the amount transferred will be paid out
of the general account reserve maintained for that purpose.
d. DEFAULT AND OPTIONS ON LAPSE
The duration of insurance coverage depends upon the Policy value
being sufficient to cover the monthly deductions plus loan interest
accrued. If the Policy value at the beginning of a month is less
than the deductions for that month plus loan interest accrued, a
grace period of 62 days will begin. Written notice will be sent to
the Policy Owner and any assignee on the Company's records stating
that such a grace period has begun and giving the amount of premium
payment necessary to prevent termination.
If sufficient payment is not received during the grace period, the
Policy will terminate without value. Notice of such termination
will be sent to the Owner and any assignee. If the Insured should
die during the grace period, an amount sufficient to cover the
overdue monthly deductions and other charges will be deducted from
the death proceeds.
e. POLICY LOAN
The policies provide that Policy Owner may take a loan of up 90% of
an amount equal to Policy value less surrender charges. The Policy
value for this purpose will be that next computed after receipt, at
the Principal Office, of a loan request. Payment of the loan
amount will be made to the Policy Owner within seven days after
such receipt.
The amount of any outstanding loan plus accrued interest is called
"debt". When a loan is made, the portion of the assets in the
Variable Account (which is a portion of the surrender value and
which also constitutes a portion of the reserves for the death
benefit) equal to the debt created thereby is transferred by the
Company from the Variable Account to the general account.
Allocation of the loan among Sub-Accounts will be according to the
Policy Owner's request. If this allocation is not specified or not
possible, the loan will be allocated based on the proportion the
Policy value in the General Account, less debt, and the Policy
value in each Sub-Account bears to the total Policy value, less
debt. Policy value in each Sub-Account equal to the Policy loan
allocated to such Subaccount will be transferred to the General
Account, and the number of Accumulation Units equal to the Policy
value so transferred will be canceled. Because of the transfer, a
portion of the Policy is not variable during the loan period and,
therefore, the death benefit and the surrender value are
permanently affected by any debt, whether or not repaid in whole or
in part. The Company credits the Policy value in the General
Account attributable to the loan with a rate of return equal to an
effective annual yield of 4.00%.
Loan Interest is payable in arrears at the current annual rate of
4.80% (4.00% for preferred loans). This rate may change, but is
guaranteed not to exceed 6.00% (4.50% for preferred loans).
Interest is payable at the end of each Policy year or on a pro rata
basis for such shorter period as the loan may exist. Loan interest
is due on each Policy anniversary. If not paid when due, it is
added to the loan principal and bears interest at the same rate of
interest. If the resulting loan principal
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exceeds the Policy value in the General Account, the Company will
transfer Policy value equal to the excess debt from the Policy
value in each Sub-Account to the General Account; as security for
the excess debt. The Company will allocate the amount transferred
among the Sub-Accounts in the same proportion that the Policy value
in each Sub-Account bears to the total Policy values in all
Sub-Accounts.
Failure to repay a loan will not necessarily terminate the Policy.
If the Policy Value is not sufficient to cover the monthly
deductions for the cost of insurance and administrative expenses,
the Policy will go into a 62 day grace period as described above.
f. TRANSFERS AMONG SUB-AACCOUNTS
Amounts may be transferred, upon request, at any time from any
Sub-Account of the Variable Account to one or more other
Sub-Accounts. Transfers from a Sub-Account of the Variable Account
will take effect as of the receipt of a written request at the
Principal Office. The first twelve transfers are free of charge;
however, the Company will make an administrative charge of $10
(guaranteed not to exceed $25) for additional transfers in a Policy
year. Transfers resulting from Policy loans, the exercise of
conversion rights, automatic transfers, and reallocation of Policy
value within 20 days of issue, will not be subject to a transfer
charge, and will not be counted for purposes of the limitation on
the number of 'free' transfers allowed in each Policy year.
Automatic transfers do not reduce the remaining number of transfers
which may be made without charge.
Transfer charges, if any, are allocated by Policy Owner request to
one Sub-Account. If an allocation is not specified or not possible
the allocations will be based on the proportion that the values in
each of the Sub-Accounts of the Variable Account bears to the total
unloaded Policy value.
g. RIGHT OF WITHDRAWAL PROCEDURES
The Policy Owner has the right to examine and cancel the Policy by
returning it to the Company Along with a written request for
cancellation to the Company or one of its representatives on or
before the 10 days after receipt of the Policy (or longer when
state law so requires).
If the Policy provides for a full refund under its "Right to
Examine Policy" provision as required in a particular state, the
refund will be the greater of the entire payment or the Policy
value plus deductions under the Policy or by the funds for taxes,
charges or fees. If the Policy does not provide for a full refund,
the refund will be the amounts allocated to the fixed account, the
policy value in the Variable Account, and all fees, charges and
taxes which have been imposed.
A free look privilege also applies after a requested increase in
Face Amount. After an increase, the Company will mail or deliver
notice of the "Free Look" with respect to the increase. The Policy
Owner will have the right to cancel the increase within 10 days,
and receive a credit for charges that would not have been deducted
but for the increase. Such charges with respect to the increase
will be added to Policy value, unless the Policy Owner requests a
refund of such charges.
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