EXHIBIT 11
DESCRIPTION OF ISSUANCE, TRANSFER, AND REDEMPTION PROCEDURES
FOR POLICIES PURSUANT TO RULE 6E-3(T)(B)(12)(III)
This document sets forth the administrative procedures that will be followed by
Security Life of Denver ("Security Life") in connection with the issuance of
certain of its Corporate Benefits flexible premium variable universal life
insurance policies (the "policies") issued through Security Life Separate
Account L1 (the "Separate Account"), the transfer of assets held under the
policies, and the redemption of interests in policies for use on multi-life
basis when the insured people share a common employment or business
relationship.
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF THE POLICIES
A. Offering of the Policy
The policy is offered only to corporate entities or qualifying groups
of individual owners ("owners") who satisfy certain suitability
standards. The policy may be purchased to acquire insurance on the life
of a person (an "insured") in whom the owner has an insurable interest.
Security Life requires satisfactory evidence of the insured's
insurability, which may include a medical examination of the insured.
The available issue ages are 15 through 85. Age is determined on the
insured's age as of the birthday nearest the policy date.
This policy is available only to groups of ten or more insured people.
Generally, we require a minimum total group first year premium of at
least $250,000. However, depending on underwriting circumstances, we
may reduce the minimum total group first year premium. We generally
require a minimum target death benefit of $50,000 per policy. We may
reduce the minimum target death benefit if the average target death
benefit at policy issuance for the group is at least $50,000.
Acceptance of an application depends on Security Life's underwriting
rules, and Security Life reserves the right to reject an application
for any reason.
If a policy has more than one owner (joint owners), then any
transaction under the policy except for telephone transfers of account
value will require the authorization of all owners.
B. Cost of Insurance Charges Structure, Payments and Underwriting
Standards
Security Life places the insured in a premium class when the policy is
issued, based on Security Life's underwriting of the application. This
original premium class applies to the initial stated death benefit.
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The current cost of insurance charge rate for a policy is based on the
age at issue, sex, and premium class of the insured, and on the policy
year, and therefore varies from time to time. Security Life currently
places insureds in the following premium classes, based on
underwriting: Standard Tobacco (ages 0-85); and Standard Non-tobacco
(ages 20-85). Insureds may also be placed in a substandard rate class,
which involves a higher mortality risk that the standard tobacco or
standard non-tobacco classes.
Security Life guarantees that the cost of insurance rates used to
calculate the monthly cost of insurance charge will not exceed the
maximum cost of insurance premiums set forth in the policies. The
guaranteed cost of insurance rate for standard classes are based on the
1980 Commissioners' Standard ordinary mortality Tables, Male or Female,
Smoker or Nonsmoker Mortality Premiums (1980 CSO Tables). The
guaranteed cost of insurance rates for substandard classes are based on
multiples of or additives to the 1980 CSO Tables.
Security Life's current cost of insurance may be less than the
guaranteed cost of insurance that is set forth in the policy. Current
cost of insurance rates will be determined based on Security Life's
expectations as to future mortality, investment earnings, expenses,
taxes, and persistency experience. These rates may change from time to
time.
Cost of insurance rates (whether guaranteed or current) for an insured
in a standard non-tobacco class are equal to or lower than guaranteed
cost of insurance for an insured of the same age and sex in a standard
tobacco class. Cost of insurance rates (whether guaranteed or current)
for an insured in a standard non-tobacco or tobacco class are generally
lower than guaranteed cost of insurance for an insured of the same age
and sex and tobacco status in a substandard class.
The cost of insurance for the policy will not be the same for all
owners. Insurance is based on the principle of pooling and distribution
of mortality risks which assumes that each owner is charged a cost of
insurance commensurate with the insured's mortality risk as actually
determined, reflecting factors such as age, sex, health, and
underwriting method. A uniform cost of insurance charge for all
insureds would discriminate unfairly in favor of those insureds
representing higher risks. Although there will be no uniform cost of
insurance charges for all insureds for a given stated death benefit
there will be a uniform cost of insurance charge for all insureds of
the same issue age, sex, policy duration and underwriting
classification.
If the insured's age or sex has been misstated in the application for
the policy or in any application for supplemental and/or rider
benefits, and if the misstatement becomes known during the lifetime of
the insured, then policy values will be adjusted to those based on the
correct monthly deductions (reflecting the correct age or sex) since
the policy date. If the policy's values are insufficient to cover the
monthly deduction on the prior monthly date, the grace period will be
deemed to have begun on such date, and notification will be sent to the
owner at least 61 days prior to the end of the grace period. See
"Policy Termination and Grace Period," below.
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The policy provides coverage on an insured named under the policy and a
Death Benefit payable upon the death of the insured. The policy will
remain in force as long as the policy's cash surrender value is
sufficient to cover the charges due.
On or after one year from the policy date, the owner may request a
reduction in the stated death benefit, by notice to Security Life,
subject to the following rules. If a change in the stated death benefit
would result in total premiums paid exceeding the premium limitations
prescribed under current tax law to qualify the policy as a life
insurance contract, Security Life will refund promptly to the owner the
amount of such excess above the premium limitations.
The minimum amount of any decrease in stated death benefit is $1,000,
and any decrease in stated death benefit will become effective on the
monthly date next following the date that notice requesting the
decrease is received and approved by Security Life. Security Life
reserves the right to decline a requested decrease in the stated death
benefit if compliance with the guideline premium limitations under
current tax law resulting from this decrease would result in immediate
termination of the policy, or if to effect the requested decrease,
payments to the owner would have to be made from the accumulated value
for compliance with the guideline premium limitations, and the amount
of such payments would exceed the cash surrender value under the
policy.
At any time after issue the owner may request an increase in the stated
death benefit; any increase in the stated death benefit must be at
least $1,000 (unless the increase is effected pursuant to a rider
providing for automatic increases in stated death benefit), and an
application must be submitted. Any increase that is not guaranteed by
rider will require satisfactory evidence of insurability and must meet
Security Life's underwriting rules. The increase in stated death
benefit will become effective on the monthly date next following the
date the request for the increase is received and approved, and the
account value will be adjusted to the extent necessary to reflect a
monthly deduction as of the effective date based on the increase in
stated death benefit.
Security Life will determine a cost of insurance rate for each increase
in coverage based on the age of the insured at the time of the
increase. The following rules will apply for purposes of determining
the risk amount for each rate.
When an increase in stated death benefit is requested, Security Life
conducts underwriting before approving the increase (except as noted
below) to determine whether a different premium class will apply to the
increase. If the premium class for the increase has lower cost of
insurance rates than the original premium class, then the premium class
for the increase will also be applied to the initial stated death
benefit. If the premium class for the increase has higher cost of
insurance rates than the original premium class, the premium class for
the increase will apply only to the increase in stated death benefit,
and the original premium class will continue to apply to the initial
stated death benefit.
For the purposes of determining the risk amount associated with a
stated death benefit, Security Life will attribute the total net amount
at risk for the total stated death benefit. If there is a
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decrease in stated death benefit after an increase, the decrease is
applied to each stated death benefit in the same proportion that it
bears to the total stated death benefit, unless state law requires
otherwise.
The policy will be offered and sold pursuant to an established
mortality structure and underwriting standards in accordance with state
insurance laws. Where state insurance laws prohibit the use of
actuarial tables that distinguish between men and women in determining
premiums and policy benefits for their insured resident, Security Life
will comply.
C. Application and Payment Processing
To purchase a policy, an application must be completed and submitted
through an authorized Security Life agent. An owner's policy coverage
will become effective on the policy date which may be specified on the
application.
The issue date is the date that Security Life has completed the review
of the application and underwriting and has printed the policy for
mailing and delivery to the Registered Representative to deliver to the
Policyowner. The initial premium does not have to be received for
issuance to occur.
The Policy Date is the date used to determine the monthly processing
date, coverage effective date and policy anniversaries. This date may
be the same as the issue and investment date but can also be a date
requested by the Policyowner. The Policy Date is not generally
determined by the receipt of the initial premium.
The Investment Date is the date that Security Life applies funds to the
Policy. It is determined by the next valuation date following the date
that we have received the initial premium, approved the policy for
issue and have received all issue requirements. It is generally the
same date as the policy and issue date.
As provided for under state insurance law, the owner, to preserve
insurance age, may be permitted to backdate the policy. In no case may
the policy date be more than six months prior to the date the
application was completed. Charges for the monthly deduction for the
backdated period are deducted on the issue date. Temporary life
insurance coverage may be provided prior to the policy date under the
terms of a temporary insurance agreement. In accordance with Security
Life's underwriting rules, temporary life insurance coverage may not
exceed $3,000,000 and will not remain in effect for more than ninety
(90) days.
The initial net premium will be credited to the policy on the issue
date if all outstanding delivery requirements are satisfied. For
backdated policies, the initial net premium will be credited on the
issue date. Planned periodic premiums and unscheduled premiums that are
not underwritten will be credited to the policy and the net premiums
will be invested to the requested divisions on the valuation date they
are received by the home office. If an additional premium payment is
rejected, Security Life will return the premium payment promptly,
without any adjustment for investment experience.
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The policy date is the date from which policy months, years, and
anniversaries are measured. A policy month is each one-month period
beginning with a monthly date and ending with the day immediately
preceding the next following monthly date. The monthly date is the same
day as the policy date for each succeeding month. The monthly deduction
is deducted on each monthly date.
A policy year is each period of twelve months commencing with the
policy date and ending immediately preceding the first annual date, or
any following year commencing with an annual date and ending
immediately preceding the next annual date. The annual date is the same
day in each policy year as the policy date.
The issue date, if the same as the policy date, is the date from which
the suicide and contestable periods start. It is shown in the policy,
and is the date that the policy is issued.
D. Allocation of Net Premiums
On the investment date, the account value is equal to the initial net
premium credited (initial premium payment less the premium expense
charge), less any monthly deductions made as the policy date up to six
months for backdated policies. On each investment date thereafter, the
account value is the sum of the variable account, the guaranteed
interest division, and the loan account. The account value will vary to
reflect the performance of the subdivisions to which amounts have been
allocated, interest credited on amounts allocated to the guaranteed
interest division, interest credited on amounts in the loan account,
charges, transfers, partial cash surrenders, loans and loan repayments.
The net account value is cash value minus any outstanding policy debt.
When applying for a policy, the owner selects a plan for paying level
premium payments at specified intervals, e.g., quarterly, semi-annually
or annually, until the maturity date. If the owner elects, Security
Life will also arrange for payment of planned period premiums on a
monthly basis under a pre-authorized payment arrangement. The owner is
not required to pay premium payments in accordance with these plans;
rather, the owner can pay more or less than planned or skip a planned
periodic premium entirely. Currently, there is no minimum amount for
each premium. Security Life may establish a minimum amount 90 days
after Security Life sends the owner a written notice of such increase.
Subject to certain limits (described below), the owner can change the
amount and frequency of planned periodic premiums whenever the owner
wishes by sending notice to the home office. However, Security Life
reserves the right to limit the amount of a premium payment or the
total premium payments paid.
In the application, the owner specifies the percentage of net premium
to be allocated to each investment option including the guaranteed
interest division (G.I.D.). Net premiums will generally be allocated to
the investment options on the valuation date that Security Life
receives them in accordance with the allocations specified in the
application or subsequent notice.
State guidelines regarding the allocation of the net initial premium
varies as does the length of time for free look. Some states mandate
that if an owner exercises his/her free look right he/she
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is entitled to a full premium refund (Premium refund states). In these
instances Security Life allocates the funds to the money market
investment option. Other states mandate that should the owner exercise
his/her free look option he/she is entitled to receive the value of the
fund allocations plus the policy charges deducted (valuation states).
In these instances Security Life allocates the net initial premium to
the divisions elected on the application during the free look period
but after the 5 day deemed delivery date.
The net premium allocation percentages specified in the application
will apply to subsequent premium payments until the owner changes the
percentages. The minimum allocation percentage that an owner may
specify for an investment option or the guaranteed account is 1%, and
allocation percentages must be whole numbers. The sum of allocations
must equal 100%. Security Life reserves the right to limit the number
of investment options (18) to which account value may be allocated. An
owner can change the allocation percentages at any time, subject to the
rules below, by sending notice to the home office or if telephone
privileges are in effect, the request can be received by phone. The
change will apply to all premium payments received with or after
receipt of the owner's notice.
E. Exchange Program
Security Life may offer an exchange program for designated inforce
policies to be exchanged to a Corporate Benefits Variable Universal
Life policy. Evidence of insurability will not be required if there is
not a request for a death benefit increase. Policies eligible for this
exchange will be limited to Strategic Advantage II policies issued
after December 1, 1999 through April 30, 2000, to policyowners who
otherwise qualify to purchase the Corporate Benefits Variable Universal
Life policy.
F. Additional Payment
Additional unscheduled premium payments can be made at any time while
the policy is in force. Premium payments after the initial premium
payment must be made to the home office.
Security Life has the right to limit the number and amount of such
premium payments. Total premium payments paid in a policy year may not
exceed guideline premium payment limitations for life insurance set
forth in the Internal Revenue Code. Security Life will promptly refund
any portion of any premium payment that is determined to be in excess
of the premium payment limit established by law to qualify a policy as
a contract for life insurance.
Security Life reserves the right to reject any requested increase in
planned periodic premiums, or any unscheduled premium. Security Life
also reserves the right to require satisfactory evidence of
insurability prior to accepting any premium which increases the risk
amount of the policy. No premium payment will be accepted after the
maturity date.
The owner may specify that a specific unscheduled premium payment is to
be applied as a repayment of a policy loan, if any.
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The payment of premiums may cause a policy to be a modified endowment
contract under the Internal Revenue Code. If acceptance of a premium
paid would, in Security Life's view, cause the policy to become a
Modified Endowment Contract, then to the extent feasible Security Life
will not accept that portion of the premium that would cause the policy
to become a Modified Endowment Contract unless the owner confirms in
writing the owner's intent to convert the policy to a Modified
Endowment Contract. Security Life may return that portion of the
payment pending receipt of instructions from the owner.
G. Policy Termination and Grace Period
The policy terminates at the earliest of the end of the grace period,
the surrender of the policy by the owner or the fulfillment of Security
Life's obligations under the policy (i.e., payment of the death benefit
proceeds).
If the cash surrender value on a monthly date is less than the amount
of the monthly deduction to be deducted on that date the policy will be
in default. In addition, if on a monthly date the cash value less any
policy loan exceeds the amount of the monthly deduction due for the
following policy month, the policy will be in default. An owner, and
any assignee of record, will be sent notice of the default.
If a policy goes into default, the owner will be allowed a 61-day grace
period to pay a premium payment sufficient to cover the monthly
deductions due during the grace period and for a period of two
additional months or a sufficient amount to avoid termination of the
policy due to excessive loans. Security Life will send notice of the
amount required to be paid during the grace period ("grace period
premium payment") to the owner's last known address and the address of
any assignee of record. The grace period will begin when the notice is
sent. An owner's policy will remain in effect during the grace period.
If the insured should die during the grace period and before the grace
period premium payment is paid, the death benefit proceeds will still
be payable to the beneficiary, although the amount paid will reflect a
reduction for the monthly deductions due on or before the date of the
insured's death (and for any policy debt). If the grace period premium
payment has not been paid before the grace period ends, the policy will
lapse. It will have no value and no benefits will be payable.
The maturity date is the date when insurance coverage under the policy
terminates and maturity benefit is paid. It is generally the insured's
100th birthday, and is shown in the policy. The maturity benefit is
equal to the cash surrender value on the maturity date.
H. Reinstatement of a Policy Terminated for Insufficient Values
The policy may be reinstated within five years after lapse and before
the maturity date, subject to compliance with certain conditions,
including the payment of a necessary premium payment and submission of
satisfactory evidence of insurability.
I. Repayment of a Loan
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An owner may repay all or part of a policy loan at any time while the
insured is living and the policy is in force. Loan repayments must be
sent to the home office and will be credited as of the date received.
The owner may instruct Security Life that a specific unscheduled
premium payment is to be applied as a loan repayment. When a loan
repayment is made, account value in the loan account in an amount
equivalent to the repayment is transferred from the loan account to the
investments options according to the owner's current net premium
allocation instructions.
J. Policy Riders
Rider benefits may be available and may be added to the policy. Monthly
charges for the rider will be deducted from the account value as part
of the monthly deductions. The rider benefits available provide fixed
benefits that do not vary with the investment experience of the
separate account. The only rider available is the Adjustable Term
Insurance Rider.
Additional rules and limits apply to these rider benefits and are set
forth in the rider.
II. TRANSFERS AMONG INVESTMENT OPTIONS
Several investment options of the Separate Account are available for
allocation of net premiums paid under the policy, subject to certain
limitations set forth in the policy. Each invests its assets in shares or
units of an underlying portfolio. Currently available investment options
invest in portfolios of AIM Variable Insurance Funds, Inc., The Alger
American Fund, Fidelity Variable Insurance Products Fund and Variable
Insurance Products Fund II, the GCG Trust, INVESCO Variable Investment
Funds, Inc., Neuberger Berman Advisors Management Trust, Van Eck Worldwide
Insurance Trust. All Funds are registered under the Investment Company Act
of 1940 as an open-end management investment company. Additional funds may
be made available in the future.
After the free-look period and prior to the maturity date, the owner may
transfer all or part of the account value (except loan amounts) from the
investment options to other investment options or to the guaranteed
interest division; or transfer a part of an amount in the guaranteed
interest to the investment options, subject to the following restrictions.
The minimum transfer amount is the lesser of $100 or the entire amount in
that investment option or the guaranteed interest. A transfer request that
would reduce the amount in an investment option or the guaranteed interest
division below $100 will be treated as a transfer request for the entire
amount in that investment option or the guaranteed interest division. With
the exception of the Right to Exchange (described below), Security Life
reserves the right to limit the number or frequency of transfers permitted
in the future.
Security Life will make the transfer as of the end of the valuation period
during which such transfer is requested and received by Security Life.
Currently, there is a 12 free transfer limit on the number of transfers
that can be made between investment options or to the guaranteed interest
division. Currently, Security Life assesses a transfer charge of $10 for
each transfer during a policy year in excess of the first twelve transfers.
The transfer charge will be deducted from the investment option from which
the requested transfer is being made, on a pro-rata basis.
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Telephone transfers will be based upon instructions given by telephone,
provided the appropriate authorization has been provided to Security Life.
Security Life reserves the right to suspend telephone transfer privileges
at any time, for any reason, if Security Life deems such suspension to be
in the best interests of owners.
During the first twenty-four policy months following the issue date, and
within sixty days of the later of notification of a change in the
investment policy of the separate account or the effective date of such
change, the owner may exercise a one-time Right to Exchange by requesting
that all or a portion of the variable account be transferred to the
guaranteed interest division. Exercise of the Right to Exchange is not
subject to the transfer charge. Following the exercise of the Right to
Exchange, net premiums may not be allocated to the subdivisions of the
variable account, and transfers of account value to the subdivisions will
not be permitted. The other terms and conditions of the policy will
continue to apply.
Transfers may also be effected pursuant to the dollar cost averaging or
auto rebalancing feature as may be elected by the owner from time to time
and as described in the current prospectus.
III. REDEMPTION PROCEDURES, SURRENDER AND RELATED TRANSACTIONS
A. Surrender for Cash Surrender Value
An owner may surrender the policy at any time for its cash surrender
value by submitting notice to the home office. Security Life may
require return of the policy. A surrender charge may apply. A surrender
request will be processed as of the valuation date the surrender notice
and all required documents are received. Payment will be made within
seven calendar days. An owner's policy will terminate and cease to be
in force if it is surrendered. It cannot later be reinstated.
B. Death Claims
The death benefit proceeds are equal to the sum of the base death
benefit for each coverage segment under the death benefit option
selected, calculated on the date of the insured's death, plus any rider
benefits, minus any outstanding policy loan including accrued but
unpaid interest, minus any unpaid monthly deductions incurred prior to
the date of death. If the insured's age or sex has been misstated in
the application for the policy or in any application for supplemental
and/or rider benefits, and if the misstatement becomes known after the
death of the insured, then the death benefit under the policy or such
supplemental and/or rider benefits will be that which the cost of
insurance charge which was deducted from the account value on the last
monthly processing date prior to the death of the insured would have
purchased for the correct sex and age.
Security Life will pay interest at the rate declared by us or at a
higher rate required by law.
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Security Life will usually pay the death benefit proceeds to the
beneficiary within seven days after receipt at its Home Office of due
proof of death of the insured and all other requirements necessary to
make payment. If the payment of the death benefit of a policy is
contested, payment of proceeds may be delayed.
The Death Benefit payable depends on the death benefit option in effect
on the date of death. Subject to certain conditions, owners may change
the death benefit option. Under Option 1, the death benefit is the
greater of the specified amount, which includes the account value or
the Applicable Percentage of account value on the date of the insured's
death. Under Option 2, the death benefit is the greater of the
specified amount plus the account value on the date of death, or the
Applicable Percentage of the account value on the date of the insured's
death. Under Option 3, the death benefit is the greater of the stated
death benefit plus the sum of all premiums paid minus partial
withdrawals or the account value multiplied by the appropriate factor.
The "Applicable Percentage" which is the AV on the date of death
multiplied by the appropriate factor from the Definition of Life
Insurance factors shown in the policy's appendix A or B. A table
showing the Applicable Percentages for Attained Ages 0 to 95 is set
forth in the policy.
On or after one year from the policy date, the owner may change the
death benefit option on the policy, by notice to Security Life, subject
to the following rules. A change in the Death Benefit Option may be
requested at least 30 days prior to a policy anniversary. After any
changes, the specified amount must be at least $50,000. The effective
date of the change will be the monthly date next following the day that
Security life receives and accepts notice of the request for change.
Security Life may require satisfactory evidence of insurability.
When a change from Option 1 to Option 2 is made, the specified amount
after the change is effected will be equal to the specified amount
before the change less the account value on the effective date of the
change. When a change from Option 2 to Option 1 is made, the specified
amount after the change will be equal to the specified amount before
the change is effected and the death benefit will be increased by the
account value on the effective date of the change. When a change from
Option 3 to Option 1 is made, the specified amount will be the stated
death benefit plus the sum of the premiums paid minus partial
withdrawals.
C. Policy Loan
After the first policy year and while the insured is living, provided
the policy is not in the grace period, the owner may borrow against the
policy at any time by submitting notice to the home office. The minimum
amount of any loan request is $100. The maximum loan amount is the net
cash surrender value less monthly deductions to the next policy
anniversary. Maximum loan amounts may be different if required by state
law.
Outstanding loans reduce the amount available for new loans. Loans will
be processed as of the date the loan notice is received and approved.
Loan proceeds generally will be sent to the owner within seven calendar
days.
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Loan interest charges on a Policy Loan accrue daily at a compound
annual interest rate of 3.25%. Interest is due in arrears on each
policy anniversary.
Outstanding loan amounts (including unpaid interest added to the loan)
plus accrued interest not yet due equals the total policy loan.
When a policy loan is made, an amount sufficient to secure the loan is
transferred out of the variable account and the guaranteed account and
into the policy's loan account. Thus, a loan will have no immediate
effect on the account value, but other policy values, such as the cash
surrender value and the death benefit proceeds, will be reduced
immediately by the amount transferred to the loan account. This
transfer is made against the account value in each subdivision and the
guaranteed account in proportion to the account value in each on the
effective date of the loan, unless the owner specifies that transfers
be made form specific subdivisions. an amount of account value equal to
any due and unpaid loan interest which exceeds interest credited to the
loan account will also be transferred to the loan account on each
annual date. Such interest will be transferred from each investment
option in the same proportion that account value in each bears to the
total unloaned account value.
The loan account will be credited with interest at an effective annual
rate of not less than the annual loan interest rate of 3%.
D. Partial Withdrawals
An owner may make partial cash surrenders under the policy at any time
after the first policy anniversary subject to the conditions below. An
owner must submit notice to the home office. Each partial cash
surrender must be at least $100. The maximum partial withdrawal is the
amount which will leave $500 as the net cash surrender value. When a
partial withdrawal is taken, the amount of the withdrawal plus a
service fee of $25 is deducted from the account value. As of the date
Security Life receives notice of a partial cash surrender request, the
cash value will be reduced by the partial cash surrender amount.
Unless the owner requests that a partial cash surrender be deducted
from specified investment options, the partial cash surrender amount
will be deducted from account value on a pro-rata basis in proportion
to the account value in each investment option.
If death benefit Option 1 is in effect, Security life may reduce the
specified amount. Security Life may reject a partial cash surrender
request if the partial cash surrender would reduce the specified amount
below $50,000, or if the partial cash surrender would cause the policy
to fail to qualify as a life insurance contract under applicable tax
laws, as interpreted by Security Life.
Partial cash surrender requests will be processed as of the valuation
date notice is received by Security Life, and generally will be paid
within seven calendar days.
E. Monthly Charges
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On each monthly date, Security Life will deduct from the account value
the monthly deductions due, commencing as of the policy date. An
owner's policy date is the date used to determine the applicable
monthly date. The monthly deduction consists of (1) cost of insurance
charges ("cost of insurance charge"), (2) the monthly administrative
charge (the "administrative charge"), (3) mortality and expense charge,
and (4) charges for any rider benefit. The monthly deduction is
deducted on pro rata basis from the account value in each investment
option.
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