AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 2004
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FILE NO. 033-91916
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 11
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GLENBROOK LIFE AND ANNUITY COMPANY
(Exact Name of Registrant)
ARIZONA 35-1113325
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification Number)
Organization)
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Address and Phone Number of Principal Executive Office)
MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
GLENBROOK LIFE AND ANNUITY COMPANY
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847-402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
COPIES TO:
ANGELA K. FONTANA, ESQ.
GLENBROOK LIFE AND ANNUITY COMPANY
ALFS, Inc.
3100 SANDERS ROAD
SUITE J5B
NORTHBROOK, IL 60062
Approximate date of commencement of proposed sale to the public: The annuity
contract covered by this registration statement is to be issued promptly and
from time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
THE STI CLASSIC VARIABLE ANNUITY
GLENBROOK LIFE AND ANNUITY COMPANY
544 LAKEVIEW PARKWAY, SUITE 300, VERNON HILLS, IL 60061
TELEPHONE NUMBER: 1-800-755-5275
PROSPECTUS DATED MAY 1, 2004
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Glenbrook Life and Annuity Company ("Glenbrook Life") is offering the STI
Classic Variable Annuity, an individual flexible premium deferred variable
annuity contract ("CONTRACT"). This prospectus contains information about the
Contract that you should know before investing. Please keep it for future
reference. The Contract is no longer being offered for new sales. If you have
already purchased the Contract, you may continue to make additional purchase
payments according to your Contract.
The Contract currently offers 42 "INVESTMENT ALTERNATIVES". The investment
alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and 39
variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Glenbrook Life
Multi-Manager Variable Account ("VARIABLE ACCOUNT"). Each Variable Sub-Account
invests exclusively in shares of one of the portfolios ("PORTFOLIOS") of the
following underlying funds ("FUNDS")
AIM VARIABLE INSURANCE FUNDS-SERIES I MFS/(R)/ VARIABLE INSURANCE
SHARES TRUST/SM/-INITIAL CLASS
FEDERATED INSURANCE SERIES OPPENHEIMER VARIABLE ACCOUNT FUNDS
FIDELITY/(R)/ VARIABLE INSURANCE PUTNAM VARIABLE TRUST-CLASS IB
PRODUCTS-INITIAL CLASS STI CLASSIC VARIABLE TRUST
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST-CLASS 2
WE (Glenbrook Life) have filed a Statement of Additional Information, dated May
1, 2004, with the Securities and Exchange Commission ("SEC"). It contains more
information about the Contract and is incorporated herein by reference, which
means it is legally a part of this prospectus. Its table of contents appears on
page 52 of this prospectus. For a free copy, please write or call us at the
address or telephone number above, or go to the SEC's Web site (http://
www.sec.gov). You can find other information and documents about us, including
documents that are legally part of this prospectus, at the SEC's Web site.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR
HAS IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
IMPORTANT THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS THAT
HAVE RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS
NOTICES OR BY EMPLOYEES OF SUCH BANKS. HOWEVER, THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY SUCH INSTITUTIONS
OR ANY FEDERAL REGULATORY AGENCY. INVESTMENT IN THE CONTRACTS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THE CONTRACTS ARE NOT FDIC INSURED.
1 PROSPECTUS
TABLE OF CONTENTS
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PAGE
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OVERVIEW
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Important Terms 3
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The Contract at a Glance 4
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How the Contract Works 6
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Expense Table 7
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Financial Information 9
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CONTRACT FEATURES
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The Contract 9
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Purchases 10
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Contract Value 11
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Investment Alternatives 12
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The Variable Sub-Accounts 12
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The Fixed Account Options 14
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Transfers 16
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Expenses 18
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PAGE
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Access To Your Money 20
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Income Payments 21
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Death Benefits 23
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OTHER INFORMATION
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More Information: 26
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Glenbrook Life 26
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The Variable Account 27
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The Portfolios 27
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The Contract 28
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Non-Qualified Annuities Held Within a Qualified Plan 28
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Legal Matters 28
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Taxes 29
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Annual Reports and Other Documents 34
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APPENDIX A- ACCUMULATION UNIT VALUES 36
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APPENDIX B- MARKET VALUE ADJUSTMENT 50
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STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 52
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2 PROSPECTUS
IMPORTANT TERMS
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This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
PAGE
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Accumulation Phase 6
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Accumulation Unit 9
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Accumulation Unit Value 9
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Anniversary Values 24
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Annuitant 9
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Automatic Additions Program 10
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Automatic Portfolio Rebalancing Program 18
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Beneficiary 9
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Cancellation Period 11
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Contract 9
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Contract Anniversary 5
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Contract Owner ("You") 9
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Contract Value 5
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Contract Year 5
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Death Benefit Anniversary 23
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Dollar Cost Averaging Program 18
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Due Proof of Death 23
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Enhanced Death Benefit Rider 24
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PAGE
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Fixed Account Options 14
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Free Withdrawal Amount 19
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Glenbrook Life ("We" or "Us") 26
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Guarantee Periods 14
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Income Plan 21
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Investment Alternatives 12
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Issue Date 6
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Market Value Adjustment 16
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Payout Phase 6
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Payout Start Date 21
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Portfolios 12
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SEC 1
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Settlement Value 24
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Systematic Withdrawal Program 21
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Valuation Date 11
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Variable Account 27
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Variable Sub-Account 12
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3 PROSPECTUS
THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
FLEXIBLE PAYMENTS You can purchase a Contract with as little as $3,000
($2,000 for "QUALIFIED CONTRACTS," which are Contracts
issued within QUALIFIED PLANS). Before age 86, you can
add to your Contract as often and as much as you like,
but each payment must be at least $50.
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RIGHT TO CANCEL You may cancel your Contract within 20 days of receipt
or any longer period your state may require
("CANCELLATION PERIOD"). Upon cancellation, we will
return your purchase payments adjusted, to the extent
applicable law permits, to reflect the investment
experience of any amounts allocated to the Variable
Account, including the deduction of mortality and
expense risk charges and administrative expense
charges.
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EXPENSES You will bear the following expenses:
.Total Variable Account annual fees equal to 1.35% of
average daily net assets (1.45% if you select the
ENHANCED DEATH BENEFIT RIDER)
.Annual contract maintenance charge of $30 (with
certain exceptions)
.Withdrawal charges ranging from 0% to 7% of payment
withdrawn (with certain exceptions)
.Transfer fee of $10 after 12th transfer in any
CONTRACT YEAR (fee currently waived)
. State premium tax (if your state imposes one)
In addition, each Portfolio pays expenses that you will
bear indirectly if you invest in a Variable
Sub-Account.
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INVESTMENT The Contract offers 42 investment alternatives
ALTERNATIVES including:
.3 Fixed Account Options (which credit interest at
rates we guarantee)
.39 Variable Sub-Accounts investing in Portfolios
offering professional money management by investment
advisers:
. A I M Advisors, Inc.
. Federated Investment Management Company
. Fidelity Management & Research Company
. Franklin Advisers, Inc.
. MFS/TM/ Investment Management
. OppenheimerFunds, Inc.
. Putnam Investment Management, LLC
. Templeton Global Advisors Limited
. Trusco Capital Management, Inc.
To find out current rates being paid on the Fixed
Account Options or how the Variable Sub-Accounts have
performed, call us at 1-800-755-5275.
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SPECIAL SERVICES For your convenience, we offer these special services:
. AUTOMATIC ADDITIONS PROGRAM
. AUTOMATIC PORTFOLIO REBALANCING PROGRAM
. DOLLAR COST AVERAGING PROGRAM
. SYSTEMATIC WITHDRAWAL PROGRAM
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4 PROSPECTUS
INCOME PAYMENTS You can choose fixed income payments, variable income
payments, or a combination of the two. You can receive
your income payments in one of the following ways:
. life income with guaranteed payments
.a "joint and survivor" life income with guaranteed
payments
.guaranteed payments for a specified period (5 to 30
years)
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DEATH BENEFITS If you die before the PAYOUT START DATE we will pay the
death benefit described in the Contract. We offer an
Enhanced Death Benefit Rider to owners of Contracts
issued on or after May 1, 1997.
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TRANSFERS Before the Payout Start Date you may transfer your
Contract value ("CONTRACT VALUE") among the investment
alternatives, with certain restrictions. No minimum
applies to the amount you transfer. We do not currently
impose a fee upon transfers. However, we reserve the
right to charge $10 per transfer after the 12th
transfer in each "CONTRACT YEAR," which we measure from
the date we issue your Contract or a Contract
anniversary ("CONTRACT ANNIVERSARY").
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WITHDRAWALS You may withdraw some or all of your Contract Value at
anytime during the Accumulation Phase. Full or partial
withdrawals are available under limited circumstances
on or after the Payout Start Date.
In general, you must withdraw at least $50 at a time.
Withdrawals taken prior to annuitization (referred to
in this prospectus as the Payout Phase) are generally
considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all
withdrawals are treated as distributions of earnings.
Withdrawals of earnings are taxed as ordinary income
and, if taken prior to age 59 1/2 , may be subject to an
additional 10% federal tax penalty. A withdrawal charge
and MARKET VALUE ADJUSTMENT also may apply.
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5 PROSPECTUS
HOW THE CONTRACT WORKS
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The Contract basically works in two ways. First, the Contract can help you (we
assume you are the CONTRACT OWNER) save for retirement because you can invest in
up to 42 investment alternatives and generally pay no federal income taxes on
any earnings until you withdraw them. You do this during what we call the
"ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date
we issue your Contract (we call that date the "ISSUE DATE") and continues until
the Payout Start Date, which is the date we apply your money to provide income
payments. During the Accumulation Phase, you may allocate your purchase payments
to any combination of the Variable Sub-Accounts and/ or Fixed Account Options.
If you invest in any of the 3 Fixed Account Options, you will earn a fixed rate
of interest that we declare periodically. If you invest in any of the Variable
Sub-Accounts, your investment return will vary up or down depending on the
performance of the corresponding Portfolios.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/ or for a pre-set number of years, by
selecting one of the income payment options ("INCOME PLANS") described on page
21. You receive income payments during the "PAYOUT PHASE" of the Contract, which
begins on the Payout Start Date and continues until we make the last payment
required by the Income Plan you select. During the Payout Phase, if you select a
fixed income payment option, we guarantee the amount of your payments, which
will remain fixed. If you select a variable income payment option, based on one
or more of the Variable Sub-Accounts, the amount of your payments will vary up
or down depending on the performance of the corresponding Portfolios. The amount
of money you accumulate under your Contract during the Accumulation Phase and
apply to an Income Plan will determine the amount of your income payments during
the Payout Phase.
The timeline below illustrates how you might use your Contract.
Issue Payout Start
Date Accumulation Phase Date Payout Phase
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You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments or income payments income payments
receive a lump sum for a set period for life
payment
As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if there is none, the
BENEFICIARY will exercise the rights and privileges provided by the Contract.
See "The Contract." In addition, if you die before the Payout Start Date, we
will pay a death benefit to any surviving Contract Owner or, if there is none,
to your Beneficiary. See "Death Benefits."
Please call us at 1-800-755-5275 if you have any question about how the Contract
works.
6 PROSPECTUS
EXPENSE TABLE
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The table below lists the expenses that you will bear directly or indirectly
when you buy a Contract. The table and the examples that follow do not reflect
premium taxes that may be imposed by the state where you reside. For more
information about Variable Account expenses, see "Expenses," below. For more
information about Portfolio expenses, please refer to the accompanying
prospectuses for the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
Withdrawal Charge (as a percentage of purchase payments)*
Number of Complete Years Since We Received Payment 0 1 2 3 4 5 6 7+
Being Withdrawn
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Applicable Charge 7% 6% 5% 4% 3% 2% 1% 0%
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Annual Contract Maintenance Charge $30.00**
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Transfer Fee $10.00***
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*
Each Contract Year, you may withdraw up to 10% of the Contract Value on the
date of the first withdrawal that Year without incurring a withdrawal charge.
However, any applicable Market Value Adjustment determined as of the date of
withdrawal will apply.
** We will waive this charge in certain cases. See "Expenses."
*** Applies solely to the thirteenth and subsequent transfers within a
Contract Year. We are currently waiving the transfer fee.
VARIABLE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSET VALUE
DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT)
Mortality and Expense Risk Charge 1.25%
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Administrative Expense Charge 0.10%
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Total Variable Account Annual Expense 1.35%
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WITH THE ENHANCED DEATH BENEFIT*
Mortality and Expense Risk Charge 1.35%
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Administrative Expense Charge 0.10%
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Total Variable Account Annual Expense 1.45%
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*The Enhanced Death Benefit Rider was available for Contracts issued on or
after May 1, 1997.
PORTFOLIO ANNUAL EXPENSES
The next table shows the minimum and maximum total operating expenses charged by
the Portfolios that you may pay periodically during the time that you own the
Contract. Advisers and/or other service providers of certain Portfolios may have
agreed to waive their fees and/or reimburse Portfolio expenses in order to keep
the Portfolios' expenses below specified limits. The range of expenses shown in
this table does not show the effect of any such fee waiver or expense
reimbursement. More detail concerning each Portfolio's fees and expenses appears
in the prospectus for each Portfolio.
ANNUAL PORTFOLIO EXPENSES
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Minimum Maximum
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Total Annual Portfolio
Operating
Expenses/(1)/
(expenses that are
deducted from
Portfolio assets,
which may include
management fees,
distribution and/or
services (12b-1) fees, 0.34% 3.91%
and other expenses)
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(1) Expenses are shown as a percentage of Portfolio average daily net assets
(before any waiver or reimbursement) as of December 31, 2003.
7 PROSPECTUS
EXAMPLE 1
This Example is intended to help you compare the cost of investing in the
Contract with the cost of investing in other variable annuity contracts. These
costs include Contract Owner transaction expenses, Contract fees, Variable
Account annual expenses, and Portfolio fees and expenses.
The example below shows the dollar amount of expenses that you would bear
directly or indirectly if you:
.. invested $10,000 in the Contract for the time periods indicated,
.. earned a 5% annual return on your investment, and
.. surrendered your Contract, or you began receiving income payments for a
specified period of less than 120 months, at the end of each time period, and
.. elected the Enhanced Death Benefit Rider (with total Variable Account expenses
of 1.45%)
The first line of the example assumes that the maximum fees and expenses of any
of the Portfolios are charged. The second line of the example assumes that the
minimum fees and expenses of any of the Portfolios are charged. Your actual
expenses may be higher or lower than those shown below.
THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO
PAY IF YOU SURRENDER YOUR CONTRACT
1 Year 3 Years 5 Years 10 Years
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Costs Based on Maximum Annual $1,120 $2,086 $3,034 $5,599
Portfolio Expenses
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Costs Based on Minimum Annual $ 752 $1,013 $1,298 $2,392
Portfolio Expenses
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..
EXAMPLE 2
This Example uses the same assumptions as Example 1 above, except that it
assumes you decided not to surrender your Contract, or you began receiving
income payments for a specified period of at least 120 months, at the end of
each time period.
1 Year 3 Years 5 Years 10 Years
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Costs Based on Maximum
Annual Portfolio $579 $1,725 $2,853 $5,599
Expenses
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Costs Based on Minimum
Annual Portfolio $213 $ 656 $1,121 $2,392
Expenses
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PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF
PAST OR FUTURE EXPENSES. YOUR RATE OF RETURN MAY BE HIGHER OR LOWER THAN 5%,
WHICH IS NOT GUARANTEED. THE EXAMPLES DO NOT ASSUME THAT ANY PORTFOLIO EXPENSE
WAIVERS OR REIMBURSEMENT ARRANGEMENTS ARE IN EFFECT FOR THE PERIODS PRESENTED.
THE ABOVE EXAMPLES ASSUME A MORTALITY AND EXPENSE RISK CHARGE OF 1.35%, AN
ADMINISTRATIVE EXPENSE CHARGE OF 0.10%, AND AN ANNUAL CONTRACT MAINTENANCE
CHARGE OF $30. IF THE ENHANCED DEATH BENEFIT RIDER WERE NOT ELECTED, THE EXPENSE
FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER.
8 PROSPECTUS
FINANCIAL INFORMATION
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To measure the value of your investment in the Variable Sub-Accounts during the
Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT."
Each Variable Sub-Account has a separate value for its Accumulation Units we
call "ACCUMULATION UNIT VALUE." Accumulation Unit Value is analogous to, but not
the same as, the share price of a mutual fund. Attached as Appendix A to this
prospectus are tables showing the Accumulation Unit Values of each Variable
Sub-Account since its inception. Prior to May 1, 2004, the Contracts were issued
through the Glenbrook Life and Annuity Company Variable Annuity Account.
Effective May 1, 2004, Glenbrook Life and Annuity Company Variable Annuity
Account and Glenbrook Life Scudder Variable Account A combined with and into the
Variable Account. As a result of the merger, the Contracts are now issued
through the Variable Account. For more information, see the Statement of
Additional Information, which contains the financial statements of Glenbrook
Life and Annuity Company Variable Annuity Account, Glenbrook Life Scudder
Variable Account A, and the Variable Account which show the effect of the merger
of Glenbrook Life and Annuity Company Variable Annuity Account and Glenbrook
Life Scudder Variable Account A into the Variable Account. The financial
statements of Glenbrook
Life also appear in the Statement of Additional Information.
THE CONTRACT
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CONTRACT OWNER
The STI Classic Variable Annuity is a contract between you, the Contract Owner,
and Glenbrook Life, a life insurance company. As the Contract Owner, you may
exercise all of the rights and privileges provided to you by the Contract. That
means it is up to you to select or change (to the extent permitted):
.. the investment alternatives during the Accumulation and Payout Phases,
.. the amount and timing of your purchase payments and withdrawals,
.. the programs you want to use to invest or withdraw money,
.. the income payment plan you want to use to receive retirement income,
.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, and
.. any other rights that the Contract provides.
If you die, any surviving Contract Owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living
Person. If the Owner is a Grantor Trust, the Owner will be considered a
non-living person for purposes of the Death of Owner and Death of Annuitant
provisions of your Contract. The maximum age of the oldest Contract Owner and
Annuitant cannot exceed 85 as of the date we receive the completed application.
Changing ownership of this contract may cause adverse tax consequences and may
not be allowed under qualified plans. Please consult with a competent tax
advisor prior to making a request for a change of Contract Owner.
The Contract can also be purchased as an IRA or TSA (also known as a 403(b)).
The endorsements required to qualify these annuities under the Internal Revenue
Code of 1986, as amended, ("Code"), may limit or modify your rights and
privileges under the Contract.
ANNUITANT
The Annuitant is the individual whose age determines the latest Payout Start
Date and whose life determines the amount and duration of income payments (other
than under Income Plans with guaranteed payments for a specified period). You
initially designate an Annuitant in your application. The Annuitant must be a
living person. If the Contract Owner is a living person, you may change the
Annuitant at any time prior to the Payout Start Date. You may designate a joint
Annuitant, prior to the Payout Start Date, who is a second person on whose life
income payments depend. If the Annuitant dies prior to the Payout Start Date,
the new Annuitant will be:
(i) the youngest Contract Owner; otherwise,
(ii) the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person selected by the Contract Owner to receive the
death benefits or become the new Contract Owner, subject to the "Death of Owner"
section of the Contract, if the sole surviving Contract Owner dies before the
Payout Start Date. If the sole surviving Contract Owner dies after the Payout
Start Date, the Beneficiaries will receive any guaranteed income payments
scheduled to continue.
You may name one or more primary and contingent Beneficiaries when you apply for
a Contract. The primary Beneficiary is the Beneficiary(ies) who is first
entitled to receive benefits under the Contract upon the death of the
9 PROSPECTUS
sole surviving Contract Owner. The contingent Beneficiary is the
Beneficiary(ies) entitled to receive benefits under the Contract when all
primary Beneficiaries predecease the sole surviving Contract Owner.
You may restrict income payments to Beneficiaries by providing us a written
request. Once we accept the written request, the change or restriction will
take effect as of the date you signed the request. Any change is subject to any
payment we make or other action we take before we accept the change.
You may change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed by you and filed with us. After we accept the form, the change of
Beneficiary will be effective as of the date you signed the form. Accordingly,
if you wish to change your Beneficiary, you should deliver your written notice
to us promptly. Each change is subject to any payment made by us or any other
action we take before we accept the change.
If no named Beneficiary is a living person or if you did not name a Beneficiary,
the Beneficiary will be:
.. your spouse or, if he or she is no longer living,
.. your surviving children equally, or if you have no surviving children,
.. your estate.
If there is more than one Beneficiary and one of the Beneficiaries is a
corporation or other type of non-living person, all Beneficiaries will be
considered to be non-living persons for the above purposes.
Unless you have provided directions to the contrary, the Beneficiaries will take
equal shares. If there is more than one Beneficiary in a class and one of the
Beneficiaries predeceases you, the remaining Beneficiaries in that class will
divide the deceased Beneficiary's share in proportion to the original share of
the remaining Beneficiaries.
If more than one Beneficiary shares in the death benefit, each Beneficiary will
be treated as a separate and independent owner of his or her respective
proceeds. Each Beneficiary will exercise all rights related to his or her share,
including the sole right to select an Income Plan, subject to any restrictions
previously placed upon the Beneficiary. Each Beneficiary may designate a
Beneficiary(ies) for his or her respective share, but that designated
Beneficiary(ies) will be restricted to the Income Plan chosen by the original
Beneficiary.
Where there are multiple Beneficiaries, we will only value the death benefit at
the time the first Beneficiary submits the necessary documentation in good
order. Any death benefit amounts attributable to any Beneficiary which remain in
the investment alternatives are subject to investment risk.
MODIFICATION OF THE CONTRACT
Only a Glenbrook Life officer may approve a change in or waive any provision of
the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. If a provision of the Contract
is inconsistent with state law, we will follow state law.
ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or
security for a loan. However, you may assign periodic income payments under the
Contract prior to the Payout Start Date. No Beneficiary may assign benefits
under the Contract until they are payable to the Beneficiary. We will not be
bound by any assignment until the Assignor signs it and files it with us. We are
not responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH
YOUR ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES
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MINIMUM PURCHASE PAYMENTS
Your initial purchase payment must be at least $3,000 ($2,000 for a Qualified
Contract). All subsequent purchase payments must be $50 or more. You may make
purchase payments at any time prior to the earlier of the Payout Start Date or
your 86th birthday. We reserve the right to limit the maximum amount of purchase
payments we will accept. We reserve the right to reject any application in our
sole discretion.
AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchase payments by automatically transferring money
from your bank account. Please call or write us for an enrollment form.
ALLOCATION OF PURCHASE PAYMENTS
At the time you apply for a Contract, you must decide how to credit your
purchase payments among the investment alternatives. The allocation you specify
on your application will be effective immediately. All allocations must be in
whole percentages that total 100% or in whole dollars. You can change your
allocations by notifying us in writing. We reserve the right to limit
10 PROSPECTUS
availability of the investment alternatives. We will allocate your purchase
payments to the investment alternatives according to your most recent
instructions on file with us. Unless you notify us in writing otherwise, we will
allocate subsequent purchase payments according to the allocation for the
previous purchase payment. We will effect any change in allocation instructions
at the time we receive written notice of the change in good order.
We will credit the initial purchase payment that accompanies your completed
application to your Contract within 2 business days after we receive the payment
at our home office. If your application is incomplete, we will ask you to
complete your application within 5 business days. If you do so, we will credit
your initial purchase payment to your Contract within that 5 business day
period. If you do not, we will return your purchase payment at the end of the 5
business day period unless you expressly allow us to hold it until you complete
the application. We will credit subsequent purchase payments to the Contract at
the close of the business day on which we receive the purchase payment at our
home office.
We use the term "BUSINESS DAY" to refer to each day Monday through Friday that
the New York Stock Exchange is open for business. We also refer to these days as
"VALUATION DATES." Our business day closes when the New York Stock Exchange
closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). If we receive your
purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit
your purchase payment using the Accumulation Unit Values computed on the next
Valuation Date.
RIGHT TO CANCEL
You may cancel the Contract by returning it to us within the Cancellation
Period, which is the 20 day period after you receive the Contract, or a longer
period should your state require it. You may return your Contract by delivering
it or mailing it to us. If you exercise this "RIGHT TO CANCEL," the Contract
terminates and we will pay you the full amount of your purchase payments
allocated to the Fixed Account. We also will return your purchase payments
allocated to the Variable Account adjusted, to the extent applicable federal or
state law permits, to reflect investment gain or loss, including the deduction
of mortality and expense risk charges and administrative expense charges, that
occurred from the date of allocation through the date of cancellation. Some
states may require us to return a greater amount to you. If this Contract is
qualified under Code Section 408(b), we will refund the greater of any purchase
payments or the Contract Value.
CONTRACT VALUE
- --------------------------------------------------------------------------------
Your Contract Value at any time during the Accumulation Phase is equal to the
sum of the value of your Accumulation Units in the Variable Sub-Accounts you
have selected, plus the value of your investment in the Fixed Account Options.
ACCUMULATION UNITS
To determine the number of Accumulation Units of each Variable Sub-Account to
credit to your Contract, we divide (i) the amount of the purchase payment or
transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation
Unit Value of that Variable Sub-Account next computed after we receive your
payment or transfer. For example, if we receive a $10,000 purchase payment
allocated to a Variable Sub-Account when the Accumulation Unit Value for the
Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable
Sub-Account to your Contract.
ACCUMULATION UNIT VALUE
As a general matter, the Accumulation Unit Value for each Variable Sub-Account
will rise or fall to reflect:
.. changes in the share price of the Portfolio in which the Variable Sub-Account
invests, and
.. the deduction of amounts reflecting the mortality and expense risk charge,
administrative expense charge, and any provision for taxes that have accrued
since we last calculated the Accumulation Unit Value.
We determine contract maintenance charges, withdrawal charges, and transfer fees
(currently waived) separately for each Contract. They do not affect the
Accumulation Unit Value. Instead, we obtain payment of those charges and fees by
redeeming Accumulation Units. For details on how we compute Accumulation Unit
Value, please refer to the Statement of Additional Information. We determine a
separate Accumulation Unit Value for each Variable Sub-Account on each Valuation
Date. We also determine a separate set of Accumulation Unit Values reflecting
the cost of the Enhanced Death Benefit Rider described on page 24.
YOU SHOULD REFER TO THE PROSPECTUSES FOR THE PORTFOLIOS THAT ACCOMPANY THIS
PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED,
SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE
CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE.
11 PROSPECTUS
INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS
- --------------------------------------------------------------------------------
You may allocate your purchase payments to up to 39 Variable Sub-Accounts. Each
Variable Sub-Account invests in the shares of a corresponding Portfolio. Each
Portfolio has its own investment objective(s) and policies. We briefly describe
the Portfolios below.
For more complete information about each Portfolio, including expenses and risks
associated with the Portfolio, please refer to the accompanying prospectus for
the Portfolio. You should carefully review the Portfolio prospectuses before
allocating amounts to the Variable Sub-Accounts.
PORTFOLIO: EACH PORTFOLIO SEEKS*: INVESTMENT ADVISOR:
- -------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS
- -------------------------------------------------------------------------------
AIM V.I. Balanced Fund To achieve as high a total
- -Series I return as possible,
consistent with preservation
of capital
- -------------------------------------------------------
AIM V.I. Capital
Appreciation Fund Growth of capital
- -Series I AIM ADVISORS, INC.
- -------------------------------------------------------
AIM V.I. Core Equity Growth of capital
Fund -Series I
- -------------------------------------------------------
AIM V.I. Growth Fund Growth of capital
- -Series I
- -------------------------------------------------------
AIM V.I. High Yield A high level of current
- -Series I income
- -------------------------------------------------------
AIM V.I. Premier Long-term growth of capital;
Equity Fund -Series I Income is a secondary
objective
- -------------------------------------------------------
FEDERATED INSURANCE SERIES
- -------------------------------------------------------------------------------
Federated Prime Money Current income consistent FEDERATED INVESTMENT
Fund II with stability of principal MANAGEMENT COMPANY
and liquidity
- -------------------------------------------------------------------------------
FIDELITY/(R)/ VARIABLE INSURANCE PRODUCTS
- -------------------------------------------------------------------------------
Fidelity VIP Long-term capital
Contrafund/(R)/ appreciation
Portfolio - Initial
Class
- -------------------------------------------------------
Fidelity VIP
Equity-Income
Portfolio - Initial Reasonable income
Class
- -------------------------------------------------------
Fidelity VIP Growth FIDELITY MANAGEMENT &
Portfolio - Initial Capital appreciation RESEARCH COMPANY
Class
- -------------------------------------------------------
Fidelity VIP High High level of current income
Income Portfolio - while also considering growth
Initial Class of capital
- -------------------------------------------------------
Fidelity VIP Index 500 Investment results that
Portfolio - Initial correspond to the total
Class return of common stocks
publicly traded in the United
States, as represented by the
Standard & Poor's 500/SM/
Index (S&P 500/(R)/) ------------------------
- -------------------------------------------------------
Fidelity VIP Overseas
Portfolio - Initial Long-term growth of capital
Class
- -------------------------------------------------------
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
- -------------------------------------------------------------------------------
FTVIP Templeton Global High current income,
Income Securities consistent with preservation
Fund- Class 2 of capital. Capital
appreciation is a secondary FRANKLIN ADVISERS, INC.
consideration.
- -------------------------------------------------------------------------------
FTVIP Templeton Growth Long-term capital growth TEMPLETON GLOBAL
Securities Fund - ADVISORS LIMITED
Class 2
- -------------------------------------------------------------------------------
12 PROSPECTUS
MFS/(R)/ VARIABLE INSURANCE TRUST/SM/
- -------------------------------------------------------------------------------
MFS Emerging Growth Long-term growth of capital
Series - Initial Class
- -------------------------------------------------------
MFS Investors Trust Long-term growth of capital
Series - Initial Class with a secondary objective to MFS/TM/ INVESTMENT
seek reasonable current MANAGEMENT
income
- -------------------------------------------------------
MFS New Discovery Capital appreciation
Series - Initial Class
- -------------------------------------------------------
MFS Research Series - Long-term growth of capital
Initial Class and future income
- -------------------------------------------------------
MFS Utilities Series - Capital growth and current
Initial Class income
- -------------------------------------------------------
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- -------------------------------------------------------------------------------
Oppenheimer Aggressive Capital appreciation
Growth Fund/VA
- -------------------------------------------------------
Oppenheimer Balanced A high total investment
Fund/VA** return which includes current
income and capital
appreciation in the value of
its shares.
- -------------------------------------------------------
Capital appreciation by OPPENHEIMERFUNDS, INC.
Oppenheimer Capital investing in securities of
Appreciation Fund/VA well-known, established
companies.
- -------------------------------------------------------
Oppenheimer Global Long-term capital
Securities Fund/VA appreciation
- -------------------------------------------------------
Oppenheimer Main High total return, which
Street Fund/VA includes growth in the value
of its shares as well as
current income, from equity ------------------------
and debt securities
- -------------------------------------------------------
Oppenheimer Strategic High level of current income
Bond Fund/VA
- -------------------------------------------------------
PUTNAM VARIABLE TRUST
- -------------------------------------------------------
Putnam VT Discovery Long-term growth of capital
Growth Fund-Class IB
- -------------------------------------------------------
Putnam VT Diversified High current income
Income Fund - Class IB consistent with capital
preservation
- -------------------------------------------------------PUTNAM INVESTMENT
Putnam VT Growth and Capital growth and current MANAGEMENT, LLC
Income Fund - income
Class IB
- -------------------------------------------------------
Putnam VT Growth Capital appreciation
Opportunities Fund -
Class IB
- -------------------------------------------------------
Putnam VT Health
Sciences Fund - Class Capital appreciation ------------------------
IB
- -------------------------------------------------------
Putnam VT New Value Long-term capital
Fund - Class IB appreciation
- -------------------------------------------------------
STI CLASSIC VARIABLE TRUST
- -------------------------------------------------------------------------------
STI Classic Capital Capital appreciation
Appreciation Fund
- -------------------------------------------------------
STI Classic Growth and Long-term capital
Income Fund appreciation with the
secondary goal of current
income
- -------------------------------------------------------
STI Classic Long-term capital
International Equity appreciation TRUSCO CAPITAL
Fund MANAGEMENT, INC.
- -------------------------------------------------------
STI Classic Investment High total return through
Grade Bond Fund current income and capital
appreciation, while
preserving the principal
amount invested
- -------------------------------------------------------
STI Classic Mid-Cap Capital appreciation
Equity Fund
- -------------------------------------------------------
STI Classic Small Cap Capital appreciation with the
Value Equity Fund secondary goal of current ------------------------
income
- -------------------------------------------------------
STI Classic Value Current income with the
Income Stock Fund secondary goal of capital
appreciation
- -------------------------------------------------------
* A portfolio's investment objective(s) may be changed by the Fund's Board of
Trustees without shareholder approval.
**Effective May 1, 2004, the Oppenheimer Multiple Strategies Fund/VA changed its
name to the Oppenheimer Balanced Fund/VA.
13 PROSPECTUS
VARIABLE INSURANCE PORTFOLIOS MAY NOT BE MANAGED BY THE SAME PORTFOLIO MANAGERS
WHO MANAGE RETAIL MUTUAL FUNDS WITH SIMILAR NAMES. THESE PORTFOLIOS ARE LIKELY
TO DIFFER FROM SIMILARLY NAMED RETAIL FUNDS IN ASSETS, CASH FLOW, AND TAX
MATTERS. ACCORDINGLY, THE HOLDINGS AND INVESTMENT RESULTS OF A VARIABLE
INSURANCE PORTFOLIO CAN BE EXPECTED TO BE GREATER OR LESS THAN THE INVESTMENT
RESULTS OF RETAIL MUTUAL FUNDS.
AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN
VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF
THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE
INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES.
SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
You may allocate all or a portion of your purchase payments to the Fixed
Account. You may choose from among 3 Fixed Account Options, including a Standard
Fixed Account Option, a Dollar Cost Averaging Fixed Account Option, and the
option to invest in one or more Guarantee Periods (included in the Guaranteed
Maturity Amount Fixed Account). The Fixed Account Options may not be available
in all states. Please consult with your representative for current information.
The Fixed Account supports our insurance and annuity obligations. The Fixed
Account consists of our general assets other than those in segregated asset
accounts. We have sole discretion to invest the assets of the Fixed Account,
subject to applicable law. Any money you allocate to a Fixed Account Option does
not entitle you to share in the investment experience of the Fixed Account.
STANDARD FIXED ACCOUNT OPTION AND DOLLAR COST AVERAGING FIXED ACCOUNT OPTION
STANDARD FIXED ACCOUNT OPTION. Purchase payments and transfers that you allocate
to the Standard Fixed Account Option will earn interest for a one year period at
the current rate in effect at the time of allocation. We will credit interest
daily at a rate that will compound over the year to the effective annual
interest rate we guaranteed at the time of allocation. After the one year
period, we will declare a renewal rate which we guarantee for a full year.
Subsequent renewal dates will be every 12 months for each payment or transfer.
Each payment or transfer you allocate to this Option must be at least $50.
DOLLAR COST AVERAGING FIXED ACCOUNT OPTION. You may establish a Dollar Cost
Averaging Program by allocating purchase payments to the Dollar Cost Averaging
Fixed Account Option ("DCA Fixed Account Option"). We will credit interest to
purchase payments you allocate to this Option for up to one year at the current
rate in effect at the time of allocation. Each purchase payment you allocate to
the DCA Fixed Account Option must be at least $500.00. We reserve the right to
reduce the minimum allocation amount.
For each purchase payment, the first transfer from the DCA Fixed Account Option
must occur within one month of the date of payment. If we do not receive an
allocation instruction from you when the payment is received, each monthly
installment will be transferred to the money market Variable Sub-Account in
substantially equal monthly installments. Transferring Contract Value to the
money market Variable Sub-Account in this manner may not be consistent with the
theory of dollar cost averaging described on page 18.
We will follow your instructions in transferring amounts monthly from the DCA
Fixed Account Option to one or more Variable Sub-Accounts. However, you may not
choose monthly installments of less than 3 or more than 12. Further, you must
transfer each purchase payment and all its earnings out of this Option to one or
more Variable Sub-Accounts by means of dollar cost averaging within the selected
program period. At the end of the transfer period, any nominal amounts remaining
in the DCA Fixed Account will be allocated to the Federated Prime Money Fund II
Variable Sub-Account. If you discontinue the Dollar Cost Averaging Program
before the end of the transfer period, we will transfer the remaining balance in
this Option to the money market Variable Sub-Account.
We bear the investment risk for all amounts allocated to the Standard Fixed
Account Option and the DCA Fixed Account Option. That is because we guarantee
the current and renewal interest rates we credit to the amounts you allocate to
either of these Options, which will never be less than the minimum guaranteed
rate in the Contract. Currently, we determine, in our sole discretion, the
amount of interest credited in excess of the guaranteed rate. We may declare
more than one interest rate for different monies based upon the date of
allocation to the Standard Fixed Account Option and the DCA Fixed Account
Option. For current interest rate information, please contact your
representative or Glenbrook Life at 1-800-755-5275.
GUARANTEE PERIODS
Each payment or transfer allocated to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years. We are currently offering Guarantee Periods of 3, 5, 7
and 10 years in length. In the future we may offer Guarantee Periods of
different lengths or stop offering
14 PROSPECTUS
some Guarantee Periods. Each payment or transfer allocated to a Guarantee Period
must be at least $50. We reserve the right to limit the number of additional
purchase payments that you may allocate to this Option.
INTEREST RATES. We will tell you what interest rates and Guarantee Periods we
are offering at a particular time. We will not change the interest rate that we
credit to a particular allocation until the end of the relevant Guarantee
Period. We may declare different interest rates for Guarantee Periods of the
same length that begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, our sales commission and administrative
expenses, general economic trends, and competitive factors. WE DETERMINE THE
INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR
GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate
information, please contact your representative or Glenbrook Life at
1-800-755-5275. The annual interest rate will never be less than the minimum
guaranteed rate stated in the Contract.
HOW WE CREDIT INTEREST. We will credit interest daily to each amount allocated
to a Guarantee Period at a rate that compounds to the annual interest rate that
we declared at the beginning of the applicable Guarantee Period.
The following example illustrates how a purchase payment allocated to a
Guarantee Period would grow, given an assumed Guarantee Period and annual
interest rate:
Purchase Payment.................................................... $10,000
Guarantee Period.................................................... 5 years
Annual Interest Rate................................................ 4.50%
END OF CONTRACT YEAR
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value................ $10,000.00
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$10,450.00
Contract Value at end
of Contract Year..... $10,450.00
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$10,920.25
Contract Value at end
of Contract Year..... $10,920.25
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$11,411.66
Contract Value at end
of Contract Year..... $11,411.66
^ (1 ^ Annual
Interest Rate) X 1.045
----------
$11,925.19
Contract Value at end
of Contract Year..... $11,925.19
^ (1 ^ Annual
Interest Rate) X 1.045
-----------
$12,461.82
TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD = $2,461.82 ($12,461.82-$10,000)
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a withdrawal, you might be required to pay a withdrawal
charge. In addition, the amount withdrawn might be increased or decreased by a
Market Value Adjustment that reflects changes in interest rates since the time
you invested the amount withdrawn. The hypothetical interest rate is for
illustrative purposes only and is not intended to predict current or future
interest rates to be declared under the Contract. Actual interest rates declared
for any given Guarantee Period may be more or less than shown above but will
never be less than the guaranteed minimum rate stated in the Contract.
RENEWALS. At the end of each Guarantee Period, we will mail you a notice asking
you what to do with the relevant amount, including the accrued interest. During
the 30-day period after the end of the Guarantee Period, you may:
1) Take no action. We will automatically apply your money to a new Guarantee
Period of the same length as the expiring Guarantee Period. The new Guarantee
Period will begin on the day the previous Guarantee Period ends. The new
interest rate will be our then current declared rate for a Guarantee Period of
that length; or
2) Instruct us to apply your money to one or more new Guarantee Periods of your
choice. The new Guarantee Period(s) will begin on the day the previous
Guarantee Period ends. The new interest rate will be our then current declared
rate for those Guarantee Periods; or
15 PROSPECTUS
3) Instruct us to transfer your money to the Standard Fixed Account Option. Your
allocation will be effective on the day the previous Guarantee Period ends; or
4) Instruct us to transfer all or a portion of your money to one or more
Variable Sub-Accounts of the Variable Account. We will effect the transfer on
the day we receive your instructions. We will not adjust the amount
transferred to include a Market Value Adjustment. We will pay interest from
the day the Guarantee Period expired until the date of the transfer. The
interest will be the rate for the shortest Guarantee Period then being
offered; or
5) Withdraw all or a portion of your money. You may be required to pay a
withdrawal charge, but we will not adjust the amount withdrawn to include a
Market Value Adjustment. The amount withdrawn will be deemed to have been
withdrawn on the day the Guarantee Period ends. Amounts not withdrawn will be
applied to a new Guarantee Period of the same length as the previous Guarantee
Period. The new Guarantee Period will begin on the day the previous Guarantee
Period ends with current interest credited from the date the Guarantee Period
expired.
MARKET VALUE ADJUSTMENT. All withdrawals and transfers from a Guarantee Period,
other than those taken during the 30 day period after such Guarantee Period
expires, are subject to a Market Value Adjustment. A Market Value Adjustment
also will apply when you apply amounts currently invested in a Guarantee Period
to an Income Plan (unless applied during the 30 day period after such Guarantee
Period expires). For Contracts issued before May 1, 1997, a Market Value
Adjustment will apply to payment of a death benefit. For Contracts issued on or
after May 1, 1997, a Market Value Adjustment may apply in the calculation of the
Settlement Value described in the "Contracts Issued On Or After May 1, 1997"
section below. We apply the Market Value Adjustment to reflect changes in
interest rates from the time the amount being withdrawn or transferred was
allocated to a Guarantee Period to the time of its withdrawal, transfer, or
application to an Income Plan. As such, you bear some investment risk on amounts
you allocate to any Guarantee Period.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than the purchase payment plus interest at the minimum guaranteed interest rate
under the Contract.
Generally, if the effective annual interest rate for the Guarantee Period is
lower than the applicable current effective annual interest rate for a period
equal to the time remaining in the Guarantee Period, then the Market Value
Adjustment will result in a lower amount payable to you or transferred.
Similarly, if the effective annual interest rate for the Guarantee Period is
higher than the applicable current effective annual interest rate, then the
Market Value Adjustment will result in a higher amount payable to you or
transferred.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years that has an effective annual rate of 4.50%. Assume that at the
end of 3 years, you make a partial withdrawal. If, at that later time, the
current interest rate for a 2 year Guarantee Period is 4.00%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current interest rate for the 2 year
Guarantee Period is 5.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix B
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
INVESTMENT ALTERNATIVES: TRANSFERS
- --------------------------------------------------------------------------------
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer Contract Value among the
investment alternatives. You may request transfers in writing or by telephone
according to the procedure described below. There is no minimum transfer amount.
We currently do not assess, but reserve the right to assess, a $10 charge on
each transfer in excess of 12 per Contract Year. All transfers to or from more
than one Portfolio on a given day count as one transfer.
We will process transfer requests that we receive before 3:00 p.m. Central Time
on any Valuation Date using the Accumulation Unit Values for that Date. We will
process requests completed after 3:00 p.m. on any Valuation Date using the
Accumulation Unit Values for the next Valuation Date. The Contract permits us to
defer transfers from the Fixed Account Options for up to 6 months from the date
we receive your request. If we decide to postpone transfers from any Fixed
Account Option for 30 days or more, we will pay interest as required by
applicable law. Any interest would be payable from the date we receive the
transfer request to the date we make the transfer.
We limit the amount you may transfer from the Standard Fixed Account Option to
any other investment alternative in any Contract Year to the greater of:
16 PROSPECTUS
1) 25% of the value in the Standard Fixed Account Option as of the most recent
Contract Anniversary (if this amount is less than $1,000, then up to $1,000
may be transferred); or
2) 25% of the sum of all purchase payments and transfers to the Standard Fixed
Account Option as of the most recent Contract Anniversary.
If you transfer an amount from the Guaranteed Maturity Fixed Account Option
other than during the 30 day period after a Guarantee Period expires, we will
increase or decrease the amount by a Market Value Adjustment.
You may not transfer Contract Value into the DCA Fixed Account Option.
We reserve the right to waive any transfer restrictions.
MARKET TIMING & EXCESSIVE TRADING
The Contracts are intended for long-term investment. Market timing and excessive
trading can potentially dilute the value of Variable Sub-Accounts and can
disrupt management of a Portfolio and raise its expenses, which can impair
Portfolio performance. Our policy is not to accept knowingly any money intended
for the purpose of market timing or excessive trading. Accordingly, you should
not invest in the Contract if your purpose is to engage in market timing or
excessive trading, and you should refrain from such practices if you currently
own a Contract.
We seek to detect market timing or excessive trading activity by reviewing
trading activities. Portfolios also may report suspected market-timing or
excessive trading activity to us. If we identify a pattern of market-timing or
excessive trading activity, we will make further inquiry and may, depending on
the circumstances, impose trading limitations as described below under "Trading
Limitations" consistent with applicable law and the Contract. We will apply
these limitations on a uniform basis to all Contract Owners we determine have
engaged in market timing or excessive trading. Because there is no universally
accepted definition of what constitutes market timing or excessive trading, we
will use our reasonable judgment based on all of the circumstances.
While we seek to deter market timing and excessive trading in Variable
Sub-Accounts, not all market timing or excessive trading is identifiable or
preventable. Therefore, we cannot guarantee that we can prevent such trading
activity in all cases or before it occurs.
TRADING LIMITATIONS
We reserve the right to limit transfers among the investment alternatives in any
Contract Year, or to refuse any transfer request, if:
.. we believe, in our sole discretion, that certain trading practices, such as
excessive trading or market timing ("Prohibited Trading Practices"), by, or on
behalf of, one or more Contract Owners, or a specific transfer request or
group of transfer requests, may have a detrimental effect on the Accumulation
Unit Values of any Variable Sub-Account or on the share prices of the
corresponding Portfolio or otherwise would be to the disadvantage of other
Contract Owners; or
.. we are informed by one or more of the Portfolios that they intend to restrict
the purchase, exchange, or redemption of Portfolio shares because of
Prohibited Trading Practices or because they believe that a specific transfer
or group of transfers would have a detrimental effect on the prices of
Portfolio shares. We may apply the restrictions in any manner reasonably
designed to prevent transfers that we consider disadvantageous to other
Contract Owners.
TRANSFERS DURING THE PAYOUT PHASE
During the Payout Phase, you may make transfers among the Variable Sub-Accounts
so as to change the relative weighting of the Variable Sub-Accounts on which
your variable income payments will be based. In addition, you will have a
limited ability to make transfers from the Variable Sub-Accounts to increase the
proportion of your income payments consisting of fixed income payments. You may
not, however, convert any portion of your right to receive fixed income payments
into variable income payments. You may not make any transfers for the first 6
months after the Payout Start Date. Thereafter, you may make transfers among the
Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to
increase the proportion of your income payments consisting of fixed income
payments. Your transfers must be at least 6 months apart.
TELEPHONE TRANSFERS
You may make transfers by telephone by calling 1-800-755-5275, if you first send
us a completed authorization form. The cut off time for telephone transfer
requests is 3:00 p.m. Central Time. In the event that the New York Stock
Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that
the Exchange closes early for a period of time but then reopens for trading on
the same day, we will process telephone transfer requests as of the close of the
Exchange on that particular day. We will not accept telephone requests received
at any telephone number other than the number that appears in this paragraph or
received after the close of trading on the Exchange.
We may suspend, modify or terminate the telephone transfer privilege, as well as
any other electronic or automated means we previously approved, at any time
without notice.
We use procedures that we believe provide reasonable assurance that the
telephone transfers are genuine. For example, we tape telephone conversations
with persons purporting to authorize transfers and request identifying
information. Accordingly, we disclaim any liability for losses resulting from
allegedly unauthorized telephone transfers. However, if we do not take
reasonable steps to help ensure that a telephone authorization is valid, we may
be liable for such losses.
17 PROSPECTUS
DOLLAR COST AVERAGING PROGRAM
Through our Dollar Cost Averaging Program, you may automatically transfer a
fixed dollar amount, subject to a minimum of $50, every month during the
Accumulation Phase from any Variable Sub-Account, the Standard Fixed Account
Option or the Dollar Cost Averaging Fixed Account Option, to any other Variable
Sub-Account. You may not use the Dollar Cost Averaging Program to transfer
amounts to a Fixed Account Option.
We will not charge a transfer fee for transfers made under this Program, nor
will such transfers count against the 12 transfers you can make each Contract
Year without paying a transfer fee.
The theory of dollar cost averaging is that if purchases of equal dollar amounts
are made at fluctuating prices, the aggregate average cost per unit will be less
than the average of the unit prices on the same purchase dates. However,
participation in this Program does not assure you of a greater profit from your
purchases under the Program nor will it prevent or necessarily reduce losses in
a declining market. Call or write us for instructions on how to enroll.
AUTOMATIC PORTFOLIO REBALANCING PROGRAM
Once you have allocated your money among the Variable Sub-Accounts, the
performance of each Sub-Account may cause a shift in the percentage you
allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing
Program, we will automatically rebalance the Contract Value in each Variable
Sub-Account and return it to the desired percentage allocations. Money allocated
to the Fixed Account Options will not be included in the rebalancing.
We will rebalance your account monthly, quarterly, semi-annually or annually,
according to your instructions. We will transfer amounts among the Variable
Sub-Accounts to achieve the percentage allocations you specify. You can change
your allocations at any time by contacting us in writing or by telephone. The
new allocation will be effective with the first rebalancing that occurs after we
receive your request. We are not responsible for rebalancing that occurs prior
to receipt of your request.
Example:
Assume that you want your initial purchase payment split among two Variable
Sub-Accounts. You want 40% to be in the STI Classic Investment Grade Bond
Variable Sub-Account and 60% to be in the STI Classic Capital Appreciation
Variable Sub-Account. Over the next 2 months the bond market does very well
while the stock market performs poorly. At the end of the first quarter, the
STI Classic Investment Grade Bond Variable Sub-Account now represents 50% of
your holdings because of its increase in value. If you choose to have your
holdings rebalanced quarterly, on the first day of the next quarter, we would
sell some of your units in the STI Classic Investment Grade Bond Variable
Sub-Account and use the money to buy more units in the STI Classic Capital
Appreciation Variable Sub-Account so that the percentage allocations would
again be 40% and 60% respectively.
The Automatic Portfolio Rebalancing Program is available only during the
Accumulation Phase. The transfers made under the Program do not count towards
the 12 transfers you can make without paying a transfer fee. Portfolio
rebalancing is consistent with maintaining your allocation of investments among
market segments, although it is accomplished by reducing your Contract Value
allocated to the better performing segments.
EXPENSES
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As a Contract Owner, you will bear, directly or indirectly, the charges and
expenses described below.
CONTRACT MAINTENANCE CHARGE
During the Accumulation Phase, on each Contract Anniversary, we will deduct a
$30 contract maintenance charge from your Contract Value invested in each
Variable Sub-Account in proportion to the amount invested. If you surrender your
Contract, we will deduct the contract maintenance charge pro rated for the part
of the Contract Year elapsed, unless your Contract qualifies for a waiver,
described below. During the Payout Phase, we will deduct the charge
proportionately from each income payment. The charge is to compensate us for the
cost of administering Contracts and the Variable Account. Maintenance costs
include expenses we incur collecting purchase payments; keeping records;
processing death claims, cash withdrawals, and policy changes; proxy statements;
calculating Accumulation Unit Values and income payments; and issuing reports to
Contract Owners and regulatory agencies. We cannot increase the charge. However,
we will waive this charge if:
.. total purchase payments equal $25,000 or more as of a Contract Anniversary or
upon full withdrawal, or
.. all of your money is allocated to the Fixed Account Options on a Contract
Anniversary.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense risk charge daily at an annual rate of 1.25%
of the average daily net assets you have invested in the Variable Sub-Accounts
(1.35% if you select the Enhanced Death Benefit Rider, available to purchasers
after May 1, 1997). The mortality and expense risk charge is for all the
insurance benefits available with your Contract (including our guarantee of
annuity rates
18 PROSPECTUS
and the death benefits), for certain expenses of the Contract, and for assuming
the risk (expense risk) that the current charges will be sufficient in the
future to cover the cost of administering the Contract. If the charges under the
Contract are not sufficient, then we will bear the loss. We charge an additional
0.10% for the Enhanced Death Benefit Rider to compensate us for the additional
risk that we accept by providing the rider.
We guarantee that we will not raise the mortality and expense risk charge. We
assess the mortality and expense risk charge during both the Accumulation Phase
and the Payout Phase.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge daily at an annual rate of 0.10% of
the average daily net assets you have invested in the Variable Sub-Accounts. We
intend this charge to cover actual administrative expenses that exceed the
revenues from the contract maintenance charge. We assess this charge each day
during the Accumulation Phase and the Payout Phase. We guarantee that we will
not raise this charge.
TRANSFER FEE
We do not currently impose a fee upon transfers among the investment
alternatives. However, we reserve the right to charge $10 per transfer after the
12th transfer in each Contract Year. We will not charge a transfer fee on
transfers that are part of a dollar cost averaging or automatic portfolio
rebalancing program.
WITHDRAWAL CHARGE
We may assess a withdrawal charge of up to 7% of the purchase payment(s) you
withdraw. The charge declines annually to 0% over a 7 year period that begins on
the day we receive your purchase payment. A schedule showing how the charge
declines appears on page 7. If you make a withdrawal before the Payout Start
Date, we will apply the withdrawal charge percentage in effect on the date of
the withdrawal, or the withdrawal charge percentage in effect on the following
day, whichever is lower. During each Contract Year, you can withdraw up to 10%
of the Contract Value on the date of the first withdrawal in that Contract Year
without paying the charge. Unused portions of this 10% "FREE WITHDRAWAL AMOUNT"
are not carried forward to future Contract Years. We will deduct withdrawal
charges, if applicable, from the amount paid. For purposes of the withdrawal
charge, we will treat withdrawals as coming from the oldest purchase payments
first. However, for federal income tax purposes, please note that withdrawals
are considered to have come first from earnings in the Contract. Thus, for tax
purposes, earnings are considered to come out first, which means you pay taxes
on the earnings portion of your withdrawal.
We do not apply a withdrawal charge in the following situations:
.. on the Payout Start Date;
.. withdrawals taken to satisfy IRS minimum distribution rules for this Contract,
or
.. withdrawals that qualify for one of the waivers described below.
We use the amounts obtained from the withdrawal charge to pay sales commissions
and other promotional or distribution expenses associated with marketing the
Contracts. To the extent that the withdrawal charge does not cover all sales
commissions and other promotional or distribution expenses, we may use any of
our corporate assets, including potential profit which may arise from the
mortality and expense risk charge or any other charges or fee described above,
to make up any difference. Withdrawals may be subject to tax penalties or income
tax and a Market Value Adjustment. You should consult your own tax counsel or
other tax advisers regarding any withdrawals.
CONFINEMENT WAIVER. We will waive the withdrawal charge on all withdrawals taken
prior to the Payout Start Date under your Contract if the following conditions
are satisfied:
1. you or the Annuitant, if the Contract is owned by a company or other legal
entity, are confined to a long term care facility or a hospital (as defined in
the Contract) for at least 90 consecutive days. You or the Annuitant must enter
the long term care facility or hospital (as defined in the Contract) at least 30
days after the Issue Date;
2. you must request the withdrawal and provide written proof of the stay no
later than 90 days following the end of your or the Annuitant's stay at the long
term care facility or hospital (as defined in the Contract); and
3. a physician must have prescribed the stay and the stay must be medically
necessary (as defined in the Contract).
You may not claim this benefit if you or the Annuitant, or a member of your or
the Annuitant's immediate family, is the physician prescribing your or the
Annuitant's stay in a long term care facility.
TERMINAL ILLNESS WAIVER. Only once during the term of the Contract, we will
waive the withdrawal charge on one partial or a full withdrawal taken prior to
the Payout Start Date under your Contract, if:
1. you (or the Annuitant, if the Contract Owner is not a living person) are
diagnosed by a physician (we may require a second opinion) with a terminal
illness at least 30 days after the Issue Date; and
19 PROSPECTUS
2. you claim this benefit and deliver adequate proof of diagnosis to us.
UNEMPLOYMENT WAIVER. We will waive the withdrawal charge on one partial or a
full withdrawal taken prior to the Payout Start Date under your Contract, if you
meet the following requirements:
1. you (or the Annuitant, if the Contract Owner is not a living person) become
unemployed at least one year after the Issue Date;
2. you (or the Annuitant, if the Contract Owner is not a living person) have
been granted unemployment compensation for at least 30 consecutive days as a
result of that unemployment and we receive due proof thereof (as defined in the
Contract) prior to the time of the withdrawal request; and
3. you exercise this benefit within 180 days of your initial receipt of
unemployment compensation.
You may exercise this benefit once during the life of your Contract.
Please refer to your Contract for more detailed information about the terms and
conditions of these waivers.
The laws of your state may limit the availability of these waivers and may also
change certain terms and/or benefits available under the waivers. You should
consult your Contract for further details on these variations. Also, even if you
do not need to pay our withdrawal charge because of these waivers, you still may
be required to pay taxes or tax penalties on the amount withdrawn. You should
consult your tax adviser to determine the effect of a withdrawal on your taxes.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
At our discretion, we may discontinue this practice and deduct premium taxes
from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state.
At the Payout Start Date, we deduct the applicable charge for premium taxes from
each investment alternative in the proportion that the Contract value in the
investment alternative bears to the total Contract Value.
DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES
We are not currently maintaining a provision for taxes. In the future, however,
we may maintain a provision for taxes if we determine, in our sole discretion,
that we will incur a tax as a result of the operation of the Variable Account.
We will deduct for any taxes we incur as a result of the operation of the
Variable Account, whether or not we previously made a provision for taxes and
whether or not it was sufficient. Our status under the Internal Revenue Code is
briefly described in the Taxes section.
OTHER EXPENSES
Each Portfolio deducts advisory fees and other expenses from its assets. You
indirectly bear the charges and expenses of the Portfolios whose shares are held
by the Variable Sub-Accounts. These fees and expenses are described in the
accompanying prospectuses for the Portfolios. For a summary of current estimates
of those charges and expenses, see page 7. We may receive compensation from the
investment advisers or administrators of the Portfolios in connection with
administrative services we provide to the Portfolios.
ACCESS TO YOUR MONEY
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You can withdraw some or all of your Contract Value at any time prior to the
Payout Start Date. Withdrawals also are available under limited circumstances on
or after the Payout Start Date. See "Income Plans" on page 21.
The amount payable upon withdrawal is the Contract Value next computed after we
receive the request for a withdrawal at our headquarters, adjusted by any Market
Value Adjustment, less any withdrawal charges, contract maintenance charges,
income tax withholding, and any premium taxes. We will pay withdrawals from the
Variable Account within 7 days of receipt of the request, subject to
postponement in certain circumstances.
You can withdraw money from the Variable Account and/ or the Fixed Account
Options. To complete a partial withdrawal from the Variable Account, we will
cancel Accumulation Units in an amount equal to the withdrawal and any
applicable withdrawal charge and premium taxes.
You must name the investment alternative from which you are taking the
withdrawal. If none is specified, we will deduct your withdrawal pro rata from
the investment alternatives according to the value of your investments therein.
In general, you must withdraw at least $50 at a time. You also may withdraw a
lesser amount if you are withdrawing your entire interest in a Variable Sub-
Account.
If you request a total withdrawal, we may require that you return your Contract
to us.
Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may be subject to an additional 10%
federal tax penalty.
POSTPONEMENT OF PAYMENTS
We may postpone the payment of any amounts due from the Variable Account under
the Contract if:
20 PROSPECTUS
1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2. An emergency exists as defined by the SEC; or
3. The SEC permits delay for your protection.
In addition, we may delay payments or transfers from the Fixed Account Options
for up to 6 months (or shorter period if required by law). If we delay payment
or transfer for 30 days or more, we will pay interest as required by law.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $50. At our
discretion, systematic withdrawals may not be offered in conjunction with Dollar
Cost Averaging or Automatic Portfolio Rebalancing.
Depending on fluctuations in the value of the Variable Sub-Accounts and the
value of the Fixed Account Options, systematic withdrawals may reduce or even
exhaust the Contract Value. Please consult your tax advisor before taking any
withdrawal.
We will make systematic withdrawal payments to you or your designated payee. We
may modify or suspend the Systematic Withdrawal Program and charge a processing
fee for the service. If we modify or suspend the Systematic Withdrawal Program,
existing systematic withdrawal payments will not be affected.
MINIMUM CONTRACT VALUE
If your request for a partial withdrawal would reduce your Contract Value to
less than $2,000, we may treat it as a request to withdraw your entire Contract
Value. Your Contract will terminate if you withdraw all of your Contract Value.
We will, however, ask you to confirm your withdrawal request before terminating
your Contract. If we terminate your Contract, we will distribute to you its
Contract Value, adjusted by any applicable Market Value Adjustment, less
withdrawal and other charges and applicable taxes.
Before terminating any Contract whose value has been reduced by partial
withdrawals to less than $2,000, we will inform you in writing of our intention
to terminate your Contract and give you at least 30 days in which to make an
additional purchase payment to restore your Contract Value to the contractual
minimum of $2,000.
MINIMUM SURRENDER VALUE
Certain states may require us to endorse your Contract to provide a minimum
surrender value. Please refer to the endorsement for details.
INCOME PAYMENTS
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PAYOUT START DATE
You select the Payout Start Date in your application. The Payout Start Date is
the day that money is applied to an Income Plan. The Payout Start Date must be
no later than the day the Annuitant reaches age 90, or the 10th Contract
Anniversary, if later.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years.
Three Income Plans are available under the Contract. Each is available to
provide:
.. fixed income payments;
.. variable income payments; or
.. a combination of the two.
A portion of each payment will be considered taxable and the remaining portion
will be a non-taxable return of your investment in the Contract, which is also
called the "basis". Once the basis in the Contract is depleted, all remaining
payments will be fully taxable. If the Contract is tax-qualified, generally, all
payments will be fully taxable. Taxable payments taken prior to age 59 1/2, may
be subject to an additional 10% federal tax penalty.
The three Income Plans are:
INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make
periodic income payments for at least as long as the Annuitant lives. If the
Annuitant dies before we have made all of the guaranteed income payments, we
will continue to pay the remainder of the guaranteed income payments.
INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under
this plan, we make periodic income payments for at least as long as either the
Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint
Annuitant die before we have made all of the guaranteed income payments, we will
continue to pay the remainder of the guaranteed income payments.
INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 YEAR TO 30 YEARS).
Under this plan, we make periodic income payments for the period you have
chosen. These payments do not depend on the
21 PROSPECTUS
Annuitant's life. We will deduct the mortality and expense risk charge from the
Variable Account assets supporting these payments even though we may not bear
any mortality risk.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amounts of each income payment. As a general
rule, longer Guarantee Periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we may
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and proof that the Annuitant or joint Annuitant is alive before
we make each payment.
Please note that under such Income Plans, if you elect to take no minimum
guaranteed payments, it is possible that the payee could receive only 1 income
payment if the Annuitant and any joint Annuitant both die before the second
income payment, or only 2 income payments if they die before the third income
payment, and so on.
Generally, you may not make withdrawals after the Payout Start Date. One
exception to this rule applies if you are receiving variable income payments
that do not depend on the life of the Annuitant (such as under Income Plan 3).
In that case you may terminate all or part of the Variable Account portion of
the income payments at any time and receive a lump sum equal to the present
value of the remaining variable payments associated with the amount withdrawn.
The minimum amount you may withdraw under this feature is $1,000.
We may make other Income Plans available.
You must apply at least the Contract Value in the Fixed Account Options on the
Payout Start Date to fixed income payments. If you wish to apply any portion of
your Fixed Account Option balance to provide variable income payments, you
should plan ahead and transfer that amount to the Variable Sub-Accounts prior to
the Payout Start Date. If you do not tell us how to allocate your Contract Value
among fixed and variable income payments, we will apply your Contract Value in
the Variable Account to variable income payments and your Contract Value in the
Fixed Account Options to fixed income payments. We will apply your Contract
Value, adjusted by a Market Value Adjustment, less applicable taxes to your
Income Plan on the Payout Start Date. If the amount available to apply under an
Income Plan is less than $2,000 or not enough to provide an initial payment of
at least $20, and state law permits, we may:
.. pay you the Contract Value, adjusted by any Market Value Adjustment and less
any applicable taxes, in a lump sum instead of the periodic payments you have
chosen, or
.. reduce the frequency of your payments so that each payment will be at least
$20.
VARIABLE INCOME PAYMENTS
The amount of your variable income payments depends upon the investment results
of the Variable Sub-Accounts you select, the premium taxes you pay, the age and
sex of the Annuitant, and the Income Plan you choose. We guarantee that the
payments will not be affected by (a) actual mortality experience and (b) the
amount of our administration expenses.
We cannot predict the total amount of your variable income payments. Your
variable income payments may be more or less than your total purchase payments
because (a) variable income payments vary with the investment results of the
underlying Portfolios and (b) the Annuitant could live longer or shorter than we
expect based on the tables we use.
In calculating the amount of the periodic payments in the annuity tables in the
Contract, we assumed an annual investment rate of 3%. If the actual net
investment return of the Variable Sub-Accounts you choose is less than this
assumed investment rate, then the dollar amount of your variable income payments
will decrease. The dollar amount of your variable income payments will increase,
however, if the actual net investment return exceeds the assumed investment
rate. The dollar amount of the variable income payments stays level if the net
investment return equals the assumed investment rate.
Please refer to the Statement of Additional Information for more detailed
information as to how we determine variable income payments. We reserve the
right to make other assumed investment rates available.
FIXED INCOME PAYMENTS
We guarantee income payment amounts derived from any Fixed Account Option for
the duration of the Income Plan. We calculate the fixed income payments by:
1. adjusting the portion of the Contract Value in any Fixed Account Option on
the Payout Start Date by any applicable Market Value Adjustment;
2. deducting any applicable premium tax; and
3. applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as we are
offering at that time.
We may defer making fixed income payments for a period of up to 6 months or such
shorter time period required by law. If we defer payments for 30 days or more,
we will pay interest as required by law from the date we receive the withdrawal
request to the date we make payment.
22 PROSPECTUS
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex to the extent permitted by
law. In certain employment-related situations, employers are required by law to
use the same income payment tables for men and women. Accordingly, if the
Contract is to be used in connection with an employment-related retirement or
benefit plan and we do not offer unisex annuity tables in your state, you should
consult with legal counsel as to whether the purchase of a Contract is
appropriate.
DEATH BENEFITS
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We will pay a death benefit prior to the Payout Start Date on:
(a) the death of any Contract owner, or
(b) the death of the Annuitant, if the Contract is owned by a non-living
person.
We will pay the death benefit to the new Contract owner as determined
immediately after the death. The new Contract owner would be a surviving
Contract owner or, if none, the Beneficiary(ies). In the case of a Contract
owned by a non-living owner, upon the death of the Annuitant, we will pay the
death benefit to the current Contract owner.
We will determine the value of the death benefit as of the end of the Valuation
Date on which we receive a complete request for settlement of the death benefit.
If we receive a request after 3 p.m. Central Time on a Valuation Date, we will
process the request as of the end of the following Valuation Date.
A complete request for settlement of the death benefit must include DUE PROOF OF
DEATH. We will accept the following documentation as "Due Proof of Death:"
.. a certified copy of the death certificate,
.. a certified copy of a decree of a court of competent jurisdiction as to the
finding of death, or
.. any other proof acceptable to us.
CONTRACTS ISSUED BEFORE MAY 1, 1997
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit before any Market Value
Adjustment is equal to the greater of:
1. the Contract Value as of the date we receive a complete request for
settlement of the death benefit, or
2. for each previous DEATH BENEFIT ANNIVERSARY, the Contract Value at that
Anniversary; plus any purchase payments made since that anniversary; minus any
amounts we paid the Contract Owner (including income tax we withheld from you)
since that Anniversary.
A "Death Benefit Anniversary" is every seventh Contract Anniversary beginning
with the Issue Date. For example, the Issue Date, 7th and 14th Contract
Anniversaries are the first three Death Benefit Anniversaries. We will calculate
Anniversary Values for each Contract Anniversary prior to the oldest Contract
Owner's or the Annuitant's, if the Contract Owner is not a natural person, 80th
birthday. We will adjust the death benefit by any applicable Market Value
Adjustment as of the date we determine the death benefit. The death benefit will
never be less than the sum of all purchase payments less any amounts previously
paid to the Contract Owner (including income tax withholding).
CONTRACTS ISSUED ON OR AFTER MAY 1, 1997
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, if we receive a complete request for settlement
of the death benefit within 180 days of the date of your death, the death
benefit is equal to the greatest of:
1. the Contract Value as of the date we receive a complete request for
settlement of the death benefit, or
2. the SETTLEMENT VALUE (that is, the amount payable on a full withdrawal of
Contract Value) on the date we receive a complete request for settlement of the
death benefit, or
3. the Contract Value on each Death Benefit Anniversary as defined above prior
to the date we receive a complete request for settlement of the death benefit,
increased by purchase payments made since that Death Benefit Anniversary and
reduced by an adjustment for any partial withdrawals since that Death Benefit
Anniversary.
The adjustment is equal to (a) divided by (b) and the result multiplied by (c)
where:
(a) is the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the Contract Value on the Death Benefit Anniversary adjusted by any
prior purchase payments or withdrawals made since that Anniversary.
We will calculate the Death Benefit Anniversary values until the oldest Contract
Owner, or the Annuitant if the Contract Owner is not a living person, attains
age 80.
If we do not receive a complete request for settlement of the death benefit
within 180 days of the date of death, the death benefit is equal to the greater
of:
1. the Contract Value as of the date we determine the death benefit; or
23 PROSPECTUS
2. the Settlement Value as of the date we determine the death benefit.
We reserve the right to extend the 180-day period on a non-discriminatory basis.
In calculating the Settlement Value, the amount in each individual Guarantee
Period may be subject to a Market Value Adjustment. A Market Value Adjustment
will apply to amounts in a Guarantee Period, unless we calculate the Settlement
Value during the 30-day period after the expiration of the Guaranty Period.
Also, the Settlement Value will reflect the deduction of any applicable
withdrawal charges, contract maintenance charges, and premium taxes. Contract
maintenance charges will be pro rated for the part of the Contract Year elapsed
as of the date we determine the Settlement Value, unless your Contract qualifies
for a waiver of such charges described in the "Contract Maintenance Charge"
section above.
ENHANCED DEATH BENEFIT RIDER.
If the oldest Contract Owner and Annuitant are less than or equal to age 75 as
of the date we receive the completed application, the Enhanced Death Benefit
Rider is an optional benefit that you may elect.
For Contracts with the Enhanced Death Benefit Rider, the death benefit will be
the greatest of (1) through (3) above, or the value of the Enhanced Death
Benefit Rider, which is the greatest of the ANNIVERSARY VALUES as of the date we
determine the death benefit. An "Anniversary Value" is equal to the Contract
Value on a Contract Anniversary, increased by purchase payments made since that
Anniversary and reduced by an adjustment for any partial withdrawals since that
Anniversary. The adjustment is equal to (a) divided by (b), and the result
multiplied by (c) where:
(a) is the withdrawal amount,
(b) is the Contract Value immediately prior to the withdrawal, and
(c) is the Contract Value on that Contract Anniversary adjusted by any prior
purchase payments and withdrawals since that Contract Anniversary.
We will calculate Anniversary Values for each Contract Anniversary prior to the
oldest Contract Owner's or the Annuitant's, if the Contract Owner is not a
living person, 80th birthday. The Enhanced Death Benefit Rider will never be
greater than the maximum death benefit allowed by any non-forfeiture laws that
govern the Contract.
If we do not receive a complete request for settlement of the death benefit
within 180 days of the date of death, the Enhanced Death Benefit Rider will not
apply and the death benefit is equal to the greater of:
1. the Contract Value as of the date we determine the death benefit; or
2. the Settlement Value as of the date we determine the death benefit.
24 PROSPECTUS
DEATH BENEFIT PAYMENTS
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DEATH OF OWNER
1. If your spouse is the sole surviving Contract Owner, or is the sole
Beneficiary:
a. Your spouse may elect to receive the death benefit in a lump sum; or
b. Your spouse may elect to receive the death benefit paid out under one of
the Income Plans (described in "Income Payments" above), subject to the
following conditions:
The Payout Start Date must be within one year of your date of death. Income
payments must be payable:
i. over the life of your spouse; or
ii. for a guaranteed number of payments from 5 to 50 years but not to
exceed the life expectancy of your spouse; or
iii. over the life of your spouse with a guaranteed number of payments from
5 to 30 years but not to exceed the life expectancy of your spouse.
c. If your spouse does not elect one of these options, the Contract will
continue in Accumulation Phase as if the death had not occurred. If the
Contract is continued in the Accumulation Phase, the following conditions
apply: The Contract Value of the continued Contract will be the death benefit.
Unless otherwise instructed by the continuing spouse, the excess, if any, of
the death benefit over the Contract Value will be allocated to the
Sub-accounts of the Variable Account. This excess will be allocated in
proportion to your Contract Value in those Sub-accounts as of the end of the
Valuation Date on which we receive the complete request for settlement of
the death benefit (the next Valuation Date if we receive the request after
3:00 p.m. Central Time), except that any portion of this excess
attributable to the Fixed Account Options will be allocated to the money
market Variable Sub-account. Within 30 days of the date the Contract is
continued, your surviving spouse may choose one of the following transfer
alternatives without incurring a transfer fee:
i. transfer all or a portion of the excess among the Variable Sub-accounts;
ii. transfer all or a portion of the excess into the Guaranteed Maturity
Fixed Account and begin a new Guarantee Period; or
iii. transfer all or a portion of the excess into a combination of Variable
Sub-accounts and the Guaranteed Maturity Fixed Account.
Any such transfer does not count as one of the free transfers allowed each
Contract Year and is subject to any minimum allocation amount specified in the
Contract.
The surviving spouse may make a single withdrawal of any amount within one year
of the date of your death without incurring a withdrawal charge or Market
Value Adjustment.
Prior to the Payout Start Date, the death benefit of the continued Contract will
be described under "Death Benefit Amount."
Only one spousal continuation is allowed under the Contract.
2. If the new Contract Owner is not your spouse but is a living person or if
there are multiple living persons new Contract Owners:
a. The new Contract Owner may elect to receive the death benefit in a lump
sum; or
b. The new Contract Owner may elect to receive the death benefit paid out
under one of the Income Plans (described in "Income Payments" above) ,
subject to the following conditions:
The Payout Start Date must be within one year of your date of death. Income
payments must be payable:
i. over the life of the new Contract Owner; or
ii. for a guaranteed number of payments from 5 to 50 years but not to
exceed the life expectancy of the new Contract Owner; or
iii. over the life of the new Contract Owner with a guaranteed number
of payments from 5 to 30 years but not to exceed the life expectancy of the new
Contract Owner.
c. If the new Contract Owner does not elect one of the options above, then
the new Contract Owner must receive the Contract Value payable within 5 years of
your date of death. The Contract Value will equal the amount of the death
benefit as determined as of the end of the Valuation Date on which we receive a
complete request for settlement of the death benefit (the next Valuation Date if
we receive the request after 3:00 p.m. Central Time). Unless otherwise
instructed by the new Contract Owner, the excess, if any, of the death benefit
over the Contract Value will be allocated to the money market
Variable Sub-Account. Henceforth, the new Contract Owner may make transfers (as
described in "Transfers During the Payout Phase" above) during this 5 year
period. No additional purchase payments may be added to the Contract under this
election. Withdrawal charges will be waived for any withdrawals made during this
5 year period.
25 PROSPECTUS
We reserve the right to offer additional options upon the death of the Contract
Owner.
If the new Contract Owner dies prior to the complete liquidation of
the Contract Value, then the new Contract Owner's named
Beneficiary(ies) will receive the greater of the Settlement Value or the
remaining Contract Value. This amount must be liquidated as a lump sum within 5
years of the date of the original Contract Owner's death.
3. If the new Contract Owner is a corporation or other type of non-living
person:
a. The new Contract Owner may elect to receive the death benefit in a
lump sum; or
b. If the new Contract Owner does not elect the option above, then the new
Contract Owner must receive the Contract Value payable within 5 years of your
date of death. The Contract Value will equal the amount of the death benefit as
determined as of the end of the Valuation Date on which we receive a complete
request for settlement of the death benefit (the next Valuation Date if we
receive the request after 3:00 p.m. Central Time). Unless otherwise instructed
by the new Contract Owner, the excess, if any, of the death benefit over the
Contract Value will be allocated to the money market Variable
Sub-Account. Henceforth, the new Contract Owner may make transfers (as described
in "Transfers During the Payout Phase" above) during this 5 year period.
No additional purchase payments may be added to the Contract under this
election. Withdrawal charges will be waived during this 5 year period.
We reserve the right to make additional options available to the new Contract
Owner upon the death of the Contract Owner.
If any new Contract Owner is a non-living person, all new Contract Owners will
be considered to be non-living persons for the above purposes. Under any of
these options, all ownership rights, subject to any restrictions previously
placed upon the Beneficiary, are available to the new Contract Owner from
the date of your death to the date on which the death benefit are paid.
DEATH OF ANNUITANT
If the Annuitant who is not also the Contract Owner dies prior to the Payout
Start Date, the following apply:
1. If the Contract Owner is a living person, then the Contract will
continue with a new Annuitant, who will be:
a. the youngest Contract Owner; otherwise
b. the youngest Beneficiary. You may change the Annuitant before the
Payout Start Date.
2. If the Contract Owner is a non-living person:
a. The Contract Owner may elect to receive the death benefit in a lump sum;
or
b. If the Contract Owner does not elect the option above, then the
Contract Owner must receive the Contract Value payable within 5 years of the
Annuitant's date of death. The Contract Value will equal the amount of the
death benefit as determined as of the end of the Valuation Date on which we
receive a complete request for settlement of the death benefit (the next
Valuation Date if we receive the request after 3:00 p.m. Central Time). Unless
otherwise instructed by the Contract Owner, the excess, if any, of the death
benefit over the Contract Value will be allocated to the money market
Variable Sub-Account. Henceforth, the Contract Owner may make transfers (as
described in "Transfers During the Payout Phase" above) during this 5 year
period.
No additional purchase payments may be added to the Contract under this
election. Withdrawal charges will be waived during this 5 year period.
We reserve the right to make additional options available to the Contract
Owner upon the death of the Annuitant.
Under any of these options, all ownership rights are available to the non-living
Contract Owner from the date of the Annuitant's death to the date on which the
death benefit are paid.
MORE INFORMATION
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GLENBROOK LIFE
Glenbrook Life is the issuer of the Contract. Glenbrook
Life is a stock life insurance company organized under the laws of the State of
Arizona in 1998. Previously, Glenbrook Life was organized under the laws of the
State of Illinois in 1992.
Glenbrook Life was originally organized under the laws of the State of Indiana
in 1965. From 1965 to 1983 Glenbrook Life was known as "United Standard Life
Assurance Company" and from 1983 to 1992 as "William Penn Life Assurance Company
of America."
Glenbrook Life is currently licensed to operate in the District of Columbia and
all states except New York. We intend to offer the Contract in those
jurisdictions in which we are licensed and in which SunTrust Bank, Inc., through
its banking subsidiaries, conducts business. Our main administrative office is
located at 3100 Sanders Road, Northbrook, Illinois 60062.
Glenbrook Life is a wholly owned subsidiary of Allstate Life Insurance Company
("ALLSTATE LIFE"), a stock life insurance company incorporated under the laws of
the State of Illinois. Allstate Life is a wholly owned subsidiary
26 PROSPECTUS
of Allstate Insurance Company, a stock property-liability insurance company
incorporated under the laws of Illinois. All of the outstanding capital stock of
Allstate Insurance Company is owned by The Allstate Corporation.
Glenbrook Life and Allstate Life entered into a reinsurance agreement, under
which Allstate Life reinsures substantially all of Glenbrook Life's liabilities
under its various insurance contracts. The reinsurance agreement provides us
with financial backing from Allstate Life. However, it does not create a direct
contractual relationship between Allstate Life and you. In other words, the
obligations of Allstate Life under the reinsurance agreement are to Glenbrook
Life; Glenbrook
Life remains the sole obligor under the Contract to you.
THE VARIABLE ACCOUNT
Glenbrook Life established the Glenbrook Life Multi-Manager Variable Account on
January 15, 1996. The Contracts were previously issued through the Glenbrook
Life and Annuity Company Variable Annuity Account. Effective May 1, 2004, the
Variable Account combined with Glenbrook Life and Annuity Company Variable
Annuity Account and Glenbrook Life Scudder Variable Account A and consolidated
duplicative Variable Sub-Accounts that invest in the same Portfolio (the
"Consolidation"). The accumulation unit values for the Variable Sub-Accounts in
which you invest did not change as a result of the Consolidation, and your
Contract Value immediately after the Consolidation was the same as the value
immediately before the Consolidation. We have registered the Variable Account
with the SEC as a unit investment trust. The SEC does not supervise the
management of the Variable Account or Glenbrook Life.
We own the assets of the Variable Account. The Variable Account is a segregated
asset account under Arizona law. That means we account for the Variable
Account's income, gains and losses separately from the results of our other
operations. It also means that only the assets of the Variable Account that are
in excess of the reserves and other Contract liabilities with respect to the
Variable Account are subject to liabilities relating to our other operations.
Our obligations arising under the Contracts are general corporate obligations of
Glenbrook Life.
The Variable Account consists of multiple Variable Sub-Accounts, of which 39 are
currently available for investment under the Contract. We may add new Variable
Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or
investment conditions so warrant. We do not guarantee the investment performance
of the Variable Account, its Sub-Accounts or the Portfolios. We may use the
Variable Account to fund our other annuity contracts. We will account separately
for each type of annuity contract funded by the Variable Account.
THE PORTFOLIOS
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all
dividends and capital gains distributions from the Portfolios in shares of the
distributing Portfolio at their net asset value.
VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote
the shares of the Portfolios held by the Variable Sub-Accounts to which you have
allocated your Contract Value. Under current law, however, you are entitled to
give us instructions on how to vote those shares on certain matters. Based on
our present view of the law, we will vote the shares of the Portfolios that we
hold directly or indirectly through the Variable Account in accordance with
instructions that we receive from Contract Owners entitled to give such
instructions.
As a general rule, before the Payout Start Date, the Contract Owner or anyone
with a voting interest is the person entitled to give voting instructions. The
number of shares that a person has a right to instruct will be determined by
dividing the Contract Value allocated to the applicable Variable Sub-Account by
the net asset value per share of the corresponding Portfolio as of the record
date of the meeting. After the Payout Start Date, the person receiving income
payments has the voting interest. The payee's number of votes will be determined
by dividing the reserve for such Contract allocated to the applicable Variable
Sub-Account by the net asset value per share of the corresponding Portfolio. The
votes decrease as income payments are made and as the reserves for the Contract
decrease.
We will vote shares attributable to Contracts for which we have not received
instructions, as well as shares attributable to us, in the same proportion as we
vote shares for which we have received instructions, unless we determine that we
may vote such shares in our own discretion. We will apply voting instructions to
abstain on any item to be voted on a pro-rata basis to reduce the votes eligible
to be cast.
We reserve the right to vote Portfolio shares as we see fit without regard to
voting instructions to the extent permitted by law. If we disregard voting
instructions, we will include a summary of that action and our reasons for that
action in the next semi annual financial report we send to you.
CHANGES IN PORTFOLIOS. If the shares of any of the Portfolios are no longer
available for investment by the Variable Account or if, in our judgment, further
investment in such shares is no longer desirable in view of the purposes of the
Contract, we may eliminate that Portfolio and substitute shares of another
eligible investment fund. Any substitution of securities will comply with the
requirements of the Investment Company Act of 1940. We also may add new Variable
Sub-Accounts that invest in additional underlying mutual funds . We will notify
you in advance of any change.
27 PROSPECTUS
CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate
accounts underlying both variable life insurance and variable annuity contracts.
It is conceivable that in the future it may be unfavorable for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the same Portfolio. The boards of directors or trustees of these Portfolios
monitor for possible conflicts among separate accounts buying shares of the
Portfolios. Conflicts could develop for a variety of reasons. For example,
differences in treatment under tax and other laws or the failure by a separate
account to comply with such laws could cause a conflict. To eliminate a
conflict, a Portfolio's board of directors or trustees may require a separate
account to withdraw its participation in a Portfolio. A Portfolio's net asset
value could decrease if it had to sell investment securities to pay redemption
proceeds to a separate account withdrawing because of a conflict.
THE CONTRACT
DISTRIBUTION. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook,
Illinois 60062-7154, serves as distributor of the Contracts. ALFS is a wholly
owned subsidiary of Allstate Life Insurance Company. ALFS is a registered broker
dealer under the Securities and Exchange Act of 1934, as amended ("Exchange
Act"), and is a member of the NASD.
We will pay commissions to broker-dealers who sell the contracts. Commissions
paid may vary, but we estimate that the total commissions paid on all Contract
sales will not exceed 8 1/2% of all purchase payments (on a present value
basis).
These commissions are intended to cover distribution expenses. Sometimes, we
also pay the broker-dealer a persistency bonus in addition to the standard
commissions. In some states, Contracts may be sold by representatives or
employees of banks which may be acting as broker-dealers without separate
registration under the Exchange Act, pursuant to legal and regulatory
exceptions.
Glenbrook Life does not pay ALFS a commission for distribution of the Contracts.
The underwriting agreement with ALFS provides that we will reimburse ALFS for
any liability to Contract Owners arising out of services rendered or Contracts
issued.
ADMINISTRATION. We have primary responsibility for all administration of the
Contracts and the Variable Account. We provide the following administrative
services, among others:
.. issuance of the Contracts;
.. maintenance of Contract Owner records;
.. Contract Owner services;
.. calculation of unit values;
.. maintenance of the Variable Account; and
.. preparation of Contract Owner reports.
We will send you Contract statements and transaction confirmations at least
quarterly. You should notify us promptly in writing of any address change. You
should read your statements and confirmations carefully and verify their
accuracy. You should contact us promptly if you have a question about a periodic
statement. We will investigate all complaints and make any necessary adjustments
retroactively, but you must notify us of a potential error within a reasonable
time after the date of the questioned statement. If you wait too long, we will
make the adjustment as of the date that we receive notice of the potential
error.
We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws.
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan,
the plan may impose different or additional conditions or limitations on
withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates,
income payments, and other Contract features. In addition, adverse tax
consequences may result if qualified plan limits on distributions and other
conditions are not met. Please consult your qualified plan administrator for
more information. Glenbrook Life no longer issues deferred annuities to
employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of state law pertaining to the Contracts, including the validity of
the Contracts and Glenbrook Life's right to issue such Contracts under state
insurance law, have been passed upon by Michael J. Velotta, General Counsel of
Glenbrook Life.
28 PROSPECTUS
TAXES
- --------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. GLENBROOK
LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
TAXATION OF GLENBROOK LIFE AND
ANNUITY COMPANY
Glenbrook Life is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the Variable
Account is not an entity separate from Glenbrook Life, and its operations form a
part of Glenbrook Life, it will not be taxed separately. Investment income and
realized capital gains of the Variable Account are automatically applied to
increase reserves under the Contract. Under existing federal income tax law,
Glenbrook Life believes that the Variable Account investment income and capital
gains will not be taxed to the extent that such income and gains are applied to
increase the reserves under the Contract. Accordingly, Glenbrook Life does not
anticipate that it will incur any federal income tax liability attributable to
the Variable Account, and therefore Glenbrook Life does not intend to make
provisions for any such taxes. If Glenbrook Life is taxed on investment income
or capital gains of the Variable Account, then Glenbrook Life may impose a
charge against the Variable
Account in order to make provision for such taxes.
TAXATION OF VARIABLE ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where:
.. the Contract Owner is a natural person,
.. the investments of the Variable Account are "adequately diversified" according
to Treasury Department regulations, and
.. Glenbrook Life is considered the owner of the Variable Account assets for
federal income tax purposes.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living
Owners in this prospectus. As a general rule, annuity contracts owned by
non-natural persons such as corporations, trusts, or other entities are not
treated as annuity contracts for federal income tax purposes. The income on such
contracts does not enjoy tax deferral and is taxed as ordinary income received
or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain qualified plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax
deferral as described in the Exceptions to the Non-Natural Owner Rule section.
In accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
surviving Contract Owner. Since the trust will be the surviving Contract Owner
in all cases, the Death Benefit will be payable to the trust notwithstanding any
beneficiary designation on the annuity contract. A trust, including a grantor
trust, has two options for receiving any death benefits: 1) a lump sum payment;
or 2) payment deferred up to five years from date of death.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for
federal income tax purposes, the investments in the Variable Account must be
"adequately diversified" consistent with standards under Treasury Department
regulations. If the investments in the Variable Account are not adequately
diversified, the Contract will not be treated as an annuity contract for federal
income tax purposes. As a result, the income on the Contract will be taxed as
ordinary income received or accrued by the Contract owner during the taxable
year. Although Glenbrook Life does not have control over the Portfolios or their
investments, we expect the Portfolios to meet the diversification requirements.
OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be
considered the owner of separate account assets if he possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. At the time the diversification regulations were issued, the
Treasury Department
29 PROSPECTUS
announced that the regulations do not provide guidance concerning circumstances
in which investor control of the separate account investments may cause a
Contract owner to be treated as the owner of the separate account. The Treasury
Department also stated that future guidance would be issued regarding the extent
that owners could direct sub-account investments without being treated as owners
of the underlying assets of the separate account.
Your rights under the Contract are different than those described by the IRS in
private and published rulings in which it found that Contract owners were not
owners of separate account assets. For example, if your contract offers more
than twenty (20) investment alternatives you have the choice to allocate
premiums and contract values among a broader selection of investment
alternatives than described in such rulings. You may be able to transfer among
investment alternatives more frequently than in such rulings. These differences
could result in you being treated as the owner of the Variable Account. If this
occurs, income and gain from the Variable Account assets would be includible in
your gross income. Glenbrook
Life does not know what standards will be set forth in any regulations or
rulings which the Treasury Department may issue. It is possible that future
standards announced by the Treasury Department could adversely affect the tax
treatment of your Contract. We reserve the right to modify the Contract as
necessary to attempt to prevent you from being considered the federal tax owner
of the assets of the Variable Account. However, we make no guarantee that such
modification to the Contract will be successful.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal
under a Non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a full withdrawal
under a Non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of
annuity payments received from a Non-Qualified Contract provides for the return
of your investment in the Contract in equal tax-free amounts over the payment
period. The balance of each payment received is taxable. For fixed annuity
payments, the amount excluded from income is determined by multiplying the
payment by the ratio of the investment in the Contract (adjusted for any refund
feature or period certain) to the total expected value of annuity payments for
the term of the Contract. If you elect variable annuity payments, the amount
excluded from taxable income is determined by dividing the investment in the
Contract by the total number of expected payments. The annuity payments will be
fully taxable after the total amount of the investment in the Contract is
excluded using these ratios. If any variable payment is less than the excludable
amount you should contact a competent tax advisor to determine how to report any
unrecovered investment. The federal tax treatment of annuity payments is
unclear in some respects. As a result, if the IRS should provide further
guidance, it is possible that the amount we calculate and report to the IRS as
taxable could be different. If you die, and annuity payments cease before the
total amount of the investment in the Contract is recovered, the unrecovered
amount will be allowed as a deduction for your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:
.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of the Contract Owner's death;
.. if any Contract Owner dies prior to the Payout Start Date, the entire interest
in the Contract will be distributed within 5 years after the date of the
Contract Owner's death. These requirements are satisfied if any portion of the
Contract Owner's interest that is payable to (or for the benefit of) a
designated Beneficiary is distributed over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of the Beneficiary) and
the distributions begin within 1 year of the Contract Owner's death. If the
Contract Owner's designated Beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner.
.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract owned by a
non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in
income as follows:
.. if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
.. if distributed under an Income Plan, the amounts are taxed in the same manner
as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the
taxable amount of any
30 PROSPECTUS
premature distribution from a non-Qualified Contract. The penalty tax generally
applies to any distribution made prior to the date you attain age 59 1/2.
However, no penalty tax is incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or becoming totally disabled,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made under an immediate annuity, or
.. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. A material modification does not include
permitted changes described in published IRS rulings. You should consult a
competent tax advisor prior to creating or modifying a substantially equal
periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is
a tax-free exchange of a non-qualified life insurance contract, endowment
contract or annuity contract into a non-Qualified annuity contract. The contract
owner(s) must be the same on the old and new contract. Basis from the old
contract carries over to the new contract so long as we receive that information
from the relinquishing company. If basis information is never received, we will
assume that all exchanged funds represent earnings and will allocate no cost
basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges
of annuity contracts. Under this ruling, if you take a withdrawal from a
receiving or relinquishing annuity contract within 24 months of the partial
exchange, then special aggregation rules apply for purposes of determining the
taxable amount of a distribution. The IRS has issued limited guidance on how to
aggregate and report these distributions. The IRS is expected to provide
further guidance, as a result, it is possible that the amount we calculate and
report to the IRS as taxable could be different.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Any assignment or pledge (or agreement to assign or pledge) of the
Contract Value is taxed as a withdrawal of such amount or portion and may also
incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified
deferred annuity contracts issued by Glenbrook Life (or its affiliates) to the
same Contract Owner during any calendar year be aggregated and treated as one
annuity contract for purposes of determining the taxable amount of a
distribution.
INCOME TAX WITHHOLDING
Generally, Glenbrook Life is required to withhold federal income tax at a rate
of 10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% of the taxable
amount. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Glenbrook Life is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. If no U.S. taxpayer identification number is
provided, we will automatically withhold using single with zero exemptions as
the default. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Glenbrook Life as a
withholding agent must withhold 30% of the taxable amounts paid to a
non-resident alien. A non-resident alien is someone other than a U.S. citizen or
resident alien. Withholding may be reduced or eliminated if covered by an
income tax treaty between the U.S. and the non-resident alien's country of
residence if the payee provides a U.S. taxpayer identification number on a
completed Form W-8BEN. A U.S. taxpayer identification number is a social
security number or an individual taxpayer identification number ("ITIN").
ITINs are issued by the IRS to non-resident alien individuals who are not
eligible to obtain a social security number. The U.S. does not have a tax
treaty with all
31 PROSPECTUS
countries nor do all tax treaties provide an exclusion or lower withholding rate
for annuities.
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred,
and the income on variable annuities held by such plans does not receive any
additional tax deferral. You should review the annuity features, including all
benefits and expenses, prior to purchasing a variable annuity as a TSA or IRA.
Tax Qualified Contracts are contracts purchased as investments as:
.. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
.. Roth IRAs under Section 408A of the Code;
.. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
.. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p)
of the Code; and
.. Tax Sheltered Annuities under Section 403(b) of the Code.
Glenbrook Life reserves the right to limit the availability of the Contract for
use with any of the retirement plans listed above or to modify the Contract to
conform with tax requirements.
The tax rules applicable to participants with tax qualified annuities vary
according to the type of contract and the terms and conditions of the
endorsement. Adverse tax consequences may result from certain transactions such
as excess contributions, premature distributions, and, distributions that do not
conform to specified commencement and minimum distribution rules. Glenbrook Life
can issue an individual retirement annuity on a rollover or transfer of proceeds
from a decedent's IRA, TSA, or employer sponsored retirement plan under which
the decedent's surviving spouse is the beneficiary. Glenbrook Life does not
offer an individual retirement annuity that can accept a transfer of funds for
any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer
sponsored retirement plan.
In the case of certain qualified plans, the terms of the plans may govern the
right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If
you make a partial withdrawal under a Tax Qualified Contract other than a Roth
IRA, the portion of the payment that bears the same ratio to the total payment
that the investment in the Contract (i.e., nondeductible IRA contributions)
bears to the Contract Value, is excluded from your income. We do not keep track
of nondeductible contributions, and all tax reporting of distributions from Tax
Qualified Contracts other than Roth IRAs will indicate that the distribution is
fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to any Roth IRA and which
are:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made to a beneficiary after the Contract Owner's death,
.. attributable to the Contract Owner being disabled, or
.. made for a first time home purchase (first time home purchases are subject to
a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. All tax reporting of distributions from Roth
IRAs will indicate that the taxable amount is not determined.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, IRAs (excluding Roth IRAs) and TSAs
require minimum distributions upon reaching age 70 1/2. Failure to withdraw the
required minimum distribution will result in a 50% tax penalty on the shortfall
not withdrawn from the Contract. Not all income plans offered under the Contract
satisfy the requirements for minimum distributions. Because these distributions
are required under the Code and the method of calculation is complex, please see
a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.
It is also possible that certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
Owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under qualified plans, such as in connection with
a 403(b) plan.
Glenbrook Life reserves the right to limit the availability of the Contract for
use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10%
penalty tax applies to the taxable amount of any premature distribution from a
Tax Qualified Contract. The penalty tax generally applies to any distribution
made prior to the date you attain age
32 PROSPECTUS
59 1/2. However, no penalty tax is incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or total disability,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made after separation from service after age 55 (applies only for IRAs),
.. made pursuant to an IRS levy,
.. made for certain medical expenses,
.. made to pay for health insurance premiums while unemployed (applies only for
IRAs),
.. made for qualified higher education expenses (applies only for IRAs), and
.. made for a first time home purchase (up to a $10,000 lifetime limit and
applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect
to Tax Qualified Contracts using substantially equal periodic payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to
a 10% penalty tax unless another exception to the penalty tax applied. The tax
for the year of the modification is increased by the penalty tax that would have
been imposed without the exception, plus interest for the years in which the
exception was used. A material modification does not include permitted changes
described in published IRS rulings. You should consult a competent tax advisor
prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Glenbrook Life is
required to withhold federal income tax at a rate of 10% from all non-annuitized
distributions that are not considered "eligible rollover distributions." The
customer may elect out of withholding by completing and signing a withholding
election form. If no election is made, we will automatically withhold the
required 10% from the taxable amount. In certain states, if there is federal
withholding, then state withholding is also mandatory. Glenbrook Life is
required to withhold federal income tax at a rate of 20% on all "eligible
rollover distributions" unless you elect to make a "direct rollover" of such
amounts to an IRA or eligible retirement plan. Eligible rollover distributions
generally include all distributions from employer sponsored retirement plans,
including TSAs but excluding IRAs, with the exception of:
.. required minimum distributions, or,
.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,
.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,
.. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding
requirement, Glenbrook Life is required to withhold federal income tax using the
wage withholding rates. The customer may elect out of withholding by completing
and signing a withholding election form. If no election is made, we will
automatically withhold using married with three exemptions as the default. If no
U.S. taxpayer identification number is provided, we will automatically withhold
using single with zero exemptions as the default. In certain states, if there
is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Glenbrook Life as a
withholding agent must withhold 30% of the taxable amounts paid to a
non-resident alien. A non-resident alien is someone other than a U.S. citizen or
resident alien. Withholding may be reduced or eliminated if covered by an
income tax treaty between the U.S. and the non-resident alien's country of
residence if the payee provides a U.S. taxpayer identification number on a
completed Form W-8BEN. A U.S. taxpayer identification number is a social
security number or an individual taxpayer identification number ("ITIN").
ITINs are issued by the IRS to non-resident alien individuals who are not
eligible to obtain a social security number. The U.S. does not have a tax
treaty with all countries nor do all tax treaties provide an exclusion or lower
withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
plans may be "rolled over" on a tax-deferred basis into an Individual Retirement
Annuity.
33 PROSPECTUS
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The income portion of a conversion or rollover distribution is taxable
currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS)
Internal Revenue Code Section 408 permits a custodian or trustee of an
Individual Retirement Account to purchase an annuity as an investment of the
Individual Retirement Account. If an annuity is purchased inside of an
Individual Retirement Account, then the Annuitant must be the same person as the
beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract in the accumulation phase, with the Annuitant's
surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under
the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;
3) We receive a complete request for settlement for the death of the Annuitant;
and
4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has
continued the Individual Retirement Account pursuant to the surviving spouse's
election.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible
employers to establish simplified employee pension plans for their employees
using individual retirement annuities. These employers may, within specified
limits, make deductible contributions on behalf of the employees to the
individual retirement annuities. Employers intending to use the Contract in
connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the
Code allow eligible employers with 100 or fewer employees to establish SIMPLE
retirement plans for their employees using individual retirement annuities. In
general, a SIMPLE IRA consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to purchase the Contract as a SIMPLE IRA should seek competent tax and
legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS
(TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND
YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations. Under Section 403(b), any contract used for a 403(b) plan must
provide that distributions attributable to salary reduction contributions made
after 12/31/88, and all earnings on salary reduction contributions, may be made
only on or after the date the employee:
.. attains age 59 1/2,
.. severs employment,
.. dies,
.. becomes disabled, or
.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).
These limitations do not apply to withdrawals where Glenbrook Life is directed
to transfer some or all of the Contract Value to another 403(b) plan.
Generally, we do not accept Employee Retirement Income Security Act of 1974
(ERISA) funds in 403(b) contracts.
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
Glenbrook Life's annual report on Form 10-K for the year ended December 31, 2003
is incorporated herein by reference, which means it is legally a part of this
prospectus.
34 PROSPECTUS
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Exchange Act are also incorporated herein by reference, which means
that they also legally become a part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000945094. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http:// www.sec.gov. You can also view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of SEC's Public Reference Room,
call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at 544 Lakeview Parkway, Suite 300, Vernon Hills, Illinois,
60061 (telephone: 1-800-755-5275).
35 PROSPECTUS
APPENDIX A ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING
FOR EACH VARIABLE SUB-ACCOUNT SINCE INCEPTION BASE POLICY(1)
- --------------------------------------------------------------------------------
For the Years Beginning January 1* and Ending December 31, 1995 1996 1997 1998 1999
----------------------------------------------------------
AIM V.I. BALANCED-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
AIM V.I. CAPITAL APPRECIATION-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period - - - - $ 14.58
Number of Units Outstanding, End of Period - - - - 468,136
AIM V.I. CORE EQUITY-SERIES I/(//2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
AIM V.I. GROWTH-SERIES I/(2//)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
AIM V.I. HIGH YIELD-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period - - - - $ 10.89
Number of Units Outstanding, End of Period - - - - 76,290
AIM V.I. PREMIER EQUITY-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FEDERATED PRIME MONEY FUND II/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.05 $ 10.42 $ 10.79 $ 11.17
Accumulation Unit Value, End of Period $ 10.05 $ 10.42 $ 10.79 $ 11.17 $ 11.54
Number of Units Outstanding, End of Period 132,650 488,506 343,107 483,734 481,530
FIDELITY VIP CONTRAFUND/(R)/ - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FIDELITY VIP EQUITY-INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FIDELITY VIP GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FIDELITY VIP HIGH INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FIDELITY VIP INDEX 500 - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
36 PROSPECTUS
FIDELITY VIP OVERSEAS - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FTVIP TEMPLETON BOND - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period /(//8//)/ - - - - $ 9.26
Number of Units Outstanding, End of Period /(//8//)/ - - - - 23,888
FTVIP TEMPLETON GLOBAL INCOME SECURITIES - CLASS 2/(2)/
Accumulation Unit Value, Beginning of Period /(//9//)/ - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FTVIP TEMPLETON GROWTH SECURITIES - CLASS 2/(//2)/
Accumulation Unit Value, Beginning of Period/(9)/ - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
FTVIP TEMPLETON STOCK - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period /(//8//)/ - - - - $ 12.92
Number of Units Outstanding, End of Period /(//8//)/ - - - - 147,546
MFS EMERGING GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
MFS INVESTORS TRUST - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
MFS NEW DISCOVERY - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
MFS RESEARCH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
MFS UTILITIES - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
OPPENHEIMER AGGRESSIVE GROWTH/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
OPPENHEIMER BALANCED/(3)//(10)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period - - - - $ 11.14
Number of Units Outstanding, End of Period - - - - 186,352
OPPENHEIMER CAPITAL APPRECIATION/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
OPPENHEIMER GLOBAL SECURITIES/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
37 PROSPECTUS
OPPENHEIMER MAIN STREET/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
OPPENHEIMER STRATEGIC BOND/(3)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.00
Accumulation Unit Value, End of Period - - - - $ 10.25
Number of Units Outstanding, End of Period - - - - 73,123
PUTNAM VT DISCOVERY GROWTH - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT DIVERSIFIED INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT GROWTH AND INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
PUTNAM GROWTH OPPORTUNITIES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT HEALTH SCIENCES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT NEW VALUE - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
STI CLASSIC CAPITAL APPRECIATION/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.66 $ 13.01 $ 17.53 $ 22.31
Accumulation Unit Value, End of Period $ 10.66 $ 13.01 $ 17.53 $ 22.31 $ 23.93
Number of Units Outstanding, End of Period 103,697 1,680,419 2,788,068 3,048,172 3,298,412
STI CLASSIC GROWTH AND INCOME/(2)/
Accumulation Unit Value, Beginning of Period - - - - -
Accumulation Unit Value, End of Period - - - - -
Number of Units Outstanding, End of Period - - - - -
STI CLASSIC INTERNATIONAL EQUITY/(5)/
Accumulation Unit Value, Beginning of Period - $ 10.00 $ 10.15 $ 11.69 $ 12.79
Accumulation Unit Value, End of Period - $ 10.15 $ 11.69 $ 12.79 $ 13.73
Number of Units Outstanding, End of Period - 97,975 734,702 785,600 681,256
STI CLASSIC INVESTMENT GRADE BOND/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.33 $ 10.42 $ 11.20 $ 12.09
Accumulation Unit Value, End of Period $ 10.33 $ 10.42 $ 11.20 $ 12.09 $ 11.72
Number of Units Outstanding, End of Period 40,503 506,887 685,967 974,155 996,889
STI CLASSIC MID-CAP EQUITY/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.28 $ 11.77 $ 14.20 $ 15.03
Accumulation Unit Value, End of Period $ 10.28 $ 11.77 $ 14.20 $ 15.03 $ 16.88
Number of Units Outstanding, End of Period 80,549 959,682 1,354,069 1,398,523 1,236,668
STI CLASSIC SMALL CAP VALUE EQUITY/(6)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 9.76 $ 8.46
Accumulation Unit Value, End of Period - - $ 9.76 $ 8.46 $ 7.95
Number of Units Outstanding, End of Period - - 111,688 339,380 330,184
38 PROSPECTUS
STI CLASSIC VALUE INCOME STOCK/(4)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.69 $ 12.51 $ 15.66 $ 16.95
Accumulation Unit Value, End of Period $ 10.69 $ 12.51 $ 15.66 $ 16.95 $ 16.22
Number of Units Outstanding, End of Period 124,596 2,238,993 3,718,933 3,867,770 3,911,784
For the Years Beginning January 1* and Ending December 31, 2000 2001 2002 2003
AIM V.I. BALANCED-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.63 $ 8.412 $ 6.880
Accumulation Unit Value, End of Period $ 9.63 $ 8.412 $ 6.880 $ 7.898
Number of Units Outstanding, End of Period 62,875 49,132 49,060 56,077
AIM V.I. CAPITAL APPRECIATION-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period $ 14.58 $ 12.82 $ 9.70 $ 7.240
Accumulation Unit Value, End of Period $ 12.82 $ 9.70 $ 7.240 $ 9.251
Number of Units Outstanding, End of Period 1,230,860 996,618 686,388 531,751
AIM V.I. CORE EQUITY-SERIES I/(//2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.32 $ 6.335 $ 5.276
Accumulation Unit Value, End of Period $ 8.32 $ 6.335 $ 5.276 $ 6.477
Number of Units Outstanding, End of Period 175,864 153,369 117,482 109,072
AIM V.I. GROWTH-SERIES I/(2//)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 7.44 $ 4.853 $ 3.305
Accumulation Unit Value, End of Period $ 7.44 $ 4.853 $ 3.305 $ 4.279
Number of Units Outstanding, End of Period 140,188 118,052 73,521 66,852
AIM V.I. HIGH YIELD-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period $ 10.89 $ 8.70 $ 8.153 $ 7.574
Accumulation Unit Value, End of Period $ 8.70 $ 8.153 $ 7.574 $ 9.567
Number of Units Outstanding, End of Period 83,527 71,056 57,048 53,370
AIM V.I. PREMIER EQUITY-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.04 $ 6.934 $ 4.771
Accumulation Unit Value, End of Period $ 8.04 $ 6.934 $ 4.771 $ 5.887
Number of Units Outstanding, End of Period 457,479 420,469 329,454 246,261
FEDERATED PRIME MONEY FUND II/(4)/
Accumulation Unit Value, Beginning of Period $ 11.54 $ 12.07 $ 12.354 $ 12.360
Accumulation Unit Value, End of Period $ 12.07 $ 12.354 $ 12.360 $ 12.277
Number of Units Outstanding, End of Period 358,725 479,698 581,948 301,855
FIDELITY VIP CONTRAFUND/(R)/ - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.40 $ 8.137 $ 7.277
Accumulation Unit Value, End of Period $ 9.40 $ 8.137 $ 7.277 $ 9.223
Number of Units Outstanding, End of Period 129,181 104,334 79,273 57,472
FIDELITY VIP EQUITY-INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.86 $ 10.186 $ 8.346
Accumulation Unit Value, End of Period $ 10.86 $ 10.186 $ 8.346 $ 10.732
Number of Units Outstanding, End of Period 19,864 50,669 66,679 81,708
FIDELITY VIP GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.67 $ 7.042 $ 4.856
Accumulation Unit Value, End of Period $ 8.67 $ 7.042 $ 4.856 $ 6.365
Number of Units Outstanding, End of Period 296,742 233,288 181,225 134,296
FIDELITY VIP HIGH INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.07 $ 7.023 $ 7.168
Accumulation Unit Value, End of Period $ 8.07 $ 7.023 $ 7.168 $ 9.000
Number of Units Outstanding, End of Period 15,164 12,392 11,722 14,137
FIDELITY VIP INDEX 500 - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.99 $ 7.798 $ 5.982
Accumulation Unit Value, End of Period $ 8.99 $ 7.798 $ 5.982 $ 7.578
Number of Units Outstanding, End of Period 282,105 257,109 215,725 199,732
39 PROSPECTUS
FIDELITY VIP OVERSEAS - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.61 $ 6.698 $ 5.268
Accumulation Unit Value, End of Period $ 8.61 $ 6.698 $ 5.268 $ 7.452
Number of Units Outstanding, End of Period 68,280 61,716 27,435 30,484
FTVIP TEMPLETON BOND - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period $ 9.26 - - -
Accumulation Unit Value, End of Period /(//8//)/ $ 9.07 - - -
Number of Units Outstanding, End of Period /(//8//)/ - - - -
FTVIP TEMPLETON GLOBAL INCOME SECURITIES - CLASS 2/(2)/
Accumulation Unit Value, Beginning of Period /(//9//)/ $ 10.00 $ 11.38 $ 11.474 $ 13.715
Accumulation Unit Value, End of Period $ 11.38 $ 11.474 $ 13.715 $ 16.567
Number of Units Outstanding, End of Period 25,703 24,475 26,683 28,298
FTVIP TEMPLETON GROWTH SECURITIES - CLASS 2/(//2)/
Accumulation Unit Value, Beginning of Period/(9)/ $ 10.00 $ 13.58 $ 13.218 $ 10.629
Accumulation Unit Value, End of Period $ 13.58 $ 13.218 $ 10.629 $ 13.857
Number of Units Outstanding, End of Period 336,766 237,738 172,904 141,292
FTVIP TEMPLETON STOCK - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period $ 12.92 - - -
Accumulation Unit Value, End of Period /(//8//)/ $ 12.97 - - -
Number of Units Outstanding, End of Period /(//8//)/ - - - -
MFS EMERGING GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.19 $ 5.376 $ 3.513
Accumulation Unit Value, End of Period $ 8.19 $ 5.376 $ 3.513 $ 4.514
Number of Units Outstanding, End of Period 173,584 145,743 101,706 90,362
MFS INVESTORS TRUST - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.86 $ 8.176 $ 6.376
Accumulation Unit Value, End of Period $ 9.86 $ 8.176 $ 6.376 $ 7.684
Number of Units Outstanding, End of Period 20,415 15,960 14,293 11,230
MFS NEW DISCOVERY - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 10.645 $ 7.180
Accumulation Unit Value, End of Period - $ 10.645 $ 7.180 $ 9.472
Number of Units Outstanding, End of Period - 82 2,498 2,998
MFS RESEARCH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.01 $ 6.999 $ 5.210
Accumulation Unit Value, End of Period $ 9.01 $ 6.999 $ 5.210 $ 6.411
Number of Units Outstanding, End of Period 47,248 62,169 36,362 32,439
MFS UTILITIES - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 9.120 $ 6.950
Accumulation Unit Value, End of Period - $ 9.120 $ 6.950 $ 9.318
Number of Units Outstanding, End of Period - 1,122 2,342 4,932
OPPENHEIMER AGGRESSIVE GROWTH/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 8.21 $ 5.566 $ 3.965
Accumulation Unit Value, End of Period $ 8.21 $ 5.566 $ 3.965 $ 4.913
Number of Units Outstanding, End of Period 93,883 78,813 55,614 47,070
OPPENHEIMER BALANCED/(3)//(10)/
Accumulation Unit Value, Beginning of Period $ 11.14 $ 11.70 $ 11.797 $ 10.428
Accumulation Unit Value, End of Period $ 11.70 $ 11.797 $ 10.428 $ 12.857
Number of Units Outstanding, End of Period 395,411 362,364 307,412 266,680
OPPENHEIMER CAPITAL APPRECIATION/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.13 $ 7.876 $ 5.683
Accumulation Unit Value, End of Period $ 9.13 $ 7.876 $ 5.683 $ 7.342
Number of Units Outstanding, End of Period 110,703 93,537 80,905 77,728
OPPENHEIMER GLOBAL SECURITIES/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.69 $ 8.405 $ 6.457
Accumulation Unit Value, End of Period $ 9.69 $ 8.405 $ 6.457 $ 9.111
Number of Units Outstanding, End of Period 108,051 112,055 86,141 72,269
40 PROSPECTUS
OPPENHEIMER MAIN STREET/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.01 $ 7.986 $ 6.398
Accumulation Unit Value, End of Period $ 9.01 $ 7.986 $ 6.398 $ 7.999
Number of Units Outstanding, End of Period 250,805 269,657 185,604 170,754
OPPENHEIMER STRATEGIC BOND/(3)/
Accumulation Unit Value, Beginning of Period $ 10.25 $ 10.38 $ 10.736 $ 11.381
Accumulation Unit Value, End of Period $ 10.38 $ 10.736 $ 11.381 $ 13.257
Number of Units Outstanding, End of Period 131,969 115,937 133,485 113,706
PUTNAM VT DISCOVERY GROWTH - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 10.138 $ 7.044
Accumulation Unit Value, End of Period - $ 10.138 $ 7.044 $ 9.173
Number of Units Outstanding, End of Period - - - -
PUTNAM VT DIVERSIFIED INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 9.964 $ 10.307
Accumulation Unit Value, End of Period - $ 9.964 $ 10.307 $ 12.207
Number of Units Outstanding, End of Period - - 576 576
PUTNAM VT GROWTH AND INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 9.904 $ 7.916
Accumulation Unit Value, End of Period - $ 9.904 $ 7.916 $ 9.948
Number of Units Outstanding, End of Period - - 1,117 2,419
PUTNAM GROWTH OPPORTUNITIES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 9,796 $ 7.058
Accumulation Unit Value, End of Period - $ 9,796 $ 7.058 $ 8.569
Number of Units Outstanding, End of Period - 700 167 167
PUTNAM VT HEALTH SCIENCES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 9.796 $ 7.698
Accumulation Unit Value, End of Period - $ 9.796 $ 7.698 $ 8.992
Number of Units Outstanding, End of Period - - 3,487 3,813
PUTNAM VT NEW VALUE - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - $ 10.000 $ 10.121 $ 8.427
Accumulation Unit Value, End of Period - $ 10.121 $ 8.427 $ 11.014
Number of Units Outstanding, End of Period - - 6,680 871
STI CLASSIC CAPITAL APPRECIATION/(4)/
Accumulation Unit Value, Beginning of Period $ 23.93 $ 24.34 $ 22.726 $ 17.513
Accumulation Unit Value, End of Period $ 24.34 $ 22.726 $ 17.513 $ 20.466
Number of Units Outstanding, End of Period 2,508,651 2,235,751 1,733,694 1,330,217
STI CLASSIC GROWTH AND INCOME/(2)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 10.13 $ 9.437 $ 7.393
Accumulation Unit Value, End of Period $ 10.13 $ 9.437 $ 7.393 $ 9.227
Number of Units Outstanding, End of Period 23,535 48,707 48,018 52,500
STI CLASSIC INTERNATIONAL EQUITY/(5)/
Accumulation Unit Value, Beginning of Period $ 13.73 $ 13.08 $ 10.660 $ 8.562
Accumulation Unit Value, End of Period $ 13.08 $ 10.660 $ 8.562 $ 11.599
Number of Units Outstanding, End of Period 453,806 382,587 319,391 269,785
STI CLASSIC INVESTMENT GRADE BOND/(4)/
Accumulation Unit Value, Beginning of Period $ 11.72 $ 12.30 $ 13.251 $ 14.041
Accumulation Unit Value, End of Period $ 12.30 $ 13.251 $ 14.041 $ 14.340
Number of Units Outstanding, End of Period 731,489 679,613 633,092 484,969
STI CLASSIC MID-CAP EQUITY/(4)/
Accumulation Unit Value, Beginning of Period $ 16.88 $ 16.17 $ 16.386 $ 11.566
Accumulation Unit Value, End of Period $ 16.17 $ 16.386 $ 11.566 $ 14.804
Number of Units Outstanding, End of Period 974,068 869,756 696,867 523,466
STI CLASSIC SMALL CAP VALUE EQUITY/(6)/
Accumulation Unit Value, Beginning of Period $ 7.95 $ 9.13 $ 10.941 $ 10.665
Accumulation Unit Value, End of Period $ 9.13 $ 10.941 $ 10.665 $ 14.566
Number of Units Outstanding, End of Period 256,009 254,243 264,163 223,379
41 PROSPECTUS
STI CLASSIC VALUE INCOME STOCK/(4)/
Accumulation Unit Value, Beginning of Period $ 16.22 $ 17.68 $ 17.240 $ 14.119
Accumulation Unit Value, End of Period $ 17.68 $ 17.240 $ 14.119 $ 17.151
Number of Units Outstanding, End of Period 2,427,230 2,159,700 1,766,255 1,361,836
*Unless otherwise indicated
(1) The Accumulation Unit Values in this table reflect a Mortality and Expense
Risk Charge of 1.25% and an Administrative Expense Charge of 0.10%.
(2) Variable Sub-Accounts that commenced operations on April 27, 2000.
(3) Variable Sub-Accounts that commenced operations on January 14, 1999.
(4) Variable Sub-Account that commenced operations on October 2, 1995.
(5) Variable Sub-Accounts that commenced operations on November 7, 1996.
(6) Variable Sub-Accounts that commenced operations on October 21, 1997.
(7) Variable Sub-Accounts that commenced operations on August 30, 2001.
(8) End of period May 1, 2000.
(9) Beginning of period May 1, 2000.
(10) Effective May 1, 2004, the Oppenheimer Multiple Strategies Fund/VA changed
its name to the Oppenheimer Balanced Fund/VA. We have made a corresponding
change in the name of the Variable Sub-Account that invests in that Portfolio.
42 PROSPECTUS
ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH
VARIABLE SUB-ACCOUNT SINCE INCEPTION
BASE POLICY PLUS
ENHANCED DEATH BENEFIT RIDER(1)
- --------------------------------------------------------------------------------
For the Years Beginning January 1* and Ending December 31, 1997 1998 1999 2000 2001
----------------------------------------------------------
AIM V.I. BALANCED-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.62
Accumulation Unit Value, End of Period - - - $ 9.62 $ 8.398
Number of Units Outstanding, End of Period - - - 47,107 49,240
AIM V.I. CAPITAL APPRECIATION-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 14.57 $ 12.79
Accumulation Unit Value, End of Period - - $ 14.57 $ 12.79 $ 9.672
Number of Units Outstanding, End of Period - - 592,699 1,177,017 968,618
AIM V.I. CORE EQUITY-SERIES I/(//2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.32
Accumulation Unit Value, End of Period - - - $ 8.32 $ 6.325
Number of Units Outstanding, End of Period - - - 99,646 90,807
AIM V.I. GROWTH-SERIES I/(2//)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 7.44
Accumulation Unit Value, End of Period - - - $ 7.44 $ 4.845
Number of Units Outstanding, End of Period - - - 101,927 83,950
AIM V.I. HIGH YIELD-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 10.87 $ 8.68
Accumulation Unit Value, End of Period - - $ 10.87 8.68 $ 8.129
Number of Units Outstanding, End of Period - - 115,113 105,396 83,541
AIM V.I. PREMIER EQUITY-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.03
Accumulation Unit Value, End of Period - - - $ 8.03 $ 6.922
Number of Units Outstanding, End of Period - - - 391,975 307,118
FEDERATED PRIME MONEY FUND II/(4)/
Accumulation Unit Value, Beginning of Period $ 10.43 $ 10.78 $ 11.15 $ 11.51 $ 12.03
Accumulation Unit Value, End of Period $ 10.78 $ 11.15 $ 11.51 $ 12.03 $ 12.297
Number of Units Outstanding, End of Period 240,430 266,876 268,039 284,797 496,709
FIDELITY VIP CONTRAFUND/(R)/ - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.40
Accumulation Unit Value, End of Period - - - $ 9.40 $ 8.137
Number of Units Outstanding, End of Period - - - 116,742 120,063
FIDELITY VIP EQUITY-INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.67
Accumulation Unit Value, End of Period - - - $ 8.67 $ 10.169
Number of Units Outstanding, End of Period - - - 298,717 63,333
FIDELITY VIP GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.06
Accumulation Unit Value, End of Period - - - $ 8.06 $ 7.042
Number of Units Outstanding, End of Period - - - 8,615 220,292
FIDELITY VIP HIGH INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.61
Accumulation Unit Value, End of Period - - - $ 8.61 $ 7.012
Number of Units Outstanding, End of Period - - - 42,836 23,979
FIDELITY VIP INDEX 500 - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.40
Accumulation Unit Value, End of Period - - - $ 9.40 $ 7.798
Number of Units Outstanding, End of Period - - - 116,742 220,428
43 PROSPECTUS
FIDELITY VIP OVERSEAS - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.61
Accumulation Unit Value, End of Period - - - $ 8.61 $ 6.698
Number of Units Outstanding, End of Period - - - 42,836 39,992
FTVIP TEMPLETON BOND - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 9.25 -
Accumulation Unit Value, End of Period /(//8//)/ - - $ 9.25 $ 9.06 -
Number of Units Outstanding, End of Period /(//8//)/ - - 23,888 - -
FTVIP TEMPLETON GLOBAL INCOME SECURITIES - CLASS 2/(2)/
Accumulation Unit Value, Beginning of Period /(//9//)/ - - - $ 10.00 $ 11.37
Accumulation Unit Value, End of Period - - - $ 11.37 $ 11.455
Number of Units Outstanding, End of Period - - - 22,202 18,984
FTVIP TEMPLETON GROWTH SECURITIES - CLASS 2/(//2)/
Accumulation Unit Value, Beginning of Period/(9)/ - - - $ 10.00 $ 13.57
Accumulation Unit Value, End of Period - - - $ 13.57 $ 13.196
Number of Units Outstanding, End of Period - - - 370,743 290,701
FTVIP TEMPLETON STOCK - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 12.91 -
Accumulation Unit Value, End of Period /(//8//)/ - - $ 12.91 $ 12.95 -
Number of Units Outstanding, End of Period /(//8//)/ - - 190,464 - -
MFS EMERGING GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.19
Accumulation Unit Value, End of Period - - - $ 8.19 $ 5.367
Number of Units Outstanding, End of Period - - - 180,090 143,998
MFS INVESTORS TRUST - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.86
Accumulation Unit Value, End of Period - - - $ 9.86 $ 8.164
Number of Units Outstanding, End of Period - - - 31,236 28,414
MFS NEW DISCOVERY - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 10.641
Number of Units Outstanding, End of Period - - - - -
MFS RESEARCH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.00
Accumulation Unit Value, End of Period - - - $ 9.00 $ 6.987
Number of Units Outstanding, End of Period - - - 83,109 74,997
MFS UTILITIES - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 9.117
Number of Units Outstanding, End of Period - - - - -
OPPENHEIMER AGGRESSIVE GROWTH/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 8.20
Accumulation Unit Value, End of Period - - - $ 8.20 $ 5.557
Number of Units Outstanding, End of Period - - - 111,564 103,565
OPPENHEIMER BALANCED/(3)//(10)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 11.13 $ 11.68
Accumulation Unit Value, End of Period - - $ 11.13 $ 11.68 $ 11.763
Number of Units Outstanding, End of Period - - 180,771 305,016 277,398
OPPENHEIMER CAPITAL APPRECIATION/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.13
Accumulation Unit Value, End of Period - - - $ 9.13 $ 7.863
Number of Units Outstanding, End of Period - - - 115,644 112,220
OPPENHEIMER GLOBAL SECURITIES/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.68
Accumulation Unit Value, End of Period - - - $ 9.68 $ 8.391
Number of Units Outstanding, End of Period - - - 119,614 121,589
44 PROSPECTUS
OPPENHEIMER MAIN STREET/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 9.01
Accumulation Unit Value, End of Period - - - $ 9.01 $ 7.973
Number of Units Outstanding, End of Period - - - 232,475 225,807
OPPENHEIMER STRATEGIC BOND/(3)/
Accumulation Unit Value, Beginning of Period - - $ 10.00 $ 10.24 $ 10.36
Accumulation Unit Value, End of Period - - $ 10.24 $ 10.36 $ 10.704
Number of Units Outstanding, End of Period - - 98,211 100,515 101,021
PUTNAM VT DISCOVERY GROWTH - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 10.135
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT DIVERSIFIED INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 9.861
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT GROWTH AND INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 9.901
Number of Units Outstanding, End of Period - - - - 1,194
PUTNAM GROWTH OPPORTUNITIES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 10.143
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT HEALTH SCIENCES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 9.792
Number of Units Outstanding, End of Period - - - - -
PUTNAM VT NEW VALUE - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period - - - - $ 10.000
Accumulation Unit Value, End of Period - - - - $ 10.117
Number of Units Outstanding, End of Period - - - - -
STI CLASSIC CAPITAL APPRECIATION/(4)/
Accumulation Unit Value, Beginning of Period $ 13.01 $ 17.52 $ 22.27 $ 23.87 $ 24.25
Accumulation Unit Value, End of Period $ 17.52 $ 22.27 $ 23.87 $ 24.25 $ 22.620
Number of Units Outstanding, End of Period 740,261 1,683,922 2,274,389 1.623,697 1,447,966
STI CLASSIC GROWTH AND INCOME/(2)/
Accumulation Unit Value, Beginning of Period - - - $ 10.00 $ 10.12
Accumulation Unit Value, End of Period - - - $ 10.12 $ 9.422
Number of Units Outstanding, End of Period - - - 54,035 62,398
STI CLASSIC INTERNATIONAL EQUITY/(5)/
Accumulation Unit Value, Beginning of Period $ 10.15 $ 11.69 $ 12.76 $ 13.69 $ 13.03
Accumulation Unit Value, End of Period $ 11.69 $ 12.76 $ 13.69 $ 13.03 $ 10.610
Number of Units Outstanding, End of Period 449,232 694,787 650,400 449,680 390,163
STI CLASSIC INVESTMENT GRADE BOND/(4)/
Accumulation Unit Value, Beginning of Period $ 10.43 $ 11.19 $ 12.07 $ 11.69 $ 12.26
Accumulation Unit Value, End of Period $ 11.19 $ 12.07 $ 11.69 $ 12.26 $ 13.189
Number of Units Outstanding, End of Period 187,763 604,179 847,001 612,043 593,732
STI CLASSIC MID-CAP EQUITY/(4)/
Accumulation Unit Value, Beginning of Period $ 11.77 $ 14.19 $ 15.01 $ 16.84 $ 16.11
Accumulation Unit Value, End of Period $ 14.19 $ 15.01 $ 16.84 $ 16.11 $ 16.310
Number of Units Outstanding, End of Period 329,138 671,132 584,235 474,428 419,051
STI CLASSIC SMALL CAP VALUE EQUITY/(6)/
Accumulation Unit Value, Beginning of Period $ 10.00 $ 9.76 $ 8.45 $ 7.93 $ 9.10
Accumulation Unit Value, End of Period $ 9.76 $ 8.45 $ 7.93 $ 9.10 $ 10.894
Number of Units Outstanding, End of Period 161,267 706,858 545,289 350,147 310,696
45 PROSPECTUS
STI CLASSIC VALUE INCOME STOCK/(4)/
Accumulation Unit Value, Beginning of Period $ 12.52 $ 15.65 $ 16.90 $ 16.18 $ 17.61
Accumulation Unit Value, End of Period $ 15.65 $ 16.90 $ 16.18 $ 17.61 $ 17.159
Number of Units Outstanding, End of Period 923,837 1,961,704 2,345,908 1,338,854 1,207,310
For the Years Beginning January 1* and Ending December 31, 2002 2003
----------------------
AIM V.I. BALANCED-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period $ 8.398 $ 6.861
Accumulation Unit Value, End of Period $ 6.861 $ 7.869
Number of Units Outstanding, End of Period 53,692 47,794
AIM V.I. CAPITAL APPRECIATION-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period $ 9.672 $ 7.211
Accumulation Unit Value, End of Period $ 7.211 $ 9.205
Number of Units Outstanding, End of Period 802,796 694,210
AIM V.I. CORE EQUITY-SERIES I/(//2)/
Accumulation Unit Value, Beginning of Period $ 6.325 $ 5.262
Accumulation Unit Value, End of Period $ 5.262 $ 6.453
Number of Units Outstanding, End of Period 81,215 55,434
AIM V.I. GROWTH-SERIES I/(2//)/
Accumulation Unit Value, Beginning of Period $ 4.845 $ 3.296
Accumulation Unit Value, End of Period $ 3.296 $ 4.264
Number of Units Outstanding, End of Period 65,366 45,883
AIM V.I. HIGH YIELD-SERIES I/(3)/
Accumulation Unit Value, Beginning of Period $ 8.129 $ 7.544
Accumulation Unit Value, End of Period $ 7.544 $ 9.520
Number of Units Outstanding, End of Period 66,195 64,844
AIM V.I. PREMIER EQUITY-SERIES I/(2)/
Accumulation Unit Value, Beginning of Period $ 6.922 $ 4.758
Accumulation Unit Value, End of Period $ 4.758 $ 5.865
Number of Units Outstanding, End of Period 246,068 223,766
FEDERATED PRIME MONEY FUND II/(4)/
Accumulation Unit Value, Beginning of Period $ 12.297 $ 12.290
Accumulation Unit Value, End of Period $ 12.290 $ 12.196
Number of Units Outstanding, End of Period 395,187 215,048
FIDELITY VIP CONTRAFUND/(R)/ - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 8.137 $ 7.277
Accumulation Unit Value, End of Period $ 7.277 $ 9.218
Number of Units Outstanding, End of Period 93,859 98,381
FIDELITY VIP EQUITY-INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 10.169 $ 8.324
Accumulation Unit Value, End of Period $ 8.324 $ 10.692
Number of Units Outstanding, End of Period 58,033 49,769
FIDELITY VIP GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 7.042 $ 4.856
Accumulation Unit Value, End of Period $ 4.856 $ 6.361
Number of Units Outstanding, End of Period 185,265 157,793
FIDELITY VIP HIGH INCOME - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 7.012 $ 7.149
Accumulation Unit Value, End of Period $ 7.149 $ 8.967
Number of Units Outstanding, End of Period 19,412 24,612
FIDELITY VIP INDEX 500 - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 7.798 $ 5.982
Accumulation Unit Value, End of Period $ 5.982 $ 7.574
Number of Units Outstanding, End of Period 199,494 185,134
46 PROSPECTUS
FIDELITY VIP OVERSEAS - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 6.698 $ 5.268
Accumulation Unit Value, End of Period $ 5.268 $ 7.447
Number of Units Outstanding, End of Period 32,488 22,213
FTVIP TEMPLETON BOND - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - -
Accumulation Unit Value, End of Period /(//8//)/ - -
Number of Units Outstanding, End of Period /(//8//)/ - -
FTVIP TEMPLETON GLOBAL INCOME SECURITIES - CLASS 2/(2)/
Accumulation Unit Value, Beginning of Period /(//9//)/ $ 11.455 $ 13.678
Accumulation Unit Value, End of Period $ 13.678 16.506
Number of Units Outstanding, End of Period 17,271 18,184
FTVIP TEMPLETON GROWTH SECURITIES - CLASS 2/(//2)/
Accumulation Unit Value, Beginning of Period/(9)/ $ 13.196 $ 10.601
Accumulation Unit Value, End of Period $ 10.601 13.806
Number of Units Outstanding, End of Period 280,084 242,109
FTVIP TEMPLETON STOCK - CLASS 2/(3)/
Accumulation Unit Value, Beginning of Period - -
Accumulation Unit Value, End of Period /(//8//)/ - -
Number of Units Outstanding, End of Period /(//8//)/ - -
MFS EMERGING GROWTH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 5.367 $ 3.504
Accumulation Unit Value, End of Period $ 3.504 $ 4.497
Number of Units Outstanding, End of Period 136,954 96,577
MFS INVESTORS TRUST - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 8.164 $ 6.359
Accumulation Unit Value, End of Period $ 6.359 $ 7.656
Number of Units Outstanding, End of Period 30,519 22,682
MFS NEW DISCOVERY - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period $ 10.641 $ 7.170
Accumulation Unit Value, End of Period $ 7.170 $ 9.450
Number of Units Outstanding, End of Period 5,692 4,958
MFS RESEARCH - INITIAL CLASS/(2)/
Accumulation Unit Value, Beginning of Period $ 6.987 $ 5.197
Accumulation Unit Value, End of Period $ 5.197 $ 6.387
Number of Units Outstanding, End of Period 55,026 54,504
MFS UTILITIES - INITIAL CLASS/(7)/
Accumulation Unit Value, Beginning of Period $ 9.117 $ 6.940
Accumulation Unit Value, End of Period $ 6.940 $ 9.296
Number of Units Outstanding, End of Period 3,754 1,439
OPPENHEIMER AGGRESSIVE GROWTH/(2)/
Accumulation Unit Value, Beginning of Period $ 5.557 $ 3.955
Accumulation Unit Value, End of Period $ 3.955 $ 4.895
Number of Units Outstanding, End of Period 87,854 56,970
OPPENHEIMER BALANCED/(3)//(10)/
Accumulation Unit Value, Beginning of Period $ 11.763 $ 10.387
Accumulation Unit Value, End of Period $ 10.387 $ 12.793
Number of Units Outstanding, End of Period 254,027 233,410
OPPENHEIMER CAPITAL APPRECIATION/(2)/
Accumulation Unit Value, Beginning of Period $ 7.863 $ 5.668
Accumulation Unit Value, End of Period $ 5.668 $ 7.315
Number of Units Outstanding, End of Period 104,457 80,421
OPPENHEIMER GLOBAL SECURITIES/(2)/
Accumulation Unit Value, Beginning of Period $ 8.391 $ 6.440
Accumulation Unit Value, End of Period $ 6.440 $ 9.078
Number of Units Outstanding, End of Period 103,773 80,720
47 PROSPECTUS
OPPENHEIMER MAIN STREET/(2)/
Accumulation Unit Value, Beginning of Period $ 7.973 $ 6.381
Accumulation Unit Value, End of Period $ 6.381 $ 7.970
Number of Units Outstanding, End of Period 163,581 147,506
OPPENHEIMER STRATEGIC BOND/(3)/
Accumulation Unit Value, Beginning of Period $ 10.704 $ 11.336
Accumulation Unit Value, End of Period $ 11.336 $ 13.191
Number of Units Outstanding, End of Period 100,250 75,920
PUTNAM VT DISCOVERY GROWTH - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 10.135 $ 7.034
Accumulation Unit Value, End of Period $ 7.034 $ 9.152
Number of Units Outstanding, End of Period - -
PUTNAM VT DIVERSIFIED INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 9.861 $ 10.293
Accumulation Unit Value, End of Period $ 10.293 $ 12.179
Number of Units Outstanding, End of Period 2,054 8,558
PUTNAM VT GROWTH AND INCOME - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 9.901 $ 7.905
Accumulation Unit Value, End of Period $ 7.905 $ 9.925
Number of Units Outstanding, End of Period 810 1,457
PUTNAM GROWTH OPPORTUNITIES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 10.143 $ 7.049
Accumulation Unit Value, End of Period $ 7.049 $ 8.549
Number of Units Outstanding, End of Period - 2,742
PUTNAM VT HEALTH SCIENCES - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 9.792 $ 7.688
Accumulation Unit Value, End of Period $ 7.688 $ 8.971
Number of Units Outstanding, End of Period 1,628 3,348
PUTNAM VT NEW VALUE - CLASS IB/(7)/
Accumulation Unit Value, Beginning of Period $ 10.117 $ 8.415
Accumulation Unit Value, End of Period $ 8.415 $ 10.988
Number of Units Outstanding, End of Period 1,515 1,481
STI CLASSIC CAPITAL APPRECIATION/(4)/
Accumulation Unit Value, Beginning of Period $ 22.620 $ 17.414
Accumulation Unit Value, End of Period $ 17.414 $ 20.330
Number of Units Outstanding, End of Period 1,179,605 991,698
STI CLASSIC GROWTH AND INCOME/(2)/
Accumulation Unit Value, Beginning of Period $ 9.422 $ 7.374
Accumulation Unit Value, End of Period $ 7.374 $ 9.193
Number of Units Outstanding, End of Period 64,219 70,030
STI CLASSIC INTERNATIONAL EQUITY/(5)/
Accumulation Unit Value, Beginning of Period $ 10.610 $ 8.514
Accumulation Unit Value, End of Period $ 8.514 $ 11.522
Number of Units Outstanding, End of Period 339,522 0
STI CLASSIC INVESTMENT GRADE BOND/(4)/
Accumulation Unit Value, Beginning of Period $ 13.189 $ 13.961
Accumulation Unit Value, End of Period $ 13.961 $ 14.244
Number of Units Outstanding, End of Period 541,750 258
STI CLASSIC MID-CAP EQUITY/(4)/
Accumulation Unit Value, Beginning of Period $ 16.310 $ 11.501
Accumulation Unit Value, End of Period $ 11.501 $ 14.705
Number of Units Outstanding, End of Period 362,074 307,054
STI CLASSIC SMALL CAP VALUE EQUITY/(6)/
Accumulation Unit Value, Beginning of Period $ 10.894 $ 10.610
Accumulation Unit Value, End of Period $ 10.610 $ 14.476
Number of Units Outstanding, End of Period 295,531 252,543
48 PROSPECTUS
STI CLASSIC VALUE INCOME STOCK/(4)/
Accumulation Unit Value, Beginning of Period $ 17.159 $ 14.040
Accumulation Unit Value, End of Period $ 14.040 $ 17.037
Number of Units Outstanding, End of Period 1,036,229 867,672
*Unless otherwise indicated.
1) The Accumulation Unit Values in this table reflect a Mortality and Expense
Risk Charge of 1.35% and an Administrative Expense Charge of 0.10%.
(2) Variable Sub-Accounts that commenced operations on April 27, 2000.
(3) Variable Sub-Accounts that commenced operations on January 14, 1999.
(4) Variable Sub-Account that commenced operations on October 2, 1995.
(5) Variable Sub-Accounts that commenced operations on November 7, 1996.
(6) Variable Sub-Accounts that commenced operations on October 21, 1997.
(7) Variable Sub-Accounts that commenced operations on August 30, 2001.
(8) End of period May 1, 2000.
(9) Beginning of period May 1, 2000.
(10) Effective May 1, 2004, the Oppenheimer Multiple Strategies Fund/VA changed
its name to the Oppenheimer Balanced Fund/VA. We have made a corresponding
change in the name of the Variable Sub-Account that invests in that Portfolio.
49 PROSPECTUS
APPENDIX B MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The Market Value Adjustment is based on the following:
I = the interest crediting rate for a Guarantee Period
N = the number of whole and partial years from the date we receive the
transfer, withdrawal, or death benefit request,
or from the Payout Start Date to the end of the Guarantee Period; and
J = the current interest crediting rate offered for a Guarantee Period of
length N on the date we determine the
Market Value Adjustment.
J will be determined by a linear interpolation between the current
interest rates for the next higher and lower
integral years. For purposes of interpolation, current interest rates
for Guarantee Periods not available under this
Contract will be calculated in a manner consistent with those which
are available.
The Market Value Adjustment factor is determined from the following formula:
.9x (I - J) x N
Any transfer, withdrawal, or death benefit (depending on your Contract) paid or
amount applied to an Income Plan from a Guarantee Period (except during the 30
day period after such Guarantee Period expires) will be multiplied by the Market
Value Adjustment factor to determine the Market Value Adjustment.
EXAMPLES OF MARKET VALUE ADJUSTMENT
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: This illustration assumes that premium taxes are not applicable.
EXAMPLE 1 (ASSUMES DECLINING INTEREST RATES)
Step 1. Calculate Contract $10,000.00 X (1.0450)/3 /= $11,411.66
Value at End of Contract Year
3:
Step 2. Calculate the Free .10 X $11,411.66 = $1,141.17
Withdrawal Amount:
Step 3. Calculate the .05 X ($10,000.00 - $1,141.17) = $442.94
Withdrawal Charge:
Step 4. Calculate the Market I = 4.5%
Value Adjustment J = 4.2%
N = 730 days = 2
--------
365 days
Market Value Adjustment Factor:.9 x (I - J) x
N =.9 x (.045 -.042) x (730/365) =.0054
Market Value Adjustment = Market Value
Adjustment Factor x Amount Subject to Market
Value Adjustment:
=.0054 X $11,411.66 = $61.62
Step 5. Calculate the amount $11,411.66 - $442.94 + $61.62 = $11,030.34
received by Customers as a
result of full withdrawal at
the end of Contract Year 3:
50 PROSPECTUS
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1. Calculate Contract Value $10,000.00 X (1.045)/3 /= $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Free .10% X ($11,411.66) = $1,141.17
Withdrawal Amount:
Step 3. Calculate the Withdrawal =.05 X ($10,000.00 - $1,141.17) = $442.94
Charge:
Step 4. Calculate the Market I = 4.5%
Value Adjustment: J = 4.8%
N = 730 days = 2
--------
365 days
Market Value Adjustment Factor:.9 x (I - J) x
N =
.9 x (.045 -.048) x (730/365) = -.0054
Market Value Adjustment = Market Value
Adjustment Factor x Amount Subject to Market
Value Adjustment:
= -.0054 X $11,411.66 = - $61.62
Step 5. Calculate the amount $11,411.66 - $442.94 - $61.62 = $10,907.10
received by Customers as a
result of full withdrawal at
the end of Contract Year 3:
51 PROSPECTUS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
- --------------------------------------------------------------------------------
THE CONTRACT
- --------------------------------------------------------------------------------
PURCHASE OF CONTRACTS
- --------------------------------------------------------------------------------
TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS)
- --------------------------------------------------------------------------------
CALCULATION OF ACCUMULATION UNIT VALUES
- --------------------------------------------------------------------------------
NET INVESTMENT FACTOR
- --------------------------------------------------------------------------------
CALCULATION OF VARIABLE INCOME PAYMENTS
- --------------------------------------------------------------------------------
CALCULATION OF ANNUITY UNIT VALUES
- --------------------------------------------------------------------------------
GENERAL MATTERS
- --------------------------------------------------------------------------------
Incontestability
- --------------------------------------------------------------------------------
Settlements
- --------------------------------------------------------------------------------
Safekeeping of the Variable Account's Assets
- --------------------------------------------------------------------------------
Premium Taxes
- --------------------------------------------------------------------------------
Tax Reserves
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
52 PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Glenbrook Life and Annuity Company ("Registrant") provide that
Registrant will indemnify its officers and directors for certain damages and
expenses that may be incurred in the performance of their duty to Registrant. No
indemnification is provided, however, when such person is adjudged to be liable
for negligence or misconduct in the performance of his or her duty, unless
indemnification is deemed appropriate by the court upon application.
ITEM 16. EXHIBITS
Exhibit No. Description
(1) Form of Underwriting Agreement (Incorporated herein by reference to the
initial filing of Registrant's Form S-1 Registration Statement (File No.
333-07275) dated June 28, 1996).
(2) None
(4) Form of Glenbrook Life and Annuity Flexible Premium Deferred Variable
Annuity Contract (Previously filed in Post-Effective Amendment No. 2 to this
Registration Statement (File No. 033-91916) dated February 25, 1997).
(5) (a)Opinion and consent of General Counsel re: Legality (Previously filed in
the initial filing of Registrant's Form N-4 Registration Statement (File No.
033-91916) dated May 4, 1995).
(5) (b) Opinion and Consent of General Counsel re: Legality (Previously filed in
Post-Effective Amendment No. 6 to this Registration Statement (File No.
033-91916) dated April 29, 1999).
(8) None.
(11) None.
(12) None.
(15) None.
(23)(a) Independent Auditors' Consent filed herewith.
(24)(a) Powers of Attorney for Michael J. Velotta, and Samuel H. Pilch
(Previously filed in Post-Effective Amendment No. 7 to this Registration
Statement (File No. 033-91916) dated May 2, 2000).
(24)(b) Powers of Attorney for Marla G. Friedman, John C. Lounds and J. Kevin
McCarthy (Previously filed in Post-Effective Amendment No. 8 to this
Registration Statement (File No. 033-91916) dated April 26, 2001).
(24)(c) Power of Attorney for Steven E. Shebik (Previously filed in
Post-Effective Amendment No. 9 to this Registration Statement (File No.
033-91916) dated April 29, 2002.)
(24)(d) Power of Attorney for Casey J. Sylla (Previously filed in Post-Effective
Amendment No. 10 to this Registration Statement (File No. 033-91916) dated April
10, 2003.)
(24) (e) Power of Attorney for Kevin R. Slawin filed herewith.
(25) None.
(26) None.
(27) Not applicable.
(99) (a) Form of Resolution of Board of Directors (Previously filed in
Post-Effective Amendment No. 1 to this Registration Statement (File No.
033-91916) dated April 9, 1996).
(99) (b) Experts filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof ) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) (a) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(3)(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing if the registrant's annual report pursuant to Section 13(a)
of 15 (d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Glenbrook Life and Annuity Company, pursuant to the foregoing
provisions, 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this amended registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Northfield, State of Illinois on the 1st day of April, 2004.
GLENBROOK LIFE AND ANNUITY COMPANY
(REGISTRANT)
By: /s/ MICHAEL J. VELOTTA
-------------------------
Michael J. Velotta
Vice President, Secretary
And General Counsel
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in their
capacities and on the 1st day of April, 2004.
*/JOHN C. LOUNDS Director
- -----------------------
John C. Lounds
*/J. KEVIN MCCARTHY Director
- -----------------------
J. Kevin McCarthy
*/SAMUEL H. PILCH Controller and Group Vice
- ---------------------- President
Samuel H. Pilch (Principal Accounting Officer)
*/STEVEN E. SHEBIK Director, Vice President and
- ------------------------ Chief Financial Officer
Steven E. Shebik (Principal Financial Officer)
*/KEVIN R. SLAWIN Director and Vice President
- -----------------------
Kevin R. Slawin
CASEY J. SYLLA Director, President and Chief
- ----------------------- Executive Officer
Casey J. Sylla (Principal Executive Officer)
/s/MICHAEL J. VELOTTA Director, Vice President, General
- ---------------------- Counsel and Secretary
Michael J. Velotta
*/ By Michael J. Velotta, pursuant to Power of Attorney filed previously or
herewith.
Exhibit Index
Exhibit Description
23(a) Independent Auditors' Consent
24 (e) Power of Attorney for Kevin R. Slawin
99(b) Experts