[LETTERHEAD OF FIRST VARIABLE LIFE INSURANCE COMPANY APPEARS HERE]
A STOCK LIFE INSURANCE COMPANY
FIRST VARIABLE LIFE INSURANCE COMPANY (the "Company") will pay the Death Benefit
Proceeds to the Beneficiary upon receipt at our Variable Service Center of due
proof of the death of the Surviving Insured while this Policy was in force. On
the Maturity Date, the Company will pay the Owner the Cash Surrender Value if
either of the Insureds is living and the Policy is in force.
This Policy is issued in return for the Application and payment of the initial
Premium Payment. A copy of the Application is attached and made a part of the
Policy.
TEN DAY FREE LOOK-- Within ten (10) days of the date of receipt of this Policy,
it may be returned by delivering or mailing it to the Company at its Variable
Service Center or to the agent through whom it was purchased. When the Company
receives this Policy, it will be voided as if it had never been in force. The
Company will refund the Account Value, and any deductions for Monthly Charges
and Premium Load, computed at the end of the Valuation Period during which this
Policy is received by the Company at its Variable Service Center.
/s/ Arnold R. Bergman /s/ John M. Soukup
Secretary President
THIS IS A LEGAL CONTRACT -- READ IT CAREFULLY.
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
POLICY, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE VARIABLE PROVISIONS OF THIS POLICY BEGIN ON PAGE __
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
JOINT LEGACY LIFE INSURANCE POLICY
NON-PARTICIPATING
TABLE OF CONTENTS
Begins on
Page
POLICY DATA PAGES PD - 1
SECTION 1. DEFINITIONS 1
SECTION 2. PREMIUM PAYMENTS
SECTION 3. DEATH BENEFITS
SECTION 4. POLICY OPTIONS
SECTION 5. TRANSFERS
SECTION 6. ACCOUNT VALUE
SECTION 7. CHARGES AND DEDUCTIONS
SECTION 8. SURRENDER AND WITHDRAWALS
SECTION 9. LOANS
SECTION 10. OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
SECTION 11. GENERAL PROVISIONS
SECTION 12. PAYOUT OPTIONS
PAYOUT OPTION TABLES
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
POLICY NUMBER: [VUL12345] POLICY DATE: [May 15, 1998]
OWNER: [JOHN DOE] MATURITY DATE: [May 15, 2048]
INSURED LIFE: [JOHN DOE] SECOND INSURED LIFE: [JANE DOE]
AGE AND SEX: [45 Male] AGE AND SEX: [45 Female]
RATE CLASS: [Non-Smoker] RATE CLASS: [Non-Smoker]
INSURANCE CLASS: [Standard] INSURANCE CLASS: [Standard]
JOINT AGE: 45
FACE AMOUNT: [$100,000]
DEATH BENEFIT OPTION [Option A, unless changed as the Policy provides.]
MINIMUM FACE AMOUNT: [$ 25,000]
BENEFICIARY: [MARY DOE]
PREMIUM:
MINIMUM INITIAL PREMIUM: [2 Monthly Minimum Premiums]
MONTHLY MINIMUM PREMIUM: [$______]
DEATH BENEFIT GUARANTEE PERIOD: [First 10 Policy Years; reduce for over Joint Age 70]
INITIAL GUIDELINE LEVEL PREMIUM: [$ __________]
PLANNED PREMIUM/FREQUENCY: [$_______/annually]
POLICY OPTIONS:
SEPARATE ACCOUNT: SEPARATE ACCOUNT VL
[VIST Small Cap Growth Portfolio] [VIST Multiple Strategies Portfolio]
[VIST World Equity Portfolio] [VIST High Income Bond Portfolio]
[VIST Growth Portfolio] [VIST Government Bond Portfolio]
[VIST Growth and Income Portfolio] [Federated Prime Money Fund II Portfolio]
[VIST Matrix Equity]
FIXED ACCOUNT: [Guaranteed Interest Rate: 4.0%]
DELAYED INVESTMENT START DATE: [Not Applicable]
DELAYED INVESTMENT START POLICY OPTION: [Not Applicable]
CHARGES AND DEDUCTIONS:
PREMIUM CHARGE: [Guaranteed not to exceed 6.75% of each Premium
Payment. On the Policy Date, the Premium Charge is 0%
of each Premium Payment. N.B. This combines a 5%
premium load with a 1.75% DAC tax charge.]
PREMIUM TAX CHARGE: [Guaranteed not to exceed 2.5% of each Premium
Payment. On the Policy Date, the Premium Tax Charge
is 0% of each Premium Payment.]
PD-1
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
CHARGES AND DEDUCTIONS (CONTINUED):
DAILY ASSET CHARGE: [The daily asset charge on net assets in each Sub-Account
is guaranteed not to exceed an annualized rate of 1.20%.
On the Policy Date, the daily asset charge is equal to an
annualized rate of 0.90% on the net assets in each
Sub-Account.]
MONTHLY ADMINISTRATIVE CHARGE: [Guaranteed not to exceed $16.00 each Policy Month. On
the Policy Date, the charge is $10.00 each Policy Month.]
MONTHLY POLICY BENEFIT CHARGE: [Guaranteed not to exceed an annualized rate of 0.30% of
the Policy's Account Value. ]
MONTHLY POLICY FEE: [On the Policy Date, the monthly fee is $_____. The fee
will increase if the Face Amount is increased.]
MONTHLY COST OF INSURANCE CHARGE: [The maximum rate is based on TABLE OF GUARANTEED RATES
for the Joint Age and Net Amount at Risk.]
ADDITIONAL BENEFIT RIDERS:
[Estate Protection Rider:] An additional amount is added to the monthly cost of
insurance charge for the first 4 Policy Years, as shown
in the Table of Estate Protection Rider charges.
[Joint Term Life Insurance Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of Joint Term Life Insurance Rider charges.
[First-to-Die Term Life Insurance Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of First-to-Die Term Life Insurance Rider charges.
[Other Insured Term Life Insurance Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of Other Insured Term Life Insurance Rider charges.
[Joint Accidental Death Benefit Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of Joint Accidental Death Benefit Rider charges.
[Cash Deposit Benefit Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of Cash Deposit Benefit Rider charges.
[Waiver of Monthly Deductions Rider:] An additional amount is added to the monthly cost of
insurance charge for the amount and period shown in the
Table of Waiver of Monthly Deductions Rider charges.
PD-2
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
CHARGES AND DEDUCTIONS (CONTINUED):
TRANSACTION CHARGES:
Withdrawals: [Guaranteed not to exceed the lesser of 2% of the
amount withdrawn or $25 per transaction. On the
Policy Date, the charge is $0 per transaction.]
Transfers: [Guaranteed not to exceed $10 per transaction for
each transfer in excess of 12 in any Policy Year.
On the Policy Date, there is no charge for
transfers, regardless of the number effected in
any Policy Year.]
Surrender: [The surrender charge applicable to the initial
Face Amount is the Surrender Charge Amount
multiplied by the applicable Surrender Charge
Percentage shown.]
Surrender Charge Amount: [$_____, equal to 100% of 12 Monthly Minimum
Premiums up to a maximum of $60 per $1,000 of Face
Amount for standard rated policies.]
Surrender Charge Percentages:
- ---------------------------------------------------------------------------------------------------------------
Policy Year 1 2 3 4 5 6 7 8 9 10 11+
- ---------------------------------------------------------------------------------------------------------------
Percentage 62.5 125 125 125 125 100 80 60 42 20 0
- ---------------------------------------------------------------------------------------------------------------
[An increase in Face Amount will result in a new Surrender Charge Amount and set
of surrender charges for 10 years after the effective date of the increase. No
surrender charge is imposed upon a partial decrease in Face Amount, but the full
surrender charge will remain in effect for a subsequent surrender. Additional
transaction charges, guaranteed not to exceed $250, may be imposed for
surrenders made for the benefit of a third party assignee of the Policy pursuant
to section 1035 of the Internal Revenue Code.]
TRANSFERS:
FREE TRANSFERS: [Guaranteed minimum of 12 per Policy Year. On the Policy Date,
an unlimited number of transfers are permitted.]
MINIMUM ACCOUNT VALUE TO BE TRANSFERRED: [$100 or the Account Value in the
selected Policy Option, if less]
RESTRICTIONS ON TRANSFERS FROM THE FIXED ACCOUNT: [Unless otherwise permitted by
the Company, Account Value to be transferred from the Fixed Account in any
Policy Year may not exceed the greater of: (1) 50% of Fixed Account Value on the
Policy Date for transfers during the first Policy Year, or, (2) for transfers
after the first Policy Year, the greater of (a) 50% of Fixed Account Value on
the immediately preceding Policy Anniversary; or (b) 100% of the Fixed Account
Value transferred to other Policy Options during the immediately preceding
Policy Year. No transfers of Account Value are permitted from the Fixed Account
to other Policy Options after payments begin under a Payout Option.]
VARIABLE SERVICE CENTER: [The Variable Service Center on the Policy Date is
located at P.O. Box 1317, Des Moines, IA 50305-1317]
PD-3
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
LIMITATIONS ON WITHDRAWALS OF CASH SURRENDER VALUE:
MINIMUM WITHDRAWAL: [$100.00]
FREQUENCY: [No withdrawals are permitted in the first Policy
Year.]
IMPACT ON DEATH BENEFIT: [No withdrawal may be made if the Death Benefit
would be reduced below the Minimum Face Amount or
below the amount required to qualify the Policy
as a life insurance contract.
IMPACT ON REMAINING CASH SURRENDER [No withdrawal may be made if the remaining Cash
VALUE: Surrender Value would be less than the greater
of: (a) $1,000 or (b) 3 times the most recent
Monthly Deduction.
LIMITATIONS ON REDUCTIONS IN FACE AMOUNT OR CHANGES IN DEATH BENEFIT OPTIONS:
FREQUENCY: [No reductions in Face Amount or change in Death
Benefit Options may be requested in the first
Policy Year. After the first Policy Year, the
Death Benefit Option may be changed no more
frequently than once per Policy Year.]
IMPACT ON DEATH BENEFIT: [No reductions in Face Amount or change in Death
Benefit Options may be made if the Death Benefit
would be reduced below the Minimum Face Amount,
or below the amount required to qualify the
Policy as a life insurance contract.]
LOANS:
MINIMUM LOAN: [$100]
LOAN INTEREST RATE:
Preferred Loan Interest Rate: [Equal to an annual rate of 4.0%]
Maximum Loan Interest Rate: [Equal to an annual rate of 6.0%]
LOAN ACCOUNT CREDITED INTEREST RATE: [4% per annum]
BONUSES:
PREMIUM VALUE BONUS:
Premium Value Bonus Factors:
Rate/Insurance Class: [Joint Non-Smoker/Joint
Smoker, Preferred, or Standard
Eligible Policy Years: [Year 9 and after]
Non - Guaranteed Premium Value
Percentage: [5%]
Guaranteed Premium Value Percentage:
[3%]
CASH VALUE BONUS:
-----------------------------------------------------------------------------
Non -Guaranteed Cash Value Bonus [Cash Accumulation [Cash Value Bonus Percentage Years
Factors: Value] Policy Years 9 and after] 21+
-----------------------------------------------------------------------------
[Less than $25,000] [.00%] 0
-----------------------------------------------------------------------------
[$25,000 to $100,000] [.10%] .20
-----------------------------------------------------------------------------
[$100,001 to 200,000] [.20] .40
-----------------------------------------------------------------------------
$200,000 and more .30 .50
---------------------------------------------------------------------------
PD-4
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
POLICY EXCHANGES:
Alternative 1 Alternative 1A:
[RIGHT TO EXCHANGE FOR TWO POLICIES: [The Company will split the Death Benefit and Cash Accumulation Value
of this Policy on the basis stated in the Policy Exchange Endorsement.]
Alternative 1B:
[The Company will split the Death Benefit and Cash Accumulation Value
of this Policy on the basis stated in the attached application. The
Owner must make a request in the manner and during the period
described in the Policy Exchange Endorsement.]
Alternative 2 Alternative 2
[NO RIGHT TO EXCHANGE FOR TWO [The Owner may not elect to split either the Death Benefit or the Cash
POLICIES:] Accumulation Value of this Policy.]
PD-5
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES:
(As a percent of Account Value)
MINIMUM MINIMUM MINIMUM
DEATH DEATH DEATH
JOINT BENEFIT JOINT BENEFIT JOINT BENEFIT
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
35 or less 250 57 142 79 105
36 250 58 138 80 105
37 250 59 134 81 105
38 250 60 130 82 105
39 250 61 128 83 105
40 250 62 126 84 105
41 243 63 124 85 105
42 236 64 122 86 105
43 229 65 120 87 105
44 222 66 119 88 105
45 215 67 118 89 105
46 209 68 117 90 105
47 203 69 116 91 104
48 197 70 115 92 103
49 191 71 113 93 102
50 185 72 111 94 101
51 178 73 109 95 100
52 171 74 107
53 164 75 105
54 157 76 105
55 150 77 105
56 146 78 105
The Joint Age is determined by the Company based on the age, sex, Insurance
Class and Rate Class for both the First Insured Life and the Second Insured
Life. The Joint Age is not adjusted upon the first death.
THE MINIMUM BENEFIT PERCENTAGES ARE DETERMINED TO COMPLY WITH SECTION 7702 OF
THE INTERNAL REVENUE CODE BUT ARE NOT GUARANTEED.
PD-6
[CAPITAL LEGACY VUL]
POLICY DATA PAGES
TABLE OF GUARANTEED MONTHLY COST OF INSURANCE RATES*
Joint Insured Lives
Rate/Insurance Classes: Male, Non-Smoker, Preferred
Female, Non-Smoker, Preferred
- ---------------------------------------------------------------------
Joint Joint Joint
Policy Insured Policy Insured Policy Insured
Year Lives Year Lives Year Lives
- ---------------------------------------------------------------------
0 19 38
- --------------------------------------------------------------------
1 20 39
- --------------------------------------------------------------------
2 21 40
- --------------------------------------------------------------------
3 22 41
- --------------------------------------------------------------------
4 23 42
- --------------------------------------------------------------------
5 24 43
- --------------------------------------------------------------------
6 25 44
- --------------------------------------------------------------------
7 26 45
- --------------------------------------------------------------------
8 27 46
- --------------------------------------------------------------------
9 28 47
- --------------------------------------------------------------------
10 29 48
- --------------------------------------------------------------------
11 30 49
- --------------------------------------------------------------------
12 31 50
- ---------------------------------------------------
13 32
- ---------------------------------------------------
14 33
- ---------------------------------------------------
15 34
- ---------------------------------------------------
16 35
- ---------------------------------------------------
17 36
- ---------------------------------------------------
18 37
- ---------------------------------------------------
* Per $1,000 of Net Amount at Risk. For cost of insurance rates which are not
a standard rate class, the Table will be increased by rating factors and/or
additional monthly charges.
PD-7
SECTION 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCOUNT The Fixed Account and/or one or more of the Sub-
Accounts of the Separate Account.
ACCOUNT VALUE The sum of the Owner's interest (i) in the Sub-Account
of the Separate Account; (ii) in the Fixed Account;
and, if there is an outstanding Policy loan, (iii) in
the Loan Account.
ACCUMULATION UNIT A unit of measurement used to calculate the Account
Value of a Sub-Account of the Separate Account.
ACCUMULATION UNIT VALUE The value of an Accumulation Unit on a Business Day.
BENEFICIARY The person, persons or entity who will receive the
Death Benefit upon the death of the Surviving Insured.
The Beneficiary is stated in the application for this
Policy, unless changed in accordance with the Policy
provisions.
BUSINESS DAY Each day the New York Stock Exchange is open for
trading, which is Monday through Friday, except for
normal business holidays.
COMPANY First Variable Life Insurance Company.
CASH ACCUMULATION VALUE Account Value minus any existing Indebtedness.
CASH SURRENDER VALUE The amount available upon surrender of the Policy
which is equal to the Account Value less all
Indebtedness; and reduced by any applicable Surrender
Charges due upon surrender.
DEATH BENEFIT The amount of insurance provided under a Policy on the
life of the second to die of the Insureds.
DEATH BENEFIT PROCEEDS The amount payable on the death of the second to die
of the Insureds. This amount is the Death Benefit less
Indebtedness and less any due and unpaid Monthly
Deduction(s).
FACE AMOUNT A dollar amount used to determine the Death Benefit
under a Policy. It is shown on the Policy Data Pages.
FIXED ACCOUNT The Fixed Account is the non-loaned portion of the
Account Value that is part of the Company's general
account. The Fixed Account provides guarantees of
principal and interest.
INDEBTEDNESS All amounts owed to the Company by the Owner. This
includes all outstanding loans on this Policy,
including any interest due or accrued.
1
INSUREDS The Insured Person and Second Insured Person as shown
on the Policy Data Pages.
JOINT AGE The joint equivalent age of the Insureds that is used
to calculate the costs and benefits of this Policy.
The Joint Age is determined by the Company on the
Policy Date and increases by 1 on each Policy
Anniversary.
LOAN ACCOUNT An account established in the Company's general
account for any amounts requested for loans.
MATURITY DATE The Policy Anniversary on or following the 95th
birthday of the younger of the Insureds. The date on
which the Policy will mature is shown on the Policy
Data Pages.
MONTHLY DEDUCTION The amount deducted from Account Value on the first
Business Day of each Policy Month to cover charges and
expenses incurred in connection with the Policy and
any additional benefit riders.
NET AMOUNT AT RISK The amount of insurance coverage determined under this
Policy for each Policy Month.
NET PREMIUM The amounts paid for a Policy, less the applicable
Premium Load, if any, shown on the Policy Data Pages.
OWNER The person, persons or entity entitled to all
ownership rights under the Policy. The Owner is stated
on the application for this Policy, unless changed in
accordance with Policy provisions.
POLICY ANNIVERSARY An anniversary of the Policy Date.
POLICY DATE The date on which the Policy became effective. The
Policy Date is shown on the Policy Data Pages. Policy
Months and Policy Years are measured from this date.
POLICY OPTION The Fixed Account or any of the Sub-Accounts of the
Separate Account which can be selected under the
Policy.
POLICY YEAR A one year period starting from the Policy Date and
from each Policy Anniversary.
PORTFOLIO The separate and distinct class of shares that is
available as an underlying investment of a Sub-
Account. On the Policy Date, each Sub-Account invests
exclusively in a Portfolio stated on the Policy Data
Pages.
PREMIUM PAYMENT An amount paid to the Company to provide benefits
under this Policy.
SEPARATE A separate investment account of the Company,
ACCOUNT designated on the Policy Data Pages.
2
SUB-ACCOUNT A segment of the Separate Account.
SURVIVING INSURED The insured person who remains alive after the first
death of the Insureds that occurs while the Policy is
in force.
VALUATION PERIOD The period of time between the close of one Business
Day and the close of business for the next succeeding
Business Day.
VARIABLE SERVICE CENTER The Company's administrative service center for this
Policy. The mailing address for the Variable Service
Center on the Policy Date is shown on the Policy Data
Pages, or such other location as we may designate.
Other terms are defined in the Policy.
SECTION 2 PREMIUM PAYMENTS
- --------------------------------------------------------------------------------
GENERAL The Minimum Initial Premium Payment shown on the
Policy Data Pages is due on or before the Policy Date.
The Owner may make additional Premium Payments at any
time during the lifetime of either of the Insureds,
subject to the Premium Limitations.
PLANNED PREMIUMS The Owner may elect, within limits specified by the
Company, to pay premium on a pre-determined schedule.
The Planned Premiums on the Policy Date, if any, are
shown on the Policy Data Pages.
PREMIUM LIMITATIONS The Company will refuse any premium payment that may
cause this Policy not to be treated as life insurance
for tax purposes. The Company reserves the right to
require satisfactory evidence of insurability before
accepting any additional Premium Payment that would
increase the then current Death Benefit. The Company
may require that any Indebtedness be repaid prior to
accepting any additional premium.
3
ALLOCATION OF PREMIUM Each Premium Payment is allocated to the Fixed Account
and/or one or more Sub-Accounts of the Separate
Account after deduction of the Premium Load, if any,
shown on the Policy Data Pages. The portion of a Net
Premium allocated to a Sub-Account of the Separate
Account is converted into Accumulation Units. The
number of Accumulation Units in a Sub-Account credited
to this Policy is determined by dividing (a) by (b),
where:
(a) is the amount of Premium Payment to be allocated
to that Sub-Account; and
(b) is the dollar value of the Accumulation Unit Value
for that Sub-Account.
It is generally calculated by the Company as of the
end of the Valuation Period during which the Company
receives a Premium Payment at its Variable Service
Center.
Except as described in the Delayed Investment Start
Date paragraph, the initial Net Premium is allocated
in accordance with the selection made by the Owner in
the application. Unless otherwise changed by the
Owner, any additional Premium Payment is allocated in
the same manner as the initial Premium Payment.
Allocation of Premium Payments is subject to the terms
and conditions imposed by the Company.
DELAYED INVESTMENT If a Delayed Investment Start Date is shown on the
START DATE Policy Data Pages, the Premium Payment for this
Policy, less the Premium Load, will be allocated to
the Delayed Investment Start Policy Option shown on
the Policy Data Pages in lieu of allocation to any
other Sub-Account Policy Option. Account Value will be
transferred from the Delayed Investment Start Policy
Option on the Business Day immediately following the
Delayed Investment Start Date to any other Sub-Account
Policy Option in accordance with the initial
instructions of the Owner.
The allocation of a Premium Payment to the Fixed
Account is not affected by a Delayed Investment Start
Date. Any Premium Payment received after a Delayed
Investment Start Date will be allocated to any Policy
Option then available under this Policy in accordance
with the Owner's direction.
4
MONTHLY MINIMUM PREMIUM The Monthly Minimum Premium on the Policy Date is
shown on the Policy Data Pages. Payment of a
sufficient amount of Monthly Minimum Premiums
guarantees that the Policy will remain in force during
the Death Benefit Guarantee Period shown on the Policy
Data Pages, as long as there are no withdrawals or
Policy loans taken during that time. Payment of
Monthly Minimum Premiums is sufficient if, on the
first Business Day of each Policy Month during the
Death Benefit Guarantee Period, (a) is equal to or
greater than (b) where:
(a) is the sum of Premium Payments, minus any
Indebtedness, minus any withdrawals and any applicable
transaction charges deducted; and
(b) is the Monthly Minimum Premium multiplied by the
number of elapsed Policy Months, plus the Monthly
Minimum Premium for the current Policy Month.
The Monthly Minimum Premium amount will be increased
if the Face Amount is increased, or other benefits
added, during the Death Benefit Guarantee Period.
GRACE PERIOD If sufficient Monthly Minimum Premiums are not paid
during the Death Benefit Guarantee Period, the Policy
will enter a grace period on the first Business Day of
any Policy Month where the Cash Surrender Value is not
sufficient to cover the current Monthly Deduction and
accrued interest on any Policy loans. After the Death
Benefit Guarantee Period, the Policy will enter a
grace period on the first Business Day of any Policy
Month where the Cash Surrender Value is not sufficient
to cover the current Monthly Deduction and accrued
interest on Policy loans.
A grace period of 61 days from the applicable Business
Day will be allowed for the payment of a minimum
required premium. The Company will send a grace period
notice to the Owner's last known address that will
show the minimum required premium for the grace
period. This is the amount necessary to cover the
Monthly Deduction(s) due under the Policy plus an
amount equal to three times the current Monthly
Deduction. If the minimum required premium is not paid
by the end of the grace period, the Policy will lapse
without value. If the Surviving Insured dies during
the grace period, the Company will pay the Death
Benefit Proceeds.
5
REINSTATEMENT If a grace period ends and the Owner has neither paid
the minimum required premium nor surrendered the
Policy for its Cash Surrender Value, the Owner may
reinstate the Policy by:
(a) submitting a written request at any time within 3
years after the end of the grace period and prior
to the Maturity Date;
(b) providing evidence of insurability satisfactory to
the Company on both Insureds;
(c) paying a sufficient Premium to cover all charges
that were due and unpaid during the grace period;
(d) paying an additional Premium sufficient the keep
the Policy in force for 3 Policy Months from the
date of reinstatement; and
(e) repaying any Indebtedness against the Policy that
existed at the end of the grace period.
No reinstatement is permitted if only the Surviving
Insured is alive at the time of the request.
A reinstatement will be effective on the first
business Day of the Policy Month beginning on or after
the Company's approval. The Account Value of the
reinstated Policy will be the Account Value at the
time of lapse plus the amount in (d) above. Other
terms and conditions of the reinstated policy will be
subject to the Company's administrative procedures.
The Surrender Charges set forth on the Policy Data
pages will be reinstated as of the Policy Year in
which the Policy lapsed.
6
SECTION 3 DEATH BENEFITS
- --------------------------------------------------------------------------------
GENERAL This Policy is designed to provide a Death Benefit
that is payable when the last of the Insureds dies. As
long as the Policy remains in force, a Death Benefit
is payable upon the death of the Surviving Insured.
Upon receipt of proof of death of both Insureds and
receipt of any applicable Payout Option election, the
Company will pay the Death Benefit Proceeds to the
Beneficiary. The Owner may elect for the Death Benefit
Proceeds to be paid in a single sum or under a Payout
Option by written request to the Company at its
Variable Service Center. The Company must receive the
election at its Variable Service Center before the
death of the Surviving Insured. If no Payout Option is
in effect upon the death of the Surviving Insured, the
Beneficiary may elect a Payout Option under the Payout
Option provisions of this Policy in lieu of a single
sum.
The Death Benefit is based on the Death Benefit Option
in effect on the date of the Surviving Insured's
death; and any increases or decreases to the Face
Amount.
DEATH BENEFIT OPTIONS DEATH BENEFIT OPTION A. Under this option, the Death
Benefit is the greater of: (a) the Face Amount or (b)
the Account Value times the applicable percentage of
Death Benefit factors shown on the Policy Data Pages.
DEATH BENEFIT OPTION B. Under this option, the Death
Benefit is the greater of: (a) the Face Amount plus
the Account Value or (b) the Account Value times the
applicable percentage of Death Benefit factors shown
on the Policy Data Pages.
The Death Benefit Option in effect on the Policy Date
is shown on the Policy Data pages.
7
CHANGE IN DEATH BENEFIT DEATH BENEFIT OPTION. The Owner may make a written
OPTIONS AND FACE AMOUNT request to the Variable Service Center to change the
Death Benefit Option, subject to any limitations shown
on the Policy Data pages.
A change from Death Benefit Option A to Death Benefit
Option B will cause the Face Amount to decrease by the
amount of the Account Value.
The Company reserves the right to require satisfactory
evidence of insurability on both Insureds before
permitting a change from Death Benefit Option B to
Death Benefit Option A. If approved, the change will
cause the Face Amount to be increased by the amount of
the Account Value.
FACE AMOUNT INCREASES. During the lifetime of both
Insureds, the Owner may make a written request to the
Variable Service Center to increase the Face Amount,
subject to any limitations shown on the Policy Data
pages.
For a change that would increase the Face Amount, the
Company may require evidence of insurability on either
or both Insureds. The Company may restrict any
requested increases in Face Amount to minimums and
maximums that vary with the Insureds' ages, Insurance
Classes and Rate Classes. If the Face Amount is
increased during the Death Benefit Guarantee Period
shown on the Policy Data Pages, the Monthly Minimum
Premium will be increased. The increase in Monthly
Minimum Premium will begin on the first Business Day
of the Policy Month on which the increase in Face
Amount is effective. An increase in Monthly Minimum
Premium will remain in effect for the remainder of the
Death Benefit Guarantee Period. The Company will
calculate the increase in Monthly Minimum Premium
based on the Insureds' ages, sex, additional Face
Amount, Insurance Classes and Rate Classes.
FACE AMOUNT DECREASES. The Owner may make a written
request to the Variable Service Center to decrease the
Face Amount, subject to any limitations shown on the
Policy Data pages.
Any reduction of Face Amount will be in the following
order:
. against the most recent increase in insurance; then
. against the next most recent increases; then
. against the initial Face Amount.
EFFECTIVE DATE OF CHANGE. A change will take effect on
the first Business Day of the Policy Month coinciding
with or next following the date the Company approves
the request.
8
PAYMENT OF DEATH BENEFIT The amount of the Death Benefit is determined on the
PROCEEDS date the Company receives proof of the death of both
Insureds. The Death Benefit Proceeds actually paid to
the Beneficiary are equal to the Death Benefit reduced
by any Indebtedness and any due and unpaid Monthly
Deductions and increased by the amounts, if any,
payable under any optional additional benefit riders
in effect on the date of the Insured's death. The
Death Benefit Proceeds will be determined by the
Company as of the date of the Surviving Insured's
death. All Death Benefits will be paid in accordance
with applicable law or regulations governing death
benefit payments.
The Company will require due proof of death before
payment of a Death Benefit. For these purposes, "due
proof of death" means:
(a) a certified death certificate;
(b) a certified decree of a court of competent
jurisdiction as to the finding of death; or
(c) any other proof satisfactory to the Company.
BENEFICIARY OTHER THAN Unless the Owner provides otherwise, the Death Benefit
A SINGLE PERSON will be paid in equal shares to the survivor(s) as
follows:
(a) to the primary Beneficiary(ies) who survive the
death of the Insured; or if there are none,
(b) to the contingent Beneficiary(ies) who survive the
death of the Insured; or if there are none,
(c) to the estate of the Owner.
SECTION 4 POLICY OPTIONS
- --------------------------------------------------------------------------------
THE SEPARATE ACCOUNT The Separate Account is a separate investment account
AND THE SUB-ACCOUNTS of the Company. It is shown on the Policy Data Pages.
The Company has allocated a part of its assets for
this and certain other policies to the Separate
Account. The assets of the Separate Account are the
property of the Company. The Company guarantees that
the portion of the Separate Account assets equal to
the Company's reserves and other policy liabilities
with respect to the Separate Account shall not be
chargeable with the liabilities arising out of any
other business the Company may conduct.
Assets of the Separate Account are valued at their
fair market value in accordance with procedures of the
Company. The Separate Account is segmented into Sub-
Accounts. Each Sub-Account available under this Policy
on the Policy Date invests its assets exclusively in
shares of one of the Portfolios shown on the Policy
Data Pages.
The investment policy of the Separate Account shall
not be changed without approval of the Insurance
Commissioner of the Company's state of domicile. On
the Policy Date, the Company's state of domicile is
Arkansas. A statement of the approval process is on
file with that state's Insurance Department.
9
SUB-ACCOUNT The Owner may allocate Net Premium to one or more of the Sub-
INVESTMENT Accounts that correspond to the Portfolios shown on the Policy
OPTIONS Data Pages. The Company may, from time to time, invest Separate
Account assets in additional mutual funds, portfolios of mutual
funds, or other investments. The Owner may be permitted to
transfer Account Value or allocate Net Premium to these
additional Separate Account investments. However, the right to
make any transfer will be limited by the terms and conditions
imposed by the Company.
If the shares of any Portfolio, or of any other Separate Account
investment, become unavailable for investment by the Separate
Account, or if the Company's Board of Directors deems further
investment in these shares inappropriate or inadvisable, the
Company may limit further purchase of these shares and may
substitute shares of another Portfolio or other investment
vehicle for shares already purchased under this Policy. The
Company also may, in its discretion, remove Portfolios for
transfers or new investments. In making these and any other
changes, the Company will comply with all applicable legal
requirements and, if required, it will seek Owner approval.
FIXED The Owner may allocate a Premium Payment to the Fixed Account.
ACCOUNT Interest will be credited to amounts allocated to the Fixed
OPTION Account as described in the "Account Value - Fixed Account
Value" provision of this Policy.
SECTION 5 TRANSFERS
- --------------------------------------------------------------------------------
TRANSFERS In any Policy Year, the Owner may transfer Account Value among
AMONG POLICY Policy Options without the imposition of any transaction fee if
OPTIONS there have been no more than the guaranteed minimum number of
free transfers shown on the Policy Data Pages. The Company may
from time to time: (a) increase the number of permitted free
transfers; or (b) decrease the number of permitted free
transfers, but not below the guaranteed minimum number of free
transfers. No transfers are permitted, however, until the end of
a Delayed Investment Start Date, if any, shown on the Policy
Data Pages. The amount of Account Value which may be transferred
from the Fixed Account to other Policy Options will be subject,
without limitation, to the specific restrictions, if any, shown
on the Policy Data Page.
All amounts and Accumulation Unit Values will be determined as
of the end of the Valuation Period in which the Company receives
the transfer request.
If more than the permitted number of free transfers have been
made in the Policy Year, the Company will deduct any applicable
transaction fee described in Section 7 of this Policy for each
subsequent transfer.
10
GENERAL The minimum amount of Account Value that can be transferred is
REQUIREMENTS shown on the Policy Data Pages. The minimum amount of Account
FOR TRANSFERS Value, if any, which must remain in a Policy Option after a
transfer from it is shown on the Policy Data Pages.
Any transfer instruction must be in a form satisfactory to the
Company, and received by the Company at its Variable Service
Center. Without limitation, any such instruction must clearly
specify the amount to be transferred and the Policy Options to
be affected. The Company will not be liable for transfers made
in accordance with instructions by, or on behalf of, the Owner.
The Company reserves the right, at any time and without prior
notice to any party, to terminate, suspend or modify the
transfer privileges described above.
SECTION 6 ACCOUNT VALUE
- --------------------------------------------------------------------------------
GENERAL The Account Value on any Business Day is the sum of the Owner's
interest (a) in the Sub-Accounts of the Separate Account; (b) in
the Fixed Account; and (c) if there is an outstanding Policy
loan, in the Loan Account. The value of the Owner's interest in
a Sub-Account is determined by multiplying the number of
Accumulation Units attributable to that Sub-Account by the
Accumulation Unit Value for that Sub-Account.
ACCUMULATION The number of Accumulation Units in a Sub-Account credited to
UNIT VALUE this Policy is determined by dividing the amount to be allocated
to that Sub-Account by the Accumulation Unit Value for that Sub-
Account as of the end of the Valuation Period when that
allocation is to be effective. An amount to be allocated may be
derived from a Premium Payment, loan repayment, Premium Value
Bonus, or a transfer of Account Value into a Sub-Account. The
Accumulation Unit Value for each Sub-Account will vary to
reflect the investment experience of the assets in that Sub-
Account and will be determined on each Valuation Date by
multiplying the Accumulation Unit Value of the Sub-account on
each Valuation preceding Valuation Date by a Net Investment
Factor for that Sub-Account for the Valuation Period then ended.
The Net Investment Factor for each Sub-Account is generally
equal to the net asset value per share of the applicable
portfolio at the end of the Valuation Period (plus the per share
amount of any dividend or capital gains distribution paid by
that Portfolio in the Valuation Period then ended) divided by
the net asset value per share of the corresponding Portfolio at
the beginning of the Valuation Period and induced by the daily
equivalent rate of the mortality and expense Risk charge.
FIXED ACCOUNT The Company guarantees that it will credit interest to the
VALUE Account Value in the Fixed Account at a rate not less than the
minimum guaranteed interest rate shown on the Policy Data Pages.
The Company may credit additional amounts of interest from time
to time in its sole discretion. The Company determines interest
rates in advance, and credits interest daily to Fixed Account
Value in dollars.
11
MINIMUM The Company reserves the right to transfer Account Value from
VALUE any Policy Option if on any Business Day the Account Value in
REQUIRED IN the Policy Option is less than $100. In such event, the Account
ANY POLICY Value will be transferred to the Policy Option with the highest
OPTION Account Value.
PREMIUM This Policy will be eligible for a Premium Value Bonus credit at
VALUE the start of the first Eligible Policy Year shown on the Policy
BONUS Data Pages. To be eligible, the cumulative amount of premiums
paid on the first Business Day of the first Eligible Policy
Year, less the amount of Indebtedness and withdrawals taken by
the Owner, must be at least equal to the product of the Monthly
Minimum Premium times the number of elapsed Policy Months.
If the eligibility requirement is met, a Premium Value Bonus
will be credited each Policy Month:
. starting on the first Business Day of the first Eligible
Policy Year;
. based on the guaranteed Premium Value Bonus factors shown on
the Policy Data Pages; but only if
. the cumulative amount of premiums paid on the last Business
Day of the immediately preceding Policy Month, less the
amount of Indebtedness and withdrawals taken by the Owner,
is at least equal to the product of the current Monthly
Minimum Premium times the number of elapsed Policy Months.
Any Premium Value Bonus credited will be at least equal to the
product of the current Monthly Minimum Premium times the
guaranteed annual Premium Value Percentage rate shown on the
Policy Data Pages.
Additional Bonuses may be credited from time to time at the
Company's sole discretion based on "current" Premium Value Bonus
factors. The current Premium Value Bonus factors (including an
annual Premium Value Percentage rate) on the Policy Date, which
may be changed by the Company at any time without notice, are
shown on the Policy Data Pages.
CASH VALUE After a Policy has been continuously in force for the first
BONUS eight Policy Years, Cash Value Bonus amounts may be credited
monthly to Account Value. Cash Value Bonuses, if any, are based
on the Cash Accumulation Value at the end of the last Business
Day of the immediately preceding Policy Month and the applicable
Cash Value Bonus Percentage rate then in effect. The Cash Value
Bonus annual percentage rate on the Policy Date is shown on the
Policy Data Pages. The rate is not guaranteed and may be
increased, decreased, or eliminated by the Company in its sole
discretion.
ALLOCATION Any Premium Value Bonus and Cash Value Bonus will be allocated
OF BONUSES among the Fixed Account and the Sub-Accounts of the Separate
Account on a pro rata basis based on the Account Value in each,
or by any other method approved by the Company in advance. The
Company will credit amounts by adding values to the Fixed
Account and/or crediting additional Accumulation Units of the
applicable Sub-Accounts to the Account Value. Bonuses are not
allocated to the Loan Account.
12
SECTION 7 CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
Various charges and deductions are made from Premium Payments, Account Value and
the Separate Account. These are:
PREMIUM The Premium Charge and Premium Tax Charge, as shown on the
CHARGE AND Policy Data Pages, is deducted from each Premium Payment. The
PREMIUM TAX Company may from time to time, reduce the amount of either, or
CHARGE both, below the applicable guaranteed amount shown on the Policy
Data Pages.
MONTHLY On the first Business Day of each Policy Month, the Company will
DEDUCTIONS take a Monthly Deduction to cover charges and expenses incurred
in connection with the Policy. This amount will be taken by
subtracting values from the Fixed Account and/or canceling
Accumulation Units from each applicable Sub-Account. The
deductions will be in the ratio that the value of each Policy
Option bears to the Cash Accumulation Value, or by any other
method selected by the Owner and acceptable to the Company. The
amount taken will vary from month to month.
The monthly deductions are comprised of the following charges:
ADMINISTRATIVE CHARGE: The Company deducts an Administrative
Charge for the amount shown on the Policy Data Pages.
MONTHLY POLICY BENEFIT CHARGE: The Company deducts a Monthly
Policy Benefit Charge for the amount shown on the Policy Data
Pages.
MONTHLY POLICY FEE: The Company deducts a Monthly Policy Fee for
the amount shown on the Policy Data Pages based on the Face
Amount on the Policy Date. The Company may adjust this amount if
the Face Amount increases.
The Company may from time to time reduce the amount of any
guaranteed charge shown.
COST OF INSURANCE: The Company deducts a Cost of Insurance
Charge from the Cash Accumulation Value on the first Business
Day of each Policy Month.
The Cost of Insurance Charge for any Policy Month is determined
by: (a) subtracting the Account Value from the Death Benefit;
(b) dividing the net amount by 1.003273739; and (c) multiplying
the results by the current cost of insurance rate divided by
1,000. The cost of insurance rate is based on Policy Year and
the Insureds' sex, ages, Insurance Classes and Rate Classes. The
Company will determine the rates, but they will never be more
than the guaranteed rates shown on the Policy Data Pages.
The maximum cost of insurance charges do not exceed the cost of
insurance rates based on the 1980 Commissioner's Standard
Ordinary Mortality Table, age, Rate Class and sex.
ADDITIONAL BENEFIT RIDER CHARGES: The charges for optional
additional benefit riders attached to the Policy, will be
deducted monthly as specified in the rider.
13
DAILY Each Business Day, the Company will deduct an asset charge which
DEDUCTIONS is equal to a percentage of the net assets in each Sub-Account
of the Separate Account for this class of Policy. The asset
charge is guaranteed by the Company not to exceed the guaranteed
rate shown on the Policy Data Pages.
The Company may from time to time, assess an asset charge for
this class of Policy that is less than the guaranteed maximum
rate. The asset charge on the Policy Date is as shown on the
Policy Data pages.
INCOME TAXES The Company reserves the right to reduce the Account Value for
federal income taxes of the Separate Account if it determines,
in its sole discretion, that it will incur a tax as a result of
the operation of the Separate Account. The Company will deduct
for any income taxes incurred by it as a result of the operation
of the Separate Account whether or not there was a Company
reserve for taxes and whether or not it was sufficient.
TRANSACTION The Company reserves the right to assess transaction charges
CHARGES shown on the Policy Data Pages for:
. transfers of Account Value described in Section 5 -
TRANSFERS;
. surrender or withdrawals of Cash Surrender Value as
described in Section 8 -SURRENDER AND WITHDRAWALS; and
. loans using the Policy as security as described in Section
9 -LOANS.
The Company may from time to time, reduce the amount of any
guaranteed transaction charge shown on the Policy Data pages.
ALLOCATION OF Transaction charges will be deducted pro-rata from Account Value
TRANSACTION in each Policy Option prior to the transaction, or by any other
CHARGES method approved by the Company in advance of the transaction. If
the entire interest in a Sub-Account or the Fixed Account is
being transferred, the pro-rata portion of any applicable
transaction fee will be deducted from the amount that is
transferred.
SECTION 8 SURRENDER AND WITHDRAWALS
- --------------------------------------------------------------------------------
SURRENDER The Owner may surrender this Policy for its Cash Surrender Value
at any time while either of the Insureds is living by written
request to the Company at its Variable Service Center. The Cash
Surrender Value of the surrendered Policy will be determined as
of the Business Day when a surrender request is received at the
Company's Variable Service Center. The Owner may request to have
all or part of the Cash Surrender Value applied to a Payout
Option. The Company's liability for the Death Benefit terminates
upon a surrender of the Policy.
14
WITHDRAWALS After the first Policy Year, the Owner may request to make a
withdrawal of a portion of the Cash Surrender Value. The amount
requested must be not less than the Minimum Withdrawal amount
shown on the Policy Data Pages. Any request is subject to any
limitations on withdrawals shown on the Policy Data pages. A
permitted withdrawal will cause a reduction in the Account Value
and Death Benefit by the sum of : (a) the amount of the Cash
Surrender Value withdrawn; and (b) any applicable transaction
charge shown on the Policy Data pages.
A permitted withdrawal will result in the cancellation of
Accumulation Units from each applicable Sub-Account Policy
Option or a reduction in Fixed Account Value in the ratio that
the Account Value in the Policy Option bears to the Cash
Accumulation Value. If Death Benefit Option A is in effect, a
withdrawal will reduce the Face Amount by the withdrawal plus
any applicable transaction charges. The Owner may request in
writing in advance if a different method for canceling
Accumulation Units or reducing Fixed Account Value is desired.
The Company reserves the right to disapprove any such request.
SURRENDER The Surrender Charge is shown on the Policy Data Pages, and is
CHARGE based on the Face Amount on the Policy Date. The charge may vary
depending on the elapsed period during which the Surrender
Charge applies. An additional Surrender Charge may apply if the
Face Amount is increased.
The Company will apply the Surrender Charge to a surrender by
subtracting values from the Fixed Account and/or canceling
Accumulation Units credited to this Policy.
SUSPENSION OR The Company generally will pay amounts from the Separate Account
DEFERRAL OF for a surrender, withdrawal, Policy loan or transfer within
PAYMENTS seven (7) days of receipt of a request in good order. The
Company reserves the right, however, to suspend or postpone such
payments for any period when:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is restricted;
(c) an emergency exists as a result of which disposal of
securities held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine
the value of the Separate Account's net assets; or
(d) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of
Owner(s).
The Company reserves the right to defer payment for a surrender,
withdrawal, Policy loan or transfer from the Fixed Account for
the period permitted by law, but not for more than six months
after written election is received by the Company.
15
SECTION 9 LOANS
- --------------------------------------------------------------------------------
GENERAL The Owner may borrow money and use the Policy as security for
the Indebtedness at any time after the Free Look period. The
Company will usually make the loan within seven (7) days of the
date a loan request is received at the Variable Service Center.
The maximum amount available as a loan is equal to 90% of the
Account Value less the sum of Surrender Charges and
Indebtedness. The minimum Policy loan amount is shown on the
Policy Data Pages.
A Policy loan reduces the Account Value in the Sub-Accounts and
Fixed Account by the amount of the loan. Account Value equal to
the amounts loaned is transferred from the Fixed Account and the
Separate Account to the Loan Account when the loans are made.
The amounts transferred will be taken in proportion to the
Account Value in each Sub-Account and the Fixed Account, unless
another method is requested in advance and agreed to by the
Company. Interest is credited monthly to the Loan Account at the
equivalent of the minimum guaranteed annual interest rate shown
on the Policy Data Pages.
The amount taken from the Policy's Sub-Accounts as a result of a
loan does not participate in the investment experience of the
Sub-Accounts. Therefore, the Death Benefit and Account Value of
the Policy can be permanently affected by a Policy loan, even if
it is repaid. In addition, any proceeds payable under a Policy
are reduced by the amount of any Indebtedness.
Interest accrues daily and will be payable in arrears at the end
of each Policy Month. Any interest not paid when due will be
added to the Indebtedness and bear interest in the same manner.
An amount equal to the unpaid interest will be deducted from the
Account Value in the Policy Options and transferred to the Loan
Account on the first Business Day of the next Policy Month.
A loan repayment increases the Account Value in the Sub-Accounts
and Fixed Account by the amount of the repayment. Policy loan
repayments are attributed to the Sub-Accounts and Fixed Account
from which an amount was taken as a result of the loan, unless
another method is requested in advance and agreed to by the
Company.
REGULAR LOANS Indebtedness as a result of a Regular Loan will be charged
interest at the maximum loan interest rate(s) shown on the
Policy Data Pages. Any money borrowed under this Policy is
treated as a Regular Loan until a Preferred Loan Event occurs.
When a Preferred Loan Event occurs, Indebtedness that is then
attributable to a Regular Loan is automatically converted within
seven (7) Business Days to a Preferred Loan, up to the Preferred
Loan Limit described below.
16
After the first Policy Year, the Owner may qualify for a
Preferred Loan. To qualify, the Policy must have a Cash
Accumulation Value of at least $25,000 on the most recent Policy
Anniversary. This is called a "Preferred Loan Event." During the
Policy Year immediately following a Preferred Loan Event, the
Owner may request a Preferred Loan at the Preferred Loan Rate
shown on the Policy Data Pages. If Cash Accumulation Value is
less than $25,000 on a Policy Anniversary, no new Preferred
Loans may be taken during the immediately following Policy Year.
Loans that do not qualify for Preferred Loan status are treated
as Regular Loans.
The maximum amount available for a Preferred Loan in any
qualifying Policy Year is the Preferred Loan Limit less the
amount of any Indebtedness converted from a Regular Loan to a
Preferred Loan for that Policy Year. The "Preferred Loan Limit"
in any Policy Year is 15% of the Cash Accumulation Value on the
immediately preceding Policy Anniversary. A Preferred Loan will
reduce the amount available as a Regular Loan.
IMMEDIATE A loan repayment will be due on the first Business Day of a
LOAN Policy Month if (a) exceeds (b), where:
REPAYMENT
(a) is the amount of Indebtedness; and
(b) the excess of the Policy's Account Value over any Surrender
Charge that would be due if the Policy were surrendered.
A period of 61 days will be allowed from the first day of such
Policy Month for a loan repayment. The Company will send a
notice to the Owner or assignee, if any. The Policy will
terminate without value 61 days after the mailing of the notice
unless a sufficient repayment is made during that period. A
repayment is sufficient if it is large enough to reduce the
total Indebtedness to an amount equal to:
(a) the Policy's Account Value less the Surrender Charge; plus
(b) an amount sufficient to continue the Policy in force for 3
months.
The Company will send such notice to the Owner's last known
address. If the Insured dies during the loan repayment period,
the Death Benefit Proceeds will be payable as stated in the
Death Benefits section.
A loan repayment must be designated as such. Otherwise, the
Company may treat the payment as a Premium Payment.
17
SECTION 10 OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP The Owner has all rights under this Policy. The Owner is the
person designated in the Application, unless changed during the
lifetime of the Insured. Upon the death of the Owner, his or her
estate will become the Owner unless a successor Owner has been
named. The Owner's rights under the Policy terminate when the
Insured dies.
ASSIGNMENT The Owner may, at any time during the lifetime of the Insured,
assign his or her rights under this Policy. The Company will not
be bound by any assignment until the Company receives written
notice at its Variable Service Center. The Company is not
responsible for the validity or tax consequences of any
assignment. The Company will not be liable as to any payment or
other settlement made by the Company before receipt of the
assignment.
BENEFICIARY The Beneficiary on the Policy Date is as named on the
Application.
CHANGE OF A request to change the designated Owner or Beneficiary must be
DESIGNATIONS made in writing and received by the Company at its Variable
Service Center. The change will become effective as of the date
the written request is signed. A new designation will not apply
to any payment made or action taken by the Company prior to the
time it records the change, and the Company shall be released
from any further liability with respect to any such payment made
or action taken.
OWNER: The Owner may change the Owner at any time while the
Surviving Insured is alive. A change of Owner will automatically
revoke any prior designation of Owner.
BENEFICIARY: Subject to the rights of any irrevocable
Beneficiary(ies), the Owner may change the primary
Beneficiary(ies) or contingent Beneficiary(ies). A permitted
change of Beneficiary will automatically revoke any prior
designation of Beneficiary.
18
SECTION 11 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE POLICY The entire contract consists of this Policy; the Application
which is attached to this Policy; and any riders or
endorsements attached to this Policy.
This Policy may be changed or altered only by the President
or Vice President and the Secretary of the Company. A change
or alteration must be made in writing.
INCONTEST-ABILITY Generally, the Company can challenge the validity of the
Policy or any rider to the Policy during the lifetime of
each of the Insureds for two years from the Policy Date,
based on misrepresentations made in the application. The
Company can challenge an increase in Death Benefit requiring
evidence of insurability for two years during the lifetime
of each of the Insureds from the date of the increase.
However, there is no time limit on the Company's right to
challenge all or part of the Policy if either of the
Insureds dies within the two-year period.
Optional benefit riders to this Policy may have different
provisions for incontestability.
Any reinstatement will be incontestable after that
reinstatement has been in force for two years from its
effective date during the lifetime of each of the Insureds.
Any contest will then be based only on the information
provided on the application for reinstatement.
SUICIDE Suicide of both the Insureds, or of the Surviving Insured,
while sane or insane, within two years from the Policy Date
is a risk not assumed under this Policy. The Company's
liability for such suicides is limited to the Cash Surrender
Value. When the laws of the state in which this Policy is
delivered require less than a two-year period, the period
will be as stated in such law.
MATURITY PROCEEDS If either of the Insureds is living on the Maturity Date,
the Company will pay the Owner the Cash Surrender Value on
the Maturity Date upon surrender of this Policy. In such
case, the Policy will terminate and the Company will have no
further obligations under the Policy.
RIGHT TO EXCHANGE During the first 24 months after the Policy Date, if the
FOR A FIXED BENEFIT Policy has not lapsed, there is an unconditional right to
POLICY transfer all of the Account Value in the Sub-Accounts to
the Fixed Account without any transaction charge.
MISSTATEMENT OF If the age or sex of either of the Insureds is misstated
AGE OR SEX in any application for benefits under this Policy, the
Death Benefit will be the amount provided by the correct age
and sex.
19
MODIFICATION This Policy may be modified and the Company may take any
other action in order to maintain compliance with applicable
state and federal law, including tax law requirements for
treatment of life insurance. The Company also has the right,
at any time, to:
. combine two or more Policy Options, or withdraw assets
relating to the Policies from one Policy Option and put
them into another;
. operate the Separate Account under the direction of a
committee or discharge such a committee at any time;
. operate the Separate Account, or one or more Policy
Options, in any other form the law allows, including a
form that allows the Company to make direct investments.
The Separate Account may be charged advisory fees and
other operating expenses if its investments are made
directly rather than through another investment company,
so long as the overall level of charges and expenses that
can be imposed on the Policies, directly or indirectly,
is not increased; and
. operate the Separate Account without registration as an
investment company.
CONFORMITY WITH This Policy is subject to the laws of the state where the
LAWS Policy was delivered. If any part of it does not follow
that law, it will be treated as if it does.
NON-PARTICIPATING This Policy is nonparticipating. It will not participate in
any dividend or distribution of the Company's surplus.
PROTECTION OF To the extent permitted by law, Death Benefits shall be
PROCEEDS free from legal process and the claim of any creditor if the
person is entitled to them under this Policy. No payment and
no amount under this Policy can be taken or assigned in
advance of its payment date unless the Company receives the
Owner's written consent.
REPORTS At least once each calendar year, the Company will furnish
the Owner with a report showing the Account Value and any
other information as may be required by law. Reports will be
sent to the last known address of the Owner.
20
SECTION 12 PAYOUT OPTIONS
- --------------------------------------------------------------------------------
GENERAL The Policy's Death Benefit Proceeds and Cash Surrender Value
can be paid in one sum, or all or part of the Proceeds may
be paid under a Payout Option. If a Payout Option is
selected for the payment of Cash Surrender Value, any
Withdrawal Charges and Indebtedness will be deducted from
the Account Value before the first payment is made.
Prior to the death of the Surviving Insured, the Owner may
elect: (a) for Cash Surrender Value to be paid under a
Payout Option; (b) for Death Benefit Proceeds to be paid
under a Payout Option; and (c) to change a previously
elected Payout Option for Death Benefit Proceeds. Any
election must be by written request to the Variable Service
Center.
If no election by the Owner is in effect at the death of the
Surviving Insured, the Beneficiary may elect that Death
Benefit Proceeds be paid as a single sum or under a Payout
Option. A Beneficiary may only elect payment under a Payout
Option during the sixty-day period beginning with the date
of receipt of proof of death.
PAYOUT OPTIONS The following Payout Options or any other Payout Option
acceptable to the Company may be selected:
OPTION A. LIFE ANNUITY: Monthly payments during the life
of the payee.
OPTION B. LIFE ANNUITY WITH PERIODS CERTAIN OF 120 MONTHS:
Monthly payments during the lifetime of the payee and in any
event for one hundred twenty (120) months.
OPTION C. FIXED PAYMENTS FOR A PERIOD CERTAIN: Fixed monthly
payments for any specified period (at least five years but
not exceeding thirty years), as selected.
OPTION D. DEATH BENEFIT PROCEEDS REMAINING WITH THE COMPANY:
Proceeds from the Death Benefit left with the Company. The
Death Benefit Proceeds will remain in the Fixed Account and
be credited with interest by the Company at a rate of not
less than 4%. Full and partial withdrawals may be made at
any time with no Withdrawal Charge.
The minimum amount of each payment under these Payout
Options will be based on the applicable Payout Tables shown.
The dollar amount of a payment for Ages or combination of
Ages not shown in the Tables or for any other form of Payout
Option agreed to by the Company will be provided by the
Company upon request. If the payee dies during a period
certain (Payout Options B or C), the remaining payments
attributable to Death Proceeds will be made to the estate of
the Beneficiary. The Beneficiary may elect to have the
commuted value of the remaining payments paid in a single
sum instead. The Company will determine the commuted value
by discounting the remaining payments at its then current
interest rate used for commutation.
21
EVIDENCE OF PROOF The Company may require satisfactory evidence of the age of
OF AGE OR SURVIVAL any person or his or her continued survival for payments
under a lifetime payment option.
OPTIONS A AND B - LIFETIME PAYMENT OPTIONS
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
AGE OF PAYEE LIFE 10 YEAR & LIFE AGE OF PAYEE LIFE 10 YEAR & LIFE
50 4.68 4.64 70 7.27 6.80
51 4.75 4.70 71 7.51 6.96
52 4.82 4.77 72 7.77 7.14
53 4.89 4.84 73 8.06 7.31
54 4.97 4.92 74 8.36 7.49
55 5.06 4.99 75 8.69 7.67
56 5.15 5.08 76 9.04 7.86
57 5.24 5.16 77 9.42 8.04
58 5.34 5.25 78 9.84 8.22
59 5.45 5.35 79 10.28 8.40
60 5.56 5.45 80 10.76 8.57
61 5.69 5.56 81 11.28 8.74
62 5.82 5.67 82 11.83 8.90
63 5.96 5.79 83 12.43 9.05
64 6.11 5.92 84 13.07 9.18
65 6.27 6.05 85 13.76 9.31
66 6.44 6.19
67 6.63 6.33
68 6.83 6.48
69 7.04 6.63
OPTION C - FIXED PAYMENTS FOR A PERIOD CERTAIN
MINIMUM MONTHLY PAYMENT RATES FOR EACH $1,000 APPLIED
YEARS MONTHLY PAYMENT YEARS MONTHLY PAYMENT YEARS MONTHLY PAYMENT
1 Not available 11 9.31 21 5.81
2 Not available 12 8.69 22 5.64
3 Not available 13 8.17 23 5.49
4 Not available 14 7.72 24 5.35
5 18.32 15 7.34 25 5.22
6 15.56 16 7.00 26 5.10
7 13.59 17 6.71 27 5.00
8 12.12 18 6.44 28 4.90
9 10.97 19 6.21 29 4.80
10 10.06 20 6.00 30 4.72
For quarterly payments, multiply the monthly payment rate by 3.01. For semi-
annual payments, multiply by 6.05. For annual payment, multiply by 12.22.
22
[LOGO OF FIRST VARIABLE LIFE INSURANCE COMPANY APPEARS HERE]
A STOCK LIFE INSURANCE COMPANY
THE ACCOUNT VALUE, CASH SURRENDER VALUE, AND DEATH BENEFIT PROVIDED BY THIS
POLICY, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT.
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
JOINT LEGACY LIFE INSURANCE POLICY
NON-PARTICIPATING
23
FIRST VARIABLE LIFE INSURANCE COMPANY
LITTLE ROCK, ARKANSAS
EXCHANGE RIGHT ENDORSEMENT
This Endorsement is made part of the Policy to which it is attached, and is
effective upon the Policy Date:
Section 11 GENERAL PROVISIONS of the Policy is amended to include the following:
RIGHT TO EXCHANGE GENERAl. Subject to any limitations and requirements shown
FOR TWO POLICIES below, this Policy may be exchanged for two policies of
individual life insurance. The Owner may elect this exchange
only upon the occurrence of an Exchange Event.
EXCHANGE EVENTS. An Exchange Event occurs if this Policy is
in force on the date of any of the following events:
. Divorce - The Business Day on or next following the
sixtieth day day after a divorce between the Insureds
is effective. The Insureds must, however, have been
married to each other on the Policy Date.
. Tax Law Change - The Business Day on or next following
the effective date of an amendment to the Code that
eliminates a marital deduction used for purposes of
computing federal estate and gift taxes. The Insureds
must, however, have been married to each other on the
Policy Date.
. Dissolution or Bankruptcy of Partnership - If the
Insureds are general partners in an active partnership
on the Policy Date, the Business Day on or next
following the date the partnership is dissolved or
ordered and adjudged to be bankrupt.
. Dissolution or Bankruptcy of Closely Held Corporation -
If the Insureds are officers, directors or shareholders
in the same closely held business corporation on the
Policy Date, the Business Day on or next following the
date the corporation is dissolved or ordered and
adjudged to be bankrupt. Shares of a closely held
corporation may not be publicly traded or listed on a
regional or national exchange.
ELECTION LIMITATIONS. The right to exchange for two policies
is not available if any of the following apply:
. Either of the Insureds is not alive on the date of the
exchange;
. Either of the Insureds is older than the maximum issue
age permitted by the Company (or its affiliate) for the
new policies; or
. The Policy is in a Grace Period or receiving benefits
from any disability rider on the date of the exchange.
Page 1 of 2
EXCHANGE RIGHT ENDORSEMENT (CONTINUED)
RIGHT TO EXCHANGE ELECTION REQUIREMENTS. An exchange for two policies may be
FOR TWO POLICIES elected by the Owner:
(CONTINUED) . For a period not to exceed 180 days following the
occurrence of any Exchange Event listed above (the
election period for a divorce begins 60 days after the
divorce is effective); and
. By submitting a written request that is received by the
Company at its Variable Service Center during the 180
day election period; and
. By returning this Policy for cancellation with the
written request.
EXCHANGED POLICIES. Each of the new policies to be issued
upon an exchange will be issued by the Company, or an
affiliate of the Company:
. On the life of one of the Insureds, and payable upon
the death of that insured if the exchanged policy is
then in effect;
. As an individual variable life insurance policy in a
form then available for such exchanges;
. For an initial death benefit amount that does not
exceed 50% of the Death Benefit of this Policy on the
date of exchange, reduced by 50% of any Indebtedness
and by any optional rider benefits then in effect under
this Policy;
. For an account value that does not exceed 50% of the
Cash Accumulation Value under this Policy on the date
of the exchange; Without the transfer or revival of any
Indebtedness under this Policy on the date of exchange;
. Without the transfer of any amount in the Loan Account
under this Policy on the date of exchange, and any such
amount will be used to repay any Indebtedness under
this Policy on the date of exchange;
. With an extended death benefit guarantee rider, if an
extended death benefit guarantee rider is in effect for
this Policy on the date of exchange;
. Without any other optional additional benefit riders,
unless the request for exchange includes evidence of
insurability on the applicable insured that is
satisfactory to the Company;
. With provisions for suicide exclusion and
incontestability that reflect the Policy Date of this
Policy;
. With provisions for withdrawal or surrender charges
that do not reflect the Policy Date of this Policy; and
. Without any transaction charges being imposed under
this Policy for the exchange.
Signed on behalf of the Company on the Policy Date.
/s/ [SIGNATURE ILLEGIBLE]^^ /s/ [SIGNATURE ILLEGIBLE]^^
- ---------------------------------- -----------------------------------
Secretary President
FIRST VARIABLE LIFE INSURANCE COMPANY
Little Rock, Arkansas
Page 2 of 2