1
Exhibit A(5)(a)
Form of Contract
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POLICY NUMBER: ZADM0002
INSURED: ZADM0006
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CANADA LIFE INSURANCE COMPANY OF AMERICA
A STOCK COMPANY
HOME OFFICE: VARIABLE LIFE SERVICE CENTER:
6201 POWERS FERRY ROAD, NW 440 LINCOLN STREET, P. O. BOX []
ATLANTA, GEORGIA 30339 WORCESTER, MASSACHUSETTS 01653
If You have any questions or complaints about this Policy, You may call Us at
Our toll free number: [].
This flexible premium variable life insurance Policy (the "Policy") is a legal
contract between You (the "Policyowner") and Canada Life Insurance Company of
America ("We", "Our", "Us", the "Company"). We will pay Your Beneficiary the
Net Death Benefit when the person You are insuring dies, while this Policy is
in force.
You may change the amount of insurance as well as the payments You make. You
may direct Your Net Payments into an account that has a guaranteed minimum
interest rate, and into Sub-Accounts of an account that has a rate of return
that will vary. These two accounts are called the Fixed and Variable Accounts,
respectively.
The value of the Variable Account may increase or decrease according to its
investment results and is not guaranteed as to dollar amount. No minimum value
in the Variable Account is guaranteed. For more details, please see the
"Sub-Accounts" provision.
The value in the Fixed Account will accumulate interest at a rate set by Us
which will not be less than 4% a year.
The amount of the death benefit and the length of time this Policy will remain
in force may increase or decrease as described in the Death Benefit provisions.
RIGHT TO EXAMINE POLICY
The Policy provides a Right to Examine Period. You have the right to examine
and cancel Your Policy by returning it to the Variable Life Service Center or
to one of Our representatives no later than10 days after You receive the Policy
or 45 days after the application for the Policy is signed.
[The Company will mail a refund to You within seven days. We may delay a refund
of any payment made by check until the check has cleared Your bank. Your refund
will be the greater of:
- Your entire payment; or
- the Policy Value plus deductions under the Policy for taxes, charges
or fees
You will receive:
- the Policy Value in the Fixed Account plus;
- the Policy Value in the Variable Account plus;
- all fees, charges and taxes which have been imposed.]
[SIG] [SIG]
Secretary President
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT DEATH OF INSURED
FLEXIBLE PREMIUMS PAYABLE TO THE FINAL PAYMENT DATE
COVERAGE TO THE FINAL PAYMENT DATE AND AMOUNT OF POLICY VALUE NOT GUARANTEED
NONPARTICIPATING
FORM XXXXXX PAGE1
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TABLE OF CONTENTS
RIGHT TO EXAMINE POLICY 1
POLICY DETAILS 6
ADDITIONAL INSURANCE BENEFITS 6
YOUR MAXIMUM PAYMENT 6
POLICY LOANS 6
POLICY DETAILS (CONTINUED) 7
THE CHARGES YOU WILL PAY 7
TABLE "I" 9
YOUR COST OF INSURANCE RATES ARE GUARANTEED 9
NEVER TO GO HIGHER THAN THE FOLLOWING: 9
TABLE "II" 10
DEATH BENEFIT OPTIONS 1 AND 2-GUIDELINE PREMIUM TEST 10
GUIDELINE MINIMUM DEATH BENEFIT FACTORS 10
TABLE "III" 11
DEATH BENEFIT OPTION 3-CASH VALUE ACCUMULATION TEST 11
DEFINITIONS 12
GENERAL PROVISIONS 14
ADJUSTMENT OF COST FACTORS 14
CONFORMITY WITH STATE LAW 14
CONTRACT 14
INCONTESTABILITY 14
MISSTATEMENT OF AGE OR SEX 14
NONPARTICIPATING 14
PROTECTION OF BENEFITS 15
PERIODIC REPORT 15
FORM XXXXXX PAGE2
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SUICIDE 15
TERMINATION 15
VARIABLE LIFE SERVICE CENTER 15
INFORMATION ABOUT YOU AND THE BENEFICIARY 15
ASSIGNMENT 15
BENEFICIARY 16
MODIFICATION 16
NOTIFICATION OF DEATH 16
POLICYOWNER 16
WHAT YOU SHOULD KNOW ABOUT THE PREMIUMS 17
PREMIUMS 17
MAXIMUM PAYMENT LIMITS 17
TERMINATION AND REINSTATEMENT 17
TERMINATION 17
REINSTATEMENT 18
INFORMATION ABOUT THE VALUE OF YOUR POLICY 18
NET PAYMENT AND ALLOCATION OF PAYMENTS 18
ALLOCATION OF NET PAYMENTS 18
MONTHLY DEDUCTION 19
COST OF INSURANCE CHARGE 19
COST OF INSURANCE RATES 20
WHAT YOU SHOULD KNOW ABOUT THE VARIABLE ACCOUNT 20
VARIABLE ACCOUNT 20
SUB-ACCOUNTS 21
SUB-ACCOUNT VALUE 21
UNITS 21
UNIT VALUE 21
NET INVESTMENT FACTOR 22
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS 22
FORM XXXXXX PAGE3
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FEDERAL TAXES 22
SPLITTING OF UNITS 22
WHAT YOU SHOULD KNOW ABOUT THE FIXED ACCOUNT 23
FIXED ACCOUNT 23
FIXED ACCOUNT INTEREST RATES 23
FIXED ACCOUNT POLICY VALUE 23
BASIS OF VALUE OF THE FIXED ACCOUNT 23
CONVERSION 24
WHAT YOU SHOULD KNOW ABOUT TRANSFERS 24
FIXED ACCOUNT RESTRICTIONS 24
IF YOU WANT TO BORROW FROM YOUR POLICY 24
AMOUNT YOU MAY BORROW 24
INTEREST CHARGED ON BORROWED AMOUNTS 25
INTEREST CREDITED TO THE LOAN ACCOUNT 25
REPAYING THE OUTSTANDING LOAN 25
FORECLOSURE 25
DETAILS ON SURRENDER AND PARTIAL WITHDRAWALS 25
SURRENDER 25
CASH SURRENDER VALUE 26
PARTIAL WITHDRAWALS 26
POSTPONEMENT OF PAYMENT 26
WHAT YOU SHOULD KNOW ABOUT THE DEATH BENEFIT 27
NET DEATH BENEFIT 27
DEATH BENEFIT OPTIONS 27
GUIDELINE MINIMUM DEATH BENEFIT 27
DEATH BENEFIT OPTION CHANGES 28
CHANGE IN FACE AMOUNT 28
INCREASE OF FACE AMOUNT 28
FORM XXXXXX PAGE4
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DECREASE OF FACE AMOUNT 29
PAYMENT OF BENEFITS 29
PAYMENT OPTIONS 29
FORM XXXXXX PAGE5
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POLICY DETAILS
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POLICYOWNER'S NAME: [John Doe
INSURED'S NAME: John Doe
INSURED'S AGE AT ISSUE: 35
UNDERWRITING CLASS: Preferred Male Non-Tobacco
POLICY NUMBER: VM00000001
INITIAL FACE AMOUNT: $50,000
DATE OF ISSUE: 11/15/1999
MONTHLY PROCESSING DATE: On the 15th day of each month
MINIMUM MONTHLY PAYMENT: $33.79
GUARANTEED DEATH BENEFIT PREMIUM:
FINAL PAYMENT DATE: 11/15/2063
DEATH BENEFIT OPTION: ]
ADDITIONAL INSURANCE BENEFITS
Term Insurance Rider: See rider
YOUR MAXIMUM PAYMENT
Guideline Single Premium: [$16,460.30
Guideline Level Premium: $1,406.92]
POLICY LOANS
Standard Loan Interest Rate: [4.8%, guaranteed not to exceed 6.0%
Standard Loan Credited Rate: 4.0%
Preferred Loan Interest Rate: 4.0%, guaranteed not to exceed 4.5%
Preferred Loan Credited Rate: 4.0%
Minimum Loan Amount: ]
FORM XXXXXX PAGE6
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POLICY DETAILS (CONTINUED)
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THE CHARGES YOU WILL PAY
PAYMENT EXPENSE CHARGE: {6.00%} of each gross payment, which is broken down as
follows:
- - Premium Tax Charge {2.00%}, Deferred Acquisition Cost ("DAC Tax") Charge,
{1.00%} and the Front-End Sales Load, 3.00%
COST OF INSURANCE CHARGE: See Table "I" and the Monthly Deduction provision.
MONTHLY EXPENSE CHARGE: {$9.50} each month for the first {120} months this
Policy is in force. A new monthly expense charge will be applied for the first
{120} months after an increase in Face Amount.
MONTHLY ADMINISTRATION FEE: {$7.50} per month.
MONTHLY MORTALITY AND EXPENSE RISK CHARGE: You will be assessed a charge each
month not to exceed 1/12 of {0.60%} on an annual basis of the daily net asset
value of the Variable Account for the mortality and expense risks assumed by Us
during the first {120} months this Policy is in force and 1/12 of {0.30%} on an
annual basis thereafter.
MONTHLY RIDER CHARGE: [ ] per month.
SURRENDER CHARGE FOR INITIAL FACE AMOUNT: If You surrender this Policy up to
the before the beginning of the 10th Policy year, except as otherwise provided
in the Reinstatement provision, You will be charged a surrender charge as shown
below:
{YEAR SURRENDER CHARGE
1 $1,139
2 $1,012
3 $886
4 $759
5 $633
6 $506
7 $380
8 $253
9 $127
10 $0}
PARTIAL WITHDRAWAL CHARGE: We deduct the following charges from Policy Value:
- a transaction fee is assessed against all partial withdrawals. This
charge is guaranteed not to exceed $25.
- A proportional amount of the full surrender charge is applied to any
partial withdrawal, except for that part of the partial withdrawal
which is considered a preferred partial withdrawal. See DETAILS ON
SURRENDER AND PARTIAL WITHDRAWALS- "Partial Withdrawals." We reduce
the Policy's outstanding surrender charge, if any, by this amount.
FORM XXXXXX PAGE7
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TRANSFER CHARGE: You may make 12 transfers in any Policy year free of charge.
After 12 transfers, You may be charged up to $25 to transfer funds from one
account to another, see WHAT YOU SHOULD KNOW ABOUT TRANSFERS.
MINIMUM MONTHLY PAYMENT: A monthly factor used to determine if Your Policy will
lapse within 48 months of the Date of Issue; see Termination and Reinstatement
provision.
FORM XXXXXX PAGE8
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TABLE "I"
YOUR COST OF INSURANCE RATES ARE GUARANTEED
NEVER TO GO HIGHER THAN THE FOLLOWING:
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Cost of Insurance Cost of Insurance
Age Rate Per $1000 Age Rate Per $1000
Net Amount at Risk Net Amount at Risk
35 [0.055 70 2.941
36 0.059 71 3.313
37 0.067 72 3.631
38 0.073 73 4.058
39 0.078 74 4.541
40 0.191 75 5.063
41 0.206 76 5.622
42 0.221 77 6.214
43 0.239 78 6.833
44 0.256 79 7.496
45 0.277 80 8.230
46 0.300 81 9.054
47 0.324 82 9.997
48 0.350 83 11.073
49 0.379 84 12.267
50 0.410 85 13.556
51 0.447 86 14.918
52 0.490 87 16.344
53 0.538 88 17.808
54 0.593 89 19.333
55 0.654 90 20.942
56 0.723 91 22.668
57 0.795 92 24.577
58 0.873 93 26.764
59 0.962 94 29.637
60 1.061 95 33.931
61 1.171 96 41.279
62 1.296 97 56.040
63 1.439 98 83.333
64 1.602 99 83.333]
65 1.781
66 1.975
67 2.186
68 2.412
69 2.660
THE MAXIMUM COST OF INSURANCE RATES DO NOT EXCEED THE COST OF INSURANCE RATES
BASED ON THE APPLICABLE (MALE OR FEMALE, SMOKER OR NON-SMOKER) 1980
COMMISSIONER STANDARD ORDINARY MORTALITY TABLE, AGE NEAREST BIRTHDAY.
FORM XXXXXX PAGE9
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TABLE "II"
DEATH BENEFIT OPTIONS 1 AND 2-GUIDELINE PREMIUM TEST
GUIDELINE MINIMUM DEATH BENEFIT FACTORS
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Age Percentage Age Percentage
Thru 40 250% 60 130%
41 243% 61 128%
42 236% 62 126%
43 229% 63 124%
44 222% 64 122%
45 215% 65 120%
46 209% 66 119%
47 203% 67 118%
48 197% 68 117%
49 191% 69 116%
50 185% 70 115%
51 178% 71 113%
52 171% 72 111%
53 164% 73 109%
54 157% 74 107%
55 150% 75 thru 90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94 101%
95-100 100%
FORM XXXXXX PAGE 10
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TABLE "III"
DEATH BENEFIT OPTION 3-CASH VALUE ACCUMULATION TEST
GUIDELINE MINIMUM DEATH BENEFIT FACTOR
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Age Percentage Age Percentage
35 [435.21% 70 151.05%
36 419.38% 71 147.81%
37 404.15% 72 144.77%
38 389.54% 73 141.87%
39 375.48% 74 139.14%
40 361.95% 75 136.59%
41 350.08% 76 134.20%
42 338.66% 77 131.97%
43 327.66% 78 129.86%
44 317.08% 79 127.87%
45 306.88% 80 125.98%
46 297.07% 81 124.19%
47 287.63% 82 122.49%
48 278.55% 83 120.90%
49 269.81% 84 119.43%
50 261.40% 85 118.06%
51 253.30% 86 116.81%
52 245.52% 87 115.64%
53 238.06% 88 114.55%
54 230.91% 89 113.52%
55 224.05% 90 112.52%
56 217.49% 91 111.54%
57 211.22% 92 110.54%
58 205.21% 93 109.51%
59 199.45% 94 108.40%
60 193.93% 95 107.20%
61 188.66% 96 105.91%
62 183.62% 97 104.58%
63 178.81% 98 103.37%
64 174.23% 99 102.44%]
65 169.87%
66 165.73%
67 161.79%
68 158.04%
69 154.46%
FORM XXXXXX PAGE 11
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DEFINITIONS
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ACCEPTANCE: The date We mail the Policy if the application is approved with no
changes requiring Your consent; otherwise, the date We receive Your written
consent to any changes.
AGE: How old the Insured is on the birthday nearest to the Policy anniversary.
ASSIGNEE: The person to whom You have transferred Your ownership of this
Policy.
BENEFICIARY: The person or person You name to receive the Net Death Benefit
when the Insured dies. The Owner may designate primary, contingent and
irrevocable Beneficiaries.
CASH SURRENDER VALUE: The amount payable on a full surrender. It is the Policy
Value less any Outstanding Loan and surrender charges.
CONTINGENT BENEFICIARY: The person(s) to whom the Net Death Benefit is paid
upon the death of the Insured if the primary Beneficiary (or beneficiaries) is
not living.
DATE OF ISSUE: The date the Policy was issued. It is used to measure the
Monthly Processing Date, Policy months, Policy years and Policy Anniversaries.
Coverage begins on this date and is shown on the Policy Details pages.
DEATH BENEFIT: The amount payable when the Insured dies prior to the Final
Payment Date, before deductions for any Outstanding Loan and partial
withdrawals, partial withdrawal charges, and due and unpaid monthly deductions.
DUE PROOF OF DEATH: Proof of death that is satisfactory to Us. Such proof may
consist of: 1) a certified copy of the death certificate; or 2) a certified
copy of the decree of a court of competent jurisdiction as to the finding of
death.
EARNINGS: The amount by which the Policy Value exceeds the sum of the payments
made less all withdrawals and withdrawal charges. Earnings are calculated at
least once each month.
EVIDENCE OF INSURABILITY: Information, including medical information, that We
use to decide the Insured's Underwriting Class.
FACE AMOUNT: The amount of insurance coverage, including any additional
increases or decreases. The initial Face Amount is shown on the Policy Details
pages.
FINAL PAYMENT DATE: The Policy anniversary nearest the Insured's 100th
birthday. After this date, no payments may be made. This date is shown on the
Policy Details pages.
FIXED ACCOUNT: Part of Our General Account that provides a fixed interest
rate. This account is not part of and does not depend on the investment
performance of the Variable Account.
GENERAL ACCOUNT: All Our assets other than those held in a separate investment
account.
INSURED: The person whose life is Insured by the Policy.
LOAN VALUE: The maximum amount You may borrow under the Policy.
MINIMUM MONTHLY PAYMENT: A monthly amount shown on the Policy Details pages. If
You pay this amount, We guarantee that Your Policy will not lapse before the
49th Monthly Processing Date from the Date of Issue or increase in Face Amount,
within limits.
MONTHLY DEDUCTION: Consists of the charges taken on each Monthly Processing
Date up to the Final Payment Date, including the Cost of Insurance Charge,
monthly expense charge, monthly administrative fee, monthly mortality and
expense risk charge, and any monthly rider charges.
MONTHLY PROCESSING DATE: The date on which the Monthly Deduction is taken.
This date is shown on the Policy Details pages.
FORM XXXXXX PAGE 12
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NET AMOUNT AT RISK: Can be determined on the Monthly Processing Date or any
other day. The Net Amount at Risk on the Monthly Processing Date is the Death
Benefit minus the Policy Value prior to theMonthly Deduction. In any other day
the Net Amount at Risk is the Death Benefit minus the Policy Value.
NET DEATH BENEFIT: The amount payable to the Beneficiary if the Insured dies.
NET PAYMENT: Your payment less the payment expense charge shown on the Policy
Details pages.
OUTSTANDING LOAN: All Policy loans taken plus interest due or accrued less
any loan payments.
POLICY ANNIVERSARY: The same date in each policy year as the Date of Issue.
POLICY CHANGE: Any change in the Face Amount, the addition or deletion of a
Rider, underwriting reclassifications, or changing from Death Benefit Option 1
to Death Benefit Option 2 (and vice versa).
POLICY DETAILS: Information specific to Your Policy, located on the pages
following Table of Contents in Your Policy.
POLICYOWNER: The person who may exercise all rights under the Policy, with the
consent of any irrevocable Beneficiary. "You" and "Your" refer to the
Policyowner.
POLICY VALUE: The sum of the Variable Account value and the Fixed Account
value.
PORTFOLIOS: The investment portfolios of the Funds in which the Sub-Accounts
invest.
PREMIUM: A payment You must make to us to keep the Policy in force.
PRO-RATA ALLOCATION: An allocation among the Fixed Account and the Sub-Accounts
in the same proportion that, on the date of allocation, the unloaned Policy
Value in the Fixed Account and the Policy Value in each Sub-Account bear to the
total unloaned Policy Value.
RIDER: A supplementary insurance contract that provides an optional benefit,
which may be added to Your Policy for an additional charge.
RIGHT TO EXAMINE PERIOD: The period described on the cover page of this Policy
during which the Policyowner may cancel the Policy for a refund by returning it
to the Company.
SUB-ACCOUNT: A subdivision of the Variable Account investing exclusively in
the shares of a Portfolio.
UNDERWRITING CLASS: The insurance risk classification that We assign to the
Insured based on the information in the application and any other Evidence of
Insurability We consider. The Insured's Underwriting Class affects the Monthly
Deduction and the payment required to keep the Policy in force. It is shown on
the Policy Details pages.
UNIT: A measurement used in the determination of the Policy's Variable Account
value.
VALUATION DAY: Each day the New York Stock Exchange is open for trading.
VALUATION PERIOD: The period beginning at the close of business on a Valuation
Day and ending at the close of business on the next succeeding Valuation Day.
The close of business is the close of regular trading on the New York Stock
Exchange (usually 4:00 P.M. Eastern Time).
VARIABLE ACCOUNT: Canada Life of America Variable Life Account 1.
VARIABLE LIFE SERVICE CENTER: Our office shown on the cover page of the
Policy. This is our mailing address.
WRITTEN NOTICE OF CLAIM: Written notification of the death of the Insured
received in the Variable Life Service Center of the Company.
WRITTEN REQUEST: Your request in writing, which is satisfactory to Us,
received at the Variable Life Service Center.
FORM XXXXXX PAGE 13
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GENERAL PROVISIONS
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ADJUSTMENT OF COST FACTORS
We determine the cost of insurance charge and Fixed Account interest rates and
expense charges which are used to calculate the Policy Value, subject to the
guarantees noted in this Policy. Any changes in these charges and rates will be
made by Underwriting Class only, and will be based on changes in Our future
expectations for such things as: Our investment Earnings, Our expenses, life
expectancy rates, and how many Policyowners keep their policies.
CONFORMITY WITH STATE LAW
This Policy is subject to the laws of the state where the application was
signed. If any part of this Policy does not comply with the law, it will be
treated as if it does.
CONTRACT
We have issued this Policy in consideration of Your application and Your
payment made. This Policy, with a copy of the application, endorsements, and
riders attached to it, is the entire contract between You and Us. The entire
contract also includes: a copy of any application to increase the Face Amount
or to change to a better Underwriting Class; any new Policy Details; any
application for reinstatement of the Policy; and any supplemental pages issued.
We assume that the information You and the Insured provide in any application
is accurate and complete to the best of Your knowledge. If We contest this
Policy or deny a claim, We may use only the information You and the Insured
provided in an application. Our representatives are not permitted to change
this Policy or extend the time for paying Premiums. Only Our President, a Vice
President or Secretary may change the provisions of this Policy, and then only
in writing.
INCONTESTABILITY
We will not contest this Policy after it has been in force during the Insured's
lifetime for two years from its Date of Issue of coverage or, if reinstated,
for two years from the date of reinstatement. We will not contest any increase
in Death Benefit or Face Amount, which is effective after the Date of Issue,
once the increase has been in force during the Insured's lifetime for two years
following the Date of Issue of the increase.
Any contest after a reinstatement or an increase in Face Amount will be limited
to material statements made in the application for such reinstatement or Face
Amount increase.
MISSTATEMENT OF AGE OR SEX
If the Insured's date of birth or sex has been misstated, the proceeds payable
will be the amount which would be provided by the most recent cost of
insurancecharge for the correct age and sex. We will not reduce the Death
Benefit to less than the Guideline Minimum Death Benefit.
No adjustment will be made if:
- - the Insured dies after the Final Payment Date; or
- - the Net Amount at Risk would have been purchased by the last monthly cost
of insurance charge using the correct age and sex.
The Insured's Age at issue shown in the Policy Details pages is the Insured's
Age at his or her birthday nearest to the Date of Issue.
NONPARTICIPATING
No insurance dividends will be paid on this Policy.
FORM XXXXXX PAGE 14
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PROTECTION OF BENEFITS
To the extent allowed by law, the benefits provided by this Policy cannot be
reached by the beneficiary's creditors. No beneficiary may assign, transfer,
anticipate or encumber the Policy Value or benefit unless You give them this
right.
PERIODIC REPORT
We will mail a report to You at Your last known address at least once a year.
This report will provide the following information.
- the period covered by the report;
- Net Death Benefit;
- current Net Payment allocations;
- Policy Values in each Sub-Account and in Fixed Account;
- the value of the Policy if You surrender it;
- payments and withdrawals made by You and Monthly Deductions
- by Us since the last report;
- Outstanding Loan amount;
- Cash Surrender Value; and
- any other information required by law.
SUICIDE
The Net Death Benefit will not be paid if the Insured commits suicide, while
sane or insane, within two years from the Date of Issue of the Policy. Instead,
We will pay the Beneficiary all payments made for the Policy, without interest,
less any Outstanding Loan and partial withdrawals. If the Insured commits
suicide, while sane or insane, within two years from any increase in Face
Amount, We will not recognize the increase. We will pay to the Beneficiary the
Net Death Benefit prior to the increase plus the monthly expense charges and
the cost of insurance charges associated with the increase.
TERMINATION
Coverage under this policy will terminate upon the earliest to occur of the
following events:
1. the Insured dies;
2. the Policyowner surrenders the Policy; and
3. the Policy lapses.
VARIABLE LIFE SERVICE CENTER
All amounts payable by Us will be payable at Our Variable Life Service Center
in Worcester, Massachusetts.
INFORMATION ABOUT YOU AND THE BENEFICIARY
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ASSIGNMENT
You may change the ownership of this Policy by sending Us a Written Request at
any time while the Insured is alive and the Policy is in force. An absolute
assignment will transfer ownership of the Policy from You to another person
called the Assignee. You may also assign this Policy as collateral to an
Assignee. The limitations on Your ownership rights while a collateral
assignment is in effect are specified in the assignment.
An assignment will take place only when the Written Request is recorded at Our
Variable Life Service Center. When recorded, it will take effect on the date
You signed it. Any rights created by the assignment will be subject to any
payments made or actions taken by Us before the change is recorded. We are not
responsible for assuring that any assignment or any Assignee's interest is
valid.
FORM XXXXXX PAGE 15
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BENEFICIARY
You name the beneficiary to receive the Net Death Benefit. You may designate
Contingent Beneficiaries. The beneficiary's interest will be affected by any
assignment You make. If You assign this Policy as collateral, all or a portion
of the Net Death Benefit will first be paid to the Assignee; any money left
over from the amount due the Assignee will go to those otherwise entitled to
it.
Your choice of beneficiary may be revocable or irrevocable. You may change a
revocable beneficiary by Written Request; but an irrevocable beneficiary must
agree to any change in writing. You will also need an irrevocable beneficiary's
permission to exercise other rights and options granted by this Policy. Unless
You have asked otherwise, this Policy's beneficiary will be revocable.
Any change of the beneficiary must be made while the Insured is living and the
Policy is in force. This change will take place on the date the request is
signed, even if the Insured is not living on the day We receive it. Any rights
created by the change will be subject to any payments made, or actions taken,
before We receive the Written Request.
If more than one beneficiary is alive when the Insured dies, We will pay each
beneficiary in equal shares, unless You have chosen otherwise.
If a beneficiary dies before the Insured, his or her interest in this Policy
will pass to any surviving beneficiaries in proportion to their share in the
Net Death Benefit, unless You have requested otherwise. If all beneficiaries
die before the Insured, the Net Death Benefit will pass to You or Your estate.
COMMON DISASTER PROVISION
The beneficiary must be alive 10 days following the Insured's date of death in
order to be entitled to receive a benefit; otherwise We will pay the Net Death
Benefit as though the beneficiary died before the Insured. The number of days,
which the beneficiary must live after the Insured's death, may be changed by
Your Written Request. You may also cancel this provision by Written Request.
MODIFICATION
Upon notice to You, We may modify the Policy, but only if such modification:
- - is necessary to make the Policy or the Variable Account comply with any law
or regulation issued by a governmental agency to which We are subject; or
- - is necessary to assure continued qualification of the Policy under the Code
or other federal or state laws relating to variable life policies; or
- - is necessary to reflect a change in the operation of the Variable Accounts;
or
- - provides additional Variable Account and/or fixed accumulation options.
In the event of any such modification, We may make any appropriate endorsement
to the Policy.
NOTIFICATION OF DEATH
The death of the Insured and/or Policyowner(s) must be file with Us
immediately, and We require Due Proof of Death.
In most states, We will compute the Net Death Benefit on:
- - the date We receive Due Proof of Death of the Insured under Death Benefit
Option 2; OR
- - the date of death for Death Benefit Options 1 and 3.
POLICYOWNER
The Insured is the Policyowner of this policy unless another person (which
could include a trust, corporation, partnership, etc.) is named as Policyowner
in the application. The Policyowner may change the ownership of this Policy
without the consent of any beneficiary. Whenever the Face Amount of insurance
is increased, the Insured must agree.
FORM XXXXXX PAGE 16
18
WHAT YOU SHOULD KNOW ABOUT THE PREMIUMS
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PREMIUMS
This Policy will not be in force until the first Premium is paid to Us.
Additional payments may be made to Us at any time while the Insured is alive
and the Policy is in force before the Final Payment Date. We reserve the right
to obtain Evidence of Insurability, which is satisfactory to Us, as a condition
to accepting any payment, which would increase the death benefit by more than
the amount of the payment. Payments must be sent either to Our Variable Life
Service Center or to Our authorized representative.
If You request it in writing, We will send You a signed receipt after payment.
The Premium amount, which must be paid to keep the Policy in force, is
described in the Termination and Reinstatement provision.
MAXIMUM PAYMENT LIMITS
We may limit the amount You pay to Us in any Policy year if Your Death Benefit
option is either 1 or 2; see Death Benefit Options provision. This limit will
not be less than the guideline level premium; however, the sum of all payments
made from the issue date, minus any partial withdrawals, may not be more than
the greater of:
- the guideline single premium; or
- the sum of the guideline level premiums to the date of payment.
The guideline premium amounts are shown on the Policy Details pages. These
Premium limitations will not apply if they prevent You from paying Us enough to
keep the Policy in force.
Guideline premiums are determined according to rules in the federal tax law,
and will be adjusted as that law changes.
If the maximum payment limit applies to this Policy, the excess payment will be
applied first to the Outstanding Loan and We will then return any balance to
You.
TERMINATION AND REINSTATEMENT
TERMINATION
We will send You, and any assignee on record, a notice if Your payments are not
enough to keep the Policy in force. Your Policy will continue for 62 days from
the date of default in which time You must pay a Premium sufficient to prevent
termination. The 62 day period is considered the grace period.
The first day of the grace period is called the date of default. We will send
the notice to Your last known address, or to the person You name to receive
this notice, showing the due date and the amount of Premium You must pay to
keep the Policy in force.
The date when the grace period begins and the amount You must pay depends on
how long the Policy has been in force and whether there have been any increases
in the Face Amount.
Beginning on the date this Policy is issued or the Date of Issue of any
increase in the Face Amount, whichever is later, and continuing for the next 47
Monthly Processing Dates, the grace period will begin when both of the
following conditions occur:
- the Policy Value less any Outstanding Loan is less than the amount
needed to pay the next Monthly Deduction plus loan interest
accrued; and
- the sum of the payments made minus any Outstanding Loan, partial
withdrawals and partial withdrawal charges since the latest of the
following three dates:
- the date this Policy is issued, or
- the Date of Issue of any increase in the Face Amount, or
- the date of any Policy Change which changes the Minimum
Monthly Payment,
is less than the accumulated Minimum Monthly Payments to date.
Thereafter, the grace period will begin if the Policy Value on a Monthly
Processing Date is less than the amount needed to pay the next Monthly
Deduction plus loan interest accrued.
FORM XXXXXX PAGE 17
19
The Minimum Monthly Payment, which is shown on the Policy Details pages, will
change if the Policy is changed; it will be listed in new Policy Details Pages
provided to You.
The death benefit during the grace period will be reduced by any overdue
charges. The Policy will lapse if the amount shown in the notice remains unpaid
at the end of the grace period. The Policy terminates on the date of lapse.
REINSTATEMENT
If this Policy has lapsed or foreclosed for failure to pay loan interest, and
has not been surrendered, it may be restored (called "reinstated" in this
Policy) within three years after the date of default or foreclosure. We will
reinstate the Policy on the Monthly Processing Date following the day We
receive all of the following items:
- a written application for reinstatement;
- Evidence of Insurability showing the Insured is insurable
according to Our underwriting rules; and
- a payment large enough to keep the Policy in force for three
months.
If reinstatement is requested when less than 48 Monthly Deductions have been
taken since the Date of Issue or increase in the Face Amount, You must pay for
the lesser of three Minimum Monthly Payments or three Monthly Deductions.
If You request reinstatement more than 48 Monthly Processing Dates from the
Date of Issue or increase in the Face Amount, You must pay 3 Monthly
Deductions.
Your reinstatement Premium will be allocated to the Fixed Account until We
approve Your application, at which time We will transfer the reinstatement
Premium, plus accrued interest, as You directed in Your last payment allocation
request.
The Policy Value on the reinstatement date is:
- the Net Payment to reinstate the Policy, including the
interest earned from the date We received Your payment; plus
- the Policy Value less any Outstanding Loan on the default
date; minus
- the Monthly Deduction due on the reinstatement date.
The amount of the surrender charge and the surrender charge period remaining on
the reinstatement date are those which were in effect on the date of default.
You may repay or reinstate any Outstanding Loan on the date of default or
foreclosure. Any Policy which has been surrendered may not be reinstated.
INFORMATION ABOUT THE VALUE OF YOUR POLICY
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NET PAYMENT AND ALLOCATION OF PAYMENTS
A Net Payment is a payment made to Us reduced by the payment expense charge. We
reserve the right to change the payment expense charge, which is shown on
Policy Details pages, only to reflect any changes in tax expenses.
Each Net Payment will be allocated to the Fixed Account or Sub-Accounts as
specified by You.
ALLOCATION OF NET PAYMENTS
If You make a payment with Your application or at any time before the Date of
Issue, We will hold the Net Payment in the Fixed Account as of the day We
receive it at Our Variable Life Service Center. When the Policy has been
issued, We will transfer any Policy Value from the Fixed Account (which were
not allocated by You to the Fixed Account) as You directed in Your application
or by later request. You can allocate Your Policy Value among the Sub-Accounts
and the Fixed Account to meet Your investment needs. If Your Policy provides
for a full refund of Premiums paid under its Right to Examine Policy provision
as required in Your state, We will allocate all Sub-Account investments to the
money market Sub-Account for:
FORM XXXXXX PAGE 18
20
- - 14 days from Acceptance, except as described below
- - 24 days from Acceptance for replacements in states with a 20-day right to
examine
- - 34 days from Acceptance for California citizens Age 60 and older, who have
a 30-day right to examine.
After this period, the money market Sub-Account value will be reallocated in
accordance with the allocation instructions in the application or in a
subsequent Written Request. All Net Payments received thereafter will be
allocated as of the date they are received at the Variable Life Service Center
in accordance with Your most recent payment allocation request. All percentage
allocations must be in whole numbers, with the total allocation to all selected
accounts equaling 100%. A processing charge of up to $25 may be made for
changing the payment allocation.
MONTHLY DEDUCTION
The monthly deduction is the sum of the following charges:
- the cost of insurance charge shown on the Policy Details
pages;
- the monthly expense charge shown on Policy Details pages;
- the monthly administration fee shown on the Policy Details
pages;
- the mortality and expense risk charge shown on the Policy
Details pages;
- any monthly Rider charge(s) shown on the Policy Details
pages.
The Monthly Deduction is made as of the Date of Issue and on each Monthly
Processing Date until the Final Payment Date. Thereafter, the mortality and
expense risk charge will be deducted as of the Monthly Processing Date for the
life of the Insured.
You may choose one or more Sub-Accounts and/or the Fixed Account from which the
Monthly Deduction will be made. If You do not make a choice, We will deduct the
Monthly Deduction Pro-rata. In the event any charge is greater than the value
of a sub-account to which it relates or the Fixed Account on a Monthly
Processing Date, the unpaid balance will be totaled and allocated Pro-rata
among the other Sub-Accounts of the Variable Account and the Fixed Account.
Charges allocated to the Fixed Account will be deducted on a last-in, first-out
basis. This means that We use the most recent payments to pay the fees.
COST OF INSURANCE CHARGE
The cost of insurance charge equals the sum of the charges that apply to:
- the Net Amount at Risk for the initial Face Amount, plus the
- Net Amount at Risk for each increase in the Face Amount.
We will determine the cost of insurance charge each month. Any changes in this
charge will be made by Underwriting Class. If You decrease the Face Amount of
the Policy, We will adjust the cost of insurance charge according to the Death
Benefit Option Changes provision.
The cost of insurance charge for the initial Face Amount for any month will not
be more than (1) multiplied by (2) where:
- (1) is the cost of insurance rate shown for the Insured's Age in
Table I; and
- (2) is the Net Amount at Risk for the initial Face Amount divided
by 1,000.
For each increase in Face Amount under Death Benefit Option 1 or Death Benefit
Option 3, the cost of insurance charge is the PRODUCT of:
- the cost of insurance rate for the increase; TIMES
- the DIFFERENCE between:
- the increase in Face Amount; AND
FORM XXXXXX PAGE 19
21
- any Policy Value IN EXCESS OF the initial Face Amount at the
beginning of the Policy month and not allocated to a prior
increase.
For each increase in Face Amount under Death Benefit Option 2, the cost of
insurance charge is the PRODUCT of:
- the cost of insurance rate for the increase; TIMES
- the increase in Face Amount.
For purposes of this calculation, Age means how old the Insured is on the
birthday closest to the anniversary of the of the increase. If either Death
Benefit option 1 or 3 is in effect and the Policy Value is higher than the
initial Face Amount, the excess Policy Value, minus charges for Rider benefits
at the beginning of the month, will be used to reduce any increases in the Face
Amount in the order in which the increases were issued.
If the Death Benefit is the minimum death benefit required for the Policy to
qualify as life insurance under the federal tax law (see "Guideline Minimum
Death Benefit Provision"), the cost of insurance charge for the portion of the
Death Benefit, which exceeds the Face Amount (i.e., initial Face Amount plus
any increases), will not be higher than (3) multiplied by (4) divided by 1,000
where:
- (3) is the cost of insurance rate applicable to the
initial Face Amount; and
- (4) is the Death Benefit less:
- the greater of the Face Amount or the Policy Value if
either Death Benefit options 1 or 3 is in effect, or
- the Face Amount plus the Policy Value, if the Death Benefit
Option 2 (see Death Benefit Options provision) is in
effect.
COST OF INSURANCE RATES
The cost of insurance rates are based on the Insured's:
- age;
- sex (unless this Policy is issued in a unisex class as indicated
on the Policy Details pages);
- Underwriting Class; and
- Face Amount.
The guaranteed rates will be no greater than the:
- The 1980 Commissioners Standard Ordinary Mortality Table,
Male, Female, or Table B for unisex risks (Tobacco or
Non-Tobacco versions of these tables are used if the Insured
is over 17 years of age on the Date of Issue); and
- appropriate increases in such tables for rated risks.
The cost of insurance rates actually charged will usually be lower than, and
never will be higher than, the guaranteed rates. We will review the actual cost
of insurance rates for this Policy whenever We change these rates for new
policies. In any event, rates will be reviewed not more often than once each
year, but not less than once in a five-year period.
WHAT YOU SHOULD KNOW ABOUT THE VARIABLE ACCOUNT
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VARIABLE ACCOUNT
The value of Your Policy will vary if a portion of it is in the Variable
Account. This account is separate from Our Fixed Account. We have exclusive and
absolute ownership and control of all assets, including those in the Variable
Account. However, the portion of assets in the Variable Account equal to the
reserves and liabilities of the policies which are supported by this account
will not be charged with liabilities that come from any other business We
conduct. We have the right to transfer to Our General Account any assets of the
Variable Account that are in excess of such reserves and other liabilities.
FORM XXXXXX PAGE 20
22
This account, which We established to support variable life insurance policies,
is registered with the U.S. Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940. It is also governed
by the laws of the State of Michigan.
SUB-ACCOUNTS
The Variable Account consists of Sub-Accounts. Each Sub-Account invests
exclusively in shares of a corresponding Fund. Shares of a Fund are purchased
and redeemed for a Sub-Account at their net asset value. Any amounts of income,
dividends and gains distributed from the shares of a Fund are reinvested in
additional shares of that Fund at net asset value.
The dollar amounts of values and benefits of this Policy provided by the
Variable Account depend of the investment performance of the Sub-Accounts
selected by the Policyowner. We do not guarantee the investment performance of
the Sub-Accounts. Policyowners bear the full investment risk for Sub-Account
Value.
We reserve the right, when the law allows, to change the name of the Variable
Account or any Sub-Account. You will find a list in Your application of the
Sub-Accounts in which You first choose to invest.
SUB-ACCOUNT VALUE
The Sub-Account Value of any Sub-Account as of the Date of Issue is equal to
the amount of the initial Net Payment allocated to that Sub-Account. On
subsequent Valuation Days the Sub-Account Value for any particular Sub-Account
is:
- - Net Payments allocated to that Sub-Account; plus
- - Policy Value transferred to that Sub-Account from another Sub-Account or
the Fixed Account; minus
- - partial withdrawals from that Sub-Account, including any applicable
partial withdrawal charges; minus
- - transfers from that Sub-Account, including any applicable transfer
charges; minus
- - any transaction charges allocated to that Sub-Account for changes in the
Face Amount; minus
- - if the Valuation Day is the Monthly Processing Date, the portion of the
Monthly Deduction allocated to that Sub-Account;
- - adjusted by any interest income, dividends, and net capital gains or
losses, realized or unrealized.
UNITS
For each Sub-Account, Net Payments allocated to a Sub-Account or amounts of
Policy Value transferred to a Sub-Account are converted into Units. The number
of Units credited to a Policy is determined by dividing the dollar amount
directed to each Sub-Account by the value of the Unit for that Sub-Account for
the Valuation Day on which the Net Payments or transferred amount is invested
in the Sub-Account. Therefore, Net Payments allocated to or amounts transferred
to a Sub-Account increase the number of Units of that Sub-Account credited to
the Policy.
Certain events will reduce the number of Units of a Sub-Account credited to a
Policy. Withdrawals or transfers from a Sub-Account will result in the
cancellation of the appropriate number of Units of that Sub-Account as will:
surrender of the Policy; payment of the Death Benefit proceeds; and the
deduction of the Monthly Deduction. Units are cancelled as of the end of the
Valuation Period in which we receive notification in writing regarding the
event.
UNIT VALUE
The Unit values for each Sub-Account were arbitrarily set initially at [$10]
when that Sub-Account began operations. Thereafter, the Unit value at the end
of every Valuation Day is the Unit value at the end of the previous Valuation
Day times the net investment factor as described below. The Sub-Account Value
for a Policy is determined on any day be multiplying the number of Units
attributable to the Policy in that Sub-Account by the value of the Unit for
that Sub-Account on that day.
FORM XXXXXX PAGE 21
23
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of Units of a Sub-Account from one Valuation Period to the next.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing 1 by 2 where:
1. is the result of:
a. the net asset value per share of the Fund held in the
Sub-Account, determined at the end of the current Valuation
Period; plus
b. the per share amount of any dividend or capital gain
distributions made by the Fund held in the Sub-Account, if
the "ex-dividend" date occurs during the current Valuation
Period; plus or minus
c. a per share charge or credit for any taxes reserved for,
which is determined by us to have resulted from the
operations of the Sub-Account.
2. is the net asset value per share of the Fund held in the
Sub-Account, determined at the end of the last prior Valuation
Period.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to law, to make additions to, deletions from, or
substitutions for the shares that are held in the Sub-Accounts. We may redeem
the shares of a Fund and substitute shares of another registered open-end
management company, if:
- the shares of the fund are no longer available for investment;
- change in tax laws; or
- in Our judgment further investment in the Fund would no longer be
appropriate based on the purposes of the Variable Account or the
affected Sub-Account.
Where the 1940 Act or other law requires, We will not substitute any shares
respecting a Policy interest in a Sub-Account without notice to Policyowners
and prior approval of the SEC and state insurance authorities. The Variable
Account may, as the law allows, purchase other securities for other policies or
allow a conversion between policies on a Policyowner's request.
We reserve the right to establish additional Sub-Accounts funded by a new fund
or by another investment company. Subject to law, We may, in Our sole
discretion, establish new Sub-Accounts or eliminate one or more Sub-Accounts.
We may change the Policy to reflect a substitution or other change and will
notify Policyowners of the change. Subject to any approvals the law may
require, the Variable Account or any Sub-Accounts may be:
- operated as a management company under the 1940 Act;
- deregistered under the 1940 Act if registration is no longer
required; or
- combined with other Sub-Accounts or Our other separate accounts.
FEDERAL TAXES
If We must pay taxes on the Variable Account, We will charge You for that tax.
Although the account is not now taxable, We reserve the right to make a charge
for taxes if the account becomes taxable.
SPLITTING OF UNITS
We reserve the right to split the value of a Unit, either to increase or
decrease the number of Units. Any splitting of Units will have no material
effect on Policy benefits.
FORM XXXXXX PAGE 22
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WHAT YOU SHOULD KNOW ABOUT THE FIXED ACCOUNT
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FIXED ACCOUNT
The Fixed Account is a part of Our General Account. The General Account
consists of all assets owned by Us, other than those in the Variable Account
and other separate accounts. Except as limited by law, We have sole control
over the investment of these General Account assets. You do not share directly
in the investment experience of the General Account, but are allowed to
allocate and transfer Policy Value into the Fixed Account.
FIXED ACCOUNT INTEREST RATES
The interest rate credited to Policy Value in the Fixed Account is set by Us
but is guaranteed never to be less than 4%. We may credit interest at rates
higher than the minimum guaranteed rate. We will review the interest rate from
time to time, at least once a year. The following guarantees apply to Policy
Value in the Fixed Account:
- the interest rate in effect on the day We receive Your
payment at Our Variable Life Service Center is guaranteed
until the next Policy anniversary unless You borrow from that
Policy Value.
- the interest rate in effect on the day Policy Value is
transferred from a sub-account of the Variable Account to the
Fixed Account is guaranteed until the next Policy anniversary
unless You borrow from that Policy Value.
- the interest rate in effect on a Policy anniversary is
guaranteed for one year for those Policy Values in the Fixed
Account on the Policy anniversary so long as those values
remain in the Fixed Account and are not borrowed.
FIXED ACCOUNT POLICY VALUE
On any day, the Fixed Account Policy Value is:
- - Net Payments allocated to the Fixed Account; plus
- - Variable Account Policy Value transferred to the Fixed Account; plus
- - interest credited to the Fixed Account; minus
- - partial withdrawals from the Fixed Account, including any applicable
partial withdrawal charges ; minus
- - transfers from the Fixed Account, including any applicable transfer
charges; minus
- - any transaction charges allocated to the Fixed Account for changes in the
Face Amount; minus
- - if the day is the Monthly Processing Date, the portion of the Monthly
Deduction allocated to the Fixed Account.
During any policy month the Fixed Account Policy Value will be calculated on a
consistent basis. For purposes of crediting interest, Policy Value deducted,
transferred or withdrawn from the Fixed Account is accounted for on a first-in,
first-out basis.
BASIS OF VALUE OF THE FIXED ACCOUNT
We base the minimum surrender value in the Fixed Account on mortality no
greater than The 1980 Commissioners Standard Ordinary Mortality Table, Male,
Female or Table B for unisex risks (or appropriate increases in such tables for
rated risks) with interest at 4% each year, compounded annually; however, if
the Insured is over age 17 on the day of issue, the minimum surrender value is
based on the Tobacco or Non-Tobacco versions of such tables.
Actual Policy Values are based on interest and cost of insurance rates that We
set. We have filed a detailed description of the way We determine this value
with the State Insurance Department. All values equal or exceed the minimums
required by law in the state in which this Policy is delivered.
FORM XXXXXX PAGE 23
25
CONVERSION
You may transfer, without charge, all or part of the Policy Value in the
Variable Account to the Fixed Account once during the first 24 months after the
Policy is issued, and once during the first 24 months first after You have
increased the Face Amount in order to convert to a fixed-only product. If You
do so, future payments will be allocated to the Fixed Account unless You
specify otherwise. All other transfers are subject to the following rules, and
will be permitted with Our approval.
WHAT YOU SHOULD KNOW ABOUT TRANSFERS
- --------------------------------------------------------------------------------
Before the Final Payment Date while the Insured is still living and the Policy
is in force, You may transfer amounts between the Fixed Account and the
Sub-Accounts or among Sub-Accounts, on request.
We reserve the right to limit the minimum and maximum amounts that may be
transferred. We reserve the right to limit the number of transfers that can be
made in each Policy year, and to set other reasonable rules controlling
transfers.
If a transfer would reduce the Policy Value in a sub-account to less than the
current minimum balance required for such accounts, We reserve the right to
include the remaining value in the amount transferred. You will not be charged
for the first 12 transfers in a Policy year, but a transfer charge may be made
on each additional transfer. Transfers that result from a Policy loan or
repayment of a loan are not subject to these rules.
FIXED ACCOUNT RESTRICTIONS
Transfers to and from the Fixed Account are currently permitted subject to the
following restrictions:
- - the amount transferred from the Fixed Account in each transfer does not
exceed the lesser of $100,000 or 25% of the Policy Value.
- - You make only one transfer involving the Fixed Account in each Policy
quarter.
IF YOU WANT TO BORROW FROM YOUR POLICY
- --------------------------------------------------------------------------------
AMOUNT YOU MAY BORROW
At any time prior to the Final Payment Date while the Insured is still living
and the Policy is in force, the Policyowner may, by Written Request, borrow
money from Us using the Policy as the sole security for the loan provided that
(a) a written loan agreement is signed by the Policyowner, and (b) the
Policyowner makes a satisfactory assignment of the Policy to Us. In taking a
loan, a Policyowner must borrow at least the minimum loan amount shown on the
Policy Details page. The maximum amount that a Policyowner may borrow is the
Loan Value. The Loan Value is 90% of the Policy Value less any surrender
charges as of the date of the loan.
There are two types of loans that may be available to You:
- - A standard loan option is always available to You. The Company will charge
interest on the amount of the loan at a current annual rate shown on the
Policy Details pages (Policy Loan Interest Rate). This current rate of
interest may change, but is guaranteed not to exceed 6%. However, the
Company will also credit interest on the Policy Value securing the loan.
The annual interest rate credited to the Policy Value securing a
non-preferred loan is shown on the Policy Details pages (Policy Loan
Credited Rate).
- - A preferred loan option is automatically available to You unless You
request otherwise. This option may be revoked by You at any time. The
preferred loan option is available on that part of an Outstanding Loan
that is attributable to Earnings. The Company will charge interest on the
amount of the loan at a current annual rate shown on the Policy Details
page (Preferred Policy Loan Interest Rate). This current rate of interest
may change, but is guaranteed not to exceed 4.50%. The annual interest
rate credited to the Earnings securing a preferred loan is shown on the
Policy Details pages (Preferred Policy Loan Credited Rate).
FORM XXXXXX PAGE 24
26
We will allocate Policy loans among the Sub-Accounts and the Fixed Account
according to Your instructions. If You do not make an allocation, We will make
a Pro-rata Allocation. We will transfer Pro-rata Allocations from each
Sub-Account to equal the total amount of the loan. This Outstanding Loan amount
is transferred to the Fixed Account.
A request for a preferred loan, a partial withdrawal after the Final Payment
Date, or the foreclosure of an Outstanding Loan will terminate a Guaranteed
Death Benefit Rider. See "Guaranteed Death Benefit Rider."
YOUR POLICY WILL BE THE SECURITY FOR THE LOAN.
INTEREST CHARGED ON BORROWED AMOUNTS
We charge interest on amounts borrowed by Policyowners. These rates are
effective annual rates compounded annually on the policy anniversary. Interest
is charged in arrears from the date of the loan and is due from Policyowners on
each policy anniversary for the prior Policy Year. If the Policyowner does not
pay such interest when due, the amount of the interest is added to the
Outstanding Loan. Thus, unpaid interest is charged interest during the ensuing
policy year.
INTEREST CREDITED TO THE LOAN ACCOUNT
We credit an Outstanding Loan with interest at an effective annual rate. On
each policy anniversary, interest earned on the Outstanding Loan since the
preceding anniversary is transferred to the Sub-Accounts and the Fixed Account.
Unless the Policyowner specifies otherwise, such transfers are allocated
Pro-rata.
REPAYING THE OUTSTANDING LOAN
The Policyowner may repay a loan or repay any part of a loan at any time while
the Insured is still living, and the Policy is in force. When You repay it, We
will transfer part or all of the Outstanding Loan in an amount equal to the
repayment to the Fixed Account and/or the Sub-Accounts. You may tell Us how to
allocate repayments, but if You do not, We will allocate them according to the
most recent payment allocation choices You have made. Loan repayments made to
the Variable Account cannot be higher than the amounts You transferred from it
to secure the Outstanding Loan.
FORECLOSURE
If at any time Your Policy Value less Outstanding Loan is insufficient to cover
the monthly deduction, We will terminate the Policy. We will mail a notice of
this termination to the last known address of You and any Assignee. If the
excess Outstanding Loan is not paid within 62 days after this notice is mailed,
the Policy will terminate with no value. You may reinstate this Policy
according to the Reinstatement provision.
DETAILS ON SURRENDER AND PARTIAL WITHDRAWALS
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SURRENDER
You may surrender the Policy and receive its Cash Surrender Value as long as
the Policy is in force and the Insured is living on the date We receive Your
Written Request in our Variable Life Service Center.
We will compute the Cash Surrender Value as of the Valuation Day on which We
receive the Policy with a Written Request for surrender. We will deduct a
surrender charge if You surrender the Policy on or before the last day of the
9th Policy year from the Date of Issue or increase in Face Amount.
The Cash Surrender Value may be paid in a lump sum or under a payment option
then offered by Us. We will normally pay the Cash Surrender Value within seven
days following Our receipt of the Written Request. We may delay benefit
payments under the circumstances. See "Postponement of Payments" below.
A surrender may have tax consequences.
FORM XXXXXX PAGE 25
27
CASH SURRENDER VALUE
The Cash Surrender Value equals the Policy Value minus the Outstanding Loan and
surrender charges.
You will find the surrender charge for the initial Face Amount on Policy
Details pages. Any changes in this charge when You increase or decrease the
Face Amount will be shown in new Policy Detail Pages.
PARTIAL WITHDRAWALS
After the first Policy year, You may withdraw part of the Cash Surrender Value
of Your Policy upon Written Request. Your Written Request must state the dollar
amount You wish to receive. You may allocate the amount withdrawn among the
Sub-Accounts and the Fixed Account. If You do not provide allocation
instructions, We will make a Pro-rata Allocation. Each partial withdrawal must
be at least $200. We will not allow a partial withdrawal if it would reduce the
Face Amount under Death Benefit Options 1 or 3 below $40,000. The maximum
amount of a partial withdrawal is the Cash Surrender Value less the greater of
$500 or three Monthly Deductions.
A partial withdrawal is considered a preferred partial withdrawal when the
withdrawal amount and the sum of the prior withdrawal amounts in the same
Policy year do not exceed 10% of the Policy Value as of the beginning of the
Policy year.
A partial withdrawal, unless it is a preferred partial withdrawal, will reduce
the Face Amount under both Death Benefit Options 1 and 3. The Face Amount
reductions will be made in the following order: (1) against the most recent
increase in Face Amount, (2) against the next most recent increases in Face
Amount in succession, and (3) against the Face Amount under the original
application.
On a partial withdrawal , We will cancel the number of Units of designated
Sub-Accounts equal in value to the amount withdrawn. The amount withdrawn will
be the amount You requested plus the partial withdrawal charges. We will
normally pay the partial withdrawal within seven days following Our receipt of
Written Request. We may delay payment. See "Postponement of Payment" below.
A partial withdrawal may have tax consequences.
A transaction fee not to exceed $25 will be assessed against all partial
withdrawals. Those partial withdrawals that are NOT classified as preferred
partial withdrawals will incur a surrender charge due to the reduction in Face
Amount. This charge is equal to a specified amount that is based on the Age,
sex and Underwriting Class of the Insured, for each $1,000 of the Policy's Face
Amount that reduces. For more information see "Surrender." A surrender charge
will not be applied to preferred partial withdrawals.
For important tax consequences of partial withdrawals, see federal tax laws.
POSTPONEMENT OF PAYMENT
We usually pay the amount of any surrender, withdrawal, Net Death Benefit, or
settlement option within seven business days after receipt of all applicable
written requests and/or Date of Death. We may postpone any transfer from the
Variable Account or payment of any amount payable on:
- surrender;
- partial withdrawal;
- transfer;
- Policy loan; or
- death of the Insured.
The postponement will continue during any period when:
- trading on the New York Stock Exchange (NYSE) is restricted as
determined by the SEC, or the NYSE is closed for days other than
weekends and holidays, or
- the SEC by order has permitted such postponement for the
protection of Policyowners suspension, or
- the SEC has determined that an emergency exists that would make
disposal of portfolio securities or valuation of assets not
reasonably practical.
FORM XXXXXX PAGE 26
28
We may also postpone any transfer from the Fixed Account or payment of any
portion of the amount payable on surrender, partial withdrawal or Policy loan
from the Fixed Account for not more than six months from the day We receive
Your Written Request and, if it is required, Your Policy.
If We postpone payments for 30 days or more, the amount postponed will earn
interest during that period of not less than 3% per year or such higher rate as
required by law. We will not postpone payments to pay Premiums on Our policies.
WHAT YOU SHOULD KNOW ABOUT THE DEATH BENEFIT
- --------------------------------------------------------------------------------
NET DEATH BENEFIT
If the Insured dies while the Policy is in force on or before the Final Payment
Date, We will pay the Net Death Benefit. The amount of the Net Death Benefit
and any Net Death Benefit under any Rider depends on which Death Benefit option
is in effect on the date of death. (There are three Death Benefit options,
which are described later.) We will deduct from the death benefit any
Outstanding Loan, and any Monthly Deduction due and unpaid through the Policy
month in which the Insured dies, as well as any partial withdrawals and
withdrawal charges.
If the Insured dies after the Final Payment Date, We shall pay the Policy Value
minus any Outstanding Loan as of the date We receive Written Notice of Claim.
Except as otherwise provided, We will pay interest from the date the Insured
dies to the date the Net Death Benefit is paid. If You choose a lump sum
payment, the interest rate will be at least 3% a year, or the minimum rate set
by law, whichever is greater. If the Death Benefit Option 2 is in effect on the
date of the Insured's death, We will begin calculating interest on the Policy
Value portion of the Net Death Benefit on the date We receive Written Notice of
Claim.
DEATH BENEFIT OPTIONS
You have three options for determining the amount of the death benefit. The
option You elected in Your application is shown on the Policy Details pages.
Under Death Benefit Options 1 and Option 3, the death benefit is:
- the Face Amount, or
- the minimum death benefit, whichever is greater.
Under the Death Benefit Option 2, the death benefit is:
- the Face Amount plus the Policy Value on the date We receive
Written Notice of Claim (We will refund monthly deductions from
the Policy Value after the Insured's date of death); or
- the minimum death benefit, whichever is greater.
GUIDELINE MINIMUM DEATH BENEFIT
In order to qualify as "life insurance" under the Federal tax laws, this Policy
must provide a Guideline Minimum Death Benefit. The Guideline Minimum Death
Benefit will be determined as of the date of death of the Insured. If Death
Benefit Option 1 or Death Benefit Option 2 is in effect, the Guideline Minimum
Death Benefit is obtained by multiplying the Policy Value by a percentage
factor for the Insured's attained age, as shown in Table II. If Death Benefit
Option 3 is in effect, the Guideline Minimum Death Benefit is obtained by
multiplying the Policy Value by a percentage for the Insured's attained age,
sex, and Underwriting Class, as set forth in Table III.
Guideline Minimum Death Benefit factors in Table II are used when Death Benefit
Option 1 or Death Benefit Option 2 is in effect. The Guideline Minimum Death
Benefit factors in Table II reflects the requirements of the "Guideline
Premium/Guideline Death Benefit" test set forth in the federal tax laws.
Guideline Minimum Death Benefit factors in Table III are used when Death
Benefit Option 3 is in effect. These factors reflect the requirements of the
"Cash Value Accumulation" test set forth in the federal tax laws. The Guideline
Minimum Death Benefit factors will be adjusted to conform to any changes in the
federal tax laws.
FORM XXXXXX PAGE 27
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DEATH BENEFIT OPTION CHANGES
If You have selected Death Benefit Option 3, You are not permitted by law to
change Your death benefit option. You may change Your death benefit option only
if You have selected either Death Benefit Options 1 or 2.
You may change the Death Benefit option by Written Request while the Insured is
still living and the Policy is in force prior to the Final Payment Date.
Evidence of Insurability may be required for a death benefit option change. The
change will be made as of the next Monthly Processing Date after We approve
Your request.
You may not change Your Death Benefit option more than once in any Policy year
or if the change reduces the Face Amount to less than $50,000.
If You change from the Death Benefit Option 1 to the Death Benefit Option 2,
the Face Amount under the Death Benefit Option 2 will be equal to the death
benefit under the Death Benefit Option 1, minus the Policy Value as of the date
of change.
If You change from the Death Benefit Option 2 to the Death Benefit Option 1,
the Face Amount will be equal to the Death Benefit under the Death Benefit
Option 2 as of the date of change.
CHANGE IN FACE AMOUNT
You may increase or decrease the Face Amount by Written Request. An increase or
decrease in the Face Amount takes effect as of the later of:
- - the Monthly Processing Date on or next following the date of receipt of
Your Written Request; or
- - the date of approval of Your Written Request, if Evidence of Insurability
is required.
You may not change the Face Amount if it does not meet the minimum Death
Benefit requirement set by federal tax law.
INCREASE OF FACE AMOUNT
To increase the Face Amount:
- You must complete Our application and provide Us with Evidence of
Insurability; and
- the Insured must be under Our maximum issue Age for new insurance;
and
- the Insured must be approved by Us according to Our underwriting
rules; and
- You must pay the amount which is necessary to keep the Policy in
force for three months if the Policy Value is less than this
amount.
This increased Face Amount will become effective on the first Monthly
Processing Date on or following the date that all the conditions are met. We
will provide You new Policy Details Pages, including a Supplemental Insurance
Protection Charge Table. These pages will include the following information:
- Date of Issue of the increase;
- amount of the increase;
- Underwriting Class;
- cost of insurance charge for the increase;
- new Minimum Monthly Payment;
- new monthly expense charge;
- new guideline Premiums; and
- new surrender charges applicable to the entire Policy.
We reserve the right to set a limit on the minimum amount of an increase in the
Face Amount. No increase may be less than Our minimum limit in effect on the
date We receive Your request.
FORM XXXXXX PAGE 28
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You may return the new Policy Details Pages to Us within ten days after
receiving them. If You return these pages, We will consider the increase void
from the beginning. We will add the charges back to the Policy Value unless You
request otherwise. We will also cancel any surrender charge for the increase.
DECREASE OF FACE AMOUNT
You may decrease the Face Amount of the Policy at any time while the Insured is
still living and the Policy is in force and prior to the Final Payment Date. It
will be effective on the first Monthly Processing Date after We receive Your
Written Request.
The Face Amount will be decreased or eliminated in the following order:
- first, the most recent increase;
- second, the next most recent increases successively; and
- last, the initial Face Amount.
We will deduct a surrender charge from the Policy Value on the date of the
decrease. You may choose the sub-account from which these charges will be
deducted; but if You do not choose, We will allocate the charges Pro-rata.
We will provide You with new Policy Details Pages. These pages will include the
following information:
- Date of Issue of the decrease;
- amount of the decrease and the Face Amount remaining in force;
- new Minimum Monthly Payment, if any;
- new guideline Premiums;
- new monthly expense charge; and
- new surrender charges applicable to the entire Policy.
You may not decrease the Face Amount to less than Our minimum issue limit for
this type of Policy. We reserve the right to establish a minimum limit on the
amount of any decrease.
PAYMENT OF BENEFITS
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PAYMENT OPTIONS
Upon Written Request, the surrender value or all or part of the Net Death
Benefit may be placed under one or more of the payment options offered by Us at
the time the request is made. If You make no election, We will pay the benefit
in a lump sum or under a payment option We offer at that time. A certificate
will be provided to the payee describing the payment option selected.
If a payment option is selected, the beneficiary, when filing proof of claim,
may pay Us any amount that otherwise would be deducted from the Net Death
Benefit.
The amounts payable under these options are paid from the General Account. The
options are not based on the investment experience of the Variable Account.
The amount applied under any one option for any one payee must be at least
$5,000 or the proceeds will be paid in one lump sum. The periodic payment for
any one payee must be at least $50.
Subject to the Policyowner and Beneficiary provisions, You may change any
option selection before the Net Death Benefit becomes payable. If You make no
selection, the beneficiary may select an option when the proceeds become
payable.
FORM XXXXXX PAGE 29
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CANADA LIFE INSURANCE COMPANY OF AMERICA
HOME OFFICE:
6201 POWERS FERRY ROAD, NW
ATLANTA, GEORGIA 30339
VARIABLE LIFE SERVICE CENTER:
440 LINCOLN STREET, P. O. BOX []
WORCESTER, MASSACHUSETTS 01653
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
DEATH PROCEEDS PAYABLE AT DEATH OF INSURED
FLEXIBLE PREMIUMS PAYABLE TO THE FINAL PAYMENT DATE
COVERAGE TO THE FINAL PAYMENT DATE AND AMOUNT OF POLICY VALUE NOT GUARANTEED
NONPARTICIPATING
FORM XXXXXX PAGE 30