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As filed with the Securities and Exchange Commission on March 29, 2000
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF
UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
(Exact name of Registrant)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
100 Summit Drive
Valhalla, NY 10595
(Address of Depositor's Principal Executive Offices)
James D. Gallagher Copy to:
President J. Sumner Jones, Esq.
The Manufacturers Life Insurance Company of Jones & Blouch L.L.P.
New York 1025 Thomas Jefferson Street, NW
100 Summit Drive Washington, DC 20007
Valhalla, NY 10595
(Name and Address of Agent for Service)
Title of Securities Being Registered: Variable Life Insurance Contracts
Approximate date of commencement of proposed public offering: As soon after the
effective date of this Registration Statement as is practicable.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The Manufacturers Life Insurance Company of New York
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
1 Cover Page; General Information About Manulife of New York, the
Separate Account and the Trust (The Separate Account)
2 Cover Page; General Information About Manulife of New York, the
Separate Account and the Trust (Manulife of New York)
3 *
4 Other Information (Distribution of the Policy)
5 General Information About Manulife of New York, the Separate Account
and the Trust (The Separate Account)
6 General Information About Manulife of New York, the Separate Account
and the Trust (The Separate Account)
7 *
8 *
9 Other Information (Litigation)
10 Death Benefits; Premium Payments; Charges and Deductions; Policy
Value; Policy Loans; Policy Surrender and Partial Withdrawals; Lapse
and Reinstatement; Other Provisions of the Policy; Other Information
11 General Information About Manulife of New York, the Separate Account
and the Trust (The Trust)
12 General Information About Manulife of New York, the Separate Account
and the Trust (The Trust)
13 Charges and Deductions
14 Issuing A Policy; Other Information (Responsibilities Assumed By
Manufacturers Life)
15 Issuing A Policy
16 **
17 Policy Surrender and Partial Withdrawals
18 General Information About Manulife of New York, the Separate Account
and the Trust
19 Other Information (Reports to Policyholders; Responsibilities Assumed
By Manufacturers Life)
20 *
21 Policy Loans
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22 *
23 **
24 Other Provisions of the Policy
25 General Information About Manulife of New York, the Separate Account
and the Trust (Manulife of New York)
26 *
27 **
28 Other Information (Officers and Directors)
29 General Information About Manulife of New York, the Separate Account
and the Trust (Manulife of New York)
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
38 Other Information (Distribution of the Policies; Responsibilities of
Manufacturers Life)
39 Other Information (Distribution of the Policies)
40 *
41 **
42 *
43 *
44 Policy Values --Determination of Policy Value; Units and Unit Values)
45 *
46 Policy Surrender and Partial Withdrawals; Other Information --
Payment of Proceeds)
47 General Information About Manulife of New York, the Separate Account
and the Trust (The Trust)
48 *
49 *
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50 General Information About Manulife of New York, the Separate Account
and the Trust
51 Issuing a Policy; Death Benefits; Premium Payments; Charges and
Deductions; Policy Value; Policy Loans; Policy Surrender and Partial
Withdrawals; Lapse and Reinstatement; Other Policy Provisions
52 Other Information (Substitution of Portfolio Shares)
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
* Omitted since answer is negative or item is not applicable.
** Omitted.
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PART I
INFORMATION REQUIRED IN PROSPECTUS
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PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
VENTURE SPVL
A MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes Venture SPVL, a modified single premium variable life
insurance policy (the "Policy"). The Manufacturers Life Insurance Company of New
York (the "Company," "Manulife New York," "we" or "us") offers the Policy on
both a single life and a survivorship basis.
Policy Value may accumulate on a fixed basis or vary with the investment
performance of the sub-accounts of Manulife New York's Separate Account B (the
"Separate Account"). The assets of each sub-account will be used to purchase
shares of a particular investment portfolio (a "Portfolio") of Manufacturers
Investment Trust (the "Trust"). The accompanying prospectus for the Trust and
the corresponding statement of additional information, describe the investment
objectives of the Portfolios in which you may invest net premiums. Other
sub-accounts and Portfolios may be added in the future.
EXCEPT FOR CERTAIN POLICIES ISSUED IN EXCHANGE FOR A POLICY WHICH IS NOT A
MODIFIED ENDOWMENT CONTRACT (A "MEC"), THE POLICY WILL BE TREATED AS A MEC FOR
FEDERAL INCOME TAX PURPOSES. AS A RESULT, ANY LOAN, PARTIAL WITHDRAWAL,
ASSIGNMENT, PLEDGE, LAPSE OR SURRENDER OF THE POLICY (OR ANY LOAN, PARTIAL
WITHDRAWAL, ASSIGNMENT OR PLEDGE OF THE POLICY WITHIN TWO YEARS BEFORE THE
POLICY BECOMES A MEC) MAY BE SUBJECT TO INCOME TAX AND A 10% PENALTY TAX.
PROSPECTIVE PURCHASERS SHOULD NOTE THAT IT MAY NOT BE ADVISABLE TO PURCHASE A
POLICY AS A REPLACEMENT FOR EXISTING INSURANCE.
The Securities and Exchange Commission maintains a web site (http://www.sec.gov)
that contains material incorporated by reference and other information regarding
registrants that file electronically with the Commission.
Please read this prospectus carefully and keep it for future reference. It is
valid only when accompanied by a current prospectus for the Trust.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
HOME OFFICE: SERVICE OFFICE MAILING ADDRESS:
The Manufacturers Life Insurance The Manufacturers Life Insurance
Company of New York Company of New York
100 Summit Lake Drive P.O. Box 633, Niagara Square Station
Second Floor Buffalo, New York 14201-0633
Valhalla, New York 10595 TELEPHONE: 1-888-267-7784
THE DATE OF THIS PROSPECTUS IS ______________
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TABLE OF CONTENTS
POLICY SUMMARY ............................................................ 4
General ................................................................ 4
Death Benefits ......................................................... 4
Premiums ............................................................... 4
Policy Value ........................................................... 4
Policy Loans ........................................................... 4
Surrender and Partial Withdrawals ...................................... 4
Lapse and Reinstatement ................................................ 4
Charges and Deductions ................................................. 6
Investment Options and Investment Advisers ............................. 6
Investment Management Fees and Expenses ................................ 6
Table of Charges and Deductions ........................................ 6
Table of Investment Management Fees and Expenses ....................... 7
Table of Investment Options and Investment Advisers .................... 9
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT
AND THE TRUST ........................................................... 10
Manulife New York ...................................................... 10
The Separate Account ................................................... 10
The Trust .............................................................. 10
ISSUING A POLICY .......................................................... 14
Requirements ........................................................... 14
Temporary Insurance Agreement .......................................... 15
Right to Examine the Policy ............................................ 15
Life Insurance Qualification ........................................... 15
DEATH BENEFITS ............................................................ 16
Death Benefit .......................................................... 16
Maturity Date .......................................................... 17
PREMIUM PAYMENTS .......................................................... 17
Initial Premiums ....................................................... 17
Subsequent Premiums .................................................... 18
Premium Allocation ..................................................... 18
Maximum Premium Limitation ............................................. 18
CHARGES AND DEDUCTIONS .................................................... 18
Tax load ............................................................... 18
Surrender Charges ...................................................... 19
Monthly Charges ........................................................ 20
Administration Charge .................................................. 20
Cost of Insurance Charge ............................................... 20
Mortality and Expense Risks Charge ..................................... 21
Charges for Supplementary Benefits ..................................... 21
Charges for Transfers .................................................. 21
Reduction in Charges ................................................... 21
SPECIAL PROVISIONS FOR EXCHANGES .......................................... 21
COMPANY TAX CONSIDERATIONS ................................................ 22
POLICY VALUE .............................................................. 22
Determination of the Policy Value ...................................... 22
Units and Unit Values .................................................. 22
Transfers of Policy Value .............................................. 23
Telephone Transfers .................................................... 23
Dollar Cost Averaging .................................................. 23
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Asset Allocation Balancer Transfer ..................................... 24
POLICY LOANS .............................................................. 24
Maximum Loanable Amount ................................................ 24
Effect of Policy Loan .................................................. 24
Interest Charged on Policy Loans ....................................... 24
Loan Account ........................................................... 24
POLICY SURRENDER AND PARTIAL WITHDRAWALS .................................. 26
Policy Surrender ....................................................... 26
Partial Withdrawals .................................................... 26
LAPSE AND REINSTATEMENT ................................................... 26
Lapse .................................................................. 26
Reinstatement .......................................................... 27
Termination ............................................................ 27
THE GENERAL ACCOUNT ....................................................... 27
Fixed Account .......................................................... 28
OTHER PROVISIONS OF THE POLICY ............................................ 28
Assignment of Rights ................................................... 28
Beneficiary ............................................................ 28
Incontestability ....................................................... 28
Misstatement of Age or Sex ............................................. 28
Suicide Exclusion ...................................................... 29
Supplementary Benefits ................................................. 29
TAX TREATMENT OF THE POLICY ............................................... 29
OTHER INFORMATION ......................................................... 34
Payment of Proceeds .................................................... 34
Reports to Policyowners ................................................ 34
Distribution of the Policies ........................................... 34
Responsibilities Assumed By Manulife New York and MSS .................. 35
Voting Rights .......................................................... 35
Substitution of Portfolio Shares ....................................... 35
Records and Accounts ................................................... 36
State Regulations ...................................................... 36
Litigation ............................................................. 36
Independent Auditors ................................................... 36
Further Information .................................................... 36
Officers and Directors ................................................. 37
Year 2000 Issues ....................................................... 37
APPENDIX A - DEFINITIONS .................................................. A1
APPENDIX B - SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER
VALUES AND DEATH BENEFITS ............................................... B1
FINANCIAL STATEMENTS ...................................................... F1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD NOT BE LAWFUL. YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE STATEMENT
OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
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POLICY SUMMARY
GENERAL
This Policy may be issued either as a modified single premium variable life
insurance policy or as a modified single premium survivorship variable life
insurance policy. We have prepared the following summary as a general
description of the most important features of the Policy. It is not
comprehensive and you should refer to the more detailed information contained in
this prospectus. Unless otherwise indicated or required by the context, the
discussion throughout this prospectus assumes that the Policy has not gone into
default, there is no outstanding Policy Debt, and the death benefit is not
determined by the minimum death benefit percentage. The Policy's provisions may
vary in some states.
DEATH BENEFITS
The Policy provides a death benefit in the event of the death of the Life
Insured. The death benefit is the FACE AMOUNT OF THE POLICY at the date of death
(less any Policy Debt and outstanding Monthly Deductions due) or, if greater,
the Minimum Death Benefit (less any Policy Debt and outstanding Monthly
Deductions due).
PREMIUMS
The Policy permits the payment of a large initial premium. The initial premium
may be 80%, 90% or 100% of the Guideline Single Premium (based on Face Amount).
However, in the case of simplified underwriting, and in order to qualify for the
Lapse Protection Benefit, 100% of the Guideline Single Premium is required. The
minimum single premium is $25,000. Additional premiums will be accepted only
under certain conditions as stated under "Premium Payments - Subsequent
Premiums." Premiums will be allocated, according to your instructions and at the
Company's discretion, to one or more of our general account (the "Fixed
Account") and the sub-accounts of the Separate Account of the Company. You (the
policyowner) may change your allocation instructions at any time. You may also
transfer amounts among the accounts.
POLICY VALUE
The Policy has a Policy Value reflecting premiums paid, certain charges for
expenses and cost of insurance, and the investment performance of the accounts
to which you have allocated premiums.
POLICY LOANS
You may borrow an amount not to exceed 90% of your Policy's Net Cash Surrender
Value. Loan interest at a rate of 6.00% is due on each Policy Anniversary.
Preferred interest rates are also available in the case of loans on amounts that
represent Earnings on the Policy. We will deduct all outstanding Policy Debt
from proceeds payable at the insured's death, or upon surrender. Policy loans
may have tax consequences. See section entitled "Tax Treatment of the Policy"
for a discussion of the potential Federal income tax implications of a loan from
the Policy.
SURRENDER AND PARTIAL WITHDRAWALS
You may make a partial withdrawal of your Policy Value. A partial withdrawal
will result in a reduction in the Face Amount of the Policy . A partial
withdrawal may result in a surrender charge if made during the Surrender Charge
Period.
You may surrender your Policy for its Net Cash Surrender Value at any time while
the Life Insured is living. The Net Cash Surrender Value is equal to the Policy
Value less the sum of (a) Surrender Charges, (b) outstanding Monthly Deductions
due, and (c) Policy Debt.
See section entitled "Tax Treatment of the Policy" for a discussion of the
potential Federal income tax implications of a surrender of, or partial
withdrawal from, the Policy.
LAPSE AND REINSTATEMENT
Unless the Lapse Protection Benefit is in effect, a Policy will lapse (and
terminate without value) when its Net Cash Surrender Value is insufficient to
pay the next monthly deduction and a grace period of 61 days expires without
your having made an adequate payment. Therefore, a Policy could lapse eventually
if increases in Policy Value (prior to deduction of Policy charges) are not
sufficient to cover Policy charges. A Policy could also lapse if the Policy Debt
is greater than the
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Cash Surrender Value since the Lapse Protection Benefit terminates on any date
that the Policy Debt exceeds the Cash Surrender Value.
A policyowner may reinstate a lapsed Policy at any time within the five year
period following lapse provided the Policy was not surrendered for its Net Cash
Surrender Value. However, in the case of a Survivorship Policy, the Policy may
not be reinstated if any of the Life Insured have died since the Policy lapsed.
We will require evidence of insurability along with a certain amount of premium
as described under "Reinstatement."
See section entitled "Tax Treatment of the Policy" for a discussion of the
potential Federal income tax implications of a lapse and reinstatement of the
Policy.
TAXATION OF POLICY BENEFITS
Characterization of a Policy as a MEC.
Section 7702A of the Internal Revenue Code (the "Code") establishes a class of
life insurance contracts designated as Modified Endowment Contracts ("MECs"),
which applies to Policies entered into or materially changed after June 20,
1988. In general, a Policy will be a MEC if the accumulated premiums paid at any
time during the first seven Policy Years exceed the sum of the net level
premiums which would have been paid on or before such time if the Policy paid up
future benefits after the payment of seven level annual premiums (the "seven-pay
test"). The determination of whether a Policy will be a MEC after a material
change generally depends upon the relationship of the death benefit and the
Policy Value at the time of such change and the additional premiums paid in the
seven years following the material change. In general, this Policy will
constitute a MEC unless:
(1) it was received in exchange for another life insurance policy which was not
a MEC,
(2) no premium payments (other than the exchanged policy) are paid into the
Policy during the first seven Policy years, and
(3) the death benefit on the new Policy is not less than the death benefit on
the exchanged policy.
If the death benefit on the new policy is less than the death benefit on the
exchanged policy, the new policy may become a MEC if (1) the exchanged policy
was, at the time of the exchange, subject to the MEC rules, (2) premiums
payments had been made to the old policy after it had become subject to the MEC
rules, and (3) the exchanged policy was in a seven-pay test period at the time
of exchange or, in the case of a Survivorship Policy, the Policy was issued (or
deemed issued) after September 13, 1989.
In addition, even if the Policy initially is not a MEC, it may in certain
circumstances become a MEC. These circumstances would include a later increase
in benefits, any other material change of the Policy (within the meaning of the
tax law), and a withdrawal or reduction in the death benefit during the first
seven Policy years.
Tax Treatment of Withdrawals, Loans, Assignments and Pledges under
MECs. If the Policy is a MEC, withdrawals from the Policy will be treated first
as withdrawals of income and then as a recovery of premium payments. Thus,
withdrawals will be includible in income to the extent the Policy value exceeds
the investment in the Policy. The amount of any loan (including unpaid interest
thereon) under the Policy will be treated as a withdrawal from the Policy for
tax purposes. In addition, if you assign or pledge any portion of the value of a
Policy (or agrees to assign or pledge any portion), such portion will be treated
as a withdrawal from the Policy for tax purposes. Your investment in the Policy
is increased by the amount includible in income with respect to such assignment,
pledge, or loan, though it is not affected by any other aspect of the
assignment, pledge, or loan (including its release or repayment). Before
assigning, pledging, or requesting a loan under a Policy which is a MEC, you
should consult a qualified tax advisor.
MEC Penalty Tax. Generally, withdrawals (or the amount of any deemed
withdrawals) from a MEC are subject to a penalty tax equal to 10% of the portion
of the withdrawal that is includible in income, unless the withdrawals are made
(1) after you attain age 59 1/2, (2) because you have become disabled (as
defined in the tax law), or (3) as substantially equal periodic payments over
your life or life (or the joint lives or life expectancies of you and your
beneficiary, as defined in the tax law).
For further information regarding the tax treatment of Policies that
are MECs, see "Tax Treatment of the Policy - Tax Treatment of Policy Benefits."
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CHARGES AND DEDUCTIONS
We assess certain charges and deductions in connection with the Policy. These
include:
- charges assessed monthly for mortality and expense risks, cost of
insurance and administration expenses,
- charges deducted from premiums paid, and
- charges assessed on surrender, lapse or withdrawal of Net Cash
Surrender Value.
These charges are summarized in the Table of Charges and Deductions. Unless you
otherwise specify and we allow, the monthly deduction will be allocated among
the Investment Accounts and the Fixed Account in the same proportion as the
Policy Value in each bears to the Net Policy Value immediately prior to the
deduction. However, the mortality and expense risk charge will only be allocated
among the Investment Accounts.
In addition, there are charges deducted from each Portfolio of the Trust. These
charges are summarized in the Table of Investment Management Fees and Expenses.
INVESTMENT OPTIONS AND INVESTMENT ADVISERS
You may allocate Net Premiums to the Fixed Account or to one or more of the
sub-accounts of our Separate Account B. Each of the sub-accounts invests in the
shares of one of the Portfolios of the Trust.
The Trust receives investment advisory services from Manufacturers Securities
Services, LLC ("MSS"). MSS is a registered investment adviser under the
Investment Advisers Act of 1940.
The Trust also employs subadvisers. The Table of Investment Options and
Investment Advisers shows the subadvisers that provide investment subadvisory
services to the indicated Portfolios.
Allocating net premiums only to one or a small number of the investment options
(other than the Lifestyle Trusts) should not be considered a balanced investment
strategy. In particular, allocating net premiums to a small number of investment
options that concentrate their investments in a particular business or market
sector will increase the risk that the value of your policy will be more
volatile since these investment options may react similarly to business or
market specific events. Examples of business or market sectors where this risk
historically has been and may continue to be particularly high include: (a)
technology related businesses, including internet related businesses, (b) small
cap securities and (c) foreign securities. The Company does not provide advice
regarding appropriate investment allocations, please discuss this matter with
your financial adviser.
INVESTMENT MANAGEMENT FEES AND EXPENSES
The Separate Account purchases shares of the Portfolios at net asset value. The
net asset value of those shares reflects investment management fees and certain
expenses of the Portfolios. The fees and expenses for each Portfolio for the
Trust's last fiscal year are shown in the Table of Investment Management Fees
and Expenses below. These fees and expenses are described in detail in the
accompanying Trust prospectus to which reference should be made.
TABLE OF CHARGES AND DEDUCTIONS
Surrender Charge
The total amount of the surrender charge is determined by multiplying the amount
withdrawn or surrendered in excess of the free withdrawal amount by the
applicable surrender charge percentage shown in the following table.
Policy Year Surrender Charge
1 10.00%
2 9.00%
3 8.00%
4 7.00%
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5 6.00%
6 5.00%
7 4.00%
8 3.00%
9 1.50%
10+ 0.00%
If necessary, the Company will reduce the surrender charge deducted upon a
partial withdrawal or a surrender of the Policy so that the sum of all tax
loads, the administration charges and surrender charge deducted (including the
surrender charge to be deducted upon such partial withdrawal or surrender) does
not exceed 10% of aggregate payments made during the first Policy Year.
Monthly Deductions: - A tax load of 0.030% of Policy Value is deducted
monthly (equivalent to 0.360% annually) for the
first 10 Policy Years. If additional premium
payments are made, the 0.030% tax load for a
particular premium payment is deducted from the
Policy Value corresponding to the premium payment
for 10 Policy Years following the premium payment.
Approximately, 13% of the tax load is expected to
cover acquisition and sales expenses, 20% federal
taxes and 67% state taxes.
- An administration charge of $7.50 plus 0.010%
monthly (equivalent to 0.12% annually).
- The cost of insurance charge.
- Any additional charges for supplementary benefits,
if applicable.
- A mortality and expense risks charge. This charge is
calculated as a percentage of the value of the
Investment Accounts and is assessed against the
Investment Accounts. The charge varies by Policy
Year as follows:
Guaranteed Monthly Guaranteed Annual
Mortality and Expense Mortality and Expense
Policy Years Risks Charge Risks Charge
---------------------------------------------------------------------
1-10 0.075% 0.900%
10+ 0.025% 0.30%
All of the above charges, except the mortality and expense
risks charge, are deducted from the Net Policy Value.
Loan Charges: A fixed loan interest rate of 6.00% annually. Interest
credited to amounts in the Loan Account is guaranteed not
to be less than 4.00% at all times. The maximum loan
amount is 90% of the Net Cash Surrender Value. Transfer
Charge: A charge of $25 per transfer for each transfer in
excess of 12 in a Policy Year.
TABLE OF INVESTMENT MANAGEMENT FEES AND EXPENSES
TRUST ANNUAL EXPENSES
(as a percentage of Trust average net assets
as of fiscal year ended December 31, 1999)
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
- --------------------------------------------------------------------------------
Pacific Rim Emerging Markets 0.850% 0.260% 1.110%
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Internet Technologies ...... 1.150% 0.136%(A) 1.286%
Science & Technology ....... 1.100% 0.060% 1.160%
International Small Cap .... 1.100% 0.270% 1.370%
Aggressive Growth .......... 1.000%(F) 0.130% 1.130%
Emerging Small Company ..... 1.050% 0.070% 1.120%
Small Company Blend ........ 1.050% 0.250%(A) 1.300%(E)
Dynamic Growth ............. 1.000% 0.132%(A) 1.132%
Mid Cap Stock .............. 0.925% 0.100%(A) 1.025%(E)
All Cap Growth ............. 0.950%(F) 0.070% 1.020%
Overseas ................... 0.950% 0.260% 1.210%
International Stock ........ 1.050% 0.200% 1.250%
International Value ........ 1.000% 0.230%(A) 1.230%(E)
TOTAL TRUST
OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES REIMBURSEMENT) REIMBURSEMENT)
Mid Cap Blend.................. 0.850%(F) 0.060% 0.910%
Small Company Value............ 1.050% 0.170% 1.220%
Global Equity.................. 0.900% 0.160% 1.060%
Growth......................... 0.850% 0.050% 0.900%
Large Cap Growth............... 0.875%(F) 0.100% 0.975%
Quantitative Equity............ 0.700% 0.060% 0.760%
Blue Chip Growth............... 0.875%(F) 0.050% 0.925%
Real Estate Securities......... 0.700% 0.070% 0.770%
Value.......................... 0.800% 0.070% 0.870%
Tactical Allocation............ 0.900% 0.127%(A) 1.027%
Growth & Income................ 0.750% 0.050% 0.800%
U.S. Large Cap Value........... 0.875% 0.070%(A) 0.945%(E)
Equity-Income.................. 0.875%(F) 0.060% 0.935%
Income & Value................. 0.800%(F) 0.080% 0.880%
Balanced....................... 0.800% 0.070% 0.870%
High Yield..................... 0.775% 0.065% 0.840%
Strategic Bond................. 0.775% 0.095% 0.870%
Global Bond.................... 0.800% 0.180% 0.980%
Total Return................... 0.775% 0.060%(A) 0.835%(E)
Investment Quality Bond........ 0.650% 0.120% 0.770%
Diversified Bond............... 0.750% 0.090% 0.840%
U.S. Government Securities..... 0.650% 0.070% 0.720%
Money Market................... 0.500% 0.050% 0.550%
International Index............ 0.550% 0.072%(A) 0.622%
Small Cap Index................ 0.525% 0.089%(A) 0.614%
Mid Cap Index.................. 0.525% 0.135%(A) 0.660%
Total Stock Market Index....... 0.525% 0.080%(A) 0.605%
500 Index ..................... 0.525% 0.039%(A) 0.564%
Lifestyle Aggressive 1000(D)... 0.075% 1.060%(B) 1.135%(C)
Lifestyle Growth 820(D)........ 0.057% 1.008%(B) 1.065%(C)
Lifestyle Balanced 640(D)...... 0.057% 0.928%(B) 0.985%(C)
Lifestyle Moderate 460(D)...... 0.066% 0.869%(B) 0.935%(C)
Lifestyle Conservative 280(D).. 0.075% 0.780%(B) 0.855%(C)
(A) Based on estimates of payments to be made during the current fiscal year.
(B) Reflects expenses of the Underlying Portfolios.
(C) The investment adviser to the Trust, The Manufacturers Securities Services,
LLC ("MSS" or "the Adviser"), has voluntarily agreed to pay certain expenses of
each Lifestyle Trust (excluding the expenses of the Underlying Portfolios) as
noted below.
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This voluntary expense reimbursement may be terminated at any time. If such
expense reimbursement was not in effect, Total Trust Annual Expenses would be
0.03% higher, except for the Lifestyle Conservative 280 Trust, which would be
0.04% higher (based on current advisory fees and Other Expenses of the Lifestyle
Trusts for the fiscal year ended December 31, 1999) as noted in the chart below:
MANAGEMENT OTHER TOTAL TRUST
TRUST PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- ------------------------------------------------------------------------------
Lifestyle Aggressive 1000........... 0.075% 1.090% 1.165%
Lifestyle Growth 820................ 0.057% 1.030% 1.087%
Lifestyle Balanced 640.............. 0.057% 0.940% 0.997%
Lifestyle Moderate 460.............. 0.066% 0.900% 0.966%
Lifestyle Conservative 280.......... 0.075% 0.810% 0.885%
If total expenses of a Lifestyle Trust (excluding the expenses of the Underlying
Portfolios and absent reimbursement) exceed .075%, the Adviser will reduce the
advisory fee or reimburse expenses of that Lifestyle Trust by an amount such
that total expenses of the Lifestyle Trust including the advisory fee but
excluding: (a) the expenses of the Underlying Portfolios, (b) taxes, (c)
portfolio brokerage, (d) interest, (e) litigation and (f) indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Trust's business, equal 0.075%. If the total expenses of a Lifestyle Trust
(excluding the expenses of the underlying Portfolios and absent reimbursement)
are equal to or less than 0.075%, then no expenses will be reimbursed by the
Adviser.
(D) Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will bear its pro rata share of the fees and
expenses incurred by the Underlying Portfolios in which it invests, and the
investment return of each Lifestyle Trust will be net of the Underlying
Portfolio expenses. Each Lifestyle Portfolio must bear its own expenses.
However, the Adviser is currently paying certain of these expenses as described
in footnote (C) above.
(E) Annualized - For the period May 1, 1999 (commencement of operations) to
December 31, 1999.
(F) Management Fees changed effective May 1, 1999. Fees shown are the current
management fees.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS
The Trust currently has eighteen subadvisers who manage all of the portfolios,
one of which subadvisers is Manufacturers Adviser Corporation ("MAC"). Both MSS
and MAC are affiliates of Manufacturers Life of America.
SUBADVISER PORTFOLIO
A I M Capital Management, Inc. Aggressive Growth Trust
All Cap Growth Trust
AXA Rosenberg Investment Management LLC Small Company Value Trust
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Fidelity Management Trust Company Mid Cap Blend Trust
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Balanced Trust
Franklin Advisers, Inc. Emerging Small Company Trust
Janus Capital Corporation Dynamic Growth Trust
Manufacturers Adviser Corporation Pacific Rim Emerging Markets Trust
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Quantitative Equity Trust
Real Estate Securities Trust
Money Market Trust
Index Trusts
Lifestyle Trusts(A)
Miller Anderson & Sherrerd, LLP Value Trust
High Yield Trust
Mitchell Hutchins Asset Management Inc. Tactical Allocation Trust
Morgan Stanley Asset Management Inc. Global Equity Trust
Munder Capital Management Internet Technologies Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Rowe Price-Fleming International, Inc. International Stock Trust
SUBADVISER PORTFOLIO
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
State Street Global Advisors Growth Trust
Lifestyle Trusts(A)
T. Rowe Price Associates, Inc. Science & Technology Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
(A) State Street Global Advisors provides subadvisory consulting services to
Manufacturers Adviser Corporation regarding management of the Lifestyle Trusts.
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST
MANULIFE NEW YORK
The Manufacturer's Life Insurance Company of New York ("Manulife New York") is a
stock life insurance company organized under the laws of New York on March 4,
1992. Its principal office is located at 100 Summit Lake Drive, Second Floor,
Valhalla, NY 10595. Manulife New York is a wholly-owned subsidiary of The
Manufacturers Life Insurance Company of North America ("Manulife North
America"). Manulife North America is a stock life insurance company organized
under the laws of Delaware in 1979 with its principal office located at 500
Boylston Street, Boston, Massachusetts 02116.
Manulife New York's and Manulife North America's ultimate parent is Manulife
Financial Corporation ("MFC") based in Toronto, Canada. MFC is the holding
company of The Manufacturers Life Insurance Company ("Manufacturers Life") and
its subsidiaries collectively known as Manulife Financial. Neither Manulife New
York, Manufacturers Life, nor MFC guarantees the investment performance of the
Separate Account.
RATINGS
Manulife New York's financial ratings are as follows:
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A++ A.M. Best
Superior in financial strength; 1st category of 15
AAA Duff & Phelps
Highest in claims paying ability; 1st category of 18
AA+ Standard & Poor's
Very strong in financial strength; 2nd category of 21
These ratings, which are current as of the date of this prospectus and are
subject to change, are assigned to the Company as a measure of the Company's
ability to honor the death benefit but not specifically to its products, the
performance (return) of these products, the value of any investment in these
products upon withdrawal or to individual securities held in any portfolio.
THE SEPARATE ACCOUNT
The Company established The Manufacturers Life Insurance Company of New York
Separate Account B ("Separate Account") on May 6, 1997, subject to approval by
the Superintendent of Insurance of New York. The Separate Account holds assets
that are segregated from all of Manulife New York's other assets. The Separate
Account is currently used only to support variable life insurance policies.
ASSETS OF THE SEPARATE ACCOUNT
The Company is the legal owner of the assets in the Separate Account. The
income, gains, and losses of the Separate Account, whether or not realized, are,
in accordance with applicable contracts, credited to or charged against the
Account without regard to the other income, gains, or losses of the Company. The
Company will at all times maintain assets in the Separate Account with a total
market value at least equal to the reserves and other liabilities relating to
variable benefits under all policies participating in the Separate Account.
These assets may not be charged with liabilities which arise from any other
business the Company conducts. However, all obligations under the variable life
insurance policies are general corporate obligations of the Company.
REGISTRATION
The Separate Account is registered with the Securities and Exchange Commission
("S.E.C.") under the Investment Company Act of 1940 ("1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company which
invests its assets in specified securities, such as the shares of one or more
investment companies, rather than in a portfolio of unspecified securities.
Registration under the 1940 Act does not involve any supervision by the S.E.C.
of the management or investment policies or practices of the Separate Account.
For state law purposes the Separate Account is treated as a part or division of
the Company.
THE TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Portfolio. The Trust is registered under the 1940 Act as an open-end
management investment company. The Separate Account will purchase and redeem
shares of the Portfolios at net asset value. Shares will be redeemed to the
extent necessary for the Company to provide benefits under the Policies, to
transfer assets from one sub-account to another or to the general account as
requested by policyowners, and for other purposes not inconsistent with the
Policies. Any dividend or capital gain distribution received from a Portfolio
with respect to the Policies will be reinvested immediately at net asset value
in shares of that Portfolio and retained as assets of the corresponding
sub-account.
The Trust shares are issued to fund benefits under both variable annuity
policies and variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company. The Company may also purchase
shares through its general account for certain limited purposes including
initial portfolio seed money. For a description of the procedures for handling
potential conflicts of interest arising from the funding of such benefits see
the accompanying Trust prospectus.
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INVESTMENT OBJECTIVES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met. A
full description of the Trust, its investment objectives, policies and
restrictions, the risks associated therewith, its expenses, and other aspects of
its operation is contained in the accompanying Trust prospectus, which should be
read together with this prospectus.
ELIGIBLE PORTFOLIOS
The Portfolios of the Trust available under the Policies are as follows:
The PACIFIC RIM EMERGING MARKETS TRUST seeks long-term growth of capital by
investing in a diversified portfolio that is comprised primarily of common
stocks and equity-related securities of corporations domiciled in countries in
the Pacific Rim region.
The INTERNET TECHNOLOGIES TRUST seeks long-term capital appreciation by
investing the portfolio's assets primarily in companies engaged in
Internet-related business (such businesses also include Intranet-related
businesses).
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital. Current income
is incidental to the portfolio's objective.
The INTERNATIONAL SMALL CAP TRUST seeks capital appreciation by investing
primarily in securities issued by foreign companies which have total market
capitalization or annual revenues of $1 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The AGGRESSIVE GROWTH TRUST seeks long-term capital appreciation by investing
the portfolio's asset principally in common stocks, convertible bonds,
convertible preferred stocks and warrants of companies which in the opinion of
the subadviser are expected to achieve earnings growth over time at a rate in
excess of 15% per year. Many of these companies are in the small and
medium-sized category.
The EMERGING SMALL COMPANY TRUST seeks long-term growth of capital by investing,
under normal market conditions, at least 65% of the portfolio's total assets in
common stock equity securities of companies with market capitalizations that
approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") at the time of purchase.
The SMALL COMPANY BLEND TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalizations
that approximately match the range of capitalization of the Russell 2000 Index
("small cap stocks") at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing the
portfolio's assets primarily in equity securities selected for their growth
potential. Normally at least 50% of its equity assets are invested in
medium-sized companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities of companies with market capitalizations that approximately
match the range of capitalization of the Wilshire Mid Cap 750 Index.
The ALL CAP GROWTH TRUST (formerly, Mid Cap Growth Trust) seeks long-term
capital appreciation by investing the portfolio's assets, under normal market
conditions, principally in common stocks of companies that are likely to benefit
from new or innovative products, services or processes, as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth.
The OVERSEAS TRUST seeks growth of capital by investing, under normal market
conditions, at least 65% of the portfolio's assets in foreign securities
(including American Depositary Receipts (ADRs) and European Depositary Receipts
(EDRs)). The portfolios expects to invest primarily in equity securities.
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The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in common stocks of established, non-U.S. companies.
The INTERNATIONAL VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in equity securities of companies
located outside the U.S., including emerging markets.
The MID CAP BLEND TRUST seeks growth of capital by investing primarily in common
stocks of U.S. issuers and securities convertible into or carrying the right to
buy common stocks.
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal circumstances, at least 65% of the portfolio's assets in common
stocks of companies with total market capitalization that approximately match
the range of capitalization of the Russell 2000 Index and are traded principally
in the markets of the United States.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing
primarily in equity securities throughout the world, including U.S. issuers and
emerging markets.
The GROWTH TRUST seeks long-term growth of capital by investing primarily in
large capitalization growth securities (market capitalizations of approximately
$1 billion or greater).
The LARGE CAP GROWTH TRUST seeks long-term growth of capital by investing, under
normal market conditions, at least 65% of the portfolio's assets in equity
securities of companies with large market capitalizations.
The QUANTITATIVE EQUITY TRUST seeks to achieve intermediate and long-term growth
through capital appreciation and current income by investing in common stocks
and other equity securities of well established companies with promising
prospects for providing an above average rate of return.
The BLUE CHIP GROWTH TRUST seeks to achieve long-term growth of capital (current
income is a secondary objective) and many of the stocks in the portfolio are
expected to pay dividends.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and satisfactory current income by investing in real estate
related equity and debt securities.
The VALUE TRUST seeks to realize an above-average total return over a market
cycle of three to five years, consistent with reasonable risk, by investing
primarily in common and preferred stocks, convertible securities, rights and
warrants to purchase common stocks, ADRs and other equity securities of
companies with equity capitalizations usually greater than $300 million.
The TACTICAL ALLOCATION TRUST seeks total return, consisting of long-term
capital appreciation and current income by allocating the portfolio's assets
between (i) a stock portion that is designed to track the performance of the S&P
500 Composite Stock Price Index, and (ii) a fixed income portion that consists
of either five-year U.S. Treasury notes or U.S. Treasury bills with remaining
maturities of 30 days.
The GROWTH & INCOME TRUST seeks long-term growth of capital and income,
consistent with prudent investment risk, by investing primarily in a diversified
portfolio of common stocks of U.S. issuers which the subadviser believes are of
high quality.
The U.S. LARGE CAP VALUE TRUST seeks long-term growth of capital and income by
investing the portfolio's assets, under normal market conditions, primarily in
equity and equity-related securities of companies with market capitalization
greater than $500 million.
The EQUITY-INCOME TRUST seeks to provide substantial dividend income and also
long-term capital appreciation by investing primarily in dividend-paying common
stocks, particularly of established companies with favorable prospects for both
increasing dividends and capital appreciation.
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The INCOME & VALUE TRUST seeks the balanced accomplishment of (a) conservation
of principal and (b) long-term growth of capital and income by investing the
portfolio's assets in both equity and fixed-income securities. The subadviser
has full discretion to determine the allocation between equity and fixed income
securities.
The BALANCED TRUST seeks current income and capital appreciation by investing in
a balanced portfolio of common stocks, U.S. and foreign government obligations
and a variety of corporate fixed income securities.
The HIGH YIELD TRUST seeks to realize an above-average total return over a
market cycle of three to five years, consistent with reasonable risk, by
investing primarily in high yield debt securities, including corporate bonds and
other fixed-income securities.
The STRATEGIC BOND TRUST seeks a high level of total return consistent with
preservation of capital by giving its subadviser broad discretion to deploy the
portfolio's assets among certain segments of the fixed income market as the
subadviser believes will best contribute to achievement of the portfolio's
investment objective.
The GLOBAL BOND TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing the
portfolio's asset primarily in fixed income securities denominated in major
foreign currencies, baskets of foreign currencies (such as the ECU), and the
U.S. dollar.
The TOTAL RETURN TRUST seeks to realize maximum total return, consistent with
preservation of capital and prudent investment management by investing, under
normal market conditions, at least 65% of the portfolio's assets in a
diversified portfolio of fixed income securities of varying maturities. The
average portfolio duration will normally vary within a three- to six-year time
frame based on the subadviser's forecast for interest rates.
The INVESTMENT QUALITY BOND TRUST seeks a high level of current income
consistent with the maintenance of principal and liquidity, by investing
primarily in a diversified portfolio of investment grade corporate bonds and
U.S. Government bonds with intermediate to longer term maturities. The portfolio
may also invest up to 20% of its assets in non-investment grade fixed income
securities.
The DIVERSIFIED BOND TRUST seeks high total return consistent with the
conservation of capital by investing at least 75% of the portfolio's assets in
fixed income securities.
The U.S. GOVERNMENT SECURITIES TRUST seeks a high level of current income
consistent with preservation of capital and maintenance of liquidity, by
investing in debt obligations and mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
derivative securities such as collateralized mortgage obligations backed by such
securities.
The MONEY MARKET TRUST seeks maximum current income consistent with preservation
of principal and liquidity by investing in high quality money market instruments
with maturities of 397 days or less issued primarily by U. S. entities.
The INTERNATIONAL INDEX TRUST seeks to approximate the aggregate total return of
a foreign equity market index by attempting to track the performance of the
Morgan Stanley European Australian Far East Free Index (the "MSCI EAFE Index").
The SMALL CAP INDEX TRUST seeks to approximate the aggregate total return of a
small cap U.S. domestic equity market index by attempting to track the
performance of the Russell 2000 Index.
The MID CAP INDEX TRUST seeks to approximate the aggregate total return of a mid
cap U.S. domestic equity market index by attempting to track the performance of
the S&P Mid Cap 400 Index.
The TOTAL STOCK MARKET INDEX seeks to approximate the aggregate total return of
a broad U.S. domestic equity market index by attempting to track the performance
of the Wilshire 5000 Equity Index.
The 500 INDEX TRUST seeks to approximate the aggregate total return of a broad
U.S. domestic equity market index by attempting to track the performance of the
S&P 500 Composite Stock Price Index.
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The LIFESTYLE AGGRESSIVE 1000 TRUST seeks to provide long-term growth of capital
(current income is not a consideration) by investing 100% of the Lifestyle
Trust's assets in other portfolios of the Trust ("Underlying Portfolios") which
invest primarily in equity securities.
The LIFESTYLE GROWTH 820 TRUST seeks to provide long-term growth of capital with
consideration also given to current income by investing approximately 20% of the
Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 80% of its assets in Underlying
Portfolios which invest primarily in equity securities.
The LIFESTYLE BALANCED 640 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to capital
growth by investing approximately 40% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 60% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE MODERATE 460 TRUST seeks to provide a balance between a high level
of current income and growth of capital with a greater emphasis given to current
income by investing approximately 60% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in fixed income securities and
approximately 40% of its assets in Underlying Portfolios which invest primarily
in equity securities.
The LIFESTYLE CONSERVATIVE 280 TRUST seeks to provide a high level of current
income with some consideration also given to growth of capital by investing
approximately 80% of the Lifestyle Trust's assets in Underlying Portfolios which
invest primarily in fixed income securities and approximately 20% of its assets
in Underlying Portfolios which invest primarily in equity securities.
ISSUING A POLICY
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. A Policy
will not be issued until the underwriting process has been completed to the
Company's satisfaction.
Policies may be issued on a basis which does not distinguish between the
insured's sex, with prior approval from the Company. A Policy will generally be
issued only on the lives of insureds from ages 20 through 90.
Under current underwriting rules, which are subject to change, proposed insureds
are eligible for simplified underwriting without a medical examination if (a)
their application responses and initial payment meet simplified underwriting
standards and (b) the initial premium is 100% of the Guideline Single Premium.
Customary underwriting standards will apply to all other proposed insureds. The
maximum initial premium currently permitted on a simplified underwriting basis
varies with the issue age of the insured according to the following table.
Simplified underwriting is not available for additional premium payments.
AGE* SIMPLIFIED UNDERWRITING
MAXIMUM INITIAL PAYMENT
20-29 $ 30,000
30-39 $ 60,000
40-49 $100,000
50-74 $150,000
75-90 $100,000
*In the case of a Survivorship Policy, the youngest of the Life Insured.
Each Policy has a Policy Date, an Effective Date and an Issue Date (See
"Definitions" in Appendix A).
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The Policy Date is the date from which the first monthly deductions are
calculated and from which Policy Years, Policy Months and Policy Anniversaries
are determined. The Effective Date is the date the Company becomes obligated
under the Policy and when the first monthly deductions are deducted from the
Policy Value. The Issue Date is the date from which Suicide and Incontestability
are measured.
If an application accepted by the Company is not accompanied by a check for the
initial premium and no request to backdate the Policy has been made:
(i) the Policy Date and the Effective Date will be the date the Company
receives the check at it's service office, and
(ii) the Issue Date will be the date the Company issues the Policy.
The initial premium must be received within 60 days after the Issue Date, and
the policyowner must be in good health on the date the initial premium is
received. If the premium is not paid or if the application is rejected, the
Policy will be canceled and any partial premiums paid will be returned to the
applicant.
MINIMUM INITIAL FACE AMOUNT
The Company will generally issue a Policy only if it has a Face Amount that
corresponds to an initial premium of at least $25,000.
BACKDATING A POLICY
Under limited circumstances, the Company may backdate a Policy, upon request, by
assigning a Policy Date earlier than the date the application is signed.
However, in no event will a Policy be backdated more than six months before the
date of the application for the Policy. Monthly deductions will be made for the
period the Policy Date is backdated.
As of the Effective Date, the premiums paid plus interest credited, net of the
premium charge (if any), will be allocated among the Investment Accounts and/or
Fixed Account in accordance with the policyowner's instructions unless such
amount is first allocated to the Money Market portfolio for the duration of the
Right to Examine period.
TEMPORARY INSURANCE AGREEMENT
In accordance with the Company's underwriting practices, temporary insurance
coverage may be provided under the terms of a Temporary Insurance Agreement.
Generally, temporary life insurance may not exceed $1,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis, which means that any benefits under such
temporary coverage will only be paid if the Life Insured meets the Company's
usual and customary underwriting standards for the coverage applied for.
The acceptance of an application is subject to the Company's underwriting rules,
and the Company reserves the right to request additional information or to
reject an application for any reason.
Persons failing to meet standard underwriting classification may be eligible for
a Policy with an additional risk rating assigned to it.
RIGHT TO EXAMINE THE POLICY
A Policy may be returned for a refund of the premium within 10 days after the
policy is received. The Policy can be mailed or delivered to the Manulife New
York agent who sold it or to the Manulife New York Service Office. Immediately
on such delivery or mailing, the Policy shall be deemed void from the beginning.
Within seven days after receipt of the returned Policy at its Service Office,
Manulife New York will refund any premium paid. Manulife New York reserves the
right to delay the refund of any premium paid by check until the check has
cleared.
If the Policy is purchased in connection with a replacement of an existing
policy (as defined below), the policyowner may also cancel the Policy by
returning it to the Service Office or the Manulife New York agent who sold it at
any time within 60 days after receipt of the Policy. Within 10 days of receipt
of the Policy by the Company, the Company will pay the policyowner the Policy
Value, computed at the end of the valuation period during which the Policy is
received by the
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Company. In the case of a replacement of a policy issued by a New York insurance
company, the policyowner may have the right to reinstate the prior policy. The
policyowner should consult with his or her attorney or the Manulife New York
agent regarding this matter prior to purchasing the new Policy.
Replacement of an existing life insurance policy generally is defined as the
purchase of a new life insurance policy in connection with (a) the lapse,
surrender or change of, or borrowing from, an existing life insurance policy or
(b) the assignment to a new issuer or an existing life insurance policy. This
description, however, does not necessarily cover all situations which could be
considered a replacement of existing life insurance policy. Therefore, a
policyowner should consult with his or her Manulife New York agent or attorney
regarding whether the purchase of a new life insurance policy is a replacement
of an existing life insurance policy.
The Company reserves the right to delay the refund of any premium paid by check
until the check has cleared.
LIFE INSURANCE QUALIFICATION
A Policy must qualify as a life insurance policy for purposes of Section 7702 of
the Code by satisfying the Guideline Premium Test.
GUIDELINE PREMIUM TEST
The Guideline Premium Test restricts the maximum premiums that may be paid into
a life insurance policy for a given death benefit. The policy's death benefit
must also be at least equal to the Minimum Death Benefit (described below).
Changes to the Policy may affect the maximum amount of premiums, such as:
- Change in Risk Classification
- Partial Withdrawals
- Addition or deletion of supplementary benefits
Any of the above changes could cause the total premiums paid to exceed the new
maximum limit. In this situation, the Company may refund any excess premiums
paid. In addition, these changes could reduce the future premium limitations.
The Guideline Premium Test requires a life insurance policy to meet minimum
ratios of life insurance coverage to policy value. This is achieved by ensuring
that the death benefit is at all times at least equal to the Minimum Death
Benefit (as described below under "Death Benefit").
DEATH BENEFITS
If the Policy is in force at the time of the death of the Life Insured, the
Company will pay an insurance benefit on receiving due proof of death. For a
Survivorship Policy, due proof of death must be provided for each of the Life
Insureds although the insurance benefit is payable on the death of the last to
die of the Life Insured. If the Life Insured should die after the Company's
receipt of a request for surrender, no insurance benefit will be payable, and
the Company will pay only the Net Cash Surrender Value.
The amount payable will be the death benefit, plus any amounts payable under any
supplementary benefits added to the Policy, less the Policy Debt and less any
outstanding monthly deductions due. The insurance benefit will be paid in one
lump sum unless another form of settlement option is agreed to by the
beneficiary and the Company. If the insurance benefit is paid in one sum, the
Company will pay interest from the date of death to the date of payment.
DEATH BENEFIT
The death benefit is the Face Amount of the Policy at the date of death (less
any Policy Debt and outstanding Monthly Deductions due) or, if greater, the
Minimum Death Benefit (less any Policy Debt and outstanding Monthly Deductions
due).
MINIMUM DEATH BENEFIT
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The Minimum Death Benefit on any date is defined as the Policy Value on that
date times the applicable Minimum Death Benefit Percentage for the Attained Age
of the Life Insured in the case of a Single Life Policy (or the youngest of the
Life Insured in the case of a Survivorship Policy). The Minimum Death Benefit
Percentages are set forth in the Policy.
Therefore, the death benefit will always be at least equal to the Face Amount of
the Policy. However, if there is a sufficient increase in Policy Value such that
the Policy Value times the applicable Minimum Death Benefit Percentage is
greater than the Face Amount, the death benefit will be greater than the Face
Amount.
LAPSE PROTECTION BENEFIT
The Lapse Protection Benefit protects the Policy from going into default. As
long as this benefit is in force and any outstanding Policy Debt is less than
the Cash Surrender Value, the Policy will not go into default.
The Lapse Protection Benefit applies to a Policy only if the initial premium
paid is 100% of the Guideline Single Premium for the Face Amount of the Policy.
As a result, if you pay less than 100% of the Guideline Single Premium, then you
may be required to pay additional premiums in the future in order to prevent
your Policy from lapsing.
The Lapse Protection Benefit Period is indicated on the policy information page
of the Policy and depends of the age of the policyowner at issuance of the
Policy (in the case of a Survivorship Policy, based on the age of the older Life
Insured at issuance of the Policy). The Lapse Protection Benefit Period for each
age at issue is set for below.
Age at Issuance of the Policy Lapse Protection Benefit Period (Number of Years)
- ----------------------------- ------------------------------------------------
20-29 35
30-39 30
40-49 25
50-59 20
60-69 15
70-84 10
85-90 8
MATURITY DATE
Provided that the Policy is in force and the Life Insured is alive (or the last
to die of the Life Insured in the case of a Survivorship Policy), the Company
will pay the policyowner the Policy Value (less any outstanding Policy Debt)
calculated as of the Maturity Date.
PREMIUM PAYMENTS
INITIAL PREMIUMS
The Policy permits the payment of a large initial premium and, subject to the
restrictions described below, additional premiums. The minimum initial premium
is $25,000. The policyowner may choose an initial premium that is 80%, 90% or
100% of the Guideline Single Premium (based on Face Amount selected by the
policyowner). In the case of simplified underwriting, the initial premium must
be 100% of the Guideline Single Premium for the Face Amount of the Policy.
The Lapse Protection Benefit applies to a Policy only if the initial premium
paid is 100% of the Guideline Single Premium for the Face Amount of the Policy.
As a result, if you pay less than 100% of the Guideline Single Premium, then you
may be required to pay additional premiums in the future in order to prevent you
Policy from lapsing. Therefore, prospective policyowners should discuss with
their financial adviser the appropriate percentage of Guideline Single Premium
for a given Face Amount.
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No premiums will be accepted prior to receipt of a completed application by the
Company. All premiums received prior to the Effective Date of the Policy will be
held in the general account and credited with interest from the date of receipt
at the rate of return then being earned on amounts allocated to the Money Market
Trust.
SUBSEQUENT PREMIUMS
After payment of the initial premium, additional premiums may be made subject to
the following conditions:
(a) while there is an outstanding Policy Debt, any additional premium payment
will be applied first to repay the loan;
(b) Face Amount increases are not permitted in connection with additional
premiums (Therefore, the total of all premiums paid for a Policy may not
exceed 100% of the Guideline Single Premium for the Face Amount of the
Policy);
(c) the Company may refuse or refund any premium payment (or any portion of
such premium payment) that would cause the Policy to fail to qualify as
life insurance under Section 7702 of the Code, and
(d) additional premiums may require evidence of insurability on the Life
Insured satisfactory to the Company unless the additional premium is
applied to repay a loan.
The Company will add additional premiums to Policy Value as of the Business Day
it receives the additional premium at its Service Office unless evidence of
insurability is required in which case the additional premium will be added to
Policy Value as of the Business Day the Company's underwriters approve the
additional premium.
PREMIUM ALLOCATION
On the later of the Effective Date or the Business Day a premium is received,
the Net Premiums paid plus interest credited will be allocated among the
Investment Accounts or the Fixed Account in accordance with the policyowner's
instructions.
Premiums may be allocated to the Fixed Account for accumulation at a rate of
interest equal to at least 4% or to one or more of the Investment Accounts for
investment in the Portfolio shares held by the corresponding sub-account of the
Separate Account. Allocations among the Investment Accounts and the Fixed
Account are made as a percentage of the premium. The percentage allocation to
any account may be any number between zero and 100, provided the total
allocation equals 100. A policyowner may change the way in which premiums are
allocated at any time without charge. The change will take effect on the date a
written request for change satisfactory to the Company is received at the
Service Office. A policyowner may also change premium allocation by telephone if
he or she has a currently valid authorization form on file with the Company.
MAXIMUM PREMIUM LIMITATION
The Policy is issued under the Guideline Premium Test which requires that in no
event may the total of all premiums paid exceed the then current maximum premium
limitations established by federal income tax law for a Policy to qualify as
life insurance.
If, at any time, a premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company will only accept
that portion of the premium which will make the total premiums equal to the
maximum. Any part of the premium in excess of that amount will be returned and
no further premiums will be accepted until allowed by the then current maximum
premium limitation.
CHARGES AND DEDUCTIONS
TAX LOAD
A Tax load of 0.030% of Policy Value is deducted monthly (equivalent to 0.360%
annually) for the 10 Policy Years. If additional premium payments are made, the
0.030% tax load for a particular premium payment is deducted from the amount of
Policy Value corresponding to the premium payment for 10 Policy Years following
the premium payment. For example, if:
- - the initial premium payment is $100,000,
- - an additional premium payment of $50,000 is made in Policy Year 7, and
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- - the Policy Value at the time the additional premium payment is made is
$200,000 (including the additional premium payment),
- - then 0.030% will be deducted from 75% of Net Policy Value in Policy Years 7
through 10 and an additional 0.030% will be deducted from 25% of Net Policy
Value in Policy Years 7 through 16.
Unless otherwise allowed by the Company and specified by the policyowner, the
tax load will be allocated among the Investment Accounts and the Fixed Account
in the Policy in the same proportion as the Policy Value in each bears to the
Net Policy Value.
The tax load is designed to cover a portion of the Company's acquisition and
sales expenses and federal and premium taxes.
SURRENDER CHARGES
During the Surrender Charge Period, the Company will deduct a Surrender Charge
if:
- - the Policy is surrendered for its Net Cash Surrender Value,
- - a partial withdrawal is made (above the Free Withdrawal Amount), or
- - the Policy terminates due to default.
The surrender charge, together with a portion of the tax load, is designed to
compensate the Company for some of the expenses it incurs in selling and
distributing the Policies, including agents' commissions, advertising, agent
training and the printing of prospectuses and sales literature.
SURRENDER CHARGE CALCULATION
The Surrender Charge is determined by multiplying the amount withdrawn or
surrendered in excess of the Free Withdrawal Amount by the applicable total
Surrender Charge percentage shown in the table below.
Policy Year Surrender Charge
10 10.00%
11 9.00%
12 8.00%
13 7.00%
14 6.00%
15 5.00%
16 4.00%
17 3.00%
18 1.50%
10+ 0.00%
If necessary, we will reduce the surrender charge deducted upon a partial
withdrawal or a surrender of the Policy so that the sum of all tax loads, the
administration charges and surrender charge deducted (including the surrender
charge to be deducted upon such partial withdrawal or surrender) does not exceed
10% of aggregate payments made during the first Policy Year.
We will allocate the deduction of the Surrender Charge for a withdrawal to the
Fixed Account and the Investment Accounts in the same proportion that the
withdrawal from each account bears to the total withdrawal. If the withdrawal
plus the Surrender Charge allocated to a particular account are greater than the
value of that account, we will reduce the portion of the withdrawal allocated to
that account. We will reduce the allocated portion so that the withdrawal plus
the charge allocated to the account equals the value of the account. If the
amount in all accounts is not sufficient to pay the Surrender Charge, we will
reduce the amount of the withdrawal.
SURRENDER CHARGES ON A PARTIAL WITHDRAWAL
Free Withdrawal Amount
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A portion of the Net Cash Surrender Value may be withdrawn without being subject
to a Surrender Charge (the "Free Withdrawal Amount"). The Free Withdrawal Amount
is the greater of 10% of the total premiums or 100% of Earnings. In determining
what, if any, portion of a partial withdrawal is in excess of the Free
Withdrawal Amount, all previous partial withdrawals that have occurred in the
current Policy Year are included.
MONTHLY CHARGES
On the Policy Date and at the beginning of each Policy Month, a deduction is due
from the Net Policy Value to cover certain charges in connection with the Policy
until the Maturity Date. On and after the Maturity Date, if there is a Policy
Debt under the Policy, loan interest and principal will continue to be payable
at the beginning of each Policy Month. Monthly deductions due prior to the
Effective Date will be taken on the Effective Date instead of the dates they
were due. These charges consist of:
- a Tax load, if applicable;
- an administration charge;
- a charge for the cost of insurance;
- a mortality and expense risks charge;
- if applicable, a charge for any supplementary benefits added to the
Policy.
Unless otherwise allowed by the Company and specified by the policyowner, the
Monthly Deduction will be allocated among the Investment Accounts and the Fixed
Account in the Policy in the same proportion as the Policy Value in each bears
to the Net Policy Value immediately prior to the deduction. However, the
mortality and expense risk charge will only be allocated among the Investment
Accounts.
ADMINISTRATION CHARGE
This charge will be equal to $7.50 per Policy Month plus 0.010% of Net Policy
Value deducted monthly (equivalent to .12% annually). The charge is designed to
cover certain administrative expenses associated with the Policy, including
maintaining policy records, collecting premiums and processing death claims,
surrender and withdrawal requests and various changes permitted under the
Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each Policy Month.
The net amount at risk is equal to (a) minus (b) where:
(a) is the death benefit as of the first day of the Policy Month, divided
by 1.0032737; and
(b) is the Policy Value as of the first day of the Policy Month.
The rates for the cost of insurance are based upon the issue age, duration of
coverage, sex, and Risk Classification of the Life Insured. For a Survivorship
Policy, the rates are determined for each of the Life Insured on the basis
described above and then are blended to produce a single cost of insurance rate.
Cost of insurance rates will generally increase with the age of the Life
Insured. The first year cost of insurance rate is guaranteed.
The cost of insurance rates reflect the Company's expectations as to future
mortality experience. The rates may be re-determined from time to time on a
basis which does not unfairly discriminate within the class of life insured. In
no event will the cost of insurance rates exceed the guaranteed rates set forth
in the Policy except to the extent that an extra charge is imposed because of an
additional rating applicable to the Life Insured. After the first Policy Year,
the cost of insurance will generally increase on each Policy Anniversary. The
guaranteed rates are based on the 1980 Commissioners Smoker Distinct Mortality
tables.
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MORTALITY AND EXPENSE RISKS CHARGE
A monthly charge equal to a percentage of the value of the Investment Accounts
is assessed against the Investment Accounts. This charge is to compensate the
Company for the mortality and expense risks it assumes under the Policy. The
mortality risks assumed are that the Life Insured may live for a shorter period
of time than the Company estimated. The expense risks assumed are that expenses
incurred in issuing and administering the Policy will be greater than the
Company estimated. The Company will realize a gain from this charge to the
extent it is not needed to provide benefits and pay expenses under the Policy.
The charge varies by Policy Year as follows:
GUARANTEED MONTHLY MORTALITY AND EQUIVALENT ANNUAL
EXPENSE RISKS CHARGE MORTALITY AND EXPENSE
POLICY YEAR RISKS CHARGE
- ---------------------------------------- -------------------------------------- --------------------------------------
1-10 0.075% 0.900%
10+ 0.025% 0.300%
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge may apply to such
Supplementary Benefit.
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a Policy
Year. The charge will be deducted from the Investment Account or the Fixed
Account to which the transfer is being made. All transfer requests received by
the Company on the same Business Day are treated as a single transfer request.
REDUCTION IN CHARGES
The Policy is available for purchase by corporations and other groups or
sponsoring organizations. Group or sponsored arrangements may include reduction
or elimination of withdrawal charges and deductions for employees, officers,
directors, agents and immediate family members of the foregoing. The Company
reserves the right to reduce any of the Policy's charges on certain cases where
it is expected that the amount or nature of such cases will result in savings of
sales, underwriting, administrative, commissions or other costs. Eligibility for
these reductions and the amount of reductions will be determined by a number of
factors, including the number of lives to be insured, the total premiums
expected to be paid, total assets under management for the policyowner, the
nature of the relationship among the insured individuals, the purpose for which
the policies are being purchased, expected persistency of the individual
policies, and any other circumstances which the Company believes to be relevant
to the expected reduction of its expenses. Some of these reductions may be
guaranteed and others may be subject to withdrawal or modification, on a uniform
case basis. Reductions in charges will not be unfairly discriminatory to any
policyowners. The Company may modify from time to time, on a uniform basis, both
the amounts of reductions and the criteria for qualification.
SPECIAL PROVISIONS FOR EXCHANGES
The Company will permit policyowners of certain fixed life insurance policies
issued either by the Company or The Manufacturers Life Insurance Company
(U.S.A.) ("Manulife USA") to exchange their policies for the Policies described
in this prospectus (and likewise, policyowners of policies described in this
Prospectus may also exchange their Policies for certain fixed policies issued
either by the Company or by Manulife USA). Policyowners considering an exchange
should consult their tax advisors as to the tax consequences of an exchange.
COMPANY TAX CONSIDERATIONS
At the present time, the Company makes no charge to the Separate Account for any
federal, state, or local taxes that the Company incurs that may be attributable
to such Account or to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policies.
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POLICY VALUE
DETERMINATION OF THE POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a policy loan or partial withdrawal, or upon surrender of the Policy.
The Policy Value may also affect the amount of the death benefit. The Policy
Value at any time is equal to the sum of the values in the Investment Accounts,
the Fixed Account, and the Loan Account.
INVESTMENT ACCOUNTS
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
FIXED ACCOUNT
Amounts in the Fixed Account do not vary with the investment performance of any
sub-account. Instead, these amounts are credited with interest at a rate
determined by the Company. For a detailed description of the Fixed Account, see
"The General Account - Fixed Account".
LOAN ACCOUNT
Amounts borrowed from the Policy are transferred to the Loan Account. Amounts in
the Loan Account do not vary with the investment performance of any sub-account.
Instead, these amounts are credited with interest at a rate which is equal to
4%. For a detailed description of the Loan Account, see "Policy Loans - Loan
Account".
UNITS AND UNIT VALUES
CREDITING AND CANCELING UNITS
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are canceled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or canceled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit on the Business Day on which the transaction occurs.
The number of units credited with respect to a premium payment will be based on
the applicable unit values for the Business Day on which the premium is received
at the Service Office, except for any premiums received before the Effective
Date. For premiums received before the Effective Date, the values will be
determined on the Effective Date.
A Business Day is any day that the New York Stock Exchange is open for business.
A Business Day ends at the close of regularly scheduled day-time trading of the
New York Stock Exchange on that day.
Units are valued at the end of each Business Day. When an order involving the
crediting or canceling of units is received after the end of a Business Day, or
on a day which is not a Business Day, the order will be processed on the basis
of unit values determined on the next Business Day. Similarly, any determination
of Policy Value, Investment Account value or death benefit to be made on a day
which is not a Business Day will be made on the next Business Day.
UNIT VALUES
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value for that sub-account is determined by
multiplying the unit value for the immediately preceding Business Day by the net
investment factor for the sub-account on such subsequent Business Day.
The net investment factor for a sub-account on any Business Day is equal to (a)
divided by (b) where:
(a) is the net asset value of the underlying Portfolio shares held
by that sub-account as of the end of such Business Day before
any policy transactions are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held
by that sub-account as of the end of the immediately preceding
Business Day after all policy transactions were made for that
day;
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The value of a unit may increase, decrease, or remain the same, depending on the
investment performance of a sub-account from one Business Day to the next.
TRANSFERS OF POLICY VALUE
At any time, a policyowner may transfer Policy Value from one sub-account to
another or to the Fixed Account. (Transfers involving the Fixed Account are
subject to certain limitations as noted below under "Transfers Involving Fixed
Account.") Transfer requests must be in writing in a format satisfactory to the
Company, or by telephone if a currently valid telephone transfer authorization
form is on file.
The Company reserves the right to impose limitations on transfers, including the
maximum amount that may be transferred. The Company also reserves the right to
modify or terminate the transfer privilege at any time in accordance with
applicable law. Transfers may also be delayed when any of the events described
under items (i) through (iv) in "Payment of Proceeds" occur. Transfer privileges
are also subject to any restrictions that may be imposed by the Trust. In
addition, the Company reserves the right to defer the transfer privilege at any
time that the Company is unable to purchase or redeem shares of the Trust.
While the Policy is in force, the policyowner may transfer the Policy Value from
any of the Investment Accounts to the Fixed Account without incurring transfer
charges:
(a) within eighteen months after the Issue Date; or
(b) within 60 days of the effective date of a material change in
the investment objectives of any of the sub-accounts or within
60 days of the date of notification of such change, whichever
is later.
Such transfers will not count against the twelve transfers that may be made free
of charge in any Policy Year.
TRANSFER CHARGES
A policyowner may make up to twelve transfers each Policy Year free of charge.
Additional transfers in each Policy Year may be made at a cost of $25 per
transfer. This charge will be deducted from the Investment Account or the Fixed
Account to which the transfer is being made. All transfer requests received by
the Company on the same Business Day are treated as a single transfer request.
Transfers under the Dollar Cost Averaging and Asset Allocation Balancer programs
do not count against the number of free transfers permitted per Policy Year.
TRANSFERS INVOLVING FIXED ACCOUNT
The maximum amount that may be transferred from the Fixed Account in any one
Policy Year is the greater of $500 or 15% of the Fixed Account Value at the
previous Policy Anniversary. Any transfer which involves a transfer out of the
Fixed Account may not involve a transfer to the Investment Account for the Money
Market Trust.
TELEPHONE TRANSFERS
Although failure to follow reasonable procedures may result in the Company being
liable for any losses resulting from unauthorized or fraudulent telephone
transfers, the Company will not be liable for following instructions
communicated by telephone that the Company reasonably believes to be genuine.
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures shall consist of
confirming that a valid telephone authorization form is on file, tape recording
of all telephone transactions and providing written confirmation thereof.
DOLLAR COST AVERAGING
The Company will offer policyowners a Dollar Cost Averaging ("DCA") program.
Under the DCA program, the policyowner will designate an amount which will be
transferred monthly from one Investment Account into any other Investment
Account(s) or the Fixed Account. Currently, no charge will be made for this
program, although the Company reserves the right to institute a charge on 90
days' written notice to the policyholder. If insufficient funds exist to effect
a DCA transfer, the transfer will not be effected and the policyowner will be so
notified.
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The Company reserves the right to cease to offer this program as of 90 days
after written notice is sent to the policyowner.
ASSET ALLOCATION BALANCER TRANSFERS
Under the Asset Allocation Balancer program the policyowner will designate an
allocation of Policy Value among Investment Accounts. At six-month intervals
beginning six months after the Policy Date (or the last Policy Anniversary), the
Company will move amounts among the Investment Accounts as necessary to maintain
the policyowner's chosen allocation. A change to the policyowner premium
allocation instructions will automatically result in a change in Asset
Allocation Balancer instructions so that the two are identical unless the
policyowner either instructs the Company otherwise or has elected the Dollar
Cost Averaging program. Currently, there is no charge for this program; however,
the Company reserves the right to institute a charge on 90 days' written notice
to the policyowner.
The Company reserves the right to cease to offer this program as of 90 days
after written notice is sent to the policyowner.
POLICY LOANS
While this Policy is in force and has an available loan value, a policyowner may
borrow against the Policy Value of the Policy. The Policy serves as the only
security for the loan. Policy loans may have tax consequences.
MAXIMUM LOANABLE AMOUNT
The Maximum Loanable Amount is 90% of the Policy's Net Cash Surrender Value.
EFFECT OF POLICY LOAN
A policy loan will have an effect on future Policy Values, since that portion of
the Policy Value in the Loan Account will increase in value at the crediting
interest rate rather than varying with the performance of the underlying
Portfolios or increasing in value at the rate of interest credited for amounts
allocated to the Fixed Account. A policy loan may cause a Policy to be more
susceptible to going into default since a policy loan will be reflected in the
Net Cash Surrender Value. See "Lapse and Reinstatement." In addition, a policy
loan may result in a termination of the Lapse Protection Benefit since this
benefit terminates if Policy Debt exceeds the Cash Surrender Value. Finally, a
policy loan will affect the amount payable on the death of the Life Insured,
since the death benefit is reduced by the Policy Debt at the date of death in
arriving at the insurance benefit.
If the Policy is a MEC, then a loan will be treated as a withdrawal for tax
purposes and may be taxable. See sections entitled "Tax Treatment of the Policy
- - Policies Which Are MECs," and "Tax Treatment of the Policy Policies Which Are
Not MECs."
INTEREST CHARGED ON POLICY LOANS
Interest on the Policy Debt will accrue daily and be payable annually on the
Policy Anniversary. The rate of interest charged will be an effective annual
rate of 6.00%. If the interest due on a Policy Anniversary is not paid by the
policyowner, the interest will be borrowed against the Policy.
Interest on the Policy Debt will continue to accrue daily if there is an
outstanding loan when monthly deductions and premium payments cease when the
Life Insured (youngest of the Life Insured in the case of a Survivorship Policy)
reaches age 100. The Policy will go into default at any time the Policy Debt
exceeds the Cash Surrender Value. At least 61 days prior to termination, the
Company will send the policyowner a notice of the pending termination. Payment
of interest on the Policy Debt during the 61 day grace period will bring the
policy out of default.
LOAN ACCOUNT
When a loan is made, an amount equal to the loan principal, plus interest to the
next Policy Anniversary, will be deducted from the Investment Accounts or the
Fixed Account and transferred to the Loan Account. Amounts transferred into the
Loan Account cover the loan principal plus loan interest due to the next Policy
Anniversary. The policyowner may designate how the amount to be transferred to
the Loan Account is allocated among the accounts from which the transfer is to
be made. In the absence of instructions, the amount to be transferred will be
allocated to each account in the same proportion as the value
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in each Investment Account and the Fixed Account bears to the Net Policy Value.
A transfer from an Investment Account will result in the cancellation of units
of the underlying sub-account equal in value to the amount transferred from the
Investment Account. However, since the Loan Account is part of the Policy Value,
transfers made in connection with a loan will not change the Policy Value.
INTEREST CREDITED TO THE LOAN ACCOUNT
Nonpreferred Loans
Interest will be credited to amounts in the Loan Account at an effective annual
rate of 4.00%. The actual rate credited is equal to the rate of interest charged
on the policy loan less the Loan Interest Credited Differential, which is
currently 2.00%. (The Loan Interest Credited Differential is the difference
between the rate of interest charged on a policy loan and the rate of interest
credited to amounts in the Loan Account.)
Preferred Loans
Preferred interest rates are available in the case of loans of amounts that
represent Earnings on the Policy ("Preferred Loans").
Interest will be credited to amounts in the Loan Account at an effective annual
rate of 6.00%. The actual rate credited is equal to the rate of interest charged
on the policy loan less the Loan Interest Credited Differential, which is
currently 0.00%.
The Company may change the Current Loan Interest Credited Differential as of 90
days after sending you written notice of such change.
For a Policy that is not a MEC, the tax consequences associated with a loan
interest credited differential of 0% are unclear. A tax adviser should be
consulted before effecting a loan to evaluate the tax consequences that may
arise in such a situation. If we determine, in our sole discretion, that there
is a substantial risk that a loan will be treated as a taxable distribution
under Federal tax law as a result of the differential between the credited
interest rate and the loan interest rate, the Company retains the right to
increase the loan interest rate to an amount that would result in the
transaction being treated as a loan under Federal tax law. If this amount is not
prescribed by any IRS ruling or regulation or any court decision, the amount of
increase will be that which the Company considers to be most likely to result in
the transaction being treated as a loan under Federal tax law. In no event will
the loan interest rate exceed the rate charged in the first ten Policy Years.
If the Policy is a MEC then, regardless of the loan interest credited
differential, a loan will be treated as a withdrawal for tax purposes and may be
taxable. See sections entitled "Tax Treatment of the Policy - Policies Which Are
MECs," and "Tax Treatment of the Policy - Policies Which Are Not MECs."
LOAN ACCOUNT ADJUSTMENTS
On the first day of each Policy Anniversary the difference between the Loan
Account and the Policy Debt is transferred to the Loan Account from the
Investment Accounts or the Fixed Account. Amounts transferred to the Loan
Account will be taken from the Investment Accounts and the Fixed Account in the
same proportion as the value in each Investment Account and the Fixed Account
bears to the Net Policy Value.
LOAN REPAYMENTS
Policy Debt may be repaid in whole or in part at any time prior to the death of
the Life Insured, provided that the Policy is in force. When a repayment is
made, the amount is credited to the Loan Account and transferred to the Fixed
Account or the Investment Accounts. Loan repayments will be allocated first to
the Fixed Account until the associated Loan Sub-Account is reduced to zero and
then to each Investment Account in the same proportion as the value in the
corresponding Loan Sub-Account bears to the value of the Loan Account.
Where permitted by applicable state law, any additional premium payment will be
applied to outstanding loan balances.
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POLICY SURRENDER AND PARTIAL WITHDRAWALS
POLICY SURRENDER
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the Life Insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the Policy Debt. The Net Cash Surrender Value will
be determined as of the end of the Business Day on which the Company receives
the Policy and a written request for surrender at its Service Office. After a
Policy is surrendered, the insurance coverage and all other benefits under the
Policy will terminate. See section entitled "Tax Treatment of the Policy" for a
discussion of the potential Federal income tax implications of a surrender of
the Policy.
PARTIAL WITHDRAWALS
A policyowner may make a partial withdrawal of the Net Cash Surrender Value
after the first Policy Anniversary. The minimum partial withdrawal amount is
$500. The policyowner may specify the portion of the withdrawal to be taken from
each Investment Account and the Fixed Account. In the absence of instructions,
the withdrawal will be allocated among such accounts in the same proportion as
the Policy Value in each account bears to the Net Policy Value. For information
on Surrender Charges on a Partial Withdrawal see "Charges and Deductions -
Surrender Charges." See section entitled "Tax Treatment of the Policy" for a
discussion of the potential Federal income tax implications of a partial
withdrawal from the Policy.
If the withdrawal would cause the Policy Value to fall below $25,000, we will
treat the withdrawal request as a full surrender of the Policy.
REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
A partial withdrawal will cause a reduction in Face Amount. The Face Amount will
be reduced by an amount equal to (a) multiplied by (b) where:
(a) is the Face Amount prior to the withdrawal; and
(b) is the Policy Value after the withdrawal, divided by the Policy Value
prior to the withdrawal.
If the reduction in the Face Amount would require the return of premiums in
order for the policy to qualify as life insurance under Section 7702 of the
Code, or any other equivalent section of the Code, then we will return premiums,
with interest, in the year of reduction, or in any subsequent year that the
return of premiums is required. If necessary, we will also limit the amount of
the withdrawal so that the Face Amount does not fall below the Face Amount
associated with the minimum initial premium of $25,000 and the percent of
Guideline Single Premium selected. The decrease in Face Amount will be effective
as of the date of the withdrawal.
LAPSE AND REINSTATEMENT
LAPSE
Unless the Lapse Protection Benefit is in effect, a Policy will go into default
if at the beginning of any Policy Month the Policy's Net Cash Surrender Value
would be zero or below after deducting the monthly deduction then due.
Therefore, a Policy could lapse eventually if increases in Policy Value (prior
to deduction of Policy charges) are not sufficient to cover Policy charges. A
Policy could also lapse if the Policy Debt is greater than the Cash Surrender
Value since the Lapse Protection Benefit terminates on any date that the Policy
Debt exceeds the Cash Surrender Value. The Company will notify the policyowner
of the default and will allow a 61 day grace period (from the date the Policy
goes into default) in which the policyowner may make a premium payment
sufficient to bring the Policy out of default. The required payment will be
equal to the amount necessary to bring the Net Cash Surrender Value to zero, if
it was less than zero on the date of default, plus the sum of (a) the monthly
deductions due at the date of default and (b) the amount equal to the monthly
deductions due to the later of the next Policy Anniversary or for at least three
Policy Months. If the required payment is not received by the end of the grace
period, the Policy will terminate with no value. See section entitled "Tax
Treatment of the Policy - Lapse or Surrender" for a discussion of the potential
Federal income tax implications of a lapse of the Policy.
DEATH DURING GRACE PERIOD
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If the Life Insured should die during the grace period, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit will be reduced by any outstanding Monthly
Deductions due at the time of death.
REINSTATEMENT
A policyowner can, by making a written request, reinstate a Policy which has
terminated after going into default at any time within the five-year period
following the date of termination subject to the following conditions:
(a) In the case of a Survivorship Policy, the Policy may not be reinstated
if any of the Life Insured have died since the Policy lapsed;
(b) Evidence of the Life Insured's insurability, satisfactory to the
Company is provided to the Company; and
(c) A premium equal to the amount that was required to bring the Policy out
of default immediately prior to termination, plus an amount equal to
the Monthly Deductions due until the next Policy Anniversary or for at
least three Policy Months is paid.
If the reinstatement is approved, the date of reinstatement will be the later of
the date the Company approves the policyowner's request or the date the required
payment is received at the Company's Service Office. In addition, any surrender
charges will be reinstated to the amount they were at the date of default. The
Policy Value on the date of reinstatement, prior to the crediting of any Net
Premium paid on the reinstatement, will be equal to the Policy Value on the date
the Policy terminated. See section entitled "Tax Treatment of the Policy Lapse
or Surrender" for a discussion of the potential Federal income tax implications
of a lapse and subsequent reinstatement of the Policy.
TERMINATION
The Policy will terminate on the earliest to occur of the following events:
(a) the end of the grace period for which the policyowner has not paid the
amount necessary to bring the Policy out of default,
(b) surrender of the Policy for its Net Cash Surrender Value;
(c) the Maturity Date unless the policyowner has elected the Maturity
Advantage option;
(d) the death of the Life Insured.
THE GENERAL ACCOUNT
The general account of the Company consists of all assets owned by the Company
other than those in the Separate Account and other separate accounts of the
Company. Subject to applicable law, the Company has sole discretion over the
investment of the assets of the general account.
By virtue of exclusionary provisions, interests in the general account of the
Company have not been registered under the Securities Act of 1933 and the
general account has not been registered as an investment company under the
Investment Company Act of 1940. Accordingly, neither the general account nor any
interests therein are subject to the provisions of these acts, and as a result
the staff of the S.E.C. has not reviewed the disclosures in this prospectus
relating to the general account. Disclosures regarding the general account may,
however, be subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
a prospectus.
FIXED ACCOUNT
A policyowner may elect to allocate net premiums to the Fixed Account or to
transfer all or a portion of the Policy Value to the Fixed Account from the
Investment Accounts. The Company will hold the reserves required for any portion
of the Policy Value allocated to the Fixed Account in its general account.
Transfers from the Fixed Account to the Investment Accounts are subject to
restrictions.
POLICY VALUE IN THE FIXED ACCOUNT
The Policy Value in the Fixed Account is equal to:
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(a) the portion of the net premiums allocated to it; plus
(b) any amounts transferred to it; plus
(c) interest credited to it; less
(d) any charges deducted from it; less
(e) any partial withdrawals from it; less
(f) any amounts transferred from it.
INTEREST ON THE FIXED ACCOUNT
An allocation of Policy Value to the Fixed Account does not entitle the
policyowner to share in the investment experience of the general account.
Instead, the Company guarantees that the Policy Value in the Fixed Account will
accrue interest daily at an effective annual rate of at least 4%, without regard
to the actual investment experience of the general account. Consequently, if a
policyowner pays the planned premiums, allocates all net premiums only to the
general account and makes no transfers, partial withdrawals, or policy loans,
the minimum amount and duration of the death benefit of the Policy will be
determinable and guaranteed.
OTHER PROVISIONS OF THE POLICY
ASSIGNMENT OF RIGHTS
The Company will not be bound by an assignment until it receives a copy of the
assignment at its Service Office. The Company assumes no responsibility for the
validity or effects of any assignment.
BENEFICIARY
One or more beneficiaries of the Policy may be appointed by the policyowner by
naming them in the application. Beneficiaries may be appointed in three classes
- - primary, secondary, and final. Beneficiaries may also be revocable or
irrevocable. Unless an irrevocable designation has been elected, the beneficiary
may be changed by the policyowner during the Life Insured's lifetime by giving
written notice to Manulife New York in a form satisfactory to the Company. The
change will take effect as of the date such notice is signed but will not apply
to any payments made or actions taken by the Company prior to receiving such
written notice. If the Life Insured dies and there is no surviving beneficiary,
the policyowner, or the policyowner's estate if the policyowner is the Life
Insured, will be the beneficiary. If a beneficiary dies before the seventh day
after the death of the Life Insured, the Company will pay the insurance benefit
as if the beneficiary had died before the Life Insured.
INCONTESTABILITY
The Company will not contest the validity of a Policy after it has been in force
during the Life Insured's lifetime for two years from the Issue Date. It will
not contest the validity of an increase in Face Amount, after such increase or
addition has been in force during the lifetime of the Life Insured for two years
from the date of such increase. If a Policy has been reinstated and been in
force during the lifetime of the Life Insured for less than two years from the
reinstatement date, the Company can contest any misrepresentation of a fact
material to the reinstatement.
MISSTATEMENT OF AGE OR SEX
If the stated age or sex, or both, of the Life Insured in the Policy are
incorrect, the Company will change the Face Amount so that the death benefit
will be that which the most recent monthly charge for the cost of insurance
would have purchased for the correct age and sex.
SUICIDE EXCLUSION
If the Life Insured dies by suicide within two years after the Issue Date (or
within the maximum period permitted by the state in which the Policy was
delivered, if less than two years), the Policy will terminate and the Company
will pay only the premiums paid less any partial Net Cash Surrender Value
withdrawal and less any Policy Debt.
The Company reserves the right to obtain evidence of the manner and cause of
death of the Life Insured.
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SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including those providing a lapse protection benefit and an
acceleration of benefits in the event of a terminal illness. More detailed
information concerning these supplementary benefits may be obtained from an
authorized agent of the Company. The cost, if any, for supplementary benefits
will be deducted as part of the monthly deduction.
TAX TREATMENT OF THE POLICY
INTRODUCTION
The following discussion of the Federal income tax treatment of the
Policy is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. The Federal income tax treatment of the Policy is
unclear in certain circumstances, and a qualified tax advisor should always be
consulted with regard to the application of law to individual circumstances.
This discussion is based on the Code, Treasury Department regulations, and
interpretations existing on the date of this Prospectus. These authorities,
however, are subject to change by Congress, the Treasury Department, and
judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of the Policy. In addition, THE COMPANY MAKES NO
GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY
POLICY OR OF ANY TRANSACTION INVOLVING A POLICY.
THE COMPANY'S TAX STATUS
The Company is taxed as a life insurance company under the Code. Since
the operations of the Separate Account are a part of, and are taxed with, the
operations of the Company, the Separate Account is not separately taxed as a
"regulated investment company" under the Code. Under existing Federal income tax
laws, investment income and capital gains of the Separate Account are not taxed
to the extent they are applied under a Policy. The Company does not anticipate
that it will incur any Federal income tax liability attributable to such income
and gains of the Separate Account, and therefore the Company does not intend to
make any provision for such taxes. If the Company is taxed on investment income
or capital gains of the Separate Account, then the Company may impose a charge
against the Separate Account to make provision for such taxes. The Company's
Federal tax liability is increased, however, in respect of the Policies because
of the Federal tax law's treatment of deferred acquisition costs (for which the
Company imposes a Federal tax charge) (see "CHARGES AND DEDUCTIONS").
TAXATION OF LIFE INSURANCE POLICIES IN GENERAL
TAX STATUS OF THE POLICY
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Code, and thereby to enjoy the tax benefits of
such a contract:
- - The Policy must satisfy the definition of life insurance under Section
7702 of the Code.
- - The investments of the Separate Account must be "adequately
diversified" in accordance with Section 817(h) of the Code and Treasury
Regulations.
- - The Policy must be a valid life insurance contract under applicable
state law.
- - The Policyowner must not possess "incidents of ownership" in the assets
of the Separate Account.
These four items are discussed in detail below.
DEFINITION OF LIFE INSURANCE
Section 7702 of the Code sets forth a definition of a life insurance contract
for federal tax purposes. For a Policy to be a life insurance contract, it must
satisfy either the Cash Value Accumulation Test or the Guideline Premium Test.
Only the Guideline Premium Test is permitted under the Policy. The Guideline
Premium Test also requires a minimum death benefit, but in addition limits the
total premiums that can be paid into a Policy for a given amount of death
benefit.
With respect to a Policy which is issued on the basis of a standard rate class,
the Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) that
such a Policy should meet the Section 7702 definition of a life insurance
contract.
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With respect to a Policy that is issued on a substandard basis (i.e., a rate
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
definition of a life insurance contract. Thus it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyowner pays
the full amount of premiums permitted under the Policy.
The Secretary of the Treasury (the "Treasury") is authorized to prescribe
regulations implementing Section 7702. However, while proposed regulations and
other interim guidance have been issued, final regulations have not been adopted
and guidance as to how Section 7702 is to be applied is limited. If a Policy
were determined not to be a life insurance contract for purposes of Section
7702, such a Policy would not provide the tax advantages normally provided by a
life insurance policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
DIVERSIFICATION
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
Code (discussed above). The Separate Account, through the Trust, intends to
comply with the diversification requirements prescribed in Treas. Reg. Sec.
1.817-5, which affect how the Trust's assets are to be invested. The Company
believes that the Separate Account will thus meet the diversification
requirement, and the Company will monitor continued compliance with the
requirement.
STATE LAW
State regulations require that the policyowner have appropriate insurable
interest in the life insured. Failure to establish an insurable interest may
result in the Policy not qualifying as a life insurance contract for federal tax
purposes.
INVESTOR CONTROL
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyowners may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets". As of the date of this prospectus, no such guidance has been
issued.
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
policyowner has additional flexibility in allocating premium payments and Policy
Values. These differences could result in an owner being treated as the owner of
a pro-rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
The remainder of this discussion assumes that the Policy will be
treated as a life insurance Policy for Federal tax purposes.
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TAX TREATMENT OF LIFE INSURANCE DEATH BENEFIT PROCEEDS
In general, the amount of the death benefit payable from a Policy by
reason of the death of the insured is excludable from gross income under Section
101 of the Code. Certain transfers of the Policy for valuable consideration,
however, may result in a portion of the death benefit being taxable.
If the death benefit is not received in a lump sum and is, instead,
applied under one of the settlement options, payments generally will be prorated
between amounts attributable to the death benefit which will be excludable from
the beneficiary's income and amounts attributable to interest (accruing after
the insured's death) which will be includible in the beneficiary's income.
Tax Deferral During Accumulation Period
Under existing provisions of the Code, except as described below, any
increase in a policyowner's Policy value is generally not taxable to the
policyowner unless amounts are received (or are deemed to be received) from the
Policy prior to the insured's death.
Lapse or Surrender
Upon a lapse or surrender of the Policy, the amount received will be
includible in the policyowner's income to the extent the amount received exceeds
the "investment in the Policy." If there is any debt at the time of a lapse or
surrender, such debt will be treated as an amount received by the policyowner.
The "investment in the Policy" generally is the aggregate amount of premium
payments and other consideration paid for the Policy, less the aggregate amount
received under the Policy previously to the extent such amounts received were
excludable from gross income. A subsequent reinstatement will not change this
tax treatment of a surrendered or lapsed Policy.
Policies Which Are MECs
Characterization of a Policy as a MEC. Section 7702A establishes a
class of life insurance contracts designated as Modified Endowment Contracts
("MECs"), which applies to Policies entered into or materially changed after
June 20, 1988. In general, a Policy will be a MEC if the accumulated premiums
paid at any time during the first seven Policy Years exceed the sum of the net
level premiums which would have been paid on or before such time if the Policy
paid up future benefits after the payment of seven level annual premiums (the
"seven-pay test"). The determination of whether a Policy will be a MEC after a
material change generally depends upon the relationship of the death benefit and
the Policy Value at the time of such change and the additional premiums paid in
the seven years following the material change. In general, this Policy will
constitute a MEC unless:
(4) it was received in exchange for another life insurance policy which was
not a MEC,
(5) no premium payments (other than the exchanged policy) are paid into the
Policy during the first seven Policy years, and
(6) the death benefit on the new Policy is not less than the death benefit
on the exchanged policy.
If the death benefit on the new policy is less than the death benefit on the
exchanged policy, the new policy may become a MEC if (1) the exchanged policy
was, at the time of the exchange, subject to the MEC rules, (2) premiums
payments had been made to the old policy after it had become subject to the MEC
rules, and (3) the exchanged policy was in a seven-pay test period at the time
of exchange or, in the case of a Survivorship Policy, the Policy was issued (or
deemed issued) after September 13, 1989.
In addition, even if the Policy initially is not a MEC, it may in certain
circumstances become a MEC. These circumstances would include a later increase
in benefits, any other material change of the Policy (within the meaning of the
tax law), and a withdrawal or reduction in the death benefit during the first
seven Policy years.
Tax Treatment of Withdrawals, Loans, Assignments and Pledges under
MECs. If the Policy is a MEC, withdrawals from the Policy will be treated first
as withdrawals of income and then as a recovery of premium payments. Thus,
withdrawals will be includible in income to the extent the Policy value exceeds
the investment in the Policy. The amount of any loan (including unpaid interest
thereon) under the Policy will be treated as a withdrawal from the Policy for
tax purposes. In addition, if the policyowner assigns or pledges any portion of
the value of a Policy (or agrees to assign or pledge any portion), such portion
will be treated as a withdrawal from the Policy for tax purposes. The
policyowner's investment in the Policy is increased by the amount includible in
income with respect to such assignment, pledge, or loan, though it is not
affected by any other aspect
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of the assignment, pledge, or loan (including its release or repayment). Before
assigning, pledging, or requesting a loan under a Policy which is a MEC, a
policyowner should consult a qualified tax advisor.
Penalty Tax. Generally, withdrawals (or the amount of any deemed
withdrawals) from a MEC are subject to a penalty tax equal to 10% of the portion
of the withdrawal that is includible in income, unless the withdrawals are made
(1) after the policyowner attains age 59 -1/2, (2) because the policyowner has
become disabled (as defined in the tax law), or (3) as substantially equal
periodic payments over the life or life expectancy of the policyowner (or the
joint lives or life expectancies of the policyowner and his or her beneficiary,
as defined in the tax law).
Aggregation of Policies. All life insurance Policies which are MECs and
which are purchased by the same person from the Company or any of its affiliates
within the same calendar year will be aggregated and treated as one Policy for
purposes of determining the amount of a withdrawal (including a deemed
withdrawal) that is includible in income. The effects of such aggregation are
not clear; however, it could affect the amount of a withdrawal (or a deemed
withdrawal) that is taxable and the amount which might be subject to the 10%
penalty tax described above.
Policies Which Are Not MECs
Tax Treatment of Withdrawals Generally. If the Policy is not a MEC
(described above), the amount of any withdrawal from the Policy will be treated
first as a non-taxable recovery of premium payments and then as income from the
Policy. Thus, a withdrawal from a Policy that is not a MEC will not be
includible in income except to the extent it exceeds the investment in the
Policy immediately before the withdrawal.
Certain Distributions Required by the Tax Law in the First 15 Policy
Years. As indicated under "Payments," Section 7702 places limitations on the
amount of premium payments that may be made and the Policy values that can
accumulate relative to the death benefit. Where cash distributions are required
under Section 7702 in connection with a reduction in benefits during the first
15 years after the Policy is issued (or if withdrawals are made in anticipation
of a reduction in benefits, within the meaning of the tax law, during this
period), some or all of such amounts may be includible in income. A reduction in
benefits may result upon a decrease in the face amount, if withdrawals are made,
and in certain other instances.
Tax Treatment of Loans. If a Policy is not a MEC, a loan received under
the Policy generally will be treated as indebtedness of the policyowner. As a
result, no part of any loan under such a Policy will constitute income to the
policyowner so long as the Policy remains in force. Nevertheless, in those
situations where the interest rate credited to the loan account equals the
interest rate charged for the loan, it is possible that some or all of the loan
proceeds may be includible in income. If a policy lapses (or if all Policy value
is withdrawn) when a loan is outstanding, the amount of the loan outstanding
will be treated as withdrawal proceeds for purposes of determining whether any
amounts are includible in the policyowner's income.
Survivorship Policies
Although the Company believes that the Policy, when issued as a
Survivor Policy, complies with Section 7702 of the Code, the manner in which
Section 7702 should be applied to Survivor Policies is not directly addressed by
Section 7702. In the absence of final regulations or other guidance issued under
Section 7702 regarding this form of Policy, there is necessarily some
uncertainty whether a Survivor Policy will meet the Section 7702 definition of a
life insurance Policy. Prospective policyowners considering purchase of the
Policy as a Survivor Policy should consult a qualified tax advisor.
Where the policyowner of the Policy is the last surviving insured, the
death proceeds will generally be includible in the policyowner's estate on his
or her death for purposes of the Federal estate tax. If the policyowner dies and
was not the last surviving insured, the fair market value of the Policy would be
included in the policyowner's estate. In general, no part of the Policy value
would be includible in the last surviving insured's estate if he or she neither
retained incidents of policyownership at death nor had given up policyownership
within three years before death.
Treatment of Maturity Benefits
At the maturity date, the surrender value will be paid to the
policyowner, and this amount will be includible in income to the extent the
amount received exceeds the investment in the Policy
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Actions to Ensure Compliance with the Tax Law
The Company believes that the maximum amount of premium payments it has
determined for the Policies will comply with the Federal tax definition of life
insurance. The Company will monitor the amount of premium payments, and, if the
premium payments during a Policy year exceed those permitted by the tax law, the
Company will refund the excess premiums within 60 days of the end of the Policy
year and will pay interest and other earnings (which will be includible in
income subject to tax) as required by law on the amount refunded. The Company
also reserves the right to increase the death benefit (which may result in
larger charges under a Policy) or to take any other action deemed necessary to
ensure the compliance of the Policy with the Federal tax definition of life
insurance.
Other Considerations
Changing the policyowner, exchanging the Policy, and other changes
under the Policy may have tax consequences (in addition to those discussed
herein) depending on the circumstances of such change.
Federal estate tax, state and local estate and inheritance tax, and
other tax consequences of policyownership or receipt of Policy proceeds depend
on the circumstances of each policyowner or beneficiary. Federal estate tax is
integrated with Federal gift tax under a unified rate schedule. In general,
estates valued at less than the "applicable exclusion amount" will not incur a
Federal estate tax liability. The applicable exclusion amount for decedents
dying in 1999 is $625,000 and increases annually until it reaches $1,000,000 for
decedents dying in 2006 and after. In addition, an unlimited marital deduction
may be available for Federal estate and gift tax purposes.
If the policyowner (whether or not he or she is an insured) transfers
policyownership of the Policy to someone two or more generations younger, the
transfer may be subject to the generation-skipping tax, the amount subject to
tax being the value of the Policy. The generation-skipping tax provisions
generally apply to transfers which would be subject to the gift or estate tax
rules. Individuals are generally allowed an aggregate generation-skipping tax
exemption of $1 million. For generation skipping transfers of decedents dying
after 1998, this exemption is indexed for inflation.
Because the Federal estate tax, gift tax, and generation skipping tax
rules are complex, prospective Policyowners should consult a qualified tax
advisor before using this Policy for estate planning purposes.
DISALLOWANCE OF INTEREST DEDUCTIONS
The Policy generally will be characterized as a single premium life
insurance Policy under Section 264 of the Code and, as a result, interest paid
on any loans under the Policy will not be tax deductible, irrespective of
whether the policyowner is an individual or a non-natural entity, such as a
corporation or a trust. In addition, in the case of Policies issued to a
non-natural taxpayer, or held for the benefit of such an entity, a portion of
the taxpayer's otherwise deductible interest expenses may not be deductible as a
result of policyownership of a Policy even if no loans are taken under the
Policy. An exception to the latter rule is provided for certain life insurance
Policies which cover the life of an individual who is a 20-percent policyowner,
or an officer, director, or employee of, a trade or business. Entities that are
considering purchasing the policy, or entities that will be beneficiaries under
a Policy, should consult a tax advisor.
FEDERAL INCOME TAX WITHHOLDING
The Company will withhold and remit to the Federal government a part of
the taxable portion of withdrawals made under a Policy unless the policyowner
notifies the Company in writing at or before the time of the withdrawal that he
or she elects not to have any amounts withheld. Regardless of whether the
policyowner requests that no taxes be withheld or whether the Company withholds
a sufficient amount of taxes, the policyowner will be responsible for the
payment of any taxes and early distribution penalties that may be due on the
amounts received. The policyowner may also be required to pay penalties under
the estimated tax rules, if the policyowner's withholding and estimated tax
payments are insufficient to satisfy the policyowner's total tax liability.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, the Company will ordinarily pay any policy
loans, surrenders, partial withdrawals or insurance benefit within seven days
after receipt at its Service Office of all the documents required for such a
payment. The Company may delay for up to six months the payment from the Fixed
Account of any policy loans, surrenders, partial
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withdrawals, or insurance benefit. In the case of any such payments from any
Investment Account, the Company may delay payment during any period during
which:
(i) the New York Stock Exchange is closed for trading (except for normal
weekend and holiday closings),
(ii) trading on the New York Stock Exchange is restricted,
(iii) 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
(iv) the SEC, by order, so permits for the protection of security holders;
provided that applicable rules and regulations of the SEC shall govern
as to whether the conditions described in (ii) and (iii) exist.
REPORTS TO POLICYOWNERS
Within 30 days after each Policy Anniversary, the Company will send the
policyowner a statement showing, among other things:
- - the amount of death benefit;
- - the Policy Value and its allocation among the Investment Accounts, the
Fixed Account and the Loan Account; - the value of the units in each
Investment Account to which the Policy Value is allocated;
- - the Policy Debt and any loan interest charged since the last report;
- - the premiums paid and other Policy transactions made during the period
since the last report; and
- - any other information required by law.
Each policyowner will also be sent an annual and a semi-annual report for the
Trust which will include a list of the securities held in each Portfolio as
required by the 1940 Act.
DISTRIBUTION OF THE POLICIES
MSS is a Delaware limited liability company organized on October 1, 1997, with
its principal offices located at 73 Tremont Street, Boston, Massachusetts 02108.
MSS acts as the principal underwriter of, and continuously offers, the Policies
pursuant to an Underwriting and Distribution Agreement with us. MSS is a
subsidiary of Manulife North America, the ultimate parent of which is Manulife
Financial. We have a 10% equity interest in MSS. MSS is registered as a
broker-dealer under the Securities Exchange Act of 1934, is a member of the
National Association of Securities Dealers and is duly appointed and licensed as
our insurance agent.
The Policies will be sold by registered representatives of broker-dealers having
distribution agreements with MSS who are also licensed by the New York State
Insurance Department and appointed with Manulife New York. A registered
representative will receive commissions not to exceed either (a) 7% of premiums
in the first year or (b) 5.75% of premiums in the first year and .25% of Net
Policy Value annually beginning 19 months after issuance of the Policy.
Representatives who meet certain productivity standards with regard to the sale
of the Policies and certain other policies issued by the Company will be
eligible for additional compensation.
RESPONSIBILITIES ASSUMED BY MANULIFE NEW YORK AND MSS
The Company has entered into an agreement with MSS pursuant to which MSS will
pay selling broker dealers maximum commission and expense allowance payments
pursuant to limitations imposed by New York Insurance Law. The Company will
prepare and maintain all books and records required to be prepared and
maintained by MSS with respect to the Policies, and send all confirmations
required to be sent by MSS with respect to the Policies. The Company will pay
MSS for expenses incurred and services performed under the terms of the
agreement in such amounts and at such times as agreed to by the parties.
Manulife Financial has also entered into a Service Agreement with us pursuant to
which Manulife Financial or its designee will provide to us all issue,
administrative, general services and recordkeeping functions on our behalf with
respect to all of our insurance policies including the Policies.
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Finally, the Company may, from time to time in its sole discretion, enter into
one or more reinsurance agreements with other life insurance companies under
which policies issued by it may be reinsured, such that its total amount at risk
under a policy would be limited for the life of an insured.
VOTING RIGHTS
As stated previously, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of the Trust. The
Company is the legal owner of those shares and as such has the right to vote
upon certain matters that are required by the 1940 Act to be approved or
ratified by the shareholders of a mutual fund and to vote upon any other matters
that may be voted upon at a shareholders' meeting. However, the Company will
vote shares held in the sub-accounts in accordance with instructions received
from policyowners having an interest in such sub-accounts. Shares held in each
sub-account for which no timely instructions from policyowners are received,
including shares not attributable to the Policies, will be voted by the Company
in the same proportion as those shares in that sub-account for which
instructions are received. Should the applicable federal securities laws or
regulations change so as to permit the Company to vote shares held in the
Separate Account in its own right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Portfolio. The number will be determined as of a date chosen by
the Company, but not more than 90 days before the shareholders' meeting.
Fractional votes are counted. Voting instructions will be solicited in writing
at least 14 days prior to the meeting.
The Company may, if required by state officials, disregard voting instructions
if such instructions would require shares to be voted so as to cause a change in
the sub-classification or investment policies of one or more of the Portfolios,
or to approve or disapprove an investment management policy. In addition, the
Company itself may disregard voting instructions that would require changes in
the investment policies or investment adviser, provided that the Company
reasonably disapproves such changes in accordance with applicable federal
regulations. If the Company does disregard voting instructions, it will advise
policyowners of that action and its reasons for such action in the next
communication to policyowners.
SUBSTITUTION OF PORTFOLIO SHARES
It is possible that in the judgment of the management of the Company, one or
more of the Portfolios may become unsuitable for investment by the Separate
Account because of a change in investment policy or a change in the applicable
laws or regulation, because the shares are no longer available for investment,
or for some other reason. In that event, the Company may seek to substitute the
shares of another Portfolio or of an entirely different mutual fund. Before this
can be done, the approval of the S.E.C. and one or more state insurance
departments may be required.
The Company also reserves the right (i) to combine other separate accounts with
the Separate Account, (ii) to create new separate accounts, (iii) to establish
additional sub-accounts within the Separate Account to invest in additional
portfolios of the Trust or another management investment company, (iv) to
eliminate existing sub-accounts and to stop accepting new allocations and
transfers into the corresponding portfolio, (v) to combine sub-accounts or to
transfer assets in one sub-account to another sub-account or (vi) to transfer
assets from the Separate Account to another separate account and from another
separate account to the Separate Account. The Company also reserves the right to
operate the Separate Account as a management investment company or other form
permitted by law, and to de-register the Separate Account under the 1940 Act.
Any such change would be made only if permissible under applicable federal and
state law.
RECORDS AND ACCOUNTS
The Service Office will perform administrative functions, such as decreases,
increases, surrenders and partial withdrawals, and fund transfers on behalf of
the Company.
All records and accounts relating to the Separate Account and the Portfolios
will be maintained by the Company. All financial transactions will be handled by
the Company. All reports required to be made and information required to be
given will be provided by the Company.
36
42
STATE REGULATIONS
The Company is subject to the regulation and supervision by the New York
Department of Insurance, which periodically examines its financial condition and
operations. It is also subject to the insurance laws and regulations of all
jurisdictions in which it is authorized to do business. The Policies have been
filed with insurance officials, and meet all standards set by law, in each
jurisdiction where they are sold.
The Company is required to submit annual statements of its operations, including
financial statements, to the insurance departments of the various jurisdictions
in which it does business for the purposes of determining solvency and
compliance with local insurance laws and regulations.
LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or the Trust.
INDEPENDENT AUDITORS
The consolidated financial statements of The Manufacturers Life Insurance
Company of New York and Separate Account B of The Manufacturers Life Insurance
Company of America at December 31, 1999 and 1998, and for each of the three
years in the period ended December 31, 1999, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the S.E.C. relating to the offering described in this prospectus. This
prospectus does not include all the information set forth in the registration
statement. The omitted information may be obtained from the S.E.C.'s principal
office in Washington D.C. upon payment of the prescribed fee. The Commission
also maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission which is located at http://www.sec.gov.
For further information you may also contact the Company's Home Office, the
address and telephone number of which are on the first page of the prospectus.
OFFICERS AND DIRECTORS
The directors and executive officers of the Company, together with their
principal occupations during the past five years, are as follows:
POSITION WITH
NAME MANULIFE NEW YORK PRINCIPAL OCCUPATION
- ---- ----------------- --------------------
Bruce Avedon Director* Consultant (self-employed) August 1983 to present.
Age: 71
Thomas Borshoff Director* Self-employed, Real Estate Owner/Manager; Chief Executive Officer and
Age: 53 Chairman, First Federal Savings and Loan of Rochester, 1983 to 1997
James Boyle Director* Senior Vice President, U.S. Annuities, Manulife Financial, July 1999 to
Age: 40 present; President and Director, Manulife North America, July 1999 to
present; Vice President, Institutional Markets, Manulife Financial, May
1998 to July 1999; Vice President, Administration, Manulife North America,
September 1996 to May 1998.
Robert Cook Director* Senior Vice President, US Insurance, Manulife Financial, January 1999 to
Age: 45 present; Vice President, US Insurance, Manulife Financial, 1995 to
December 1998.
John DesPrez III Director* Executive Vice President, U.S. Operations, Manulife Financial, January
Age: 43 1999 to present; Director, September 1996 to present and Chairman of the
Board, January 1999 to present, of Manulife North America; President,
Manulife North America, September 1996 to December 1998;
37
43
President, Manufacturers Investment Trust, September 1996 to October 1999;
Senior Vice President, U.S. Annuities, Manulife Financial, September 1996 to
December 1998.
Ruth Ann Flemming Director* Attorney, consulting services and pro bono activities.
Age: 41
James Gallagher Director* and President Vice President, US Law and Government Relations, Manulife Financial,
Age: 45 January 1996 to present.
Tracy Kane Secretary and Counsel Assistant Vice President and Senior Counsel, MNA, April 1993 to present.
Age: 37
David Libbey Treasurer Vice President, Treasurer and Chief Financial Officer, Manulife North
Age: 53 America, December 1997 to present; Vice President, Finance, Manulife
North America, June 1997 to December 1997; Vice President, Finance,
Annuities, Manulife Financial, June 1997 to present; Vice President &
Actuary, Paul Revere Insurance Group, June 1970 to March 1997.
James O'Malley Director* Senior Vice President, U.S. Pensions, Manulife Financial, January 1999
Age: 54 to present; Vice President, Systems New Business Pensions, Manulife
Financial, 1984 to December 1998.
Neil Merkl, Esq. Director* Attorney (self-employed), April 1994 to present.
Age: 69
John Richardson Director and Chairman Senior Executive Vice President, Manulife Financial, January 1999 to
Age: 62 of the Board of present; Executive Vice President, U.S. Operations, Manulife Financial,
Directors* November 1997 to December 1998; Senior Vice President and General
Manager, U.S. Operations, Manulife Financial, January 1995 to October
1997.
James Robinson Director* Retired; Attorney and Assistant Secretary, Eastman Kodak Company, 1958
Age: 73 to 1991.
E. Paige Sabine Assistant Vice Assistant Vice President and Chief Administrative Officer, Manulife New
Age: 33 President and Chief York, August 1998 to present; Director - Divisional Compliance, Manulife
Administrative Officer Financial, August 1998 to November 1998; Manager - US Market Conduct
and Compliance, Manulife Financial, June 1996 to August 1998.
John Vrysen Vice President and Vice President and Chief Financial Officer, U.S. Operations, Manulife
Age: 44 Chief Actuary Financial, January 1996 to present.
YEAR 2000 ISSUES
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect us, including those
related to customers, suppliers, or other third parties, have been fully
resolved.
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APPENDIX A
DEFINITIONS
Additional Rating
is an increase to the Cost of Insurance Rate for insureds who do not meet, at a
minimum, the Company's underwriting requirements for the standard Risk
Classification.
Age
on any date is the Life Insured's age on his or her nearest birthday. If no
specific date is mentioned, Age means the Life Insured's age on the Policy
Anniversary nearest to the birthday.
Attained Age
on any date is the Age at issue plus the number of whole years that have elapsed
since the Policy Date. In the case of a Survivorship Policy, Attained Age is
based on the youngest Life Insured at issue of the Policy.
Business Day
is any day that the New York Stock Exchange is open for business. A Business Day
ends at the close of regularly scheduled day-time trading of the New York Stock
Exchange on that day.
Cash Surrender Value
is the Policy Value less the sum of (a) the Surrender Charge and (b) any
outstanding Monthly Deductions due.
The Company (or "we," "us" or "our")
refers to The Manufacturers Life Insurance Company of New York.
Earnings
is an amount calculated in relation to a loan and free withdrawals. The amount
is calculated as of the date the Company receives the request for the loan or
the free withdrawal and is equal to the Policy Value less the sum of (a) the
value of any Policy Debt and (b) total premiums paid.
Effective Date
is the date the underwriters approve issuance of the Policy. If the Policy is
approved without the initial premium, the Effective Date will be the date the
Company receives at least the minimum initial premium at our Service Office. In
either case, the Company will take the first Monthly Deduction on the Effective
Date.
Fixed Account
is that part of the Policy Value which reflects the value the policyowner has in
the general account of the Company.
Guideline Single Premium
is the maximum premium that can be paid under the Guideline Premium Test
(described under "Life Insurance Qualification") which will still allow the
Policy to qualify as life insurance for tax purposes under Section 7702 of the
Code.
Investment Account
is that part of the Policy Value which reflects the value the policyowner has in
one of the sub-accounts of the Separate Account.
Issue Date
is the date the Company issued the Policy. The Issue Date is also the date from
which the Suicide and Validity provisions of the Policy are measured.
Life Insured
is the person or persons whose life (or lives) is (are) covered by the Policy.
In the case of a Survivorship Policy, all provisions of the Policy which are
based on the death of the Life Insured will be based on the death of the last
survivor of the persons so named and reference to the youngest of the Life
Insured means the youngest person insured under the Policy when it is first
issued.
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45
Loan Account
is that part of the Policy Value which reflects the value transferred from the
Fixed Account or the Investment Accounts as collateral for a policy loan.
Maturity Date
is the date shown in the Policy. In the case of a Single Life Policy, it is the
Policy Anniversary nearest Attained Age 100 of the Life Insured. In the case of
a Survivorship Policy, it is the Policy Anniversary nearest Attained Age 100 of
the youngest of the Life Insured at issue.
Net Cash Surrender Value
is the Cash Surrender Value less the Policy Debt.
Net Policy Value
is the Policy Value less the value in the Loan Account.
Net Premium
is the gross premium paid less the Premium Charge. It is the amount of premium
allocated to the Fixed Account and/or Investment Accounts.
Policy Date
is the date coverage takes effect under the Policy, provided the underwriting
process has been completed to the Company's satisfaction and the Company has
received the minimum initial premium at its Service Office, and is the date from
which charges for the first monthly deduction are calculated, and the date from
which Policy Years, Policy Months, and Policy Anniversaries are determined.
Policy Debt
as of any date equals (a) plus (b) plus (c) minus (d), where:
(a) is the total amount of loans borrowed as of such date;
(b) is the total amount of any unpaid loan interest charges which
have been borrowed against the policy on a Policy Anniversary;
(c) is any interest charges accrued from the last Policy
Anniversary to the current date; and
(d) is the total amount of loan repayments as of such date.
Policy Value
is the sum of the values in the Loan Account, the Fixed Account, and the
Investment Accounts.
Single Life Policy
is a modified single premium variable life insurance policy offered on a single
life basis under the Policy described in this Prospectus.
Separate Account
refers to Separate Account B of the Company.
Service Office Address
is P.O. Box 633, Niagara Square Station, Buffalo, New York 14201-0633.
Surrender Charge Period
is the period following the Issue Date during which the Company will assess
surrender charges. Surrender charges will apply during this period if the Policy
terminates due to default, if the policyowner surrenders the Policy or makes a
partial withdrawal.
Survivorship Policy
is a modified single premium survivorship variable life insurance policy offered
on a survivorship basis under the Policy described in this Prospectus.
Written Request
is the policyowner's request to the Company which must be in a form satisfactory
to the Company, signed and dated by the policyowner, and received at the Service
Office.
2
46
3
47
APPENDIX B
APPENDIX B
SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER VALUES AND DEATH BENEFITS
The following tables have been prepared to help show how values under the Policy
change with investment performance. The tables are based on initial premiums of
$25,000 and $100,000. A male age 55 and a female age 55 are illustrated for the
single life Policy. A male age 55 and female age 50 are illustrated for the last
survivorship Policy.
The tables include both Policy Values and Cash Surrender Values as well as Death
Benefits. The Policy Value is the sum of the values in the Investment Accounts,
as the tables assume no values in the Fixed Account or Loan Account. The Cash
Surrender Value is the Policy Value less any applicable surrender charges. The
tables illustrate how Policy Values and Cash Surrender Values, which reflect all
applicable charges and deductions, and Death Benefits of the Policy on an
insured of given age would vary over time if the return on the assets of the
Portfolios was a uniform, gross, after-tax, annual rate of 0%, 6% or 12%. The
Policy Values, Death Benefits and Cash Surrender Values would be different from
those shown if the returns averaged 0%, 6% or 12%, but fluctuated over and under
those averages throughout the years. The charges reflected in the tables include
those for deductions from premiums, surrender charges, and monthly deductions.
The amounts shown for the Policy Value, Death Benefit and Cash Surrender Value
as of each Policy Year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return. This
is because the expenses and fees borne by Manufacturers Investment Trust are
deducted from the gross return. The illustrations reflect a simple average of
those Portfolios' current expenses, which is approximately 0.960% per annum. The
gross annual rates of return of 0%, 6% and 12% correspond to approximate net
annual rates of return of - 0.955%, 4.987% and 10.930%. The expense of the
Portfolios may fluctuate from year to year but are assumed to remain constant
for purposes of these tables. The illustrations reflect the expense
reimbursement in effect for the Lifestyle Trusts. In the absence of such expense
reimbursement, the average of the Portfolio's current expenses would have been
0.963% per annum and the gross annual rates of return of 0%, 6% and 12% would
have corresponded to approximate net annual rates of return of -0.958%, 4.984%
and 10.927%. The expense reimbursement for the Lifestyle Trusts is expected to
remain in effect during the fiscal year ended December 31, 1999 and the fiscal
year ended December 31, 2000. Were the expense reimbursement and expense
limitation to terminate, the average of the Portfolios' current expenses would
be higher and the approximate net annual rates of return would be lower.
The tables assume that no premiums have been allocated to the Fixed Account,
that planned premiums are paid on the Policy Anniversary and that no transfers,
partial withdrawals, Policy loans, changes in death benefit options or changes
in face amount have been made. The tables reflect the fact that no charges for
federal, state or local taxes are currently made against the Separate Account.
If such a charge is made in the future, it would take a higher gross rate of
return to produce after-tax returns of 0%, 6% and 12% than it does now.
There are two tables shown for each Policy, one based on current cost of
insurance charges assessed by the Company and the other based on the maximum
cost of insurance charges based on the 1980 Commissioners Smoker Distinct
Mortality Tables. Current cost of insurance charges are not guaranteed and may
be changed. Upon request, Manufacturers Life of America will furnish a
comparable illustration based on the proposed life insured's issue age, sex
(unless unisex rates are required by law, or are requested) and risk classes and
any additional ratings, face amount and planned premium requested.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may include
Cash Surrender Values and Death Benefit figures computed using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Portfolio for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables. This information may be shown in the form of graphs, charts, tables and
examples.
The Policies have been offered to the public only since approximately _______,
2000. However, total return data may be advertised for as long a period of time
as the underlying Portfolio has been in existence. The results for any period
prior to
1
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the Policies' being offered would be calculated as if the Policies had
been offered during that period of time, with all charges assumed to be those
applicable to the Policies.
[To Be Filed By Amendment]
2
49
FINANCIAL STATEMENTS
[To Be Filed By Amendment]
1
50
PART II
OTHER INFORMATION
UNDERTAKINGS
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940, as amended.
The Manufacturers Life Insurance Company of New York (the "Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 42 pages;
Representation pursuant to Section 26 of the Investment Company Act of
1940; The signatures; Written consents of the following persons:
Gretchen H. Swanz - [TO BE FILED BY AMENDMENT]
John Vrysen - [TO BE FILED BY AMENDMENT]
Ernst & Young LLP- [TO BE FILED BY AMENDMENT]
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions
as to exhibits in Form N-8B-2 are set forth below under
designations based on such instructions:
A(1) Resolutions of Board of Directors of First North
American Life Assurance Company establishing FNAL
Variable Life Account I were previously filed in the
Registrant's initial registration statement on Form
S-6 (File No. 333-33351) as filed with the Commission
on August 8, 1997.
A(2) Not applicable.
A(3)(a) Underwriting and Distribution Agreement between The
Manufacturers Life Insurance Company of New York
(Depositor) and Manufacturers Securities Services, LLC
(Underwriter) is incorporated by reference to Exhibit
(b)(3)(a) to post-effective amendment No. 7 to the
Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
A(3)(b) Selling Agreement between The Manufacturers Life
Insurance Company of New York, Manufactures Securities
Services, LLC (Underwriter), Selling Broker Dealers,
and General Agent is incorporated by reference to
Exhibit (b)(3)(b) to post-effective amendment No. 7 to
the Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Modified Single Premium Variable Life
Insurance Policy -FILED
5
51
HEREWITH.
A(6)(a)(i) Declaration of Intention and Charter of First North
American Life Assurance Company is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
A(6)(a)(ii) Certificate of amendment of the Declaration of
Intention and Charter of First North American Life
Assurance Company is incorporated by reference to
Exhibit (b)(6)(i) to post-effective amendment No. 7 to
the Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
A(6)(a)(iii) Certificate of amendment of the Declaration of
Intention and Charter of The Manufacturers Life
Insurance Company of New York is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
(A)(6)(b) By-laws of The Manufacturers Life Insurance Company of
New York are incorporated by reference to Exhibit
(b)(6)(i) to post-effective amendment No. 7 to the
Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
A(7) Not applicable.
A(8)(a) Form of Reinsurance Agreement between The
Manufacturers Life Insurance Company of New York and
The Manufacturers Life Insurance Company (USA) is
incorporated by reference to Exhibit A(8)(a) to
pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed on
March 16, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
A(8)(b) Administrative Services Agreement between The
Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company of New York is
incorporated by reference to Exhibit (b)(8)(a) to
post-effective amendment No. 7 to the Registration
Statement on Form N-4, file number 33-46217, filed
February 25, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account A.
A(8)(c) Investment Services Agreement between The
Manufacturers Life Insurance Company of New York and
The Manufacturers Life Insurance Company is
incorporated by reference to Exhibit A(8)(a) to
pre-effective amendment No. 1 to a Registration
Statement on Form S-6, file number 333-33351, filed on
March 16, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account B.
A(9) Not applicable.
A(10)(a) Form of Application for a Modified Single Premium
Variable Life Insurance Policy filed herewith.
6
52
2. Consents of the following:
A Opinion and consent of Gretchen H. Swanz, Esq., Secretary and
Counsel of The Manufacturers Life Insurance Company of New
York - [TO BE FILED BY AMENDMENT]
B Consent of John G. Vrysen, Chief Actuary of The Manufacturers
Life Insurance Company of New York - [TO BE FILED BY
AMENDMENT]
C Consent of Ernst & Young LLP - [TO BE FILED BY AMENDMENT]
3. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable.
6. Memorandum Regarding Issuance, Face Amount Increase, Redemption and
Transfer Procedures for the Policies - [TO BE FILED BY AMENDMENT].
7.(i) Powers of Attorney are incorporated by reference to Exhibit A(7) to
pre-effective amendment No. 1 to a Registration Statement on Form S-6,
file number 333-33351, filed on March 17, 1998 on behalf of The
Manufacturers Life Insurance Company of New York Separate Account B.
7.(ii) Power of Attorney, James O'Malley and Thomas Borshoff - previously
filed as Exhibit (b)(14)(b) to post-effective amendment no. 6 to
Registrant's Registration Statement on Form N-4, File No. 33-79112,
filed March 2, 1999.
53
EXHIBIT INDEX
Exhibit No. Description
A(5) Form of Modified Single Premium Variable Life Insurance Policy
A(10)(a) Form of Application for a Modified Single Premium Variable
Life Insurance Policy
54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT B, and the depositor, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW
YORK, have duly caused this registration statement to be signed on their behalf
by the undersigned thereunto duly authorized, in the city of Boston, and
Commonwealth of Massachusetts, on the 29th day of March, 2000.
THE MANUFACTURERS LIFE INSURANCE COMPANY
OF NEW YORK SEPARATE ACCOUNT B
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ JAMES D. GALLAGHER
-------------------------------------
James D. Gallagher
President
Attest
/s/ Gretchen H. Swanz
- ---------------------------------
Gretchen H. Swanz
Secretary
55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 29th day of March, 2000.
NAME TITLE
- ---- -----
/s/ JAMES D. GALLAGHER Director and President
- ---------------------------- (Principal Executive
James D. Gallagher Officer)
* Chairman of the Board
- ---------------------------- of Directors
John D. Richardson
* Director
- ----------------------------
John D. DesPrez, III
* Director
- ----------------------------
Ruth Ann Flemming
* Director
- ----------------------------
Neil M. Merkl
* Director
- ----------------------------
Thomas Borshoff
* Director
- ----------------------------
James K. Robinson
* Director
- ----------------------------
James R. Boyle
* Director
- ----------------------------
Bruce Avedon
* Director
- ----------------------------
James O'Malley
* Director
- ----------------------------
Robert Cook
/s/ DAVID W. LIBBEY Treasurer (Principal
- ---------------------------- Financial and Accounting
David W. Libbey Officer)
*By: /s/ David W. Libbey
------------------------------
David W. Libbey
Attorney-in-Fact Pursuant
to Powers of Attorney