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Exhibit 6. Memorandum Regarding Issuance, Face Amount Increase,
Redemption and Transfer Procedures for the Policies.
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EXHIBIT 99.6
THE MANUFACTURERS INSURANCE COMPANY OF NEW YORK
DESCRIPTION OF PURCHASE, TRANSFER AND REDEMPTION PROCEDURES
Variable Universal Life Insurance Policies
(1933 File Act No. 333-69987)
This document sets forth, as required by Rule 6e-3(T)(b)(12)(iii), the
administrative procedures that will be followed by The Manufacturers Life
Insurance Company of New York (the "Company") and any office the Company
designates for the receipt of payments and processing of policyowner requests
(the "Service Office") in connection with the issuance of its flexible premium
variable universal life insurance policies described in this registration
statement (1933 Act file no. 333-69987) (the "Policy"), the transfer of assets
held thereunder, and the redemption by policyowners of their interests in the
Policy.
I. ISSUING A POLICY
A. Premiums
This Policy is a flexible premium variable universal life insurance
policy. The Policy permits the policyowner to pay flexible premiums. After
payment of the initial premium, premiums may be paid at any time and in
any amount during the lifetime of the insured. A Policy will be issued
with a planned premium, which is based on the amount of premium the
policyowner wished to pay. In no event may the total of all premiums paid
exceed the then-current maximum premium limitations established by federal
income tax law for Policies that qualify as life insurance under the
Guideline Premium Test. 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. The Company
also reserves the right to request evidence of insurability if a premium
payment would result in an increase in the death benefit that is greater
than the increase in Policy Value.
B. Underwriting
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. The Company will
require satisfactory evidence of insurability. This may include medical
exams and other information. Persons failing to meet standard underwriting
classification may be eligible for a Policy with an additional rating
assigned to it.
C. Application
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. Generally, a Policy
will only be issued on the lives of insureds from ages 20 through 90.
Each Policy is issued with a Policy Date, an Effective Date and an Issue
Date.
The Policy Date 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.
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The Effective Date is the date the Company becomes obligated under the
Policy. It is the date the underwriters approve issuance of the Policy. If
the Company approves the policy without the initial premium, the Effective
Date will be the date we receive 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.
The 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.
If an application is accompanied by a check for the initial premium and
the application is accepted:
(i) the Policy Date will be the date the application and check were
received at the Service Office (unless a special Policy Date is
requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Company's underwriters
approve issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the Policy.
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 Effective Date will be the date the Company
receives the check at its 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.
D. Minimum Initial Face Amount
The Company will generally issue a Policy only if it has a Face Amount of
at least $250,000.
E. 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 earlier 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.
Regardless of whether or not a policy is backdated, Net Premiums (premium
paid less premium charge) received prior to the Effective Date of a Policy
will be credited with interest from the date of receipt at the rate of
return then being earned on amounts allocated to the Money Market
portfolio.
As of the Effective Date, the premiums paid plus interest credited, net of
the premium charge, will be allocated among the Investment Accounts (as
described below under ("Policy Value - Investment Accounts") and/or Fixed
Account in accordance with the policyowner's instructions.
F. Temporary Insurance
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
$5,000,000 and may not be in effect for more than 90 days. This temporary
insurance coverage will be
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issued on a conditional receipt basis, which means that any benefits under
such temporary coverage will only be paid if the lives insured meet 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 rating assigned to it.
G. Right to Examine the Policy
A Policy may be returned for a refund of the premium within 10 days after
it is received. This ten day period is known as the "free look" period.
The Policy can be mailed or delivered to the Company's agent who sold it
or to the 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, the Company will
refund any premium paid. The Company 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 Company's 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, it will pay the policyowner the
Policy Value, computed at the end of the valuation period during which the
Policy is received by the 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.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above
to cancel the increase. If canceled, the Policy Value and the surrender
charges will be recalculated to the amounts they would have been had the
increase not taken place. A policyowner may request a refund of all or any
portion of premiums paid during the free look period, and the Policy Value
and the surrender charges will be recalculated to the amounts they would
have been had the premiums not been paid.
H. Premium Allocation
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 of the Company 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.
On the Effective Date, 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.
All Net Premiums received on or after the Effective Date will be allocated
among Investment Accounts or the Fixed Account as of the business day the
premiums were received at the Service Office. Monthly deductions are due
on the Policy Date and at the beginning of each policy month thereafter.
However, if due prior to the Effective Date, they will be taken on the
Effective Date instead of the dates they were due.
Premiums may be allocated to either the Fixed Account for accumulation at
a rate of interest determined by the Company (the rate of interest will be
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.
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II. DEATH BENEFIT OPTION CHANGES
The death benefit option may be changed on the first day of any Policy
month once each Policy Year after the first Policy Year. The change will
occur on the first day of the next Policy month after a written request
for a change is received at the Service Office. The Company reserves the
right to limit a request for a change if the change would cause the Policy
to fail to qualify as life insurance for tax purposes. The Company will
not allow a change in death benefit option if it would cause the face
amount to decrease below $250,000.
A change in the death benefit option will result in a change in the
Policy's Face Amount, in order to avoid any change in the amount of the
death benefit, as follows:
CHANGE FROM OPTION 1 TO OPTION 2
The new Face Amount will be equal to the Face Amount prior to the change
minus the Policy Value as of the date of the change. The Policy will not
be assessed a Surrender Charge for a reduction in Face Amount solely due
to a change in the death benefit option.
CHANGE FROM OPTION 2 TO OPTION 1
The new Face Amount will be equal to the Face Amount prior to the change
plus the Policy Value as of the date of the change. No new Surrender
Charges will apply to an increase in Face Amount solely due to a change in
the death benefit option.
III. FACE AMOUNT CHANGES
Subject to the limitations stated in the prospectus for the Policy a
policyowner may, upon written request, increase or decrease the Face
Amount of the Policy. The Company reserves the right to limit a change in
Face Amount so as to prevent the Policy from failing to qualify as life
insurance for tax purposes.
A. Increase in Face Amount
Increases in Face Amount may be made once each Policy Year after the first
Policy Year. Any increase in Face Amount must be at least $50,000. An
increase will become effective at the beginning of the policy month
following the date Manulife New York approves the requested increase.
Increases in Face Amount are subject to satisfactory evidence of
insurability. The Company reserves the right to refuse a requested
increase if any of the Lives Insureds' Attained Ages at the effective date
of the increase would be greater than the maximum issue age for new
Policies at that time.
B. New Surrender Charges for an Increase
An increase in face amount will usually result in the Policy being subject
to new surrender charges. There will be no new surrender charges
associated with restoration of a prior decrease in Face Amount. As with
the purchase of a Policy, a policyowner will have a free look right with
respect to any increase resulting in new surrender charges.
An additional premium may be required for a face amount increase, and a
new No-Lapse Guarantee Premium will be determined, if the No-Lapse
Guarantee is in effect at the time of the face amount increase.
C. Increase with Prior Decreases
If, at the time of the increase, there have been prior decreases in Face
Amount, these prior decreases will be restored first. The insurance
coverage eliminated by the decrease of the oldest face amount will be
deemed to be restored first.
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D. Decrease in Face Amount
Decreases in Face Amount may be made once each Policy Year after the first
Policy Year. Any decrease in Face Amount must be at least $50,000. A
written request from a policyowner for a decrease in the Face Amount will
be effective at the beginning of the Policy Month following the date the
Company approves the requested decrease. If there have been previous
increases in Face Amount, the decrease will be applied to the most recent
increase first and thereafter to the next most recent increases
successively. The Company will not allow a decrease in the Face Amount if
it is for the reduction or termination of a prior Face Amount increase
which has been in force for less than one year. Under no circumstances
should the sum of all decreases cause the Policy to fall below the minimum
Face Amount of $250,000. Decreases in Face Amount will not result in a
decrease in surrender charges.
E. Changing Both the Face Amount and the Death Benefit Option
If a policyowner requests to change both the Face Amount and the Death
Benefit Option in the same month, the Death Benefit Option change shall be
deemed to occur first.
IV. POLICY VALUE
A. 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.
B. 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.
C. 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.
D. 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 the amount charged on the outstanding Policy Debt
(the aggregate amount of policy loans, including borrowed and accrued
interest, less any loan repayments) less the Loan Spread set forth in the
Policy. (See "Policy Loans - Interested Credited to the Loan Account"
below).
E. 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.
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For premiums received before the Effective Date, the values will be
determined on the Effective Date.
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.
*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.
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.
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.
V. TRANSFER OF POLICY VALUE
A. General Transfers
At any time, a policyowner may transfer Policy Value (the sum of the
values in the Loan Account, the Fixed Account and the Investment Accounts)
from one sub-account to another or to the Fixed Account. (Transfers
involving the Fixed Account are subject to certain limitations noted
below.) Transfer requests must be in writing in a format satisfactory to
the Company.
These transfer privileges are subject to the Company's consent. 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 during any
period 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, and (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. Transfer privileges are
also subject to any restrictions that may be imposed by Manufacturers
Investment Trust or other mutual fund in which the Separate Account
invests. In addition, the Company reserves the right to defer the transfer
privilege at any time when we are unable to purchase or redeem shares of a
portfolio.
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 as described below.
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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
per transfer as set forth in the currently effective prospectus. 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.
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.
VI. POLICY SURRENDER AND PARTIAL WITHDRAWALS
A. 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. If
there have been any prior Face Amount increases, the Surrender Charge will
be the sum of the Surrender Charge for the Initial Face Amount plus the
Surrender Charge for each increase. The Net Cash Surrender Value will be
determined at 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.
A policyowner may make a partial withdrawal of the Net Cash Surrender
Value once each Policy Month after the first Policy Anniversary. 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 (Policy Value less the value in the Loan Account).
Withdrawals will be limited if they would otherwise cause the Face Amount
to fall below $250,000.
If Death Benefit Option 1 is in effect when a partial withdrawal is made,
the Face Amount of the Policy will be reduced by the amount of the
withdrawal plus any applicable Surrender Charges.
If the death benefit is based upon the Policy Value times the minimum
death benefit percentage, the Face Amount will be reduced only to the
extent that the amount of the withdrawal plus the portion of the Surrender
Charge assessed exceeds the difference between the death benefit and the
Face Amount. When the Face Amount of a Policy is based on one or more
increases subsequent to issuance of the Policy, a reduction resulting from
a partial withdrawal will be applied in the same manner as a requested
decrease in Face Amount, i.e., against the Face Amount provided by the
most recent increase, then against the next most recent increases
successively and finally against the initial Face Amount.
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 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, and (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; provided that
applicable rules and regulations of the SEC shall govern as to whether the
conditions described in (ii) and (iii) exist.
B. Surrender Charges
The Company will deduct a Surrender Charge if during the first 15 years
following the Policy Date, or the
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effective date of a Face Amount increase:
- the Policy is surrendered for its Net Cash Surrender Value,
- a partial withdrawal is made in excess of the Withdrawal Tier Amount
(as described below), or
- an increase in Face Amount is cancelled within two years of the
increase, or
- the Policy lapses.
Surrender Charge Calculation
The Surrender Charge for the initial Face Amount or for the amount of any
increase in Face Amount is determined by the following formula (the
calculation is also described in words below):
Surrender Charge = (Surrender Charge Rate) x (Face Amount associated with
the Surrender Charge / 1000) x(Grading Percentage)
Face Amount associated with the Surrender Charge
The Face Amount associated with the Surrender Charge equals the Face
Amount for which the Surrender Charge is being applied.
Surrender Charge Rate (the calculation is also described in words below)
Surrender Charge Rate = (8.50) + (82.5%)x(Surrender Charge Premium)
Definitions of the Formula Factors Above
The Surrender Charge Premium is the Surrender Charge Premium Limit
specified in the Policy per $1000 of Face Amount:
Grading Percentage
The grading percentage is based on the issue age of the youngest insured
and the policy year in which the transaction causing the assessment of the
charge occurs as set forth in the table below:
SURRENDER CHARGE GRADING PERCENTAGE
ISSUE AGES OF YOUNGER INSURED 0-75 76 77 78 79 80+
- ----------------------------------------------------------------------------
POLICY YEAR 1 93% 92% 92% 91% 90% 90%
POLICY YEAR 2 86% 85% 84% 83% 81% 80%
POLICY YEAR 3 80% 78% 76% 75% 72% 70%
POLICY YEAR 4 73% 71% 69% 66% 63% 60%
POLICY YEAR 5 66% 64% 61% 58% 54% 50%
POLICY YEAR 6 60% 57% 53% 50% 45% 40%
POLICY YEAR 7 53% 50% 46% 41% 36% 30%
POLICY YEAR 8 46% 42% 38% 33% 27% 20%
POLICY YEAR 9 40% 35% 30% 25% 18% 10%
POLICY YEAR 10 33% 28% 23% 16% 9% 0%
POLICY YEAR 11 26% 21% 15% 8% 0%
POLICY YEAR 12 20% 14% 7% 0%
POLICY YEAR 13 13% 7% 0%
POLICY YEAR 14 6% 0%
POLICY YEAR 15 0%
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Formulas Described in Words
Surrender Charge
The Surrender Charge is determined by multiplying the Surrender Charge
Rate by the Face Amount associated with the Surrender Charge divided by
1000. The amount obtained is then multiplied by the Grading Percentage, a
percent which starts at 100% and grades down each policy year to zero over
a period not to exceed 15 years.
Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a)
equals 8.50 and (b) equals 82.5% times the Surrender Charge Premium.
Illustration of Surrender Charge Calculation - Maximum Surrender Charge
Assumptions
- 50 year old male and 40 year old female (standard risks and
nonsmoker status)
- Policy issued 7 years ago
- Surrender Charge Premium for the Policy is $3.18
- Face Amount of the Policy is $250,000
- Policy is surrendered during the last month of the seventh policy
year
Maximum Surrender Charge
The maximum Surrender Charge to be assessed would be $1,473 determined as
follows:
First, the Surrender Charge Rate is determined by applying the Surrender
Charge Rate formula as set forth below.
Surrender Charge Rate = (8.50) + (82.5%) x (Surrender Charge Premium)
$11.12 = (8.50) + (82.5%) x (3.18)
The Surrender Charge Rate is equal to $11.12.
Second, the Surrender Charge Rate is entered into the Surrender Charge
formula and the Surrender Charge is determined as set forth below.
Surrender Charge = (Surrender Charge Rate) x (Face Amount Associated with
the Surrender Charge) x(Grading Percentage)
$1,473 = (11.12) x (250,000 / 1000) x (53%)
The maximum Surrender Charge is equal to $1,473.
Manulife New York may reduce the surrender charge as described above on
policies where the anticipated annual premium is $100,000 or greater and
the Policy is issued as part of an employer sponsored split dollar or
keyman arrangement; 80% of the Surrender Charge will be waived during the
first year of the Policy, 60% during the second year and 40% during the
third year. The full Surrender Charge will be imposed if the surrender
takes place in a fourth or subsequent Policy Year. The Surrender Charge,
together with a portion of the premium charge, is designed to compensate
the Company for some of the expenses incurred in selling and distributing
the Policies, including agent commission, advertising, agent training and
the printing of prospectuses and sales literature.
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Surrender Charges on a Partial Withdrawal
A partial withdrawal will result in the assessment of a portion of the
Surrender Charges to which the Policy is subject. The portion of the
Surrender Charges assessed will be based on the ratio of the amount of the
withdrawal which exceeds the Withdrawal Tier Amount to the Net Cash
Surrender Value of the Policy as at the date of the withdrawal. The
Surrender Charges will be deducted from the Policy Value at the time of
the partial withdrawal on a pro-rata basis from each of the Investment
Accounts and the Fixed Account.
Whenever a portion of the Surrender Charges is deducted as a result of a
partial withdrawal, the Policy's remaining Surrender Charges will be
reduced in the same proportion that the Surrender Charge deducted bears to
the total Surrender Charge immediately before the partial withdrawal.
Withdrawal Tier Amount
The Withdrawal Tier Amount is equal to 10% of the Net Cash Surrender Value
as at the last Policy Anniversary. In determining what, if any, portion of
a partial withdrawal is in excess of the Withdrawal Tier Amount, all
previous partial withdrawals that have occurred in the current Policy Year
are included.
VII. LAPSE AND REINSTATEMENT
A. Lapse
Unless the No-Lapse Guarantee 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 lapse could have adverse tax consequences as described
under "Tax Treatment of the Policy - Tax Treatment of Policy Benefits
Surrender or Lapse." Manulife New York will notify the policyowner of the
default and will allow a 61 day grace period 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 monthly deductions due at the date of default and
payable at the beginning of each of the two Policy Months thereafter, plus
any applicable premium load. If the required payment is not received by
the end of the grace period, the Policy will terminate with no value.
No-Lapse Guarantee
As long as the No-Lapse Guarantee Cumulative Premium Test is satisfied
during the No-Lapse Guarantee Period, as described below, the Company will
guarantee that the Policy will not go into default, even if adverse
investment experience or other factors should cause the Policy's Net Cash
Surrender Value to be insufficient to meet the monthly deductions due at
the beginning of a Policy Month.
The Monthly No-Lapse Guarantee Premium is one-twelfth of the No-Lapse
Guarantee Premium.
The No-Lapse Guarantee Premium is set at issue and reflects any Additional
Rating and Supplementary Benefits, if applicable. It is subject to change
if the face amount of the Policy is changed, if there is a Death Benefit
Option change, or if there is any change in the supplementary benefits
added to the Policy or in the risk classification of any Lives Insured
because of a change in smoking status.
The No-Lapse Guarantee Period is set at issue and generally is fixed at
twenty years but may be shorter based on the age of the insured at issue.
While the No-Lapse Guarantee is in effect, the Company will determine at
the beginning of the Policy Month that your policy would otherwise be in
default, whether the No-Lapse Guarantee Cumulative Premium Test, described
below, has been met. If it has not been satisfied, the Company will notify
the policyowner of that fact and allow a 61-day grace period in which the
policyowner may make a premium payment sufficient to keep the policy from
going into default. This required payment, as described in the
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notification to the policyowner, will be equal to the lesser of:
(a) the outstanding premium requirement to satisfy the No-Lapse
Guarantee Cumulative Premium Test at the date of default, plus the
Monthly No-Lapse Guarantee Premium due for the next two Policy
Months, or
(b) the amount necessary to bring the Net Cash Surrender Value to zero
plus the monthly deductions due, plus the next two monthly
deductions plus the applicable premium load.
If the required payment is not received by the end of the grace period,
the No-Lapse Guarantee and the Policy will terminate.
No-Lapse Guarantee Cumulative Premium Test
The No-Lapse Guarantee Cumulative Premium Test is satisfied if, as of the
beginning of the Policy Month that your policy would otherwise be in
default, the sum of all premiums paid to date less any gross withdrawals
and less any policy debt, is at least equal to the sum of the Monthly
No-Lapse Guarantee Premiums due from the Policy Date to the date of the
test.
Death During Grace Period
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 reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination
without furnishing evidence of insurability, subject to the following
conditions:
(a) All Lives Insured's risk classifications are standard or preferred,
and
(b) All Lives Insured's Attained Ages are less than 46.
A policyowner can 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) Evidence of all Lives Insured's insurability, or on the survivor(s)
who were insured at the end of the grace period, satisfactory to the
Company is provided to the Company;
(b) A premium equal to the amount that was required to bring the Policy
out of default immediately prior to termination, plus the next two monthly
deductions;
(c) The Policy cannot be reinstated if any of the Lives Insured die after
the Policy has terminated.
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.
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VIII. POLICY LOANS
While the 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.
A. Available Loan Value
The amount of any loan cannot exceed 90% of the Policy's Net Cash
Surrender Value.
B. 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 5.25%. If the interest due on a Policy Anniversary is not
paid by the policyowner, the interest will be borrowed against the Policy.
The Policy will go into default at any time the Policy Debt exceeds the
Policy 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.
C. Loan Account
When a loan is made, an amount equal to the loan will be deducted from the
Investment Accounts or the Fixed Account and transferred to the Loan
Account. 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 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.
D. Interest Credited to the Loan Account
Interest will be credited to amounts in the Loan Account at an effective
annual rate of at least 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 1.25% and guaranteed not to
exceed this percentage.
E. Loan Repayments
Policy Debt may be repaid in whole or in part at any time prior to the
death of the last-to-die of the Lives 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.
Amounts paid to the Company not specifically designated in writing as loan
repayments will be treated as premiums.
F. 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.
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