As filed with the Securities and Exchange Commission on October 22, 2002.
Registration No. 333 -69987
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF L933
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
(Exact name of trust)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(Name of depositor)
100 Summit Lake Drive, 2nd Floor
Valhalla, NY 10595
(Address of depositor's principal executive offices)
James D. Gallagher
President
The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive, 2nd Floor
Valhalla, NY 10595
(Name and Address of Agent for Service)
Copy to:
J. Sumner Jones
Jones & Blouch, L.L.P
1025 Thomas Jefferson Street, N.W
Washington, D.C. 20007-0805
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.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Registration Statement on Form S-6
Cross-Reference Sheet
Form N-8B-2
Item No. Caption in Prospectus
1 ----- Cover Page; General Information About The Manufacturers Life Insurance Company of New York, The
Manufacturers Life Insurance Company of New York Separate Account B and Manufacturers Investment Trust
2 ----- Cover Page; General Information About The Manufacturers Life Insurance Company of New York, The
Manufacturers Life Insurance Company of New York Separate Account B and Manufacturers Investment Trust
3 ----- *
4 ----- Miscellaneous Matters (Distribution of the Policy)
5 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
6 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
7 ----- *
8 ----- *
9 ----- Miscellaneous Matters (Pending Litigation)
10 ----- Detailed Information About The Policies
11 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
12 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
13 ----- Detailed Information About The Policies (Charges and Deductions)
14 ----- Detailed Information About the Policies (Premium Provisions -- Policy Issue and Initial Premium);
Miscellaneous Matters (Responsibilities Assumed By The Manufacturers Life Insurance Company of New York)
15 ----- Detailed Information About The Policies (Premium Provisions -- Policy Issue and Initial Premium)
16 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
17 ----- Detailed Information About The Policies (Policy Values -- Partial Withdrawals and Surrenders);
OtherProvisions -- Payment of Proceeds)
18 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
19 ----- Detailed Information About The Policies (Other Provisions -- Reports To Policyowners); Miscellaneous
Matters (Responsibilities Assumed By The Manufacturers Life Insurance Company of New York)
20 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust; Miscellaneous Matters
(Responsibilities Assumed By The Manufacturers Life Insurance Company of New York)
21 ----- Detailed Information About The Policies (Policy Values -- Policy Loans)
22 ----- *
Form N-8B-2
Item No. Caption in Prospectus
23 ----- **
24 ----- Detailed Information About the Policies (Other General Policy Provisions)
25 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
26 ----- *
27 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
28 ----- Miscellaneous Matters (Directors And Officers of The Manufacturers Life Insurance Company of New York)
29 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
30 ----- *
31 ----- *
32 ----- *
33 ----- *
34 ----- *
35 ----- Miscellaneous Matters (State Regulations)
36 ----- *
37 ----- *
38 ----- Miscellaneous Matters (Distribution of the Policy; Responsibilities Assumed By The Manufacturers Life
Insurance Company of New York)
39 ----- Miscellaneous Matters (Distribution of the Policy)
40 ----- *
41(a)--- Miscellaneous Matters (Distribution of the Policy)
41(b)--- **
41(c)--- **
42 ----- *
43 ----- *
44 ----- Detailed Information About The Policies (Policy Values -- Policy Value)
45 ----- *
46 ----- Detailed Information About The Policies (Policy Values -- Partial Withdrawals and Surrenders; Other
Provisions -- Payment of Proceeds)
47 ----- General Information About The Manufacturers Life Insurance Company of New York, The Manufacturers Life
Insurance Company of New York Separate Account B and Manufacturers Investment Trust
48 ----- *
49 ----- *
50 ----- *
51 ----- Detailed Information About The Policies
52 ----- Detailed Information About The Policies (Miscellaneous Matters -- Portfolio Share Substitution)
53 ----- **
54 ----- *
55 ----- *
56 ----- *
57 ----- *
58 ----- *
59 ----- Financial Statements
* Omitted since answer is negative or item is not applicable.
** Omitted.
PART I
INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
VENTURE SURVIVORSHIP VUL
FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE POLICY
This prospectus describes Survivorship VUL, a flexible premium survivorship
variable universal life insurance policy (the "Policy"). The Policy is offered
by The Manufacturers Life Insurance Company of New York (the "Company" or
"Manulife New York"), a stock life insurance company that is an indirect
wholly-owned subsidiary of The Manufacturers Life Insurance Company
("Manufacturers Life") based in Toronto, Canada. Manulife Financial Corporation
("MFC") is the holding company of Manufacturers Life and its subsidiaries,
collectively known as Manulife Financial.
The Policy is designed to provide lifetime insurance protection together with
flexibility as to the timing and amount of premium payments, the investments
underlying the Policy Value, and the amount of insurance coverage. This
flexibility allows the policyowner to pay premiums and to adjust insurance
coverage in light of his or her current financial circumstances and insurance
needs.
The Policy provides for:
(1) a Net Cash Surrender Value that can be obtained by surrendering the
Policy;
(2) policy loans and partial withdrawals; and
(3) an insurance benefit payable at the death of the last-to-die of the
Lives Insured.
Unless the No-Lapse Guarantee is in effect, the Policy will remain in force so
long as the Net Cash Surrender Value is sufficient to cover charges assessed
against the Policy. If the No-Lapse Guarantee is in effect, the Policy will
remain in force as long as the No-Lapse Guarantee Cumulative Premium Test has
been met.
Policy Value may accumulate on a fixed basis or may vary with the investment
performance of the sub-accounts of The Manufacturers Life Insurance Company of
New York's Separate Account B (the "Separate Account"), to which the policyowner
allocates net premiums. The assets of each sub-account will be used to purchase
Series I shares (formerly referred to as "Class A shares") of a particular
investment portfolio (a "Portfolio") of Manufacturers Investment Trust (the
"Trust"). The accompanying prospectus for the Trust, and its corresponding
statement of additional information, describe the investment objectives of the
Portfolios. The Portfolios available for allocation of Net Premiums are shown in
the Policy Summary under "Investment Options and Investment Advisers." Manulife
New York may add other sub-accounts and Portfolios in the future.
BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES. ALSO, 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 ("SEC") maintains a web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TRUST.
THESE POLICIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC. NEITHER THE SEC
NOR ANY STATE HAS DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Home Office: Service Office Mailing Address:
The Manufacturers Life Insurance Company of New York The Manufacturers Life Insurance Company of New York
100 Summit Lake Drive P.O. Box 633
Second Floor Niagara Square Station
Valhalla, NY 10595 Buffalo, New York 14201--0633
Telephone: 1-888-267-7784
The date of this Prospectus is [ ].
NYSVUL [2003]
TABLE OF CONTENTS
DEFINITIONS.......................................................................................................4
POLICY SUMMARY....................................................................................................6
General........................................................................................................6
Death Benefits.................................................................................................6
Premiums.......................................................................................................6
Policy Value...................................................................................................6
Policy Loans...................................................................................................6
Surrender and Partial Withdrawals..............................................................................7
Lapse and Reinstatement........................................................................................7
Charges and Deductions.........................................................................................7
Investment Options and Investment Advisers.....................................................................7
Investment Management Fees and Expenses........................................................................7
Table of Charges and Deductions................................................................................7
Table of Investment Management Fees and Expenses...............................................................8
TRUST ANNUAL EXPENSES (SERIES I SHARES (FORMERLY REFERRED TO AS "CLASS A SHARES").................................8
Table of Investment Options and Investment Subadvisers........................................................11
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST..................................14
Manulife New York.............................................................................................14
The Separate Account..........................................................................................14
The Trust.....................................................................................................15
Investment Objectives of the Portfolios.......................................................................15
ISSUING A POLICY.................................................................................................19
Requirements..................................................................................................19
Minimum Initial Face Amount...................................................................................20
Temporary Insurance Agreement.................................................................................20
Right to Examine the Policy...................................................................................20
DEATH BENEFITS...................................................................................................21
Life Insurance Qualification..................................................................................21
Death Benefit Options.........................................................................................22
Changing the Face Amount......................................................................................22
PREMIUM PAYMENTS.................................................................................................23
Initial Premiums..............................................................................................23
Subsequent Premiums...........................................................................................23
Maximum Premium Limitation....................................................................................23
Premium Allocation............................................................................................24
CHARGES AND DEDUCTIONS...........................................................................................24
Premium Charge................................................................................................24
Surrender Charges.............................................................................................24
Monthly Charges...............................................................................................26
Charges for Transfers.........................................................................................28
Reduction in Charges..........................................................................................28
SPECIAL PROVISIONS FOR EXCHANGES.................................................................................28
COMPANY TAX CONSIDERATIONS.......................................................................................28
POLICY VALUE.....................................................................................................28
Determination of the Policy Value.............................................................................28
Units and Unit Values.........................................................................................29
Transfers of Policy Value.....................................................................................29
POLICY LOANS.....................................................................................................30
Effect of Policy Loan.........................................................................................30
Interest Charged on Policy Loans..............................................................................31
Loan Account..................................................................................................31
POLICY SURRENDER AND PARTIAL WITHDRAWALS.........................................................................31
Policy Surrender..............................................................................................31
Partial Withdrawals...........................................................................................31
LAPSE AND REINSTATEMENT..........................................................................................32
Lapse.........................................................................................................32
No-Lapse Guarantee............................................................................................32
No-Lapse Guarantee Cumulative Premium Test....................................................................33
Reinstatement.................................................................................................33
Termination and Maturity Benefit..............................................................................33
THE GENERAL ACCOUNT..............................................................................................33
Fixed Account.................................................................................................34
OTHER PROVISIONS OF THE POLICY...................................................................................34
Policyowner Rights............................................................................................34
Beneficiary...................................................................................................35
Incontestability..............................................................................................35
Misstatement of Age or Sex....................................................................................36
Suicide Exclusion.............................................................................................36
Supplementary Benefits........................................................................................36
Conversion Privilege..........................................................................................36
TAX TREATMENT OF THE POLICY......................................................................................36
Life Insurance Qualification..................................................................................37
Tax Treatment of Policy Benefits..............................................................................38
Alternative Minimum Tax.......................................................................................41
Income Tax Reporting..........................................................................................41
OTHER INFORMATION................................................................................................41
Return of Premium Death Benefit...............................................................................41
Payment of Proceeds...........................................................................................41
Reports to Policyowners.......................................................................................42
Distribution of the Policies..................................................................................42
Responsibilities of Manulife New York, Manulife USA and Manulife Financial Securities.........................42
Voting Rights.................................................................................................42
Substitution of Portfolio Shares..............................................................................43
Records and Accounts..........................................................................................43
State Regulations.............................................................................................43
Litigation....................................................................................................43
Independent Auditors..........................................................................................43
Further Information...........................................................................................44
Directors and Officers........................................................................................44
Illustrations.................................................................................................44
Financial Statements..........................................................................................45
APPENDIX A: SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER VALUES AND DEATH BENEFITS....................A-1
APPENDIX B: AUDITED FINANCIAL STATEMENTS.......................................................................B-1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE
STATEMENT OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST.
Examine this prospectus carefully. The Policy Summary will briefly describe the
Policy. More detailed information will be found further in the prospectus.
DEFINITIONS
Additional Rating
is an increase to the Cost of Insurance Rate for any of the Lives Insured who do
not meet, at a minimum, the Company's underwriting requirements for the standard
Risk Classification.
Age
on any date is each of the Lives Insured's age on their birthday closest to the
policy date.
Attained Age
is the Age plus the number of whole years that have elapsed since the Policy
Date.
Business Day
is any day that the New York Stock Exchange is open for trading. The net asset
value of the underlying shares of a Sub-Account will be determined as of the end
of each Business Day, if trading is not restricted. If trading has been
restricted, the Company reserves the right to determine accumulation unit values
for the Sub-Accounts, if practicable. The Company will deem each Business Day to
end at the close of regularly scheduled trading of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on that day.
Cash Surrender Value
is the Policy Value less the Surrender Charge and any outstanding Monthly
Deductions due.
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.
Fixed Account
is that part of the Policy Value which reflects the value the policyowner has in
the general account of the Company.
Gross Withdrawal
is the amount of partial Net Cash Surrender Value the policyowner requests plus
any Surrender Charge applicable to the withdrawal.
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 last-to-die of the Lives Insured.
Lives Insured
are the persons whose lives are insured under the Policy. References to the
youngest of the Lives Insured mean the youngest person insured under the Policy
when it is first issued.
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 Policy Anniversary nearest the date on which the youngest of the Lives
Insured reached Attained Age 100, or the date such person would have reached
Attained Age 100 if living.
4
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 Load. It is the amount of premium
allocated to the Fixed Account and/or Investment Accounts.
No-Lapse Guarantee
When the Policy is in the No-Lapse Guarantee Period, as long as the No-Lapse
Guarantee Cumulative Premium Test is met, the Policy will not lapse, even when
the Net Cash Surrender Value falls to or below zero.
No-Lapse Guarantee Period
is set at issue and will vary by issue age, as set forth in the Policy.
No-Lapse Guarantee Premium
is set at issue and is recalculated whenever there is a policy change.
No-Lapse Guarantee Cumulative Premium
is the minimum amount due to satisfy the No-Lapse Guarantee Cumulative Premium
Test. This amount will change if any of the following changes occur under the
Policy:
- - the face amount of insurance changes.
- - a Supplementary Benefit is added, changed or terminated.
- - the risk classification of any of the Lives Insured changes because of a
change in smoking status.
- - a temporary Additional Rating is added (due to a face amount increase), or
terminated.
- - the Death Benefit Option Changes.
No-Lapse Guarantee Cumulative Premium Test
is a test that is satisfied if the sum of all premiums paid, less any gross
partial withdrawals and less any Policy Debt, is greater than or equal to the
sum of the monthly No-Lapse Guarantee Premiums due since the Policy Date.
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.
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.
Service Office Address
is P. O. Box 633, Niagra Square Station Buffalo, New York 14201-0633.
5
Surrender Charge Period
is the period following the Issue Date or following any increase in Face Amount
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.
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.
POLICY SUMMARY
GENERAL
The Policy is a flexible premium survivorship variable universal life insurance
policy. The following summary is intended to provide a general description of
the most important features of the Policy. It is not comprehensive and is
qualified in its entirety by 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.
DEATH BENEFITS
The Policy provides a death benefit in the event of the death of the last-to-die
of the Lives Insured. There are two death benefit options. Under Option 1 the
death benefit is the Face Amount of the Policy at the date of death or, if
greater, the Minimum Death Benefit. Under Option 2 the death benefit is the Face
Amount plus the Policy Value of the Policy at the date of death or, if greater,
the Minimum Death Benefit. The policyowner may change the death benefit option
and increase or decrease the Face Amount.
RETURN OF PREMIUM RIDER
The Policy may be issued with an optional Return of Premium Death Benefit rider
if death benefit Option 1 is elected. This rider provides an additional death
benefit payable upon death of the last-to-die of the Lives Insured after the
Company receives due proof of death. The Return of Premium Death Benefit is
calculated as follows:
The return of premium rider death benefit is equal to the initial premium. Any
subsequent premiums will increase the death benefit at the time of the premium
payment by the amount of the premium. Any partial withdrawal will reduce the
death benefit at the time of withdrawal by an amount equal to the withdrawal
plus any applicable Surrender Charge (except that the rider death benefit will
not be reduced to less than zero). The No Lapse Guarantee provisions of the
Policy apply to the Return of Premium Rider Death Benefit for the first Policy
Year only.
PREMIUMS
Premium payments may be made at any time and in any amount, subject to certain
limitations as described under "Premium Payments - Subsequent Premiums." Net
Premiums will be allocated, according to the policyowner's instructions, to one
or more of the general account and the sub-accounts of Manulife New York's
Separate Account B. The policyowner may change allocation instructions at any
time and may make transfers 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 the policyowner has allocated premiums. The policyowner may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
POLICY LOANS
The policyowner may borrow against the Cash Surrender Value of the Policy. Loan
interest at a rate of 5.25% is due and payable in arrears on each Policy
Anniversary. All outstanding Policy Debt will be deducted from proceeds payable
at the insured's death, or upon surrender.
6
SURRENDER AND PARTIAL WITHDRAWALS
The policyowner may make a partial withdrawal of the Policy Value. A partial
withdrawal may result in a reduction in the Face Amount of the Policy and an
assessment of a portion of the surrender charges to which the Policy is subject.
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 Surrender Charges and outstanding Monthly Deductions due minus the
Policy Debt.
LAPSE AND REINSTATEMENT
Unless the No-Lapse Guarantee is in effect, a Policy will lapse (and terminate
without value) when the Net Cash Surrender Value is insufficient to pay the next
monthly deduction and a grace period of 61 days expires without an adequate
payment being made by the policyowner. If the No-Lapse Guarantee is in effect,
the Policy will lapse if the No-Lapse Guarantee Cumulative Premium Test (see
definition) has not been met.
The Policies, therefore, differ in two important respects from conventional life
insurance policies. First, the failure to make planned premium payments will not
itself cause a Policy to lapse. Second, a Policy can lapse even if planned
premiums have been paid.
A lapsed Policy may be reinstated by the policyowner at any time within the five
year period following lapse provided none of the Lives Insured dies after the
policy termination and the Policy was not surrendered for its Net Cash Surrender
Value. Evidence of insurability is required, along with a certain amount of
premium as described under "Reinstatement."
CHARGES AND DEDUCTIONS
The Company assesses certain charges and deductions in connection with the
Policy. These include: (i) charges assessed monthly for mortality and expense
risks, cost of insurance, administration expenses, (ii) charges deducted from
premiums paid (iii) and charges assessed on surrender or lapse. These charges
are summarized in the Table of Charges and Deductions.
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
The policyowner may allocate Net Premiums to the general account or to one or
more of the sub-accounts of Manulife New York's 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. 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. These
fees and expenses are described in detail in the accompanying Trust prospectus
to which reference should be made.
TABLE OF CHARGES AND DEDUCTIONS
Premium Charge % of each premium paid.
Surrender Charges A Surrender Charge is applicable during
the first Policy Years. The Surrender
Charge is determined by the following
formula:
Surrender Charge = (Surrender Charge Rate)
x (Face Amount Associated with the
Surrender
7
Charge /1000) x (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 and is set forth in the table under
"Charges and Deductions - Surrender
Charges."
The Surrender Charge Rate is calculated as
follows:
Surrender Charge Rate = ( ) + ( %) x
(Surrender Charge Premium)
The Surrender Charge Premium is
the Surrender Charge Premium
Limit specified in the Policy
divided by 1000.
The maximum Surrender Charge for any
Policy per $1000 of Face Amount is $00. A
portion of this charge may be assessed on
a partial withdrawal, as set forth under
"Charges and Deductions - Surrender
Charges on a Partial Withdrawal."
Monthly Deductions An administration charge of $ plus $
per $1,000 of current face amount
per policy month will be deducted in the
first policy year. In subsequent years,
the administration charge will not exceed
$ plus $ per $1,000 of current Face
Amount per policy month.
The cost of insurance charge.
Any additional charges for supplementary
benefits.
A mortality and expense risks charge. This
charge varies by Policy Year as follows:
Current and Equivalent Annual Mortality and
Policy Years Guaranteed Expense Risk Charge
Monthly
Mortality and
Expense Risks
Charge
% %
+ % %
All of the above charges are deducted from
the Net Policy Value.
Loan Charges A fixed loan interest rate of %.
Interest credited to amounts in the Loan
Account will be equal to the % rate
charged to the loan less the current (and
maximum loan spread of %.
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 (SERIES I SHARES
(FORMERLY REFERRED TO AS "CLASS A SHARES")
(as a percentage of Trust average net assets for the
fiscal year ended December 31, 2001)
TOTAL TRUST
SERIES I OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT RULE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES FEES (G) REIMBURSEMENT) REIMBURSEMENT)
Internet Technologies 1.000% 0.150% 0.110% 1.26%
8
TOTAL TRUST
SERIES I OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT RULE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES FEES G REIMBURSEMENT) REIMBURSEMENT)
Pacific Rim Emerging Markets 0.700% 0.150% 0.380% 1.23%
Telecommunications 0.950% 0.150% 0.340% 1.44%(A)
Science & Technology 0.916%(D) 0.150% 0.060% 1.13%
International Small Cap 0.950% 0.150% 0.500% 1.60%
Health Sciences 0.942%(D) 0.150% 0.350% 1.44%(A)
Aggressive Growth 0.850% 0.150% 0.070% 1.07%
Emerging Small Company 0.900% 0.150% 0.070% 1.12%
Small Company Blend 0.900% 0.150% 0.120% 1.17%
Dynamic Growth 0.850% 0.150% 0.080% 1.08%
Mid Cap Growth 0.850% 0.150% 0.390% 1.39% (A)
Mid Cap Opportunities 0.850% 0.150% 0.440% 1.44%(A)
Mid Cap Stock 0.775% 0.150% 0.080% 1.00%
All Cap Growth 0.785% 0.150% 0.060% 0.99%
Financial Services 0.800% 0.150% 0.260% 1.21%(A)
Overseas 0.800% 0.150% 0.150% 1.10%
International Stock 0.838%(D) 0.150% 0.170% 1.16%
International Value 0.850% 0.150% 0.150% 1.15%
Capital Appreciation 0.750% 0.150% 0.300% 1.20%
Strategic Opportunities 0.700% 0.150% 0.060% 0.91%
Quantitative Mid Cap 0.650% 0.150% 0.100% 0.90%(A)
Global Equity 0.750% 0.150% 0.110% 1.01%
Strategic Growth 0.750% 0.150% 0.200% 1.10%(A)
All Cap Core 0.697% 0.150% 0.060% 0.91%
Large Cap Growth 0.750% 0.150% 0.080% 0.98%
All Cap Value 0.800% 0.150% 0.470% 1.42%(A)
Capital Opportunities 0.750% 0.150% 0.500%(G) 1.40%(A F)
Quantitative Equity 0.599% 0.150% 0.060% 0.81%
Blue Chip Growth 0.702%(D) 0.150% 0.060% 0.91%
Utilities 0.750% 0.150% 0.500%(G) 1.40%(A F)
Real Estate Securities 0.645% 0.150% 0.070% 0.87%
Small Company Value 0.891%(D) 0.150% 0.110% 1.15%
Mid Cap Value 0.800% 0.150% 0.200% 1.15%(A)
Value 0.642% 0.150% 0.060% 0.85%
Tactical Allocation 0.750% 0.150% 0.400% 1.30%
Fundamental Value 0.798% 0.150% 0.120% 1.07% (A)
Growth & Income 0.529% 0.150% 0.050% 0.73%
U.S. Large Cap Value 0.725% 0.150% 0.050% 0.93%
Equity-Income 0.711%(D) 0.150% 0.050% 0.91%
Income & Value 0.650% 0.150% 0.070% 0.87%
Balanced 0.563% 0.150% 0.100% 0.81%
High Yield 0.625% 0.150% 0.060% 0.84%
Strategic Bond 0.625% 0.150% 0.080% 0.86%
Global Bond 0.600% 0.150% 0.220% 0.97%
Total Return 0.600% 0.150% 0.060% 0.81%
Investment Quality Bond 0.500% 0.150% 0.090% 0.74%
Diversified Bond 0.600% 0.150% 0.070% 0.82%
U.S. Government Securities 0.550% 0.150% 0.060% 0.76%
Money Market 0.350% 0.150% 0.050% 0.55%
Small Cap Index (E) 0.375% 0.150% 0.075% 0.60%
International Index (E) 0.400% 0.150% 0.050% 0.60%
Mid Cap Index (E) 0.375% 0.150% 0.075% 0.60%
9
TOTAL TRUST
SERIES I OTHER EXPENSES ANNUAL EXPENSES
MANAGEMENT RULE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
TRUST PORTFOLIO FEES FEES G REIMBURSEMENT) REIMBURSEMENT)
Total Stock Market Index (E) 0.375% 0.150% 0.060% 0.59%
500 Index (E) 0.375% 0.150% 0.050% 0.57%
Lifestyle Aggressive 1000 0.065% 0.000% 0.010% 0.075%(B C)
Lifestyle Growth 820 0.054% 0.000% 0.021% 0.075%(B C)
Lifestyle Balanced 640 0.054% 0.000% 0.021% 0.075%(B C)
Lifestyle Moderate 460 0.062% 0.000% 0.013% 0.075%(B C)
Lifestyle Conservative 280 0.069% 0.000% 0.006% 0.075%(B C)
(A) Annualized; For the period April 30, 2001 (commencement of operations) to
December 31, 2001.
(B) The investment adviser to the Trust, Manufacturers Securities Services,
LLC ("MSS" or the "Adviser") has voluntarily agreed to pay certain
expenses of each Lifestyle Trust as noted below. (For purposes of the
expense reimbursement, total expenses of a Lifestyle Trust includes the
advisory fee but excludes (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.)
If total expenses of a Lifestyle Trust (absent reimbursement) exceed
0.075%, 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 equal 0.075%. If the total expenses of the Lifestyle Trust
(absent reimbursement) are equal to or less than 0.075%, then no expenses
will be reimbursed by the Adviser.
This voluntary expense reimbursement may be terminated at any time. If
such expense reimbursement was not in effect, Total Trust Annual Expenses
would be higher (based on current advisory fees and the Other Expenses of
the Lifestyle Trusts for the fiscal year ended December 31, 2001) as noted
in the chart below:
TOTAL TRUST
MANAGEMENT RULE OTHER ANNUAL
TRUST PORTFOLIO FEES 12B-1 FEES EXPENSES EXPENSES
Lifestyle Aggressive 1000 0.065% 0.000% 1.081% 1.146%
Lifestyle Growth 820 0.054% 0.000% 0.998% 1.052%
Lifestyle Balanced 640 0.054% 0.000% 0.914% 0.968%
Lifestyle Moderate 460 0.062% 0.000% 0.823% 0.885%
Lifestyle Conservative 280 0.069% 0.000% 0.790% 0.859%
(C) 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 (B) above.
(D) Effective June 1, 2000, the Adviser voluntarily agreed to waive a portion
of its advisory fee for the Science & Technology Trust, Health Sciences
Trust, Small Company Value Trust, the Blue Chip Growth Trust, the
Equity-Income Trust and the International Stock Trust. Once the combined
assets exceed specified amounts, the fee reduction is increased. The
percentage fee reduction for each asset level is as follows:
FEE REDUCTION
COMBINED ASSET LEVELS (AS A PERCENTAGE OF THE ADVISORY FEE
First $750 million 0.00%
Between $750 million and $1.5 billion 5.00%
Between $1.5 billion and $3.0 billion 7.50%
Over $3.0 billion 10.00%
The fee reductions are applied to the advisory fees of each of the six
portfolios. (However, in the case of the Small Company Value Trust, the
fee reduction will be reduced by 0.05% of the first $500 million in net
assets.) This voluntary fee waiver may be terminated at any time by the
adviser. As of December 31, 2001, the combined asset level for all six
portfolios was approximately $4.097 billion resulting in a fee reduction
of 5.00%. There is no guarantee that the combined asset level will remain
at this amount. If the combined asset level were to decrease to a lower
breakpoint, the fee reduction would decrease as well.
10
(E) MSS has voluntarily agreed to pay expenses of each Index Trust (excluding
the advisory fee) that exceed the following amounts: 0.050% in the case of
the International Index Trust and 500 Index Trust and 0.075% in the case
of the Small Cap Index Trust, the Mid Cap Index Trust and Total Stock
Market Index Trust. For Series I shares, if such expense reimbursement
were not in effect, it is estimated that "Other Expenses" and "Total Trust
Annual Expenses" would be 0.07% and 0.62%, respectively, for the
International Index Trust, 0.075% and 0.60%, respectively, for the Small
Cap Index Trust, and 0.075% and 0.60%, respectively, for the Mid Cap Index
Trust and 0.060% and 0.59%, respectively, for the Total Stock Market Index
Trust. It is estimated that the expense reimbursement will not be
effective during the year end December 31, 2002 for the 500 Index Trust.
The expense reimbursement may be terminated at any time by MSS.
(F) For all portfolios except the Lifestyle Trusts, the Adviser reduces its
advisory fee or reimburses the portfolio if the total of all expenses
(excluding advisory fees, taxes, portfolio brokerage commissions,
interest, litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the portfolio's business)
exceed certain annual rates. In the case of the Capital Opportunities and
Utilities Trusts, the Adviser reimbursed the portfolios for certain
expenses for the year ended December 31, 2001. For Series I shares, if
such expense reimbursement were not in effect, it is estimated that "Other
Expenses" and "Total Trust Annual Expenses" would be 0.560% and 1.46%,
respectively, for the Capital Opportunities Trust and 0.610% and 1.51%,
respectively for the Utilities Trust. These voluntary expense
reimbursements may be terminated at any time.
(G) Effective January 1, 2002, the Trust implemented a Series I Rule 12b-1
plan while simultaneously reducing its advisory fees and implementing
advisory fee breakpoints. The Trust Annual Expense chart reflects these
changes.
TABLE OF INVESTMENT OPTIONS AND INVESTMENT SUBADVISERS
The Trust currently has the following subadvisers who manage the portfolios of
the Trust which are investment options for this Policy, one of which is MFC
Global Investment Management (U.S.A.) Limited. Both MSS and MFC Global
Investment Management (U.S.A.) Limited are affiliates of ours.
SUBADVISER PORTFOLIO
A I M Capital Management, Inc. All Cap Growth Trust
Aggressive Growth Trust
11
SUBADVISER PORTFOLIO
Capital Guardian Trust Company Small Company Blend Trust
U.S. Large Cap Value Trust
Income & Value Trust
Diversified Bond Trust
Davis Advisers Financial Services Trust
Fundamental Value Trust
Deutsche Asset Management, Inc. Real Estate Securities Trust
Dynamic Growth Trust
All Cap Core Trust
Lifestyle Trusts (A)
Deutsche Asset Management International Stock Trust
Investment Services Ltd.
The Dreyfus Corporation All Cap Value Trust
Fidelity Management & Research Company Strategic Opportunities Trust
Large Cap Growth Trust
Overseas Trust
Founders Asset Management LLC International Small Cap Trust
Franklin Advisers, Inc. Emerging Small Company Trust
INVESCO Funds Group, Inc. Telecommunications Trust
Mid Cap Growth Trust
Jennison Associates LLC Capital Appreciation Trust
Lord, Abbett & Co. Mid Cap Value Trust
MFC Global Investment Management (U.S.A.) Limited Pacific Rim Emerging Markets Trust
Quantitative Equity Trust
Quantitative Mid Cap Trust
Money Market Trust
Index Trusts
Lifestyle Trusts (A)
Balanced Trust
Massachusetts Financial Services Company Strategic Growth Trust
Capital Opportunities Trust
Utilities Trust
Miller Anderson(B) Value Trust
High Yield Trust
Munder Capital Management Internet Technologies Trust
Pacific Investment Management Company Global Bond Trust
Total Return Trust
Putnam Investment Management, L.L.C. Mid Cap Opportunities Trust
Global Equity Trust
Salomon Brothers Asset Management Inc U.S. Government Securities Trust
Strategic Bond Trust
12
13
SUBADVISER PORTFOLIO
T. Rowe Price Associates, Inc. Science & Technology Trust
Small Company Value Trust
Health Sciences Trust
Blue Chip Growth Trust
Equity-Income Trust
Templeton Investment Counsel, Inc. International Value Trust
UBS Global Asset Management Tactical Allocation Trust
(formerly, Brinson Advisors, Inc.)
Wellington Management Company, LLP Growth & Income Trust
Investment Quality Bond Trust
Mid Cap Stock Trust
- -----------------
(A) Deutsche Asset Management, Inc. provides subadvisory consulting services
to MFC Global Investment Management (U.S.A.) Limited regarding management
of the Lifestyle Trusts.
(B) Morgan Stanley Investment Management Inc. ("MSIM") is the sub-adviser to
the Value Trust and the High Yield Trust. MSIM does business in certain
instances (including its role as the sub-adviser to the Value Trust and
the High Yield Trust) using the name "Miller Anderson". Prior to May 1,
2002, Morgan Stanley Investments LP, an affiliate of MSIM, (formerly,
Miller Anderson & Sherrerd LLP) was the sub-adviser to the Value Trust and
High Yield Trust.
GENERAL INFORMATION ABOUT MANULIFE NEW YORK, THE SEPARATE ACCOUNT AND THE TRUST
MANULIFE NEW YORK
We are a stock life insurance company organized under the laws of New York on
February 10, 1992. Our principal office is located at 100 Summit Lake Drive,
Second Floor, Valhalla, New York 10595. We are a wholly-owned subsidiary of The
Manufacturers Life Insurance Company (U.S.A.) ("MANULIFE USA"), a stock life
insurance company incorporated in Maine on August 20, 1955 by a special act of
the Maine legislature and redomesticated under the laws of Michigan with its
principal office located at 73 Tremont Street, Boston, Massachusetts 02108. Our
ultimate parent is Manulife Financial Corporation ("MFC"), a publicly traded
company, based in Toronto, Canada. MFC is the holding company of The
Manufacturers Life Insurance Company and its subsidiaries, collectively known as
Manulife Financial.
The Manufacturers Life Insurance Company of New York's financial ratings are as
follows:
A++ A.M. Best
Superior companies have a very strong ability to meet their
obligations; 1st category of 16
AA+ Fitch
Very strong capacity to meet policyholder and contract obligations; 2nd
category of 22
AA+ Standard & Poor's
Very strong financial security characteristics; 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 Manufacturers Life Insurance Company of
New York 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.
14
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
Separate 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
("SEC") 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 SEC 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
Manulife New York.
THE TRUST
Each sub-account of the Separate Account will only purchase Series I shares
(formerly referred to as "Class A shares") of a particular Portfolio. The Trust
is registered under the 1940 Act as an open-end management investment company.
Each of the Trust portfolios, except the Lifestyle Trusts, are subject to a Rule
12b-1 fee of .15% of a portfolio's Series I net assets. The Separate Account
will purchase and redeem shares of the Portfolios at net asset value. Shares
will be redeemed to the extent necessary for Manulife New York 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
contracts and variable life insurance policies issued by the Company or life
insurance companies affiliated with the Company. Manulife New York 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.
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 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 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 TELECOMMUNICATIONS TRUST seeks capital appreciation (with earning income as
a secondary objective) by investing, under normal market conditions, primarily
in equity securities of companies engaged in the telecommunications sector, that
is, in the design, development, manufacture, distribution or sale of
communications services and equipment and companies that are involved in
supplying equipment or services to such companies.
The SCIENCE & TECHNOLOGY TRUST seeks long-term growth of capital by investing,
under normal market condition, at least 80% of its net assets (plus any
borrowings for investment purposes) in common stocks of companies expected to
benefit from the development, advancement, and use of science and technology.
Current income is incidental to the portfolio's objective.
15
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 $1.5 billion or less. These securities may
represent companies in both established and emerging economies throughout the
world.
The HEALTH SCIENCES TRUST seeks long-term capital appreciation by investing,
under normal market conditions, at least 80% of its net assets (plus any
borrowings for investment purposes) in common stocks of companies engaged in the
research, development, production, or distribution of products or services
related to health care, medicine, or the life sciences (collectively termed
"health sciences").
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 80% of its net assets (plus any
borrowings for investment purposes) in common stock equity securities of
companies with market capitalizations that approximately match the range of
capitalization of the Russell 2000 Growth 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
at the time of purchase.
The DYNAMIC GROWTH TRUST seeks long-term growth of capital by investing the
portfolio's assets primarily in stocks and other equity securities of
medium-sized U.S. companies with strong growth potential
The MID CAP GROWTH TRUST seeks capital appreciation by investing primarily in
common stocks of mid-sized companies - those with market capitalizations between
$2.5 billion and $15 billion at the time of purchase.
The MID CAP OPPORTUNITIES TRUST seeks capital appreciation by investing, under
normal market conditions, primarily in common stocks and other equity securities
of U.S. mid-size companies.
The MID CAP STOCK TRUST seeks long-term growth of capital by investing primarily
in equity securities of mid-size companies with significant capital appreciation
potential.
The ALL 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 FINANCIAL SERVICES TRUST seeks growth of capital by investing primarily in
common stocks of financial companies. During normal market conditions, at least
65% (80% after July 31, 2002) of the portfolio's net assets (plus any borrowings
for investment purposes) are invested in companies that are principally engaged
in financial services. A company is "principally engaged" in financial services
if it owns financial services-related assets constituting at least 50% of the
value of its total assets, or if at least 50% of its revenues are derived from
its provision of financial services.
The OVERSEAS TRUST seeks growth of capital by investing, under normal market
conditions, at least 80% of its net assets (plus any borrowings for investment
purposes) in foreign securities (including American Depositary Receipts (ADRs)
and European Depositary Receipts (EDRs)). The portfolio expects to invest
primarily in equity securities.
The INTERNATIONAL STOCK TRUST seeks long-term growth of capital by investing
primarily in stocks and other securities with equity characteristics of
companies located in the developed countries that makeup the MSCI EAFE Index.
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 CAPITAL APPRECIATION TRUST seeks long-term capital growth by investing at
least 65% of its total assets in equity-related securities of companies that
exceed $1 billion in market capitalization and that the subadviser believes have
above-average growth prospectus. These companies are generally medium-to-large
capitalization companies.
16
The STRATEGIC OPPORTUNITIES 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 QUANTITATIVE MID CAP TRUST seeks long-term growth of capital by investing,
under normal market conditions, at least 80% of its total assets (plus any
borrowings for investment purposes) in U.S. mid-cap stocks, convertible
preferred stocks, convertible bonds and warrants.
The GLOBAL EQUITY TRUST seeks long-term capital appreciation by investing, under
normal market conditions, at least 80% of its net assets (plus any borrowings
for investment purposes) in equity securities of companies in at least three
different countries, including the U.S. The portfolio may invest in companies of
any size but emphasizes mid- and large-capitalization companies that the
subadviser believes are undervalued.
The STRATEGIC GROWTH TRUST seeks capital appreciation by investing, under normal
market conditions, at least 65% of the portfolio's total assets in common stocks
and related securities (such as preferred stocks, bonds, warrants or rights
convertible into stock and depositary receipts for these securities) of
companies which the subadviser believes offer superior prospects for growth.
The ALL CAP CORE TRUST (formerly, "Growth Trust) seeks long-term growth of
capital by investing primarily common stocks and other equity securities within
all asset classes (small, mid and large cap) primarily those within the Russell
3000 Index.
The LARGE CAP GROWTH TRUST seeks long-term growth of capital by investing, under
normal market conditions, at least 80% of its net assets (plus any borrowings
for investment purposes) in equity securities of companies with large market
capitalizations.
The ALL CAP VALUE TRUST seeks capital appreciation by investing, under normal
market conditions, at least 65% of the portfolio's total assets in the stocks of
value companies of any size.
The CAPITAL OPPORTUNITIES TRUST seeks capital appreciation by investing, under
normal market conditions, at least 65% of the portfolio's total assets in common
stocks and related securities, such as preferred stock, convertible securities
and depositary receipts. The portfolio focuses on companies which the subadviser
believes have favorable growth prospects and attractive valuations based on
current and expected earnings or cash flow.
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) by investing, under normal market conditions,
at least 80% of the portfolio's total assets in the common stocks of large and
medium-sized blue chip growth companies. Many of the stocks in the portfolio are
expected to pay dividends.
The UTILITIES TRUST seeks capital growth and current income (income above that
available from a portfolio invested entirely in equity securities) by investing,
under normal market conditions, at least 80% of the portfolio's net assets (plus
any borrowings for investment purposes) in equity and debt securities of
domestic and foreign companies in the utilities industry.
The REAL ESTATE SECURITIES TRUST seeks to achieve a combination of long-term
capital appreciation and current income by investing, under normal market
conditions, at least 80% of its net assets (plus any borrowings for investment
purposes) in equity securities of real estate investment trusts ("REITS") and
real estate companies.
The SMALL COMPANY VALUE TRUST seeks long-term growth of capital by investing,
under normal market conditions, primarily in small companies whose common stocks
are believed to be undervalued. Under normal market conditions, the portfolio
will invest at least 80% of its net assets (plus any borrowings for investment
purposes) in companies with a market capitalization that do not exceed the
maximum market capitalization of any security in the Russell 2000 Index at the
time of purchase.
The MID CAP VALUE TRUST seeks capital appreciation by investing, under normal
market conditions, at least 80% of the portfolio's net assets (plus any
borrowings for investment purposes) will consist of investments in mid-sized
companies, with market capitalizations of roughly $500 million to $10 billion.
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
17
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 FUNDAMENTAL VALUE TRUST seeks growth of capital by investing, under normal
market conditions, primarily in common stocks of U.S. companies with market
capitalizations of at least $5 billion that the subadviser believes are
undervalued. The portfolio may also invest in U.S. companies with smaller
capitalizations.
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.
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
the portfolio's assets in a balanced portfolio of (i) equity securities and (ii)
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 in a
diversified portfolio of investment grade bonds and tends to focus its
investment on 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, under normal market conditions, at least
80% of the portfolio's net assets (plus any borrowings for investment purposes)
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 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.*
18
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 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.*
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.
*"Standard & Poor's(R)," "S&P 500(R)," "Standard and Poor's 500(R)" and
"Standard and Poor's 400(R)" are trademarks of The McGraw-Hill Companies, Inc.
"Russell 2000(R)" and "Russell 2000(R) Growth" is a trademark of Frank Russell
Company. "Wilshire 5000(R)" is a trademark of Wilshire Associates. "Morgan
Stanley European Australian Far East Free" and "EAFE(R)" are trademarks of
Morgan Stanley & Co. Incorporated. None of the Index Trusts are sponsored,
endorsed, managed, advised, sold or promoted by any of these companies, and none
of these companies make any representation regarding the advisability of
investing in the Trust.
ISSUING A POLICY
REQUIREMENTS
To purchase a Policy, an applicant must submit a completed application. The
Company will not issue a Policy until the underwriting process has been
completed to its satisfaction.
Policies may be issued on a basis which does not take into account the insured's
sex and/or smoking status, with prior approval from the Company. A Policy will
generally be issued only on the lives of insureds from ages 0 through 90.
Each Policy is issued with a Policy Date, an Effective Date and an Issue Date
(see Definitions). The Issue Date is the date from which the Suicide and
Validity provisions of the Policy are determined and is the expected date of
actual delivery of the Policy to the policyowner. The Effective Date is the date
on which the first monthly deductions are taken, and is the date on which the
underwriters approve the Policy issuance. The Policy Date is the date coverage
takes effect under the Policy, provided the Company receives the minimum initial
premium at its Service Office, is the date from which charges for the first
monthly deduction are calculated, and is the
19
date from which Policy Years, Policy Months and Policy Anniversaries are
determined.
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 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 the application is rejected, the Policy will be
canceled and any partial premium paid will be returned to the applicant.
MINIMUM INITIAL FACE AMOUNT
Manulife New York will generally issue a Policy only if it has a Face Amount of
at least $250,000.
BACKDATING A POLICY
Under limited circumstances, we 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. Regardless of whether or not a policy is
backdated, Net Premiums 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.
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 $5,000,000 and may not be in
effect for more than 90 days. This temporary insurance coverage will be issued
on a conditional receipt basis. This 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.
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 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 Manulife New York, it will pay the policyowner the Policy
Value, computed at the end of the valuation period during which the Policy is
received by Manulife New York. 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 an existing life insurance policy. Therefore, a
policyowner should consult with his or her attorney or Manulife New York agent
regarding whether the purchase of a new life insurance policy is a replacement
of an existing life insurance policy.
If you request an increase in face amount which results in new surrender
charges, you 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
20
had the increase not taken place. You 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.
DEATH BENEFITS
If the Policy is in force at the time of the death of the last-to-die of the
Lives Insured, the Company will pay an insurance benefit. The amount payable
will be the death benefit under the selected death benefit option, 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 the beneficiary and the Company
agree to another form of settlement option. If the insurance benefit is paid in
one sum, the Company will pay interest from the date of death to the date of
payment. 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.
LIFE INSURANCE QUALIFICATION
This product uses the Guideline Premium Test to qualify as a life insurance
contract for purposes of Section 7702 of the Internal Revenue Code of 1986, as
amended.
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:
- A change in the policy's Face Amount.
- A change in the death benefit option.
- 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 will require the policyowner to
take a partial withdrawal. In addition, these changes could reduce the future
premium limitations.
MINIMUM DEATH BENEFIT
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. 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 youngest of the Lives Insured, or the Attained Age such person would
have reached if living. The Minimum Death Benefit Percentages are shown in the
Table of Minimum Death Benefit Percentages.
TABLE OF MINIMUM DEATH BENEFIT PERCENTAGES
Attained Age Applicable Percentage
40 and under 250%
45 215%
50 185%
55 150%
60 130%
65 120%
70 115%
75 105%
90 105%
95 and above 100%
21
To determine the Applicable Percentage in the above table, use the Attained Age
of the youngest of the Lives Insured, or the Attained Age such person would have
reached if living. For ages not shown, the Applicable Percentage can be found by
reducing the values proportionately.
DEATH BENEFIT OPTIONS
There are two death benefit options, described below.
DEATH BENEFIT OPTION 1
Under Option 1 the death benefit is the Face Amount of the Policy at the date of
death or, if greater, the Minimum Death Benefit.
DEATH BENEFIT OPTION 2
Under Option 2 the death benefit is the Face Amount plus the Policy Value of the
Policy at the date of death or, if greater, the Minimum Death Benefit.
CHANGING THE DEATH BENEFIT OPTION
The policyowner may change the death benefit option 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.
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.
CHANGING THE FACE AMOUNT
Subject to the limitations stated in this Prospectus, 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.
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.
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. See "Lapse and Reinstatement -
No-Lapse Guarantee."
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.
22
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 policy owner for a decrease in the Face Amount will be effective
at the beginning of the Policy Month following the date Manulife New York
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.
SURRENDER CHARGE ON DECREASE IN FACE AMOUNT
If the Face Amount of insurance is decreased, a pro-rata Surrender Charge will
be deducted from the Policy Value. A decrease in Face Amount caused by a change
from Death Benefit Option 1 to Option 2 will not incur a pro-rata Surrender
Charge. Each time a pro-rata Surrender Charge is deducted for a Face Amount
decrease, the remaining Surrender Charge will be reduced in the same proportion
that the Surrender Charge deducted bears to the total Surrender Charge
immediately before the Face Amount decrease.
PREMIUM PAYMENTS
INITIAL PREMIUMS
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.
The minimum initial premium is one-twelfth of the No-Lapse Guarantee Premium.
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.
SUBSEQUENT PREMIUMS
After the payment of the initial premium, premiums may be paid at any time and
in any amount until the Maturity Date, subject to the limitations on premium
amount described below.
A Policy will be issued with a planned premium, which is based on the amount of
premium the policyowner wishes to pay. Manulife New York will send notices to
the policyowner setting forth the planned premium at the payment interval
selected by the policyowner. However, the policyowner is under no obligation to
make the indicated payment.
The Company may refuse any premium payment that would cause the Policy to fail
to qualify as life insurance under the Internal Revenue Code. 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.
Payment of premiums will not guarantee that the Policy will stay in force.
Conversely, failure to pay premiums will not necessarily cause the Policy to
lapse.
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.
MAXIMUM PREMIUM LIMITATION
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.
23
PREMIUM ALLOCATION
Premiums may be allocated to either 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.
CHARGES AND DEDUCTIONS
PREMIUM CHARGE
Manulife New York deducts a premium charge from each premium payment, equal to
% of the premium. The premium charge is designed to cover a portion of the
Company's acquisition and sales expenses and premium taxes, or other related
taxes associated with the sale of life insurance products, including the
Policies, in the state of New York.
SURRENDER CHARGES
The Company will deduct a Surrender Charge if during the first years
following the Policy Date, or the 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
(see below for a description of this amount),
- there is a decrease in Face Amount, 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 x 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 = ( ) + ( %) 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
24
ISSUE AGES OF YOUNGER INSURED
- --------------------------------------------------------------------------------
POLICY YEAR % % % %
POLICY YEAR % % % % % %
POLICY YEAR % % % % % %
POLICY YEAR % % % % % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR % %
POLICY YEAR %
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 years.
The maximum Surrender Charge for any Policy per $1000 of Face Amount is $ .
Surrender Charge Rate
The Surrender Charge Rate is equal to the sum of (a) plus (b) where (a) equals
and (b) equals % times the Surrender Charge Premium.
Illustration of Surrender Charge Calculation
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 $
- - Face Amount of the Policy is $250,000
- - Policy is surrendered during the last month of the seventh policy year
25
Surrender Charge
The Surrender Charge to be assessed would be $ determined as follows:
First, the Surrender Charge Rate is determined by applying the Surrender Charge
Rate formula as set forth below.
Surrender Charge Rate = ( ) + %) x (Surrender Charge Premium)
The Surrender Charge Rate is equal to .
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)
The Surrender Charge is equal to $ .
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 (as described below) 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.
SURRENDER CHARGE ON DECREASE IN FACE AMOUNT
If the Face Amount of insurance is decreased, a pro-rata Surrender Charge will
be deducted from the Policy Value. A decrease in Face Amount caused by a change
from Death Benefit Option 1 to Option 2 will not incur a pro-rata Surrender
Charge.
Each time a pro-rata Surrender Charge is deducted for a Face Amount decrease,
the remaining Surrender Charge will be reduced in the same proportion that the
Surrender Charge deducted bears to the total Surrender Charge immediately before
the Face Amount decrease.
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.
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. 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. The charges consist
of:
(i) a monthly administration charge;
(ii) a monthly charge for the cost of insurance;
(iii) a monthly mortality and expense risk charge;
26
(iv) a monthly 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 same proportion as the Policy value in each bears to the Net
Policy Value.
ADMINISTRATION CHARGE
This charge will be equal to $ plus $ per $1,000 of current face
amount per Policy Month in the Policy Year. For all subsequent Policy Years, the
administration charge will not exceed $ plus $ per $1,000 of
current face amount per Policy Month. 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 cost of insurance rate and the net amount at risk are
determined separately for the initial Face Amount and for each increase in Face
Amount. In determining the net amount at risk, if there have been increases in
the Face Amount, the Policy Value shall first be considered a part of the
initial Face Amount. If the Policy Value exceeds the initial Face Amount, it
shall then be considered a part of the additional increases in Face Amount
resulting from the increases, in the order the increases occurred.
The net amount at risk is equal to the greater of zero, or the result of (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 prior to
deduction of monthly cost of insurance.
The rates for the cost of insurance are blended and based upon the Attained Age,
sex, and Risk Classification of the Lives Insured.
Cost of insurance rates will generally increase with the age of each of the
Lives 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 Lives 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 Lives 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 Standard Ordinary
Smoker/Non-Smoker Mortality Tables.
CHARGES FOR SUPPLEMENTARY BENEFITS
If the Policy includes Supplementary Benefits, a charge will be made applicable
to such Supplementary Benefit.
MORTALITY AND EXPENSE RISK CHARGE
A monthly charge is assessed against the Policy Value equal to a percentage of
the Policy Value. This charge is to compensate the Company for the mortality and
expense risks it assumes under the Policy. The mortality risk assumed is that
Lives Insured may live for a shorter period of time than the Company estimated.
The expense risk assumed is 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:
Equivalent Annual
Current and Guaranteed Monthly Mortality and Mortality and Expense
Policy Year Expense Risks Charge Risks Charge
% %
% %
27
CHARGES FOR TRANSFERS
A charge of $25 will be imposed on each transfer in excess of twelve in a Policy
Year, to cover processing and other administrative costs associated with such
transfers.
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, immediate family members of the foregoing, and employees or
agents of Manufacturers Life and its subsidiaries. Manulife New York reserves
the right to reduce any of the Policy's loads or 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 Manulife New York 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. Manulife New York may modify from time to time, on a uniform
basis, both the amounts of reductions and the criteria for qualification.
In addition, groups and persons purchasing under a sponsored arrangement may
apply for simplified underwriting. If simplified underwriting is granted, the
cost of insurance charge may increase as a result of higher anticipated
mortality experience.
SPECIAL PROVISIONS FOR EXCHANGES
The Company will permit owners of certain fixed life insurance policies issued
by Manulife New York to exchange their policies for the Policies described in
this prospectus (and likewise, owners of policies described in this Prospectus
may also exchange their Policies for certain fixed policies issued by Manulife
New York). Policyowners considering an exchange should consult their tax
advisers as to the tax consequences of an exchange.
COMPANY TAX CONSIDERATIONS
At the present time, the Company makes no specific 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.
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 Manulife New York. For a detailed description of the Fixed
Account, see "The General Account - Fixed Account".
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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 less the Loan Spread. 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.
Units are valued at the end of each Business Day. When an order involving the
crediting or cancelling 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 $12.50
depending on sub-account. 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 that 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.
TRANSFERS OF POLICY VALUE
At any time, a policyowner may transfer Policy Value from one sub-account to
another or to the Fixed Account. Transfer requests must be in writing in a
format satisfactory to the Company, or by telephone if a currently valid
transfer authorization form is on file.
The Company reserves the right to impose limitations on transfers, including the
maximum amount that may be transferred. In addition, transfer privileges are
subject to any restrictions that may be imposed by 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 12 transfers that may be made free of
charge in any Policy Year, as described below.
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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 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, Manulife New York 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 program. Under the
Dollar Cost Averaging program the policyowner will designate an amount which
will be transferred at predetermined intervals from one Investment Account into
any other Investment Account(s) or the Fixed Account. Currently, no charge will
be made for this program. If insufficient funds exist to effect a Dollar Cost
Averaging transfer, the transfer will not be effected and the policyowner will
be so notified.
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, 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 Manulife New
York 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
At any time while this Policy is in force, a policyowner may borrow against the
Policy Value of the Policy. The amount of any loan cannot exceed 90% of the
Policy's Net Cash Surrender Value. The Policy serves as the only security for
the loan. Policy loans may have tax consequences, see "Policy Loan Interest" and
"Surrender or Lapse" under the heading "Tax Treatment of Policy Benefits."
LOAN VALUE
The Loan Value is equal to the Policy's Net Cash Surrender Value less the
monthly deductions due to the next Policy Anniversary.
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 Policy's failing to satisfy the No-Lapse Guarantee
Cumulative Premium Test since the Policy Debt is subtracted from the sum of the
premiums paid in determining whether this test is satisfied. Finally, a policy
loan will affect the amount payable on the death of the last-to-die of the Lives
Insured, since the death benefit is reduced by the Policy Debt at the date of
death in arriving at the insurance benefit.
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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 %. 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.
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.
INTEREST CREDITED TO THE LOAN ACCOUNT
Interest will be credited to amounts in the Loan Account at an effective annual
rate of at least %. 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 % and guaranteed not to exceed this percentage. We may change
the differential as of 90 days after we send you written notice of such change.
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 or the Fixed Account in the
same proportion as the value in each Investment Account and 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 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 value that was transferred from
it is fully restored, and then to each Investment Account in the same proportion
that the value that was transferred from it 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.
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. 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 as of the end of the Business Day on
which Manulife New York 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.
PARTIAL WITHDRAWALS
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. For information on Surrender Charges on a
Partial Withdrawal see "Charges and Deductions - Surrender Charges."
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REDUCTION IN FACE AMOUNT DUE TO A PARTIAL WITHDRAWAL
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 set forth under "Death Benefit - Minimum Death Benefit," 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.
LAPSE AND REINSTATEMENT
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 will vary by issue age, as set
forth in the Policy.
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 notification to the policyowner, will be
equal to the lesser of:
(i) 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
(ii) 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.
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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.
TERMINATION AND MATURITY BENEFIT
TERMINATION OF THE POLICY
Your Policy will terminate on the earliest of the following events:
- the end of the grace period for which you have not paid the amount
necessary to bring the Policy out of default;
- surrender of the Policy for its Net Cash Surrender Value;
- the death of the Life Insured; or
- the Maturity Date.
MATURITY BENEFIT
We will pay you the Net Cash Surrender Value of your Policy as of the Maturity
Date provided the Policy has not terminated and the Life Insured is alive.
THE GENERAL ACCOUNT
The general account of Manulife New York 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, Manulife New York has sole discretion
over the investment of the assets of the general account.
33
By virtue of exclusionary provisions, interests in the general account of
Manulife New York 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. Manulife New York 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:
(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, Manulife New York guarantees that the Policy Value in the Fixed Account
will accrue interest daily at an effective annual rate of at least, 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
Return of Premium Rider Death Benefit
The Policy may be issued with an optional Return of Premium Death Benefit rider
if death benefit Option 1 is elected. This rider provides an additional death
benefit payable upon the death of the last-to-die of the Lives Insured after the
Company receives due proof of death. The Return of Premium Death Benefit is
calculated as follows:
The Return of Premium Rider death benefit is equal to initial premium. Any
subsequent premiums will increase the rider death benefit at the time of the
premium payment by the amount of the premium. Any partial withdrawal will reduce
the death benefit at the time of withdrawal by an amount equal to the withdrawal
plus any applicable Surrender Charge (except that the rider death benefit will
not be reduce to less than zero).
Cessation of Increases. Increases in the Return of Premium Death
Benefit coverage will cease at the earlier of:
(a) the Policy Anniversary coincident with or next following the
date we receive your written request for cessation of any
further increases;
(b) the beginning of the Policy Month coincident with or next
following the date we approve your written request for a
change to Death Benefit Option 2; or
(c) the date as of which Monthly Deductions cease and no further
premiums may be paid in determining the amount of the Return
of Premium death benefit coverage.
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Decreases in Coverage. The Return of Premium Death Benefit may be
decreased if requested by the policyowner. The decrease will take effect at the
beginning of the Policy Month on or next following the date Company approves the
request. The Return of Premium Rider Death Benefit coverage will be reduced by
the amount of the requested decreased. Decreases in the death benefit are not
subject to pro-rata Surrender Charges.
Partial Withdrawals. If the Policyowner makes a written request for
a partial withdrawal of net cash surrender value while this rider is in force,
the Company will process the withdrawal so that it first reduces the amount of
the Return of Premium Death Benefit coverage. Any withdrawals will be subject to
a pro-rata surrender charge as described under "Charges and Deductions -
Surrender Charges." In addition, the Face Amount will be reduced by the amount
by which the withdrawal plus the Surrender Charge exceeds the amount of the
Return of Premium Rider Death Benefit.
No Lapse Guarantee. The No Lapse Guarantee provisions of the Policy
apply to the Return of Premium Rider Death Benefit for the first ___ Policy
Years only.
POLICYOWNER RIGHTS
Unless otherwise restricted by a separate agreement, the policyowner may:
- Vary the premiums paid under the Policy.
- Change the death benefit option.
- Change the premium allocation for future premiums.
- Transfer amounts between sub-accounts.
- Take loans and/or partial withdrawals.
- Surrender the contract.
- Transfer ownership to a new owner.
- Name a contingent owner that will automatically become owner
if the policyowner dies before the insured.
- Change or revoke a contingent owner.
- Change or revoke a beneficiary.
ASSIGNMENT OF RIGHTS
Manulife New York will not be bound by an assignment until it receives a copy of
the assignment at its Service Office. Manulife New York 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 Lives Insured 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. 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
Manulife New York will not contest the validity of a Policy after it has been in
force during any Lives Insured's lifetime for two years from the Issue Date. It
will not contest the validity of an increase in Face Amount or the addition of a
Supplementary Benefit, after such increase or addition which requires evidence
of insurability has been in force during the lifetime of the Lives Insured for
two years. If a Policy has been reinstated and been in force during the lifetime
of the Lives Insured for less than two years from the reinstatement date, the
Company can contest any misrepresentation of a fact material to the
reinstatement.
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MISSTATEMENT OF AGE OR SEX
If the stated age or sex or both of any of the Lives Insured in the Policy are
incorrect, Manulife New York 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 any of the Lives Insured dies by suicide within two years after the Issue
Date, 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.
If any of the Lives Insured dies by suicide within two years after the effective
date of an applied for increase in Face Amount, the Company will credit the
amount of any Monthly Deductions taken for the increase and reduce the Face
Amount to what it was prior to the increase. If the last death is by suicide,
the Death Benefit for that increase will be limited to the Monthly Deductions
taken for the increase.
The Company reserve the right to obtain evidence of the manner and cause of
death of the Lives Insured.
SUPPLEMENTARY BENEFITS
Subject to certain requirements, one or more supplementary benefits may be added
to a Policy, including the Estate Preservation Rider which provides additional
term insurance at no extra charge during the first four Policy Years to protect
against application of the "three year contemplation of death" rule and an
option to split the Policy into two individual policies upon divorce, or certain
federal tax law changes without evidence of insurability (the "Policy Split
Option"). More detailed information concerning these supplementary benefits may
be obtained from an authorized agent of the Company. The cost of any
supplementary benefits will be deducted as part of the monthly deduction. There
is an additional charge for the Estate Preservation Rider of 6 cents per $1,000
of Face Amount.
CONVERSION PRIVILEGE
The Policy may be converted to a fixed paid-up benefit at any Policy
Anniversary, without evidence of insurability. This conversion privilege is
subject to the following conditions:
- no further Monthly Deductions will be taken from the Policy Value
after the date of conversion,
- the Investment Account values as well as the Death Benefit, Policy
Value and any other values based on Policy Value will be determined
as of the Business Day on which the Company receives a written
request for conversion of the Policy,
- the basis for determining the amount of paid-up life insurance will
be the Commissioners 1980 Standard Ordinary Smoker or Non-Smoker
Mortality Table and an interest rate of 4% per year,
- the Policy may not be reinstated after the date of the conversion.
The Company currently imposes no charge with respect to this privilege.
TAX TREATMENT OF THE POLICY
The following summary provides a general description of the federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisers should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "Service"). No representation is made as to the
likelihood of continuation of the present federal income tax laws nor of the
current interpretations by the Service. MANULIFE NEW YORK DOES NOT MAKE ANY
GUARANTEE REGARDING THE TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING
THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuation plans, split dollar insurance
plans, executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on the tax
consequences, is contemplated, a qualified tax adviser should be consulted for
advice on the tax attributes of the particular arrangement.
36
The Company is taxed as a life insurance company. Because the operations of the
Separate Account are a part of and taxed with the Company's operations, the
Separate Account is not separately taxed as a "regulated investment company"
under the Code. Under existing Federal income tax laws, the Company is not taxed
on the investment income and capital gains of the Separate Account, but the
Company may be eligible for certain tax credits or deductions relating to
foreign taxes paid and dividends received by Trust portfolios. The Company's use
of these tax credits and deductions will not adversely affect or benefit the
Separate Account. The Company does not anticipate that it will be taxed on the
income and gains of the Separate Account in the future, but if the Company is,
in may impose a corresponding charge against the Separate Account.
LIFE INSURANCE QUALIFICATION
There are several requirements that must be met for a Policy to be considered a
Life Insurance Contract under the Internal Revenue Code, and thereby to enjoy
the tax benefits of such a contract:
1. The Policy must satisfy the definition of life insurance under Section
7702 of the Internal Revenue Code of 1986 (the "Code").
2. The investments of the Separate Account must be "adequately diversified"
in accordance with Section 817(h) of the Code and Treasury Regulations.
3. The Policy must be a valid life insurance contract under applicable state
law.
4. 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.
By limiting cash value at any time to the net single premium that would be
required in order to fund future benefits under the Policy, the Cash Value
Accumulation Test in effect requires a minimum death benefit for a given Policy
Value. 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 that 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.
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.
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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
Policy has many more portfolios to which policyowners may allocate premium
payments and Policy Values than were available in the policies described in the
rulings. 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.
TAX TREATMENT OF POLICY BENEFITS
The following discussion assumes that the Policy will qualify as a life
insurance contract for federal income tax purposes. The Company believes that
the proceeds and cash value increases of a Policy should be treated in a manner
consistent with a fixed-benefit life insurance policy for federal income tax
purposes.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, partial withdrawal, surrender, or
an assignment of the Policy may have federal income tax consequences. In
addition, federal, state and local transfer, and other tax consequences of
ownership or receipt of Policy proceeds depend on the circumstances of each
policyowner or beneficiary.
DEATH BENEFIT
The death benefit under the Policy should be excludible from the gross income of
the beneficiary under Section 101(a)(1) of the Code.
CASH VALUES
Generally, the policyowner will not be deemed to be in constructive receipt of
the Policy Value until there is a distribution. This includes additions
attributable to interest, dividends, appreciation or gains realized on transfers
among sub-accounts.
INVESTMENT IN THE POLICY
Investment in the Policy means:
(a) the aggregate amount of any premiums or other consideration paid for
a Policy; minus
(b) the aggregate amount, other than loan amounts, received under the
Policy which has been excluded from the gross income of the
policyowner (except that the amount of any loan from, or secured by,
a Policy that is a MEC, to the extent such amount has been excluded
from gross income, will be disregarded); plus
(c) the amount of any loan from, or secured by a Policy that is a MEC to
the extent that such amount has been included in the gross income of
the policyowner.
The repayment of a policy loan, or the payment of interest on a loan, does not
affect the Investment in the Policy.
SURRENDER OR LAPSE
Upon a complete surrender or lapse of a Policy or when benefits are paid at a
Policy's Maturity Date, if the amount received plus the amount of Policy Debt
exceeds the total investment in the Policy, the excess will generally be treated
as ordinary income subject to tax.
38
If, at the time of lapse, a Policy has a loan, the loan is extinguished and the
amount of the loan is a deemed payment to the policyholder. If the amount of
this deemed payment exceeds the investment in the contract, the excess is
taxable income and is subject to Internal Revenue Service reporting
requirements."
DISTRIBUTIONS
The tax consequences of distributions from, and loans taken from or secured by,
a Policy depend on whether the Policy is classified as a "Modified Endowment
Contract" or "MEC".
DISTRIBUTIONS FROM NON-MEC'S
A distribution from a non-MEC is generally treated as a tax-free recovery by the
policyowner of the Investment in the Policy to the extent of such Investment in
the Policy, and as a distribution of taxable income only to the extent the
distribution exceeds the Investment in the Policy. Loans from, or secured by, a
non-MEC are not treated as distributions. Instead, such loans are treated as
indebtedness of the policyowner.
Force Outs
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the policyowner in order for the Policy to continue to
comply with the Section 7702 definitional limits. Such a cash distribution will
be taxed in whole or in part as ordinary income (to the extent of any gain in
the Policy) under rules prescribed in Section 7702. Changes include partial
withdrawals and death benefit option changes.
DISTRIBUTIONS FROM MEC'S
Policies classified as MEC's will be subject to the following tax rules:
(a) First, all partial withdrawals from such a Policy are treated as
ordinary income subject to tax up to the amount equal to the excess
(if any) of the Policy Value immediately before the distribution
over the Investment in the Policy at such time.
(b) Second, loans taken from or secured by such a Policy and assignments
or pledges of any part of its value are treated as partial
withdrawals from the Policy and taxed accordingly. Past-due loan
interest that is added to the loan amount is treated as a loan.
(c) Third, a 10% additional income tax is imposed on the portion of any
distribution (including distributions on surrender) from, or loan
taken from or secured by, such a policy that is included in income
except where the distribution or loan:
(i) is made on or after the date on which the policyowner attains
age 59 1/2;
(ii) is attributable to the policyowner becoming disabled; or
(iii) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the policyowner or the
joint lives (or joint life expectancies) of the policyowner
and the policyowner's beneficiary.
These exceptions are not likely to apply in situations where the Policy is not
owned by an individual.
Definition of Modified Endowment Contracts
Section 7702A establishes a class of life insurance contracts designated as
"Modified Endowment Contracts," which applies to Policies entered into or
materially changed after June 20, 1988.
In general, a Policy will be a Modified Endowment Contract if the accumulated
premiums paid at any time during the first seven Policy Years exceed the
"seven-pay premium limit". The seven-pay premium limit on any date is equal to
the sum of the net level premiums that would have been paid on or before such
date if the policy provided for paid-up future benefits after the payment of
seven level annual premiums (the "seven-pay premium").
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyowner should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
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Material Changes
A policy that is not a MEC may become a MEC if it is "materially changed". If
there is a material change to the policy, the seven year testing period for MEC
status is restarted. The material change rules for determining whether a Policy
is a MEC are complex. In general, however, the determination of whether a Policy
will be a MEC after a material change generally depends upon the relationship
among the death benefit of the Policy at the time of such change, the Policy
Value at the time of the change, and the additional premiums paid into the
Policy during the seven years starting with the date on which the material
change occurs.
Reductions in Face Amount
If there is a reduction in benefits during the first seven Policy Years, the
seven-pay premium limit is recalculated as if the policy had been originally
issued at the reduced benefit level. Failure to comply would result in
classification as a MEC regardless of any efforts by the Company to provide a
payment schedule that will not violate the seven pay test.
Exchanges
A life insurance contract received in exchange for a MEC will also be treated as
a MEC.
Processing of Premiums
If a premium which would cause the Policy to become a MEC, is received within 23
days of the next Policy Anniversary, the Company will not apply the portion of
the premium which would cause MEC status ("excess premium") to the Policy when
received. The excess premium will be placed in a suspense account until the next
anniversary date, at which point the excess premium, along with interest, earned
on the excess premium at a rate of 3.5% from the date the premium was received,
will be applied to the Policy. (Any amount that would still be excess premium on
the next anniversary will be refunded to the policyowner. The policyowner will
be advised of this action and will be offered the opportunity to have the
premium credited as of the original date received or to have the premium
returned. If the policyowner does not respond, the premium and interest will be
applied to the Policy as of the next anniversary.
If a premium which would cause the Policy to become a MEC is received more than
23 days prior to the next Policy Anniversary, the Company will refund any excess
premium to the policyowner. The portion of the premium which is not excess will
be applied as of the date received. The policyowner will be advised of this
action and will be offered the opportunity to return the premium and have it
credited to the account as of the original date received.
Multiple Policies
All MEC's that are issued by a Company (or its affiliates) to the same
policyowner during any calendar year are treated as one MEC for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
Policy Split Options
This option permits a Policy to be split into two other individual Policies upon
the occurrence of a divorce of the lives insured or certain changes in federal
estate tax law. The purchase and exercise of the policy split option could have
adverse tax consequences. For example, it is not clear whether a policy split
will be treated as a nontaxable exchange under Sections 1031 through 1043 of the
Code. If a policy split is not treated as a nontaxable exchange, a split could
result in the recognition of taxable income in an amount up to any gain in the
Policy at the time of the split. It is also not clear whether the cost of the
policy split option, which is deducted monthly from Policy Value, will be
treated as a taxable distribution. Before purchasing the policy split option or
exercising rights provided by the policy split option, please consult with a
competent tax adviser regarding the possible consequences.
POLICY LOAN INTEREST
Generally, personal interest paid on any loan under a Policy which is owned by
an individual is not deductible. For policies purchased on or after January 1,
1996, interest on any loan under a Policy owned by a taxpayer and covering the
life of any individual who is an officer or employee of or is financially
interested in the business carried on by the taxpayer will not be tax deductible
unless the employee is a key person within the meaning of Section 264 of the
Code. A deduction will not be permitted for interest on a loan under a Policy
held on the life of a key person to the extent the aggregate of such loans with
respect to contracts covering the key person exceed $50,000. The number of
employees who can qualify as key persons depends in part on the size of the
employer but cannot exceed 20 individuals.
Furthermore, if a non-natural person owns a Policy, or is the direct or indirect
beneficiary under a Policy, section 264(f) of the Code disallows a pro-rata
portion of the taxpayer's interest expense allocable to unborrowed Policy cash
values attributable to insurance held on the lives of individuals who are not
20% (or more) owners of the taxpayer-entity, officers, employees, or former
employees of the taxpayer.
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The portion of the interest expense that is allocable to unborrowed Policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed Policy cash values under such life insurance
policies bear to the sum of such average unborrowed Policy cash values and the
average adjusted bases for all other assets of the taxpayer.
If the policyowner is an individual, and if the taxpayer is a business and is
not the policyowner, but is the direct or indirect beneficiary under the
Policy, then the amount of unborrowed cash value of the Policy taken into
account in computing the portion of the taxpayer's interest expense allocable to
unborrowed Policy cash values cannot exceed the benefit to which the taxpayer is
directly or indirectly entitled under the Policy.
POLICY EXCHANGES
A policyowner generally will not recognize gain upon the exchange of a Policy
for another life insurance policy covering the same Lives Insured issued by the
Company or another insurance company, except to the extent that the policyowner
receives cash in the exchange or is relieved of Policy indebtedness as a result
of the exchange. In no event will the gain recognized exceed the amount by which
the Policy Value (including any unpaid loans) exceeds the policyowner's
Investment in the Policy.
OTHER TRANSACTIONS
A transfer of the Policy, a change in the owner, a change in the Life or Lives
Insured, a change in the beneficiary, and certain other changes to the Policy,
as well as particular uses of the Policy (including use in a so called
"split-dollar" arrangement) may have tax consequences depending upon the
particular circumstances and should not be undertaken prior to consulting with a
qualified tax adviser. For instance, if the owner transfers the Policy or
designates a new owner in return for valuable consideration (or, in some cases,
if the transferor is relieved of a liability as a result of the transfer), then
the Death Benefit payable upon the death of the Insured may in certain
circumstances be includible in taxable income to the extent that the Death
Benefit exceeds the prior consideration paid for the transfer and any premiums
or other amounts subsequently paid by the transferee. Further, in such a case,
if the consideration received exceeds the transferor's Investment in the Policy,
the difference will be taxed to the transferor as ordinary income.
Federal estate and state and local estate, inheritance and other tax
consequences of ownership or receipt of Policy proceeds depend on the individual
circumstances of each policyowner and beneficiary.
ALTERNATIVE MINIMUM TAX
Corporate owners may be subject to Alternative Minimum Tax on the annual
increases in Cash Surrender Values and on the Death Benefit proceeds.
INCOME TAX REPORTING
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
the value each year of the life insurance protection provided;
an amount equal to any employer-paid premiums;
an amount equal to imputed interest on a deemed employer loan; or
some or all of the amount by which the current value exceeds the
employer's interest in the Policy.
Participants should consult with their tax adviser to determine the tax
consequences of these arrangements.
OTHER INFORMATION
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manulife New York 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, (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.
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REPORTS TO POLICYOWNERS
Within 30 days after each Policy Anniversary, Manulife New York 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
Manulife Financial Securities LLC ("Manulife Financial Securities"), whose
principal offices are located at 73 Tremont Street, Boston, Massachusetts 02108,
acts as the principal underwriter of, and continuously offers, the Policies
pursuant to an Underwriting and Distribution Agreement with Manulife New York.
Manulife Financial Securities is an indirect wholly-owned subsidiary of MFC.
Manulife Financial Securities 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 an insurance agent of
Manulife New York. Manulife Financial Securities is a Delaware limited liability
company, the managing member of which is Manulife USA. Manulife USA in its
capacity as managing member is authorized to act on behalf of Manulife Financial
Securities. The Policies will be sold by registered representatives of
broker-dealers having distribution agreements with Manulife Financial Securities
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 105% of
premiums in the first year, of all premiums paid in the and after the second
anniversary of the Policy Value per year. Representatives who meet certain
productivity standards with regard to the sale of the Policies and certain other
policies issued by Manulife New York or Manufacturers Life will be eligible for
additional compensation.
RESPONSIBILITIES OF MANULIFE NEW YORK, MANULIFE USA AND MANULIFE FINANCIAL
SECURITIES
The Company has entered into an agreement with Manulife Financial Securities
pursuant to which Manulife Financial Securities will pay selling broker dealers
commission and expense allowance payments subject 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 Manulife Financial Securities with
respect to the Policies, and send all confirmations required to be sent by
Manulife Financial Securities with respect to the Policies. The Company will pay
Manulife Financial Securities 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 USA has entered into a Service Agreement with us pursuant to which
Manulife USA or its designee will provide to us all issue, administrative,
general services and record keeping functions on our behalf with respect to all
of our insurance policies including the Policies.
VOTING RIGHTS
As stated previously, all of the assets held in each sub-account of the Separate
Account will be invested in shares of a particular Portfolio of the Trust.
Manulife New York 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, Manulife New York
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
Manulife New York 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 Manulife New York 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
Manulife New York, but not more than 90 days before the
42
shareholders' meeting. Fractional votes are counted. Voting instructions will be
solicited in writing at least 14 days prior to the meeting.
Manulife New York 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
contract. In addition, the Company itself may disregard voting instructions that
would require changes in the investment policies or investment adviser, provided
that Manulife New York reasonably disapproves such changes in accordance with
applicable federal regulations. If Manulife New York 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 Manulife New York, 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 regulations, because the shares are no longer available for investment,
or for some other reason. In that event, Manulife New York 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 the New York State
insurance department may be required.
Manulife New York 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.
STATE REGULATIONS
Manulife New York 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.
Manulife New York 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 at December 31, 2001 and 2000 and for each of the three
years in the period ended December 31, 2001 and the financial statements of
Separate Account B of The Manufacturers Life Insurance Company of New York at
December 31, 2001, and for each of the two years in the period ended December
31, 2001, 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.
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FURTHER INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the SEC 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 SEC'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 Manulife New York's Home Office,
the address and telephone number of which are on the first page of the
prospectus.
DIRECTORS AND OFFICERS
Our Directors and Officers, together with their principal occupations during the
past five years, are as follows:
NAME, AGE AND PRINCIPAL
BUSINESS ADDRESS POSITION WITH THE COMPANY PRINCIPAL OCCUPATION
Bruce Avedon Director* Director, Manulife New York, March 1992 to present;
Age: 73 Consultant (self-employed) September 1983 to present.
6601 Hitching Post Lane
Cincinnati, OH 45230
Thomas Borshoff Director* Director, Manulife New York, February 1999 to present;
Age: 55 Self-employed, Real Estate Owner/Manager; Chief
536 Stone Road Executive Officer and Chairman, First Federal Savings
Pittsford, NY 14534 and Loan of Rochester, 1983 to 1997.
James R. Boyle Director* Director, Manulife New York, August 1999 to present;
Age: 43 President, U.S. Annuities, Manulife Financial, July 1999
500 Boylston Street to present; President, Manulife North America, July 1999
Boston, MA 02116 to present; Treasurer, Manufacturers Investment Trust,
June 1998 to present; Vice President, Institutional
Markets, Manulife Financial, May 1998 to July 1999; Vice
President, Administration and Chief Administrative
Officer, Manulife North America, September 1996 to May
1998; Vice President, Chief Financial Officer and Chief
Administrative Officer, Manulife North America, August
1994 to September 1996.
Robert A. Cook Director* Director, Manulife New York, February 1999 to present;
Age: 47 President, U.S. Insurance, Manulife Financial, January
73 Tremont Street 1999 to present; Vice President, U.S. Insurance,
Boston, MA 02108 Manulife Financial, 1995 to December 1998.
John D. DesPrez III Director* and Chairman of President, Manulife USA, January 1999 to present;
Age: 45 the Board of Directors Director, Manulife Wood Logan, October 1996 to present;
73 Tremont Street Director, September 1996 to present and Chairman of the
Boston, MA 02108 Board, January 1999 to present, of Manulife North
America; President, Manulife North America, September
1996 to December 1998; President, MIT September 1996 to
present; Senior Vice President, U.S. Annuities, Manulife
USA, September 1996 to December 1998; Vice President,
Mutual Funds, Manulife Financial, January 1995 to
September 1996; Director, MWL, December 1995 to present;
Director, Wood Logan Distributors, March 1993 to
present; President, North American Funds, March 1993 to
September 1996; Director, Manulife New York, March 1992
to present.
Ruth Ann Fleming Director* Director, Manulife New York, March 1992 to present;
Age: 43 Attorney, consulting services and pro bono activities.
205 Highland Avenue
Short Hills, NJ 07078
James D. Gallagher Director* and President President, Manufacturers Investment Trust, February 2001
Age: 47 to Present, President, The Manufacturers Life Insurance
73 Tremont Street Company of New York, August 1999 to Present, Executive
Boston, MA 02108 Vice President, Secretary and Chief Legal Counsel, The
Manufacturers Life Insurance Company (USA), January 1997
to present;
44
NAME, AGE AND PRINCIPAL
BUSINESS ADDRESS POSITION WITH THE COMPANY PRINCIPAL OCCUPATION
Secretary and General Counsel, Manufacturers
Adviser Corporation, January 1997 to present; Vice
President, Chief Legal Officer and Government
Relations-U.S. Operations, The Manufacturers Life
Insurance Company, January 1996 to present; Vice
President, Secretary and General Counsel, The
Manufacturers Life Insurance Company of North America,
1994 to present.
David W. Libbey Treasurer Senior Vice President, Treasurer and Chief Financial
Age: 55 Officer, U.S. Annuities, Manulife USA, December 1997 to
500 Boylston Street present; Treasurer, Manulife New York, November 1997 to
Boston, MA 02116 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.
Neil M. Merkl, Esq. Director* Director, Manulife New York, December 1995 to present;
Age: 71 Attorney (self-employed), April 1994 to present;
35-35 161st Street Attorney, Wilson Elser, 1979 to 1994.
Flushing, NY 11358
James P. O'Malley Director* Senior Vice President, U.S. Pensions, Manulife
Age:55 Financial, January 1999 to present; Director, Manulife
200 Bloor Street East New York, November 1998 to present; Director,
Toronto, Ontario ManAmerica, November 1998 to present; Vice President,
Canada M4W 1E5 Systems New Business Pensions, Manulife Financial, 1984
to December 1998.
Bradford J. Race Jr. Director* Director, Manulife New York, February 2002 to present;
Age: 57 Secretary to the Governor, Chief of Staff and Senior
136 East 64(th) Street Policy Advisor to the Governor of the State of New York,
New York, NY 10021 George E. Pataki, 1995-February 2002; Partner, Seward &
Kissel - Law Firm, 1981-1994, Attorney, Dewey
Ballantine, 1970-1981, 2002 - Present.
Kim Ciccarelli Secretary and Counsel Secretary and Counsel, Manulife New York, November 2001
Age: 32 to present; Assistant Counsel, Manulife U.S.A., November
73 Tremont Street 1999 to present; Paralegal, Manulife U.S.A., March 1995
Boston, MA 02108 - October 1999.
John Ostler Appointed Actuary Appointed Actuary, Manulife New York, November 2000 to
Age: 48 present; Executive Vice President and Chief Financial
200 Bloor Street East Officer, Manulife USA, October 1, 2000 to present; Vice
Toronto, Ontario President and Corporate Actuary, The Manufacturers Life
Canada M4W 1E5 Insurance Company, March 1998 to September 2000; Vice
President & CFO U.S. Individual Insurance, The
Manufacturers Life Insurance Company, 1992 to March
1998; Vice President, U.S. Insurance Products, The
Manufacturers Life Insurance Company, 1990-1992;
Assistant Vice President & Pricing Actuary , U.S.
Insurance, The Manufacturers Life Insurance Company,
1988-1990.
*Each Director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and qualified.
ILLUSTRATIONS
The tables set forth in Appendix A illustrate the way in which a Policy's Death
Benefit, Policy Value, and Cash Surrender Value could vary over an extended
period of time.
FINANCIAL STATEMENTS
Our financial statements included herein should be distinguished from the
financial statements of the Separate Account and should be considered only as
bearing upon our ability to meet our obligations under the Policies.
45
APPENDIX A - 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 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 a given age would vary over time
if the return on the assets of the Portfolio 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: deferred underwriting and
sales charges, and monthly deductions for administration, cost of insurance and
mortality and expense risks.
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 Series I shares of the Portfolios are
deducted from the gross return. The illustrations reflect an average of the
Trusts' expenses, which is approximately % on an annual basis. The gross
annual rates of return of 0%, 6% and 12% correspond to approximate net annual
rates of return of The illustrations reflect the expense reimbursement in effect
for the Lifestyle Trusts and for the Index Trusts. In the absence of such
expense reimbursement and expense limitation, the average of the Portfolios
current expenses would have been 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 . The expense reimbursements for the Lifestyle Trusts
remained in effect during the fiscal year ended December 31, 2001 and is
expected to remain in effect during the fiscal year ended December 31, 2002.
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 death benefit option for male non-smokers,
one based on current cost of insurance and monthly administration charges and
the other based on the maximum administration charges, deductions from premiums
and cost of insurance charges based on the 1980 Commissioners Standard Ordinary
Smoker/Nonsmoker Mortality Tables. The current waiver of deductions from
premiums and current monthly administration charges and cost of insurance
charges are not guaranteed and may be changed. Upon request, we will furnish a
comparable illustration based on the proposed life insured's age, sex (unless
unisex rates are required by law) and risk class, any additional ratings and the
death benefit option, face amount and planned premium requested. Illustrations
for smokers would show less favorable results than the illustrations shown
below.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, we 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 Portfolios 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.
A-1
APPENDIX B: AUDITED FINANCIAL STATEMENTS
B-1
PART II
OTHER INFORMATION
PART II.
OTHER INFORMATION
UNDERTAKINGS
Undertaking to File Reports.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
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 "Corporation") 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 Corporation.
Rule 484 Undertaking.
Article 10 of the Charter of the Corporation provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Corporation provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled or is otherwise disposed of,
or (2) any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that the
court in which the action was brought, or , if no action was brought, any court
of competent jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the court
deems proper.
The Corporation may indemnify any person made, or threatened to be made, a party
to an action or proceeding (other than one by or in the right of the Corporation
to procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he or
she, his or her testator, testatrix or intestate, was a director or officer of
the Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he or she reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the best
interests of the Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any such civil or criminal action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, of its equivalent,
shall not in itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the Corporation or that he or she had reasonable cause to
believe that his or her conduct was unlawful.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
Cross-Reference Sheet;
The Prospectus, consisting of __ pages;
Undertaking to file reports;
Representation pursuant to Section 26 of the Investment Company Act of
1940, as amended;
Rule 484 Undertaking;
The signatures;
Written consents of the following persons:
Brian Koop, FSA, MAAA, FCIA To Be Filed by Amendment
Ernst & Young, LLP (Boston, MA) - To Be Filed by Amendment
Ernst & Young, LLP (Philadelphia, PA) 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.
Incorporated by reference to Exhibit A(1) to the initial
registration statement on Form S-6 filed by FNAL Variable Life
Account I on August 8, 1997 (File No. 333-33351).
A(2) Not applicable.
A(3)(a) Underwriting and Distribution Agreement between The
Manufacturers Life Insurance Company of New York (Depositor)
and Manufacturers Financial Securities LLC(Underwriter -
Incorporated by reference to Exhibit A(3)(a) to post-effective
amendment no. #2 to the registration statement on Form S-6
filed on March 1, 2002 (333-69987) ("Post-Effective Amendment
No. 2)
A(3)(b) Selling Agreement between The Manufacturers Life Insurance
Company of New York, Manufacturers Financial Securities LLC,
Selling Broker Dealers and General Agent - Incorporated by
reference to Exhibit A(3)(b) to Post-Effective Amendment no.
#2.
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Flexible Premium Variable Life Insurance Policy. To Be
Filed by Amendment.
A(6)(a)(i) Declaration of Intention and Charter of First North American
Life Assurance Company. Incorporated by reference to Exhibit
(b)(6)(a)(i) to post-effective amendment no. 7 to the
Registration Statement on Form N-4 filed by The Manufacturers
Life Insurance Company of New York Separate Account A on
February 25, 1998 (File No. 33-46217).
A(6)(a)(ii) Certificate of amendment of the Declaration of Intention and
Charter of First North American Life Assurance Company.
Incorporated by reference to Exhibit (b)(6)(a)(ii) to
post-effective amendment no. 7 to the Registration Statement
on Form N-4 filed by The Manufacturers Life Insurance Company
of New York Separate Account A on February 25, 1998 (File No.
33-46217).
A(6)(a)(iii) Certificate of amendment of the Declaration of Intention and
Charter of The Manufacturers Life Insurance Company of New
York. Incorporated by reference to Exhibit (b)(6)(a)(iii) to
post-effective amendment no. 7 to the Registration Statement
on Form N-4 filed by The Manufacturers Life Insurance Company
of New York Separate Account A on February 25, 1998 (File No.
33-46217).
A(6)(b) By-Laws of The Manufacturers Life Insurance Company of New
York. Incorporated by reference to Exhibit (b)(6)(b) to
post-effective amendment no. 7 to the Registration
Statement on Form N-4 filed by The Manufacturers Life
Insurance Company of New York Separate Account A on February
25, 1998 (File No. 33-46217).
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). Incorporated by reference to Exhibit
A(8)(a) to pre-effective amendment no. 1 to the Registration
Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of New York Separate Account B on March 17,
1998 (File No. 333-33351).
A(8)(b) Administrative Services Agreement between The Manufacturers
Life Insurance Company of New York and The Manufacturers Life
Insurance Company (U.S.A.) - Incorporated by reference to
Exhibit A(8)(b) to Post-Effective Amendment No. 2.
A(8)(c) Investment Services Agreement between The Manufacturers Life
Insurance Company of New York and The Manufacturers Life
Insurance Company. Incorporated by reference to Exhibit
A(8)(c) to pre-effective amendment no. 1 to the Registration
Statement on Form S-6 filed by The Manufacturers Life
Insurance Company of New York Separate Account B on March 17,
1998 (File No. 333-33351).
A(9) Not applicable.
A(10) Form of Application for Flexible Premium Variable Life
Insurance Policy.
2. Consents of the following:
A. Opinion and consent of Gretchen Swanz, Esq., Secretary
and Counsel of The Manufacturers Life Insurance Company
of New York. To Be Filed by Amendment
B. Consent of Brian Koop, FSA, MAAA, FCIA, AVP & Pricing
Actuary of The Manufacturers Life Insurance Company of
New York - To Be Filed by Amendment
C. Consent of Ernst & Young, LLP (Boston, MA)-To Be Filed
by Amendment
D. Consent of Ernst & Young, LLP (Philadelphia, PA)-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. (a) Power of Attorney. Incorporated by reference to Exhibit (b)(14) to
post-effective amendment no. 7 to the Registration Statement on Form
N-4 filed by The Manufacturers Life Insurance Company of New York
Separate Account A on February 25, 1998 (File No. 33-46217).
(b) Power of Attorney, Bradford J. Race Jr. - Incorporated by
reference to Exhibit 7(a) to Post-Effective Amendment No. 2.
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 22nd day of October, 2002.
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/Kim Ciccarelli
- -----------------
Kim Ciccarelli
Secretary
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 22nd day of October, 2002.
NAME TITLE
/s/James D. Gallagher Director and President
- ---------------------------
James D. Gallagher (Principal Executive
Officer)
* Director
--------------------------
John D. DesPrez, III
* Director
--------------------------
Ruth Ann Flemming
* Director
--------------------------
Neil M. Merkl
* Director
--------------------------
Thomas Borshoff
* Director
--------------------------
James R. Boyle
* Director
--------------------------
Bruce Avedon
* Director
--------------------------
James O'Malley
* Director
--------------------------
Robert Cook
* Director
--------------------------
Bradford J. Race Jr.
/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
EXHIBIT INDEX
Exhibit No. Description