EQUITY ADVANTAGE VUL
Flexible Premium
Variable Life Insurance Policies
Issued by
MetLife Investors USA Variable Life Account A of
MetLife Investors USA Insurance Company
5 Park Plaza, Suite 1900
Irvine, California 92614
(800) 989-3752
This prospectus offers individual flexible premium variable life insurance
policies (the "Policies") issued by MetLife Investors USA Insurance Company
("MetLife Investors USA").
You allocate net premiums among the Investment Divisions of MetLife
Investors USA Variable Life Account A (the "Separate Account"). Each Investment
Division of the Separate Account invests in shares of one of the following
"Portfolios":
METROPOLITAN SERIES FUND, INC.
BlackRock Aggressive Growth Portfolio
BlackRock Bond Income Portfolio
BlackRock Diversified Portfolio
BlackRock Large Cap Value Portfolio
BlackRock Legacy Large Cap Growth Portfolio
BlackRock Strategic Value Portfolio
Davis Venture Value Portfolio
FI International Stock Portfolio
FI Large Cap Portfolio
FI Mid Cap Opportunities Portfolio
FI Value Leaders Portfolio
Franklin Templeton Small Cap Growth Portfolio
Harris Oakmark Focused Value Portfolio
Harris Oakmark Large Cap Value Portfolio
Jennison Growth Portfolio
Lehman Brothers(R) Aggregate Bond Index Portfolio
Loomis Sayles Small Cap Portfolio
MetLife Mid Cap Stock Index Portfolio
MetLife Stock Index Portfolio
MFS(R) Total Return Portfolio
Morgan Stanley EAFE(R) Index Portfolio
Neuberger Berman Mid Cap Value Portfolio
Oppenheimer Global Equity Portfolio
Russell 2000(R) Index Portfolio
T. Rowe Price Large Cap Growth Portfolio
T. Rowe Price Small Cap Growth Portfolio
Western Asset Management Strategic Bond
Opportunities Portfolio
Western Asset Management U.S. Government Portfolio
MetLife Conservative Allocation Portfolio
MetLife Conservative to Moderate Allocation Portfolio
MetLife Moderate Allocation Portfolio
MetLife Moderate to Aggressive Allocation Portfolio
MetLife Aggressive Allocation Portfolio
MET INVESTORS SERIES TRUST
BlackRock Large-Cap Core Portfolio
Cyclical Growth and Income ETF Portfolio
Cyclical Growth ETF Portfolio
Harris Oakmark International Portfolio
Janus Forty Portfolio
Lazard Mid-Cap Portfolio
Legg Mason Partners Aggressive Growth Portfolio
Legg Mason Value Equity Portfolio
Lord Abbett Bond Debenture Portfolio
Met/AIM Small Cap Growth Portfolio
MFS(R) Research International Portfolio
Neuberger Berman Real Estate Portfolio
Oppenheimer Capital Appreciation Portfolio
PIMCO Inflation Protected Bond Portfolio
PIMCO Total Return Portfolio
RCM Technology Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
AMERICAN FUNDS INSURANCE SERIES
American Funds Bond Fund
American Funds Global Small Capitalization Fund
American Funds Growth Fund
American Funds Growth-Income Fund
You may also allocate net premiums to our Fixed Account. Special limits may
apply to Fixed Account transfers and withdrawals.
When we apply your initial premium to the Policy, depending on state law,
you will either receive Separate Account performance immediately, or Fixed
Account interest for 20 days before we then allocate your cash value to the
Separate Account.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE POLICIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE PORTFOLIO PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM FOR
REFERENCE.
WE DO NOT GUARANTEE HOW ANY OF THE INVESTMENT DIVISIONS OR PORTFOLIOS WILL
PERFORM. THE POLICIES AND THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY.
THIS PROSPECTUS PROVIDES A GENERAL DESCRIPTION OF THE POLICY. THERE MAY BE
DIFFERENCES BETWEEN THE DESCRIPTION OF THE POLICY CONTAINED IN THIS PROSPECTUS
AND THE POLICY ISSUED TO YOU DUE TO DIFFERENCES IN STATE LAW. YOU SHOULD READ
THE POLICY CAREFULLY FOR ANY VARIATIONS IN YOUR STATE.
APRIL 28, 2008
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
-----
SUMMARY OF BENEFITS AND RISKS............................... A-4
Benefits of the Policy................................. A-4
Risks of the Policy.................................... A-5
Risks of the Portfolios................................ A-7
FEE TABLES.................................................. A-7
Transaction Fees....................................... A-7
Periodic Charges Other Than Portfolio Operating
Expenses.............................................. A-9
Annual Portfolio Operating Expenses.................... A-12
HOW THE POLICY WORKS........................................ A-14
THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS........ A-15
The Company............................................ A-15
The Separate Account................................... A-15
The Portfolios......................................... A-15
Share Classes of the Portfolios........................ A-18
Certain Payments We Receive with Regard to the
Portfolios............................................ A-18
Selection of the Portfolios............................ A-19
Voting Rights.......................................... A-19
Rights Reserved by MetLife Investors USA............... A-20
THE POLICIES................................................ A-20
Purchasing a Policy.................................... A-20
Replacing Existing Insurance........................... A-20
Policy Owner and Beneficiary........................... A-21
24 Month Conversion Right.............................. A-21
PREMIUMS.................................................... A-21
Flexible Premiums...................................... A-21
Amount Provided for Investment under the Policy........ A-22
Right to Examine Policy................................ A-22
Allocation of Net Premiums............................. A-23
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE INVESTORS
USA'S DESIGNATED OFFICE................................... A-23
Payment of Proceeds.................................... A-24
CASH VALUE.................................................. A-25
DEATH BENEFITS.............................................. A-25
Death Proceeds Payable................................. A-26
Change in Death Benefit Option......................... A-27
Increase in Face Amount................................ A-27
Reduction in Face Amount............................... A-27
SURRENDERS AND PARTIAL WITHDRAWALS.......................... A-28
Surrender.............................................. A-28
Partial Withdrawal..................................... A-28
TRANSFERS................................................... A-30
Transfer Option........................................ A-30
AUTOMATED INVESTMENT STRATEGIES............................. A-32
</Table>
A-2
<Table>
<Caption>
PAGE
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LOANS....................................................... A-33
LAPSE AND REINSTATEMENT..................................... A-34
Lapse.................................................. A-34
Reinstatement.......................................... A-35
ADDITIONAL BENEFITS BY RIDER................................ A-35
THE FIXED ACCOUNT........................................... A-36
General Description.................................... A-36
Values and Benefits.................................... A-36
Policy Transactions.................................... A-36
CHARGES..................................................... A-37
Deductions from Premiums............................... A-38
Surrender Charge....................................... A-38
Partial Withdrawal Charge.............................. A-40
Transfer Charge........................................ A-40
Illustration of Benefits Charge........................ A-40
Monthly Deduction from Cash Value...................... A-40
Loan Interest Spread................................... A-42
Charges Against the Portfolios and the Investment
Divisions of the Separate Account..................... A-42
TAX CONSIDERATIONS.......................................... A-42
Introduction........................................... A-42
Tax Status of the Policy............................... A-43
Tax Treatment of Policy Benefits....................... A-43
MetLife Investors USA's Income Taxes................... A-47
DISTRIBUTION OF THE POLICIES................................ A-47
LEGAL PROCEEDINGS........................................... A-49
RESTRICTIONS ON FINANCIAL TRANSACTIONS...................... A-49
FINANCIAL STATEMENTS........................................ A-49
GLOSSARY.................................................... A-50
APPENDIX A: GUIDELINE PREMIUM TEST AND CASH VALUE
ACCUMULATION TEST......................................... A-51
APPENDIX B: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES AND
CASH SURRENDER
VALUES.................................................... A-52
</Table>
A-3
SUMMARY OF BENEFITS AND RISKS
This summary describes the Policy's important benefits and risks. The sections
in the prospectus following this summary discuss the Policy in more detail. THE
GLOSSARY AT THE END OF THE PROSPECTUS DEFINES CERTAIN WORDS AND PHRASES USED IN
THIS PROSPECTUS.
BENEFITS OF THE POLICY
DEATH PROCEEDS. The Policy is designed to provide insurance protection. Upon
receipt of satisfactory proof of the death of the insured, we pay death proceeds
to the beneficiary of the Policy. Death proceeds generally equal the death
benefit on the date of the insured's death plus any additional insurance
provided by rider, less any outstanding loan and accrued loan interest.
CHOICE OF DEATH BENEFIT OPTION. You may choose among three death benefit
options:
-- a level death benefit that equals the Policy's face amount,
-- a variable death benefit that equals the Policy's face amount plus the
Policy's cash value, and
-- a combination variable and level death benefit that equals the Policy's
face amount plus the Policy's cash value until the insured attains age
65 and equals the Policy's face amount thereafter.
The death benefit under any option could increase to satisfy Federal tax law
requirements if the cash value reaches certain levels. After the first Policy
year you may change your death benefit option, subject to our underwriting
rules. A change in death benefit option may have tax consequences.
PREMIUM FLEXIBILITY. You can make premium payments based on a schedule you
determine, subject to some limits. You may change your payment schedule at any
time or make a payment that does not correspond to your schedule. We can,
however, limit or prohibit payments in some situations.
RIGHT TO EXAMINE THE POLICY. During the first ten days following your receipt
of the Policy (more in some states), you have the right to return the Policy to
us. Depending on state law, we will refund the premiums you paid, or the
Policy's cash value plus any charges that were deducted from the premiums you
paid.
INVESTMENT OPTIONS. You can allocate your net premiums and cash value among
your choice of fifty-four Investment Divisions in the Separate Account, each of
which corresponds to a mutual fund portfolio, or "Portfolio." The Portfolios
available under the Policy include several common stock funds, including funds
which invest primarily in foreign securities, as well as bond funds, balanced
funds, asset allocation funds and funds that invest in exchange-traded funds.
You may also allocate premiums and cash value to our Fixed Account which
provides guarantees of interest and principal. You may change your allocation of
future premiums at any time.
PARTIAL WITHDRAWALS. You may withdraw cash surrender value from your Policy at
any time after the first Policy anniversary. The minimum amount you may withdraw
is $500 (less in some states). We reserve the right to limit partial withdrawals
to no more than 90% of the Policy's cash surrender value. We may limit the
number of partial withdrawals to 12 per Policy year or impose a processing
charge of $25 for each partial withdrawal. Partial withdrawals may have tax
consequences.
TRANSFERS AND AUTOMATED INVESTMENT STRATEGIES. You may transfer your Policy's
cash value among the Investment Divisions or between the Investment Divisions
and the Fixed Account. The minimum amount you may transfer is $50, or if less,
the total amount in the Investment Division or the Fixed Account. We may limit
the number of transfers among the Investment Divisions and the Fixed Account to
no more than four per Policy year. We may impose a processing charge of $25 for
each transfer. We may also impose restrictions on "market timing" transfers.
(See "Transfers" for additional information on such restrictions.) We offer five
automated investment strategies that allow you to periodically transfer or
reallocate your cash value among the Investment Divisions and the Fixed Account.
(See "Automated Investment Strategies.")
A-4
LOANS. You may borrow from the cash value of your Policy. The minimum amount
you may borrow is $500. The maximum amount you may borrow is an amount equal to
the Policy's cash value net of the Surrender Charge, reduced by monthly
deductions and interest charges through the next Policy anniversary, increased
by interest credits through the next Policy anniversary, less any existing
Policy loans. We charge you a maximum annual interest rate of 4.0% for the first
ten Policy years and 3.0% thereafter. We credit interest at an annual rate of at
least 3.0% on amounts we hold as collateral to support your loan. Loans may have
tax consequences.
SURRENDERS. You may surrender the Policy for its cash surrender value at any
time. Cash surrender value equals the cash value reduced by any Policy loan and
accrued loan interest and by any applicable Surrender Charge. A surrender may
have tax consequences.
TAX BENEFITS. We anticipate that the Policy should be deemed to be a life
insurance contract under Federal tax law. Accordingly, undistributed increases
in cash value should not be taxable to you. As long as your Policy is not a
modified endowment contract, partial withdrawals should be non-taxable until you
have withdrawn an amount equal to your total investment in the Policy. Death
benefits paid to your beneficiary should generally be free of Federal income
tax. Death benefits may be subject to estate taxes.
CONVERSION RIGHT. During the first two Policy years, you may convert the Policy
to fixed benefit coverage by exchanging the Policy for a fixed benefit life
insurance policy that we agree to, and that is issued by us or an affiliate that
we name. We will make the exchange without evidence of insurability.
SUPPLEMENTAL BENEFITS AND RIDERS. We offer a variety of riders that provide
supplemental benefits under the Policy. We generally deduct any monthly charges
for these riders as part of the Monthly Deduction. Your registered
representative can help you determine whether any of these riders are suitable
for you. These riders may not be available in all states.
PERSONALIZED ILLUSTRATIONS. You will receive personalized illustrations in
connection with the purchase of this Policy that reflect your own particular
circumstances. These hypothetical illustrations may help you to understand the
long-term effects of different levels of investment performance, the possibility
of lapse, and the charges and deductions under the Policy. They will also help
you to compare this Policy to other life insurance policies. The personalized
illustrations are based on hypothetical rates of return and are not a
representation or guarantee of investment returns or cash value.
RISKS OF THE POLICY
INVESTMENT RISK. If you invest your Policy's cash value in one or more of the
Investment Divisions, then you will be subject to the risk that investment
performance will be unfavorable and that your cash value will decrease. In
addition, we deduct Policy fees and charges from your Policy's cash value, which
can significantly reduce your Policy's cash value. During times of poor
investment performance, this deduction will have an even greater impact on your
Policy's cash value. It is possible to lose your full investment and your Policy
could lapse without value, unless you pay additional premium. If you allocate
cash value to the Fixed Account, then we credit such cash value with a declared
rate of interest. You assume the risk that the rate may decrease, although it
will never be lower than the guaranteed minimum annual effective rate of 3%.
SURRENDER AND WITHDRAWAL RISKS. The Policies are designed to provide lifetime
insurance protection. They are not offered primarily as an investment, and
should not be used as a short-term savings vehicle. If you surrender the Policy
within the first ten Policy years (11 in Florida) (or within the first ten
Policy years (11 in Florida) following a face amount increase), you will be
subject to a Surrender Charge as well as income tax on any gain that is
distributed or deemed to be distributed from the Policy. You will also be
subject to a Surrender Charge if you make a partial withdrawal from the Policy
within the first ten Policy years (11 in Florida) (or the first ten Policy years
(11 in Florida) following the face amount increase) if the partial withdrawal
reduces the face amount (or the face amount increase). If you surrender the
Policy in the first Policy year (or in the first year following a face amount
increase) we will also deduct an amount equal to the remaining first year Policy
Charges and Coverage Expense Charges.
A-5
You should purchase the Policy only if you have the financial ability to keep it
in force for a substantial period of time. You should not purchase the Policy if
you intend to surrender all or part of the Policy's cash value in the near
future. Even if you do not ask to surrender your Policy, surrender charges may
play a role in determining whether your Policy will lapse (terminate without
value), because surrender charges determine the cash surrender value, which is a
measure we use to determine whether your Policy will enter the grace period (and
possibly lapse).
RISK OF LAPSE. Your Policy may lapse if you have paid an insufficient amount of
premiums or if the investment experience of the Investment Divisions is poor. If
your cash surrender value is not enough to pay the monthly deduction, your
Policy may enter a 62-day grace period. We will notify you that the Policy will
lapse unless you make a sufficient payment of additional premium during the
grace period. Your Policy generally will not lapse if you pay certain required
premium amounts and you are therefore protected by a Guaranteed Minimum Death
Benefit. If your Policy does lapse, your insurance coverage will terminate,
although you will be given an opportunity to reinstate it. Lapse of a Policy on
which there is an outstanding loan may have adverse tax consequences.
TAX RISKS. We anticipate that the Policy should be deemed to be a life
insurance contract under Federal tax law. However, if your Policy is issued on a
substandard basis, there is some risk that your Policy may not be treated as a
life insurance contract under Federal tax law. If your Policy is not treated as
a life insurance contract under Federal tax law, increases in the Policy's cash
value will be taxed currently.
Even if your Policy is treated as a life insurance contract for Federal tax
purposes, it may become a modified endowment contract due to the payment of
excess premiums or unnecessary premiums, due to a material change or due to a
reduction in your death benefit. If your Policy becomes a modified endowment
contract, surrenders, partial withdrawals and loans will be treated as a
distribution of the earnings in the Policy and will be taxable as ordinary
income to the extent thereof. In addition, if the Policy Owner is under age
59 1/2 at the time of the surrender, partial withdrawal or loan, the amount that
is included in income will generally be subject to a 10% penalty tax.
If the Policy is not a modified endowment contract, distributions generally will
be treated first as a return of basis or investment in the contract and then as
taxable income. Moreover, loans will generally not be treated as distributions,
although the tax consequences of loans outstanding after the tenth Policy year
are uncertain. Finally, neither distributions nor loans from a Policy that is
not a modified endowment contract are subject to the 10% penalty tax.
See "Tax Considerations." You should consult a qualified tax adviser for
assistance in all Policy-related tax matters.
LOAN RISKS. A Policy loan, whether or not repaid, will affect the cash value of
your Policy over time because we subtract the amount of the loan from the
Investment Divisions and/or Fixed Account as collateral, and hold it in our Loan
Account. This loan collateral does not participate in the investment experience
of the Investment Divisions or receive any higher current interest rate credited
to the Fixed Account.
We also reduce the amount we pay on the insured's death by the amount of any
outstanding loan and accrued loan interest. Your Policy may lapse if your
outstanding loan and accrued loan interest reduces the cash surrender value to
zero.
If you surrender your Policy or your Policy lapses while there is an outstanding
loan, there will generally be Federal income tax payable on the amount by which
loans and partial withdrawals exceed the premiums paid. Since loans and partial
withdrawals reduce your Policy's cash value, any remaining cash value may be
insufficient to pay the income tax due.
LIMITATIONS ON CASH VALUE IN THE FIXED ACCOUNT. Transfers to and from the Fixed
Account must generally be in amounts of $50 or more. Partial withdrawals from
the Fixed Account must be in amounts of $500 or more. The total amount of
transfers and withdrawals from the Fixed Account in a Policy year may generally
not exceed the greater of 25% of the Policy's cash surrender value in the Fixed
Account at the beginning of the year, or the maximum transfer amount for the
preceding Policy year. We may also limit the number of transfers and partial
withdrawals and may impose a processing charge for transfers and partial
withdrawals. We are not currently imposing the maximum limit on transfers and
withdrawals from the Fixed Account, but we reserve the right to do so.
A-6
TAX LAW CHANGES. Tax laws, regulations, and interpretations have often been
changed in the past and such changes continue to be proposed. To the extent that
you purchase a Policy based on expected tax benefits, relative to other
financial or investment products or strategies, there is no certainty that such
advantages will always continue to exist.
RISKS OF THE PORTFOLIOS
A comprehensive discussion of the risks associated with each of the Portfolios
can be found in the Portfolio prospectuses attached at the end of this
prospectus. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS
STATED INVESTMENT OBJECTIVE.
FEE TABLES
The following tables describe the fees and expenses that a Policy Owner
will pay when buying, owning and surrendering the Policy. The first table
describes the fees and expenses that a Policy Owner will pay at the time he or
she buys the Policy, surrenders the Policy or transfers cash value among
accounts.
If the amount of a charge varies depending on the Policy Owner's or the
insured's individual characteristics (such as age, sex, or risk class), the
tables below show the minimum and maximum charges we assess under the Policy
across the range of all possible individual characteristics, as well as the
charges for a specified typical Policy Owner or insured. THESE CHARGES MAY NOT
BE REPRESENTATIVE OF THE CHARGES YOU WILL ACTUALLY PAY UNDER THE POLICY. Your
Policy's specifications page will indicate these charges as applicable to your
Policy, and more detailed information concerning your charges is available on
request from our Designated Office. Also, before you purchase the Policy, we
will provide you personalized illustrations of your future benefits under the
Policy based on the insured's age and risk class, the death benefit option, face
amount, planned periodic premiums and riders requested.
TRANSACTION FEES
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
- ---------------------------------------------------------------------------------------------------
Sales Charge Imposed On payment of premium 2.25% of premiums paid 2.25% of each premium
on Premiums up to the Target paid
Premium per Policy
year(1)
- ---------------------------------------------------------------------------------------------------
Premium Tax Imposed On payment of premium 2.0% in all Policy 2.0% in all Policy years
on Premiums years
- ---------------------------------------------------------------------------------------------------
Federal Tax Imposed On payment of premium 1.25% in all Policy 1.25% in all Policy years
on Premiums years
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The target premium varies based on individual characteristics, including the
insured's issue age, risk class and except for unisex policies, sex.
A-7
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
- ---------------------------------------------------------------------------------------------------
Surrender Charge(1) On surrender, lapse, or
face amount reduction
in the first ten Policy
years (11 in FL) (and,
with respect to a face
amount increase, in the
first ten Policy years
(11 in FL) after the
increase)
Minimum and Maximum In Policy year 1, $3.75 In Policy year 1, $3.75
Charge to $38.25 per $1,000 of to $38.25 per $1,000 of
base Policy face base Policy face
amount(2) amount(2)
Charge in the first $14.00 per $1,000 of $14.00 per $1,000 of base
Policy year for a base Policy face amount Policy face amount
male insured, age
35, in the preferred
nonsmoker risk class
with a base Policy
face amount of
$300,000
- ---------------------------------------------------------------------------------------------------
Transfer Charge(3) On transfer of cash Not currently charged $25 for each transfer
value among Investment
Divisions and to and
from the Fixed Account
- ---------------------------------------------------------------------------------------------------
Partial Withdrawal On partial withdrawal Not currently charged $25 for each partial
Charge of cash value withdrawal(4)
- ---------------------------------------------------------------------------------------------------
Illustration of On provision of each Not currently charged $25 per illustration
Benefits Charge illustration in excess
of one per year
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The Surrender Charge varies based on individual characteristics, including
the insured's issue age, risk class, sex (except for unisex policies),
smoker status, and the Policy's face amount. The Surrender Charge may not be
representative of the charge that a particular Policy Owner would pay. You
can obtain more information about the Surrender Charge and other charges
that would apply for a particular insured by contacting your registered
representative.
(2) No Surrender Charge will apply on up to 10% of cash surrender value
withdrawn each year. The Surrender Charge will remain level for one to three
Policy years, and will then begin to decline on a monthly basis until it
reaches zero in the last month of the tenth Policy year (11th in Florida).
The Surrender Charge applies to requested face amount reductions as well as
to face amount reductions resulting from a change in death benefit option.
(3) The Portfolios in which the Investment Divisions invest may impose a
redemption fee on shares held for a relatively short period.
(4) If imposed, the partial withdrawal charge would be in addition to any
Surrender Charge that is imposed.
A-8
The next table describes the fees and expenses that a Policy Owner will pay
periodically during the time that he or she owns the Policy, not including
Portfolio fees and expenses.
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
- ---------------------------------------------------------------------------------------------------
Cost of Insurance(1)
Minimum and Maximum Monthly $.01 to $83.33 per $.02 to $83.33 per $1,000
Charge $1,000 of net amount at of net amount at risk(2)
risk(2)
Charge in the first Monthly $.02 per $1,000 of net $.09 per $1,000 of net
Policy year for a amount at risk amount at risk
male insured, age
35, in the preferred
nonsmoker risk class
with a base Policy
face amount of
$300,000
- ---------------------------------------------------------------------------------------------------
Policy Charge(3)
Policy face amount Monthly $12 in Policy year 1 $12 in Policy year 1
less than $50,000 $9 in Policy years 2+ $9 in Policy years 2+
Policy face amount Monthly $15 in Policy year 1 $15 in Policy year 1
between $50,000 and $8 in Policy years 2+ $8 in Policy years 2+
$249,999
- ---------------------------------------------------------------------------------------------------
Mortality and Expense Monthly .60% in Policy years .80% in Policy years 1-10
Risk Charge (annual 1-10 .35% in Policy years
rate imposed on cash .35% in Policy years 11-19
value in the Separate 11-19 .20% in Policy years
Account)(4) .20% in Policy years 20-29
20-29 .05% in Policy years 30+
.05% in Policy years
30+
- ---------------------------------------------------------------------------------------------------
Coverage Expense
Charge(5)
Minimum and Monthly $.04 to $2.30 per $.04 to $2.30 per $1,000
Maximum Charge $1,000 of base Policy of base Policy face
face amount in first amount
eight Policy years(6)
Charge for a male Monthly $.16 per $1,000 of base $.16 per $1,000 of base
insured, age 35, in Policy face amount in Policy face amount
the preferred first eight Policy
nonsmoker risk class years(6)
with a base Policy
face amount of
$300,000
- ---------------------------------------------------------------------------------------------------
Loan Interest Annually (or on loan 1.00% of loan 1.00% of loan collateral
Spread(7) termination, if collateral in Policy in Policy years 1-10
earlier) years 1-10
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The cost of insurance charge varies based on individual characteristics,
including the Policy's face amount and the insured's age, risk class, and
except for unisex policies, sex. The cost of insurance charge may not be
representative of the charge that a particular Policy Owner would pay. You
can obtain more information about the cost of insurance or other charges
that would apply for a particular insured by contacting your registered
representative.
(2) The net amount at risk is the difference between the death benefit
(generally discounted at the monthly equivalent of 3% per year) and the
Policy's cash value.
(3) No Policy Charge applies to Policies issued with face amounts equal to or
greater than $250,000. If you surrender the Policy in the first Policy year,
we will deduct from the surrender proceeds an amount equal to the Policy
Charges due for the remainder of the first Policy year.
(4) The Mortality and Expense Risk Charge depends on the Policy's net cash
value. The percentages shown in the Current Amount Deducted column apply if
the Policy's net cash value is less than an amount equal to five Target
Premiums. The percentages decrease as the Policy's net cash value, measured
as a multiple of Target Premiums, increases. If the Policy's net cash value
is equal to or greater than five but less than ten Target Premiums, the
charge is 0.55% in Policy years 1-10, 0.30% in Policy years 11-19, 0.15% in
Policy years 20-29 and 0.05% thereafter. If the Policy's net cash value is
equal to or greater than ten but less than 20 Target Premiums, the charge is
0.30% in Policy years 1-10, 0.15% in
A-9
Policy years 11-19, 0.10% in Policy years 20-29 and 0.05% thereafter. If the
Policy's net cash value is equal to 20 or more Target Premiums, the charge
is 0.15% in Policy years 1-10, 0.10% in Policy years 11-19, and 0.05%
thereafter.
(5) If you surrender the Policy in the first Policy year (or in the first year
following a face amount increase), we will deduct from the surrender
proceeds an amount equal to the Coverage Expense Charges due for the
remainder of the first Policy year (or the first year following the face
amount increase). If the Policy's face amount is reduced in the first Policy
year (or in the first year following a face amount increase), we will deduct
from the cash value an amount equal to the Coverage Expense Charges due for
the remainder of the first Policy year (or the first year following the face
amount increase).
(6) The Coverage Expense Charge is imposed in Policy years 1-8 and, with respect
to a requested face amount increase, during the first eight years following
the increase.
(7) We charge interest on Policy loans at an effective rate of 4.0% per year in
Policy years 1-10 and 3.0% thereafter. Cash value we hold as security for
the loan ("loan collateral") earns interest at an effective rate of not less
than 3% per year. The loan interest spread is the difference between these
interest rates.
CHARGES FOR OPTIONAL FEATURES (RIDERS):
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
- ----------------------------------------------------------------------------------------------------
Guaranteed Survivor
Income Benefit Rider
Minimum and Maximum Monthly $.01 to $1.08 per $.01 to $83.33 per $1,000
Charge $1,000 of Eligible of Eligible Death Benefit
Death Benefit
Charge for a male Monthly $.02 per $1,000 of $.02 per $1,000 of
insured, age 35, in Eligible Death Benefit Eligible Death Benefit
the preferred
nonsmoker risk class
with an Eligible
Death Benefit of
$
- ----------------------------------------------------------------------------------------------------
Children's Term Monthly $.40 per $1,000 of $.40 per $1,000 of rider
Insurance Rider rider face amount face amount
- ----------------------------------------------------------------------------------------------------
Waiver of Monthly
Deduction Rider
Minimum and Maximum Monthly $.00 to $61.44 per $100 $.00 to $61.44 per $100
Charge of Monthly Deduction of Monthly Deduction
Charge in the first Monthly $6.30 per $100 of $6.30 per $100 of Monthly
Policy year for a Monthly Deduction Deduction
male insured, age 35,
in the preferred
nonsmoker risk class
- ----------------------------------------------------------------------------------------------------
</Table>
A-10
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
- ---------------------------------------------------------------------------------------------------
Waiver of Specified
Premium Rider
Minimum and Maximum Monthly $.00 to $21.75 per $100 $.00 to $21.75 per $100
Charge of Specified Premium of Specified Premium
Charge in the first Monthly $3.00 per $100 of $3.00 per $100 of
Policy year for a Specified Premium Specified Premium
male insured, age
35, in the preferred
nonsmoker risk class
- ---------------------------------------------------------------------------------------------------
Options to Purchase
Additional Insurance
Coverage Rider
Minimum and Maximum Monthly $.02 to $.25 per $1,000 $.02 to $.25 per $1,000
Charge of Option amount of Option amount
Charge for a male Monthly $.03 per $1,000 of $.03 per $1,000 of Option
insured, age 35, in Option amount amount
the preferred
nonsmoker risk class
- ---------------------------------------------------------------------------------------------------
Option to Purchase
Long Term Care
Insurance Rider
Minimum and Maximum Monthly $.20 to $1.88 per $10 $.20 to $1.88 per $10 of
Charge of initial daily initial daily benefit
benefit amount amount
Charge for a male Monthly $.37 per $10 of initial $.37 per $10 of initial
insured, age 35, in daily benefit amount daily benefit amount
the preferred
nonsmoker risk class
- ---------------------------------------------------------------------------------------------------
Accidental Death
Benefit Rider
Minimum and Maximum Monthly $.00 to $.34 per $1,000 $.00 to $83.33 per $1,000
Charge of rider face amount of rider face amount
Charge in the first Monthly $.05 per $1,000 of $.08 per $1,000 of rider
Policy year for a rider face amount face amount
male insured, age
35, in the preferred
nonsmoker risk class
- ---------------------------------------------------------------------------------------------------
Guaranteed Minimum
Death Benefit Rider
Minimum and Maximum Monthly $.01 to $.04 per $1,000 $.01 to $83.33 per $1,000
Charge of net amount at risk of net amount at risk
Charge for a male Monthly $.01 per $1,000 of net $.01 per $1,000 of net
insured, age 35, in amount at risk amount at risk
the preferred
nonsmoker risk class
- ---------------------------------------------------------------------------------------------------
Acceleration of Death At time of benefit Not currently charged One-time fee of $150
Benefit Rider payment
- ---------------------------------------------------------------------------------------------------
Overloan Protection At time of exercise One-time fee of 3.5% of One-time fee of 3.5% of
Rider Policy cash value Policy cash value
- ---------------------------------------------------------------------------------------------------
</Table>
A-11
ANNUAL PORTFOLIO OPERATING EXPENSES
The next table describes the Portfolio fees and expenses that a Policy
Owner may pay periodically during the time that he or she owns the Policy. The
table shows the minimum and maximum total operating expenses charged by the
Portfolios for the fiscal year ended December 31, 2007. Expenses of the
Portfolios may be higher or lower in the future. More detail concerning each
Portfolio's fees and expenses is contained in the table that follows and in the
prospectus for each Portfolio.
<Table>
<Caption>
MINIMUM MAXIMUM
------- -------
Total Annual Eligible Fund Operating Expenses
(expenses that are deducted from Eligible Fund assets,
including management fees, distribution (12b-1) fees and
other expenses)......................................... % %
</Table>
The following table describes the annual operating expenses for each
Portfolio for the year ended December 31, 2007, before and after any applicable
contractual fee waivers and expense reimbursements:
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<Table>
<Caption>
ACQUIRED GROSS TOTAL FEE WAIVERS NET TOTAL
MANAGEMENT OTHER 12B-1 PORTFOLIO FEES ANNUAL AND EXPENSE ANNUAL
FEES EXPENSES FEES AND EXPENSES EXPENSES REIMBURSEMENTS EXPENSES(1)
---------- -------- ----- -------------- ----------- -------------- -----------
METROPOLITAN SERIES FUND, INC.
(CLASS A SHARES)
BlackRock Aggressive Growth
Portfolio..........................
BlackRock Bond Income Portfolio......
BlackRock Diversified Portfolio......
BlackRock Large Cap Value
Portfolio..........................
BlackRock Legacy Large Cap Growth
Portfolio..........................
BlackRock Strategic Value
Portfolio..........................
Davis Venture Value Portfolio........
FI International Stock Portfolio.....
FI Large Cap Portfolio...............
FI Mid Cap Opportunities Portfolio...
FI Value Leaders Portfolio...........
Franklin Templeton Small Cap Growth
Portfolio..........................
Harris Oakmark Focused Value
Portfolio..........................
Harris Oakmark Large Cap Value
Portfolio..........................
Jennison Growth Portfolio............
Lehman Brothers Aggregate Bond Index
Portfolio..........................
Loomis Sayles Small Cap Portfolio....
MetLife Mid Cap Stock Index
Portfolio..........................
MetLife Stock Index Portfolio........
MFS Total Return Portfolio...........
Morgan Stanley EAFE Index
Portfolio..........................
Neuberger Berman Mid Cap Value
Portfolio..........................
Oppenheimer Global Equity
Portfolio..........................
Russell 2000 Index Portfolio.........
T. Rowe Price Large Cap Growth
Portfolio..........................
T. Rowe Price Small Cap Growth
Portfolio..........................
Western Asset Management Strategic
Bond Opportunities Portfolio.......
Western Asset Management U.S.
Government Portfolio...............
MetLife Conservative Allocation
Portfolio..........................
</Table>
A-12
<Table>
<Caption>
ACQUIRED GROSS TOTAL FEE WAIVERS NET TOTAL
MANAGEMENT OTHER 12B-1 PORTFOLIO FEES ANNUAL AND EXPENSE ANNUAL
FEES EXPENSES FEES AND EXPENSES EXPENSES REIMBURSEMENTS EXPENSES(1)
---------- -------- ----- -------------- ----------- -------------- -----------
MetLife Conservative to Moderate
Allocation Portfolio...............
MetLife Moderate Allocation
Portfolio..........................
MetLife Moderate to Aggressive
Allocation Portfolio...............
MetLife Aggressive Allocation
Portfolio..........................
MET INVESTORS SERIES TRUST
(CLASS A SHARES)
BlackRock Large-Cap Core Portfolio...
Cyclical Growth and Income ETF
Portfolio..........................
Cyclical Growth ETF Portfolio........
Harris Oakmark International
Portfolio..........................
Janus Forty Portfolio................
Lazard Mid-Cap Portfolio.............
Legg Mason Partners Aggressive Growth
Portfolio..........................
Legg Mason Value Equity Portfolio....
Lord Abbett Bond Debenture
Portfolio..........................
Met/AIM Small Cap Growth Portfolio...
MFS Research International
Portfolio..........................
Neuberger Berman Real Estate
Portfolio..........................
Oppenheimer Capital Appreciation
Portfolio..........................
PIMCO Inflation Protected Bond
Portfolio..........................
PIMCO Total Return Portfolio.........
RCM Technology Portfolio.............
T. Rowe Price Mid-Cap Growth
Portfolio..........................
AMERICAN FUNDS INSURANCE SERIES
(CLASS 2 SHARES)
American Funds Bond Fund.............
American Funds Global Small
Capitalization Fund................
American Funds Growth Fund...........
American Funds Growth-Income Fund....
</Table>
The fee and expense information regarding the Portfolios was provided by
those Portfolios. The American Funds Insurance Series is not affiliated with
MetLife Investors USA Insurance Company.
For information concerning compensation paid for the sale of the Policies,
see "Distribution of the Policies."
A-13
HOW THE POLICY WORKS
[FLOW CHART]
PREMIUM PAYMENTS
- - Flexible
- - Planned premium options
- - Guaranteed Minimum Death Benefit premium (5-year, 20-year, or to age 65)
CHARGES FROM PREMIUM PAYMENTS
- - Sales Load: 2.25% up to Target Premium per Policy year (maximum 2.25% on all
premiums)
- - Premium Tax Charge: 2.0%
- - Charge for Federal Taxes: 1.25%
CASH VALUES
- - Net premium payments invested in your choice of Portfolio investments (after
an initial period in the Fixed Account in return of premium states) or the
Fixed Account
- - The cash value reflects investment experience, interest, premium payments,
policy charges and any distributions from the Policy
- - We do not guarantee the cash value invested in the Portfolios
- - Any earnings you accumulate are generally free of any current income taxes
- - You may change the allocation of future net premiums at any time. You may
transfer funds among Investment Divisions (and to the Fixed Account).
Currently we do not limit the number of Investment Division transfers you can
make in a Policy year (subject to restrictions we impose on "market timing"
transfers).
- - We reserve the right to impose a $25 charge on each partial withdrawal and on
each Investment Division transfer (including a transfer between an Investment
Division and the Fixed Account)
- - We may limit the amount of transfers from (and in some cases to) the Fixed
Account
LOANS
- - You may borrow your cash value
- - Loan interest charge is 4.0% in Policy years 1-10 and 3.0% thereafter.
- - We transfer loaned funds out of the Fixed Account and the Investment
Divisions into the Loan Account where we credit them with not less than 3.0%
interest.
RETIREMENT BENEFITS
- - Fixed settlement options are available for policy proceeds
DEATH BENEFIT
- - Level, Variable and combined Level/Variable Death Benefit Options
- - Guaranteed not to be less than face amount (less any loan and loan interest)
if the Guaranteed Minimum Death Benefit is in effect.
- - On or after age 121, under Options A and C, equal to the greater of (1) the
face amount of the Policy as of the insured's age 121; and (2) the Policy's
cash value. Under Option B, the face amount of the Policy as of the insured's
age 121, plus the Policy's cash value.
- - Generally income tax free to named beneficiary; may be subject to estate tax.
DAILY DEDUCTIONS FROM ASSETS OF THE SEPARATE ACCOUNT
- - Investment advisory fees and other expenses are deducted from the Portfolio
values
BEGINNING OF MONTH CHARGES
- - We deduct the cost of insurance protection (reflecting any substandard risk
rating) from the cash value each month
- - Any Rider Charges
- - Policy Charge: $15.00 per month first year and $8.00 per month thereafter for
Policies issued with face amounts of $50,000 and greater; but less than
$250,000; $12.00 per month first year and $9.00 per month thereafter for
Policies issued with face amounts of less than $50,000
- - Coverage Expense Charge: Monthly charge imposed on base Policy face amount
that applies during the first eight Policy years or during the first eight
years following a face amount increase (in all years on a guaranteed basis).
- - Mortality and Expense Risk Charge applied against the cash value in the
Separate Account at a maximum annual rate of .80% in Policy years 1-10; .35%
in Policy years 11-19; .20% in Policy years 20-29; and .05% thereafter
SURRENDER CHARGE
- - Applies on lapse, surrender, face amount reduction, or partial withdrawal or
change in death benefit option that results in face reduction in first ten
Policy years (or in first ten Policy years following a face amount increase).
Maximum charge applies in first three Policy years. After the third Policy
year, charge decreases monthly over the remaining years of the surrender
charge period.
LIVING BENEFITS
- - If policyholder has elected and qualified for benefits for disability and
becomes totally disabled, we will waive the monthly deduction or a specified
amount of monthly premium during the period of disability up to certain
limits.
- - You may surrender the Policy at any time for its cash surrender value
- - Deferred income taxes, including taxes on certain amounts borrowed, become
payable upon surrender or lapse
- - Grace period for lapsing with no value is 62 days from the first date in
which Monthly Deduction was not paid due to insufficient cash value
- - Subject to our rules, you may reinstate a lapsed Policy within three years of
date of lapse if it has not been surrendered
A-14
THE COMPANY, THE SEPARATE ACCOUNT
AND THE PORTFOLIOS
THE COMPANY
MetLife Investors USA Insurance Company is an indirect wholly-owned
subsidiary of MetLife, Inc., a publicly traded company. Our principal office is
located at 5 Park Plaza, Suite 1900, Irvine, California 92614. MetLife Investors
USA is licensed to sell life insurance in all states (except New York), the
District of Columbia and Puerto Rico. We are obligated to pay all benefits under
the Policies.
THE SEPARATE ACCOUNT
MetLife Investors USA Variable Life Account A is the funding vehicle for
the Policies and other variable life insurance policies that we issue. Income
and realized and unrealized capital gains and losses of the Separate Account are
credited to the Separate Account without regard to any of our other income or
capital gains or losses. Although we own the assets of the Separate Account,
applicable law provides that the portion of the Separate Account assets equal to
the reserves and other liabilities of the Separate Account may not be charged
with liabilities that arise out of any other business we conduct. This means
that the assets of the Separate Account are not available to meet the claims of
our general creditors, and may only be used to support the cash values of the
variable life insurance policies issued by the Separate Account. Death benefits
in excess of Policy cash value are paid from our general account. Death benefits
paid from the general account are subject to the claims-paying ability of
MetLife Investors USA.
THE PORTFOLIOS
Each Investment Division of the Separate Account invests in a corresponding
Portfolio. Each Portfolio is part of an open-end management investment company,
more commonly known as a mutual fund, that serves as an investment vehicle for
variable life insurance and variable annuity separate accounts of various
insurance companies. The mutual funds that offer the Portfolios are the
Metropolitan Series Fund, Inc., the Met Investors Series Trust and the American
Funds Insurance Series. Each of these mutual funds has an investment adviser
responsible for overall management of the fund. Some investment advisers have
contracted with sub-advisers to make the day-to-day investment decisions for the
Portfolios.
The adviser, sub-adviser and investment objective of each Portfolio are as
follows:
METROPOLITAN SERIES FUND, INC. ADVISER: METLIFE ADVISERS, LLC
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
BlackRock Aggressive Growth BlackRock Advisors, Inc. Maximum capital appreciation.
Portfolio
BlackRock Bond Income BlackRock Advisors, Inc. A competitive total return
Portfolio primarily from investing in
fixed-income securities.
BlackRock Diversified BlackRock Advisors, Inc. High total return while attempting
Portfolio to limit investment risk and
preserve capital.
BlackRock Large Cap Value BlackRock Advisors, Inc. Long-term growth of capital.
Portfolio
BlackRock Legacy Large Cap BlackRock Advisors, Inc. Long-term growth of capital.
Growth Portfolio
BlackRock Strategic Value BlackRock Advisors, Inc. High total return, consisting
Portfolio principally of capital
appreciation.
Davis Venture Value Davis Selected Advisers, Growth of capital.
Portfolio L.P.(1)
FI International Stock Fidelity Management & Long-term growth of capital.
Portfolio Research Company
</Table>
A-15
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
FI Large Cap Portfolio Fidelity Management & Long-term growth of capital.
Research Company
FI Mid Cap Opportunities Fidelity Management & Long-term growth of capital.
Portfolio Research Company
FI Value Leaders Portfolio Fidelity Management & Long-term growth of capital.
Research Company
Franklin Templeton Small Cap Franklin Advisers, Inc. Long-term capital growth.
Growth Portfolio
Harris Oakmark Focused Value Harris Associates L.P. Long-term capital appreciation.
Portfolio
Harris Oakmark Large Cap Harris Associates L.P. Long-term capital appreciation.
Value Portfolio
Jennison Growth Portfolio Jennison Associates LLC Long-term growth of capital.
Lehman Brothers Aggregate Metropolitan Life Insurance To equal the performance of the
Bond Index Portfolio Company Lehman Brothers Aggregate Bond
Index.
Loomis Sayles Small Cap Loomis, Sayles & Company, Long-term capital growth from
Portfolio L.P. investments in common stocks or
other equity securities.
MetLife Mid Cap Stock Index Metropolitan Life Insurance To equal the performance of the
Portfolio Company Standard & Poor's MidCap 400
Composite Stock Price Index.
MetLife Stock Index Metropolitan Life Insurance To equal the performance of the
Portfolio Company Standard & Poor's 500 Composite
Stock Price Index.
MFS Total Return Portfolio Massachusetts Financial Favorable total return through
Services Company investment in a diversified
portfolio.
Morgan Stanley EAFE Index Metropolitan Life Insurance To equal the performance of the
Portfolio Company MSCI EAFE Index.
Neuberger Berman Mid Cap Neuberger Berman Management Capital growth.
Value Portfolio Inc.
Oppenheimer Global Equity OppenheimerFunds, Inc. Capital appreciation.
Portfolio
Russell 2000 Index Portfolio Metropolitan Life Insurance To equal the return of the Russell
Company 2000 Index.
T. Rowe Price Large Cap T. Rowe Price Associates, Long-term growth of capital and,
Growth Portfolio Inc. secondarily, dividend income.
T. Rowe Price Small Cap T. Rowe Price Associates, Long-term capital growth.
Growth Portfolio Inc.
Western Asset Management Western Asset Management To maximize total return
Strategic Bond Company consistent with preservation of
Opportunities Portfolio capital.
Western Asset Management Western Asset Management To maximize total return
U.S. Government Portfolio Company consistent with preservation of
capital and maintenance of
liquidity.
MetLife Conservative N/A A high level of current income,
Allocation Portfolio with growth of capital as a
secondary objective.
</Table>
A-16
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
MetLife Conservative to N/A A high total return in the form of
Moderate Allocation income and growth of capital, with
Portfolio a greater emphasis on income.
MetLife Moderate Allocation N/A A balance between a high level of
Portfolio current income and growth of
capital, with a greater emphasis
on growth of capital.
MetLife Moderate to N/A Growth of capital.
Aggressive Allocation
Portfolio
MetLife Aggressive N/A Growth of capital.
Allocation Portfolio
</Table>
MET INVESTORS SERIES TRUST ADVISER: MET INVESTORS ADVISORY LLC
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
BlackRock Large-Cap Core BlackRock Advisors, Inc. Long-term capital growth.
Portfolio
Cyclical Growth and Income Gallatin Asset Management, Growth of capital and income.
ETF Portfolio Inc.
Cyclical Growth ETF Gallatin Asset Management, Growth of capital.
Portfolio Inc.
Harris Oakmark International Harris Associates L.P. Long-term capital appreciation.
Portfolio
Janus Forty Portfolio Janus Capital Management LLC Capital appreciation.
Lazard Mid-Cap Portfolio Lazard Asset Management LLC Long-term capital appreciation.
Legg Mason Partners ClearBridge Advisors, LLC Long-term growth of capital.
Aggressive Growth
Portfolio
Legg Mason Value Equity Legg Mason Capital Long-term growth of capital.
Portfolio Management, Inc.
Lord Abbett Bond Debenture Lord, Abbett & Co. LLC High current income and the
Portfolio opportunity for capital
appreciation to produce a high
total return.
Met/AIM Small Cap Growth A I M Capital Management, Long-term growth of capital.
Portfolio Inc.
MFS Research International Massachusetts Financial Capital appreciation.
Portfolio Services Company
Neuberger Berman Real Estate Neuberger Berman Management Total return through investment in
Portfolio Inc. real estate securities,
emphasizing both capital
appreciation and current income.
Oppenheimer Capital OppenheimerFunds, Inc. Capital appreciation.
Appreciation Portfolio
PIMCO Inflation Protected Pacific Investment Maximum real return, consistent
Bond Portfolio Management Company LLC with preservation of capital and
prudent investment management.
PIMCO Total Return Portfolio Pacific Investment Maximum total return, consistent
Management Company LLC with the preservation of capital
and prudent investment management.
</Table>
A-17
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
RCM Technology Portfolio RCM Capital Management LLC Capital appreciation; no
consideration is given to income.
T. Rowe Price Mid-Cap Growth T. Rowe Price Associates, Long-term growth of capital.
Portfolio Inc.
</Table>
AMERICAN FUNDS INSURANCE SERIES ADVISER: CAPITAL RESEARCH AND MANAGEMENT
COMPANY
<Table>
<Caption>
ELIGIBLE FUND SUB-ADVISER INVESTMENT OBJECTIVE
- ------------- ----------- --------------------
American Funds Bond Fund N/A Maximize current income and
preserve capital by investing
primarily in fixed-income
securities.
American Funds Global Small N/A Capital appreciation through
Capitalization Fund stocks.
American Funds Growth Fund N/A Capital appreciation through
stocks.
American Funds Growth-Income N/A Capital appreciation and income.
Fund
</Table>
- ---------------
(1) Davis Selected Advisers, L.P. may also delegate any of its responsibilities
to Davis Selected Advisers--NY, Inc., a wholly-owned subsidiary.
FOR MORE INFORMATION REGARDING THE PORTFOLIOS AND THEIR INVESTMENT ADVISERS AND
SUB-ADVISERS, SEE THE PORTFOLIO PROSPECTUSES ATTACHED AT THE END OF THIS
PROSPECTUS AND THEIR STATEMENTS OF ADDITIONAL INFORMATION.
The Portfolios' investment objectives may not be met. The investment
objectives and policies of certain Portfolios are similar to the investment
objectives and policies of other funds that may be managed by the same
investment adviser or sub-adviser. The investment results of the Portfolios may
be higher or lower than the results of these funds. There is no assurance, and
no representation is made, that the investment results of any of the Portfolios
will be comparable to the investment results of any other fund.
SHARE CLASSES OF THE PORTFOLIOS
The Portfolios offer various classes of shares, each of which has a
different level of expenses. [Attached prospectuses] for the Portfolios may
provide information for share classes that are not available through the Policy.
When you consult the attached prospectus for any Portfolio, you should be
careful to refer to only the information regarding the class of shares that is
available through the Policy. For the Metropolitan Series Fund, Inc. and Met
Investors Series Trust, we offer Class A shares only, and for the American Funds
Insurance Series we offer Class 2 shares only.
CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS
An investment adviser (other than our affiliates MetLife Advisers, LLC and
Met Investors Advisory, LLC) or subadviser of a Portfolio, or its affiliates,
may make payments to us and/or certain of our affiliates. These payments may be
used for a variety of purposes, including payment for expenses for certain
administrative, marketing and support services with respect to the Policies and,
in our role as intermediary, with respect to the Portfolios. We and our
affiliates may profit from these payments. These payments may be derived, in
whole or in part, from the advisory fee deducted from Portfolio assets. Policy
Owners, through their indirect investment in the Portfolios, bear the costs of
these advisory fees (see the Portfolio prospectuses for more information). The
amount of the payments we receive is based on a percentage of assets of the
Portfolio attributable to the Policies and certain other variable insurance
products that we and our affiliates issue. These percentages differ and some
advisers or subadvisers (or other affiliates) may pay us more than others. These
percentages currently range up to 0.50%. Additionally, an investment adviser or
subadviser of a Portfolio or its affiliates may provide us with wholesaling
services that assist in the distribution of the Policies and may pay us and/or
certain of our affiliates amounts to participate in sales
A-18
meetings. These amounts may be significant and may provide the adviser or
subadviser (or their affiliate) with increased access to persons involved in the
distribution of the Policies.
We and/or certain of our affiliated insurance companies have joint
ownership interests in our affiliated investment advisers MetLife Advisers, LLC
and Met Investors Advisory, LLC, which are formed as "limited liability
companies." Our ownership interests in MetLife Advisers, LLC and Met Investors
Advisory, LLC entitle us to profit distributions if the adviser makes a profit
with respect to the advisory fees it receives from the Portfolios. We will
benefit accordingly from assets allocated to the Portfolios to the extent they
result in profits to the advisers. (See "Fee Tables--Annual Portfolio Operating
Expenses" for information on the management fees paid by the Portfolios and the
Statement of Additional Information for the Portfolios for information on the
management fees paid by the advisers to the subadvisers.)
Certain Portfolios have adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940. A Portfolio's 12b-1 Plan, if any, is described
in more detail in the Portfolio's prospectus. (See "Fee Tables--Annual Portfolio
Expenses" and "Distribution of the Policies.") Any payments we receive pursuant
to those 12b-1 Plans are paid to us or our Distributor. Payments under a
Portfolio's 12b-1 Plan decrease the Portfolio's investment return.
SELECTION OF THE PORTFOLIOS
We select the Portfolios offered through the Policy based on several
criteria, including asset class coverage, the strength of the adviser's or
subadviser's reputation and tenure, brand recognition, performance, and the
capability and qualification of each investment firm. Another factor we consider
during the selection process is whether the Portfolio's adviser or subadviser is
one of our affiliates or whether the Portfolio, its adviser, its subadviser(s),
or an affiliate will make payments to us or our affiliates. For additional
information on these arrangements, see "Certain Payments We Receive with Regard
to the Portfolios" above. In this regard, the profit distributions we receive
from our affiliated investment advisers are a component of the total revenue
that we consider in configuring the features and investment choices available in
the variable insurance products that we and our affiliated insurance companies
issue. Since we and our affiliated insurance companies may benefit more from the
allocation of assets to Portfolios advised by our affiliates than those that are
not, we may be more inclined to offer Portfolios advised by our affiliates in
the variable insurance products we issue. We review the Portfolios periodically
and may remove a Portfolio or limit its availability to new premium payments
and/or transfers of cash value if we determine that the Portfolio no longer
meets one or more of the selection criteria, and/or if the Portfolio has not
attracted significant allocations from Policy Owners.
WE DO NOT PROVIDE ANY INVESTMENT ADVICE AND DO NOT RECOMMEND OR ENDORSE ANY
PARTICULAR PORTFOLIO. YOU BEAR THE RISK OF ANY DECLINE IN THE CASH VALUE OF YOUR
POLICY RESULTING FROM THE PERFORMANCE OF THE PORTFOLIOS YOU HAVE CHOSEN.
We make certain payments to American Funds Distributors, Inc., principal
underwriter for the American Funds Insurance Series. (See "Distribution of the
Policies.")
VOTING RIGHTS
We own the Portfolio shares held in the Separate Account and have the right
to vote those shares at meetings of the Portfolio shareholders. However, to the
extent required by Federal securities law, we will give you, as Policy Owner,
the right to instruct us how to vote the shares that are attributable to your
Policy.
We will determine, as of the record date, if you are entitled to give
voting instructions and the number of shares to which you have a right of
instruction. If we do not receive timely instructions from you, we will vote
your shares for, against, or withhold from voting on, any proposition in the
same proportion as the shares held in that Investment Division for all policies
for which we have received voting instructions. The effect of this proportional
voting is that a small number of Policy Owners may control the outcome of a
vote.
We will vote Portfolio shares held by our general account (or any
unregistered separate account for which voting privileges were not extended) in
the same proportion as the total of (i) shares for which voting instructions
were received and (ii) shares that are voted in proportion to such voting
instructions.
A-19
We may disregard voting instructions for changes in the investment policy,
investment adviser or principal underwriter of a Portfolio if required by state
insurance law, or if we (i) reasonably disapprove of the changes and (ii) in the
case of a change in investment policy or investment adviser, make a good faith
determination that the proposed change is prohibited by state authorities or
inconsistent with an Investment Division's investment objectives. If we do
disregard voting instructions, the next semi-annual report to Policy Owners will
include a summary of that action and the reasons for it.
RIGHTS RESERVED BY METLIFE INVESTORS USA
We and our affiliates may change the voting procedures and vote Portfolio
shares without Policy Owner instructions, if the securities laws change. We also
reserve the right: (1) to add Investment Divisions; (2) to combine Investment
Divisions; (3) to substitute shares of another registered open-end management
investment company, which may have different fees and expenses, for shares of a
Portfolio; (4) to substitute or close an Investment Division to allocations of
premium payments or cash value or both, and to existing investments or the
investment of future premiums, or both, for any class of Policy or Policy Owner,
at any time in our sole discretion; (5) to operate the Separate Account as a
management investment company under the Investment Company Act of 1940 or in any
other form; (6) to deregister the Separate Account under the Investment Company
Act of 1940; (7) to combine it with other Separate Accounts; and (8) to transfer
assets supporting the Policies from one Investment Division to another or from
the Separate Account to other Separate Accounts, or to transfer assets to our
general account as permitted by applicable law. We will exercise these rights in
accordance with applicable law, including approval of Policy Owners if required.
We will notify you if exercise of any of these rights would result in a material
change in the Separate Account or its investments.
We will not make any changes without receiving any necessary approval of
the SEC and applicable state insurance departments. We will notify you of any
changes.
THE POLICIES
PURCHASING A POLICY
To purchase a Policy, you must submit a completed application and an
initial premium to us at our Designated Office. (See "Receipt of Communications
and Payments at MetLife Investors USA's Designated Office.") The minimum face
amount for the base Policy is $50,000 unless we consent to a lower amount. For
Policies acquired through a pension or profit sharing plan qualified under
Section 401 of the Internal Revenue Code of 1986, the minimum face amount is
$25,000.
The Policies are available for insureds age 85 or younger. We can provide
you with details as to our underwriting standards when you apply for a Policy.
We reserve the right to modify our minimum face amount and underwriting
requirements at any time. We must receive evidence of insurability that
satisfies our underwriting standards before we will issue a Policy. We reserve
the right to reject an application for any reason permitted by law.
We offer other variable life insurance policies that have different death
benefits, policy features, and optional programs. However, these other policies
also have different charges that would affect your Investment Division
performance and cash values. To obtain more information about these other
policies, contact our Designated Office or your registered representative.
REPLACING EXISTING INSURANCE
It may not be in your best interest to surrender, lapse, change, or borrow
from existing life insurance policies or annuity contracts in connection with
the purchase of the Policy. You should compare your existing insurance and the
Policy carefully. You should replace your existing insurance only when you
determine that the Policy is better for you. You may have to pay a surrender
charge on your existing insurance, and the Policy will impose a new surrender
charge period. You should talk to your financial professional or tax adviser to
make sure the exchange will be tax-free. If you surrender your existing policy
for cash and then buy the Policy, you may have to pay a tax, including
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possibly a penalty tax, on the surrender. Because we may not issue the Policy
until we have received an initial premium from your existing insurance company,
the issuance of the Policy may be delayed.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time
to time. While the insured is living and the Policy is in force, the Policy
Owner may exercise all the rights and options described in the Policy, subject
to the terms of any beneficiary designation or assignment of the Policy. These
rights include selecting and changing the beneficiary, changing the owner,
changing the face amount of the Policy and assigning the Policy. At the death of
the Policy Owner who is not the insured, his or her estate will become the
Policy Owner unless a successor Policy Owner has been named. The Policy Owner's
rights (except for rights to payment of benefits) terminate at the death of the
insured.
The beneficiary is also named in the application. You may change the
beneficiary at any time before the death of the insured, unless the beneficiary
designation is irrevocable. The beneficiary has no rights under the Policy until
the death of the insured and must survive the insured in order to receive the
death proceeds. If no named beneficiary survives the insured, we pay proceeds to
the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made and
actions taken by us under the Policy before we receive a signed change form. You
can contact your registered representative or our Designated Office for the
procedure to follow.
You may assign (transfer) your rights in the Policy to someone else. An
absolute assignment of the Policy is a change of Policy Owner and beneficiary to
the assignee. A collateral assignment of the Policy does not change the Policy
Owner or beneficiary, but their rights will be subject to the terms of the
assignment. Assignments are subject to all payments made and actions taken by us
under the Policy before we receive a signed copy of the assignment form. We are
not responsible for determining whether or not an assignment is valid. Changing
the Policy Owner or assigning the Policy may have tax consequences. (See "Tax
Considerations" below.)
24 MONTH CONVERSION RIGHT
GENERAL RIGHT. Generally, during the first two Policy years, you may
convert the Policy to fixed benefit coverage by exchanging the Policy for a
fixed benefit life insurance policy agreed to by us and issued by us or an
affiliate that we name provided that you repay any Policy loans and loan
interest, and the Policy has not lapsed. We make the exchange without evidence
of insurability. The new policy will have the same base Policy face amount as
that being exchanged. The new policy will have the same issue age, risk class
and Policy Date as the variable life Policy had.
Contact our Designated Office or your registered representative for more
specific information about the 24 Month Conversion Right. The exchange may
result in a cost or credit to you. On the exchange, you may need to make an
immediate premium payment on the new policy in order to keep it in force.
PREMIUMS
FLEXIBLE PREMIUMS
Subject to the limits described below, you choose the amount and frequency
of premium payments. You select a Planned Premium schedule, which consists of a
first-year premium amount and an amount for subsequent premium payments. This
schedule appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP
YOUR POLICY IN FORCE. You may skip Planned Premium payments or make additional
payments. Additional payments could be subject to underwriting. No payment can
be less than $50, except with our consent.
You can pay Planned Premiums on an annual, semi-annual or quarterly
schedule, or on a monthly schedule if payments are drawn directly from your
checking account under our pre-authorized checking arrangement. We will send
premium notices for annual, semi-annual or quarterly Planned Premiums. You may
make payments by check or through our pre-authorized checking arrangement. You
can change your Planned Premium schedule by sending your
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request to us at our Designated Office. You may not make premium payments on or
after the Policy anniversary when the insured reaches age 121, except for
premiums required during the grace period.
If any payments under the Policy exceed the "7-pay limit" under Federal tax
law, your Policy will become a modified endowment contract and you may have more
adverse tax consequences with respect to certain distributions than would
otherwise be the case if premium payments did not exceed the "7-pay limit." The
amount of your "7-pay limit" is shown in your Policy illustration and in your
annual Policy statement. If you make a payment that exceeds the "7-pay limit,"
we will notify you and give you an opportunity to receive a refund of the excess
premium to prevent your Policy from becoming a modified endowment contract. (See
"Tax Considerations.") In addition, if you have selected the guideline premium
test, Federal tax law limits the amount of premiums that you can pay under the
Policy. You need our consent if, because of tax law requirements, a payment
would increase the Policy's death benefit by more than it would increase cash
value. We may require evidence of insurability before accepting the payment.
We allocate net payments to your Policy's Investment Divisions as of the
date we receive the payments at our Designated Office (or at our Administrative
Office in Tampa, Florida), if they are received before the close of regular
trading on the New York Stock Exchange. Payments received after that time, or on
a day that the New York Stock Exchange is not open, will be allocated to your
Policy's Investment Divisions on the next day that the New York Stock Exchange
is open. (See "Receipt of Communications and Payments at MetLife Investors USA's
Designated Office.")
Under our current processing, we treat any payment received by us as a
premium payment unless it is clearly marked as a loan repayment.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
INVESTMENT START DATE. Your initial net premium receives Separate Account
investment performance and/or Fixed Account interest as of the investment start
date. The investment start date is the later of the Policy Date and the date we
first receive a premium payment for the Policy at our Designated Office. (See
"Receipt of Communications and Payments at MetLife Investors USA's Designated
Office.")
PREMIUM WITH APPLICATION. If you make a premium payment with the
application, unless you request otherwise, the Policy Date is the date the
policy application is approved. Monthly Deductions begin on the Policy Date. You
may only make one premium payment with the application. The minimum amount you
must pay is set forth in the application. If we decline an application, we
refund the premium payment made.
If you make a premium payment with the application, we will cover the
insured under a temporary insurance agreement beginning on the later of the date
the application is signed or on the date of any required medical examination.
(See "Death Benefits.")
PREMIUM ON DELIVERY. If you pay the initial premium upon delivery of the
Policy, unless you request otherwise, the Policy Date and the investment start
date are the date your premium payment is received at our Designated Office.
Monthly Deductions begin on the Policy Date.
BACKDATING. We may sometimes backdate a Policy, if you request, by
assigning a Policy Date earlier than the date the Policy application is
approved. You may wish to backdate so that you can obtain lower cost of
insurance rates, based on a younger insurance age. For a backdated Policy, you
must also pay the minimum premiums due for the period between the Policy Date
and the investment start date. As of the investment start date, we allocate the
net premiums to the Policy, adjusted for monthly Policy charges.
RIGHT TO EXAMINE POLICY
You may cancel the Policy within ten days (more in some states) after you
receive it. You may return the Policy to our Designated Office (see "Receipt of
Communications and Payments at MetLife Investors USA's Designated Office") or
your registered representative. Insurance coverage ends as soon as you return
the Policy (determined by postmark, if the Policy is mailed). If you cancel the
Policy, we refund any premiums paid, the Policy's cash value, or any other
amount that is required by state insurance law.
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FOR POLICIES ISSUED IN CALIFORNIA. If you are age 60 or older, you may
cancel the Policy within 30 days after you receive it. If you elected on the
Policy application to allocate 100% of your initial net premium to the Fixed
Account, we will generally refund the premiums you paid; if you elected to
allocate your initial net premium to the Investment Divisions, we will refund
the Policy's cash value.
ALLOCATION OF NET PREMIUMS
We allocate your initial net premium to the Investment Divisions and/or the
Fixed Account as of the investment start date. In states that require a refund
of premiums if you exercise the Right to Examine Policy provision, we will hold
your initial net premium in the Fixed Account for twenty days, and then we make
the allocation among the Investment Divisions as you choose. In states that
require a return of cash value if you exercise the Right to Examine Policy
provision, we allocate your initial net premium to the Investment Divisions when
we receive it. You may allocate any whole percentage to an Investment Division.
You make the initial premium allocation when you apply for a Policy. You
can change the allocation of future premiums at any time thereafter. The change
will be effective for premiums applied on or after the date when we receive your
request. You may request the change by telephone, by written request or over the
Internet. (See "Receipt of Communications and Payments at MetLife Investors
USA's Designated Office.")
When we allocate net premiums to your Policy's Investment Divisions, we
convert them into accumulation units of the Investment Divisions. We determine
the number of accumulation units by dividing the dollar amount of the net
premium by the accumulation unit value. For your initial premium, we use the
accumulation unit value on the investment start date. For subsequent premiums,
we use the accumulation unit value next determined after receipt of the payment.
(See "Cash Value.")
FOR POLICIES ISSUED IN CALIFORNIA. If you are age 60 or older and you
allocate 100% of your initial net premium to the Fixed Account in order to
receive a refund of premiums should you cancel the Policy during the Right to
Examine Policy period, we will not automatically transfer your cash value or
reallocate your future premiums to the Investment Divisions once the Right to
Examine Policy period has ended. You must contact us to request a transfer or
reallocation.
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE INVESTORS USA'S DESIGNATED
OFFICE
We will treat your request for a Policy transaction, or your submission of
a payment, as received by us if we receive a request conforming to our
administrative procedures or a payment at our Designated Office before the close
of regular trading on the New York Stock Exchange on that day (usually 4:00 p.m.
Eastern Time). If we receive it after that time, or if the New York Stock
Exchange is not open that day, then we will treat it as received on the next day
when the New York Stock Exchange is open. These rules apply regardless of the
reason we did not receive your request by the close of regular trading on the
New York Stock Exchange--even if due to our delay (such as a delay in answering
your telephone call).
The Designated Office for various Policy transactions is as follows:
<Table>
Premium Payments MetLife Investors USA
P.O. Box 371499
Pittsburgh, PA 15250-7499
Payment Inquiries and MetLife Investors USA
Correspondence P.O. Box 30440
Tampa, FL 33630-3440
Beneficiary and Ownership MetLife Investors USA
Changes P.O. Box 541
Warwick, RI 02887-0541
Surrenders, Loans, MetLife Investors USA
Withdrawals and P.O. Box 543
Investment Division Transfers Warwick, RI 02887-0543
</Table>
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<Table>
Cancellations (Right to Examine MetLife Investors USA
Policy Period) Johnstown Compliance Resource Center
Free Look Unit
500 Schoolhouse Road
Johnstown, PA 15904
Death Claims MetLife Investors USA
P.O. Box 353
Warwick, RI 02887-0353
Investment Division Transfers by (800) 200-2214
Telephone
All Other Telephone (800) 388-4000
Transactions and Inquiries
</Table>
You may request a cash value transfer or reallocation of future premiums by
written request (which may be telecopied) to us, by telephoning us or over the
Internet (subject to our restrictions on "market timing" transfers). To request
a transfer or reallocation by telephone, you should contact your registered
representative or contact us at 1-800-200-2214. To request a transfer over the
Internet, you may log on to our website at www.metlife.com. We use reasonable
procedures to confirm that instructions communicated by telephone, facsimile or
Internet are genuine. Any telephone, facsimile or Internet instructions that we
reasonably believe to be genuine are your responsibility, including losses
arising from any errors in the communication of instructions. However, because
telephone and Internet transactions may be available to anyone who provides
certain information about you and your Policy, you should protect that
information. We may not be able to verify that you are the person providing
telephone or Internet instructions, or that you have authorized any such person
to act for you.
Telephone, facsimile, and computer systems (including the Internet) may not
always be available. Any telephone, facsimile or computer system, whether it is
yours, your service provider's, your registered representative's, or ours, can
experience outages or slowdowns for a variety of reasons. These outages or
slowdowns may delay or prevent our processing of your request. Although we have
taken precautions to help our systems handle heavy use, we cannot promise
complete reliability under all circumstances. If you are experiencing problems,
you should make your request by writing to our Designated Office.
PAYMENT OF PROCEEDS
We ordinarily pay any cash surrender value, loan value or death benefit
proceeds from the Investment Divisions within seven days after we receive a
request, or satisfactory proof of death of the insured (and any other
information we need to pay the death proceeds). (See "Receipt of Communications
and Payments at MetLife Investors USA's Designated Office.") However, we may
delay payment (except when a loan is made to pay a premium to us) or transfers
from the Investment Divisions: (i) if the New York Stock Exchange is closed for
other than weekends or holidays, or if trading on the New York Stock Exchange is
restricted as determined by the SEC, (ii) if the SEC by order permits
postponement or determines that an emergency exists that makes payments or
Investment Division transfers impractical, or (iii) at any other time when the
Portfolios or the Separate Account have the legal right to suspend payment.
We may withhold payment of surrender, withdrawal or loan proceeds if any
portion of those proceeds would be derived from a Policy Owner's check that has
not yet cleared (i.e., that could still be dishonored by your banking
institution). We may use telephone, facsimile, Internet or other means of
communications to verify that payment from the Policy Owner's check has been or
will be collected. We will not delay payment longer than necessary for us to
verify that payment has been or will be collected. Policy Owners may avoid the
possibility of delay in the disbursement of proceeds coming from a check that
has not yet cleared by providing us with a certified check.
Unless otherwise requested, we may apply the Policy's death proceeds to our
Total Control Account. We establish a Total Control Account at a banking
institution at the time for payment. The Total Control Account is an
interest-bearing checking account through which you have convenient and complete
access to the proceeds, which are maintained in our general account or that of
an affiliate. Interest is credited at an effective rate of 3% per year.
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CASH VALUE
Your Policy's total cash value includes its cash value in the Separate
Account and in the Fixed Account. If you have a Policy loan, the cash value also
includes the amount we hold in the Loan Account as a result of the loan. The
cash value reflects:
-- net premium payments
-- the net investment experience of the Policy's Investment Divisions
-- interest credited to cash value in the Fixed Account
-- interest credited to amounts held in the Loan Account for a Policy loan
-- the death benefit option you choose
-- Policy charges
-- partial withdrawals
-- transfers among the Investment Divisions and the Fixed Account.
The Policy's total cash value in the Separate Account equals the number of
accumulation units credited in each Investment Division multiplied by that
Investment Division's accumulation unit value. We convert any premium, interest
earned on loan cash value, or cash value allocated to an Investment Division
into accumulation units of the Investment Division. Surrenders, partial
withdrawals, Policy loans, transfers and charges deducted from the cash value
reduce the number of accumulation units credited in an Investment Division. We
determine the number of accumulation units by dividing the dollar amount of the
transaction by the Investment Division's accumulation unit value next determined
following the transaction. (In the case of an initial premium, we use the
accumulation unit value on the investment start date).
The accumulation unit value of an Investment Division depends on the net
investment experience of its corresponding Portfolio and reflects fees and
expenses of the Portfolio. We determine the accumulation unit value as of the
close of regular trading on the New York Stock Exchange on each day that the
Exchange is open for trading by multiplying the most recent accumulation unit
value by the net investment factor ("NIF") for that day (see below).
The NIF for an Investment Division reflects:
-- the change in net asset value per share of the corresponding Portfolio
(as of the close of regular trading on the Exchange) from its last
value,
-- the amount of dividends or other distributions from the Portfolio since
the last determination of net asset value per share, and
-- any deductions for taxes that we make from the Separate Account.
The NIF can be greater or less than one.
DEATH BENEFITS
If the insured dies while the Policy is in force, we pay a death benefit to
the beneficiary. Coverage under the Policy generally begins when you pay the
initial premium. If you make a premium payment with the application, we will
cover the insured under a temporary insurance agreement for a limited time that
begins on the later of the date we receive the premium payment or the date of
any required medical examination. Temporary coverage is not available for
proposed insureds who have received medical treatment for, or been diagnosed as
having, certain conditions or diseases specified in the temporary insurance
agreement. The maximum temporary coverage is the lesser of the amount of
insurance applied for and $1,000,000. These provisions vary in some states.
DEATH BENEFIT OPTIONS. When you apply for a Policy, you must choose among
three death benefit options. If you fail to select a death benefit option in the
application, we will seek the required information from you.
The Option A death benefit is equal to the face amount of the Policy. The
Option A death benefit is fixed, subject to increases required by the Internal
Revenue Code of 1986 (the "Code").
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The Option B death benefit is equal to the face amount of the Policy, plus
the Policy's cash value, if any. The Option B death benefit is also subject to
increases required by the Code.
The Option C death benefit (available if the insured is age 60 or younger)
is equal to the face amount of the Policy plus the Policy's cash value until the
insured attains age 65, at which time we will increase the Policy's face amount
by the amount of the Policy's cash value and thereafter the death benefit will
remain level, at the increased face amount, subject to increases required by the
Code.
CHOICE OF TAX TEST. The Internal Revenue Code requires the Policy's death
benefit to be not less than an amount defined in the Code. As a result, if the
cash value grows to certain levels, the death benefit increases to satisfy tax
law requirements.
When you apply for your Policy, you select which tax test will apply to the
death benefit. You will choose between: (1) the guideline premium test, and (2)
the cash value accumulation test. The test you choose at issue cannot be
changed.
Under the GUIDELINE PREMIUM TEST, the death benefit will not be less than
the cash value times the guideline premium factor. See Appendix A.
Under the CASH VALUE ACCUMULATION TEST, the death benefit will not be less
than the cash value times the net single premium factor set by the Code. Net
single premium factors are based on the age, smoking status, risk class and sex
of the insured at the time of the calculation. Sample net single premium factors
appear in Appendix A.
If cash value growth in the later Policy years is your main objective, the
guideline premium test may be the appropriate choice because it does not require
as high a death benefit as the cash value accumulation test, and therefore cost
of insurance charges may be lower, once the Policy's death benefit is subject to
increases required by the Code. If you select the cash value accumulation test,
you can generally make a higher amount of premium payments for any given face
amount, and a higher death benefit may result in the long term. If cash value
growth in the early Policy years is your main objective, the cash value
accumulation test may be the appropriate choice because it allows you to invest
more premiums in the Policy for each dollar of death benefit.
AGE 121. The death benefit payable under Option A or Option C on or after
the insured's attained age 121 will be the greater of:
-- the cash value on the date of death, or
-- the face amount of the base Policy on the Policy anniversary at the
insured's attained age 121.
The death benefit payable under Option B on or after the insured's attained
age 121 will be the face amount of the base Policy on the Policy anniversary at
the insured's attained age 121, plus the cash value on the date of death.
The tax consequences of keeping the Policy in force beyond the insured's
attained age 121 are unclear.
DEATH PROCEEDS PAYABLE
The death proceeds we pay are equal to the death benefit on the date of the
insured's death, reduced by any outstanding loan and accrued loan interest on
that date. If death occurs during the grace period, we reduce the proceeds by
the amount of unpaid Monthly Deductions. (See "Lapse and Reinstatement.") We
increase the death proceeds (1) by any rider benefits payable and (2) by any
cost of insurance charge made for a period beyond the date of death. Riders that
can have an effect on the amount of death proceeds payable are the Accelerated
Death Benefit Rider, the Accidental Death Benefit Rider and the Option to
Purchase Additional Insurance Coverage Rider. (See "Additional Benefits by
Rider.")
We may adjust the death proceeds if the insured's age or sex was misstated
in the application, if death results from the insured's suicide within two years
(less in some states) from the Policy's date of issue, or if a rider limits the
death benefit.
SUICIDE. If the insured, while sane or insane, commits suicide within two
years (or less, if required by state law) from the date of issue, the death
benefit will be limited to premiums paid, less any partial withdrawals, less any
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loan and loan interest outstanding on the date of death. If the insured, while
sane or insane, commits suicide within two years (or less, if required by state
law) after the effective date of an increase in face amount, the death benefit
for such increase may be limited to the Monthly Deductions for the increase.
(Where required by state law, we determine the death benefit under this
provision by using the greater of: the reserve of the insurance which is subject
to the provision; and the amounts used to purchase the insurance which is
subject to the provision.)
CHANGE IN DEATH BENEFIT OPTION
After the first Policy year you may change your death benefit option,
subject to our underwriting rules, by written request to our Designated Office.
The change will be effective on the monthly anniversary on or following the date
we receive your request. We may require proof of insurability. A change in death
benefit option may have tax consequences.
If you change from Option A (or from Option C after the insured's attained
age 65) to Option B (or to Option C on or before the insured's attained age 60),
we reduce the Policy's face amount if necessary so that the death benefit is the
same immediately before and after the change. A face amount reduction below
$50,000 requires our consent. If we reduce the face amount, we will first reduce
any prior increases in face amount that you applied for, in the reverse order in
which the increases occurred, then any remaining initial face amount, and then
any increase in face amount from a prior change in death benefit option, but not
below the Policy minimum. A partial withdrawal of cash value may be necessary to
meet Federal tax law limits on the amount of premiums that you can pay into the
Policy. A Surrender Charge may apply to a Policy face amount reduction or
partial withdrawal that reduces the face amount on a change from Option A (or
from Option C after the insured's attained age 65) to Option B (or to Option C
on or before the insured's attained age 60). (See "Surrender Charge.") In
addition, if the face amount reduction occurs within 12 months after a face
amount increase, we will deduct a proportionate part of the Coverage Expense
Charges due with respect to the face amount increase for the remainder of the
12-month period.
If you change from Option B (or from Option C on or before the insured's
attained age 65) to Option A, we increase the Policy's face amount, if
necessary, so that the death benefit is the same immediately before and after
the change. This increase in face amount is not subject to the Coverage Expense
Charge and will not be subject to any Surrender Charge.
INCREASE IN FACE AMOUNT
You may increase the Policy's face amount. We require satisfactory evidence
of insurability, and the insured's attained age must be 85 or less. The minimum
amount of increase permitted is $5,000. The increase is effective on the day we
approve your request. Requests for face increases should be submitted to our
Designated Office. An increase in face amount may have tax consequences.
The face amount increase will have its own Target Premium, as well as its
own Surrender Charge, current cost of insurance rates, Coverage Expense Charge
and Right to Examine Policy and suicide and contestability periods as if it were
a new Policy. (See "Surrender Charge", "Monthly Deduction from Cash Value",
"Partial Withdrawal" and "Reduction in Face Amount.") When calculating the
monthly cost of insurance charge, we attribute the Policy's cash value first to
any remaining initial face amount (including any increase in face amount from a
prior change in death benefit option), then to any face amount increases in the
order in which they were issued, for purposes of determining the net amount at
risk.
We reserve the right to (i) restrict certain Policy changes, such as death
benefit increases, or (ii) require the issuance of a new Policy in connection
with such Policy changes if we deem it administratively necessary or prudent to
do so in order to comply with applicable law, including applicable Federal
income tax law.
REDUCTION IN FACE AMOUNT
After the first Policy year, you may reduce the face amount of your Policy
without receiving a distribution of any Policy cash value. If you reduce the
face amount of your Policy, we deduct any Surrender Charge that applies from the
Policy's cash value in proportion to the amount of the face amount reduction. If
the face amount of your Policy is
A-27
reduced in the first year following a face amount increase, we will also deduct
a proportionate part of the Coverage Expense Charges due for the remainder of
the first year following the face amount increase.
A face amount reduction will decrease the Policy's death benefit unless we
are increasing the death benefit to satisfy Federal income tax laws, in which
case a face amount reduction will not decrease the death benefit unless we
deduct a Surrender Charge from the cash value. A reduction in face amount in
this situation may not be advisable. The amount of any face reduction must be at
least $5,000, and the face amount remaining after a reduction must meet our
minimum face amount requirements for issue, except with our consent.
If you choose to reduce your Policy's face amount, unless you request
otherwise, we will first decrease any prior increases in base Policy face amount
that you applied for, in the reverse order in which the increases occurred, then
any remaining initial base Policy face amount, and then any increase in face
amount from a prior change in death benefit option.
A reduction in face amount reduces the Federal tax law limits on the amount
of premiums that you can pay under the Policy under the guideline premium test.
In these cases, a portion of the Policy's cash value may have to be paid to you
to comply with Federal tax law.
A face amount reduction takes effect as of the date we receive your
request. You can contact your registered representative or the Designated Office
for information on face amount reduction procedures.
A reduction in the face amount of a Policy may create a modified endowment
contract or have other adverse tax consequences. If you are contemplating a
reduction in face amount, you should consult your tax adviser regarding the tax
consequences of the transaction. (See "Tax Considerations.")
SURRENDERS AND PARTIAL WITHDRAWALS
SURRENDER
You may surrender the Policy for its cash surrender value at any time while
the insured is living. We determine the cash surrender value as of the date when
we receive the surrender request. (See "Receipt of Communications and Payments
at MetLife Investors USA's Designated Office.") The cash surrender value equals
the cash value reduced by any Policy loan and accrued interest and by any
applicable Surrender Charge. (See "Surrender Charge.") If you surrender the
Policy in the first Policy year (or in the first year following a face amount
increase), we will also deduct an amount equal to the remaining first year
Coverage Expense Charges and Policy Charges.
You may apply all or part of the surrender proceeds to a payment option.
Once a Policy is surrendered, all coverage and benefits cease and cannot be
reinstated. A surrender may result in adverse tax consequences. (See "Tax
Considerations" below.)
The Policies are designed to be long-term investments. As a result, you
should be aware that if you surrender your Policy in the first Policy year, the
Surrender Charge is likely to exceed the cash value of your Policy and you will
receive no proceeds upon surrender.
PARTIAL WITHDRAWAL
After the first Policy anniversary you may withdraw a portion of the
Policy's cash surrender value. A partial withdrawal reduces the Policy's death
benefit and may reduce the Policy's face amount if necessary so that the amount
at risk under the Policy will not increase. A partial withdrawal may also reduce
rider benefits. The minimum amount of a partial withdrawal request must be $500.
We have the right to limit partial withdrawals to no more than 90% of the
cash surrender value. In addition, a partial withdrawal will be limited by any
restriction that we currently impose on withdrawals from the Fixed Account. (See
"The Fixed Account.") Currently, we permit partial withdrawals equal to the
lesser of 100% of the Policy's cash surrender value in the Separate Account as
of the beginning of the year, or the maximum amount that can be withdrawn
without causing the Policy's face amount to fall below the minimum permitted.
(However, we may allow the face amount to fall below the minimum if the Policy
has been in force for at least 15 years and the insured's
A-28
attained age is greater than 55.) You may not make a partial withdrawal that
would reduce your cash surrender value to less than the amount of two monthly
deductions. We have the right to limit partial withdrawals to 12 per Policy
year. Currently we do not limit the number of partial withdrawals. We reserve
the right to impose a charge of $25 on each partial withdrawal.
If a partial withdrawal reduces your Policy's face amount, the amount of
the Surrender Charge that will be deducted from your cash value is an amount
that is proportional to the amount of the face reduction. The amount deducted
will reduce the remaining Surrender Charge payable under the Policy. No
Surrender Charge will apply on up to 10% of the cash surrender value withdrawn
each year, measured as a percentage of each withdrawal.
EXAMPLE. The following example assumes that a Policy Owner withdraws, in the
first month of the second Policy year, 20% of the cash surrender value of a
Policy that has the following characteristics.
<Table>
<Caption>
Face Amount:....................... $ 300,000
Death Benefit Option:.............. Option A -- Level
Cash Value:........................ $ 11,718
Surrender Charge:.................. $ 4,200
-----------------
Cash Surrender Value:.............. $ 7,518
x 20%
-----------------
Withdrawal Amount:................. $ 1,504
</Table>
The first 10% of cash surrender value, or $752, can be withdrawn free of
Surrender Charge. The remaining $752 withdrawn is subject to a portion of the
Policy's Surrender Charge -- based on the ratio that such excess withdrawal
amount bears to the Policy's face amount less the Surrender Charge, as shown in
the formula below:
<Table>
<Caption>
Withdrawal Amount in
Surrender Charge x Excess of Free Withdrawal = Surrender Charge
---------------------------------
Face Amount less Surrender Charge On Withdrawal
$4,200 x $752 = $11
---------------------------------
$300,000 - $4,200
</Table>
Because the Policy has a level death benefit, the withdrawal will cause a
dollar for dollar reduction in the Policy's face amount, so that the cash value
and the face amount will both be reduced by the $1,504 withdrawal and by the $11
Surrender Charge. The overall impact of the withdrawal on Policy values would
therefore be as follows:
The effect of the withdrawal on the Policy would be as follows:
<Table>
<Caption>
Face Amount before Withdrawal............................... $300,000
Withdrawal................................................ - 1,504
Surrender Charge on Withdrawal............................ - 11
--------
Face Amount after Withdrawal................................ $298,485
Surrender Charge before Withdrawal.......................... $ 4,200
Surrender Charge on Withdrawal............................ - 11
--------
Surrender Charge after Withdrawal........................... $ 4,189
Cash Value before Withdrawal................................ $ 11,718
Withdrawal................................................ - 1,504
Surrender Charge on Withdrawal............................ - 11
--------
Cash Value after Withdrawal................................. $ 10,203
Surrender Charge after Withdrawal........................... -4,189
--------
Cash Surrender Value after Withdrawal....................... $ 6,014
</Table>
A-29
If a partial withdrawal that reduces the Policy's face amount occurs within
12 months after a face amount increase, we will deduct a proportionate part of
the Coverage Expense Charges due with respect to the face amount increase for
the remainder of the 12-month period.
Any face amount reduction resulting from a partial withdrawal will reduce
the face amount in the following order: any prior increases in base Policy face
amount that you applied for, in the reverse order in which the increases
occurred; any remaining initial face amount; and then any face amount increases
resulting from a change in death benefit option, down to the required minimum.
A partial withdrawal reduces the cash value in the Investment Divisions of
the Separate Account and the Fixed Account in the same proportion that the cash
value in each bears to the Policy's total unloaned cash value. We determine the
amount of cash surrender value paid upon a partial withdrawal as of the date
when we receive a request. You can contact your registered representative or our
Designated Office for information on partial withdrawal procedures. (See
"Receipt of Communications and Payments at MetLife Investors USA's Designated
Office.")
A reduction in the death benefit as a result of a partial withdrawal may
create a modified endowment contract or have other adverse tax consequences. If
you are contemplating a partial withdrawal, you should consult your tax adviser
regarding the tax consequences. (See "Tax Considerations.")
TRANSFERS
TRANSFER OPTION
You may transfer your Policy's cash value between and among the Investment
Divisions and the Fixed Account. In states where we refund your premium if you
exercise the Right to Examine Policy provision, your right to transfer begins 20
days after we apply your initial premium to the Policy. We reserve the right to
limit transfers to four per Policy year. Currently we do not limit the number of
transfers per Policy year. We reserve the right to make a charge of $25 per
transfer. We treat all transfer requests made at the same time as a single
request. The transfer is effective as of the date when we receive the transfer
request, if the request is received before the close of regular trading on the
New York Stock Exchange. Transfer requests received after that time, or on a day
that the New York Stock Exchange is not open, will be effective on the next day
that the New York Stock Exchange is open. (See "Receipt of Communications and
Payments at MetLife Investors USA's Designated Office.") For special rules
regarding transfers involving the Fixed Account, see "The Fixed Account".
Frequent requests from Policy Owners to transfer cash value may dilute the
value of a Portfolio's shares if the frequent trading involves an attempt to
take advantage of pricing inefficiencies created by a lag between a change in
the value of the securities held by the Portfolio and the reflection of that
change in the Portfolio's share price ("arbitrage trading"). Regardless of the
existence of pricing inefficiencies, frequent transfers may also increase
brokerage and administrative costs of the underlying Portfolios and may disrupt
portfolio management strategy, requiring a Portfolio to maintain a high cash
position and possibly resulting in lost investment opportunities and forced
liquidations ("disruptive trading"). Accordingly, arbitrage trading and
disruptive trading activities (referred to collectively as "market timing") may
adversely affect the long-term performance of the Portfolios, which may in turn
adversely affect Policy Owners and other persons who may have an interest in the
Policies (e.g., beneficiaries).
We have policies and procedures that attempt to detect and deter frequent
transfers in situations where we determine there is a potential for arbitrage
trading. Currently, we believe that such situations may be presented in the
international, small-cap, and high-yield Portfolios (i.e., the BlackRock
Strategic Value Portfolio, FI International Stock Portfolio, Franklin Templeton
Small Cap Growth Portfolio, Loomis Sayles Small Cap Portfolio, Morgan Stanley
EAFE Index Portfolio, Oppenheimer Global Equity Portfolio, Russell 2000 Index
Portfolio, Western Asset Management Strategic Bond Opportunities Portfolio, T.
Rowe Price Small Cap Growth Portfolio, Harris Oakmark International Portfolio,
Lord Abbett Bond Debenture Portfolio, Met/AIM Small Cap Growth Portfolio, MFS
Research International Portfolio, and American Funds Global Small Capitalization
Fund--the "Monitored Portfolios") and we monitor transfer activity in those
Monitored Portfolios. In addition, as described below, we intend to treat all
American Funds Insurance Series portfolios ("American Funds portfolios") as
Monitored Portfolios. We employ various means to monitor transfer activity, such
as examining the frequency and size of transfers into and out of the
A-30
Monitored Portfolios within given periods of time. For example, we currently
monitor transfer activity to determine if, for each category of international,
small-cap, and high-yield Portfolios, in a 12-month period there were, (1) six
or more transfers involving the given category; (2) cumulative gross transfers
involving the given category that exceed the current cash value; and (3) two or
more "round-trips" involving any Portfolio in the given category. A round-trip
generally is defined as a transfer in followed by a transfer out within the next
seven calendar days or a transfer out followed by a transfer in within the next
seven calendar days, in either case subject to certain other criteria. We do not
believe that other Portfolios present a significant opportunity to engage in
arbitrage trading and therefore do not monitor transfer activity in those
Portfolios. We may change the Monitored Portfolios at any time without notice in
our sole discretion. In addition to monitoring transfer activity in certain
Portfolios, we rely on the underlying Portfolios to bring any potential
disruptive trading activity they identify to our attention for investigation on
a case-by-case basis. We will also investigate other harmful transfer activity
that we identify from time to time. We may revise these policies and procedures
in our sole discretion at any time without prior notice.
AMERICAN FUNDS MONITORING POLICY. As a condition to making their
portfolios available in our products, American Funds requires us to treat all
American Funds portfolios as Monitored Portfolios under our current market
timing and excessive trading policies and procedures. Further, American Funds
requires us to impose additional specified monitoring criteria for all American
Funds portfolios available under the Policy, regardless of the potential for
arbitrage trading. We are required to monitor transfer activity in American
Funds portfolios to determine if there were two or more transfers in followed by
transfers out, in each case of a certain dollar amount or greater, in any 30-
day period. A first violation of the American Funds monitoring policy will
result in a written notice of violation; each additional violation will result
in the imposition of a six-month restriction, during which period we will
require all transfer requests to or from an American Funds portfolio to be
submitted with an original signature. Further, as Monitored Portfolios, all
American Funds portfolios also will be subject to our current market timing and
excessive trading policies, procedures and restrictions (described below), and
transfer restrictions may be imposed upon a violation of either monitoring
policy.
Our policies and procedures may result in transfer restrictions being
applied to deter market timing. Currently, when we detect transfer activity in
the Monitored Portfolios that exceeds our current transfer limits, or other
transfer activity that we believe may be harmful to other Policy Owners or other
persons who have an interest in the Policies, we require all future transfer
requests to or from any Monitored Portfolios or other identified Portfolios
under that Policy to be submitted either (i) in writing with an original
signature or (ii) by telephone prior to 10:00 a.m. Transfers made under an
Automated Investment Strategy are not treated as transfers when we evaluate
trading patterns for market timing.
The detection and deterrence of harmful transfer activity involves
judgments that are inherently subjective, such as the decision to monitor only
those Portfolios that we believe are susceptible to arbitrage trading or the
determination of the transfer limits. Our ability to detect and/or restrict such
transfer activity may be limited by operational and technological systems, as
well as our ability to predict strategies employed by Policy Owners to avoid
such detection. Our ability to restrict such transfer activity also may be
limited by provisions of the Policy. Accordingly, there is no assurance that we
will prevent all transfer activity that may adversely affect Policy Owners and
other persons with interests in the Policies. We do not accommodate market
timing in any Portfolio and there are no arrangements in place to permit any
Policy Owner to engage in market timing; we apply our policies and procedures
without exception, waiver, or special arrangement.
The Portfolios may have adopted their own policies and procedures with
respect to frequent purchases and redemptions of their respective shares, and we
reserve the right to enforce these policies and procedures. For example,
Portfolios may assess a redemption fee (which we reserve the right to collect)
on shares held for a relatively short period. The prospectuses for the
Portfolios describe any such policies and procedures, which may be more or less
restrictive than the policies and procedures we have adopted. Although we may
not have the contractual authority or the operational capacity to apply the
frequent trading policies and procedures of the Portfolios, we have entered into
a written agreement, as required by SEC regulation, with each Portfolio or its
principal underwriter that obligates us to provide to the Portfolio promptly
upon request certain information about the trading activity of individual Policy
Owners, and to execute instructions from the Portfolio to restrict or prohibit
further purchases or transfers by specific Policy Owners who violate the
frequent trading policies established by the Portfolio.
A-31
In addition, Policy Owners and other persons with interests in the Policies
should be aware that the purchase and redemption orders received by the
Portfolios generally are "omnibus" orders from intermediaries such as retirement
plans or separate accounts funding variable insurance products. The omnibus
orders reflect the aggregation and netting of multiple orders from individual
owners of variable insurance products and/or individual retirement plan
participants. The omnibus nature of these orders may limit the Portfolios in
their ability to apply their frequent trading policies and procedures. In
addition, the other insurance companies and/or retirement plans may have
different policies and procedures or may not have any such policies and
procedures because of contractual limitations. For these reasons, we cannot
guarantee that the Portfolios (and thus Policy Owners) will not be harmed by
transfer activity relating to other insurance companies and/or retirement plans
that may invest in the Portfolios. If a Portfolio believes that an omnibus order
reflects one or more transfer requests from Policy Owners engaged in disruptive
trading activity, the Portfolio may reject the entire omnibus order.
In accordance with applicable law, we reserve the right to modify or
terminate the transfer privilege at any time. We also reserve the right to defer
or restrict the transfer privilege at any time that we are unable to purchase or
redeem shares of any of the Portfolios, including any refusal or restriction on
purchases or redemptions of their shares as a result of their own policies and
procedures on market timing activities (even if an entire omnibus order is
rejected due to the market timing activity of a single Policy Owner). You should
read the Portfolio prospectuses for more details.
AUTOMATED INVESTMENT STRATEGIES
You can choose one of five automated investment strategies. You can change
or cancel your choice at any time.
EQUITY GENERATOR. The Equity Generator allows you to transfer the interest
earned in the Fixed Account to any one of the Investment Divisions on each
monthly anniversary. The interest earned in the month must be at least $20 in
order for the transfer to take place. If less than $20 is earned, no transfer
will occur, and the interest not transferred cannot be counted towards the next
month's minimum.
ALLOCATOR. The Allocator allows you to systematically transfer cash value
from the Fixed Account or any one Investment Division (the "source fund") to any
number of Investment Divisions. The transfers will take place on each monthly
anniversary. You can choose to transfer a specified dollar amount (1) for a
specified number of months, or (2) until the source fund is depleted. In either
case, payments must continue for at least a three month period.
ENHANCED DOLLAR COST AVERAGER. With the Enhanced Dollar Cost Averager,
cash value is transferred from the EDCA fixed account to the Investment
Divisions monthly. You elect the EDCA at issue and select the total dollar
amount of cash value to be transferred. The cash value earmarked for the
strategy is held in the EDCA fixed account where it is credited with a rate of
interest that is higher than the Fixed Account's current crediting rate. The
amount transferred each month to the Investment Divisions equals the total
amount earmarked for the strategy divided by 12.
REBALANCER. The Rebalancer allows your Policy's cash value to be
automatically redistributed on a quarterly basis among the Investment Divisions
and the Fixed Account in accordance with the allocation percentages you have
selected.
INDEX SELECTOR. The Index Selector allows you to choose one of five asset
allocation models which are designed to correlate to various risk tolerance
levels. Based on your selection, we allocate 100% of your cash value among the
five Investment Divisions that invest in the five index Portfolios available
under the Policy (the Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE
Index, MetLife Stock Index, MetLife Mid Cap Stock Index and Russell 2000 Index
Portfolios) and the Fixed Account. On a quarterly basis, we will redistribute
your cash value among these Investment Divisions and the Fixed Account in order
to return your cash value to the original allocation percentages. If you change
your allocation of net premiums the Index Selector strategy, including the
rebalancing feature, will be terminated.
These automated investment strategies allow you to take advantage of
investment fluctuations, but none assures a profit nor protects against a loss.
Because certain strategies involve continuous investment in securities
A-32
regardless of fluctuating price levels of such securities, you should consider
your financial ability to continue purchases through periods of fluctuating
price levels.
We reserve the right to modify or terminate any of the automated investment
strategies for any reason, including, without limitation, a change in regulatory
requirements applicable to such programs. For more information about the
automated investment strategies, please contact your registered representative.
LOANS
YOU MAY BORROW FROM YOUR POLICY AT ANY TIME. The maximum amount you may
borrow, calculated as of the date of the loan, is:
-- the Policy's cash value, less
-- any Policy loan balance, less
-- loan interest due to the next Policy anniversary, less
-- the most recent Monthly Deduction times the number of months to the next
Policy anniversary, less
-- any Surrender Charge, plus
-- interest credited on the cash value at the guaranteed interest rate to
the next Policy anniversary.
The minimum loan amount is $500 (less in some states). We make the loan as
of the date when we receive a loan request. (See "Receipt of Communications and
Payments at MetLife Investors USA's Designated Office.") You may increase your
risk of lapse if you take a loan. You should contact our Designated Office or
your registered representative for information on loan procedures.
A Policy loan reduces the Policy's cash value in the Investment Divisions
by the amount of the loan. A loan repayment increases the cash value in the
Investment Divisions by the amount of the repayment. We attribute Policy loans
to the Investment Divisions and the Fixed Account in proportion to the cash
value in each. We transfer cash value equal to the amount of the loan from the
Investment Divisions and the Fixed Account to the Loan Account (which is part of
our general account).
You may repay all or part of your loan at any time while the insured is
still alive. When you make a loan repayment, we transfer an amount of cash value
equal to the repayment from the Loan Account to the Divisions of the Separate
Account and to the Fixed Account in proportion to the cash value in each. (See
"Receipt of Communications and Payments at MetLife Investors USA's Designated
Office.")
We guarantee that the interest rate charged on Policy loans will not be
more than 4.0% per year in Policy years 1-10 and 3.0% per year thereafter.
Policy loan interest is due and payable annually on each Policy
anniversary. If not paid when due, we add the interest accrued to the loan
amount, and we transfer an amount of cash value equal to the unpaid interest
from the Investment Divisions and the Fixed Account to the Loan Account in the
same manner as a new loan.
Cash value in the Loan Account earns interest at not less than 3.0% per
year and is transferred on each Policy anniversary to the Investment Divisions
and to the Fixed Account in proportion to the cash value in each. The interest
credited will also be transferred: (1) when you take a new loan; (2) when you
make a full or partial loan repayment; and (3) when the Policy enters the grace
period.
The amount taken from the Policy's Investment Divisions as a result of a
loan does not participate in the investment experience of the Investment
Divisions. Therefore, loans can permanently affect the death benefit and cash
value of the Policy, even if repaid. In addition, we reduce any proceeds payable
under a Policy by the amount of any outstanding loan plus accrued interest.
If a Policy loan is outstanding, it may be better to repay the loan than to
pay a premium, because the payment is subject to sales and premium tax charges,
and the loan repayment is not subject to charges. (See "Deductions from
Premiums.") If you want us to treat a payment as a loan repayment, it should be
clearly marked as such.
A-33
A loan that is taken from, or secured by, a Policy may have tax
consequences. Although the issue is not free from doubt, we believe that a loan
from or secured by a Policy that is not classified as a modified endowment
contract should generally not be treated as a taxable distribution.
Nevertheless, the tax consequences associated with loans outstanding after the
tenth Policy year are uncertain. A tax adviser should be consulted when
considering a loan.
LAPSE AND REINSTATEMENT
LAPSE
In general, in any month that your Policy's cash surrender value is not
large enough to cover a Monthly Deduction, your Policy will be in default, and
may lapse. However, you can prevent your Policy from lapsing, regardless of the
amount of your cash surrender value, if the premiums you pay are sufficient to
keep the Guaranteed Minimum Death Benefit ("GMDB") in effect.
The base Policy offers, at no additional charge, a five-year GMDB, a
20-year GMDB and a GMDB that lasts until the insured's age 65. For an additional
charge you can add a Policy rider at issue that provides a GMDB to age 85 or a
GMDB to age 121. All Policies are issued with the five-year GMDB, which
guarantees that the Policy will remain in force for at least five years if the
required Guaranteed Minimum Death Benefit Monthly Premiums ("GMDB Monthly
Premiums") are paid when due. The five-year GMDB Monthly Premium is set forth in
your Policy. It is the minimum initial periodic premium you can pay into the
Policy. The 20-year GMDB and the GMDB to age 65 are available to eligible Policy
Owners and can be elected at issue.
The GMDB Monthly Premium varies depending on the guarantee period, the
insured's age, sex (except for unisex policies), smoking status and risk class,
the Policy's face amount and the death benefit option chosen. The GMDB Monthly
Premium may change in the event that any of the following events occur: an
increase or decrease in the base Policy face amount; adding, deleting or
changing a rider; a change in death benefit option or the insured's risk class;
or a misstatement of the insured's age or sex in the Policy application.
On each monthly anniversary we test the Policy to determine if the
cumulative premiums you have paid, less any partial withdrawals or outstanding
loans you have taken, equal or exceed the sum of the GMDB Monthly Premiums due
to date for the GMDB you selected. If you meet this test, the GMDB you selected
will be in effect. However, even if you have not elected the 20-year GMDB or the
GMDB to age 65, if the amount of premiums you pay into the Policy for each
Policy month since the Policy Date is sufficient to meet the requirements of the
20-year GMDB or the GMDB to age 65, in your third annual statement we will
notify you that the applicable GMDB is in effect. Conversely, if you have
elected the 20-year GMDB or the GMDB to age 65 and your premium payments are
insufficient to satisfy the GMDB Monthly Premium requirements, we will notify
you that your GMDB will be reduced to the five-year GMDB, the GMDB to age 65, or
the 20-year GMDB, as applicable, unless you pay sufficient premiums within 62
days to meet the requirements of the GMDB you originally selected. If, during
the first five Policy years, you fail to pay sufficient premiums to keep the
five-year GMDB in effect, we will notify you that the GMDB will terminate within
62 days if you fail to pay the required Monthly Premiums. If the guarantee
provided by the GMDB terminates, the Policy will continue in force for as long
as there is cash surrender value sufficient to pay the Monthly Deduction. If the
GMDB terminates, you may reinstate it within nine months provided the Policy
remains in force. In order to reinstate the GMDB, you must pay sufficient
premiums to satisfy the cumulative premium requirement for the applicable GMDB
(five-year, 20-year or to age 65) at the time of reinstatement.
If the GMDB is in effect and the Policy's cash surrender value is
insufficient to cover the Monthly Deduction, the Policy will not lapse. We will
take the Monthly Deduction from the Policy's cash value until the cash value has
been reduced to zero. At that point, future Monthly Deductions will be waived
for as long as the GMDB is in effect.
If the GMDB is not in effect and the cash surrender value is insufficient
to pay the Monthly Deduction, the Policy will enter a 62-day grace period during
which you will have an opportunity to pay a premium sufficient to keep the
Policy in force. The minimum amount you must pay is the lesser of three Monthly
Deductions or, if applicable, the amount necessary to reinstate the GMDB. We
will tell you the amount due. If you fail to pay this amount before the end of
the grace period, the Policy will terminate.
A-34
Your Policy may also lapse if Policy loans plus accrued interest exceed the
Policy's cash value less the Surrender Charge. Your Policy may be protected
against lapse in these circumstances if it has been in force for 15 years, the
insured has attained age 75, and the other requirements of the Overloan
Protection Rider have been met. If your Policy is not so protected, we will
notify you that the Policy is going to terminate. The Policy terminates without
value unless you make a sufficient payment within the later of 62 days from the
monthly anniversary immediately before the date when the excess loan occurs or
31 days after we mail the notice. If the Policy lapses with a loan outstanding,
adverse tax consequences may result. (See "Tax Considerations" below.)
Some states may require a different grace period than that described above.
Please read the grace period provision of your Policy for details.
REINSTATEMENT
If your Policy has lapsed, in most states you may reinstate it within three
years after the date of lapse if the insured has not attained age 121. If more
than three years have passed, you need our consent to reinstate. Reinstatement
in all cases requires payment of certain charges described in the Policy and
usually requires evidence of insurability that is satisfactory to us. If the
Policy lapses and is reinstated during the first five Policy years, only the
five-year GMDB will be reinstated. If the Policy lapses after the first five
Policy years, the GMDB will terminate and cannot be reinstated. Under no
circumstances can the GMDB provided by Policy rider be reinstated following a
Policy lapse.
If we deducted a Surrender Charge on lapse, we credit it back to the
Policy's cash value on reinstatement. The Surrender Charge on the date of
reinstatement is the same as it was on the date of lapse. When we determine the
Surrender Charge and other charges except cost of insurance and the Policy loan
interest rate, we do not count the amount of time that a Policy was lapsed.
ADDITIONAL BENEFITS BY RIDER
You can add additional benefits to the Policy by rider, subject to our
underwriting and issuance standards. These additional benefits usually require
an additional charge as part of the Monthly Deduction from cash value. The rider
benefits available with the Policy provide fixed benefits that do not vary with
the investment experience of the Separate Account.
There is no limit on the number of riders you can add to your Policy.
However, you may not elect both the Option to Purchase Long-Term Care Insurance
Rider and the Options to Purchase Additional Insurance Coverage Rider, nor may
you elect both the Waiver of Monthly Deduction Rider and the Waiver of Specified
Premium Rider.
The following riders, some of which have been described previously, are
available:
CHILDREN'S TERM INSURANCE RIDER, which provides term insurance on the lives
of children of the insured.
WAIVER OF MONTHLY DEDUCTION RIDER, which provides for waiver of Monthly
Deductions in the event of the disability of the insured.
WAIVER OF SPECIFIED PREMIUM RIDER, which provides for waiver of a specified
amount of monthly premium in the event of the disability of the insured. (Not
available in California.)
OPTIONS TO PURCHASE ADDITIONAL INSURANCE COVERAGE RIDER, which allows the
Owner to purchase additional coverage on the insured without providing evidence
of insurability.
OPTION TO PURCHASE LONG-TERM CARE INSURANCE RIDER, which allows the Owner
to purchase long-term care coverage on the insured without providing evidence of
insurability. (Not available in Connecticut, Florida or Virginia.)
ACCELERATION OF DEATH BENEFIT RIDER, which allows a Policy Owner to
accelerate payment of all or part of the Policy's death benefit if the insured
is terminally ill. In calculating the Accelerated Death Benefit, we assume that
death occurs one year from the date of claim and we discount the future death
benefit using an interest rate not to exceed the greater of (1) the current
yield on 90-day Treasury bills, and (2) the maximum policy loan interest rate
under the Policy. The Policy Owner must accelerate at least $20,000, but not
more than the greater of $250,000 or 10% of the death benefit. As an example, if
a Policy Owner accelerated the death benefit of a Policy with a face
A-35
amount of $1,000,000, the maximum amount that could be accelerated would be
$250,000. Assuming an interest rate of 6%, the present value of the benefit
would be $235,849. If we exercised our reserved right to impose a $150
processing fee, the benefit payable would be $235,849 less $150, or $235,699.
(Not available in Pennsylvania or Puerto Rico.)
GUARANTEED SURVIVOR INCOME BENEFIT RIDER, which provides the beneficiary
with the option of exchanging the Policy's death benefit for enhanced monthly
income payments for life.
ACCIDENTAL DEATH BENEFIT, which provides for the payment of an additional
death benefit in the event of the insured's death by accident.
GUARANTEED MINIMUM DEATH BENEFIT RIDER, which provides for a guaranteed
death benefit until the insured's age 85 or the insured's age 121. (Not
currently available in Florida or Virginia.)
OVERLOAN PROTECTION RIDER, which provides protection from Policy lapse due
to an excess Policy loan.
Not all riders may be available to you and riders in addition to those
listed above may be made available. You should consult your registered
representative regarding the availability of riders.
THE FIXED ACCOUNT
You may allocate net premiums and transfer cash value to the Fixed Account,
which is part of MetLife Investors USA's general account. Because of exemptive
and exclusionary provisions in the Federal securities laws, interests in the
Fixed Account are not registered under the Securities Act of 1933. Neither the
Fixed Account nor the general account is registered as an investment company
under the Investment Company Act of 1940. Therefore, neither the Fixed Account,
the general account nor any interests therein are generally subject to the
provisions of these Acts, and the SEC does not review Fixed Account disclosure.
This disclosure may, however, be subject to certain provisions of the Federal
securities laws on the accuracy and completeness of prospectuses.
GENERAL DESCRIPTION
Our general account includes all of our assets except assets in the
Separate Account or in our other separate accounts. We decide how to invest our
general account assets. Fixed Account allocations do not share in the actual
investment experience of the general account. Instead, we guarantee that the
Fixed Account will credit interest at an annual effective rate of at least 3%.
We may or may not credit interest at a higher rate. We declare the current
interest rate for the Fixed Account periodically. The Fixed Account earns
interest daily.
VALUES AND BENEFITS
Cash value in the Fixed Account increases from net premiums allocated and
transfers to the Fixed Account and Fixed Account interest, and decreases from
loans, partial withdrawals made from the Fixed Account, charges and transfers
from the Fixed Account. We deduct charges from the Fixed Account and the
Policy's Investment Divisions in proportion to the amount of cash value in each.
(See "Monthly Deduction from Cash Value.") A Policy's total cash value includes
cash value in the Separate Account, the Fixed Account, and any cash value held
in the Loan Account due to a Policy loan.
Cash value in the Fixed Account is included in the calculation of the
Policy's death benefit in the same manner as the cash value in the Separate
Account. (See "Death Benefits.")
POLICY TRANSACTIONS
Except as described below, the Fixed Account has the same rights and
limitations regarding premium allocations, transfers, loans, surrenders and
partial withdrawals as the Separate Account. The following special rules apply
to the Fixed Account.
Twenty days after we apply the initial premium to the Policy (less in some
states) you may transfer cash value from the Fixed Account to the Separate
Account. The amount of any transfer must be at least $50, unless the balance
remaining would be less than $50, in which case you may withdraw or transfer the
entire Fixed Account cash
A-36
value. After the first Policy year you may withdraw cash value from the Fixed
Account. The amount of any partial withdrawal, net of applicable Surrender
Charges, must be at least $500. No amount may be withdrawn from the Fixed
Account that would result in there being insufficient cash value to meet any
Surrender Charges that would be payable immediately following the withdrawal
upon the surrender of the remaining cash value in the Policy. We reserve the
right to only allow transfers and withdrawals from the Fixed Account during the
30-day period that follows the Policy anniversary. The total amount of transfers
and withdrawals in a Policy year may not exceed the greater of (a) 25% of the
Policy's cash surrender value in the Fixed Account at the beginning of the
Policy year, (b) the previous Policy year's maximum allowable withdrawal amount,
and (c) 100% of the cash surrender value in the Fixed Account if withdrawing the
greater of (a) and (b) would result in a Fixed Account balance of $50 or less.
We are not currently imposing the maximum limit on transfers and withdrawals
from the Fixed Account, but we reserve the right to do so.
There is currently no transaction charge for partial withdrawals or
transfers. We reserve the right to limit partial withdrawals to 12 and transfers
to four in a Policy year and to impose a charge of $25 for each partial
withdrawal or transfer. We may revoke or modify the privilege of transferring
amounts to or from the Fixed Account at any time. Partial withdrawals will
result in the imposition of any applicable Surrender Charges.
Unless you request otherwise, a Policy loan reduces the Policy's cash value
in the Investment Divisions and the Fixed Account proportionately. We allocate
all loan repayments in the same proportion that the cash value in each
Investment Division and the Fixed Account bears to the Policy's total unloaned
cash value. The amount transferred from the Policy's Investment Divisions and
the Fixed Account as a result of a loan earns interest at an effective rate of
at least 3% per year, which we credit to the Policy's cash value in the
Investment Divisions and the Fixed Account in proportion to the Policy's cash
value in each on the day it is credited.
We take partial withdrawals from the Policy's Investment Divisions and the
Fixed Account in the same proportion that the cash value in each account bears
to the Policy's total unloaned cash value.
We can delay transfers, surrenders, withdrawals and Policy loans from the
Fixed Account for up to six months (to the extent allowed by state insurance
law). We will not delay loans to pay premiums on policies issued by us.
CHARGES
We make certain charges and deductions under the Policy. These charges and
deductions compensate us for: (1) services and benefits we provide; (2) costs
and expenses we incur; and (3) risks we assume.
Services and benefits we provide:
- the death benefit, cash, and loan benefits under the Policy
- investment options, including premium allocations
- administration of elective options
- the distribution of reports to Policy Owners
Costs and expenses we incur:
- costs associated with processing and underwriting applications, and with
issuing and administering the Policy (including any riders)
- overhead and other expenses for providing services and benefits
- sales and marketing expenses
- other costs of doing business, such as collecting premiums, maintaining
records, processing claims, effecting transactions, and paying federal,
state, and local premium and other taxes and fees
A-37
Risks we assume:
- that the cost of insurance charges we may deduct are insufficient to meet
our actual claims because the insureds die sooner than we estimate
- that the cost of providing the services and benefits under the Policies
exceed the charges we deduct
The amount of a charge may not necessarily correspond to the costs of the
services or benefits that are implied by the name of the charge or that are
associated with the particular Policy. For example, the sales charge and
Surrender Charge may not fully cover all of our sales and distribution expenses,
and we may use proceeds from other charges, including the Mortality and Expense
Risk Charge and the cost of insurance charge, to help cover those expenses. We
may profit from certain Policy charges.
DEDUCTIONS FROM PREMIUMS
Prior to the allocation of a premium, we deduct a percentage of your
premium payment. We credit the remaining amount (the net premium) to your cash
value according to your allocation instructions. The deductions we make from
each premium payment are the sales charge, the premium tax charge, and the
federal tax charge.
SALES CHARGE. We deduct a 2.25% sales charge from each premium payment.
Currently, the sales charge is only deducted from premium payments that are
less than or equal to the Target Premium.
PREMIUM TAX CHARGE. We deduct 2.0% from each premium for premium taxes and
administrative expenses. Premium taxes vary from state to state, but we deduct a
flat 2.0%, which is based on an average of such taxes. Administrative expenses
covered by this charge include those related to premium tax and certain other
state filings.
FEDERAL TAX CHARGE. We deduct 1.25% from each premium for our Federal
income tax liability related to premiums.
EXAMPLE: The following chart shows the net amount that we would allocate
to the Policy assuming a premium payment of $4,000 (and a Target Premium of
$2,000).
<Table>
<Caption>
NET
PREMIUM PREMIUM
- ------- -------
$4,000 $4,000
- 175 (5.5% X $2,000) + (3.25% X $2,000) = total sales, premium
------- tax and Federal tax charges
$3,825 Net Premium
</Table>
SURRENDER CHARGE
If, during the first ten Policy years, or during the first ten Policy years
following a face amount increase, you surrender or lapse your Policy, reduce the
face amount, or make a partial withdrawal or change in death benefit option that
reduces the face amount, then we will deduct a Surrender Charge from the cash
value. The maximum Surrender Charge is shown in your Policy. The Surrender
Charge period is 11 years for policies issued in Florida.
No Surrender Charge will apply on up to 10% of the cash surrender value
withdrawn each year.
The Surrender Charge depends on the face amount of your Policy and the
issue age, sex (except for unisex policies), risk class and smoker status of the
insured. The Surrender Charge will remain level for up to three Policy years, or
for up to three years after a face amount increase, and will then decline on a
monthly basis until it reaches zero at the end of the tenth Policy year (or the
tenth year following the face amount increase).
A-38
The table below shows the maximum Surrender Charge that applies (in all
states except Florida) if the lapse, surrender or face amount reduction occurs
at any time in the first Policy year, and in the last month of each Policy year
thereafter.
<Table>
<Caption>
FOR POLICIES WHICH THE MAXIMUM SURRENDER
ARE SURRENDERED, CHARGE PER $1,000
LAPSED OR OF BASE POLICY
REDUCED DURING FACE AMOUNT
------------------ ---------------------
Entire Policy Year 1 $38.25
Last Month of Policy Year 2 35.81
3 32.56
4 31.74
5 29.84
6 27.13
7 24.42
8 18.99
9 9.50
10 0.00
</Table>
The table below shows the maximum Surrender Charge that applies for
Policies issued in Florida.
<Table>
<Caption>
FOR POLICIES WHICH THE MAXIMUM SURRENDER
ARE SURRENDERED, CHARGE PER $1,000
LAPSED OR OF BASE POLICY
REDUCED DURING FACE AMOUNT
------------------ ---------------------
Entire Policy Year 1 $38.25
Last Month of Policy Year 2 35.81
3 32.56
4 31.74
5 29.84
6 27.13
7 24.42
8 18.99
9 11.87
10 5.93
11 0.00
</Table>
In the case of a face amount reduction or a partial withdrawal or change in
death benefit option that results in a face amount reduction, we deduct any
Surrender Charge that applies from the Policy's remaining cash value in an
amount that is proportional to the amount of the Policy's face amount
surrendered. (See "Reduction in Face Amount," "Partial Withdrawal" and "Change
in Death Benefit Option.")
If you surrender the Policy (or a face amount increase) in the first Policy
year (or in the first year following the face amount increase) we will deduct
from the surrender proceeds an amount equal to the remaining first year Coverage
Expense Charges and Policy Charges. If you reduce the face amount of your Policy
in the first year following a face amount increase, we will deduct from your
cash value a proportionate amount of the remaining first year Coverage Expense
Charges, based on the ratio of the face amount reduction to the Policy's
original face amount.
The Surrender Charge reduces the Policy's cash value in the Investment
Divisions and the Fixed Account in proportion to the amount of the Policy's cash
value in each. However, if you designate the accounts from which a partial
withdrawal is to be taken, the charge will be deducted proportionately from the
cash value of the designated accounts.
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PARTIAL WITHDRAWAL CHARGE
We reserve the right to impose a processing charge on each partial
withdrawal. If imposed, this charge would compensate us for administrative costs
in generating the withdrawn payment and in making all calculations that may be
required because of the partial withdrawal.
TRANSFER CHARGE
We reserve the right to impose a processing charge on each transfer between
Investment Divisions or between an Investment Division and the Fixed Account to
compensate us for the costs of processing these transfers. Transfers under one
of our Automated Investment Strategies do not count as transfers for the purpose
of assessing this charge.
ILLUSTRATION OF BENEFITS CHARGE
We reserve the right to impose a charge for each illustration of Policy
benefits that you request in excess of one per year. If imposed, this charge
would compensate us for the cost of preparing and delivering the illustration to
you.
MONTHLY DEDUCTION FROM CASH VALUE
On the first day of each Policy month, starting with the Policy Date, we
deduct the "Monthly Deduction" from your cash value.
-- If your Policy is protected against lapse by a Guaranteed Minimum Death
Benefit, we make the Monthly Deduction each month regardless of the
amount of your cash surrender value. If your cash surrender value is
insufficient to pay the Monthly Deduction in any month, your Policy
will not lapse, but the shortfall will, in effect, cause your cash
surrender value to have a negative balance. (See "Lapse and
Reinstatement.")
-- If a Guaranteed Minimum Death Benefit is not in effect, and the cash
surrender value is not large enough to cover the entire Monthly
Deduction, we will make the deduction to the extent cash value is
available, but the Policy will be in default, and it may lapse. (See
"Lapse and Reinstatement.")
There is no Monthly Deduction on or after the Policy anniversary when the
insured attains age 121.
The Monthly Deduction reduces the cash value in each Investment Division
and in the Fixed Account in proportion to the cash value in each. However, you
may request that we charge the Monthly Deduction to a specific Investment
Division or to the Fixed Account. If, in any month, the designated account has
insufficient cash value to cover the Monthly Deduction, we will first reduce the
designated account cash value to zero and then charge the remaining Monthly
Deduction to all Investment Divisions and, if applicable, the Fixed Account, in
proportion to the cash value in each.
The Monthly Deduction includes the following charges:
POLICY CHARGE. The Policy Charge is equal to $15.00 per month in the first
Policy year and $8.00 per month thereafter. The Policy Charge is $12 per month
in the first Policy year and $9 per month thereafter for Policies issued with
face amounts of less than $50,000. No Policy Charge applies to Policies issued
with face amounts equal to or greater than $250,000. The Policy Charge
compensates us for administrative costs such as record keeping, processing death
benefit claims and policy changes, preparing and mailing reports, and overhead
costs.
COVERAGE EXPENSE CHARGE. We impose a monthly charge for the costs of
underwriting, issuing (including sales commissions), and administering the
Policy or the face amount increase. The monthly charge is imposed on the base
Policy face amount and varies by the base Policy's face amount and duration, and
by the insured's issue age, smoking status, risk class (at the time the Policy
or a face amount increase is issued), and, except for unisex Policies, the
insured's sex. Currently, we only impose the Coverage Expense Charge during the
first eight Policy years, and during the first eight years following a requested
face amount increase.
MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. The cost of insurance charge
for a Policy month is equal to the "amount at risk" under the Policy, multiplied
by the cost of insurance rate for that Policy month. We determine the amount at
risk on the first day of the
A-40
Policy month. The amount at risk is the amount by which the death benefit
(generally discounted at the monthly equivalent of 3% per year) exceeds the
Policy's cash value. The amount at risk is affected by investment performance,
loans, premium payments, fees and charges, partial withdrawals and face amount
reductions.
The guaranteed cost of insurance rates for a Policy depend on the insured's
-- smoking status
-- risk class
-- attained age
-- sex (if the Policy is sex-based).
The current cost of insurance rates will depend on the above factors, plus
-- the insured's age at issue (and at the time of any face amount
increase)
-- the Policy year (and the year of any face amount increase)
-- the Policy's face amount.
We guarantee that the rates for underwritten Policies will not be higher
than rates based on
-- the 2001 Commissioners Standard Ordinary Mortality Tables (the "2001
CSO Tables") with smoker/nonsmoker modifications, for Policies issued
on non-juvenile insureds (age 18 and above at issue), adjusted for
substandard ratings or flat extras, if applicable
-- the 2001 CSO Aggregate Tables (Nonsmoker Tables for attained age 16 and
older), for Policies issued on juvenile insureds (below age 18 at
issue).
The actual rates we use may be lower than the maximum rates, depending on
our expectations about our future mortality and expense experience, lapse rates,
taxes and investment earnings. We review the adequacy of our cost of insurance
rates and other non-guaranteed charges periodically and may adjust them. Any
change will apply prospectively.
The risk classes we use are
-- for Policies issued on non-juvenile insureds: preferred smoker,
standard smoker, rated smoker, elite nonsmoker, preferred nonsmoker,
standard nonsmoker, and rated nonsmoker.
-- for Policies issued on juvenile insureds: standard and rated.
Rated Policies have higher cost of insurance deductions. We base the
guaranteed maximum mortality charges for substandard ratings on multiples of the
2001 CSO Tables.
The following standard or better smoker and non-smoker classes are
available for underwritten Policies:
-- elite nonsmoker for Policies with face amounts of $250,000 or more
where the issue age is 18 through 80;
-- preferred smoker and preferred nonsmoker for Policies with face amounts
of $100,000 or more where the issue age is 18 through 80;
-- standard smoker and standard nonsmoker for Policies with face amounts
of $50,000 or more ($25,000 for pension plans) where the issue age is
18 through 85.
The elite nonsmoker class generally offers the best current cost of
insurance rates, and the preferred classes generally offer better current cost
of insurance rates than the standard classes.
Cost of insurance rates are generally lower for nonsmokers than for smokers
and generally lower for females than for males. Within a given risk class, cost
of insurance rates are generally lower for insureds with lower issue ages. Where
required by state law, and for Policies sold in connection with some employee
benefit plans, cost of insurance rates (and Policy values and benefits) do not
vary based on the sex of the insured.
A-41
CHARGES FOR ADDITIONAL BENEFITS. We charge for the cost of any additional
rider benefits as described in the rider form.
MORTALITY AND EXPENSE RISK CHARGE. We impose a monthly charge for our
mortality and expense risks.
The mortality risk we assume is that insureds may live for shorter periods
of time than we estimated. The expense risk is that our costs of issuing and
administering the Policies may be more than we estimated. The charge is imposed
on the cash value in the Separate Account, but the rate we charge is determined
by the cash value in the Separate Account and the Fixed Account. The rate is
determined on each monthly anniversary and varies based on the Policy year and
the Policy's net cash value in relation to the Policy's Target Premium. As shown
in the table below, the rate declines as the Policy's net cash value and the
Policy years increase. The charge is guaranteed not to exceed 0.80% in Policy
years 1-10, 0.35% in Policy years 11-19, 0.20% in Policy years 20-29 and 0.05%
thereafter.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------
CHARGE APPLIED
TO CASH VALUE IN
POLICY YEAR NET CASH VALUE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------------------
less than 5 target premiums 0.60%
5 but less than 10 target premiums 0.55%
1 - 10 10 but less than 20 target premiums 0.30%
20 target premiums or more 0.15%
- --------------------------------------------------------------------------------------------
less than 5 target premiums 0.35%
5 but less than 10 target premiums 0.30%
11 - 19 10 but less than 20 target premiums 0.15%
20 target premiums or more 0.10%
- --------------------------------------------------------------------------------------------
less than 5 target premiums 0.20%
5 but less than 10 target premiums 0.15%
20 - 29 10 but less than 20 target premiums 0.10%
20 target premiums or more 0.05%
- --------------------------------------------------------------------------------------------
30+ 0.05%
- --------------------------------------------------------------------------------------------
</Table>
LOAN INTEREST SPREAD
We charge you interest on a loan at a maximum effective rate of 4.0% per
year in Policy years 1-10 and 3.0% per year thereafter, compounded daily. We
also credit interest on the amount we take from the Policy's accounts as a
result of the loan at a minimum annual effective rate of 3% per year, compounded
daily. As a result, the loan interest spread will never be more than 1.00%.
CHARGES AGAINST THE PORTFOLIOS AND THE INVESTMENT DIVISIONS OF THE SEPARATE
ACCOUNT
CHARGES FOR INCOME TAXES. We currently do not charge the Separate Account
for income taxes, but in the future we may make such a charge, if appropriate.
We have the right to make a charge for any taxes imposed on the Policies in the
future. (See "MetLife Investors USA's Income Taxes".)
PORTFOLIO EXPENSES. There are daily charges against the Portfolio assets
for investment advisory services and fund operating expenses. These are
described in the Fee Table as well as in the attached Portfolio prospectuses.
TAX CONSIDERATIONS
INTRODUCTION
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 tax 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 our understanding of the
present Federal income tax laws. No representation is made as to the
A-42
likelihood of continuation of the present Federal income tax laws or as to how
they may be interpreted by the Internal Revenue Service.
IRS CIRCULAR 230 NOTICE: The tax information contained herein is not
intended to (and cannot) be used by anyone to avoid IRS penalties. It is
intended to support the sale of the Policy. The Policy Owner should seek tax
advice based on the Policy Owner's particular circumstances from an independent
tax adviser.
TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we anticipate that the
Policy should be deemed to be a life insurance contract under Federal tax law.
However, if your Policy is issued on a substandard basis, there is additional
uncertainty and some risk that your Policy will not be treated as a life
insurance contract under Federal tax law. Moreover, if you elect the
Acceleration of Death Benefit Rider, the tax qualification consequences
associated with continuing the Policy after a distribution is made under the
rider are unclear. We may take appropriate steps to bring the Policy into
compliance with applicable requirements, and we reserve the right to restrict
Policy transactions in order to do so. The insurance proceeds payable on the
death of the insured will never be less than the minimum amount required for the
Policy to be treated as life insurance under section 7702 of the Internal
Revenue Code, as in effect on the date the Policy was issued.
In some circumstances, owners of variable contracts who retain excessive
control over the investment of the underlying separate account assets may be
treated as the owners of those assets. Although published guidance in this area
does not address certain aspects of the Policies, we believe that the Owner of a
Policy should not be treated as the owner of the Separate Account assets. We
reserve the right to modify the Policies to bring them into conformity with
applicable standards should such modification be necessary to prevent Owners of
the Policies from being treated as the owners of the underlying Separate Account
assets.
In addition, the Code requires that the investments of the Separate Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Separate Account, through the Portfolios, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. We believe that the death benefit under a Policy should
generally be excludible from the gross income of the beneficiary. Federal, state
and local transfer, and other tax consequences of ownership or receipt of Policy
proceeds depend on the circumstances of each Policy Owner or beneficiary. A tax
adviser should be consulted on these consequences.
In the case of employer-owned life insurance as defined in Section 101(j),
the amount of the death benefit excludable from gross income is limited to
premiums paid unless the Policy falls within certain specified exceptions and a
notice and consent requirement is satisfied before the Policy is issued. Certain
specified exceptions are based on the status of an employee as highly
compensated or recently employed. There are also exceptions for Policy proceeds
paid to an employee's heirs. These exceptions only apply if proper notice is
given to the insured employee and consent is received from the insured employee
before the issuance of the Policy. These rules apply to Policies issued August
18, 2006 and later and also apply to policies issued before August 18, 2006
after a material increase in the death benefit or other material change. An IRS
reporting requirement applies to employer-owned life insurance subject to these
rules. Because these rules are complex and will affect the tax treatment of
death benefits, it is advisable to consult tax counsel. The death benefit will
also be taxable in the case of a transfer-for-value unless certain exceptions
apply.
Generally, the Policy Owner will not be deemed to be in constructive
receipt of the Policy cash value until there is a distribution or a deemed
distribution. When distributions from a Policy occur, or when loans are taken
from or
A-43
secured by a Policy, the tax consequences depend on whether the Policy is
classified as a modified endowment contract ("MEC").
MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain
life insurance contracts are classified as modified endowment contracts, with
less favorable income tax treatment than other life insurance contracts. Due to
the Policy's flexibility with respect to premium payments and benefits, each
Policy's circumstances will determine whether the Policy is a MEC. In general a
Policy will be classified as a modified endowment contract if the amount of
premiums paid into the Policy causes the Policy to fail the "7-pay test." A
Policy will fail the 7-pay test if at any time in the first seven Policy years,
the amount paid into the Policy exceeds the sum of the level premiums that would
have been paid at that point under a Policy that provided for paid-up future
benefits after the payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during the first
seven Policy years, for example, as a result of a partial withdrawal, the 7-pay
test will have to be reapplied as if the Policy had originally been issued at
the reduced face amount. If there is a "material change" in the Policy's
benefits or other terms, even after the first seven Policy years, the Policy may
have to be retested as if it were a newly issued Policy. A material change can
occur, for example, when there is an increase in the death benefit which is due
to the payment of an unnecessary premium. Unnecessary premiums are premiums paid
into the Policy which are not needed in order to provide a death benefit equal
to the lowest death benefit that was payable in the first seven Policy years. To
prevent your Policy from becoming a modified endowment contract, it may be
necessary to limit premium payments or to limit reductions in benefits. A
current or prospective Policy Owner should consult a tax adviser to determine
whether a Policy transaction will cause the Policy to be classified as a
modified endowment contract.
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT
CONTRACTS. Policies classified as modified endowment contracts are subject to
the following tax rules:
(1) All distributions other than death benefits, including
distributions upon surrender and withdrawals, from a modified endowment
contract will be treated first as distributions of gain taxable as ordinary
income and as tax-free recovery of the Policy Owner's investment in the
Policy only after all gain has been distributed.
(2) Loans taken from or secured by a Policy classified as a modified
endowment contract are treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount
subject to tax except where the distribution or loan is made when the
Policy Owner has attained age 59 1/2 or is disabled, or where the
distribution is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the Policy Owner or the joint lives
(or joint life expectancies) of the Policy Owner and the Policy Owner's
beneficiary or designated beneficiary.
If a Policy becomes a modified endowment contract, distributions will be
taxed as distributions from a modified endowment contract. In addition,
distributions from a Policy within two years before it becomes a modified
endowment contract will be taxed in this manner. This means that a distribution
made from a Policy that is not a modified endowment contract could later become
taxable as a distribution from a modified endowment contract.
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED
ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy that
is not classified as a modified endowment contract are generally treated first
as a recovery of the Policy Owner's investment in the Policy and only after the
recovery of all investment in the Policy as taxable income. However, certain
distributions which must be made in order to enable the Policy to continue to
qualify as a life insurance contract for Federal income tax purposes if Policy
benefits are reduced during the first 15 Policy years may be treated in whole or
in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a modified endowment contract
are generally not treated as distributions. However, the tax consequences
associated with Policy loans that are outstanding after the first ten Policy
years are less clear and a tax adviser should be consulted about such loans.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a modified endowment contract are subject to the 10 percent
additional income tax.
A-44
INVESTMENT IN THE POLICY. Your investment in the Policy is generally your
aggregate premiums. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax-free.
POLICY LOANS. In general, interest on a Policy loan will not be
deductible. If a Policy loan is outstanding when a Policy is canceled or lapses,
the amount of the outstanding indebtedness will be added to the amount
distributed and will be taxed accordingly. A loan may also be taxed when a
Policy is exchanged. Before taking out a Policy loan, you should consult a tax
adviser as to the tax consequences.
MULTIPLE POLICIES. All modified endowment contracts that are issued by
MetLife Investors USA (or its affiliates) to the same Policy Owner during any
calendar year are treated as one modified endowment contract for purposes of
determining the amount includible in the Policy Owner's income when a taxable
distribution occurs.
WITHHOLDING. To the extent that Policy distributions are taxable, they are
generally subject to withholding for the recipient's Federal income tax
liability. Recipients can generally elect, however, not to have tax withheld
from distributions.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN
CORPORATIONS. Policy Owners that are not U.S. citizens or residents will
generally be subject to U.S. Federal withholding tax on taxable distributions
from life insurance policies at a 30% rate, unless a lower treaty rate applies.
In addition, Policy Owners may be subject to state and/or municipal taxes and
taxes that may be imposed by the Policy Owner's country of citizenship or
residence. Prospective purchasers are advised to consult with a qualified tax
adviser regarding taxation with respect to a purchase of the Policy.
ACCELERATION OF DEATH BENEFIT RIDER. We believe that payments received
under the Acceleration of Death Benefit Rider should be fully excludable from
the gross income of the beneficiary except in certain business contexts.
However, you should consult a qualified tax adviser about the consequences of
adding this rider to a Policy or requesting payment under this rider.
ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES. The transfer of the
Policy or the designation of a beneficiary may have Federal, state, and/or local
transfer and inheritance tax consequences, including the imposition of gift,
estate, and generation-skipping transfer taxes. When the insured dies, the death
proceeds will generally be includable in the Policy Owner's estate for purposes
of the Federal estate tax if the Policy Owner was the insured. If the Policy
Owner was not the insured, the fair market value of the Policy would be included
in the Policy Owner's estate upon the Policy Owner's death. The Policy would not
be includable in the insured's estate if the insured neither retained incidents
of ownership at death nor had given up ownership within three years before
death.
Moreover, under certain circumstances, the Internal Revenue Code may impose
a "generation-skipping transfer tax" when all or part of a life insurance policy
is transferred to, or a death benefit is paid to, an individual two or more
generations younger than the Policy Owner. Regulations issued under the Internal
Revenue Code may require us to deduct the tax from your Policy, or from any
applicable payment, and pay it directly to the IRS.
Qualified tax advisers should be consulted concerning the estate and gift
tax consequences of Policy ownership and distributions under Federal, state and
local law. The individual situation of each Policy Owner or beneficiary will
determine the extent, if any, to which Federal, state, and local transfer and
inheritance taxes may be imposed and how ownership or receipt of Policy proceeds
will be treated for purposes of Federal, state and local estate, inheritance,
generation-skipping and other taxes.
The Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA")
repeals the Federal estate tax and replaces it with a carryover basis income tax
regime effective for estates of decedents dying after December 31, 2009. EGTRRA
also repeals the generation-skipping transfer tax, but not the gift tax, for
transfers made after December 31, 2009. EGTRRA contains a sunset provision,
which essentially returns the Federal estate, gift and generation-skipping
transfer taxes to their pre-EGTRRA form, beginning in 2011. Congress may or may
not enact permanent repeal between now and then.
During the period prior to 2010, EGTRRA provides for periodic decreases in
the maximum estate tax rate coupled with periodic increases in the estate tax
exemption. For 2006, the maximum estate tax rate is 46% and the
A-45
maximum rate for 2007-2009 is 45%. The estate tax exemption is $2,000,000 for
2006-2008 and $3,500,000 in 2009.
The complexity of the new tax law, along with uncertainty as to how it
might be modified in coming years, underscores the importance of seeking
guidance from a qualified adviser to help ensure that your estate plan
adequately addresses your needs and those of your beneficiaries under all
possible scenarios.
OTHER POLICY OWNER TAX MATTERS. The tax consequences of continuing the
Policy beyond the insured's attained age 121 are unclear. You should consult a
tax adviser if you intend to keep the Policy in force beyond the insured's
attained age 121.
If a trustee under a pension or profit-sharing plan, or similar deferred
compensation arrangement, owns a Policy, the Federal, state and estate tax
consequences could differ. The amounts of life insurance that may be purchased
on behalf of a participant in a pension or profit-sharing plan are limited.
Providing excessive life insurance coverage in a retirement plan will have
adverse tax consequences. The inclusion of riders, such as waiver of premium
riders, may also have adverse tax consequences. Therefore, it is important to
discuss with your tax adviser the suitability of the Policy, including the
suitability of coverage amounts and Policy riders, before any purchase by a
retirement plan. Any proposed distribution or sale of a Policy by a retirement
plan will also need to be discussed with a tax adviser. The current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and must be included annually in the plan participant's gross income. If the
plan participant dies while covered by the plan and the Policy proceeds are paid
to the participant's beneficiary, then the excess of the death benefit over the
cash value is not income taxable. However, the cash value will generally be
taxable to the extent it exceeds the participant's cost basis in the Policy.
Policies owned under these types of plans may be subject to restrictions under
the Employee Retirement Income Security Act of 1974 ("ERISA"). You should
consult a qualified adviser regarding ERISA.
Department of Labor ("DOL") regulations impose requirements for participant
loans under retirement plans covered by ERISA. Plan loans must also satisfy tax
requirements to be treated as nontaxable. Plan loan requirements and provisions
may differ from the Policy loan provisions. Failure of plan loans to comply with
the requirements and provisions of the DOL regulations and of tax law may result
in adverse tax consequences and/or adverse consequences under ERISA. Plan
fiduciaries and participants should consult a qualified adviser before
requesting a loan under a Policy held in connection with a retirement plan.
Businesses can use the Policies in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit
plans, retiree medical benefit plans and others. The tax consequences of such
plans may vary depending on the particular facts and circumstances. If you are
purchasing the Policy for any arrangement the value of which depends in part on
its tax consequences, you should consult a qualified tax adviser. In recent
years, moreover, Congress has adopted new rules relating to life insurance owned
by businesses. Any business contemplating the purchase of a new Policy or a
change in an existing Policy should consult a tax adviser.
Ownership of the Policy by a corporation, trust or other non-natural person
could jeopardize some (or all) of such entity's interest deduction under
Internal Revenue Code Section 264, even where such entity's indebtedness is in
no way connected to the Policy. In addition, under Section 264(f)(5), if a
business (other than a sole proprietorship) is directly or indirectly a
beneficiary of the Policy, the Policy could be treated as held by the business
for purposes of the Section 264(f) entity-holder rules. Therefore, it would be
advisable to consult with a qualified tax adviser before any non-natural person
is made an owner or holder of the Policy, or before a business (other than a
sole proprietorship) is made a beneficiary of the Policy.
GUIDANCE ON SPLIT DOLLAR PLANS. The IRS has issued guidance on split
dollar insurance plans. A tax adviser should be consulted with respect to this
guidance if you have purchased or are considering the purchase of a Policy for a
split dollar insurance plan. If your Policy is part of an equity split dollar
arrangement, there is a risk that some portion of the Policy cash value may be
taxed prior to any Policy distribution. If your split dollar plan provides
deferred compensation, recently enacted rules governing deferred compensation
arrangements may apply. Failure to adhere to these rules will result in adverse
tax consequences. Consult a tax adviser.
A-46
In addition, the Sarbanes-Oxley Act of 2002 (the "Act"), which was signed
into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded
companies, including non-U.S. companies that have securities listed on U.S.
exchanges, from extending, directly or indirectly or through a subsidiary, many
types of personal loans to their directors or executive officers. It is possible
that this prohibition may be interpreted to apply to split-dollar life insurance
arrangements for directors and executive officers of such companies, since such
arrangements can arguably be viewed as involving a loan from the employer for at
least some purposes.
Although the prohibition on loans generally took effect as of July 30,
2002, there is an exception for loans outstanding as of the date of enactment,
so long as there is no material modification to the loan terms and the loan is
not renewed after July 30, 2002. Any affected business contemplating the payment
of a premium on an existing Policy or the purchase of a new Policy in connection
with a split-dollar life insurance arrangement should consult legal counsel.
ALTERNATIVE MINIMUM TAX. There may also be an indirect tax upon the income
in the Policy or the proceeds of a Policy under the Federal corporate
alternative minimum tax, if the Policy Owner is subject to that tax.
POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes
is uncertain, there is always the possibility that the tax treatment of the
Policy could change by legislation or otherwise. Consult a tax adviser with
respect to legislative developments and their effect on the Policy.
FOREIGN TAX CREDITS. To the extent permitted under Federal tax law, we may
claim the benefit of certain foreign tax credits attributable to taxes paid by
certain Portfolios to foreign jurisdictions.
METLIFE INVESTORS USA'S INCOME TAXES
Under current Federal income tax law, MetLife Investors USA is not taxed on
the Separate Account's operations. Thus, currently we do not deduct a charge
from the Separate Account for Federal income taxes. We reserve the right to
charge the Separate Account for any future Federal income taxes we may incur.
Under current laws in several states, we may incur state and local taxes
(in addition to premium taxes). These taxes are not now significant and we are
not currently charging for them. If they increase, we may deduct charges for
such taxes.
DISTRIBUTION OF THE POLICIES
We have entered into a distribution agreement with our affiliate, MetLife
Investors Distribution Company ("Distributor"), for the distribution of the
Policies. We and Distributor have entered into selling agreements with other
affiliated and unaffiliated broker-dealers ("selling firms") for the sale of the
Policies through their registered representatives. Our affiliated broker-dealers
are MetLife Securities, Inc. ("MSI"), New England Securities Corporation
("NES"), Tower Square Securities, Inc. and Walnut Street Securities, Inc.
Distributor, MSI, NES and our other affiliated selling firms are registered with
the SEC as broker-dealers under the Securities Exchange Act of 1934 and are
members of the Financial Industry Regulatory Authority ("FINRA"). More
information about our affiliated selling firms and their registered persons is
available at http://www.finra.com or by calling 1-800-298-9999. You can also
obtain an investor brochure from FINRA describing its Public Disclosure Program.
All selling firms receive commissions. A portion of the payments made to
selling firms may be passed on their sales representatives in accordance with
their internal compensation programs. Those programs may also include other
types of cash and non-cash compensation and other benefits.
MSI and NES sales representatives receive cash payments for the products
they sell and service based on a "gross dealer concession" model. The cash
payment is equal to a percentage of the gross dealer concession amount described
below. The percentage is determined based on a formula that takes into
consideration the amount of proprietary products the sales representative sells
and services. Proprietary products are products issued by us or an affiliate.
Because sales of proprietary products are a factor in determining the percentage
of the gross dealer concession amount to which MSI and NES sales representative
are entitled, these sales representatives have an incentive to favor sale of the
Policy over similar products issued by non-affiliates.
A-47
In the first Policy year, the gross dealer concession amount for the
Policies is 117% of premiums paid up to the Commissionable Target Premium, and
5% of premiums paid in excess of the Commissionable Target Premium. In Policy
years 2 through 10, the gross dealer concession amount is 8.0% of all premiums
paid, and in Policy years 11 and thereafter the gross dealer concession amount
is 2.0% of all premiums. Commissionable Target Premium is the Target Premium, as
defined in the Glossary, plus the Target Premium associated with any riders
added to the Policy. Sales representatives of affiliated selling firms and their
managers may be eligible for various cash benefits that we may provide jointly
with affiliated selling firms. Ask your sales representative for further
information about what your sales representative and the selling firm for which
he or she works may receive in connection with your purchase of the Policy.
Sales representatives of our affiliates and their Managing Partners may
also be eligible for cash compensation such as bonuses, equity awards (for
example, stock options), training allowances, supplemental salary, payments
based on a percentage of the Policy's cash value, financing arrangements,
marketing support, medical and retirement benefits and other insurance and
non-insurance benefits. The amount of this cash compensation is based primarily
on the amount of proprietary products sold. Proprietary products are products
issued by us and our affiliates. Sales representatives of certain affiliates
must meet a minimum level of sales of proprietary products in order to maintain
their agent status with the company and in order to be eligible for most of the
cash compensation listed above. Managing Partners may be eligible for additional
cash compensation based on the performance (with emphasis on the sale of
proprietary products) of the sales representatives that the Managing Partner
supervises. Managing Partners may pay a portion of their cash compensation to
their sales representatives.
Receipt of the cash compensation described above may provide our sales
representatives and their Managing Partners, and the sales representatives and
Managing Partners of our affiliates, with an incentive to favor the sale of the
Policies over similar products issued by non-affiliates.
Sales representatives and their Managing Partners (and the sales
representatives and managers of our affiliates) are also eligible for various
non-cash compensation programs that we offer such as conferences, trips, prizes,
and awards. Other payments may be made for other services that do not directly
involve the sale of the Policies. These services may include the recruitment and
training of personnel, production of promotional literature, and similar
services.
We and Distributor may enter into preferred distribution arrangements with
selected selling firms under which we pay additional compensation, including
marketing allowances, introduction fees, persistency payments, preferred status
fees and industry conference fees. Marketing allowances are periodic payments to
certain selling firms based on cumulative periodic (usually quarterly) sales of
these variable insurance products. Introduction fees are payments to selling
firms in connection with the addition of these variable products to the selling
firm's line of investment products, including expenses relating to establishing
the data communications systems necessary for the selling firm to offer, sell
and administer these products. Persistency payments are periodic payments based
on account and/or cash values of these variable insurance products. Preferred
status fees are paid to obtain preferred treatment of these products in selling
firms' marketing programs, which may include marketing services, participation
in marketing meetings, listings in data resources and increased access to their
sales representatives. Industry conference fees are amounts paid to cover in
part the costs associated with sales conferences and educational seminars for
selling firms' sales representatives.
These preferred distribution arrangements are not offered to all selling
firms. The terms of any particular agreement governing compensation may vary
among selling firms and the amounts may be significant. We and Distributor have
entered into preferred distribution arrangements with our affiliated
broker-dealers, Walnut Street Securities Inc. and Tower Square Securities, Inc.,
and with the unaffiliated selling firms listed in the Statement of Additional
Information. We and Distributor may enter into similar arrangements with our
other affiliates MetLife Securities, Inc. and New England Securities
Corporation. The prospect of receiving, or the receipt of, additional
compensation as described above may provide selling firms or their
representatives with an incentive to favor sales of the Policies over other
variable insurance policies (or other investments) with respect to which the
selling firm does not receive additional compensation, or lower levels of
additional compensation. You may wish to take such payment arrangements into
account when considering and evaluating any recommendation relating to the
Policies. For more information about any such arrangements, ask your sales
representative for further information about what
A-48
your sales representative and the selling firm for which he or she works may
receive in connection with your purchase of a Policy.
We also pay amounts to Distributor that may be used for its operating and
other expenses, including the following sales expenses: compensation and bonuses
for Distributor's management team, advertising expenses, and other expenses of
distributing the Policies. Distributor's management team may also be eligible
for non-cash compensation items that we may provide jointly with Distributor.
Non-cash items include conferences, seminars and trips (including travel,
lodging and meals in connection therewith), entertainment, merchandise and
similar items.
We pay American Funds Distributors, Inc., principal underwriter for the
American Funds Insurance Series, a percentage of all premiums allocated to the
American Funds Bond Fund, the American Funds Global Small Capitalization Fund,
the American Funds Growth Fund, and the American Funds Growth-Income Fund, for
the services it provides in marketing the Funds' shares in connection with the
Policies. Each of these Funds makes payments to Distributor under their
distribution plans in consideration of services provided and expenses incurred
by Distributor in distributing their shares. The payments to Distributor
currently equal 0.25% of Separate Account assets invested in the particular
Portfolio. (See "Fee Tables--Annual Portfolio Operating Expenses" and the
Portfolio prospectuses.) Distributor may also receive brokerage commissions on
securities transactions initiated by an investment adviser of a Portfolio.
Commissions and other incentives or payments described above are not
charged directly to Policy Owners or the Separate Account. We intend to recoup
commissions and other sales expenses through fees and charges deducted under the
Policy.
The Statement of Additional Information contains additional information
about the compensation paid for the sale of the Policies.
LEGAL PROCEEDINGS
In the ordinary course of business, MetLife Investors USA, similar to other
life insurance companies, is involved in lawsuits (including class action
lawsuits), arbitrations and other legal proceedings. Also, from time to time,
state and federal regulators or other officials conduct formal and informal
examinations or undertake other actions dealing with various aspects of the
financial services and insurance industries. In some legal proceedings involving
insurers, substantial damages have been sought and/or material settlement
payments have been made. It is not possible to predict with certainty the
ultimate outcome of any pending legal proceeding or regulatory action. However,
MetLife Investors USA does not believe any such action or proceeding will have a
material adverse effect upon the Separate Account or upon the ability of MetLife
Investors Distribution Company to perform its contract with the Separate Account
or of MetLife Investors USA to meet its obligations under the Policies.
RESTRICTIONS ON FINANCIAL TRANSACTIONS
Applicable laws designed to counter terrorism and prevent money laundering
might, in certain circumstances, require us to reject a premium payment and/or
block or "freeze" your Policy. If these laws apply in a particular situation, we
would not be allowed to process any request for withdrawals, surrenders, loans
or death benefits, make transfers, or continue making payments under your death
benefit option until instructions are received from the appropriate regulator.
We also may be required to provide additional information about you or your
Policy to government regulators.
FINANCIAL STATEMENTS
You may find the financial statements of MetLife Investors USA in the
Statement of Additional Information. MetLife Investors USA's financial
statements should be considered only as bearing on our ability to meet our
obligations under the Policies. They should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
A-49
GLOSSARY
AGE. The age of an insured refers to the insured's age at his or her
nearest birthday.
ATTAINED AGE. The insured's issue age plus the number of completed Policy
years.
BASE POLICY. The Policy without riders.
CASH SURRENDER VALUE. The amount you receive if you surrender the Policy.
It is equal to the Policy's cash value reduced by any Surrender Charge that
would apply on surrender and by any outstanding Policy loan and accrued
interest.
CASH VALUE. A Policy's cash value includes the amount of its cash value
held in the Separate Account, the amount held in the Fixed Account and, if there
is an outstanding Policy loan, the amount of its cash value held in the Loan
Account.
FIXED ACCOUNT. The Fixed Account is a part of our general account to which
you may allocate net premiums. It provides guarantees of principal and interest.
INVESTMENT DIVISION. A sub-account of the Separate Account that invests in
shares of an open-ended management investment company or other pools of
investment assets.
INVESTMENT START DATE. This is the later of the Policy Date and the date
we first receive a premium payment for the Policy.
ISSUE AGE. The age of the insured as of his or her birthday nearest to the
Policy Date.
LOAN ACCOUNT. The account to which cash value from the Separate and/or
Fixed Accounts is transferred when a Policy loan is taken.
NET CASH VALUE. The Policy's cash value less any outstanding loans and
accrued loan interest.
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose to help meet your future goals under the Policy. The Planned Premium
consists of a first-year premium amount and an amount for premium payments in
subsequent Policy years. It is subject to certain limits under the Policy.
POLICY DATE. The date on which coverage under the Policy and Monthly
Deductions begin. If you make a premium payment with the application, unless you
request otherwise, the Policy Date is generally the date the Policy application
is approved. If you choose to pay the initial premium upon delivery of the
Policy, unless you request otherwise, the Policy Date is generally the date on
which we receive your initial payment.
PREMIUMS. Premiums include all payments under the Policy, whether a
Planned Premium or an unscheduled payment.
SEPARATE ACCOUNT. MetLife Investors USA Variable Life Account A, a
separate account established by MetLife Investors USA to receive and invest
premiums paid under the Policies and certain other variable life insurance
policies, and to provide variable benefits.
TARGET PREMIUM. We use the Target Premium to determine the amount of
Mortality and Expense Risk Charge imposed on the Separate Account and the amount
of Sales Charge imposed on premium payments. The Target Premium varies by issue
age, sex, smoking status and any substandard rating of the insured and the
Policy's base face amount.
YOU. "You" refers to the Policy Owner.
A-50
APPENDIX A
GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than what is
required by the "guideline premium test" under Section 7702(a)(2) of the
Internal Revenue Code, or the "cash value accumulation test" under Section
7702(a)(1) of the Internal Revenue Code, as selected by you when the Policy is
issued. The test you choose at issue will be used for the life of the Policy.
(See "Death Benefits.")
For the guideline premium test, the table below shows the percentage of the
Policy's cash value that is used to determine the death benefit.
<Table>
<Caption>
AGE OF AGE OF
INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF
THE POLICY YEAR CASH VALUE THE POLICY YEAR CASH VALUE
- ------------------- ------------- ------------------- -------------
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 121 101
59 134
60 130
</Table>
For the cash value accumulation test, sample net single premium factors for
selected ages of male and female insureds, in a standard or better nonsmoker
risk class, are listed below.
<Table>
<Caption>
NET SINGLE PREMIUM
FACTOR
-------------------
AGE MALE FEMALE
- --- -------- --------
30.......................................................... 5.82979 6.59918
40.......................................................... 4.11359 4.63373
50.......................................................... 2.93292 3.28706
60.......................................................... 2.14246 2.40697
70.......................................................... 1.64028 1.82665
80.......................................................... 1.32530 1.44515
90.......................................................... 1.15724 1.22113
100......................................................... 1.08417 1.10646
120......................................................... 1.02597 1.02597
</Table>
A-51
APPENDIX B
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES
AND CASH SURRENDER VALUES
The tables in Appendix B illustrate the way the Policies work, based on
assumptions about investment returns and the insured's characteristics. They
show how the death benefit, cash surrender value and cash value could vary over
an extended period of time assuming hypothetical gross rates of return (i.e.,
investment income and capital gains and losses, realized or unrealized) for the
Separate Account equal to constant after tax annual rates of 0%, 6% and 10%. The
tables are based on a face amount of $300,000 for a male aged 35. The insured is
assumed to be in the preferred nonsmoker risk class. The tables assume no rider
benefits and assume that no allocations are made to the Fixed Account. Values
are first given based on current Policy charges and then based on guaranteed
Policy charges. (See "Charges.") Illustrations show the Option A death benefit.
Policy values would be different (either higher or lower) from the
illustrated amounts in certain circumstances. For example, illustrated amounts
would be different where actual gross rates of return averaged 0%, 6% or 10%,
but: (i) the rates of return varied above and below these averages during the
period, (ii) premiums were paid in other amounts or at other than annual
intervals, or (iii) cash values were allocated differently among individual
Investment Divisions with varying rates of return. They would also differ if a
Policy loan or partial withdrawal were made during the period of time
illustrated, if the insured were female or in another risk classification, or if
the Policies were issued at unisex rates. For example, as a result of variations
in actual returns, additional premium payments beyond those illustrated may be
necessary to maintain the Policy in force for the periods shown or to realize
the Policy values shown, even if the average rate of return is achieved.
The death benefits, cash surrender values and cash values shown in the
tables reflect: (i) deductions from premiums for the sales charge, premium tax
and federal tax charge; and (ii) a Monthly Deduction (consisting of a Policy
Charge, a Coverage Expense Charge, a Mortality and Expense Risk Charge, and a
charge for the cost of insurance) from the cash value on the first day of each
Policy month. The cash surrender values reflect a Surrender Charge deducted from
the cash value upon surrender, face reduction or lapse during the first ten
Policy years. (See "Charges.") The illustrations reflect an arithmetic average
of the gross investment advisory fees and operating expenses of the Portfolios,
at an annual rate of 1.01% of the average daily net assets of the Portfolios.
This average does not reflect expense subsidies by the investment advisers of
certain Portfolios.
The gross rates of return used in the illustrations do not reflect the
deductions of the charges and expenses of the Portfolios. Taking account of the
average investment advisory fee and operating expenses of the Portfolios, the
gross annual rates of return of 0%, 6% and 10% correspond to net investment
experience at constant annual rates of -1.00%, 4.93% and 8.89%, respectively.
If you request, we will furnish a personalized illustration reflecting the
proposed insured's age, sex, risk class, and the face amount or premium payment
schedule requested. Because these and other assumptions will differ, the values
shown in the personalized illustrations can differ very substantially from those
shown in the tables. Therefore, you should carefully review the information that
accompanies any personalized illustration. That information will disclose all
the assumptions on which the personalized illustration is based. Where
applicable, we will also furnish on request a personalized illustration for a
Policy which is not affected by the sex of the insured. You should contact your
registered representative to request a personalized illustration.
A-52
MALE ISSUE AGE 35
$ ANNUAL PREMIUM FOR
PREFERRED NONSMOKER RISK CLASS
$300,000 FACE AMOUNT
OPTION A DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<Table>
<Caption>
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY -------------------------------- ------------------------------- -------------------------------
YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10%
- ------ -- -- --- -- -- --- -- -- ---
1
2
3
4
5
6
7
8
9
10
15
20
25
30
35
40
45
50
55
60
65
</Table>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS
CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S
INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR
BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY
LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE
INVESTORS USA OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-53
MALE ISSUE AGE 35
$ ANNUAL PREMIUM FOR
PREFERRED NONSMOKER RISK CLASS
$300,000 FACE AMOUNT
OPTION A DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<Table>
<Caption>
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY -------------------------------- ------------------------------ ------------------------------
YEAR 0% 6% 10% 0% 6% 10% 0% 6% 10%
- ------ -- -- --- -- -- --- -- -- ---
1
2
3
4
5
6
7
8
9
10
15
20
25
30
35
40
45
50
55
60
65
</Table>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS
CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S
INVESTMENT DIVISIONS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR
A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF
RETURN AVERAGED 0%, 6%, AND 10% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR
BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY
LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY METLIFE
INVESTORS USA OR THE PORTFOLIOS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-54
Additional information about the Policy and the Separate Account can be
found in the Statement of Additional Information, which is available online at
our website www.metlife.com. You may also obtain a copy of the Statement of
Additional Information, without charge, by calling 1-800-200-2214 or by
e-mailing us at . You may also obtain, without
charge, a personalized illustration of death benefits, cash surrender values and
cash values by calling your registered representative.
For Investment Division transfers and premium reallocations, call
1-800-200-2214.
For current information about your Policy values, to change or update
Policy information such as your billing address, billing mode, beneficiary or
ownership, for information about other Policy transactions, and to ask questions
about your Policy, you may call our TeleService Center at 1-800-388-4000.
This prospectus incorporates by reference all of the information contained
in the Statement of Additional Information, which is legally part of this
prospectus.
Information about the Policy and the Separate Account, including the
Statement of Additional Information, is available for viewing and copying at the
SEC's Public Reference Room in Washington, D.C. Information about the operation
of the Public Reference Room may be obtained by calling the SEC at 202-551-8090.
The Statement of Additional Information, reports and other information about the
Separate Account are available on the SEC Internet site at www.sec.gov. Copies
of this information may be obtained upon payment of a duplicating fee, by
writing to the SEC's Public Reference Section at 100 F Street, NE, Washington,
DC 20549-0102.
File No. 811-21851
METLIFE INVESTORS USA INSURANCE COMPANY
5 PARK PLAZA, SUITE 1900
IRVINE, CA 92614
RECEIPT
This is to acknowledge receipt of an Equity Advantage VUL Prospectus dated April
28, 2008. This Variable Life Insurance Policy is offered by MetLife Investors
USA Insurance Company.
<Table>
- ----------------------------------------------------- -----------------------------------------------------
(Date) (Client's Signature)
</Table>
EQUITY ADVANTAGE VUL
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
METLIFE INVESTORS USA VARIABLE LIFE ACCOUNT A
ISSUED BY METLIFE INVESTORS USA INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
(PART B)
APRIL 28, 2008
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus dated April 28,
2008 and should be read in conjunction therewith. A copy of the Prospectus may
be obtained by writing to MetLife Investors USA Insurance Company, 5 Park Plaza,
Suite 1900, Irvine, CA 92614.
SAI-1
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
-------
GENERAL INFORMATION AND HISTORY............................. SAI-3
The Company............................................... SAI-3
The Separate Account...................................... SAI-3
DISTRIBUTION OF THE POLICIES................................ SAI-3
ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE
POLICIES.................................................. SAI-3
Payment of Proceeds....................................... SAI-3
Payment Options........................................... SAI-3
ADDITIONAL INFORMATION ABOUT CHARGES........................ SAI-4
Group or Sponsored Arrangements........................... SAI-4
LOANS.......................................................
POTENTIAL CONFLICTS OF INTEREST............................. SAI-4
LIMITS TO METLIFE INVESTORS USA'S RIGHT TO CHALLENGE THE
POLICY.................................................... SAI-5
MISSTATEMENT OF AGE OR SEX.................................. SAI-5
REPORTS..................................................... SAI-5
PERSONALIZED ILLUSTRATIONS.................................. SAI-5
PERFORMANCE DATA............................................ SAI-6
INVESTMENT ADVICE........................................... SAI-6
REGISTRATION STATEMENT...................................... SAI-8
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............... SAI-8
EXPERTS..................................................... SAI-8
FINANCIAL STATEMENTS........................................ F-1
</Table>
SAI-2
GENERAL INFORMATION AND HISTORY
THE COMPANY
MetLife Investors USA Insurance Company is a stock life insurance company
founded on September 13, 1960 and organized under the laws of the State of
Delaware. Our principal executive offices are located at 5 Park Plaza, Suite
1900, Irvine, California 92614. MetLife Investors USA is authorized to transact
the business of life insurance, including annuities, and is currently licensed
to do business in all states (except New York) and the District of Columbia.
MetLife Investors USA is an indirect, wholly-owned subsidiary of MetLife, Inc.,
a publicly-traded company. MetLife, Inc., through its subsidiaries and
affiliates, is a leading provider of insurance and other financial services to
individual and institutional customers.
THE SEPARATE ACCOUNT
We established the Separate Account as a separate investment account on
November 15, 2005 under Delaware law. The Separate Account is the funding
vehicle for the Policies, and other variable life insurance policies that we
issue. These other policies impose different costs, and provide different
benefits, from the Policies. The Separate Account meets the definition of a
"separate account" under Federal securities laws, and is registered with the
Securities and Exchange Commission (the "SEC") as a unit investment trust under
the Investment Company Act of 1940. Registration with the SEC does not involve
SEC supervision of the Separate Account's management or investments. However,
the Delaware Insurance Commissioner regulates MetLife Investors USA and the
Separate Account, which are also subject to the insurance laws and regulations
where the Policies are sold.
DISTRIBUTION OF THE POLICIES
The Policies are offered to the public on a continuous basis. We anticipate
continuing to offer the Policies, but reserve the right to discontinue the
offering.
Our affiliate, MetLife Investors Distribution Company, 5 Park Plaza, Suite
1900, Irvine, California 92614, ("Distributor") serves as principal underwriter
for the Policies. Distributor is a Missouri corporation organized in 2000.
Distributor is registered as a broker-dealer with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as well as with the
securities commissions in the states in which it operates, and is a member of
NASD, Inc. Distributor is not a member of the Securities Investor Protection
Corporation. Distributor may enter into selling agreements with other
broker-dealers ("selling firms") and compensate them for their services.
Distributor passes through commissions it receives to selling firms for
their sales and does not retain any portion of it in return for its services as
distributor for the Policies. Under the distribution arrangement, we pay the
following sales expenses: sales representative training allowances; deferred
compensation and insurance benefits of registered persons; advertising expenses;
and all other expenses of distributing the Policies.
ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICIES
PAYMENT OF PROCEEDS
We may withhold payment of surrender or loan proceeds if those proceeds are
coming from a Policy Owner's check, or from a premium transaction under our
pre-authorized checking arrangement, which has not yet cleared. We may also
delay payment while we consider whether to contest the Policy. We pay interest
on the death benefit proceeds from the date they become payable to the date we
pay them.
Normally we promptly make payments of cash value, or of any loan value
available, from cash value in the Fixed Account. However, we may delay those
payments for up to six months. We pay interest in accordance with state
insurance law requirements on delayed payments.
PAYMENT OPTIONS
We pay the Policy's death benefit and cash surrender value in one sum
unless you or the payee choose a payment option for all or part of the proceeds.
You can choose a combination of payment options. You can make,
SAI-3
change or revoke the selection of payee or payment option before the death of
the insured. You can contact your registered representative or our Designated
Office for the procedure to follow. (See "Receipt of Communications and Payments
at MetLife Investors USA's Designated Office.") The payment options available
are fixed benefit options only and are not affected by the investment experience
of the Separate Account. Once payments under an option begin, withdrawal rights
may be restricted. Even if the death benefit under the Policy is excludible from
income, payments under Payment Options may not be excludible in full. This is
because earnings on the death benefit after the insured's death are taxable and
payments under the Payment Options generally include such earnings. You should
consult a tax adviser as to the tax treatment of payments under Payment Options.
The following payment options are available:
(i) SINGLE LIFE INCOME. We pay proceeds in equal monthly installments
for the life of the payee.
(ii) SINGLE LIFE INCOME -- 10-YEAR GUARANTEED PAYMENT PERIOD. We pay
proceeds in equal monthly installments during the life of the payee,
with a guaranteed payment period of 10 years.
(iii) JOINT AND SURVIVOR LIFE INCOME. We pay proceeds in equal monthly
installments (a) while either of two payees is living, or (b) while
either of the two payees is living, but for at least 10 years.
ADDITIONAL INFORMATION ABOUT CHARGES
GROUP OR SPONSORED ARRANGEMENTS
We may issue the Policies to group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a situation where a trustee,
employer or similar entity purchases individual Policies covering a group of
individuals. Examples of such arrangements are non-qualified deferred
compensation plans. A "sponsored arrangement" includes a situation where an
employer or an association permits group solicitation of its employees or
members for the purchase of individual Policies.
We may waive, reduce or vary any Policy charges under Policies sold to a
group or sponsored arrangement. We may also raise the interest rate credited to
loaned amounts under these Policies. The amount of the variations and our
eligibility rules may change from time to time. In general, they reflect cost
savings over time that we anticipate for Policies sold to the eligible group or
sponsored arrangements and relate to objective factors such as the size of the
group, its stability, the purpose of the funding arrangement and characteristics
of the group members. Consult your registered representative for any variations
that may be available and appropriate for your case.
The United States Supreme Court has ruled that insurance policies with
values and benefits that vary with the sex of the insured may not be used to
fund certain employee benefit programs. Therefore, we offer Policies that do not
vary based on the sex of the insured to certain employee benefit programs. We
recommend that employers consult an attorney before offering or purchasing the
Policies in connection with an employee benefit program.
POTENTIAL CONFLICTS OF INTEREST
The Portfolios' Boards of Trustees monitor events to identify conflicts
that may arise from the sale of Portfolio shares to variable life and variable
annuity separate accounts of affiliated and, if applicable, unaffiliated
insurance companies and qualified plans. Conflicts could result from changes in
state insurance law or Federal income tax law, changes in investment management
of a Portfolio, or differences in voting instructions given by variable life and
variable annuity contract owners and qualified plans, if applicable. If there is
a material conflict, the Board of Trustees will determine what action should be
taken, including the removal of the affected Portfolios from the Separate
Account, if necessary. If we believe any Portfolio action is insufficient, we
will consider taking other action to protect Policy Owners. There could,
however, be unavoidable delays or interruptions of operations of the Separate
Account that we may be unable to remedy.
SAI-4
LIMITS TO METLIFE INVESTORS USA'S RIGHT TO CHALLENGE THE POLICY
Generally, we can challenge the validity of your Policy or a rider during
the insured's lifetime for two years (or less, if required by state law) from
the date of issue, based on misrepresentations made in the application. We can
challenge the portion of the death benefit resulting from an underwritten
premium payment for two years during the insured's lifetime from receipt of the
premium payment. However, if the insured dies within two years of the date of
issue, we can challenge all or part of the Policy at any time based on
misrepresentations in the application. We can challenge an increase in face
amount, with regard to material misstatements concerning such increase, for two
years during the insured's lifetime from its effective date.
MISSTATEMENT OF AGE OR SEX
If we determine during the first Policy year that there was a misstatement
of age or sex in the application, the Policy values and charges will be
recalculated from the issue date based on the correct information. If, after the
first Policy year, we determine that the application misstates the insured's age
or sex, the Policy's death benefit is the amount that the most recent Monthly
Deduction which was made would provide, based on the insured's correct age and,
if the Policy is sex-based, correct sex.
REPORTS
We will send you an annual statement showing your Policy's death benefit,
cash value and any outstanding Policy loan principal. We will also confirm
Policy loans, account transfers, lapses, surrenders and other Policy
transactions when they occur.
You will be sent periodic reports containing the financial statements of
the Portfolios.
PERSONALIZED ILLUSTRATIONS
We may provide personalized illustrations showing how the Policies work
based on assumptions about investment returns and the Policy Owner's and/or
insured's characteristics. The illustrations are intended to show how the death
benefit, cash surrender value, and cash value could vary over an extended period
of time assuming hypothetical gross rates of return (i.e., investment income and
capital gains and losses, realized or unrealized) for the Separate Account equal
to specified constant after-tax rates of return. One of the gross rates of
return will be 0%. Gross rates of return do not reflect the deduction of any
charges and expenses. The illustrations will be based on specified assumptions,
such as face amount, premium payments, insured, risk class, and death benefit
option. Illustrations will disclose the specific assumptions upon which they are
based. Values will be given based on guaranteed mortality and expense risk and
other charges and may also be based on current mortality and expense risk and
other charges.
The illustrated death benefit, cash surrender value, and cash value for a
hypothetical Policy would be different, either higher or lower, from the amounts
shown in the illustration if the actual gross rates of return averaged the gross
rates of return upon which the illustration is based, but varied above and below
the average during the period, or if premiums were paid in other amounts or at
other than annual intervals. For example, as a result of variations in actual
returns, additional premium payments beyond those illustrated may be necessary
to maintain the Policy in force for the period shown or to realize the Policy
values shown in particular illustrations even if the average rate of return is
realized.
Illustrations may also show the internal rate of return on the cash
surrender value and the death benefit. The internal rate of return on the cash
surrender value is equivalent to an interest rate (after taxes) at which an
amount equal to the illustrated premiums could have been invested outside the
Policy to arrive at the cash surrender value of the Policy. The internal rate of
return on the death benefit is equivalent to an interest rate (after taxes) at
which an amount equal to the illustrated premiums could have been invested
outside the Policy to arrive at the death benefit of the Policy. Illustrations
may also show values based on the historical performance of the Investment
Divisions. We reserve the right to impose a $25 fee for each illustration that
you request in excess of one per year.
SAI-5
PERFORMANCE DATA
We may provide information concerning the historical investment experience
of the Investment Divisions, including average annual net rates of return for
periods of one, three, five, and ten years, as well as average annual net rates
of return and total net rates of return since inception of the Portfolios. These
net rates of return represent past performance and are not an indication of
future performance. Insurance, sales, premium tax, mortality and expense risk
and coverage expense charges, which can significantly reduce the return to the
Policy Owner, are not reflected in these rates. The rates of return reflect only
the fees and expenses of the underlying Portfolios. The net rates of return show
performance from the inception of the Portfolios, which in some instances, may
precede the inception date of the corresponding Investment Division.
INVESTMENT ADVICE
The Separate Account invests in the Portfolios of the Metropolitan Series
Fund, Inc. ("Met Series Fund"), the Met Investors Series Trust, and other
unaffiliated open-end management investment companies that serve as investment
vehicles for variable life and variable annuity separate accounts. MetLife
Advisers, LLC ("MetLife Advisers") and Met Investors Advisory LLC ("Met
Investors Advisory"), as the advisers to the Met Series Fund and the Met
Investors Series Trust, respectively, may, from time to time, replace the
sub-adviser of a Portfolio with a new sub-adviser. A number of sub-adviser
changes have been made with respect to the Portfolios in which the Separate
Account invests.
MetLife Advisers (formerly known as New England Investment Management, Inc.
which was formerly known as TNE Advisers, Inc.) became the investment adviser to
the Portfolios of the Met Series Fund on May 1, 2001. Prior to May 1, 2001,
Metropolitan Life Insurance Company was the investment adviser for all
Portfolios of the Met Series Fund.
MetLife Advisers was also the investment adviser to each of the Series of
the New England Zenith Fund ("Zenith Fund") until May 1, 2003, the date on which
each Series became a Portfolio of the Met Series Fund. MetLife Advisers had been
the adviser to all Series of the Zenith Fund since 1994, with the following
exceptions: in the case of the Back Bay Advisors Bond Income Series (currently,
the BlackRock Bond Income Portfolio), the Westpeak Value Growth Series
(currently, the FI Value Leaders Portfolio), the Loomis Sayles Small Cap Series
and the Loomis Sayles Avanti Growth Series (currently, the Harris Oakmark
Focused Value Portfolio), MetLife Advisers became the adviser on May 1, 1995.
Met Investors Advisory (formerly known as Met Investors Advisory Corp.
which was formerly known as Security First Investment Management) became the
investment adviser for the Portfolios of the Met Investors Series Trust on
February 12, 2001.
The following is the sub-adviser history of the Met Series Fund Portfolios
that, prior to May 1, 2003, were Series of the Zenith Fund:
The sub-adviser of the FI Value Leaders Portfolio (formerly, the FI
Structured Equity Portfolio which was formerly the Westpeak Growth and Income
Series which was formerly the Westpeak Value Growth Series) was Westpeak
Investment Advisors, L.P. until May 1, 2002, when Fidelity Management & Research
Company became the sub-adviser. The sub-adviser to the BlackRock Bond Income
Portfolio (formerly, the State Street Research Bond Income Portfolio which was
formerly the Back Bay Advisors Bond Income Series) was Back Bay Advisors, L.P.
until July 1, 2001, when State Street Research & Management Company became the
sub-adviser; BlackRock Advisors, Inc. became the sub-adviser to these Portfolios
on January 31, 2005. The sub-adviser to the MFS Total Return Portfolio
(formerly, the Back Bay Advisors Managed Series) was Back Bay Advisors, L.P.
until July 1, 2001 when Massachusetts Financial Services Company became the
sub-adviser. The sub-adviser to the Harris Oakmark Focused Value Portfolio
(formerly, the Harris Oakmark Mid Cap Value Series which was formerly the
Goldman Sachs Midcap Value Series which was formerly the Loomis Sayles Avanti
Growth Series) was Loomis, Sayles and Company, L.P. until May 1, 1998, when
Goldman Sachs Asset Management, a separate operating division of Goldman Sachs &
Co., became the sub-adviser; Harris Associates L.P. became the sub-adviser on
May 1, 2000. The sub-adviser to the Balanced Portfolio (formerly, the Loomis
Sayles Balanced Series) was Loomis, Sayles and Company, L.P. until May 1, 2000,
when Wellington Management Company, LLP became the sub-adviser. On or about
April 30, 2004, the Balanced Portfolio merged with and into the MFS Total Return
Portfolio and the Balanced
SAI-6
Portfolio ceased to exist. The sub-advisor to the Westpeak Stock Index Series,
which was replaced by the MetLife Stock Index Portfolio on April 27, 2001 and
was formerly known as the Stock Index Series, was Back Bay Advisors, L.P. until
August 1, 1993, when Westpeak Investment Advisors, L.P. became the sub-adviser.
The sub-adviser to the BlackRock Legacy Large Cap Growth Portfolio
(formerly, the State Street Research Large Cap Growth Portfolio which was
formerly the Alger Equity Growth Portfolio) was Fred Alger Management, Inc.
until May 1, 2004, when State Street Research & Management Company became the
sub-adviser; BlackRock Advisors, Inc. became the sub-adviser on January 31,
2005. On or about April 30, 2004, the FI Mid Cap Opportunities Portfolio merged
with and into the Janus Mid Cap Portfolio and immediately thereafter Fidelity
Management & Research Company replaced Janus Capital Management LLC as the
sub-adviser to the Portfolio, which then became known as the FI Mid Cap
Opportunities Portfolio. On or about April 30, 2004, the MFS Research Managers
Portfolio merged with and into the MFS Investors Trust Portfolio and the MFS
Research Managers Portfolio ceased to exist. On or about May 1, 2006, the MFS
Investors Trust Portfolio merged with and into the Legg Mason Value Equity
Portfolio, a Portfolio of the Met Investors Series Trust, and the MFS Investors
Trust Portfolio ceased to exist.
The following is the sub-adviser history of the remaining Met Series Fund
Portfolios:
Metropolitan Life Insurance Company became the sub-adviser of the Lehman
Brothers(R) Aggregate Bond Index Portfolio, the MetLife Stock Index Portfolio,
the MetLife Mid Cap Stock Index Portfolio, the Morgan Stanley EAFE(R) Index
Portfolio and the Russell 2000(R) Index Portfolio on May 1, 2001. The
sub-adviser to the FI International Stock Portfolio (formerly, the Putnam
International Stock Portfolio) was Putnam Investment Management, LLC until
December 16, 2003 when Fidelity Management & Research Company became the
sub-adviser. On December 1, 2000, the Putnam International Stock Portfolio
replaced the Morgan Stanley International Magnum Equity Series (formerly the
Draycott International Equity Series) of the Zenith Fund. The sub-adviser to the
Morgan Stanley International Magnum Equity Series was Draycott Partners, Ltd.
until May 1, 1997, when Morgan Stanley Asset Management Inc. became the
sub-adviser. On April 28, 2003, the Janus Growth Portfolio, formerly a Portfolio
of the Met Series Fund, merged with and into the Janus Aggressive Growth
Portfolio of the Met Investors Series Trust.
The sub-adviser to the BlackRock Aggressive Growth Portfolio (formerly, the
State Street Research Aggressive Growth Portfolio), the BlackRock Strategic
Value Portfolio (formerly, the State Street Research Aurora Portfolio), the
BlackRock Diversified Portfolio (formerly, the State Street Research Diversified
Portfolio), the BlackRock Investment Trust Portfolio (formerly, the State Street
Research Investment Trust Portfolio), and the BlackRock Large Cap Value
Portfolio (formerly, the State Street Research Large Cap Value Portfolio) was
State Street Research & Management Company until January 31, 2005, when
BlackRock Advisors, Inc. became the sub-adviser. The sub-adviser to the
Oppenheimer Global Equity Portfolio (formerly, the Scudder Global Equity
Portfolio) was Deutsche Investment Management Americas Inc. until May 1, 2005
when OppenheimerFunds, Inc. became the sub-adviser. On May 1, 2005, the
Met/Putnam Voyager Portfolio (formerly, the Putnam Large Cap Growth Portfolio)
merged with and into the Jennison Growth Portfolio and the Met/Putnam Voyager
Portfolio ceased to exist. The sub-adviser to the Western Asset Management
Strategic Bond Opportunities Portfolio and the Western Asset Management U.S.
Government Portfolio (formerly, the Salomon Brothers Strategic Bond
Opportunities Portfolio and the Salomon Brothers U.S. Government Portfolio,
respectively) was Salomon Brothers Asset Management Inc. until May 1, 2006, when
Western Asset Management Company became the sub-adviser to the Portfolios.
The following is the sub-adviser history of the Met Investors Series Trust:
The sub-adviser to the T. Rowe Price Mid-Cap Growth Portfolio (formerly,
the MFS Mid Cap Growth Portfolio) was Massachusetts Financial Services Company
until T. Rowe Price Associates, Inc. became the sub-adviser effective January 1,
2003. The sub-adviser to the Harris Oakmark International Portfolio (formerly,
the State Street Research Concentrated International Portfolio) was State Street
Research & Management Company until Harris Associates, L.P. became the
sub-adviser effective January 1, 2003. The sub-adviser to the RCM Global
Technology Portfolio (formerly, the PIMCO PEA Innovation Portfolio) was PEA
Capital LLC until January 15, 2005 when RCM Capital Management LLC became the
sub-adviser. The sub-adviser to the Lazard Mid-Cap Portfolio (formerly, the
Met/AIM Mid Cap Core Equity Portfolio) was AIM Capital Management Inc. until
December 19, 2005, when Lazard Asset Management LLC became the sub-adviser.
SAI-7
REGISTRATION STATEMENT
This Statement of Additional Information and the prospectus omit certain
information contained in the Registration Statement which has been filed with
the SEC. Copies of such additional information may be obtained from the SEC upon
payment of the prescribed fee.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of MetLife Investors USA Insurance Company (the
"Company") (which report expresses an unqualified opinion and includes an
explanatory paragraph referring to the fact that the Company changed its method
of accounting for certain non-traditional long duration contracts and separate
accounts in certain insurance products as required by new accounting guidance
which became effective on January 1, 2004, and recorded the impact as a
cumulative effect of changes in accounting principles. In addition, the Company
changed its method of accounting for mandatorily redeemable preferred stock as
required by new accounting guidance which was adopted as of January 1, 2004),
included in this Statement of Additional Information have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their report appearing herein, and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing. The principal address of Deloitte & Touche LLP is 201 East Kennedy
Boulevard, Suite 1200, Tampa, Florida 33602-5827.
EXPERTS
Paul L. LeClair, FSA, MAAA, Vice President of Metropolitan Life Insurance
Company has examined actuarial matters included in the Registration Statement,
as stated in his opinion filed as an exhibit to the Registration Statement.
SAI-8
DRAFT MARCH 14, 2008
MARY E. THORNTON
DIRECT LINE: 202.383.0698
Internet: mary.thornton@sablaw.com
April __, 2008
VIA EDGAR TRANSMISSION
Alison White, Esq.
Office of Insurance Products
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Pre-Effective Amendments No. 2 to the
Registration Statements on Form N-6 for
Metropolitan Life Separate Account UL (File No. 333-147508) and
MetLife Investors USA Variable Life Account A (File No. 333-147509)
-------------------------------------------------------------------
Dear Ms. White:
On behalf of Metropolitan Life Insurance Company ("MetLife") and MetLife
Investors USA Insurance Company ("MLI") (together, the "Companies"), attached
for your convenience is a courtesy copy of the prospectuses and statements of
additional information included in the Pre-Effective Amendments No. 2 (the
"Amendments") to the above captioned Registration Statements on Form N-6. The
Amendments were filed with the Commission on April __, 2008. The attached copies
have been marked to show changes from the original prospectuses and statements
of additional information included in the initial Registration Statements. In
the Amendments, the Companies have made changes in response to your comments,
have included financial statements and all required exhibits, have updated
certain information, and have made other stylistic and formatting changes.
Also, we are providing responses to the comments in your letters dated January
14, 2008. For your convenience, we are providing a single response to both
letters, inasmuch as the comments,
Alison White, Esq.
April __, 2008
Page 2 of 11
with the one exception noted below, were identical. Please note, however, that
the comment number relates to the numbers set forth in your letter regarding
Metropolitan Life Separate Account UL. Each of your comments is set forth below
followed by the Companies' responses.
As noted in the transmittal letter that accompanied the Amendments, the
Companies and their principal underwriters are seeking acceleration of the
effectiveness of these registration statements to April 28, 2008, or as soon
thereafter as is reasonably practicable. (Copies of these acceleration requests
are enclosed.) Any assistance you and the Staff can provide to the Companies to
assist them in meeting this request would be very much appreciated.
1. General Comment
Comment: Please confirm that the contract name on the front
cover page of the prospectus will continue to be the
same as the EDGAR class identifier associated with
the contract.
Response: The MetLife and MLI versions of the contracts will each
be known as Equity Advantage VUL, and this name will
appear on the front cover page of both prospectuses.
To distinguish one from the other, however, the EDGAR
class identifiers for the contracts are Equity
Advantage VUL (MetLife) and Equity Advantage VUL (MLI).
2. Right to Examine Policy, pages 4 and 23-24
Comment: Please revise the disclosure to state that if a
policy owner returns his policy during the free-look
period, he will receive premiums paid or any amount
required under state law if that amount is greater
than the surrender value of the policy.
Response: The disclosure in the MLI prospectus has been revised so
that it exactly reflects prevailing state law (the
disclosure in the MetLife prospectus reflects New York
law and has not been changed). As revised, the disclosure
now reads as follows: "Depending on state law, we will
refund either the premiums you paid, or the Policy's cash
value plus any charges that were deducted from the
premiums you paid." The Companies note that Rule 6e-3(T)
under the Investment Company Act of 1940 provides that an
insurer is exempt from Section 27(f) so long as the
insurer permits the contract owner to withdraw from the
contract during a specified period (the "free look"
period) and the insurer refunds to the contract owner
cash value plus charges, "Provided, however, That if
state law or the contract so require, the redeeming
contractholder shall receive a refund of all
Alison White, Esq.
April __, 2008
Page 3 of 11
payments made for such contract." The Companies believe
the fact that there is no "greater of" standard apparent
in this rule is an indication that the Commission did not
determine it is necessary to provide a "greater of" free
look right to variable contract owners generally. It is
worth noting that because the surrender charge is not
imposed upon exercise of the free look right, it would be
virtually impossible for the premiums paid to ever be
less than the policy's "surrender value."
3. Tax Benefits, page 5
Comment: Please disclose that the death benefit may be subject to
estate taxes.
Response: The Companies have added the following sentence at the
end of the Tax Benefits paragraph: "Death benefits may
be subject to estate taxes."
4. Supplemental Benefits and Riders, pages 5 and 36
Comment: We note your statement that the riders may not be
available in all states. Please note that any variations
among the jurisdictions in which the policy is offered
and sold should be disclosed in the prospectus.
Response: Although this comment was provided in the letter
regarding Metropolitan Life Separate Account UL, the
language actually appears in the prospectus for the
product to be issued by MLI. The MetLife version of the
product will be sold only in New York and therefore the
prospectus identifies only the riders that are available
in that state. However, the MLI prospectus has been
modified to identify all state variations of which MLI is
currently aware. The Companies will update the
prospectus disclosure to reflect any changes in the
availability of riders in future annual post-effective
amendments.
5. Transaction Fees, pages 7-8
Comment: a. Please add the policy re-issue/re-dating fee described
at the top of page 42 to the table.
Response: The Companies have determined not to impose a
re-issue/re-dating fee under any circumstances.
Therefore, all references to this fee have been deleted
from the prospectuses.
Alison White, Esq.
April __, 2008
Page 4 of 11
Comment: b. Please make it clear that the Surrender Charge and the
Partial Withdrawal Charge may be assessed simultaneously.
Response: Although the Companies have reserved the right to impose
a Partial Withdrawal Charge, they have no current
intention of doing so. Nevertheless, the Companies have
added the following footnote to the Fee Table: "If
imposed, the Partial Withdrawal Charge would be in
addition to any Surrender Charge that is imposed."
6. Cost of Insurance Charge, page 9
Comment: Please add a footnote describing the characteristics of
an individual subject to the minimum COI fee and an
individual subject to the maximum COI fee.
Response: Form N-6 only requires that the Fee Table disclose the
minimum and maximum COI fees and the COI fee applicable
to a representative insured. The range of COI fees shown
in the Fee Table reflects the universe of all possible
insureds, which is determined by the minimum and maximum
issue ages and the underwriting classes for the contract,
as fully described in the prospectus. The Companies
believe that the characteristics of the insureds at the
upper and lower ends of the range would be so unique as
to be of no practical value to a prospective purchaser.
Moreover, given that this information is not required
by the Form, the Companies respectfully submit that its
inclusion is not warranted.
7. Policy Charge, pages 8-9
Comment: Please revise the table to show the maximum Policy Charge
in years 2+ as $9, so that the disclosure is consistent
with the disclosure on page 39.
Response: Given that no contract owner would pay a Policy Charge of
$15 in the first Policy year and $9 thereafter, the
Companies have inserted two Policy Charge ranges in the
Fee Table to accurately reflect what contract owners will
pay.
8. Annual Portfolio Operating Expenses, pages 12-14
Comment: a. Please update the footnotes in this section. In this
regard, please note that you may only reflect contractual
expense reimbursements and waivers in the table if they
extend a year beyond the date of the prospectus.
Alison White, Esq.
April __, 2008
Page 5 of 11
Response: The Companies have updated the footnotes.
Comment: b. If any of the American Funds are feeder funds, please
disclose this fact and confirm that the prospectuses for
both the master and the feeder will be included with the
contract prospectus.
Response: The products will not offer any feeder funds.
Comment: c. With respect to the fund of funds described in
footnote (5) on page 13, please disclose in this section
whether any of the underlying funds pays a 12b-1 fee to
MetLife Investors USA Insurance Company or any of its
affiliates.
Response: The Companies have confirmed that no underlying fund
pays a 12b-1 fee to MLI, MetLife, or any of their
affiliates in connection with their investments in
the funds of funds described in the prospectuses.
9. The Company, page 16
Comment: Please disclose to the staff whether there are any types
of guarantees or support agreements with third parties to
support the company's guarantees under the policy.
Response: There are no guarantees or support agreements with third
parties to support the Companies' guarantees under the
policy, other than standard reinsurance agreements
referenced in Part C of the registration statements.
10. Voting Rights, pages 20-21
Comment: Please disclose voting procedures and quorum requirements
for votes held by the separate account (i.e., requesting
approval to substitute underlying funds).
Response: The Companies have fully described the voting rights that
contract owners possess, and the procedures the Companies
follow in soliciting voting instructions and casting
votes, as provided under the Investment Company Act of
1940. The Companies intend that any substitutions of
underlying funds would be effected solely on the basis of
an SEC order. The Companies do not intend to effect any
substitution of an underlying fund
Alison White, Esq.
April __, 2008
Page 6 of 11
that would require contract owner approval. Therefore,
the Companies respectfully submit that adding disclosure
regarding voting procedures and quorum requirements for
votes seeking approval of underlying fund substitutions
is not warranted.
11. Death Benefits, pages 26-29
Comment: Please specify which riders may impact the death benefit
and include a cross-reference to their description in the
prospectus.
Response: Only three riders have any bearing on the death benefit
(i.e., the Accelerated Death Benefit Rider, the
Accidental Death Benefit Rider, and the Option to
Purchase Additional Insurance Coverage Rider). The
Companies have added the following disclosure to "Death
Proceeds Payable":
"Riders that can have an effect on the amount of death
proceeds payable are the Accelerated Death Benefit Rider,
the Accidental Death Benefit Rider and the Options to
Purchase Additional Insurance Coverage Rider. (See
"Additional Benefits by Rider.")"
12. Reduction in Face Amount, pages 28-29
Comment: If true, please disclose that a reduction in the face
amount may be subject to a partial withdrawal fee.
Response: A reduction in the face amount will not be subject to a
partial withdrawal fee.
13. Surrenders and Partial Withdrawals, pages 29-30
Comment: a. Please include examples showing: (a) the calculation
of cash surrender value for a contract surrendered during
the first Policy year, including the impact of Surrender
Charges, Coverage Expense Charges and Policy Charges; (b)
the calculation of the death benefit, face amount and
cash surrender value of a contract subject to a partial
withdrawal during the second Policy year; (c) the
calculation of a face amount reduction due to a partial
withdrawal occurring 12 months after a face amount
increase; and (d) the impact of a partial surrender on
rider benefits.
Alison White, Esq.
April __, 2008
Page 7 of 11
Response: (a) The Contracts are designed to be long-term
investments and the pricing of the product is based on
the assumption the contract owners will hold their
contracts long-term. Consequently, if a contract owner
were to surrender his or her contract in the first Policy
year, in almost every instance, the surrender charge
alone would be greater than the contract's cash value, so
that the cash surrender value would be zero. Under these
circumstances, the Companies do not feel an example
showing the calculation would be of any benefit to
prospective purchasers. Instead, the Companies have
inserted the following disclosure: "The Policies are
designed to be long-term investments. As a result, you
should be aware that if you surrender your Policy in the
first Policy year, the Surrender Charge is likely to
exceed the cash value of your Policy and you will receive
no proceeds upon surrender." (b) The Companies have
included an example showing the effect of taking a
partial withdrawal of 20% of the Policy's cash surrender
value in the second Policy year. The example is set forth
in Appendix A attached. (c) The Companies believe that
the likelihood of a face amount reduction due to a
partial withdrawal occurring within 12 months of a face
amount increase is so remote as to render an example of
little value to a prospective purchaser. Therefore, the
Companies would prefer not to include such an example.
(d) A partial surrender will have no direct impact on
rider benefits.
Comment: b. Please disclose the impact of any riders on surrenders
or partial withdrawals.
Response: The Companies do not anticipate that riders would have
any impact on surrenders or partial withdrawals.
14. American Funds Monitoring Policy, page 31
Comment: Please update the disclosure concerning the status of
your ability to impose the American Funds' Monitoring
Policy.
Response: The Companies are now able to impose the American Funds'
Monitoring Policy. The disclosure has been updated
accordingly.
15. Portfolio Redemption Fees, page 31
Comment: Please disclose the potential that the portfolios will
assess a redemption fee in a footnote to the Transaction
Fees table.
Alison White, Esq.
April __, 2008
Page 8 of 11
Response: The Companies have added the following footnote: "The
Portfolios in which the Investment Divisions invest may
impose a redemption fee on shares held for a relatively
short period."
16. Additional Benefits By Rider, pages 35-36
Comment: Please clarify at the beginning of this section
whether any of the riders are mutually exclusive, how
ma[n]y of the riders may be concurrently elected by a
contract owner, and any negative consequences to
having more than one rider in effect at the same
time.
Response: The Companies have added the following disclosure at the
beginning of this section:
"There is no limit on the number of riders you can add
to your Policy. However, you may not elect both the
Option to Purchase Long-Term Care Insurance Rider and the
Options to Purchase Additional Insurance Coverage Rider,
nor may you elect both the Waiver of Monthly Deduction
Rider and the Waiver of Specified Premium Rider."
In addition, the Companies do not believe there are any
negative consequences to having more than one rider in
effect at the same time.
17. Acceleration of Death Benefit Rider, p. 36
Comment: Please explain the concepts of discounting and
present valuing in plain English and include an
example of the calculation of the death benefit under
the rider. In addition, please disclose the minimum
and maximum interest rates you will use in
determining the benefit.
Response: The Companies have revised the disclosure as follows:
ACCELERATION OF DEATH BENEFIT RIDER, which
allows a Policy Owner to accelerate payment
of all or part of the Policy's death benefit
if the insured is terminally ill. In
calculating the Accelerated Death Benefit,
we assume that death occurs one year from
the date of claim and we discount the future
death benefit using an interest rate not to
exceed the greater of (1) the current yield
on 90-day Treasury bills, and (2) the
maximum policy loan interest rate under the
Policy. The Policy Owner must accelerate at
least $20,000, but not more than the greater
of $250,000 or 10% of
Alison White, Esq.
April __, 2008
Page 9 of 11
the death benefit. As an example, if a Policy
Owner accelerated the death benefit of a
Policy with a face amount of $1,000,000,
the maximum amount that could be accelerated
would be $250,000. Assuming an interest rate
of 6%, the present value of the benefit would
be $235,849. If we exercised our reserved right
to impose a $150 processing fee, the benefit
payable would be $235,849 less $150, or $235,699.
(Not available in Pennsylvania or Puerto Rico.)
18. Surrender Charge, pages 38-39
Comment: Please specify what is provided in consideration for the
Surrender Charge. In this regard, we note that the policy
has a front-end load, as well as a surrender charge.
Response: The prospectuses clearly describe on page A-[36] the
services and benefits the Companies provide, the costs
and expenses they incur, and the risks they assume in
exchange for the charges and deductions they make under
the contracts, including the Surrender Charge. The
prospectuses further disclose that the amount of a charge
may not necessarily correspond to the costs of the
services and benefits implied by the name of the charge
or that are associated with the particular policy. The
Companies respectfully submit that this disclosure, in
conjunction with the Companies' representations in the
registration statements as to the reasonableness of its
fees and charges, is adequate disclosure.
19. Personalized Illustrations, page SAI-5
Comment: Please state, as you do in the prospectus, that each
illustration in excess of one per year may be subject
to a $25 fee.
Response: The Companies have added this disclosure to the
Statements of Additional Information.
Alison White, Esq.
April __, 2008
Page 10 of 11
20. Tandy Comment
Comment: We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the
filings reviewed by the staff to be certain that they
have provided all information investors require for
an informed decision. Since the fund and its
management are in possession of all facts relating to
the fund's disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have
made.
Notwithstanding our comments, in the event the fund
requests acceleration of the effective date of the
pending registration statement, it should furnish a
letter, at the time of such request, acknowledging
that
- should the Commission or the staff, acting
pursuant to delegated authority, declare the
filing effective, it does not foreclose the
Commission from taking any action with
respect to the filing;
- the action of the Commission or the staff,
acting pursuant to delegated authority, in
declaring the filing effective, does not
relieve the fund from its full
responsibility for the adequacy and accuracy
of the disclosure in the filing; and
- the fund may not assert this action as
defense in any proceeding initiated by the
Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide
to the staff of the Division of Investment Management
in connection with our review of your filing or in
response to our comments on your filing.
We will consider a written request for acceleration
of the effective date of the registration statement
as a confirmation of the fact that those requesting
acceleration are aware of their respective
responsibilities. We will act on the request and,
pursuant to delegated authority, grant acceleration of
the effective date.
Response: Each Company attached as correspondence with its
Amendment a letter to the staff acknowledging the Tandy
Comment (copies of the Companies' letters are attached
herewith).
Alison White, Esq.
April __, 2008
Page 11 of 11
* * *
We hope you find these responses satisfactory. If you have any questions or
further comments, please call the undersigned at 202.383.0698.
Sincerely,
Mary E. Thornton
cc: John E. Connolly, Jr., Esq.
APPENDIX A - PARTIAL WITHDRAWAL EXAMPLES
EXAMPLE. The following example assumes that a Policy Owner withdraws, in the
first month of the second Policy year, 20% of the cash surrender value of a
Policy that has the following characteristics.
Face Amount: $300,000
Death Benefit Option Level (Option A)
Cash Value: $ 11,718
Surrender Charge: $ 4,200
--------
Cash Surrender Value: $ 7,518
x 20%
--------
Withdrawal Amount $ 1,504
The first 10% of cash surrender value, or $752, can be withdrawn free of
surrender charge. The remaining $752 withdrawn is subject to a portion of the
Policy's Surrender Charge--based on the ratio that such excess withdrawal amount
bears to the Policy's face amount less the Surrender Charge, as shown in the
formula below:
Withdrawal Amount in
Surrender Excess of Free Withdrawal Surrender Charge
Charge x --------------------------------- = on Withdrawal
Face Amount less Surrender Charge
$752
$4,200 x ----------------- = $11
$300,000 - $4,200
Because the Policy has a level death benefit, the withdrawal will cause a dollar
for dollar reduction in the Policy's face amount, so that the cash value and the
face amount will both be reduced by the $1,504 withdrawal and by the $11
Surrender Charge. The overall impact of the withdrawal on Policy values would
therefore be as follows:
Face Amount before Withdrawal $ 300,000
Withdrawal - 1,504
Surrender Charge on Withdrawal - 11
---------
Face Amount after Withdrawal $ 298,485
Surrender Charge before Withdrawal $ 4,200
Surrender Charge on Withdrawal - 11
---------
Surrender Charge after Withdrawal $ 4,189
Cash Value before Withdrawal $ 11,718
Withdrawal - 1,504
Surrender Charge on Withdrawal - 11
---------
Cash Value after Withdrawal $ 10,203
Surrender Charge after Withdrawal - 4,189
---------
Cash Surrender Value after Withdrawal $ 6,014