1
As filed with the Securities and Exchange Commission on March 17, 1998.
Registration No. 333-33351
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT
INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
(Formerly FNAL Variable Life Account I)
(Exact name of trust)
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
(formerly First North American Life Assurance Company)
(Name of depositor)
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580
(Address of depositor's principal executive offices)
A. Scott Logan, President Copy to:
The Manufacturers Life Insurance J. Sumner Jones
Company of New York Jones & Blouch L.L.P.
Corporate Center at Rye 1025 Thomas Jefferson St., NW
555 Theodore Fremd Avenue Suite 405 West
Rye, New York 10580 Washington, DC 20007-0805
(Name and Address of Agent for Service)
Approximate date of commencement of proposed public offering: As soon after the
effective date of this Registration Statement as is practicable.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Registration Statement on Form S-6
Cross-Reference Sheet
FORM
N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
1 Cover Page; General Information About Manulife New York, the Separate Account and Manufacturers
Investment Trust
2 Cover Page; General Information About Manulife New York, the Separate Account and Manufacturers
Investment Trust
3 *
4 Miscellaneous Matters (Distribution of the Policy)
5 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
6 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
7 *
8 *
9 Miscellaneous Matters (Pending Litigation)
10 Detailed Information About The Policies
11 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
12 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
13 Detailed Information About The Policies (Charges and Deductions)
14 Detailed Information About the Policies (Premium Provisions -- Policy Issue and Initial Premium);
Miscellaneous Matters (Responsibilities Assumed By Manulife New York)
15 Detailed Information About The Policies (Premium Provisions -- Policy Issue and Initial Premium)
16 **
17 Detailed Information About The Policies (Policy Values -- Partial Withdrawals and Surrenders); Other
Provisions -- Payment of Proceeds)
18 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
19 Detailed Information About The Policies (Other Provisions - Reports To Policyowners); Miscellaneous
Matters (Responsibilities Assumed By Manulife New York)
20 *
21 Detailed Information About The Policies
22 *
23 **
24 Detailed Information About the Policies (Other General Policy Provisions)
25 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
26 *
27 **
28 Miscellaneous Matters (The Directors And Officers Of Manulife New York)
29 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
30 *
31 *
32 *
33 *
34 *
35 **
36 *
37 *
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38 Miscellaneous Matters (Distribution of the Policy; Responsibilities Assumed By Manulife New York)
39 Miscellaneous Matters (Distribution of the Policy)
40 *
41 **
42 *
43 *
44 Detailed Information About The Policies (Policy Values - Policy Value)
45 *
46 Detailed Information About The Policies (Policy Values - Partial Withdrawals and Surrenders; Other
Provisions -- Payment of Proceeds)
47 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
48 *
49 *
50 General Information About Manulife New York, the Separate Account and Manufacturers Investment Trust
51 Detailed Information About The Policies
52 Detailed Information About The Policies (Miscellaneous Matters -- Portfolio Share Substitution)
53 **
54 *
55 *
56 *
57 *
58 *
59 Financial Statements
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* Omitted since answer is negative or item is not applicable.
** Omitted.
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PART I
PROSPECTUS
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[LOGO]
PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT B
VENTURE VUL
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
This prospectus describes the flexible premium variable life insurance policy
(the "Policy") issued by The Manufacturers Life Insurance Company of New York
("Manulife New York" or the "Company"), formerly First North American Life
Assurance Company, a stock life insurance company that is a wholly-owned
subsidiary of The Manufacturers Life Insurance Company of North America
("Manulife North America"), formerly North American Security Life Insurance
Company, the ultimate parent of which is The Manufacturers Life Insurance
Company ("Manulife"). The Policies are designed to provide lifetime insurance
protection together with flexibility as to the timing and amount of premium
payments, the investments underlying the Policy Value and the amount of
insurance coverage. This flexibility allows the policyowner to pay premiums and
adjust insurance coverage in light of his or her current financial circumstances
and insurance needs. The Policies provide for: (1) a Net Cash Surrender Value
that can be obtained by partial withdrawals or surrender of the Policy; (2)
policy loans; and (3) an insurance benefit payable at the life insured's death.
Policy Value may be accumulated on a fixed basis or vary with the investment
performance of the sub-accounts of The Manufacturers Life Insurance Company of
New York Separate Account B (the "Separate Account") to which the policyowner
allocates net premiums.
The assets of each sub-account will be used to purchase shares of a particular
investment portfolio (the "Portfolio") of Manufacturers Investment Trust,
formerly NASL Series Trust. The accompanying prospectus for Manufacturers
Investment Trust, and the corresponding statement of additional information,
describes the investment objectives of the Portfolios in which net premiums may
be invested. The Portfolios available for allocation of net premiums are the:
Pacific Rim Emerging Markets Trust, Science & Technology Trust, International
Small Cap Trust, Emerging Growth Trust, Pilgrim Baxter Growth Trust, Small/Mid
Cap Trust, International Stock Trust, Worldwide Growth Trust, Global Equity
Trust, Small Company Value Trust, Equity Trust, Growth Trust, Quantitative
Equity Trust, Equity Index Trust, Blue Chip Growth Trust, Real Estate Securities
Trust, Value Trust, International Growth and Income Trust, Growth and Income
Trust, Equity-Income Trust, Balanced Trust, Aggressive Asset Allocation Trust,
High Yield Trust, Moderate Asset Allocation Trust, Conservative Asset Allocation
Trust, Strategic Bond Trust, Global Government Bond Trust, Capital Growth Bond
Trust, Investment Quality Bond Trust, U.S. Government Securities Trust, Money
Market Trust, Lifestyle Aggressive 1000 Trust, Lifestyle Growth 820 Trust,
Lifestyle Balanced 640 Trust, Lifestyle Moderate 460 Trust and Lifestyle
Conservative 280 Trust (collectively the "Manulife Trusts"). Other sub-accounts
and Portfolios may be added in the future.
Prospective purchasers should ask a Manulife New York sales representative if
changing, or adding to, existing insurance coverage would be advantageous.
Prospective purchasers should note that it may not be advisable to purchase a
Policy as a replacement for existing insurance.
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BECAUSE OF THE SUBSTANTIAL NATURE OF THE SURRENDER CHARGES, THE POLICY IS NOT
SUITABLE FOR SHORT-TERM INVESTMENT PURPOSES.
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. IT IS
VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR MANUFACTURERS INVESTMENT
TRUST.
The Securities and Exchange Commission ("SEC") maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
HOME OFFICE:
The Manufacturers Life Insurance Company of New York
Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, New York 10580
SERVICE OFFICE MAILING ADDRESS:
The Manufacturers Life Insurance Company of New York
P.O. Box 633
Niagara Square Station
Buffalo, New York 14201-0633
TELEPHONE: 1-888-267-7784
THE DATE OF THIS PROSPECTUS IS MARCH 31, 1998.
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PROSPECTUS CONTENTS
PAGE
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INTRODUCTION TO POLICIES........................................................................ 5
GENERAL INFORMATION ABOUT THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK,
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B AND
MANUFACTURERS INVESTMENT TRUST.................................................................. 12
The Manufacturers Life Insurance Company of New York and The Manufacturers Life Insurance
Company................................................................................ 12
The Manufacturers Life Insurance Company of New York Separate Account B................ 12
Manufacturers Investment Trust......................................................... 13
Investment Objectives and Certain Policies of the Portfolios........................... 14
DETAILED INFORMATION ABOUT THE POLICIES......................................................... 18
PREMIUM PROVISIONS......................................................................... 18
Policy Issue and Initial Premium....................................................... 18
Premium Allocation..................................................................... 18
Premium Limitations.................................................................... 18
Short-Term Cancellation Right and "Free Look" Provisions............................... 19
INSURANCE BENEFIT.......................................................................... 19
The Insurance Benefit.................................................................. 19
No Lapse Guarantee..................................................................... 19
No Lapse Guarantee Cumulative Premium Test............................................. 20
Death Benefit Guarantee................................................................ 20
Death Benefit Options.................................................................. 21
Death Benefit Option Changes........................................................... 22
Face Amount Changes.................................................................... 22
POLICY VALUES.............................................................................. 23
Policy Value........................................................................... 23
Transfers of Policy Value.............................................................. 24
Policy Loans........................................................................... 25
Partial Withdrawals and Surrenders..................................................... 27
Charges and Deductions................................................................. 28
Deductions From Premiums............................................................... 28
Surrender Charges...................................................................... 28
Monthly Deductions..................................................................... 32
Administration Charge.................................................................. 32
Cost of Insurance Charge............................................................... 32
Mortality and Expense Risks Charge..................................................... 33
Other Charges.......................................................................... 33
The General Account.................................................................... 34
OTHER GENERAL POLICY PROVISIONS............................................................ 35
Policy Default......................................................................... 35
Policy Reinstatement................................................................... 35
Miscellaneous Policy Provisions........................................................ 35
OTHER PROVISIONS........................................................................... 36
Supplementary Benefits................................................................. 36
Payment of Proceeds.................................................................... 36
Reports To Policyowners................................................................ 36
MISCELLANEOUS MATTERS...................................................................... 37
Portfolio Share Substitution........................................................... 37
Federal Income Tax Considerations...................................................... 37
Tax Status of The Policy............................................................... 37
Tax Treatment of Policy Benefits....................................................... 38
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The Company's Taxes.................................................................... 40
Distribution of The Policy............................................................. 40
Responsibilities Assumed By Manulife New York and MSS.................................. 41
Voting Rights.......................................................................... 41
Directors and Officers of Manulife New York ........................................... 42
State Regulations ..................................................................... 43
Pending Litigation .................................................................... 43
Additional Information ................................................................ 44
Legal Matters ......................................................................... 44
Experts ............................................................................... 44
Year 2000 Issues ...................................................................... 44
FINANCIAL STATEMENTS............................................................................ 44
APPENDICES...................................................................................... 68
A. Sample Illustrations of Policy Values, Cash Surrender Values and Death Benefits........ 68
B. Definitions............................................................................ 77
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS OF MANUFACTURERS INVESTMENT TRUST, OR THE
STATEMENT OF ADDITIONAL INFORMATION OF MANUFACTURERS INVESTMENT TRUST.
You are urged to examine this prospectus carefully. "INTRODUCTION TO POLICIES"
will briefly describe the Flexible Premium Variable Life Insurance Policy. More
detailed information will be found within.
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INTRODUCTION TO POLICIES
The following summary is intended to provide a general description of the most
important features of the Policy. It is not comprehensive and is qualified in
its entirety by the more detailed information contained in this prospectus.
Unless otherwise indicated or required by the context, the discussion throughout
this prospectus assumes that the Policy has not gone into default, there is no
outstanding Policy Debt, and the death benefit is not determined by the corridor
percentage test (see "Death Benefit Options").
GENERAL
The Policy provides a death benefit in the event of the death of the life
insured.
Premium payments may be made at any time and in any amount, subject to certain
limitations.
After certain deductions, premiums will be allocated, according to the
policyowner's instructions, to one or more of the general account and the
sub-accounts of the Separate Account. Assets of the sub-accounts of the Separate
Account are invested in shares of a particular Portfolio of Manufacturers
Investment Trust. Allocation instructions may be changed at any time and
transfers among the accounts may be made subject to certain restrictions (see
"Transfers of Policy Value").
The Portfolios currently offered are the: Pacific Rim Emerging Markets Trust,
Science & Technology Trust, International Small Cap Trust, Emerging Growth
Trust, Pilgrim Baxter Growth Trust, Small/Mid Cap Trust, International Stock
Trust, Worldwide Growth Trust, Global Equity Trust, Small Company Value Trust,
Equity Trust, Growth Trust, Quantitative Equity Trust, Equity Index Trust, Blue
Chip Growth Trust, Real Estate Securities Trust, Value Trust, International
Growth and Income Trust, Growth and Income Trust, Equity-Income Trust, Balanced
Trust, Aggressive Asset Allocation Trust, High Yield Trust, Moderate Asset
Allocation Trust, Conservative Asset Allocation Trust, Strategic Bond Trust,
Global Government Bond Trust, Capital Growth Bond Trust, Investment Quality Bond
Trust, U.S. Government Securities Trust, Money Market Trust, Lifestyle
Aggressive 1000 Trust, Lifestyle Growth 820 Trust, Lifestyle Balanced 640 Trust,
Lifestyle Moderate 460 Trust and Lifestyle Conservative 280 Trust. Other
sub-accounts and Portfolios may be added in the future.
The Policy has a Policy Value reflecting premiums paid, the investment
performance of the accounts to which the policyowner has allocated premiums, and
certain charges for expenses and cost of insurance. The policyowner may obtain a
portion of the Policy Value by taking a policy loan or a partial withdrawal, or
by full surrender of the Policy.
DEATH BENEFIT
Death Benefit Options. The policyowner elects to have the Policy's death benefit
determined under one of two options:
- death benefit equal to the face amount of the Policy, or
- death benefit equal to the face amount of the Policy plus the Policy
Value.
Under either option, the death benefit may have to be increased to a multiple of
the Policy Value to satisfy the corridor percentage test under the definition of
life insurance in the Internal Revenue Code of 1986, as amended (the "Code")
(see DETAILED INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- The
Insurance Benefit and Death Benefit Options).
The Policyowner May Change The Death Benefit Option. A change in the death
benefit option may be requested after the Policy has been in force for one year
(see DETAILED INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- Death
Benefit Option Changes).
The Policyowner May Increase The Face Amount. After the Policy has been in force
for one year, an increase in the face amount of the Policy may be requested once
per policy year. An increase in the face amount is subject to satisfactory
evidence of insurability and will usually result in the Policy's being subject
to new surrender charges (see DETAILED
5
10
INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- Face Amount
Changes).
The Policyowner May Decrease The Face Amount. A decrease in the face amount may
be requested once per policy year after the Policy has been in force for one
year. A decrease in face amount may result in certain surrender charges being
deducted from the Policy Value (see DETAILED INFORMATION ABOUT THE POLICIES --
INSURANCE BENEFIT -- Face Amount Changes).
PREMIUM PAYMENTS ARE FLEXIBLE
The policyowner may pay premiums at any time and in any amount, subject to
certain limitations (see DETAILED INFORMATION ABOUT THE POLICIES -- PREMIUM
PROVISIONS -- Policy Issue and Initial Premium and Premium Limitations).
The policyowner must pay at least the Initial Premium to put the Policy in force
(see DETAILED INFORMATION ABOUT THE POLICIES -- PREMIUM PROVISIONS -- Premium
Limitations and INSURANCE BENEFIT -- Death Benefit Guarantee).
After the Initial Premium is paid there is no minimum premium required. However,
by complying with the Death Benefit Guarantee Cumulative Premium Test the
policyowner can ensure the Policy will not go into default for the first three
policy years. By complying with the No Lapse Guarantee Cumulative Premium Test,
the policy owner can ensure the policy will not go into default for the first
five policy years. For Policies with a face amount of at least $250,000, the
policyowner can ensure the Policy will not go into default (i) prior to the life
insured reaching age 100 if Death Benefit Option 1 is maintained throughout the
life of the Policy and (ii) prior to the life insured reaching age 85 if Death
Benefit Option 2 is selected at any time, by satisfying the Death Benefit
Guarantee Cumulative Premium Test or the Fund Value Test (see DETAILED
INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- No Lapse Guarantee and
Death Benefit Guarantee).
Certain maximum premium limitations apply to the Policy to ensure the Policy
qualifies as life insurance under rules defined in the Code (see DETAILED
INFORMATION ABOUT THE POLICIES -- PREMIUM PROVISIONS --Premium Limitations).
SUMMARY OF CHARGES AND DEDUCTIONS
Charges under the Policy are assessed as:
(1) deductions from premiums
- the Company reserves the right to make a charge for state, local and
Federal taxes in an amount not to exceed 3.60%. The Company currently
makes no deduction of charges from premium payments for state, local
and Federal taxes
(2) surrender charges upon surrender, partial withdrawal in excess of the
Withdrawal Tier Amount, decrease in face amount or lapse
- deferred underwriting charge of $4.50 for each $1,000 of face amount
- deferred sales charge of a maximum of 50% of premiums paid up to a
maximum of 2.59 Target Premiums
(3) monthly deductions
- administration charge of $35 per month until the first policy
anniversary; thereafter, $10 per month (the right is reserved to
increase the administration charge by an additional amount of up to
$.01 per $1,000 of face amount per month)
- cost of insurance charge
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- mortality and expense risks charge of 0.075% per month through the
later of the tenth policy anniversary and the policyowner's attained
age 60 and, thereafter, 0.0375 % per month
- supplementary benefit(s) charge(s)
(4) other charges
Investment Management Fees and Expenses. Investment management fees
paid by Manufacturers Investment Trust (excluding the Lifestyle
Trusts) range from .25% to 1.10% of the assets of the Portfolios. The
Lifestyle Trusts do not charge an investment management fee. Total
Trust Annual Expenses range from .54% to 1.95% of the assets of the
Portfolios. In the case of the Lifestyle Trusts, Manufacturers
Securities Services,LLC, ("MSS") the adviser to Manufacturers
Investment Trust, has voluntarily agreed to pay the expenses of the
Lifestyle Trusts (other than the expenses of the Underlying
Portfolios).This expense reimbursement may be terminated at any time.
Absent the expense reimbursement agreement between the adviser and
Manufacturers Investment Trust, total trust annual expenses for the
Lifestyle Trusts would range from .748% to 1.156%. Because each
Lifestyle Trust will invest in shares of Underlying Portfolios (all
of the Portfolios except the Lifestyle Trusts) each will bear its pro
rata share of the fees and expenses incurred by the Underlying
Portfolios.
(5) certain transfers
- transfer fee of $25 per transfer in excess of twelve transfers in any
policy year
- transfer fee of $5 for each transfer under the Dollar Cost Averaging
program when Policy Value does not exceed $15,000
For a complete discussion of charges and deductions see the heading "Charges and
Deductions" in this Introduction and the references therein, and see also the
heading "Transfers Are Permitted" in this Introduction and the references
therein.
INVESTMENT OPTIONS
Premiums will be allocated, according to the policyowner's instructions, to any
combination of the general account or one or more of the sub-accounts of the
Separate Account.
Each sub-account of the Separate Account invests its assets in the shares of one
of the following portfolios:
- - Pacific Rim Emerging Markets Trust - Growth and Income Trust
- - Science & Technology Trust - Equity-Income Trust
- - International Small Cap Trust - Balanced Trust
- - Emerging Growth Trust - Aggressive Asset Allocation Trust
- - Pilgrim Baxter Growth Trust - High Yield Trust
- - Small/Mid Cap Trust - Moderate Asset Allocation Trust
- - International Stock Trust - Conservative Asset Allocation Trust
- - Worldwide Growth Trust - Strategic Bond Trust
- - Global Equity Trust - Global Government Bond Trust
- - Small Company Value Trust - Capital Growth Bond Trust
- - Equity Trust - Investment Quality Bond Trust
- - Growth Trust - U.S. Government Securities Trust
- - Quantitative Equity Trust - Money Market Trust
- - Equity Index Trust - Lifestyle Aggressive 1000 Trust
- - Blue Chip Growth Trust - Lifestyle Growth 820 Trust
- - Real Estate Securities Trust - Lifestyle Balanced 640 Trust
- - Value Trust - Lifestyle Moderate 460 Trust
- - International Growth and Income Trust - Lifestyle Conservative 280 Trust
The policyowner may change the allocation of net premiums among the general
account and the sub-accounts at any time (see GENERAL INFORMATION ABOUT THE
MANUFACTURERS LIFE INSURANCE COMPANY OF NEW
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YORK, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
AND MANUFACTURERS INVESTMENT TRUST and DETAILED INFORMATION ABOUT THE POLICIES
- -- PREMIUM PROVISIONS -- Premium Allocation and POLICY VALUES -- Policy Value).
THE POLICY VALUE
The Policy has a Policy Value which reflects the following: premium payments
made; investment performance of the sub-accounts to which amounts have been
allocated; interest credited by the Company to amounts allocated to the general
account; partial withdrawals; and deduction of charges described under "Charges
and Deductions" below.
The Policy Value is the sum of the values in the Investment Accounts, the
Guaranteed Interest Account and the Loan Account.
Investment Account. An Investment Account is established under the Policy for
each sub-account of the Separate Account to which net premiums or transfer
amounts have been allocated. An Investment Account measures the interest of the
Policy in the corresponding sub-account.
The value of each Investment Account under the Policy varies each Business Day
and reflects the investment performance of the Portfolio shares held in the
corresponding sub-account (See DETAILED INFORMATION ABOUT THE POLICIES -- POLICY
VALUES --Policy Value).
Guaranteed Interest Account. The Guaranteed Interest Account consists of that
portion of the Policy Value based on net premiums allocated to, and amounts
transferred to, the general account of the Company.
Manulife New York credits interest on amounts in the Guaranteed Interest Account
at an effective annual rate guaranteed to be at least 4% (see DETAILED
INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- The General Account).
Loan Account. When a policy loan is made, Manulife New York will establish a
Loan Account under the Policy and will transfer an amount from the Investment
Accounts and the Guaranteed Interest Account to the Loan Account.
The Company will credit interest to amounts in the Loan Account at an effective
annual rate of at least 4%. The actual rate credited on loan amounts will be the
rate charged on loan amounts less an interest rate differential, currently
1.75%, except on Select Loan Amounts where the interest rate differential,
subject to change in certain circumstances, is currently 0% (see DETAILED
INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Policy Loans).
Transfers Are Permitted. A policyowner may make transfers among the sub-accounts
of the Separate Account and the Company's general account, subject to certain
restrictions.
Twelve transfers per policy year may be made at no cost to the policyowner;
excess transfers will be permitted at a cost of $25 per transfer. All transfer
requests received at the same time are treated as a single transfer request.
Certain restrictions may apply to transfer requests (see DETAILED INFORMATION
ABOUT THE POLICIES -- POLICY VALUES -- Transfers of Policy Value).
USING THE POLICY VALUE
Borrowing Against The Policy Value. The policyowner may borrow against the
Policy Value. The minimum loan amount is $500.
Loan interest will be charged on a fixed basis at an effective annual rate of
5.75% (see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Policy
Loans).
A Policyowner May Make A Partial Withdrawal Of The Policy Value. After a Policy
has been in force for two years the policyowner may make a partial withdrawal of
the Policy Value. The minimum withdrawal amount is $500. The policyowner may
specify that the withdrawal is to be made from a specific Investment Account or
the Guaranteed Interest
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Account.
A partial withdrawal may result in a reduction in the face amount of the Policy
and may also result in the assessment of a portion of the surrender charges to
which the Policy is subject (See DETAILED INFORMATION ABOUT THE POLICIES
- --POLICY VALUES -- Partial Withdrawals and Surrenders, Charges and Deductions
and Surrender Charges).
The Policy May Be Surrendered For Its Net Cash Surrender Value. The Net Cash
Surrender Value is equal to the Policy Value less surrender charges, outstanding
monthly deductions due and the value of the Policy Debt. Surrender of a Policy
during the Surrender Charge Period will usually result in assessment of
surrender charges (see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES
- -- Partial Withdrawals and Surrenders, Charges and Deductions and Surrender
Charges).
CHARGES AND DEDUCTIONS
1) DEDUCTIONS FROM PREMIUMS. The Company reserves the right to make a charge
for state, local and Federal taxes in an amount not to exceed 3.60%. The
Company currently makes no deduction of charges from premium payments for
state, local and Federal taxes.
2) SURRENDER CHARGES. Manulife New York will usually deduct a deferred
underwriting charge and a deferred sales charge if, during the Surrender
Charge Period:
- the Policy is surrendered for its Net Cash Surrender Value,
- a partial withdrawal in excess of the Withdrawal Tier Amount is made,
- a decrease in face amount is requested, or
- the Policy lapses.
The deferred underwriting charge is $4.50 for each $1,000 of face amount of life
insurance coverage initially or added by increase. In effect, the charge applies
only to the first $500,000 of face amount initially purchased or the first
$500,000 of each subsequent increase in face amount. Thus, the charge made in
connection with any one underwriting will not exceed $2,250.
The maximum deferred sales charge is 50% of premiums paid up to a maximum number
of Target Premiums that varies (from -2.00 to 2.59) according to the issue age
of the life insured, the face amount at issue and the amount of any increase.
The full amount of the deferred underwriting charge and the deferred sales
charge will be in effect for five years following Policy issue. Beginning in the
sixth year these charges grade downward over a maximum ten-year period (see
DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Charges and
Deductions and Surrender Charges).
In the event of a face amount increase, the surrender charges applicable to the
increase will be those rates that would apply if a Policy were issued to the
life insured at his or her then attained age and based on the amount of the
increase.
3) MONTHLY DEDUCTIONS. At the beginning of each policy month Manulife New
York deducts from the Policy Value:
- an administration charge of $35 per month until the first policy
anniversary; thereafter $10 per month (the right is reserved to increase
the administration charge by an additional amount of up to $.01 per
$1,000 of face amount per month)
- a charge for the cost of insurance,
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- a charge for mortality and expense risks of 0.075% per month through the
later of the tenth policy anniversary and the policyowner's attained age
60 and, thereafter, 0.0375% per month. This charge is assessed against
the value of the policyowner's investment accounts, and
- charge(s) for any supplementary benefit(s) added to the Policy.
The cost of insurance charge varies based on the net amount at risk under the
Policy and the applicable cost of insurance rate. Cost of insurance rates vary
according to issue age, the duration of the coverage, sex, any additional
ratings indicated in the policy, and risk class of the life insured. The maximum
cost of insurance rate that can be charged is guaranteed not to exceed the 1980
Commissioners Standard Ordinary Smoker/Nonsmoker Mortality Tables. However, any
additional ratings as indicated in the Policy will be added to the cost of
insurance rate (see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES
- --Charges and Deductions and Monthly Deductions).
If the Policy is still in force when the life insured attains age 100, no
further monthly deductions will be taken from the Policy Value.
4) OTHER CHARGES. Charges will be imposed on certain transfers of Policy
Values, including a $25 charge for each transfer in excess of twelve per
policy year and a $5 charge for each Dollar Cost Averaging transfer if
Policy Value does not exceed $15,000 (see DETAILED INFORMATION ABOUT THE
POLICIES -- POLICY VALUES -- Transfers of Policy Value).
Certain expenses are, or will be, assessed against the assets of the Portfolios,
as follows:
INVESTMENT MANAGEMENT FEES AND EXPENSES. Investment management fees paid by
Manufacturers Investment Trust (excluding the Lifestyle Trusts) range from .25%
to 1.10% of the assets of the Portfolios. The Lifestyle Trusts do not charge an
investment management fee. Total Trust Annual Expenses range from .54% to 1.95%
of the assets of the Portfolios. In the case of the Lifestyle Trusts, MSS, the
adviser to Manufacturers Investment Trust, has voluntarily agreed to pay the
expenses of the Lifestyle Trusts (other than the expenses of the Underlying
Portfolios). Absent the expense reimbursement agreement between the adviser and
Manufacturers Invest Trust, total trust annual expenses for the Lifestyle Trusts
would range from .748% to 1.156%. This expense reimbursement may be terminated
at any time. Because each Lifestyle Trust will invest in shares of Underlying
Portfolios each will bear its pro rata share of the fees and expenses incurred
by the Underlying Portfolios (see DETAILED INFORMATION ABOUT THE POLICIES
- --POLICY VALUES -- Charges and Deductions and Other Charges).
Manulife New York reserves the right to charge or establish a provision for any
Federal, state or local taxes that may be attributable to the Separate Account
or the operations of the Company with respect to the Policies in addition to the
deductions for state, local and Federal taxes currently being made.
SUPPLEMENTARY BENEFITS
A policyowner may choose to add certain supplementary benefits to the Policy.
These supplementary benefits are offered subject to state approval and include
an accidental death benefit, life insurance for additional insured persons,
supplementary insurance option, change of life insured and a disability benefit
to waive the cost of monthly deductions.
The cost of any supplementary benefits will be deducted from the Policy Value
monthly (see DETAILED INFORMATION ABOUT THE POLICIES -- OTHER PROVISIONS
- --Supplementary Benefits).
DEFAULT
Unless the No Lapse Guarantee or Death Benefit Guarantee is in effect, the
Policy will go into default if the Net Cash Surrender Value at the beginning of
any policy month would go below zero after deducting the monthly charges then
due. The Policy will not go into default if the policy qualifies for the No
Lapse Guarantee or Death Benefit Guarantee. The Company will notify the
policyowner in the event the Policy goes into default, and will allow a grace
period in which the policyowner may make a premium payment sufficient to bring
the Policy out of default. If the required premium is not paid
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during the grace period the Policy will terminate (see DETAILED INFORMATION
ABOUT THE POLICIES -- OTHER GENERAL POLICY PROVISIONS -- Policy Default).
DEATH BENEFIT GUARANTEE
On Policies issued and maintained with a minimum face amount of $250,000, as
long as the Death Benefit Guarantee Cumulative Premium Test or, where
applicable, the Fund Value Test is satisfied, the Company guarantees that the
Policy will not go into default (i) prior to the life insured's attaining age
100 if Death Benefit Option 1 is maintained throughout the life of the Policy
and (ii) prior to the life insured reaching age 85 if Death Benefit Option 2 is
selected at any time, regardless of the investment performance of the Funds
underlying the Policy Value. On Policies with face amounts of less than $250,000
there is no Death Benefit Guarantee after the third policy anniversary (see
DETAILED INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- Death Benefit
Guarantee).
NO LAPSE GUARANTEE
On Policies issued with a face amount of at least $250,000, as long as the No
Lapse Guarantee Cumulative Premium Test is satisfied, Manulife New York will
guarantee that the Policy will not go into default, even if a combination of
Policy loans, adverse investment experience and other factors should cause the
Policy's Net Cash Surrender Value to be insufficient to meet the monthly
deductions due at the beginning of a policy month. For purposes of determining
the face amount at issue for the No Lapse Guarantee, the face amount shall
include any amounts purchased under the supplementary insurance option. The No
Lapse Guarantee Period is the first 5 Policy Years for life insureds with an
issue age up to and including 85. It is not offered to life insureds whose Issue
Age exceeds 85 (see DETAILED INFORMATION ABOUT THE POLICIES --INSURANCE BENEFIT
- -- No Lapse Guarantee).
REINSTATEMENT
A terminated policy may be reinstated by the policyowner within either the
21-day or five-year period following the date of termination, providing certain
conditions are met (see DETAILED INFORMATION ABOUT THE POLICIES -- OTHER GENERAL
POLICY PROVISIONS -- Policy Reinstatement).
FREE LOOK
A Policy may be returned for a refund of premium within the later of:
- 10 days after it is received
- 45 days after the application for the Policy is signed
- 10 days after Manulife New York mails or delivers a notice of this right
of withdrawal.
If a policyowner requests an increase in face amount which results in new
surrender charges, the "free look" provision will also apply to the increase
(see DETAILED INFORMATION ABOUT THE POLICIES -- PREMIUM PROVISIONS -- Short-Term
Cancellation Right and "Free Look" Provisions).
FEDERAL TAX MATTERS
Manulife New York believes that a Policy issued on a standard risk class basis
should meet the definition of a life insurance contract as set forth in Section
7702 of the Code. With respect to a Policy issued on a substandard basis, there
is less guidance available to determine if such a Policy would satisfy the
Section 7702 definition of a life insurance contract, particularly if the
policyowner pays the full amount of premiums permitted under such a Policy.
Assuming that a Policy qualifies as a life insurance contract for Federal income
tax payments, a policyowner should not be deemed to be in constructive receipt
of Policy Value under a Policy until there is a distribution from the Policy.
Moreover, death benefits payable under a Policy should be completely excludable
from the gross income of the beneficiary. As a result, the beneficiary generally
should not be taxed on these proceeds (see DETAILED INFORMATION ABOUT THE
POLICIES -- MISCELLANEOUS MATTERS -- Federal Income Tax Considerations and Tax
Status of the Policy).
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Under certain circumstances, a Policy may be treated as a "Modified Endowment
Contract ("MEC"). If the Policy is a MEC, then all pre-death distributions,
including Policy loans, will be treated first as a distribution of taxable
income and then as a return of investment in the Policy. In addition, prior to
age 59 1/2 any such distributions generally will be subject to a 10% penalty tax
(see DETAILED INFORMATION ABOUT THE POLICIES -- MISCELLANEOUS MATTERS -- Federal
Income Tax Considerations and Tax Treatment Of Policy Benefits).
If the Policy is not a MEC, distributions generally will be treated first as a
return of investment in the Policy and then a disbursement of taxable income.
Moreover, loans will not be treated as distributions. Select Loans may, however,
be treated as taxable distributions. A policyowner considering the use of
systematic policy loans as one element of a comprehensive retirement income plan
should consult his or her personal tax advisor regarding the potential tax
consequences if such loans were to so reduce Policy Value that the Policy would
lapse, absent additional payments. The premium payment necessary to avert lapse
would increase with the age of the insured. Finally, neither distributions nor
loans under a Policy that is not a MEC are subject to the 10% penalty tax (see
DETAILED INFORMATION ABOUT THE POLICIES -- MISCELLANEOUS MATTERS -- Federal
Income Tax Considerations).
The United States Congress has in the past considered, and in the future may
consider legislation that, if enacted, could change the tax treatment of life
insurance policies. In addition, the Treasury Department may amend existing
regulations, or adopt new interpretations of existing laws, state tax laws or,
if the policyowner is not a United States resident, foreign tax laws, which may
affect the tax consequences to him or her, the lives insured or the beneficiary.
These laws may change from time to time without notice and, as a result, the tax
consequences may be altered. There is no way of predicting whether, when or in
what form any such change would be adopted. Any such change could have a
retroactive effect regardless of the date of enactment. The Company suggests
that a tax advisor be consulted.
ESTATE AND GENERATION-SKIPPING TAXES
The proceeds of this life insurance policy may be taxable under Estate and
Generation-Skipping Tax provisions of the Code. The policyowner should consult
his or her tax advisor regarding these taxes.
GENERAL INFORMATION ABOUT THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK,
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B AND
MANUFACTURERS INVESTMENT TRUST
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK AND THE MANUFACTURERS LIFE
INSURANCE COMPANY
Manulife New York is a stock life insurance company organized under the laws of
New York in 1992. The Company's principal office is located at Corporate Center
at Rye, 555 Theodore Fremd Avenue, Rye, New York 10580. The Company is a
wholly-owned subsidiary of Manulife North America. Manulife North America is a
stock life insurance company organized under the laws of Delaware in 1979 with
its principal office located at 116 Huntington Avenue, Boston, Massachusetts
02116.
The ultimate parent of the Company is Manulife. Prior to January 1, 1996,
Manulife North America was a wholly owned subsidiary of North American Life
Assurance Company ("NAL"), a Canadian mutual life insurance company. On January
1, 1996 NAL and Manulife merged with the combined company retaining the Manulife
name.
Effective January 1, 1996, immediately following the merger of NAL and Manulife,
Manulife North America experienced a corporate restructuring which resulted in
the formation of a newly organized holding corporation, Manulife-Wood Logan
Holding Co., Inc., formerly NAWL Holding Co., Inc. ("MWL"). MWL holds all of the
outstanding shares of Manulife North America and Wood Logan Associates, Inc.
("WLA"). MWL is owned 62.5% by The Manufacturers Life Insurance Company
(U.S.A.), 22.5% by MRL Holding, LLC and 15% by the principals of WLA.
On January 19, 1998, the Board of Directors of Manulife asked the Management of
Manulife to prepare a plan for conversion of Manulife from a mutual life
insurance company to an investor-owned, publicly traded stock
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company. Any demutualization plan for Manulife is subject to the approval of the
Manulife Board of Directors and participating policy holders as well as
regulatory approval.
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE ACCOUNT B
Manulife New York established the Separate Account on May 6, 1997, subject to
approval by the Superintendent of Insurance of New York, as a separate account
under New York law. The Separate Account holds assets that are segregated from
all Manulife New York's other assets. The Separate Account is currently used
only to support variable life insurance policies.
Manulife New York is the legal owner of the assets in the Separate Account. The
income, gains and losses of the Separate Account, whether or not realized, are,
in accordance with applicable contracts, credited to or charged against the
Account without regard to the other income, gains or losses of Manulife New
York. Manulife New York will at all times maintain assets in the Separate
Account with a total market value at least equal to the reserves and other
liabilities relating to variable benefits under all policies participating in
the Separate Account. These assets may not be charged with liabilities which
arise from any other business Manulife New York conducts. However, all
obligations under the variable life insurance policies are general corporate
obligations of Manulife New York.
The Separate Account is registered with the SEC under the Investment Company Act
of 1940, as amended (the "1940 Act") as a unit investment trust. A unit
investment trust is a type of investment company which invests its assets in
specified securities, such as the shares of one or more investment companies,
rather than in a portfolio of unspecified securities. Registration under the
1940 Act does not involve any supervision by the SEC of the management or
investment policies or practices of the Separate Account. For state law purposes
the Separate Account is treated as a part or division of Manulife New York.
MANUFACTURERS INVESTMENT TRUST
Each sub-account of the Separate Account will purchase shares only of a
particular Manulife Trust. Manufacturers Investment Trust, formerly NASL Series
Trust, is registered under the 1940 Act as an open-end management investment
company. The Separate Account will purchase and redeem shares of Manulife Trusts
at net asset value. Shares will be redeemed to the extent necessary for Manulife
New York to provide benefits under the Policies, to transfer assets from one
sub-account to another or to the general account as requested by policyowners,
and for other purposes consistent with the Policies. Any dividend or capital
gain distribution received from a Portfolio will be reinvested immediately at
net asset value in shares of that Portfolio and retained as assets of the
corresponding sub-account.
Manufacturers Investment Trust shares are issued to fund benefits under both
variable annuity contracts and variable life insurance policies issued by the
Company or life insurance companies affiliated with the Company. Manulife New
York will purchase shares through its general account for certain limited
purposes including initial portfolio seed money. For a description of the
procedures for handling potential conflicts of interest arising from the funding
of such benefits see the accompanying Manufacturers Investment Trust prospectus.
Manufacturers Investment Trust receives investment advisory services from MSS,
the successor to NASL Financial Services, Inc. MSS is a registered investment
adviser under the Investment Advisers Act of 1940. Manufacturers Investment
Trust also employs subadvisers. The following subadvisers provide investment
subadvisory services to the indicated portfolios:
PORTFOLIO SUBADVISER
AGGRESSIVE GROWTH PORTFOLIOS
Pacific Rim Emerging Markets Trust Manufacturers Adviser Corporation*
Science & Technology Trust T. Rowe Price Associates, Inc.
International Small Cap Trust Founders Asset Management, Inc.
Emerging Growth Trust Warburg Pincus Asset Management, Inc.
Pilgrim Baxter Growth Trust Pilgrim Baxter & Associates, Ltd.
Small/Mid Cap Trust Fred Alger Management, Inc.
International Stock Trust Rowe Price-Fleming International, Inc.
GROWTH PORTFOLIOS
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Worldwide Growth Trust Founders Asset Management, Inc.
Global Equity Trust Morgan Stanley Asset Management Inc.
Small Company Value Trust Rosenberg Institutional Equity Management
Equity Trust Fidelity Management Trust Company
Growth Trust Founders Asset Management, Inc.
Quantitative Equity Trust Manufacturers Adviser Corporation*
Equity Index Trust Manufacturers Adviser Corporation*
Blue Chip Growth Trust T. Rowe Price Associates, Inc.
Real Estate Securities Trust Manufacturers Adviser Corporation*
PORTFOLIO SUBADVISER
GROWTH & INCOME PORTFOLIOS
Value Trust Miller Anderson & Sherrerd, LLP
International Growth and Income Trust J.P. Morgan Investment Management Inc.
Growth and Income Trust Wellington Management Company, LLP
Equity-Income Trust T. Rowe Price Associates, Inc.
BALANCED PORTFOLIOS
Balanced Trust Founders Asset Management, Inc.
Aggressive Asset Allocation Trust Fidelity Management Trust Company
Moderate Asset Allocation Trust Fidelity Management Trust Company
Conservative Asset Allocation Trust Fidelity Management Trust Company
BOND PORTFOLIOS
High Yield Trust Miller Anderson & Sherrerd, LLP
Strategic Bond Trust Salomon Brothers Asset Management Inc
Global Government Bond Trust Oechsle International Advisors, L.P.
Capital Growth Bond Trust Manufacturers Adviser Corporation*
Investment Quality Bond Trust Wellington Management Company, LLP
U.S. Government Securities Trust Salomon Brothers Asset Management Inc
MONEY MARKET PORTFOLIOS
Money Market Trust Manufacturers Adviser Corporation*
LIFESTYLE PORTFOLIOS
Lifestyle Aggressive 1000 Trust Manufacturers Adviser Corporation*
Lifestyle Growth 820 Trust Manufacturers Adviser Corporation*
Lifestyle Balanced 640 Trust Manufacturers Adviser Corporation*
Lifestyle Moderate 460 Trust Manufacturers Adviser Corporation*
Lifestyle Conservative 280 Trust Manufacturers Adviser Corporation*
- ----------
* Manufacturers Adviser Corporation is an indirect wholly-owned subsidiary of
Manulife.
INVESTMENT OBJECTIVES AND CERTAIN POLICIES OF THE PORTFOLIOS
The investment objectives and certain policies of the Portfolios currently
available to policyowners through corresponding sub-accounts are set forth
below. There is, of course, no assurance that these objectives will be met.
AGGRESSIVE GROWTH PORTFOLIOS
PACIFIC RIM EMERGING MARKETS TRUST. The investment objective of the Pacific Rim
Emerging Markets Trust is to achieve long-term growth of capital. Manufacturers
Adviser Corporation ("MAC") manages the Pacific Rim Emerging Markets Trust and
seeks to achieve this investment objective by investing in a diversified
portfolio that is comprised primarily of common stocks and equity-related
securities of corporations domiciled in countries of the Pacific Rim region.
SCIENCE & TECHNOLOGY TRUST. The investment objective of the Science & Technology
Trust is long-term growth of capital.
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Current income is incidental to the Portfolio's objective. T. Rowe Price
Associates, Inc. ("T. Rowe Price") manages the Science & Technology Trust.
INTERNATIONAL SMALL CAP TRUST. The investment objective of the International
Small Cap Trust is to seek long-term capital appreciation. Founders Asset
Management, Inc. ("Founders") manages the International Small Cap Trust and will
pursue this objective by investing primarily in securities issued by foreign
companies which have total market capitalizations or annual revenues of $1
billion or less. These securities may represent companies in both established
and emerging economies throughout the world.
EMERGING GROWTH TRUST. The investment objective of the Emerging Growth Trust is
maximum capital appreciation. Warburg Pincus Asset Management, Inc. manages the
Emerging Growth Trust and will pursue this objective by investing primarily in a
portfolio of equity securities of domestic companies. The Emerging Growth Trust
ordinarily will invest at least 65% of its total assets in common stocks or
warrants of emerging growth companies that represent attractive opportunities
for maximum capital appreciation.
PILGRIM BAXTER GROWTH TRUST. The investment objective of the Pilgrim Baxter
Growth Trust is capital appreciation. Pilgrim Baxter & Associates, Ltd. ("PBA")
manages the Pilgrim Baxter Growth Trust and seeks to achieve its objective by
investing in companies believed by PBA to have an outlook for strong earnings
growth and the potential for significant capital appreciation.
SMALL/MID CAP TRUST. The investment objective of the Small/Mid Cap Trust is to
seek long term capital appreciation. Fred Alger Management, Inc. manages the
Small/Mid Cap Trust and will pursue this objective by investing at least 65% of
the Portfolio's total assets (except during temporary defensive periods) in
small/mid cap equity securities.
INTERNATIONAL STOCK TRUST. The investment objective of the International Stock
Trust is to achieve long-term growth of capital. Rowe Price-Fleming
International, Inc. manages the International Stock Trust and seeks to obtain
this objective by investing primarily in common stocks of established, non-U.S.
companies.
GROWTH PORTFOLIOS
WORLDWIDE GROWTH TRUST. The investment objective of the Worldwide Growth Trust
is long-term growth of capital. Founders manages the Worldwide Growth Trust and
seeks to attain this objective by normally investing at least 65% of its total
assets in equity securities of growth companies in a variety of markets
throughout the world.
GLOBAL EQUITY TRUST. The investment objective of the Global Equity Trust is
long-term capital appreciation. Morgan Stanley Asset Management Inc. manages the
Global Equity Trust and intends to pursue this objective by investing primarily
in equity securities of issuers throughout the world, including U.S. issuers.
SMALL COMPANY VALUE TRUST. The investment objective of the Small Company Value
Trust is long-term growth of capital. Rosenberg Institutional Equity Management
manages the Small Company Value Trust and seeks to attain the foregoing
objective by investing in equity securities of smaller companies which are
traded principally in the markets of the United States.
EQUITY TRUST. The principal investment objective of the Equity Trust is growth
of capital. Current income is a secondary consideration although growth of
income may accompany growth of capital. Fidelity Management Trust Company
("FMTC") manages the Equity Trust and seeks to attain the foregoing objective by
investing primarily in common stocks of United States issuers or securities
convertible into or which carry the right to buy common stocks.
GROWTH TRUST. The investment objective of the Growth Trust is to seek long-term
growth of capital. Founders manages the Growth Trust and will pursue this
objective by investing, under normal market conditions, at least 65% of its
total assets in common stocks of well-established, high-quality growth companies
that Founders believes have the potential to increase earnings faster than the
rest of the market.
QUANTITATIVE EQUITY TRUST. The investment objective of the Quantitative Equity
Trust is to achieve intermediate and long-term growth through capital
appreciation and current income by investing in common stocks and other equity
securities of well established companies with promising prospects for providing
an above-average rate of return. MAC manages the Quantitative Equity Trust.
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EQUITY INDEX TRUST. The investment objective of the Equity Index Trust is to
achieve investment results which approximate the total return of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index. MAC manages the Equity Index Trust.
BLUE CHIP GROWTH TRUST. The primary investment objective of the Blue Chip Growth
Trust is to provide long-term growth of capital. Current income is a secondary
objective, and many of the stocks in the portfolio are expected to pay
dividends. T. Rowe Price manages the Blue Chip Growth Trust.
REAL ESTATE SECURITIES TRUST. The investment objective of the Real Estate
Securities Trust is to achieve a combination of long-term capital appreciation
and satisfactory current income by investing in real estate related equity and
debt securities. MAC manages the Real Estate Securities Trust.
GROWTH & INCOME PORTFOLIOS
VALUE TRUST. The investment objective of the Value Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk. Miller Anderson & Sherrerd, LLP ("MAS") manages
the Value Trust and seeks to attain this objective by investing primarily in
common and preferred stocks, convertible securities, rights and warrants to
purchase common stocks, ADRs and other equity securities of companies with
equity capitalizations usually greater than $300 million.
INTERNATIONAL GROWTH AND INCOME TRUST. The investment objective of the
International Growth and Income Trust is to seek long-term growth of capital and
income. The Portfolio is designed for investors with a long-term investment
horizon who want to take advantage of investment opportunities outside the
United States. J.P. Morgan Investment Management Inc. manages the International
Growth and Income Trust.
GROWTH AND INCOME TRUST. The investment objective of the Growth and Income Trust
is to provide long-term growth of capital and income consistent with prudent
investment risk. Wellington Management Company LLP ("Wellington Management")
manages the Growth and Income Trust and seeks to achieve the Trust's objective
by investing primarily in a diversified portfolio of common stocks of U.S.
issuers which Wellington Management believes are of high quality.
EQUITY-INCOME TRUST. The investment objective of the Equity-Income Trust is to
provide substantial dividend income and also long term capital appreciation. T.
Rowe Price manages the Equity-Income Trust and seeks to attain this objective by
investing primarily in dividend-paying common stocks, particularly of
established companies with favorable prospects for both increasing dividends and
capital appreciation.
BALANCED PORTFOLIOS
BALANCED TRUST. The investment objective of the Balanced Trust is current income
and capital appreciation. Founders is the manager of the Balanced Trust and
seeks to attain this objective by investing in a balanced portfolio of common
stocks, U.S. and foreign government obligations and a variety of corporate
fixed-income securities.
AUTOMATIC ASSET ALLOCATION TRUSTS (AGGRESSIVE, MODERATE AND CONSERVATIVE). The
investment objective of each of the Automatic Asset Allocation Trusts is to
realize the highest potential total return consistent with a specified level of
risk tolerance -- conservative, moderate or aggressive. The amount of each
Portfolio's assets invested in each category of securities -- debt, equity, and
money market -- is dependent upon the judgment of FMTC as to what percentages of
each Portfolio's assets in each category will contribute to the limitation of
risk and the achievement of its investment objective.
BOND PORTFOLIOS
HIGH YIELD TRUST. The investment objective of High Yield Trust is to realize an
above-average total return over a market cycle of three to five years,
consistent with reasonable risk. MAS manages the High Yield Trust and seeks to
attain this objective by investing primarily in high yield debt securities,
including corporate bonds and other fixed-income securities.
STRATEGIC BOND TRUST. The investment objective of the Strategic Bond Trust is to
seek a high level of total return consistent with preservation of capital. The
Strategic Bond Trust seeks to achieve its objective by giving its Subadviser,
Salomon Brothers Asset Management Inc ("SBAM") broad discretion to deploy the
Strategic Bond Trust's assets among certain segments of the fixed-income market
as SBAM believes will best contribute to the achievement of the Portfolio's
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objective.
GLOBAL GOVERNMENT BOND TRUST. The investment objective of the Global Government
Bond Trust is to seek a high level of total return by placing primary emphasis
on high current income and the preservation of capital. Oechsle International
Advisors, L.P. manages the Global Government Bond Trust and intends to pursue
this objective by investing primarily in a selected global portfolio of
high-quality, fixed-income securities of foreign and U.S. governmental entities
and supranational issuers.
CAPITAL GROWTH BOND TRUST. The investment objective of the Capital Growth Bond
Trust is to achieve growth of capital by investing in medium-grade or better
debt securities, with income as a secondary consideration. MAC manages the
Capital Growth Bond Trust. The Capital Growth Bond Trust differs from most
"bond" funds in that its primary objective is capital appreciation, not income.
INVESTMENT QUALITY BOND TRUST. The investment objective of the Investment
Quality Bond Trust is to provide a high level of current income consistent with
the maintenance of principal and liquidity. Wellington Management manages the
Investment Quality Bond Trust and seeks to achieve the Portfolio's objective by
investing primarily in a diversified portfolio of investment grade corporate
bonds and U.S. Government bonds with intermediate to longer term maturities.
U.S. GOVERNMENT SECURITIES TRUST. The investment objective of the U.S.
Government Securities Trust is to obtain a high level of current income
consistent with preservation of capital and maintenance of liquidity. SBAM
manages the U.S. Government Securities Trust and seeks to attain its objective
by investing a substantial portion of its assets in debt obligations and
mortgage-backed securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and derivative securities such as collateralized
mortgage obligations backed by such securities.
MONEY MARKET PORTFOLIO
MONEY MARKET TRUST. The investment objective of the Money Market Trust is to
obtain maximum current income consistent with preservation of principal and
liquidity. MAC manages the Money Market Trust and seeks to achieve this
objective by investing in high quality, U.S. dollar denominated money market
instruments.
LIFESTYLE PORTFOLIOS
LIFESTYLE AGGRESSIVE 1000 TRUST. The investment objective of the Lifestyle
Aggressive 1000 Trust is to provide long term growth of capital. Current income
is not a consideration. MAC manages the Portfolio and seeks to achieve this
objective by investing approximately 100% of the Lifestyle Trust's assets in
Underlying Portfolios which invest primarily in equity securities.
LIFESTYLE GROWTH 820 TRUST. The investment objective of the Lifestyle Growth 820
Trust is to provide long term growth of capital with consideration also given to
current income. MAC manages the Portfolio and seeks to achieve this objective by
investing approximately 20% of the Lifestyle Trust's assets in Underlying
Portfolios which invest primarily in fixed income securities and approximately
80% of its assets in Underlying Portfolios which invest primarily in equity
securities.
LIFESTYLE BALANCED 640 TRUST. The investment objective of the Lifestyle Balanced
640 Trust is to provide a balance between high level of current income and
growth of capital with a greater emphasis given to capital growth. MAC manages
the Portfolio and seeks to achieve this objective by investing approximately 40%
of the Lifestyle Trust's assets in Underlying Portfolios which invest primarily
in fixed income securities and approximately 60% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE MODERATE 460 TRUST. The investment objective of the Lifestyle Moderate
460 Trust is to provide a balance between a high level of current income and
growth of capital with a greater emphasis given to high income. MAC manages the
Portfolio and seeks to achieve this objective by investing approximately 60% of
the Lifestyle Trust's assets in Underlying Portfolios which invest primarily in
fixed income securities and approximately 40% of its assets in Underlying
Portfolios which invest primarily in equity securities.
LIFESTYLE CONSERVATIVE 280 TRUST. The investment objective of the Lifestyle
Conservative 280 Trust is to provide a high level of current income with some
consideration also given to growth of capital. MAC manages the Portfolio and
seeks to achieve this objective by investing approximately 80% of the Lifestyle
Trust's assets in Underlying Portfolios which invest
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primarily in fixed income securities and approximately 20% of its assets in
Underlying Portfolios which invest primarily in equity securities.
A full description of the Manufacturers Investment Trust, its investment
objectives, policies and restrictions, the risks associated therewith, its
expenses, and other aspects of its operation is contained in the accompanying
Manufacturers Investment Trust prospectus, which should be read together with
this prospectus.
DETAILED INFORMATION ABOUT THE POLICIES
PREMIUM PROVISIONS
POLICY ISSUE AND INITIAL PREMIUM
To purchase a Policy, an applicant must submit a completed application. Manulife
New York will issue a Policy only if it has a face amount of at least $50,000
($100,000 for preferred risk policies). A Policy will generally be issued to
persons between ages 0 and 90. In certain circumstances the Company may at its
sole discretion issue a Policy to persons above age 90. Before issuing a Policy,
Manulife New York will require evidence of insurability satisfactory to it. A
life insured will have a risk class of preferred/non-smoker, preferred/smoker,
standard/non-smoker or standard/smoker as determined by underwriting rules.
Persons failing to meet standard underwriting requirements nonetheless may be
eligible to purchase a Policy provided an additional rating is assigned.
Acceptance of an application is subject to the Company's insurance underwriting
rules. Each Policy is issued with a policy date from which policy years, policy
months and policy anniversaries are all determined. Each Policy also has an
effective date which is the date the Company becomes obligated under the Policy
and when the first monthly deductions are taken. If an application is
accompanied by a check for at least the Initial Premium and the application is
accepted, the policy date will be the date the application and check were
received at the Manulife New York Service Office and the effective date will be
the date Manulife New York's underwriters approve issuance of the Policy. If an
application is accompanied by a check for at least the Initial Premium, the life
insured may be covered under the terms of a conditional insurance agreement
until the effective date. If an application accepted by the Company is not
accompanied by a check for at least the Initial Premium, the Policy will be
issued with a policy date which is seven days after issuance of the Policy (the
"issue date") and with an effective date which is the date the Service Office
receives at least the Initial Premium. In certain situations a different policy
date may be used. The Initial Premium must be received within 60 days after the
policy date; however, the Initial Premium may be required within 30 days on
Policies issued with Additional Ratings. If the Initial Premium is not paid or
if the application is rejected, the Policy will be canceled and any premiums
paid will be returned to the applicant.
Under certain circumstances a Policy may be issued with a backdated policy date.
A Policy will not be backdated more than six months before the date of the
application for the Policy. Monthly deductions will be made for the period the
policy date is backdated.
All premiums received prior to the effective date of a Policy will be credited
with interest from the date of receipt at the rate of return then being earned
on amounts allocated to the Money Market Trust. On the effective date, the
premiums paid plus interest credited, net of deductions for Federal, state and
local taxes, will be allocated among the Investment Accounts or the Guaranteed
Interest Account in accordance with the policyowner's instructions.
All premiums received on or after the effective date of the Policy will be
allocated among the Investment Accounts or the Guaranteed Interest Account as of
the date the premiums were received at the Manulife New York Service Office.
Monthly deductions are due on the policy date and at the beginning of each
policy month thereafter. However, if due prior to the effective date, they will
be taken on the effective date instead of the dates they were due.
PREMIUM ALLOCATION
Net Premiums may be allocated to either the Guaranteed Interest Account for
accumulation at a rate of interest equal to at least 4% or to one or more of the
Investment Accounts for investment in the Portfolio shares held by the
corresponding sub-account of the Separate Account. Allocations among the
Investment Accounts and the Guaranteed Interest Account are made as a percentage
of the Net Premium. The percentage allocation to any account may be any whole
number between zero and 100, provided the total percentage allocations equal
100. A policyowner may change the way in which Net Premiums are allocated at any
time without charge. The change will take effect on the date a written or
authorized telephonic request for
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change, in a format satisfactory to the Company, is received at the Manulife New
York Service Office.
PREMIUM LIMITATIONS
After the payment of the Initial Premium, premiums may be paid at any time and
in any amount during the lifetime of the life insured subject to certain
limitations. After the Initial Premium, all premiums must be paid to the
Manulife New York Service Office. Unlike traditional insurance, premiums are not
payable at specified intervals or in specified amounts. A Policy will be issued
with a Planned Premium which is based on the amount of premium the policyowner
wishes to pay. It is recommended that the Planned Premium be such that the No
Lapse Guarantee or Death Benefit Guarantee Cumulative Premium Test (see DETAILED
INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFITS -- No Lapse Guarantee and
Death Benefit Guarantee) will be satisfied.
Manulife New York will send notices to the policyowner setting forth the Planned
Premium at the payment interval selected by the policyowner, unless payment is
being made pursuant to a pre-authorized payment plan. However, the policyowner
is under no obligation to make the indicated payment.
Manulife New York will not accept any premium payment which is less than $50,
unless the premium is payable pursuant to a pre-authorized payment plan. In that
case the Company will accept a payment of as little as $10. Manulife New York
may change these minimums on 90 days' written notice. The Policies also limit
the sum of the premiums that may be paid at any time in order to preserve the
qualification of the Policies as life insurance for Federal tax purposes. These
limitations are set forth in each Policy. Manulife New York reserves the right
to refuse or refund any premium payments that may cause the Policy to fail to
qualify as life insurance under applicable tax law.
SHORT-TERM CANCELLATION RIGHT AND "FREE LOOK" PROVISIONS
A Policy may be returned for a refund of the premium within 10 days after it is
received, within 45 days after the application for the Policy is signed, or
within 10 days after Manulife New York mails or delivers a notice of right of
withdrawal, whichever is latest. The Policy can be mailed or delivered to the
Manulife New York agent who sold it or to the Manulife New York Service Office.
Immediately on such delivery or mailing, the Policy shall be deemed void from
the beginning. Within seven days after receipt of the returned Policy at its
Service Office, Manulife New York will refund any premium paid. Manulife New
York reserves the right to delay the refund of any premium paid by check until
the check has cleared.
If a policyowner requests an increase in face amount which results in new
surrender charges, he or she will have the same rights as described above to
cancel the increase. If canceled, the Policy Value and the surrender charges
will be recalculated to the amounts they would have been had the increase not
taken place. A policyowner may request a refund of all or any portion of
premiums paid during the free look period, and the Policy Value and the
surrender charges will be recalculated to the amounts they would have been had
the premiums not been paid.
INSURANCE BENEFIT
THE INSURANCE BENEFIT
If the Policy is in force at the time of the life insured's death, Manulife New
York will pay an insurance benefit based on the death benefit option selected by
the policyowner upon receipt of due proof of death. The amount payable will be
the death benefit under the selected option, plus any amounts payable under any
supplementary benefits added to the Policy, less the value of the Policy Debt at
the date of death. The insurance benefit will be paid in one sum unless another
form of settlement option is agreed to by the beneficiary and the Company. If
the insurance benefit is paid in one sum, Manulife New York will pay interest
from the date of death to the date of payment. If the life insured should die
after the Company's receipt of a request for surrender, no insurance benefit
will be payable, and Manulife New York will pay only the Net Cash Surrender
Value.
NO LAPSE GUARANTEE
On Policies issued with a face amount of at least $250,000 (calculated as
described below), the policyowner may elect the No Lapse Guarantee. If elected,
as long as the No Lapse Guarantee Cumulative Premium Test (see below) is
satisfied during the
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No Lapse Guarantee Period, as described below, Manulife New York will guarantee
that the Policy will not go into default (see DETAILED INFORMATION ABOUT THE
POLICIES -- OTHER GENERAL POLICY PROVISIONS -- Policy Default), even if a
combination of Policy loans, adverse investment experience and other factors
should cause the Policy's Net Cash Surrender Value to be insufficient to meet
the monthly deductions due at the beginning of a policy month. For purposes of
determining the face amount at issue for the No Lapse Guarantee, the face amount
shall include any amounts purchased under the supplementary insurance option.
The No Lapse Guarantee Period is the first five Policy Years for life insureds
with an issue age up to and including 85. It is not offered to life insureds
whose Issue Age exceeds 85.
While the No Lapse Guarantee is in effect, Manulife New York will determine at
the beginning of each policy month whether the No Lapse Guarantee Cumulative
Premium Test, described below, has been satisfied. If it has not been satisfied,
the Company will notify the policyowner of that fact and allow a 61-day grace
period in which the policyowner may make a premium payment sufficient to keep
the No Lapse Guarantee in effect. This required payment, as described in the
notification to the policyowner, will be equal to the outstanding premium
requirement as of the date the No Lapse Guarantee was not satisfied plus the
Monthly No Lapse Guarantee Premium due for the next two policy months. If the
required payment is not received by the end of the grace period, the No Lapse
Guarantee will terminate, and the Policy subsequently may go into default if the
Policy's Net Cash Surrender Value is insufficient to meet the monthly deductions
due at the beginning of a policy month. A death benefit option change will also
terminate the No Lapse Guarantee if it is in effect at the time of the change as
will a decrease in face amount below $250,000. The No Lapse Guarantee cannot be
reinstated after it has been terminated (see DETAILED INFORMATION ABOUT THE
POLICIES -- OTHER GENERAL POLICY PROVISIONS -- Policy Default, and INSURANCE
BENEFIT -- Death Benefit Option Changes).
NO LAPSE GUARANTEE CUMULATIVE PREMIUM TEST
The No Lapse Guarantee Cumulative Premium Test is satisfied if, as of the
beginning of the policy month, the sum of all premiums paid to date less any
partial withdrawals and less any Policy Debt is at least equal to the sum of the
Monthly No Lapse Guarantee Premiums due since the policy date, as follows:
The Policy will satisfy the No Lapse Guarantee Cumulative Premium Test if (a) is
greater than or equal to (b), where:
(a) is the sum of all premiums paid, less any partial withdrawals and
less any Policy Debt; and
(b) is the sum of the Monthly No Lapse Guarantee Premiums due since
the policy date.
The Monthly No Lapse Guarantee Premium is one-twelfth of the No Lapse Guarantee
Premium. The No Lapse Guarantee Premium is set forth in the Policy. It is
subject to change if the face amount of the Policy is changed (see DETAILED
INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- Face Amount Changes), or
if there is any change in the supplementary benefits added to the Policy or in
the risk class of any life insured.
DEATH BENEFIT GUARANTEE
Policies With Face Amounts of at Least $250,000. If elected by the policyowner,
on Policies issued and maintained with a minimum face amount of $250,000, and if
the Death Benefit Guarantee Cumulative Premium Test (see below) is satisfied,
Manulife New York will guarantee that the Policy will not go into default (see
DETAILED INFORMATION ABOUT THE POLICIES --OTHER GENERAL POLICY PROVISIONS
- --Policy Default) even if a combination of policy loans, adverse investment
experience or other factors should cause the Policy's Net Cash Surrender Value
to be insufficient to meet the monthly deductions due at the beginning of a
policy month.
If elected by the policyowner, on Policies issued and maintained with a minimum
face amount of $250,000, if after the tenth policy anniversary the Death Benefit
Guarantee Cumulative Premium Test is not satisfied but the Fund Value Test (see
below) is satisfied, Manulife New York will keep the Death Benefit Guarantee in
effect.
This Death Benefit Guarantee will expire at the end of a policy year specified
in the Policy, currently (i) the year in which the life insured reaches attained
age 100 if Death Benefit Option 1 is maintained throughout the life of the
Policy and (ii) the year in which the life insured reaches attained age 85 if
Death Benefit Option 2 is selected at any time. While the guarantee is
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in effect, Manulife New York will determine at the beginning of each policy
month whether the Death Benefit Guarantee Cumulative Premium Test or the Fund
Value Test has been satisfied. If neither has been satisfied, the Company will
notify the policyowner of that fact and allow a 61-day grace period in which the
policyowner may make a premium payment sufficient to keep the Death Benefit
Guarantee in effect. The required payment will be equal to the outstanding
premium required to meet the Death Benefit Guarantee Cumulative Premium Test at
the date neither test was satisfied, plus the Monthly Death Benefit Guarantee
Premium due for the next two policy months. If the required payment is not
received by the end of the grace period, the Death Benefit Guarantee will
terminate. Once the Death Benefit Guarantee is terminated, it cannot be
reinstated.
Policies With Face Amounts Under $250,000. On Policies with a face amount less
than $250,000 at issue or after face amount decrease, if the Death Benefit
Guarantee Cumulative Premium Test is satisfied in the first three years,
Manulife New York will guarantee that the Policy will not go into default even
if a combination of policy loans, adverse investment experience or other factors
should cause the Policy's Net Cash Surrender Value to be insufficient to meet
the monthly deductions due at the beginning of a policy month. After the third
policy anniversary, there is no Death Benefit Guarantee on (a) Policies issued
with face amounts of less than $250,000 or (b) Policies on which a face amount
decrease has resulted in a face amount of less than $250,000.
Death Benefit Guarantee Cumulative Premium Test. The Policy provides for a Death
Benefit Guarantee Cumulative Premium Test. The Death Benefit Guarantee
Cumulative Premium Test is satisfied if at the beginning of each policy month
the sum of all premiums paid to date less any partial withdrawals and any Policy
Debt is at least equal to the sum of the Monthly Death Benefit Guarantee
Premiums due since the policy date. The Death Benefit Guarantee Premium is set
forth in the Policy. It is subject to change if the face amount of the Policy or
the death benefit option is changed (see DETAILED INFORMATION ABOUT THE
POLICIES -- INSURANCE BENEFITS -- Death Benefit Option Changes and Face Amount
Changes) or if there is any change in the supplementary benefits added to the
Policy or in the risk class of the life insured.
Fund Value Test. The Policy provides for a Fund Value Test. The Fund Value Test
is applicable after the tenth anniversary of the Policy. The Fund Value Test is
satisfied if at the beginning of each policy month the Net Policy Value is
greater than or equal to the Gross Single Premium.
DEATH BENEFIT OPTIONS
The Policy permits the policyowner to select one of two death benefit options
- -- Option 1 and Option 2. Under Option 1 the death benefit is the face amount of
the Policy at the date of death or, if greater, the Policy Value at the date of
death multiplied by the applicable percentage in the table set forth below.
Under Option 2 the death benefit is the face amount of the Policy plus the
Policy Value at the date of death or, if greater, the Policy Value at the date
of death multiplied by the applicable percentage in the following table:
CORRIDOR CORRIDOR CORRIDOR CORRIDOR
AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE AGE PERCENTAGE
40 & below 250% 51 178% 62 126% 73 109%
41 243 52 171 63 124 74 107
42 236 53 164 64 122 75-90 105
43 229 54 157 65 120 91 104
44 222 55 150 66 119 92 103
45 215 56 146 67 118 93 102
46 209 57 142 68 117 94 101
47 203 58 138 69 116 95 & above 100
48 197 59 134 70 115
49 191 60 130 71 113
50 185 61 128 72 111
Regardless of which death benefit option is in effect, the relationship of
Policy Value to death benefit will change whenever the "corridor percentages"
are used to determine the amount of the death benefit. This will occur whenever
multiplying the Policy Value by the applicable percentage set forth in the above
table results in a greater death benefit than would otherwise apply under the
selected option. For example, assume the life insured under a Policy with a face
amount of $100,000 has an attained age of 40. If Option 1 is in effect, the
corridor percentage will produce a greater death benefit whenever the Policy
Value exceeds $40,000 (250% x $40,000 = $100,000). If the Policy Value is less
than $40,000, an incremental change in Policy Value, up or down, will have no
effect on the death benefit. If the Policy Value is greater than $40,000, an
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incremental change in Policy Value will result in a change in the death benefit
by a factor of 2.5. Thus, if the Policy Value were to increase to $40,010, the
death benefit would be increased to $100,025 (250% x $40,010 = $100,025).
If Option 2 were in effect in the above example, the corridor percentage would
produce a greater death benefit whenever the Policy Value exceeded $66,667 (250%
x 66,667 = 166,667). At that point the death benefit produced by multiplying the
Policy Value by 250% would result in a greater amount than adding the Policy
Value to the face amount of the Policy. If the Policy Value is less than
$66,667, an incremental change in Policy Value will have a dollar-for-dollar
effect on the death benefit. If the Policy Value is greater than $66,667, an
incremental change in Policy Value will result in a change in the death benefit
by a factor of 2.5 in the same manner as would be the case under Option 1 when
the corridor percentage determined the death benefit.
DEATH BENEFIT OPTION CHANGES
The death benefit option is selected initially by the policyowner in the
application. After the Policy has been in force for one year the death benefit
option may be changed effective as of any subsequent policy month. Written
request for a change must be received by Manulife New York at least 30 days
prior to the beginning of a policy month in order to become effective on that
date. The Company reserves the right to limit a request for change if the change
would cause the Policy to fail to qualify as life insurance for tax purposes.
A change in death benefit option will result in a change in the Policy's face
amount in order to avoid any change in the amount of the death benefit.
If the change in death benefit is from Option 1 to Option 2, the new face amount
will be equal to the face amount prior to the change minus the Policy Value on
the effective date of the change. A change to Option 2 will not be allowed if it
would cause the face amount of the Policy to go below the minimum face amount of
$50,000 ($100,000 for preferred risk policies). A change of death benefit option
to Option 2 will shorten the death benefit guarantee period to the year in which
the life insured reaches attained age 85.
If the change in death benefit is from Option 2 to Option 1, the new face amount
will be equal to the face amount prior to the change plus the Policy Value on
the effective date of the change. The increase in face amount resulting from a
change to Option 1 will not affect the amount of surrender charges to which a
Policy may be subject. The Company has the right to require satisfactory
evidence of insurability before permitting a change from Option 2 to Option 1.
The Company does not currently require evidence of insurability when making this
change.
Policyowners who wish to have level insurance coverage should generally select
Option 1. Under Option 1, increases in Policy Value usually will reduce the net
amount of risk under a Policy which will reduce cost of insurance charges. This
means that favorable investment performance should result in a faster increase
in Policy Value than would occur under an identical Policy with Option 2 in
effect. However, the larger Policy Value which may result under Option 1 will
not affect the amount of the death benefit unless the corridor percentages are
used to determine the death benefit.
Policyowners who want to have the Policy Value reflected in the death benefit so
that any increases in Policy Value will increase the death benefit should
generally select Option 2. Under Option 2, the net amount at risk will remain
level unless the corridor percentages are used to determine death benefit, in
which case increases in Policy Value will increase the net amount at risk.
FACE AMOUNT CHANGES
Subject to certain limitations, a policyowner may, upon written request,
increase or decrease the face amount of the Policy. A change in face amount may
affect the Death Benefit Guarantee Premium, the monthly deductions and surrender
charges (see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES --Charges
and Deductions). Currently, each increase or decrease (other than a decrease
resulting from a partial withdrawal) in face amount must be at least $50,000
($100,000 for increases in preferred risk policies). Manulife New York reserves
the right to increase or decrease the minimum face amount change on 90 days'
written notice to the policyowner. The Company also reserves the right to limit
a change in face amount to the extent necessary to prevent the Policy from
failing to qualify as life insurance for tax purposes.
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Increases. Increases in face amount are subject to satisfactory evidence of
insurability. Increases may be made only once per policy year and only after the
first policy anniversary. An increase will become effective at the beginning of
the next policy month following the date Manulife New York approves the
requested increase. The Company reserves the right to refuse a requested
increase if the life insured's age at the effective date of the increase would
be greater than the maximum issue age for new Policies at that time.
An increase in face amount will usually result in the Policy's being subject to
new surrender charges. The new surrender charges will be computed as if a new
Policy were being purchased for the increase in face amount. For purposes of
determining the new deferred sales charge, a portion of the Policy Value at the
time of the increase, and a portion of the premiums paid on or subsequent to the
increase, will be deemed to be premiums attributable to the increase (see
DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Charges and
Deductions and Surrender Charges). Any increase in face amount to a level less
than the highest face amount previously in effect will have no effect on the
surrender charges to which the Policy is subject, since surrender charges, if
applicable, will have been assessed in connection with the prior decrease in
face amount. The insurance coverage eliminated by the decrease of the oldest
face amount will be deemed to be restored first. As with the purchase of a
Policy, a policyowner will have a free look right with respect to any increase
resulting in new surrender charges.
No additional premium is required for a face amount increase. However, a premium
payment may be necessary to prevent the Policy from going into default, since
new surrender charges resulting from an increase would automatically reduce the
Net Cash Surrender Value of the Policy. Moreover, a new Death Benefit Guarantee
Premium will be determined.
Decreases. A decrease in the face amount may be requested only once per policy
year and only after the Policy has been in force for one year. A decrease in
face amount will become effective at the beginning of the next policy month
following the receipt of a properly executed request. A decrease will not be
allowed if it would cause the face amount to go below the minimum face amount of
$50,000 ($100,000 for preferred risk policies).
A decrease in face amount during the Surrender Charge Period will usually result
in surrender charges being deducted from the Policy Value (see DETAILED
INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Charges and Deductions
and Surrender Charges). For purposes of determining surrender and cost of
insurance charges, a decrease will reduce face amount in the following order:
(a) the face amount provided by the most recent increase, then (b) the face
amounts provided by the next most recent increases successively, and finally (c)
the initial face amount.
POLICY VALUES
POLICY VALUE
A Policy has a Policy Value, a portion of which is available to the policyowner
by making a policy loan or partial withdrawal or upon surrender of the Policy
(see "Policy Loans" and "Partial Withdrawals and Surrenders" below). The Policy
Value may also affect the amount of the death benefit (see DETAILED INFORMATION
ABOUT THE POLICIES -- INSURANCE BENEFIT -- Death Benefit Options). The Policy
Value at any time is equal to the sum of the Values in the Investment Accounts,
the Guaranteed Interest Account and the Loan Account. The following discussion
relates only to the Investment Accounts. Policy loans are discussed under
"Policy Loans" and the Guaranteed Interest Account is discussed under "The
General Account." The portion of the Policy Value based on the Investment
Accounts is not guaranteed and will vary each Business Day with the investment
performance of the underlying Portfolio.
An Investment Account is established under each Policy for each sub-account of
the Separate Account to which net premiums or transfer amounts have been
allocated. Each Investment Account under a Policy measures the interest of the
Policy in the corresponding sub-account. The value of the Investment Account
established for a particular sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such units.
Units of a particular sub-account are credited to a Policy when net premiums are
allocated to that sub-account or amounts are transferred to that sub-account.
Units of a sub-account are canceled whenever amounts are deducted, transferred
or withdrawn from the sub-account. The number of units credited or canceled for
a specific transaction is based on the dollar amount of the transaction divided
by the value of the unit at the end of the Business Day on which the transaction
occurs. The number of units credited with respect to a premium payment will be
based on the applicable unit values at the end of the Business Day on which the
premium is received at the Manulife New York Service Office or other office or
entity so
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designated by Manulife New York.
Units are valued at the end of each Business Day. A Business Day is deemed to
end at the time of the determination of the net asset value of the Fund shares.
When an order involving the crediting or canceling of units is received after
the end of a Business Day or on a day which is not a Business Day, the order
will be processed on the basis of unit values determined at the end of the next
Business Day. Similarly, any determination of Policy Value, Investment Account
value or death benefit to be made on a day which is not a Business Day will be
made at the end of the next Business Day.
The value of a unit of each sub-account was initially fixed at $10.00. For each
subsequent Business Day the unit value is determined by multiplying the unit
value for the preceding Business Day by the "net investment factor" for the
particular sub-account for such subsequent Business Day. The net investment
factor for a sub-account for any Business Day is equal to (a) divided by (b),
where:
(a) is the net asset value of the underlying Portfolio shares held by that
sub-account at the end of such Business Day before any policy
transactions are made on that day; and
(b) is the net asset value of the underlying Portfolio shares held by that
sub-account at the end of the immediately preceding Business Day after
all policy transactions have been made for that day.
Manulife New York reserves the right to adjust the above formula for any taxes
determined by it to be attributable to the operations of the sub-account.
TRANSFERS OF POLICY VALUE
A policyowner may change the extent to which his or her Policy Value is based
upon any specific sub-account of the Separate Account or the Company's general
account. Such changes are made by transferring amounts from one or more
Investment Accounts or the Company's general account to other Investment
Accounts or the Company's general account. A policyowner is permitted to make
twelve transfers each policy year free of charge. Additional transfers in each
policy year may be made at a cost of $25 per transfer. This charge will be
assessed against the Investment Account or the Guaranteed Interest Account from
which the amount is being transferred. For this purpose all transfer requests
received by Manulife New York on the same Business Day are treated as a single
transfer request. There will be no change in issue age, risk class of the life
insured or face amount as a result of any transfer.
The maximum amount that may be transferred from the Guaranteed Interest Account
in any one policy year is the greater of $500 or 15% of the Guaranteed Interest
Account value at the previous policy anniversary. Any transfer which involves a
transfer out of the Guaranteed Interest Account may not involve a transfer to
the Investment Account for the Money Market Trust.
Transfer requests must be in a format satisfactory to Manulife New York and in
writing, or by telephone, if a currently valid telephone transfer authorization
form is on file. Although failure to follow reasonable procedures may result in
Manulife New York's liability for any losses resulting from unauthorized or
fraudulent telephone transfers, Manulife New York will not be liable for
following instructions communicated by telephone that it reasonably believes to
be genuine. Manulife New York will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures include:
confirming receipt of a valid telephone authorization form; tape recording all
telephone transactions; and providing written confirmation thereof.
While the Policy is in force, the policyowner may transfer the Policy Value from
all the Investment Accounts to the Guaranteed Interest Account, without
incurring transfer charges:
(a) within 18 months after the Issue Date; or
(b) within 60 days of the effective date of a material change
in the investment objectives of the sub-accounts, or within 60
days of the date the notification of such change.
Limitations. To the extent that total surrenders, partial withdrawals and
transfers out of a sub-account exceed total net premium allocations and
transfers into that sub-account, portfolio securities of the underlying
Portfolio may have to be sold.
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Excessive sales of the investment portfolio securities in such a situation could
be detrimental to that Portfolio and to policyowners with Policy Values
allocated to sub-accounts investing in that Portfolio.
To protect the interests of all policyowners, Manulife New York reserves the
right to limit transfers when in its opinion processing transfers would be
detrimental to a particular portfolio or to policyowners who had allocated
investments to that portfolio (see DETAILED INFORMATION ABOUT THE POLICIES
- -- OTHER PROVISIONS -- Payment of Proceeds).
Dollar Cost Averaging. Manulife New York will offer policyowners a Dollar Cost
Averaging program. Under this program amounts will be automatically transferred
at predetermined intervals from one Investment Account to any other Investment
Account(s) or the Guaranteed Interest Account.
Under the Dollar Cost Averaging program the policyowner will designate an amount
to be transferred at predetermined intervals from one Investment Account into
any other Investment Account(s) or the Guaranteed Interest Account. Each
transfer under the Dollar Cost Averaging program must be of a minimum amount as
set by Manulife New York. Once set, this minimum may be changed at any time at
the discretion of Manulife New York. Currently, no charge will be made for this
program if the Policy Value exceeds $15,000 on the date of transfer. Otherwise,
there will be a charge of $5 for each transfer under this program. The charge
will be deducted from the value of the Investment Account out of which the
transfer occurs. If insufficient funds exist to effect a Dollar Cost Averaging
transfer, including the charge, if applicable, the transfer will not be effected
and the policyowner will be so notified. Manulife New York reserves the right to
cease to offer this program on 90 days' written notice to the policyowner.
Asset Allocation Balancer Transfers. Manulife New York will also offer
policyowners the ability to have amounts automatically transferred among
stipulated Investment Accounts to maintain an allocated percentage in each
stipulated Investment Account.
Under the Asset Allocation Balancer program the policyowner will designate an
allocation of Policy Value among Investment Accounts. At six month intervals,
beginning six months after the policy date, Manulife New York will move amounts
among the Investment Accounts as necessary to maintain the policyowner's chosen
allocation. A change to the policyowner's premium allocation instructions will
automatically result in a change in Asset Allocation Balancer instructions so
that the two are identical unless the policyowner either instructs Manulife New
York differently or a Dollar Cost Averaging request is in effect. Currently,
there is no charge for this program; however, Manulife New York reserves the
right to institute a charge on 90 days' written notice to the policyowner.
Manulife New York reserves the right to cease to offer this program on 90 days'
written notice to the policyowner.
POLICY LOANS
While the Policy is in force, the policyowner may borrow against the Policy
Value of his or her Policy. The Policy serves as the only security for the loan.
The minimum amount of any loan is $500. The maximum loan amount is the amount
which would cause the Modified Policy Debt to equal the loan value of the Policy
on the date of the loan. The loan value is the Policy's Cash Surrender Value
less the monthly deductions due to the next policy anniversary. The Modified
Policy Debt as of any date is the Policy Debt (the aggregate amount of policy
loans, including borrowed interest, less any loan repayments) plus the amount of
interest to be charged to the next policy anniversary, all discounted from the
next policy anniversary to such date at an annual rate of 4%. An amount equal to
the Modified Policy Debt is transferred to the Loan Account to ensure that a
sufficient amount will be available to pay interest on the Policy Debt at the
next policy anniversary.
For example, assume a Policy with a loan value of $5,000, no outstanding policy
loans and a loan interest rate of 5.75%. The maximum amount that can be borrowed
is an amount that will cause the Modified Policy Debt to equal $5,000. If the
loan is made on a policy anniversary, the maximum loan will be $4,917. This
amount at 5.75% interest will equal $5,200 one year later; $5,200 discounted to
the date of the loan at 4% (the Modified Policy Debt) equals $5,000. Because the
minimum rate of interest credited to the Loan Account is 4%, $5,000 must be
transferred to the Loan Account to ensure that $5,200 will be available at the
next policy anniversary to cover the interest accrued on the Policy Debt.
When a loan is made, Manulife New York will deduct from the Investment Accounts
or the Guaranteed Interest Account, and transfer to the Loan Account, an amount
which will result in the Loan Account value being equal to the
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Modified Policy Debt. The policyowner may designate how the amount to be
transferred to the Loan Account is allocated among the accounts from which the
transfer is to be made. In the absence of instructions, the amount to be
transferred will be allocated to each account in the same proportion as the
value in each Investment Account and the Guaranteed Interest Account bears to
the Net Policy Value. A transfer from an Investment Account will result in the
cancellation of units of the underlying sub-account equal in value to the amount
transferred from the Investment Account. However, since the Loan Account is part
of the Policy Value, transfers made in connection with a loan will not change
the Policy Value.
A policy loan may result in a Policy's failing to satisfy the No Lapse Guarantee
and/or the Death Benefit Guarantee Cumulative Premium Test, since the Policy
Debt is subtracted from the sum of the premiums paid in determining whether the
Death Benefit Guarantee Cumulative Premium Test is satisfied. As a result, the
Death Benefit Guarantee or No Lapse Guarantee may terminate (see DETAILED
INFORMATION ABOUT THE POLICIES -- INSURANCE BENEFIT -- No Lapse Guarantee and
Death Benefit Guarantee and OTHER GENERAL POLICY PROVISIONS -- Policy Default).
Moreover, if the Death Benefit Guarantee or No Lapse Guarantee is not in force,
a policy loan may cause a Policy to be more susceptible to going into default,
since a policy loan will be reflected in the Net Cash Surrender Value (see
DETAILED INFORMATION ABOUT THE POLICIES -- OTHER GENERAL POLICY PROVISIONS
- --Policy Default). A policy loan will also affect future Policy Values, since
that portion of the Policy Value in the Loan Account will increase in value at
the crediting interest rate rather than varying with the performance of the
underlying Funds selected by the policyowner or increasing in value at the rate
of interest credited for amounts allocated to the Guaranteed Interest Account.
Policy loans may have tax consequences. A policyowner considering the use of
systematic policy loans as one element of a comprehensive retirement income plan
should consult his or her personal tax advisor regarding the potential tax
consequences if such loans were to so reduce Policy Value that the Policy would
lapse, absent additional payments. The premium payment necessary to avert lapse
would increase with the age of the insured (see DETAILED INFORMATION ABOUT THE
POLICIES --MISCELLANEOUS MATTERS -- Federal Income Tax Considerations and Tax
Treatment of Policy Benefits). Finally, a policy loan will affect the amount
payable on the death of the life insured, since the death benefit is reduced by
the value of the Policy Debt at the date of death in arriving at the insurance
benefit.
Interest Charged On Policy Loans. Interest on the Policy Debt will accrue daily
and be payable annually on the policy anniversary. The rate of interest charged
will be fixed at an effective annual rate of 5.75%. If the interest due on a
policy anniversary is not paid by the policyowner, the interest will be borrowed
against the Policy.
Interest Credited To The Loan Account. Manulife New York will credit interest to
any amount in the Loan Account at an effective annual rate of at least 4%. The
actual rate credited is:
- On amounts up to the Policy's Select Loan Amount, the rate of interest
charged on the policy loan less an interest rate differential,
currently 0%; provided, however, if at some time in the future it is
determined that the current differential could cause the loan to be
treated as a taxable distribution under any applicable ruling,
regulation or court decision, Manulife New York has the right to
increase the differential on all subsequent Select Loan Amounts either
(i) to an amount that may be prescribed in such ruling, regulation or
court decision that would result in the transaction being treated as a
loan under Federal tax law or (ii) if no amount is prescribed, to an
amount that Manulife New York considers to be more likely to result in
the transaction being treated as a loan under Federal tax law.
- On amounts in excess of the Select Loan Amount as described above, the
rate of interest charged on the policy loan less an interest rate
differential, currently 1.75%.
Prior to the later of the tenth policy anniversary and the anniversary following
attained age 55, the amount available as a Select Loan is zero; after the later
of the tenth policy anniversary and the policy anniversary following attained
age 55, the amount available annually as a Select Loan is equal to 12% of the
Policy's Net Cash Surrender Value at the previous policy anniversary. The amount
available as a Select Loan applies to existing and new loans. If, at the time a
policyowner is considering a Select Loan, interest due currently on his or her
outstanding loans equals or exceeds the Select Loan Amount, the Select Loan
feature could not be used to withdraw additional cash from Policy Value. The
total of all loans, including the Select Loan Amount, cannot exceed the maximum
loan amount as described above.
To illustrate the amount available as a Select Loan, assume that a Policy has an
issue age of 47 and a Net Cash Surrender Value on the eleventh policy
anniversary of $10,000. The Select Loan Amount available during the twelfth
policy year is $1,200 (12% x $10,000). Assume that at the beginning of the
twelfth policy year, a loan of $1,500 is taken. $1,200 of that
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amount is considered the Select Loan Amount, $300 an ordinary policy loan.
At the end of the twelfth policy year, assume that the Net Cash Surrender Value
is $9,000. The Select Loan Amount available during the thirteenth policy year is
$1,080 (12% x $9,000). If not already repaid, the $300 from the prior year's
loan that was not considered a Select Loan is immediately converted to a Select
Loan, leaving $780 of the Select Loan Amount available for the thirteenth policy
year (provided that the sum of all outstanding loans does not exceed the
Policy's maximum loan amount). The amount of any unpaid interest on the Select
Loan and the ordinary policy loan from the twelfth policy year also would be
borrowed as a Select Loan up to the maximum Select Loan Amount and thereby
reduce by that amount the $780 available for borrowing as a Select Loan during
the remainder of the thirteenth policy year.
Loan Account Adjustments. When a loan is first taken out, and at specified
events thereafter, the value of the Loan Account is adjusted. Whenever the Loan
Account is adjusted, the difference between (i) the Loan Account before any
adjustment and (ii) the Modified Policy Debt at the time of adjustment, is
transferred between the Loan Account and the Investment Accounts or the
Guaranteed Interest Account. The amount transferred to or from the Loan Account
will be such that the value of the Loan Account is equal to the Modified Policy
Debt after the adjustment.
The specified events which cause an adjustment to the Loan Account are (i) a
policy anniversary, (ii) a partial or full loan repayment, (iii) a new loan
being taken out, or (iv) when an amount is needed to meet a monthly deduction. A
loan repayment may be implicit in that policy debt is effectively repaid upon
termination (i.e., upon death of the life insured, surrender or lapse of the
policy). In each of these instances, the Loan Account will be adjusted so that
any excess of the Loan Account over the Modified Policy Debt after the repayment
will be included in the termination proceeds.
Except as noted below in the Loan Repayments section, amounts transferred from
the Loan Account will be allocated to the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the value in the corresponding "loan
sub-account" bears to the value of the Loan Account. A "loan sub-account" exists
for each Investment Account and for the Guaranteed Interest Account. Amounts
transferred to the Loan Account are allocated to the appropriate loan
sub-account to reflect the account from which the transfer was made.
Loan Account Illustration. (Dollar amounts in this illustration have been
rounded to the nearest dollar.) The operation of the Loan Account may be
illustrated by consideration of a Policy with a loan value of $5,000, a loan
interest rate of 5.75%, and a maximum loan amount on a policy anniversary of
$4,917. For purposes of the illustration, assume that the Select Loan Amount is
zero. If a loan in the maximum amount of $4,917 is made, an amount equal to the
Modified Policy Debt, $5,000, is transferred to the Loan Account. At the next
policy anniversary the value of the Loan Account will have increased to $5,200
($5,000 x 1.04) reflecting interest credited at an effective annual rate of
4.0%. At that time the loan will have accrued interest charges of $283 ($4,917 x
.0575), bringing the Policy Debt to $5,200.
If the accrued interest charges are paid on the policy anniversary, the Policy
Debt will continue to be $4,917, and the Modified Policy Debt, reflecting
interest for the next policy year and discounting the Policy Debt and such
interest at 4%, will be $5,000. An amount will be transferred from the Loan
Account to the Guaranteed Interest Account or the Investment Accounts so that
the Loan Account value will equal the Modified Policy Debt. Since the Loan
Account value was $5,200, a transfer of $200 will be required ($5,200 --
$5,000).
If, however, the accrued interest charges of $283 are borrowed, an amount will
be transferred from the Investment Accounts and the Guaranteed Interest Account
so that the Loan Account value will equal the Modified Policy Debt recomputed at
the policy anniversary. The new Modified Policy Debt is the Policy Debt, $5,200,
plus loan interest to be charged to the next policy anniversary, $299 ($5,200 x
.0575), discounted at 4%, which results in a figure of $5,288. Since the value
of the Loan Account was $5,200, a transfer of $88 will be required. This amount
is equivalent to the 1.75% interest rate differential on the $5,000 transferred
to the Loan Account on the previous policy anniversary.
Loan Repayments. Policy Debt may be repaid in whole or in part at any time prior
to the death of the life insured provided the Policy is in force. When a
repayment is made, the amount is credited to the Loan Account and a transfer is
made to the Guaranteed Interest Account or the Investment Accounts so that the
Loan Account at that time equals the Modified Policy Debt. Loan repayments will
first be allocated to the Guaranteed Interest Account until the associated loan
sub-account is reduced to zero. Loan repayments will then be allocated to each
Investment Account in the same proportion as the value in the corresponding loan
sub-account bears to the value of the Loan Account. Amounts paid to the Company
not specifically designated in writing as loan repayments will be treated as
premiums.
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PARTIAL WITHDRAWALS AND SURRENDERS
After a Policy has been in force for one policy year, the policyowner may make a
partial withdrawal of the Net Cash Surrender Value. The minimum amount that may
be withdrawn is $500. The policyowner should specify the portion of the
withdrawal to be taken from each Investment Account and the Guaranteed Interest
Account. In the absence of instructions the withdrawal will be allocated among
such accounts in the same proportion as the Policy Value in each account bears
to the Net Policy Value. No more than one partial withdrawal may be made in any
one policy month.
A partial withdrawal made during the Surrender Charge Period will usually result
in the assessment of a portion of the surrender charges to which the Policy is
subject (see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Charges
and Deductions and Surrender Charges) if the withdrawal is in excess of the
Withdrawal Tier Amount. The Withdrawal Tier Amount is equal to 10% of the Net
Cash Surrender Value determined as of the previous policy anniversary. The
portion of a partial withdrawal that is considered to be in excess of the
Withdrawal Tier Amount includes all previous partial withdrawals that have
occurred in the current policy year. If the Option 1 death benefit is in effect
under a Policy from which a partial withdrawal is made, the face amount of the
Policy will be reduced(see DETAILED INFORMATION ABOUT THE POLICIES -- POLICY
VALUES -- Charges and Deductions and Surrender Charges).
A Policy may be surrendered for its Net Cash Surrender Value at any time while
the life insured is living. The Net Cash Surrender Value is equal to the Policy
Value less any surrender charges and outstanding monthly deductions due (the
"Cash Surrender Value") minus the value of the Policy Debt. The Net Cash
Surrender Value will be determined at the end of the Business Day on which
Manulife New York receives the Policy and a written request for surrender at its
Service Office. After a Policy is surrendered, the insurance coverage and all
other benefits under the Policy will terminate. Surrender of a Policy during the
Surrender Charge Period will usually result in the assessment by Manulife New
York of surrender charges (see DETAILED INFORMATION ABOUT THE POLICIES --POLICY
VALUES -- Charges and Deductions and Surrender Charges).
CHARGES AND DEDUCTIONS
Charges under the Policy are assessed as (i) deductions from premiums, (ii)
surrender charges upon surrender, partial withdrawals, decreases in face amount
or lapse, (iii) monthly deductions, and (iv) other charges. These charges are
described below.
DEDUCTIONS FROM PREMIUMS
Manulife New York currently makes no deduction of charges from premium payments
for state and local taxes. The maximum amount of deductions for such charges
which may be applicable to future premium payments is 2.35%. Manulife New York
currently makes no deduction of a charge from premium payments for Federal
taxes. The maximum amount of deduction for such a charge which may be applicable
to future premium payments is 1.25%.
SURRENDER CHARGES
Manulife New York will assess surrender charges upon surrender, a partial
withdrawal of Policy Value in excess of the Withdrawal Tier Amount, a requested
decrease in face amount, or lapse. The charges will usually be assessed if any
of the above transactions occurs within the Surrender Charge Period unless the
charges have been previously deducted. There are two surrender charges -- a
deferred underwriting charge and a deferred sales charge.
Deferred Underwriting Charge. The deferred underwriting charge is $4.50 for each
$1,000 of face amount of life insurance coverage initially purchased or added by
increase. In effect, the charge applies only to the first $500,000 of face
amount initially purchased or the first $500,000 of each subsequent increase in
face amount. Thus, the charge made in connection with any one underwriting will
not exceed $2,250. The amount of the charge remains level for five years.
Following the fifth year after issuance of the Policy or a face amount increase,
the charge applicable to the initial face amount or increase will decrease each
month by varying rates depending upon the life insured's issue age until the
charge has decreased to zero. The applicable percentage of the deferred
underwriting charges to which the Policy is subject is illustrated by Table 2.
The deferred underwriting charge is designed to cover the administrative
expenses associated with underwriting and policy
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issue, including the costs of processing applications, conducting medical
examinations, determining the life insured's risk class and establishing policy
records.
Deferred Sales Charge. The maximum deferred sales charge is 50% of premiums paid
up to a maximum number of Target Premiums that varies (from -2.00 to 2.59)
according to the issue age of the life insured, the face amount at issue and the
amount of any increase. This charge compensates the Company for some of the
expenses of selling and distributing the Policies, including agents'
commissions, advertising, agent training and the printing of prospectuses and
sales literature.
The deferred sales charge deducted in any policy year is not specifically
related to sales expenses incurred in that year. Instead, the Company expects
that the major portion of the sales expenses attributable to a Policy will be
incurred during the first policy year, although the deferred sales charge might
be deducted up to fifteen years later. Manulife New York anticipates that the
aggregate amounts received under the Policies for sales charges will be
insufficient to cover aggregate sales expenses. To the extent that sales
expenses exceed sales charges, Manulife New York will pay the excess from its
other assets or surplus, including amounts derived from the mortality and
expense risks charge described below.
The Target Premium for the initial face amount is specified in the Policy. A
Target Premium will be computed for each increase in face amount above the
highest face amount of coverage previously in effect, and the policyowner will
be advised of each new Target Premium. Target Premiums depend upon the face
amount of insurance provided at issue or by an increase and the issue age and
sex of the life insured. The maximum number of Target Premiums subject to the
deferred sales charge varies, based on the issue age of the life insured, the
face amount at issue and the amount of any increase, according to Table 1:
TABLE 1: NUMBER OF TARGET PREMIUMS SUBJECT TO DEFERRED SALES CHARGE
(APPLICABLE TO THE INITIAL FACE AMOUNT AND INCREASES)
AGE $250,000 OR UNDER AGE $250,000 UNDER AGE $250,000 UNDER
MORE $250,000 OR MORE $250,000 OR MORE $250,000
0 -2.00* 1.68 30 1.56 2.15 60 2.06 2.43
1 -0.52* 1.46 31 1.61 2.19 61 2.06 2.43
2 0.06 1.45 32 1.67 2.23 62 2.05 2.43
3 0.24 1.45 33 1.72 2.27 63 2.05 2.43
4 0.62 1.46 34 1.78 2.30 64 2.05 2.42
5 0.63 1.47 35 1.83 2.33 65 2.05 2.41
6 0.67 1.49 36 1.86 2.38 66 2.03 2.41
7 0.69 1.51 37 1.89 2.41 67 2.03 2.41
8 0.72 1.52 38 1.91 2.45 68 1.96 2.41
9 0.75 1.54 39 1.94 2.49 69 1.83 2.30
10 0.78 1.55 40 1.96 2.52 70 1.71 2.17
11 0.82 1.58 41 1.98 2.55 71 1.58 2.05
12 0.85 1.60 42 2.01 2.59 72 1.46 1.92
13 0.88 1.61 43 2.04 2.57 73 1.35 1.80
14 0.92 1.63 44 2.06 2.55 74 1.25 1.70
15 0.88 1.52 45 2.08 2.54 75 1.16 1.60
16 0.90 1.53 46 2.12 2.53 76 1.08 1.50
17 0.94 1.58 47 2.16 2.51 77 1.01 1.40
18 0.99 1.64 48 2.20 2.50 78 0.93 1.30
19 1.03 1.68 49 2.21 2.49 79 0.87 1.22
20 1.07 1.72 50 2.19 2.48 80 0.82 1.14
21 1.11 1.77 51 2.17 2.47 81 0.76 1.07
22 1.16 1.82 52 2.16 2.47 82 0.71 1.01
23 1.20 1.86 53 2.15 2.46 83 0.67 0.95
24 1.25 1.91 54 2.13 2.46 84 0.62 0.89
25 1.30 1.95 55 2.12 2.45 85 0.58 0.83
26 1.35 1.99 56 2.10 2.44 86 0.56 0.78
27 1.40 2.04 57 2.09 2.44 87 0.54 0.73
28 1.46 2.08 58 2.08 2.43 88 0.52 0.68
29 1.51 2.12 59 2.07 2.43 89 0.50 0.64
90 0.50 0.63
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* The negative Number of Target Premiums produces a negative Deferred Sales
Charge. When combined with the Deferred Underwriting Charge, the negative
Deferred Sales Charge reduces the total surrender charge.
The maximum deferred sales charge will be in effect for at least the first five
years of the Surrender Charge Period. After that, the portion of the deferred
sales charge that remains in effect will grade down at a rate that also varies
according to the issue age of the life insured until, at the end of the
Surrender Charge Period, there is no deferred sales charge. The table to be used
to reduce the applicable deferred sales charge during the Surrender Charge
Period is set forth in Table 2 to this Prospectus. The applicable table will be
set forth in each Policy and the policyowner will be informed of the table to be
used in connection with sales charges on increases in face amount.
In order to determine the deferred sales charge applicable to a face amount
increase, Manulife New York will treat a portion of the Policy Value on the date
of increase as a premium attributable to the increase. In addition, a portion of
each premium paid on or subsequent to the increase will be attributed to the
increase. In each case, the portion attributable to the increase will be the
ratio of the "guideline annual premium" for the increase to the sum of the
guideline annual premiums for the initial face amount and all increases
including the requested increase.
TABLE 2: DEFERRED UNDERWRITING CHARGES AND DEFERRED SALES CHARGES
TRANSACTION OCCURS
AFTER MONTHLY
DEDUCTION TAKEN FOR
LAST MONTH PRECEDING PERCENT OF DEFERRED UNDERWRITING CHARGES AND DEFERRED SALES CHARGE BY ISSUE AGE*
END OF MONTH* AGE
MONTH 0-50 51 52 53 54 55+
----- ---- -- -- -- -- ---
12 100% 100% 100% 100% 100% 100%
24 100% 100% 100% 100% 100% 100%
36 100% 100% 100% 100% 100% 100%
48 100% 100% 100% 100% 100% 100%
60 100% 100% 100% 100% 100% 100%
72 90% 88.89% 87.50% 85.71% 83.33% 80.00%
84 80% 77.78% 75.00% 71.43% 66.67% 60.00%
96 70% 66.67% 62.50% 57.14% 50.00% 40.00%
108 60% 55.56% 50.00% 42.86% 33.33% 20.00%
120 50% 44.44% 37.50% 28.57% 16.67% 0%
132 40% 33.33% 25.00% 14.28% 0%
144 30% 22.22% 12.50% 0%
156 20% 11.11% 0%
168 10% 0%
180 0%
* Months not shown may be calculated by interpolation.
The following example illustrates how deferred underwriting and deferred sales
charges are calculated using data from Tables 1 and 2 above.
Assume a 36-year-old male (standard risk), whose Policy was issued at age 30,
and who has paid $9,000 in premiums under a Policy with a Target Premium of $593
and a face amount of $100,000 surrenders his Policy during the last month of the
sixth policy year.
A deferred underwriting charge of $405 would be assessed. The maximum deferred
underwriting charge of $450 ($4.50 per $1,000 of face amount x 100) would be
multiplied by the 90% listed in Table 2 as applicable to surrenders during the
last month of the sixth policy year 90% x ($4.50 x 100) = $405.
A deferred sales charge of $573.73 would also be assessed. According to Table 1,
the maximum number of Target Premiums subject to the deferred sales charge for a
person who was 30 years old when his or her Policy with a face amount less than
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$250,000 was issued would be 2.15. Thus $1,274.95 (2.15 x $593) would be the
maximum amount of premiums subject to the 50% sales charge, producing a maximum
sales charge of $637.48 (50% x $1,274.95 = $637.48). Because the surrender
occurs during the last month of the sixth policy year, only 90% (from Table 2
for issue age 30) of the maximum sales charge remains applicable 90% x (.50 x
2.15 x $593) = $573.73.
Charges On Partial Withdrawals. Whenever a portion of the surrender charges is
deducted as a result of a partial withdrawal of Policy Value in excess of the
Withdrawal Tier Amount, the Policy's remaining surrender charges will be reduced
by the amount of the charges taken. The surrender charges not assessed as a
result of the 10% free withdrawal provision remain in effect under the Policy
and may be assessed upon surrender or lapse, other partial withdrawals, or a
requested decrease in face amount. The portion of the surrender charges assessed
will be based on the ratio of the amount of the withdrawal in excess of the
Withdrawal Tier Amount to the Net Cash Surrender Value of the Policy less the
Withdrawal Tier Amount immediately prior to the withdrawal. The surrender
charges will be deducted from each Investment Account and the Guaranteed
Interest Account in the same proportion as the amount of the withdrawal taken
from such account bears to the total amount of the withdrawal. If the amount in
the account is insufficient to pay the portion of the surrender charges
allocated to that account, then the portion of the withdrawal allocated to that
account will be reduced so that the withdrawal plus the portion of the surrender
charges allocated to that account equal the value of that account. Units equal
to the amount of the partial withdrawal taken, and surrender charges deducted,
from each Investment Account will be canceled based on the value of such units
determined at the end of the Business Day on which Manulife New York receives a
written request for withdrawal at its Service Office.
If the Option 1 death benefit is in effect under a Policy from which a partial
withdrawal is made, the face amount of the Policy will be reduced. If the death
benefit is equal to the face amount at the time of withdrawal, the face amount
will be reduced by the amount of the withdrawal plus the portion of the
surrender charges assessed. If the death benefit is based upon the Policy Value
times the applicable percentage set forth under "INSURANCE BENEFIT -- Death
Benefit Options" above, the face amount will be reduced only to the extent that
the amount of the withdrawal plus the portion of the surrender charges assessed
exceeds the difference between the death benefit and the face amount. Reductions
in face amount resulting from partial withdrawals will not incur any surrender
charges above the surrender charges applicable to the withdrawal. When the face
amount of a Policy is based on one or more increases subsequent to issuance of
the Policy, a reduction resulting from a partial withdrawal will be applied in
the same manner as a requested decrease in face amount, i.e., against the face
amount provided by the most recent increase, then against the next most recent
increases successively and finally against the initial face amount.
Charges On Decreases In Face Amount. As with partial withdrawals, a portion of a
Policy's surrender charges will be deducted upon a decrease, or a cancellation
of an increase, in face amount requested by the policyowner. Since surrender
charges are determined separately for the initial face amount and each face
amount increase, and since a decrease in face amount will have a different
impact on each level of insurance coverage, the portion of the surrender charges
to be deducted with respect to each level of insurance coverage will be
determined separately. Such portion will be the same as the ratio of the amount
of the reduction in such coverage to the amount of such coverage prior to the
reduction.
As noted under "INSURANCE BENEFIT -- Face Amount Changes," decreases are applied
to the most recent increase first and thereafter to the next most recent
increases successively. The charges will be deducted from the Policy Value, and
the amount so deducted will be allocated among the Investment Accounts and the
Guaranteed Interest Account in the same proportion as the Policy Value in each
bears to the Net Policy Value. Whenever a portion of the surrender charges is
deducted as a result of a decrease in face amount, the Policy's remaining
surrender charges will be reduced by the amount of the charges taken.
Charges Remaining After Face Amount Decreases Or Partial Withdrawals. Each time
a pro-rata deferred underwriting charge or a pro-rata deferred sales charge for
a face amount decrease or for a partial withdrawal is deducted, the remaining
deferred underwriting charge and deferred sales charge will be reduced
proportionately.
The remaining deferred underwriting charge will be calculated using Table 2
above. The actual remaining charge will be the result of (a) divided by (b),
multiplied by (c), where:
(a) is the grading percentage applicable to the life insured's
issue age and Policy duration;
(b) is the grading percentage applicable to the life insured's
issued age at the time of the last face amount decrease or
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partial withdrawal; and
(c) is the remaining deferred sales charge prior to the last face
amount decrease or partial withdrawal less the deferred
underwriting charge deducted for that face amount decrease or
partial withdrawal.
The remaining deferred sales charge will be calculated using Table 1 above. The
actual remaining charge will be the result of (a) divided by (b), multiplied by
(c), where:
(a) is the grading percentage applicable to the Policy duration;
(b) is the grading percentage at the time of the last face amount
decrease or partial withdrawal; and
(c) is the remaining deferred sales charge prior to the last face
amount decrease or partial withdrawal less the deferred sales
charge deducted for that face amount decrease or partial
withdrawal.
Until the sum of premiums paid equals or exceeds the number of Target Premiums
subject to deferred sales charge multiplied by the Target Premium, subsequent
premium payments will increase the remaining deferred sales charge.
MONTHLY DEDUCTIONS
Each month a deduction consisting of an administration charge, a charge for the
cost of insurance, a charge for mortality and expense risks, and charge(s) for
any supplementary benefit(s) (see DETAILED INFORMATION ABOUT THE POLICIES
- --OTHER PROVISIONS -- Supplementary Benefits) is deducted from Policy Value. The
monthly deduction will be allocated among the Investment Accounts and (other
than the mortality and expense risks charge) the Guaranteed Interest Account in
the same proportion as the Policy Value in each bears to the Net Policy Value.
Monthly deductions due prior to the effective date will be taken on the
effective date instead of the dates they were due. If the Policy is still in
force when the life insured attains age 100, no further monthly deductions will
be taken from the Policy Value.
ADMINISTRATION CHARGE
The monthly administration charge is $35 until the first anniversary and,
thereafter, $10 (the right is reserved to increase the administration charge by
an additional amount up to $.01 per $1,000 of face amount per month). The charge
is designed to cover certain administrative expenses associated with the Policy,
including maintaining policy records, collecting premiums and processing death
claims, surrender and withdrawal requests and various charges permitted under a
Policy.
COST OF INSURANCE CHARGE
The monthly charge for the cost of insurance is determined by multiplying the
applicable cost of insurance rate times the net amount at risk at the beginning
of each policy month. The cost of insurance rate is based on the life insured's
issue age, the duration of the coverage, sex and risk class. The rate is
determined separately for the initial face amount and for each increase in face
amount. Cost of insurance rates will generally increase with the life insured's
age. Any additional ratings as indicated in the Policy will be added to the cost
of insurance rate.
The cost of insurance rates used by Manulife New York reflect its expectations
as to future mortality experience as based on current experience. The rates may
be changed from time to time on a basis which does not unfairly discriminate
within the class of life insureds. In no event will the cost of insurance rate
exceed the guaranteed rate set forth in the Policy except to the extent that an
extra rate is imposed because of an additional rating applicable to the life
insured. The guaranteed rates are based on the 1980 Commissioners Standard
Ordinary Smoker/Nonsmoker Mortality Tables.
The net amount at risk to which the cost of insurance rate is applied is the
difference between the death benefit, divided by 1.0032737 (a factor which
reduces the net amount at risk for cost of insurance charge purposes by taking
into account assumed monthly earnings at an annual rate of 4%), and the Policy
Value. Because different cost of insurance rates may apply to different levels
of insurance coverage, the net amount at risk will be calculated separately for
each level of insurance coverage. When the Option 1 death benefit is in effect,
for purposes of determining the net amount at risk applicable to each level of
insurance coverage, the Policy Value is attributed first to the initial face
amount and then, if the Policy Value is greater than the initial face amount, to
each increase in face amount in the order made.
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Because the calculation of the net amount at risk is different under the death
benefit options when more than one level of insurance coverage is in effect, a
change in the death benefit option may result in a different net amount at risk
for each level of insurance coverage than would have occurred had the death
benefit option not been changed. Since the cost of insurance is calculated
separately for each level of insurance coverage, any change in the net amount at
risk for a level of insurance coverage resulting from a change in the death
benefit option may affect the amount of the charge for the cost of insurance.
Partial withdrawals and decreases in face amount will also affect the manner in
which the net amount at risk for each level of insurance coverage is calculated.
MORTALITY AND EXPENSE RISKS CHARGE
Manulife New York deducts a monthly charge from the Policy Value for the
mortality and expense risks it assumes under the Policies. This charge is made
at the beginning of each policy month at a rate of 0.075% through the later of
the tenth anniversary of the Policy and the policyowner's attained age of 60
and, thereafter, 0.0375%. It is assessed against the value of the policyowner's
Investment Accounts by cancellation of units in the same proportion as the value
of each Investment Account bears to the total value of the Investment Accounts.
The mortality risk assumed is that lives insured may live for a shorter period
of time than the Company estimated. The expense risk assumed is that expenses
incurred in issuing and administering the Policies will be greater than the
Company estimated. Manulife New York estimates that virtually all of the
mortality and expense risks charge currently relates to expense risks. Manulife
New York will realize a gain from this charge to the extent it is not needed to
provide benefits and pay expenses under the Policies.
OTHER CHARGES
Currently, Manulife New York makes no charge against the Separate Account for
Federal, state or local taxes that may be attributable to the Separate Account
or to the operations of the Company with respect to the Policies. However, if
Manulife New York incurs any such taxes, it may make a charge therefor.
Charges will be imposed on certain transfers of Policy Values, including a $25
charge for each transfer in excess of twelve in a policy year and a $5 charge
for each Dollar Cost Averaging transfer when Policy Value does not exceed
$15,000 (See DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES
- -- Transfers of Policy Value).
The Separate Account purchases shares of Portfolios at net asset value. The net
asset value of those shares reflects the following investment management fees
and expenses:
MANAGEMENT OTHER TOTAL TRUST
MANULIFE TRUSTS FEES EXPENSES ANNUAL EXPENSES
- --------------------------------------------------------------------------------
Pacific Rim Emerging Markets.. 0.850% 0.570% 1.420%
Science & Technology.......... 1.100% 0.160% 1.260%
International Small Cap....... 1.100% 0.210% 1.310%
Emerging Growth............... 1.050% 0.060% 1.110%
Pilgrim Baxter Growth......... 1.050% 0.130% 1.180%
Small/Mid Cap................. 1.000% 0.050% 1.050%
International Stock........... 1.050% 0.330% 1.380%
Worldwide Growth.............. 1.000% 0.320% 1.320%
Global Equity................. 0.900% 0.110% 1.010%
Small Company Value........... 1.050% 0.100%* 1.150%
Equity........................ 0.750% 0.050% 0.800%
Growth........................ 0.850% 0.100% 0.950%
Quantitative Equity........... 0.700% 0.070% 0.770%
Blue Chip Growth.............. 0.925% 0.050% 0.975%
Real Estate Securities........ 0.700% 0.070% 0.770%
Value......................... 0.800% 0.160% 0.960%
International Growth and
Income........................ 0.950% 0.170% 1.120%
Growth and Income............. 0.750% 0.040% 0.790%
Equity-Income................. 0.800% 0.050% 0.850%
Balanced...................... 0.800% 0.080% 0.880%
Aggressive Asset Allocation... 0.750% 0.150% 0.900%
High Yield.................... 0.775% 0.110% 0.885%
Moderate Asset Allocation..... 0.750% 0.100% 0.850%
Conservative Asset Allocation. 0.750% 0.140% 0.890%
Strategic Bond................ 0.775% 0.100% 0.875%
Global Government Bond........ 0.800% 0.130% 0.930%
Capital Growth Bond........... 0.650% 0.080% 0.730%
Investment Quality Bond....... 0.650% 0.090% 0.740%
U.S. Government Securities.... 0.650% 0.070% 0.720%
Money Market ................. 0.500% 0.040% 0.540%
Lifestyle Aggressive 1000#.... 0% 1.116%** 1.116%
Lifestyle Growth 820#......... 0% 1.048%** 1.048%
Lifestyle Balanced 640#....... 0% 0.944%** 0.944%
Lifestyle Moderate 460#....... 0% 0.850%** 0.850%
Lifestyle Conservative 280#... 0% 0.708%** 0.708%
*Based on estimates of payments to be made during the current fiscal year.
**Reflects expenses of the Underlying Portfolios. Manufacturers Securities
Services, LLC has voluntarily agreed to pay the expenses of each Lifestyle Trust
(excluding the expenses of the Underlying Portfolios). This voluntary expense
reimbursement may be terminated at any time. If such expense reimbursement was
not in effect, Total Trust Annual Expenses would be .04% higher (based on
expenses of the Lifestyle Trusts for the fiscal year December 31, 1997) as noted
in the chart below:
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MANAGEMENT OTHER TOTAL TRUST
MANULIFE TRUSTS FEES EXPENSES ANNUAL EXPENSES
- --------------------------------------------------------------------------------
Lifestyle Aggressive 1000..... 0% 1.156% 1.156%
Lifestyle Growth 820.......... 0% 1.088% 1.088%
Lifestyle Balanced 640........ 0% 0.984% 0.984%
Lifestyle Moderate 460........ 0% 0.890% 0.890%
Lifestyle Conservative 280.... 0% 0.748% 0.748%
#Each Lifestyle Trust will invest in shares of the Underlying Portfolios.
Therefore, each Lifestyle Trust will, in addition to its own expenses, such as
certain Other Expenses, bear its pro rata share of the fees and expenses
incurred by the Underlying Portfolios and the investment return of each
Lifestyle Trust will be net of the Underlying Portfolio expenses.
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Detailed information concerning such fees and expenses is set forth under the
caption "Management of The Trust" in the Prospectus for Manufacturers
Investment Trust that accompanies this Prospectus.
THE GENERAL ACCOUNT
By virtue of exclusionary provisions, interests in the general account of
Manulife New York have not been registered under the Securities Act of 1933 and
the general account has not been registered as an investment company under the
1940 Act. Accordingly, neither the general account nor any interests therein are
subject to the provisions of these acts, and as a result the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the general
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the Federal securities laws relating
to the accuracy and completeness of statements made in a prospectus.
The general account of Manulife New York consists of all assets owned by the
Company other than those in its separate accounts. Subject to applicable law,
Manulife New York has sole discretion over the investment of the assets of the
general account.
A policyowner may elect to allocate net premiums to the Guaranteed Interest
Account or to transfer all or a portion of the Policy Value to the Guaranteed
Interest Account from the Investment Accounts. Transfers from the Guaranteed
Interest Account to the Investment Accounts are subject to restrictions (see
DETAILED INFORMATION ABOUT THE POLICIES -- POLICY VALUES -- Transfers of Policy
Value and Policy Value). Manulife New York will hold the reserves required for
any portion of the Policy Value allocated to the Guaranteed Interest Account in
its general account. However, an allocation of Policy Value to the Guaranteed
Interest Account does not entitle the policyowner to share in the investment
experience of the general account. Instead, Manulife New York guarantees that
the Policy Value in the Guaranteed Interest Account will accrue interest daily
at an effective annual rate of at least 4%, without regard to the actual
investment experience of the general account. The Company may, at its sole
discretion, credit a higher rate of interest, although it is not obligated to do
so. The policyowner assumes the risk that interest credited may not exceed the
guaranteed minimum rate of 4% per year.
OTHER GENERAL POLICY PROVISIONS
POLICY DEFAULT
Unless the No Lapse Guarantee or Death Benefit Guarantee is in effect, a Policy
will go into default if the Policy's Net Cash Surrender Value at the beginning
of any policy month would go below zero after deducting the monthly deductions
then due. Manulife New York will notify the policyowner of the default and will
allow a 61-day grace period in which the policyowner may make a premium payment
sufficient to bring the Policy out of default. The required payment will be
equal to the amount necessary to bring the Net Cash Surrender Value to zero, if
it was less than zero at the date of default, plus the monthly deductions due at
the date of default and at the beginning of each of the two policy months
thereafter, based on the Policy Value at the date of default. If the required
payment is not received by the end of the grace period, the Policy will
terminate and the Net Cash Surrender Value as of the date of default less the
monthly deductions then
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due will be paid to the policyowner. If the life insured should die during the
grace period following a Policy's going into default, the Policy Value used in
the calculation of the death benefit will be the Policy Value as of the date of
default and the insurance benefit payable will be reduced by any outstanding
monthly deductions due at the time of death.
POLICY REINSTATEMENT
A policyowner can reinstate a Policy which has terminated after going into
default at any time within 21 days following the date of termination without
furnishing evidence of insurability, subject to the following conditions:
(a) The life insured's risk class is standard or preferred.
(b) The life insured's attained age is less than 46.
A policyowner can reinstate a Policy which has terminated after going into
default at any time within the five-year period following the date of
termination subject to the following conditions:
(a) The Policy must not have been surrendered for its Net Cash
Surrender Value at the request of the policyowner;
(b) Evidence of the life insured's insurability satisfactory to
Manulife New York is furnished to it;
(c) A premium equal to the payment required during the 61-day
grace period following default to keep the Policy in force is
paid to Manulife New York; and
(d) An amount equal to any amounts paid by Manulife New York in
connection with the termination of the Policy is repaid to
Manulife New York.
If the reinstatement is approved, the date of reinstatement will be the later of
the date of the policyowner's written request or the date the required payment
is received at the Manulife New York Service Office.
MISCELLANEOUS POLICY PROVISIONS
Beneficiary. One or more beneficiaries of the Policy may be appointed by the
policyowner by naming them in the application. Beneficiaries may be appointed in
three classes -- primary, secondary and final. Thereafter the beneficiary may be
changed by the policyowner during the life insured's lifetime by giving written
notice to Manulife New York in a form satisfactory to it unless an irrevocable
designation has been elected. If the life insured dies and there is no surviving
beneficiary, the policyowner, or the policyowner's estate if the policyowner is
the life insured, will be the beneficiary. If a beneficiary dies before the
seventh day after the death of the life insured, the Company will pay the
insurance benefit as if the beneficiary had died before the life insured.
Incontestability. Manulife New York will not contest the validity of a Policy
after it has been in force during the life insured's lifetime for two years from
the issue date. It will not contest the validity of an increase in face amount
or the addition of a supplementary benefit after such increase or addition has
been in force during the life insured's lifetime for two years. If a Policy has
been reinstated and been in force for less than two years from the reinstatement
date, the Company can contest any misrepresentation of a fact material to the
reinstatement.
Misstatement of Age Or Sex. If the life insured's stated age or sex or both in
the Policy are incorrect, Manulife New York will change the face amount of
insurance so that the death benefit will be that which the most recent monthly
charge for the cost of insurance would have bought for the correct age and sex.
Suicide Exclusion. If the life insured dies by suicide within two years from the
issue date, Manulife New York will pay only the premiums paid less any partial
withdrawals of the Net Cash Surrender Value and any amount in the Policy Debt.
If the life insured should die by suicide within two years after a face amount
increase, the death benefit for the increase will be limited to the monthly
deduction for the increase.
Assignment. Manulife New York will not be bound by an assignment until it
receives a copy of it at its Service Office. Manulife New York assumes no
responsibility for the validity or effects of any assignment.
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Conversion Privilege. The policyowner may effectively convert his or her policy
at any Policy Anniversary, to a fixed paid-up benefit, without evidence of
insurability. The Policy Value, other values based thereon, the Investment
Account values and the Death Benefit Guarantee will be determined as of the
Business Day on which the Company receives the written request for conversion.
The basis for determining the Policy Value will be the Commissioners 1980
Standard Ordinary Smoker or Non-Smoker Mortality Table and an interest rate of
4% per year. The Flexible Premium Variable Life coverage cannot be reinstated
after the date of conversion.
OTHER PROVISIONS
SUPPLEMENTARY BENEFITS
Subject to state approval and certain requirements, one or more supplementary
benefits may be added to a Policy, including those providing term insurance for
additional insureds, providing supplementary insurance options, providing
accidental death coverage, waiving monthly deductions upon disability, and, in
the case of corporate-owned Policies, permitting a change of the life insured.
More detailed information concerning supplementary benefits may be obtained from
an authorized agent of the Company. The cost of any supplementary benefits will
be deducted as part of the monthly deduction (see DETAILED INFORMATION ABOUT THE
POLICIES -- POLICY VALUES -- Monthly Deductions).
PAYMENT OF PROCEEDS
As long as the Policy is in force, Manulife New York will ordinarily pay any
policy loans, partial withdrawals, Net Cash Surrender Value or any insurance
benefit within seven days after receipt at the Manulife New York Service Office
of all the documents required for such a payment.
The Company may delay the payment of any policy loans, partial withdrawals, Net
Cash Surrender Value or the portion of any insurance benefit that depends on the
Guaranteed Interest Account value for up to six months; otherwise the Company
may delay payment for any period during which (i) the New York Stock Exchange is
closed for trading (except for normal holiday closings) or trading on the New
York Stock Exchange is otherwise restricted; or (ii) an emergency exists as
defined by the SEC or the SEC requires that trading be restricted; or (iii) the
SEC permits a delay for the protection of policyowners. Also, transfers may be
denied under the circumstances stated in clauses (i), (ii) and (iii) above and
under the circumstances previously set forth (see DETAILED INFORMATION ABOUT THE
POLICIES -- POLICY VALUES -- Transfers of Policy Value).
REPORTS TO POLICYOWNERS
Within 30 days after each policy anniversary, Manulife New York will send the
policyowner a statement showing, among other things, the amount of the death
benefit, the Policy Value and its allocation among the Investment Accounts, the
Guaranteed Interest Account and the Loan Account, the value of the units in each
Investment Account to which the Policy Value is allocated, any Loan Account
balance and any interest charged since the last statement, the premiums paid and
policy transactions made during the period since the last statement and any
other information required by law.
Within 10 days after any transaction involving purchase, sale, or transfer of
units of Investment Accounts, a confirmation statement will be sent.
Each policyowner will also be sent an annual and a semi-annual report for
Manufacturers Investment Trust which will include a list of the securities held
in each Portfolio as required by the 1940 Act.
MISCELLANEOUS MATTERS
PORTFOLIO SHARE SUBSTITUTION
Although Manulife New York believes it to be highly unlikely, it is possible
that in the judgment of its management, one or more of the Portfolios may become
unsuitable for investment by the Separate Account because of a change in
investment policy or a change in the applicable laws or regulations, because the
shares are no longer available for investment, or for some other reason. In that
event, Manulife New York may seek to substitute the shares of another
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Portfolio or of an entirely different mutual fund. Before this can be done, the
approval of the SEC and the New York Department of Insurance may be required.
Manulife New York also reserves the right to combine other separate accounts
with the Separate Account to establish additional sub-accounts within the
Separate Account, to operate the Separate Account as a management investment
company or other form permitted by law, to transfer assets from this Separate
Account to another separate account and from another separate account to this
Separate Account, and to de-register the Separate Account under the 1940 Act.
Any such change would be made only if permissible under applicable Federal and
New York state law.
The investment objectives of the Separate Account will not be changed materially
without first filing the change with the Insurance Commissioner of the State of
New York. Policyowners will be advised of any such change at the time it is
made.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary provides a general description of the Federal income tax
considerations associated with the Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Counsel
or other competent tax advisors should be consulted for more complete
information. This discussion is based upon the Company's understanding of the
present Federal income tax laws as they are currently interpreted by the
Internal Revenue Service (the "IRS"). No representation is made as to the
likelihood of continuation of the present Federal income tax laws or of the
current interpretations by the IRS. WE DO NOT MAKE ANY GUARANTEE REGARDING THE
TAX STATUS OF ANY POLICY OR ANY TRANSACTION REGARDING THE POLICIES.
The Policies may be used in various arrangements, including non-qualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if the use of such
Policies in any such arrangement, the value of which depends in part on its tax
consequences, is contemplated, a qualified tax advisor should be consulted for
advice on the tax attributes of the particular arrangement.
TAX STATUS OF THE POLICY
Section 7702 of the Code sets forth a definition of a life insurance contract
for Federal tax purposes. The Secretary of Treasury (the "Treasury") is
authorized to prescribe regulations implementing Section 7702. However, while
proposed regulations and other interim guidance have been issued, final
regulations have not been adopted and guidance as to how Section 7702 is to be
applied is limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, such Policy would not provide the tax
advantages normally provided by a life insurance policy.
With respect to a Policy issued on the basis of a standard rate class, the
Company believes (largely in reliance on IRS Notice 88-128 and the proposed
mortality charge regulations under Section 7702, issued on July 5, 1991) that
such a Policy should meet the Section 7702 definition of a life insurance
contract.
With respect to a Policy that is issued on a substandard basis (i.e., a premium
class involving higher-than-standard mortality risk), there is less guidance, in
particular as to how mortality and other expense requirements of Section 7702
are to be applied in determining whether such a Policy meets the Section 7702
definition of a life insurance contract. Thus, it is not clear whether or not
such a Policy would satisfy Section 7702, particularly if the policyowner pays
the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section 7702,
the Company may take whatever steps are appropriate and reasonable to attempt to
cause such a Policy to comply with Section 7702. For these reasons, the Company
reserves the right to restrict Policy transactions as necessary to attempt to
qualify it as a life insurance contract under Section 7702.
Section 817(h) of the Code requires that the investments of the Separate Account
be "adequately diversified" in accordance with Treasury regulations in order for
the Policy to qualify as a life insurance contract under Section 7702 of the
Code (discussed above). The Separate Account, through Manufacturers Investment
Trust, intends to comply with the diversification requirements prescribed in
Treas. Reg. Sec. 1.817-5, which affect how Manufacturers Investment Trust's
assets are to be invested. The Company believes that the Separate Account will
thus meet the diversification
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requirement, and the Company will monitor continued compliance with the
requirement.
In certain circumstances, owners of variable life insurance Policies may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their Policies. In those circumstances, income
and gains from the separate account assets would be includible in the variable
policyowner's gross income. The IRS has stated in published rulings that a
variable policyowner will be considered the owner of separate account assets if
the policyowner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the policyowner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyowners may direct their
investments to particular sub-accounts without being treated as owners of the
underlying assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
Policy has many more Portfolios to which policyowners may allocate premium
payments and Policy Values than were available in the policies described in the
rulings. These differences could result in an owner being treated as the owner
of a pro rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
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. The Company believes that the proceeds and cash value increases of a
Policy should be treated in a manner consistent with a fixed-benefit life
insurance policy for Federal income tax purposes. Thus, the death benefit under
the Policy should be excludable from the gross income of the beneficiary under
Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Policy, a change in the
Policy's death benefit option, a Policy loan, a partial withdrawal, a surrender,
a change in ownership, a change of insured, the addition of an accelerated death
benefit rider, or an assignment of the Policy may have Federal income tax
consequences. In addition, Federal, state and local transfer, and other tax
consequences of ownership or receipt of Policy proceeds depend on the
circumstances of each policyowner or beneficiary. Generally, the policyowner
will not be deemed to be in constructive receipt of the Policy Value, including
increments thereof, until there is a distribution. The tax consequences of
distributions from, and loans taken from or secured by, a Policy depend on
whether the Policy is classified as a MEC. Upon a complete surrender or lapse of
a Policy or when benefits are paid at a Policy's maturity date, if the amount
received plus the amount of indebtedness exceeds the total investment in the
Policy, the excess will generally be treated as ordinary income subject to tax,
regardless of whether the Policy is or is not a MEC.
Modified Endowment Contracts. Section 7702A establishes a class of life
insurance contracts designated as "Modified Endowment Contracts," which applies
to Policies entered into or materially changed after June 20, 1988.
Because of the Policy's flexibility, classification as a Modified Endowment
Contract ("MEC") will depend on the individual circumstances of each Policy. In
general, a Policy will be a MEC if the accumulated premiums paid at any time
during the first seven policy years exceed the sum of the net level premiums
which would have been paid on or before such time if Policy provided for paid-up
future benefits after the payment of seven level annual premiums. The
determination of whether a Policy will be a MEC after a material change
generally depends upon the relationship of the death benefit and Policy Value at
the time of such change and the additional premiums paid in the seven years
following the material change. If a premium is received which would cause the
Policy to become a MEC within 23 days of the next policy anniversary, the
Company will not apply the portion of the premium which would cause MEC status
(excess premium) to the Policy when received. The excess premium will be placed
in a suspense account until the next anniversary date, at which point the excess
premium along with interest, earned on the excess premium at a rate of 3.5% from
the date the premium was received, will be applied to the Policy. The
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policyowner will be advised of this action and will be offered the opportunity
to have the premium credited as of the original date received or to have the
premium returned. If the policyowner does not respond, the premium and interest
will be applied to the Policy as of the first day of the next anniversary.
If a premium is received which would cause the Policy to become a MEC more than
23 days prior to the next policy anniversary, the Company will refund any excess
premium to the policyowner. The portion of the premium which is not excess will
be applied as of the date received. The policyowner will be advised of this
action and will be offered the opportunity to return the premium and have it
credited to the account as of the original date received.
If, in connection with the application or issue of the Policy, the policyowner
acknowledges that the Policy is or will become a MEC, excess premiums that would
cause MEC status will be credited as of the date received.
Further, if a transaction occurs which reduces the face amount of the Policy
during the first seven years, the Policy will be retested retroactive to the
date of purchase, to determine compliance with the seven-pay test based on the
lower face amount. As well, if a reduction of the face amount occurs within
seven years of a material change, the Policy will be retested for compliance
retroactive to the date of the material change. Failure to comply would result
in classification as a MEC regardless of any efforts by the Company to provide a
payment schedule that will not violate the seven-pay test.
The rules relating to whether a Policy will be treated as a MEC are extremely
complex and cannot be adequately described in the limited confines of this
summary. Therefore, a current or prospective policyowner should consult with a
competent adviser to determine whether a transaction will cause the Policy to be
treated as a MEC.
Distributions From Policies Classified As Modified Endowment Contracts. Policies
classified as MECs will be subject to the following tax rules: First, all
partial withdrawals from such a Policy are treated as ordinary income subject to
tax up to the amount equal to the excess (if any) of the Policy Value
immediately before the distribution over the investment in the Policy (described
below) at such time. Second, loans taken from or secured by such a Policy are
treated as partial withdrawals from the Policy and taxed accordingly. Past-due
loan interest that is added to the loan amount is treated as a loan. Third, a
10% additional income tax is imposed on the portion of any distribution
(including distributions upon surrender) from, or loans taken from or secured
by, such a Policy that is included in income except where the distribution or
loan is made on or after the policyowner attains age 59 1/2, is attributable to
the policyowner's becoming disabled, or is part of a series of substantially
equal periodic payments for the life (or life expectancy) of the policyowner or
the joint lives (or joint life expectancies) of the policyowner and the
policyowner's beneficiary.
Distributions From Policies Not Classified As Modified Endowment Contracts. A
distribution from a Policy that is not a MEC is generally treated as a tax-free
recovery by the policyowner of the investment in the Policy (described below) to
the extent of such investment in the Policy, and as a distribution of taxable
income only to the extent the distribution exceeds the investment in the Policy.
An exception to this general rule occurs in the case of a decrease in the
Policy's death benefit or any other change that reduces benefits under the
Policy in the first 15 years after the Policy is issued and that results in a
cash distribution to the policyowner in order for the Policy to continue
complying with the Section 7702 definitional limits. Such a cash distribution
will be taxed in whole or in part as ordinary income (to the extent of any gain
in the Policy) under rules prescribed in Section 7702.
Loans from, or secured by, a Policy that is not a MEC are not treated as
distributions. Instead, such loans are treated as indebtedness of the
policyowner. Select Loans may, however, be treated as a distribution.
Finally, neither distributions (including distributions upon surrender) nor
loans from, or secured by, a Policy that is not a MEC are subject to the 10%
additional tax.
Policy Loan Interest. Generally, personal interest paid on any loan under a
Policy which is owned by an individual is not deductible. In addition, interest
on any loan under a Policy owned by a taxpayer and covering the life of any
individual who is an officer or employee of or is financially interested in the
business carried on by the taxpayer will not be tax deductible unless the
employee is a key person within the meaning of Section 264 of the Code. A
deduction will not be permitted for interest on a loan under a policy held on
the life of a key person to the extent the aggregate of such loans with respect
to contracts covering the key person exceeds $50,000. The number of employees
who can qualify as key persons depends in part on the size of the employer but
cannot exceed 20 individuals.
If a non-natural person owns a Policy, or is the direct or indirect beneficiary
under a Policy, Section 264(f) of the Code disallows a pro-rata portion of the
taxpayer's interest expense allocable to unborrowed policy cash values. Section
264(f) does not apply if the insurance is on a single life and the life insured
is a 20% (or more) owner of the taxpayer-entity, or is an officer, employee, or
former employee of the taxpayer.
The portion of the interest expense that is allocable to unborrowed policy cash
values is an amount that bears the same ratio to that interest expense as the
taxpayer's average unborrowed policy cash values under such life insurance
policies bears to the average adjusted bases for all assets of the taxpayer.
If the taxpayer is not the owner, but is the direct or indirect beneficiary
under the contract, then the amount of unborrowed cash value of the Policy taken
into account in computing the portion of the taxpayer's interest expense
allocable to unborrowed policy cash values can't exceed the benefit to which the
taxpayer is directly or indirectly entitled under the Policy.
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Investment In The Policy. Investment in the Policy means (i) the aggregate
amount of any premiums or other consideration paid for a Policy, minus (ii) the
aggregate amount received under the Policy which has been excluded from gross
income of the policyowner (except that the amount of any loan from, or secured
by, a Policy that is a MEC, to the extent such amount has been excluded from
gross income, will be disregarded), plus (iii) the amount of any loan from, or
secured by, a Policy that is a MEC to the extent that such amount has been
included in the gross income of the policyowner.
Multiple Policies. All MECs that are issued by the Company (or its affiliates)
to the same policyowner during any calendar year are treated as one MEC for
purposes of determining the amount includible in the gross income under Section
72(e) of the Code.
THE COMPANY'S TAXES
As a result of the Omnibus Budget Reconciliation Act of 1990, insurance
companies are generally required to capitalize and amortize certain policy
acquisition expenses over a 10-year period rather than currently deducting such
expenses. This treatment applies to the deferred acquisition expenses of a
Policy and results in a significantly higher corporate income tax liability for
the Company. The Company makes a charge to premiums to compensate it for the
anticipated higher corporate income taxes.
At the present time, the Company makes no charge to the Separate Account for any
Federal, state or local taxes that the Company incurs that may be attributable
to such Account or to the Policies. The Company, however, reserves the right in
the future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that it determines to be properly
attributable to the Separate Account or to the Policies.
DISTRIBUTION OF THE POLICY
MSS, a Delaware limited liability company whose principal offices are located
at 73 Tremont Street, Boston, Massachusetts 02108, will act as the principal
underwriter of, and continuously offer, the Policies pursuant to a Distribution
Agreement with Manulife New York. MSS is a subsidiary of Manulife North
America, the ultimate parent of which is Manulife, a Canadian mutual life
insurance company. MSS is registered as a broker-dealer under the Securities
Exchange Act of 1934, is a member of the National Association of Securities
Dealers and is duly appointed and licensed as an insurance agent of Manulife New
York. The Policies will be sold by registered representatives of broker-dealers
having distribution agreements with MSS who are also licensed by the New York
State Insurance Department and appointed with Manulife New York. The gross
first-year compensation paid by the Company, consisting of commission, expense
allowance and General Agent override, if applicable, will not exceed 99% of
premiums paid up to the Target Premium and a total of 3% of the excess thereof.
Additionally, the Company may pay renewal compensation consisting of
commissions and expense allowance, totaling 3% of premiums paid in years 2 to
15, and 2% thereafter, plus 0.15% of the Policy Value per annum after the third
anniversary.
RESPONSIBILITIES ASSUMED BY MANULIFE NEW YORK AND MSS
Manulife New York has entered into an agreement with MSS pursuant to which MSS
will pay selling broker dealers maximum commission and expense allowance
payments pursuant to limitations imposed by New York Insurance Law. Manulife New
York will prepare and maintain all books and records required to be prepared and
maintained by MSS with respect to the Policies and such other policies, and send
all confirmations required to be sent by MSS with respect to the Policies and
such other policies. Manulife New York will pay MSS for expenses incurred and
services performed by MSS under the terms of the agreement in such amounts and
at such times as agreed to by the parties.
Manulife has also entered into a Service Agreement with Manulife New York
pursuant to which Manulife or its designee will provide to Manulife New York all
issue, administrative, general services and recordkeeping functions on behalf of
Manulife New York with respect to all of its insurance policies including the
Policies.
Finally, Manufacturers USA has entered into a reinsurance agreement with
Manulife New York under which Manufacturers USA automatically reinsures policies
issued by Manulife New York, such that total risk to Manulife New York is
limited to $100,000 for the life of the insured.
41
46
VOTING RIGHTS
As stated above, all of the assets held in the sub-accounts of the Separate
Account will be invested in shares of a particular Portfolio of Manufacturers
Investment Trust. Manulife New York is the legal owner of those shares and as
such has the right to vote upon matters that are required by the 1940 Act to be
approved or ratified by the shareholders of a mutual fund and to vote upon any
other matters that may be voted upon at a shareholders' meeting. However,
Manulife New York will vote shares held in the sub-accounts in accordance with
instructions received from policyowners having an interest in such sub-accounts.
Shares held in each sub-account for which no timely instructions from
policyowners are received, including shares not attributable to Policies, will
be voted by Manulife New York in the same proportion as those shares in that
sub-account for which instructions are received. Should the applicable Federal
securities laws or regulations change so as to permit Manulife New York to vote
shares held in the Separate Account in its own right, it may elect to do so.
The number of shares in each sub-account for which instructions may be given by
a policyowner is determined by dividing the portion of the Policy Value derived
from participation in that sub-account, if any, by the value of one share of the
corresponding Manufacturers Investment Trust. The number will be determined as
of a date chosen by Manulife New York, but not more than 90 days before the
shareholders' meeting. Fractional votes are counted. Voting instructions will be
solicited in writing at least 14 days prior to the shareholders' meeting.
Manulife New York may, if required by state insurance officials, disregard
voting instructions if such instructions would require shares to be voted so as
to cause a change in the sub-classification or investment policies of one or
more of the Portfolios, or to approve or disapprove an investment management
contract. In addition, Manulife New York itself may disregard voting
instructions that would require changes in the investment policies or investment
adviser, provided that Manulife New York reasonably disapproves such changes in
accordance with applicable Federal regulations. If Manulife New York does
disregard voting instructions, it will advise policyowners of that action and
its reasons for such action in the next communication to policyowners.
DIRECTORS AND OFFICERS OF MANULIFE NEW YORK
The Directors and Officers of Manulife New York, together with their principal
occupations during the past few years, are as follows:
NAME, ADDRESS AND AGE POSITION WITH THE PRINCIPAL OCCUPATION
COMPANY
Bruce Avedon Director* Consultant (self-employed).
6601 Hitching Post Lane
Cincinnati, OH 45230
Age:68
John D. DesPrez III Director* Senior Vice President, Annuities, Manulife,
73 Tremont Street September 1996 to present; Director and
Boston, MA 02108 President, Manulife North America, September
Age: 40 1996 to present; Vice President, Mutual
Funds, Manulife, January, 1995 to September
1996; President and Chief Executive Officer,
North American Funds, March 1993 to
September 1996; Vice President and General
Counsel, Manulife North America, January
1991 to June 1994.
Stephanie Elliman Vice President and Chief Chief Administration Officer, Manulife New
Corporate Center at Rye Administration Officer York, August 1993: Manager, Marketing
555 Theodore Fremd Ave. Specialists, WLA, 1991 to August 1993.
Rye, NY 10580
Age: 50
Ruth Ann Flemming Director* Homemaker.
145 Western Drive
Short Hills, NJ 07078
Age: 39
42
47
NAME, ADDRESS AND AGE POSITION WITH THE PRINCIPAL OCCUPATION
COMPANY
Bruce Gordon Director* Senior Vice President, North American Group
200 Bloor Street East Pensions, Manulife.
Toronto, Ontario, Canada
M4W 1E5
Age:53
Tracy A. Kane Secretary and Counsel Assistant Vice President and Counsel,
73 Tremont Street Manulife North America, April 1993 to
Boston, MA 02108 present; Counsel, Fidelity Investments, prior
Age: 36 to April 1993.
Theodore Kilkuskie Director* Senior Vice President, U.S. Individual
73 Tremont Street Insurance, Manulife, June 1995 to present;
Boston, MA 02108 Executive Vice President, Mutual Fund Sales
Age 42 & Marketing, State Street Research &
Management, March 1994 to May 1995; Vice
President, Mutual Fund Sales & Marketing,
MetLife, prior to March 1994.
David W. Libbey Treasurer Vice President, Finance, Manulife North
73 Tremont Street America, June 1997 to present; Vice President
Boston, MA 02108 and Actuary, Second Vice President and
Age: 49 Actuary, Paul Revere Insurance Group, June
1970 to March 1997.
Neil M. Merkl, Esq. Director* Attorney (self-employed), April 1994 to
35-35 161st Street present; Partner, Wilson Elser, Etc., 1979 to
Flushing, NY 11358 1994.
Age:66
Robert C. Perez, Ph.D. Director* Associate Professor, Iona College, Hagen
715 North Ave. Business School.
New Rochelle, NY 01801
Age:70
John Richardson Director and Chairman of the Board Executive Vice President and General Manager,
200 Bloor Street East of Directors* U.S. Operations, Manulife, January 1995 to
Toronto, Ontario, Canada present; Senior Vice President and General
M4W 1E5 Manager, Canadian Operations, Manulife, June
Age:59 1992 to January 1995; Senior Vice President,
Financial Services, Manulife, prior to June
1992.
James K. Robinson Director* Attorney, Assistant Secretary, Eastman Kodak
7 Summit Drive Company.
Rochester, NY 14620
Age:70
A. Scott Logan Director* and President Director and President, Wood Logan
1455 East Putnam Ave. Associates, Inc. Senior Vice President and
Old Greenwich, CT 06870 National Marketing Director, Massachusetts
Age: 59 Financial Services.
John G. Vrysen Vice President and Chief Actuary Vice President and Chief Financial Officer,
73 Tremont Street U.S. Operations, Manulife, January 1996 to
Boston, MA 02108 present; Vice President and Chief Actuary,
Age: 42 Manulife North America.
*Each Director is elected to serve until the next annual meeting of shareholders
or until his or her successor is elected and qualified.
43
48
STATE REGULATIONS
Manulife New York is subject to regulation and supervision by the New York
Department of Insurance, which periodically examines its financial condition and
operations. It is also subject to the insurance laws and regulations of all
jurisdictions in which it is authorized to do business. The Policies have been
filed with insurance officials, and meet all standards set by law, in each
jurisdiction where they are sold.
Manulife New York is required to submit annual statements of its operations,
including financial statements, to the insurance departments of the various
jurisdictions in which it does business for the purposes of determining solvency
and compliance with local insurance laws and regulations.
PENDING LITIGATION
No litigation is pending that would have a material effect upon the Separate
Account or Manufacturers Investment Trust.
ADDITIONAL INFORMATION
A registration statement under the Securities Act of 1933 has been filed with
the SEC relating to the offering described in this prospectus. This prospectus
does not include all the information set forth in the registration statement.
The omitted information may be obtained from the SEC's principal office in
Washington, D.C. upon payment of the prescribed fee.
For further information you may also contact Manulife New York's Service Office.
LEGAL MATTERS
The legal validity of the policies has been passed on by Tracy Anne Kane Esq.,
Secretary and Counsel of Manulife New York. Jones & Blouch L.L.P., Washington,
D.C., has passed on certain matters relating to the Federal securities laws.
EXPERTS
The financial statements of Manulife New York at December 31, 1997 and 1996 and
for the years then ended appearing in this prospectus have been audited by Ernst
& Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports given
upon the authority of such firm as experts in auditing and accounting.
The statements of income, changes in shareholder's equity and cash flows of
Manulife New York for the year ended December 31, 1995, appearing in this
prospectus have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
YEAR 2000 ISSUES
Like other business organizations and individuals, the Company would be
adversely affected if its computer systems and those of its service providers do
not properly process and calculate date-related information and data from and
after January 1, 2000. The Company is completing an assessment of the Year 2000
impact on its systems and business processes. Management believes that the
Company will complete its Year 2000 project for all critical systems and
processes by September 30, 1998, prior to any anticipated impact on the critical
systems and processes.
The date on which the Company believes it will complete the Year 2000 project is
based on management's best estimates, which were derived utilizing numerous
assumptions of future events. However, there can be no guarantee that these
estimates will be achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer code, and
other similar uncertainties.
FINANCIAL STATEMENTS
The financial statements of Manulife New York included herein should be
considered only as bearing upon the ability of Manulife New York to meet its
obligations under the Policies.
44
49
CONSOLIDATED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
WITH REPORTS OF INDEPENDENT AUDITORS
45
50
AUDITED FINANCIAL STATEMENTS
THE MANUFACTURERS LIFE
INSURANCE COMPANY OF NEW YORK
Years ended December 31, 1997, 1996 and 1995
46
51
The Manufacturers Life Insurance Company of New York
Audited Financial Statements
Years ended December 31, 1997, 1996 and 1995
CONTENTS
Report of Independent Auditors.......................................1
Audited Financial Statements
Balance Sheets.......................................................3
Statements of Income.................................................4
Statements of Changes in Shareholder's Equity........................5
Statements of Cash Flows.............................................6
Notes to Financial Statements........................................7
47
52
Report of Independent Auditors
The Board of Directors and Shareholder
The Manufacturers Life Insurance Company of New York
We have audited the accompanying balance sheets of The Manufacturers Life
Insurance Company of New York (formerly First North American Life Assurance
Company and hereinafter referred to as the Company) as of December 31, 1997 and
1996, and the related statements of income, changes in shareholder's equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 1997 and 1996 financial statements referred to above present
fairly, in all material respects, the financial position of The Manufacturers
Life Insurance Company of New York at December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
February 18, 1998
48
53
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholder of
The Manufacturers Life Insurance Company of New York:
We have audited the accompanying statements of income, changes in shareholder's
equity and cash flows of The Manufacturers Life Insurance Company of New York
(formerly First North American Life Assurance Company) for the year ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The
Manufacturers Life Insurance Company of New York for the year ended December 31,
1995 in conformity with generally accepted accounting principles.
As discussed in Note 2 to the financial statements, the Company adopted
Financial Accounting Standards Board Interpretation No. 40 (FIN 40) and
Statement of Financial Accounting Standards No. 120 (SFAS 120), which required
implementation of several accounting pronouncements not previously adopted.
The effects of adopting FIN 40 and SFAS 120 were retroactively applied to the
Company's previously issued financial statements, consistent with the
implementation guidance of those standards.
Boston, Massachusetts
January 22, 1998
49
54
The Manufacturers Life Insurance Company of New York
Balance Sheets
DECEMBER 31
1997 1996
-----------------------------------------------
ASSETS
Investments:
Fixed maturities available-for-sale, at fair value $129,150,862 $ 83,466,225
Short-term investments 9,998,179 3,984,370
Policy loans 398,270 183,070
-----------------------------------------------
139,547,311 87,633,665
Cash and cash equivalents 1,431,114 4,104,731
Accrued investment income 2,401,173 1,528,000
Deferred policy acquisition costs 28,363,714 20,208,071
Other assets 231,211 152,140
Separate account assets 597,193,343 361,309,525
-----------------------------------------------
Total assets $769,167,866 $474,936,132
===============================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Policyholder funds $ 86,611,035 $ 80,033,667
Payable to affiliates 4,345,038 2,016,646
Deferred tax liability 2,269,418 1,935,001
Other liabilities 987,521 872,306
Separate account liabilities 597,193,343 361,309,525
-----------------------------------------------
Total liabilities 691,406,355 446,167,145
Shareholder's equity:
Common stock (shares authorized, issued and outstanding:
2,000,000; par value $1) 2,000,000 2,000,000
Additional paid-in capital 72,530,624 24,800,000
Unrealized appreciation on available-for-sale securities 1,095,152 419,378
Retained earnings 2,135,735 1,549,609
-----------------------------------------------
Total shareholder's equity 77,761,511 28,768,987
-----------------------------------------------
Total liabilities and shareholder's equity $769,167,866 $474,936,132
===============================================
See accompanying notes.
50
55
The Manufacturers Life Insurance Company of New York
Statements of Income
YEARS ENDED DECEMBER 31
1997 1996 1995
------------------------------------------------------------------------
Revenues:
Fees from separate account and
policyholder funds $ 7,395,201 $ 4,761,702 $3,139,174
Net investment income 6,716,053 5,224,209 4,767,914
Net realized investment gain 769,361 88,772 466,164
------------------------------------------------------------------------
14,880,615 10,074,683 8,373,252
Benefits and expenses:
Benefits to policyholders 4,746,668 4,189,360 4,734,027
Amortization of deferred policy
acquisition costs 3,393,073 2,318,595 1,162,044
Other insurance expenses 5,845,047 1,191,984 1,193,232
------------------------------------------------------------------------
13,984,788 7,699,939 7,089,303
------------------------------------------------------------------------
Income before provision for income taxes 895,827 2,374,744 1,283,949
Provision for income taxes
Current 339,161 612,686 101,510
Deferred (29,460) 220,079 349,000
------------------------------------------------------------------------
309,701 832,765 450,510
------------------------------------------------------------------------
Net income $ 586,126 $ 1,541,979 $ 833,439
========================================================================
See accompanying notes.
51
56
The Manufacturers Life Insurance Company of New York
Statements of Changes in Shareholder's Equity
Years ended December 31, 1997, 1996 and 1995
UNREALIZED
APPRECIATION ON RETAINED TOTAL
ADDITIONAL AVAILABLE-FOR-SALE EARNINGS SHAREHOLDER'S
COMMON STOCK PAID-IN CAPITAL SECURITIES (DEFICIT) EQUITY
-------------- --------------- ----------------- -------------- ----------------
Balance at December 31, 1994, as
previously reported $ 2,000,000 $ 8,500,000 $(2,396,360) $ 8,103,640
Cumulative effect of applying
new basis of accounting $ (567,943) 1,570,551 1,002,608
------------ ------------ ----------- ----------- -----------
Balance at January 1, 1995 2,000,000 8,500,000 (567,943) (825,809) 9,106,248
Capital contribution 3,000,000 3,000,000
Net income 833,439 833,439
Change in unrealized
appreciation of available-
for-sale securities, net of
tax and adjustment for DPAC 2,272,070 2,272,070
------------ ------------ ----------- ----------- -----------
Balance at December 31, 1995 2,000,000 11,500,000 1,704,127 7,630 15,211,757
Capital contribution 13,300,000 13,300,000
Net income 1,541,979 1,541,979
Change in unrealized
appreciation of available-
for-sale securities, net of
tax and adjustment for DPAC (1,284,749) (1,284,749)
------------ ------------ ----------- ----------- -----------
Balance at December 31, 1996 2,000,000 24,800,000 419,378 1,549,609 28,768,987
Capital contribution 47,730,624 47,730,624
Net income 586,126 586,126
Change in unrealized
appreciation of available-
for-sale securities, net of
tax and adjustment for DPAC 675,774 675,774
------------ ------------ ----------- ----------- -----------
Balance at December 31, 1997 $ 2,000,000 $ 72,530,624 $ 1,095,152 $ 2,135,735 $77,761,511
============ ============ =========== =========== ===========
See accompanying notes.
52
57
The Manufacturers Life Insurance Company of New York
Statements of Cash Flows
YEARS ENDED DECEMBER 31
1997 1996 1995
--------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 586,126 $ 1,541,979 $ 833,439
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Amortization of bond discount and premium 333,012 141,447 46,319
Net realized investment gain (769,361) (88,772) (466,164)
Deferred income tax provision (29,460) 220,079 349,000
Amortization of deferred policy acquisition 3,393,073 2,318,595 1,162,044
costs
Policy acquisition costs deferred (11,684,074) (7,224,022) (5,481,175)
Return credited to policyholders and other
benefits 4,746,668 4,189,360 4,734,027
Changes in assets and liabilities:
Accrued investment income (873,173) (6,987) (1,191,261)
Other assets (79,071) 195,420 68,994
Payable to affiliates 2,328,392 864,422 327,843
Other liabilities 115,215 (152,572) 580,171
-------------------------------------------------------
Net cash (used in) provided by operating activities (1,932,653) 1,998,949 963,237
INVESTING ACTIVITIES
Purchase of fixed maturities (103,382,988) (41,409,440) (69,601,388)
Proceeds from fixed maturities sold, matured or 59,307,170 31,658,755 18,834,870
repaid
Net change in short-term investments (6,011,270) (3,984,370)
Net change in policy loans (215,200) (115,747) (67,323)
-------------------------------------------------------
Net cash used in investing activities (50,302,288) (13,850,802) (50,833,841)
FINANCING ACTIVITIES
Receipts credited to policyholder funds 17,212,556 18,408,172 40,048,872
Return of policyholder funds (15,381,856) (24,676,276) (1,915,371)
Change in notes payable (2,000,000) 2,000,000
Capital contribution 47,730,624 13,300,000 3,000,000
-------------------------------------------------------
Net cash provided by financing activities 49,561,324 5,031,896 43,133,501
-------------------------------------------------------
Net decrease in cash and cash equivalents (2,673,617) (6,819,957) (6,737,103)
Cash and cash equivalents at beginning of year 4,104,731 10,924,688 17,661,791
-------------------------------------------------------
Cash and cash equivalents at end of year $ 1,431,114 $ 4,104,731 $ 10,924,688
=======================================================
See accompanying notes.
53
58
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements
December 31, 1997
1. ORGANIZATION
The Manufacturers Life Insurance Company of New York (formerly First North
American Life Assurance Company and hereinafter referred to as the Company), a
stock life insurance company, was organized on February 10, 1992 under the laws
of the state of New York. Subsequently, on July 22, 1992, the Company was
granted a license by the New York State Insurance Department. The Company is a
wholly-owned subsidiary of The Manufacturers Life Insurance Company of North
America (formerly North American Security Life Insurance Company and hereinafter
referred to as MNA or the Parent).
On January 1, 1996, North American Life Assurance Company (NAL), the previous
owner of the Parent, merged with The Manufacturers Life Insurance Company (MLI).
The surviving company conducts business under the name, "The Manufacturers Life
Insurance Company."
Concurrent with the merger, the Company's Parent went through a corporate
restructuring which resulted in the formation of a newly organized holding
corporation, Manulife Wood Logan Holding Company, Inc. (formerly NAWL Holding
Company, Inc. and hereinafter referred to as MWL). At that time, all of the
assets and liabilities of MNA and its subsidiaries, the Company and NASL
Financial Services, Inc. (NASL Financial), were transferred from MLI to MWL. In
addition, MLI's 20.2% ownership interest in Wood Logan Associates, Inc. (Wood
Logan) was transferred to MWL. In exchange, MLI received all Class A shares of
MWL common stock. On January 1, 1997, MLI contributed 62.5% of its 85% ownership
interest to its indirect wholly-owned subsidiary, The Manufacturers Life
Insurance Company (U.S.A.). Effective December 18, 1997, MLI transferred its
remaining 22.5% interest to MRL Holding, LLC, a newly formed Delaware limited
liability company.
Also effective January 1, 1996, as part of the restructuring, the remaining
79.8% of Wood Logan was purchased by MWL. In exchange for the remaining shares
of Wood Logan, certain employees and former owners of Wood Logan received Class
B voting shares of MWL representing a 15% ownership interest. Until October 1,
1997, Wood Logan was the promotional agent for the sale of the insurance
products of the Company and MNA.
54
59
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
1. ORGANIZATION (CONTINUED)
On December 22, 1995, the New York State Insurance Department approved the
application submitted by MLI to acquire control of the Company subject to
commitment letters given to the Department by MNA and the Company. As part of
the agreement, MLI contributed $13,300,000 of additional surplus to the Company
in 1996.
On April 17, 1997, a revised plan of operation was submitted to the New York
State Insurance Department in connection with the Company's intention to expand
its product offerings. On October 21, 1997, the Company received approval of the
revised plan including modifications from the New York State Insurance
Department, and as part of the agreement, MNA contributed $47,730,624 in support
of the new plan of operations.
The Company issues variable annuity and individual life insurance contracts in
the State of New York. Amounts invested in the fixed portion of the contracts
are allocated to the general account of the Company. Amounts invested in the
variable portion of the contracts are allocated to the separate account of the
Company. The separate account assets are invested in shares of the Manufacturers
Investment Trust (formerly NASL Series Trust and hereinafter referred to as
MIT), a no-load, open-end management investment company organized as a
Massachusetts business trust.
Prior to October 1, 1997, NASL Financial acted as investment adviser to MIT and
as principal underwriter of the annuity contracts issued by the Company. NASL
Financial had an agreement with Wood Logan to act as the promotional agent for
the sale of the annuity contracts.
Effective October 1, 1997, Manufacturers Securities Services, LLC (MSS), an
affiliate of the Company, replaced NASL Financial as the investment advisor to
MIT and as the principal underwriter of the annuity contracts. Wood Logan
provides marketing services for the sale of annuity contracts under an
Administrative Services Agreement dated October 7, 1997, between the Company and
MLI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared in
conformity with generally accepted accounting principles (GAAP).
55
60
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Prior to 1996, the Company prepared its financial statements in conformity with
accounting practices prescribed or permitted by the New York Insurance
Department which practices were considered GAAP for mutual life insurance
companies. FASB Interpretation 40, Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and other Enterprises (FIN 40),
as amended, which is effective for 1996 annual financial statements, no longer
permits statutory-basis financial statements to be described as being prepared
in conformity with GAAP. Accordingly, the Company has adopted various accounting
pronouncements, principally Statement of Financial Accounting Standards No. 120,
Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts (SFAS No. 120),
which addresses the accounting for long-duration insurance contracts.
Pursuant to the requirements of the above pronouncements, the effect of the
changes in accounting have been applied retroactively and the previously issued
1995 financial statements have been restated for the change. The effect of the
change applicable to years prior to January 1, 1995 has been presented as a
restatement of shareholder's equity as of this date.
The adoption had the effect of increasing net income for 1995 by $1,412,338.
The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported in the financial statements and the
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known, which could impact the amounts reported and
disclosed herein.
INVESTMENTS AND INVESTMENT INCOME
The Company accounts for its fixed maturities in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). SFAS 115 requires that fixed maturities
be designated as either held-to-maturity, available-for-sale or trading at the
time of purchase. Held-to-maturity
56
61
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
fixed maturities are reported at amortized cost and the remainder of fixed
maturities are reported at fair value with unrealized holding gains and losses
reported in income for those designated as trading and as a separate component
of shareholder's equity for those designated as available-for-sale.
The Company has classified all of its fixed maturities as available-for-sale. As
a result, these securities are reported in the accompanying financial statements
at fair value. Changes in fair values, after adjustment for deferred policy
acquisition costs (DPAC) and deferred income taxes, are reported as unrealized
appreciation or depreciation directly in shareholder's equity, and accordingly,
have no effect on net income. The DPAC offset to the unrealized appreciation or
depreciation represents valuation adjustments or reinstatements of DPAC that
would have been required as a charge or credit to operations had such unrealized
amounts been realized.
The cost of fixed maturities is adjusted for the amortization of premiums and
accretion of discounts using the interest method. This amortization or accretion
is included in net investment income.
For the mortgage-backed bond portion of the fixed maturities portfolio, the
Company recognizes amortization using a constant effective yield based on
anticipated prepayments and the estimated economic life of the securities. When
actual prepayments differ significantly from anticipated prepayments, the
effective yield is recalculated to reflect actual payments to date and
anticipated future payments. The net investment in the security is adjusted to
the amount that would have existed had the new effective yield been applied
since the acquisition of the security. That adjustment is included in net
investment income.
Short-term investments generally consist of instruments which have a maturity of
less than one year at the time of acquisition. Short-term investments are
reported at cost, which approximates fair value.
Policy loans are reported at unpaid balances, not in excess of the underlying
cash value of the policies.
Realized gains or losses on investments sold and declines in value judged to be
other-than-temporary are determined on the specific identification basis.
57
62
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with an
original maturity date of three months or less to be cash equivalents. Cash
equivalents are stated at cost plus accrued interest, which approximates fair
value.
DEFERRED POLICY ACQUISITION COSTS
Commissions and other costs of acquiring new business that vary with and are
primarily related to the production of new business have been deferred. These
acquisition costs are being amortized generally in proportion to the present
value of expected gross profits from surrender charges and investment, mortality
and expense margins. That amortization is adjusted retrospectively when
estimates of current or future gross profits to be realized from a group of
products are revised.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate account assets and liabilities that are reported in the accompanying
balance sheets represent investments in MIT, which are mutual funds that are
separately administered for the exclusive benefit of the annuity policyholders
and are reported at fair value. Such policyholders, rather than the Company,
bear the investment risk. The operations of the separate accounts are not
included in the accompanying financial statements. Fees charged on separate
account policyholder funds are included in revenues.
POLICYHOLDER FUNDS AND BENEFITS TO POLICYHOLDERS
Policyholder funds for the fixed portion of variable annuity contracts are
computed under a retrospective deposit method and represent account balances
before applicable surrender charges. Benefits to policyholders include interest
credited to policyholders and other benefits that are charged to expense
including benefit claims incurred in the period in excess of the related
policyholder account balances. Interest crediting rates for the fixed portion of
annuity contracts range from 4.10% to 6.15% in 1997; 4.00% to 6.15% in 1996 and
4.20% to 7.00% in 1995.
58
63
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECOGNITION OF REVENUES
Fees from separate accounts and policyholder funds represent fees assessed
against policyholder account balances, and include mortality and expense risk
charges, surrender charges and an annual administrative charge.
INCOME TAXES
Income taxes have been provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that likely
will be in effect when the differences are expected to reverse. The measurement
of deferred tax assets is reduced by a valuation allowance if, based upon the
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.
3. INVESTMENTS
The major components of net investment income are as follows:
YEAR ENDED DECEMBER 31
1997 1996 1995
---------------------------------------------------------
Fixed maturities $6,342,800 $4,476,472 $4,436,994
Short-term investments 475,545 873,146 403,497
---------------------------------------------------------
6,818,345 5,349,618 4,840,491
Less investment expenses (102,292) (125,409) (72,577)
---------------------------------------------------------
Net investment income $6,716,053 $5,224,209 $4,767,914
=========================================================
59
64
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The gross unrealized gains and losses for available-for-sale fixed maturities
held at December 31, 1997 and 1996 are as follows:
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------------------------------------------------
(In Thousands)
DECEMBER 31, 1997
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. Government
agencies $ 7,422 $ 284 $ 7,706
Corporate securities 108,682 1,879 $ 23 110,538
Mortgage-backed securities 5,016 69 5,085
States, territories and possessions 5,594 228 5,822
-------------------------------------------------------------
Total $126,714 $2,460 $ 23 $129,151
=============================================================
DECEMBER 31, 1996
Fixed maturities:
U.S. Treasury securities and
obligations of U.S. Government
agencies $ 3,244 $ 193 $ 3,437
Corporate securities 73,366 1,082 $191 74,257
Mortgage-backed securities 1,017 5 1,012
States, territories and possessions 4,578 182 4,760
-------------------------------------------------------------
Totals $ 82,205 $1,457 $196 $ 83,466
=============================================================
60
65
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The amortized cost and fair value of fixed maturities at December 31, 1997, by
contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because borrowers or lenders may have the right to call
or prepay obligations with or without call or prepayment penalties.
AMORTIZED FAIR
COST VALUE
------------------------------------
(In Thousands)
FIXED MATURITIES AVAILABLE-FOR-SALE
Due in one year or less $12,618 $12,617
Due after one year through five years 59,514 60,938
Due after five years through ten years 28,353 28,627
Due after ten years through twenty years 1,921 1,967
Due after twenty years 19,292 19,917
Mortgage-backed securities 5,016 5,085
------------------------------------
Total fixed maturities available-for-sale $126,714 $129,151
====================================
The proceeds from sales of available-for-sale fixed maturities for the year
ended December 31, 1997, 1996 and 1995 were $45,217,170, $6,558,755 and
$11,634,871, respectively. Gross gains of $772,361, $90,811 and $466,164 and
gross losses of $5,539, $2,039 and $0 were realized on these sales,
respectively.
Fixed maturities with a fair value of $414,100 at December 31, 1997 are in a
custody account on behalf of the New York State Insurance Department to satisfy
regulatory requirements. At December 31, 1996, the comparable amount was
$401,651.
4. FEDERAL INCOME TAXES
Beginning in 1996, the Company participates as a member of the MWL affiliated
group consolidated federal income tax return. In 1995, the Company participated
as a member of the MNA consolidated federal income tax return. The Company files
separate state income tax returns. The method of allocation between companies is
subject to a written tax sharing agreement. The tax liability is allocated to
each member on a pro rata basis based on the relationship that the member's tax
liability computed on a separate return
61
66
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
4. FEDERAL INCOME TAXES (CONTINUED)
basis bears to the tax liability of the consolidated group. The tax charge to
the Company shall not be more than the Company would have paid on a separate
return basis. The Company settles its current income tax each year through an
intercompany account.
The Company's effective income tax rate varies from the statutory federal income
tax rate as follows:
YEAR ENDED DECEMBER 31
1997 1996 1995
-------------------------------
Statutory federal income tax rate applied
to income before federal income taxes 35% 35% 35%
Add (deduct):
Disallowed meals, entertainment 2
Nondeductible consulting fees 4
Reversal of deferred asset valuation
allowance (6)
------------------------------
Effective income tax rate 35% 35% 35%
===============================
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred tax liability are as follows:
DECEMBER 31
1997 1996
---------------------------------
Deferred tax assets:
Investment amortization $ 92,345 $ 62,711
Reserves 117,558
---------------------------------
Total deferred tax assets 92,345 180,269
---------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs (1,134,971) (1,283,150)
Reserves (3,683)
Unrealized gain on fixed maturities,
net of DPAC effect (589,696) (225,819)
Other (633,413) (606,301)
---------------------------------
Total deferred tax liabilities (2,361,763) (2,115,270)
---------------------------------
Net deferred tax liability $ (2,269,418) $ (1,935,001)
=================================
62
67
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
4. FEDERAL INCOME TAXES (CONTINUED)
In the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred tax assets and, therefore, no valuation
allowance has been established.
5. SHAREHOLDER'S EQUITY
The net assets of the Company available for the Parent as dividends are
generally limited to and cannot be made except from earned statutory-basis
profits. The maximum amount of dividends that may be paid by life insurance
companies without prior approval of the New York Insurance Commissioner is
subject to restrictions relating to statutory surplus and net gain from
operations on a statutory basis.
Net income (loss) and capital and surplus, as determined in accordance with
statutory accounting principles, for the Company were as follows:
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------------------------------------
Net income (loss) $(1,562,544) $ 231,315 $ (578,899)
Net capital and surplus 68,336,238 22,265,070 8,821,782
The components of the balance sheet caption "Unrealized appreciation on
available-for-sale securities" in shareholder's equity are summarized as
follows:
DECEMBER 31
1997 1996
--------------- ---------------
(In Thousands)
Fair value of securities $129,151 $83,466
Amortized cost of securities 126,714 82,205
-------------- --------------
Unrealized appreciation 2,437 1,261
Adjustment to deferred policy
acquisition costs (752) (616)
Deferred income taxes (590) (226)
-------------- --------------
Unrealized appreciation on securities
available-for-sale $ 1,095 $ 419
============== ==============
63
68
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
6. RELATED-PARTY TRANSACTIONS
The Company utilizes various services administered by its Parent and affiliates
such as legal, personnel, investment accounting and other corporate services. In
1995, NAL charged the Company approximately $456,000 and, in 1996, MLI and MNA
charged the Company approximately $661,000 for those services. At December 31,
1996, the Company had a net liability of $1,965,338 to MLI and MNA for these
charges. For the first nine months of 1997, MLI and MNA charged the Company
approximately $623,000. Effective October 1, 1997, pursuant to a new Plan of
Operations, all intercompany expenses were billed through MLI. For the fourth
quarter of 1997, MLI billed the Company expenses of $869,000. At December 31,
1997, the Company had a net liability to MLI of $2,977,176 for these services.
For the nine months ended September 30, 1997 and the two years ended December
31, 1996 and 1995, the Company paid underwriting commissions to NASL Financial
of $8,421,182, $7,049,687 and $5,348,500, respectively. NASL Financial then
reimbursed Wood Logan for promotional agent services. Effective October 1, 1997,
MSS replaced NASL Financial as underwriter. Thereafter, all commissions were
paid to MSS by the Company, and Wood Logan marketing services were paid by MLI
who was reimbursed by the Company. Underwriting commissions and marketing
services expense of $4,431,068 was incurred during the fourth quarter of 1997.
At December 31, 1997 and 1996, the Company had a net liability of $1,367,857 and
$51,308, respectively, for these services.
The financial statements have been prepared from the records maintained by the
Company and may not necessarily be indicative of the financial conditions or
results of operations that would have occurred if the Company had been operated
as an unaffiliated corporation (see also Notes 1, 4, 5 and 8 for additional
related-party transactions).
7. NOTES PAYABLE
The Company has an unsecured line of credit with State Street Bank and Trust in
the amount of $5,000,000, bearing interest at the bank's money market rate plus
50 basis points. There were no outstanding advancements under the line of credit
at December 31, 1997 and 1996.
64
69
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
8. RETIREMENT PLANS
MLI, and formerly NAL prior to the merger, sponsors a defined benefit pension
plan (the Plan) covering substantially all of the Company's employees. The
benefits are based on years of service and the employee's compensation during
the last five years of employment. MLI's funding policy is to contribute
annually the normal cost up to the maximum amount that can be deducted for
federal income tax purposes and to charge each subsidiary for its allocable
share of such contributions based on a percentage of payroll. No pension costs
were allocated to the Company in 1997, 1996 or 1995, as the Plan was subject to
the full funding limitation under the Internal Revenue Code.
The Company participates in a defined contribution retirement plan sponsored by
the Parent pursuant to regulation 401(k) of the Internal Revenue Code. All
employees who are 21 years old are eligible after one year of service. The
Company contributes two percent of base pay plus fifty percent of the employee
savings contribution. The employee savings contribution is limited to six
percent of base pay.
9. LEASES
The Company leases office space under an operating lease agreement which expires
in 1999 and is subject to a renewal option at market rates prevailing at the
time of renewal. For the years ended December 31, 1997, 1996 and 1995, the
Company incurred rent expense of $83,809, $79,950 and $72,695, respectively. The
minimum lease payments associated with the office space are as follows:
MINIMUM LEASE
PAYMENTS
--------------
Year ended:
1998 $ 81,648
1999 61,236
---------
Total $ 142,884
=========
65
70
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
10. FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 (SFAS 107), "Disclosures
About Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
consolidated balance sheet, for which it is practicable to estimate that value.
In cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlement of the instrument.
SFAS No. 107 also excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements and allows companies to forego the
disclosures when those estimates can only be made at excessive cost.
Accordingly, the aggregate fair value amounts presented herein are limited by
each of these factors and do not purport to represent the underlying value of
the Company.
The following methods and assumptions were used by the Company in estimating the
fair value disclosures for financial instruments:
Fixed maturities: Fair values for fixed maturities are obtained from an
independent pricing service.
Short-term investments and cash and cash equivalents: The carrying amounts
reported in the accompanying balance sheet for short-term investments,
cash and cash equivalents approximate their fair values.
Policy loans: The carrying amount in the balance sheet for policy loans
approximates the fair value.
Policyholder funds: Fair values of the Company's liabilities under
contracts not involving significant mortality risk (deferred annuities)
are estimated to be the cash surrender value, or the cost the Company
would incur to extinguish the liability.
66
71
The Manufacturers Life Insurance Company of New York
Notes to Financial Statements (continued)
10. FINANCIAL INSTRUMENTS (CONTINUED)
The carrying values and estimated fair values of the Company's financial
instruments are as follows:
DECEMBER 31, 1997 DECEMBER 31, 1996
-----------------------------------------------------------------------------
CARRYING VALUE FAIR CARRYING VALUE FAIR
VALUE VALUE
-----------------------------------------------------------------------------
Assets:
Fixed maturities $129,150,862 $129,150,862 $83,466,225 $83,466,225
Short-term investments 9,998,179 9,998,179 3,984,370 3,984,370
Policy loans 398,270 398,270 183,070 183,070
Cash and cash equivalents 1,431,114 1,431,114 4,104,731 4,104,731
Liabilities:
Policyholder funds 86,611,035 81,715,263 80,033,667 74,985,163
11. YEAR 2000 ISSUES (UNAUDITED)
Like other business organizations and individuals, the Company would be
adversely affected if its computer systems and those of its service providers do
not properly process and calculate date-related information and data from and
after January 1, 2000. The Company is completing an assessment of the Year 2000
impact on its systems and business processes. Management believes that the
Company will complete its Year 2000 project for all critical systems and
processes by September 30, 1998, prior to any anticipated impact on the critical
systems and processes.
The date on which the Company believes it will complete the Year 2000 project is
based on management's best estimates, which were derived utilizing numerous
assumptions of future events. However, there can be no guarantee that these
estimates will be achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer code, and
other similar uncertainties.
67
72
APPENDIX A
SAMPLE ILLUSTRATIONS OF POLICY VALUES, CASH SURRENDER VALUES AND DEATH BENEFITS
The following tables have been prepared to help show how values under the Policy
change with investment performance. The tables include both Policy Values and
Cash Surrender Values as well as Death Benefits. The Policy Value is the sum of
the values in the Investment Accounts, as the tables assume no values in the
Guaranteed Interest Account or Loan Account. The Cash Surrender Value is the
Policy Value less any applicable surrender charges. The tables illustrate how
Policy Values and Cash Surrender Values, which reflect all applicable charges
and deductions, and Death Benefits of the Policy on an insured of a given age
would vary over time if the return on the assets of the Portfolio was a uniform,
gross, after-tax, annual rate of 0%, 6% or 12%. The Policy Values, Death
Benefits and Cash Surrender Values would be different from those shown if the
returns averaged 0%, 6% or 12%, but fluctuated over and under those averages
throughout the years. The charges reflected in the tables include those for:
deferred underwriting and sales charges, and monthly deductions for
administration, cost of insurance and mortality and expense risks.
The amounts shown for the Policy Value, Death Benefit and Cash Surrender Value
as of each policy year reflect the fact that the net investment return on the
assets held in the sub-accounts is lower than the gross, after-tax return. This
is because the expenses and fees borne by the Portfolios are deducted from the
gross return. The illustrations reflect an average of the Trusts' expenses,
which is approximately 0.938% on an annual basis. The gross annual rates of
return of 0%, 6% and 12% correspond to approximate net annual rates of return of
- -0.933%, 5.011% and 10.955%.
The tables assume that no premiums have been allocated to the Guaranteed
Interest Account, that planned premiums are paid on the policy anniversary and
that no transfers, partial withdrawals, policy loans, changes in death benefit
options or changes in face amount have been made. The tables reflect the fact
that no charges for Federal, state or local taxes are currently made against the
Separate Account. If such a charge is made in the future, it would take a higher
gross rate of return to produce after-tax returns of 0%, 6% and 12% than it does
now.
There are two tables shown for each combination of age and death benefit option
for male non-smokers, one based on current cost of insurance and monthly
administration charges and the other based on the maximum administration
charges, deductions from premiums and cost of insurance charges based on the
1980 Commissioners Standard Ordinary Smoker/Nonsmoker Mortality Tables. The
current waiver of deductions from premiums and current monthly administration
charges and cost of insurance charges are not guaranteed and may be changed.
Upon request, Manulife New York will furnish a comparable illustration based on
the proposed life insured's age, sex (unless unisex rates are required by law)
and risk class, any additional ratings and the death benefit option, face amount
and planned premium requested. Illustrations for smokers would show less
favorable results than the illustrations shown below.
From time to time, in advertisements or sales literature for the Policies that
quote performance data of one or more of the Portfolios, the Company may include
cash surrender values and death benefit figures computed using the same
methodology as that used in the following illustrations, but with the average
annual total return of the Portfolios for which performance data is shown in the
advertisement replacing the hypothetical rates of return shown in the following
tables. This information may be shown in the form of graphs, charts, tables and
examples.
68
73
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$5,960 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
-------------------------------- ------------------------------ -------------------------------
End of Accumulated Cash Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 6,258 $ 4,614 $ 0 $500,000 $ 4,926 $ 0 $500,000 $ 5,238 $ 8 $ 500,000
2 12,829 9,409 2,932 500,000 10,326 3,849 500,000 11,281 4,804 500,000
3 19,728 14,073 7,596 500,000 15,903 9,426 500,000 17,883 11,406 500,000
4 26,973 18,604 12,127 500,000 21,659 15,182 500,000 25,097 18,619 500,000
5 34,579 22,993 16,516 500,000 27,592 21,114 500,000 32,973 26,496 500,000
6 42,566 27,267 21,437 500,000 33,733 27,904 500,000 41,606 35,777 500,000
7 50,953 31,389 26,207 500,000 40,055 34,873 500,000 51,035 45,853 500,000
8 59,758 35,363 30,829 500,000 46,566 42,032 500,000 61,345 56,811 500,000
9 69,004 39,183 35,296 500,000 53,266 49,380 500,000 72,618 68,732 500,000
10 78,712 42,851 39,612 500,000 60,168 56,929 500,000 84,960 81,721 500,000
15 135,039 58,691 58,691 500,000 97,745 97,745 500,000 166,837 166,837 500,000
20 206,927 69,614 69,614 500,000 140,660 140,660 500,000 297,801 297,801 500,000
25 298,676 74,682 74,682 500,000 189,924 189,924 500,000 509,341 509,341 682,517
30 415,774 71,195 71,195 500,000 250,643 250,643 500,000 862,995 862,995 1,052,853
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
69
74
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$5,960 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
------------------------------ -------------------------------- --------------------------------
End of Accumulated Policy Cash Death Policy Cash Death Policy Cash Death
Policy Premiums Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year(1) (2) Value(3) Value(3) Value(3)
1 $ 6,258 $ 4,339 $ 0 $500,000 $ 4,636 $ 0 $500,000 $ 4,934 $ 0 $500,000
2 12,829 8,865 2,388 500,000 9,736 3,259 500,000 10,643 4,166 500,000
3 19,728 13,264 6,787 500,000 14,999 8,521 500,000 16,877 10,400 500,000
4 26,973 17,534 11,057 500,000 20,427 13,950 500,000 23,684 17,207 500,000
5 34,579 21,668 15,191 500,000 26,020 19,543 500,000 31,115 24,638 500,000
6 42,566 25,665 19,836 500,000 31,782 25,952 500,000 39,231 33,402 500,000
7 50,953 29,515 24,334 500,000 37,706 32,524 500,000 48,090 42,908 500,000
8 59,758 33,222 28,688 500,000 43,803 39,269 500,000 57,771 53,237 500,000
9 69,004 36,774 32,888 500,000 50,069 46,182 500,000 68,348 64,462 500,000
10 78,712 40,177 36,938 500,000 56,513 53,274 500,000 79,919 76,681 500,000
15 135,039 54,621 54,621 500,000 91,347 91,347 500,000 156,432 156,432 500,000
20 206,927 63,788 63,788 500,000 130,394 130,394 500,000 278,219 278,219 500,000
25 298,676 64,780 64,780 500,000 172,503 172,503 500,000 474,575 474,575 635,931
30 415,774 54,180 54,180 500,000 221,329 221,329 500,000 802,301 802,301 978,807
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
70
75
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$7,450 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
------------------------------ ----------------------------- -------------------------------------
End of Accumulated Cash Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 7,823 $ 6,069 $ 94 $506,069 $ 6,467 $ 492 $506,467 $ 6,867 $ 892 $ 506,867
2 16,036 12,282 5,805 512,282 13,462 6,985 513,462 14,690 8,213 514,690
3 24,660 18,330 11,852 518,330 20,686 14,209 520,686 23,235 16,758 523,235
4 33,716 24,208 17,730 524,208 28,143 21,666 528,143 32,569 26,092 532,569
5 43,224 29,908 23,430 529,908 35,831 29,353 535,831 42,757 36,279 542,757
6 53,208 35,456 29,627 535,456 43,782 37,952 543,782 53,909 48,079 553,909
7 63,691 40,815 35,633 540,815 51,965 46,783 551,965 66,077 60,895 566,077
8 74,698 45,987 41,453 545,987 60,389 55,855 560,389 79,363 74,828 579,363
9 86,255 50,965 47,078 550,965 69,052 65,166 569,052 93,864 89,978 593,864
10 98,391 55,751 52,512 555,751 77,964 74,725 577,964 109,704 106,465 609,704
15 168,798 76,522 76,522 576,522 126,175 126,175 626,175 213,629 213,629 713,629
20 258,658 91,111 91,111 591,111 180,008 180,008 680,008 374,927 374,927 874,927
25 373,345 98,388 98,388 598,388 238,836 238,836 738,836 626,371 626,371 1,126,371
30 519,718 95,660 95,660 595,660 304,150 304,150 804,150 1,038,425 1,038,425 1,538,425
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
71
76
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 35 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$7,450 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------------- --------------------------------- -------------------------------------
End of Accumulated Cash Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 7,823 $5,741 $ 0 $505,741 $ 6,122 $ 147 $506,122 $ 6,504 $ 529 $ 506,504
2 16,036 11,635 5,158 511,635 12,759 6,282 512,759 13,929 7,452 513,929
3 24,660 17,368 10,891 517,368 19,611 13,133 519,611 22,037 15,560 522,037
4 33,716 22,937 16,460 522,937 26,680 20,203 526,680 30,889 24,412 530,889
5 43,224 28,336 21,858 528,336 33,965 27,488 533,965 40,550 34,073 540,550
6 53,208 33,562 27,732 533,562 41,471 35,641 541,471 51,094 45,264 551,094
7 63,691 38,604 33,422 538,604 49,190 44,008 549,190 62,593 57,411 562,593
8 74,698 43,465 38,931 543,465 57,131 52,597 557,131 75,143 70,609 575,143
9 86,255 48,134 44,248 548,134 65,289 61,402 565,289 88,833 84,947 588,883
10 98,391 52,615 49,376 552,615 73,672 70,433 573,672 103,777 100,538 603,777
15 168,798 71,810 71,810 571,810 118,751 118,751 618,751 201,528 201,528 701,528
20 258,658 84,481 84,481 584,481 168,237 168,237 668,237 352,334 352,334 852,334
25 373,345 87,346 87,346 587,346 218,672 218,672 718,672 583,336 583,336 1,083,336
30 519,718 77,359 77,359 577,359 269,816 269,816 769,816 957,183 957,183 1,457,183
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
72
77
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$15,095 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
------------------------------- -------------------------------- ----------------------------------
End of Accumulated Cash Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 15,850 $ 10,720 $ 922 $500,000 $ 11,480 $ 1,683 $500,000 $ 12,243 $ 2,446 $ 500,000
2 32,492 21,329 6,523 500,000 23,525 8,719 500,000 25,815 11,010 500,000
3 49,966 31,493 16,688 500,000 35,816 21,011 500,000 40,508 25,703 500,000
4 68,314 41,492 26,686 500,000 48,652 33,846 500,000 56,738 41,932 500,000
5 87,580 51,346 36,541 500,000 62,079 47,274 500,000 74,694 59,889 500,000
6 107,809 61,033 49,189 500,000 76,106 64,261 500,000 94,546 82,702 500,000
7 129,049 70,396 61,512 500,000 90,605 81,722 500,000 116,352 107,469 500,000
8 151,351 79,367 73,444 500,000 105,541 99,619 500,000 140,281 134,359 500,000
9 174,768 87,997 85,036 500,000 120,993 118,032 500,000 166,638 163,677 500,000
10 199,356 96,286 96,286 500,000 136,994 136,994 500,000 195,720 195,720 500,000
15 342,015 137,180 137,180 500,000 233,448 233,448 500,000 405,872 405,872 500,000
20 524,087 158,276 158,276 500,000 349,972 349,972 500,000 759,762 759,762 812,945
25 756,463 116,567 116,567 500,000 498,372 498,372 523,290 1,331,351 1,331,351 1,397,918
30 1,053,039 0 (4) 0(4) 500,000(5) 691,765 691,765 726,354 2,237,092 2,237,092 2,348,947
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
(4) In the absence of additional premium payments, the Policy will lapse, unless
the Death Benefit Guarantee is in effect.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
73
78
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 1
$15,095 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
------------------------------ ---------------------------------- ------------------------------------
End of Accumulated Cash Cash Cash
Policy Premiums Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) (2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 15,850 $ 10,044 $ 246 $500,000 $ 10,767 $ 970 $500,000 $ 11,494 $ 1,696 $ 500,000
2 32,492 19,896 5,091 500,000 21,974 7,168 500,000 24,143 9,337 500,000
3 49,966 29,254 14,448 500,000 33,328 18,522 500,000 37,753 22,948 500,000
4 68,314 38,105 23,299 500,000 44,824 30,019 500,000 52,422 37,617 500,000
5 87,580 46,416 31,610 500,000 56,438 41,632 500,000 68,241 53,435 500,000
6 107,809 54,155 42,310 500,000 68,147 56,302 500,000 85,321 73,477 500,000
7 129,049 61,288 52,404 500,000 79,929 71,045 500,000 103,794 94,911 500,000
8 151,351 67,758 61,835 500,000 91,743 85,821 500,000 123,797 117,875 500,000
9 174,768 73,499 70,537 500,000 103,543 100,582 500,000 145,492 142,531 500,000
10 199,356 78,438 78,438 500,000 115,282 115,282 500,000 169,080 169,080 500,000
15 342,015 91,123 91,123 500,000 176,267 176,267 500,000 334,624 334,624 500,000
20 524,087 68,400 68,400 500,000 233,986 233,986 500,000 628,104 628,104 672,072
25 756,463 0(4) 0(4) 500,000(4) 281,220 281,220 500,000 1,111,012 1,111,012 1,166,563
30 1,053,039 0(4) 0(4) 500,000(4) 310,816 310,816 500,000 1,871,555 1,871,555 1,965,132
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
(4) In the absence of additional premium payments, the Policy will lapse, unless
the Death Benefit Guarantee is in effect.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
74
79
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$17,920 ANNUAL PLANNED PREMIUM
ASSUMING CURRENT CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
----------------------------- ------------------------------- --------------------------------
End of Cash Cash Cash
Policy Accumulated Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 18,816 $ 13,397 $ 2,187 $513,397 $ 14,318 $ 3,108 $514,318 $ 15,241 $ 4,031 $ 515,241
2 38,573 26,539 11,733 526,539 29,207 14,401 529,207 31,988 17,183 531,988
3 59,317 39,080 24,275 539,080 44,329 29,523 544,329 50,019 35,214 550,019
4 81,099 51,316 36,511 551,316 59,987 45,182 559,987 69,764 54,959 569,764
5 103,970 63,270 48,465 563,270 76,221 61,416 576,221 91,413 76,607 591,413
6 127,985 74,918 63,073 574,918 93,024 81,180 593,024 115,124 103,279 615,124
7 153,200 86,074 77,191 586,074 110,224 101,340 610,224 140,900 132,016 640,900
8 179,676 96,654 90,732 596,654 127,738 121,816 627,738 168,846 162,924 668,846
9 207,476 106,710 103,749 606,710 145,623 142,661 645,623 199,223 196,262 699,223
10 236,666 116,233 116,233 616,233 163,874 163,874 663,874 232,253 232,253 732,253
15 406,022 161,066 161,066 661,066 268,695 268,695 768,695 459,483 459,483 959,483
20 622,169 174,545 174,545 674,545 367,854 367,854 867,854 797,626 797,626 1,297,626
25 898,033 102,063 102,063 602,063 393,411 393,411 893,411 1,240,333 1,240,333 1,740,333
30 1,250,113 0(4) 0(4) 500,000(4) 325,090 325,090 825,090 1,852,936 1,852,936 2,352,936
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
(4) Provided the Death Benefit Guarantee has been in effect, the Policy will
have been kept in force until the end of the policy year in which the life
insured reached attained age 85, at which time the Death Benefit Guarantee will
expire and in the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
75
80
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
MALE NON-SMOKER ISSUE AGE 55 (STANDARD)
$500,000 FACE AMOUNT DEATH BENEFIT OPTION 2
$17,920 ANNUAL PLANNED PREMIUM
ASSUMING GUARANTEED CHARGES
0% Hypothetical 6% Hypothetical 12% Hypothetical
Gross Investment Return Gross Investment Return Gross Investment Return
------------------------------ --------------------------------- ----------------------------------
End of Accumulated Cash Cash Cash
Policy Accumulated Policy Surrender Death Policy Surrender Death Policy Surrender Death
Year(1) Premiums(2) Value Value(3) Benefit Value Value(3) Benefit Value Value(3) Benefit
1 $ 18,816 $ 12,623 $ 1,413 $512,623 $ 13,502 $ 2,292 $513,502 $ 14,383 $ 3,173 $ 514,383
2 38,573 24,914 10,109 524,914 27,447 12,641 527,447 30,088 15,283 530,088
3 59,317 36,557 21,751 536,557 41,521 26,716 541,521 46,907 32,101 546,907
4 81,099 47,528 32,722 547,528 55,695 40,889 555,695 64,912 50,106 564,912
5 103,970 57,780 42,975 557,780 69,909 55,104 569,909 84,158 69,353 584,158
6 127,985 67,269 55,424 567,269 84,106 72,262 584,106 104,708 92,863 604,708
7 153,200 75,942 67,059 575,942 98,219 89,335 598,219 126,621 117,738 626,621
8 179,676 83,727 77,805 583,727 112,151 106,229 612,151 149,940 144,018 649,940
9 207,476 90,536 87,574 590,536 125,789 122,828 625,789 174,693 171,732 674,694
10 236,666 96,277 96,277 596,277 139,008 139,008 639,008 200,909 200,909 700,909
15 406,022 108,944 108,944 608,944 199,201 199,201 699,201 363,876 363,876 863,876
20 622,169 79,427 79,427 579,427 226,985 226,985 726,985 577,602 577,602 1,077,602
25 898,033 0(4) 0(4) 500,000(4) 181,773 181,733 681,773 837,122 837,122 1,337,122
30 1,250,113 0(4) 0(4) 0(4) 9,447 9,447 509,447 1,130,810 1,130,810 1,630,810
- ----------
(1) All values shown are as of the end of the policy year indicated, have been
rounded to the nearest dollar, and assume that (a) premiums paid after the
initial premium are received on the policy anniversary, (b) no policy loan has
been made, (c) no partial withdrawal of the Cash Surrender Value has been made
and (d) no premiums have been allocated to the Guaranteed Interest Account.
(2) Assumes net interest of 5% compounded annually.
(3) Provided the No Lapse Guarantee Cumulative Premium Test has been and
continues to be met, the No Lapse Guarantee will keep the Policy in force until
the end of the first 5 Policy Years. Provided the Cumulative Premium Test or the
Fund Value Test has been and continues to be met, if elected the Death Benefit
Guarantee will keep the Policy in force on all policies for the first three
years and until age 100 on Policies issued and maintained with a minimum face
amount of $250,000 and Death Benefit Option 1; to age 85 on policies issued and
maintained with a face amount of at least $250,000 and if Death benefit Option 2
is selected at any time.
(4) Provided the Death Benefit Guarantee has been in effect, the Policy will
have been kept in force until the end of the policy year in which the life
insured reached attained age 85, at which time the Death Benefit Guarantee will
expire and in the absence of additional premium payments, the Policy will lapse.
THE POLICY VALUE, CASH SURRENDER VALUE AND THE DEATH BENEFIT WILL DIFFER IF
PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES. IT IS EMPHASIZED THAT THE
HYPOTHETICAL INVESTMENT RETURNS ARE ILLUSTRATIVE ONLY, AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE RESULTS. ACTUAL INVESTMENT RETURNS MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING
THE INVESTMENT ALLOCATION MADE BY THE POLICYOWNER, AND THE INVESTMENT RETURNS
FOR THE FUNDS OF MANUFACTURERS INVESTMENT TRUST. THE POLICY VALUE, CASH
SURRENDER VALUE AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE
SHOWN IF ACTUAL RATES OF INVESTMENT RETURN AVERAGED THE RATE SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL
POLICY YEARS. NO REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
76
81
APPENDIX B
DEFINITIONS
The following terms have the following meanings when used in this Prospectus:
ADDITIONAL RATING -- an addition to the cost of insurance rate for insureds who
do not meet at least the underwriting requirements of the standard risk class.
BUSINESS DAY -- any day that the New York Stock Exchange is open for trading and
trading is not restricted. The net asset value of the underlying shares of a
sub-account of the Separate Account will be determined at the end of each
Business Day.
CASH SURRENDER VALUE -- the Policy Value less the deferred sales charge, the
deferred underwriting charge and any outstanding monthly deductions due.
DEATH BENEFIT GUARANTEE CUMULATIVE PREMIUM TEST -- a test that, if satisfied in
the first three policy years and, where applicable, if satisfied in subsequent
policy years, will maintain the Death Benefit Guarantee. To satisfy the Death
Benefit Guarantee Cumulative Premium Test, the sum of premiums paid, less
withdrawals, and less policy loans, must equal or exceed the sum of Death
Benefit Guarantee Premiums since issue as at the beginning of each policy month.
DEATH BENEFIT GUARANTEE -- Manulife New York's guarantee that the Policy will
not go into default even if a combination of policy loans, adverse investment
experience or other factors should cause the Policy's Net Cash Surrender Value
to be insufficient to meet the monthly deductions due at the beginning of a
policy month.
DEATH BENEFIT GUARANTEE PREMIUM -- a measure of premium used in determining
compliance with the Cumulative Premium Test. The Death Benefit Guarantee Premium
as an annual amount is established by the Company based on issue age, sex, risk
class, death benefit option, supplementary benefits and additional ratings.
EFFECTIVE DATE -- the date that Manulife New York becomes obligated under the
Policy and when the first monthly deductions are taken.
FUND VALUE TEST -- a test which, if satisfied in applicable policy years will
maintain the Death Benefit Guarantee feature. To satisfy the Fund Value Test,
the Gross Single Premium at the beginning of any applicable policy month must
not be greater than the Net Policy Value.
GROSS SINGLE PREMIUM -- the amount of premium needed to endow the Policy to the
expiration of the Death Benefit Guarantee assuming 4% interest and current
charges.
GUARANTEED INTEREST ACCOUNT -- that part of the Policy Value which reflects the
value the policyowner has in the general account of Manulife New York.
GUIDELINE ANNUAL PREMIUM (GAP) -- used to determine the proportion of premiums
and the Policy Value attributable to an increase in Face Amount for the purpose
of calculating the new Deferred Sales Charge after such increase.
INITIAL PREMIUM -- at least 1/12 of the Target Premium. The Initial Premium must
be received within 60 days after the policy date.
INVESTMENT ACCOUNT -- that part of the Policy Value which reflects the value the
policyowner has in one of the sub-accounts of the Separate Account.
ISSUE AGE -- the age on the nearest birthday, at policy date, as shown in the
Policy.
LOAN ACCOUNT -- that part of the Policy Value which reflects the value the
policyowner has transferred from the Guaranteed Interest Account or the
Investment Accounts as collateral for a policy loan.
MODIFIED POLICY DEBT -- as of any date, the Policy Debt plus the amount of
interest to be charged to the next policy anniversary, all discounted from the
next policy anniversary to such date at an annual rate of 4%.
MONTHLY DEATH BENEFIT GUARANTEE PREMIUM -- 1/12 of the Death Benefit Guarantee
Premium.
MONTHLY NO LAPSE GUARANTEE PREMIUM -- 1/12 of the No Lapse Guarantee Premium.
77
82
NET CASH SURRENDER VALUE -- the Cash Surrender Value less Policy Debt.
NET POLICY VALUE -- the Policy Value less the value in the Loan Account.
NET PREMIUM -- amount of premium allocated to the Investment Accounts or
Guaranteed Interest Account. It equals gross premiums less the deduction for
state, local and Federal taxes.
NO LAPSE GUARANTEE -- Manulife New York guarantees that the Policy will not go
into default even if a combination of Policy loans, adverse investment
experience and other factors should cause the Policy's Net Cash Surrender Value
to be insufficient to meet the monthly deductions due at the beginning of a
policy month.
NO LAPSE GUARANTEE CUMULATIVE PREMIUM TEST -- a test that, if satisfied in the
No Lapse Guarantee Period, will maintain the No Lapse Guarantee. To satisfy the
No Lapse Guarantee Cumulative Premium Test, the sum of premiums paid, less
withdrawals, and less Policy loans must equal or exceed the sum of No Lapse
Guarantee Premiums since issue as at the beginning of each policy month.
NO LAPSE GUARANTEE PERIOD -- is the first 5 policy years for life insureds with
an issue age up to and including 85. It is not offered to life insureds whose
Issue Age exceeds 85.
NO LAPSE GUARANTEE PREMIUM -- is a measure of premium used in determining
compliance with the No Lapse Guarantee Cumulative Premium Test. The No Lapse
Guarantee premium for each policyowner is set forth in the Policy.
PLANNED PREMIUM -- The premium the policyowner plans to pay periodically.
Subject to certain requirements of law, the Planned Premium may be changed at
any time.
POLICY DATE -- The date from which policy years, policy months and policy
anniversaries are determined. Monthly deductions are due on the policy date. If
a check for at least the Initial Premium accompanies the application, the policy
date is the date the application and check are received at the Service office.
If an application accepted by the Company is not accompanied by a check for the
Initial Premium, the policy will be issued with a policy date which is 7 days
after issuance of the policy.
POLICY DEBT -- as of any date, the aggregate amount of policy loans, including
borrowed interest, less any loan repayments.
POLICY VALUE -- the sum of the values in the Loan Account, the Guaranteed
Interest Account and the Investment Accounts.
SELECT LOAN -- A loan on which the differential between the interest credited
and the interest charged is currently 0%; provided, however, if at some time in
the future it is determined that the current differential could cause the loan
to be treated as a taxable distribution under any applicable ruling, regulation
or court decision, Manulife New York has the right to increase the differential
on all subsequent Select Loans either (i) to an amount that may be presented in
such ruling, regulation or court decision that would result in the transaction
being treated as a loan under Federal tax law or (ii) if no amount is
prescribed, to an amount that Manulife New York feels would be more likely to
result in the transaction being treated as a loan under Federal tax law.
SELECT LOAN AMOUNT -- the amount of any Select Loan.
SERVICE OFFICE -- the office designated to service the Policies, which is shown
on the cover page of this prospectus.
SURRENDER CHARGE PERIOD -- the period (usually 15 years) following issuance of
the Policy or any increase in face amount during which surrender charges may be
assessed if the Policy is surrendered or lapsed, the face amount is decreased or
a partial withdrawal takes place.
TARGET PREMIUM -- a premium amount used to measure the maximum deferred sales
charge under a Policy. The Target Premium for the initial face amount is set
forth in the Policy. The policyowner will be advised of the Target Premium for
any increase in face amount.
WITHDRAWAL TIER AMOUNT -- as of any date, the net Cash Surrender Value at the
previous anniversary multiplied by 10%.
78
83
PART II
OTHER INFORMATION
UNDERTAKINGS
Undertaking to File Reports.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
Representation of Insurer Pursuant to Section 26 of the Investment Company Act
of 1940, as amended.
The Manufacturers Life Insurance Company of New York (the "Company") hereby
represents that the fees and charges deducted under the contracts issued
pursuant to this registration statement, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
Rule 484 Undertaking.
Article 10 of the Charter of the Company provides as follows:
TENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its shareholders for damages for any breach of duty as a
director; provided, however, the foregoing provision shall not eliminate or
limit (i) the liability of a director if a judgment or other final adjudication
adverse to such director established his or her such acts or omissions were in
bad faith or involved intentional misconduct or were acts or omissions (a) which
he or she knew or reasonably should have known violated the New York Insurance
Law or (b) which violated a specific standard of care imposed on directors
directly, and not by reference, by a provision of the New York Insurance Law (or
any regulations promulgated thereunder) or (c) which constituted a knowing
violation of any other law, or establishes that the director personally gained
in fact a financial profit or other advantage to which the director was not
legally entitled or (ii) the liability of a director for any act or omission
prior to the adoption of this Article by the shareholders of the Corporation.
Any repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Article VII of the By-laws of the Company provides as follows:
Section VII.1. Indemnification of Directors and Officers. The Corporation may
indemnify any person made, or threatened to be made, a party to an action by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she, his or her testator, testatrix or intestate, is or was
a director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him or her in connection with the defense or settlement of such
action, or in connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
84
the best interests of the Corporation, except that no indemnification under this
Section shall be made in respect of (1) a threatened action, or a pending action
which is settled or is otherwise disposed of, or (2) any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the court in which the action
was brought, or, if no action was brought, any court of competent jurisdiction,
determines upon application that, in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such portion of
the settlement amount and expenses as the court deems proper.
The Corporation may indemnify any person made, or threatened to be made, a party
to an action or proceeding (other than one by or in the right of the Corporation
to procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that he or
she, his or her testator, testatrix or intestate, was a director or officer of
the Corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he or she reasonably believed to be in, or, in the
case of service for any other corporation or any partnership, joint venture,
trust, employee benefit plan or other enterprise, not opposed to, the best
interests of the Corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
The termination of any such civil or criminal action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, of its equivalent,
shall not in itself create a presumption that any such director or officer did
not act, in good faith, for a purpose which he or she reasonably believed to be
in, or, in the case of service for any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise, not opposed to,
the best interest of the Corporation or that he or she had reasonable cause to
believe that his or her conduct was unlawful.
Notwithstanding the foregoing, Registrant hereby makes the following undertaking
pursuant to Rule 484 under the Securities Act of 1933:
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
85
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet;
The Prospectus, consisting of 76 pages;
Undertaking to file reports;
Representation pursuant to Section 26 of the Investment Company Act of
1940;
Rule 484 Undertaking;
The signatures;
Written consents of the following persons:
Tracy A. Kane, Esq., Counsel
John G. Vrysen, Chief Actuary
Ernst & Young LLP
Cooper & Lybrand L.L.P.
Jones & Blouch L.L.P.
The following exhibits are filed as part of this Registration Statement:
1. Copies of all exhibits required by paragraph A of the instructions as
to exhibits in Form N-8B-2 are set forth below under designations based
on such instructions:
A(1) Resolutions of Board of Directors of First North
American Life Assurance Company establishing FNAL
Variable Life Account I were previously filed in the
Registrant's initial registration statement on Form
S-6 (File No. 333-33351) as filed with the Commission
on August 8, 1997.
A(2) Not applicable.
A(3)(a) Underwriting and Distribution Agreement between The
Manufacturers Life Insurance Company of New York
(Depositor) and Manufacturers Securities Services,
LLC (Underwriter) is incorporated by reference to
Exhibit (b)(3)(a) to post-effective amendment No. 7
to the Registration Statement on Form N-4, file
number 33-46217, filed February 25, 1998 on behalf of
The Manufacturers Life Insurance Company of New York
Separate Account A.
A(3)(b) Selling Agreement between The Manufacturers Life
Insurance Company of New York, Manufactures
Securities Services, LLC (Underwriter), Selling
Broker Dealers, and General Agent is incorporated by
reference to Exhibit (b)(3)(b) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
A(3)(c) Not applicable.
A(4) Not applicable.
A(5) Form of Flexible Premium Variable Life Insurance
Policy is filed herewith.
86
A(6)(a)(i) Declaration of Intention and Charter of First North
American Life Assurance Company is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
A(6)(a)(ii) Certificate of amendment of the Declaration of
Intention and Charter of First North American Life
Assurance Company is incorporated by reference to
Exhibit (b)(6)(i) to post-effective amendment No. 7
to the Registration Statement on Form N-4, file
number 33-46217, filed February 25, 1998 on behalf of
The Manufacturers Life Insurance Company of New York
Separate Account A.
A(6)(a)(iii) Certificate of amendment of the Declaration of
Intention and Charter of The Manufacturers Life
Insurance Company of New York is incorporated by
reference to Exhibit (b)(6)(i) to post-effective
amendment No. 7 to the Registration Statement on Form
N-4, file number 33-46217, filed February 25, 1998 on
behalf of The Manufacturers Life Insurance Company of
New York Separate Account A.
(A)(6)(b) By-laws of The Manufacturers Life Insurance Company
of New York are incorporated by reference to Exhibit
(b)(6)(i) to post-effective amendment No. 7 to the
Registration Statement on Form N-4, file number
33-46217, filed February 25, 1998 on behalf of The
Manufacturers Life Insurance Company of New York
Separate Account A.
A(7) Not applicable.
A(8)(a) Form of Reinsurance Agreement between The
Manufacturers Life Insurance Company of New York and
The Manufacturers Life Insurance Company (USA) is
filed herein.
A(8)(b) Administrative Services Agreement between The
Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company of New York is
incorporated by reference to Exhibit (b)(8)(a) to
post-effective amendment No. 7 to the Registration
Statement on Form N-4, file number 33-46217, filed
February 25, 1998 on behalf of The Manufacturers Life
Insurance Company of New York Separate Account A.
A(8)(c) Investment Services Agreement between The
Manufacturers Life Insurance Company of New York and
The Manufacturers Life Insurance Company is field
herewith.
A(9) Not applicable.
A(10)(a) Form of Application for Flexible Premium Variable
Life Insurance Policy is filed herewith.
A(10)(b) Form of supplement to the Application for Flexible
Premium Variable Life
87
Insurance Policy is filed herewith.
2. Consents of the following:
A Opinion and consent of Tracy A. Kane, Esq., Secretary and
Counsel of The Manufacturers Life Insurance Company of New
York
B Consent of John G. Vrysen, Chief Actuary of The Manufacturers
Life Insurance Company of New York
C Consent of Jones & Blouch LLP
D Consent of Ernst & Young LLP
E Consent of Coopers & Lybrand, L.L.P.
3. No financial statements are omitted from the prospectus pursuant to
instruction 1(b) or (c) of Part I.
4. Not applicable.
5. Not applicable.
6. Memorandum Regarding Issuance, Face Amount Increase, Redemption and
Transfer Procedures for the Policies is incorporated by reference to
the Registrant's registration statement on Form S-6 (File No.
333-33351) as filed with the Commission on August 8, 1997.
7. Powers of Attorney are filed herewith.
88
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
registrant, THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK SEPARATE
ACCOUNT B has duly caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the city of Boston, and Commonwealth of
Massachusetts, on the 13th day of March, 1998.
THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK SEPARATE
ACCOUNT B
(Registrant)
By: THE MANUFACTURERS LIFE INSURANCE
COMPANY OF NEW YORK
(Depositor)
By: /s/ A. SCOTT LOGAN
-----------------------------
A. Scott Logan
President
Attest
/s/ TRACY A. KANE
- -----------------
Tracy A. Kane
Secretary
89
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, this registration
statement has been signed by the following persons in the capacities indicated
on this 13th day of March, 1998.
SIGNATURE TITLE DATE
/s/ A. SCOTT LOGAN Director and President March 13, 1998
- ---------------------- (Principal Executive --------------
A. Scott Logan Officer) (Date)
Chairman of the Board March 13, 1998
*--------------------- of Directors ---------------
John D. Richardson (Date)
Director March 13, 1998
*--------------------- --------------
John D. DesPrez, III (Date)
Director March 13, 1998
*--------------------- ---------------
Ruth Ann Flemming (Date)
Director March 13, 1998
*--------------------- --------------
Neil M. Merkl (Date)
Director March 13, 1998
*--------------------- ---------------
Robert C. Perez (Date)
Director March 13, 1998
*--------------------- ---------------
James K. Robinson (Date)
Director March 13, 1998
*--------------------- ---------------
Theodore Kilkuskie (Date)
Director March 13, 1998
*--------------------- ---------------
Bruce Avedon (Date)
Director March 13, 1998
*--------------------- ---------------
Bruce Gordon (Date)
/s/ David W. LIBBEY Treasurer (Principal March 13, 1998
- ---------------------- Financial and Accounting ---------------
David W. Libbey Officer) (Date)
*By: /s/ TRACY A. KANE March 13, 1998
------------------------- ---------------
Tracy A. Kane (Date)
Attorney-in-Fact Pursuant
to Powers of Attorney
90
EXHIBIT INDEX
Exhibit No. Description
1(A)(5) Form of Flexible Premium Variable Life Insurance Policy
1(A)(8)(a) Form of Reinsurance Agreement between The Manufacturers
Life Insurance Company of New York and The Manufacturers
Life Insurance Company (USA)
1(A)(8)(c) Investment Services Agreement between The Manufacturers
Life Insurance Company of New York and The Manufacturers
Life Insurance Company
1(A)(10)(a) Form of Application for Flexible Premium Variable Life
Insurance Policy
1(A)(10)(b) Form of supplement to the Application for Flexible Premium
Variable Life Insurance Policy
2A Opinion and consent of Tracy A. Kane, Esq., Secretary and
Counsel of The Manufacturers Life Insurance Company of New
York
2B Consent of John G. Vrysen, Chief Actuary of The
Manufacturers Life Insurance Company of New York
2C Consent of Jones & Blouch LLP
2D Consent of Ernst & Young LLP
2E Consent of Coopers & Lybrand, L.L.P.
7 Powers of Attorney