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Exhibit 6
EXHIBIT A.(11)
THE MANUFACTURERS INSURANCE COMPANY OF AMERICA
DESCRIPTION OF PURCHASE, TRANSFER AND REDEMPTION PROCEDURES
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by The Manufacturers
Insurance Company of America (the "Company") and any office the Company
designates for the receipt of payments and processing of policyholder
requests (the "Service Office") in connection with the issuance of its
flexible premium variable universal life insurance contract described
in this registration statement (1933 Act file no. 333-51293) (the
"Policy"), the transfer of assets held thereunder, and the redemption
by contract owners of their interests in said Policy.
I. ISSUING A POLICY
A. Premiums
This Policy is a flexible premium variable universal life
insurance contract. The Policy permits the policyholder to
pay flexible premiums. After payment of the initial premium,
premiums may be paid at any time and in any amount during
the lifetime of the insured. A Policy will be issued with a
planned premium, which is based on the amount of premium the
policyholder wished to pay. In no event may the total of all
premiums paid exceed the then-current maximum premium
limitations established by federal income tax law for a
Policy to qualify as life insurance. If, at any time, a
premium is paid which would result in total premiums
exceeding the above maximum premium limitation, the Company
will only accept that portion of the premium which will make
the total premiums equal to the maximum. Any part of the
premium in excess of that amount will be returned and no
further premiums will be accepted until allowed by the
then-current maximum premium limitation.
B. Underwriting
The Polices are offered on three underwriting bases,
which vary by the amount of information required of the
prospective insured. These are described in more detail
below. Regardless of which underwriting procedure is used,
the acceptance of an application is subject to the Company's
underwriting rules, and the Company reserves the right to
request additional information or to reject an application
for any reason.
Generally, the availability of short form underwriting
depends on the characteristics of the case, such as the
number of lives to be insured and the amounts of insurance.
Under Short Form underwriting, a proposed insured is
required to answer qualifying questions in the application,
but is not required to submit to a medical or paramedical
exam. Short form underwriting is generally available only up
to issue age 65.
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Like short form underwriting the availability of simplified
underwriting depends on the characteristics of the case.
Under Simplified Underwriting, the proposed insured is
required to respond satisfactorily to certain health
questions in the application. Medical records, such as
"Attending Physician's Statements" (APS's) are generally
required. In some instances, a blood test may also be
required.
If the requirements for short form or simplified underwriting
are not satisfied, the Company will require satisfactory
evidence of insurability. This may include medical exams and
other information. Persons failing to meet standard
underwriting classification may be eligible for a Policy with
an additional rating assigned to it.
C. Application
To purchase a Policy, an applicant must submit a completed
application. A Policy will not be issued until the
underwriting process has been completed to the Company's
satisfaction.
Policies may be issued on a basis which does not distinguish
between the insured's sex and/or smoking status, with prior
approval from the Company. A Policy will only be issued on
the lives of insureds from ages 20 through 80.
Each Policy is issued with a Policy Date, an Effective Date
and an Issue Date. The Policy Date is the date from which
the first monthly deductions are calculated and from which
Policy Years, Policy Months and Policy Anniversaries are
determined. The Effective Date is the date the Company
becomes obligated under the Policy and when the first
monthly deductions are deducted from the Policy Value. The
Issue Date is the date from which the suicide and
incontestability provisions are measured.
If an application is accompanied by a check for the initial
premium and the application is accepted:
(i) the Policy Date will be the date the application and
check were received at the Service Office (unless a special
Policy Date is requested (See "Backdating a Policy" below);
(ii) the Effective Date will be the date the Company's
underwriters approve issuance of the Policy; and
(iii) the Issue Date will be the date the Company issues the
Policy.
If an application accepted by the Company is not accompanied
by a check for the initial premium:
(i) the Policy Date will be the date the Company issues the
Policy (unless a special Policy Date is requested (See
"Backdating a Policy" below);
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(ii) the Effective Date will be the date the Service Office
receives the initial premium; and
(iii) the Issue Date will be the date the Company issues the
Policy.
The initial premium must be received within 60 days after
the Policy Date. If the premium is not paid or if the
application is rejected, the Policy will be cancelled and
any partial premiums paid will be returned to the applicant.
D. Minimum Initial Face Amount
The Company will issue a Policy only if it has a Face Amount
of at least $50,000.
E. Backdating a Policy
Under limited circumstances, the Company may backdate a
Policy, upon request, by assigning a Policy Date earlier
than the date the application is signed. However, in no
event will a Policy be backdated earlier than the earliest
date allowed by state law, which is generally three months
to one year prior to the date of application for the Policy.
Monthly deductions will be made for the period the Policy
Date is backdated. Regardless of whether or not a policy is
backdated, Net Premiums (premium paid less premium load)
received prior to the Effective Date of a Policy will be
credited with interest from the date of receipt at the rate
of return then being earned on amounts allocated to the
Money Market portfolio. As of the Effective Date, the
premiums paid plus interest credited, net of the premium
load, will be allocated among the Investment Accounts (as
described below under ("Policy Value Investment Accounts")
and/or Guaranteed Interest Account in accordance with the
policyholder's instructions unless such amount is first
allocated to the Money Market portfolio for the duration of
the Right to Examine period described below.
F. Temporary Insurance
In accordance with the Company's underwriting practices,
temporary insurance coverage may be provided under the
terms of a Temporary Insurance Agreement. Generally,
temporary life insurance may not exceed $1,000,000 and may
not be in effect for more than 90 days. This temporary
insurance coverage will be issued on a conditional receipt
basis, which means that any benefits under such temporary
coverage will only be paid if the life insured meets the
Company's usual and customary underwriting standards for
the coverage applied for.
G. Right to Examine the Policy
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A Policy may be returned for a refund within 10 days after
it is received. Some states provide a longer period of time
to exercise this right. The Policy will indicate if the
policyholder has a longer time. The Policy can be mailed or
delivered to the Company's agent who sold it or to the
Service Office. Immediately on such delivery or mailing, the
Policy shall be deemed void from the beginning. Within seven
days after receipt of the returned Policy at its Service
Office, the Company will refund to the policyholder an
amount equal to:
(a) the difference between payments made and amounts
allocated to separate account which supports the Policies
(the "Separate Account") and the Guaranteed Interest
Account; plus
(b) the value of the amount allocated to the Separate
Account and the Guaranteed Interest Account as of the date
the returned Policy is received by the Company; minus
(c) any partial withdrawals made and policy loans taken.
Some state laws require the refund of all premiums paid,
without adjustment for the investment gains and losses of
the Separate Account. In these states, all Net Premiums will
be allocated to the Money Market Trust during the right to
examine period, and the policyholder will receive a refund
of all payments made less any partial withdrawals and policy
loans taken.
If a policyholder 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
cancelled, the Policy Value and the surrender charges will
be recalculated to the amounts they would have been had the
increase not taken place. A policyholder 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.
The Company reserves the right to delay the refund of any
premium paid by check until the check has cleared.
H. Premium Allocation
No premiums will be accepted prior to receipt of a completed
application by the Company. All premiums received prior to
the Effective Date of the Policy will be held in the general
account of the Company and credited with interest from the
date of receipt at the rate of return then being earned on
amounts allocated to the Money Market Trust.
On the Effective Date, the Net Premiums paid plus interest
credited will be allocated among the Investment Accounts or
the Guaranteed Interest Account in accordance with the
policyholder's instructions.
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All Net Premiums received on or after the Effective Date
will be allocated among Investment Accounts or the
Guaranteed Interest Account as of the date the premiums were
received at the Service Office. Monthly deductions are due
on the Policy Date and at the beginning of each policy month
thereafter. However, if due prior to the Effective Date,
they will be taken on the Effective Date instead of the
dates they were due.
Some state laws require the refund of all premiums paid,
without adjustment for gains and losses of the Separate
Account, if a Policy is returned during the right to examine
period. In these states, all Net Premiums will be allocated
to the Money Market Trust during the right to examine
period. At the end of this period, the Policy Value in the
Money Market Trust will be allocated among the Investment
Accounts or the Guaranteed Interest Account. The Policy will
state if a return of premiums is required.
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 premium. The percentage
allocation to any account may be any number between zero and
100, provided the total allocation equals 100.
Alternatively, a policyholder may specify the allocation of
a specific premium payment in dollar amounts, so long as the
total allocation among the Investment Accounts equals the
Net Premium paid. A policyholder may change the way in which
premiums are allocated at any time without charge. The
change will take effect on the date a written request for
change satisfactory to the Company is received at the
Service Office.
II. DEATH BENEFIT OPTION CHANGES
The death benefit option may be changed on the first day of
any Policy month. The change will occur on the first day of
the next Policy month which is 30 days after a written
request for a change is received at the Service Office. The
Company reserves the right to limit a request for a change
if the change would cause the Policy to fail to qualify as
life insurance for tax purposes.
A change in the death benefit option will result in a change
in the Policy's Face Amount, in order to avoid any change in
the amount of the death benefit, as follows:
Change from Option 1 to Option 2
The new Face Amount will be equal to the Face Amount prior
to the change minus the Policy Value on the date of the
change. The Policy will not be assessed a surrender charge
for a reduction in Face Amount solely due to a change in the
death benefit option.
Change from Option 2 to Option 1
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The new Face Amount will be equal to the Face Amount prior
to the change plus the Policy Value on the date of the
change. No new surrender charges will apply to an increase
in Face Amount solely due to a change in the death benefit
option.
III. FACE AMOUNT CHANGES
Subject to the limitations stated in this Prospectus, a
policyholder may, upon written request, increase or decrease
the Face Amount of the Policy. The Company reserves the
right to limit a change in Face Amount so as to prevent the
Policy from failing to qualify as life insurance for tax
purposes.
A. Increase in Face Amount
Increases in Face Amount are subject to satisfactory
evidence of insurability. An increase will become effective
at the beginning of the Policy month following the date the
Company approves the requested increase. The Company
reserves the right to refuse a requested increase if the
life insured's Attained Age (life insured's age on the
birthday closer to the Policy Date plus the number of
completed Policy Years*) at the effective date of the
increase would be greater than the maximum Issue Age for new
Policies at that time.
*Policy Year is a period beginning on a Policy Anniversary
and ending on the day immediately preceding the next Policy
Anniversary.
B. New Surrender Charges for an Increase
An increase in Face Amount will 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 surrender charges a portion of the premiums paid on or
subsequent to the increase will be deemed to be premiums
attributable to the increase. The portion attributable to
the increase in any Policy Year will be the amount of
premiums in excess of the sum of the Target Premiums for the
(i) initial Face Amount during the first five Policy Years
and (ii) all prior increases that are in effect at the time
of the increase in Face Amount and have been in effect for
less than five years.
C. Increase with Prior Decreases
If, at the time of the increase, there have been prior
decreases in Face Amount, these prior decreases will be
restored first. There will be no new surrender charges
associated with these increases, since surrender charges
will have already been assessed at the time of the prior
decrease.
D. Decrease in Face Amount
A written request from a policyholder for a decrease in the
Face Amount must be received by Manufacturers Life of
America at least 30 days prior to the first day of a policy
month for the change to take effect on the first day of that
policy month. If there have been previous increases in Face
Amount, the decrease will be applied to the most recent
increase first and thereafter to the next most recent
increases successively.
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E. Surrender Charges Assessed on a Decrease
A portion of a Policy's surrender charge will be deducted
from the Policy Value on a decrease in Face Amount. Since
surrender charges are determined separately for the initial
Face Amount and each Face Amount Increase, the portion of
the surrender charges to be deducted with respect to each
level of insurance coverage will be determined separately.
The portion of the surrender charge deducted with respect to
a level of coverage will be equal to:
(a) the amount of the decrease; divided by
(b) the amount of the coverage prior to the decrease;
multiplied by
(c) the surrender charge for the coverage.
The charges 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
(Policy Value less the value in the Loan Account).
Whenever a portion of the surrender charges are deducted as
a result of a decrease in Face Amount, the Policy's
remaining surrender charges will be reduced in the same
proportion that the surrender charge deducted bears to the
total surrender charge immediately prior to the decrease in
Face Amount.
IV. POLICY VALUE
A. Determination of the Policy Value
A Policy has a Policy Value, a portion of which is available
to the policyholder by making a policy loan or partial
withdrawal, or upon surrender of the Policy. The Policy
Value may also affect the amount of the death benefit. The
Policy Value at any time is equal to the sum of the values
in the Investment Accounts, the Guaranteed Interest Account,
and the Loan Account.
B. Investment Accounts
An Investment Account is established under each Policy for
each sub-account of the Separate Account to which net
premiums or transfer amounts have been allocated. Each
Investment Account under a Policy measures the interest of
the Policy in the corresponding sub-account. The value of
the Investment Account established for a particular
sub-account is equal to the number of units of that
sub-account credited to the Policy times the value of such
units.
C. Guaranteed Interest Account
Amounts in the Guaranteed Interest Account do not vary with
the investment performance of any sub-account. Instead,
these amounts are credited with interest at a rate
determined by the Company.
D. Loan Account
Amounts borrowed from the Policy are transferred to the Loan
Account. Amounts in the Loan Account do not vary with the
investment performance of any sub-account. Instead, these
amounts are credited with interest at a rate
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which is equal to the amount charged on the outstanding
Policy Debt (the aggregate amount of policy loans, including
borrowed and accrued interest, less any loan repayments)
less the Loan Spread set forth in the Policy.
E. Units and Unit Values
Crediting and Canceling Units
Units of a particular sub-account are credited to a Policy
when Net Premiums are allocated to that sub-account or
amounts are transferred to that sub-account. Units of a
sub-account are cancelled whenever amounts are deducted,
transferred or withdrawn from the sub-account. The number of
units credited or cancelled for a specific transaction is
based on the dollar amount of the transaction divided by the
value of the unit on the Business Day on which the
transaction occurs. The number of units credited with
respect to a premium payment will be based on the applicable
unit values for the Business Day on which the premium is
received at the Service Office, except for any premiums
received before the Effective Date. For premiums received
before the Effective Date, the values will be determined on
the Effective Date.
Units are valued at the end of each Business Day. When an
order involving the crediting or canceling of units is
received after the end of a Business Day, or on a day which
is not a Business Day, the order will be processed on the
basis of unit values determined on the next Business Day.
Similarly, any determination of Policy Value, Investment
Account value or death benefit to be made on a day which is
not a Business Day will be made on the next Business Day.
Unit Values
The value of a unit of each sub-account was initially fixed
at $10.00. For each subsequent Business Day the unit value
for that sub-account is determined by multiplying the unit
value for the immediately preceding Business Day by the net
investment factor for the that sub-account on such
subsequent Business Day.
The net investment factor for a sub-account on any Business
Day is equal to (a) divided by (b) minus (c), where:
(a) is the net asset value of the underlying Portfolio
shares of Manufacturers Investment Trust held by that
sub-account as of the end of such Business Day before any
policy transaction are made on that day;
(b) is the net asset value of the underlying Portfolio
shares held by that sub-account as of the end of the
immediately preceding Business Day after all policy
transaction were made for that day; and
(c) is a charge not exceeding the daily mortality and
expense risk charge.
The value of a unit may increase, decrease, or remain the
same, depending on the investment performance of a
sub-account from one Business Day to the next.
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Due to the fact that the daily mortality and expense risk
charge varies by Policy Years, two unit values will be
calculated for each sub-account commencing 10 years after
the effective date of the first Policy.
V. TRANSFER OF POLICY VALUE
A. General Transfers
At any time, a policyholder may transfer policy value from
one sub-account to another or to the Guaranteed Interest
Account. Transfer requests must be in writing in a format
satisfactory to the Company, or by telephone if a currently
valid telephone transfer authorization form is on file.
These transfer privileges are subject to the Company's
consent. The Company reserves the right to impose
limitations on transfers, including the maximum amount that
may be transferred. In addition, transfer privileges are
subject to any restrictions that may be imposed by
Manufacturers Investment Trust.
If a transfer would result in more than a 5% reduction in
the number of shares outstanding at the close of the
previous business day in the Equity Index sub-account, the
Company may decline the transfer. If at a later date you
wish to make a previously declined transfer, the Company
will require a new transfer request.
A policyholder may make up to twelve transfers each policy
year free of charge. Additional transfers in each policy
year may be made at a cost of per transfer as set forth in
the currently effective prospectus. This charge will be
allocated among the Investment Accounts and the Guaranteed
Interest Account in the same proportion as the amount
transferred from each bears to the total amount transferred.
All transfer requests received by the Company on the same
Business Day are treated as a single transfer request.
The maximum amount that may be transferred from the
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.
Although failure to follow reasonable procedures may result
in the Company being liable for any losses resulting from
unauthorized or fraudulent telephone transfers,
Manufacturers Life of America will not be liable for
following instructions communicated by telephone that the
Company reasonably believes to be genuine. The Company will
employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures shall
consist of confirming that a valid telephone authorization
form is on file, tape recording of all telephone
transactions and providing written confirmation thereof.
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VI. POLICY SURRENDER AND PARTIAL WITHDRAWALS
A. Policy Surrender
A Policy may be surrendered for its Net Cash Surrender Value
at any time while the life insured is living. The Net Cash
Surrender Value is equal to the Policy Value less any
surrender charges and outstanding monthly deductions due
(the "Cash Surrender Value") minus the Policy Debt. The Net
Cash Surrender Value will be determined at the end of the
Business Day on which Manufacturers Life of America receives
the Policy and a written request for surrender at its
Service Office. After a Policy is surrendered, the insurance
coverage and all other benefits under the Policy will
terminate.
A policyholder may make a partial withdrawal of the Net Cash
Surrender Value. The policyholder may 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.
If Death Benefit Option 1 is in effect when a partial
withdrawal is made, the Face Amount of the Policy will be
reduced by the amount of the withdrawal plus any applicable
Surrender Charges. Reductions in Face Amount resulting from
partial withdrawals will not incur any surrender charges
above the surrender charges applicable to the withdrawal.
If the death benefit is based upon the Policy Value times
the minimum death benefit percentage, the Face Amount will
be reduced only to the extent that the amount of the
withdrawal plus the portion of the Surrender Charge assessed
exceeds the difference between the death benefit and the
Face Amount. When the Face Amount of a Policy is based on
one or more increases subsequent to issuance of the Policy,
a reduction resulting from a partial withdrawal will be
applied in the same manner as a requested decrease in Face
Amount, i.e., against the Face Amount provided by the most
recent increase, then against the next most recent increases
successively and finally against the initial Face Amount.
As long as the Policy is in force, Manufacturers Life of
America will ordinarily pay any policy loans, surrenders,
partial withdrawals or insurance benefit within seven days
after receipt at its Service Office of all the documents
required for such a payment. The Company may delay the
payment of any policy loans, surrenders, partial
withdrawals, or insurance benefit that depends on Guaranteed
Interest Account values for up to six months or in the case
of any Investment Account for any period during which (i)
the New York Stock Exchange is closed for trading (except
for normal weekend and holiday closings), (ii) trading on
the New York Stock Exchange is restricted (iii) an emergency
exists as a result of which disposal of securities held in
the Separate Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the
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Separate Account's net assets or (iv) the SEC, by order, so
permits for the protection of security holders; provided
that applicable rules and regulations of the SEC shall
govern as to whether the conditions described in (2) and (3)
exist.
B. Surrender Charges
The Company will deduct a Surrender Charge if during the
first 10 years following the Policy date, or the effective
date of a Face Amount increase:
- the Policy is surrendered for its Net Cash Surrender
Value,
- a partial withdrawal is made in excess of the Free
Partial Withdrawal Amount,
- the Face Amount is decreased, or
- the Policy lapses.
The surrender charge is expressed as a percentage of the
total premiums paid from the Effective Date. However,
premiums paid in any Policy Year in excess of the target
premium, and premiums paid after the fifth Policy Year, are
not counted in the determination of total premiums paid.
Therefore, the timing of premium payments may affect the
amount of the surrender charge. The percentages vary by
Policy Year as follows:
Policy Year Percentage
1 10.00%
2 7.50%
3 5.00%
4 5.00%
5 5.00%
6 5.00%
7 4.00%
8 3.00%
9 2.00%
10+ 0.00%
Surrender Charges on a Partial Withdrawal
A partial withdrawal will result in the assessment of a
portion of the surrender charges to which the Policy is
subject. The portion of the surrender charges assessed will
be based on the ratio of the amount of the withdrawal which
exceeds the Free Withdrawal Amount (defined below) to the
Net Cash Surrender Value of the Policy immediately prior to
the withdrawal. The Surrender Charges will be deducted on a
pro-rata basis from each of the Investment Accounts and the
Guaranteed Interest Account. If the amount in the accounts
are not sufficient to pay the surrender charges assessed,
then the amount of the withdrawal will be reduced.
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Whenever a portion of the surrender charges are deducted as
a result of a partial withdrawal, the Policy's remaining
surrender charges will be reduced in the same proportion
that the surrender charge deducted bears to the total
surrender charge immediately before the partial withdrawal.
Free Withdrawal Amount
The Free Withdrawal Amount is equal to 10% of the Net Cash
Surrender Value at the time of the withdrawal. In
determining what, if any, portion of a partial withdrawal is
in excess of the Free Withdrawal Amount, all previous
partial withdrawals that have occurred in the current Policy
Year are included.
VII. LAPSE AND REINSTATEMENT
A. Lapse
A Policy will go into default if at the beginning of any
policy month the Policy's Net Cash Surrender Value would go
below zero after deducting the monthly deduction then due.
The Company will notify the policyholder of the default and
will allow a 61 day grace period in which the policyholder
may make a premium payment sufficient to bring the Policy
out of default. The required payment will be equal to the
amount necessary to bring the Net Cash Surrender Value to
zero, if it was less than zero on the date of default, plus
the monthly deductions due at the date of default and
payable at the beginning of each of the two policy months
thereafter, plus any applicable premium load. If the
required payment is not received by the end of the grace
period, the Policy will terminate with no value.
Death During Grace Period
If the life insured should die during the grace period, the
Policy Value used in the calculation of the death benefit
will be the Policy Value as of the date of default and the
insurance benefit will be reduced by any outstanding monthly
deductions due at the time of death.
B. Reinstatement
A policyholder 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;
(b) Evidence of the life insured's insurability satisfactory
to the Company is furnished to the Company; and
(c) A premium equal to the payment required during the grace
period following default to keep the Policy in force is paid
to the Company.
VIII. POLICY LOANS
At any time while this Policy is in force, a policyholder
may borrow against the Policy Value of the Policy. The
Policy serves as the only security for the loan.
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A. Maximum Loan
The amount of any loan cannot exceed the amount which would
cause the Policy Debt to equal the Loan Value of the Policy
on the date of the loan.
B. Loan Value
The Loan Value is equal to the Policy's Cash Surrender Value
less the monthly deductions due to the next Policy
Anniversary.
C. Interest Charged on Policy Loans
Interest on the Policy Debt will accrue daily and be payable
annually on the Policy Anniversary. The rate of interest
charged will be an effective annual rate of 5.00%.
D. Loan Account
When a loan is made, an amount equal to the loan will be
deducted from the Investment Accounts or the Guaranteed
Interest Account and transferred to the Loan Account. The
policyholder 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.
E. Interest Credited to the Loan Account
Interest will be credited to amounts in the Loan Account at
an effective annual rate of at least 4.00%. The actual rate
credited is equal to the rate of interest charged on the
policy loan less the Loan Spread. The Loan Spread varies by
Policy Year as follows:
Policy Year Loan Spread
1-10 1.00%
11-20 0.50%
21+ 0.25%
F. Loan Account Adjustments
On the first day of each policy month the difference between
the Loan Account and the Policy Debt is transferred to the
Loan Account from the Investment Accounts or the Guaranteed
Interest Account. 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 each Investment Account and the Guaranteed Interest
Account bears to the Net Policy Value.
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G. Loan Repayments
Policy Debt may be repaid in whole or in part at any time
prior to the death of the life insured, provided that the
Policy is in force. When a repayment is made, the amount is
credited to the Loan Account and transferred to the
Guaranteed Interest Account or the Investment Accounts. Loan
repayments will be allocated to the Guaranteed Interest
Account and each Investment Account in the same proportion
as the value in each Investment Account and the Guaranteed
Interest Account bears to the Net Policy Value.
Amounts paid to the Company not specifically designated in
writing as loan repayments will be treated as premiums.
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