EXHIBIT 99.A7-1
Exhibit 1.A.(5)(b)
Joint Speciment Flexible Premium Variable Life Insurance Policy
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PFL LIFE INSURANCE COMPANY Home Office:
(A STOCK COMPANY) 4333 Edgewood Road, N.E. - Cedar Rapids, Iowa 52499
(319) 398-8511
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IN THIS POLICY, PFL Life Insurance Company will be referred to as WE, OUR or US.
WE WILL pay the Death Benefit Proceeds to the Beneficiary upon the death of the
Surviving Insured when We receive proof that both Joint Insureds died while this
Policy is In Force. THE AMOUNT OF THE DEATH BENEFIT PROCEEDS WILL INCREASE OR
DECREASE DEPENDING ON THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS IN THE
SEPARATE ACCOUNT.
WE WILL pay the Net Surrender Value to the Owner if at least one of the Joint
Insureds is alive on the Maturity Date and while this Policy is In Force. CASH
VALUES WILL INCREASE OR DECREASE IN ACCORDANCE WITH THE POLICY VALUE PROVISIONS
AND THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS IN THE SEPARATE ACCOUNT. CASH
VALUES ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
THE PROVISIONS on the following pages are part of this Policy.
IN WITNESS WHEREOF, We have signed this Policy at Our Office in Cedar Rapids,
Iowa as of the Policy Date.
/s/ CRAIG S. VERMIE /s/ WILLIAM L. BUSLER
Secretary President
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RIGHT TO EXAMINE POLICY
The Owners may cancel this Policy by returning it to Us at 4333 Edgewood Road,
N.E., Cedar Rapids, Iowa 52499 or to the representative through whom it was
purchased within 10 days after receipt. If the Policy is returned within this
period, it will be void from the beginning and a refund will be made to the
Owners. The refund will equal the sum of:
1. The difference between the Single Premium paid and the amount allocated to
any Accounts under the Policy; plus
2. The total amount of monthly deductions made and any other charges imposed on
amounts allocated to the Accounts; plus
3. The value of amounts allocated to the Accounts on the date We or Our agent
receive the returned Policy.
If state law prohibits the calculation above, the refund will be the total of
all premiums paid for this Policy.
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Joint Survivorship Modified Single Premium Variable Life Insurance Policy
Death Benefit Proceeds Payable at Death of Surviving Insured Prior to
Maturity Date
Net Surrender Value Payable at Maturity Date
Non-Participating - No Dividends
Some Benefits Reflect Investment Results
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POLICY GUIDE
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POLICY SCHEDULE.................... 3 PREMIUM PROVISIONS................... 11
TABLE OF SURRENDER CHARGES......... 3 Payment............................ 11
TABLE OF GUARANTEED RATES.......... 4 Premiums........................... 11
DEFINITIONS........................ 5 Grace Period....................... 11
Accounts......................... 5 SEPARATE ACCOUNT PROVISIONS.......... 11
Age.............................. 5 The Separate Account............... 11
Anniversary...................... 5 Subaccounts........................ 12
Beneficiary...................... 5 Transfers.......................... 12
Death Benefit Proceeds........... 5 Addition, Deletion or Substitution
Fixed Account.................... 5 of Investments.................... 12
In Force......................... 5 Change of Investment Objective..... 13
Initial Premium.................. 5 Unit Value......................... 13
Joint Insureds................... 5 POLICY VALUE PROVISIONS.............. 13
Loan Reserve..................... 5 Allocation of Premium.............. 13
Maturity Date.................... 5 Monthly Deductions................. 14
Monthiversary.................... 6 Monthly Policy Charge.............. 14
Net Surrender Value.............. 6 Monthly Cost of Insurance.......... 14
Office........................... 6 Monthly Cost of Insurance Rates.... 15
Policy Date...................... 6 Subaccount Value................... 15
Reallocation Date................ 6 Fixed Account Value................ 15
SEC.............................. 6 Cash Value......................... 16
Separate Account................. 6 Surrender.......................... 16
Series Fund(s)................... 6 Net Surrender Value................ 16
Subaccount....................... 6 Surrender Charge................... 16
Surviving Insured................ 6 Withdrawals........................ 16
Termination...................... 6 Continuation of Insurance.......... 17
Valuation Date................... 6 Insufficient Value................. 17
Valuation Period................. 7 Basis of Computations.............. 17
Written Notice................... 7 Policy Loans....................... 17
GENERAL PROVISIONS................. 7 POLICY SPLIT OPTION................ 18
The Policy....................... 7 Split Option....................... 18
Ownership........................ 7 Specified Amount................... 19
Beneficiary...................... 7 Cash Value......................... 19
Assignment....................... 8 Issue Limits and Premium Rate
Classification..................... 19
Incontestability................. 8 Premiums........................... 19
Suicide.......................... 8 Policy Date........................ 19
Issue Age and Sex................ 8 Owner/Beneficiary.................. 19
Periodic Report.................. 8
Termination...................... 8
Policy Payment................... 9
Optional Methods of Settlement... 9
Payments and Transfers........... 9
Extended Maturity Date........... 9
Conversion Rights................ 9
Protection of Proceeds........... 9
DEATH BENEFIT PROVISIONS........... 10
Death Benefit.................... 10
Specified Amount................. 10
Limitation Percentage............ 10
Death Benefit Proceeds........... 10
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PFL LIFE INSURANCE COMPANY
CEDAR RAPIDS, IOWA
POLICY SCHEDULE
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JOINT INSUREDS: John Doe
Jane Doe
POLICY NUMBER: 01-23456789 POLICY DATE: December 01, 1998
SPECIFIED AMOUNT: $243,440 REALLOCATION DATE: December 16, 1998
INITIAL PREMIUM: $50,000 MATURITY DATE: December 01, 2053
REALLOCATION ACCOUNT: Fixed Account
SEPARATE ACCOUNT PROVISIONS
SEPARATE ACCOUNT: Legacy Builder Variable Life Separate Account
ASSET BASED CHARGES POLICY YEARS
(Expressed as an Annual Percentage) 1-10 11 +
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SEPARATE ACCOUNT CHARGES
Daily Charge: .50% .50%
Monthly Deduction Charge: 1.50% .50%
FIXED ACCOUNT CHARGES
Monthly Deduction Charge: 1.50% .50%
DEFERRED SURRENDER CHARGES: Surrender Charges are the percentage shown
below times the Initial Premium.
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SURRENDER SURRENDER
POLICY YEAR CHARGE POLICY YEAR CHARGE
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At Issue 9.75%
1 9.75% 6 7.00%
2 9.50% 7 6.00%
3 9.25% 8 4.00%
4 9.00% 9 2.00%
5 8.00% 10+ 0.00%
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PFL LIFE INSURANCE COMPANY
CEDAR RAPIDS, IOWA
TABLE OF GUARANTEED MAXIMUM COST OF INSURANCE RATES
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POLICY NUMBER: 01-23456789
Guaranteed Rate Basis for Initial Specified Amount on Joint Insureds
Commissioners 1980 Standard Ordinary Tobacco User and Non-Tobacco User
Mortality Table
John Doe: Male Issue Age 45, Standard, Tobacco User Classification
Jane Doe: Female Issue Age 45, Standard, Tobacco User Classification
Annual Cost of Insurance Rates Per $1,000
(The monthly cost of insurance calculations will use
one-twelfth of these rates.)
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POLICY YEAR ANNUAL RATE POLICY YEAR ANNUAL RATE
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1 0.031 2 0.103
3 0.191 4 0.298
5 0.426 6 0.580
7 0.764 8 0.987
9 1.256 10 1.572
11 1.941 12 2.362
13 2.834 14 3.361
15 3.957 16 4.649
17 5.471 18 6.462
19 7.650 20 9.035
21 10.605 22 12.346
23 14.226 24 16.272
25 18.552 26 21.170
27 24.282 28 27.978
29 32.314 30 37.300
31 42.872 32 48.913
33 55.335 34 62.166
35 69.569 36 77.756
37 86.921 38 97.215
39 108.829 40 121.323
41 134.456 42 148.060
43 162.130 44 176.728
45 191.696 46 207.860
47 225.060 48 244.153
49 266.749 50 296.863
51 341.982 52 414.444
53 537.477 54 744.016
55 1000.00
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DEFINITIONS
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ACCOUNTS Allocation options including the Fixed Account and the
Subaccounts of the Separate Account.
AGE Issue Age refers to the Age on each Joint Insured's last
birthday prior to the Policy Date. Attained Age refers to
the Issue Age plus the number of completed policy years.
ANNIVERSARY The same day and month as the Policy Date for each
succeeding year the Policy remains In Force.
BENEFICIARY The person or persons specified by the Owner to receive
the Death Benefit Proceeds.
DEATH BENEFIT The amount payable upon the death of the Surviving
PROCEEDS Insured in accordance with the Death Benefit Provisions.
FIXED ACCOUNT Allocation option(s) other than the Separate Account.
IN FORCE Condition under which the coverage is active and the
Surviving Insured's life remains insured.
INITIAL PREMIUM The amount which must be paid before coverage begins. The
amount is shown on the Policy Schedule page.
JOINT INSUREDS The persons whose lives are insured under this Policy, as
shown on the Policy Schedule pages.
LOAN RESERVE A portion of the Fixed Account used as collateral for any
policy loan.
MATURITY DATE The date when coverage under the Policy will terminate if
either Joint Insured is living and the Policy is In
Force, unless extended in accordance with the Extended
Maturity Date provision.
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MONTHIVERSARY The day of each month coinciding with the Policy Date. If
there is no day in a calendar month which coincides with
the Policy Date, the Monthiversary will be the first day
of the next month.
NET SURRENDER The amount payable upon surrender in accordance with the
VALUE Policy Value Provisions of this Policy.
OFFICE Refers to Our administrative office located in Cedar
Rapids, Iowa.
POLICY DATE The date coverage is effective and monthly deductions
commence under the Policy. Policy months, years and
anniversaries are measured from the Policy Date, as shown
on the Policy Schedule page.
REALLOCATION The date on which any premiums are reallocated from the
DATE Reallocation Account to the Accounts elected by the Owner
on the application. The Reallocation Account is shown on
the Policy Schedule page.
SEC The United States Securities and Exchange Commission.
SEPARATE A separate investment account shown on the Policy
ACCOUNT Schedule page which is composed of several subaccounts
established to receive and invest premiums under the
Policy.
SERIES FUND(S) Designated mutual fund(s) from which each Subaccount of
the Separate Account will buy shares.
SUBACCOUNT A sub-division of the Separate Account. Each Subaccount
invests exclusively in the shares of a specified Series
Fund portfolio.
SURVIVING INSURED The Joint Insured who remains alive after the other Joint
Insured has died.
TERMINATION Condition under which the insurance coverage is no longer
In Force under this Policy.
VALUATION DATE Any day We are required by law to value the assets of the
Separate Account.
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VALUATION The period commencing at the end of one Valuation Date
PERIOD and continuing to the end of the next succeeding
Valuation Date.
WRITTEN NOTICE Written Notice means a notice by the Owners to Us
requesting or exercising a right of the Owners as
provided in the Policy provision of the General
Provisions. In order for a notice to be considered a
Written Notice, it must: be in writing, signed by the
Owners; be in a form acceptable to Us; and contain the
information and documentation, as determined in Our sole
discretion, necessary for Us to take the action
requested, or for the Owners to exercise the right
specified. A Written Notice will not be considered
complete until all necessary supporting documentation
required or requested by Us has been received by Us at
Our Administrative Office.
GENERAL PROVISIONS
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THE POLICY This Policy is issued in consideration of the attached
application and payment of the Initial Premium. This
Policy and the attached application constitute the entire
contract. All statements in these applications, in the
absence of fraud, will be deemed representations and not
warranties. No statement can be used to void this Policy
or be used in defense of a claim unless it is contained
in the written application. No policy provision can be
waived or changed except by endorsement. Such endorsement
must be signed by Our President or Secretary.
OWNERSHIP This Policy belongs to the Owner. The Owner, as named in
the application or as subsequently changed, may exercise
all rights under this Policy while either or both of the
Joint Insureds is living. If two Owners are named, this
Policy will be owned jointly and the consent of each
Owner will be required to exercise ownership rights under
this Policy.
We will not be bound by any change in the ownership
designation unless it is made by Written Notice. The
change will be effective on the date the Written Notice
is accepted by Us. If We request, this Policy must be
returned to Our Administrative Office for endorsement.
BENEFICIARY The Beneficiary, as named in the application or
subsequently changed, will receive the benefits payable
upon the death of the Surviving Insured. If the
Beneficiary dies before the Surviving Insured, the
Contingent Beneficiary, if named, becomes the
Beneficiary. If no Beneficiary or Contingent Beneficiary
survives the Surviving Insured, the benefits payable at
the Surviving Insured's death will be paid to the Owner
or the Owner's estate.
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We will not be bound by any change in the Beneficiary
designation unless it is made by Written Notice. The
change will be effective on the date the Written Notice
was signed; however, no change will apply to any payment
We made before the Written Notice is received. If We
request, this Policy must be returned to Our Office for
endorsement.
ASSIGNMENT This Policy may be assigned. We will not be bound by any
assignment unless made by Written Notice. The assignment
will be effective on the date the Written Notice is
received at Our Office and accepted by Us. We assume no
responsibility for the validity of any assignment.
INCONTESTABILITY This Policy shall be incontestable after it has been In
Force, while either Joint Insured is still alive, for two
years from the Policy Date.
SUICIDE If either Joint Insured dies by suicide, while sane or
insane, within two years from the Policy Date, this
Policy shall terminate and Our total liability, including
all Riders attached to this Policy, will be limited to
the total premiums paid, less any loans and prior
withdrawals, during such period.
ISSUE AGE If either Joint Insured's date of birth or sex is not
AND SEX correctly stated, the death benefit will be adjusted
based on what the Initial Premium would have purchased
based on the correct date of birth and sex.
PERIODIC REPORT We will send a periodic report to the Owner at least once
each policy year. The periodic report will show:
1. The current Cash Value; 4. Any current policy loans;
2. The current Net Surrender 5. Activity since the last
Value; report.
3. The current death benefit;
Additional activity within each Subaccount showing
investment experience will also be provided. The periodic
report provided nearest to the end of the calendar year
will show projected values for the following year.
TERMINATION This Policy will terminate on the earliest of:
1. The Maturity Date; 3. The end of the grace period;
2. The date of the Surviving 4. The date of surrender.
Insured's death;
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POLICY PAYMENT All proceeds to be paid upon Termination will be paid in
one sum unless an optional method of settlement is
elected. Instead of a single amount, the payee may elect
to receive the proceeds under the terms of the next
provision.
OPTIONAL METHODS OF At the time that any proceeds are due in a single
SETTLEMENT payment, if requested in writing, We will inform the
payee of all other forms of a settlement including
annutiies, with or without life contingencies. Interest
will be at an annual rate that We decide, but not less
than the rate required by law.
PAYMENTS AND All payments and transfers from the Subaccounts will be
TRANSFERS processed as provided in this Policy unless one of the
following situations exists:
1. The New York Stock Exchange is closed; or
2. The SEC requires that trading be restricted or
declares an emergency; or
3. The SEC allows Us to defer payments to protect Our
policyowners.
We reserve the right to defer the payment of any Fixed
Account values for the period permitted by law, but not
for more than six months.
EXTENDED MATURITY The Owners may request that the Maturity Date shown on
DATE the Policy Schedule page be extended. The request must be
in writing and received by Us at least 90 days, but no
more than 180 days, prior to the scheduled Maturity Date.
The Owner must request that the Maturity Date be extended
each Policy Anniversary following the Maturity Date as
shown on the Policy Schedule page. Any Riders In Force on
the scheduled Maturity Date will terminate on that date
and will not be extended. Interest on any outstanding
policy loan will continue to accrue during the period for
which the Maturity Date is extended.
If the Maturity Date is extended on each Valuation Date,
the Specified Amount will be adjusted to equal the Cash
Value, and the Limitation Percentage will be 100%. No
additional Premium payments will be permitted except if
required to prevent lapse of this Policy. Future monthly
deductions will be waived.
CONVERSION At any time upon written request within the first two
RIGHTS policy years, the Owner may elect to transfer all
Subaccount values to the Fixed Account without a transfer
charge.
PROTECTION OF Unless the Owner direct by filing Written Notice, no
PROCEEDS Beneficiary may assign any payments under this Policy
before the same are due. To the extent permitted by law,
no payments under this Policy will be subject to the
claims of creditors of any Beneficiary.
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DEATH BENEFIT PROVISIONS
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DEATH BENEFIT The death benefit is the greater of:
1. the Specified Amount; or
2. the Limitation Percentage times the Cash Value of this
Policy on the date of the Surviving Insured's death.
SPECIFIED AMOUNT The Specified Amount is as shown on the Policy Schedule
page, adjusted for any withdrawals as provided in the
Withdrawal Provision of the Policy Value Provisions.
LIMITATION The Limitation Percentage is a percentage based on the
PERCENTAGE Attained Age of the younger Joint Insured at the
beginning of the policy year equal to:
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ATTAINED AGE LIMITATION PERCENTAGE
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40 and under 250%
41 through 45 250% minus 7% for each Age over Age 40
46 through 50 215% minus 6% for each Age over Age 45
51 through 55 185% minus 7% for each Age over Age 50
56 through 60 150% minus 4% for each Age over Age 55
61 through 65 130% minus 2% for each Age over Age 60
66 through 70 120% minus 1% for each Age over Age 65
71 through 75 115% minus 2% for each Age over Age 70
76 through 90 105%
91 through 94 105% minus 1% for each Age over Age 90
95 and over 100%
DEATH BENEFIT The Death Benefit Proceeds is the amount payable by Us
PROCEEDS under this Policy provided this Policy has not terminated
prior to the Surviving Insured's death. Except as
provided in the Suicide section of the General
Provisions, the Death Benefit Proceeds will be equal to:
1. The death benefit; minus
2. Any monthly deductions due during the grace period;
minus
3. Any outstanding policy loan; minus
4. Any accrued loan interest.
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PREMIUM PROVISIONS
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PAYMENT The Initial Premium shown on the Policy Schedule page
must be paid on or before the Policy Date.
PREMIUMS While this Policy is In Force, additional premiums may be
paid at any time prior to the Maturity Date shown on the
Policy Schedule page. We reserve the right to limit or
refund any premium if:
1. The amount is below Our current minimum payment
requirement; or
2. The premium would increase the death benefit by more
than the amount of the premium; or
3. The premium would disqualify this Policy as a life
insurance contract as defined by the United States
Internal Revenue Code and applicable regulations.
GRACE PERIOD If the Net Surrender Value on any Monthiversary is not
sufficient to cover the monthly deductions on such day,
We will mail a notice to the last known address of the
Owners and any assignee of record. A grace period of 61
days after the mailing date of the notice will be allowed
for the payment. The notice will specify the minimum
payment and the final date on which such payment must be
received by Us to keep the Policy In Force. The Policy
will remain In Force during the grace period. If the
amount due is not received by Us within the grace period,
all coverage under the Policy will terminate without
value at the end of the grace period.
SEPARATE ACCOUNT PROVISIONS
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THE SEPARATE The variable benefits under this Policy are provided
ACCOUNT through the Separate Account as shown on the Policy
Schedule page. The assets of the Separate Account are Our
property. Assets equal to the reserve and other
contractual liabilities under all policies issued in
connection with the Separate Account will not be charged
with liabilities arising out of any other business We may
conduct. If the assets of the Separate Account exceed the
liabilities arising under the policies supported by the
Separate Account, then the excess may be used to cover
the liabilities of Our general account. The assets of the
Separate Account shall be valued as often as any policy
benefits vary, but at least monthly.
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SUBACCOUNTS The Separate Account has various Subaccounts with
different investment objectives. We reserve the right to
add or remove any Subaccount of the Separate Account.
Income, if any, and any gains or losses, realized or
unrealized, from assets in each Subaccount are credited
to, or charged against, the amount allocated to that
Subaccount without regard to income, gains, or losses in
other Subaccounts. Any amount charged against the
investment base for federal or state income taxes will be
deducted from that Subaccount. The assets of each
Subaccount are invested in shares of a corresponding
Series Fund portfolio. The value of a portfolio share is
based on the value of the assets of the portfolio
determined at the end of each Valuation Period in
accordance with applicable law.
TRANSFERS The Owner may transfer all or a portion of this Policy's
value in each Subaccount to other Subaccounts or the
Fixed Account. We reserve the right to charge a $10 fee
for each transfer in excess of twelve per policy year.
This charge will be deducted from the funds transferred.
A request for a transfer must be made in a form
satisfactory to Us. The transfer will ordinarily take
effect on the first Valuation Date on or following the
date the request is received at Our Office.
ADDITION, DELETION OR We reserve the right to transfer assets of the Separate
SUBSTITUTION Account, which We determine to be associated with the
OF INVESTMENTS class of contracts to which this Policy belongs, to
another Separate Account. If this type of transfer is
made, the term "Separate Account", as used in this
Policy, shall then mean the Separate Account to which the
assets were transferred. We also reserve the right to
add, delete, or substitute investments held by any
Subaccount.
We reserve the right, when permitted by law, to:
1. Deregister the Separate Account under the Investment
Company Act of 1940;
2. Manage the Separate Account under the direction of a
committee at any time;
3. Restrict or eliminate any voting privileges of Owners
or other persons who have voting privileges as to the
Separate Account;
4. Combine the Separate Account or any Subaccount(s) with
one or more other Separate Accounts or Subaccounts;
5. Operate the Separate Account as a management
investment company;
6. Establish additional Subaccounts to invest in either a
new series of the Series Fund, or in shares of another
diversified, open-end registered investment company;
and
7. Fund additional classes of variable life insurance
contracts through the Separate Account.
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CHANGE OF We reserve the right to change the investment objective
INVESTMENT OBJECTIVE of a Subaccount. If required by law or regulation, an
investment objective of the Separate Account, or of a
Series Fund portfolio designated for a Subaccount, will
not be materially changed unless a statement of the
change is filed with and approved by the appropriate
insurance official of the state of Our domicile or deemed
approved in accordance with such law or regulation. If
required, approval of or change of any investment
objective will be filed with the Insurance Department of
the state where this Policy is delivered.
UNIT VALUE Some of the policy values fluctuate with the investment
results of the Subaccounts. In order to determine how
investment results affect the policy values, a unit value
is determined for each Subaccount. The unit value of each
Subaccount was originally established at $10 per unit.
The unit value may increase or decrease from one
Valuation Period to the next. Unit values also will vary
between Subaccounts. The unit value of any Subaccount at
the end of a Valuation Period is the result of:
1. The total value of the assets held in the Subaccount.
This value is determined by multiplying the number of
shares of the designated Series Fund portfolio owned
by the Subaccount times the net asset value per share;
minus
2. A charge equal to the daily net assets of the
Sub-Account multiplied by the daily equivalent of the
Daily Charge. The maximum annual factor for the Daily
Charge is shown on the Policy Schedule page; minus
3. The accrued amount of reserve for any taxes or other
economic burden resulting from the application of tax
laws that are determined by Us to be properly
attributable to the Subaccount; and the result divided
by
4. The number of outstanding units in the Subaccount.
The use of the unit value in determining contract values
is described in the Policy Value Provisions.
POLICY VALUE PROVISIONS
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ALLOCATION OF The premium will be allocated to the Accounts on the
PREMIUM first Valuation Date on or following the date the premium
is received at Our Office; except any premium or portion
of premium received prior to the Policy Date will be
allocated on the first Valuation Date on or following the
Policy Date. Any premium received prior to the
Reallocation Date will be allocated to the Reallocation
Account. On the first Valuation Date on or following the
Reallocation Date, the values in the Reallocation Account
will be transferred in accordance with the Owners'
current premium allocation instructions.
Page 13
We reserve the right to limit any allocation to any
Account to no less than 1%. No fractional percentages may
be permitted. The allocation may be changed by the
Owners. The request for change of allocations must be in
a form satisfactory to Us. The allocation change will be
effective on the date the request for change is recorded
by Us.
MONTHLY On the Policy Date and on each Monthiversary thereafter,
DEDUCTIONS a monthly deduction for this Policy will be made from the
Policy's Cash Value in an amount equal to the sum of the
following:
1. The Monthly Policy Charge based on the assets of the
Separate Account; plus
2. The Monthly Policy Charge based upon the assets of the
Fixed Account; plus
3. The Monthly Cost of Insurance Charge for this Policy,
if any; plus
4. The Monthly Charge for benefits provided by Riders
attached to this Policy, if any.
Deductions will be withdrawn from each Account in
accordance with the Owners' current premium allocation.
If the value of any Account is insufficient to pay its
part of the monthly deduction, the monthly deduction will
be taken on a pro rata basis from all Accounts.
MONTHLY POLICY The Monthly Policy Charge applicable to the Separate
CHARGE Account is equal to:
1. The Separate Account Monthly Deduction Charge divided
by 12; multiplied by
2. The sum of the Subaccount Values on the Valuation Date
of each monthly deduction.
The Monthly Policy Charge applicable to the Fixed Account
is equal to:
1. The Fixed Account Monthly Deduction Charge divided by
12; multiplied by
2. The Fixed Account value on the Valuation Date of each
monthly deduction, minus any outstanding loans.
The Separate Account and Fixed Account Monthly Deduction
Charges are shown on the Policy Schedule page.
MONTHLY COST OF We reserve the right to impose a maximum Monthly Cost of
INSURANCE Insurance Charge. This charge may not exceed the death
benefit minus the Cash Value, and the difference
multiplied by the appropriate monthly cost of insurance
rate.
Currently we do not impose this charge. Should this
charge be imposed in the future, all future Deferred
Surrender Charges will be waived.
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MONTHLY COST OF The Guaranteed Maximum Monthly cost of insurance rates
INSURANCE RATES are based on the sex, Attained Age, plan of insurance and
rating class of the person(s) insured. Any change in the
current cost of insurance rates will not exceed those
shown in the Table of Guaranteed Maximum Life Insurance
Rates.
SUBACCOUNT At the end of any Valuation Period, the Subaccount value
VALUE is equal to the number of units that the Policy has in
the Subaccount, multiplied by the unit value of that
Subaccount.
The number of units that the Policy has in each
Subaccount is equal to:
1. The initial units purchased on the Policy Date; plus
2. Units purchased as a result of any additional
premiums; plus
3. Units purchased through transfers from another
Account; minus
4. Those units that are redeemed to pay for monthly
deductions as they are due; minus
5. Any units that are redeemed to pay for cash
withdrawals; minus
6. Any units that are redeemed as part of a transfer to
another Account.
FIXED ACCOUNT At the end of any Valuation Period, the Fixed Account
VALUE value is equal to:
1. The premiums allocated to the Fixed Account; plus
2. Any amounts transferred from a Subaccount to the Fixed
Account; plus
3. Total interest credited to the Fixed Account; minus
4. Any amounts charged to pay for monthly deductions as
they are due; minus
5. Any amounts withdrawn from the Fixed Account to pay
for cash with-drawals; minus
6. Any amounts transferred from the Fixed Account to a
Subaccount.
Interest on the Fixed Account will be compounded daily at
a minimum guaranteed effective annual interest rate of 3%
per year. We may declare from time to time various higher
current interest rates. Each payment or transfer to the
Fixed Account will be credited with the current interest
rate at the time of payment or transfer. In declaring any
higher rates to be applied to any Fixed Account values,
We may include an expense charge of up to 1% per year,
however, in no event will any net effective annual
interest rate be less than 3%.
On transfers from the Fixed Account to a Subaccount, We
reserve the right to impose the following limitations:
1. Written Notice be received by Us within 30 days after
an Anniversary.
2. The transfer will take place on the date We receive
such Written Notice.
3. The maximum amount that may be transferred is the
greater of (a) 25% of the amount in the Fixed Account;
or (b) the amount transferred in the prior policy year
from the Fixed Account.
Page 15
We further reserve the right to defer payment of any
amounts from the Fixed Account for no longer than six
months after We receive such Written Notice.
CASH VALUE At the end of any Valuation Period, the Cash Value of the
Policy is equal to the sum of the Subaccount values plus
the Fixed Account value.
SURRENDER While this Policy is In Force, the Owners may surrender
this Policy for the Net Surrender Value. Payment will
usually be made within seven days of Written Notice,
subject to the Policy Payment section of the General
Provisions.
NET SURRENDER The Net Surrender Value is the amount payable upon
VALUE surrender of this Policy. The Net Surrender Value as of
any date is equal to:
1. the Cash Value as of such date; minus
2. any Surrender Charge as of such date; minus
3. any outstanding policy loan; minus
4. any accrued loan interest.
SURRENDER During the first 9 policy years, a Surrender Charge will
CHARGE be incurred upon surrender of this Policy. This charge
will be based upon the Deferred Surrender Charges shown
on the Policy Schedule page.
WITHDRAWALS Cash withdrawals may be made any time after the first
policy year and while this Policy is In Force. Only one
withdrawal is allowed during any 12 month period. The
maximum amount of withdrawal is:
1. the Cash Value as of the date of withdrawal; minus
2. the total premium paid; minus
3. any outstanding policy loans plus accrued loan
interest.
When a withdrawal is made, the Cash Value will be reduced
by the amount of the withdrawal. The Specified Amount
will also be reduced by an amount equal to:
1. the initial Specified Amount; divided by
2. the Initial Premium; times
3. the amount of the withdrawal.
In no event will any withdrawal reduce the Specified
Amount below $1,000.
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The Accounts from which the withdrawal will be made may
be specified in the Written Notice. If no Account is
specified, the withdrawal amount will be withdrawn from
each Account in accordance with the Owners' current
allocation instructions. Payment will usually be made
within seven days of Written Notice, subject to the
Policy Payment section of the General Provisions of this
Policy.
CONTINUATION OF Subject to the Grace Period section of the Premium
INSURANCE Provisions, insurance coverage under this Policy will be
continued In Force until the Net Surrender Value is
insufficient to cover the monthly deductions. This
provision shall not continue this Policy beyond the
Maturity Date shown on the Policy Schedule page.
INSUFFICIENT If the Net Surrender Value on any Monthiversary is not
VALUE sufficient to cover the monthly deductions then due, this
Policy shall terminate subject to the Grace Period
section of the Premium Provisions.
BASIS OF Policy values and reserves are at least equal to those
COMPUTATIONS required by law. A detailed statement of the method of
computation of values and reserves has been filed with
the insurance department of the state in which this
Policy was delivered.
POLICY LOANS During the continuance of this Policy, the Owners can
borrow against this Policy an amount which is not greater
than 90% of the Cash Value, minus:
1. any Surrender Charge as of such date; minus
2. any outstanding policy loan; minus
3. any accrued policy loan interest.
The amount of any policy loan may be limited to no less
than $500, except as noted below.
When a loan is made, an amount equal to the loan will be
withdrawn from the Accounts and transferred to the loan
reserve. The loan reserve is a portion of the Fixed
Account used as collateral for any policy loan. The
Owners may specify the Account or Accounts from which the
withdrawal will be made. If no Account is specified, the
withdrawal will be made from each Account in accordance
with the Owners' current allocation instructions.
While this Policy is In Force, any loan may be repaid.
Interest on any loan will be at the maximum policy loan
rate of 6% payable in arrears. We reserve the right to
charge a lower loan rate on all or a portion of any loan.
Interest is due at each Anniversary. Interest not paid
when due will be added to the loan on each Anniversary.
Page 17
At each Anniversary, We will compare the amount of the
outstanding loan to the amount in the loan reserve. We
will also make this comparison anytime the Owners repay
all or part of the loan. At each such time, if the amount
of the outstanding loan exceeds the amount in the loan
reserve, We will withdraw the difference from the
Accounts and transfer it to the loan reserve, in the same
fashion as when a loan is made. If the amount in the loan
reserve exceeds the amount of the outstanding loan, We
will withdraw the difference from the loan reserve and
transfer it to the Accounts in accordance with the
Owners' current allocation instructions. However, We
reserve the right to require the transfer to the Fixed
Account if such loans were originally transferred from
the Fixed Account.
POLICY SPLIT OPTION
==============================================================================
SPLIT OPTION Subject to our evidence of insurability requirements, the
Owners may request to split this Policy, not including
any Riders, and purchase two permanent individual fixed
account life insurance policies offered by Us at the time
of the request, one on the life of each Joint Insured.
The Owners may request this Split Option by notifying Us
at Our Office in writing within 90 days following either:
1. The later of the enactment or the effective date of a
change in the federal estate tax laws that would
reduce or eliminate the unlimited marital deduction;
or
2. The date of entry of a final decree of divorce with
respect to the Joint Insureds; or
3. Written confirmation of a dissolution of a business
partnership of which the partners are the Joint
Insureds.
If more than one person owns this Policy, each Owner must
agree to the split.
SPECIFIED AMOUNT The initial Specified Amount for each new policy cannot
be greater than 50% of this Policy's Specified Amount,
not including the face amount of any Riders.
CASH VALUE Cash value and indebtedness under this Policy will be
allocated equally to each of the new policies. If one
Joint Insured does not meet our insurability
requirements, We will pay the Owner one half of this
Policy's Net Surrender Value and issue only the policy
covering that Joint Insured who meets our insurability
requirements; or, the Owner may elect to keep this Policy
In Force on both Joint Insureds and no new policies will
be issued.
Page 18
ISSUE LIMITS AND The new policies will be subject to our minimum and
PREMIUM RATE maximum specified amounts and issue ages for the plan of
CLASSIFICATION insurance selected.
If one of the Joint Insureds is older than the new
policy's maximum Issue Age at the time the Split Option
is requested, Our approval must be obtained to exercise
this Split Option.
PREMIUMS The premiums for the new policies wil be based on each
Joint Insured's Attained Age and premium rate class as
determined by current evidence of insurability. Premiums
are payable as of the policy dates for each new policy.
POLICY DATE The policy date for each new policy will be the
Monthiversary following notification to Us to execute
this Split Option.
OWNER/BENEFICIARY The Owner and Beneficiary for the new policies will be
those named in this Policy, unless otherwise specified.
Page 19
PFL LIFE INSURANCE COMPANY
Home Office:
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499
Joint Survivorship Modified Single Premium Variable Life Insurance Policy
Death Benefit Proceeds Payable at Death of Surviving Insured Prior to
Maturity Date
Net Surrender Value Payable at Maturity Date
Non-Participating - No Dividends
Some Benefits Reflect Investment Results