EXHIBIT 10
PROTECTIVE LIFE INSURANCE COMPANY
DESCRIPTION OF ISSUANCE, TRANSFER, AND REDEMPTION PROCEDURES FOR FLEXIBLE
PREMIUM VARIABLE AND FIXED LIFE INSURANCE POLICIES
PURSUANT TO RULE *6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be followed by
Protective Life Insurance Company ("Protective Life" or the "Company")
concerning the issuance of an individual Flexible Premium Variable and Fixed
Life Insurance Policy (the "Policy"), the transfer of assets held thereunder,
and the redemption by Owners of their interests in such Policy.
I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF POLICIES
A. APPLICATION AND UNDERWRITING
Upon receipt of a completed application, the Company will follow
underwriting (e.g., evaluation of risks) procedures designed to determine
whether the applicant is insurable. The underwriting policies of the Company are
established by management. The Company uses information from the application
and, in some cases, inspection reports, attending physician statements, or
medical examinations to determine whether a Policy should be issued as applied
for, rated, or rejected. Medical examinations of applicants are required for
Policies in excess of certain prescribed amounts and for most insurance applied
for by applicants over age 50. Medical examinations are requested of any
applicant, regardless of age and amount of requested coverage, if an examination
is deemed necessary to underwrite the risk. Substandard risks may be referred to
reinsurers for full or partial reinsurance of the substandard risk.
The Company requires blood samples to be drawn with applications for
coverage over $100,000 (ages 16-50) or $150,000 (age 51 and over). Blood samples
are tested for a wide range of chemical values and are screened for antibodies
to the HIV virus. Applications also contain questions permitted by law regarding
the HIV virus which must be answered by the proposed insureds. The Company will
not issue a Policy until the underwriting procedures have been completed.
Insurance coverage under a Policy will begin as of the Policy Effective
Date, which is generally the Issue Date. If, an initial minimum premium is
received with an application, the Policy Effective Date will be the later of the
date that the application is signed or any required medical examination is
completed. Temporary life insurance coverage (including various types of
conditional receipt) may be provided under the terms of the temporary life
insurance (or conditional receipt) agreement. In accordance with the terms of
the such agreements, temporary life insurance coverage may not exceed $250,000
and may not be in effect for more than 90 days.
In order to obtain a more favorable Issue Age, the Company may permit Owners
to "backdate" a Policy by electing a Policy Effective Date which is up to six
months prior to the date of the original application. Charges will be deducted
as of the new Policy Effective Date for the backdated period for Monthly
Deductions.
B. INITIAL PREMIUM PROCESSING AND PREMIUM PAYMENTS
Premiums for the Policies will not be the same for all Owners. The Company
requires that the initial premium payment for a Policy be at least equal to the
minimum required for the mode of premium selected. For example, the initial
premium payment can never be less than $150 quarterly. Owners who request to pay
premiums on a preauthorized checking withdrawal basis are required to pay an
amount equal to two months premiums upon issuance of their Policy. Premiums paid
on a preauthorized checking withdrawal basis can never be less than $50 per
month.
For Policies issued in states where, upon cancellation during the
Cancellation Period, the Company returns at least the Owner's premium payments,
the Company reserves the right to allocate the initial Net Premium Payment (and
any subsequent Net Premium Payments made during the Cancellation Period) to the
Protective Money Market Sub-Account or the Fixed Account until the expiration of
the number of days in the Cancellation Period plus six days starting from the
date the Policy is mailed from the Home Office. Upon expiration of this period,
the Policy Value in the Protective Money Market Sub-Account or the Fixed Account
and all Net Premium Payments will be allocated according
to the Owner's allocation instructions then in effect. In all other states, the
Company will allocate the initial Net Premium Payment (and any subsequent Net
Premium Payments made during the Cancellation Period) in accordance with the
Owner's instructions.
Following the initial premium, the Owner may pay planned premiums in any
amount on a quarterly, semi-annual, and annual basis. For the first Policy Year,
the amount of the planned premiums can be no less than the minimum initial
premium payment calculated on an annual basis. The minimum initial premium
payment required depends on a number of factors, including the age, sex and rate
class of the proposed insured, the initial face amount, any supplemental
benefits and/or riders and the Plan, Periodic Premiums Selected. If the Owner
fails to pay the planned premiums, this will not cause the Policy to lapse.
An Owner may make unscheduled premium payments, at any time, in any amount.
A Policy will remain in force while the cash surrender value is sufficient to
pay the monthly deduction unless the Policy is otherwise protected by the No
Lapse Guarantee provision. The amount of premium, if any, which must be paid to
keep the Policy in force depends upon the cash surrender value of the Policy,
which in turn depends on such factors as the investment experience and the
amount of monthly deductions which includes cost of insurance. While not every
insured is subject to the same cost of insurance rate, there will be a single
"rate" for every Insured in a given actuarial category.
The cost of insurance rate for a Policy is based on and varies with the
Issue Age, duration, sex and rate class of the Insured and on the number of
years that a Policy has been in force. Protective Life currently places Insureds
in the following rate classes, based on underwriting: Preferred (ages 18-75) or
Nonsmoker (ages 0-75), or Tobacco (ages 15-75) or Smoker (ages 15-75), and
substandard rate classes, which involve a higher mortality risk than the Smoker
or Tobacco or Nonsmoker classes.
Protective Life will determine a cost of insurance rate for increments of
Face Amount above the Initial Face Amount based on the Issue Age, duration, sex
and rate class of the Insured at the time of the request for an increase. The
following rules will apply for purposes of determining the Net Amount at Risk
for each rate.
Protective Life places the Insured in a rate class when the Policy is
issued, based on Protective Life's underwriting of the application. This
original rate class applies to the Initial Face Amount. When an increase in Face
Amount is requested, Protective Life conducts underwriting before approving the
increase to determine whether a different rate class will apply to the increase.
If the rate class for the increase has lower cost of insurance rates than the
original rate class, the rate class for the increase also will be applied to the
Initial Face Amount. If the rate class for the increase has a higher cost of
insurance rate than the original rate class, the rate class for the increase
will apply only to the increase in Face Amount, and the original rate class will
continue to apply to the Initial Face Amount.
Protective Life does not conduct underwriting for an increase in Face Amount
if the increase is requested as part of a conversion from a term contract or on
exercise of a guaranteed option to increase the Face Amount without
underwriting.
However, in no event may the total of all premiums paid in any Policy year
exceed the current maximum premium limitations for that year established by
Federal tax laws or by the Company. If the Owner pays a premium that would
result in total premiums exceeding the current maximum premium limitations, the
Company will only accept that portion of the premium that will make total
premiums equal the maximum. Any premium in excess of that amount will be
returned or applied as otherwise agreed and no further premiums will be accepted
until allowed by the current maximum premium limitations prescribed by Federal
tax law.
If any premium payment would cause an increase in the Policy's death benefit
exceeding the premium received, the Company may require additional evidence of
insurability before accepting any premium payment.
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C. LAPSE AND REINSTATEMENT PROCEDURES
The Company offers a "No Lapse Guarantee" to all Owners of Policies for a
specified period of time from the policy effective date. The specified period
for this "Guarantee" is established based on the age of the insured as of the
Policy Effective Date. This guarantee offers continued life insurance coverage
for the requested initial face amount provided the Owner of the Policy continues
to pay minimum monthly premiums equivalent to one twelfth of the minimum first
year annual premium, and after that, pays premiums equivalent to a minimum
monthly guarantee premium throughout the Guarantee period. The minimum monthly
guarantee premium in the second year and later is equal to the minimum renewal
annual premium divided by 12 and multiplied by the number of months left in the
Guarantee period.
The Policy's No Lapse Guarantee Provision will be threatened if the Company
does not receive an amount equal to the minimum monthly guarantee premium
specified in the Policy.
Before the maturity date, the Policy may be reinstated within five years
after lapse and while the Insured is still living unless the Policy has been
surrendered. A Policy will be reinstated upon receipt by the Company of: (1) a
written application for reinstatement; (2) evidence of insurability satisfactory
to the Company; (3) payment of net premiums equal to (a) all monthly deductions
due upon lapse and (b) which are at least sufficient to keep the Reinstated
Policy in force for three months; and (4) the Owner repays or reinstates any
outstanding policy debt as of the date of lapse.
The amount of cash value in the Policy on the date the Policy is approved
for reinstatement will be equal to the amount of any Policy Debt reinstated or
repaid at the time of reinstatement plus the Net Premiums paid at reinstatement.
The effective date of reinstatement will be the date the Company approves the
application for reinstatement. A full monthly deduction will be charged for the
month of reinstatement.
II. REDEMPTION PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
The principal policy provisions and administrative procedures regarding
"redemption" transactions are summarized below. Due to the insurance nature of
the Policies, the procedures that will be followed may be different from the
redemption procedures for mutual funds and contractual plans.
A. SURRENDERS AND PARTIAL WITHDRAWALS
An Owner of a Policy may submit a written request to the Company to
surrender the Policy at any time prior to the maturity date while the insured is
living and while the Policy is in effect. The amount available for surrender is
the surrender value as of the valuation day on or next following the date the
written surrender request, the Policy and any other required documents are
submitted and received by the Company. If the Policy itself isn't returned to
the Company the request must be accompanied by completed affidavit of lost
policy. Amounts payable from the Variable Account upon surrender or a partial
withdrawal will be paid within seven calendar days of receipt of the written
request.
Upon surrender, the Company will pay in a lump sum the surrender value that
is equal to the cash value as of the valuation day less any outstanding Policy
Debt which includes accrued interest less any applicable surrender charges.
Coverage under a Policy will end as of the date of surrender.
If the Policy is surrendered, or if the initial face amount is reduced,
through the first nineteen Policy Years, a surrender charge will be deducted
from the Policy Value for the initial face amount (or the reduction thereof).
The surrender charge, which is a contingent/deferred sales charge, will be
deducted before any surrender value is paid.
The surrender charge varies depending on issue-age, sex and
rate-classification of the Insured and is set forth in your Policy.
Representative surrender chages per $1,000 of inital face amount for the
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first Policy Year for an Insured male non-smoker at each specified issue age are
set forth below. The surrender charge decreases over the nineteen-year period.
For a decrease in the initial face amount, the charge shown is per $1,000 of
decrease.
SURRENDER CHARGE (FIRST
YEAR)
PER $1,000 OF
ISSUE AGE INITIAL FACE AMOUNT
- ------------- ---------------------------
30 $ 18.50
35 20.50
40 23.00
45 26.25
50 30.50
55 36.25
60 44.00
65 54.50
70 57.75
75 57.25
After the 19th Policy Year, there is no surrender charge for the initial face
amount. If the initial face amount is decreased at any time during the first
nineteen Policy Years, a Contingent Deferred Sales Charge will be imposed which
will be equal to the stated surrender charge for such Policy Year per $1,000 of
decrease. In the event of a decrease in the initial face Amount, the pro-rated
surrender charge will be allocated to each Sub-Account and to the Fixed Account
based on the proportion of Policy Value in each Sub-Account and in the Fixed
Account. A surrender charge imposed in connection with a reduction in the
initial face amount reduces the remaining surrender charge that may be imposed
in connection with a surrender of the Policy.
After the first Policy Year, the Owner may also request a partial withdrawal
by sending a written request to the Company. An Owner may make a partial
withdrawal of an amount equal to or greater than $500. The request must be
submitted in writing to the Company. The Company will withdraw the amount
requested, plus a withdrawal charge, as of the date the request is received in
the Home Office. The Owner may elect to deduct the amount of the withdrawal from
any Sub-Account or the Fixed Account. If the Owner does not specify an
allocation, or if the Sub-Account value or Fixed Account value is insufficient
to carry out the request, the withdrawal will be based on the proportion that
such Sub-Account value(s) and Fixed Account value, bear to the total unloaned
Policy Value on the valuation day immediately prior to the withdrawal. No
withdrawal amounts will be processed if the withdrawal would result in there
being insufficient cash value to pay any surrender charges applicable upon a
full surrender.
The Company will deduct an administrative charge upon a withdrawal. This
charge is the lesser of 2% of the amount withdrawn or $25. This withdrawal
charge will be deducted from the Policy Value in addition to the amount
requested to be withdrawn and will be considered to be part of the withdrawal
amount. The withdrawal charge will be allocated in the manner described above
for the requested amount.
The death benefit will be affected by withdrawals. If death benefit option 1
is in effect, then the Company reserves the right to reduce the face amount by
the amount withdrawn (inclusive of withdrawal charge). If the Owner requests
that the initial face amount be retained, the Company will honor this request
provided the amount of withdrawal does not exceed $2,000. If the request for
withdrawal exceeds $2,000, then the Company will request that satisfactory
evidence of insurability be provided with the withdrawal request. If death
benefit option 2 is in effect, then the Company will not reduce the face amount.
The face amount after a partial withdrawal may not be less than the minimum
amount for which the Policy would be issued under the Company's current rules.
If the withdrawal causes the Policy to fail to qualify as a life insurance
contract under applicable tax laws, as interpreted by the Company it
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will not be processed. If the Face Amount at the time of withdrawal requires a
decrease of Face Amount, the reduction is made first from the most recent
increase, then from prior increases, if any in reverse order of their being made
and finally from the initial Face Amount.
B. CHANGES IN FACE AMOUNT
An Owner may increase or decrease the face amount of the Policy after the
first Policy Anniversary by submitting a written request to the Company. A
supplemental application is required for an increase in face amount. The Company
reserves the right to require satisfactory evidence of insurability for the
requested increase portion. Face Amount increases and decreases are subject to
the following rules:
1. For increases in face amount, the insured's attained age must be less
than the maximum current issue age for the Policies, as determined by the
Company from time to time.
2. The amount of the requested increase must be at least $10,000.
3. Any increase in face amount will be effective on the monthly anniversary
day on or next following the date the request for the increase is
received and approved by the Company.
4. If the No-Lapse Guarantee provision is in effect, the minimum monthly
premium amount required to keep the Policy in force will generally
increase and additional premium payments may be required.
5. The monthly cost of insurance charge will be adjusted as of the next
monthly anniversary day following the date of the written request.
6. There will be an administrative charge assessed based on a rate per
$1,000 of increased coverage. This administrative charge will be deducted
from the Policy Value monthly during the twelve month period following
the effective date of the increase. This administrative charge is based
on the original issue age, duration, sex , and rate class of the insured.
7. A decrease in face amount will not be accepted by the Company, if the
amount requested would decrease the face amount below $100,000.
8. A proportionate Contingent Deferred Sales Charge will be imposed for
decreases in face amount (please note previous section on "Surrenders and
Partial Withdrawals").
The Company reserves the right to not process any decrease in Face Amount if
compliance with guideline premium limitations under current tax law resulting
from such a decrease would result in immediate termination of the Policy, or if
to effect the requested decrease payments to the Owner would have to be made
from Policy Value for compliance with the guideline premium limitations, and the
amount of such payments would exceed the Surrender Value of the Policy. In
addition, the Company reserves the right to prohibit any decrease in Face Amount
(i) for three years following an increase in Face Amount and (ii) for One Policy
Year following the last decrease in Face Amount.
C. CHANGE IN DEATH BENEFIT OPTION
On or after the first Policy Anniversary, the Owner may request in writing a
change in the death benefit option. Any change will go into effect on the
monthly anniversary day that coincides with or next follows the date the Company
receives and accepts the request for change. If the Owner requests a change from
the Option 1 to Option 2, the face amount will be increased to equal the face
amount on the effective date of change. If the Owner requests a change from a
Option 2 to Option 1, the face amount will be decreased so that it equals the
death benefit less the policy value on the date of the change. The Company
reserves the right to require satisfactory proof of insurability before allowing
a change in death benefit options.
D. DEATH BENEFIT CLAIMS
While the Policy remains in force, the Company will pay a death benefit to
the named beneficiary in accordance with the death benefit option elected by the
Owner. The Company will pay the death
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benefit within seven calendar days after receipt in its home office of all
necessary proof of death of the insured. Payment of a death benefit may be
postponed under certain circumstances, such as the New York Stock Exchange being
closed for reasons other than customary weekend and holiday closings. The death
benefit proceeds will be determined as of the date of the insured's death and
will be equal to:
1. the death benefit under the option elected; plus
2. any additional benefits due under any supplemental and/or riders
benefits attached to this Policy; less
3. any policy debt; less
4. any unpaid monthly deductions if the insured dies during the grace
period.
The death benefit proceeds will be determined based on the death benefit
option elected by the Owner on the application for insurance or any request for
change in death benefits. If Death Benefit Option 1 is chosen, the death benefit
will be the greater of (a) the face amount of insurance on the insured's date of
death; or (b) a specified percentage of the policy value on the date of the
insured's death as indicated on the table of percentages included in the Policy.
If Death Benefit Option 2 is chosen, the death benefit will be the greater of
(a) the face amount of insurance on the insured's date of death plus the policy
value on the insured's date of death: or (b) a specified percentage of the
policy value on the insured's date of death as indicated on the Table of
Percentages included in the Policy. The specified percentage is 250% when the
Insured has reached an "Attained Age" of 40 or less by date of death, and
decreases each year thereafter to 100% when the Insured has reached an "Attained
Age" of 95 at death.
E. POLICY LOANS
After the first Policy Anniversary and while the insured is still living, an
Owner may borrow from the Company no less than $500 and not more than 90% of the
Surrender Value on the date the loan is received. The Owner must submit a
written request for a Policy loan. Any amount due an Owner under a loan will
generally be paid within seven calendar days after the Company receives a loan
request.
When a Policy loan is made, an amount equal to the loan is transferred out
of the sub-account(s) and the fixed account and into the Policy's loan account.
The Owner can specify the Sub-Accounts and Fixed Account from which collateral
is transferred to the loan account. If no allocation is specified, collateral is
transferred from each Sub-Account and from the Fixed Account in the same
proportion that each Sub-Account value and the Fixed Account value bears to the
total unloaned Policy value on the date that the loan is made.
Like the Fixed Account, a Policy's loan account is part of Protective Life's
General Account. During the first ten Policy years, the Company will charge
interest daily on any outstanding loan at an effective annual rate of 6.0%.
During Policy Years 11 and after, the Company will charge interest daily on any
outstanding loan at an effective annual rate of 4.5%. Interest is due and
payable at the end of each Policy Year while a loan is outstanding. If interest
is not paid when due, the amount of the interest is added to the loan and
becomes part of the Policy Debt.
The loan account is credited with interest at an effective annual rate of
not less than 4.0%. The maximum net cost of a loan is 2.0% per year during
Policy Years 1 through 10, and .5% thereafter. During the first ten Policy years
and on each Policy anniversary, the net difference between interest earned and
interest charged will be transferred to the loan account and deducted from the
Sub-Account(s) and the Fixed Account in the same proportion that each
Sub-Account value and the Fixed Account value bears to the total unloaned Policy
value. The Company determines the rate of interest to be credited to the loan
account in advance of each calendar year. The rate, once determined, is applied
to the calendar year that follows the date of determination.
If the Insured dies while a loan is outstanding, the Policy debt is deducted
from the death benefit in calculating the death benefit proceeds.
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A Policy loan may be repaid in whole or in part at any time while the
insured is living and the Policy is in force. Loan repayments will be credited
as of the date they are received in the Home Office. When a loan repayment is
made, Policy value in the loan account in an amount equal to the repayment will
be transferred from the loan account to the Sub-Accounts and/or the Fixed
Account in the same proportion that premium payments are allocated. Amounts paid
while a Policy loan is outstanding will be treated as premiums unless the Owner
requests in writing that these payments be treated as repayment of indebtedness.
III. TRANSFERS
A Policy's cash value, except amounts credited to the loan account, may be
transferred among the Sub-Accounts and between the Fixed Account which is a part
of the Company's General Account and the Sub-Accounts.
Upon receipt of written notice or a telephone request from the Owner, the
Company will accept transfer requests subject to the limitations described
below. Transfer requests will be accepted at any time on or after the later of
the following: (1) thirty days after the Policy effective date, or (2) six days
after the expiration of the cancellation period. Transfers (including telephone
transfers) are processed as of the date the request is received by the Company.
The minimum amount of Policy value that may be transferred is the lesser of: (1)
$100; or (2) the entire Policy Value in any Sub-Account or the Fixed Account
from which the transfer is made. If, after the transfer, the Policy Value
remaining in a Sub-Account(s) or the Fixed Account is less than $100, the
Company reserves the right to transfer the entire amount instead of the
requested amount. The Company also reserves the right to limit transfers to 12
per Policy year and to charge a transfer fee for each additional transfer over
12 in any Policy year. If the fee is imposed, it will be deducted from the
amount requested to be transferred. If an amount is being transferred from more
than one Sub-Account or the Fixed Account, the transfer fee will be deducted
proportionately from the amount be transferred from each.
The maximum amount that may be transferred from the Fixed Account in any
Policy Year is the greater of: (1) $2,500; or (2) 25% of the Fixed Account
value.
Telephone transfers may be made upon instructions given by telephone,
provided the appropriate election has been made on the application or written
authorization is provided. We require a form of personal identification before
acting on these telephone instructions. All transfer requests made by telephone
instruction will be recorded as a method of documenting authenticity. A
confirmation of all instructions received by telephone will be mailed to the
Owner to determine if they are genuine.
The Company currently intends to allow transfers for the foreseeable future,
Although the Prospectus provides that the Company may at any time, for any class
of Policies, modify, restrict, suspend, or eliminate the transfer privilege
(including telephone transfers). In particular, we reserve the right not to
honor transfer requests by a third party holding a power of attorney from an
Owner where that third party requests simultaneous transfers on behalf of the
Owners of two or more Policies.
The Owner may direct the Company to systematically and automatically
transfer, on a monthly or quarterly basis, specified dollar amounts from or to
the Fixed Account or from or to any Sub-Account(s). This is known as the dollar
cost averaging method of investment. By transferring on a regularly scheduled
basis as opposed to allocating the total amount at one time, an Owner may be
less susceptible to the impact of market fluctuations in Sub-Account unit
values. The Company makes no guarantee that the dollar cost averaging method
will result in a profit or protect against loss. The Company reserves the right
to assess a processing fee for this service. The Company reserves the right to
stop offering dollar cost averaging upon 30 days written notice.
To elect dollar-cost averaging, the fixed account value must be at least
$5,000 at the time of election. The Owner may elect dollar cost averaging for
periods of at least 12 months but no longer
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than 48 months. At least $100 must be transferred on a monthly basis and a
minimum of $300 on a quarterly basis. Dollar-cost averaging transfers may
commence on any day of the month that the Owner requests, except the 29th, 30th,
or 31st.
The Company will continue to process dollar cost averaging transfers until
the earlier of the following:
(1) the designated number of transfers has been completed;
(2) the Fixed Account value is depleted;
(3) the Owner, by written notice, instructs the Company to cease the
automatic transfers;
(4) a grace period begins under the Policy; or
(5) the maximum amount of Policy value has been transferred under a dollar
cost averaging election.
The owner may direct the Company to systematically and automatically
transfer on a quarterly, semiannual, or annual basis, contract value among
specified Sub-Accounts. This is known as the portfolio rebalancing method of
investment and is done to achieve a particular percentage allocation among such
Sub-Accounts. By transferring on a regularly scheduled basis as opposed to
allocating the total amount at one time, an Owner may be less susceptible to the
impact of market fluctuations in Sub-Account unit values. The Fixed Account
value will not be considered in the automatic transfer process. The Company
makes no guarantee that the portfolio rebalancing method will result in a profit
or protect against loss. The Company reserves the right to assess a processing
fee for this service. The Company reserves the right to stop offering portfolio
rebalancing upon 30 days written notice.
The Applicant/Owner can elect portfolio rebalancing at the time of
application or any time thereafter by submitting a written request to the
Company. This feature is available on a quarterly, semiannual, and annual basis
and may commence on any day of the month that the Owner requests, except the
29th, 30th or 31st. Once elected, portfolio rebalancing will begin on the first
modal anniversary following the election.
The Company will continue to process these automatic transfers until the
earlier of the following:
(1) Sub-Account values are depleted;
(2) the Owner requests the company to cease the automatic transfers, by
written notice. This can also be requested by telephone if the owner
previously authorized us to take telephone instructions.
IV. REFUNDS
The right to examine and cancel the Policy is as defined in the Policy. The
Owner may cancel a Policy for a refund during the Cancellation Period by
returning it to the Company's home office or to the sales representative who
sold it along with a written request. The Cancellation Period is determined by
the law of the state in which the application is signed and is shown in the
Policy. In most states, it expires at the latest of: (1) ten days after the
Owner receives the Policy; (2) 45 days after the Owner signs the application; or
(3) 10 days after the Company mails or delivers a Notice of Right of Withdrawal.
Return of the Policy by mail is effective when it is received at the home
office.
Within seven calendar days after receiving the returned Policy, the Company
will refund (i) the difference between premiums paid and amounts allocated to
the fixed account or the variable account (after deduction of any policy fees
and/or other charges), plus (ii) fixed account value determined as of the date
the returned Policy is received, plus (iii) variable account value determined as
of the date the returned Policy is received. This amount may be more or less
than the aggregate Premium Payments. In states where required, the Company will
refund Premium Payments to the Owner of the Policy.
An increase in Face Amount may also be cancelled by the Owner in accordance
with the Policy's cancellation period provisions. The amount refunded will be
calculated in accordance with the provisions described above. If no additional
Premium Payments are required in connection with the Face
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Amount increase, the amount refunded is limited to that portion of the first
monthly deduction following the increase and will be reallocated to the
Sub-Account(s) and the Fixed Account in the same proportion that each
sub-account value and the fixed account value bears to the total unloaned Policy
Value as of the effective date of the cancellation. The effective date of this
cancellation will be equal to the effective date of the face increase.
V. GENERAL PROVISIONS
A. SUICIDE
If the insured commits suicide, while sane or insane, within two years from
the Policy Effective Date, the death benefit will be limited to the premiums
paid before death, less any Policy debt and less any withdrawals. If the insured
commits suicide, while sane or insane, within two years after an increase in
face amount, the death benefit with respect to such increase shall be limited to
the sum of the monthly cost of insurance charges deducted for such increase.
B. REPRESENTATIONS AND CONTESTABILITY
The Company can not contest the Policy or any supplemental benefit and/or
rider after the Policy or rider has been in force during the Insured's lifetime
for two years from the Policy Effective Date or the effective date of the rider,
unless fraud is involved. The Company also has the right to contest the validity
of any policy change based on material misstatements made in any application for
that change and any reinstatement of benefits within two years during the
lifetime of the insured after the reinstatement has been approved.
C. MISSTATEMENT OF AGE OR SEX
Questions in the application concern the insured's date of birth and sex. If
the date of birth or sex given in the application or any application for
supplemental benefits and/or riders is not correct, the death benefit and any
benefits provided under any riders to this Policy will be adjusted to those that
would have been purchased by the most recent cost of insurance change and the
cost of any such supplemental benefits provided by such riders, at the correct
age and sex.
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