EXHIBIT A.(11)
ALPINE LIFE INSURANCE COMPANY
DESCRIPTION OF TRANSFER AND REDEMPTION PROCEDURES AND
METHOD OF COMPUTING ADJUSTMENTS IN PAYMENTS AND
ACCOUNT VALUES UPON CONVERSION TO
FIXED BENEFIT CONTRACTS
This document sets forth, as required by Rule 6e-3(T)(b)(12)(ii), the
administrative procedures that will be followed by Alpine Life Insurance Company
("Alpine") in connection with the issuance of its modified single premium
variable life insurance Policy (the "Policy"), the transfer of assets held
thereunder, and the redemption by Policy Owners of their interests in said
Policies. The document also describes the method that Alpine will use in
adjusting the payments and cash values when a Policy is exchanged for a fixed
benefit insurance policy pursuant to Rule 6e-3(T)(b)(13)(v)(B).
TRANSFER AND REDEMPTION PROCEDURES
I. PURCHASE AND RELATED TRANSACTIONS
A. PREMIUMS AND UNDERWRITING STANDARDS
This Policy is a modified single premium policy. The Policy permits the
Policy Owner to pay a large single premium and, subject to restrictions,
additional premiums. The Policy Owner may choose a minimum initial premium
of 80%, 90% or 100% of the Guideline Single Premium (based on the Face
Amount). Under current underwriting rules, which are subject to change,
Applicants between the ages of 45 and 80 who pay an initial premium of 100%
of the Guideline Single Premium are eligible for simplified underwriting
without a medical examination if they meet simplified underwriting
standards as evidenced in their responses in the application. For Policy
Owners who pay an initial premium of 80% or 90% of the Guideline Single
Premium or who are below age 45 or above age 80, standard underwriting
applies. Additional premiums are allowed if they do not cause the Policy
to fail to meet the definition of a life insurance policy under Section
7702 of the Internal Revenue Code. Alpine may require evidence of
insurability for any additional premiums which increase the Coverage
Amount. Generally, the minimum initial premium Alpine will accept is
$10,000. Alpine may accept less than $10,000 under certain circumstances.
No premium will be accepted which does not meet the tax qualification
guidelines for life insurance under the Code. The Policies will be offered
and sold pursuant to established underwriting standards and in accordance
with state insurance laws, which prohibit unfair discrimination among
Policy Owners, but recognize that premiums must be based upon factors such
as age, health or occupation.
B. APPLICATION AND INITIAL PREMIUM PROCESSING
Upon receipt of a completed application, Alpine will follow certain
insurance underwriting (i.e., evaluation of risks) procedures designed to
determine whether the applicant is eligible for simplified or standard
underwriting for determining insurability. Standard underwriting may
involve such verification procedures as medical examinations and may
require that further information be provided by the proposed Insured before
a determination can be made. A Policy will not be issued, and consequently
a Policy Issue Date established, until underwriting procedures have been
completed.
If a premium is submitted with the Policy application, insurance coverage
will begin immediately if the proposed Insured is insurable at a standard
rate under a conditional receipt agreement. Otherwise, insurance coverage
will not begin until the Policy's Issue Date. In either case, the Policy
when issued will be effective from the date Alpine receives the initial
premium at its National Service Center.
If a premium is not paid with the application, insurance coverage will
begin and the Policy will be effective on the later of the date the
underwriting determination is made or on the date the premium is received.
C. PREMIUM ALLOCATION
In the application for a Policy, the Policy Owner can allocate the initial
premium among the various Sub-Accounts. Alpine will allocate the entire
premium to the Money Market Sub-Account available under the Policy. At a
later date, the value of the Policy Owner's interest in the Money Market
Sub-Account will be allocated among the Sub-Accounts of Separate Account
Five in accordance with the Policy Owner's instructions in the application
for insurance.
D. POLICY LOANS
A Policy Owner may obtain a cash loan from Alpine, which is secured by the
Policy. The aggregate amount of all loans (including the currently applied
for loan) may not exceed 90% of the Cash Value at the time a loan is
requested.
The amount of each loan will be transferred on a Pro Rata Basis from each
of the Sub-Accounts (unless the Policy Owner specifies otherwise) to the
Loan Account. The Loan Account is a mechanism used to ensure that any
outstanding Indebtedness remains fully secured by the Policy values.
LOAN INTEREST AND CREDITED INTEREST
Interest will accrue daily on the indebtedness at the Policy Loan Interest
Rate indicated in the Policy. The difference between the value of the Loan
Account and the Indebtedness will be transferred on a Pro Rata Basis from
the Sub-Accounts to the Loan Account on each Monthly Activity Date.
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The amounts allocated to the Loan Account will bear interest at a rate of
4% per annum (6% for "Preferred Loans"). The amount of the Loan Account
that equals the difference between the Account Value and the total of all
premiums paid under the Policy is considered a "Preferred Loan." The loan
interest rate that Alpine will charge on all loans is 6% per annum.
LOAN REPAYMENTS
Policy Owners can repay any part of or the entire loan at any time.
The amount of loan repayment will be deducted from the Loan Account and
will be allocated among the Sub-Accounts in the same percentage as premiums
are allocated.
TERMINATION DUE TO EXCESSIVE INDEBTEDNESS
If total Indebtedness equals or exceeds the Cash Value, the Policy will
terminate 61 days after we have mailed notice to the Policy Owner's last
known address and that of any assignees of record. If sufficient loan
repayment if not made by the end of the Grace Period, the Policy will end
without value.
EFFECT OF LOANS ON ACCOUNT VALUE
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to
the amount remaining in such Sub-Accounts. The longer a loan is
outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Sub-Accounts earn more than the annual
interest rate for funds held in the Loan Account, a Policy Owner's Account
Value will not increase as rapidly as it would have had no loan been made.
If the Sub-Accounts earn less than the Loan Account, the Policy Owners
Account Value will be greater than it would have been had no loan been
made. Also, if not repaid, the aggregate amount of the indebtedness under
the Policy will reduce the Death Proceeds and Cash Surrender Value
otherwise payable.
II. TRANSFER AMONG INVESTMENT DIVISIONS
Each Sub-Account available under the Policies invests in shares of an
open-end diversified management investment company registered with the
Securities and Exchange Commission. At any time, the Policy Owner may
transfer value among the Funds. We reserve the right at a future date to
limit the size of transfers and remaining balances and to limit the number
and frequency of transfers.
A transfer will take effect on the date the written request (or telephone
request) is received at Alpine unless a later date is designated in the
request for transfer. A transfer between the Loan Account and the Separate
Account incident to the repayment or making of a loan under the Policy will
not be considered a transfer. A transfer from the Money Market Sub-Account
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at the end of the Right to Cancel Period or a transfer arising because of a
substitution of securities by Alpine will also not be considered a
transfer.
III. "REDEMPTION" PROCEDURES: SURRENDER AND RELATED TRANSACTIONS
A. SURRENDER FOR CASH VALUE
At any time before the death of the Insured and while the Policy is in
force, the Policy Owner may completely surrender the Policy by written
request. The surrender payment from the Sub-Accounts will be made within
seven days after Alpine receives the written request, unless payment is
postponed pursuant to the relevant provision of the Investment Company Act
of 1940.
B. BENEFIT CLAIMS
As long as the Policy remains in force, Alpine will usually pay the Death
Proceeds to the named Beneficiary within seven days after receipt of due
proof of death of the Insured unless the Policy is contested. Payment of
the Death Proceeds may be postponed as permitted pursuant to the relevant
provisions of the Investment Company Act of 1940.
The Death Proceeds equal the Death Benefit under the Policy less all
Indebtedness under the Policy. The Death Benefit will be determined on the
date Alpine receives written notice of death and is a function of the Death
Benefit Option chosen by the Policy Owner.
In lieu of payment of the death proceeds in a single sum, an election may
be made to apply all or a portion of the proceeds under one of the fixed
and variable benefit settlement options described in the Policy and
Prospectus or a combination of options. The election may be made by the
Policy Owner during the Insured's lifetime. The Beneficiary may make or
change an election within 90 days of the death of the Insured, unless the
Policy Owner has made an irrevocable election. The fixed and variable
benefit settlement options are subject to the restrictions and limitations
set forth in the Policy and Prospectus.
C. POLICY LAPSE
The Policy will terminate 61 days after a Monthly Activity Date on which
the Cash Surrender Value is less than zero. The 61-day period is the Grace
Period. If sufficient premium is not paid by the end of the Grace Period,
the Policy will terminate without value. The Company will mail the Policy
Owner and any assignee written notice of the amount of premium that will be
required to continue the Policy in force at least 61 days before the end of
the Grace Period. The premiums required will be no greater than the amount
required to pay three (3) Monthly Deduction Amounts as of the day the Grace
Period began. If that premium is not paid by the end of the Grace Period,
the Policy will terminate.
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If the Policy lapses, the Policy Owner may reinstate the Policy by payment
of the reinstatement premium (and any applicable charges) shown in the
Policy. A request for reinstatement may be made at any time within five
years of lapse. If a loan was outstanding at the time of lapse, Alpine
will require repayment of the loan before permitting reinstatement or the
loan will also be reinstated. In addition, Alpine reserves the right to
require satisfactory evidence of insurability.
D. POLICY LOANS
See "Purchase and Related Transactions," Section 1. D. on page 2 of this
Exhibit.
CASH ADJUSTMENT UPON EXCHANGE OF POLICY
If the Policy is in effect, the Policy Owner may exchange it any time,
during the 24 months following its Date of Issue, for a permanent life
insurance policy offered by Alpine on the life of the Insured without
evidence of insurability.
The new Policy will be issued by Alpine with an amount at risk which equals
or is less than the amount at risk in effect on the Exchange Date and with
premiums based on the same risk classification as the Policy.
This exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under the
Policy and the new Policy.
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