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PROTECTIVE LIFE INSURANCE COMPANY / P. O. BOX 2606 / BIRMINGHAM, ALABAMA 35202
A STOCK COMPANY (205-879-9230)
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VARIABLE LIFE INSURANCE POLICY
John Doe
Policy Number VULLVULIA
This is an Individual Flexible Premium Variable and Fixed Life Insurance Policy
("Policy") which has been issued to the Owner(s). This Policy provides a death
benefit.
THE OWNER(S) HAVE THE RIGHT TO RETURN THIS POLICY. The Owner(s) may cancel
this Policy after receipt by returning the Policy to our Home Office, or to
any Agent of the Company, with a written request for cancellation within (a)
10 days after receipt; or (b) 45 days after the Application was signed; or
(c) 10 days after we mail or deliver a Notice of Right of Withdrawal,
whichever is later. Return of this Policy by mail is effective on receipt by
Us. The returned Policy will be treated as if we had never issued it. In
states where permitted, we will promptly refund an amount equal to the sum
of: (a) the difference between the premiums paid (after deduction of any
policy fees and other charges) and the amounts allocated to the Fixed Account
or the Sub-Accounts, plus (b) the value of the amounts allocated to the Fixed
Account, including any interest credited on such amounts accumulated to the
date that this Policy is returned to Us, plus (c) the value of the amounts
allocated to the Sub-Accounts, adjusted to reflect the net investment
experience of such Sub-Accounts, to the date that this Policy is returned to
Us. This amount may be more or less than the premium payment(s). In states
where required, we will promptly refund the premium payment(s).
/s/ John W. John /s/ Deborah J. Long
President Secretary
THE POLICY VALUES, THE AMOUNT OF THE DEATH BENEFIT PROVIDED IN THIS CONTRACT, OR
THE DURATION OF THE INSURANCE COVERAGE, MAY BE FIXED OR VARIABLE WHEN BASED ON
THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE FLUCTUATIONS IN THE NET INVESTMENT FACTOR, AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNTS. THERE IS NO GUARANTEED MINIMUM FOR THE PORTION
OF YOUR POLICY VALUE IN THE SUB-ACCOUNTS. PLEASE REFER TO PAGE 12 OF THIS POLICY
FOR MORE INFORMATION REGARDING THE VARIABLE ACCOUNT. PLEASE REFER TO PAGE 14 FOR
A DESCRIPTION OF THE DEATH BENEFIT.
READ YOUR CONTRACT CAREFULLY
THIS POLICY IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
Policy VULLVULIA
VUL-06 3-98 Page 1
INDEX
POLICY SPECIFICATIONS PAGES....................................................................................3
TABLE OF GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES....................................................3
DEFINITIONS.........................................4......BASIS OF COMPUTATIONS..............................12
GENERAL PROVISIONS..................................6......FIXED ACCOUNT......................................12
Entire Contract..................................6...... Calculation of the Fixed Account Value..........12
Modification of the Contract.....................6...... Interest Credited...............................12
Misstatement of Age or Sex.......................6......VARIABLE ACCOUNT...................................12
Non-Participating................................6...... General Description.............................12
Suicide Exclusion................................6...... Sub-Accounts of the Variable Account............13
Termination......................................6...... Valuation of Assets.............................13
Representations and Contestability...............6...... Calculation of Sub-Account Values...............13
Reports..........................................7...... Net Investment Factor...........................14
Arbitration......................................7...... Transfers.......................................14
CONTROL PROVISIONS..................................7......DEATH BENEFIT......................................14
The Parties Involved.............................7...... Death Benefit Proceeds..........................14
Rights of Owner..................................7...... Amount of Death Benefit Proceeds................14
Contingent Owner.................................8...... Payment of Death Benefit Proceeds...............15
Beneficiary......................................8...... Suspension of Payment...........................15
Changing the Owner...............................8...... Creditor Claims.................................15
Assignment.......................................8......SURRENDERS AND WITHDRAWALS.........................15
Protection of Proceeds...........................8...... Surrenders......................................15
Suspension or Delay in Payment...................8...... Withdrawals.....................................15
Tax Considerations...............................9
Changes in Policy Cost Factors...................9...... POLICY LOANS......................................16
Coverage Limitations.............................9...... Right to Make Loans, Policy Debt................16
PREMIUMS............................................9...... Maximum Loan....................................16
Premium Payment(s)...............................9...... Interest........................................16
Planned Premium Payments.........................9...... Collateral......................................16
Unscheduled Premium Payments.....................9...... Repaying Policy Debt............................16
Minimum Monthly Premium Guarantee................9...... CHANGING THIS POLICY..............................16
Premium Expense Charges.........................10...... Increasing the Face Amount......................17
Allocation of Net Premiums......................10...... Premium Payments Required for a
Grace Period....................................10...... Face Amount Increase........................17
Reinstatement...................................10...... Cancellation of an Increase of
Minimum Values..................................10...... Face Amount.................................17
DEDUCTIONS FROM POLICY VALUE.......................11...... Decreasing the Face Amount......................17
Monthly Deductions..............................11...... Changing the Death Benefit Option...............17
Monthly Cost of Insurance Charge................11...... Change Approval.................................17
Premium Expense Charge..........................11......SETTLEMENT OPTIONS.................................17
Administration Fee..............................11...... Availability of Options.........................18
Cost of Insurance Rates.........................11...... Minimum Amounts.................................18
Charges for Benefits Under Riders...............11...... Electing a Settlement Option....................18
Mortality and Expense Risk Charge...............11...... Effective Date and Payment Date.................18
Other Deductions................................11...... Description of Options..........................18
Policy VULLVULIA
VUL-06 3-98 Page 2
POLICY SPECIFICATIONS
POLICY NUMBER: VULLVULIA POLICY EFFECTIVE DATE: APRIL 12, 1999
POLICY ISSUE DATE: MAY 01, 1999 ISSUE AGE: 35
INSURED: JOHNNY DOE SEX: MALE
INITIAL FACE AMOUNT: $ 1,000,000 MINIMUM FACE AMOUNT: $ 250,000
DEATH BENEFIT OPTION: LEVEL MONTHLY ANNIVERSARY DAY: 12
INITIAL PREMIUM PAYMENT: NONE RATE CLASS: STANDARD TOBACCO
MINIMUM MONTHLY PREMIUM PAYMENT: $557.38
PLANNED PREMIUM PAYMENT: $40,000.00 PAYABLE ANNUALLY
OWNER: JOHNNY DOE
RIDER MONTHLY CHARGE
NUMBER SCHEDULE OF ADDITIONAL BENEFITS DURING FIRST YEAR
SEE SCHEDULE OF ADDITIONAL BENEFITS ATTACHMENT
MONTHLY GUARANTEED INTEREST RATE FOR FIXED ACCOUNT 4% ANNUALLY (.3274% MONTHLY)
INITIAL ANNUAL EFFECTIVE INTEREST RATE FOR FIXED ACCOUNT 4.75%
LOAN INTEREST RATE 6% YEARS 1-10 - 4.25% YEARS 11+
THIS POLICY PROVIDES LIFE INSURANCE COVERAGE ON THE INSURED UNTIL TERMINATION,
PROVIDED THAT THE POLICY VALUE IS SUFFICIENT TO COVER THE DEDUCTIONS FOR THE
COST OF THE BENEFITS OF THIS POLICY. THERE MAY BE LITTLE OR NO SURRENDER VALUE
PAYABLE ON CONTRACT TERMINATION.
MINIMUM MONTHLY PREMIUM GUARANTEE PERIOD: 5 YEARS.
Policy VULLVULIA
VUL-06 3-98 Page 3
POLICY SPECIFICATIONS (Continued)
CHARGES
PREMIUM EXPENSE CHARGES. None
MONTHLY DEDUCTIONS
ADMINISTRATION FEE. The Administration Fee to be deducted monthly from the
Fixed Account and Variable Account Value(s) is $3.
ADMINISTRATION CHARGE FOR INCREASE IN FACE AMOUNT. None
CHARGE FOR BENEFITS UNDER RIDERS. Every month the Company deducts a charge for
any riders.
COST OF INSURANCE CHARGE. Every month the Company deducts a charge for the
Cost of Insurance, which varies and is calculated in accordance with the policy
provisions. See Page 11 for details.
MORTALITY AND EXPENSE RISK CHARGE. Every month the Company deducts a
Mortality and Expense Risk Charge from the Variable Account Policy Value. The
maximum monthly Mortality and Expense Risk Charge to be deducted is equal to
.075% multiplied by the Variable Account Value, which is equivalent to an
annual rate of .90% of such amount. The Company reserves the right to charge
less than the maximum charge. Accordingly, during Policy Years 1 through 10,
the monthly Mortality and Expense Risk Charge is .062% multiplied by the
Variable Account Value, which is equivalent to an annual rate of .75% of such
amount. In Policy Years 11 and thereafter, the monthly Mortality and Expense
Risk Charge is .021% multiplied by the Variable Account Value, which is
equivalent to an annual rate of .25% of such amount.
OTHER DEDUCTIONS
WITHDRAWAL CHARGE. A Withdrawal Charge equal to the lesser of: (a) 2% of the
amount withdrawn; or (b) $25 is deducted from the Fixed Account and Variable
Account Value(s) whenever you make a withdrawal. None
TRANSFER FEE. A $25 charge may be deducted from the Fixed Account and
Variable Account Value(s) being transferred for each transfer request in
excess of 12 during a Policy Year.
SURRENDER CHARGES
There are no surrender charges for this policy.
Policy VULLVULIA
VUL-06 3-98 Page 3A
POLICY SPECIFICATIONS (Continued)
GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES
PER $1,000 OF NET AMOUNT AT RISK
ATTAINED ATTAINED ATTAINED ATTAINED ATTAINED
AGE RATE AGE RATE AGE RATE AGE RATE AGE RATE
0 0.00000 20 0.00000 40 0.32844 60 1.93624 80 10.23621
1 0.00000 21 0.00000 41 0.36179 61 2.10944 81 10.98690
2 0.00000 22 0.00000 42 0.39599 62 2.30446 82 11.82144
3 0.00000 23 0.00000 43 0.43518 63 2.52552 83 12.74625
4 0.00000 24 0.00000 44 0.47605 64 2.76931 84 13.72670
5 0.00000 25 0.00000 45 0.52277 65 3.03333 85 14.73050
6 0.00000 26 0.00000 46 0.56949 66 3.30840 86 15.72511
7 0.00000 27 0.00000 47 0.62038 67 3.59705 87 16.69584
8 0.00000 28 0.00000 48 0.67378 68 3.89427 88 17.75732
9 0.00000 29 0.00000 49 0.73387 69 4.21099 89 18.80718
10 0.00000 30 0.00000 50 0.79730 70 4.56070 90 19.86094
11 0.00000 31 0.00000 51 0.87075 71 4.94853 91 20.93946
12 0.00000 32 0.00000 52 0.95257 72 5.38972 92 22.08817
13 0.00000 33 0.00000 53 1.04609 73 5.88695 93 23.56764
14 0.00000 34 0.00000 54 1.15132 74 6.42940 94 25.47887
15 0.00000 35 0.21921 55 1.26326 75 7.02990 95 28.27400
16 0.00000 36 0.23422 56 1.38441 76 7.64974 96 33.10700
17 0.00000 37 0.25339 57 1.50977 77 8.27796 97 41.68500
18 0.00000 38 0.27507 58 1.64353 78 8.90442 98 58.01300
19 0.00000 39 0.30009 59 1.78233 79 9.54779 99 83.33300
1O0+ 0.00000
GUARANTEED MAXIMUM COST OF INSURANCE RATES FOR THE RATE CLASS SHOWN ON PAGE 3
ARE EQUAL TO THE ABOVE RATES INCREASED BY $0.000 EACH MONTH.
Policy VULLVULIA
VUL-06 3-98 Page 3B
POLICY SPECIFICATIONS (Continued)
ALLOCATION OF PREMIUM PAYMENTS:
Protective Variable Life Separate Account:
Goldman Sachs/PlC Growth & Income 50.00%
MFS Emerging Growth 50.00%
Policy VULLVULIA
VUL-06V2
DEFINITIONS
APPLICATION. The paperwork completed to apply for this Policy.
ATTAINED AGE. The Insured's age as of the nearest birthday on the Policy
Effective Date plus the number of complete Policy Years since the Policy
Effective Date.
BENEFICIARY. The Beneficiary is the person entitled to receive the Death
Benefit Proceeds upon the death of the Insured.
PRIMARY. Where a Primary Beneficiary is living, such person is the
Beneficiary. The Primary Beneficiary is the person named as the
"Primary Beneficiary" in the Application, unless changed.
CONTINGENT. Where no Primary Beneficiary is living, the "Contingent
Beneficiary", as named in the Application, is the Beneficiary, unless
changed.
IRREVOCABLE. An Irrevocable Beneficiary is one whose consent is
necessary to change the Beneficiary or exercise certain other rights.
CASH VALUE. It is equal to the Policy Value minus any applicable Surrender
Charge.
DEATH BENEFIT. The greater of the Face Amount of insurance on the Insured's
date of death or a specified percentage of the Policy Value on the date of
the Insured's death (see Page 14).
DEATH BENEFIT PROCEEDS. The amount payable to the Beneficiary if the Insured
dies while the Policy is in force which is equal to the Death Benefit less any
Policy debt and unpaid Monthly Deductions if the Insured dies during a grace
period.
FACE AMOUNT. Initially the Face Amount is shown on the Policy Specifications
Page. Thereafter, the Face Amount may be increased or decreased in accordance
with the terms of this Policy or may change in accordance with the Death
Benefit and Withdrawal provisions.
FIXED ACCOUNT. Part of our General Account to which Policy Value may be
transferred or Net Premiums allocated under a Policy.
FIXED ACCOUNT VALUE. The Policy Value in the Fixed Account.
FUND. An investment portfolio of Protective Investment Company or any other
open-end management investment company or unit investment trust in which a
Sub-Account invests.
GENERAL ACCOUNT. The assets of the Company other than those allocated to the
Variable Account or another separate account.
HOME OFFICE. 2801 Highway 280 South, Birmingham, Alabama, 35223.
INITIAL FACE AMOUNT. The Face Amount on the Policy Effective Date as shown on
the Policy Specifications Page.
INSURED. The person whose life is covered by the Policy.
ISSUE AGE. The Insured's age as of the nearest birthday on the Policy
Effective Date.
ISSUE DATE. The date the Policy is issued. The Issue Date may be a later date
than the Policy Effective Date if the initial Premium Payment is received at
the Home Office before the Issue Date.
LAPSE. Termination of the Policy at the expiration of the Grace Period while
the Insured is still living.
LOAN ACCOUNT. An account within the Company's General Account to which the Fixed
Account Value and/or Variable Account Value is transferred as collateral for
policy loans.
LOAN ACCOUNT VALUE. The Policy Value in the Loan Account.
MINIMUM MONTHLY PREMIUM. The minimum amount of Premium Payments that must be
paid in order for the Minimum Monthly Premium Guarantee to remain in effect.
Policy VULLVULIA
VUL-06 3-98 Page 4
MONTHLY ANNIVERSARY DAY. The same day of the month as the Policy Effective
Date. The Monthly Anniversary Day is shown on the Policy Specifications Page.
MONTHLY DEDUCTIONS. The fees and charges deducted monthly from the Policy Value
and/or Variable Account Value as described on the Policy Specifications Page.
NET AMOUNT AT RISK. As of any Monthly Anniversary Day, the Death Benefit
under this Policy (discounted for the upcoming Policy Month) less the Policy
Value (before deduction of the monthly Administration Fee and monthly rider
charges on that day).
NET ASSET VALUE PER SHARE. The value per share of any Fund as computed on any
Valuation Day as described in the Fund prospectus.
NET PREMIUM. The Premium Payment after deduction of the Premium Expense
Charges.
OWNER. The person(s) who own the Policy. Herein referred to as "you" or your
PLANNED PREMIUM PAYMENT. The premium determined by the Owner as a level
amount that he or she (or they) plan to pay at fixed intervals over a
specified period of time.
POLICY ANNIVERSARY. The same day in each Policy Year as the Policy Effective
Date.
POLICY DEBT. The sum of all outstanding policy loans plus accrued interest.
POLICY EFFECTIVE DATE. The date shown on the Policy Specifications Page and
on which coverage takes effect. Policy Years are measured from the Policy
Effective Date. For any increase, decrease, additions, or changes to
coverage, the effective date shall be the Monthly Anniversary Day on or next
following the date the supplemental application is approved by the Company.
The Policy Effective Date will never be the 29th, 30th or the 31st of a month.
POLICY VALUE. The sum of the Variable Account Value, the Fixed Account Value
and the Loan Account Value.
POLICY YEAR. Each period of 12 months commencing with the Policy Effective
Date.
PREMIUM PAYMENT(s). The amount(s) paid by the Owner(s) to purchase and
maintain this Policy.
PROTECTIVE LIFE INSURANCE COMPANY. Herein referred to as "We", "Us", "Our"
and "Company".
SETTLEMENT OPTION. Alternatives to a lump sum for payment by Us under the
Death Benefit or surrender provisions of this Policy.
SUB-ACCOUNT. A separate division of the Variable Account. Each Sub-Account
invests in a corresponding Fund.
SUB-ACCOUNT VALUE. The Policy Value in a Sub-Account as defined on Page 13.
Surrender Value. The Cash Value minus any outstanding Policy Debt.
UNIT. A unit of measurement used to calculate the Sub-Account Values.
UNSCHEDULED PREMIUM PAYMENT. Any Premium Payment other than a Planned Premium
Payment.
VALUATION DAY. Each day the New York Stock Exchange is open for business
except Federal and other holidays and days when the Company is not otherwise
open for business.
VALUATION PERIOD. The period commencing at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ending at the close of
regular trading on the New York Stock Exchange on the next succeeding
Valuation Day.
VARIABLE ACCOUNT. The Protective Variable Life Separate Account, a separate
investment account of the Company to which Policy value may be transferred or
into which Net Premiums may be allocated.
VARIABLE ACCOUNT VALUE. The sum of all Sub-Account Values.
WITHDRAWAL. A Withdrawal by the Owner(s) of an amount of Cash Value that is
less than the Surrender Value.
WRITTEN NOTICE. A written notice or request that is received by the Company
at the Home Office.
Policy VULLVULIA
VUL-06 3-98 Page 5
GENERAL PROVISIONS
ENTIRE CONTRACT. This Policy, any riders and/or endorsements attached
hereto, and the Application, a copy of which is attached, and all subsequent
applications, constitute the entire contract. Any application for
reinstatement becomes part of this Policy if the reinstatement is approved by
the Company. The Policy is issued in consideration of payment of the Initial
Premium Payment shown on the Policy Specifications Page.
MODIFICATION OF THE CONTRACT. No change or waiver of the terms of this
Policy is valid unless made by Us, in writing, and approved by the President,
Secretary or a Vice President of the Company. We reserve the right to change
the provisions of this Policy to conform to any applicable laws, or
applicable regulations or rulings issued by a government agency.
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 riders is not correct, the Death Benefit
and any benefits provided under any riders to this Policy will be adjusted to
those which would be purchased by the most recent deduction for the cost of
insurance and the cost of any benefits provided by such riders, at the
correct age and sex.
NON-PARTICIPATING. This Policy does not share in our surplus or profits and
does not pay dividends.
SUICIDE EXCLUSION. If the Insured commits suicide, while sane or insane,
within two years from the Policy Effective Date, the Company's total
liability shall be limited to the Premium Payments made before death, less
any Policy Debt and less any Withdrawals. If the Insured commits suicide,
while sane or insane, within two years from the effective date of any
increase in the Face Amount, the Company's total liability with respect to
such increase shall be limited to the sum of the monthly cost of insurance
charges deducted for such increase.
TERMINATION. All coverage under this Policy shall terminate when any one of
the following events occurs:
(1) The Owner(s) requests a full surrender. A surrender will require
a return of this Policy.
(2) The Insured dies.
(3) The Policy lapses, as described in the sub-section entitled
"Grace Period" under "Premiums" and the sub-section entitled
"Collateral" under "Policy Loans".
REPRESENTATIONS AND CONTESTABILITY. In issuing this Policy, the Company relies
on all statements made by or for the Insured in the Application or in a
supplemental application. Legally, these statements are considered to be
representations and not warranties, unless fraud is involved. The Company can
contest the validity of this Policy or resist a claim for any material
misrepresentation of a fact made on the Application or in a supplemental
application for this Policy. We also have the right to contest the validity of
any policy change based on material misstatements made in any application for
that change. To do so, however, the representation must have been made in the
Application, or in a supplemental application. Also, a copy of such application
must have been attached to this Policy when issued or made a part of the Policy
when changes in coverage became effective.
The Company cannot bring any legal action to contest the validity of this Policy
after it has been in force during the lifetime of the Insured for two years from
the Policy Effective Date unless fraud is involved.
If there was a rider or endorsement added to this Policy after the Issue Date,
or benefits added by a supplemental Policy Specifications Page, the Company
cannot contest the validity of any benefits so added after the benefits have
been in force during the lifetime of the Insured for two years from the
effective date of the addition of the benefits unless fraud is involved.
Policy VULLVULIA
VUL-06 3-98 Page 6
The Company cannot contest the validity of any reinstated benefits after the
reinstated benefits have been in force during the lifetime of the Insured for
two years from the date the Company approves the reinstatement application
unless fraud is involved.
REPORTS. At least once a year We will send to you at your last known address, a
report for this Policy. The report will show as of the end of the report period:
(1) the current Death Benefit; (2) the current Policy Value; (3) the current
Fixed Account Value; (4) the current Variable Account Value; (5) the current
Loan Account Value; (6) the current Sub-Account Values; (7) Premium Payments
made since the last report; (8) any Withdrawals since the last report; (9) any
policy loans and accrued interest; (10) the current Surrender Value; (11) your
current premium allocations; (12) charges deducted since the last report; and
(13) any other information required by law.
In addition, the Company will provide a Report for this Policy at any time upon
the Owner's written request. If the Owner(s) requests this information more
frequently than annually, the Company may charge a fee which shall not exceed
$50.
ARBITRATION. The parties hereby acknowledge that the provision of insurance
pursuant to this Policy takes place in and substantially affects interstate
commerce and that the Federal Arbitration Act permits and promotes the use of
arbitration as a means of dispute resolution in matters arising from
interstate commerce.
Any controversy, dispute or claim by any Owner(s), Insured or Beneficiary, or
their respective assigns (each referred to herein as "Claimant"), arising out
of or relating in any way to this Policy or the solicitation or sale thereof
shall be submitted to binding arbitration pursuant to the provisions of the
Federal Arbitration Act, 9 U.S.C. Section 1, et seq. Absent consolidation of
arbitration as provided for below, such arbitration shall be governed by the
rules and provisions of the Dispute Resolution Program for Insurance Claims
of the American Arbitration Association ("AAA"). The arbitration panel shall
consist of three (3) arbitrators, one (1) selected by the Company, one (1)
selected by the Claimant and one (1) selected by the arbitrators previously
selected.
If a Claimant, the Company or a third-party have any dispute between or among
them or any of them that is directly or indirectly related to any dispute
governed by this arbitration provision, the Claimant and the Company consent to
the consolidation of the dispute governed by this arbitration provision with
such other dispute; if such other dispute is governed by an arbitration
agreement that selects the forum and rules of the National Association of
Securities Dealers, Inc. or the New York Stock Exchange, Inc., the Claimant and
the Company shall be deemed to have consented to the jurisdiction of such other
forum to the extent allowed by law and will abide by the rules, provisions and
interpretations thereof, including those for selection of arbitrators.
It is understood and agreed that the arbitration shall be binding upon the
parties, that the parties are waiving their right to seek remedies in court,
including the right to jury trial; and that an arbitration award may not be set
aside in later litigation except upon the limited circumstances set forth in the
Federal Arbitration Act.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
Court having jurisdiction thereof. The arbitration expenses shall be borne by
the losing party or in such proportion as the arbitrator(s) shall decide.
CONTROL PROVISIONS
THE PARTIES INVOLVED. The Owner(s) is the person(s) who owns this Policy as
shown on the Policy Specifications Page, on an endorsement or on an amendment
to the Application. The Owner is the Insured unless someone else is named as
the Insured. The Insured is the person whose life this Policy insures.
RIGHTS OF OWNER. While the Insured is living, the Owner(s) may exercise all
rights and benefits contained in the Policy or allowed by the Company. These
rights include assigning this Policy, changing Beneficiaries, changing
ownership, enjoying all benefits and exercising all policy provisions. The
use of these rights may be subject to the consent of any assignee or
irrevocable Beneficiary.
Policy VULLVULIA
VUL-06 3-98 Page 7
If a Partnership has any rights under this Policy, such rights shall belong to
the Partnership as it exists when the right is exercised.
CONTINGENT OWNER. If the Owner is not the Insured, the Owner(s) may name a
Contingent Owner provided such request is made in writing on a form
acceptable to Us. The Contingent Owner will become the Owner if the Owner(s)
die. If there is not a Contingent Owner named when the Owner(s) die, the
estate of the last Owner to die will become the Owner.
BENEFICIARY. A Beneficiary is any person named by the Owner(s) on the
Company's records to receive the Death Benefit Proceeds on the Insured's
death. There may be different classes of Beneficiaries such as primary and
contingent. These classes set the order of payment of the Death Benefit. The
Owner(s) may change the Beneficiary at any time prior to the Insured's death.
To make a change, We must receive a written request satisfactory to Us at our
Home Office. If an irrevocable Beneficiary has been designated however, such
designation cannot be changed or revoked without the irrevocable
Beneficiary's written consent. Any change of Beneficiaries is effective on
the date the request was signed. Provided, however, We will not be liable for
any payment We make before such request has been received and acknowledged at
our Home Office.
CHANGING THE OWNER. The Owner(s) may be changed at any time prior to the
Insured's death. To make a change, We must receive from the Owner(s) a
written request satisfactory to Us at our Home Office. Any such change will
be effective on the date the request was signed. Provided, however, We will
not be liable for any payment We make before such request has been received
and acknowledged at our Home Office.
ASSIGNMENT. Upon notice to Us, the Owner(s) may assign his or her rights under
this Policy. However, for this assignment to be binding on the Company, it must
be in writing and filed at the Home Office. We assume no responsibility for the
validity of any assignment. Any claim under any assignment shall be subject to
proof of interest and the extent of assignment. Once the Company receives a
signed copy of the assignment, the Owner's rights and the interest of any
Beneficiary or any other person will be subject to the assignment. An assignment
is subject to any Policy Debt.
PROTECTION OF PROCEEDS. To the extent permitted by law, any payment of Death
Benefit Proceeds, surrender value or any Withdrawal shall be free from legal
process from the claim of any creditor of the person entitled to them.
SUSPENSION OR DELAY IN PAYMENT. The Company has the right to suspend or delay
the date of payment of a Withdrawal, loan, surrender, or the Death Benefit
Proceeds for any period:
1) when the New York Stock Exchange is closed; or
2) when trading on the New York Stock Exchange is restricted; or
3) when an emergency exists (as determined by the Securities & Exchange
Commission) as a result of which (a) the disposal of securities in
the Variable Account is not reasonably practicable; or (b) it is not
reasonably practicable to determine fairly the value of the net assets
of the Variable Account; or
4) when the Securities & Exchange Commission, by order, so permits for the
protection of security holders.
As to amounts allocated to the Fixed Account, We may defer payment of Death
Benefit proceeds for up to two months and any withdrawal, surrender or the
making of a policy loan for up to six months after We receive a written request.
If We delay payment of surrender benefits under this Policy, We will pay the
Owner interest at the rate specified under applicable state law as required, if
any, at the time of the surrender request.
Policy VULLVULIA
VUL-06 3-98 Page 8
TAX CONSIDERATIONS. In order to receive the tax treatment afforded to life
insurance contracts under federal tax laws, this Policy must qualify and
continue to qualify as a life insurance contract under the Internal Revenue Code
of 1986, as amended. The Company reserves the right to decline to: (a) accept a
Premium Payment; or (b) change the Death Benefit Option; or (c) process a
Withdrawal. The Company also reserves the right to refund a Premium Payment,
including any earnings thereon, if such refund is necessary to prevent this
Policy from failing to qualify as a life insurance contract.
We also reserve the right to make changes to this Policy or to any riders or to
make distributions from this Policy to the extent We consider necessary for this
Policy to continue to qualify as a life insurance contract. Such changes will
apply uniformly to all affected policies. You will receive advance written
notification of such changes.
CHANGES IN POLICY COST FACTORS. Changes in non guaranteed credited rates,
cost of insurance charges, or mortality and expense risk charges will be by
class and will be based upon changes in future expectations of such factors
as investment earnings, mortality, persistency, expenses, and taxes.
COVERAGE LIMITATIONS. Unless the health and other conditions of the Insured
on the date that the Policy is delivered to the Owner(s) is the same as that
indicated in the application, the Company reserves the right to cancel the
Policy or re-underwrite the Policy and make appropriate adjustments to the
monthly cost of insurance charge.
PREMIUMS
PREMIUM PAYMENT(s). Premium Payment(s) are payable at our Home Office or to
any Agent of the Company. Premium Payment(s) must be made by check payable to
Protective Life Insurance Company or by any other method which the Company
deems acceptable. The minimum monthly Premium Payment(s) that We will accept
is: (1) $50 if paid by a pre-authorized payment arrangement; or (2) $150 for
any other mode of payment accepted by the Company.
The Company has the right not to accept any Premium Payment in the event that it
is determined in the Company's discretion that the Premium Payment will cause
the Policy to fail to qualify as a life insurance contract under federal tax
laws.
No insurance will take effect until the initial Premium Payment is paid and the
health and other conditions of the Insured are determined to be the same as that
described in the Application on the date the Policy is delivered.
PLANNED PREMIUM PAYMENTS. The amounts and frequency of the Planned Premium
Payments in effect on the Policy Effective Date are shown on the Policy
Specifications Page. You do not have to make the Planned Premium Payment.
Subject to the limits described above, you may change the frequency and
amount of the Planned Premium Payments at any time.
The Company will send Planned Premium Payment reminder notices to you unless
otherwise requested. You can choose to have them sent at 12, 6, or 3 month
intervals. If desired, the Company will also arrange for Planned Premium
Payments to be made on a monthly basis under a pre-authorized payment
arrangement.
UNSCHEDULED PREMIUM PAYMENTS. Subject to the limits described above, while this
Policy is in force, Premium Payment(s) other than the Planned Premium Payments
will be accepted by the Company at any time. The Owner(s) may specify in writing
that all Unscheduled Premium Payments are to be applied against Policy Debt, if
any, as a loan repayment.
MINIMUM MONTHLY PREMIUM GUARANTEE. In return for paying the Minimum Monthly
Premium shown on the Policy Specifications Page or an amount equivalent
thereto by the Monthly Anniversary Day, the Company guarantees, to the extent
outlined herein, that the Policy will not Lapse. The policy will not Lapse
during the Minimum Monthly Premium Guarantee Period, which is shown on the
Policy Specifications Page, if for each month that the policy has been in
force (a) equals or exceeds (b). For purposes of the Minimum Monthly Premium
Guarantee:
Policy VULLVULIA
VUL-06 3-98 Page 9
(a) is the total Premiums paid less any Withdrawals and Policy Debt
(b) is the Minimum Monthly Premium as shown on the Policy Specifications
Page multiplied by the number of complete policy months since the Policy
Effective Date, including the current month.
PREMIUM EXPENSE CHARGES. The Premium Expense Charges are shown on the Policy
Specifications Page.
ALLOCATION OF NET PREMIUMS. Net Premiums will be allocated to the
Sub-Accounts and the Fixed Account on the date We receive them according to
the instructions of the Owner(s) in the Application or subsequent written
notice. Owner(s) may change the allocations in effect at any time by Written
Notice. Allocations must be made in whole percentages. The minimum amount
that can be allocated to any Sub-Account or the Fixed Account is 10% of any
Net Premiums, and the sum of allocations must add up to 100%.
If the Contract is issued in a state where, upon cancellation and within the
cancellation period, the Company returns the Premium Payment(s) made, the
Company reserves the right to allocate the initial Premium Payment and any
additional Premium Payments made during cancellation period to the Fixed Account
or Money Market Sub-Account. Thereafter, allocations will be made as shown in
the Policy Specifications Page in accordance with the selections made by the
Owner(s).
GRACE PERIOD. Unless this Policy is otherwise continued under the Minimum
Monthly Premium Guarantee, if the Surrender Value on a Monthly Anniversary
Day is insufficient to cover the Monthly Deductions due on that Monthly
Anniversary Day, this Policy will stay in force for 61 days. This 61 day
period is called the Grace Period.
If the Owner(s) does not pay sufficient Premiums (less Premium Expense Charges)
to cover the current and past due Monthly Deductions by the end of the Grace
Period, this Policy will terminate without value and all coverage under this
Policy will terminate. At the beginning of the Grace Period, the Company will
mail a notice of such Premiums due to the Owner's last known address and to the
address of any assignee of record. Coverage continues during the Grace Period.
The Company will deduct unpaid Monthly Deductions and Policy Debt from any Death
Benefit payable if death occurs during the Grace Period.
REINSTATEMENT. Prior to the Insured's death if this Policy has Lapsed, it can be
reinstated. Reinstatement means to restore the Policy when the Policy has
terminated at the end of the Grace Period. We will not reinstate this Policy if
it has been surrendered. The Company will reinstate the Policy if the Company
receives:
(1) the Owner's written request within five years after the end of the
Grace Period,
(2) evidence of insurability satisfactory to the Company,
(3) payment of Net Premium equal to all Monthly Deductions that were due
and unpaid during the Grace Period with interest at a rate not to
exceed 6% per annum compounded annually, if required by the Company,
and payment of Premium Payments at least sufficient to keep this
Policy in force for three months (We may accept Premium Payments
larger than this amount), and
(4) payment of or reinstatement of any Policy Debt which existed at the
end of the Grace Period.
The effective date of a reinstated policy will be the day the Company approves
the reinstatement and all of the above requirements have been received.
MINIMUM VALUES. The values and benefits of this Policy shall not be less
than the minimum benefits required by the statutes of the state in which this
Policy was delivered.
Policy VULLVULIA
VUL-06 3-98 Page 10
DEDUCTIONS FROM POLICY VALUE
MONTHLY DEDUCTIONS. The Monthly Deductions is a charge made as of the Policy
Effective Date and on each Monthly Anniversary Day thereafter. Monthly
Deductions will reduce the Sub-Account Value(s) and/or Fixed Account Value in
the proportion that each SubAccount Value and the Fixed Account Value bears to
the Policy Value. Beginning as of the Policy Effective Date, We will deduct the
Monthly Deductions described on the Policy Specifications Page.
MONTHLY COST OF INSURANCE CHARGE. The monthly cost of insurance charge is
determined at the end of each policy month. The monthly cost of insurance
charge is computed as follows:
(1) divide the Death Benefit at the beginning of the Policy month by the
sum of 1 plus the monthly guaranteed interest rate which is shown on
the Policy Specifications page.
(2) reduce the result by the amount of the Policy Value (prior to
deducting the Monthly Deductions) at the beginning of the policy
month;
(3) multiply the difference by the cost of insurance rate as described
in the Cost of Insurance Rates Section; divided by 1,000.
The Monthly Cost of Insurance Charge is computed separately for the Initial Face
Amount and for each increase in Face Amount.
PREMIUM EXPENSE CHARGE. A premium expense charge, as described on the Policy
Specifications Page will be deducted from each Premium Payment.
ADMINISTRATION FEE. An administration fee as described on the Policy
Specifications Page will be deducted monthly.
COST OF INSURANCE RATES. The monthly cost of insurance rate is based on the
sex, issue age, duration and rate class of the Insured and on the number of
years that a Policy has been in force. For each Face Amount increase, We will
use the issue age, sex, rate class and duration of this Policy at the time of
the request. Monthly cost of insurance rates will be determined by the
Company, based on its expectations as to future mortality experience,
investment earnings, mortality, persistency, expenses and taxes.
Any change in the monthly cost of insurance rates will be on a uniform basis for
insureds of the same class such as age, sex, rate class, and policy year.
However, the cost of insurance rates will never be greater than those shown in
the Guaranteed Maximum Monthly Cost of Insurance Rates Table on the Policy
Specifications Page.
CHARGES FOR BENEFITS UNDER RIDERS. We will deduct a monthly charge for each
rider to the Policy as shown on the Policy Specifications Page.
MORTALITY AND EXPENSE RISK CHARGE. We will deduct a mortality and expense
risk charge equal, on a monthly basis, to the percentage shown on the Policy
Specifications Page of the daily net asset value of each Sub-Account in the
Variable Account. This deduction is made to compensate the Company for
assuming the mortality and expense risks under this Policy. The Mortality and
Expense Risk Charge is deducted only from the Variable Account.
OTHER DEDUCTIONS. We also make the following other deductions as they occur:
(1) Withdrawal Charge for Withdrawals;
(2) Surrender Charge if you surrender this Policy, decrease its Initial
Face Amount, or if this Policy lapses at the end of a Grace Period;
(3) Transfer fee for certain transfers of the Fixed Account or Variable
Account Values.
Policy VULLVULIA
VUL-06 3-98 Page 11
BASIS OF COMPUTATIONS
Minimum Surrender Values and maximum cost of insurance rates are based on the
Commissioner's 1980 Standard Ordinary Smoker or Non-Smoker, Male or Female
Mortality Table (age nearest birthday) and the rate class of the Insured.
Surrender Values are at least equal to those required by law. Reserves are
computed by the Commissioner's Reserve Valuation Method.
FIXED ACCOUNT
CALCULATION OF THE FIXED ACCOUNT VALUE. The value of the Fixed Account at
any time is equal to:
(a) the Net Premiums allocated to the Fixed Account; plus
(b) Policy Value transferred to the Fixed Account; plus
(c) interest credited to the Fixed Account; less
(d) any Withdrawals including any withdrawal charges deducted or transfers
from the Fixed Account including any transfer fees deducted from
the Fixed Account; less
(e) any surrender charges deducted in the event of a decrease of Face
Amount; less
(f) Monthly Deductions.
INTEREST CREDITED. The Company guarantees that the interest credited during
the first Policy Year to the initial Net Premiums allocated to the Fixed
Account will be at a rate not less than the Initial Annual Effective Interest
Rate for the Fixed Account shown on the Policy Specifications Page.
For subsequent Net Premiums allocated to or Policy Value transferred to the
Fixed Account, the guaranteed interest rate applicable will be the annual
effective interest rate in effect on the date the subsequent Net Premium is
received by Us or the date the transfer is made. Such guaranteed interest rate
will apply to such amounts for a twelve month period which begins on the date
the Net Premium is allocated or the date the transfer is made.
After the guaranteed interest rate expires, (i.e., 12 months after the Net
Premium or transfer is placed in the Fixed Account) We will credit interest on
the Fixed Account Value attributable to such Net Premiums and transfers at the
current interest rate in effect. New current interest rates are effective for
such Fixed Account Value for 12 months from the time they are first applied. The
Initial Annual Effective Interest Rate and the current interest rates the
Company will credit are annual effective interest rates of not less than 4.00%.
For purposes of crediting interest, amounts deducted, transferred or withdrawn
from the Fixed Account will be accounted for on a "first-in, first-out" (FlFO)
basis.
The Company reserves the right to apply different interest rate guarantees to
certain amounts credited to the Fixed Account.
VARIABLE ACCOUNT
GENERAL DESCRIPTION. The variable benefits under the Policy are provided
through the Variable Account. The Variable Account is registered with the
Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account are not chargeable with the
liabilities arising out of any other business We may conduct. We have the right
to transfer to our General Account any assets of the Variable Account which are
in excess of such reserves and other liabilities. The assets of the Variable
Account are available to cover the liabilities of the General Account of the
Company only to the extent that the assets of the Variable Account exceed the
liabilities of the Variable Account arising under the policies supported by the
Variable Account.
Policy VULLVULIA
VUL-06 3-98 Page 12
SUB-ACCOUNTS OF THE VARIABLE ACCOUNT. The assets of the Variable Account are
divided into a series of Sub-Accounts that are listed on the Policy
Specifications Page and in the current Prospectus you received. Each
Sub-Account invests exclusively in shares of a corresponding Fund. Any
amounts of income, dividends, and gains distributed from the shares of a Fund
will be reinvested in additional shares of that Fund at its Net Asset Value
Per Share.
When permitted by law, We may:
(1) create new variable accounts;
(2) combine variable accounts, including the Variable Account;
(3) add new Sub-Accounts to or remove existing Sub-Accounts from
the Variable Account or combine Sub-Accounts;
(4) make new Sub-Accounts or other Sub-Accounts available to such
classes of the Policies as We may determine;
(5) add new Funds or remove existing Funds;
(6) if shares of a Fund are no longer available for investment
or if We determine that investment in a Fund is no longer
appropriate in light of the purposes of the Variable Account,
substitute a different Fund for any existing Fund;
(7) deregister the Variable Account under the Investment Company Act
of 1940 if such registration is no longer required;
(8) operate the Variable Account as a management investment company
under the Investment Company Act of 1940 or in any other form
permitted by law; and
(9) make any changes to the Variable Account or its operations as may
be required by the Investment Company Act of 1940 or other
applicable law or regulations.
The investment policy of the Variable Account will not be changed without
approval pursuant to the insurance laws of the State of Tennessee. If required,
approval of or change of investment policy will be filed with the insurance
department of the state where this Policy is delivered.
The values and benefits of this Policy provided by the Variable Account depend
on the investment performance of the Funds in which your selected Sub-Accounts
are invested. We do not guarantee the investment performance of the Funds. The
Owner(s) bear the full investment risk for Net Premiums allocated or Policy
Value transferred to the Sub-Accounts.
VALUATION OF ASSETS. Assets of Funds held by each Sub-Account will be valued
at their Net Asset Value per share on each Valuation Day. The Prospectus the
Owners(s) received for the Funds defines the Net Asset Value per share of the
Funds and describes each Fund.
CALCULATION OF SUB-ACCOUNT VALUES. The Sub-Account Value for any Sub-Account
is equal to the number of Units this Policy then has in that Sub-Account,
multiplied by the value of such units at that time. Amounts allocated,
transferred or added to a Sub-Account are used to purchase Units of that
Sub-Account. Units are redeemed when amounts are deducted, transferred, or
withdrawn. The number of Units in a Sub-Account at any time is equal to the
number of Units purchased minus the number of Units redeemed up to such time.
For each Sub-Account, the Net Premiums allocated to or Policy Value
transferred to the Sub-Account are converted into Units. The number of Units
credited is determined by dividing the dollar amount directed to each
Sub-Account by the value of the Unit for that Sub-Account for the Valuation
Day on which the Net Premiums allocated to or Policy Value transferred are
credited to the Sub-Account. The Unit value at the end of every Valuation Day
is the Unit value at the end of the previous Valuation Day times the Net
Investment Factor, as described below.
Policy VULLVULIA
VUL-06 3-98 Page 13
NET INVESTMENT FACTOR. The Unit value for each Sub-Account for any Valuation
Period is determined by the Net Investment Factor. The Net Investment Factor
is an index applied to measure the investment performance of a Sub-Account
from one Valuation Period to the next. The Net Investment Factor for a
Sub-Account for any Valuation Period is determined by dividing (1) by (2)
where
(1) is the result of:
a. the Net Asset Value per share of the Fund held in the Sub-Account,
determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
made by the Fund to the Sub-Account, if the "ex-dividend" date
occurs during the current Valuation Period; plus or minus
c. a per share charge or credit for any taxes reserved for, which is
determined by the Company to have resulted from the operations of
the Sub-Account.
(2) is the Net Asset Value per share of the Fund held in the Sub-Account,
determined at the end of the last prior Valuation Period.
TRANSFERS. On or after the later of thirty days after the Policy Effective
Date or six days after the ten-day cancellation period, or such other period
as required by law, upon receipt of Written Notice, the Owner(s) may transfer
the Fixed Account Value or any Sub-Account Value to other Sub-Accounts and/or
the Fixed Account. The transfer will be effected as of the date We receive
Written Notice from the Owner(s).
The amount transferred must be at least $100 or, if less, the entire amount in
the Fixed Account or the Sub-Account(s) each time a transfer is made. If, after
the transfer, the amount remaining in the Fixed Account or Sub-Account(s) from
which the transfer is made is less than $100, We reserve the right to transfer
the entire amount instead of the requested amount. The maximum amount which may
be transferred from the Fixed Account is the greater of (1) $2500; or (2) 25% of
the Fixed Account Value in any Policy Year.
The Policy Value on the effective date of the transfer will not be affected
except to the extent of the transfer fee. We reserve the right to limit
transfer requests to no more than 12 per year. For each additional transfer
request over 12 during each Policy Year, We reserve the right to charge a
Transfer Fee which is indicated on the Policy Specifications Page. The
Transfer Fee, if any, will be deducted from the amount being transferred.
We reserve the right, at any time and without prior notice, to terminate,
suspend or modify the transfer privileges described above.
DEATH BENEFIT
DEATH BENEFIT PROCEEDS. On the Insured's death, provided this Policy is in
force, We will pay the Death Benefit Proceeds when We receive satisfactory
proof of death of the Insured.
AMOUNT OF DEATH BENEFIT PROCEEDS. The Death Benefit Proceeds will be
determined as of the date of the Insured's death and will be equal to: (1),
plus (2), minus (3), minus (4), where
(1) is the Death Benefit under the Death Benefit option selected;
(2) is any additional benefits due under any riders attached to this Policy;
(3) is any Policy Debt; and
(4) is any unpaid Monthly Deductions if the Insured dies during the Grace
Period.
The Death Benefit Proceeds shall be determined under the Level Death Benefit or
Increasing Death Benefit, whichever is chosen by the Owner(s) and indicated on
the Policy Specifications Page, or any supplemental Policy Specifications Page.
Policy VULLVULIA
VUL-06 3-98 Page 14
Level Death Benefit - 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 below.
Increasing Death Benefit - 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 below.
TABLE OF PERCENTAGES
- -----------------------------------------------------------------------------------------------------------------------------------
Attained Attained Attained Age Attained
Age Percentage Age Percentage Age Percentage Age Percentage
- -----------------------------------------------------------------------------------------------------------------------------------
0-40 250% 50 185% 60 130% 70 115%
41 243% 51 178% 61 128% 71 113%
42 236% 52 171% 62 126% 72 111%
43 229% 53 164% 63 124% 73 109%
44 222% 54 157% 64 122% 74 107%
45 215% 55 150% 65 120% 75-90 105%
46 209% 56 146% 66 119% 91 104%
47 203% 57 142% 67 118% 92 103%
48 197% 58 138% 68 117% 93 102%
49 191% 59 134% 69 116% 94 101%
95 + 100%
- -----------------------------------------------------------------------------------------------------------------------------------
PAYMENT OF DEATH BENEFIT PROCEEDS. We will pay the Death Benefit Proceeds to the
Beneficiary in a lump sum, unless a Settlement Option has been selected. If the
Primary or Contingent Beneficiary is not living, or if no Beneficiary has been
designated, We will pay the Owner(s) or Owner's estate.
SUSPENSION OF PAYMENT. Payment of Death Benefit Proceeds may be suspended or
delayed under the circumstances described herein for suspension or delay of
payment of surrenders or Withdrawals.
CREDITOR CLAIMS. To the extent permitted by applicable laws, no right or benefit
under this Policy shall be subject to claims of creditors, except as may be
provided by an assignment.
SURRENDERS AND WITHDRAWALS
SURRENDERS. Prior to the Insured's death, and while the Policy is in force,
this Policy may be surrendered for its Surrender Value. The surrender will be
effective as of the Valuation Day on which We receive a Written Notice
requesting surrender of the Policy. If the Policy is surrendered, any
applicable Surrender Charge as described on the Policy Specifications Page
will be imposed. Once the surrender is effective, all benefits provided by
the Policy cease and the Policy cannot be reinstated.
WITHDRAWALS. After the first Policy Year, the Owner(s) may make a written
request for a Withdrawal of the Surrender Value, subject to certain
restrictions. The minimum Withdrawal request is $500. As of the date We
receive Written Notice from the Owner(s), We will reduce the Policy Value by
the amount withdrawn (including the withdrawal charge as described on the
Policy Specifications Page). If a Level Death Benefit is in effect, We
reserve the right to reduce the Face Amount of the Policy by the amount of
the Withdrawal (exclusive of the withdrawal charge). Face Amount reductions
will be effective as provided in the provision "Decreasing the Face Amount".
The Owner(s) may specify how the Withdrawal and withdrawal charge are to be
deducted from the Policy Value. In the event an allocation is not specified,
We will allocate the Withdrawal and withdrawal charge based on the proportion
that the value in the Fixed Account and the value in the Sub-Accounts bear to
the unloaned Policy Value.
We reserve the right to decline a Withdrawal request if the remaining Face
Amount would be below the minimum amount for which We would then issue the
Policy under our rules; or We determine that the Withdrawal would cause this
Policy to fail to qualify as a life insurance contract under applicable tax
laws, as interpreted by Us.
Policy VULLVULIA
VUL-06 3-98 Page 15
POLICY LOANS
RIGHT TO MAKE LOANS, POLICY DEBT. After the first Policy Anniversary and prior
to the Insured's death and while this Policy is in force, loans can be made on
this Policy provided it has Surrender Value greater than Zero. However, the
Policy must be properly assigned to the Company before any policy loan is made.
No other collateral is needed. Any policy loan must be for at least a minimum
loan amount of $500. The Company may delay making any policy loan from the Fixed
Account for up to six months.
MAXIMUM LOAN. The most the Owner(s) can borrow is an amount that equals 90% of
the Surrender Value of the Policy on the date the policy loan request is
received.
INTEREST. The interest charged on any policy loan is at an effective annual
rate, shown on the Policy Specifications Page, compounded yearly on the Policy
Anniversary. Interest payments are due for the prior Policy Year on each Policy
Anniversary. If interest is not paid when due, it will be added to the amount of
the policy loan and will bear interest at the rate payable on the policy loan.
Interest is charged in arrears from the date of the policy loan. Interest, as it
accrues from day to day, is considered part of the Policy Debt.
COLLATERAL. When a policy loan is made, an amount sufficient to secure the
policy loan is transferred out of the Sub-Account(s) and the Fixed Account and
into the Policy's Loan Account. The Owner(s) can specify how to allocate the
amount to be transferred to the Loan Account as collateral from among the
Sub-Account(s) and the Fixed Account. If an allocation is not specified, the
amount will be allocated in the same proportion that the value of your Fixed
Account and the value of your Sub-Account(s) bear to the total unloaned Policy
Value on the date We make the policy loan. An amount equal to any unpaid policy
loan interest will also be transferred on each Policy Anniversary to the Loan
Account. We will allocate the unpaid interest based on the proportion that the
value of your Fixed Account and the value of your Sub-Account(s) bear to the
total unloaned Policy Value. The Loan Account Value will be recalculated (1)
when policy interest is added to the amount of the loan, (2) when a loan
repayment is made, or (3) when a new policy loan is made.
We will credit the Loan Account with interest at an effective annual rate of
not less than the Guaranteed Interest Rate for the Fixed Accounts. We will
determine such rate in advance of each calendar year. This rate will apply
to the calendar year which follows the date of determination. On each Policy
Anniversary, the interest earned on the Loan Account since the preceding
Policy Anniversary will be transferred to the Sub-Account(s) and the Fixed
Account. The interest will be transferred to the SubAccount(s) and the Fixed
Account in the same proportion that Premium Payments are allocated.
If the Loan Account Value exceeds the Cash Value, the Owner(s) must pay the
excess. We will send you a notice of the amount the Owner(s) must pay. This
amount must be paid within 31 days after We send the notice, or the Policy will
Lapse. We will send the notice to you and to any assignee of record.
REPAYING POLICY DEBT. Policy Debt can be repaid in part or in full any time
during the Insured's life while this Policy is in force. When a loan repayment
is made, Policy Value in the Loan Account in an amount equal to that payment
will be transferred to the Sub-Account(s) and the Fixed Account. The Owner(s)
may tell Us how to allocate this transfer among the Sub-Account(s) and the Fixed
Account. If no allocation is specified, We will allocate that amount among the
Sub-Account(s) and the Fixed Account in the same proportion that Premium
Payments are allocated.
CHANGING THIS POLICY
The Owner(s) can request any one of the following changes subject to certain
conditions. The Owner's request must be received in writing at the Company's
Home Office.
Policy VULLVULIA
VUL-06 3-98 Page 16
INCREASING THE FACE AMOUNT. On or after the first Policy Anniversary, the
Owner(s) may submit a supplemental application for an increase in Face Amount.
The Company reserves the right to require satisfactory proof of insurability in
connection with evaluating any requested increase in Face Amount. The Insured's
current Attained Age must be less than the maximum issue age. The amount of any
increase must be at least $10,000. Any increase approved by the Company will be
effective on the effective date shown on the supplemental Policy Specifications
Page which will be issued and attached to the Policy and will be subject to
monthly cost of insurance deductions for the increase from the Policy Value of
this Policy.
PREMIUM PAYMENTS REQUIRED FOR A FACE AMOUNT INCREASE. Additional Premium
Payments may be required in connection with an increase in Face Amount. We
will notify the Owner(s) if additional Premium Payments are required and
specify the Premium Payments required on the supplemental Policy
Specifications Page.
CANCELLATION OF AN INCREASE OF FACE AMOUNT. The cancellation provision on
the cover of this Policy applies equally to any increase in Face Amount
except that where no additional Premium Payments are required in order to
increase the Face Amount, only the first monthly cost of insurance deduction
and the administration fee for increases in Face Amount will be credited back
to the sub-accounts and fixed account in the proportion that each Sub-Account
Value and the Fixed Account Value bears to the Policy Value if the increase
is cancelled.
DECREASING THE FACE AMOUNT. On or after the first Policy Anniversary, you can
request in writing a decrease in Face Amount subject to the following rules.
Any decrease will go into effect on the Monthly Anniversary Day that falls on
or next following the date the Company receives and accepts the request for
change. The decrease will first be applied against increases in Face Amount
in the reverse order in which they occurred. It will then be applied against
the Initial Face Amount. The Company reserves the right to prohibit any
decrease: (1) for the three years following an increase in Face Amount; and
(2) for one Policy Year following the last decrease in Face Amount.
The Face Amount remaining in effect after any decrease cannot be less than the
Minimum Face Amount shown on the Policy Specifications Page. Decreasing the Face
Amount may result in lower Monthly Deductions or a refund in Premiums and
earnings thereon. Decreasing the Initial Face Amount may result in a Surrender
Charge. The Company reserves the right to refuse a decrease in Face Amount if
such decrease would cause this Policy to fail to qualify as a life insurance
contract under applicable tax laws, as interpreted by Us.
CHANGING THE DEATH BENEFIT OPTION. On or after the first Policy Anniversary,
the Owner(s) may request in writing a change in the Death Benefit Option. The
change will go into effect on the Monthly Anniversary Day that falls on or
next following the date the Company receives and accepts the request for
change. If the Owner(s) requests a change from Increasing Death Benefit to
Level Death Benefit, the Face Amount will be increased to equal the Death
Benefit on the effective date of change. If the Owner(s) requests a change
from Level Death Benefit to Increasing Death Benefit, 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 permitting a change in Death Benefit options.
CHANGE APPROVAL. All changes must be approved by the Home Office. No agent
has the authority to make any changes or waive any of the terms of this
Policy.
SETTLEMENT OPTIONS
Optional Methods of Settlement provide alternative ways in which payment can be
made. Payment under these Optional Methods of Settlement will not be affected by
the investment experience of any Sub-Account after the proceeds are applied
under such option.
Policy VULLVULIA
VUL-06 3-98 Page 17
AVAILABILITY OF OPTIONS. Upon written request, all or part of the Death
Benefit Proceeds or Surrender Value may be applied under any Settlement
Option We offer on the option date. The option date is any date this Policy
terminates under the termination provision. If this Policy is assigned,
either before or after the choice of an option, any amount due to the
assignee will be paid in one sum. The balance, if any, may be applied under
any Settlement Option.
MINIMUM AMOUNTS. If the amount to be applied under any Settlement Option for
any one person is less than $5,000, the Company may pay that amount in one
sum instead. If the payments under any option come to less than $50 each, the
Company has the right to make payments at less frequent intervals.
ELECTING A SETTLEMENT OPTION. To elect any Settlement Option, the Company
requires that a written request, satisfactory to it, be received at its Home
Office. The Owner(s) may elect a Settlement Option during the Insured's
lifetime. If the Death Benefit Proceeds are payable in one sum when the Insured
dies, the Beneficiary may elect a Settlement Option with the Company's consent.
EFFECTIVE DATE AND PAYMENT DATE. The effective date of a Settlement Option
is the date the amount is applied under that option. For Death Benefit
Proceeds, this is the date that due proof of the Insured's death is received
at the Company's Home Office. For the Surrender Value, it is the effective
date of surrender.
A later date for the first payment may be requested in the Settlement Option
election. All payment dates will fall on the same day of the month as the first
one. No payment will become due until a payment date. No partial payment will be
made for any period shorter than the time between payment dates.
If the Surrender Value is applied under any option, the Company may delay
payment of any Withdrawal for up to six months. Interest at the rate in effect
for Option 3 during this period will be paid on the amount withdrawn.
DESCRIPTION OF OPTIONS. The Company's Settlement Options are described
below. Any other Settlement Option agreed to by the Company may be elected.
The Settlement Options are described in terms of monthly payments.
OPTION 1 - Payment For A Fixed Period. Equal monthly payments will be made
for any period selected up to 30 years. The amount of each payment depends on
the total amount applied, the period selected and the monthly payment rates
the Company is using when the first payment is due. The rate of any payment
for each $1,000 of proceeds applied will not be less than shown in the Option
1 Table. The payments shown in this table are based on an interest rate of 3%
per year.
Option 1 Table
Minimum Monthly Payment Rates for Each $1,000 Applied
- -------------------------------------------------------------------------------------------------------------------------
Monthly Monthly Monthly
Years Payment Years Payment Years Payment
- -------------------------------------------------------------------------------------------------------------------------
1 $84.47 11 $ 8.86 21 $ 5.32
2 42.86 12 8.24 22 5.15
3 28.99 13 7.71 23 4.99
4 22.06 14 7.26 24 4.84
5 17.91 15 6.87 25 4.71
6 15.14 16 6.53 26 4.59
7 13.16 17 6.23 27 4.47
8 11.68 18 5.96 28 4.37
9 10.53 19 5.73 29 4.27
10 9.61 20 5.51 30 4.18
- -------------------------------------------------------------------------------------------------------------------------
Policy VULLVULIA
VUL-06 3-98 Page 18
OPTION 2 - LIFE INCOME WITH PAYMENTS FOR A GUARANTEED PERIOD. Equal monthly
payments are based on the life of the named person. Payments will continue
for the lifetime of that person with payments guaranteed for 10 or 20 years.
Payments stop at the end of the selected guaranteed period or when the named
person dies, whichever is later.
The Option 2 Table shows the minimum monthly payment for each $1,000 applied.
The actual payments will be based on the monthly payment rates the Company is
using when the first payment is due. They will not be less than shown in the
Table, which is based on the 1983 Individual Annuity Mortality Table A projected
13 years with interest at 3% per annum. One year will be deducted from the
Attained Age of the named person for every completed three years beyond the year
1996. The Age of the payee is the age at the birthday nearest to the effective
date of the Option.
OPTION 2 TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Age of Male Female Age Male Female
Payee Guaranteed Perod Guaranteed Period of Payee Guaranteed Period Guaranteed Period
- ------------------------------------------------------------------------------------------------------------------------------------
10 Yrs 20 Yrs 10 Yrs 20 Yrs 10 Yrs 20 Yrs 10 Yrs 20 Yrs
- ------------------------------------------------------------------------------------------------------------------------------------
0-30 3.08 3.07 2.95 2.95 56 4.33 4.16 3,93 3.86
31 3.10 3.09 2.97 2.96 57 4.42 4.22 4.00 3.92
32 3.13 3.12 2.99 2.98 58 4.51 4.29 4.08 3.98
33 3.16 3.15 3.01 3.00 59 4.61 4.36 4.16 4.04
34 3.19 3.17 3.03 3.03 60 4.71 4.43 4.24 4.11
35 3.22 3.20 3.06 3.05 61 4.82 4.49 4.33 4.18
36 3.25 3.23 3.08 3.07 62 4.94 4.57 4.42 4.25
37 3.28 3.26 3.11 3.10 63 5.06 4.64 4.52 4.32
38 3.32 3.29 3.13 3.12 64 5.19 4.71 4.63 4.40
39 3.35 3.33 3.16 3.15 65 5.32 4.77 4.74 4.47
40 3.39 3.36 3.19 3.18 66 5.46 4.84 4.86 4.55
41 3.43 3.40 3.22 3.21 67 5.61 4.91 4.98 4.63
42 3.48 3.44 3.25 3.24 68 5.76 4.97 5.12 4.70
43 3.52 3.48 3.29 3.27 69 5.91 5.03 5.26 4.78
44 3.57 3.52 3.32 3.31 70 6.08 5.09 5.41 4.86
45 3.61 3.56 3.36 3.34 71 6.25 5.15 5.56 4.93
46 3.67 3.61 3.40 3.38 72 6.42 5.20 5.73 5.00
47 3.72 3.66 3.44 3.42 73 6.59 5.24 5.90 5.06
48 3.77 3.70 3.49 3.48 74 6.77 5.29 6.08 5.13
49 3.83 3.75 3.53 3.50 75 6.96 5.33 6.27 5.18
50 3.89 3.81 3.58 3.55 76 7.14 5.36 6.46 5.23
51 3.96 3.86 3.63 3.59 77 7.32 5.39 6.66 5.28
52 4.02 3.92 3.69 3.64 78 7.51 5.42 6.87 5.32
53 4.10 3.97 3.74 3.69 79 7.69 5.44 7.08 5.36
54 4.17 4.03 3.80 3.74 80 7.87 5.46 7.29 5.39
55 4.25 4.10 3.87 3.80 & Over
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION 3 - INTEREST INCOME. The Company will hold any amount applied under
this option. Interest on the unpaid balance will be paid each month at a rate
determined by it. This rate will be not less than the equivalent of 3% per
year.
OPTION 4 - PAYMENTS OF A FIXED AMOUNT. Equal monthly payments will be for an
agreed fixed amount. The amount of each payment may not be less than $10 for
each $1,000 applied. Interest will be credited each month on the unpaid
balance and added to it. This interest will be at a rate set by Us, but not
less than an effective interest rate of 3% per year. Payments continue until
the amount We hold runs out. The last payment will be for the balance only.
DEATH OF PAYEE. If the payee dies while there are any unpaid installments
under Option 1 or before the end of the guaranteed period under Option 2, the
Company will pay the commuted value of the remaining payments in a lump sum.
The commuted value or any balance held under Option 3 or Option 4 will be
paid to the payee's executors or administrators unless the written election
of the Option directed the Company differently. Any commuted value will be
calculated using 3% interest per year.
Policy VULLVULIA
VUL-06 3-98 Page 19