Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust:
American Skandia Life Assurance Corporation Separate Account F
B. Name of depositor:
American Skandia Life Assurance Corporation
C. Complete address of depositor's principal executive offices:
One Corporate Drive, Shelton, CT 06484
D. Name and complete address of agent for service:
Scott K. Richardson, Esq.
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, CT 06484
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on ____________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on ____________ pursuant to paragraph (a)(1) of rule (485)
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment
E. Title and amount of securities being registered: Modified Single
Premium Variable Life Insurance.
The Registrant elects to register an indefinite number of securities by
this registration statement in accordance with Rule 24f-2 under the
Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
G. Amount of filing fee:
None
H. Approximate date of proposed public offering
As soon as practicable after the effective date of this Registration
Statement.
[ ] Check box if it is proposed that this filing will become effective on
______________ at ____________ pursuant to Rule 487.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, action pursuant to said Section 8(a), may determine.
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1. Face page
2. Face page
3. Not applicable
4. Distribution of this Offering
5. The Separate Account
6. The Separate Account
7. Not Applicable
8. Not Applicable
9. Legal Proceedings
10. Face page; Variable Investment Options; The Separate
Account; Voting; Modification of the Separate
Account; Additional Tax Considerations; Loans;
Partial Withdrawals; Surrenders; Transfers and
Allocation Services; Safekeeping of the Assets
11. Face page; Variable Investment Options
12. Face page; Variable Investment Options
13. Costs; Variable Investment Options; Taxes;
Additional Tax Considerations
14. Buying a Policy - How do I buy a Policy?
15. Account Value and Cash Value; Buying a Policy - How
and When is my Premium Invested?
16. Buying a Policy - How and When is my Premium
Invested? Variable Investment Options
17. Partial Withdrawals; Surrenders; Reinstatement;
Account Value and Cash Value; Buying a Policy;
Pricing Transactions
18. Account Value; Variable Investment Options; The
Separate Account; Safekeeping of the Assets
19. Reports
20. Voting; Safekeeping of the Assets
21. Loans
22. Not applicable
23. Safekeeping of the Assets
24. Not applicable
25. Regulation; The Insurance Company
26. Not applicable
27. The Insurance Company
28. Appendix C - Executive Officers and Directors
29. The Insurance Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. The Insurance Company; Regulation
36. Not applicable
37. Not applicable
38. Distribution of this Offering
39. Distribution of this Offering
40. Not applicable
41. The Insurance Company; Distribution of this Offering
42. Not applicable
43. Not applicable
44. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
45. Not applicable
46. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
47. Variable Investment Options; The Separate Account
48. Face Page; The Insurance Company
49. Not applicable
50. The Separate Account; Safekeeping of the Assets
51. Face Page; The Insurance Company; Benefits at the
Insured's Death; Designations
52. Modification of the Separate Account
53. Additional Tax Considerations
54. Not applicable
55. Not applicable
56. Not applicable
57. Not applicable
58. Not applicable
59. Appendix D
This Prospectus describes a modified single premium variable life insurance
policy being offered by American Skandia Life Assurance Corporation ("we,"
"our," "us," "American Skandia," or "the Company"), One Corporate Drive, P.O.
Box 883, Shelton, Connecticut, 06484. This policy may be offered as individual
coverage or as interest in a group policy. This Prospectus provides a detailed
discussion of matters you should consider before buying a Policy. This policy or
certain of its investment options may not be available in all jurisdictions.
Various rights and benefits may differ between jurisdictions to meet applicable
law and/or regulations. This Prospectus is made up of the following general
sections: Cover Page, Table of Contents, Definitions, Description of the
Offering, Miscellaneous Provisions and Additional Details. On this cover page
and in the Description of the Offering section, we use a "question and answer"
format to assist you in understanding this offering.
In summary, what is American Skandia offering to me? We are offering a
type of cash value life insurance coverage. This life insurance coverage is
called a "modified single premium variable life insurance policy." These
technical terms can be explained, as follows:
(1) This coverage is life insurance because a death benefit becomes
payable to a beneficiary upon the death of the person insured. It is cash value
life insurance because, in addition to a death benefit, it also provides living
benefits for the owner, such as a right to take loans from us using the value of
the policy as collateral and the right to take withdrawals.
(2) This coverage is called modified single premium because we do not
accept any premium other than the first unless we know about the additional
premium during the underwriting period or an additional amount is required to
keep the policy from being cancelled.
(3) This coverage is variable because you can allocate all or part of
your premium to variable investment options that invest in underlying mutual
funds. The performance of these investment options is not guaranteed. You bear
the investment risk if you allocate funds to these investment options because
the benefits that depend on the investment performance of these investment
options can decrease or increase.
(4) This coverage allows you to allocate all or part of your premium to
a fixed option to which we credit interest. The return on this option is
guaranteed. We bear the investment risk if you allocate funds to this option.
(5) We believe this policy will be treated as a "modified endowment
contract" under the Internal Revenue Code (the "Code"). In general, the tax
treatment of a modified endowment contract's death benefit is similar to that of
death benefits under life insurance policies, while the tax treatment of the
contract's living benefits are similar to those of living benefits under
deferred annuities. This means that in many circumstances the beneficiary owes
no Federal income tax on the death proceeds. However, most distributions from
such a policy while the insured is alive, including loans, withdrawals and
surrender, are taxable to the owner, like distributions from a deferred annuity
before annuity payments begin. This means that such distributions are deemed to
come first from any gain in the policy. Any gain is treated as ordinary income
and may be subject to a 10% tax penalty if taken before your age 59 1/2.
Information relating to the tax treatment of life insurance contracts which are
not modified endowment contracts appears in the section entitled "Additional Tax
Considerations".
What are the investment options? The premium is allocated to your
choice of investment options. The variable investment options are segments of
American Skandia Life Assurance Corporation Separate Account F ("Account F").
Each segment in Account F invests exclusively in an underlying mutual fund or
one portfolio of an underlying mutual fund. As of the date of this Prospectus,
the following underlying mutual funds or portfolios of the following underlying
mutual funds are being offered: American Skandia Trust, The Alger American Fund,
Neuberger & Berman Advisers Management Trust and Montgomery Variable Series. The
available portfolios of these underlying funds and the applicable investment
management fees and operating expenses are listed on page [ ]. We also offer a
fixed option that credits a fixed rate of interest. Our obligations based on
allocations to the fixed option are supported by our general account, as are any
obligations such as the portion of the death benefit in excess of the policy's
account value or any fixed settlement options. The investment manager to
American Skandia Trust, as of the date of this Prospectus, is our affiliate,
American Skandia Investment Services, Incorporated.
Is there Federal insurance for these policies? Premiums for these policies are
not deposits or obligations of, or guaranteed or endorsed by, any bank or bank
subsidiary. Neither premiums nor any payments or benefits pursuant to these
policies are insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE
READ THIS PROSPECTUS AND THE CURRENT PROSPECTUSES FOR THE UNDERLYING FUNDS. KEEP
IT FOR FUTURE REFERENCE.
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SPVLI1-PROS (12/97) CALL 1-800-752-6342 FOR FURTHER INFORMATION
Prospectus Dated: December [ ], 1997
This page is intentionally left blank.
TABLE OF CONTENTS
DEFINITIONS
DESCRIPTION OF THE OFFERING
Purchasers
The Insurance Company
Benefits at the Insured's Death
Account Value and Cash Value
Cash Value Credits
Costs
Buying a Policy
Variable Investment Options
Transfers and Allocation Services
Loans
Partial Withdrawals
Surrenders
Accelerated Death Benefit
Medically-Related Waiver
Risks
Other Rights
The Separate Account
Taxes
Available Information
MISCELLANEOUS PROVISIONS AND ADDITIONAL DETAILS
Providing Services to You
Designations
Net Investment Factor
Allocation Programs
Limitations on Transfers
Death During the Grace Period
Reinstatement
Maturity
Pricing Transactions
Delaying Transactions
Voting Transfers, Assignments Pledges
Reports
Incontestability
Suicide
Misstatement
Backdating
Resolving Material Conflicts
Modification of the Separate Account
Entire Contract
Additional Tax Considerations
Safekeeping of the Assets
Regulation
Legal Matters
Legal Proceedings
Experts
Distribution of this Offering
Illustrations
Executive Officers and Directors
Financial Statements
TABLE OF CONTENTS (continued)
APPENDIX A - HYPOTHETICAL ILLUSTRATION OF DEATH BENEFITS, ACCOUNT
VALUES AND CASH VALUES
APPENDIX B - HYPOTHETICAL ILLUSTRATION OF ACCELERATED DEATH BENEFIT
APPENDIX C - EXECUTIVE OFFICERS AND DIRECTORS
APPENDIX D - FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION AND AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION SEPARATE ACCOUNT F
DEFINITIONS: The following are key terms used in this Prospectus. Other terms
are defined in this Prospectus as they appear.
ACCOUNT VALUE is the value of each allocation to a Sub-account and any Fixed
Allocation, plus any earnings and less any losses, distributions and charges
thereon, plus the value of any amounts in the Loan Account, plus any earnings
and less any distributions and charges thereon, all before assessment of any
contingent deferred sales charge, contingent deferred tax charge or Debt.
Account Value is determined separately for each Sub-account and each Fixed
Allocation, as well as for any amounts in the Loan Account, and then totaled to
determine the Account Value of your entire Policy.
AGE is the age of an Insured for purposes of this Policy. Initially, and for the
first Policy Year, it is the age last birthday of an Insured as of the Policy
Date. In each following Policy Year, it is the age last birthday of an Insured
as of the Policy Anniversary.
APPLICATION is the form or combination of forms we require you to submit when
you are seeking a Policy. Where there are two Insureds, Application means the
form or combination of forms required for both Insureds.
BENEFICIARY is a person or entity you designate on whose behalf any Death
Proceeds are payable. Unless otherwise specified, Beneficiary refers to all
persons or entities so designated.
CASH VALUE is the Account Value less any contingent deferred sales charge,
contingent deferred tax charge and Debt.
CASH VALUE CREDITS are amounts we credit to your Account Value. We credit these
amounts if your total Cash Value on a Policy Anniversary equals or exceeds a
Cash Value trigger.
CODE is the Internal Revenue Code of 1986, as amended from time to time.
DEATH BENEFIT is the amount payable as a result of an Insured's death before any
applicable reduction for any Debt and before addition of any interest due
pursuant to law. If there is a second Insured, the Death Benefit is payable upon
the death of the last surviving Insured.
DEATH PROCEEDS is the amount payable as a result of the Insured's death after
any applicable reduction for Debt and after addition of any interest due
pursuant to law.
DEBT is the total of any outstanding loan and loan interest.
FACE AMOUNT is the Death Benefit as of the Policy Date.
FIXED ALLOCATION is an allocation of Account Value that is to be credited a
fixed rate of interest.
GROWTH is a portion of the Account Value. It equals (a) less (b) less (c),
where: (a) is the total current Account Value; (b) is any Debt; and (c) is the
Premium less any partial withdrawals treated as a withdrawal of Premium.
GUARANTEED MINIMUM DEATH BENEFIT is the minimum amount we guarantee is due as a
result of the Insured's death, prior to any reduction for Debt, even if it is
higher than the Required Death Benefit.
IN WRITING is in a written form, in a manner we accept, that is satisfactory to
us and filed at our Office. We retain the right to specifically agree in advance
to accept communication regarding a specific matter by telephone or by some
other form of electronic transmission, in a manner we prescribe.
INSURED is the person upon whose life coverage is issued and as a result of
whose death the Death Proceeds are payable. If there is more than one Insured,
Insured means the last surviving Insured, unless otherwise stated.
ISSUE DATE is the date we issue your Policy.
LOAN ACCOUNT is where we maintain Account Value that is collateral for a loan to
you from us.
MATURITY DATE is the Policy Anniversary immediately following the Insured's 95th
birthday, or if there are two Insureds, immediately following the 95th birthday
of the younger Insured, or what would have been the younger Insured's 95th
birthday if the younger Insured predeceases the older Insured.
MONTHLY PROCESSING DATE is the Valuation Day each month when we deduct charges
from the Account Value. The first Monthly Processing Date is the Policy Date.
After that, the Monthly Processing Dates generally occur on the same day of the
month as the Policy Date. If the Monthly Processing Date occurs on a day that is
not a Valuation Day, the Monthly Processing Date that month will be the next
Valuation Period.
NET SINGLE PREMIUM is the amount that would be required, according to the Code
and the regulations based on the Code, to fund: (a) the Policy's Required Death
Benefit, assuming the current Required Death Benefit would not change; and (b)
future benefits and charges using assumptions about: (i) growth of Account Value
so that it would equal the current Required Death Benefit on the Maturity Date;
and (ii) charges, as provided pursuant to the Code. The Net Single Premium
depends on the attained age, gender (where permitted) and risk class of the
Insured. The Net Single Premium changes as the Insured ages. The applicable Net
Single Premiums would change if required under the Code or regulations based on
the Code.
OFFICE is our administrative office: American Skandia Life Assurance
Corporation, P.O. Box 290698, Wethersfield, Connecticut 06129-0698.
OWNER is either an entity or person who may exercise the ownership rights
provided by a Policy. If we issue a certificate representing interests in a
group life insurance policy, the rights, benefits, and requirements of and the
events relating to an Owner, as described in this Prospectus, will be your
rights as participant in such group policy. Unless later changed, Owner refers
to all persons or entities designated as such in your Policy.
POLICY is the insurance contract we issue as evidence of our commitment to pay
the Death Proceeds upon the death of the Insured.
POLICY ANNIVERSARY is the yearly anniversary of the Policy Date.
POLICY DATE is the effective date of your Policy.
POLICY YEARS are continuous 12-month periods that begin on the Policy Date and
each Policy Anniversary thereafter.
PORTFOLIO is a portfolio of an underlying mutual fund.
PREMIUM is the cash consideration you give to us for the rights, privileges and
benefits provided by a Policy according to its terms. This includes Premium paid
as of the Issue Date, as shown in the Policy, and any additional consideration
we choose to accept. Acceptance must occur before completion of the underwriting
for the Policy.
REQUIRED DEATH BENEFIT is the minimum amount due as a result of the Insured's
death pursuant to the applicable test we apply in accordance with the Code,
prior to any reduction for Debt.
SEPARATE ACCOUNT is our separate account to which we allocate assets in relation
to our obligations for benefits based on the variable investment options.
SUB-ACCOUNT is a division of the Separate Account.
UNIT is a measure used to calculate Account Value in a Sub-account.
UNIT PRICE is used for calculating: (a) the number of Units allocated to a
Sub-account; and (b) the value of transactions into or out of a Sub-account or
benefits based on Account Value in a Sub-account. Each Sub-account has its own
Unit Price, which will vary each Valuation Period to reflect the investment
experience of that Sub-account.
VALUATION DAY/DATE is every day the New York Stock Exchange is open for trading
or any other day that the Securities and Exchange Commission requires mutual
funds or unit investment trusts to be valued.
VALUATION PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.
"we," "us," "our," "American Skandia," or "the Company" means American Skandia
Life Assurance Corporation.
"you" or "your" means the Owner.
DESCRIPTION OF THE OFFERING: This Policy is described using a "question and
answer" format that assumes you, the prospective purchaser, are asking the
questions. The description below is divided into the following sections:
Purchasers, The Insurance Company, Benefits at the Insured's Death, Account
Value and Cash Value, Cash Value Credits, Costs, Buying a Policy, Variable
Investment Options, Transfers and Allocation Services, Loans, Partial
Withdrawals, Surrenders, Accelerated Death Benefit, Medically-Related Waiver,
Risks, Other Rights, The Separate Account, Taxes and Available Information. A
Description of Miscellaneous Provisions and Additional Details about American
Skandia follows this description.
Purchasers
Who should buy this Policy? Life insurance can be bought to meet a
number of needs of individuals or entities, such as corporations or trusts.
Different types of life insurance are designed to address certain needs more
than others. This Policy may be appropriate for a number of persons or entities,
but it may be especially useful for addressing a range of estate planning needs.
Because of estate taxes, purchasers may want to consider placing this type of
coverage in an applicable trust or transferring ownership of the Policy in an
effort to remove the asset from their estate. This Policy may also be useful for
persons seeking to make a sizable donation to a charity or eligible non-profit
organization, where the charity is named both Owner and Beneficiary of the
Policy, and the donor is named as the Insured. You should evaluate carefully
with your financial representative whether this Policy is right for your
specific needs in light of your entire situation and your personal and financial
goals. In particular, you should evaluate the advantages and disadvantages of
replacing any existing life insurance or annuity coverage with this Policy. If
you are seeking specific tax consequences, you should consult with a competent
tax advisor as to whether and how your goals may best be achieved.
The Insurance Company
Who is American Skandia? American Skandia Life Assurance Corporation is
organized as a stock insurance company domiciled in Connecticut. We are licensed
as a life insurer in all 50 states and the District of Columbia. We are a wholly
owned subsidiary of American Skandia Investment Holding Corporation, whose
indirect parent is Skandia Insurance Company Ltd. Skandia Insurance Company Ltd.
is part of a group of companies whose predecessor began operations in 1855. Two
of our affiliates, American Skandia Marketing, Incorporated, and American
Skandia Information Services and Technology Corporation, may undertake certain
administrative functions for us. We also may engage various independent firms to
undertake various administrative functions for us. Our affiliate, American
Skandia Investment Services, Incorporated, currently acts as the investment
manager to American Skandia Trust, one of the underlying mutual funds whose
Portfolios are available as variable investment options. We currently engage
Skandia Investment Management, Inc., an affiliate whose indirect parent is
Skandia Insurance Company Ltd., as investment manager for our general account.
We are under no obligation to engage or continue to engage any investment
manager.
Benefits at the Insured's Death
What benefits are due as a result of the Insured's death? The benefits
due as a result of the Insured's death are the Death Proceeds. If there are
joint Insureds, the benefits are due as a result of the death of the last
surviving Insured.
What are the Death Proceeds? The Death Proceeds are based on the Death
Benefit as of the date we receive all our requirements for paying a death claim
and are satisfied that the death claim can be paid. These requirements include,
but are not limited to, receipt of a valid death certificate and information we
need to make payments to each Beneficiary.
We determine the Death Proceeds by first subtracting any Debt from the Death
Benefit. We then add any interest amount required by law.
What is the Death Benefit? The Death Benefit is the higher of the
Required Death Benefit and the Guaranteed Minimum Death Benefit as of the date
we receive due proof of death. The Required Death Benefit is the minimum amount
that must be payable at the Insured's death, before reduction for any Debt, for
the Policy to be treated as life insurance under the Code. The Guaranteed
Minimum Death Benefit, which is discussed below in response to the question,
"What is the Guaranteed Minimum Death Benefit?," is the minimum amount payable
at the Insured's death, before reduction for any Debt, irrespective of the
Required Death Benefit. The Required Death Benefit is determined by treating the
Account Value as if it were the Net Single Premium. We determine the Required
Death Benefit by dividing the Account Value by factors that are determined as of
the Policy Date. These factors vary by the attained Age, gender (where
permitted) and risk class of the Insured. The following are representative
examples of the factors on the Policy Date for different Ages, genders and risk
classes, as well as the amount of the Required Death Benefit if the Account
Value were $100,000.
Female, Age 55, not a tobacco user: The factor is [ ]. $100,000 divided
by [ ] results in a Required Death Benefit of $[ ].
Male, Age 60, a tobacco user: The factor is [ ]. $100,000 divided by [
] results in a Required Death Benefit of $[ ].
Female, Age 70, a tobacco user: The factor is [ ]. $100,000 divided by
[ ] results in a Required Death Benefit of $[ ].
Male, Age 75, not a tobacco user: The factor is [ ]. $100,000 divided
by [ ] results in a Required Death Benefit of $[ ].
As noted above, the factors depend on the Insured's gender (where permitted),
risk class and attained Age. The gender and risk class of the Insured does not
change, so the only element that changes the factor after the Policy Date is the
aging of the Insured. The following example may help you understand the effect
of aging on the Required Death Benefit.
The Insured is a woman, Age 64, for whom coverage was issued at her Age 60 in
the "not a tobacco user" risk class. On the Valuation Day before the Policy
Anniversary following the Insured's 65th birthday, the Account Value is
$100,000. The Required Death Benefit as required under the Code for this
Insured's age, gender, risk class and Account Value is $100,000 divided by the
applicable factor of [ ], which results in a Required Death Benefit of $[ ]. For
the sake of this example, assume that the next Valuation Day, which is the
Policy Anniversary after the Insured's 65th birthday (the day the Insured turns
Age 65 for purposes of the Policy), the Account Value remains $100,000. At the
higher Age of 65, the Required Death Benefit on the Policy Anniversary is
$100,000 divided by the applicable factor of [ ], which results in a Required
Death Benefit of $[ ].
What else can affect the Required Death Benefit? The Required Death
Benefit changes as the Account Value changes. This is because the Required Death
Benefit is calculated based on the Account Value. A few examples may help show
what this means. Assume for purposes of these examples that the Insured is a
woman, Age 65, for whom coverage was issued at her Age 60 in the "not a tobacco
user" risk class.
(a) On a particular Monthly Processing Date, the Account Value of the
Policy is $100,000. The Required Death Benefit as of that Valuation Day is
$100,000 divided by the then applicable factor of [ ], or $[ ]. As of the next
Valuation Day, assume the Account Value has grown to $100,010. The Required
Death Benefit is $100,010 divided by the same factor of [ ], or $[ ].
(b) On a particular Monthly Processing Date, the Account Value of the
Policy is $100,000. The Required Death Benefit as of that Valuation Day is
$100,000 divided by the then applicable factor of [ ], or $[ ]. As of the next
Valuation Day, assume the Account Value has decreased to $99,990. The Required
Death Benefit is $99,990 divided by the same factor of [ ], or $[ ].
(c) On a particular Monthly Processing Date, the Account Value of the
Policy before any partial withdrawal is $100,000. The Required Death Benefit as
of that Valuation Day is $100,000 divided by the then applicable factor of [ ],
or $[ ]. On that same day, assume $20,000 is taken as a partial withdrawal.
Immediately after the partial withdrawal, the Required Death Benefit is $80,000
divided by the same factor of [ ], or $[ ].
What is the Face Amount? The Face Amount is the Required Death Benefit
on the Policy Date.
What is the Guaranteed Minimum Death Benefit? We use the Guaranteed
Minimum Death Benefit in determining the Death Proceeds if the Guaranteed
Minimum Death Benefit is higher than the Required Death Benefit. The Guaranteed
Minimum Death Benefit is determined as follows:
(a) On the Policy Date, the Guaranteed Minimum Death Benefit equals the
Premium.
(b) After the Policy Date and until the first Policy Anniversary, the
Guaranteed Minimum Death Benefit is the Premium less every "reduction due to a
withdrawal," which is defined below.
(c) After the first Policy Anniversary but before the "target date,"
(the Policy Anniversary that the Insured turns Age 75), the Guaranteed Minimum
Death Benefit is the higher of (1) or (2), where: (1) is the Premium less every
"reduction due to a withdrawal"; and (2) is the highest "Anniversary Value."
"Anniversary Value" is the Account Value on any Policy Anniversary less every
reduction due to a withdrawal since that Policy Anniversary.
(d) On or after the "target date," the Guaranteed Minimum Death Benefit
is the higher of (1) or (2), where: (1) is the Premium less every "reduction due
to a withdrawal"; and (2) is the highest Anniversary Value, as defined above in
(c), as of the "target date," less every "reduction due to a withdrawal" after
the "target date."
(e) Notwithstanding items (a) through (d) above, if the Insured is Age
75 or older on the Policy Date, the Guaranteed Minimum Death Benefit is the
Premium less every "reduction due to a withdrawal."
(f) If the Policy is issued for two (2) Insureds, the Guaranteed
Minimum Death Benefit is based on the age of the younger Insured, or what would
have been the age of the younger Insured if the younger Insured predeceases the
older Insured.
A "reduction due to a withdrawal" is a proportional reduction. It equals the
ratio by which the Account Value is reduced by a partial withdrawal or a payment
under the Accelerated Death Benefit provision, described below in the section of
the same name, multiplied by the Guaranteed Minimum Death Benefit as of the
effective date of such partial withdrawal or payment. For example, if the
Guaranteed Minimum Death Benefit before a partial withdrawal is $100,000 and the
Account Value is $120,000, the Guaranteed Minimum Death Benefit after a $60,000
partial withdrawal (a 50% reduction in the Account Value) would be $50,000 (a
50% reduction in the Guaranteed Minimum Death Benefit).
How are Death Proceeds paid? We pay the Death Proceeds as a lump sum or
in accordance with the terms of whatever settlement options we then make
available to Beneficiaries. Generally, the Beneficiary can choose a lump sum or
one of the settlement options. However, you may choose the method of payment if
you let us know In Writing before the Insured's death how you want the Death
Proceeds to be paid.
Account Value and Cash Value
What is the Account Value? The Account Value is the value of a Policy
before any deduction for any contingent deferred sales charge, contingent
deferred tax charge or Debt. It is the total of the Account Value maintained in
the investment options you choose to utilize plus any Account Value in the Loan
Account. You may allocate Account Value to variable investment options, which
are all Sub-accounts of the Separate Account, or to Fixed Allocations. Account
Value is maintained in the Loan Account as collateral for outstanding loans.
How does American Skandia determine the Account Value in the variable
investment options? On each Valuation Date, the Account Value in any variable
investment option you utilize equals the number of Units you then maintain in
that investment option multiplied by that investment option's then current Unit
Price. When you allocate all or a portion of the Premium to an investment option
or when you transfer Account Value into a variable investment option, Units are
purchased using the then current Unit Price. When you take all or a portion of a
distribution or benefit from a variable investment option or you transfer
Account Value from a variable investment option, Units are sold at the then
current Unit Price in order to fund that distribution, benefit or transfer.
How does American Skandia determine the Account Value for Fixed
Allocations? We credit a fixed rate of interest to Fixed Allocations. From time
to time we declare interest rates applicable to new Fixed Allocations. If you
make a Fixed Allocation, we credit the rate then in effect to that Fixed
Allocation until the next Policy Anniversary. Once that Policy Anniversary is
reached, we credit, for the next Policy Year, the then current rate applicable
to new Fixed Allocations. This applies to all your Fixed Allocations then in
effect. During each subsequent Policy Year, the rate we credit for each Policy
Year is the one in effect for new Fixed Allocations at the beginning of that
Policy Year.
The Policy offered pursuant to this Prospectus includes Fixed Allocations. These
Fixed Allocations are not registered as a security with the Securities and
Exchange Commission under either the Securities Act of 1933 or the Investment
Company Act of 1940. The Fixed Allocations are not subject to these Acts.
Information about the Fixed Allocations is included in this Prospectus to help
with your understanding of the features of the Policy. The staff of the
Securities and Exchange Commission has not reviewed this information. However,
the information may be subject to certain generally applicable provisions of the
Federal securities laws regarding accuracy and completeness. The assets
supporting Fixed Allocations are held in American Skandia's general account.
How does American Skandia determine the interest rate for Fixed
Allocations? We determine the interest rate applied to Fixed Allocations based
on our assessment of the earnings we expect to achieve when investing to support
these obligations, our costs, competition, profit targets and other factors. We
have sole discretion to determine the rates. However, the interest rate will
never be less than 3.0% per year, compounded yearly.
How does American Skandia determine the Account Value in the Loan
Account? The rate we credit to Account Value in the Loan Account depends on
whether that Account Value is serving as collateral for "preferred loans" or for
"standard loans," which are discussed below in response to the question "What
are a `preferred loan' and a `standard loan'?" We credit interest at the rate of
6.0% per year, compounded yearly, to Account Value in the Loan Account serving
as collateral for "preferred loans." We credit interest at the rate of 4.0% per
year, compounded yearly, to Account Value in the Loan Account serving as
collateral for "standard loans."
What is the Cash Value? The Cash Value is the total Account Value less
any contingent deferred sales charge, contingent deferred tax charge and Debt.
Do I have to maintain a minimum Cash Value? The answer depends on
whether there is any Debt. You do not have to maintain a minimum Cash Value if
there is no Debt, except if you take a partial withdrawal. We will inform you of
the Monthly Processing Date your Cash Value equals or is less than zero. Such
Monthly Processing Date is the beginning of the grace period. At that time we
will also inform you of the amount you can pay if you wish to reestablish any
Cash Value. No payment is required. The Policy remains in force with the Death
Benefit equal to the Guaranteed Minimum Death Benefit as of the beginning of the
grace period.
If there is any Debt, there must always be enough Cash Value so that after we
deduct any charges the Cash Value is more than zero. If the Cash Value would be
zero or less after we deduct charges, we send you a notice giving you a 61-day
"grace period" to send us a required amount. If this amount is not paid by the
end of the grace period, the Policy ends without value.
Cash Value Credits
What are Cash Value Credits, and how do I get them? Cash Value Credits
are amounts we credit to your Account Value, where permitted by law. We provide
these amounts if your total Cash Value on a Policy Anniversary equals or exceeds
a Cash Value trigger. We determine if your Policy is eligible for a Cash Value
Credit on each Policy Anniversary. Eligibility for Cash Value Credits may change
from year to year. Whether your Cash Value meets or exceeds the trigger depends
on investment performance of the investment options, partial withdrawals, Debt
and whether you pay back any loans or loan interest.
What is the Cash Value trigger? The Cash Value trigger is 200% of the
Premium. That means that, even if your Account Value is 200% of the Premium, you
may not have reached the trigger amount, since the Cash Value may be less than
the Account Value due to the contingent deferred sales charge, the contingent
deferred tax charge and any Debt.
How much is added to my Account Value? The Cash Value Credit, if any,
added to your Account Value equals 0.25% of the Cash Value on the applicable
Policy Anniversary. The following examples may help you understand this.
(a) Assume that the Premium paid for a Policy is $100,000. Assume that
on the 10th Policy Anniversary the Cash Value is $202,000. The
Cash Value trigger is 200% of $100,000, which is $200,000. The
amount to be added to the Account Value is 0.25% of $202,000,
which is $505.
(b) Assume that, for the same Policy, the Cash Value on the 11th
Policy Anniversary is $195,000, due to a combination of investment
performance and a loan of $25,000 in the middle of the Policy
Year. The Cash Value trigger for this Policy, as noted above, is
$200,000. Therefore, no Cash Value Credit is provided on the 11th
Policy Anniversary.
(c) Assume that, for the same Policy, the Cash Value on the 12th
Policy Anniversary is $240,000, due to a combination of investment
performance and repayment of the loan and loan interest. As noted
above, the Cash Value trigger is $200,000. The amount to be added
is 0.25% of $240,000, which is $600.
Who pays for the Cash Value Credits, and how are they paid? We pay for
any Cash Value Credits out of our general account. We allocate any Cash Value
Credits due on the applicable Policy Anniversary to the variable investment
options and Fixed Allocations in which you then maintain Account Value. We make
the allocations pro-rata based on the Account Value in the variable investment
options and any Fixed Allocations on the applicable Policy Anniversary. No
allocation is made to the Loan Account. Cash Value Credits cannot be used to
repay Debt.
Costs
What kind of charges are there for this Policy? The Policy has four (4)
different kinds of charges: (1) charges we assess against assets maintained in
the Separate Account, which only apply to the Account Value you allocate to the
variable investment options; (2) charges we deduct monthly from the Account
Value and which are due in all Policy Years; (3) charges that we deduct monthly
from the Account Value only for the first ten Policy Years; and (4) "contingent"
charges, which are those charges that you only pay in certain specified
circumstances.
What are the charges assessed against the Separate Account and when are
they paid? We assess a mortality and expense risk charge and an administration
charge against the assets in the Separate Account each Valuation Period. The
mortality and expense risk charge is 0.90% per year. The charge for the
administrative expenses connected with operating the Separate Account is 0.25%
per year. We assess these charges each Valuation Period against the average
daily total value of each Sub-account. We reserve the right to assess the
Separate Account for any taxes that may be attributed to it. Currently, no such
charge for taxes is assessed.
What monthly charge applies in all Policy Years? We always deduct the
cost of insurance charge. We take this charge from your Account Value, in
advance, each Monthly Processing Day. The charge is a percentage of your then
current Account Value.
How much is the cost of insurance charge? The cost of insurance charge
is not a constant dollar amount, in part because it is a percentage of your
Account Value. The percentage of your Account Value that we charge differs
depending on four factors: (1) whether we issue the Policy for only one Insured
or for two; (2) the Age(s) of the Insured(s) as of the Policy Date; (3) the
gender of the Insured(s), where permitted; and (4) the risk class(es) of the
Insured(s). We reserve the right to also have the percentage decrease based on
the size of the Premium.
The actual charge is a monthly charge. The equivalent yearly cost of insurance
charges as of the Policy Date are shown below for a Policy issued for one
Insured. The charges will be different if we are required by law to charge the
same amount for males and females. For purposes of this and the succeeding
table, "Age" is as of the Policy Date.
Gender Tobacco Usage Class Ages 20-69 Ages 70 -90
------ ------------------- ---------- -----------
Male No Tobacco Use 0.55% 0.90%
Female No Tobacco Use 0.40% 0.75%
Male Tobacco User 0.90% 1.25%
Female Tobacco User 0.75% 1.10%
If the Policy is issued for two Insureds, the yearly percentages of the Account
Value we deduct for the cost of insurance will depend on the risk classes of the
Insureds. The following are examples of applicable charges as of the Policy
Date. The charges will be different if we are required by law to charge the same
amount for males and females.
Gender, 1st Insured Tobacco Usage Class Gender, 2nd Insured Tobacco Usage Class Charge
- ------------------- ------------------- ------------------- ------------------- ------
Male No Tobacco Use Female No Tobacco Use .25%
Male Tobacco User Female Tobacco User .35%
Male No Tobacco Use Female Tobacco User .30%
Male Tobacco User Female No Tobacco Use .30%
Is there a maximum cost of insurance charge? We monitor the cost of
insurance charge so that it never exceeds a guaranteed maximum charge. We
determine that guaranteed maximum as if we were charging you an increasing
amount based on the Insured's attained Age and were assessing that charge on the
difference between the Required Death Benefit and the Account Value. If the
percentages we otherwise would charge would exceed the guaranteed maximum, we
only charge the guaranteed maximum.
The guaranteed maximum cost of insurance charge depends on the risk class of the
Insured(s). Also, if required by law, unisex charges will apply. We base the
guaranteed maximum charges on the sex distinct 1980 Commissioners Standard
Ordinary Ultimate Mortality Table, age last birthday.
What monthly charges apply only in the first 10 Policy Years? We deduct
the tax charge and the sales charge only in the first 10 Policy Years.
How much is the sales charge and when do I pay it? We deduct the sales
charge during the first 10 Policy Years. It is a percentage of your Account
Value and is the equivalent of 0.40% per year. We deduct this charge monthly in
advance. We take the charge from your Account Value each Monthly Processing Day.
The charge is a percentage of your then current Account Value. If you surrender
your Policy or take a partial withdrawal, we may deduct a contingent deferred
sales charge, as described below in response to the question "How much is the
contingent deferred sales charge and when must I pay it?"
There are certain circumstances which may result in reduction or elimination of
the sales charge. These are exactly the same circumstances that may result in
reduction or elimination of the contingent deferred sales charge, as described
below in response to the question "How much is the contingent deferred sales
charge and when must I pay it?"
How much is the tax charge and when do I pay it? We deduct the tax
charge during the first 10 Policy Years. It is a percentage of your Account
Value and is the equivalent of 0.25% per year. We deduct this charge monthly in
advance. We take the charge from your Account Value each Monthly Processing Day.
The charge is a percentage of your then current Account Value. If you surrender
your Policy or take a partial withdrawal, we deduct a contingent deferred tax
charge, as described below in response to the question "How much is the
contingent deferred tax charge and when must I pay it?"
What are the contingent charges? The contingent charges are: (1) the
contingent deferred sales charge; (2) the contingent deferred tax charge; (3)
the maintenance fee; and (4) the transfer fee.
How much is the contingent deferred sales charge, and when must I pay
it? The contingent deferred sales charge is a percentage of any amount being
surrendered or withdrawn: (a) during the first nine (9) Policy Years; and (b)
that, according to our rules, is a withdrawal of Premium, not a withdrawal of
Growth. It may be assessed at the time of any partial withdrawal or surrender.
The percentages are as follows:
Policy Year Percentage
1 7.75
2 7.50
3 7.25
4 6.50
5 5.75
6 5.00
7 4.25
8 3.50
9 2.75
10+ 0.00
From time to time, and to the extent permitted by law, we may reduce the amount
of the sales charge and the contingent deferred sales charge, the period during
which such charges apply, or both, when Policies are sold to persons or groups
of persons in a manner that reduces sales expenses. We would consider such
factors as: (a) the size and type of group; (b) the amount of Premiums; and/or
(c) other transactions where sales expenses are likely to be reduced.
No sales charge or contingent deferred sales charge is imposed when the Owner,
as of the Issue Date, or the Insured of a Policy issued pursuant to this
Prospectus is: (a) any parent company, affiliate or subsidiary of ours; (b) an
officer, director, employee, retiree, sales representative, or in the case of an
affiliated broker-dealer, registered representative of such company; (c) a
director, officer or trustee of any underlying mutual fund; (d) a director,
officer or employee of any investment manager, sub-advisor, transfer agent,
custodian, auditing, legal or administrative services provider that is providing
investment management, advisory, transfer agency, custodianship, auditing, legal
and/or administrative services to an underlying mutual fund or any affiliate of
such firm; (e) a director, officer, employee or registered representative of a
broker-dealer or insurance agency that has a then current selling agreement with
us and/or with American Skandia Marketing, Incorporated; (f) a director,
officer, employee or authorized representative of any firm providing us or our
affiliates with regular legal, actuarial, auditing, underwriting, claims,
administrative, computer support, marketing, office or other services; (g) the
then current spouse of any such person noted in (b) through (f) above; (h) the
parents of such person noted in (b) through (g) above; and (i) such person's
child or other legal dependent under the age of 21.
How much is the contingent deferred tax charge, and when must I pay it?
The contingent deferred tax charge is a percentage of any amount being
surrendered or withdrawn: (a) during the first nine (9) Policy Years; and (b)
that, according to our rules, is a withdrawal of Premium, not a withdrawal of
Growth. It is assessed at the time of any partial withdrawal or surrender. The
percentages are as follows:
Policy Year Percentage
1 2.25
2 2.00
3 1.75
4 1.50
5 1.25
6 1.00
7 0.75
8 0.50
9 0.25
10+ 0.00
How much is the maintenance fee and when must I pay it? The maintenance
fee is $2.50 per month. We deduct it only when your Account Value on a Monthly
Processing Date is less than $75,000. We take this charge monthly in advance. We
take the charge from your Account Value each Monthly Processing Date.
How much is the transfer fee, and when must I pay it? We charge $10.00
for every transfer after the 12th in each Policy Year. That includes transfers
into a Fixed Allocation and any transfers from a Fixed Allocation unless the
transfer occurs on a Policy Anniversary. For this purpose, all transfers
occurring during the same Valuation Period are considered one transfer. We
assess the transfer fee pro-rata against the Account Value being transferred in
the same ratio as Account Value is being transferred to such investment options.
It is assessed at the time of any transfer.
How are charges deducted from Account Value? We deduct charges from
your investment options pro-rata based on the Account Value in each investment
option. If you maintain Account Value in more than one Fixed Allocation in a
Policy Year, any applicable charges will be deducted on a "last-in, first-out"
basis, starting with the last Fixed Allocation that was made prior to the
Monthly Processing Date the deduction is made. Upon surrender or withdrawal, we
assess charges against the investment options pro-rata in the same ratio as
Account Value is being withdrawn from such investment options.
What are the charges for the Portfolios? Each Portfolio has different
fees and charges. Expenses for the Portfolios are provided in the "Variable
Investment Options" section below. More detailed information about fees and
charges can be found in the prospectuses for the Portfolios.
Buying a Policy
How do I buy a Policy? We require that our standards be met and that we
receive a Premium before we issue a Policy. We need information to determine if
those standards have been met. We require you to submit an Application as part
of our effort to gather the needed information. We may require additional
information, including, but not limited to, some of the Insured's medical
records. We may also require the Insured to take certain medical tests. As part
of our standards, we will not issue a Policy if, as of the Policy Date, the
Insured would be less than Age 20 or older than Age 90. If our standards are not
met and we received a Premium, we will return to you an amount equal to the
Premium. No interest will be paid.
To the extent permitted by law, we reserve the right to apply differing
standards of insurability to persons who may be part of a group or who may
qualify, for some other reason, as part of a different class. Such classes may
include, but are not limited to, persons seeking a Policy who are applying all
or a portion of proceeds from an insurance or annuity contract issued by
American Skandia or an affiliate, or proceeds of a redemption from another
financial product, such as mutual funds, distributed by any of our affiliates.
One of the criteria we may apply in such a situation is that such differing
standards of insurability apply only after maintaining funds in such policy,
contract, or financial product for a specified period of time.
What is the Premium, and when do I pay it? The minimum Premium we
generally accept is $10,000. We may accept less under certain circumstances. The
maximum we accept without prior approval by our home office is $500,000. If you
are seeking a specific Face Amount, the Premium will depend on the Insured's
age, risk class and gender, where permitted. We will determine the Face Amount
using the Premium as the Net Single Premium for the Insured's age, risk class
and gender, where permitted. You may submit Premium with the Application if: (a)
the Insured is not over age 80; and (b) the Insured meets certain medical
underwriting criteria. If any portion of the Premium is to be received as part
of a replacement of a life insurance, endowment or annuity policy then we must
receive all our requirements In Writing for all such replacements as of the same
date and any additional Premium amounts other than the proceeds of such
replacement must be received by us at our Office at the same time as we receive
such requirements In Writing. Replacements include tax-free exchanges subject to
our acceptance. We will immediately return any Premium that should not have been
submitted based on these criteria. If we would not accept Premium with the
Application or you chose not to submit a Premium with the Application, we will
notify you if and when we have accepted the Application and agreed, subject to
submission of the Premium, to issue a Policy. We will not issue a Policy until
we receive Premium at our Office. We will not accept Premium of which we were
not informed at the time you submit the Application to us.
You may choose to use our funds transfer authorization procedures as
part of buying a Policy. If you elect this procedure, you authorize us to redeem
funds to pay Premium from one or more financial institutions with which you
currently maintain funds. You must do so In Writing using a form that authorizes
us to obtain such funds only if and when we have determined that the Application
meets our standards for issuing a Policy. If you use this procedure, you must
provide us with all such authorizations simultaneously. If you wish to also pay
any additional amounts, we must receive such Premium amounts at the same time we
receive such authorizations.
The standards we apply in reviewing the Application may depend on
factors such as the proposed Insured's age and the amount of Premium to be
applied to the Policy. In certain cases, we may apply simplified standards.
However, the Premium amount you state in the Application may be an estimate if
you are planning: (a) to replace a life insurance, endowment or annuity policy;
(b) to exchange a life insurance or endowment policy; or (c) to use our funds
transfer authorization procedures. If we used simplified standards based on a
Premium estimate but the actual amounts we receive to be applied as Premium
exceed the limits for such standards, we reserve the right, to the extent
permitted by law, to not issue a Policy and return such amounts directly to you
or, on your behalf, to the financial institution from which the funds were
obtained. We cannot guarantee such institution will accept the return of such
amounts.
Am I covered during the period my Application is being reviewed? We may
issue you a temporary insurance agreement during the "underwriting period." The
"underwriting period" is the period between the time you first apply for a
Policy and the time we either issue the Policy or decide not to issue one. A
temporary insurance agreement may be issued if: (a) the Application is completed
in full; (b) the Insured answers "no" to certain questions on the Application
(these are questions we use as indicators of whether we will issue temporary
insurance); (c) the Insured is age 80 or younger; and (d) a Premium is submitted
with the Application. If we issue a temporary insurance agreement and the
Insured (both Insureds if there are two Insureds) dies during the underwriting
period, the temporary insurance benefit will be payable if all the temporary
insurance agreement's conditions are met. The underwriting period generally will
not exceed 45 days. If any of the above conditions is not satisfied and no
temporary insurance agreement was in effect, and the Insured(s) die(s) during
the underwriting period, no benefit is payable.
We will return any Premium submitted with the Application if we cannot complete
underwriting within 45 days from the date the Application is signed.. If you
notify us promptly, we will continue the underwriting process and notify you if
and when you meet our standards for issuing a Policy, at which time you may once
again send us a Premium.
Temporary insurance ends 45 days after the Application is signed, even if the
underwriting period exceeds 45 days.
What is the temporary insurance benefit? If the Insured dies while
temporary insurance is in effect, we pay the Beneficiary the lesser of the Face
Amount that would be in effect on the Policy Date if a Policy had been issued or
$250,000. This $250,000 maximum applies to all temporary insurance then in
effect with us. Premium amounts in excess of this benefit are returned to you,
without interest or earnings.
How and when is my Premium invested? We invest the Premium on the Issue
Date. You can request that we allocate the Premium using one or more variable
investment options and/or a Fixed Allocation. However, we initially invest the
portion of the Premium that you indicate to us that you want invested in
variable investment options in the AST Money Market Sub-account, unless you
submit a "return waiver" In Writing before the Issue Date, where permitted by
law. A return waiver is an election by you to invest as soon as possible in the
variable investment options of your choice. The "trade off" for this election is
that you may receive back less than the Premium should you decide to return your
Policy during the "free-look" period discussed below. Generally, we transfer the
Account Value in the AST Money Market Sub-account to the variable investment
options you request as of the Valuation Date which is on or immediately after
the 15th day after the date we issue a Policy. However, we will make the
transfer as of a later date if your "free-look" period is longer than 10 days to
meet state law requirements.
What happens if I change my mind about buying a Policy? You have a
"free-look" period during which you can change your mind about buying a Policy.
The free-look period is never less than 10 days from the date you receive your
Policy. It may be longer depending on the applicable state law and the
circumstances of your purchase. If you return your Policy to us within the
free-look period, we generally will return the greater of Premium paid or your
Account Value plus any charges deducted from your Account Value. However, if you
have submitted a "return waiver," we will return only your Account Value plus
any charges deducted from your Account Value. This may be more or less than
Premium paid.
Variable Investment Options
What are the investment objectives and policies of the variable
investment options? How much are the charges taken out of the Portfolios in
which these options invest? Each variable investment option is a Sub-account of
the Separate Account. Each Sub-account invests exclusively in one Portfolio.
Details about the investment objectives, policies, risks, costs and management
of the Portfolios are found in the prospectuses for the underlying mutual funds.
You should carefully read such prospectuses for any Portfolio in which you are
interested. To assist you in determining which Portfolios may be of interest to
you, we have provided below a list of the Portfolios, their investment
objectives (in italics) and a short, summary description of their key policies.
Next to the name of each Portfolio, we have also provided two percentages. The
first percentage is the total annual expense for the investment management fee
and other expenses of each Portfolio stated as a percentage of its average daily
net assets. These are the total annual expenses after any applicable
reimbursement or waiver of fees. The second percentage shown is the investment
management fee as a percentage of the applicable Portfolio's average daily net
assets. These are the investment management fees after any applicable
reimbursement or waiver of the investment management fees. These percentages are
fees for the calendar year that ended December 31 in the year prior to the
effective date of this Prospectus. If any Portfolio was not in operation for a
full year, the percentage is annualized. Those Portfolios below which are marked
with an asterisk are new, and any expenses shown are estimated future expenses.
The amount of other expenses of each Portfolio after any applicable
reimbursement or waiver of fees can be derived by subtracting its investment
management fee from its total annual expenses.
American Skandia Trust Portfolios:
JanCap Growth (1.10%/0.90%): growth of capital in a manner consistent
with the preservation of capital. The Portfolio pursues its objective by
emphasizing investments in common stocks.
AST Janus Overseas Growth (1.42%/1.00%): to seek long-term growth of
capital. The Portfolio pursues its objective primarily through investments in
common stocks of issuers located outside the United States.
Lord Abbett Growth and Income (0.97%/0.75%): long-term growth of
capital and income while attempting to avoid excessive fluctuations in market
value. Normally, investments will be made in common stocks of seasoned companies
which are expected to show above-average growth and which the Porfolio's
sub-advisor believes to be in sound financial condition.
* Lord Abbett Small Cap Value (x.xx%/x.xx%): to seek long-term capital
appreciation. Under normal circumstances, the Portfolio will invest at least 65%
of its assets in common stocks issued by smaller, less well-known companies,
with market capitalizations of less than $1 billion.
Federated Utility Income (0.93%/0.67%): to achieve high current income
and moderate capital appreciation by investing primarily in a professionally
managed and diversified portfolio of equity and debt securities of utility
companies. The Portfolio will invest at least 65% of its total assets in
securities of utility companies.
Federated High Yield (1.03%/0.75%): to seek high current income by
investing primarily in a diversified portfolio of fixed income securities. The
Portfolio will invest at least 65% of its assets in lower-rated (BBB or lower)
fixed rate corporate debt obligations. Lower-rated or unrated bonds are commonly
referred to as "junk bonds."
AST Money Market (0.60%/0.45%): to maximize current income and maintain
high levels of liquidity. The Portfolio attempts to accomplish its objective by
maintaining a dollar-weighted average maturity of not more than 90 days and by
investing in securities which have effective maturities of not more than 397
days.
T. Rowe Price Asset Allocation (1.20%/0.85%): to seek a high level of
total return by investing primarily in a diversified group of fixed income and
equity securities. Under normal conditions over the long-term, the Portfolio
expects to allocate its assets so that approximately 40% of its assets will be
in fixed income securities and approximately 60% in equity securities.
T. Rowe Price International Equity (1.30%/1.00%): to seek total return
of its assets from long-term growth of capital and income, principally through
investments in common stock of established, non-U.S. companies. The Portfolio
intends to diversify broadly among countries and to normally have at least three
different countries represented in the Portfolio.
T. Rowe Price Natural Resources (1.30%/0.90%): to seek long-term growth
of capital through investment primarily in common stocks of companies which own
or develop natural resources and other basic commodities. The Portfolio will
invest primarily (at least 65% of its total assets) in common stocks of
companies which own or develop natural resources and other basic commodities.
T. Rowe Price International Bond (1.16%/0.80%): seeks to provide high
current income and capital appreciation by investing in high-quality, non
dollar-denominated government and corporate bonds outside the United States. The
Portfolio will invest at least 65% of its assets in high-quality, non
dollar-denominated government and corporate bonds outside the United States. The
Portfolio may also invest up to 20% of its assets in below investment-grade,
high-risk bonds, including bonds in default or those with the lowest rating
(commonly referred to as "junk bonds").
T. Rowe Price Small Company Value (1.27%/0.90%): to provide long-term
capital appreciation by investing primarily in small-capitalization stocks that
appear to be undervalued. The Portfolio will invest at least 65% of its total
assets in companies with a market capitalization of $1 billion or less that
appear undervalued by various measures, such as price/earnings or price/book
value ratios.
Founders Capital Appreciation (1.16%/0.90%): capital appreciation. The
Portfolio will normally invest at least 65% of its total assets in common stocks
of U.S. companies with market capitalizations of $1.5 billion or less.
Founders Passport (1.36%/1.00%): capital appreciation. The Portfolio
invests primarily in securities issued by foreign companies which have market
capitalizations or annual revenues of $1 billion or less. At least 65% of the
Portfolio's assets will normally be invested in foreign securities representing
a minimum of three countries.
INVESCO Equity Income (0.98%/0.75%): to seek high current income while
following sound investment practices. The Portfolio normally will invest at
least 65% of its assets in dividend-paying, marketable common stocks of domestic
and foreign industrial issuers.
PIMCO Total Return Bond (0.89%/0.65%): to seek to maximize total
return. The Portfolio will invest in a diversified portfolio of fixed-income
securities of varying maturities with a portfolio duration from three to six
years.
PIMCO Limited Maturity Bond (0.89%/0.65%): to seek to maximize total
return, consistent with preservation of capital and prudent investment
management. The Portfolio will invest in a diversified portfolio of fixed income
securities of varying maturities with a portfolio duration from one to three
years.
Berger Capital Growth (1.01%/0.75%): long-term capital appreciation.
The Portfolio seeks to achieve this objective by investing primarily in common
stocks of established companies which the sub-advisor believes offer favorable
growth prospects.
Robertson Stephens Value + Growth (1.33%/1.00): to seek capital
appreciation. The Portfolio will invest primarily in growth companies believed
by the sub-advisor to have favorable relationships between price/earnings ratios
and growth rates in sectors offering the potential for above-average returns.
The Portfolio may invest a substantial portion of its assets in securities of
small companies. The Portfolio may invest up to 35% of its net assets in
securities principally traded in foreign markets.
* Robertson Stephens Contrarian (x.xx%/x.xx%): to seek maximum
long-term growth. The Portfolio focuses its investments primarily on equity
securities of domestic, multinational, and foreign companies whose potential
values generally have been overlooked by other investors.
AST Putnam Value Growth & Income (1.08%/0.75%): to seek capital growth
with current income as a secondary objective. The Portfolio invests primarily in
common stocks that offer potential for capital growth, and may, consistent with
its investment objectives, invest in stocks that offer potential for current
income. The Portfolio may invest up to 20% of its assets in securities traded in
foreign markets.
AST Putnam International Equity (1.16%/0.89%): to seek capital
appreciation. The Portfolio will, under normal circumstances, invest at least
65% of its total assets in issuers located in at least three different countries
other than the United States.
AST Putnam Balanced (0.99%/0.75%): to provide a balanced investment
composed of a well-diversified portfolio of stocks and bonds which will produce
both capital growth and current income. The Portfolio may invest in almost any
type of security or negotiable instrument, including cash or money market
instruments. Under normal market conditions, it is expected that at least 25% of
the Portfolio's total assets will be invested in fixed income securities. The
Portfolio may invest up to 20% of its assets in equity securities principally
traded in foreign markets or in fixed income securities denominated in foreign
currencies.
Twentieth Century Strategic Balanced (1.18%/0.85%): to seek capital
growth and current income. It is the intention of the Portfolio's sub-advisor to
maintain approximately 60% of the Portfolio's assets in common stocks that are
considered by the sub-advisor to have better-than-evarage prospects for
appreciation and the remainder in bonds and other fixed income securities.
Twentieth Century International Growth (1.42%/1.00%): to seek capital
growth. The Portfolio will invest primarily in issuers in developed markets.
Under normal conditions, the Portfolio will invest at least 65% of its assets in
equity and equity equivalent securities of issuers from at least three different
countries outside the United States.
* Cohen & Steers Real Estate Investment (x.xx%/x.xx%): to maximize total return
through investment in real estate securities. The Portfolio pursues its
investment objective of maximizing total return by seeking, with approximately
equal emphasis, capital appreciation (both realized and unrealized) and current
income. Under normal circumstances, the Portfolio will invest substantially all
of its assets in the equity securities of real estate companies.
* Stein Roe Small Cap Blend (x.xx%/x.xx%): to seek long-term capital
appreciation. The Portfolio emphasizes investments in financially strong small
and medium-sized companies, based principally on management appraisal and stock
valuation.
* Bankers Trust Enhanced 500 Index (x.xx%/x.xx%): to outperform the Standard &
Poor's Composite Price Index (the "S&P 500(R) Index") through stock selection
resulting in different weightings of common stocks relative to the index. The
Portfolio will include the common stocks of companies included in the S&P
500(R). The Portfolio is not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied regarding the
advisability of investing in securities generally or in the Portfolio
particularly or the ability of the S&P 500 to track general stock market
performance.
* Marsico Capital Growth (x.xx%/x.xx%): to seek capital growth. Income
realization is not an investment objective and any income realized on the
Portfolio's investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by investing primarily in
common stocks.
The Alger American Fund Portfolios:
Alger American Growth (0.79%/0.75%): long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of
purchase, have total market capitalization of $1 billion or greater.
Alger American Small Capitalization (0.88%/0.85%): long-term capital
appreciation. Except during defensive periods, the Portfolio invests at least
65% of its total assets in equity securities of companies that, at the time of
purchase of the securities, have total market capitalization within the range of
companies included within the Russell 2000 Growth Index or the S&P SmallCap 600
Index, updated quarterly.
Alger American MidCap Growth (0.84%/0.80%): long-term capital
appreciation. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the S&P MidCap 400 Index, updated quarterly.
Neuberger & Berman Advisers Management Trust Portfolio:
(This Portfolio invests in a corresponding series of a "master/feeder" structure
- - Advisers Managers Trust, so the investment objective is of that corresponding
series):
AMT Partners (0.95%/0.84%): to seek capital growth. The Portfolio
invests primarily in common stocks of medium to large capitalization established
companies, using the value-oriented investment approach.
Montgomery Variable Series Portfolio:
Emerging Markets Fund (1.45%/0.23%): capital appreciation, which under
normal conditions it seeks by investing at least 65% of its total assets in
equity securities of companies in countries having emerging markets. Under
normal conditions, investments are maintained in at least six emerging market
countries at all times and no more than 35% of total assets are invested in any
one emerging market country.
Transfers and Allocation Services
May I transfer Account Value between investment options? You may
transfer Account Value between investment options, but there are limits, as well
as potential charges, which are discussed above in the question "How much is the
transfer fee, and when must I pay it?" Unless you instruct us otherwise, we
permit the agent of record to make transfers on your behalf.
Are there any limits on transfers? No transfers are permitted when the
Policy is in its "grace period." Should you wish to maintain Account Value in an
investment option after transferring a portion of your Account Value out of that
investment option, we require that there be at least $500.00 in such investment
option after the transfer. If, as a result of the transfer, there would be less
than $500.00 in an investment option, we will transfer the remaining Account
Value pro rata to the investment option(s) that you were transferring to. We
retain the right to impose a limit of not more than 12 transfers per Policy
Year, including transfers involving Fixed Allocations. Unless such a limit is in
effect, there is no limit on the number of transfers that only involve variable
investment options, or the number of transfers from variable investment options
to make Fixed Allocations. However, we do limit each transfer from Fixed
Allocations that are to be effective on any day other than a Policy Anniversary
to the greater of 25% of the Account Value in your Fixed Allocations or $1,000.
If you make such a transfer from your Fixed Allocations, you cannot make another
such transfer until either 90 days has passed or the next Policy Anniversary
occurs. We also retain the right to refuse, limit or delay transfers, either for
one Owner or a group of Owners, if we believe there may be adverse consequences
for other Owners.
What are `allocation services'? Allocation services are programs that
automatically transfer Account Value between investment options. Any limitations
on transfers from Fixed Allocations also apply if any allocation services are
being utilized.
What allocation services does American Skandia provide? We support
dollar cost averaging and static rebalancing.
Loans
When can I take a loan? We offer loans using Account Value as
collateral. We do not make loans available during the first Policy Year.
Starting after the first Policy Year, we allow one loan each Policy Year. The
Insured must be alive when you take a loan (if there are two Insureds, at least
one must be alive when a loan is taken). Subject to our rules, we will establish
on the Issue Date a loan equal to the outstanding indebtedness on previous life
insurance exchanged for a Policy.
Is this type of loan tax-free? A loan from this Policy is treated for
income tax purposes as a distribution, similar to a partial withdrawal, in that:
(a) amounts are deemed to come first from any gain in the Policy; (b)
distributions of gain are subject to income tax as ordinary income; and (c) if
the distribution occurs before age 59 1/2 of the taxpayer, there may be an
additional 10% tax on any gain distributed.
How much is available for a loan? You can receive loans equal to 90% of
your current Account Value less any applicable contingent deferred sales charge
and contingent deferred tax charge. At the time you take a loan, the amount then
available for a new loan is the maximum otherwise available less any Debt. The
minimum amount you may borrow is $500.
What happens to the Account Value if I take a loan? When you take a
loan, we move Account Value equal to the amount of the loan into the Loan
Account. Unless you give us different instructions, we move Account Value from
the variable investment options and the Fixed Allocations in the same proportion
as your Account Value in the investment options on the Valuation Date we move
such Account Value.
The impact of a loan on your Account Value may be positive or negative. If the
Account Value transferred to the Loan Account would earn more than would be
earned in the investment options, the loan will have a positive impact on your
Account Value and on the Required Death Benefit. If the Account Value
transferred to the Loan Account would earn less than would be earned in the
investment options, the loan will have a negative impact on your Account Value
and on the Required Death Benefit.
What is the interest rate charged on any loan? You owe us interest on
any loan at the rate of 6.0% per year, compounded yearly, in arrears. Each
Policy Anniversary Year that the loan is not repaid, we add an amount equal to
any unpaid interest to your Debt.
Does Account Value in the Loan Account earn interest? We credit
interest at the rate of 6.0% per year, compounded yearly, to the Account Value
maintained in the Loan Account that serves as collateral for a "preferred loan."
We credit interest at the rate of 4.0% per year, compounded yearly, to the
Account Value maintained in the Loan Account that serves as collateral for a
"standard loan."
What are a "preferred loan" and a "standard loan"? We determine what
portion of a loan is a "preferred loan" and what portion is a "standard loan" at
the time you take the loan. Whether a loan is "preferred" or "standard" depends
on the source of the collateral to support the loan. We consider the Account
Value moved to the Loan Account to come first from Growth. The portion of any
outstanding loans supported by Account Value drawn from Growth is treated as a
preferred loan. The portion of any outstanding loans supported by Account Value
drawn from other than Growth is treated as a standard loan. A loan retains its
character as "preferred" or "standard" until repaid.
Once a loan is taken, does American Skandia ever require more
`collateral' in the Loan Account? The Loan Account acts as collateral for any
loans from us, so we need to make sure the Debt and the Account Value are equal
to each other. Therefore, on each Policy Anniversary we equalize the Debt and
the Account Value in the Loan Account. If the Debt is larger due to outstanding
loan interest, we transfer Account Value equal to the difference pro-rata from
the investment options and add it to the Loan Account.
We also match up the Debt and the Loan Account when you repay any portion of the
Debt. If the Account Value in the Loan Account then exceeds the Debt, we
transfer the excess to the investment options and allocate it pro-rata to the
investment options which you are utilizing at that time. Any amount then
allocated to the fixed option will be treated as a separate Fixed Allocation.
When must I repay the loan? You are not required to repay the loan
while the Insured is alive, except when an amount is due to keep the Policy in
force or upon reinstatement.
What happens at the Insured's death if I have not repaid the loan? If
there is any outstanding Debt when Death Proceeds are due, we subtract the Debt
from the Death Benefit as part of the calculation of the Death Proceeds.
What happens if I repay any portion of the loan? The amount of Debt is
reduced by the amount of any loan repayment. Any standard loan is repaid before
any preferred loan. The repayment reduces the amount of principal and loan
interest proportionately based on the ratio between principal and loan interest
as of the Valuation Date the loan repayment is applied. We allocate any such
loan repayment to the variable investment and fixed options pro-rata based on
the Account Value in each investment option as of the Valuation Period we
receive your loan repayment. Any amount then allocated to the fixed option will
be treated as a separate Fixed Allocation.
Partial Withdrawals
When can I make a partial withdrawal? We allow partial withdrawals
while the Insured is alive, except that, where permitted by law, you may not
take a partial withdrawal until after the end of the "free-look" period.
How much is available as a partial withdrawal? The maximum partial
withdrawal at any time equals the then current maximum amount we would permit as
a loan under your Policy. This amount is equal to 90% of your current Account
Value less any applicable contingent deferred sales charge and contingent
deferred tax charge. The minimum amount of a partial withdrawal is $500.00.
What happens to the Account Value if I take a partial withdrawal? When
you take a partial withdrawal, we reduce your Account Value by an amount equal
to the amount of the partial withdrawal. Unless you give us different
instructions, we take Account Value from the variable investment options and the
Fixed Allocations in the same proportion as your Account Value in the investment
options on the Valuation Date we take such Account Value. If you have multiple
Fixed Allocations, amounts are taken on a "last in, first out" basis. Any
Account Value in the Loan Account is not available for a partial withdrawal.
Is there a charge for a partial withdrawal? We charge any applicable
contingent deferred sales charge and contingent deferred tax charge on the
portion of any partial withdrawal that is not treated as a "free withdrawal" or
for which we waive such charges under the medically-related waiver provision. We
take these charges pro-rata from the investment options from which we take the
Account Value as a result of the partial withdrawal.
What amount can I take as a free withdrawal? In any Policy Year the
maximum amount you can take as a free withdrawal is the greater of Growth or 10%
of the Premium. The following examples may help show what this means. For each
example, assume that the Premium was $50,000.
(a) For this example assume the Account Value as of the Valuation Day
we process your partial withdrawal is $60,000. You request a partial withdrawal
of $25,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the greater
of Growth, which is the current Account Value ($60,000) less the Premium
($50,000), or $10,000, and 10% of the Premium, which is $5,000. Therefore, we
treat $10,000 as the free withdrawal portion of this partial withdrawal.
Assuming that this partial withdrawal request occurs during the "surrender
charge period," and there is no subsequent Growth in that Policy Year, we would
assess the then applicable contingent deferred sales charge and contingent
deferred tax charge on $15,000, which is the portion of the partial withdrawal
that exceeds the free withdrawal amount. The contingent deferred sales charge
and contingent deferred tax charge would apply to the full amount of any
subsequent partial withdrawal you request during the same Policy Year that was
not eligible for a medically-related waiver.
(b) For this example assume the Account Value as of the Valuation Day
we process your partial withdrawal request for the "maximum free withdrawal
amount" is $47,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the greater
of Growth, which is the current Account Value ($47,000) less the Premium
($50,000), or $3,000, and 10% of the Premium, which is $5,000. Therefore, the
maximum free withdrawal amount is $5,000. Assuming that this partial withdrawal
request occurs during the "surrender charge period," and there is no subsequent
Growth in that Policy Year, the contingent deferred sales charge and the
contingent deferred tax charge would apply to any subsequent surrender or
partial withdrawal that Policy Year that was not eligible for a
medically-related waiver.
Does a partial withdrawal affect the Death Benefit? A partial
withdrawal reduces the Required Death Benefit. The Required Death Benefit is
reduced because the Account Value, which is used in calculating the Required
Death Benefit, has been reduced. It also reduces the Guaranteed Minimum Death
Benefit in the same proportion as the Account Value is reduced by the partial
withdrawal. The effect on the Guaranteed Minimum Death Benefit is described
above in response to the question "What is the Guaranteed Minimum Death
Benefit."
Can I put back funds taken as a partial withdrawal? No.
Surrenders
When can I surrender my Policy? You can surrender your Policy after the
end of the free-look period as long as the Insured is alive.
What is paid out when a Policy is surrendered? If you surrender the
Policy, we will pay you the Cash Value.
Accelerated Death Benefit
What is an accelerated death benefit? An accelerated death benefit is
pre-payment to the Insured of a portion of the Death Proceeds. The maximum we
will pay, before any reductions, is the lesser of 50% of the Required Death
Benefit or $250,000. The actual amount is reduced by a 12-month interest rate
discount (currently 6.0%) and a pro-rata portion of any Debt. We reserve the
right to change the interest rate discount percentage.
When will American Skandia make such a payment? We will make such a
payment one time, where allowed by law, based on the Owner's request. The
Insured may not request such a payment unless the Insured is also the Owner. We
only make the payment if we receive all our requirements. Our requirements
include, but are not limited to, proof satisfactory to us In Writing that the
Insured (the last surviving Insured if there are two Insureds) became terminally
ill, as defined in your Policy: (a) at least 30 days after the Issue Date; or
(b) as a result of an accident that occurred after the Issue Date. To the extent
permitted by law, we will change our procedures in relation to this benefit or
the definition of terminally ill or any other applicable term in order to
maintain the tax-free status of any amounts paid out under this provision.
What happens to the remaining benefits if American Skandia makes such a
payment? Any such payment reduces the Account Value, the Premium, the Guaranteed
Minimum Death Benefit and any Debt in the same ratio as the Required Death
Benefit is reduced as of the Valuation Period such a payment is made. You should
consult a tax advisor on the tax consequences of such a payment. Please refer to
Appendix B for a hypothetical illustration of the accelerated death benefit
provision.
Medically-Related Waiver
What is a medically-related waiver? The medically-related waiver is
available by rider to the Policy, currently with no charge to you. A
medically-related waiver is our waiver of the contingent deferred sales charge
and the contingent deferred tax charge that would otherwise apply to a partial
withdrawal or surrender. Note that while the accelerated death benefit is
payable to the Insured, the medically-related waiver is a benefit, while based
on the Insured's life, that is of value to the Owner, who normally is the
recipient of amounts paid as a partial withdrawal or surrender.
When would American Skandia waive these charges? We will consider
waiving the contingent deferred sales charge and contingent deferred tax charge,
where allowed by law, based on your request. We only waive these charges if we
receive all of our requirements. Our requirements include, but are not limited
to proof satisfactory to us In Writing that the Insured (the last surviving
Insured if there is more than one Insured) has continuously been confined to a
long term care facility, such as a nursing home or a hospital, as defined in the
rider, and that such confinement started after the Issue Date.
Are there any restrictions on medically-related waivers? We will only
consider waiving the contingent deferred sales charge and the contingent
deferred tax charge on a partial withdrawal or surrrender up to $500,000. The
$500,000 maximum will apply to a partial withdrawal(s) or surrender, regardless
of when taken, on any life insurance policy or annuity contract issued by
American Skandia where the Insured under this Policy is named as the Insured,
Owner or Annuitant under the other policy or contract.
What happens to the remaining benefits if American Skandia makes such a
payment in connection with a partial withdrawal? A partial withdrawal for which
we grant a medically-related waiver has the same impact on the remaining
benefits that results from any other partial withdrawal. We simply do not deduct
the contingent deferred sales charge and contingent deferred tax charge that
otherwise would apply.
Risks
What are the risks, and who takes the risks? We bear the risk that, for
all the Policies issued, when considered together, our expenses exceed our
charges, including the expense for providing from our general account the
difference at death between the Account Value and the Death Benefit. We also
bear the investment and reinvestment risk in providing interest crediting
guarantees to Fixed Allocations and to the Loan Account, as well as for any
settlement options that assume a fixed rate of return. We also bear the risk in
guaranteeing the Guaranteed Minimum Death Benefit if your Policy lapses and you
do not have any Debt. You bear the investment risk when allocating Account Value
to any variable investment option, since that will affect the amount available
for any loans, partial withdrawals or surrender. Any irrevocable beneficiary
bears the risk as to the Death Proceeds, which are affected by investment
performance of the investment options, the age at which the Insured dies, any
loan or withdrawal activity by the Owner prior to the Insured's death or payment
of an accelerated death benefit.
Other Rights
Do I have any other rights if I buy a Policy? There are certain other
ownership rights you may exercise under a Policy. Some of these rights include,
but are not limited to, the following. You may name a Beneficiary. You may make
that designation "irrevocable," which means it cannot be changed. If you do not
designate the Beneficiary as irrevocable, you retain the right to change the
Beneficiary before the Insured dies. You may transfer, pledge or assign your
Policy, which may trigger a currently taxable event. You should only transfer,
pledge or assign your Policy after consulting with a competent tax advisor. You
may exercise voting rights in relation to the applicable Portfolios. Some of
these rights may be limited depending on the usage of your Policy, especially if
it is held in connection with certain retirement plans designed to be
"qualified" plans under the Code.
The Separate Account
What supports American Skandia's obligation to me if I buy a Policy?
The benefits provided by the Policy are our obligations. The assets supporting
our obligations equalling the Account Value allocated to the variable investment
options are held in our Separate Account F. We maintain assets in our general
account to support our obligations: (1) equal to the Account Value allocated to
the fixed option; (2) equal to the Account Value in the Loan Account; (3) for
the portion of the Death Proceeds greater than the Account Value; (4) for any
settlement option; and (5) for any other obligation we may have in relation to a
Policy.
The Separate Account was established under the laws of Connecticut.
Assets in the Separate Account may support obligations created in relation to
the Policies described in this Prospectus or other policies we offer. We are the
legal owner of the assets in the Separate Account. Income, gains and losses,
whether or not realized, are credited or charged to the Separate Account
according to the terms of the Policies and any other policies supported by the
assets in the Separate Account without regard to our other income, gains or
losses or to the income, gains or losses in any other of our separate accounts.
Separate Account F is registered with the U.S. Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 as a unit
investment trust, which is a type of investment company. This does not involve
any supervision by the SEC of the investment policies, management or practices
of the Separate Account or of us.
The only Sub-accounts available to you are those offered in this
Prospectus. These Sub-accounts are available as investment options for other
policies we offer. Sub-accounts are permitted to invest in Portfolios we
consider suitable. The Portfolios in which the Sub-accounts invest are available
to Sub-accounts of other separate accounts, including separate accounts we use
in relation to a number of variable annuities. Separate accounts of other
insurers and of various qualified retirement plans may also invest in the
Portfolios.
Taxes
What are the taxes connected to the Policy? Federal and state tax laws,
as well as the interpretations of the laws, change. In addition, we do not know
your particular circumstances, which is one of a number of reasons we cannot
give you tax advice. You should consult a professional tax advisor for tax
advice for your particular situation. You should also be sure to read the
"Additional Tax Considerations" section appearing later in this Prospectus,
which includes, but is not limited to, information regarding estate taxes. What
we do provide are some brief summary answers to the following questions about
Federal income taxes.
Is gain in the Policy taxed as income every year? Under most
circumstances, any gain in the Policy is not taxed currently. However, if you
assign or pledge the Policy, we expect to report any gain in the Policy as then
currently taxable as ordinary income. In addition, except in the case of a
partial assignment as of the Policy Date, we expect to report gain in the Policy
as currently taxable in each tax year the assignment remains in effect.
How are amounts that I receive before the Insured's death taxed?
Amounts you receive as a partial withdrawal, a loan or if you surrender the
Policy are deemed for income tax purposes to come first from any gain in the
Policy. Any gain is taxed as ordinary income. Any portion of these types of
distributions representing gain in the Policy may be subject to a 10% tax
penalty if taken before your age 59 1/2.
What are the taxes due on the Death Proceeds? Under most circumstances,
the Beneficiary does not pay any income tax on the Death Proceeds.
Available Information
How can I find out more about this offer? You first should review the
rest of this Prospectus for additional information. This Prospectus is part of
the registration statement we filed with the Securities and Exchange Commission
("SEC") regarding this offering. Additional information on American Skandia and
this offering is available in that registration statement and accompanying
exhibits. You may obtain copies of these materials at the prescribed rates from
the SEC's Public Reference Section, 450 Fifth Street N.W., Washington, D.C.,
20549. You may inspect and copy the registration statement and the accompanying
exhibits at the SEC's public reference facilities at the above address, Room
1024, and at the SEC's Regional Offices, 7 World Trade Center, New York, NY, and
the Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago, IL.
These documents, as well as documents incorporated by reference, may also be
obtained through the SEC's Internet Website (http://www.sec.gov) for this
registration statement as well as for other registrants that file electronically
with the SEC.
MISCELLANEOUS PROVISIONS AND ADDITIONAL DETAILS: The following sections provide
additional information you should consider before purchasing a Policy.
Providing Services to You
You can reach us by telephone at 1-888-554-3348 or on the Internet at
http://www.americanskandia.com. We may require that you provide us with proper
identification before we release information about your Policy or accept
instructions received over the phone, the Internet or via any other electronic
means. We may require that you provide your Social Security or tax
identification number. We also may require you to present the personal
identification number ("PIN") we provide you after we issue a Policy. To the
extent permitted by law or regulation, neither we nor any person authorized by
us will be responsible for any claim, loss, liability or expense in connection
with a transaction, including but not limited to a transfer between investment
options, over the phone, the Internet or via any other electronic means.
However, this will only be the case if we or such authorized person acted: (a)
in good faith reliance that you authorized the transaction; and (b) on
reasonable procedures to identify you or your designee though a number of
verification methods. These methods may include taping phone conversations,
requesting Social Security or tax identification numbers, PINs, confirming
electronic mail addresses, or similar means. We may be liable for losses due to
unauthorized or fraudulent instructions should we not follow such reasonable
procedures.
We may require that you submit forms In Writing for certain transactions. We
require the written consent of all joint Owners for any transaction for which we
require the Owner's written consent.
Designations
Certain designations apply to a Policy - the Owner, the Insured and the
Beneficiary. All designations are subject to our rules and our acceptance. We
assume all designations, other than the Insured, are revocable unless you tell
us otherwise. You should consult with a competent tax advisor on the income tax,
estate and inheritance tax implications of various designations. You should also
consult with a competent legal advisor as to the implications of certain
designations in relation to an estate, bankruptcy and community property, where
applicable, as well as other matters.
We assume the Insured is the Owner unless you tell us otherwise. If you name
more than one Owner, all rights reserved to Owners are then held jointly. Naming
someone to be the Owner other than the payor of the Premium may have gift,
estate or other tax implications.
We assume the Beneficiary is you or your estate unless you tell us otherwise.
You may name more than one primary and more than one contingent Beneficiary.
Net Investment Factor
For each Sub-account the initial Unit Price was $10.00. The Unit Price for each
subsequent Valuation Period is the net investment factor for that Valuation
Period, multiplied by the Unit Price for the immediately preceding Valuation
Period. The net investment factor is (1) divided by (2), less (3), where:
(1) is the net result of:
(a) the net asset value per share of the underlying Portfolio at
the end of the current Valuation Period plus the per share
amount of any dividend or capital gain distribution declared
and unpaid by the Portfolio during that Valuation Period; plus
or minus
(b) any per share charge or credit during the Valuation Period as
a provision for taxes attributable to the operation or
maintenance of that Sub-account.
(2) is the net result of:
(a) the net asset value per share plus any declared or unpaid
dividends per share of the underlying Portfolio shares held in
that Sub-account at the end of the preceding Valuation Period;
plus or minus
(b) any per share charge or credit during the preceding Valuation
Period as a provision for taxes attributable to the operation
or maintenance of the Sub-account.
(3) is the mortality and expense risk charges and the administration
charge.
Allocation Programs
We may provide administrative support for various programs that automatically
transfer Account Value between certain investment options at scheduled times.
These include dollar cost averaging and static rebalancing (periodic rebalancing
of Account Values between investment options to conform to preset percentages).
However, we only offer to support such allocation programs according to our
rules. While we are offering to support these programs as of the date of this
Prospectus, we do not guarantee to support these programs at all times.
We may also provide administrative support for various allocation programs that
may be made available by your financial professional. These may include various
asset allocation and market timing programs. In connection with such programs,
we may support periodic withdrawals from your Policy to pay your financial
professional. We only offer to support such programs according to our rules.
These rules may include, but are not limited to, receipt of your authorization
In Writing permitting a financial professional to make transfers between
investment options on your behalf, or to enroll your Policy in one of the
allocation programs for which we provide administrative support. Unless you give
us other instructions, we do permit the agent of record to make transfers on
your behalf.
Any financial professional you authorize may or may not be appointed by us as
our agent for the sale of Policies. However, we do not engage any agent of
record or any third parties to offer investment allocation services of any type,
so that persons or firms offering such services do so independent from any
agency relationship they may have with us for the sale of Policies. We therefore
take no responsibility for the investment allocations and transfers transacted
on your behalf by such third parties, in accordance with any allocation programs
employed by such third parties or any investment allocation recommendations made
by such third parties. While we were offering support for a number of these
programs as of the date of this Prospectus, we do not support all such programs
and do not guarantee to always continue support for those programs we currently
support or may support in the future.
Limitations on Transfers
We retain the right to refuse or delay transfers, either for one Owner or a
group of Owners, if we believe that: (a) excessive trading or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Prices or the share prices of the Portfolios; or (b) we are informed by one
or more of the Portfolios that the purchase or redemption of shares is to be
restricted because of excessive trading or a specific transfer or group of
transfers is deemed to have a detrimental effect on the share prices of affected
Portfolios.
Death During the Grace Period
If the Insured dies during a grace period while there is any Debt and before we
receive any payment, we deduct the unpaid charges from the Death Benefit when
calculating the Death Proceeds. For more information on the grace period, please
refer to the response to the question "Do I have to maintain a minimum Cash
Value?"
Reinstatement
You may apply for reinstatement of the Policy if it lapses. We must receive this
application In Writing at our Office within 3 years of the date the lapse
occurred as measured from the end of the grace period. We may require evidence
of insurability satisfactory to us. In order to reinstate your Policy, you also
must pay us a reinstatement amount, including any applicable charges and any
Debt.
Maturity
A Policy "matures" as of the Policy Anniversary on which the Insured is Age 95.
If there are two Insureds, a Policy "matures" as of the Policy Anniversary on
which the younger Insured is Age 95 or would have been Age 95 if the younger
Insured is then deceased. We will pay out the Cash Value once the Policy
matures. The Policy will then end, and we will not have any more obligations
under the Policy. We may provide a rider, where permitted by law, that allows
the Policy to mature at a later date if there is adequate guidance available to
us regarding the tax treatment of all Policies if we were to permit extension of
the maturity date. Should we permit such extension of the maturity, we advise
you to seek tax advice regarding your specific circumstances should you want the
Policy to mature at a later date. If the Policy is no longer treated as life
insurance after any extension of maturity, gain in the Policy may be taxable to
you in the year of the original maturity and all or a portion of the Death
Proceeds may be taxable to the beneficiary.
Pricing Transactions
We "price" charges, transfers, distributions and payments on the dates indicated
below. If such transactions are scheduled to occur on other than a Valuation
Day, we price such transactions as of the following Valuation Period.
(1) We price "scheduled" transactions such as monthly deductions,
transfers and distributions as of the date such transactions are so scheduled.
"Scheduled" transactions include, but are not limited to, all charges deducted
on a Monthly Processing Date, equalization of Debt and the Loan Account on a
Policy Anniversary, transfers under a dollar cost averaging program or transfers
previously scheduled with us at our Office as part of any rebalancing, asset
allocation or similar program, or any program of scheduled distributions.
(2) We price "unscheduled" distributions such as transfers, loans or
partial withdrawals that are not subject to any medical waiver as of the date we
receive at our Office the request for such transactions. "Unscheduled" transfers
include any transfers processed in conjunction with any market timing program,
or transfers not previously scheduled with us at our Office pursuant to any
rebalancing, asset allocation or similar program which you employ or you
authorize to be employed on your behalf. "Unscheduled" transfers received
pursuant to an authorization to accept transfer instructions using voice or data
transmission over the phone are priced as of the Valuation Period we receive the
request at our Office for such transactions. We price unscheduled payments as of
the date we receive such amounts at our Office. These include loan repayments,
payments to keep a Policy in effect during a grace period or a reinstatement
payment.
(3) We price surrenders, withdrawals subject to a medical waiver,
accelerated death benefit payments and payment of Death Proceeds as of the date
we receive at our Office all materials we require for such transactions and such
materials are satisfactory to us.
Delaying Transactions
We may defer any distribution or transfer from a Fixed Allocation or any payment
under a fixed settlement option for a period not to exceed the lesser of 6
months or the period permitted by law. If we defer a distribution or transfer
from any Fixed Allocation or any payment under a settlement option for more than
thirty days, or less where required by law, we pay interest at the minimum rate
required by law but not less than 3% per year on the amount deferred. We may
defer payment of proceeds of any distribution from any Sub-account or any
transfer from a Sub-account for a period not to exceed 7 calendar days from the
date the transaction is effected. This is a delay in payment only, and is not a
delay in the pricing of any such distribution or transfer. Any deferral period
begins on the date such distribution or transfer would otherwise have been
transacted.
All procedures, including distributions, based on the valuation of the
Sub-accounts may be postponed during the period: (1) the New York Stock Exchange
is closed (other than customary holidays or weekends) or trading on the New York
Stock Exchange is restricted as determined by the SEC; (2) the SEC permits
postponement and so orders; or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.
Voting
You have voting rights in relation to Account Value maintained in the
Sub-accounts. You do not have voting rights in relation to Account Value
maintained in any Fixed Allocations, in the Loan Account or in relation to fixed
payments under a settlement option.
We will vote shares of the Portfolios in which the Sub-accounts invest in the
manner directed by Owners, unless we, in our sole discretion, determine that we
are required by law or regulation to vote otherwise. Owners give instructions
equal to the number of shares represented by the Sub-account Units attributable
to their Policy.
We will vote the shares attributable to assets held in the Sub-accounts solely
for us rather than on behalf of Owners, or any share as to which we have not
received instructions, in the same manner and proportion as the shares for which
we have received instructions. We will do so separately for each Sub-account
from various classes that may invest in the same underlying mutual fund
portfolio.
The number of votes for a Portfolio will be determined as of the record date for
such Portfolio as chosen by its board of trustees or board of directors, as
applicable. We will furnish Owners with proper forms and proxies to enable them
to instruct us how to vote.
You may instruct us how to vote on the following matters: (a) changes to the
board of trustees or board of directors, as applicable; (b) changing the
independent accountant; (c) approval of changes to the investment advisory
agreement or adoption of a new investment advisory agreement; (d) any change in
the fundamental investment policy; and (e) any other matter requiring a vote of
the shareholders.
With respect to approval of changes to the investment advisory agreement,
approval of a new investment advisory agreement or any change in fundamental
investment policy, only Owners maintaining Account Value as of the record date
in a Sub-account investing in the applicable Portfolio will instruct us how to
vote on the matter, pursuant to the requirements of Rule 18f-2 under the
Investment Company Act of 1940.
Transfers, Assignments, Pledges
Generally, your rights in a Policy may be transferred, assigned or pledged at
any time. These transactions may be subject to income taxes and certain penalty
taxes. You may transfer, assign or pledge your rights to another person at any
time, prior to the death upon which the Death Benefit is payable. You must
request a transfer or provide us a copy of the assignment In Writing. A transfer
or assignment is subject to our acceptance. We will not be deemed to know of or
be obligated under any assignment prior to our receipt and acceptance thereof.
We assume no responsibility for the validity or sufficiency of any assignment.
Reports
We mail you, at your last known address of record, any statements and reports
required by applicable law or regulation. You should therefore give us prompt
notice of any address change. We send a confirmation statement to you each time
an unscheduled transaction is made affecting Account Value. Such transactions
will generally include changes in investment allocation or transfers among
investment options, loans and loan repayments, partial surrenders or
withdrawals, and any charges associated with such unscheduled transactions.
Quarterly statements are also mailed detailing the activity affecting your
Policy during the prior quarter, including all scheduled and unscheduled
transactions. To the extent permitted by law, some types of scheduled
transactions will only be confirmed on a quarterly basis. Such transactions will
generally include those pre-authorized charges deducted on the Monthly
Processing Date. You may request additional reports. We reserve the right to
charge up to $50 for each such additional report. You should review the
information in these statements carefully. You must report all errors or
corrections to us at our Office immediately to assure proper crediting to your
Policy. For transactions for which we immediately send confirmations, we assume
all transactions are accurate unless you notify us otherwise within 30 days
after the date of the transaction. For transactions that are only confirmed on
the quarterly statement, we assume all transactions are accurate unless you
notify us within 30 days of the end of the calendar quarter. We may also send
you each year an annual report and a semi-annual report containing financial
statements for the applicable Sub-accounts, as of December 31 and June 30,
respectively. We reserve the right, to the extent permitted by law, to provide
any prospectus supplements, confirmations, statements and reports required by
applicable law or regulation to you via the Internet or any other electronic
means.
Incontestability
We may not contest the validity of a Policy after it has been in effect during
the Insured's lifetime for two years from the Issue Date. If there are two
Insureds, this applies to the lifetime of either Insured. If the Policy is
reinstated, to the extent permitted by law, we may not contest the validity of a
Policy after it has been in effect for two years from the date of the
reinstatement.
Suicide
If an Insured commits suicide within two years of the Policy Date (or whatever
maximum period is permitted under law) or the date of a reinstatement if allowed
by law, the Death Benefit will be the greater of: (a) Premium paid less any
outstanding Debt and any partial withdrawals; or (b) the Cash Value. All other
requirements as to calculation and payment of Death Proceeds will apply.
Misstatement
We will adjust the amount of the Death Proceeds to conform to the facts if the
age or gender of an Insured is incorrectly stated. We will do so as specified in
the Policy and as permitted by law.
Backdating
Depending on your Age at the time you apply for a Policy, it may be advantageous
to have the Policy Date be earlier than the Issue Date. This is known as
"backdating." Doing so may enable you to qualify for lower cost of insurance
charges. We permit backdating: (a) only if doing so will qualify you for a lower
cost of insurance charge; and (b) the Policy Date is the date the Application is
signed, but in no case more than 90 days before the Issue Date. If you elect
backdating, on the Issue Date we will deduct charges that would have been
deducted as of the Policy Date and any Monthly Processing Dates between the
Policy Date and the Issue Date. To the extent permitted by law, we do not
guarantee any increase in the Account Value for the period between the Policy
Date and the Issue Date. However, we also reserve the right, to the extent
permitted by law, to credit you a fixed rate of interest for such period.
Resolving Material Conflicts
Portfolios may be available to registered separate accounts offering either or
both life and annuity contracts of insurance companies not affiliated with us.
We also may offer life insurance policies and/or annuity contracts that offer
different variable investment options from those offered under this Policy, but
which invest in the same Portfolios. It is possible that differences might arise
between our Separate Account F and one or more accounts of other insurance
companies which participate in a Portfolio. It is also possible that differences
might arise between a Sub-account offered under this Policy and variable
investment options offered under different life insurance policies or annuities
we offer, even though such different variable investment options invest in the
same Portfolio. In some cases, it is possible that the differences could be
considered "material conflicts." Such a "material conflict" could also arise due
to changes in the law (such as state insurance law or Federal tax law) which
affect either these different life and annuity separate accounts or differing
life insurance policies and annuities. It could also arise by reason of
differences in voting instructions of persons with voting rights under our
policies and/or annuities and those of other companies, persons with voting
rights under annuities and those with rights under life policies, or persons
with voting rights under one of our life policies or annuities with those under
other life policies or annuities we offer. It could also arise for other
reasons. We will monitor events so we can identify how to respond to such
conflicts. If such a conflict occurs, we will take the necessary action to
protect persons with voting rights under our life policies or annuities
vis-a-vis those with rights under life policies or annuities offered by other
insurance companies. We will also take the necessary action to treat equitably
persons with voting rights under this Policy and any persons with voting rights
under any other life policy or annuity we offer.
Modification of the Separate Account
We reserve the right to do any or all of the following: (a) combine a
Sub-account with other Sub-accounts; (b) combine Separate Account F or a portion
thereof with other separate accounts; (c) deregister Separate Account F under
the Investment Company Act of 1940; (d) operate Separate Account F as a
management investment company under the Investment Company Act of 1940 or in any
other form permitted by law; (e) make changes required by any change in the
Securities Act of 1933, the Securities Exchange Act of 1934 or the Investment
Company Act of 1940; (f) make changes that are necessary to maintain the tax
status of your Policy under the Code; and (g) make changes required by any
change in other Federal or state laws relating to life insurance policies in
general or variable life insurance policies in particular.
Also, from time to time, we may make additional Sub-accounts available to you.
These Sub-accounts will invest in Portfolios we believe to be suitable for the
Policy. We may or may not make a new Sub-account available to invest in any new
portfolio of one of the current underlying mutual funds should such a portfolio
be made available to Separate Account F.
We may eliminate Sub-accounts, combine two or more Sub-accounts or substitute
one or more new underlying mutual funds or portfolios for the one in which a
Sub-account is invested. Substitutions may be necessary if we believe a
Portfolio no longer suits the purpose of the Policy. This may happen due to a
change in laws or regulations, or a change in the investment objectives or
restrictions of a Portfolio, or because the Portfolio is no longer available for
investment, or for some other reason. We would obtain prior approval from the
insurance department of our state of domicile, if so required by law, before
making such a substitution, combination, deletion or addition. We also would
obtain prior approval from the SEC so long as required by law, and any other
required approvals before making such a substitution, combination, deletion or
addition.
Entire Contract
For any Policy issued, the entire contract between you and us includes the
Policy form and any of the following which may be attached to the Policy: riders
or endorsements, the copy of any Application and endorsements. All statements
made in any Application are deemed to be representations and not warranties. No
statement is used to void a Policy or defend a claim unless it is contained in
any Application attached to the Policy.
Only our President, one of our Vice Presidents or our Secretary may change or
waive any provisions of a Policy. Any change or waiver must be In Writing. To
the extent permitted by law, we are not bound by any promises or representations
made by or to any other person.
Additional Tax Considerations
The following is a brief summary of certain Federal tax laws as they are
currently interpreted. No one can be certain that the laws or interpretations
will remain unchanged or that agencies or courts will always agree as to how the
tax law or regulations are to be interpreted. This discussion is not intended as
tax advice. You may wish to consult a professional tax advisor for tax advice as
to your particular situation.
Our taxation: We are taxed as a life insurance company under Part I, subchapter
L, of the Code.
Treatment as a "modified endowment contract": Under most circumstances, taxes on
any gain in the Policy are `deferred' and not taxed every year. Unless your
Policy is established as part of an eligible exchange of a life insurance policy
entered into before June 21, 1988, amounts you receive as a partial withdrawal,
a loan or as a surrender are taxed in the same manner as distributions from a
deferred annuity before annuity payments begin. This means that these types of
distributions are deemed to come first from any gain in the policy and that any
gain is treated as ordinary income. It also means that distributions of gain may
be subject to a 10% tax penalty if taken before age 59 1/2. Under most
circumstances, the Beneficiary will not pay any income tax on the Death
Proceeds.
Assignment: If you assign or pledge any portion of the Policy, the transaction
is treated as a distribution subject to taxation as ordinary income. The tax
penalty noted above may apply. In addition, except in the case of a partial
assignment as of the Policy Date, we expect to report gain in the Policy as
currently taxable in each tax year the assignment remains in effect.
Gifts: If you give your Policy as a gift to an entity for which you are not the
taxpayer or to anyone other than your spouse (or former spouse incident to a
divorce), the gift is treated for tax purposes as a distribution.
Aggregation rules: You may purchase more than one life insurance policy from us
in the same calendar year that is treated under the Code as a "modified
endowment contract," including the Policy described in this Prospectus. If you
do, all such policies are subject to "aggregation rules." Under these rules, all
of these policies must be treated as one modified endowment contract when
determining the portion of any distribution or deemed distribution which is
currently taxable. It is also possible that these aggregation rules may apply to
any annuity contracts you purchase from us in the same calendar year as you
purchase a Policy.
Exchanges: Section 1035 of the Code permits certain tax-free exchanges of life
insurance policies. You must comply with various requirements for such exchanges
to be treated as tax-free, which include, but are not limited to: (a) the need
for the insured to be the same individual or individuals before and after the
exchange; and (b) the need to have the Debt on a Policy as of the date all
premium is received equal to any outstanding indebtedness on the life insurance
exchanged for the Policy. If you exchange a life insurance policy entered into
before June 21, 1988 which is not a modified endowment contract, we believe the
new policy generally will not be treated as a modified endowment contract if no
new premium is paid and there is no reduction in the death benefit as a result
of the exchange. For those Policies not treated as modified endowment contracts,
we believe that loans are not treated as distributions and withdrawals are
deemed to come first from your investment in the policy. In addition, we believe
that the aggregation rules as well as the tax treatment of assignments, pledges
and gifts, noted above, would not apply. However, we cannot guarantee this tax
treatment and advise you to consult your tax advisor before exchanging any
existing life insurance policy.
Transfers between investment options: Transfers between investment options are
not subject to taxation. The Treasury Department may promulgate guidelines under
which a variable life insurance policy will not be treated as life insurance for
tax purposes if persons with ownership rights have excessive control over the
investments underlying such a policy. Such guidelines may or may not address the
number of investment options or the number of transfers between investment
options offered. It is not known whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also not known what effect, if
any, such guidelines may have on transfers between the investment options of the
Policy offered pursuant to this Prospectus. We will take any action, including
modifications to your Policy or the Sub-accounts, required to comply with such
guidelines if promulgated.
Generation skipping transfers: Under the Code certain taxes may be due when all
or part of a life insurance policy is transferred to or a death benefit is paid
to an individual two or more generations younger than the policy holder. These
taxes tend to apply to transfers of significantly large dollar amounts. We may
be required to determine whether a transaction must be treated as a direct skip
as defined in the Code and the amount of the resulting tax. If so required, we
will deduct from your Policy or from any applicable payment to be treated as a
direct skip any amount we are required to pay as a result of the transaction.
Diversification: Section 817(h) of the Code provides that a variable life
insurance policy, in order to qualify as life insurance, must have an
"adequately diversified" segregated asset account (including investments in a
mutual fund by the segregated asset account of insurance companies). The
Treasury Department's regulations prescribe the diversification requirements for
variable life insurance policy. We believe the underlying mutual fund portfolios
should comply with the terms of these regulations.
Withholding: Section 3405 of the Code provides for Federal income tax
withholding on the portion of a distribution which is includible in the gross
income of the recipient. Amounts to be withheld depend upon the nature of the
distribution. However, under most circumstances a recipient may elect not to
have income taxes withheld or have income taxes withheld at a different rate by
filing a completed election form with us. A withholding form may be required.
Accelerated Death Benefits: Payments of amounts to an Insured that otherwise
would be payable to the Beneficiary as a result of an Insured's death can
qualify for the same tax-free treatment as death benefits if certain
requirements are met. These are requirements regarding the terminal illness of
the insured. We believe payments under the provisions of the accelerated death
benefit of the Policy will meet the requirements of the Code and the regulations
in order to qualify as tax-free payments.
Extending the Policy's Maturity: We believe that a Policy will continue to be
treated as life insurance and as a modified endowment contract under the Code if
you extend the Policy's maturity under any extended maturity rider we may offer
in the future. However, this tax treatment is not certain, so you should consult
your tax advisor before taking this step. If the Policy is not treated as life
insurance after any extension of maturity, gain in the Policy may no longer be
taxed deferred, and all or a portion of the Death Proceeds may be taxable to the
Beneficiary.
Survivorship Policies: The Code does not directly address how certain features
of a policy paying on the death of a surviving insured should be treated. We
believe such a Policy should be treated as other life insurance policies, but
there is some uncertainty as to whether that is the case. If the surviving
Insured is an Owner, the Death Proceeds payable as a result of the death of the
last surviving Insured generally will be treated as part of the Owner's estate
for purposes of the federal estate tax. If the surviving Insured was not an
Owner, the replacement cost of the Policy may be included in the estate of the
Owner upon his or her death and Death Proceeds payable as a result of the death
of the surviving Insured are includible in the person's estate if the proceeds
are payable to or for the benefit of that person's estate or if the surviving
Insured held incidents of ownership in the Policy within three years prior to
death.
Taxes other than Federal income taxes: Amounts received or deemed received from
a Policy that may be subject to Federal income tax also may be subject to state
income taxes. The fair market value of a Policy or the Death Proceeds may be
included under certain circumstances in an estate for purposes of state
inheritance taxes or Federal estate taxes. Federal estate and gift taxes are
integrated for various purposes. An unlimited marital deduction may apply for
purposes of Federal estate and gift taxes, which would allow deferral of taxes
until the death of the surviving spouse.
Safekeeping of the Assets
We maintain the assets of the Separate Account and those in our general account.
The assets of the Separate Account are segregated from those in our general
account.
Regulation
We are organized as a Connecticut stock life insurance company, and are subject
to Connecticut law governing insurance companies. We are regulated and
supervised by the Connecticut Commissioner of Insurance. By March 1 of every
year, we must prepare and file an annual statement, in a form prescribed by the
Connecticut Insurance Department, which covers our operations for the preceding
calendar year, and must prepare and file our statement of financial condition as
of December 31 of such year. The Commissioner and his or her agents have the
right at all times to review or examine our books and assets. A full examination
of our operations will be conducted periodically according to the rules and
practices of the National Association of Insurance Commissioners ("NAIC"). We
are subject to the insurance laws and various Federal and state securities laws
and regulations and to regulatory agencies, such as the Securities and Exchange
Commission (the "SEC") and the Connecticut Banking Department, which administer
those laws and regulations.
We can be assessed up to prescribed limits for policyholder losses incurred by
insolvent insurers under the insurance guaranty fund laws of most states. We
cannot predict or estimate the amount any such future assessments we may have to
pay. However, the insurance guaranty laws of most states provide for deferring
payment or exempting a company from paying such an assessment if it would
threaten such insurer's financial strength.
Several states, including Connecticut, regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates. Under such laws, inter-company transactions, such as dividend
payments to parent companies and transfers of assets, may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions and
initiatives often have significant effects on our business. Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance companies; (b) the tax treatment of insurance products; (c)
the securities laws, particularly as they relate to insurance and annuity
products; (d) the "business of insurance" exemption from many of the provisions
of the anti-trust laws; (e) the barriers preventing most banks from selling or
underwriting insurance: and (f) any initiatives directed toward improving the
solvency of insurance companies. We would also be affected by federal
initiatives that have impact on the ownership of or investment in United States
companies by foreign companies or investors.
Legal Matters
The law firm of Werner & Kennedy has passed on the legal matters relating to the
offering of these Policies.
Legal Proceedings
As of the date of this Prospectus, neither we nor American Skandia Marketing,
Incorporated were involved in any litigation outside of the ordinary course of
business, and know of no material claims.
Experts
The audited financial statement included in this Prospectus and Registration
Statement are presented in accordance with generally accepted accounting
principles. These statements were audited by Deloitte & Touche LLP, independent
auditors. We rely on their authority as experts in accounting and auditing.
Brian L. Hirst has approved the hypothetical illustration included in this
Prospectus and Registration Statement. We have included them relying on his
opinion that they are reasonable.
Distribution of this Offering
American Skandia Marketing, Incorporated ("ASM, Inc."), a wholly-owned
subsidiary of American Skandia Investment Holding Corporation, acts as the
principal underwriter of the Policies. ASM, Inc.'s principal business address is
One Corporate Drive, Shelton, Connecticut 06484. ASM, Inc. is a broker-dealer
registered with the SEC under the 1934 Act and a member of the National
Association of Securities Dealers, Inc. ("NASD").
ASM, Inc. will enter into distribution agreements with certain broker-dealers
registered under the Securities and Exchange Act of 1934 or with entities which
may otherwise offer the Policies that are exempt from such registration. In
addition, ASM, Inc. may offer Policies directly to potential purchasers. The
maximum initial concession to be paid on premiums received is 8.5% and a portion
of compensation may be paid from time to time based on all or a portion of
either the Account Value or the Cash Value. We reserve the right to base
concessions from time-to-time on the investment options chosen by Owners,
including investment options that may be deemed our "affiliates" or "affiliates"
of ASM, Inc. under the Investment Company Act of 1940.
As of the date of this Prospectus, we expect to pay an on-going service fee in
relation to providing certain statistical information upon request by Owners
about the investment options and the Portfolios. We may make the fee payable to
the service providers based on either the Account Value or Cash Value of
Policies. Under most circumstances, we will engage the broker-dealer of record
for your Policy, or the entity of record if such entity could offer Policies
without registration as a broker-dealer (i.e. certain banks), to be your
resource for the statistical information, and to be available upon your request
to both provide and explain such information to you. The broker-dealer of record
or the entity of record is the firm which sold you the Policy, unless later
changed. Some portion of the fee we pay for this service may be payable to your
representative. We may structure this program such that no fee is payable based
on the value in Fixed Allocations. If that were to occur, it is possible that
your representative may receive on-going service fee compensation, but only in
relation to value maintained in variable investment options.
From time to time we may promote the sale of our products such as the Policies
offered pursuant to this Prospectus through programs of non-cash rewards to
registered representatives of participating broker-dealers. We may withdraw or
alter such promotions at any time.
To the extent permitted, we may advertise certain information regarding the
performance of the investment options that does not take into consideration the
effect of either the cost of insurance charges, the contingent deferred sales
charge, the contingent tax charge or the maintenance fee. This performance
information may help you review the performance of the investment options and
provide a basis for comparison between the Policy's investment options. This
information may be less useful when comparing the performance of the investment
options with the performance of investment options provided in other variable
life policies because each plan of life insurance will have its own applicable
charges. This information is even less useful in comparing performance to that
of any savings or investment vehicle, rather than variable life insurance.
Performance information on the Sub-accounts is based on past performance only
and is no indication of future performance. Actual performance will depend on
the type, quality and, for some of the Sub-accounts, the maturities of the
investments held by the Portfolios and upon prevailing market conditions and the
response of the Portfolios to such conditions. Actual performance will also
depend on changes in the expenses of the Portfolios. Such changes are reflected,
in turn, in the Sub-accounts which invest in such Portfolios. In addition, the
charges deducted from your Account Value and those assessed against each
Sub-account will affect performance.
As of the date of this Prospectus, all the Portfolios existed prior to the
inception of these Sub-accounts. Performance quoted in advertising regarding
such Sub-accounts may indicate periods during which the Sub-accounts have been
in existence but prior to the initial offering of the Policies. Such
hypothetical performance is calculated using the same assumptions employed in
calculating actual performance since inception of the Sub-accounts. Any such
historical performance will be based on assumptions. These include assumptions
regarding: (a) the Age, risk class and gender, where applicable, of an Insured
or Insureds; (b) the Premium and Policy Date; and (c) assumptions about a lack
of transfers, loans, loan repayments and withdrawals during the period for which
performance is quoted.
American Skandia Life Assurance Corporation may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay Death Proceeds, make payments under any settlement options or administer
Policies. Such rankings and ratings do not reflect or relate to the performance
of Separate Account F.
Illustrations
In Appendix A we provide examples of the kind of hypothetical illustrations
available to help you better understand how a Policy works. In that Appendix, we
also provide information on how you may obtain additional hypothetical
illustrations. In Appendix B, we provide hypothetical illustrations of how
exercise of the accelerated death benefit provision affects the values of a
Policy.
Executive Officers and Directors
Our executive officers and directors are listed in Appendix C.
Financial Statements
Financial statements for American Skandia Life Assurance Corporation and
American Skandia Life Assurance Corporation Separate Account F are found in
Appendix D.
Appendix A
Illustrations
It is impossible to illustrate exactly how a Policy will perform in the future.
However, you may better understand how a Policy works, and may be able to better
compare a Policy with other life insurance plans, using hypothetical
illustrations based on certain assumptions about the future. You can do this
using the hypothetical illustrations provided in this Appendix A. You can also
do this by requesting from us personalized hypothetical illustrations based on:
(a) the Age(s) of the Insured(s); (b) the expected risk class(es) of the
Insured(s); (c) the gender of the Insured(s), where permitted; (d) the Face
Amount you seek or the amount of Premium you intend to pay; and (e) guaranteed
and/or current cost of insurance charges. Please forward any such request to us
at our address as shown on the first page of this Prospectus.
As of the date of this Prospectus, we only provide such hypothetical
illustrations on paper. We reserve the right to make such illustrations
available in the future via electronic transmission or as part of a multi-media
presentation.
As of the date of this Prospectus, we do not provide hypothetical illustrations
that assume future loans, withdrawals, loan repayments or varying assumed rates
of return. However, we reserve the right to make such illustrations available in
the future.
The hypothetical illustrations that follow show the changes in the Death
Benefit, Account Value and Surrender Value over time based on certain
assumptions. Values are provided as of the end of each Policy Year shown. For
comparison, it also shows what an amount equal to the applicable Premium would
be worth before tax if interest were credited to such an amount at 5% interest.
The assumptions used are as follows:
1. Hypothetical constant gross rates of return in the Portfolios of 0%,
6% and 12%.
2. Hypothetical constant expense ratios of 1.00% for the Portfolios.
3. The mortality and expense risk charge assessed against the
assets in the Separate Account at an annualized rate of 0.90%.
The charge for administrative expenses connected with
operating the Separate Account is 0.25% per year. It is also
assumed that there is no tax charge assessed against the
Separate Account.
4. The charges under the Policy, including the current cost of
insurance charges that differ by gender. It is assumed that
there are no transfer fees applicable.
5. There are no loans, loan repayments, withdrawals, accelerated
death benefit payments or amounts paid to maintain the Policy
in effect during a grace period.
6. The Age(s) and gender of the Insured(s) shown in each illustration.
7. The Insured(s) is/are eligible for the no tobacco use risk class.
8. The Premium and Face Amount are as shown in each illustration.
[ACTUAL ILLUSTRATIONS TO BE FILED BY AMENDMENT]
Appendix B
Illustration Of Accelerated Death Benefit
The following are hypothetical illustrations of the impact of payments made to
the Insured under the accelerated death benefit provision of the Policy. The
first hypothetical illustration assumes the Insured is a female, age 45 as of
the Issue Date. The second hypothetical illustration assumes the Insured is a
male, age 65 as of the Issue Date. The following other assumptions apply to both
hypothetical illustrations:
1. The Premium paid was $20,000.
2. The provision is exercised as of the 10th Policy Anniversary.
3. The investment options in which Account Value was allocated
have grown on a constant basis since the Issue Date at an
annualized rate of 8% per year.
4. There have been no loans or loan repayments. 5. No amounts
have been withdrawn.
6. 50% of the maximum available amount is taken pursuant to the
accelerated death benefit provision.
7. The 12 month interest rate discount used in the calculation of
the benefit assumes interest at 6% per year, compounded
yearly.
The following are various policy values immediate before and after the
accelerated death benefit is paid:
Female Age 45 Male Age 65
------------- -----------
Account Value Before the
Accelerated Death Benefit is Paid: $34,224 $33,708
Cash Value Before the
Accelerated Death Benefit is Paid: 34,224 33,708
Maximum Amount Available
For a Loan Before the
Accelerated Death Benefit is Paid: 30,802 30,337
Death Benefit Before the
Accelerated Death Benefit is Paid: 85,371 45,746
Guaranteed Minimum Death Benefit Before the
Accelerated Death Benefit is Paid: 34,224 33,708
Amount Paid as the Accelerated
Death Benefit: 20,135 10,789
Account Value After the
Accelerated Death Benefit is Paid: 25,668 25,281
Cash Value After the
Accelerated Death Benefit is Paid: 25,668 25,281
Maximum Amount Available
For a Loan After the
Accelerated Death Benefit is Paid: 23,101 22,753
Death Benefit After the
Accelerated Death Benefit is Paid: 64,028 34,310
Guaranteed Minimum Death Benefit After the
Accelerated Death Benefit is Paid: 25,668 25,281
Appendix C
Executive Officers and Directors
Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding work experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
Gordon C. Boronow* President President and
44 and Chief Chief Operating Officer:
Operating Officer, American Skandia Life
Director (since July, 1991) Assurance Corporation
Nancy F. Brunetti Senior Vice President, Senior Vice President, Customer
35 Customer Service and Service and Business Operations:
Business Operations American Skandia Life
Director (since February, 1996) Assurance Corporation
Ms. Brunetti joined us in 1992. She previously held the position of Senior Business Analyst at Monarch Life Insurance Company.
Malcolm M. Campbell Director (since April, 1991) Director of Operations,
41 Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi* Chief Executive Executive Vice President and
52 Officer and Member of Corporate Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Cindy C. Ciccarello Vice President, Vice President,
38 Customer Service Customer Service:
American Skandia Life
Assurance Corporation
Ms. Ciccarello joined us in 1997. She previously held the position of Assistant
Vice President at Phoenix Duff & Phelps from 1996 to 1997 and positions of
Director and Operations Manager at Phoenix Equity Planning Corporation from 1989
to 1996.
Lincoln R. Collins Senior Vice President, Senior Vice President,
36 Product Management Product Management:
Director (since February, 1996) American Skandia Life
Assurance Corporation
William F. Cordner, Jr. Vice President, Vice President,
50 Customer Focus Teams Customer Focus Teams:
American Skandia Life
Assurance Corporation
Mr. Cordner joined us in 1996. He previously held the position of Vice President at United Healthcare from 1993 to 1996 and Vice
President at The Travelers Insurance Company from 1990 to 1993.
Henrik Danckwardt Director (since July, 1991) Director of Finance
43 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Wade A. Dokken Director (since July, 1991) Director:
37 and Employee American Skandia Life
Assurance Corporation;
President and Chief Marketing Officer:
American Skandia Marketing, Incorporated
Teresa Grove Vice President, Vice President,
41 Customer Service Customer Service:
American Skandia Life
Assurance Corporation
Ms. Grove joined us in 1996. She previously held positions of Operations
Manager at Twentieth Century/Benham from January, 1992 to September, 1996 and
Operations Manager at Lateef Management Association from January, 1989 to June,
1991.
Brian L. Hirst Vice President, Vice President,
49 Corporate Actuary Corporate Actuary:
American Skandia Life
Assurance Corporation
Mr. Hirst joined us in 1996. He previously held the positions of Vice President from 1993 to 1996 and Second Vice President from
1987 to 1992 at Allmerica Financial.
N. David Kuperstock Vice President, Vice President,
45 Product Development Product Development:
American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
44 Chief Financial Officer, Chief Financial Officer:
Director (since October, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since November, 1994) Director - Marketing and Sales,
42 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Vice President and Vice President and
35 Controller Controller:
American Skandia Life
Assurance Corporation
Mr. Monroe joined us in 1996. He previously held positions of Assistant
Vice President and Director at Allmerica Financial from August, 1994 to July,
1996 and Senior Manager at KPMG Peat Marwick from July, 1983 to July, 1994.
Polly Rae Vice President, Vice President,
34 Service Development Service Development:
American Skandia Life
Assurance Corporation
Rodney D. Runestad Vice President Vice President:
47 American Skandia Life
Assurance Corporation
Anders O. Soderstrom Director (since October, 1994) President and
37 Chief Operating Officer:
American Skandia Information
Services and Technology Corporation
Amanda C. Sutyak Executive Vice President Executive Vice President
39 and Deputy Chief and Deputy Chief
Operating Officer, Operating Officer:
Director (since July, 1991) American Skandia Life
Assurance Corporation
C. Ake Svensson Treasurer, Vice President, Treasurer
46 Director (since December, 1994) and Corporate Controller:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice President with Nordenbanken.
Bayard F. Tracy Director (since October, 1994) Senior Vice President
49 and National Sales Manager:
American Skandia
Marketing, Incorporated
Jeffrey M. Ulness Vice President, Vice President,
36 Product Management Product Management:
American Skandia Life
Assurance Corporation
Mr. Ulness joined us in 1994. He previously held the positions of Counsel at
North American Security Life Insurance Company from March, 1991 to July, 1994
and Associate at LeBoeuf, Lamb, Leiby, Green and MacRae from January, 1990 to
March 1991.
- --------
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
Appendix D
Financial Statements
[To be filed by amendment]
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and
documents:
The facing sheet.
The prospectus consisting of 39 pages.
Representations and Undertakings.
The signatures.
Written consents of the following persons:
Werner & Kennedy TO BE FILED BY AMENDMENT
Deloitte and Touche, LLP TO BE FILED BY AMENDMENT
Corporate Actuary TO BE FILED BY AMENDMENT
The following exhibits which correspond to those required by paragraph
A of the instructions for exhibits to Form N-8B-2:
1.A.(1) Resolution of the Board of Directors of the Company is filed
herewith.
(2) Not applicable.
(3) Distributing contracts:
(a) Principal Underwriting Agreement is filed herewith.
(b) Form of Dealer Agreement incorporated by reference to
Post-Effective Amendment No. 3 to Registration
Statement No. 33-44436,filed April 20, 1993.
(c) Not applicable.
(4) Not applicable.
(5) Form of Modified Single Premium Variable Life Insurance Policy
TO BE FILED BY AMENDMENT
(6) Articles of Incorporation and By-laws of American Skandia
Life Assurance Corporation, incorporated by reference to
Pre-Effective Amendment No. 2 to Registration Statement
No. 33-19363, filed July 27, 1988.
(7) Not applicable.
(8) Not applicable.
(9) Other material contracts.
TO BE FILED BY AMENDMENT
(10) Form of Application for Modified Single Premium Variable Life
Insurance Policy. TO BE FILED BY AMENDMENT
(11) Memorandum describing transfer and redemption procedures is
filed herewith.
2. Opinion and Consent of Werner and Kennedy.
TO BE FILED BY AMENDMENT
3. No financial statements are to be omitted from the prospectus
pursuant to instruction 1(b) or 1(c) of the instructions as to
the prospectus.
4. Not applicable.
5. Financial Data Schedules. TO BE FILED BY AMENDMENT
6. Not applicable.
7. Opinion and Consent of certifying actuary.
TO BE FILED BY AMENDMENT
8. Opinion and Consent of Deloitte and Touche, LLP
TO BE FILED BY AMENDMENT
9. Powers of Attorney are filed herewith.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING ON INDEMNIFICATION
Article XIII of the By-laws of American Skandia Life Assurance Corporation, a
Connecticut corporation, (the "Corporation") provides for indemnification of its
officers, directors, and employees as follows:
SECTION 1. Proceedings Other Than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigate
(other than an action by or in the right of the Corporation) by reason of the
fact that he, or the person whose representative he is, is or was a shareholder,
director, officer, employee or agent of the Corporation, or is or was serving
solely at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if the person is
successful on the merits in the defense of the proceeding or as provided in
Section 3 hereof, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, the person had no reasonable
cause to believe his conduct was unlawful or if upon application to the court as
provided in Section 5 hereof, the court shall have determined that in view of
all the circumstances such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine; except that,
in connection with an alleged claim based upon his purchase or sale of
securities of the Corporation or of another enterprise, which he serves or
served at the request of the Corporation, the Corporation shall only indemnify
such person after the court shall have determined, on application as provided in
Section 5 hereof, that in view of all the circumstances such person is fairly
and reasonably entitled to be indemnified, and then for such amount as the court
shall determine. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or of the participants and
beneficiaries of such employee benefit plan or trust and consistent with the
provisions of such employee benefit plan or trust, or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. Proceedings by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Corporation, to procure a judgment in its
favor by reason of the fact that he, or the person whose legal representative he
is, is or was a shareholder, director, officer, employee or agent of the
Corporation, or is or was serving solely at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise, against expenses (including attorney fees)
actually and reasonably incurred by him in connection with such proceeding in
relation to matters as to which such person, or the person whose legal
representative his is, is finally adjudged not to have breached his duty to the
Corporation, or where the court, on application as provided in Section 6 hereof,
shall have determined that in view or all the circumstances such person is
fairly and reasonably entitled to be indemnified, and then for such amount as
the court shall determine. The Corporation shall not so indemnify any such
person for amounts paid to the Corporation, to a plaintiff or to counsel for a
plaintiff in settling or otherwise disposing of a proceeding, with or without
court approval; or for expenses incurred in defending a proceeding which is
settled or otherwise disposed of without court approval.
SECTION 3. Determination of Right of Indemnification.
The conclusion provided for in Section 1 hereof may be reached by any of the
following: (1) The Board of Directors of the Corporation by a consent in writing
signed by a majority of those directors who were not parties to such proceeding;
(2) independent legal counsel selected by a consent in writing signed by a
majority of those directors who were not parties to such proceeding; (3) in the
case of any employee or agent who is not an officer or director of the
Corporation, the Corporation's general counsel; or (4) the shareholders of the
Corporation by the affirmative vote of at least a majority of the voting power
of shares not owned by parties to such proceeding, represented at an annual or
special meeting of shareholders, duly called with notice of such purpose stated.
Such person shall also be entitled to apply to a court for such conclusion, upon
application as provided in Section 5 hereof, even though the conclusion reached
by any of the foregoing shall have been adverse to him or to the person whose
legal representative he is.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION AND UNDERTAKING
The Registrant and the Company hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 (the "Act"). The Registrant and the Company elect to be
governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the Policies
described in the prospectus. The Policies are designed in such a way as to
qualify for the exemptive relief from various provisions of the Act afforded by
Rule 6e-3(T).
(b) The Company is relying on Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) for the
deduction of the mortality and expense risk charges ("risk charges")assumed by
the Company under the Policies. The Company represents that the risk charges are
reasonable in relation to all of the risks assumed by the issuer under the
Policies. (Paragraph (b)(13)(iii)(F)(2)(ii)). Actuarial memoranda demonstrating
the reasonableness of these charges are maintained by the Company, and will be
made available to the Securities and Exchange Commission (the "Commission") on
request.(Paragraph (b)(13)(iii)(F)(3).
(c) The Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit the
separate account and the contractholders and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation.(Paragraph (b)(13)(iii)(F)(4)(ii)(A).
(d) The Company represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of the company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses. (Paragraph (b)(13)(iii)(F)(4)(ii)(B)(2).
(e) Pursuant to Rule 26(e) under the Act, the Company hereby represents that the
fees and charges deducted under the Policy described in the Prospectus, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Shelton, State of Connecticut, on day of October,
1997.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
SEPARATE ACCOUNT F
(Registrant)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Depositor)
By:/s/Amanda C. Sutyak Attest: /s/Kathleen A. Chapman
Amanda C. Sutyak, Kathleen A. Chapman,
Executive Vice President Assistant Corporate Secretary
and Deputy Chief
Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, 10/17/97
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer)
/s/Thomas M. Mazzaferro Executive Vice President and 10/17/97
Thomas M. Mazzaferro Chief Financial Officer
(Principal Accounting Officer)
/s/David R. Monroe Vice President and 10/17/97
David R. Monroe Controller
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro* Gunnar Moberg* Bayard F. Tracy*
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom* C. Ake Svensson* Lincoln R. Collins*
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
Nancy F. Brunetti*
Nancy F. Brunetti
*By: /s/Kathleen A. Chapman
Kathleen A. Chapman
*Pursuant to Powers of Attorney filed herewith.