-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nusz5jeeFi9MvADY1U5mM/TVsFvG9pEReT2MHGEOrjXyIehrHte8tr06+f6NeCkl dkfFYKa6Am0fueLiqZ6/jA== 0001190903-07-000076.txt : 20080627 0001190903-07-000076.hdr.sgml : 20080627 20070312150800 ACCESSION NUMBER: 0001190903-07-000076 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20070312 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONWIDE VLI SEPARATE ACCOUNT 4 CENTRAL INDEX KEY: 0001041357 IRS NUMBER: 314156830 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 614-249-7111 MAIL ADDRESS: STREET 1: NATIONWIDE LIFE INSURANCE CO STREET 2: ONE NATIONWIDE PLAZA CITY: COLUMBUS STATE: OH ZIP: 43215 CORRESP 1 filename1.htm Next Gen CVUL PEA 2

[
Office of General Counsel  Please Reply to:         Timothy D. Crawford Officer, Managing Counsel
One Nationwide Plaza
01-09-V2
Columbus, Ohio 43215
                                                                                                                                    VIA EDGAR E-mail: crawfot1@nationwide.com
Tel: (614) 249-3398
Fax: (614) 249-2112
March 12, 2007

Ms. Rebecca A. Marquigny
Senior Counsel
U.S. Securities and Exchange Commission
Division of Investment Management
100 F. Street, NE
Washington, D.C. 20549-0506

Re: Nationwide Life Insurance Company
Nationwide VLI Separate Account - 4
Supplemental Response to Pre-Effective Amendment No. 2
N-6 Registration Statement, File No. 333-137202

Dear Ms. Marquigny:

On behalf of Nationwide Life Insurance Company (“Nationwide”) and its Nationwide VLI Separate Account - 4 (“Variable Account”), we are filing this correspondence to supplement our response letter dated February 15, 2007. The Registration Statement referenced above provides for the offering of certain life insurance policies through the Variable Account.

This filing is being made electronically via EDGAR in accordance with Regulation S-T.

We have set out detailed information below with regard to how the life insurance policies offered through the Variable Account will be sold and marketed, as well as providing detailed information on charge structures. In addition, we have provided examples of how charges would be structured based on certain policy component allocations.

GENERAL INFORMATION REGARDING THE SALE AND MARKETING OF THE POLICY

The policies offered under the Registration Statement have been designed specifically for the Corporate Owned Life Insurance (“COLI”) market. The policies are marketed exclusively to corporate entities (including limited liability companies and professional corporations). The COLI market is not the same as the group life insurance market. Individuals will not be purchasing insurance coverage pursuant to a group life insurance policy.

The most common use for a COLI policy is as an informal funding vehicle for executive benefits as well as a limited set of broader, long term, corporate benefit plans. To a far lesser extent, a COLI policy may be used as key person insurance. In addition, it is important to note that individual ownership is not typical in the COLI market. In fact, individual ownership is incidental and occurs only in the event the corporation owning the policy makes a conscious decision to transfer ownership to an individual person. Thus, it is fair to state that the policies will not be marketed to individuals.

The COLI policies, in tandem with executive benefit services, will be marketed by a number of third-party firms. Sales professionals employed by such firms are usually highly trained specialists in the market and will typically consult with a client on all aspects of plan design from initial design, creation of legal documents, assistance in implementation and enrollment, as well as provide ongoing administration services. COLI is one of several informal funding mechanisms that is typically offered and evaluated along with mutual funds, options and letters of credit, just to name a few others.

During the course of a typical funding sale, professionals from the third-party selling firm will work with the client to develop financial models of the different options that might be appropriate for that client’s particular situation. A client will typically assign internal resources, or engage external consultants, to evaluate and verify these models in addition to the third-party selling firm.

Each purchaser will have their own particular needs and desires with respect to how the policy charges will effect the cash value growth. Some will value configurations that offer longer term lower charges (Policy Components A, B and C), others will prefer to have minimal impact to the cash value in the early years (Policy Component D) while still others will seek their own balance between short and long term charges which can be achieved through a blending of the various components.

It is important to note that Policy Component allocations impact the timing and manner compensation is paid to the distributing firm.

INFORMATION REGARDING POLICY COMPONENTS AND CHARGE STRUCTURES

The purpose the Policy Component charge structure is two-fold: (1) to permit each corporate purchaser of the policy to customize overall charges based on need and desired timing of cost; and (2) to permit the distributing firm in consultation with the corporate purchaser to determine how to allocate policy expenses, including distribution expenses, over the life of the policy. Certain Policy Components front-load load expenses while others “smooth” them over the years on an asset basis.

It is also important to note that each purchaser of the policy receives a comprehensive illustration of charges based on the Policy Component allocations being considered.

A Note on Surrender Charges

Before specific Policy Components are discussed, it is important to note that the policy, and for the most part the COLI market, does not assess back-end surrender charges. Corporate purchasers of these products are free to find other funding vehicles and exit the policy without being assessed a back-end surrender charge.

A Brief Description of the Policy Components

Each Policy Component apportions charges differently. Below is a brief description of each Policy Component.

·  
Policy Component A - This Policy Component apportions charges on the front-end the greatest. This Policy Component includes a five year declining front-end premium load with a deferred premium load assessed in the second through the fifth policy year. Monthly charges deducted from cash value are lower in the first four years compared to Policy Components B and C and such charges are lower when compared to Policy Component D in all policy years.
·  
Policy Component B - This Policy Component apportions charges on the front-end less than Policy Component A. Policy Component B has a five year declining premium load, but has no deferred premium load. Monthly charges deducted from cash value are lower in the first four years when compared to Policy Component A. The monthly charges are lower than Policy Component C during the first ten policy years and are lower than Policy Component D in all policy years.
·  
Policy Component C - This Policy Component apportions charges on the front-end less than Policy Component A and B. This Policy Component has a four year declining front-end premium load. Monthly charges deducted from cash value are lower than Policy Component D in all policy years. The monthly charges are higher than Policy Component A during the first four policy years and higher than Policy Component B in the first ten policy years. After these timelines pass, Policy Components A and B are similar in monthly charges.
·  
Policy Component D - This Policy Component apportions charges on the front-end the least when compared to the other Policy Components. This Policy Component has no front end premium load and no deferred premium load, but monthly charges deducted from cash value are higher than Policy Components A, B, and C.

A note on Supplemental Insurance Protection Policy Components

The Policy Components described above describe base insurance coverage under the policy. However, there is supplemental insurance protection that may be elected via rider that is term insurance on the insured. Supplemental insurance protection have some variations in charges (cost of insurance, sub-account asset based charge, and specified amount).

Helpful examples showing how base and supplemental insurance coverage charge variations blend to develop ultimate total charges is included in “Examples Of Ultimate Charge Structures Based On Certain Policy Component Allocations” later in this correspondence.

Table of Charges

The table below shows maximum guaranteed charges by component and base versus supplemental coverage charges.




Charge
Policy Component A
Policy Component B
Policy Component C
Policy Component D
Premium Load
10%
10%
10%
10%
Deferred Premium Load
2%
0%
0%
0%
Illustration Charge
$25
$25
$25
$25
Sub-Account Asset Charge (Base Policy)
0.10% Monthly
0.10% Monthly
0.10% Monthly
0.10% Monthly
Sub-Account Asset Charge (Supplemental Insurance Rider)
0.10% Monthly
0.10% Monthly
0.10% Monthly
0.10% Monthly
Base Policy Cost of Insurance
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
Supplemental Insurance Rider Cost of Insurance
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
$83.33 per $1,000 of Net Amount At Risk
Base Policy Specified Amount Charge
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount
Supplemental Insurance Rider Specified Amount Charge
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount
$0.40 per $1,000 of Base Specified Amount

The tables below show current premium loads and deferred premium loads assessed.

Table 1: Premium Loads on Target Amounts
Policy Year
1
2
3
4
5 and thereafter
Premium Load: Policy Component A
10%
8%
6%
4%
2%
Premium Load: Policy Component B
10%
8%
6%
4%
2%
Premium Load: Policy Component C
8%
6%
4%
2%
2%
Premium Load: Policy Component D
0%
0%
0%
0%
0%
 

Table 2: Premium Loads on Excess Amounts
Policy Year
1
Premium Load: Policy Component A
2%
Premium Load: Policy Component B
2%
Premium Load: Policy Component C
2%
Premium Load: Policy Component D
0%
 

 
Table 3: Deferred Premium Loads on Target Amounts
Policy Year
1
2-5
6 and thereafter
Deferred Premium Load: Policy Component A
0%
2%
0%
Deferred Premium Load: Policy Component B
0%
0%
0%
Deferred Premium Load: Policy Component C
0%
0%
0%
Deferred Premium Load: Policy Component D
0%
0%
0%



Table 4: Deferred Premium Load on Excess Amounts
Policy Year
1
2-5
6 and thereafter
Deferred Premium Load: Policy Component A
0%
0.5%
0%
Deferred Premium Load: Policy Component B
0%
0%
0%
Deferred Premium Load: Policy Component C
0%
0%
0%
Deferred Premium Load: Policy Component D
0%
0%
0%

The tables below show current specified amount charges on base policy coverage and supplemental insurance rider (Rider) coverage.
 
Table 5: Base Specified Amount Charges
 
Policy Year
 
 
Amount of Total Specified Amount
 
Up to $50,000
 
Over $50,000
 
1 through 20
 
$0.30 per $1,000
 
$0.01 per $1,000
 
21 and thereafter
 
$0.01 per $1,000
 
$0.01 per $1,000
 
 
 
Table: 6 Rider Specified Amount Charges
 
Policy Year
 
 
Amount of Total Specified Amount
 
Up to $50,000
 
Over $50,000
 
1 through 20
 
$0.05 per $1,000
 
$0.01 per $1,000
 
21 and thereafter
 
$0.01 per $1,000
 
$0.01 per $1,000

The tables below show current Sub-Account Asset Charges on amounts attributable to base policy coverage and amounts attributable to Rider coverage. Detailed tables showing variations on how the ratio of cash value to the 7-pay amount is shown in “Examples Of Ultimate Charge Structures Based On Certain Policy Component Allocations” later in this correspondence.
 
 
Table 7: Base Policy Sub-Account Asset Charges (shown as an annual rate)1
Ratio of Cash Value to
7-Pay Amount
Policy Component A
Policy Component B
Policy Component C
Policy Component D
Under 125%
0.30%
0.25%
0.25%
0.60%
125% - 249%
0.26%
0.23%
0.23%
0.55%
250% - 374%
0.22%
0.20%
0.20%
0.50%
375% - 499%
0.19%
0.18%
0.18%
0.46%
500% - 649%
0.17%
0.16%
0.16%
0.42%
650% - 799%
0.15%
0.14%
0.14%
0.38%
800% - 999%
0.13%
0.13%
0.13%
0.35%
1000% - 1299%
0.11%
0.11%
0.11%
0.33%
1300% - 1599%
0.10%
0.10%
0.10%
0.31%
1600% - 1999%
0.09%
0.09%
0.09%
0.29%
2000% - 2499%
0.08%
0.08%
0.08%
0.27%
2500% & over
0.06%
0.06%
0.06%
0.25%
 
1 To calculate the monthly deduction, use the following formula.
 
Monthly Rate = (1+ Annual Rate) (Number of days in the Month / Number of days in the year) - 1


Table 8: Rider Sub-Account Asset Charges (shown as an annual rate)1
Ratio of Cash Value to
7-Pay Amount
Policy Component A
Policy Component B
Policy Component C
Policy Component D
Under 125%
0.20%
0.16%
0.16%
0.30%
125% - 249%
0.18%
0.15%
0.15%
0.27%
250% - 374%
0.16%
0.14%
0.14%
0.24%
375% - 499%
0.14%
0.13%
0.13%
0.22%
500% - 649%
0.12%
0.12%
0.12%
0.20%
650% - 799%
0.11%
0.11%
0.11%
0.18%
800% - 999%
0.10%
0.10%
0.10%
0.16%
1000% - 1299%
0.09%
0.09%
0.09%
0.14%
1300% - 1599%
0.08%
0.08%
0.08%
0.13%
1600% - 1999%
0.07%
0.07%
0.07%
0.12%
2000% - 2499%
0.06%
0.06%
0.06%
0.11%
2500% & over
0.05%
0.05%
0.05%
0.10%
1 To calculate the monthly deduction, use the following formula.
Monthly Rate = (1+ Annual Rate) (Number of days in the Month / Number of days in the year) - 1

Explanation of How 7-Pay Amount Is Determined

Below is an explanation of how the 7-Pay Amount (or 7-Pay Premium) is determined Premium (7-Pay Premium) and how the Necessary Premium (NP) under the Cash Value Accumulation Test is determined.

Technical Definition of 7-Pay Premium:

7-Pay Premium (x) = usual definition = [NSP(x) - ACV]/(annuity factor for 7 yrs from x) where the ACV = Max (0, 1035 exchange amount).

Technical Definition of Necessary Premium:

A Premium is “necessary” as long as it doesn’t exceed (A)-(B),
where (A) = the attained age NSP for the lowest DB during the 1st 7 years;
and (B) = Minimum [a, b];
where a= DCSV;
and b=the Actual Cash Surrender Value (CSV).

Narrative Description of How 7-Pay Amount Is Determined
 
The Necessary Premium helps us define the Non-MEC funding limits, or capacity, such that any premium below this limit avoids increases to the Specified Amount.

Payment of Unnecessary Premiums will then, by definition, cause a material change and an increase in the amount of insurance required to retain Non-MEC status for the policy.

NSP is the traditional A (x+t) using 7702 (b) from the IRC, which means using an assumed interest rate which is Max(4%, guar rate);

Deemed CSV is the hypothetical CSV using an assumed interest rate which is “policy rate”(4% for COLI products), ignoring Surrender Charges or Loans, and calculated immediately before the premium payment;

Actual CSV is the Policy’s CSV at any point in time t, without regard to Surrender Charges or Policy Loans.

The 7-Pay premium is essentially the maximum premium, if paid on a consistent basis for each of the first 7 years, that allows the contract to remain a Non-MEC.

Maximum Gross NP includes the premium load and the Maximum Net NP is after deduction of the premium load. Our interpretation is to use the former in our testing.

In Variable Life contracts, there occurs the situation that the Actual CSV can be below the Deemed CSV, due to fund performance being volatile and potentially negative.

Cost of Insurance Charges

Cost of insurance charges vary based on individual characteristics of each insured. Listed below are representative amounts of the cost of insurance assuming the following.

·  
40 year old.
·  
Non tobacco.
·  
10th Policy Year.
·  
Issued on a short-form non-medical basis.
·  
25% allocation to each policy component.

Base Policy Monthly Cost of Insurance: $0.29 per $1,000 of the Net Amount at Risk
Rider Monthly Cost of Insurance: $0.19 per $1,000 of the Net Amount at Risk

EXAMPLES OF ULTIMATE CHARGE STRUCTURES BASED ON CERTAIN POLICY COMPONENT ALLOCATIONS

Examples appear in the attachment marked and attached hereto as “Exhibit A.”

We appreciate your continued review of this matter. If you have any questions about this filing, please reply to me at the contact information on the first page of this correspondence.

Sincerely yours,

/s/ TIMOTHY D. CRAWFORD

Timothy D. Crawford
Officer, Managing Counsel
Office of General Counsel
Nationwide Life Insurance Company



EXHIBIT A

SUB-ACCOUNT ASSET CHARGE EXAMPLE BY POLICY COMPONENT WITH AN EXPLANATION OF 7-PAY RATIO CALCULATION

This is the Sub-Account Asset Charge calculation that will be done on a monthly basis, with charges as follows for Components A, B, C and D:

Sub-Account Asset Charge (SAC)

 
Policy Component A
Policy
Component B
Policy
Component C
Policy
Component D
Ratio of CV to 7-Pay amount
Base Policy
Rider
Base Policy
Rider
Base Policy
Rider
Base Policy
Rider
Under 125%
0.30%
0.20%
0.25%
0.16%
0.25%
0.16%
0.60%
0.30%
125% - 249%
0.26%
0.18%
0.23%
0.15%
0.23%
0.15%
0.55%
0.27%
250% - 374%
0.22%
0.16%
0.20%
0.14%
0.20%
0.14%
0.50%
0.24%
375% - 499%
0.19%
0.14%
0.18%
0.13%
0.18%
0.13%
0.46%
0.22%
500% - 649%
0.17%
0.12%
0.16%
0.12%
0.16%
0.12%
0.42%
0.20%
650% - 799%
0.15%
0.11%
0.14%
0.11%
0.14%
0.11%
0.38%
0.18%
800% - 999%
0.13%
0.10%
0.13%
0.10%
0.13%
0.10%
0.35%
0.16%
1000% - 1299%
0.11%
0.09%
0.11%
0.09%
0.11%
0.09%
0.33%
0.14%
1300% - 1599%
0.10%
0.08%
0.10%
0.08%
0.10%
0.08%
0.31%
0.13%
1600% - 1999%
0.09%
0.07%
0.09%
0.07%
0.09%
0.07%
0.29%
0.12%
2000% - 2499%
0.08%
0.06%
0.08%
0.06%
0.08%
0.06%
0.27%
0.11%
2500% & over
0.06%
0.05%
0.06%
0.05%
0.06%
0.05%
0.25%
0.10%

Appendix: Examples for the Sub-Account Asset Charge

Assuming the following weights of all Policy Components:
(1) Component A - 40%
(2) Component B - 30%
(3) Component C - 20%
and (4) Component D - 10%

Assume the base policy/rider blend is 75% / 25%



Example 1
Year 1, Month 1; 7 Pay Premium = 50,000; Cash Value = 46,550

Since 46,550 < 1.25 x 50,000 =>
Annual SAC = [(0.40 x 0.30%) + (0.30 x 0.25%) + (0.20 x 0.25%) + (0.10 x 0.60%)] x 0.75 +
[(0.40 x 0.20%) + (0.30 x 0.16%) + (0.20 x 0.16%) + (0.10 x 0.30%)] x 0.25 = 0.27625%

Monthly SAC = 1- [(1- Annual SAC) ^ (exact # days in month/exact number of days in year)] = 0.02305003%

SAC Monthly Deduction = (Cash Value) x (Monthly SAC) = 10.73

Example 2
Year 2, Month 1; 7 Pay Premium = 50,000; Cash Value = 113,400

Since (2.49 x 50,000) > 113,400 > (1.25 x 50,000) =>
Annual SAC = [(0.40 x 0.26%) + (0.30 x 0.23%) + (0.20 x 0.23%) + (0.10 x 0.55%)] x 0.75 +
[(0.40 x 0.18%) + (0.30 x 0.15%) + (0.20 x 0.15%) + (0.10 x 0.27%)] x 0.25 = 0.249%

Monthly SAC = 1- [(1- Annual VSAC) ^ (exact # days in month/exact number of days in year)] = 0.02077372%

VSAC Monthly Deduction = (Cash Value) x (Monthly SAC) = 23.56




EXAMPLES OF ULTIMATE CHARGE STRUCTURES BASED ON CERTAIN POLICY COMPONENT ALLOCATIONS

Example 1: 60% Base Policy 40% Rider Blend with 100% Allocation to Policy Component A (Front Loaded)
 
Policy
Premium
Premium Load
Deferred Premium Load
Per Unit Charge
Conditional
Year
Maximum 7-Pay
Actual Paid
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to $50,000
Excess
Enhancement
1
100,000.00
100,000.00
10.00%
2.00%
6,800.00
6.800%
0.00%
0.00%
0.00
0.000%
0.20
0.06
9.720%
10
0.00
0.00
2.00%
2.00%
0.00
2.000%
0.00%
0.00%
0.00
0.000%
0.20
0.06
0.000%

Ratio of CV to 7-Pay amount
Sub-Account Asset Charge
Under 125%
0.2600%
125% - 249%
0.2280%
250% - 374%
0.1960%
375% - 499%
0.1700%
500% - 649%
0.1500%
650% - 799%
0.1340%
800% - 999%
0.1180%
1000% - 1299%
0.1020%
1300% - 1599%
0.0920%
1600% - 1999%
0.0820%
2000% - 2499%
0.0720%
2500% & over
0.0560%

             
Sub-
  
Cash
        
Annual
  
 
Total
  
Deferred
Current
  
Per
Account
Net
Value
Total
  
Net Cash
Total
Death
  
Policy
Policy
Premium
Premium
COI
Admin
$1,000
Charge
Investment
Released
Contract
Conditional
Surrender
Death
Claims
Accumulated
Year
Premium
Load
Load
Charges
Fee
Charge
(BPs)
Income
On Death
Value
Enhancement
Value
Benefit
Paid
IRR
1
2,000,000
136,000
0
43,733
1,200
26,591
26
145,674
0
1,933,233
187,910
2,121,144
35,757,878
0
6.06%
2
2,000,000
112,000
28,000
46,194
1,200
26,591
23
299,911
0
4,010,213
351,295
4,361,507
35,757,878
0
5.91%
3
2,000,000
88,000
28,000
59,783
1,200
26,591
20
467,270
0
6,261,794
465,878
6,727,672
35,757,878
0
5.83%
4
2,000,000
64,000
28,000
63,974
1,200
26,591
17
649,815
0
8,713,528
514,098
9,227,626
35,757,878
0
5.79%
5
2,000,000
40,000
28,000
76,088
1,200
26,591
15
845,476
0
11,370,691
495,762
11,866,453
35,757,878
0
5.76%
 
10,000,000
440,000
112,000
289,771
6,000
132,957
  
2,408,145
0
        
0
  
                               
6
2,000,000
40,000
0
81,316
1,200
26,591
13
1,061,015
0
14,264,731
430,795
14,695,526
36,424,391
0
5.82%
7
2,000,000
40,000
0
97,325
1,200
26,591
12
1,291,806
0
17,371,340
343,953
17,715,292
42,583,178
0
5.89%
8
0
0
0
105,768
1,200
26,591
12
1,384,766
0
18,601,021
225,072
18,826,093
43,902,599
0
5.96%
9
0
0
0
113,981
1,200
26,591
12
1,479,316
0
19,915,569
107,544
20,023,113
45,317,517
0
6.02%
10
0
0
0
129,475
1,200
26,591
10
1,585,668
0
21,323,090
0
21,323,090
46,855,057
0
6.09%
 
14,000,000
520,000
112,000
817,635
12,000
265,915
  
9,210,717
0
        
0
  


Example 2: 30% Base Policy 70% Rider Blend with 100% Allocation to Policy Component B (Lower Front Load)
Policy
Premium
Premium Load
Deferred Premium Load
Per Unit Charge
Conditional
Year
Maximum 7-Pay
Actual Paid
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to $50,000
Excess
Enhancement
1
100,000.00
100,000.00
10.00%
2.00%
4,400.00
4.400%
0.00%
0.00%
0.00
0.000%
0.13
0.03
7.020%
10
0.00
0.00
2.00%
2.00%
0.00
2.000%
0.00%
0.00%
0.00
0.000%
0.13
0.03
0.000%

Ratio of CV to 7-Pay amount
Sub-Account Asset Charge
Under 125%
0.1870%
125% - 249%
0.1740%
250% - 374%
0.1580%
375% - 499%
0.1450%
500% - 649%
0.1320%
650% - 799%
0.1190%
800% - 999%
0.1090%
1000% - 1299%
0.0960%
1300% - 1599%
0.0860%
1600% - 1999%
0.0760%
2000% - 2499%
0.0660%
2500% & over
0.0530%

             
Variable
                
             
Sub-
  
Cash
        
Annual
  
 
Total
  
Deferred
Current
  
Per
Account
Net
Value
Total
  
Net Cash
Total
Death
  
Policy
Policy
Premium
Premium
COI
Admin
$1,000
Charge
Investment
Released
Contract
Conditional
Surrender
Death
Claims
Accumulated
Year
Premium
Load
Load
Charges
Fee
Charge
(BPs)
Income
On Death
Value
Enhancement
Value
Benefit
Paid
IRR
1
2,000,000
88,000
0
42,789
1,200
15,681
19
150,068
0
1,998,698
140,309
2,139,007
35,757,878
0
6.95%
2
2,000,000
76,000
0
47,090
1,200
15,681
17
310,785
0
4,162,665
254,963
4,417,628
35,757,878
0
6.81%
3
2,000,000
64,000
0
52,141
1,200
15,681
16
484,509
0
6,504,108
341,140
6,845,248
35,757,878
0
6.74%
4
2,000,000
52,000
0
54,675
1,200
15,681
14
673,383
0
9,041,722
391,507
9,433,229
35,757,878
0
6.70%
5
2,000,000
40,000
0
58,255
1,200
15,681
13
875,241
0
11,787,090
402,529
12,189,619
35,757,878
0
6.67%
 
10,000,000
320,000
0
254,949
6,000
78,406
  
2,493,986
0
        
0
  
                               
6
2,000,000
40,000
0
55,081
1,200
15,681
12
1,095,979
0
14,754,073
374,753
15,128,827
37,498,372
0
6.66%
7
2,000,000
40,000
0
66,796
1,200
15,681
11
1,332,766
0
17,944,174
318,509
18,262,684
43,898,971
0
6.65%
8
0
0
0
79,870
1,200
15,681
11
1,432,265
0
19,259,282
214,741
19,474,023
45,413,576
0
6.65%
9
0
0
0
101,523
1,200
15,681
10
1,532,977
0
20,652,862
109,460
20,762,322
46,990,540
0
6.64%
10
0
0
0
122,489
1,200
15,681
10
1,645,410
0
22,137,587
0
22,137,587
48,644,821
0
6.64%
 
14,000,000
400,000
0
680,708
12,000
156,812
  
9,533,383
0
        
0
  


Example 3: 20% Base Policy 80% Rider Blend with 50%/50% Allocation to Policy Component B & C
Policy
Premium
Premium Load
Deferred Premium Load
Per Unit Charge
Conditional
Year
Maximum 7-Pay
Actual Paid
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to $50,000
Excess
Enhancement
1
100,000.00
100,000.00
9.00%
2.00%
3,400.00
3.400%
0.00%
0.00%
0.00
0.000%
0.10
0.03
5.930%
10
0.00
0.00
2.00%
2.00%
0.00
2.000%
0.00%
0.00%
0.00
0.000%
0.10
0.03
0.000%

Ratio of CV to 7-Pay amount
Sub-Account Asset Charge
Under 125%
0.1780%
125% - 249%
0.1660%
250% - 374%
0.1520%
375% - 499%
0.1400%
500% - 649%
0.1280%
650% - 799%
0.1160%
800% - 999%
0.1060%
1000% - 1299%
0.0940%
1300% - 1599%
0.0840%
1600% - 1999%
0.0740%
2000% - 2499%
0.0640%
2500% & over
0.0520%

             
Sub-
  
Cash
        
Annual
  
 
Total
  
Deferred
Current
  
Per
Account
Net
Value
Total
  
Net Cash
Total
Death
  
Policy
Policy
Premium
Premium
COI
Admin
$1,000
Charge
Investment
Released
Contract
Conditional
Surrender
Death
Claims
Accumulated
Year
Premium
Load
Load
Charges
Fee
Charge
(BPs)
Income
On Death
Value
Enhancement
Value
Benefit
Paid
IRR
1
2,000,000
68,000
0
46,869
1,200
12,044
18
151,654
0
2,019,998
119,786
2,139,784
35,757,878
0
6.99%
2
2,000,000
60,000
0
50,439
1,200
12,044
17
313,779
0
4,203,181
218,565
4,421,746
35,757,878
0
6.87%
3
2,000,000
52,000
0
54,181
1,200
12,044
15
488,801
0
6,563,056
293,369
6,856,425
35,757,878
0
6.82%
4
2,000,000
44,000
0
55,140
1,200
12,044
14
678,876
0
9,117,237
336,882
9,454,119
35,757,878
0
6.79%
5
2,000,000
40,000
0
57,652
1,200
12,044
13
881,452
0
11,872,951
351,439
12,224,390
35,757,878
0
6.77%
 
10,000,000
264,000
0
264,280
6,000
60,222
  
2,514,562
0
        
0
  
                               
6
2,000,000
40,000
0
56,111
1,200
12,044
12
1,102,958
0
14,849,411
331,884
15,181,295
37,628,420
0
6.76%
7
2,000,000
40,000
0
68,232
1,200
12,044
11
1,340,484
0
18,049,321
287,887
18,337,207
44,078,108
0
6.75%
8
0
0
0
80,048
1,200
12,044
11
1,440,830
0
19,376,330
196,670
19,573,000
45,644,392
0
6.75%
9
0
0
0
94,099
1,200
12,044
9
1,542,824
0
20,791,848
97,722
20,889,570
47,278,534
0
6.75%
10
0
0
0
118,638
1,200
12,044
9
1,656,934
0
22,297,581
0
22,297,581
48,996,392
0
6.75%
 
14,000,000
344,000
0
681,409
12,000
120,445
  
9,598,592
0
        
0
  

Example 4: 50% Base Policy 50% Rider Blend with 25% Allocation to Each Policy Component

Policy
Premium
Premium Load
Deferred Premium Load
Per Unit Charge
Conditional
Year
Maximum 7-Pay
Actual Paid
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to TP
In Excess of TP
$ Amount
Effective Rate
Up to $50,000
Excess
Enhancement
1
100,000.00
100,000.00
7.00%
1.50%
4,250.00
4.250%
0.00%
0.00%
0.00
0.000%
0.18
0.05
7.569%
10
0.00
0.00
1.50%
1.50%
0.00
1.500%
0.00%
0.00%
0.00
0.000%
0.18
0.05
0.000%

Ratio of CV to 7-Pay amount
Sub-Account Asset Charge
Under 125%
0.2775%
125% - 249%
0.2525%
250% - 374%
0.2250%
375% - 499%
0.2038%
500% - 649%
0.1838%
650% - 799%
0.1650%
800% - 999%
0.1500%
1000% - 1299%
0.1338%
1300% - 1599%
0.1225%
1600% - 1999%
0.1113%
2000% - 2499%
0.1000%
2500% & over
0.0850%

             
Variable
                
             
Sub-
  
Cash
        
Annual
  
 
Total
  
Deferred
Current
  
Per
Account
Net
Value
Total
  
Net Cash
Total
Death
  
Policy
Policy
Premium
Premium
COI
Admin
$1,000
Charge
Investment
Released
Contract
Conditional
Surrender
Death
Claims
Accumulated
Year
Premium
Load
Load
Charges
Fee
Charge
(BPs)
Income
On Death
Value
Enhancement
Value
Benefit
Paid
IRR
1
2,000,000
85,000
0
51,067
1,200
22,955
28
149,568
0
1,983,911
150,158
2,134,069
35,757,878
0
6.70%
2
2,000,000
70,000
6,250
55,144
1,200
22,955
25
308,792
0
4,127,147
273,939
4,401,087
35,757,878
0
6.54%
3
2,000,000
55,000
6,250
62,053
1,200
22,955
23
480,969
0
6,446,326
362,606
6,808,932
35,757,878
0
6.46%
4
2,000,000
40,000
6,250
65,690
1,200
22,955
20
668,214
0
8,961,132
407,167
9,368,299
35,757,878
0
6.42%
5
2,000,000
30,000
6,250
70,558
1,200
22,955
18
868,029
0
11,677,961
408,729
12,086,689
35,757,878
0
6.39%
 
10,000,000
280,000
25,000
304,511
6,000
114,774
  
2,475,572
0
        
0
  
                               
6
2,000,000
30,000
0
72,864
1,200
22,955
16
1,086,739
0
14,615,161
372,687
14,987,848
37,148,941
0
6.39%
7
2,000,000
30,000
0
88,328
1,200
22,955
15
1,320,944
0
17,767,960
310,939
18,078,899
43,457,199
0
6.40%
8
0
0
0
95,815
1,200
22,955
15
1,416,859
0
19,037,324
211,790
19,249,114
44,889,087
0
6.41%
9
0
0
0
111,517
1,200
22,955
13
1,514,182
0
20,387,430
109,582
20,497,013
46,390,075
0
6.42%
10
0
0
0
124,409
1,200
22,955
13
1,623,527
0
21,835,055
0
21,835,055
47,980,041
0
6.44%
 
14,000,000
340,000
25,000
797,444
12,000
229,547
  
9,437,824
0
        
0
  

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