Office
of General Counsel
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Please
Reply to:
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Timothy
D. Crawford
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AVP,
Associate General Counsel
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One
Nationwide Plaza 01-34-201
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Columbus,
Ohio 43215
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VIA
EDGAR
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E-mail:
crawfot1@nationwide.com
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Tel:
(614) 249-3398
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Fax:
(614) 249-0078
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December
8, 2009
Ms.
Rebecca A. Marquigny
Senior
Counsel
U.S.
Securities and Exchange Commission
Division
of Investment Management
100 F.
Street, NE
Washington,
D.C. 20549-8629
Re: Nationwide Life Insurance
Company
Nationwide VLI Separate Account -
4
N-6
Registration Statement, File No. 333-153343
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 in
response to your supplemental comments by telephone November 30, 2009 relating
to the above-referenced Registration Statement. The Registration
Statement 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.
Responses
to your comments appear below in the numerical sequence established at the time
they were provided. Pages on which language has been added or changed
are attached to this letter.
1.
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The
language on page 22 of the prospectus regarding payment of the Enhancement
Benefit being a general account liability and subject to Nationwide’s
claims paying ability should be replicated in another location in the
prospectus describing the general account more broadly. This
added language should describe how guaranteed benefits exceeding the value
held in the separate account are subject to Nationwide’s claims paying
ability.
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Response
We will
modify the prospectus by adding the following fourth paragraph to the
“Generally” subsection of the “Policy” section.
It
is important to remember the portion of any amounts allocated to our general
account and any guaranteed benefits we may provide under the policy exceeding
the value of amounts held in the separate account are subject to our claims
paying ability.
We will
also add the following language to “Fixed Account” subsection of the “Policy
Investment Options” section of the prospectus.
It
is important to remember any guaranteed benefits or interest crediting
associated with the fixed account is subject to our claims paying
ability.
The
forgoing language should fully address your comment.
2.
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Specify
what the Base Variable Account Charge (pg. 29 of the prospectus) is
designed to cover as it relates to your risk or expense. Is
this a mortality and/or expense risk based charge? If not,
please describe its purpose.
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Response
The
second sentence of the first paragraph of the “Base Variable Account Asset
Charge” subsection of the “Policy and Rider Charges” section of the prospectus
is modified as follows.
This
charge also is
designed to provide us revenue to off-set expense risks
associated with issuing the
Policy, the risk that
lapse and surrender rates will be higher than expected, and revenue that
may be profit to us.
3.
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Please
clarify the language page 40 regarding payment of policy
proceeds. Specifically, clarify how amounts are paid out on a
tiered basis (different payment dates for separate account proceeds and
general account proceeds). Please note, amounts attributable to
the separate account must be paid out within seven (7)
days.
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Response
The
entire “Payment of Policy Proceeds” section of the prospectus will be modified
as follows.
When Proceeds are due under the
policy you
may elect to
leave the Proceeds on deposit with us (or an affiliate) in an interest-bearing
account or have them
paid to you.
If you make an election to
receive Proceeds from us we require you to make such an election in writing to
us at our Home Office. When we receive your request in good order to
be paid Proceeds, we may make payment in two lump sums.
The first
lump sum will be the portion of the Cash Surrender Value in the separate
account. This first lump sum
will be paid within seven days of
the date we receive your good order request in writing
at our Home Office. We may delay payment of the first lump sum only in cases where
the SEC permits us by emergency order to do so.
The second lump sum will be
paid if there are any remaining Proceeds attributable to the general
account. These amounts
normally will be paid within thirty days of the date we
receive your good order request in writing at
our Home Office. However, we reserve
the right to delay payment of any portion of Proceeds attributable
to the general
account for up to six months, or as permitted under state law.
4.
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In
the third paragraph of the “Organization, Registration, and Operation”
subsection of the “Nationwide VLI Separate Account -4” section of the
prospectus, examine the second and third sentences. It appears
these sentences do not belong within this
paragraph.
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Response
These two
sentences will be removed from the prospectus.
Change
pages on each of these comments are attached to this filing. The
foregoing modifications will be included in the definitive prospectus that is a
part of the Registration Statement upon its effectiveness.
Finally,
we acknowledge the following:
§
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should
the Securities and Exchange Commission (the "Commission") or the staff,
acting pursuant to delegated authority, declare the filing effective, it
does not foreclose the Commission from taking any action with respect to
the filing;
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§
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the
action of the Commission or the staff, acting pursuant to delegated
authority, in declaring the filing effective, does not relieve Nationwide
from its full responsibility for the adequacy and accuracy of the
disclosure in the filing; and
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§
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Nationwide
may not assert this action as defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.
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Sincerely
yours,
/s/
TIMOTHY D. CRAWFORD
Timothy
D. Crawford
AVP,
Associate General Counsel
Office of
General Counsel
Nationwide
Life Insurance Company
Policy
Investment Options
The
Policy Owner designates how Net Premium payments are allocated among the
Sub-Accounts and/or the fixed account. Allocation instructions must
be in whole percentages and must be at least one percent (1%) and the sum of the
allocations must equal 100%.
Fixed
Account
Net
Premium that is allocated to the fixed investment option is held in the fixed
account, which is part of our general account. Except as provided in
the "Right of Conversion" section of "The Policy" provision, we reserve the
right to limit allocations to the fixed account to no more than 25% of the
Policy’s Cash Value.
The
general account is not subject to the same laws as the separate account and the
SEC has not reviewed the disclosures in this prospectus relating to the fixed
account.
The
general account contains all of our assets other than those in the separate
accounts and funds the fixed account. These assets are subject to our
general liabilities from business operations and are used to support our
insurance and annuity obligations. We bear the full investment risk
for all amounts allocated to the fixed account. The amounts allocated
to the fixed account will not share in the investment performance of our general
account. Rather, the investment income earned on allocations to the
fixed account will be based on varying interest crediting rates that we
set.
We
guarantee that the amounts allocated to the fixed account will be credited
interest daily at a net effective annual interest rate of no less than the
guaranteed minimum interest crediting rate of 2%. Interest crediting
rates are set at the beginning of each calendar month, but are subject to change
at any time, in our sole discretion. Premiums applied to the Policy
at different times may receive different interest crediting rates. We
will credit any interest in excess of the guaranteed minimum interest crediting
rate at our sole discretion. The Policy Owner assumes the risk that
the actual interest crediting rate may not exceed the guaranteed minimum
interest crediting rate. Interest that we credit to the fixed account
may be insufficient to pay the Policy’s charges.
It is important to remember any guaranteed benefits or interest
crediting associated with the fixed account is subject to our claims paying
ability.
Variable
Investment Options
The
variable investment options available under the Policy are Sub-Accounts that
correspond to mutual funds that are registered with the SEC. The
mutual funds' registration with the SEC does not involve the SEC's supervision
of the management or investment practices or policies of the mutual
funds. The mutual funds listed are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
Underlying mutual funds in the
variable account are NOT publicly traded mutual funds. They
are only available as investment options in variable life insurance policies or
variable annuity contracts issued by life insurance companies, or in some cases,
through participation in certain qualified pension or retirement
plans.
The
investment advisers of the underlying mutual funds may manage publicly traded
mutual funds with similar names and investment objectives. However,
the underlying mutual funds are NOT directly related to any publicly traded
mutual fund. Policy Owners should not compare the performance of a
publicly traded fund with the performance of underlying mutual funds
participating in the separate account. The performance of the
underlying mutual funds could differ substantially from that of any publicly
traded funds.
The
particular underlying mutual funds available under the Policy may change from
time to time. Specifically, underlying mutual funds or underlying
mutual fund share classes that are currently available may be removed or closed
off to future investment. New underlying mutual funds or new share
classes of currently available underlying mutual funds may be
added. Policy Owners will receive notice of any such changes that
affect their contract. Additionally, not all of the underlying mutual
funds are available in every state.
In the
future, additional underlying mutual funds managed by certain financial
institutions, brokerage firms or their affiliates may be added to the separate
account. These additional underlying mutual funds may be offered
exclusively to purchasing customers of the particular financial institution or
brokerage firm, or through other exclusive distribution
arrangements.
Each
Sub-Account’s assets are held separately from the assets of the other
Sub-Accounts, and each Sub-Account portfolio has investment objectives and
policies that are different from those of the other Sub-Accounts. The
result is that each Sub-Account operates independently of the other Sub-Accounts
so the income or losses of one Sub-Account will not affect the Investment
Experience of any other Sub-Account.
reliability
under all circumstances. If a Policy Owner is experiencing problems,
please make transfer requests in writing.
In
instances of disruptive trading that we may determine, or may have already
determined to be harmful to other Policy Owners, we will, through the use of
appropriate means available to us, attempt to curtail or limit the disruptive
trading. If a Policy Owner's trading activities, or those of a third
party acting on their behalf, constitute disruptive trading, we will not limit
that Policy Owner's ability to initiate the trades as provided in the Policy;
however, we may limit their means for making a transfer or take other action we
deem necessary to protect the interests of those investing in the affected
Sub-Accounts. Please see "Sub-Account Transfers" earlier in this
prospectus.
Generally
The
Policy is a legal contract. It will comprise and be evidenced by: a
written contract; any Riders; any endorsements; the Policy Data Page(s); and the
application, including any supplemental application. This prospectus
discloses all material provisions of the Policy. In addition to the
terms and conditions of the Policy, Policy Owner rights are governed by this
prospectus and protected by federal securities laws and
regulations. The benefits described in the Policy and this
prospectus, including any optional Riders or modifications in coverage, may be
subject to our underwriting and approval. We will consider the
statements made in the application as representations, and we will rely on them
as being true and complete. However, we will not void the Policy or
deny a claim unless a statement is a material misrepresentation. If
an error or misstatement is made by the prospective Policy Owner on the
application, we will adjust the Death Benefit (including the Supplemental
Insurance Rider Death Benefit, if applicable) and Cash Value
accordingly.
Operation
of the Policy, optional Riders, programs, benefits and features described in
this prospectus may vary by the state where the policy is issued. In
addition, some optional Riders, programs and features may not be available or
approved for use in every state. For additional information regarding
availability and provisions that vary by state, please see "Appendix E: State
Variations" later in this prospectus.
Any
modification (or waiver) of our rights or requirements under the Policy must be
in writing and signed by our president and corporate secretary. No
agent may bind us by making any promise not contained in the
Policy.
We may
modify the Policy, our operations, or the separate account’s operations to meet
the requirements of any law (or regulation issued by a government agency) to
which the Policy, our company, or the separate account is subject. We
may modify the Policy to assure that it continues to qualify as a life insurance
contract under the federal tax laws. We will notify Policy Owners of
all modifications and we will make appropriate endorsements to the
Policy.
The
Policy is nonparticipating, meaning that we will not be contributing any
operating profits or surplus earnings toward the Policy Proceeds.
To the
extent permitted by law, policy benefits are not subject to any legal process on
the part of a third-party for the payment of any claim, and no right or benefit
will be subject to the claims of creditors (except as may be provided by
assignment).
It is important to remember the portion of any amounts allocated
to our general account and any guaranteed benefits we may provide under the
policy exceeding the value of amounts held in the separate account are subject
to our claims paying ability.
In order
to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide
has implemented procedures designed to prevent policies described in this
prospectus from being used to facilitate money laundering or the financing of
terrorist activities.
Policy
Owner and Beneficiaries
Policy Owner. The
Policy belongs to the Policy Owner named in the application or as a result of a
valid assignment. The purchaser and initial Policy Owner must be: (i)
a corporation; or (ii) a legal entity established by a
corporation. The Insured is the person named in the
application. The Policy Owner must have an insurable interest in the
Insured up to the full amount of coverage. Otherwise, this Policy
will not qualify as life insurance under applicable state and federal tax
law.
Policy
Owners should consult with a qualified adviser when determining the amount of
coverage and before taking any action to increase the amount of coverage to
ensure that the Policy Owner maintains a sufficient insurable
interest.
Subject
to our approval, the Policy Owner may exercise all policy rights in accordance
with Policy terms while the Policy is In Force. These rights include,
but are not limited to, the following:
·
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changing
the Policy Owner, contingent owner, and
beneficiary;
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·
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assigning,
exchanging and/or converting the
policy;
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·
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requesting
transfers, policy loans, and partial surrenders or a complete surrender;
and
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·
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changing
insurance coverage such as death benefit option changes, adding or
removing riders, and/or increasing or decreasing the Total Specified
Amount.
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Premium
in excess of target is assessed a different Premium Load in accordance with the
table below.
Premium
Loads on Excess Premium
Policy
Year
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Per
Policy Charge Based on the Band Assigned to the Policy
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Band 1
$100,000 -$249,999
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Band 2
$250,000 - $499,999
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Band 3
$500,000 - $999,999
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Band 4
≥ $1,000,000
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1-5
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5%
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3%
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3%
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3%
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6 –
10
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4%
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3%
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3%
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3%
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11
and thereafter
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4%
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2%
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2%
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2%
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For
purposes of determining the Premium Load applicable to an increase in the Base
Specified Amount the effective date of the increase will be used. An
increase in the Base Specified Amount will not impact (i.e. change) the Premium band
assigned to the policy at issue.
Base
Policy Cost of Insurance
We deduct
a Cost of Insurance Charge from the Policy's Cash Value on the Policy Date and
on each monthly anniversary of the Policy Date to compensate us for providing
expected mortality benefits, and to reimburse us for certain actual expenses,
including acquisition costs and state and federal taxes. This charge
also provides revenue to compensate us for assuming certain risks associated
with the Policy and revenue that may be profit to us. The Cost of
Insurance Charge is the product of the Net Amount At Risk and the cost of
insurance rate. The cost of insurance rate will vary by the Insured’s
age, sex (if not unisex classified), tobacco use, Substandard Ratings, and
underwriting class, the applicable band, and the number of years from the Policy
Date. The cost of insurance rates are based on our expectations as to
future mortality, investment earnings, persistency, expenses, and
taxes. The Base Policy Cost of Insurance Charge that the Policy Owner
pays is determined by multiplying the Base Policy Net Amount At Risk by the cost
of insurance rate. There may be a separate cost of insurance rate for
the initial Base Specified Amount and any Base Specified Amount
increase. In the event that there is a decrease in the Base Specified
Amount, then there will be a proportional decrease in the monthly Cost of
Insurance Charge for the Base Specified Amount. The cost of insurance rates will
never be greater than those shown on the Policy Data Page plus any monthly flat
extra charge assessed for Substandard Ratings.
We will
uniformly apply any change in cost of insurance rates for Insureds of the same
age, sex, underwriting class and any Substandard Ratings, and In Force policy
duration. If a change in the cost of insurance rates causes the
amount of a Policy's Cost of Insurance Charge to increase, that Policy’s Cash
Value could decrease. If a change in the cost of insurance rates
causes a Policy's Cost of Insurance Charge to decrease, that Policy's Cash Value
could increase.
We may
underwrite the Policy on a non-medical basis that may result in a higher Cost of
Insurance Charge. Non-medical underwriting means that a physical
examination to obtain medical information on the proposed Insured is not
required to issue the Policy. The higher Cost of Insurance Charge
would compensate us for assuming additional mortality risk as a result of
issuing without the information that results from medical
underwriting. The result is that healthy individuals will subsidize
less healthy individuals because there is no medical underwriting, which
typically results in lower cost of insurance rates being applied to fully
underwritten policies. If the Policy Owner was to purchase one
of our policies that is medically underwritten and the Insured is healthy, the
cost of insurance rates for that Policy would be lower.
The Cost
of Insurance Charge, including any Flat Extra we assess due to a Substandard
Rating, will be deducted proportionally from the Policy's Sub-Account
allocations and the fixed account.
Flat Extras and Substandard
Ratings. As part of our underwriting process, we may inquire
about the occupation and activities of the Insured. If the activities
or occupation of the Insured cause an increase health or accident risk, it may
result in the Insured receiving a Substandard Rating. If this is the
case, we may add an additional component to the Cost of Insurance Charge called
a "Flat Extra." The Flat Extra accounts for the increased risk of
providing life insurance when one or more of these factors apply to the
Insured. The Flat Extra is a component of the total Cost of Insurance
Charge, so if applied it will be deducted from the Policy's Cash Value on the
Policy Date and the monthly anniversary of the Policy Date. The
monthly Flat Extra is between $0.00
and $2.08
per $1,000 of the Net Amount At Risk. If a Flat Extra is applied, it
is shown on the Policy Data Pages. In no event will the Flat Extra
result in the Cost of Insurance Charge exceeding the maximum charge listed in
the Fee Table of this prospectus. If a Flat Extra is applied and the
Policy Owner has elected the Supplemental Insurance Rider, it will also be
applied to the Rider Specified Amount.
Base
Variable Account Asset Charge
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We deduct
a Variable Account Asset Charge from the Policy's Cash Value allocated to the
Variable Account on each monthly anniversary of the Policy Date to compensate us
for certain actual expenses, including a partial reimbursement of acquisitions
costs and premium taxes not covered by the Premium Load. This charge
also is designed to provide us
revenue to off-set expense risks associated
with issuing the Policy , the
risk that lapse and surrender rates will be higher than expected, and
revenue that may be profit to us. In the Policy, this charge is
referred to as the "Sub-Account Asset Charge."
The
Variable Account Asset Charge will be deducted proportionally from the Policy
Owner's Variable Account allocations on each monthly anniversary of the Policy
Date. The Variable Account Asset Charge applicable to a particular
Policy depends on the amount of your Cash Value allocated to the Variable
Account, the applicable band, and whether there is any specified amount
attributable to the Supplemental Insurance Rider. (Different Variable Account
Asset Charges apply to the Rider. Information on Variable Account
Asset Charges associated with the Supplemental Insurance Rider is provided under
Policy Riders and Rider Charges section below.) We assess this charge
in addition to any charges assessed by the mutual funds underlying the
Sub-Accounts of the Variable Account. The table below shows the current Base
Variable Account Asset Charges.
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Current Base Variable Account
Asset Charges (shown as an annual rate)1
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Policy
Years
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Per Policy Charge Based on the Band Assigned to
the Policy
(as
a percentage of assets allocated to the Variable
Account)
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Band 1
$100,000 - $249,999
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Band 2
$250,000 - $499,999
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Band 3
$500,000 - $999,999
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Band 4
≥ $1,000,000
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1-10
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0.50%
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0.35%
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0.30%
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0.25%
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11-20
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0.30%
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0.20%
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0.15%
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0.15%
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21-30
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0.20%
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0.15%
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0.15%
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0.10%
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31
and Afterwards
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0.10%
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0.05%
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0.05%
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0.05%
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1 To
calculate the monthly deduction based on the annual rates listed above, use the
following formula:
Monthly
Rate = (1+ Annual Rate) (Number of
days in the Month / Number of days in the year) – 1
The
guaranteed maximum annual and monthly charges are shown on the Policy Data
Pages. The maximum Base Variable Account Asset Charge is 0.90%
(annual rate) regardless of the band assigned to the Policy.
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Base
Specified Amount Charge
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We deduct
a monthly Base Specified Amount Charge from the Policy's Cash Value to
compensate us for sales, underwriting, distribution and issuance of the
Policy. The charge applicable to a particular Policy depends on the
Total Specified Amount and the applicable band. The maximum guaranteed monthly
Base Specified Amount Charge is $0.40 per $1,000 of Specified
Amount.
The table
below shows the current Base Specified Amount Charges. The Base
Specified Amount Charge will be deducted proportionally from a Policy's
Sub-Account allocations and the fixed account.
Base
Specified Amount Charges
Per Policy Charge Based on the Band Assigned to
the Policy
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Band 1
$100,000 - $249,999
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Band 2
$250,000 - $499,999
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Band 3
$500,000 - $999,999
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Band 4
≥ $1,000,000
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$0.08
per $1,000 of Base Specified Amount
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$0.07
per $1,000 of Base Specified Amount
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$0.07
per $1,000 of Base Specified Amount
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$0.07
per $1,000 of Base Specified Amount
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A
distinct Rider Specified Amount charge applies to the Supplemental Insurance
Rider. If the Policy Owner elects that Rider, the Total Specified
Amount charges the Policy Owner pays will depend upon the allocation of Total
Specified Amount between the base policy and the Supplemental Insurance
Rider. To determine Total Specified Amount charges, the Policy Owner
must add the amount of the Base Specified Amount charge to the Rider Specified
Amount charge. Total charges are a weighted average of the amount of
Base Specified Amount and Rider Specified Amount. The end result is a
charge blending. For further explanation of this blending,
including an example, see the "Charges Associated with the Supplemental
Insurance Rider" sub-section of the "Policy Rider Charges" section
below.
Administrative
Charge
We deduct
a monthly Administrative Charge from the Policy's Cash Value to reimburse us for
the costs of maintaining the Policy, including accounting and
recordkeeping. Currently, the Administrative Charge is $5 per month
per policy. The maximum guaranteed Administrative Charge is $10 per
month per Policy.
The
Administrative Charge will be deducted proportionally from the Policy's
Sub-Account allocations and the fixed account.
(pursuant
to election of the Change of Insured Rider) after it has been In Force during
the new Insured’s lifetime for two years from the Change Date.
Suicide
If the
Insured dies by suicide, while sane or insane, within two years from the Policy
Date or the reinstatement date, we will pay no more than the sum of the Premiums
paid, less any Indebtedness, and less any partial surrenders. If such
Insured’s Policy had a Supplemental Insurance Rider, we will return the charges
deducted for such Rider, but not pay the death benefit.
If the
Insured dies by suicide, while sane or insane, within two years from the date we
accept an application for an increase in the Total Specified Amount, we will pay
no more than the Death Benefit associated with insurance that has been In Force
for at least two years from the Policy Date, plus the Cost of Insurance Charges
associated with any increase in Total Specified Amount that has been In Force
for a shorter period.
If the
Insured dies by suicide, while sane or insane, within two years from the
effective date of a change of Insured (pursuant to the terms of the Change of
Insured Rider, if elected), we will pay no more than the Cash Value as of the
Change Date, plus any Premium paid since such date, less any Indebtedness, and
less any partial surrenders.
If the
Policy was issued pursuant to an exchange under Section 1035 of the Code, and
the Insured dies by suicide within two years of the Policy Date, we will pay a
Death Benefit equal to the lesser of: (a) the amount of insurance under the
exchanged Policy as of the Policy Date; or (b) the Total Specified Amount of
this Policy. This provision only applies if the Policy Owner is also the
Beneficiary, and if the exchanged Policy was originally issued more than two
years prior to the Policy Date of this Policy. If the Policy Owner and Beneficiary are
not the same, the amount of insurance received will be the amount of insurance
under the exchanged (predecessor) Policy as of the Policy Date.
If the
Policy is In Force on the Maturity Date, the Policy will automatically be
extended to the Insured's date of death, unless you elect
otherwise. Refer to the "Extending Coverage Beyond the Maturity Date"
section below for additional information.
If you
elect not to extend the Policy beyond the Maturity Date and the Policy is In
Force, we will pay the Maturity Proceeds to you, generally, within seven days
after we receive your written request at our Home Office. Payment of
Proceeds will be postponed, however, when: the New York Stock Exchange is
closed; the SEC restricts trading or declares an emergency; the SEC permits us
to defer it for the protection of our Policy Owners; or the Proceeds are to be
paid from the fixed account. The Maturity Proceeds will equal the
Policy's Cash Value minus any Indebtedness and will be paid directly to you in a
lump sum, unless you elect to leave the Proceeds on deposit with us (or an
affiliate) in an interest-bearing account. After we pay the Proceeds,
the Policy is terminated.
The
primary purpose of Maturity Date extension is to continue the life insurance
coverage, and avoid current income taxes on any earnings in excess of your cost
basis if the maturity Proceeds are taken. See, "Surrendering the
Policy; Maturity," in the "Taxes" section of this prospectus for additional
information.
Assuming
you have no outstanding loans on the Maturity Date and no partial surrenders or
loans are taken after the Maturity Date, the Proceeds after the Maturity Date
will equal or exceed the Proceeds at maturity. However, because the
loan interest rate charged may be greater than loan interest credited, if you
have an outstanding loan on or after the Maturity Date, Proceeds after the
Maturity Date may be less than the Proceeds at maturity.
Extending
Coverage Beyond the Maturity Date
After the
Maturity Date, the Policy will operate the same as it did prior to the Maturity
Date, except as follows:
(1)
|
no
changes to the Total Specified Amount will be
allowed;
|
(2)
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the
Proceeds will equal the Cash Value;
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(3)
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Death
Benefit Options 2 and 3 will be changed to a revised Death Benefit 1 where
the death benefit equals the Cash Value
only;
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100% of
the Policy's Cash Value will be transferred to the fixed account;
(4)
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no
additional Premium payments will be allowed;
and
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(5)
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no
additional periodic charges will be
deducted.
|
Payment
of Policy Proceeds
When Proceeds are due under the
policy you may elect to leave the Proceeds on
deposit with us (or an affiliate) in an interest-bearing account or have them paid to you.
If you make an election to receive Proceeds from us we require
you to make such an election in writing to us at our Home
Office. When we receive your request in good order to be paid
Proceeds, we may make payment in two lump sums.
The first
lump sum will be the portion of the Cash Surrender Value in the separate
account . This first lump sum will be paid
within seven days of the date we receive your good order request in writing at our Home Office. We may
delay payment of the first lump sum only in cases
where the SEC permits us by emergency order to do so.
The second lump sum will be paid if there are a ny
remaining Proceeds attributable to the general
account. These amounts normally will be paid
by us in a second lump sum within thirty of the date
we receive your written request in good order request in
writing at our Home Office. However,
w e reserve the right to delay payment of any portion of the Cash
Surrender Value of Proceeds attributable to the
general fixed account for up to six months, or as
permitted under state law.
The tax
treatment of life insurance policies under the Code is complex and the tax
treatment of your Policy will depend on your particular
circumstances. Seek competent tax advice regarding the tax
treatment of the Policy given your situation. The following
discussion provides an overview of the Code’s provisions relating to certain
common life insurance policy transactions. It is not and cannot be
comprehensive, and it
cannot
replace personalized advice provided by a competent tax
professional.
Types
of Taxes
Federal Income
Tax. Generally, the United States assesses a tax on income,
which is broadly defined to include all items of income from whatever source,
unless specifically excluded. Certain expenditures can reduce income
for tax purposes and
correspondingly
the amount of tax payable. These expenditures are called
deductions. While there are many more income tax concepts under the
Code, the concepts of "income" and "deduction" are the most fundamental to the
federal income tax treatment that pertains to this
Policy.