-----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, LlboPfWjbNVdFG38BsUeNrfXthvAaW/yPr9Gf2b/UswmBVvGi2Fv1QUyPxIQJ8Ij g0Y5LHR2FOnwCP7HeNvxtw== 0000898432-03-000410.txt : 20030501 0000898432-03-000410.hdr.sgml : 20030501 20030501165739 ACCESSION NUMBER: 0000898432-03-000410 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20030501 EFFECTIVENESS DATE: 20030501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE CO CENTRAL INDEX KEY: 0001052863 IRS NUMBER: 741472662 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-45343 FILM NUMBER: 03677425 BUSINESS ADDRESS: STREET 1: USAA BUILDING STREET 2: 9800 FREDERICKBURG RD CITY: SAN ANTONIO STATE: TX ZIP: 78288 BUSINESS PHONE: 2104988000 MAIL ADDRESS: STREET 1: USAA BUILDING STREET 2: 9800 FREDERICKSBURG RD CITY: SAN ANTONIO STATE: TX ZIP: 78288 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE CO CENTRAL INDEX KEY: 0001052863 IRS NUMBER: 741472662 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08625 FILM NUMBER: 03677426 BUSINESS ADDRESS: STREET 1: USAA BUILDING STREET 2: 9800 FREDERICKBURG RD CITY: SAN ANTONIO STATE: TX ZIP: 78288 BUSINESS PHONE: 2104988000 MAIL ADDRESS: STREET 1: USAA BUILDING STREET 2: 9800 FREDERICKSBURG RD CITY: SAN ANTONIO STATE: TX ZIP: 78288 485BPOS 1 usaa_n6.txt POST-EFFECTIVE AMENDMENT NO. 8 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-6 Registration Nos. 333-45343 811-08625 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 8 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 [ ] Amendment No. 3 [X] LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY ------------------------------------------------------ (Exact Name of Registrant) USAA LIFE INSURANCE COMPANY ------------------------------------------------------ (Name of Depositor) 9800 Fredericksburg Road, A-1-E San Antonio, Texas 78288-4501 (Address of Depositor's Principal Executive Offices)(Zip Code) Depositor's Telephone Number:(210) 498-8000 Name and Address of Agent Please send copies of all for Service: communications to: Cynthia A. Toles, Esq. Diane E. Ambler, Esq. USAA Life Insurance Company Kirkpatrick & Lockhart LLP 9800 Fredericksburg Road, A-1-E 1800 Massachusetts Ave, NW San Antonio, Texas 78288-4501 Washington. D.C. 20036 It is proposed that this filing will become effective (check appropriate box) [X] immediately upon filing pursuant to paragraph (b) of Rule 485 [ ] on May 1, 2003 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on May 1, 2003 pursuant to paragraph (a)(1) of Rule 485 If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title and Amount of Securities Being Registered: An Indefinite Amount of Interests in Life Insurance Separate Account of USAA Life Insurance Company Under Variable Universal Life Insurance Policies. VARIABLE UNIVERSAL LIFE INSURANCE POLICY PROSPECTUS MAY 1, 2003 Offered by: USAA LIFE INSURANCE COMPANY Telephone: Toll-Free 1-800-531-2923 This prospectus describes a Variable Universal Life Insurance Policy ("Policy") that we are offering, through our Life Insurance Separate Account, to individual members of the United Services Automobile Association ("USAA"), the parent company of the USAA Group of Companies, as well as to the general public. The Policy offers: o Life insurance protection guaranteed by USAA Life Insurance Company ("USAA Life") (See "Payment of Policy Benefits") o Flexible premium payments (See "Premium Payments") o 18 investment options (See "Investment Options" and the Fund prospectuses for a description of the Funds)
USAA LIFE INVESTMENT TRUST FIDELITY(R)VARIABLE INSURANCE PRODUCTS -------------------------- -------------------------------------- USAA Life Growth and Income Fund Fidelity VIP Contrafund(R)Portfolio, Initial Class USAA Life Aggressive Growth Fund Fidelity VIP Equity-Income Portfolio, Initial Class USAA Life World Growth Fund Fidelity VIPs Dynamic Capital Appreciation Portfolio, USAA Life Diversified Assets Fund Initial Class USAA Life Income Fund VANGUARD(R) VARIABLE INSURANCE FUND SCUDDER VARIABLE SERIES I ----------------------------------- ------------------------- Vanguard Diversified Value Portfolio Scudder VS I Capital Growth Portfolio, Class A Shares Vanguard Equity Index Portfolio Vanguard Mid-Cap Index Portfolio THE ALGER AMERICAN FUND ----------------------- Vanguard Small Company Growth Portfolio Alger American Growth Portfolio, Class O Shares Vanguard International Portfolio Vanguard REIT Index Portfolio Vanguard High Yield Bond Portfolio Vanguard Money Market Portfolio
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE REFERENCE. YOUR PROSPECTUS AND POLICY MAY REFLECT VARIATIONS REQUIRED BY THE LAWS OF YOUR STATE. DEFINED TERMS USED IN THIS PROSPECTUS APPEAR AT THE END OF THIS BOOKLET. FOR MORE INFORMATION, REQUEST A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION ("SAI"), DATED MAY 1, 2003. THE TABLE OF CONTENTS OF THE SAI APPEARS ON PAGE 38 OF THIS PROSPECTUS. FREE COPIES OF THE PROSPECTUS, ANNUAL REPORT OR SEMI-ANNUAL REPORT FOR EACH OF THE FUNDS ARE AVAILABLE BY CALLING 1-800-531-2923. IMPORTANT NOTICES: o THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME. o YOU MAY CANCEL THE POLICY WITHIN 10 DAYS AFTER RECEIVING IT, OR SUCH LONGER PERIOD AS THE LAWS OF YOUR STATE MAY REQUIRE. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE VUL Policy 1 TABLE OF CONTENTS POLICY SUMMARY...............................................................4 POLICY BENEFITS...........................................................4 TYPE OF LIFE INSURANCE..................................................4 PURCHASING A POLICY.....................................................4 INSURANCE PROTECTION OFFERED BY THE POLICY.............................4 PERSONALIZED ILLUSTRATIONS..............................................4 FREE LOOK/RIGHT TO EXAMINE..............................................4 FLEXIBLE PREMIUM PAYMENTS...............................................5 INVESTMENT OPTIONS......................................................5 SEPARATE ACCOUNT.....................................................5 INVESTMENT CHOICES...................................................5 TRANSFERS AMONG INVESTMENT OPTIONS...................................5 ALLOCATING CASH VALUE...................................................5 TRACKING CASH VALUE.....................................................5 ACCESSING YOUR CASH VALUE...............................................6 FULL SURRENDER.......................................................6 PARTIAL SURRENDER....................................................6 LOAN.................................................................6 POLICY RISKS..............................................................6 CASH VALUE AND INVESTMENT EXPERIENCE....................................6 TRANSACTION RISKS.......................................................6 RISKS OF INVESTMENT OPTIONS.............................................6 LAPSE RISK..............................................................6 TAX RISKS...............................................................7 FEE TABLES................................................................7 TRANSACTION FEES........................................................7 PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES.....................7 OPTIONAL RIDER CHARGES..................................................8 TOTAL ANNUAL FUND OPERATING EXPENSES....................................9 POLICY INFORMATION..........................................................10 WHO MAY PURCHASE A POLICY AND HOW TO PURCHASE A POLICY.................10 EFFECTIVE DATE.........................................................11 PREMIUM PAYMENTS.......................................................11 METHODS OF PAYMENT..................................................11 AMOUNT AND FREQUENCY OF PAYMENTS....................................11 PREMIUM ALLOCATION..................................................11 PLANNED PERIODIC PREMIUM PAYMENTS...................................11 ANNUAL TARGET PREMIUM PAYMENT.......................................12 INVESTMENT OPTIONS.....................................................12 ADDITIONS OR CHANGES TO INVESTMENT OPTIONS..........................12 VOTING PRIVILEGES...................................................12 POLICY LAPSE AND REINSTATEMENT.........................................19 LAPSE...............................................................19 GRACE PERIOD........................................................19 GUARANTEED DEATH BENEFIT............................................20 REINSTATEMENT.......................................................20 CHARGES AND DEDUCTIONS.................................................20 PREMIUM CHARGE......................................................20 MONTHLY DEDUCTIONS FROM CASH VALUE..................................21 SEPARATE ACCOUNT CHARGES............................................21 TRANSFER CHARGES....................................................22 SURRENDER CHARGES...................................................22 OTHER CHARGES.......................................................22 DEDUCTION OF CHARGES................................................22 VUL Policy 2 DEATH BENEFIT..........................................................22 CHANGING DEATH BENEFIT OPTION.......................................23 CHANGING POLICY'S SPECIFIED AMOUNT..................................23 OPTIONAL INSURANCE BENEFITS............................................24 PAYMENT OF POLICY BENEFITS.............................................25 BENEFITS AT MATURITY................................................25 PAYMENT AT DEATH....................................................25 DEATH BENEFIT PAYMENT OPTIONS.......................................25 CASH VALUE.............................................................26 CALCULATING YOUR VALUE IN THE VARIABLE FUND ACCOUNTS................26 TRANSFER OF VALUE...................................................27 LOANS..................................................................27 LOAN COLLATERAL.....................................................27 LOAN INTEREST.......................................................27 REPAYMENT OF INDEBTEDNESS...........................................28 EFFECT OF POLICY LOANS..............................................28 SURRENDERS.............................................................28 FULL SURRENDERS.....................................................28 PARTIAL SURRENDERS..................................................28 TELEPHONE TRANSACTIONS.................................................29 DOLLAR COST AVERAGING PROGRAM..........................................29 POSTPONEMENT OF PAYMENTS...............................................29 MORE POLICY INFORMATION.....................................................30 OWNERS AND BENEFICIARIES...............................................30 OWNERS..............................................................30 BENEFICIARIES.......................................................30 CALCULATING YOUR COST OF INSURANCE.....................................30 NET AMOUNT AT RISK..................................................31 NET AMOUNT AT RISK - MORE THAN ONE RATE CLASS.......................31 COST OF INSURANCE RATES.............................................31 MINIMUM AMOUNT INSURED.................................................31 OTHER INFORMATION...........................................................32 USAA LIFE..............................................................32 SEPARATE ACCOUNT.......................................................32 TAX MATTERS............................................................32 TAXATION OF POLICY PROCEEDS.........................................33 TAXATION OF USAA LIFE...............................................36 LEGAL PROCEEDINGS......................................................36 FINANCIAL STATEMENTS...................................................36 DEFINITIONS.................................................................36 STATEMENT OF ADDITIONAL INFORMATION.........................................40 VUL Policy 3 POLICY SUMMARY - -------------- This summary describes the Policy's benefits and risks. Please read the remainder of this Prospectus for further details. The glossary at the end of the Prospectus defines certain terms used in this Prospectus. POLICY BENEFITS - --------------- TYPE OF LIFE INSURANCE - ---------------------- The Policy is a FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY. "Flexible Premium" gives you the flexibility to vary the amount and frequency of your premium payments, within certain limits. The Policy is called "Variable" life insurance because your Cash Value, your cost of insurance charges, and your life insurance (death) benefits can vary according to your investment in one or more Variable Fund Accounts. Your investment experience in the Variable Fund Accounts may be positive or negative. THE POLICY HAS NO MINIMUM GUARANTEED CASH VALUE, WHICH MEANS YOU BEAR THE ENTIRE INVESTMENT RISK THAT YOUR CASH VALUE COULD DECLINE TO ZERO. PURCHASING A POLICY - ------------------- Call us at 1-800-531-2923. USAA Life Insurance Company's licensed insurance representatives can help you complete an application and guide you through the "underwriting" process, which normally involves a medical exam. o We will issue you a Policy, provided you meet requirements for insurability. o The minimum amount of insurance available is $100,000 ($25,000 if the Insured is less than 18 years of age). o We will not issue a Policy that insures a person older than age 80. o We reserve the right to reject an application for any reason. o Insurance coverage under your Policy begins on its Effective Date. INSURANCE PROTECTION OFFERED BY THE POLICY - ------------------------------------------ The Policy offers insurance protection as either a level death benefit option or an increasing death benefit option as shown below. OPTION A (LEVEL DEATH BENEFIT) OPTION B (INCREASING DEATH BENEFIT) ------------------------------ ----------------------------------- Death Benefit Greater of: Death Benefit Greater of: o Your Policy's Specified o Your Policy's Specified Amount Amount, or PLUS the Cash Value, or o The Minimum Amount Insured o The Minimum Amount Insured See "Death Benefit" for more detailed information. As long as the Policy remains in effect, under either option, the death benefit will never be less than the Policy's Specified Amount, less any Indebtedness and any due and unpaid Monthly Deductions. In addition, you can add optional insurance death benefits to a Policy by rider (see "Other Policy Benefits - Optional Insurance Benefits"). PERSONALIZED ILLUSTRATIONS - -------------------------- Upon request and at no charge, we will provide a personalized illustration showing Insured's age, sex and rate class. If applicable and requested, an illustration for a Policy not affected by sex of the Insured will be provided. To receive a personalized illustration, please contact us at 1-800-531-4265. "FREE LOOK"/RIGHT TO EXAMINE ---------------------------- You may cancel the Policy within 10 days after receiving it, or later, as required by law. Initial Net Premium Payments allocated to any of the Variable Fund Accounts will be invested in the Vanguard Money Market Portfolio Variable Fund Account during the 10-day "Free Look" period plus 5 calendar days. Should you elect to cancel the Policy, return it to us with your written request for cancellation and we will refund the greater of: o your premium payments, or o the value of the Variable Fund Accounts VUL Policy 4 as of the date of receipt of your request plus any premium charge, monthly deduction, and mortality and expense charge that we deducted. FLEXIBLE PREMIUM PAYMENTS - ------------------------- Within certain limits, you have the flexibility to determine the amount and timing of your premium payments to reflect your changing financial conditions or objectives. We generally require a minimum initial premium to issue a Policy, but we do not impose a minimum on your subsequent premium payments. You must maintain sufficient Cash Value to keep your Policy in effect, which may require you to make additional unscheduled premium payments. You can request a periodic premium schedule to suit your needs when applying for a Policy and we will bill you for these amounts, if you wish; however, you are not required to follow this schedule. INVESTMENT OPTIONS - ------------------ SEPARATE ACCOUNT The Separate Account is a segregated asset account of USAA Life that supports the Policy's variable life insurance benefits. The Separate Account consists of 18 Variable Fund Accounts, each of which invests in a corresponding Fund. INVESTMENT CHOICES Through the Separate Account, you may invest in up to 18 Variable Fund Accounts, each of which invests exclusively in a corresponding Fund of o the USAA Life Investment Trust ("Trust"), o the Vanguard(R)Variable Insurance Fund ("Vanguard Fund"), o the Fidelity(R)Variable Insurance Products ("Fidelity Funds"), o the Scudder Variable Series I ("Scudder Series"), or o the Alger American Fund ("Alger Fund"). TRANSFERS AMONG INVESTMENT OPTIONS - ---------------------------------- You may transfer value among the Variable Fund Accounts up to 18 times per Policy Year without charge. Transfers under the Dollar Cost Averaging Program are free and do not count against the limit. o Additional transfers in a Policy Year are subject to a $25 transfer charge. o You may authorize transfers by telephone or by written notice. o Transfers must be at least $250, or the remaining value in the Variable Fund Account, if less. o We reserve the right at any time, without prior notice, to terminate, suspend or modify these transfer privileges. ALLOCATING CASH VALUE - --------------------- o Specify on your Policy application how much of your Net Premium Payment to apply to each Variable Fund Account. o After the Free Look Period, we will allocate your Net Premium Payments in accordance with these instructions until you direct otherwise. o Change future allocations at any time by telephone or by written notice. o Allocations can be as small as 1/10th of one percent. TRACKING CASH VALUE - ------------------- We will mail you periodic reports regarding your Policy and the Separate Account. In addition, log on to USAA.COM or call the USAA TOUCHLINE(R) at 1-800-531-5433 to find information about: o Policy details o Variable Fund Account summaries o Financial activity You will need a USAA Member Number and USAA PIN to access USAA.COM or USAA TOUCHLINE(R) information. You can also use your Social Security Number to access USAA TOUCHLINE(R) information. VUL Policy 5 ACCESSING YOUR CASH VALUE - ------------------------- Access your Cash Value through full or partial surrenders or Policy loans. FULL SURRENDER At any time while your Policy is in force, you may request to surrender the Policy and receive the Policy's Cash Surrender Value. Cash Surrender Value is the Policy Cash Value less the Surrender Charge, if any, payable on full surrender of your Policy. A full surrender may have tax consequences. (See "Tax Matters) A full surrender terminates the Policy. PARTIAL SURRENDER At any time while your policy is in force, you may request to withdraw part of the Policy's Cash Value. An administrative charge equal to the lesser of $25 or 2% of the amount withdrawn will apply. Your Policy's remaining Cash Value, after a partial surrender, may not be less than an amount equal to the then current surrender charge for a full surrender. A partial surrender will reduce your death benefit. A partial surrender may have tax consequences. (See "Tax Matters) LOAN You may borrow from your Policy at any time after the first Policy Year. The Policy is used as security for the loan. The maximum loan amount is 85% of the Cash Value which would be available for a full surrender. We charge you interest, in advance, at a maximum annual interest rate of 6% (4.5% for preferred loans). Lower rates may be available. If loans are not repaid, they will reduce the Policy's death benefit. A loan may have tax consequences. (See "Tax Matters) POLICY RISKS - ------------ The Policy is a long-term investment designed to provide significant life insurance benefits. You should consider the Policy in conjunction with other insurance you own. It may be to your advantage to replace existing insurance with the Policy. The Policy should be purchased only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy Cash Value in the near future. THE POLICY IS DESIGNED TO MEET LONG-TERM FINANCIAL GOALS. IT IS NOT SUITABLE AS A SHORT-TERM INVESTMENT. CASH VALUE AND INVESTMENT EXPERIENCE - ------------------------------------ o Your Policy's Cash Value may change daily to reflect the investment experience of the Variable Fund Accounts. o Your Policy's Cash Value also will reflect the amount and frequency of premium payments, partial surrenders of Cash Value, Policy loans and the charges and deductions connected with the Policy. o Your Policy has no minimum guaranteed Cash Value, which means you bear the entire investment risk that your Cash Value could decline to zero (see "Cash Value"). TRANSACTION RISKS - ----------------- There are risks associated with surrenders, withdrawals, and loans. These risks arise from the charges associated with those transactions, as well as their effect on the Policy. You should consider the following carefully: o A surrender charge applies for 10 Policy Years after the Policy Date. It is possible you will receive no net cash surrender value if you surrender your Policy in the first few Policy years. o You should not purchase the Policy if you intend to surrender all or part of the policy account value in the near future. o You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. RISKS OF INVESTMENT OPTIONS - --------------------------- A COMPREHENSIVE DISCUSSION OF THE RISKS OF EACH FUND MAY BE FOUND IN EACH FUND'S PROSPECTUS. PLEASE REFER TO THE FUNDS' PROSPECTUSES FOR MORE INFORMATION. LAPSE RISK - ---------- If the Cash Value can no longer cover the Policy's Monthly Deduction and any loan interest due, the Policy will lapse and a grace period will begin, unless you have paid enough premiums to qualify for the Guaranteed Death VUL Policy 6 Benefit (see "Guaranteed Death Benefit"). During the grace period, you must pay the necessary premium. If you do not pay the necessary premium before the grace period ends, the Policy will terminate without value, ending all insurance coverage, including any benefits provided by rider. If partial surrenders, loans, and charges reduce the Cash Value to too low an amount and/or if the investment experience in your selected Variable Fund Accounts is unfavorable, there is a risk that the Policy could lapse. After termination, you may reinstate the Policy within five years, subject to certain conditions. TAX RISKS - --------- WE DO NOT INTEND THIS DISCUSSION TO BE TAX ADVICE. YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR BEFORE PURCHASING A POLICY (SEE "TAX MATTERS"). This Policy is intended to meet the definition of a "life insurance contract" under federal tax law. The Policy's death benefit should be fully excludable from the Beneficiary's gross income if paid due to the death of the Insured. Any earnings on your investment in a Variable Fund Account should not be taxable to you while the Policy is in effect unless you receive a full or partial surrender of the Policy's Cash Value. Federal tax law limits premium payments relative to your Policy's Specified Amount in order for the Policy to meet the definition of life insurance. If the premiums you pay exceed these limits, the Policy will be treated as a modified endowment contract ("MEC") and federal tax law may impose penalties on amounts you take out of your Policy, whether as withdrawals, surrenders, or loans. We monitor your premium payments to help assure that you do not exceed permitted amounts or inadvertently incur any tax penalties due to excess premium payments. FEE TABLES - ---------- The following tables describe the fees and charges that you will pay when buying, owning, and surrendering the Policy. The first table describes the fees and charges that you will pay at the time you buy the Policy, surrender the Policy, or transfer Cash Value between investment options.
- ------------------------------------------------------------------------------------------------- TRANSACTION FEES - ------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED - ------------------------------------------------------------------------------------------------- Maximum Charge Imposed on Each premium payment until 3% of premium paid Premiums the amount paid totals 10 Annual Target Premium Payments(1) - ------------------------------------------------------------------------------------------------- Maximum Deferred Sales Charge On surrender of Policy Maximum of 50% of Annual Target Premium Payment(2) - ------------------------------------------------------------------------------------------------- Partial Surrender On partial surrender of Lesser of $25 or 2% of amount Policy withdrawn - ------------------------------------------------------------------------------------------------- Transfer Fees Applied, after the 18th $25 per transfer(3) transfer in each Policy Year, to each transfer. - -------------------------------------------------------------------------------------------------
1 An increase or decrease in the Policy's Specified Amount will result in a new Annual Target Premium Payment. 2 Declines by 5% each Policy Year to 0% after the 10th Policy Year. 3 We reserve the right at any time, and without prior notice, to terminate, suspend or modify transfer privileges under the Policy. The next table describes the fees and charges that you will pay periodically during the time that you own the Policy, not including Fund operating expenses.
- ------------------------------------------------------------------------------------------------- PERIODIC CHARGES OTHER THAN FUND OPERATING EXPENSES - ------------------------------------------------------------------------------------------------- CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED - ------------------------------------------------------------------------------------------------- Cost of Insurance(4) Policy's Effective Date, and each (per $1,000 of net amount at risk) Monthly Anniversary thereafter - ------------------------------------------------------------------------------------------------- o Minimum and Maximum Charge $0.03 - $83.33 per $1,000 of Net Amount at Risk - -------------------------------------------------------------------------------------------------
VUL Policy 7
- ------------------------------------------------------------------------------------------------- o Charge for 34 year old male $.062 per $1,000 of in preferred rate class in Net Amount at Risk the first policy year - -------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------- Maintenance Charge Policy's Effective Date, and each $5 Monthly Anniversary thereafter - ------------------------------------------------------------------------------------------------- Annualized rate of Mortality and Expense Charge(5) Daily .75% of average net assets of each Variable Fund Account - ------------------------------------------------------------------------------------------------- Policy's Effective Date, and each Administrative Charge Monthly Anniversary thereafter $10 during the first Policy Year - ------------------------------------------------------------------------------------------------- Federal Income Tax Charge None(6) - ------------------------------------------------------------------------------------------------- At the commencement of the loan Loan Interest and at the beginning of each Policy Year thereafter so long as the loan is outstanding - ------------------------------------------------------------------------------------------------- Maximum Loan Interest Rate Policy Years 1 - 10 and each year after that until the Insured is 6.0% annually age 55 - ------------------------------------------------------------------------------------------------- Maximum Loan Interest Rate Policy Year 11 and thereafter if 4.5% annually (Insured is age 55 or older) the Insured is age 55 or older - ------------------------------------------------------------------------------------------------- OPTIONAL RIDER CHARGES(7) - ------------------------------------------------------------------------------------------------- Accidental Death Benefit Rider Later of the Policy's Effective Annualized rate of Date or the rider's effective date, and each Monthly Anniversary $.84 per $1,000 thereafter coverage - ------------------------------------------------------------------------------------------------- Later of the Policy's Effective Date or the rider's effective date, Annualized rate of Children Term Life Insurance Rider and each Monthly Anniversary $6.00 per $1,000 thereafter coverage - ------------------------------------------------------------------------------------------------- Extended Maturity Date Rider Not applicable None - ------------------------------------------------------------------------------------------------- Terminal Illness Rider Not applicable None - ------------------------------------------------------------------------------------------------- Later of the Policy's Effective Date or the rider's effective date, Waiver of Monthly Deduction Rider(8) and each Monthly Anniversary thereafter - ------------------------------------------------------------------------------------------------- $0.05 - $0.277 per o Minimum and Maximum Charge $1 of Monthly Deduction - ------------------------------------------------------------------------------------------------- o Charge for 34 year old $0.062 per $1 of male in preferred rate class in the first policy year Monthly Deduction - -------------------------------------------------------------------------------------------------
4 The cost of insurance charge for an Insured depends on the age, sex, and rate class of the Insured. (See "Calculating Your Cost of Insurance.") The cost of insurance charge shown in the table may not be representative of the charge that a particular Policy Owner will pay. The actual charge will be determined by an underwriting review of the Insured's health and circumstances. On request, we will provide a personalized illustration which will include the cost of insurance charge for the Insured. 5 We deduct the Mortality and Expense Charge on a daily basis at an annual rate of .75% of the average net assets of each Variable Fund Account. 6 Currently, we make no charge for federal income taxes that may be attributable to the Separate Account. We may, however, make such a charge in the future, should it be necessary. We also may make charges for other taxes, if any, attributable to the Separate Account. 7 Riders offer additional benefits to go with your Policy. Not all riders are available in all states. 8 The Waiver of Monthly Deduction charge for an Insured depends on the age of the Insured. The charge shown in the table may not be representative of the charge that a particular Policy Owner will pay. On request, we will provide a personalized illustration which will include the Waiver of Monthly Deduction rider. The next table shows the minimum and maximum total operating expenses charged by the Funds that you will pay periodically during the time that you own the Policy. More detail concerning each Fund's fees and expenses is contained in the prospectus for each Fund. VUL Policy 8 - -------------------------------------------------------------------------------- TOTAL ANNUAL FUND OPERATING EXPENSES MINIMUM MAXIMUM - -------------------------------------------------------------------------------- Expenses that are deducted from Fund assets, .18% 2.64% including management fees and other expenses(9) - -------------------------------------------------------------------------------- 9 The maximum actual total Fund operating expense was 1.50% as the result of a voluntary expense reimbursement arrangement that had the effect of reducing expenses actually paid by the Fund. The expense reimbursement arrangements, including whether they are voluntary or contractual, appear in footnotes to the next following table of expenses. The next table shows the operating expenses (before and after contractual waiver or reimbursement) charged by each Fund for the fiscal year ended December 31, 2002. FUND OPERATING EXPENSES -----------------------
- --------------------------------------------------------- --------------------------------- OTHER TOTAL FUND TOTAL FUND EXPENSES OPERATING VARIABLE FUND MANAGEMENT OTHER OPERATING AFTER EXPENSES AFTER ACCOUNT FEES EXPENSES EXPENSES REIMBURSEMENT REIMBURSEMENT - --------------------------------------------------------- --------------------------------- USAA LIFE INVESTMENT TRUST(10, 11) - --------------------------------------------------------- --------------------------------- Growth and Income .20 .26 .46 .26 .46 - --------------------------------------------------------- --------------------------------- Aggressive Growth .50 .68 1.18 .45 .95 - --------------------------------------------------------- --------------------------------- World Growth .35 1.30 1.65 .60 .95 - --------------------------------------------------------- --------------------------------- Diversified Assets .20 .38 .58 .38 .58 - --------------------------------------------------------- --------------------------------- Income .20 .51 .71 .45 .65 - --------------------------------------------------------- --------------------------------- VANGUARD(R) VARIABLE INSURANCE FUND - --------------------------------------------------------- --------------------------------- .46 .04 .50 N/A .50 Diversified Value Portfolio - --------------------------------------------------------- --------------------------------- Equity Index .16 .02 .18 N/A .18 Portfolio - --------------------------------------------------------- --------------------------------- Mid-Cap Index .24 .06 .30 N/A .30 Portfolio - --------------------------------------------------------- --------------------------------- Small Company .54 .03 .57 N/A .57 Growth Portfolio - --------------------------------------------------------- --------------------------------- International .42 .11 .53 N/A .53 Portfolio - --------------------------------------------------------- --------------------------------- REIT Index .34 .05 .39 N/A .39 Portfolio - --------------------------------------------------------- --------------------------------- High Yield Bond .30 .03 .33 N/A .33 Portfolio - --------------------------------------------------------- --------------------------------- Money Market .18 .03 .21 N/A .21 Portfolio - --------------------------------------------------------- ---------------------------------
VUL Policy 9 FUND OPERATING EXPENSES -----------------------
- --------------------------------------------------------- --------------------------------- OTHER TOTAL FUND TOTAL FUND EXPENSES OPERATING VARIABLE FUND MANAGEMENT OTHER OPERATING AFTER EXPENSES AFTER ACCOUNT FEES EXPENSES EXPENSES REIMBURSEMENT REIMBURSEMENT - --------------------------------------------------------- --------------------------------- FIDELITY(R) VARIABLE INSURANCE PRODUCTS - --------------------------------------------------------- --------------------------------- Contrafund(R) .58 .10 .68 N/A N/A Portfolio, Initial Class - --------------------------------------------------------- --------------------------------- .48 .069 .57 N/A N/A Equity-Income Portfolio, Initial Class - --------------------------------------------------------- --------------------------------- .58 2.06 2.64 N/A(12) N/A(12) Dynamic Capital Appreciation Portfolio, Initial Class - --------------------------------------------------------- --------------------------------- SCUDDER VARIABLE .47 .04 .51 .04 .51 SERIES I Capital Growth Portfolio, Class A Shares - --------------------------------------------------------- --------------------------------- ALGER AMERICAN .75 .10 .85 .10 .85 FUND Growth Portfolio, Class O Shares - --------------------------------------------------------- ---------------------------------
(10) Pursuant to a contractual expense reimbursement arrangement, USAA Life, out of its general account, limits Fund expenses of the USAA Life Investment Trust Funds, excluding fee offset arrangements, and reimburse the Funds for all expenses in excess of, on an annual basis, .95% of the average net assets of the Aggressive Growth and World Growth Funds, .75% of the average net assets of the Diversified Assets Fund, .65% of the average net assets of the Income Fund, and .60% of the average net assets of the Growth & Income Fund. The arrangement may not be terminated before May 1, 2004. (11) A portion of the brokerage commissions that the Funds pay may be reimbursed and used to reduce the Funds' expenses. In addition, through fee offset arrangements with the Funds' custodian, credits, if any, realized as a result of uninvested cash balances are used to reduce custodian expenses. Total fund operating expenses reflect total expenses excluding any custodian fee offset arrangement, which reduced the total expenses of the Aggressive Growth Fund, the World Growth Fund, and the Income Fund by .01%, and had no impact on the total expenses of the Growth and Income Fund and Diversified Assets Fund. (12) The Fund's manager has voluntarily agreed to reimburse the Fund to the extent that total operating expenses (excluding interest, taxes, certain securities lending costs, brokerage commissions, and extraordinary expenses) exceed 1.50%. As a result, for the fiscal year ended December 31, 2002, Other Expenses After Reimbursement were .92%, and Total Fund Operating Expenses After Reimbursement were 1.50%. This arrangement can be discontinued by the Fund's manager at any time. POLICY INFORMATION - ------------------ WHO MAY PURCHASE A POLICY AND HOW TO PURCHASE A POLICY - ------------------------------------------------------ o Complete an application and submit it, with your initial premium payment (if required), to our Home Office. o You are required to provide us with satisfactory evidence of your insurability as part of the "underwriting" process. o During the underwriting process, you will be asked to complete a medical examination in order to assign you to an underwriting class used to determine your cost of insurance charges. o After completion of the underwriting process, we will notify you of our decision regarding your application. o We will not issue a Policy to insure a person older than age 80. VUL Policy 10 EFFECTIVE DATE - -------------- o If the first premium is submitted with the application, the Effective Date will ordinarily be the date the application is approved and the Policy is issued. o Insurance coverage begins on the Policy's Effective Date which is shown on the Policy Information Page. o You must pay the first premium before the Policy becomes effective. PREMIUM PAYMENTS - ---------------- METHODS OF PAYMENT o We accept premium payments by check or money order drawn on a U.S. bank in U.S. dollars and made payable to "USAA Life Insurance Company" or "USAA Life". o We accept premium payments made by bank draft, wire, or exchange from another insurance company. o Premium payments must be sent directly to our Home Office. o You may use our Automatic Payment Plan to have monthly premium payments automatically deducted from your bank account. AMOUNT AND FREQUENCY OF PAYMENTS o As long as you maintain sufficient Cash Value, you have flexibility to determine amount and frequency of premium payments. o INITIAL PREMIUM PAYMENT - To issue a Policy, you are required to provide us with an initial premium payment equal to at least one full Planned Periodic Premium Payment specified in your Policy. (If you select the Automatic Payment Plan, your initial premium payment would equal 2 monthly payments under the Plan.) o MINIMUM AND MAXIMUM PREMIUM PAYMENTS - Except for the initial premium payment, we do not require any minimum premium. However, you must maintain enough Cash Value to cover policy charges or the Policy will lapse. In addition, for the Policy to qualify as a life insurance contract for federal tax purposes, the total amount of your premium payments may not exceed the maximum amount allowed by federal tax law, unless necessary to prevent lapse. If a premium payment would cause you to exceed that maximum amount, we will refund the excess premium payment to you. (See "Tax Matters.") PREMIUM ALLOCATION On your application, you must specify the allocation of Net Premium Payments to each selected Variable Fund Account. You can specify allocations in increments as small as 1/10th of one percent. The total amount of your allocations must equal 100%. During the application process, we will hold your initial premium payment in our general account (without interest). If a policy is not issued, we will return your premium. Once your application is in good order, we will credit your initial net premium to the Policy as of the date the Policy is issued. There is a "Free Look" period during which we will allocate your initial Net Premium Payment and any subsequent Net Premium received during the "Free Look" period to the Vanguard Money Market Portfolio Variable Fund Account. The Net Premium will remain in the Vanguard Money Market Portfolio Variable Fund Account for the "Free Look" period plus five days. On the Valuation Date immediately following the end of that period, we will allocate the initial Net Premium Payment, together with any subsequent Net Premium Payments that have been made, plus any earnings, among the Variable Fund Accounts in the percentages directed on the application. We will allocate these amounts at the Accumulation Unit Value next computed on that date. (See "Calculating Your Value in the Variable Fund Accounts.") You may change your fund allocations at any time by telephone or by written notice. There are no charges or fees for changing your allocation instructions. The allocation change will become effective with the first premium payment we receive on or following the Date of Receipt of your request. (See "Transfer of Value") PLANNED PERIODIC PREMIUM PAYMENTS You may choose to make planned periodic premium payments. For convenience, we will also set up a schedule of premium payments and will send you premium notices at quarterly, semiannual or annual intervals. To facilitate planned periodic premium payments, we also will accept monthly premium payments through our Automatic Payment Plan. You are not obligated to follow the schedule of planned periodic premium payments, and failing to do so will not itself cause your Policy to lapse. Conversely, following the schedule will not guarantee that your Policy will remain in effect, unless you have made enough premium payments to qualify for the Guaranteed Death Benefit (see "Guaranteed Death Benefit"). VUL Policy 11 ANNUAL TARGET PREMIUM PAYMENT We will use the Annual Target Premium Payment specified in your Policy to determine whether we will deduct a premium charge from your premium payments or a surrender charge if you fully surrender. (SEE "Premium Charge" and "Surrender Charge" under "Charges and Deductions.") We also will use the Annual Target Premium Payment to determine whether the Guaranteed Death Benefit applies. (SEE "Guaranteed Death Benefit" under "Lapse and Reinstatement.") We determine the Annual Target Premium Payment actuarially based on the age, sex and rate class of the Insured, and the insurance benefits contained in the Policy. INVESTMENT OPTIONS - ------------------ Currently, you may invest in up to 18 Funds through the Separate Account. You can invest in a Fund by allocating Net Premium Payments to the corresponding Variable Fund Account. The Funds are managed by professional money managers as shown in the chart below that provides a brief description of each Fund. For more information, including a discussion of potential investment and other risks, please refer to the prospectuses for the Funds. ADDITIONS OR CHANGES TO INVESTMENT OPTIONS In the future, additional Funds may be made available as investment options through corresponding Variable Fund Accounts. For example, we may add Funds if we believe investment or marketing conditions warrant. We reserve the right, subject to compliance with applicable law, to change the Funds available as investment options. For example, we may eliminate or merge one or more Funds or substitute the shares of a Fund for those of another fund. We may do so, in our sole discretion, if we determine further investment in any Fund would be inconsistent with the purposes of the Policies. We will give you written notice of the addition, elimination, merger, or substitution of any Fund to the extent required by law. In the event of a substitution or other change, we may, by appropriate endorsement, make any changes in your Policy and any future policies as may be necessary or appropriate to reflect the substitution or change, operate the Separate Account as a management company, deregister it with the SEC in the event such registration is no longer required, or combine it with other USAA Life separate accounts. VOTING PRIVILEGES Based on our present view of the law, we will vote the shares of the Funds we hold directly or indirectly through the Separate Account in accordance with instructions received from Owners entitled to give such instructions. We will determine the persons entitled to give voting instructions and the number of shares a person has a right to instruct based on Variable Fund Account Values as of the record date of the meeting. We will vote shares attributable to Policies for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine, based on SEC rules or other authority, that we may vote such shares ourselves in our own discretion.
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- LARGE-CAP VALUE FUNDS - ------------------------------------------------------------------------------------------------- FIDELITY VIP EQUITY-INCOME o Normally invests at May be appropriate for PORTFOLIO INITIAL CLASS least 80% of total assets investors who are willing to in income-producing equity ride out stock market OBJECTIVE: securities, which tends to fluctuations in pursuit of Reasonable income. The Fund lead to investments in potentially above-average will also consider the large cap "value" stocks. long-term returns. Designed potential for capital o Potentially invests for those who want some appreciation. The Fund's goal in other types of equity income from equity and bond is to achieve a yield which securities and debt securities, but also want to exceeds the composite yield on securities, including be invested in the stock the securities comprising the lower-quality debt market for its long-term S&P 500(R)Index securities. growth potential o Invests in domestic ADVISER: and foreign issuers. Fidelity Management & Research o Uses fundamental Company analysis of each issuer's 82 Devonshire Street financial condition and Boston, Massachusetts 02109 industry position and market and economic conditions to select investments. - -------------------------------------------------------------------------------------------------
VUL Policy 12
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- LARGE-CAP VALUE FUNDS - ------------------------------------------------------------------------------------------------- USAA LIFE GROWTH & INCOME FUND o Invests primarily in Designed for the investor equity securities that seeking to benefit from OBJECTIVE: show the best potential long-term growth of capital Primary: Capital growth for total return through a and return. Because the Fund Secondary: Current income combination of capital emphasizes investments in appreciation and income. common stocks, its value will ADVISER: o Investments in convertible fluctuate based on market USAA Investment Management securities is limited to conditions. Consequently, Company 5% of assets. May invest the Fund should not be relied 9800 Fredericksburg Road in nonconvertible debt upon for short-term financial San Antonio, Texas 78288 securities and preferred needs or short-term stock. investment in the stock SUBADVISER: o While most of the Fund's market. Wellington Management Co., LLP assets will be invested 75 State Street in U.S. securities, we Boston, MA 02109 may also invest up to 20% of the Fund's total assets in foreign securities purchased in either foreign or U.S. markets. These foreign holdings may include securities issued in emerging markets as well as securities issued in established markets. - ------------------------------------------------------------------------------------------------- LARGE-CAP GROWTH FUNDS - ------------------------------------------------------------------------------------------------- VANGUARD DIVERSIFIED VALUE o Invests primarily in May be suitable investment PORTFOLIO common stocks of large and for you if: (1) you wish to medium-size companies add a stock fund to your OBJECTIVE: whose stocks are existing holdings, which Long-term growth of capital and considered by the adviser could include other stock a moderate level of dividend to be undervalued and out investments as well as bond income of favor with investors. and money market investments; Such "value" stocks (2) you want a stock fund ADVISER: typically have employing a value approach in Barrow, Hanley, Mewhinney & above-average dividend seeking long-term growth in Strauss, Inc. yields and/or capital as well as moderate One McKinney Plaza below-average prices in level of dividend income. 3232 McKinney Ave, 15th Floor relation to such financial Dallas, Texas 75204 measures as earnings, book value, and cash flow. - ------------------------------------------------------------------------------------------------- ALGER AMERICAN GROWTH o Invests primarily in May be appropriate for PORTFOLIO, CLASS O SHARES* equity securities, such investors seeking long-term as common or preferred capital appreciation. OBJECTIVE: stocks, which are listed Long-term capital appreciation on U.S. exchanges or in the over-the-counter ADVISER: market. Fred Alger Management, Inc. o The Portfolio invests primarily in "growth" 111 Fifth Avenue stocks. New York, NY 10003 o Under normal circumstances, the *The Alger American Portfolio invests Fund offers both primarily in the Class O and Class S equity securities of shares. The classes large companies with a differ only in that market capitalization of Class S shares are $1 billion or greater. subject to distribution and shareholder servicing fees, while Class O shares are not. Only Class O shares are available under the Policy. - -------------------------------------------------------------------------------------------------
VUL Policy 13
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- LARGE-CAP GROWTH FUNDS - ------------------------------------------------------------------------------------------------- FIDELITY VIP CONTRAFUND(R) o Normally invests May be appropriate for PORTFOLIO, INITIAL CLASS primarily in common stocks investors who are willing to OBJECTIVE: o Invests in securities ride out stock market Long-term capital appreciation of companies whose value fluctuations in pursuit of it believes is not fully potentially above-average ADVISER: recognized by the public. long-term returns. Fidelity Management & Research o Invests in domestic Company and foreign issuers. 82 Devonshire Street o Invests in either Boston, Massachusetts 02109 "growth" stocks or "value" stocks or both. o Uses fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. - ------------------------------------------------------------------------------------------------- LARGE-CAP BLEND FUNDS - ------------------------------------------------------------------------------------------------- SCUDDER VS I CAPITAL GROWTH o Invests at least 65% May be appropriate for PORTFOLIO, CLASS A SHARES of total assets in common investors seeking long-term OBJECTIVE: stocks of U.S. companies. growth. Maximize long-term capital o Although the Portfolio growth through a broad and can invest in companies flexible investment program. of any size, it generally focuses on ADVISER: established companies that Deutsche Investment Management are similar in size to the Americas, Inc. companies in the S&P 500 345 Park Avenue Index. The Portfolio New York, New York intends to invest primarily in companies whose market capitalizations fall within the normal range of the Index. - ------------------------------------------------------------------------------------------------- VANGUARD EQUITY INDEX PORTFOLIO o Employs a "passively" May be a suitable investment OBJECTIVE: managed- or for you if: (1) you wish to Long-term growth of capital and index-approach, by holding add a low-cost, income by attempting to match all of the stocks in the large-capitalization stock the performance of a Standard & Poor's 500 index fund to your existing broad-based market index of Composite Stock Price holdings, which could include stocks of large U.S. companies. Index in roughly the same other stock investments as proportion to their well as bond and money market ADVISER: weighting in the index. investments; (2) you want the The Vanguard Group o Stocks represented in potential for long-term P.O. Box 2600 the Index, and thus the capital appreciation, with a Valley Forge, Pennsylvania Portfolio's holding, are moderate level of dividend 19482 weighted according to each income. stock's market capitalization (shares outstanding x share price). For example, if a specific stock represented 2% of the S&P 500 Index, the Portfolio would invest 2% of its assets in that company. - -------------------------------------------------------------------------------------------------
VUL Policy 14
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- LARGE-CAP BLEND FUNDS - ------------------------------------------------------------------------------------------------- VANGUARD MID-CAP INDEX PORTFOLIO o Employs a "passively" May be a suitable investment OBJECTIVE: managed- or index-approach for you if: (1) you wish to Long-term growth of capital by by holding the stocks in add a low-cost, attempting to match the the Standard & Poor's mid-capitalization stock performance of a broad-based MidCap 400 Index in index fund to your existing market index of stocks of roughly the same holdings, which could include medium-size U.S. companies. proportion to their other stock investments as weighting in the Index. well as bond and money market ADVISER: o Stocks represented in investments; (2) you want the The Vanguard Group the Index, and thus the potential for long-term P.O. Box 2600 Portfolio's holdings, are capital appreciation. Valley Forge, Pennsylvania weighted according to 19482 each stock's market capitalization. For example, if a specific stock represented 5% of the S&P MidCap 400 Index, the Portfolio would invest 5% of its assets in that company. - ------------------------------------------------------------------------------------------------- MID-CAP GROWTH FUNDS - ------------------------------------------------------------------------------------------------- FIDELITY VIP DYNAMIC CAPITAL o Normally invests May be appropriate for APPRECIATION PORTFOLIO, INITIAL primarily in common stocks. investors seeking broad CLASS o Invests in domestic exposure to the domestic OBJECTIVE: and foreign issuers. equity market without Capital appreciation o Invests in either investment style restrictions. "growth" stocks or "value" ADVISER: stocks or both Fidelity Management & Research o Uses fundamental Company analysis of each issuer's 82 Devonshire Street financial condition and Boston, Massachusetts 02109 industry position and market and economic conditions to select investments. - ------------------------------------------------------------------------------------------------- USAA LIFE AGGRESSIVE GROWTH FUND o Invests primarily in Designed for the investor OBJECTIVE: equity securities of large seeking to benefit from Appreciation of capital companies that are long-term growth of capital. selected for their Generally, this Fund is ADVISER: attractive growth expected to have a greater USAA Investment Management potential. These potential for long-term Company investments will tend to capital appreciation than 9800 Fredericksburg Road consist primarily of a growth and income funds, but San Antonio, Texas 78288 diversified portfolio of is also significantly more stocks of large companies volatile. SUBADVISER: selected for their growth Marsico Capital Management, LLC potential. The term 1200 17th Street, Suite 1300 "equity securities" is Denver, CO 80202 used to include common stocks, convertible securities, and securities that carry the right to buy common stock. o While most of the Fund's assets will be invested in U.S. securities, we may also invest up to 20% of the Fund's total assets in foreign securities purchased in either foreign or U.S. markets. - -------------------------------------------------------------------------------------------------
VUL Policy 15
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- MID-CAP GROWTH FUNDS - ------------------------------------------------------------------------------------------------- VANGUARD SMALL COMPANY GROWTH o Invest mainly in the May be suitable investment PORTFOLIO stocks of smaller for you if: (1) you wish to OBJECTIVE: companies (which, at the add a small-capitalization Long-term growth of capital time of purchase, growth stock fund to your typically have a market existing holdings, which ADVISERS: value of less than $1-$2 could include other stock Granahan Investment Management, billion). These companies investments as well as bond Inc. are considered by the and money market investments; 275 Wyman Street Portfolio's advisers to (2) you are seeking growth of Waltham, Massachusetts 02154 have above-average capital over the long-term at prospects for growth, but least five years; (3) you are Grantham, Mayo, Van Otterloo & often provide little or no not looking for dividend Co. LLC dividend income. income; (4) you are willing 40 Rowes Wharf to assume the above-average Boston, Massachusetts 02110 risk associated with investing in small cap growth stocks. - ------------------------------------------------------------------------------------------------- DOMESTIC HYBRID FUND - ------------------------------------------------------------------------------------------------- USAA LIFE DIVERSIFIED ASSETS o Invests in a Designed for the investor FUND diversified program within seeking the benefits of both OBJECTIVE: one mutual fund by long-term capital Long-term capital growth, allocating the Fund's appreciation and current consistent with preservation of assets, under normal return. Generally, the Fund capital and balanced by current market conditions, in is expected to have less income. approximately 60% equity exposure to equity securities securities (selected for than growth funds. ADVISER: their potential return) USAA Investment Management and approximately 40% in Company debt securities of varying 9800 Fredericksburg Road maturities. San Antonio, Texas 78288 o The equity securities will consist significantly of domestic common stocks and, to a much lesser extent, may include shares of real estate investments trust (REITs). o The fixed income component will be made up of the same types of debt securities in which the USAA Life Income Fund may invest. The Fund may also invest in municipal lease obligations. o While most of the Fund's assets will be invested in U.S. securities, we may also invest up to 20% of the Fund's total assets in foreign or U.S. markets. These foreign holdings may include securities issued in emerging markets as well as securities issued in established markets. - -------------------------------------------------------------------------------------------------
VUL Policy 16
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- WORLD STOCK FUND - ------------------------------------------------------------------------------------------------- USAA LIFE WORLD GROWTH FUND o Invests primarily in Designed for the investor OBJECTIVE: equity securities of both seeking to diversify by Long-term capital appreciation foreign and domestic investing in securities of issuers. both domestic and foreign ADVISER: o May not invest more issuers and who is prepared USAA Investment Management than 25% of assets in one to bear the risks of such Company industry. investments. Because of the 9800 Fredericksburg Road o Under normal market Fund's emphasis on equity San Antonio, Texas 78288 conditions, the Fund's securities and securities of investments will be foreign issuers, the Fund SUBADVISER: diversified in at least should not be relied upon as MFS Investment Management three countries, one of a balanced investment program. 500 Boylston Street which is the United States. Boston, MA 02116 - ------------------------------------------------------------------------------------------------- FOREIGN STOCK FUND - ------------------------------------------------------------------------------------------------- VANGUARD INTERNATIONAL PORTFOLIO o Invests in the stocks May be suitable investment OBJECTIVE: of seasoned companies for you if: (1) you wish to Long-term growth of capital located outside of the add an international stock United States. fund to your existing ADVISER 1: o In selecting stocks, holdings, which could include Schroder Investment Management Schroder evaluates foreign other stock investments as North America, Inc. markets around the world. well as bond and money market 875 3rd Avenue, New York, NY Within markets regarded as investments; (2) you are 10022 having favorable seeking growth of capital investment climates, this over the long-term at least Sub-Adviser: advisor selects companies five years; (3) you are not Schroder Investment Management with above-average growth looking for income; (4) you North America, Limited potential whose stocks are willing to assume the 31 Gresham Street sell at reasonable prices. additional risks (including London EC2V 7QA, England o Baillie Gifford uses currency and country risk) a fundamental approach to associated with international Adviser 2: identify quality growth stocks. Baillie Gifford Overseas Ltd companies and considers 1 Rutland Court, Edinburgh, EH3 sustainable earnings and 8EY, Scotland free cash flow growth to be critical factors in evaluating a company's prospects. Companies are screened first for quality and then for value. Baillie Gifford looks for companies with attractive industry backgrounds, strong competitive positions within those industries, high quality earnings and a positive approach towards shareholders. The main fundamental factors considered when analyzing companies in this bottom-up analysis are: earnings growth, cash flow growth, profitability, debt and interest coverage, and valuation. - -------------------------------------------------------------------------------------------------
VUL Policy 17
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- LONG-TERM BOND FUND - ------------------------------------------------------------------------------------------------- USAA LIFE INCOME FUND o Invests primarily in Designed primarily for the OBJECTIVE: U.S. dollar-denominated investor seeking to benefit Maximum current income without debt and income-producing from returns higher than undue risk to principal. securities that have been those available in a money selected for their high market fund. An investor in ADVISER: yields relative to the this Fund should also be USAA Investment Management risk involved. willing to accept principal Company o Debt securities must fluctuations. The Fund 9800 Fredericksburg Road be investment-grade at the should not be relied upon as San Antonio, Texas 78288 time of purchase. a balanced investment program. - ------------------------------------------------------------------------------------------------- HIGH YIELD BOND FUND - ------------------------------------------------------------------------------------------------- VANGUARD HIGH YIELD BOND o Invests primarily in May be a suitable investment PORTFOLIO a diversified group of for you if: (1) you are OBJECTIVE: high -yielding, seeking a high level of High level of income higher-risk corporate income and are willing to bonds with medium- and take substantial risks in ADVISER: lower-range credit-quality pursuit of higher returns; Wellington Management Company, ratings, commonly known as (2) you have a long-term LLP "junk bonds". investment horizon - more 75 State Street o The Portfolio emphasizes than five years. Boston, Massachusetts 02109 higher grades of credit quality within the high- yield bond universe. The Portfolio invests at least 80% of its assets in corporate bonds that are rated below Baa by Moody's Investors Service, Inc. or below BBB by Standard & Poor's Corporation. o The Portfolio may not invest more than 20% of its assets in any of the following taken as a whole: securities with credit ratings lower than B or that are unrated, convertible securities, and preferred stocks. o The adviser may consider a security's potential for capital appreciation only when it is consistent with the objective of high and sustainable current income. - -------------------------------------------------------------------------------------------------
VUL Policy 18
- ------------------------------------------------------------------------------------------------- INVESTMENT OBJECTIVE PRINCIPAL INVESTMENT & INVESTMENT ADVISER STRATEGIES INVESTOR PROFILE - ------------------------------------------------------------------------------------------------- SPECIALTY-REAL ESTATE FUND - ------------------------------------------------------------------------------------------------- VANGUARD REIT INDEX PORTFOLIO o Invests in the stocks May be a suitable investment OBJECTIVE: of real estate investment for you if: (1) You are High level of income and rusts (REITs), which own looking for a simple way to moderate long-term growth of office buildings, hotels, gain indirect exposure to the capital shopping centers, and real estate market to further other properties. diversify your existing ADVISER: o The Portfolio employs holdings, which could include The Vanguard Group a "passively" managed-or other stock, bond, and money P.O. Box 2600 index-approach, by holding market investments. (2) You Valley Forge, Pennsylvania a mix of securities that want a stock fund that offers 19482 seeks to match the the potential for performance of the Morgan above-average dividend Stanley REIT Index, a income. (Historically, the benchmark of U.S. REITs. securities that make up the Holdings of the Index, and Index have provided higher thus of the Portfolio, are dividend income than those in weighted according to each the S&P 500 Index.) (3) You stock's market are seeking modest growth of capitalization. capital over the long term - o The Portfolio holds at least five years. each stock found in the Index in approximately the same proportion as represented in the Index itself. For example, if a specific stock represented 2% of the Morgan Stanley REIT Index, the Portfolio would invest 2% in that stock - ------------------------------------------------------------------------------------------------- MONEY MARKET FUND - ------------------------------------------------------------------------------------------------- VANGUARD MONEY MARKET PORTFOLIO o Invests more than 25% May be a suitable investment OBJECTIVE: of its assets in for you if: (1) you wish to Income while maintaining high-quality, short-term add a money market fund to liquidity and a stable share money market instruments your existing holdings, which price of $1 issued by companies in the might also include stock and financial services bond investments; (2) you are ADVISER: industry. The Fund also seeking income and stability The Vanguard Group invests in high-quality of principal. P.O. Box 2600 money market instruments Valley Forge, Pennsylvania issued by non-financial 19482 corporations, such as securities backed by the full faith and credit of the U.S. government, securities issued by U.S. agencies, or obligations issued by corporations and financial institutions. - -------------------------------------------------------------------------------------------------
POLICY LAPSE AND REINSTATEMENT - ------------------------------ LAPSE Your Policy will lapse if your Policy Cash Value is insufficient to pay the Monthly Deduction and any loan interest due, unless you have paid enough premiums to qualify for the Guaranteed Death Benefit. (See "Guaranteed Death Benefit") GRACE PERIOD You have a 61-day grace period to provide sufficient payment to keep your Policy in force. The grace period will begin on any Monthly Anniversary when your Policy Cash Value is insufficient to cover the Monthly Deduction for the following month and any loan interest due. We will notify you and any assignee of record of the date the grace period expires and of the premium payment necessary to continue the Policy in effect. During the grace period, you must submit enough premium to cover 3 Monthly Deductions and any loan interest due. If you do not pay the necessary premium within the grace period, the Policy will lapse, terminating all insurance, including benefits provided by rider. If the Insured dies during the grace period, we will pay your Beneficiary the death benefit, less VUL Policy 19 any due and unpaid Monthly Deductions and any loan interest due through the month of death. During the grace period, or at lapse, we will not refund any Cash Value remaining in the Policy at the beginning of the grace period. GUARANTEED DEATH BENEFIT During the first 5 Policy years, your Policy will qualify for the Guaranteed Death Benefit if specified minimum premium payments have been paid. Guaranteed Death Benefit means that we guarantee that your Policy will not lapse, even if the Cash Value is insufficient to pay for the monthly deduction and any loan interest then due. The determination will be made at each Monthly Anniversary, at which time premium payments must total the Annual Target Premium payment specified in your Policy, adjusted to reflect the number of Monthly Anniversaries since the Policy's Effective Date. For example, if o Annual Target Premium is $2,000. o The policy has been in force for 3.5 years. o There are no partial surrenders and no loans. o The Cash Value at 3.5 years is insufficient to pay the Monthly Deduction. To qualify for the Guaranteed Death Benefit, premium payments must equal the Annual Target Premium. Here, $2,000 x 3.5 years = $7,000 premium. If $7,000 total premiums have been paid, then the policy will not lapse because the Guaranteed Death Benefit applies. The Guaranteed Death Benefit is only available during the first five policy years. We will declare a new Annual Target Premium payment if the Specified Amount is increased or decreased within the first five policy years. We will use the new Annual Target Premium Payment in the Guaranteed Death Benefit calculation. REINSTATEMENT You may reinstate a lapsed Policy within 5 years from the date of lapse and before the Policy's Maturity Date if you meet all of the following requirements: o Provide a completed written application for reinstatement. o Give proof of insurability satisfactory to USAA Life. o Make payment of premium sufficient to pay the estimated Monthly Deductions for at least the 3 Policy months beginning with the effective date of reinstatement. o Make payment of, or agreement to reinstate, any Policy Indebtedness. The Effective Date of the reinstatement will be the Monthly Anniversary on or before we approve your request. Upon reinstatement, the death benefit will be the Specified Amount in effect at lapse, less any reinstated Indebtedness. Your Policy's initial reinstated Cash Value will be calculated as follows: o Net reinstated premium, o MINUS the monthly deduction for the month following the Effective Date of reinstatement, o PLUS (if applicable) any reinstated indebtedness, o PLUS any interest earnings credited to the loan collateral held in the general account. An advantage of reinstating a lapsed Policy is that we will not deduct the first-year Administrative Charge again if it has already been paid. A possible disadvantage of reinstatement is that you must pay or reinstate any Policy Indebtedness. A Policy cannot be reinstated once it has been fully surrendered. CHARGES AND DEDUCTIONS - ---------------------- PREMIUM CHARGE o We deduct a 3% premium charge from each premium as compensation for selling expenses and taxes. o We deduct the premium charge from all of your premium payments until the gross amount of premium payments exceeds the sum of the Annual Target Premium payments payable over 10 years. (See "Annual Target Premium Payment") o If you increase or decrease the Specified Amount, we will declare a new Annual Target Premium Payment for you and use it to determine whether the premium charge applies. VUL Policy 20 The amount remaining after we deduct the premium charge is the Net Premium payment and is the amount we allocate to the Variable Fund Accounts you select. EXAMPLE: Annual Target Premium payment is $2,000. $2,000 x 10 years = $20,000. We would no longer deduct the premium charge once you have paid in premiums of $20,000. MONTHLY DEDUCTIONS FROM CASH VALUE On your Policy's Effective Date, and each Monthly Anniversary thereafter, we will deduct certain monthly charges from your Policy's Cash Value (See "Deduction of Charges"). The Monthly Deduction includes the following items, each as described below. o Cost of insurance charge. o Charge for optional insurance benefits provided by rider. o Administrative charge. o Maintenance charge. COST OF INSURANCE CHARGES. (See "Calculating Your Cost of Insurance" for a more detailed discussion of the factors that affect the net amount at risk and how the cost of insurance charge is calculated.) Monthly cost of insurance charges depend on a number of variables, including: o Specified Amount of insurance coverage; o Death benefit option you select; o Cost of insurance RATE; and o Investment experience of your value in the Variable Fund Accounts. CHARGES FOR OPTIONAL INSURANCE BENEFITS. Monthly Deductions include charges for any optional insurance benefits added to the Policy by rider. (See "Optional Insurance Benefits") ADMINISTRATIVE CHARGES (FIRST POLICY YEAR ONLY). During the first 12 Policy months only, we deduct a monthly Administrative Charge of $10 for start-up administrative expenses we incur in issuing your Policy. These expenses include the cost of processing your application, conducting a medical examination, determining insurability and rate class, and establishing Policy records. The investment advisers or other affiliates of certain Funds may reimburse USAA Life for the cost of administrative services provided to the Funds as investment options under the Policies. Compensation is paid out of fee earnings, based on a percentage of a Fund's average net assets attributable to a Policy. MAINTENANCE CHARGE. The Monthly Deduction includes a recurring Maintenance Charge of $5. This charge compensates us for the recurring administrative expenses related to the maintenance of your Policy and of the Separate Account. These expenses include premium notices and collection, record keeping, processing death benefit claims, Policy changes, reporting, and overhead costs. USAA Life guarantees that this charge will not increase during the life of the Policy. SEPARATE ACCOUNT CHARGES We deduct certain charges on a daily basis as a percentage of the value of each Variable Fund Account of the Separate Account. These charges reduce your Policy's Cash Value. MORTALITY AND EXPENSE CHARGE. We assess a daily charge of .00204% (equal to .75% annual rate) against the values of each Variable Fund Account for mortality and expense risks that USAA Life assumes under the Policies. We guarantee that this charge will not increase during the life of your Policy. The mortality risk that USAA Life assumes is that Insureds may live for a shorter period of time than we estimate and thus a greater amount of death benefits than expected will be payable. The expense risk we assume is that expenses incurred in issuing and administering the Policies will be greater than we estimate. FEDERAL INCOME TAX CHARGE. Currently, we make no charge against a Variable Fund Account for federal income tax that may be attributable to that Account. We may, however, make such a charge in the future, should it be necessary. We also may make charges for other taxes, if any, attributable to any Variable Fund Account. VUL Policy 21 TRANSFER CHARGES For each transfer between Variable Fund Accounts in excess of 18 per Policy Year, we assess a $25 charge. We reserve the right, at any time, and without prior notice, to terminate, suspend, or modify these transfer privileges. SURRENDER CHARGES PARTIAL SURRENDER CHARGE. For each partial surrender, we assess a charge equal to the lesser of $25 or 2% of the amount withdrawn. This charge is an administrative processing fee. FULL SURRENDER CHARGE. For full surrenders prior to the end of the 10th Policy Year, we assess the surrender charge described below. The surrender charge compensates USAA Life for the expenses it incurs in distributing the Policies. The amount of the surrender charge will equal a percentage of the Annual Target Premium Payment specified in your Policy, regardless of the amount of premiums you actually pay. The surrender charge depends on when you surrender. As shown in the table below, the surrender charge declines each Policy Year to 0% after the 10th Policy Year. - -------------------------------------------------------------------------------- SURRENDER CHARGE AS A % OF ANNUAL TARGET PREMIUM PAYMENT POLICY YEAR 1 2 3 4 5 6 7 8 9 10 11+ APPLICABLE % 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0 - -------------------------------------------------------------------------------- Example: o Annual Target Premium payment is $2,000, o Full surrender during the first Policy Year Surrender charge = 50% x $2,000 or $1,000 surrender charge If you increase or decrease your Policy's Specified Amount within the first 10 Policy Years, we will set a new Annual Target Premium Payment for you. We will use the new Annual Target Premium Payment to determine the surrender charge. (See "Changing Your Policy's Specified Amount") We will not impose a surrender charge at the time you decrease your Policy's Specified Amount. OTHER CHARGES The Variable Fund Accounts purchase shares of the Funds at the Net Asset Value ("NAV") of the shares. The NAV reflects the investment management fees and other expenses already deducted from each Fund's assets. These fees and other expenses appear in the "Fee Tables." Please refer to the prospectuses for the Funds for more information on these fees and expenses. DEDUCTION OF CHARGES We will deduct the Monthly Deduction, any partial surrender charge, and any transfer charge from your value in each Variable Fund Account in the same proportion as each Variable Fund Account's value has to the total Policy Cash Value. Alternatively, you may specify in advance the Variable Fund Account(s) from which you want the partial surrender charge and transfer charge deducted. DEATH BENEFIT - ------------- The Policy offers two death benefit options, Option A and Option B, which you select on your Policy application. Under either option, we will reduce the amount of death benefit we pay by the amount of any outstanding Indebtedness and any due and unpaid Monthly Deductions. (See "Payment of Policy Benefits") Partial surrenders and related surrender charges also will reduce the amount of your death benefit. (See "Changing Your Policy's Specified Amount") The death benefit increases by any applicable optional insurance benefits provided by rider. (See "Optional Insurance Benefits") VUL Policy 22
- ---------------------------------------------------------------------------------------------------- OPTION A (LEVEL DEATH BENEFIT) OPTION B (INCREASING DEATH BENEFIT) - ---------------------------------------------------------------------------------------------------- DEATH BENEFIT Greater of: Greater of: o Your Policy's Specified o Your Policy's Specified Amount Amount, or PLUS your Cash Value, or o The Minimum Amount Insured o The Minimum Amount Insured - ---------------------------------------------------------------------------------------------------- PURPOSE Emphasizes Cash Value Growth Emphasizes Death Benefit Growth - ---------------------------------------------------------------------------------------------------- IMPACT Cost of Insurance will generally be Death Benefit generally greater than for lower than for same Specified Amount same Specified Amount in Option A in Option B - ----------------------------------------------------------------------------------------------------
EXAMPLE OF OPTION A AND OPTION B: -------------------------------- o Insured less than 40 years old o Policy's Specified Amount is $100,000 o No loans or outstanding Monthly Deductions o Policy Cash Value is $25,000
- ---------------------------------------------------------------------------------------------------- OPTION A OPTION B - ---------------------------------------------------------------------------------------------------- Death Benefit greater of $100,000 or Minimum Death Benefit greater of $125,000 ($100,000 Amount Insured* Specified Amount plus $25,000 Cash Value) or the Minimum Amount Insured* - ----------------------------------------------------------------------------------------------------
* The Minimum Amount Insured is calculated by multiplying Cash Value by a specific percentage based on the Insured's age (see "Calculating Your Cost of Insurance"). CHANGING DEATH BENEFIT OPTION After the death benefit option you selected on your application has been in effect for one Policy Year, you may change it by sending written notice to USAA Life. The new death benefit option also must remain in effect for one Policy Year before we allow another change. There is no charge or fee for changing the death benefit option. The change will become effective on the Monthly Anniversary on or following the date we approve the change. A change in death benefit option will affect your cost of insurance. (See "Calculating Your Cost of Insurance") We will recalculate the maximum premium limitation following a change in death benefit option. (See "Minimum Amount Insured" under "Calculating Your Cost of Insurance") OPTION A TO OPTION B - -------------------- o Option B Specified Amount equals prior Option A Specified Amount MINUS Policy's Cash Value as of the date we receive written notice of the requested change. (The result of this is that the death benefit before and after the change will remain the same.) o We will not allow the change if it would result in a Specified Amount that is less than the minimum Specified Amount of $50,000 ($25,000 for Insureds less than 18 years of age). o If you want the Option B Specified Amount to be the same as the prior Option A Specified Amount, you must provide proof of insurability. OPTION B TO OPTION A - -------------------- o Option A Specified Amount equals prior Option B Specified Amount PLUS Policy's Cash Value next determined on the Date of Receipt of written notice. (The result of this is that the death benefit before and after the change will remain the same.) o This change does not require proof of insurability, unless you also want to make changes in your Policy's Specified Amount or add optional benefits by rider. CHANGING POLICY'S SPECIFIED AMOUNT You may increase or decrease your Policy's Specified Amount, within certain limits. A change in Specified Amount: o May increase or decrease your cost of insurance charges (see "Calculating Your Cost of Insurance"). o May have tax consequences (see "Tax Matters"). o Does not necessarily require changes in planned periodic premiums (see "Planned Periodic Premium Payments"). o Will require us to set a new Annual Target Premium payment for the new Specified Amount (see "Annual Target Premium Payment"). VUL Policy 23 Whether the premium charge applies is determined using the new Annual Target Premium Payment. (See "Premium Charge") We will recalculate the maximum premium limitation following an increase or decrease in Specified Amount. (See "Premium Payments" and "Tax Matters") Any increase to your Policy's specified Amount must be at least $25,000, unless such increase is in conjunction with a change in death benefit option or to satisfy federal tax law requirements. For any increase, you must apply in writing and we will require satisfactory proof of insurability. An increase will become effective on the Monthly Anniversary on or following the date we approve the increase. Your rights to cancel your Policy do not apply to increases in Specified Amounts. You may not reduce your Policy's Specified Amount to less than $50,000. There are exceptions for reductions resulting from a surrender of Cash Value under Option A and if the Insured is less than 18 years of age. We will not allow a reduction that would cause your Policy not to qualify as a life insurance contract for federal tax law purposes. You must request a reduction in writing. To determine the cost of insurance charge, we will apply any decrease in Specified Amount against the most recent increase in Specified Amount. The decrease will become effective on the Monthly anniversary on or following the Date of Receipt of your written notice to USAA Life. OPTIONAL INSURANCE BENEFITS - --------------------------- You may add one or more of the following optional insurance benefits to your Policy by rider, subject to certain underwriting or issue requirements. Each rider's description in this Prospectus is subject to the specific terms and conditions of the rider. We will deduct the cost of any optional insurance benefits as part of the Monthly Deduction. (See "Monthly Deductions") NOT ALL RIDERS ARE AVAILABLE IN ALL STATES. ACCELERATED BENEFITS FOR TERMINAL ILLNESS RIDER. This rider provides for an early benefit payment to you upon receipt of proof that the Insured is terminally ill (as defined in the rider). The maximum amount you may receive under the rider prior to the Insured's death is the lesser of (1) 50% of the then current death benefit payable under the Policy (excluding additional benefits payable under other riders), or (2) $250,000. We will deduct the amount of any Indebtedness from the amount of the early payment. We treat the early payment as a "lien" against Policy values. We reduce the death benefit by the amount of the lien and any Policy loans, plus accrued interest. We will continue to take Monthly Deductions after the early payment. The Owner's access to the Cash Value of the Policy through Policy loans, partial surrenders, or full surrender is limited to any excess of the Cash Value over the amount of the lien. We charge interest on the amount of the early payment and any unpaid Monthly Deductions. We require premium payments to be made for cost of insurance that are still required to be made after the early payment. If such payment is not paid when due, we will pay the premium on behalf of the Owner and add that amount to the early payment amount to be deducted from the death benefit. If the amount of the early payment plus accrued interest and required unpaid cost of insurance premiums ever exceed the amount of the death benefit, we will terminate the Policy and no additional insurance benefits will be payable. There is no charge for this rider. ACCIDENTAL DEATH BENEFIT RIDER. This rider provides an additional life insurance benefit if the Insured's death results from accidental bodily injury (as defined in the rider). You can select an additional life insurance benefit up to a maximum of $200,000, or the Specified Amount, whichever is less. The premium for this rider is $.84 per $1,000 of coverage per year. CHILDREN TERM LIFE INSURANCE RIDER. This rider provides level term life insurance on the lives of the Insured's children (as defined in the rider). The cost for this rider is $6 per $1,000 of coverage per year. EXTENDED MATURITY DATE RIDER. This rider permits you to extend your Policy's Maturity Date up to 10 years beyond what it otherwise would be (i.e., the Monthly Anniversary following the Insured's 100th birthday). The death benefit during the extended maturity period will be your Policy's Cash Value less any Indebtedness. Also during this period, the Policy's Cash Value will continue to accrue in the same manner as described in the Policy, and any Policy loans in effect will continue to accrue interest. We will not deduct cost of insurance charges or accept additional premium payments during this period. We will assess the Maintenance Charge during this period. Extension of the Maturity Date is subject to all of the terms and conditions of the Policy, except where they are inconsistent with the rider. Extending the maturity date of your Policy beyond the Insured's age 100 may result in the current taxation of any increases in your Policy's Cash Value that result from investment experience in the Variable Fund Accounts. You should consult a qualified tax advisor before making such an extension. VUL Policy 24 WAIVER OF MONTHLY DEDUCTION RIDER. This rider waives your Monthly Deduction during periods of total and permanent disability of the Insured, but only if the Insured has been totally and permanently disabled (as defined in the rider) for at least 6 consecutive months. We will not deduct the amount of any Monthly Deduction waived under this rider from the Cash Value proceeds payable upon maturity of your Policy, or the death benefit proceeds payable if the Insured dies before the Policy matures. If Option A is in effect when we approve a claim under the rider, we will change your death benefit option from Option A to Option B as of the Monthly Anniversary after the disability began. While we are paying benefits under the rider, you may not increase your Policy's Specified Amount. Please note that the rider does not apply to interest under your Policy loans. As a result, it is possible that your Policy could lapse for nonpayment of loan interest. The premium for this rider varies based upon the age of the Insured. If you would like further information about the optional insurance benefits available under your Policy, please contact us at 1-800-531-2923. Please note that adding or deleting riders, or increasing or decreasing coverage under the riders, can have tax consequences. (See "Tax Matters") You should consult a qualified tax advisor. PAYMENT OF POLICY BENEFITS - -------------------------- BENEFITS AT MATURITY All Policies will mature on the Monthly Anniversary following the Insured's 100th birthday, unless extended by rider. If the Insured is living at maturity, we will pay the Cash Value of your Policy (less any Indebtedness and any due and unpaid Monthly Deductions). We may postpone payments in certain circumstances. (See "Postponement of Payments") PAYMENT AT DEATH As long as your Policy has not terminated due to lapse, maturity, or full surrender, we will pay your Policy's death benefit to your Beneficiary. We will usually pay the death benefit within 7 days after we receive due proof of death at our Home Office and all other requirements necessary to make payment. We will determine the Cash Value portion of the death benefit as of the Valuation Date immediately following the date of death. We will pay the death benefit in cash or under one or more of the payment options you have selected in advance. If you have not selected a payment option, your Beneficiary may select the payment option. We may postpone payment of the death benefit in certain circumstances. (See "Postponement of Payments") We will reduce the death benefit by any Indebtedness and any due and unpaid Monthly Deductions. These proceeds will be increased by any applicable additional optional insurance death benefits provided by rider. DEATH BENEFIT PAYMENT OPTIONS We will pay the death benefit in a lump sum or under one of the payment options below. During the Insured's lifetime, you may select a payment option. If the Insured dies and you have not chosen a payment option, your Beneficiary can choose a payment option. If you have selected a payment option before the Insured's death, your Beneficiary may not change that option after the Insured's death. Proceeds applied under a payment option will no longer vary by the investment experience of the Variable Fund Accounts. The nature and timing of your choice of payment option may have tax consequences to you or your Beneficiary. You should consult your tax advisor. INTEREST ONLY OPTION. The Policy's principal amount may be left on deposit with USAA Life for a mutually determined period, not to exceed 30 years. We will make interest payments at mutually determined regular intervals. The principal amount will earn interest at a minimum rate of 3% compounded annually. At the end of the fixed period, we will pay the principal amount. INSTALLMENTS FOR A FIXED PERIOD OPTION. Under this option, we will pay the principal amount plus interest in installments for a specified number of years (not more than 30), as mutually agreed upon. The amount of the installments will not be less than that shown in the Table of Guaranteed Payments contained in your Policy. INSTALLMENTS OF A FIXED AMOUNT OPTION. Under this option, we will pay the principal amount plus interest in installments, as mutually agreed upon, until the amount applied, together with interest on the unpaid balance, is paid in full. VUL Policy 25 OTHER OPTIONS. We will apply the principal amount under any other option mutually agreed upon. Any arrangements involving more than one payment option, or involving a Beneficiary that is not a natural person (e.g., a corporation) or who is a fiduciary (e.g., a trustee) are subject to our approval. In addition, the details of the arrangements are subject to our rules in effect at the time the arrangements take effect. The Beneficiary may designate a successor payee as to any amount that we would otherwise pay to the Beneficiary's estate. Amounts applied under these payment options will not be subject to the claims of creditors or to legal process, to the extent permitted by law. CASH VALUE - ---------- Your Policy's Cash Value will vary: o on a daily basis with the investment experience of the Variable Fund Accounts to which you have allocated your Net Premium Payments; o to reflect the effect of various Policy transactions, such as additional premium payments, partial surrenders, and Policy loans; and o to reflect applicable charges and deductions. YOUR POLICY DOES NOT PROVIDE A MINIMUM GUARANTEED CASH VALUE, WHICH MEANS YOU BEAR THE ENTIRE INVESTMENT RISK THAT YOUR CASH VALUE COULD FALL TO ZERO. On your Policy's Effective Date, your Cash Value will equal your Net Premium Payments, less the Monthly Deduction for the following Policy month. Thereafter, your Cash Value on any Valuation Date will equal the sum of: o your Policy's value in each Variable Fund Account; o plus, if applicable, any value held in our general account to secure any Policy loan; o plus any interest earnings credited on the value held in the general account; o less the amount of any outstanding Indebtedness; o less any Monthly Deductions, transfer charges, and partial surrender charges applied through that date. On each Monthly Anniversary, the Monthly Deduction will reduce your Policy's Cash Value. CALCULATING YOUR VALUE IN THE VARIABLE FUND ACCOUNTS When you invest in a Variable Fund Account, you are purchasing units of interest or "Accumulation Units" ("units") of that Account. You purchase units at their price next determined on any given Valuation Date following the receipt of your payment. Therefore, on any given Valuation Date, you can calculate the value of your investment in a Variable Fund Account by multiplying (1) the number of units of each Variable Fund Account credited to your Policy by (2) the price of the units on that Date. We determine the number of units to credit to you by dividing (1) the Net Premium Payment you allocate to a Variable Fund Account by (2) that Variable Fund Account's price per unit or "unit value" next computed on the Date of Receipt of the premium payment. Certain transactions will affect the number of units in a Variable Fund Account credited to you. Net Premium Payments will increase the number of full or fractional units. Loans, partial or full surrenders, partial surrender charges, transfer charges, and Monthly Deductions involve redemption of full or fractional units and will decrease the number of units. In addition, Transfer of Value among Variable Fund Accounts will decrease the number of units in the Variable Fund Accounts from which value is transferred and increase the number of units in the Variable Fund Accounts to which value is transferred. Each Variable Fund Account's units are valued separately. We calculate the value of an Accumulation Unit ("Accumulation Unit Value (AUV)") for each Variable Fund Account on any Valuation Date by adjusting the unit value from the previous Valuation Date for: o the investment performance of the corresponding Fund; o any dividends or distributions paid by that Fund; and o the Separate Account charges that we assess. (SEE "Separate Account Charges.") VUL Policy 26 Log on to USAA.COM to access information about your Policy details, Variable Fund Account summaries, and financial activity information. You may also find out information about your Cash Value, including the value and number of units of each Variable Fund Account credited to your Policy, by calling us at 1-800-531-4265. TRANSFER OF VALUE Except during the first 30 days after your Policy becomes effective, you may transfer all or part of the value in any Variable Fund Account to any other Variable Fund Account of the Separate Account, up to 18 times per Policy Year, without charge. Each transfer thereafter is subject to a $25 charge. Excessive transfer activity can disrupt portfolio management strategy and increase Variable Fund Account expenses, which are borne by all Policy owners participating in the Variable Fund Accounts regardless of their transfer activity. You should note that the product is not designed for professional "market timing" organizations, or other organizations or individuals engaged in market timing strategy, making programmed transfers, or frequent transfers that are large in relation to the total assets of the underlying Funds in which the Variable Fund Account options invest. Market timing strategies are disruptive to the underlying Funds in which the Variable Fund Account options invest. If we determine that your transfer patterns among the Variable Fund Account options reflect a market timing strategy, we reserve the right to take action including but not limited to: restricting the availability of transfers through telephone requests, facsimile transmissions, automated telephone services, internet services, or any electronic transfer services. We will inform you in writing of any such transfer restrictions on your Policy. The minimum amount you can transfer from any Variable Fund Account is $250 (or the remaining Account value if less). A transfer will result in the redemption or purchase (or both) of units of the Variable Fund Accounts involved. You may request a transfer by telephone or by Notice to Us. A request for transfer must clearly state the amount to be transferred, the Variable Fund Account from which it is to be withdrawn, and the Variable Fund Account to which it is to be credited. We will effect the transfer using the Variable Fund Account unit values next computed on the Date of Receipt of your request, unless a postponement of payments is in effect. (SEE "Postponement of Payments.") We reserve the right at any time, and without prior notice, to terminate, suspend, or modify these transfer privileges. LOANS - ----- After your first Policy Year, you may borrow money from USAA Life by using your Policy as the sole security for the loan. The amount that you may borrow is the "loan value." The maximum loan value is 85% of your cash surrender value. You may request a loan by telephone or by Notice to Us, but you must obtain the written consent of all assignees and irrevocable Beneficiaries, if any, before we can make the loan. We will usually pay you the loan proceeds within 7 days after the Date of Receipt of your loan request, unless a postponement of payments is in effect. (SEE "Postponement of Payments.") LOAN COLLATERAL When you take a loan, we will transfer an amount equal to the loan from your value in the Variable Fund Accounts to our general account. We make this transfer of "loan collateral" to secure your loan. You may specify the Variable Fund Accounts from which you want us to withdraw the loan collateral. If you do not so specify, we will withdraw the loan collateral from the Variable Fund Accounts in the same proportion as each Account's value has to the total Policy Cash Value. While a loan is outstanding, we will credit the loan collateral with interest on a daily basis at an effective annual rate of 4%. LOAN INTEREST You are charged interest on the loan at a maximum annual rate of 6% payable in advance. We have the option of charging less. For Policies that have been in effect more than 10 Policy Years and if the Insured is age 55 or older, we charge a preferred loan interest rate of 4.5%. We have the option of charging less for a preferred loan. The entire amount of interest on your loan balance for each Policy Year is payable in advance at the commencement of the loan and at the beginning of each Policy Year thereafter. We will automatically deduct the interest from your Variable Fund Account(s) in the same proportion as each Account's value has to the total Policy Cash Value on the date the loan starts. Similarly, we will deduct interest from your Variable Fund Account(s) at the beginning of each Policy Year in the same proportion as each Account's value has to the total Policy Cash Value as of that date. VUL Policy 27 If there is insufficient value in your Variable Fund Account(s) to pay the interest in advance, your policy will enter its grace period. Because interest is paid in advance, loan repayments during a Policy Year may result in an overpayment of interest. We will credit any overpayment of interest to you on the date of any loan repayment. REPAYMENT OF INDEBTEDNESS You may repay your Indebtedness (I.E., loans and any unpaid interest) in full or in part at any time before the Insured's death and while the Policy is in effect. If not repaid, we will deduct the Indebtedness from any death benefit, maturity benefit, or full surrender proceeds. You may not repay loans and unpaid loan interest in existence at the end of the grace period until the Policy is reinstated. You must designate any loan repayment as such. Otherwise, we will treat it as a premium payment. You may direct how you want your loan repayment to be allocated among the Variable Fund Accounts. If you do not specify an allocation, we will allocate your loan repayment to the Variable Fund Accounts in the same proportion as Net Premium Payments are being allocated. EFFECT OF POLICY LOANS A loan will reduce the value of the Variable Fund Accounts from which it is deducted. Thus, the amount loaned will not share in the investment experience of the Variable Fund Accounts. A loan, whether repaid or not, will have a permanent effect on the Cash Value of the Policy. We will determine loan values as of the Date of Receipt of the loan request. A Policy loan may increase the chance that your Policy may lapse and result in adverse tax consequences. For situations where a Policy loan may be treated as a taxable distribution, SEE "Tax Matters." SURRENDERS - ---------- You may fully or partially surrender your Policy for all or part of its Cash Value to the extent described below. We will usually pay full or partial surrenders of Cash Value within 7 days after we receive your written request at our Home Office. We will determine the Cash Value of the surrendered amount as of the Date of Receipt of your request for surrender. There may be tax consequences in connection with a full or partial surrender. (SEE "Tax Matters.") You must obtain the written consent of all assignees or irrevocable Beneficiaries, if any, before we will process any request for surrender. We will effect any surrenders using the Variable Fund Account unit values next computed on the Date of Receipt of your Notice to Us or, in the case of partial surrenders, your Notice to Us or telephone request. In certain circumstances, we may postpone the payment of surrenders. (SEE "Postponement of Payments.") FULL SURRENDERS At any time before the Insured's death and while the Policy is still in effect, you may surrender your Policy for its entire cash surrender value by sending Notice to Us. We may require the return of the Policy. We also may assess a surrender charge. (SEE "Surrender Charges.") We sometimes refer to the net amount you would receive as the Policy's "cash surrender value." We will terminate your Policy and all insurance on the Date of Receipt of your Notice to Us. PARTIAL SURRENDERS After your first Policy Year and while your Policy is still in effect, but before the Insured's death, you may surrender a portion of your Policy for cash. We will assess an administrative processing fee equal to the lesser of $25 or 2% of the amount withdrawn. You may direct how you would like us to withdraw a partial surrender and the administrative processing fee from your current value in the Variable Fund Accounts. If you do not specify a withdrawal allocation, we will withdraw the partial surrender and the administrative processing fee from the Variable Fund Accounts in the same proportion as each Account's value has to the total Policy Cash Value. (SEE "Surrender Charges" and "Deduction of Charges.") You may request a partial surrender by telephone or by Notice to Us. Your Policy's remaining Cash Value after a partial surrender may not be less than an amount equal to the then current surrender charge for a full surrender. VUL Policy 28 Partial surrenders and related surrender charges reduce your Policy's death benefit on a dollar for dollar basis. If the death benefit is the Minimum Amount Insured, your death benefit will be reduced by a multiple of the amount surrendered. Under death benefit Option A, we will reduce the Specified Amount and the Cash Value by the amount of the partial surrender. Under death benefit Option B, we will reduce only the Cash Value portion of the death benefit by the amount of the partial surrender. TELEPHONE TRANSACTIONS - ---------------------- You may submit requests by telephone to change your premium payment allocation, request partial surrenders, request loans, and request Transfer of Value among Variable Fund Accounts. We will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and only if we do not will we be liable for any losses because of unauthorized or fraudulent instructions. We will obtain information prior to any discussion regarding your Policy including, but not limited to: o your USAA number or Policy number, o your name, and o your Social Security number. In addition, we will record all telephone communications with you and will send confirmations of all transactions to your address. Your Policy automatically authorizes you to make telephone transactions, subject to our right to modify, suspend, or discontinue this telephone transaction privilege at any time without prior notice. When filling out your Policy application, you may decline the option of utilizing the telephone transaction privilege. DOLLAR COST AVERAGING PROGRAM - ----------------------------- The Dollar Cost Averaging Program enables you to make regular, equal investments over time into one or more of the Variable Fund Accounts, by transferring a fixed dollar amount at regular intervals from one or more other Variable Fund Accounts under the Policy. To begin the Dollar Cost Averaging Program, you must have at least $5,000 in the Variable Fund Account from which you intend to transfer value. The minimum amount you may transfer is $100, or the remaining value of the Account, if less. The transfers must be scheduled to occur over a period of at least 12 months at monthly, quarterly, or semiannual intervals, as you elect. You may select this Program by submitting a written request to our Home Office or by making a request by telephone. You may cancel your participation in this Program in the same manner. We will process transfers under the Dollar Cost Averaging Program to be effective at the Accumulation Unit Values (AUV) at the end of the Valuation Period that includes the date of the transfer. No charges apply to transfers made under the Dollar Cost Averaging Program. Also, transfers under this Program do not count against your limit on free transfers. We reserve the right to suspend, terminate, or modify the Dollar Cost Averaging Program upon providing you written notice 30 days in advance. Should we suspend or terminate the Program, the suspension or cancellation will not affect any Policy for which the Dollar Cost Averaging Program is already in effect. POSTPONEMENT OF PAYMENTS - ------------------------ We may postpone payments of partial surrenders, full surrenders, Policy loans, maturity benefits, death benefits, and Variable Fund Account transfers beyond 7 days whenever: o the New York Stock Exchange is closed, o the SEC, by order, permits postponement for the protection of Policy Owners, or o the SEC requires trading to be restricted or declares an emergency. We reserve the right to defer payment of any partial surrenders, full surrenders, Policy loans or refunds that would be derived from a premium payment made by a check until the check has cleared the banking system. - -------------------------------------------------------------------------------- Log on to USAA.COM for policy details, fund account summaries and financial activity information. - -------------------------------------------------------------------------------- - ----------------------- MORE POLICY INFORMATION - ----------------------- VUL Policy 29 OWNERS AND BENEFICIARIES - ------------------------ OWNERS If you are the Owner of the Policy, the rights and privileges of the Policy during the lifetime of the Insured belong to you. Generally, the Owner is also the Insured, unless a different Owner is designated in the application or at a later date. SUCCESSOR OWNER. As Owner, you may designate a successor Owner. If you die without designating a successor Owner, ownership of the Policy will pass to your estate. CHANGE OF OWNERSHIP. As Owner, you may change ownership of your Policy, at any time, during the Insured's lifetime, by submitting Notice to Us. The change will take effect on the Date of Receipt of the request. A change of ownership is subject to the rights of an assignee of record and those of any irrevocable Beneficiary. We are not responsible for any payments made or actions taken before we receive your Notice to Us. COLLATERAL ASSIGNMENT. As Owner, you may assign the Policy as collateral security by submitting a Notice to Us. You will need to obtain the written consent of any irrevocable Beneficiaries and assignees of record before we recognize any assignment; however, a collateral assignment takes precedence over the interest of a revocable Beneficiary. The assignment will take effect as of the date we receive your Notice to Us. We are not responsible for the validity or effect of any collateral assignment, nor are we responsible for any payment or other action taken before we receive the Notice to Us. We are not bound by an assignment until we receive it at our Home Office. We will pay any death benefit payable to an assignee in one lump sum. We will pay any remaining proceeds to the designated Beneficiary or Beneficiaries. A collateral assignee is not an Owner. A collateral assignment is not a transfer of ownership, unless it is an absolute assignment. All collateral assignees of record must consent to any full surrender, partial surrender, loan or payment from a Policy under an Accelerated Benefits for Terminal Illness Rider. There may be unfavorable tax consequences, including recognition of taxable income and the loss of income tax-free treatment for any death benefit payable to the Beneficiary. Therefore, you should consult a qualified tax advisor prior to making an assignment. BENEFICIARIES You may name one or more Beneficiaries in your Policy application. You may classify Beneficiaries as primary, contingent, revocable, or irrevocable. If no primary Beneficiary survives the Insured, we will pay the Policy proceeds to the contingent Beneficiaries. Beneficiaries in the same class will receive equal payments unless you direct otherwise. A Beneficiary must survive the Insured in order to receive his or her share of the death benefit proceeds. If a Beneficiary dies before the Insured dies, his or her unpaid share is divided among the remaining Beneficiaries of the same class who survive the Insured. If no Beneficiary survives the Insured, we will pay the proceeds to you, if you are alive, or, if not, to your estate. CHANGE OF BENEFICIARY. You may change the Beneficiary while the Insured is living, by submitting a Notice to Us. You must obtain the written consent of any irrevocable Beneficiaries before we will accept any change in Beneficiary. A change in Beneficiary will take effect on the Date of Receipt of the request. We will not be responsible for any payment or other action taken before receipt of your Notice to Us. If we make a payment of death benefits in good faith before receiving the Notice to Us, we will receive credit for the payment against our liability under the Policy. A change of Beneficiary is subject to the rights of an assignee of record. CALCULATING YOUR COST OF INSURANCE - ---------------------------------- For each Monthly Anniversary, we determine your monthly cost of insurance by multiplying (1) the net amount at risk under your Policy by (2) your cost of insurance rate, and (3) dividing the resulting amount by 1000. NET AMOUNT AT RISK We determine the net amount at risk by (1) subtracting your Policy's Cash Value on any Monthly Anniversary (prior to the application of the Monthly Deduction, including the Cost of Insurance charge) from (2) your Policy's current death benefit (divided by a factor that discounts the death benefit to the beginning of the month). Your Policy's death benefit may be the death benefit required to VUL Policy 30 qualify the Policy as life insurance. (SEE "Minimum Amount Insured.") The net amount at risk may be greater if you have selected death benefit Option B rather than death benefit Option A. SEE "Death Benefits." Since the death benefit payable under Option B is the Specified Amount plus the Cash Value, the difference between the death benefit and the Cash Value will be greater under Option B than under Option A (unless the Minimum Amount Insured applies). As the net amount at risk will be greater, so the cost of insurance also will be greater. The net amount at risk also may be affected by changes in your Policy's Cash Value or in the Specified Amount. (SEE "Cash Value" and "Death Benefits.") The net amount at risk for each Policy continues to be determined generally by subtracting the Policy's Cash Value from the Policy's death benefit (divided by a factor that discounts the death benefit to the beginning of the month), regardless of whether the death benefit is the Policy's current Specified Amount or the Minimum Amount Insured. The cost of insurance rate applied against the net amount at risk will continue to increase as the Insured's age increases. NET AMOUNT AT RISK - MORE THAN ONE RATE CLASS If you increase the Specified Amount and the rate class applicable to the increase is different from that of the initial Specified Amount, then, in determining the cost of insurance charge, we will calculate the net amount at risk separately for each rate class. The method of determining the net amount at risk for each rate class will differ between Option A and Option B. If Option A is in effect, we will apportion the Cash Value among the initial Specified Amount and any increases in Specified Amount. The Cash Value will first be considered a part of the initial Specified Amount. If the Cash Value is greater than the initial Specified Amount, the balance of the Cash Value will then be considered a part of each increase in Specified Amount, beginning with the first increase. If Option B is in effect, we will determine the net amount at risk by the proportional relationship of the initial Specified Amount and the Specified Amount increases for each new rate class to the total Specified Amount. Because the method of calculating the net amount at risk is different between Option A and Option B when more than one rate class is in effect, a change in the death benefit option may result in a different net amount at risk for each rate class than would have occurred had the death benefit option not been changed. Thus, the total cost of insurance will be increased or decreased. COST OF INSURANCE RATES Your cost of insurance rates are based on the Insured's age, sex, and rate class. Generally, we set cost of insurance rates based on our expectations as to future mortality experience. We apply any changes to cost of insurance rates to all persons of the same age, sex, and rate class. We will give you 30 days' notice before any increase in your current cost of insurance rates becomes effective. We guarantee that your cost of insurance rates will never be greater than the maximum cost of insurance rates shown in your Policy. These guaranteed rates are based on the 1980 Commissioners Standard Ordinary Mortality Table and age on the Insured's last birthday. The rate class of the Insured will affect your cost of insurance rate. USAA Life currently places Insureds into one of three preferred rate classes or into one of two standard rate classes involving higher mortality risks. In an otherwise identical Policy, Insureds in the preferred rate class will have a lower cost of insurance rate than those in a standard rate class. We make all final determinations of an Insured's rate class. MINIMUM AMOUNT INSURED - ---------------------- The Minimum Amount Insured is the amount of insurance proceeds that the Internal Revenue Code requires for your Policy to qualify as life insurance and to exclude the death benefit from your Beneficiary's taxable income. If higher than the death benefit under Option A or Option B, we will pay you the Minimum Amount Insured. You can determine the Minimum Amount Insured by multiplying your Policy's Cash Value (ignoring the amount of any outstanding loan and any unpaid loan interest) by a specified percentage based on the Insured's age. The specified percentages, which generally decline as the Insured gets older, are: - -------------------------------------------------------------------------------- MINIMUM AMOUNT INSURED AS A PERCENTAGE OF CASH VALUE - -------------------------------------------------------------------------------- VUL Policy 31 - -------------------------------------------------------------------------------- INSURED'S 40 or 95 and AGE* Under 45 50 55 60 65 70 75 to 90 older PERCENTAGE 250% 215% 185% 150% 130% 120% 115% 105% 100% - -------------------------------------------------------------------------------- * Last birthday at the beginning of the Policy Year. A more complete table appears in your Policy. If, prior to the Insured's death, unexpected increases in your Policy's Cash Value would cause your Policy not to satisfy Internal Revenue Code requirements, we will increase the death benefit to the Minimum Amount Insured so that the death benefit will be excluded from the Beneficiary's taxable income. - ----------------- OTHER INFORMATION - ----------------- USAA LIFE - --------- USAA Life is a stock insurance company incorporated in the State of Texas on June 24, 1963. USAA Life is principally engaged in writing life insurance policies, health insurance policies, and annuity contracts. USAA Life is authorized to transact insurance business in all states of the United States (except New York) and the District of Columbia. On a consolidated basis prepared in conformity with accounting principles generally accepted in the United States of America, USAA Life had total assets of $10,376,573,000 on December 31, 2002. USAA Life is a wholly-owned stock subsidiary of USAA, a diversified financial services organization. The commitments under the Policies are USAA Life's, and USAA has no legal obligation to back those commitments. USAA Life is obligated to pay all amounts promised to Policy owners under the Policies. USAA Life is the depositor administering the Separate Account. USAA Life's obligations as depositor of the Separate Account may not be transferred without notice to and consent of the Owners. USAA Life also issues variable annuity contracts through another separate account, which is also a registered investment company. In addition, USAA Life serves as transfer agent of the USAA Life Investment Trust. SEPARATE ACCOUNT - ---------------- By a resolution of the Board of Directors of USAA Life, we established the Separate Account as a separate account on January 20, 1998. The Separate Account is organized as a unit investment trust and registered with the SEC under the Investment Company Act of 1940. Registration does not involve supervision of the management of the Separate Account by the SEC. The assets of the Separate Account are the property of USAA Life and are held for the benefit of the Owners and other persons entitled to payments under Policies issued through the Separate Account. The assets of the Separate Account equal to the reserves and other liabilities of the Separate Account are not chargeable with liabilities that arise from any other business which USAA Life may conduct. The Separate Account is divided into Variable Fund Accounts, each representing a different investment objective. Net Premium Payments are allocated to the Variable Fund Accounts in accordance with your instructions. (SEE "Investment Options.") Each Variable Fund Account invests exclusively in the shares at the Net Asset Value (NAV) of a Fund. Income and gains and losses from assets in each Variable Fund Account are credited to, or charged against, that Variable Fund Account without regard to income, gains, or losses in the other Variable Fund Accounts. TAX MATTERS - ----------- The following is a discussion of certain federal income tax matters affecting your ownership of a Policy. The discussion is general in nature, does not purport to be complete or to cover all situations, and should not be considered tax advice, for which you should consult a qualified tax advisor. The particular situation of each Owner or Beneficiary will determine how ownership or receipt of Policy proceeds will be treated for purposes of the federal estate tax, state inheritance tax and other taxes. TAXATION OF POLICY PROCEEDS The following discussion is based on current federal tax law and interpretations. It assumes that the Owner is a natural person who is a U.S. citizen and resident. The tax effects on non-U.S. residents or non-U.S. citizens may be different. VUL Policy 32 GENERAL. A Policy will be treated as a "life insurance contract" for federal tax purposes (a) if it meets the definition thereof under Section 7702 of the Internal Revenue Code (the "Code") and (b) for as long as the investments made by the underlying Funds in which Premium Payments under the Policy are invested satisfy certain investment diversification requirements under Section 817(h) of the Code. We believe that the Policies will meet these requirements and that: o the death benefit received by the Beneficiary under your Policy will not be subject to federal income tax; and o increases in your Policy's Cash Value as a result of investment experience will not be subject to federal income tax unless and until there is a distribution from your Policy, such as a surrender or a partial surrender. The federal tax consequences of a distribution from or loan under your Policy can be affected by whether your Policy is determined to be a "modified endowment contract ("MEC")" (which is discussed below). In all cases, however, the character of all income that is described below as taxable to the payee will be ordinary income (as opposed to capital gain). TESTING FOR MODIFIED ENDOWMENT CONTRACT (MEC) STATUS. Your Policy will be a MEC if, at any time during the first seven Policy Years, you have paid a cumulative amount of premiums that exceeds the premiums that would have been paid by that time under a similar fixed-benefit insurance policy that was designed (based on certain assumptions mandated under the Code) to provide for paid-up future benefits after the payment of seven level annual premiums. This is called the "seven-pay" test. Whenever there is a "material change" under a Policy, the Policy will generally be (1) treated as a new contract for purposes of determining whether the Policy is a MEC and (2) subject to a new seven-pay period and a new seven-pay limit. The new seven-pay limit would be determined taking into account, under a prescribed formula, the accumulation value of the Policy at the time of such change. A materially changed Policy would be considered a MEC if it failed to satisfy the new seven-pay limit. A material change for these purposes could occur as a result of a change in death benefit option, the selection of additional rider benefits, an increase in your Policy's Specified Amount of coverage, and certain other changes. If your Policy's benefits are reduced during the first seven Policy Years (or within seven years after a material change), the calculated seven-pay premium limit will be redetermined based on the reduced level of benefits and applied retroactively for purposes of the seven-pay test. (Such a reduction in benefits could include, for example, a decrease in the Specified Amount you request or, in some cases, a partial surrender or termination of additional benefits under a rider.) If the premiums previously paid are greater than the recalculated seven-pay premium level limit, the Policy will become a MEC. A life insurance policy that is received in exchange for a MEC will also be considered a MEC. OTHER EFFECTS OF POLICY CHANGES. Changes made to your Policy (for example, a decrease in benefits or a lapse or reinstatement of your Policy) may have other effects on the Policy. Such effects may include impacting the maximum amount of premiums that can be paid under your Policy, as well as the maximum amount of accumulation value that may be maintained under your Policy. TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT CONTRACT (MEC). As long as your Policy remains in force during the Insured's lifetime as a non-MEC, a Policy loan will be treated as Indebtedness and not a distribution, and no part of the loan proceeds will be subject to current federal income tax. Interest on the loan generally will not be tax deductible. After the first 15 Policy Years, the proceeds from a partial surrender will be subject to federal income tax only to the extent they exceed your "basis" in your Policy. (Your basis generally will equal the premiums you have paid, less the amount of any previous distributions from your Policy that were not taxable.) During the first 15 Policy Years, the proceeds from a partial surrender or a reduction in insurance coverage could be subject to federal income tax, under a complex formula, to the extent that your Cash Value exceeds your basis in your Policy. On the Maturity Date or upon full surrender, any excess of the proceeds we pay (including amounts we use to discharge any Policy loan) over your basis in the Policy will be subject to federal income tax. In addition, if a Policy terminates after a grace period while there is a Policy loan, the cancellation of such loan and accrued loan interest will be treated as a distribution and could be subject to tax under the above rules. Finally, if you make an VUL Policy 33 assignment of rights or benefits under your Policy, you may be deemed to have received a distribution from the Policy, all or part of which may be taxable. TAXATION OF PRE-DEATH DISTRIBUTIONS IF YOUR POLICY IS A MODIFIED ENDOWMENT CONTRACT (MEC). If your Policy is a MEC, any distribution from your Policy during the Insured's lifetime will be taxed on an "income-first" basis. Distributions for this purpose include (1) loan proceeds (including any increase in the loan amount to pay interest on an existing loan or an assignment or a pledge to secure a loan) or (2) partial surrender. Any such distributions will be considered taxable income to you to the extent your Cash Value exceeds your basis in the Policy. (For MECs, your basis is similar to the basis described above for other Policies, except that it also would be increased by the amount of any prior loan under your Policy that was considered taxable income to you.) For purposes of determining the taxable portion of any distribution, all MECs issued by the same insurer (or its affiliate) to the same owner (excluding certain qualified plans) during any calendar year are aggregated. The U.S. Treasury Department has authority to prescribe additional rules to prevent avoidance of "income-first" taxation on distributions from MECs. A 10% penalty will apply to the taxable portion of most distributions from a Policy that is a MEC. The penalty will not, however, apply to distributions (1) to taxpayers 59 1/2 years of age or older, (2) in the case of a "disability" (as defined in the Code), or (3) received as part of a series of substantially equal periodic annuity payments for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his or her Beneficiary. If your Policy terminates after a grace period while there is a Policy loan, the cancellation of such loan will be treated as a distribution to the extent not previously treated as such and could be subject to federal income tax, including the 10% penalty, as described above. In addition, on the Maturity Date and upon a full surrender, any excess of the proceeds we pay (including any amounts we use to discharge any loan) over your basis in the Policy will be subject to federal income tax and, unless an exception applies, the 10% penalty. Distributions that occur during a Policy Year in which your Policy becomes a MEC, and during any subsequent Policy Years, will be taxed as described in the two preceding paragraphs. In addition, distributions from a Policy within two years before it becomes a MEC also will be subject to tax in this manner. This means that a distribution made from a Policy that is not a MEC could later become taxable as a distribution from a MEC. The Treasury Department has been authorized to prescribe rules that would treat similarly other distributions made in anticipation of a Policy becoming a MEC. POLICY LAPSES AND REINSTATEMENTS. A Policy that has lapsed may have the tax consequences described above, even though you may be able to reinstate that Policy. For tax purposes, some reinstatements may be treated as the purchase of a new life insurance contract. TERMINAL ILLNESS RIDER. Amounts received under an insurance policy on the life of an individual who is "terminally ill," as defined by the Code, are generally excludable from the payee's gross income. We believe that the benefits provided under our terminal illness rider meet the Code's definition of terminally ill and can qualify for this income tax exclusion. This exclusion does not apply, however, to amounts paid to someone other than the Insured, if the payee has an insurable interest in the Insured's life because the Insured is a director, officer or employee of the payee or by reason of the Insured's being financially interested in any trade or business carried on by the payee. DIVERSIFICATION. Under Section 817(h) of the Code, the Treasury Department has issued regulations that implement investment diversification requirements for insurance company separate accounts - for these purposes, each Variable Fund Account is treated as a separate account. Failure to comply with these regulations would disqualify your Policy as a life insurance contract for federal tax purposes. If this occurred, you would be subject to federal income tax on the income under the Policy for the period of the disqualification and all subsequent periods. Each Variable Fund Account, through the underlying Fund in which it invests, intends to continue to comply with these requirements. In connection with the issuance of the diversification regulations in 1986, the Treasury Department stated that guidance would be provided concerning the circumstances in which an insurance policy owner's control of a separate account's investments may cause that owner, rather than the insurance company, to be treated as owning the assets in the account. If you (rather than USAA Life) were considered the owner of the Separate Account's assets attributable to your Policy, income and gains from the account would be included in your gross income currently for federal income tax purposes. USAA Life reserves the right to amend the Policies in any way necessary to avoid any such result. As of the date of this Prospectus, no such guidance has been issued, although the Treasury Department VUL Policy 34 has informally indicated that any such guidance could limit the number of investment funds or the frequency of transfers among such funds. These guidelines may apply only prospectively, although retroactive application is possible if such standards are considered not to embody a new position. FEDERAL ESTATE AND GENERATION-SKIPPING TAXES. If the Insured is the Policy Owner, the death benefit under the Policy will be includable in the Owner's estate for federal estate tax purposes. If the Owner is not the Insured, under certain conditions only an amount approximately equal to the cash surrender value of the Policy would be so includable. In general, taxable estates of less than $1,000,000 for decedents dying during 2003 (increasing incrementally to $3,500,000 in 2009) ("exclusion amount") will not incur a federal estate tax liability. In addition, an unlimited marital deduction is available for federal estate tax purposes. As a general rule, if a "transfer" of property is made to a person two or more generations younger than the donor, a federal tax is payable at rates similar to the maximum federal estate tax rate in effect at the time. The generation-skipping tax provisions generally apply to "transfers" that would be subject to the federal estate tax rules. Individuals are generally allowed an aggregate generation-skipping tax exemption of $1,100,000 for 2003, and thereafter an exemption equal to the exclusion amount. Because these rules are complex, you should consult with a qualified tax advisor for specific information, especially where benefits are passing to younger generations. If the Owner of the Policy is not the Insured, and the Owner dies before the Insured, the value of the Policy, as determined for federal estate tax purposes, is includable in the federal gross estate of the Owner for those purposes. PENSION AND PROFIT-SHARING PLANS. If Policies are purchased by a trust that forms part of a pension or profit-sharing plan qualified under Section 401(a) of the Code (a "plan") for the benefit of participants covered under the plan, the federal income tax treatment of such Policies will be somewhat different from that described above. If insurance is purchased for a participant as part of a plan, the reasonable net annual premium cost for such insurance is treated as ordinary income to the participant. The amount so treated is the lower of the IRS "P.S. 58" table cost or the life insurance company's actual rates for standard risks. If the plan participant dies while covered by the plan and the Policy proceeds are paid to the participant's Beneficiary, then the excess of the death benefit over the Policy's Cash Value will not be subject to federal income tax. However, the Policy's Cash Value will generally be taxable to the extent it exceeds the participant's cost basis in the Policy, which will generally include the costs of insurance previously taxable as income to the participant. Special rules may apply if the participant had borrowed from the Policy or was an owner-employee under the plan. There are limits on the amounts of life insurance that may be purchased on behalf of a participant in a plan. Complex rules, in addition to those discussed above, apply whenever life insurance is purchased by a plan. You should consult a qualified tax advisor. OTHER EMPLOYEE BENEFIT PROGRAMS. Complex rules may also apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of other employee benefits. These Policy Owners must consider whether the Policy was applied for by or issued to a person having an insurable interest under applicable state law and with the Insured person's consent. The lack of an insurable interest or consent may, among other things, affect the qualification of the Policy as life insurance for federal tax purposes and the right of the Beneficiary to receive a death benefit. ERISA. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974. You should consult a qualified legal advisor. WHEN WE WITHHOLD INCOME TAXES. Generally, unless you provide us with an election to the contrary before we make the distribution, we are required to withhold income tax from any proceeds we distribute as part of a taxable transaction under your Policy. In some cases, where generation-skipping taxes may apply, we may also be required to withhold for such taxes unless we are provided satisfactory written notification that no such taxes are due. TAX CHANGES. The U.S. Congress frequently considers legislation that, if enacted, could change the tax treatment of life insurance policies. In addition, the Treasury Department may amend existing regulations, issue regulations on the qualification of life insurance and MECs, or adopt new interpretations of existing law. VUL Policy 35 State and local tax laws or, if you are not a U.S. citizen or resident, foreign tax laws, may also affect the tax consequences to you, the Insured, or your Beneficiary, and are subject to change. Any changes in federal, state, local, or foreign tax law or interpretation could have a retroactive effect. We suggest you consult a qualified tax advisor. TAXATION OF USAA LIFE USAA Life is taxed as a life insurance company under the Code. USAA Life does not initially expect to incur any federal income tax liability on the earnings or the realized capital gains attributable to any Variable Fund Account. If, in the future, USAA Life determines that a Variable Fund Account may incur federal income tax, then we may assess a charge against the Variable Fund Accounts for that tax. Any charge will reduce the Policy's Cash Value. We may have to pay state, local, or other taxes in addition to applicable taxes based on premiums. At present, these taxes are not substantial. If they increase, we may make charges for such taxes when they are attributable to the Separate Account or allocable to the Policies. LEGAL PROCEEDINGS - ----------------- USAA LIFE, LIKE OTHER LIFE INSURANCE COMPANIES, IS INVOLVED IN LAWSUITS, INCLUDING CLASS ACTION LAW SUITS. IN SOME CLASS ACTION AND OTHER LAWSUITS INVOLVING INSURERS, SUBSTANTIAL DAMAGES HAVE BEEN SOUGHT AND/OR MATERIAL SETTLEMENT PAYMENTS HAVE BEEN MADE. ALTHOUGH THE OUTCOME OF ANY LITIGATION CANNOT BE PREDICTED WITH CERTAINTY, USAA LIFE BELIEVES THAT, AS OF THE DATE OF THIS PROSPECTUS, THERE ARE NO PENDING OR THREATENED LAWSUITS THAT WILL HAVE A MATERIALLY ADVERSE IMPACT ON USAA LIFE OR THE SEPARATE ACCOUNT. FINANCIAL STATEMENTS - -------------------- The financial statements for the Separate Account and USAA Life appear in the SAI. To obtain a copy of the SAI, call us at 1-800-531-2923. You should consider our financial statements only as bearing on our ability to meet our obligations under the Contracts. Our financial statements do not bear on the investment performance of the Separate Account. - ----------- DEFINITIONS - ----------- IN THIS PROSPECTUS: - ------------------- ACCUMULATION UNIT or UNIT means an accounting unit of measure that we use to calculate values in each Variable Fund Account. The value of one unit is known as the Accumulation Unit Value ("AUV"). ADMINISTRATIVE CHARGE means a monthly charge deducted from the Policy's Cash Value during the first Policy Year only. The Administrative Charge compensates us for the start-up expenses we incur in issuing the Policy. The Administrative Charge is shown on the Policy Information Page. ANNIVERSARY means the same date each succeeding year as the Effective Date of the Policy. ANNUAL TARGET PREMIUM PAYMENT means an annual amount of premium payment that we establish when we issue your Policy. It is shown on the Policy Information Page. We use it to determine whether a premium charge will be deducted from premium payments, whether a surrender charge is imposed on a full surrender, and whether the Guaranteed Death Benefit applies. BENEFICIARY means the person or entity designated to receive the death benefit upon the Insured's death. CASH SURRENDER VALUE means your Policy Cash Value less the surrender charge, if any, payable on full surrender of your Policy. CASH VALUE, on the Effective Date, means the Net Premium less the Monthly Deduction for the following month. Thereafter, on any Valuation Date, Cash Value means the sum of: o your Policy's value that you invest in the Variable Fund Accounts; o plus, if applicable, any value that is held in USAA Life's general account to secure any Policy loan; VUL Policy 36 o plus any interest earnings we credit on the value held in the general account; o less the amount of any outstanding loan including any unpaid loan interest; and o less any Monthly Deductions, transfer charges, and partial surrender charges we apply through that date. DATE OF RECEIPT means the date we actually receive the item at our Home Office, subject to two exceptions: o IF WE RECEIVE THE ITEM ON A DATE OTHER THAN A VALUATION DATE, THE DATE OF RECEIPT WILL BE THE FOLLOWING VALUATION DATE; AND o if we receive the item on a Valuation Date after close of regular trading of the New York Stock Exchange, the Date of Receipt will be the following Valuation Date. DEATH BENEFIT means the benefit we pay in accordance with the death benefit option in effect on the Insured's death (1) reduced by any Indebtedness and any due and unpaid Monthly Deductions; and (2) increased by any optional insurance benefits provided by rider. DEATH BENEFIT OPTION means one of the two death benefit options that the Policy provides, namely, Option A and Option B. Option A is the greater of the current Specified Amount or the Minimum Amount Insured. Option B is the greater of the current Specified Amount, plus the Policy's Cash Value, or the Minimum Amount Insured. EFFECTIVE DATE means the date we approve the application and issue your Policy or the date we approve any increase in Specified Amount under your Policy. The Effective Date is shown on the Policy Information Page. FREE LOOK PERIOD means the period of time required by state law during which you may return the Policy for cancellation and receive a refund. The Free Look Period is shown on the Policy Information Page. You may cancel your Policy within 10 days of receipt (or a longer period depending on where you reside). Your initial premium payment allocated to any of the Variable Fund Accounts is invested in the Vanguard Money Market Portfolio Variable Fund Account during the Free Look Period plus 5 calendar days. (SEE "Free Look Right.") FUND means an investment portfolio that has specific investment objectives and policies and is offered by a mutual fund. GUARANTEED DEATH BENEFIT means that if you pay a sufficient amount of premium, we guarantee your Policy will not lapse during the first 5 Policy Years. HOME OFFICE means USAA Life Insurance Company, USAA Building, 9800 Fredericksburg Road, San Antonio, Texas 78288. INDEBTEDNESS means the sum of all unpaid Policy loans and any unpaid accrued interest due on such loans. INSURED means the person whose life is insured. The Insured is identified on the Policy Information Page. The Insured may or may not be the Owner. LAPSE means your Policy has terminated because of insufficient Cash Value from which to deduct the Monthly Deduction and any loan interest then due. No insurance coverage exists when your Policy has lapsed. MAINTENANCE CHARGE means a monthly charge that we deduct from the Policy's Cash Value. The Maintenance Charge compensates us for recurring administrative expenses related to the maintenance of the Policy and the Separate Account. The Maintenance Charge is shown on the Policy Information Page. MATURITY DATE means the date that we will pay your Policy's Cash Value to you, as long as the Policy has not terminated because of lapse, full surrender, or the Insured's death. The Maturity Date is shown on the Policy Information Page. MONTHLY ANNIVERSARY means the same date of each succeeding month as the Effective Date of your Policy. MONTHLY DEDUCTION means a charge we make under your Policy each month against the Policy's Cash Value. The charge is equal to: o the cost of insurance and any riders; plus VUL Policy 37 o the Administrative Charge that is applied during the first 12 months that the Policy is in effect; plus o the Maintenance Charge. MINIMUM AMOUNT INSURED means the minimum amount of life insurance required by the Internal Revenue Code to qualify your Policy as life insurance and to exclude the death benefit from a Beneficiary's taxable income. NET ASSET VALUE ("NAV") means the current value of each Fund's total assets, less all liabilities, divided by the total number of shares outstanding. NET PREMIUM PAYMENT means the amount of a premium payment less the Policy's premium charge. NOTICE TO US means your signed statement that we receive at our Home Office and that is in a form satisfactory to us. OWNER means the person to whom we owe the rights and privileges of the Policy. POLICY INFORMATION PAGE means the page that identifies certain information about the Policy and specifies certain terms of the Policy. POLICY YEAR means a period of 12 calendar months starting with the Effective Date of the Policy, and each 12-month period thereafter. For example, if your Policy was issued on July 15, your first Policy Year would end on the following July 14. Each subsequent Policy Year would start on July 15 and end on July 14. PREMIUM CHARGE means an amount that we deduct from premium payments to compensate us for sales charges and taxes related to the Policy. SEPARATE ACCOUNT means the Life Insurance Separate Account of USAA Life Insurance Company. The Separate Account is an investment account established under Texas law through which we invest the Net Premium Payments we receive for investment in the Variable Fund Accounts under the Policy. The Separate Account is divided into subdivisions called the Variable Fund Accounts. Each Variable Fund Account invests the Net Premium Payments allocated to it in a particular Fund. We own the assets of the Separate Account. To the extent that the assets are equal to the reserves and other contractual liabilities, they are not chargeable with liabilities arising out of any other business of ours. We credit or charge the income, gains, and losses, realized or unrealized, from the assets of the Separate Account to or against the Separate Account without regard to our other income, gains or losses. We registered the Separate Account as an investment company under federal securities law. SPECIFIED AMOUNT means the minimum death benefit payable as long as the Policy is in effect. It is also the amount of life insurance we issue. The specified amount is shown on the Policy Information Page. SURRENDER CHARGE means an amount that we may deduct from your Policy's Cash Value if you surrender your Policy in full. VALUATION DATE means any business day, Monday through Friday, on which the New York Stock Exchange is open for regular trading, except o any day on which the value of the shares of a Fund is not computed, or o any day during which no order for the purchase, surrender or transfer of Accumulation Units is received. VALUATION PERIOD means the period of time from the end of any Valuation Date to the end of the next Valuation Date. VARIABLE FUND ACCOUNT means a subdivision of the Separate Account in which you may invest Net Premium Payments. The Policy provides several Variable Fund Accounts. Each Variable Fund Account corresponds to a particular Fund. Net Premium Payments that you allocate to a Variable Fund Account are invested in a particular Fund. We also refer to the Variable Fund Accounts as Accounts in this Prospectus. WE, OUR, US, OR USAA LIFE means USAA Life Insurance Company. VUL Policy 38 YOU, YOUR OR YOURS refers to the Owner of the Policy. VUL Policy 39 STATEMENT OF ADDITIONAL INFORMATION - ----------------------------------- A Statement of Additional Information, with the same date as this prospectus, containing further information about the Life Insurance Separate Account of USAA Life Insurance Company and the Variable Universal Life Insurance Policy is available from us upon request. It has been filed with the SEC and is incorporated by reference into this prospectus. In addition, you may order a personalized illustration of death benefits, cash surrender values, and Cash Values, without charge, from us. To request a Statement of Additional Information, a personalized illustration or any information about your Policy call us at 1-800-531-2923 or write to us at 9800 Fredericksburg Road, San Antonio, TX 78288. Information about the Life Insurance Separate Account of USAA Life Insurance Company (including the Statement of Additional Information) can be reviewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC or at the SEC's website, HTTP://WWW.SEC.GOV. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, 450 Fifth Street, NW, Washington, DC, 20549-0102. You can also call the SEC at 1-202-942-8090. We have not authorized anyone to give any information or make any representations other than those contained in this Prospectus, the Statement of Additional Information or other material filed with the SEC (or any sales literature we approve) in connection with the offer of the Policies described in this prospectus. You may not rely on any such information or representations, if made. This Prospectus does not constitute an offer in any jurisdiction to any person to whom such offer would be unlawful. The table of contents for the Statement of Additional Information is as follows: Additional Information About Operation of Policies and Separate Account Special Considerations State Regulation of USAA Life Underwriters Performance Data Illustrations Legal Matters Independent Auditors Financial Statements INVESTMENT COMPANY ACT FILE NUMBER 811-08625 VUL Policy 40 Life Insurance Separate Account of USAA Life Insurance Company (Registrant) USAA Life Insurance Company (Depositor) 9800 Fredericksburg Road San Antonio, Texas 78288 1-800-531-2923 STATEMENT OF ADDITIONAL INFORMATION VARIABLE UNIVERSAL LIFE INSURANCE POLICY May 1, 2003 This Statement of Additional Information ("SAI") contains additional information regarding the Variable Universal Life Insurance Policy (the "Policy") offered by USAA Life Insurance Company. This SAI is not a prospectus, and should be read together with the prospectus for the Policy dated May 1, 2003 and the prospectuses for the Funds. You may obtain a copy of these prospectuses by calling us at 1-800-531-2923 or by writing to us at the address above. - -------------------------------------------------------------------------------- TABLE OF CONTENTS ADDITIONAL INFORMATION ABOUT OPERATION OF POLICIES AND SEPARATE ACCOUNT......2 THE POLICIES..............................................................2 INCONTESTABILITY..........................................................2 MISSTATEMENT OF AGE OR SEX................................................2 SUICIDE EXCLUSION.........................................................2 NONPARTICIPATING POLICY...................................................3 REPORTS AND RECORDS.......................................................3 SPECIAL CONSIDERATIONS.......................................................3 STATE REGULATION OF USAA LIFE................................................3 UNDERWRITERS.................................................................4 PERFORMANCE DATA.............................................................4 ILLUSTRATIONS................................................................5 LEGAL MATTERS................................................................5 INDEPENDENT AUDITORS.........................................................5 FINANCIAL STATEMENTS.........................................................5 VUL SAI 1 ADDITIONAL INFORMATION ABOUT OPERATION OF POLICIES AND SEPARATE ACCOUNT - ----------------------------------------------------------------------- THE POLICIES The Policy is a legal contract between you and us. The consideration for issuing the Policy is: o completion of the application, and o payment of the first full premium. The entire contract consists of: o your Policy, o your Policy application, and o any supplemental applications, riders, endorsements, and amendments. WE WILL CONSIDER STATEMENTS IN THE APPLICATION AS REPRESENTATIONS AND NOT WARRANTIES. WE WILL NOT USE ANY REPRESENTATION TO VOID YOUR POLICY OR DEFEND A CLAIM UNDER YOUR POLICY UNLESS IT IS CONTAINED IN YOUR WRITTEN APPLICATION OR SUPPLEMENTAL APPLICATION. ONLY THE PRESIDENT OR SECRETARY OF USAA LIFE HAS AUTHORITY TO CHANGE OR WAIVE A PROVISION OF YOUR POLICY, AND THEN ONLY IN WRITING. All requests for changes to your Policy must be clear and in writing, and must be received by our Home Office. This Policy is subject to the laws of the state where it is issued. To the extent that the Policy may not comply, it will be interpreted and applied to comply. INCONTESTABILITY We will not contest a Policy, or any increase in Specified Amount, except for lapse or fraud, after the Policy or increase has been in effect during the Insured's lifetime for 2 years. Each increase in the Specified Amount will have its own 2-year contestable period beginning with the Effective Date of the increase. During any 2-year contestable period, we have the right to contest the validity of your Policy based on material misstatements made in the application or any supplemental application. The 2-year contestable period begins on the Effective Date of your Policy, or, in the case of an increase, on the date the increase is approved and made effective. If your Policy is reinstated after lapse, a new 2-year contestable period begins on the date of reinstatement. If the Policy has been in force for 2 years during the lifetime of the Insured, it will be contestable only as to statements made in the reinstatement application. If the Policy has been in force for less than 2 years, it will be contestable as to statements made in any reinstatement applications as well as the initial application. The incontestability provisions do not apply to optional insurance benefits added to your Policy by rider. Each rider contains its own incontestability provision. If we contest and rescind your Policy, you will receive your premiums paid, less any Indebtedness and any previous partial surrenders. MISSTATEMENT OF AGE OR SEX Age means the Insured's age on his or her last birthday. If the Insured's age or sex has been misstated on the application or any supplemental application, we will adjust the Cash Value and death benefit to those based on the correct Monthly Deductions, based on the correct age or sex, since the Policy's Effective Date. SUICIDE EXCLUSION Your Policy does not cover suicide by the Insured, while sane or insane, during an exclusion period after the Policy's Effective Date. This exclusion period is generally 2 years from the Policy's Effective Date but may vary by state. If the Insured commits suicide during this period, our sole liability will be to refund all premiums paid, less any Indebtedness and previous partial surrenders. We will not pay any death benefit in those circumstances. If your Policy lapses and is later reinstated, we will measure the 2-year suicide exclusion period from the Effective Date of reinstatement. If you increase your Policy's Specified Amount, we will measure the 2-year suicide exclusion period for the increase from the increase's Effective Date. If the Insured dies as a result of suicide (whether sane or insane) during the separate 2-year suicide exclusion period, we will only pay the death benefit attributable to the initial Specified Amount (on which the 2-year suicide exclusion period has expired). We will refund the premium payments less any Indebtedness and any partial surrenders attributable to the increase in the Specified Amount. VUL SAI 2 NONPARTICIPATING POLICY YOUR POLICY IS "NONPARTICIPATING," WHICH MEANS YOU WILL NOT SHARE IN ANY OF OUR PROFITS OR SURPLUS EARNINGS. WE WILL NOT PAY DIVIDENDS ON YOUR POLICY. REPORTS AND RECORDS We will maintain all records relating to the Policy and the Separate Account. We will mail to you a Policy annual statement showing: o the amount of death benefit; o the Cash Value; o any Indebtedness; o any loan interest charge; o any loan repayment since the last annual statement; o any partial surrender since the last annual statement; o all premium payments since the last annual statement; o all deductions and charges since the last annual statement; and o other pertinent information required by any applicable law or regulation, or that we deem helpful to you. We will mail the statement within 30 days after the Policy's anniversary, or, at our discretion, within 30 days after the end of each calendar year showing information as of a date not more than 60 days prior to the mailing of the annual statement. We also will send you periodic reports for the Funds that correspond to the Variable Fund Accounts, periodic reports for the Separate Account, and any other information, as required by state and federal law. We will mail confirmation notices (or other appropriate notification) promptly at the time of the following transactions: o Policy issue; o receipt of premium payments; o transfers among Variable Fund Accounts; o change of premium allocation; o change of death benefit option; o increases or decreases in Specified Amount; o partial surrenders; o receipt of loan repayments; and o reinstatement. SPECIAL CONSIDERATIONS - ---------------------- The Funds managed by the Vanguard Group, Fidelity Management & Research Company, Deutsche Investment Management Americas, Fred Alger Management, Barrow Hanley Mewhinney & Strauss, Granahan Investment Management, Grantham Mayo Van Otterloo & Co., Schroder Investment Management, Marsico Capital Management, MFS Investment Management, and Wellington Management may offer shares to separate accounts of unaffiliated life insurance companies to fund benefits under variable annuity contracts and variable life insurance policies. The Funds managed by USAA Investment Management Company ("USAA IMCO") offer shares only to our separate accounts to fund benefits under the Policies and the variable annuity contracts that we offer. The boards of directors or trustees of these Funds monitor for possible conflicts among separate accounts buying shares of the Funds. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, a Fund's board of directors or trustees may require a separate account to withdraw its participation in a Fund. A Fund's Net Asset Value (NAV) could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict. STATE REGULATION OF USAA LIFE USAA Life, a stock life insurance company organized under the laws of Texas, is subject to regulation by the Texas Department of Insurance. An annual statement is filed with the Texas Department of Insurance on or before March 1st of each year covering the operations and reporting on the financial condition of USAA Life as of December 31 of the preceding year. Periodically, the Commissioner of Insurance examines the liabilities and reserves of USAA Life and the Separate Account and certifies their adequacy. VUL SAI 3 In addition, USAA Life is subject to the insurance laws and regulations of all other states and jurisdictions where it is licensed. Generally, the Insurance Department of any other state applies the laws of the state of Texas in determining USAA Life's permissible investments. UNDERWRITERS - ------------ We intend to sell the Policy in all states in which we are licensed and the District of Columbia. USAA IMCO, located at 9800 Fredericksburg Road, San Antonio, Texas 78288, is the principal underwriter distributing the Policy. USAA IMCO, a Delaware corporation, organized in May 1970, is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is an active member of the National Association of Securities Dealers, Inc. USAA IMCO is a wholly owned subsidiary of USAA and is an affiliate of USAA Life. The Policy will be sold by licensed life insurance sales representatives who are also registered representatives of USAA IMCO. These licensed insurance sales representatives are salaried employees of USAA Life and receive neither direct nor indirect commissions nor any renewal commissions from the sale of the Policies. The Policies are sold and premium payments are accepted on a continuous basis. USAA IMCO serves as principal underwriter for the Policies pursuant to an amended and restated Distribution and Administration Agreement with USAA Life dated March 30, 1998. Pursuant to this agreement, USAA Life bears the cost of the salaries of the sales representatives who sell the Policies and substantially all other distribution expenses of the Policies. USAA IMCO receives no commission for serving as principal underwriter of the Policies. The agreement terminates upon its assignment or upon at least 60 days notice by either party. USAA IMCO serves as both principal underwriter and investment adviser for the following registered investment companies: USAA Tax Exempt Fund, Inc., USAA Investment Trust, USAA State Tax-Free Trust, USAA Mutual Fund, Inc., and USAA Life Investment Trust. In addition, USAA IMCO serves as principal underwriter for the Separate Account of USAA Life, a registered investment company. PERFORMANCE DATA - ---------------- From time to time, we may quote performance information for the Variable Fund Accounts of the Separate Account in advertisements, sales literature, or reports to Owners or prospective investors. We may quote performance information in any manner permitted under applicable law. We may, for example, present such information as a change in a hypothetical Owner's Cash Value or death benefit. We also may present the yield or total return of the Variable Fund Accounts based on a hypothetical investment in a Policy. The performance information shown may cover various periods of time, including periods beginning with the commencement of the operations of the Variable Fund Account or the Fund in which it invests. The performance information shown may reflect the deduction of only some of the applicable charges to the Policy. We may, for example, exclude the deduction of one or more charges, such as the premium charge or surrender charge, and we generally expect to exclude cost of insurance charges because of the individual nature of these charges. The "yield" of a Variable Fund Account refers to the income generated by an investment in the Variable Fund Account over the period specified in the advertisement, excluding realized and unrealized capital gains and losses in the corresponding fund's investments. This income is then "annualized" and shown as a percentage of the investment. We also may advertise the "effective yield" of the Vanguard Money Market Portfolio Variable Fund Account, which is calculated similarly, but, when annualized, the income earned by an investment in the Vanguard Money market Portfolio Variable Fund Account is assumed to be reinvested. The "effective yield" will be slightly higher than the "yield" because of the compounding effect of this assumed reinvestment. The "total return" of a Variable Fund Account is the total change in value of an investment in the Variable Fund Account over a period of time specified in the advertisement. "Average annual total return" is the rate of return that would produce that change in value over the specified period, if compounded annually. "Cumulative total return" is the total return over the entire specified period expressed as a percentage. Neither yield nor total return figures reflect deductions for Policy charges such as the premium charge, surrender charges, administrative and maintenance fees, and cost of insurance charges. Yield and total return figures would be lower if Policy charges were included. We may compare a Variable Fund Account's performance to that of other variable life separate accounts or investment products, as well as to generally accepted indices or analyses, such as those provided by research firms VUL SAI 4 and rating services. In addition, we may use performance ratings that may be reported periodically in financial publications, such as MONEY MAGAZINE, FORBES, BUSINESS WEEK, FORTUNE, FINANCIAL PLANNING, and THE WALL STREET JOURNAL. We also may advertise ratings of USAA Life's financial strength or claims-paying ability as determined by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. We may from time to time provide advertisements, sales literature or tools to assist you in choosing your investment options by defining your asset allocation strategy and appropriate risk tolerance. Performance information for any Variable Fund Account reflects the performance of a hypothetical Policy and are not illustrative of how actual investment performance would affect the benefits under your Policy. Therefore, you should not consider such performance information to be an estimate or guarantee of future performance. ILLUSTRATIONS - ------------- Illustrations are tools that can help demonstrate how the Policy operates, given the Policy's charges, investment options and any optional features selected, how you plan to accumulate or access Policy value over time, and assumed rates of return. Illustrations may also be able to assist you in comparing the Policy's death benefits, cash surrender values, and Policy values with those of other variable life insurance policies based upon the same or similar assumptions. LEGAL MATTERS - ------------- The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., has advised USAA Life on certain federal securities law matters. All matters of Texas law pertaining to the Policy, including the validity of the Policy and USAA Life's right to issue the Policy under Texas insurance law, have been passed upon by Cynthia A. Toles, Vice President and Assistant Secretary of USAA Life. INDEPENDENT AUDITORS - -------------------- The audited financial statements and financial highlights of the Separate Account as of December 31, 2002, and for each of the years or periods presented, and the audited consolidated financial statements of USAA Life Insurance Company and its subsidiaries as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, are included in this SAI or will be included in an amendment to this SAI. The information has been audited by KPMG LLP, independent certified public accountants, through their offices located at 112 E. Pecan, Suite 2400, San Antonio, Texas 78205. FINANCIAL STATEMENTS - -------------------- VUL SAI 5 INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF USAA LIFE INSURANCE COMPANY AND CONTRACTOWNERS OF THE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY: We have audited the accompanying statements of assets and liabilities as of December 31, 2002, the related statements of operations, statements of changes in net assets, and financial highlights presented in note 6 for each of the years or periods presented, for the 18 variable fund accounts available within the Separate Account of USAA Life Insurance Company: USAA Life Growth and Income, USAA Life Aggressive Growth, USAA Life World Growth, USAA Life Diversified Assets, USAA Life Income, Vanguard Diversified Value Portfolio, Vanguard Equity Index Portfolio, Vanguard Mid-Cap Index Portfolio, Vanguard Small Company Growth Portfolio, Vanguard International Portfolio, Vanguard REIT Index Portfolio, Vanguard High Yield Bond Portfolio, Vanguard Money Market Portfolio, Fidelity VIP II Contrafund(R) Portfolio, Fidelity VIP Equity-Income Portfolio, Fidelity VIP III Dynamic Cap Appreciation Portfolio, Scudder Capital Growth Portfolio, and Alger American Growth Portfolio. These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investments owned at December 31, 2002 were verified by confirmation with the investment custodian of the underlying portfolios of the USAA Life Investment Trust or through confirmation with the transfer agents of the other portfolios. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the aforementioned fund accounts available within the Separate Account of USAA Life Insurance Company as of December 31, 2002, and the results of their operations, the changes in their net assets, and financial highlights for each of the years or periods presented, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP San Antonio, Texas January 31, 2003 LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2002 (In Thousands, Except Per Unit Data) FUND ACCOUNTS INVESTING IN: - --------------------------------------------------------------------------------
VVIF USAA LIFE USAA LIFE USAA LIFE USAA LIFE DIVERSIFIED VVIF MID- GROWTH AND AGGRESSIVE WORLD GROWTH DIVERSIFIED USAA LIFE VALUE VVIF EQUITY CAP INDEX INCOME FUND GROWTH FUND FUND ASSETS FUND INCOME FUND PORTFOLIO INDEX PORTFOLIO PORTFOLIO ----------- ----------- ------------ ----------- ----------- ----------- --------------- --------- ASSETS: Investments at market value $ 564 $ 796 $ 211 $ 575 $ 302 $ 133 $ 1,162 $ 274 ---------- ---------- ---------- ---------- ---------- --------- --------- --------- Net Assets $ 564 $ 796 $ 211 $ 575 $ 302 $ 133 $ 1,162 $ 274 ========== ========== ========== ========== ========== ========= ========= ========= Net Assets: Net assets attributable to policyowners' reserves $ 564 $ 796 $ 211 $ 575 $ 302 $ 133 $ 1,162 $ 274 ========== ========== ========== ========== ========== ========= ========= ========= Units outstanding (accumulation) 32 67 15 29 18 17 145 33 ========== ========== ========== ========== ========== ========= ========= ========= Unit value (accumulation) $17.449936 $11.836938 $14.273481 $19.611603 $17.110216 $7.947514 $7.995176 $8.397224 ========== ========== ========== ========== ========== ========= ========= ========= VVIF SMALL FVIP FVIP EQUITY- COMPANY VVIF VVIF HIGH VVIF MONEY CONTRAFUND(R) INCOME GROWTH INTERNATIONAL VVIF REIT YIELD BOND MARKET PORTFOLIO, PORTFOLIO, PORTFOLIO PORTFOLIO INDEX PORTFOLIO PORTFOLIO PORTFOLIO INITIAL CLASS INITIAL CLASS ---------- ------------- --------------- ---------- ---------- ------------- ------------- ASSETS: Investments at market value $ 376 $ 224 $ 240 $ 230 $ 1,190 $ 114 $ 175 --------- --------- ---------- --------- --------- --------- --------- Net Assets $ 376 $ 224 $ 240 $ 230 $ 1,190 $ 114 $ 175 ========= ========= ========== ========= ========= ========= ========= Net Assets: Net assets attributable to policyowners' reserves $ 376 $ 224 $ 240 $ 230 $ 1,190 $ 114 $ 175 ========= ========= ========== ========= ========= ========= ========= Units outstanding (accumulation) 47 31 21 23 881 13 23 ========= ========= ========== ========= ========= ========= ========= Unit value (accumulation) $8.065415 $7.120925 $11.252063 $9.946870 $1.350997 $8.561012 $7.771493 ========= ========= ========== ========= ========= ========= ========= FVIP DYNAMIC CAP. SVS I CAPITAL ALGER APPRECIATION GROWTH AMERICAN PORTFOLIO, PORTFOLIO, GROWTH INITIAL CLASS CLASS A SHARES PORTFOLIO TOTAL ------------- -------------- ---------- -------- ASSETS: Investments at market value $ 37 $ 370 $ 816 $7,789 --------- ---------- ---------- ------ Net Assets $ 37 $ 370 $ 816 $7,789 ========= ========== ========== ====== Net Assets: Net assets attributable to policyowners' reserves $ 37 $ 370 $ 816 $7,789 ========= ========== ========== ====== Units outstanding (accumulation) 5 22 47 ========= ========== ========== Unit value (accumulation) $7.809482 $16.508497 $17.520609 ========= ========== ==========
See accompanying Notes to Financial Statements. LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS YEAR OR PERIOD ENDED DECEMBER 31, 2002 (In Thousands) FUND ACCOUNTS INVESTING IN: - --------------------------------------------------------------------------------
USAA LIFE USAA LIFE USAA LIFE USAA LIFE VVIF GROWTH AND AGGRESSIVE WORLD GROWTH DIVERSIFIED USAA LIFE DIVERSIFIED INCOME FUND GROWTH FUND FUND ASSETS FUND INCOME FUND VALUE PORTFOLIO ----------- ----------- ------------ ------------ ----------- --------------- NET INVESTMENT INCOME (LOSS): Income Dividends from investments $ 7 $ - $ 2 $ 14 $ 13 $ 2 ----- ----- ---- ---- ----- ---- Expenses Mortality and expense risk charge 4 6 2 4 2 1 ----- ----- ---- ---- ----- ---- Net investment income (loss) 3 (6) - 10 11 1 ----- ----- ---- ---- ----- ---- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on sale of investments (20) (179) (23) (18) (2) (2) Capital gains distributions 14 - - 25 - - ----- ----- ---- ---- ----- ---- Net realized gain (loss) (6) (179) (23) 7 (2) (2) Change in net unrealized appreciation/ depreciation (125) (127) (13) (87) 9 (16) ----- ----- ---- ---- ----- ---- Net realized and unrealized gain (loss) on investments (131) (306) (36) (80) 7 (18) ----- ----- ---- ---- ----- ---- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(128) $(312) $(36) $(70) $ 18 $(17) ===== ===== ==== ==== ===== ==== VVIF SMALL COMPANY VVIF VVIF HIGH VVIF EQUITY VVIF MID-CAP GROWTH INTERNATIONAL VVIF REIT YIELD BOND INDEX PORTFOLIO INDEX PORTFOLIO PORTFOLIO PORTFOLIO INDEX PORTFOLIO PORTFOLIO --------------- --------------- ---------- ------------ --------------- ---------- NET INVESTMENT INCOME (LOSS): Income Dividends from investments $ 19 $ 1 $ 3 $ 4 $ 6 $ 7 ------ ---- ----- ---- --- --- Expenses Mortality and expense risk charge 9 1 3 1 2 1 ------ ---- ----- ---- --- --- Net investment income (loss) 10 - - 3 4 6 ------ ---- ----- ---- --- --- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on sale of investments (38) (9) (2) (4) (3) (1) Capital gains distributions 71 7 12 6 2 - ------ ---- ----- ---- --- --- Net realized gain (loss) 33 (2) 10 2 (1) (1) Change in net unrealized appreciation/ depreciation (338) (32) (111) (44) (8) (1) ------ ---- ----- ---- --- --- Net realized and unrealized gain (loss) on investments (305) (34) (101) (42) (9) (2) ------ ---- ----- ---- --- --- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (295) $(34) $(101) $(39) $(5) $ 4 ====== ==== ===== ==== === === FVIP DYNAMIC SVS I CAPITAL FVIP FVIP EQUITY- CAP GROWTH ALIGER VVIF MONEY CONTRAFUND(R) INCOME APPRECIATION PORTFOLIO, AMERICAN MARKET PORTFOLIO, PORTFOLIO, PORTFOLIO, CLASS A GROWTH PORTFOLIO INITIAL CLASS INITIAL CLASS INITIAL CLASS SHARES PORTFOLIO ---------- ------------- ------------- ------------- ------------ --------- NET INVESTMENT INCOME (LOSS): Income Dividends from investments $ 29 $ - $ 2 $ - $ 1 $ - ----- ----- ---- ---- ----- ----- Expenses Mortality and expense risk charge 13 - 1 - 3 7 ----- ----- ---- ---- ----- ----- Net investment income (loss) 16 - 1 - (2) (7) ----- ----- ---- ---- ----- ----- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on sale of investments - 1 (6) - (179) (233) Capital gains distributions - - 2 - - - ----- ----- ---- ---- ----- ----- Net realized gain (loss) - 1 (4) - (179) (233) Change in net unrealized appreciation/ depreciation - (9) (24) (2) 25 (149) ----- ----- ---- ---- ----- ----- Net realized and unrealized gain (loss) on investments - (8) (28) (2) (154) (382) ----- ----- ---- ---- ----- ----- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16 $ (8) $(27) $ (2) $(156) $(389) ===== ===== ==== ==== ===== =====
See accompanying Notes to Financial Statements. LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS YEARS OR PERIODS ENDED DECEMBER 31, 2002 AND 2001 (In Thousands) FUND ACCOUNTS INVESTING IN: - --------------------------------------------------------------------------------
USAA LIFE USAA LIFE USAA LIFE GROWTH AGGRESSIVE USAA LIFE WORLD DIVERSIFIED ASSETS AND INCOME FUND GROWTH FUND GROWTH FUND FUND ----------------- ---------------- ----------------- -------------------- 2002 2001 2002 2001 2002 2001 2002 2001 ----------------- ---------------- ----------------- -------------------- FROM OPERATIONS: Net investment income (loss) $ 3 $ 5 $ (6) $ (6) $ - $ 1 $ 10 $ 6 Net realized gain (loss) (6) 15 (179) (23) (23) (10) 7 8 Change in net unrealized appreciation/depreciation (125) (50) (127) (201) (13) (25) (87) 24 ---------------- --------------- --------------- ------------------- Increase (decrease) in net assets resulting from operations (128) (30) (312) (230) (36) (34) (70) 38 ---------------- --------------- --------------- ------------------- FROM POLICY TRANSACTIONS: Purchases and transfers in 215 404 290 461 60 135 248 401 Monthly deduction charges (36) (27) (53) (48) (12) (10) (23) (13) Other redemptions (68) (146) (97) (83) (29) (16) (117) (75) ---------------- --------------- --------------- ------------------- Increase (decrease) in net assets from policy transactions 111 231 140 330 19 109 108 313 ---------------- --------------- --------------- ------------------- Net increase (decrease) in net assets (17) 201 (172) 100 (17) 75 38 351 NET ASSETS: Beginning of period 581 380 968 868 228 153 537 186 ---------------- --------------- --------------- ------------------- End of period $ 564 $ 581 $ 796 $ 968 $ 211 $ 228 $ 575 $ 537 ================ =============== =============== =================== UNITS ISSUED AND REDEEMED Beginning balance 26 16 56 38 13 7 24 9 Units issued 13 19 27 29 5 8 13 19 Units redeemed (7) (9) (16) (11) (3) (2) (8) (4) ---------------- --------------- --------------- ------------------- Ending balance 32 26 67 56 15 13 29 24 ================ =============== =============== =================== USAA LIFE VVIF DIVERSIFIED **VVIF EQUITY- *VVIF MID-CAP INCOME FUND VALUE PORTFOLIO INDEX PORTFOLIO INDEX PORTFOLIO ------------------- ----------------- -------------------- ------------------ 2002 2001 2002 2001 2002 2001 2002 2001 ------------------- ----------------- -------------------- ------------------ FROM OPERATIONS: Net investment income (loss) $ 11 $ 8 $ 1 $ - $ 10 $ (9) $ - $ - Net realized gain (loss) (2) (10) (2) - 33 (158) (2) (6) Change in net unrealized appreciation/depreciation 9 16 (16) - (338) 3 (32) 1 ----------------- --------------- ----------------- ----------------- Increase (decrease) in net assets resulting from operations 18 14 (17) - (295) (164) (34) (5) ----------------- --------------- ----------------- ----------------- FROM POLICY TRANSACTIONS: Purchases and transfers in 224 161 109 60 337 638 257 123 Monthly deduction charges (17) (10) (4) - (56) (45) (11) (2) Other redemptions (200) (111) (15) - (115) (285) (29) (25) ----------------- --------------- ----------------- ----------------- Increase (decrease) in net assets from policy transactions 7 40 90 60 166 308 217 96 ----------------- --------------- ----------------- ----------------- Net increase (decrease) in net assets 25 54 73 60 (129) 144 183 91 NET ASSETS: Beginning of period 277 223 60 - 1,291 1,147 91 - ----------------- --------------- ----------------- ----------------- End of period $ 302 $ 277 $ 133 $ 60 $1,162 $ 1,291 $ 274 $ 91 ================= =============== ================= ================= UNITS ISSUED AND REDEEMED Beginning balance 17 15 6 - 125 97 9 - Units issued 15 10 13 6 46 67 30 13 Units redeemed (14) (8) (2) - (26) (39) (6) (4) ----------------- --------------- ----------------- ----------------- Ending balance 18 17 17 6 145 125 33 9 ================= =============== ================= ================= **VVIF SMALL **VVIF ***USAA LIFE COMPANY GROWTH INTERNATIONAL INTERNATIONAL *VVIF REIT INDEX PORTFOLIO PORTFOLIO FUND PORTFOLIO ------------------ ------------------- ----------------- ---------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------------------ ------------------- ----------------- ---------------- FROM OPERATIONS: Net investment income (loss) $ - $ (2) $ 3 $ (1) $ - $ - $ 4 $ - Net realized gain (loss) 10 (5) 2 (24) - (5) (1) - Change in net unrealized appreciation/depreciation (111) 36 (44) (2) - 2 (8) 4 ----------------- ----------------- ---------------- --------------- Increase (decrease) in net assets resulting from operations (101) 29 (39) (27) - (3) (5) 4 ----------------- ----------------- ---------------- --------------- FROM POLICY TRANSACTIONS: Purchases and transfers in 189 179 85 150 - 10 370 107 Monthly deduction charges (18) (11) (12) (9) - (1) (16) (2) Other redemptions (73) 4 (3) (19) - (53) (218) - ----------------- ----------------- ---------------- --------------- Increase (decrease) in net assets from policy transactions 98 172 70 122 - (44) 136 105 ----------------- ----------------- ---------------- --------------- Net increase (decrease) in net assets (3) 201 31 95 - (47) 131 109 NET ASSETS: Beginning of period 379 178 193 98 - 47 109 - ----------------- ----------------- ---------------- --------------- End of period $ 376 $ 379 $ 224 $ 193 $ - $ - $ 240 $ 109 ================= ================= ================ =============== UNITS ISSUED AND REDEEMED Beginning balance 35 18 22 9 - 4 10 - Units issued 23 19 13 17 - 1 33 10 Units redeemed (11) (2) (4) (4) - (5) (22) - ----------------- ----------------- ---------------- --------------- Ending balance 47 35 31 22 - - 21 10 ================= ================= ================ =============== *FVIP CONTRAFUND *FVIP EQUITY- *VVIF HIGH YIELD **VVIF MONEY (R) PORTFOLIO, INCOME PORTFOLIO, BOND PORTFOLIO MARKET PORTFOLIO INITIAL CLASS INITIAL CLASS ----------------- -------------------- ------------------ ------------------ 2002 2001 2002 2001 2002 2001 2002 2001 ----------------- -------------------- ------------------ ------------------ FROM OPERATIONS: Net investment income (loss) $ 6 $ - $ 16 $ 44 $ - $ - $ 1 $ - Net realized gain (loss) (1) (1) - - 1 - (4) - Change in net unrealized appreciation/depreciation (1) 2 - - (9) 1 (24) 2 --------------- ------------------- ----------------- --------------- Increase (decrease) in net assets resulting from operations 4 1 16 44 (8) 1 (27) 2 --------------- ------------------- ----------------- --------------- FROM POLICY TRANSACTIONS: Purchases and transfers in 130 115 1,376 1,983 94 54 130 95 Monthly deduction charges (6) (1) (56) (30) (9) (1) (7) (1) Other redemptions (1) (12) (1,506) (1,650) (5) (12) (17) - --------------- ------------------- ----------------- --------------- Increase (decrease) in net assets from policy transactions 123 102 (186) 303 80 41 106 94 --------------- ------------------- ----------------- --------------- Net increase (decrease) in net assets 127 103 (170) 347 72 42 79 96 NET ASSETS: Beginning of period 103 - 1,360 1,013 42 - 96 - --------------- ------------------- ----------------- --------------- End of period $ 230 $ 103 $ 1,190 $ 1,360 $ 114 $ 42 $ 175 $ 96 =============== =================== ================= =============== UNITS ISSUED AND REDEEMED Beginning balance 10 - 1,016 782 4 - 10 - Units issued 14 12 1,122 1,735 11 6 16 10 Units redeemed (1) (2) (1,257) (1,501) (2) (2) (3) - --------------- ------------------- ----------------- --------------- Ending balance 23 10 881 1,016 13 4 23 10 =============== =================== ================= =============== FVIP DYNAMIC CAP. APPRECIATION SVS I CAPITAL PORTFOLIO, INITIAL GROWTH PORTFOLIO, ALGER AMERICAN CLASS CLASS A SHARES GROWTH PORTFOLIO ------------------ ------------------ ------------------- 2002 2001 2002 2001 2002 2001 ------------------ ------------------ ------------------- FROM OPERATIONS: Net investment income (loss) $ - $ - $ (2) $ (3) $ (7) $ (6) Net realized gain (loss) - - (179) (30) (233) 54 Change in net unrealized appreciation/depreciation (2) - 25 (128) (149) (206) ----------------- ----------------- ---------------- Increase (decrease) in net assets resulting from operations (2) - (156) (161) (389) (158) ----------------- ----------------- ---------------- FROM POLICY TRANSACTIONS: Purchases and transfers in 35 7 106 313 230 480 Monthly deduction charges (2) - (32) (31) (57) (55) Other redemptions (1) - (184) (134) (161) (81) ----------------- ----------------- ---------------- Increase (decrease) in net assets from policy transactions 32 7 (110) 148 12 344 ----------------- ----------------- ---------------- Net increase (decrease) in net assets 30 7 (266) (13) (377) 186 NET ASSETS: Beginning of period 7 - 636 649 1,193 1,007 ----------------- ----------------- ---------------- End of period $ 37 $ 7 $ 370 $ 636 $ 816 $1,193 ================= ================= ================ UNITS ISSUED AND REDEEMED Beginning balance 1 - 27 22 45 33 Units issued 4 1 7 13 14 19 Units redeemed - - (12) (8) (12) (7) ----------------- ----------------- ---------------- Ending balance 5 1 22 27 47 45 ================= ================= ================
See accompanying Notes to Financial Statements. * Variable fund accounts commenced operations May 1, 2001. ** See accompanying Notes to Financial Statements for information on May 1, 2001 fund substitution. *** USAA Life International Fund reflects operations from 01/01/01 to 04/30/01. LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 1) ORGANIZATION The Life Insurance Separate Account of USAA Life Insurance Company (Life Insurance Separate Account) is registered under the Investment Company Act of 1940, as amended, as a segregated unit investment account of USAA Life Insurance Company (USAA Life), a wholly owned subsidiary of the United Services Automobile Association (USAA). Units of the Life Insurance Separate Account are sold only in connection with the Variable Universal Life Policy. Under applicable insurance law, the assets and liabilities of the Life Insurance Separate Account are clearly identified and distinguished from USAA Life. The Life Insurance Separate Account cannot be charged with liabilities arising out of any other business of USAA Life. The Life Insurance Separate Account is divided into 18 variable fund accounts which are invested in shares of a designated portfolio of the USAA Life Investment Trust, Vanguard(R) Variable Insurance Fund (VVIF), Fidelity(R) Variable Insurance Products (FVIP), Scudder Variable Series I (SVS I), or the Alger American Fund as follows:
Fund Account Mutual Fund Investment - -------------------------------------------------------------------------------------------------------------- USAA Life Growth and Income USAA Life Growth and Income Fund USAA Life Aggressive Growth USAA Life Aggressive Growth Fund USAA Life World Growth USAA Life World Growth Fund USAA Life Diversified Assets USAA Life Diversified Assets Fund USAA Life Income USAA Life Income Fund Vanguard Diversified Value Portfolio VVIF Diversified Value Portfolio Vanguard Equity Index Portfolio VVIF Equity Index Portfolio Vanguard Mid-Cap Index Portfolio VVIF Mid-Cap Index Portfolio Vanguard Small Company Growth Portfolio VVIF Small Company Growth Portfolio Vanguard International Portfolio VVIF International Portfolio Vanguard REIT Index Portfolio VVIF REIT Index Portfolio Vanguard High Yield Bond Portfolio VVIF High Yield Bond Portfolio Vanguard Money Market Portfolio VVIF Money Market Portfolio Fidelity VIP Contrafund(R) Portfolio FVIP Contrafund(R) Portfolio, Initial Class Fidelity VIP Equity-Income Portfolio FVIP Equity-Income Portfolio, Initial Class Fidelity VIP Dynamic Cap Appreciation Portfolio FVIP Dynamic Cap Appreciation Portfolio, Initial Class Scudder Capital Growth Portfolio SVS I Capital Growth Portfolio, Class A shares Alger American Growth Portfolio Alger American Growth Portfolio
On May 1, 2001, USAA Life substituted shares of the VVIF Equity Index Portfolio for shares of the Deutsche VIT Equity 500 Index Fund, shares of the VVIF Small Company Growth Portfolio for shares of the Deutsche VIT Small Cap Index Fund, shares of the VVIF International Portfolio for shares of the Deutsche VIT EAFE(R) Equity Index Fund and the USAA Life International Fund, and shares of the VVIF Money Market Fund Portfolio for shares of the USAA Life Money Market Fund. The operations of the predecessor funds prior to May 1, 2001 are included in the accompanying financial statements. Each fund substitution was a non-taxable event for policyholders and did not affect total assets. The policyholders' accumulated value did not change as a result of the substitution. For the Vanguard International Portfolio fund account, which replaced two fund accounts, the accumulation unit value (AUV) of the Deutsche EAFE(R) Equity Index fund account was used as the starting AUV. The AUVs remained the same immediately before and after the substitution for the other fund substitutions. 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SECURITY VALUATION Investments in mutual fund securities are carried in the Statements of Assets and Liabilities at net asset value as reported by the fund. Gains or losses on securities transactions are determined on the basis of the first-in first-out (FIFO) cost method. Security transactions are recorded on the trade date. Dividend income, if any, is recorded on ex-dividend date. DISTRIBUTIONS The net investment income (loss) and realized capital gains of the Life Insurance Separate Account are not distributed, but instead are retained and reinvested for the benefit of unit owners. FEDERAL INCOME TAX Operations of the Life Insurance Separate Account are included in the federal income tax return of USAA Life, which is taxed as a "Life Insurance Company" under the Internal Revenue Code. Under current federal income tax law, no income taxes are payable with respect to operation of the Life Insurance Separate Account. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts in the financial statements. 3) RELATED PARTY TRANSACTIONS During the year ended December 31, 2002, advisory and administrative fees of approximately $722,000 were paid or payable to USAA Investment Management Company (USAA IMCO) by the funds of the USAA Life Investment Trust (the Trust). USAA IMCO is indirectly wholly owned by USAA. The Funds' advisory fees are computed at an annualized rate of .50% of the monthly average net assets of the USAA Life Aggressive Growth Fund, .35% of the monthly average net assets of the USAA Life World Growth Fund, and .20% of the monthly average net assets for each of the other Funds of the Trust for each calendar month. Prior to November 1, 2002, the advisory fee for the USAA Life World Growth Fund was .20% of the Fund's monthly average net assets. The funds are an investment option for both the Variable Universal Life Policy and the Flexible Premium Deferred Combination Fixed and Variable Annuity Contract. Administrative fees are based on USAA IMCO's estimated time incurred to provide such services. 4) EXPENSES A mortality and expense risk charge is deducted by USAA Life from the Life Insurance Separate Account on a daily basis which is equal, on an annual basis, to 0.75% of the daily net assets of each variable fund account. The mortality risk assumed is that insureds may live for a shorter period of time than estimated. Thus, a greater amount of death benefits than expected will be payable. The expense risk assumed by USAA Life is that the costs of administering the policies and the Life Insurance Separate Account may exceed the amount recovered from the policy maintenance and administration expense charges. The mortality and expense risk charge is guaranteed by USAA Life and cannot be increased. The following expenses are charged to reimburse USAA Life for the expenses it incurs in the establishment and maintenance of the Policies and each variable fund account. On the policy's effective date, and each monthly anniversary thereafter, certain monthly charges will be deducted by USAA Life through a redemption of units from the cash value of the policy. The monthly deduction will include cost of insurance charges, which includes charges for any optional insurance benefits provided by rider, an administrative charge of $10 during the first twelve policy months, and a recurring maintenance charge of $5. Total charges deducted during the current year were approximately $430,000. A transfer charge of $25 will be deducted for each value transfer between Variable Fund Accounts in excess of six per Policy Year. For each partial surrender of cash value, a charge equal to the lesser of $25 or 2% of the amount withdrawn will be deducted. This charge is also referred to as an "administrative processing fee." For full surrenders, the amount of the surrender charge will equal a percentage of the Annual Target Premium Payment specified in the policy. The number of years the policy has been in force at the time of surrender determines the applicable percentage. A 3% premium charge is deducted from the policyholder's premium to compensate USAA Life for sales charges and taxes. The charge will be deducted from the policyholder's premium payments until the policyholder's gross amount of premium payments received exceeds the sum of the policyholder's Annual Target Premium payments payable over 10 years. LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2002 5) INVESTMENTS The following table shows the number of shares owned, aggregate cost and net asset value per share of each fund at December 31, 2002:
NUMBER OF AGGREGATE NET ASSET SHARES COST VALUE PER (000) (000) SHARE ------------- ------------- ------------- USAA Life Growth and Income Fund 44 $ 733 $ 12.88 USAA Life Aggressive Growth Fund 73 1,308 10.96 USAA Life World Growth Fund 23 275 9.19 USAA Life Diversified Assets Fund 54 651 10.63 USAA Life Income Fund 28 261 10.78 Vanguard Diversified Value Portfolio 15 148 8.98 Vanguard Equity Index Portfolio 54 1,568 21.68 Vanguard Mid-Cap Index Portfolio 26 305 10.60 Vanguard Small Company Growth Portfolio 31 457 11.99 Vanguard International Portfolio 23 283 9.67 Vanguard REIT Index Portfolio 19 243 12.84 Vanguard High Yield Bond 28 230 8.21 Vanguard Money Market Portfolio 1,190 1,190 1.00 Fidelity VIP Contrafund Portfolio 6 121 18.10 Fidelity VIP Equity-Income Portfolio 10 197 18.16 Fidelity VIP Dynamic Capital App. Portfolio 6 39 5.66 Scudder VLIF Capital Growth Portfolio-Class A Shares 32 579 11.55 Alger American Growth Portfolio 33 1,439 24.63
LIFE INSURANCE SEPARATE ACCOUNT OF USAA LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - CONTINUED DECEMBER 31, 2002 6) FINANCIAL HIGHLIGHTS A summary of unit values and units outstanding for variable annuity contracts and the expense ratios, excluding expenses of the underlying funds, for each period is as follows:
USAA LIFE GROWTH AND INCOME FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ ------------ At end of period: Accumulation units (000) 32 26 16 12 1 Accumulation unit value $ 17.449936 $ 22.397368 $ 23.978970 $ 23.296591 $ 20.468785 Net assets (000) $ 564 $ 581 $ 380 $ 276 $ 3 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -22.47% -6.96% 2.32% 12.52% NA
USAA LIFE AGGRESSIVE GROWTH FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ ----------- At end of period: Accumulation units (000) 67 56 38 17 - Accumulation unit value $ 11.836938 $ 17.214778 $ 22.654870 $ 26.991318 $ 13.993064 Net assets (000) $ 796 $ 968 $ 868 $ 455 $ - Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -31.50% -24.22% -16.30% 91.33% NA
USAA LIFE WORLD GROWTH FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ ----------- At end of period: Accumulation units (000) 15 13 7 2 - Accumulation unit value $ 14.273481 $ 16.988356 $ 20.654406 $ 23.209674 $ 17.860722 Net assets (000) $ 211 $ 228 $ 153 $ 51 $ - Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -16.44% -18.11% -11.48% 28.46% NA
USAA LIFE DIVERSIFIED ASSETS FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001 2000 1999 1998(a) ----------- ----------- ----------- ----------- ----------- At end of period: Accumulation units (000) 29 24 9 7 2 Accumulation unit value $ 19.611603 $ 22.295041 $ 19.815589 $ 19.192009 $ 17.974654 Net assets (000) $ 575 $ 537 $ 186 $ 142 $ 38 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -12.42% 12.08% 2.55% 5.41% NA
USAA LIFE INCOME FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ ----------- At end of period: Accumulation units (000) 18 17 15 9 - Accumulation unit value $ 17.110216 $ 15.969161 $ 15.007467 $ 13.262741 $ 14.089499 Net assets (000) $ 302 $ 277 $ 223 $ 119 $ - Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) 6.64% 5.92% 12.24% -7.29% NA
VANGUARD DIVERSIFIED VALUE PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ----------- At end of period: Accumulation units (000) 17 6 Accumulation unit value $ 7.947514 $ 9.336800 Net assets (000) $ 133 $ 60 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) -15.42% -6.98%(f)
VANGUARD EQUITY INDEX PORTFOLIO FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001(c) 2000 1999 1998(a) ----------- ----------- ----------- ----------- ----------- At end of period: Accumulation units (000) 145 125 97 54 1 Accumulation unit value $ 7.995176 $ 10.341906 $ 11.844646 $ 13.147788 $ 11.003536 Net assets (000) $ 1,162 $ 1,291 $ 1,147 $ 715 $ 3 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -23.11% -13.05% -10.40% 18.20% NA
VANGUARD MID-CAP INDEX PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ----------- At end of period: 33 9 Accumulation units (000) $ 8.397224 $ 9.912441 Accumulation unit value $ 274 $ 91 Net assets (000) Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) -15.79% -1.25%(f)
VANGUARD SMALL COMPANY GROWTH PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001(c) 2000 1999 1998(a) ----------- ------------ ------------ ------------ ------------ At end of period: 47 35 18 7 - Accumulation units (000) $ 8.065415 $ 10.696387 $ 10.043462 $ 10.526480 $ 8.825971 Accumulation unit value $ 376 $ 379 $ 178 $ 78 $ - Net assets (000) Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -24.93% 6.11% -5.09% 17.88% NA
VANGUARD INTERNATIONAL PORTFOLIO FUND ACCOUNT ---------------------------------------------------------------------------- Year Ended December 31, 2002 2001(c) 2000 1999 1998(a) ----------- ----------- ----------- ----------- ----------- At end of period: Accumulation units (000) 31 22 9 1 1 Accumulation unit value $ 7.120925 $ 8.670638 $ 10.881890 $ 13.154856 $ 10.386978 Net assets (000) $ 224 $ 193 $ 98 $ 12 $ 2 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -18.40% -20.73% -17.77% 25.12% NA
VANGUARD REIT INDEX PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ------------- At end of period: Accumulation units (000) 21 10 Accumulation unit value $ 11.252063 $ 10.950003 Net assets (000) $ 240 $ 109 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) 2.27% 9.13%(f)
VANGUARD HIGH YIELD BOND PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ------------- At end of period: Accumulation units (000) 23 10 Accumulation unit value $ 9.946870 $ 9.869512 Net assets (000) $ 230 $ 103 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) 0.22% -1.67%(f)
VANGUARD MONEY MARKET PORTFOLIO FUND ACCOUNT ---------------------------------------------------------------------------------- Year Ended December 31, 2002 2001(c) 2000 1999 1998(a) ------------ ------------ ------------ ----------- ------------ At end of period: Accumulation units (000) 881 1,016 782 276 1 Accumulation unit value $ 1.350997 $ 1.338044 $ 1.293846 $ 1.227534 $ 1.178565 Net assets (000) $ 1,190 $ 1,360 $ 1,013 $ 339 $ 1 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) 0.47% 2.94% 4.61% 2.65% NA
FIDELITY CONTRAFUND(R) PORTFOLIO FUND ACCOUNT ---------------------------------------------------------------------------------- Year Ended December 31, 2002 2001 (b) ------------ ------------ At end of period: Accumulation units (000) 13 4 Accumulation unit value $ 8.561012 $ 9.515065 Net assets (000) $ 114 $ 42 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) -10.57% -5.21%(f)
FIDELITY EQUITY-INCOME PORTFOLIO FUND ACCOUNT ---------------------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ------------ At end of period: Accumulation units (000) 23 10 Accumulation unit value $ 7.771493 $ 9.427762 Net assets (000) $ 175 $ 96 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) -18.10% -6.09%(f)
FIDELITY DYNAMIC CAP APPRECIATION PORTFOLIO ---------------------------------------------------------------------------------- Year Ended December 31, 2002 2001(b) ------------ ------------ At end of period: Accumulation units (000) 5 1 Accumulation unit value $ 7.809482 $ 8.464990 Net assets (000) $ 37 $ 7 Ratio of expenses to average net assets(d) 0.75% 0.75%(e) Total return(g) -8.37% -15.71%(f)
SCUDDER CAPITAL GROWTH PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------------------------ Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ --------------- At end of period: Accumulation units (000) 22 27 22 12 1 Accumulation unit value $ 16.508497 $ 23.487941 $ 29.346175 $ 32.816021 $ 24.448446 Net assets (000) $ 370 $ 636 $ 649 $ 384 $ 3 Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -30.10% -20.28% -10.99% 32.82% NA
ALGER AMERICAN GROWTH PORTFOLIO FUND ACCOUNT ------------------------------------------------------------------------------------ Year Ended December 31, 2002 2001 2000 1999 1998(a) ------------ ------------ ------------ ------------ --------------- At end of period: Accumulation units (000) 47 45 33 15 - Accumulation unit value $ 17.520609 $ 26.344044 $ 30.100055 $ 35.583778 $ 26.806157 Net assets (000) $ 816 $ 1,193 $ 1,007 $ 546 $ - Ratio of expenses to average net assets(d) 0.75% 0.75% 0.75% 0.75% 0.75%(e) Total return(g) -33.85% -12.81% -15.78% 31.46% NA
(a) Variable fund accounts commenced operations August 31, 1998 with the following initial unit values per unit: USAA Life Growth and Income $ 16.937712 USAA Life Aggressive Growth 9.446371 USAA Life World Growth 14.981795 USAA Life Diversified Assets 16.007256 USAA Life Income 13.766435 Vanguard Equity Index Portfolio 8.561922 Vanguard Small Company Growth Portfolio 7.048653 Vanguard International Portfolio 8.920584 Vanguard Money Market Fund Portfolio 1.162018 Scudder Capital Growth Portfolio 18.614844 Alger American Growth Portfolio 19.521151
(b) Variable fund accounts commenced operations May 1, 2001 with an initial accumulation unit value of $10.00 per unit. (c) See accompanying Notes to Financial Statements for information on May 1, 2001 fund substitution. (d) The information for 2002 is based on actual expenses to the policyowner for the period, excluding the expenses of the underlying fund, and charges made directly to policyowner accounts through the redemption of units. Prior years have been restated to exclude the expenses of the underlying fund, and charges made directly to the policyowner accounts through the redemption of units. (e) Annualized. The ratio is not necessarily indicative of 12 months of operations. (f) Not annualized for periods less than one year. (g) The AUV total return figures are computed in accordance with a formula prescribed by the Securities and Exchange Commission, which includes deduction of policy charges. INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors USAA LIFE INSURANCE COMPANY: We have audited the accompanying consolidated balance sheets of USAA LIFE INSURANCE COMPANY and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of USAA LIFE INSURANCE COMPANY and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. KPMG LLP San Antonio, Texas March 14, 2003 USAA LIFE INSURANCE COMPANY Consolidated Balance Sheets December 31, 2002 and 2001 (Dollars in Thousands, Except Share Data) ASSETS 2002 2001 - ------ ---- ---- Investments: Debt securities, at fair value $ 6,772,929 6,091,920 Loaned debt securities, at fair value 819,049 495,375 Equity securities, at fair value 251,064 226,797 Loaned equity securities, at fair value 4,364 - Mortgage loans 2,061 2,379 Policy loans 138,209 139,997 -------- -------- Total investments 7,987,676 6,956,468 Cash and cash equivalents 79,041 116,927 Premium balances receivable 4,890 4,903 Accounts receivable - affiliates 204 37 Furniture and equipment 1,081 2,840 Collateral for securities loaned at fair value 831,657 506,409 Accrued investment income 106,689 114,890 Deferred policy acquisition costs 332,620 313,537 Deferred tax 47,988 61,023 Reinsurance recoverable 677,533 584,691 Other assets 20,894 41,718 Separate account assets 286,300 378,098 ---------- --------- Total assets $ 10,376,573 9,081,541 ========== ========= LIABILITIES Insurance reserves $ 1,866,596 1,480,882 Funds on deposit 6,335,844 5,779,484 Accounts payable and accrued expenses 51,486 86,151 Accounts payable - affiliates 21,100 19,815 Payable upon return of securities loaned 831,657 506,409 Other liabilities 99,053 57,007 Separate account liabilities 286,300 378,098 ---------- ---------- Total liabilities 9,492,036 8,307,846 ---------- ---------- STOCKHOLDERS' EQUITY - -------------------- Preferred capital stock, $100 par value; 1,200,000 shares authorized; 800,000 shares and 700,000 shares issued and outstanding at December 31, 2002 and 2001, respectively 80,000 70,000 Common capital stock, $100 par value; 30,000 shares authorized; 25,000 shares issued and outstanding 2,500 2,500 Additional paid-in capital 51,408 61,408 Accumulated other changes in equity from nonowner sources 48,474 13,169 Retained earnings 702,155 626,618 --------- --------- Total stockholders' equity 884,537 773,695 --------- --------- Total liabilities and stockholders' equity $ 10,376,573 9,081,541 =========== ========== See accompanying notes to consolidated financial statements. 1 USAA LIFE INSURANCE COMPANY Consolidated Statements of Income Years ended December 31, 2002, 2001, and 2000 (Dollars in Thousands) 2002 2001 2000 ---- ---- ---- REVENUES Premiums $ 485,248 478,265 428,191 Investment income, net 473,675 487,715 484,984 Fees, sales, and loan income 19,465 17,648 16,324 Net realized investment (losses) (21,144) (34,299) (65,989) Other revenues 81,980 68,252 66,682 ---------- ---------- --------- Total revenues 1,039,224 1,017,581 930,192 ---------- ---------- --------- BENEFITS AND EXPENSES Losses, benefits, and settlement expenses 653,743 655,869 582,999 Deferred policy acquisition costs 28,331 22,857 24,508 Dividends to policyholders 52,206 56,081 55,012 Other operating expenses 175,367 180,914 179,434 ---------- ---------- --------- Total benefits and expenses 909,647 915,721 841,953 ---------- ---------- --------- Income before income taxes 129,577 101,860 88,239 ---------- ---------- --------- Federal income tax expense (benefit): Current 52,088 32,355 35,156 Deferred (6,039) 2,863 (3,165) ---------- ---------- --------- Total Federal income tax expense 46,049 35,218 31,991 ---------- ---------- --------- Net income $ 83,528 66,642 56,248 ========== ========== ========= See accompanying notes to consolidated financial statements. 2 USAA LIFE INSURANCE COMPANY Consolidated Statements of Stockholders' Equity Years Ended December 31, 2002, 2001, and 2000 (Dollars in Thousands) 2002 2001 2000 ---- ---- ---- Capital Preferred capital stock $ 80,000 70,000 60,000 Common capital stock 2,500 2,500 2,500 Additional paid-in capital 51,408 61,408 51,408 ------- ------- ------- End of year 133,908 133,908 113,908 ------- ------- ------- ACCUMULATED OTHER CHANGES IN EQUITY FROM NONOWNER SOURCES, NET OF TAX Beginning of year 13,169 (15,618) (77,137) Unrealized gains on securities during year, net of income taxes and reclassification adjustments 35,305 28,787 61,519 ------- ------- -------- End of year 48,474 13,169 (15,618) ------- ------- -------- RETAINED EARNINGS Beginning of year 626,618 601,979 563,260 Net income 83,528 66,642 56,248 Dividends to stockholders (7,991) (42,003) (17,529) ------- -------- -------- End of year 702,155 626,618 601,979 ------- -------- -------- Total stockholders' equity $884,537 773,695 700,269 ======= ======== ======== SUMMARY OF CHANGES IN EQUITY FROM NONOWNER SOURCES Net income $ 83,528 66,642 56,248 Other changes in equity from nonowner sources, net of tax 35,305 28,787 61,519 ------- ------- ------- Total changes in equity from nonowner sources $118,832 95,429 117,767 ======= ======= ======= See accompanying notes to consolidated financial statements. 3 USAA LIFE INSURANCE COMPANY Consolidated Statements of Cash Flows Years ended December 31, 2002, 2001, and 2000 (Dollars in Thousands)
2002 2001 2000 ---- ---- ---- Cash flows from operating activities: Net income $ 83,528 66,642 56,248 Adjustments to reconcile net income to net cash provided by operating activities: Net realized investment losses 21,144 34,299 65,989 Interest credited on policyholder deposits 300,973 300,416 292,963 Increase in deferred policy acquisition costs (18,318) (31,196) (23,459) Depreciation and amortization (120) (4,558) (8,473) Deferred income tax expense (benefit) (6,039) 2,863 (3,165) (Increase) decrease in premium balances receivable 13 283 (2,326) (Increase) decrease in accounts receivable- affiliate (167) 62 (22) Increase in accrued investment income 8,201 (9,484) (8,976) Increase in reinsurance recoverable and other assets (61,393) (120,024) (87,034) Increase in insurance reserves 187,211 174,936 147,534 Increase (decrease) in accounts payable and accrued expense (34,665) 2,932 24,493 Increase (decrease) in accounts payable- affiliates 1,285 11,842 (6,253) Increase in other liabilities 31,421 3,651 616 Other (9,659) (3,596) (2,223) ----------- ----------- ----------- Net cash provided by operating activities 503,415 429,068 445,912 ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sales and maturities of available-for-sale securities 2,036,825 1,594,188 1,137,153 Proceeds from maturities of held-to-maturity securities - - 46,039 Proceeds from principal collections on investments 340,507 397,397 95,891 Other investments sold 913 1,213 1,186 Securities purchased - available-for-sale (3,126,174) (2,353,779) (1,218,635) Other investments purchased (586) (730) (5,774) ----------- ----------- ----------- Net cash provided by (used in) investing activities (748,515) (361,711) 55,860 ----------- ----------- ----------- Cash flows from financing activities: Deposits to funds on deposit 524,539 394,599 270,294 Proceeds from short-term borrowings (2,600) 2,600 - Issuance of preferred stock - 20,000 - Withdrawals from funds on deposit (306,734) (421,240) (714,873) Dividends to stockholders (7,991) (41,977) (17,529) ----------- ----------- ----------- Net cash provided by (used in) financing activities 207,214 (46,018) (462,108) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (37,886) 21,339 39,664 Cash and cash equivalents at beginning of year 116,927 95,588 55,924 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 79,041 116,927 95,588 =========== =========== ===========
See accompanying notes to consolidated financial statements. 4 USAA LIFE INSURANCE COMPANY (CONSOLIDATED BREAKOUT OF OTHER CASH FLOWS DECEMBER 31, 2002
ACCOUNT BALANCES 2000 2001 2002 02/01 - ---------------- Insurance Reservces Per B/S (after FAS 113) 1,239,461,925 1,480,882,463 1,866,595,694 385,713,231 FAS 115 PH Reserve #301115 18,569,565 140,766,308 404,310,492 263,544,184 C/S U/R Gain Liab. PH reserve #301116 10,867,410 (30,148,625) (54,334,707) (24,186,082) PHIR (CMR) 25,891,172 27,101,628 475,694 (26,625,934) Current PHIR Inv. Income (CMR) 23,057,803 87,511,741 91,419,217 3,907,476 Reinsurance ceded reserve 475,997,363 559,337,288 658,736,533 99,399,245 Reinsurance Recoverable reserve 136,889,694 202,650,323 283,912,018 81,261,695 Change Insurance Reservces Per B/S (after FAS 113) 385,713,231 X Change FAS 115 PH Reserve #301115 239,358,102 Change PHIR (CMR) (26,625,934) Change Current PHIR Inv. Income (CMR) 3,907,476 ----------- 216,639,644 Y Change Reinsurance ceded reserve 99,399,245 Change Reinsurance Recoverable reserve 81,261,695 ----------- 18,137,550 Z 187,211,137 (10) X-Y+Z
USAA LIFE INSURANCE COMPANY December 31, 2002 and 2001 Notes to Consolidated Financial Statements (Dollars in Thousands) (1) Summary of significant accounting policies ------------------------------------------ (a) Organization ------------ USAA LIFE INSURANCE COMPANY (Life Company) is a wholly owned subsidiary of UNITED SERVICES AUTOMOBILE ASSOCIATION (USAA). Life Company markets individual life insurance policies, annuity contracts, group credit life and accident and health policies, and individual and group accident and health policies primarily to individuals eligible for membership in USAA. Life Company is licensed to do business in all states including the District of Columbia but excluding New York. Life Company has a subsidiary company, USAA Life Insurance Company of New York (Life of New York), licensed to sell life and annuity contracts in that state. Life Company's other subsidiary business, USAA Life General Agency (LGA), offers additional products of other insurance companies requested by USAA membership, which are not sold by Life Company. The consolidated financial statements include the accounts of Life Company and its subsidiaries, (collectively, the Company). All significant intercompany balances and transactions have been eliminated in consolidation. (b) Accounting Standards Issued --------------------------- Effective January 1, 2001, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS Nos. 137 and 138. The standard requires companies to record derivatives on their balance sheet at fair value. Changes in the fair value of those derivatives would be reported in earnings or equity from non-owner sources depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in offsetting changes in fair value of assets or liabilities or cash flows. The implementation of SFAS No. 133 did not have a material effect on the Company's financial position or results of operations. Effective April 1, 2001, the Company adopted Emerging Issues Task Force (EITF) Issue 99-20, "Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interest in Securitized Financial Assets". Under the consensus, investors in certain asset-backed securities are required to record changes in their estimated yield on a prospective basis and to evaluate these securities for an other than temporary decline in value. If the fair value of the asset-backed security has declined below its carrying amount and the decline is determined to be other than temporary, the security is written down to fair value. The adoption of EITF Issue 99-20 did not have an impact on the Company's financial position or results of operations. In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities". SFAS No. 140 replaces SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", and rescinds SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125". This statement, which is required to be applied prospectively with certain exceptions, is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. Additionally, this statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of this statement did not have a material impact on the Company's consolidated financial statements. (Continued) 5 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Effective January 1, 2002, the Company adopted the provisions of FASB SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". The standard addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard establishes a single accounting model, based on the framework established in SFAS 121 for long-lived assets to be disposed of by sale, and resolves significant implementation issues related to SFAS 121. The implementation of SFAS No. 144 did not have a material effect on the Company's financial position, results of operations, or liquidity. (c) Investments ----------- All debt securities, including bonds, mortgage-backed securities, and redeemable preferred stocks are classified as available-for-sale and are carried at fair value with unrealized gains or losses (net of related deferred income taxes, deferred policy acquisition costs, and insurance reserves) reflected in stockholders' equity. Bonds, at amortized cost of approximately $173,694, and $171,940 were on deposit with various state governmental agencies at December 31, 2002, and 2001, respectively. Mortgage-backed securities held at December 31, 2002 and 2001 represent participating interests in pools of long term first mortgage loans originated and serviced by the issuers of the securities. Market interest rate fluctuations can affect the prepayment speed of principal and the yield on the securities. All equity securities, which include common and non-redeemable preferred stocks, are classified as available-for-sale. Equity securities are carried at fair value with unrealized gains or losses (net of related deferred income taxes, deferred policy acquisition costs, and insurance reserves) reflected in stockholders' equity. Mortgage loans and policy loans are carried at their unpaid principal balances with interest rates ranging from 4.80% to 9.75% at December 31, 2002. Interest is recognized over the life of the note using the interest method. Mortgage loans are collateralized by a first lien on real estate while policy loans are collateralized by the cash surrender value of the related policy. Short-term securities, included in cash and cash equivalents, are carried at amortized cost, which approximates fair value. Principal or interest payments on debt securities or loans are determined to be uncollectible when they are 90 days past due, and the amounts determined to be uncollectible are written off through the Income Statement. Interest is not accrued on debt securities or loans for which principal or interest payments are determined to be uncollectible. Realized gains and losses are included in net income based upon specific identification of the investment sold. When impairment of the value of an investment is considered to be other than temporary, a provision for the write down to estimated net realizable value is recorded. Net realized capital gains (losses) of $(18,077), $25,943, and $1,455 for 2002, 2001 and 2000 respectively, allocable to future policyholder dividends and interest, were deducted from net realized capital gains (losses) and an offsetting amount was reflected in insurance reserves. Amortization of bond premium or discount is calculated using the scientific (constant yield) interest method. (Continued) 6 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (d) Cash and cash equivalents ------------------------- For purposes of the consolidated statement of cash flows, all highly liquid marketable securities that have a maturity date at purchase of three months or less and money market mutual funds are considered to be cash equivalents. At December 31, 2002 and 2001, cash includes $414 and $41, respectively, of separate account purchases awaiting reinvestment. These funds are restricted from the Company's use. (e) Federal income taxes -------------------- Life Company and its subsidiaries are included in the consolidated federal income tax return filed by USAA. Taxes are allocated to the separate companies of USAA based on a tax allocation agreement, whereby companies receive a current benefit to the extent their losses are utilized by the consolidated group. Separate company current taxes are the higher of taxes computed at a 35% rate on regular taxable income or taxes computed at a 20% rate on alternative minimum taxable income adjusted for any consolidated benefits allocated to the companies based on the use of separate company losses within the group. Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred income taxes from a change in tax rates is recognized in income in the period that includes the enactment date. (f) Fair value of financial instruments ----------------------------------- The fair value estimates of the Company's financial instruments were made at a point in time, based on relevant market information and information about the related financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holding of a particular financial instrument. In addition, the tax ramifications related to the effect of fair market value estimates have not been considered in the estimates. (g) Use of estimates ---------------- The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (GAAP), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (h) Deferred policy acquisition costs --------------------------------- Policy acquisition costs, consisting primarily of certain underwriting and selling expenses, are deferred and amortized. Traditional individual life and health acquisition costs are amortized in proportion to anticipated premium income after allowing for lapses and terminations. The period for amortization is 20-30 years, but not to exceed the life of the policy. (Continued) 7 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Acquisition costs for universal life and annuity policies are amortized in relation to the present value of estimated gross profits from surrender charges and investment, mortality and expense margins. The amortization period for universal life policy deferred acquisition costs is 20 years. The period for amortization for annuities deferred acquisition costs is either 20 or 30 years. Deferred policy acquisition costs are reviewed by line of business to determine that the unamortized portion does not exceed the present value of anticipated gross profits or the sum of the present value of expected gross premiums and the reserves held, less the present value of expected future benefits. (i) Insurance reserves ------------------ Included in insurance reserves are traditional life and health products and payout annuities with life contingencies. Traditional life and individual health reserves are computed using a net level premium method and are based on assumed or guaranteed investment yields and assumed rates of mortality, morbidity, withdrawals, expenses and anticipated future policyholder dividends. Payout annuity reserves are computed by discounting future payments at rates based on assumed or guaranteed investment yields and mortality. These assumptions vary by such characteristics as plan, year of issue, policy duration, date of receipt of funds and may include provisions for adverse deviation. (j) Funds on deposit ---------------- Funds on deposit are liabilities for universal life policies, payout annuities without life contingencies and deferred annuities. These liabilities are determined following the "retrospective deposit" method and consist principally of policy account balances before applicable surrender charges. (k) Insurance revenues and expenses ------------------------------- Premiums on traditional life insurance products and accident and health contracts are recognized as revenues as they become due. Benefits and expenses are matched with premiums in determining net income through the holding of reserves that provide for policy benefits and amortization of acquisition costs over the lives of the policies. Universal life policy and investment annuity contract revenues consist of investment earnings and policy charges for the cost of insurance, policy administration, and surrender charges assessed during the period. Expenses for these policies and contracts include interest credited to policy account balances, benefit claims incurred in excess of policy account balances, and administrative expenses. The related deferred policy acquisition costs are amortized in relation to the present value of expected gross profits from surrender charges, investment, mortality, and expense margins. (l) Participating business ---------------------- Certain life insurance policies contain dividend payment provisions, which enable the policyholder to participate in the earnings of the life insurance operations. The participating insurance in force accounted for 5% of the total life insurance in force at both December 31, 2002, and December 31, 2001. (Continued) 8 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Participating policies accounted for 14%, 16%, and 18% of the premium income in 2002, 2001, and 2000, respectively. The provision for policyholders' dividends is based on benefit reserves and a future dividend liability based on the current dividend scales. The Company guarantees to pay dividends in aggregate, on all participating policies issued after December 31, 1983, in the total amount of $19,796 in 2003. Income attributable to participating policies in excess of policyholder dividends is restricted by several states for the benefit of participating policyholders of those states, otherwise income in excess of policyholder dividends is accounted for as belonging to the stockholders. (m) Reclassifications ----------------- Certain reclassifications of prior period amounts have been made to conform with the current year's presentation. (2) Basis of accounting ------------------- The Company prepares separate statutory financial statements in accordance with accounting practices prescribed or permitted by the insurance departments of the states of Texas and New York. Prior to the adoption of Codification of Statutory Accounting Principles (SAP) by the insurance departments of the states of Texas and New York on January 1, 2001, prescribed statutory accounting practices included a variety of publications of the National Association of Insurance Commissioners (NAIC) as well as state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The NAIC adopted SAP in March 1998. The Texas Department of Insurance and New York State Insurance Department adopted SAP in its entirety, except as provided in Title 28 Part 1 Chapter 7 Subchapter A Rule 7.18, "NAIC Accounting Practices and Procedures Manual" (Rule 7.18), of the Texas Administrative Code and in Regulation 172, "Financial Statement Filings and Accounting Practices and Procedures" (Reg. 172), respectively. The adoption of SAP resulted in an increase in statutory surplus of approximately $34,113. These consolidated financial statements have been prepared on the basis of GAAP, which differs from the statutory basis of accounting followed in reporting to insurance regulatory authorities. Reconciliation of statutory net income and capital and surplus, as determined using statutory accounting principles, to the amounts included in the accompanying consolidated financial statements, are as follows:
2002 2001 2000 ---- ---- ---- Statutory net income $ 60,761 47,809 72,901 Gain (loss) on sale of investments 15,496 (22,135) (34,800) Deferred policy acquisitions costs 18,246 31,526 23,809 Tax adjustments 4,692 3,176 (2,863) Participating policyholder earnings (loss) 119 (2,032) (73) Insurance reserves and other (15,786) 12,378 (6,806) ------- -------- -------- GAAP net income $ 83,528 66,642 56,248 ======== ======== ======== (Continued)
9 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Statutory capital and surplus $ 601,853 584,857 528,830 Increases (decreases): Deferred policy acquisition costs 332,620 313,537 282,938 Federal income taxes 21,853 34,787 79,348 Asset valuation reserve 32,705 26,365 51,877 Participating policyholder liability (7,040) (7,223) (7,111) Policyholder reserve and funds (93,636) (99,166) (95,792) Deferred and uncollected premiums (133,637) (103,741) (87,993) Investment unrealized gain (loss) adjustments: Investment valuation difference 482,501 161,458 (6,579) Policyholder accounts and other assets (336,164) (110,618) (29,437) Other adjustments (16,518) (26,561) (15,812) ------- -------- -------- GAAP capital and surplus $ 884,537 773,695 700,269 ======= ======= =======
(3) Investments ----------- The amortized cost, estimated fair values, and carrying values of investments in debt and equity securities classified as available-for-sale as of December 31, 2002 are as follows:
Available-for-Sale --------------------------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Carrying Cost Gains Losses Value Value --------------------------------------------------------------------- Debt securities --------------- U.S. Treasury securities and obligations of U.S. Government corporations $ 4,691 398 - 5,089 5,089 and agencies Obligations of states and political 89,624 4,321 - 93,945 93,945 subdivisions Debt securities issued by foreign governments and corporations 174,743 8,326 (1,440) 181,629 181,629 Mortgage-backed securities 2,109,009 126,577 (728) 2,234,858 2,234,858 Corporate securities 370,682 (31,770) 5,010,538 5,010,538 4,671,626 Redeemable preferred stock 65,476 814 (371) 65,919 65,919 --------- ------- ------- --------- --------- Total debt securities $ 7,115,169 511,118 (34,309) 7,591,978 7,591,978 ========= ======= ======= ========= ========= Equity securities ----------------- Common stock $ 304,011 - (54,335) 249,676 249,676 Non-redeemable preferred stock 5,715 37 - 5,752 5,752 --------- ------- ------- --------- --------- Total equity securities $ 309,726 37 (54,335) 255,428 255,428 ========= ======= ======= ========= ========= (Continued)
10 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) The amortized cost, estimated fair values, and carrying values of investments in debt and equity securities classified as available for sale as of December 31, 2001 were as follows:
Available-for-Sale --------------------------------------------------------------------- Gross Gross Estimated Amortized Unrealized Unrealized Fair Carrying Cost Gains Losses Value Value --------------------------------------------------------------------- Debt securities --------------- U.S. Treasury securities and obligations of U.S. Government corporations and $ 3,529 369 - 3,898 3,898 agencies Obligations of states and political 37,192 946 - 38,138 38,138 subdivisions Debt securities issued by foreign governments and corporations 309,153 9,494 (1,492) 317,155 317,155 Mortgage-backed securities 991,016 26,139 (2,898) 1,014,257 1,014,257 Corporate securities 5,086,498 166,894 (39,545) 5,213,847 5,213,847 --------- ------- ------ --------- --------- Total debt securities $ 6,427,388 203,842 (43,935) 6,587,295 6,587.295 ========= ======= ====== ========= ========= Equity securities ----------------- Common stock $ 251,130 - (30,149) 220,981 220,981 Non-redeemable preferred stock 5,970 - (154) 5,816 5,816 --------- ------- ------ --------- --------- Total equity securities $ 257,100 - (30,303) 226,797 226,797 ========= ======= ====== ========= ========= The amortized cost and estimated fair values of debt securities classified as available-for-sale at December 31, 2002, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations.
Available-for-Sale ------------------------- Estimated Amortized Fair Cost Value ------------- ---------- Due in one year or less $ 424,421 431,167 Due after one year through five years 1,536,750 1,637,148 Due after five years through ten years 1,954,580 2,121,262 Due after ten years 1,090,409 1,167,543 --------- --------- 5,006,160 5,357,120 Mortgage-backed securities 2,109,009 2,234,858 ---------- --------- $ 7,115,169 7,591,978 ========== ========= Proceeds from sales of available-for-sale debt securities during 2002, 2001, and 2000 were $1,500,037, $1,381,444, and $995,947, respectively. Gross gains and losses of $50,848 and $58,737, respectively, for 2002, $25,832 and $21,651, respectively, for 2001, and $10,472 and $65,470, respectively, for 2000, were realized on those sales.
(Continued) 11 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Included in such realized investment losses on the consolidated statement of income are other than temporary write-downs of debt securities of $978, $0, and $10,033 for 2002, 2001, and 2000, respectively. Proceeds from sales of equity securities during 2002, 2001, and 2000 were $50,593, $64,640, and $573, respectively. Gross gains and losses of $0 and $34,813, respectively, for 2002, $11,068 and $0, respectively, for 2001 and $67, and $70, respectively, for 2000 were realized on those sales. Gross investment income during 2002, 2001, and 2000 was $479,345, $494,179, and $490,890, respectively, and consists primarily of interest income on fixed maturity securities. Investment expenses were $5,670, $6,464, and $5,906 for 2002, 2001, and 2000, respectively. Life Company engages in securities lending whereby certain securities from its portfolio are loaned to other institutions for short periods of time. Initial cash collateral is required at a rate of 102% of the market value of a loaned security. The collateral is deposited by the borrower with a lending agent, and retained and invested by the lending agent according to the Company's guidelines to generate additional income or used for operations. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value of the loaned securities fluctuates. At December 31, 2002 and 2001, net unrealized investment gains of $349,976 and $110,618, respectively, were allocated to insurance reserves for participating life insurance policies and interest sensitive contracts. In addition net unrealized losses of $912 and $146 were allocated against deferred policy acquisition costs in 2002 and 2001, respectively. (4) Federal income tax ------------------ The expected statutory federal income tax amounts for the years ended December 31, 2002, 2001, and 2000 differ from the actual tax amounts as follows:
2002 2001 2000 ---- ---- ---- Income before income taxes $ 129,577 101,860 88,239 ======= ======= ====== Federal income tax expense at 35% statutory rate 45,352 35,651 30,884 Increase (decrease) in tax resulting from: Dividends received deductions (157) (540) (189) Tax credits (53) (112) (556) Other, net 907 219 1,852 ------- ------- ------ Federal income tax expense $ 46,049 35,218 31,991 ======= ======= ======
Deferred income tax expense or benefit for the years ended December 31, 2002, 2001, and 2000 was primarily attributable to differences between the valuation of assets and insurance liabilities for financial reporting and tax purposes. (Continued) 12 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 are presented below:
2002 2001 ---- ---- Deferred tax assets: Insurance reserves $ 147,407 124,969 Accounts payable and accrued expenses 2,686 8,924 Policyholder dividends 4,347 4,909 Other, net 3,488 2,972 ----------- ------- Total gross deferred tax assets 157,928 141,774 Deferred tax liabilities: Investments 8,650 7,276 Depreciable assets (456) 729 Deferred policy acquisition costs 53,116 51,539 Other, net 22,923 14,510 ----------- ------- Total gross deferred tax liabilities 84,233 74,054 ----------- ------- Deferred tax asset (liability) on net unrealized gain (loss) on investments (25,707) (6,697) ----------- ------- Net deferred tax asset $ 47,988 61,023 =========== =======
Management believes that the realization of the deferred tax asset is more likely than not based on the expectation that such benefits will be utilized in the future consolidated tax returns of the USAA group. At December 31, 2002, other liabilities includes federal income tax payable of $10,625 and in 2001 other assets includes federal income tax receivable of $7,523. Aggregate cash payments to USAA for income taxes were $31,221, $35,004, and $32,988 for Life Company and $2,719, $1,554, and $956 for its subsidiaries during the years ended December 31, 2002, 2001, and 2000, respectively. 13 (Continued) USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Detailed tax amounts for items of total nonowner changes in equity are as follows:
Before- Tax Tax (Expense) Net-of-Tax Amount or Benefit Amount ---------- ----------- ------------ FOR THE YEAR ENDING DECEMBER 31, 2000 Unrealized gains on securities: Unrealized holding gains arising during year $ 69,788 (24,426) 45,362 Less: reclassification adjustment for losses realized in 24,857 (8,700) 16,157 income ------ ------ ------- Net unrealized gains from securities 94,645 (33,126) 61,519 ------ ------- ------- Other changes in equity from nonowner sources $ 94,645 (33,126) 61,519 ====== ======= ======= FOR THE YEAR ENDING DECEMBER 31, 2001 Unrealized gains on securities: Unrealized holding gains arising during year $ 28,759 (10,066) 18,693 Less: reclassification adjustment for losses realized in 15,529 (5,435) 10,094 income -------- ------ ------ Net unrealized gains from securities 44,288 (15,501) 28,787 -------- ------ ------ Other changes in equity from non-owner sources $ 44,288 (15,501) 28,787 ======== ====== ====== FOR THE YEAR ENDING DECEMBER 31, 2002 Unrealized gains on securities: Unrealized holding gains arising during year $ 67,150 (23,502) 43,648 Less: reclassification adjustment for gains realized in (12,835) 4,492 (8,343) income -------- ------ ------ Net unrealized gains from securities 54,315 (19,010) 35,305 -------- ------ ------ Other changes in equity from non-owner sources $ 54,315 (19,010) 35,305 ======== ====== ====== 14 (Continued)
USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (5) Fair value of financial instruments ----------------------------------- The following tables present the carrying values and estimated fair values of the Company's financial instruments at December 31. SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.
2002 2001 ------------------------ ------------------------ Carrying Fair Carrying Fair Value Value Value Value ------------------------ ------------------------ Financial assets: Cash and cash equivalents 79,041 79,041 116,927 116,927 $ Debt securities 7,591,978 7,591,978 6,587,295 6,587,295 Equity securities 255,428 255,428 226,797 226,797 Mortgage loans 2,061 1,892 2,379 2,226 Policy loans 138,209 138,209 139,997 139,997 Premium balances receivable 4,890 4,890 4,903 4,903 Accounts receivable - affiliates 204 204 37 37 Collateral for securities loaned 831,657 831,657 506,409 506,409 Accrued investment income 106,689 106,689 114,890 114,890 Separate account 286,300 286,300 378,098 378,098 Financial liabilities: Deferred annuities and annuities without life 4,147,175 4,147,175 3,725,116 3,725,116 contingencies Policyholder dividend accumulations 35,198 35,198 34,309 34,309 Policy dividends declared but unpaid 28,124 28,124 30,993 30,993 Accounts payable and accrued expenses 51,486 51,486 86,151 86,151 Accounts payable - affiliates 21,100 21,100 19,815 19,815 Payable upon return of securities loaned 831,657 831,657 506,409 506,409 Separate account 286,300 286,300 378,098 378,098
All carrying values are included in the balance sheet under the indicated captions, except for deferred annuities and annuities without life contingencies, and policyholder dividend accumulations, both of which are included in funds on deposit, and policy dividends declared but unpaid which are included in other liabilities. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and cash equivalents: The carrying value of cash and cash equivalents approximates fair value because of the short maturity. Debt and equity securities: The fair market values for bonds and stocks are determined using quoted market prices from Merrill Lynch Pricing Services, Bloomberg Services or individual brokers. 15 (Continued) USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Mortgage loans: The fair value of mortgage loans are estimated by discounting the future cash flows using interest rates currently being offered for mortgage loans with similar characteristics and maturities. Policy loans: In the Company's opinion, the book value of the policy loans approximates their fair value. Policy loans are shown on the financial statements at the aggregate unpaid balance, and carry interest rates ranging from 4.8% to 7.4% in advance. Premium balances receivable: The recorded amount for premiums receivable approximates fair value because only a slight percentage of total policies issued by the Company lapse. Accounts receivable and payable - affiliates: The carrying value of the accounts receivable and accounts payable for affiliates approximates its fair value because of the short-term nature of the obligations. Collateral for securities loaned and payable upon return of securities loaned: The carrying value of collateral for securities loaned and payable upon return of securities loaned approximates fair value because of the short maturity of the collateral. Accrued investment income: The accrued amount of investment income approximates its fair value because of the quality of the Company's investment portfolio combined with the short-term nature of the collection period. Deferred annuities and annuities without life contingencies: The fair value of the deferred annuities is equal to the current accumulated value without anticipation of any applicable surrender charges, which approximates the carrying value. The fair value of annuities without life contingencies is estimated as the commuted value of the annuity. Policyholder dividend accumulations: The fair value of policy holder dividend accumulations is estimated using the book value less a percentage of accrued interest anticipated to be forfeited as a result of policy cancellations. Estimated annual interest to be forfeited is not material. Policy dividends declared but unpaid: The carrying value of policy dividends declared but unpaid approximates the fair value because the carrying value reflects anticipated forfeitures as a result of policy cancellations. Estimated annual interest to be forfeited is not material. Accounts payable and accrued expenses: The fair value of accounts payable and accrued expenses approximates its carrying value because of the short-term nature of the obligations. Separate account assets and liabilities: The separate account assets reflect the net asset value of the underlying mutual funds, therefore, carrying value is considered fair value. The separate account liabilities are reflected at the underlying balances due to the contract holders, without consideration for applicable surrender charges, if any. 16 (Continued) USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (6) Borrowings ---------- The Company has no borrowing activity outside of the agreements described in Note 7 "Transactions with affiliates." (7) Transactions with affiliates ---------------------------- Certain services have been contracted from USAA and its affiliates, such as rental of office space, utilities, mail processing, data processing, printing, and employee benefits. USAA allocates these and other expenses to affiliates for administrative services performed by them. The contracted services and allocations are based upon various formulas or agreements with the net amounts included in expenses. The aggregate amount of such contracted services for Life Company and its affiliates was $117,742, $115,389, and $164,572 for 2002, 2001, and 2000, respectively. The Company has an agreement with USAA Investment Management Company regarding the reimbursement of costs for investment services provided. The aggregate amount of the USAA Investment Management Company contracted services was $5,651, $6,433 and $5,866 for 2002, 2001, and 2000, respectively. Life Company also received premium and annuity considerations from USAA of $9,259, $6,415, and $5,780 in 2002, 2001, and 2000, respectively, representing amounts received for structured settlements issued to claimants of USAA and for group insurance on USAA employees. Life Company provides credit life and disability insurance to members of the USAA Federal Savings Bank (USAA FSB) through an insurance arrangement with USAA FSB. Total credit life and disability premiums were $6,708, $6,468, and $5,732 in 2002, 2001 and 2000, respectively. Life Company has intercompany funding agreements with USAA Capital Corporation (CAPCO) and USAA Funding Company (FUNDCO) that provide for borrowing up to $50,000 at any one time on an unsecured basis. Borrowings are intended to be short-term (less than 270 days) and to be used for liquidity purposes. Interest rates on borrowings are based upon CAPCO's or FUNDCO's external cost of obtaining funds. As of December 31, 2002, 2001, and 2000, Life Company had $0, $2,600 and $0 liability for borrowed money. Life Company had short-term borrowings totaling $0, $53,918, and $0 in 2002, 2001, and 2000, respectively, through the use of these funding agreements. The maximum amount outstanding under such short-term borrowings by Life Company at any time during 2002, 2001, and 2000 was $0, $23,000, and $0, respectively. The interest associated with these intercompany funding agreements was $0, $10, and $0 in 2002, 2001, and 2000, respectively. Life Company has intercompany lending agreements with CAPCO and FUNDCO. Life Company is authorized to loan excess funds under guidelines established with the Texas Department of Insurance. The Company loaned $0, $6,800, and $0 during 2002, 2001, and 2000, respectively. There were no note receivables outstanding at December 31, 2002, 2001, and 2000. Interest income associated with these lending agreements was $0, $9, and $0 in 2002, 2001, and 2000, respectively. The Company purchased securitized notes created by USAA FSB. The notes were purchased on the open market through a third-party broker. The Company had $76,450, $68,618, and $37,200 of securitized notes at carrying value created by USAA FSB at December 31, 2002, 2001, and 2000, respectively. 17 (Continued) USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) Life of New York has an intercompany funding agreement with CAPCO that provides for aggregate borrowings outstanding at any one time that shall not exceed an amount equal to 5 percent of Life of New York's prior year admitted assets. Life of New York did not borrow any money through the use of these funding agreements during 2002, 2001, or 2000. (8) Reinsurance ----------- The Company is party to several reinsurance treaties. Life Company's general policy is to reinsure that portion of any risk in excess of $600 with a $100 corridor on the life of any one individual. However, in 1997 Life Company entered into certain reinsurance treaties that are based on a first dollar quota share pool. Life Company retains 10% of the risk on each life policy up to the normal $600 retention and the remaining 90% is ceded to a coinsurance pool that is placed with a number of reinsurers on a quota share basis. Once Life Company's retention has been reached, the quota share pool reinsures all of the risk above Life Company's retention. Life of New York's general policy is the same except that they reinsure that portion of any risk in excess of $200 on the life of any one individual. Life Company cedes Bank Owned Life Insurance (BOLI) business through two reinsurance treaties, one Yearly Renewable Term (YRT) and one Coinsurance treaty, both of which are with one reinsurer on a first dollar basis, with Life Company retaining 50% of the business under the coinsurance arrangement. Assets backing the coinsurance reserves held by the reinsurer are held in a trust by the reinsurer. This trust arrangement should reduce the credit risk associated with the high reserve liability held by the reinsurer for Life Company. Although the ceding of reinsurance does not discharge the Company from its primary legal liability to a policyholder, the reinsuring company assumes responsibility to reimburse the Company for the related liability. Life insurance in force in the amounts of $4,817,402, $5,051,994 and $5,161,519 is ceded on a yearly renewable term basis and $66,414,798, $49,794,678 and $37,080,679 is ceded on a coinsurance basis at December 31, 2002, 2001, and 2000, respectively. Reinsurance amounts recoverable related to insurance reserves, funds on deposit, and paid losses totaled $668,118 and $576,141 at December 31, 2002, and 2001, respectively. Premium revenues and interest credited to policyholders were reduced by $140,041, $113,853 and $104,622 for reinsurance premiums ceded during the years ended December 31, 2002, 2001, and 2000, respectively. Losses, benefits and settlement expenses were reduced by $114,812, $101,813 and $91,618 for reinsurance recoverables during the years ended December 31, 2002, 2001, and 2000, respectively. Life Company assumes business through various assumption agreements, with most of the business assumed on a yearly renewable term basis. Such premium amounts were not significant in 2002, 2001, and 2000. 18 (Continued) USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (9) Deferred policy acquisition costs and future policy benefits ------------------------------------------------------------ Deferred policy acquisitions costs and premiums are summarized below:
Accident Life Annuity and Health Total ----------- ----------- ------------- --------- Balance at December 31, 1999 $ 184,840 60,131 22,143 267,114 ------- ------ ------ ------- Additions 31,925 9,279 6,763 47,967 Amortization (16,272) (4,375) (3,861) (24,508) Fair value adjustment 652 (8,287) - (7,635) ------- ------ ------ ------- Net changes 16,305 (3,383) 2,902 15,824 ------- ------ ------ ------- Balance at December 31, 2000 201,145 56,748 25,045 282,938 ------- ------ ------ ------- Additions 36,970 11,460 5,623 54,053 Amortization (13,721) (2.466) (6,670) (22,857) Fair value adjustment (607) 10 - (597) ------- ------ ------ ------- Net change 22,642 9,004 (1,047) 30,599 Balance at December 31, 2001 223,788 65,752 23,998 313,537 ------- ------ ------ ------- Additions 33,692 9,502 3,455 46,649 Amortization (15,979) (2,105) (10,248) (28,332) Fair value adjustment 288 478 - 766 ------- ------ ------ ------- Net change 18,001 7,875 (6,793) 19,083 ------- ------ ------ ------- Balance at December 31, 2002 $ 241,789 73,627 17,205 332,620 ======= ====== ======= ======= 2000 Premiums $ 296,640 10,626 120,925 428,191 ======= ====== ======= ======= 2001 Premiums $ 312,972 16,830 148,463 478,265 ======= ====== ======= ======= 2002 Premiums $ 322,485 27,356 135,407 485,248 ======= ====== ======= =======
(Continued) 19 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) The liabilities for future policy benefits and related insurance in force at December 31, 2002 and 2001 are summarized below: Future Policy Benefits ------------------------- 2002 2001 ---- ---- Life and annuity: Individual $ 1,786,341 1,401,140 Group 6,837 5,523 ----------- ---------- Total life and annuity $ 1,406,663 1,793,178 =========== ========== Accident and health $ 73,418 74,219 =========== ========== Insurance in Force ------------------------- 2002 2001 ---- ---- Life and annuity: Individual $ 64,814,140 64,934,370 Credit life 824,306 716,520 Group 2,581,568 2,618,975 ----------- ---------- Total life and annuity $ 68,220,014 68,269,865 =========== ========== Life Insurance and Annuities: Interest assumptions used in the calculation of future policy benefits for Traditional Life Policies are as follows: Participating term 9.28% Participating permanent 6.75% to 9.16% Non - Participating term 6.00% to 8.91% Non - Participating permanent 6.09% to 7.09% Future policy benefits for Payout Annuities use the original pricing interest rates. Mortality and lapse assumptions are based on the Company's experience. Health Insurance: Interest assumptions used for future policy benefits on the health policies are calculated using a level interest rate of 6%. Morbidity for Income Replacement policies for active lives is based on a modified 1985 CIDA and for disabled lives is based on the 1985 CIDA. Morbidity for In Hospital Cash policies is based on the 1966-67 Intercompany Experience table. The Active Life Reserves for Issue Age Standardized Medicare Supplement Plans, Attained Age Standardized Medicare Supplement Plans, and TRICARE Supplement Plans are valued on a net level basis using 6% interest, and each uses different modifications of 1994 Tillinghast claim costs. Termination assumptions are based on Life Company and industry experience. (Continued) 20 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (10) Capital stock ------------- The Company has outstanding 600,000 shares of Annually Adjustable Cumulative Perpetual Preferred Stock, 100,000 shares each of Series A, Series B, Series C, Series D, Series E, and Series F issued at $100 (not in thousands) par value. During 2001, the Company issued 100,000 shares of Series G Annually Adjustable Noncumulative Perpetual Preferred Stock at $100 (not in thousands) par value plus $10,000 of additional paid-in capital. During 2002, the Company revised the previous issuance of Series G Annually Adjustable Noncumulative Perpetual Preferred Stock. The original additional paid-in capital of $10,000 was applied towards the issuance of an additional 100,000 shares at $100 (not in thousands) par value. To date, there has been a total issuance of 200,000 shares of Series G annually Adjustable Noncumulative Perpetual Preferred Stock at $100 (not in thousands) par value. All of the preferred stock is owned by FUNDCO. No other stock ranks Senior to the Series A through G preferred stock. The dividend rate for the Series A through F preferred stock is equal to 65% of the cost of the funds for CAPCO on Commercial paper having a 180-day maturity on the first business day of each dividend period. The dividend rate for the Series G preferred stock is 6.16% through December 15, 2006 when the rate will reset using the five-year treasury rate plus 1.75%. The preferred stock has a liquidation value of $100 (not in thousands) per share. The preferred stock shares are redeemable at the option of the Company for cash, in whole or in part, on the 15th day of each December for Series A and Series B and on the 15th day of each June for Series C, Series D, Series E, Series F, and Series G at par value plus accrued and unpaid dividends. Preferred stock dividends of $1,991, $1,977, and $2,529 were paid in 2002, 2001, and 2000, respectively and $73, $114, and $113 were accrued for each year after the last payments on December 15, 2002, 2001, and 2000, respectively. The Company has authorized 30,000 shares of common capital stock, $100 (not in thousands) par value, of which 25,000 shares were issued and outstanding at December 31, 2002, 2001, and 2000. Dividends of $6,000, $40,000, and $15,000 were paid in cash on the common stock during 2002, 2001, and 2000, respectively, as well as a $25 non-cash dividend during 2001. (11) Unassigned surplus and dividend restrictions -------------------------------------------- Texas law limits the payment of ordinary dividends to shareholders. The maximum ordinary dividend that may be paid without prior approval of the Insurance Commissioner is limited to the greater of net gain from operations of the preceding calendar year or 10% of capital and surplus as of the prior December 31, less any dividends made within the preceding 12 months. As a result, ordinary dividend payments to shareholders are limited to approximately $85,768 in 2003. Dividends are paid as determined by the Board of Directors and at its discretion. The Texas Department of Insurance imposes minimum risk-based capital (RBC) requirements on insurance companies that were developed by the NAIC. The formulas for determining the amount of RBC specify various weighting factors that are applied to statutory financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of the company's regulatory total adjusted capital to its authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. Life Company's and its subsidiaries' current statutory capital and surplus are in excess of the threshold RBC requirements. (Continued) 21 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (12) Business segments ----------------- The significant business segments of the Company are life insurance, annuity products, and health insurance that are marketed primarily to individuals eligible for membership in USAA. The life insurance segment offers universal life, whole life, term, and other individual coverages. The annuity segment offers both fixed and variable annuity products. The health segment offers individual and group supplement accident and health policies. The following table shows total revenues, income before income taxes, and total assets for these segments as of and for the years ended December 31, 2002, 2001, and 2000:
2002 2001 2000 ---- ---- ---- Revenues: Premiums Life $ 322,485 312,972 296,640 Annuity 27,356 16,830 10,626 Health 135,407 148,463 120,925 --------- --------- -------- 485,248 478,265 428,191 --------- --------- -------- Investment income, net: Life 180,598 201,270 198,093 Annuity 288,691 282,037 282,882 Health 4,386 4,408 4,009 --------- --------- -------- 473,675 487,715 484,984 --------- --------- -------- Realized capital gains (losses), net: Life (9,748) (10,190) (16,067) Annuity 11,396) (24,109) (49,922) Health - - - --------- --------- -------- (21,144) (34,299) (65,989) --------- --------- -------- Fees, sales, loan income and other revenues: Life 64,516 53,157 49,237 Annuity 18,177 15,947 17,231 Health 18,752 16,796 16,538 --------- --------- -------- 101,445 85,900 83,006 --------- --------- -------- Total revenues: $ 1,039,224 1,017,581 930,192 $ ========== ========= ======== Income before income taxes: Life $ 87,324 94,809 107,483 $ Annuity 37,842 18,139 (1,664) Health 4,411 (11,088) (17,580) --------- --------- -------- $ 129,577 101,860 88,239 ========== ========= ======== Income tax expense (benefit): Life $ 30,755 32,777 43,330 $ Annuity 13,700 6,267 (4,414) Health 1,594 (3,826) (6,925) --------- --------- -------- $ 46,049 35,218 31,991 ========== ========= ======== (Continued)
22 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands)
2002 2001 2000 ---- ---- ---- Total assets: ------------ Life $ 4,368,493 3,909,310 3,663,174 $ Annuity 5,949,531 5,081,762 4,932,744 Health 58,549 90,469 83,381 ---------- --------- --------- $ 10,376,573 9,081,541 8,679,299 $ ========== ========= =========
Effective March 6, 2002, the Company discontinued selling TRICARE supplement health insurance. The Company recognized the Department of Defense's reforms to the TRICARE program substantially improved health coverage for all military beneficiaries and reduced the Company's members' need for this supplemental health insurance. Effective December 1, 2002, the Company terminated its TRICARE group policy, and the individual certificates will expire on their paid-to dates. These events did not have a material impact on the operations of the Company. (13) Employee benefit plans ---------------------- (a) Pension plan ------------ Substantially all employees are covered under a pension plan administered by USAA which is accounted for on a group basis. The benefits are determined based on years of service and the employee's final average pay, as defined in the plan, at the date of retirement. The total net pension cost allocated to the Company on the basis of salary expense was $2,897, $3,572, and $3,922 in 2002, 2001, and 2000, respectively. At December 31, 2002, 2001, and 2000, a prepaid asset (liability) of $15,665, ($134), and ($2,157), respectively, has been recorded which represents the excess (deficit) of net periodic pension cost allocated to the Company over its allocated funding requirements. (b) Postretirement benefit plan --------------------------- Substantially all employees of the Company may become eligible for certain medical and life insurance benefits provided for retired employees under a plan administered by USAA if they meet minimum age and service requirements and retire while working for USAA. The postretirement benefit cost allocated to the Company based on the number of employees was $1,907, $1,358, and $1,555 in 2002, 2001, and 2000, respectively. At December 31, 2002 and 2001, a liability of $8,407, and $6,500, respectively, has been recorded which represents the excess of net periodic postretirement benefit cost allocated to the Company over its allocated funding requirements. (c) Contributory retirement plan ---------------------------- Substantially all employees of the Company are eligible to participate in USAA's contributory retirement plan. The Company matches participant contributions dollar for dollar to a maximum of 6% of a participant's compensation. During the first three years of credited service, the Company's contributions are 0% vested, and after three years of credited service, the Company's contributions are 100% vested. In 2002, 2001, and 2000, the Company's contributions to the plan totaled $2,848, $3,080, and $2,584, respectively. (Continued) 23 USAA LIFE INSURANCE COMPANY Notes to Consolidated Financial Statements (Dollars in Thousands) (14) Separate accounts ----------------- The Separate Account and the Life Insurance Separate Account (Separate Accounts) are segregated asset accounts established under Texas law through which Life Company invests the premium payments received from contract owners and policy owners, respectively. The Separate Accounts included seed money of Life Company in the amount of $6,624, $7,825, and $64,531 as of December 31, 2002, 2001, and 2000, respectively. The assets of the Separate Accounts are the property of Life Company. However, only the assets of the Separate Accounts in excess of the reserves, and other contract liabilities with respect to the Separate Accounts, are chargeable with liabilities arising out of any other business Life Company may conduct. In accordance with the contracts and policies, income, gains and losses, whether or not realized, are credited to, or charged against the Separate Accounts and excluded from Life Company. Life Company's obligations arising under the contracts and policies are general corporate obligations. Each Separate Account currently is divided into eighteen variable fund accounts, each of which invests in a corresponding fund. The funds that are available under this contract or policy include five funds of the USAA Life Investment Trust, the Capital Growth Portfolio of the Scudder Variable Life Investment Funds, the Growth Portfolio of the Alger American Funds, three funds of the Fidelity VIP portfolio, and eight funds of the Vanguard Variable Insurance Fund. The accumulated unit value of the contract or policy in a variable fund account will vary, primarily based on the investment experience of the Fund in whose shares the variable funds account invest. The value of the funds' securities is carried at market value. Life Company incurs mortality expenses on behalf of the Separate Accounts' contract holders and policy owners. Life Company also incurs administrative expenses on behalf of contract and policy owners. Life Company collects fees for these expenses from both contract holders and policy owners at set amounts. In addition, Life Company incurs various expenses related to conducting the business or operations of the USAA Life Investment Trust (Trust) as outlined by an underwriting and administrative services agreements. Life Company, out of its general account, has agreed to pay directly, or reimburse the Trust, for Trust expenses exceeding established limits. Such reimbursements were not significant in 2002, 2001, and 2000. (15) Commitments and contingencies ----------------------------- The Company is required by law to participate in the guaranty associations of the various states in which it does business. The state guaranty associations ensure payment of guaranteed benefits, with certain restrictions to policy holders of impaired or insolvent insurance companies, by assessing all other companies involved in similar lines of business. There are currently several insurance companies which have substantial amounts of life, annuity and health business in the process of liquidation or rehabilitation. The Company received net refunds of $78 and $336 and paid $62 to various state guaranty associations during the years ended December 31, 2002, 2001, and 2000, respectively. The Company accrues its best estimate for known insolvencies. At December 31, 2002 and 2001, other liabilities include $7,636 and $7,148 respectively, related to estimated assessments. The Company is party to various lawsuits and claims generally incidental to its business. The ultimate disposition of these matters is not expected to have a significant adverse effect on the Company's financial position or results of operations. 24 PART C: OTHER INFORMATION EXHIBITS - -------- A. Resolution of Board of Directors of USAA Life Insurance Company establishing Life Insurance Separate Account of USAA Life Insurance Company. (The resolution is filed in lieu of a trust or indenture creating a unit investment trust.)(1) B. None. C. Underwriting Agreement by and between USAA Life Insurance Company and USAA Investment Management Company effective May 1, 2003 (filed herewith). D. Revised Form of Variable Universal Life Insurance Policy (Policy Form No. VUL 31891TX), including riders.(2) E. 1. Revised Form of Application for the Variable Universal Life Insurance Policy filed as Exhibit D.(2) 2. Form of Application for Variable Universal Life Insurance Policy Change.(2) 3. Section 1035 Exchange Form.(2) F. 1. Articles of Incorporation of USAA Life Insurance Company, as amended.(3) 2. Bylaws of USAA Life Insurance Company, as amended, February 20, 2000.(4) G. 1. Novation Agreement among USAA Life Insurance Company, Munich American Reassurance Company, and Continental Assurance Company (acquired by Munich) Effective June 30, 2001 (filed herewith). 2. Self-Administered Automatic Yearly Renewable Term Reinsurance Agreement Between USAA Life Insurance Company and Continental Assurance Company, Effective June 1, 1998(11) 3. Risk Premium Reinsurance Agreement between USAA Life Insurance Company and Reinsurance Group of America, Inc. Effective June 1, 1998 (filed herewith). 4. Yearly Renewable Term Reinsurance Agreement between USAA Life Insurance Company and The Lincoln National Life Insurance Company, Effective June 1, 1998(11) 5. Automatic Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and Munich American Reassurance Company (filed herewith). 6. Automatic Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and American Phoenix Life and Reassurance Company (filed herewith). 7. Automatic and Facultative Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and Security Life of Denver Insurance Company (filed herewith) H. 1. Amended Participation Agreement by and between Scudder Variable Life Investment Fund and USAA Life Insurance Company, dated February 3, 1995, as amended May 21, 1998.(5) 2. Amended Participating Contract and Policy Agreement by and between Scudder Investor Services, Inc. and USAA Investment Management Company, dated February 3, 1995, as amended February 29, 1998.(5) 3. Amended Reimbursement Agreement by and between Scudder Kemper Investments, Inc. and USAA life Insurance Company, dated February 3, 1995, as amended May 21, 1998.(5) 4. Amended Letter Agreement by and between Scudder Kemper Investments, Inc., Scudder Investor Services, Inc., Scudder Variable Life Investment Fund, USAA Life Insurance VUL Part C -- 1 Company and USAA Investment Management Company, dated February 3, 1995, as amended March 16, 1998.(5) 5. Amended Participation Agreement by and between The Alger American Fund, Fred Alger Management, Inc., Fred Alger & Company, Incorporated, and USAA Life Insurance Company, dated December 16, 1994, as amended March 16, 1998.(4) 6. Amended Expense Allocation Agreement by and between Fred Alger Management, Inc., Fred Alger & Company, Inc., and USAA Life Insurance Company, dated December 16, 1994 as amended March 16, 1998.(2) 7. Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation, and USAA Life Insurance Company, dated March 12, 2001.(9) 8. Participation Agreement by and between Variable Insurance Products Funds, Fidelity Distributors Corporation, and USAA Life Insurance Company, dated February 20, 2001.(9) I. 1. Administrative Services Agreement, by and between USAA Life Insurance Company and USAA Life Investment Trust effective May 1, 2003 (filed herewith). 2. Form of Administrative Services Agreement, by and between USAA Life Insurance Company and USAA Investment Management Company.(11) 3. Investment Advisory Agreement by and between USAA Life Investment Trust and USAA Investment Management Company, dated November 1, 2002.(7) 4. Subadvisory Agreement by and between USAA Life Investment Trust and MFS Investment Management with respect to the USAA Life World Growth Fund dated November 1, 2002.(7) 5. Subadvisory Agreement by and between USAA Life Investment Trust and Wellington Management Company LLP with respect to the USAA Life Diversified Assets Fund dated November 1, 2002.(7) 6. Subadvisory Agreement by and between USAA Life Investment Trust and Marsico Capital Management LLC with respect to the USAA Life Aggressive Growth Fund dated November 1, 2002.(7) 7. Transfer Agent Agreement by and between USAA Life Investment Trust and USAA Life Insurance Company, dated December 15, 1994.(8) 8. Letter Agreement by and between USAA Life Investment Trust and USAA Life Insurance Company, appointing USAA Life as the Transfer Agent and Dividend Disbursing Agent for Funds added to Trust, dated February 7, 1997.(8) 9. Amendment to Transfer Agent Agreement by and between USAA Life Investment Trust and USAA Life Insurance Company, to encompass variable universal life insurance, dated February 18, 1998.(8) 10. Amended and Restated Distribution and Administration Agreement by and between USAA Life Insurance Company and USAA Investment Management Company, dated December 16, 1994, and amended and restated, to encompass variable universal life insurance, March 30, 1998.(2) J. None. K. 1. Opinion and Consent of Cynthia A. Toles, Esq., Vice President and Assistant Secretary, USAA Life Insurance Company, as to the legality of the Policy interests being registered.(6) 2. Consent of Kirkpatrick & Lockhart LLP.(11) L. Not applicable. M. Not applicable. N. Other Opinions. 1. Consent of KPMG LLP, Independent Auditors. (Filed herewith.) VUL Part C -- 2 2. Power of Attorney for Robert G. Davis.(1) 3. Powers of Attorney for James M. Middleton, Bradford W. Rich, and Josue Robles, Jr.(3) 4. Powers of Attorney for Russell A. Evenson and Larkin W. Fields.(4) 5. Power of Attorney for Edward R. Dinstel.(9) O. None. P. Not applicable. Q. Not applicable. R. Persons Controlled by or Under Common Control with the Depositor or Registrant.11 - ---------- 1 Previously filed on January 30, 1998, with the initial filing of this Registration Statement. 2 Previously filed on May 15, 1998, with the Pre-Effective Amendment to Registrant's Form S-6 Registration Statement. 3 Previously filed on April 27, 2000, with the Post-Effective Amendment No. 3 to Registrant's Form S-6 Registration Statement. 4 Previously filed on March 1, 2002, with the Post-Effective Amendment No. 5 to Registrant's Form S-6 Registration Statement. 5 Previously filed on February 26, 1999, with the Post-Effective Amendment No. 1 to Registrant's Form S-6 Registration Statement. 6 Previously filed on April 27, 2001, with the Post-Effective Amendment No. 4 to Registrant's Form S-6 Registration Statement. 7 Incorporated herein by reference to Post-Effective Amendment No. 11, filed on February 28, 2003, to the Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 8 Incorporated herein by reference to Post-Effective Amendment No. 6, filed on March 2, 1998, to the Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 9 Previously filed on April 30, 2002, with the Post-Effective Amendment No. 6 to Registrant's Form S-6 Registration Statement. 2 Incorporated herein by reference to Post-Effective Amendment No. 3, filed on February 14, 1997, to Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 5 Incorporated herein by reference to Post-Effective Amendment No. 7, filed on February 26, 1999, to the Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 7 Incorporated herein by reference to Post-Effective Amendment No. 8, filed on February 28, 2000, to the Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 10 Incorporated herein by reference to Post-Effective Amendment No. 11, filed on April 26, 2002, to the Form N-1A Registration Statement (File No. 33-82270) of USAA Life Investment Trust. 11 Previously filed on March 20, 2003 with the Post Effective Amendment No. 7 under the 1933 Act and Amendment No. 2 under the 1940 Act to the N-6 Registration Statement (File Nos. 333-45343 and 811-08625) of USAA Life Investment Trust VUL Part C -- 3 DIRECTORS AND OFFICERS OF THE DEPOSITOR - --------------------------------------- DIRECTORS. Set forth below are the Directors of USAA Life, the depositor of the Separate Account, who are engaged directly or indirectly in activities relating to the Registrant or the variable universal life policies offered by the Registrant, including each senior executive officer of USAA Life. The principal business address for all of the following Directors and officers of USAA Life is 9800 Fredericksburg Road, San Antonio, Texas 78288. NAME PRINCIPAL OCCUPATION - ---- -------------------- Robert G. Davis Director and Chairman James M. Middleton Director and Vice Chairman Edward R. Dinstel Director Russell A. Evenson Director Larkin W. Fields Director Bradford W. Rich Director Josue Robles, Jr. Director OFFICERS (OTHER THAN DIRECTORS). - -------------------------------- Set forth below are the officers of USAA Life, the depositor of the Separate Account, who are engaged directly or indirectly in activities relating to the Registrant or the variable universal life policies offered by the Registrant, including each senior executive officer of USAA Life. The principal business address of each person listed is same as the address of USAA Life, as shown on the cover page of this Prospectus. NAME POSITIONS & OFFICES WITH USAA LIFE: - ---- ----------------------------------- James M. Middleton President and Chief Executive Officer Edward R. Dinstel Senior Vice President John W. Douglas Senior Vice President Russell A. Evenson Senior Vice President David M. Holmes Senior Vice President and Treasurer Mark S. Rapp Senior Vice President Bradford W. Rich Senior Vice President and Secretary Sharon L. Kaminsky Vice President and Assistant Treasurer Kristi A. Matus Vice President Pattie S. McWilliams Vice President Allen R. Pierce, Jr. Vice President Diana L. Scheel Vice President Cynthia A. Toles Vice President and Assistant Secretary Brenda E. Davis Assistant Vice President Michael P. Egan Assistant Vice President James M. Garvin Assistant Vice President Brian P. McGlinchey Assistant Vice President William J. Nabholz Assistant Vice President and Assistant Secretary Layne C. Roetzel Assistant Vice President Jane B. Wickstrom Assistant Vice President Lynda C. Cabell Assistant Treasurer PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT - ------------------------------------------------------------------------------ Registrant is a separate account of USAA Life that invests exclusively in mutual funds. Registrant may be deemed to be a control person of one or more of these mutual funds to the extent that it beneficially owns more than 25% of the voting securities thereof. It also may be deemed to be under common control with companies affiliated with its depositor, USAA Life. For further information, please refer to the organizational list that is filed as Exhibit R hereto and incorporated by reference in response to this item. VUL Part C -- 4 INDEMNIFICATION - --------------- UNDERTAKING PURSUANT TO RULE 484(B)(1) UNDER THE SECURITIES ACT OF 1933 Rule 484(b)(1) under the Securities Act of 1933 requires a description of "[a]ny provision or arrangement . . . whereby the registrant may indemnify a director, officer or controlling person of the registrant against liabilities arising under the [Securities] Act." Registrant, the Life Insurance Separate Account of USAA Life Insurance Company, does not, as a technical matter, have any directors or officers. Nevertheless, Registrant, pursuant to Section 13 of the Amended and Restated Distribution and Administration Agreement, may indemnify, albeit indirectly, directors and/or officers of its depositor, USAA Life Insurance Company ("USAA Life"), as follows. Section 13 of such Agreement provides that Registrant shall indemnify the employees of USAA Investment Management Company ("IMCO"), Registrant's principal underwriter. To whatever extent any director or officer of USAA Life may be deemed to be an "employee" of IMCO, Registrant may be deemed to be permitted to indemnify such person pursuant to such Agreement, which is filed as Exhibit 1.(3)(a) to this Registration Statement and is herein incorporated by reference. Additionally, there are certain other provisions or arrangements whereby USAA Life, and/or certain of its affiliated persons, may be indemnified by parties or entities other than Registrant. Such provisions or arrangements are incorporated herein by reference, as follows: to Article IX of the By-Laws of USAA Life, filed as Exhibit 1.6(b) to this Registration Statement; to Section 9 of the Amended and Restated Underwriting and Administrative Services Agreement, filed as Exhibit 1.(8)(a) to this Registration Statement; to Section 12 of the Transfer Agent Agreement, as amended, filed as Exhibit 1.(8)(c) to this Registration Statement; to Section 5(b) of the Amended Participation Agreement, filed as Exhibit 1.8(d)(i) of this Registration Statement; to Section 6(b) of the Amended Reimbursement Agreement, filed as Exhibit 1.8(d)(iii) to this Registration Statement; to Section 12.2 of the Amended Participation Agreement, filed as Exhibit 1.8(e)(i) to this Registration Statement; to the Amended Expense Allocation Agreement, filed as Exhibit 1.8(e)(ii) to this Registration Statement; to Section 7 of the Participation Agreement, filed as Exhibit 1.8(f) to this Registration Statement; and to Section 8 of the Participation Agreement filed as Exhibit 1.8(g) to this Registration Statement. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, 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 Registrant of expenses incurred or paid by a director, officer or controlling person of 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, 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. PRINCIPAL UNDERWRITERS - ---------------------- (a) Other Activity. USAA Investment Management Company ("USAA IMCO") is the principal underwriter for the Contracts. USAA IMCO also serves as the investment adviser and principal underwriter to USAA Life Investment Trust, USAA Investment Trust, USAA State Tax-Free Trust, USAA Mutual Fund, Inc., and USAA Tax Exempt Fund, Inc. (b) Management. Set forth below are the Directors and Officers of USAA IMCO who are engaged directly or indirectly in activities relating to the Registrant or the Contracts offered by the Registrant, including each senior executive officer of USAA IMCO. The principal business address for all of the following Directors and Officers of USAA IMCO is 9800 Fredericksburg Road, San Antonio, Texas 78288. Directors with Positions and Offices with USAA IMCO: Robert G. Davis Director and Chairman Christopher W. Claus Director and Vice Chairman VUL Part C -- 5 Officers with Positions with USAA IMCO: Christopher W. Claus CEO and President Clifford A. Gladson Senior Vice President, Fixed Income Investments David M. Holmes Senior Vice President, Senior Financial Officer and Treasurer Mark S. Howard Senior Vice President, Secretary and Counsel Terri L. Luensmann Senior Vice President, Investment Operations Mark S. Rapp Senior Vice President, Marketing Stuart H. Wester Vice president, Equity Investments (c) Compensation from Registrant. The following commissions and other compensation were received by each principal underwriter, directly or indirectly, from the Registrant during the Registrant's last fiscal year: NONE LOCATION OF ACCOUNTS AND RECORDS - -------------------------------- The accounts and records of Registrant are located at the offices of its depositor, USAA Life, located at 9800 Fredericksburg Road, San Antonio, Texas, 78288; the offices of the principal underwriter of the Contracts, USAA IMCO, are located at 9800 Fredericksburg Road, San Antonio, Texas, 78288. FEE REPRESENTATIONS - ------------------- REPRESENTATION REGARDING THE REASONABLENESS OF AGGREGATE FEES AND CHARGES DEDUCTED UNDER THE POLICIES PURSUANT TO SECTION 26(E)(2)(A) OF THE INVESTMENT COMPANY ACT OF 1940 USAA Life Insurance Company ("USAA Life") represents that the fees and charges deducted under the Policies, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company under the Policies. USAA Life bases its representation on its assessment of all of the facts and circumstances, including such relevant factors as: the nature and extent of such services, expenses and risks; the need for USAA Life to earn a profit; the degree to which the Policies include innovative features; and the regulatory standards for exemptive relief under the Investment Company Act of 1940 used prior to October 1996, including the range of industry practice. This representation applies to all Policies sold pursuant to this Registration Statement, including those sold on the terms specifically described in the prospectus contained herein, or any variations therein, based on supplements, endorsements, or riders to any Policies or prospectus, or otherwise. VUL Part C -- 6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment company Act of 1940, as amended, the Registrant, Life Insurance Separate Account of USAA Life Insurance Company, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this amended Registration Statement and has duly caused this amended Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, in the City of San Antonio, and State of Texas, on this 29th day of April, 2003. Signature: Life Insurance Separate Account of USAA Life Insurance Company (Registrant) By: USAA Life Insurance Company (Depositor) (On behalf of Registrant and itself) By: /s/ JAMES M. MIDDLETON ----------------------------- James M. Middleton President and Chief Executive Officer Attest: /s/ CYNTHIA A. TOLES --------------------- Cynthia A. Toles Vice President and Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. (NAME) (TITLE) (DATE) - ---------------------- Robert G. Davis Chairman /s/ James M. Middleton - ---------------------- James M. Middleton Vice Chairman, President and April 29, 2003 Chief Executive Officer /s/ Edward R. Dinstel - --------------------- Edward R. Dinstel Director April 29, 2003 /s/ Russell A. Evenson - ---------------------- Russell A. Evenson Director April 29, 2003 /s/ Mark S. Rapp - ---------------- Mark S. Rapp Director April 29, 2003 /s/ David M. Holmes - ------------------- David M. Holmes Director and Treasurer April 29, 2003 - ------------------ Bradford W. Rich Director April ____, 2003 - ------------------ Josue Robles, Jr. Director April ____, 2003 VUL Part C -- 7 EXHIBIT INDEX EXHIBITS - -------- 1. Underwriting Agreement by and between USAA Life Insurance Company and USAA Investment Management Company, effective May 1, 2003 2. Novation Agreement among USAA Life Insurance Company, Munich American Reassurance Company, and Continental Assurance Company (acquired by Munich) Effective June 30, 2001 3. Risk Premium Reinsurance Agreement between USAA Life Insurance Company and Reinsurance Group of America, Inc. Effective June 1, 1998 4. Automatic Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and Munich American Reassurance Company. 5. Automatic Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and American Phoenix Life and Reassurance Company 6. Automatic and Facultative Reinsurance Agreement Effective June 1, 1998 between USAA Life Insurance Company and Security Life of Denver Insurance Company 7. Administrative Services Agreement, by and between USAA Life Insurance Company and USAA Life Investment Trust, effective May 1, 2003. 8. Consent of KPMG LLP, Independent Auditors. 9. Persons Controlled by or Under Common Control with the Depositor or Registrant VUL Part C -- 8 EX-99 3 ua_imco-lit.txt EXHIBIT 1 UNDERWRITING AGREEMENT THIS UNDERWRITING AGREEMENT is made as of May 1, 2003, by and between USAA INVESTMENT MANAGEMENT COMPANY, a registered broker-dealer organized as a corporation under the laws of the State of Delaware and having a place of business in San Antonio, Texas ("IMCO"), and USAA LIFE INVESTMENT TRUST, a Delaware business trust having a place of business in San Antonio, Texas (the "Trust"). RECITALS The Trust is an open-end management investment company registered under the Investment Company Act of 1940 (the "1940 Act"), as amended, whose shares are registered under the Securities Act of 1933 (the "1933 Act"), as amended, and with shares offered in various investment funds ("Funds"); and The Trust presently makes its shares available for purchase to the Separate Account of USAA Life Insurance Company and the Life Insurance Separate Account of USAA Life Insurance Company (the "Separate Accounts"), and may make its shares available to any other separate accounts of USAA Life Insurance Company ("USAA Life") or any of USAA Life's subsidiaries or affiliates, and to separate accounts of non-affiliated life insurance companies (all such eligible purchasers being referred to collectively as "Purchasers"). IMCO is registered as a broker-dealer under the Securities Exchange Act of 1934, is a member of the National Association of Securities Dealers (the "NASD"), is the investment adviser for the Trust, and has agreed to service as principal underwriter for the Trust. AGREEMENT In consideration of the agreements contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Trust and IMCO agree as follows: 1. APPOINTMENT OF UNDERWRITER The Trust hereby appoints IMCO as principal underwriter and distributor of the Trust to sell its shares to Purchasers, and IMCO hereby accepts such appointment. 2. SALE AND REDEMPTION OF SHARES (a) IMCO shall offer the Trust's shares only on the terms set forth in the current prospectus, including the Statement of Additional Information ("SAI"). IMCO shall not be obligated to sell any specific number of shares. (b) In selling shares of the Trust, IMCO shall use its best efforts in all respects to conform with the requirements of all federal and state laws and regulations and the regulations of the NASD, relating to the sale of such shares. Neither IMCO nor any other person is authorized to give any information or to make any representations, other than those contained in the registration statement or related prospectus of the Trust and any sales literature or advertisements authorized by the Trust. (c) IMCO shall distribute, or shall arrange for others to distribute, prospectuses for the Trust, as required by the Securities and Exchange Commission ("SEC"); and shall comply in all respects with the requirements of all federal and state laws and regulations and the regulations of the NASD, relating to the sale of Trust shares. (d) To the extent permitted by applicable laws and regulations, the Trust reserves the right to suspend the redemption of shares at any time pursuant to the conditions set forth in the prospectus. The Trust shall give IMCO prompt notice of any such suspension and shall promptly furnish such other information in connection with the sale and redemption of Trust shares as IMCO reasonably requests. (e) To the extent required by laws and regulations, IMCO shall cause any sales literature, advertising, or other promotional materials used in connection with its sales of Trust shares to be filed and, if necessary, approved by the NASD, the SEC, or any other required securities regulatory body. 3. INDEPENDENT CONTRACTOR IMCO shall act as an independent contractor and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Trust in any way or be deemed an employee of the Trust. IMCO shall be responsible for its own conduct and the employment, control and conduct of its agents and employees, assuming full responsibility for its agents and employees and for injury to such agents or employees or to others through its agents or employees under applicable statutes, and agrees to pay all employer taxes thereunder as well as maintain insurance against public liability in such an amount as the Trust and IMCO may, from time to time, agree. 4. ALLOCATION OF EXPENSES (a) Trust. The Trust will pay (or will enter into arrangements providing for others to pay) for all expenses of the offering of its shares incurred in connection with: i. The preparation, printing, and filing of any registration statement and/or prospectus required to be filed under applicable federal or state securities laws. ii. The preparation, printing, and distribution of prospectuses and periodic reports to existing shareholders and owners of variable annuity contracts and variable life insurance policies issued by USAA Life and funded by the Separate Accounts (collectively "USAA Life Variable Products"), as may be required under applicable federal and state laws and regulations. iii. The preparation, printing, and distribution of any proxy statements, notices, and reports, and the performance of any acts required to be performed by the Trust under applicable federal and state securities laws and regulations. iv. The issuance of Trust shares, including all federal and state, issue and/or transfer taxes, if any. (b) IMCO. IMCO will pay (or will enter into arrangements providing for others to pay) for all expenses of the offering of Trust shares incurred in connection with: i. The printing and distribution of the Trust's prospectuses that are to be used in connection with the marketing of USAA Life Variable Products. ii. The preparation, printing and distribution of advertising and sales literature for use in the offering of the Trust's shares, and the printing and distribution of reports to shareholders used as sales literature. 2 iii. The qualification of IMCO as a distributor or broker or dealer under any applicable federal or state securities laws or regulations. (c) IMCO agrees that it shall receive no compensation for the performance of its duties under this Agreement, except as otherwise specifically provided herein. No commission or other fees shall be charged or paid to any person or entity in connection with the sale of Trust shares under this Agreement. 5. INDEMNIFICATION BY IMCO IMCO shall indemnify and hold harmless the Trust and each of its Trustees and officers (or former Trustees and officers), and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act ("Indemnitees") against any loss, liability, claim, damage, or expense (including reasonable cost of investigation and defense against the same and any counsel fees reasonably incurred in connection therewith) incurred by any Indemnitees under the 1933 Act or under common law or otherwise, which arise out of or are based upon (1) any untrue or alleged untrue statements of a material fact contained in information furnished to the Trust by IMCO for use in the Trust's registration statement, prospectus, or annual or interim reports, (2) any omission or alleged omission to state a material fact in connection with such information furnished by IMCO to the Trust that is required to be stated in any of such documents or necessary to make such information not misleading, (3) any misrepresentation or omission or alleged misrepresentation or omission to state a material fact on the part of IMCO or any agent or employee of IMCO or any other person for whose acts IMCO is responsible, unless such misrepresentation or omission or alleged misrepresentation or omission was made in reliance on information furnished by the Trust, or (4) the willful misconduct or failure to exercise reasonable care and diligence on the part of IMCO or any agent or employee of IMCO or any other person for whose acts IMCO is responsible with respect to services rendered under this Agreement. This indemnity provision, however, shall not operate to protect any Trustee or officer of the Trust from any liability to the Trust by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. In case any action shall be brought against any Indemnitee, IMCO shall not be liable under its indemnity agreement contained in this paragraph with respect to any claim made against any Indemnitee, unless the Indemnitee shall have notified IMCO in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon the Indemnitee (or after the Indemnitee shall have received notice of such service on any designated agent), but failure to notify IMCO of any such claim shall not relieve it from liability to the Indemnitees against whom such action is brought otherwise than on account of this Section 6. IMCO will be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any such liability, but if IMCO elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Indemnitees which are defendants in the suit. In the event IMCO elects to assume the defense of any such suit and retain such counsel, the Indemnitees that are defendants in the suit shall bear the fees and expenses of any additional counsel retained by them, but, in case IMCO does not elect to assume the defense of ay such suit, IMCO will reimburse the Indemnitees which are defendants in the suit for the reasonable fees and expenses of any counsel retained by them. IMCO shall promptly notify the Trust of the commencement of any litigation or proceedings in connection with the issuance or sales of shares. The foregoing rights of indemnification shall be in addition to any other rights to which the Trust or a Trustee may be entitled as a matter of law. 6. INDEMNIFICATION BY TRUST The Trust agrees to indemnify and hold harmless IMCO and each person who has been, is, or may hereafter be, an officer, director, employee or agent of IMCO against any loss, damage or expense reasonably incurred by any of them in connection with any claim or in connection with any action, suit, or 3 proceeding to which any of them may be a party, which arises out of or is alleged to arise out of or is based upon any untrue or alleged untrue statement of material fact, or the omission or alleged omission to state a material fact necessary to make the statements therein not misleading, contained in the Trust's registration statement or prospectus, or any amendment or supplement thereto, unless such statement or omission was made in reliance upon written information furnished by IMCO. The foregoing rights of indemnification shall be in addition to any other rights to which IMCO may be entitled as a matter of law. 7. DURATION AND TERMINATION OF AGREEMENT (a) This Agreement shall become effective on the date set forth above and, unless terminated, shall remain in full force and effect from year to year thereafter, but only so long as such continuance is specifically approved at least annually by (i) the Board of Trustees, or by a majority of the outstanding voting securities of the Trust, cast in person or by proxy; and (ii) a majority of those Trustees who are not parties to this Agreement or interested persons of any such party cast in person at a meeting called for the purpose of voting on such approval. (b) Notwithstanding the provisions of paragraph (a), the Board of Trustees may, from time to time, establish a new effective date for the continuance of this Agreement with respect to any current or additional Fund, provided that such new effective date precedes the then current termination date of the Agreement. (c) This Agreement may be terminated at any time without payment of penalty, by the Board of Trustees, or by IMCO on 60 days' written notice to the other party. 8. AMENDMENT This Agreement may be amended at any time by mutual agreement in writing of the parties hereto, provided that any such amendment is approved by a majority of the Trustees of the Trust who are not interested persons. 9. ASSIGNMENT This Agreement shall automatically terminate in the event of its assignment (as defined in section 2(a)(4) of the 1940 Act) by IMCO; provided, however, that IMCO may employ such other person, persons, corporation, or corporations, as it shall determine, in order to assist it in carrying out this Agreement. 10. GOVERNING LAW This Agreement shall be construed in accordance with the laws of the state of Texas and the applicable provisions of the 1940 Act. To the extent the applicable law of the state of Texas, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control. 11. CONFIDENTIALITY IMCO shall not disclose or use any records or information obtained hereunder in any manner whatsoever except as expressly authorized hereunder, and further, shall keep confidential any information obtained pursuant to this Agreement with the Trust as set forth herein, and disclose such information only if the Trust has authorized such disclosure, or if such disclosure is expressly required by applicable federal or state regulatory authorities. 4 12. PRIOR AGREEMENT SUPERSEDED This Agreement supersedes any prior agreement relating to the subject matter hereof between the parties. 13. ENTIRE AGREEMENT This is the complete and entire Agreement as represented herein. IN WITNESS WHEREOF, the parties execute this Agreement on the date above. USAA INVESTMENT MANAGEMENT COMPANY USAA LIFE INVESTMENT TRUST By: /s/ Christopher W. Claus By: /s/ James M. Middleton --------------------------------- --------------------------------- Christopher W. Claus James M. Middleton President President 5 EX-99 4 novationagmt.txt EXHIBIT 2 NOVATION AGREEMENT This Novation Agreement is made effective as of June 30, 2001 among Munich American Reassurance Company of Atlanta, Georgia (hereafter referred to as "MARC"), USAA LIFE INSURANCE COMPANY (hereafter referred to -- the "Ceding Company") and Continental Assurance Company of Chicago, Illinois (hereafter referred to as "Continental") WHEREAS Continental, as a result of the sale of its Life Reinsurance Strategic Business Unit, wishes to transfer and assign the reinsurance contracts and treaties listed in Schedule A attached hereto (collectively, the (M)Reinsurance Agreements") as of the Effective Date and afl of Continental's rights, duties, obligations and liabilities wider each of the Reinsurance Agreements to MARC in order that Continental will be relieved of all of its rights, duties, obligations and liabilities under the Reinsurance Agreements; and WHEREAS the Ceding Company wishes to consent and agree to such transfer and assignment. NOW THEREFORE IN CONSIDERATION of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. Continental hereby transfers and assigns, as of the Effective Date, each of the Reinsurance Agreements and all of Continental's rights, duties, obligations and liabilities thereunder to MARC. 2. MARC hereby accepts such transfer and assignment and agrees with each of Continental and the Ceding Company that MARC shall be bound by all of the terms and conditions of the Reinsurance Agreements, shall enjoy all of Continental's rights under and shall perform all of Continental's duties, obligations and liabilities under the Reinsurance Agreements to the same extent as if MARC had been the original party to the Reinsurance Agreements instead of Continental. 3. The Ceding Company a) consents to the transfer and assignment of the Reinsurance Agreements and all of Continental's rights, duties, obligations and liabilities thereunder from Continental to MARC, agrees that MARC shall enjoy and shall be entitled to enforce all of Continental's rights under the Reinsurance Agreements and agrees that all of Continental's duties, obligations and liabilities under the Reinsurance Agreements shall be performed by MARC as if MARC had been the original party to the Reinsurance Agreements instead of Continental; and b) releases and forever discharges Continental from the observance and performance of any of the terms and conditions of the Reinsurance Agreements and all of Continental's duties, obligations and liabilities under the Reinsurance Agreements and from all claims, demands, actions and causes of action which the Ceding Company ever had, now has or may hereafter have against Continental in any way arising out of, resulting from or related to the Reinsurance Agreements or the transfer and assignment referenced herein. 4. MARC and the Ceding Company hereby ratify and confirm the Reinsurance Agreements as agreements solely between them and agree that the Reinsurance Agreements shall continue between them unaltered and in full force and effect in accordance with its terms and conditions. 5. Each party agrees to do all things necessary to give full effect to this Novation Agreement. 6. This Novation Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. NOVATION AGREEMENT IN WITNESS WHEREOF the parties have executed this Novation Agreement as of June 30, 2001. FOR: CONTINENTAL ASSURANCE COMPANY OF CHICAGO, ILLINOIS By: ______________________ Attest: ____________________ Title:______________________ Title:______________________ FOR: MUNICH AMERICAN REASSURANCE COMPANY OF ATLANTA, GEORGIA By: ______________________ Attest: ____________________ Title:______________________ Title:______________________ FOR: USAA LIFE INSURANCE COMPANY By: ______________________ Attest: ____________________ Title:______________________ Title:______________________ Schedule A To the Novation Agreement made as of the JUNE 30, 2001 Between Munich American Reassurance Company And USAA LIFE INSURANCE COMPANY Contract(s) referred to in the above referenced Novation Agreement
- ------------------------------------------------------------------------------------------- Can's Company Code Client Agreement # Treaty Effective Date Treaty Description - ------------------------------------------------------------------------------------------- K3400 2524 09/01/1997 FACULTATIVE YRT - ------------------------------------------------------------------------------------------- K3401 2525 06/01/1998 AUTOMATIC YRT - ------------------------------------------------------------------------------------------- ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________
EX-99 5 rga-treaty.txt EXHIBIT 3 ================================================================================ 3208-00-00 RISK PREMIUM REINSURANCE AGREEMENT between USAA LIFE INSURANCE COMPANY (hereinafter called the "Ceding Company") San Antonio, Texas, USA and RGA REINSURANCE COMPANY (hereinafter called the "Reinsurer") St. Louis, Missouri, USA THIS AGREEMENT IS EFFECTIVE JUNE 1, 1998 ================================================================================ TABLE OF CONTENTS =================
ARTICLE TITLE PAGE ------- ----- ---- I PARTIES TO THE AGREEMENT 3 II COMMENCEMENT, TERMINATION AND CONTINUANCE OF REINSURANCE 3 III SCOPE 4 IV COVERAGE 5 V LIABILITY 6 VI RETENTION AND RECAPTURE 7 VII REINSURANCE PREMIUMS AND ALLOWANCES 7 VIII RESERVES 8 IX TERMINATIONS AND REDUCTIONS 8 X POLICY ALTERATIONS 8 XI POLICY ADMINISTRATION AND PREMIUM ACCOUNTING 9 XII CLAIMS 10 XIII ARBITRATION 11 XIV INSOLVENCY 13 XV RIGHT TO INSPECT 13 XVI UNINTENTIONAL ERRORS, MISUNDERSTANDINGS OR OMISSIONS 13 XVII CHOICE OF LAW, FORUM AND LANGUAGE 14 XVIII ALTERATIONS TO THE AGREEMENT 14 XIX EXECUTION OF THE AGREEMENT 15 SCHEDULES --------- I REINSURANCE SPECIFICATIONS 16 II RETENTION 20 III BUSINESS COVERED 21 IV REINSURANCE PREMIUMS 22 V LIMITS 27 VI SAMPLE STATEMENT SPECIFICATIONS 28 VII SAMPLE POLICY EXHIBIT 29 VIII DEFINITIONS 30
2 ARTICLE I PARTIES TO THE AGREEMENT ------------------------ Reinsurance required by the Ceding Company will be assumed by the Reinsurer as described in the terms of this Agreement. This is an Agreement solely between the Reinsurer and the Ceding Company. In no instance will anyone other than the Reinsurer or the Ceding Company have any rights under this Agreement, and the Ceding Company is and will remain solely liable to any insured, policyowner, or beneficiary under the Original Policies reinsured hereunder. The current general and special policy conditions, the premium schedules, and underwriting guidelines of the Ceding Company, applying to the business covered by this Agreement as set out in the Schedules, will form an integral part of this Agreement. Additions or alterations to any of these conditions or schedules will be reported to the Reinsurer without delay. In the case of significant changes, both parties to the Agreement must agree to the new reinsurance conditions. ARTICLE II COMMENCEMENT, TERMINATION AND CONTINUANCE OF REINSURANCE -------------------------------------------------------- 1. AGREEMENT COMMENCEMENT ---------------------- Notwithstanding the date on which this Agreement is signed, this Agreement will take effect as from the date shown in the attached Schedule I, and applies to new business taking effect on and after this date. 2. AGREEMENT TERMINATION --------------------- This Agreement will be in effect for an indefinite period and may be terminated as to new reinsurance at any time by either party giving ninety (90) days written notice of termination. The day the notice is mailed to the other party's Home Office, or, if the mail is not used, the day it is delivered to the other party's Home Office or to an Officer of the other party will be the first day of the ninety (90) day period. During the ninety(90) day period, this Agreement will continue to operate in accordance with its terms. 3. POLICY TERMINATION ------------------ If the Policy is terminated by death, lapse, surrender or otherwise, the reinsurance will terminate on the same date. If premiums have been paid on the reinsurance for a period beyond the termination date, refunds will follow the terms as shown in Schedule I. If the Policy continues in force without payment of premium during any days of grace pending its surrender, whether such continuance be as a result of a Policy provision or a practice of the Ceding Company, the reinsurance will also continue without payment of premium and will terminate on the same date as the Ceding Company's risk terminates. If the Policy continues in force because of the operation of an Automatic Premium Loan provision, or other such provision by which the Ceding Company receives compensation for its risk, then the reinsurance will also continue and the Ceding Company will pay the Reinsurer the reinsurance premium for the period to the date of termination. 3 ARTICLE II COMMENCEMENT, TERMINATION AND CONTINUANCE OF REINSURANCE (CONTINUED) -------------------------------------------------------------------- 4. CONTINUATION OF REINSURANCE --------------------------- On termination of this Agreement in accordance with the provisions in Paragraph two of this Article, the reinsurance ceded will remain in force subject to the terms and conditions of this Agreement until their natural expiry. ARTICLE III SCOPE ----- 1. RETENTION OF THE CEDING COMPANY ------------------------------- The type and amount of the Ceding Company's retention on any one life is as shown in Schedule I. In determining the amounts at risk in each case, any additional death benefits on the same life (e.g. additional term insurance or family income benefits) will be taken into account, as will the amounts at risk under any other existing policies, at the time of commencement, of the policy ceded under this Agreement. The Ceding Company may alter its retention in respect of future new business at any time. The Ceding Company will promptly notify the Reinsurer of such alteration and its effective date. 2. CURRENCY -------- All reinsurance to which the provisions of this Agreement apply will be effected in the same currencies as that expressed in the Original Policies and as shown in Schedule I. 3. THE REINSURER'S SHARE --------------------- The Reinsurer's Share is as shown in Schedule I. 4. BASIS OF REINSURANCE -------------------- Plans of insurance listed in Schedule I will be reinsured on the basis described in Schedule I, using the rates given in the Rate Table as shown in Schedule I. 5. REINSURANCE ALLOWANCES ---------------------- The Reinsurer will pay to the Ceding Company the reinsurance allowance, if any, as shown in Schedule I. If any reinsurance premiums or installments of reinsurance premiums are returned to the Ceding Company, any corresponding reinsurance allowance previously credited to the Ceding Company, will be reimbursed to the Reinsurer. 6. PREMIUM RATE GUARANTEE ---------------------- Premium Rate Guarantees, if any, are as shown in Schedule I. 7. POLICY FEES ----------- Policy fees, if any, are as shown in Schedule I. 4 ARTICLE III SCOPE (CONTINUED) ----------------- 8. TAXES ----- Taxes, if any, are shown in Schedule I. 9. EXPERIENCE REFUND OR PROFIT COMMISSION -------------------------------------- If an experience refund or profit commission is payable under this Agreement, the conditions and formula are as shown in Schedule I. 10. EXPENSE OF THE ORIGINAL POLICY ------------------------------ The Ceding Company will bear the expense of all medical examinations, inspection fees and other charges incurred in connection with the original policy. ARTICLE IV COVERAGE -------- AUTOMATIC PROVISIONS - -------------------- For each risk on which reinsurance is ceded, the Ceding Company's retention at the time of issue will take into account both currently issued and previously issued policies. The Ceding Company must cede and the Reinsurer must automatically accept reinsurance, if all of the following conditions are met for each life: 1. RETENTION --------- The Ceding Company has retained its limit of retention as shown in Schedule I; and 2. PLANS AND RIDERS ---------------- The basic plan or supplementary benefit, if any, is shown in Schedule I; and 3. AUTOMATIC ACCEPTANCE LIMITS --------------------------- The underwriting class, age, minimum reinsurance amount, binding amounts and jumbo limits fall within the automatic limits as shown in Schedule I; and 4. UNDERWRITING ------------ The risk is underwritten according to the Ceding Company's Standard Guidelines; and The Ceding Company has never made facultative application for reinsurance on the same life to the Reinsurer or any other Reinsurer; and 5. RESIDENCE --------- The risk is a resident of the Countries, as shown in Schedule I. 5 ARTICLE IV COVERAGE (CONTINUED) -------------------- AUTOMATIC PROVISIONS (CONTINUED) - -------------------------------- If, for a given application, the Ceding Company cannot comply with the automatic reinsurance conditions described above, or if the Ceding Company submits the application to other Reinsurers for their facultative assessment, the Ceding Company can submit this application to the Reinsurer on a facultative basis. FACULTATIVE PROVISIONS - ---------------------- The Ceding Company will send copies of the original applications, all medical reports, inspection reports, attending physician's statement, and any additional information pertinent to the insurability of the risk to the Reinsurer. The Ceding Company will also notify the Reinsurer of any underwriting information requested or received after the initial request for reinsurance is made. For policies which contain automatic increase provisions, the Ceding Company will inform the Reinsurer of the initial and ultimate risk amounts for which reinsurance is being requested, or in the case of indexed amounts, the basis of the indexing. On a timely basis, the Reinsurer will submit a written decision to the Ceding Company. In no case will the Reinsurer's offer on facultative submissions be open after 120 days have elapsed from the date of the Reinsurer's offer to participate in the risk. Acceptance of the offer and delivery of the policy according to the rules of the Ceding Company must occur within 120 days of the final reinsurance offer. Unless the Reinsurer explicitly states in writing that the final offer is extended, the offer will be automatically withdrawn at the end of day 120. The Reinsurer will not be liable for proceeds paid under the Ceding Company's conditional receipt or temporary insurance agreement for risks submitted on a facultative basis. ARTICLE V LIABILITY --------- The liability of the Reinsurer for, will commence simultaneously with that of the Ceding Company and will cease at the same time as the liability of the Ceding Company ceases. 6 ARTICLE VI RETENTION AND RECAPTURE ----------------------- If the Ceding Company changes its limit of retention as shown in Schedule I, written notice of the change will promptly be given to the Reinsurer. At the option of the Ceding Company, a corresponding reduction may be made in the reinsurance in force under this Agreement, on all lives, on which the Ceding Company has maintained its maximum limit of retention, provided that all eligible business is reduced on the same basis. The Ceding Company may apply the new limits of retention to existing reinsurance and reduce and recapture reinsurance inforce in accordance with the following rules: 1. No recapture will be made unless reinsurance has been in force for the minimum period shown in Schedule I. 2. Recapture will become effective on the policy anniversary date following written notification of the Ceding Company's intent to recapture. 3. No recapture will be made unless the Ceding Company retained its maximum limit of retention for the plan, age and mortality rating at the time the policy was issued. No recapture will be allowed in any class of fully reinsured business or in any classes of risks for which the Ceding Company established special retention limits less than the Ceding Company's maximum retention limits for the plan, age, and mortality rating at the time the policy was issued. 4. If any reinsurance is recaptured, all reinsurance eligible for recapture, under the provisions of this Article, must be recaptured. 5. If there is reinsurance with other reinsurers on risks eligible for recapture, the necessary reduction is to be applied to each company in proportion to the total outstanding reinsurance. ARTICLE VII REINSURANCE PREMIUMS AND ALLOWANCES ----------------------------------- 1. LIFE REINSURANCE ---------------- Premiums for Life and Supplemental Benefit reinsurance will be as shown in Schedule I. 2. SUBSTANDARD PREMIUMS -------------------- Premiums will be increased by any (flat) extra premium or substandard premium as shown in Schedule I, charged the insured on the face amount initially reinsured. 3. JOINT POLICY PREMIUMS --------------------- In the case of joint policy premiums, if any, the premium rate payable to the Reinsurer will be as shown in Schedule I. 4. SUPPLEMENTAL BENEFITS --------------------- The Reinsurer will receive a proportionate share of any premiums for additional benefits as shown in Schedule I, as well as for any extra premiums the Ceding Company may collect for the coverage of special risks (traveling, climate, occupation, etc.). This share will be based on the ratio between the amount at risk and the total initial benefits insured and will remain constant throughout the entire period of premium payment. 7 ARTICLE VIII RESERVES -------- Reserve requirements of the Ceding Company, if any, are as shown in Schedule I. ARTICLE IX TERMINATIONS AND REDUCTIONS --------------------------- Terminations or reductions will take place in accordance with the following rules in order of priority: 1. The Ceding Company must keep its initial or recaptured retention on the policy. 2. Termination or reduction of a wholly reinsured policy will not affect other reinsurance inforce. 3. A termination or reduction on a wholly retained case will cause an equal reduction in existing automatic reinsurance with the oldest policy being reduced first. 4. A termination or reduction will be made first to reinsurance of partially reinsured policies with the oldest policy being reduced first. 5. If the policies are reinsured with multiple reinsurers, the reinsurance will be reduced by the ratio of the amount of reinsurance in each company to the total outstanding reinsurance on the risk involved. 6. When a policy is reinstated, reinsurance will be reinstated as if the lapse or reduction had not occurred. ARTICLE X POLICY ALTERATIONS ------------------ 1. REINSTATEMENT ------------- Any policy originally reinsured in accordance with the terms and conditions of this Agreement by the Ceding Company may be automatically reinstated with the Reinsurer as long as the policy is reinstated in accordance with the terms and rules of the Ceding Company. Any policy originally reinsured with the Reinsurer on a facultative basis which has been in a lapsed status for more than ninety (90) days must be submitted with underwriting requirements and approved by the Reinsurer before it is reinstated. The Ceding Company will pay the Reinsurer its share of amounts collected or charged for the reinstatement of such policies. 2. EXTENDED TERM AND REDUCED PAID-UP ADDITIONS ------------------------------------------- Changes as a result of extended term or reduced paid-up insurance will be handled like reductions. 8 ARTICLE X POLICY ALTERATIONS (CONTINUED) ------------------------------ 3. EXCHANGES OR CONVERSIONS ------------------------ An exchange or conversion is a new policy replacing a policy issued earlier by the Ceding Company or a change in an existing policy that is issued or made either: 1. Under the terms of the original policy, or, 2. Without the same new underwriting information the Ceding Company would obtain in the absence of the original policy, 3. Without a suicide exclusion period, or contestable period of equal duration, to those contained in new issues by the Ceding Company, or 4. Without the payment of the same allowances in the first year that the Ceding Company would have paid in the absence of the original policy. Exchanges or Conversions will be reinsured under this Agreement only if the original policy was reinsured with the Reinsurer; the amount of reinsurance under this Agreement will not exceed the amount of the reinsurance on the original policy with the Reinsurer immediately prior to the exchange or conversion. Premiums will be as shown in Schedule I. Note: An original date policy Reissue will not be treated as a continuation of the original policy. It will be treated as a new policy and the original policy will be treated as Not Taken. All premiums previously paid to the Reinsurer for the original policy will be refunded to the Ceding Company. All premiums will be due on the new policy from the original issue date of the old policy. Note: Re-Entry, e.g. wholesale replacement and similar programs are not covered under this Article. If Re-Entry is applicable to this treaty, then it will be covered in Schedule I. ARTICLE XI POLICY ADMINISTRATION AND PREMIUM ACCOUNTING -------------------------------------------- 1. ACCOUNTING PERIOD AND PREMIUM DUE --------------------------------- The Ceding Company will submit accounts to the Reinsurer, for reporting new business, alterations, terminations, renewals, claims, and premium due, as shown in Schedule I. 2. ACCOUNTING ITEMS ---------------- The accounts will contain a list of premiums due for the current accounting period, explain the reason for each premium payment, show premium subtotals adequate to use for premium accounting, including first year and renewal year premiums and allowances. The account information should provide the ability to evaluate retention limits, premium calculations and to establish reserves. 3. REINSURANCE ADMINISTRATION REQUIREMENTS --------------------------------------- Reinsurance Administration Requirements are as shown in Schedule I. 9 ARTICLE XI POLICY ADMINISTRATION AND PREMIUM ACCOUNTING (CONTINUED) -------------------------------------------------------- 4. PAYMENT OF BALANCES ------------------- The Ceding Company will pay any balance due the Reinsurer, at the same time as the account is rendered, but in all cases, by the Accounting and Premium Due frequency as shown in Schedule I. The Reinsurer will pay any balance due the Ceding Company, at the same time as the account is confirmed, however, at the latest, within thirty (30) days after receipt of the statement of account. Should the Reinsurer be unable to confirm the account in its entirety, the confirmed portion of the balance will be paid immediately. As soon as the account has been fully confirmed, the difference will be paid immediately by the debtor. All balances not paid within thirty (30) days of the due date shown on the statement will be in default. 5. BALANCES IN DEFAULT ------------------- The Reinsurer will have the right to terminate this Agreement, when balances are in default, by giving ninety (90) days written notice of termination to the Ceding Company. As of the close of the last day of this ninety (90) day notice period, the Reinsurer's liability for all risks reinsured under this Agreement will terminate. The first day of this ninety (90) day notice of termination, resulting from default as described in paragraph four of this Agreement, will be the day the notice is received in the mail by the Ceding Company, or if the mail is not used, the day it is delivered to the Ceding Company. If all balances in default are received within the ninety (90) day time period, the Agreement will remain in effect. The interest payable on balances in default is stipulated as shown in Schedule I. 6 OFFSET ------ Any amounts due, by either of the parties to this Agreement, whether they arise out of this Agreement, or out of any other reinsurance relationship between the parties, may be offset against the claims of the other party. This right will continue to exist after the termination of this Agreement, or of any business relationship between the parties. 7. FLUCTUATIONS IN EXCHANGE RATES ------------------------------ If the premium due periods allowed for the payment of balances are exceeded by either party, the debtor will bear the currency risk, in the event of any subsequent alteration in the exchange rate, by more than five percent, unless the debtor is not responsible for the delay in payment. ARTICLE XII CLAIMS ------ 1. NOTICE ------ The Ceding Company will promptly notify the Reinsurer of all claims. 2. PROOFS ------ In every case of loss, copies of the proofs obtained by the Ceding Company will be taken by the Reinsurer as sufficient. Copies thereof, together with proof of the amount paid on such claim by the Ceding Company will be furnished to the Reinsurer when requesting its share of the claim. 10 ARTICLE XII CLAIMS (CONTINUED) ------------------ 3. PAYMENT OF BENEFITS ------------------- The Reinsurer will pay its share of all payable claims, however, if the amount reinsured with the Reinsurer is more than the amount retained by the Ceding Company and the claim is contestable, all papers in connection with such claim, including all underwriting and investigation papers, must be submitted to the Reinsurer for its recommendation before admission of any liability on the part of the Ceding Company. If the amount of insurance changes because of a misstatement of rate classification, the Reinsurer's share of reinsurance liability will change proportionately. 4. CONTESTED CLAIMS ---------------- The Ceding Company will notify the Reinsurer of its intention to contest, compromise, or litigate a claim. Unless it declines to be a party to such action, the Reinsurer will pay its share of any settlement up to the maximum that would have been payable under the specific policy had there been no controversy plus its share of specific expenses, except as specified below. 5. CLAIMS EXPENSES --------------- If the Reinsurer declines to be a party to the contest, compromise, or litigation of a claim, it will pay its full share of the amount reinsured, as if there had been no contest, compromise, or litigation, and its proportionate share of covered expenses incurred to the date, from the date it notifies the Ceding Company it declines to be a party. 6. EXTRA CONTRACTUAL OBLIGATIONS ----------------------------- In no event will the following categories of expenses or liabilities be reimbursed: a. Routine investigative or administrative expenses; b. Salaries of employees or other internal expenses of the Ceding Company or the original issuing companies; c. Extra contractual damages, including punitive damages and exemplary damages; or d. Expenses incurred in connection with a dispute or contest arising out of conflicting or any other claims of entitlement to policy proceeds or benefits. ARTICLE XIII ARBITRATION ----------- 1. GENERAL ------- The parties agree to act in all things with the highest good faith. However, if the parties cannot mutually resolve a dispute or claim, which arises out of, or in connection with this Agreement, including formation and validity, and whether arising during, or after the period of this Agreement, the dispute or claim will be referred to an arbitration tribunal (a group of three arbitrators), and settled through arbitration. 11 ARTICLE XIII ARBITRATION (CONTINUED) ----------------------- 1. GENERAL (CONTINUED) ------------------- The arbitrators will be individuals, other than from the contracting companies, including those who have retired, with more than ten (10) years insurance or reinsurance experience within the industry. The arbitrators will base their decision on the terms and conditions of this Agreement plus, as necessary, on the customs and practices of the insurance and reinsurance industry rather than solely on a strict interpretation of the applicable law; there will be no appeal from their decision, and any court having jurisdiction of the subject matter, and the parties, may reduce that decision to judgment. 2. NOTICE ------ To initiate arbitration, either party will notify the other party by Certified Mail of its desire to arbitrate, stating the nature of the dispute and the remedy sought. The party, to which the notice is sent, will respond to the notification in writing, within ten (10) days of its receipt. 3. PROCEDURE --------- Each of the two parties will appoint one arbitrator, and these two arbitrators will select the third arbitrator. Upon the selection of the third arbitrator, the arbitration tribunal will be constituted, and the third arbitrator will act as Chairman of the tribunal. If either party fails to appoint an arbitrator within sixty (60) days after the other party has given notice of appointing an arbitrator, then the Arbitration Association, as shown in Schedule I, will appoint an arbitrator for the party that has failed to do so. The party that has failed to appoint an arbitrator will be responsible for all expenses levied by the Arbitration Association, for such appointment. Should the two arbitrators be unable to agree on the choice of the third arbitrator, then the appointment of this arbitrator is left to the Arbitration Association. Such expense shall be borne equal by each party to this Agreement. The tribunal, may in its sole discretion make orders and directions as it considers to be necessary for the final determination of the matters in dispute. Such orders and directions may be necessary with regard to pleadings, discovery, inspection of documents, examination of witnesses and any other matters relating to the conduct of the arbitration. The tribunal, will have the widest discretion permissible under the law, and practice of the place of arbitration, when making such orders or directions. 4. ARBITRATION COSTS ----------------- All costs of the arbitration will be determined by the tribunal, which may take into account the law and practice of the place of arbitration, and in what manner arbitration costs will be paid, and by whom. 5. PLACE OF ARBITRATION -------------------- The place of arbitration is as shown in Schedule I. 6. ARBITRATION SETTLEMENT ---------------------- The award of the tribunal, will be in writing, and binding upon the consenting parties. 12 ARTICLE XIV INSOLVENCY ---------- In the event of the insolvency of the Ceding Company, all reinsurance will be payable directly to the liquidator, receiver, or statutory successor of the Ceding Company without diminution. In the event of insolvency of the Ceding Company, the liquidator, receiver, or statutory successor will immediately give written notice to the Reinsurer of all pending claims against the Ceding Company on any policies reinsured. While a claim is pending, the Reinsurer may investigate and interpose, at its own expense, in the proceedings where the claim is adjudicated, any defense or defenses which it may deem available to the Ceding Company or its liquidator, receiver, or statutory successor. The expense incurred by the Reinsurer will be chargeable, subject to court approval against the Ceding Company as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to the Ceding Company solely as a result of the defense undertaken by the Reinsurer. Where two or more Reinsurers are participating in the same claim and a majority in interest elect to interpose a defense or defenses to any such claim, the expense will be apportioned in accordance with the terms of the reinsurance agreement as though such expense had been incurred by the Ceding Company. Any debts or credits, matured or unmatured, liquidated or unliquidated, in favor of or against, either the Reinsurer or the Ceding Company, with respect to this Agreement or with respect to any other claim of one party against the other, are deemed mutual debts or credits, as the case may be, and will be offset, and only the balance will be allowed or paid. ARTICLE XV RIGHT TO INSPECT ---------------- Upon request the Ceding Company will furnish the Reinsurer with detailed information concerning the risks reinsured under this Agreement. In particular the Reinsurer will be entitled to request that: 1. Copies of the whole or part of any documents relating to the risks and their reinsurance be made available to the Reinsurer at its own expense; 2. During the Ceding Company's normal office hours these documents will be made available to a representative of the Reinsurer who will be named in advance; notification of such visits will normally be given two weeks in advance and even in urgent cases at least forty-eight hours in advance; and 3. The Reinsurer will have this right of inspection as long as one of the two parties to this Agreement is claiming from the other. ARTICLE XVI UNINTENTIONAL ERRORS, MISUNDERSTANDINGS OR OMISSIONS ---------------------------------------------------- It is expressly understood and agreed that if failure to comply with any terms of this Agreement is hereby shown to be the result of an unintentional error, misunderstanding or omission, on the part of either the Ceding Company or the Reinsurer, both the Ceding Company and the Reinsurer, will be restored to the position they would have occupied, had no such error, misunderstanding or omission occurred, subject always to the correction of the error, misunderstanding or omission. 13 ARTICLE XVII CHOICE OF LAW, FORUM, AND LANGUAGE ---------------------------------- 1. CHOICE OF LAW AND FORUM ----------------------- This Agreement, will in all respects be governed by, and construed in accordance with the law and exclusive jurisdiction of the Courts, as shown in Schedule I. 2. LANGUAGE -------- The Parties hereto acknowledge and agree that, even though they may execute this Agreement in both an English version and in another language, as shown in Schedule I, the version as shown in Schedule I will control for all legal purposes in the event of any inconsistency between or disagreement between the two versions. ARTICLE XVIII ALTERATIONS TO THE AGREEMENT ---------------------------- This reinsurance Agreement constitutes the entire Agreement between the parties, with respect to the business being reinsured hereunder, and there are no understandings between the parties other than as expressed in this Agreement. Any alterations to the provisions of this Agreement will be made by Amendment, Addenda or by correspondence attached to the Agreement embodying such alterations as may be agreed upon and signed by both parties. These documents will be regarded as part of this Agreement and will be equally binding. 14 ================================================================================ ARTICLE XIX EXECUTION OF THE AGREEMENT -------------------------- In Witness of the Above, USAA LIFE INSURANCE COMPANY Of San Antonio, Texas, USA And RGA REINSURANCE COMPANY Of St. Louis, Missouri, USA Have by Their Respective Officers Executed and Delivered this Agreement in Duplicate on the Dates Indicated Below: USAA LIFE INSURANCE COMPANY BY: ________________________ BY: ________________________ TITLE: ________________________ TITLE: ________________________ DATE: ________________________ RGA REINSURANCE COMPANY BY: ________________________ TITLE: ________________________ DATE: ________________________ ================================================================================ 15 SCHEDULE I REINSURANCE SPECIFICATIONS -------------------------- - -------------------------------------------------------------------------------- COMMENCEMENT, TERMINATION AND CONTINUANCE OF REINSURANCE, ARTICLE II: - -------------------------------------------------------------------------------- 1. EFFECTIVE DATE: This Agreement applies to policies with on and after June 1, 1998. 2. POLICY TERMINATION REFUNDS: Unearned premium will be refunded on lapses, terminations and death. - -------------------------------------------------------------------------------- SCOPE, ARTICLE III: - -------------------------------------------------------------------------------- 1. RETENTION OF THE CEDING COMPANY: See Schedule II, Retention 2. CURRENCY: United States Dollars ("US$") 3. THE REINSURER'S SHARE: First Dollar Quota Share with 10% Retained 4. PLANS OF REINSURANCE: See Schedule III, Business Covered 5. BASIS OF REINSURANCE: Risk Premium Agreement (YRT) 6. REINSURANCE ALLOWANCE: See Schedule IV, Reinsurance Premiums 7. PREMIUM RATE GUARANTEE: See Schedule IV, Reinsurance Premiums 8. POLICY FEES: See Schedule IV, Reinsurance Premiums 9. TAXES: DAC TAX REGULATIONS ------------------- The Ceding Company and the Reinsurer hereby agree to the following pursuant to Section 1.848-2(g)(8) of the Income Tax Regulations issued December 29, 1992, under Section 848 of the Internal Revenue Code of 1986, as amended. 1. The term "party" will refer to either the Ceding Company or the Reinsurer as appropriate. 2. The terms used in this Article are defined by reference to Treasury Regulation Section 1.848-2 in effect as of December 29, 1992. The term "net consideration" will refer to net consideration as defined in Treasury Regulation Section 1.848-2(f). 16 SCHEDULE I REINSURANCE SPECIFICATIONS (CONTINUED) -------------------------------------- - -------------------------------------------------------------------------------- SCOPE, ARTICLE III (CONTINUED): - -------------------------------------------------------------------------------- 3. The party with the net positive consideration for this Agreement for each taxable year will capitalize specified policy acquisition expenses with respect to this Agreement without regard to the general deductions limitation of IRS Section 848(c)(1). 4. The Ceding Company and the Reinsurer agree to exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency. The Ceding Company and the Reinsurer also agree to exchange information that may be otherwise required by the IRS. 5. The Ceding Company will submit a schedule to the Reinsurer by June 1, of each year of its calculation of the net consideration for the preceding calendar year. This schedule of calculations will be accompanied by a statement signed by an officer of the Ceding Company stating that the Ceding Company will report such net consideration in its tax return for the preceding calendar year. 6. The Reinsurer may contest such calculation by providing an alternative calculation to the Ceding Company. If the Reinsurer does not so notify the Ceding Company, the Reinsurer will report the net consideration as determined by the Ceding Company in the Reinsurer's tax return for the previous calendar year. 7. If the Reinsurer contests the Ceding Company's calculation of the net consideration, the parties will act in good faith to reach an agreement as to the correct amount. If the Ceding Company and the Reinsurer reach agreement on an amount of net consideration, each party will report such amount in their respective tax returns for the previous calendar year. PREMIUM TAX: Premium Tax will not be reimbursed. EXCISE TAX: Excise Tax is not applicable to this Agreement. EXPERIENCE REFUND OR PROFIT COMMISSION: See Schedule IV, Reinsurance Premiums - -------------------------------------------------------------------------------- COVERAGE, ARTICLE IV: - -------------------------------------------------------------------------------- 1. RETENTION: See Schedule II, Retention 2. PLAN(S) AND RIDER(S): See Schedule III, Business Covered 3. AUTOMATIC ACCEPTANCE LIMITS: See Schedule V, Limits 4. UNDERWRITING CLASS: See Schedule IV, Reinsurance Premiums 5. RESIDENCE: United States, Canada, Puerto Rico, or Guam - -------------------------------------------------------------------------------- RETENTION AND RECAPTURE, ARTICLE VI: - -------------------------------------------------------------------------------- MINIMUM RECAPTURE PERIOD: Ten (10) Years 17 SCHEDULE I REINSURANCE SPECIFICATIONS (CONTINUED) -------------------------------------- - -------------------------------------------------------------------------------- REINSURANCE PREMIUMS AND ALLOWANCES, ARTICLE VII: - -------------------------------------------------------------------------------- 1. LIFE REINSURANCE: See Schedule IV, Reinsurance Premiums 2. SUBSTANDARD PREMIUMS: See Schedule IV, Reinsurance Premiums 3. JOINT POLICY PREMIUMS: See Schedule IV, Reinsurance Premiums 4. SUPPLEMENTARY BENEFITS: See Schedule IV, Reinsurance Premiums - -------------------------------------------------------------------------------- RESERVES, ARTICLE VIII: - -------------------------------------------------------------------------------- The Ceding Company agrees to post on its books any deficiency reserves on the coverage reinsured under this Agreement. - -------------------------------------------------------------------------------- POLICY ALTERATIONS, ARTICLE X: - -------------------------------------------------------------------------------- 1. EXCHANGES OR CONVERSIONS: See Schedule IV, Reinsurance Premiums 2. RE-ENTRY'S: See Schedule IV, Reinsurance Premiums - -------------------------------------------------------------------------------- POLICY ADMINISTRATION AND PREMIUM ACCOUNTING, ARTICLE XI: - -------------------------------------------------------------------------------- 1. ACCOUNTING PERIOD AND PREMIUM DUE: Annually in Advance 2. ACCOUNTING ITEMS: See Schedule VI, Sample Statement Specifications and Schedule VII, Sample Policy Exhibit 3. REINSURANCE ADMINISTRATION: Self Administration 4. BALANCES IN DEFAULT: The Reinsurer reserves the right to charge interest at the Prime Rate plus 2% as stated in the Wall Street Journal on January 1 prior to the due date of the premium when: Renewal premiums are not paid within sixty (60) days of the due date. Premiums for new business are not paid within one hundred twenty (120) days of the date the policy is issued. 18 SCHEDULE I REINSURANCE SPECIFICATIONS (CONTINUED) -------------------------------------- - -------------------------------------------------------------------------------- ARBITRATION, ARTICLE XIII: - -------------------------------------------------------------------------------- 1. ARBITRATION ASSOCIATION: American Arbitration Association 2. PLACE OF ARBITRATION: St. Louis, Missouri, USA - -------------------------------------------------------------------------------- CHOICE OF LAW, FORUM AND LANGUAGE, ARTICLE XVII: - -------------------------------------------------------------------------------- 1. CHOICE OF LAW AND FORUM: Missouri, USA 2. LANGUAGE: English 19 SCHEDULE II RETENTION --------- 1. Life Insurance: a. Non-Military Life $600,000 per life b. Enlisted Military Personnel On Active Duty $50,000 per life c. All Other Military Personnel
Rank Standard and Substandard ---- ------------------------ W0 through 0-3 $250,000 0-4 and above $350,000
2. Disability Waiver of Premium Benefit:
Issue Age Standard and Substandard - --------- ------------------------ 15-55 $600,000
3. Accidental Death Benefit: Not reinsured under this Agreement. 20 SCHEDULE III BUSINESS COVERED ---------------- June 1, 1998 - -------------------------------------------------------------------------------- PLAN(S) - -------------------------------------------------------------------------------- Variable Universal Life - -------------------------------------------------------------------------------- RIDER(S) - -------------------------------------------------------------------------------- Waiver of Monthly Deduction 21 SCHEDULE IV REINSURANCE PREMIUMS -------------------- - -------------------------------------------------------------------------------- LIFE: - -------------------------------------------------------------------------------- Business Covered, as shown in Schedule III will be reinsured on the yearly renewable term basis with the Reinsurer participating only in mortality risks (not cash values, loans, dividends or other features specific to permanent policies). The mortality risk shall be the net amount at risk on that portion of the policy which is reinsured with the Reinsurer. The Life Reinsurance premium rates contained in this Agreement are guaranteed for one year, and the Reinsurer anticipates continuing to accept premiums on the basis of these rates indefinitely. If the Reinsurer deems it necessary to increase rates, such increased rates cannot be higher than the valuation net premiums for annually renewable term insurance calculated using the minimum statutory mortality rates and maximum statutory interest rate for each year of issue. Reinsurance premiums will be determined according to the amount reinsured with the Reinsurer per insured life as follows. The life reinsurance premium will be calculated in the case of life risks, by multiplying the appropriate life premium rate, from the attached Rate Table labeled below, for the age of the insured, at the beginning of the policy year, by the amount at risk reinsured for that policy year, multiplied by the applicable pay percentage as shown below. The same procedure will apply for single premium policies and for paid up policies.
PLAN(S) RATE TABLE UNDERWRITING CLASS YEAR 1 YEARS 2 + - ------- ---------- ------------------ ------ --------- Variable Universal Life S-1 Preferred Ultra 0% 32% Preferred Plus 0% 40% Preferred 0% 48% Standard Plus 0% 45% Standard 0% 63%
All Policy Fees will be retained by the Ceding Company. - -------------------------------------------------------------------------------- SUBSTANDARD PREMIUMS, CONTINUED: - -------------------------------------------------------------------------------- SUBSTANDARD TABLE EXTRA ----------------------- Premiums will be increased by any (flat) extra premium or substandard premium charged the insured on the face amount initially reinsured. For substandard table ratings, premiums will be increased by the following percent per table: 25% FLAT EXTRA PREMIUMS ------------------- The premium will be increased by any flat extra premium charged the insured on the face amount initially reinsured, less total allowances as shown below:
First Year Permanent First Year Temporary -------------------- -------------------- Payable 6 Years or More: Payable 1 - 5 Years: Renewal: - ------------------------ -------------------- -------- 100% 20% 20%
22 SCHEDULE IV REINSURANCE PREMIUMS (CONTINUED) -------------------------------- - -------------------------------------------------------------------------------- JOINT POLICY PREMIUMS: - -------------------------------------------------------------------------------- Not applicable under this Agreement. - -------------------------------------------------------------------------------- SUPPLEMENTAL BENEFITS: - -------------------------------------------------------------------------------- WAIVER OF MONTHLY DEDUCTION --------------------------- The annual premium to be paid to the Reinsurer for reinsurance of Waiver of Premium benefits will be based on the appropriate rate from the attached rates tables, less the applicable allowance as shown below:
RATE TABLE FIRST YEAR ALLOWANCE RENEWAL YEAR ALLOWANCE - ---------- -------------------- ---------------------- S-3 100% 20%
- -------------------------------------------------------------------------------- RE-ENTRY'S: - -------------------------------------------------------------------------------- Re-Entry's are not covered under this Agreement. - -------------------------------------------------------------------------------- CONVERSIONS OR EXCHANGES: - -------------------------------------------------------------------------------- If any business covered under this Agreement is subsequently converted or exchanged to any other plan reinsured by the Reinsurer, then such business will be reinsured at the rates as shown in the Agreement covering the new plan. Rates and allowances, or pay percentages, applicable to the new plan will be determined at point in scale based on the original policy that is being converted or exchanged. If the Agreement including the new rates requires policy fees, then they will also apply to the new plan. If any business covered under this Agreement, is subsequently converted or exchanged to a plan that is not reinsured with the Reinsurer, under a specific document, then such business will be reinsured with the Reinsurer, at the rates and policy fees as shown below. Rates will be determined at point in scale, based on the original policy that is being converted or exchanged. Rate Table S-2 - -------------------------------------------------------------------------------- EXPERIENCE REFUND OR PROFIT COMMISSION: - -------------------------------------------------------------------------------- Experience Refund or Profit Commission is not covered under this Agreement. 23 SCHEDULE IV REINSURANCE PREMIUMS -------------------- - -------------------------------------------------------------------------------- RATE SCHEDULE S-1 - -------------------------------------------------------------------------------- 24 SCHEDULE IV REINSURANCE PREMIUMS -------------------- - -------------------------------------------------------------------------------- RATE SCHEDULE S-2 - -------------------------------------------------------------------------------- 25 SCHEDULE IV REINSURANCE PREMIUMS -------------------- - -------------------------------------------------------------------------------- RATE SCHEDULE S-3 - -------------------------------------------------------------------------------- 26 SCHEDULE V LIMITS ------ - -------------------------------------------------------------------------------- REINSURER'S SHARE: - -------------------------------------------------------------------------------- 20% - -------------------------------------------------------------------------------- MINIMUM REINSURANCE AMOUNT: - -------------------------------------------------------------------------------- $ 10,000 - -------------------------------------------------------------------------------- BINDING LIMITS: - -------------------------------------------------------------------------------- MAXIMUM AUTOMATIC BINDING LIMIT: -------------------------------- Life: $6,600,000 - -------------------------------------------------------------------------------- JUMBO LIMIT: - -------------------------------------------------------------------------------- $ 25,000,000 27 SCHEDULE VI REINSURANCE SPECIFICATIONS -------------------------- - -------------------------------------------------------------------------------- SAMPLE STATEMENT SPECIFICATIONS - -------------------------------------------------------------------------------- The following information should appear on each Statement and Inforce listing: o Name of the Insured(s) o Date of Birth of the Insured(s) o The Issue Age of each Insured(s) o The Sex of the Insured(s) o The Insured(s) Country of Residence o Underwriting Classification (i.e. Preferred, Standard, etc.) o Smoking Class (i.e. Smoker, Non Smoker, etc.) o Indication if Business is Facultative or Automatic o Indication if Business is Risk Premium or Coinsurance o Policy Number(s) o Plan Code(s)/Kind Code(s): Cession Series o Original Face Amount of the Policy(s) o Amount(s) Ceded to the Reinsurer o Amount of Premium being Paid; separated for Supplementary Benefits. o The Amount of any Reinsurance Premium Allowances o Any Extra Premiums concerned. Example: $5 / 1000 / 5 YRS o Effective Date and Duration of any Policy(s) Change, Reissue, or Termination 28 SCHEDULE VII REINSURANCE SPECIFICATIONS -------------------------- - -------------------------------------------------------------------------------- SAMPLE POLICY EXHIBIT - --------------------------------------------------------------------------------
POLICY SUMMARY NUMBER OF REINSURANCE - -------------- --------- ----------- CLASSIFICATION POLICIES AMOUNT - -------------- -------- ------ Inforce as of Last Report 878 $410,220,973.00 New Issues 2 $ 516,666.00 Reinstatements 3 $ 483,334.00 Increases $ 500,000.00 Decreases - Still Inforce $ 133,332.00 Rollover - In 0 $ 0.00 Deduct By: - ---------- Death 0 $ 0.00 Surrender 1 $ 250,000.00 Lapse 4 $ 1,000,001.00 Conversion - Out 0 $ 0.00 Decreases - Termination 3 $ 299,999.00 Inactive - Pending 0 $ 0.00 Not Taken 0 $ 0.00 Inforce as of Current Report 875 $410,037,641.00
29 SCHEDULE VIII DEFINITIONS ----------- ASSUME - To accept or takes over a risk, the converse of cedes. AUTOMATIC REINSURANCE - A reinsurance agreement under which the Reinsurer is obligated to accept or assume risks which meet certain specific criteria based on the Ceding Company's underwriting. BINDING LIMIT - The amount of risk over the Ceding Company's retention, which can be ceded automatically if all automatic conditions are met. CASH VALUE - The amount of money which the policy owner will receive as a refund if the policy owner cancels the coverage and returns the policy to the company. CEDE - To transfer an insurance risk from the company originally issuing the policy to another insurance company known as the Reinsurer. CEDING COMPANY - A ceding insurer is an insurer which underwrites and issues an original, principal policy to an insured and contractually transfers (cedes) a portion of the risk to the Reinsurer. A ceding Reinsurer is a Reinsurer which transfers (cedes) a portion of the underlying reinsurance to a retrocessionnaire. CEDING COMPANY'S PUBLISHED TERM CONVERSION GUIDELINES CEDING COMPANY'S STANDARD GUIDELINES CONDITIONAL RECEIPT - A provision included in some life insurance policies providing coverage from the date of the application to the date at which the policy is either issued or declined. EXPERIENCE REFUND OR PROFIT COMMISSION - A provision found in some reinsurance agreements which provides for profit sharing. Parties agree to a formula for calculating profit, an allowance for the Reinsurer's expenses, and the Ceding Company's share of such profit after expenses. EXTRA CONTRACTUAL OBLIGATIONS (ECO) - A generic term that, when used in a reinsurance agreement, refers to damages awarded by a court against an insurer which are outside the provisions of the insurance policy, due to the insurer's bad faith, fraud or gross negligence in the handling of a claim. FACULTATIVE - Reinsurance under which the Ceding Company has the option (faculty) of submitting and the Reinsurer has the option of accepting or declining individual risks. This Agreement merely reflects how individual facultative reinsurance will be handled. FLAT EXTRA PREMIUM - A method for rating substandard risks used when the extra risk is considered to be constant. The underwriter assesses a specific extra premium for each $1,000 of insurance. Flat extra ratings usually apply to applicants in hazardous occupations or avocations, aviation, or with certain physical impairments of a temporary nature. INDEXING - The adjustment of the Ceding Company's retention and the reinsurance limit by a measure of inflation such as the Consumer Price Index. ORIGINAL POLICY(S) - Insurance contracts between the Original Company and the Insured(s). POLICY RESERVE - A liability account that identifies the amount of assets that, together with the future premiums to be received from inforce policies, is expected to be sufficient to pay future claims on those inforce policies. Also called a legal reserve or a statutory reserve. 30 SCHEDULE VIII DEFINITIONS (CONTINUED) ----------------------- POOL - A method of allocating reinsurance among several Reinsurers. Using this method, each Reinsurer receives a specified percentage of each risk ceded into the pool. A reinsurance pool is a multi-Reinsurer agreement under which each Reinsurer in the group or pool assumes a specified portion of each risk ceded to the pool. PREMIUM - (Written/Unearned/Earned) - Written premium is premium registered on the books of an insurer or Reinsurer at the time a policy is issued and paid. Premium for a future exposure period is said to be unearned premium. For an individual policy, written premium minus unearned premium equals earned premium. Earned premium is income for the accounting period while unearned premium will be income in a future accounting period. PUNITIVE DAMAGES - A term that, when used in reinsurance agreements, refers to damages awarded by a court against an insured or against an insurer in addition to compensatory damages. Punitive damages are intended to punish the insured or the insurer for willful and careless misconduct and to serve as a deterrent. When the award is against an insurer, it is usually related to the conduct of the insurer in the handling of a claim. QUOTA SHARE - A form of reinsurance in which premiums and losses are shared proportionately between the Ceding Company and the Reinsurer, in which the same percentage applies to all policies reinsured. RATE - The premium rate is the amount of premium charged per exposure unit, e.g. per $1,000. RECAPTURE - The process by which the Ceding Company recovers the liabilities transferred to the Reinsurer. REINSURER - A company which contractually assumes all or part of the Ceding Company's risk. RESERVE - See Policy Reserves RETENTION - The dollar amount or percentage of each loss retained by the Ceding Company under this reinsurance agreement. The Ceding Company's retention is not reinsured in any way. RISK - Insurance on an individual life. RISK PREMIUM REINSURANCE - Another name for Yearly Renewable Term (YRT) reinsurance. A form of reinsurance under which the risks, but not the permanent plan reserves, are transferred to the Reinsurer for a premium that varies each year with the amount at risk and the ages of the insureds. Under the YRT method, the Ceding Company will transfer to the Reinsurer the mortality risk on either a net amount at risk basis or on an approximation of the net amount at risk basis. SELF ADMINISTRATION - A reinsurance arrangement where the Ceding Company provides the Reinsurer with periodic reports for reinsurance ceded giving premium, inforce, reserve, and any other information required by the Reinsurer for its financial reports. Self Administration is also known as Bulk or Bordereaux. STANDARD GUIDELINES - The underwriting guidelines intended to be applied to all applications for insurances of the type(s) reinsured under this agreement. SUBSTANDARD RISKS - Those insureds who, under the terms of the Ceding Company's standard guidelines, do not meet the criteria for issuance at standard premium rates. SUBSTANDARD TABLE EXTRA - Substandard table extra ratings usually apply to physically impaired lives. The rates will be increased by a factor as shown in Schedule I for each table of additional mortality. SUM AT RISK OR NET AMOUNT AT RISK - The excess of the death benefit of a policy over the policy reserve. 31 SCHEDULE VIII DEFINITIONS (CONTINUED) ----------------------- TERMINATION - The formal ending of a reinsurance agreement by its natural expiry, cancellation or commutation by both parties. Terminations can be either on a cutoff or runoff basis. Under cutoff provisions, the parties' obligations are fixed as of the agreed cutoff date. Otherwise, obligations incurred while the agreement was inforce are run off to their natural extinction. YEARLY RENEWABLE TERM - Another name for Risk Premium Reinsurance. 32 EX-99 6 munich-treaty.txt EXHIBIT 4 A USAA LIFE INSURANCE COMPANY [LOGO OF USAA] =========================================================== USAA(R) July 25, 2000 Sig C. Brekke, FLMI, AALU Vice President Munich American Reassurance Co 56 Perimeter Center East Atlanta, GA 30346-2290 RE: All existing treaties Dear Sig: Enclosed is the proposed standard claim form presented at the USAA Financial Conference, Reinsurance Breakout Session on May 8,2000. Please take the time to carefully review the form, as changes have been made to the form discussed at the conference. Effective immediately, we intend that this form will be used for USAA Life to provide notice to MARC of the contest, compromise, or litigation of a claim, as required by the terms of the existing agreements. Unless USAA Life receives written notice from MARC in response that MARC does not consent to the contest, compromise, or litigation, USAA Life will assume that MARC consents to the contest, compromise, or litigation, and will reimburse USAA Life for MARC's portion of the associated liability and expenses in accordance with the terms of the existing agreements, including MARC's proportionate share of any compromise or settlement. If you agree with the above, please sign and date in the spaces indicated below and return the duplicated copy to us. USAA Life Insurance Company Munich American Reassurance Co /s/ /s/ - --------------------------- ------------------------------ Signature Signature Allen R. Pierce, VP Actuary Sig C. BREKKE, Vice President - --------------------------- ------------------------------ Name & Title Name & Title 7/27/2000 8/29/00 - --------------------------- ------------------------------ Date Date 9800 Fredericksburg Road San Antonio, Texas 78288 1-800-531-8000 in San Antonio 498-8000 31710-0198 ---------- [LOGO OF USAA] USAA LIFE INSURANCE COMPANY USAA(R) USAA LIFE INSURANCE COMPANY OF NEW YORK REINSURANCE DEATH CLAIM FORM ---------------------------- - -------------------------------------------------------------------------------- I. CLAIM DATA - -------------------------------------------------------------------------------- REINSURANCE COMPANY: Munich American Reinsurance Co STATUS ------------------------------ INSURED: ___________________________________________ [ ] INCONTESTABLE DATE OF BIRTH: _____________________________________ [ ] CONTESTABLE DATE OF DEATH: _____________________________________ [ ] UNDER INVESTIGATION CAUSE OF DEATH: ____________________________________ [ ] SETTLED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- II. NOTIFICATION - -------------------------------------------------------------------------------- [ ] PRELIMINARY NOTICE [ ] NOTIFICATION OF CONTEST [ ] REQUEST FOR PAYMENT /COMPROMISE/S LITIGATION - -------------------------------------------------------------------------------- POLICIES ISSUED AS A RESULT OF CONVERSION, EXCHANGE OR REPLACEMENT OF OTHER USAA LIFE INSURANCE COVERAGE: [ ] YES IF YES, PLEASE PROVIDE ORIGINAL POLICY DATE:___ ORIGINAL $:___ THE FOLLOWING INFORMATION: [ ] NO POLICY #s: POLICY #s: POLICY #s: - -------------------------------------------------------------------------------- *THIS CLAIM FORM IS NOTIFICATION OF USAA'S INTENTION TO CONTEST, COMPROMISE, OR LITIGATE A CLAIM IN ACCORDANCE WITH THE TREATY TERMS. UNLESS REINSURER NOTIFIES USAA LIFE, IN WRITING, THAT IT DECLINES TO BE A PARTY TO SUCH ACTION, REINSURER WILL PAY ITS SHARE OF ANY SETTLEMENT UP TO THE MAXIMUM THAT WOULD HAVE BEEN PAYABLE UNDER THE SPECIFIC POLICY PLUS ITS SHARE OF SPECIFIC EXPENSES AND DAMAGES, IF ANY, IN CONNECTION WITH THE CONTEST, COMPROMISE, OR LITIGATION. FOR INCONTESTABLE CLAIMS, WE WILL PROCESS ALL REQUIREMENTS AND PROCEED WITH CLAIM PAYMENT UNLESS NOTIFIED OTHERWISE. - -------------------------------------------------------------------------------- DATE OF DATE OF REINSTATEMENT AMOUNT OF POLICY NUMBER ISSUE FACE AMOUNT TERMINATION DATE REINSURANCE - -------------- ------- ----------- ----------- ------------- -------------- ______________ _______ ___________ ___________ _____________ ______________ ______________ _______ ___________ ___________ _____________ ______________ ______________ _______ ___________ ___________ _____________ ______________ ______________ _______ ___________ ___________ _____________ ______________ ______________ _______ ___________ ___________ _____________ ______________ TOTAL ISSUED: _________ AMOUNT REINSURED W/REINSURER: ____________ LESS TERMINATED: _________ AMOUNT W/OTHER REINSURERS: ____________ USAA RETENTION: ____________ AMOUNT IN FORCE: _________ TOTAL: ____________ - -------------------------------------------------------------------------------- III. FINAL DISPOSITION/REQUEST FOR PAYMENT - -------------------------------------------------------------------------------- [ ] CLAIM HAS BEEN [ ] SETTLEMENT HAS BEEN SENT [ ] CLAIM [ ] POLICY APPROVED TO THE BENEFICIARY DENIED RESCINDED - -------------------------------------------------------------------------------- POLICY NUMBER REINSURED AMOUNT INTEREST TOTAL - ------------------ ------------------------- ----------------- -------------- __________________ _________________________ _________________ ______________ __________________ _________________________ _________________ ______________ __________________ _________________________ _________________ ______________ __________________ _________________________ _________________ ______________ __________________ _________________________ _________________ ______________ SUB TOTAL: ______________ INVESTIGATION EXPENSE: ______________ INTEREST PAID AT _____% FOR_____DAYS. LEGAL EXPENSE: ______________ TOTAL REQUESTED: ______________ - -------------------------------------------------------------------------------- COMMENTS: - -------------------------------------------------------------------------------- INCONTESTABLE CLAIMS REQUIREMENTS: CONTESTABLE CLAIMS REQUIREMENTS: ---------------------------------- -------------------------------- - Complete this form & attach proof IF CEDED FACULTATIVELY: of death -Attach proof of death, complete this form & investigation reports IF CEDED AUTOMATICALLY: -Attach proof of death, complete this form, investigation reports & underwriting papers - -------------------------------------------------------------------------------- Date: _______ Completed By: Cheryl Moczygemba Title: Reinsurance Specialist ----------------- ---------------------- Ceding Company Name: USAA Phone#: 210-498-9248 Fax#: 210-498-0338 ---- ------------ ------------ Address: ATTN: REINSURANCE Wire Information: NATIONS BANK, DALLAS ----------------- -------------------- DEPT., F-2-E ABA #111000025 ------------ -------------- 9800 FREDERICKSBURG RD. ACCOUNT #7110373357 ----------------------- ------------------- SAN ANTONIO, ACCOUNT NAME- USAA LIFE ------------ ----------------------- TX 78288-0338 ------------- - -------------------------------------------------------------------------------- 36557-0800 ---------- LUF749ST [LOGO OF MUNICH AMERICAN MUNICH AMERICAN REASSURANCE COMPANY REASSURANCE COMPANY] - -------------------------------------------------------------------------------- Maureen L. Fuller, FLMI, ALHC Treaty Associate 56 Perimeter Center East, N.E. August 31, 2000 Atlanta, GA 30346-2290 Mailing Address: P.O. BOX 3210 Atlanta, GA 30302-3210 Telephone: (770) 350-3239 Mr. Allen R. Pierce Telefax:(770)350-3339 Vice President, Actuary E-mail: mfuller@marclife.com USAA Life Insurance Company 9800 Fredericksburg Road San Antonio, TX 78288 Dear Allen: Enclosed is a signed copy of the letter adding your new claim form to our reinsurance agreements. I will file a copy with all of the agreements that we have with USAA. The claim form has been reviewed and approved of by our claims and administration departments. Thanks for your help. Sincerely, MLF/ c: S. C. Brekke MARC-Life Munich Re Group T [LOGO OF MUNICH AMERICAN MUNICH AMERICAN REASSURANCE COMPANY REASSURANCE COMPANY] - -------------------------------------------------------------------------------- AUTOMATIC REINSURANCE AGREEMENT effective June 1, 1998 between USAA LIFE INSURANCE COMPANY SAN ANTONIO, TEXAS (hereinafter called the Ceding Company) and MUNICH AMERICAN REASSURANCE COMPANY ATLANTA, GEORGIA (hereinafter called MARC-Life) Treaty ID: 1544 TABLE OF CONTENTS Article I Basis of Reinsurance 1 Article II Mode of Notification and Cession 2 Article III Liability of MARC-Life 2 Article IV Plan of Reinsurance 3 Article V Reinsurance Premiums 4 Article VI Tax Procedures 4 Article VII Claims 5 Article VIII Policy Changes 6 Article IX Accounting 7 Article X Expenses of Original Policy 7 Article XI Errors and Omissions 8 Article XII Retention Limit Changes (Recapture) 8 Article XIII Inspection of Records 9 Article XIV Insolvency 10 Article XV Arbitration 10 Article XVI Parties to Agreement; Entire Agreement 12 Article XVII Duration of Agreement; Termination 12 Article XVIII Effective Date; Execution 13 Exhibit I Reinsurance Submission Form Exhibit II Limits and Special Conditions Exhibit III Retention Limits of the Ceding Company Exhibit IV Life Reinsurance Premiums Exhibit V Accidental Death Reinsurance Premiums Exhibit VI List of Risks Reinsured Exhibit VII List of Amendments Exhibit VIII In-Force Summary Form
- -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- ARTICLE I BASIS OF REINSURANCE 1. On and after the effective date of this agreement, the Ceding Company will automatically cede to MARC-Life its proportional share of the pool as defined in Exhibit II. MARC-Life will automatically accept its share within the limits shown in Exhibit II, provided the Ceding Company keeps its regular retention and applies its normal underwriting standards. The Ceding Company's regular retention limits are shown in Exhibit III. Normal underwriting standards are explained in paragraph 7 of this article. 2. If the Ceding Company is already on the risk for its regular retention under previously issued policies, MARC-Life will automatically accept reinsurance up to the limits shown in Exhibit II, provided the Ceding Company has applied the same underwriting rules it would have applied if the new policy had fallen completely within its regular retention. 3. If the Ceding Company retains less than its regular retention on a risk, MARC-Life will automatically accept an amount not exceeding the amount retained by the Ceding Company on the current application. Facultative Submissions 4. The Ceding Company may submit any risk that is eligible for automatic reinsurance to MARC-Life for its underwriting opinion. If such risk is acceptable, it will be reinsured automatically under this agreement. 5. In addition, the Ceding Company may apply to MARC-Life for facultative reinsurance of any individual life risk that is issued on a policy plan covered under this agreement. An application may include waiver of premium disability or accidental death benefits with life. 6. The Ceding Company will make such facultative submissions by sending MARC-Life copies of all papers relating to the insurability of the risk, together with a Reinsurance Submission Form (Exhibit I). MARC-Life will examine the papers and notify the Ceding Company of its 1 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- underwriting action promptly. Any offer made by MARC-Life will expire as indicated in the offer unless the Ceding Company withdraws its application earlier. If no expiration date is shown in the offer, the offer will expire after 120 days from the date of the offer. The Ceding Company must notify MARC-Life of its acceptance of an offer before the expiration of the offer and during the lifetime of the insured. Underwriting Standards 7. The Ceding Company will use MARC-Life's Life Underwriting Manual to determine underwriting risk classifications, unless the Ceding Company and MARC-Life agree to use an alternative method. The Ceding Company should discuss any proposed changes in underwriting standards, requirements, or other criteria with MARC-Life before implementation. ARTICLE II MODE OF NOTIFICATION AND CESSION 1. There will be no individual cessions for risks reinsured hereunder. Instead, each month the Ceding Company will supply MARC-LIFE with three lists containing the information shown in Exhibit VI, "List of Risks Reinsured," Exhibit VII, "List of Amendments," and Exhibit VIII, "In-Force Summary." The Ceding Company will submit all monthly lists to MARC-Life no later than the tenth day of the following month. 2. If the Ceding Company chooses to report its reinsurance transactions via electronic media, it will consult with MARC-Life to determine the appropriate format. The Ceding Company will notify MARC-Life before making any changes in the data format or code structure of any such reports. ARTICLE III LIABILITY OF MARC-LIFE For automatic reinsurances, MARC-Life's liability will begin at the same time as the Ceding Company's liability. For facultative submissions, MARC-Life's liability will begin at the same time as the Ceding Company's liability if all the requirements of Articles I and II have been met. 2 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- ARTICLE IV PLAN OF REINSURANCE 1. Life reinsurance will be ceded on a yearly renewable term basis for the Reinsurance Death Benefit. Reinsurance Death Benefit 2. The Reinsurance Death Benefit will be rounded to the nearest dollar and will equal the Proportion of the Policy Reinsured multiplied by the difference between the death benefit and the cash value included in the death benefit. Proportion of the Policy Reinsured 3. The Proportion of the Policy Reinsured will be as stated in Exhibit II attached hereto. Increases and Decreases 4. Any increase or decrease in the death benefit will be shared proportionately by the Ceding Company and MARC-Life until the Ceding Company has reached its retention limit. Additional increases will be assumed by MARC-Life subject to the provisions for increased amounts specified in Article VIII and Exhibit II. Additional Benefits 5. Reinsurance of waiver of premium disability and accidental death benefits will agree with the Ceding Company's original policy forms. The Ceding Company must furnish MARC-Life with copies of its waiver of premium disability and accidental death riders and keep MARC-Life informed of any changes. 6. MARC-Life will not participate in gross annual premiums and policy fees paid by the policyholder, expense charges, cash values, accumulation fund amounts, dividends, nor any benefits not expressly referred to herein. 3 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- ARTICLE V REINSURANCE PREMIUMS 1. The reinsurance premium rates for life insurance are in Exhibit IV. The reinsurance premium rates for accidental death benefits are in Exhibit V. 2. The reinsurance premiums for waiver of premium disability benefits will be the following percentages of the premium that the Ceding Company charges the insured on the Reinsurance Death Benefit: First Year Renewal Years ---------- ------------- 0% 90% 3. The Ceding Company will pay the reinsurance premiums annually in advance. These premiums will be payable as long as the reinsurance remains in force. If any reinsurance is reduced or terminated, MARC-Life will refund any unearned portion of reinsurance premium. 4. MARC-Life cannot guarantee the life reinsurance premium rates for more than one year; however, MARC-Life expects to continue accepting premiums on these rates indefinitely. ARTICLE VI TAX PROCEDURES 1. MARC-Life will not reimburse the Ceding Company for any state premium taxes the Ceding Company has to pay. 2. Both companies hereby enter into an election under Treasury Regulations Section 1.848-2(g)(8) whereby: a. For each taxable year under this agreement, the party with net positive consideration, as defined in Treasury Code Section 848, will capitalize specified policy acquisition expenses with respect to this reinsurance agreement without regard to the general deductions limitation of Section 848(c)(1). 4 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- b. Both companies agree to exchange information about the amount of net consideration for all reinsurance agreements in force between them to ensure consistency for purposes of computing specified policy acquisition expenses. c. This election will be effective as of the beginning of the taxable year that includes the effective date of this agreement. This election will remain in effect for all future taxable years for which this agreement remains in effect. ARTICLE VII CLAIMS 1. If the Ceding Company pays a claim in full, MARC-Life will pay the Ceding Company the full Reinsurance Death Benefit. If the Ceding Company pays less than the full amount of a claim, MARC-Life and the Ceding Company will share proportionately in the reduction. 2. If any special expenses are involved in the settlement of a claim, MARC-Life and the Ceding Company will share the expenses proportionately. Such special expenses include, but are not limited to, court and arbitration costs, special investigations, etc. The following will not be considered special expenses: a. Salaries of the Ceding Company's and MARC-Life's employees b. Expenses incurred in connection with a dispute or contest arising out of conflicting claims of entitlement to policy proceeds or benefits that the Ceding Company admits are payable c. Expenses, fees, settlements, or judgements arising out of or in connection with claims made against the Ceding Company for extra-contractual damages, such as punitive damages, bad faith damages, or compensatory damages that may arise from acts or omissions of the Ceding Company in its conduct with its own insured, policy owner, beneficiary or assignee of the policy, or others; provided, however, that MARC-Life will pay its proportionate part of any such 5 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- expenses, fees, settlements, and judgements solely to the extent that such expenses, fees, settlements, and judgements result directly from acts or omissions of MARC-Life, or acts or omissions of the Ceding Company to which MARC-Life affirmatively consented in writing or that were directed, ratified, or agreed to by MARC-Life in writing 3. Both companies will share proportionately in any increase or reduction resulting from an insured's misstatement of age or sex. 4. In every case of loss, any proofs acceptable to the Ceding Company will be sufficient for MARC-Life. However, the Ceding Company must furnish MARC-Life with copies of the proofs. Contestable Claims 5. The Ceding Company must give MARC-Life advance notice of any contestable claim if fifty percent or more of the life or waiver of premium disability risk is reinsured by MARC-Life. The Ceding Company must also give MARC-Life advance notice of any contestable accidental death claim if the accidental death benefit is reinsured hereunder. On request, the Ceding Company will submit all papers relating to any such claim to MARC-Life for its opinion before making any commitment or payment to the claimant. ARTICLE VIII POLICY CHANGES 1. The Ceding Company will include any changes in the List of Amendments described in Exhibit VII. 2. If the face amount or death benefit is increased according to procedures in the policy, the Reinsurance Death Benefit and the Proportion of the Policy Reinsured will be recalculated. Such increases are subject to the submission of satisfactory evidence of insurability and will therefore be treated as new issues, subject to the provisions of Article I and the limitations shown in Exhibit II. Reinsurance premiums for such increased amounts will be calculated as for other new issues. 6 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- 3. If any portion of the total insurance retained by the Ceding Company on any life is reduced or terminated, the amount of reinsurance carried by the Ceding Company on that life will be reduced by a like amount. The reinsurance on the policy or policies reduced or terminated will be the first to be reduced. If further reduction in reinsurance is required, the cessions to be reduced or terminated will be determined by the order in which they were reinsured. The first to be reinsured would be the first to be reduced or terminated, and so on. If the reinsurance is shared by two or morereinsurers, the reduction will be prorated among all the reinsurers. 4. If a policy is reinstated in accordance with its terms and the Ceding Company's reinstatement rules, reinsurance of the death benefit and other benefits will be restored as if no change had occurred. The reinsurance premium will be appropriately adjusted. ARTICLE IX ACCOUNTING 1. Within the first ten days of each calendar month, the Ceding Company will send MARC-Life the List of Risks Reinsured, the List of Amendments, and the In-Force Summary, including all the information required by Exhibits VI, VII, and VIII. 2. If the Ceding Company owes MARC-Life, it will remit the amount owed with the statement. MARC-Life will remit any amount it owes the Ceding Company within twenty working days after receiving the statement. 3. Claim payments will be settled individually when they are due. 4. Any debts or credits in favor of or against the Ceding Company or MARC-Life under this agreement, or any other agreement heretofore or hereafter entered into between the Ceding Company and MARC-Life, may be set off with only the balance being paid. 7 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- ARTICLE X EXPENSES OF ORIGINAL POLICY The Ceding Company will pay for all medical examinations, inspection fees, and other charges incurred in issuing policies. ARTICLE XI ERRORS AND OMISSIONS 1. Errors and omissions on any statement or reinsurance record will not affect MARC-Life's liability for any reinsurance under this agreement. Any error affecting reinsurance premiums will be rectified as soon as possible after discovery. 2. If the failure of either party to comply with any provision of this agreement is unintentional or the result of a misunderstanding or oversight, both parties will be restored as closely as possible to the positions they would have occupied if no error or oversight had occurred. 3. This article will not apply to any facultative submission until the Ceding Company has notified MARC-Life of its acceptance of MARC-Life's offer in accordance with Article I. ARTICLE XII RETENTION LIMIT CHANGES (RECAPTURE) 1. The reinsurance under this agreement will remain in force without reduction as long as the original policy remains in force without reduction, except as provided below. 2. If the Ceding Company increases its regular retention limits, it may choose to recapture. Such recapture will increase the total amount the Ceding Company carries on each case up to its then maximum retention. If the Ceding Company chooses to recapture, it must send MARC-Life a written request. 8 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- 3. Recaptures will take effect on the later of the following dates: a. The first policy anniversary date after the Ceding Company notifies MARC-Life of its retention limit increase b. When the policy has been in force for the number of years stated in Exhibit IV If any reinsurance on any policy reinsured hereunder is recaptured, all other eligible policies must be similarly recaptured, subject to the restrictions herein. 4. If the reinsurance to be reduced is shared by two or more reinsurers, the reduction will be prorated among all the reinsurers. 5. Reductions or cancellations that were overlooked will be made when discovered. MARC-Life's acceptance of reinsurance premiums after the effective dates of any overlooked reductions or cancellations will not constitute or determine a liability of MARC-Life. MARC-Life will be liable only for a refund of the premium so received. 6. No recapture will be made if the Ceding Company retained less than its regular retention limit at issue or if the Ceding Company retained no part of the risk. 7. If a waiver of premium disability claim is in effect when recapture takes place, the Ceding Company will recapture the life risk and all other eligible benefits as if there were no waiver of premium disability claim. MARC-Life's liability for these benefits will then cease. The waiver of premium disability reinsurance will remain in effect until the policy is returned to a premium paying status. When that happens, the Ceding Company will recapture the waiver of premium disability benefits. 8. If a recaptured waiver of premium claim is resumed because of an extension of the initial disability under the 9 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- terms of the Ceding Company's policy, MARC-Life will pay its share of the waiver of premium benefit if the Ceding Company pays MARC-Life the reinsurance premium for the period following recapture. ARTICLE XIII INSPECTION OF RECORDS Both MARC-Life and the Ceding Company will have the right to inspect all books, records, and documents relating to the reinsurance under this agreement. Both parties will have the right to make such inspections at any reasonable time at the office of the other party. ARTICLE XIV INSOLVENCY 1. If the Ceding Company becomes insolvent, MARC-Life will pay all reinsurance directly to the liquidator, receiver or statutory successor without reduction because of the insolvency. The liquidator, receiver, or statutory successor will give MARC-Life written notice of any pending claims on policies reinsured hereunder. Such notice will be given within a reasonable time after a claim is filed in the insolvency proceeding. 2. While any such claim is pending, MARC-Life may investigate the claim and interpose in the name of the Ceding Company (its liquidator, receiver, or statutory successor) at its own expense in the proceeding where such claim is to be adjudicated. Any expense thus incurred by MARC-Life will be chargeable, subject to court approval, against the Ceding Company as part of the expense of liquidation. Where two or more reinsurers are participating in the same claim and a majority in interest elects to interpose a defense or defenses to any such claim, the expense will be apportioned in accordance with the terms of the reinsurance agreements as though the Ceding Company had incurred such expense. ARTICLE XV ARBITRATION 1. The Ceding Company and MARC-Life specifically agree that, even if this reinsurance agreement has been 10 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- terminated for new business, any dispute or difference of opinion arising out of or concerning the validity of this agreement will be submitted to and settled by a Panel of Arbitration. 2. Either party may initiate arbitration by notifying the other party. 3. The Panel of Arbitration will consist of three members unless the parties agree in writing to appoint and abide by the decision of a single arbitrator. a. The two parties will name the single arbitrator within thirty days of their mutual agreement to use a single arbitrator. b. Under a three-member Panel of Arbitration, each of the two parties will appoint an arbitrator. The arbitrators must be appointed within thirty days after receipt of the written notice initiating arbitration. c. An arbitrator must be an active or retired executive from the life insurance industry who is not affiliated with either company. Each arbitrator must be knowledgeable about life insurance and life reinsurance and the aspect thereof that is the basis of the dispute or difference of opinion. d. Within thirty days after the second of the appointments is made, the two arbitrators will appoint a third arbitrator. If the two arbitrators cannot agree on a third arbitrator within such time, the two arbitrators will obtain a list of at least five qualified and available arbitrators from the American Arbitration Association (AAA) or its successor organization. Within fifteen days, the two appointed arbitrators will select the third arbitrator from the list. If mutual agreement is again not reached within the prescribed time, the AAA will appoint the third arbitrator as soon as possible. 4. The Panel of Arbitration will not be bound by formal rules of legal procedure and will regard this agreement in accordance with equity and the customary practices of 11 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- the life insurance and life reinsurance industries rather than from a strict interpretation of the law. 5. The Panel of Arbitration will decide the issue by majority vote and render a written decision within sixty days after completion of the Panel of Arbitration unless MARC-Life and the Ceding Company both agree to extend the period of deliberation. The arbitration proceedings will be held in Atlanta, Georgia. The decision of the Panel of Arbitration will be accepted by MARC-Life and the Ceding Company without right of appeal. 6. Expenses of the individually selected arbitrators will be the responsibility of the appointing party. The expenses of the single or third arbitrator and all other costs of arbitration, including any fees due the American Arbitration Association, will be shared equally by MARC-Life and the Ceding Company. ARTICLE XVI PARTIES TO AGREEMENT; ENTIRE AGREEMENT 1. This is an agreement solely between the Ceding Company and MARC-Life. MARC-Life's acceptance of reinsurance hereunder will not create any right or legal relationship whatsoever between MARC-Life and the insured or beneficiary under any policy that may be reinsured hereunder. 2. This agreement represents the entire agreement between MARC-Life and the Ceding Company concerning the business reinsured hereunder. There are no understandings between MARC-Life and the Ceding Company other than as expressed in this agreement. 3. Any change or modification of this agreement will be null and void unless made by an amendment to the agreement and signed by both MARC-Life and the Ceding Company. ARTICLE XVII DURATION OF AGREEMENT; TERMINATION 1. The duration of this agreement will be unlimited. However, either party to this agreement may terminate it at any time, for new business only, by giving thirty days' 12 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- notice in writing to the other party. MARC-Life will continue to accept reinsurance during the thirty day period and will remain liable on all reinsurance already placed in force under the terms of this agreement until such contracts are terminated between the original insured and the Ceding Company. 2. If either party to this agreement fails to pay any amount due hereunder, except as provided by Article XI, "Errors and Omissions," the other party will have the right to cancel all reinsurance in force under this agreement by giving thirty days' written notice to the other party. ARTICLE XIII EFFECTIVE DATE; EXECUTION The said USAA Life Insurance Company, San Antonio, Texas, and the said Munich American Reassurance Company, Atlanta, Georgia, declare that this agreement and all its terms will be effective as of June 1, 1998, and will apply to all eligible policies applied for on and after such date, even though such policies may have been backdated for up to six months to save age. In witness whereof they have by their officers executed and delivered this agreement in duplicate. USAA LIFE INSURANCE COMPANY BY /s/ ----------------------------------- Title: AVP - ACTUARY Attest /s/ Date 12/17/1998 -------------------- --------------------------------- MUNICH AMERICAN REASSURANCE COMPANY BY /s/ ----------------------------------- Title: Vice President Attest /s/ Date September 14, 1988 -------------------- --------------------------------- 13 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- E EXHIBIT 1 --------- REINSURANCE SUBMISSION FORM - -------------------------------------------------------------------------------- FACULTATIVE-AUTOMATIC SUBMISSION MUNICH AMERICAN REASSURANCE COMPANY ORIGINAL-ADDITIONAL-MIB-INQUIRY ONLY P.O. BOX 3210, ATLANTA, GA 30302-3210 Ceding Co. : _____________ TELEPHONE: (770) 394-5665 Address : _____________ DATE: ______ TELEFAX : (770) 394-7744 Underwriters Name:________ Underwriters Area:________ ================================================================================ Insured's Name (Lst, Fst, M)_______________ Policy Number :___________________ Date of Birth:______ Issue Age:_____Sex:___ Policy Date :___________________ Birth State :______ Birth Country:________ Reins Eff Date:___________________ Reside State :______ Reside Country:_______ Occupation:________________________________ Policy Certificate ID:____________ Second Insured's Name:_____________________ Date of Birth:_____ Issue Age:_____ Sex:___ Original Pol No. :________________ Original Pol Date:________________ Original Iss Age :________________ Continuation :___ Duration ___ - -------------------------------------------------------------------------------- Plan Name :_________ Smoker Code:__________ Rider Name:_________ Smoker Code:__________ Life Rates : ____________________________ Reserve Basis: __________________________ Benefit 1 :_________ Ben 1 Rating :______ Benefit 2 :_________ Ben 2 Rating :______ Benefit 3 :_________ Ben 3 Rating :______ Benefit 4 :_________ Ben 4 Rating :______ Benefit 5 :_________ Ben 5 Rating :______ Flat Extra 1:_________ Flat Ex 1 Dur:______ Flat Extra 2:_________ Flat Ex 2 Dur:______ - ------------------------------------------------------------ LIFE WPD ADB - ------------------------------------------------------------ PREVIOUS IN FORCE ______ ______ ______ ______ ______ PREVIOUS RETAINED ______ ______ ______ ______ ______ ISSUED THIS POLICY ______ ______ ______ ______ ______ RETAINED THIS POLICY ______ ______ ______ ______ ______ REINSURED AMOUNT ______ ______ ______ ______ ______ - ------------------------------------------------------------ - ---------------------- ----------------------------------------------------- POLICY AMOUNT INFORCE POLICIES: YEAR AGE AT RISK ----------------------------------------------------- - ---------------------- POLICY NUMBER ISSUE AMOUNT RETAINED AMOUNT ______ ______ ______ ----------------------------------------------------- ______ ______ ______ ________________ _______________ __________________ ______ ______ ______ ________________ _______________ __________________ ______ ______ ______ ________________ _______________ __________________ ______ ______ ______ ________________ _______________ __________________ ______ ______ ______ ______ ______ ______ COMMENTS: _______________________________________ ______ ______ ______ _____________________________________________________ ______ ______ ______ _____________________________________________________ ______ ______ ______ _____________________________________________________ - -------------------------------------------------------------------------------- Submission Type: Fac._______ Auto______ Original Submission Date:______________ Offer Accepted Date:___________________ Withdrawal Date:_______________________ - ------------------------------------------------ Circle Withdrawal ***: 1. Underwriting Not Complete 2. Policy Not Delivered 3. All Within Our Retention 4. Placed With Automatic Reinsurer 5. Placed With Another Reinsurer: a) Planing b) Requirements c) Quicker Response - ------------------------------------------------ ================================================================================ Submitted File Includes: ================================================================================ _______ Application ______ X-Ray _______ Medical Examination ______ Other Medical Underwriting Data _______ Blood Profile ______ Inspection Report _______ Heart Chart ______ Additional Inspection Report _______ Attending Physician's Report ______ Aviation Questionnaire _______ Microscopic Urinalysis ______ Other Non-medical Data _______ Electrocardiogram ================================================================================ - -------------------------------------------------------------------------------- R - 148 (REV. 1/94) File Name: M.\RAD\CESSUND WK3 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT II ---------- LIMITS AND SPECIAL CONDITIONS The proportional share of the Ceding Company's pool to be automatically covered under this agreement, including previous reinsurances ceded to MARC-Life by the Ceding Company on the same life, is the amount of death benefit provided by a policy minus the cash value that is included in the death benefit at issue and minus the Ceding Company's retention as shown in Exhibit III. The following limitations apply: 1. Policy Forms ------------ All amounts of new, direct agency issues of individual life insurance above the Ceding Company's retention limits on the following policy plans: Variable Universal Life, Policy Form No. 2. Jumbo Limits ------------ Automatic coverage of any risk will be granted only if, according to the Ceding Company's papers, the total amount in force and applied for on the same life with all insurance companies does not exceed the applicable amounts shown below: a. Life (with or without waiver of premium): $25,000,000 b. Accidental Death Benefits: $200,000 3. Binding Limits -------------- a. Life Insurance (i) Standard and substandard risks written by the Ceding Company in the United States or Canada, up to and including Table 16 (500% total mortality), or corresponding flat extras. (ii) The Non-Enlisted Life Binding Limits for Male and Female
================================================================================ Plan MARC-Life's Maximum Maximum in Pool Name Share Binding to MARC-Life Excluding Retention ---- ----- -------------------- -------------------- - -------------------------------------------------------------------------------- Variable Universal 20% $1,320,000 $6,600,000 Life ================================================================================
- -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT II ---------- (CONTINUED) (iii) The Enlisted Life Binding Limits for Male and Female
================================================================================ Plan MARC-Life's Maximum Maximum in Pool Name Share Binding to MARC-Life Excluding Retention ---- ----- -------------------- -------------------- - -------------------------------------------------------------------------------- Variable Universal 20% $40,000 $200,000 Life ================================================================================
Automatic reinsurance is provided for increases resulting from changes in existing insurance coverage as provided in the policy, as long as such coverage qualifies as life insurance according to U.S. federal income tax laws and regulations, subject however to the automatic coverage limits defined herein. Increases above the automatic coverage limits will be ceded facultatively. b. Waiver of Premium Disability Benefits Same as for life insurance, subject to age and substandard issue limits imposed by the Ceding Company on such risks. c. Accidental Death Benefits Accidental death benefits will not be reinsured hereunder unless the Ceding Company and MARC-Life agree to include such benefits hereunder. 4. Supplementary Benefit Forms --------------------------- Supplementary benefits to be covered automatically under this agreement will be those provided by the following policy forms: Waiver of Premium Disability Benefits, Form No. LBR30447ST 07-97 - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT III ----------- RETENTION LIMITS OF THE CEDING COMPANY Will be 10% of the Risk up to a Maximum of the Retentions Listed Below Life Insurance --------------
Issue Ages Standard Substandard - ----- -------- ----------- Table 4 and Tables 5-8 Tables 9 and Above Flat Extras and Flat Extras and Flat Extras to $10.00 $10.01 to $20.00 $20.01 and Over ----------- ---------------- ------------------ All $600,000 $600,000 $600,000
Military Life -------------
Standard and Rank Substandard ---- ----------- WO through 0-3 $250,000 0-4 and above $350,000
Enlisted Military Personnel on Active Duty ------------------------------------------ All Ages $50,000 Tables and Flat Extras
Waiver of Premium Disability Benefits ------------------------------------- Same as for Life Insurance for Ages 15-55 Accidental Death Benefits ------------------------- Not Reinsured Hereunder - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT IV ---------- LIFE REINSURANCE PREMIUMS A. Premiums for reinsurance per life --------------------------------- 1. Life reinsurance premiums for business ceded hereunder will be subject to the following percentages of the attached '91 Bragg rate schedules:
Policy Years ------------ Year 1 2+ ------ ------ Preferred Ultra 0% 32% Preferred Plus 0% 40% Preferred 0% 46% Standard Plus 0% 45% Standard 0% 63%
2. Life reinsurance premiums will be calculated as follows: a. For standard risks, by multiplying the Reinsurance Death Benefit by the appropriate percentage of the cost of insurance as shown on the attached schedules. b. For substandard risks accepted subject to table ratings, by multiplying the corresponding standard premiums by the applicable rating factors from the table below:
Table Rating Rating Factor - -------------- ------------- A (1) 1.25 AA (1 1/2) 1.375 B (2) 1.50 BB (2 1/2) 1.625 C (3) 1.75 D (4) 2.00 E (5) 2.25 F (6) 2.50 G (7) 2.75 H (8) 3.00 I (9) 3.25 J (10) 3.50 L (12) 4.00 P (16) 5.00
- -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT IV ---------- (CONTINUED) A. Premiums for of reinsurance per life (continued) ------------------------------------ c. Life reinsurance premiums for substandard risks subject to a flat extra premium will be the sum of: (i) The applicable standard or substandard reinsurance premiums, calculated from paragraphs 2.a. and 2.b. preceding, and (ii) The following percentages of the policy annual flat extra premiums applicable to the initial Reinsurance Death Benefit hereunder on such risks:
Term of Flat Extra Premium First Year Renewal Years - ------------- ---------- ------------- More than five years 0% 80% Five years or less 80% 80%
B. Periodic listings to be sent to MARC-Life by the Ceding Company in accordance with Article II, "Mode of Notification and Cession," will identify Preferred Ultra, Preferred Plus, Preferred, Standard Plus and Standard risks. C. Reinsurances ceded on these rate schedules will be eligible for recapture in accordance with Article XII after they have been in force for at least ten years. - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- Male Non Smoker 91 Bragg, Male Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.1200 0.7000 0.4700 0.4200 0.3700 0.3200 0.3100 0.2800 0.2700 0.2700 0.2800 1 0.9856 0.6002 0.3849 0.3369 0.2876 0.3116 0.3137 0.2183 0.2231 0.2571 0.2962 2 0.8054 0.5067 0.3324 0.2908 0.2452 0.3032 0.3174 0.2120 0.2406 0.3264 0.4091 3 0.6119 0.4238 0.3032 0.2714 0.2338 0.2948 0.3211 0.2464 0.3004 0.4411 0.5696 4 0.4378 0.3555 0.2882 0.2683 0.2444 0.2864 0.3248 0.3068 0.3804 0.5641 0.7288 5 0.3154 0.3061 0.2791 0.2744 0.2679 0.2782 0.3283 0.3784 0.4586 0.6585 0.8377 6 0.2486 0.3076 0.2739 0.2804 0.3138 0.3563 0.4419 0.4819 0.5504 0.7296 0.8937 7 0.2157 0.3091 0.2760 0.3031 0.3882 0.4745 0.6092 0.6271 0.6704 0.8020 0.9294 8 0.2223 0.3106 0.2821 0.3383 0.4768 0.6075 0.7918 0.7830 0.7956 0.8678 0.9487 9 0.2289 0.3120 0.3118 0.3852 0.5654 0.7302 0.9512 0.9186 0.9030 0.9191 0.9513 10 0.2638 0.3134 0.3635 0.4430 0.6395 0.8175 1.0490 1.0028 0.9693 0.9481 0.9538 11 0.3310 0.4130 0.4550 0.5246 0.7028 0.8651 1.0440 1.0006 0.9647 0.9454 0.9352 12 0.4344 0.5605 0.5832 0.6306 0.7648 0.8898 1.0390 0.9984 0.9600 0.9163 0.8972 13 0.5508 0.7218 0.7213 0.7415 0.8201 0.8929 0.9800 0.9502 0.9169 0.8747 0.8521 14 0.6570 0.8630 0.8425 0.8378 0.8636 0.8940 0.9160 0.8975 0.8712 0.8346 0.8123 15 0.7300 0.9500 0.9200 0.9000 0.8900 0.8900 0.8700 0.8600 0.8400 0.8100 0.7900 16 0.7340 0.9517 0.9296 0.9086 0.8847 0.8750 0.8403 0.8351 0.8216 0.8131 0.7956 17 0.7380 0.9534 0.9392 0.9171 0.8794 0.8466 0.8115 0.8096 0.8045 0.8162 0.8012 18 0.7420 0.9078 0.9100 0.8941 0.8537 0.8128 0.7863 0.7875 0.7946 0.8193 0.8208 19 0.7460 0.8515 0.8699 0.8620 0.8246 0.7813 0.7673 0.7782 0.7893 0.8225 0.8423 20 0.7500 0.8000 0.8300 0.8300 0.8000 0.7600 0.7636 0.7768 0.7937 0.8305 0.8600 21 0.7189 0.7470 0.7832 0.7911 0.7772 0.7588 0.7652 0.7809 0.8027 0.8385 0.8714 22 0.6719 0.6822 0.7220 0.7394 0.7510 0.7576 0.7731 0.8064 0.8295 0.8546 0.8810 23 0.6185 0.6149 0.6572 0.6850 0.7254 0.7564 0.7918 0.8379 0.8618 0.8738 0.8905 24 0.5680 0.5544 0.5996 0.6385 0.7044 0.7552 0.8107 0.8682 0.8938 0.8957 0.9058 25 0.5300 0.5100 0.5600 0.6100 0.7019 0.7572 0.8201 0.8900 0.9200 0.9200 0.9300 26 0.5049 0.5016 0.5600 0.6093 0.6994 0.7592 0.8294 0.8960 0.9293 0.9419 0.9597 27 0.4865 0.4932 0.5600 0.6086 0.7070 0.7644 0.8345 0.9020 0.9391 0.9615 0.9922 28 0.4766 0.4848 0.5600 0.6246 0.7146 0.7696 0.8396 0.9080 0.9446 0.9862 1.0330 29 0.4689 0.4764 0.5600 0.6465 0.7223 0.7748 0.8448 0.9140 0.9618 1.0233 1.0871 30 0.4671 0.4747 0.5600 0.6700 0.7300 0.7800 0.8500 0.9200 1.0000 1.0800 1.1600 31 0.4710 0.4746 0.5750 0.6922 0.7559 0.8151 0.8887 0.9685 1.0594 1.1570 1.2524 32 0.4782 0.4813 0.5939 0.7157 0.7863 0.8598 0.9382 1.0314 1.1333 1.2495 1.3608 33 0.4928 0.4955 0.6193 0.7451 0.8247 0.9149 0.9993 1.1082 1.2215 1.3565 1.4840 34 0.5078 0.5176 0.6538 0.7850 0.8748 0.9814 1.0730 1.1979 1.3238 1.4770 1.6208 35 0.5200 0.5500 0.7000 0.8400 0.9400 1.0600 1.1600 1.3000 1.4400 1.6100 1.7700 36 0.5280 0.5964 0.7628 0.9158 1.0254 1.1543 1.2634 1.4152 1.5687 1.7500 1.9222 37 0.5360 0.6553 0.8404 1.0093 1.1285 1.2638 1.3827 1.5440 1.7102 1.8976 2.0781 38 0.5440 0.7210 0.9256 1.1119 1.2419 1.3830 1.5133 1.6852 1.8662 2.0612 2.2519 39 0.5520 0.7878 1.0112 1.2150 1.3582 1.5069 1.6506 1.8376 2.0389 2.2492 2.4578 40 0.5600 0.8500 1.0900 1.3100 1.4700 1.6300 1.7900 2.0000 2.2300 2.4700 2.7100 41 0.5932 0.9010 1.1534 1.3862 1.5668 1.7407 1.9196 2.1622 2.4319 2.7199 3.0086 42 0.6348 0.9447 1.2061 1.4495 1.6536 1.8426 2.0424 2.3249 2.6434 2.9934 3.3441 43 0.6848 0.9909 1.2611 1.5157 1.7460 1.9530 2.1764 2.5035 2.8758 3.2958 3.7163 44 0.7432 1.0494 1.3314 1.6006 1.8596 2.0897 2.3396 2.7134 3.1409 3.6329 4.1250 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.3300 0.3800 0.4600 0.6600 0.8391 15 1 0.3808 0.4178 0.4844 0.6628 1.0713 16 2 0.5423 0.5554 0.5950 0.7240 1.0196 17 3 0.7525 0.7379 0.7456 0.8136 0.9817 18 4 0.9491 0.9107 0.8898 0.9012 0.9569 19 5 1.0702 1.0190 0.9814 0.9568 0.9600 20 6 1.0794 1.0529 0.9769 0.9563 0.9600 21 7 1.0885 1.0490 0.9724 0.9558 0.9600 22 8 1.0464 1.0220 0.9679 0.9553 0.9600 23 9 0.9958 0.9867 0.9635 0.9549 0.9600 24 10 0.9561 0.9578 0.9590 0.9474 0.9600 25 11 0.9222 0.9298 0.9392 0.9400 0.9600 26 12 0.8811 0.8927 0.9111 0.9301 0.9600 27 13 0.8406 0.8551 0.8819 0.9202 0.9600 28 14 0.8081 0.8253 0.8588 0.9125 0.9600 29 15 0.8014 0.8222 0.8570 0.9101 0.9600 30 16 0.7947 0.8191 0.8551 0.9125 0.9600 31 17 0.8136 0.8422 0.8727 0.9203 0.9600 32 18 0.8406 0.8734 0.8973 0.9356 0.9700 33 19 0.8685 0.9052 0.9246 0.9556 0.9800 34 20 0.8900 0.9300 0.9500 0.9800 1.0000 35 21 0.8974 0.9383 0.9694 1.0062 1.0300 36 22 0.9052 0.9471 0.9855 1.0343 1.0700 37 23 0.9137 0.9520 1.0050 1.0683 1.1300 38 24 0.9226 0.9669 1.0343 1.1122 1.2000 39 25 0.9500 1.0000 1.0800 1.1700 1.2800 40 26 0.9902 1.0502 1.1396 1.2368 1.3700 41 27 1.0387 1.1119 1.2088 1.3100 1.4600 42 28 1.0981 1.1865 1.2912 1.3968 1.5500 43 29 1.1710 1.2754 1.3904 1.5044 1.6500 44 30 1.2600 1.3800 1.5100 1.6400 1.7800 45 31 1.3644 1.4978 1.6476 1.8028 1.9400 46 32 1.4824 1.6279 1.8008 1.9880 2.1600 47 33 1.6152 1.7741 1.9732 2.1968 2.4200 48 34 1.7640 1.9402 2.1684 2.4304 2.7300 49 35 1.9300 2.1300 2.3900 2.6900 3.0600 50 36 2.1004 2.3302 2.6214 2.9524 3.4200 51 37 2.2744 2.5381 2.8601 3.2168 3.7800 52 38 2.4712 2.7739 3.1311 3.5180 4.1100 53 39 2.7100 3.0578 3.4594 3.8908 4.4500 54 40 3.0100 3.4100 3.8700 4.3700 4.8800 55 41 3.3806 3.8389 4.3737 4.9746 5.4400 56 42 3.8091 4.3310 4.9538 5.6815 6.2100 57 43 4.2813 4.8738 5.5942 6.4621 7.1800 58 44 4.7830 5.4543 6.2783 7.2878 8.3000 59
Male Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 45 0.8100 1.1300 1.4300 1.7200 2.0100 2.2700 2.5500 2.9700 3.4500 4.0100 4.5700 46 0.8878 1.2370 1.5544 1.8678 2.1919 2.4922 2.8073 3.2710 3.7971 4.4147 5.0325 47 0.9765 1.3637 1.6960 2.0333 2.3950 2.7447 3.0994 3.6061 4.1746 4.8434 5.5126 48 1.0723 1.5039 1.8584 2.2259 2.6270 3.0301 3.4270 3.9787 4.5914 5.3146 6.0386 49 1.1714 1.6514 2.0452 2.4550 2.8961 3.3510 3.7903 4.3922 5.0569 5.8473 6.6383 50 1.2700 1.8000 2.2600 2.7300 3.2100 3.7100 4.1900 4.8500 5.5800 6.4600 7.3400 51 1.3629 1.9438 2.5071 3.0609 3.5746 4.1067 4.6210 5.3456 6.1547 7.1518 8.1466 52 1.4526 2.0871 2.7842 3.4414 3.9845 4.5394 5.0831 5.8768 6.7750 7.9103 9.0395 53 1.5470 2.2385 3.0846 3.8566 4.4311 5.0086 5.5837 6.4532 7.4498 8.7369 10.0141 54 1.6535 2.4066 3.4021 4.2911 4.9058 5.5153 6.1302 7.0844 8.1885 9.6330 11.0658 55 1.7800 2.6000 3.7300 4.7300 5.4000 6.0600 6.7300 7.7800 9.0000 10.6000 12.1900 56 1.9211 2.8220 4.0836 5.1937 5.9266 6.6489 7.3818 8.5274 9.8586 11.5986 13.3284 57 2.0718 3.0668 4.4672 5.6922 6.4913 7.2814 8.0805 9.3201 10.7583 12.6279 14.4840 58 2.2398 3.3296 4.8580 6.1950 7.0747 7.9486 8.8283 10.1771 11.7377 13.7469 15.7444 59 2.4333 3.6056 5.2332 6.6711 7.6574 8.6411 9.6274 11.1174 12.8354 15.0146 17.1972 60 2.6600 3.8900 5.5700 7.0900 8.2200 9.3500 10.4800 12.1600 14.0900 16.4900 18.9300 61 2.9270 4.1676 5.8121 7.3663 8.6720 9.9798 11.2857 13.2126 15.4237 18.1081 20.9182 62 3.2291 4.4416 5.9746 7.5206 9.0264 10.5367 12.0430 14.2627 16.8106 19.8294 23.1033 63 3.5557 4.7348 6.1422 7.6806 9.4188 11.1637 12.9026 15.4485 18.3678 21.7518 25.5223 64 3.8962 5.0700 6.3991 7.9745 9.9848 12.0038 14.0147 16.9082 20.2119 23.9727 28.2122 65 4.2400 5.4700 6.8300 8.5300 10.8600 13.2000 15.5300 18.7800 22.4600 26.5900 31.2100 66 4.5784 5.9113 7.4194 9.3454 12.0727 14.8106 17.5354 21.1384 25.1542 29.5860 34.3969 67 4.9184 6.3786 8.1111 10.3355 13.5326 16.7403 19.9307 23.8912 28.2167 32.8956 37.7482 68 5.2732 6.9074 8.9281 11.5029 15.1970 18.9017 22.5853 26.9268 31.5841 36.5452 41.4422 69 5.6560 7.5327 9.8934 12.8502 17.0237 21.2074 25.3686 30.1336 35.1930 40.5612 45.6567 70 6.0800 8.2900 11.0300 14.3800 18.9700 23.5700 28.1500 33.4000 38.9800 44.9700 50.5700 71 6.5397 9.1635 12.3052 16.0451 20.9776 25.9165 30.8400 36.6249 42.8342 49.6475 56.0513 72 7.0262 10.1298 13.7037 17.8436 23.0747 28.3051 33.5257 39.8827 46.7977 54.5761 61.9818 73 7.5480 11.2123 15.2745 19.8466 25.3490 30.8455 36.3413 43.3251 51.0371 59.9419 68.5576 74 8.1131 12.4346 17.0669 22.1251 27.8882 33.6472 39.4213 47.1036 55.7190 65.9312 75.9750 75 8.7300 13.8200 19.1300 24.7500 30.7800 36.8200 42.9000 51.3700 61.0100 72.7300 84.4300 76 9.4910 15.6638 21.9397 28.3196 34.6125 40.9597 47.3957 56.8977 67.9061 81.7093 95.7363 77 10.2520 17.5076 24.7493 31.8893 38.4450 45.0994 51.8915 62.4253 74.8022 90.6885 107.0426 78 11.0130 19.3513 27.5590 35.4589 42.2775 49.2391 56.3872 67.9530 81.6983 99.6678 118.3489 79 11.7740 21.1951 30.3687 39.0286 46.1100 53.3788 60.8829 73.4806 88.5944 108.6470 129.6552 80 12.5350 23.0389 33.1783 42.5982 49.9425 57.5186 65.3787 79.0083 95.4905 117.6263 140.9615 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 45 5.3000 6.0600 6.9900 8.1300 9.4800 60 46 5.7999 6.6636 7.7070 8.9690 10.6300 61 47 6.2922 7.2736 8.4401 9.8237 11.7000 62 48 6.8254 7.9308 9.2227 10.7239 12.6800 63 49 7.4485 8.6760 10.0882 11.6994 13.6300 64 50 8.2100 9.5500 11.0700 12.7800 14.6400 65 51 9.1193 10.5469 12.1411 13.9138 15.8000 66 52 10.1438 11.6394 13.2794 15.0809 17.1000 67 53 11.2698 12.8366 14.5250 16.3591 18.4700 68 54 12.4831 14.1471 15.9185 17.8262 19.9500 69 55 13.7700 15.5800 17.5000 19.5600 21.6700 70 56 15.0491 17.0478 19.1810 21.4735 23.7500 71 57 16.3298 18.5447 20.9345 23.5150 26.2400 72 58 17.7338 20.2017 22.8935 25.8146 29.0300 73 59 19.3833 22.1498 25.1910 28.5029 32.1600 74 60 21.4000 24.5200 27.9600 31.7100 35.7300 75 61 23.8016 27.3169 31.1772 35.3722 39.8500 76 62 26.5068 30.4530 34.7540 39.4025 44.5600 77 63 29.4892 33.9218 38.7252 43.8967 49.7500 78 64 32.7224 37.7163 43.1256 48.9506 55.4700 79 65 36.1800 41.8300 47.9900 54.6600 61.8200 80 66 39.6714 46.0598 53.1208 60.8483 68.9400 81 67 43.2143 50.4101 58.4948 67.4518 76.9000 82 68 47.0945 55.1855 64.4084 74.7350 85.6600 83 69 51.5978 60.6906 71.1580 82.9629 95.1800 84 70 57.0100 67.2300 79.0400 92.4000 106.2900 85 71 63.1963 74.6285 87.8288 103.0635 119.5200 86 72 69.9660 82.6832 97.3269 114.7770 134.1000 87 73 77.5216 91.6567 107.8725 127.5147 149.5100 88 74 86.0655 101.8114 119.8041 141.2509 165.2000 89 75 95.8000 113.4100 133.4600 155.9600 180.9500 90 76 108.8366 128.9902 151.8378 173.6219 197.0000 91 77 121.8732 144.5703 170.2155 191.2838 213.4500 92 78 134.9098 160.1505 188.5933 208.9456 230.1200 93 79 147.9464 175.7307 206.9711 226.6075 246.8300 94 80 160.9830 191.3108 225.3488 244.2694 263.1900 95 279.2900 96 295.8000 97 312.7300 98 330.0600 99 364.0500 100 427.5800 101 517.9300 102 651.1400 103 817.2900 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110
Male Non Smoker
Attained Ultimate Age 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Male Smoker 91 Bragg, Male Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.5867 0.9917 0.6658 0.5950 0.5242 0.4533 0.4392 0.3967 0.3825 0.3825 0.3967 1 1.4315 0.8855 0.5803 0.5128 0.4427 0.3765 0.4444 0.3445 0.3514 0.3994 0.4549 2 1.1806 0.7575 0.5099 0.4524 0.3870 0.3318 0.4496 0.3400 0.3806 0.5021 0.6192 3 0.8933 0.6268 0.4549 0.4122 0.3577 0.3197 0.4548 0.3755 0.4520 0.6513 0.8334 4 0.6290 0.5125 0.4156 0.3906 0.3550 0.3403 0.4600 0.4435 0.5477 0.8079 1.0413 5 0.4468 0.4336 0.3924 0.3923 0.3795 0.3941 0.4651 0.5361 0.6497 0.9329 1.1867 6 0.3499 0.4357 0.3757 0.3939 0.4397 0.5006 0.6214 0.6782 0.7752 1.0291 1.2620 7 0.2986 0.4378 0.3756 0.4155 0.5352 0.6595 0.8492 0.8749 0.9363 1.1226 1.3045 8 0.3068 0.4399 0.3755 0.4574 0.6533 0.8415 1.1010 1.0890 1.1070 1.2090 1.3258 9 0.3150 0.4419 0.4206 0.5259 0.7811 1.0175 1.3291 1.2833 1.2613 1.2840 1.3376 10 0.3737 0.4440 0.5150 0.6276 0.9060 1.1581 1.4861 1.4206 1.3732 1.3431 1.3512 11 0.4937 0.6360 0.6950 0.7922 1.0446 1.2677 1.4914 1.4949 1.4393 1.3860 1.3577 12 0.6779 0.9200 0.9512 1.0155 1.2055 1.3657 1.4968 1.5310 1.4770 1.4154 1.3641 13 0.8827 1.2316 1.2289 1.2527 1.3636 1.4457 1.5036 1.5278 1.4822 1.4322 1.3682 14 1.0646 1.5064 1.4734 1.4591 1.4935 1.5013 1.5118 1.5245 1.4873 1.4311 1.3699 15 1.1800 1.6800 1.6300 1.5900 1.5700 1.5042 1.5200 1.5000 1.4700 1.4300 1.3651 16 1.1875 1.7321 1.6818 1.5990 1.5785 1.5071 1.4723 1.4525 1.4272 1.4032 1.3578 17 1.1949 1.7055 1.6651 1.6079 1.5358 1.4486 1.3999 1.3760 1.3557 1.3559 1.3352 18 1.1462 1.6308 1.6055 1.5484 1.4639 1.3699 1.3174 1.2883 1.2735 1.3010 1.3103 19 1.0903 1.5388 1.5286 1.4745 1.3846 1.2906 1.2393 1.2070 1.1989 1.2514 1.2898 20 1.0500 1.4600 1.4600 1.4100 1.3200 1.2300 1.1800 1.1500 1.1500 1.2200 1.2808 21 1.0253 1.3870 1.3908 1.3463 1.2639 1.1845 1.1359 1.1420 1.1540 1.2260 1.2702 22 1.0011 1.2995 1.3040 1.2678 1.2018 1.1413 1.0974 1.1340 1.1580 1.2320 1.2660 23 0.9772 1.2084 1.2128 1.1870 1.1426 1.1056 1.0698 1.1260 1.1620 1.2380 1.2602 24 0.9536 1.1249 1.1304 1.1169 1.0957 1.0827 1.0699 1.1180 1.1660 1.2440 1.2854 25 0.9300 1.0600 1.0700 1.0700 1.0700 1.0853 1.0700 1.1100 1.1700 1.2500 1.3500 26 0.9038 1.0150 1.0310 1.0760 1.0696 1.0878 1.1019 1.1630 1.2410 1.3429 1.4617 27 0.8750 0.9824 1.0045 1.0820 1.0692 1.1088 1.1510 1.2363 1.3349 1.4682 1.6110 28 0.8477 0.9604 0.9988 1.0880 1.0916 1.1461 1.2190 1.3301 1.4503 1.6182 1.7866 29 0.8259 0.9509 1.0008 1.0940 1.1340 1.2048 1.3081 1.4446 1.5858 1.7847 1.9767 30 0.8172 0.9427 1.0100 1.1000 1.2000 1.2900 1.4200 1.5800 1.7400 1.9600 2.1700 31 0.8106 0.9399 1.0392 1.1620 1.2906 1.4048 1.5578 1.7391 1.9131 2.1382 2.3563 32 0.8115 0.9436 1.0800 1.2416 1.4033 1.5457 1.7203 1.9218 2.1062 2.3247 2.5434 33 0.8145 0.9492 1.1372 1.3412 1.5367 1.7082 1.9029 2.1238 2.3186 2.5281 2.7462 34 0.8340 0.9775 1.2156 1.4632 1.6894 1.8878 2.1010 2.3413 2.5501 2.7570 2.9801 35 0.8700 1.0300 1.3200 1.6100 1.8600 2.0800 2.3100 2.5700 2.8000 3.0200 3.2600 36 0.9213 1.1094 1.4549 1.7858 2.0479 2.2806 2.5222 2.7982 3.0553 3.3047 3.5705 37 0.9851 1.2113 1.6170 1.9889 2.2542 2.4927 2.7405 3.0285 3.3162 3.6054 3.9014 38 1.0633 1.3314 1.7998 2.2131 2.4794 2.7225 2.9767 3.2787 3.6026 3.9406 4.2762 39 1.1576 1.4657 1.9963 2.4522 2.7245 2.9762 3.2426 3.5666 3.9339 4.3293 4.7179 40 1.2700 1.6100 2.2000 2.7000 2.9900 3.2600 3.5500 3.9100 4.3300 4.7900 5.2500 41 1.4071 1.7591 2.4023 2.9457 3.2667 3.5647 3.8921 4.3090 4.7988 5.3415 5.9105 42 1.5678 1.9158 2.6078 3.1934 3.5542 3.8862 4.2610 4.7517 5.3272 5.9714 6.6838 43 1.7418 2.0878 2.8290 3.4594 3.8662 4.2382 4.6670 5.2379 5.9032 6.6514 7.5130 44 1.9193 2.2833 3.0789 3.7595 4.2169 4.6349 5.1199 5.7674 6.5148 7.3537 8.3407 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.4675 0.5383 0.6517 0.9350 1.1887 15 1 0.5748 0.6271 0.7215 0.9741 1.5177 16 2 0.8080 0.8264 0.8827 1.0650 1.4444 17 3 1.0924 1.0718 1.0827 1.1785 1.3907 18 4 1.3534 1.2990 1.2694 1.2851 1.3556 19 5 1.5161 1.4436 1.3903 1.3555 1.3600 20 6 1.5237 1.4886 1.3838 1.3563 1.3600 21 7 1.5312 1.4768 1.3773 1.3571 1.3600 22 8 1.4661 1.4339 1.3708 1.3579 1.3600 23 g 1.3963 1.3854 1.3642 1.3587 1.3600 24 10 1.3545 1.3569 1.3572 1.3594 1.3600 25 11 1.3514 1.3520 1.3521 1.3593 1.3600 26 12 1.3484 1.3472 1.3465 1.3590 1.3600 27 13 1.3468 1.3444 1.3430 1.3580 1.3600 28 14 1.3468 1.3437 1.3416 1.3562 1.3600 29 15 1.3449 1.3450 1.3407 1.3576 1.3600 30 16 1.3445 1.3483 1.3412 1.3570 1.3600 31 17 1.3423 1.3537 1.3449 1.3631 1.3700 32 18 1.3401 1.3591 1.3479 1.3679 1.4000 33 19 1.3379 1.3646 1.3650 1.3917 1.4400 34 20 1.3402 1.3700 1.4000 1.4400 1.5000 35 21 1.3408 1.3959 1.4486 1.5126 1.5900 36 22 1.3514 1.4236 1.5067 1.6035 1.7000 37 23 1.3604 1.4644 1.5805 1.7132 1.8500 38 24 1.4003 1.5295 1.6762 1.8419 2.0300 39 25 1.4800 1.6300 1.8000 1.9900 2.2200 40 26 1.6073 1.7714 1.9531 2.1531 2.4200 41 27 1.7726 1.9463 2.1314 2.3310 2.6300 42 28 1.9643 2.1465 2.3330 2.5302 2.8200 43 29 2.1706 2.3638 2.5565 2.7577 3.0200 44 30 2.3800 2.5900 2.8000 3.0200 3.2600 45 31 2.5791 2.8098 3.0478 3.3022 3.5500 46 32 2.7758 3.0287 3.3009 3.5997 3.9100 47 33 2.9898 3.2697 3.5831 3.9351 4.3300 48 34 3.2413 3.5558 3.9182 4.3310 4.8100 49 35 3.5500 3.9100 4.3300 4.8100 5.3400 50 36 3.9018 4.3218 4.8131 5.3739 5.9600 51 37 4.2833 4.7759 5.3518 6.0078 6.6600 52 38 4.7159 5.2881 5.9538 6.7086 7.4600 53 39 5.2210 5.8742 6.6273 7.4737 8.3300 54 40 5.8200 6.5500 7.3800 8.3000 9.2700 55 41 6.5598 7.3530 8.2298 9.1746 10.2700 56 42 7.4263 8.2727 9.1713 10.0995 11.3000 57 43 8.3489 9.2529 10.1779 11.0941 12.3100 58 44 9.2570 10.2374 11.2230 12.1778 13.3700 59
Male Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 45 2.0900 2.5100 3.3700 4.1100 4.6200 5.0900 5.6300 6.3400 7.1500 8.0500 9.1100 46 2.2362 2.7568 3.6920 4.5038 5.0766 5.6143 6.2108 6.9638 7.8040 8.7122 9.7616 47 2.3647 3.0184 4.0364 4.9301 5.5773 6.1986 6.8556 7.6389 8.4848 9.3591 10.3336 48 2.5021 3.3116 4.4188 5.3995 6.1207 6.8266 7.5440 8.3531 9.1996 10.0329 10.9148 49 2.6750 3.6532 4.8548 5.9226 6.7054 7.4825 8.2556 9.0942 9.9556 10.7758 11.5940 50 2.9100 4.0600 5.3600 6.5100 7.3300 8.1500 8.9700 9.8500 10.7600 11.6300 12.4600 51 3.2064 4.5467 5.9557 7.1814 7.9952 8.8103 9.6608 10.5777 11.5594 12.5375 13.4350 52 3.5464 5.1022 6.6314 7.9299 8.7020 9.4742 10.3416 11.2854 12.3489 13.4702 14.4599 53 3.9312 5.7042 7.3554 8.7257 9.4492 10.1698 11.0520 12.0374 13.2087 14.5150 15.6513 54 4.3620 6.3309 8.0955 9.5390 10.2356 10.9257 11.8316 12.8975 14.2190 15.7593 17.1258 55 4.8400 6.9600 8.8200 10.3400 11.0600 11.7700 12.7200 13.9300 15.4600 17.2900 19.0000 56 5.3849 7.5847 9.5192 11.1210 11.9285 12.7230 13.7318 15.1689 16.9826 19.1597 21.3745 57 5.9958 8.2198 10.2144 11.9017 12.8418 13.7657 14.8405 16.5714 18.7335 21.3102 24.1714 58 6.6434 8.8754 10.9200 12.6939 13.7910 14.8679 16.0243 18.0866 20.6361 23.6630 27.2402 59 7.2979 9.5621 11.6504 13.5094 14.7667 15.9994 17.2614 19.6631 22.6138 26.1391 30.4299 60 7.9300 10.2900 12.4200 14.3600 15.7600 17.1300 18.5300 21.2500 24.5900 28.6600 33.5900 61 8.4908 11.0470 13.2189 15.2219 16.7103 18.1084 19.6473 22.6542 26.3891 31.1470 36.6951 62 9.0000 11.8263 14.0374 16.0874 17.6238 18.9548 20.6278 23.9099 28.0622 33.6527 39.8458 63 9.5308 12.6461 14.8906 16.9918 18.5910 19.8960 21.7458 25.3065 29.8726 36.2949 43.0798 64 10.1564 13.5246 15.7931 17.9709 19.7029 21.1588 23.2751 27.1334 32.0841 39.1914 46.4353 65 10.9500 14.4800 16.7600 19.0600 21.0500 22.9700 25.4900 29.6800 34.9600 42.4600 49.9500 66 11.9428 15.4791 17.6877 20.1315 22.5390 25.4058 28.5298 33.0830 38.5876 46.0317 53.4221 67 13.0860 16.5098 18.5662 21.1618 24.1093 28.3149 32.2117 37.1495 42.7912 49.8278 56.8262 68 14.3328 17.6218 19.5510 22.3422 25.9011 31.5831 36.3267 41.6745 47.4400 53.9522 60.4654 69 15.6364 18.8653 20.7971 23.8645 28.0546 35.0962 40.6658 46.4530 52.4032 58.5083 64.6423 70 16.9500 20.2900 22.4600 25.9200 30.7100 38.7400 45.0200 51.2800 57.5500 63.6000 69.6600 71 18.2434 21.8839 24.5345 28.4926 33.8249 42.4160 49.2565 56.0150 62.7491 69.1431 75.4815 72 19.5479 23.6136 26.9170 31.4547 37.3058 46.2005 53.5148 60.7946 68.0876 75.0685 81.9049 73 20.9086 25.4975 29.6153 34.8305 41.2163 50.2409 57.9938 65.8298 73.7626 81.5024 88.9856 74 22.3709 27.5535 32.6371 38.6442 45.6198 54.6849 62.8925 71.3312 79.9711 88.5708 96.7789 75 23.9800 29.8000 35.9900 42.9200 50.5800 59.6800 68.4100 77.5100 86.9100 96.4000 105.3400 76 25.9691 32.5935 40.3261 48.5499 57.1253 66.1317 75.5184 85.4394 95.7777 106.3431 116.1311 77 27.9583 35.3869 44.6622 54.1799 63.6705 72.5835 82.6269 93.3687 104.6454 116.2863 126.9221 78 29.9474 38.1804 48.9983 59.8098 70.2158 79.0352 89.7353 101.2981 113.5131 126.2294 137.7132 79 31.9365 40.9739 53.3344 65.4398 76.7610 85.4869 96.8438 109.2274 122.3808 136.1726 148.5043 80 33.9257 43.7674 57.6705 71.0697 83.3063 91.9386 103.9522 117.1568 131.2484 146.1157 159.2954 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 45 10.0800 11.1700 12.2800 13.3700 14.5600 60 46 10.7270 11.9618 13.2694 14.6124 15.9900 61 47 11.2449 12.6503 14.2091 15.8920 17.6900 62 48 11.7703 13.3689 15.2181 17.2964 19.6200 63 49 12.4398 14.2510 16.4154 18.9132 21.7500 64 50 13.3900 15.4300 17.9200 20.8300 24.1300 65 51 14.5525 16.8398 19.6850 23.0257 26.7700 66 52 15.8362 18.3913 21.6309 25.4418 29.7000 67 53 17.3438 20.1839 23.8283 28.1102 32.9200 68 54 19.1775 22.3170 26.3478 31.0623 36.4000 69 55 21.4400 24.8900 29.2600 34.3300 40.1100 70 56 24.2485 28.0174 32.6566 37.9710 44.0200 71 57 27.5346 31.6329 36.4907 41.9641 48.1100 72 58 31.1226 35.5647 40.6245 46.2227 52.3900 73 59 34.8363 39.6410 44.9202 50.6602 56.8700 74 60 38.5000 43.6900 49.2400 55.1900 61.5500 75 61 42.1442 47.7458 53.5987 59.7886 66.4400 76 62 45.8861 51.9231 58.0882 64.5139 71.5100 77 63 49.6799 56.1705 62.6862 69.4009 76.7300 78 64 53.4798 60.4366 67.3709 74.4846 82.1300 79 65 57.2400 64.6700 72.1200 79.8000 87.8200 80 66 60.6071 68.4839 76.5272 84.9418 93.9200 81 67 63.6118 71.9126 80.6072 89.8865 100.4100 82 68 66.7838 75.5362 84.9696 95.2423 107.1800 83 69 70.6533 79.9353 90.2240 101.6174 114.2900 84 70 75.7500 85.6900 96.9800 109.6200 123.5800 85 71 82.0795 92.8058 105.2254 119.4822 136.0000 86 72 89.2886 100.8957 114.5539 130.7987 150.0000 87 73 97.3689 109.9518 124.9837 143.2211 164.7400 88 74 106.3121 119.9659 136.5330 156.4010 179.3700 89 75 116.1100 130.9300 149.2200 169.9900 193.3400 90 76 128.4828 144.7549 165.2960 185.2710 206.7500 91 77 140.8556 158.5798 181.3720 200.5520 220.0800 92 78 153.2284 172.4047 197.4480 215.8330 233.7000 93 79 165.6012 186.2296 213.5240 231.1140 247.9500 94 80 177.9740 200.0544 229.6000 246.3950 263.1900 95 279.2900 96 295.8000 97 312.7300 98 330.0600 99 364.0500 100 427.5800 101 517.9300 102 651.1400 103 817.2900 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110
Male Smoker
Attained Ultimate Age 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Female Non Smoker 91 Bragg, Female Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 0.8400 0.3300 0.3000 0.2700 0.2400 0.2200 0.2000 0.1800 0.1900 0.1900 0.2100 1 0.7147 0.2467 0.2149 0.1886 0.1607 0.2178 0.2058 0.1172 0.1314 0.1398 0.1647 2 0.5718 0.2094 0.1771 0.1586 0.1360 0.2156 0.2116 0.1225 0.1421 0.1632 0.1939 3 0.4294 0.2010 0.1696 0.1611 0.1459 0.2134 0.2174 0.1670 0.1920 0.2267 0.2628 4 0.3054 0.2043 0.1757 0.1771 0.1702 0.2112 0.2232 0.2222 0.2511 0.2967 0.3364 5 0.2179 0.2052 0.1780 0.1864 0.1890 0.2091 0.2292 0.2593 0.2894 0.3395 0.3796 6 0.2159 0.2061 0.1855 0.1956 0.2072 0.2336 0.2513 0.2806 0.3079 0.3456 0.3786 7 0.2139 0.2102 0.1927 0.2140 0.2383 0.2708 0.2814 0.3052 0.3266 0.3517 0.3776 8 0.2119 0.2143 0.2117 0.2379 0.2747 0.3122 0.3137 0.3297 0.3440 0.3578 0.3766 9 0.2099 0.2184 0.2331 0.2625 0.3088 0.3493 0.3425 0.3508 0.3584 0.3639 0.3755 10 0.2131 0.2224 0.2526 0.2829 0.3330 0.3736 0.3513 0.3554 0.3642 0.3670 0.3728 11 0.2162 0.2431 0.2726 0.3000 0.3389 0.3705 0.3608 0.3621 0.3682 0.3700 0.3706 12 0.2290 0.2718 0.2957 0.3170 0.3448 0.3673 0.3595 0.3588 0.3681 0.3678 0.3668 13 0.2438 0.3029 0.3187 0.3326 0.3496 0.3646 0.3590 0.3576 0.3662 0.3656 0.3636 14 0.2583 0.3306 0.3382 0.3454 0.3534 0.3623 0.3593 0.3584 0.3626 0.3622 0.3611 15 0.2674 0.3393 0.3432 0.3490 0.3549 0.3598 0.3581 0.3571 0.3612 0.3607 0.3593 16 0.2765 0.3479 0.3482 0.3526 0.3553 0.3576 0.3576 0.3578 0.3581 0.3579 0.3582 17 0.2830 0.3467 0.3453 0.3510 0.3535 0.3552 0.3557 0.3564 0.3573 0.3570 0.3579 18 0.2895 0.3455 0.3424 0.3494 0.3517 0.3528 0.3538 0.3550 0.3565 0.3561 0.3576 19 0.2961 0.3443 0.3396 0.3477 0.3499 0.3504 0.3519 0.3535 0.3558 0.3552 0.3574 20 0.2946 0.3371 0.3337 0.3432 0.3466 0.3473 0.3510 0.3536 0.3589 0.3579 0.3630 21 0.2931 0.3298 0.3279 0.3386 0.3433 0.3441 0.3500 0.3536 0.3620 0.3612 0.3687 22 0.2835 0.3108 0.3160 0.3312 0.3386 0.3402 0.3500 0.3552 0.3690 0.3699 0.3837 23 0.2739 0.2899 0.3035 0.3238 0.3339 0.3363 0.3500 0.3568 0.3760 0.3792 0.4032 24 0.2644 0.2709 0.2943 0.3164 0.3293 0.3324 0.3500 0.3584 0.3830 0.3959 0.4283 25 0.2591 0.2635 0.2893 0.3158 0.3284 0.3355 0.3585 0.3600 0.3900 0.4200 0.4600 26 0.2539 0.2560 0.2861 0.3152 0.3282 0.3386 0.3669 0.3811 0.4150 0.4509 0.4972 27 0.2529 0.2545 0.2871 0.3214 0.3338 0.3532 0.3896 0.4087 0.4457 0.4873 0.5393 28 0.2519 0.2530 0.2881 0.3276 0.3400 0.3729 0.4179 0.4427 0.4829 0.5302 0.5878 29 0.2510 0.2515 0.2891 0.3338 0.3552 0.3982 0.4514 0.4832 0.5274 0.5807 0.6442 30 0.2535 0.2545 0.2900 0.3400 0.3800 0.4300 0.4900 0.5300 0.5800 0.6400 0.7100 31 0.2560 0.2588 0.3116 0.3716 0.4163 0.4673 0.5317 0.5819 0.6403 0.7080 0.7857 32 0.2620 0.2676 0.3414 0.4134 0.4621 0.5097 0.5766 0.6390 0.7078 0.7840 0.8702 33 0.2680 0.2811 0.3764 0.4615 0.5149 0.5585 0.6278 0.7030 0.7830 0.8680 0.9630 34 0.2740 0.2984 0.4136 0.5117 0.5718 0.6148 0.6879 0.7761 0.8669 0.9600 1.0631 35 0.2800 0.3200 0.4500 0.5600 0.6300 0.6800 0.7600 0.8600 0.9600 1.0600 1.1700 36 0.3089 0.3470 0.4864 0.6077 0.6920 0.7572 0.8466 0.9556 1.0605 1.1630 1.2756 37 0.3478 0.3789 0.5248 0.6574 0.7596 0.8456 0.9457 1.0616 1.1678 1.2691 1.3804 38 0.3914 0.4143 0.5640 0.7074 0.8292 0.9404 1.0535 1.1768 1.2850 1.3857 1.4964 39 0.4339 0.4518 0.6028 0.7555 0.8972 1.0368 1.1662 1.3000 1.4147 1.5202 1.6356 40 0.4700 0.4900 0.6400 0.8000 0.9600 1.1300 1.2800 1.4300 1.5600 1.6800 1.8100 41 0.4974 0.5237 0.6826 0.8427 1.0046 1.2085 1.3855 1.5598 1.7176 1.8671 2.0268 42 0.5197 0.5538 0.7026 0.8516 1.0335 1.2754 1.4854 1.6901 1.8856 2.0766 2.2780 43 0.5403 0.5882 0.7026 0.8605 1.0661 1.3482 1.5934 1.8315 2.0688 2.3054 2.5528 44 0.5626 0.6343 0.7405 0.9002 1.1218 1.4439 1.7237 1.9946 2.2720 2.5509 2.8404 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.2300 0.2600 0.2900 0.3400 0.3800 15 1 0.1828 0.2102 0.2376 0.3472 0.3800 16 2 0.2076 0.2286 0.2495 0.3544 0.3800 17 3 0.2710 0.2838 0.2965 0.3616 0.3800 18 4 0.3395 0.3447 0.3497 0.3688 0.3800 19 5 0.3797 0.3799 0.3799 0.3728 0.3800 20 6 0.3797 0.3799 0.3799 0.3768 0.3800 21 7 0.3797 0.3799 0.3799 0.3776 0.3800 22 8 0.3797 0.3799 0.3799 0.3784 0.3800 23 9 0.3797 0.3799 0.3799 0.3792 0.3800 24 10 0.3797 0.3800 0.3800 0.3796 0.3800 25 11 0.3784 0.3786 0.3800 0.3800 0.3800 26 12 0.3771 0.3773 0.3790 0.3800 0.3800 27 13 0.3742 0.3746 0.3780 0.3800 0.3800 28 14 0.3698 0.3704 0.3766 0.3800 0.3800 29 15 0.3694 0.3705 0.3786 0.3800 0.3800 30 16 0.3675 0.3690 0.3802 0.3880 0.3800 31 17 0.3697 0.3718 0.3852 0.3960 0.3800 32 18 0.3719 0.3746 0.3902 0.4040 0.4000 33 19 0.3740 0.3773 0.3951 0.4120 0.4200 34 20 0.3818 0.3800 0.4000 0.4200 0.4500 35 21 0.3895 0.3982 0.4245 0.4493 0.4900 36 22 0.4058 0.4211 0.4555 0.4854 0.5300 37 23 0.4268 0.4498 0.4931 0.5290 0.5800 38 24 0.4543 0.4857 0.5378 0.5803 0.6400 39 25 0.4900 0.5300 0.5900 0.6400 0.7000 40 26 0.5330 0.5823 0.6483 0.7066 0.7800 41 27 0.5823 0.6418 0.7126 0.7797 0.8600 42 28 0.6390 0.7090 0.7846 0.8615 0.9600 43 29 0.7045 0.7849 0.8665 0.9542 1.0600 44 30 0.7800 0.8700 0.9600 1.0600 1.1700 45 31 0.8667 0.9641 1.0646 1.1777 1.3000 46 32 0.9638 1.0666 1.1789 1.3058 1.4400 47 33 1.0694 1.1782 1.3039 1.4462 1.6000 48 34 1.1821 1.2991 1.4406 1.6003 1.7800 49 35 1.3000 1.4300 1.5900 1.7700 1.9600 50 36 1.4130 1.5625 1.7454 1.9509 2.1700 51 37 1.5221 1.6962 1.9063 2.1418 2.3900 52 38 1.6427 1.8438 2.0825 2.3494 2.6300 53 39 1.7902 2.0175 2.2838 2.5799 2.8800 54 40 1.9800 2.2300 2.5200 2.8400 3.1600 55 41 2.2230 2.4890 2.7950 3.1277 3.4700 56 42 2.5091 2.7863 3.1023 3.4386 3.8000 57 43 2.8217 3.1101 3.4361 3.7758 4.1600 58 44 3.1442 3.4486 3.7906 4.1419 4.5400 59
Female Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 45 0.5900 0.7000 0.8100 0.9800 1.2200 1.5800 1.8900 2.1900 2.5000 2.8100 3.1300 46 0.6189 0.7876 0.9120 1.1013 1.3656 1.7674 2.1058 2.4320 2.7645 3.0878 3.4200 47 0.6470 0.8920 1.0372 1.2518 1.5456 1.9947 2.3619 2.7136 3.0622 3.3861 3.7176 48 0.6798 1.0096 1.1844 1.4298 1.7528 2.2453 2.6381 3.0132 3.3758 3.6975 4.0252 49 0.7223 1.1368 1.3524 1.6331 1.9800 2.5026 2.9142 3.3092 3.6875 4.0146 4.3452 50 0.7800 1.2700 1.5400 1.8600 2.2200 2.7500 3.1700 3.5800 3.9800 4.3300 4.6800 51 0.8582 1.4188 1.7594 2.1214 2.4800 2.9844 3.3979 3.8102 4.2343 4.6244 5.0066 52 0.9535 1.5856 2.0113 2.4187 2.7648 3.2168 3.6114 4.0143 4.4622 4.9028 5.3233 53 1.0577 1.7560 2.2775 2.7353 3.0636 3.4520 3.8218 4.2153 4.6918 5.1940 5.6647 54 1.1626 1.9156 2.5398 3.0546 3.3656 3.6948 4.0409 4.4362 4.9517 5.5268 6.0654 55 1.2600 2.0500 2.7800 3.3600 3.6600 3.9500 4.2800 4.7000 5.2700 5.9300 6.5600 56 1.3487 2.1499 2.9991 3.6582 3.9439 4.2085 4.5203 4.9847 5.6182 6.3670 7.1079 57 1.4342 2.2250 3.2094 3.9601 4.2246 4.4670 4.7542 5.2750 5.9773 6.8185 7.6862 58 1.5182 2.2890 3.4090 4.2559 4.5062 4.7394 5.0098 5.6038 6.3903 7.3395 8.3554 59 1.6029 2.3561 3.5965 4.5358 4.7933 5.0391 5.3157 6.0045 6.9002 7.9850 9.1765 60 1.6900 2.4400 3.7700 4.7900 5.0900 5.3800 5.7000 6.5100 7.5500 8.8100 10.2100 61 1.7740 2.5315 3.8976 4.9704 5.3494 5.7143 6.1170 7.0673 8.2804 9.7496 11.3699 62 1.8536 2.6214 3.9804 5.0836 5.5685 6.0330 6.5479 7.6542 9.0628 10.7672 12.6158 63 1.9372 2.7234 4.0664 5.2016 5.8179 6.4074 7.0613 8.3506 9.9860 11.9600 14.0766 64 2.0332 2.8517 4.2036 5.3964 6.1682 6.9093 7.7258 9.2359 11.1388 13.4252 15.8817 65 2.1500 3.0200 4.4400 5.7400 6.6900 7.6100 8.6100 10.3900 12.6100 15.2600 18.1600 66 2.2678 3.2044 4.7823 6.2623 7.4229 8.5595 9.7500 11.8659 14.4846 17.5959 21.1404 67 2.3809 3.3956 5.1986 6.9154 8.3198 9.7102 11.1000 13.6106 16.7033 20.3682 24.7368 68 2.5191 3.6296 5.6786 7.6542 9.3214 10.9870 12.6060 15.5442 19.1387 23.3794 28.6060 69 2.7122 3.9424 6.2125 8.4341 10.3679 12.3153 14.2140 17.5873 21.6634 26.4325 32.4048 70 2.9900 4.3700 6.7900 9.2100 11.4000 13.6200 15.8700 19.6600 24.1500 29.3300 35.7900 71 3.3459 4.9007 7.4007 9.9629 12.3877 14.8595 17.5193 21.6909 26.5101 31.9634 38.6120 72 3.7602 5.5106 8.0512 10.7227 13.3706 16.0837 19.1978 23.7330 28.8287 34.4643 41.0996 73 4.2425 6.2171 8.7573 11.5181 14.3937 17.3551 20.9877 25.8937 31.2382 36.9954 43.4773 74 4.8025 7.0378 9.5350 12.3776 15.5018 18.7364 22.9711 28.2803 33.8712 39.7197 45.9692 75 5.4500 7.9900 10.4000 13.3300 16.7400 20.2900 25.2300 31.0000 36.8600 42.8000 48.8000 76 6.3468 9.3137 11.5059 14.5226 18.3083 22.2773 28.2061 34.5762 40.7398 46.7312 52.3479 77 7.2436 10.6375 12.6117 15.7152 19.8765 24.2646 31.1822 38.1524 44.6197 50.6625 55.8957 78 8.1404 11.9612 13.7176 16.9078 21.4448 26.2519 34.1583 41.7286 48.4995 54.5937 59.4436 79 9.0372 13.2850 14.8234 18.1004 23.0131 28.2392 37.1344 45.3048 52.3794 58.5250 62.9914 80 9.9339 14.6087 15.9293 19.2930 24.5814 30.2264 40.1105 48.8810 56.2592 62.4562 66.5393 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 45 3.4600 3.7900 4.1600 4.5400 4.9600 60 46 3.7575 4.1214 4.5305 4.9562 5.4400 61 47 4.0478 4.4507 4.9058 5.3887 5.9600 62 48 4.3482 4.7973 5.3070 5.8581 6.5100 63 49 4.6765 5.1806 5.7547 6.3850 7.1000 64 50 5.0500 5.6200 6.2700 6.9900 7.7700 65 51 5.4493 6.0919 6.8246 7.6398 8.5400 66 52 5.8626 6.5834 7.4047 8.3205 9.4100 67 53 6.3194 7.1298 8.0525 9.0823 10.3300 68 54 6.8487 7.7669 8.8102 9.9754 11.3400 69 55 7.4800 8.5300 9.7200 11.0500 12.5100 70 56 8.1625 9.3608 10.7148 12.2298 13.9100 71 57 8.8766 10.2356 11.7664 13.4815 15.5200 72 58 9.6986 11.2420 12.9756 14.9193 17.2800 73 59 10.7043 12.4676 14.4432 16.6574 19.2300 74 60 11.9700 14.0000 16.2700 18.8100 21.5200 75 61 13.4026 15.7402 18.3526 21.2710 24.3100 76 62 14.9515 17.6297 20.6239 23.9641 27.6300 77 63 16.7561 19.8171 23.2389 27.0487 31.3900 78 64 18.9558 22.4510 26.3526 30.6842 35.5900 79 65 21.6900 25.6800 30.1200 35.0300 40.3700 80 66 25.1727 29.6730 34.6350 40.0737 45.8700 81 67 29.3110 34.3309 39.7941 45.7090 52.1100 82 68 33.7838 39.4003 45.4567 51.9546 59.0100 83 69 38.2705 44.6278 51.4822 58.8287 66.5900 84 70 42.4500 49.7600 57.7300 66.3500 75.5900 85 71 46.1571 54.6102 63.9769 74.5069 86.3900 86 72 49.6057 59.3474 70.3168 83.2872 98.3500 87 73 53.0437 64.2516 77.0841 92.7080 111.0100 88 74 56.7192 69.6024 84.6137 102.7866 123.8700 89 75 60.8800 75.6800 93.2400 113.5400 136.6600 90 76 66.1663 83.5643 104.7105 126.2952 149.5100 91 77 71.4526 91.4487 116.1809 139.0505 162.6100 92 78 76.7389 99.3330 127.6514 151.8057 176.0500 93 79 82.0252 107.2174 139.1219 164.5609 189.9000 94 80 87.3115 115.1017 150.5924 177.3162 204.0400 95 218.5000 96 233.5000 97 249.0400 98 265.1200 99 296.3000 100 363.2100 101 468.3200 102 613.2600 103 796.7400 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110
Female Non Smoker
Attained Ultimate Age 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Female Smoker 91 Bragg, Female Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.5695 0.6166 0.5605 0.5045 0.4484 0.4111 0.3737 0.3363 0.3550 0.3550 0.3924 1 1.4090 0.5360 0.4766 0.4275 0.3737 0.4070 0.3172 0.2925 0.3189 0.3344 0.3812 2 1.1513 0.4779 0.4176 0.3833 0.3368 0.4029 0.3138 0.3114 0.3480 0.3870 0.4450 3 0.8576 0.4371 0.3787 0.3631 0.3276 0.3988 0.3440 0.3670 0.4137 0.4777 0.5461 4 0.5892 0.4084 0.3553 0.3583 0.3364 0.3947 0.3886 0.4333 0.4875 0.5718 0.6468 5 0.4071 0.4004 0.3508 0.3670 0.3531 0.3907 0.4282 0.4845 0.5407 0.6343 0.7093 6 0.4027 0.3924 0.3462 0.3757 0.3891 0.4391 0.4729 0.5275 0.5783 0.6655 0.7074 7 0.3983 0.3982 0.3690 0.4105 0.4509 0.5138 0.5356 0.5796 0.6191 0.6888 0.7055 8 0.3939 0.4040 0.4030 0.4545 0.5216 0.5950 0.6012 0.6302 0.6561 0.7035 0.7036 9 0.3894 0.4098 0.4400 0.4972 0.5844 0.6630 0.6545 0.6690 0.6820 0.7046 0.7017 10 0.3898 0.4155 0.4720 0.5286 0.6222 0.6980 0.6621 0.6698 0.6761 0.7057 0.6942 11 0.3924 0.4537 0.5032 0.5497 0.6208 0.6903 0.6697 0.6705 0.6701 0.6866 0.6867 12 0.3999 0.5087 0.5391 0.5674 0.6194 0.6528 0.6324 0.6315 0.6285 0.6523 0.6683 13 0.4098 0.5671 0.5732 0.5765 0.5975 0.6005 0.5825 0.5815 0.5777 0.6120 0.6482 14 0.4197 0.6153 0.5988 0.5813 0.5719 0.5480 0.5337 0.5333 0.5305 0.5748 0.6302 15 0.4243 0.6400 0.5994 0.5758 0.5500 0.5100 0.5000 0.5000 0.5000 0.5500 0.6244 16 0.4257 0.6364 0.6000 0.5659 0.5286 0.4854 0.4928 0.4940 0.5020 0.5500 0.6185 17 0.4169 0.6136 0.5752 0.5366 0.5027 0.4644 0.4856 0.4880 0.5040 0.5500 0.6189 18 0.4013 0.5785 0.5421 0.5025 0.4771 0.4487 0.4784 0.4820 0.5060 0.5500 0.6193 19 0.3847 0.5383 0.5080 0.4710 0.4566 0.4444 0.4713 0.4760 0.5080 0.5500 0.6197 20 0.3700 0.5000 0.4800 0.4500 0.4516 0.4400 0.4763 0.4700 0.5100 0.5500 0.6200 21 0.3560 0.4578 0.4558 0.4500 0.4506 0.4504 0.4813 0.4964 0.5458 0.5902 0.6609 22 0.3409 0.4071 0.4305 0.4500 0.4550 0.4700 0.5072 0.5352 0.5945 0.6459 0.7169 23 0.3263 0.3565 0.4078 0.4500 0.4695 0.4964 0.5403 0.5828 0.6523 0.7125 0.7845 24 0.3140 0.3146 0.3911 0.4500 0.4884 0.5272 0.5785 0.6356 0.7154 0.7854 0.8600 25 0.3102 0.2900 0.3880 0.4500 0.5100 0.5600 0.6200 0.6900 0.7800 0.8600 0.9400 26 0.3064 0.2901 0.3875 0.4592 0.5306 0.5911 0.6624 0.7428 0.8417 0.9306 1.0178 27 0.3073 0.2901 0.3908 0.4683 0.5512 0.6222 0.7068 0.7964 0.9030 1.0003 1.0959 28 0.3082 0.3075 0.4050 0.4841 0.5776 0.6586 0.7571 0.8556 0.9706 1.0777 1.1841 29 0.3091 0.3346 0.4304 0.5126 0.6153 0.7061 0.8169 0.9252 1.0507 1.1714 1.2922 30 0.3100 0.3700 0.4700 0.5600 0.6700 0.7700 0.8900 1.0100 1.1500 1.2900 1.4300 31 0.3413 0.4142 0.5268 0.6320 0.7466 0.8563 0.9794 1.1116 1.2682 1.4294 1.5888 32 0.3826 0.4683 0.5988 0.7244 0.8413 0.9614 1.0827 1.2268 1.4011 1.5839 1.7620 33 0.4343 0.5313 0.6815 0.8288 0.9467 1.0762 1.1953 1.3532 1.5489 1.7597 1.9628 34 0.4966 0.6022 0.7701 0.9368 1.0554 1.1921 1.3126 1.4884 1.7118 1.9630 2.2044 35 0.5700 0.6800 0.8600 1.0400 1.1600 1.3000 1.4300 1.6300 1.8900 2.2000 2.5000 36 0.6608 0.7693 0.9517 1.1333 1.2494 1.3802 1.5254 1.7551 2.0639 2.4631 2.8558 37 0.7688 0.8706 1.0482 1.2222 1.3285 1.4385 1.6017 1.8654 2.2334 2.7482 3.2631 38 0.8844 0.9774 1.1490 1.3146 1.4139 1.5047 1.6923 1.9950 2.4278 3.0666 3.7125 39 0.9980 1.0827 1.2531 1.4179 1.5222 1.6086 1.8306 2.1785 2.6769 3.4301 4.1946 40 1.1000 1.1800 1.3600 1.5400 1.6700 1.7800 2.0500 2.4500 3.0100 3.8500 4.7000 41 1.1874 1.2654 1.4637 1.6766 1.8598 2.0310 2.3709 2.8360 3.4562 4.3517 5.2467 42 1.2665 1.3433 1.5646 1.8227 2.0805 2.3417 2.7710 3.3136 3.9957 4.9274 5.8410 43 1.3419 1.4195 1.6718 1.9845 2.3283 2.6939 3.2198 3.8432 4.5851 5.5394 6.4558 44 1.4182 1.4998 1.7939 2.1682 2.5994 3.0694 3.6863 4.3852 5.1810 6.1495 7.0645 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.4297 0.4858 0.5418 0.6353 0.7100 15 1 0.4152 0.4663 0.5174 0.6026 0.7100 16 2 0.4709 0.5098 0.5488 0.6139 0.7100 17 3 0.5618 0.5854 0.6092 0.6489 0.7100 18 4 0.6530 0.6624 0.6718 0.6876 0.7100 19 5 0.7094 0.7098 0.7098 0.7100 0.7100 20 6 0.7084 0.7098 0.7098 0.7100 0.7100 21 7 0.7074 0.7097 0.7098 0.7100 0.7100 22 8 0.7064 0.7096 0.7098 0.7100 0.7100 23 9 0.7053 0.7096 0.7098 0.7100 0.7100 24 10 0.7027 0.7095 0.7099 0.7100 0.7100 25 11 0.6984 0.7088 0.7088 0.7100 0.7100 26 12 0.6925 0.7080 0.7079 0.7100 0.7100 27 13 0.6850 0.7060 0.7058 0.7100 0.7100 28 14 0.6758 0.7027 0.7025 0.7100 0.7100 29 15 0.6724 0.7057 0.7060 0.7100 0.7100 30 16 0.6673 0.7074 0.7085 0.7285 0.7100 31 17 0.6680 0.7155 0.7179 0.7502 0.7400 32 18 0.6687 0.7236 0.7352 0.7818 0.8200 33 19 0.6694 0.7318 0.7669 0.8295 0.9000 34 20 0.6700 0.7400 0.8200 0.9000 1.0000 35 21 0.7212 0.8020 0.8969 0.9951 1.1200 36 22 0.7919 0.8842 0.9929 1.1106 1.2600 37 23 0.8761 0.9815 1.1044 1.2434 1.4000 38 24 0.9675 1.0885 1.2280 1.3909 1.5600 39 25 1.0600 1.2000 1.3600 1.5500 1.7400 40 26 1.1440 1.3075 1.4930 1.7152 1.9400 41 27 1.2236 1.4146 1.6295 1.8884 2.1600 42 28 1.3132 1.5338 1.7805 2.0780 2.4000 43 29 1.4272 1.6781 1.9570 2.2924 2.6600 44 30 1.5800 1.8600 2.1700 2.5400 2.9500 45 31 1.7649 2.0730 2.4132 2.8136 3.2600 46 32 1.9722 2.3087 2.6792 3.1076 3.6000 47 33 2.2122 2.5769 2.9776 3.4328 3.9600 48 34 2.4947 2.8874 3.3180 3.8000 4.3400 49 35 2.8300 3.2500 3.7100 4.2200 4.7600 50 36 3.2239 3.6691 4.1566 4.6954 5.2300 51 37 3.6698 4.1382 4.6515 5.2189 5.7800 52 38 4.1586 4.6506 5.1901 5.7867 6.3800 53 39 4.6817 5.2001 5.7678 6.3950 7.0400 54 40 5.2300 5.7800 6.3800 7.0400 7.7500 55 41 5.8228 6.4088 7.0434 7.7354 8.4800 56 42 6.4660 7.0908 7.7611 8.4837 9.2300 57 43 7.1308 7.7984 8.5081 9.2643 10.0300 58 44 7.7884 8.5040 9.2594 10.0566 10.8600 59
Female Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 45 1.5000 1.5900 1.9400 2.3800 2.8900 3.4500 4.1400 4.9000 5.7400 6.7200 7.6400 46 1.5830 1.6858 2.1095 2.6243 3.2136 3.8585 4.6082 5.4142 6.2854 7.2642 8.1896 47 1.6643 1.7835 2.2966 2.8970 3.5728 4.3070 5.1113 5.9541 6.8461 7.8075 8.7312 48 1.7501 1.8893 2.5018 3.1914 3.9472 4.7614 5.6083 6.4799 7.3871 8.3297 9.2540 49 1.8466 2.0094 2.7261 3.5013 4.3164 5.1871 6.0582 6.9618 7.8734 8.8106 9.7472 50 1.9600 2.1500 2.9700 3.8200 4.6600 5.5500 6.4200 7.3300 8.2700 9.2300 10.2000 51 2.1029 2.3258 3.2413 4.1447 4.9580 5.8103 6.6376 7.5531 8.5154 9.5403 10.5772 52 2.2710 2.5325 3.5394 4.4798 5.2240 5.9910 6.7384 7.6478 8.6329 9.7550 10.8860 53 2.4458 2.7483 3.8530 4.8294 5.4880 6.1514 6.8064 7.7058 8.7147 9.9454 11.1792 54 2.6083 2.9514 4.1703 5.1981 5.7800 6.3513 6.9256 7.8193 8.8530 10.1833 11.5096 55 2.7400 3.1200 4.4800 5.5900 6.1300 6.6500 7.1800 8.0800 9.1400 10.5400 11.9300 56 2.8147 3.2234 4.7682 6.0041 6.5398 7.0538 7.5803 8.4867 9.5546 10.9626 12.3454 57 2.8450 3.2763 5.0427 6.4374 6.9893 7.5231 8.0706 8.9782 10.0355 11.4035 12.7205 58 2.8698 3.3245 5.3241 6.8918 7.4759 8.0485 8.6346 9.5562 10.6141 11.9421 13.1979 59 2.9285 3.4138 5.6330 7.3687 7.9970 8.6206 9.2565 10.2229 11.3218 12.6578 13.9202 60 3.0600 3.5900 5.9900 7.8700 8.5500 9.2300 9.9200 10.9800 12.1900 13.6300 15.0300 61 3.2796 3.8639 6.3984 8.3956 9.1399 9.8891 10.6378 11.8511 13.2569 14.9126 16.6053 62 3.5612 4.2050 6.8444 8.9444 9.7686 10.6042 11.4207 12.8350 14.5014 16.4525 18.5510 63 3.8820 4.5970 7.3232 9.5164 10.4282 11.3566 12.2497 13.8962 15.8666 18.1691 20.7502 64 4.2192 5.0241 7.8300 10.1116 11.1113 12.1281 13.1058 14.9997 17.2951 19.9818 23.0855 65 4.5500 5.4700 8.3600 10.7300 11.8100 12.9000 13.9700 16.1100 18.7300 21.8100 25.4400 66 4.8546 5.9038 8.8945 11.3492 12.4673 13.5745 14.7024 17.0704 20.0091 23.4914 27.6858 67 5.1481 6.3361 9.4366 11.9692 13.0882 14.1638 15.3156 17.9044 21.1706 25.0797 29.9009 68 5.4603 6.8135 10.0146 12.6236 13.7586 14.8150 16.0196 18.8472 22.4574 26.8183 32.2771 69 5.8210 7.3826 10.6563 13.3460 14.5639 15.6747 17.0244 20.1340 24.1129 28.9506 35.0062 70 6.2600 8.0900 11.3900 14.1700 15.5900 16.8900 18.5400 22.0000 26.3800 31.7200 38.2800 71 6.7749 8.9229 12.2117 15.0941 16.8387 18.4608 20.5494 24.4174 29.2222 35.0770 42.0390 72 7.3458 9.8504 13.1027 16.0959 18.2528 20.2892 22.9126 27.2293 32.4774 38.8595 46.1554 73 7.9763 10.8914 14.0689 17.1777 19.8296 22.3751 25.6552 30.4775 36.2006 43.1415 50.7182 74 8.6699 12.0649 15.1160 18.3416 21.5663 24.7187 28.8025 34.2038 40.4465 47.9970 55.8167 75 9.4300 13.3900 16.2500 19.5900 23.4600 27.3200 32.3800 38.4500 45.2700 53.5000 61.5400 76 10.3851 15.1444 17.6367 21.0886 25.8286 30.6942 37.2143 44.2000 51.7533 60.8470 69.0187 77 11.3401 16.8989 19.0235 22.5873 28.1971 34.0683 42.0486 49.9500 58.2366 68.1939 76.4974 78 12.2952 18.6533 20.4102 24.0859 30.5657 37.4425 46.8829 55.7001 64.7200 75.5409 83.9761 79 13.2502 20.4078 21.7970 25.5845 32.9343 40.8166 51.7172 61.4501 71.2033 82.8879 91.4547 80 14.2053 22.1622 23.1837 27.0831 35.3029 44.1908 56.5515 67.2001 77.6866 90.2349 98.9334 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 45 8.4100 9.1800 9.9900 10.8400 11.7000 60 46 8.9985 9.8330 10.7120 11.6330 12.5600 61 47 9.5730 10.4813 11.4420 12.4493 13.4500 62 48 10.1294 11.1151 12.1620 13.2611 14.3700 63 49 10.6631 11.7246 12.8540 14.0406 15.3200 64 50 11.1700 12.3000 13.5000 14.7600 16.2500 65 51 11.6210 12.7986 14.0342 15.3235 17.1000 66 52 12.0191 13.2271 14.4687 15.7498 17.7600 67 53 12.4077 13.6493 14.9021 16.1822 18.1300 68 54 12.8302 14.1290 15.4330 16.7645 18.3900 69 55 13.3300 14.7300 16.1600 17.6400 18.8400 70 56 13.7763 15.3190 16.9651 18.7184 19.7800 71 57 14.1402 15.8533 17.7826 19.9040 21.4100 72 58 14.6178 16.5331 18.7894 21.3324 23.6300 73 59 15.4057 17.5586 20.1629 23.1392 26.3000 74 60 16.7000 19.1300 22.0800 25.4600 29.3800 75 61 18.6034 21.3350 24.5971 28.3007 32.8100 76 62 20.9849 24.0403 27.5962 31.5710 36.5200 77 63 23.6907 27.1141 30.9926 35.2618 40.4800 78 64 26.5670 30.4246 34.7021 39.3645 44.7900 79 65 29.4600 33.8400 38.6400 43.8700 49.5500 80 66 32.2738 37.2582 42.6451 48.6008 54.9100 81 67 35.1109 40.7669 46.7738 53.5628 60.9100 82 68 38.1151 44.5195 51.2678 59.0224 67.4300 83 69 41.4302 48.6694 56.3693 65.2460 74.5100 84 70 45.2000 53.3700 62.3200 72.5000 83.4300 85 71 49.3518 58.5173 68.9661 80.8844 94.8400 86 72 53.7898 64.0090 76.1464 90.2217 107.6400 87 73 58.6228 70.0011 84.0916 100.3617 120.9800 88 74 63.9599 76.6495 93.0326 111.1545 133.9800 89 75 69.9100 84.1100 103.2000 122.4500 146.0000 90 76 77.5537 93.7991 116.7392 135.4536 157.1000 91 77 85.1974 103.4882 130.2784 148.4572 167.8500 92 78 92.8411 113.1774 143.8176 161.4608 178.8700 93 79 100.4848 122.8665 157.3568 174.4644 190.7500 94 80 108.1285 132.5556 170.8960 187.4680 204.0400 95 218.5000 96 233.5000 97 249.0400 98 265.1200 99 296.3000 100 363.2100 101 468.3200 102 613.2600 103 796.7400 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110
Female Smoker
Attained Ultimate Age 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Blended Non Smoker 91 Bragg, Blended Non Smoker Assumes 80% Male, 20% Female
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.0640 0.6260 0.4360 0.3900 0.3440 0.3000 0.2880 0.2600 0.2540 0.2540 0.2660 1 0.9314 0.5295 0.3509 0.3072 0.2622 0.2928 0.2921 0.1981 0.2048 0.2336 0.2699 2 0.7587 0.4472 0.3013 0.2644 0.2234 0.2857 0.2962 0.1941 0.2209 0.2938 0.3661 3 0.5754 0.3792 0.2765 0.2493 0.2162 0.2785 0.3004 0.2305 0.2787 0.3982 0.5082 4 0.4113 0.3253 0.2657 0.2501 0.2296 0.2714 0.3045 0.2899 0.3545 0.5106 0.6503 5 0.2959 0.2859 0.2589 0.2568 0.2521 0.2644 0.3085 0.3546 0.4248 0.5947 0.7461 6 0.2421 0.2873 0.2562 0.2634 0.2925 0.3318 0.4038 0.4416 0.5019 0.6528 0.7907 7 0.2153 0.2893 0.2593 0.2853 0.3582 0.4338 0.5436 0.5627 0.6016 0.7119 0.8190 8 0.2202 0.2913 0.2680 0.3182 0.4364 0.5484 0.6962 0.6923 0.7053 0.7658 0.8343 9 0.2251 0.2933 0.2961 0.3607 0.5141 0.6540 0.8295 0.8050 0.7941 0.8081 0.8361 10 0.2537 0.2952 0.3413 0.4110 0.5782 0.7287 0.9095 0.8733 0.8483 0.8319 0.8376 11 0.3080 0.3790 0.4185 0.4797 0.6300 0.7662 0.9074 0.8729 0.8454 0.8303 0.8223 12 0.3933 0.5028 0.5257 0.5679 0.6808 0.7853 0.9031 0.8705 0.8416 0.8066 0.7911 13 0.4894 0.6380 0.6408 0.6597 0.7260 0.7872 0.8558 0.8317 0.8068 0.7729 0.7544 14 0.5773 0.7565 0.7416 0.7393 0.7616 0.7877 0.8047 0.7897 0.7695 0.7401 0.7221 15 0.6375 0.8279 0.8046 0.7898 0.7830 0.7840 0.7676 0.7594 0.7442 0.7201 0.7039 16 0.6425 0.8309 0.8133 0.7974 0.7788 0.7715 0.7438 0.7396 0.7289 0.7221 0.7081 17 0.6470 0.8321 0.8204 0.8039 0.7742 0.7483 0.7203 0.7190 0.7151 0.7244 0.7125 18 0.6515 0.7953 0.7965 0.7852 0.7533 0.7208 0.6998 0.7010 0.7070 0.7267 0.7282 19 0.6560 0.7501 0.7638 0.7591 0.7297 0.6951 0.6842 0.6933 0.7026 0.7290 0.7453 20 0.6589 0.7074 0.7307 0.7326 0.7093 0.6775 0.6811 0.6922 0.7067 0.7360 0.7606 21 0.6337 0.6636 0.6921 0.7006 0.6904 0.6759 0.6822 0.6954 0.7146 0.7430 0.7709 22 0.5942 0.6079 0.6408 0.6578 0.6685 0.6741 0.6885 0.7162 0.7374 0.7577 0.7815 23 0.5496 0.5499 0.5865 0.6128 0.6471 0.6724 0.7034 0.7417 0.7646 0.7749 0.7930 24 0.5073 0.4977 0.5385 0.5741 0.6294 0.6706 0.7186 0.7662 0.7916 0.7957 0.8103 25 0.4758 0.4607 0.5059 0.5512 0.6272 0.6729 0.7278 0.7840 0.8140 0.8200 0.8360 26 0.4547 0.4525 0.5052 0.5505 0.6252 0.6751 0.7369 0.7930 0.8264 0.8437 0.8672 27 0.4398 0.4455 0.5054 0.5512 0.6324 0.6822 0.7455 0.8033 0.8404 0.8667 0.9016 28 0.4317 0.4384 0.5056 0.5652 0.6397 0.6903 0.7553 0.8149 0.8523 0.8950 0.9440 29 0.4253 0.4314 0.5058 0.5840 0.6489 0.6995 0.7661 0.8278 0.8749 0.9348 0.9985 30 0.4244 0.4307 0.5060 0.6040 0.6600 0.7100 0.7780 0.8420 0.9160 0.9920 1.0700 31 0.4280 0.4314 0.5223 0.6281 0.6880 0.7455 0.8173 0.8912 0.9756 1.0672 1.1591 32 0.4350 0.4386 0.5434 0.6552 0.7215 0.7898 0.8659 0.9529 1.0482 1.1564 1.2627 33 0.4478 0.4526 0.5707 0.6884 0.7627 0.8436 0.9250 1.0272 1.1338 1.2588 1.3798 34 0.4610 0.4738 0.6058 0.7303 0.8142 0.9081 0.9960 1.1135 1.2324 1.3736 1.5093 35 0.4720 0.5040 0.6500 0.7840 0.8780 0.9840 1.0800 1.2120 1.3440 1.5000 1.6500 36 0.4842 0.5465 0.7075 0.8542 0.9587 1.0749 1.1800 1.3233 1.4671 1.6326 1.7929 37 0.4984 0.6000 0.7773 0.9389 1.0547 1.1802 1.2953 1.4475 1.6017 1.7719 1.9386 38 0.5135 0.6597 0.8533 1.0310 1.1594 1.2945 1.4213 1.5835 1.7500 1.9261 2.1008 39 0.5284 0.7206 0.9295 1.1231 1.2660 1.4129 1.5537 1.7301 1.9141 2.1034 2.2934 40 0.5420 0.7780 1.0000 1.2080 1.3680 1.5300 1.6880 1.8860 2.0960 2.3120 2.5300 41 0.5740 0.8255 1.0592 1.2775 1.4544 1.6343 1.8128 2.0417 2.2890 2.5493 2.8122 42 0.6118 0.8665 1.1054 1.3299 1.5296 1.7292 1.9310 2.1979 2.4918 2.8100 3.1309 43 0.6559 0.9104 1.1494 1.3847 1.6100 1.8320 2.0598 2.3691 2.7144 3.0977 3.4836 44 0.7071 0.9664 1.2132 1.4605 1.7120 1.9605 2.2164 2.5696 2.9671 3.4165 3.8681 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.3100 0.3560 0.4260 0.5960 0.7473 15 1 0.3412 0.3763 0.4350 0.5997 0.9330 16 2 0.4754 0.4900 0.5259 0.6501 0.8917 17 3 0.6562 0.6471 0.6558 0.7232 0.8614 18 4 0.8272 0.7975 0.7818 0.7947 0.8415 19 5 0.9321 0.8912 0.8611 0.8400 0.8440 20 6 0.9395 0.9183 0.8575 0.8404 0.8440 21 7 0.9467 0.9152 0.8539 0.8402 0.8440 22 8 0.9131 0.8936 0.8503 0.8399 0.8440 23 9 0.8726 0.8653 0.8468 0.8398 0.8440 24 10 0.8408 0.8422 0.8432 0.8338 0.8440 25 11 0.8134 0.8196 0.8274 0.8280 0.8440 26 12 0.7803 0.7896 0.8047 0.8201 0.8440 27 13 0.7473 0.7590 0.7811 0.8122 0.8440 28 14 0.7204 0.7343 0.7624 0.8060 0.8440 29 15 0.7150 0.7319 0.7613 0.8041 0.8440 30 16 0.7093 0.7291 0.7601 0.8076 0.8440 31 17 0.7248 0.7481 0.7752 0.8154 0.8440 32 18 0.7469 0.7736 0.7959 0.8293 0.8560 33 19 0.7696 0.7996 0.8187 0.8469 0.8680 34 20 0.7884 0.8200 0.8400 0.8680 0.8900 35 21 0.7958 0.8303 0.8604 0.8948 0.9220 36 22 0.8053 0.8419 0.8795 0.9245 0.9620 37 23 0.8163 0.8516 0.9026 0.9604 1.0200 38 24 0.8289 0.8707 0.9350 1.0058 1.0880 39 25 0.8580 0.9060 0.9820 1.0640 1.1640 40 26 0.8988 0.9566 1.0413 1.1308 1.2520 41 27 0.9474 1.0179 1.1096 1.2039 1.3400 42 28 1.0063 1.0910 1.1899 1.2897 1.4320 43 29 1.0777 1.1773 1.2856 1.3944 1.5320 44 30 1.1640 1.2780 1.4000 1.5240 1.6580 45 31 1.2649 1.3911 1.5310 1.6778 1.8120 46 32 1.3787 1.5156 1.6764 1.8516 2.0160 47 33 1.5060 1.6549 1.8393 2.0467 2.2560 48 34 1.6476 1.8120 2.0228 2.2644 2.5400 49 35 1.8040 1.9900 2.2300 2.5060 2.8400 50 36 1.9629 2.1767 2.4462 2.7521 3.1700 51 37 2.1239 2.3697 2.6693 3.0018 3.5020 52 38 2.3055 2.5879 2.9214 3.2843 3.8140 53 39 2.5260 2.8497 3.2243 3.6286 4.1360 54 40 2.8040 3.1740 3.6000 4.0640 4.5360 55 41 3.1491 3.5689 4.0580 4.6052 5.0460 56 42 3.5491 4.0221 4.5835 5.2329 5.7280 57 43 3.9894 4.5211 5.1626 5.9248 6.5760 58 44 4.4552 5.0532 5.7808 6.6586 7.5480 59
Blended Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 45 0.7660 1.0440 1.3060 1.5720 1.8520 2.1320 2.4180 2.8140 3.2600 3.7700 4.2820 46 0.8340 1.1471 1.4259 1.7145 2.0266 2.3472 2.6670 3.1032 3.5906 4.1493 4.7100 47 0.9106 1.2694 1.5642 1.8770 2.2251 2.5947 2.9519 3.4276 3.9521 4.5519 5.1536 48 0.9938 1.4050 1.7236 2.0667 2.4522 2.8731 3.2692 3.7856 4.3483 4.9912 5.6359 49 1.0816 1.5485 1.9066 2.2906 2.7129 3.1813 3.6151 4.1756 4.7830 5.4808 6.1797 50 1.1720 1.6940 2.1160 2.5560 3.0120 3.5180 3.9860 4.5960 5.2600 6.0340 6.8080 51 1.2620 1.8388 2.3576 2.8730 3.3557 3.8822 4.3764 5.0385 5.7706 6.6463 7.5186 52 1.3528 1.9868 2.6296 3.2369 3.7406 4.2749 4.7888 5.5043 6.3124 7.3088 8.2963 53 1.4491 2.1420 2.9232 3.6323 4.1576 4.6973 5.2313 6.0056 6.8982 8.0283 9.1442 54 1.5553 2.3084 3.2296 4.0438 4.5978 5.1512 5.7123 6.5548 7.5411 8.8118 10.0657 55 1.6760 2.4900 3.5400 4.4560 5.0520 5.6380 6.2400 7.1640 8.2540 9.6660 11.0640 56 1.8066 2.6876 3.8667 4.8866 5.5301 6.1608 6.8095 7.8189 9.0105 10.5523 12.0843 57 1.9443 2.8984 4.2156 5.3458 6.0380 6.7185 7.4152 8.5111 9.8021 11.4660 13.1244 58 2.0955 3.1215 4.5682 5.8072 6.5610 7.3068 8.0646 9.2624 10.6682 12.4654 14.2666 59 2.2672 3.3557 4.9059 6.2440 7.0846 7.9207 8.7651 10.0948 11.6484 13.6087 15.5931 60 2.4660 3.6000 5.2100 6.6300 7.5940 8.5560 9.5240 11.0300 12.7820 14.9540 17.1860 61 2.6964 3.8404 5.4292 6.8871 8.0075 9.1267 10.2520 11.9835 13.9950 16.4364 19.0085 62 2.9540 4.0776 5.5758 7.0332 8.3348 9.6360 10.9440 12.9410 15.2610 18.0170 21.0058 63 3.2320 4.3325 5.7270 7.1848 8.6986 10.2124 11.7343 14.0289 16.6914 19.7934 23.2332 64 3.5236 4.6263 5.9600 7.4589 9.2215 10.9849 12.7569 15.3737 18.3973 21.8632 25.7461 65 3.8220 4.9800 6.3520 7.9720 10.0260 12.0820 14.1460 17.1020 20.4900 24.3240 28.6000 66 4.1163 5.3699 6.8920 8.7288 11.1427 13.5604 15.9783 19.2839 23.0203 27.1880 31.7456 67 4.4109 5.7820 7.5286 9.6515 12.4900 15.3343 18.1646 21.8351 25.9140 30.3901 35.1459 68 4.7224 6.2518 8.2782 10.7332 14.0219 17.3188 20.5894 24.6503 29.0950 33.9120 38.8750 69 5.0672 6.8146 9.1572 11.9670 15.6925 19.4290 23.1377 27.6243 32.4871 37.7355 43.0063 70 5.4620 7.5060 10.1820 13.3460 17.4560 21.5800 25.6940 30.6520 36.0140 41.8420 47.6140 71 5.9009 8.3109 11.3243 14.8287 19.2596 23.7051 28.1759 33.6381 39.5694 46.1107 52.5634 72 6.3730 9.2060 12.5732 16.4194 21.1339 25.8608 30.6601 36.6528 43.2039 50.5537 57.8054 73 6.8869 10.2133 13.9711 18.1809 23.1579 28.1474 33.2706 39.8388 47.0773 55.3526 63.5415 74 7.4510 11.3552 15.5605 20.1756 25.4109 30.6650 36.1313 43.3389 51.3494 60.6889 69.9738 75 8.0740 12.6540 17.3840 22.4660 27.9720 33.5140 39.3660 47.2960 56.1800 66.7440 77.3040 76 8.8622 14.3938 19.8529 25.5602 31.3516 37.2232 43.5578 52.4334 62.4728 74.7136 87.0586 77 9.6503 16.1335 22.3218 28.6545 34.7313 40.9325 47.7496 57.5707 68.7657 82.6833 96.8132 78 10.4385 17.8733 24.7907 31.7487 38.1109 44.6417 51.9414 62.7081 75.0585 90.6529 106.5678 79 11.2266 19.6131 27.2596 34.8430 41.4906 48.3509 56.1332 67.8455 81.3514 98.6226 116.3225 80 12.0148 21.3529 29.7285 37.9372 44.8702 52.0601 60.3250 72.9828 87.6442 106.5922 126.0771 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 45 4.9320 5.6060 6.4240 7.4120 8.5760 60 46 5.3914 6.1552 7.0717 8.1664 9.5920 61 47 5.8433 6.7090 7.7332 8.9367 10.5520 62 48 6.3300 7.3041 8.4396 9.7507 11.4460 63 49 6.8941 7.9769 9.2215 10.6365 12.3240 64 50 7.5780 8.7640 10.1100 11.6220 13.2660 65 51 8.3853 9.6559 11.0778 12.6590 14.3480 66 52 9.2876 10.6282 12.1045 13.7288 15.5620 67 53 10.2797 11.6952 13.2305 14.9037 16.8420 68 54 11.3562 12.8711 14.4968 16.2560 18.2280 69 55 12.5120 14.1700 15.9440 17.8580 19.8380 70 56 13.6718 15.5104 17.4878 19.6248 21.7820 71 57 14.8392 16.8829 19.1009 21.5083 24.0960 72 58 16.1268 18.4098 20.9099 23.6355 26.6800 73 59 17.6475 20.2134 23.0414 26.1338 29.5740 74 60 19.5140 22.4160 25.6220 29.1300 32.8880 75 61 21.7218 25.0016 28.6123 32.5520 36.7420 76 62 24.1957 27.8883 31.9280 36.3148 41.1740 77 63 26.9426 31.1009 35.6279 40.5271 46.0780 78 64 29.9691 34.6632 39.7710 45.2973 51.4940 79 65 33.2820 38.6000 44.4160 50.7340 57.5300 80 66 36.7717 42.7824 49.4236 56.6934 64.3260 81 67 40.4336 47.1943 54.7547 63.1032 71.9420 82 68 44.4324 52.0285 60.6181 70.1789 80.3300 83 69 48.9323 57.4780 67.2228 78.1361 89.4620 84 70 54.0980 63.7360 74.7780 87.1900 100.1500 85 71 59.7885 70.6248 83.0584 97.3522 112.8940 86 72 65.8939 78.0160 91.9249 108.4790 126.9500 87 73 72.6260 86.1757 101.7148 120.5534 141.8100 88 74 80.1962 95.3696 112.7660 133.5580 156.9340 89 75 88.8160 105.8640 125.4160 147.4760 172.0920 90 76 100.3025 119.9050 142.4123 164.1566 187.5020 91 77 111.7891 133.9460 159.4086 180.8371 203.2820 92 78 123.2756 147.9870 176.4049 197.5177 219.3060 93 79 134.7622 162.0280 193.4012 214.1982 235.4440 94 80 146.2487 176.0690 210.3975 230.8788 251.3600 95 267.1320 96 283.3400 97 299.9920 98 317.0720 99 350.5000 100 414.7060 101 508.0080 102 643.5640 103 813.1800 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110
Blended Non Smoker
Attained Ultimate Age 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Blended Smoker 91 Bragg, Blended Smoker Assumes 80% Male, 20% Female
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.5832 0.9166 0.6448 0.5769 0.5090 0.4449 0.4261 0.3846 0.3770 0.3770 0.3958 1 1.4270 0.8156 0.5596 0.4957 0.4289 0.3826 0.4190 0.3341 0.3449 0.3864 0.4402 2 1.1747 0.7016 0.4914 0.4386 0.3770 0.3460 0.4224 0.3343 0.3741 0.4791 0.5844 3 0.8862 0.5889 0.4397 0.4024 0.3517 0.3355 0.4326 0.3738 0.4443 0.6166 0.7759 4 0.6210 0.4917 0.4035 0.3841 0.3513 0.3512 0.4457 0.4415 0.5357 0.7607 0.9624 5 0.4389 0.4270 0.3841 0.3872 0.3742 0.3934 0.4577 0.5257 0.6279 0.8732 1.0912 6 0.3605 0.4270 0.3698 0.3903 0.4296 0.4883 0.5917 0.6481 0.7358 0.9564 1.1511 7 0.3185 0.4299 0.3743 0.4145 0.5183 0.6304 0.7865 0.8158 0.8729 1.0358 1.1847 8 0.3242 0.4327 0.3810 0.4568 0.6270 0.7922 1.0010 0.9972 1.0168 1.1079 1.2014 9 0.3299 0.4355 0.4245 0.5202 0.7418 0.9466 1.1942 1.1604 1.1454 1.1681 1.2104 10 0.3769 0.4383 0.5064 0.6078 0.8492 1.0661 1.3213 1.2705 1.2338 1.2157 1.2198 11 0.4734 0.5995 0.6566 0.7437 0.9598 1.1522 1.3271 1.3300 1.2855 1.2461 1.2235 12 0.6223 0.8377 0.8688 0.9259 1.0883 1.2231 1.3239 1.3511 1.3073 1.2628 1.2249 13 0.7881 1.0987 1.0978 1.1175 1.2104 1.2767 1.3194 1.3385 1.3013 1.2682 1.2242 14 0.9356 1.3282 1.2985 1.2835 1.3092 1.3106 1.3162 1.3263 1.2959 1.2598 1.2220 15 1.0289 1.4720 1.4239 1.3872 1.3660 1.3054 1.3160 1.3000 1.2760 1.2540 1.2170 16 1.0351 1.5130 1.4654 1.3924 1.3685 1.3028 1.2764 1.2608 1.2422 1.2326 1.2099 17 1.0393 1.4871 1.4471 1.3936 1.3292 1.2518 1.2170 1.1984 1.1854 1.1947 1.1919 18 0.9972 1.4203 1.3928 1.3392 1.2665 1.1857 1.1496 1.1270 1.1200 1.1508 1.1721 19 0.9492 1.3387 1.3245 1.2738 1.1990 1.1214 1.0857 1.0608 1.0607 1.1111 1.1558 20 0.9140 1.2680 1.2640 1.2180 1.1463 1.0720 1.0393 1.0140 1.0220 1.0860 1.1486 21 0.8914 1.2012 1.2038 1.1670 1.1012 1.0377 1.0050 1.0129 1.0324 1.0988 1.1483 22 0.8691 1.1210 1.1293 1.1042 1.0524 1.0070 0.9794 1.0142 1.0453 1.1148 1.1562 23 0.8470 1.0380 1.0518 1.0396 1.0080 0.9838 0.9639 1.0174 1.0601 1.1329 1.1651 24 0.8257 0.9628 0.9825 0.9835 0.9742 0.9716 0.9716 1.0215 1.0759 1.1523 1.2003 25 0.8060 0.9060 0.9336 0.9460 0.9580 0.9802 0.9800 1.0260 1.0920 1.1720 1.2680 26 0.7843 0.8700 0.9023 0.9526 0.9618 0.9885 1.0140 1.0790 1.1611 1.2604 1.3729 27 0.7615 0.8439 0.8818 0.9593 0.9656 1.0115 1.0622 1.1483 1.2485 1.3746 1.5080 28 0.7398 0.8298 0.8800 0.9672 0.9888 1.0486 1.1266 1.2352 1.3544 1.5101 1.6661 29 0.7225 0.8276 0.8867 0.9777 1.0303 1.1051 1.2099 1.3407 1.4788 1.6620 1.8398 30 0.7158 0.8282 0.9020 0.9920 1.0940 1.1860 1.3140 1.4660 1.6220 1.8260 2.0220 31 0.7167 0.8348 0.9367 1.0560 1.1818 1.2951 1.4421 1.6136 1.7841 1.9964 2.2028 32 0.7257 0.8485 0.9838 1.1382 1.2909 1.4288 1.5928 1.7828 1.9652 2.1765 2.3871 33 0.7385 0.8656 1.0461 1.2387 1.4187 1.5818 1.7614 1.9697 2.1647 2.3744 2.5895 34 0.7665 0.9024 1.1265 1.3579 1.5626 1.7487 1.9433 2.1707 2.3824 2.5982 2.8250 35 0.8100 0.9600 1.2280 1.4960 1.7200 1.9240 2.1340 2.3820 2.6180 2.8560 3.1080 36 0.8692 1.0414 1.3543 1.6553 1.8882 2.1005 2.3228 2.5896 2.8570 3.1364 3.4276 37 0.9418 1.1432 1.5032 1.8356 2.0691 2.2819 2.5127 2.7959 3.0996 3.4340 3.7737 38 1.0275 1.2606 1.6696 2.0334 2.2663 2.4789 2.7198 3.0220 3.3676 3.7658 4.1635 39 1.1257 1.3891 1.8477 2.2453 2.4840 2.7027 2.9602 3.2890 3.6825 4.1495 4.6132 40 1.2360 1.5240 2.0320 2.4680 2.7260 2.9640 3.2500 3.6180 4.0660 4.6020 5.1400 41 1.3632 1.6604 2.2146 2.6919 2.9853 3,2580 3.5879 4.0144 4.5303 5.1435 5.7777 42 1.5075 1.8013 2.3992 2.9193 3.2595 3.5773 3.9630 4.4641 5.0609 5.7626 6.5152 43 1.6618 1.9541 2.5976 3.1644 3.5586 3.9293 4.3776 4.9590 5.6396 6.4290 7.3016 44 1.8191 2.1266 2.8219 3.4412 3.8934 4,3218 4.8332 5.4910 6.2480 7.1129 8.0855 45 1.9720 2.3260 3.0840 3.7640 4.2740 4.7620 5.3320 6.0520 6.8680 7.7840 8.8160 46 2.1056 2.5426 3.3755 4.1279 4.7040 5.2631 5.8903 6.6539 7.5003 8.4226 9.4472 47 2.2246 2.7714 3.6884 4.5235 5.1764 5.8203 6.5067 7.3019 8.1571 9.0488 10.0131 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.4599 0.5278 0.6297 0.8751 1.0930 15 1 0.5429 0.5949 0.6807 0.8998 1.3561 16 2 0.7406 0.7631 0.8159 0.9748 1.2975 17 3 0.9863 0.9745 0.9880 1.0726 1.2546 18 4 1.2133 1.1717 1.1499 1.1656 1.2265 19 5 1.3548 1.2968 1.2542 1.2264 1.2300 20 6 1.3606 1.3328 1.2490 1.2270 1.2300 21 7 1.3664 1.3234 1.2438 1.2277 1.2300 22 8 1.3142 1.2890 1.2386 1.2283 1.2300 23 9 1.2581 1.2502 1.2333 1.2290 1.2300 24 10 1.2241 1.2274 1.2277 1.2295 1.2300 25 11 1.2208 1.2234 1.2234 1.2294 1.2300 26 12 1.2172 1.2194 1.2188 1.2292 1.2300 27 13 1.2144 1.2167 1.2156 1.2284 1.2300 28 14 1.2126 1.2155 1.2138 1.2270 1.2300 29 15 1.2104 1.2171 1.2138 1.2281 1.2300 30 16 1.2091 1.2201 1.2147 1.2313 1.2300 31 17 1.2074 1.2261 1.2195 1.2405 1.2440 32 18 1.2058 1.2320 1.2254 1.2507 1.2840 33 19 1.2042 1.2380 1.2454 1.2793 1.3320 34 20 1.2062 1.2440 1.2840 1.3320 1.4000 35 21 1.2169 1.2771 1.3383 1.4091 1.4960 36 22 1.2395 1.3157 1.4039 1.5049 1.6120 37 23 1.2635 1.3678 1.4853 1.6192 1.7600 38 24 1.3137 1.4413 1.5866 1.7517 1.9360 39 25 1.3960 1.5440 1.7120 1.9020 2.1240 40 26 1.5146 1.6786 1.8611 2.0655 2.3240 41 27 1.6628 1.8400 2.0310 2.2425 2.5360 42 28 1.8341 2.0240 2.2225 2.4398 2.7360 43 29 2.0219 2.2267 2.4366 2.6646 2.9480 44 30 2.2200 2.4440 2.6740 2.9240 3.1980 45 31 2.4163 2.6624 2.9209 3.2045 3.4920 46 32 2.6151 2.8847 3.1766 3.5013 3.8480 47 33 2.8343 3.1311 3.4620 3.8346 4.2560 48 34 3.0920 3.4221 3.7982 4.2248 4.7160 49 35 3.4060 3.7780 4.2060 4.6920 5.2240 50 36 3.7662 4.1913 4.6818 5.2382 5.8140 51 37 4.1606 4.6484 5.2117 5.8500 6.4840 52 38 4.6044 5.1606 5.8011 6.5242 7.2440 53 39 5.1131 5.7394 6.4554 7.2580 8.0720 54 40 5.7020 6.3960 7.1800 8.0480 8.9660 55 41 6.4124 7.1642 7.9925 8.8868 9.9120 56 42 7.2342 8.0363 8.8893 9.7763 10.8860 57 43 8.1053 8.9620 9.8439 10.7281 11.8540 58 44 8.9633 9.8907 10.8303 11.7536 12.8680 59 45 9.7460 10.7720 11.8220 12.8640 13.9880 60 46 10.3813 11.5360 12.7579 14.0165 15.3040 61 47 10.9105 12.2165 13.6557 15.2035 16.8420 62
Blended Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 48 2.3517 3.0271 4.0354 4.9579 5.6860 6.4136 7.1569 7.9785 8.8371 9.6923 10.5826 49 2.5093 3.3244 4.4291 5.4383 6.2276 7.0234 7.8161 8.6657 9.5392 10.3828 11.2246 50 2.7200 3.6780 4.8820 5.9720 6.7960 7.6300 8.4600 9.3460 10.2620 11.1500 12.0080 51 2.9857 4.1025 5.4128 6.5741 7.3878 8.2103 9.0562 9.9728 10.9506 11.9381 12.8634 52 3.2913 4.5883 6.0130 7.2399 8.0064 8.7776 9.6210 10.5579 11.6057 12.7272 13.7451 53 3.6341 5.1130 6.6549 7.9464 8.6570 9.3661 10.2029 11.1711 12.3099 13.6011 14.7569 54 4.0113 5.6550 7.3105 8.6708 9.3445 10.0108 10.8504 11.8819 13.1458 14.6441 16.0026 55 4.4200 6.1920 7.9520 9.3900 10.0740 10.7460 11.6120 12.7600 14.1960 15.9400 17.5860 56 4.8709 6.7124 8.5690 10.0976 10.8508 11.5892 12.5015 13.8325 15.4970 17.5203 19.5687 57 5.3656 7.2311 9.1801 10.8088 11.6713 12.5172 13.4865 15.0528 16.9939 19.3289 21.8812 58 5.8887 7.7652 9.8008 11.5335 12.5280 13.5040 14.5464 16.3805 18.6317 21.3188 24.4317 59 6.4240 8.3324 10.4469 12.2813 13.4128 14.5236 15.6604 17.7751 20.3554 23.4428 27.1280 60 6.9560 8.9500 11.1340 13.0620 14.3180 15.5500 16.8080 19.1960 22.1100 25.6540 29.8780 61 7.4486 9.6104 11.8548 13.8566 15.1962 16.4645 17.8454 20.4936 23.7627 27.9001 32.6771 62 7.9122 10.3020 12.5988 14.6588 16.0528 17.2847 18.7864 21.6949 25.3500 30.2127 35.5868 63 8.4010 11.0363 13.3771 15.4967 16.9584 18.1881 19.8466 23.0244 27.0714 32.6697 38.6139 64 8.9690 11.8245 14.2005 16.3990 17.9846 19.3527 21.2412 24.7067 29.1263 35.3495 41.7653 65 9.6700 12.6780 15.0800 17.3940 19.2020 20.9560 23.1860 26.9660 31.7140 38.3300 45.0480 66 10.5252 13.5640 15.9291 18.3750 20.5247 23.0395 25.7643 29.8805 34.8719 41.5236 48.2748 67 11.4984 14.4751 16.7403 19.3233 21.9051 25.4847 28.8325 33.3005 38.4671 44.8782 51.4411 68 12.5583 15.4601 17.6437 20.3985 23.4726 28.2295 32.2653 37.1090 42.4435 48.5254 54.8277 69 13.6733 16.5688 18.7689 21.7608 25.3565 31.2119 35.9375 41.1892 46.7451 52.5968 58.7151 70 14.8120 17.8500 20.2460 23.5700 27.6860 34.3700 39.7240 45.4240 51.3160 57.2240 63.3840 71 15.9497 19.2917 22.0699 25.8129 30.4277 37.6250 43.5151 49.6955 56.0437 62.3299 68.7930 72 17.1075 20.8610 24.1541 28.3829 33.4952 41.0182 47.3944 54.0815 60.9656 67.8267 74.7550 73 18.3221 22.5763 26.5060 31.2999 36.9390 44.6677 51.5261 58.7593 66.2502 73.8302 81.3321 74 19.6307 24.4558 29.1329 34.5837 40.8091 48.6917 56.0745 63.9057 72.0662 80.4560 88.5865 75 21.0700 26.5180 32.0420 38.2540 45.1560 53.2080 61.2040 69.6980 78.5820 87.8200 96.5800 76 22.8523 29.1037 35.7882 43.0577 50.8659 59.0442 67.8576 77.1915 86.9728 97.2439 106.7086 77 24.6346 31.6893 39.5345 47.8614 56.5758 64.8804 74.5112 84.6850 95.3636 106.6678 116.8372 78 26.4170 34.2750 43.2807 52.6650 62.2858 70.7166 81.1648 92.1785 103.7544 116.0917 126.9658 79 28.1993 36.8607 47.0269 57.4687 67.9957 76.5528 87.8184 99.6720 112.1453 125.5156 137.0944 80 29.9816 39.4463 50.7732 62.2724 73.7056 82.3891 94.4721 107.1655 120.5361 134.9396 147.2230 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 48 11.4421 12.9181 14.6069 16.4893 18.5700 63 49 12.0845 13.7457 15.7031 17.9387 20.4640 64 50 12.9460 14.8040 17.0360 19.6160 22.5540 65 51 13.9662 16.0316 18.5548 21.4853 24.8360 66 52 15.0728 17.3585 20.1985 23.5034 27.3120 67 53 16.3566 18.8770 22.0431 25.7246 29.9620 68 54 17.9080 20.6794 24.1648 28.2027 32.7980 69 55 19.8180 22.8580 26.6400 30.9920 35.8560 70 56 22.1541 25.4777 29.5183 34.1205 39.1720 71 57 24.8557 28.4770 32.7491 37.5521 42.7700 72 58 27.8216 31.7584 36.2575 41.2446 46.6380 73 59 30.9502 35.2245 39.9687 45.1560 50.7560 74 60 34.1400 38.7780 43.8080 49.2440 55.1160 75 61 37.4360 42.4636 47.7984 53.4910 59.7140 76 62 40.9059 46.3465 51.9898 57.9253 64.5120 77 63 44.4821 50.3592 56.3475 62.5731 69.4800 78 64 48.0972 54.4342 60.8371 67.4606 74.6620 79 65 51.6840 58.5040 65.4240 72.6140 80.1660 80 66 54.9404 62.2388 69.7508 77.6736 86.1180 81 67 57.9116 65.6835 73.8405 82.6218 92.5100 82 68 61.0501 69.3329 78.2292 87.9983 99.2300 83 69 64.8087 73.6821 83.4531 94.3431 106.3340 84 70 69.6400 79.2260 90.0480 102.1960 115.5500 85 71 75.5340 85.9481 97.9735 111.7626 127.7680 86 72 82.1888 93.5184 106.8724 122.6833 141.5280 87 73 89.6197 101.9617 116.8053 134.6492 155.9880 88 74 97.8417 111.3026 127.8329 147.3517 170.2920 89 75 106.8700 121.5660 140.0160 160.4820 183.8720 90 76 118.2970 134.5637 155.5846 175.3075 196.8200 91 77 129.7240 147.5615 171.1533 190.1330 209.6340 92 78 141.1509 160.5592 186.7219 204.9586 222.7340 93 79 152.5779 173.5569 202.2906 219.7841 236.5100 94 80 164.0049 186.5547 217.8592 234.6096 251.3600 95 267.1320 96 283.3400 97 299.9920 98 317.0720 99 350.5000 100 414.7060 101 508.0080 102 643.5640 103 813.1800 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116
Blended Smoker
Attained Ultimate Age 1,000.0000 117 1,000.0000 118 1,000.0000 119
EXHIBIT V --------- ACCIDENTAL DEATH REINSURANCE PREMIUMS Not Applicable - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT VI ---------- LIST OF RISKS REINSURED Universal Life -------------- A "List of Risks Reinsured," showing all renewing policies, should be prepared and submitted monthly, quarterly, or annually according to the terms of the agreement. At least once a year at the end of each year, the Ceding Company must submit a list showing ALL risks reinsured under this agreement. Premiums due should be included only for the period being reported. The information required to be shown on such lists is set out below. A. Policy number B. Name of insured (minimum is surname and first initial; prefer to have first name and middle initial as well.) C. Sex D. Date of birth (month, day, year) E. Issue age * F. Attained age G. Policy date (month, day, year) or date of increase/decrease in specified amount H. Transaction code (in force) 1. First year, newly reported (i.e., new business) 2. First year, previously reported (i.e., renewal business in first policy year) 3. Renewal I. Substandard rating (table, mortality percentage, flat extra amount and duration. Show multiple of standard for ADB or WPD.) J. Plan or plan code (if more than one plan is covered by the agreement) K. Underwriting class (smoker, nonsmoker, preferred, etc.) L. Specified amount issued (life, ADB, WPD) M. Death benefit option (i.e., cash value is included in specified amount or additional to specified amount) * N. Current death benefit (under original policy) * O. Cost of insurance (under original policy) P. Proportion reinsured this policy Q. Reinsurance death benefit (or amount reinsured if ADB or WPD) R. Reinsurance premium (life, ADB, WPD) * S. Net cash amount due MARC-Life (life, ADB, WPD) * T. Automatic or facultative * Desirable but not required - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT VI ---------- (CONTINUED) There should be separate subtotals for all items listed below. Each subtotal should include Policy count (life-separately for new business, renewals, and combined) Reinsurance death benefit (separately for new business, renewals, and combined) Reinsurance premium (separately for first year, renewals and combined) Net amount due MARC-Life (separately for first year, renewals and combined) It is not necessary to adhere strictly to the set of transaction codes shown above as long as the appropriate subtotals and totals can be provided. The various policy details including Reinsurance Death Benefit and proportion reinsured for this policy shown on the "List of Risks Reinsured" should correspond to the in force after any changes reported concurrently on the "List of Amendments." We need a grand total each reporting period for policy count in force and Reinsurance Death Benefit in force (separately for new business, renewals, and combined). A separate total of ADB in force is needed. This need not be separated into new business and renewals. A grand total of reinsurance premium and net amount due MARC-Life, including all in force and amendments, should be shown (separately for first year, renewals, and combined categories). Separate totals should be provided for life, ADB, and WPD. This may be shown on the "List of Risks Reinsured" or may be included in a separate summary. Where premiums for more than one period are being reported on a single list, the basic identification (policy number, name of insured, sex, date of birth, age, and policy date) need be shown only one time on the first line for the policy. Subsequent lines should each relate to a different period and the period involved should be indicated. Although an increase or decrease in specified amount will not, as a rule, result in the issuance of a new policy, the amount of such increase or decrease should be reported separately from the base specified amount so that differences in premium rates can be reflected. For example, the amount of increase in specified amount might involve a substandard rating that differs from the rating for the base specified amount. In any such case, it might be a good idea to assign a separate policy number suffix. Any significant deviations from these reporting guidelines must be agreed to by MARC-Life. - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT VII ----------- LIST OF AMENDMENTS Universal Life -------------- Each "List of Amendments" (monthly, quarterly, or annual) should show details for each policy for which any transaction (see codes 4-12 below) occurred which has an effect on either the Reinsurance Death Benefit or reinsurance premium. The basic policy details to be shown include the following: a. Policy number b. Name of insured * c. Date of birth d. Transaction code (changes to in force) 4. Termination without value 5. Policy not placed (NTO) 6. Surrender (full or partial) 7. Reinstatement 8. Increase in specified amount 9. Decrease in specified amount 10. Conversion or change of plan (e.g., Option A to Option B) 11. Death 12. Other (Please describe.) e. Effective date of transaction f. Net increase or decrease in Reinsurance Death Benefit from the Reinsurance Death Benefit last reported to MARC-Life before the change g. Reinsurance premium adjustment (separately for first year/renewal) h. Net adjustment due MARC-Life (separately for first year/renewal) Subtotals of policy count and Reinsurance Death Benefit should be provided for each transaction code where the transaction is such that the life policy count in force is altered by the transaction. For items g and h only grand totals are required (separately for first year/renewal/combined). The premium adjustments should include adjustments up to the current reporting period (e.g., month, quarter). Premiums for the current reporting period should appear on the "List of Risks Reinsured." It is not necessary to adhere strictly to the set of transaction codes shown above as long as the amendments are clearly identified and appropriate subtotals and totals can be provided. *Desirable but not required - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EXHIBIT VIII ------------ IN-FORCE SUMMARY FORM - -------------------------------------------------------------------------------- SELF-ADMINISTERED LIFE REINSURANCE Summary Report For the Period_________ through ________ To Munich American Reassurance Company Account Company Name ____________________________ Number ____________________________ Treaty ID: ____________________________ Plan ID: ____________________________ Prepared By ____________________________ Date Phone ________________________ I. Policy Exhibit Summary (Life Reinsurance Only) ================================================================================ Number of Amount of Policies Reinsurance - -------------------------------------------------------------------------------- A. In Force As Of Last Report __________ __________ B. New Paid Reinsurance Ceded __________ __________ C. NTO __________ __________ D. Reinstatements __________ __________ E. Administrative New Business (Conversions, Etc.) __________ __________ F. Lapses __________ __________ G. Recaptures __________ __________ H. Surrenders (Coinsurance Only) __________ __________ I. Death __________ __________ J. Expenses __________ __________ K. Administrative Lapses __________ __________ L. Increase/Decrease XXXXXX __________ M. In Force As Of Current Report __________ __________ N. ADB in Force As of Current Report XXXXXX __________ ================================================================================ II. Accounting Summary ================================================================================ Premiums Commissions -------------------------------------------------- Net Due Category First Year Renewal Year First Year Renewal Year Other* MARC-Life - -------------------------------------------------------------------------------- Life ______________________________________________________________________ WP ______________________________________________________________________ ADB ______________________________________________________________________ Total ______________________________________________________________________ ================================================================================ * If more than one category is included (e.g., surrender benefits, dividends), please show details on the reverse side of this form. RADF61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [LOGO OF MARC-LIFE MUNICH RE GROUP] MARC-LIFE MUNICH RE GROUP - -------------------------------------------------------------------------------- EX-99 7 am_phoenix-treaty.txt EXHIBIT 5 USAA CCN: 115008 AUTOMATIC REINSURANCE AGREEMENT NO. 2673 EFFECTIVE JUNE 1, 1998 between USAA LIFE INSURANCE COMPANY of San Antonio, Texas as Ceding Company: referred to as You and Your and AMERICAN PHOENIX LIFE AND REASSURANCE COMPANY of Hartford, Connecticut as Reinsurer: referred to as We, Us and Our [LOGO OF PHOENIX] PHOENIX TABLE OF CONTENTS ARTICLES -------- Article I Scope of the Agreement Page 1 Parties to the Agreement Effective Date of the Agreement Scope of the Agreement Duration of the Agreement Article II Reinsurance Coverage Page 2 Automatic Reinsurance Facultative Reinsurance Basis of Reinsurance Article III Procedures Page 3 Article IV Liability Page 4 Article V Reinsurance Rates and Payments Page 4 Tax Reimbursement Experience Refund Article VI Changes to the Reinsurance Page 7 Errors and Oversights Misstatement of Age or Sex Changes to the Underlying Policy Reductions, Terminations and Reinstatements Article VII Recapture Page 9 Article VIII Claims Page 10 Article IX Arbitration Page 13 Article X Insolvency Page 15 Article XI Inspection of Records Page 15 Article XII Letter of Credit Page 15 Article XIII Execution of the Agreement Page 17
Continued... TABLE OF CONTENTS EXHIBITS -------- Exhibit A Reinsurance Coverage Retention Limits Automatic Acceptance Limits Exclusions to Automatic Reinsurance Coverage, including Jumbo Limits Exhibit B Reinsurance Reporting Forms and Reinsurance Administration Exhibit C Reinsurance Rates and Allowances Net Amount at Risk Calculation Exhibit D Reinsurance Claim Form Exhibit E Conditional Receipt Liability
ARTICLE I - SCOPE OF THE AGREEMENT ---------------------------------- 1. PARTIES TO THE AGREEMENT ------------------------ We mutually agree to transact reinsurance according to the terms of this Agreement. This Agreement is for indemnity reinsurance and we are the only two parties to the Agreement. There will be no right or legal relationship whatsoever between us as reinsurer and any other person having an interest of any kind in policies reinsured under this Agreement. 2. EFFECTIVE DATE OF THE AGREEMENT ------------------------------- This Agreement will go into effect at 12:01 A.M., June 1, 1998, and will cover policies effective on and after that date. 3. SCOPE OF THE AGREEMENT ---------------------- The text of this Agreement and all Exhibits, Schedules and Amendments are considered to be the entire agreement between us. There are no other understandings or agreements between us regarding the policies reinsured other than as expressed in this Agreement. We may make changes or additions to this Agreement, but they will not be considered to be in effect unless they are made by means of a written amendment which has been signed by both of us. 4. DURATION OF THE AGREEMENT ------------------------- The duration of this Agreement will be unlimited. However, either one of us may terminate the Agreement at any time by giving the other ninety days prior written notice. We will continue to accept new reinsurance during the ninety-day period. Existing reinsurance will not be affected by the termination of this Agreement for new reinsurance. Existing reinsurance will remain in force until the termination or expiry of the underlying policy on which reinsurance is based, as long as you continue to pay reinsurance premiums as shown in Article V (Reinsurance Rates and Payment). However, we will not be liable for any claims or premium refunds which are not reported to us within one hundred eighty days following the termination or expiry of the last cession reinsured under this Agreement. -1- ARTICLE II - REINSURANCE COVERAGE --------------------------------- 1. AUTOMATIC REINSURANCE --------------------- We will accept automatically reinsurance of life benefits for your individually underwritten ordinary life policies on any permanent resident of the United States or Canada, in agreement with the provisions and limitations shown in Exhibit A (Reinsurance Coverage). We will also accept automatically reinsurance of riders and supplementary benefits written with the covered life benefits, but only to the extent that the riders and supplementary benefits are specifically shown in Exhibit A (Reinsurance Coverage), Part I. You have the right to modify your retention limits shown in Exhibit A (Reinsurance Coverage), Part II at any time. If your retention limits are reduced as a result of the modification, you will need to notify us in writing before you can cede reinsurance on the basis of the reduced retention limits. We will prepare a treaty amendment which will serve as our written approval of the reduction. We reserve the right to amend the Automatic Acceptance Limits shown in Exhibit A (Reinsurance Coverage), Part III if you modify your retention limits. We also reserve the right to modify the Automatic Acceptance Limits if you elect to participate in another arrangement or arrangements to secure additional automatic binding capacity. Changes in your issue limits or underwriting guidelines will be subject to our review. Significant changes to your underwriting guidelines which will affect future reinsurance will be subject to our written approval. 2. FACULTATIVE REINSURANCE ----------------------- If you wish to submit a risk not covered automatically under this Agreement, or if you wish our advice on any application, you may submit and we will consider the risk on a facultative basis. 3. BASIS OF REINSURANCE -------------------- Life reinsurance under this Agreement will be on the Yearly Renewable Term plan for the net amount at risk on the portion of the original policy that is reinsured with us. The net amount at risk for any policy period will be calculated according to Exhibit C (Reinsurance Rates and Allowances), Part I. Riders or supplementary benefits ceded with life benefits will be reinsured as shown in Exhibit C. Any differences in the net amount at risk calculation for these benefits will be shown in Exhibit C. -2- ARTICLE III - PROCEDURES ------------------------ 1. AUTOMATIC REINSURANCE --------------------- No individual notification will be necessary for placing automatic reinsurance. Subject to Article V (Reinsurance Rates and Payment) and Exhibit B (Reinsurance Reporting Forms and Reinsurance Administration), new business or changes to existing reinsurance will be shown on your periodic billing report. 2. FACULTATIVE REINSURANCE ----------------------- When you wish to submit a risk for facultative consideration, you will send us a reinsurance application form together with copies of all the information you have regarding the insurability of the risk. You may use either the Application for Reinsurance shown in Exhibit B-1 (Reinsurance Reporting Forms and Reinsurance Administration) or you may use your own form, as long as it is in general compliance with the Application for Reinsurance. We will review the information and promptly notify you of our decision. After we have made an unconditional offer to reinsure a risk, no individual notification of your acceptance will be necessary. You will confirm your acceptance of our offer and the placement of the reinsurance on your periodic billing report. Your confirmation must be made no later than the termination date we specify in our acceptance of the risk. Our offer may remain open beyond the termination date shown in our acceptance if you give us a written request for an extension and we give you our written approval of the request. If an extension is granted, the offer will terminate automatically on the expiry date shown in our written approval of the extension. 3. POLICY EXPENSES --------------- You will bear the expenses of all medical examinations, inspection fees and other charges incurred in connection with policy issues, reinstatements or reentries. 4. REFERENCE MATERIALS ------------------- Upon request you will provide us with any reference materials which we may require for proper administration of reinsurance ceded under this Agreement. -3- ARTICLE IV - LIABILITY ---------------------- 1. AUTOMATIC REINSURANCE --------------------- Our liability for reinsurance placed automatically under this Agreement will begin and end simultaneously with your liability for the underlying policy on which reinsurance is based. 2. FACULTATIVE REINSURANCE ----------------------- Our liability for facultative reinsurance will begin and end simultaneously with your liability for the underlying policy on which reinsurance is based when we have given you an unconditional offer to reinsure the risk and you have indicated your acceptance of our offer on the periodic billing report, provided that the acceptance date is before the expiry date shown on our offer. If our offer depends on your approval of further information about the insurability of the risk, we will have no liability unless you have requested and approved the information and documented your policy file accordingly. 3. CONDITIONAL RECEIPT LIABILITY ----------------------------- Our liability for losses under the terms of a Conditional Receipt or Temporary Insurance Receipt is shown in Exhibit E (Conditional Receipt Liability). 4. CONTINUATION OF LIABILITY ------------------------- Continuation of our liability is conditioned on your payment of reinsurance premiums as shown in Article V (Reinsurance Rates and Payment) and is subject to Article VI (Changes to the Reinsurance) and Article VII (Recapture). ARTICLE V - REINSURANCE RATES AND PAYMENTS ------------------------------------------ 1. REINSURANCE RATES ----------------- Reinsurance rates that you will pay us for business covered under this Agreement are shown in Exhibit C. The reinsurance rate payable for any cession for any accounting period will be calculated on the basis of the net amount risk reinsured as of that period. For reasons relating to deficiency reserve requirements by the various state insurance departments, the rates shown in Exhibit C cannot be guaranteed for more than one year. While we anticipate that reinsurance rates shown in Exhibit C will continue to be charged, it may become necessary for us to charge a guaranteed -4- ARTICLE V - REINSURANCE RATES AND PAYMENTS ------------------------------------------ 1. REINSURANCE RATES ----------------- (CONTINUED) rate that is the greater of the rate from Exhibit C or the corresponding statutory net premium rate based on the 1980 CSO Table at 4.5% interest for the applicable mortality rating. If the original policy is issued with interim insurance, you will pay us a reinsurance rate for the interim period that is the same percentage of the first year premium that the interim period bears to twelve months. The rate that you pay us for the first policy year after the interim period will be calculated on the basis of the full annual reinsurance rate. Procedures and details of reinsurance rate calculation for any benefits or riders ceded under this Agreement are shown in Exhibit C. All financial transactions under this Agreement will be in United States dollars, unless we mutually agree to use other currencies. Specifications of the currencies and details of currency conversion procedures will be shown in Exhibit C if necessary. 2. PAYMENTS -------- You will self-administer the periodic reporting of your statements of account and payment of balances due to us as shown in Exhibit B. Within thirty days after the close of each reporting period, you will send us a statement of account for that period along with payment of the full balance due. If the statement of account shows a balance due you, we will remit that amount to you within thirty days of our receipt of the statement of account. Your timely payment of reinsurance premiums is a condition precedent to our continued liability. If you have not paid the balance due us by the thirty-first day following the close of the reporting period, we have the right to give you thirty days' written notice of our intention to terminate the reinsurance on which the balance is due and unpaid. At the end of this thirty-day period, our liability will automatically terminate for all reinsurance on which balances remain due and unpaid, including reinsurance on which balances became due and unpaid during and after the thirty-day notice period. Even though we have terminated the reinsurance, you will continue to be liable for the payment of unpaid balances along with interest charges calculated from the due date shown above to the date of payment. The interest rate payable will be the same that we charge for delinquent premiums on our individual life insurance policies. -5- ARTICLE V - REINSURANCE RATES AND PAYMENTS ------------------------------------------ 2. PAYMENTS - (CONTINUED) ---------------------- You may reinstate reinsurance terminated for non-payment of balances due at any time within sixty days of the date of termination, by paying us all balances due and interest charged in full. However, we will have no liability for claims incurred between the termination date and the reinstatement date. 3. TAX REIMBURSEMENTS ------------------ Details of any reimbursement of premium taxes that you pay on behalf of reinsurance payments to us are shown in Exhibit C, Section VIII. (Premium Taxes). We mutually agree to the following pursuant to Section 1.848-2 (g) (8) of the Income Tax Regulation issued December 29, 1992 under Section 848 of the Internal Revenue Code of 1986, as amended. This election will be effective for all taxable years for which this Agreement remains in effect. The terms used in this Section are defined in Regulation Section 1.848-2 in effect as of December 29, 1992. The term "net consideration" will refer to either net consideration as defined in Section 1.848-2 (f) or "gross premium and other consideration" as defined in Section 1.848-3 (b), as appropriate. a) The party with the net positive consideration for this Agreement for each taxable year will capitalize specified policy acquisition expenses with respect to this Agreement without regard to the General Deductions Limitation of IRC Section 848 (c)(l). b) We mutually agree to exchange information pertaining to the amount of net consideration under this Agreement each year to ensure consistency. We also mutually agree to exchange information otherwise required by the Internal Revenue Service. 4. EXPERIENCE REFUND ----------------- Details of any Experience Refund payable to you will be shown in Exhibit C. Section XI. (Experience Refund). -6- ARTICLE VI - CHANGES TO THE REINSURANCE --------------------------------------- 1. ERRORS AND OVERSIGHTS --------------------- If either of us fail to comply with any of the provisions of this Agreement because of an unintentional oversight or misunderstanding, the underlying status of this Agreement will not be changed. Both of us will be restored to the position we would have occupied had no such oversight nor misunderstanding occurred. 2. MISSTATEMENT OF AGE OR SEX -------------------------- If the misstatement of the age or sex of a reinsured life causes an increase or reduction in the amount of insurance in your underlying policy, we will both share in the change in proportion to our original liabilities at the time the policy was issued. 3. CHANGES TO THE UNDERLYING POLICY -------------------------------- a) All changes. If any change is made to the underlying policy, the reinsurance will change accordingly. You will give us prompt written notification of the change, including details and the effective date of the change. b) Increases. If the amount at risk increases because of a change in the underlying policy, you will promptly send us copies of all papers relating to the change in plan. Our approval will be necessary if the increase causes the amount reinsured to exceed the Automatic Acceptance Limits shown in Exhibit A, Part III., if the policy was reinsured on a facultative basis, or if the underwriting classification of a substandard risk reinsured on a facultative basis was changed. c) Extended Term and Reduced Paid-Up Insurance. If any policy reinsured under this Agreement converts to Extended Term Insurance or Reduced Paid-Up Insurance, the net amount at risk reinsured will be adjusted as appropriate and reinsurance will be continued in accordance with the provisions of the underlying policy. Reinsurance payments for the adjusted policy will be calculated on the basis of the original issue age of the insured and the duration of the original policy at the time the adjustment became effective, i.e. point-in-scale basis. -7- ARTICLE VI - CHANGES TO THE REINSURANCE --------------------------------------- 4. REDUCTIONS, TERMINATIONS AND REINSTATEMENTS ------------------------------------------- If any part of the underlying coverage on a life reinsured under this Agreement is reduced or terminated, the amount of reinsurance will also be reduced or terminated to the extent that you will continue to maintain your appropriate retention limit as shown in Exhibit A. You will not be required to assume amounts in excess of the retention limit that was in force when the affected policy or policies were issued. If a policy reinsured under this Agreement is lapsed or terminated, the reinsurance will also terminate. If a policy reinsured automatically lapses and is reinstated in accordance with your standard rules and procedures, reinsurance for the amount at risk effective at the time of the lapse will be reinstated automatically at the date of reinstatement of the policy. You will notify us of the reinstatement on your periodic statement of account. You will send us copies of your reinstatement papers only upon request. We will not need to approve reinstatement of a policy reinsured under this Agreement on a facultative basis when: a) you have kept your full retention on the policy; and b) the reinsured amount falls within the Automatic Acceptance Limits shown in Exhibit A. Otherwise, you will need our prior review and approval for reinstatement of any facultative reinsurance. You will send us prompt written notice of your intention to reinstate the policy along with copies of the reinstatement papers required by your standard rules and procedures. The reinsurance will be reinstated at the same time as the policy, subject to our written approval of the reinstatement. You will notify us of all reinstatements on your periodic statement of account, and you will pay all reinsurance payments due from the date of reinstatement to the date of the current statement of account, including a proportionate share of interest collected. Thereafter, reinsurance payments will be in accordance with Article V. (Reinsurance Rates and Payments). -8- ARTICLE VII - RECAPTURE ----------------------- 1. Basis of Recapture ------------------ If you increase the retention limits or your quota share percentage shown in Exhibit A, you may make a corresponding reduction in eligible reinsurance cessions. Policies are eligible for recapture if: a) you have maintained the stated quota share percentage retention limit shown in Exhibit A. Policies on which you retained less than your quota share percentage will not be eligible for recapture unless you are partially or fully retained on the insured life in a prior policy. b) the policy has been in force under this Agreement for the Recapture Period shown in Exhibit C, Section IX. The recapture period will always be measured from the original policy issue date. For converted policies the recapture period will be the greater of the recapture period in the original reinsurance agreement, or the recapture period in the agreement to which the policy has converted. 2. METHOD OF RECAPTURE ------------------- You will give us written notice of your intention to recapture within ninety days of the effective date of your retention or quota share percentage increase. If you elect to recapture at a later date, you will give us additional written notice before you begin the recapture. When you have given us written notice of your intent to recapture, and the date that the recapture will begin: a) All eligible policies will be recaptured; b) Reinsurance will be reduced on the next anniversary date of each eligible policy; c) Reinsurance on each eligible policy will be reduced by an amount that will increase your retention or quota share percentage to the current limit set forth in Exhibit A. If you increase your retention or the stated quota share percentage shown in Exhibit A, the percentage of the risk reinsured will reduce proportionately. If reinsurance was placed with more than one reinsurer, each reinsurer's percentage will be reduced in the same proportion that each reinsurer's original percentage bore to the total percentage reinsured. -9- ARTICLE VII - RECAPTURE ----------------------- 2. METHOD OF RECAPTURE - (CONTINUED) --------------------------------- d) If there is reinsurance in force in other companies on any one insured life, the reduction of the reinsurance in force under this Agreement will be in the same proportion that the amount reinsured with us bears to the total reinsurance on the life; e) If at the time of recapture the insured is disabled and premiums are being waived under any type of Disability Benefit Rider, only the life benefit will be recaptured. The reinsured portion of the Disability Benefit Rider will remain in force until the policy is returned to premium-paying status, at which time it will be eligible for recapture. If you omit or overlook the recapture of any eligible policy or policies, our acceptance of reinsurance payments after the date the recapture would have taken place will not cause us to be liable for the amount of the risk that would have been recaptured. We will be liable only for a refund of reinsurance payments received, without interest. If your retention increase is due to your purchase by or purchase of another company, or your merger, assumption or any other affiliation with another company, no immediate recapture will be allowed. However, you may recapture eligible policies once the Recapture Period set out in Exhibit C, Section IX. has expired. ARTICLE VIII - CLAIMS --------------------- 1. NOTICE OF CLAIM --------------- When you receive notice that a claim has been incurred on a policy reinsured under this Agreement, you will immediately complete and send us a form in compliance with the "Request for Reinsurance Benefits" Form shown in Exhibit D. You will also forward copies of the death certificate and the claimant's statement as each document becomes available. Copies of the application and underwriting papers will be sent only for a claim incurred during the contestable period of the policy; otherwise you will send us only the claim documents we specifically request. 2. SETTLEMENT OF CLAIMS -------------------- We will accept your good faith decision in settling any claim except as specified in this Article. Once we have received the proofs cited in Section 1 and upon evidence of your settlement with the claimant, we will discharge our net -10- ARTICLE VIII - CLAIMS --------------------- 2. SETTLEMENT OF CLAIMS -------------------- (CONTINUED) reinsurance liability by paying you one lump sum, regardless of the method of settlement you use. For the settlement of Waiver of Premium Disability or other Disability Rider benefits, we will pay you our proportional share of the gross premium waived annually. You will consult with us before conceding any liability or making any settlement with the claimant for claims incurred during the contestable period of the policy. Your claim settlements will be administered in good faith, according to the standard procedures you apply to all claims, whether reinsured or not. 3. CONTESTABLE CLAIMS ------------------ You will immediately notify us if you intend to contest, compromise or litigate a claim involving reinsurance. If we prefer not to participate in the contest, we will notify you of our decision within fifteen days of our receipt of all documents requested, and we will immediately pay you the full amount of reinsurance due. Once we have paid our reinsurance liability, we will not be liable for legal and/or investigative expenses and we will have no further liability for expenses associated with the contest, compromise or litigation. When we agree to participate in a contest, compromise or litigation involving reinsurance, you will give us prompt notice of the beginning of any legal proceedings involving the contested policy. You will promptly furnish us with copies of all documents pertaining to a lawsuit or notice of intent to file a lawsuit by any of the claimants or parties to the policy. We will share in the payment of legal or investigative expenses relating to a contested claim in the same proportion as our liability bears to your liability. We will not reimburse expenses associated with non-reinsured policies. If your contest, compromise or litigation results in a reduction in the liability of the contested policy, we will share in the reduction in the same proportion that the amount of reinsurance bore to the amount payable under the terms of the policy on the date of death of the insured. -11- ARTICLE VIII - CLAIMS --------------------- 4. CLAIM EXPENSES -------------- We will pay our proportionate share of the following expenses arising out of the settlement or litigation of a claim, providing that the expenses are reasonable: a) investigative expenses; b) attorneys' fees; c) penalties and interest imposed automatically against you by statute and rising solely out of a judgment rendered against you in a suit for policy benefits; d) interest paid to the claimant on death benefit proceeds according to your practices. Reimbursement of interest in excess of 9%, unless otherwise dictated by local legislation, will require our approval. Our share of claim expenses will be in the same proportion that our liability bears to your liability. You will be responsible for payment of the following claim expenses, which are not considered items of "net reinsurance liability" as referenced in Section 2. of this Article: a) routine administrative expenses for the home office or elsewhere, including your employees' salaries; b) expenses incurred in connection with any dispute or contest arising out of a conflict in claims of entitlement to policy proceeds or benefits which you admit are payable. 5. EXTRA CONTRACTUAL DAMAGES ------------------------- We will not be liable for nor will we pay any extra contractual damages, including but not limited to consequential, compensatory, exemplary or punitive damages which are awarded against you, or which you pay voluntarily, in settlement of a dispute or claim where damages were awarded as the result of any direct or indirect act, omission or course of conduct undertaken by you, your agents or representatives, in connection with any aspect of the policies reinsured under this Agreement. We recognize that special circumstances may arise in which we should participate to the extent permitted by law in certain assessed damages. These circumstances are difficult to describe or define in advance but could include those situations in -12- ARTICLE VIII - CLAIMS --------------------- 5. EXTRA CONTRACTUAL DAMAGES ------------------------- (CONTINUED) which we were an active party in the act, omission or course of conduct which ultimately resulted in the assessment of the damages. The extent of our participation is dependent upon a good-faith assessment of the relative culpability in each case; but all factors being equal, the division of any such assessment would generally be in the same proportion of the net liability accepted by each party. ARTICLE IX - ARBITRATION ------------------------ 1. BASIS FOR ARBITRATION --------------------- We mutually understand and agree that the wording and interpretation of this Agreement is based on the usual customs and practices of the insurance and reinsurance industry. While we agree to act in good faith in our dealings with each other, it is understood and recognized that situations arise in which we cannot reach an agreement. In the event that any dispute cannot be resolved to our mutual satisfaction, the dispute will first be subject to good-faith negotiation as described below in an attempt to resolve the dispute without the need to institute formal arbitration proceedings. 2. NEGOTIATION ----------- Within ten days after one of us has given the other the first written notification of the specific dispute, each of us will appoint a designated officer to attempt to resolve the dispute. The officers will meet at a mutually agreeable location as early as possible and as often as necessary, in order to gather and furnish the other with all appropriate and relevant information concerning the dispute. The officers will discuss the problem and will negotiate in good faith without the necessity of any formal arbitration proceedings. During the negotiation process, all reasonable requests made by one officer to the other for information will be honored. The specific format for such discussions will be decided by the designated officers. If the officers cannot resolve the dispute within thirty days of their first meeting, we agree that we will submit the dispute to formal arbitration. However, we may agree in writing to extend the negotiation period for an additional thirty days. -13- ARTICLE IX - ARBITRATION ------------------------ 3. ARBITRATION PROCEEDINGS ----------------------- No later than fifteen days after the final negotiation meeting, the officers taking part in the negotiation will give both of us written confirmation that they are unable to resolve the dispute and that they recommend establishment of formal arbitration. An arbitration panel consisting of three past or present officers of life insurance companies not affiliated with either of us in any way will settle the dispute. Each of us will appoint one arbitrator and the two will select a third. If the two arbitrators cannot agree on the choice of a third, the choice will be made by the Chairman of the American Arbitration Association. The arbitration proceedings will be conducted according to the Commercial Arbitration Rules of the American Arbitration Association which are in effect at the time the arbitration begins. The arbitration will take place in Hartford, Connecticut unless we mutually agree otherwise. Within sixty days after the beginning of the arbitration proceedings the arbitrators will issue a written decision on the dispute and a statement of any award to be paid as a result. The decision will be based on the terms and conditions of this Agreement as well as the usual customs and practices of the insurance and reinsurance industry, rather than on strict interpretation of the law. The decision will be final and binding on both of us and there will be no further appeal, except that either of us may petition any court having jurisdiction regarding the award rendered by the arbitrators. We may agree to extend any of the negotiation or arbitration periods shown in this Article. Unless otherwise decided by the arbitrators, we will share equally in all expenses resulting from the arbitration, including the fees and expenses of the arbitrators, except that each of us will be responsible for our own attorneys' fees. -14- ARTICLE X - INSOLVENCY ---------------------- 1. If you are judged insolvent, we will pay all reinsurance under this Agreement directly to you, your liquidator, receiver or statutory successor on the basis of your liability under the policy or policies reinsured without decrease because of your insolvency. It is understood, however, that in the event of your insolvency the liquidator, receiver or statutory successor will give us written notice of a pending claim on a policy reinsured within a reasonable time after the claim is filed in the insolvency proceedings. While the claim is pending, we may investigate and interpose at our own expense in the proceedings where the claim is to be adjudicated, any defense which we may deem available to you, your liquidator, receiver or statutory successor. It is further understood that the expense we incur will be chargeable, subject to court approval, against you as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to you solely as a result of the defense we have undertaken. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to the claim, the expenses will be apportioned in accordance with the terms of the reinsurance agreement as though you had incurred the expense. 2. If we are judged insolvent, we will be considered in default under this Agreement. Amounts due us will be paid directly to our liquidator, receiver or statutory successor without diminution because of our insolvency. ARTICLE XI - INSPECTION OF RECORDS ---------------------------------- 1. Either one of us will have the right at any reasonable time to inspect the original papers, records, books, files or other documents relating directly or indirectly to the reinsurance coverage under this Agreement. ARTICLE XII - LETTER OF CREDIT ------------------------------ 1. For those states in which you are not permitted to take credit on your Annual Statement for all or a part of the reinsurance you cede to us, we will furnish you with a clean, irrevocable Letter of Credit. The Letter of Credit will be issued by the designated bank in an amount equal to the reserves ceded to us and will be in a form you find acceptable. We will bear the cost of the Letter of Credit. It is understood that you may draw on the Letter of Credit at any time, notwithstanding any other provisions in this Agreement. -15- ARTICLE XII - LETTER OF CREDIT ------------------------------ 1. (CONTINUED) You undertake to use and apply any amount which you may draw upon the Letter of Credit pursuant to the terms of this Agreement under which the Letter of Credit is held, and only for the following purposes: a) To pay our share or to reimburse you for our share of unearned premium or any liability for loss reinsured by this Agreement. b) To make refund of any sum which is in excess of the actual amount required to pay our share of any unearned premium or liability reinsured under this Agreement; c) To pay other amounts due to you under this Agreement. You agree to return to us any amounts drawn on Letters of Credit which are in excess of the actual amounts required for a) or b) above, or in the case of c) above, any amounts that are subsequently determined not to be due. The amounts drawn under any Letter of Credit will be applied without diminution because of the insolvency of either of us. The designated bank shall have no responsibility whatsoever in connection with the propriety of withdrawals you make or the disposition of funds withdrawn, except to see that withdrawals are made only upon the order of your properly authorized representatives. -16- ARTICLE XIII - EXECUTION OF THE AGREEMENT ----------------------------------------- In witness whereof, we have caused this Agreement to be executed in duplicate at the dates and places shown below, by our respective officers duly authorized to do so. USAA LIFE INSURANCE COMPANY SAN ANTONIO, TEXAS /s/ Allen R. Pierce - --------------------------------------- Signature AVP - Actuary - --------------------------------------- Title 12/30/98 - --------------------------------------- Date of Signature AMERICAN PHOENIX LIFE AND REASSURANCE COMPANY HARTFORD, CONNECTICUT /s/ - --------------------------------------- Signature Director, Treaties and Compliance - --------------------------------------- Title June 2, 1998 - --------------------------------------- Date of Signature -17- EXHIBIT A --------- (EFFECTIVE JUNE 1, 1998) REINSURANCE COVERAGE -------------------- I. REINSURANCE COVERAGE You will retain 10% and cede 90% of each risk on a first dollar quota share basis, for each risk not submitted on a facultative basis, up to the Retention Limit shown in Section II. below. Above this point 100% of the risk will be ceded up to the Automatic Acceptance Limit shown in Section III below. This Agreement will cover Life Benefits on the VUL Plan. Reinsurance coverage will provide neither loan nor cash surrender values. II. RETENTION LIMITS A. LIFE You will retain 10% of each risk to a maximum as shown below: NON MILITARY LIFE (MALE AND FEMALE)
- ------------------------------------------------------------------------------- Standard - Table 4 Tables 5 - 8 Tables 9 and Over and Flat Extras to and Flat Extras and Flat Extra Ages $10.00 $10.01 to $20.00 $20.01 and Over =============================================================================== All $600,000 $600,000 $600,000 - -------------------------------------------------------------------------------
NOTE: You will retain an additional $100,000 if by so doing you can eliminate the need for a reinsurance cessions. ENLISTED MILITARY PERSONNEL ON ACTIVE DUTY ------------------------------------------ All $50,000 ------------------------------------------ The maximum issue limit for this program is $200,000. Continued... EXHIBIT A - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) II. RETENTION LIMITS A. LIFE - (Continued)
MILITARY LIFE ISSUE LIMITS (MALE AND FEMALE) - ------------------------------------ Standard and Rank Substandard ==================================== WO through 0-3 $250,000 0-4 and above $350,000 - ------------------------------------
B. WAIVER OF PREMIUM DISABILITY OR WAIVER OF MONTHLY DEDUCTION
(MALE AND FEMALE) (STANDARD AND SUBSTANDARD) - --------------------------- Ages Face Amount =========================== 15-55 $600,000 - ---------------------------
C. ACCIDENTAL DEATH BENEFITS Not reinsured under this Agreement. III. AUTOMATIC ACCEPTANCE LIMITS A. LIFE We will accept automatically 5% of each risk to a maximum $330,000 for Non-Enlisted insureds and $10,000 for Enlisted insureds. However, the maximum amount of reinsurance per life that we will accept under all automatic reinsurance agreements written between our two companies will not exceed the largest individual acceptance limit shown in the agreements. For the purposes of this Agreement, the maximum binding in all companies is $6,600,000. The binding limits include your retention. Continued... EXHIBIT A - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) B. WAIVER OF PREMIUM OR WAIVER OF MONTHLY DEDUCTION We will participate in Waiver of Monthly Deduction benefits to a maximum $2,000,000 of Benefit face amount per insured life. C. ACCIDENTAL DEATH BENEFIT Accidental Death Benefits are not reinsured under this Agreement. IV. EXCLUSIONS TO AUTOMATIC REINSURANCE COVERAGE Automatic reinsurance coverage will not be available in the following situations: 1. The policy has been submitted on a facultative, facultative obligatory or initial inquiry basis to us or to any other reinsurer; 2. The risk is categorized as a "Jumbo Risk", where your underwriting papers indicate that the total life insurance in force and applied for on the insured's life exceeds $25,000,000. 3. The policy is part of any special program that you offer, including: a) experimental or limited retention programs, including but not limited to cancer, diabetes, aviation or coronary risks; b) external replacement and/or conversion programs other than contractual conversions or exchanges of the original policy. 4. You have retained an amount less than your stated quota share percentage limit. 5. The policy is a result of a conversion from group insurance, unless we agree otherwise. Continued... EXHIBIT A (CONTINUED) --------------------- (EFFECTIVE JUNE 1, 1998) V. CONFIDENTIALITY AGREEMENT We understand that during the term of this Agreement, we may be dealing with confidential and proprietary information which is your property, used in the course of your business (confidential information). Our officers, directors, employees, and agents shall protect the information as your proprietary and confidential information. We shall not disclose your information and materials to any other person, firm, organization, or employee who is not necessarily authorized by us to review the information and materials as part of our service under this Agreement. All materials which you prepare or which may be given to us in the course of this Agreement shall be deemed confidential and proprietary information and are your exclusive properties which shall be used only in the course of the performance of services permitted by the terms and conditions of this Agreement. We agree that all tapes will be hand-delivered to and from your location by your designated representative or, at your option by the appropriate postal authority or mail expediting service. The tapes shall remain in a secured area when not being processed. Reprinting of any data contained on any tapes you provided to us must be approved by you in writing prior to such reprinting. If any data is reprinted, we agree to keep such data in a secured area. Any data which has been reprinted must either be delivered to you upon completion for its use, or, with your prior written approval be shredded. Your confidential information shall not be copied, re-printed, duplicated, or recreated in whole or in part without your express written consent. We shall take reasonable action by instruction, agreement or otherwise with respect to our employees or other persons permitted access to the confidential information to comply fully our obligation hereto with respect to the use, copying, protection, and security of your Confidential Information. You retain the right of reasonable inspection to insure that the above security measures are in place during the term of this Agreement. Continued... EXHIBIT A - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) V. CONFIDENTIALITY AGREEMENT - (CONTINUED) We agree during our relationship and thereafter, to hold in confidence, and not to directly or indirectly reveal, report, publish, disclose or transfer any of the Confidential Information to any person or entity, or utilize any of the Confidential Information for any purpose, except in the course of the service provided to you. Because of the unique nature of the Confidential Information, we understand and agree that you may suffer irreparable harm in the event that we fail to comply with any of our obligations, and that monetary damages may be inadequate to compensate you for such breach. Accordingly, we agree that you will, in addition to any other remedies available at law or equity, be entitled to seek injunctive relief to enforce the terms of this Agreement. EXHIBIT B --------- (EFFECTIVE JUNE 1, 1998) REINSURANCE ADMINISTRATION -------------------------- Reinsurance administration and premium accounting will be on a self-administered basis. Premiums will be paid and reported monthly. For each reporting period you will submit to us a statement containing information in general compliance with the following: I. MONTHLY DETAIL REPORT Policy Number Name of Insured Date of Birth Sex Smoker/Non Smoker Code Automatic/Facultative/Facultative Obligatory Code YRT/Coinsurance Code Original Issue Date Issue Date Flat Extra Rate Flat Extra Duration Flat Extra Premium Flat Extra Allowances Age Nearest/Last Indicator Treaty Code Substandard Percentage Plan Name (Your Product Name) Plan Type (Whole Life, Term, UL, Variable UL, etc.) Joint Policy Indicator* Original Amount of Insurance (amount you issued) Amount Reinsured (original amount reinsured with us) Net Amount at Risk Reinsured (current amount at risk) * Joint Policies ---------------- For All Insureds Covered Under the Policy: Names of Insureds Dates of Birth Sex of Insureds Smoker/Non Smoker Codes Substandard Percentages Continued... EXHIBIT B - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) II. MONTHLY BILLING INFORMATION Policy Number Billing Date Transaction Code (New Business, Lapse, Amendment, etc.) Transaction Date Current Net Amount at Risk Billed Premium (Life, WP, ADB, Flat Extra, etc.) Billed Allowances (Life, WP, ADB, Flat Extra, etc.) III. PREMIUM SUMMARY REPORT (Information should be summarized) FY RY TOTAL Life Premium WP Premium ADB Premium Flat Extra Premium Total Premium Policy Fees Life Allowances WP Allowances ADB Allowances Flat Extra Allowances Total Allowances Premium Taxes (if applicable) Total Amount Due = (Total Premium + Policy Fees) - (Total Allowances + Premium Taxes) The premium summary should balance to the Monthly Detail Report. Continued... EXHIBIT B - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) IV. QUARTERLY VALUATION REPORT
- ------------------------------------------------------------ Statutory Tax Reserves Reserves (annual only) ============================================================ Basic Waiver Disabled Lives ADB Deficiency Total - ------------------------------------------------------------
V. POLICY EXHIBIT From ______________________ Reporting Period:___________________ Activity For Period _______________________
Case Count Volume ----- ------ Beginning In Force New Business Reinstatements Other Increases Conversions On Conversions Off Not Takens Deaths Lapses Cancellations Surrenders Recaptures Other Decreases Ending In Force
Continued... EXHIBIT B - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) NOTE: 1. Any activity resulting from the insured having exercised a conversion privilege or any similar option granted under policy provisions should be reflected in the "Conversion Off" or "Conversion On" categories, rather than being reflected in the "New Business or "Lapse" categories. "Conversion Off" denotes policies terminated as a result of a conversion for which reinsurance with us will be continued under a new policy; "Conversion On" denotes new policies resulting from such conversions. For the purposes of this Agreement, any such change will be considered a continuation of the original policy. The combination of "Conversion Off" and "Conversion On" will normally net to zero for both policy count and volume in the Policy Exhibit totals. 2. A separate Policy Exhibit should be prepared for each Premium Summary Report. [LOGO OF PHOENIX HOME LIFE] PHOENIX HOME LIFE APPLICATION FOR REINSURANCE INSTRUCTIONS TO CEDING COMPANY 1. Retain copies 1 and 2 - Return copy 3 to Phoenix Home Life 2. When case is put in force - Return copy 2 to Phoenix Home Life 3. To cancel case, complete bottom of 1 and return to Phoenix Home Life - -------------------------------------------------------------------------------- PLEASE TYPE SEND TO PHOENIX HOME LIFE APP. PREPARED BY , 19 - -------------------------------------------------------------------------------- CEDING COMPANY NUMBER OF ORIGINAL CESSION NUMBER [] AUTOMATIC POLICY [] FACULTATIVE ________________________________________________________________________________ PRIMARY INSURED SEX STATE OF STATE OF DATE OF AGE OCCUPATION SMOKER (LAST, FIRST, RESIDENCE BIRTH BIRTH []YES []NO MIDDLE INITIAL) ________________________________________________________________________________ SECOND INSURED []YES []NO ________________________________________________________________________________ PAYOR BENEFIT NAME OF PAYOR POLICY PLAN OF RESERVE SHORT TERM DATE INSURANCE BASIS FROM: [] PD & D [] Payor Death Only ================================================================================ 1ST INSURED 2ND INSURED RATING ----------------------------------------------- LIFE DISABILITY ADB LIFE DISABILITY ADB - -------------------------------------------------------------------------------- DIS. RATE FOR Previous $1,000 OF BASIC insurance in INSURANCE force ____ __________ ___ ____ __________ ___ ___________________ PREVIOUS CESSION Of which we NUMBERS, IF ANY retained ____ __________ ___ ____ __________ ___ ___________________ MIB CODES BEING Insurance now REPORTED applied for ____ __________ ___ ____ __________ ___ ___________________ IS THIS AN AMENDMENT? []YES []NO IF YES, GIVE Of which we CESSION NUMBER: will retain ____ __________ ___ ____ __________ ___ ___________________ HAS CASE BEEN OFFERED TO OTHER Reinsurance COMPANIES? this []YES []NO application ____ __________ ___ ____ __________ ___ ___________________ REMARKS: FOR CANCELLATION [] FILED AS INCOMPLETE [] POLICY NOT PLACED [] REINSURANCE PLACED ELSEWHERE [] WITHIN OUR RETENTION [] Pre-notice given to the proposed insured(s) and we have MIB authorization(s). - -------------------------------------------------------------------------------- DO NOT TYPE BELOW THIS LINE - -------------------------------------------------------------------------------- EXHIBIT B-1 COPY 1 [LOGO OF PHOENIX HOME LIFE] PHOENIX HOME LIFE APPLICATION FOR REINSURANCE - -------------------------------------------------------------------------------- PLEASE TYPE SEND TO PHOENIX HOME LIFE APP. PREPARED BY , 19 - -------------------------------------------------------------------------------- CEDING COMPANY NUMBER OF ORIGINAL CESSION NUMBER [] AUTOMATIC POLICY [] FACULTATIVE ________________________________________________________________________________ PRIMARY INSURED SEX STATE OF STATE OF DATE OF AGE OCCUPATION SMOKER (LAST, FIRST, RESIDENCE BIRTH BIRTH []YES []NO MIDDLE INITIAL) ________________________________________________________________________________ SECOND INSURED []YES []NO ________________________________________________________________________________ PAYOR BENEFIT NAME OF PAYOR POLICY PLAN OF RESERVE SHORT TERM DATE INSURANCE BASIS FROM: [] PD & D [] Payor Death Only ================================================================================ 1ST INSURED 2ND INSURED RATING ----------------------------------------------- LIFE DISABILITY ADB LIFE DISABILITY ADB - -------------------------------------------------------------------------------- DIS. RATE FOR Previous $1,000 OF BASIC insurance in INSURANCE force ____ __________ ___ ____ __________ ___ ___________________ PREVIOUS CESSION Of which we NUMBERS, IF ANY retained ____ __________ ___ ____ __________ ___ ___________________ MIB CODES BEING Insurance now REPORTED applied for ____ __________ ___ ____ __________ ___ ___________________ IS THIS AN AMENDMENT? []YES []NO IF YES, GIVE Of which we CESSION NUMBER: will retain ____ __________ ___ ____ __________ ___ ___________________ HAS CASE BEEN OFFERED TO OTHER Reinsurance COMPANIES? this []YES []NO application ____ __________ ___ ____ __________ ___ ___________________ REMARKS: FOR CANCELLATION [] FILED AS INCOMPLETE [] POLICY NOT PLACED [] REINSURANCE PLACED ELSEWHERE [] WITHIN OUR RETENTION [] Pre-notice given to the proposed insured(s) and we have MIB authorization(s). - -------------------------------------------------------------------------------- DO NOT TYPE BELOW THIS LINE - -------------------------------------------------------------------------------- SUBST TERM OF PAYOR OR CO REEX- RECAP REMARKS TABLE REINS. DIS CODE NUMBER TENSION CODE PLAN CODE - -------------------------------------------------- ------------------ RATING ________________________________________________________________________________ AMOUNT AT POL AMOU- POL AMOU- POL AMOU- POL AMOU- POL AMOU- AGE RISK YR NT YR NT YR NT YR NT YR NT CODE -------------------------------------------------------------- ________________________________________________________________________________ PAYOR DIS OR RATE/M DIS FLAT DIS ------ TERM FLAT FLAT FLAT FLAT FLAT EXTRA GROSS 1ST AGE EXTRA EXTRA EXTRA EXTRA EXTRA YRS PERM PREM YR RENL ------------------------------------------------------------------------- ________________________________________________________________________________ PREMIUM ADB WAIVED RATE/M ADB LO HI ----------- TERM POS POS 1ST YR RENL AGE - --------------------------------- ________________________________________________________________________________ COPY 2 [LOGO OF PHOENIX HOME LIFE] PHOENIX HOME LIFE APPLICATION FOR REINSURANCE - -------------------------------------------------------------------------------- PLEASE TYPE SEND TO PHOENIX HOME LIFE APP. PREPARED BY , 19 - -------------------------------------------------------------------------------- CEDING COMPANY NUMBER OF ORIGINAL CESSION NUMBER [] AUTOMATIC POLICY [] FACULTATIVE ________________________________________________________________________________ PRIMARY INSURED SEX STATE OF STATE OF DATE OF AGE OCCUPATION SMOKER (LAST, FIRST, RESIDENCE BIRTH BIRTH []YES []NO MIDDLE INITIAL) ________________________________________________________________________________ SECOND INSURED []YES []NO ________________________________________________________________________________ PAYOR BENEFIT NAME OF PAYOR POLICY PLAN OF RESERVE SHORT TERM DATE INSURANCE BASIS FROM: [] PD & D [] Payor Death Only ================================================================================ 1ST INSURED 2ND INSURED RATING ----------------------------------------------- LIFE DISABILITY ADB LIFE DISABILITY ADB - -------------------------------------------------------------------------------- DIS. RATE FOR Previous $1,000 OF BASIC insurance in INSURANCE force ____ __________ ___ ____ __________ ___ ___________________ PREVIOUS CESSION Of which we NUMBERS, IF ANY retained ____ __________ ___ ____ __________ ___ ___________________ MIB CODES BEING Insurance now REPORTED applied for ____ __________ ___ ____ __________ ___ ___________________ IS THIS AN AMENDMENT? []YES []NO IF YES, GIVE Of which we CESSION NUMBER: will retain ____ __________ ___ ____ __________ ___ ___________________ HAS CASE BEEN OFFERED TO OTHER Reinsurance COMPANIES? this []YES []NO application ____ __________ ___ ____ __________ ___ ___________________ REMARKS: FOR CANCELLATION [] FILED AS INCOMPLETE [] POLICY NOT PLACED [] REINSURANCE PLACED ELSEWHERE [] WITHIN OUR RETENTION [] Pre-notice given to the proposed insured(s) and we have MIB authorization(s). - -------------------------------------------------------------------------------- DO NOT TYPE BELOW THIS LINE - -------------------------------------------------------------------------------- COPY 3 EXHIBIT C --------- (EFFECTIVE JUNE 1, 1998) REINSURANCE RATES AND ALLOWANCES -------------------------------- I. NET AMOUNT AT RISK CALCULATION The Net Amount at Risk in any policy year will be the difference between the face amount of life benefit reinsured and the total cash value, taken to the nearest dollar, as of the policy anniversary occurring in that year. When the original policy is issued on a decreasing term plan or on a level term plan with a duration of twenty years or less, the cash values will be disregarded. You will maintain a level retention in all years. II. RATES FOR LIFE REINSURANCE The 1991 Bragg Tables shown in this Exhibit are annual rates for standard risks and are per $1,000 of the life benefit reinsured. You will pay us these rates multiplied by the following renewal percentages. First year percentage will be 0% for all classes.
- ----------------------------------------------------------------------- Preferred Preferred Standard Ultra Plus Preferred Plus Standard ======================================================================= 34% 43% 60% 47% 64% - -----------------------------------------------------------------------
These rates are guaranteed to a maximum reinsured amount of $20,000,000 per life under this Agreement. III. POLICY FEE No policy fee will be charged. IV. RATES FOR SUBSTANDARD TABLE RATINGS For substandard risks issued at table ratings, the standard rate will be multiplied by the appropriate mortality factor:
- ------------------------------ ------------------------ Table Mortality Table Mortality Rating Factor Rating Factor ============================== ======================== 1 or A 125% 5 or E 225% 1 1/2 or AA 137.5% 6 or F 250% 2 or B 150% 8 or H 300% 2 1/2 or BB 162.5% 1O or J 350% 3 or C 175% 12 or L 400% 4 or D 200% 16 or P 500% - ------------------------------ ------------------------
Continued... EXHIBIT C - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) V. RATES FOR FLAT EXTRA RATINGS Substandard risks issued at flat extra ratings will be coinsured. You will pay us the appropriate portion of the flat extra premium charged the insured less the following allowances:
- ------------------------------------------------------------ Duration First Year Renewal Years ============================================================ Over Five Years 75% 10% Five Years or Less 10% 10% - ------------------------------------------------------------
VI. RATES FOR WAIVER OF PREMIUM DISABILITY BENEFIT OR WAIVER OF MONTHLY DEDUCTION Waiver Benefits will be coinsured. You will pay us the appropriate portion of the annual Waiver Benefit premium charged the insured less the following allowances:
- ------------------------------- First Year Renewal Years =============================== 75% 10% - -------------------------------
VII. RATES FOR ACCIDENTAL DEATH BENEFIT Accidental Death Benefits will not be reinsured under this Agreement. VIII. PREMIUM TAXES We will not reimburse premium taxes for reinsurance ceded under this Agreement. IK. RECAPTURE PERIOD Recapture will be allowed after 10 years. Continued... EXHIBIT C - CONTINUED --------------------- (EFFECTIVE JUNE 1, 1998) X. CONVERSIONS For the purposes of this Agreement, and unless otherwise specifically covered elsewhere, "conversions" will mean continuations, rollovers, exchanges and/or internal replacements. a) The rates charged for conversions to plans reinsured under this Agreement will be based on the original issue age of the insured and the current duration of the original policy at the time of the conversion, i.e. point-in-scale basis. b) Conversions from plans reinsured under this Agreement to plans reinsured under other Reinsurance Agreements in force between us will be subject to the provisions of the other Agreements, including provisions covering rates, allowances and/or discounts. The rates charged will be based on the original issue age of the insured and the current duration of the original policy, i.e. point-in-scale basis. Conversions from plans reinsured under this Agreement to plans that we do not reinsure will remain under this Agreement. Rates charged will be the YRT Rates shown in this Exhibit, based on the original issue age of the insured and the current duration of the policy at the time of the conversion, i.e. point-in-scale basis. XI. EXPERIENCE REFUND Reinsurance under this Agreement is not eligible for an Experience Refund. XII. REENTRIES Policies reinsured under this Agreement are not eligible for re-entry. [LOGO OF PHOENIX] PHOENIX REQUEST FOR REINSURANCE BENEFITS - -------------------------------------------------------------------------------- SEND COMPLETED REQUEST TO: COMPANY: Phoenix Home Life Mutual TOLL FREE: 1-800-243-3342 [] Phoenix Home Life Insurance Company 1-860-403-1000 Mutual Insurance Company **Insurance Claims 3E302 FAX: 1-860-403-2881 [] American Phoenix Life **Bright Meadow Bfvd., and Reassurance Enfield, CT 06083-1900 [] Phoenix Life and Reassurance of New York - -------------------------------------------------------------------------------- **NAME OF INSURED __________________________________ DATE OF BIRTH ____________ DATE OF DEATH CAUSE OF DEATH DATE OF DISABILITY CAUSE OF DISABILITY ________________________________________________________________________________ LINE OF BUSINESS [] Individual [] Bulk/Self [] Group [] ADB [] Waiver (Check Appropriate): Life/Cession Administration Life/ADD Premium - -------------------------------------------------------------------------------- RATING INFO: (Check Appropriate): REINSURANCE DATA [] Smoker [] Standard []Auto Pool Number______ [] Non-Smoker [] Substandard Rating __ []Fac. Pool %_____ [] Flat Extra Date Premium Last Reported___ - -------------------------------------------------------------------------------- List all policies issued on this insured, with date of termination if not in force at the date of death. Also indicate whether any policies have been reinstated within two years prior to date of death. - -------------------------------------------------------------------------------- FACE AMOUNT LAPSED WITHIN FACE AMOUNT CEDING COMPANY INSURED DATE OF PAST TWO REINSURED POLICY NUMBER ISSUE ------------- TERMINATION YEARS (NOT NET RISK) DATE LIFE ADB ----------------------------- (CHECK ONE) DATE LIFE ADB REINSTATED - -------------------------------------------------------------------------------- []Yes []No ________________________________________________________________________________ []Yes []No ________________________________________________________________________________ []Yes []No ________________________________________________________________________________ []Yes []No ________________________________________________________________________________ []Yes []No ________________________________________________________________________________ TOTAL ISSUED AMOUNT REINSURED WITH PHOENIX ____________ _____________ REINSURED WITH OTHERS ____________________ LESS TOTAL TERMINATED AMOUNT RETAINED AT OWN RISK ______________ _____________ ** INSURANCE NOW IN TOTAL ____________________________________ FORCE ________________________________________________________________________________ FRAUD STATEMENT AMOUNT OF REINSURANCE REQUIRED BY SOME REINSURANCE WITH PHOENIX STATES CESSION NUMBER PLAN NAME (CURRENT NAR) ANY PERSON WHO --------------------------------------------------------- KNOWINGLY AND WITH _________________________________________________________ INTENT TO DEFRAUD ANY INSURANCE COMPANY _________________________________________________________ OR OTHER PERSON FILES A STATEMENT OF CLAIM _________________________________________________________ CONTAINING ANY MATERIALLY FALSE _________________________________________________________ INFORMATION, OR CONCEALS FOR THE TOTAL REQUESTED> ___________________ PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A FRAUDULENT INSURANCE ACT, WHICH IS A CRIME. [] Contestable [] Yes [] No [] Conversion, Exchange or Replacement [] Routine Investigation [] Yes [] No [] Reentry [] Initial Notification List: [] Additional Information Enclosed Policy No.__________ Plan Name___ [] Copies of all claim papers Orig. Issue date____ Reins. with enclosed includes: Phoenix Contestable Claims - Application [] Yes [] No and all underwriting papers, Conversion or Reentry Underwritten investigation, claimant statement, [] Yes [] No death certificate and proof of [] We have paid our claim in full payment. on________and request payment Non-Contestable - reinsured for of $________ $250,000 plus also include [] Interest expense at ___% per application and underwriting. annum for ____ days $________ Waivers - application and [] Investigation expense $_____ underwriting, claimant statement, [] Legal Expense $_____ attending physician statement, waiver premium provison and any investigation. [] Copies of investigation are enclosed [] We are awaiting your consultation REMARKS: before completing settlement - -------------------------------------------------------------------------------- ** ING COMPANY NAME PHONE NUMBER ( ) ________________________________________________________________________________ ADDRESS ________________________________________________________________________________ DATE COMPLETED BY TITLE ________________________________________________________________________________ White copy-Return to Yellow copy-Client Pink copy-Request for HO 2722 11-96 Phoenix Company payment EXHIBIT E --------- (EFFECTIVE JUNE 1, 1998) CONDITIONAL RECEIPT LIABILITY ----------------------------- I. AUTOMATIC REINSURANCE We will be liable for losses under the terms of a Conditional Receipt or Temporary Insurance Receipt only when the following qualifications are met: a) we have reviewed your Conditional Receipt or Temporary Insurance Receipt Form and have given you our written acceptance of the terms and procedures contained in the Form. b) the risk would have qualified for automatic coverage under this Agreement; c) you have kept your full retention for the age and table rating of the insured; d) the amount ceded to us does not exceed the Automatic Acceptance Limits set forth in Exhibit A (Reinsurance Coverage), Part III. If you change your application or receipt forms or your procedures and practices for issuing life insurance covered under this Agreement, we have the right of review, acceptance or rejection of the changes. We will have no liability for claims incurred on policies issued on the basis of the changes unless we have given you written acknowledgment of our acceptance of the changes. Copies of your Conditional or Temporary Receipt Forms and our letter(s) of acceptance are on file in our Home Office. II. FACULTATIVE REINSURANCE We will not be liable for a claim incurred under the terms of a Conditional Receipt or Temporary Insurance Receipt for a risk which has been submitted to us on a facultative basis. 91 Bragg, Female Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 0.8400 0.3300 0.3000 0.2700 0.2400 0.2200 0.2000 0.1800 0.1900 0.1900 0.2100 1 0.7147 0.2467 0.2149 0.1886 0.1607 0.2178 0.2058 0.1172 0.1314 0.1398 0.1647 2 0.5718 0.2094 0.1771 0.1586 0.1360 0.2156 0.2116 0.1225 0.1421 0.1632 0.1939 3 0.4294 0.2010 0.1696 0.1611 0.1459 0.2134 0.2174 0.1670 0.1920 0.2267 0.2628 4 0.3054 0.2043 0.1757 0.1771 0.1702 0.2112 0.2232 0.2222 0.2511 0.2967 0.3364 5 0.2179 0.2052 0.1780 0.1864 0.1890 0.2091 0.2292 0.2593 0.2894 0.3395 0.3796 6 0.2159 0.2061 0.1855 0.1956 0.2072 0.2336 0.2513 0.2806 0.3079 0.3456 0.3786 7 0.2139 0.2102 0.1927 0.2140 0.2383 0.2708 0.2814 0.3052 0.3266 0.3517 0.3776 8 0.2119 0.2143 0.2117 0.2379 0.2747 0.3122 0.3137 0.3297 0.3440 0.3578 0.3766 9 0.2099 0.2184 0.2331 0.2625 0.3088 0.3493 0.3425 0.3508 0.3584 0.3639 0.3755 10 0.2131 0.2224 0.2526 0.2829 0.3330 0.3736 0.3513 0.3554 0.3642 0.3670 0.3728 11 0.2162 0.2431 0.2726 0.3000 0.3389 0.3705 0.3608 0.3621 0.3682 0.3700 0.3706 12 0.2290 0.2718 0.2957 0.3170 0.3448 0.3673 0.3595 0.3588 0.3681 0.3678 0.3668 13 0.2438 0.3029 0.3187 0.3326 0.3496 0.3646 0.3590 0.3576 0.3662 0.3656 0.3636 14 0.2583 0.3306 0.3382 0.3454 0.3534 0.3623 0.3593 0.3584 0.3626 0.3622 0.3611 15 0.2674 0.3393 0.3432 0.3490 0.3549 0.3598 0.3581 0.3571 0.3612 0.3607 0.3593 16 0.2765 0.3479 0.3482 0.3526 0.3553 0.3576 0.3576 0.3578 0.3581 0.3579 0.3582 17 0.2830 0.3467 0.3453 0.3510 0.3535 0.3552 0.3557 0.3564 0.3573 0.3570 0.3579 18 0.2895 0.3455 0.3424 0.3494 0.3517 0.3528 0.3538 0.3550 0.3565 0.3561 0.3576 19 0.2961 0.3443 0.3396 0.3477 0.3499 0.3504 0.3519 0.3535 0.3558 0.3552 0.3574 20 0.2946 0.3371 0.3337 0.3432 0.3466 0.3473 0.3510 0.3536 0.3569 0.3579 0.3630 21 0.2931 0.3298 0.3279 0.3386 0.3433 0.3441 0.3500 0.3536 0.3620 0.3612 0.3687 22 0.2835 0.3108 0.3160 0.3312 0.3386 0.3402 0.3500 0.3552 0.3690 0.3699 0.3837 23 0.2739 0.2899 0.3035 0.3238 0.3339 0.3363 0.3500 0.3568 0.3760 0.3792 0.4032 24 0.2644 0.2709 0.2943 0.3164 0.3293 0.3324 0.3500 0.3584 0.3830 0.3959 0.4283 25 0.2591 0.2635 0.2893 0.3158 0.3284 0.3355 0.3585 0.3600 0.3900 0.4200 0.4600 26 0.2539 0.2560 0.2861 0.3152 0.3262 0.3386 0.3669 0.3811 0.4150 0.4509 0.4972 27 0.2529 0.2545 0.2871 0.3214 0.3338 0.3532 0.3896 0.4087 0.4457 0.4873 0.5393 28 0.2519 0.2530 0.2881 0.3276 0.3400 0.3729 0.4179 0.4427 0.4829 0.5302 0.5878 29 0.2510 0.2515 0.2891 0.3338 0.3552 0.3982 0.4514 0.4832 0.5274 0.5807 0.6442 30 0.2535 0.2545 0.2900 0.3400 0.3800 0.4300 0.4900 0.5300 0.5800 0.6400 0.7100 31 0.2560 0.2588 0.3116 0.3716 0.4163 0.4673 0.5317 0.5819 0.6403 0.7080 0.7857 32 0.2620 0.2676 0.3414 0.4134 0.4621 0.5097 0.5766 0.6390 0.7078 0.7840 0.8702 33 0.2680 0.2811 0.3764 0.4615 0.5149 0.5585 0.6278 0.7030 0.7830 0.8680 0.9630 34 0.2740 0.2984 0.4136 0.5117 0.5718 0.6148 0.6879 0.7761 0.8669 0.9600 1.0631 35 0.2800 0.3200 0.4500 0.5600 0.6300 0.6800 0.7600 0.8600 0.9600 1.0600 1.1700 36 0.3089 0.3470 0.4864 0.6077 0.6920 0.7572 0.8466 0.9556 1.0605 1.1630 1.2756 37 0.3478 0.3789 0.5248 0.6574 0.7596 0.8456 0.9457 1.0616 1.1678 1.2691 1.3804 38 0.3914 0.4143 0.5640 0.7074 0.8292 0.9404 1.0535 1.1768 1.2850 1.3857 1.4964 39 0.4339 0.4518 0.6028 0.7555 0.8972 1.0368 1.1662 1.3000 1.4147 1.5202 1.6356 40 0.4700 0.4900 0.6400 0.8000 0.9600 1.1300 1.2800 1.4300 1.5600 1.6800 1.8100 41 0.4974 0.5237 0.6826 0.8427 1.0046 1.2085 1.3855 1.5598 1.7176 1.8671 2.0268 42 0.5197 0.5538 0.7026 0.8516 1.0335 1.2754 1.4854 1.6901 1.8856 2.0766 2.2780 43 0.5403 0.5882 0.7026 0.8605 1.0661 1.3482 1.5934 1.8315 2.0688 2.3054 2.5528 44 0.5626 0.6343 0.7405 0.9002 1.1218 1.4439 1.7237 1.9946 2.2720 2.5509 2.8404 45 0.5900 0.7000 0.8100 0.9800 1.2200 1.5800 1.8900 2.1900 2.5000 2.8100 3.1300 46 0.6189 0.7876 0.9120 1.1013 1.3656 1.7674 2.1058 2.4320 2.7645 3.0878 3.4200 47 0.6470 0.8920 1.0372 1.2518 1.5456 1.9947 2.3619 2.7136 3.0622 3.3861 3.7176 48 0.6798 1.0096 1.1844 1.4298 1.7528 2.2453 2.6381 3.0132 3.3758 3.6975 4.0252 49 0.7223 1.1368 1.3524 1.6331 1.9800 2.5026 2.9142 3.3092 3.6875 4.0146 4.3452 50 0.7800 1.2700 1.5400 1.8600 2.2200 2.7500 3.1700 3.5800 3.9800 4.3300 4.6800 51 0.8582 1.4188 1.7594 2.1214 2.4800 2.9844 3.3979 3.8102 4.2343 4.6244 5.0066 52 0.9535 1.5856 2.0113 2.4187 2.7648 3.2168 3.6114 4.0143 4.4622 4.9028 5.3233 53 1.0577 1.7560 2.2775 2.7353 3.0636 3.4520 3.8218 4.2153 4.6918 5.1940 5.6647 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.2300 0.2600 0.2900 0.3400 0.3800 15 1 0.1828 0.2102 0.2376 0.3472 0.3800 16 2 0.2076 0.2286 0.2495 0.3544 0.3800 17 3 0.2710 0.2838 0.2965 0.3616 0.3800 18 4 0.3395 0.3447 0.3497 0.3688 0.3800 19 5 0.3797 0.3799 0.3799 0.3728 0.3800 20 6 0.3797 0.3799 0.3799 0.3768 0.3800 21 7 0.3797 0.3799 0.3799 0.3776 0.3800 22 8 0.3797 0.3799 0.3799 0.3784 0.3800 23 9 0.3797 0.3799 0.3799 0.3792 0.3800 24 10 0.3797 0.3800 0.3800 0.3796 0.3800 25 11 0.3784 0.3786 0.3800 0.3800 0.3800 26 12 0.3771 0.3773 0.3790 0.3800 0.3800 27 13 0.3742 0.3746 0.3780 0.3800 0.3800 28 14 0.3698 0.3704 0.3766 0.3800 0.3800 29 15 0.3694 0.3705 0.3786 0.3800 0.3800 30 16 0.3675 0.3690 0.3802 0.3880 0.3800 31 17 0.3697 0.3718 0.3852 0.3960 0.3800 32 18 0.3719 0.3746 0.3902 0.4040 0.4000 33 19 0.3740 0.3773 0.3951 0.4120 0.4200 34 20 0.3818 0.3800 0.4000 0.4200 0.4500 35 21 0.3895 0.3982 0.4245 0.4493 0.4900 36 22 0.4058 0.4211 0.4555 0.4854 0.5300 37 23 0.4268 0.4498 0.4931 0.5290 0.5800 38 24 0.4543 0.4857 0.5378 0.5803 0.6400 39 25 0.4900 0.5300 0.5900 0.6400 0.7000 40 26 0.5330 0.5823 0.6483 0.7066 0.7800 41 27 0.5823 0.6418 0.7126 0.7797 0.8600 42 28 0.6390 0.7090 0.7846 0.8615 0.9600 43 29 0.7045 0.7849 0.8665 0.9542 1.0600 44 30 0.7800 0.8700 0.9600 1.0600 1.1700 45 31 0.8667 0.9641 1.0646 1.1777 1.3000 46 32 0.9638 1.0666 1.1789 1.3058 1.4400 47 33 1.0694 1.1782 1.3039 1.4462 1.6000 48 34 1.1821 1.2991 1.4406 1.6003 1.7800 49 35 1.3000 1.4300 1.5900 1.7700 1.9600 50 36 1.4130 1.5625 1.7454 1.9509 2.1700 51 37 1.5221 1.6962 1.9063 2.1418 2.3900 52 38 1.6427 1.8438 2.0825 2.3494 2.6300 53 39 1.7902 2.0175 2.2838 2.5799 2.8800 54 40 1.9800 2.2300 2.5200 2.8400 3.1600 55 41 2.2230 2.4890 2.7950 3.1277 3.4700 56 42 2.5091 2.7863 3.1023 3.4386 3.8000 57 43 2.8217 3.1101 3.4361 3.7758 4.1600 58 44 3.1442 3.4486 3.7906 4.1419 4.5400 59 45 3.4600 3.7900 4.1600 4.5400 4.9600 60 46 3.7575 4.1214 4.5305 4.9562 5.4400 61 47 4.0478 4.4507 4.9058 5.3887 5.9600 62 48 4.3482 4.7973 5.3070 5.8581 6.5100 63 49 4.6765 5.1806 5.7547 6.3850 7.1000 64 50 5.0500 5.6200 6.2700 6.9900 7.7700 65 51 5.4493 6.0919 6.8246 7.6398 8.5400 66 52 5.8626 6.5834 7.4047 8.3205 9.4100 67 53 6.3194 7.1298 8.0525 9.0823 10.3300 68
91 Bragg, Female Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 54 1.1626 1.9156 2.5398 3.0546 3.3656 3.6948 4.0409 4.4362 4.9517 5.5268 6.0654 55 1.2600 2.0500 2.7800 3.3600 3.6600 3.9500 4.2800 4.7000 5.2700 5.9300 6.5600 56 1.3487 2.1499 2.9991 3.6582 3.9439 4.2085 4.5203 4.9847 5.6182 6.3670 7.1079 57 1.4342 2.2250 3.2094 3.9601 4.2246 4.4670 4.7542 5.2750 5.9773 6.8185 7.6862 58 1.5182 2.2890 3.4090 4.2559 4.5062 4.7394 5.0098 5.6038 6.3903 7.3395 8.3554 59 1.6029 2.3561 3.5965 4.5358 4.7933 5.0391 5.3157 6.0045 6.9002 7.9850 9.1765 60 1.6900 2.4400 3.7700 4.7900 5.0900 5.3800 5.7000 6.5100 7.5500 8.8100 10.2100 61 1.7740 2.5315 3.8976 4.9704 5.3494 5.7143 6.1170 7.0673 6.2804 9.7496 11.3699 62 1.8536 2.6214 3.9804 5.0836 5.5685 6.0330 6.5479 7.6542 9.0628 10.7672 12.6158 63 1.9372 2.7234 4.0664 5.2016 5.8179 6.4074 7.0613 8.3506 9.9860 11.9600 14.0766 64 2.0332 2.8517 4.2036 5.3964 6.1682 6.9093 7.7258 9.2359 11.1388 13.4252 15.8817 65 2.1500 3.0200 4.4400 5.7400 6.6900 7.6100 8.6100 10.3900 12.6100 15.2600 18.1600 66 2.2676 3.2044 4.7823 6.2623 7.4229 8.5595 9.7500 11.8659 14.4846 17.5959 21.1404 67 2.3809 3.3956 5.1986 6.9154 8.3198 9.7102 11.1000 13.6106 16.7033 20.3682 24.7368 68 2.5191 3.6296 5.6786 7.6542 9.3214 10.9870 12.6060 15.5442 19.1387 23.3794 28.6060 69 2.7122 3.9424 6.2125 8.4341 10.3679 12.3153 14.2140 17.5873 21.6634 26.4325 32.4048 70 2.9900 4.3700 6.7900 9.2100 11.4000 13.6200 15.8700 19.6600 24.1500 29.3300 35.7900 71 3.3459 4.9007 7.4007 9.9629 12.3877 14.8595 17.5193 21.6909 26.5101 31.9634 38.6120 72 3.7602 5.5106 8.0512 10.7227 13.37O6 16.0837 19.1978 23.7330 28.8287 34.4643 41.0996 73 4.2425 6.2171 8.7573 11.5181 14.3937 17.3551 20.9877 25.8937 31.2382 36.9954 43.4773 74 4.8025 7.0378 9.5350 12.3776 15.5018 18.7364 22.9711 28.2803 33.8712 39.7197 45.9692 75 5.4500 7.9900 10.4000 13.3300 16.7400 20.2900 25.2300 31.0000 36.8600 42.8000 48.8000 76 6.3468 9.3137 11.5059 14.5226 18.3083 22.2773 28.2061 34.5762 40.7398 46.7312 52.3479 77 7.2436 10.6375 12.6117 15.7152 19.8765 24.2646 31.1822 38.1524 44.6197 50.6625 55.8957 78 8.1404 11.9612 13.7176 16.9078 21.4448 26.2519 34.1583 41.7286 48.4995 54.5937 59.4436 79 9.0372 13.2850 14.8234 18.1004 23.0131 28.2392 37.1344 45.3048 52.3794 58.5250 62.9914 80 9.9339 14.6087 15.9293 19.2930 24.5814 30.2264 40.1105 46.8810 56.2592 62.4562 66.5393 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 54 6.8487 7.7669 8.8102 9.9754 11.3400 69 55 7.4800 8.5300 9.7200 11.0500 12.5100 70 56 8.1625 9.3608 10.7148 12.2298 13.9100 71 57 8.8766 10.2356 11.7664 13.4815 15.5200 72 58 9.6986 11.2420 12.9756 14.9193 17.2800 73 59 10.7043 12.4676 14.4432 16.6574 19.2300 74 60 11.9700 14.0000 16.2700 18.8100 21.5200 75 61 13.4026 15.7402 18.3526 21.2710 24.3100 76 62 14.9515 17.6297 20.6239 23.9641 27.6300 77 63 16.7561 19.8171 23.2389 27.0487 31.3900 78 64 18.9558 22.4510 26.3526 30.6842 35.5900 79 65 21.6900 25.6800 30.1200 35.0300 40.3700 80 66 25.1727 29.6730 34.6350 40.0737 45.8700 81 67 29.3110 34.3309 39.7941 45.7090 52.1100 82 68 33.7838 39.4003 45.4567 51.9546 59.0100 83 69 38.2705 44.6278 51.4822 58.8287 66.5900 84 70 42.4500 49.7600 57.7300 66.3500 75.5900 85 71 46.1571 54.6102 63.9769 74.5069 86.3900 86 72 49.6057 59.3474 70.3168 83.2872 98.3500 87 73 53.0437 64.2516 77.0841 92.7080 111.0100 88 74 56.7192 69.6024 84.6137 102.7866 123.8700 89 75 60.8800 75.6800 93.2400 113.5400 136.6600 90 76 66.1663 83.5643 104.7105 126.2952 149.5100 91 77 71.4526 91.4487 116.1809 139.0505 162.6100 92 78 76.7389 99.3330 127.6514 151.8057 176.0500 93 79 82.0252 107.2174 139.1219 164.5609 189.9000 94 80 87.3115 115.1017 150.5924 177.3162 204.0400 95 218.5000 96 233.5000 97 249.0400 98 265.1200 99 296.3000 100 363.2100 101 468.3200 102 613.2600 103 796.7400 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
91 Bragg, Female Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.5695 0.6166 0.5605 0.5045 0.4484 0.4111 0.3737 0.3363 0.3550 0.3550 0.3924 1 1.4090 0.5360 0.4766 0.4275 0.3737 0.4070 0.3172 0.2925 0.3189 0.3344 0.3812 2 1.1513 0.4779 0.4176 0.3833 0.3368 0.4029 0.3138 0.3114 0.3480 0.3870 0.4450 3 0.8576 0.4371 0.3787 0.3631 0.3276 0.3988 0.3440 0.3670 0.4137 0.4777 0.5461 4 0.5892 0.4084 0.3553 0.3583 0.3364 0.3947 0.3886 0.4333 0.4875 0.5718 0.6468 5 0.4071 0.4004 0.3508 0.3670 0.3531 0.3907 0.4282 0.4845 0.5407 0.6343 0.7093 6 0.4027 0.3924 0.3462 0.3757 0.3891 0.4391 0.4729 0.5275 0.5783 0.6655 0.7074 7 0.3983 0.3982 0.3690 0.4105 0.4509 0.5138 0.5356 0.5796 0.6191 0.6888 0.7055 8 0.3939 0.4040 0.4030 0.4545 0.5216 0.5950 0.6012 0.6302 0.6561 0.7035 0.7036 9 0.3894 0.4098 0.4400 0.4972 0.5844 0.6630 0.6545 0.6690 0.6820 0.7046 0.7017 10 0.3898 0.4155 0.4720 0.5286 0.6222 0.6980 0.6621 0.6698 0.6761 0.7057 0.6942 11 0.3924 0.4537 0.5032 0.5497 0.6208 0.6903 0.6697 0.6705 0.6701 0.6866 0.6867 12 0.3999 0.5087 0.5391 0.5674 0.6194 0.6528 0.6324 0.6315 0.6285 0.6523 0.6683 13 0.4098 0.5671 0.5732 0.5765 0.5975 0.6005 0.5825 0.5815 0.5777 0.6120 0.6482 14 0.4197 0.6153 0.5988 0.5813 0.5719 0.5480 0.5337 0.5333 0.5305 0.5748 0.6302 15 0.4243 0.6400 0.5994 0.5758 0.5500 0.5100 0.5000 0.5000 0.5000 0.5500 0.6244 16 0.4257 0.6364 0.6000 0.5659 0.5286 0.4854 0.4928 0.4940 0.5020 0.5500 0.6185 17 0.4169 0.6136 0.5752 0.5366 0.5027 0.4644 0.4856 0.4880 0.5040 0.5500 0.6189 18 0.4013 0.5785 0.5421 0.5025 0.4771 0.4487 0.4784 0.4820 0.5060 0.5500 0.6193 19 0.3847 0.5383 0.5080 0.4710 0.4566 0.4444 0.4713 0.4760 0.5080 0.5500 0.6197 20 0.3700 0.5000 0.4800 0.4500 0.4516 0.4400 0.4763 0.4700 0.5100 0.5500 0.6200 21 0.3560 0.4578 0.4558 0.4500 0.4506 0.4504 0.4813 0.4964 0.5458 0.5902 0.6609 22 0.34O9 0.4071 0.4305 0.4500 0.4550 0.4700 0.5072 0.5352 0.5945 0.6459 0.7169 23 0.3263 0.3565 0.4078 0.4500 0.4695 0.4964 0.5403 0.5828 0.6523 0.7125 0.7845 24 0.3140 0.3146 0.3911 0.4500 0.4884 0.5272 0.5785 0.6356 0.7154 0.7854 0.8600 25 0.3102 0.2900 0.3880 0.4500 0.5100 0.5600 0.6200 0.6900 0.7800 0.8600 0.9400 26 0.3064 0.2901 0.3875 0.4592 0.5306 0.5911 0.6624 0.7428 0.8417 0.9306 1.0178 27 0.3073 0.2901 0.3908 0.4683 0.5512 0.6222 0.7068 0.7964 0.9030 1.0003 1.0959 28 0.3082 0.3075 0.4050 0.4841 0.5776 0.6586 0.7571 0.8556 0.9706 1.0777 1.1841 29 0.3091 0.3346 0.4304 0.5126 0.6153 0.7061 0.8169 0.9252 1.0507 1.1714 1.2922 30 0.3100 0.3700 0.4700 0.5600 0.6700 0.7700 0.8900 1.0100 1.1500 1.2900 1.4300 31 0.3413 0.4142 0.5268 0.6320 0.7466 0.8563 0.9794 1.1116 1.2682 1.4294 1.5888 32 0.3826 0.4683 0.5988 0.7244 0.8413 0.9614 1.0827 1.2268 1.4011 1.5839 1.7620 33 0.4343 0.5313 0.6815 0.8288 0.9467 1.0762 1.1953 1.3532 1.5489 1.7597 1.9628 34 0.4966 0.6022 0.7701 0.9368 1.0554 1.1921 1.3126 1.4884 1.7118 1.9630 2.2044 35 0.5700 0.6800 0.8600 1.0400 1.1600 1.3000 1.4300 1.6300 1.8900 2.2000 2.5000 36 0.6608 0.7693 0.9517 1.1333 1.2494 1.3802 1.5254 1.7551 2.0639 2.4631 2.8558 37 0.7688 0.8706 1.0482 1.2222 1.3285 1.4385 1.6017 1.8654 2.2334 2.7482 3.2631 38 0.8844 0.9774 1.1490 1.3146 1.4139 1.5047 1.6923 1.9950 2.4278 3.0666 3.7125 39 0.9980 1.0827 1.2531 1.4179 1.5222 1.6088 1.8306 2.1785 2.6769 3.4301 4.1946 40 1.1000 1.1800 1.3600 1.5400 1.6700 1.7800 2.0500 2.4500 3.0100 3.8500 4.7000 41 1.1874 1.2654 1.4637 1.6766 1.8598 2.0310 2.3709 2.8360 3.4562 4.3517 5.2467 42 1.2665 1.3433 1.5646 1.8227 2.0805 2.3417 2.7710 3.3136 3.9957 4.9274 5.8410 43 1.3419 1.4195 1.6718 1.9845 2.3283 2.6939 3.2198 3.8432 4.5851 5.5394 6.4558 44 1.4182 1.4998 1.7939 2.1682 2.5994 3.0694 3.6863 4.3852 5.1810 6.1495 7.0645 45 1.5000 1.5900 1.9400 2.3800 2.8900 3.4500 4.1400 4.9000 5.7400 6.7200 7.6400 46 1.5830 1.6858 2.1095 2.6243 3.2136 3.8585 4.6082 5.4142 6.2854 7.2642 8.1896 47 1.6643 1.7835 2.2966 2.8970 3.5728 4.3070 5.1113 5.9541 6.8461 7.8075 8.7312 48 1.7501 1.8893 2.5018 3.1914 3.9472 4.7614 5.6083 6.4799 7.3871 8.3297 9.2540 49 1.8466 2.0094 2.7261 3.5013 4.3164 5.1871 6.0582 6.9518 7.8734 8.8106 9.7472 50 1.9600 2.1500 2.9700 3.8200 4.6600 5.5500 6.4200 7.3300 8.2700 9.2300 10.2000 51 2.1029 2.3258 3.2413 4.1447 4.9580 5.8103 6.6376 7.5531 8.5154 9.5403 10.5772 52 2.2710 2.5325 3.5394 4.4798 5.2240 5.9910 6.7384 7.6478 8.6329 9.7550 10.8860 53 2.4458 2.7483 3.8530 4.8294 5.4880 6.1514 6.8064 7.7058 8.7147 9.9454 11.1792 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.4297 0.4858 0.5418 0.6353 0.7100 15 1 0.4152 0.4663 0.5174 0.6026 0.7100 16 2 0.4709 0.5098 0.5488 0.6139 0.7100 17 3 0.5618 0.5854 0.6092 0.6489 0.7100 18 4 0.6530 0.6624 0.6718 0.6876 0.7100 19 5 0.7094 0.7098 0.7098 0.7100 0.7100 20 6 0.7084 0.7098 0.7098 0.7100 0.7100 21 7 0.7074 0.7097 0.7098 0.7100 0.7100 22 8 0.7064 0.7096 0.7098 0.7100 0.7100 23 9 0.7053 0.7096 0.7098 0.7100 0.7100 24 10 0.7027 0.7095 0.7099 0.7100 0.7100 25 11 0.6984 0.7088 0.7088 0.7100 0.7100 26 12 0.6925 0.7080 0.7079 0.7100 0.7100 27 13 0.6850 0.7060 0.7058 0.7100 0.7100 28 14 0.6758 0.7027 0.7025 0.7100 0.7100 29 15 0.6724 0.7057 0.7060 0.7100 0.7100 30 16 0.6673 0.7074 0.7085 0.7285 0.7100 31 17 0.6680 0.7155 0.7179 0.7502 0.7400 32 18 0.6687 0.7236 0.7352 0.7818 0.8200 33 19 0.6694 0.7318 0.7669 0.8295 0.9000 34 20 0.6700 0.7400 0.8200 0.9000 1.0000 35 21 0.7212 0.8020 0.8969 0.9951 1.1200 36 22 0.7919 0.8842 0.9929 1.1106 1.2600 37 23 0.8761 0.9815 1.1044 1.2434 1.4000 38 24 0.9675 1.0885 1.2280 1.3909 1.5600 39 25 1.0600 1.2000 1.3600 1.5500 1.7400 40 26 1.1440 1.3075 1.4930 1.7152 1.9400 41 27 1.2236 1.4146 1.6295 1.8884 2.1600 42 28 1.3132 1.5338 1.7805 2.0780 2.4000 43 29 1.4272 1.6781 1.9570 2.2924 2.6600 44 30 1.5800 1.8600 2.1700 2.5400 2.9500 45 31 1.7649 2.0730 2.4132 2.8136 3.2600 46 32 1.9722 2.3087 2.6792 3.1076 3.6000 47 33 2.2122 2.5769 2.9776 3.4328 3.9600 48 34 2.4947 2.8874 3.3180 3.8000 4.3400 49 35 2.8300 3.2500 3.7100 4.2200 4.7600 50 36 3.2239 3.6691 4.1566 4.6954 5.2300 51 37 3.6698 4.1382 4.6515 5.2189 5.7800 52 38 4.1586 4.6506 5.1901 5.7867 6.3800 53 39 4.6817 5.2001 5.7678 6.3950 7.0400 54 40 5.2300 5.7800 6.3800 7.0400 7.7500 55 41 5.8228 6.4088 7.0434 7.7354 8.4800 56 42 6.4660 7.0908 7.7611 8.4837 9.2300 57 43 7.1308 7.7984 8.5081 9.2643 10.0300 58 44 7.7884 8.5040 9.2594 10.0566 10.8600 59 45 8.4100 9.1600 9.9900 10.8400 11.7000 60 46 8.9985 9.8330 10.7120 11.6330 12.5600 61 47 9.5730 10.4813 11.4420 12.4493 13.4500 62 48 10.1294 11.1151 12.1620 13.2611 14.3700 63 49 10.6631 11.7246 12.8540 14.0406 15.3200 64 50 11.1700 12.3000 13.5000 14.7600 16.2500 65 51 11.6210 12.7966 14.0342 15.3235 17.1000 66 52 12.0191 13.2271 14.4687 15.7498 17.7600 67 53 12.4077 13.6493 14.9021 16.1822 18.1300 68
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 54 2.6083 2.9514 4.1703 5.1981 5.7800 6.3513 6.9256 7.8193 8.8530 10.1833 11.5096 55 2.7400 3.1200 4.4800 5.5900 6.1300 6.6500 7.1800 8.0800 9.1400 10.5400 11.9300 56 2.8147 3.2234 4.7682 6.0041 6.5398 7.0538 7.5803 8.4867 9.5546 10.9626 12.3454 57 2.8450 3.2763 5.0427 6.4374 6.9893 7.5231 8.0706 8.9782 10.0355 11.4035 12.7205 58 2.8698 3.3245 5.3241 6.8918 7.4759 8.0485 8.6346 9.5562 10.6141 11.9421 13.1979 59 2.9285 3.4138 5.6330 7.3687 7.9970 8.6206 9.2565 10.2229 11.3218 12.6578 13.9202 60 3.0600 3.5900 5.9900 7.8700 8.5500 9.2300 9.9200 10.9800 12.1900 13.6300 15.0300 61 3.2796 3.8639 6.3984 8.3956 9.1399 9.8891 10.6378 11.8511 13.2569 14.9126 16.6053 62 3.5612 4.2050 6.8444 8.9444 9.7686 10.6042 11.4207 12.8350 14.5014 16.4525 18.5510 63 3.8820 4.5970 7.3232 9.5164 10.4282 11.3566 12.2497 13.8962 15.8666 18.1691 20.7502 64 4.2192 5.0241 7.8300 10.1116 11.1113 12.1281 13.1058 14.9997 17.2951 19.9818 23.0855 65 4.5500 5.4700 8.3600 10.7300 11.8100 12.9000 13.9700 16.1100 18.7300 21.8100 25.4400 66 4.8546 5.9038 8.8945 11.3492 12.4673 13.5745 14.7024 17.0704 20.0091 23.4914 27.6858 67 5.1481 6.3361 9.4366 11.9692 13.0882 14.1638 15.3156 17.9044 21.1706 25.0797 29.9009 68 5.4603 6.8135 10.0146 12.6236 13.7586 14.8150 16.0198 18.8472 22.4574 26.8183 32.2771 69 5.8210 7.3826 10.6563 13.3460 14.5639 15.6747 17.0244 20.1340 24.1129 28.9506 35.0062 70 6.2600 8.0900 11.3900 14.1700 15.5900 16.8900 18.5400 22.0000 26.3800 31.7200 38.2800 71 6.7749 8.9229 12.2117 15.0941 16.8387 18.4608 20.5494 24.4174 29.2222 35.0770 42.0390 72 7.3458 9.8504 13.1027 16.0959 18.2528 20.2892 22.9126 27.2293 32.4774 38.8595 46.1554 73 7.9763 10.8914 14.0689 17.1777 19.8296 22.3751 25.6552 30.4775 36.2006 43.1415 50.7182 74 8.6699 12.0649 15.1160 18.3416 21.5663 24.7187 28.8025 34.2038 40.4465 47.9970 55.8167 75 9.4300 13.3900 16.2500 19.5900 23.4600 27.3200 32.3800 38.4500 45.2700 53.5000 61.5400 76 10.3851 15.1444 17.6367 21.0886 25.8286 30.6942 37.2143 44.2000 51.7533 60.8470 69.0187 77 11.3401 16.8989 19.0235 22.5873 28.1971 34.0683 42.0486 49.9500 58.2366 68.1939 76.4974 78 12.2952 18.6533 20.4102 24.0859 30.5657 37.4425 46.8829 55.7001 64.7200 75.5409 83.9761 79 13.2502 20.4078 21.7970 25.5845 32.9343 40.8166 51.7172 61.4501 71.2033 82.8879 91.4547 80 14.2053 22.1622 23.1837 27.0831 35.3029 44.1908 58.5515 67.2001 77.6866 90.2349 98.9334 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 54 12.8302 14.1290 15.4330 16.7645 18.3900 69 55 13.3300 14.7300 16.1600 17.6400 18.8400 70 56 13.7763 15.3190 16.9651 18.7184 19.7800 71 57 14.1402 15.8533 17.7826 19.9040 21.4100 72 58 14.6178 16.5331 18.7894 21.3324 23.6300 73 59 15.4057 17.5586 20.1629 23.1392 26.3000 74 60 16.7000 19.1300 22.0800 25.4600 29.3800 75 61 18.6034 21.3350 24.5971 28.3007 32.8100 76 62 20.9849 24.0403 27.5962 31.5710 36.5200 77 63 23.6907 27.1141 30.9926 35.2618 40.4800 78 64 26.5670 30.4246 34.7021 39.3645 44.7900 79 65 29.4600 33.8400 38.6400 43.6700 49.5500 80 66 32.2738 37.2582 42.6451 48.6008 54.9100 81 67 35.1109 40.7669 46.7738 53.5628 60.9100 82 68 38.1151 44.5195 51.2678 59.0224 67.4300 83 69 41.4302 48.6694 56.3693 65.2460 74.5100 84 70 45.2000 53.3700 62.3200 72.5000 83.4300 85 71 49.3518 58.5173 68.9661 80.8844 94.8400 86 72 53.7898 64.0090 76.1464 90.2217 107.6400 87 73 58.6228 70.0011 84.0916 100.3617 120.9800 88 74 63.9599 76.6495 93.0326 111.1545 133.9800 89 75 69.9100 84.1100 103.2000 122.4500 146.0000 90 76 77.5537 93.7991 116.7392 135.4536 157.1000 91 77 85.1974 103.4882 130.2784 148.4572 167.8500 92 78 92.8411 113.1774 143.8176 161.4608 178.8700 93 79 100.4848 122.8665 157.3568 174.4644 190.7500 94 80 108.1285 132.5556 170.8960 187.4680 204.0400 95 218.5000 96 233.5000 97 249.0400 98 265.1200 99 296.3000 100 363.2100 101 468.3200 102 613.2600 103 796.7400 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
91 Bragg, Male Non Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.1200 0.7000 0.4700 0.4200 0.3700 0.3200 0.3100 0.2800 0.2700 0.2700 0.2800 1 0.9856 0.6002 0.3849 0.3369 0.2876 0.3116 0.3137 0.2183 0.2231 0.2571 0.2962 2 0.8054 0.5067 0.3324 0.2908 0.2452 0.3032 0.3174 0.2120 0.2406 0.3264 0.4091 3 0.6119 0.4238 0.3032 0.2714 0.2338 0.2948 0.3211 0.2464 0.3004 0.4411 0.5696 4 0.4378 0.3555 0.2882 0.2683 0.2444 0.2864 0.3248 0.3068 0.3804 0.5641 0.7288 5 0.3154 0.3061 0.2791 0.2744 0.2679 0.2782 0.3283 0.3784 0.4586 0.6585 0.8377 6 0.2486 0.3076 0.2739 0.2804 0.3138 0.3563 0.4419 0.4819 0.5504 0.7296 0.8937 7 0.2157 0.3091 0.2760 0.3031 0.3882 0.4745 0.6092 0.6271 0.6704 0.8020 0.9294 8 0.2223 0.3106 0.2821 0.3383 0.4768 0.6075 0.7918 0.7830 0.7956 0.8678 0.9487 9 0.2289 0.3120 0.3118 0.3852 0.5654 0.7302 0.9512 0.9186 0.9030 0.9191 0.9513 10 0.2638 0.3134 0.3635 0.4430 0.6395 0.8175 1.0490 1.0028 0.9693 0.9481 0.9538 11 0.3310 0.4130 0.4550 0.5246 0.7028 0.8651 1.0440 1.0006 0.9647 0.9454 0.9352 12 0.4344 0.5605 0.5832 0.6306 0.7648 0.8898 1.0390 0.9984 0.9600 0.9163 0.8972 13 0.5508 0.7218 0.7213 0.7415 0.8201 0.8929 0.9800 0.9502 0.9169 0.8747 0.8521 14 0.6570 0.8630 0.8425 0.8378 0.8636 0.8940 0.9160 0.8975 0.8712 0.8346 0.8123 15 0.7300 0.9500 0.9200 0.9000 0.8900 0.8900 0.8700 0.8600 0.8400 0.8100 0.7900 16 0.7340 0.9517 0.9296 0.9086 0.8847 0.8750 0.8403 0.8351 0.8216 0.8131 0.7956 17 0.7380 0.9534 0.9392 0.9171 0.8794 0.8466 0.8115 0.8096 0.8045 0.8162 0.8012 18 0.7420 0.9078 0.9100 0.8941 0.8537 0.8128 0.7863 0.7875 0.7946 0.8193 0.8208 19 0.7460 0.8515 0.8699 0.8620 0.8246 0.7813 0.7673 0.7782 0.7893 0.8225 0.8423 20 0.7500 0.8000 0.8300 0.8300 0.8000 0.7600 0.7636 0.7768 0.7937 0.8305 0.8600 21 0.7189 0.7470 0.7832 0.7911 0.7772 0.7588 0.7652 0.7809 0.8027 0.8385 0.8714 22 0.6719 0.6822 0.7220 0.7394 0.7510 0.7576 0.7731 0.8064 0.8295 0.8546 0.8810 23 0.6185 0.6149 0.6572 0.6850 0.7254 0.7564 0.7918 0.8379 0.8618 0.8738 0.8905 24 0.5680 0.5544 0.5996 0.6385 0.7044 0.7552 0.8107 0.8682 0.8938 0.8957 0.9058 25 0.5300 0.5100 0.5600 0.6100 0.7019 0.7572 0.8201 0.8900 0.9200 0.9200 0.9300 26 0.5049 0.5016 0.5600 0.6093 0.6994 0.7592 0.8294 0.8960 0.9293 0.9419 0.9597 27 0.4865 0.4932 0.5600 0.6086 0.7070 0.7644 0.8345 0.9020 0.9391 0.9615 0.9922 28 0.4766 0.4848 0.5600 0.6246 0.7146 0.7696 0.8396 0.9080 0.9446 0.9862 1.0330 29 0.4689 0.4764 0.5600 0.6465 0.7223 0.7748 0.8448 0.9140 0.9618 1.0233 1.0871 30 0.4671 0.4747 0.5600 0.6700 0.7300 0.7800 0.8500 0.9200 1.0000 1.0800 1.1600 31 0.4710 0.4746 0.5750 0.8922 0.7559 0.8151 0.8887 0.8685 1.0594 1.1570 1.2524 32 0.4782 0.4813 0.5939 0.7157 0.7863 0.8598 0.9382 1.0314 1.1333 1.2495 1.3608 33 0.4928 0.4955 0.6193 0.7451 0.8247 0.9149 0.9993 1.1082 1.2215 1.3565 1.4840 34 0.5078 0.5176 0.6538 0.7850 0.8748 0.9814 1.0730 1.1979 1.3238 1.4770 1.6208 35 0.5200 0.5500 0.7000 0.8400 0.9400 1.0600 1.1600 1.3000 1.4400 1.6100 1.7700 36 0.5280 0.5964 0.7628 0.9158 1.0254 1.1543 1.2634 1.4152 1.5687 1.7500 1.9222 37 0.5360 0.6553 0.8404 1.0093 1.1285 1.2638 1.3827 1.5440 1.7102 1.8976 2.0781 38 0.5440 0.7210 0.9256 1.1119 1.2419 1.3830 1.5133 1.6852 1.8662 2.0612 2.2519 39 0.5520 0.7878 1.0112 1.2150 1.3582 1.5069 1.6506 1.8376 2.0389 2.2492 2.4578 40 0.5600 0.8500 1.0900 1.3100 1.4700 1.6300 1.7900 2.0000 2.2300 2.4700 2.7100 41 0.5932 0.9010 1.1534 1.3862 1.5668 1.7407 1.9196 2.1622 2.4319 2.7199 3.0086 42 0.6348 0.9447 1.2061 1.4495 1.6536 1.8426 2.0424 2.3249 2.6434 2.9934 3.3441 43 0.6848 0.9909 1.2611 1.5157 1.7460 1.9530 2.1764 2.5035 2.8758 3.2958 3.7163 44 0.7432 1.0494 1.3314 1.6006 1.8596 2.0897 2.3396 2.7134 3.1409 3.6329 4.1250 45 0.8100 1.1300 1.4300 1.7200 2.0100 2.2700 2.5500 2.9700 3.4500 4.0100 4.5700 46 0.8878 1.2370 1.5544 1.8678 2.1919 2.4922 2.8073 3.2710 3.7971 4.4147 5.0325 47 0.9765 1.3637 1.6960 2.0333 2.3950 2.7447 3.0994 3.6061 4.1746 4.8434 5.5126 48 1.0723 1.5039 1.8584 2.2259 2.6270 3.0301 3.4270 3.9787 4.5914 5.3146 6.0386 49 1.1714 1.6514 2.0452 2.4550 2.8961 3.3510 3.7903 4.3922 5.0569 5.8473 6.6383 50 1.2700 1.8000 2.2600 2.7300 3.2100 3.7100 4.1900 4.8500 5.5800 6.4600 7.3400 51 1.3629 1.9438 2.5071 3.0609 3.5746 4.1067 4.6210 5.3456 6.1547 7.1518 8.1466 52 1.4526 2.0871 2.7842 3.4414 3.9845 4.5394 5.0831 5.8768 6.7750 7.9103 9.0395 53 1.5470 2.2385 3.0846 3.8566 4.4311 5.0086 5.5837 6.4532 7.4498 8.7369 10.0141 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.3300 0.3800 0.4600 0.6600 0.8391 15 1 0.3808 0.4178 0.4844 0.6628 1.0713 16 2 0.5423 0.5554 0.5950 0.7240 1.0196 17 3 0.7525 0.7379 0.7456 0.8136 0.9817 18 4 0.9491 0.9107 0.8896 0.9012 0.9569 19 5 1.0702 1.0190 0.9814 0.9568 0.9600 20 6 1.0794 1.0529 0.9769 0.9563 0.9600 21 7 1.0885 1.0490 0.9724 0.9558 0.9600 22 8 1.0464 1.0220 0.9679 0.9553 0.9600 23 9 0.9958 0.9867 0.9635 0.9549 0.9600 24 10 0.9561 0.9578 0.9590 0.9474 0.9600 25 11 0.9222 0.9298 0.9392 0.9400 0.9600 26 12 0.8811 0.8927 0.9111 0.9301 0.9600 27 13 0.6406 0.8551 0.8819 0.9202 0.9600 28 14 0.8081 0.8253 0.8588 0.9125 0.9600 29 15 0.8014 0.8222 0.8570 0.9101 0.9600 30 16 0.7947 0.8191 0.8551 0.9125 0.9600 31 17 0.8136 0.8422 0.8727 0.9203 0.9600 32 18 0.8406 0.8734 0.8973 0.9356 0.9700 33 19 0.8685 0.9052 0.9246 0.9556 0.9800 34 20 0.8900 0.9300 0.9500 0.9800 1.0000 35 21 0.8974 0.9383 0.9694 1.0062 1.0300 36 22 0.9052 0.9471 0.9855 1.0343 1.0700 37 23 0.9137 0.9520 1.0050 1.0683 1.1300 38 24 0.9226 0.9669 1.0343 1.1122 1.2000 39 25 0.9500 1.0000 1.0800 1.1700 1.2800 40 26 0.9902 1.0502 1.1396 1.2368 1.3700 41 27 1.0387 1.1119 1.2068 1.3100 1.4600 42 28 1.0981 1.1865 1.2912 1.3968 1.5500 43 29 1.1710 1.2754 1.3904 1.5044 1.6500 44 30 1.2600 1.3800 1.5100 1.6400 1.7800 45 31 1.3644 1.4976 1.6476 1.8028 1.9400 46 32 1.4824 1.6279 1.6008 1.9880 2.1600 47 33 1.6152 1.7741 1.9732 2.1968 2.4200 48 34 1.7640 1.9402 2.1684 2.4304 2.7300 49 35 1.9300 2.1300 2.3900 2.6900 3.0600 50 36 2.1004 2.3302 2.6214 2.9524 3.4200 51 37 2.2744 2.5381 2.8601 3.2168 3.7800 52 38 2.4712 2.7739 3.1311 3.5180 4.1100 53 39 2.7100 3.0578 3.4594 3.8908 4.4500 54 40 3.0100 3.4100 3.8700 4.3700 4.8800 55 41 3.3806 3.8389 4.3737 4.9746 5.4400 56 42 3.8091 4.3310 4.9538 5.6815 6.2100 57 43 4.2813 4.8738 5.5942 6.4621 7.1800 58 44 4.7830 5.4543 6.2783 7.2878 8.3000 59 45 5.3000 6.0600 6.9900 8.1300 9.4800 60 46 5.7999 6.6636 7.7070 8.9690 10.6300 61 47 6.2922 7.2736 8.4401 9.8237 11.7000 62 48 6.6854 7.9308 9.2227 10.7239 12.6800 63 49 7.4485 8.6760 10.0882 11.6994 13.6300 64 50 8.2100 9.5500 11.0700 12.7800 14.6400 65 51 9.1193 10.5469 12.1411 13.9138 15.8000 66 52 10.1438 11.6394 13.2794 15.0809 17.1000 67 53 11.2698 12.8366 14.5250 16.3591 18.4700 68
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 54 1.6535 2.4066 3.4021 4.2911 4.9058 5.5153 6.1302 7.0844 8.1885 9.6330 11.0658 55 1.7800 2.6000 3.7300 4.7300 5.4000 6.0600 6.7300 7.7800 9.0000 10.6000 12.1900 56 1.9211 2.8220 4.0836 5.1937 5.9266 6.6489 7.3818 8.5274 9.8586 11.5986 13.3284 57 2.0718 3.0668 4.4672 5.6922 6.4913 7.2814 8.0805 9.3201 10.7583 12.6279 14.4840 58 2.2398 3.3296 4.8580 6.1950 7.0747 7.9486 8.8283 10.1771 11.7377 13.7469 15.7444 59 2.4333 3.6056 5.2332 6.6711 7.6574 8.6411 9.6274 11.1174 12.8354 15.0146 17.1972 60 2.6600 3.8900 5.5700 7.0900 8.2200 9.3500 10.4800 12.1600 14.0900 16.4900 18.9300 61 2.9270 4.1676 5.8121 7.3663 8.6720 9.9798 11.2857 13.2126 15.4237 18.1081 20.9182 62 3.2291 4.4418 5.9746 7.5206 9.0264 10.5367 12.0430 14.2627 16.8106 19.8294 23.1033 63 3.5557 4.7348 6.1422 7.6806 9.4188 11.1637 12.9026 15.4485 18.3678 21.7518 25.5223 64 3.8962 5.0700 6.3991 7.9745 9.9848 12.0038 14.0147 16.9082 20.2119 23.9727 28.2122 65 4.2400 5.4700 6.8300 8.5300 10.8600 13.2000 15.5300 18.7800 22.4600 26.5900 31.2100 66 4.5784 5.9113 7.4194 9.3454 12.0727 14.8106 17.5354 21.1384 25.1542 29.5860 34.3969 67 4.9184 6.3786 8.1111 10.3355 13.5326 16.7403 19.9307 23.8912 28.2167 32.8956 37.7482 68 5.2732 6.9074 8.9281 11.5029 15.1970 18.9017 22.5853 26.9268 31.5841 36.5452 41.4422 69 5.6560 7.5327 9.8934 12.8502 17.0237 21.2074 25.3686 30.1336 35.1930 40.5612 45.6567 70 6.0800 8.2900 11.0300 14.3800 18.9700 23.5700 28.1500 33.4000 38.9800 44.9700 50.5700 71 6.5397 9.1635 12.3052 16.0451 20.9776 25.9165 30.8400 36.6249 42.8342 49.6475 56.0513 72 7.0262 10.1298 13.7037 17.8436 23.0747 28.3051 33.5257 39.6827 46.7977 54.5761 61.9818 73 7.5480 11.2123 15.2745 19.8466 25.3490 30.8455 36.3413 43.3251 51.0371 59.9419 68.5576 74 8.1131 12.4346 17.0669 22.1251 27.8882 33.6472 39.4213 47.1036 55.7190 65.9312 75.9750 75 8.7300 13.8200 19.1300 24.7500 30.7600 36.8200 42.9000 51.3700 61.0100 72.7300 84.4300 76 9.4910 15.6638 21.9397 28.3196 34.6125 40.9597 47.3957 56.8977 67.9061 81.7093 95.7363 77 10.2520 17.5076 24.7493 31.8893 38.4450 45.0994 51.8915 62.4253 74.8022 90.6885 107.0426 78 11.0130 19.3513 27.5590 35.4589 42.2775 49.2391 56.3872 67.9530 81.6983 99.6678 118.3489 79 11.7740 21.1951 30.3687 39.0286 46.1100 53.3788 60.8829 73.4806 88.5944 108.6470 129.6552 80 12.5350 23.0389 33.1783 42.5962 49.9425 57.5186 65.3787 79.0083 95.4905 117.6263 140.9615 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 54 2.4831 14.1471 15.9185 17.8262 19.9500 69 55 13.7700 15.5800 17.5000 19.5600 21.6700 70 56 15.0491 17.0478 19.1810 21.4735 23.7500 71 57 16.3298 18.5447 20.9345 23.5150 26.2400 72 58 17.7338 20.2017 22.8935 25.8146 29.0300 73 59 19.3833 22.1498 25.1910 28.5029 32.1600 74 60 21.4000 24.5200 27.9600 31.7100 35.7300 75 61 23.8016 27.3169 31.1772 35.3722 39.8500 76 62 26.5068 30.4530 34.7540 39.4025 44.5600 77 63 29.4892 33.9218 38.7252 43.8967 49.7500 78 64 32.7224 37.7163 43.1256 48.9506 55.4700 79 65 36.1800 41.8300 47.9900 54.6600 61.8200 80 66 39.6714 46.0598 53.1208 60.8483 68.9400 81 67 43.2143 50.4101 58.4948 67.4518 76.9000 82 68 47.0945 55.1855 64.4084 74.7350 85.6600 83 69 51.5978 60.6906 71.1580 82.9629 95.1800 84 70 57.0100 67.2300 79.0400 92.4000 106.2900 85 71 63.1963 74.6285 87.8288 103.0635 119.5200 86 72 69.9660 82.6832 97.3269 114.7770 134.1000 87 73 77.5216 91.6567 107.8725 127.5147 149.5100 88 74 86.0655 101.8114 119.8041 141.2509 165.2000 89 75 95.8000 113.4100 133.4600 155.9600 180.9500 90 76 108.8366 128.9902 151.8378 173.6219 197.0000 91 77 121.8732 144.5703 170.2155 191.2838 213.4500 92 78 134.9098 160.1505 188.5933 208.9456 230.1200 93 79 147.9464 175.7307 206.9711 226.6075 246.8300 94 80 160.9830 191.3108 225.3488 244.2694 263.1900 95 279.2900 96 295.8000 97 312.7300 98 330.0600 99 364.0500 100 427.5800 101 517.9300 102 651.1400 103 817.2900 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
91 Bragg, Male Smoker
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 0 1.5867 0.9917 0.6658 0.5950 0.5242 0.4533 0.4392 0.3967 0.3825 0.3825 0.3967 1 1.4315 0.8855 0.5803 0.5128 0.4427 0.3765 0.4444 0.3445 0.3514 0.3994 0.4549 2 1.1806 0.7575 0.5099 0.4524 0.3870 0.3318 0.4496 0.3400 0.3806 0.5021 0.0192 3 0.8933 0.6268 0.4549 0.4122 0.3577 0.3197 0.4548 0.3755 0.4520 0.6513 0.8334 4 0.6290 0.5125 0.4156 0.3906 0.3550 0.3403 0.4600 0.4435 0.5477 0.8079 1.0413 5 0.4468 0.4336 0.3924 0.3923 0.3795 0.3941 0.4651 0.5361 0.6497 0.9329 1.1867 6 0.3499 0.4357 0.3757 0.3939 0.4397 0.5006 0.6214 0.6782 0.7752 1.0291 1.2620 7 0.2986 0.4378 0.3756 0.4155 0.5352 0.6595 0.8492 0.8749 0.9363 1.1226 1.3045 8 0.3068 0.4399 0.3755 0.4574 0.6533 0.8415 1.1010 1.0890 1.1070 1.2090 1.3258 9 0.3150 0.4419 0.4206 0.5259 0.7811 1.0175 1.3291 1.2833 1.2613 1.2840 1.3376 10 0.3737 0.4440 0.5150 0.6276 0.9060 1.1581 1.4861 1.4206 1.3732 1.3431 1.3512 11 0.4937 0.6360 0.6950 0.7922 1.0446 1.2677 1.4914 1.4949 1.4393 1.3860 1.3577 12 0.6779 0.9200 0.9512 1.0155 1.2055 1.3657 1.4968 1.5310 1.4770 1.4154 1.3641 13 0.8827 1.2316 1.2289 1.2527 1.3636 1.4457 1.5036 1.5278 1.4822 1.4322 1.3682 14 1.0646 1.5064 1.4734 1.4591 1.4935 1.5013 1.5118 1.5245 1.4873 1.4311 1.3699 15 1.1800 1.6800 1.6300 1.5900 1.5700 1.5042 1.5200 1.5000 1.4700 1.4300 1.3651 16 1.1875 1.7321 1.6818 1.5990 1.5785 1.5071 1.4723 1.4525 1.4272 1.4032 1.3578 17 1.1949 1.7055 1.6651 1.6079 1.5358 1.4486 1.3999 1.3760 1.3557 1.3559 1.3352 18 1.1462 1.6308 1.6055 1.5484 1.4639 1.3699 1.3174 1.2883 1.2735 1.3010 1.3103 19 1.0903 1.5388 1.5286 1.4745 1.3846 1.2906 1.2393 1.2070 1.1989 1.2514 1.2898 20 1.0500 1.4600 1.4600 1.4100 1.3200 1.2300 1.1800 1.1500 1.1500 1.2200 1.2808 21 1.0253 1.3870 1.3908 1.3463 1.2639 1.1845 1.1359 1.1420 1.1540 1.2260 1.2702 22 1.0011 1.2995 1.3040 1.2878 1.2018 1.1413 1.0974 1.1340 1.1580 1.2320 1.2660 23 0.9772 1 2084 1.2128 1.1870 1.1426 1.1056 1.0698 1.1260 1.1620 1.2380 1.2602 24 0.9536 1.1249 1.1304 1.1169 1.0957 1.0827 1.0699 1.1180 1.1660 1.2440 1.2854 25 0.9300 1.0600 1.0700 1.0700 1.0700 1.0853 1.0700 1.1100 1.1700 1.2500 1.3500 26 0.9038 1.0150 1.0310 1.0760 1.0696 1.0878 1.1019 1.1630 1.2410 1.3429 1.4617 27 0.8750 0.9824 1.0045 1.O820 1.0692 1.1088 1.1510 1.2363 1.3349 1.4682 1.6110 28 0.8477 0.9604 0.9988 1.0880 1.0916 1.1461 1.2190 1.3301 1.4503 1.6182 1.7866 29 0.8259 0.9509 1.0008 1.0940 1.1340 1.2048 1.3081 1.4446 1.5858 1.7847 1.9767 30 0.8172 0.9427 1.0100 1.1000 1.2000 1.2900 1.4200 1.5800 1.7400 1.9600 2.1700 31 0.8106 0.9399 1.0392 1.1620 1.2906 1.4048 1.5578 1.7391 1.9131 2.1382 2.3563 32 0.8115 0.9436 1.0800 1.2416 1.4033 1.5457 1.7203 1.9218 2.1062 2.3247 2.5434 33 0.8145 0.9492 1.1372 1.3412 1.5367 1.7082 1.9029 2.1238 2.3186 2.5281 2.7462 34 0.8340 0.9775 1.2156 1.4632 1.6894 1.8878 2.1010 2.3413 2.5501 2.7570 2.9801 35 0.8700 1.0300 1.3200 1.6100 1.8600 2.0800 2.3100 2.5700 2.8000 3.0200 3.2600 36 0.9213 1 1094 1.4549 1.7858 2.0479 2.2806 2.5222 2.7982 3.0553 3.3047 3.5705 37 0.9851 1.2113 1.6170 1.9889 2.2542 2.4927 2.7405 3.0285 3.3162 3.6054 3.9014 38 1.0633 1.3314 1.7998 2.2131 2.4794 2.7225 2.9767 3.2787 3.6026 3.9406 4.2762 39 1.1576 1.4657 1.9963 2.4522 2.7245 2.9762 3.2426 3.5666 3.9339 4.3293 4.7179 40 1.2700 1.6100 2.2000 2.7000 2.9900 3.2600 3.5500 3.9100 4.3300 4.7900 5.2500 41 1.4071 1.7591 2.4023 2.9457 3.2667 3.5647 3.8921 4.3090 4.7988 5.3415 5.9105 42 1.5678 1.9158 2.6078 3.1934 3.5542 3.8862 4.2610 4.7517 5.3272 5.9714 6.6838 43 1.7418 2.0878 2.8290 3.4594 3.8662 4.2382 4.6670 5.2379 5.9032 6.6514 7.5130 44 1.9193 2.2833 3.0789 3.7595 4.2169 4.6349 5.1199 5.7674 6.5148 7.3537 8.3407 45 2.0900 2.5100 3.3700 4.1100 4.6200 5.0900 5.6300 6.3400 7.1500 8.0500 9.1100 46 2.2362 2.7568 3.6920 4.5038 5.0766 5.6143 6.2108 6.9638 7.8040 8.7122 9.7616 47 2.3647 3.0184 4.0364 4.9301 5.5773 6.1986 6.8556 7.6389 8.4848 9.3591 10.3336 48 2.5021 3.3116 4.4188 5.3995 6.1207 6.8266 7.5440 8.3531 9.1996 10.0329 10.9148 49 2.6750 3.6532 4.8548 5.9226 6.7054 7.4825 8.2556 9.0942 9.9556 10.7758 11.5940 50 2.9100 4.0600 5.3600 6.5100 7.3300 8.1500 8.9700 9.8500 10.7600 11.6300 12.4600 51 3.2064 4.5467 5.9557 7.1814 7.9952 8.8103 9.6608 10.5777 11.5594 12.5375 13.4350 52 3.5464 5.1022 6.6314 7.9299 8.7020 9.4742 10.3416 11.2854 12.3489 13.4702 14.4599 53 3.9312 5.7042 7.3554 8.7257 9.4492 10.1698 11.0520 12.0374 13.2087 14.5150 15.6513 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 0 0.4675 0.5383 0.6517 0.9350 1.1887 15 1 0.5748 0.6271 0.7215 0.9741 1.5177 16 2 0.8080 0.8264 0.8827 1.0650 1.4444 17 3 1.0924 1.0718 1.0827 1.1785 1.3907 18 4 1.3534 1.2990 1.2694 1.2851 1.3556 19 5 1.5161 1.4436 1.3903 1.3555 1.3600 20 6 1.5237 1.4886 1.3838 1.3563 1.3600 21 7 1.5312 1.4768 1.3773 1.3571 1.3600 22 8 1.4661 1.4339 1.3708 1.3579 1.3600 23 9 1.3963 1.3854 1.3642 1.3587 1.3600 24 10 1.3545 1.3569 1.3572 1.3594 1.3600 25 11 1 3514 1.3520 1.3521 1.3593 1.3600 26 12 1.3484 1.3472 1.3465 1.3590 1.3600 27 13 1.3468 1.3444 1.3430 1.3580 1.3600 28 14 1.3468 1.3437 1.3416 1.3562 1.3600 29 15 1.3449 1.3450 1.3407 1.3576 1.3600 30 16 1.3445 1.3483 1.3412 1.3570 1.3600 31 17 1.3423 1.3537 1.3449 1.3631 1.3700 32 18 1.3401 1.3591 1.3479 1.3679 1.4000 33 19 1.3379 1.3646 1.3650 1.3917 1.4400 34 20 1.3402 1.3700 1.4000 1.4400 1.5000 35 21 1.3408 1.3959 1.4486 1.5126 1.5900 36 22 1.3514 1.4236 1.5067 1.6035 1.7000 37 23 1.3604 1.4644 1.5805 1.7132 1.8500 38 24 1.4003 1.5295 1.6762 1.8419 2.0300 39 25 1.4800 1.6300 1.8000 1.9900 2.2200 40 26 1.6073 1.7714 1.9531 2.1531 2.4200 41 27 1.7726 1.9463 2.1314 2.3310 2.6300 42 28 1.9643 2.1465 2.3330 2.5302 2.8200 43 29 2.1706 2.3838 2.5565 2.7577 3.0200 44 30 2.3800 2.5900 2.8000 3.0200 3.2600 45 31 2.5791 2.8098 3.0478 3.3022 3.5500 46 32 2.7758 3.0287 3.3009 3.5997 3.9100 47 33 2.9898 3.2697 3.5831 3.9351 4.3300 48 34 3.2413 3.5558 3.9182 4.3310 4.8100 49 35 3.5500 3.9100 4.3300 4.8100 5.3400 50 36 3.9018 4.3218 4.8131 5.3739 5.9600 51 37 4.2833 4.7759 5.3518 6.0078 6.6600 52 38 4.7159 5.2881 5.9538 6.7086 7.4600 53 39 5.2210 5.8742 6.6273 7.4737 8.3300 54 40 5.8200 6.5500 7.3800 8.3000 9.2700 55 41 6.5598 7.3530 8.2298 9.1746 10.2700 56 42 7.4263 8.2727 9.1713 10.0995 11.3000 57 43 8.3489 9.2529 10.1779 11.0941 12.3100 58 44 9.2570 10.2374 11.2230 12.1778 13.3700 59 45 10.0800 11.1700 12.2800 13.3700 14.5600 60 46 10.7270 11.9618 13.2694 14.6124 15.9900 61 47 11.2449 12.6503 14.2091 15.8920 17.6900 62 48 11.7703 13.3689 15.2181 17.2964 19.6200 63 49 12.4398 14.2510 16.4154 18.9132 21.7500 64 50 13.3900 15.4300 17.9200 20.8300 24.1300 65 51 14.5525 16.8398 19.6850 23.0257 26.7700 66 52 15.8362 18.3913 21.6309 25.4418 29.7000 67 53 17.3438 20.1839 23.8283 28.1102 32.9200 68
Duration/ Issue Age 0 1 2 3 4 5 6 7 8 9 10 54 4.3620 6.3309 8.0955 9.5390 10.2356 10.9257 11.8316 12.8975 14.2190 15.7593 17.1258 55 4.8400 6.9600 8.8200 10.3400 11.0600 11.7700 12.7200 13.9300 15.4600 17.2900 19.0000 56 5.3849 7.5847 9.5192 11.1210 11.9285 12.7230 13.7318 15.1689 16.9826 19.1597 21.3745 57 5.9958 8.2198 10.2144 11.9017 12.8418 13.7657 14.8405 16.5714 18.7335 21.3102 24.1714 58 6.6434 8.8754 10.9200 12.6939 13.7910 14.8679 16.0243 18.0866 20.6361 23.6630 27.2402 59 7.2979 9.5621 11.6504 13.5094 14.7667 15.9994 17.2614 19.6631 22.6138 26.1391 30.4299 60 7.9300 10.2900 12.4200 14.3600 15.7600 17.1300 18.5300 21.2500 24.5900 28.6600 33.5900 61 8.4908 11.0470 13.2189 15.2219 16.7103 18.1084 19.6473 22.6542 26.3891 31.1470 36.6951 62 9.0000 11.8263 14.0374 16.0874 17.6238 18.9548 20.6278 23.9099 28.0622 33.6527 39.8458 63 9.5308 12.6461 14.8906 16.9918 18.5910 19.8960 21.7458 25.3065 29.8726 36.2949 43.0798 64 10.1564 13.5246 15.7931 17.9709 19.7029 21.1588 23.2751 27.1334 32.0841 39.1914 46.4353 65 10.9500 14.4800 16.7600 19.0600 21.0500 22.9700 25.4900 29.6800 34.9600 42.4600 49.9500 66 11.9428 15.4791 17.6877 20.1315 22.5390 25.4058 28.5298 33.0830 38.5876 46.0317 53.4221 67 13.0860 16.5098 18.5662 21.1618 24.1093 28.3149 32.2117 37.1495 42.7912 49.8278 56.8262 68 14.3328 17.6218 19.5510 22.3422 25.9011 31.5831 36.3267 41.6745 47.4400 53.9522 60.4654 69 15.6364 18.8653 20.7971 23.8645 28.0546 35.0962 40.6658 46.4530 52.4032 58.5083 64.6423 70 16.9500 20.2900 22.4600 25.9200 30.7100 38.7400 45.0200 51.2800 57.5500 63.6000 69.6600 71 18.2434 21.8839 24.5345 28.4926 33.8249 42.4160 49.2565 56.0150 62.7491 69.1431 75.4815 72 19.5479 23.6136 26.9170 31.4547 37.3058 46.2005 53.5148 60.7946 68.0876 75.0685 81.9049 73 20.9086 25.4975 29.6153 34.8305 41.2163 50.2409 57.9938 65.8298 73.7626 81.5024 88.9856 74 22.3709 27.5535 32.6371 38.6442 45.6198 54.6849 62.8925 71.3312 79.9711 88.5708 96.7789 75 23.9800 29.8000 35.9900 42.9200 50.5800 59.6800 68.4100 77.5100 86.9100 96.4000 105.3400 76 25.9691 32.5935 40.3261 46.5499 57.1253 66.1317 75.5184 85.4394 95.7777 106.3431 116.1311 77 27.9583 35.3869 44.6622 54.1799 63.6705 72.5835 82.6269 93.3687 104.6454 116.2863 126.9221 78 29.9474 38.1804 48.9983 59.8098 70.2158 79.0352 89.7353 101.2981 113.5131 126.2294 137.7132 79 31.9365 40.9739 53.3344 65.4398 76.7610 85.4869 96.8438 109.2274 122.3808 136.1726 148.5043 80 33.9257 43.7674 57.6705 71.0697 83.3063 91.9386 103.9522 117.1568 131.2484 146.1157 159.2954 Duration/ Issue Attained Age 11 12 13 14 Ultimate Age 54 19.1775 22.3170 26.3478 31.0623 36.4000 69 55 21.4400 24.8900 29.2600 34.3300 40.1100 70 56 24.2485 28.0174 32.6566 37.9710 44.0200 71 57 27.5346 31.6329 36.4907 41.9641 48.1100 72 58 31.1226 35.5647 40.6245 46.2227 52.3900 73 59 34.8363 39.6410 44.9202 50.6602 56.8700 74 60 38.5000 43.6900 49.2400 55.1900 61.5500 75 61 42.1442 47.7458 53.5987 59.7886 66.4400 76 62 45.8861 51.9231 58.0882 64.5139 71.5100 77 63 49.6799 56.1705 62.6862 69.4009 76.7300 78 64 53.4798 60.4366 67.3709 74.4846 82.1300 79 65 57.2400 64.6700 72.1200 79.8000 87.8200 80 66 60.6071 68.4839 76.5272 84.9418 93.9200 81 67 63.6118 71.9128 80.6072 89.8865 100.4100 82 68 66.7838 75.5362 84.9696 95.2423 107.1800 83 69 70.6533 79.9353 90.2240 101.6174 114.2900 84 70 75.7500 85.6900 96.9800 109.6200 123.5800 85 71 82.0795 92.8058 105.2254 119.4822 136.0000 86 72 89.2886 100.8957 114.5539 130.7987 150.0000 87 73 97.3689 109.9518 124.9837 143.2211 164.7400 88 74 106.3121 119.9659 136.5330 156.4010 179.3700 89 75 116.1100 130.9300 149.2200 169.9900 193.3400 90 76 128.4828 144.7549 165.2960 185.2710 206.7500 91 77 140.8556 158.5798 181.3720 200.5520 220.0800 92 78 153.2284 172.4047 197.4480 215.8330 233.7000 93 79 165.6012 186.2296 213.5240 231.1140 247.9500 94 80 177.9740 200.0544 229.6000 246.3950 263.1900 95 279.2900 96 295.8000 97 312.7300 98 330.0600 99 364.0500 100 427.5800 101 517.9300 102 651.1400 103 817.2900 104 1,000.0000 105 1,000.0000 106 1,000.0000 107 1,000.0000 108 1,000.0000 109 1,000.0000 110 1,000.0000 111 1,000.0000 112 1,000.0000 113 1,000.0000 114 1,000.0000 115 1,000.0000 116 1,000.0000 117 1,000.0000 118 1,000.0000 119
Effective June 1,199* VARIABLE UNIVERSAL LIFE INSURANCE WAIVER OF MONTHLY DEDUCTION (WMD) MALE/FEMALE NON-SMOKER/SMOKER
- -------------------------------------------------------------------------------------- AGE COST PER $1.00 MONTHLY DEDUCTION AGE COST PER $1.00 MONTHLY DEDUCTION - -------------------------------------------------------------------------------------- 15 0.050 40 0.082 16 0.050 41 0.087 17 0.050 42 0.092 18 0.050 43 0.097 19 0.050 44 0.103 20 0.050 45 0.109 21 0.050 46 0.118 22 0.050 47 0.128 23 0.050 48 0.138 24 0.050 49 0.149 25 0.050 50 0.161 26 0.050 51 0.173 27 0.050 52 0.186 28 0.050 53 0.199 29 0.050 54 0.213 30 0.050 55 0.227 31 0.053 56 0.240 32 0.056 57 0.253 33 0.059 58 0.265 34 0.062 59 0.277 35 0.066 36 0.069 37 0.072 38 0.075 39 0.078 - --------------------------------------------------------------------------------------
Waiver of Monthly Deduction USAA CCN: 114531 NOVATION AMENDMENT TO REINSURANCE AGREEMENT(S) SHOWN IN THE ATTACHED LISTS between USAA LIFE INSURANCE COMPANY of San Antonio, Texas and AMERICAN PHOENIX LIFE AND REASSURANCE COMPANY of Hartford, Connecticut (Administrative Offices in Enfield, Connecticut) The reinsurance agreements shown in the attached lists are amended as follows: This amendment causes the liability of American Phoenix Life and Reassurance Company to be assumed by ERC Life Reinsurance Corporation, of Overland Park, Kansas. As respects interests and liabilities outstanding as of January 1, 2000 and incurred thereafter, American Phoenix Life and Reassurance Company is deleted and ERC Life Reinsurance Corporation is substituted therefor. This Agreement is now between USAA Life Insurance Company and ERC Life Reinsurance Corporation without otherwise affecting its provisions. In witness whereof, this Amendment is signed in duplicate on the dates indicated by an officer of the companies. USAA LIFE INSURANCE COMPANY AMERICAN PHOENIX LIFE AND REASSURANCE COMPANY Approved by: _____________________ Approved by: ______________________________ Title: VP - ACTUARY Title: VICE PRESIDENT & REINSURANCE ACTUARY Date: *** 29, 1999 Date: NOV 10 1999 ERC LIFE REINSURANCE CORPORATION Approved by: _____________________ Title: Assistant Secretary, Treaties Date: November 9, 1999
- -------------------------------------------------------------------------- COMPANY EFFECTIVE NO. COMPANY NAME TREATY NO. TREATY TYPE DATE - -------------------------------------------------------------------------- 5251 USAA Life 2673 Auto Net Rate YRT 6/1/98 - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- - --------------------------------------------------------------------------
[LOGO OF USAA] USAA LIFE INSURANCE COMPANY USAA(R) ============================================================ December 30, 1998 Mr. Kevin M. Hawk Reinsurance Contract Administrator Phoenix Home Life Insurance Co. 100 Bright Meadow Boulevard Enfield, CT 06083-1900 RE: VUL Yearly Renewable Term (effective 6-1-98) Dear Kevin: Enclosed is your signed copy of the above agreement. I appreciate your prompt and accurate response to treaty term issues discussed between you and Charles. I have retained our copy for our files. If you have any questions, please do not hesitate to contact me at (210) 498-6790. Sincerely, /s/ Allen R. Pierce Allen R. Pierce AVP Actuary 9800 Fredericksburg Road San Antonio, Texas 78288 1-800-531-8000 In San Antonio 498-8000 31710-0198 ---------- PHOENIX HOME LIFE MUTUAL 100 Bright Meadow Boulevard Phone 860 403-1000 INSURANCE COMPANY PO Box 1900 Toll Free 800 243-3342 AMERICAN PHOENIX LIFE AND Enfield CT 06083-1900 Internet www.phl.com REASSURANCE COMPANY PHOENIX LIFE AND REASSURANCE COMPANY OF NEW YORK [LOGO OF PHOENIX] PHOENIX December 18, 1998 Mr. Charles D. Dou USAA Life Insurance Company 9800 Fredericksburg Road San Antonio, TX 78288-0001 Re: Treaty No(s). 2673 Dear Charles: We have added Waiver of Monthly Deduction benefits to the above treaty as requested during our phone conversation of December 3, 1998. Enclosed please find two copies of Exhibit A and Exhibit C that will replace the current Exhibit A and C now in your possession. If you have any questions or comments please do not hesitate to call me at 1-(860)-403-2391. Sincerely, /s/ Kevin M. Hawk Kevin M. Hawk Reinsurance Contract Administrator Reinsurance Sales cc: Hiram Gonzalez Enclosure [LOGO OF SPECIAL OLYMPICS] SPECIAL OLYMPICS INTERNATIONAL/PROUD WORLDWIDE PARTNER PHOENIX HOME LIFE MUTUAL 100 Bright Meadow Boulevard Phone 860403-1000 INSURANCE COMPANY PO Box 1900 Toll Free 800 243-3342 AMERICAN PHOENIX LIFE AND Enfield CT 06083-1900 Internet www.phl.com REASSURANCE COMPANY PHOENIX LIFE AND REASSURANCE COMPANY OF NEW YORK [LOGO OF PHOENIX] PHOENIX June 4, 1998 Mr. Allen R. Pierce, FSA Assistant Vice President Annuities/Life Products Actuary USAA Life Insurance Company USAA Building F-2-E San Antonio, TX 78288-0339 Re: Agreement covering USAA's VUL plan Dear Allen, Enclosed you will find two copies of PHL Treaty No. 2673 covering your VUL plan on a first dollar basis. If you have any questions or comments, please feel free to contact me at (860)403-2391. Otherwise, please countersign both copies of the treaty and return one to my attention. Sincerely, /s/ Linda Gavello Linda Gavello Reinsurance Contract Administrator [LOGO OF SPECIAL OLYMPICS] SPECIAL OLYMPICS INTERNATIONAL/PROUD WORLDWIDE PARTNER [LOGO OF USAA] USAA LIFE INSURANCE COMPANY USAA(R) ============================================================ 05/11/98 Mitch Mitchell Phoenix Home Life Mutual Insurance Company 5400 LBJ Freeway Suite 1540 Dallas, TX 75240 Dear Mitch: Thanks for your prompt action in providing a reinsurance proposal for our new VUL product. I would also like to thank you for the prompt manner in which you revised quotes based on our conversations. Based on your final proposal and the percentages (shown below) as applied to the YRT table I supplied to you, I'd like to offer you the following quota shares of our new products, contingent upon agreeable treaty terms. QUOTA SHARES PRODUCT = VUL Your share of the Pool is 5.0% First year factors in your offer were 0% with the following renewal factors to be applied to the YRT table I provided to you: RENEWAL FACTORS PRODUCT = VUL Preferred Ultra 34.0% Preferred Plus 43.0% Preferred 60.0% Standard Plus 47.0% Standard 64.0% These factors are applied to the appropriate class and premium band of the contract being reinsured. The treaty should be prepared on a 1st dollar quota share coinsurance basis. USAA will retain 10% of the risk and the remainder will be ceded to a Pool. The maximum amount of life reinsurance added to the pool on an automatic basis should be $6,600,000. Your portion of the pool will be proportional to your quota share for each product. The 10% retained risk should not exceed our maximum retention limits for Military and Non-Military lives. In addition I would like you to consider a Jumbo Risk Limit of $25,000,000. However is that exceeds your capacity then I will accept $10,000,000. As we discussed, I believe it would be advantageous and certainly desirable on USAA's part to draft a contract with an effective date of June 1, 1998. If that effective date is mutually 9800 Fredericksburg Road San Antonio, Texas 78288 1-800-531-8000 In San Antonio 498-8000 31710-0198 ---------- [LOGO OF USAA] USAA LIFE INSURANCE COMPANY USAA(R) ============================================================ acceptable, please draft the appropriate contract forms using that information. The final contracts will of course be subject to review and approval by both parties. Sincerely, /s/ Allen R. Pierce Allen R. Pierce AVP - Actuarial Support & Management Accounting 9800 Fredericksburg Road San Antonio, Texas 78288 1-800-531-8000 In San Antonio 498-8000 31710-0198 ---------- EX-99 8 denver-treaty.txt EXHIBIT 6 AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT (YEARLY RENEWABLE TERM) EFFECTIVE June 1, 1998 USAA LIFE INSURANCE COMPANY (CEDING COMPANY) 9800 Fredericksburg Road San Antonio, Texas 78288 And SECURITY LIFE OF DENVER INSURANCE COMPANY (SECURITY) Security Life Center 1290 Broadway Denver, Colorado 80203-5699 02711916 URT97 (7/1/97) AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT (YEARLY RENEWABLE TERM) This Agreement is between USAA LIFE INSURANCE COMPANY (CEDING COMPANY), 9800 Fredericksburg Road, San Antonio, Texas 78288 and SECURITY LIFE OF DENVER INSURANCE COMPANY (SECURITY), Security Life Center, 1290 Broadway, Denver, Colorado 80203-5699. SECURITY agrees to reinsure certain portions of CEDING COMPANY's contract risks as described in the terms and conditions of this Agreement. This reinsurance Agreement constitutes the entire Agreement between the parties with respect to the business being reinsured hereunder and there are no understandings between the parties other than as expressed in this Agreement. Any change or modification to this Agreement is null and void unless made by amendment to this Agreement and signed by both parties. In witness of the above, USAA and SECURITY have by their respective officers executed and delivered this Agreement in duplicate on the dates indicated below, with an effective date of June 1, 1998. USAA LIFE SECURITY LIFE OF DENVER INSURANCE COMPANY INSURANCE COMPANY By:__________________________________ By:__________________________________ Title:_______________________________ Title:_______________________________ Date:________________________________ Date:________________________________ By:__________________________________ By:__________________________________ Title:_______________________________ Title:_______________________________ Date:________________________________ Date:________________________________ 2 02711916 URT97 (7/1/97) AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT ----------------------------------------------- Table of Contents 1. PARTIES TO AGREEMENT........................................1 2. REINSURANCE BASIS...........................................1 3. AUTOMATIC REINSURANCE TERMS.................................1 a. CONVENTIONAL UNDERWRITING ...........................1 b. RETENTION ...........................................1 c. AUTOMATIC ACCEPTANCE LIMITS .........................1 d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT.............2 e. RESIDENCE............................................2 f. MINIMUM CESSION......................................2 g. FACULTATIVE QUOTES...................................2 4. AUTOMATIC REINSURANCE NOTICE PROCEDURE .....................2 5. FACULTATIVE REINSURANCE.....................................2 6. COMMENCEMENT OF REINSURANCE COVERAGE........................3 a. AUTOMATIC REINSURANCE ...............................3 b. FACULTATIVE REINSURANCE .............................3 c. PRE-ISSUE COVERAGE ..................................3 7. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES ..3 a. LIFE REINSURANCE ....................................3 b. SUPPLEMENTAL BENEFITS ...............................3 i. WAIVER OF PREMIUM ............................3 c. PRELIMINARY TERM INSURANCE ..........................4 d. TERM INSURANCE RENEWALS..............................4 e. TABLE RATED SUBSTANDARD PREMIUMS.....................4 f. FLAT EXTRA PREMIUMS..................................4 g. RATES NOT GUARANTEED.................................4 8. CASH VALUES OR LOANS........................................4 9. PAYMENT OF REINSURANCE PREMIUMS.............................4 a. PREMIUM DUE..........................................4 b. FAILURE TO PAY PREMIUMS..............................4 c. PREMIUM ADJUSTMENT...................................4
3 02711916 URT97 (7/1/97) 10. PREMIUM TAX REIMBURSEMENT ..................................5 11. DAC TAX AGREEMENT ..........................................5 12. REPORTS.....................................................6 13. RESERVES FOR REINSURANCE ...................................6 14. CLAIMS .....................................................6 a. NOTICE ..............................................6 b. PROOFS...............................................6 c. AMOUNT AND PAYMENT OF BENEFITS.......................6 d. CONTESTED CLAIMS ....................................6 e. CLAIM EXPENSES.......................................6 f. EXTRACONTRACTUAL DAMAGES ............................7 15. MISREPRESENTATION, SUICIDE, AND MISSTATEMENT ...............7 16. POLICY CHANGES..............................................7 a. NOTICE ..............................................8 b. INCREASES ...........................................8 c. REDUCTION OR TERMINATION.............................8 d. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC....8 e. EXTENDED TERM AND REDUCED PAID-UP INSURANCE .........8 17. REINSTATEMENTS .............................................8 a. AUTOMATIC REINSTATEMENT .............................8 b. FACULTATIVE REINSTATEMENT............................8 c. PREMIUM ADJUSTMENT ..................................8 d. NONFORFEITURE REINSURANCE TERMINATION ...............9 18. INCREASE IN RETENTION.......................................9 a. NEW BUSINESS ........................................9 b. RECAPTURE............................................9 19. ERRORS AND OMISSIONS........................................9 20. INSOLVENCY.................................................10 21. ARBITRATION................................................10 a. GENERAL.............................................10 b. NOTICE..............................................10 c. PROCEDURE...........................................10 d. COSTS...............................................11
4 02711916 URT97 (7/1/97) 22. GOOD FAITH; FINANCIAL SOLVENCY.............................11 23. TERM OF THIS AGREEMENT.....................................11 24. MEDICAL INFORMATION BUREAU ................................11
5 02711916 URT97 (7/1/97) Listing of Schedules: SCHEDULE A 1. Plans Reinsured 2. Automatic Portion Reinsured 3. Automatic Retention Limit 4. Automatic Acceptance Limits 5. Automatic In Force and Applied for Limit 6. Premium Due 7. Recapture Period 8. Net Amount at Risk 9. Additional Underwriting Requirements SCHEDULE B - AUTOMATIC REINSURANCE PREMIUMS 1. Life Insurance 2. Supplemental Benefits 3. Age Basis 4. Other Policy Changes, Conversions, Exchanges, Etc. 5. Facultative Rate Limit SCHEDULE C - REPORTING INFORMATION Information on Risks Reinsured Policy Exhibit Summary Reserve Credit Summary Accounting Summary SCHEDULE D - FACULTATIVE FORMS Application for Reinsurance Notification of Reinsurance 6 02711916 URT97 (7/1/97) AUTOMATIC AND FACULTATIVE REINSURANCE AGREEMENT 1. PARTIES TO AGREEMENT. This Agreement is solely between SECURITY and CEDING COMPANY. There is no third party beneficiary to this Agreement. Reinsurance under this Agreement will not create any right nor legal relationship between SECURITY and any other person, for example, any insured, policyowner, agent, beneficiary, or assignee. CEDING COMPANY agrees that it will not make SECURITY a party to any litigation between any such third party and CEDING COMPANY. CEDING COMPANY shall not use SECURITY's name with regard to CEDING COMPANY's agreements or transactions with these third parties unless SECURITY gives prior written approval for the use of its name. 2. REINSURANCE BASIS. This Agreement, including the attached Schedules, states the terms and conditions of automatic and facultative reinsurance which shall be on a Yearly Renewable Term basis. This Agreement is applicable only to reinsurance of policies directly written by CEDING COMPANY. Any policies acquired through merger of another company, reinsurance, or purchase of another company's policies are not included under the terms of this Agreement. 3. AUTOMATIC REINSURANCE TERMS. SECURITY agrees to automatically accept contractual risks on the life insurance plans and supplemental benefits shown in Schedule A, subject to the following requirements: a. CONVENTIONAL UNDERWRITING. Automatic reinsurance applies only to insurance applications underwritten by CEDING COMPANY with conventional underwriting and issue practices which are consistently applied. Conventional underwriting and issue practices are those customarily used and generally accepted by life insurance companies. Some examples of non-customary underwriting practices which are not accepted for automatic reinsurance under this Agreement are guaranteed issue, any form of simplified underwriting, short-form applications, any form of non-customary nonmedical underwriting limits, or internal or external policy exchanges that do not require conventional underwriting. An example of an unacceptable issue practice is the issuance of a policy with contestability and suicide clauses with time limitations that are shorter than the maximum allowed by state law. CEDING COMPANY must comply with additional underwriting requirements at least as restrictive as those set forth in Schedule A. These requirements may be changed by SECURITY. SECURITY will provide 120 days advance written notice to CEDING COMPANY before the effective date of such change. b. RETENTION. CEDING COMPANY will retain, and not otherwise reinsure, an amount 7 02711916 URT97 (7/1/97) of insurance on each life equal to its retention shown in Schedule A. If CEDING COMPANY's scheduled retention is zero, automatic reinsurance is not available. c. AUTOMATIC ACCEPTANCE LIMITS. On any one life, the amount automatically reinsured under all agreements with all reinsurers shall not exceed the Automatic Acceptance Limits shown in Schedule A. d. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT. On any one life, the total life insurance in force and applied for with all companies of which CEDING COMPANY is aware, cannot exceed the In Force and Applied For Limits as shown in Schedule A. e. RESIDENCE. Each insured must be a resident of the United States or Canada at the time of issue. f. MINIMUM CESSION. The minimum amount of reinsurance per cession that SECURITY will accept is $10,000 and reinsurance will be terminated when the amount reinsured is less than $10,000. g. FACULTATIVE QUOTES. The risk shall not have been submitted on a facultative basis to SECURITY or any other reinsurer. 4. AUTOMATIC REINSURANCE NOTICE PROCEDURE. After the policy has been paid for and delivered, CEDING COMPANY shall submit all relevant individual policy information, as defined in Schedule C, in its next statement to SECURITY. 5. FACULTATIVE REINSURANCE. CEDING COMPANY may apply for facultative reinsurance with SECURITY on a risk if the automatic reinsurance terms are not met, or if the terms are met and it prefers to apply for facultative reinsurance. If CEDING COMPANY wishes to obtain a facultative quote from other reinsurers on a case eligible for automatic reinsurance, the case shall also be submitted to SECURITY for a facultative offer. The following items must be submitted to obtain a facultative quote: a. A form substantially similar to SECURITY's "Application for Reinsurance" form shown in Schedule D. b. Copies of the original insurance application, medical examiner's reports, financial information, and all other papers and information obtained by CEDING COMPANY regarding the insurability of the risk. After receipt of CEDING COMPANY's application, SECURITY will promptly examine the materials and notify CEDING COMPANY either of the terms and conditions of SECURITY's 8 02711916 URT97 (7/1/97) offer for facultative reinsurance or that no offer will be made. SECURITY's offer expires 120 days after the offer is made, unless the written offer specifically states otherwise. If CEDING COMPANY accepts SECURITY's offer, then CEDING COMPANY shall note its acceptance in its underwriting file and mail, as soon as possible, a formal reinsurance cession to SECURITY using a form substantially similar to the "Notification of Reinsurance" form shown in Schedule D. If CEDING COMPANY does not accept SECURITY's offer, then CEDING COMPANY shall notify SECURITY in writing, as soon as possible. Automatic reinsurance rates can be used for facultative business up to the limits shown in Schedule B. 6. COMMENCEMENT OF REINSURANCE COVERAGE. Commencement of SECURITY's reinsurance coverage on any policy or pre-issue risk under this Agreement is described below: a. AUTOMATIC REINSURANCE. SECURITY's reinsurance coverage for any policy that is ceded automatically under this Agreement shall begin and end simultaneously with CEDING COMPANY's contractual liability for the policy reinsured. b. FACULTATIVE REINSURANCE. SECURITY's reinsurance coverage for any policy that is ceded facultatively under this Agreement shall begin when CEDING COMPANY accepts SECURITY's offer. If CEDING COMPANY has submitted the application for reinsurance to other reinsurers, SECURITY's offer shall be considered revoked when a better offer, as determined by table rating, is made by another reinsurer. c. PRE-ISSUE COVERAGE. SECURITY will not be liable for benefits paid under CEDING COMPANY's conditional receipt or temporary insurance agreement unless all the conditions for automatic reinsurance coverage under Section 3 of this Agreement are met. SECURITY's liability under CEDING COMPANY's conditional receipt or temporary insurance agreement is limited to the lesser of i. or ii. below: i. The Automatic Acceptance Limits with SECURITY as shown in Schedule A. ii. The amount for which CEDING COMPANY is liable less its retention shown in Schedule A, less any amount of reinsurance with other reinsurers. The pre-issue liability applies only once on any given life no matter how many receipts were issued or initial premiums were accepted by CEDING COMPANY. After a policy has been issued, no reinsurance benefits are payable under this pre-issue coverage provision. 7. BASIS OF REINSURANCE AMOUNT AND REINSURANCE PREMIUM RATES. --------------------------------------------------------- a. LIFE REINSURANCE. The amount reinsured on a policy is the policy's net amount at 9 02711916 URT97 (7/1/97) risk less CEDING COMPANY's retention available on the policy less any amount of reinsurance with other reinsurers. The retention on each life, or both lives for joint policies, is shown in Schedule A. The net amount at risk is shown in Schedule A. The reinsurance premiums per $1000 are shown in Schedule B. b. SUPPLEMENTAL BENEFITS. For the supplemental benefits reinsured under this Agreement, the following provisions will apply: i. WAIVER OF PREMIUM. The reinsurance benefit is the premium waived on a policy for the amount reinsured with SECURITY. Reinsurance premiums for this benefit are shown in Schedule B. c. PRELIMINARY TERM INSURANCE. Premiums for reinsurance of preliminary term insurance are at the second year rate for the insured's attained age, as shown in Schedule B, for the fraction of a year covered. d. TERM INSURANCE RENEWALS. Reinsurance premium rates for term renewals are calculated using the original issue age, duration since issuance of the original policy, and the original underwriting classification. e. TABLE RATED SUBSTANDARD PREMIUMS. If CEDING COMPANY's policy is issued with a table rated substandard premium, the reinsurance premiums shown in Schedule B will apply. f. FLAT EXTRA PREMIUMS. If CEDING COMPANY's policy is issued with a flat extra premium, the reinsurance premiums shown in Schedule B will apply. g. RATES NOT GUARANTEED. The reinsurance premium rates are not guaranteed. SECURITY reserves the right to change the rates at any time. If SECURITY changes the rates, it will give CEDING COMPANY 90 days prior written notice of the change. Any change applies only to reinsurance premiums due after the expiration of the notice period. 8. CASH VALUES OR LOANS. This Agreement does not provide reinsurance for cash surrender values. In addition, SECURITY will not participate in policy loans or other forms of indebtedness on reinsured business. 9. PAYMENT OF REINSURANCE PREMIUMS. ------------------------------- a. PREMIUM DUE. Reinsurance premiums for each reinsurance cession are due as shown in Schedule A. On any payment date, monies payable between SECURITY and 10 02711916 URT97 (7/1/97) CEDING COMPANY may be netted to determine the payment due. b. FAILURE TO PAY PREMIUMS. If reinsurance premiums are 60 days past due, for reasons other than those due to error or omission as defined below in Section 19, the premiums will be considered in default and SECURITY may terminate the reinsurance upon 30 days prior written notice. SECURITY will have no further liability as of the termination date. CEDING COMPANY will be liable for the prorated reinsurance premiums to the termination date. CEDING COMPANY agrees that it will not force termination under the provisions of this paragraph solely to avoid the recapture requirements or to transfer the block of business reinsured to another reinsurer. c. PREMIUM ADJUSTMENT. If CEDING COMPANY overpays a reinsurance premium and SECURITY accepts the overpayment, SECURITY's acceptance will not constitute nor create a reinsurance liability nor result in any additional reinsurance. Instead, SECURITY will be liable to CEDING COMPANY for a credit in the amount of the overpayment. If a reinsured policy terminates, SECURITY will refund the reinsurance premium. This refund will be on a prorated basis without interest from the date of termination of the policy to the date to which a reinsurance premium has been paid. 10. PREMIUM TAX REIMBURSEMENT. Premium taxes shall not be reimbursed. 11. DAC TAX AGREEMENT. ----------------- CEDING COMPANY and SECURITY, herein collectively called the "Parties", or singularly the "Party", hereby enter into an election under Treasury Regulations Section 1.848-2 (g)(8) whereby: a. For each taxable year under this Agreement, the party with the net positive consideration, as defined in the regulations promulgated under Treasury Code Section 848, will capitalize specified policy acquisition expenses with respect to this Agreement without regard to general deductions limitation of Section 848 (c)(1); b. CEDING COMPANY and SECURITY agree to exchange information pertaining to the net consideration under this Agreement each year to insure consistency or as otherwise required by the Internal Revenue Service; c. CEDING COMPANY will submit to SECURITY by May 1 of each year its calculation of the net consideration for the preceding calendar year. This schedule of calculations will be accompanied by a statement signed by an officer of CEDING COMPANY stating that CEDING COMPANY will report such net consideration in its tax return for the preceding calendar year; 11 02711916 URT97 (7/1/97) d. SECURITY may contest such calculation by providing an alternative calculation to CEDING COMPANY in writing within 30 days of SECURITY's receipt of CEDING COMPANY's calculation. If SECURITY does not so notify CEDING COMPANY, SECURITY will report the net consideration as determined by CEDING COMPANY in SECURITY's tax return for the previous calendar year. e. If SECURITY contests CEDING COMPANY's calculation of the net consideration, the parties will act in good faith to reach an agreement as to the correct amount within 30 days of the date SECURITY submits its alternative calculation. If CEDING COMPANY and SECURITY reach agreement on the net amount of consideration, each party shall report such amount in their respective tax returns for the previous calendar year. Both Parties represent and warrant that they are subject to U.S. taxation under either Subchapter L of Chapter 1, or Subpart F of Subchapter N of Chapter 1 of the Internal Revenue Code of 1986, as amended. 12. REPORTS. The reporting period shall be monthly. The administrating party shall be CEDING COMPANY. For each reporting period, CEDING COMPANY will submit a statement to SECURITY with information that is substantially similar to the information displayed in Schedule C. The statement will include information on the risks reinsured with SECURITY, premiums owed, policy exhibit activity, and an accounting summary. Within fifteen days after the end of each calendar quarter, the administrating party will submit a reserve credit summary similar to that shown in Schedule C. 13. RESERVES FOR REINSURANCE. The statutory reserve basis for the reinsurance will be shown on the reserve credit summary provided each quarter. 14. CLAIMS. ------ a. NOTICE. CEDING COMPANY will notify SECURITY, as soon as reasonably possible, after it receives a claim request. b. PROOFS. CEDING COMPANY will promptly provide SECURITY with proper claim proofs, all relevant information respecting the claim, and an itemized statement of the benefits paid by CEDING COMPANY. c. AMOUNT AND PAYMENT OF BENEFITS. As soon as SECURITY receives proper claim notice and proof of the claim, SECURITY will promptly pay the reinsurance benefits due CEDING COMPANY. CEDING COMPANY's contractual liability for claims is binding on SECURITY. The maximum benefit payable to CEDING COMPANY under each reinsured policy is the amount specifically reinsured with SECURITY. The total reinsurance in all companies on a policy shall not exceed 12 02711916 URT97 (7/1/97) CEDING COMPANY's total contractual liability on the policy, less its retention used on the policy. The excess, if any, of the total reinsurance in all companies plus CEDING COMPANY's retention used on the policy over its contractual liability under the reinsured policy will first be applied to reduce all reinsurance on the policy. This reduction in reinsurance will be shared among all the reinsurers in proportion to their respective amounts of reinsurance prior to the reduction. d. CONTESTED CLAIMS. CEDING COMPANY will notify SECURITY of its intention to contest, compromise, or litigate a claim involving a reinsured policy. If CEDING COMPANY's contest, compromise, or litigation results in a reduction in its liability, SECURITY will share in the reduction in the proportion that SECURITY's net liability bears to the sum of the net liability of all reinsurers on the insured's date of death. If SECURITY should decline to participate in the contest, compromise or litigation, SECURITY will then release all of its liability by paying CEDING COMPANY its full share of reinsurance and not sharing in any subsequent reduction in liability. e. CLAIM EXPENSES. SECURITY will pay its share of reasonable investigation and legal expenses connected with the litigation or settlement of contractual liability claims unless SECURITY has released its liability, in which case SECURITY will not participate in any expenses after the date of release. However, claim expenses do not include routine claim and administration expenses, including CEDING COMPANY's home office expenses. Also, expenses incurred in connection with a dispute or contest arising out of conflicting claims of entitlement to policy proceeds or benefits that CEDING COMPANY admits are payable are not a claim expense under this Agreement. f. EXTRACONTRACTUAL DAMAGES. In no event will SECURITY participate in punitive or compensatory damages which are awarded against CEDING COMPANY as a result of an act, omission or course of conduct committed by CEDING COMPANY in connection with the insurance under this Agreement. SECURITY will, however, pay its share of statutory penalties awarded against CEDING COMPANY in connection with the insurance reinsured under this Agreement. The parties recognize that circumstances may arise in which equity would require SECURITY, to the extent permitted by law, to share proportionately in certain assessed damages. Such circumstances are difficult to define in advance, but generally would be those situations in which SECURITY was an active party and directed, consented to, or ratified the act, omission, or course of conduct of CEDING COMPANY which ultimately resulted in the assessment of punitive and/or compensatory damages. In such situations, CEDING COMPANY and SECURITY would share such damages assessed in equitable proportions. Routine expenses incurred in the normal settlement of uncontested claims and the salary of an officer or employee of CEDING COMPANY are excluded from this provision. For purposes of the provision, the following definitions will apply: "Punitive Damages" are those damages awarded as penalties, the amounts of which are not governed nor fixed by statute; 13 02711916 URT97 (7/1/97) "Statutory Penalties" are those amounts awarded as penalties, and are fixed in amount by statute; "Compensatory Damages" are those amounts awarded to compensate for actual damages sustained, and are not awarded as penalties, nor fixed in amount by statute. 15. MISREPRESENTATION, SUICIDE, AND MISSTATEMENT. If either a misrepresentation on an application or a death of an insured by suicide results in the return of policy premiums by CEDING COMPANY under the policy rather than payment of policy benefits, SECURITY will refund all of the reinsurance premiums paid for that policy to CEDING COMPANY. This refund will be in lieu of all other benefits under this Agreement. If there is an adjustment for a misrepresentation or misstatement of age or sex, a corresponding adjustment to the reinsurance benefit will be made. 16. POLICY CHANGES. -------------- a. NOTICE. If a reinsured policy is changed, a corresponding change will be made in the reinsurance for that policy. CEDING COMPANY will notify SECURITY of the change in CEDING COMPANY's next accounting statement. b. INCREASES. If life insurance on a reinsured policy is increased and the increase is subject to new underwriting evidence, then the increase of life insurance on the reinsured policy will be handled the same as the issuance of a new policy. If the increase is not subject to new underwriting evidence, then the increase shall be automatically accepted by SECURITY, but it is not to exceed the Automatic Acceptance Limits shown in Schedule A. Reinsurance rates will be based on the original issue age, duration since issuance of the original policy and the original underwriting classification. c. REDUCTION OR TERMINATION. If life insurance on a reinsured policy is reduced, then reinsurance will be reduced by the amount of the reduction on the date of such change. If more than one reinsurer participates in the reinsurance, the reinsurance with each reinsurer will be reduced proportionately. If life insurance on a reinsured policy is terminated, then reinsurance will cease on the date of such termination. d. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC. Exchanges, term conversions or other changes in the insurance reinsured with SECURITY, where not fully underwritten as a new issue, will continue to be ceded to SECURITY. Reinsurance rates for these policies will be the YRT conversion rates shown in Schedule B or may be mutually agreed upon. Rates will be based on the original issue age and duration since issuance of the original policy. When these changes are fully underwritten, the policy will be handled the same as issuance of a new policy. 14 02711916 URT97 (7/1/97) e. EXTENDED TERM AND REDUCED PAID-UP INSURANCE. When a reinsured policy changes to extended term or reduced paid-up insurance, CEDING COMPANY will notify SECURITY of the new amount of reinsurance. Reinsurance rates will remain the same as the rates used for the original policy and will be based on the original issue age, duration since issuance of the original policy and the original underwriting classification. 17. REINSTATEMENTS. -------------- a. AUTOMATIC REINSTATEMENT. If CEDING COMPANY reinstates a policy that was originally ceded to SECURITY as automatic reinsurance using conventional underwriting practices, SECURITY's reinsurance for that policy shall be reinstated. b. FACULTATIVE REINSTATEMENT. If CEDING COMPANY has been requested to reinstate a policy that was originally ceded to SECURITY as facultative reinsurance, then CEDING COMPANY will again submit the case to SECURITY for underwriting approval before the reinsurance can be reinstated. c. PREMIUM ADJUSTMENT. Reinsurance premiums for the interval during which the policy was lapsed will be paid to SECURITY on the same basis as CEDING COMPANY charged its policy owner for the reinstatement. d. NONFORFEITURE REINSURANCE TERMINATION. If CEDING COMPANY has been requested to reinstate a policy that was reinsured while on extended term or reduced paid-up then such reinsurance will terminate and either automatic or facultative reinstatement procedures shall be followed. 18. INCREASE IN RETENTION. --------------------- a. NEW BUSINESS. If CEDING COMPANY increases its retention limits, then it may, at its option and with written notice to SECURITY, increase its retention shown in Schedule A for policies issued after the effective date of the retention increase. b. RECAPTURE. If CEDING COMPANY increases its retention limits, then it may, with 90 days written notice to SECURITY, reduce or recapture the reinsurance in force subject to the following requirements: i. A cession is not eligible for recapture until it has been reinsured for the minimum number of years shown in Schedule A. The effective date of the reduction in reinsurance shall be the later of the first policy anniversary following the expiration of the 90 day notice period to recapture and the policy anniversary date when the required minimum of years is attained. 15 02711916 URT97 (7/1/97) ii. On all policies eligible for recapture, reinsurance will be reduced by the amount necessary to increase the total insurance retained up to the new retention limits. iii. If more than one policy per life is eligible for recapture, then starting with the earliest policy issue date, the recapture will be in chronological order according to policy issue date. iv. Recapture of reinsurance will not be allowed on any policy for which CEDING COMPANY did not keep its maximum retention at issue. CEDING COMPANY's retention limits are stated in Section 3 of Schedule A. v. If any policy eligible for recapture is also eligible for recapture from other reinsurers, the reduction in SECURITY's reinsurance on that policy shall be in proportion to the total amount of reinsurance on the life with all reinsurers. vi. Recapture will not be on a basis that may result in any anti-selection against SECURITY as it, in its discretion, may determine. 19. ERRORS AND OMISSIONS. If either SECURITY or CEDING COMPANY fails to comply with any of the terms of this Agreement and it is shown that the failure was unintentional or the result of a misunderstanding or an administrative oversight on the part of either party, this Agreement will remain in effect. If the failure to comply changes the operation or effect of this Agreement, both parties will be put back to the positions they would have occupied if the failure to comply had not occurred. 20. INSOLVENCY. In the event that CEDING COMPANY is deemed insolvent, all reinsurance claims payable hereunder shall be payable by SECURITY directly to CEDING COMPANY, its liquidator, receiver or statutory successor, without diminution because of the insolvency of CEDING COMPANY. It is understood, however, that in the event of such insolvency, the liquidator or receiver or statutory successor of CEDING COMPANY shall give written notice to SECURITY of the pendency of a claim against SECURITY on a risk reinsured hereunder within a reasonable time after such claim is filed in the insolvency proceeding. Such notice shall indicate the policy reinsured and whether the claim could involve a possible liability on the part of SECURITY. During the pendency of such claim, the reinsurer may investigate such claim and interpose, at their own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses it may deem available to CEDING COMPANY, its liquidator, receiver or statutory successor. It is further understood that the expense thus incurred by SECURITY shall be chargeable, subject to court approval, against CEDING COMPANY as part of the expense of liquidation to the extent of a proportionate share of the benefit which may accrue to CEDING COMPANY solely as a result of the defense undertaken by SECURITY. 16 02711916 URT97 (7/1/97) 21. ARBITRATION. ----------- a. GENERAL. All disputes and differences under this Agreement that cannot be amicably agreed upon by the parties will be decided by arbitration. The arbitrators will have the authority to interpret this Agreement and, in doing so, will consider the customs and practices of the life insurance and life reinsurance industries. The arbitrators will consider this Agreement an honorable engagement rather than merely a legal obligation, and they are relieved of all judicial formalities and may abstain from following the strict rules of the law. b. NOTICE. To initiate arbitration, one of the parties will notify the other, in writing, of its desire to arbitrate. The notice will state the nature of the dispute and the desired remedies. The party to which the notice is sent will respond to the notification in writing within 10 days of receipt of the notice. At that time, the responding party will state any additional dispute it may have regarding the subject of arbitration. c. PROCEDURE. Arbitration will be heard before a panel of three arbitrators. The arbitrators will be executive officers of life insurance or reinsurance companies; however, these companies will not be either party nor their affiliates. Each party will appoint one arbitrator. Notice of the appointment of these arbitrators will be given by each party to the other party within 30 days of the date of mailing of the notification initiating the arbitration. These two arbitrators will, as soon as possible, but no longer than 45 days after the date of the mailing of the notification initiating the arbitration, then select the third arbitrator. Should either party fail to appoint an arbitrator or should the two initial arbitrators be unable to agree on the choice of a third arbitrator, each arbitrator will nominate three candidates, two of whom the other will decline, and the decision will be made by drawing lots on the final selection. Once chosen, the three arbitrators will have the authority to decide all substantive and procedural issues by a majority vote. The arbitration hearing will be held on the date fixed by the arbitrators at a location agreed upon by the parties. The arbitrators will issue a written decision from which there will be no appeal. Either party may reduce this decision to a judgment before any court which has jurisdiction of the subject of the arbitration. d. COSTS. Each party will pay the fees of its own attorneys, the arbitrator appointed by that party, and all other expenses connected with the presentation of its own case. The two parties will share equally in the cost of the third arbitrator. 22. GOOD FAITH; FINANCIAL SOLVENCY. CEDING COMPANY agrees that all matters with respect to this Agreement require its utmost good faith. SECURITY or its representatives have the right at any reasonable time to inspect CEDING COMPANY's records relating to this Agreement. Each party represents and warrants to the other party that it is solvent on a statutory basis in all states in which it does business or is licensed. Each party agrees to promptly notify the other if it is subsequently financially impaired. SECURITY has entered 17 02711916 URT97 (7/1/97) into this Agreement in reliance upon CEDING COMPANY's representations and warranties. CEDING COMPANY affirms that it has and will continue to disclose all matters material to this Agreement and each cession. Examples of such matters are a change in underwriting or issue practices or philosophy, a change in underwriting management personnel, or a change in CEDING COMPANY's ownership or control. 23. TERM OF THIS AGREEMENT. CEDING COMPANY will maintain and continue the reinsurance provided in this Agreement as long as the policy to which it relates is in force or has not been fully recaptured. This Agreement may be terminated, without cause, for the acceptance of new reinsurance after 90 days written notice of termination by either party to the other. SECURITY will continue to accept reinsurance during this 90 day period. SECURITY's acceptance will be subject to both the terms of this Agreement and CEDING COMPANY's payment of applicable reinsurance premiums. In addition, this Agreement may be terminated immediately for the acceptance of new reinsurance by either party if one of the parties materially breaches this Agreement, or becomes insolvent or financially impaired. 24. MEDICAL INFORMATION BUREAU. SECURITY is required to strictly adhere to the Medical Information Bureau Rules, and CEDING COMPANY agrees to abide by these Rules, as amended from time to time. CEDING COMPANY will not submit a preliminary notice, application for reinsurance, or reinsurance cession to SECURITY unless CEDING COMPANY has an authentic, signed preliminary or regular application for insurance in its home office and the current required Medical Information Bureau authorization. 18 02711916 URT97 (7/1/97) SCHEDULE A 1. PLANS REINSURED: The policy and supplemental benefit forms automatically and facultatively reinsured are: Variable Universal Life Disability Waiver of Premium Benefit 2. AUTOMATIC PORTION REINSURED: Security shall automatically reinsure 15% of Ceding Company's pool, on a first dollar quota share basis. Ceding Company shall keep 10% of each risk up to Ceding Company's retention limits and place the remainder into the Ceding Company's pool. 3. AUTOMATIC RETENTION LIMIT: a. Life Insurance: i. Non-Military Life $600,000 per life ii. Enlisted Military Personnel On Active Duty $50,000 per life iii. All Other Military Personnel
========================================================== Rank Standard and Substandard - ---------------------------------------------------------- W0 through 0-3 $250,000 - ---------------------------------------------------------- 0-4 and above $350,000 ==========================================================
SCHEDULE A, CONTINUED 1 02711916 URT97 (7/1/97) b. Disability Waiver of Premium Benefit:
========================================================== Issue Age Standard and Substandard - ---------------------------------------------------------- 15-55 $600,000 ==========================================================
c. Accidental Death Benefit Not reinsured under this Agreement 4. AUTOMATIC ACCEPTANCE LIMITS: a. Life Insurance: i. Enlisted Military Personnel on Active Duty, The maximum issue limit is $200,000 per life. SECURITY shall automatically reinsure up to $10,000 per life. ii. Non-Military Life and All Other Military Personnel On any one life, the amount automatically reinsured under all agreements with all reinsurers shall not exceed the following:
========================================================================================================= ISSUE STANDARD - TABLE 8 TABLES 9 - 16 AGE - --------------------------------------------------------------------------------------------------------- 0 - 75 11 TIMES CEDING COMPANY'S RETENTION 11 TIMES CEDING COMPANY'S RETENTION AS AS STATED IN SCHEDULE A OF THIS AGREEMENT, STATED IN SCHEDULE A OF THIS AGREEMENT, SUBJECT SUBJECT TO A MAXIMUM OF $6,600,000. TO A MAXIMUM OF $6,600,000. - --------------------------------------------------------------------------------------------------------- 76-80 11 TIMES CEDING COMPANY'S RETENTION AUTOMATIC REINSURANCE IS NOT AVAILABLE. AS STATED IN SCHEDULE A OF THIS AGREEMENT, SUBJECT TO A MAXIMUM OF $6,600,000. - --------------------------------------------------------------------------------------------------------- 81+ 11 TIMES CEDING COMPANY'S RETENTION AS AUTOMATIC REINSURANCE IS NOT AVAILABLE. STATED IN SCHEDULE A OF THIS AGREEMENT, SUBJECT TO A MAXIMUM OF $6,600,000.* =========================================================================================================
* Standard Only SCHEDULE A, CONTINUED 2 02711916 URT97 (7/1/97) b. Disability Waiver of Premium Benefit: SECURITY shall automatically reinsure Disability Waiver of Premium Benefits up to a maximum of $2,000,000 of Benefit face amount per life. c. Accidental Death Benefit: Not reinsured under this Agreement The total mortality rating on each life shall not be higher than 500%. 5. AUTOMATIC IN FORCE AND APPLIED FOR LIMIT: $25,000,000 6. PREMIUM DUE: Reinsurance premiums are due annually in advance. These premiums are due on the issue date and each subsequent policy anniversary. 7. RECAPTURE PERIOD: The minimum number of years for a cession to be reinsured before it is eligible for recapture is 10 years. 8. NET AMOUNT AT RISK: The net amount at risk for purposes of this agreement is the policy face amount less the policy account value. SCHEDULE A, CONTINUED 3 02711916 URT97 (7/1/97) 9. ADDITIONAL UNDERWRITING REQUIREMENTS: The following requirements apply to business reinsured under this Agreement. These requirements are in addition to the conventional underwriting and issue practices described in Section 3.a. of this Agreement. BLOOD PROFILE LIMITS: Where permitted by law, a blood profile including an AIDS test is required according to the age and amount conditions described below. The AIDS test is to be an HIV or, when the HIV is not permitted, a T-Cell ratio.
===================================================== Issue Age Applied For Amount - ----------------------------------------------------- 0-14 $200,000 - ----------------------------------------------------- 15+ $100,000 =====================================================
4 02711916 URT97 (7/1/97) SCHEDULE B AUTOMATIC REINSURANCE PREMIUMS - YEARLY RENEWABLE TERM BASIS 1. LIFE INSURANCE: a. Standard annual reinsurance premiums per $1000 reinsured shall be the following percentages of the 91 Bragg Table Premium rates attached to this Schedule B:
======================================================================= YEAR PREFERRED PREFERRED PREFERRED STANDARD STANDARD ULTRA PLUS PLUS - ----------------------------------------------------------------------- 1 0% 0% 0% 0% 0% - ----------------------------------------------------------------------- 2+ 32% 40% 48% 41% 52% =======================================================================
b. Table rated substandard reinsurance premiums shall be at the appropriate multiple of the standard reinsurance premiums (25% per table). c. Flat Extra reinsurance premiums shall be the following percentages of such premiums charged the insured:
====================================================================== Permanent flat extra premiums (for more than 5 years duration) - -------------------------------------------------------------------- First Year 25% - -------------------------------------------------------------------- Renewal Years 90% ====================================================================
==================================================================== Temporary flat extra premiums (for 5 years or less duration) - -------------------------------------------------------------------- All Years 90% ====================================================================
2. SUPPLEMENTAL BENEFITS: Disability Waiver of Premium Benefit reinsurance premiums shall be the following percentages of such premiums charged the insured:
==================================================================== Year Percentage - -------------------------------------------------------------------- 1 0% - -------------------------------------------------------------------- 2+ 80% ====================================================================
1 02711916 URT97 (7/1/97) SCHEDULE B, CONTINUED 3. AGE BASIS: Age Last Birthday 4. OTHER POLICY CHANGES, CONVERSIONS, EXCHANGES, ETC.: Annual reinsurance premiums for conversions shall be as shown in the Security Life Reinsurance Rates For After Conversion attached to this Schedule B. Reinsurance rates shall be based on the original issue age, duration since issuance of the original policy and original underwriting classification. 5. FACULTATIVE RATE LIMIT: The automatic reinsurance rates in this Agreement can be used for facultative reinsurance up to the limits shown below. If either limit would be exceeded, then the reinsurance rates shall be mutually agreed upon. a. The total individual in force and applied for in all companies, for each life, does not exceed $35,000,000. b. The total amount reinsured with SECURITY, for each life, does not exceed the following:
=================================================================================== Issue Age Std - Table 4 Tables 5 - 8 Tables 9 - 16 - ----------------------------------------------------------------------------------- 0-75 $20,000,000 $15,000,000 $10,000,000 - ----------------------------------------------------------------------------------- 76-80 $15,000,000 $10,000,000 $5,000,000 - ----------------------------------------------------------------------------------- 81-85 $5,000,000 $2,000,000 $0 ===================================================================================
2 02711916 URT97 (7/1/97) SCHEDULE C REPORTING INFORMATION INFORMATION ON RISKS REINSURED * 1. Full Name of Insured * 2. Date of Birth * 3. Sex * 4. Nonsmoker/Smoker * 5. Insured's State of Residence * 6. Issue Age 7. Policy Number 8. Issue Date 9. Policy Plan Code 10. Type of Transaction 11. Effective Date of Transaction 12. Automatic/Facultative Indicator 13. Duration from Original Policy Date 14. Face Amount Issued 15. Reinsured Amount (Initial Amount) 16. Reinsured Amount (Current Amount at Risk) 17. Change in Amount at Risk Since Last Report 18. Death Benefit Option (For Universal Life Type Plans) 19. ADB Amount (If Applicable) 20. Substandard Rating 21. Flat Extra Amount Per Thousand 22. Duration of Flat Extra 24. Previous Policies (Yes or No) 25. Premiums categorized by: Life, Riders, Waivers, Accidental Death Benefits and Flat Extras 26. Statutory Reserves for: Life, Substandard Risks, Waivers and Accidental Death Benefits *Please provide this information for every insured on each policy SCHEDULE C, CONTINUED 1 02711916 URT97 (7/1/97) SAMPLE POLICY EXHIBIT SUMMARY (Life Reinsurance Only) CEDING COMPANY: _____________________________________________________________ REINSURER: _____________________________________________________________ ACCOUNT NO: _____________________________________________________________ PREPARED BY: _______________ Phone: _(____________) ___________________ DATE PREPARED: _____________________________________________________________ TYPE OF REINSURANCE: Yearly Renewable Term _______________________________________ Coinsurance _______________________________________ Modified Coinsurance _______________________________________ Other _______________________________________ VALUATION DATE: _______________ NUMBER OF AMOUNT OF POLICIES REINSURANCE A. In Force Beginning of Period___/___/___ _____________ ___________________ B. New Paid Reinsurance Ceded _____________ ___________________ C. Reinstatements _____________ ___________________ D. Revivals _____________ ___________________ E. Increases (Net) _____________ ___________________ F. Conversion In _____________ ___________________ G. Transfers In _____________ ___________________ H. Total Increases (B - G) _____________ ___________________ I. Deaths _____________ ___________________ J. Maturities _____________ ___________________ K. Cancellations _____________ ___________________ L. Expiries _____________ ___________________ M. Surrenders _____________ ___________________ N. Lapses _____________ ___________________ O. Recaptures _____________ ___________________ P. Other Decreases (Net) _____________ ___________________ Q. Reductions _____________ ___________________ R. Conversions Out _____________ ___________________ S. Transfers Out _____________ ___________________ T. Total Decreases (I - S) _____________ ___________________ U. Current In Force___/___/___ _____________ ___________________ (A + H - T) SCHEDULE C, CONTINUED SAMPLE ------ 2 02711916 URT97 (7/1/97) RESERVE CREDIT SUMMARY CEDING COMPANY: _____________________________________________________________ REINSURER: _____________________________________________________________ ACCOUNT NO: _____________________________________________________________ PREPARED BY: _______________ Phone: _(____________) __________________ DATE PREPARED: _____________________________________________________________ TYPE OF REINSURANCE: Yearly Renewable Term _______________________________________ Coinsurance _______________________________________ Modified Coinsurance _______________________________________ Other _______________________________________ VALUATION DATE: _______________ TYPE OF RESERVES: Statutory _______________________________________ GAAP _______________________________________ Tax _______________________________________
VALUATION BASIS ISSUE IN YEAR FORCE IN FORCE RESERVE MORTALITY INTEREST VALUATION RANGE COUNT AMOUNT CREDIT A. Life Insurance ____________ __________ ___________ _________ _________ _________ __________ ____________ __________ ___________ _________ _________ _________ __________ B. Accidental Death Benefit ____________ __________ ___________ _________ _________ _________ __________ C. Disability Active Lives ____________ __________ ___________ _________ _________ _________ __________ D. Disability Disabled Lives ____________ __________ ___________ _________ _________ _________ __________ E. Other Please Explain ____________ __________ ___________ _________ _________ _________ __________ GRAND TOTAL: _________
SCHEDULE C, CONTINUED SAMPLE ------ 3 02711916 URT97 (7/1/97) ACCOUNTING SUMMARY CEDING COMPANY: _____________________________________________________________ REINSURER: _____________________________________________________________ ACCOUNT NO: _____________________________________________________________ PREPARED BY: _______________ Phone: _(____________) __________________ DATE PREPARED: _____________________________________________________________ TYPE OF REINSURANCE: Yearly Renewable Term _______________________________________ Coinsurance _______________________________________ Modified Coinsurance _______________________________________ Other _______________________________________ VALUATION DATE: _______________
LIFE WP AD TOTAL Premiums First Year ___________ ___________ ___________ ___________ Renewal ___________ ___________ ___________ ___________ Allowances First Year ___________ ___________ ___________ ___________ Renewal ___________ ___________ ___________ ___________ Adjustments First Year ___________ ___________ ___________ ___________ Renewal ___________ ___________ ___________ ___________ Net Due REINSURER First Year ___________ ___________ ___________ ___________ Renewal ___________ ___________ ___________ ___________ TOTAL DUE ___________ ___________ ___________ ___________
(The above information should be a summary of the detail information provided to REINSURER.) 4 02711916 URT97 (7/1/97) SCHEDULE D FACULTATIVE FORMS Application for Reinsurance Notification of Reinsurance 1 02711916 URT97 (7/1/97) EX-99 9 asa_imco-lit.txt EXHIBIT 7 ADMINISTRATIVE SERVICES AGREEMENT AGREEMENT made as of May 1, 2003, between USAA LIFE INSURANCE COMPANY, a corporation organized under the laws of the state of Texas and having a place of business in San Antonio, Texas ("USAA Life"), and USAA LIFE INVESTMENT TRUST, a Delaware business trust having a place of business in San Antonio, Texas (the "Trust"). RECITALS The Trust is an open-end management investment company registered under the Investment Company Act of 1940 (the "1940 Act"), as amended, whose shares ("Shares") are registered under the Securities Act of 1933 (the "1933 Act"), as amended, and with Shares offered in various investment funds as set forth in Exhibit A (the "Existing Funds") (such funds together with any funds subsequently established by the Trust for which the Trust desires to retain USAA Life to provide services under this Agreement, and for which USAA Life is willing to do so, being collectively referred to as the "Funds"). The Trust makes its shares available for purchase to the Separate Account of USAA Life Insurance Company and the Life Insurance Separate Account of USAA Life Insurance Company (the "Separate Accounts"), and may in the future (subject to any necessary approval by the Board of Trustees) make its shares available to any other separate accounts of USAA Life or any of USAA Life's subsidiaries or affiliates, and to separate accounts of non-affiliated life insurance companies (all such eligible purchasers being referred to collectively as "Purchasers"). USAA Life issues variable annuity contracts and variable life insurance policies (collectively "Contracts") funded through the Separate Accounts. USAA Life invests certain assets of the Separate Accounts in the Trust for the benefit of the owners of the Contracts ("Contract Owners"). USAA Life represents that the services provided under this Agreement and the fees received hereunder do not duplicate services provided and fees received under the Contracts or otherwise in connection with the Separate Accounts. AGREEMENT In consideration of the agreements contained herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Trust and USAA Life agree as follows: 1. APPOINTMENT OF USAA LIFE. (a) Existing Funds. The Trust hereby appoints USAA Life to act as administrator for the Existing Funds for the period and on the terms herein set forth. USAA Life accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. (b) Additional Funds. In the event that the Trust desires to retain USAA Life to render administrative services hereunder with respect to any Fund other than an Existing Fund, it shall notify USAA Life in writing. If USAA Life is willing to render such services it shall notify the Trust in writing, whereupon the Trust shall appoint USAA Life to act as administrator for such Fund for the period and on the terms herein 1 set forth, and USAA Life shall accept such appointment and agree to render the services herein set forth for the compensation herein provided. (c) USAA Life shall be subject to the direction and control of the Trust in providing services under this Agreement, and shall provide such services in compliance with all applicable provisions of the Trust's Master Trust Agreement, Bylaws, Prospectus, and any applicable federal or state laws and regulations. 2. DUTIES OF USAA LIFE. USAA Life shall administer the affairs of the Trust and provide related services required for the operation of the Funds; provided, that USAA Life shall not have any obligation to provide under this Agreement any services related to the distribution of Fund shares or any other services which are the subject of a separate agreement or arrangement between the Trust and USAA Life or its affiliates with respect to the Funds. Subject to the foregoing, USAA Life shall provide the following services and facilities to the Trust: (a) Office Space, Equipment and Facilities. Furnish such office space, office equipment, and office facilities as are adequate for the Trust's needs with respect to the Funds. (b) Personnel. Provide the services of individuals competent to perform all of the Trust's executive, administrative, and clerical functions that are not performed by employees or other agents engaged by the Trust or by USAA Life acting in some other capacity pursuant to a separate agreement or arrangement with the Trust with respect to the Funds. (c) Agents. Assist the Trust in selecting and coordinating the activities of the other agents engaged by the Trust with respect to the Funds, including the Trust's transfer agent, custodian, independent auditors, and legal counsel. (d) Trustees and Officers. Authorize and permit USAA Life's directors, officers and employees who may be elected or appointed as trustees or officers of the Trust to serve in such capacities, without remuneration from or other cost to the Trust. (e) Books and Records. Assure that all financial, accounting and other records required to be prepared, maintained, and preserved by the Trust with respect to the Funds are prepared, maintained, and preserved by it or on its behalf in accordance with applicable laws and regulations. (f) Regulatory Reports and Filings. Prepare and file (as required) or arrange for others to prepare and file, but not pay for, all tax returns with respect to the Trust, all proxy statements with respect to the Funds, all periodic reports by the Trust with respect to the Funds, and all reports and filings required to maintain the registration and qualification of the Trust and the Shares, or to meet other regulatory or tax requirements applicable to the Funds under federal and state securities and tax laws. (g) Board Reports. Prepare and coordinate materials relating to the Funds to be presented to the Trust's Board of Trustees in preparation for its meetings. (h) Fidelity Bond. Provide and maintain a bond issued by a reputable insurance company authorized to do business in the place where the bond is issued, against larceny and embezzlement covering each officer and employee of the Trust who may singly or jointly with others have access to funds or securities of the Trust, with direct or indirect authority to draw upon such funds or to direct generally the disposition of such funds. The bond shall be in such reasonable amount as a majority of the Board of Trustees of the Trust 2 who are not officers or employees of the Trust shall determine, with due consideration to the aggregate assets of the Trust to which any such officer or employee may have access. (i) Calculation of Net Asset Value. Compute each Fund's net asset value per Share. (j) Delegation. Delegate, at its expense, some or all of its duties hereunder to other persons or entities approved by USAA Life upon prior notice to the Trust. (k) Other Services. Provide such other services as the parties may from time to time agree in writing. 3. DUTIES OF THE TRUST. Provide or cause others to provide to USAA Life all financial or other information necessary to USAA Life's providing services under this Agreement. 4. ALLOCATION OF EXPENSES. Except for the services and facilities to be provided by USAA Life set forth in paragraph 2 above and except for the services provided by USAA Life set forth in any other Agreement between the Trust and USAA Life, the Trust assumes and shall pay all expenses for all other Fund operations and activities and shall reimburse USAA Life for any such expenses incurred by USAA Life. The expenses to be borne by the Trust shall include, without limitation: (a) the charges and expenses of any registrar, share transfer or dividend disbursing agent, custodian, or depository appointed by the Trust for the safekeeping of a Fund's cash, portfolio securities and other property; (b) the charges and expenses of independent auditors; (c) brokerage commissions, if any, for transactions in the portfolio securities of the Funds; (d) all taxes, including issuance and transfer taxes, and fees payable by a Fund to federal, state or other governmental agencies; (e) the cost of any share certificates representing Shares of a Fund; (f) fees involved in registering and maintaining registrations of the Trust and of its Shares with the applicable federal, state, and other jurisdictions; (g) all expenses of shareholders' and Trustees' meetings and of preparing, printing and mailing proxy statements, any quarterly reports, semiannual reports, annual reports and other communications (including prospectuses) to existing shareholders and Contract Owners; (h) compensation and travel expenses of Trustees who are not "interested persons" of the Trust within the meaning of the 1940 Act; (i) charges and expenses of legal counsel in connection with matters relating to the Funds, including, without limitation, legal services rendered in connection with the Funds' legal and financial structure 3 and relations with its shareholders and Contract Owners, issuance of Fund Shares, and registration and qualification of securities under federal, state and other laws; (j) membership or association dues for the Investment Company Institute or similar organizations; (k) interest payable on Fund borrowings; and (l) postage. 5. ADMINISTRATION FEE. (a) For the services and facilities to be provided by USAA Life as provided in paragraph 2 hereof, the Trust shall reimburse USAA Life, on a monthly basis in arrears, for the cost of providing the services under this Agreement; provided, however, that such reimbursement shall be subject to the Maximum Expense with respect to each Fund, as set forth in Exhibit A hereto. (b) USAA Life may, from time to time, and for such periods as it deems appropriate, voluntarily waive fees or otherwise reduce its compensation hereunder. 6. LIABILITY AND INDEMNIFICATION. (a) USAA Life. USAA Life shall exercise reasonable care in performing its services under this Agreement. USAA Life shall indemnify and hold the Trust, and its trustees, officers, and employees harmless from and against any and all loss, cost, damage and expense (a "Loss"), including reasonable expenses for counsel, incurred by it resulting from any claim, demand, action or suit relating to the performance of its duties under this Agreement, or any action or omission by it in the performance of its duties hereunder; provided, however, that this indemnification shall not apply to any Loss resulting from any action or inaction of the Trust constituting willful misconduct, bad faith or negligence in the performance of its duties or the reckless disregard of its duties under this Agreement. Prior to confessing any claim against it, which may be the subject of this indemnification, the Trust shall give USAA Life reasonable opportunity to defend against such claim in its own name or in the name of the Trust. (b) Trust. The Trust shall indemnify and hold USAA Life and its officers, directors and employees harmless from and against any and all loss, cost, damage and expense (a "Loss"), including reasonable expenses for counsel, incurred by it resulting from any claim, demand, action or suit relating to the performance of its duties under this Agreement, or any action or omission by it in the performance of its duties hereunder; provided, however, that this indemnification shall not apply to any Loss resulting from any action or inaction of USAA Life constituting willful misconduct, bad faith or negligence in the performance of its duties or the reckless disregard of its duties under this Agreement. Prior to confessing any claim against it which may be the subject of this indemnification, USAA Life shall give the Trust reasonable opportunity to defend against such claim in its own name or in the name of USAA Life. 7. CONFIDENTIALITY. (a) Trust records maintained by USAA Life under this Agreement shall be and remain the property of the Trust. USAA Life shall promptly surrender or make such records available to the Trust or its designee, without charge, except for reimbursement of expenses for the surrender of such documents, upon request by the Trust or upon termination of this Agreement. 4 (b) USAA Life shall not disclose or use any records or information obtained hereunder in any manner whatsoever except as expressly authorized hereunder, and further, shall keep confidential any information obtained pursuant to this Agreement with the Trust as set forth herein, and disclose such information only if the Trust has authorized such disclosure, or if such disclosure is expressly required by applicable federal or state regulatory authorities. 8. DURATION AND TERMINATION OF THIS AGREEMENT. (a) Duration. This Agreement shall become effective as of the date first set forth above and, unless terminated, shall continue in force from year to year thereafter, but only so long as such continuance is specifically approved annually (a) by the Trust's Board of Trustees or by a vote of a majority of the Funds' outstanding voting securities (as that term is defined in the 1940 Act) and (b) by a majority of the Trustees who are not parties to this Agreement or "interested persons" of any such party (as defined in the 1940 Act.) (b) Termination. This Agreement may be terminated at any time, without payment of any penalty, by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding shares (as defined in the 1940 Act), or by USAA Life on 60 days' written notice to the other party, subject to subparagraph (c) below with respect to Maximum Expenses. This Agreement shall automatically terminate upon its assignment by USAA Life; provided, however, that USAA Life may delegate its duties as provided in subparagraph (j) of paragraph 2 hereof. (c) Amendment. This agreement may be amended at any time by mutual agreement in writing of the parties hereto, provided that any such amendment is approved by a majority of the Trustees of the Trust who are not interested persons. Notwithstanding the foregoing, no change (including termination of this Agreement) to the Maximum Expenses set forth in Exhibit A shall take effect until the then current Maximum Expense has been in effect for at least one year and the Trust has received advance notice as required by subparagraph (b) above. 9. PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes any prior agreement relating to the subject matter hereof between the parties. 10. SERVICES NOT EXCLUSIVE. The services of USAA Life to the Trust hereunder are not to be deemed exclusive, and USAA Life shall be free to render similar services to others so long as its services hereunder are not impaired thereby. 11. GOVERNING LAW This Agreement shall be construed in accordance with the laws of the State of Texas and the applicable provisions of the 1940 Act. To the extent the applicable law of the State of Texas, or any of the provisions herein, conflict with the applicable provisions of the 1940 Act, the latter shall control. 12. ENTIRE AGREEMENT. This is the complete and entire agreement as represented herein. 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above. USSA LIFE INVESTMENT TRUST USAA LIFE INSURANCE COMPANY By: /s/ Christopher W. Claus By: /s/ James M. Middleton ---------------------------------- ------------------------------ Name: Christopher W. Claus Name: James M. Middleton Title: Senior Vice President Title: President 6 EXHIBIT A --------- LISTING OF FUNDS AND MAXIMUM EXPENSES -------------------------------------
Name of Fund Maximum Expense ------------ --------------- USAA Life Growth & Income 0.60% USAA Life Aggressive Growth 0.95% USAA Life World Growth 0.95% USAA Life Diversified Assets 0.75% USAA Life Income 0.65%
(a) For purposes of this Agreement, Maximum Expense is based on the total Fund expenses for all Fund operations and activities, including but not limited to the expenses allocated to the Trust under section 4 of this Agreement, investment advisory expenses, and the cost of administrative services provided under this Agreement. Maximum Expense is computed as a percentage of the average net assets of the Fund for each month at the rate set forth in this Exhibit. (b) The schedule of Maximum Expenses as set forth herein shall remain in full force and effect for the life of this Agreement. (c) The "average net assets" of the Fund for any month shall be equal to the quotient produced by dividing (i) the sum of the net assets of such Fund, determined in accordance with procedures established from time to time by or under the direction of the Board of Trustees of the Trust, for each calendar day of such month, by (ii) the number of such days. 7 EX-23 10 consent.txt EXHIBIT 8 KPMG [LOGO] 112 EAST PECAN, SUITE 2400 SAN ANTONIO, TX 78205-1585 CONSENT OF INDEPENDENT AUDITORS ------------------------------- The Board of Directors of USAA Life Insurance Company and Policyowners of the Life Insurance Separate Account of USAA Life Insurance Company: We consent to the use of our report included herein for the USAA Life Insurance Company and for the Life Insurance Separate Account of USAA Life Insurance Company and to the reference to our firm under the heading "Independent Auditors" in the Registration Statement. KPMG LLP San Antonio, Texas April 28, 2003 [LOGO] KPMG, LLP. KPMG, LLP a U.S. limited liability partnership, is a member of KPMG International, a Swiss association -----END PRIVACY-ENHANCED MESSAGE-----