-----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, UW7F56AzeioNRWam/Qy7+wM/jEvwhRGyyIHEf5Rw99ZJacWQhMmSuKMz8oprzaEH ehNO2hg8tDnZid6K8HxI7Q== 0001017062-01-500983.txt : 20020413 0001017062-01-500983.hdr.sgml : 20020413 ACCESSION NUMBER: 0001017062-01-500983 CONFORMED SUBMISSION TYPE: S-6/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20011227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE & ANNUI CENTRAL INDEX KEY: 0001074487 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-6/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-62446 FILM NUMBER: 1823972 BUSINESS ADDRESS: STREET 1: 700 NEWPORT CTR DR STREET 2: P O BOX 7500 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7146403326 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC SELECT EXEC SEPARATE ACCT OF PM GP LIFE INSURANCE CO DATE OF NAME CHANGE: 19981201 S-6/A 1 ds6a.txt PACIFIC LIFE SEP NY PRE-EFFECTIVE AMENDMENT As filed with the Securities and Exchange Commission on December 27, 2001 Registration No. 333-62446 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE & ANNUITY COMPANY (Exact Name of Registrant) PACIFIC LIFE & ANNUITY COMPANY (Name of Depositor) 700 Newport Center Drive P.O. Box 9000 Newport Beach, California 92660 (Address of Depositor's Principal Executive Office) (949)219-3743 (Depositor's Telephone Number, including Area Code) Diane N. Ledger Vice President Pacific Life Insurance Company 700 Newport Center Drive P.O. Box 9000 Newport Beach, California 92660 (Name and Address of Agent for Service of Process) Copies to: Jeffrey S. Puretz, Esq. Dechert 1775 Eye Street, N.W. Washington, D.C. 20006-2401 Title of securities being registered: interests in the Separate Account under Pacific Select Estate Preserver-NY Flexible Premium Variable Life Insurance Policies. Approximate date of proposed public offering: As soon as practicable after the effective date of the Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Filing fee: None Pacific Select Exec Separate Account of Pacific Life & Annuity Company RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B2 AND THE PROSPECTUS (PURSUANT TO INSTRUCTION 4 OF FORM S-6) CROSS-REFERENCE SHEET Pursuant to Rule 404(c) of Regulation C under the Securities Act of 1933 (Form N-8B-2 Items required by Instruction as to the Prospectus in Form S-6)
Form N-8B-2 Form S-6 Item Number Heading in Prospectus 1. (a) Name of trust............................... Prospectus front cover (b) Title of securities issued.................. Prospectus front cover 2. Name and address of each depositor............... Prospectus front cover; Back Cover 3. Name and address of trustee...................... N/A 4. Name and address of each principal underwriter... About PL&A 5. State of organization of trust................... Pacific Select Exec Separate Account 6. Execution and termination of trust agreement..... Pacific Select Exec Separate Account 7. Changes of name.................................. N/A 8. Fiscal year...................................... N/A 9. Material Litigation.............................. N/A II. General Description of the Trust and Securities of the Trust 10. (a) Registered or bearer securities............. Pacific Select Estate Preserver-NY basics; The death benefit (b) Cumulative or distributive
securities................................ Pacific Select Estate Preserver-NY basics; The death benefit (c) Withdrawal or redemption......... Withdrawals, surrenders and loans (d) Conversion, transfer, etc........ Withdrawals, surrenders and loans (e) Periodic payment plan............ N/A (f) Voting rights.................... Voting Rights (g) Notice to security holders....... Reports we'll send you (h) Consents required................ Voting Rights (i) Other provisions................. N/A 11. Type of securities comprising units................................. Pacific Select Estate Preserver-NY basics 12. Certain information regarding periodic payment plan certificates.... N/A 13. (a) Load, fees, expenses, etc......... Deductions from your premiums; Surrendering your policy (b) Certain information regarding periodic payment plan certificates.... N/A (c) Certain percentages................... Deductions from your premiums; Surrendering your policy (d) Difference in price................... N/A (e) Certain other fees, etc............... Deductions from your premiums; Surrendering your policy (f) Certain other profits or benefits.............................. The death benefit; Your policy's accumulated value (g) Ratio of annual charges to income................................ N/A 14. Issuance of trust's securities........ Pacific Select Exec Estate Preserver-NY basics
15. Receipt and handling of payments From purchasers..................... How premiums work 16. Acquisition and disposition of Your policy's accumulated underlying securities............... value: Your investment options 17. Withdrawal or redemption............ Withdrawals, surrenders and loans 18. (a) Receipt, custody and disposition of income....................... Your policy's accumulated value (b) Reinvestment of distributions... N/A (c) Reserves or special funds....... N/A (d) Schedule of distributions....... N/A 19. Records, accounts and reports....... Statements and Reports 20. Certain miscellaneous provisions of trust agreement: (a) Amendment....................... N/A (b) Termination..................... N/A (c) and (d) Trustees, removal and successor....................... N/A (e) and (f) Depositors, removal and successor................... N/A 21. Loans to security holders........... Withdrawals, surrenders and loans 22. Limitations on liability............ N/A 23. Bonding arrangements................ N/A 24. Other material provisions of trust agreement..................... N/A
III. Organizations, Personnel and Affiliated Persons of Depositor 25. Organization of depositor...................................................... About PL&A 26. Fees received by depositor..................................................... See Items 13(a) and 13(e) 27. Business of depositor.......................................................... About PL&A 28. Certain information as to officials and affiliated persons of depositor........ About PL&A 29. Voting securities of depositor................................................. N/A 30. Persons controlling depositor.................................................. N/A 31. Payments by depositor for certain services rendered to trust................... N/A 32. Payments by depositor for certain other services rendered to trust............. N/A 33. Remuneration of employees of depositor for certain services rendered to trust.. N/A 34. Remuneration of other persons for certain services rendered to trust........... N/A IV. Distribution and Redemption of Securities 35. Distribution of trust's securities by states................................... N/A 36. Suspension of sales of trust's securities...................................... N/A 37. Revocation of authority to distribute.......................................... N/A
38. (a) Method of distribution.......................................... How policies are distributed (b) Underwriting agreements......................................... How policies are distributed (c) Selling agreements.............................................. How policies are distributed 39. (a) Organization of principal underwriters.......................... How policies are distributed (b) N.A.S.D. membership of principal underwriters................... How policies are distributed 40. Certain fees received by principal underwriters...................... How policies are distributed 41. (a) Business of each principal underwriter.......................... How policies are distributed (b) Branch offices of each principal underwriter.................... N/A (c) Salesmen of each principal underwriter.......................... N/A 42. Ownership of trust's securities by certain persons................... N/A 43. Certain brokerage commissions received by principal underwriters..... N/A 44. (a) Method of valuation............................................. Your policy's accumulated value (b) Schedule as to offering price................................... How premiums work (c) Variation in offering price to certain persons.................. Monthly deductions 45. Suspension of redemption rights...................................... Timing of payments, forms, and requests
46. (a) Redemption valuation................................................... Withdrawals, surrenders and loans (b) Schedule as to redemption price........................................ Withdrawals, surrenders and loans 47. Maintenance of position in underlying securities............................ Your investment options V. Information Concerning the Trustee or Custodian 48. Organization and regulation of trustee...................................... N/A 49. Fees and expenses of trustees............................................... N/A 50. Trustee's lien.............................................................. N/A VI. Information Concerning Insurance of Holders of Securities 51. Insurance of holders of trust's securities.................................. The death benefit VII. Policy of Registrant 52. (a) Provisions of trust agreement with respect to selection or elimination of under lying securities............................... How our accounts work (b) Transactions involving elimination of underlying securities............ How our accounts work (c) Policy regarding substitution or elimination of underlying securities.. How our accounts work (d) Fundamental policy not otherwise covered............................... N/A 53. Tax status of trust......................................................... Variable life insurance and your taxes VIII. Financial and Statistical Information
54. Trust's securities during last ten years.......... N/A 55. N/A 56. Certain information regarding periodic payment plan certificates................................. N/A 57. N/A 58. N/A 59. Financial statements (Instruction 1(c) of "Instructions as to the Prospectus" of Form S-6).. Financial Statements
PACIFIC SELECT PROSPECTUS , 2001 ESTATE PRESERVER - NY Pacific Select Estate Preserver - NY is a last survivor flexible premium variable life insurance policy issued by Pacific Life & Annuity Company. This policy is not This prospectus provides information that you should available in all know before buying a policy. It's accompanied by a states. This current prospectus for the Pacific Select Fund, a fund prospectus is not that provides the underlying portfolios for the an offer in any variable investment options offered under the policy. state or Please read these prospectuses carefully and keep them jurisdiction where for future reference. we're not legally permitted to offer Here's a list of all of the investment options the policy. available under your policy: The policy is VARIABLE INVESTMENT OPTIONS described in detail in this prospectus. Blue Chip International Value The Pacific Select Fund is described Aggressive Growth Capital Opportunities in its prospectus and in its Emerging Markets Mid-Cap Growth Statement of Additional Diversified Research Global Growth Information (SAI). No one has the Small-Cap Equity Equity Index right to describe the policy or the International Large-Cap Small-Cap Index Pacific Select Fund any differently I-Net Tollkeeper SM REIT than they have been described in these Financial Services Inflation Managed documents. (formerly called Health Sciences "Government Securities") You should be aware that the Securities Technology Managed Bond and Exchange Commission (SEC) Telecommunications Money Market has not reviewed the policy for its Multi-Strategy High Yield Bond investment merit, and does not Large-Cap Core Equity Income guarantee that the (formerly called information in this "Equity Income") Research prospectus is accurate or Strategic Value Equity complete. It's a criminal offense Growth LT Aggressive Equity to say otherwise. Focused 30 Large-Cap Value Mid-Cap Value FIXED OPTIONS Fixed Account Fixed LT Account YOUR GUIDE TO THIS PROSPECTUS An overview of Pacific Select Estate Preserver - NY 4 - ---------------------------------------------------------------------- Pacific Select Estate Preserver - NY basics 12 Owners, people insured by the policy, and beneficiaries 13 Policy date, monthly payment date, policy anniversary date 14 Statements and reports we'll send you 15 Your right to cancel 15 Timing of payments, forms and requests 16 Telephone and electronic transactions 17 - ---------------------------------------------------------------------- The death benefit 18 Choosing your death benefit option 18 The guideline minimum death benefit 19 When we pay the death benefit 19 Comparing the death benefit options 20 Changing your death benefit option 20 Decreasing the face amount 21 Optional riders 21 - ---------------------------------------------------------------------- How premiums work 22 Planned periodic premium payments 22 Paying your premium 23 Deductions from your premiums 23 Allocating your premiums 24 Limits on the premium payments you can make 24 - ---------------------------------------------------------------------- Your policy's accumulated value 26 Calculating your policy's accumulated value 26 Persistency credit 26 Monthly deductions 27 Lapsing and reinstatement 29 - ---------------------------------------------------------------------- Your investment options 31 Variable investment options 31 Fixed options 36 Transferring among investment options 36 Transfer programs 37 - ---------------------------------------------------------------------- Withdrawals, surrenders and loans 39 Making withdrawals 39 Taking out a loan 40 Ways to use your policy's loan and withdrawal features 41 Automated income option 42 Surrendering your policy 44 Policy restoration 45 - ---------------------------------------------------------------------- General information about your policy 46 - ---------------------------------------------------------------------- Variable life insurance and your taxes 49 - ---------------------------------------------------------------------- About PL&A 53 - ---------------------------------------------------------------------- Appendices 113 Appendix A: Joint equal age 113 Appendix B: Rates per $1,000 of initial face amount 114 Appendix C: Death benefit percentages 115 Appendix D: Death benefit factor table 116 - ---------------------------------------------------------------------- Where to go for more information back cover
2 Terms used in this prospectus We've tried to make this prospectus easy to read and understand, but you may find some words and terms that are new to you. We've identified some of these below and the pages where you'll find an explanation of what they mean. If you have any questions, please ask your registered representative or call us at 1-888-595-6997. Accumulated value 26 Joint owners 13 Accumulation units 34 Lapse 29 Age 13 Loan account 40 In this prospectus, Allocation 23 Modified endowment contract 49 you and your mean Assignment 48 Monthly payment date 14 the policy holder Beneficiary 14 Net amount at risk 20 or owner. PL&A, we, Business day 16 Net cash surrender value 44 us and our refer to Cash surrender value 44 Net premium 22 Pacific Life & Contingent beneficiary 14 Outstanding loan amount 40 Annuity Company. Cost of insurance rate 27 Planned periodic premium 22 The fund refers to Death benefit 18 Policy anniversary 14 Pacific Select Death benefit factor 19 Policy date 14 Fund. Policy means Death benefit percentage 19 Policy year 14 a Pacific Select Face amount 18 Portfolio 31 Estate Preserver - Fixed account 36 Proper form 16 NY variable life Fixed LT account 36 Reinstatement 29 insurance policy, Fixed options 36 Riders 21 unless we state General account 54 Sales surrender target 44 otherwise. Guideline minimum death benefit 19 Separate account 54 Guideline premium limit 24 Seven-pay limit 51 Illustration 15 Tax code 49 In force 12 Unit value 34 Income benefit 46 Variable account 31 Income period 43 Variable investment option 31 Joint equal age 28
3 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY This overview tells you some key things you should know about your policy. It's designed as a summary only - please read the entire prospectus and your policy for more detailed information. Some states have different rules about how life insurance policies are described or administered. The terms of your policy, or of any endorsement or rider, prevail over what's in this prospectus. --------------------------------------------------------- Pacific Select Pacific Select Estate Preserver - NY is a last survivor Estate Preserver - flexible premium variable life insurance policy. NY basics . Last survivor means the policy insures the lives of Last survivor life two people and provides a death benefit that's insurance may be payable after both people have died. appropriate for two spouses who want to . Flexible premium means you can vary the amount and provide a death frequency of your premium payments. benefit for their children. . Variable means the policy's value depends on the performance of the investment options you choose. This may not be the right kind of . Life insurance means the policy provides a death policy for someone benefit to the beneficiary you choose. who wants to provide a death In addition to providing a death benefit that is benefit for his or generally free of federal income tax, any growth in her spouse. In that your policy's accumulated value is tax-deferred. You case, a policy that can choose from 33 variable investment options, each of insures a single which invests in a corresponding portfolio of the life may be more Pacific Select Fund, and from two fixed options, both appropriate. of which provide a guaranteed minimum rate of interest. Please discuss your You may choose to allocate net premium and accumulated insurance needs and value to no more than 20 investment options at any one financial time. objectives with your registered Pacific Select Estate Preserver - NY is designed for representative. long-term financial planning. Please take some time to read the information in this prospectus before you You'll find more decide if this life insurance policy meets your about the basics insurance needs and financial objectives. of Pacific Select Estate Preserver - Your right to cancel NY starting on During the free look period, you have the right to page 12. cancel your policy and return it to us or your registered representative for a refund. We'll refund the amount of your premium payments. We'll hold the net premiums in the Money Market investment option until the free look transfer date. 4 --------------------------------------------------------- The death benefit You can choose one of four death benefit options depending on what is more important to you: a larger Your policy death benefit or building the accumulated value of your provides a death policy. benefit for your beneficiary after You can change your death benefit option and reduce both of the people your policy's face amount (with certain restrictions) insured by the while your policy is in force. policy have died, as long as your Optional riders policy is in force. There are three optional riders that provide extra You'll find more benefits, some at additional cost. Not all riders are about the death available in every state, and some riders may only be benefit starting on added when you apply for your policy. page 18. --------------------------------------------------------- How premiums work Deductions from your premiums We deduct a premium load from each premium payment you Your policy gives make. The premium load is made up of a sales load, a you the flexibility state and local tax charge, and a federal tax charge. to choose the amount and Limits on the premium payments you can make frequency of your Federal tax law puts limits on the premium payments you premium payments, can make in relation to your policy's death benefit. We within certain may refuse all or part of a premium payment you make, limits. Each or remove all or part of a premium from your policy and premium payment return it to you under certain circumstances. must be at least $50. You'll find more about how premiums work starting on page 22. --------------------------------------------------------- Your policy's Accumulated value is the value of your policy on any accumulated value business day. It is not guaranteed - it depends on the performance of the investment options you've chosen, Accumulated value the premium payments you've made, policy charges, and is used as the how much you've borrowed or withdrawn from the policy. basis for determining policy Monthly deductions benefits and We deduct a monthly charge from your policy's charges. If there accumulated value on each monthly payment date. The is not enough charge is made up of cost of insurance, an accumulated value administrative charge, and a mortality and expense risk to cover policy charge. If you add any riders, we'll add any charges charges, your for them to your monthly charge. policy could lapse. Lapsing and reinstatement You'll find more If there is not enough accumulated value to cover the about accumulated monthly charge on the day we make the deduction, your value starting on policy may lapse - which means you'll no longer have page 26. any insurance coverage. If your policy is in danger of lapsing, we'll give you a grace period of 61 days to pay the required premium. If your policy lapses at the end of the grace period, you have five years from the day it lapses to apply for a reinstatement. 5 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY --------------------------------------------------------- Your investment You can choose from 33 variable investment options, options each of which invests in a corresponding portfolio of the Pacific Select Fund. Pacific Life is the investment The investment adviser for the Pacific Select Fund. It oversees the options you choose management of all the fund's portfolios and manages two will affect your of the portfolios directly. It has retained other policy's portfolio managers to manage the other portfolios. The accumulated value, value of each portfolio will fluctuate with the value and may affect the of the investments it holds, and returns are not death benefit. guaranteed. Your policy's You can also choose from two fixed options, the Fixed accumulated value account and the Fixed LT account, both of which provide may be allocated to a guaranteed minimum annual interest rate of 3% during up to 20 investment the first 10 policy years, 3.6% during policy years 11 options at any one through 20, and 3.85% during policy year 21 and time. thereafter. We may offer a higher interest rate. If we do, we'll guarantee that rate for one year. Please review the investment options We allocate your premium payments and accumulated value carefully and ask to the investment options you choose. Your policy's your registered accumulated value will fluctuate depending on the representative to investment options you've chosen. You bear the help you choose the investment risk of any variable investment options you right ones for your choose. goals and risk tolerance. We'll hold your premium payments in the Money Market investment option until the free look transfer date. You'll find more Please turn to Your right to cancel for details. about the investment options Transferring among investment options starting on page You can transfer among the investment options during 31. the life of your policy without paying any current income tax. There is currently no charge for transfers. You can make as many transfers as you like between variable investment options. You can also make automatic transfers from one variable investment option to another using our dollar cost averaging or portfolio rebalancing program. These programs are not available for the fixed options. You can only make one transfer from each fixed option in any 12-month period. For the Fixed account, each transfer may be no more than $5,000 or 25% of the accumulated value in the Fixed account, whichever is greater. For the Fixed LT account, each transfer may be no more than $5,000 or 10% of the accumulated value in the Fixed LT account, whichever is greater. You can only transfer to the fixed options in the policy month right before each policy anniversary. We reserve the right, in our sole discretion, to waive the transfer restrictions on the fixed options. The restrictions for transfers from the Fixed LT account are temporarily waived during the first policy year. You will be permitted to transfer any amount out of the Fixed LT account at any time during the first twelve policy months. We reserve the right to discontinue this waiver at any time. However, if the waiver is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. You'll find out You can also make automatic transfers from the Fixed more about our account to other investment options during the first automatic transfer policy year using our first year transfer program. programs starting on page 37. 6 --------------------------------------------------------- Withdrawals, You can take out all or part of your policy's surrenders and accumulated value while your policy is in force by loans making withdrawals or surrendering your policy. You can take out a loan from us using your policy as security. Making a You can also use your policy's loan and withdrawal withdrawal, taking features to supplement your income, for example, during out a loan or retirement. surrendering your policy can change Making withdrawals your policy's tax You can withdraw part of your policy's net cash status, generate surrender value starting on your policy's first taxable income, or anniversary. This reduces your policy's accumulated make your policy value and could affect the face amount and death more susceptible to benefit. lapsing. Be sure to plan carefully Taking out a loan before using these policy benefits. You can take out a loan from us using your policy's accumulated value as security. You pay interest on the You'll find more amount you borrow at an annual rate of 4.1%. The about withdrawals, accumulated value used to secure your loan is set aside surrenders and in a loan account, where it earns interest at an annual loans starting on rate of 3.1% during the first 10 policy years, 3.7% page 39. during policy years 11 through 20, and at least 3.85% during policy year 21 and thereafter. The amount in the loan account is not available to help pay for any policy charges. Taking out a loan affects the accumulated value of your policy because the amount set aside in the loan account misses out on the potential earnings available through the investment options. Surrendering your policy You can surrender or cash in your policy for its net cash surrender value while either of the two people insured by the policy is still living. If you surrender your policy during the first 10 policy years, we'll apply a surrender charge. --------------------------------------------------------- Variable life Your beneficiary generally will not have to pay federal insurance and your income tax on death benefit proceeds. You'll also taxes generally not be taxed on any or all of your policy's accumulated value unless you receive a cash There are tax distribution by making a withdrawal or surrendering issues to consider your policy. when you own a life insurance policy. If your policy is a modified endowment contract, all These are described distributions you receive during the life of the policy in detail starting may be subject to tax and a 10% penalty. on page 49. --------------------------------------------------------- About PL&A PL&A is a life insurance company based in Arizona. We issue the policies. Pacific Select Distributors, Inc., When you buy a life our affiliate, is the distributor of the policies. insurance policy, you're relying on How our accounts work the insurance We put your premium payments in our general and company that issues separate accounts. We own the assets in our accounts it to be able to and make the allocations to the investment options meet its financial you've chosen. obligations to you. Amounts allocated to the fixed options are held in our You'll find more general account. Our general account includes all of about PL&A, and our our assets, except for those held in our separate strength as a accounts. Our ability to meet our obligations under the company, starting policy is backed by our strength as an insurance on page 53. company. We may use any Amounts allocated to the variable investment options profit derived from are held in our separate account. The assets in this any charges under account are kept separate from the assets in our the policy for any general account and our other separate accounts, and lawful purpose, are protected from our general creditors. including our distribution and administrative expenses. 7
AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY This section of the overview explains the fees and expenses associated with your Pacific Select Estate Preserver - NY Policy. ------------------------------------------------------------------------------------- Understanding policy expenses and ----------------- cash flow Your premium The chart to the right illustrates how cash You make a ----------------------------------------------------- normally flows through a Pacific Select premium Estate Preserver - NY policy. payment v ----------------- The dark shaded boxes show the fees and ----------------- We deduct a expenses you pay directly or indirectly premium load under your policy. These are explained in ----------------- the pages that follow. Net premium In some states we'll hold your net premium We allocate the ----------------- payments in the Money Market investment net premium to option until the free look transfer date. the investment ----------------------------------------------------- Please turn to Your right to cancel for options you details. choose ----------------- v v ------------------- -------------------- ----------------- --------------------- Fixed options Variable Pacific Select The fund investment Fund deducts advisory We hold options fees and other amounts you ---- The variable --- fund expenses from allocate to these We hold investment the portfolios options in our amounts you options invest general account allocate to these in the fund's options in our portfolios separate account ------------------- -------------------- ----------------- --------------------- --------------------- We deduct: . cost of insurance . administrative We make monthly deductions charge -------------------------- . mortality and expense risk charge . rider charges v ------------------- -------------------- ----------------- --------------------- Loan account Accumulated We deduct a value withdrawal charge Accumulated If you make a withdrawal value set aside --- The total value ------------------------ to secure a of your policy policy loan ------------------- -------------------- --------------------- --------------------- We deduct a If you surrender your policy surrender charge during the first 10 policy years -------------------------------- ---------------------
8 --------------------------------------------------------- Deductions from We deduct a premium load from each premium payment you your premiums make. The load is made up of three charges: The premium load is Sales load - 0% of each premium payment during the explained in more first 10 policy years and 3% after the 10th policy detail on page 23. year. State and local tax charge - 2.35% of each premium payment. Federal tax charge - 1.50% of each premium payment. --------------------------------------------------------- Deductions from We deduct a monthly charge from your policy's your policy's accumulated value in the investment options on each accumulated value monthly payment date. This charge is made up of three charges: The monthly charge Cost of insurance - We calculate this charge by is explained in multiplying the current cost of insurance rate by a more detail discounted net amount at risk at the beginning of each starting on page policy month. When the younger of the two people 27. insured by the policy reaches age 100, the cost of insurance charge is zero -- in other words, you no An example longer pay any cost of insurance charge. For a policy with: Administrative charge - We deduct a charge of $7.50 a . a joint equal age month. When the younger of the two people insured by of 50 the policy reaches age 100, the administrative charge is zero -- in other words, you no longer pay any . a face amount of administrative charge. $100,000 Mortality and expense risk charge - The mortality and . accumulated expense risk charge varies depending on your policy's value of $60,000 face amount, and age and sex of both people insured by after deducting the policy on the policy date and accumulated value. any outstanding It's made up of two components: loan amount. . The face amount component, which we deduct every The maximum monthly month during the first 10 policy years at a rate that charge for the face is based on the age and sex of both people insured by amount component of the policy, and each $1,000 of the initial face the mortality and amount of your policy. expense risk charge is $15.20 . The accumulated value component, which we deduct (($100,000 / 1,000) X every month during the first 10 policy years at an 0.152). annual rate of 0.90% (0.075% monthly) of your policy's accumulated value in the investment options. The monthly charge During policy years 11 through 20, we reduce the for the accumulated annual rate to 0.30% (0.025% monthly) of the value component is accumulated value. During policy year 21 and $45 thereafter, we further reduce the annual rate to ($60,000 X 0.075%). 0.05% (0.0042% monthly) of the accumulated value. The charge in policy years 11 Riders - If you add any riders to your policy, we add through 20 would be any charges for them to your monthly charge. $15 ($60,000 X 0.025%) if the policy's accumulated value was $60,000. The charge in policy year 21 (and thereafter) would be $2.52 ($60,000 X 0.0042%) if the policy's accumulated value was $60,000. The monthly charge for the face amount component of the mortality and expense risk charge will never exceed $0.64 per $1,000 of the initial face amount of your policy. Joint equal age is explained in Appendix A. The maximum rates for the face amount component are shown in Appendix B. 9 AN OVERVIEW OF PACIFIC SELECT ESTATE PRESERVER - NY --------------------------------------------------------- Withdrawal and You can withdraw part of your policy's net cash surrender charges surrender value at any time starting on your policy's first anniversary. There is a $25 charge for each withdrawal you make. We deduct this charge Withdrawal and proportionately from all of your investment options. surrender charges are explained in If you surrender or cash in your policy, or decrease more detail on its face amount, during the first 10 years of owning pages 39 and 44. the policy, we'll deduct a surrender charge. The surrender charge is made up of two components: An example . The underwriting surrender charge, which is assessed For a policy that at a rate that is based on the joint equal age and is surrendered at each $1,000 of the initial face amount of your the end of the policy. The amount of the charge does not change first policy year, during the first policy year. Starting on the first with: policy anniversary, we reduce the charge by 0.9259% a . a joint equal age month until it reaches zero at the end of 10 policy of 50 years. . an initial face amount of . The sales surrender charge, which, during the first $100,000. policy year, equals the smaller of the following amounts: The underwriting surrender charge is . 70% of the premium payments you've made, or $520. . 70% of the sales surrender target, which is based The maximum sales on the joint equal age of the people insured by the surrender target is policy for each $1,000 of a policy's initial face $1,236. The maximum amount. sales surrender charge is $865.20. The sales surrender charge increases until the premiums you pay reach the sales surrender target. In the 13th The most we will month you own your policy, we reduce the sales assess for the surrender charge so that it is 99.0741% of the charge underwriting as calculated above. After that, we reduce it by surrender charge on 0.9259% a month until it reaches zero at the end of 10 any surrendered policy years. policy is $17.30 per $1,000 of face amount. The underwriting surrender charge and sales surrender target rates appear in Appendix B. --------------------------------------------------------- Transfer charges Currently, there is no charge for making a transfer among your investment options, but in the future we may charge you $25 per transfer in excess of 12 transfers per year. --------------------------------------------------------- Fees and expenses The Pacific Select Fund pays advisory fees and other paid by the expenses. These are deducted from the assets of the Pacific Select Fund fund's portfolios and may vary from year to year. They are not fixed and are not part of the terms of your You'll find more policy. If you choose a variable investment option, about the Pacific these fees and expenses affect you indirectly because Select Fund they reduce portfolio returns. starting on page 31, and in the Advisory fee fund's prospectus, Pacific Life is the investment adviser to the fund. The which accompanies fund pays an advisory fee to us for these services. The this prospectus. table below shows the advisory fee as a annual percentage of each portfolio's average daily net assets. 10 Other expenses The table below shows the advisory fee and fund expenses as an annual percentage of each portfolio's average daily net assets, based on the year 2000 unless otherwise noted. To help limit fund expenses, effective July 1, 2000 Pacific Life contractually agreed to waive all or part of its investment advisory fees or otherwise reimburse each portfolio for operating expenses (including organizational expenses, but not including advisory fees, additional costs associated with foreign investing and extraordinary expenses) that exceed an annual rate of 0.10% of its average daily net assets. Such waiver or reimbursement is subject to repayment to Pacific Life to the extent such expenses fall below the 0.10% expense cap. Any amounts repaid to Pacific Life will have the effect of increasing such expenses of the portfolio, but not above the 0.10% expense cap. For each portfolio, Pacific Life's right to repayment of amounts waived and/or reimbursed is limited to amounts that do not cause such expenses to exceed the new 0.10% expense cap. There is no guarantee that Pacific Life will continue to cap expenses after December 31, 2002. In 2000, Pacific Life reimbursed approximately $13,202 to the I-Net Tollkeeper Portfolio, $36,311 to the Strategic Value Portfolio, $34,134 to the Focused 30 Portfolio and $27,505 to the Small-Cap Index Portfolio.
---------------------------------------------------------------------------------------- Advisory Other 12b-1 Total Less adviser's Total net Portfolio fee expenses amounts+ expenses reimbursement expenses ---------------------------------------------------------------------------------------- As an annual % of average daily net assets Blue Chip/1/ 0.95 0.06 -- 1.01 -- 1.01 Aggressive Growth/1/ 1.00 0.06 -- 1.06 -- 1.06 Emerging Markets/2/ 1.10 0.21 -- 1.31 -- 1.31 Diversified Research/2/ 0.90 0.08 0.01 0.99 -- 0.99 Small-Cap Equity/2/ 0.65 0.05 -- 0.70 -- 0.70 International Large-Cap 1.05 0.12 -- 1.17 -- 1.17 I-Net Tollkeeper/2/,/3/ 1.40 0.13 -- 1.53 (0.02) 1.51 Financial Services/1/ 1.10 0.15 -- 1.25 (0.05) 1.20 Health Sciences/1/ 1.10 0.11 -- 1.21 (0.01) 1.20 Technology/1/ 1.10 0.08 -- 1.18 -- 1.18 Telecommunications/1/ 1.10 0.08 -- 1.18 -- 1.18 Multi-Strategy 0.65 0.04 -- 0.69 -- 0.69 Large-Cap Core/2/ 0.65 0.04 0.01 0.70 -- 0.70 (formerly Equity Income) Strategic Value 0.95 0.49 -- 1.44 (0.39) 1.05 Growth LT 0.75 0.04 -- 0.79 -- 0.79 Focused 30 0.95 0.42 -- 1.37 (0.32) 1.05 Mid-Cap Value/2/ 0.85 0.03 0.10 0.98 -- 0.98 International Value 0.85 0.11 -- 0.96 -- 0.96 Capital Opportunities/1/ 0.80 0.06 -- 0.86 -- 0.86 Mid-Cap Growth/1/ 0.90 0.06 -- 0.96 -- 0.96 Global Growth/1/ 1.10 0.19 -- 1.29 -- 1.29 Equity Index 0.25 0.04 -- 0.29 -- 0.29 Small-Cap Index/2/ 0.50 0.13 -- 0.63 (0.02) 0.61 REIT 1.10 0.04 -- 1.14 -- 1.14 Inflation Managed/2/ 0.60 0.05 -- 0.65 -- 0.65 Managed Bond/2/ 0.60 0.05 -- 0.65 -- 0.65 Money Market 0.34 0.04 -- 0.38 -- 0.38 High Yield Bond/2/ 0.60 0.05 -- 0.65 -- 0.65 Equity Income/1/ 0.95 0.15 -- 1.10 (0.05) 1.05 Research/1/ 1.00 0.12 -- 1.12 (0.02) 1.10 Equity 0.65 0.04 -- 0.69 -- 0.69 Aggressive Equity/2/ 0.80 0.04 0.02 0.86 -- 0.86 Large-Cap Value/2/ 0.85 0.05 0.05 0.95 -- 0.95 ------------------------------------------------------------------------------------------
/1/ Expenses are estimated. There were no actual advisory fees or expenses for these portfolios in 2000 because the portfolios started after December 31, 2000. /2/ Total adjusted net expenses for these portfolios, after deduction of an offset for custodian credits and the 12b-1 recapture were: 1.30% for Emerging Markets Portfolio, 0.98% for Diversified Research Portfolio, 0.69% for Small-Cap Equity Portfolio, 1.50% for I-Net Tollkeeper Portfolio (adjusted for the reduced advisory fee rate/3/), 0.69% for Large-Cap Core Portfolio, 0.88% for Mid-Cap Value Portfolio, 0.60% for Small-Cap Index Portfolio, 0.62% for Inflation Managed Portfolio, 0.64% for Managed Bond Portfolio, 0.64% for High Yield Bond Portfolio, 0.84% for Aggressive Equity Portfolio and 0.90% for Large-Cap Value Portfolio. /3/ Effective January 1, 2002, advisory fee is reduced from the annual rate of 1.50% of average daily net assets to 1.40%. + The fund has a brokerage enhancement 12b-1 plan under which brokerage transactions, subject to best price and execution, may be placed with certain broker- dealers in return for credits, cash or other compensation ("recaptured commissions"). While a portfolio pays the cost of brokerage when it buys or sells a portfolio security, there are no fees or charges to the fund under the plan. Recaptured commissions may be used to promote and market fund shares and the distributor may therefore defray expenses for distribution that it might otherwise incur. The SEC staff requires that the amount of recaptured commissions be shown as an expense in the chart above. 11 PACIFIC SELECT ESTATE PRESERVER - NY BASICS When you buy a Pacific Select Estate Preserver - NY life insurance policy, you're entering into a contract with Pacific Life & Annuity Company. Your contract with us is made up of your application, your policy, applications to change or reinstate the policy, any amendments, riders or endorsements to your policy, and specification pages. Policy amendments When we approve your signed application, we'll issue and endorsements your policy. If your application does not meet our are a part of your underwriting and administrative requirements, we can policy and confirm reject it or ask you for more information. Once we changes you or we receive your first premium payment, and any contractual make to the policy. and administrative requirements have been met, we'll consider your policy to be in force. Our obligations Specification pages under the policy begin when the policy is in force and summarize has been delivered to you. information specific to your Your policy will be in force until one of the following policy at the time happens: the policy is . both people insured by the policy die issued. . the grace period expires and your policy lapses, or . you surrender your policy. Riders provide If your policy is not in force when both people insured extra benefits, by the policy die, we are not obligated to pay the some at additional death benefit proceeds to your beneficiary. cost. Not all riders are Pacific Select Estate Preserver - NY is a last survivor available in every flexible premium variable life insurance policy that state and some insures the lives of two people and pays death benefit riders may only be proceeds after both people have died. added when you apply for your Under a flexible premium life insurance policy, you policy. have the flexibility to choose the amount and frequency of your premium payments. You must, however, pay enough Last survivor life premiums to cover the ongoing cost of policy benefits. insurance may be appropriate for two A premium load is deducted from each premium payment spouses who want to you make. The resulting net premium is allocated to the provide a death investment options you choose, and becomes part of your benefit for their policy's accumulated value. children. Charges are deducted from the accumulated value each This may not be the month to help cover the cost of the policy's death right kind of benefit and other expenses. If there is not enough policy for someone accumulated value to cover the monthly charge on the who wants to day we make the deduction, your policy may lapse after provide a death a grace period - which means you'll no longer have any benefit for his or insurance coverage. her spouse. In that case, a policy that Investment earnings will increase your policy's insures a single accumulated value, while investment losses will life may be more decrease it. The premium payments you'll be required to appropriate. make to keep your policy in force will be influenced by the investment results of the investment options you've Please discuss your chosen. insurance needs and financial objectives with your registered representative. We'll hold your net premium payments in the Money Market investment option until the free look transfer date. Please turn to Your right to cancel for details. 12 --------------------------------------------------------- Owners, people Owners insured by the The owner is the person named on the application who policy, and makes the decisions about the policy and its benefits beneficiaries while it's in force. You can own a policy by yourself or with someone else. Two or more owners are called joint owners. You need the signatures of all owners for Please consult your all policy transactions. financial advisor or a lawyer about If one of the joint owners dies, the surviving owners designating will hold all rights under the policy. If the last ownership joint owner dies, his or her estate will own the policy interests. unless you've given us other instructions. A policy can also be owned by an institution, trust, corporation or group or sponsored arrangement. These If you would like owners often buy more than one policy, which may to change the owner qualify them for reduced charges or lower premium of your policy, payments. please contact us or your registered We may reduce or waive the sales load or surrender representative for charges on policies sold to our directors or employees, a change of owner to any of our affiliates, or to trustees, employees or form. We can affiliates of the fund. process the change only if we receive You can change the owner of your policy by completing a your instructions change of owner form. Once we've received and recorded in writing. your request, the change will be effective as of the day you signed the change of owner form. People insured by the policy This policy insures the lives of two people who are between the ages of 20 and 85 at the time you apply for your policy, and who have given us satisfactory evidence of insurability. Your policy refers to these people as the insureds. The policy pays death benefit proceeds after both of these people have died. Risk classes are Each person to be insured by the policy is assigned an usually based on underwriting or insurance risk class which we use to age, gender, health calculate cost of insurance and other charges. We and whether or not normally use the medical or paramedical underwriting the person to be method to assign underwriting or insurance risk insured by the classes, which may require a medical examination. We policy smokes. Most may, however, use other forms of underwriting if we insurance companies think it's appropriate. use similar risk classification criteria. When we refer to When we use a person's age in policy calculations, we age throughout this generally use his or her age as of the nearest policy prospectus, we're date, and we add one year to this age on each policy using the word as anniversary date. For example, when we talk about we've defined it someone "reaching age 100", we're referring to the here, unless we policy anniversary date closest to that person's 100th tell you otherwise. birthday, not to the day when he or she actually turns 100. 13 PACIFIC SELECT ESTATE PRESERVER - NY BASICS Beneficiaries The beneficiary is the person, people, entity or If you would like entities you name to receive the death benefit to change the proceeds. Here are some things you need to know about beneficiary of your naming beneficiaries: policy, please contact us or your . You can name one or more primary beneficiaries who registered each receive an equal share of the death benefit representative for proceeds unless you tell us otherwise. If one a change of beneficiary dies, his or her share will pass to the beneficiary form. surviving primary beneficiaries in proportion to the We can process the share of the proceeds they're entitled to receive, change only if we unless you tell us otherwise. receive your instructions in . You can also name a contingent beneficiary for each writing. primary beneficiary you name. The contingent beneficiary will receive the death benefit proceeds if the primary beneficiary dies. . You can choose to make your beneficiary permanent (sometimes called irrevocable). You cannot change a permanent beneficiary's rights under the policy without his or her permission. . If none of your beneficiaries is still living when the death benefit proceeds are payable, you as the policy owner will receive the proceeds. If you're no longer living, the proceeds will go to your estate. . You can change your beneficiary at any time while either person insured by the policy is still living, and while the policy is in force. The change will be effective as of the day you signed the change of beneficiary form. --------------------------------------------------------- Policy date, Your policy date monthly payment This is usually the day we approve your policy date, policy application. It's also the beginning of your first anniversary date policy year. Your policy's monthly, quarterly, semi- annual and annual anniversary dates are based on your policy date. The policy date is set so that it never falls on the 29th, 30th or 31st of any month. We'll apply your first premium payment as of your policy date or as of the day we receive your premium, whichever is later. Backdating your policy You can have your policy backdated up to six months, as long as we approve it. Backdating in some cases may lower your cost of insurance rates since these rates are based on the ages of the people insured by the policy. Your first premium payment must cover the premium load and monthly charges for the period between the backdated policy date and the day your policy is issued. Your monthly payment date This is the day we deduct the monthly charges from your policy's accumulated value. The first monthly payment date is your policy date, and it's the same day each month thereafter. Monthly charges are explained in the section called Your policy's accumulated value. Your policy anniversary date This is the same day as your policy date every year after we issue your policy. A policy year starts on your policy date and each anniversary date, and ends on the day before the next anniversary date. 14 --------------------------------------------------------- Statements and We send the following statements and reports to policy reports owners: we'll send you . a confirmation for many financial transactions, usually including premium payments and transfers, loans, loan repayments, withdrawals and surrenders. Monthly deductions and scheduled transactions made We can create under the dollar cost averaging and portfolio customized rebalancing programs are reported on your quarterly hypothetical policy statement. illustrations of benefits under your . a quarterly policy statement. The statement will tell policy based on you the accumulated value of your policy by different investment option, cash surrender value, the amount assumptions. of the death benefit, the policy's face amount, and any outstanding loan amount. It will also include a We'll send you one summary of all transactions that have taken place policy illustration since the last quarterly statement, as well as any free of charge each other information required by law. policy year if you ask for one. We . supplemental schedules of benefits and planned reserve the right periodic premiums. We'll send these to you if you to charge $25 for change your policy's face amount or change any of the additional policy's other benefits. illustrations. . financial statements, at least annually or as required by law, of the separate account and Pacific Select Fund, that include a listing of securities for each portfolio of the Pacific Select Fund. --------------------------------------------------------- Your right to During the free look period, once your policy is in cancel force you have the right to cancel (or refuse) your policy and return it to us or your registered Please call us or representative for a refund. your registered representative if The amount of your refund will be the amount of the you have questions premium payments you've made. We'll always deduct any about your right to outstanding loan amount from the amount we refund to cancel your policy. you. You'll find a complete description of the free look period that applies to your policy on the policy's cover sheet, or on a notice that accompanied your policy. The free look period ends 10 days after you receive your policy. If you are replacing another life insurance policy, your free look period ends 60 days after you receive your policy. If you cancel your policy during the free look period, we're required to refund the premium payments you've made. We'll hold the net premiums in the Money Market investment option until the free look transfer date. On that day, we'll transfer the accumulated value in the Money Market investment option to the investment options you've chosen. The free look transfer date is the latest of the following: . 10 days after we issue your policy . when we consider your policy to be in force. 15 PACIFIC SELECT ESTATE PRESERVER - NY BASICS --------------------------------------------------------- Timing of payments, Effective date forms and requests Once your policy is in force, the effective date of payments, forms and requests you send us is usually A business day, determined by the day and time we receive the item in called a valuation proper form at the mailing address that appears on the date in your back cover of this prospectus. policy, is any day that the New York Planned periodic premium payments, loan requests, Stock Exchange and transfer requests, loan payments or withdrawal or our life insurance surrender requests that we receive in proper form client services before 4:00 p.m. Eastern time on a business day will offices are open. normally be effective as of the end of that day, unless It usually ends at the transaction is scheduled to occur on another 4:00 p.m. Eastern business day. If we receive your payment or request on time. or after 4:00 p.m. Eastern time on a business day, your payment or request will be effective as of the end of The New York Stock the next business day. If a scheduled transaction falls Exchange is usually on a day that is not a business day, we'll process it closed on weekends as of the end of the next business day. and on the following days: Other forms, notices and requests are normally . New Year's Day, effective as of the next business day after we receive Martin Luther them in proper form, unless the transaction is King, Jr. Day, scheduled to occur on another business day. Change of President's Day, owner and beneficiary forms are effective as of the day Good Friday, you sign the change form, once we receive them in Memorial Day, proper form. July Fourth, Labor Day, Proper form Thanksgiving Day We'll process your requests once we receive all and Christmas letters, forms or other necessary documents, completed Day, and to our satisfaction. Proper form may require, among . the Friday before other things, a signature guarantee or some other proof New Year's Day, of authenticity. We do not generally require a July Fourth or signature guarantee, but we may ask for one if it Christmas Day if appears that your signature has changed, if the that holiday signature does not appear to be yours, if we have not falls on a received a properly completed application or Saturday confirmation of an application, or for other reasons to . the Monday protect you and us. following New Year's Day, July When we make payments and transfers Fourth or We'll normally send the proceeds of transfers, Christmas Day if withdrawals, loans, surrenders, exchanges and death that holiday benefit payments within seven days after the effective falls on a Sunday date of the request in proper form. We may delay unless unusual payments and transfers, or the calculation of payments business conditions and transfers based on the value in the variable exist, such as the investment options under unusual circumstances, for ending of a monthly example, if: or yearly accounting period. . the New York Stock Exchange closes on a day other than a regular holiday or weekend Our client services . an emergency exists as determined by the SEC, as a offices are also result of which the sale of securities is not usually closed on practicable, or it is not practicable to determine the following days: the value of a variable account's assets. . the Monday before New Year's Day, We may delay transfers and payments from the fixed July Fourth, or options, including the proceeds from withdrawals, Christmas Day, if surrenders and loans, for up to six months. We'll pay any of these interest at an annual rate of at least 3% on any holidays falls on withdrawals or surrender proceeds from the fixed a Tuesday options that we delay for 30 days or more. . the Tuesday before Christmas We pay interest at an annual rate of at least 3% on Day if that death benefit proceeds, calculated from the day the holiday falls on last surviving person insured by the policy dies to the a Wednesday day we pay the proceeds. . the Friday after New Year's Day, July Fourth or Christmas Day, if any of these holidays falls on a Thursday . the Friday after Thanksgiving. Call us or contact your registered representative if you have any questions about the proper form required for a request. To request payment of death benefit proceeds, send us proof of death and payment instructions. 16 --------------------------------------------------------- Telephone and You can make loans or transfers, and give us electronic instructions regarding the dollar cost averaging transactions program or portfolio rebalancing program, by telephone any time after the free look period as long as we have Please ask your your signed authorization form on file. registered representative for Certain registered representatives are able to give us more information instructions electronically if authorized by you. You regarding may appoint your registered representative to give us electronic instructions on your behalf by completing and filing a transactions. telephone and electronic authorization form with us. Here are some things you need to know about telephone and electronic transactions: . You must complete a telephone and electronic authorization form. . If your policy is jointly owned, all joint owners must sign the telephone and electronic authorization. We'll take instructions from any owner or anyone you appoint. . We may use any reasonable method to confirm that your telephone or electronic instructions are genuine. For example, we may ask you to provide personal identification or we may record all or part of the telephone conversation. We may refuse any transaction request made by telephone or electronically. We'll send you a written confirmation of each telephone and electronic transaction. Sometimes, you may not be able to make loans or transfers by telephone or electronically, for example, if our telephone lines or our website are busy because of unusual market activity or a significant economic or market change, or our telephone lines or the Internet are out of service during severe storms or other emergencies. In these cases, you can send your request to us in writing, or call us the next business day or when service has resumed. When you send us your telephone and electronic authorization form, you agree that: . we can accept and act upon instructions you or anyone you appoint give us over the telephone or electronically . neither we, the administrator, any of our affiliates, the Pacific Select Fund, or any director, trustee, officer, employee or agent of ours or theirs will be liable for any loss, damages, cost or expenses that result from transactions processed because of a request by telephone or submitted electronically that we believe to be genuine, as long as we have followed our own procedures . you bear the risk of any loss that arises from your right to make loans or transfers over the telephone or electronically. 17 THE DEATH BENEFIT We'll pay death benefit proceeds to your beneficiary after the last surviving person insured by the policy dies while the policy is still in force. Your beneficiary generally will not have to pay federal income tax on death benefit proceeds. This policy offers four death benefit options, Options Your policy's A, B, C and D. The option you choose will generally initial amount of depend on which is more important to you: a larger insurance coverage death benefit or building the accumulated value of your is its initial face policy. amount. We determine the face Here are some things you need to know about the death amount based on benefit: instructions provided in your . You choose your death benefit option on your policy application. application. The minimum face . If you do not choose a death benefit option, we'll amount when a assume you've chosen Option A. policy is issued is usually $100,000, . The death benefit will always be the greater of the but we may reduce death benefit under the option you choose or the this in some guideline minimum death benefit. circumstances. . The death benefit will never be lower than the face You'll find your amount of your policy if you've chosen Option A, B or policy's face D. Of course, the death benefit proceeds will always amount, which be reduced by any outstanding loan amount. includes any increases or . We'll pay the death benefit proceeds to your decreases, in the beneficiary when we receive proof of the deaths of specification pages both of the people insured by the policy. in your policy. . After the youngest person insured by the policy reaches age 100, the death benefit equals the accumulated value. --------------------------------------------------------- Choosing your death You can choose one of the following four options for benefit option the death benefit on your application. The graphs below help you compare the options using several hypothetical examples. Option A - the Option B - the face amount of face amount of your policy plus its accumulated your policy. value. [ILLUSTRATION [ILLUSTRATION APPEARS HERE] APPEARS HERE] The death benefit changes as your policy's accumulated value changes. The better your investment options perform, the larger the death benefit will be. Option C - the Option D - the face amount of face amount of your policy multiplied by a your policy plus death benefit factor. the total premiums you've paid minus any withdrawals or [ILLUSTRATION APPEARS HERE] distributions made. The death benefit gradually increases over time no matter how your investment options [ILLUSTRATION perform, as long as there is APPEARS HERE] enough accumulated value to keep your policy in force. The more premiums you pay and the less you withdraw, the larger the death benefit will be. 18 --------------------------------------------------------- How we calculate the death benefit for Option D If you choose Option D, we'll calculate the death benefit by multiplying the face amount by a death benefit factor. The death benefit factor is a number from 1.0 to 2.0. A factor of 1.0 means the death benefit equals the face amount. A factor of 2.0 means the death benefit is two times the face amount. The factor changes on each policy anniversary and is based on the joint equal age of the people insured by the policy and the number of completed policy years. Joint equal age is a calculation that blends the ages and insurance risks of the two people insured by the policy. Generally, the death benefit factor will reach the maximum of 2.0 when joint equal age plus the number of completed policy years is between 85 and 90. You'll find more information about how we calculate joint equal age in Appendix A. You'll find more information about the death benefit factor in Appendix D and in your policy. --------------------------------------------------------- The guideline The guideline minimum death benefit is the minimum minimum death death benefit needed for your policy to qualify as life benefit insurance under Section 7702 of the Internal Revenue Code. If the amount of the death benefit under the If your policy's option you choose is less than the guideline minimum death benefit is death benefit, we'll adjust your death benefit to equal equal to the the guideline minimum death benefit. guideline minimum death benefit, and We calculate the guideline minimum death benefit by the net amount at multiplying the accumulated value of your policy by a risk is more than death benefit percentage. This percentage is based on three times the the age of the younger person insured by the policy, death benefit on and will increase over time. You'll find a table of the policy date, we guideline minimum death benefit percentages in may reduce the Appendix C. death benefit by making withdrawals from your policy. We will not charge you our usual $25 withdrawal fee, but the withdrawals may be taxable. Please turn to Withdrawals, surrenders and loans for information about making withdrawals. --------------------------------------------------------- When we pay the We calculate the amount of the death benefit proceeds death benefit as of the end of the day the last surviving person insured by the policy dies. If that person dies on a Your beneficiary day that is not a business day, we calculate the can choose to proceeds as of the next business day. receive the death benefit proceeds in Your policy's beneficiary must send us proof that both a lump sum or use people insured by the policy died while the policy was it to buy an income in force, along with payment instructions. If both benefit. Please see people insured by the policy die at the same time, or the discussion if it's not clear who died first, we'll assume the about income younger of the two died first. benefits in General information about Death benefit proceeds equal the total of the death your policy. benefits provided by your policy and any riders you've added, minus any outstanding loan amount, minus any It is important overdue charges. that we have a current address for We'll pay interest at an annual rate of at least 3% on your beneficiary so the death benefit proceeds, calculated from the day the that we can pay last surviving person insured by the policy dies to the death benefit day we pay the proceeds. proceeds promptly. If we cannot pay the proceeds to your beneficiary within five years of the death of the last surviving person insured by the policy, we'll be required to pay them to the state. 19 THE DEATH BENEFIT --------------------------------------------------------- Comparing the death The tables below compare the death benefits provided by benefit options the policy's four death benefit options. The examples are intended only to show differences in death benefits and net amounts at risk. Accumulated value assumptions may not be realistic. Example A assumes These examples show that each death benefit option the following: provides a different level of protection. Keep in mind . the people that cost of insurance charges, which affect your insured by the policy's accumulated value, increase with the amount of policy are male the death benefit, as well as over time. The cost of and female non- insurance is charged at a rate per $1,000 of the smokers, each age discounted net amount at risk. As the net amount at 45 at the time risk increases, your cost of insurance increases. the policy was Accumulated value also varies depending on the issued performance of the investment options in your policy. . face amount is $1,000,000 . accumulated value at year 20 is $600,000 . total premiums paid into the policy at year 20 is $300,000 . the death benefit percentage for the guideline minimum death benefit is 120% . the death benefit factor for Option D at year 20 is 108.4% . the guideline minimum death benefit is $720,000 (accumulated value times a death benefit percentage factor of 120%)
------------------------------------------------------------------------------------------ Example A The death benefit is the larger of these two amounts ------------------------------- Death Death benefit Guideline Net amount at risk benefit How it's under minimum used for cost of option calculated the option death benefit insurance charge ------------------------------------------------------------------------------------------ Option A Face amount $1,000,000 $720,000 $397,540.10 Option B Face amount plus accumulated value $1,600,000 $720,000 $996,064.16 Option C Face amount plus premiums less distributions $1,300,000 $720,000 $696,802.13 Option D Face amount times death benefit factor $1,084,000 $720,000 $481,333.47 ------------------------------------------------------------------------------------------
Example B uses the same assumptions as Example A, but has an accumulated value of $1,400,000. Because accumulated value has increased, the guideline minimum death benefit is now $1,680,000 ($1,400,000 times a death benefit factor of 120%).
------------------------------------------------------------------------------------------ Example B The death benefit is the larger of these two amounts ------------------------------- Death Death benefit Guideline Net amount at risk benefit How it's under minimum used for cost of option calculated the option death benefit insurance charge ------------------------------------------------------------------------------------------ Option A Face amount $1,000,000 $1,680,000 $275,867.37 Option B Face amount plus accumulated value $2,400,000 $1,680,000 $994,096.24 Option C Face amount plus premiums less distributions $1,300,000 $1,680,000 $275,867.37 Option D Face amount times death benefit factor $1,084,000 $1,680,000 $275,867.37 ------------------------------------------------------------------------------------------
--------------------------------------------------------- Changing your death benefit option You can change the death benefit option of your policy. Here's how it works: We will not change . You can change the death benefit once in any policy your death benefit year. option if it means . You must send us your request in writing. your policy will be treated as a . You can only change to Option A or Option B. modified endowment . The change will become effective on the first monthly contract, unless payment date after we receive your request. If we you've told us in receive your request on a monthly payment date, we'll writing that this process it that day. would be acceptable . The face amount of your policy will change by the to you. Modified amount needed to make the death benefit under the new endowment contracts option equal the death benefit under the old option are discussed in just before the change. We will not let you change Variable life the death benefit if doing so means the face amount insurance and your of your policy will become less than $100,000. We may taxes. waive this minimum amount under certain circumstances. Net amount at risk . Changing the death benefit option can also affect the is the difference monthly cost of insurance charge since this charge between the death varies with the net amount at risk. benefit that would . The new death benefit option will be used in all be payable if both future calculations. people insured by the policy died, and the accumulated value of your policy. 20 --------------------------------------------------------- Decreasing the face You can decrease your policy's face amount starting on amount the first policy anniversary as long as we approve it. Here's how it works: Decreasing the face amount may affect . You can decrease the face amount as long as at least your policy's tax one of the people insured by the policy is still status. To ensure living. your policy . You can only decrease the face amount once in any continues to policy year. qualify as life . You must send us your request in writing while your insurance, we might policy is in force. be required to . The decrease will become effective on the first return part of your monthly payment date after we receive your request. premium payments to If we receive your request on a monthly payment date, you, or make we'll process it that day. distributions from . Decreasing the face amount can affect the monthly the accumulated cost of insurance charge since this charge varies value, which may be with the net amount at risk. taxable. . We can refuse your request to make the face amount less than $100,000. We can waive this minimum amount We will not in certain situations, such as group or sponsored decrease the face arrangements. amount if it means your policy will be If you decrease your face amount in the first 10 years treated as a of the policy, we'll deduct a surrender charge from modified endowment your policy's accumulated value. Please turn to contract, unless Withdrawals, surrenders and loans for information about you've told us in how we calculate surrender charges. writing that this would be acceptable to you. For more information, please see Variable life insurance and your taxes. --------------------------------------------------------- Optional riders There are three optional riders that provide extra We offer other benefits, some at additional cost. Not all riders are variable life available in every state, and some riders may only be insurance policies added when you apply for your policy. which provide insurance . Last survivor added protection benefit protection on the Provides level or varying term insurance on the two lives of two people people insured by the policy. or on the life of one person. The . Individual annual renewable term rider loads and charges Provides level or varying term insurance on either or on these policies both people insured by the policy. may be different. Combining a policy and a rider, . Policy split option rider however, may be more economical Splits the policy into two individual policies with than adding another evidence of insurability. policy. It may also be more economical Certain restrictions may apply and are described in the to provide an rider or benefit. We'll add any rider charges to the amount of insurance monthly charge we deduct from your policy's accumulated coverage through a value. policy alone. Ask your registered representative for more information about the riders available with the policy, or about other kinds of life insurance policies offered by PL&A. There may be tax consequences if you exercise your rights under the Policy split option rider. Please see Variable life insurance and your taxes for more information. Samples of the provisions for the extra optional benefits are available from us upon written request. 21 HOW PREMIUMS WORK Your policy gives you the flexibility to choose the amount and frequency of your premium payments. The amount, We usually set the amount of your first premium frequency, and payment. You can schedule the amount and frequency of period of time over remaining premium payments within certain limits. Each which you make premium payment must be at least $50. premium payments may affect whether We deduct a premium load from each premium payment, and your policy will be then allocate your net premium to the investment classified as a options you've chosen. Depending on the performance of modified endowment your investment options, and on how many withdrawals, contract, or no loans or other policy features you've taken advantage longer qualifies as of, you may need to make additional premium payments to life insurance for keep your policy in force. tax purposes. See Variable life If we do not receive the minimum initial premium insurance and your payment within 20 days after we issue your policy, we taxes for more can cancel the policy and refund any partial premium information. payment you've made. We may waive the 20 day requirement in some cases. --------------------------------------------------------- Planned periodic You can schedule the amount and frequency of your premium payments premium payments. We refer to scheduled premium payments as your planned periodic premium. Here's how it works: Even if you pay all your premiums when . On your application, you choose a fixed amount of at they're scheduled, least $50 for each premium payment. your policy could lapse if the . You indicate whether you want to make premium accumulated value, payments annually, semi-annually, or quarterly. You less any can also choose monthly payments using our monthly outstanding loan Uni-check plan, which is described below. amount, is not enough to pay your . We send you a notice to remind you of your scheduled monthly charges. premium payment (except for monthly electronic funds Turn to Your transfer plan payments, which are paid policy's automatically). While you do not have to make the accumulated value premium payments you've scheduled, not making a for more premium payment may have an impact on any financial information. objectives you may have set for your policy's accumulated value and death benefit, and could cause your policy to lapse. . We'll treat any payment you make during the life of your policy as a loan repayment, not as a premium payment, unless you tell us otherwise. When a payment, or any portion of it, exceeds your outstanding loan amount, we'll treat it as a premium payment. 22 --------------------------------------------------------- Paying your premium Premium payments must be made in a form acceptable to us before we can process it. You may pay your premium: . by personal check, drawn on a U.S. bank . by cashier's check, money order, and traveler's checks in single denominations of $10,000 or more if they originate in a U.S. bank. . by third party check, when there is a clear connection of the third party to the underlying transaction . wire transfers that originate in U.S. banks. We may not accept premium payments in the following forms: . cash . credit card or check drawn against a credit card account . cashier's check, money order or traveler's checks in single denominations of less than $10,000 . cashier's checks, money orders, traveler's checks or personal checks drawn on non-U.S. banks, even if the payment may be effected through a U.S. bank . third party check, if there is not a clear connection of the third party to the underlying transaction . wires that originate from foreign bank accounts. Monthly electronic funds transfer plan Once you've made your first premium payment, you can make monthly premium payments using our electronic funds transfer plan. Here's how it works: . you authorize us to withdraw a specified amount from your checking account each month . you can choose any day between the 4th and 28th of the month . if you do not specify a day for us to make the withdrawal, we'll withdraw the premium payment on your policy's monthly anniversary. If your policy's monthly anniversary falls on the 1st, 2nd or 3rd of the month, we'll withdraw the payment on the 4th of each month. --------------------------------------------------------- Deductions from We deduct a premium load from each premium payment you your premiums make. The load is made up of three charges: Your net premium is Sales load your premium During the first 10 years of your policy, we deduct a payment less the 0% sales load from each premium payment you make. The premium load. sales load is 3% after the 10th policy year. This charge helps pay for the cost of distributing our policies and is guaranteed not to increase. If our sales and distribution expenses are more than the sales load, we can recover these expenses from other charges, such as the mortality and expense risk charge and the surrender charge, and from any mortality gains. State and local tax charge We deduct 2.35% from each premium payment to pay state and local premium and other taxes. The actual taxes we pay vary from state to state, and in some instances, among municipalities. This rate approximates the average rate we pay for all states. We do not expect to profit from this charge, and do not expect to change the rate unless the rate we pay increases. 23 HOW PREMIUMS WORK Federal tax charge We deduct 1.50% from each premium payment to pay federal taxes. We reserve the right to change this rate to respond to changes in law. --------------------------------------------------------- Allocating your We generally allocate your net premiums to the premiums investment options you've chosen on your application on the day we receive them. We currently limit your There are special allocations to 20 investment options at one time. restrictions when allocating premiums We allocate your first premium on the free look to the Fixed LT transfer date. We'll hold your net premiums in the account. Money Market investment option until the free look transfer date, and then transfer them to the investment Please turn to Your options you've chosen. investment options for more information about the investment options. --------------------------------------------------------- Limits on the Federal tax law puts limits on the amount of premium premium payments payments you can make in relation to your policy's you can make death benefit. These limits apply in the following situations: Before you buy a . If accepting the premium means your policy will no policy, you can ask longer qualify as life insurance for federal income us or your tax purposes. registered representative for The total amount you can pay in premiums and still have a personalized your policy qualify as life insurance is your policy's illustration that guideline premium limit. The sum of the premiums paid, will show you the less any withdrawals, at any time cannot exceed the guideline single guideline premium limit, which is the greater of: premium and guideline level . the guideline single premium or annual premiums. . the sum of the guideline level annual premiums. Your policy's guideline single premium and guideline level annual premiums appear on your policy's specification pages. We may refuse to accept all or part of a premium payment if, by accepting it, you will exceed your policy's guideline premium limit. If we find that you've exceeded your guideline premium limit, we may remove all or part of a premium you've paid from your policy as of the day we applied it, and return it to you. We'll adjust the death benefit retroactively to that date to reflect the reduction in premium payments. You'll find a . If applying the premium in that policy year means your detailed discussion policy will become a modified endowment contract. of modified endowment contracts A life insurance policy will become a modified in Variable life endowment contract if the sum of premium payments made insurance and your during the first seven contract years, less a portion taxes. of withdrawals, exceeds the seven-pay limit defined in Section 7702A of the Internal Revenue Code. Unless you've told us in writing that you want your policy to become a modified endowment contract, we'll remove all or part of the premium payment from your policy as of the day we applied it and return it to you. We'll also adjust the death benefit retroactively to that date to reflect the reduction in premium payments. If we receive such a premium within 20 days before your policy anniversary, we'll hold it and apply it to your policy on the anniversary date. In both of these situations, if we remove an excess premium from your policy, we'll return the premium amount to you no later than 60 days after the end of that policy year. We may adjust the amount for interest or for changes in accumulated value that relate to the amount of the excess premium payment we're returning to you. 24 If we do not return the premium amount to you within that time, we'll increase your policy's death benefit retroactively, to the day we applied the premium, and prospectively, so that it's always the amount necessary to ensure your policy qualifies as life insurance, or to prevent it from becoming a modified endowment contract. If we increase your death benefit, we'll adjust cost of insurance or rider charges retroactively and prospectively to reflect the increase. Net amount at risk . If applying the premium payment to your policy will is the difference increase the net amount at risk. This will happen if between the death your policy's death benefit is equal to the guideline benefit that would minimum death benefit or would be equal to it once we be payable if both applied your premium payment. people insured by the policy died and We may choose to accept your premium payment in this the accumulated situation, but before we do so, we may require value of your satisfactory evidence of the insurability of the two policy. people insured by the policy. We will not accept premium payments after the youngest person insured by the policy reaches age 100. 25 YOUR POLICY'S ACCUMULATED VALUE Accumulated value Accumulated value is the value of your policy on any is used as the business day. basis for determining policy We use it to calculate how much money is available to benefits and you for loans and withdrawals, and how much you'll charges. receive if you surrender your policy. It also affects the amount of the death benefit if you choose a death benefit option that's calculated using accumulated value. The accumulated value of your policy is not guaranteed - it depends on the performance of the investment options you've chosen, the premium payments you've made, policy charges and how much you've borrowed or withdrawn from the policy. --------------------------------------------------------- Calculating your Your policy's accumulated value is the total amount policy's allocated to the variable investment options and the accumulated value fixed options, plus the amount in the loan account. Please see Taking We determine the value allocated to the variable out a loan for investment options on any business day by multiplying information about the number of accumulation units for each variable loans and the loan investment option credited to your policy on that day, account. by the variable investment option's unit value at the end of that day. The process we use to calculate unit values for the variable investment options is described in Your investment options. --------------------------------------------------------- Persistency credit Policies may be eligible for a persistency credit. Here's how it works: Beginning on your 16th policy anniversary and on each policy anniversary thereafter, we may credit your policy with a persistency credit of 0.15% on an annual basis. We calculate the persistency credit amount on your policy's average accumulated value less any outstanding loan amount on each monthly payment date during the preceding policy year. We add it proportionately to your investment options according to your most recent allocation instructions. Beginning on your 21st policy anniversary, we may increase your annual persistency credit to 0.25%. Your policy's persistency credit is not guaranteed, and we may discontinue the program at any time. 26 --------------------------------------------------------- Monthly deductions We deduct a monthly charge from your policy's accumulated value in the investment options each If there is not monthly payment date. enough accumulated value to pay the Unless you tell us otherwise, we deduct the monthly monthly charge, charge from the investment options that make up your your policy could policy's accumulated value, in proportion to the lapse. The accumulated value you have in each option. This charge performance of the is made up of three charges: investment options you choose, not Cost of insurance making planned This charge is for providing you with life insurance premium payments, protection. Like other policy charges, we may profit or taking out a from the cost of insurance charge and may use these loan all affect the profits for any lawful purpose such as the payment of accumulated value distribution and administrative expenses. of your policy. There are maximum or guaranteed cost of insurance rates You'll find a associated with your policy. When the younger of the discussion about two people insured by your policy reaches age 100, the when your policy guaranteed cost of insurance rate is zero - in other might lapse, and words, you no longer pay any cost of insurance. what you can do to reinstate it, later The guaranteed rates include the insurance risks in this section. associated with insuring two people. They are calculated using 1980 Commissioners Standard Ordinary Unisex rates are Mortality Tables or the 1980 Commissioners Ordinary used when a policy Mortality Table B, which are used for unisex cost of is owned by an insurance rates. The rates are also based on the ages, employer in gender and risk classes of the people insured by the connection with policy unless unisex rates are required. employment-related or benefit Our current cost of insurance rates will apply programs. uniformly to all members of the same class. Any changes in the cost of insurance will apply uniformly to all Class is determined members of the same class. These rates generally by a number of increase as the ages of the two people increase, and factors, including they vary with the number of years the policy has been the age, risk in force. Our current rates are lower than the classification, guaranteed rates and they will not exceed the smoking status and guaranteed rates in the future. gender (unless unisex rates are required) of the two people insured by the policy, and the policy date and duration. --------------------------------------------------------- How we calculate cost of insurance We calculate cost of insurance by multiplying the current cost of insurance rate by a discounted net amount at risk at the beginning of each policy month. Net amount at risk for the cost of insurance calculation is the difference between a discounted death benefit that would be payable if both people insured by the policy died, and the accumulated value of your policy. We calculate it in two steps: . Step 1: we divide the death benefit that would be payable at the beginning of the policy month by 1.002466. . Step 2: we subtract your policy's accumulated value at the beginning of the policy month from the amount we calculated in step 1. Administrative charge We deduct a charge of $7.50 a month. We guarantee that this charge will not increase. When the younger of the two people insured by the policy reaches age 100, the administrative charge is zero - in other words, you no longer pay any administrative charge. If you buy additional Pacific Select Estate Preserver - NY policies that insure the same two people, we will not deduct the administrative charge from the additional policies. Instead, we'll deduct $200 from each policy's first premium payment to help cover our processing costs. 27 YOUR POLICY'S ACCUMULATED VALUE Mortality and expense risk charge Mortality risk is the chance that the people insured by policies we've issued do not live as long as expected. This means the cost of insurance charges specified in the policies may not be enough to pay out actual claims. Expense risk is the chance that our actual administrative and operating expenses are more than expenses we expected. The mortality and expense risk charge helps compensate us for these risks. It has two components, which are described in the box on the following page. We guarantee this charge will not increase. Charges for optional riders If you add any riders to your policy, we add any charges for them to your monthly charge. --------------------------------------------------------- An example How we calculate the mortality and expense risk charge For a policy with: The mortality and expense risk charge has two . a joint equal age components: a face amount component and an accumulated of 50 value component. . a face amount of $100,000 . Face amount component We deduct a face amount . accumulated value component every month during the first 10 policy of $60,000 after years, at a rate that is based on the joint equal age deducting any on the policy date and each $1,000 of the initial outstanding loan face amount of your policy. The rates for the face amount. amount component are shown in Appendix B. Joint equal age is a calculation that combines the ages and The maximum monthly insurance risks of the two people insured by the charge for the face policy, and is explained in Appendix A. amount component is $15.50 . Accumulated value component We deduct an accumulated (($100,000 / 1,000) value component every month during the first 10 X 0.155). policy years at an annual rate of 0.90% (0.075% monthly) of your policy's accumulated value in the The monthly charge investment options. During policy years 11 through for the accumulated 20, we reduce the annual rate to 0.30% (0.025% value component is monthly) of the accumulated value. During policy year $45 ($60,000 X 21 and thereafter, we further reduce the annual rate 0.075%). The charge to 0.05% (0.0042% monthly) of the accumulated value. in policy years 11 For the purposes of this charge, the amount of through 20 would be accumulated value is calculated on the monthly $15 ($60,000 payment date after we deduct the cost of insurance X 0.025%) if the and charges for any optional riders. policy's accumulated value was $60,000. The charge in policy year 21 (and thereafter) would be $2.52 ($60,000 X .0042%) if the policy's accumulated value was $60,000. The monthly charge for the face amount component of the mortality and expense risk charge will never exceed $0.64 per $1,000 of the initial face amount of your policy. 28 --------------------------------------------------------- Lapsing and Your policy will lapse if there is not enough reinstatement accumulated value, after subtracting any outstanding loan amount, to cover the monthly charge on the day we make the deduction. Your policy's accumulated value is affected by the following: . loans or withdrawals you make from your policy . not making planned premium payments . the performance of your investment options . charges under the policy. There is no guarantee that your policy will not lapse even if you pay your planned periodic premium. If there is not enough accumulated value to pay the total monthly charge, we deduct the amount that's available and send you, and anyone you've assigned your policy to, a notice telling you the minimum amount you have to pay to keep your policy in force. This minimum amount is equal to three times the monthly charge that was due on the monthly payment date when there was not enough accumulated value to pay the charge. We'll give you a grace period of 61 days from when we send the notice to pay the required premium. Your policy will remain in force during the grace period. If you do not make the minimum payment If we do not receive your payment within the grace period, your policy will lapse with no value. This means we'll end your life insurance coverage. If you make the minimum payment If we receive your payment within the grace period, we'll allocate your net premium to the investment options you've chosen and deduct the monthly charge from your investment options in proportion to the accumulated value you have in each option. Remember to tell us If your policy is in danger of lapsing and you have an if a payment is a outstanding loan amount, you may find that making the premium payment. minimum payment would cause the total premiums paid to Otherwise, we'll exceed the maximum amount for your policy's face amount treat it as a loan under tax laws. In that situation, we will not accept repayment. the portion of your payment that would exceed the maximum amount. To stop your policy from lapsing, you'll have to repay a portion of your outstanding loan amount. How to avoid future lapsing To stop your policy from lapsing in the future, you may want to make larger or more frequent premium payments if tax laws permit it. Or if you have a loan, you may want to repay a portion if it. Paying death benefit proceeds during the grace period If the last surviving person insured by the policy dies during the grace period, we'll pay death benefit proceeds to your beneficiary. We'll reduce the payment by any unpaid monthly charges and any outstanding loan amount. Reinstating a lapsed policy If your policy lapses, you have five years from the end of the grace period to apply for a reinstatement. We'll reinstate it if you send us the following: . a written application . evidence satisfactory to us that the two people insured by the policy are still insurable 29 YOUR POLICY'S ACCUMULATED VALUE . a premium payment sufficient to keep your policy in force for three months after the day your policy is reinstated . payment of all unpaid monthly charges that were due in the grace period. We'll reinstate your policy as of the first monthly payment date on or after the day we approve the reinstatement. When we reinstate your policy, its accumulated value will be the same as it was on the day your policy lapsed. We'll allocate it according to your most recent premium allocation instructions. Reinstating a lapsed policy with an outstanding loan amount If you had an outstanding loan amount when your policy lapsed, we will not pay or credit interest on it during the period between the lapsing and reinstatement of your policy. There are special rules that apply to reinstating a policy with an outstanding loan amount: . If we reinstate your policy on the first monthly payment date that immediately follows the lapse, we'll also reinstate the loan amount that was outstanding the day your policy lapsed. . If we reinstate your policy on any monthly payment date other than the monthly payment date that immediately follows the lapse, we'll deduct the outstanding loan amount from your policy's accumulated value. This means you will no longer have an outstanding loan amount when your policy is reinstated. 30 YOUR INVESTMENT OPTIONS This section tells you about the investment options available under your policy and how they work. You can change your We put your premium payments in our general and premium allocation separate accounts. We own the assets in our accounts instructions by and allocate your premiums, less any charges, to the writing or sending investment options you've chosen. Amounts allocated to a fax. If we have the fixed options are held in our general account. your completed Amounts allocated to the variable investment options telephone and are held in our separate account. electronic authorization form You choose your initial investment options on your on file you can application. If you choose more than one investment call us at 1-888- option, you must tell us the dollar amount or 595-6997 or submit percentage you want to allocate to each option. You can a request change your premium allocation instructions at any electronically time. through your appointed agent. Or The investment options you choose, and how they you can ask your perform, will affect your policy's accumulated value registered and may affect the death benefit. Please review the representative to investment options carefully and ask your registered contact us. representative to help you choose the right ones for your goals and tolerance for risk. Make sure you You'll find understand any costs you may pay directly and information about indirectly on your investment options because they will when we allocate affect the value of your policy. net premiums to your investment options in How premiums work. Your policy's accumulated value may be allocated to up to 20 investment options at any one time. --------------------------------------------------------- Variable investment You can choose from 33 variable investment options. options Each variable investment option is set up as a variable account under our separate account and invests in a Variable investment corresponding portfolio of the Pacific Select Fund. options are also Each portfolio invests in different securities and has known as variable its own investment goals, strategies and risks. The accounts. These value of each portfolio will fluctuate with the value variable accounts of the investments it holds, and returns are not are divisions of guaranteed. Your policy's accumulated value will our separate fluctuate depending on the investment options you've account. We bear chosen. You bear the investment risk of any variable the direct investment options you choose. operating expenses of our separate The following chart is a summary of the Pacific Select account. For more Fund portfolios. You'll find detailed descriptions of information about the portfolios in the Pacific Select Fund prospectus how these accounts that accompanies this prospectus. There's no guarantee work, see that a portfolio will achieve its investment objective. About PL&A. You should read the fund prospectus carefully before investing. Pacific Life is the investment adviser for the Pacific Select Fund. They oversee the management of all the fund's portfolios, and manage two of the portfolios directly. They've retained other portfolio managers to manage the other portfolios. 31 YOUR INVESTMENT OPTIONS
PORTFOLIO INVESTMENT GOAL THE PORTFOLIO'S PORTFOLIO MAIN INVESTMENTS MANAGER Blue Chip Long-term growth of Equity securities of "blue chip" A I M Capital capital. Current income companies--typically large companies Management, Inc. is of secondary that are well established in their importance. respective industries. Aggressive Growth Long-term growth of Equity securities of small- and A I M Capital capital. medium-sized growth companies. Management, Inc. Emerging Markets Long-term growth of Equity securities of companies that Alliance Capital capital. are located in countries generally Management L.P. regarded as "emerging market" countries. Diversified Research Long-term growth of Equity securities of U.S. companies Capital Guardian capital. and securities whose principal markets Trust Company are in the U.S. Small-Cap Equity Long-term growth of Equity securities of smaller and Capital Guardian capital. medium-sized companies. Trust Company International Large-Cap Long-term growth of Equity securities of non-U.S. Capital Guardian capital. companies and securities whose Trust Company principal markets are outside of the U.S. I-Net Tollkeeper Long-term growth of Equity securities of companies which Goldman Sachs capital. use, support, or relate directly or Asset Management indirectly to use of the Internet. Such companies include those in the media, telecommunications, and technology sectors. Financial Services Long-term growth of Equity securities in the financial INVESCO capital. services sector. Such companies Funds Group, Inc. include banks, insurance companies, brokerage firms and other finance- related firms. Health Sciences Long-term growth of Equity securities in the health INVESCO capital. sciences sector. Such companies Funds Group, Inc. include medical equipment or supplies, pharmaceuticals, health care facilities and other health sciences- related firms. Technology Long-term growth of Equity securities in the technology INVESCO capital. sector. Such companies include Funds Group, Inc. biotechnology, communications, computers, electronics, Internet telecommunications, networking, robotics, video and other technology- related firms. Telecommunications Long-term growth of Equity securities in the INVESCO capital. Current income telecommunications sector. Such as Funds Group, Inc. is of secondary companies that offer telephone importance. service, wireless communications, satellite communications, television and movie programming, broadcasting and Internet access. Multi-Strategy High total return. A mix of equity and fixed income J.P. Morgan securities. Investment Management Inc. Large-Cap Core Long-term growth of Equity securities of large and medium- J.P. Morgan (formerly called capital and income. sized dividend-paying U.S. companies. Investment Equity Income) Management Inc. Strategic Value Long-term growth of Equity securities with the potential Janus Capital capital. for long-term growth of capital. Corporation Growth LT Long-term growth of Equity securities of a large number of Janus Capital capital consistent with companies of any size. Corporation the preservation of capital. Focused 30 Long-term growth of Equity securities selected for their Janus Capital capital. growth potential. Corporation
32
PORTFOLIO INVESTMENT GOAL THE PORTFOLIO'S PORTFOLIO MAIN INVESTMENTS MANAGER Mid-Cap Value Capital appreciation. Equity securities of medium-sized U.S. Lazard Asset companies believed to be undervalued. Management International Value Long-term capital Equity securities of companies of any Lazard Asset appreciation primarily size located in developed countries Management through investment in outside of the U.S. equity securities of corporations domiciled in countries other than the U.S. Capital Opportunities Long-term growth of Equity securities with the potential MFS Investment capital. for long-term growth of capital. Management Mid-Cap Growth Long-term growth of Equity securities of medium-sized MFS Investment capital. companies believed to have above- Management average growth potential. Global Growth Long-term growth of Equity securities of any size located MFS Investment capital. within and outside of the U.S. Management Equity Index Investment results that Equity securities of companies that Mercury Advisors correspond to the total are included in the Standard & Poor's return of common stocks 500 Composite Stock Price Index. publicly traded in the U.S. Small-Cap Index Investment results that Equity securities of companies that Mercury Advisors correspond to the total are included in the Russell 2000 Small return of an index of Stock Index. small capitalization companies. REIT Current income and long- Equity securities of U.S. and non-U.S. Morgan Stanley term capital companies principally engaged in the Asset Management appreciation. U.S. real estate industry. Inflation Managed Maximize total return Inflation-indexed bonds of varying Pacific (formerly called consistent with prudent maturities issued by the U.S. and non Investment Government Securities) investment management. U.S. governments, their agencies and Management government sponsored enterprises, and Company corporations, forward contracts and derivative instruments relating to such securities. Managed Bond Maximize total return Medium and high-quality fixed income Pacific consistent with prudent securities with varying terms to Investment investment management. maturity. Management Company Money Market Current income consistent Highest quality money market Pacific Life with preservation of instruments believed to have limited capital. credit risk. High Yield Bond High level of current Fixed income securities with lower and Pacific Life income. medium-quality credit ratings and intermediate to long terms to maturity. Equity Income Current income. Capital Equity securities of large U.S. Putnam growth is of secondary companies with a focus on income- Investment importance. producing securities believed to be Management, Inc. undervalued by the market. Research Long-term growth of Equity securities of large U.S. Putnam capital. companies with potential for capital Investment appreciation. Management, Inc. Equity Capital appreciation. Equity securities of large U.S. Putnam Current income is of growth-oriented companies. Investment secondary importance. Management, Inc. Aggressive Equity Capital appreciation. Equity securities of small Putnam and medium-sized companies. Investment Management, Inc. Large-Cap Value Long-term growth of Equity securities of large U.S. Salomon Brothers capital. Current income companies. Asset Management is of secondary Inc importance.
33 YOUR INVESTMENT OPTIONS An example Calculating unit values When you choose a variable investment option, we credit You ask us to your policy with accumulation units. The number of allocate $6,000 to units we credit equals the amount we've allocated the Inflation divided by the unit value of the variable account. Managed investment Similarly, the number of accumulation units in your option on a policy will be reduced when you make a transfer, business day. At withdrawal or loan from a variable investment option, the end of that and when your monthly charges are deducted. day, the unit value of the variable The value of an accumulation unit is the basis for all account is $15. financial transactions relating to the variable We'll credit your investment options. We calculate the unit value for policy with 400 each variable account once every business day, usually units ($6,000 at or about 4:00 p.m. Eastern time. divided by $15). Generally, for any transaction, we'll use the next unit The value of an value calculated after we receive your written request. accumulation unit If we receive your written request before 4:00 p.m. is not the same as Eastern time, we'll use the unit value calculated as of the value of a the end of that business day. If we receive your share in the request on or after 4:00 p.m. Eastern time, we'll use underlying the unit value calculated as of the end of the next portfolio. business day. For information If a scheduled transaction falls on a day that is not a about timing of business day, we'll process it as of the end of the transactions, see next business day. For your monthly charge, we'll use Pacific Select the unit value calculated on your monthly payment date. Estate If your monthly payment date does not fall on a Preserver - NY business day, we'll use the unit value calculated as of basics. the end of the next business day. To calculate the unit value, we multiply the unit value from the previous business day by the net investment factor. The net investment factor for a variable account on any business day is (a) minus (b), divided by (c) where: a = the net asset value of the variable account as of the close of the prior business day, adjusted by investment performance and any dividends or distributions paid; b = any charges for any taxes that are, or may become, associated with the operation of the variable account; and c = the net asset value of the variable account as of the close of the previous business day. The net asset value of a variable account on any business day is the net asset value per share for the variable account on the business day multiplied by the number of shares in the variable account on the valuation date. The investment company in whose shares the variable account invests reports the net asset value per share and the number of shares outstanding for each variable account on each business day. The unit value of a variable account will change with the value of its corresponding Pacific Select Fund portfolio. Changes in the unit value of a variable account will not change the number of accumulation units credited to your policy. A look at performance Performance information may appear in advertisements, sales literature, or reports to policy owners or prospective buyers. Information about the performance of any variable account of the separate account reflects only the performance of a hypothetical policy. The calculations are based on allocating the hypothetical policy's accumulated value to the variable account during a particular time period. 34 Performance information is no guarantee of how a variable account will perform in the future. You should keep in mind the investment objectives and policies, characteristics and quality of the portfolio of the fund in which the variable account invests, and the market conditions during the period of time that's shown. We may show performance information in any way that's allowed under the law that applies to it. This may include presenting a change in accumulated value due to the performance of one or more variable accounts, or as a change in a policy owner's death benefit. We may show performance as a change in accumulated value over time or in terms of the average annual compounded rate of return on accumulated value. This would be based on allocating premium payments for a hypothetical policy to a particular variable account over certain periods of time, including one year, or from the day the variable account started operating. If a portfolio has existed for longer than its corresponding variable account, we may also show the hypothetical returns that the variable account would have achieved had it invested in the portfolio from the day the portfolio started operating. Performance may reflect the deduction of all policy charges including premium load, the cost of insurance, the administrative charge, and the mortality and expense risk charge. The different death benefit options will result in different expenses for the cost of insurance, and the varying expenses will result in different accumulated values. Performance may also reflect the deduction of the surrender charge, if it applies, by assuming the hypothetical policy is surrendered at the end of the particular period. At the same time, we may give other performance figures that do not assume the policy is surrendered and do not reflect any deduction of the surrender charge. In our advertisements, sales literature and reports to policy owners, we may compare performance information for a variable account to: . other variable life separate accounts, mutual funds, or investment products tracked by research firms, ratings services, companies, publications, or persons who rank separate accounts or investment products on overall performance or other criteria . the Consumer Price Index, to assess the real rate of return from buying a policy by taking inflation into consideration. Reports and promotional literature may also contain our rating or a rating of our claims-paying ability. These ratings are set by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. You'll find more Fees and expenses paid by the Pacific Select Fund about Pacific The Pacific Select Fund pays advisory fees and other Select Fund fees expenses. These are deducted from the assets of the and expenses in An fund's portfolios and may vary from year to year. They overview of Pacific are not fixed and are not part of the terms of your Select Estate policy. If you choose a variable investment option, Preserver - NY. these fees and expenses affect you indirectly because they reduce portfolio returns. The fund is governed by its own Board of Trustees. 35 YOUR INVESTMENT OPTIONS --------------------------------------------------------- Fixed options You can also choose from two fixed options: the Fixed account and the Fixed LT account. The fixed options The fixed options provide a guaranteed minimum annual rate of interest. are not securities, The amounts allocated to the fixed options are held in so they do not fall our general account. We have contracted with Pacific under any Life to manage our general account assets, subject to securities act. For investment policies, objectives, directions and this reason, the guidelines established by our Board. SEC has not reviewed the Here are some things you need to know about the fixed disclosure in this options: prospectus about these options. . Accumulated value allocated to the fixed options earn However, other interest on a daily basis, using a 365-day year. Our federal securities minimum annual interest rate is 3% during the first laws may apply to 10 policy years, 3.6% during policy years 11 through the accuracy and 20, and 3.85% during policy year 21 and thereafter. completeness of the . We may offer a higher annual interest rate on the disclosure about fixed options. If we do, we'll guarantee the higher these options. rate for one year. . There are no investment risks or direct charges. For more information about . There are limitations on when and how much you can the general transfer from the fixed options. These limitations account, see About are described below in Transferring among investment PL&A. options. We reserve the right, in our sole discretion, to waive the transfer restrictions on the fixed options. Please contact us or your registered representative to find out if a waiver is currently in effect. . We may limit the total amount you allocate to the Fixed LT account for all Pacific Life policies you own to $1,000,000 in any 12-month period, and transfer any amount over $1,000,000 to your other investment options according to your most recent instructions. We may increase the $1,000,000 limit at any time at our sole discretion. You should contact us to find out if a higher limit is in effect. --------------------------------------------------------- Transferring among You can transfer among your investment options any time investment options during the life of your policy without triggering any current income tax. You can make transfers by writing You can make to us, by making a telephone or electronic transfer, or transfers and use by signing up for one of our automatic transfer transfer programs programs. You'll find more information about making only after the free telephone and electronic transfers in Pacific Select look transfer date. Estate Preserver - NY basics. For more information, please Transfers will normally be effective as of the end of see Pacific Select the business day we receive your written, telephone or Estate electronic request. Preserver - NY basics. Here are some things you need to know about making transfers: You'll find more about the first . Your policy's accumulated value may be invested in up year transfer to 20 investment options at one time. program later in . If you're making transfers between variable this section. investment options, there is no minimum amount required and you can make as many transfers as you like. . You can make transfers from the variable investment options to the Fixed account at any time. . You can make transfers from the variable investment options to the Fixed LT account only in the policy month right before each policy anniversary. . If you have transferred accumulated value out of the fixed options, you must wait 90 days before making a transfer to the Fixed account. However, you can make transfers to the Fixed account anytime during the first 18 months of your policy. . You can only make one transfer from each fixed option in any 12-month period, except if you've signed up for the first year transfer program. . You can only transfer up to the greater of $5,000 or 25% of your policy's accumulated value in the Fixed account in any 12-month period, except for scheduled transfers under the first year program. 36 . You can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT account in any 12-month period. The restrictions for transfers from the Fixed LT account are temporarily waived during the first policy year. You will be permitted to transfer any amount out of the Fixed LT account at any time during the first twelve policy months. We reserve the right to discontinue this waiver at any time. However, if the waiver is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. . Currently, there is no charge for making a transfer, but in the future we may charge you $25 per transfer in excess of 12 transfers per policy year. . There is no minimum required value for the investment option you're transferring to or from. . You cannot make a transfer if your policy is in the grace period and is in danger of lapsing. . We can restrict or suspend transfers. . We may choose to impose limits on transfer amounts, the value of the investment options you're transferring to or from, or the number and frequency of transfers you can make. --------------------------------------------------------- Transfer programs We offer three programs that allow you to make automatic transfers of accumulated value from one investment option to another. Under the dollar cost averaging and portfolio rebalancing programs, you can transfer among the variable investment options. Under the first year transfer program, you can make transfers from the Fixed account to the Fixed LT account and the variable investment options. Since the value of Dollar cost averaging program accumulation units Our dollar cost averaging program allows you to make can change, more scheduled transfers of $50 or more between variable units are credited investment options. It does not allow you to make for a scheduled transfers to or from either of the fixed options. transfer when unit Here's how the program works: values are lower, and fewer units . You can set up this program at any time while your when unit values policy is in force. are higher. This . You need to complete a request form to enroll in the allows you to program. You may enroll by telephone or average the cost of electronically if you have a completed telephone and investments over electronic authorization form on file. time. Investing . You must have at least $5,000 in a variable this way does not investment option to start the program. guarantee profits . We'll automatically transfer accumulated value from or prevent losses. one variable investment option to one or more of the other variable investment options you've selected. . We'll process transfers as of the end of the business day on your policy's monthly, quarterly, semi-annual or annual anniversary, depending on the interval you've chosen. We will not make the first transfer until after the free look transfer date. . We will not charge you for the dollar cost averaging program or for transfers made under this program, even if we decide to charge you in the future for transfers outside of the program, except if we have to by law. . We have the right to discontinue, modify or suspend the program at any time. We'll keep making transfers at the intervals you've chosen until one of the following happens: . the total amount you've asked us to transfer has been transferred . there is no more accumulated value in the investment option you're transferring from . your policy enters the grace period and is in danger of lapsing . you tell us in writing to cancel the program . we discontinue the program. 37 YOUR INVESTMENT OPTIONS Because the Portfolio rebalancing program portfolio As the value of the underlying portfolios changes, the rebalancing program value of the allocations to the variable investment matches your options will also change. The portfolio rebalancing original percentage program automatically transfers your policy's allocations, we may accumulated value among the variable investment options transfer money from according to your original percentage allocations. an investment option with relatively higher returns to one with relatively lower returns. Here's how the program works: . You can set up this program at any time while your policy is in force. . You enroll in the program by sending us a written signed request or a completed automatic rebalancing form. You may enroll by telephone or electronically if you have a completed telephone and electronic authorization form on file. . Your first rebalancing will take place on the monthly payment date you choose. You choose whether we should make transfers quarterly, semi-annually or annually, based on your policy date. . If you cancel this program, you must wait 30 days to begin it again. . You cannot use this program if you're already using the dollar cost averaging program. . We do not currently charge for the portfolio rebalancing program or for transfers made under this program. . We can discontinue, modify or suspend the program at any time. This program allows First year transfer program you to average the Our first year transfer program allows you to make cost of investments monthly transfers during the first policy year from the over your first Fixed account to the variable investment options or the policy year. Fixed LT account. It does not allow you to transfer Investing this way among variable investment options. does not guarantee profits or prevent Here's how the program works: losses. . You enroll in the program when you apply for your policy. . You choose a regular amount to be transferred every month for 12 months. . We make the first transfer on the day we allocate your first net premium to the investment options you've chosen. Each transfer will be made on the same day every month. . If you sign up for this program, we'll waive the usual transfer limit for the Fixed account during the first policy year. . If we make the last transfer during the second policy year, we will not count it toward the usual one transfer per year limit for the Fixed account. . If the accumulated value in the Fixed account is less than the amount to be transferred, we'll transfer the balance and then cancel the program. . If there is accumulated value remaining in the Fixed account at the end of the program, our usual rules for the Fixed account will apply. . We do not currently charge for the first year transfer program or for transfers made under this program. 38 WITHDRAWALS, SURRENDERS AND LOANS Making a You can take out all or part of your policy's withdrawal, taking accumulated value while your policy is in force by out a loan or making withdrawals or surrendering your policy. You can surrendering your take out a loan from us using your policy as security. policy can change You can also use your policy's loan and withdrawal your policy's tax features to supplement your income, for example, during status, generate retirement. taxable income, or make your policy more susceptible to lapsing. Be sure to plan carefully before using these policy benefits. If you withdraw a larger amount than you've paid into your policy, your withdrawal may be considered taxable income. For more information, see Variable life insurance and your taxes. --------------------------------------------------------- Making withdrawals You can withdraw part of your policy's net cash surrender value starting on your policy's first You can choose to anniversary. Here's how it works: receive your withdrawal in a . You must send us a written request that's signed by lump sum or use it all owners. to buy an income . Each withdrawal must be at least $500, and the net benefit. Please see cash surrender value of your policy after the the discussion withdrawal must be at least $500. about income . If your policy has an outstanding loan amount, the benefits in General maximum withdrawal you can take is the amount, if information about any, by which the cash surrender value just before your policy. the withdrawal, exceeds the outstanding loan amount divided by 90%. We will not accept . We'll charge you $25 for each withdrawal you make. your request to . If you do not tell us which investment options to make a withdrawal take the withdrawal from, we'll deduct the withdrawal if it will cause and the withdrawal charge from all of your investment your policy to options in proportion to the accumulated value you become a modified have in each option. endowment contract, . The accumulated value, cash surrender value and net unless you've told cash surrender value of your policy will be reduced us in writing that by the amount of each withdrawal. you want your . If the last surviving person insured under the policy policy to become a dies after you've sent a withdrawal request to us, modified endowment but before we've made the withdrawal, we'll deduct contract. the amount of the withdrawal from any death benefit proceeds owing. How withdrawals affect your policy's death benefit Making a withdrawal will affect your policy's death benefit in the following ways: . if your policy's death benefit does not equal the guideline minimum death benefit, the death benefit will decrease by the amount of your withdrawal. . if your policy's death benefit equals the guideline minimum death benefit, the death benefit may decrease by more than the amount of your withdrawal. How withdrawals affect your policy's face amount If you've chosen death benefit Option B or Option C, making a withdrawal does not reduce your policy's face amount. If you've chosen death benefit Option A or Option D, a withdrawal may reduce your face amount. The face amount will be reduced by the amount if any, by which the face amount exceeds the death benefit immediately before the withdrawal, minus the amount of the withdrawal. 39 WITHDRAWALS, SURRENDERS AND LOANS --------------------------------------------------------- Taking out a loan You can borrow money from us any time while your policy is in force either by sending us a request in writing, The amount in the over the telephone or electronically. You'll find more loan account, plus information about requesting a loan by telephone or any interest you electronically in Pacific Select Estate Preserver - NY owe, is referred to basics. throughout this prospectus as your When you borrow money from us, we use your policy's outstanding loan accumulated value as security. You pay interest on the amount. Your policy amount you borrow. The accumulated value set aside to refers to this secure your loan also earns interest. Here's how it amount as policy works: debt. . To secure the loan, we transfer an amount equal to Taking out a loan the amount you're borrowing from your accumulated will affect the value in the investment options to the loan account. growth of your We'll transfer this amount from your investment policy's options in proportion to the accumulated value you accumulated value, have in each option, unless you tell us otherwise. and may affect the death benefit. . Interest owing on the amount you've borrowed accrues daily at an annual rate of 4.1%. . Interest that has accrued during the policy year is due on your policy anniversary. If you do not pay the interest when it's due, we'll add it to the amount of your loan and begin accruing interest on it from the day it was due. We'll also transfer an amount equal to the interest that was due, from your policy's accumulated value to the loan account. We'll transfer this amount from your investment options in proportion to the accumulated value you have in each option, unless you tell us otherwise. . The amount in the loan account earns interest daily at an annual rate of 3.1% during the first 10 policy years, 3.7% during policy years 11 through 20, and at least 3.85% during policy year 21 and thereafter. On your policy anniversary, we transfer the interest that's been credited to the loan account proportionately to your investment options according to your most recent allocation instructions. . We currently intend to credit interest on the amount in the loan account at an annual rate of 4.1% in policy year 21 and thereafter. We can decrease the rate credited if we believe the change is needed to ensure that your policy loan is not treated as a taxable distribution under federal income tax laws, or any applicable ruling, regulation, or court decision. We will not decrease the annual rate to less than 3.85% on the amount in the loan account during policy year 21 and thereafter. How much you can borrow The minimum amount you can borrow is $200. You can borrow up to the larger of the following amounts: An example For a policy in . 100% of the accumulated value in the fixed options, policy year 13 plus 90% of the accumulated value in the variable with: investment options, less any surrender charges that . accumulated value would apply if you surrendered your policy on the day of $100,000 you took out the loan. . a most recent monthly charge of . the result of a x (b / c) - d, where: $100 a = the accumulated value of your policy less any . an outstanding surrender charges that would have applied if you loan amount of surrendered your policy on the day you took out $50,000 the loan, and less 12 times the most recent monthly charge The maximum amount you can borrow is b = 1.031 during the first 10 policy years, 1.037 $48,325.46 during policy years 11 through 20, and 1.0385 (($100,000 - during policy year 21 and thereafter. $1,200) X (1.036 / 1.041)- $50,000) c = 1.041 d = any outstanding loan amount. Paying off your loan You can pay off all or part of the loan any time while your policy is in force. Unless you tell us otherwise, we'll transfer any loan payments you make proportionately to your investment options according to your most recent allocation instructions. While you have an outstanding loan, we'll treat any money you send us as a premium payment unless you tell us in writing that it's a loan repayment. 40 What happens if you do not pay off your loan If you do not pay off your loan, we'll deduct the Your outstanding amount in the loan account, including any interest you loan amount could owe, from one of the following: result in taxable income if you . the death benefit proceeds before we pay them to your surrender your beneficiary policy, if your . the cash surrender value if you surrender your policy policy lapses, or . the amount we refund if you exercise your right to if your policy is a cancel. modified endowment contract. You Taking out a loan, whether or not you repay it, will should talk to your have a permanent effect on the value of your policy. tax advisor before For example, while your policy's accumulated value is taking out a loan held in the loan account, it will miss out on the under your policy. potential earnings available through the variable For more investment options. The amount of interest you earn on information, please the loan account may be less than the amount of turn to Taking out interest you would have earned from the fixed options. a loan in Variable These could lower your policy's accumulated value, life insurance and which could reduce the amount of the death benefit. your taxes. When a loan is outstanding, the amount in the loan account is not available to help pay for any policy charges. If, after deducting your outstanding loan amount, there is not enough accumulated value in your policy to cover the policy charges, your policy could lapse. You may need to make additional premium payments or loan repayments to prevent your policy from lapsing. --------------------------------------------------------- Ways to use your You can use your policy's loan and withdrawal features policy's loan and to supplement your income, for example, during withdrawal features retirement. If you're Using your policy to supplement your income does not interested in using change your rights or our obligations under the policy. your life insurance The terms for loans and withdrawals described in this policy to prospectus remain the same. supplement your retirement income, Here are some things you should consider when setting please contact us up an income stream: for more information. . the rate of return you expect to earn on your investment options We can provide you . how long you would like to receive regular income with illustrations . the amount of accumulated value you want to maintain that give you in your policy. examples of how this could affect Understanding the risks the accumulated Setting up an income stream may not be suitable for all value, net cash policy owners. It's important to understand the risks surrender value and that are involved in using your policy's loan and death benefit of withdrawal features. your policy based on different You must always leave enough accumulated value in your hypothetical gross policy to help ensure your policy will continue to rates of return. We qualify as life insurance and will not lapse. Your will not use a policy will lapse if there is not enough accumulated higher rate than value, after subtracting any outstanding loan amount, 12%, and will to cover the monthly charge on the day we make the always compare it deduction and the grace period expires. If your policy with a rate of 0% lapses, we'll end your life insurance coverage. based on guaranteed insurance costs. There are also charges associated with reinstating a lapsed policy. The hypothetical rates of return are You should consult with your financial adviser and not illustrative of carefully consider how much you can withdraw and borrow past or future from your policy each year to set up your income results. Policy stream. values and benefits would be different Remember that the performance of your investment if: options also affects your policy's accumulated value. Poor performance can increase the danger of your policy . the gross annual lapsing. And as the cost of insurance generally rates of return increases with the ages of the persons insured by the are different policy, this can also reduce the accumulated value. from the hypothetical rates . premiums were not paid as illustrated . loan interest was paid when due. 41 WITHDRAWALS, SURRENDERS AND LOANS You can also ask In addition, you should carefully review the policy for accompanying statements we send you. Your statements will allow you charts and graphs to monitor your policy's accumulated value, less your that compare outstanding loan amount, to ensure your policy can results from continue to support the income stream you have chosen. various retirement strategies. If your policy lapses, or you surrender your policy after you have taken out a loan, you could face You can ask your significant income tax liability in the year of the registered lapse or surrender. Any outstanding loan amount will representative for automatically be repaid when your policy lapses or you illustrations surrender your policy. You could be taxed to the extent showing how policy that the net surrender value plus the outstanding loan charges may affect amount repaid exceeds the cost basis of your policy. existing accumulated value Interest on a loan is due to us on each policy and how future anniversary. If we do not receive the interest when withdrawals and due, we'll add it to the outstanding loan amount and loans may affect begin accruing interest from the day it was due. This the accumulated has a compounding effect and can add to your income tax value and death liability. benefit. If both persons insured by the policy die, we'll deduct Tax issues are any outstanding loan amount from the death benefit. described in detail This means the death benefit proceeds will be less than in Variable the death benefit and may be less than the face amount. insurance and your taxes. --------------------------------------------------------- Automated income Our automated income option ("AIO") program allows you option to make scheduled withdrawals or loans. Your policy is eligible after the 7th policy anniversary. To begin the Withdrawals and program, you must have a minimum net cash surrender loans may reduce value of $50,000, and your policy must not qualify as a policy values and modified endowment contract. benefits. They may also increase your You request participation in the AIO program and risk of lapse. In specify your AIO preferences by sending us an AIO order to minimize request form. If you wish to do so, contact your the risk of lapse, registered representative for an AIO request form. you should not take additional loans or There is no fee to participate in the AIO program. The withdrawals while $25 fee for withdrawals under the AIO program is you are in the AIO currently waived. program. Here's how the program works: Distributions under the AIO program may . You can set up the income stream from your policy on result in tax either a monthly or annual basis. Each scheduled liability. Please income payment must be at least $500 if you choose to consult your tax receive monthly payments, or $1,000 if you choose advisor. annual payments. For more . You may choose to receive either a fixed amount of information, see income or an amount based on a fixed duration. Variable life Depending upon your objectives, you may wish to insurance and your reduce your face amount or change your policy's death taxes. benefit option in order to maximize your income. . You choose the scheduled income payment date. You may elect to have your income payments sent either by check or by electronic deposit to a bank account. The effective date of the withdrawal or loan will be the business day before any income payment date. . If the scheduled income payment date falls on a weekend or holiday, the actual income payment date will be the business day before the scheduled income payment date. . The withdrawal or loan will be taken from your policy's investment options in proportion to the accumulated value in each option. 42 Over time, your Upon our receipt of your AIO request form, we will run policy's actual a hypothetical illustration to determine if your performance, and request can be fulfilled, or if any adjustments will be perhaps your use of necessary. We use the illustration to test your policy the policy's for the minimum net cash surrender value requirement. options, are likely Your policy must continue to have an illustrated net to vary from the cash surrender value at age 100 sufficient to meet the assumptions used in minimum accumulated value required to allow for payment the illustrations. of policy charges, including policy loan interest. Changes in your policy's investment Illustrations generally will be run at an annual gross option allocations earnings rate chosen by you, not to exceed 10%. No can impact your earnings rate used is a guarantee or indication of future values and actual earnings. income you receive. Your policy may We will complete an AIO agreement form, and send it and also be more the illustration to your registered representative for susceptible to delivery to you. The AIO agreement form will confirm lapse. your income payment amount, frequency and duration, and will also confirm your policy's cost basis and other You are responsible information about your elections under the AIO program. to monitor your policy's Unless you request otherwise, distributions under the accumulated value AIO program will be taken first as withdrawals if not to ensure your taxable, then they will be taken as loans. policy is not in danger of lapsing. Payments under the AIO program will begin as scheduled You may need to once we receive your signed AIO agreement form. We will make additional send you a letter confirming the date and amount of the premium payments or first income payment. loan repayments to prevent your policy The income payments will usually remain constant during from lapsing. each income period, unless there is insufficient net cash surrender value to make a payment. The duration of You will not each income period is one year, except that the first receive a notice to income period may differ depending on the following: remind you of your scheduled premium . If the AIO program start date is six months or more payments while you from your next policy anniversary, the income period are in the AIO will end on the next policy anniversary. In this program. case, the first income period will last at least six months, but not more than one year. . If the AIO program start date is less than six months from your next policy anniversary, the income period will extend to the following policy anniversary. In this case, the first income period will last at least one year, but not more than 18 months. There is no charge After the first income period, and each year you remain for illustrations in the AIO program, we will run an illustration after we run in each policy anniversary. This illustration will connection with the generally be run at a rate chosen by you, not to exceed AIO program. They a gross annual rate of 10%. Your policy must continue do not count toward to have an illustrated net cash surrender value at age your one free 100 sufficient to meet the minimum accumulated value illustration per required to allow for payment of policy charges, year. including policy loan interest. We will send you a letter and the illustration to notify you of any changes in your income payment amount or duration. The new income payment amount will be effective on the income payment date following the previous income period. You may discontinue participation in the AIO program at any time by sending a written notice to us. 43 WITHDRAWALS, SURRENDERS AND LOANS --------------------------------------------------------- You can surrender or cash in your policy at any time Surrendering your while either of the two people insured by the policy is policy still living. Your policy's cash surrender value is its accumulated value less any surrender charge that You can choose to applies. The net cash surrender value equals your receive your money policy's cash surrender value after deducting any in a lump sum or outstanding loan amount. use it to buy an income benefit. Here are some things you need to know about Please see the surrendering your policy: discussion about income benefits in . You must send us your policy and a written request. General information about your policy. . We'll send you the policy's net cash surrender value. If you surrender your policy during the first 10 policy years, we'll deduct a surrender charge that helps cover our costs for underwriting, issuing and distributing our policies. The following box describes how we calculate the surrender charge. There's no surrender charge after 10 policy years. . We guarantee the surrender charge rates will not increase. We can reduce or waive the surrender charge on policies sold to our directors or employees, to any of our affiliates or to any trustees or employees or affiliates of the Pacific Select Fund. --------------------------------------------------------- How we calculate the surrender charge Joint equal age is The surrender charge is assessed against your policy's a calculation that accumulated value. It has two parts: an underwriting combines the ages surrender charge and a sales surrender charge. Both and insurance risks charges are based on the joint equal age on the policy of the two people date of the two people insured by the policy, and on insured by the the initial face amount of your policy. policy, and is explained in The underwriting surrender charge is designed to help Appendix A. cover our administrative expenses for underwriting and issuing a policy, including the costs of processing The underwriting applications, conducting medical examinations, surrender charge determining the insurability and underwriting classes and sales surrender of the people insured, and establishing policy records. target rate appear in Appendix B. The amount of the charge does not change during the first policy year. Starting on the first policy anniversary, the charge decreases by 0.9259% each month An example until it reaches zero at the end of the 10th policy year. For a policy with: The sales surrender charge helps pay for our costs of . a joint equal age distributing policies. During the first policy year, of 50 this charge is equal to the smaller of the following . an initial face amounts: amount of $100,000. . 70% of the premium payments you've made, or . 70% of the sales surrender target, which is based on Here's the the joint equal age of the people insured by the surrender charge at policy for each $1,000 of the policy's initial face the end of the amount. first policy year: The sales surrender charge increases until the premiums . Underwriting you pay reach the sales surrender target. In the 13th surrender charge: month you own your policy, we reduce the sales $520 (5.20 X surrender charge so that it is 99.0741% of the charge $100,000 / 1,000) as calculated above. After that, we reduce it by . Maximum sales 0.9259% a month until it reaches zero at the end of 10 surrender charge: policy years. $865.20 (70% X 12.36 X We will not increase the charge if your policy's face $100,000 / 1,000). amount increases. If you decrease the face amount of your policy, we'll charge you a surrender charge that's calculated based on the amount of the decrease. At the end of the third policy year, the surrender --------------------------------------------------------- charge is reduced Calculating the surrender charge on a decrease in face to: amount . Underwriting Here's how we calculate the surrender charge on a surrender charge: decrease in face amount: $404.45 ($520 - ($520 X 0.9259% X . Step 1: we divide the amount of the decrease by your 24 months)) policy's face amount immediately before the decrease . Maximum sales . Step 2: we multiply the amount we calculated in step surrender charge: 1 by the total surrender charge that would apply if $672.94 ($865.20 you surrendered your policy. - ($865.20 X 0.9259% X 24 We deduct the amount we calculated in step 2 from your months)). investment options in proportion to the accumulated value you have in each option. The most we will assess for the We calculate any surrender charge after a decrease in underwriting face amount by dividing the new face amount by the old surrender change face amount, and multiplying the result by the on any surrendered surrender charge that would have applied before the policy is $17.30 decrease. per $1,000 of face amount. 44 --------------------------------------------------------- Policy restoration You may request to restore a policy you surrender if the person insured by the policy is still living. If you surrender Here's how it works: your policy and use the proceeds to . We must receive your request to restore the policy purchase another along with the full amount of the surrender proceeds policy we must within 30 days from the original date of the receive your surrender. We will not require evidence of request to restore insurability. your policy within . If we assessed a surrender charge when you 60 days of delivery surrendered your policy, we will add the value of of your the charge to the surrender proceeds we receive from replacement. you. . The surrender proceeds and any refunded surrender charge will be placed into the Fixed account as of the original date of the surrender. We will calculate and pay interest on this amount from the date of surrender to the date we process your restoration request. . On the date we process your restoration request, we will transfer your accumulated value in the Fixed account to the investment options you choose according to your most recent premium allocation instructions. . If you had an outstanding loan amount when you surrendered your policy, we will reinstate the loan amount that was outstanding the day you surrendered your policy. . Once we have restored the policy, we will send you a written confirmation. We will not restore a policy that has been surrendered for an income benefit. 45 GENERAL INFORMATION ABOUT YOUR POLICY This section tells you some additional things you should know about your policy. --------------------------------------------------------- Income benefit If you surrender or make a withdrawal from your policy, you can use the money to buy an income benefit that provides a monthly income. Your policy's beneficiary can use death benefit proceeds to buy an income benefit. In addition to the income benefit described below, you can choose from other income benefits we may make available from time to time. The following is one income benefit available under the Pacific Select Estate Preserver - NY policy: . The income benefit is based on the life of the person receiving the income. If the policy owner is buying the income benefit, monthly income will be based on the owner's life. If the policy's beneficiary buys the income benefit, monthly income will be based on the beneficiary's life. . We'll pay a monthly income for at least 10 years regardless of whether the person receiving the income is still alive. . After 10 years, we'll only pay the monthly income for as long as the person receiving it is still alive. . The minimum monthly income benefit calculated must be at least $100. . For this income benefit, the amount you receive will always be at least as much as the amount guaranteed by your policy. --------------------------------------------------------- Reduced Paid-Up Benefit You may use the net cash surrender value of your policy to purchase fixed paid-up insurance on the lives of the people insured by the policy, or the life of the person insured by the policy, if only one person is living at the time of conversion. You may choose to do this on any policy anniversary while the policy is in force. We guarantee your right to convert your policy, and we will not require evidence of insurability. If you convert your policy, your policy and any riders attached to it will terminate and the net cash surrender value will be transferred to our general account. Investment options are not available under the policy issued when you convert. The net cash surrender value will be applied as a net single premium to purchase paid-up insurance. No premium payments will be required or accepted on the converted policy. The amount of such insurance will be calculated based on 1980 Commissioners Standard Ordinary Mortality Tables, 3% interest and on the ages and risk classifications of the people insured by the policy or, if only one person is living at the time of conversion, the age and risk classification of the surviving person. --------------------------------------------------------- Paying the death benefit in the case If both people insured by the policy commit suicide, of suicide or, if only one person insured by the policy is still living, that person commits suicide, within two years of the policy date, while sane or insane, death benefit proceeds will be the total of all premiums you've paid, less any outstanding loan amount and any withdrawals you've made. --------------------------------------------------------- Replacement of life The term replacement has a special meaning in the life insurance or insurance industry. Before you make a decision to buy, annuities we want you to understand what impact a replacement may have on your existing insurance policy. 46 A replacement occurs when you buy a new life insurance policy or annuity contract, and a policy or contract you already own has been or will be: . lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated . converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values . amended to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid . reissued with any reduction in cash value, or . pledged as collateral or subject to borrowing, whether in a single loan or under a schedule of borrowing over a period of time. There are circumstances when replacing your existing life insurance policy or annuity contract can benefit you. As a general rule, however, replacement is not in your best interest. You should carefully compare the costs and benefits of your existing policy or contract with those of the new policy or contract to determine whether replacement is in your best interest. --------------------------------------------------------- Errors on your If the age of either person insured by your policy is application stated incorrectly on your application, the death benefit under your policy will be the greater of the following: . the amount of death benefit that would be purchased by the most recent cost of insurance charge for the correct age or . the guideline minimum death benefit for the correct age. We'll adjust the accumulated value by recalculating all previous cost of insurance charges and other monthly deductions based on the correct age. --------------------------------------------------------- Contesting the We have the right to contest the validity of your validity of your policy for two years from the policy date. Once your policy policy has been in force for two years from the policy date during the lifetime of the people insured by the policy, we generally lose the right to contest its validity. We also have the right to contest the validity of a policy that you reinstate for two years from the day that it was reinstated. Once your reinstated policy has been in force for two years from the reinstatement date during the lifetime of the people insured by the policy, we generally lose the right to contest its validity. During this period, we may contest your policy only if there is a material misrepresentation on your application for reinstatement. We have the right to contest the validity of an increase in the face amount of a policy for two years from the day the increase becomes effective. Once the increased face amount has been in force for two years during the lifetime of the person insured by the policy, we generally lose the right to contest its validity. Regardless of the above, we can contest the validity of your policy for failure to pay premiums at any time. The policy will terminate upon successful contest with respect to either person insured by the policy. 47 GENERAL INFORMATION ABOUT YOUR POLICY --------------------------------------------------------- Assigning your You can assign your policy as collateral to secure a policy as loan, mortgage, or other kind of debt. Here's how it collateral works: Assigning a policy . An assignment does not change the ownership of the that's a modified policy. endowment contract . After the policy has been assigned, your rights and may generate the rights of your beneficiary will be subject to the taxable income and assignment. The entire policy, including any income a 10% penalty tax. benefit, rider, benefit and endorsement, will also be subject to the assignment. . We're not responsible for the validity of any assignment. . We must receive a copy of the original assignment before we'll consider it binding. . Unless otherwise provided, the person or organization you assign your policy to may exercise the rights under the policy, except the right to change the policy owner or the beneficiary or the right to choose a monthly income benefit. --------------------------------------------------------- Non-participating This policy will not share in any of our surplus earnings. 48 VARIABLE LIFE INSURANCE AND YOUR TAXES This discussion about taxes is based on our understanding of the present federal income tax laws as they are currently interpreted by the Internal Revenue Service (IRS). It's based on the Internal Revenue Code (the tax code) and does not cover any state or local tax laws. The tax This is not a complete discussion of all federal income consequences of tax questions that may arise under the policy. There owning a policy or are special rules that we do not include here that may receiving proceeds apply in certain situations. from it may vary by jurisdiction and We do not know whether the current treatment of life according to the insurance policies under current federal income tax or circumstances of estate or gift tax laws will continue. We also do not each owner or know whether the current interpretations of the laws by beneficiary. the IRS or the courts will remain the same. Future legislation may adversely change the tax treatment of Speak to a life insurance policies, other tax consequences qualified tax described in this discussion or tax consequences that adviser for relate directly or indirectly to life insurance complete policies. information about federal, state and We do not make any guarantees about the tax status of local taxes that your policy, and you should not consider the discussion may apply to you. that follows to be tax advice. Recently passed tax legislation provides, among other things, for reductions in federal estate tax rates, increases in the exemption amount, and a "repeal" of the federal estate tax in 2010. However, the legislation provides for full reinstatement of the federal estate tax in the year 2011. If you are considering the purchase of the policy to help pay federal estate taxes at death, consult with your tax advisor. --------------------------------------------------------- Tax treatment of Definition of life insurance life insurance We believe that the policy qualifies as life insurance. policies That means it will receive the same tax advantages as a conventional fixed life insurance policy. The two main In order to qualify tax advantages are: as a life insurance contract for . In general, your policy's beneficiary will not be federal income tax subject to federal income tax when he or she receives purposes, the the death benefit proceeds. This is true regardless policy must meet of whether the beneficiary is an individual, the statutory corporation, or other entity. definition of life . You'll generally not be taxed on your policy's insurance. accumulated value unless you receive a cash distribution by making a withdrawal, surrendering Death benefits may your policy, or in some instances, taking a loan from be excluded from your policy. income under Section 101(a) of The tax laws defining life insurance, however, do not the tax code. cover all policy features. Your policy may have features that could prevent it from qualifying as life We believe that insurance. For example, the tax laws have yet to last survivor address many issues concerning the treatment of policies meet the substandard risk policies, policies with term insurance statutory on the person insured by the policy or certain tax definition of life requirements relating to joint survivorship life insurance under insurance policies. We can make changes to your policy Section 7702 of the if we believe the changes are needed to ensure that tax code. However, your policy continues to qualify as a life insurance the area of tax law contract. relating to the definition of life The tax code and tax regulations impose limitations on insurance does not unreasonable mortality and expense charges for purposes explicitly address of determining whether a policy qualifies as life all relevant issues insurance for federal tax purposes. For life insurance relating to last policies entered into on or after October 21, 1988, survivor life these calculations must be based upon reasonable insurance policies. mortality charges and other charges reasonably expected We reserve the to be actually paid. right to make changes to the policy if we deem the changes appropriate to continue to qualify your policy as a life insurance contract. If a policy were determined not to qualify as life insurance, the policy would not provide the tax advantages normally provided by life insurance. This includes excluding the death benefit from the gross income of the beneficiary. 49 VARIABLE LIFE INSURANCE AND YOUR TAXES While the Treasury Department has issued proposed regulations about reasonable standards for mortality charges, the standards that apply to joint survivor life insurance policies are not entirely clear. While we believe that our mortality costs and other expenses used in calculating whether the policy qualifies as life insurance are reasonable under current laws, we cannot be sure that the IRS agrees with us. We can change our mortality charges if we believe the changes are needed to ensure that your policy qualifies as a life insurance contract. Section 817(h) of Diversification rules and ownership of the separate the tax code account describes the Your policy will not qualify for the tax benefit of a diversification life insurance contract unless the separate account rules. follows certain rules requiring diversification of investments underlying the policy. In addition, the IRS For more requires that the policyholder does not have control information about over the underlying assets. diversification rules, please see The Treasury Department has announced that the Managing the diversification rules "do not provide guidance Pacific Select Fund concerning the circumstances in which it will treat an in the accompanying investor, rather than the insurance company, as the Pacific Select Fund owner of the assets in a separate account." The IRS prospectus. treats a variable policy owner as the owner of separate account assets if he or she has the ability to exercise investment control over them. Owners of the assets are taxed on any income or gains the assets generate. Although the Treasury Department announced several years ago that it would provide further guidance on the issue, it had not done so when we wrote this prospectus. The ownership rights under your policy are similar to, but different in certain respects from, those described by the IRS in rulings in which it was determined that policyowners were not owners of separate account assets. Since you have greater flexibility in allocating premiums and policy values than was the case in those rulings, it is possible the IRS would treat you as the owner of your policy's proportionate share of the assets of the separate account. We do not know what will be in future Treasury Department regulations or other guidance. We cannot guarantee that the fund's portfolios will be able to operate as currently described in the prospectus, or that the fund will not have to change any portfolio's investment objective or policies. We can modify your policy if we believe it will prevent you from being considered the owner of your policy's proportionate share of the assets of the separate account. Policy exchanges Policy exchanges fall under Section If you exchange your policy for another one that 1035(a) of the tax insures the same person, it generally will be treated code. as a tax-free exchange and, if so, will not result in the recognition of gain or loss. If any of the people insured by the policy are changed, the exchange will be treated as a taxable exchange. Change of ownership You may have taxable income if you transfer ownership of your policy, sell your policy, or change the ownership of it in any way. There are special Corporate owners rules for There are special tax issues for corporate owners: corporate-owned policies. You . using your policy to fund deferred compensation should consult your arrangements for employees has special tax tax adviser. consequences . corporate ownership of a policy may affect your Section 59A of the liability under the alternative minimum tax and the tax code deals with environmental tax. the environmental tax. 50 --------------------------------------------------------- Conventional life The tax treatment of your policy will depend upon insurance policies whether it is a type of contract known as a modified endowment contract. We describe modified endowment Under Section 7702A contracts later in this section. If your policy is not of the tax code, a modified endowment contract, it will be treated as a policies that are conventional life insurance policy and will have the not classified as following tax treatment: modified endowment contracts are taxed Surrendering your policy as conventional When you surrender, or cash in, your policy, you'll life insurance generally be taxed on the difference, if any, between policies. the cash surrender value and the cost basis in your policy. The cost basis in your policy is Making a withdrawal generally the If you make a withdrawal after your policy has been in premiums you've force for 15 years, you'll only be taxed on the amount paid plus any you withdraw that exceeds the cost basis in the policy. taxable distributions less Special rules apply if you make a withdrawal within the any withdrawals or first 15 policy years and it's accompanied by a premiums previously reduction in benefits. In this case, there is a special recovered that were formula under which you may be taxed on all or a not taxable. portion of the withdrawal amount. Taking out a loan If you take out a loan, you will not pay tax on the loan amount unless your policy is surrendered or lapses and you have not repaid your outstanding loan amount. The interest you pay, or that's accrued, on a loan is generally nondeductible. Ask your tax adviser for more information. Loans and corporate-owned policies If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest payable on loan proceeds. If the taxpayer is an entity that's a direct or indirect beneficiary of certain life insurance, endowment or annuity contracts, a portion of the entity's deductions for loan interest may be disallowed, even though this interest may relate to debt that's completely unrelated to the contract. There may be a limited exception that applies to contracts issued on 20% owners, officers, directors or employees of the entity. For more information about this exception, you should consult your tax adviser. --------------------------------------------------------- Modified endowment A modified endowment contract is a special type of life contracts insurance policy. If your policy is a modified endowment contract, it will have the tax treatment Section 7702A of described below. Any distributions you receive during the tax code the life of the policy are treated differently than defines a class of under conventional life insurance policies. life insurance Withdrawals, loans, pledges, assignments and policies known as surrendering your policy are all considered modified endowment distributions and may be subject to tax on an income- contracts. Like first basis and a 10% penalty. other life insurance policies, When a policy becomes a modified endowment contract the death benefit A life insurance policy becomes a modified endowment proceeds paid to contract if, at any time during the first seven policy your beneficiary years, the sum of actual premiums paid exceeds the generally are not seven-pay limit. The seven-pay limit is the cumulative subject to federal total of the level annual premiums (or seven-pay income tax and your premiums) required to pay for the policy's future death policy's and endowment benefits. accumulated value grows on a tax- deferred basis until you receive a cash distribution. If there is a material change to your policy, like a change in the death benefit, we may have to retest your policy and restart the seven-pay premium period to determine whether the change has caused the policy to become a modified endowment contract. 51 VARIABLE LIFE INSURANCE AND YOUR TAXES For example, if the seven-pay premiums were $1,000 a year, the maximum premiums you could pay during the first seven years to avoid modified endowment treatment would be $1,000 in the first year, $2,000 through the first two years and $3,000 through the first three years, etc. Under this test, a Pacific Select Estate Preserver - NY policy may or may not be a modified endowment contract, depending on the amount of premiums paid during the policy's first seven contract years or after a material change has been made to the policy. Surrendering your policy If you surrender your policy, you're taxed on the amount by which the cash surrender value exceeds the cost basis in the policy. Making a withdrawal or taking out a loan If you make a withdrawal or take out a loan from a modified endowment contract, you're taxed on the amount of the withdrawal or loan that's considered income, including all previously non-taxed gains. Income is the difference between the cash surrender value and the cost basis in your policy. It's unclear whether interest paid, or accrued, on a loan is considered interest for federal income tax purposes. If you borrow money to buy or carry certain life insurance policies, tax law provisions may limit the deduction of interest payable on loan proceeds. You should consult your tax adviser. All modified endowment contracts we or our affiliates issue to you in a calendar year are treated as a single contract when we calculate whether a distribution amount is subject to tax. 10% penalty tax If any amount you receive from a modified endowment contract is taxable, you may also have to pay a penalty tax equal to 10% of the taxable amount. A taxpayer will not have to pay the penalty tax if any of the following exceptions apply: . you're at least 59 1/2 years old . you're receiving an amount because you've become disabled . you're receiving an amount that's part of a series of substantially equal periodic payments, paid out at least annually. These payments may be made for your life or life expectancy or for the joint lives or joint life expectancies of you and your beneficiaries. Distributions before a policy becomes a modified endowment contract If your policy fails the seven-pay test and becomes a modified endowment contract, any amount you receive or are deemed to have received during the two years before it became a modified endowment contract may be taxable. The distribution would be treated as having been made in anticipation of the policy's failing to meet the seven-pay test under Treasury Department regulations which are yet to be prescribed. --------------------------------------------------------- Policy riders Split policy option rider This rider allows a policy to be split into two Please see the individual policies. If the split is not treated as a discussion of nontaxable exchange, it could result in the recognition optional riders in of taxable income up to any gain or income in the The death benefit. policy at the time of the split. Please consult with your tax adviser if you want to exercise your rights under this rider. 52 ABOUT PL&A Pacific Life & Annuity Company is a life insurance company based in Arizona. Our operations include life insurance, annuity and institutional products, group life and health insurance and various other insurance products and services. At the end of 2000, we had total admitted assets of $461.7 million. PL&A is authorized to conduct life insurance and annuity business in Arizona, New York and certain other states. Our principal office is located at 700 Newport Center Drive, Newport Beach, California 92660. --------------------------------------------------------- How we're organized PL&A was incorporated in 1982 under the name of Pacific Financial Life Insurance Company. We merged with Pacific Financial Life Insurance Company of Arizona and assumed the name PM Group Life Insurance Company in transferring domicile from California to Arizona, which was completed in 1990. On January 1, 1999, we changed our name to our current name, PL&A. PL&A is a stockholder owned company. As such, purchasing and owning a PL&A policy does not confer any membership rights nor ownership rights in PL&A or in any other company affiliated with PL&A. --------------------------------------------------------- How policies are Pacific Life Insurance Company administers the policies administered sold under this prospectus. At the end of 2000, Pacific Life had over $124.6 billion of individual life insurance in force and total admitted assets of approximately $51.7 billion. It is ranked the 14th largest life insurance carrier in the U.S. in terms of 2000 admitted assets. The Pacific Life family of companies has total assets and funds under management of $335.9 billion. Pacific Life's principal office is at 700 Newport Center Drive, Newport Beach, CA 92660. --------------------------------------------------------- How policies are Pacific Select Distributors, Inc. (PSD), our affiliate, distributed is the distributor of our policies. PSD is located at 700 Newport Center Drive, Newport Beach, California 92660. PSD is registered as a broker-dealer with the SEC and is a member of the National Association of Securities Dealers (NASD). We pay PSD for its services as our distributor. The policies are sold by registered representatives of broker-dealers who have signed agreements with us and PSD. Registered representatives must be licensed to sell variable life insurance under the state insurance and securities regulations that apply. Broker-dealers must be registered with the SEC. How we pay broker-dealers We pay broker-dealers commission for promoting, marketing and selling our policies. Broker-dealers pay a portion of the commission to their registered representatives, under their own arrangements. 53 ABOUT PL&A Commissions are based on "target" premiums we A target premium is determine. The commission we pay will vary with the a hypothetical agreement, but the most common schedule of commissions premium that is we pay is: used only to calculate . 55% of premiums paid up to the first target premium commissions. It in the first policy year varies with the . 4% of premiums paid up to the first target premium death benefit after the first policy year option you choose, . 4% of the premiums paid under targets 2-10 the age of the . 2% of premiums paid in excess of the 10th target person insured by premium. the policy on the policy date, and We may pay broker-dealers an annual renewal commission the gender (unless of up to 0.20% of a policy's accumulated value less any unisex rates are outstanding loan amount. We calculate the renewal required) and risk amount monthly and it becomes payable on each policy class of the person anniversary. insured by the policy. We may also pay override payments, expense and marketing allowances, bonuses, wholesaler fees and A policy's target training allowances. premium will be less than the Registered representatives who meet certain sales policy's guideline levels can qualify for sales incentives programs we level premiums. sponsor. We may also pay them non-cash compensation like expense-paid trips, expense-paid educational seminars, and merchandise. They can choose to receive their compensation on a deferred basis. --------------------------------------------------------- How our accounts We own the assets in our general account and our work separate account. We allocate your net premiums to these accounts according to the investment options you've chosen. General account We can provide you Our general account includes all of our assets, except with reports of our for those held in our separate accounts. We guarantee ratings as an you an interest rate for up to one year on any amount insurance company allocated to the fixed options. The rate is reset and our ability to annually. The fixed options are part of our general pay claims with account, which we may invest as we wish, according to respect to our any laws that apply. We'll credit the guaranteed rate general account even if the investments we make earn less. Our ability assets. to pay these guarantees is backed by our strength as a company. You'll find the The fixed options are not securities, so they do not audited financial fall under any securities act. For this reason, the SEC statements for the has not reviewed the disclosure in this prospectus Pacific Select Exec about the fixed options. However, other federal separate account securities laws may apply to the accuracy and later in this completeness of the disclosure about the fixed options. section of the prospectus. This section of the Separate account prospectus also Amounts allocated to the variable investment options includes the are held in our separate account. The assets in this audited account are kept separate from the assets in our consolidated general account and our other separate accounts, and financial are protected from our general creditors. statements for PL&A later in this The separate account was established on September 24, section of the 1998 under Arizona law under the authority of our Board prospectus. We of Directors. It's registered with the SEC as a type of include these investment company called a unit investment trust. The financial SEC does not oversee the administration or investment statements to show practices or policies of the account. our strength as a company and our The separate account is divided into variable accounts. ability to meet our Each variable account invests in shares of a designated obligations under portfolio of the Pacific Select Fund. We may add the policies. variable accounts that invest in other portfolios of the fund or in other securities. The separate account is not the We're the legal owner of the assets in the separate only investor in account, and pay its operating expenses. The separate the Pacific Select account is operated only for our variable life Fund. Investment in insurance policies. We must keep enough money in the the fund by other account to pay anticipated obligations under the separate accounts insurance policies funded by the account, but we can for variable transfer any amount that's more than these anticipated annuity contracts obligations to our general account. Some of the money and variable life in the separate account may include charges we collect insurance contracts from the account and any investment results on those could cause charges. conflicts. For more information, please see the Statement of Additional Information for the Pacific Select Fund. 54 We cannot charge the assets in the separate account attributable to our reserves and other liabilities under the policies funded by the account with any liabilities from our other business. Similarly, the income, gains or losses, realized or unrealized, of the assets of any variable account belong to that variable account and are credited to or charged against the assets held in that variable account without regard to our other income, gains or losses. Making changes to the separate account We can add, change or remove any securities that the separate account or any variable account holds or buys, as long as we comply with the laws that apply. We can substitute shares of one Pacific Select Fund portfolio with shares of another portfolio or fund if: . any portfolio is no longer available for investment . our management believes that a portfolio is no longer appropriate in view of the purposes of the policy. We'll give you any required notice or receive any required approval from policy owners or the SEC before we substitute any shares. We'll comply with the filing or other procedures established by insurance regulators as required by law. We can add new variable accounts, which may include additional subaccounts of the separate account, to serve as investment options under the policies. These may be managed separate accounts or they may invest in a new portfolio of the fund, or in shares of another investment company or one of its portfolios, or in a suitable investment vehicle with a specified investment objective. We can add new variable accounts when we believe that it's warranted by marketing needs or investment conditions. We'll decide on what basis we'll make new accounts available to existing policy owners. We can also eliminate any of our variable accounts if we believe marketing, tax or investment conditions warrant it. We can terminate and liquidate any variable account. If we make any changes to variable accounts or substitution of securities, we can make appropriate changes to this policy or any of our other policies, by appropriate endorsement, to reflect the change or substitution. We will notify you if there is a material change in the investment policy of a Variable Account. The notice will inform you of your options, including your option to transfer from such Variable Account to the Fixed Account within 60 days after: . the effective date of the material change, or . the date you receive the notice, whichever is later. If we believe it's in the best interests of people holding voting rights under the policies and we meet any required regulatory approvals we can do the following: . operate the separate account as a management investment company, unit investment trust, or any other form permitted under securities or other laws . register or deregister the separate account under securities law . combine the separate account with one of our other separate accounts or our affiliates' separate accounts . combine one or more variable accounts . create a committee, board or other group to manage the separate account . change the classification of any variable account. 55 ABOUT PL&A Taxes we pay We may be charged for state and local taxes. Currently, we pay these taxes because they are small amounts with respect to the policy. If these taxes increase significantly, we may deduct them from the separate account. We may charge the separate account for any federal, state and local taxes that apply to the separate account or to our operations. This could happen if our tax status or the tax treatment of variable life insurance changes. --------------------------------------------------------- Voting rights We're the legal owner of the shares of the Pacific Select Fund that are held by the variable accounts. We may vote on any matter at shareholder meetings of the fund. However, we are required by law to vote as you instruct on the shares relating to your allocation in a variable investment option. This is called your voting interest. Your voting interest is calculated as of a day set by the Board of Trustees of the fund called the record date. Your voting interest equals the accumulated value in a variable investment option divided by the net asset value of a share of the corresponding portfolio. Fractional shares are included. If allowed by law, we may change how we calculate your voting interest. We'll send you documents from the fund called proxy materials. They include information about the items you'll be voting on and forms for you to give us your instructions. We'll vote shares held in the separate account for which we do not receive voting instructions in the same proportion as all other shares in the portfolio held by that separate account for which we've received timely instructions. If we do not receive any voting instructions for the shares in a separate account, we will vote the shares in that separate account in the same proportion as the total votes for all of our separate accounts for which we've received timely instructions. We'll vote shares of any portfolio we hold in our general account in the same proportion as the total votes for all of our separate accounts, including this separate account. If the law changes to allow it, we can vote as we wish on shares of the portfolios held in the separate account. When required by state insurance regulatory authorities, we may disregard voting instructions that: . would change a portfolio's investment objective or subclassification . would approve or disapprove an investment advisory contract. We may disregard voting instructions on a change initiated by policy owners that would change a portfolio's investment policy, investment adviser or portfolio manager if: . our disapproval is reasonable . we determine in good faith that the change would be against state law or otherwise be inappropriate, considering the portfolio's objectives and purpose, and considering what effect the change would have on us. If we disregard any voting instructions, we'll include a summary of the action we took and our reasons for it in the next report to policy owners. 56 --------------------------------------------------------- Illustrations We will provide you with illustrations based on different sets of assumptions upon your request. You If you ask us, can request such illustrations at any time. we'll provide you Illustrations may help you understand how your policy with different values would vary over time based on different kinds of assumptions. We have filed examples of such an illustrations. illustration as an exhibit to the registration statement that relates to the policy on file with the . Illustrations SEC. based on information you give us about the age of the person to be insured by the policy, their risk class, the face amount, the death benefit and premium payments. . Illustrations that show the allocation of premium payments to specified variable accounts. These will reflect the expenses of the portfolio of the Fund in which the variable account invests. . Illustrations that use a hypothetical gross rate of return that's greater than 12%. These are available only to certain large institutional investors. --------------------------------------------------------- State regulation We're subject to the laws of the state of Arizona governing insurance companies and to regulations issued by the Commissioner of Insurance of Arizona. In addition, we're subject to the insurance laws and regulations of the other states and jurisdictions in which we're licensed or may become licensed to operate. An annual statement in a prescribed form must be filed with the Commissioner of Insurance of Arizona and with regulatory authorities of other states on or before March 1st in each year. This statement covers our operations for the preceding year and our financial condition as of December 31st of that year. Our affairs are subject to review and examination at any time by the Commissioner of Insurance or his agents, and subject to full examination of our operations at periodic intervals. --------------------------------------------------------- Legal proceedings The separate account is not involved in any legal and legal matters proceedings that would have a material effect on policy owners. Legal matters concerning the issue and sale of the life insurance policies described in this prospectus, our organization and authority to issue the policies under Arizona law, and the validity of the forms of the policies under Arizona law, have been passed upon by our general counsel. Legal matters relating to federal securities laws and federal income tax laws have been passed upon by Dechert. --------------------------------------------------------- Registration We've filed a registration statement with the SEC for statement Pacific Select Estate Preserver - NY, under the Securities Act of 1933. The SEC's rules allow us to omit some of the information required by the registration statement from this prospectus. You can ask for it from the SEC's office in Washington, D.C. They may charge you a fee. --------------------------------------------------------- Management The following is a list of our directors and certain officers, along with some information about their business activities over the past five years. They do not receive any compensation from the separate account for services they provide to it nor do we pay any separately allocable compensation for these services. The business address of each of these people is c/o Pacific Life & Annuity Company, 700 Newport Center Drive, Newport Beach, California 92660. 57 ABOUT PL&A
NAME AND POSITION PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS Thomas C. Sutton Director, Chairman of the Board and Chief Executive Officer (since August 2001) of Director, Chairman PL&A; Director, Chairman of the Board and Chief Executive Officer of Pacific Life of the Board and Insurance Company; Director, Chairman of the Board and Chief Executive Officer of Chief Executive Pacific LifeCorp, August 1997 to present; Director, Chairman of the Board and Chief Officer Executive Officer of Pacific Mutual Holding Company, August 1997 to present; Trustee and Chairman of the Board and Former President of Pacific Select Fund; former Management Board Member of PIMCO Advisors L.P.; Former Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company; Director of Newhall Land & Farming; The Irvine Company; Edison International; and similar positions with other affiliated companies of Pacific Life Insurance Company. David R. Carmichael Director of PL&A; Senior Vice President and General Counsel of PL&A, July 1998 to Director, Senior present; Director (since August 1997), Senior Vice President and General Counsel of Vice President and Pacific Life Insurance Company; Senior Vice President and General Counsel of Pacific General Counsel LifeCorp, August 1997 to present; Senior Vice President and General Counsel of Pacific Mutual Holding Company, August 1997 to present; Director of Association of California Life and Health Insurance Companies; and President-elect and former Director of Association of Life Insurance Counsel. Audrey L. Milfs Director, Vice President (since February 1999) and Secretary of PL&A; Director Director, Vice (since August 1997), Vice President and Corporate Secretary of Pacific Life President and Insurance Company; Vice President and Corporate Secretary of Pacific LifeCorp, Secretary August 1997 to present; Vice President and Corporate Secretary of Pacific Mutual Holding Company, August 1997 to present; Secretary of Pacific Select Fund; similar positions with other affiliated companies of Pacific Life Insurance Company. Glenn S. Schafer Director and President (since August 2001) of PL&A; Director and President of Director and Pacific Life Insurance Company; Executive Vice President and Chief Financial Officer President of Pacific Life Insurance Company, April 1991 to January 1995; Director and President of Pacific LifeCorp, August 1997 to present; Director and President of Pacific Mutual Holding Company, August 1997 to present; President (since February 1999) and Former Trustee of Pacific Select Fund; former Management Board Member of PIMCO Advisors L.P.; Former Equity Board Member of PIMCO Advisors L.P.; Former Director of Pacific Corinthian Life Insurance Company; and similar positions with other affiliated companies of Pacific Life Insurance Company. Khanh T. Tran Executive Vice President (since April 2001) and Chief Financial Officer of PL&A; Executive Vice Senior Vice President of PL&A, February 1999 to April 2001; Director (since August President and Chief 1997), Executive Vice President (since April 2001) and Chief Financial Officer of Financial Officer Pacific Life Insurance Company, June 1996 to present; Senior Vice President of Pacific Life, June 1996 to April 2001; Vice President and Treasurer of Pacific Life, November 1991 to June 1996; Senior Vice President and Chief Financial Officer of Pacific LifeCorp, August 1997 to present; Senior Vice President and Chief Financial Officer of Pacific Mutual Holding Company, August 1997 to present; Executive Vice President and Chief Financial Officer of other affiliated companies of Pacific Life Insurance Company; Director of Prandium, Inc. Lynn C. Miller Executive Vice President of PL&A, July 1998 to present; Executive Vice President of Executive Vice Pacific Life Insurance Company. President Brian D. Klemens Vice President and Treasurer of PL&A, February 1999 to present; Vice President and Vice President and Treasurer of Pacific Life Insurance Company, December 1998 to present; Assistant Treasurer Vice President, Accounting and Assistant Controller of Pacific Life Insurance Company, April 1994 to December 1998; Vice President and Treasurer of Pacific LifeCorp, June 1999 to present; Vice President and Treasurer of Pacific Mutual Holding Company, June 1999 to present; Vice President and Treasurer of other affiliated companies of Pacific Life Insurance Company.
--------------------------------------------------------- Financial The next several pages contain the statements of net statements assets of Pacific Select Exec Separate Account as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000. These are followed by the unaudited statement of assets and liabilities of the Pacific Select Exec Separate Account as of September 30, 2001 and the related statement of operations for the nine months then ended, and the statement of changes in net assets for the nine month period ended September 30, 2001 and for the year ended December 31, 2000. These are followed by the financial statements- statutory basis for PL&A as of December 31, 2000 and 1999 and for the years then ended, which are included in this prospectus so you can assess our ability to meet our obligations under the policies. These are followed by the unaudited financial statements - statuatory basis for PL&A as of September 30, 2001 and December 31, 2000 and for the nine months ended September 30, 2001 and 2000. 58 --------------------------------------------------------- Experts The financial statements-statutory basis for PL&A as of December 31, 2000 and 1999 and for the years then ended and the statement of net assets of Pacific Select Exec Separate Account as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000 included in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein, which report on the financial statements of PL&A expresses an unqualified opinion with respect to the presentation of such financial statements-statutory basis in accordance with the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, and also states that such financial statements-statutory basis, are not presented fairly in accordance with accounting principles generally accepted in the United States of America, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. 59 INDEPENDENT AUDITORS' REPORT The Board of Directors Pacific Life & Annuity Company: We have audited the accompanying statement of assets and liabilities of Pacific Select Exec Separate Account (the "Separate Account") (comprised of the Aggressive Equity, Emerging Markets, Diversified Research, Small-Cap Equity, International Large-Cap, Equity, I-Net Tollkeeper, Multi-Strategy, Equity Income, Growth LT, Mid-Cap Value, Equity Index, Small-Cap Index, REIT, International Value, Government Securities, Managed Bond, Money Market, High Yield Bond, and Large-Cap Value Variable Accounts) as of December 31, 2000 and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of each of the respective Variable Accounts constituting Pacific Select Exec Separate Account as of December 31, 2000 and the results of their operations and the changes in their net assets for the periods from commencement of operations through December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. DELOITTE & TOUCHE LLP Costa Mesa, California February 6, 2001 60 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ---------------------------------------------------------------------------------------------------------- ASSETS Investments: Aggressive Equity Portfolio....... $2,892 Emerging Markets Portfolio....... $1,631 Diversified Research Portfolio....... $894 Small-Cap Equity Portfolio....... $4,691 International Large-Cap Portfolio....... $6,676 Equity Portfolio....... $1,226 I-Net Tollkeeper Portfolio....... $8,479 Multi-Strategy Portfolio....... $9,751 Equity Income Portfolio....... $7,631 Growth LT Portfolio....... $18,880 Receivables: Due from Pacific Life & Annuity Company......... 187 187 234 ---------------------------------------------------------------------------------------------------------- Total Assets..... 2,892 1,631 894 4,878 6,863 1,226 8,479 9,751 7,631 19,114 ---------------------------------------------------------------------------------------------------------- LIABILITIES Payables: Fund shares purchased....... 187 187 234 ---------------------------------------------------------------------------------------------------------- Total Liabilities...... 187 187 234 ---------------------------------------------------------------------------------------------------------- NET ASSETS....... $2,892 $1,631 $894 $4,691 $6,676 $1,226 $8,479 $9,751 $7,631 $18,880 ========================================================================================================== Shares Owned in each Portfolio... 261 242 81 221 851 47 1,250 633 325 603 ========================================================================================================== Cost of Investments ..... $3,250 $1,741 $870 $5,020 $6,892 $1,340 $11,177 $10,036 $7,729 $22,221 ==========================================================================================================
See Notes to Financial Statements 61 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES (Continued) DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account -------------------------------------------------------------------------------------------------------- ASSETS Investments: Mid-Cap Value Portfolio........ $5,701 Equity Index Portfolio........ $16,708 Small-Cap Index Portfolio........ $3,270 REIT Portfolio... $691 International Value Portfolio.. $10,226 Government Securities Portfolio........ $11,748 Managed Bond Portfolio........ $7,080 Money Market Portfolio........ $105,137 High Yield Bond Portfolio........ $4,000 Large-Cap Value Portfolio........ $16,132 Receivables: Due from Pacific Life & Annuity Company.......... 94 140 94 -------------------------------------------------------------------------------------------------------- Total Assets...... 5,795 16,848 3,270 691 10,226 11,748 7,080 105,137 4,094 16,132 -------------------------------------------------------------------------------------------------------- LIABILITIES Payables: Fund shares purchased........ 94 140 94 -------------------------------------------------------------------------------------------------------- Total Liabilities....... 94 140 94 -------------------------------------------------------------------------------------------------------- NET ASSETS........ $5,701 $16,708 $3,270 $691 $10,226 $11,748 $7,080 $105,137 $4,000 $16,132 ======================================================================================================== Shares Owned in each Portfolio.... 442 490 294 56 645 1,101 655 10,420 520 1,281 ======================================================================================================== Cost of Investments....... $5,417 $17,552 $3,247 $674 $10,012 $11,611 $7,009 $105,252 $4,061 $15,711 ========================================================================================================
See Notes to Financial Statements 62 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account (1) Account Account Account Account Account Account ----------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends (1)... $1 $13 $5 $47 $11 $40 ----------------------------------------------------------------------------------------------------------- Net Investment Income........... 1 13 5 47 11 40 ----------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions.... ($59) ($226) (72) (70) ($6) ($66) (6) (111) Net unrealized appreciation (depreciation) on investments.. (359) (109) 24 (330) (217) (114) (2,698) (285) (98) (3,342) ----------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on investments...... (418) (335) 24 (402) (287) (120) (2,764) (291) (98) (3,453) ----------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.. ($418) ($335) $25 ($389) ($282) ($120) ($2,764) ($244) ($87) ($3,413) ===========================================================================================================
(1) Pacific Select Fund had declared dividends for the Aggressive Equity, Emerging Markets, and Equity Portfolios during 2000. The corresponding Variable Accounts did not own shares prior to the ex-dividend dates. See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 63 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS (Continued) FOR THE PERIODS ENDED DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends........ $12 $29 $22 $9 $15 $105 $119 $2,106 $75 $80 ------------------------------------------------------------------------------------------------------- Net Investment Income............ 12 29 22 9 15 105 119 2,106 75 80 ------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) from security transactions..... 7 (9) (73) (116) 2 9 (271) (6) (73) Net unrealized appreciation (depreciation) on investments... 284 (844) 25 18 214 137 71 (117) (61) 420 ------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on investments....... 291 (853) (48) 18 98 139 80 (388) (67) 347 ------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... $303 ($824) ($26) $27 $113 $244 $199 $1,718 $8 $427 =======================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 64 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIODS ENDED DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Growth Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Income LT Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account -------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............. $1 $13 $5 $47 $11 $40 Net realized loss from security transactions....... ($59) ($226) (72) (70) ($6) ($66) (6) (111) Net unrealized appreciation (depreciation) on investments..... (359) (109) 24 (330) (217) (114) (2,698) (285) (98) (3,342) -------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations..... (418) (335) 25 (389) (282) (120) (2,764) (244) (87) (3,413) -------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums........... 138 281 281 56 820 Transfers between variable accounts, net...... 3,675 2,049 885 5,112 7,166 1,482 11,501 10,124 7,938 22,441 Transfers--policy charges and deductions......... (374) (241) (16) (342) (538) (137) (258) (184) (220) (902) Transfers--other... 9 20 29 49 1 (1) (66) -------------------------------------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions........ 3,310 1,966 869 5,080 6,958 1,346 11,243 9,995 7,718 22,293 -------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS.......... 2,892 1,631 894 4,691 6,676 1,226 8,479 9,751 7,631 18,880 -------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of Period............. -------------------------------------------------------------------------------------------------------- End of Period...... $2,892 $1,631 $894 $4,691 $6,676 $1,226 $8,479 $9,751 $7,631 $18,880 ========================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 65 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIODS ENDED DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Government Managed Money High-Yield Large-Cap Value Index Index REIT Value Securities Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............ $12 $29 $22 $9 $15 $105 $119 $2,106 $75 $80 Net realized gain (loss) from security transactions...... 7 (9) (73) (116) 2 9 (271) (6) (73) Net unrealized appreciation (depreciation) on investments.... 284 (844) 25 18 214 137 71 (117) (61) 420 ------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Assets Resulting from Operations.... 303 (824) (26) 27 113 244 199 1,718 8 427 ------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums.......... 140 211 275 688 688 272,763 278 413 Transfers between variable accounts, net..... 5,713 17,658 3,255 736 10,033 11,821 6,429 (148,228) 3,875 16,334 Transfers-- policy charges and deductions.... (430) (338) (168) (72) (639) (317) (235) (21,135) (159) (1,034) Transfers--other.. (25) 1 (66) 31 (1) 19 (2) (8) ------------------------------------------------------------------------------------------------------ Net Increase in Net Assets Derived from Policy Transactions....... 5,398 17,532 3,296 664 10,113 11,504 6,881 103,419 3,992 15,705 ------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS......... 5,701 16,708 3,270 691 10,226 11,748 7,080 105,137 4,000 16,132 ------------------------------------------------------------------------------------------------------ NET ASSETS Beginning of Period............ ------------------------------------------------------------------------------------------------------ End of Period..... $5,701 $16,708 $3,270 $691 $10,226 $11,748 $7,080 $105,137 $4,000 $16,132 ======================================================================================================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 66 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES The Pacific Select Exec Separate Account (the "Separate Account") is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and is comprised of twenty-two subaccounts called Variable Accounts: the Aggressive Equity, Emerging Markets, Diversified Research, Small- Cap Equity, International Large-Cap, Equity, I-Net Tollkeeper, Multi-Strategy, Equity Income, Strategic Value, Growth LT, Focused 30, Mid-Cap Value, Equity Index, Small-Cap Index, REIT, International Value, Government Securities, Managed Bond, Money Market, High Yield Bond, and Large-Cap Value Variable Accounts as of December 31, 2000. The assets in each Variable Account are invested in shares of the corresponding portfolios of Pacific Select Fund (the "Fund"), each of which pursues different investment objectives and policies. The financial statements of the Fund, including the schedules of investments, are provided separately and should be read in conjunction with the Separate Account's financial statements. The Separate Account was established by Pacific Life & Annuity Company (PL&A), a wholly-owned subsidiary of Pacific Life Insurance Company (Pacific Life), on September 24, 1998 and commenced operations on August 15, 2000. The following Variable Accounts commenced operations in 2000: the Money Market Variable Account commenced operations on August 15, 2000; the Aggressive Equity, Emerging Markets, Small-Cap Equity, International Large-Cap, Growth LT, Mid-Cap Value, International Value and Large-Cap Value Variable Accounts commenced operations on September 8, 2000; the Equity Index and High Yield Bond Variable Accounts commenced operations on October 2, 2000; the Small-Cap Index and Managed Bond Variable Accounts commenced on October 20, 2000; the I-Net Tollkeeper and Multi-Strategy Variable Accounts commenced operations on November 3, 2000; the Equity and Government Securities Variable Accounts commenced operations on November 27, 2000; the Equity Income Variable Account commenced operations on November 28, 2000; the Diversified Research Variable Account commenced operations on November 30, 2000; and the REIT Variable Account commenced operations on December 6, 2000. There were no operational activities in the Strategic Value and Focused 30 Variable Accounts through December 31, 2000. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of PL&A. The assets of the Separate Account will not be charged with any liabilities arising out of any other business conducted by PL&A, but the obligations of the Separate Account, including benefits related to variable life insurance, are obligations of PL&A. The Separate Account held by PL&A represents funds from individual flexible premium variable life policies. The assets of the Separate Account are carried at market value. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for investment companies which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. A. Valuation of Investments Investments in shares of the Fund are valued at the reported net asset values of the respective portfolios. Valuation of securities held by the Fund is discussed in the notes to its financial statements. B. Security Transactions and Investment Income Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date. C. Federal Income Taxes The operations of the Separate Account will be reported on the Federal income tax return of PL&A, which is taxed as a life insurance company under the provisions of the Tax Reform Act of 1986. Under current tax law, no Federal income taxes are expected to be paid by PL&A with respect to the operations of the Separate Account. 2. DIVIDENDS During 2000, the Fund declared dividends for each portfolio, except for the I- Net Tollkeeper Portfolio, invested by the Separate Account. The amounts accrued by the Separate Account for its share of the dividends were reinvested in additional full and fractional shares of the related portfolios. 3. CHARGES AND EXPENSES With respect to variable life insurance policies funded by the Separate Account, PL&A makes certain deductions from premiums for sales load and state premium taxes before amounts are allocated to the Separate Account. PL&A also makes certain deductions from the net assets of each Variable Account for the mortality and expense risks PL&A assumes, administrative expenses, cost of insurance, charges for optional benefits and any sales and underwriting surrender charges. The operating expenses of the Separate Account are paid by PL&A. 4. RELATED PARTY AGREEMENT Pacific Select Distributors, Inc. (formerly Pacific Mutual Distributors, Inc.), a wholly-owned subsidiary of Pacific Life, serves as principal underwriter of variable life insurance policies funded by interests in the Separate Account, without remuneration from the Separate Account. 67 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) 5. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES The investment in the Fund shares are carried at identified cost, which represents the amount available for investment (including reinvested distributions of net investment income and realized gains). A reconciliation of total cost and market value of the Separate Account's investments in the Fund as of December 31, 2000 were as follows:
Variable Accounts (1) --------------------------------------------------------------------- Aggressive Emerging Diversified Small-Cap International Equity Markets Research Equity Large-Cap Equity --------------------------------------------------------------------- Total net proceeds from policy transactions $6,314 $4,669 $885 $7,998 $9,939 $1,375 Add: Reinvested net investment income distributions from the Fund 1 13 5 --------------------------------------------------------------------- Sub-Total 6,314 4,669 886 8,011 9,944 1,375 Less: Cost of investments disposed during the period 3,064 2,928 16 2,991 3,052 35 --------------------------------------------------------------------- Total cost of investments at end of period 3,250 1,741 870 5,020 6,892 1,340 Add: Unrealized appreciation (depreciation) (358) (110) 24 (329) (216) (114) --------------------------------------------------------------------- Total market value of investments at end of period $2,892 $1,631 $894 $4,691 $6,676 $1,226 ===================================================================== I-Net Multi- Equity Growth Mid-Cap Equity Tollkeeper Strategy Income LT Value Index --------------------------------------------------------------------- Total net proceeds from policy transactions $11,501 $10,179 $7,802 $25,528 $7,444 $17,687 Add: Reinvested net investment income distributions from the Fund 47 11 40 12 29 --------------------------------------------------------------------- Sub-Total 11,501 10,226 7,813 25,568 7,456 17,716 Less: Cost of investments disposed during the period 324 190 84 3,347 2,039 164 --------------------------------------------------------------------- Total cost of investments at end of period 11,177 10,036 7,729 22,221 5,417 17,552 Add: Unrealized appreciation (depreciation) (2,698) (285) (98) (3,341) 284 (844) --------------------------------------------------------------------- Total market value of investments at end of period $8,479 $9,751 $7,631 $18,880 $5,701 $16,708 ===================================================================== Small-Cap International Government Managed Money Index REIT Value Securities Bond Market --------------------------------------------------------------------- Total net proceeds from policy transactions $4,564 $678 $15,721 $11,821 $10,978 $222,997 Add: Reinvested net investment income distributions from the Fund 22 9 15 105 119 2,106 --------------------------------------------------------------------- Sub-Total 4,586 687 15,736 11,926 11,097 225,103 Less: Cost of investments disposed during the period 1,339 13 5,724 315 4,088 119,851 --------------------------------------------------------------------- Total cost of investments at end of period 3,247 674 10,012 11,611 7,009 105,252 Add: Unrealized appreciation (depreciation) 23 17 214 137 71 (115) --------------------------------------------------------------------- Total market value of investments at end of period $3,270 $691 $10,226 $11,748 $7,080 $105,137 ===================================================================== High Yield Large-Cap Bond Value --------------------- Total net proceeds from policy transactions $4,150 $22,390 Add: Reinvested net investment income distributions from the Fund 75 80 --------------------- Sub-Total 4,225 22,470 Less: Cost of investments disposed during the period 164 6,759 --------------------- Total cost of investments at end of period 4,061 15,711 Add: Unrealized appreciation (depreciation) (61) 421 --------------------- Total market value of investments at end of period $4,000 $16,132 =====================
- --------------- (1) Operations commenced during 2000 (See Note 1 to Financial Statements). 68 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) 6. TRANSACTIONS IN SEPARATE ACCOUNT UNITS AND SELECTED ACCUMULATION UNIT ** INFORMATION Transactions in Separate Account units for the periods ended December 31, 2000 and the selected accumulation unit information as of December 31, 2000 were as follows:
Variable Accounts (1) --------------------------------------------------------------------------------- Aggressive Emerging Diversified Small-Cap International I-Net Equity Markets Research Equity Large-Cap Equity Tollkeeper --------------------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 15 34 29 (b) Transfers between variable accounts, net 388 212 86 582 747 150 1,181 (c) Transfers--policy charges and deductions (44) (28) (2) (41) (56) (14) (32) (d) Transfers--other (1) 5 --------------------------------------------------------------------------------- Total units outstanding at end of period 344 199 84 574 725 136 1,149 ================================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $8.41 $8.18 $10.63 $8.17 $9.21 $9.04 $7.38 Multi- Equity Mid-Cap Equity Small-Cap Strategy Income Growth LT Value Index Index REIT --------------------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 6 95 14 23 27 (b) Transfers between variable accounts, net 1,012 793 2,375 560 1,826 324 73 (c) Transfers--policy charges and deductions (18) (22) (106) (42) (36) (17) (7) (d) Transfers--other (1) (1) (6) --------------------------------------------------------------------------------- Total units outstanding at end of period 999 770 2,364 532 1,813 328 66 ================================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $9.76 $9.90 $7.99 $10.71 $9.22 $9.96 $10.43 International Government Managed Money High Yield Large-Cap Value Securities Bond Market Bond Value ----------------------------------------------------------------------- Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 72 69 27,083 29 41 (b) Transfers between variable accounts, net 1,049 1,177 642 (14,718) 404 1,652 (c) Transfers--policy charges and deductions (67) (31) (23) (2,099) (17) (105) (d) Transfers--other 1 2 (1) ----------------------------------------------------------------------- Total units outstanding at end of period 1,055 1,146 688 10,268 416 1,587 ======================================================================= Accumulation Unit Value: At beginning of period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 At end of period $9.70 $10.25 $10.30 $10.24 $9.61 $10.17
- ------ ** Accumulation Unit: unit of measure used to calculate the value of a Policy Owner's interest in a Variable Account during the accumulation period. (1) Operations commenced during 2000 (See Note 1 to Financial Statements). 69 PACIFIC SELECT EXEC SEPARATE ACCOUNT Financial Statements as of September 30, 2001 And for the nine months ended September 30, 2001 And for the year ended December 31, 2000 70 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2001 (Unaudited)
Blue Aggressive Aggressive Emerging Diversified Small-Cap International Chip Growth Equity Markets Research Equity Large-Cap Equity Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------- ASSETS Investments: Blue Chip Portfolio.... $18,025 Aggressive Growth Portfolio.............. $1,819 Aggressive Equity Portfolio.............. $24,833 Emerging Markets Portfolio.............. $12,845 Diversified Research Portfolio.............. $10,663 Small-Cap Equity Portfolio.............. $31,689 International Large-Cap Portfolio.............. $54,221 Equity Portfolio....... $13,796 Receivables: Due from Pacific Life Insurance Company...... 2 641 47 646 42 248 32 Fund shares redeemed... 21 ------------------------------------------------------------------------------------- Total Assets............ 18,046 1,821 25,474 12,892 11,309 31,731 54,469 13,828 ------------------------------------------------------------------------------------- LIABILITIES Payables: Due to Pacific Life Insurance Company...... 21 Fund shares purchased.. 2 641 47 646 42 248 32 ------------------------------------------------------------------------------------- Total Liabilities....... 21 2 641 47 646 42 248 32 ------------------------------------------------------------------------------------- NET ASSETS.............. $18,025 $1,819 $24,833 $12,845 $10,663 $31,689 $54,221 $13,796 ===================================================================================== Shares Owned in each Portfolio............... 2,489 258 3,297 2,710 1,144 2,265 9,603 814 ===================================================================================== Cost of Investments..... $20,986 $2,134 $30,876 $15,537 $11,031 $40,146 $63,476 $15,902 =====================================================================================
See Notes to Financial Statements 71 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES (Continued) SEPTEMBER 30, 2001 (Unaudited)
I-Net Financial Health Telecom- Multi- Equity Strategic Tollkeeper Services Sciences Technology munications Strategy Income Value Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account --------------------------------------------------------------------------------- ASSETS Investments: I-Net Tollkeeper Portfolio........... $15,986 Financial Services Portfolio......... $6,712 Health Sciences Portfolio............ $8,161 Technology Portfolio ................ $5,810 Telecommunications Portfolio......... $4,382 Multi-Strategy Portfolio............. $29,615 Equity Income Portfolio.............. $63,919 Strategic Value Portfolio............ $4,379 Receivables: Due from Pacific Life Insurance Company.............................. 2 196 656 853 190 Fund shares redeemed................. 7 --------------------------------------------------------------------------------- Total Assets.......................... 15,986 6,714 8,357 5,817 4,382 30,271 64,772 4,569 --------------------------------------------------------------------------------- LIABILITIES Payables: Due to Pacific Life Insurance Company.............................. 7 Fund shares purchased................ 2 196 656 853 190 --------------------------------------------------------------------------------- Total Liabilities..................... 2 196 7 656 853 190 --------------------------------------------------------------------------------- NET ASSETS............................ $15,986 $6,712 $8,161 $5,810 $4,382 $29,615 $63,919 $4,379 ================================================================================= Shares Owned in each Portfolio........ 4,418 776 936 1,346 981 2,124 3,425 564 ================================================================================= Cost of Investments................... $24,119 $7,063 $8,250 $7,583 $5,779 $31,682 $70,717 $4,626 =================================================================================
See Notes to Financial Statements 72 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES (Continued) SEPTEMBER 30, 2001 (Unaudited)
Growth Focused Mid-Cap International Capital Mid-Cap Global Equity LT 30 Value Value Opportunities Growth Growth Index Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account ---------------------------------------------------------------------------------- ASSETS Investments: Growth LT Portfolio................. $84,329 Focused 30 Portfolio ............... $67 Mid-Cap Value Portfolio............. $59,046 International Value Portfolio....... $71,040 Capital Opportunities Portfolio..... $5,793 Mid-Cap Growth Portfolio............ $2,915 Global Growth Portfolio............. $24 Equity Index Portfolio.............. $152,556 Receivables: Due from Pacific Life Insurance Company............................. 34 1 803 779 190 176 5 574 ---------------------------------------------------------------------------------- Total Assets......................... 84,363 68 59,849 71,819 5,983 3,091 29 153,130 ---------------------------------------------------------------------------------- LIABILITIES Payables: Fund shares purchased............... 34 1 803 779 190 176 5 574 ---------------------------------------------------------------------------------- Total Liabilities.................... 34 1 803 779 190 176 5 574 ---------------------------------------------------------------------------------- NET ASSETS........................... $84,329 $67 $59,046 $71,040 $5,793 $2,915 $24 $152,556 ================================================================================== Shares Owned in each Portfolio....... 5,000 12 4,937 6,270 810 459 3 5,695 ================================================================================== Cost of Investments.................. $114,529 $72 $64,196 $79,548 $6,576 $3,259 $17 $173,891 ==================================================================================
See Notes to Financial Statements 73 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF ASSETS AND LIABILITIES (Continued) SEPTEMBER 30, 2001 (Unaudited)
Small-Cap Inflation Managed Money High Yield Large-Cap Index REIT Managed Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Account Account Account (1) Account Account Account Account ------------------------------------------------------------------------ ASSETS Investments: Small-Cap Index Portfolio.............. $14,030 REIT Portfolio......... $17,501 Inflation Managed Portfolio (1).......... $44,753 Managed Bond Portfolio.............. $93,348 Money Market Portfolio.............. $1,303,834 High Yield Bond Portfolio.............. $23,938 Large-Cap Value Portfolio.............. $42,165 Receivables: Due from Pacific Life Insurance Company...... 6 492 849 Fund shares redeemed... 18 50 309 41 ------------------------------------------------------------------------ Total Assets............ 14,048 17,507 44,803 93,840 1,304,143 23,979 43,014 ------------------------------------------------------------------------ LIABILITIES Payables: Due to Pacific Life Insurance Company...... 18 50 309 41 Fund shares purchased.. 6 492 849 ------------------------------------------------------------------------ Total Liabilities....... 18 6 50 492 309 41 849 ------------------------------------------------------------------------ NET ASSETS.............. $14,030 $17,501 $44,753 $93,348 $1,303,834 $23,938 $42,165 ======================================================================== Shares Owned in each Portfolio............... 1,641 1,394 4,122 8,304 129,232 3,519 3,953 ======================================================================== Cost of Investments..... $17,520 $16,849 $44,370 $91,188 $1,304,991 $26,242 $46,920 ========================================================================
(1) Formerly named Government Securities Variable Account and Government Portfolio. See Notes to Financial Statements 74 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Blue Aggressive Aggressive Emerging Diversified Small-Cap International Chip Growth Equity Markets Research Equity Large-Cap Equity Variable Variable Variable Variable Variable Variable Variable Variable Account (1) Account (1) Account Account Account Account Account Account ------------------------------------------------------------------------------------------ INVESTMENT INCOME Dividends........................... $1 $7 $3,189 $160 $586 ------------------------------------------------------------------------------------------ Net Investment Income................ 1 7 3,189 160 586 ------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions........................ (82) ($4) ($1,936) ($286) (69) (941) (773) (707) Net unrealized depreciation on investments......................... (2,961) (315) (5,684) (2,583) (392) (8,127) (9,038) (1,992) ------------------------------------------------------------------------------------------ Net Realized and Unrealized Loss on Investments.......................... (3,043) (319) (7,620) (2,869) (461) (9,068) (9,811) (2,699) ------------------------------------------------------------------------------------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... ($3,042) ($319) ($7,620) ($2,869) ($454) ($5,879) ($9,651) ($2,113) ==========================================================================================
(1) Operations commenced during 2001 (see Note 1 to Financial Statements). See Notes to Financial Statements 75 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
I-Net Financial Health Telecom- Multi- Equity Strategic Tollkeeper Services Sciences Technology munications Strategy Income Value Variable Variable Variable Variable Variable Variable Variable Variable Account Account (1) Account (1) Account (1) Account (1) Account Account Account (1) ------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends.............. $400 $359 $1 ------------------------------------------------------------------------------------------- Net Investment Income... 400 359 1 ------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions.. ($4,093) ($9) ($15) ($13) (164) (512) (110) Net unrealized depreciation on investments............ (5,435) (351) ($89) (1,773) (1,397) (1,782) (6,700) (247) ------------------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments............. (9,528) (360) (89) (1,788) (1,410) (1,946) (7,212) (357) ------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. ($9,528) ($360) ($89) ($1,788) ($1,410) ($1,546) ($6,853) ($356) ===========================================================================================
(1) Operations commenced during 2001 (see Note 1 to Financial Statements). See Notes to Financial Statements 76 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Growth Focused Mid-Cap International Capital Mid-Cap Global LT 30 Value Value Opportunities Growth Growth Variable Variable Variable Variable Variable Variable Variable Account Account (1) Account Account Account (1) Account (1) Account (1) ----------------------------------------------------------------------------------- INVESTMENT INCOME Equity Index Variable Account ----------------------------------------------------------------------------------- INVESTMENT INCOME Dividends (2)....................... $11,719 $1,195 $651 ----------------------------------------------------------------------------------- Net Investment Income................. 11,719 1,195 651 ----------------------------------------------------------------------------------- Dividends (2)....................... $972 ----------------------------------------------------------------------------------- Net Investment Income................. 972 ----------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions........................ (10,415) (402) (891) ($53) ($61) ($10) Net unrealized appreciation (depreciation) on investments....... (26,858) ($5) (5,434) (8,722) (783) (344) 7 ----------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments........................... (37,273) (5) (5,836) (9,613) (836) (405) (3) ----------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................($25,554) ($5) ($4,641) ($8,962) ($836) ($405) ($3) ----------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions........................ (1,136) Net unrealized appreciation (depreciation) on investments....... (20,491) ----------------------------------------------------------------------------------- Net Realized and Unrealized Loss on Investments........................... (21,627) ----------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................($20,655) ===================================================================================
(1) Operations commenced during 2001 (see Note 1 to Financial Statements). (2) Pacific Select Fund had declared dividends for the Focused 30 Portfolio during 2001. The corresponding Variable Account did not own shares prior to the ex-dividend date. See Notes to Financial Statements 77 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF OPERATIONS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Small-Cap Inflation Managed Money High Yield Large-Cap Index REIT Managed Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Account Account Account (1) Account Account Account Account ----------------------------------------------------------------------- INVESTMENT INCOME Dividends.............. $1,386 $62 $510 $1,398 $29,743 $1,808 $784 ----------------------------------------------------------------------- Net Investment Income... 1,386 62 510 1,398 29,743 1,808 784 ----------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss from security transactions.. (1,053) (54) (31) (43) (628) (4,937) (558) Net unrealized appreciation (depreciation) on investments............ (3,515) 634 246 2,089 (1,040) (2,243) (5,175) ----------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments.......... (4,568) 580 215 2,046 (1,668) (7,180) (5,733) ----------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... ($3,182) $642 $725 $3,444 $28,075 ($5,372) ($4,949) =======================================================================
(1) Formerly named Government Securities Variable Account. See Notes to Financial Statements 78 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Blue Aggressive Aggressive Emerging Diversified Small-Cap International Chip Growth Equity Markets Research Equity Large-Cap Equity Variable Variable Variable Variable Variable Variable Variable Variable Account (1) Account (1) Account Account Account Account Account Account ----------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............... $1 $7 $3,189 $160 $586 Net realized loss from security transactions........................ (82) ($4) ($1,936) ($286) (69) (941) (773) (707) Net unrealized depreciation on investments......................... (2,961) (315) (5,684) (2,583) (392) (8,127) (9,038) (1,992) ----------------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations...................... (3,042) (319) (7,620) (2,869) (454) (5,879) (9,651) (2,113) ----------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............ 1,525 66 11,131 4,900 7,975 14,268 18,640 7,856 Transfers between variable accounts, net................................. 20,683 2,125 27,692 11,014 3,493 22,923 44,976 8,552 Transfers--policy charges and deductions.......................... (1,083) (43) (9,309) (1,847) (1,258) (4,133) (6,443) (1,766) Transfers--other.................... (58) (10) 47 16 13 (181) 23 41 ----------------------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions............. 21,067 2,138 29,561 14,083 10,223 32,877 57,196 14,683 ----------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS........... 18,025 1,819 21,941 11,214 9,769 26,998 47,545 12,570 ----------------------------------------------------------------------------------------- NET ASSETS Beginning of Period................. 2,892 1,631 894 4,691 6,676 1,226 ----------------------------------------------------------------------------------------- End of Period....................... $18,025 $1,819 $24,833 $12,845 $10,663 $31,689 $54,221 $13,796 =========================================================================================
(1) Operations commenced during 2001 (see Note 1 to Financial Statements). See Note to Financial Statements 79 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
I-Net Financial Health Telecom- Multi- Equity Strategic Tollkeeper Services Sciences Technology munications Strategy Income Value Variable Variable Variable Variable Variable Variable Variable Variable Account Account (1) Account (1) Account (1) Account (1) Account Account Account (1) ------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............... $400 $359 $1 Net realized loss from security transactions........................ ($4,093) ($9) ($15) ($13) (164) (512) (110) Net unrealized depreciation on investments......................... (5,435) (351) ($89) (1,773) (1,397) (1,782) (6,700) (247) ------------------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations...................... (9,528) (360) (89) (1,788) (1,410) (1,546) (6,853) (356) ------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............ 5,439 971 1,030 1,392 193 8,390 23,681 1,756 Transfers between variable accounts, net................................. 14,334 6,202 7,367 6,356 5,690 15,563 43,796 3,816 Transfers--policy charges and deductions.......................... (2,457) (109) (209) (231) (149) (2,552) (4,423) (891) Transfers--other.................... (281) 8 62 81 58 9 87 54 ------------------------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions............. 17,035 7,072 8,250 7,598 5,792 21,410 63,141 4,735 ------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS........... 7,507 6,712 8,161 5,810 4,382 19,864 56,288 4,379 ------------------------------------------------------------------------------------------- NET ASSETS Beginning of Period................. 8,479 9,751 7,631 ------------------------------------------------------------------------------------------- End of Period....................... $15,986 $6,712 $8,161 $5,810 $4,382 $29,615 $63,919 $4,379 ===========================================================================================
(1)Operations commenced during 2001 (see Note 1 to Financial Statements). See Notes to Financial Statements 80 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Growth Focused Mid-Cap International Capital Mid-Cap Global LT 30 Value Value Opportunities Growth Growth Variable Variable Variable Variable Variable Variable Variable Account Account (1) Account Account Account (1) Account (1) Account (1) ----------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income................ $11,719 $1,195 $651 Net realized loss from security transactions......................... (10,415) (402) (891) ($53) ($61) ($10) Net unrealized appreciation (depreciation) on investments........ (26,858) ($5) (5,434) (8,722) (783) (344) 7 ----------------------------------------------------------------------------------- Net Decrease in Net Assets Resulting from Operations....................... (25,554) (5) (4,641) (8,962) (836) (405) (3) ----------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............. 18,555 13 19,701 16,576 686 49 Transfers between variable accounts, net.................................. 86,814 71 53,265 59,044 6,846 2,886 5 Transfers--policy charges and deductions........................... (14,624) (12) (15,014) (5,786) (190) (294) (27) Transfers--other..................... 258 34 (58) (27) 42 ----------------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions.............. 91,003 72 57,986 69,776 6,629 3,320 27 ----------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS............ 65,449 67 53,345 60,814 5,793 2,915 24 ----------------------------------------------------------------------------------- NET ASSETS Beginning of Period.................. 18,880 5,701 10,226 ----------------------------------------------------------------------------------- End of Period........................ $84,329 $67 $59,046 $71,040 $5,793 $2,915 $24 =================================================================================== Equity Index Variable Account --------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income................ $972 Net realized loss from security transactions......................... (1,136) Net unrealized appreciation (depreciation) on investments........ (20,491) --------- Net Decrease in Net Assets Resulting from Operations....................... (20,655) --------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............. 46,240 Transfers between variable accounts, net.................................. 118,948 Transfers--policy charges and deductions........................... (8,358) Transfers--other..................... (327) --------- Net Increase in Net Assets Derived from Policy Transactions.............. 156,503 --------- NET INCREASE IN NET ASSETS............ 135,848 --------- NET ASSETS Beginning of Period.................. 16,708 --------- End of Period........................ $152,556 =========
(1)Operations commenced during 2001 (see Note 1 to Financial Statements). See Notes to Financial Statements 81 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIOD ENDED SEPTEMBER 30, 2001 (Unaudited)
Small-Cap Inflation Managed Money High Yield Large-Cap Index REIT Managed Bond Market Bond Value Variable Variable Variable Variable Variable Variable Variable Account Account Account (1) Account Account Account Account -------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income........... $1,386 $62 $510 $1,398 $29,743 $1,808 $784 Net realized loss from security transactions.................... (1,053) (54) (31) (43) (628) (4,937) (558) Net unrealized appreciation (depreciation) on investments... (3,515) 634 246 2,089 (1,040) (2,243) (5,175) -------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations....................... (3,182) 642 725 3,444 28,075 (5,372) (4,949) -------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums........ 2,312 6,637 6,449 20,900 2,040,050 1,720 10,599 Transfers between variable accounts, net................... 19,771 11,601 30,399 67,797 (766,634) 32,568 31,966 Transfers--policy charges and deductions...................... (8,195) (2,044) (4,554) (5,864) (104,589) (8,986) (11,630) Transfers--other................ 54 (26) (14) (9) 1,795 8 47 -------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions..................... 13,942 16,168 32,280 82,824 1,170,622 25,310 30,982 -------------------------------------------------------------------------- NET INCREASE IN NET ASSETS....... 10,760 16,810 33,005 86,268 1,198,697 19,938 26,033 -------------------------------------------------------------------------- NET ASSETS Beginning of Period............. 3,270 691 11,748 7,080 105,137 4,000 16,132 -------------------------------------------------------------------------- End of Period................... $14,030 $17,501 $44,753 $93,348 $1,303,834 $23,938 $42,165 ==========================================================================
(1) Formerly named Government Securities Variable Account. See Notes to Financial Statements 82 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIODS ENDED DECEMBER 31, 2000
Aggressive Emerging Diversified Small-Cap International I-Net Multi- Equity Markets Research Equity Large-Cap Equity Tollkeeper Strategy Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account Account Account ------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............... $1 $13 $5 $47 Net realized loss from security transactions............... ($59) ($226) (72) (70) ($6) ($66) (6) Net unrealized appreciation (depreciation) on investments....... (359) (109) 24 (330) (217) (114) (2,698) (285) ------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Assets Resulting from Operations............ (418) (335) 25 (389) (282) (120) (2,764) (244) ------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............ 138 281 281 56 Transfers between variable accounts, net................................. 3,675 2,049 885 5,112 7,166 1,482 11,501 10,124 Transfers--policy charges and deductions.......................... (374) (241) (16) (342) (538) (137) (258) (184) Transfers--other.................... 9 20 29 49 1 (1) ------------------------------------------------------------------------------------ Net Increase in Net Assets Derived from Policy Transactions............. 3,310 1,966 869 5,080 6,958 1,346 11,243 9,995 ------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS........... 2,892 1,631 894 4,691 6,676 1,226 8,479 9,751 ------------------------------------------------------------------------------------ NET ASSETS Beginning of Period................. ------------------------------------------------------------------------------------ End of Period....................... $2,892 $1,631 $894 $4,691 $6,676 $1,226 $8,479 $9,751 ==================================================================================== Equity Growth Income LT Variable Variable Account Account ------------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income............... $11 $40 Net realized loss from security transactions............... (111) Net unrealized appreciation (depreciation) on investments....... (98) (3,342) ------------------ Net Increase (Decrease) in Net Assets Resulting from Operations............ (87) (3,413) ------------------ INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............ 820 Transfers between variable accounts, net................................. 7,938 22,441 Transfers--policy charges and deductions.......................... (220) (902) Transfers--other.................... (66) ------------------ Net Increase in Net Assets Derived from Policy Transactions.............. 7,718 22,293 ------------------ NET INCREASE IN NET ASSETS............ 7,631 18,880 ------------------ NET ASSETS Beginning of Period................. ------------------ End of Period....................... $7,631 $18,880 ==================
See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 83 PACIFIC SELECT EXEC SEPARATE ACCOUNT STATEMENT OF CHANGES IN NET ASSETS (Continued) FOR THE PERIODS ENDED DECEMBER 31, 2000
Mid-Cap Equity Small-Cap International Inflation Managed Money Value Index Index REIT Value Managed Bond Market Variable Variable Variable Variable Variable Variable Variable Variable Account Account Account Account Account Account (1) Account Account ---------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income................ $12 $29 $22 $9 $15 $105 $119 $2,106 Net realized gain (loss) from security transactions................ 7 (9) (73) (116) 2 9 (271) Net unrealized appreciation (depreciation) on investments........ 284 (844) 25 18 214 137 71 (117) ---------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets Resulting from Operations............................ 303 (824) (26) 27 113 244 199 1,718 ---------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............. 140 211 275 688 688 272,763 Transfers between variable accounts, net.................................. 5,713 17,658 3,255 736 10,033 11,821 6,429 (148,228) Transfers--policy charges and deductions........................... (430) (338) (168) (72) (639) (317) (235) (21,135) Transfers--other..................... (25) 1 (66) 31 (1) 19 ---------------------------------------------------------------------------------- Net Increase in Net Assets Derived from Policy Transactions.......................... 5,398 17,532 3,296 664 10,113 11,504 6,881 103,419 ---------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS............ 5,701 16,708 3,270 691 10,226 11,748 7,080 105,137 ---------------------------------------------------------------------------------- NET ASSETS Beginning of Period.................. ---------------------------------------------------------------------------------- End of Period........................ $5,701 $16,708 $3,270 $691 $10,226 $11,748 $7,080 $105,137 ================================================================================== High Yield Large-Cap Bond Value Variable Variable Account Account --------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income................ $75 $80 Net realized gain (loss) from security transactions................ (6) (73) Net unrealized appreciation (depreciation) on investments........ (61) 420 --------------------- Net Increase (Decrease) in Net Assets Resulting from Operations............................ 8 427 --------------------- INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS Transfer of net premiums............. 278 413 Transfers between variable accounts, net.................................. 3,875 16,334 Transfers--policy charges and deductions........................... (159) (1,034) Transfers--other..................... (2) (8) --------------------- Net Increase in Net Assets Derived from Policy Transactions.......................... 3,992 15,705 --------------------- NET INCREASE IN NET ASSETS............ 4,000 16,132 --------------------- NET ASSETS Beginning of Period.................. --------------------- End of Period........................ $4,000 $16,132 =====================
(1)Formerly named Government Securities Variable Account. See Notes to Financial Statements (This Separate Account commenced operations on August 15, 2000) 84 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES The Pacific Select Exec Separate Account (the "Separate Account") is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and is comprised of thirty-one subaccounts called Variable Accounts: the Blue Chip, Aggressive Growth, Aggressive Equity, Emerging Markets, Diversified Research, Small-Cap Equity, International Large-Cap, Equity, I-Net Tollkeeper, Financial Services, Health Sciences, Technology, Telecommunications, Multi-Strategy, Equity Income, Strategic Value, Growth LT, Focused 30, Mid-Cap Value, International Value, Capital Opportunities, Mid-Cap Growth, Global Growth, Equity Index, Small-Cap Index, REIT, Inflation Managed (formerly Government Securities), Managed Bond, Money Market, High Yield Bond, and Large-Cap Value Variable Accounts as of September 30, 2001. The assets in each Variable Account are invested in shares of the corresponding portfolios of Pacific Select Fund (the "Fund"), each of which pursues different investment objectives and policies. The Semi-Annual Report of the Fund dated June 30, 2001 is available upon request to Pacific Life & Annuity Company (PL&A). The Separate Account has organized and registered with the Securities and Exchange Commission (SEC) nine new Variable Accounts: the Blue Chip, Aggressive Growth, Financial Services, Health Sciences, Technology, Telecommunications, Capital Opportunities, Mid-Cap Growth, and Global Growth Variable Accounts. The Strategic Value Variable Account commenced operations on February 27, 2001; the Blue Chip, Aggressive Growth, and Capital Opportunities Variable Accounts commenced operations on May 1, 2001; the Financial Services, Health Sciences, Technology, Telecommunications, and Focused 30 Variable Accounts commenced operations on May 23, 2001; the Global Growth Variable Account commenced operations on June 14, 2001; and the Mid-Cap Growth commenced operations on July 9, 2001. The Strategic Value and Focused 30 Variable Accounts were organized and registered with the SEC in 2000. The Separate Account was established by PL&A, a wholly-owned subsidiary of Pacific Life Insurance Company (Pacific Life), on September 24, 1998 and commenced operations on August 15, 2000. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the other assets and liabilities of PL&A. The assets of the Separate Account will not be charged with any liabilities arising out of any other business conducted by PL&A, but the obligations of the Separate Account, including benefits related to variable life insurance, are obligations of PL&A. The Separate Account held by PL&A represents funds from individual flexible premium variable life policies. The assets of the Separate Account are carried at market value. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for investment companies which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. A. Valuation of Investments Investments in shares of the Fund are valued at the reported net asset values of the respective portfolios. Valuation of securities held by the Fund is discussed in the notes to its financial statements. B. Security Transactions and Investment Income Transactions are recorded on the trade date. Realized gains and losses on sales of investments are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date. C. Federal Income Taxes The operations of the Separate Account will be reported on the Federal income tax return of PL&A, which is taxed as a life insurance company under the provisions of the Tax Reform Act of 1986. Under current tax law, no Federal income taxes are expected to be paid by PL&A with respect to the operations of the Separate Account. 2. DIVIDENDS During the nine-month period ended September 30, 2001, the Fund declared dividends for each portfolio, except for the Aggressive Growth, Aggressive Equity, Emerging Markets, I-Net Tollkeeper, Financial Services, Health Sciences, Technology, Telecommunications, Capital Opportunities, Mid-Cap Growth, and Global Growth Portfolios. The amounts accrued by the Separate Account for its share of the dividends were reinvested in additional full and fractional shares of the related portfolios. 3. CHARGES AND EXPENSES With respect to variable life insurance policies funded by the Separate Account, PL&A makes certain deductions from premiums for sales load and state premium taxes before amounts are allocated to the Separate Account. PL&A also makes certain deductions from the net assets of each Variable Account for the mortality and expense risks PL&A assumes, administrative expenses, cost of insurance, charges for optional benefits and any sales and underwriting surrender charges. The operating expenses of the Separate Account are paid by PL&A. 4. RELATED PARTY AGREEMENT Pacific Select Distributors, Inc., a wholly-owned subsidiary of Pacific Life, serves as principal underwriter of variable life insurance policies funded by interests in the Separate Account, without remuneration from the Separate Account. 85 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited) 5. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES The investment in the Fund shares are carried at identified cost, which represents the amount available for investment (including reinvested distributions of net investment income and realized gains). A reconciliation of total cost and market value of the Separate Account's investments in the Fund as of September 30, 2001 were as follows:
Variable Accounts ----------------------------------------------------------------------------------------- Blue Aggressive Aggressive Emerging Diversified Small-Cap International Chip (1) Growth (1) Equity Markets Research Equity Large-Cap ----------------------------------------------------------------------------------------- Total cost of investments at beginning of period $3,250 $1,741 $870 $5,020 $6,892 Add: Total net proceeds from policy transactions $21,604 $2,174 39,958 15,688 11,337 44,797 61,576 Reinvested distributions from the Funds: (a) Net investment income 1 7 78 160 (b) Net realized gain 3,111 ----------------------------------------------------------------------------------------- Sub-Total 21,605 2,174 43,208 17,429 12,214 53,006 68,628 Less: Cost of investments disposed during the period 619 40 12,332 1,892 1,183 12,860 5,152 ----------------------------------------------------------------------------------------- Total cost of investments at end of period 20,986 2,134 30,876 15,537 11,031 40,146 63,476 Add: Unrealized depreciation (2,961) (315) (6,043) (2,692) (368) (8,457) (9,255) ----------------------------------------------------------------------------------------- Total market value of investments at end of period $18,025 $1,819 $24,833 $12,845 $10,663 $31,689 $54,221 ========================================================================================= I-Net Financial Health Tech- Telecom- Multi- Equity Tollkeeper Services (1) Sciences (1) nology (1) munications (1) Strategy ----------------------------------------------------------------------------------------- Total cost of investments at beginning of period $1,340 $11,177 $10,036 Add: Total net proceeds from policy transactions 18,230 25,169 $7,143 $8,311 $7,667 $5,836 23,612 Reinvested distributions from the Funds: (a) Net investment income 361 (b) Net realized gain 586 39 ----------------------------------------------------------------------------------------- Sub-Total 20,156 36,346 7,143 8,311 7,667 5,836 34,048 Less: Cost of investments disposed during the period 4,254 12,227 80 61 84 57 2,366 ----------------------------------------------------------------------------------------- Total cost of investments at end of period 15,902 24,119 7,063 8,250 7,583 5,779 31,682 Add: Unrealized depreciation (2,106) (8,133) (351) (89) (1,773) (1,397) (2,067) ----------------------------------------------------------------------------------------- Total market value of investments at end of period $13,796 $15,986 $6,712 $8,161 $5,810 $4,382 $29,615 ========================================================================================= Inter- Capital Equity Strategic Growth Focused Mid-Cap national Opportuni- Income Value (1) LT 30 (1) Value Value ties (1) ----------------------------------------------------------------------------------------- Total cost of investments at beginning of period $7,729 $22,221 $5,417 $10,012 Add: Total net proceeds from policy transactions 72,085 $5,503 122,582 $78 71,312 76,873 $6,791 Reinvested distributions from the Funds: (a) Net investment income 116 1 705 153 186 (b) Net realized gain 243 11,014 1,042 465 ----------------------------------------------------------------------------------------- Sub-Total 80,173 5,504 156,522 78 77,924 87,536 6,791 Less: Cost of investments disposed during the period 9,456 878 41,993 6 13,728 7,988 215 ----------------------------------------------------------------------------------------- Total cost of investments at end of period 70,717 4,626 114,529 72 64,196 79,548 6,576 Add: Unrealized depreciation (6,798) (247) (30,200) (5) (5,150) (8,508) (783) ----------------------------------------------------------------------------------------- Total market value of investments at end of period $63,919 $4,379 $84,329 $67 $59,046 $71,040 $5,793 ========================================================================================= Mid-Cap Global Small-Cap Inflation Growth (1) Growth (1) Equity Index Index REIT Managed (2) Managed Bond ----------------------------------------------------------------------------------------- Total cost of investments at beginning of period $17,552 $3,247 $674 $11,611 $7,009 Add: Total net proceeds from policy transactions $3,614 $33 200,372 21,974 21,378 39,725 88,784 Reinvested distributions from the Funds: (a) Net investment income 671 75 22 510 1,398 (b) Net realized gain 301 1,311 40 ----------------------------------------------------------------------------------------- Sub-Total 3,614 33 218,896 26,607 22,114 51,846 97,191 Less: Cost of investments disposed during the period 355 16 45,005 9,087 5,265 7,476 6,003 ----------------------------------------------------------------------------------------- Total cost of investments at end of period 3,259 17 173,891 17,520 16,849 44,370 91,188 Add: Unrealized appreciation (depreciation) (344) 7 (21,335) (3,490) 652 383 2,160 ----------------------------------------------------------------------------------------- Total market value of investments at end of period $2,915 $24 $152,556 $14,030 $17,501 $44,753 $93,348 =========================================================================================
- ---------------- (1) Operations commenced during 2001 (See Note 1 to Financial Statements) (2) Inflation Managed was formerly named Government Securities. 86 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
Variable Accounts -------------------------------- Money High Yield Large-Cap Market Bond Value -------------------------------- Total cost of investments at beginning of period $105,252 $4,061 $15,711 Add: Total net proceeds from policy transactions Reinvested distributions from the Funds: 1,701,474 67,652 40,444 (a) Net investment income 29,743 1,808 124 (b) Net realized gain 660 --------------------------------- Sub-Total 1,836,469 73,521 56,939 Less: Cost of investments disposed during the period 531,478 47,279 10,019 --------------------------------- Total cost of investments at end of period 1,304,991 26,242 46,920 Add: Unrealized depreciation (1,157) (2,304) (4,755) --------------------------------- Total market value of investments at end of period $1,303,834 $23,938 $42,165 =================================
6. TRANSACTIONS IN SEPARATE ACCOUNT UNITS AND SELECTED ACCUMULATION UNIT ** INFORMATION Transactions in Separate Account units for the periods ended September 30, 2001 and the selected accumulation unit information as of September 30, 2001 were as follows:
Variable Accounts ---------------------------------------------------------------------------------------- Blue Aggressive Aggressive Emerging Diversified Small-Cap International Chip (1) Growth (1) Equity Markets Research Equity Large-Cap ---------------------------------------------------------------------------------------- Total units outstanding at beginning of period 344 199 84 574 725 Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 190 8 1,708 812 877 1,981 2,530 (b) Transfers between variable accounts, net 2,284 234 3,621 1,465 345 2,946 5,676 (c) Transfers--policy charges and deductions (119) (3) (1,335) (249) (125) (514) (803) (d) Transfers--other (6) (1) 8 3 1 (23) 3 ---------------------------------------------------------------------------------------- Sub-Total 2,349 238 4,002 2,031 1,098 4,390 7,406 ---------------------------------------------------------------------------------------- Total units outstanding at end of period 2,349 238 4,346 2,230 1,182 4,964 8,131 ======================================================================================== Accumulation Unit Value: At beginning of period $10.00 $10.00 $8.41 $8.18 $10.63 $8.17 $9.21 At end of period $7.67 $7.66 $5.71 $5.76 $9.02 $6.38 $6.67 I-Net Financial Health Tech- Telecom- Multi- Equity Tollkeeper Services (1) Sciences (1) nology (1) munications (1) Strategy ---------------------------------------------------------------------------------------- Total units outstanding at beginning of period 136 1,149 999 Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 1,179 1,081 122 114 251 35 930 (b) Transfers between variable accounts, net 1,134 2,259 666 765 883 816 1,623 (c) Transfers--policy charges and deductions (242) (384) (14) (32) (60) (41) (269) (d) Transfers--other 5 (44) 2 10 21 16 1 ---------------------------------------------------------------------------------------- Sub-Total 2,076 2,912 776 857 1,095 826 2,285 ---------------------------------------------------------------------------------------- Total units outstanding at end of period 2,212 4,061 776 857 1,095 826 3,284 ======================================================================================== Accumulation Unit Value: At beginning of period $9.04 $7.38 $10.00 $10.00 $10.00 $10.00 $9.76 At end of period $6.24 $3.94 $8.65 $9.52 $5.31 $5.31 $9.02
- ---------------- ** Accumulation Unit: unit of measure used to calculate the value of a Policy Owner's interest in a Variable Account during the accumulation period. (1) Operations commenced during 2001 (See Note 1 to Financial Statements). 87 PACIFIC SELECT EXEC SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
Variable Accounts -------------------------------------------------------------------------- Inter- Capital Equity Strategic Focused Mid-Cap national Opportuni- Income Value (1) Growth LT 30 (1) Value Value ties (1) -------------------------------------------------------------------------- Total units outstanding at beginning of period 770 2,364 532 1,055 Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 2,849 236 3,134 2 1,831 2,208 (b) Transfers between variable accounts, net 4,858 434 13,316 8 4,765 7,461 853 (c) Transfers--policy charges and deductions (495) (106) (2,332) (2) (1,348) (699) (22) (d) Transfers--other 11 6 41 4 (8) (4) -------------------------------------------------------------------------- Sub-Total 7,223 570 14,159 8 5,252 8,962 827 -------------------------------------------------------------------------- Total units outstanding at end of period 7,993 570 16,523 8 5,784 10,017 827 ========================================================================== Accumulation Unit Value: At beginning of period $9.90 $10.00 $7.99 $10.00 $10.71 $9.70 $10.00 At end of period $8.00 $7.68 $5.10 $8.18 $10.21 $7.09 $7.00 Mid-Cap Global Equity Small-Cap Inflation Managed Growth (1) Growth (1) Index Index REIT Managed (2) Bond -------------------------------------------------------------------------- Total units outstanding at beginning of period 1,813 328 66 1,146 688 Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 99 5 5,370 277 640 606 1,933 (b) Transfers between variable accounts, net 348 1 14,659 1,924 1,105 2,845 6,319 (c) Transfers--policy charges and deductions (42) (3) (965) (857) (189) (429) (545) (d) Transfers--other 6 (38) 5 (3) (1) (1) -------------------------------------------------------------------------- Sub-Total 411 3 19,026 1,349 1,553 3,021 7,706 -------------------------------------------------------------------------- Total units outstanding at end of period 411 3 20,839 1,677 1,619 4,167 8,394 ========================================================================== Accumulation Unit Value: At beginning of period $10.00 $10.00 $9.22 $9.96 $10.43 $10.25 $10.30 At end of period $7.09 $8.12 $7.32 $8.37 $10.81 $10.74 $11.12 Money High Yield Large-Cap Market Bond Value ------------------------------ Total units outstanding at beginning of period 10,268 416 1,587 Increase (decrease) in units resulting from policy transactions: (a) Transfer of net premiums 196,376 176 1,143 (b) Transfers between variable accounts, net (73,350) 2,927 3,187 (c) Transfers--policy charges and deductions (10,183) (906) (1,169) (d) Transfers--other 174 1 5 ------------------------------ Sub-Total 113,017 2,198 3,166 ------------------------------ Total units outstanding at end of period 123,285 2,614 4,753 ============================== Accumulation Unit Value: At beginning of period $10.24 $9.61 $10.17 At end of period $10.58 $9.16 $8.87
- ---------------- ** Accumulation Unit: unit of measure used to calculate the value of a Policy Owner's interest in a Variable Account during the accumulation period. (1) Operations commenced during 2001 (See Note 1 to Financial Statements). (2) Inflation Managed was formerly named Government Securities. ------------------ 88 PACIFIC LIFE & ANNUITY COMPANY Financial Statements - Statutory Basis as of and for the years ended December 31, 2000 and 1999 and Independent Auditors' Report 89 INDEPENDENT AUDITORS' REPORT ---------------------------- Pacific Life & Annuity Company: We have audited the accompanying statements of admitted assets, liabilities and capital and surplus- statutory basis of Pacific Life & Annuity Company (the Company) as of December 31, 2000 and 1999, and the related statements of operations-statutory basis, capital and surplus-statutory basis, and cash flows-statutory basis for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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. As described in Note 1 to the financial statements, the Company has prepared these financial statements on the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on such financial statements of the differences between the statutory basis of accounting and accounting principles generally accepted in the United States of America are also described in Note 1. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of Pacific Life & Annuity Company as of December 31, 2000 and 1999, or the results of its operations or its cash flows for the years then ended. In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and capital and surplus of Pacific Life & Annuity Company as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 1. DELOITTE & TOUCHE LLP Costa Mesa, CA February 26, 2001 90 Pacific Life & Annuity Company STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS-STATUTORY BASIS
December 31, 2000 1999 - ------------------------------------------------------------------------------------- (In Thousands) ADMITTED ASSETS Bonds $258,266 $239,981 Preferred stocks 6,963 6,536 Common stocks 6,849 7,963 Mortgage loans 15,004 15,409 Cash and short-term investments 91,041 73,725 Other invested assets 56,832 29,453 Premiums due and unpaid 20,966 19,824 Other assets 5,527 10,421 Separate account assets 243 - ------------------------------------------------------------------------------------- TOTAL ADMITTED ASSETS $461,691 $403,312 ===================================================================================== LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Policy reserves $116,331 $102,041 Policy benefits payable 58,096 50,738 Deposit funds 23,527 6,300 Accrued general expenses 8,169 9,433 Other liabilities 24,842 28,561 Asset valuation reserve 4,769 5,291 Separate account liabilities 243 - ------------------------------------------------------------------------------------- TOTAL LIABILITIES 235,977 202,364 - ------------------------------------------------------------------------------------- Capital and Surplus: Common stock - $1 par value; 5 million shares authorized; 2.9 million shares issued and outstanding 2,900 2,900 Paid-in surplus 134,607 134,607 Unassigned surplus 88,207 63,441 - ------------------------------------------------------------------------------------- TOTAL CAPITAL AND SURPLUS 225,714 200,948 - ------------------------------------------------------------------------------------- TOTAL LIABILITIES AND CAPITAL AND SURPLUS $461,691 $403,312 =====================================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 91 Pacific Life & Annuity Company STATEMENTS OF OPERATIONS-STATUTORY BASIS
Years Ended December 31, 2000 1999 - ---------------------------------------------------------------------------------------------- (In Thousands) REVENUES Premiums $434,580 $359,936 Net investment income 31,089 24,786 Other income 1,997 246 - ---------------------------------------------------------------------------------------------- TOTAL REVENUES 467,666 384,968 - ---------------------------------------------------------------------------------------------- BENEFITS AND EXPENSES Current and future policy benefits 315,803 250,328 Operating expenses 102,581 87,013 - ---------------------------------------------------------------------------------------------- TOTAL BENEFITS AND EXPENSES 418,384 337,341 - ---------------------------------------------------------------------------------------------- INCOME BEFORE FEDERAL INCOME TAXES 49,282 47,627 Federal income taxes 16,910 16,196 - ---------------------------------------------------------------------------------------------- NET GAIN FROM OPERATIONS 32,372 31,431 Net realized capital losses (4,201) (405) - ---------------------------------------------------------------------------------------------- NET INCOME $ 28,171 $ 31,026 ==============================================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 92 Pacific Life & Annuity Company STATEMENTS OF CAPITAL AND SURPLUS-STATUTORY BASIS
Common Stock ------------- Paid-in Unassigned Shares Amount Surplus Surplus Total - ----------------------------------------------------------------------- (In Thousands) BALANCES, JANUARY 1, 1999 2,900 $2,900 $ 37,607 $36,192 $ 76,699 Net income 31,026 31,026 Capital contribution 97,000 97,000 Other surplus transactions (3,777) (3,777) - ----------------------------------------------------------------------- BALANCES, DECEMBER 31, 1999 2,900 2,900 134,607 63,441 200,948 Net income 28,171 28,171 Other surplus transactions (3,405) (3,405) - ----------------------------------------------------------------------- BALANCES, DECEMBER 31, 2000 2,900 $2,900 $134,607 $88,207 $225,714 =======================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 93 Pacific Life & Annuity Company STATEMENTS OF CASH FLOWS-STATUTORY BASIS
Years Ended December 31, 2000 1999 - ------------------------------------------------------------------------------- (In Thousands) CASH FROM OPERATIONS Receipts Premiums $ 433,264 $ 366,624 Net investment income 27,997 22,917 Other, net 4,554 Payments Policy benefit payments (271,663) (301,317) Operating expenses (92,298) (92,375) Premium and other taxes (7,875) (10,817) Federal income taxes (25,858) (4,268) Other, net (415) - ------------------------------------------------------------------------------- NET CASH FROM OPERATIONS 63,152 (14,682) - ------------------------------------------------------------------------------- CASH FROM INVESTMENTS Proceeds Bonds 64,792 84,064 Stocks 5,391 5,918 Mortgage loans 12,654 7,017 Other 12,424 4,210 Payments for the purchase of Bonds (86,900) (108,883) Stocks (8,197) (3,550) Mortgage loans (12,000) (11,000) Other (35,568) (17,407) Net tax on capital (gains) losses 782 (2,561) - ------------------------------------------------------------------------------- NET CASH FROM INVESTMENTS (46,622) (42,192) - ------------------------------------------------------------------------------- CASH FROM FINANCING AND MISCELLANEOUS SOURCES Capital contribution 97,000 Other, net 786 (3,323) - ------------------------------------------------------------------------------- NET CASH FROM FINANCING AND MISCELLANEOUS SOURCES 786 93,677 - ------------------------------------------------------------------------------- Net change in cash and short-term investments 17,316 36,803 Cash and short-term investments, beginning of year 73,725 36,922 - ------------------------------------------------------------------------------- CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 91,041 $ 73,725 ===============================================================================
See Independent Auditors' Report and Notes to Financial Statements - Statutory Basis 94 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND DESCRIPTION OF BUSINESS Pacific Life & Annuity Company (PL&A) is a stock life insurance company domiciled in the State of Arizona, and a wholly owned subsidiary of Pacific Life Insurance Company (Pacific Life). PL&A provides benefit programs to employers and other benefit plan sponsors throughout the United States and offers medical, dental, life, and other ancillary coverages to small and mid-size employers, as well as flexible funding arrangements for labor management and union trusts. In addition, stop loss products are sold through Pacific Life and companion group life insurance is sold through PL&A to self-funded plan sponsors. Also, PL&A began selling structured settlement annuities in 2000. In 1999, PL&A changed its name from PM Group Life Insurance Company and received approval from the State of New York Insurance Department to transact business in the State of New York. In connection with this approval, Pacific Life contributed $97 million of additional paid-in surplus in cash to PL&A in 1999. During 2000, PL&A began selling variable life insurance and institutional products and services and filed for variable annuity product approval in the State of New York. BASIS OF PRESENTATION These financial statements have been prepared in accordance with accounting practices prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). Prescribed statutory accounting practices include 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. Accounting practices prescribed or permitted by the Insurance Department of the State of Arizona differ in certain respects, which in some cases are materially different from GAAP. GAAP stockholder's equity as of December 31, 2000 and 1999 was $255.5 million and $221.9 million, respectively, compared to statutory capital and surplus as included in these financial statements of $225.7 million and $200.9 million, respectively. GAAP net income for the years ended December 31, 2000 and 1999 was $30.9 million and $30.0 million, respectively, compared to statutory net income included in these financial statements of $28.2 million and $31.0 million, respectively. The significant differences are noted below: An interest maintenance reserve (IMR) is established to capture realized investment gains and losses, net of tax, on the sale of fixed income investments resulting from changes in the general level of interest rates, and is amortized into income over the remaining years to expected maturity of the assets sold under statutory accounting practices; no such reserve is allowed under GAAP. An asset valuation reserve (AVR), based upon a formula prescribed by the NAIC, is established as a liability to offset potential noninterest related investment losses, and changes in the AVR are charged or credited directly to surplus under statutory accounting practices; no such reserve is allowed under GAAP. Investments in bonds and preferred stocks are generally carried at amortized cost under statutory accounting practices; under GAAP, investments in bonds and preferred stocks, other than those classified as held to maturity, are carried at estimated fair value. Certain assets, principally deferred income taxes and furniture and equipment, are designated as non admitted and excluded from assets by a direct charge to surplus under statutory accounting practices; under GAAP, such assets are carried on the statement of financial condition with appropriate valuation allowances. 95 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) In 1998, the NAIC adopted the Codification of Statutory Accounting Principles (Codification). Codification, which is intended to standardize regulatory accounting and reporting to state insurance departments, is effective January 1, 2001. However, statutory accounting principles will continue to be established by individual state laws and permitted practices. The Insurance Department of the State of Arizona is requiring adoption of Codification for the preparation of statutory financial statements effective January 1, 2001. The impact of adopting Codification will be reported as an adjustment to statutory surplus on the effective date. PL&A has not yet finalized the effects of adopting Codification, but anticipates that there will not be any adverse effect on statutory surplus. PL&A's significant statutory accounting practices are described below. INVESTMENTS Bonds qualifying for amortization are carried at amortized cost; all other bonds are carried at prescribed values. Preferred stocks are principally stated at amortized cost. Common stocks are carried at market value. The cost of bonds, and preferred and common stocks is adjusted for impairments in value deemed to be other than temporary. Mortgage loans are stated at unpaid principal balances. Short-term investments are carried at amortized cost which approximates estimated fair value. Short-term investments generally consist of bonds, commercial paper and money market instruments whose maturities at the time of acquisition were one year or less. Other invested assets, which consist principally of joint venture and partnership interests, are primarily accounted for using the equity method. The AVR is computed in accordance with a prescribed formula and is designed to stabilize surplus against valuation and credit-related losses for certain invested assets. Changes to the AVR are reported as direct additions to, or deductions from, unassigned surplus. The IMR results in the deferral of after-tax realized capital gains and losses attributable to interest rate fluctuations on fixed income investments. These capital gains and losses are amortized into net investment income over the remaining life of the investment sold. The IMR of $1.8 million and $1.2 million as of December 31, 2000 and 1999, respectively, is included in other liabilities. Net realized capital gains and losses are determined on the specific identification method and are presented net of Federal capital gains tax and transfers to the IMR. Derivatives that qualify for hedge accounting are valued consistently with the hedged items. Realized hedged gains and losses on fixed income contracts are deferred and amortized over the average life of the related hedged assets or insurance liabilities. Derivatives that do not qualify for hedge accounting are valued at market value through surplus while still held and when realized through income. POLICY RESERVES AND DEPOSIT FUNDS Medical expense claim reserves are based on PL&A's actual loss experience. Group life insurance reserves, including premium waivers, are based on various tabular methods and actual loss experience. Disabled life reserves are determined using various tabular reserve methods. Reserves for variable life insurance and individual annuities are maintained principally on the Commissioners' Reserve Valuation Method. 96 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) The liability for deposit funds, including guaranteed interest contracts, is based primarily upon, and is not less than, the policyholders' equity in their deposit accounts, including credited interest. REVENUES, BENEFITS AND EXPENSES Premiums are recognized as revenue over the premium paying period. Deposits made in connection with annuity contracts are recognized as revenue when received. Investment income is recorded as earned. Expenses, including policy acquisition costs and Federal income taxes, are charged to operations as incurred. FEDERAL INCOME TAXES PL&A's operations are included in the consolidated Federal income tax return of Pacific Mutual Holding Company, PL&A's ultimate parent. PL&A is allocated an income tax expense based on the effect of including its operations in the consolidated return. Deferred taxes are provided for as permitted by the Insurance Department of the State of Arizona. The net deferred tax asset is non admitted. This practice has no effect on total surplus. OTHER SURPLUS TRANSACTIONS Other surplus transactions primarily consist of unrealized capital gains and losses, changes in non admitted assets and change in the AVR. SEPARATE ACCOUNTS Separate account assets are recorded at market value and the related liabilities represent segregated contract owner funds maintained in accounts with individual investment objectives. The operating results of separate account assets pass through to separate account policyholders and contract owners. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments disclosed in Notes 2 and 3 has been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented may not be indicative of the amounts PL&A could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. RISK-BASED CAPITAL Risk-based capital is a method developed by the NAIC to measure the minimum amount of capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formulas for determining the amount of risk-based capital specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. The adequacy of a company's actual capital is measured by the risk-based capital results as determined by the formulas. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2000 and 1999, PL&A exceeded the minimum risk-based capital requirements. BUSINESS RISKS PL&A operates in a business environment which is subject to various risks and uncertainties. PL&A's group health insurance is subject to varying levels of regulation. The United States Congress has, from time to time, considered various health care proposals and several states have enacted health care reform legislation. Although 97 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) it is not possible to predict what changes may be adopted at the state or Federal level, certain changes could have a negative impact upon the group health business of PL&A. USE OF ESTIMATES The preparation of financial statements in conformity with accounting practices prescribed or permitted by regulatory authorities requires management to make estimates and assumptions that affect the reported amounts of admitted 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. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the 2000 financial statement presentation. 2. INVESTMENTS IN DEBT AND EQUITY SECURITIES The amortized cost, gross unrealized gains and losses, and estimated fair value of debt and equity securities are shown below. Debt securities include bonds, redeemable preferred stocks and short-term investments. Equity securities include perpetual preferred stocks and common stocks. The estimated fair value of publicly traded securities is based on quoted market prices. For securities not actively traded, estimated fair values were provided by independent pricing services specializing in matrix pricing and modeling techniques. PL&A also estimates certain fair values based on interest rates, credit quality and average maturity, or from securities with comparable trading characteristics.
Gross Unrealized Amortized ---------------- Estimated Cost Gains Losses Fair Value -------------------------------------- (In Thousands) December 31, 2000: ------------------ U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 7,976 $ 78 $ 2 $ 8,052 Obligations of states and political subdivisions 9,456 147 13 9,590 Foreign governments 3,058 162 3,220 Corporate securities 281,495 3,750 2,514 282,731 Mortgage-backed and asset-backed securities 50,645 850 335 51,160 Redeemable preferred stock 2,276 2 2,274 ------------------------------------- Total debt securities $354,906 $ 4,987 $ 2,866 $357,027 ===================================== Total equity securities $ 12,443 $ 1,607 $ 2,503 $ 11,547 ===================================== December 31, 1999: ------------------ U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 6,029 $ 7 $ 22 $ 6,014 Obligations of states and political subdivisions 8,290 141 40 8,391 Foreign governments 1,000 37 1,037 Corporate securities 231,786 1,241 2,624 230,403 Mortgage-backed and asset-backed securities 68,657 28 1,602 67,083 Redeemable preferred stock 6,111 22 6 6,127 ------------------------------------- Total debt securities $321,873 $ 1,476 $ 4,294 $319,055 ===================================== Total equity securities $ 5,999 $ 3,843 $ 1,454 $ 8,388 =====================================
98 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 2. INVESTMENTS IN DEBT AND EQUITY SECURITIES (Continued) The amortized cost and estimated fair value of debt securities as of December 31, 2000, by contractual repayment date of principal, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Estimated Cost Fair Value -------------------- (In Thousands) Due in one year or less $ 83,464 $ 83,426 Due after one year through five years 162,152 162,702 Due after five years through ten years 21,085 21,487 Due after ten years 37,560 38,252 ------------------- 304,261 305,867 Mortgage-backed and asset-backed securities 50,645 51,160 ------------------- Total $354,906 $357,027 ===================
Proceeds from sales of investments in debt securities were $13.1 million and $23.3 million for the years ended December 31, 2000 and 1999, respectively. Gross gains of $1.1 million and $0.1 million and gross losses of $0.1 million and $0.9 million were realized on those sales for the years ended December 31, 2000 and 1999, respectively. 3. FINANCIAL INSTRUMENTS The estimated fair values of PL&A's financial instruments, including debt and equity securities (Note 2), are as follows:
December 31, 2000 December 31, 1999 ----------------- ----------------- Statement Estimated Statement Estimated Value Fair Value Value Fair Value ------------------------------------------ (In Thousands) Assets: Debt securities $354,379 $357,027 $321,873 $319,055 Equity securities 11,536 11,547 8,388 8,388 Mortgage loans 15,004 16,152 15,409 17,131 Financial futures contracts (1,110) Foreign currency derivatives (129) 7 Liabilities: Guaranteed interest contracts 20,314 20,314 Deposit liabilities 3,213 3,213 6,300 6,300
The following methods and assumptions were used to estimate the fair value of these financial instruments as of December 31, 2000 and 1999: MORTGAGE LOANS The estimated fair value of the mortgage loan portfolio is determined by discounting the estimated future cash flows, using a year-end market rate which is applicable to the yield, credit quality and average maturity of the composite portfolio. 99 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 3. FINANCIAL INSTRUMENTS (Continued) GUARANTEED INTEREST CONTRACTS AND DEPOSIT LIABILITIES The estimated fair value of fixed maturity guaranteed interest contracts is estimated using the rates currently offered for deposits of similar remaining maturities. The estimated fair value of deposit liabilities with no defined maturities is the amount payable on demand. FINANCIAL FUTURES CONTRACTS PL&A uses exchange-traded financial futures contracts to hedge cash flow timing differences between assets and liabilities and overall portfolio duration. Assets and liabilities are rarely acquired or sold at the same time, which creates a need to hedge their change in value during the unmatched period. In addition, foreign currency futures may be used to hedge foreign currency risk on non-U.S. dollar denominated securities. Financial futures contracts obligate the holder to buy or sell the underlying financial instrument at a specified future date for a set price and may be settled in cash or by delivery of the financial instrument. Price changes on futures are settled daily through the required margin cash flows. The notional amounts of the contracts do not represent future cash requirements, as PL&A intends to close out open positions prior to expiration. FOREIGN CURRENCY DERIVATIVES PL&A enters into foreign exchange forward contracts to hedge against fluctuations in foreign currency exposure. Foreign currency derivatives involve the exchange of foreign currency denominated payments for U.S. dollar denominated payments. Gains and losses on foreign exchange forward contracts offset losses and gains, respectively, on the related foreign currency denominated assets. Foreign currency derivatives expire during the year 2001. 4. LIABILITY FOR GROUP HEALTH UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES Activity in the liability for group health unpaid claims and claim adjustment expenses, which is included in both policy reserves and policy benefits payable, is summarized as follows:
Years Ended December 31, 2000 1999 ------------------ (In Thousands) Balance at January 1 $ 91,583 $137,181 Less reinsurance recoverables 107 119 ------------------ Net balance at January 1 91,476 137,062 ------------------ Incurred related to: Current year 301,160 279,002 Prior years (27,823) (33,283) ------------------ Total incurred 273,337 245,719 ------------------ Paid related to: Current year 221,370 213,682 Prior years 45,078 77,623 ------------------ Total paid 266,448 291,305 ------------------ Net balance at December 31 98,365 91,476 Plus reinsurance recoverables 49 107 ------------------ Balance at December 31 $ 98,414 $ 91,583 ==================
100 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 4. LIABILITY FOR GROUP HEALTH UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES (Continued) As a result of favorable settlement of prior years' estimated claims, the provision for claims and claim adjustment expenses decreased by $27.8 million and $33.3 million for the years ended December 31, 2000 and 1999, respectively. 5. RELATED PARTY TRANSACTIONS Pacific Life provides services of certain management and other personnel, and other support services to PL&A. Services provided include employee participation in certain benefit plans provided by Pacific Life (Note 6). Charges for these services amounted to $12.9 million and $11.9 million for the years ended December 31, 2000 and 1999, respectively, and are included in operating expenses. Under a reinsurance and service agreement, which terminated on January 1, 1999, PL&A assumed substantially all of Pacific Life's group life and health insurance. Premiums of ($0.6) million and $0.4 million and benefits of $1.4 million and ($0.7) million were assumed for the years ended December 31, 2000 and 1999, respectively. Amounts payable under this agreement were $0.4 million and $1.3 million as of December 31, 2000 and 1999, respectively. Effective January 1, 1999, PL&A began to provide underwriting and administrative services for this business under an administrative services agreement. Fees earned amounted to $10.7 million and $10.2 million for the years ended December 31, 2000 and 1999, respectively, and are included as an offset to operating expenses. 6. EMPLOYEE BENEFIT PLANS PL&A permits eligible employees to participate in a retirement plan provided by Pacific Life. PL&A permits certain employees to defer a portion of cash compensation under a deferred compensation plan provided by Pacific Life. Interest accrued to this plan amounted to $0.4 million for the years ended December 31, 2000 and 1999. PL&A participates in a defined benefit health care plan and a defined benefit life insurance plan (the Plans) provided by Pacific Life. The Plans provide postretirement benefits for all eligible retirees and their dependents. Generally, qualified employees may become eligible for these benefits if they reach normal retirement age, have been covered under Pacific Life's policy as an active employee for a minimum continuous period prior to the date retired, and have an employment date before January 1, 1990. The Plans contain cost-sharing features such as deductibles and coinsurance, and require retirees to make contributions which can be adjusted annually. Pacific Life's commitment to qualified employees who retire after April 1, 1994 is limited to specific dollar amounts. Pacific Life reserves the right to modify or terminate the Plans at any time. Pacific Life and PL&A utilize the accrual method of accounting for the costs of the Plans as prescribed by the Insurance Departments of the States of California and Arizona, respectively. PL&A has elected to amortize the transition obligation, which was allocated from Pacific Life, of $3.7 million over 20 years. The transition obligation amortization amounted to $0.2 million for each of the years ended December 31, 2000 and 1999. The postretirement obligation included in other liabilities reflects the amortized balance less reductions due to payouts under the Plans. The balance as of December 31, 2000 and 1999 is $1.1 million and $1.0 million, respectively. 7. DIVIDEND RESTRICTIONS Dividend payments by PL&A to its parent cannot exceed the lesser of 10% of surplus as of the preceding year-end, as regards to policyholders, or the statutory net gain from operations for the previous calendar year, without prior approval from the Insurance Commissioner of the State of Arizona. No dividends were paid during 2000 and 1999. During 2001, PL&A can pay dividends amounting to approximately $22.3 million without prior approval from the Insurance Commissioner of the State of Arizona. 101 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS-STATUTORY BASIS 8. COMMITMENTS AND CONTINGENCIES PL&A has outstanding commitments to make investments in bonds, mortgage loans and other invested assets as follows (In Thousands):
Year Ending December 31: ------------------------ 2001 $ 9,620 2002 through 2005 25,679 2006 and thereafter 17,324 ------- Total $52,623 =======
PL&A leases office facilities under various noncancelable operating leases. Rent expense in connection with these leases was $2.6 million and $2.4 million for the years ended December 31, 2000 and 1999, respectively. Aggregate minimum future commitments are as follows (In Thousands):
Year Ending December 31: ------------------------ 2001 $3,415 2002 3,321 2003 1,106 2004 1,102 2005 and thereafter 685 ------ Total $9,629 ======
PL&A is a respondent in a number of legal proceedings, some of which involve extra-contractual damages. In the opinion of management, the outcome of these proceedings is not likely to have a material adverse effect on the financial position or results of operations of PL&A. - -------------------------------------------------------------------------------- 102 PACIFIC LIFE & ANNUITY COMPANY Financial Statements--Statutory Basis as of September 30, 2001 and December 31, 2000 and for the nine months ended September 30, 2001 and 2000 103 Pacific Life & Annuity Company STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND SURPLUS - STATUTORY BASIS
September 30, 2001 December 31, (Unaudited) 2000 - -------------------------------------------------------------------------- (In Thousands) ADMITTED ASSETS Bonds $392,504 $258,266 Preferred stocks 4,688 6,963 Common stocks 5,249 6,849 Mortgage loans 14,557 15,004 Cash and short-term investments 105,175 91,041 Other invested assets 66,845 56,832 Premiums due and unpaid 26,342 20,966 Investment income due and accrued 6,431 3,729 Other assets 6,460 1,798 Separate account assets 2,222 243 - -------------------------------------------------------------------------- TOTAL ADMITTED ASSETS $630,473 $461,691 ========================================================================== LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Policy reserves $223,010 $136,645 Policy benefits payable 77,141 58,097 Deposit-type contracts 4,646 3,212 Accrued general expenses 12,243 8,169 Other liabilities 55,286 24,842 Asset valuation reserve 10,340 4,769 Separate account liabilities 2,222 243 - -------------------------------------------------------------------------- TOTAL LIABILITIES 384,888 235,977 - -------------------------------------------------------------------------- Capital and Surplus: Common stock - $1 par value; 5 million shares authorized; 2.9 million shares issued and outstanding 2,900 2,900 Paid-in surplus 134,607 134,607 Unassigned surplus 108,078 88,207 - -------------------------------------------------------------------------- TOTAL CAPITAL AND SURPLUS 245,585 225,714 - -------------------------------------------------------------------------- TOTAL LIABILITIES AND CAPITAL AND SURPLUS $630,473 $461,691 ==========================================================================
See Notes to Financial Statements - Statutory Basis 104 Pacific Life & Annuity Company STATEMENTS OF OPERATIONS - STATUTORY BASIS (Unaudited)
Nine Months Ended September 30, 2001 2000 - ----------------------------------------------------- (In Thousands) REVENUES Premiums and other income $529,793 $299,239 Net investment income 23,592 22,678 - ----------------------------------------------------- TOTAL REVENUES 553,385 321,917 - ----------------------------------------------------- BENEFITS AND EXPENSES Current and future policy benefits 423,467 210,385 Operating expenses 111,715 73,525 - ----------------------------------------------------- TOTAL BENEFITS AND EXPENSES 535,182 283,910 - ----------------------------------------------------- INCOME BEFORE FEDERAL INCOME TAXES 18,203 38,007 Federal income taxes 7,035 12,998 - ----------------------------------------------------- NET GAIN FROM OPERATIONS 11,168 25,009 Net realized capital gains 3,002 504 - ----------------------------------------------------- NET INCOME $ 14,170 $ 25,513 =====================================================
See Notes to Financial Statements - Statutory Basis 105 Pacific Life & Annuity Company STATEMENTS OF CAPITAL AND SURPLUS - STATUTORY BASIS
Common Stock ------------- Paid-in Unassigned Shares Amount Surplus Surplus Total - --------------------------------------------------------------------------------------- (In Thousands) BALANCES, JANUARY 1, 2000 2,900 $2,900 $134,607 $ 63,441 $200,948 Net income 28,171 28,171 Other surplus transactions (3,405) (3,405) - --------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 2000 2,900 2,900 134,607 88,207 225,714 Net income 14,170 14,170 Cumulative effect of changes in accounting principles 12,383 12,383 Other surplus transactions (6,682) (6,682) - --------------------------------------------------------------------------------------- BALANCES (Unaudited), SEPTEMBER 30, 2001 2,900 $2,900 $134,607 $108,078 $245,585 =======================================================================================
See Notes to Financial Statements - Statutory Basis 106 Pacific Life & Annuity Company STATEMENTS OF CASH FLOWS - STATUTORY BASIS (Unaudited)
Nine Months Ended September 30, 2001 2000 - --------------------------------------------------------------------------- (In Thousands) CASH FROM OPERATIONS Receipts Premiums $ 523,759 $ 299,183 Net investment income 18,683 20,120 Federal income taxes 7,634 Other, net 3,389 Payments Policy benefit payments (317,769) (193,876) Operating expenses (94,386) (64,016) Net transfer to separate accounts (2,067) (67) Premium and other taxes (10,322) (7,909) Federal income taxes (12,835) Other, net (109) - --------------------------------------------------------------------------- NET CASH FROM OPERATIONS 128,921 40,491 - --------------------------------------------------------------------------- CASH FROM INVESTMENTS Proceeds Bonds 42,092 55,592 Stocks 4,867 5,027 Mortgage loans 453 1,325 Payments for the purchase of Bonds (172,941) (55,762) Stocks (659) (7,463) Other, net (1,415) (17,734) - --------------------------------------------------------------------------- NET CASH FROM INVESTMENTS (127,603) (19,015) - --------------------------------------------------------------------------- CASH FROM FINANCING AND MISCELLANEOUS SOURCES Other, net 12,816 2,152 - --------------------------------------------------------------------------- NET CASH FROM FINANCING AND MISCELLANEOUS SOURCES 12,816 2,152 - --------------------------------------------------------------------------- Net change in cash and short-term investments 14,134 23,628 Cash and short-term investments, beginning of period 91,041 73,725 - --------------------------------------------------------------------------- CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 105,175 $ 97,353 - ---------------------------------------------------------------------------
See Notes to Financial Statements - Statutory Basis 107 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS (Unaudited) 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION DESCRIPTION OF BUSINESS Pacific Life & Annuity Company (PL&A) is a stock life insurance company domiciled in the State of Arizona, and a wholly owned subsidiary of Pacific Life Insurance Company (Pacific Life). PL&A provides benefit programs to employers and other benefit plan sponsors throughout the United States and offers medical, dental, life, and other ancillary coverages to small and mid-size employers, as well as flexible funding arrangements for labor management and union trusts. In addition, stop loss products are sold through Pacific Life and companion group life insurance is sold through PL&A to self-funded plan sponsors. Also, PL&A began selling structured settlement annuities in 2000. In 1999, Pacific Life contributed $97 million in cash of additional paid-in surplus to PL&A in conjunction with PL&A's approval from the State of New York Insurance Department (NY DOI) to transact business in the State of New York. In 2000, PL&A began selling variable life insurance and institutional products and services in New York. In 2001, PL&A received product approval from the NY DOI to sell variable annuity products. Sales of the variable annuity products are pending approval from the Securities and Exchange Commission. BASIS OF PRESENTATION The information set forth in the statement of admitted assets, liabilities and capital and surplus - statutory basis as of September 30, 2001 and the statements of operations - statutory basis, the statements of capital and surplus - statutory basis and of cash flows - statutory basis for the nine months ended September 30, 2001 and 2000 is unaudited. The September 30, 2001 and 2000 information reflects all adjustments, consisting only of normal recurring adjustments, that, in the opinion of management, are necessary to present fairly the financial position and results of operations of PL&A for the periods indicated. Results of operations for the interim periods are not necessarily indicative of the results of operations for the full year. It is suggested that these unaudited financial statements be read in conjunction with the audited financial statements for the years ended December 31, 2000 and 1999. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING PRACTICES The financial statements of PL&A are prepared in conformity with accounting practices prescribed or permitted by the Insurance Department of the State of Arizona (AZ DOI). The AZ DOI has adopted as prescribed accounting practice the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual, version effective January 1, 2001 (NAIC Manual). The AZ DOI has the right to permit accounting practices that differ from those in the NAIC's Manual. PL&A's net income and capital and surplus as of September 30, 2001 are the same between the NAIC Manual and accounting practices permitted by the State of Arizona. NAIC Statement of Statutory Accounting Principles (SSAP) and accounting practices prescribed or permitted by the AZ DOI differ in certain respects, which in some cases may be material from accounting principles generally accepted in the United States of America (GAAP). GAAP stockholder's equity as of September 30, 2001 and December 31, 2000 was $276 million and $255 million, respectively, compared to statutory capital and surplus as included herein of $246 million and $226 million, respectively. GAAP net income for the nine months ended September 30, 2001 and 2000 was $16 million and $29 million, respectively, compared to statutory net income included herein of $14 million and $26 million, respectively. 108 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) USE OF ESTIMATES IN THE PREPARATION OF THE FINANCIAL STATEMENTS The preparation of these financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses during the period. It also requires disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. ACCOUNTING POLICIES Health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Life premiums are recognized as income when due from the policyholder under the terms of the insurance contract. For flexible premium products, premiums are recognized as income when received from the policyholder. Annuity considerations are recognized as revenue when received. Guaranteed Interest Contracts (GIC's) are recorded as premium in the period received. GIC's contain purchase rate guarantees that cause them to be classified as life contracts under SSAP No. 50, Classifications and Definitions of Insurance or Managed Care Contracts In Force. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. Payments received on contracts which do not incorporate any mortality or morbidity risk are recorded directly as a liability for deposit-type contracts. Interest credited to deposit-type contracts is recorded as an expense when earned under the terms of the contract. Payments to policyholders are recorded as benefit expense to the extent that such payments differ from the recorded liability. In addition, PL&A uses the following accounting policies: Short-term investments are stated at amortized cost. Bonds not backed by other loans, where eligible under NAIC rules, are stated at amortized cost using the interest method. Other bonds are valued at the lower of amortized cost or market. Investments in unaffiliated common stocks are valued, as provided by the NAIC, at approximate market value. Preferred stocks, where eligible under NAIC rules, are stated at amortized cost. Other preferred stock is stated at the lower of amortized cost or market. Mortgage loans on real estate are stated at the aggregate carrying value less accrued interest. PL&A utilizes the retrospective method of accounting for amortization of premium and discount for all mortgage and asset backed securities except for interest only and residual securities, which are valued using the prospective method. The prepayment assumptions for all mortgage and asset backed securities were obtained from broker dealer surveys or internal estimates. These assumptions are consistent with the current interest rate and economic conditions at the time of valuation. PL&A generally carries its unaffiliated investments in joint ventures, partnerships and limited liability companies based on the underlying audited GAAP equity of the investee. Derivative instruments are valued in accordance with the NAIC Manual. All derivative instruments are valued consistently with the hedged item. 109 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS (Unaudited) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) PL&A establishes loss liabilities for accident and health claims incurred before the valuation date but not yet paid. PL&A also establishes an expense liability associated with paying those claims. The method for establishing this liability involves calculating lag reserves on each type of business using PL&A's own experience. A portion of this is set aside as the claim liability for incurred but unreported claims as well as claims in course of settlement. Any liability for resisted claims is added to this. The group business accrues an operating expense for the cost of settling benefit claims incurred in the current period, with settlement in future periods. The estimation is based upon the number of transactions expected and the total expected costs of settlement including overhead expenses for each transaction. 3. ACCOUNTING CHANGES Effective January 1, 2001, the AZ DOI required that insurance companies domiciled in Arizona prepare statutory basis financial statements in accordance with the NAIC Manual. Accounting changes adopted to conform to the provision of the NAIC Manual are reported as changes in accounting principles. The cumulative effect of changes in accounting principles is reported as an adjustment to unassigned funds (surplus) in the period of the change in accounting principles. The cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported at that date if the new accounting principles had been applied retroactively for all prior periods. As a result of these changes, PL&A reported changes in accounting principles as a net adjustment that increased unassigned funds (surplus) of $12 million as of January 1, 2001. Included in this total adjustment is an increase of $4 million related to deferred tax assets and $8 million related to federal income taxes recoverable. 4. DERIVATIVE INSTRUMENTS Financial Futures Contracts: PL&A uses exchange-traded financial futures contracts to hedge cash flow timing differences between assets and liabilities and overall portfolio duration. Assets and liabilities are rarely acquired or sold at the same time, which creates a need to hedge their change in value during the unmatched period. Financial futures contracts obligate the holder to buy or sell the underlying financial instrument. Price changes on futures are settled daily through the daily margin cash flows. The notional amounts of the contract do not represent future cash requirements, as PL&A intends to close out open positions prior to expiration. Foreign Exchange Forward Contracts: PL&A enters into foreign exchange forward contracts to hedge against fluctuations in foreign currency exposure. Foreign currency derivatives involve the exchange of foreign currency denominated payments for U.S. dollar denominated payments. Gains and losses on foreign exchange forward contracts offset currency gains and losses on the related assets. Interest Rate Swap Contracts: PL&A uses interest rate swaps to manage interest rate risk. The interest rate swap agreements generally involve the exchange of fixed and floating rate interest payments or the exchange of floating to floating interest payments tied to different indexes. Generally, no premium is paid to enter into the contract and no principal payments are made by either party. The amounts to be received or paid pursuant to these agreements are accrued and recognized in the statement of operations through an adjustment to net investment income over the life of the agreements. 5. INCOME TAXES For the year 2000, the AZ DOI approved a permitted practice for PL&A to record deferred income taxes. As of December 31, 2000, PL&A had a nonadmitted net deferred tax asset (DTA) of $11 million. The change in the net DTA of $7 million was recorded as Federal income taxes in net income and as a change to surplus through 110 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS (Unaudited) 5. INCOME TAXES (Continued) change in nonadmitted assets. Surplus was unaffected. If deferred income taxes had not been recognized, net income would have been increased by $7 million for the year ended December 31, 2000 as compared to the NAIC Manual in effect for that year. For the period ended September 30, 2001, PL&A adopted SSAP No. 10, Income Taxes, from the NAIC Manual. The tables below reflect differences between newly adopted SSAP No. 10 and the former permitted practice. No deferred tax liabilities (DTL) were recognized. The components of the net DTA/DTL as of September 30, 2001 and December 31, 2000 are as follows:
September 30, December 31, 2001 2000 -------------------------- (In Thousands) Total of all DTA's (admitted and nonadmitted) $11,289 $11,857 Total of all DTL's 351 283 Total DTA's nonadmitted in accordance with SSAP No. 10 (2001) and permitted practice (2000) 7,733 11,574 Decrease in DTA nonadmitted (3,841) (6,879) DTAs and DTLs are as follows: September 30, December 31, 2001 2000 -------------------------- (In Thousands) Current income tax expense, including ordinary income and capital gains $5,900 $15,153 -------------------------- Increase (decrease) in DTA's ($568) ($6,690) (Increase) decrease in DTL's (68) (189) Change due to beginning unrealized capital gains 424 -------------------------- Net change in deferred taxes ($212) ($6,879) ==========================
PL&A's Federal income tax expense and change in DTA/DTL differs from the amount obtained by applying the Federal statutory rate of 35% to income before Federal income taxes for the following reasons:
For the Nine Months Ended Year Ended September 30, December 31, 2001 2000 -------------------------- (In Thousands) Expected Federal income tax expense $6,371 $17,248 Interest maintenance reserve amortization (92) (117) Dividends received deduction and other 755 (221) -------------------------- Total incurred Federal income tax expense $7,034 $16,910 ==========================
111 Pacific Life & Annuity Company NOTES TO FINANCIAL STATEMENTS - STATUTORY BASIS (Unaudited) 5. INCOME TAXES (Continued) As of September 30, 2001, PL&A had no net operating loss carryforwards. The following are ordinary and capital gain income taxes incurred in the three prior years that will be available for recoupment in the event of future net losses (In Thousands): Years Ending: ------------- 2000 $13,980 1999 14,452 1998 4,252
PL&A's Federal income tax return is consolidated with Pacific Mutual Holding Company, its ultimate parent, along with other includable subsidiaries. The method of allocation between companies is subject to written agreement, approved by the Board of Directors. Allocation is based upon separate return calculations with current credit for net losses to the extent utilized in the consolidated return. If the consolidated return has tax losses, inter-company balances are settled as refunds are received. If the consolidated return has a tax payable, the inter-company balances are settled on a quarterly basis. 6. RETROSPECTIVELY RATED CONTRACTS PL&A estimates accrued retrospective premium adjustments for its group life and group health insurance business through a mathematical approach using its experience rating practices. The amount of net premiums earned by PL&A for the nine months ended September 30, 2001 that are subject to retrospective rating features was $4 million, which represented 0.9% of the total net premiums earned for group life and group health. 7. LITIGATION PL&A is a respondent in a number of legal proceedings, some of which involve allegations for extra-contractual damages. In the opinion of management, the outcome of the foregoing proceedings is not likely to have a material adverse effect on the financial position or results of operations of PL&A. - -------------------------------------------------------------------------------- 112 APPENDIX A - JOINT EQUAL AGE --------------------------------------------------------- An example Joint equal age is a calculation that combines the ages and insurance risks of two people insured by a policy. This example It changes many possible combinations of ages, risk assumes a male classes, and genders for the two people insured by the smoker who is age policy into a two life status. With joint equal age, we 65 and a female assume that both people have the same age, gender (both nonsmoker who is always male), and risk class (both smoker or both age 55. nonsmoker). Here's how we How we use joint equal age calculate the joint Using the joint equal age of the two people insured by equal age. the policy eliminates many of the tables needed when age rates are used. We use the joint equal age for Step 1 calculating the following: Subtract 0 from the . certain policy charges. We use joint equal age to male age of 65. For determine the rates per $1000 of initial face amount the female, for the sales surrender target and underwriting subtract 5 from age surrender charge. 55. . the death benefit under Option D. Adjusted ages after How we calculate joint equal age Step 1: .Male 65 Here are the three steps we use to calculate joint .Female 50 equal age. We start with the actual ages of the two people insured by the policy on the policy date. Step 2 Step 1 Adjust ages for gender Subtract 50 from 65. The difference We subtract years from the age of each person insured is 15. The add-on by the policy, based on gender. The table below shows factor for 15 is 6 how we make the adjustment. in the table. --------------------------------------------------------- Step 3 Gender Subtract from adjusted age (years) --------------------------------------------------------- Add 6, the add-on Female 5 factor to 50, the Male 0 younger adjusted Unisex 1 age. --------------------------------------------------------- The joint equal age Step 2 Determine the add-on factor is 56. We subtract the younger adjusted age from the older adjusted age. We find the difference between the two in the table below and go across the row to determine the add-on factor. ---------------------- ---------------------- Difference in Add-on Difference in Add-on adjusted age factor adjusted age factor (years) (years) (years) (years) ---------------------- ---------------------- 0 0 40-44 12 1-2 1 45-47 13 3-4 2 48-50 14 5-6 3 51-53 15 7-9 4 54-56 16 10-12 5 57-60 17 13-15 6 61-64 18 16-18 7 65-69 19 19-23 8 70-75 20 24-28 9 76-82 21 29-34 10 83-91 22 35-39 11 92-100 23 ---------------------- ---------------------- Step 3 Calculate joint equal age We add the add-on factor to the younger adjusted age (from Step 1). The sum is the joint equal age. 113 APPENDIX B - RATES PER $1,000 OF INITIAL FACE AMOUNT
- -------------------------------------------- -------------------------------------------- Face amount Face amount Joint Sales Underwriting component Joint Sales Underwriting component of equal surrender surrender of M & E equal surrender surrender M & E age target/1/ charge risk charge/2/ age target/1/ charge risk charge/2/ - -------------------------------------------- -------------------------------------------- 15 3.98 2.0 0.098 51 13.20 5.3 0.159 16 4.05 2.1 0.098 52 13.98 5.4 0.163 17 4.13 2.1 0.099 53 14.82 5.5 0.167 18 4.30 2.2 0.100 54 16.00 5.8 0.172 19 4.27 2.3 0.100 55 17.07 6.1 0.176 20 4.34 2.3 0.101 56 18.42 6.4 0.182 21 4.52 2.4 0.102 57 19.77 6.7 0.187 22 4.60 2.4 0.103 58 21.33 7.0 0.193 23 4.68 2.5 0.104 59 22.92 7.3 0.200 24 4.76 2.6 0.105 60 24.60 7.6 0.207 25 4.84 2.7 0.106 61 26.29 7.9 0.214 26 4.93 2.8 0.107 62 28.18 8.2 0.222 27 5.02 2.9 0.108 63 30.17 8.5 0.231 28 5.11 3.0 0.109 64 32.83 8.9 0.240 29 5.18 3.1 0.110 65 35.66 9.3 0.250 30 5.26 3.2 0.111 66 38.42 9.7 0.261 31 5.34 3.3 0.112 67 41.48 10.1 0.273 32 5.42 3.4 0.114 68 44.75 10.5 0.286 33 5.51 3.5 0.115 69 48.08 10.9 0.300 34 5.84 3.6 0.117 70 50.94 11.3 0.316 35 5.98 3.7 0.118 71 54.60 11.7 0.332 36 6.33 3.8 0.120 72 56.78 12.1 0.350 37 6.60 3.9 0.122 73 60.34 12.5 0.370 38 6.78 4.0 0.123 74 65.37 12.9 0.391 39 7.17 4.1 0.125 75 68.95 13.3 0.414 40 7.58 4.2 0.127 76 70.86 13.7 0.440 41 8.02 4.3 0.129 77 72.68 14.1 0.467 42 8.58 4.4 0.132 78 74.86 14.5 0.498 43 9.08 4.5 0.134 79 77.34 14.9 0.531 44 9.52 4.6 0.137 80 79.33 15.3 0.567 45 9.77 4.7 0.139 81 76.61 15.7 0.553 46 10.14 4.8 0.142 82 78.74 16.1 0.584 47 10.62 4.9 0.145 83 77.90 16.5 0.599 48 11.02 5.0 0.148 84 80.62 16.9 0.614 49 11.57 5.1 0.151 85 82.10 17.3 0.640 50 12.36 5.2 0.155 - -------------------------------------------- --------------------------------------------
/1/Maximum sales surrender target for the joint equal age. The sales surrender target charged may be less and will depend upon the individual ages and the sex of the insureds. /2/Maximum face amount component of the M&E risk charge for the joint equal age. The face amount component of the M&E risk charge may be less and will depend upon the individual ages and the sex of the insureds. 114 APPENDIX C - DEATH BENEFIT PERCENTAGES
- ---------------- --------------- --------------- ---------------------------- Age Percentage Age Percentage Age Percentage Age Percentage - ---------------- --------------- --------------- ---------------------------- 0-40 250 50 185 60 130 70 115 41 243 51 178 61 128 71 113 42 236 52 171 62 126 72 111 43 229 53 164 63 124 73 109 44 222 54 157 64 122 74 107 45 215 55 150 65 120 75-90 105 46 209 56 146 66 119 91 104 47 203 57 142 67 118 92 103 48 197 58 138 68 117 93 102 49 191 59 134 69 116 (greater than) 93 101 - ---------------- -------------- --------------- ----------------------------
115 APPENDIX D - DEATH BENEFIT FACTOR TABLE
- ------------------------------------------------------------------------------------------------ Rate per $1.00 of Face Amount - ------------------------------------------------------------------------------------------------ Joint equal age Policy years* - ------------------------------------------------------------------------------------------------ 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75+ - ------------------------------------------------------------------------------------------------ 15 1.000 1.000 1.000 1.001 1.002 1.005 1.010 1.022 1.048 1.102 1.210 1.415 1.702 1.957 2.000 20 1.000 1.000 1.001 1.002 1.004 1.009 1.021 1.046 1.100 1.207 1.411 1.700 1.957 2.000 2.000 25 1.000 1.000 1.001 1.003 1.008 1.019 1.044 1.097 1.204 1.408 1.697 1.956 2.000 2.000 2.000 30 1.000 1.001 1.003 1.007 1.018 1.042 1.094 1.200 1.404 1.694 1.955 2.000 2.000 2.000 2.000 35 1.000 1.002 1.006 1.016 1.039 1.091 1.197 1.400 1.692 1.954 2.000 2.000 2.000 2.000 2.000 40 1.001 1.005 1.014 1.036 1.087 1.192 1.395 1.688 1.953 2.000 2.000 2.000 2.000 2.000 2.000 45 1.002 1.011 1.032 1.081 1.185 1.388 1.682 1.952 2.000 2.000 2.000 2.000 2.000 2.000 2.000 50 1.006 1.025 1.072 1.174 1.376 1.674 1.949 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 55 1.015 1.058 1.157 1.358 1.660 1.945 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 60 1.035 1.128 1.327 1.636 1.936 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 65 1.079 1.274 1.595 1.920 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 70 1.175 1.519 1.891 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 75 1.357 1.822 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 80 1.620 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 85 1.894 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 90 1.969 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 95 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 99 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 2.000 - ------------------------------------------------------------------------------------------------
* Factors are portrayed for both joint equal ages and policy anniversaries, at five year intervals. See your policy for one year increments in death benefit factors. 116 PACIFIC SELECT ESTATE PRESERVER - NY WHERE TO GO FOR MORE INFORMATION The Pacific Select For more information about Pacific Select Estate Estate Preserver - Preserver - NY, please call or write to us at the NY variable life address below. You should also use this address to send insurance policy is us any notices, forms or requests about your policy. underwritten by Pacific Life & Annuity Company. --------------------------------------------------------- How to contact us Pacific Life & Annuity Company Client Services Department 700 Newport Center Drive P.O. Box 6530 Newport Beach, California 92658-7500 1-888-595-6997 7 a.m. through 5 p.m. Pacific time --------------------------------------------------------- How to contact the You can also find reports and other information about SEC the policy and separate account from the SEC. The SEC may charge you a fee for this information. Public Reference Section of the SEC Washington, D.C. 20549-6009 1-800-SEC-0330 Internet: www.sec.gov PACIFIC SELECT EXEC SEPARATE ACCOUNT PART II. ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS Contents of Registration Statement This Registration Statement on Form S-6 comprises the following papers and documents: The facing sheet. The cross-reference table. The Prospectus consisting of 116 pages. The undertaking to file reports. Representation pursuant to Section 26(e) of the Investment Company Act of 1940. Rule 484 undertaking. The Signatures. Written consent of the following person (included in the exhibits shown below): Deloitte & Touche LLP, independent auditors Dechert Price & Rhoads The following exhibits: 1. (1) (a) Minutes of Action of Board of Directors of PM Group Life Insurance Company (PL&A) dated July 1, 1998/1/ (b) Memorandum Establishing Separate Account/1/ (2) Inapplicable (3) (a) Form of Distribution Agreement Between PL&A and Pacific Select Distributors, Inc./1/ (b) Form of Selling Agreement Between Pacific Select Distributors, Inc. and Various Broker-Dealers/1/ (4) Inapplicable (5) (a) Flexible Premium Variable Life Insurance Policy (Form P0156-NY) (b) Last Survivor Added Protection Benefit Rider (Form R01LST-NY) (c) Individual Annual Renewable Term Rider (Form R01IRT-NY) (d) Policy Split Option Rider (Form R94PSO-NY) (e) Accelerated Living Benefit Rider (Form R92ALB-NY)/1/ (f) Estate Tax Repeal Rider (Form R01ETR-NY)/1/ (6) (a) Bylaws of PL&A/1/ (b) Articles of Incorporation of PM Group Life Insurance Company/1/ (c) Amended & Restated Articles of Incorporation for PM Group Life Insurance Company/1/ (7) Inapplicable (8) Inapplicable (9) (a) Form of Participation Agreement between PL&A and Pacific Select Fund/1/ (b) Administrative Agreement Between PL&A and Pacific Life Insurance Company (Pacific Life)/1/ (c) Form of Addendum to Participation Agreement between PL&A and Pacific Select Fund (10) Application for Flexible Premium Variable Life Insurance Policy & General Questionnaire 2. Form of Opinion and consent of legal officer of PL&A as to legality of Policies being registered/1/ 3. Inapplicable 4. Inapplicable 5. Inapplicable 6. (a) Consent of Deloitte & Touche LLP (b) Consent of Dechert/1/ 7. (a) Opinion of Actuary (b) Form of Illustration of Policy Benefits 8. Memorandum Describing Issuance, Transfer and Redemption Procedures/1/ 9. Powers of Attorney 10. Inapplicable 11. Inapplicable 12. Inapplicable 13. Inapplicable 14. Inapplicable 15. Inapplicable 16. Inapplicable 17. Inapplicable _________________ /1/ Filed as part of Registration Statement on Form S-6 via EDGAR on June 6, 2001, File No. 333-62446, Accession Number 0001017062-01-500429. UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940 Pacific Life & Annuity Company, the sponsoring insurance company of the Registrant, represents that the fees and charges to be deducted under the variable Life Insurance Policy ("Policy") described in the prospectus contained in this registration statement are, in the aggregate, reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed in connection with the Policy. RULE 6e-3(T) REPRESENTATION This filing is made pursuant to Rule 6e-3(T) and Rule 6c-3 under the Investment Company Act of 1940. RULE 484 UNDERTAKING Pacific Life & Annuity Company's Articles of Incorporation provide in Article IX for indemnification of directors, officers and employees of the Company. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Pacific Select Exec Separate Account of Pacific Life & Annuity Company, certifies that it has caused this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 to be signed on its behalf by the undersigned thereunto duly authorized in the City of Newport Beach, and State of California, on this 27th day of December, 2001. PACIFIC SELECT EXEC SEPARATE ACCOUNT (Registrant) BY: PACIFIC LIFE & ANNUITY COMPANY (Depositor) BY: _____________________________________ Thomas C. Sutton* Chief Executive Officer *BY: /s/ DAVID R. CARMICHAEL David R. Carmichael as attorney-in-fact (Powers of Attorney are contained as Exhibit 9 in this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 for the Pacific Select Exec Separate Account.) SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Pacific Life & Annuity Company certifies that it has duly caused this Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized all in the City of Newport Beach, and State of California, on this 27th day of December, 2001. BY: PACIFIC LIFE & ANNUITY COMPANY (Registrant) BY: _________________________________ Thomas C. Sutton* Chief Executive Officer *BY: /s/ DAVID R. CARMICHAEL David R. Carmichael as attorney-in-fact (Powers of Attorney are contained as Exhibit 9 in this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 for the Pacific Select Exec Separate Account.) SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated: Signature Title Date ____________________ Director, Chairman of the Board ___________ , 2001 Thomas C. Sutton* and Chief Executive Officer ____________________ Director, Senior Vice President and ___________ , 2001 David R. Carmichael* General Counsel ____________________ Director, Vice President ___________ , 2001 Audrey L. Milfs* and Secretary ____________________ Director and President ___________ , 2001 Glenn S. Schafer* ____________________ Executive Vice President and Chief ___________ , 2001 Khanh T. Tran* Financial Officer ____________________ Executive Vice President ___________ , 2001 Lynn C. Miller* ____________________ Vice President and Treasurer ___________ , 2001 Brian D. Klemens* *By: /s/ DAVID R. CARMICHAEL December 27, 2001 ------------------------------ David R. Carmichael as attorney-in-fact
(Powers of Attorney are contained as Exhibit 9 in this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 of Pacific Select Exec Separate Account.) EX-99.1 (5) (A) 3 dex9915a.txt FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY EXHIBIT 1.(5)(A) [LOGO OF PACIFIC LIFE APPEARS HERE] PACIFIC LIFE & ANNUITY COMPANY Mailing Address: 700 Newport Center Drive . Newport Beach, CA 92660 ================================================================================ FLEXIBLE READ YOUR POLICY CAREFULLY. This is a legal contract PREMIUM between you, the Owner, and us, Pacific Life & Annuity JOINT AND Company, a stock insurance company. We agree to pay the LAST SURVIVOR benefits of this policy according to its provisions. The VARIABLE LIFE consideration for this policy is the application for it, INSURANCE a copy of which is attached, and payment of the premiums. . Death Benefit Premiums are flexible, subject to minimums required to Payable on Death of keep the policy in force. Variable Account Values may the Survivor of the increase or decrease depending upon Variable Account Insureds While investment experience. There is no guaranteed Variable Policy in Force Account Value. Policy loan value is less than one hundred percent (100%) of the policy's cash surrender value. . Net Cash Surrender Value Payable upon The method for determining the death benefit is Surrender While the described in the Death Benefit section of this policy. Policy is in Force The amount of the death benefit may be fixed or variable according to the Death Benefit Option selected and may . Adjustable Face increase or decrease. The duration this policy remains Amount in force may vary, depending on the premiums paid and the investment experience of the Variable Accounts. . Benefits May Vary Based on Investment Free Look Right - You may return this policy within 10 Experience days after you receive it. To do so, deliver or mail it to us or to our agent. This policy will then be deemed . Non-Participating void from the beginning and we will refund the premiums paid. Signed for Pacific Life & Annuity Company, /s/ THOMAS C. SUTTON /s/ AUDREY L. MILFS --------------------- ------------------- President and Chief Secretary Executive Officer POLICY NUMBER: 1234567-0 INSURED #1: LELAND STANFORD POLICY DATE: JAN. 1, 2001 RISK CLASSIFICATION: MALE NONSMOKER INITIAL FACE AMOUNT: $150,000 AGE ON POLICY DATE: 35 OWNER: LELAND STANFORD INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE NONSMOKER AGE ON POLICY DATE: 35 NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT CONTINUE IN FORCE (THAT IS, IT MAY LAPSE BEFORE THE DEATH OF THE SURVIVOR) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION. P0156-NY (P) GUIDE TO POLICY PROVISIONS SECTION PAGE POLICY SPECIFICATIONS.................................................... 3 DEFINITIONS.............................................................. 5 OWNER AND BENEFICIARY.................................................... 6 PREMIUMS................................................................. 6 DEATH BENEFIT............................................................ 7 ACCUMULATED VALUE........................................................ 9 TRANSFERS................................................................ 12 SURRENDER AND WITHDRAWAL OF VALUES....................................... 13 TIMING OF PAYMENTS AND TRANSFERS......................................... 14 INCOME BENEFITS.......................................................... 14 POLICY LOANS............................................................. 15 SEPARATE ACCOUNT PROVISIONS.............................................. 16 GENERAL PROVISIONS....................................................... 17 INDEX.................................................................... 20 POLICY NUMBER: VP999999990 POLICY SPECIFICATIONS BASIC POLICY: FLEXIBLE PREMIUM SURVIVORSHIP VARIABLE LIFE INSURANCE PREMIUMS: PLANNED ANNUAL PREMIUM = $ 1,104.57 GUIDELINE SINGLE PREMIUM = $ 11,370.84 GUIDELINE LEVEL PREMIUM = $ 1,104.57 DEATH BENEFIT OPTION: A INTEREST ON THE FIXED OPTIONS IS GUARANTEED TO BE NOT LESS THAN 3.00% ANNUALLY FOR THE FIRST 10 POLICY YEARS, 3.60% FOR YEARS 11-20, AND 3.85% THEREAFTER. INTEREST ON THE LOAN ACCOUNT MAY BE AS MUCH AS 4.1% ANNUALLY FOR ALL POLICY YEARS AND IS GUARANTEED TO BE NOT LESS THAN 3.10% ANNUALLY FOR THE FIRST 10 POLICY YEARS, 3.70% FOR YEARS 11-20, AND 3.85% THEREAFTER. ANY EXCESS INTEREST RATE DECLARED BY US AT THE BEGINNING OF EACH POLICY YEAR WILL BE GUARANTEED UNTIL THE END OF THAT YEAR. BEFORE SUCH DECLARATION, EXCESS AMOUNTS ARE NOT GUARANTEED. SUBJECT TO POLICY GUARANTEES, WE HAVE THE RIGHT TO CHANGE THE INTEREST CREDITED TO THE FIXED OPTIONS AND THE COST OF INSURANCE AND OTHER CHARGES DEDUCTED, WHICH MAY REQUIRE MORE PREMIUM TO BE PAID THAN WAS ILLUSTRATED OR THE ACCUMULATED VALUE TO BE LESS THAN WAS ILLUSTRATED. PREMIUM LOAD: FOR EACH PREMIUM PAID THERE IS A PREMIUM LOAD THAT CONSISTS OF A SALES LOAD OF 0% DURING POLICY YEARS 1-10 AND 3% THEREAFTER, PLUS A CHARGE OF 2.35% FOR CERTAIN STATE AND LOCAL TAXES AND A CHARGE OF 1.50% FOR CERTAIN FEDERAL TAXES. ADMINISTRATIVE CHARGE: $7.50 PER MONTH UNTIL THE YOUNGER INSURED'S AGE 100; $0 THEREAFTER. WITHDRAWAL FEE: $25 UNDERWRITING SURRENDER CHARGE: $350.00 REMAINS LEVEL FOR THE FIRST POLICY YEAR; AND THEN DECREASES BY $3.24 PER MONTH TO ZERO AT THE END OF THE 12OTH MONTH. SALES SURRENDER TARGET: $378.70 REMAINS LEVEL FOR THE FIRST POLICY YEAR; AND THEN DECREASES BY $3.51 PER MONTH TO ZERO AT THE END OF THE 120TH MONTH. M&E RISK FACE AMOUNT CHARGE: $11.40 PER MONTH FOR POLICY YEARS 1 TO 10; $0 THEREAFTER. REFER TO M&E RISK CHARGE PROVISION FOR DETAILS. M&E RISK ASSET CHARGE: A MONTHLY CHARGE WHICH IS A PERCENTAGE OF THE VARIABLE ACCUMULATED VALUE. THE PERCENTAGE IS 0.075% FOR POLICY YEARS 1-10, 0.025% FOR POLICY YEARS 11-20, AND 0.0042% THEREAFTER UNTIL THE YOUNGER INSURED'S AGE 100. POLICY NUMBER: 1234567-0 INSURED #1: LELAND STANFORD POLICY DATE: JAN. 1, 2001 RISK CLASSIFICATION: MALE NONSMOKER INITIAL FACE AMOUNT: $150,000 AGE ON POLICY DATE: 35 OWNER: LELAND STANFORD INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE NONSMOKER AGE ON POLICY DATE: 35 NOTE: IT IS POSSIBLE THAT THE POLICY MAY NOT CONTINUE IN FORCE (THAT IS, IT MAY LAPSE BEFORE THE DEATH OF THE SURVIVOR) EVEN IF PLANNED PREMIUMS ARE PAID DUE TO CHANGE IN THE CURRENT INTEREST RATE BEING CREDITED ON THE FIXED OPTIONS, THE INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNTS IN THE SEPARATE ACCOUNT, CHANGES IN EXPENSE LOADS OR COST OF INSURANCE RATES, LOANS AND WITHDRAWALS OR CHANGES IN THE DEATH BENEFIT OPTION. P0156-NY Page 3.0 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE P0156-NY: BASIC COVERAGE FACE AMOUNT: $100,000 INSURED #1: LELAND STANFORD AGE AT ISSUE: 35 RISK CLASSIFICATION: MALE NONSMOKER INSURED #2: MARY STANFORD AGE AT ISSUE: 35 RISK CLASSIFICATION: FEMALE NONSMOKER ________________________________________________________________________________ R01LST-NY: LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER FACE AMOUNT: $50,000 (VARYING) INSURED #1: LELAND STANFORD RISK CLASSIFICATION: MALE NONSMOKER INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE NONSMOKER ________________________________________________________________________________ R01IRT-NY: INDIVIDUAL ANNUAL RENEWABLE TERM RIDER FACE AMOUNT: $50,000 (VARYING) AGE AT ISSUE: 35 RISK CLASSIFICATION: MALE NONSMOKER PERSON COVERED: LELAND STANFORD ________________________________________________________________________________ P0156-NY Page 3.1 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER VARYING SCHEDULE INSURED #1: LELAND STANFORD RISK CLASSIFICATION: MALE NONSMOKER INSURED #2: MARY STANFORD RISK CLASSIFICATION: FEMALE NONSMOKER
POLICY FACE POLICY FACE POLICY FACE YEAR AMOUNT YEAR AMOUNT YEAR AMOUNT - -------------------------------------------------------------------------------- 1 $ 50,000 36 $100,000 2 50,000 37 100,000 3 50,000 38 100,000 4 50,000 39 100,000 5 50,000 40 100,000 6 100,000 41 100,000 7 100,000 42 100,000 8 100,000 43 100,000 9 100,000 44 100,000 10 100,000 11 100,000 12 100,000 13 100,000 14 100,000 15 100,000 16 100,000 17 100,000 18 100,000 19 100,000 20 100,000 21 100,000 22 100,000 23 100,000 24 100,000 25 100,000 26 100,000 27 100,000 28 100,000 29 100,000 30 100,000 31 100,000 32 100,000 33 100,000 34 100,000 35 100,000
P0156-NY Page 3.2 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS SUMMARY OF COVERAGES EFFECTIVE ON THE POLICY DATE INDIVIDUAL RENEWABLE TERM INSURANCE RIDER VARYING SCHEDULE INSURED: LELAND STANFORD RISK CLASSIFICATION: MALE NONSMOKER
ATTAINED FACE ATTAINED FACE ATTAINED FACE AGE AMOUNT AGE AMOUNT AGE AMOUNT - -------------------------------------------------------------------------------- 35 $ 50,000 70 $100,000 36 50,000 71 100,000 37 50,000 72 100,000 38 50,000 73 100,000 39 50,000 74 100,000 40 100,000 75 100,000 41 100,000 76 100,000 42 100,000 77 100,000 43 100,000 78 100,000 44 100,000 79 100,000 45 100,000 46 100,000 47 100,000 48 100,000 49 100,000 50 100,000 51 100,000 52 100,000 53 100,000 54 100,000 55 100,000 56 100,000 57 100,000 58 100,000 59 100,000 60 100,000 61 100,000 62 100,000 63 100,000 64 100,000 65 100,000 66 100,000 67 100,000 68 100,000 69 100,000
P0156-NY Page 3.3 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF SURRENDER CHARGES
POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER MONTH CHARGE MONTH CHARGE MONTH CHARGE - -------------------------------------------------------------------------------- 1 $728.70 41 $533.03 81 $263.14 2 728.70 42 526.28 82 256.39 3 728.70 43 519.54 83 249.65 4 728.70 44 512.79 84 242.90 5 728.70 45 506.04 85 236.15 6 728.70 46 499.29 86 229.41 7 728.70 47 492.55 87 222.66 8 728.70 48 485.80 88 215.91 9 728.70 49 479.05 89 209.16 10 728.70 50 472.31 90 202.42 11 728.70 51 465.56 91 195.67 12 728.70 52 458.81 92 188.92 13 721.95 53 452.06 93 182.18 14 715.21 54 445.32 94 175.43 15 708.46 55 438.57 95 168.68 16 701.71 56 431.82 96 161.93 17 694.96 57 425.08 97 155.19 18 688.22 58 418.33 98 148.44 19 681.47 59 411.58 99 141.69 20 674.72 60 404.83 100 134.94 21 667.98 61 398.09 101 128.20 22 661.23 62 391.34 102 121.45 23 654.48 63 384.59 103 114.70 24 647.73 64 377.84 104 107.96 25 640.99 65 371.10 105 101.21 26 634.24 66 364.35 106 94.46 27 627.49 67 357.60 107 87.71 28 620.74 68 350.86 108 80.97 29 614.00 69 344.11 109 74.22 30 607.25 70 337.36 110 67.47 31 600.50 71 330.61 111 60.73 32 593.76 72 323.87 112 53.98 33 587.01 73 317.12 113 47.23 34 580.26 74 310.37 114 40.48 35 573.51 75 303.63 115 33.74 36 566.77 76 296.88 116 26.99 37 560.02 77 290.13 117 20.24 38 553.27 78 283.38 118 13.49 39 546.53 79 276.64 119 6.75 40 539.78 80 269.89 120 0.00
P0156-NY Page 3.4 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO BASE POLICY COVERING BOTH LIVES.
POLICY MONTHLY POLICY MONTHLY YEAR RATE YEAR RATE - ----------------------------------------------------------------- 1 0.00000029 40 0.00206346 2 0.00000094 41 0.00242313 3 0.00000174 42 0.00283191 4 0.00000270 43 0.00328732 5 0.00000390 44 0.00378906 6 0.00000537 45 0.00434789 7 0.00000720 46 0.00498290 8 0.00000937 47 0.00571389 9 0.00001195 48 0.00656426 10 0.00001498 49 0.00755141 11 0.00001858 50 0.00866656 12 0.00002272 51 0.00989906 13 0.00002754 52 0.01123693 14 0.00003316 53 0.01267302 15 0.00003975 54 0.01420425 16 0.00004742 55 0.01583604 17 0.00005651 56 0.01758447 18 0.00006727 57 0.01947971 19 0.00008019 58 0.02158283 20 0.00009532 59 0.02400871 21 0.00011279 60 0.02706405 22 0.00013278 61 0.03141825 23 0.00015505 62 0.03857529 24 0.00017990 63 0.05230724 25 0.00020807 64 0.08333333 26 0.00024063 65 0.08333333 27 0.00027924 66+ 0.00000000 28 0.00032573 29 0.00038256 30 0.00045033 31 0.00052931 32 0.00061934 33 0.00072032 34 0.00083185 35 0.00095820 36 0.00110541 37 0.00128088 38 0.00149413 39 0.00175379
P0156-NY Page 4.0 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO LAST SURVIVOR ADDED PROTECTION BENEFIT COVERING BOTH LIVES.
POLICY MONTHLY POLICY MONTHLY YEAR RATE YEAR RATE - ---------------------------------------------------------------- 1 0.00000029 26 0.00024063 2 0.00000094 27 0.00027924 3 0.00000174 28 0.00032573 4 0.00000270 29 0.00038256 5 0.00000390 30 0.00045033 6 0.00000537 31 0.00052931 7 0.00000720 32 0.00061934 8 0.00000937 33 0.00072032 9 0.00001195 34 0.00083185 10 0.00001498 35 0.00095820 11 0.00001858 36 0.00110541 12 0.00002272 37 0.00128088 13 0.00002754 38 0.00149413 14 0.00003316 39 0.00175379 15 0.00003975 40 0.00206346 16 0.00004742 41 0.00242313 17 0.00005651 42 0.00283191 18 0.00006727 43 0.00328732 19 0.00008019 44 0.00378906 20 0.00009532 21 0.00011279 22 0.00013278 23 0.00015505 24 0.00017990 25 0.00020807
P0156-NY Page 4.1 POLICY NUMBER VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES GUARANTEED MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO INDIVIDUAL RENEWABLE TERM INSURANCE RIDER COVERING LELAND STANFORD. POLICY POLICY YEAR MONTHLY RATE YEAR MONTHLY RATE -------------------------------------------------------- 35 0.00017600 60 0.00134998 36 0.00018686 61 0.00147355 37 0.00020022 62 0.00161341 38 0.00021526 63 0.00177217 39 0.00023280 64 0.00194909 40 0.00025202 65 0.00214342 41 0.00027458 66 0.00235100 42 0.00029715 67 0.00257276 43 0.00032307 68 0.00280882 44 0.00034984 69 0.00306532 45 0.00037996 70 0.00335367 46 0.00041093 71 0.00368199 47 0.00044442 72 0.00406029 48 0.00047960 73 0.00449620 49 0.00051898 74 0.00498352 50 0.00056089 75 0.00551331 51 0.00061038 76 0.00607653 52 0.00066577 77 0.00666569 53 0.00072875 78 0.00727588 54 0.00080018 79 0.00792387 55 0.00087672 56 0.00096005 57 0.00104684 58 0.00113962 59 0.00123925 P0156-NY Page 4.2 POLICY NUMBER: VP99999990 POLICY SPECIFICATIONS TABLE OF COST OF INSURANCE RATES CURRENT MONTHLY COST OF INSURANCE RATES PER $1.00 APPLICABLE TO INDIVIDUAL RENEWABLE TERM INSURANCE RIDER COVERING LELAND STANFORD.
AGE MONTHLY RATE AGE MONTHLY RATE --------- ----------------- ---------- ----------------- 35 0.00003555 60 0.00041758 36 0.00003820 61 0.00046025 37 0.00004291 62 0.00050676 38 0.00004656 63 0.00055634 39 0.00005079 64 0.00060518 40 0.00005361 65 0.00067468 41 0.00005925 66 0.00074652 42 0.00006488 67 0.00082684 43 0.00007121 68 0.00091641 44 0.00007824 69 0.00102295 45 0.00008878 70 0.00112655 46 0.00009887 71 0.00123871 47 0.00011071 72 0.00135871 48 0.00012513 73 0.00148890 49 0.00014070 74 0.00162544 50 0.00015817 75 0.00176528 51 0.00017412 76 0.00192548 52 0.00019160 77 0.00210225 53 0.00021060 78 0.00229493 54 0.00023189 79 0.00248879 55 0.00025318 56 0.00027979 57 0.00030870 58 0.00034143 59 0.00037950
PO156-NY Page 4.3 POLICY NUMBER VP99999990 POLICY SPECIFICATIONS TABLE OF GUARANTEED MAXIMUM M&E RISK FACE AMOUNT CHARGES LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER M&E RISK FACE AMOUNT CHARGE APPLICABLE TO THE LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER: MONTHLY CHARGE EQUAL TO THE AMOUNTS SHOWN BELOW. REFER TO THE RIDER FOR DETAILS. POLICY M&E RISK POLICY M&E RISK POLICY M&E RISK YEAR CHARGE YEAR CHARGE YEAR CHARGE - ------------------------------------------------------------------------------- 1 $ 5.70 26 11.40 2 5.70 27 11.40 3 5.70 28 11.40 4 5.70 29 11.40 5 5.70 30 11.40 6 11.40 31 11.40 7 11.40 32 11.40 8 11.40 33 11.40 9 11.40 34 11.40 10 11.40 35 11.40 11 11.40 36 11.40 12 11.40 37 11.40 13 11.40 38 11.40 14 11.40 39 11.40 15 11.40 40 11.40 16 11.40 41 11.40 17 11.40 42 11.40 18 11.40 43 11.40 19 11.40 44 11.40 20 11.40 21 11.40 22 11.40 23 11.40 24 11.40 25 11.40 P0156-NY Page 4.4 DEFINITIONS In this section, we define certain terms used throughout this policy. Other terms may be defined in other parts of the policy. Defined terms are usually capitalized to provide emphasis. Age - means the Insured's Age to the nearest birthday as of the Policy Date, increased by the number of complete policy years elapsed. Code - is the U.S. Internal Revenue Code, and the rules and regulations issued thereunder. Evidence of Insurability - is information, including medical information, satisfactory to us that is used to determine insurability and the Insured's risk classification. Face Amount - is used in determining the death benefit under this policy. The Face Amount as of the Policy Date is shown in the Policy Specifications. The Face Amount may be decreased, as provided for in the Death Benefit section. Fixed Options - consist of the Fixed Account and the Fixed LT Account. Free Look Transfer Date - is 10 days after the policy is issued, or if later, the date all requirements necessary to place the policy in force are delivered to the Home Office. Home Office - means our Life Insurance Client Services offices. Insureds - are the two persons insured under this policy. The Insureds are shown in the Policy Specifications. Investment Options - consist of the Variable Accounts and the Fixed Options. Monthly Payment Date - is the day each month on which certain policy charges are deducted from, or credits are made to, the Accumulated Value. The first Monthly Payment Date is the Policy Date. Later Monthly Payment Dates occur each month after the Policy Date on the same day of the month as the Policy Date. NAR - stands for the Net Amount at Risk. The NAR is equal to the death benefit as of the most recent Monthly Payment Date divided by 1.002466, then reduced by the Accumulated Value at the beginning of the policy month before the Monthly Deduction is due. Also, the Accumulated Value section describes how the NAR is used to calculate the Cost of Insurance charge. Net Premium - is the premium we receive reduced by any Premium Load. PL&A, we, our, ours, us and the Company - refers to Pacific Life & Annuity Company. Policy Date - is shown on page 3. Policy months, quarters, years and anniversaries are measured from this date. Policy Debt - is the sum of outstanding policy loans plus accrued Loan Interest. Separate Account - is the Pacific Select Exec Separate Account, which is a separate account of ours that consists of subaccounts, also called Variable Accounts. Each Variable Account may invest its assets in a separate class of shares of a designated investment company or companies. Survivor - is the Insured remaining alive after the first death of the two Insureds that occurs while this policy is in force. If the two Insureds die in close proximity such that it cannot be determined who died first, unless otherwise provided, it shall be assumed that the younger survived the older. P0156-NY Page 5 (P) Valuation Date - is each day required by applicable law and currently includes each day the New York Stock Exchange is open for trading and our Home Office is open. If any transaction or event is scheduled to occur on a day that is not a Valuation Date, such transaction or event will be deemed to occur on the next following Valuation Date unless otherwise specified. Valuation Period - is the period of time between successive Valuation Dates. Variable Account - is a subaccount of a separate account of ours in which assets are segregated from assets in our general account and from assets in other subaccounts. Premiums and Accumulated Value under this policy may be allocated to a Variable Account for variable accumulation. Written Request - is a request in writing, signed by you, and received by us at our Home Office. You, your or Owner - refers to the Owner of this policy. OWNER AND BENEFICIARY Owner - The Owner of this policy is as shown in the Policy Specifications or in a later Written Request. If you change the owner, the change is effective on the date the Written Request is signed, subject to our receipt of it. If there are two or more Owners, they will own this contract as joint tenants with right of survivorship. Assignment - You may assign this policy by Written Request. An assignment will take place only when recorded at our Home Office. When received, the assignment will take effect as of the date the Written Request was signed. Any rights created by the assignment will be subject to any payments made or actions taken by us before the change is recorded. We will not be responsible for the validity of any assignment. Beneficiary - The beneficiary is named by you in the application to receive the death benefit proceeds. The beneficiary may be one or more persons. If the beneficiary is more than one person, they will share the death benefit proceeds equally or as otherwise specified by you in a Written Request. The interest of any beneficiary will be subject to any assignment. If you have named a contingent beneficiary, that person becomes the beneficiary if the beneficiary dies before the Survivor. A beneficiary may not, at or after the Survivor's death, assign, transfer or encumber any benefit payable. To the extent allowed by law, policy benefits will not be subject to the claims of any creditor of any beneficiary. You may make a change of beneficiary by Written Request on a form provided by us while at least one Insured is living. The change will take place as of the date the request is signed, subject to our receipt of the request. Any rights created by the change will be subject to any payments made or actions taken by us before the Written Request is received. You may designate a permanent beneficiary whose rights under the policy cannot be changed without his or her written consent. The interest of a beneficiary who does not survive to receive payment will pass to the surviving beneficiaries in proportion to their share in the proceeds, unless otherwise provided. If no beneficiaries survive to receive payment, the death proceeds will pass to the Owner, or the Owner's estate if the Owner does not survive to receive payment. PREMIUMS Premiums - This policy will not be in force until the initial premium is paid. The initial premium is payable either at our Home Office or to our agent. Additional premiums, if any, are payable in advance at our Home Office. At your request, a premium receipt signed by one of our officers will be given to you. No premium may be less than $50. Premiums may be paid at any time, subject to the premium limitations below. The Planned Premium is the amount identified in the application, or later changed by Written Request, which you plan to pay. Payment of the Planned Premium does not guarantee that the policy will continue in force. The amount of Planned Premium at policy issue is shown on Page 3.0. P0156-NY Page 6 (P) Premium Allocation Before the Free Look Transfer Date - Any Net Premium received before the Free Look Transfer Date will be allocated to the Money Market Variable Account on the issue date or, if later, the date the premium is received and accepted by us. On the Free Look Transfer Date, the Accumulated Value in the Money Market Variable Account will be allocated to the Investment Options according to the premium allocation specified in the application or your most recent allocation instructions received by us, if any. Premium Allocation On or After the Free Look Transfer Date - Any Net Premium received by us on or after the Free Look Transfer Date will be allocated to the Investment Options according to the premium allocation specified in the application or your most recent instructions received by us, if any. Upon Written Request, you may change the premium allocation. Subsequently, Net Premiums will be allocated to the Investment Options according to your most recent instructions. Premium Limitation - We reserve the right to require Evidence of Insurability, satisfactory to us, for any premium payment that would result in an immediate increase in the NAR. Guideline Premium Limitation - For this policy to be treated as life insurance under the Code, the sum of premiums paid less a portion of any withdrawals, as defined in the Code, may not exceed the greater of: . The Guideline Single Premium; or . The sum of the Guideline Level Premiums to date. The amounts of the Guideline Premiums are shown on the Policy Specification pages. The Guideline Premiums may change whenever there is a change to the policy or riders. In such case, the new Guideline Premium will be shown in the supplemental schedule of benefits and premiums we will send to you at the time of the change. See the Tax Qualification as Life Insurance subsection of the General Provisions section for details. Also, see the Tax Qualification as Life Insurance and MEC Status subsections of the General Provisions section to see how premium payments can affect the federal tax treatment of your policy. DEATH BENEFIT Death Benefit - This policy provides a death benefit on the death of the Survivor as long as the policy continues in force. There is no death benefit payable on the first death of the two Insureds. The death benefit, Death Benefit Option and the Guideline Premium Test are described in this section. Before the younger Insured reaches Age 100 (or would have attained Age 100 had the younger Insured survived), the death benefit is calculated as the larger of: . The Minimum Death Benefit calculated under the Guideline Premium Test; or . The death benefit as calculated under the Death Benefit Option in effect. Beginning on the younger Insured's Age 100 (or would have attained Age 100 had the younger Insured survived), the death benefit is equal to the Accumulated Value. Guideline Premium Test - The Minimum Death Benefit at any time is the Accumulated Value multiplied by the death benefit percentage shown in the following table, based on the Age of the younger Insured:
Death Benefit Death Benefit Death Benefit Death Benefit Age Percentage Age Percentage Age Percentage Age Percentage 0-40 250% 50 185% 60 130% 70 115% 41 243 51 178 61 128 71 113 42 236 52 171 62 126 72 111 43 229 53 164 63 124 73 109 44 222 54 157 64 122 74 107 45 215 55 150 65 120 75-90 105 46 209 56 146 66 119 91 104 47 203 57 142 67 118 92 103 48 197 58 138 68 117 93 102 49 191 59 134 69 116 Over 93 101
P0156-NY Page 7 (P) Death Benefit Options - You have elected the Death Benefit Option in the application. The Death Benefit Option for this policy appears in the Policy Specifications. The Death Benefit Options are explained below. . Option A - The death benefit equals the Face Amount. . Option B - The death benefit equals the Face Amount plus the Accumulated Value at death. . Option C - The death benefit is the Face Amount plus the sum of the premiums paid minus the sum of any withdrawals taken and any other distribution of the Accumulated Value to the date of death. If the sum of the withdrawals is greater than the sum of the premiums paid, then the death benefit will be less than the Face Amount. . Option D - The death benefit equals the Face Amount times the death benefit factor for the current policy year. If you have elected Option D, the death benefit factors are shown on the Policy Specifications pages. Change of Death Benefit Option - The Death Benefit Option may be changed to Option A or B upon Written Request a maximum of once per year. Changes to Option C or D are not permitted. After any such change, the Face Amount will be that which results in the death benefit after the change being equal to the death benefit before the change. For this purpose, death benefit is the amount calculated under the Death Benefit Options, disregarding the Minimum Death Benefit. The change will be effective on the Monthly Payment Date on or next following the day we receive your Written Request. Death Benefit Proceeds - The death benefit proceeds are the actual amount payable if the Survivor dies while this policy is in force. The death benefit proceeds are equal to the death benefit, as of the date of the Survivor's death, less any Policy Debt and less any due and unpaid monthly deductions occurring during a grace period. We will pay the death benefit proceeds to the beneficiary after we receive, at our Home Office, due proof of the Insureds' deaths (certified copies of the death certificates or, if unavailable, other legal documentation which we accept) and information sufficient to identify the beneficiary. The death benefit proceeds paid are subject to the conditions and adjustments defined in other policy provisions, such as General Provisions, Withdrawals and Policy Loans. We will pay interest on death proceeds from the date of death to the date of payment, at a rate not less than the current rate payable on the Interest Settlement Option described under Income Benefits. Face Amount Decrease - The Face Amount may not be increased. However, subject to our approval, you may decrease the Face Amount a maximum of one time in any policy year after the first policy year. The effective date of the decreased Face Amount will be the first Monthly Payment Date on or following the date we receive the Written Request. We recommend you consult your tax advisor before requesting a decrease in policy Face Amount. A supplemental schedule of benefits and premiums will be issued. This schedule will include the following information: . the effective date of the decreased Face Amount; . the amount of the decrease and the decreased Face Amount; and . the new Guideline Premiums. The request for a decrease in Face Amount will be subject to the Guideline Premiums Limitation as defined in the Internal Revenue Code. This may result in a refund of premiums and/or the distribution of Accumulated Value in order to maintain compliance with such limitations. Such request will not be allowed if the resulting Guideline Premiums could cause an amount in excess of the Net Cash Surrender Value to be distributed from the policy. The Face Amount of this policy may not be decreased to less than our minimum issue limit in effect on the date of the request. Paid-Up Insurance - On each policy anniversary you have the option to use the Net Cash Surrender Value to purchase guaranteed fixed joint and last survivor paid-up insurance. At the time of conversion, the Net Cash Surrender Value will be transferred to our general account. The entire Net Cash Surrender Value will be applied as a net single premium to purchase paid-up insurance. The amount of such insurance will be not less than that amount which can be purchased based on the guaranteed minimum interest rates for the Fixed Account and on the P0156-NY Page 8 (P) guaranteed maximum rates for the Cost of Insurance as shown in the Policy Specifications, beginning with the policy year in which the Paid-Up Insurance is purchased. If the amount of paid-up insurance so determined would exceed the death benefit of the policy immediately prior to purchase of the paid-up insurance, we will apply only a portion of the Net Cash Surrender Value to purchase paid-up insurance, and the remainder will be paid to you. In this case, we will determine the amount of paid-up insurance so that the paid-up insurance plus the Net Cash Surrender Value paid to you will equal the policy's death benefit immediately prior to the purchase of the paid-up insurance. This policy and any riders attached to it will terminate at the time of conversion. Such paid-up insurance may be surrendered at any time, with the cash surrender value being determined on the same basis. No charges other than Cost of Insurance charges will be used in such determination. In particular, the Administrative Charge will not be used. Change in Benefits - Under the Guideline Premium Test, any change in policy or rider benefits will require an adjustment to the guideline premium limitation. See the Tax Qualification as Life Insurance subsection of the General Provisions section for details. ACCUMULATED VALUE Accumulated Value - is defined on each Valuation Date and is the sum of the Fixed Accumulated Value plus the Variable Accumulated Value plus the Loan Account and any interest credited to it. Fixed Accumulated Value - The Fixed Accumulated Value is the sum of the Accumulated Value in each Fixed Option. The Fixed Options consist of the Fixed Account and the Fixed LT Account. This subsection describes how we calculate the Accumulated Value in each Fixed Option. We credit interest on a daily basis using a 365-day year and at a rate not less than an annual effective rate of 3% in the first 10 policy years, 3.60% in policy years 11-20, and 3.85% thereafter. At our discretion, we may credit a higher rate of interest. The interest rate in effect at the beginning of the policy year will be effective for the duration of that year. Once credited, interest is nonforfeitable, except indirectly due to any applicable Surrender Charge. The Accumulated Value for each Fixed Option on any Valuation Date is the following, including interest on each: . the Accumulated Value for the Fixed Option on the prior Monthly Payment Date; . plus the amount of any Net Premium received and allocated to the Fixed Option since the last Monthly Payment Date; . plus the amount of any transfer to the Fixed Option, including transfers from the Loan Account, since the last Monthly Payment Date; . minus the monthly deduction and other deductions due, if any, and assessed against the Fixed Option; and . minus the amount of any withdrawals, or transfers from the Fixed Option, including transfers to the Loan Account, since the last Monthly Payment Date. Variable Accumulated Value - The Variable Accumulated Value is the sum of your policy's Accumulated Value in each Variable Account. This subsection describes how we calculate your policy's Accumulated Value in each Variable Account. Assets in each Variable Account are divided into Accumulation Units, which are a measure of value used for bookkeeping purposes. We credit your policy with Accumulation Units in each Variable Account as a result of: . the amount of any Net Premium received and allocated to the Variable Account; and . transfers of Accumulated Value to the Variable Account, including transfers from the Loan Account. We debit Accumulation Units in each Variable Account as a result of: . transfers from the Variable Account, including transfers to the Loan Account; . Surrenders and withdrawals from the Variable Account; and P0156-NY Page 9 (P) . the monthly deduction and other deductions due, if any, and assessed against the Variable Account. To determine the number of Accumulation Units debited or credited for a transaction, we divide the dollar amount of the transaction by the Unit Value of the affected Variable Account. To determine your policy's Accumulated Value in each Variable Account, we multiply the number of Accumulation Units in the Variable Account by the Unit Value of the Variable Account. The number of Accumulation Units in each Variable Account will not change because of subsequent changes in Unit Value. At the inception of each Variable Account the Unit Value was $10. The Unit Value of each Variable Account is adjusted on each Valuation Date. To calculate the Unit Value of a Variable Account on any Valuation Date, we multiply the Unit Value from the previous Valuation Date by the Net Investment Factor. The Net Investment Factor for a Variable Account on any Valuation Date is (a) minus (b), divided by (c), where: (a) is the Net Asset Value of the Variable Account as of the close of the business day, excluding the impact of any policy transactions since the prior Valuation Date (this will include any dividends or capital gains distributions made to the Variable Account since the prior Valuation Date); (b) is the value of charges assessed by us since the prior Valuation Date for taxes attributable to the operation of the Variable Account; and (c) is the Net Asset Value of the Variable Account as of the close of the previous Valuation Date. The Net Asset Value of a Variable Account on any Valuation Date is the Net Asset Value per share for the Variable Account on the Valuation Date multiplied by the number of shares in the Variable Account on the Valuation Date. For each Variable Account, the Net Asset Value per share and the number of shares outstanding are reported to us each Valuation Date by the investment company in whose shares the Variable Account is invested. Loan Account - The Loan Account is the amount set aside to secure Policy Debt. The amount in the Loan Account on any date is the following, including interest on each: . the amount in the Loan Account on the prior anniversary; . plus any loan taken since the prior anniversary; and . minus any loan amount repaid since the prior anniversary. We will credit interest to the Loan Account on a daily basis using a 365-day year and the daily equivalent of an annual effective rate of 3.10% in the first 10 policy years, 3.70% in policy years 11-20, and 3.85% thereafter. At our discretion, we may use a higher rate of interest not to exceed the rate of 4.1% charged on policy loans. On each policy anniversary, any interest earned and held in the Loan Account will be transferred to the Investment Options according to your most recent premium allocation instructions. Monthly Deduction - A Monthly Deduction for a policy month is due on each Monthly Payment Date and is equal to the sum of the following items: . the monthly Cost of Insurance Charge; . the M&E Risk Charge; . the Administrative Charge, if any; and . rider or benefit charges, if any. Unless you have made a Written Request to the contrary, the Monthly Deduction will be charged proportionately to the Accumulated Value in each Variable Account and each Fixed Option on the Monthly Payment Date. Cost of Insurance Charge - Beginning on the Policy Date and monthly thereafter, there will be a monthly Cost of Insurance (COI) Charge for the death benefit payable under this policy equal to (1) multiplied by (2), where: (1) is the applicable monthly Cost of Insurance Rate; and (2) is the Net Amount at Risk. Cost of Insurance Rates - The Cost of Insurance Rates are based on a number of factors, including the Insureds' Ages, Risk Classifications, and the policy duration. Part of the cost is intended to recover acquisition expenses at issue. Such expense recoveries are greater in the early policy years. The P0156-NY Page 10 (P) current monthly Cost of Insurance Rates will be determined by us. These rates will not exceed the Guaranteed Maximum Monthly Cost of Insurance Rates shown in the Policy Specifications. Guaranteed Maximum Cost of Insurance rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table. Change in Policy Cost Factors - Any change in policy cost factors, including credited interest on the Fixed Options, persistency credit, COI rates, risk and expense charges and loads, will be by class and based on changes in our expectations of future investment earnings, mortality, persistency and expenses. Class is determined by a number of factors, including the two Insureds' Ages, Risk Classifications, Policy Date, and policy duration. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state in which this policy is delivered. Cost of insurance rates and other expense factors will be reviewed no more frequently than annually and no less frequently than once every five years to determine whether an adjustment is necessary. Interest to be credited to the Fixed Options will be reviewed at least annually to determine whether an adjustment is necessary. M&E Risk Charge - The Mortality and Expense Risk Charge (M&E Risk Charge) is to compensate us for the risk we assume that mortality, expenses and other costs of providing your policy will be greater than estimated. Beginning on the Policy Date and monthly thereafter, the M&E Risk Charge will be the sum of the M&E Risk Face Amount Charge and the M&E Risk Asset Charge. The M&E Risk Face Amount Charge is the amount shown in the Policy Specifications, and is based on the Face Amount at policy issue. The M&E Risk Asset Charge is assessed monthly until the younger Insured's Age 100 and is a percentage of the Variable Accumulated Value. In the first 10 policy years, the charge is 0.075% (0.90% annually). During policy years 11 through 20, the charge is 0.025% (0.30% annually). For policy years after the 20th, the charge is .0042% (0.05% annually). The percentages are also shown in the Policy Specifications. Administrative Charge - Beginning on the Policy Date and monthly thereafter, there will be an Administrative Charge against the Accumulated Value. The amount of this charge will equal the amount shown in the Policy Specifications. Premium Load - A Premium Load will be charged each time that a premium is paid to cover certain local, state and federal tax and certain sales and distribution costs. The Premium Load will equal the premium paid multiplied by the Premium Load rate shown in the Policy Specifications. The Premium Load associated with each premium will be immediately deducted from the premium paid. We reserve the right to increase the Premium Load with respect to the charge for local, state and federal tax. We will only increase the Premium Load if the effective tax paid by us increases and only if any such increase is first approved by the Insurance Department of the state in which this policy is delivered. We will notify you of any such change. Other Taxes - In addition to the charges imposed under Premium Load and elsewhere, we reserve the right to make a charge for federal, state or local taxes that may be attributable to the Variable Accounts or to our operations with respect to this policy if we incur any such taxes, but only if any such charge is first approved by the Insurance Department of the state in which this policy is delivered. Grace Period and Lapse - If the Accumulated Value less Policy Debt on a Monthly Payment Date is not sufficient to cover the current monthly deduction, a grace period of 61 days will be allowed for the payment of sufficient premium to keep your policy in force. The grace period begins on the Monthly Payment Date on which the insufficiency occurred and ends 61 days thereafter. At the start of the grace period, we will send notice to you at your last known address and to any assignee of record. The notice will state the due date and the amount of premium required for your policy to remain in force. A minimum of three times the monthly deduction due when the insufficiency occurred, plus Premium Load, must be paid. Premiums we receive during the grace period will be applied to your policy according to your most recent premium allocation instructions. There is no penalty for paying P0156-NY Page 11 (P) a premium during the grace period. Your policy will remain in force during the grace period. If sufficient premium is not paid by the end of the grace period, a lapse will occur. Thirty-one days prior to lapse, we will send you and any assignee of record a notice containing the lapse date and the required premium to keep your policy in force. If the Survivor dies during the grace period, the death benefit proceeds will be reduced by any overdue charges. Upon lapse, the policy will terminate with no value. Reinstatement - If it has not been surrendered, this policy may be reinstated not more than three years after the end of the grace period. To reinstate this policy you must provide us with the following: . a written application; . evidence of Insurability satisfactory to us for each Insured who was alive on the date of lapse; . sufficient premium to cover all monthly deductions due and unpaid during the grace period; plus . sufficient premium to keep the policy in force for three months after the date of reinstatement. The effective date of the reinstated policy will be the first Monthly Payment Date on or following the date we approve your reinstatement application. When this policy is reinstated, the Accumulated Value will be equal to the Accumulated Value on the date of lapse subject to the following. If the policy is reinstated on the first Monthly Payment Date following lapse, any Policy Debt on the date of lapse will also be reinstated with the corresponding portion of the Accumulated Value allocated to the Loan Account as described in the Policy Loans section. If the policy is reinstated after the first Monthly Payment Date following lapse, the Accumulated Value will be reduced by the amount of any Policy Debt on the date of lapse and the Policy Debt will be extinguished. At reinstatement, the surrender charge will be that in effect at the beginning of the grace period, and will then decrease each policy month thereafter according to the successive month-by-month surrender charges shown in the Policy Specifications pages. Additional Amounts Nonforfeitable After Crediting - Any additional credits in excess of those guaranteed, or charge less than the maximum guaranteed charge, will be credited no less frequently than annually, and are nonforfeitable after crediting, except indirectly due to surrender charges. TRANSFERS Transfers - After your initial Net Premium has been allocated according to your instructions and while your policy is in force, you may, upon Written Request, transfer your Accumulated Value, or a part of it, among the Investment Options as provided in this section. No transfer may be made if the policy is in a grace period and the required premium has not been paid. Transfers to or from the Fixed Account - If you have transferred out of either Fixed Option within the last 90 days, you cannot transfer to the Fixed Account, except that during the first 18 policy months transfers into the Fixed Account are unlimited (see below). One transfer from the Fixed Account may be made in any twelve-month period. Each transfer from the Fixed Account will be limited to the greater of $5,000 or 25% of the Accumulated Value in the Fixed Account. Regardless of the limitations stated in this paragraph, on each policy anniversary you can transfer any or all of the Accumulated Value to the Fixed Account with no restriction. Transfers to or from the Fixed LT Account - Transfers to the Fixed LT Account can be made only during the policy month prior to a policy anniversary. One transfer from the Fixed LT Account may be made in any twelve month period. Each transfer from the Fixed LT Account will be limited to the greater of $5,000 or 10% of the Accumulated Value in the Fixed LT Account. Allocations to the Fixed LT Account - We reserve the right to limit the amount allocated to the Fixed LT Account to $1,000,000 during the most recent 12 months for all policies owned by you. Allocations include Net Premium payments, transfers and loan repayments. Any excess over $1,000,000 will be transferred to your other Investment Options relative to your most recent allocation instructions. We may increase the $1,000,000 limit at any time at our sole discretion. You may contact us to find out if a higher limit is in effect. P0156-NY Page 12 (P) Transfer into the Fixed Account Unlimited Under Special Circumstances - You may transfer from any Variable Account to the Fixed Account with no limitation under the following circumstances: . For a period of time, as described below, after a material change in the investment policy of that Variable Account; and . During the first 18 policy months. We will notify you if there is a material change in the investment policy of a Variable Account. The notice will inform you of your options, including your option to transfer from such Variable Account to the Fixed Account within 60 days after (i) the effective date of the material change or (ii) the date you receive the notice, whichever is later. Transfer Limits - No charges are currently imposed for transfers. We reserve the right: . to limit the size of transfers so that each transfer is at least $500; . to limit the frequency of transfers (however, at least one transfer per quarter will be allowed); . to disallow a transfer from any Investment Option if the balance would be less than $500; . to assess a $25 charge for each transfer exceeding 12 per policy year. SURRENDER AND WITHDRAWAL OF VALUES Surrender - Upon Written Request while either Insured is living you may surrender this policy for its Net Cash Surrender Value. The policy will terminate on the date the request is received. Net Cash Surrender Value - The Net Cash Surrender Value is the Cash Surrender Value less any Policy Debt. Cash Surrender Value - The Cash Surrender Value is the Accumulated Value less any Surrender Charge. Surrender Charge - If you surrender your policy, a Surrender Charge will be deducted from the Accumulated Value. The Surrender Charge is needed to help pay for costs such as underwriting, policy issue and sales and distribution costs. The total Surrender Charge is equal to the sum of the Underwriting Surrender Charge and the Sales Surrender Charge. The Underwriting Surrender Charge is shown on the Policy Specifications. It remains level for the first policy year and then decreases by 0.9259% per month to zero at the 120th month. The Sales Surrender Charge is equal to 70% of the premiums paid up to the Sales Surrender Target. The Sales Surrender Target is shown on the Policy Specifications. The Sales Surrender Charge increases as premiums are paid until the Sales Surrender Target is reached. After the first policy year, the Sales Surrender Charge, as calculated above, is adjusted by multiplying by a reduction factor. This reduction factor is equal to 99.0741% in the 13th month and reduces by .9259% per month to zero at the 120th month. Surrender Charge on Face Amount Decrease - If you request to decrease the Face Amount, a Surrender Charge will be deducted from the Accumulated Value. The Surrender Charge in such case will equal the Surrender Charge that would be imposed if you were to surrender your policy at the time of the decrease multiplied by the ratio of the amount of the Face Amount decrease divided by the Face Amount immediately before the decrease. After a Face Amount decrease, the total Surrender Charge is reduced by the Surrender Charge deducted from the Accumulated Value as a result of the decrease. Withdrawals - Upon Written Request on or after the first policy anniversary while either Insured is living, you may withdraw a portion of the Net Cash Surrender Value of this policy. We will deduct a withdrawal fee of $25 from the Accumulated Value for each withdrawal. The withdrawal fee will be deducted from the Investment Options in the same proportion as the withdrawal. There is no Surrender Charge imposed for a Withdrawal, even if the Face Amount is reduced as a result of the Withdrawal. P0156-NY Page 13 (P) Withdrawals will be subject to the following conditions: The amount of each withdrawal must be at least $500 and the Net Cash Surrender Value remaining after each withdrawal must be at least $500. Also, if there is any Policy Debt at the time of each withdrawal, the amount of the withdrawal is limited to the excess, if any, of the Cash Surrender Value immediately prior to the withdrawal over the result of the Policy Debt divided by 90%. The amount of each withdrawal will be allocated proportionately to the Accumulated Value in the Investment Options unless you request otherwise. If the Survivor dies after the request for a withdrawal is sent to us and prior to the withdrawal being effected, the amount of the withdrawal will be deducted from the death benefit proceeds, which will be determined without taking the withdrawal into account. A withdrawal will affect the death benefit, depending on the Death Benefit Option you have chosen. If your policy's death benefit is greater than the Minimum Death Benefit, then the withdrawal will reduce the death benefit by the amount of the withdrawal. However, if your policy's death benefit is equal to the Minimum Death Benefit, the withdrawal may cause the death benefit to decrease by an amount greater than the amount of the withdrawal. For Death Benefit Option C, if the sum of the withdrawals and other distributions from the policy is greater than the premiums, the death benefit will be less than the Face Amount. Withdrawals May Affect the Face Amount - A withdrawal will never increase the NAR. A withdrawal will reduce the Face Amount, but only for policies having Death Benefit Option A or D. In the case of Option A, the reduction of the Face Amount will equal the excess of the Face Amount prior to the withdrawal over (a). In the case of Option D, the reduction of the Face Amount will equal the excess of the Face Amount prior to the withdrawal over (a) divided by (b), where: (a) = the death benefit prior to the withdrawal minus the amount of withdrawal; and (b) = the Option D death benefit factor in the year of the withdrawal. TIMING OF PAYMENTS AND TRANSFERS Variable Accounts - With respect to allocations made to the Variable Accounts, we will calculate values for surrenders, withdrawals, loans and, unless transfers are restricted, transfers as of the end of the Valuation Date on or next following the day on which we receive your instructions. We will calculate death benefit proceeds based on allocations made to the Variable Accounts as of the end of the Valuation Date on or next following the day on which Survivor's death occurs. We will pay such amounts and will effect such transfers within seven days after we receive all the information needed to process the transaction. However, we may postpone the calculation, payment or transfer of any amounts that are based on the investment performance of the Variable Accounts, if: . the New York Stock Exchange is closed on other than normal weekend and holiday closings; or . an emergency exists, as determined by the SEC, as a result of which it is not reasonably practicable to determine the value of the Account assets or to dispose of Account securities. Fixed Options - With respect to allocations made to the Fixed Options or if this policy is being continued under a fixed nonforfeiture benefit, we may defer surrenders, withdrawals, loans (except for loans to pay a premium on any policy issued by us), and transfers from the Fixed Options, for up to six months after we receive your request. If we defer any such payment for more than 10 days after we receive your request, we will pay interest at a rate not less than the current rate payable on the Interest Settlement Option described under Income Benefits. INCOME BENEFITS Income Benefits - Surrender or withdrawal benefits may be used to buy a lifetime monthly income for either Insured as long as the monthly income is at least $100. Death benefits may be used to buy a monthly income for the lifetime of the beneficiary. The monthly income will automatically be guaranteed to continue for at least ten years, unless another form of payment is requested. Under the automatic form P0156-NY Page 14 (P) of payment, if the income recipient dies before the end of the ten-year period, payments will continue to the end of the ten-year period to a person designated by the income recipient in writing. The purchase rates for the monthly income will be set periodically by the Company. However, under the automatic form, the monthly income bought by each $1,000 of benefit amount will always be at least as large as that shown below.
Monthly Income Monthly Income Monthly Income Age Male Female Age Male Female Age Male Female 0-30 $3.20 $3.09 46 $3.81 $3.61 62 $5.10 $4.73 32 3.25 3.14 48 3.92 3.71 64 5.35 4.95 34 3.31 3.19 50 4.05 3.81 66 5.62 5.20 36 3.38 3.24 52 4.18 3.93 68 5.92 5.47 38 3.45 3.30 54 4.33 4.06 70 6.23 5.78 40 3.53 3.37 56 4.49 4.20 72 6.56 6.11 42 3.62 3.44 58 4.68 4.36 74 6.90 6.48 44 3.71 3.52 60 4.88 4.54 75+ 7.08 6.67
Monthly income amount for ages not shown are halfway between the two amounts for the nearest two ages that are shown. Amounts shown are based on the Annuity 2000 table with interest at 3.00%. This benefit is not available if the income would be less than $100 a month. We may require evidence of survival for incomes that last more than ten years. Other Income Options - Surrender, withdrawal or death benefits may be used under any other payment plans that we make available at that time. We will make an Interest Settlement Option available under which we will credit interest monthly. Amounts left on deposit under this plan, and credited interest, will be accumulated until you request a withdrawal. POLICY LOANS Policy Loans - You may obtain loans by Written Request after the Free Look Period, on the sole security of the Loan Account of this policy. We recommend you consult your tax advisor before requesting a policy loan. The amount of a loan must be at least $200. Loan Amount Available - The amount available for a loan will be at least equal to 75% of the Net Cash Surrender Value or, if greater, the result of (a x b/c)-d, where: a = the Accumulated Value less 12 times the most recent monthly deduction less any Surrender Charge on the date of the loan; b = 1 + rate of loan interest credited at the time of the loan; c = 1.041; and d = any existing Policy Debt. Loan Interest - Interest will accrue daily and is payable in arrears at the annual rate of 4.10%. Interest not paid when due will be added to the loan principal and bear interest at the same rate of interest. Loan Account - When a loan is taken, an amount equal to the loan is transferred out of the Accumulated Value in the Investment Options into the Loan Account to secure the loan. Unless you request otherwise, loan amounts will be deducted from the Variable Accounts and the Fixed Options on a pro rata basis, up to the amount available. We will credit interest to the Loan Account as described in the Accumulated Value section. On each policy anniversary, if the amount in the Loan Account exceeds Policy Debt, the excess will be transferred from the Loan Account to the Investment Options according to your most recent allocation instructions. If Policy Debt exceeds the amount in the Loan Account, an amount equal to such excess will be transferred from the Investment Options on a proportionate basis to the Loan Account. P0156-NY Page 15 (P) Loan Repayment - Loans may be repaid at any time prior to lapse of this policy. An amount equal to the portion of any loan repaid, but not more than the amount in the Loan Account, will be transferred from the Loan Account to the Investment Options according to your most recent allocation instructions. We reserve the right to first transfer repayments from the Loan Account to each Fixed Option up to the amount that was originally borrowed. Any excess over such amount will be transferred to the Variable Accounts relative to your most recent allocation instructions. Any payment we receive from you while you have a loan will be first considered a loan repayment, unless you tell us in writing it is a premium payment. SEPARATE ACCOUNT PROVISIONS Separate Account - This policy uses the Pacific Select Exec Separate Account owned by Pacific Life & Annuity Company, herein called the "Separate Account". The assets of the Separate Account shall be valued at least as often as any policy benefits vary, but at least monthly. We established the Separate Account and maintain it under the laws and regulations of Arizona. The Separate Account is divided into subaccounts, called Variable Accounts. Income and realized and unrealized gains and losses from the assets of each Variable Account are credited or charged against it without regard to our other income, gains or losses. Assets may be put in our Separate Account to support this policy and other variable life policies. Assets may be put in our Separate Account for other purposes, but not to support contracts or policies other than variable life contracts or policies. The assets of our Separate Account are our property. The portion of its assets equal to the reserves and other policy liabilities with respect to our Separate Account will not be chargeable with liabilities arising out of any other business we conduct. We may transfer assets of a Variable Account in excess of the reserves and other liabilities with respect to that Variable Account to another Variable Account or to our general account. All obligations arising under the policy are general corporate obligations of ours. We do not hold ourselves out to be trustees of the Separate Account assets. Variable Accounts - Each Variable Account may invest its assets in a separate class of shares of a designated investment company or companies. The Variable Accounts of our Separate Account that were available for your initial allocations are shown in your application for this policy. From time to time, we may make other Variable Accounts available to you. We will provide you with written notice of all material details including investment objectives and all charges. We reserve the right, subject to compliance with the law then in effect, to: . change or add designated investment companies; . add, remove or combine Variable Accounts; . add, delete or make substitutions for the securities that are held or purchased by the Separate Account or any Variable Account; . register or deregister any Variable Account under the Investment Company Act of 1940; . change the classification of any Variable Account; . operate any Variable Account as a managed investment company or as a unit investment trust; . combine the assets of any Variable Account with other separate accounts or subaccounts of ours or our affiliates; . transfer any Variable Account assets to other separate accounts or subaccounts of ours or of our affiliates; . run any Variable Account under the direction of a committee, board, or other group; . restrict or eliminate any voting rights of policy Owners with respect to any Variable Account, or other persons who have voting rights as to any Variable Account; . change the allocations permitted under the policy; . terminate and liquidate any Variable Account; and . make any other change needed to comply with law. If any of these changes result in a material change in the underlying investments of a Variable Account of our Separate Account, we will notify you of such change. Unless required by law or regulation, we will not P0156-NY Page 16 (P) change the investment policy of the Separate Account without following the filing and other procedures of the Insurance Commissioner in the State of Arizona and without following the filing and other procedures established by the insurance regulators of the state in which this policy is delivered. GENERAL PROVISIONS Entire Contract - This policy is a contract between you and us. This policy, any attached endorsements, benefits and riders and the attached copy of the initial application are the entire contract, except as follows. Any written application for a change in policy terms allowed by the policy after issue or written notice of exercise of policy options made after the policy has been issued will also become part of the contract upon our acceptance of such application or notice and our mailing of same to your address last known to us. Only our president, chief executive officer or secretary is authorized to change this contract or extend the time for paying premiums. Any such change must be in writing. All statements in the application shall be deemed representations and not warranties. We will not use any statement to contest this policy or defend a claim on grounds of misrepresentation unless the statement is in an application. Non-Participating - This policy will not share in any of our surplus earnings. Incontestability - We will not contest this policy unless there was a material misrepresentation in an application, including any reinstatement application. This policy will terminate upon successful contest with respect to either Insured. Except for failure to pay premiums, this policy cannot be contested after the expiration of the following time periods: . If this policy has not been reinstated, we cannot contest this policy after it has been in force during the lifetime of at least one of the Insureds for two years from the Policy Date; and . Following a reinstatement, we cannot contest this policy after it has been in force during the lifetime of at least one of the Insureds for two years from the reinstatement date. Suicide Exclusion - If the death of the Survivor is the result of suicide within two years of the policy date, no death proceeds will be paid. Instead, we will pay the beneficiary the sum of the gross premiums charged on the policy less any indebtedness due to us on the policy, including interest due or accrued. Misstatement - If either Insured's Age has been misstated, the death benefit will be adjusted so that the NAR after adjustment is the NAR before the adjustment multiplied by the ratio of the incorrect Cost of Insurance (COI) rate to the correct COI rate. If the Minimum Death Benefit after adjustment is larger, the death benefit will be this larger amount. Evidence of Insurability - We reserve the right to require Evidence of Insurability for any policy change request or any premium payment which would result in an increase in NAR. We have the right to refuse any such change or premium payment. Maturity - This policy does not mature, but will continue in force so long as at least one Insured is alive and there is sufficient Accumulated Value to provide for the Monthly Deduction due. After Age 100 of the younger Insured, no Monthly Deduction is due. No premium payments may be made after Age 100 of the younger Insured, except as needed to keep the policy from lapsing. After Age 100 of the younger Insured, policy loans and loan repayments, withdrawals, and transfers among variable accounts can continue to be made. Payment of the Planned Premium does not guarantee that the policy will continue in force to the younger Insured's Age 100. P0156-NY Page 17 (P) Reports - A report will be mailed to you at the end of each policy quarter to your last known address. This report will include the following information for the policy quarter: . the Accumulated Value; . the Cash Surrender Value; . the current death benefit; . any Surrender Charges; . any existing Policy Debt; . transactions that occurred during the policy quarter; . changes in the Guideline Premiums, if applicable; and . any information required by law. In addition to the above reports, an annual report will also be mailed to you. The report will contain financial statements for the Separate Account and the designated investment company(ies) in which the Separate Account invests, the latter of which will include a list of the portfolio securities of the investment company, as required by the Investment Company Act of 1940. We will also send any other reports as required by federal securities law and applicable law and regulation of the state in which this policy is delivered. Policy Illustrations - Upon request we will give you an illustration of the future benefits under this policy based upon both guaranteed and current cost factor assumptions. However, if you ask us to do this more than once in any policy year, we reserve the right to charge you a fee not to exceed $25 per request for this service. Illustrated benefits that are not guaranteed, such as benefits based on the current cost factor assumptions, will vary depending upon a number of factors, including but not limited to, changes in future investment performance. Basis of Values - A detailed statement showing how values are determined has been filed with the Insurance Department of the state in which this policy is delivered. Values are based on the Commissioner's 1980 Standard Ordinary Mortality Table and interest at the rate of 3%. Such values do not change upon the first death of the Insureds, nor do the cost of insurance rates; that is, the values and rates are based on the Frasier rate structure. The cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by any statute of the state in which the policy is delivered. Ownership of Assets - We have the exclusive and absolute control of our assets, including all assets in the Separate Account. Tax Qualification as Life Insurance - This policy is intended to qualify as a life insurance contract for federal tax purposes, and the death benefit under this policy is intended to qualify for federal income tax exclusion. The policy, including any other rider, benefit or endorsement, shall be interpreted to ensure and maintain such tax qualification, despite any other provision to the contrary. We will not accept a premium payment which would cause the policy to fail to qualify as a life insurance contract for federal tax purposes. However, as of the effective date of the filing of this policy in the state in which it was delivered, the IRS has not issued any official guidance on the tax treatment of life insurance policies that continue coverage beyond Age 100. You should consult your tax advisor. If at any time the premiums paid under the policy exceed the amount allowable for such tax qualification, the excess amount, including any associated investment gains or losses, shall be removed from the policy as of the date of its payment, and any appropriate adjustment in the death benefit shall be made as of such date. The excess amount, including any associated investment gains or losses, shall be refunded no later than 60 days after the end of the applicable contract year as determined under federal tax law. For any such refund, any premium load originally assessed will be refunded and no surrender charges will apply. If this excess amount is not refunded by the end of such 60-day period, the death benefit shall be increased retroactively to the minimum extent necessary so that at no time is the death benefit ever less than the amount necessary to ensure or maintain such tax qualification, and the Accumulated Value will be reduced to reflect the increased Monthly Deductions as a result of such death benefit increase. P0156-NY Page 18 (P) If you request a decrease in policy or rider benefits, it may cause a reduction in any applicable limitations on premiums or cash values for the policy under federal tax law. Such a reduction in these limits may require us to make a distribution from the policy equal to the greatest amount by which the premiums paid or cash values for the policy, as determined under federal tax law, exceed any such reduced limits, in order to maintain the policy's tax qualification. If such a distribution is made, the distribution will be paid to you and the Accumulated Value will be reduced by the amount of the distribution. However, no request for a decrease in policy or rider benefits will be allowed to the extent that the resulting reduction in such tax limits would require us to distribute more than the Net Cash Surrender Value for the policy. MEC Status - Unless you have given us Written Notice to the contrary, the provisions of this MEC Status subsection apply. MEC stands for Modified Endowment Contract. Under federal tax law, if the funding of a life insurance contract occurs too rapidly, it becomes a MEC and fails to qualify for certain favorable treatment as a result. This policy is intended to qualify as a life insurance contract that is not a MEC for federal tax purposes. This policy, including any other rider, benefit or endorsement, shall be interpreted to prevent the policy from being subject to such MEC treatment, despite any other provision to the contrary. We will not accept a payment as premium or otherwise which would cause the policy to become a MEC. If at any time the amounts paid under the policy exceed the limit for avoiding such MEC treatment, the excess amount, including any associated investment gains or losses, shall be removed from the policy as of the date of its payment and any appropriate adjustment in the death benefit shall be made as of such date. The excess amount, as determined under federal tax law including any associated investment gains or losses, shall be refunded no later than 60 days after the end of the applicable contract year. For any such refund, any premium load originally assessed will be refunded and no surrender charges will apply. If this excess amount is not refunded by the end of such 60-day period, the death benefit shall be increased retroactively to the minimum extent necessary so that at no time is the death benefit ever less than the amount necessary to avoid such MEC treatment, and the Accumulated Value will be reduced to reflect the increased Monthly Deductions as a result of such death benefit increase. Any request that would change the death benefits under the policy and riders will not be processed if the change would cause the policy to be treated as a MEC. Such changes include a reduction in the Face Amount, a change in death benefit option, and a reduction in Face Amount due to a withdrawal. Other Distributions of Accumulated Value - If the NAR ever exceeds three times the original Face Amount, we reserve the right to make a distribution of Accumulated Value to make the NAR equal three times the original Face Amount. In such case, the distribution will be treated as a premium refund and no surrender charge will be imposed. By treating the distribution as a premium refund, we mean that, in addition to the distribution of Accumulated Value which you will receive, we will also pay you an amount representing a return of premium load associated with the distribution. The amount representing the return of premium load will be equal to the reduction in Accumulated Value multiplied by (1/(1-premium load rate))-1, provided that such amount can never exceed the total premium load paid under the policy. Termination - This policy will terminate on the earliest of: . the death of the Survivor; and . the lapse or surrender of this policy. Compliance - We reserve the right to make any change to the provisions of this policy to comply with, or give you the benefit of, any federal or state statute, rule, or regulation, including those of the state in which this policy is delivered and including the requirements for life insurance contracts under the Code. After filing with, and approval by, the Insurance Department of the state in which this policy is delivered, we will provide you with a copy of any such change. You have the right to refuse the change. P0156-NY Page 19 (P) INDEX
Accumulated Value 9 Modified Endowment Contract 19 Administrative Charge 11 Monthly Deduction 10 Age 5 Monthly Payment Date 5 Assignment 6 Mortality and Expense Risk Charge 10 Basis of Values 18 NAR 5 Beneficiary 6 Net Asset Value 10 Cash Surrender Value 13 Net Cash Surrender Value 13 Change in Policy Cost Factors 11 Net Investment Factor 10 Change of Death Benefit Option 8 Net Premium 5 Code 5 Non-Participating 17 Compliance 19 Owner 6 Cost of Insurance Charge 10 Paid-Up Benefit 8 Cost of Insurance Rates 10 Planned Premium 6 Death Benefit 7 Policy Date 5 Death Benefit Options 8 Policy Debt 5 Death Benefit Proceeds 8 Policy Illustrations 18 Entire Contract 17 Policy Loans 15 Evidence of Insurability 5, 17 Premium Allocation 7 Face Amount 5 Premium Limitation 7 Face Amount Decrease 8 Premium Load 3, 11 Fixed Accumulated Value 9 Premiums 6 Fixed Options 5, 14 Reinstatement 12 Free Look Transfer Date 5 Reports 18 Grace Period 11 Risk Classification 3 Guideline Premium Limitation 7 Sales Surrender Charge 13 Guideline Premium Test 7 Sales Surrender Target 13 Home Office 5 Separate Account 5, 16 Income Benefits 14 Suicide Exclusion 17 Incontestability 17 Surrender 13 Insureds 5 Surrender Charge 13 Interest Settlement Option 15 Survivor 5 Investment Options 5 Tax Qualification as Life Insurance 18 Lapse 11 Termination 19 Loan Account 10, 15 Transfer Limits 13 Loan Amount Available 15 Transfers 12 Loan Interest 15 Underwriting Surrender Charge 13 Loan Repayment 16 Valuation Date 6 M&E Risk Charge 11 Valuation Period 6 Maturity 17 Variable Account 6, 16 MEC 19 Variable Accumulated Value 9 MEC Status 19 Withdrawals 13 Misstatement 17 Written Request 6
P0156-NY Page 20 (P) [LOGO OF PACIFIC LIFE APPEARS HERE] PACIFIC LIFE & ANNUITY COMPANY Home Office: 17360 Brookhurst Street Fountain Valley, CA 92708-8003 Mailing Address: 700 Newport Center Drive Newport Beach, CA 92660 ================================================================================ FLEXIBLE PREMIUM JOINT AND LAST SURVIVOR VARIABLE LIFE INSURANCE . Death Benefit Payable on Death of the Survivor of the Insureds While Policy is in Force . Net Cash Surrender Value Payable upon Surrender While the Policy is in Force . Adjustable Face Amount . Benefits May Vary Based on Investment Experience . Non-Participating P0156-NY (P) EX-99.1 (5) (B) 4 dex9915b.txt LAST SURVIVOR ADDED PROTECTION BENEFIT RIDER EXHIBIT 1.(5)(B) LAST SURVIVOR ADDED PROTECTION BENEFIT Coverage - When we receive proof that the Survivor's death occurred while this benefit was in force, we will pay the Face Amount in effect, if any, under this benefit on the date of the Survivor's death. This rider has no cash value, but it affects the cash value of the policy. Death Benefit - The Face Amount of the policy to which this benefit is attached is changed to include the Face Amount of this benefit. The death benefit for this policy will depend on the combined Face Amount of the policy and this benefit and will be determined as described in the policy. Face Amount - The Face Amount of this benefit in any policy year is shown in the Policy Specifications. Such amount may be level or varying by policy year. Unscheduled increases or decreases in the Face Amount may take place after the policy date as described below. The initial Face Amount is the Face Amount on the effective date of this benefit. Unscheduled Change of Face Amount - Subject to our approval, you may change the Face Amount of this rider by Written Request while this rider is in force. Such request cannot be made effective before the first policy anniversary. Upon approval of any unscheduled change in Face Amount, we will issue a supplemental schedule of coverage, which will include the following: . the effective date of the change; . the amount of the increase or decrease; . if the change is an increase in Face Amount, the Insured's risk class for the increase and the Guaranteed Maximum Monthly COI Rates pertaining to the increase. Unscheduled Face Amount Increase - If your request to change the Face Amount is a request for an increase, then our approval of the increase is subject to the following conditions: . you provide evidence of insurability satisfactory to us; . no previous increase has been made effective in the same policy year; . the Insured consents to the increase; and . the increase is at least $10,000. An Administrative Charge not to exceed $100 will be deducted from the policy's Accumulated Value on the effective date of any such increase. This charge is to cover expenses of evaluating the evidence of insurability. The effective date of the increase will be the first Monthly Payment Date on or following the date all conditions are met. Unscheduled Face Amount Decrease - The Face Amount may be decreased only if there has been no previous decrease in the same policy year. If there have been prior increases in Face Amount, then any decrease in Face Amount that you request will be applied against prior increases in the reverse order in which they arose. The effective date of the decrease will be the first Monthly Payment Date on or following the date we receive your Written Request. If the Face Amount varies automatically by policy year as shown in a schedule of Face Amounts in the Policy Specifications, any unscheduled decrease in the Face Amount which you request for any policy year will require equal decreases for future policy years. You will be informed of such future decreases, and your consent will be obtained before your requested decrease becomes effective. Benefit Charges - The monthly charge for this benefit is equal to the sum of the Benefit Charges applicable to the following portions of the Face Amount: . initial Face Amount of this benefit in force for that month; plus . each increase in the Face Amount of this benefit in force for that month. The Benefit Charge for each portion of the Face Amount noted above is obtained by multiplying the monthly COI Rate by the Face Amount at the beginning of the policy month divided by 1.002466. If there has been an unscheduled decrease in the Face Amount, see the Unscheduled Decrease in Face Amount provision for a description of the order in which the existing R01LST-NY Page 1 of 3 Face Amount has been decreased or eliminated. Cost of Insurance Rates - The Cost of Insurance (COI) Rates are based on a number of factors, including the policy duration and on the Insureds' ages and risk classes. Part of the cost is intended to recover acquisition expenses at issue. Such expense recoveries are greater in the early policy years. The COI Rates for the initial Face Amount are based on the policy duration and on the Insureds' ages and risk classes on the policy date. The COI Rates for each increase in the Face Amount are based on the policy duration pertaining to the increase and on the Insureds' ages and risk classes on the effective date of the increase. The current monthly COI Rates will be determined by us and are subject to change at any time, but will not exceed the Guaranteed Maximum Monthly COI Rates for this benefit shown on the Policy Specifications. Guaranteed Maximum COI rates are based on the 1980 Commissioners' Standard Ordinary Mortality Table. The COI Rates used to calculate the COI Charges for an increase in coverage necessary to meet the Guideline Minimum Death Benefit will be the same as those used for the most recent Face Amount in force under this benefit. Changes to Policy Factors - Any change in the cost factors for this benefit in effect at the inception of this rider, including COI rates, risk and expense charges will be by class and based on changes in our expectations of future investment earnings, mortality, persistency, taxes and expenses. Class is determined by a number of factors, including the Insured's Age, risk class, Policy Date and policy duration. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state of New York and will apply uniformly to all members of the same class. COI rates and other expense factors will be reviewed no more than annually and no less than once every five years to determine whether a change is needed. M&E Risk Charge - The Mortality and Expense Risk Charge (M&E Risk Charge) is to compensate us for the risk we assume that mortality, expenses and other costs of providing your policy will be greater than estimated. Beginning on the effective date of this benefit and monthly thereafter, there may be an M&E Risk Charge deducted from the Accumulated Value. The guaranteed maximum amount of the charge for this benefit, including any increases in this benefit is shown in the Policy Specifications or in a supplemental schedule of coverage. Decrease - The Decrease provision of the policy to which this benefit is attached is changed to include this benefit. This benefit will always be decreased or eliminated before any decrease is applied to the policy face amount in effect on the policy date. For further details please see the Decrease provision of your policy. Withdrawals - The Withdrawals provision of the policy, to which this benefit is attached, is changed to include this benefit. For the purpose of the Withdrawals provision, this benefit is considered part of the Face Amount of the policy. If a decrease in Face Amount is required as a result of a Withdrawal, this benefit will always be decreased or eliminated before any decrease is applied to the policy Face Amount in effect on the policy date. For details, please see the Withdrawals provision of your policy. Misstatement - The Misstatement provision of the policy, to which this benefit is attached, is changed to include this benefit. For the purpose of the Misstatement provision, this benefit is considered part of the Face Amount of the policy. For further details please see the Misstatement provision of your policy. Effective Date - This benefit is effective on the policy date unless otherwise stated. Incontestability - We may not contest coverage under this benefit's original face amount or any increase in Face Amount, which was applied for and for which evidence of insurability was required, after such amount has been in force while at least one insured has been alive for 2 years from the later of the effective date of the Face Amount or any reinstatement date. In no event may we contest coverage under this benefit unless there has been a material misstatement in an application. Suicide Exclusion - If the death of the Survivor is the result of suicide after two years from the Policy Date but within two years after the effective date of an increase in the Face Amount of this benefit, no death benefit proceeds will be paid with respect to such R01LST-NY Page 2 of 3 increase. Instead, we will pay the beneficiary the rider charges for such increase. Conversion - Coverage under this benefit is convertible to an increase in Face Amount of the policy to which this benefit is attached after 5 years from the effective date of the benefit coverage or at the younger Insured's Age 80, if earlier. COI rates for such increase in Face Amount will be those pertaining to conversions. The risk class for such increase in policy Face Amount will be the same as the risk class of the converted amount of this benefit. For such Face Amount: . No evidence of insurability will be required; . No M&E Risk Charge will apply; and . No surrender charge will apply. This benefit will be cancelled on the effective date of the corresponding increase in policy Face Amount. Termination - Coverage under this benefit will terminate on the earlier of: . Age 80 of the younger insured; . your written request; . termination of the policy; . conversion of this benefit; or . upon the Survivor's death. General Conditions - This benefit is part of the policy to which it is attached. All terms of the policy which do not conflict with this benefit's terms apply to this benefit. In the event of any conflict between the terms of this benefit and the terms of the policy, the terms of this benefit shall prevail over the terms of the policy. Signed for Pacific Life & Annuity Company, /s/ THOMAS C. SUTTON /s/ AUDREY L. MILFS - ------------------------------------- ------------------------------------- President and Chief Executive Officer Secretary R01LST-NY Page 3 of 3 EX-99.1 (5) (C) 5 dex9915c.txt INDIVIDUAL ANNUAL RENEWABLE TERM RIDER EXHIBIT 1.(5)(C) INDIVIDUAL RENEWABLE TERM INSURANCE Insured - The person covered under this rider is listed as the "Person Covered" in the Policy Specifications in the section identified as Individual Renewable Term Insurance Rider. Such person may be either, or both, of the Insureds under this policy. No other person may be insured under this rider. An Insured may be deleted from or, with evidence of insurability satisfactory to us, added to this rider. The remainder of this rider describes the coverage with respect to a single Insured. If both Insureds are covered under this rider, the rider applies separately to each. Coverage - This rider provides term insurance on the Insured under this rider. When we receive proof that the Insured's death occurred while this benefit was in force, we will pay the Face Amount in effect, if any, under this rider on the date of the Insured's death. This rider has no cash value, but it affects the cash value of the policy. Face Amount - The Face Amount of this rider is shown in the Policy Specifications and in any supplemental schedule of coverage and may be level or varying by policy year. Unscheduled changes in the Face Amount may take place after the Policy Date as described below. Unscheduled Change of Face Amount - Subject to our approval, you may to change the Face Amount by Written Request during the lifetime of the Insured and while this rider is in force. Such request cannot be made effective before the first policy anniversary. Upon approval of any unscheduled change in Face Amount, we will issue a supplemental schedule of coverage, which will include the following information: . the effective date of the change; . the amount of the increase or decrease; . if the change is an increase in Face Amount, the Insured's risk class for the increase and the Guaranteed Maximum Monthly COI Rates applicable to the increase. Unscheduled Face Amount Increase - If your request to change the Face Amount is a request for an increase, then our approval of the increase is subject to the following conditions: . you provide evidence of insurability satisfactory to us; . no previous increase has been made effective in the same policy year; . the Insured consents to the increase; and . the increase is at least $10,000. An Administrative Charge not to exceed $100 will be deducted from the policy's Accumulated Value on the effective date of any such increase. This charge is to cover expenses associated with our evaluation of evidence of insurability. The effective date of the increase will be the first Monthly Payment Date on or following the date all applicable conditions are met. Unscheduled Face Amount Decrease - The Face Amount may be decreased only if there has been no previous decrease in the same policy year. Any decrease in Face Amount that you request for any policy year will first be applied against the most recent increase, if any, and then against successively earlier increases, if any, and finally against the original Face Amount. The effective date of the decrease will be the first Monthly Payment Date on or following the date we receive your Written Request. If the Face Amount varies automatically by policy year as shown in a schedule of Face Amounts in the Policy Specifications, any unscheduled decrease in the Face Amount which you request for any policy year will require equivalent decreases for future policy years. You will be informed of such equivalent future decreases, and your consent will be obtained before your requested decrease becomes effective. Rider Charge - Beginning on the Policy Date and for every month thereafter, there will be a charge for this rider equal to the sum of the charge for the initial Face Amount plus the charge for each increase in the Face Amount. The charge for each such Face Amount is equal to the Face Amount multiplied by the applicable monthly COI Rate for the Face Amount. R01IRT-NY Page 1 NY Cost of Insurance Rates - The Cost of Insurance (COI) Rates are based on a number of factors, including the Insured's Age, risk class and the policy duration. The current monthly COI Rates will be determined by us. These rates will not exceed the Guaranteed Maximum Monthly COI Rates shown in the Policy Specifications and any supplemental schedule of coverage. Any changes in the COI Rates in effect at the inception of this rider will apply uniformly to all members of the same class and based on changes in our expectations of future mortality, persistency and expenses. Any such change will be determined in accordance with procedures and standards on file with the Insurance Department of the state of New York. COI rates and other expense factors will be reviewed no more frequently than annually and no less frequently than once every five years to determine whether an adjustment is necessary. Misstatement - If the Insured's age has been misstated, the death benefit for this rider will be adjusted by the ratio of the incorrect COI rate to the correct COI rate. Effective Date - This rider is effective on the Policy Date unless otherwise specified. Incontestability - We may not contest coverage under this rider's original face amount or any increase in Face Amount, which was applied for and for which evidence of insurability was required, after such amount has been in force during the lifetime of the Insured for 2 years from the later of the effective date of the Face Amount or any reinstatement date. In no event may we contest coverage under this rider unless there has been a material misrepresentation in an application. Suicide Exclusion - If the Insured commits suicide after two years from the Policy Date, but within two years of the effective date of an increase in the Face Amount of this rider, we will limit the death benefit paid with respect to such Face Amount increase to the rider charges for such Face Amount. Conversion - This rider is not convertible. Termination - This rider will terminate on the earliest of the following: . the Insured's Age 80; or . your Written Request; or . lapse of the policy; or . termination of the policy. General Conditions - This rider is part of the policy to which it is attached. All terms of this policy that do not conflict with this rider's terms apply to this rider. In the event of any conflict between the terms of this benefit and the terms of the base policy, the terms of this benefit shall prevail over the terms of the base policy. Signed for Pacific Life & Annuity Company, /s/ THOMAS C. SUTTON /s/ AUDREY L. MILFS - ------------------------------------- -------------------------------------- President and Chief Executive Officer Secretary R01IRT-NY Page 2 NY EX-99.1 (5) (D) 6 dex9915d.txt POLICY SPLIT OPTION RIDER EXHIBIT 1.(5)(D) POLICY SPLIT OPTION RIDER Benefit - You may exchange this policy for two new individual policies, one on each of the two insureds, subject to this rider's terms. Exchange Conditions - To exercise this option, you must: . request the exchange in writing on a form that we will provide; . return the base policy; and . provide evidence of insurability for both insureds satisfactory to us. A $200 Administrative Charge will be deducted from the Accumulated Value of the base policy on the day prior to the Exchange Date. This charge is to cover expenses associated with the evaluation of the evidence of insurability. We reserve the right to deduct a charge on the day prior to the Exchange Date from the base policy's Accumulated Value to cover PL&A's expenses arising from any state or federal taxes generated by the exchange. Exchange Date - The exchange will be effective on the Exchange Date, which is the date all of the above exchange conditions are met. New Policies - The exchange may be to any individual flexible premium adjustable life policy that we regularly issue at the time of exchange, subject to our approval. The policy date of each of the two new individual policies will be the Exchange Date. The new policy on each insured will be based on that insured's age and risk classification as of the Exchange Date. The new policies will only take effect once the original policy has terminated and will not provide any insurance until such time. The Accumulated Value less the Surrender Charge under the original policy on the day prior to the Exchange Date will be divided and allocated to the two new individual policies in proportion to their face amounts. Any policy debt under the original policy on the day prior to the Exchange Date will also be divided and allocated to the new policies in proportion to their face amounts. This will result in the Cash Surrender Value of each new policy being equal to the Cash Surrender Value of the original policy multiplied by the face amount of the new policy and divided by the sum of the face amounts of the two new policies. The face amount of each new individual policy may be for any amount you elect, provided that the sum of the face amounts of the two new policies does not exceed the sum, as of the Exchange Date, of the base policy's Death Benefit plus the Coverage Amount under the Last Survivor Added Protection Benefit, if such benefit is attached to the base policy. Your signature of consent is required if the face amounts of the two new individual policies are not equal. Subject to our approval, riders or benefits may be added to the new policies where available. Assignment - Any assignment of this policy will apply to each new individual policy. Effective Date - This rider is effective on the policy date unless otherwise stated. Termination - Coverage under this rider will terminate on the earliest of: . your written request; or . the date that the first death of the two insureds occurs: or . termination of the base policy; or . the policy anniversary nearest the 80th birthday of the older of the two insureds; or . exercise of the option to exchange this policy under this rider. General Conditions - This rider is part of the base policy to which it is attached. All terms of the base policy, which do not conflict with this rider's terms, apply to this rider. In the event of any conflict between the terms of this rider and the terms of the base policy, the terms of this rider shall prevail over the terms of the base policy. Signed for Pacific Life & Annuity Company, /s/ THOMAS C. SUTTON /s/ AUDREY L. MILFS - ------------------------------------- --------------------------------------- President and Chief Executive Officer Secretary R94PSO-NY EX-99.1 (9) (C) 7 dex9919c.txt FORM OF ADDENDUM TO PARTICIPATION AGREEMENT EXHIBIT 1.(9)(C) FORM OF Exhibit B Aggressive Equity Portfolio Emerging Markets Portfolio Diversified Research Portfolio Small-Cap Equity Portfolio International Large-Cap Portfolio Equity Portfolio I-Net Tollkeeper Portfolio Multi-Strategy Portfolio Large-Cap Core Portfolio (formerly the Equity Income Portfolio) Growth LT Portfolio Strategic Value Portfolio Focused 30 Portfolio Mid-Cap Value Portfolio Equity Index Portfolio Small-Cap Index Portfolio REIT Portfolio International Value Portfolio Inflation Managed Portfolio Managed Bond Portfolio Money Market Portfolio High Yield Bond Portfolio Large-Cap Value Portfolio Global Growth Portfolio Mid-Cap Growth Portfolio Capital Opportunities Portfolio Technology Portfolio Financial Services Portfolio Telecommunications Portfolio Health Sciences Portfolio Aggressive Growth Portfolio Blue Chip Portfolio Equity Income Portfolio Research Portfolio Effective _______________, 2002 agreed to and accepted by: PACIFIC SELECT FUND ATTEST: __________________________ BY: _______________________________ Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Trustee PACIFIC SELECT DISTRIBUTORS, INC. ATTEST: __________________________ BY: _______________________________ Name: Audrey L. Milfs Name: Gerald W. Robinson Title: Secretary Title: Chairman & Chief Executive Officer PACIFIC LIFE INSURANCE COMPANY ATTEST: __________________________ BY: _______________________________ Name: Audrey L. Milfs Name: Thomas C. Sutton Title: Secretary Title: Chairman of the Board & Chief Executive Officer ATTEST: __________________________ BY: _______________________________ Name: Audrey L. Milfs Name: Glenn S. Schafer Title: Secretary Title: President PACIFIC LIFE & ANNUITY COMPANY ATTEST: __________________________ BY: _______________________________ Name: Audrey L. Milfs Name: Lynn C. Miller Title: Secretary Title: Executive Vice President EX-99.1 (10) 8 dex99110.txt APPLICATION FOR FLEXIBLE VARIABLE LIFE INSURANCE EXHIBIT 1(10) APPLC PACIFIC LIFE & ANNUITY COMPANY [LOGO] Mailing Life Insurance Operations Center Address P.O. Box 6520 . Newport Beach, CA 92658-6520 (888) 595-6997 APPLICATION FOR LIFE INSURANCE, PART 1
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION A CLIENT INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ PROPOSED INSURED 1. Name of Proposed Insured (Print as to appear in policy: First/Middle/Last) 2. Sex Complete for all Life [_] Male [_] Female Insurance Policies. 3. Date of Birth 4. Age (Nearest birthday) 5. Place of Birth 6. Soc. Sec. # 7. Driver's License # & State 8. Telephone # 9. E-mail Address 10. Address (Street, City, County, State, Zip Code) 11. How Long 12. Employer Name & Address (Street, City, County, State, Zip Code) 13. How Long 14. Occupation 15. Type of Business - ------------------------------------------------------------------------------------------------------------------------------------ PROPOSED ADDITIONAL 16. Name of Additional Proposed Insured (Print as to appear in policy: First/Middle/Last) 17. Sex INSURED [_] Male [_] Female Complete for a Joint and Last 18. Date of Birth 19. Age (Nearest birthday) 20. Place of Birth 21. Soc. Sec. # Survivor Life Insurance Policy 22. Driver's License # & State 23. Telephone # 24. E-mail Address or for a Term Rider on Another 25. Address (Street, City, County, State, Zip Code) 26. How Long Covered Person for an Individual 27. Employer Name & Address (Street, City, County, State, Zip Code) 28. How Long Life Insurance Policy. 29. Occupation 30. Type of Business 31. Relationship to Insured - ------------------------------------------------------------------------------------------------------------------------------------ OWNER 32. Name of Owner(s) (Print as to appear in policy: First/Middle/Last) Complete only if Owner is other than 33. Address (Street, City, County, State, Zip Code) 34. Relationship to Insured(s) the Insured(s). If Trust, give name of 35. Date of Birth 36. Soc. Sec. # / Tax ID # 37. Telephone # 38. E-mail Address trust, trustee, and date of trust. - ------------------------------------------------------------------------------------------------------------------------------------ PRIMARY BENEFICIARY 39. Name of Beneficiary (Print as to appear in policy: First/Middle/Last) 40. Relationship to Insured(s) 41. Soc. Sec. # / Tax ID # - ------------------------------------------------------------------------------------------------------------------------------------ CONTINGENT 42. Name of Contingent Beneficiary (Print as to appear in policy: First/Middle/Last) BENEFICIARY 43. Relationship to Insured(s) 44. Soc. Sec. # / Tax ID # - ------------------------------------------------------------------------------------------------------------------------------------ BENEFICIARY FOR 45. Name of Beneficiary for Individual Term Rider (Print as to appear in policy: First/Middle/Last) INDIVIDUAL TERM RIDER 46. Relationship to Insured 47. Soc. Sec. # / Tax ID # - ------------------------------------------------------------------------------------------------------------------------------------
AP2001-NY Page 1 85-23808-00 01/2002
- --------------------------------------------------------------------------------------------------------------------------------- SECTION A CLIENT INFORMATION (CONTINUED) - --------------------------------------------------------------------------------------------------------------------------------- PREMIUM NOTICES 48. Send Premium Notices to: [_] Insured [_] Owner [_] Other (If other, give name, relationship, and address below) ---------------------------------------------------------------------------------------------------------------- 49A. Name B. Relationship to Insured(s) ---------------------------------------------------------------------------------------------------------------- C. Address (Street, City, County, State, Zip Code) ---------------------------------------------------------------------------------------------------------------- 50. Method & Frequency of Payment (Select One): A. Direct B. [ ] Electronic Funds Transfer C. List Bill (3 or more policies) D. [ ] Single [ ] Annually (EFT) (Monthly only) Attach [ ] Annually Premium [ ] Semi-Annually voided check and complete EFT [ ] Semi-Annually [ ] Quarterly Authorization on page 10. [ ] Quarterly [ ] Monthly ---------------------------------------------------------------------------------------------------------------- AMOUNT PAID WITH 51A. Is an initial premium submitted with this application? [ ] Yes [ ] No THIS APPLICATION (Do not submit money unless the Temporary Insurance Agreement is completed) B. If yes, show amount of initial premium and complete the Amount $_____________________________ next question. C. Do you understand, accept, and agree to the terms of the Temporary Insurance Agreement? [ ] Yes [ ] No ---------------------------------------------------------------------------------------------------------------- SPECIAL POLICY 52A. [ ] Date to Save Age [ ] Specific Date DATING If either box is checked, give policy date and complete below: Month__________ Day_________ Year_______ B. I understand that insurance charges and expenses begin on the Policy Date [ ] Yes [ ] No ---------------------------------------------------------------------------------------------------------------- LIFE INSURANCE IN 53. Give details of all life insurance in force on any Proposed Insured. If none, check this box: [ ] FORCE ---------------------------------------------------------------------------------------------------------------- Will This Year Policy Be Insured's Name Company Policy Number Face Amount Issued Replaced? YES NO ---------------------------------------------------------------------------------------------------------------- [ ] [ ] ---------------------------------------------------------------------------------------------------------------- [ ] [ ] ---------------------------------------------------------------------------------------------------------------- [ ] [ ] ---------------------------------------------------------------------------------------------------------------- [ ] [ ] ---------------------------------------------------------------------------------------------------------------- REPLACEMENT & 1035 YES NO EXCHANGE ---------------------------------------------------------------------------------------------------------------- INFORMATION 54. Will the policy applied for replace, cause a change in, or involve a cash withdrawal or loan from any life insurance or annuity on any Proposed Insured's life or in any life insurance or annuity owned by the Applicant? If yes, give details in "Remarks." [ ] [ ] ---------------------------------------------------------------------------------------------------------------- EXCHANGE INFORMATION 55. Is this a 1035 exchange? If yes, list the policies to be exchanged in "Remarks." [ ] [ ] ---------------------------------------------------------------------------------------------------------------- 56. If a 1035 exchange, will a loan be carried over? If yes, list in "Remarks" the policies and the loan amount(s) to be carried over. [ ] [ ] - --------------------------------------------------------------------------------------------------------------------------------- REMARKS - IDENTIFY QUESTION AND GIVE DETAILS - ---------------------------------------------------------------------------------------------------------------------------------
AP2001-NY Page 2 85-23808-00 01/2002
- -------------------------------------------------------------------------------------------------------------------------------- SECTION B GENERAL INFORMATION - -------------------------------------------------------------------------------------------------------------------------------- GENERAL Additional INFORMATION Proposed Insured Insured Complete each question 1. Annual earned income from occupation (After for the Proposed and deduction of business expenses) $ $ Additional Insured. 2. Other income (State source in "Remarks") $ $ 3. Net Worth $ $ YES NO YES NO 4. Do you contemplate leaving the USA for travel or residence? (If yes, explain in "Remarks") [_] [_] [_] [_] 5A. Do you plan to fly, or within the last 2 years have you flown, as a pilot, student pilot, or crewmember? [_] [_] [_] [_] B. Do you plan to participate in, or within the last 2 years have you participated in, parachute jumping, scuba diving, auto/motorboat/motorcycle racing, hang gliding, or mountain climbing? [_] [_] [_] [_] (If yes to A or B, complete a separate General Questionnaire for each Proposed/Additional Insured) 6. Have you ever had insurance declined, rated, [_] [_] [_] [_] modified, cancelled, or not renewed? (If yes, explain in "Remarks") 7. Have you been convicted of a felony within the [_] [_] [_] [_] past 5 years? (If yes, explain in "Remarks") 8. Have you had a driver's license restricted or revoked or been convicted of 3 or more moving violations within the past 5 years? (If yes, explain in "Remarks") [_] [_] [_] [_] 9. Have you applied for any other insurance within [_] [_] [_] [_] the last 3 months? (If yes, explain in "Remarks") 10. Have you smoked a cigarette in the last 12 months? [_] [_] [_] [_] (If yes, give date last smoked) Date:________ Date:________ 11. Have you used any other form of tobacco within the [_] [_] [_] [_] last 2 years? (If yes, give type and date last used) Type:________ Type:________ Date:________ Date:________ - ---------------------------------------------------------------------------------------------------------------------------------- JUVENILE INSURANCE 12A. If a child age 14 years and 6 months or younger is to be insured under this policy, answer B & C below: B. What is the relationship of the owner to the child? _____________________________________ C. What is the total amount of insurance on the owner, which is in force and applied for in this and all other companies? $___________________________________________________ - ----------------------------------------------------------------------------------------------------------------------------------- SECTION C MEDICAL CERTIFICATION - ----------------------------------------------------------------------------------------------------------------------------------- MEDICAL 1. The attached examination is on the life of: CERTIFICATION Proposed Additional Name of Insurance Company Date of Complete when Insured Insured Examination submitting a medical [_] [_] examination of another [_] [_] insurance company. 2. To the best of your knowledge and belief, are the statements in the examination true as of today? Proposed Insured [_] Yes [_] No (If no, explain in Remarks) Additional Insured [_] Yes [_] No 3. Has the person who was examined consulted a doctor or other medical practitioner, or received medical or surgical advice since the date of the examination? Proposed Insured [_] Yes [_] No (If yes, explain in Remarks) Additional Insured [_] Yes [_] No - ----------------------------------------------------------------------------------------------------------------------------------- REMARKS - IDENTIFY QUESTION AND GIVE DETAILS - -----------------------------------------------------------------------------------------------------------------------------------
AP2001-NY Page 3 85-23808-00 01/2002 - ----------------------------------------------------------------------------------------------------------------------------------- SECTION D POLICY INFORMATION FOR VARIABLE LIFE INSURANCE - ----------------------------------------------------------------------------------------------------------------------------------- PRODUCT/PREMIUM 1. Product Name 2A. Initial Premium B. Planned Annual Premium $ $ - ----------------------------------------------------------------------------------------------------------------------------------- DEATH BENEFIT 3. Face Amount (Base Only) + Initial Annual Renewable Term Insurance = Total Initial Coverage Rider/Joint and Last Survivor Term Insurance Rider $ $ $ - ----------------------------------------------------------------------------------------------------------------------------------- DEATH BENEFIT 4. Check one: [_] Option A [_] Option B [_] Option C (Face amount plus [_] Option D (Face amount multiplied OPTION (Level) (Increasing) premiums less distributions) by a death benefit factor) - ----------------------------------------------------------------------------------------------------------------------------------- OPTIONAL BENEFITS 5. Individual Life Insurance Products Only 6. Joint and Last Survivor Life Insurance Products Only A. [_] Annual Renewable Term Rider on Other A. [_] Individual Annual Renewable Term Rider on the Covered Person Proposed Insured $_______________ $______________________________ B. [_] Accidental Death Rider $_______ B. [_] Individual Annual Renewable Term Rider on the Additional Insured $_______________ C. [_] Children's Term Rider_________(units) (Complete Application Part 2, Non-Medical) D. [_] Disability Benefit Rider $___________ E. [_] Guaranteed Insurability Rider $______ F. [_] Waiver of Charges Rider (On Insured) ------------------------------------------------------------------------------------------------------------------ 7. If any optional benefit applied for cannot be approved, should the policy be issued without it? [_] Yes [_] No - ----------------------------------------------------------------------------------------------------------------------------------- PREMIUM ALLOCATION 8. Indicate how premiums are to be allocated until later changed by you or your authorized representative. The total of the percentages must be 100%. Allocation percentages must be whole numbers. ------------------------------------------------------------------------------------------------------------------ Investment Manager Premium Investment Manager Premium Option % Option % ------------------------------------------------------------------------------------------------------------------ [Blue Chip] [AIM Capital Management] _______ [Capital Opportunities] [MFS Investment] _____ [Aggressive Growth] [AIM Capital Management] _______ [Mid-Cap Growth] [MFS Investment] _____ [Emerging Markets] [Alliance Capital] _______ [Global Growth] [MFS Investment] _____ [Diversified Research] [Capital Guardian] _______ [Equity Index] [Mercury Advisors] _____ [Small-Cap Equity] [Capital Guardian] _______ [Small-Cap Index] [Mercury Advisors] _____ [International Large-Cap] [Capital Guardian] _______ [REIT] [Morgan Stanley] _____ [I-Net Tollkeeper] [Goldman Sachs] _______ [Inflation Managed] [PIMCO] _____ [Financial Services] [Invesco Funds] _______ [Managed Bond] [PIMCO] _____ [Health Sciences] [Invesco Funds] _______ [Money Market] [Pacific Life] _____ [Technology] [Invesco Funds] _______ [High Yield Bond] [Pacific Life] _____ [Telecommunications] [Invesco Funds] _______ [Equity Income] [Putnam] _____ [Multi-Strategy] [JP Morgan] _______ [Research] [Putnam] _____ [Large-Cap Core] [JP Morgan] _______ [Equity] [Putnam] [Strategic Value] [Janus] _______ [Aggressive Equity] [Putnam] _____ [Growth LT] [Janus] _______ [Large-Cap Value] [Salomon Brothers] _____ [Focused 30] [Janus] _______ Fixed Account* Pacific Life _____ [Mid-Cap Value] [Lazard] _______ Fixed LT Account* Pacific Life _____ [International Value] [Lazard] _______ ------------------------------------------------------------------------------------------------------------------ *The Fixed LT Account has less transfer liquidity and may credit a higher current rate of interest than the Fixed Account. Both fixed account options credit a fixed minimum guaranteed interest rate. See the prospectus for details. - ----------------------------------------------------------------------------------------------------------------------------------- ACKNOWLEDGEMENT All questions must be answered. YES NO To be completed ------------------------------------------------------------------------------------------------------------------ by the 9. Do you understand that the amount and duration of the death benefit may vary, depending Applicant. on the investment performance of the variable investment options? [_] [_] ------------------------------------------------------------------------------------------------------------------ 10. Do you understand that the policy values may increase or decrease, depending on the investment experience of the variable investment options? [_] [_] ------------------------------------------------------------------------------------------------------------------ 11. Did you receive the separate account and fund prospectuses (bound together) for the policy applied for? If yes, give date below. [_] [_] ---------------------- Date of Separate Account & Fund Prospectuses: ____________________________________________________ ------------------------------------------------------------------------------------------------------------------ POLICY VALUES MAY INCREASE OR DECREASE, AND MAY EVEN BE REDUCED TO ZERO AND CAUSE THE POLICY TO LAPSE WITHOUT VALUE, DEPENDING ON THE EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS. THE DEATH BENEFIT MAY BE VARIABLE OR FIXED UNDER SPECIFIED CONDITIONS. A CURRENT ILLUSTRATION OF BENEFITS, INCLUDING DEATH BENEFITS, POLICY VALUES AND HYPOTHETICAL CASH SURRENDER VALUES, IS AVAILABLE UPON REQUEST. - ----------------------------------------------------------------------------------------------------------------------------------- AP2001-NY Page 4 85-23808-00 01/2002
SECTION D POLICY INFORMATION FOR VARIABLE LIFE INSURANCE (CONTINUED) REBALANCING 12. I authorize Pacific Life & Annuity Company to automatically rebalance the variable accounts to the Optional allocation percentages shown in question 8. Start Date: Frequency: _____________________ ________ _____________ [_] Quarterly Month Day Year [_] Semi-Annually [_] Annually FIRST YEAR TRANSFER 13. I elect First Year Transfer Program Yes [_] No [_] (if elected, submit the proper authorization form) PROGRAM DOLLAR COST 14. I elect Dollar Cost Averaging Yes [_] No [_] (if elected, submit the proper authorization form) AVERAGING REMARKS - IDENTIFY QUESTION AND GIVE DETAILS SECTION E POLICY INFORMATION FOR TERM LIFE INSURANCE 1. Product Name 2. Face Amount $ REMARKS - IDENTIFY QUESTION AND GIVE DETAILS
AP2001-NY Page 5 85-23808-00 01/2002
- ------------------------------------------------------------------------------------------------------------------------------------ SECTION F POLICY INFORMATION FOR AN ADDITIONAL OR ALTERNATE FLEXIBLE PREMIUM LIFE INSURANCE POLICY - ------------------------------------------------------------------------------------------------------------------------------------ (SELECT ONE) VARIABLE FLEXIBLE PREMIUM LIFE INSURANCE POLICY [ ] ADDITIONAL OR [ ] ALTERNATE - ------------------------------------------------------------------------------------------------------------------------------------ PRODUCT/PREMIUM 1. Product Name 2A. Initial Premium B. Planned Annual Premium $ $ - ------------------------------------------------------------------------------------------------------------------------------------ DEATH BENEFIT 3. Face Amount (Base Only) + Initial Annual Renewable Term Rider/ =Total Initial Coverage Joint and Last Survivor Added Protection Benefit Rider $ $ $ - ------------------------------------------------------------------------------------------------------------------------------------ DEATH BENEFIT 4. Check one: [ ] Option A [ ] Option B [ ] Option C (Face amount plus [ ] Option D (Face amount times OPTION (Level) (Increasing) premiums less distributions) the death benefit factor) - ------------------------------------------------------------------------------------------------------------------------------------ DIVIDEND OPTION 5. Check one: [ ] Cash [ ] Increase Accumulated Value - ------------------------------------------------------------------------------------------------------------------------------------ OPTIONAL BENEFITS 6. Individual Life Insurance Products Only 7. Joint and Last Survivor Life Insurance A. [ ] Annual Renewable Term Rider on Other Covered Person Products Only $__________________________________________________ A. [ ] Individual Annual Renewable Term B. [ ] Accidental Death Rider $___________________________ Rider on the Proposed Insured $_____ C. [ ] Children's Term Rider______________(units) B. [ ] Individual Annual Renewable Term (Complete Application Part 2, Non-Medical) Rider on the Additional Insured $___ D. [ ] Disability Benefit Rider $_________________________ E. [ ] Guaranteed Insurability Rider $____________________ F. [ ] Waiver of Charges Rider (On Insured) 8. If any optional benefit applied for cannot be approved, should the policy be issued without it? [ ] Yes [ ] No - ------------------------------------------------------------------------------------------------------------------------------------ PREMIUM ALLOCATION 9. Indicate how premiums are to be allocated until later changed by you or your authorized representative. The total of the percentages must be 100%. Allocation percentages must be whole numbers. Investment Premium Investment Premium Option Manager % Option Manager % --------------------------------------------------------------------------------------------------------------- [Blue Chip] [AIM Capital Management] _______ [Capital Opportunities] [MFS Investment] ______ [Aggressive Growth] [AIM Capital Management] _______ [Mid-Cap Growth] [MFS Investment] ______ [Emerging Markets] [Alliance Capital] _______ [Global Growth] [MFS Investment] ______ [Diversified Research] [Capital Guardian] _______ [Equity Index] [Mercury Advisors] ______ [Small-Cap Equity] [Capital Guardian] _______ [Small-Cap Index] [Mercury Advisors] ______ [International Large-Cap] [Capital Guardian] _______ [REIT] [Morgan Stanley] ______ [I-Net Tollkeeper] [Goldman Sachs] _______ [Inflation Managed] [PIMCO] ______ [Financial Services] [Invesco Funds] _______ [Managed Bond] [PIMCO] ______ [Health Sciences] [Invesco Funds] _______ [Money Market] [Pacific Life] ______ [Technology] [Invesco Funds] _______ [High Yield Bond] [Pacific Life] ______ [Telecommunications] [Invesco Funds] _______ [Equity Income] [Putnam] ______ [Multi-Strategy] [JP Morgan] _______ [Research] [Putnam] ______ [Large-Cap Core] [JP Morgan] _______ [Equity] [Putnam] ______ [Strategic Value] [Janus] _______ [Aggressive Equity] [Putnam] ______ [Growth LT] [Janus] _______ [Large-Cap Value] [Salomon Brothers] ______ [Focused 30] [Janus] _______ Fixed Account* Pacific Life ______ [Mid-Cap Value] [Lazard] _______ Fixed LT Account* Pacific Life ______ [International Value] [Lazard] _______ *The Fixed LT Account has less transfer liquidity and may credit a higher current rate of interest than the Fixed Account. Both fixed account options credit a fixed minimum guaranteed interest rate. See the prospectus for details. NOTE: IF APPLYING FOR AN ADDITIONAL OR ALTERNATE VARIABLE FLEXIBLE PREMIUM LIFE INSURANCE POLICY THE ACKNOWLEDGEMENT ON PAGE 4, SECTION D, ALSO APPLIES TO THIS POLICY. 10. If any optional benefit applied for cannot be approved, should the policy be issued without it? [ ] Yes [ ] No - ------------------------------------------------------------------------------------------------------------------------------------ REMARKS - IDENTIFY QUESTION AND GIVE DETAILS - ------------------------------------------------------------------------------------------------------------------------------------
AP2001-NY Page 6 85-23808-00 01/2002 - ------------------------------------------------------------------------------ SECTION G CERTIFICATION OF OWNER'S TAXPAYER ID AND APPLICANT'S DECLARATIONS - ------------------------------------------------------------------------------ CERTIFICATION OF OWNER'S TAXPAYER IDENTIFICATION # Under penalty of perjury, I certify that: 1. The number shown in this application as my social security number or taxpayer identification number is correct; and 2. I am not subject to backup withholding under Section 3406(a)(1)(c) of the Internal Revenue Code. (If statement is false strike out and initial.) This certification is required by the Internal Revenue Service before any taxable distribution can be made. GPT CVAT DISCLOSURE (Does not apply to Last Survivor policies) The Internal Revenue Code has two separate tests, at least one of which must be satisfied by a policy for it to qualify as life insurance for federal tax purposes. As applicant, you choose which of the two tests you want to use. You may not change the test after the policy has been issued. The two tests are the Guideline Premium Test (GPT) and the Cash Value Accumulation Test (CVAT). GPT limits the amount of premiums that can be paid for a policy, and may require the death benefit to increase above the specified amount if the cash value is large. CVAT does not limit premiums, but it also requires the death benefit to increase above the specific amount if the cash value is large. With CVAT the death benefit may need to be increased earlier than with GPT and by a larger amount, assuming the same cash values under both tests. Under either test, the cost of insurance charge is based on the total death benefit in force, including any increases resulting from your choice of GPT or CVAT. You should consider the CVAT test if you wish to maximize premium payments over a short period. You should consider the GPT test if you wish to maintain a higher level of cash value in relation to death benefit protection. Your producer can supply you with illustrations showing the effects of each test and explain how each affects the policy. You should consult your tax advisor for any tax questions. DECLARATIONS The answers in this application are true and complete to the best of my knowledge and belief. I understand and agree that: 1. Except as provided in the terms or conditions of any Temporary Insurance Agreement that I may have received in connection with this application, coverage will take effect when the policy is delivered and the entire first premium is paid only if at that time the Proposed Insured(s) is alive, and all answers in this application that are material to the risk are still true and complete to the best of my knowledge and belief. 2. If I have given money with the application and received a Temporary Insurance Agreement and if the coverage amount of the application exceeds the Temporary Insurance Agreement coverage limits, I understand that if the Proposed Insured(s) die(s) before a policy is delivered, the death benefit will be limited to the Temporary Insurance Agreement coverage limit. 3. I must inform the Producer or Pacific Life & Annuity Company in writing of any changes in the health of any Proposed Insured(s) or if any of the statements or answers on this application change prior to delivery of the policy. 4. My statements and answers in this application must continue to be true, to the best of my knowledge and belief, as of the date I receive the policy. 5. No Producer is authorized to make or modify contracts or insurance policies on Pacific Life & Annuity Company's behalf. 6. No Producer may alter the terms of this application, the Temporary Insurance Agreement, or the policy, nor can the Producer waive any of Pacific Life & Annuity Company's rights or requirements. 7. I believe that the policy(ies) applied for will meet my insurance needs and financial objectives. 8. This application will be attached to and made part of the policy. Signed and Dated by the Applicant: In:______________________________ _______ __________________________ City State Month/Day/Year - ------------------------------------------------------------------------------ SIGNATURE OF APPLICANT - ------------------------------------------------------------------------------ X ____________________________________________________________________________ Applicant* - ------------------------------------------------------------------------------ SIGNATURE OF PROPOSED INSURED(S) - IF OTHER THAN THE APPLICANT OR SIGNATURE OF PARENT IF PROPOSED INSURED IS 14 YEARS AND 6 MONTHS OR YOUNGER - ------------------------------------------------------------------------------ X ____________________________________________________________________________ Proposed Insured X ____________________________________________________________________________ Proposed Additional Insured (if applicable) - ------------------------------------------------------------------------------ SIGNATURE OF OWNER - IF OTHER THAN THE APPLICANT OR THE PROPOSED INSURED - ------------------------------------------------------------------------------ X ____________________________________________________________________________ Owner* *If a Corporation, the signature and title of any authorized officer other than the Proposed Insured(s) is required and the full name of the corporation must be shown. If a Trust, the signature of the Trustee. - ------------------------------------------------------------------------------ PRODUCER'S CERTIFICATION - ------------------------------------------------------------------------------ I certify that I have truly and accurately recorded hereon the information supplied. X ___________________________________ _____________________________________ Signature of Soliciting Producer Print Soliciting Producer's Name AP2001-NY Page 7 85-23808-00 01/2002 PACIFIC LIFE & ANNUITY COMPANY P.O. Box 6520 [LOGO] PACIFIC LIFE Newport Beach, CA 92658-6520 & ANNUITY COMPANY - -------------------------------------------------------------------------------- SECTION H AUTHORIZATION OF THE PROPOSED INSURED(S) TO OBTAIN INFORMATION - -------------------------------------------------------------------------------- Complete for all applications. I authorize any physician, medical practitioner, hospital, clinic, other medical or medically related facility, insurance company, the Medical Information Bureau, Inc., consumer reporting agency, state motor vehicle agency, or employer to release to Pacific Life & Annuity Company, its subsidiaries, its reinsurer(s), or its legal representative any information they may have as to diagnosis, treatment, and prognosis of any physical or mental condition and/or any non-medical information, including finances, avocations, occupation, foreign travel, alcohol, and driving record for me and any minor children. I understand that any information obtained will be used to determine eligibility for insurance and will not be released to any person or organization except reinsurer(s), the Medical Information Bureau, Inc., and other persons or organizations performing business or legal services in connection with my application, or as may be otherwise lawfully required, or as I may further authorize. I understand that I may revoke this authorization as it applies to drug and/or alcohol abuse information at any time, except to the extent it will not affect any action taken or information released prior to the revocation. Such revocation may cause the denial of this application. I also understand the information authorized for release may include medical information about a communicable or venereal disease, including but not limited to diseases such as hepatitis, syphilis, gonorrhea, and the human immunodeficiency virus, also know as Acquired Immune Deficiency Syndrome (AIDS). I know that I may request a copy of this authorization. I also acknowledge receipt of the Disclosure Notice. A photographic copy of this Authorization shall be as valid as the original and shall be valid for two years from the date shown below. Signed and Dated by the Proposed Insured(s): In:____________________________ __________ _________________________________ City State Month/Day/Year X _____________________________________________________________________________ Signature of Proposed Insured (or signature of parent if Proposed Insured is 14 years and 6 months or younger) X _____________________________________________________________________________ Signature of Proposed Additional Insured (if applicable) AP2001-NY Page 8 85-23808-00 01/2002 PACIFIC LIFE & ANNUITY COMPANY P.O. Box 6520 [LOGO APPEARS HERE] Newport Beach, CA 92658-6520 - -------------------------------------------------------------------------------- SECTION I AUTHORIZATION FOR ELECTRONIC FUNDS TRANSFER - MONTHLY BANK DRAFT - -------------------------------------------------------------------------------- To be completed, by the Authorized Account Holder, only if Electronic Funds Transfer Billing Method (monthly bank drafter) is requested. As a convenience to me, I request and authorize you to pay and charge to the bank account referenced below any monthly debit entries on that account by and payable to the order of Pacific Life & Annuity Company, provided there are sufficient collected funds in said account to pay the same upon presentation. I agree that your rights in respect to each such debit shall be the same as if it were a debit drawn on you and signed personally by me. This authority is to remain in effect until revoked by me in writing, and until you actually receive such notice I agree that you shall be fully protected in honoring any such debit. Pacific Life & Annuity Company will determine the monthly draft date based upon my policy effective date. However, any special drafting requests are indicated below. Bank Account No. ______________________________________________________________ Bank Account in the Name(s) of: _______________________________________________ Special Drafting Request: _________________________ (All requests for special dating will be reviewed against the policy date for eligibility) Signed and dated at: ___________________________________ _______ ________________________________ City State Month/Day/Year Signature of Authorized Account Holder: X _____________________________________________________________________________ A voided check must be attached below. (A blank deposit slip will not be accepted) Premium payments can only be drawn from authorized U.S. financial institutions. Some savings and money market accounts may not qualify. PLACE VOIDED CHECK HERE If your check does not state your financial institution's name and address, please list below: ______________________________________________________________________________ Page 9 85-23808-00 01/2002
SECTION J PRODUCER INFORMATION PRODUCER REPORT To be answered by the soliciting Producer YES NO Complete for all 1. Have you personally asked all applicable questions in this application? [ ] [ ] applications. (If no, explain in "Remarks") 2. Are you aware of any information not given in the application that might affect the insurability of the Proposed Insured(s)? (If yes, explain in "Remarks") [ ] [ ] 3. Did the Proposed Insured/Additional Insured change his/her name during [ ] [ ] the past 5 years? (If yes, give former name(s) in "Remarks") 4. To the best of your knowledge, is this life insurance intended to replace, or will it cause a change in, or involve a loan from any life insurance or annuity on any Proposed Insured's life or in any life insurance or annuity owned by the Annuitant? (If yes, give details in "Remarks") [ ] [ ] 5A. If sales materials were used in this sale, did you use only sales materials approved by Pacific Life & Annuity Company? [ ] [ ] B. If sales materials were used in the sale, did you leave sales materials with the Applicant? [ ] [ ] 6. Is application submitted on a: [ ] Medical Basis? [ ] Guaranteed Issue Basis? [ ] Non-Medical Basis? [ ] Guaranteed to Issue Basis? 7. Check appropriate items that have been ordered: [ ] Medical Exam [ ] H.O. Specimen [ ] Paramedical Exam [ ] Inspection Report [ ] EKG [ ] APS___________________________________________ [ ] Blood Profile ___________________________________________ 8. If this policy is used to fund a tax-qualified plan, indicate type: [ ] Pension/Profit Sharing [ ] HR-10 [ ] Other (Explain In "Remarks") BUSINESS INSURANCE 1. This life insurance policy is being purchased in conjunction with a: Complete if applying for A. [ ] Buy/Sell D. [ ] Split Dollar business insurance. B. [ ] Employee Fringe Benefit E. [ ] Key Employee C. [ ] Deferred Compensation F. [ ] Other (Explain in "Remarks") Amount of G. Name of Principal Officers, Partners, or Key Employees Position % of Business Insurance Owned by Owned Business H. What is the current value of the business? $ I. What was the annual net profit (before taxes) of business? Last Year 2 Years Ago $ $ J. Are other officers, partners, or key employees proportionately insured? [ ] Yes [ ] No (If no, explain in "Remarks") JUVENILE INSURANCE 1. Did you personally observe the Proposed Insured? [ ] Yes [ ] No (If no, explain in "Remarks") Complete if the Proposed Insured is 14 years and 6 2. Are the Proposed Insured's brothers and sisters insured for equal amounts? months or younger. [ ] Yes [ ] No (If no, explain in "Remarks") 3A. Name of Person on whom Proposed Insured depends for support: B. Relationship to Insured C. Estimated annual income D. Estimated net worth E. Estimated amount of life insurance $ $ $ 4A. Name of Applicant B. Relationship to Insured C. Purpose of Insurance D. Amount of life insurance in force $
Page 10 85-23808-00 01/2002
- ---------------------------------------------------------------------------------------------- SECTION K PRODUCER CERTIFICATION - ---------------------------------------------------------------------------------------------- Complete for all I certify that to the best of my knowledge and belief: YES NO applications. A. I have presented to the Company all pertinent facts and have correctly and completely recorded all required answers. [ ] [ ] B. I have given the Proposed Insured(s) (or Parent for Juvenile insurance) a copy of the Disclosure Notice, and any other disclosure notice or statement required by state or federal law. [ ] [ ] C. I have fully explained the terms and conditions of the Temporary Insurance Agreement to the Proposed Insured(s) (or Owner) and have given it to him/her (them). [ ] [ ] D. I have complied with state and federal laws on cost comparison, illustration, and replacement. [ ] [ ] E. I have reviewed, with my Broker Dealer, as applicable, the purchase of this insurance policy. [ ] [ ] F. If sales activity (including solicitation, application and policy delivery) took place in a state other than the application state, indicate the states and associated activity. (If needed, use "Remarks" section below) State(s)_____________________ Activity___________________________________ Signature(s) Of Soliciting Producer(s). Pay Commission as Indicated Below. X_______________________________________________ X___________________________________
First Name Listed Below Will Be The Servicing Producer - ---------------------------------------------------------------------------------------------------------------------- PHONE FAX SERVICING PRODUCER COMM PRODUCER NAME NUMBER E-MAIL ADDRESS NUMBER OFFICE # CODE % - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------
Broker Dealer Name_____________________________________________________________ - -------------------------------------------------------------------------------- REMARKS - IDENTIFY QUESTION AND GIVE DETAILS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 11 85-23808-00 01/2002 This Page is Intentionally Left Blank Page 12 85-23808-00 01/2002 [LOGO OF PACIFIC LIFE] PACIFIC LIFE & ANNUITY COMPANY P.O. Box 6520 Newport Beach, CA 92658-6520 DISCLOSURE NOTICE TO BE DETACHED AND LEFT WITH THE PROPOSED INSURED(S) This is a brief description of our underwriting process ("process"). It will help you understand how an application for insurance is handled, the types and sources of information ("data") we may collect about you, the circumstances under which we may disclose that data to others and your right to learn the nature and substance of that data. The purpose of the process is to see if you qualify for insurance under our rules, and if you do, to establish the proper premium charge. This will assure that the cost of insurance is shared fairly among all policy owners. To determine your insurability, we consider factors such as your medical history, physical condition, occupation, and hazardous avocations. We get this data from various sources. Application and Medical Records - Your application, including the medical history, is the primary source of data in the process. We may ask you to take a physical exam or other special medical test. We may also ask for a report from your doctor or hospital, another insurance company, or the Medical Information Bureau, Inc. ("MIB"). When we do so, we will use the authorization you signed with your application. Medical Information Bureau, Inc. - MIB is a non-profit corporation, which maintains a data exchange for member life insurance companies. As a member company, we will ask MIB if it has a record for you. If you applied to a member company for insurance, MIB may have data about you in its file. The purpose of MIB is to protect member companies and their policy owners from those who would conceal facts relevant to their insurability. The data, which is obtained from MIB, may be used only as an alert to the possible need for further investigation. It cannot be used as a basis to make a final underwriting decision. Pacific Life & Annuity Company, its subsidiaries, or its reinsurer(s) may make a brief report to MIB. If you later apply to another MIB member company for life or health insurance coverage, or a claim for benefits is made to such a company, MIB may supply the company with data it may have about you in its file. At your request, MIB will arrange disclosure of any data it may have about you in its file. If you question the accuracy of such data, you may contact MIB and seek a correction in accordance with the federal Fair Credit Reporting Act procedures. Their address is MIB, PO Box 105, Essex Station, Boston, MA 02112. Their phone no. is (617) 426-3660. Investigative Consumer Report - We may request an investigative consumer report ("ICR") from a consumer reporting agency ("CRA"). An ICR confirms and supplements the data in your application having to do with employment, residence, smoking habits, marital status, occupation, hazardous avocations, and general health. An ICR may also cover data about your general reputation, motor vehicle driving record, criminal activity, personal characteristics, and mode of living, except as may be related directly or indirectly to your sexual orientation. This data may be obtained through personal interviews with you, your family, friends, neighbors, and business associates. If an ICR is required and you wish to be personally interviewed, please let us know and we will notify the CRA. The data contained in the report may be retained by the CRA and later disclosed to other companies to the extent permitted by the Fair Credit Reporting Act. You have a right to make a written request within a reasonable time to receive any other details about the nature and scope this report. An ICR may have an adverse effect on your insurability. If it should, however, we will notify you in writing and identify the CRA. DISCLOSURE TO OTHERS Data obtained about you during the process and at other times is private and will not be disclosed to others without your written authorization except to the extent necessary for the conduct of our business. Examples of situations where we may share data about you are as follows: 1. The Producer may keep a copy of your application, and after a policy is issued will have access to ongoing policy data to better serve you. 2. If reinsurance were required, the reinsurance company would have access to our application file. 3. We may release data to another life insurance company to whom you have applied for insurance or to whom you have submitted a claim for benefits, if you have authorized it to obtain such data. 4. We may report data to MIB. 5. We will disclose data to government, law enforcement, and others where required by law. DISCLOSURE TO YOU In general, you have a right to learn the nature and substance of any personal data about you in our file upon written request. Whenever an adverse underwriting decision is made, we will notify you of the reason(s) for the decision and the source of the data on which our action is based. Medical record data, however, will normally be given only to a licensed physician of your choice. Please refer to the section on MIB for their disclosure procedures. Should you feel that any data we have is not correct or complete, please write to: Manager, Risk Selection Department, Pacific Life & Annuity Co., P.O. Box 6520 Newport Beach, CA 92658-6520. Your comments will be carefully considered and corrections made where justified. We hope this Notice will help you to understand how we obtain and use personal data in the underwriting process, and the ways you can learn about this data. We are concerned with insuring privacy as well as lives, and the collection, use, and disclosure of personal data is limited to those specified in this Notice. AP2001-DISC-NY Page 13 85-23808-00 01/2002 EX-99.6 (A) 9 dex996a.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 6(a) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Pre-Effective Amendment No. 1 to Registration Statement No. 333-62446 on Form S-6 of Pacific Select Exec Separate Account of Pacific Life & Annuity Company of our report dated February 6, 2001, related to the statement of assets and liabilities of Pacific Select Exec Separate Account of Pacific Life & Annuity Company as of December 31, 2000, and the related statement of operations and statement of changes in net assets for the periods from commencement of operations through December 31, 2000, and of our report dated February 26, 2001, related to the financial statements - statutory basis of Pacific Life & Annuity Company as of December 31, 2000 and 1999, and for the years then ended, which report expresses an unqualified opinion with respect to the presentation of such financial statements - statutory basis in accordance with the accounting basis prescribed or permitted by the Insurance Department of the State of Arizona, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America, and also states that such financial statements - statutory basis are not presented fairly in accordance with accounting principles generally accepted in the United States of America, appearing in the Prospectus of Pacific Select Estate Preserver - NY, which is part of such Registration Statement. We also consent to the reference to us under the heading "Experts" appearing in such Prospectus. /s/ DELOITTE & TOUCHE LLP Costa Mesa, California December 27, 2001 EX-99.7 (A) 10 dex997a.txt OPINION OF ACTUARY EXHIBIT 7.(a) [Letterhead of Pacific Life & Annuity Company] December 19, 2001 PACIFIC LIFE INSURANCE COMPANY 700 Newport Center Drive Newport Beach, CA 92660 RE: Pacific Select Estate Preserver - NY Flexible Premium Variable Life Insurance Policy To whom it may concern: In my capacity as Assistant Vice President of the Product Design Department of Pacific Life & Annuity Company, I have provided actuarial advice concerning: The preparation of the Pre-Amendment No. 1 to the Registration Statement on Form S-6 filed by Pacific Life Insurance Company with the Securities and Exchange Commission under the Securities Act of 1933 with respect to variable life insurance policies (the "Registration Statement") and the preparation of the policy forms for the variable life insurance policies described in the Registration Statement (the "Policies"). It is my professional opinion that: The illustration of death benefits, cash values and accumulated premiums shown in this Pre-Effective Amendment No. 1 to the Registration Statement on Form S-6 as Exhibit 7(b), based on the assumptions used in the illustrations, are consistent with the provisions of the Policies. The rate structure of the Policies has not been designed so as to make the relationship between premiums and benefits, as shown in the illustrations, appear to be correspondingly more favorable to the prospective purchaser of the Policies at age 55 in the underwriting classes illustrated than to prospective purchasers of Policies at other ages or underwriting classes. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, /s/ LAWRENCE M. HERSH Lawrence M. Hersh, FSA, MAAA Assistant Vice President EX-99.7 (B) 11 dex997b.txt FORM OF ILLUSTRATION OF POLICY BENEFITS
[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Proposed Insured #1: Mr. SEP-NY 6 Simple Avg Death Benefit Option = Level Presented By: Male, Age 55 Total Initial Face Amount = 1,500,000 PL agent Select Nonsmoker Premium Payment Interval = Annual 12535 Insurance Dr Proposed Insured #2: Mrs. Insured Female, Age 55 Select Nonsmoker Summary Page - ------------------------------------------------------------------------------------------------------------------------------------ Current Policy Charges (1) Guaranteed Policy Charges (2) Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross Annual Investment Return of Annual Investment Return of Annual Investment Return of 6.00% (5.02% Net) 0.00% (-0.92% Net) 6.00% (5.02% Net) --------------------------------------------------------------------------------------------- [Net Loans Net Net Net Net Net Net Planned Premiums and With- Accum'd Surr'r Death Accum'd Surr'r Death Accum'd Surr'r Death Annual Plus 5% drawals Value Value Benefit Value Value Benefit Value Value Benefit Yr Premium Interest (BOY)] (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) - ---------------------------------------------------------------------------------------------------------------------------------- 1 31,711 33,297 0 28,533 5,142 1,500,000 26,835 3,444 1,500,000 28,531 5,140 1,500,000 2 31,711 68,259 0 57,985 37,193 1,500,000 52,944 32,152 1,500,000 57,980 37,188 1,500,000 3 31,711 104,969 0 88,358 70,165 1,500,000 78,301 60,108 1,500,000 88,346 70,153 1,500,000 4 31,711 143,514 0 119,652 104,058 1,500,000 102,883 87,289 1,500,000 119,630 104,036 1,500,000 5 31,711 183,987 0 151,866 138,871 1,500,000 126,659 113,664 1,500,000 151,831 138,836 1,500,000 6 31,711 226,483 0 184,992 174,596 1,500,000 149,592 139,196 1,500,000 184,938 174,542 1,500,000 7 31,711 271,104 0 219,007 211,210 1,500,000 171,626 163,829 1,500,000 218,928 211,131 1,500,000 8 31,711 317,956 0 253,870 248,672 1,500,000 192,685 187,487 1,500,000 253,761 248,563 1,500,000 9 31,711 367,151 0 289,515 286,916 1,500,000 212,665 210,066 1,500,000 289,367 286,768 1,500,000 10 31,711 418,806 0 326,102 326,102 1,500,000 231,447 231,447 1,500,000 325,672 325,672 1,500,000 15 31,711 718,501 0 559,703 559,703 1,500,000 321,265 321,265 1,500,000 541,406 541,406 1,500,000 20 31,711 1,100,996 0 863,169 863,169 1,500,000 355,794 355,794 1,500,000 778,923 778,923 1,500,000 25 31,711 1,589,168 0 1,273,869 1,273,869 1,500,000 269,552 269,552 1,500,000 1,046,052 1,046,052 1,500,000 30 31,711 2,212,212 0 1,809,265 1,809,265 1,899,728 ## ## ## 1,388,135 1,388,135 1,500,000 35 31,711 3,007,393 0 2,491,008 2,491,008 2,615,559 1,873,199 1,873,199 1,966,859 ## - Additional premiums are required to maintain the requested benefits. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. The 'Net Surrender Value' column is equal to the accumulated value, less any policy debt and less any surrender charges. The 'Net Death Benefit' column is the policy death benefit less any policy debt. 1 - The policy values under the Current Policy Charges heading reflect current policy charges, current cost of insurance rates, current mortality and expense charges and the hypothetical gross earnings rate assumption described in the section entitled Gross Hypothetical Returns. Current policy charges and cost of insurance rates are subject to change. Policy values will vary from those illustrated if actual rates differ from those assumed. Current cost of insurance rates are not dependent upon future improvements in underlying mortality. 2 - The policy values under the Guaranteed Policy Charges heading assume maximum cost of insurance rates.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Important Information About Your Illustration - ------------------------------------------------------------------------------------------------------------------------------------ THIS IS AN This is an illustration and not a contract. Although the information contained in this illustration is based on ILLUSTRATION, certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be obtained NOT A CONTRACT from the applicant's own counsel or other advisor. This illustration is prepared for presentation in the state of NY. ILLUSTRATED BENEFITS: Death Benefit Option Start End Option 1 65 Level Base Policy Face Amount Start End Amount 1 65 1,500,000 PREMIUM Illustrated periodic premium payments are assumed to be made one time per year at the beginning of each premium FREQUENCY: payment interval. ANNUAL TIMING OF All values assume premiums and loan interest are paid when due. If a payment is received without being PAYMENTS designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. GROSS You have selected to have your accumulated value allocated to the variable investment options. HYPOTHETICAL RETURNS Hypothetical Gross Earnings Rate Start End Gross Net 1 65 6.00% 5.02%
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY The hypothetical rates of return and values shown are illustrative only and should not be deemed as a representation of past or future investment results. The illustrated policy values might not be achieved if actual rates of return, policy charges, premium amount or frequency differ from those assumed. Actual rates of return may be more or less than those shown and will depend on a number of factors including the investment allocations made to the variable investment options by the policyowner and the experience of those investment options. No representation can be made by Pacific Life & Annuity, the Separate Account, or the underlying Fund that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. The gross annual earnings rate assumption is after brokerage expenses and any foreign taxes. A portfolio's foreign investment may be subject to foreign taxes. Foreign taxes from interest and dividend income are treated as a deduction from relevant income for accounting purposes rather than an expense. SUB-ACCOUNT This illustration assumes that all net premiums (after deduction of premium load) have been allocated to the ALLOCATION variable investment options. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values in this illustration reflect an average daily investment advisory fee equivalent to an annual rate of 0.85% of the aggregate average daily net assets of the fund. The policy values also reflect net operating expenses (after any offset for custodian credits and excluding any foreign taxes) at an annual rate of 0.07% of the aggregate average daily net assets of the portfolios. The total aggregate annualized expenses for the periods ending December 31, 2000 (including investment advisory fees and excluding any foreign taxes) is 0.92%.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Portfolio Investment Operating Advisory Fee Expenses Aggressive Equity 0.80% 0.04% Aggressive Growth 1.00% 0.06% Blue Chip 0.95% 0.06% Capital Opportunities 0.80% 0.06% Diversified Research 0.90% 0.08% Emerging Markets 1.10% 0.20% Equity 0.65% 0.04% Equity Income 0.95% 0.10% Equity Index 0.25% 0.04% Financial Services 1.10% 0.10% Focused 30 0.95% 0.10% Global Growth 1.10% 0.19% Growth LT 0.75% 0.04% Health Sciences 1.10% 0.10% High Yield Bond 0.60% 0.04% I-Net Tollkeeper 1.40% 0.06% Inflation Managed 0.60% 0.02% International Large-Cap 1.05% 0.12% International Value 0.85% 0.11% Large-Cap Core 0.65% 0.04% Large-Cap Value 0.85% 0.05% Managed Bond 0.60% 0.04% Mid-Cap Growth 0.90% 0.06% Mid-Cap Value 0.85% 0.03% Money Market 0.34% 0.04% Multi-Strategy 0.65% 0.04% REIT 1.10% 0.04% Research 1.00% 0.10% Small-Cap Equity 0.65% 0.04% Small-Cap Index 0.50% 0.10% Strategic Value 0.95% 0.10% Technology 1.10% 0.08% Telecommunications 1.10% 0.08% The investment advisory fees and net operating expenses for the underlying portfolios reflect fees and expenses incurred by the portfolios for the periods ending December 31, 2000. The operating expenses for Aggressive Growth, Blue Chip, Capital Opportunities, Equity Income, Financial Services, Global Growth, Health Sciences, Mid-Cap Growth, Research, Technology, and Telecommunications are estimated. The Inflation Managed portfolio was formerly called the Government Securities portfolio. The Large-Cap Core portfolio was formerly called the Equity Income portfolio. Although some portfolios may have names or investment objectives that resemble retail mutual funds managed by the portfolio manager, these portfolios will not have the same underlying holdings or performance. Please note: Net Premiums and Policy Accumulated Value may be invested in up to twenty (20) investment options at one time.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver- NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY NET ANNUAL After deduction of the investment advisory fees and other operating expenses, illustrated gross annual RETURN investment returns of 0% and 6.00% correspond to approximate net annual rates of return of -0.92% and 5.02% respectively. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values reflect a non-guaranteed persistency credit of 0.15% beginning in year 16, increasing to 0.25% in year 21. This persistency credit is applied at the end of each policy year, based on the average annual unloaned policy accumulated value for the year. The gross and net earnings rates shown on this illustration do not reflect the impact of this credit. For the effects on the policy without this persistency credit, please refer to the guaranteed policy charge columns in the illustration. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values also reflect the fact that the net investment return on the variable investment options is lower than the gross return of the assets as a result of the charges levied against the account. FIXED ACCOUNT Net premiums or Accumulated Value may also be allocated to a choice of two fixed options: Fixed Account and OPTION(S) Fixed LT Account. At the beginning of each year, a current rate will be declared and guaranteed for that year. The guaranteed minimum annual interest rate on amounts allocated to the Fixed Account and Fixed LT Account is 3.00%. The current rate is set at Pacific Life & Annuity's discretion and is likely to change from year to year but will never be less than the guaranteed rate. Our ability to pay these guarantees is backed by our financial strength as a company. There are limitations on transferring in and out of the Fixed Account and Fixed LT Account: . You can make transfers from the variable investment options to the fixed options only in the policy month right before each policy anniversary. . You can only make one transfer from each Fixed Account option in any 12-month period, except if you have signed up for the first year transfer program. . Currently, the company has waived the restrictions for transfers from the Fixed LT Account option during the first policy year. You will be permitted to transfer any amount out of the Fixed LT Account at any time during the first twelve policy months. We reserve the right to discontinue this program at any time. However, if the program is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. After the first policy year, you can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT Account in any 12-month period. . Fixed Account: Transfers into the Fixed Account in any 12-month period are limited to the greater of $5,000 or 25% of your policy's accumulated value, except for scheduled transfers under the first year transfer program. . Fixed LT Account: Transfers into the Fixed LT Account in any 12-month period are limited to the greater of $5,000 or 10% of your policy's accumulated value. There is a limitation on amounts allocated to the Fixed LT Account during any 12-month period of $1,000,000 for all policies of the same owner. For more information on the Fixed Account Option(s), please consult the product prospectus.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY This illustration does not reflect allocations to either fixed account. DEDUCTIONS AND A Premium Load is deducted from each premium payment. The Accumulated Value is subject to several monthly CHARGES charges: cost of insurance charges, administrative charge, mortality and expense risk charge, and deductions for optional insurance benefits, if present. The surrender charge is equal to a specified amount that is determined by the insured's age and risk classification, the death benefit option selected, the policy face amount, and any face increases. Over time, the surrender charge decreases until it reaches zero at the end of the 120th policy month. For more detailed information about the surrender charge, please see the current prospectus. LOANS/PARTIAL [Any loans or withdrawals illustrated are based on Current Policy Charge Assumptions and might not be WITHDRAWALS available under Guaranteed Policy Charge Assumptions. Policy loans and/or Partial Withdrawals may have an adverse effect on the policyowner's Benefits. This illustration shows a policy loan. Interest is charged on policy loans at an effective annual rate of 4.10% in arrears. The guaranteed interest rate credited to the portion of the Accumulated Value securing the policy loan is 3.10% in policy years 1-10, 3.70% in policy years 11-20 and 3.85% thereafter. This illustration reflects interest credited to the portion of the accumulated value securing the policy loan at a current effective annual rate of 3.10% in policy years 1-10, 3.70% in policy years 11-20 and a current effective annual rate of 4.10% thereafter. Pacific Life & Annuity reserves the right to decrease the current rate credited. For example, we may decrease the rate credited if we believe that it is necessary to maintain the policy loan as a non-taxable distribution. However we will not reduce the effective annual rate credited to less than the guaranteed rate stated above. All values assume premiums and loan interest are paid when due. If a payment is received without being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. The loan is automatically repaid from the Gross Death Benefit at the death of the second insured, resulting in the estimated payment to the beneficiary of the Net Death Benefit illustrated. Upon lapse or surrender, the loan is automatically repaid, resulting in the estimated payment to the policyowner of the Net Surrender Value. The automatic repayment of the loan during a lapse or surrender will cause the recognition of taxable income, to the extent that the Net Surrender Value plus the amount of the repaid loan exceeds the policyowner's basis in the policy. The policy will lapse if the Accumulated Value less Policy Debt is insufficient to cover the current monthly deduction for charges on any monthly payment date, and a grace period expires without the policyowner making a sufficient payment. If the policy is insufficiently funded in relation to the income stream from the policy, the policy can lapse prematurely and result in a significant income tax liability to the policyowner in the year in which the lapse occurs. A policyowner should be careful to structure a policy so that the policy will not lapse prematurely under various market conditions or scenarios as a result of withdrawals and/or loans taken from the policy. The policyowner should also request at least annually a revised illustration that reflects current policy values to assure the policy is sufficiently funded to support a desired income stream, if any.]
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY FUTURE ACTION If you want to change the premium amount that you are billed, you must request the change in writing. REQUIRED BY POLICYOWNER [Policy loans or withdrawals are illustrated. This illustration assumes that a written request is submitted by the policyowner at the start of the policy year indicated to receive the partial withdrawal or loan illustrated, unless the policyowner is eligible for and elects the Automated Income Option (AIO).] COLUMN Accumulated The total value of the amounts in the Investment Options for the Policy as well as any amounts DEFINITIONS AND Value set aside in the Loan Account, including any accrued earned interest, as of the end of the KEY TERMS policy year. Age (BOY) The insured's age as of his or her nearest birthday as of the policy date, increased by the number of complete policy years elapsed. BOY Beginning of year. Cash The Accumulated Value minus any applicable Surrender Charge as of the end of the policy year. Surrender Value (EOY) Cum. Premium The illustrated premiums paid each year accumulated at a hypothetical rate of return of 5%. Plus 5% "Current Reflect current policy charges at the hypothetical gross earnings rate(s). Policy Charges" columns EOY End of year. Estimated Estimated dollar amount of any tax that may be due as a result of a policy loan or partial Tax on withdrawal. Disbursements Face Amount The minimum death benefit for so long as the policy remains in force. The face amount may be increased or decreased under certain circumstances. Fixed Account An account that is part of Pacific Life & Annuity's general account to which all or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. Fixed LT An account that is part of Pacific Life & Annuity's general account to which all or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. "Guaranteed Reflect maximum policy charges at 0% hypothetical gross investment return and at an assumed Policy Charges" hypothetical gross earnings rate. Columns
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Material Change IRC 7702A describes the 7-Pay Test and also provides that a Material Change will cause the 7-Pay Test period to start over. A Material Change may occur when there is an increase in benefits, depending on the amount of cumulative premiums paid into the policy at that time. In addition, a Material Change will occur if certain policy guarantees change (e.g. a change in rating class). Net Annual Loan The loan amount taken in cash from a policy. This does not include loans taken to pay loan (BOY) interest. Net Cash Cash Surrender Value after deducting any outstanding loan amount. Surrender Value Net Death The amount payable upon the second insured's death. The death benefit proceeds are always Benefit (EOY) reduced by any outstanding loan balance and increased by any applicable rider benefits. Partial A partial withdrawal of a portion of the Net Cash Surrender Value. All illustrated partial Withdrawal withdrawals are based on current policy charges and hypothetical gross earnings rate (BOY) assumptions and may not be available if actual experience is different from the assumptions. Premium Outlay Annualized premiums that are the sum of the periodic payments you plan to make each year. Variable A separate account of Pacific Life & Annuity or a subaccount of such a separate account, which Investment is used only to support the variable death benefits and policy values of variable life Options insurance policies, and the assets of which are segregated from the Pacific Life & Annuity's general account and our other separate accounts. TAX INFORMATION Although the information in this illustration is based on our understanding of the Internal Revenue Code (IRC) and on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be obtained from your own counsel or other tax advisor. The following tax rates have been used to estimate your taxes, if any, due to a policy loan or partial withdrawal: Assumed Income Tax Rate Start End Rate 1 65 31.00% Death Proceeds: Death benefit proceeds from a life insurance policy are generally excludable from the beneficiary's gross income for income tax purposes.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Guideline Premium Test: A life insurance policy will qualify as life insurance under IRC Section 7702 if it meets one of two alternative tests. This illustration uses the Guideline Premium Test which requires that the sum of the premiums paid reduced by non-taxable partial withdrawals and non-taxable cash dividends at any time does not exceed the greater of the guideline single premium or the sum of the guideline level premiums at such time, and the death benefit payable under the policy at any time is at least equal to an applicable percentage of the accumulated value (the "cash value corridor test"). For the policy being illustrated here, the Guideline Single Premium at issue is $327,996.20 and the Guideline Level Premium at issue is $31,711.40 per year. Failure to qualify as life insurance will have adverse tax consequences. Withdrawals/Loans: Interest credited to the accumulated value of a life insurance policy is generally tax- deferred and may be taxable at the time of partial withdrawal, surrender or lapse. Assuming the life insurance policy is not a MEC (as described below), partial withdrawals are taxed under the "cost recovery rule" and are generally taxable only to the extent the partial withdrawal exceeds the cost basis of the policy. Basis equals the gross premiums paid less prior non-taxable partial withdrawals and non-taxable cash dividends. For a life insurance policy that is not a Modified Endowment Contract as defined in IRC Sec. 7702A: Withdrawals in the first 15 policy years may be taxable under IRC 7702(f)(7)(B); after 15 years, withdrawals up to policy tax basis are not taxable; and policy loans are not taxable provided that the policy remains in force until the insured dies. Withdrawals and policy loans may reduce policy values and death benefits. If a life insurance policy loan is still outstanding when a policy is surrendered or lapses, the loan is automatically repaid from policy values. This will result in taxable income to the extent the cash surrender value plus the amount of the repaid loan exceeds the cost basis of the policy. Any tax estimate(s) included in this illustration does not include an estimate of this tax. If a life insurance policy loan is still outstanding at the time of death, the loan is automatically repaid from the policy's death benefit. This use of the death benefit to repay a policy loan does not cause the recognition of taxable income. Modified Endowment Contracts: As defined in IRC Section 7702A, a modified endowment contract (MEC) is a life insurance policy in which the cumulative premium payments (less non-taxable partial withdrawals and non-taxable cash dividends) since the policy effective date exceeds, at any time during the first seven policy years, the cumulative total of the Seven-Pay Premiums (the 7-pay test). The initial annual Seven-Pay Premium limit on the policy being illustrated here is $79,505.37. Generally, once a policy is a MEC, it is always a MEC. However, if premiums in excess of the Seven-Pay Premium limit are paid, the MEC status can be avoided if such premium payments, plus interest (which is taxable), are returned to the policyowner within 60 days after the end of the 'measuring year' in which the premium payment was made. For this purpose, the 'measuring year' is the same as a policy year, except that, if the policy has a Material Change then the 'measuring year' will run between anniversaries of the Material Change date instead. Note, if a Material Change occurs on a date other than a policy anniversary, the specific timing of the 60-day window may change.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Distributions from a MEC, either a partial withdrawal, a cash dividend, or loan, are taxed to the extent there is a gain in the policy and may be subject to additional penalties. Distributions taken from a policy during the two years prior to the policy becoming a MEC will be treated as taxable under MEC rules in the year the policy becomes a MEC. This illustration does not reflect this taxation process. If there is a "material change" in the terms or benefits of the policy, the 7-pay test will be applied as if this is a new policy at the date of the material change. Based on our understanding of the Internal Revenue Code and the assumptions in this illustration, THIS POLICY WOULD NOT BECOME A MEC. PREMIUM LIMITS Initial Guideline Single,Premium: $327,996.20 SUMMARY Initial Guideline Level Premium: $ 31,711.40 Initial Seven Pay Premium: $ 79,505.37 When the death benefit is greater than the face amount due to accumulated value growth, payment of additional premium will be subject to approval. POLICY FREE LOOK There is a free look right in the policy, which provides that you may return it within 10 days after you RIGHT receive it. You need only deliver it to Pacific Life & Annuity Company or to the agent who delivered the policy to you. In such case, the policy will be deemed void from the beginning and Pacific Life & Annuity Company will refund the premiums paid. If the policy is issued as a replacement of existing coverage, the free look period is 60 days and Pacific Life & Annuity Company will refund the policy value plus any charges and loads which were deducted.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Proposed Insured #1: Mr. SEP-NY 12 Simple Avg Death Benefit Option = Level Presented By: Male, Age 55 Total Initial Face Amount = 1,500,000 PL agent Select Nonsmoker Premium Payment Interval = Annual 12535 Insurance Dr Proposed Insured #2: Mrs. Insured Female, Age 55 Select Nonsmoker Summary Page - ------------------------------------------------------------------------------------------------------------------------------------ Current Policy Charges (1) Guaranteed Policy Charges (2) Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross Annual Investment Return of Annual Investment Return of Annual Investment Return of 12.00% (10.97% Net) 0.00% (-0.92% Net) 12.00% (10.97% Net) ------------------------------------------------------------------------------------------------ [Net Loans Net Net Net Net Net Net Planned Premiums and With- Accum'd Surr'r Death Accum'd Surr'r Death Accum'd Surr'r Death Annual Plus 5% drawals Value Value Benefit Value Value Benefit Value Value Benefit Yr Premium Interest (BOY)] (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) - ------------------------------------------------------------------------------------------------------------------------------------ 1 31,711 33,297 0 30,231 6,840 1,500,000 26,835 3,444 1,500,000 30,230 6,839 1,500,000 2 31,711 68,259 0 63,226 42,434 1,500,000 52,944 32,152 1,500,000 63,221 42,429 1,500,000 3 31,711 104,969 0 99,223 81,030 1,500,000 78,301 60,108 1,500,000 99,211 81,018 1,500,000 4 31,711 143,514 0 138,490 122,896 1,500,000 102,883 87,289 1,500,000 138,467 122,873 1,500,000 5 31,711 183,987 0 181,318 168,323 1,500,000 126,659 113,664 1,500,000 181,279 168,284 1,500,000 6 31,711 226,483 0 228,026 217,630 1,500,000 149,592 139,196 1,500,000 227,967 217,571 1,500,000 7 31,711 271,104 0 278,957 271,160 1,500,000 171,626 163,829 1,500,000 278,869 271,072 1,500,000 8 31,711 317,956 0 334,478 329,280 1,500,000 192,685 187,487 1,500,000 334,354 329,156 1,500,000 9 31,711 367,151 0 394,982 392,383 1,500,000 212,665 210,066 1,500,000 394,814 392,215 1,500,000 10 31,711 418,806 0 461,134 461,134 1,500,000 231,447 231,447 1,500,000 460,693 460,693 1,500,000 15 31,711 718,501 0 947,660 947,660 1,500,000 321,265 321,265 1,500,000 932,335 932,335 1,500,000 20 31,711 1,100,996 0 1,778,039 1,778,039 1,902,501 355,794 355,794 1,500,000 1,722,292 1,722,292 1,842,852 25 31,711 1,589,168 0 3,220,828 3,220,828 3,381,869 269,552 269,552 1,500,000 3,067,265 3,067,265 3,220,628 30 31,711 2,212,212 0 5,658,883 5,658,883 5,941,828 ## ## ## 5,254,505 5,254,505 5,517,230 35 31,711 3,007,393 0 9,755,279 9,755,279 10,243,042 8,706,160 8,706,160 9,141,468 ## - Additional premiums are required to maintain the requested benefits. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. The 'Net Surrender Value' column is equal to the accumulated value, less any policy debt and less any surrender charges. The 'Net Death Benefit' column is the policy death benefit less any policy debt. 1 - The policy values under the Current Policy Charges heading reflect current policy charges, current cost of insurance rates, current mortality and expense charges and the hypothetical gross earnings rate assumption described in the section entitled Gross Hypothetical Returns. Current policy charges and cost of insurance rates are subject to change. Policy values will vary from those illustrated if actual rates differ from those assumed. Current cost of insurance rates are not dependent upon future improvements in underlying mortality. 2 - The policy values under the Guaranteed Policy Charges heading assume maximum cost of insurance rates.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Important Information About Your Illustration - ------------------------------------------------------------------------------------------------------------------------------------ THIS IS AN This is an illustration and not a contract. Although the information contained in this illustration is based ILLUSTRATION, on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be NOT A CONTRACT obtained from the applicant's own counsel or other advisor. This illustration is prepared for presentation in the state of NY. ILLUSTRATED BENEFITS: Death Benefit Option Start End Option 1 65 Level Base Policy Face Amount Start End Amount 1 65 1,500,000 PREMIUM Illustrated periodic premium payments are assumed to be made one time per year at the beginning of each FREQUENCY: premium payment interval. ANNUAL TIMING OF All values assume premiums and loan interest are paid when due. If a payment is received without being PAYMENTS designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. GROSS You have selected to have your accumulated value allocated to the variable investment options. HYPOTHETICAL RETURNS Hypothetical Gross Earnings Rate Start End Gross Net 1 65 12.00% 10.97%
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY The hypothetical rates of return and values shown are illustrative only and should not be deemed as a representation of past or future investment results. The illustrated policy values might not be achieved if actual rates of return, policy charges, premium amount or frequency differ from those assumed. Actual rates of return may be more or less than those shown and will depend on a number of factors including the investment allocations made to the variable investment options by the policyowner and the experience of those investment options. No representation can be made by Pacific Life & Annuity, the Separate Account, or the underlying Fund that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. The gross annual earnings rate assumption is after brokerage expenses and any foreign taxes. A portfolio's foreign investment may be subject to foreign taxes. Foreign taxes from interest and dividend income are treated as a deduction from relevant income for accounting purposes rather than an expense. SUB-ACCOUNT This illustration assumes that all net premiums (after deduction of premium load) have been allocated to the ALLOCATION variable investment options. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values in this illustration reflect an average daily investment advisory fee equivalent to an annual rate of 0.85% of the aggregate average daily net assets of the fund. The policy values also reflect net operating expenses (after any offset for custodian credits and excluding any foreign taxes) at an annual rate of 0.07% of the aggregate average daily net assets of the portfolios. The total aggregate annualized expenses for the periods ending December 31, 2000 (including investment advisory fees and excluding any foreign taxes) is 0.92%.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Portfolio Investment Operating Advisory Fee Expenses Aggressive Equity 0.80% 0.04% Aggressive Growth 1.00% 0.06% Blue Chip 0.95% 0.06% Capital Opportunities 0.80% 0.06% Diversified Research 0.90% 0.08% Emerging Markets 1.10% 0.20% Equity 0.65% 0.04% Equity Income 0.95% 0.10% Equity Index 0.25% 0.04% Financial Services 1.10% 0.10% Focused 30 0.95% 0.10% Global Growth 1.10% 0.19% Growth LT 0.75% 0.04% Health Sciences 1.10% 0.10% High Yield Bond 0.60% 0.04% I-Net Tollkeeper 1.40% 0.06% Inflation Managed 0.60% 0.02% International Large-Cap 1.05% 0.12% International Value 0.85% 0.11% Large-Cap Core 0.65% 0.04% Large-Cap Value 0.85% 0.05% Managed Bond 0.60% 0.04% Mid-Cap Growth 0.90% 0.06% Mid-Cap Value 0.85% 0.03% Money Market 0.34% 0.04% Multi-Strategy 0.65% 0.04% REIT 1.10% 0.04% Research 1.00% 0.10% Small-Cap Equity 0.65% 0.04% Small-Cap Index 0.50% 0.10% Strategic Value 0.95% 0.10% Technology 1.10% 0.08% Telecommunications 1.10% 0.08% The investment advisory fees and net operating expenses for the underlying portfolios reflect fees and expenses incurred by the portfolios for the periods ending December 31, 2000. The operating expenses for Aggressive Growth, Blue Chip, Capital Opportunities, Equity Income, Financial Services, Global Growth, Health Sciences, Mid-Cap Growth, Research, Technology, and Telecommunications are estimated. The Inflation Managed portfolio was formerly called the Government Securities portfolio. The Large-Cap Core portfolio was formerly called the Equity Income portfolio. Although some portfolios may have names or investment objectives that resemble retail mutual funds managed by the portfolio manager, these portfolios will not have the same underlying holdings or performance. Please note: Net Premiums and Policy Accumulated Value may be invested in up to twenty (20) investment options at one time.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY NET ANNUAL After deduction of the investment advisory fees and other operating expenses, illustrated gross annual RETURN investment returns of 0% and 12.00% correspond to approximate net annual rates of return of -0.92% and 10.97% respectively. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values reflect a non-guaranteed persistency credit of 0.15% beginning in year 16, increasing to 0.25% in year 21. This persistency credit is applied at the end of each policy year, based on the average annual unloaned policy accumulated value for the year. The gross and net earnings rates shown on this illustration do not reflect the impact of this credit. For the effects on the policy without this persistency credit, please refer to the guaranteed policy charge columns in the illustration. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values also reflect the fact that the net investment return on the variable investment options is lower than the gross return of the assets as a result of the charges levied against the account. FIXED ACCOUNT Net premiums or Accumulated Value may also be allocated to a choice of two fixed options: Fixed Account and OPTION(S) Fixed LT Account. At the beginning of each year, a current rate will be declared and guaranteed for that year. The guaranteed minimum annual interest rate on amounts allocated to the Fixed Account and Fixed LT Account is 3.00%. The current rate is set at Pacific Life & Annuity's discretion and is likely to change from year to year but will never be less than the guaranteed rate. Our ability to pay these guarantees is backed by our financial strength as a company. There are limitations on transferring in and out of the Fixed Account and Fixed LT Account: . You can make transfers from the variable investment options to the fixed options only in the policy month right before each policy anniversary. . You can only make one transfer from each Fixed Account option in any 12-month period, except if you have signed up for the first year transfer program. . Currently, the company has waived the restrictions for transfers from the Fixed LT Account option during the first policy year. You will be permitted to transfer any amount out of the Fixed LT Account at any time during the first twelve policy months. We reserve the right to discontinue this program at any time. However, if the program is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. After the first policy year, you can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT Account in any 12-month period. . Fixed Account: Transfers into the Fixed Account in any 12-month period are limited to the greater of $5,000 or 25% of your policy's accumulated value, except for scheduled transfers under the first year transfer program. . Fixed LT Account: Transfers into the Fixed LT Account in any 12-month period are limited to the greater of $5,000 or 10% of your policy's accumulated value. There is a limitation on amounts allocated to the Fixed LT Account during any 12-month period of $1,000,000 for all policies of the same owner. For more information on the Fixed Account Option(s), please consult the product prospectus.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY This illustration does not reflect allocations to either fixed account. DEDUCTIONS AND A Premium Load is deducted from each premium payment. The Accumulated Value is subject to several monthly CHARGES charges: cost of insurance charges, administrative charge, mortality and expense risk charge, and deductions for optional insurance benefits, if present. The surrender charge is equal to a specified amount that is determined by the insured's age and risk classification, the death benefit option selected, the policy face amount, and any face increases. Over time, the surrender charge decreases until it reaches zero at the end of the 120th policy month. For more detailed information about the surrender charge, please see the current prospectus. LOANS/PARTIAL [Any loans or withdrawals illustrated are based on Current Policy Charge Assumptions and might not be WITHDRAWALS available under Guaranteed Policy Charge Assumptions. Policy loans and/or Partial Withdrawals may have an adverse effect on the policyowner's Benefits. This illustration shows a policy loan. Interest is charged on policy loans at an effective annual rate of 4.10% in arrears. The guaranteed interest rate credited to the portion of the Accumulated Value securing the policy loan is 3.10% in policy years 1-10, 3.70% in policy years 11-20 and 3.85% thereafter. This illustration reflects interest credited to the portion of the accumulated value securing the policy loan at a current effective annual rate of 3.10% in policy years 1-10, 3.70% in policy years 11-20 and a current effective annual rate of 4.10% thereafter. Pacific Life & Annuity reserves the right to decrease the current rate credited. For example, we may decrease the rate credited if we believe that it is necessary to maintain the policy loan as a non-taxable distribution. However we will not reduce the effective annual rate credited to less than the guaranteed rate stated above. All values assume premiums and loan interest are paid when due. If a payment is received without being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. The loan is automatically repaid from the Gross Death Benefit at the death of the second insured, resulting in the estimated payment to the beneficiary of the Net Death Benefit illustrated. Upon lapse or surrender, the loan is automatically repaid, resulting in the estimated payment to the policyowner of the Net Surrender Value. The automatic repayment of the loan during a lapse or surrender will cause the recognition of taxable income, to the extent that the Net Surrender Value plus the amount of the repaid loan exceeds the policyowner's basis in the policy. The policy will lapse if the Accumulated Value less Policy Debt is insufficient to cover the current monthly deduction for charges on any monthly payment date, and a grace period expires without the policyowner making a sufficient payment. If the policy is insufficiently funded in relation to the income stream from the policy, the policy can lapse prematurely and result in a significant income tax liability to the policyowner in the year in which the lapse occurs. A policyowner should be careful to structure a policy so that the policy will not lapse prematurely under various market conditions or scenarios as a result of withdrawals and/or loans taken from the policy. The policyowner should also request at least annually a revised illustration that reflects current policy values to assure the policy is sufficiently funded to support a desired income stream, if any.]
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY FUTURE ACTION If you want to change the premium amount that you are billed, you must request the change in writing. REQUIRED BY POLICYOWNER [Policy loans or withdrawals are illustrated. This illustration assumes that a written request is submitted by the policyowner at the start of the policy year indicated to receive the partial withdrawal or loan illustrated, unless the policyowner is eligible for and elects the Automated Income Option (AIO).] COLUMN Accumulated The total value of the amounts in the Investment Options for the Policy as well as any DEFINITIONS AND Value amounts set aside in the Loan Account, including any accrued earned interest, as of the end KEY TERMS of the policy year. Age (BOY) The insured's age as of his or her nearest birthday as of the policy date, increased by the number of complete policy years elapsed. BOY Beginning of year. Cash Surrender The Accumulated Value minus any applicable Surrender Charge as of the end of the policy year. Value (EOY) Cum. Premium The illustrated premiums paid each year accumulated at a hypothetical rate of return of 5%. Plus 5% "Current Reflect current policy charges at the hypothetical gross earnings rate(s). Policy Charges" columns EOY End of year. Estimated Estimated dollar amount of any tax that may be due as a result of a policy loan or partial Tax on withdrawal. Disbursements Face Amount The minimum death benefit for so long as the policy remains in force. The face amount may be increased or decreased under certain circumstances. Fixed Account An account that is part of Pacific Life & Annuity's general account to which all or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. Fixed LT An account that is part of Pacific Life & Annuity's general account to which all or a Account portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. "Guaranteed Reflect maximum policy charges at 0% hypothetical gross investment return and at an assumed Policy Charges" hypothetical gross earnings rate. columns
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Material IRC 7702A describes the 7-Pay Test and also provides that a Material Change will cause the Change 7-Pay Test period to start over. A Material Change may occur when there is an increase in benefits, depending on the amount of cumulative premiums paid into the policy at that time. In addition, a Material Change will occur if certain policy guarantees change (e.g. a change in rating class). Net Annual The loan amount taken in cash from a policy. This does not include loans taken to pay loan Loan (BOY) interest. Net Cash Cash Surrender Value after deducting any outstanding loan amount. Surrender Value Net Death The amount payable upon the second insured's death. The death benefit proceeds are always Benefit (EOY) reduced by any outstanding loan balance and increased by any applicable rider benefits. Partial A partial withdrawal of a portion of the Net Cash Surrender Value. All illustrated partial Withdrawal withdrawals are based on current policy charges and hypothetical gross earnings rate (BOY) assumptions and may not be available if actual experience is different from the assumptions. Premium Outlay Annualized premiums that are the sum of the periodic payments you plan to make each year. Variable A separate account of Pacific Life & Annuity or a subaccount of such a separate account, Investment which is used only to support the variable death benefits and policy values of variable life Options insurance policies, and the assets of which are segregated from the Pacific Life & Annuity's general account and our other separate accounts. TAX INFORMATION Although the information in this illustration is based on our understanding of the Internal Revenue Code (IRC) and on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be obtained from your own counsel or other tax advisor. The following tax rates have been used to estimate your taxes, if any, due to a policy loan or partial withdrawal: Assumed Income Tax Rate Start End Rate 1 65 31.00% Death Proceeds: Death benefit proceeds from a life insurance policy are generally excludable from the beneficiary's gross income for income tax purposes.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Guideline Premium Test: A life insurance policy will qualify as life insurance under IRC Section 7702 if it meets one of two alternative tests. This illustration uses the Guideline Premium Test which requires that the sum of the premiums paid reduced by non-taxable partial withdrawals and non-taxable cash dividends at any time does not exceed the greater of the guideline single premium or the sum of the guideline level premiums at such time, and the death benefit payable under the policy at any time is at least equal to an applicable percentage of the accumulated value (the "cash value corridor test"). For the policy being illustrated here, the Guideline Single Premium at issue is $327,996.20 and the Guideline Level Premium at issue is $31,711.40 per year. Failure to qualify as life insurance will have adverse tax consequences. Withdrawals/Loans: Interest credited to the accumulated value of a life insurance policy is generally tax- deferred and may be taxable at the time of partial withdrawal, surrender or lapse. Assuming the life insurance policy is not a MEC (as described below), partial withdrawals are taxed under the "cost recovery rule" and are generally taxable only to the extent the partial withdrawal exceeds the cost basis of the policy. Basis equals the gross premiums paid less prior non-taxable partial withdrawals and non-taxable cash dividends. For a life insurance policy that is not a Modified Endowment Contract as defined in IRC Sec. 7702A: Withdrawals in the first 15 policy years may be taxable under IRC 7702(f)(7)(B); after 15 years, withdrawals up to policy tax basis are not taxable; and policy loans are not taxable provided that the policy remains in force until the insured dies. Withdrawals and policy loans may reduce policy values and death benefits. If a life insurance policy loan is still outstanding when a policy is surrendered or lapses, the loan is automatically repaid from policy values. This will result in taxable income to the extent the cash surrender value plus the amount of the repaid loan exceeds the cost basis of the policy. Any tax estimate(s) included in this illustration does not include an estimate of this tax. If a life insurance policy loan is still outstanding at the time of death, the loan is automatically repaid from the policy's death benefit. This use of the death benefit to repay a policy loan does not cause the recognition of taxable income. Modified Endowment Contracts: As defined in IRC Section 7702A, a modified endowment contract (MEC) is a life insurance policy in which the cumulative premium payments (less non-taxable partial withdrawals and non- taxable cash dividends) since the policy effective date exceeds, at any time during the first seven policy years, the cumulative total of the Seven-Pay Premiums (the 7-pay test). The initial annual Seven-Pay Premium limit on the policy being illustrated here is $79,505.37. Generally, once a policy is a MEC, it is always a MEC. However, if premiums in excess of the Seven-Pay Premium limit are paid, the MEC status can be avoided if such premium payments, plus interest (which is taxable), are returned to the policyowner within 60 days after the end of the 'measuring year' in which the premium payment was made. For this purpose, the 'measuring year' is the same as a policy year, except that, if the policy has a Material Change then the 'measuring year' will run between anniversaries of the Material Change date instead. Note, if a Material Change occurs on a date other than a policy anniversary, the specific timing of the 60-day window may change.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Distributions from a MEC, either a partial withdrawal, a cash dividend, or loan, are taxed to the extent there is a gain in the policy and may be subject to additional penalties. Distributions taken from a policy during the two years prior to the policy becoming a MEC will be treated as taxable under MEC rules in the year the policy becomes a MEC. This illustration does not reflect this taxation process. If there is a "material change" in the terms or benefits of the policy, the 7-pay test will be applied as if this is a new policy at the date of the material change. Based on our understanding of the Internal Revenue Code and the assumptions in this illustration, THIS POLICY WOULD NOT BECOME A MEC. PREMIUM LIMITS Initial Guideline Single Premium: $327,996.20 SUMMARY Initial Guideline Level Premium: $31,711.40 Initial Seven Pay Premium: $79,505.37 When the death benefit is greater than the face amount due to accumulated value growth, payment of additional premium will be subject to approval. POLICY FREE LOOK There is a free look right in the policy, which provides that you may return it within 10 days after you RIGHT receive it. You need only deliver it to Pacific Life & Annuity Company or to the agent who delivered the policy to you. In such case, the policy will be deemed void from the beginning and Pacific Life & Annuity Company will refund the premiums paid. If the policy is issued as a replacement of existing coverage, the free look period is 60 days and Pacific Life & Annuity Company will refund the policy value plus any charges and loads which were deducted.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Proposed Insured #1: Mr. SEP-NY 6 Weighted Avg Death Benefit Option = Level Presented By: Male, Age 55 Total Initial Face Amount = 1,500,000 PL agent Select Nonsmoker Premium Payment Interval = Annual 12535 Insurance Dr Proposed Insured #2: Mrs. Insured Female, Age 55 Select Nonsmoker Summary Page - ------------------------------------------------------------------------------------------------------------------------------------ Current Policy Charges (1) Guaranteed Policy Charges (2) Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross Annual Investment Return of Annual Investment Return of Annual Investment Return of 6.00% (5.25% Net) 0.00% (-0.71% Net) 6.00% (5.25% Net) ---------------------------------------------------------------------------------------------- [Net Loans Net Net Net Net Net Net Planned Premiums and With- Accum'd Surr'r Death Accum'd Surr'r Death Accum'd Surr'r Death Annual Plus 5% drawals Value Value Benefit Value Value Benefit Value Value Benefit Yr Premium Interest (BOY)] (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) - ------------------------------------------------------------------------------------------------------------------------------------ 1 31,711 33,297 0 28,596 5,205 1,500,000 26,895 3,504 1,500,000 28,595 5,204 1,500,000 2 31,711 68,259 0 58,178 37,386 1,500,000 53,118 32,326 1,500,000 58,173 37,381 1,500,000 3 31,711 104,969 0 88,749 70,556 1,500,000 78,643 60,450 1,500,000 88,738 70,545 1,500,000 4 31,711 143,514 0 120,318 104,724 1,500,000 103,441 87,847 1,500,000 120,297 104,703 1,500,000 5 31,711 183,987 0 152,888 139,893 1,500,000 127,481 114,486 1,500,000 152,853 139,858 1,500,000 6 31,711 226,483 0 186,456 176,060 1,500,000 150,724 140,328 1,500,000 186,402 176,006 1,500,000 7 31,711 271,104 0 221,006 213,209 1,500,000 173,111 165,314 1,500,000 220,927 213,130 1,500,000 8 31,711 317,956 0 256,504 251,306 1,500,000 194,564 189,366 1,500,000 256,394 251,196 1,500,000 9 31,711 367,151 0 292,891 290,292 1,500,000 214,977 212,378 1,500,000 292,742 290,143 1,500,000 10 31,711 418,806 0 330,333 330,333 1,500,000 234,228 234,228 1,500,000 329,902 329,902 1,500,000 15 31,711 718,501 0 570,589 570,589 1,500,000 327,089 327,089 1,500,000 552,351 552,351 1,500,000 20 31,711 1,100,996 0 886,032 886,032 1,500,000 365,666 365,666 1,500,000 802,371 802,371 1,500,000 25 31,711 1,589,168 0 1,317,535 1,317,535 1,500,000 284,945 284,945 1,500,000 1,094,749 1,094,749 1,500,000 30 31,711 2,212,212 0 1,885,185 1,885,185 1,979,445 ## ## ## 1,495,540 1,495,540 1,570,317 35 31,711 3,007,393 0 2,615,161 2,615,161 2,745,919 2,026,136 2,026,136 2,127,443 ## - Additional premiums are required to maintain the requested benefits. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. The 'Net Surrender Value' column is equal to the accumulated value, less any policy debt and less any surrender charges. The 'Net Death Benefit' column is the policy death benefit less any policy debt. 1 - The policy values under the Current Policy Charges heading reflect current policy charges, current cost of insurance rates, current mortality and expense charges and the hypothetical gross earnings rate assumption described in the section entitled Gross Hypothetical Returns. Current policy charges and cost of insurance rates are subject to change. Policy values will vary from those illustrated if actual rates differ from those assumed. Current cost of insurance rates are not dependent upon future improvements in underlying mortality. 2 - The policy values under the Guaranteed Policy Charges heading assume maximum cost of insurance rates.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Important Information About Your Illustration - ------------------------------------------------------------------------------------------------------------------------- THIS IS AN This is an illustration and not a contract. Although the information contained in this illustration ILLUSTRATION, is based on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such NOT A CONTRACT advice should be obtained from the applicant's own counsel or other advisor. This illustration is prepared for presentation in the state of NY. ILLUSTRATED BENEFITS: Death Benefit Option Start End Option 1 65 Level Base Policy Face Amount Start End Amount 1 65 1,500,000 PREMIUM Illustrated periodic premium payments are assumed to be made one time per year at the beginning of FREQUENCY: each premium payment interval. ANNUAL TIMING OF All values assume premiums and loan interest are paid when due. If a payment is received without PAYMENTS being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. GROSS You have selected to have your accumulated value allocated to the variable investment options. HYPOTHETICAL RETURNS Hypothetical Gross Earnings Rate Start End Gross Net 1 65 6.00% 5.25%
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY The hypothetical rates of return and values shown are illustrative only and should not be deemed as a representation of past or future investment results. The illustrated policy values might not be achieved if actual rates of return, policy charges, premium amount or frequency differ from those assumed. Actual rates of return may be more or less than those shown and will depend on a number of factors including the investment allocations made to the variable investment options by the policyowner and the experience of those investment options. No representation can be made by Pacific Life & Annuity, the Separate Account, or the underlying Fund that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. The gross annual earnings rate assumption is after brokerage expenses and any foreign taxes. A portfolio's foreign investment may be subject to foreign taxes. Foreign taxes from interest and dividend income are treated as a deduction from relevant income for accounting purposes rather than an expense. SUB-ACCOUNT This illustration assumes that all net premiums (after deduction of premium load) have been allocated ALLOCATION to the variable investment options. You have requested that this illustration reflect your selection of investment options. The amounts shown for the Death Benefits, Accumulated Values and Cash Surrender Values in this illustration reflect your selection of investment options and the underlying portfolios' annualized fund expenses (excluding any foreign taxes) incurred by the portfolios for the periods ending December 31, 2000 adjusted to reflect a decrease in fees for certain operating expenses.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Investment Portfolio Advisory Operating Fee Expenses Aggressive Equity 0.80% 0.04% Aggressive Growth 1.00% 0.06% Blue Chip 0.95% 0.06% Capital Opportunities 0.80% 0.06% Diversified Research 0.90% 0.08% Emerging Markets 1.10% 0.20% Equity 0.65% 0.04% Equity Income 0.95% 0.10% Equity Index 0.25% 0.04% Financial Services 1.10% 0.10% Focused 30 0.95% 0.10% Global Growth 1.10% 0.19% Growth LT 0.75% 0.04% Health Sciences 1.10% 0.10% High Yield Bond 0.60% 0.04% I-Net Tollkeeper 1.40% 0.06% Inflation Managed 0.60% 0.02% International Large-Cap 1.05% 0.12% International Value 0.85% 0.11% Large-Cap Core 0.65% 0.04% Large-Cap Value 0.85% 0.05% Managed Bond 0.60% 0.04% Mid-Cap Growth 0.90% 0.06% Mid-Cap Value 0.85% 0.03% Money Market 0.34% 0.04% Multi-Strategy 0.65% 0.04% REIT 1.10% 0.04% Research 1.00% 0.10% Small-Cap Equity 0.65% 0.04% Small-Cap Index 0.50% 0.10% Strategic Value 0.95% 0.10% Technology 1.10% 0.08% Telecommunications 1.10% 0.08% You have selected allocations in the investment options that reflect the weighted annualized expenses of all the available underlying portfolios as of December 31, 2000. The annualized expenses of the underlying portfolios weighted according to your selection is equivalent to an annual rate of 0.66% for investment advisory fees and 0.05% for operating expenses (after any offset for custodian credits and excluding any foreign taxes) which amounts to a total of 0.71%. The investment advisory fees and net operating expenses for the underlying portfolios reflect fees and expenses incurred by the portfolios for the periods ending December 31, 2000. The operating expenses for Aggressive Growth, Blue Chip, Capital Opportunities, Equity Income, Financial Services, Global Growth, Health Sciences, Mid-Cap Growth, Research, Technology, and Telecommunications are estimated. The Inflation Managed portfolio was formerly called the Government Securities portfolio. The Large-Cap Core portfolio was formerly called the Equity Income portfolio.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Although some portfolios may have names or investment objectives that resemble retail mutual funds managed by the portfolio manager, these portfolios will not have the same underlying holdings or performance. Please note: Net Premiums and Policy Accumulated Value may be invested in up to twenty (20) investment options at one time. The annualized expenses for all available portfolios for the periods ending December 31, 2000 reflect an average daily investment advisory fee equivalent to an annual rate of 0.85% of the aggregate average daily net assets of the fund. They also reflect net operating expenses (after any offset for custodian credits and excluding any foreign taxes) at an annual rate of 0.07% of the aggregate average daily net assets of the portfolios. The total aggregate annualized expenses for the periods ending December 31, 2000 (including investment advisory fees and excluding any foreign taxes) is 0.92%. NET ANNUAL After deduction of the investment advisory fees and other operating expenses, illustrated gross annual RETURN investment returns of 0% and 6.00% correspond to approximate net annual rates of return of -0.71% and 5.25% respectively. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values reflect a non-guaranteed persistency credit of 0.15% beginning in year 16, increasing to 0.25% in year 21. This persistency credit is applied at the end of each policy year, based on the average annual unloaned policy accumulated value for the year. The gross and net earnings rates shown on this illustration do not reflect the impact of this credit. For the effects on the policy without this persistency credit, please refer to the guaranteed policy charge columns in the illustration. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values also reflect the fact that the net investment return on the variable investment options is lower than the gross return of the assets as a result of the charges levied against the account. FIXED ACCOUNT Net premiums or Accumulated Value may also be allocated to a choice of two fixed options: OPTION(S) Fixed Account and Fixed LT Account. At the beginning of each year, a current rate will be declared and guaranteed for that year. The guaranteed minimum annual interest rate on amounts allocated to the Fixed Account and Fixed LT Account is 3.00%. The current rate is set at Pacific Life & Annuity's discretion and is likely to change from year to year but will never be less than the guaranteed rate. Our ability to pay these guarantees is backed by our financial strength as a company. There are limitations on transferring in and out of the Fixed Account and Fixed LT Account: . You can make transfers from the variable investment options to the fixed options only in the policy month right before each policy anniversary. . You can only make one transfer from each Fixed Account option in any 12-month period, except if you have signed up for the first year transfer program.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver- NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY . Currently, the company has waived the restrictions for transfers from the Fixed LT Account option during the first policy year. You will be permitted to transfer any amount out of the Fixed LT Account at any time during the first twelve policy months. We reserve the right to discontinue this program at any time. However, if the program is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. After the first policy year, you can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT Account in any 12-month period. . Fixed Account: Transfers into the Fixed Account in any 12-month period are limited to the greater of $5,000 or 25% of your policy's accumulated value, except for scheduled transfers under the first year transfer program. . Fixed LT Account: Transfers into the Fixed LT Account in any 12-month period are limited to the greater of $5,000 or 10% of your policy's accumulated value. There is a limitation on amounts allocated to the Fixed LT Account during any 12-month period of $1,000,000 for all policies of the same owner. For more information on the Fixed Account Option(s), please consult the product prospectus. This illustration does not reflect allocations to either fixed account. DEDUCTIONS AND A Premium Load is deducted from each premium payment. The Accumulated Value is subject to several monthly CHARGES charges: cost of insurance charges, administrative charge, mortality and expense risk charge, and deductions for optional insurance benefits, if present. The surrender charge is equal to a specified amount that is determined by the insured's age and risk classification, the death benefit option selected, the policy face amount, and any face increases. Over time, the surrender charge decreases until it reaches zero at the end of the 120th policy month. For more detailed information about the surrender charge, please see the current prospectus.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver- NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY LOANS/PARTIAL [Any loans or withdrawals illustrated are based on Current Policy Charge Assumptions and might not be WITHDRAWALS available under Guaranteed Policy Charge Assumptions. Policy loans and/or Partial Withdrawals may have an adverse effect on the policyowner's Benefits. This illustration shows a policy loan. Interest is charged on policy loans at an effective annual rate of 4.10% in arrears. The guaranteed interest rate credited to the portion of the Accumulated Value securing the policy loan is 3.10% in policy years 1-10, 3.70% in policy years 11-20 and 3.85% thereafter. This illustration reflects interest credited to the portion of the accumulated value securing the policy loan at a current effective annual rate of 3.10% in policy years 1-10, 3.70% in policy years 11-20 and a current effective annual rate of 4.10% thereafter. Pacific Life & Annuity reserves the right to decrease the current rate credited. For example, we may decrease the rate credited if we believe that it is necessary to maintain the policy loan as a non-taxable distribution. However we will not reduce the effective annual rate credited to less than the guaranteed rate stated above. All values assume premiums and loan interest are paid when due. If a payment is received without being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. The loan is automatically repaid from the Gross Death Benefit at the death of the second insured, resulting in the estimated payment to the beneficiary of the Net Death Benefit illustrated. Upon lapse or surrender, the loan is automatically repaid, resulting in the estimated payment to the policyowner of the Net Surrender Value. The automatic repayment of the loan during a lapse or surrender will cause the recognition of taxable income, to the extent that the Net Surrender Value plus the amount of the repaid loan exceeds the policyowner's basis in the policy. The policy will lapse if the Accumulated Value less Policy Debt is insufficient to cover the current monthly deduction for charges on any monthly payment date, and a grace period expires without the policyowner making a sufficient payment. If the policy is insufficiently funded in relation to the income stream from the policy, the policy can lapse prematurely and result in a significant income tax liability to the policyowner in the year in which the lapse occurs. A policyowner should be careful to structure a policy so that the policy will not lapse prematurely under various market conditions or scenarios as a result of withdrawals and/or loans taken from the policy. The policyowner should also request at least annually a revised illustration that reflects current policy values to assure the policy is sufficiently funded to support a desired income stream, if any.] FUTURE ACTION If you want to change the premium amount that you are billed, you must request the change in writing. REQUIRED BY POLICYOWNER Policy loans or withdrawals are illustrated. This illustration assumes that a written request is submitted by the policyowner at the start of the policy year indicated to receive the partial withdrawal or loan illustrated, unless the policyowner is eligible for and elects the Automated Income Option (AIO). COLUMN Accumulated The total value of the amounts in the Investment Options for the Policy as well as any amount DEFINITIONS AND Value set aside in the Loan Account, including any accrued earned interest, as of the end of the KEY TERMS policy year. Age (BOY) The insured's age as of his or her nearest birthday as of the policy date, increased by the number of complete policy years elapsed.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY BOY Beginning of year. Cash Surrender The Accumulated Value minus any applicable Surrender Charge as of the end of the Value (EOY) policy year. Cum. Premium The illustrated premiums paid each year accumulated at a hypothetical rate of return Plus 5% of 5%. "Current Policy Reflect current policy charges at the hypothetical gross earnings rate(s). Charges" columns EOY End of year. Estimated Tax on Estimated dollar amount of any tax that may be due as a result of a policy loan or Disbursements partial withdrawal. Face Amount The minimum death benefit for so long as the policy remains in force. The face amount may be increased or decreased under certain circumstances. Fixed Account An account that is part of Pacific Life & Annuity's general account to which all or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. Fixed LT An account that is part of Pacific Life & Annuity's general account to which all or Account a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. "Guaranteed Reflect maximum policy charges at 0% hypothetical gross investment return and at an Policy Charges" assumed hypothetical gross earnings rate. columns Material Change IRC 7702A describes the 7-Pay Test and also provides that a Material Change will cause the 7-Pay Test period to start over. A Material Change may occur when there is an increase in benefits, depending on the amount of cumulative premiums paid into the policy at that time. In addition, a Material Change will occur if certain policy guarantees change (e.g. a change in rating class). Net Annual Loan The loan amount taken in cash from a policy. This does not include loans taken to (BOY) pay loan interest. Net Cash Cash Surrender Value after deducting any outstanding loan amount. Surrender Value Net Death The amount payable upon the second insured's death. The death benefit proceeds Benefit (EOY) are always reduced by any outstanding loan balance and increased by any applicable rider benefits.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver- NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Partial A partial withdrawal of a portion of the Net Cash Surrender Value. All illustrated Withdrawal partial withdrawals are based on current policy charges and hypothetical gross (BOY) earnings rate assumptions and may not be available if actual experience is different from the assumptions. Premium Outlay Annualized premiums that are the sum of the periodic payments you plan to make each year. Variable A separate account of Pacific Life & Annuity or a subaccount of such a separate Investment account, which is used only to support the variable death benefits and policy values Options of variable life insurance policies, and the assets of which are segregated from the Pacific Life & Annuity's general account and our other separate accounts. TAX INFORMATION Although the information in this illustration is based on our understanding of the Internal Revenue Code (IRC) and on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be obtained from your own counsel or other tax advisor. The following tax rates have been used to estimate your taxes, if any, due to a policy loan or partial withdrawal: Assumed Income Tax Rate Start End Rate 1 65 31.00% Death Proceeds: Death benefit proceeds from a life insurance policy are generally excludable from the beneficiary's gross income for income tax purposes. Guideline Premium Test: A life insurance policy will qualify as life insurance under IRC Section 7702 if it meets one of two alternative tests. This illustration uses the Guideline Premium Test which requires that the sum of the premiums paid reduced by non-taxable partial withdrawals and non-taxable cash dividends at any time does not exceed the greater of the guideline single premium or the sum of the guideline level premiums at such time, and the death benefit payable under the policy at any time is at least equal to an applicable percentage of the accumulated value (the "cash value corridor test"). For the policy being illustrated here, the Guideline Single Premium at issue is $327,996.20 and the Guideline Level Premium at issue is $31,711.40 per year. Failure to qualify as life insurance will have adverse tax consequences. Withdrawals/Loans: Interest credited to the accumulated value of a life insurance policy is generally tax- deferred and may be taxable at the time of partial withdrawal, surrender or lapse. Assuming the life insurance policy is not a MEC (as described below), partial withdrawals are taxed under the "cost recovery rule" and are generally taxable only to the extent the partial withdrawal exceeds the cost basis of the policy. Basis equals the gross premiums paid less prior non-taxable partial withdrawals and non-taxable cash dividends. For a life insurance policy that is not a Modified Endowment Contract as defined in IRC Sec. 7702A: Withdrawals in the first 15 policy years may be taxable under IRC 7702(f)(7)(B); after 15 years, withdrawals up to policy tax basis are not taxable; and policy loans are not taxable provided that the policy remains in force until the insured dies. Withdrawals and policy loans may reduce policy values and death benefits.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY- GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY If a life insurance policy loan is still outstanding when a policy is surrendered or lapses, the loan is automatically repaid from policy values. This will result in taxable income to the extent the cash surrender value plus the amount of the repaid loan exceeds the cost basis of the policy. Any tax estimate(s) included in this illustration does not include an estimate of this tax. If a life insurance policy loan is still outstanding at the time of death, the loan is automatically repaid from the policy's death benefit. This use of the death benefit to repay a policy loan does not cause the recognition of taxable income. Modified Endowment Contracts: As defined in IRC Section 7702A, a modified endowment contract (MEC) is a life insurance policy in which the cumulative premium payments (less non-taxable partial withdrawals and non- taxable cash dividends) since the policy effective date exceeds, at any time during the first seven policy years, the cumulative total of the Seven-Pay Premiums (the 7-pay test). The initial annual Seven-Pay Premium limit on the policy being illustrated here is $79,505.37. Generally, once a policy is a MEC, it is always a MEC. However, if premiums in excess of the Seven-Pay Premium limit are paid, the MEC status can be avoided if such premium payments, plus interest (which is taxable), are returned to the policyowner within 60 days after the end of the 'measuring year' in which the premium payment was made. For this purpose, the 'measuring year' is the same as a policy year, except that, if the policy has a Material Change then the 'measuring year' will run between anniversaries of the Material Change date instead. Note, if a Material Change occurs on a date other than a policy anniversary, the specific timing of the 60-day window may change. Distributions from a MEC, either a partial withdrawal, a cash dividend, or loan, are taxed to the extent there is a gain in the policy and may be subject to additional penalties. Distributions taken from a policy during the two years prior to the policy becoming a MEC will be treated as taxable under MEC rules in the year the policy becomes a MEC. This illustration does not reflect this taxation process. If there is a "material change" in the terms or benefits of the policy, the 7-pay test will be applied as if this is a new policy at the date of the material change. Based on our understanding of the Internal Revenue Code and the assumptions in this illustration, THIS POLICY WOULD NOT BECOME A MEC. PREMIUM LIMITS Initial Guideline Single Premium: $327,996.20 SUMMARY Initial Guideline Level Premium: $ 31,711.40 Initial Seven Pay Premium: $ 79,505.37 When the death benefit is greater than the face amount due to accumulated value growth, payment of additional premium will be subject to approval. POLICY FREE LOOK There is a free look right in the policy, which provides that you may return it within 10 days after you RIGHT receive it. You need only deliver it to Pacific Life & Annuity Company or to the agent who delivered the policy to you. In such case, the policy will be deemed void from the beginning and Pacific Life & Annuity Company will refund the premiums paid. If the policy is issued as a replacement of existing coverage, the free look period is 60 days and Pacific Life & Annuity Company will refund the policy value plus any charges and loads which were deducted.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Proposed Insured #1: Mr. SEP-NY 12 Weighted Avg Death Benefit Option = Level Presented By: Male, Age 55 Total Initial Face Amount = 1,500,000 PL agent Select Nonsmoker Premium Payment Interval = Annual 12535 Insurance Dr Proposed Insured #2: Mrs. Insured Female, Age 55 Select Nonsmoker Summary Page - ------------------------------------------------------------------------------------------------------------------------------------ Current Policy Charges (1) Guaranteed Policy Charges (2) Assuming Hypothetical Gross Assuming Hypothetical Gross Assuming Hypothetical Gross Annual Investment Return of Annual Investment Return of Annual Investment Return of 12.00% (11.21% Net) 0.00% (-0.71% Net) 12.00% (11.21% Net) ------------------------------------------------------------------------------------------------- [Net Loans Net Net Net Net Net Net Planned Premiums and With- Accum'd Surr'r Death Accum'd Surr'r Death Accum'd Surr'r Death Annual Plus 5% drawals Value Value Benefit Value Value Benefit Value Value Benefit Yr Premium Interest (BOY)] (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) (EOY) - ------------------------------------------------------------------------------------------------------------------------------------ 1 31,711 33,297 0 30,298 6,907 1,500,000 26,895 3,504 1,500,000 30,297 6,906 1,500,000 2 31,711 68,259 0 63,437 42,645 1,500,000 53,118 32,326 1,500,000 63,432 42,640 1,500,000 3 31,711 104,969 0 99,670 81,477 1,500,000 78,643 60,450 1,500,000 99,658 81,465 1,500,000 4 31,711 143,514 0 139,280 123,686 1,500,000 103,441 87,847 1,500,000 139,257 123,663 1,500,000 5 31,711 183,987 0 182,579 169,584 1,500,000 127,481 114,486 1,500,000 182,540 169,545 1,500,000 6 31,711 226,483 0 229,906 219,510 1,500,000 150,724 140,328 1,500,000 229,846 219,450 1,500,000 7 31,711 271,104 0 281,628 273,831 1,500,000 173,111 165,314 1,500,000 281,540 273,743 1,500,000 8 31,711 317,956 0 338,143 332,945 1,500,000 194,564 189,366 1,500,000 338,019 332,821 1,500,000 9 31,711 367,151 0 399,877 397,278 1,500,000 214,977 212,378 1,500,000 399,708 397,109 1,500,000 10 31,711 418,806 0 467,530 467,530 1,500,000 234,228 234,228 1,500,000 467,089 467,089 1,500,000 15 31,711 718,501 0 968,031 968,031 1,500,000 327,089 327,089 1,500,000 952,897 952,897 1,500,000 20 31,711 1,100,996 0 1,830,903 1,830,903 1,959,066 365,666 365,666 1,500,000 1,775,731 1,775,731 1,900,032 25 31,711 1,589,168 0 3,344,908 3,344,908 3,512,153 284,945 284,945 1,500,000 3,188,979 3,188,979 3,348,428 30 31,711 2,212,212 0 5,930,604 5,930,604 6,227,134 ## ## ## 5,512,324 5,512,324 5,787,941 35 31,711 3,007,393 0 10,321,664 10,321,664 10,837,748 9,219,922 9,219,922 9,680,918 ## - Additional premiums are required to maintain the requested benefits. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. The 'Net Surrender Value' column is equal to the accumulated value, less any policy debt and less any surrender charges. The 'Net Death Benefit' column is the policy death benefit less any policy debt. 1 - The policy values under the Current Policy Charges heading reflect current policy charges, current cost of insurance rates, current mortality and expense charges and the hypothetical gross earnings rate assumption described in the section entitled Gross Hypothetical Returns. Current policy charges and cost of insurance rates are subject to change. Policy values will vary from those illustrated if actual rates differ from those assumed. Current cost of insurance rates are not dependent upon future improvements in underlying mortality. 2 - The policy values under the Guaranteed Policy Charges heading assume maximum cost of insurance rates.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Important Information About Your Illustration - --------------------------------------------------------------------------------------------------------------------------- THIS IS AN This is an illustration and not a contract. Although the information contained in this illustration ILLUSTRATION, is based on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such NOT A CONTRACT advice should be obtained from the applicant's own counsel or other advisor. This illustration is prepared for presentation in the state of NY. Death Benefit Option ILLUSTRATED BENEFITS: Start End Option 1 65 Level Base Policy Face Amount Start End Amount 1 65 1,500,000 PREMIUM Illustrated periodic premium payments are assumed to be made one time per year at the beginning of each FREQUENCY: premium payment interval. ANNUAL TIMING OF All values assume premiums and loan payment interest are paid when due. If a payment is received without PAYMENTS being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. All values except premiums, loans, loan interest and withdrawals are values at the end of the policy year. GROSS You have selected to have your accumulated value allocated to the variable investment options. HYPOTHETICAL RETURNS Hypothetical Gross Earnings Rate Start End Gross Net 1 65 12.00% 11.21%
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY The hypothetical rates of return and values shown are illustrative only and should not be deemed as a representation of past or future investment results. The illustrated policy values might not be achieved if actual rates of return, policy charges, premium amount or frequency differ from those assumed. Actual rates of return may be more or less than those shown and will depend on a number of factors including the investment allocations made to the variable investment options by the policyowner and the experience of those investment options. No representation can be made by Pacific Life & Annuity, the Separate Account, or the underlying Fund that these hypothetical rates of return can be achieved for any one year or sustained over any period of time. The gross annual earnings rate assumption is after brokerage expenses and any foreign taxes. A portfolio's foreign investment may be subject to foreign taxes. Foreign taxes from interest and dividend income are treated as a deduction from relevant income for accounting purposes rather than an expense. SUB-ACCOUNT This illustration assumes that all net premiums (after deduction of premium load) have been ALLOCATION allocated to the variable investment options. You have requested that this illustration reflect your selection of investment options. The amounts shown for the Death Benefits, Accumulated Values and Cash Surrender Values in this illustration reflect your selection of investment options and the underlying portfolios' annualized fund expenses (excluding any foreign taxes) incurred by the portfolios for the periods ending December 31, 2000 adjusted to reflect a decrease in fees for certain operating expenses.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Portfolio Investment Operating Advisory Fee Expenses Aggressive Equity 0.80% 0.04% Aggressive Growth 1.00% 0.06% Blue Chip 0.95% 0.06% Capital Opportunities 0.80% 0.06% Diversified Research 0.90% 0.08% Emerging Markets 1.10% 0.20% Equity 0.65% 0.04% Equity Income 0.95% 0.10% Equity Index 0.25% 0.04% Financial Services 1.10% 0.10% Focused 30 0.95% 0.10% Global Growth 1.10% 0.19% Growth LT 0.75% 0.04% Health Sciences 1.10% 0.10% High Yield Bond 0.60% 0.04% I-Net Tollkeeper 1.40% 0.06% Inflation Managed 0.60% 0.02% International Large-Cap 1.05% 0.12% International Value 0.85% 0.11% Large-Cap Core 0.65% 0.04% Large-Cap Value 0.85% 0.05% Managed Bond 0.60% 0.04% Mid-Cap Growth 0.90% 0.06% Mid-Cap Value 0.85% 0.03% Money Market 0.34% 0.04% Multi-Strategy 0.65% 0.04% REIT 1.10% 0.04% Research 1.00% 0.10% Small-Cap Equity 0.65% 0.04% Small-Cap Index 0.50% 0.10% Strategic Value 0.95% 0.10% Technology 1.10% 0.08% Telecommunications 1.10% 0.08% You have selected allocations in the investment options that reflect the weighted annualized expenses of all the available underlying portfolios as of December 31, 2000. The annualized expenses of the underlying portfolios weighted according to your selection is equivalent to an annual rate of 0.66% for investment advisory fees and 0.05% for operating expenses (after any offset for custodian credits and excluding any foreign taxes) which amounts to a total of 0.71%. The investment advisory fees and net operating expenses for the underlying portfolios reflect fees and expenses incurred by the portfolios for the periods ending December 31, 2000. The operating expenses for Aggressive Growth, Blue Chip, Capital Opportunities, Equity Income, Financial Services, Global Growth, Health Sciences, Mid-Cap Growth, Research, Technology, and Telecommunications are estimated. The Inflation Managed portfolio was formerly called the Government Securities portfolio. The Large-Cap Core portfolio was formerly called the Equity Income portfolio.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Although some portfolios may have names or investment objectives that resemble retail mutual funds managed by the portfolio manager, these portfolios will not have the same underlying holdings or performance. Please note: Net Premiums and Policy Accumulated Value may be invested in up to twenty (20) investment options at one time. The annualized expenses for all available portfolios for the periods ending December 31, 2000 reflect an average daily investment advisory fee equivalent to an annual rate of 0.85% of the aggregate average daily net assets of the fund. They also reflect net operating expenses (after any offset for custodian credits and excluding any foreign taxes) at an annual rate of 0.07% of the aggregate average daily net assets of the portfolios. The total aggregate annualized expenses for the periods ending December 31, 2000 (including investment advisory fees and excluding any foreign taxes) is 0.92%. NET ANNUAL After deduction of the investment advisory fees and other operating expenses, illustrated gross RETURN annual investment returns of 0% and 12.00% correspond to approximate net annual rates of return of -0.71% and 11.21% respectively. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values reflect a non-guaranteed persistency credit of 0.15% beginning in year 16, increasing to 0.25% in year 21. This persistency credit is applied at the end of each policy year, based on the average annual unloaned policy accumulated value for the year. The gross and net earnings rates shown on this illustration do not reflect the impact of this credit. For the effects on the policy without this persistency credit, please refer to the guaranteed policy charge columns in the illustration. The amounts shown for Death Benefits, Accumulated Values and Cash Surrender Values also reflect the fact that the net investment return on the variable investment options is lower than the gross return of the assets as a result of the charges levied against the account. FIXED ACCOUNT Net premiums or Accumulated Value may also be allocated to a choice of two fixed options: Fixed OPTION(S) Account and Fixed LT Account. At the beginning of each year, a current rate will be declared and guaranteed for that year. The guaranteed minimum annual interest rate on amounts allocated to the Fixed Account and Fixed LT Account is 3.00%. The current rate is set at Pacific Life & Annuity's discretion and is likely to change from year to year but will never be less than the guaranteed rate. Our ability to pay these guarantees is backed by our financial strength as a company. There are limitations on transferring in and out of the Fixed Account and Fixed LT Account: . You can make transfers from the variable investment options to the fixed options only in the policy month right before each policy anniversary. . You can only make one transfer from each Fixed Account option in any 12-month period, except if you have signed up for the first year transfer program.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY . Currently, the company has waived the restrictions for transfers from the Fixed LT Account option during the first policy year. You will be permitted to transfer any amount out of the Fixed LT Account at any time during the first twelve policy months. We reserve the right to discontinue this program at any time. However, if the program is in effect on the date you sign the application for your policy, the waiver on transfer restrictions will remain in effect for your first policy year. After the first policy year, you can only transfer up to the greater of $5,000 or 10% of your policy's accumulated value in the Fixed LT Account in any 12-month period. . Fixed Account: Transfers into the Fixed Account in any 12-month period are limited to the greater of $5,000 or 25% of your policy's accumulated value, except for scheduled transfers under the first year transfer program. . Fixed LT Account: Transfers into the Fixed LT Account in any 12-month period are limited to the greater of $5,000 or 10% of your policy's accumulated value. There is a limitation on amounts allocated to the Fixed LT Account during any 12-month period of $1,000,000 for all policies of the same owner. For more information on the Fixed Account Option(s), please consult the product prospectus. This illustration does not reflect allocations to either fixed account. DEDUCTIONS AND A Premium Load is deducted from each premium payment. The Accumulated Value is subject to several CHARGES monthly charges: cost of insurance charges, administrative charge, mortality and expense risk charge, and deductions for optional insurance benefits, if present. The surrender charge is equal to a specified amount that is determined by the insured's age and risk classification, the death benefit option selected, the policy face amount, and any face increases. Over time, the surrender charge decreases until it reaches zero at the end of the 120th policy month. For more detailed information about the surrender charge, please see the current prospectus.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY LOANS/PARTIAL [Any loans or withdrawals illustrated are based on Current Policy Charge Assumptions and might not be WITHDRAWALS available under Guaranteed Policy Charge Assumptions. Policy loans and/or Partial Withdrawals may have an adverse effect on the policyowner's Benefits. This illustration shows a policy loan. Interest is charged on policy loans at an effective annual rate of 4.10% in arrears. The guaranteed interest rate credited to the portion of the Accumulated Value securing the policy loan is 3.10% in policy years 1-10, 3.70% in policy years 11-20 and 3.85% thereafter. This illustration reflects interest credited to the portion of the accumulated value securing the policy loan at a current effective annual rate of 3.10% in policy years 1-10, 3.70% in policy years 11-20 and a current effective annual rate of 4.10% thereafter. Pacific Life & Annuity reserves the right to decrease the current rate credited. For example, we may decrease the rate credited if we believe that it is necessary to maintain the policy loan as a non-taxable distribution. However we will not reduce the effective annual rate credited to less than the guaranteed rate stated above. All values assume premiums and loan interest are paid when due. If a payment is received without being designated as a premium payment or loan payment, and there is an outstanding loan, the payment will be applied as a loan payment. The loan is automatically repaid from the Gross Death Benefit at the death of the second insured, resulting in the estimated payment to the beneficiary of the Net Death Benefit illustrated. Upon lapse or surrender, the loan is automatically repaid, resulting in the estimated payment to the policyowner of the Net Surrender Value. The automatic repayment of the loan during a lapse or surrender will cause the recognition of taxable income, to the extent that the Net Surrender Value plus the amount of the repaid loan exceeds the policyowner's basis in the policy. The policy will lapse if the Accumulated Value less Policy Debt is insufficient to cover the current monthly deduction for charges on any monthly payment date, and a grace period expires without the policyowner making a sufficient payment. If the policy is insufficiently funded in relation to the income stream from the policy, the policy can lapse prematurely and result in a significant income tax liability to the policyowner in the year in which the lapse occurs. A policyowner should be careful to structure a policy so that the policy will not lapse prematurely under various market conditions or scenarios as a result of withdrawals and/or loans taken from the policy. The policyowner should also request at least annually a revised illustration that reflects current policy values to assure the policy is sufficiently funded to support a desired income stream, if any. FUTURE ACTION If you want to change the premium amount that you are billed, you must request the change in REQUIRED BY writing. POLICYOWNER Policy loans or withdrawals are illustrated. This illustration assumes that a written request is submitted by the policyowner at the start of the policy year indicated to receive the partial withdrawal or loan illustrated, unless the policyowner is eligible for and elects the Automated Income Option (AIO). COLUMN DEFINITIONS Accumulated The total value of the amounts in the Investment Options for the Policy as well AND KEY TERMS Value as any amounts set aside in the Loan Account, including any accrued earned interest, as of the end of the policy year. Age (BOY) The insured's age as of his or her nearest birthday as of the policy date, increased by the number of complete policy years elapsed.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY BOY Beginning of year. Cash Surrender The Accumulated Value minus any applicable Surrender Charge as of the end of the Value (EOY) policy year. Cum. Premium The illustrated premiums paid each year accumulated at a hypothetical rate of Plus 5% return of 5%. "Current Policy Reflect current policy charges at the hypothetical gross earnings rate(s). Charges" columns EOY End of year. Estimated Tax on Estimated dollar amount of any tax that may be due as a result of a policy loan Disbursements or partial withdrawal. Face Amount The minimum death benefit for so long as the policy remains in force. The face amount may be increased or decreased under certain circumstances. Fixed Account An account that is part of Pacific Life & Annuity's general account to which all or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. Fixed LT An account that is part of Pacific Life & Annuity's general account to which all Account or a portion of the net premiums may be allocated for accumulation at a fixed rate of interest (which may not be less than 3.0%) declared by Pacific Life & Annuity. "Guaranteed Reflect maximum policy charges at 0% hypothetical gross investment return and at Policy Charges" an assumed hypothetical gross earnings rate. columns Material Change IRC 7702A describes the 7-Pay Test and also provides that a Material Change will cause the 7-Pay Test period to start over. A Material Change may occur when there is an increase in benefits, depending on the amount of cumulative premiums paid into the policy at that time. In addition, a Material Change will occur if certain policy guarantees change (e.g. a change in rating class). Net Annual Loan The loan amount taken in cash from a policy. This does not include loans taken (BOY) to pay loan interest. Net Cash Cash Surrender Value after deducting any outstanding loan amount. Surrender Value Net Death The amount payable upon the second insured's death. The death benefit proceeds Benefit (EOY) are always reduced by any outstanding loan balance and increased by any applicable rider benefits.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY Partial A partial withdrawal of a portion of the Net Cash Surrender Value. All Withdrawal illustrated partial withdrawals are based on current policy charges and BOY) hypothetical gross earnings rate assumptions and may not be available if actual experience is different from the assumptions. Premium Outlay Annualized premiums that are the sum of the periodic payments you plan to make each year. Variable A separate account of Pacific Life & Annuity or a subaccount of such a separate Investment account, which is used only to support the variable death benefits and policy Options values of variable life insurance policies, and the assets of which are segregated from the Pacific Life & Annuity's general account and our other separate accounts. TAX INFORMATION Although the information in this illustration is based on our understanding of the Internal Revenue Code (IRC) and on certain tax and legal assumptions, it is not intended to be tax or legal advice. Such advice should be obtained from your own counsel or other tax advisor. The following tax rates have been used to estimate your taxes, if any, due to a policy loan or partial withdrawal: Assumed Income Tax Rate Start End Rate 1 65 31.00% Death Proceeds: Death benefit proceeds from a life insurance policy are generally excludable from the beneficiary's gross income for income tax purposes. Guideline Premium Test: A life insurance policy will qualify as life insurance under IRC Section 7702 if it meets one of two alternative tests. This illustration uses the Guideline Premium Test which requires that the sum of the premiums paid reduced by non-taxable partial withdrawals and non-taxable cash dividends at any time does not exceed the greater of the guideline single premium or the sum of the guideline level premiums at such time, and the death benefit payable under the policy at any time is at least equal to an applicable percentage of the accumulated value (the "cash value corridor test"). For the policy being illustrated here, the Guideline Single Premium at issue is $327,996.20 and the Guideline Level Premium at issue is $31,711.40 per year. Failure to qualify as life insurance will have adverse tax consequences. Withdrawals/Loans: Interest credited to the accumulated value of a life insurance policy is generally tax-deferred and may be taxable at the time of partial withdrawal, surrender or lapse. Assuming the life insurance policy is not a MEC (as described below), partial withdrawals are taxed under the "cost recovery rule" and are generally taxable only to the extent the partial withdrawal exceeds the cost basis of the policy. Basis equals the gross premiums paid less prior non-taxable partial withdrawals and non-taxable cash dividends. For a life insurance policy that is not a Modified Endowment Contract as defined in IRC Sec. 7702A: Withdrawals in the first 15 policy years may be taxable under IRC 7702(f)(7)(B); after 15 years, withdrawals up to policy tax basis are not taxable; and policy loans are not taxable provided that the policy remains in force until the insured dies. Withdrawals and policy loans may reduce policy values and death benefits.
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[LOGO OF PACIFIC LIFE Pacific Select Estate Preserver - NY - GPT - Life Insurance Illustration & ANNUITY COMPANY] Last Survivor Flexible Premium Variable Universal Life Insurance Policy Form #P0156NY - For Presentation in NY If a life insurance policy loan is still outstanding when a policy is surrendered or lapses, the loan is automatically repaid from policy values. This will result in taxable income to the extent the cash surrender value plus the amount of the repaid loan exceeds the cost basis of the policy. Any tax estimate(s) included in this illustration does not include an estimate of this tax. If a life insurance policy loan is still outstanding at the time of death, the loan is automatically repaid from the policy's death benefit. This use of the death benefit to repay a policy loan does not cause the recognition of taxable income. Modified Endowment Contracts: As defined in IRC Section 7702A, a modified endowment contract (MEC) is a life insurance policy in which the cumulative premium payments (less non-taxable partial withdrawals and non-taxable cash dividends) since the policy effective date exceeds, at any time during the first seven policy years, the cumulative total of the Seven-Pay Premiums (the 7-pay test). The initial annual Seven-Pay Premium limit on the policy being illustrated here is $79,505.37. Generally, once a policy is a MEC, it is always a MEC. However, if premiums in excess of the Seven-Pay Premium limit are paid, the MEC status can be avoided if such premium payments, plus interest (which is taxable), are returned to the policyowner within 60 days after the end of the 'measuring year' in which the premium payment was made. For this purpose, the 'measuring year' is the same as a policy year, except that, if the policy has a Material Change then the 'measuring year' will run between anniversaries of the Material Change date instead. Note, if a Material Change occurs on a date other than a policy anniversary, the specific timing of the 60-day window may change. Distributions from a MEC, either a partial withdrawal, a cash dividend, or loan, are taxed to the extent there is a gain in the policy and may be subject to additional penalties. Distributions taken from a policy during the two years prior to the policy becoming a MEC will be treated as taxable under MEC rules in the year the policy becomes a MEC. This illustration does not reflect this taxation process. If there is a "material change" in the terms or benefits of the policy, the 7-pay test will be applied as if this is a new policy at the date of the material change. Based on our understanding of the Internal Revenue Code and the assumptions in this illustration, THIS POLICY WOULD NOT BECOME A MEC. PREMIUM LIMITS Initial Guideline Single Premium: $327,996.20 SUMMARY Initial Guideline Level Premium: $31,711.40 Initial Seven Pay Premium: $79,505.37 When the death benefit is greater than the face amount due to accumulated value growth, payment of additional premium will be subject to approval. POLICY FREE LOOK There is a free look right in the policy, which provides that you may return it within 10 days after RIGHT you receive it. You need only deliver it to Pacific Life & Annuity Company or to the agent who delivered the policy to you. In such case, the policy will be deemed void from the beginning and Pacific Life & Annuity Company will refund the premiums paid. If the policy is issued as a replacement of existing coverage, the free look period is 60 days and Pacific Life & Annuity Company will refund the policy value plus any charges and loads which were deducted.
SUMMARY PAGE CONTINUED ON NEXT PAGE Presented by: PL agent For: Mr. SEP-NY 12 Weighted Avg Pacific Life & Annuity Company, 700 Newport Center Drive, Newport Beach, CA 92660 SEPNY - GPT - NonGI Page: 10 Of 10 EX-99.9 12 dex999.txt POWERS OF ATTORNEY EXHIBIT 9 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: March 23, 1999 /s/ DAVID R. CARMICHAEL ------------------------------- David R. Carmichael POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger and Jeffrey S. Puretz his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 6/15/99 /s/ BRIAN D. KLEMENS ------------------------------- Brian D. Klemens POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ AUDREY L. MILFS ------------------------------- Audrey L. Milfs POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 4/7/99 /s/ LYNN C. MILLER ------------------------------- Lynn C. Miller POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ GLENN S. SCHAFER ------------------------------- Glenn S. Schafer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 22 MAR 99 /s/ TC SUTTON ------------------------------- Thomas C. Sutton POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints David R. Carmichael, Sharon A. Cheever, Diane N. Ledger, Jeffrey S. Puretz and Robin Yonis Sandlaufer his/her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution for him/her in his/her name, place, and stead, in any and all Registration Statements applicable to Pacific Select Exec Separate Account of Pacific Life & Annuity Company and Separate Account A of Pacific Life & Annuity Company and any amendments or supplements thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his/her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: 3/23/99 /s/ KHANH T. TRAN ------------------------------- Khanh T. Tran -----END PRIVACY-ENHANCED MESSAGE-----