<![CDATA[Great-West Life & Annuity Insuraance Company]]>
As filed with the Securities and Exchange Commission on February 28, 2014
File Nos. 333-70963; 811-09201
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 28
AND THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21
COLI VUL-2
SERIES ACCOUNT
(Exact Name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East
Orchard Road
Greenwood Village, Colorado 80111
(Address of Depositor’s Principal Executive Offices)
(303) 737-3000
(Depositor’s
Telephone Number)
Mitchell T.G. Graye
President, Chief Executive Officer and Principal Financial Officer
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
8515 East Orchard Road
Greenwood
Village, Colorado 80111
(Name and Address of Agent for Service)
COPIES TO:
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Ann B. Furman, Esq. |
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Beverly A. Byrne, Esq. |
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Carlton Fields Jorden Burt, P.A. |
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Chief Compliance Officer & Legal Counsel, |
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Suite 400 East |
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Financial Services |
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1025 Thomas Jefferson Street, N.W. |
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Great-West Life & Annuity Insurance Company |
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Washington, D.C. 20007-5208 |
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8525 East Orchard Road, 2T3 |
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Greenwood Village, Colorado 80111 |
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Approximate date of proposed public offering: Continuous
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485.
[ ] on pursuant
to paragraph (b)(1)(vii) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a)(1)
of Rule 485.
[X] on May 1, 2014 pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a previously filed
post-effective amendment.
Title of securities being offered: flexible premium variable universal life insurance policies.
Great-West Life & Annuity Insurance Company
A Stock Company
8515
East Orchard Road
Greenwood Village, Colorado 80111
(303) 737-3000
Executive Benefit VUL
II — Prospectus
A Flexible Premium Variable Universal Life Insurance Policy
offered by Great-West Life & Annuity Insurance Company
in connection with its COLI VUL-2 Series Account
This prospectus describes Executive Benefit VUL II, a flexible premium variable universal life insurance policy (the “Policy”)
offered by Great-West Life & Annuity Insurance Company (“Great-West,” “Company,” “we,” “our” or “us”). The Policy is designed for use by corporations and employers to provide life insurance
coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. The Policy is designed to meet the definition of a “life insurance contract” for federal income tax
purposes.
The Policy allows “you,” the Owner, within certain limits to:
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choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change;
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choose the amount and timing of Premium payments, within certain limits; |
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allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment
objectives change; and |
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access your Account Value through loans and partial withdrawals or total surrenders. |
This prospectus contains important information you should understand before purchasing a Policy, including a description of the material
rights and obligations under the Policy. We use certain special terms that are defined in Appendix A. Your Policy and any endorsements are the formal contractual agreement between you and the Company. It is important that you read the Policy and
endorsements which reflect other variations. You should keep this prospectus on file for future reference.
The Policy that we are
currently issuing became available on May 1, 2011. Policies issued before May 1, 2011 are described in a separate prospectus.
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is May 1, 2014
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Table of Contents
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Summary of the Policy and its Benefits
This is a summary of some of the most important features of your Policy. The Policy is more fully described in the remainder of this
prospectus. Please read this prospectus carefully. Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply.
1. Corporate-Owned Variable Life Insurance. We will issue Policies to corporations and employers and to certain individuals to provide
life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We will issue Policies on the lives of prospective Insureds who meet our underwriting standards.
2. The Series Account. We have established a separate account to fund the variable benefits under the Policy. The assets of the Series
Account are insulated from the claims of our general creditors.
3. Premium Payments. You must pay us an Initial Premium to put
your Policy in force. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100.00. Thereafter, you choose the amount and timing of
Premium payments, within certain limits.
4. Fixed Account. You may allocate some or all of your net payments and/or make Transfers
from the Sub-Accounts to the Fixed Account. The Fixed Account is part of our General Account. We own the assets in the General Account, and we use these assets to support our insurance and annuity obligations other than those funded by our separate
accounts. These Fixed Account assets are subject to our general liabilities from business operations. Subject to applicable law, we have sole discretion over investment of the Fixed Account assets. We bear the full investment risk for all amounts
allocated or transferred to the Fixed Account.
We guarantee that the amounts allocated to the Fixed Account will be credited interest at
a net effective annual interest rate of at least the minimum interest rate indicated in your Policy. At our discretion, we will review the interest rate at least once a year. We may reset the interest rate monthly. The Fixed Account is not affected
by the investment performance of the Sub-Accounts. Policy value in the Fixed Account will be reduced by the Policy fees and charges we deduct and the effects of any Policy transactions (loans, withdrawals, and Transfers) on your Policy value in the
Fixed Account.
5. Free Look Period. You may return your Policy to us for any reason within ten days of receiving it, or such
longer period as required by applicable state law (in some states, up to 30 days for replacement policies), and depending on state law, receive (i) the greater of your Premiums, less any withdrawals, or your Account Value, or (ii) your
Account Value plus the return of any expense charges deducted. The money you contribute to the Policy will be invested at your direction, except that in some states during your free look period your Premiums will be allocated to the Great-West Money
Market Division.
6. Investment Options and Funds. You may allocate your net Premium payments among the available investment
divisions (“Divisions”) or the Fixed Account.
Each Division invests exclusively in shares of a single Fund. Each Fund has its
own distinct investment objective and policies, which are described in the accompanying prospectuses for the Funds.
You may Transfer
amounts from one Division to another or the Fixed Account, subject to the restrictions described herein.
7. Death Benefit. You may choose from
among two death benefit options –
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a fixed benefit equal to the Total Face Amount of your Policy; or |
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a variable benefit equal to the sum of the Total Face Amount and your Account Value. |
For each option, the death benefit may be greater if necessary to satisfy federal tax law requirements.
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We will deduct any outstanding Policy Debt and unpaid Policy charges before we pay a death
benefit. In addition, prior partial withdrawals may reduce the Death Benefit Proceeds under the first option.
At any time, you may
increase or decrease the Total Face Amount, subject to our approval and other requirements set forth in the Policy.
After the first Policy Year, you may
change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect –
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the investment performance of the Divisions you select; |
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the value of the Fixed Account. |
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any Policy loans or partial withdrawals; |
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your Loan Account balance; and |
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the charges we deduct under the Policy. |
9. Accessing Your Account Value. You may borrow from us using your Account Value as collateral. Loans may be treated as taxable income
if your Policy is a “modified endowment contract” (“MEC”) for federal income tax purposes and you have had positive net investment performance.
There are no surrender charges associated with your Policy. You may surrender your Policy for its Cash Surrender Value plus return of expense
charge, if applicable. The return of expense charge is a percentage of your Account Value and is described in greater detail on page .
You may
withdraw a portion of your Account Value at any time while your Policy is in force.
A withdrawal may reduce your death benefit.
We will charge an administrative fee not greater than $25 per withdrawal on partial withdrawals after the first in a Policy Year.
10. Supplemental Benefits. The following optional riders are available –
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term life insurance; and |
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change of Insured (not available to individual Owners). |
We will deduct the cost, if any, of the rider(s) from your Account Value on a monthly basis.
11. Paid-Up Life Insurance. If the Insured reaches Attained Age 121 and your Policy is in force, the Account Value, less Policy Debt,
will be applied as a single Premium to purchase “paid-up” insurance. Your Account Value will remain in the Series Account allocated to the Divisions or the Fixed Account in accordance with your instructions. The death benefit under this
paid-up insurance will be fixed by the Internal Revenue Code of 1986, as amended (“Code”) for Insureds age 99. As your Account Value changes based on the investment experience of the Divisions, the death benefit will increase or decrease
accordingly.
12. Reinstatement. If your Policy terminates due to insufficient value, we will reinstate it within three years at
your Request, subject to certain conditions.
13. Surrenders. You may surrender your Policy for its Cash Surrender Value at any
time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate.
If you
withdraw part of the Cash Surrender Value, your Policy’s death benefit may be reduced and you may incur taxes and tax penalties.
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14. Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time
while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account.
The Death Benefit Proceeds and your Account Value will be reduced by the amount of any partial withdrawals.
15. Policy Loans. You may borrow from us using your Account Value as collateral. You may Request a Policy loan of up to 90% of your
Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made.
The minimum Policy loan amount is $500.
16. Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time. Each increase or
decrease in the Total Face Amount must be at least $25,000. Minimum face amount is $100,000.
17. Target Premium. Your target
Premium is actuarially determined and will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) and equals the maximum Premium payable such that the Policy remains
compliant with the Code. The target Premium is used to determine your expense charged applied to the Premium and the sales compensation we pay. Payment of the target premium does not guarantee that your Policy will not lapse, and you may need to pay
additional Premiums to keep your Policy in force. Each increase to the Total Face Amount is considered to be a new segment to the Policy. Each segment will have a separate target Premium associated with it.
18. State Variations. Policies issued in your state may provide different features and benefits from, and impose different costs than,
those described in this prospectus because of state law variations. These differences include, among other things, free look rights, issue age limitations, and the general availability of riders. This prospectus describes the material rights and
obligations of an Owner, and the maximum fees and charges for all Policy features and benefits are set forth in the fee table of this prospectus. See your policy for specific variations because any such state variations will be included in your
policy or in riders or endorsements attached to your policy. See your agent or contact us for specific information that is applicable to your state.
Policy Risks
1. Account Value Not Guaranteed. Your Account Value is not guaranteed. Your Account Value fluctuates based on
the performance of the investment options you select. The investment options you select may not perform to your expectations. Your Account Value may also be affected by charges under your Policy.
2. Not Suitable as Short-Term Savings Vehicle. The Policy is designed for long-term financial planning. Accordingly, you should not
purchase the Policy if you need access to the Account Value within a short time. Before purchasing a Policy, consider whether the long-term nature of the Policy is consistent with the purposes for which it is being considered.
3. Risk of Contract Lapse. Your Policy may terminate if your Account Value at the beginning of any Policy Month is insufficient to pay
the Policy’s monthly charges.
If your Policy would terminate due to insufficient value, we will send you notice and allow you a 61-day grace period.
If, within the grace period, you do not make a Premium payment sufficient to cover all accrued and unpaid charges and deductions, your
Policy will terminate at the end of the grace period without further notice.
4. Limitations on Withdrawals. Partial withdrawals of
Account Value are permitted at any time the Policy is in force. As noted above, the amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A maximum administrative fee
of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. Please note that withdrawals reduce your Account Value and your Death Benefit Proceeds. In addition, withdrawals may have tax
consequences.
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5. Limitations on Transfers. Subject to our rules as they may exist from time to time,
you may at any time Transfer to another Division all or a portion of the Account Value allocated to a Division. In addition, we do not intend to enforce the restrictions on Transfers set forth in your Policy except in cases of identified market
timing unless the Sub-Account has additional restrictions that are noted in the respective Fund’s prospectus. See “Market Timing & Excessive Trading” on page . Certain limitations apply to Transfers into and out of the Fixed
Account. See “Fixed Account Transfers” on page .
6. Limitations or Charges on Surrender of Policy. You may
surrender your Policy for its Cash Surrender Value at any time while the Insured is living. Upon surrender of your Policy, the insurance coverage and all other benefits under the Policy will terminate.
There are no surrender charges associated with your Policy. However, the surrender of your Policy may have tax consequences.
7. Risks of Taking a Policy Loan. As noted above, you may Request a Policy loan of up to 90% of your Account Value, decreased by the
amount of any outstanding Policy Debt on the date the Policy loan is made. The minimum Policy loan amount is $500.
Taking a Policy loan
may increase the risk that your Policy will lapse, will reduce your Account Value, and may reduce the death benefit. In addition, if your Policy is a MEC for tax purposes, taking a Policy loan may have tax consequences.
8. Adverse Tax Consequences. Your Policy is structured to meet the definition of a life insurance contract under the Code. Current
federal tax law generally excludes all death benefits from the gross income of the Beneficiary of a life insurance policy. Generally, you are not taxed on any increase in the Account Value until it is withdrawn, but are taxed on surrender proceeds
and the proceeds of any partial withdrawals if those amounts, when added to all previous non-taxable distributions, exceed the total Premium paid. Amounts received upon surrender or withdrawals in excess of Premiums are treated as ordinary income.
Under certain circumstances, a Policy may become a MEC for federal tax purposes. This may occur if you reduce the Total Face Amount of
your Policy or pay excessive Premiums. We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy to become a MEC without your written permission. We will not invest
any Premium or portion of a Premium that would cause your Policy to become a MEC, but instead will promptly refund the money to you. If you elect to have a MEC contract, you can return the money to us with a signed form of acceptance.
Under current tax law, Death Benefit Proceeds under MECs generally are excluded from the gross income of the Beneficiary. Withdrawals and
Policy loans, however, are treated first as income, to the extent of any gain, and then as a return of Premium. The income portion of the distribution is includable in your taxable income and taxed at ordinary income tax rates. A 10% penalty tax is
also generally imposed on the taxable portion of any amount received before age 59 1⁄2.
Fund Risks
The Policy currently offers several variable investment options, each of which is a Division of the Series Account. Each Division uses its
assets to purchase, at their net asset value, shares of a Fund. The Divisions are referred to as “variable” because their investment experience depends upon the investment experience of the Funds in which they invest.
We do not guarantee that the Funds will meet their investment objectives. Your Account Value may increase or decrease in value
depending on the investment performance of the Funds. You bear the risk that those Funds may not meet their investment objectives. A comprehensive discussion of the risks of each Fund may be found in each Fund’s prospectus, including detailed
information concerning investment objectives, strategies, and their investment risk. You may obtain a copy of the Fund prospectuses without charge by contacting us at 888-353-2654. If you received a summary prospectus for a Fund, please follow
the directions on the first page of the summary prospectus to obtain a copy of the Fund’s prospectus.
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Fee Tables
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table
describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or Transfer cash value between investment options.
Transaction Fees
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When Charge is Deducted |
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Amount Deducted |
| Maximum Expense Charge Imposed on Premium* |
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Upon each Premium payment |
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Maximum: 10% of Premium
Current: 6.0%
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| Sales Load** |
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Upon each Premium Payment. |
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Maximum: 6.5% of Premium
Current: 2.5% of Premium up to target and 1.0% of Premium in
excess of target |
| Premium Tax**
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Upon each Premium payment
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Maximum: 3.5% of Premium
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| Partial Withdrawal Fee |
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Upon partial withdrawal |
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Maximum: $25 deducted from Account
Value for all partial withdrawals after the first made in the same Policy Year. |
| Change of Death Benefit Option Fee |
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Upon change of option |
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Maximum: $100 deducted from Account
Value for each change of death benefit option. |
| Transfer Fee |
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At time of Transfer for all Transfers
in excess of 12 made in the same
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Maximum: $10/Transfer |
| Loan Interest |
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Upon issuance of Policy loan |
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Maximum: the Moody’s Corporate Bond Yield Average – Monthly Average
Corporates |
* The Expense Charge consists of the Sales Load plus the Premium Tax.
** The Sales Load and Premium Tax comprise (and are not in addition to) the Expense Charge.
The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund
fees and expenses.
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Periodic Charges Other Than Fund Operating Expenses
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When Charge is Deducted |
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Amount Deducted |
| Cost of Insurance (per $1000 Net
Amount at Risk)1
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Minimum & Maximum Cost
of Insurance Charge |
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Guaranteed:
Minimum: $0.02 per $1000.
Maximum: $83.33 per $1000.
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| Cost of
Insurance Charge for a 46-year old Male
Non-Smoker, $550,000
Face Amount, Option
1 (Level
Death) |
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Monthly |
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Guaranteed:
$0.21 per $1000. |
| Mortality and Expense Risk Charge2 |
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Monthly |
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Guaranteed: 0.90% (of average
daily net assets) annually.
Current: 0.50% for Policy Years 1-20, and 0.10% thereafter. |
| Service Charge |
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Monthly |
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Maximum: $15/month
Current: $10.00/month, Policy Years 1-3 and $7.50/month, Policy
Years 4+ |
1 The cost of insurance will vary based on individual characteristics. The cost of insurance shown in the table is a sample
illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance by contacting us at 888-353-2654.
2 The mortality and expense risk is accrued daily and deducted on the first day of each Policy month by cancelling accumulation
units pro-rata against all Sub-Accounts.
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Supplemental Benefit Charges
Currently, we are offering the following supplemental
optional riders. The charges for the rider you select are deducted monthly
from your Account Value as part of the Monthly Deduction described on page of this prospectus. The benefits provided under each
rider are summarized in “Other
Provisions and Benefits” beginning on page below. |
| Change of Insured Rider* |
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Upon change of Insured |
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Minimum: $100 per change.
Maximum: $400 per change. |
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Change of Insured
Rider for a
46-year old Male Non-Smoker,
$550,000 Face Amount,
Option 1 (Level
Death)* |
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$400 per change. |
| Term Life Insurance Rider |
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Monthly |
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Guaranteed:
Minimum COI: $0.02 per $1000.
Maximum COI: $83.33 per $1000.
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Term Life Insurance
Rider for a
46-year old Male
Non-Smoker,
$550,000 Face
Amount, Option 1
(Level Death) |
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Monthly |
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Guaranteed:
$0.21 per $1000. |
*/ Not available for individual Owners.
The next table shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time
that you own the Policy. More detail concerning each Fund’s fee and expenses is contained in the prospectus for each Fund.
Total Annual Fund Operating Expenses1
(Expenses that are deducted from Fund
assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses)
[TO BE COMPLETED BY AMENDMENT]
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Minimum |
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Maximum |
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Annual Fund Operating Expenses |
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THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS, WE HAVE NOT INDEPENDENTLY VERIFIED THE
ACCURACY OF THE INFORMATION.
1 Expenses are shown as a percentage of a
Fund’s average net assets as of December 31, 2013. The expenses above include fees and expenses incurred indirectly by the Great-West Profile Funds and the Great-West Lifetime Funds as a result of investing in shares of acquired funds, if
any. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Funds have agreed to waive their fees and/or reimburse the Funds’ expenses
in order to keep the expenses below specified limits. In some cases, these expense limitations may be contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. Please see the prospectus for each Fund for
information regarding the expenses for each Fund, including fee reduction and/or expense reimbursement arrangements, if applicable. The management fees and other expenses of the Funds are more fully described in the Fund prospectuses.
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Description of Depositor, Registrant, and Funds
Great-West Life & Annuity Insurance Company
Great-West is a stock life insurance company organized under the laws of the state of Colorado. Our offices are located at 8515 East Orchard
Road, Greenwood Village, Colorado 80111.
We are authorized to do business in 49 states, the District of Columbia, Puerto Rico, U.S.
Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an
indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services
industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on
October
8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
The
Series Account
The Series Account is a segregated asset account of Great-West. We use the Series Account to fund benefits payable
under the Policy. The Series Account may also be used to fund benefits payable under other life insurance policies issued by us.
We own
the assets of the Series Account, which we hold separate and apart from our General Account assets. The income, gains or losses, realized or unrealized, from assets allocated to the Series Account are credited to or charged against the Series
Account without regard to our other income, gains or losses. The income, gains, and losses credited to, or charged against, the Series Account reflect the Series Account’s own investment experience and not the investment experience of
Great-West’s other assets. The assets of the Series Account may not be used to pay any liabilities of Great-West other than those arising from the Policies (and any other life insurance policies issued by us and funded by the Series Account).
In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of
company assets, including Series Account assets that are treated as company assets under applicable income tax law. These benefits, which reduce our overall corporate income tax liability may include dividends received deductions and foreign tax
credits which can be material. We do not pass these benefits through to the Series Account or our other separate accounts, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no
reduction in the dollar amount of dividends that the Series Account receives; and (ii) under applicable income tax law, Owners are not the owners of the assets generating the benefits.
Great-West is obligated to pay all amounts promised to Owners under the Policies (and any other life insurance policies issued by us and
funded by the Series Account).
We will at all times maintain assets in the Series Account with a total market value at least equal to the
reserves and other liabilities relating to the variable benefits under all policies participating in the Series Account.
The Series
Account is divided into Divisions. Each Division invests exclusively in shares of a corresponding Fund. We may in the future add new or delete existing Divisions. The income, gains or losses, realized or unrealized, from assets allocated to each
Division are credited to or charged against that Division without regard to the other income, gains or losses of the other Divisions.
All
amounts allocated to a Division will be used to purchase shares of the corresponding Fund. The Divisions will at all times be fully invested in Fund shares. We maintain records of all purchases and redemptions of shares of the Funds.
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The Investment Options and Funds
The Policy offers a number of Divisions or Sub-Accounts. Each Division invests in a single Fund. Each Fund is a mutual fund registered
under the Investment Company Act of 1940, as amended (the “1940 Act”), or a separate series of shares of such a mutual fund. More comprehensive information, including a discussion of potential risks, is found in the current prospectuses
for the Funds. The fund prospectuses should be read in connection with this prospectus. YOU MAY OBTAIN A PROSPECTUS AND, IF AVAILABLE, A FUND SUMMARY, CONTAINING COMPLETE INFORMATION ON EACH FUND, WITHOUT CHARGE, UPON REQUEST BY CONTACTING US AT
888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund’s prospectus.
Each Fund holds its assets separate from the assets of the other Funds, and each Fund has its own distinct investment objective and policies.
Each Fund operates as a separate investment fund, and the income, gains and losses of one Fund generally have no effect on the investment performance of any other Fund.
The Funds are NOT available to the general public directly. The Funds are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans.
Some of the Funds have been established by investment advisers that manage publicly available mutual funds having similar names and investment
objectives. While some of the Funds may be similar to, and may in fact be modeled after publicly available mutual funds, the Funds are not otherwise directly related to any publicly available mutual fund. Consequently, the investment performance of
publicly available mutual funds and any similarly named Fund may differ substantially.
Payments We
Receive. Some of the Funds’ investment advisers or affiliates may compensate us for providing the administrative, recordkeeping and reporting services they would normally be required to provide for individual shareholders or cost savings
experienced by the investment advisers or affiliates of the Funds. Such compensation is typically a percentage of Series Account assets invested in the relevant Fund and generally may range up to 0.35% of net assets. GWFS Equities, Inc.
(“GWFS”), a broker-dealer and subsidiary of Great-West and the principal underwriter and distributor of the Policy, may also receive Rule 12b-1 fees (ranging up to 0.25%) directly from certain Funds for providing distribution related
services related to shares of Funds offered in connection with a Rule 12b-1 plan. If GWFS receives 12b-1 fees, combined compensation for administrative and distribution related services generally ranges up to 0.60% annually of Series Account assets
invested in a Fund.
If you purchased the Policy through a broker-dealer or other financial intermediary (such as a bank), the Funds and
their related companies may pay the intermediary for services provided with regard to the sale of Fund shares to the Divisions under the Policy. The amount and/or structure of the compensation can possibly create conflict of interest as it may
influence the broker-dealer or other intermediary and your salesperson to present this Policy (and certain Divisions under the Policy) over other investment alternatives. The variations in compensation, however, may also reflect differences in sales
effort or ongoing customer services expected of the broker-dealer or other intermediary or your salesperson. You may ask your salesperson about variations and how he or she and his or her broker-dealer are compensated for selling the Policy or visit
your financial intermediary’s Web site for more information.
Payments We Make. In addition to the
direct cash compensation described above for sales of the Policies, Great-West and/or its affiliates may also pay GWFS agents additional cash and non-cash incentives to promote the sale of the Policies and other products distributed by GWFS,
including Funds of Great-West Funds, Inc., which are available Funds under the Policies. Great-West and/or its affiliates may sponsor various contests and promotions subject to applicable FINRA regulations in which GWFS agents may receive prizes
such as travel awards, merchandise and cash. Subject to applicable FINRA regulations, Great-West and/or its affiliates may also pay for travel expenses, meals, lodging and entertainment of salespersons in connection with educational and sales
promotional programs and sponsor speakers, educational seminars and charitable events.
Cash incentive payments may vary depending on the
arrangement in place at any particular time. Cash incentives payable to GWFS agents may be based on certain performance measurements, including a percentage of the net amount invested in certain Funds available under the Policy. These additional
payments could be viewed as creating conflicts of interest. In some cases, the payment of incentive-based compensation may create a financial incentive for a GWFS agent to recommend or sell the Policy instead of other products or recommend certain
Funds under the Policy over other Funds, which may not necessarily be to your benefit.
13
Closed Divisions.
Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund.
Effective May 1, 2013, the Division investing in the following Fund was closed to new owners: Invesco VI Global Health Care Fund. Owners
with amounts invested in this Fund as of May 1, 2013, may continue to allocate premium payments and Transfer amounts into and out of this Division.
Fund Investment Objectives. The investment objectives of the Funds are briefly described below:
Alger Portfolios (advised by Fred Alger Management, Inc.)
Alger Small Cap Growth Portfolio (Class I-2 Shares) The Fund seeks long-term capitalization.
American Century Variable Portfolios, Inc. (advised by American Century Investment Management, Inc.)
American Century Investments VP Value Fund (Class I Shares) The Fund seeks long-term capital growth. Income is a
secondary objective.
American Century Investments VP VistaSM
Fund (Class I Shares) The Fund seeks long-term capital growth.
American Funds Insurance Series (advised by Capital Research and Management
Company)
American Funds IS Growth Fund (Class 2 Shares) The Fund’s investment objective is to provide
growth of capital.
American Funds IS Global Small Capitalization Fund (Class 2 Shares) The Fund’s
investment objective is to provide long-term growth of capital.
American Funds IS International Fund (Class 2
Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS
New World Fund (Class 2 Shares) The Fund’s investment objective is long-term capital appreciation.
Columbia Variable Portfolio
(advised by Columbia Management Advisers, LLC)
Small Cap Value Fund (Class 1 Shares) The Fund seeks
long-term capital appreciation.
Davis Variable Account Fund, Inc. (advised by Davis Selected Advisors, L.P.)
Davis Financial Fund The Fund’s investment objective is long-term growth of capital.
Davis Value Fund The Fund’s investment objective is long-term growth of capital.
Dreyfus Stock Index Fund (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) The Fund seeks to match the total return of the Standard &
Poor’s 500 Composite Stock Price Index.
Dreyfus Variable Investment Fund (advised by The Dreyfus Corporation of New York, New York)
Dreyfus VIF International Equity Portfolio (Initial Shares) The Fund seeks capital growth. Newton Capital
Management Limited is the sub-adviser to this Fund.
14
DWS (advised by Deutsche Investment Management Americas Inc.)
DWS Variable Series II: DWS Alternative Asset Allocation VIP (Class A Shares) The Fund seeks capital
appreciation. RREEF America L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Core Equity VIP
(Class A Shares) The Fund seeks long-term growth of capital, current income and growth of income.
DWS
Variable Series II: DWS Small Mid Cap VIP (Class A Shares) The Fund seeks long-term capital appreciation. Dreman Value Management L.L.C. is the subadviser for the Fund.
DWS Variable Series I: DWS Global Small Cap Growth VIP (Class A Shares) The Fund seeks above-average capital
appreciation over the long term.
DWS Variable Series II: DWS High Income VIP (Class A Shares) The Fund
seeks to provide a high level of current income.
DWS Investments VIT Funds: DWS Small Cap Index VIP (Class A
Shares) The Fund seeks to replicate, as closely as possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small US
companies. Northern Trust Investments, N.A. is the sub-adviser for the Fund.
Fidelity Variable Insurance Products (VIP) Fund (advised by Fidelity
Management & Research Company)
Fidelity VIP Contrafund® Portfolio (Service Class 2 Shares) The Fund seeks long-term capital appreciation. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Fidelity VIP Mid Cap Portfolio (Service Class 2 Shares) The Fund seeks long-term growth of capital. FMR Co.,
Inc. and other investment advisers serve as sub-advisers for the Fund.
Goldman Sachs Variable Investment Trust (advised by Goldman Sachs Asset
Management)
Goldman Sachs Mid Cap Value Fund (Institutional Class Shares) The Fund seeks long-term capital
appreciation.
Great-West Funds, Inc. (advised by Great-West Capital Management, LLC, a wholly owned subsidiary of Great-West)
Great-West Ariel Small Cap Value Fund The Fund seeks long-term capital appreciation. Ariel Investments, LLC
is the sub-adviser to this Fund. Effective on or about December 20, 2013, merger of Great-West Ariel Small Cap Value Fund, a series of Great-West Funds, with and into Great-West Ariel Mid Cap Value Fund, another series of Great-West Funds (the
“Merger”). The Merger does not require shareholder approval. It is anticipated that the Merger will be a tax-free reorganization for U.S. federal income tax purposes.
Great-West Bond Index Fund The Fund seeks results that track the total return of the fixed income securities
that comprise the Barclays Capital Aggregate Bond Index.
Great-West Federated Bond Fund The Fund seeks to
provide total return, consisting of two components: (1) changes in the market value of its portfolio holdings (both realized and unrealized appreciation); and (2) income received from its portfolio holdings.
Great-West Multi-Manager Large Cap Growth Fund (formerly known as Great-West Janus Large Cap Growth Fund) The
Fund seeks long-term growth of capital. Pioneer Investment Management, Inc. and J.P. Morgan Investment Management, Inc. are the Sub-advisers to the Fund.
Great-West International Index Fund The Fund seeks investment results, before fees and expenses, that track the
total return of the common stocks that comprise the MSCI EAFE (Europe, Australasia, Far East) Index.
Great-West
Loomis Sayles Bond Fund The Fund seeks high total investment return through a combination of current income and capital appreciation. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
15
Great-West Loomis Sayles Small Cap Value Fund The Fund seeks
long-term capital growth. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West MFS
International Value Fund The Fund seeks long-term capital growth. Massachusetts Financial Service Company is the sub-adviser to this Fund.
Great-West Money Market Fund The Fund seeks as high a level of current income as is consistent with the
preservation of capital and liquidity.
Investment in the Great-West Money Market Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this Fund.
Great-West Real Estate Index Fund The Fund seeks investment results, before fees and expenses, that track the
total return of a benchmark index that measures the performance of publicly traded equity real estate investment trusts.
Great-West S&P MidCap 400® Index Fund The Fund
seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the Standard & Poor’s MidCap 400® Index.
Great-West Short Duration Bond Fund The Fund seeks maximum total return that is consistent with preservation of
capital and liquidity.
Great-West T. Rowe Price Equity Income Fund The Fund seeks substantial dividend
income and also long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West T. Rowe Price Mid Cap Growth Fund The Fund seeks long-term capital appreciation. T. Rowe Price
Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund The Fund seeks
current income with capital appreciation and growth of income. Franklin Advisers, Inc. is the sub-advisor to this Fund.
Great-West U.S. Government Mortgage Securities Fund The Fund seeks the highest level of return consistent with
preservation of capital and substantial credit protection.
Great-West Profile I Funds
Each of the following five Profile Funds seeks to provide an asset allocation program designed to meet certain investment
goals based on an investor’s risk tolerance, investment time horizon and personal objectives.
Great-West
Aggressive Profile I Fund seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments.
Great-West Moderately Aggressive Profile I Fund seeks long-term capital appreciation primarily through
investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments and, to a lesser degree, fixed income securities.
Great-West Moderate Profile I Fund seeks long-term capital appreciation primarily through investments in other
mutual funds, including mutual funds that may not be affiliated with Great-West Funds, with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Conservative Profile I Fund seeks capital appreciation primarily through investments in
other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments, and, to a lesser degree, equity investments.
16
Great-West Conservative Profile I Fund seeks capital
preservation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments.
Great-West Lifetime Funds
Great-West Lifetime 2015 Fund II - Class T The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2015, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2025 Fund II - Class T The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2025, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2035 Fund II - Class T The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2035, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2045 Fund II - Class T The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2045, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2055 Fund II - Class T The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2055, the investment objective is to seek income and, secondarily, capital growth.
Invesco Variable Insurance
Funds (advised by Invesco Advisors, Inc.)
Invesco V.I. Global Real Estate Fund (Series I Shares)
The Fund’s investment objective is total return through growth of capital and current income. Invesco Asset Management Limited is the sub-adviser for this Fund.
Invesco V.I. International Growth Fund (Series I Shares) The Fund’s investment objective is long-term
growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares) The Fund’s objective is
long-term growth of capital.
Janus Aspen Series (advised by Janus Capital Management, LLC)
Janus Aspen Balanced Portfolio (Institutional Shares) The Fund seeks long-term growth of capital consistent with
preservation of capital and balanced by current income.
Janus Aspen Flexible Bond Portfolio (Institutional
Shares) The Fund seeks to obtain maximum total return consistent with the preservation of capital.
Janus
Aspen Forty Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Global
Technology Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen
Overseas Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Neuberger Berman Advisers Management Trust (advised
by Neuberger Berman Management Incorporated)
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) The
Fund seeks growth of capital.
17
Neuberger Berman AMT Socially Responsive Portfolio (Class I Shares)
The Fund seeks long-term growth of capital.
PIMCO Variable Insurance Trust (advised by Pacific Investment Management Company, LLC)
PIMCO VIT High Yield Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with
preservation of capital and prudent investment management.
PIMCO VIT Low Duration Portfolio (Administrative Shares)
The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Shares) The Fund seeks maximum real return, consistent with
preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative
Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
Putnam Variable Trust
(advised by Putnam Investment Management, LLC)
Putnam VT Equity Income Fund (Class IA Shares) The Fund
seeks capital growth and current income.
Putnam VT Global Health Care Fund (Class IA Shares) The
Fund seeks capital appreciation.
Putnam VT High Yield Fund (Class IA Shares) The Fund seeks high current
income. Capital growth is a secondary goal when consistent with achieving high current income.
Putnam VT
International Growth Fund Class (IA Shares) The Fund seeks long-term capital appreciation.
Putnam VT
MidCap Value Fund (Class IA Shares) The Fund seeks capital appreciation and, as a secondary objective, current income.
Royce Capital
Fund (advised by Royce & Associates, LLC)
Royce Micro-Cap Portfolio (Service Class Shares) The
Fund’s investment goal is long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares)
The Fund’s investment goal is long-term growth of capital.
Van Eck Worldwide Insurance Trust (advised by Van Eck Associates
Corporation)
Van Eck VIP Global Hard Assets (Initial Class Shares) The Fund seeks long term capital
appreciation by primarily investing in hard asset securities. Income is a secondary consideration.
You should contact your representative for further
information on the availability of the Divisions.
Each Fund is subject to certain investment restrictions and policies that may not be
changed without the approval of a majority of the shareholders of the Fund. See the Fund prospectuses for further information.
We
automatically reinvest all dividends and capital gain distributions from the Funds in shares of the distributing Fund at their net asset value. The income and realized and unrealized gains or losses on the assets of each Division are separate and
are credited to, or charged against, the particular Division without regard to income, gains or losses from any other Division or from any other part of our business. We will use amounts you allocate to a Division to purchase shares in the
corresponding Fund and will redeem shares in the Funds to meet Policy obligations or make adjustments in reserves. The Funds are required to redeem their shares at net asset value and to make payment within seven days.
18
The Funds may also be available to separate accounts offering variable annuity, variable life
products and qualified plans of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between
the interests of the Series Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences
in the voting instructions of Owners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Owners, including withdrawal of the Series Account from participation in the Funds that
are involved in the conflict or substitution of shares of other Funds.
Voting. We are the legal owner of all shares of the Funds
held in the Divisions of the Series Account. In general, you do not have a direct right to vote the Fund shares held in the Divisions of the Series Account. However, under current law, you are entitled to give us instructions on how to vote the
shares held in the Divisions. At regular and special shareholder meetings, we will vote the shares held in the Divisions in accordance with those instructions received from Owners who have an interest in the respective Divisions.
We will vote shares held in each Division for which no timely instructions from Owners are received, together with shares not attributable to
a Policy, in the same proportion as those shares in that Division for which instructions are received.
The number of shares in each
Division for which instructions may be given by an Owner is determined by dividing the portion of the Account Value derived from participation in that Division, if any, by the value of one share of the corresponding Fund. We will determine the
number as of the record date chosen by the Fund. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders’ meeting.
We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as
to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the
investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in
our next communication to Owners.
This description reflects our current view of applicable federal securities law. Should the applicable
federal securities laws change so as to permit us to vote shares held in the Series Account in our own right, we may elect to do so.
Fixed Account
The Fixed Account is part of our General Account. We have absolute ownership of the assets in the Fixed Account.
Except as limited by law, we have sole control over the investment of the General Account assets. You do not share in the investment experience of the General Account, but are allowed to allocate and transfer Account Value into the Fixed Account. We
assume the risk of investment gain or loss on this amount. All assets in the General Account are subject to our general liabilities from business operations. The Fixed Account does not participate in the investment performance of the Sub-Accounts.
The Fixed Account is not registered with the SEC under the Securities Act of 1933. Neither the Fixed Account nor the General Account have
been registered as an investment company under the 1940 Act. As a result, neither the Fixed Account nor the General Account are generally subject to regulation under either Act. However, certain disclosures may be subject to generally applicable
provisions of the federal securities laws regarding the accuracy of statements made in registration statements.
The Fixed Account offers
a guarantee of principal, after deductions for fees and expenses. We also guarantee that amounts you allocated to the Fixed Account will earn interest at a rate of at least the minimum guaranteed interest rate indicated in your Policy. We do not
rely on predetermined formulas to set Fixed Account interest rates. We will review the interest rate at least once a year, but at the Company’s discretion we may reset the interest rate monthly.
The Fixed Account may not be available in all states.
19
Employer-Financed Insurance Purchase Arrangements--Tax and Other Legal Issues
In addition to corporations and other employers, the Policy is also available for purchase by individuals whose employers will pay
some or all of the Premiums due under the Policy pursuant to an employer-financed insurance purchase arrangement. In such cases, references in this prospectus to the “Owner” of the Policy will refer to the individual and, depending
on the context, references to the “payment of premiums” will refer to payments to Great-West under the Policy by the employer and/or by the employee.
Employers and employees contemplating the purchase of a Policy as a part of an employer-financed insurance purchase arrangement should
consult qualified legal and tax counsel with regard to the issues presented by such a transaction. For this purpose, an employer-financed insurance purchase arrangement is a plan or arrangement which contemplates that an employer will pay one
or more Premiums for the purchase of a Policy that will be owned, subject to certain restrictions, by an employee or by a person or entity designated by the employee.
The general considerations applicable to such a purchase include the following:
| 1. |
Payments by the employer under an employer-financed insurance purchase arrangement will only be deductible for income tax purposes when the
payments are taxable to the employee with respect to whom they are made. |
| 2. |
Imposition of certain types of restrictions, specifically a substantial risk of forfeiture, on the purchased Policy may defer both the
deductibility of the payments to the employer and their taxability to the employee. |
| 3. |
The payment of some or all of the Premiums by the employer may create an ERISA welfare benefit plan which is subject to the reporting, disclosure,
fiduciary and enforcement provisions of ERISA. |
| 4. |
The payment of some or all of the Premiums by the employer will not prevent the Owner from being treated as the owner of the Policy for federal
income tax purposes. |
| 5. |
Under some circumstances, the failure of the employer to make one or more of the planned Premiums under the Policy may cause a lapse of the Policy.
|
| 6. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial
and tax benefits of the ownership of the Policy outweigh the costs, such as sales loads and cost of insurance charges that will be incurred as a result of the purchase and ownership of the Policy. |
| 7. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the
designation of another person or entity as the owner of the Policy will have adverse consequences under applicable gift, estate, or inheritance tax laws. |
| 8. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial
performance of the Policy will support any planned withdrawals or borrowings under the Policy. |
| 9. |
In an employer-financed insurance purchase arrangement, the procedures described below on page , which are designed to prevent or minimize market
timing and excessive trading by Owners may, in certain circumstances, require us to perform standardized trade monitoring; in other circumstances such monitoring will be performed by the Fund. Certain Funds require us to provide reports of the
Owner’s trading activity, if prohibited trading, as defined by the Fund, is suspected. The determination of whether there is prohibited trading based on the Funds’ definition of prohibited trading may be made by us or by the Fund. The Fund
determines the restrictions imposed, which could be one of the four restrictions described on page or by restricting the Owner from making Transfers into the identified Fund for the period of time specified by the Fund. |
20
Charges and Deductions
The Policy has insurance features and investment features, and there are costs related to each. This section describes the fees and charges
that we may make under the Policy to compensate for: (1) the services and benefits we provide; (2) the costs and expenses we incur; and (3) the risks we assume. The fees and charges we deduct under this Policy may result in a profit
to us.
Expense Charge Applied to Premium. We will deduct a maximum charge of 10% from each Premium
payment, which is broken down as follows. A maximum of 6.5% will be deducted as sales load to compensate us in part for sales and promotional expenses in connection with selling the Policies, such as commissions, the cost of preparing sales
literature, other promotional activities and other direct and indirect expenses. A maximum of 3.5% of Premium will be used to cover Premium taxes and certain federal income tax obligations resulting from the receipt of Premiums. All states and some
cities and municipalities impose taxes on Premiums paid for life insurance, which generally range from 2% to 4% of Premium but may exceed 4% in some states. The amount of your state’s Premium tax may be higher or lower than the amount
attributable to Premium taxes that we deduct from your Premium payments.
The current expense charge applied to Premium for sales load is
2.5% of Premium up to target and 1.0% of Premium in excess of target for Policy Years 1 through 10. Your target Premium will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class
(if any) which equals the maximum Premium payable under the seven-pay test such that the Policy remains compliant with 7702A of the Code. Thereafter, there is no charge for sales load. The current expense charge applied to Premium to cover our
Premium taxes and the federal tax obligation described above is 3.5% in all Policy Years.
Where permitted by applicable state
insurance law, if your Policy is surrendered for the Surrender Benefit (Account Value less any outstanding Policy loans and less accrued loan interest) within the first seven Policy Years, we will return a percentage of the expense charge. The
return of expense charge will be a percentage of your Account Value on the date the Request for surrender was received by us at our Corporate Headquarters. This amount will be in addition to the Surrender Benefit.
The return of expense charge is based on the following:
|
|
|
| Policy Year |
|
Percentage of Account
Value Returned |
| Year 1 |
|
7% |
| Year 2 |
|
6% |
| Year 3 |
|
5% |
| Year 4 |
|
4% |
| Year 5 |
|
3% |
| Year 6 |
|
2% |
| Year 7 |
|
1% |
|
Year 8 |
|
0% |
As described under the heading “Term Life Insurance Rider” on page , we may offer a term life
insurance rider that may have the effect of reducing the sales charge you pay on purchasing an equivalent amount of insurance. We offer this rider in circumstances that result in the savings of sales and distribution expenses and administrative
costs. To qualify, a corporation, employer, or other purchaser must satisfy certain criteria such as, for example, the number of Policies it expects to purchase and the expected Total Face Amount under all such Policies. Generally, the sales
contacts and effort and administrative costs per Policy depend on factors such as the number of Policies purchased by a single Owner, the purpose for which the Policies are purchased, and the characteristics of the proposed Insureds. The amount of
reduction and the criteria for qualification are related to the sales effort and administrative costs resulting from sales to a qualifying Owner. Great-West from time to time may modify on a uniform basis both the amounts of reductions and the
criteria for qualification. Reductions in these charges will not be unfairly discriminatory against any person, including the affected Owners funded by the Series Account.
Mortality and Expense Risk Charge. This charge is for the mortality and expense risks we assume with respect
to the Policy. It is based on an annual rate that we accrue against each Division of the Series Account on a daily basis and deduct on the first day of each Policy month by cancelling accumulation units on a pro-rata basis across all Sub-Accounts.
We convert the mortality and expense risk charge into a daily rate by dividing the annual rate by 365. The mortality and expense risk charge will be determined by us from time to time based on our expectations of future
21
interest, mortality experience, persistency, expenses and taxes, but will not exceed 0.90% annually. Currently, the charge is 0.50% for Policy Years 1 through 20 and 0.10% thereafter. On
surrender and payment of the death benefit, we will deduct the pro-rata portion of the mortality and expense charge that has accrued.
Because the value of your Sub-Accounts can vary from month-to-month, the monthly deduction for the mortality and expense risk charge will also
vary. If the amount the mortality and expense risk charge is insufficient to cover the costs resulting from the mortality and expense risks that we assume, we will bear the loss. If the amount we charge is more than sufficient to cover such costs,
we will make a profit on the charge. To the extent that we do make a profit from this charge, we may use this profit for any corporate purpose, including the payment of administrative, marketing, distribution, and other expenses in connection with
the Policies.
The mortality risk we assume is that the group of lives insured under the Policies may, on average, live for shorter
periods of time than we estimated. The expense risk we assume is that the costs of issuing and administering Policies may be more than we estimated.
Monthly Deduction. We make a monthly deduction from your Account Value on the Policy Date and the first day
of each Policy Month. This monthly deduction will be charged proportionally to the amounts in the Divisions.
The monthly deduction equals the sum of (1),
(2), (3), (4) and (5) where:
| (1) |
is the cost of insurance charge (the monthly risk charge) equal to the current monthly risk rate (described below) multiplied by the net amount at
risk divided by 1,000; |
| (2) |
is the service charge; |
| (3) |
is the monthly cost of any additional benefits provided by riders which are a part of your Policy; |
| (4) |
is any extra risk charge if the Insured is in a rated class as specified in your Policy; and |
| (5) |
is the accrued mortality and expense charge. |
The net amount at risk equals:
| • |
|
the death benefit divided by 1.00327374; less |
| • |
|
your Account Value on the first day of a Policy Month prior to assessing the monthly deduction. |
If there are increases in the Total Face Amount other than increases caused by changes in the death benefit option, the monthly deduction
described above is determined separately for the initial Total Face Amount and each increase in the Total Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the most recent increase in the death benefit
and then to each increase in the Total Face Amount in the reverse order in which the increases were made.
Monthly Risk Rates. The monthly risk rate is used to determine the cost of insurance charge (monthly risk
charge) for providing insurance coverage under the Policy. The monthly risk rate is applied to the amount at risk. The monthly risk rates (except for any such rate applicable to an increase in the Total Face Amount) are based on the length of time
your Policy has been in force and the Insured’s sex (in the case of non-unisex Policies) and Issue Age. If the Insured is in a rated class as specified in your Policy, we will deduct an extra risk charge that reflects that class rating. The
monthly risk rates applicable to each increase in the Total Face Amount are based on the length of time the increase has been in force and the Insured’s sex (in the case of non-unisex Policies), Issue Age, and class rating, if any. The monthly
risk rates will be determined by us from time to time based on our expectations of future experience with respect to mortality, investment earnings, persistency, capital and reserve requirements, interest rates and expenses (including taxes), but
will not exceed the guaranteed maximum monthly risk rates based on the 2001 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table (“2001 CSO”). Currently, the guaranteed
minimum monthly risk charge is $0.02 per $1000 and the guaranteed maximum is $83.33 per $1000. If your Policy is issued in Montana, unisex rates are charged and these rates will never exceed the male Smoker Ultimate Mortality Table.
The guaranteed maximum monthly risk rates reflect any class rating applicable to the Policy. We have filed a detailed statement of our methods
for computing Account Values with the insurance department in each jurisdiction where the Policy was delivered. These values are equal to or exceed the minimum required by law.
22
The monthly risk rate is greater on policies that require less underwriting to be performed
regardless of the health of the individual. Monthly risk rate charges will be greatest on guaranteed issue policies, followed by simplified issue policies, then fully underwritten policies.
Service Charge. We will deduct a maximum of $15 from your Account Value on the first day of each Policy
Month to cover our administrative costs, such as salaries, postage, telephone, office equipment and periodic reports. This charge may be increased or decreased by us from time to time based on our expectations of future expenses, but will never
exceed $15 per Policy Month. The service charge will be deducted proportionally from the Divisions. The current service charge is $10 per Policy Month for Policy Years 1 through 3 and $7.50 per Policy Month thereafter.
Transfer Fee. A maximum administrative charge of $10 per Transfer of Account Value from one Division to
other Divisions will be deducted from your Account Value for all Transfers in excess of 12 made in the same Policy Year. The allocation of your Initial Premium from the Great-West Money Market Division to your selected Divisions will not count
toward the 12 free Transfers. Similarly, Transfers made under dollar cost averaging and periodic rebalancing under the rebalancer option are not subject to the fee and do not count as Transfers for this purpose (except a one-time rebalancing under
the rebalancer option will count as one Transfer). All Transfers Requested on the same Business Day will be aggregated and counted as one Transfer. The current charge is $10 per Transfer.
Partial Withdrawal Fee. A maximum administrative fee of $25 will be deducted from your Account Value for all
partial withdrawals after the first made in the same Policy Year. The partial withdrawal fee will be deducted proportionally from all Divisions.
Surrender Charges. Your Policy has no surrender charges.
Change of Death Benefit Option Fee.
A maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option. The change of death benefit fee will be deducted proportionally from all Divisions.
Fund Expenses. You indirectly bear the charges and expenses of the Funds whose shares are held by the
Divisions to which you allocate your Account Value. The Series Account purchases shares of the Funds at net asset value. Each Fund’s net asset value reflects investment advisory fees and administrative expenses already deducted from the
Fund’s assets. For more information concerning the investment advisory fees and other charges against the Funds, see the Fund prospectuses and the statements of additional information for the Funds, which are available upon Request.
We may receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the
services we provide or the cost savings resulting from the arrangement and, therefore, may differ between Funds. See “Payments We Receive” on page.
General Description of Policy
Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and
current federal tax laws apply. The Policy described in this prospectus is offered to corporations and other employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed
insurance purchase arrangements. We issue Policies on the lives of prospective Insureds who meet our underwriting standards.
Policy Rights
Owner. While the Insured is alive, unless you have assigned any of these rights, you may:
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transfer ownership to a new Owner; |
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name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured; |
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change or revoke a contingent owner; |
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change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable); |
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exercise all other rights in the Policy; |
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increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and |
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change the death benefit option, subject to the other provisions of the Policy. |
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When you transfer your rights to a new Owner, you automatically revoke any prior contingent owner
designation. When you want to change or revoke a prior Beneficiary designation, you have to specify that action. You do not affect a prior Beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation.
You do not need the consent of a Beneficiary or a contingent owner in order to exercise any of your rights. However, you must give us written
notice satisfactory to us of the Requested action. Your Request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before it was received by us.
Beneficiary. The Beneficiary has no rights in the Policy until the death of the Insured, except an
irrevocable Beneficiary cannot be changed without the consent of that Beneficiary. If a Beneficiary is alive at that time, the Beneficiary will be entitled to payment of the Death Benefit Proceeds as they become due.
Policy Limitations
Allocation of Net Premiums. Except as otherwise described herein, your net Premium will be allocated in
accordance with the allocation percentages you select. Percentages must total 100% and can be up to two decimal places.
We will
credit Premium payments received prior to the end of the free look period as described in the “Free Look Period” section of this prospectus on page.
You may change your allocation percentages at any time by Request.
Transfers Among Divisions. Subject to our rules as they may exist from time to time, you may at any time
after the Free-Look Period Transfer to another Division all or a portion of the Account Value allocated to a Division. We will make Transfers pursuant to a Request.
Transfers may be Requested by indicating the Transfer of either a specified dollar amount or a specified percentage of the Division’s
value from which the Transfer will be made.
Transfer privileges are subject to our consent. We reserve the right to impose
limitations on Transfers, including, but not limited to: (1) the minimum amount that may be Transferred; and (2) the minimum amount that may remain in a Division following a Transfer from that Division. In addition, we do not intend to
enforce the restriction on Transfers set forth in your Policy except in cases of identified market timing unless the Sub-Account has additional restrictions that are noted in the respective Fund’s prospectus. See “Market Timing &
Excessive Trading” on page.
A fee of $10 per Transfer will apply for all Transfers in excess of 12 made in a Policy Year. We
may increase or decrease the Transfer charge; however, it is guaranteed to never exceed $10 per Transfer. All Transfers Requested on the same Business Day will count as only one Transfer toward the 12 free Transfers. The Transfer of your Initial
Premium from the Great-West Money Market Fund Division to your selected Divisions does not count toward the 12 free Transfers. Likewise, any Transfers under dollar cost averaging or periodic rebalancing of your Account Value under the rebalancer
option do not count toward the 12 free Transfers (a one time rebalancing, however, will be counted as one Transfer).
Fixed Account Transfers. Transfers into the Fixed Account are limited to once every 60 days. Transfers from the Fixed Account may only be made once per year. The maximum to be transferred out will be the greater of 25% of your balance in the
Fixed Account or the amount of the transfer in the previous 365 day period.
Market Timing &
Excessive Trading. The Policies are intended for long-term investment and not for the purpose of market timing or excessive trading activity. Market timing activity may dilute the interests of Owners in the Funds. Market timing generally
involves frequent or unusually large transfers that are intended to take advantage of short-term fluctuations in the value of a Fund’s portfolio securities and the reflection of that change in the Fund’s share price. In addition, frequent
or unusually large transfers may harm performance by increasing Fund expenses and disrupting Fund management strategies. For example, excessive trading may result in forced liquidations of portfolio securities or cause the Fund to keep a relatively
higher cash position, resulting in increased brokerage costs and lost investment opportunities.
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We maintain procedures designed to discourage market timing and excessive trading by Owners. As
part of those procedures, we will rely on the Funds to monitor for such activity. If a Fund believes such activity has occurred, we will scrutinize the Owner’s activity and request a determination from the Fund as to whether such activity
constitutes market timing or excessive trading. If the Fund determines that the activity constitutes market timing or excessive trading, we will contact the Owner in writing to request that market timing and/or excessive trading stop immediately. We
will then provide a subsequent report of the Owner’s trading activity to the Fund. If the Fund determines that the Owner has not ceased improper trading, and upon request of the Fund, we will inform the Owner in writing that a trading
restriction is being implemented. The four possible trading restrictions are:
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• |
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Restrict the Owner to inquiry-only access for the web and voice response unit so that the Owner will only be permitted to make Transfer Requests by
written Request mailed to us through U.S. mail (“U.S. Mail Restriction”); the Owner will not be permitted to make Transfer Requests via overnight mail, fax, the web, or the call center. Once the U.S. Mail Restriction has been in place for
180 days, the restricted Owner may Request that we lift the U.S. Mail Restriction by signing, dating and returning a form to us whereby the Owner acknowledges the potentially harmful effects of market timing and/or excessive trading on Funds and
other investors, represents that no further market timing or excessive trading will occur, and acknowledges that we may implement further restrictions, if necessary, to stop improper trading by the Owner; |
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• |
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Close the applicable Fund to all new monies, including contributions and Transfers in; |
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Restrict all Owners to one purchase in the applicable Fund per 90 day period; or |
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Remove the Fund as an investment option and convert all allocations in that Fund to a different investment option. |
The discretionary nature of our procedures creates a risk that we may treat some Owners differently than others.
Our market timing and excessive trading procedures are such that we do not impose trading restrictions unless or until a Fund first detects
and notifies us of potential market timing or excessive trading activity. Accordingly, we cannot prevent all market timing or excessive trading transfer activity before it occurs, as it may not be possible to identify it unless and until a trading
pattern is established. To the extent the Funds do not detect and notify us of market timing and/or excessive trading or the trading restrictions we impose fail to curtail it, it is possible that a market timer or excessive trader may be able to
make market timing and/or excessive trading transactions with the result that the management of the Funds may be disrupted and the Owners may suffer detrimental effects such as increased costs, reduced performance, and dilution of their interests in
the affected Funds.
We endeavor to ensure that our procedures are uniformly and consistently applied to all Owners, and we do not exempt
any Owners from these procedures. In addition, we do not enter into agreements with Owners whereby we permit market timing or excessive trading. Subject to applicable state law and the terms of each Policy, we reserve the right without prior notice
to modify, restrict, suspend or eliminate the Transfer privileges (including telephone Transfers) at any time, to require that all Transfer Requests be made by you and not by your designee, and to require that each Transfer Request be made by a
separate communication to us. We also reserve the right to require that each Transfer Request be submitted in writing and be signed by you.
The Funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares.
The prospectuses for the Funds should describe any such policies and procedures. The frequent trading policies and procedures of a Fund may be different, and more or less restrictive, than the frequent trading policies and procedures of other Funds
and the policies and procedures we have adopted to discourage market timing and excessive trading. For example, a Fund may impose a redemption fee. Owners should also be aware that we may not have the contractual obligation or the operational
capacity to apply the frequent trading policies and procedures of the respective Funds that would be affected by the Transfers.
We may
revise our market timing and excessive trading policy and related procedures at our sole discretion, at any time and without prior notice, as we deem necessary or appropriate to comply with state or federal regulatory requirements or to impose
additional or alternative restrictions on Owners engaging in market timing or excessive trading. In addition, our orders to purchase shares of the Funds are generally subject to acceptance by the Fund, and in some cases a Fund may reject or reverse
our purchase order. Therefore, we reserve the right to reject any Owner’s Transfer Request if our order to purchase shares of the Fund is not accepted by, or is reversed by, an applicable Fund.
25
You should note that other insurance companies and retirement plans may invest in the Funds and
that those companies or plans may or may not have their own policies and procedures on frequent transfers. You should also know that the purchase and redemption orders received by the Funds generally are “omnibus” orders from
intermediaries such as retirement plans or separate accounts funding variable insurance contracts. Omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of
variable insurance contracts. The nature of such orders may limit the Funds’ ability to apply their respective frequent trading policies and procedures. As a result, there is a risk that the Funds may not be able to detect potential market
timing and/or excessive trading activities in the omnibus orders they receive. We cannot guarantee that the Funds will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that invest in the Funds. If
the policies and procedures of other insurance companies or retirement plans fail to successfully discourage frequent transfer activity, it may affect the value of your investments in the Funds. In addition, if a Fund believes that an omnibus order
we submit may reflect one or more Transfer Requests from an Owner engaged in frequent transfer activity, the Fund may reject the entire omnibus order and thereby interfere with our ability to satisfy your Request even if you have not made frequent
transfers. For Transfers into more than one investment option, we may reject or reverse the entire Transfer Request if any part of it is not accepted by or is reversed by a Fund.
Exchange of Policy. You may exchange your Policy for a new policy issued by Great-West that does not provide
for variable benefits. The new policy will have the same Policy Date, Issue Age, and Insured as your Policy on the date of the exchange. The exchange must be made within 24 Policy Months after the Issue Date of your Policy and all Policy Debt must
be repaid.
The cash value of your current Policy will be applied to the new policy as the Initial Premium.
Age Requirements. An Insured’s Issue Age must be between 20 and 85 for Policies issued on a fully
underwritten basis and between 20 and 70 for Policies issued on a guaranteed underwriting or a simplified underwriting basis.
Policy or Registrant Changes
Addition, Deletion or Substitution of Investment Options. Shares
of any or all of the Funds may not always be available for purchase by the Divisions of the Series Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, shares of other registered open-end
investment companies or unit investment trusts may be substituted both for Fund shares already purchased by the Series Account and/or as the security to be purchased in the future, provided that these substitutions have been approved by the SEC, to
the extent necessary. We also may close a Division to future Premium allocations and Transfers of Account Value. A Division closing may affect dollar cost averaging and the rebalancer option. We also reserve the right to add Divisions, or to
eliminate or combine existing Divisions or to Transfer assets between Divisions, or from any Division to our General Account. In the event of any substitution or other act described in this paragraph, we may make appropriate amendment to the Policy
to reflect the change.
The Series Account. We reserve the right to operate the Series Account in
any form permitted by law, to take any action necessary to comply with applicable law or obtain and continue any exemption from applicable laws, to assess a charge for taxes attributable to the operation of the Series Account or for other taxes, as
described in “Charges and Deductions” beginning on page of this prospectus, and to change the way in which we assess other charges, as long as the total other charges do not exceed the maximum guaranteed charges under the Policies.
Entire Contract. Your entire contract with us consists of the Policy, including the attached copy of
your application and any attached copies of supplemental applications for increases in the Total Face Amount, any endorsements and any riders. Any illustrations prepared in connection with the Policy do not form a part of our contract with you and
are intended solely to provide information about how values under the Policy, such as Cash Surrender Value, death benefit and Account Value, will change with the investment experience of the Divisions, and such information is based solely upon data
available at the time such illustrations are prepared.
Alteration. Sales representatives do not have
any authority to either alter or modify your Policy or to waive any of its provisions. The only persons with this authority are our president, secretary, or one of our vice presidents.
Modification. Upon notice to you, we may modify the Policy if such a modification –
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is necessary to make the Policy or the Series Account comply with any law or regulation issued by a governmental agency to which we are, or the
Series Account is, subject; |
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is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy;
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is necessary to reflect a change in the operation of the Series Account or the Divisions; or |
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adds, deletes or otherwise changes Division options. |
We also reserve the right to modify certain provisions of the Policy as stated in those provisions. In the event of any such modification, we
may make appropriate amendment to the Policy to reflect such modification.
Assignments. During the
lifetime of the Insured, you may assign all or some of your rights under the Policy. All assignments must be filed at our Corporate Headquarters and must be in written form satisfactory to us. The assignment will then be effective as of the date you
signed the form, subject to any action taken before we received it. We are not responsible for the validity or legal effect of any assignment.
Notice and Elections. To be effective, all notices and elections under the Policy must be in writing, signed
by you, and received by us at our Corporate Headquarters. Certain exceptions may apply. Unless otherwise provided in the Policy, all notices, Requests and elections will be effective when received at our Corporate Headquarters complete with all
necessary information.
Account Value
Your Account Value is the sum of your interests in each Division you have chosen, plus your interests in the Fixed Account, plus the amount in
your Loan Account. The Account Value varies depending upon the Premiums paid, expense charges applied to Premium, mortality and expense risk charge, service charges, monthly risk charges, partial withdrawals, fees, Policy loans and the net
investment factor (described below) for the Divisions to which your Account Value is allocated and the interest credited to the Fixed Account.
We measure the amounts in the Divisions in terms of Units and Unit Values. On any given date, your interest in a Division is equal to the Unit
Value multiplied by the number of Units credited to you in that Division. Amounts allocated to a Division will be used to purchase Units of that Division. Units are redeemed when you make partial withdrawals, undertake Policy loans or Transfer
amounts from a Division, and for the payment of service charges, monthly mortality and expense charges, monthly risk charges and other fees. The number of Units of each Division purchased or redeemed is determined by dividing the dollar amount of
the transaction by the Unit Value for the Division. The Unit Value for each Division was established at $10 for the first Valuation Date of the Division. The Unit Value for any subsequent Valuation Date is equal to the Unit Value for the preceding
Valuation Date multiplied by the net investment factor (determined as provided below). The Unit Value of a Division for any Valuation Date is determined as of the close of the Valuation Period ending on that Valuation Date.
Transactions are processed on the date we receive a Premium at our Corporate Headquarters or upon approval of a Request. If your Premium or
Request is received on a date that is not a Valuation Date, or after the close of the NYSE on a Valuation Date, the transaction will be processed on the next Valuation Date.
The Account Value on the Policy Date equals:
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that portion of net Premium received and allocated to the Division, plus |
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that portion of net Premium received and allocated to the Fixed Account, less |
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the service charges due on the Policy Date, less |
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the monthly risk charge due on the Policy Date, less |
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the monthly mortality and expense risk charge due on the Policy Date, less |
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the monthly risk charge for any riders due on the Policy Date. |
We apply your Initial Premium on the Policy Date, which will be the Issue Date (if we have already received your Initial Premium) or
the Business Day we receive a Premium equal to, or in excess of, the Initial Premium after we have approved your application.
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The Account Value attributable to each Division of the Series Account on the subsequent Valuation Dates is equal
to:
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the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division’s net investment factor, plus
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that portion of net Premium received and allocated to the Division during the current Valuation Period, plus |
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that portion of the value of the Loan Account Transferred to the Division upon repayment of a Policy loan during the current Valuation Period,
plus |
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any amounts Transferred by you to the Division from another Division during the current Valuation Period, less
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any amounts Transferred by you from the Division to another Division during the current Valuation Period, less
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that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less |
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that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less
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that portion of fees due in connection with a partial withdrawal charged to the Division, less |
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the pro-rata portion of the mortality and expense risk charge accrued and charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the service charge for the Policy Month just
beginning charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the monthly risk charge for the Policy Month
just beginning charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the mortality and expense risk charge for the Policy
Month just ending charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that Division’s portion of the cost for any riders and any
extra risk charge if the Insured is in a rated class as specified in your Policy, for the Policy Month just beginning. |
Net Investment Factor. The net investment factor for each Division for any Valuation Period is
determined by dividing (1) by (2) where:
(1) is the net result of:
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the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus
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the per share amount of any dividend or other distribution declared on Fund shares held in the Division if the “ex-dividend” date occurs
during the current Valuation Period, plus or minus |
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a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the
current Valuation Period which are determined by us to be attributable to the operation of the Division; and |
(2) is the
net result of:
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the net asset value of a Fund share held in the Division determined as of the end of the preceding Valuation Period, plus or minus
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a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the
preceding Valuation Period which are determined by us to be attributable to the operation of the Division. |
The net
investment factor may be greater or less than or equal to one. Therefore, the Unit Value may increase, decrease or remain unchanged.
The
net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of each Fund. These fees and expenses are not fixed or specified under the terms of the Policy, may differ between Funds, and may vary from
year to year. Fund fees and expenses are described in each Fund prospectus.
The Fixed Account Value is:
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Premiums, less Expense Charges, allocated to the Fixed Account; plus |
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Sub-Account Value transferred to the Fixed Account; plus |
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Interest credited to the Fixed Account; minus |
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Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus |
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The portion of any accrued policy fees and charges allocated to the Fixed Account; minus |
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Loans from the Fixed Account; minus |
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Transfers from the Fixed Account, including any applicable transfer charges. |
During any Policy Month the Fixed Account Value will be calculated on a consistent basis. For purposes of crediting interest, policy value
deducted, transferred or withdrawn from the Fixed Account is accounted for on a first in first out basis.
The mortality and expense risk
charge for the Valuation Period is the annual mortality and expense risk charge divided by 365 multiplied by the number of days in the Valuation Period.
Splitting Units. We reserve the right to split or combine the value of Units. In effecting any such change,
strict equity will be preserved and no such change will have a material effect on the benefits or other provisions of your Policy.
Other Provisions and Benefits
Misstatement of Age or Sex (Non-Unisex Policy). If the age or (in
the case of a non-unisex Policy) sex of the Insured is stated incorrectly in your Policy application or rider application, we will adjust the amount payable appropriately as described in the Policy.
If we determine that the Insured was not eligible for coverage under the Policy after we discover a misstatement of the Insured’s age,
our liability will be limited to a return of Premiums paid, less any partial withdrawals, any Policy Debt, and the cost for riders.
Suicide. If the Insured, whether sane or insane, commits suicide within two years after your Policy’s Issue Date (one year if your Policy is issued in Colorado or North Dakota), we will not pay any part of the Death Benefit Proceeds. We
will pay the Beneficiary the Premiums paid, less the amount of any Policy Debt, any partial withdrawals and the cost for riders.
If the
Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Total Face Amount (one year if your Policy is issued in Colorado or North Dakota), then our liability as to that increase will be the
cost of insurance for that increase and that portion of the Account Value attributable to that increase. The Total Face Amount of the Policy will be reduced to the Total Face Amount that was in effect prior to the increase.
Incontestability. All statements made in the application or in a supplemental application are
representations and not warranties. We relied and will continue to rely on those statements when approving the issuance, increase in face amount, increase in death benefit over Premium paid, or change in death benefit option of the Policy. In the
absence of fraud, we can use no statement in defense of a claim or to cancel the Policy for misrepresentation unless the statement was made in the application or in a supplemental application. In the absence of fraud, after the Policy has been in
force during the lifetime of the Insured for a period of two years from its Issue Date, we cannot contest it except for non-payment of Premiums. However, any increase in the Total Face Amount which is effective after the Issue Date will be
incontestable only after such increase has been in force during the lifetime of the Insured for two years from the effective date of coverage of such increase.
Paid-Up Life Insurance. When the Insured reaches Attained Age 121 (if your Policy is in force at that time),
the entire Account Value of your Policy (less outstanding Policy Debt) will be applied as a single Premium to purchase “paid-up” insurance. Outstanding Policy Debt will be repaid at this time. This repayment may be treated as a taxable
distribution to you if your Policy is not a MEC. The net single Premium for this insurance will be based on the 2001 Commissioner’s Standard Ordinary, Sex Distinct, Non-Smoker Mortality Table and 4% interest. The cash value of your paid-up
insurance, which initially is equal to the net single Premium, will remain in the Divisions of the Series Account in accordance with your then current allocation. While the paid-up life insurance is in effect your assets will remain in the Series
Account. You may change your Division allocation instructions and you may Transfer your
29
cash value among the Divisions. All charges under your Policy, to the extent applicable, will continue to be assessed, except we will no longer make a deduction each Policy Month for the monthly
risk charge. Your death benefit will be fixed by the Code for insured age 99. As your cash value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly. You may surrender the paid-up
insurance Policy at any time and, if surrendered within 30 days of a Policy Anniversary, its cash value will not be less than it was on that Policy Anniversary. Please see “Federal Income Tax Considerations — Treatment When Insured Reaches
Attained Age 121” on page .
Supplemental Benefits. The following supplemental benefit riders are
available, subject to certain limitations. An additional monthly risk charge will be assessed for each rider that is in force as part of the monthly deduction from your Account Value. If a supplemental benefit rider is terminated, the monthly risk
charge for such rider will end immediately. See fee tables beginning on page.
Term Life Insurance
Rider. This rider provides term life insurance on the Insured. Coverage is renewable annually until the Insured’s Attained Age 121. The amount of coverage provided under this rider varies from month to month as described below. We will pay
the rider’s death benefit to the Beneficiary when we receive Due Proof of death of the Insured while this rider is in force.
This
rider provides the same three death benefit options as your Policy. The option you choose under the rider must at all times be the same as the option you have chosen for your Policy. The rider’s death benefit will be determined at the beginning
of each Policy Month in accordance with one of those options. For each of the options, any outstanding Policy Debt will reduce your death benefit.
If you purchase this rider, the Total Face Amount shown on your Policy’s specifications page will be equal to the minimum amount of
coverage provided by this rider plus the base face amount (which is the minimum death benefit under your Policy without the rider’s death benefit). The minimum allocation of Total Face Amount between your Policy and the rider is 10% and 90% at
inception, respectively. The total Death Benefit Payable under the rider and the Policy will be determined as described in “Death Benefit” below, using the Total Face Amount shown on your Policy’s specifications page.
Coverage under this rider will take effect on the latter of:
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the Policy Date of the Policy to which this rider is attached; or |
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the date this rider is delivered and the first rider premium is paid to the Company |
The monthly risk rate for this rider will be the same as that used for the Policy and the monthly risk charge for the rider will be determined
by multiplying the monthly risk rate by the rider’s death benefit. This charge will be calculated on the first day of each Policy Month and added to the Policy’s monthly risk charge.
If you purchase this rider, the sales load and return of expense charge will be proportionately lower as a result of a reduction in commission
payments. Commissions payable to sales representatives for the sale of the Policy are calculated based on the total Premium payments. As a result, this rider generally is not offered in connection with any Policy with annual Premium payments of less
than $100,000, except for policies issued on a guaranteed issue basis. In our discretion, we may decline to offer this rider or refuse to consent to a proposed allocation of coverage between a Policy and term rider.
If this rider is offered, the commissions will vary depending on the allocation of your coverage between the Policy and the term rider. The
same initial Death Benefit will result in the highest commission when there is no term rider, with the commission declining as the portion of the Death Benefit coverage allocated to the term rider increases. Thus, the lowest commission amount is
payable, and the lowest amount of sales load deducted from your Premiums will occur, when the maximum term rider is purchased.
You may terminate this
rider by Request. This rider also will terminate on the earliest of the following dates:
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the date the Policy is surrendered or terminated; |
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the expiration of the grace period of the Policy; or |
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the death of the Insured. |
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Change of Insured Rider (Not available to individual Owners).
This rider permits you to change the Insured under your Policy or any Insured that has been named by virtue of this rider. Before we change the Insured you must provide us with (1) a Request for the change signed by you and approved by us;
(2) Evidence of Insurability for the new Insured; (3) evidence that there is an insurable interest between you and the new Insured; (4) evidence that the new Insured’s age, at the nearest birthday, is under 70 years; and
(5) evidence that the new Insured was born prior to the Policy Date. We may charge a fee for administrative expenses when you change the Insured. The minimum charge is $100 per change and the maximum charge is $400 per change. When a change of
Insured takes effect, Premiums will be based on the new Insured’s age, sex, mortality class and the Premium rate in effect on the Policy Date.
Report to Owner. We will maintain all records relating to the Series Account and the Divisions and the Fixed
Account. We will send you a report at least once each Policy Year within 30 days after a Policy Anniversary. The report will show current Account Value, current allocation in each Division, death benefit, Premiums paid, investment experience since
your last report, deductions made since the last report, and any further information that may be required by laws of the state in which your Policy was issued. It will also show the balance of any outstanding Policy loans and accrued interest on
such loans. There is no charge for this report.
In addition, we will send you the financial statements of the Funds and other reports as
specified in the 1940 Act. We also will mail you confirmation notices or other appropriate notices of Policy transactions quarterly or more frequently within the time periods specified by law. Please give us prompt written notice of any address
change. Please read your statements and confirmations carefully and verify their accuracy and contact us promptly with any questions.
Dollar Cost Averaging. By Request, you may elect dollar cost averaging in order to purchase Units of the Divisions over a period of time. There is no charge for this service.
Dollar cost averaging permits you to automatically Transfer a predetermined dollar amount, subject to our minimum, at regular intervals from
any one or more designated Divisions to one or more of the remaining, then available Divisions. The Unit Value will be determined on the dates of the Transfers. You must specify the percentage to be Transferred into each designated Division.
Transfers may be set up on any one of the following frequency periods: monthly, quarterly, semiannually, or annually. The Transfer will be initiated one frequency period following the date of your Request. We will provide a list of Divisions
eligible for dollar cost averaging that may be modified from time to time. Amounts Transferred through dollar cost averaging are not counted against the 12 free Transfers allowed in a Policy Year. You may not participate in dollar cost averaging and
the rebalancer option (described below) at the same time. Participation in dollar cost averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. We reserve the right to
modify, suspend, or terminate dollar cost averaging at any time.
Rebalancer Option. By Request, you may
elect the rebalancer option in order to automatically Transfer Account Value among the Divisions on a periodic basis. There is no charge for this service. This type of transfer program automatically reallocates your Account Value so as to maintain a
particular percentage allocation among Divisions chosen by you. The amount allocated to each Division will grow or decline at different rates depending on the investment experience of the Divisions. Rebalancing does not change your Premium
allocation unless that option is checked on the rebalancer Request. Your Premium allocation can also be changed by written Request at the address on the first page of this prospectus.
You may Request that rebalancing occur one time only, in which case the Transfer will take place on the date of the Request. This Transfer
will count as one Transfer towards the 12 free Transfers allowed in a Policy Year.
You may also choose to rebalance your Account Value on
a quarterly, semiannual, or annual basis, in which case the first Transfer will be initiated one frequency period following the date of your Request. On that date, your Account Value will be automatically reallocated to the selected Divisions.
Thereafter, your Account Value will be rebalanced once each frequency period. In order to participate in the rebalancer option, your entire Account Value must be included. Transfers made with these frequencies will not count against the 12 free
Transfers allowed in a Policy Year.
You must specify the percentage of Account Value to be allocated to each Division and the frequency
of rebalancing. You may terminate the rebalancer option at any time by Request.
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You may not participate in the rebalancer option and dollar cost averaging at the same time.
Participation in the rebalancer option does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify, suspend, or terminate the rebalancer option
at any time.
Non-Participating. The Policy does not pay dividends.
Premiums
Policy Application, Issuance and Initial Premium. To purchase a Policy, you must submit an application to our Corporate Headquarters. We will then follow our underwriting procedures designed to determine the insurability of the applicant. We
may require full underwriting, which includes a medical examination and further information, before your application may be approved. We also may offer the Policy on a simplified underwriting or guaranteed issue basis. Applicants must be acceptable
risks based on our applicable underwriting limits and standards. We will not issue a Policy until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application for any lawful reason or to
“rate” an Insured as a substandard risk, which will result in increased monthly risk rates. The monthly risk rate also may vary depending on the type of underwriting we use.
You must specify certain information in the application, including the Total Face Amount, the death benefit option and supplemental benefits,
if any. The Total Face Amount generally may not be decreased below $100,000.
Upon approval of the application, we will issue to you a
Policy on the life of the Insured. A specified Initial Premium must be paid before we issue the Policy. The effective date of coverage for your Policy (which we call the “Policy Date”) will be the date we receive a Premium equal to or in
excess of the specified Initial Premium after we have approved your application. If your Premium payment is received on the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that month.
We generally do not accept Premium payments before approval of an application; however, at our discretion, we may elect to do so. While your
application is in underwriting, if we accept your Premium payment before approval of your application, we will provide you with temporary insurance coverage in accordance with the terms of our temporary insurance agreement. In our discretion, we may
limit the amount of Premium we accept and the amount of temporary coverage we provide. If we approve your application, we will allocate your Premium payment to the Series Account or Fixed Account on the Policy Date, as described below. Otherwise, we
will promptly return your payment to you. We will not credit interest to your Premium payment for the period while your application is in underwriting.
We reserve the right to change the terms or conditions of your Policy to comply with differences in applicable state law. Variations from the
information appearing in this prospectus due to individual state requirements are described in supplements that are attached to this prospectus or in endorsements to the Policy, as appropriate.
Free Look Period. During the free look period (ten days or longer where required by state law), you may
cancel your Policy. If you exercise the free look privilege, you must return the Policy to our Corporate Headquarters or to the representative from whom you purchased the Policy.
Generally, net Premium will be allocated to the Divisions you selected on the application. However, under certain circumstances described
below, the net Premium will first be allocated to the Great-West Money Market Division and remain there until the next Valuation Date following the end of the free look period. On that date, the Sub-Account value held in the Great-West Money Market
Division will be allocated to the Division(s) selected by you. If your Premium payments are received after 4:00 PM EST/EDT, such payments will be credited on the next Valuation Date. Regardless of when the payment is credited, you will receive the
utilized values from the date we received your payment.
During the free look period, you may change your Division allocations and your
allocation percentages, however depending on whether your state permits the immediate investment of your premium, changes made during the free look period may not take effect until after the free look period has expired.
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Policies returned during the free look period will be void from the Issue Date. In some states,
we will refund your current Account Value plus the return of any expense charges deducted. In those states, this amount may be higher or lower than your Premium payments, which means you bear the investment risk during the free look period.
Certain states require that we return the greater of your Account Value (less any surrenders, withdrawals and distributions already received)
or the amount of the Premiums received. In those states, we will allocate your net Premium payments to the Great-West Money Market Fund Division. We will Transfer the Account Value in that Division to the other Divisions of the Series Account in
accordance with your most recent allocation instructions on file at the end of the free look period.
Premium. All Premium payments must be made payable to “Great-West Life & Annuity Insurance
Company” and mailed to our Corporate Headquarters. The Initial Premium will be due and payable on or before your Policy’s Issue Date. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the
death benefits option you select, but may not be less than $100. You may pay additional Premium payments to us in the amounts and at the times you choose, subject to the limitations described below. To find out whether your Premium payment has been
received, contact us at the address or telephone number shown on the first page of this prospectus.
We reserve the right to limit the
number of Premium payments we accept on an annual basis. No Premium payment may be less than $100 per Policy without our consent, although we will accept a smaller Premium payment if necessary to keep your Policy in force. We reserve the right to
restrict or refuse any Premium payments that exceed the Initial Premium amount shown on your Policy. We also reserve the right not to accept a Premium payment that causes the death benefit to increase by an amount that exceeds the Premium received.
Evidence of insurability satisfactory to us may be required before we accept any such Premium.
We will not accept Premium payments that
would, in our opinion, cause your Policy to fail to qualify as life insurance under applicable federal tax law. If a Premium payment is made in excess of these limits, we will accept only that portion of the Premium within those limits, and will
refund the remainder to you.
Net Premiums. The net Premium is the amount you pay as the Premium
less any expense charges applied to Premiums. See “Charges and Deductions -- Expense Charge Applied to Premium,” on page.
Planned Periodic Premiums. While you are not required to make additional Premium payments according to a
fixed schedule, you may select a planned periodic Premium schedule and corresponding billing period, subject to our limits. We will send you reminder notices for the planned periodic Premium, unless you Request to have reminder notices suspended.
You are not required, however, to pay the planned periodic Premium; you may increase or decrease the planned periodic Premium subject to our limits, and you may skip a planned payment or make unscheduled payments. Depending on the investment
performance of the Divisions you select, the planned periodic Premium may not be sufficient to keep your Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of your
Policy.
Death Benefits
Death Benefit. If your Policy is in force at the time of the Insured’s death, we will pay the
Beneficiary an amount based on the death benefit option you select once we have received Due Proof of the Insured’s death. The amount payable will be:
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the amount of the selected death benefit option, less |
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the value of any Policy Debt on the date of the Insured’s death, less |
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any accrued and unpaid Policy charges. |
We will pay this amount to the Beneficiary in one lump sum, unless the Beneficiary and we agree on another form of settlement. We will pay
interest, at a rate not less than that required by law, on the amount of Death Benefit Proceeds, if payable in one lump sum, from the date of the Insured’s death to the date of payment.
In order to meet the definition of life insurance under the Code, section 7702 of the Code defines alternative testing procedures for the
minimum death benefit under a Policy. See “Federal Income Tax Considerations - Tax Status of the Policy,” on page . Your Policy must qualify under the cash value accumulation test (“CVAT”).
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Under the CVAT testing procedures, there is a minimum death benefit required at all times equal
to your Account Value multiplied by a pre-determined factor. The factors used to determine the minimum death benefit vary by age. The factors (expressed as percentages) used for the CVAT are set forth in your Policy.
The Policy has two death benefit options.
Option 1. The
“Level Death” Option. Under this option, the death benefit is –
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the Policy’s Total Face Amount on the date of the Insured’s death less any partial withdrawals; or, if greater,
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the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to minimize your cost of insurance (monthly risk charge).
Option 2. The “Coverage Plus” Option. Under this option, the death benefit is –
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the sum of the Total Face Amount and Account Value of the Policy on the date of the Insured’s death less any partial withdrawals;
or, if greater, |
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the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to maximize your death benefit.
Your Account Value and death benefit fluctuate based on the performance of the investment options you select and the expenses and deductions
charged to your account. See the “Account Value” and “Charges and Deductions” sections of this prospectus.
There is no minimum death
benefit guarantee associated with this Policy.
Changes in Death Benefit Option. After the first Policy
Year, but not more than once each Policy Year, you may change the death benefit option by Request. Any change will be effective on the first day of the Policy Month following the date we approve your Request. A maximum administrative fee of $100
will be deducted from your Account Value each time you change your death benefit option.
A change in the death benefit option will not
change the amount payable upon the death of the Insured on the date of change. Any change is subject to the following conditions:
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If the change is from option 1 to option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the
Account Value. Evidence of insurability may be required. |
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If the change is from option 2 to option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the
Account Value. |
Changes in Total Face Amount. You may increase or decrease the Total
Face Amount of your Policy at any time within certain limits.
Minimum Changes. Each increase or decrease in the Total Face Amount must be
at least $25,000. We reserve the right to change the minimum amount by which you may change the Total Face Amount.
Increases in Total
Face Amount. To Request an increase in Total Face Amount, you must provide satisfactory evidence of the Insured’s insurability. Once approved by us, an increase will become effective on the Policy Anniversary following our approval of your
Request, subject to the deduction of the first Policy Month’s monthly risk charge, service charge, any extra risk charge if the Insured is in a rated class and the cost of any riders.
Each increase to the Total Face Amount is considered to be a new segment to the Policy. When an increase is approved, Premium is allocated
against the original Policy segment up to the seven-pay Premium limit established on the Issue Date. Any excess Premium is then allocated toward the new segment. Each segment will have a separate target Premium associated with it. The expense charge
applied to Premium is higher up to target and lower for Premium in excess of the target as described in detail in the “Charges and Deductions” section of this prospectus.
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The expense charge formula will apply to each segment based on the target Premium for that segment. In addition, each segment will have a new incontestability period and suicide exclusion period
as described in the “Other Provisions and Benefits” section of this prospectus.
Decreases in Total Face Amount. A decrease in
Total Face Amount will become effective at the beginning of the next Policy Month following our approval of your Request. The Total Face Amount after the decrease must be at least $100,000.
For purposes of the incontestability provision of your Policy, any decrease in Total Face Amount will be applied in the following order:
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first, to the most recent increase; |
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second, to the next most recent increases, in reverse chronological order; and |
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finally, to the initial Total Face Amount. |
Surrenders and Withdrawals
Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is
living. If you do, the insurance coverage and all other benefits under the Policy will terminate. To surrender your Policy, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork
necessary for you to Request the surrender of your Policy. The proceeds of a surrender will be payable within seven days of our receipt of the completed Request.
We will determine your Cash Surrender Value (minus any charges not previously deducted) as of the end of the first Valuation Date after we
receive your Request for surrender.
If you withdraw part of the Cash Surrender Value, your Policy’s death benefit will be reduced
and you may incur taxes and tax penalties.
You may borrow from us using your Account Value as collateral.
A surrender may have tax consequences, including tax penalties. See “Federal Income Tax Considerations – Tax Treatment of Policy
Benefits,” beginning on page of this prospectus.
Partial Withdrawal. You may Request a
partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A partial withdrawal fee will
be deducted from your Account Value for all partial withdrawals after the first made during the same Policy Year. This administrative fee is guaranteed to be no greater than $25. To Request a partial withdrawal, contact us at the address or
telephone number shown on the first page of this prospectus. We will send you the paperwork necessary for you to request a withdrawal from your Policy. The proceeds of any such partial withdrawal will be payable within seven days of our receipt
of the completed Request.
The Death Benefit Proceeds will be reduced by the amount of any partial withdrawals.
Your Account Value will be reduced by the amount of a partial withdrawal. The amount of a partial withdrawal will be withdrawn from the
Divisions and the Fixed Account in proportion to the amounts in the Divisions and the Fixed Account bearing on your Account Value. You cannot repay amounts taken as a partial withdrawal. Any subsequent payments received by us will be treated as
additional Premium payments and will be subject to our limitations on Premiums.
A partial withdrawal may have tax consequences. See
“Federal Income Tax Considerations - - Tax Treatment of Policy Benefits,” beginning on page of this prospectus.
Loans
Policy Loans. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made less any accrued loan interest and less the current monthly deductions
remaining for the balance of the Policy Year. When a Policy loan is made, a portion of your
35
Account Value equal to the amount of the Policy loan will be allocated to the Loan Account as collateral for the loan. This amount will not be affected by the investment experience of the Series
Account while the loan is outstanding and will be subtracted from the Divisions in proportion to the amounts in the Divisions bearing on your Account Value. The minimum Policy loan amount is $500.
The interest rate on the Policy loan will be determined annually, using a simple interest formula, at the beginning of each Policy Year. That
interest rate will be guaranteed for that Policy Year and will apply to all Policy loans outstanding during that Policy Year. Interest is due and payable on each Policy Anniversary. Interest not paid when due will be added to the principal amount of
the loan and will bear interest at the loan interest rate.
Presently, the maximum interest rate for Policy loans is the Moody’s
Corporate Bond Yield Average - Monthly Average Corporates, which is published by Moody’s Investor Service, Inc. If the Moody’s Corporate Bond Yield Average ceases to be published, the maximum interest rate for Policy loans will be derived
from a substantially similar average adopted by your state’s Insurance Commissioner.
We must reduce our Policy loan interest rate if
the maximum loan interest rate is lower than the loan interest rate for the previous Policy Year by one-half of one percent or more.
We
may increase the Policy loan interest rate but such increase must be at least one-half of one percent. No increase may be made if the Policy loan interest rate would exceed the maximum loan interest rate. We will send you advance notice of any
increase in the Policy loan rate.
Interest will be credited to amounts held in the Loan Account using a compound interest formula. The
rate will be no less than the Policy loan interest rate then in effect less a maximum of 0.9%.
All payments we receive from you will be
treated as Premium payments unless we have received notice, in form satisfactory to us, that the funds are for loan repayment. If you have a Policy loan, it is generally advantageous to repay the loan rather than make a Premium payment because
Premium payments incur expense charges whereas loan repayments do not. Loan repayments will first reduce the outstanding balance of the Policy loan and then accrued but unpaid interest on such loans. We will accept repayment of any Policy loan at
any time while the Policy is in force. Amounts paid to repay a Policy loan will be allocated to the Divisions in accordance with your allocation instructions then in effect at the time of repayment. Any amount in the Loan Account used to secure the
repaid loan will be allocated back to the Sub-Accounts.
A Policy loan, whether or not repaid, will affect the Death Benefit Proceeds,
payable upon the Insured’s death, and the Account Value because the investment results of the Divisions do not apply to amounts held in the Loan Account. The longer a loan is outstanding, the greater the effect is likely to be, depending on the
investment results of the Divisions while the loan is outstanding. The effect could be favorable or unfavorable.
Lapse and
Reinstatement
Lapse and Continuation of Coverage. If you cease making Premium payments, coverage
under your Policy and any riders to the Policy will continue until your Account Value, less any Policy Debt, is insufficient to cover the monthly deduction. When that occurs, the grace period will go into effect.
Grace Period. If the first day of a Policy Month occurs during the Valuation Period and your Account Value,
less any Policy Debt, is not sufficient to cover the monthly deduction for that Policy Month, then your Policy will enter the grace period described below. If you do not pay sufficient additional Premiums during the grace period, your Policy will
terminate without value.
The grace period will allow 61 days for the payment of Premium sufficient to keep the Policy in force. Any such
Premium must be in an amount sufficient to cover deductions for the monthly risk charge, the service charge, the cost for any riders and any extra risk charge if the Insured is in a rated class for the next two Policy Months. Notice of Premium due
will be mailed to your last known address or the last known address of any assignee of record at least 31 days before the date coverage under your Policy will cease. If the Premium due is not paid within the grace period, then the Policy and all
rights to benefits will terminate without value at the end of the 61-day period. The Policy will continue to remain in force during this grace period. If the Death Benefit Proceeds become payable by us during the grace period, then any due and
unpaid Policy charges will be deducted from the amount payable by us.
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Termination of Policy. Your Policy will terminate on the
earliest of the date we receive your Request to surrender, the expiration date of the grace period due to insufficient value or the date of death of the Insured. Upon lapse or termination, the Policy no longer provides insurance benefits.
Reinstatement. Before the Insured’s death, we will reinstate your Policy, provided that the Policy has
not been surrendered, and provided further that:
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you make your reinstatement Request within three years from the date of termination; |
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you submit satisfactory Evidence of Insurability to us; |
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you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period; |
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you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and |
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you repay or reinstate any Policy loan that was outstanding on the date coverage ceased, including interest at 6.00% per year compounded
annually from the date coverage ceased to the date of reinstatement of your Policy. |
A reinstated Policy’s Total
Face Amount may not exceed the Total Face Amount at the time of termination. Your Account Value on the reinstatement date will reflect:
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the Account Value at the time of termination; plus |
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net Premiums attributable to Premiums paid to reinstate the Policy; less |
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the monthly expense charge; less |
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the monthly cost of insurance charge applicable on the date of reinstatement; less |
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The expense charge applied to Premium. |
The effective date of reinstatement will be the date the application for reinstatement is approved by us.
Deferral of Payment. We will usually pay any amount due from the Series Account within seven days after the
Valuation Date following your Request giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment of any amount payable from the Series Account on death, surrender, partial withdrawal, or Policy loan may be
postponed whenever:
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the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted; |
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the SEC, by order, permits postponement for the protection of Owners; or |
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an emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonably practicable, or it is not reasonably
practicable to determine the value of the assets of the Series Account. |
Federal Income Tax Considerations
The following summary provides a general description of the federal income tax considerations associated with the Policy and does not
purport to be complete or to cover all situations. This discussion is not intended as tax advice. You should consult counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the
Internal Revenue Service’s (the “IRS”) current interpretation of current federal income tax laws. We make no representation as to the likelihood of continuation of the current federal income tax laws or of the current interpretations
by the IRS. We do not make any guarantee regarding the tax status of any Policy or any transaction regarding the Policy.
The
Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans
may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the use of the Policy in any such arrangement is contemplated, you should consult a qualified tax adviser for advice on the tax attributes and
consequences of the particular arrangement.
Tax Status of the Policy
A Policy has certain tax advantages when treated as a life insurance contract within the meaning of section 7702 of the Code. We believe that
the Policy meets the section 7702 definition of a life insurance contract and will take whatever steps are appropriate and reasonable to attempt to cause the Policy to comply with section 7702. We reserve the right to amend the Policy to comply with
any future changes in the Code, any regulations or rulings under the Code and any other requirements imposed by the IRS.
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Diversification of Investments. Section 817(h) of the Code
requires that the investments of each Division of the Series Account be “adequately diversified” in accordance with certain Treasury Department regulations. Disqualification of the Policy as a life insurance contract for failure to comply
with the diversification requirements would result in the imposition on you of federal income tax at ordinary income tax rates with respect to the earnings allocable to the Policy in the year of the failure and all prior years prior to the receipt
of payments under the Policy. We believe that the Divisions will be adequately diversified.
Policy Owner
Control. In connection with its issuance of temporary and proposed regulations under Section 817(h) in 1986, the Treasury Department announced that those regulations did not “provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the investor (i.e., the Owner), rather than the insurance company to be treated as the owner of the assets in the account” (which would result in the current
taxation of the income on those assets to the Owner). In Revenue Ruling 2003-91, the IRS provided such guidance by describing the circumstances under which the owner of a variable contract will not possess sufficient control over the assets
underlying the contract to be treated as the owner of those assets for federal income tax purposes. Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract is to be treated as the owner of the assets held by the
insurance company under the contract will depend on all of the facts and circumstances. We do not believe that your ownership rights under the Policy would result in your being treated as the Owner of the assets of the Policy under Rev. Rul.
2003-91. However, we do not know whether additional guidance will be provided by the IRS on this issue and what standards may be contained in such guidance. Therefore, we reserve the right to modify the Policy as necessary to attempt to prevent an
Owner from being considered the owner of a pro rata share of the assets of the Policy.
The following discussion assumes that your Policy
will qualify as a life insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
Life Insurance Death Benefit Proceeds. In general, the amount of the Death Benefit Payable under your Policy
is excludible from your Beneficiary’s gross income under the Code.
If the death benefit is not received in a lump sum and is,
instead, applied under a proceeds option agreed to by us and the Beneficiary, payments generally will be prorated between amounts attributable to the death benefit, which will be excludible from the Beneficiary’s income, and amounts
attributable to interest (occurring after the Insured’s death), which will be includable in the Beneficiary’s income.
Tax Deferred Accumulation. Any increase in your Account Value is generally not taxable to you. If you receive or are deemed to receive amounts from the Policy before the Insured dies, see the following section entitled
“Distributions” for a more detailed discussion of the taxability of such payments.
Depending on the circumstances, any of the following
transactions may have federal income tax consequences:
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the exchange of a Policy for a life insurance, endowment or annuity contract; |
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a change in the death benefit option; |
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a change in the ownership of a Policy; |
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a change of the named Insured; or |
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an assignment of a Policy. |
In addition, federal, state and local transfer and other tax consequences of ownership or receipt of Death Benefit Proceeds will depend on
your circumstances and those of the named Beneficiary. Whether partial withdrawals (or other amounts deemed to be distributed) constitute income subject to federal income tax depends, in part, upon whether your Policy is considered a MEC.
38
Surrenders. If you surrender your Policy, you will recognize
ordinary income to the extent the Account Value exceeds the “investment in the contract,” which is generally the total of Premiums and other consideration paid for the Policy, less all amounts previously received under the Policy to the
extent those amounts were excludible from gross income.
Modified Endowment Contracts.
Section 7702A of the Code treats certain life insurance contracts as MECs. In general, a Policy will be treated as a MEC if total Premiums paid at any time during the first seven Policy Years exceed the sum of the net level Premiums which would
have been paid on or before that time if the Policy provided for paid-up future benefits after the payment of seven level annual Premiums (“seven-pay test”). In addition, a Policy may be treated as a MEC if there is a “material
change” to the Policy.
We will monitor your Premium payments and other Policy transactions and notify you if a payment or other
transaction might cause your Policy to become a MEC. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC without instruction to do so from you. We will promptly notify you or your agent of the excess
cash received. We will not process the Premium payment unless we receive a MEC acceptance form or Policy change form within 48 hours of receipt of the excess funds. If paperwork is received that allows us to process the excess cash, the effective
date will be the date of the new paperwork.
Further, if a transaction occurs which decreases the Total Face Amount of your Policy during
the first seven years, we will retest your Policy, as of the date of its purchase, based on the lower Total Face Amount to determine compliance with the seven-pay test. Also, if a decrease in Total Face Amount occurs within seven years of a
“material change,” we will retest your Policy for compliance as of the date of the “material change.” Failure to comply in either case would result in the Policy’s classification as a MEC regardless of our efforts to provide
a payment schedule that would not otherwise violate the seven-pay test.
The rules relating to whether a Policy will be treated as a MEC
are complex and cannot be fully described in the limited confines of this summary. Therefore, you should consult with a competent tax adviser to determine whether a particular transaction will cause your Policy to be treated as a MEC.
Distributions
Distributions Under a Policy That Is Not a MEC. If your Policy is not a MEC, a distribution is generally
treated first as a tax-free recovery of the “investment in the contract,” and then as a distribution of taxable income to the extent the distribution exceeds the “investment in the contract.” An exception is made for cash
distributions that occur in the first 15 Policy Years as a result of a decrease in the death benefit or other change that reduces benefits under the Policy that are made for purposes of maintaining compliance with section 7702. Such distributions
are taxed in whole or part as ordinary income (to the extent of any gain in the Policy) under rules prescribed in section 7702.
If your
Policy is not a MEC, Policy loans and loans secured by the Policy are generally not treated as distributions. Such loans are instead generally treated as your indebtedness.
Finally, if your Policy is not a MEC, distributions (including distributions upon surrender), Policy loans and loans secured by the Policy are
not subject to the ten percent additional tax applicable to distributions from a MEC.
Distributions Under
Modified Endowment Contracts. If treated as a MEC, your Policy will be subject to the following tax rules:
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First, partial withdrawals are treated as ordinary income subject to ordinary income tax up to the amount equal to the excess (if any) of your
Account Value immediately before the distribution over the “investment in the contract” at the time of the distribution. |
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Second, Policy loans and loans secured by a Policy are treated as partial withdrawals and taxed accordingly. Any past-due loan interest that is
added to the amount of the loan is treated as a loan. |
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Third, a ten percent additional penalty tax is imposed on that portion of any distribution (including distributions upon surrender), Policy loans,
or loans secured by a Policy, that is included in income, except where the distribution or loan is made to a taxpayer that is a natural person, and: |
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1. |
is made when the taxpayer is age 59 1⁄2 or older;
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2. |
is attributable to the taxpayer becoming disabled; or |
39
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3. |
is part of a series of substantially equal periodic payments (not less frequently than annually) for the duration of the taxpayer’s life (or
life expectancy) or for the duration of the longer of the taxpayer’s or the Beneficiary’s life (or life expectancies). |
Multiple Policies. All MECs issued by us (or our affiliates) to you during any calendar year will be treated
as a single MEC for purposes of determining the amount of a Policy distribution that is taxable to you.
Treatment When Insured Reaches Attained Age 121. As described above, when the Insured reaches Attained Age
121, we will issue you a “paid-up” life insurance Policy. We believe that the paid-up life insurance Policy will continue to qualify as a “life insurance contract” under the Code. However, there is some uncertainty regarding this
treatment. It is possible, therefore, that you would be viewed as constructively receiving the Cash Surrender Value in the year in which the Insured attains age 121 and would realize taxable income at that time, even if the Death Benefit Proceeds
were not distributed at that time. In addition, any outstanding Policy Debt will be repaid at that time. This repayment may be treated as a taxable distribution to you, if your contract is not a MEC.
The IRS has issued Revenue Procedure 2010-28 providing a safe harbor concerning the application of Sections 7702 and 7702A to life insurance
contracts that have mortality guarantees based on the 2001 CSO Table and which may continue in force after an insured attains age 100. If a contract satisfies all the requirements of Sections 7702 and 7702A using all of the Age 100 Safe Harbor
Testing Method requirements set forth in Rev. Proc. 2010-28, the IRS will not challenge the qualification of that contract under Sections 7702 and 7702A. Rev. Proc. 2010-28 also states that “No adverse inference should be drawn with respect to
the qualification of a contract as a life insurance contract under §7702, or its status as not a MEC under §7702A, merely by reason of a failure to satisfy all of the requirements of [the Age 100 Safe Harbor].”
Federal Income Tax Withholding. We are required to withhold 10% on that portion of a Policy distribution
that is taxable, unless you direct us in writing not to do so at or before the time of the Policy distribution. As the Owner you are responsible for the payment of any taxes and early distribution penalties that may be due on Policy distributions.
Actions to Ensure Compliance with the Tax Law. We believe that the maximum amount of Premiums we
intend to permit for the Policies will comply with the Code definition of a “life insurance contract.” We will monitor the amount of your Premiums, and, if you pay a Premium during a Policy Year that exceeds those permitted by the Code, we
will promptly refund the Premium or a portion of the Premium before any allocation to the Funds. We reserve the right to increase the death benefit (which may result in larger charges under a Policy) or to take any other action deemed necessary to
ensure the compliance of the Policy with the federal tax definition of a life insurance contract.
Trade or
Business Entity Owns or Is Directly or Indirectly a Beneficiary of the Policy. Where a Policy is owned by other than a natural person, the Owner’s ability to deduct interest on business borrowing unrelated to the Policy can be impacted as a
result of its ownership of cash value life insurance. No deduction will be allowed for a portion of a taxpayer’s otherwise deductible interest expense unless the Policy covers only one individual, and such individual is, at the time first
covered by the Policy, a 20 percent owner of the trade or business entity that owns the Policy, or an officer, director, or employee of such trade or business.
Although this limitation generally does not apply to Policies held by natural persons, if a trade or business (other than one carried on as a
sole proprietorship) is directly or indirectly the Beneficiary under a Policy (e.g., pursuant to a split-dollar agreement), the Policy will be treated as held by such trade or business. The effect will be that a portion of the trade or
business entity’s deduction for its interest expenses will be disallowed unless the above exception for a 20 percent owner, employee, officer or director applies.
The portion of the entity’s interest deduction that is disallowed will generally be a pro rata amount which bears the same ratio to such
interest expense as the taxpayer’s average unborrowed cash value bears to the sum of the taxpayer’s average unborrowed cash value and average adjusted bases of all other assets. Any corporate or business use of the life insurance should be
carefully reviewed by your tax adviser with attention to these rules as well as any other rules and possible tax law changes that could occur with respect to corporate-owned life insurance.
In Revenue Ruling 2011-9, the IRS held that the status of an insured as an employee “at the time first covered” for purposes of
Section 264(f) does not carry over from a contract given up in a Section 1035 tax-free exchange to a contract received in such an exchange. Therefore, the pro rata interest expense disallowance exception of Section 264(f)(4) does not apply
to new Policies received in Section 1035 tax-free exchanges unless such Policies also qualify for the exception provided by Section 264(f)(4) of the Code.
40
Employer-Owned Life Insurance. The Pension Protection Act of
2006 added a new section to the Code that denies the tax-free treatment of death benefits payable under an employer-owned life insurance contract unless certain notice and consent requirements are met and either (1) certain rules relating to
the insured employee’s status are satisfied or (2) certain rules relating to the payment of the “amount received under the contract” to, or for the benefit of, certain beneficiaries or successors of the insured employee are
satisfied. The new rules apply to life insurance contracts owned by corporations (including S corporations), individual sole proprietors, estates and trusts and partnerships that are engaged in a trade or business. Any business contemplating the
purchase of a Policy on the life of an employee should consult with its legal and tax advisers regarding the applicability of the new legislation to the proposed purchase.
Split Dollar Life Insurance. A tax adviser should also be consulted with respect to the split dollar
regulations if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. Any business contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax
adviser.
Alternative Minimum Tax. There may also be an indirect tax upon the income in the Policy or
the proceeds of a Policy under the federal corporate alternative minimum tax, if the policy owner is subject to that tax.
Other Employee Benefit Programs. Complex rules may apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of employee benefits. These Policy owners also must consider whether the
Policy was applied for by, or issued to, a person having an insurable interest under applicable state law, as the lack of insurable interest may, among other things, affect the qualification of the Policy as life insurance for federal income tax
purposes and the right of the Beneficiary to death benefits. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should
consult your legal advisor.
Policy Loan Interest. Generally, no tax deduction is allowed for interest
paid or accrued on any indebtedness under a Policy.
Change of Insured Rider. The Company makes no representations concerning the
tax effects of the change of insured rider. Owners are responsible for seeking tax counsel regarding the tax effects of the Rider. The Company reserves the right to refund cash value exceeding allowable limits for tax exempt purposes, or that would
be charged as current interest income to Owners.
Investment Income Surtax. In taxable years beginning in 2013, taxable
distributions from life insurance policies are considered “investment income” for purposes of the newly enacted Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable
portion of distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts as follows: an amount equal to the lesser of (a) “net investment income”; or (b) the excess of a
taxpayer’s modified adjusted gross income over a specified income threshold ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for everyone else). The IRS has issued regulations that treat
taxable distributions from life insurance policies as “Net investment income.” Please consult the impact of the Investment Income Surtax on you with a competent tax advisor.
Our Taxes. We are taxed as a life insurance company under part I of subchapter L of the Code. The
operations of the Series Account are taxed as part of our operations. Investment income and realized capital gains are not taxed to the extent that they are applied under the Policies. As a result of the Omnibus Budget Reconciliation Act of 1990, we
are generally required to capitalize and amortize certain Policy acquisition expenses over a ten year period rather than currently deducting such expenses. This so-called “deferred acquisition cost” tax (“DAC tax”) applies to the
deferred acquisition expenses of a Policy and results in a significantly higher corporate income tax liability for Great-West. We reserve the right to adjust the amount of a charge to Premium to compensate us for these anticipated higher corporate
income taxes.
A portion of the expense charges applied to Premium is used to offset the federal, state or local taxes that we incur which
are attributable to the Series Account or the Policy. We reserve the right to adjust the amount of this charge.
41
Summary.
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• |
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We do not make any guarantees about the Policy’s tax status. |
| |
• |
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We believe the Policy will be treated as a life insurance contract under federal tax laws. |
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• |
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Death benefits generally are not subject to federal income tax. |
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• |
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Investment gains are normally not taxed unless distributed to you before the Insured dies. |
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• |
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If you pay more Premiums than permitted under the seven-pay test, your Policy will be a MEC. |
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If your Policy becomes a MEC, partial withdrawals, Policy loans and surrenders may incur taxes and tax penalties. |
Corporate Tax Shelter Requirements
The Company does not believe that any purchase of a Policy by an Owner pursuant to this offering will be subject to the tax shelter
registration, customer list or reporting requirements under the Code and implementing regulations. All Owners that are corporations are advised to consult with their own tax and/or legal counsel and advisers, to make their own determination as to
the applicability of the disclosure requirements of IRC § 6011 and Treas. Reg. Section
1.6011-4 to their federal income tax returns.
Legal Proceedings
There are no pending legal proceedings that would have an adverse material effect on the Series Account or on GWFS. Great-West is engaged in
various kinds of routine litigation that, in our judgment, is not material to its total assets or material with respect to the Series Account.
Legal Matters
Pursuant to Commodity Futures Trading Commission Rule 4.5, Great-West has claimed an exclusion from the definition
of the term “commodity pool operator” under the Commodity Exchange Act. Therefore, it is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
Beverly A. Byrne, Chief Compliance Officer & Legal Counsel, Financial Services, of Great-West, has passed upon all matters of
Colorado law pertaining to the Policy, including the validity of the Policy and our right to issue the Policy under Colorado law. The law firm of Carlton Fields Jorden Burt P.A., 1025 Thomas Jefferson St., N.W., Suite 400 East, Washington, D.C.
20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
Abandoned Property
Requirements
Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property
(including proceeds of life insurance policies) under various circumstances. This “escheatment” is revocable, however, and the state is obligated to pay the applicable proceeds if the property owner steps forward to claim it with the
proper documentation. To help prevent such escheatment, it is important that you keep your policy and other information on file with us up to date, including the names, contact information, and identifying information for owners, beneficiaries, and
other payees. Such updates should be communicated by writing to the Company at 8515 E. Orchard Road, 9T2, Greenwood Village, CO 80111, by calling 888-353-2654, by sending an email to gwexecbenefits@greatwest.com or via the web at
www.greatwest.com/executivebenefits.
42
Financial Statements
Great-West’s consolidated financial statements, which are included in the Statement of Additional Information (“SAI”), should
be considered only as bearing on our ability to meet our obligations with respect to the death benefit and our assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares
held in the Series Account.
43
Appendix A – Glossary of Terms
Unless otherwise defined in this prospectus, capitalized terms shall have the meaning set forth below.
Account Value – The sum of the value of your interests in the Divisions, the Fixed Account and the Loan Account. This amount
reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan Account balance; and (5) the charges we deduct under the Policy.
Attained Age – The age of the Insured, nearest birthday, as of the Policy Date and each Policy Anniversary thereafter.
Beneficiary – The person(s) named by the Owner to receive the Death Benefit Proceeds upon the death of the Insured.
Business Day – Any day that we are open for business. We are open for business every day that the NYSE is open for trading.
Cash Surrender Value – is equal to:
| |
(a) |
Account Value on the effective date of the surrender; less |
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(b) |
outstanding Policy loans and accrued loan interest, if any; less |
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(c) |
any monthly cost of insurance charges. |
Corporate Headquarters – Great-West Life & Annuity Insurance Company, 8515 East Orchard Road, Greenwood Village, Colorado
80111, or such other address as we may hereafter specify to you by written notice.
Death Benefit Proceeds – The amount
determined in accordance with the terms of the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt, and increased by the amounts payable under any supplemental
benefits.
Divisions – Divisions into which the assets of the Series Account are divided, each of which corresponds to
and contains shares of a Fund. Divisions may also be referred to as “investment divisions” or “sub-accounts” in the prospectus, SAI or Series Account financial statements.
Due Proof – Such evidence as we may reasonably require in order to establish that Death Benefit Proceeds are due and payable.
Effective Date – The date on which the first Premium payment is credited to the Policy.
Evidence of Insurability – Information about an Insured that is used to approve or reinstate this Policy or any additional
benefit.
Fixed Account – A division of our General Account that provides a fixed interest rate. This account is not
part of and does not depend on the investment performance of the Sub-Accounts.
Fund – An underlying mutual fund in
which a Division invests. Each Fund is an investment company registered with the SEC or a separate investment series of a registered investment company.
General Account – All of our assets other than those held in a separate investment account.
Initial Premium – The initial Premium amount specified in a Policy.
Insured – The person whose life is insured under the Policy.
Issue Age – The Insured’s age as of the Insured’s birthday nearest the Policy Date.
Issue Date – The date on which we issue a Policy.
44
Loan Account – All outstanding loans plus credited loan interest held in the General
Account of the Company. The Loan Account is not part of the Series Account.
Loan Account Value – The sum of all outstanding
loans plus credited loan interest for this Policy.
MEC – Modified Endowment Contract. For more information regarding
MECs, see “Modified Endowment Contracts” on page.
NYSE – New York Stock Exchange.
Owner – The person(s) named in the application who is entitled to exercise all rights and privileges under the Policy, while the
Insured is living. The purchaser of the Policy will be the Owner unless otherwise indicated in the application.
Policy Anniversary
– The same day in each succeeding year as the day of the year corresponding to the Policy Date.
Policy Date – The
effective date of coverage under this Policy. The Policy Months, Policy Years and Policy Anniversaries are measured from the Policy Date.
Policy Debt – The principal amount of any outstanding loan against the Policy plus accrued but unpaid interest on such loan.
Policy Month – The one-month period commencing on the same day of the month as the Policy Date.
Policy Year – The one-year period commencing on the Policy Date or any Policy Anniversary and ending on the next Policy
Anniversary.
Premiums – Amounts received and allocated to the Sub-Account(s) and the Fixed Account prior to any deductions.
Request – Any instruction in a form, written, telephoned or computerized, satisfactory to the Company and received in good
order at the Corporate Headquarters from the Owner or the Owner’s assignee (as specified in a form acceptable to the Company) or the Beneficiary, (as applicable) as required by any provision of this Policy or as required by the Company. The
Request is subject to any action taken or payment made by the Company before it was processed.
SEC – The United States
Securities and Exchange Commission.
Series Account – The segregated investment account established by the Company as a
separate account under Colorado law named the COLI VUL –2 Series Account. It is registered as a unit investment trust under the 1940 Act.
Sub-Account – Sub-division(s) of the Owner’s Account Value containing the value credited to the Owner from the Series
Account. Sub-Accounts may also be referred to as “investment divisions” or “Divisions” in the prospectus, SAI or Series Account financial statements.
Surrender Benefit – Account Value less any outstanding Policy loans and less accrued loan interest.
Total Face Amount – The amount of life insurance coverage you request as specified in your Policy.
Transaction Date – The date on which any Premium payment or Request from the Owner will be processed by the Company. Premium
payments and Requests received after 4:00 p.m. EST/EDT will be deemed to have been received on the next Business Day. Requests will be processed and the Sub-Account value will be valued on the day that the Premium payments or Request is received and
the NYSE is open for trading.
45
Transfer – The moving of money from one or more Division(s) or the Fixed Account to
one or more Division(s) or the Fixed Account.
Unit – An accounting unit of measurement that we use to calculate the value of
each Division.
Unit Value – The value of each Unit in a Division.
Valuation Date – The date on which the net asset value of each Fund is determined. A Valuation Date is each day that the NYSE is
open for regular business. The value of a Division’s assets is determined at the end of each Valuation Date (generally 4:00 p.m. EST/EDT). To determine the value of an asset on a day that is not a Valuation Date, the value of that asset as of
the end of the previous Valuation Date will be used.
Valuation Period – The period of time from one determination of Unit
Values to the next following determination of Unit Values. We will determine Unit Value for each Valuation Date as of the close of the NYSE (generally 4:00 p.m. EST/EDT) on that Valuation Date.
46
The SAI is a document that includes additional information about the Series Account, including
the financial statements of both Great-West and of each of the Divisions of the Series Account. The SAI is incorporated by reference as a matter of law into the prospectus, which means that it is legally part of the prospectus. The SAI is available
upon request, without charge. To request the SAI or other information about the Policy, or to make any inquires about the Policy, contact Great-West toll-free at 888-353-2654 or via email at www.greatwest.com/executivebenefits.
Information about the Series Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Series Account are available on the SEC’s Internet site at http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee, by writing at the Public Reference Section of the Commission, 100 F Street, N.E., Washington, D.C. 20549-0102.
Investment Company Act File No. 811-09201
47
Great-West Life & Annuity Insurance Company
A Stock Company
8515
East Orchard Road
Greenwood Village, Colorado 80111
(303) 737-3000
Executive Benefit VUL
— Prospectus
A Flexible Premium Variable Universal Life Insurance Policy
offered by Great-West Life & Annuity Insurance Company
in connection with its COLI VUL-2 Series Account
This prospectus describes a flexible premium variable universal life insurance policy (the “Policy”) offered by Great-West
Life & Annuity Insurance Company (“Great-West,” “Company,” “we,” “our” or “us”). The Policy offered under this prospectus is no longer issued to new purchasers. The Policy offered
under this prospectus has not been offered for sale since April 30, 2011; however, you may make additional Premium payments as permitted under your Policy.
The Policy is designed for use by corporations and employers to provide life insurance coverage in connection with, among other things,
deferred compensation plans and employer-financed insurance purchase arrangements. The Policy is designed to meet the definition of a “life insurance contract” for federal income tax purposes.
The Policy allows “you,” the Owner, within certain limits to:
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choose the type and amount of insurance coverage you need and increase or decrease that coverage as your insurance needs change;
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choose the amount and timing of Premium payments, within certain limits; |
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allocate Premium payments among the available investment options and Transfer Account Value among available investment options as your investment
objectives change; and |
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access your Account Value through loans and partial withdrawals or total surrenders. |
This prospectus contains important information you should understand before purchasing a Policy, including a description of the material
rights and obligations under the Policy. We use certain special terms that are defined in Appendix A. Your Policy and any endorsements are the formal contractual agreement between you and the Company. It is important that you read the Policy and
endorsements which reflect other variations. You should keep this prospectus on file for future reference. The Policy that we are currently issuing, Executive Benefit VUL II, is offered under a separate prospectus.
The Policy and Fixed Account endorsement (and optional Term Life Insurance Rider) that we issued until April 30, 2011 became available on
January 1, 2009. The Policy and optional Term Life Insurance Rider described in this prospectus are based on state-required 2001 CSO mortality tables, as defined below. Before January 1, 2009, we issued an earlier version of the Policy
(“Pre-2009 Policy”) and optional Rider, which were based on 1980 CSO mortality tables. Many of the Pre-2009 Policies and optional Riders still remain outstanding. The Pre-2009 Policy differs somewhat from the Policy that we issued until
April 30, 2011, and certain of the information in this prospectus, therefore, does not apply to those Pre-2009 Policies. Appendix B to this prospectus explains the information that applies instead to the Pre-2009 Policy and Pre-2009 optional
Rider. Therefore, if you own a Pre-2009 Policy (issued prior to January 1, 2009), you should also refer to Appendix B at the end of this prospectus for information about how your Pre-2009 Policy and optional Rider differs from the Policy
that we issued until April 30, 2011.
The Securities and Exchange Commission has not approved or disapproved these securities
or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this
prospectus is May 1, 2014
1
Table of Contents
2
3
4
Summary of the Policy and its Benefits
This is a summary of some of the most important features of your Policy. The Policy is more fully described in the remainder of this
prospectus. Please read this prospectus carefully. Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and current federal tax laws apply.
1. Corporate-Owned Variable Life Insurance. We will issue Policies to corporations and employers and to certain individuals to provide
life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed insurance purchase arrangements. We will issue Policies on the lives of prospective Insureds who meet our underwriting standards.
2. The Series Account. We have established a separate account to fund the variable benefits under the Policy. The assets of
the Series Account are insulated from the claims of our general creditors.
3. Premium Payments. You must pay us an Initial Premium
to put your Policy in force. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the death benefits option you select, but may not be less than $100.00. Thereafter, you choose the amount and timing of
Premium payments, within certain limits.
4. Fixed Account. You may allocate some or all of your net payments and/or make Transfers
from the Sub-Accounts to the Fixed Account. The Fixed Account is part of our General Account. We own the assets in the General Account, and we use these assets to support our insurance and annuity obligations other than those funded by our separate
accounts. These Fixed Account assets are subject to our general liabilities from business operations. Subject to applicable law, we have sole discretion over investment of the Fixed Account assets. We bear the full investment risk for all amounts
allocated or transferred to the Fixed Account.
We guarantee that the amounts allocated to the Fixed Account will be credited interest at
a net effective annual interest rate of at least 3.00%, the minimum interest rate provide in your Policy. At our discretion, we will review the interest rate at least once a year. We may reset the interest rate monthly. The Fixed Account is not
affected by the investment performance of the Sub-Accounts. Policy value in the Fixed Account will be reduced by the Policy fees and charges we deduct and the effects of any Policy transactions (loans, withdrawals, and Transfers) on your Policy
value in the Fixed Account.
5. Free Look Period. You may return your Policy to us for any reason within ten days of receiving it,
or such longer period as required by applicable state law (in some states, up to 30 days for replacement policies), and depending on state law, receive (i) the greater of your Premiums, less any withdrawals, or your Account Value, or
(ii) your Account Value plus the return of any expense charges deducted. The money you contribute to the Policy will be invested at your direction, except that in some states during your free look period your Premiums will be allocated to the
Great-West Money Market Division.
6. Investment Options and Funds. You may allocate your net Premium payments among the available
investment divisions (“Divisions”) or the Fixed Account.
Each Division invests exclusively in shares of a single Fund. Each
Fund has its own distinct investment objective and policies, which are described in the accompanying prospectuses for the Funds.
You may
Transfer amounts from one Division to another or the Fixed Account, subject to the restrictions described herein.
7. Death Benefit. You may choose
from among two death benefit options –
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1. |
a fixed benefit equal to the Total Face Amount of your Policy; or |
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2. |
a variable benefit equal to the sum of the Total Face Amount and your Account Value. |
For each option, the death benefit may be greater if necessary to satisfy federal tax law requirements.
5
We will deduct any outstanding Policy Debt and unpaid Policy charges before we pay a death
benefit. In addition, prior partial withdrawals may reduce the Death Benefit Proceeds under the first option.
At any time, you may
increase or decrease the Total Face Amount, subject to our approval and other requirements set forth in the Policy.
After the first Policy Year, you may
change your death benefit option once each Policy Year.
8. Account Value. Your Account Value will reflect –
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2. |
the investment performance of the Divisions you select; |
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3. |
the value of the Fixed Account. |
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4. |
any Policy loans or partial withdrawals; |
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5. |
your Loan Account balance; and |
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6. |
the charges we deduct under the Policy. |
9. Accessing Your Account Value. You may borrow from us using your Account Value as collateral. Loans may be treated as taxable income
if your Policy is a “modified endowment contract” (“MEC”) for federal income tax purposes and you have had positive net investment performance.
There are no surrender charges associated with your Policy. You may surrender your Policy for its Cash Surrender Value plus return of expense
charge, if applicable. The return of expense charge is a percentage of your Account Value and is described in greater detail on.
You may withdraw a
portion of your Account Value at any time while your Policy is in force.
A withdrawal may reduce your death benefit.
We will charge an administrative fee not greater than $25 per withdrawal on partial withdrawals after the first in a Policy Year.
| 10. |
Supplemental Benefits. The following optional riders are available – |
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1. |
term life insurance; and |
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2. |
change of Insured (not available to individual Owners). |
We will deduct the cost, if any, of the rider(s) from your Account Value on a monthly basis.
11. Paid-Up Life Insurance. If the Insured reaches Attained Age 121 and your Policy is in force, the Account Value, less Policy Debt,
will be applied as a single Premium to purchase “paid-up” insurance. Your Account Value will remain in the Series Account allocated to the Divisions or the Fixed Account in accordance with your instructions. The death benefit under this
paid-up insurance will be fixed by the Internal Revenue Code of 1986, as amended (“Code”) for Insureds age 99. As your Account Value changes based on the investment experience of the Divisions, the death benefit will increase or decrease
accordingly.
12. Reinstatement. If your Policy terminates due to insufficient value, we will reinstate it within three years at
your Request, subject to certain conditions.
13. Surrenders. You may surrender your Policy for its Cash Surrender Value at any
time while the Insured is living. If you do, the insurance coverage and all other benefits under the Policy will terminate.
If you
withdraw part of the Cash Surrender Value, your Policy’s death benefit may be reduced and you may incur taxes and tax penalties.
6
14. Partial Withdrawal. You may Request a partial withdrawal of Account Value at any time
while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account.
The Death Benefit Proceeds and your Account Value will be reduced by the amount of any partial withdrawals.
15. Policy Loans. You may borrow from us using your Account Value as collateral. You may Request a Policy loan of up to 90% of your
Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made.
The minimum Policy loan amount is $500.
16. Changes in Total Face Amount. You may increase or decrease the Total Face Amount of your Policy at any time. Each increase or
decrease in the Total Face Amount must be at least $25,000. Minimum face amount is $100,000.
17. Target Premium. Your target
Premium is actuarially determined and will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class (if any) and equals the maximum Premium payable such that the Policy remains
compliant with the Code. The target Premium is used to determine your expense charged applied to the Premium and the sales compensation we pay. Payment of the target premium does not guarantee that your Policy will not lapse, and you may need to pay
additional Premiums to keep your Policy in force. Each increase to the Total Face Amount is considered to be a new segment to the Policy. Each segment will have a separate target Premium associated with it.
18. State Variations. Policies issued in your state may provide different features and benefits from, and impose different costs than, those described
in this prospectus because of state law variations. These differences include, among other things, free look rights, issue age limitations, and the general availability of riders. This prospectus describes the material rights and obligations of an
Owner, and the maximum fees and charges for all Policy features and benefits are set forth in the fee table of this prospectus. See your Policy for specific variations because any such state variations will be included in your Policy or in riders or
endorsements attached to your Policy. See your agent or contact us for specific information that is applicable to your state.
Policy Risks
1. Account Value Not Guaranteed. Your Account Value is not guaranteed. Your Account Value fluctuates based on the performance of the
investment options you select. The investment options you select may not perform to your expectations. Your Account Value may also be affected by charges under your Policy.
2. Not Suitable as Short-Term Savings Vehicle. The Policy is designed for long-term financial planning. Accordingly, you should not
purchase the Policy if you need access to the Account Value within a short time. Before purchasing a Policy, consider whether the long-term nature of the Policy is consistent with the purposes for which it is being considered.
3. Risk of Contract Lapse. Your Policy may terminate if your Account Value at the beginning of any Policy Month is insufficient to pay
the Policy’s monthly charges.
If your Policy would terminate due to insufficient value, we will send you notice and allow you a 61-day grace period.
If, within the grace period, you do not make a Premium payment sufficient to cover all accrued and unpaid charges and deductions, your
Policy will terminate at the end of the grace period without further notice.
4. Limitations on Withdrawals. Partial withdrawals of
Account Value are permitted at any time the Policy is in force. As noted above, the amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A maximum administrative fee
of $25 will be deducted from your Account Value for all partial withdrawals after the first made in the same Policy Year. Please note that withdrawals reduce your Account Value and your Death Benefit Proceeds. In addition, withdrawals may have tax
consequences.
7
5. Limitations on Transfers. Subject to our rules as they may exist from time to time,
you may at any time Transfer to another Division all or a portion of the Account Value allocated to a Division. Certain limitations apply to Transfers into and out of the Fixed Account. See “Fixed Account Transfers” on page.
6. Limitations or Charges on Surrender of Policy. You may surrender your Policy for its Cash Surrender Value at any time while the
Insured is living. Upon surrender of your Policy, the insurance coverage and all other benefits under the Policy will terminate.
There
are no surrender charges associated with your Policy. However, the surrender of your Policy may have tax consequences.
7. Risks of
Taking a Policy Loan. As noted above, you may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of any outstanding Policy Debt on the date the Policy loan is made. The minimum Policy loan amount is $500.
Taking a Policy loan may increase the risk that your Policy will lapse, will reduce your Account Value, and may reduce the death benefit. In
addition, if your Policy is a MEC for tax purposes, taking a Policy loan may have tax consequences.
8. Adverse Tax Consequences.
Your Policy is structured to meet the definition of a life insurance contract under the Code. Current federal tax law generally excludes all death benefits from the gross income of the Beneficiary of a life insurance policy. Generally, you are
not taxed on any increase in the Account Value until it is withdrawn, but are taxed on surrender proceeds and the proceeds of any partial withdrawals if those amounts, when added to all previous non-taxable distributions, exceed the total Premium
paid. Amounts received upon surrender or withdrawals in excess of Premiums are treated as ordinary income.
Under certain circumstances, a
Policy may become a MEC for federal tax purposes. This may occur if you reduce the Total Face Amount of your Policy or pay excessive Premiums. We will monitor your Premium payments and other Policy transactions and notify you if a payment or other
transaction might cause your Policy to become a MEC without your written permission. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC, but instead will promptly refund the money to you. If you elect
to have a MEC contract, you can return the money to us with a signed form of acceptance.
Under current tax law, Death Benefit Proceeds
under MECs generally are excluded from the gross income of the Beneficiary. Withdrawals and Policy loans, however, are treated first as income, to the extent of any gain, and then as a return of Premium. The income portion of the distribution is
includable in your taxable income and taxed at ordinary income tax rates. A 10% penalty tax is also generally imposed on the taxable portion of any amount received before age 59 1⁄2.
Fund Risks
The Policy currently offers several variable investment options, each of which is a Division of the Series Account. Each Division uses its
assets to purchase, at their net asset value, shares of a Fund. The Divisions are referred to as “variable” because their investment experience depends upon the investment experience of the Funds in which they invest.
We do not guarantee that the Funds will meet their investment objectives. Your Account Value may increase or decrease in value
depending on the investment performance of the Funds. You bear the risk that those Funds may not meet their investment objectives. A comprehensive discussion of the risks of each Fund may be found in each Fund’s prospectus, including detailed
information concerning investment objectives, strategies, and their investment risk. You may obtain a copy of the Fund prospectuses without charge by contacting us at 888-353-2654. If you received a summary prospectus for a Fund, please follow
the directions on the first page of the summary prospectus to obtain a copy of the Fund’s prospectus.
8
Fee Tables
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. The first table
describes the fees and expenses that you will pay at the time that you buy the Policy, surrender the Policy, or Transfer cash value between investment options.
Transaction Fees
|
|
|
|
|
| Charge |
|
When Charge is Deducted |
|
Amount Deducted |
| Maximum Expense Charge Imposed on
Premium* |
|
Upon each Premium payment |
|
Maximum: 10% of Premium
Current: 9.0% of Premium up to target and 6.5% of Premium
in excess of target |
|
Sales Load** |
|
Upon each Premium payment |
|
Maximum: 6.5% of Premium
Current: 5.5% of Premium up to target and 3.0% of Premium in
excess of target |
|
Premium Tax** |
|
Upon each Premium payment |
|
Maximum: 3.5% of Premium
|
| Partial
Withdrawal Fee |
|
Upon partial withdrawal |
|
Maximum: $25 deducted from Account
Value for all partial withdrawals after the first made in the same Policy Year. |
| Change of Death Benefit Option Fee |
|
Upon change of option |
|
Maximum: $100 deducted from Account
Value for each change of death benefit option. |
| Transfer
Fee |
|
At time of Transfer for all Transfers in excess of 12 made in the same Policy Year |
|
Maximum: $10/Transfer |
| Loan
Interest |
|
Upon issuance of Policy loan |
|
Maximum: the Moody’s Corporate
Bond Yield Average – Monthly Average Corporates |
* The Expense Charge consists of the Sales Load plus the Premium Tax.
** The Sales Load and Premium Tax comprise (and are not in addition to) the Expense Charge.
The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund
fees and expenses.
9
Periodic Charges Other Than Fund Operating Expenses
|
|
|
|
|
| Charge |
|
When Charge is Deducted |
|
Amount Deducted |
| |
|
|
| Cost of Insurance
(per $1000 Net Amount at Risk)1 |
|
|
|
|
|
Minimum & Maximum Cost of Insurance Charge |
|
Monthly |
|
Guaranteed:
Minimum: $0.02 per $1000.
Maximum: $83.33 per $1000.
|
|
Cost of Insurance Charge for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) |
|
Monthly |
|
Guaranteed:
$0.21 per $1000. |
|
Mortality and Expense Risk Charge2 |
|
Monthly |
|
Guaranteed: 0.90% (of average daily
net assets) annually.
Current: 0.40% for Policy Years 1-5, 0.25% for Policy Years
6-20, and 0.10% thereafter. |
| Service Charge |
|
Monthly |
|
Maximum: $15/month
Current: $10.00/month, Policy Years 1-3 and $7.50/month, Policy Years 4+
|
1 The cost of insurance will vary based on individual characteristics. The cost of
insurance shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner will pay. Owners may obtain more information about their particular cost of insurance by contacting us at 888-353-2654.
2 The mortality and expense risk is accrued daily and deducted on the
first day of each Policy month by cancelling accumulation units pro-rata against all Sub-Accounts.
10
|
|
|
|
|
|
Supplemental Benefit Charges
Currently, we are offering the following supplemental
optional riders. The charges for the rider you select are deducted monthly from your Account Value as part of the Monthly Deduction described on page of this prospectus. The benefits provided under each rider are summarized in “Other Provisions
and Benefits” beginning on page below. |
| Change of Insured Rider* |
|
Upon change of Insured |
|
Minimum: $100 per change.
Maximum: $400 per change. |
|
Change of Insured Rider for a 46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)*
|
|
|
|
$400 per change. |
| Term Life
Insurance Rider |
|
Monthly |
|
Guaranteed:
Minimum COI: $0.02 per $1000.
Maximum COI: $83.33 per $1000.
|
| Term Life Insurance Rider for a
46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) |
|
Monthly |
|
Guaranteed:
$0.21 per $1000. |
*/ Not available to individual Owners.
The next table shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time
that you own the Policy. More detail concerning each Fund’s fee and expenses is contained in the prospectus for each Fund.
Total Annual Fund Operating Expenses1
(Expenses that are deducted from Fund
assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses)
[TO BE COMPLETED BY AMENDMENT]
|
|
|
|
|
| |
|
Minimum |
|
Maximum |
|
Total Annual Fund Operating |
|
%
|
|
% |
THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE
ACCURACY OF THE INFORMATION.
1 Expenses are shown as a percentage of a
Fund’s average net assets as of December 31, 2013. The expenses above include fees and expenses incurred indirectly by the Great-West Profile Funds and the Great-West Lifetime Funds as a result of investing in shares of acquired funds, if
any. The range of expenses above does not show the effect of any fee waiver or expense reimbursement arrangements. The advisers and/or other service providers of certain Funds have agreed to waive their fees and/or reimburse the Funds’ expenses
in order to keep the expenses below specified limits. In some cases, these expense limitations may be contractual. In other cases, these expense limitations are voluntary and may be terminated at any time. Please see the prospectus for each Fund for
information regarding the expenses for each Fund, including fee reduction and/or expense reimbursement arrangements, if applicable. The management fees and other expenses of the Funds are more fully described in the Fund prospectuses.
11
Description of Depositor, Registrant, and Funds
Great-West Life & Annuity Insurance Company
Great-West is a stock life insurance company organized under the laws of the state of Colorado. Our offices are located at 8515 East Orchard
Road, Greenwood Village, Colorado 80111.
We are authorized to do business in 49 states, the District of Columbia, Puerto Rico, U.S.
Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an
indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services
industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on
October
8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
The
Series Account
The Series Account is a segregated asset account of Great-West. We use the Series Account to fund benefits payable
under the Policy. The Series Account may also be used to fund benefits payable under other life insurance policies issued by us.
We own
the assets of the Series Account, which we hold separate and apart from our General Account assets. The income, gains or losses, realized or unrealized, from assets allocated to the Series Account are credited to or charged against the Series
Account without regard to our other income, gains or losses. The income, gains, and losses credited to, or charged against, the Series Account reflect the Series Account’s own investment experience and not the investment experience of
Great-West’s other assets. The assets of the Series Account may not be used to pay any liabilities of Great-West other than those arising from the Policies (and any other life insurance policies issued by us and funded by the Series Account).
In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of
company assets, including Series Account assets that are treated as company assets under applicable income tax law. These benefits, which reduce our overall corporate income tax liability may include dividends received deductions and foreign tax
credits which can be material. We do not pass these benefits through to the Series Account or our other separate accounts, principally because: (i) the great bulk of the benefits results from the dividends received deduction, which involves no
reduction in the dollar amount of dividends that the Series Account receives; and (ii) under applicable income tax law, Owners are not the owners of the assets generating the benefits.
Great-West is obligated to pay all amounts promised to Owners under the Policies (and any other life insurance policies issued by us and
funded by the Series Account).
We will at all times maintain assets in the Series Account with a total market value at least equal to the
reserves and other liabilities relating to the variable benefits under all policies participating in the Series Account.
The Series
Account is divided into Divisions. Each Division invests exclusively in shares of a corresponding Fund. We may in the future add new or delete existing Divisions. The income, gains or losses, realized or unrealized, from assets allocated to each
Division are credited to or charged against that Division without regard to the other income, gains or losses of the other Divisions.
All
amounts allocated to a Division will be used to purchase shares of the corresponding Fund. The Divisions will at all times be fully invested in Fund shares. We maintain records of all purchases and redemptions of shares of the Funds.
12
The Investment Options and Funds
The Policy offers a number of Divisions or Sub-Accounts. Each Division invests in a single Fund. Each Fund is a mutual fund registered
under the Investment Company Act of 1940, as amended (the “1940 Act”), or a separate series of shares of such a mutual fund. More comprehensive information, including a discussion of potential risks, is found in the current prospectuses
for the Funds. The fund prospectuses should be read in connection with this prospectus. YOU MAY OBTAIN A PROSPECTUS AND, IF AVAILABLE, A FUND SUMMARY, CONTAINING COMPLETE INFORMATION ON EACH FUND, WITHOUT CHARGE, UPON REQUEST BY CONTACTING US AT
888-353-2654. If you received a summary prospectus for a Fund, please follow the directions on the first page of the summary prospectus to obtain a copy of the Fund’s prospectus.
Each Fund holds its assets separate from the assets of the other Funds, and each Fund has its own distinct investment objective and policies.
Each Fund operates as a separate investment fund, and the income, gains and losses of one Fund generally have no effect on the investment performance of any other Fund.
The Funds are NOT available to the general public directly. The Funds are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in some cases, through participation in certain qualified pension or retirement plans.
Some of the Funds have been established by investment advisers that manage publicly available mutual funds having similar names and investment
objectives. While some of the Funds may be similar to, and may in fact be modeled after publicly available mutual funds, the Funds are not otherwise directly related to any publicly available mutual fund. Consequently, the investment performance of
publicly available mutual funds and any similarly named Fund may differ substantially.
Payments We
Receive. Some of the Funds’ investment advisers or affiliates may compensate us for providing the administrative, recordkeeping and reporting services they would normally be required to provide for individual shareholders or cost savings
experienced by the investment advisers or affiliates of the Funds. Such compensation is typically a percentage of Series Account assets invested in the relevant Fund and generally may range up to 0.35% of net assets. GWFS Equities, Inc.
(“GWFS”), a broker-dealer and subsidiary of Great-West and the principal underwriter and distributor of the Policy, may also receive Rule 12b-1 fees (ranging up to 0.25%) directly from certain Funds for providing distribution related
services related to shares of Funds offered in connection with a Rule 12b-1 plan. If GWFS receives 12b-1 fees, combined compensation for administrative and distribution related services generally ranges up to 0.60% annually of Series Account assets
invested in a Fund.
If you purchased the Policy through a broker-dealer or other financial intermediary (such as a bank), the Funds and
their related companies may pay the intermediary for services provided with regard to the sale of Fund shares to the Divisions under the Policy. The amount and/or structure of the compensation can possibly create conflict of interest as it may
influence the broker-dealer or other intermediary and your salesperson to present this Policy (and certain Divisions under the Policy) over other investment alternatives. The variations in compensation, however, may also reflect differences in sales
effort or ongoing customer services expected of the broker-dealer or other intermediary or your salesperson. You may ask your salesperson about variations and how he or she and his or her broker-dealer are compensated for selling the Policy or visit
your financial intermediary’s Web site for more information.
Payments We Make. In addition to the
direct cash compensation described above for sales of the Policies, Great-West and/or its affiliates may also pay GWFS agents additional cash and non-cash incentives to promote the sale of the Policies and other products distributed by GWFS,
including Funds of Great-West Funds, Inc., which are available Funds under the Policies. Great-West and/or its affiliates may sponsor various contests and promotions subject to applicable FINRA regulations in which GWFS agents may receive prizes
such as travel awards, merchandise and cash. Subject to applicable FINRA regulations, Great-West and/or its affiliates may also pay for travel expenses, meals, lodging and entertainment of salespersons in connection with educational and sales
promotional programs and sponsor speakers, educational seminars and charitable events.
Cash incentive payments may vary depending on the
arrangement in place at any particular time. Cash incentives payable to GWFS agents may be based on certain performance measurements, including a percentage of the net amount invested in certain Funds available under the Policy. These additional
payments could be viewed as creating conflicts of interest. In some cases, the payment of incentive-based compensation may create a financial incentive for a GWFS agent to recommend or sell the Policy instead of other products or recommend certain
Funds under the Policy over other Funds, which may not necessarily be to your benefit.
13
Closed Divisions. Effective April 1, 2004, the Divisions investing in the following
Funds were closed to new Owners: American Century VP International Fund (Class I Shares), American Century VP Income & Growth Fund (Class I Shares), AIM V.I. Core Stock Fund (now known as the Invesco V.I. Core Equity Fund) (Class I Shares)
and Neuberger Berman AMT Guardian Portfolio (I Shares). However, Owners with amounts invested in the aforementioned Divisions as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2005, the Divisions investing in the following Funds were closed to new Owners: AIM V.I. Technology Fund (Series I
Shares), Federated American Leaders Fund II (Primary Shares) (now known as Federated Clover Value Fund II (Primary Shares)), Federated International Equity Fund II, Fidelity VIP Growth Portfolio (Service Class 2 Shares); Janus Aspen Worldwide Growth
Portfolio (Institutional Shares), Maxim Small-Cap Growth Portfolio (formerly the Maxim Trusco Small-Cap Growth Portfolio, which was formerly the Maxim MFS® Small-Cap Growth Portfolio),
Neuberger Berman AMT Mid-Cap Growth Portfolio (I Shares). However, Owners with amounts invested in the aforementioned Divisions as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2005, the Division investing in the following Fund was closed to all Owners: AIM V.I. Financial Services Fund
(Series I Shares). Premium payments and Transfers are not permitted into this Division.
Effective May 1, 2006, the Division
investing in Maxim Ariel Mid-Cap Value Portfolio was closed to new Owners. However, Owners with amounts invested in this Fund as of May 1, 2006, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Effective February 23, 2007, the Division investing in Dreyfus IP Emerging Leaders Portfolio (Initial Shares) was closed to all Owners
and no Premium payments or Transfers are permitted into this Division.
Effective May 1, 2007, the Divisions investing in the
following Funds were closed to new Owners: AIM V.I. Global Health Care (Series I Shares), American Century VP Ultra (Class I Shares) and Dreyfus VIF Appreciation Portfolio (Initial Shares). However, Owners with amounts transferred in the
aforementioned Divisions as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1, 2008, the Divisions investing in the following Funds were closed to new Owners: Dreyfus IP Technology Growth (Initial
Shares), Federated High Income Bond Fund II (Primary Shares), Neuberger Berman AMT Small Cap Growth (S Shares) (formerly Neuberger Berman AMT Fasciano (S Shares)). However, Owners with amounts transferred in the aforementioned Division as of
May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of such Divisions.
Effective May 1,
2009, the Divisions investing in the following Funds were closed to new Owners: Dreyfus IP MidCap Stock (Initial Shares); Fidelity VIP Investment Grade Bond (Service Class 2 Shares); and Neuberger Berman AMT Partners (I Shares).
Effective May 1, 2009, each of the following three Putnam Funds (IB Shares) are replaced with IA Shares: Putnam VT High Yield Fund;
Putnam VT International New Opportunities Fund; and Putnam VT MidCap Value Fund.
Effective April 30, 2010, the Division investing in
the Federated Kaufmann Fund is closed to new owners, however, Owners with amounts transferred in to aforementioned Division as of April 30, 2010, may continue to allocate Premium payments and Transfer amounts into and out of such Division.
Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value Fund.
Effective May 1, 2013, the Division investing in the following Fund was closed to new owners: Invesco VI Global Health Care Fund. Owners
with amounts invested in this Fund as of May 1, 2013, may continue to allocate premium payments and Transfer amounts into and out of this Division.
Fund Investment Objectives. The investment objectives of the Funds are briefly described below:
Alger Portfolios (advised by Fred Alger Management, Inc.)
14
Alger Small Cap Growth Portfolio (Class I-2 Shares) The Fund seeks
long-term capitalization.
American Century Variable Portfolios, Inc. (advised by American Century Investment Management, Inc.)
American Century Investments VP Income & Growth Fund (Class I Shares) The Fund seeks capital growth.
Income is a secondary objective. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of April 1, 2004, may continue to allocate Premium payments
and Transfer amounts into and out of this Division.
American Century Investments VP International Fund (Class I
Shares) The Fund seeks capital growth. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of April 1, 2004, may continue to allocate
Premium payments and Transfer amounts into and out of this Division.
American Century Investments VP Ultra® Fund (Class I Shares) The Fund seeks long-term capital growth. Effective May 1, 2007, the Division investing in this Fund was closed to new Owners; however, Owners with amounts
invested in the Division as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
American Century Investments VP Value Fund (Class I Shares) The Fund seeks long-term capital growth. Income is a
secondary objective.
American Century Investments VP VistaSM
Fund (Class I Shares) The Fund seeks long-term capital growth.
American Funds Insurance Series (advised by Capital Research and Management
Company)
American Funds IS Growth Fund (Class 2 Shares) The Fund’s investment objective is to provide
growth of capital.
American Funds IS Global Small Capitalization Fund (Class 2 Shares) The Fund’s
investment objective is to provide long-term growth of capital.
American Funds IS International Fund (Class 2
Shares) The Fund’s investment objective is to provide long-term growth of capital.
American Funds IS
New World Fund (Class 2 Shares) The Fund’s investment objective is long-term capital appreciation.
Columbia Variable Portfolio
(advised by Columbia Management Advisers, LLC)
Small Cap Value (Class 1 Shares) The Fund seeks long-term
capital appreciation.
Davis Variable Account Fund, Inc. (advised by Davis Selected Advisors, L.P.)
Davis Financial Fund The Fund’s investment objective is long-term growth of capital.
Davis Value Fund The Fund’s investment objective is long-term growth of capital.
Dreyfus Stock Index Fund (advised by The Dreyfus Corporation)
Dreyfus Stock Index Fund (Initial Shares) The Fund seeks to match the total return of the Standard &
Poor’s 500 Composite Stock Price Index.
15
Dreyfus Investment Portfolios (advised by The Dreyfus Corporation of New York, New York)
Dreyfus IP MidCap Stock Portfolio (Initial Shares) The Fund seeks investment returns that are greater than the
total return performance of publicly traded common stocks of medium-sized domestic companies in the aggregate as represented by the Standard & Poor’s MidCap 400® Index. Effective
May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this
Division.
Dreyfus IP Technology Growth Portfolio (Initial Shares) The Fund seeks capital appreciation. The
Fund may also sell stocks when the managers’ evaluation of a sector has changed. Effective May 1, 2008, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1,
2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Dreyfus Variable Investment Fund (advised by
The Dreyfus Corporation of New York, New York)
Dreyfus VIF Appreciation Portfolio (Initial Shares) The Fund
seeks long-term capital growth consistent with the preservation of capital. Its secondary goal is current income. Fayez Sarofim & Co. is the sub-adviser to this Fund. Effective May 1, 2007, the Division investing in this Fund was
closed to new Owners; however, Owners with amounts invested in the Division as of May 1, 2007, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Dreyfus VIF International Equity Portfolio (Initial Shares) The Fund seeks capital growth. Newton Capital
Management Limited is the sub-adviser to this Fund.
DWS (advised by Deutsche Investment Management Americas Inc.)
DWS Variable Series II: DWS Alternative Asset Allocation VIP (Class A Shares) The Fund seeks capital
appreciation. RREEF America L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Small Mid Cap Value
VIP (Class A Shares) The Fund seeks long-term capital appreciation. Dreman Value Management L.L.C. is the subadviser for the Fund.
DWS Variable Series II: DWS Core Equity VIP (Class A Shares) The Fund seeks long-term growth of capital, current
income and growth of income.
DWS Variable Series I: DWS Global Small Cap Growth VIP (Class A Shares)
The Fund seeks above-average capital appreciation over the long term.
DWS Variable Series II: DWS High Income VIP
(Class A Shares) The Fund seeks to provide a high level of current income.
DWS Variable Series II: DWS
Large Cap Value VIP (Class A Shares)) The Fund seeks to achieve a high rate of total return. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as
of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
DWS Investments VIT Funds: DWS Small Cap Index VIP (Class A Shares) The Fund seeks to replicate, as closely as
possible, before the deduction of expenses, the performance of the Russell 2000® Index, which emphasizes stocks of small US companies. Northern Trust Investments, N.A. is the sub-adviser for
the Portfolio.
Federated Insurance Series
Federated High Income Bond Fund II (Primary Shares) The Fund seeks high current income. Effective May 1,
2008, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division. Advised
by Federated Investment Management Company.
Federated Kaufmann Fund II (Primary Shares) The Fund seeks
capital appreciation. Effective April 30, 2009, the Division investing this Fund was closed to new Owners however, Owners with amounts in the Division as of April 30, 2010, may continue to allocate Premium payments and Transfer amounts
into and out of this Division. Advised by Federated Equity Management Company of Pennsylvania.
16
Fidelity Variable Insurance Products (VIP) Fund (advised by Fidelity Management & Research
Company)
Fidelity VIP Contrafund® Portfolio (Service Class
2 Shares) The Fund seeks long-term capital appreciation. FMR Co., Inc. and other investment advisers serve as sub-advisers for the Fund.
Fidelity VIP Growth Portfolio (Service Class 2 Shares) The Fund seeks to achieve capital appreciation. Effective
May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this
Division.
Fidelity VIP Investment Grade Bond Portfolio (Service Class 2 Shares) The Fund seeks to provide
as high a level of current income as is consistent with the preservation of capital. Fidelity Investments Money Management, Inc. and other investment advisers serve as sub-advisers for the Fund. Effective May 1, 2009, the Division investing in
this Fund was closed to new Owners however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Fidelity VIP Mid Cap Portfolio (Service Class 2 Shares) The Fund seeks long-term growth of capital. FMR Co.,
Inc. and other investment advisers serve as sub-advisers for the Fund.
Goldman Sachs Variable Investment Trust (advised by Goldman Sachs Asset
Management)
Goldman Sachs Mid Cap Value Fund (Institutional Class Shares) The Fund seeks long-term capital
appreciation.
Great-West Funds, Inc. (advised by Great-West Capital Management, LLC, a wholly owned subsidiary of Great-West)
Great-West Ariel MidCap Value Fund (Initial Class) The Fund seeks long-term capital appreciation. Effective
May 1, 2006, the Division investing in this Fund was closed to new investors; however, Owners with amounts invested in this Division as of May 1, 2006 may continue to allocate Premium payments and Transfer amounts into and out of this
Division. Ariel Investments, LLC is the sub-adviser to this Fund. Effective on October 31, 2013, merger of Great-West Ariel Small Cap Value Fund, a series of Great-West Funds, with and into Great-West Ariel Mid Cap Value Fund, another series of
Great-West Funds (the “Merger”). The Merger does not require shareholder approval. It is anticipated that the Merger will be a tax-free reorganization for U.S. federal income tax purposes.
Great-West Bond Index Fund (Initial Class) The Fund seeks results that track the total return of the fixed
income securities that comprise the Barclays Capital U.S. Aggregate Bond Index.
Great-West Federated Bond Fund
(Initial Class) The Fund seeks to provide total return, consisting of two components: (1) changes in the market value of its portfolio holdings (both realized and unrealized appreciation); and (2) income received from its portfolio
holdings.
Great-West International Index Fund (Initial Class) The Fund seeks investment results, before
fees and expenses, that track the total return of the common stocks that comprise the MSCI EAFE (Europe, Australasia, Far East) Index.
Great-West Multi-Manager Large Cap Growth Fund (Initial Class) (formerly known as Great-West Janus Large Cap Growth
Fund) The Fund seeks long-term growth of capital. Pioneer Investment Management, Inc. and J.P. Morgan Investment Management Inc. are the sub-advisers to this Fund.
17
Great-West Loomis Sayles Bond Fund (Initial Class) The Fund
seeks high total investment return through a combination of current income and capital appreciation. Loomis, Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West Loomis Sayles Small Cap Value Fund (Initial Class) The Fund seeks long-term capital growth. Loomis,
Sayles & Company, L.P. is the sub-adviser to this Fund.
Great-West MFS International Value Fund (Initial
Class) The Fund seeks long-term capital growth. Massachusetts Financial Service Company is the sub-adviser to this Fund. Effective April 30, 2013, the Great-West Invesco ADR Fund was merged into the Great-West MFS International Value
Fund.
Great-West Money Market Fund The Fund seeks as high a level of current income as is consistent with
the preservation of capital and liquidity.
Investment in the Great-West Money Market Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this Fund.
Great-West Real Estate Index Fund (Initial Class) The Fund seeks investment results, before fees and expenses,
that track the total return of a benchmark index that measures the performance of publicly traded equity real estate investment trusts.
Great-West S&P MidCap 400® Index Fund (Initial
Class) The Fund seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the Standard & Poor’s MidCap 400®
Index.
Great-West Short Duration Bond Fund (Initial Class)The Fund seeks maximum total return that is
consistent with preservation of capital and liquidity.
Great-West Small Cap Growth Fund (Initial Class)The
Fund seeks long-term capital growth. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments
and Transfer amounts into and out of this Division. Silvant Capital Management, LLC is the sub-adviser for this Fund.
Great-West T. Rowe Price Equity Income Fund (Initial Class) The Fund seeks substantial dividend income and also
long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West
T. Rowe Price Mid Cap Growth Fund (Initial Class) The Fund seeks long-term capital appreciation. T. Rowe Price Associates, Inc. is the sub-adviser to this Fund.
Great-West Templeton Global Bond Fund (Initial Class) The Fund seeks current income with capital appreciation
and growth of income. Franklin Advisers, Inc. is the sub-adviser to this Fund.
Great-West U.S. Government Mortgage
Securities Fund (Initial Class) The Fund seeks the highest level of return consistent with preservation of capital and substantial credit protection.
Great-West Profile I Funds
Each of the following five Profile Funds seeks to provide an asset allocation program designed to meet certain investment
goals based on an investor’s risk tolerance, investment time horizon and personal objectives.
Great-West
Aggressive Profile I Fund (Initial Class) seeks long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments.
Great-West Moderately Aggressive Profile I Fund (Initial Class)seeks long-term capital appreciation
primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize equity investments and, to a lesser degree, fixed income securities.
18
Great-West Moderate Profile I Fund (Initial Class) seeks
long-term capital appreciation primarily through investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, with a relatively equal emphasis on equity and fixed income investments.
Great-West Moderately Conservative Profile I Fund (Initial Class) seeks capital appreciation primarily through
investments in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments, and, to a lesser degree, equity investments.
Great-West Conservative Profile I Fund (Initial Class) seeks capital preservation primarily through investments
in other mutual funds, including mutual funds that may not be affiliated with Great-West Funds, that emphasize fixed income investments.
Great-West
Lifetime Funds
Great-West Lifetime 2015 Fund II ( Class T) The Fund seeks capital appreciation and
income consistent with its current asset allocation. After 2015, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2025 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2025, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2035 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2035, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2045 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2045, the investment objective is to seek income and, secondarily, capital growth.
Great-West Lifetime 2055 Fund II (Class T) The Fund seeks capital appreciation and income consistent with its
current asset allocation. After 2055, the investment objective is to seek income and, secondarily, capital growth.
Invesco Variable Insurance
Funds (advised by Invesco Advisers, Inc.)
Invesco V.I. Core Equity Fund (Series I Shares) The
Fund’s investment objective is long-term growth of capital. Effective April 1, 2004, the AIM V.I. Core Stock Fund was closed to new Owners; Owners with amounts invested in this Division as of April 1, 2004, were permitted to continue
to allocate Premium payments and Transfer amounts into and out of this Division. Effective May 1, 2006, the AIM V.I. Core Stock Fund merged into the AIM V.I. Core Equity Fund. Following the transaction, this Division investing in the AIM V.I.
Core Equity Fund continues to be closed to new Owners; however, Owners with amounts invested in this Division may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Invesco V.I. Diversified Dividend Fund (Series I Shares) The Fund’s investment
objective is to provide reasonable current income and long-term growth of income and capital. Effective May 1, 2005, the Division investing in this Fund was closed to all Owners and no Premium payments or Transfers are permitted into the
Division.
Invesco V.I. Global Health Care Fund (Series I Shares) The Fund’s investment objective
is long-term growth of capital. Effective May 1, 2007, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2007, may continue to allocate Premium payments and
Transfer amounts into and out of this Divisions.
19
Invesco V.I. Global Real Estate Fund (Series I Shares) The
Fund’s investment objective is total return through growth of capital and current income. Invesco Asset Management Limited is the sub-adviser for this Fund.
Invesco V.I. International Growth Fund (Series I Shares) The Fund’s investment objective is long-term
growth of capital.
Invesco V.I. Mid Cap Core Equity Fund (Series I Shares) The Fund’s objective is
long-term growth of capital.
Invesco V.I. Technology Fund (Series I Shares) The Fund’s investment
objective is long-term growth of capital. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium
payments and Transfer amounts into and out of this Division.
Janus Aspen Series (advised by Janus Capital Management, LLC)
Janus Aspen Balanced Portfolio (Institutional Shares) The Fund seeks long-term growth of capital consistent with
preservation of capital and balanced by current income.
Janus Aspen Flexible Bond Portfolio (Institutional
Shares) The Fund seeks to obtain maximum total return, consistent with the preservation of capital.
Janus
Aspen Forty Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen Global
Technology Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen
Overseas Portfolio (Institutional Shares) The Fund seeks long-term growth of capital.
Janus Aspen
Global Research Portfolio (Institutional Shares) The Fund seeks long-term growth of capital. Effective May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as
of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman Advisers
Management Trust (advised by Neuberger Berman Management Incorporated)
Neuberger Berman AMT Guardian Portfolio
(Class I Shares) The Fund seeks long-term growth of capital; current income is a secondary goal. Effective April 1, 2004, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this
Division as of April 1, 2004, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Mid-Cap Growth Portfolio (Class I Shares) The Fund seeks growth of capital. Effective
May 1, 2005, the Division investing in this Fund was closed to new Owners; however, Owners with amounts invested in this Division as of May 1, 2005, may continue to allocate Premium payments and Transfer amounts into and out of this
Division.
Neuberger Berman AMT Large Cap Value Portfolio (Class I Shares) The Fund seeks growth of
capital. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as of May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and
out of this Division.
Neuberger Berman AMT Mid Cap Intrinsic Value Portfolio (Class I Shares) The Fund
seeks growth of capital.
Neuberger Berman AMT Small Cap Growth Portfolio (Class S Shares) The Fund seeks
long-term capital growth. Effective May 1, 2008, the Division investing in this Fund was closed to new Owners; however,
20
Owners with amounts invested in this Division as of May 1, 2008, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Neuberger Berman AMT Socially Responsive Portfolio (Class I Shares) The Fund seeks long-term growth of capital
by investing in securities of companies that meet the Fund’s financial criteria and social policy.
PIMCO Variable Insurance Trust (advised by
Pacific Investment Management Company, LLC)
PIMCO VIT High Yield Portfolio (Administrative Shares) The Fund
seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT
Low Duration Portfolio (Administrative Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
PIMCO VIT Real Return Portfolio (Administrative Shares) The Fund seeks maximum real return, consistent with
preservation of real capital and prudent investment management.
PIMCO VIT Total Return Portfolio (Administrative
Shares) The Fund seeks maximum total return, consistent with preservation of capital and prudent investment management.
Putnam Variable Trust
(advised by Putnam Investment Management, LLC)
Putnam VT Equity Income Fund (Class IA Shares) The Fund
seeks capital growth and current income.
Putnam VT Global Health Care Fund (Class IA Shares) The
Fund seeks capital appreciation.
Putnam VT High Yield Fund (Class IA Shares) The Fund seeks high current
income. Capital growth is a secondary goal when consistent with achieving high current income.
Putnam VT
International Growth Fund Class (IA Shares) The Fund seeks long-term capital appreciation.
Putnam VT MidCap
Value Fund (Class IA Shares) The Fund seeks capital appreciation and, as a secondary objective, current income.
Royce Capital Fund
(advised by Royce & Associates, LLC)
Royce Micro-Cap Portfolio (Service Class Shares) The
Fund’s investment goal is long-term growth of capital.
Royce Small-Cap Portfolio (Service Class Shares)
The Fund’s investment goal is long-term growth of capital.
Van Eck Worldwide Insurance Trust (advised by Van Eck Associates
Corporation)
Van Eck VIP Emerging Markets Fund (Initial Class Shares) The Fund seeks long-term capital
appreciation by investing primarily in equity securities in emerging markets around the world. Effective May 1, 2009, the Division investing in this Fund was closed to new Owners however, Owners with amounts invested in this Division as of
May 1, 2009, may continue to allocate Premium payments and Transfer amounts into and out of this Division.
Van
Eck VIP Global Hard Assets Fund (Initial Class Shares) The Fund seeks long term capital appreciation by primarily investing in hard asset securities. Income is a secondary consideration.
You should contact your representative for further information on the availability of the Divisions.
Each Fund is subject to certain investment restrictions and policies that may not be changed without the approval of a majority of the
shareholders of the Fund. See the Fund prospectuses for further information.
21
We automatically reinvest all dividends and capital gain distributions from the Funds in shares
of the distributing Fund at their net asset value. The income and realized and unrealized gains or losses on the assets of each Division are separate and are credited to, or charged against, the particular Division without regard to income, gains or
losses from any other Division or from any other part of our business. We will use amounts you allocate to a Division to purchase shares in the corresponding Fund and will redeem shares in the Funds to meet Policy obligations or make adjustments in
reserves. The Funds are required to redeem their shares at net asset value and to make payment within seven days.
The Funds may also be
available to separate accounts offering variable annuity, variable life products and qualified plans of other affiliated and unaffiliated insurance companies, as well as our other separate accounts. Although we do not anticipate any disadvantages to
this, there is a possibility that a material conflict may arise between the interests of the Series Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the
operations of variable life and variable annuity separate accounts, differences in the voting instructions of Owners and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Owners,
including withdrawal of the Series Account from participation in the Funds that are involved in the conflict or substitution of shares of other Funds.
Voting. We are the legal owner of all shares of the Funds held in the Divisions of the Series Account. In general, you do not have a
direct right to vote the Fund shares held in the Divisions of the Series Account. However, under current law, you are entitled to give us instructions on how to vote the shares held in the Divisions. At regular and special shareholder meetings, we
will vote the shares held in the Divisions in accordance with those instructions received from Owners who have an interest in the respective Divisions.
We will vote shares held in each Division for which no timely instructions from Owners are received, together with shares not attributable to
a Policy, in the same proportion as those shares in that Division for which instructions are received.
The number of shares in each
Division for which instructions may be given by an Owner is determined by dividing the portion of the Account Value derived from participation in that Division, if any, by the value of one share of the corresponding Fund. We will determine the
number as of the record date chosen by the Fund. Fractional votes are counted. Voting instructions will be solicited in writing at least 14 days prior to the shareholders’ meeting.
We may, if required by state insurance regulators, disregard voting instructions if those instructions would require shares to be voted so as
to cause a change in the sub-classification or investment policies of one or more of the Funds, or to approve or disapprove an investment management contract. In addition, we may disregard voting instructions that would require changes in the
investment policies or investment adviser, provided that we reasonably disapprove of those changes in accordance with applicable federal regulations. If we disregard voting instructions, we will advise you of that action and our reasons for it in
our next communication to Owners.
This description reflects our current view of applicable federal securities law. Should the applicable
federal securities laws change so as to permit us to vote shares held in the Series Account in our own right, we may elect to do so.
Fixed Account
The Fixed Account is part of our General Account. We assume the risk of investment gain or loss on this amount. All
assets in the General Account are subject to our general liabilities from business operations. The Fixed Account does not participate in the investment performance of the Sub-Accounts.
The Fixed Account is not registered with the SEC under the Securities Act of 1933. Neither the Fixed Account nor the General Account have been
registered as an investment company under the 1940 Act. As a result, neither the Fixed Account nor the General Account are generally subject to regulation under either Act. However, certain disclosures may be subject to generally applicable
provisions of the federal securities laws regarding the accuracy of statements made in registration statements.
The Fixed Account offers
a guarantee of principal, after deductions for fees and expenses. We also guarantee that the amounts you allocate to the Fixed Account will earn interest at a rate of at least the minimum guaranteed interest rate indicated in your Policy. We do not
rely on predetermined formulas to set Fixed Account interest rates. We
22
will review the interest rate at least once a year, but at the Company’s discretion we may reset the interest rate monthly.
The Fixed Account may not be available in all states.
Employer-Financed Insurance Purchase Arrangements--Tax and Other Legal Issues
In addition to corporations and other employers,
the Policy is also available for purchase by individuals whose employers will pay some or all of the Premiums due under the Policy pursuant to an employer-financed insurance purchase arrangement. In such cases, references in this prospectus
to the “Owner” of the Policy will refer to the individual and, depending on the context, references to the “payment of premiums” will refer to payments to Great-West under the Policy by the employer and/or by the employee.
Employers and employees contemplating the purchase of a Policy as a part of an employer-financed insurance purchase arrangement should
consult qualified legal and tax counsel with regard to the issues presented by such a transaction. For this purpose, an employer-financed insurance purchase arrangement is a plan or arrangement which contemplates that an employer will pay one
or more Premiums for the purchase of a Policy that will be owned, subject to certain restrictions, by an employee or by a person or entity designated by the employee.
The general considerations applicable to such a purchase include the following:
| 1. |
Payments by the employer under an employer-financed insurance purchase arrangement will only be deductible for income tax purposes when the
payments are taxable to the employee with respect to whom they are made. |
| 2. |
Imposition of certain types of restrictions, specifically a substantial risk of forfeiture, on the purchased Policy may defer both the
deductibility of the payments to the employer and their taxability to the employee. |
| 3. |
The payment of some or all of the Premiums by the employer may create an ERISA welfare benefit plan which is subject to the reporting, disclosure,
fiduciary and enforcement provisions of ERISA. |
| 4. |
The payment of some or all of the Premiums by the employer will not prevent the Owner from being treated as the owner of the Policy for federal
income tax purposes. |
| 5. |
Under some circumstances, the failure of the employer to make one or more of the planned Premiums under the Policy may cause a lapse of the Policy.
|
| 6. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial
and tax benefits of the ownership of the Policy outweigh the costs, such as sales loads and cost of insurance charges that will be incurred as a result of the purchase and ownership of the Policy. |
| 7. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the
designation of another person or entity as the owner of the Policy will have adverse consequences under applicable gift, estate, or inheritance tax laws. |
| 8. |
An employee considering whether to participate in an employer-financed insurance purchase arrangement should consider whether the financial
performance of the Policy will support any planned withdrawals or borrowings under the Policy. |
| 9. |
In an employer-financed insurance purchase arrangement, the procedures described below on page , which are designed to prevent or minimize market
timing and excessive trading by Owners may, in certain circumstances, require us to perform standardized trade monitoring; in other circumstances such monitoring will be performed by the Fund. Certain Funds require us to provide reports of the
Owner’s trading activity, if prohibited trading, as defined by the Fund, is suspected. The determination of whether there is prohibited trading based on the Funds’ definition of prohibited trading may be made by us or by the Fund. The Fund
determines the restrictions imposed, which could be one of the four restrictions described on page or by |
23
| |
restricting the Owner from making Transfers into the identified Fund for the period of time specified by the Fund. |
Charges and Deductions
The Policy has insurance features and investment features, and there are costs related to each. This section describes the fees and charges
that we may make under the Policy to compensate for: (1) the services and benefits we provide; (2) the costs and expenses we incur; and (3) the risks we assume. The fees and charges we deduct under this Policy may result in a profit
to us.
Expense Charge Applied to Premium. We will deduct a maximum charge of 10% from each Premium
payment, which is broken down as follows. A maximum of 6.5% will be deducted as sales load to compensate us in part for sales and promotional expenses in connection with selling the Policies, such as commissions, the cost of preparing sales
literature, other promotional activities and other direct and indirect expenses. A maximum of 3.5% of Premium will be used to cover Premium taxes and certain federal income tax obligations resulting from the receipt of Premiums. All states and some
cities and municipalities impose taxes on Premiums paid for life insurance, which generally range from 2% to 4% of Premium but may exceed 4% in some states. The amount of your state’s Premium tax may be higher or lower than the amount
attributable to Premium taxes that we deduct from your Premium payments.
The current expense charge applied to Premium for sales load is
5.5% of Premium up to target and 3.0% of Premium in excess of target for Policy Years 1 through 10. Your target Premium will depend on the initial Total Face Amount of your Policy, your Issue Age, your sex (except in unisex states), and rating class
(if any) which equals the maximum Premium payable under the seven-pay test such that the Policy remains compliant with section 7702A of the Code. Thereafter, there is no charge for sales load. The current expense charge applied to Premium to cover
our Premium taxes and the federal tax obligation described above is 3.5% in all Policy Years.
Where permitted by applicable state
insurance law and for corporate owned policies only, if your Policy is surrendered for the Surrender Benefit (Account Value less any outstanding Policy loans and less accrued loan interest) within the first seven Policy Years, we will return a
percentage of the expense charge. The return of expense charge will be a percentage of your Account Value on the date the Request for surrender was received by us at our Corporate Headquarters. This amount will be in addition to the Surrender
Benefit.
The return of expense charge is based on the following:
|
|
|
| Policy Year |
|
Percentage of Account
Value Returned |
| Year 1 |
|
6% |
| Year 2 |
|
5% |
| Year 3 |
|
4% |
| Year 4 |
|
3% |
| Year 5 |
|
2% |
| Year 6 |
|
1% |
| Year 7+ |
|
0% |
As described under the heading “Term Life Insurance Rider” on page , we may offer a term life
insurance rider that may have the effect of reducing the sales charge you pay on purchasing an equivalent amount of insurance. We offer this rider in circumstances that result in the savings of sales and distribution expenses and administrative
costs. To qualify, a corporation, employer, or other purchaser must satisfy certain criteria such as, for example, the number of Policies it expects to purchase and the expected Total Face Amount under all such Policies. Generally, the sales
contacts and effort and administrative costs per Policy depend on factors such as the number of Policies purchased by a single Owner, the purpose for which the Policies are purchased, and the characteristics of the proposed Insureds. The amount of
reduction and the criteria for qualification are related to the sales effort and administrative costs resulting from sales to a qualifying Owner. Great-West from time to time may modify on a uniform basis both the amounts of reductions and the
criteria for qualification. Reductions in these charges will not be unfairly discriminatory against any person, including the affected Owners funded by the Series Account.
24
Mortality and Expense Risk Charge. This charge is for the
mortality and expense risks we assume with respect to the Policy. It is based on an annual rate that we accrue against each Division of the Series Account on a daily basis and deduct on the first day of each Policy month by cancelling accumulation
units on a pro-rata basis across all Sub-Accounts. We convert the mortality and expense risk charge into a daily rate by dividing the annual rate by 365. The mortality and expense risk charge will be determined by us from time to time based on our
expectations of future interest, mortality experience, persistency, expenses and taxes, but will not exceed 0.90% annually. Currently, the charge is 0.40% for Policy Years 1 through 5, 0.25% for Policy Years 6 through 20 and 0.10% thereafter.
On surrender and payment of the death benefit, we will deduct the pro-rata portion of the mortality and expense charge that has accrued.
Because the value of your Sub-Accounts can vary from month-to-month, the monthly deduction for the mortality and expense risk charge will also
vary. If the amount the mortality and expense risk charge is insufficient to cover the costs resulting from the mortality and expense risks that we assume, we will bear the loss. If the amount we charge is more than sufficient to cover such costs,
we will make a profit on the charge. To the extent that we do make a profit from this charge, we may use this profit for any corporate purpose, including the payment of administrative, marketing, distribution, and other expenses in connection with
the Policies.
The mortality risk we assume is that the group of lives insured under the Policies may, on average, live for shorter
periods of time than we estimated. The expense risk we assume is that the costs of issuing and administering Policies may be more than we estimated.
Monthly Deduction. We make a monthly deduction from your Account Value on the Policy Date and the first day
of each Policy Month. This monthly deduction will be charged proportionally to the amounts in the Divisions.
The monthly deduction equals the sum of (1),
(2), (3), (4) and (5) where:
| (1) |
is the cost of insurance charge (the monthly risk charge) equal to the current monthly risk rate (described below) multiplied by the net amount at
risk divided by 1,000; |
| (2) |
is the service charge; |
| (3) |
is the monthly cost of any additional benefits provided by riders which are a part of your Policy; and |
| (4) |
is any extra risk charge if the Insured is in a rated class as specified in your Policy; and |
| (5) |
is the accrued mortality and expense charge. |
The net amount at risk equals:
| • |
|
the death benefit divided by 1.00327374; less |
| • |
|
your Account Value on the first day of a Policy Month prior to assessing the monthly deduction. |
If there are increases in the Total Face Amount other than increases caused by changes in the death benefit option, the monthly deduction
described above is determined separately for the initial Total Face Amount and each increase in the Total Face Amount. In calculating the net amount at risk, your Account Value will first be allocated to the most recent increase in the death benefit
and then to each increase in the Total Face Amount in the reverse order in which the increases were made.
Monthly Risk Rates. The monthly risk rate is used to determine the cost of insurance charge (monthly risk
charge) for providing insurance coverage under the Policy. The monthly risk rate is applied to the amount at risk. The monthly risk rates (except for any such rate applicable to an increase in the Total Face Amount) are based on the length of time
your Policy has been in force and the Insured’s sex (in the case of non-unisex Policies) and Issue Age. If the Insured is in a rated class as specified in your Policy, we will deduct an extra risk charge that reflects that class rating. The
monthly risk rates applicable to each increase in the Total Face Amount are based on the length of time the increase has been in force and the Insured’s sex (in the case of non-unisex Policies), Issue Age, and class rating, if any. The monthly
risk rates will be determined by us from time to time based on our expectations of future experience with respect to mortality, persistency, interest rates, expenses and taxes, but will not exceed the guaranteed maximum monthly risk rates based on
the 2001 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table (“2001 CSO”). Currently, the guaranteed minimum monthly risk charge is $0.02 per $1000 and the guaranteed maximum
is $83.33 per $1000. If your Policy is issued in Montana, unisex rates are charged and these rates will never exceed the male Smoker Ultimate Mortality Table.
25
The guaranteed maximum monthly risk rates reflect any class rating applicable to the Policy. We
have filed a detailed statement of our methods for computing Account Values with the insurance department in each jurisdiction where the Policy was delivered. These values are equal to or exceed the minimum required by law.
The monthly risk rate is greater on policies that require less underwriting to be performed regardless of the health of the individual.
Monthly risk rate charges will be greatest on guaranteed issue policies, followed by simplified issue policies, then fully underwritten policies.
Service Charge. We will deduct a maximum of $15 from your Account Value on the first day of each Policy
Month to cover our administrative costs, such as salaries, postage, telephone, office equipment and periodic reports. This charge may be increased or decreased by us from time to time based on our expectations of future expenses, but will never
exceed $15 per Policy Month. The service charge will be deducted proportionally from the Divisions. The current service charge is $10 per Policy Month for Policy Years 1 through 3 and $7.50 per Policy Month thereafter.
Transfer Fee. A maximum administrative charge of $10 per Transfer of Account Value from one Division to
other Divisions will be deducted from your Account Value for all Transfers in excess of 12 made in the same Policy Year. The allocation of your Initial Premium from the Great-West Money Market Division to your selected Divisions will not count
toward the 12 free Transfers. Similarly, Transfers made under dollar cost averaging and periodic rebalancing under the rebalancer option are not subject to the fee and do not count as Transfers for this purpose (except a one-time rebalancing under
the rebalancer option will count as one Transfer). All Transfers Requested on the same Business Day will be aggregated and counted as one Transfer. The current charge is $10 per Transfer.
Partial Withdrawal Fee. A maximum administrative fee of $25 will be deducted from your Account Value for all
partial withdrawals after the first made in the same Policy Year. The partial withdrawal fee will be deducted proportionally from all Divisions.
Surrender Charges. Your Policy has no surrender charges.
Change of Death Benefit Option Fee. A
maximum administrative fee of $100 will be deducted from your Account Value each time you change your death benefit option. The change of death benefit fee will be deducted proportionally from all Divisions.
Fund Expenses. You indirectly bear the charges and expenses of the Funds whose shares are held by the
Divisions to which you allocate your Account Value. The Series Account purchases shares of the Funds at net asset value. Each Fund’s net asset value reflects investment advisory fees and administrative expenses already deducted from the
Fund’s assets. For more information concerning the investment advisory fees and other charges against the Funds, see the Fund prospectuses and the statements of additional information for the Funds, which are available upon Request.
We may receive compensation from the investment advisers or administrators of the Funds. Such compensation will be consistent with the
services we provide or the cost savings resulting from the arrangement and, therefore, may differ between Funds. See “Payments We Receive” on page .
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General Description of Policy
Unless otherwise indicated, the description of the Policy in this prospectus assumes that the Policy is in force, there is no Policy Debt and
current federal tax laws apply. The Policy described in this prospectus is offered to corporations and other employers to provide life insurance coverage in connection with, among other things, deferred compensation plans and employer-financed
insurance purchase arrangements. We issue Policies on the lives of prospective Insureds who meet our underwriting standards.
Policy Rights
Owner. While the Insured is alive, unless you have assigned any of these rights, you may:
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transfer ownership to a new Owner; |
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name a contingent owner who will automatically become the Owner of the Policy if you die before the Insured; |
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change or revoke a contingent owner; |
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change or revoke a Beneficiary (unless a previous Beneficiary designation was irrevocable); |
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exercise all other rights in the Policy; |
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increase or decrease the Total Face Amount, subject to the other provisions of the Policy; and |
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change the death benefit option, subject to the other provisions of the Policy. |
When you transfer your rights to a new Owner, you automatically revoke any prior contingent owner designation. When you want to change or
revoke a prior Beneficiary designation, you have to specify that action. You do not affect a prior Beneficiary when you merely transfer ownership, or change or revoke a contingent owner designation.
You do not need the consent of a Beneficiary or a contingent owner in order to exercise any of your rights. However, you must give us written
notice satisfactory to us of the Requested action. Your Request will then, except as otherwise specified herein, be effective as of the date you signed the form, subject to any action taken before it was received by us.
Beneficiary. The Beneficiary has no rights in the Policy until the death of the Insured, except an
irrevocable Beneficiary cannot be changed without the consent of that Beneficiary. If a Beneficiary is alive at that time, the Beneficiary will be entitled to payment of the Death Benefit Proceeds as they become due.
Policy Limitations
Allocation of Net Premiums. Except as otherwise described herein, your net Premium will be allocated in
accordance with the allocation percentages you select. Percentages must total 100% and can be up to two decimal places.
We will
credit Premium payments received prior to the end of the free look period as described in the “Free Look Period” section of this prospectus on page .
You may change your allocation percentages at any time by Request.
Transfers Among Divisions. Subject to our rules as they may exist from time to time, you may at any time
after the Free-Look Period Transfer to another Division all or a portion of the Account Value allocated to a Division. We will make Transfers pursuant to a Request.
Transfers may be Requested by indicating the Transfer of either a specified dollar amount or a specified percentage of the Division’s
value from which the Transfer will be made.
Transfer privileges are subject to our consent. We reserve the right to impose limitations on
Transfers, including, but not limited to: (1) the minimum amount that may be Transferred; and (2) the minimum amount that may remain in a Division following a Transfer from that Division.
A fee of $10 per Transfer will apply for all Transfers in excess of 12 made in a Policy Year. We may increase or decrease the Transfer charge;
however, it is guaranteed to never exceed $10 per Transfer. All Transfers Requested on the same Business Day will count as only one Transfer toward the 12 free Transfers. The Transfer of your Initial
27
Premium from the Great-West Money Market Division to your selected Divisions does not count toward the 12 free Transfers. Likewise, any Transfers under dollar cost averaging or periodic
rebalancing of your Account Value under the rebalancer option do not count toward the 12 free Transfers (a one time rebalancing, however, will be counted as one Transfer).
Fixed Account Transfers. Transfers into the Fixed Account are limited to once every 60 days. Transfers from
the Fixed Account may only be made once per year. The maximum to be transferred out will be the greater of 25% of your balance in the Fixed Account or the amount of the transfer in the previous 365 day period.
Market Timing & Excessive Trading. The Policies are intended for long-term investment and not for
the purpose of market timing or excessive trading activity. Market timing activity may dilute the interests of Owners in the Funds. Market timing generally involves frequent or unusually large transfers that are intended to take advantage of
short-term fluctuations in the value of a Fund’s portfolio securities and the reflection of that change in the Fund’s share price. In addition, frequent or unusually large transfers may harm performance by increasing Fund expenses and
disrupting Fund management strategies. For example, excessive trading may result in forced liquidations of portfolio securities or cause the Fund to keep a relatively higher cash position, resulting in increased brokerage costs and lost investment
opportunities.
We maintain procedures designed to discourage market timing and excessive trading by Owners. As part of those
procedures, we will rely on the Funds to monitor for such activity. If a Fund believes such activity has occurred, we will scrutinize the Owner’s activity and request a determination from the Fund as to whether such activity constitutes market
timing or excessive trading. If the Fund determines that the activity constitutes market timing or excessive trading, we will contact the Owner in writing to request that market timing and/or excessive trading stop immediately. We will then provide
a subsequent report of the Owner’s trading activity to the Fund. If the Fund determines that the Owner has not ceased improper trading, and upon request of the Fund, we will inform the Owner in writing that a trading restriction is being
implemented. The four possible trading restrictions are:
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Restrict the Owner to inquiry-only access for the web and voice response unit so that the Owner will only be permitted to make Transfer Requests by
written Request mailed to us through U.S. mail (“U.S. Mail Restriction”); the Owner will not be permitted to make Transfer Requests via overnight mail, fax, the web, or the call center. Once the U.S. Mail Restriction has been in place for
180 days, the restricted Owner may Request that we lift the U.S. Mail Restriction by signing, dating and returning a form to us whereby the Owner acknowledges the potentially harmful effects of market timing and/or excessive trading on Funds and
other investors, represents that no further market timing or excessive trading will occur, and acknowledges that we may implement further restrictions, if necessary, to stop improper trading by the Owner; |
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• |
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Close the applicable Fund to all new monies, including contributions and Transfers in; |
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Restrict all Owners to one purchase in the applicable Fund per 90 day period; or |
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Remove the Fund as an investment option and convert all allocations in that Fund to a different investment option. |
The discretionary nature of our procedures creates a risk that we may treat some Owners differently than others.
Our market timing and excessive trading procedures are such that we do not impose trading restrictions unless or until a Fund first detects and
notifies us of potential market timing or excessive trading activity. Accordingly, we cannot prevent all market timing or excessive trading transfer activity before it occurs, as it may not be possible to identify it unless and until a trading
pattern is established. To the extent the Funds do not detect and notify us of market timing and/or excessive trading or the trading restrictions we impose fail to curtail it, it is possible that a market timer or excessive trader may be able to
make market timing and/or excessive trading transactions with the result that the management of the Funds may be disrupted and the Owners may suffer detrimental effects such as increased costs, reduced performance, and dilution of their interests in
the affected Funds.
We endeavor to ensure that our procedures are uniformly and consistently applied to all Owners, and we do not exempt
any Owners from these procedures. In addition, we do not enter into agreements with Owners whereby we permit market timing or excessive trading. Subject to applicable state law and the terms of each Policy, we reserve the right without prior notice
to modify, restrict, suspend or eliminate the Transfer privileges (including telephone Transfers) at any time, to require that all Transfer Requests be made by you and not by your designee, and to require
28
that each Transfer Request be made by a separate communication to us. We also reserve the right to require that each Transfer Request be submitted in writing and be signed by you.
The Funds may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares.
The prospectuses for the Funds should describe any such policies and procedures. The frequent trading policies and procedures of a Fund may be different, and more or less restrictive, than the frequent trading policies and procedures of other Funds
and the policies and procedures we have adopted to discourage market timing and excessive trading. For example, a Fund may impose a redemption fee. Owners should also be aware that we may not have the contractual obligation or the operational
capacity to apply the frequent trading policies and procedures of the respective Funds that would be affected by the Transfers.
We may
revise our market timing and excessive trading policy and related procedures at our sole discretion, at any time and without prior notice, as we deem necessary or appropriate to comply with state or federal regulatory requirements or to impose
additional or alternative restrictions on Owners engaging in market timing or excessive trading. In addition, our orders to purchase shares of the Funds are generally subject to acceptance by the Fund, and in some cases a Fund may reject or reverse
our purchase order. Therefore, we reserve the right to reject any Owner’s Transfer Request if our order to purchase shares of the Fund is not accepted by, or is reversed by, an applicable Fund.
You should note that other insurance companies and retirement plans may invest in the Funds and that those companies or plans may or may not
have their own policies and procedures on frequent transfers. You should also know that the purchase and redemption orders received by the Funds generally are “omnibus” orders from intermediaries such as retirement plans or separate
accounts funding variable insurance contracts. Omnibus orders reflect the aggregation and netting of multiple orders from individual retirement plan participants and/or individual owners of variable insurance contracts. The nature of such orders may
limit the Funds’ ability to apply their respective frequent trading policies and procedures. As a result, there is a risk that the Funds may not be able to detect potential market timing and/or excessive trading activities in the omnibus orders
they receive. We cannot guarantee that the Funds will not be harmed by transfer activity relating to the retirement plans and/or other insurance companies that invest in the Funds. If the policies and procedures of other insurance companies or
retirement plans fail to successfully discourage frequent transfer activity, it may affect the value of your investments in the Funds. In addition, if a Fund believes that an omnibus order we submit may reflect one or more Transfer Requests from an
Owner engaged in frequent transfer activity, the Fund may reject the entire omnibus order and thereby interfere with our ability to satisfy your Request even if you have not made frequent transfers. For Transfers into more than one investment
option, we may reject or reverse the entire Transfer Request if any part of it is not accepted by or is reversed by a Fund.
Exchange of Policy. You may exchange your Policy for a new policy issued by Great-West that does not provide for variable benefits. The new policy will have the same Policy Date, Issue Age, and Insured as your Policy on the date of the
exchange. The exchange must be made within 24 Policy Months after the Issue Date of your Policy and all Policy Debt must be repaid.
The cash value of
your current Policy will be applied to the new policy as the Initial Premium.
Age Requirements. An
Insured’s Issue Age must be between 20 and 85 for Policies issued on a fully underwritten basis and between 20 and 70 for Policies issued on a guaranteed underwriting or a simplified underwriting basis.
Policy or Registrant Changes
Addition, Deletion or Substitution of Investment Options. Shares of any or all of the Funds may not always
be available for purchase by the Divisions of the Series Account, or we may decide that further investment in any such shares is no longer appropriate. In either event, shares of other registered open-end investment companies or unit investment
trusts may be substituted both for Fund shares already purchased by the Series Account and/or as the security to be purchased in the future, provided that these substitutions have been approved by the SEC, to the extent necessary. We also may close
a Division to future Premium allocations and Transfers of Account Value. A Division closing may affect dollar cost averaging and the rebalancer option. We reserve the right to operate the Series Account in any form permitted by law, to take any
action necessary to comply with applicable law or obtain and continue any exemption from applicable laws, to assess a charge for taxes attributable to the operation of the Series Account or for other taxes, as described in “Charges and
Deductions” beginning on page of this prospectus, and to
29
change the way in which we assess other charges, as long as the total other charges do not exceed the maximum guaranteed charges under the Policies. We also reserve the right to add Divisions, or
to eliminate or combine existing Divisions or to Transfer assets between Divisions, or from any Division to our General Account. In the event of any substitution or other act described in this paragraph, we may make appropriate amendment to the
Policy to reflect the change.
Entire Contract. Your entire contract with us consists of the Policy,
including the attached copy of your application and any attached copies of supplemental applications for increases in the Total Face Amount, any endorsements and any riders. Any illustrations prepared in connection with the Policy do not form a part
of our contract with you and are intended solely to provide information about how values under the Policy, such as Cash Surrender Value, death benefit and Account Value, will change with the investment experience of the Divisions, and such
information is based solely upon data available at the time such illustrations are prepared.
Alteration. Sales representatives do not have any authority to either alter or modify your Policy or to
waive any of its provisions. The only persons with this authority are our president, secretary, or one of our vice presidents.
Modification. Upon notice to you, we may modify the Policy if such a modification –
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is necessary to make the Policy or the Series Account comply with any law or regulation issued by a governmental agency to which we are, or the
Series Account is, subject; |
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is necessary to assure continued qualification of the Policy under the Code or other federal or state laws as a life insurance policy;
|
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is necessary to reflect a change in the operation of the Series Account or the Divisions; or |
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adds, deletes or otherwise changes Division options. |
We also reserve the right to modify certain provisions of the Policy as stated in those provisions. In the event of any such modification, we
may make appropriate amendment to the Policy to reflect such modification.
Assignments. During the
lifetime of the Insured, you may assign all or some of your rights under the Policy. All assignments must be filed at our Corporate Headquarters and must be in written form satisfactory to us. The assignment will then be effective as of the date you
signed the form, subject to any action taken before we received it. We are not responsible for the validity or legal effect of any assignment.
Notice and Elections. To be effective, all notices and elections under the Policy must be in writing, signed
by you, and received by us at our Corporate Headquarters. Certain exceptions may apply. Unless otherwise provided in the Policy, all notices, Requests and elections will be effective when received at our Corporate Headquarters complete with all
necessary information.
Account Value
Your Account Value is the sum of your interests in each Division you have chosen, plus your interests in the Fixed Account, plus the amount in
your Loan Account. The Account Value varies depending upon the Premiums paid, expense charges applied to Premium, mortality and expense risk charge, service charges, monthly risk charges, partial withdrawals, fees, Policy loans and the net
investment factor (described below) for the Divisions to which your Account Value is allocated and the interest credited to the Fixed Account.
We measure the amounts in the Divisions in terms of Units and Unit Values. On any given date, your interest in a Division is equal to the Unit
Value multiplied by the number of Units credited to you in that Division. Amounts allocated to a Division will be used to purchase Units of that Division. Units are redeemed when you make partial withdrawals, undertake Policy loans or Transfer
amounts from a Division, and for the payment of service charges, monthly mortality and expense charges, monthly risk charges and other fees. The number of Units of each Division purchased or redeemed is determined by dividing the dollar amount of
the transaction by the Unit Value for the Division. The Unit Value for each Division was established at $10 for the first Valuation Date of the Division. The Unit Value for any subsequent Valuation Date is equal to the Unit Value for the preceding
Valuation Date multiplied by the net investment factor (determined as provided below). The Unit Value of a Division for any Valuation Date is determined as of the close of the Valuation Period ending on that Valuation Date.
30
Transactions are processed on the date we receive a Premium at our Corporate Headquarters or upon
approval of a Request. If your Premium or Request is received on a date that is not a Valuation Date, or after the close of the NYSE on a Valuation Date, the transaction will be processed on the next Valuation Date.
The Account Value on the Policy Date equals:
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that portion of net Premium received and allocated to the Division, plus |
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that portion of net Premium received and allocated to the Fixed Account, less |
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the service charges due on the Policy Date, less |
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the monthly risk charge due on the Policy Date, less |
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the monthly risk charge for any riders due on the Policy Date. |
We apply your Initial Premium on the Policy Date, which will be the Issue Date (if we have already received your Initial Premium) or the
Business Day we receive a Premium equal to, or in excess of, the Initial Premium after we have approved your application.
The Account Value attributable
to each Division of the Series Account on the subsequent Valuation Dates is equal to:
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the Account Value attributable to the Division on the preceding Valuation Date multiplied by that Division’s net investment factor, plus
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that portion of net Premium received and allocated to the Division during the current Valuation Period, plus |
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that portion of the value of the Loan Account Transferred to the Division upon repayment of a Policy loan during the current Valuation Period,
plus |
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any amounts Transferred by you to the Division from another Division during the current Valuation Period, less
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any amounts Transferred by you from the Division to another Division during the current Valuation Period, less
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that portion of any partial withdrawals deducted from the Division during the current Valuation Period, less |
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that portion of any Account Value Transferred from the Division to the Loan Account during the current Valuation Period, less
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that portion of fees due in connection with a partial withdrawal charged to the Division, less |
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the mortality and expense risk charge for each day in the Valuation Period, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the service charge for the Policy Month just
beginning charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the monthly risk charge for the Policy Month
just beginning charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that portion of the mortality and expense risk charge for the Policy
Month just ending charged to the Division, less |
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if the first day of a Policy Month occurs during the current Valuation Period, that Division’s portion of the cost for any riders and any
extra risk charge if the Insured is in a rated class as specified in your Policy, for the Policy Month just beginning. |
Net Investment Factor. The net investment factor for each Division for any Valuation Period is determined by
dividing (1) by (2) where:
(1) is the net result of:
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the net asset value of a Fund share held in the Division determined as of the end of the current Valuation Period, plus
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the per share amount of any dividend or other distribution declared on Fund shares held in the Division if the “ex-dividend” date occurs
during the current Valuation Period, plus or minus |
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a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the
current Valuation Period which are determined by us to be attributable to the operation of the Division; and |
(2) is the
net result of:
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the net asset value of a Fund share held in the Division determined as of the end of the preceding Valuation Period, plus or minus
|
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a per share credit or charge with respect to any taxes incurred by or reserved for, or paid by us if not previously reserved for, during the
preceding Valuation Period which are determined by us to be attributable to the operation of the Division. |
The net
investment factor may be greater or less than or equal to one. Therefore, the Unit Value may increase, decrease or remain unchanged.
The
net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of each Fund. These fees and expenses are not fixed or specified under the terms of the Policy, may differ between Funds, and may vary from
year to year. Fund fees and expenses are described in each Fund prospectus.
The Fixed Account Value is:
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Premiums, less expense charges, allocated to the Fixed Account; plus |
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Sub-Account Value transferred to the Fixed Account; plus |
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Interest credited to the Fixed Account; minus |
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Partial withdrawals from the Fixed Account including any applicable partial withdrawal charges; minus |
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The portion of any accrued policy fees and charges allocated to the Fixed Account; |
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Loans from the Fixed Account; minus |
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Transfers from the Fixed Account, including any applicable transfer charges. |
During any Policy Month the Fixed Account Value will be calculated on a consistent basis. For purposes of crediting interest, policy value
deducted, transferred or withdrawn from the Fixed Account is accounted for on a first in first out basis.
The mortality and expense risk
charge for the Valuation Period is the annual mortality and expense risk charge divided by 365 multiplied by the number of days in the Valuation Period.
Splitting Units. We reserve the right to split or combine the value of Units. In effecting any such change,
strict equity will be preserved and no such change will have a material effect on the benefits or other provisions of your Policy.
Other Provisions and Benefits
Misstatement of Age or Sex (Non-Unisex Policy). If the age or (in
the case of a non-unisex Policy) sex of the Insured is stated incorrectly in your Policy application or rider application, we will adjust the amount payable appropriately as described in the Policy.
If we determine that the Insured was not eligible for coverage under the Policy after we discover a misstatement of the Insured’s age,
our liability will be limited to a return of Premiums paid, less any partial withdrawals, any Policy Debt, and the cost for riders.
Suicide. If the Insured, whether sane or insane, commits suicide within two years after your Policy’s Issue Date (one year if your Policy is issued in Colorado or North Dakota), we will not pay any part of the Death Benefit Proceeds. We
will pay the Beneficiary the Premiums paid, less the amount of any Policy Debt, any partial withdrawals and the cost for riders.
If the
Insured, whether sane or insane, commits suicide within two years after the effective date of an increase in the Total Face Amount (one year if your Policy is issued in Colorado or North Dakota), then our liability as to that increase will be the
cost of insurance for that increase and that portion of the Account Value attributable to that increase. The Total Face Amount of the Policy will be reduced to the Total Face Amount that was in effect prior to the increase.
Incontestability. All statements made in the application or in a supplemental application are
representations and not warranties. We relied and will continue to rely on those statements when approving the issuance, increase in face amount, increase in death benefit over Premium paid, or change in death benefit option of the Policy. In the
absence
32
of fraud, we can use no statement in defense of a claim or to cancel the Policy for misrepresentation unless the statement was made in the application or in a supplemental application. In the
absence of fraud, after the Policy has been in force during the lifetime of the Insured for a period of two years from its Issue Date, we cannot contest it except for non-payment of Premiums. However, any increase in the Total Face Amount which is
effective after the Issue Date will be incontestable only after such increase has been in force during the lifetime of the Insured for two years from the effective date of coverage of such increase.
Paid-Up Life Insurance. When the Insured reaches Attained Age 121 (if your Policy is in force at that time),
the entire Account Value of your Policy (less outstanding Policy Debt) will be applied as a single Premium to purchase “paid-up” insurance. Outstanding Policy Debt will be repaid at this time. This repayment may be treated as a taxable
distribution to you if your Policy is not a MEC. The net single Premium for this insurance will be based on the 2001 Commissioner’s Standard Ordinary, Sex Distinct, Non-Smoker Mortality Table and 4% interest. The cash value of your paid-up
insurance, which initially is equal to the net single Premium, will remain in the Divisions of the Series Account in accordance with your then current allocation. While the paid-up life insurance is in effect your assets will remain in the Series
Account. You may change your Division allocation instructions and you may Transfer your cash value among the Divisions. All charges under your Policy, to the extent applicable, will continue to be assessed, except we will no longer make a deduction
each Policy Month for the monthly risk charge. Your death benefit will be fixed by the Code for insured age 99. As your cash value changes based on the investment experience of the Divisions, the death benefit will increase or decrease accordingly.
You may surrender the paid-up insurance Policy at any time and, if surrendered within 30 days of a Policy Anniversary, its cash value will not be less than it was on that Policy Anniversary. Please see “Federal Income Tax Considerations —
Treatment When Insured Reaches Attained Age 121” on page .
Supplemental Benefits. The following
supplemental benefit riders are available, subject to certain limitations. An additional monthly risk charge will be assessed for each rider that is in force as part of the monthly deduction from your Account Value. If a supplemental benefit rider
is terminated, the monthly risk charge for such rider will end immediately. See fee tables beginning on page .
Term Life Insurance Rider. This rider provides term life insurance on the Insured. Coverage is renewable annually until the Insured’s Attained Age 121. The amount of coverage provided under this rider varies from month to month as
described below. We will pay the rider’s death benefit to the Beneficiary when we receive Due Proof of death of the Insured while this rider is in force.
This rider provides the same three death benefit options as your Policy. The option you choose under the rider must at all times be the same
as the option you have chosen for your Policy. The rider’s death benefit will be determined at the beginning of each Policy Month in accordance with one of those options. For each of the options, any outstanding Policy Debt will reduce your
death benefit.
If you purchase this rider, the Total Face Amount shown on your Policy’s specifications page will be equal to the
minimum amount of coverage provided by this rider plus the base face amount (which is the minimum death benefit under your Policy without the rider’s death benefit). The minimum allocation of Total Face Amount between your Policy and the rider
is 10% and 90% at inception, respectively. The total Death Benefit Payable under the rider and the Policy will be determined as described in “Death Benefit” below, using the Total Face Amount shown on your Policy’s specifications
page.
Coverage under this rider will take effect on the latter of:
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the Policy Date of the Policy to which this rider is attached; or |
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the date this rider is delivered and the first rider premium is paid to the Company |
The monthly risk rate for this rider will be the same as that used for the Policy and the monthly risk charge for the rider will be determined
by multiplying the monthly risk rate by the rider’s death benefit. This charge will be calculated on the first day of each Policy Month and added to the Policy’s monthly risk charge.
If you purchase this rider, the sales load and return of expense charge will be proportionately lower as a result of a reduction in commission
payments. Commissions payable to sales representatives for the sale of the Policy are calculated based on the total Premium payments. As a result, this rider generally is not offered in connection with any Policy with annual Premium payments of less
than $100,000, except for policies issued on a guaranteed issue
33
basis. In our discretion, we may decline to offer this rider or refuse to consent to a proposed allocation of coverage between a Policy and term rider.
If this rider is offered, the commissions will vary depending on the allocation of your coverage between the Policy and the term rider. The
same initial Death Benefit will result in the highest commission when there is no term rider, with the commission declining as the portion of the Death Benefit coverage allocated to the term rider increases. Thus, the lowest commission amount is
payable, and the lowest amount of sales load deducted from your Premiums will occur, when the maximum term rider is purchased.
You may terminate this
rider by Request. This rider also will terminate on the earliest of the following dates:
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the date the Policy is surrendered or terminated; |
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the expiration of the grace period of the Policy; or |
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the death of the Insured. |
Change of Insured Rider (Not available to individual purchasers). This rider permits you to change the
Insured under your Policy or any Insured that has been named by virtue of this rider. Before we change the Insured you must provide us with (1) a Request for the change signed by you and approved by us; (2) Evidence of Insurability for the
new Insured; (3) evidence that there is an insurable interest between you and the new Insured; (4) evidence that the new Insured’s age, at the nearest birthday, is under 70 years; and (5) evidence that the new Insured was born
prior to the Policy Date. We may charge a fee for administrative expenses when you change the Insured. The minimum charge is $100 per change and the maximum charge is $400 per change. When a change of Insured takes effect, Premiums will be based on
the new Insured’s age, sex, mortality class and the Premium rate in effect on the Policy Date.
Report to Owner. We will maintain all records relating to the Series Account and the Divisions and the Fixed
Account. We will send you a report at least once each Policy Year within 30 days after a Policy Anniversary. The report will show current Account Value, current allocation in each Division, death benefit, Premiums paid, investment experience since
your last report, deductions made since the last report, and any further information that may be required by laws of the state in which your Policy was issued. It will also show the balance of any outstanding Policy loans and accrued interest on
such loans. There is no charge for this report.
In addition, we will send you the financial statements of the Funds and other reports as
specified in the 1940 Act. We also will mail you confirmation notices or other appropriate notices of Policy transactions quarterly or more frequently within the time periods specified by law. Please give us prompt written notice of any address
change. Please read your statements and confirmations carefully and verify their accuracy and contact us promptly with any questions.
Dollar Cost Averaging. By Request, you may elect dollar cost averaging in order to purchase Units of the Divisions over a period of time. There is no charge for this service.
Dollar cost averaging permits you to automatically Transfer a predetermined dollar amount, subject to our minimum, at regular intervals from
any one or more designated Divisions to one or more of the remaining, then available Divisions. The Unit Value will be determined on the dates of the Transfers. You must specify the percentage to be Transferred into each designated Division.
Transfers may be set up on any one of the following frequency periods: monthly, quarterly, semiannually, or annually. The Transfer will be initiated one frequency period following the date of your Request. We will provide a list of Divisions
eligible for dollar cost averaging that may be modified from time to time. Amounts Transferred through dollar cost averaging are not counted against the 12 free Transfers allowed in a Policy Year. You may not participate in dollar cost averaging and
the rebalancer option (described below) at the same time. Participation in dollar cost averaging does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. We reserve the right to
modify, suspend, or terminate dollar cost averaging at any time.
Rebalancer Option. By Request, you may
elect the rebalancer option in order to automatically Transfer Account Value among the Divisions on a periodic basis. There is no charge for this service. This type of transfer program automatically reallocates your Account Value so as to maintain a
particular percentage allocation among Divisions chosen by you. The amount allocated to each Division will grow or decline at different rates depending on the investment experience of the Divisions. Rebalancing does not change your Premium
allocation unless that option is
34
checked on the rebalancer Request. Your Premium allocation can also be changed by written Request at the address on the first page of this prospectus.
You may Request that rebalancing occur one time only, in which case the Transfer will take place on the date of the Request. This Transfer
will count as one Transfer towards the 12 free Transfers allowed in a Policy Year.
You may also choose to rebalance your Account Value on
a quarterly, semiannual, or annual basis, in which case the first Transfer will be initiated one frequency period following the date of your Request. On that date, your Account Value will be automatically reallocated to the selected Divisions.
Thereafter, your Account Value will be rebalanced once each frequency period. In order to participate in the rebalancer option, your entire Account Value must be included. Transfers made with these frequencies will not count against the 12 free
Transfers allowed in a Policy Year.
You must specify the percentage of Account Value to be allocated to each Division and the frequency
of rebalancing. You may terminate the rebalancer option at any time by Request.
You may not participate in the rebalancer option and
dollar cost averaging at the same time. Participation in the rebalancer option does not assure a greater profit, or any profit, nor will it prevent or necessarily alleviate losses in a declining market. The Company reserves the right to modify,
suspend, or terminate the rebalancer option at any time.
Non-Participating. The Policy does not pay dividends.
Premiums
Policy Application, Issuance and Initial Premium. To purchase a Policy, you must submit an application to our Corporate Headquarters. We will then follow our underwriting procedures designed to determine the insurability of the applicant. We
may require full underwriting, which includes a medical examination and further information, before your application may be approved. We also may offer the Policy on a simplified underwriting or guaranteed issue basis. Applicants must be acceptable
risks based on our applicable underwriting limits and standards. We will not issue a Policy until the underwriting process has been completed to our satisfaction. We reserve the right to reject an application for any lawful reason or to
“rate” an Insured as a substandard risk, which will result in increased monthly risk rates. The monthly risk rate also may vary depending on the type of underwriting we use.
You must specify certain information in the application, including the Total Face Amount, the death benefit option and supplemental benefits,
if any. The Total Face Amount generally may not be decreased below $100,000.
Upon approval of the application, we will issue to you a
Policy on the life of the Insured. A specified Initial Premium must be paid before we issue the Policy. The effective date of coverage for your Policy (which we call the “Policy Date”) will be the date we receive a Premium equal to or in
excess of the specified Initial Premium after we have approved your application. If your Premium payment is received on the 29th, 30th or 31st of a month, the Policy will be dated the 28th of that month.
We generally do not accept Premium payments before approval of an application; however, at our discretion, we may elect to do so. While your
application is in underwriting, if we accept your Premium payment before approval of your application, we will provide you with temporary insurance coverage in accordance with the terms of our temporary insurance agreement. In our discretion, we may
limit the amount of Premium we accept and the amount of temporary coverage we provide. If we approve your application, we will allocate your Premium payment to the Series Account or Fixed Account on the Policy Date, as described below. Otherwise, we
will promptly return your payment to you. We will not credit interest to your Premium payment for the period while your application is in underwriting.
We reserve the right to change the terms or conditions of your Policy to comply with differences in applicable state law. Variations from the
information appearing in this prospectus due to individual state requirements are described in supplements that are attached to this prospectus or in endorsements to the Policy, as appropriate.
35
Free Look Period. During the free look period (ten days or
longer where required by state law), you may cancel your Policy. If you exercise the free look privilege, you must return the Policy to our Corporate Headquarters or to the representative from whom you purchased the Policy.
Generally, net Premium will be allocated to the Divisions you selected on the application. However, under certain circumstances described
below, the net Premium will first be allocated to the Great-West Money Market Division and remain there until the next Valuation Date following the end of the free look period. On that date, the Sub-Account value held in the Great-West Money Market
Division will be allocated to the Division(s) selected by you. If your Premium payments are received after 4:00 PM EST/EDT, such payments will be credited on the next Valuation Date. Regardless of when the payment is credited, you will receive the
utilized values from the date we received your payment.
During the free look period, you may change your Division allocations and your
allocation percentages, however depending on whether your state permits the immediate investment of your premium, changes made during the free look period may not take effect until after the free look period has expired.
Policies returned during the free look period will be void from the Issue Date. In some states, we will refund your current Account Value plus
the return of any expense charges deducted. In those states, this amount may be higher or lower than your Premium payments, which means you bear the investment risk during the free look period.
Certain states require that we return the greater of your Account Value (less any surrenders, withdrawals and distributions already received)
or the amount of the Premiums received. In those states, we will allocate your net Premium payments to the Great-West Money Market Division. We will Transfer the Account Value in that Division to the other Divisions of the Series Account in
accordance with your most recent allocation instructions on file at the end of the free look period.
Premium. All Premium payments must be made payable to “Great-West Life & Annuity Insurance
Company” and mailed to our Corporate Headquarters. The Initial Premium will be due and payable on or before your Policy’s Issue Date. The minimum Initial Premium will vary based on various factors, including the age of the Insured and the
death benefits option you select, but may not be less than $100. You may pay additional Premium payments to us in the amounts and at the times you choose, subject to the limitations described below. To find out whether your Premium payment has been
received, contact us at the address or telephone number shown on the first page of this prospectus.
We reserve the right to limit the
number of Premium payments we accept on an annual basis. No Premium payment may be less than $100 per Policy without our consent, although we will accept a smaller Premium payment if necessary to keep your Policy in force. We reserve the right to
restrict or refuse any Premium payments that exceed the Initial Premium amount shown on your Policy. We also reserve the right not to accept a Premium payment that causes the death benefit to increase by an amount that exceeds the Premium received.
Evidence of insurability satisfactory to us may be required before we accept any such Premium.
We will not accept Premium payments that
would, in our opinion, cause your Policy to fail to qualify as life insurance under applicable federal tax law. If a Premium payment is made in excess of these limits, we will accept only that portion of the Premium within those limits, and will
refund the remainder to you.
Net Premiums. The net Premium is the amount you pay as the Premium
less any expense charges applied to Premiums. See “Charges and Deductions - - Expense Charge Applied to Premium,” on page .
Planned Periodic Premiums. While you are not required to make additional Premium payments according to a
fixed schedule, you may select a planned periodic Premium schedule and corresponding billing period, subject to our limits. We will send you reminder notices for the planned periodic Premium, unless you Request to have reminder notices suspended.
You are not required, however, to pay the planned periodic Premium; you may increase or decrease the planned periodic Premium subject to our limits, and you may skip a planned payment or make unscheduled payments. Depending on the investment
performance of the Divisions you select, the planned periodic Premium may not be sufficient to keep your Policy in force, and you may need to change your planned payment schedule or make additional payments in order to prevent termination of your
Policy.
36
Death Benefits
Death Benefit. If your Policy is in force at the time of the Insured’s death, we will pay the
Beneficiary an amount based on the death benefit option you select once we have received Due Proof of the Insured’s death. The amount payable will be:
| • |
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the amount of the selected death benefit option, less |
| • |
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the value of any Policy Debt on the date of the Insured’s death, less |
| • |
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any accrued and unpaid Policy charges. |
We will pay this amount to the Beneficiary in one lump sum, unless the Beneficiary and we agree on another form of settlement. We will pay
interest, at a rate not less than that required by law, on the amount of Death Benefit Proceeds, if payable in one lump sum, from the date of the Insured’s death to the date of payment.
In order to meet the definition of life insurance under the Code, section 7702 of the Code defines alternative testing procedures for the
minimum death benefit under a Policy. See “Federal Income Tax Considerations - Tax Status of the Policy,” on page . Your Policy must qualify under the cash value accumulation test (“CVAT”).
Under the CVAT testing procedures, there is a minimum death benefit required at all times equal to your Account Value multiplied by a
pre-determined factor. The factors used to determine the minimum death benefit vary by age. The factors (expressed as percentages) used for the CVAT are set forth in your Policy.
The Policy has two death benefit options.
Option 1. The
“Level Death” Option. Under this option, the death benefit is –
| • |
|
the Policy’s Total Face Amount on the date of the Insured’s death less any partial withdrawals; or, if greater,
|
| • |
|
the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to minimize your cost of insurance (monthly risk charge).
Option 2. The “Coverage Plus” Option. Under this option, the death benefit is –
| • |
|
the sum of the Total Face Amount and Account Value of the Policy on the date of the Insured’s death less any partial withdrawals;
or, if greater, |
| • |
|
the Account Value on the date of death multiplied by the applicable factor shown in the table set forth in your Policy. |
This death benefit option should be selected if you want to maximize your death benefit.
Your Account Value and death benefit fluctuate based on the performance of the investment options you select and the expenses and deductions
charged to your account. See the “Account Value” and “Charges and Deductions” sections of this prospectus.
There is no minimum death
benefit guarantee associated with this Policy.
Changes in Death Benefit Option. After the first Policy
Year, but not more than once each Policy Year, you may change the death benefit option by Request. Any change will be effective on the first day of the Policy Month following the date we approve your Request. A maximum administrative fee of $100
will be deducted from your Account Value each time you change your death benefit option.
A change in the death benefit option will not
change the amount payable upon the death of the Insured on the date of change. Any change is subject to the following conditions:
| • |
|
If the change is from option 1 to option 2, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount less the
Account Value. Evidence of insurability may be required. |
| • |
|
If the change is from option 2 to option 1, the new Total Face Amount, at the time of the change, will equal the prior Total Face Amount plus the
Account Value. |
37
Changes in Total Face Amount. You may increase or decrease the
Total Face Amount of your Policy at any time within certain limits.
Minimum Changes. Each increase or decrease in the Total Face Amount
must be at least $25,000. We reserve the right to change the minimum amount by which you may change the Total Face Amount.
Increases in
Total Face Amount. To Request an increase in Total Face Amount, you must provide satisfactory evidence of the Insured’s insurability. Once approved by us, an increase will become effective on the Policy Anniversary following our approval of
your Request, subject to the deduction of the first Policy Month’s monthly risk charge, service charge, any extra risk charge if the Insured is in a rated class and the cost of any riders.
Each increase to the Total Face Amount is considered to be a new segment to the Policy. When an increase is approved, Premium is allocated
against the original Policy segment up to the seven-pay Premium limit established on the Issue Date. Any excess Premium is then allocated toward the new segment. Each segment will have a separate target Premium associated with it. The expense charge
applied to Premium is higher up to target and lower for Premium in excess of the target as described in detail in the “Charges and Deductions” section of this prospectus. The expense charge formula will apply to each segment based on the
target Premium for that segment. In addition, each segment will have a new incontestability period and suicide exclusion period as described in the “Other Provisions and Benefits” section of this prospectus.
Decreases in Total Face Amount. A decrease in Total Face Amount will become effective at the beginning of the next Policy Month following our
approval of your Request. The Total Face Amount after the decrease must be at least $100,000.
For purposes of the incontestability
provision of your Policy, any decrease in Total Face Amount will be applied in the following order:
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first, to the most recent increase; |
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second, to the next most recent increases, in reverse chronological order; and |
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finally, to the initial Total Face Amount. |
Surrenders and Withdrawals
Surrenders. You may surrender your Policy for its Cash Surrender Value at any time while the Insured is
living. If you do, the insurance coverage and all other benefits under the Policy will terminate. To surrender your Policy, contact us at the address or telephone number shown on the first page of this prospectus. We will send you the paperwork
necessary for you to Request the surrender of your Policy. The proceeds of a surrender will be payable within seven days of our receipt of the completed Request.
We will determine your Cash Surrender Value (minus any charges not previously deducted) as of the end of the first Valuation Date after we
receive your Request for surrender.
If you withdraw part of the Cash Surrender Value, your Policy’s death benefit will be reduced
and you may incur taxes and tax penalties.
You may borrow from us using your Account Value as collateral.
A surrender may have tax consequences, including tax penalties. See “Federal Income Tax Considerations – Tax Treatment of Policy
Benefits,” beginning on page of this prospectus.
Partial Withdrawal. You may Request a
partial withdrawal of Account Value at any time while the Policy is in force. The amount of any partial withdrawal must be at least $500 and may not exceed 90% of your Account Value less the value of the Loan Account. A partial withdrawal fee will
be deducted from your Account Value for all partial withdrawals after the first made during the same Policy Year. This administrative fee is guaranteed to be no greater than $25. To Request a partial withdrawal, contact us at the address or
telephone number shown on the first page of this prospectus. We will send you the paperwork necessary for you to request a withdrawal from your Policy. The proceeds of any such partial withdrawal will be payable within seven days of our receipt
of the completed Request.
38
The Death Benefit Proceeds will be reduced by the amount of any partial withdrawals.
Your Account Value will be reduced by the amount of a partial withdrawal. The amount of a partial withdrawal will be withdrawn from the
Divisions in proportion to the amounts in the Divisions bearing on your Account Value. You cannot repay amounts taken as a partial withdrawal. Any subsequent payments received by us will be treated as additional Premium payments and will be subject
to our limitations on Premiums.
A partial withdrawal may have tax consequences. See “Federal Income Tax Considerations - - Tax
Treatment of Policy Benefits,” beginning on page of this prospectus.
Loans
Policy Loans. You may Request a Policy loan of up to 90% of your Account Value, decreased by the amount of
any outstanding Policy Debt on the date the Policy loan is made less any accrued loan interest and less the current monthly deductions remaining for the balance of the Policy Year. When a Policy loan is made, a portion of your Account Value equal to
the amount of the Policy loan will be allocated to the Loan Account as collateral for the loan. This amount will not be affected by the investment experience of the Series Account while the loan is outstanding and will be subtracted from the
Divisions in proportion to the amounts in the Divisions bearing on your Account Value. The minimum Policy loan amount is $500.
The
interest rate on the Policy loan will be determined annually, using a simple interest formula, at the beginning of each Policy Year. That interest rate will be guaranteed for that Policy Year and will apply to all Policy loans outstanding during
that Policy Year. Interest is due and payable on each Policy Anniversary. Interest not paid when due will be added to the principal amount of the loan and will bear interest at the loan interest rate.
Presently, the maximum interest rate for Policy loans is the Moody’s Corporate Bond Yield Average - Monthly Average Corporates, which is
published by Moody’s Investor Service, Inc. If the Moody’s Corporate Bond Yield Average ceases to be published, the maximum interest rate for Policy loans will be derived from a substantially similar average adopted by your state’s
Insurance Commissioner.
We must reduce our Policy loan interest rate if the maximum loan interest rate is lower than the loan interest
rate for the previous Policy Year by one-half of one percent or more.
We may increase the Policy loan interest rate but such increase
must be at least one-half of one percent. No increase may be made if the Policy loan interest rate would exceed the maximum loan interest rate. We will send you advance notice of any increase in the Policy loan rate.
Interest will be credited to amounts held in the Loan Account using a compound interest formula. The rate will be no less than the Policy loan
interest rate then in effect less a maximum of 0.9%.
All payments we receive from you will be treated as Premium payments unless we have
received notice, in form satisfactory to us, that the funds are for loan repayment. If you have a Policy loan, it is generally advantageous to repay the loan rather than make a Premium payment because Premium payments incur expense charges whereas
loan repayments do not. Loan repayments will first reduce the outstanding balance of the Policy loan and then accrued but unpaid interest on such loans. We will accept repayment of any Policy loan at any time while the Policy is in force. Amounts
paid to repay a Policy loan will be allocated to the Divisions in accordance with your allocation instructions then in effect at the time of repayment. Any amount in the Loan Account used to secure the repaid loan will be allocated back to the
Sub-Accounts.
A Policy loan, whether or not repaid, will affect the Death Benefit Proceeds, payable upon the Insured’s death, and
the Account Value because the investment results of the Divisions do not apply to amounts held in the Loan Account. The longer a loan is outstanding, the greater the effect is likely to be, depending on the investment results of the Divisions while
the loan is outstanding. The effect could be favorable or unfavorable.
39
Lapse and Reinstatement
Lapse and Continuation of Coverage. If you cease making Premium payments, coverage under your Policy and any
riders to the Policy will continue until your Account Value, less any Policy Debt, is insufficient to cover the monthly deduction. When that occurs, the grace period will go into effect.
Grace Period. If the first day of a Policy Month occurs during the Valuation Period and your Account Value,
less any Policy Debt, is not sufficient to cover the monthly deduction for that Policy Month, then your Policy will enter the grace period described below. If you do not pay sufficient additional Premiums during the grace period, your Policy will
terminate without value.
The grace period will allow 61 days for the payment of Premium sufficient to keep the Policy in force. Any such
Premium must be in an amount sufficient to cover deductions for the monthly risk charge, the service charge, the cost for any riders and any extra risk charge if the Insured is in a rated class for the next two Policy Months. Notice of Premium due
will be mailed to your last known address or the last known address of any assignee of record at least 31 days before the date coverage under your Policy will cease. If the Premium due is not paid within the grace period, then the Policy and all
rights to benefits will terminate without value at the end of the 61-day period. The Policy will continue to remain in force during this grace period. If the Death Benefit Proceeds become payable by us during the grace period, then any due and
unpaid Policy charges will be deducted from the amount payable by us.
Termination of Policy. Your
Policy will terminate on the earliest of the date we receive your Request to surrender, the expiration date of the grace period due to insufficient value or the date of death of the Insured. Upon lapse or termination, the Policy no longer provides
insurance benefits.
Reinstatement. Before the Insured’s death, we will reinstate your Policy,
provided that the Policy has not been surrendered, and provided further that:
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you make your reinstatement Request within three years from the date of termination; |
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you submit satisfactory Evidence of Insurability to us; |
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you pay an amount equal to the Policy charges which were due and unpaid at the end of the grace period; |
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you pay a Premium equal to four times the monthly deduction applicable on the date of reinstatement; and |
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you repay or reinstate any Policy loan that was outstanding on the date coverage ceased, including interest at 6.00% per year compounded
annually from the date coverage ceased to the date of reinstatement of your Policy. |
A reinstated Policy’s Total
Face Amount may not exceed the Total Face Amount at the time of termination. Your Account Value on the reinstatement date will reflect:
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the Account Value at the time of termination; plus |
| • |
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net Premiums attributable to Premiums paid to reinstate the Policy; less |
| • |
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the monthly expense charge; less |
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the monthly cost of insurance charge applicable on the date of reinstatement; less |
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The expense charge applied to Premium. |
The effective date of reinstatement will be the date the application for reinstatement is approved by us.
Deferral of Payment. We will usually pay any amount due from the Series Account within seven days after the
Valuation Date following your Request giving rise to such payment or, in the case of death of the Insured, Due Proof of such death. Payment of any amount payable from the Series Account on death, surrender, partial withdrawal, or Policy loan may be
postponed whenever:
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the NYSE is closed other than customary weekend and holiday closing, or trading on the NYSE is otherwise restricted; |
| • |
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the SEC, by order, permits postponement for the protection of Owners; or |
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an emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonably practicable, or it is not reasonably
practicable to determine the value of the assets of the Series Account. |
40
Federal Income Tax Considerations
The following summary provides a general description of the federal income tax considerations associated with the Policy and does not purport
to be complete or to cover all situations. This discussion is not intended as tax advice. You should consult counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the
Internal Revenue Service’s (the “IRS”) current interpretation of current federal income tax laws. We make no representation as to the likelihood of continuation of the current federal income tax laws or of the current interpretations
by the IRS. We do not make any guarantee regarding the tax status of any Policy or any transaction regarding the Policy.
The
Policy may be used in various arrangements, including non-qualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, retiree medical benefit plans and others. The tax consequences of such plans
may vary depending on the particular facts and circumstances of each individual arrangement. Therefore, if the use of the Policy in any such arrangement is contemplated, you should consult a qualified tax adviser for advice on the tax attributes and
consequences of the particular arrangement.
Tax Status of the Policy
A Policy has certain tax advantages when treated as a life insurance contract within the meaning of section 7702 of the Code. We believe that
the Policy meets the section 7702 definition of a life insurance contract and will take whatever steps are appropriate and reasonable to attempt to cause the Policy to comply with section 7702. We reserve the right to amend the Policy to comply with
any future changes in the Code, any regulations or rulings under the Code and any other requirements imposed by the IRS.
Diversification of Investments. Section 817(h) of the Code requires that the investments of each Division of the Series Account be “adequately diversified” in accordance with certain Treasury Department
regulations. Disqualification of the Policy as a life insurance contract for failure to comply with the diversification requirements would result in the imposition on you of federal income tax at ordinary income tax rates with respect to the
earnings allocable to the Policy in the year of the failure and all prior years prior to the receipt of payments under the Policy. We believe that the Divisions will be adequately diversified.
Policy Owner Control. In connection with its issuance of temporary and proposed regulations
under Section 817(h) in 1986, the Treasury Department announced that those regulations did not “provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor
(i.e., the Owner), rather than the insurance company to be treated as the owner of the assets in the account” (which would result in the current taxation of the income on those assets to the Owner). In Revenue Ruling 2003-91, the IRS
provided such guidance by describing the circumstances under which the owner of a variable contract will not possess sufficient control over the assets underlying the contract to be treated as the owner of those assets for federal income tax
purposes. Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract is to be treated as the owner of the assets held by the insurance company under the contract will depend on all of the facts and circumstances. We
do not believe that your ownership rights under the Policy would result in your being treated as the Owner of the assets of the Policy under Rev. Rul. 2003-91. However, we do not know whether additional guidance will be provided by the IRS on this
issue and what standards may be contained in such guidance. Therefore, we reserve the right to modify the Policy as necessary to attempt to prevent an Owner from being considered the owner of a pro rata share of the assets of the Policy.
The following discussion assumes that your Policy will qualify as a life insurance contract for federal income tax purposes.
Tax Treatment of Policy Benefits
Life Insurance Death Benefit Proceeds. In general, the amount of the Death Benefit Payable under your Policy
is excludible from your Beneficiary’s gross income under the Code.
If the death benefit is not received in a lump sum and is,
instead, applied under a proceeds option agreed to by us and the Beneficiary, payments generally will be prorated between amounts attributable to the death benefit, which will be excludible from the Beneficiary’s income, and amounts
attributable to interest (occurring after the Insured’s death), which will be includable in the Beneficiary’s income.
41
Tax Deferred Accumulation. Any increase in your Account Value
is generally not taxable to you. If you receive or are deemed to receive amounts from the Policy before the Insured dies, see the following section entitled “Distributions” for a more detailed discussion of the taxability of such payments.
Depending on the circumstances, any of the following transactions may have federal income tax consequences:
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the exchange of a Policy for a life insurance, endowment or annuity contract; |
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a change in the death benefit option; |
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a change in the ownership of a Policy; |
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a change of the named Insured; or |
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an assignment of a Policy. |
In addition, federal, state and local transfer and other tax consequences of ownership or receipt of Death Benefit Proceeds will depend on
your circumstances and those of the named Beneficiary. Whether partial withdrawals (or other amounts deemed to be distributed) constitute income subject to federal income tax depends, in part, upon whether your Policy is considered a MEC.
Surrenders. If you surrender your Policy, you will recognize ordinary income to the extent the Account Value
exceeds the “investment in the contract,” which is generally the total of Premiums and other consideration paid for the Policy, less all amounts previously received under the Policy to the extent those amounts were excludible from gross
income.
Modified Endowment Contracts. Section 7702A of the Code treats certain life insurance
contracts as MECs. In general, a Policy will be treated as a MEC if total Premiums paid at any time during the first seven Policy Years exceed the sum of the net level Premiums which would have been paid on or before that time if the Policy provided
for paid-up future benefits after the payment of seven level annual Premiums (“seven-pay test”). In addition, a Policy may be treated as a MEC if there is a “material change” to the Policy.
We will monitor your Premium payments and other Policy transactions and notify you if a payment or other transaction might cause your Policy
to become a MEC. We will not invest any Premium or portion of a Premium that would cause your Policy to become a MEC without instruction to do so from you. We will promptly notify you or your agent of the excess cash received. We will not process
the Premium payment unless we receive a MEC acceptance form or Policy change form within 48 hours of receipt of the excess funds. If paperwork is received that allows us to process the excess cash, the effective date will be the date of the new
paperwork.
Further, if a transaction occurs which decreases the Total Face Amount of your Policy during the first seven years, we will
retest your Policy, as of the date of its purchase, based on the lower Total Face Amount to determine compliance with the seven-pay test. Also, if a decrease in Total Face Amount occurs within seven years of a “material change,” we will
retest your Policy for compliance as of the date of the “material change.” Failure to comply in either case would result in the Policy’s classification as a MEC regardless of our efforts to provide a payment schedule that would not
otherwise violate the seven-pay test.
The rules relating to whether a Policy will be treated as a MEC are complex and cannot be fully
described in the limited confines of this summary. Therefore, you should consult with a competent tax adviser to determine whether a particular transaction will cause your Policy to be treated as a MEC.
Distributions
Distributions Under a Policy That Is Not a MEC. If your Policy is not a MEC, a distribution is generally
treated first as a tax-free recovery of the “investment in the contract,” and then as a distribution of taxable income to the extent the distribution exceeds the “investment in the contract.” An exception is made for cash
distributions that occur in the first 15 Policy Years as a result of a decrease in the death benefit or other change that reduces benefits under the Policy that are made for purposes of maintaining compliance with section 7702. Such distributions
are taxed in whole or part as ordinary income (to the extent of any gain in the Policy) under rules prescribed in section 7702.
42
If your Policy is not a MEC, Policy loans and loans secured by the Policy are generally not
treated as distributions. Such loans are instead generally treated as your indebtedness.
Finally, if your Policy is not a MEC,
distributions (including distributions upon surrender), Policy loans and loans secured by the Policy are not subject to the ten percent additional tax applicable to distributions from a MEC.
Distributions Under Modified Endowment Contracts. If treated as a MEC, your Policy will be subject to the
following tax rules:
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First, partial withdrawals are treated as ordinary income subject to ordinary income tax up to the amount equal to the excess (if any) of your
Account Value immediately before the distribution over the “investment in the contract” at the time of the distribution. |
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Second, Policy loans and loans secured by a Policy are treated as partial withdrawals and taxed accordingly. Any past-due loan interest that is
added to the amount of the loan is treated as a loan. |
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Third, a ten percent additional penalty tax is imposed on that portion of any distribution (including distributions upon surrender), Policy loan,
or loan secured by a Policy, that is included in income, except where the distribution or loan is made to a taxpayer that is a natural person, and: |
| |
1. |
is made when the taxpayer is age 59 1⁄2 or older;
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2. |
is attributable to the taxpayer becoming disabled; or |
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3. |
is part of a series of substantially equal periodic payments (not less frequently than annually) for the duration of the taxpayer’s life (or
life expectancy) or for the duration of the longer of the taxpayer’s or the Beneficiary’s life (or life expectancies). |
Multiple Policies. All MECs issued by us (or our affiliates) to you during any calendar year will be treated
as a single MEC for purposes of determining the amount of a Policy distribution that is taxable to you.
Treatment When Insured Reaches Attained Age 121. As described above, when the Insured reaches Attained Age
121, we will issue you a “paid-up” life insurance Policy. We believe that the paid-up life insurance Policy will continue to qualify as a “life insurance contract” under the Code. However, there is some uncertainty regarding this
treatment. It is possible, therefore, that you would be viewed as constructively receiving the Cash Surrender Value in the year in which the Insured attains age 121 and would realize taxable income at that time, even if the Death Benefit Proceeds
were not distributed at that time. In addition, any outstanding Policy Debt will be repaid at that time. This repayment may be treated as a taxable distribution to you, if your contract is not a MEC.
The IRS has issued Revenue Procedure 2010-28 providing a safe harbor concerning the application of Sections 7702 and 7702A to life insurance
contracts that have mortality guarantees based on the 2001 CSO Table and which may continue in force after an insured attains age 100. If a contract satisfies all the requirements of Sections 7702 and 7702A using all of the Age 100 Safe Harbor
Testing Method requirements set forth in Rev. Proc. 2010-28, the IRS will not challenge the qualification of that contract under Sections 7702 and 7702A. Rev. Proc. 2010-28 also states that “No adverse inference should be drawn with respect to
the qualification of a contract as a life insurance contract under §7702, or its status as not a MEC under §7702A, merely by reason of a failure to satisfy all of the requirements of [the Age 100 Safe Harbor].”
Federal Income Tax Withholding. We are required to withhold 10% on that portion of a Policy distribution
that is taxable, unless you direct us in writing not to do so at or before the time of the Policy distribution. As the Owner you are responsible for the payment of any taxes and early distribution penalties that may be due on Policy distributions.
Actions to Ensure Compliance with the Tax Law. We believe that the maximum amount of Premiums we intend
to permit for the Policies will comply with the Code definition of a “life insurance contract.” We will monitor the amount of your Premiums, and, if you pay a Premium during a Policy Year that exceeds those permitted by the Code, we will
promptly refund the Premium or a portion of the Premium before any allocation to the Funds. We reserve the right to increase the death benefit (which may result in larger charges under a Policy) or to take any other action deemed necessary to ensure
the compliance of the Policy with the federal tax definition of a life insurance contract.
43
Trade or Business Entity Owns or Is Directly or Indirectly a
Beneficiary of the Policy. Where a Policy is owned by other than a natural person, the Owner’s ability to deduct interest on business borrowing unrelated to the Policy can be impacted as a result of its ownership of cash value life
insurance. No deduction will be allowed for a portion of a taxpayer’s otherwise deductible interest expense unless the Policy covers only one individual, and such individual is, at the time first covered by the Policy, a 20 percent owner of the
trade or business entity that owns the Policy, or an officer, director, or employee of such trade or business.
Although this limitation
generally does not apply to Policies held by natural persons, if a trade or business (other than one carried on as a sole proprietorship) is directly or indirectly the Beneficiary under a Policy (e.g., pursuant to a split-dollar agreement),
the Policy will be treated as held by such trade or business. The effect will be that a portion of the trade or business entity’s deduction for its interest expenses will be disallowed unless the above exception for a 20 percent owner,
employee, officer or director applies.
The portion of the entity’s interest deduction that is disallowed will generally be a pro
rata amount which bears the same ratio to such interest expense as the taxpayer’s average unborrowed cash value bears to the sum of the taxpayer’s average unborrowed cash value and average adjusted bases of all other assets. Any corporate
or business use of the life insurance should be carefully reviewed by your tax adviser with attention to these rules as well as any other rules and possible tax law changes that could occur with respect to corporate-owned life insurance.
In Revenue Ruling 2011-9, the IRS held that the status of an insured as an employee “at the time first covered” for purposes of
Section 264(f) does not carry over from a contract given up in a Section 1035 tax-free exchange to a contract received in such an exchange. Therefore, the pro rata interest expense disallowance exception of Section 264(f)(4) does not
apply to new Policies received in Section 1035 tax-free exchanges unless such Policies also qualify for the exception provided by Section 264(f)(4) of the Code.
Employer-Owned Life Insurance. The Pension Protection Act of 2006 added a new section to the Code that
denies the tax-free treatment of death benefits payable under an employer-owned life insurance contract unless certain notice and consent requirements are met and either (1) certain rules relating to the insured employee’s status are
satisfied or (2) certain rules relating to the payment of the “amount received under the contract” to, or for the benefit of, certain beneficiaries or successors of the insured employee are satisfied. The new rules apply to life
insurance contracts owned by corporations (including S corporations), individual sole proprietors, estates and trusts and partnerships that are engaged in a trade or business. Any business contemplating the purchase of a Policy on the life of an
employee should consult with its legal and tax advisers regarding the applicability of the new legislation to the proposed purchase.
Split Dollar Life Insurance. A tax adviser should also be consulted with respect to the 2003 split dollar regulations if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. Any business
contemplating the purchase of a new life insurance contract or a change in an existing contract should consult a tax adviser.
Alternative Minimum Tax. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal
corporate alternative minimum tax, if the policy owner is subject to that tax.
Other Employee Benefit
Programs. Complex rules may apply when a Policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of employee benefits. These Policy owners also must consider whether the Policy was applied for by,
or issued to, a person having an insurable interest under applicable state law, as the lack of insurable interest may, among other things, affect the qualification of the Policy as life insurance for federal income tax purposes and the right of the
Beneficiary to death benefits. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult your legal adviser.
Policy Loan Interest. Generally, no tax deduction is allowed for interest paid or accrued on any
indebtedness under a Policy.
Change of Insured Rider. The Company makes no representations concerning the tax effects of the
change of insured rider. Owners are responsible for seeking tax counsel regarding the tax effects of the Rider. The Company reserves the right to refund cash value exceeding allowable limits for tax exempt purposes, or that would be charged as
current interest income to Owners.
44
Investment Income Surtax. In taxable years beginning in 2013, taxable distributions
from life insurance policies are considered “investment income” for purposes of the newly enacted Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of
distributions (e.g., earnings) to individuals, trusts, and estates whose income exceeds certain threshold amounts as follows: an amount equal to the lesser of (a) “net investment income”; or (b) the excess of a taxpayer’s
modified adjusted gross income over a specified income threshold ($250,000 for married couples filing jointly, $125,000 for married couples filing separately, and $200,000 for everyone else). The IRS has issued regulations that treat taxable
distributions from life insurance policies as “Net investment income.” Please consult the impact of the Investment Income Surtax on you with a competent tax advisor.
Our Taxes. We are taxed as a life insurance company under part I of subchapter L of the Code. The
operations of the Series Account are taxed as part of our operations. Investment income and realized capital gains are not taxed to the extent that they are applied under the Policies. As a result of the Omnibus Budget Reconciliation Act of 1990, we
are generally required to capitalize and amortize certain Policy acquisition expenses over a ten year period rather than currently deducting such expenses. This so-called “deferred acquisition cost” tax (“DAC tax”) applies to the
deferred acquisition expenses of a Policy and results in a significantly higher corporate income tax liability for Great-West. We reserve the right to adjust the amount of a charge to Premium to compensate us for these anticipated higher corporate
income taxes.
A portion of the expense charges applied to Premium is used to offset the federal, state or local taxes that we incur which
are attributable to the Series Account or the Policy. We reserve the right to adjust the amount of this charge.
Summary.
| |
• |
|
We do not make any guarantees about the Policy’s tax status. |
| |
• |
|
We believe the Policy will be treated as a life insurance contract under federal tax laws. |
| |
• |
|
Death benefits generally are not subject to federal income tax. |
| |
• |
|
Investment gains are normally not taxed unless distributed to you before the Insured dies. |
| |
• |
|
If you pay more Premiums than permitted under the seven-pay test, your Policy will be a MEC. |
| |
• |
|
If your Policy becomes a MEC, partial withdrawals, Policy loans and surrenders may incur taxes and tax penalties. |
Corporate Tax Shelter Requirements
The Company does not believe that any purchase of a Policy by an Owner pursuant to this offering will be subject to the tax shelter
registration, customer list or reporting requirements under the Code and implementing regulations. All Owners that are corporations are advised to consult with their own tax and/or legal counsel and advisers, to make their own determination as to
the applicability of the disclosure requirements of IRC § 6011 and Treas. Reg. Section
1.6011-4 to their federal income tax returns.
Legal Proceedings
There are no pending legal proceedings that would have an adverse material effect on the Series Account or on GWFS. Great-West is engaged in
various kinds of routine litigation that, in our judgment, is not material to its total assets or material with respect to the Series Account.
Legal Matters
Pursuant to Commodity Futures Trading Commission Rule 4.5, Great-West has claimed an exclusion from the definition
of the term “commodity pool operator” under the Commodity Exchange Act. Therefore, it is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
Beverly A. Byrne, Chief Compliance Officer & Legal Counsel, Financial Services, of Great-West, has passed upon all matters of
Colorado law pertaining to the Policy, including the validity of the Policy and our right to issue the Policy under Colorado law. The law firm of Carlton Fields Jorden Burt P.A., 1025 Thomas Jefferson St., N.W., Suite 400 East, Washington, D.C.
20007-5208, serves as special counsel to Great-West with regard to the federal securities laws.
45
Abandoned Property Requirements
Every state has unclaimed property laws that generally provide for escheatment to the state of unclaimed property (including proceeds of life
insurance policies) under various circumstances. This “escheatment” is revocable, however, and the state is obligated to pay the applicable proceeds if the property owner steps forward to claim it with the proper documentation. To help
prevent such escheatment, it is important that you keep your policy and other information on file with us up to date, including the names, contact information, and identifying information for owners, beneficiaries, and other payees. Such updates
should be communicated by writing to the Company at 8515 E. Orchard Road, 9T2, Greenwood Village, CO 80111, by calling 888-353-2654, by sending an email to gwexecbenefits@greatwest.com or via the web at www.greatwest.com/executivebenefits.
Financial Statements
Great-West’s consolidated financial statements, which are included in the Statement of Additional Information (“SAI”), should
be considered only as bearing on our ability to meet our obligations with respect to the death benefit and our assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares
held in the Series Account.
46
Appendix A – Glossary of Terms
Unless otherwise defined in this prospectus, capitalized terms shall have the meaning set forth below.
Account Value – The sum of the value of your interests in the Divisions, the Fixed Account and the Loan Account. This amount
reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan Account balance; and (5) the charges we deduct under the Policy.
Attained Age – The age of the Insured, nearest birthday, as of the Policy Date and each Policy Anniversary thereafter.
Beneficiary – The person(s) named by the Owner to receive the Death Benefit Proceeds upon the death of the Insured.
Business Day – Any day that we are open for business. We are open for business every day that the NYSE is open for trading.
Cash Surrender Value – is equal to:
| |
(a) |
Account Value on the effective date of the surrender; less |
| |
(b) |
outstanding Policy loans and accrued loan interest, if any; less |
| |
(c) |
any monthly cost of insurance charges. |
Corporate Headquarters – Great-West Life & Annuity Insurance Company, 8515 East Orchard Road, Greenwood Village, Colorado
80111, or such other address as we may hereafter specify to you by written notice.
Death Benefit Proceeds – The amount
determined in accordance with the terms of the Policy which is payable at the death of the Insured. This amount is the death benefit, decreased by the amount of any outstanding Policy Debt, and increased by the amounts payable under any supplemental
benefits.
Divisions – Divisions into which the assets of the Series Account are divided, each of which corresponds to and
contains shares of a Fund. Divisions may also be referred to as “investment divisions” or “sub-accounts” in the prospectus, SAI or Series Account financial statements.
Due Proof – Such evidence as we may reasonably require in order to establish that Death Benefit Proceeds are due and payable.
Effective Date – The date on which the first Premium payment is credited to the Policy.
Evidence of Insurability – Information about an Insured that is used to approve or reinstate this Policy or any additional
benefit.
Fixed Account – A division of our General Account that provides a fixed interest rate. This account is not part of
and does not depend on the investment performance of the Sub-Accounts. The Fixed Account is not an available option for Pre-2009 Policies.
Fund – An underlying mutual fund in which a Division invests. Each Fund is an investment company registered with the SEC or a
separate investment series of a registered investment company.
General Account – All of our assets other than those held in a
separate investment account.
Initial Premium – The initial Premium amount specified in a Policy.
Insured – The person whose life is insured under the Policy.
Issue Age – The Insured’s age as of the Insured’s birthday nearest the Policy Date.
Issue Date – The date on which we issue a Policy.
47
Loan Account – All outstanding loans plus credited loan interest held in the General
Account of the Company. The Loan Account is not part of the Series Account.
Loan Account Value – The sum of all outstanding
loans plus credited loan interest for this Policy.
MEC – Modified Endowment Contract. For more information regarding
MECs, see “Modified Endowment Contracts” on page.
NYSE – New York Stock Exchange.
Owner – The person(s) named in the application who is entitled to exercise all rights and privileges under the Policy, while the
Insured is living. The purchaser of the Policy will be the Owner unless otherwise indicated in the application.
Policy Anniversary
– The same day in each succeeding year as the day of the year corresponding to the Policy Date.
Policy Date – The
effective date of coverage under this Policy. The Policy Months, Policy Years and Policy Anniversaries are measured from the Policy Date.
Policy Debt – The principal amount of any outstanding loan against the Policy plus accrued but unpaid interest on such loan.
Policy Month – The one-month period commencing on the same day of the month as the Policy Date.
Policy Year – The one-year period commencing on the Policy Date or any Policy Anniversary and ending on the next Policy
Anniversary.
Pre-2009 Policy – A Policy issued before January 1, 2009. Owners of a Pre-2009 Policy may continue to make
additional premium payments. For information about how the Pre-2009 Policy differs from the Policy that we offer until April 30, 2011, please see Appendix B.
Premiums – Amounts received and allocated to the Sub-Account(s) prior to any deductions.
Request – Any instruction in a form, written, telephoned or computerized, satisfactory to the Company and received in good order
at the Corporate Headquarters from the Owner or the Owner’s assignee (as specified in a form acceptable to the Company) or the Beneficiary, (as applicable) as required by any provision of this Policy or as required by the Company. The Request
is subject to any action taken or payment made by the Company before it was processed.
SEC – The United States Securities and
Exchange Commission.
Series Account – The segregated investment account established by the Company as a separate account
under Colorado law named the COLI VUL –2 Series Account. It is registered as a unit investment trust under the 1940 Act.
Sub-Account – Sub-division(s) of the Owner’s Account Value containing the value credited to the Owner from the Series
Account. Sub-Accounts may also be referred to as “investment divisions” or “Divisions” in the prospectus, SAI or Series Account financial statements.
Surrender Benefit – Account Value less any outstanding Policy loans and less accrued loan interest.
Total Face Amount – The amount of life insurance coverage you request as specified in your Policy.
Transaction Date – The date on which any Premium payment or Request from the Owner will be processed by the Company. Premium
payments and Requests received after 4:00 p.m. EST/EDT will be deemed to have been received on the next Business Day. Requests will be processed and the Sub-Account value will be valued on the day that the Premium payments or Request is received and
the NYSE is open for trading.
48
Transfer – The moving of money from one or more Division(s) or the Fixed Account to
one or more Division(s) or the Fixed Account.
Unit – An accounting unit of measurement that we use to calculate the value of
each Division.
Unit Value – The value of each Unit in a Division.
Valuation Date – The date on which the net asset value of each Fund is determined. A Valuation Date is each day that the NYSE is
open for regular business. The value of a Division’s assets is determined at the end of each Valuation Date (generally 4:00 p.m. EST/EDT). To determine the value of an asset on a day that is not a Valuation Date, the value of that asset as of
the end of the previous Valuation Date will be used.
Valuation Period – The period of time from one determination of Unit
Values to the next following determination of Unit Values. We will determine Unit Value for each Valuation Date as of the close of the NYSE (generally 4:00 p.m. EST/EDT) on that Valuation Date.
49
Appendix B –
Information About How a Pre-2009 Policy and Optional Term Insurance Rider
(Issued Prior to January 1, 2009) Differs from the Policy and Optional Rider that
We Issued until April 30, 2011
Prior to January 1, 2009, we issued and earlier version of this Policy (the “Pre-2009 Policy”). The Pre-2009 Policy is no
longer offered for sale. However, many Pre-2009 Policies remain outstanding and most of the information in the prospectus is applicable. However, this Appendix B explains the differences between the Pre-2009 Policy from the description in the rest
of the prospectus, which describes Policies we issued until April 30, 2011. If you own a Pre-2009 (issued prior to January 1, 2009), you should read this Appendix B for information as to your Pre-2009 Policy differs from the Policy
described in the rest of the prospectus.
| 1. |
Different Cost of Insurance Charge Amounts |
Certain information as to how we calculate the cost of insurance changes for the Policy we issued until April 30, 2011 is set forth under
“Monthly Risk Rates” on page of the prospectus. That discussion applies to the Pre-2009 policy with one exception. References to the 2001 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate
Mortality Table do not apply to the Pre-2009 Policy. Instead, these statements would refer to the 1980 Commissioner’s Standard Ordinary, Age Nearest Birthday, Male/Female, Smoker/Non-Smoker Ultimate Mortality Table.
The cost of insurance charges under the Pre-2009 Policy differ from those charged under the Policy issued on or after January 1, 2009 as
provided in the tables below. Specifically, under the Pre-2009 Policy the minimum cost of insurance charge is $.08 per $1000 and under a Policy issued on or after January 1, 2009, the minimum cost of insurance charge is $.02 per $1000.
The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Pre-2009 Policy. The first
table describes the fees and expenses that you will pay at the time that you buy the Pre-2009 Policy, surrender the Pre-2009 Policy, or Transfer cash value between investment options.
Transaction Fees
|
|
|
|
|
| Charge |
|
When Charge is Deducted |
|
Amount Deducted |
| Maximum Sales Charge Imposed on Premium |
|
Upon each Premium payment |
|
Maximum: 6.5% of Premium
Current: 5.5% of Premium up to
target and 3.0% of Premium in
excess of target |
| Partial Withdrawal Fee |
|
Upon partial withdrawal |
|
Maximum: $25 deducted from Account
Value for all partial withdrawals after the first made in
the same Policy Year. |
| Change of Death Benefit Option Fee |
|
Upon change of option |
|
Maximum: $100 deducted from Account
Value for each change of death benefit option.
|
| Premium Tax
|
|
Upon each Premium payment |
|
Maximum: 3.5% of Premium |
50
|
|
|
|
|
| Transfer Fee |
|
At time of Transfer for
all Transfers in excess of 12 made in the same calendar year |
|
Maximum: $10/Transfer |
| Loan Interest |
|
Upon issuance of Policy loan |
|
Maximum: the Moody’s Corporate Bond Yield Average – Monthly Average Corporates
|
The next table describes the fees and expenses that you will pay periodically during the time that you own
the Pre-2009 Policy, not including Fund fees and expenses.
Periodic Charges Other Than Fund Operating Expenses
|
|
|
|
|
| Charge |
|
When Charge is Deducted |
|
Amount Deducted |
| |
|
|
|
|
| Cost of Insurance (per $1000 Net Amount at Risk1 |
|
|
|
|
| Minimum & Maximum Cost of Insurance Charge |
|
Monthly |
|
Guaranteed:
Minimum: $0.08 per $1000.
Maximum: $83.33 per $1000. |
| Cost of Insurance Charge for a
46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death) |
|
Monthly |
|
Guaranteed:
$0.41 per $1000. |
| Mortality and Expense Risk Fees2 |
|
Monthly |
|
Guaranteed: 0.90%
annually. Current:
0.40% for Policy Years 1-5, 0.25% for Policy Years 6-20, and
0.10% thereafter. |
| Service
Charge |
|
Monthly |
|
Maximum:
$15/month Current: $10.00/month,
Policy Years 1-3 and $7.50/month, Policy Years 4+ |
1 The cost of insurance will vary based on individual characteristics. The cost of
insurance shown in the table is a sample illustration only and may not be representative of the charge that a particular Owner of the Pre-2009 Policy will pay. Owners may obtain more information about their particular cost of insurance by contacting
us at 888-353-2654.
2 The mortality and expense risk charge is accrued daily
and deducted on the first day of each Policy month by cancelling accumulation units pro-rata against all Sub-Accounts.
51
|
|
|
|
|
| Supplemental Benefit Charges
The charges for the rider you selected are deducted monthly
from your Account Value as part of the Monthly Deduction described on page of this prospectus. The benefits provided under each rider are summarized in “Other Provisions and Benefits” beginning on page.
|
| |
|
|
|
|
| Change of Insured Rider* |
|
Upon change of Insured |
|
Minimum: $100 per change.
Maximum: $400 per change. |
| Change of Insured Rider for a
46-year old Male Non-Smoker, $550,000 Face Amount, Option 1 (Level Death)* |
|
|
|
$400 per change. |
| Term Life Insurance Rider |
|
Monthly |
|
Guaranteed:
Minimum COI: $0.08 per $1000.
Maximum COI: $83.33 per $1000.
|
| Term Life Insurance Rider for a 46-year old Male Non-Smoker, $550,000
Face Amount, Option 1 (Level Death) |
|
Monthly |
|
Guaranteed:
$0.41 per $1000. |
* Not available to individual Owners.
| 3. |
Paid-Up Life Insurance |
For the Pre-2009 Policy, if the Insured reached Attained Age 100 and the Policy is in force, the Account Value, less Policy
Debt, will be applied as a single Premium to purchase “paid-up” insurance. This is different from the age disclosed on pages , and of the prospectus for the Policy that we issued until April 30, 2011.
| 4. |
Term Life Insurance Rider |
For the Pre-2009 Policy, the rider is renewable annually until the Insured’s Attained Age 100. This is different from the
age disclosed on page of the prospectus for the Policy that we issued until April 30, 2011. In addition, the cost of insurance charges under the Pre-2009 Policy Term Life Insurance Rider differ from those charged under the Term Life Insurance
Rider issued on or after January 1, 2009 as provided in the table above. Specifically, under the Pre-2009 Policy Term Life Insurance Rider, the minimum cost of insurance charge is $.08 per $1000 and under a Term Life Insurance Rider issued on
or after January 1, 2009, the minimum cost of insurance charge is $.02 per $1000.
For the Pre-2009 Policy, the Fixed Account is not an available investment option.
| 6. |
Definition of Account Value |
Because the Fixed Account is not an option for Pre-2009 Policies, the term of Account Value is defined as “the sum of the
value of your interests in the Divisions and the Loan Account. This amount reflects: (1) the Premiums you pay; (2) the investment performance of the Divisions you select; (3) any Policy loans or partial withdrawals; (4) your Loan
Account balance; and (5) the charges we deduct under the Policy.”
52
The SAI is a document that includes additional information about the Series Account, including
the financial statements of both Great-West and of each of the Divisions of the Series Account. The SAI is incorporated by reference as a matter of law into the prospectus, which means that it is legally part of the prospectus. The SAI is available
upon request, without charge. To request the SAI or other information about the Policy, or to make any inquires about the Policy, contact Great-West toll-free at 888-353-2654 or via email at www.greatwest.com/executivebenefits.
Information about the Series Account (including the SAI) can be reviewed and copied at the SEC’s Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Series Account are available on the SEC’s Internet site at http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee, by writing at the Public Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549-0102.
Investment Company Act File No. 811-09201
53
COLI VUL-2 SERIES ACCOUNT
Flexible Premium Variable
Universal Life Insurance Policies
Issued by:
Great-West
Life & Annuity Insurance Company
8515 East Orchard Road
Greenwood Village, Colorado 80111
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. It contains information in addition to the information in the
prospectus for the Policy. The prospectus for the Policy, which we may amend from time to time, contains the basic information you should know before purchasing a Policy. This Statement of Information should be read in conjunction with the
prospectus, dated May 1, 2014, which is available without charge by contacting Great-West Life & Annuity Insurance Company at (888) 353-2654 or via e-mail at www.greatwest.com/executivebenefits.
May 1, 2014
Table of Contents
2
General Information and History of Great-West and the Series Account
Great-West Life & Annuity Insurance Company (“Great-West,” the “Company,” “we” or “us”) is a
stock life insurance company that was originally organized under the laws of the state of Kansas as the National Interment Association. Our name was changed to Ranger National Life Insurance Company in 1963 and to Insuramerica Corporation in 1980
prior to changing to our current name in February 1982. In September 1990, we redomesticated under the laws of Colorado.
We are
authorized to do business in forty-nine states, the District of Columbia, Puerto Rico, U.S. Virgin Islands and Guam. We issue individual and group life insurance policies and annuity contracts and accident and health insurance policies.
Great-West is a wholly owned subsidiary of GWL&A Financial, Inc., a Delaware holding company. GWL&A Financial, Inc. is an
indirect wholly-owned subsidiary of Great-West Lifeco Inc., a Canadian holding company. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation, a Canadian holding company with substantial interests in the financial services
industry. Power Financial Corporation is a subsidiary of Power Corporation of Canada, a Canadian holding and management company. Through a group of private holding companies, The Desmarais Family Residuary Trust, which was created on
October 8, 2013 under the Last Will and Testament of Paul G. Desmarais, has voting control of Power Corporation of Canada.
We
established the COLI VUL-2 Series Account of Great-West Life & Annuity Insurance Company (the “Series Account”) in accordance with Colorado law on November 25, 1997. The Series Account is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940.
State Regulation
We are subject to the laws of Colorado governing life insurance companies and to regulation by Colorado’s Commissioner of Insurance,
whose agents periodically conduct an examination of our financial condition and business operations. We are also subject to the insurance laws and regulations of all the jurisdictions in which we are authorized to do business.
We are required to file an annual statement with the insurance regulatory authority of those jurisdictions where we are authorized to do
business relating to our business operations and financial condition as of December 31st of the preceding year.
Independent Registered Public Accounting Firm
The financial statements and financial highlights of each of the investment divisions of the COLI VUL-2 Series Account of Great-West
Life & Annuity Insurance Company included in this Statement of Additional Information have been audited by [], an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration
Statement. The consolidated financial statements of Great-West Life & Annuity Insurance Company and subsidiaries included in this Statement of Additional Information and the related financial statement schedule included elsewhere in the
Registration Statement have been audited by [], an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the Registration Statement (which report expresses an unqualified opinion on the
consolidated financial statements and financial statement schedule and includes an explanatory paragraph referring to the retrospective adoption of a change in accounting for costs associated with acquiring or renewing insurance contracts). Such
financial statements and financial statement schedule have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
Underwriters
The offering of the Policy is made on a continuous basis by GWFS Equities, Inc. (“GWFS Equities”), an indirect wholly owned
subsidiary of Great-West, whose principal business address is 8515 East Orchard Road, Greenwood Village, Colorado 80111. GWFS Equities is registered with the SEC under the Securities Exchange Act of 1934 (“Exchange Act”) as a broker-dealer
and is a member of the Financial Industry Regulatory Authority (“FINRA”).
3
GWFS Equities has received no underwriting commissions in connection with this offering in each
of the last three fiscal years.
Licensed insurance agents will sell the Policy in those states where the Policy may be lawfully sold.
Such agents will be registered representatives of broker-dealers registered under the Exchange Act, which are members of FINRA and which have entered into selling agreements with GWFS Equities. GWFS Equities also acts as the general distributor of
certain annuity contracts issued by us. The maximum sales commission payable to our agents, independent registered insurance agents and other registered broker-dealers is 25% of Premium. In addition, asset-based trail commissions may be paid. A
sales representative may be required to return all or a portion of the commissions paid if: (i) a Policy terminates prior to the second Policy Anniversary; or (ii) a Policy is surrendered for the Surrender Benefit within the first six
Policy Years and applicable state insurance law permits a return of expense charge.
Underwriting Procedures
We will issue on a fully underwritten basis applicants up to 300% of our standard current mortality assumptions. We will issue on a simplified
basis based on case characteristics, such as required Policy size, average age of group and the industry of the group using our standard mortality assumptions. We will issue on a guaranteed basis for larger groups based on case characteristics such
as the size of the group, Policy size, average age of group, industry, and group location.
Illustrations
Upon Request, we will provide you an illustration of Cash Surrender Value, Account Value and death benefits. The first illustration you
Request during a Policy Year will be provided to you free of charge. Thereafter, each additional illustration Requested during the same Policy Year will be provided to you for a nominal fee not to exceed $50.
Financial Statements
The consolidated financial statements of Great-West as contained herein should be considered only as bearing upon Great-West’s ability to
meet its obligations under the Policies, and they should not be considered as bearing on the investment performance of the Series Account. The variable interest of Owners under the Policies are affected solely by the investment results of the Series
Account. The financial statements of the Series Account are also included herein.
[To be filed by amendment.]
4
PART C: OTHER INFORMATION
Item 26. Exhibits
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| (a) |
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Board of Directors Resolution. Resolution authorizing establishment of Registrant is incorporated by reference to initial Registrant’s
Registration Statement on Form S-6 filed on January 22, 1999 (File No. 333-70963). |
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| (b) |
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Custodian Agreements. None. |
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| (c) |
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Underwriting Contracts. Copy of underwriting contract between Great-West Life & Annuity Insurance Company (“Great- West”) and GWFS
Equities, Inc. (formerly BenefitsCorp Equities, Inc.) is incorporated by reference to Registrant’s Post- Effective Amendment No. 9 on Form N-6 filed on April 29, 2003 (File Nos. 333-70963). |
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| (d) |
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Policies. |
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(d)(1) |
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Specimen Policy Form 355-CSO is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008
(File No. 333-70963). |
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(d)(2) |
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Specimen Term Life Insurance Rider (Form J355rider-CSO for policies issued after January 1, 2009) is incorporated by reference to Registrant’s
Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963). |
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(d)(3) |
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Specimen Policy Free-Look Endorsement is incorporated by reference to Registrant’s Post-Effective Amendment No. 1 on Form S-6 filed on April 27, 2000
(File No. 333-70963). |
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(d)(4) |
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Specimen Policy Return of Expense Charge Endorsement is incorporated by reference to Registrant’s Post-Effective Amendment No. 4 on Form S-6 filed on
April 25, 2001 (File No. 333-70963). |
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(d)(5) |
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Change of Insured Rider is incorporated by reference to Registrant’s Post-Effective Amendment No. 10 on Form N-6 filed on April 30, 2004 (File No.
333-70963 and 811-09201). |
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(d)(8) |
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Specimen Fixed Account Endorsement Form 379 is incorporated by reference to Registrant’s Post-Effective Amendment No. 19 to Registration Statement on Form
N-6 as filed on December 17, 2008 (File No. 333-70963). |
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(d)(9) |
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Specimen Policy Form J355rev2 is incorporated by reference to Registrant’s Post-Effective Amendment No. 25 to Registration Statement on Form N-6 as filed
on April 27, 2012. |
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(d)(10) |
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Specimen Policy Endorsement (Form ICC 12-J801) is incorporated by reference to Registrant’s Post-Effective Amendment No. 26 to Registration Statement filed
on Form N-6 as filed on September 27, 2012. |
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(d)(11) |
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Specimen Policy Form J355rev3 is filed herewith. |
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| (e) |
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Applications. Specimen Application is incorporated by reference to Registrant’s Pre-Effective Amendment No. 1 on Form S-6 filed on
June 23, 1999 (File No. 333-70963). |
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| (f) |
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(f)(1) |
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Depositor’s Certificate of Incorporation. Copy of Articles of Incorporation of Great-West, as amended, is incorporated by reference to Pre-Effective
Amendment No. 2 on |
C-1
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Form S-1 of Great-West filed on October 29, 1996, (File No. 333-01173). |
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(f)(2) |
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By-Laws of Great-West as amended June 17, 1997 is incorporated by reference to Amendment No. 1 on Form 10-K of Great-West filed on March 31, 1998
(File No. 333-01173); Amended Bylaws of Great-West are incorporated by reference to Post-Effective Amendment No. 38 to the Registration Statement filed by FutureFunds Series Account on Form N-4 on April 24, 2006 (File No.
2-89550). |
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| (g) |
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Reinsurance Contracts. |
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(g)(1) |
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Automatic YRT Reinsurance Agreement Effective October 1, 2008 between Great-West and The Canada Life Assurance Company (redacted), Amendment 1 to the
Automatic YRT Reinsurance Agreement Effective October 1, 2008 dated August 1, 2010 (redacted) and Amendment 2 to the Automatic YRT Reinsurance Agreement Effective October 1, 2008 dated August 1, 2010 (redacted) are incorporated
by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West Life & Annuity Insurance Company of New York(“Great-West of New York”) on Form N-6 on April 26, 2011
(File No. 333-146241). |
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(g)(2) |
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Automatic/Facultative YRT Guaranteed Issue and Fully Underwritten Reinsurance Agreement between Great-West and RGA Reinsurance Company effective May 1, 2010
(redacted) is incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333-146241). |
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(g)(3) |
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Automatic Yearly Renewable Term Reinsurance Agreement between Great-West and SCOR Global Life U.S. Re Insurance Company effective May 1, 2010 (redacted) is
incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333-146241). |
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(g)(4) |
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Automatic Yearly Renewable Term Reinsurance Agreement between Great-West and Hannover Life Reassurance Company of America effective May 1, 2010 (redacted) is
incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 on April 26, 2011 (File No. 333-146241). |
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| (h) |
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Participation Agreements. |
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(h)(1) |
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Participation Agreement among Great-West, AIM Variable Insurance Funds, Inc., and AIM Distributors, Inc., dated March 30, 2005, is incorporated by
reference to Registrant’s Post Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File Nos. 333-70963). |
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(h)(2) |
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First Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc and Great-West dated April 30, 2004, is incorporated
by reference to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241). |
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(h)(3) |
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Second Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc and Great-West dated April 30, 2004, is incorporated
by reference to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No. 333-146241). |
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(h)(4) |
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Third Amendment to Participation Agreement among AIM Variable Insurance Funds, AIM Distributors, Inc and Great-West dated April 30, 2004, is incorporated
by reference |
C-2
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to Pre Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on
December 4, 2007 (File No. 333-146241). |
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(h)(5) |
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Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated September 14, 1999, is
incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(6) |
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First Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc. and Fund Distributors, dated April 20, 2000,
is incorporated by reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(7) |
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Second Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc. and Fund Distributors, dated May 1, 2002,
is incorporated by reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(8) |
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Third Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated April 26,
2005, is incorporated by reference to Registrant’s Post Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963). |
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(h)(9) |
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Fourth Amendment to Fund Participation Agreement among Great-West, American Century Investment Management, Inc., and Fund Distributors, dated September 17,
2007 is incorporated by reference to the Initial Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on September 21, 2007 (File No. 333-146241). |
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(h)(10) |
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Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), American Funds Insurance Series and Capital Research and
Management Company dated January 28, 2008 is incorporated by reference to Registrant’s Post-Effective No. 16 on Form N-6 filed on April 21, 2008 (File No. 333-70963) |
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(h)(11) |
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Fund Participation Agreement among Great-West, Davis Variable Account Fund, Inc., Davis Selected Advisers, L.P. and Davis Distributors, LLC, dated
December 16, 2004, is incorporated by reference to Registrant’s Post Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963). |
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(h)(12) |
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First Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Davis Variable Account Fund, Inc.,
Davis Selected Advisers, L.P., and Davis Distributors, LLC, dated July 2, 2007 is incorporated by reference to the Initial Registration Statement filed by COLI VUL-4 Series Account of First Great-West on Form N-6 filed on September 21,
2007 (File No. 333-146241). |
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(h)(13) |
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Fund Participation Agreement between Great-West and Dreyfus Stock Index Fund Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.), dated
December 31, 1998, is incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(14) |
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Amendment to Fund Participation Agreement between Great-West and Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.),
dated March 15, 1999, is incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(15) |
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Amendment to Fund Participation Agreement among Great-West, Dreyfus Growth and |
C-3
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Value Funds, Inc., Dreyfus Life & Annuity Index Fund, Inc., and Dreyfus Variable Investment Fund, dated January 1, 2002, is incorporated by
reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(16) |
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Second Amendment to Fund Participation Agreement among Great-West, Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund,
Inc.) and Dreyfus Variable Investment Fund is incorporated by reference to Registrant’s Post Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No. 333-70963). |
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(h)(17) |
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Third Amendment to Fund Participation Agreement among Great-West, Dreyfus Stock Index Fund, Inc. (formerly known as Dreyfus Life & Annuity Index Fund, Inc.)
and Dreyfus Variable Investment Fund, dated December 1, 2004, is incorporated by reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(18) |
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Fourth Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Dreyfus Stock Index Fund, Inc.
(formerly known as Dreyfus Life & Annuity Index Fund, Inc.) and Dreyfus Variable Investment Fund, dated July 31, 2007 is incorporated by reference to Initial Registration Statement filed by COLI VUL-4 Series Account of First Great-West on
Form N-6 filed on September 21, 2007 (File No. 333-146241). |
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(h)(19) |
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Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated February 1, 1994, is incorporated
by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(20) |
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First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated November 1,
2000, is incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(21) |
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Second Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund and Fidelity Distributors Corporation, dated May 1, 2001, is
incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(22) |
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Participation Agreement among Great-West, Variable Insurance Products Fund II and Fidelity Distributors Corporation, dated May 1, 1999, is incorporated by
reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(23) |
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First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund II and Fidelity Distributors Corporation, dated November 1,
2000, is incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(24) |
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Participation Agreement among Great-West, Variable Insurance Products Fund III and Fidelity Distributors Corporation, dated November 1, 2000, is
incorporated by reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(25) |
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First Amendment to Participation Agreement among Great-West, Variable Insurance Products Fund III and Fidelity Distributors Corporation, dated May 1, 2001,
is incorporated by reference to Registrant’s Post Effective Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(26) |
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Amended and Restated Fund Participation Agreement among Great-West, Variable |
C-4
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Insurance Products Funds, and Fidelity Distributors Corporation dated October 26, 2006 is incorporated by reference to Registrant’s Post Effective
Amendment No. 14 to the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963). |
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(h)(27) |
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Amendment to Fund Participation Agreement among Great-West, Variable Insurance Products Funds, and Fidelity Distributors Corporation dated May 16, 2007 is
incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333). |
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(h)(28) |
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Second Amendment to Amended and Restated Participation Agreement among Great-West, Variable Insurance Products I, Variable Insurance Products II, Variable
Insurance Products III, Variable Insurance Products IV, Variable Insurance Products V and Fidelity Distributors Corporation dated August 29, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed
by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333). |
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(h)(29) |
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Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated June 1, 1998, is incorporated by reference to
Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(30) |
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Letter Agreement Supplement to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated April 27, 1998, is
incorporated by reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(31) |
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Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated December 1, 1998, is incorporated by
reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(32) |
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Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series and Janus Capital Corporation, dated October 4, 1999, is incorporated by
reference to Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(33) |
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Third Amendment to Fund Participation Agreement between Great-West, Janus Aspen Series and Janus Capital Corporation, dated September 14, 2007 is
incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No. 333-145333). |
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(h)(34) |
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Amendment to Fund Participation Agreement among Great-West, Janus Aspen Series, and Janus Capital Corporation dated January 31, 2007 is incorporated by
reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008 (File No. 333-70963). |
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(h)(35) |
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Agreement between Great-West and Maxim Series Fund, Inc. (now known as Great-West Funds, Inc.) is incorporated by reference to Registrant’s Post Effective
Amendment No. 13 on Form N-6 filed on April 28, 2006 (File No. 333-70963). |
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(h)(36) |
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Amendment to Agreement between Great-West, First Great-West (now known as Great-West of New York), and Maxim Series Fund, Inc. (now known as Great-West Funds,
Inc.) dated November 1, 2007, is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007 (File No.
333-145333). |
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(h)(37) |
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Fund Participation Agreement among Great-West, Neuberger Berman Advisers |
C-5
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Management Trust, Advisers Managers Trust, and Neuberger Berman Management Incorporated, dated January 1, 1999, is incorporated by reference to
Registrant’s Post Effective Amendment No. 5 to Form S-6 filed on April 24, 2002 (File No. 333-70963). |
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(h)(38) |
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Amendment to Fund Participation Agreement among Great-West, Neuberger Berman Advisers Management Trust, Advisers Managers Trust, and Neuberger Berman Management
Incorporated, dated October 24, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West of New York on Form N-6 filed on December 4, 2007 (File No.
333-146241). |
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(h)(39) |
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Fund Participation Agreement among Great-West, PIMCO Variable Insurance Trust, Pacific Investment Management Company LLC and PIMCO Advisors Distributors LLC,
dated March 1, 2004 is incorporated by reference to Registrant’s Post-Effective Amendment No. 10 on Form N-6 filed on May 3, 2004 (File No. 333-70963). |
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(h)(40) |
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First Amendment to Participation Agreement among Great-West, PIMCO Variable Trust, Pacific Investment Management Company, LLC, Allianz Global Investors
Distributors, LLC and First-Great-West dated August 31, 2007 is incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement filed by COLI VUL-4 Series Account of Great-West on Form N-6 filed on November 1, 2007
(File No. 333-145333). |
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(h)(41) |
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Fund Participation Agreement among Great-West, Scudder Variable Series I, Scudder Variable Series II, Scudder Investment VIT Funds, Deutsche Investment
Management Americas, Inc., Deutsche Asset Management, Inc. and Scudder Distributors, dated March 31, 2005, is incorporated by reference to Registrant’s Post Effective Amendment No. 12 on Form N-6 filed on April 29, 2005 (File No.
333-70963). |
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(h)(42) |
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First Amendment to Fund Participation Agreement among Great-West, DWS Variable Series I (formerly Scudder Variable Series I), DWS Variable Series II (formerly
Scudder Variable Series II), DWS Investments VIT Funds (formerly Scudder Investments VIT Funds), Deutsche Investment Management Americas Inc., DWS Scudder Distributors, Inc. (formerly Scudder Distributors, Inc.) and First Great-West (now known as
Great-West of New York) dated April 11, 2007 is incorporated by reference to the Initial Registration Statement of COLI VUL-4 Series Account of Great-West of New York filed on September 21, 2007 (File No. 333-146241) . |
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(h)(43) |
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Second Amendment to Fund Participation Agreement among Great-West, DWS Variable Series I (formerly Scudder Variable Series I), DWS Variable Series II (formerly
Scudder Variable Series II), DWS Investments VIT Funds (formerly Scudder Investments VIT Funds), Deutsche Investment Management Americas Inc., DWS Scudder Distributors, Inc. (formerly Scudder Distributors, Inc.) and First Great-West (now known as
Great-West of New York) dated July 1, 2007 is incorporated by reference to the Initial Registration Statement of COLI VUL-4 Series Account of Great-West of New York filed on September 21, 2007 (File No. 333-146241). |
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(h)(44) |
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Fund Participation Agreement among Great-West, Royce Capital Fund, and Royce & Associates, LLC dated September 30, 2005 is incorporated by reference to
Registrant’s Post Effective Amendment No. 14 to the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963). |
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(h)(45) |
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Participation Agreement among Van Eck Worldwide Insurance Trust, Van Eck Securities Corporation, Van Eck Associates Corporation, Great-West and First Great-West
dated October 11, 2007 is incorporated by reference to Registrant’s Post Effective Amendment No. 16 on Form N-6, as filed on April 21, 2008. (File No. 333-70963). |
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(h)(46) |
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Participation Agreement among Putnam Variable Trust, Putnam Management Limited Partnership, Great-West and First Great-West (now known as Great-West of New
York) |
C-6
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dated April 30, 2008 is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on September 30, 2008.
(File No. 333-70963). |
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(h)(47) |
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Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Columbia Funds Variable Insurance Trust, Columbia Management
Advisors, LLC and Columbia Management Distributors, Inc. dated April 30, 2009 is incorporated by reference to Registrant’s Post Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333-70963). |
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(h)(48) |
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Amendment to Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Royce Capital Fund, and Royce and Associates, LLC
dated May 1, 2009 is incorporated by reference to Registrant’s Post Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333-70963). |
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(h)(49) |
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Second Amendment to the Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), The Alger American Fund, Fred
Alger Management, Inc., and Fred Alger & Company, Inc. dated November 2, 2009 is incorporated by reference to Registrant’s Post Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333-70963). |
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(h)(50) |
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Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), Federated Insurance Series and Federated Securities Corp.
dated March 3, 2012 is incorporated by reference to Registrant’s Post-Effective Amendment No. 25 to Registration Statement on Form N-6 as filed on April 27, 2012. |
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(h)(51) |
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First Amendment to Fund Participation Agreement among Great-West, First Great-West (now known as Great-West of New York), GWFS Equities, Inc., Federated
Insurance Series and Federated Securities Corp. dated March 3, 2012 is incorporated by reference to Registrant’s Post-Effective Amendment No. 25 to Registration Statement on Form N-6 as filed on April 27, 2012. |
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(h)(52) |
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Participation Agreement among Great-West, Great-West of New York, Goldman Sachs Variable Insurance Trust, and Goldman, Sachs & Co. dated April 25, 2013 is
incorporated by reference to Registrant’s Post-Effective Amendment No. 27 to Registration Statement on Form N-6 as filed on April 26, 2013. |
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| (i) |
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Administrative Contracts. None. |
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| (j) |
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Other Material Contracts. Form of Rule 22c-2 Shareholder Information Agreement is incorporated by reference to Post Effective Amendment No. 14 to
the Registration Statement filed on Form N-6 on April 30, 2007 (File No. 333-70963). |
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| (k) |
|
Legal Opinion. An opinion and consent of counsel regarding the legality of the securities being registered is incorporated by reference to
Registrant’s Pre-Effective Amendment No. 1 to Form S-6 filed on June 23, 1999 (File No. 333-70963) |
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| (l) |
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Actuarial Opinion. None. |
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| (m) |
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Calculation of Hypothetical Illustration Value is incorporated by reference to Registrant’s Post Effective Amendment No. 9 to Form N-6 filed on
April 29, 2003 (File No. 333-70963). |
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| (n) |
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Other Opinions. |
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(n)(1) |
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Legal Consent of Carlton Fields Jorden Burt, P.A. is filed herewith. |
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(n)(2) |
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Independent Registered Public Accounting Firm’s consent will be filed by amendment. |
C-7
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| (o) |
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Omitted Financial Statements. None. |
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| (p) |
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Initial Capital Agreements. None. |
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| (q) |
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Redeemability Exemption. None. |
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| (r) |
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Power of Attorney for Raymond L.S. McFeetors is incorporated by reference to Registrant’s Post-Effective Amendment No. 17 on form N-6 filed on
September 30, 2008. Power of Attorney for R.J. Orr is incorporated by reference to Registrant’s Post Effective Amendment No. 16 on Form N-6, as filed on April 21, 2008. The Powers of Attorney for the J.L. Bernbach, A. Desmerais, P.
Desmarias, Jr., A. Louvel, J.E.A. Nickerson, M. Plessis-Bélair and B. E. Walsh are incorporated by reference to Post Effective Amendment No. 15 to the Registration Statement filed on Form N-6 on April 26, 2007 (File No. 333-70963). The
Powers of Attorney for H.P. Rousseau and R. Royer are incorporated by reference to Registrant’s Post Effective Amendment No. 21 on form N-6 filed on April 16, 2010 (File No. 333-70963). The Powers of Attorney for P. Mahon, J. Selitto and
G. Tretiak are filed herewith. |
Item 27. Directors and Officers of the Depositor.
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| Name |
|
Principal Business Address |
|
Positions and Offices with Depositor |
| J. L. Bernbach |
|
EngineUSA
460 Park Avenue South, 7th Floor
New York, NY 10016 |
|
Director |
| A. Desmarais |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| P. Desmarais, Jr. |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| M.T.G. Graye |
|
8515 E. Orchard Road
Greenwood Village, CO 80111 |
|
Director, President and Chief Executive Officer |
| A. Louvel |
|
P.O. Box 1073
38 Beach Lane Wainscott, NY 11975 |
|
Director |
| R. L. McFeetors |
|
Great-West Life
100 Osborne Street N Winnipeg, Canada MB R3C 3A5 |
|
Director |
| Paul Mahon |
|
Great-West Life
100 Osborne Street N Winnipeg, Canada MB R3C 3A5 |
|
Director |
| J. E.A. Nickerson |
|
H.B. Nickerson & Sons Limited
P.O. Box 130 255 Commercial Street
North Sydney, Nova Scotia, Canada
B2A 3M2 |
|
Director |
| R.J. Orr |
|
Power Financial Corporation
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Chairman of the Board |
| M. Plessis-Bélair, F. C. A. |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| H.P. Rousseau |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| R. Royer |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| J. Selitto |
|
437 West Chestnut Hill Avenue
Philadelphia, PA 19118 |
|
Director |
C-8
|
|
|
|
|
| G. Tretiak |
|
Power Corporation of Canada
751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3 |
|
Director |
| B. E. Walsh |
|
Saguenay Capital, LLC
Two Manhattanville Rd, #403 Purchase, New York 10577 |
|
Director |
| S. M. Corbett |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Executive Vice President and Chief Investment Officer |
| R. K. Shaw |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Executive Vice President, Individual Markets |
| C. H. Cumming |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, Defined Contribution Markets |
| M. R. Edwards |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, FASCore Operations |
| E.P. Friesen |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, Investments and Chief Investment Officer,
General Account |
| J.S. Greene |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President and Chief Marketing Officer |
| W.S. Harmon |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, 401(k) Standard Markets |
| R. J. Laeyendecker |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, Executive Benefits Markets |
| D.G. McLeod |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, Product Management |
| S. A. Miller |
|
8525 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President and Chief Information Officer |
| C. P. Nelson |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
President, Great-West Retirement Services |
| R.G. Schultz |
|
8525 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, General Counsel and Secretary |
| Brian Schwartz |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President, Commercial Mortgage Investments |
| C.S. Tocher |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President and Chief Investment Officer, Segregated Funds |
C-9
Item 28. Person Controlled by or Under Common Control with the Depositor or the Registrant.
The Registrant is a separate account of Great-West Life & Annuity Insurance Company, a stock life company organized under the
laws of the State of Colorado (“Depositor”). The Depositor is an indirect subsidiary of Power Corporation of Canada. An organizational chart for Power Corporation of Canada is set out below.
Organizational Chart – December 31, 2013
| I. |
OWNERSHIP OF POWER CORPORATION OF CANADA |
The following sets out the ownership, based on votes attached to the outstanding voting shares, of Power Corporation of Canada:
|
|
|
| The Desmarais Family Residuary Trust
99.999% - Pansolo Holding Inc.
100% - 3876357 Canada Inc.
100% - 3439496 Canada Inc.
100% - Capucines Investments Corporation
32% - Nordex Inc. (68% also owned directly by the Desmarais Family Residuary Trust)
94.9% - Gelco Enterprises Ltd. (5.1% also owned directly by the Desmarais Family Residuary Trust)
53.60% - Power Corporation of Canada
The total voting rights of Power
Corporation of Canada (PCC) controlled directly and indirectly by the Desmarais Family Residuary Trust are as follows. There are issued and outstanding as of December 31, 2013 411,399,721 Subordinate Voting Shares (SVS) of PCC carrying one vote
per share and 48,854,772 Participating Preferred Shares (PPS) carrying 10 votes per share; hence the total voting rights are 899,947,441.
Pansolo Holding Inc. owns directly 15,216,033 SVS and 367,692 PPS, entitling Pansolo Holding Inc. directly to an aggregate
percentage of voting rights of 18,892,953 or 2.1 % of the total voting rights attached to the shares of PCC. Pansolo Holding Inc. wholly owns 3876357 Canada Inc., 3439496 Canada Inc. and Capucines Investments Corporation which respectively own
40,686,080 SVS, 3,236,279 SVS, 3,125,000 SVS of PCC, representing respectively 4.52 %, 0.36%, 0.35 % of the aggregate voting rights of PCC.
Gelco Entreprises Ltd owns directly 48,235,700 PPS, representing 53.60% of the aggregate voting rights of PCC (PPS (10 votes)
and SVS (1 vote)). Hence, the total voting rights of PCC under the direct and indirect control of the Desmarais Family Residuary Trust is approximately 61.10%; note that this is not the equity percentage.
The Desmarais Family Residuary Trust also
owns 1,561,750 SVS of PCC. |
| II. |
OWNERSHIP BY POWER CORPORATION OF CANADA |
Power Corporation of Canada has a 10% or greater voting interest in the following entities:
| A. |
Great-West Life & Annuity Insurance Company Group of Companies (U.S. insurance) |
|
|
|
| Power Corporation of Canada
100.0% - 171263 Canada Inc.
65.78% - Power Financial Corporation
67.0% - Great-West Lifeco Inc.
100.0% - Great-West Financial (Canada) Inc.
100.0% - Great-West Financial (Nova Scotia) Co.
100.0% - Great-West Lifeco U.S. Inc.
100.0% - GWL&A Financial Inc.
60.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co.
60.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. II
60.0% - Great-West Life & Annuity Insurance Capital, LLC
60.0% - Great-West Life & Annuity Insurance Capital, LLC II
100.0% - Great-West Life & Annuity Insurance Company (Fed ID # 84-0467907 - NAIC # 68322, CO)
100.0% - Great-West Life & Annuity Insurance Company of New York (Fed ID # 13-2690792 - NAIC #
79359, NY) 100.0% - Advised Assets Group, LLC
100.0% - GWFS Equities, Inc.
100.0% - Great-West Life & Annuity Insurance Company of South Carolina
100.0% - Emjay Corporation
100.0% - FASCore, LLC
50.0% - Westkin Properties Ltd.
65.17% - Great-West Funds, Inc.
100.0% - Great-West Capital Management, LLC
100.0% - Great-West Trust Company, LLC
100.0% - Lottery Receivables Company One LLC
100.0% - LR Company II, L.L.C.
100.0% - Singer Collateral Trust IV
100.0% - Singer Collateral Trust V |
| B. |
Putnam Investments Group of Companies (Mutual Funds) |
|
|
|
| Power Corporation of Canada
100.0% - 171263 Canada Inc.
65.78% - Power Financial Corporation
67.0% - Great-West Lifeco Inc.
100.0% - Great-West Financial (Canada) Inc.
100.0% - Great-West Financial (Nova Scotia) Co.
100% - Great-West Lifeco U.S. Inc.
100% - Putnam Investments, LLC
100.0% - Putnam Acquisition Financing Inc.
100.0% - Putnam Acquisition Financing LLC
100.0% - Putnam U.S. Holdings I, LLC
100.0% - Putnam Investment Management, LLC
100.0% - Putnam Fiduciary Trust Company (NH)
100.0% - Putnam Investor Services, Inc.
100.0% - Putnam Retail Management GP, Inc.
99.0% - Putnam Retail Management Limited Partnership (1% owned by Putnam Retail Management GP, Inc.)
100.0% - PanAgora Holdings Inc.
80.0% - PanAgora Asset Management, Inc.
100.0% -Putnam GP Inc.
99.0% - TH Lee Putnam Equity Managers LP (1% owned by Putnam GP Inc.)
100.0% - Putnam Investment Holdings, LLC
100.0% - Savings Investments, LLC
100.0% - Putnam Aviation Holdings, LLC
100.0% - Putnam Capital, LLC
100.0% - The Putnam Advisory Company, LLC
100.0% - Putnam Investments Inc.
100.0% - Putnam Investments (Ireland) Limited
100.0% - Putnam Investments Australia Pty Limited
100.0% - Putnam Investments Securities Co., Ltd.
100.0% - Putnam International Distributors, Ltd.
100.0% - Putnam Investments Argentina S.A.
100.0% - Putnam Investments Limited |
| C. |
The Great-West Life Assurance Company Group of Companies (Canadian insurance) |
|
|
|
| Power Corporation of Canada
100.0% - 171263 Canada Inc.
65.78% - Power Financial Corporation
67.0% - Great-West Lifeco Inc.
100.0% - 2142540 Ontario Inc.
100.0% - Great-West Lifeco Finance (Delaware) LP
100.0% - Great-West Lifeco Finance (Delaware) LLC
100.0% - 2023308 Ontario Inc.
100.0% - Great-West Life & Annuity Insurance Capital, LP
40.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co.
40.0% - Great-West Life & Annuity Insurance Capital, LLC
100.0% - Great-West Life & Annuity Insurance Capital, LP II
40.0% - Great-West Life & Annuity Insurance Capital (Nova Scotia) Co. II
40.0% - Great-West Life & Annuity Insurance Capital, LLC II
100.0% - 2171866 Ontario Inc
100.0% - Great-West Lifeco Finance (Delaware) LP II
100.0% - Great-West Lifeco Finance (Delaware) LLC II
100.0% - 2023310 Ontario Inc.
100.0% - 2023311 Ontario Inc.
100.0% - 6109756 Canada Inc.
100.0% - 6922023 Canada Inc.
100.0% - 8563993 Canada Inc.
100.0% - The Great-West Life Assurance Company (NAIC #80705, MI)
71.4% - GWL THL Private Equity I Inc. (28.6% owned by The Canada Life Assurance Company)
100.0% - GWL THL Private Equity II Inc.
100.0% - Great-West Investors Holdco Inc.
100.0% - Great-West Investors LLC
100.0% - Great-West Investors LP Inc.
100.0% - Great-West Investors GP Inc.
100.0% - Great-West Investors LP
100.0% - T.H. Lee Interests
100.0% - GWL Realty Advisors Inc.
100.0% - GWL Realty Advisors U.S., Inc.
100.0% - RA Real Estate Inc.
0.1% RMA Real Estate LP
100.0% - Vertica Resident Services Inc.
100.0% - 2278372 Ontario Inc. (0.0001% interest in NF Real Estate Limited Partnership) |
|
|
|
| 100.0% - GLC Asset Management Group Ltd.
100.0% - 801611 Ontario Limited
100.0% - 118050 Canada Inc.
100.0% - 1213763 Ontario Inc.
99.9% - Riverside II Limited Partnership
70.0% - Kings Cross Shopping Centre Ltd.
100.0% - 681348 Alberta Ltd.
100.0% - The Owner: Condominium Plan No 8510578
50.0% - 3352200 Canada Inc.
100.0% - 1420731 Ontario Limited
100.0% - 1455250 Ontario Limited
100.0% - CGWLL Inc.
65.0% - The Walmer Road Limited Partnership
50.0% - Laurier House Apartments Limited
100.0% - 2024071 Ontario Limited
100.0 % - 431687 Ontario Limited
0.1% - Riverside II Limited Partnership
100.0% - High Park Bayview Inc.
75.0% - High Park Bayview Limited Partnership
5.6% - MAM Holdings Inc. (94.4% owned by The Canada Life Insurance Company of Canada)
100.0% - 647679 B.C. Ltd.
70.0% - TGS North American Real Estate Investment Trust
100.0% - TGS Trust
70.0% - RMA Investment Company (Formerly TGS Investment Company)
100.0% - RMA Property Management Ltd. (Formerly TGS REIT Property Management Ltd.)
100.0% - RMA Property Management 2004 Ltd. (Formerly TGS REIT Property Management 2004 Ltd.)
100.0% - RMA Realty Holdings Corporation Ltd. (Formerly TGS Realty Holdings Corporation Ltd.)
100.0% - RMA (U.S.) Realty LLC (Delaware) [(special shares held by each of 1218023 Alberta Ltd. (50%) and 1214931
Alberta Ltd. (50%)] 100.0% - RMA American Realty Corp.
1% - RMA American Realty Limited Partnership [(99% owned by RMA (U.S.) Realty LLC
(Delaware)] 99.0% - RMA American Realty Limited Partnership (1% owned by RMA American Realty
Corp.) 100.0% - 1218023 Alberta Ltd.
50% - special shares in RMA (U.S.) Realty LLC (Delaware)
100.0% - 1214931 Alberta Ltd.
50% - special shares in RMA (U.S.) Realty LLC (Delaware)
70.0% - RMA Real Estate LP
100.0% - RMA Properties Ltd. (Formerly TGS REIT Properties Ltd.)
100.0% - S-8025 Holdings Ltd.
100.0% - RMA Properties (Riverside) Ltd. (Formerly TGS REIT Properties (Riverside) Ltd.
70.0% - KS Village (Millstream) Inc. |
|
|
|
| 70.0% - 0726861 B.C. Ltd.
70.0% - Trop Beau Developments Limited
70.0% - Kelowna Central Park Properties Ltd.
70.0% - Kelowna Central Park Phase II Properties Ltd.
40.0% - PVS Preferred Vision Services
12.5% - Vaudreuil Shopping Centres Limited
70.0% - Saskatoon West Shopping Centres Limited
12.5% - 2331777 Ontario Ltd.
12.5% - 2344701 Ontario Ltd.
12.5% - 2356720 Ontario Ltd.
12.5% - 0977221 B.C. Ltd.
100.0% - London Insurance Group Inc.
100.0% - Trivest Insurance Network Limited
100.0% - London Life Insurance Company (Fed ID # 52-1548741 – NAIC # 83550, MI)
100.00% - 1542775 Alberta Ltd.
100.0% - 0813212 B.C. Ltd.
30.0% - Kings Cross Shopping Centre Ltd.
30.0% - 0726861 B.C. Ltd.
30.0% - TGS North American Real Estate Investment Trust
100.0% - TGS Trust
30.0% - RMA Investment Company (Formerly TGS Investment Company)
100.0% - RMA Property Management Ltd. (Formerly TGS REIT Property Management Ltd.)
100.0% - RMAProperty Management 2004 Ltd. (Formerly TGS REIT Property Management 2004 Ltd.)
100.0% - RMA Realty Holdings Corporation Ltd. (Formerly TGS Realty Holdings Corporation Ltd.)
100.0% - RMA (U.S.) Realty LLC (Delaware) [(special shares held by each of 1218023 Alberta Ltd. (50%) and 1214931
Alberta Ltd. 50%)] 100.0% - RMA American Realty Corp.
1% - RMA American Realty Limited Partnership [(99% owned by RMA (U.S.) Realty LLC (Delaware)]
99.0% - RMA American Realty Limited Partnership (1% owned by RMA American Realty Corp.)
100.0% - 1218023 Alberta Ltd.
50% - special shares in RMA (U.S.) Realty LLC (Delaware)
100.0% - 1214931 Alberta Ltd.
50% - special shares in RMA (U.S.) Realty LLC (Delaware)
30.0% - RMA Real Estate LP
100.0% - RMA Properties Ltd. (Formerly TGS REIT Properties Ltd.)
100.0% - S-8025 Holdings Ltd.
100.0% - RMA Properties (Riverside) Ltd. (Formerly TGS REIT Properties (Riverside) Ltd.
100.0% - 1319399 Ontario Inc.
100.0% - 3853071 Canada Limited
50.0% - Laurier House Apartments Limited |
|
|
|
| 30.0% - Kelowna Central Park Properties Ltd.
30.0% - Kelowna Central Park Phase II Properties Ltd.
30.0% - Trop Beau Developments Limited
100.0% - 4298098 Canada Inc.
100.0% - GWLC Holdings Inc.
100% - GLC Reinsurance Corporation
100.0% - 389288 B.C. Ltd.
100.0% - Quadrus Investment Services Ltd.
35.0% - The Walmer Road Limited Partnership
100.0% - 177545 Canada Limited
100.0% - Lonlife Financial Services Limited
88.0% - Neighborhood Dental Services Ltd.
100.0% - Quadrus Distribution Services Ltd.
100.0% - Toronto College Park Ltd.
25.0% - High Park Bayview Limited Partnership
30.0% - KS Village (Millstream) Inc.
100.0% - London Life Financial Corporation
89.4% - London Reinsurance Group, Inc. (10.6% owned by London Life Insurance Company)
100.0% - London Life & General Reinsurance Co. Ltd. (1 share held by London Life & Casualty Reinsurance
Corporation and 20,099,999 shares held by London Reinsurance Group Inc.) 100.0% - London Life & Casualty
Reinsurance Corporation 100.0% - Trabaja Reinsurance Company Ltd.
100.0% - London Life and Casualty (Barbados) Corporation
100.0% - LRG (US), Inc.
100.0% - London Life International Reinsurance Corporation
100.0% - London Life Reinsurance Company (Fed ID # 23-2044256 – NAIC # 76694, PA)
75.0% - Vaudreuil Shopping Centres Limited
30.0% - Saskatoon West Shopping Centres Limited
75.0% - 2331777 Ontario Ltd.
75.0% - 2344701 Ontario Ltd.
75.0% - 2356720 Ontario Ltd.
75.0% - 0977221 B.C. Ltd.
100.0% - Canada Life Financial Corporation
100.0% - The Canada Life Assurance Company (Fed ID # 38-0397420, NAIC # 80659, MI)
100.0% - Canada Life Brasil LTDA
100.0% - Canada Life Capital Corporation, Inc.
100.0% - Canada Life International Holdings, Limited
100.0% - Canada Life International Services Limited
100.0% - Canada Life International, Limited |
|
|
|
| 100.0% - CLI Institutional Limited
100.0% - Canada Life Irish Holding Company, Limited
100.0% - Setanta Asset Management Limited
50.0% - Setanta Asset Management Funds Public Limited Company
100.0% - Canada Life Group Services Limited
100.0% - Canada Life Europe Investment Limited
78.67% - Canada Life Assurance Europe Limited
100.0% - Canada Life Europe Management Services, Limited
21.33% - Canada Life Assurance Europe Limited
100.0% - Canada Life International Re,
Limited 100.0% - Canada Life Reinsurance International, Ltd.
100.0% - Canada Life Reinsurance, Ltd.
100.0% - The Canada Life Group (U.K.), Limited
100.0% - Canada Life Pension Managers & Trustees, Limited
100.0% - Canada Life Asset Management Limited
100.0% - Canada Life European Real Estate Limited
100% - Hotel Operations (Walsall) Limited
100.0% - Hotel Operations (Cardiff) Limited
100.0% - Canada Life Trustee Services (U.K.), Limited
100.0% - CLFIS (U.K.), Limited
100.0% - Canada Life, Limited
100.0% - Canada Life Assurance (Ireland), Limited
50.0% - Setanta Asset Management Funds Public Limited Company
100.0% - Canada Life (U.K.), Limited
100.0% - Albany Life Assurance Company, Limited
100.0% - Canada Life Management (U.K.), Limited
100.0% - Canada Life Services (U.K.),
Limited 100.0% - Canada Life Fund Managers (U.K.), Limited
100.0% - Canada Life Group Services (U.K.), Limited
100.0% - Canada Life Holdings (U.K.), Limited
100.0% - Canada Life Irish Operations, Limited
100.0% - Canada Life Ireland Holdings, Limited.
100.0% - Irish Life Group Limited
100.0% - Irish Progressive Services International Ltd
100.0% - Irish Life Group Services Limited
100.0% - Irish Life Financial Services Limited
49.0% - Glohealth Financial Services Limited |
|
|
|
| 100.0% - Irish Life Investment Managers Limited
100.0% - Summit Asset Managers Ltd.
7.0% - Irish Association of Investment Managers
100.0% - Vestone Ltd.
100.0% - Cornmarket Group Financial Services Ltd.
100.0% - Cornmarket Insurance Brokers Ltd.
100.0% - Adelaide Insurance Services Ltd.
100.0% - Savings & Investments Ltd.
100.0% - Gregan McGuiness (Life & Pensions) Ltd.
100.0% - Irish Life Associate Holdings
100.0% - Irish Life Irish Holdings
30.0% - Allianz-Irish Life Holdings plc.
100.0% - Irish Life Assurance plc.
100.0% - Ballsbridge Property Investments Ltd.
100.0% - Cathair Ce Ltd.
100.0% - Ilona Financial Group, Inc.
100.0% - Irish Life Unit Fund Managers Ltd.
100.0% - Keko Park Ltd.
100.0% - Stephen Court Ltd.
100.0% - Tredwell Associates Ltd.
100.0% - Irish Life Trustee Services Limited
100.0% - Kohlenberg & Ruppert Premium Properties S.A.
100.0% - Office Park De Mont-St-Guibert A S.A.
100.0% - Office Park De Mont-St-Guibert B S.A.
100.0% - Office Park De Mont-St-Guibert C S.A.
100.0% - Ilot St Michel Lux S.A.R.L.
100.0% - Ilot St Michel FH S.P.R.L.
100.0% - Ilot St Michel LLH S.P.R.L.
100.0% - Etak SAS
100.0% - Mili SAS
100.0% - Sarip SCI
66.66% - City Park (Hove) Management Company Ltd.
66.66% - City Gate Park Administration Limited
98.0% - Westlink Industrial Estate Management Company Ltd.
51.0% - Sjrq Riverside IV Management Limited
50.0% - Hollins Clough Management Company Ltd.
50.0% - Dakline Company Ltd.
50.0% - Ashtown Management Company Ltd.
25.0% - Fulwood Park Management Company (No. 2) Ltd.
20.0% - Choralli Limited |
|
|
|
| 14.0% - Houghton Hall Management Limited
14.0% - Baggot Court Management Limited
14.0% - Richview Office Park Management Company Limited
5.5% - Padamul Ltd.
100.0% - Canada Life Group Holdings Limited
100.0% - 4073649 Canada, Inc. (1 common share owned by 587443 Ontario, Inc.)
100.0% - Canada Life Finance (U.K.), Limited
100.0% - CL Luxembourg Capital Management S.á.r.l.
100.0% - 8478163 Canada Limited
100.0% - Canada Life Bermuda Limited
100.0% - The Canada Life Insurance Company of Canada
94.4% - MAM Holdings Inc. (5.6% owned by GWL)
100.0% - Mountain Asset Management LLC
12.5% - 2331777 Ontario Ltd.
12.5% - 2344701 Ontario Ltd.
12.5% - Vaudreuil Shopping Centres Limited
12.5% - 2356720 Ontario Ltd.
12.5% - 0977221 B.C. Ltd.
100.0% - CL Capital Management (Canada), Inc.
100.0% - GRS Securities, Inc.
100.0% - 587443 Ontario, Inc.
100.0% - Canada Life Mortgage Services, Ltd.
100.0% - Adason Properties, Limited
100.0% - Adason Realty, Ltd.
D. IGM Financial Inc. Group of Companies
(Canadian mutual funds) Power Corporation
of Canada 100.0% - 171263 Canada Inc.
65.78% - Power Financial Corporation
58.63% - IGM Financial Inc.
100.0% - Investors Group Inc.
100.0% - Investors Group Financial Services Inc.
100.0% - I.G. International Management Limited
100.0% - I.G. Investment Management (Hong Kong) Limited
100.0% - Investors Group Trust Co. Ltd.
100.0% - 391102 B.C. Ltd.
100.0% - I.G. Insurance Services Inc.
100.0% - Investors Syndicate Limited
100.0% - Investors Group Securities Inc. |
|
|
|
| 100.0% - 6460675 Manitoba Ltd.
100.0% - I.G. Investment Management, Ltd.
100% - Investors Group Corporate Class Inc.
100.0% - Investors Syndicate Property Corp.
100.0% - 0965311 B.C. Ltd.
19.63% - I.G. (Rockies) Corp.
100.0% - I.G. Investment Corp.
80.37% - I.G. (Rockies) Corp. (19.63% owned by I.G. Investment Management, Ltd.)
100.0% - Mackenzie Inc.
100.0% - Mackenzie Financial Corporation
100.0% - Mackenzie Investments Charitable Foundation
14.28% - Strategic Charitable Giving Foundation
100.0% - Mackenzie Cundill Investment Management (Bermuda) Ltd.
100.0% - Mackenzie Financial Capital Corporation
100.0% - Multi-Class Investment Corp.
100.0% - MMLP GP Inc.
100.0% - Mackenzie Investments Corporation
100.0% - Mackenzie Investments PTE. Ltd.
97.50% - Investment Planning Counsel Inc. (and 2.50% owned by Management of IPC management)
100.0% - IPC Investment Corporation
100.0% - 9132-2115 Quebec Inc.
100.0% - IPC Save Inc.
100.0% - IPC Estate Services Inc.
100.0% - IPC Securities Corporation
88.95% - IPC Portfolio Services Inc. (and 11.05% owned by advisors of IPC Investment Corporation and IPC Securities
Corporation) 100.0% - Counsel Portfolio Services Inc.
100.0% - Counsel Portfolio Corporation
100% - Independent Planning Group Inc.
100.0% - VirtucoTechnologies Inc.
100.0% - IPG Insurance Inc. |
| E. |
Pargesa Holding SA Group of Companies (European investments) |
Power Corporation of Canada
|
|
|
| 100.0% - 171263 Canada Inc.
65.78% - Power Financial Corporation
100.0% - Power Financial Europe B.V.
50.0% - Parjointco N.V.
75.4% - Pargesa Holding SA (55.6% capital)
100.0% - Pargesa Netherlands B.V.
52.0% - Groupe Bruxelles Lambert (50.0% in capital)
Capital
7.2% - Suez Environment Company (of which 0.3% in trading)
27.3% - Lafarge SA (21.0% in capital)
6.9% - Pernod Ricard (7.5% in capital)
0.1% - Iberdrola (INFORMATION NOT PUBLIC)
5.6% - Umicore (INFORMATION NOT PUBLIC)
0.4% - LTI One
100.0% - Belgian Securities B.V.
Capital
71.6% - Imerys (56.2% in capital)
100.0% - Brussels Securities B.V.
Capital
99.6% - LTI One
100.0% - Sagerpar
3.9% - Groupe Bruxelles Lambert
100.0% - GBL Overseas Finance N.V.
100.0% - GBL Treasury Center
Capital
100.0% - GBL Energy S.á.r.l.
Capital
3.3% - Total SA (3.6% in capital)
100.0% - GBL Verwaltung GmbH
100.0% - Immobilière Rue de Namur S.á.r.l.
100.0% - GBL Verwaltung SA
Capital
100.0% - GBL Investments Limited
100.0% - GBL R
100.0% - Sienna Capital S.á.r.l
Capital
66.66% - Kartesia Credit Opportunities I SCA, SICAV-SIF |
|
|
|
| 40.0% - Kartesia GP SA
100.0% - Serena S.á.r.l
Capital
15.0% - SGS
2.4% - GDF SUEZ (of which 0.1% in trading)
43.0% - ECP 1
42.4% - ECP 2
100.0% - ECP3
100.0% - Pargesa Netherlands B.V.
100.0% - SFPG |
| F. |
Square Victoria Communications Group Inc. Group of Companies (Canadian communications) |
Power Corporation of Canada
|
|
|
| 100.0% - Square Victoria Communications Group Inc.
100.0% - Gesca Ltée
100.0% - La Presse, ltée
100.0% 7991347 Canada inc.
100.0% - Gesca Numérique Ltée
100.0% - 3855082 Canada Inc.
100.0% - 3834310 Canada Inc.
100.0% - Square Victoria Digital Properties inc.
100.0% - 4400046 Canada Inc.
81.73% - 9059-2114 Québec Inc.
98.36% - DuProprio Inc.
100.0% - VR Estates Inc.
100.0% - 0757075 B.C. Ltd.
0.1% - Lower Mainland Comfree LP
99.9% - Lower Mainland Comfree LP
100.0% - Comfree Commission Free Realty Inc.
100.0% - CF Real Estate First Inc.
100.0% - CF Real Estate Max Inc.
100.0% - CF Real Estate Ontario Inc.
100.0% - CF Real Estate Maritimes Inc.
100.0% - DP Immobilier Québec Inc.
100.0% - 8495122 Canada Inc.
100.0% - Les Éditions Gesca Ltée
100.0% - 9289-9822 Québec inc. (anciennement Groupe Espaces Inc.) |
|
|
|
| 100.0% - Les Éditions La Presse Ltée
100.0% - (W.illi.am) 6657443 Canada Inc.
2.72% - Acquisio Inc.
50.0% - Workopolis Canada
23.61% - Tuango Inc.
25.0% - Olive Média
100.0% - Attitude Digitale Inc.
26.32% - Checkout 51 Inc.
100.0% - Square Victoria C.P. Holding Inc.
33.3% - Canadian Press Enterprises Inc.
100.0% - Broadcast News Limited
100.0% - Press News Limited
100.0% - Pagemasters North America Inc. |
| G. |
Power Corporation (International) Limited Group of Companies (Asian investments) |
Power Corporation of Canada
|
|
|
| 100.0% - Power Corporation (International) Limited
99.9% - Power Pacific Corporation Limited
25.0% - Barrick Power Gold Corporation of China Limited
100.0% - Power Pacific Mauritius Limited
0.1% - Power Pacific Equities Limited
99.9% - Power Pacific Equities Limited
4.31% - CITIC Pacific Limited
9.78% - Vimicro International Corporation
100.0% - Power Communications Inc.
0.1% - Power Pacific Corporation Limited
10.0% - China Asset Management Limited |
Power
Corporation of Canada
|
|
|
| 100.0% - 152245 Canada Inc.
100.0% - Power Tek, LLC
100.0% - 3540529 Canada Inc.
18.75% - Société Immobiliére HMM
100.0% - Gelprim Inc.
100.0% - 3121011 Canada Inc.
100.0% - 171263 Canada Inc.
100.0% - Victoria Square Ventures Inc. |
|
|
|
| 22.12% - Bellus Health Inc.
25.0% - Club de Hockey Les Remparts de Québec Inc.
100.0% - Power Energy Corporation
62.83% - Potentia Solar Inc.
100.0% - Power Energy Eagle Creek Inc.
60.0% - Power Energy Eagle Creek LLP
22.98% - Eagle Creek Renewable Energy, LLC
100.0% - Power Communications Inc.
100.0% - Brazeau River Resources Investments Inc.
100.0% - PCC Industrial (1993) Corporation
100.0% - Power Corporation International
100.0% - 3249531 Canada Inc.
100.0% - Sagard Capital Partners GP, Inc.
99.7% - Sagard Capital Partners, L.P.
100.0% - Power Corporation of Canada Inc.
100.0% - Square Victoria Real Estate Inc.
100.0% - PL S.A.
100.0% - 4190297 Canada Inc.
100% Sagard Capital Partners Management Corp.
100.0% - Sagard S.A.S.
100.0% - Marquette Communications (1997) Corporation
100.0% - 4507037 Canada Inc.
100.0% - 4524781 Canada Inc.
100.0% - 4524799 Canada Inc.
100.0% - 4524802 Canada Inc. |
Power Financial Corporation
|
|
|
| 100.0% - 4400003 Canada Inc.
100.0% - 3411893 Canada Inc.
100.0% - 3439453 Canada Inc.
100.0% - 4507045 Canada Inc.
100.0% - Power Financial Capital Corporation
100.0% - 7973594 Canada Inc.
100.0% - 7973683 Canada Inc.
100.0% - 7974019 Canada Inc.
100.0% - 8677964 Canada Inc. |
| Item 29. |
Indemnification. Provisions exist under the Colorado Business Corporation Act and the Bylaws of Great-West whereby Great-West may indemnify a director, officer or controlling person of Great-West against any liability
incurred in his or her official capacity. The following excerpts contain the substance of these provisions: |
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) “Corporation” includes any domestic or foreign entity that is a predecessor of the corporation by reason of a
merger, or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.
(2)
“Director” means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation’s request as a director, an officer, an agent, an associate, an
employee, a fiduciary, a manager, a member, a partner, a promoter, or a trustee of, or to hold any similar position with, another domestic or foreign entity or employee benefit plan. A director is considered to be serving an employee benefit plan at
the corporation’s request if the director’s duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. “Director” includes,
unless the context requires otherwise, the estate or personal representative of a director.
(3) “Expenses”
includes counsel fees.
(4) “Liability” means the obligation incurred with respect to a proceeding to pay a
judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses.
(5) “Official capacity” means, when used with respect to a director, the office of director in the corporation and,
when used with respect to a person other than a director as contemplated in Section 7-109-107, the office in a corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent
on behalf of the corporation. “Official capacity” does not include service for any other domestic or foreign corporation or other person or employee benefit plan.
(6) “Party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a
proceeding.
(7) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative and whether formal or informal.
Section 7-109-102. Authority to
indemnify directors.
(1) Except as provided in subsection (4) of this section, a corporation may indemnify a person
made a party to the proceeding because the person is or was a director against liability incurred in the proceeding if:
| |
(a) |
The person conducted himself or herself in good faith; and |
| |
(b) |
The person reasonably believed: |
(I) In the case of conduct in an official capacity with the corporation, that his or her conduct was in the
corporation’s best interests; and
(II) In all other cases, that his or her conduct was at least not opposed to the
corporation’s best interests; and
| |
(c) |
In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. |
(2) A director’s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in
the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirements of subparagraph (II) of paragraph (b) of subsection (1) of this section. A director’s conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of subparagraph (a) of subsection (1) of
this section.
(3) The termination of any proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo
contendere or its equivalent, is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to
the corporation; or
(b) In connection with any proceeding charging that the director derived an improper personal
benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a proceeding by or in the right of a corporation is
limited to reasonable expenses incurred in connection with the proceeding.
Section 7-109-103. Mandatory Indemnification
of Directors.
Unless limited by the articles of incorporation, a corporation shall indemnify a person who was wholly
successful, on the merits or otherwise, in defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in
advance of the final disposition of the proceeding if:
(a) The director furnishes the corporation a written
affirmation of the director’s good-faith belief that he or she has met the standard of conduct described in Section 7-109-102;
(b) The director furnishes the corporation a written undertaking, executed personally or on the director’s behalf,
to repay the advance if it is ultimately determined that he or she did not meet such standard of conduct; and
(c) A
determination is made that the facts then known to those making the determination would not preclude indemnification under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of this section shall be an unlimited general
obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this section shall be made in the manner specified in Section 7-109-106.
Section 7-109-105.
Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in the articles of incorporation, a director who is
or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may
order indemnification in the following manner:
(a) If it determines the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order indemnification, in which case the court shall also order the corporation to pay the director’s reasonable expenses incurred to obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of conduct set forth in section 7-109-102 (1) or was adjudged liable in the circumstances described in Section 7-109-102 (4), the court may order such indemnification as the court
deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described Section 7-109-102 (4) is limited to reasonable expenses incurred in connection with the
proceeding and reasonable expenses incurred to obtain court-ordered indemnification.
Section
7-109-106. Determination and Authorization of Indemnification of Directors.
(1) A corporation may not indemnify a
director under Section 7-109-102 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in
Section 7-109-102. A corporation shall not advance expenses to a director under Section 7-109-104 unless authorized in the specific case after the written affirmation and undertaking required by Section 7-109-104(1)(a) and
(1)(b) are received and the determination required by Section 7-109-104(1)(c) has been made.
(2) The
determinations required by under subsection (1) of this section shall be made:
(a) By the board of directors
by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a committee of the board of directors designated by the board
of directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a) of subsection (2) of this section, and the
committee cannot be established under paragraph (b) of subsection (2) of this section, or even if a quorum is obtained or a committee designated, if a majority of the directors constituting such quorum or such committee so directs, the
determination required to be made by subsection (1) of this section shall be made:
(a) By independent legal
counsel selected by a vote of the board of directors or the committee in the manner specified in paragraph (a) or (b) of subsection (2) of this section or, if a quorum of the full board cannot be obtained and a committee cannot be
established, by independent legal counsel selected by a majority vote of the full board of directors; or
(b) By the
shareholders
(4) Authorization of indemnification and advance of expenses shall be made in the same manner as the
determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance
of expenses shall be made by the body that selected such counsel.
Section 7-109-107. Indemnification of Officer,
Employees, Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under section
7-109-103, and is entitled to apply for court-ordered indemnification under section 7-109-105, in each case to the same extent as a director;
(b) A corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to
the same extent as a director; and
(c) A corporation may indemnify and advance expenses to an officer, employee,
fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee,
fiduciary, or agent of the corporation, or who, while a director, officer, employee, fiduciary, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, fiduciary, or agent
of any other domestic or foreign entity or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from the person’s status as a director, officer, employee, fiduciary, or agent
whether or not the corporation would have the power to indemnify the person against such liability under the Section 7-109-102, 7-109-103 or 7-109-107. Any such insurance may be procured from any insurance company designated by the board of
directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the corporation has an equity or any other interest through stock
ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision treating a corporation’s indemnification of, or advance of expenses to, directors that is contained in
its articles of incorporation or bylaws, in a resolution of its shareholders or board of directors, or in a contract, except for an insurance policy or otherwise, is valid only to the extent the provision is not inconsistent with Sections 7-109-101
to 7-109-108. If the articles of incorporation limit indemnification or advance of expenses, indemnification or advance of expenses are valid only to the extent not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation’s power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of Director.
If a corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in
the right of the corporation, the corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders’ meeting. If the next shareholder action is taken without a meeting
at the instigation of the board of directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.
Bylaws of Great-West
Article IV. Indemnification
SECTION 1. In this Article, the following terms shall have the following meanings:
| |
(a) |
“expenses” means reasonable expenses incurred in a proceeding, including expenses of investigation and preparation, expenses in
connection with an appearance as a witness, and fees and disbursement of counsel, accountants or other experts; |
| |
(b) |
“liability” means an obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty or fine;
|
| |
(c) |
“party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding;
|
| |
(d) |
“proceeding” means any threatened, pending or completed action, suit, or proceeding whether civil, criminal, administrative or
investigative, and whether formal or informal. |
SECTION 2. Subject to applicable law, if any person who
is or was a director, officer or employee of the corporation is made a party to a proceeding because the person is or was a director, officer or employee of the corporation, the corporation shall indemnify the person, or the estate or personal
representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if, with respect to the matter(s) giving rise to the proceeding:
| |
(a) |
the person conducted himself or herself in good faith; and |
| |
(b) |
the person reasonably believed that his or her conduct was in the corporation’s best interests; and |
| |
(c) |
in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and
|
| |
(d) |
if the person is or was an employee of the corporation, the person acted in the ordinary course of the person’s employment with the
corporation. |
SECTION 3. Subject to applicable law, if any person who is or was serving as a director,
officer, trustee or employee of another company or entity at the request of the corporation is made a party to a proceeding because the person is or was serving as a director, officer, trustee or employee of the other company or entity, the
corporation shall indemnify the person, or the estate or personal representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if:
| |
(a) |
the person is or was appointed to serve at the request of the corporation as a director, officer, trustee or employee of the other company or
entity in accordance with Indemnification Procedures approved by the Board of Directors of the corporation; and |
| |
(b) |
with respect to the matter(s) giving rise to the proceeding: |
| |
(i) |
the person conducted himself or herself in good faith; and |
| |
(ii) |
the person reasonably believed that his or her conduct was at least not opposed to the corporation’s best interests (in the case of a trustee
of one of the corporation’s staff benefits plans, this means that the person’s conduct was for a purpose the person reasonably believed to be in the interests of the plan participants); and |
| |
(iii) |
in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and
|
if the person is or was an employee of the other company or entity, the person acted in the ordinary
course of the person’s employment with the other company or entity.
Item 30. Principal Underwriter.
| |
(a) |
In addition to securities of the Registrant, GWFS Equities, Inc. currently distributes securities of Great-West Funds, Inc., an open-end management
investment company, FutureFunds Series Account of Great-West, Maxim Series Account of Great-West, COLI VUL-4 Series Account of Great-West, Variable Annuity-1 Series Account of Great-West, Prestige Variable Life Account of Great-West, Trillium
Variable Annuity Account of Great-West, Variable Annuity-2 Series Account of Great-West, and the Variable Annuity-1 Series Account of Great-West of New York, COLI VUL-2 Series |
| |
Account of First Great-West, Variable Annuity-2 Series Account of Great-West of New York, and COLI VUL-4 Series Account of Great-West of New York. |
| |
(b) |
Directors and Officers of GWFS Equities, Inc. |
|
|
|
|
|
| Name
|
|
Principal Business Address
|
|
Position and
Officers with Underwriter |
| C. P. Nelson |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Chairman, President and Chief Executive Officer |
| R. K. Shaw |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Director and Executive Vice President |
| M. R. Edwards |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President |
| W. S. Harmon |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Director, Senior Vice President |
| R.J. Laeyendecker |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Senior Vice President |
| B. Neese |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Director, Vice President |
| C. Bergeon |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President |
| S.M. Gile |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President |
| B. Lewis |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President, Defined
Contribution Markets |
| B. Neese |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President |
| C. Silvaggi |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President, Retirement Solutions |
| B. A. Byrne |
|
8525 East Orchard Road
Greenwood Village, CO 80111 |
|
Secretary and Chief Compliance Officer |
| T. L. Luiz |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Compliance Officer |
| M. C. Maiers |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President and Treasurer |
| S.A. Bendrick |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Director and Vice President |
| J.G.
Gibbs |
|
8515 East Orchard Road
Greenwood Village, CO 80111 |
|
Vice President – Trading Operations |
| |
(c) |
Commissions and other compensation received from the Registrant by Principal Underwriter during Registrant’s last fiscal year:
|
|
|
|
|
|
|
|
|
|
| Name of Principal
Underwriter |
|
Net
Underwriting
Discounts and
Commissions |
|
Compensation
on Redemption |
|
Brokerage
Commissions |
|
Compensation |
|
|
|
|
|
| GWFS Equities |
|
-0- |
|
-0- |
|
-0- |
|
-0- |
| Item 31. |
Location of Accounts and Records. All accounts, books, or other documents required to be maintained by Section 31(a) of the Investment Company Act
of 1940 and the rules promulgated thereunder are maintained by the Registrant through Great-West, 8515 East Orchard Road, Greenwood Village, Colorado 80111. |
| Item 32. |
Management Services. None. |
| Item 33. |
Fee Representation. Great-West represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred and the risks assumed by Great-West. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this
Post-Effective Amendment to be signed on its behalf, in the City of Greenwood Village, and State of Colorado, on this 27th day of February, 2014.
COLI
VUL-2 SERIES ACCOUNT of
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Registrant)
|
|
|
| By: |
|
/s/ M.T.G. Graye |
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M.T.G. Graye |
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President and Chief Executive Officer and Principal Financial Officer
of Great-West Life & Annuity Insurance Company |
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GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Depositor) |
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| By: |
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/s/ M.T.G. Graye |
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M.T.G. Graye |
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President and Chief Executive Officer and Principal Financial Officer |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
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| Signature |
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Title |
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Date |
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| /s/ R. J. Orr |
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Chairman of the Board |
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February 27, 2014 |
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R. J. Orr* |
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| /s/ M. T. G. Graye |
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Director, President and Chief Executive
Officer (Principal Financial Officer) |
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February 27, 2014 |
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M. T. G. Graye |
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| /s/ R.M. Southall
R.M. Southall |
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Vice President Reporting and Finance (Principal Accounting Officer) |
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February 27, 2014 |
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| /s/ J. L. Bernbach |
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Director |
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February 27, 2014 |
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J. L. Bernbach* |
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| /s/ A. Desmarais |
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Director |
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February 27, 2014 |
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A. Desmarais* |
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| /s/ P. Desmarais, Jr. |
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Director |
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February 27, 2014 |
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P. Desmarais, Jr.* |
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| /s/ A.Louvel |
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Director |
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February 27, 2014 |
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A.Louvel* |
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| /s/ P. Mahon |
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Director |
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February 27, 2014 |
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P. Mahon* |
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| /s/ R. L. McFeetors |
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Director |
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February 27, 2014 |
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R. L. McFeetors* |
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| /s/ J. E. A. Nickerson |
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Director |
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February 27, 2014 |
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J. E. A. Nickerson* |
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| /s/ M. Plessis-Bélair |
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Director |
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February 27, 2014 |
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M. Plessis-Bélair* |
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| /s/ H. Rousseau |
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Director |
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February 27, 2014 |
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H. Rousseau* |
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| /s/ R. Royer |
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Director |
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February 27, 2014 |
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R. Royer* |
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| /s/ J. Selitto |
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Director |
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February 27, 2014 |
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J. Selitto* |
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| /s/ G. Tretiak |
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Director |
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February 27, 2014 |
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G. Tretiak* |
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| /s/ B. E. Walsh |
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Director |
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February 27, 2014 |
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B. E. Walsh* |
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| *By: |
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/s/ R. G. Schultz |
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February 27, 2014 |
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R. G. Schultz |
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Attorney-in-Fact pursuant to Power of Attorney |
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