-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VD4dwLDEXkKkdtnnw0xk0UrKNgM8bDr0l+6JZtF8Tqa9FdjfwbSrhlEdmku49nzs Rd754W8AzXS3QJz+eKPWVA== 0000950135-01-503635.txt : 20020411 0000950135-01-503635.hdr.sgml : 20020411 ACCESSION NUMBER: 0000950135-01-503635 CONFORMED SUBMISSION TYPE: S-6 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20011119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT CENTRAL INDEX KEY: 0000717347 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 042708937 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-6 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73676 FILM NUMBER: 1795591 BUSINESS ADDRESS: STREET 1: 501 BOYLSTON ST CITY: BOSTON STATE: MA ZIP: 02117 BUSINESS PHONE: 6175782000 MAIL ADDRESS: STREET 1: NEW ENGLAND VARIABLE LIFE INSURANCE CO STREET 2: 501 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02117 S-6 1 b40975s6s-6.txt ZENITH FLEXIBLE LIFE 2002 As filed with Securities and Exchange Commission on November 19, 2001 Registration No. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------- FORM S-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT (Exact Name of Trust) NEW ENGLAND LIFE INSURANCE COMPANY (Name of Depositor) 501 Boylston Street Boston, Massachusetts 02117 (Address of depositor's principal executive offices) --------------------- MARIE C. SWIFT Second Vice President and Counsel New England Life Insurance Company 501 Boylston Street Boston, Massachusetts 02117 (Name and address of agent for service) Copies to: STEPHEN E. ROTH Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, D.C. 20004 --------------------------- Title of Securities Being Registered: Units of Interest in Flexible Premium Variable Life Insurance Policies. As soon as practicable after the effective date of this Registration Statement (Approximate date of proposed public offering) The Registrant hereby amends this Registration Statement under the Securities Act of 1933 on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT REGISTRATION STATEMENT ON FORM S-6 CROSS-REFERENCE SHEET
FORM N-8B-2 ITEM NO. CAPTION IN PROSPECTUS - ----------- --------------------- 1 Cover Page 2 Cover Page 3 Inapplicable 4 Distribution of the Policies 5 NELICO 6 The Variable Account 9 Inapplicable 10(a) Other Policy Features 10(b) Policy Values and Benefits 10(c), (d), (e) Death Benefit; Cash Value; 24 Month Conversion Right; Surrender; Partial Withdrawal; Right to Examine the Policy; Loan Provision; Transfer Option; Premiums 10(f), (g), (h) Voting Rights; Rights Reserved by NELICO 10(i) Limits to NELICO's Right to Challenge the Policy; Payment of Proceeds; Investment Options 11 The Variable Account 12 Investments of the Variable Account; Distribution of the Policies 13 Charges and Expenses; Distribution of the Policies; NELICO's Income Taxes; Appendix A 14 Amount Provided for Investment Under the Policy; Distribution of the Policies 15 Premiums 16 Investments of the Variable Account 17 Captions referenced under Items 10(c), (d), (e) and (i) above 18 The Variable Account 19 Reports; Distribution of the Policies 20 Captions referenced under Items 6 and 10(g) above 21 Loan Provision 22 Inapplicable 23 Distribution of the Policies 24 Limits to NELICO's Right to Challenge the Policy 25 NELICO 26 Distribution of the Policies 27 NELICO 28 Management
FORM N-8B-2 ITEM NO. CAPTION IN PROSPECTUS - ----------- --------------------- 29 NELICO 30 Inapplicable 31 Inapplicable 32 Inapplicable 33 Inapplicable 34 Distribution of the Policies 35 NELICO 36 Inapplicable 37 Inapplicable 38 Distribution of the Policies 39 Distribution of the Policies 40 Distribution of the Policies 41(a) Distribution of the Policies 42 Inapplicable 43 Inapplicable 44(a) Investments of the Variable Account; Amount Provided for Investment Under the Policy; Deductions from Premiums; Flexible Premiums 44(b) Charges and Expenses 44(c) Flexible Premiums; Deductions from Premiums 45 Inapplicable 46 Investments of the Variable Account; Captions referenced under Items 10(c), (d) and (e) above 47 Inapplicable 48 Inapplicable 49 Inapplicable 50 Inapplicable 51 Cover Page; Death Benefit; Lapse and Reinstatement; Charges and Expenses; Additional Benefits by Rider; 24 Month Conversion Right; Payment Options; Policy Owner and Beneficiary; Premiums; Distribution of the Policies 52 Rights Reserved by NELICO 53 Tax Considerations 54 Inapplicable 55 Inapplicable 59 Financial Statements
ZENITH FLEXIBLE LIFE 2002 Flexible Premium Variable Life Insurance Policies Issued by New England Variable Life Separate Account of New England Life Insurance Company 501 Boylston Street Boston, Massachusetts 02116 (617) 578-2000 This prospectus offers individual flexible premium variable life insurance policies the ("Policies") issued by New England Life Insurance Company ("NELICO"). The Policy provides premium flexibility. You may choose between two death benefit options. One provides a fixed death benefit equal to the Policy's face amount. The other provides a death benefit that may vary daily with the investment experience of the Eligible Funds. Cash value allocated to the Eligible Funds is not guaranteed, and fluctuates daily with the investment results of the Eligible Funds. You allocate net premiums among the investment Sub-Accounts of NELICO's Variable Life Separate Account (the "Variable Account"). Each Sub-Account of the Variable Account invests in shares of an Eligible Fund. The Eligible Funds are: NEW ENGLAND ZENITH FUND State Street Research Bond Income Series MFS Total Return Series State Street Research Money Market Series Capital Growth Series Westpeak Growth and Income Series Balanced Series Loomis Sayles Small Cap Series Alger Equity Growth Series Davis Venture Value Series Harris Oakmark Mid Cap Value Series MFS Investors Trust Series MFS Research Managers Series METROPOLITAN SERIES FUND, INC. Putnam Large Cap Growth Portfolio Janus Mid Cap Portfolio Russell 2000(R) Index Portfolio Putnam International Stock Portfolio MetLife Stock Index Portfolio MetLife Mid Cap Stock Index Portfolio* Morgan Stanley EAFE(R) Index Portfolio* Lehman Brothers(R) Aggregate Bond Index Portfolio* State Street Research Aurora Small Cap Value Portfolio* Janus Growth Portfolio* State Street Research Investment Trust Portfolio* Franklin Templeton Small Cap Growth Portfolio* Neuberger Berman Partners Mid Cap Value Portfolio* MET INVESTORS SERIES TRUST MFS Mid-Cap Growth Portfolio* PIMCO Innovation Portfolio* VARIABLE INSURANCE PRODUCTS FUND ("VIP") Overseas Portfolio Equity-Income Portfolio High Income Portfolio VARIABLE INSURANCE PRODUCTS FUND II ("VIP II") Asset Manager Portfolio AMERICAN FUNDS INSURANCE SERIES American Funds Growth Fund* American Funds Growth-Income Fund* American Funds Global Small Capitalization Fund* - --------------- * Subject to any necessary state insurance department approvals You receive State Street Research Money Market Sub-Account performance until 15 days (less in some states) after we apply your initial premium payment to the Policy. Thereafter, we invest the Policy's cash value according to your instructions. You may also allocate net premiums to a Fixed Account in most states. Special limits apply to Fixed Account transfers and withdrawals. You may cancel the Policy during the "Right to Examine Policy" period. Replacing existing insurance with the Policy might not be to your advantage. Before you buy a Policy, ask your registered representative if changing, or adding to, current insurance coverage would be advantageous. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE POLICIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A WEB SITE THAT CONTAINS THE STATEMENTS OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER INFORMATION REGARDING REGISTRANTS THAT FILE ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE ADDRESS OF THE SITE IS http://www.sec.gov. THE ELIGIBLE FUND PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM FOR REFERENCE. WE DO NOT GUARANTEE HOW ANY OF THE SUB-ACCOUNTS OR ELIGIBLE FUNDS WILL PERFORM. THE POLICIES AND THE ELIGIBLE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. , 2002 TABLE OF CONTENTS
PAGE ----- GLOSSARY.................................................... A-4 INTRODUCTION TO THE POLICIES................................ A-5 The Policies........................................... A-5 Availability of the Policy............................. A-6 Policy Charges......................................... A-7 How the Policy Works................................... A-11 Receipt of Communications and Payments at NELICO's Administrative Office................................. A-12 NELICO................................................. A-12 POLICY VALUES AND BENEFITS.................................. A-14 Death Benefit.......................................... A-14 Death Proceeds Payable................................. A-15 Change in Death Benefit Option......................... A-16 Cash Value............................................. A-16 Allocation of Net Premiums............................. A-17 Amount Provided for Investment under the Policy........ A-17 Right to Examine Policy................................ A-18 CHARGES AND EXPENSES........................................ A-18 Deductions from Premiums............................... A-18 Surrender Charge....................................... A-18 Monthly Deduction from Cash Value...................... A-20 Charges Against the Eligible Funds and the Sub-Accounts of the Variable Account............................... A-22 Group or Sponsored Arrangements........................ A-22 PREMIUMS.................................................... A-23 Flexible Premiums...................................... A-23 Lapse and Reinstatement................................ A-24 OTHER POLICY FEATURES....................................... A-24 Increase in Face Amount................................ A-24 Loan Provision......................................... A-25 Surrender.............................................. A-26 Partial Withdrawal..................................... A-27 Reduction in Face Amount............................... A-27 Investment Options..................................... A-28 Transfer Option........................................ A-28 Dollar Cost Averaging.................................. A-29 Portfolio Rebalancing.................................. A-29 Change of Insured Person............................... A-30 Payment of Proceeds.................................... A-30 24 Month Conversion Right.............................. A-30 Other Exchange Rights.................................. A-31 Payment Options........................................ A-31 Additional Benefits by Rider........................... A-32 Policy Owner and Beneficiary........................... A-33
A-2
PAGE ----- THE VARIABLE ACCOUNT........................................ A-33 Investments of the Variable Account.................... A-33 Investment Management.................................. A-36 Substitution of Investments............................ A-37 Share Classes of the Eligible Funds.................... A-37 THE FIXED ACCOUNT........................................... A-38 General Description.................................... A-38 Values and Benefits.................................... A-38 Policy Transactions.................................... A-38 DISTRIBUTION OF THE POLICIES................................ A-39 LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY............ A-40 Misstatement of Age or Sex............................. A-40 Suicide................................................ A-40 TAX CONSIDERATIONS.......................................... A-40 Introduction........................................... A-40 Tax Status of the Policy............................... A-41 Tax Treatment of Policy Benefits....................... A-41 NELICO's Income Taxes.................................. A-43 MANAGEMENT.................................................. A-44 VOTING RIGHTS............................................... A-46 RIGHTS RESERVED BY NELICO................................... A-47 TOLL-FREE NUMBERS........................................... A-47 REPORTS..................................................... A-47 ADVERTISING PRACTICES....................................... A-47 LEGAL MATTERS............................................... A-48 REGISTRATION STATEMENT...................................... A-48 EXPERTS..................................................... A-48 APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, CASH SURRENDER VALUES AND ACCUMULATED PREMIUMS............ A-49 APPENDIX B: INVESTMENT EXPERIENCE INFORMATION............... A-52 APPENDIX C: LONG TERM MARKET TRENDS......................... A-67 APPENDIX D: USES OF LIFE INSURANCE.......................... A-68 APPENDIX E: TAX INFORMATION................................. A-70 APPENDIX F: GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST......................................... A-71 FINANCIAL STATEMENTS........................................ AA-1
A-3 GLOSSARY ACCOUNT. A Sub-Account of the Variable Account or the Fixed Account. AGE. The age of an insured refers to the insured's age at his or her nearest birthday. BASE POLICY. The Policy without riders. CASH SURRENDER VALUE. The amount you receive if you surrender the Policy. It is equal to the Policy's cash value reduced by any Surrender Charge that would apply on surrender and by any outstanding Policy loan and accrued interest. CASH VALUE. A Policy's cash value includes the amount of its cash value held in the Variable Account, the amount held in the Fixed Account and, if there is an outstanding Policy loan, the amount of its cash value held in the Loan Account. FIXED ACCOUNT. The Fixed Account is a part of our general account to which you may allocate net premiums. It provides guarantees of principal and interest. INVESTMENT START DATE. This is the later of the date we first receive a premium payment for the Policy and the Policy Date. LOAN ACCOUNT. The account to which cash value from the Variable and/or Fixed Accounts is transferred when a Policy loan is taken. PLANNED PREMIUM. The Planned Premium is the premium payment schedule you choose to help meet your future goals under the Policy. The Planned Premium is a level amount that is subject to certain limits under the Policy. PREMIUMS. Premiums include all payments under the Policy, whether a Planned Premium or an unscheduled payment. POLICY DATE. If you make a premium payment with the application, the Policy Date is generally the later of the date Part II of the application (if any) was signed and receipt of the premium payment. If you choose to pay the initial premium upon delivery of the Policy, we issue the Policy with a Policy Date which is generally up to 30 days after issue. When you receive the Policy, you will have an opportunity to redate it to a current date. TARGET PREMIUM. We use the Target Premium to determine the amount of Surrender Charge that may apply on a surrender, lapse, face amount reduction, or a partial withdrawal or change in death benefit option that results in a face amount reduction. The Target Premium varies by issue age, sex, smoking status and any substandard rating of the insured and the Policy's base face amount. YOU. "You" refers to the Policy Owner. A-4 INTRODUCTION TO THE POLICIES THE POLICIES The Policies are designed to provide lifetime insurance coverage. They are not offered primarily as an investment. Here is a summary of the Policy's basic features. You should read the entire prospectus for more complete information. -- You can make premium payments under the Policy based on a schedule you determine, subject to some limits. Your policy also provides flexibility to change your schedule at any time or make a payment that does not correspond with your schedule. We can limit or prohibit payments in some situations. (See "Premiums".) -- You can allocate net premiums to one or more of the Sub-Accounts of the Variable Account corresponding to mutual fund portfolios, in some states after an initial period in the State Street Research Money Market Sub-Account. (See "Allocation of Net Premiums" and "Investment Options".) -- The mutual fund portfolios available under the Policy include several common stock funds, including funds which invest primarily in foreign securities, as well as bond funds, balanced funds, and a money market fund. You may allocate your Policy's cash value to a cumulative maximum of 49 accounts (including the Fixed Account) over the life of the Policy. (See "Investments of the Variable Account".) We may limit your initial selection to 25 accounts. -- If the Fixed Account is available in your state, you may also allocate funds to that account. We provide guarantees of Fixed Account principal and interest. SPECIAL LIMITS APPLY TO TRANSFERS AND WITHDRAWALS OF CASH --------------------------------------------------------- VALUE FROM THE FIXED ACCOUNT. We have the right to restrict transfers ----------------------------- of cash value and allocations of premiums into the Fixed Account. (See "The Fixed Account".) -- The cash value of the Policy will vary daily based on the net investment experience of your Policy's Sub-Accounts and the amount of interest credited to your Policy's cash value in the Fixed Account. (See "Cash Value", "Charges and Expenses", "Premiums", "Loan Provision" and "Partial Withdrawal".) -- The portion of the cash value in the Sub-Accounts is not guaranteed. You bear the investment risk on this portion of the cash value. (See "Cash Value".) -- You may choose between two death benefit options and two definitions of life insurance under the Policy. The level option death benefit equals the Policy's face amount. The variable option death benefit equals the face amount plus any cash value, which varies with the net investment experience of your Policy's Sub-Accounts and the rate of interest credited on your cash value in the Fixed Account. The death benefit in either case could increase to satisfy tax law requirements if the cash value reaches certain levels. (See "Death Benefit".) -- You may change your allocation of future net premiums at any time. (See "Allocation of Net Premiums" and "Investment Options".) -- A loan privilege and partial withdrawal feature are available. (See "Loan Provision" and "Partial Withdrawal".) -- The Policy allows you to withdraw cash value from the Policy or transfer cash value among the Sub-Accounts and the Fixed Account up to twelve times in a Policy year without our consent. Currently, we do not limit the number of Sub-Account transfers or withdrawals you may make in a Policy year. We reserve the right to impose a charge of $25 for each transfer or each withdrawal in excess of twelve. Transfers, withdrawals and allocations involving the Fixed Account are subject to special limits. (See "Transfer Option" and "The Fixed Account--Policy Transactions".) -- Death benefits paid to the beneficiary generally are not subject to Federal income tax. Under current law, undistributed increases in cash value generally are not taxable to you. (See "Tax Considerations".) A-5 -- Loans, assignments and other pre-death distributions may have tax consequences depending primarily on the amount which you have paid into the Policy but also on any "material change" in the terms or benefits of the Policy or any death benefit reduction. If premium payments, a death benefit reduction, or a material change cause the Policy to become a "Modified Endowment Contract," then pre-death distributions (including loans) will be included in income on an income first basis, and a 10% penalty tax may be imposed on income distributed before the Policy Owner attains age 59 1/2. Tax considerations may therefore influence the amount and timing of premium payments and certain Policy transactions which you choose to make. (See "Tax Considerations".) -- If the Policy is not a Modified Endowment Contract, we believe that loans under the Policy will generally not be taxable to you as long as the Policy has not lapsed, been surrendered or terminated. However, the tax consequences associated with loans outstanding after the tenth policy year are uncertain. With some exceptions, other pre-death distributions under a Policy that is not a Modified Endowment Contract are includible in income only to the extent they exceed your investment in the Policy. (See "Tax Considerations".) -- During the "Right to Examine Policy" period you can return the Policy for a refund. (See "Right to Examine Policy".) -- Within 24 months after a Policy's date of issue, you may exercise the Policy's 24 Month Conversion Right. If you do, we allocate all of your Policy's cash value and future premiums to the Fixed Account. The purpose of the 24 Month Conversion Right is to provide you with fixed Policy values and benefits. (See "24 Month Conversion Right" for a description of this provision and for a description of the variation which applies to Policies issued in Maryland, New York and Connecticut.) In many respects the Policies are similar to fixed-benefit universal life insurance. Like universal life insurance, the Policies offer death benefits and provide flexible premiums, a cash value, and loan privileges. The Policies are different from fixed-benefit universal life insurance in that the death benefit may, and the cash value will, vary to reflect the investment experience of the selected Sub-Accounts. The Policies are designed to provide insurance protection. Although the underlying mutual fund portfolios invest in securities similar to those in which mutual funds available directly to the public invest, in many ways the Policies differ from mutual fund investments. The main differences are: -- The Policy provides a death benefit based on our assumption of an actuarially calculated risk. -- If the cash surrender value is not sufficient to pay a Monthly Deduction, the Policy may lapse with no value unless you pay additional premiums. If the Policy lapses when Policy loans are outstanding, adverse tax consequences may result. -- In addition to sales charges, insurance-related charges not associated with mutual fund investments are deducted from the premiums and values of the Policy. These charges include various insurance, risk, administrative and premium tax charges. (See "Charges and Expenses".) -- The Variable Account, not the Policy Owner, owns the mutual fund shares. -- Federal income tax liability on any earnings is generally deferred until you receive a distribution from the Policy. Transfers from one underlying fund portfolio to another do not incur tax liability under current law. -- Dividends and capital gains are automatically reinvested. For a discussion of some of the uses of the Policies, see "Appendix D: Uses of Life Insurance". AVAILABILITY OF THE POLICY The Policies are available for insureds age 85 or younger on an underwritten basis and from the age of 20 to 70 on a guaranteed issue basis. (We issue guaranteed issue Policies based on very limited underwriting information.) We may consent to issue the Policies on insureds up to age 90. All persons must meet our underwriting and other requirements. A-6 The minimum face amount for the base Policy is $50,000 unless we consent to a lower amount. We offer other variable life insurance policies that have different death benefits, policy features, and optional programs. However, these other policies also have different charges that would affect your Sub-Account performance and cash values. The Policies may also be available with term riders that provide death benefit coverage at a lower overall cost than coverage under the base Policy; however, term riders have no cash value and terminate at the insured's age 100. To obtain more information about these other policies and term riders, contact our Administrative Office or your registered representative. For information concerning compensation paid for the sale of the Policies, see "Distribution of the Policies". POLICY CHARGES PREMIUM-BASED CHARGES. We deduct the following charges from premiums: -- A maximum sales charge of 5% (currently 2% in Policy year 11 and thereafter); -- A state premium tax charge of 2.5%; -- A charge for federal taxes of 1.25%. SURRENDER CHARGE. A Surrender Charge applies to a lapse, surrender, face amount reduction, or a partial withdrawal or change in death benefit option that results in a face amount reduction during the first ten Policy years, or during the first ten years following a face amount increase (nine years for issue age 90). For the first partial withdrawal in each Policy year, no Surrender Charge will apply to 10% of the cash surrender value at the time of the withdrawal. The maximum Surrender Charge equals 45% of the Target Premium. After the first Policy year (or after the first year following a face amount increase), the Surrender Charge declines ratably on a monthly basis over the remaining nine years of the Surrender Charge period until it reaches $0 in the last month of the tenth Policy year (or the tenth year following the face amount increase). We deduct the Surrender Charge from the Policy's available cash value, regardless of whether that cash value comes from premiums or investment experience. MONTHLY DEDUCTION FROM CASH VALUE. We deduct certain charges from the cash value: -- Monthly charge for the cost of insurance and for any benefits provided by rider; -- Monthly Administration and Issue Expense Charge during the first ten Policy years (and during the first ten Policy years following a face amount increase), that varies by issue age, risk class and, except for unisex Policies, sex of the insured. The monthly charge per $1000 of base Policy face amount coverage ranges from approximately 3 cents to 38 cents; -- A Face Amount Increase Administration Charge of $100 that applies to each underwritten face amount increase and is deducted from the Policy's cash value on the monthly anniversary when the increase takes place; -- Monthly Policy Charge, currently equal to $25.00 per month in the first Policy year and $6.00 per month thereafter (guaranteed not to exceed these amounts in any year); -- Monthly Asset Charge against the cash value in the Variable Account for our mortality and expense risk, currently equal to an annual rate of .60% in Policy years 1-10; .25% in Policy years 11-20; and .15% thereafter (guaranteed not to exceed .70% in Policy years 1-10; .35% in Policy years 11-20; and .25% thereafter). A-7 CHARGES DEDUCTED FROM THE ELIGIBLE FUNDS. There are daily charges against the Eligible Fund assets for investment advisory services and fund operating expenses. NEW ENGLAND ZENITH FUND (CLASS A SHARES). The following table shows the annual operating expenses for each New England Zenith Fund series, based on actual expenses for 2000, after any applicable expense cap or expense deferral arrangement:
MANAGEMENT OTHER TOTAL ANNUAL SERIES FEES EXPENSES EXPENSES ------ ---------- -------- ------------ Capital Growth.............................................. .62% .04% .66%** State Street Research Bond Income........................... .40% .07% .47% State Street Research Money Market.......................... .35% .06% .41% MFS Total Return............................................ .50% .08% .58% Westpeak Growth and Income.................................. .68% .05% .73%** Loomis Sayles Small Cap..................................... .90% .06% .96%** Harris Oakmark Mid Cap Value................................ .75% .15% .90%* Balanced.................................................... .70% .10% .80% Davis Venture Value......................................... .75% .04% .79% Alger Equity Growth......................................... .75% .04% .79% MFS Investors Trust......................................... .75% .15% .90%* MFS Research Managers....................................... .75% .15% .90%*
- ------------ * Without the applicable expense cap or expense deferral arrangement (described below), Total Series Operating Expenses for the year ended December 31, 2000 would have been: Harris Oakmark Mid Cap Value Series, .96%; MFS Investors Trust Series, 1.57%; and MFS Research Managers Series, 1.25%. ** Total annual expenses do not reflect certain expense reductions due to directed brokerage arrangements. If we included these reductions, total annual expenses would have been .65% for Capital Growth Series, .70% for Westpeak Growth and Income, and .95% for Loomis Sayles Small Cap Series. Our affiliate, MetLife Advisers, LLC (formerly New England Investment Management, LLC) advises the series of the New England Zenith Fund. MetLife Advisers voluntarily limits the expenses (other than brokerage costs, interest, taxes or extraordinary expenses) of certain series with either an expense cap or expense deferral arrangement. Under the expense cap, MetLife Advisers bears expenses of the Loomis Sayles Small Cap Series that exceed 1.00% of average daily net assets. Under the expense deferral agreement, MetLife Advisers bears expenses of the Harris Oakmark Mid Cap Value, MFS Investors Trust, and MFS Research Managers Series that exceed .90% of average daily net assets in the year the series incurs them and charges those expenses to the series in a future year if actual expenses of the series are below the limit. MetLife Advisers may end these expense limits at any time. METROPOLITAN SERIES FUND (CLASS A SHARES). MetLife Advisers is the investment manager for the Portfolios of the Metropolitan Series Fund, Inc. The Portfolios pay investment management fees to MetLife Advisers and also bear other expenses. The chart below shows the total operating expenses of the Portfolios based on the year ended December 31, 2000 and current expense subsidies (in the case of the Janus Growth Portfolio and the Franklin Templeton Small Cap Growth Portfolio, anticipated expenses for 2001) as a percentage of Portfolio net assets. A-8
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEES EXPENSES EXPENSES - --------- ---------- -------- ------------ Putnam Large Cap Growth..................................... .80% .20% 1.00%* Janus Mid Cap............................................... .66% .04% .70% Russell 2000 Index.......................................... .25% .30% .55% Putnam International Stock.................................. .90% .24% 1.14%++ MetLife Stock Index......................................... .25% .03% .28% MetLife Mid Cap Stock Index................................. .25% .20% .45%* Morgan Stanley EAFE Index................................... .30% .40% .70%* Lehman Brothers Aggregate Bond Index........................ .25% .12% .37% State Street Research Aurora Small Cap Value................ .85% .20% 1.05%* Janus Growth................................................ .80% .15% .95%* State Street Research Investment Trust...................... .47% .03% .50%** Franklin Templeton Small Cap Growth......................... .90% .15% 1.05%* Neuberger Berman Partners Mid Cap Value..................... .70% .19% .89%**
- ------------ * Without the applicable expense cap arrangement (described below), Total Annual Expenses for the year ended December 31, 2000 would have been 1.39% for the Putnam Large Cap Growth Portfolio, .83% for the MetLife Mid Cap Stock Index Portfolio, and 1.34% for the State Street Research Aurora Small Cap Value Portfolio. The Total Annual Expenses for these Portfolios are annualized since the Portfolios' start dates (May 1, 2000 for the Putnam Large Cap Growth Portfolio and July 5, 2000 for the MetLife Mid Cap Stock Index and the State Street Research Aurora Small Cap Value Portfolios). Without the applicable expense cap arrangement (described below), Total Annual Expenses for the year ended December 31, 2000 would have been .78% for the Morgan Stanley EAFE Index Portfolio. Without the applicable expense deferral arrangement (described below), the anticipated Total Annual Expenses would be 1.09% for the Janus Growth Portfolio and 1.61% for the Franklin Templeton Small Cap Growth Portfolio (annualized since their start date of May 1, 2001). ** Total Annual Expenses do not reflect certain expense reductions due to directed brokerage arrangements. If we included these reductions, Total Annual Expenses would have been .49% for the State Street Research Investment Trust Portfolio and .76% for the Neuberger Berman Partners Mid Cap Value Portfolio. ++ Until May 1, 2000, the management fee for the Putnam International Stock Portfolio was .75%. MetLife Advisers voluntarily pays expenses (other than the management fee, brokerage commissions, taxes, interest and other loan costs, and any unusual one-time expenses) of (a) the Putnam Large Cap Growth Portfolio that exceed .20% of the net assets until the earlier of (i) April 30, 2002 and (ii) the date when the Portfolio's net assets reach $100 million; (b) the State Street Research Aurora Small Cap Value Portfolio that exceed .20% of the net assets until April 30, 2002; (c) the MetLife Mid Cap Stock Index Portfolio that exceed .20% of the net assets until the earlier of (i) June 30, 2002 and (ii) the date when the Portfolio's net assets reach $100 million, but in no event earlier than April 30, 2002; (d) the Morgan Stanley EAFE Index Portfolio that exceed .40% of the net assets until the earlier of (i) April 30, 2002 and (ii) the date when the Portfolio's net assets reach $200 million; and (e) the Russell 2000 Index Portfolio that exceed .30% of the net assets until the earlier of (i) April 30, 2002 and (ii) the date when the Portfolio's net assets reach $200 million. MetLife Advisers also voluntarily pays expenses (other than brokerage commissions, taxes, interest and any extraordinary or nonrecurring expenses) that exceed .95% of the net assets of the Janus Growth Portfolio and 1.05% of the net assets of the Franklin Templeton Small Cap Growth Portfolio through April 30, 2002, in the year the Portfolio incurs them and charges those expenses to the Portfolio in a future year if the actual expenses of the Portfolio are below the limit. MetLife Advisers can terminate these arrangements at any time upon notice to the Board of Directors and to Fund shareholders. MET INVESTORS SERIES TRUST (CLASS A SHARES). The investment adviser for Met Investors Series Trust is Met Investors Advisory Corp. ("Met Investors Advisory") (formerly known as Security First Management Corp.). The Portfolios of Met Investors Series Trust pay investment management fees to Met Investors Advisory and also bear A-9 certain other expenses. The anticipated total operating expenses of the Portfolios for 2001 after any expense subsidies, as a percentage of Portfolio average net assets, are:
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEES EXPENSES EXPENSES - --------- ---------- -------- ------------ MFS Mid-Cap Growth.......................................... .62% .18% .80%* PIMCO Innovation............................................ .69% .41% 1.10%*
- ------------ * Met Investors Advisory and Met Investors Series Trust have entered into an Expense Limitation Agreement whereby for a period of at least one year from the February 12, 2001 commencement of operations, the Management Fees of the Portfolios will be limited so that Total Annual Expenses will not exceed .80% for the MFS Mid-Cap Growth Portfolio and 1.10% for the PIMCO Innovation Portfolio. Absent this Agreement, Management Fees for the period ending December 31, 2001 would be .65% for the MFS Mid-Cap Growth Portfolio and 1.05% for the PIMCO Innovation Portfolio, resulting in anticipated (annualized) Total Annual Expenses for the two Portfolios of .83% and 1.46% respectively. Under certain circumstances, any fees waived or expenses reimbursed by Met Investors Advisory may, with the approval of the Trust's Board of Trustees, be repaid to Met Investors Advisory. VIP AND VIP II (INITIAL CLASS SHARES). The investment adviser for VIP and VIP II is Fidelity Management & Research Company ("FMR"). The Portfolios of VIP and VIP II pay investment management fees to FMR and also bear other expenses. For the year ended December 31, 2000, the total operating expenses of the Portfolios, as a percentage of Portfolio average net assets, were:
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEES EXPENSES EXPENSES - --------- ---------- -------- ------------ VIP Equity-Income........................................... .48% .08% .56%* VIP Overseas................................................ .72% .17% .89%* VIP High Income............................................. .58% .10% .68% VIP II Asset Manager........................................ .53% .08% .61%
- ------------ * Total annual expenses do not reflect certain expense reductions due to directed brokerage arrangements and custodian interest credits. If we included these reductions, total annual expenses would have been .55% for VIP Equity-Income Portfolio, and .87% for VIP Overseas Portfolio. AMERICAN FUNDS INSURANCE SERIES (CLASS 2 SHARES). The investment adviser for American Funds Insurance Series is Capital Research and Management Company ("Capital Research"). The Funds of American Funds Insurance Series pay investment management fees to Capital Research and also bear certain other expenses. For the year ended December 31, 2000, the total operating expenses of each Fund, as a percentage of Fund average net assets, were:
MANAGEMENT 12B-1 OTHER TOTAL ANNUAL FUND FEES FEES EXPENSES EXPENSES - ---- ---------- ----- -------- ------------ American Funds Growth................................. .36% .25% .02% .63% American Funds Growth-Income.......................... .34% .25% .01% .60% American Funds Global Small Capitalization............ .80% .25% .06% 1.11%
An investment adviser or affiliates thereof may compensate NELICO and/or certain affiliates for administrative, distribution, or other services relating to Eligible Funds. We (or our affiliates) may also be compensated with 12b-1 fees from Eligible Funds. This compensation is based on assets of the Eligible Funds attributable to the Policies and certain other variable insurance products that we and our affiliates issue. Some funds or their advisers (or other affiliates) may pay us more than others, and the amounts paid may be significant. New England Securities may also receive brokerage commissions on securities transactions initiated by an investment adviser. See "Charges and Expenses". A-10 HOW THE POLICY WORKS PREMIUM PAYMENTS [FLOW CHART] * Flexible * Planned premium options * No Lapse Premium (in first five Policy years) * Secondary Guarantee Premium (to age 100) CHARGES FROM PREMIUM PAYMENTS * Sales Load: 5% (currently 2% in Policy years 11 and thereafter) * State Premium Tax Charge: 2.5% * Charge for Federal Taxes: 1.25% LOANS * You may borrow your cash value * Loan interest charge is 3.5%. (Currently we intend to charge 3.25% interest in Policy years 11-20 and 3.00% thereafter.) We transfer loaned funds out of the Fixed Account and the Eligible Funds into the Loan Account where we credit them with not less than 3.0% interest. RETIREMENT BENEFITS * Fixed settlement options are available for policy proceeds CASH VALUES * Net premium payments invested in your choice of Eligible Fund investments or the Fixed Account (generally after an initial period in the State Street Research Money Market Sub-Account) * The cash value reflects investment experience, interest, premium payments, policy charges and any distributions from the Policy * We do not guarantee the cash value invested in the Eligible Funds * Any earnings you accumulate are generally free of any current income taxes * You may change the allocation of future net premiums at any time. You may transfer funds among investment options (and to the Fixed Account). Currently we do not limit the number of Sub-Account transfers you can make in a Policy year. * We limit the amount of transfers from (and in some cases to) the Fixed Account * You may allocate your cash value among a maximum of 49 accounts over the life of the Policy. DEATH BENEFIT * Level or Variable Death Benefit Options * Guaranteed not to be less than face amount (less any loan and loan interest) during first five Policy years if the five-year No Lapse Premium guarantee is in effect, or until age 100 if the Secondary Guarantee Rider is in effect. * On or after age 100, equal to cash value for insureds over age 80 at issue. For insureds age 80 or younger at issue, equal to the greater of (1) cash value and (2) the lesser of the face amount on the Policy anniversary at age 80 and at age 100. * Income tax free to named beneficiary (generally) DAILY DEDUCTIONS FROM ASSETS * Investment advisory fees and other expenses are deducted from the Eligible Fund values BEGINNING OF MONTH CHARGES * We deduct the cost of insurance protection (reflecting any substandard risk or guaranteed issue rating) from the cash value each month * Any Rider Charges * Policy Fee: $25.00 per month (first year) and $6.00 per month thereafter * Administration and Issue Expense Charge: Monthly charge ranging from approximately $.03 to $.38 per $1,000 of base Policy face amount that applies during the first ten Policy years or during the first ten Policy years following a face amount increase. * Face Amount Increase Administration Charge: maximum one-time charge of $100 levied on each underwritten increase in the base Policy's face amount. * Asset Charge applied against the cash value in the Variable Account at an annual rate of .60% in Policy years 1-10; .25% in Policy years 11-20; and .15% thereafter (guaranteed not to exceed .70% in Policy years 1-10; .35% in Policy years 11-20; and .25% thereafter) SURRENDER CHARGE * Applies on lapse, surrender, face amount reduction, or partial withdrawal or change in death benefit option that results in face reduction in first ten Policy years (or in first ten Policy years following a face amount increase). Maximum charge is 45% of Target Premium in first Policy year. After first Policy year, charge reduces ratably on a monthly basis over the remaining nine years of the surrender period. LIVING BENEFITS * If policyholder has elected and qualified for benefits for disability and becomes totally disabled, we will waive monthly charges during the period of disability up to certain limits. * You may surrender the Policy at any time for its cash surrender value * Deferred income taxes, including taxes on certain amounts borrowed, become payable upon surrender * Grace period for lapsing with no value is 62 days from the first date in which Monthly Deduction was not paid due to insufficient cash value * Subject to our rules, you may reinstate a lapsed Policy within three years of date of lapse if it has not been surrendered A-11 RECEIPT OF COMMUNICATIONS AND PAYMENTS AT NELICO'S ADMINISTRATIVE OFFICE We will treat your request for a Policy transaction, or your submission of a payment, as received by us if we receive a request conforming to our administrative procedures or a payment at our Administrative Office before the close of regular trading on the New York Stock Exchange on that day. If we receive it after that time, or if the New York Stock Exchange is not open that day, then we will treat it as received on the next day when the New York Stock Exchange is open. NELICO NELICO was organized as a stock life insurance company in Delaware in 1980 and is licensed to sell life insurance in all states, the District of Columbia and Puerto Rico. Originally, NELICO was a wholly-owned subsidiary of New England Mutual Life Insurance Company ("New England Mutual"). On August 30, 1996, New England Mutual merged into Metropolitan Life Insurance Company ("MetLife"), a life insurance company whose principal office is One Madison Avenue, New York, NY 10010. MetLife then became the parent of NELICO. MetLife is a wholly-owned subsidiary of MetLife, Inc., a publicly-traded company. In connection with the merger, NELICO changed its name from "New England Variable Life Insurance Company" to "New England Life Insurance Company" and changed its domicile from the State of Delaware to the Commonwealth of Massachusetts. NELICO's Home Office is now at 501 Boylston Street, Boston, Massachusetts 02116. NELICO's mailing address is: P.O. Box 9116, Boston, Massachusetts 02117. NELICO'S Administrative Office The chart on the next page illustrates the relationship of NELICO, the Fixed Account, the Variable Account and the Eligible Funds. A-12 [FLOW CHART] NELICO (Insurance company subsidiary of MetLife) We deduct charges. We allocate net premiums and net unscheduled payments to your choice of sub-accounts in the Variable Account or to the Fixed Account. Premiums Fixed Account VARIABLE ACCOUNT Zenith Capital Growth Sub-Account Zenith State Street Research Bond Income Sub-Account Zenith State Street Research Money Market Sub-Account Zenith MFS Total Return Sub-Account Zenith Westpeak Growth and Income Sub-Account Zenith Loomis Sayles Small Cap Sub-Account Zenith Balanced Sub-Account Zenith Alger Equity Growth Sub-Account Zenith Davis Venture Value Sub-Account Zenith Harris Oakmark Mid Cap Value Sub-Account Zenith MFS Investors Trust Sub-Account Zenith MFS Research Managers Sub-Account Metropolitan Putnam Large Cap Growth Sub-Account Metropolitan Janus Mid Cap Sub-Account Metropolitan Russell 2000 Index Sub-Account Metropolitan Putnam International Stock Sub-Account Metropolitan MetLife Stock Index Sub-Account Metropolitan MetLife Mid Cap Stock Index Sub-Account Metropolitan Morgan Stanley EAFE Index Sub-Account Metropolitan Lehman Brothers Aggregate Bond Index Sub-Account Metropolitan State Street Research Aurora Small Cap Value Sub-Account Metropolitan Janus Growth Sub-Account Metropolitan State Street Investment Trust Sub-Account Metropolitan Franklin Templeton Small Cap Growth Sub-Account Metropolitan Neuberger Berman Partners Mid Cap Value Sub-Account Met Investors MFS Mid-Cap Growth Sub-Account Met Investors PIMCO Innovation Sub-Account VIP Equity-Income Sub-Account VIP Overseas Sub-Account VIP High Income Sub-Account VIP II Asset Manager Sub-Account American Funds Growth Sub-Account American Funds Growth-Income Sub-Account American Funds Global Small Capitalization Sub-Account Sub-accounts buy shares of the Eligible Funds. NEW ENGLAND ZENITH FUND Capital Growth Series State Street Research Advisors Bond Income Series State Street Research Advisors Money Market Series MFS Total Return Series Westpeak Growth and Income Series Loomis Sayles Small Cap Series Balanced Series Alger Equity Growth Series Davis Venture Value Series Harris Oakmark Mid Cap Value Series MFS Investors Trust Series MFS Research Managers Series METROPOLITAN SERIES FUND, INC. Putnam Large Cap Growth Portfolio Janus Mid Cap Portfolio Russell 2000 Index Portfolio Putnam International Stock Portfolio MetLife Stock Index Portfolio MetLife Mid Cap Stock Index Portfolio* Morgan Stanley EAFE Index Portfolio* Lehman Brothers Aggregate Bond Index Portfolio* State Street Research Aurora Small Cap Value Portfolio* Janus Growth Portfolio* State Street Research Investment Trust Portfolio* Franklin Templeton Small Cap Growth Portfolio* Neuberger Berman Partners Mid Cap Value Portfolio* MET INVESTORS SERIES TRUST MFS Mid-Cap Growth Portfolio* PIMCO Innovation Portfolio* VIP Equity-Income Portfolio Overseas Portfolio High Income Portfolio VIP II Asset Manager Portfolio AMERICAN FUNDS INSURANCE SERIES American Funds Growth Fund* American Funds Growth-Income Fund* American Funds Global Small Capitalization Fund* Eligible Funds buy portfolio investments to support values and benefits of the Policies. * Availability is subject to any necessary state insurance department approvals. A-13 THIS PROSPECTUS PROVIDES A GENERAL DESCRIPTION OF THE POLICY. POLICIES ISSUED IN YOUR STATE MAY PROVIDE DIFFERENT FEATURES AND BENEFITS FROM, AND IMPOSE DIFFERENT COSTS THAN, THOSE DESCRIBED IN THIS PROSPECTUS. YOUR ACTUAL POLICY AND ANY ENDORSEMENTS ARE THE CONTROLLING DOCUMENTS. YOU SHOULD READ THE POLICY CAREFULLY FOR ANY VARIATIONS IN YOUR STATE. POLICY VALUES AND BENEFITS DEATH BENEFIT If the insured dies while the Policy is in force, we pay a death benefit to the beneficiary. DEATH BENEFIT OPTIONS--TO AGE 100. When you apply for a Policy, you choose between two death benefit options. The Option A (Face Amount) death benefit is equal to the face amount of the Policy. The Option A death benefit is fixed, subject to increases required by the Internal Revenue Code of 1986 (the "Code"). The Option B (Face Amount Plus Cash Value) death benefit is equal to the face amount of the Policy, plus the Policy's cash value, if any. The Option B death benefit is also subject to increases required by the Internal Revenue Code. CHOICE OF TAX TEST. The Internal Revenue Code requires the Policy's death benefit to be not less than an amount defined in the Code. As a result, if the cash value grows to certain levels, the death benefit increases to satisfy tax law requirements. When you apply for your Policy, you select which tax test will apply to the death benefit. You will choose between: (1) the guideline premium test, and (2) the cash value accumulation test. The test you choose at issue cannot be changed. Under the GUIDELINE PREMIUM TEST, the death benefit will not be less than the cash value times the guideline premium factor. See Appendix F. Under the CASH VALUE ACCUMULATION TEST, the death benefit will not be less than the cash value times the net single premium factor set by the Code. Net single premium factors are based on the age, smoking status, underwriting class and sex of the insured at the time of the calculation. Sample net single premium factors appear in Appendix F. If cash value growth in the later Policy years is your main objective, the guideline premium test may be the appropriate choice because it does not require as high a death benefit as the cash value accumulation test, and therefore cost of insurance charges may be lower, once the Policy's death benefit is subject to increases required by the Code. If you select the cash value accumulation test, you can generally make a higher amount of premium payments for any given face amount, and a higher death benefit may result in the long term. If cash value growth in the early Policy years is your main objective, the cash value accumulation test may be the appropriate choice because it allows you to invest more premiums in the Policy for each dollar of death benefit. TERM RIDER "IN" OR "OUT". If you add a Supplemental Coverage Term Rider to your Policy at issue, we will add the face amount of the rider to the face amount of the base Policy when we calculate the Policy death benefit under your chosen death benefit option ("Inside Term"). If you add a Convertible Supplemental Coverage Term Rider to your Policy at issue, we will not include the rider face amount in the calculation of the Policy death benefit but will simply add the face amount of the rider to the Policy proceeds ("Outside Term"). You may not select both Supplemental Coverage Term and Convertible Supplemental Coverage Term or change from one to the other. If you choose Supplemental Coverage Term, the Policy may have greater potential for the cash value to grow relative to the death benefit. If you choose Convertible Supplemental Coverage Term, the Policy may have greater potential for higher Policy proceeds relative to the cash value. Also, you may be able to convert Convertible Supplemental Coverage Term (but not Supplemental Coverage Term) to permanent insurance. If you choose Convertible Supplemental Coverage Term, any death benefit increases required by the Code will be triggered earlier than would be the case with Supplemental Coverage Term. These increases lead to higher Monthly Deductions. A-14 AGE 100. If the death benefit is payable on or after the insured's attained age 100, the death benefit will be: -- the cash value on the date of death, if the insured was older than 80 at issue, or -- the greater of (1) the cash value on the date of death, and (2) the lesser of the face amount of the Policy on the Policy anniversary when the insured was 80 and the face amount on the Policy anniversary when the insured is 100, if the insured was 80 or younger at issue. For Policies issued in New York, your Policy will mature at age 100 for the net cash value. SECONDARY GUARANTEE RIDER. If available in your state, you may choose at issue the Secondary Guarantee Rider. If you choose this benefit, we determine whether the Secondary Guarantee is in effect on the first day of each Policy month until the insured reaches age 100. If the Secondary Guarantee is in effect, the Policy will not lapse even if the cash surrender value is less than the Monthly Deduction for that month. However, any shortfall will, in effect, cause your cash surrender value to have a negative balance. During any period in which your Policy has negative cash value, no earnings will be credited to the Policy. If a negative cash surrender value balance is not restored, then upon termination of the guarantee period, you will have to pay an amount sufficient to cover the accumulated outstanding Monthly Deductions, in addition the amount you are required to pay to prevent lapse at the end of the grace period, in order to keep the Policy in force. (See "Premiums".) On the first day of a Policy month, if the total premiums you have paid, less all partial withdrawals and any outstanding Policy loan and loan interest (and less any cash value paid to you to allow the Policy to continue to qualify as life insurance), are at least equal to the sum of the Secondary Guarantee Premiums for each monthly anniversary since the Policy Date, then the guarantee will apply for that month. If your total premiums paid do not equal this amount, you will have a grace period of 62 days from the first day of the Policy month to pay a premium sufficient to keep the guarantee in force. If we do not receive this amount, the rider will terminate and the guarantee provided by the rider will no longer apply. We will restrict any premium payment that would cause the Policy to fail to meet the definition of a life insurance contract under the Internal Revenue Code. This limitation will not cause the Secondary Guarantee Rider to terminate. When testing whether the guarantee is in effect, we use each Secondary Guarantee Premium that applied to the Policy for the period of time it was in effect. If you choose this rider, the Monthly Deduction will include a charge for the rider until the insured reaches age 100, unless the rider terminates before then. The rider will also terminate upon request or in the event of the following: -- death of the insured -- termination of the Policy -- change of insured -- addition of a term rider on the life of someone other than the insured, if you have selected the guideline premium test for the Policy. DEATH PROCEEDS PAYABLE The death proceeds we pay are equal to the death benefit on the date of the insured's death, reduced by any outstanding loan and accrued loan interest on that date. If the death occurs during the grace period, we reduce the proceeds by the amount due, to cover unpaid Monthly Deductions to the date of death. (See "Lapse and Reinstatement".) We increase the death proceeds (1) by any rider benefits payable and (2) by any cost of insurance charge made for a period beyond the date of death. We may adjust the death proceeds if the insured's age or sex was misstated in the application, if death results from the insured's suicide within two years (less in some states) from the Policy's date of issue, or if a rider limits the death benefit. (See "Limits to NELICO's Right to Challenge the Policy"). A-15 CHANGE IN DEATH BENEFIT OPTION After the first Policy year, you may change your death benefit option by written request to our Administrative Office. The change will be effective on the monthly anniversary on or following the date we receive your request. We may require proof of insurability. A change in death benefit option may have tax consequences. If you change from Option A (Face Amount) to Option B (Face Amount Plus Cash Value), we reduce the Policy's face amount if necessary so that the death benefit is the same immediately before and after the change. A face amount reduction below $50,000 requires our consent. If we reduce the face amount, we will first reduce any prior increases in face amount that you applied for, in the reverse order in which the increases occurred, then the face amount of any Supplemental Term Coverage Rider, then the initial face amount (including any increase in face amount from a prior change in death benefit option), but not below the Policy minimum, and finally the face amount of any Adjustable Benefit Term Rider. A partial withdrawal of cash value may be necessary to meet Federal tax law limits on the amount of premiums that you can pay into the Policy. A Surrender Charge will apply to a Policy face amount reduction or partial withdrawal that reduces the face amount on a change from Option A to Option B. If you change from Option B (Face Amount Plus Cash Value) to Option A (Face Amount), we increase the Policy's face amount, if necessary, so that the death benefit is the same immediately before and after the change. CASH VALUE Your Policy's total cash value includes its cash value in the Variable Account and in the Fixed Account. If you have a Policy loan, the cash value also includes the amount we hold in the Loan Account as a result of the loan. The cash value reflects: -- net premium payments -- the net investment experience of the Policy's Sub-Accounts -- interest credited to cash value in the Fixed Account -- interest credited to amounts held in the Loan Account for a Policy loan -- the death benefit option you choose -- Policy charges -- partial withdrawals -- transfers among the Sub-Accounts and the Fixed Account. We pay you the cash surrender value if you surrender the Policy. It equals the cash value minus any outstanding Policy loan (plus interest) and any Surrender Charge that applies. (See "Loan Provision", "Surrender Charge", and "Monthly Deduction from Cash Value".) The Policy's cash value in the Variable Account may increase or decrease daily depending on net investment experience. Poor investment experience can reduce the cash value to zero. YOU HAVE THE ENTIRE INVESTMENT RISK FOR THE CASH VALUE IN THE VARIABLE ACCOUNT. The Policy's total cash value in the Variable Account equals the number of accumulation units credited in each Sub-Account multiplied by that Sub-Account's accumulation unit value. We convert any premium, interest earned on loan cash value, or cash value allocated to a Sub-Account into accumulation units of the Sub-Account. Surrenders, partial withdrawals, Policy loans, transfers and charges deducted from the cash value reduce the number of accumulation units credited in a Sub-Account. We determine the number of accumulation units by dividing the dollar amount of the transaction by the Sub-Account's accumulation unit value next determined following the transaction. (In the case of an initial premium, we use the accumulation unit value on the investment start date). The accumulation unit value of a Sub-Account depends on the net investment experience of its corresponding Eligible Fund and reflects fees and expenses of the Eligible Fund. We determine the accumulation unit value as of the close of regular trading on the New York Stock Exchange on each day that the Exchange is open for trading by multiplying the most recent accumulation unit value by the net investment factor ("NIF") for that day (see below). A-16 The NIF for a Sub-Account reflects: -- the change in net asset value per share of the corresponding Eligible Fund (as of the close of regular trading on the Exchange) from its last value, -- the amount of dividends or other distributions from the Eligible Fund since the last determination of net asset value per share, and -- any deductions for taxes that we make from the Variable Account. The NIF can be greater or less than one. ALLOCATION OF NET PREMIUMS Your cash value is held in the general account of NELICO or an affiliate until we issue the Policy. We credit the first net premium with net investment experience equal to that of the State Street Research Money Market Sub-Account from the investment start date until the day we apply the initial premium to the Policy (in states that require a refund of premiums if you exercise the Right to Examine Policy provision, until 15 days after we apply the initial premium to the Policy). (The "investment start date" is defined below.) Then, we allocate the cash value to the Sub-Accounts and/or the Fixed Account as you choose. You can allocate to a cumulative maximum of 49 accounts (including the Fixed Account) over the life of the Policy. We may limit your initial selection to 25 accounts. AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY INVESTMENT START DATE. The investment start date is the later of: the date when we first receive a premium payment for the Policy and the Policy Date. (For this purpose, receipt of the premium payment means receipt by your registered representative, if the payment is made with the application; otherwise, it means the earlier of receipt by our Administrative Office or by a NELICO agency.) PREMIUM WITH APPLICATION. If you make a premium payment with the application, the Policy Date is generally the later of the date Part II (if any) of the application is signed and receipt of the premium payment. In that case, the Policy Date and investment start date are the same. The amount of premium paid with the application must be at least 10% of the annual Planned Premium for the Policy. You may only make one premium payment before the Policy is issued. When the Policy is delivered to you, you will need to pay any remaining monthly No Lapse Premiums for the period between the Policy Date and the delivery date. (See "Premiums".) If you make a premium payment with the application, we will cover the insured under a temporary insurance agreement for a limited period that usually begins when we receive the premium for the Policy (or, if later, on the date when Part II of the application is signed). The maximum temporary coverage is the lesser of the amount of insurance applied for and $500,000 for standard and preferred risks ($250,000 for substandard risks and $50,000 for persons who are determined to be uninsurable). We may increase these limits. These provisions vary in some states. If we issue a Policy, Monthly Deductions begin from the Policy Date, even if we delayed the Policy's issuance for underwriting. The deductions are for the face amount of the Policy issued, even if the temporary insurance coverage during underwriting was for a lower amount. If we decline an application, we refund the premium payment made. PREMIUM ON DELIVERY. If you pay the initial premium on delivery of the Policy, the Policy Date is generally up to 30 days after issue. When you receive the Policy, you will have an opportunity to redate it to a current date. The investment start date is the later of the Policy Date and the date we received the premium. Monthly Deductions begin on the Policy Date. Insurance coverage under the Policy begins when we receive the monthly No Lapse Premiums for the period since the Policy Date. BACKDATING. We may sometimes backdate a Policy, if you request, by assigning a Policy Date earlier than the date the application is signed. You may wish to backdate so that you can obtain lower cost of insurance rates, based on a younger insurance age. For a backdated Policy, you must also pay the No Lapse Premiums due for the period between the Policy Date and the investment start date. As of the investment start date, we allocate to the Policy those net premiums, adjusted for monthly Policy charges. A-17 RIGHT TO EXAMINE POLICY You may cancel the Policy or an increase in face amount within ten days (more in some states) after you receive it. You may return the Policy or face amount increase to us or your registered representative. Insurance coverage ends as soon as you return the Policy (determined by postmark, if the Policy is mailed). If you cancel the Policy, we refund any premiums paid (or any other amount that is required by state insurance law). If you return an increase in face amount, it is cancelled from its beginning, and we will return to your cash value the Monthly Deductions for the increase, as well as the Face Amount Increase Administration Charge. CHARGES AND EXPENSES The amount of a charge may not necessarily correspond to the costs of the services or benefits that are implied by the name of the charge or that are associated with the particular Policy. For example, the sales charge and surrender charge may not fully cover all of our sales and distribution expenses, and we may use proceeds from other charges, including the mortality and expense risk charge and the cost of insurance charge, to help cover those expenses. We can profit from certain Policy charges. DEDUCTIONS FROM PREMIUMS We deduct a 5% sales charge from premiums. The sales charge is currently 2% rather than 5% for premiums paid in Policy year 11 and thereafter. We may reduce sales charges for Policies sold to some group or sponsored arrangements. We offer a program under which you may exchange certain fixed-benefit life insurance policies that New England Mutual issued for the Policy without a deduction for the sales charge from the amount of cash value that you transfer to the Policy. We may also offer a similar exchange program for certain policies issued by our affiliates. Eligibility conditions apply. Your registered representative can advise you regarding terms and availability of these programs. STATE PREMIUM TAX CHARGE. We deduct 2.5% from each premium for state premium taxes and administrative expenses. Premium taxes vary from state to state and the 2.5% charge reflects an average. Administrative expenses covered by this charge include those related to premium tax and certain other state filings. FEDERAL PREMIUM TAX CHARGE. We deduct 1.25% from each premium for our federal income tax liability related to premiums. EXAMPLE: The following chart shows the net amount that we would allocate to the Variable Account assuming a premium payment of $2,000 (in the first ten Policy years).
NET PREMIUM PREMIUM - ------- ------- $2,000 $2,000 - 175 (8.75% X 2,000 = total sales and premium tax charge) ------- $1,825 Net Premium
SURRENDER CHARGE If, during the first ten Policy years, or during the first ten years following a face amount increase, you surrender or lapse your Policy, reduce the face amount, or make a partial withdrawal or change in death benefit option that reduces the face amount, then we will deduct a Surrender Charge from the cash value. (For insureds whose issue age is 90 at issue of the Policy, the Surrender Charge period is nine years.) The maximum Surrender Charge is shown in your Policy. For the first partial withdrawal in each Policy year, no Surrender Charge will apply to 10% of the cash surrender value at the time of the withdrawal (or, if less, the amount of the partial withdrawal). A-18 We base the Surrender Charge on a percentage of the Target Premium. The Surrender Charge that applies during the first Policy year is equal to 45% of ---------------------------- the Target Premium. After the first Policy year, the Surrender Charge declines ratably on a monthly basis until it reaches $0 in the last month of the tenth Policy year. EXAMPLES -- SURRENDER CHARGES
HYPOTHETICAL MAXIMUM SURRENDER INSURED TARGET PREMIUM CHARGE ------- --------------------------- ----------------- Male, Age 40 Nonsmoker Preferred Face Amount $500,000 Female, Age 45 Smoker Preferred Face Amount $100,000 Male, Age 55 Smoker Standard Face Amount $1,000,000
The table below shows the maximum Surrender Charge that applies to the Policy. The table shows the charge that applies if the lapse, surrender or face reduction occurs in any month of Policy year one and in the last month of Policy years two through ten.
THE MAXIMUM SURRENDER FOR POLICIES WHICH ARE CHARGE IS THE FOLLOWING SURRENDERED, LAPSED OR PERCENTAGE OF ONE REDUCED DURING TARGET PREMIUM ---------------------- ----------------------- Entire Policy Year 1 45% Last Month of Policy Years 2 40% 3 35% 4 30% 5 25% 6 20% 7 15% 8 10% 9 5% 10 0%
In the case of a face amount reduction or a partial withdrawal or change in death benefit option that results in a face amount reduction, we deduct any Surrender Charge that applies from the Policy's remaining cash value in an amount that is proportional to the amount of the Policy's face amount surrendered. (See "Reduction in Face Amount," "Partial Withdrawal" and "Change in Death Benefit Option".) The charge reduces the Policy's cash value in the Sub-Accounts and the Fixed Account in proportion to the amount of the Policy's cash value in each. However, if you designate the accounts from which a partial withdrawal is to be taken, the charge will be deducted proportionately from the cash value of the designated accounts. A-19 MONTHLY DEDUCTION FROM CASH VALUE On the first day of each Policy month, starting with the Policy Date, we deduct the "Monthly Deduction" from your cash value. -- If your Policy is protected against lapse by the five year No Lapse Premium guarantee or the Secondary Guarantee Rider, we make the Monthly Deduction each month regardless of the amount of your cash surrender value. If your cash surrender value is insufficient to pay the Monthly Deduction in any month, your Policy will not lapse, but the shortfall will, in effect, cause your cash surrender value to have a negative balance. During any period in which your Policy has negative cash value, no earnings will be credited to the Policy. If a negative cash surrender value balance is not restored, then upon termination of the guarantee period, you will have to pay an amount sufficient to cover the accumulated outstanding Monthly Deductions, in addition to the amount you are required to pay to prevent lapse at the end of the grace period, in order to keep the Policy in force. (See "Premiums".) -- If the five year No Lapse Premium guarantee or the Secondary Guarantee Rider is not in effect, and the cash surrender value is not large enough to cover the entire Monthly Deduction, we will make the deduction to the extent cash value is available, but the Policy will be in default, and it may lapse. (See "Lapse and Reinstatement".) There is no Monthly Deduction on or after the Policy anniversary when the insured attains age 100. The Monthly Deduction reduces the cash value in each Sub-Account of the Variable Account and in the Fixed Account in proportion to the cash value in each. However, you may request that we charge the Monthly Deduction to a specific Sub-Account of the Variable Account or to the Fixed Account. If, in any month, the designated account has insufficient cash surrender value to satisfy the Monthly Deduction, we will charge the Monthly Deduction to all Sub-Accounts and, if applicable, the Fixed Account, in proportion to the cash value in each. The Monthly Deduction includes the following charges: POLICY CHARGE. The Policy Charge is currently equal to $25.00 per month in the first Policy year and $6.00 per month thereafter (guaranteed not to exceed these amounts in any year). ADMINISTRATION AND ISSUE EXPENSE CHARGE. During the first ten Policy years, and during the first ten Policy years following a face amount increase, we impose a monthly charge for the costs of underwriting, issuing (including sales commissions), and administering the Policy or the face amount increase. The monthly charge per $1000 of base Policy face amount coverage ranges from approximately 3 cents to 38 cents, and varies by the insured's issue age and underwriting class (at the time the Policy or a face amount increase is issued), and, except for unisex Policies, the insured's sex. In addition, each time there is an underwritten increase in the face amount of the base Policy, we deduct a one-time Face Amount Increase Administration Charge of $100 from the Policy's cash value on the monthly anniversary when the increase takes place. MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of providing insurance protection under your Policy. The cost of insurance charge for a Policy month is equal to the "amount at risk" under the Policy, multiplied by the cost of insurance rate for that Policy month. We determine the amount at risk on the first day of the Policy month after we process the Monthly Deduction, except for the cost of insurance and Waiver of Monthly Deduction Rider charges. The amount at risk is the amount by which the death benefit (generally discounted at the monthly equivalent of 3% per year) exceeds the Policy's cash value. The cost of insurance rate for your Policy may change from month to month. A-20 The guaranteed cost of insurance rates for a Policy depend on the insured's -- smoking status -- substandard rating -- age on the first day of the Policy year -- sex (if the Policy is sex-based). The current cost of insurance rates will also depend on -- underwriting class -- the insured's age at issue (and at the time of any face amount increase) -- the Policy year (and the year of any face amount increase). We guarantee that the rates for underwritten Policies will not be higher than rates based on -- the 1980 Commissioners Standard Ordinary Mortality Tables (the "1980 CSO Tables") with smoker/nonsmoker modifications, for Policies issued on non-juvenile insureds (age 18 and above at issue) -- the 1980 Nonsmoker CSO Tables, for Policies issued on juvenile insureds (below age 18 at issue). The actual rates we use may be lower than the maximum rates, depending on our expectations about our future mortality and expense experience, lapse rates, taxes and investment earnings. We review the adequacy of our cost of insurance rates and other non-guaranteed charges periodically and may adjust them. Any change will apply prospectively. The underwriting classes we use are -- for Policies issued on non-juvenile insureds: preferred smoker, standard smoker, substandard smoker, preferred nonsmoker, standard nonsmoker, substandard nonsmoker, guaranteed issue smoker and guaranteed issue nonsmoker -- for Policies issued on juvenile insureds: standard and substandard. Substandard and guaranteed issue ratings result in higher cost of insurance deductions. We base the guaranteed maximum mortality charges for substandard ratings on multiples of the 1980 CSO Tables. (See below for a discussion of guaranteed issue Policies.) The following standard or better smoker and non-smoker classes are available for underwritten Policies: -- elite nonsmoker for Policies with total face amounts (base Policy plus Supplemental Coverage or Convertible Supplemental Coverage Term Riders) of $250,000 or more where the issue age is 18 through 80; -- preferred smoker and preferred nonsmoker for Policies with total face amounts (base Policy plus Supplemental Coverage or Convertible Supplemental Coverage Term Riders) of $100,000 or more where the issue age is 18 through 80; -- standard smoker and standard nonsmoker for Policies with total face amounts (base Policy plus Supplemental Coverage or Convertible Supplemental Coverage Term Riders) of $50,000 or more where the issue age is 18 through 90. The elite nonsmoker class offers the best current cost of insurance rates, and the preferred classes generally offer better current cost of insurance rates than the standard classes. Cost of insurance rates are generally lower for nonsmokers than for smokers and generally lower for females than for males. Within a given underwriting class, cost of insurance rates are generally lower for insureds with lower issue ages. Where required by state law, and for Policies sold in connection with some employee benefit plans, cost of insurance rates (and Policy values and benefits) do not vary based on the sex of the insured. A-21 We may offer Policies on a guaranteed issue basis to certain group or sponsored arrangements. The classes available are guaranteed issue smoker and guaranteed issue nonsmoker. We issue these Policies up to predetermined face amount limits. Because we issue these Policies based on minimal underwriting information, they may present a greater mortality cost to us than Policies in a standard class. Therefore, these Policies have their own cost of insurance rates. The cost of insurance rates are guaranteed not to exceed 100% of the 1980 CSO Tables (with smoker/nonsmoker modifications for non-juvenile insureds). Generally the current guaranteed issue rates will exceed current cost of insurance rates for a comparable underwritten Policy. Some group or sponsored arrangements may be eligible to purchase Policies on a simplified underwriting basis. They may elect simplified underwriting instead of guaranteed issue or for amounts of insurance above our guaranteed issue limits. However, they may not choose guaranteed issue for some members of the group and simplified underwriting for others. There is no extra insurance charge for Policies issued on a simplified underwriting basis. CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. We charge for the cost of any additional rider benefits as described in the rider form. We also may charge you a nominal fee, which we will bill directly to you, if you request a Policy re-issue or re-dating. ASSET CHARGE. We charge for our mortality and expense risks. Currently, the charge is made monthly at an annual rate of .60% in Policy years 1 through 10; .25% in Policy years 11 through 20; and .15% thereafter. The charge is guaranteed not to exceed .70% in Policy years 1 through 10; .35% in Policy years 11 through 20; and .25% thereafter. The mortality risk we assume is that insureds may live for shorter periods of time than we estimated. The expense risk is that our costs of issuing and administering the Policies may be more than we estimated. CHARGES AGAINST THE ELIGIBLE FUNDS AND THE SUB-ACCOUNTS OF THE VARIABLE ACCOUNT CHARGES FOR INCOME TAXES. We currently do not charge the Variable Account for income taxes, but in the future we may make such a charge, if appropriate. We have the right to make a charge for any taxes imposed on the Policies in the future. (See "NELICO's Income Taxes".) ELIGIBLE FUND EXPENSES. Charges for investment advisory fees and other expenses are deducted from the assets of the Eligible Funds. (See the "Policy Charges" section under "Introduction to the Policies.") GROUP OR SPONSORED ARRANGEMENTS We may issue the Policies to group or sponsored arrangements, as well as on an individual basis. A "group arrangement" includes a situation where a trustee, employer or similar entity purchases individual Policies covering a group of individuals. Examples of such arrangements are non-tax qualified deferred compensation plans. A "sponsored arrangement" includes a situation where an employer or an association permits group solicitation of its employees or members for the purchase of individual Policies. We may waive, reduce or vary any Policy charges under Policies sold to a group or sponsored arrangement. We may also raise the interest rate credited to loaned amounts under these Policies. The amount of the variations and our eligibility rules may change from time to time. In general, they reflect cost savings over time that we anticipate for Policies sold to the eligible group or sponsored arrangements and relate to objective factors such as the size of the group, its stability, the purpose of the funding arrangement and characteristics of the group members. These variations of charges do not apply to Policies sold in New York other than Policies sold to non-tax qualified deferred compensation plans of various types. Consult your registered representative for any variations that may be available and appropriate for your case. The United States Supreme Court has ruled that insurance policies with values and benefits that vary with the sex of the insured may not be used to fund certain employee benefit programs. Therefore, we offer Policies that do not vary based on the sex of the insured to certain employee benefit programs. We recommend that employers consult an attorney before offering or purchasing the Policies in connection with an employee benefit program. A-22 PREMIUMS FLEXIBLE PREMIUMS Within limits, you choose the amount and frequency of premium payments. You select a Planned Premium schedule, which is a level amount. This schedule appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR POLICY IN FORCE. You may skip Planned Premium payments or make additional payments. Additional payments could be subject to underwriting. No payment can be less than $10. You can pay Planned Premiums on an annual, semi-annual or quarterly schedule or, with our consent, monthly. You can change your Planned Premium schedule by sending your request to us. However, an increase in the amount of your Planned Premium may require our consent. You may make payments by check or money order. We will send premium notices for annual, semi-annual or quarterly Planned Premiums. You may also choose to have us withdraw your premium payments from your bank checking account or Nvest Cash Management Trust account. (This is known as the Master Service Account arrangement.) You may not make premium payments on or after the Policy anniversary when the insured reaches age 100, except for premiums required during the grace period. If any payments under the Policy exceed the "7-pay limit" under Federal tax law, your Policy will become a "Modified Endowment Contract" and you may have more adverse tax consequences with respect to certain distributions than would otherwise be the case if premium payments did not exceed the "7-pay limit". (See "Tax Considerations".) In addition, if you have selected the guideline premium test, Federal tax law limits the amount of premiums that you can pay under the Policy. You need our consent if, because of tax law requirements, a payment would increase the Policy's death benefit by more than it would increase cash value. We may require evidence of insurability before accepting the payment. We allocate net payments to your Policy's Sub-Accounts as of the date we receive the payment. (See "Receipt of Communications and Payments at NELICO's Administrative Office".) Under our current processing, unless you instruct us otherwise in writing, we treat a payment that is greater than the amount billed, first, as a payment of loan interest due, and second, as a premium payment. If a payment is less than the amount billed, we treat the entire payment as a premium payment. If the payment is equal to the amount billed, we apply the payment to premium and loan interest as set forth in the bill. We do not treat a payment as repayment of a Policy loan unless you instruct us to. If you have a Policy loan, it may be better to repay the loan than to make a premium payment, because the premium payment is subject to sales and tax charges, whereas the loan repayment is not subject to any charges. (See "Loan Provision" and "Deductions from Premiums".) Two types of premium payment levels can protect your Policy against lapse (1) for the first five Policy years, and (2) until age 100 of the insured. FIRST FIVE POLICY YEARS. In general, if you pay the five-year No Lapse Monthly Premium amount on time, the Policy will not lapse even if the cash surrender value is less than the Monthly Deduction in any month. If (a) the total premiums you have paid, less all partial withdrawals and any outstanding Policy loan balance and loan interest (and less any cash value paid to you to allow the Policy to continue to qualify as life insurance), at least equal (b) the total No Lapse Monthly Premiums for the Policy up to that Policy month, the Policy will not lapse. The guarantee will not apply if you reinstate the Policy. We recalculate the No Lapse Premium if (1) you change the face amount, (2) you add, delete or change rider coverage, (3) the rating classification for your Policy is changed, (4) we correct a misstatement of the insured's age or sex, or (5) you change the insured. The No Lapse Annual Premium is shown in your Policy. The No Lapse Monthly Premium is one twelfth of the No Lapse Annual Premium. TO AGE 100. In general, if you choose the Secondary Guarantee Rider and pay the Secondary Guarantee Premiums on time, the Policy will stay in force until the insured reaches age 100. Your total premium payments A-23 (less any partial withdrawals, outstanding Policy loans, loan interest, and cash value paid to you to allow the Policy to continue to qualify as life insurance) must meet the requirements of the rider. We recalculate the Secondary Guarantee Premium if: -- you change your death benefit option -- you increase or decrease the face amount -- you increase or add rider coverage -- a correction is made in the age or sex of the insured -- the underwriting class of the Policy is changed. If your Policy is protected against lapse by the five year No Lapse Premium guarantee or the Secondary Guarantee Rider, we make the Monthly Deduction regardless of the amount of your cash surrender value. If your cash surrender value is insufficient to pay the Monthly Deduction in any month, your Policy will not lapse, but the shortfall will, in effect, cause your cash surrender value to have a negative balance. During any period in which your Policy has negative cash value, no earnings will be credited to the Policy. If a negative cash surrender value balance is not restored, then upon termination of the guarantee period, you will have to pay an amount sufficient to cover the accumulated outstanding Monthly Deductions, in addition to the amount you are required to pay to prevent lapse at the end of the grace period, in order to keep the Policy in force. LAPSE AND REINSTATEMENT LAPSE. Unless your Policy is protected by the Secondary Guarantee Rider or by the five-year No Lapse Premium guarantee, any month that your Policy's cash surrender value is not large enough to cover a Monthly Deduction, your Policy will be in default. Your Policy provides a 62 day grace period for payment of a premium large enough to pay the amount due. The amount due is the least of: a premium large enough to cover the Monthly Deduction and all deductions from the premium; a premium large enough to satisfy the Secondary Guarantee Rider requirement, if the Policy has the rider; and a premium large enough to meet the five-year No Lapse Monthly Premium test. We will tell you the amount due. You have insurance coverage during the grace period, but if the insured dies before you have paid the premium, we deduct from the death proceeds the amount due for the period before the date of death. If you have not paid the required premium by the end of the grace period, your Policy will lapse without value. REINSTATEMENT. If your Policy has lapsed, in most states you may reinstate it within three years after the date of lapse if the insured has not attained age of 100. If more than three years have passed, you need our consent to reinstate. Reinstatement in all cases requires payment of certain charges described in the Policy and usually requires evidence of insurability that is satisfactory to us. If we deducted a Surrender Charge on lapse, we credit it back to the Policy's cash value on reinstatement. The Surrender Charge on the date of reinstatement is the same as it was on the date of lapse. When we determine the Surrender Charge and other charges except cost of insurance and the Policy loan interest rate, we do not count the amount of time that a Policy was lapsed. Some states may require a different grace period than that described above. Please read the grace period provision of your Policy for details. OTHER POLICY FEATURES INCREASE IN FACE AMOUNT You may increase the Policy's face amount. We require satisfactory evidence of insurability, and the insured's attained age must not exceed the maximum age at which we currently offer new insurance for the amount of the increase. The minimum amount of increase permitted is $10,000 ($20,000 for Policies issued in New York or for A-24 insureds aged 90.). The increase is effective on the monthly anniversary on or next following our receipt of a completed request. A Face Amount Increase Administration Charge of $100 applies to each underwritten face amount increase, and is deducted from the Policy's cash value on the monthly anniversary when the increase takes effect. The face amount increase will have its own Target Premium, as well as its own Surrender Charge, monthly Administration and Issue Expense Charge rates, current cost of insurance rates, and Right to Examine Policy and suicide and contestability periods as if it were a new Policy. When calculating the monthly cost of insurance charge, we attribute the Policy's cash value first to the initial face amount, then to the Supplemental Coverage Term Rider, then to the Adjustable Benefit Term Rider, and finally to any face amount increases in the order in which they were issued, for purposes of determining the net amount at risk. LOAN PROVISION You may borrow all or part of the Policy's "loan value". We make the loan as of the date when we receive a loan request. (See "Receipt of Communications and Payments at NELICO's Administrative Office".) You should contact our Administrative Office or your registered representative for information on loan procedures. The Policy's loan value equals: (i) the Policy's cash value; minus (ii) the Policy's Surrender Charge; minus (iii) the amount of the most recent Monthly Deduction, times the number of Policy months to the earlier of the next Planned Premium due date and the next Policy anniversary; plus (iv) interest at an annual rate of 3% to the next Policy anniversary; minus (v) loan interest to the next Policy anniversary; minus (vi) any outstanding Policy loans. EXAMPLE: Using the Policy illustrated on page A- assume that the Policy's Planned Premiums have been paid and that the Policy's Sub-Accounts have earned a constant 6% hypothetical gross annual rate of return (equal to a constant net annual rate of return of %). After the premium payment on the 10th Policy anniversary, the maximum amount that you could borrow (if there are no outstanding loans) would be determined as follows under an annual premium payment schedule:
ANNUAL ------ ------ (1) Cash Value after Premium Payment on 10th Policy Anniversary............................................... (2) Cash Value Reduced by the Policy's Surrender Charge.... (3) Amount Calculated in (2), Reduced by the Most Recent Monthly Deduction Times the Number of Policy Months to the Earlier of the Next Planned Premium Due Date and the Next Policy Anniversary............................ (4) Amount Calculated in (3), Plus Interest at an Annual Rate of Return of 3% to the 11th Policy Anniversary............................... (5) Amount Calculated in (4), Reduced by Loan Interest to the Next Policy Anniversary............................
A Policy loan reduces the Policy's cash value in the Sub-Accounts by the amount of the loan. A loan repayment increases the cash value in the Sub-Accounts by the amount of the repayment. Unless you request otherwise, we attribute Policy loans to the Sub-Accounts of the Variable Account and the Fixed Account in proportion to the cash value in each. We transfer cash value equal to the amount of the loan from the Sub-Accounts and the Fixed Account to the appropriate Loan Sub-Account within the Loan Account (which is part of NELICO's general account). The Loan Account has a Loan Sub-Account that corresponds to each Sub-Account of the Variable Account and the Fixed Account. A-25 When you make a loan repayment, we transfer an amount of cash value equal to the repayment from the Loan Account to the Sub-Accounts of the Variable Account and to the Fixed Account in the same proportion that the cash value in each Loan Sub-Account bears to the total cash value in the Loan Account. We guarantee that the interest rate charged on Policy loans will not be more than 3.50% per year. Currently, we charge: -- 3.5% in Policy years 1-10 -- 3.25% in Policy years 11-20 -- 3.00% in Policy years 21+. Policy loan interest is due and payable annually on each Policy anniversary. If not paid when due, we add the interest accrued to the loan amount, and we transfer an amount of cash value equal to the unpaid interest from the Sub-Accounts and the Fixed Account to the appropriate Loan Sub-Accounts in the same manner as a new loan. Cash value in the Loan Account earns interest at not less than 3% per year and is transferred on each Policy anniversary to the Sub-Accounts of the Variable Account and to the Fixed Account in the same proportion that the cash value in each Loan Sub-Account bears to the total cash value in the Loan Account. The interest credited will also be transferred: (1) when you take a new loan; (2) when you make a full or partial loan repayment; and (3) when the Policy enters the grace period. The amount taken from the Policy's Sub-Accounts as a result of a loan does not participate in the investment experience of the Sub-Accounts. Therefore, loans can permanently affect the death benefit and cash value of the Policy, even if repaid. In addition, we reduce any proceeds payable under a Policy by the amount of any outstanding loan plus accrued interest. If a Policy loan is outstanding, it may be better to repay the loan than to pay a premium, because the payment is subject to sales and premium tax charges, and the loan repayment is not subject to charges. (See "Deductions from Premiums".) Although the issue is not free from doubt, we believe that a loan from or secured by a Policy that is not classified as a Modified Endowment Contract should generally not be treated as a taxable distribution. A tax adviser should be consulted when considering a loan. If you surrender your Policy or your Policy lapses while there is an outstanding loan balance, there will generally be Federal income tax payable on the amount by which withdrawals and loans exceed the premiums paid to date. Please be advised that amounts borrowed and withdrawn reduce the Policy's cash value and any remaining cash value of the Policy may be insufficient to pay the income tax on your gains. If Policy loans plus accrued interest exceed the Policy's cash value less the Surrender Charge, we notify you that the Policy is going to terminate. The Policy terminates without value unless you make a sufficient payment within the later of 62 days from the monthly anniversary immediately before the date when the excess loan occurs or 31 days after we mail the notice. If the Policy lapses with a loan outstanding, adverse tax consequences may result. If your Policy is a Modified Endowment Contract, loans under your Policy may be treated as taxable distributions. (See "Tax Considerations" below.) SURRENDER You may surrender a Policy for its cash surrender value at any time while the insured is living. We determine the cash surrender value as of the date when we receive the surrender request. The cash surrender value equals the cash value reduced by any Policy loan and accrued interest and by any applicable Surrender Charge. (See "Surrender Charge".) You may apply all or part of the cash surrender value to a payment option. (See "Payment Options".) A surrender may result in adverse tax consequences. (See "Tax Considerations" below.) A-26 PARTIAL WITHDRAWAL After the Right to Examine Policy period you may withdraw a portion of the Policy's cash surrender value. A partial withdrawal reduces the Policy's death benefit and may reduce the Policy's face amount if necessary so that the amount at risk under the Policy will not increase. A partial withdrawal may also reduce rider benefits. We reserve the right to decline a partial withdrawal request that would reduce the face amount below the Policy's required minimum. The minimum amount of a partial withdrawal request must be $500. We have the right to limit partial withdrawals to no more than 90% of the cash surrender value. In addition, a partial withdrawal will be limited by any restriction that we currently impose on withdrawals from the Fixed Account. (See "The Fixed Account".) Currently, we permit partial withdrawals of up to 100% of the cash surrender value. We have the right to limit partial withdrawals to twelve per Policy year. Currently we do not limit the number of partial withdrawals. We reserve the right to impose a charge of $25 on each partial withdrawal in excess of twelve per Policy year. If a partial withdrawal reduces your Policy's face amount, the amount of the Surrender Charge that will be deducted from your cash value is an amount that is proportional to the amount of the face reduction. The amount deducted will reduce the remaining Surrender Charge payable under the Policy. For the first partial withdrawal in each Policy year, no Surrender Charge will apply to 10% of the cash surrender value at the time of the withdrawal (or, if less, the amount of the partial withdrawal). Any face amount reduction resulting from a partial withdrawal will reduce the face amount in the following order: the initial face amount (including face amount increases resulting from a change in death benefit option) down to the required minimum (excluding riders), the amount of any Supplemental Term Coverage Rider, the face amount of any Adjustable Benefit Term Rider, and any face amount increases in the same order in which they were issued. You may not reinvest cash value paid upon a partial withdrawal in the Policy except as premium payments, which are subject to the charges described under "Deductions From Premiums". Unless you request otherwise, a partial withdrawal reduces the cash value in the Sub-Accounts of the Variable Account and the Fixed Account in the same proportion that the cash value in each bears to the Policy's total unloaned cash value. If current restrictions on the Fixed Account will not permit this allocation, we will ask you for an acceptable allocation. We determine the amount of cash surrender value paid upon a partial withdrawal as of the date when we receive a request. You can contact your registered representative or our Administrative Office for information on partial withdrawal procedures. A reduction in the death benefit as a result of a partial withdrawal may create a Modified Endowment Contract or have other adverse tax consequences. If you are contemplating a partial withdrawal, you should consult your tax adviser regarding the tax consequences. (See "Tax Considerations".) REDUCTION IN FACE AMOUNT After the first Policy year, you may reduce the face amount of your Policy without receiving a distribution of any Policy cash value. You may reduce your Policy's face amount by reducing the face amount of your Supplemental Coverage Term Rider or your Adjustable Benefit Term Rider, if applicable, or by reducing the face amount of your base Policy. If you decrease the face amount of your base Policy, we deduct any Surrender Charge that applies from the Policy's cash value in proportion to the amount of the face amount reduction. (A reduction in the face amount of your Supplemental Coverage Term Rider or Adjustable Benefit Term Rider will not trigger a Surrender Charge.) A face amount reduction usually decreases the Policy's death benefit. (However, if we are increasing the death benefit to satisfy Federal income tax laws, a face amount reduction will not decrease the death benefit unless we deduct a Surrender Charge from the cash value. A reduction in face amount in this situation may not be advisable.) We also may decrease any rider benefits attached to the Policy. The amount of any face reduction must be at least A-27 the required minimum shown in your Policy for a face amount reduction, and the face amount remaining after a reduction must meet our minimum face amount requirements for issue, except with our consent. If you choose to reduce your base Policy face amount, we will first decrease any prior increases in face amount that you applied for, in the reverse order in which the increases occurred, and then the initial face amount (including any increase in face amount from a prior change in death benefit option). A reduction in face amount reduces the Federal tax law limits on the amount of premiums that you can pay under the Policy under the guideline premium test. In these cases, you may need to have a portion of the Policy's cash value paid to you to comply with Federal tax law. A face amount reduction takes effect as of the monthly anniversary on or next following the date when we receive a request. You can contact your registered representative or the Administrative Office for information on face reduction procedures. A reduction in the face amount of a Policy may create a Modified Endowment Contract or have other adverse tax consequences. If you are contemplating a reduction in face amount, you should consult your tax adviser regarding the tax consequences of the transaction. (See "Tax Considerations".) INVESTMENT OPTIONS You can allocate your Policy's premiums and cash value among the Sub-Accounts of the Variable Account and the Fixed Account in any combination, as long as you choose no more than a cumulative total of 49 accounts (including the Fixed Account) over the life of the Policy. You may allocate any whole percentage to a Sub-Account. For special rules regarding allocations to the Fixed Account, see "The Fixed Account." You make the initial premium allocation when you apply for a Policy. You can change the allocation of future premiums at any time thereafter. The change will be effective for premiums applied on or after the date when we receive your request. You may request the change by telephone or by written request. (See "Receipt of Communications and Payments at NELICO's Administrative Office.") See "Transfer Option" below for information on how to request a transfer or reallocation by telephone. TRANSFER OPTION You may transfer your Policy's cash value between Sub-Accounts. (In states where we refund your premium if you exercise the Right to Examine Policy provision, your right to transfer begins after the first 15 days following application of the initial premium to the Policy.) We reserve the right to limit Sub-Account transfers to twelve per Policy year. Currently we do not limit the number of Sub-Account transfers per Policy year. We reserve the right to make a charge of $25 per transfer for transfers in excess of twelve in a Policy year. We treat all Sub-Account transfer requests made at the same time as a single request. The transfer is effective as of the date when we receive the transfer request. (See "Receipt of Communications and Payments at NELICO's Administrative Office".) For special rules regarding transfers involving the Fixed Account, see "The Fixed Account". We did not design the Policy's transfer privilege to give you a way to speculate on short-term market movements. To prevent excessive transfers that could disrupt the management of the Eligible Funds and increase transaction costs, we may adopt procedures to limit excessive transfer activity. For example, we may impose conditions and limits on, or refuse to accept, transfer requests that we receive from third parties. Third parties include investment advisers or registered representatives acting under power(s) of attorney from one or more Policy owners. In addition, certain Eligible Funds may restrict or refuse purchases or redemptions of their shares as a result of certain market timing activities. You should read the prospectuses of the Eligible Funds for more details. You may request a Sub-Account transfer or reallocation of future premiums by written request (which may be telecopied) to us or by telephoning us. To request a transfer or reallocation by telephone, you should contact your registered representative or contact us at 1-800-200-2214. We use reasonable procedures to confirm that instructions communicated by telephone are genuine. Any telephone instructions that we reasonably believe to be genuine are your responsibility, including losses arising from any errors in the communication of instructions. A-28 We do not currently offer Internet transfer capability to Policy Owners, but may do so in the future. We will notify you if we begin to offer Internet transactions. Telephone, facsimile, and computer systems may not always be available. Any telephone facsimile, or computer system, whether it is yours, your service provider's, your registered representative's, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Administrative Office. DOLLAR COST AVERAGING You may select an automated transfer privilege called dollar cost averaging. The same dollar amount is transferred from the State Street Research Money Market Sub-Account to other selected Sub-Accounts on a monthly basis. Over time, more purchases of Eligible Fund shares are made when the value of those shares is low, and fewer shares are purchased when the value is high. As a result, a lower than average cost of purchases may be achieved over the long term. This plan of investing allows you to take advantage of investment fluctuations, but does not assure a profit or protect against a loss in declining markets. Under this feature, you may request that a certain amount of your cash value be transferred on any selected business day of each period (or if not a day when the New York Stock Exchange is open, the next such day), from the State Street Research Money Market Sub-Account to one or more of the other Sub-Accounts. You must transfer a minimum of $100 to each account that you select under this feature, and each selected Sub-Account must receive at least 1% of the total amount of each monthly transfer. Fractional percentages may not be used. If we exercise our right to limit the number of transfers in the future, transfers made under the dollar cost averaging program will not count against the total number of transfers allowed in a Policy year. You can select a dollar cost averaging program when you apply for the Policy or at a later date by contacting our Administrative Office. You may not participate in the dollar cost averaging program while you are participating in the portfolio rebalancing program. (See "Portfolio Rebalancing" below). You can cancel your use of the dollar cost averaging program at any time before a transfer date. Transfers will continue until you notify us to stop or there no longer is sufficient cash value in the Sub-Account from which you are transferring. There is no extra charge for this feature. We reserve the right to suspend dollar cost averaging at any time. PORTFOLIO REBALANCING You can select a portfolio rebalancing program for your cash value. Cash value allocated to the Sub-Accounts can be expected to increase or decrease at different rates. A portfolio rebalancing program automatically reallocates your cash value among the Sub-Accounts and the Fixed Account periodically to return the allocation to the allocation percentages you specify. Portfolio rebalancing is intended to transfer cash value from those accounts that have increased in value to those that have declined, or not increased as much, in value. Portfolio rebalancing does not guarantee profits, nor does it assure that you will not have losses. There are two methods of rebalancing available--periodic and variance. PERIODIC REBALANCING. Under this option you elect a frequency (monthly, quarterly, semi-annually or annually), measured from the Policy anniversary. On each date elected, we will rebalance the accounts by generating transfers to reallocate the cash value according to the investment percentages elected. VARIANCE REBALANCING. Under this option you elect a specific allocation percentage for the Fixed Account and each Sub-Account of the Variable Account. For each such account, the allocation percentage (if not zero) must be a whole percentage. You also elect a maximum variance percentage (5%, 10%, 15%, or 20% only), and can exclude specific accounts from being rebalanced. On each Monthly anniversary we will review the current account balances to determine whether any balance is outside of the variance range (either above or below) as a percentage of the specified allocation percentage for that fund. If any account is outside of the variance range, we will generate transfers to rebalance all of the specified accounts back to the predetermined percentages. A-29 If we exercise our right to limit the number of transfers in the future, transfers resulting from portfolio rebalancing will not count against the total number of transfers allowed in a Policy year. You may elect either form of portfolio rebalancing by specifying it on the Policy application, or may elect it later for an in-force Policy, or may cancel it, by submitting a change form acceptable to us under our administrative rules. Only one form of portfolio rebalancing may be elected at any one time, and portfolio rebalancing may not be used in conjunction with dollar cost averaging. (See "Dollar Cost Averaging".) We reserve the right to suspend portfolio rebalancing at any time. CHANGE OF INSURED PERSON We offer a benefit that permits you to change the insured person under your Policy, if you provide satisfactory evidence that the person proposed to be insured is insurable and that you have an insurable interest in that person's life. The right to change the insured person is subject to some restrictions and may result in a cost or credit to you. A change of the insured person is a taxable exchange. In addition, a change of the insured person could reduce the amount of premiums you can pay into the Policy under Federal tax law and, therefore, may require a partial withdrawal of cash value. (No Surrender Charge will apply.) Your registered representative can provide current information on the availability of this benefit. You should consult your tax adviser before changing the insured person under your Policy. PAYMENT OF PROCEEDS We ordinarily pay any cash surrender value, loan value or death benefit proceeds from the Sub-Accounts within seven days after we receive a request, or satisfactory proof of death of the insured (and any other information we need to pay the death proceeds). (See "Receipt of Communications and Payments at NELICO's Administrative Office".) However, we may delay payment (except when a loan is made to pay a premium to us) or transfers from the Sub-Accounts: (i) if the New York Stock Exchange is closed for other than weekends or holidays, or if trading on the New York Stock Exchange is restricted, (ii) if the SEC determines that an emergency exists that makes payments or Sub-Account transfers impractical, or (iii) at any other time when the Eligible Funds or the Variable Account have the legal right to suspend payment. We may withhold payment of surrender or loan proceeds if those proceeds are coming from a Policy Owner's check, or from a Master Service Account premium transaction, which has not yet cleared. We may also delay payment while we consider whether to contest the Policy. We pay interest on the death benefit proceeds from the date they become payable to the date we pay them. Unless otherwise requested, we may apply the Policy's death proceeds to our Total Control Account. We establish a Total Control Account at a banking institution at the time for payment. The Total Control Account gives convenient access to the proceeds, which are maintained in our general account or that of an affiliate, through checkbook privileges with the bank. Normally we promptly make payments of cash value, or of any loan value available, from cash value in the Fixed Account. However, we may delay those payments for up to six months. We pay interest in accordance with state insurance law requirements on delayed payments. 24 MONTH CONVERSION RIGHT GENERAL RIGHT. Generally, during the first 24 months after the Policy's issue date, you may convert the Policy to fixed benefit coverage by transferring all of your Policy's cash value to the Fixed Account. The request to convert to fixed benefit coverage must be in written form satisfactory to us. You may exercise this privilege only once within 24 months after issue. If you do so, we will automatically allocate all future net premiums to the Fixed Account and transfers of cash value to the Variable Account will no longer be permitted. The Policy permits us to limit allocations to the Fixed Account under some circumstances. (See "The Fixed Account.") If we limit such allocations, you may still exercise the 24 Month Conversion Right. A-30 FOR POLICIES ISSUED IN MARYLAND, NEW YORK AND CONNECTICUT. Under Policies issued in Maryland, New York and Connecticut, you can exchange the face amount of your Policy for a fixed benefit life insurance policy provided that you repay any policy loans and (1) the Policy has not lapsed and (2) the exchange is made within 24 months after the Policy's issue date. If you exercise this option, you will have to make up any investment loss you had under the variable life insurance policy. We make the exchange without evidence of insurability. The new policy will have the same face amount as that being exchanged. The new policy will have the same issue age, underwriting class and policy date as the variable life policy had. We will attach any riders to the original Policy to the new policy if they are available. Contact us or your registered representative for more specific information about the 24 Month Conversion Right in these states. The exchange may result in a cost or credit to you. On the exchange, you may need to make an immediate premium payment on the new policy in order to keep it in force. OTHER EXCHANGE RIGHTS FOR POLICIES ISSUED IN NEW YORK. Under policies issued in New York, you can exchange your Policy while it is in force for a new policy which provides Paid-Up Insurance. Paid-Up Insurance will be provided by using the cash surrender value of the Policy as a net single premium at your age on the date of the exchange. Paid-Up Insurance is permanent insurance with no further premiums due. The face amount of the new policy of Paid-Up Insurance may be less than the face amount of this Policy. GROUP OR SPONSORED ARRANGEMENTS. For a Policy issued in certain business situations, we offer the additional option of exchanging the Policy at any time during the first 36 months after the Policy's issue date, if the Policy has not lapsed, to a fixed-benefit term life insurance policy issued by us or an affiliate. (Availability of this feature depends on state insurance department approval.) Contact us or your registered representative for more information about this feature. PAYMENT OPTIONS We pay the Policy's death benefit and cash surrender value in one sum unless you or the payee choose a payment option for all or part of the proceeds. You can choose a combination of payment options. You can make, change or revoke the selection of payee or payment option before the death of the insured. You can contact your registered representative or our Administrative Office for the procedure to follow. The payment options available are fixed benefit options only and are not affected by the investment experience of the Variable Account. Once payments under an option begin, withdrawal rights may be restricted. The following payment options are available: (i) INCOME FOR A SPECIFIED NUMBER OF YEARS. We pay proceeds in equal monthly installments for up to 30 years, with interest at a rate not less than 3.0% a year, compounded yearly. Additional interest that we pay for any year is added to the monthly payments for that year. (ii) LIFE INCOME. We pay proceeds in equal monthly installments (i) for the longer of the life of the payee or 10 years, (ii) for the longer of the life of the payee or 15 years, or (iii) for the longer of the life of the payee or 20 years. (iii) LIFE INCOME WITH REFUND. We pay proceeds in equal monthly installments during the life of the payee. At the payee's death, we pay any remaining proceeds in one sum. (iv) INTEREST. We hold proceeds and pay interest of at least 3.0% a year monthly or add it to the principal annually. Withdrawals of at least $500 may be made at any time by written request. (v) LIFE INCOME FOR TWO LIVES. We pay proceeds in equal monthly installments (i) while either of two payees is living, but for at least 10 years, or (ii) while the two payees are living and, after the death of one payee, we pay two-thirds of the monthly amount for the life of the surviving payee. (vi) SPECIFIED AMOUNT OF INCOME. We make monthly payments of a chosen amount until the entire proceeds, with interest, are paid. A-31 You need our consent to use an option if the installment payments would be less than $50. ADDITIONAL BENEFITS BY RIDER You can add additional benefits to the Policy by rider, subject to our underwriting and issuance standards. These additional benefits usually require an additional charge as part of the Monthly Deduction from cash value. The rider benefits available with the Policies provide fixed benefits that do not vary with the investment experience of the Variable Account. If you seek to reduce the overall cost of your insurance protection, it is to your economic advantage to include a significant portion or percentage of your insurance coverage under a level term insurance rider. Reductions in or elimination of term rider coverage do not trigger a Surrender Charge, and use of a term rider generally reduces sales compensation. However, like the cost of coverage under the Policy, charges deducted from the Policy's cash value to pay for term rider coverage no longer participate in the investment experience of the Variable Account, and usually increase with the age of the covered individual. Term riders have no cash value and provide no growth potential. Your registered representative can provide you more information on the uses of term rider coverage. The following riders and endorsements, some of which have been described previously, are available: SUPPLEMENTAL COVERAGE TERM RIDER, which provides term insurance. CONVERTIBLE SUPPLEMENTAL COVERAGE TERM RIDER, which provides term insurance that can be converted to permanent coverage. TEMPORARY TERM RIDER, which provides insurance coverage from the investment start date to the date of issue. SECONDARY GUARANTEE RIDER, which provides for a guaranteed death benefit to age 100. CHILDREN'S LIFE INSURANCE RIDER, which provides term insurance on the life of children of the insured. WAIVER OF MONTHLY DEDUCTION RIDER, which provides for waiver of Monthly Deductions upon the disability of the insured. WAIVER OF SPECIFIED PREMIUM RIDER, which provides for waiver of a specified amount of monthly premium in the event of the disability of the insured. OPTIONS TO PURCHASE ADDITIONAL LIFE INSURANCE RIDER, which allows the Owner to purchase additional coverage on the insured without providing evidence of insurability. TERM INSURANCE ON COVERED INSURED RIDER, which provides term insurance on any person in whom the insured has an insurable interest. OPTION TO PURCHASE LONG-TERM CARE INSURANCE RIDER, which allows the Owner to purchase long-term care coverage on the insured without providing evidence of insurability. ADJUSTABLE BENEFIT TERM RIDER, which provides term insurance coverage on the insured that allows annual adjustments and which terminates at age 100. ACCELERATION OF DEATH BENEFIT RIDER, which provides for an accelerated payment of all or part of the Policy's death benefit, on a discounted basis, if the insured is terminally ill, as defined in the rider. EXCHANGE TO TERM INSURANCE ENDORSEMENT, which allows the Policy to be reissued as term insurance if it is surrendered within the first three Policy years. Not all riders may be available to you and riders in addition to those listed above may be made available. You should consult your registered representative regarding the availability of riders. A-32 POLICY OWNER AND BENEFICIARY The Policy Owner is named in the application but may be changed from time to time. At the death of the Policy Owner, his or her estate will become the Policy Owner unless a successor Policy Owner has been named. The Policy Owner's rights (except for rights to payment of benefits) terminate at the death of the insured. The beneficiary is also named in the application. You may change the beneficiary at any time before the death of the insured, unless the beneficiary designation is irrevocable. The beneficiary has no rights under the Policy until the death of the insured and must survive the insured in order to receive the death proceeds. If no named beneficiary survives the insured, we pay proceeds to the Policy Owner. A change of Policy Owner or beneficiary is subject to all payments made and actions taken by us under the Policy before we receive a signed change form. You can contact your registered representative or our Administrative Office for the procedure to follow. You may assign (transfer) your rights in the Policy to someone else. An absolute assignment of the Policy is a change of Policy Owner and beneficiary to the assignee. A collateral assignment of the Policy does not change the Policy Owner or beneficiary, but their rights will be subject to the terms of the assignment. Assignments are subject to all payments made and actions taken by us under the Policy before we receive a signed copy of the assignment form. We are not responsible for determining whether or not an assignment is valid. Changing the Policy Owner or assigning the Policy may have tax consequences. (See "Tax Considerations" below.) THE VARIABLE ACCOUNT We established the Variable Account as a separate investment account on January 31, 1983 under Delaware law. It became subject to Massachusetts law when we changed our domicile to Massachusetts on August 30, 1996. The Variable Account is the funding vehicle for the Policies, and other NELICO variable life insurance policies; these other policies impose different costs, and provide different benefits, from the Policies. The Variable Account meets the definition of a "separate account" under Federal securities laws, and is registered with the Securities and Exchange Commission (the "SEC") as a unit investment trust under the Investment Company Act of 1940. Registration with the SEC does not involve SEC supervision of the Variable Account's management or investments. However, the Massachusetts Insurance Commissioner regulates NELICO and the Variable Account, which are also subject to the insurance laws and regulations where the Policies are sold. Although we own the assets of the Variable Account, applicable law provides that the portion of the Variable Account assets equal to the reserves and other liabilities of the Variable Account may not be charged with liabilities that arise out of any other business we may conduct. We believe this means that the assets of the Variable Account equal to the reserves and other liabilities of the Variable Account are not available to meet the claims of our general creditors, and may only be used to support the cash values under our variable life insurance policies issued by the Variable Account. We may transfer to our general account assets which exceed the reserves and other liabilities of the Variable Account. We will consider any possible adverse impact such a transfer might have on the Variable Account. Income and realized and unrealized capital gains and losses of the Variable Account are credited to the Variable Account without regard to any of our other income or capital gains and losses. INVESTMENTS OF THE VARIABLE ACCOUNT Sub-Accounts of the Variable Account that are available in this Policy invest in the following Eligible Funds: The Zenith State Street Research Money Market Series (formerly, the Back Bay Advisors Money Market Series). Its investment objective is a high level of current income consistent with preservation of capital. An investment in the Money Market Series is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Money Market Series seeks to maintain a net asset value of $100 per share, it is possible to lose money by investing in the Money Market Series. A-33 The Zenith State Street Research Bond Income Series (formerly, the Back Bay Advisors Bond Income Series). Its investment objective is competitive total return primarily from investing in fixed-income securities. The Zenith Capital Growth Series. Its investment objective is the long-term growth of capital through investment primarily in equity securities of companies whose earnings are expected to grow at a faster rate than the United States economy. The Zenith MFS Total Return Series (formerly, Back Bay Advisors Managed Series). Its investment objective is a favorable total return through investment in a diversified portfolio. The Zenith Westpeak Growth and Income Series. Its investment objective is long-term total return through investment in equity securities. The Zenith Harris Oakmark Mid Cap Value Series (formerly, the Goldman Sachs Midcap Value Series). Its investment objective is long-term capital appreciation. The Zenith Loomis Sayles Small Cap Series. Its investment objective is long-term capital growth from investments in common stocks or other equity securities. The Zenith Balanced Series (formerly, the Loomis Sayles Balanced Series). Its investment objective is long-term total return from a combination of capital appreciation and current income. The Zenith Davis Venture Value Series. Its investment objective is growth of capital. The Zenith Alger Equity Growth Series. Its investment objective is long-term capital appreciation. The Zenith MFS Investors Trust Series (formerly, the MFS Investors Series). Its investment objective is long-term growth of capital with a secondary objective to seek reasonable current income. The Zenith MFS Research Managers Series. Its investment objective is long-term growth of capital. The Metropolitan Putnam Large Cap Growth Portfolio. Its investment objective is capital appreciation. The Metropolitan Janus Mid Cap Portfolio. Its investment objective is long-term growth of capital. The Metropolitan Russell 2000 Index Portfolio. Its investment objective is to equal the return of the Russell 2000 Index. The Metropolitan Putnam International Stock Portfolio. Its investment objective is long-term growth of capital. The Metropolitan MetLife Stock Index Portfolio. Its investment objective is to equal the performance of the Standard & Poor's 500 Composite Stock Price Index. The Metropolitan MetLife Mid Cap Stock Index Portfolio.* Its investment objective is to equal the performance of the Standard & Poor's MidCap 400 Composite Stock Index. The Metropolitan Morgan Stanley EAFE Index Portfolio.* Its investment objective is to equal the performance of the MSCI EAFE Index. The Metropolitan Lehman Brothers Aggregate Bond Index Portfolio.* Its investment objective is to equal the performance of the Lehman Brothers Aggregate Bond Index. The Metropolitan State Street Research Aurora Small Cap Value Portfolio.* Its investment objective is high total return, consisting principally of capital appreciation. The Metropolitan Janus Growth Portfolio.* Its investment objective is long-term growth of capital. The Metropolitan State Street Research Investment Trust Portfolio (formerly, the State Street Research Growth Portfolio).* Its investment objective is long-term growth of capital and income and moderate current income. The Metropolitan Franklin Templeton Small Cap Growth Portfolio.* Its investment objective is long-term capital growth. A-34 The Metropolitan Neuberger Berman Partners Mid Cap Value Portfolio.* Its investment objective is capital growth. The Met Investors MFS Mid-Cap Growth Portfolio.* Its investment objective is long-term growth of capital. The Met Investors PIMCO Innovation Portfolio.* Its investment objective is to seek capital appreciation; no consideration is given to income. The VIP Equity-Income Portfolio. It seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund seeks a yield which exceeds the composite yield on the securities comprising the S&P 500. The VIP Overseas Portfolio. It seeks long-term growth of capital. Foreign markets, particularly emerging markets, can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments and can perform differently than the U.S. market. The VIP High Income Portfolio. It seeks a high level of current income while also considering growth of capital. Lower-quality debt securities (those of less than investment-grade quality) can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market or economic developments. The VIP II Asset Manager Portfolio. It seeks high total return with reduced risk over the long-term by allocating its assets among stocks, bonds and short-term instruments. The American Funds Insurance Series American Funds Growth Fund.* Its investment objective is to seek capital appreciation through stocks. The American Funds Insurance Series American Funds Growth-Income Fund.* Its investment objective is to seek capital appreciation and income. The American Funds Insurance Series American Funds Global Small Capitalization Fund.* Its investment objective is to seek capital appreciation through stocks. - ------------ * Availability of these Portfolios is subject to any necessary state insurance department approvals. The New England Zenith Fund, the Metropolitan Series Fund, Inc. and the Met Investors Series Trust are open-end management investment companies, more commonly known as mutual funds. These funds are available as investment vehicles for separate investment accounts of MetLife, NELICO, and other life insurance companies. VIP, VIP II and the American Funds Insurance Series are mutual funds that serve as the investment vehicles for variable life insurance and variable annuity separate accounts of various insurance companies. The Variable Account purchases and sells Eligible Fund shares at their net asset value (without a deduction for sales load) determined as of the close of regular trading on the New York Stock Exchange on each day when the exchange is open for trading. The Eligible Funds' investment objectives may not be met. More about the Eligible Funds, including their investments, expenses, and risks, is in the attached Eligible Fund prospectuses and the Eligible Funds' Statements of Additional Information. The investment objectives and policies of certain Eligible Funds are similar to the investment objectives and policies of other funds that may be managed by the same sub-adviser. The investment results of the Eligible Funds may be higher or lower than the results of these funds. There is no assurance, and no representation is made, that the investment results of any of the Eligible Funds will be comparable to the investment results of any other fund. A-35 INVESTMENT MANAGEMENT MetLife Advisers, LLC (formerly New England Investment Management, LLC) is the investment adviser for the series of the New England Zenith Fund. The chart below shows the sub-adviser for each series of the New England Zenith Fund. MetLife Advisers, which is an affiliate of NELICO, and each of the sub-advisers are registered with the SEC as investment advisers under the Investment Advisers Act of 1940.
SERIES SUB-ADVISER ------ ----------- Capital Growth Capital Growth Management Limited Partnership State Street Research Money Market State Street Research and Management Company State Street Research Bond Income State Street Research and Management Company MFS Total Return Massachusetts Financial Services Company Westpeak Growth and Income Westpeak Investment Advisors, L.P. Loomis Sayles Small Cap Loomis, Sayles & Company, L.P. Balanced Wellington Management Company, LLP Harris Oakmark Mid Cap Value Harris Associates L.P. Davis Venture Value Davis Selected Advisers, L.P.* Alger Equity Growth Fred Alger Management, Inc. MFS Investors Trust Massachusetts Financial Services Company MFS Research Managers Massachusetts Financial Services Company
- ------------ * Davis Selected may also delegate any of its responsibilities to Davis Selected Advisers--NY, Inc., a wholly-owned subsidiary of Davis Selected. In the case of the State Street Research Money Market Series, State Street Research Bond Income Series, MFS Total Return Series, Westpeak Growth and Income Series, Harris Oakmark Mid Cap Value Series and Loomis Sayles Small Cap Series, MetLife Advisers became the adviser on May 1, 1995. Effective May 1, 2001, MetLife Advisers became the investment adviser to the Capital Growth Series and Capital Growth Management Limited Partnership became the sub-adviser. The State Street Research Money Market Series', State Street Research Bond Income Series' and MFS Total Return Series' sub-adviser was Back Bay Advisors, L.P. until July 1, 2001. At that time State Street Research and Management Company became the sub-adviser to the State Street Research Money Market and Bond Income Series and Massachusetts Financial Services Company became the sub-adviser to the MFS Total Return Series. The Harris Oakmark Mid Cap Value Series' sub-adviser was Loomis, Sayles until May 1, 1998, when Goldman Sachs Asset Management, a separate operating division of Goldman Sachs & Co., became the sub-adviser. Harris Associates became the sub-adviser on May 1, 2000. The Balanced Series' sub-adviser was Loomis, Sayles until May 1, 2000, when Wellington Management Company became the sub-adviser. For more information about the Series' advisory agreements, see the New England Zenith Fund prospectus attached at the end of this prospectus and the New England Zenith Fund's Statement of Additional Information. A-36 MetLife Advisers became the investment manager for the Metropolitan Series Fund Portfolios on May 1, 2001. Prior to that time, MetLife was the investment manager. For more information regarding the investment manager and sub-investment managers of the Metropolitan Series Fund Portfolios, see the Metropolitan Series Fund prospectus attached at the end of this prospectus and its Statement of Additional Information. The following chart shows the sub-investment manager for each portfolio of the Metropolitan Series Fund.
PORTFOLIO SUB-INVESTMENT MANAGER --------- ---------------------- Putnam Large Cap Growth Putnam Investment Management, LLC Janus Mid Cap Janus Capital Corporation Russell 2000 Index Metropolitan Life Insurance Company* Putnam International Stock Putnam Investment Management, LLC MetLife Stock Index Metropolitan Life Insurance Company* MetLife Mid Cap Stock Index Metropolitan Life Insurance Company* Morgan Stanley EAFE Index Metropolitan Life Insurance Company* Lehman Brothers Aggregate Bond Index Metropolitan Life Insurance Company* State Street Research Aurora Small Cap Value State Street Research and Management Company Janus Growth Janus Capital Corporation State Street Research Investment Trust State Street Research and Management Company Franklin Templeton Small Cap Growth Franklin Advisers, Inc. Neuberger Berman Partners Mid Cap Value Neuberger Berman Management Inc.
- ------------ * Metropolitan Life Insurance Company became the sub-investment manager on May 1, 2001. Met Investors Advisory Corp. (formerly known as Security First Management Corp.) is an indirect wholly-owned subsidiary of Metropolitan Life Insurance Company and is the investment adviser for the Portfolios of the Met Investors Series Trust. For more information regarding the MFS Mid-Cap Growth Portfolio and the PIMCO Innovation Portfolio, see the Met Investors Series Trust prospectuses attached at the end of this prospectus and their Statement of Additional Information. Fidelity Management & Research Company ("FMR") is the investment adviser for VIP and VIP II. For more information regarding the VIP Equity-Income, VIP Overseas, VIP High Income and VIP II Asset Manager Portfolios and FMR, see the VIP and VIP II prospectuses attached at the end of this prospectus and their Statements of Additional Information. Capital Research and Management Company ("Capital Research") is the investment adviser for the American Funds Insurance Series. For more information regarding the American Funds Growth Fund, the American Funds Growth-Income Fund and the American Funds Global Small Capitalization Fund, see the American Funds Insurance Series prospectuses attached at the end of this prospectus and their Statement of Additional Information. SUBSTITUTION OF INVESTMENTS If investment in the Eligible Funds or a particular Fund is no longer possible, in our judgment becomes inappropriate for the purposes of the Policies, or for any other reason in our sole discretion, we may substitute another Eligible Fund or Funds without your consent. The substituted fund may have different fees and expenses. Substitution may be made with respect to existing investments or the investment of future premium payments, or both. However, we will not make such substitution without any necessary approval of the Securities and Exchange Commission. Furthermore, we may make available or close Sub-Accounts to allocation of premium payments or cash value, or both, for some or all classes of Policies, at any time in our sole discretion. SHARE CLASSES OF THE ELIGIBLE FUNDS The Eligible Funds offer various classes of shares, each of which has a different level of expenses. Attached prospectuses for the Eligible Funds may provide information for share classes that are not available through the Policy. When you consult the attached prospectus for any Eligible Fund, you should be careful to refer to only the A-37 information regarding the class of shares that is available through the Policy. For the New England Zenith Fund, Metropolitan Series Fund and Met Investors Series Trust, we offer Class A shares only, for VIP and VIP II we offer Initial Class shares only, and for the American Funds Insurance Series we offer Class 2 shares only. THE FIXED ACCOUNT THE POLICY HAS A FIXED ACCOUNT OPTION ONLY IN STATES THAT APPROVE IT. You may allocate net premiums and transfer cash value to the Fixed Account, which is part of NELICO's general account. Because of exemptive and exclusionary provisions in the Federal securities laws, interests in the Fixed Account are not registered under the Securities Act of 1933. Neither the Fixed Account nor the general account is registered as an investment company under the Investment Company Act of 1940. Therefore, neither the Fixed Account, the general account nor any interests therein are generally subject to the provisions of these Acts, and the SEC does not review Fixed Account disclosure. This disclosure may, however, be subject to certain provisions of the Federal securities laws on the accuracy and completeness of prospectuses. GENERAL DESCRIPTION Our general account includes all of our assets except assets in the Variable Account or in our other separate accounts. We decide how to invest our general account assets. Fixed Account allocations do not share in the actual investment experience of the Fixed Account. Instead, we guarantee that the Fixed Account will credit interest at an annual effective rate of at least 3%. We may or may not credit interest at a higher rate. We declare the current interest rate for the Fixed Account periodically. The Fixed Account earns interest daily. VALUES AND BENEFITS Cash value in the Fixed Account increases from net premiums allocated and transfers to the Fixed Account and Fixed Account interest, and decreases from loans, partial withdrawals made from the Fixed Account, charges and transfers from the Fixed Account. We deduct charges from the Fixed Account and the Policy's Sub-Accounts in proportion to the amount of cash value in each. (See "Monthly Deduction from Cash Value".) A Policy's total cash value includes cash value in the Variable Account, the Fixed Account, and any cash value held in the Loan Account due to a Policy loan. Cash value in the Fixed Account is included in the calculation of the Policy's death benefit in the same manner as the cash value in the Variable Account. (See "Death Benefit".) POLICY TRANSACTIONS Except as described below, the Fixed Account has the same rights and limitations regarding premium allocations, transfers, loans, surrenders and partial withdrawals as the Variable Account. (See "Other Policy Features".) The following special rules apply to the Fixed Account. After the Right to Examine Policy period, a portion of the cash value may be withdrawn from the Fixed Account or transferred from the Fixed Account to the Variable Account. The amount of any partial withdrawal (net of applicable Surrender Charges) or any transfer must be at least $500, unless the balance remaining would be less than $100, in which case you may withdraw or transfer the entire Fixed Account cash value. No amount may be withdrawn from the Fixed Account that would result in there being insufficient cash value to meet any Surrender Charges that would be payable immediately following the withdrawal upon the surrender of the remaining cash value in the Policy. The total amount of transfers and withdrawals in a Policy year may not exceed a Maximum Amount equal to the greater of (a) 25% of the Policy's cash surrender value in the Fixed Account at the beginning of the Policy year, or (b) the previous Policy year's Maximum Amount (not to exceed the total cash surrender value of the Policy). Transfers and premium allocations to the Fixed Account are limited by the Maximum Allocation Percentage set forth in your Policy and in effect at the time a transfer request is made. A-38 There is no transaction charge for the first twelve partial withdrawals or twelve transfers in a Policy year. We reserve the right to limit partial withdrawals and transfers to twelve each in a Policy year and to impose a charge of $25 for each partial withdrawal or transfer in excess of twelve in a Policy year. We may revoke or modify the privilege of transferring amounts to or from the Fixed Account at any time. Partial withdrawals will result in the imposition of any applicable Surrender Charges. Unless you request otherwise, a Policy loan reduces the Policy's cash value in the Sub-Accounts and the Fixed Account proportionately. We allocate all loan repayments in the same proportion that the cash value in each Loan Sub-Account bears to the total value of the Loan Account. The amount transferred from the Policy's Sub-Accounts and the Fixed Account as a result of a loan earns interest at an effective rate of at least 3% per year, which we credit to the Policy's cash value in the Sub-Accounts and the Fixed Account in proportion to the Policy's cash value in each on the day it is credited. Unless you request otherwise, we take partial withdrawals from the Policy's Sub-Accounts and the Fixed Account in the same proportion that the cash value in each account bears to the Policy's total unloaned cash value. If current restrictions on the Fixed Account will not permit this allocation, we will ask you for an acceptable allocation. We can delay transfers, surrenders, withdrawals and Policy loans from the Fixed Account for up to six months (to the extent allowed by state insurance law). We will not delay loans to pay premiums on policies issued by us. DISTRIBUTION OF THE POLICIES We sell the Policies through licensed insurance agents. These agents are also registered representatives of New England Securities Corporation ("New England Securities"), and are registered with the National Association of Securities Dealers, Inc. and with the states in which they do business. Registered representatives with New England Securities are also licensed as insurance agents in the states in which they do business and are appointed with NELICO. New England Securities, a Massachusetts corporation organized in 1968 and an indirect, wholly-owned subsidiary of NELICO, is registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934 as well as with the securities commissions in the states in which it operates, and is a member of the National Association of Securities Dealers, Inc. More information about New England Securities and its registered persons is available at http://www.nasdr.com or by calling 1-800-289-9999. You also can obtain an investor brochure from NASD Regulation describing its Public Disclosure Program. New England Securities, 399 Boylston Street, Boston, Massachusetts 02116, also serves as the principal underwriter for the Policies under a Distribution Agreement with NELICO. Under the Distribution Agreement, we pay sales commissions for sale of the Policies and the following sales expenses: general agent and agency manager's compensation, agents' training allowances, deferred compensation and insurance benefits of agents, general agents and agency managers and advertising expenses and all other expenses of distributing the Policies. We pay the following commissions and/or service fees to the selling agent: a maximum of 50% of the Commission Breakpoint Premium paid in the first Policy year, a maximum of 5% in Policy years two through ten, and a maximum of 3% thereafter. Agents receive a maximum commission of 3% of each payment in excess of the Commission Breakpoint Premium in any year. For Policies sold in connection with certain executive benefit plans the maximum commissions are: 20% of the Commission Breakpoint Premium in the first Policy year, 10% in Policy years two through ten, and 2% thereafter. For these Policies we will pay a maximum commission of 3.5% of each payment in excess of the Commission Breakpoint Premium in Policy years one through ten, and 2% of such excess premiums thereafter. Agents who meet certain NELICO productivity and persistency standards may be eligible for additional compensation. Agents may receive a portion of the general agent's expense reimbursement allowance. All or a portion of commissions may be returned if the Policy is not continued through the first Policy year. Agents receive less compensation for the sale of Policies that provide a significant portion of death benefit coverage through the use of term riders. New England Securities may enter into selling agreements with other broker-dealers registered under the Securities Exchange Act of 1934 whose representatives are authorized by applicable law to sell variable life insurance policies. Under the agreements with those broker-dealers, commissions paid to the broker-dealer on behalf of the registered representative will not exceed those described above. Selling firms may retain a portion of A-39 commissions. We may pay certain broker-dealers an additional bonus after the first Policy year on behalf of certain registered representatives, which may be up to the amount of the basic commission for the particular Policy year. We pay commissions through the registered broker-dealer, and may pay additional compensation to the broker-dealer and/or reimburse it for portions of Policy sales expenses. The registered representative may receive a portion of the expense reimbursement allowance paid to the broker-dealer. New England Securities does not retain any override as distributor for the Policies. However, New England Securities' operating and other expenses are paid for by NELICO. Also, New England Securities or an affiliate may receive 12b-1 fees from the American Funds Growth Fund, the American Funds Growth-Income Fund, and the American Funds Global Small Capitalization Fund. Because registered representatives of New England Securities are also agents of NELICO, they are eligible for various cash benefits, such as bonuses, insurance benefits and financing arrangements, and non-cash compensation programs that NELICO offers, such as conferences, trips, prizes, and awards. Other payments may be made for other services that do not directly involve the sale of the Policies. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. We intend to recoup commissions and other sales expenses through fees and charges imposed under the Policy. Commissions paid on the Policy, including other incentives or payments, are not charged directly to the Policy owners or the Variable Account. We offer the Policies to the public on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering. LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY Generally, we can challenge the validity of your Policy or a rider during the insured's lifetime for two years (or less, if required by state law) from the date of issue, based on misrepresentations made in the application. We can challenge the portion of the death benefit resulting from an underwritten premium payment for two years during the insured's lifetime from receipt of the premium payment. However, if the insured dies within two years of the date of issue, we can challenge all or part of the Policy at any time based on misrepresentations in the application. We can challenge an increase in face amount, with regard to material misstatements concerning such increase, for two years during the insured's lifetime from its effective date. MISSTATEMENT OF AGE OR SEX If the application misstates the insured's age or sex, the Policy's death benefit is the amount that the most recent Monthly Deduction which was made would provide, based on the insured's correct age and, if the Policy is sex-based, correct sex. SUICIDE If the insured commits suicide within two years (or less, if required by state law) from the date of issue, the death benefit is limited to premiums paid, less any policy loan balance and partial withdrawals. If the insured, while sane or insane, commits suicide within two years after the effective date of an increase in face amount, the death benefit for such increase will be limited to the Monthly Deductions for the increase. (Where required by state law, we determine the death benefit under this provision by using the greater of: the reserve of the insurance which is subject to the provision; and the amounts used to purchase the insurance which is subject to the provision.) TAX CONSIDERATIONS INTRODUCTION 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 tax situations. This discussion is not intended as tax advice. Counsel or other competent tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present Federal income tax laws. No representation is made as to the A-40 likelihood of continuation of the present Federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. TAX STATUS OF THE POLICY In order to qualify as a life insurance contract for Federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under Federal tax law, a Policy must satisfy certain requirements which are set forth in the Internal Revenue Code. Guidance as to how these requirements are to be applied is limited. Nevertheless, we believe that the Policies should satisfy the applicable requirements. There is less guidance, however, with respect to Policies issued on a substandard or guaranteed issue basis and Policies with term riders added, and it is not clear whether such Policies will in all cases satisfy the applicable requirements. We may take appropriate steps to bring the Policy into compliance with applicable requirements, and we reserve the right to restrict Policy transactions in order to do so. In certain circumstances, owners of variable life insurance contracts have been considered for Federal income tax purposes to be the owners of the assets of the variable account supporting their contracts, due to their ability to exercise investment control over those assets. Where this is the case, the contract owners have been currently taxed on income and gains attributable to variable account assets. There is little guidance in this area, and some features of the Policies, such as the flexibility of a Policy Owner to allocate premiums and cash values, have not been explicitly addressed in published rulings. While we believe that the Policies do not give Policy Owners investment control over Variable Account assets, we reserve the right to modify the Policies as necessary to prevent a Policy Owner from being treated as the owner of the Variable Account assets supporting the Policy. In addition, the Code requires that the investments of the Variable Account be "adequately diversified" in order for the Policies to be treated as life insurance contracts for Federal income tax purposes. It is intended that the Variable Account, through the Eligible Funds, will satisfy these diversification requirements. The following discussion assumes that the Policy will qualify as a life insurance contract for Federal income tax purposes. TAX TREATMENT OF POLICY BENEFITS IN GENERAL. We believe that the death benefit under a Policy should be excludible from the gross income of the beneficiary. Federal, state and local transfer, and other tax consequences of ownership or receipt of Policy proceeds depend on the circumstances of each Policy Owner or beneficiary. A tax adviser should be consulted on these consequences. Generally, the Policy Owner will not be deemed to be in constructive receipt of the Policy cash value until there is a distribution or a deemed distribution. When distributions from a Policy occur, or when loans are taken from or secured by a Policy, the tax consequences depend on whether the Policy is classified as a "Modified Endowment Contract." MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life insurance contracts are classified as "Modified Endowment Contracts," with less favorable income tax treatment than other life insurance contracts. In general a Policy will be classified as a Modified Endowment Contract if the amount of premiums paid into the Policy causes the Policy to fail the "7-pay test." A Policy will fail the 7-pay test if at any time in the first seven Policy years, the amount paid into the Policy exceeds the sum of the level premiums that would have been paid at that point under a Policy that provided for paid-up future benefits after the payment of seven level annual payments. If there is a reduction in the benefits under the Policy during the first seven Policy years, for example, as a result of a partial withdrawal, the 7-pay test will have to be reapplied as if the Policy had originally been issued at the reduced face amount. If there is a "material change" in the Policy's benefits or other terms, even after the first seven Policy years, the Policy may have to be retested as if it were a newly issued Policy. A material change can occur, for example, when there is an increase in the death benefit which is due to the payment of an unnecessary premium. Unnecessary premiums are premiums paid into the Policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the first seven Policy years. To prevent your Policy from A-41 becoming a Modified Endowment Contract, it may be necessary to limit premium payments or to limit reductions in benefits. A current or prospective Policy Owner should consult a tax adviser to determine whether a Policy transaction will cause the Policy to be classified as a Modified Endowment Contract. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS. Policies classified as Modified Endowment Contracts are subject to the following tax rules: (1) All distributions other than death benefits, including distributions upon surrender and withdrawals, from a Modified Endowment Contract will be treated first as distributions of gain taxable as ordinary income and as tax-free recovery of the Policy Owner's investment in the Policy only after all gain has been distributed. (2) Loans taken from or secured by a Policy classified as a Modified Endowment Contract are treated as distributions and taxed accordingly. (3) A 10 percent additional income tax is imposed on the amount subject to tax except where the distribution or loan is made when the Policy Owner has attained age 59 1/2 or is disabled, or where the distribution is part of a series of substantially equal periodic payments for the life (or life expectancy) of the Policy Owner or the joint lives (or joint life expectancies) of the Policy Owner and the Policy Owner's beneficiary or designated beneficiary. If a Policy becomes a Modified Endowment Contract, distributions will be taxed as distributions from a Modified Endowment Contract. In addition, distributions from a Policy within two years before it becomes a Modified Endowment Contract will be taxed in this manner. This means that a distribution made from a Policy that is not a Modified Endowment Contract could later become taxable as a distribution from a Modified Endowment Contract. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy that is not classified as a Modified Endowment Contract are generally treated first as a recovery of the Policy Owner's investment in the Policy and only after the recovery of all investment in the Policy as taxable income. However, certain distributions which must be made in order to enable the Policy to continue to qualify as a life insurance contract for Federal income tax purposes if Policy benefits are reduced during the first 15 Policy years may be treated in whole or in part as ordinary income subject to tax. Loans from or secured by a Policy that is not a Modified Endowment Contract are generally not treated as distributions. However, the tax consequences associated with Policy loans that are outstanding after the first ten Policy years are less clear and a tax adviser should be consulted about such loans. Finally, neither distributions from nor loans from or secured by a Policy that is not a Modified Endowment Contract are subject to the 10 percent additional income tax. INVESTMENT IN THE POLICY. Your investment in the Policy is generally your aggregate premiums. When a distribution is taken from the Policy, your investment in the Policy is reduced by the amount of the distribution that is tax-free. POLICY LOANS. In general, interest on a Policy loan will not be deductible. If a Policy loan is outstanding when a Policy is canceled or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly. A loan may also be taxed when a Policy is exchanged. Before taking out a Policy loan, you should consult a tax adviser as to the tax consequences. MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by NELICO (or its affiliates) to the same Policy Owner during any calendar year are treated as one Modified Endowment Contract for purposes of determining the amount includible in the Policy Owner's income when a taxable distribution occurs. ACCELERATION OF DEATH BENEFIT RIDER. We believe that payments received under the Acceleration of Death Benefit Rider should be fully excludable from the gross income of the beneficiary if the beneficiary is the insured under the Policy. However, you should consult a qualified tax adviser about the consequences of adding this rider to a Policy or requesting payment under this rider. OTHER POLICY OWNER TAX MATTERS. The transfer of the Policy or designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and A-42 generation-skipping transfer taxes. For example, the transfer of the Policy or the payment of proceeds to a person who is assigned to a generation which is two or more generations below the generation assignment of the Policy Owner may have generation-skipping transfer tax consequences under Federal tax law. Federal and state estate, inheritance, transfer and other tax consequences depend on the individual circumstances of each Policy Owner or beneficiary. The tax consequences of continuing the Policy beyond the insured's 100th year are unclear. You should consult a tax adviser if you intend to keep the Policy in force beyond the insured's 100th year. If a trustee under a pension or profit-sharing plan, or similar deferred compensation arrangement, owns a Policy, the Federal, state and estate tax consequences could differ. The amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan are limited. The current cost of insurance for the net amount at risk is treated as a "current fringe benefit" and must be included annually in the plan participant's gross income. We report this cost to the participant annually. If the plan participant dies while covered by the plan and the Policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the cash value is not income taxable. However, the cash value will generally be taxable to the extent it exceeds the participant's cost basis in the Policy. Policies owned under these types of plans may be subject to restrictions under the Employee Retirement Income Security Act of 1974 ("ERISA"). You should consult a qualified adviser regarding ERISA. Department of Labor ("DOL") regulations impose requirements for participant loans under retirement plans covered by ERISA. Plan loans must also satisfy tax requirements to be treated as nontaxable. Plan loan requirements and provisions may differ from the Policy loan provisions. Failure of plan loans to comply with the requirements and provisions of the DOL regulations and of tax law may result in adverse tax consequences and/or adverse consequences under ERISA. Plan fiduciaries and participants should consult a qualified adviser before requesting a loan under a Policy held in connection with a retirement plan. Businesses can use the Policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser. In recent years, moreover, Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new Policy or a change in an existing Policy should consult a tax adviser. NEW GUIDANCE ON SPLIT DOLLAR PLANS. The IRS has recently issued guidance on split dollar insurance plans. A tax adviser should be consulted with respect to this new guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. 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 Policyowner is subject to that tax. POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Policy. NELICO'S INCOME TAXES Under current Federal income tax law, NELICO is not taxed on the Variable Account's operations. Thus, currently we do not deduct a charge from the Variable Account for Federal income taxes. We reserve the right to charge the Variable Account for any future Federal income taxes we may incur. Under current laws in several states, we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes. A-43 MANAGEMENT The directors and executive officers of NELICO and their principal business experience during the past five years are: DIRECTORS OF NELICO
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE BUSINESS ADDRESS DURING THE PAST FIVE YEARS ------------------ ----------------------------- James M. Benson................... Chairman, President and Chief Executive Officer of NELICO since 1998 and President, Individual Business of Metropolitan Life Insurance Company since 1999; formerly, Director, President and Chief Operating Officer 1997-1998 of NELICO; President and Chief Executive Officer 1996-1997 of Equitable Life Assurance Society; President and Chief Operating Officer 1996-1997 of Equitable Companies, Inc.; President and Chief Operating Officer 1994-1996 of Equitable Life Assurance Society. Susan C. Crampton................. Director of NELICO since 1996 and serves as Principal of The 6 Tarbox Road Vermont Partnership, a business consulting firm located in Jericho, VT 05465 Jericho, Vermont since 1989; formerly, Director 1989-1996 of New England Mutual. Edward A. Fox..................... Director of NELICO since 1996 and Chairman of the Board of R.R. Box 67-15 SLM Holdings since 1997; formerly, Director 1994-1996 of New Harborside, ME 04642 England Mutual. George J. Goodman................. Director of NELICO since 1996 and author, television Adam Smith's Global Television journalist, and editor. 50th Floor, Craig Drill Capital General Motors Building 767 Fifth Street New York, NY 10153 Dr. Evelyn E. Handler............. Director of NELICO since 1996 and President of Merrimack Ten Sterling Place Higher Education Associates, Inc. since 1998; formerly, Bow, NH 03304 Director 1987-1996 of New England Mutual and Executive Director and Chief Executive Officer 1994-1997 of the California Academy of Sciences. Philip K. Howard, Esq............. Director of NELICO since 1996 and Partner of the law firm of Covington & Burling Covington & Burling in New York City. 1330 Avenue of the Americas New York, NY 10019 Bernard A. Leventhal.............. Director of NELICO since 1996; formerly, Vice Chairman of Burlington Industries the Board of Directors 1995-1998 of Burlington Industries, 1345 Avenue of the Americas Inc. 17th Floor New York, NY 10105 Thomas J. May..................... Director of NELICO since 1996 and Chairman and Chief NSTAR Executive Officer of NSTAR since 2000; formerly, Chairman, 800 Boylston Street President and Chief Executive Officer of Boston Edison Boston, MA 02199 Company 1994-2000 and, Director 1994-1996 of New England Mutual. Stewart G. Nagler................. Director of NELICO since 1996 and Vice Chairman and Chief Metropolitan Life Financial Officer of Metropolitan Life Insurance Company Insurance Co. since 1998; formerly, Senior Executive Vice President and One Madison Avenue Chief Financial Officer 1986-1998 of Metropolitan Life New York, NY 10010 Insurance Company. Catherine A. Rein................. Director of NELICO since 1998 and President and Chief Metropolitan Property and Executive Officer of Metropolitan Property and Casualty Casualty Insurance Company since 1999; formerly, Senior Executive Vice President 700 Quaker Lane 1998-1999; Executive Vice President 1989-1998 of Warwick, RI 02887 Metropolitan Life Insurance Company.
A-44
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE BUSINESS ADDRESS DURING THE PAST FIVE YEARS ------------------ ----------------------------- Rand N. Stowell................... Director of NELICO since 1996 and President of United Timber P.O. Box 60 Corp. and President, Randwell Co. since 2000 of Weld, Maine; Weld, ME 04285 formerly, Director 1990-1996 of New England Mutual. Lisa M. Weber..................... Director of NELICO since 2000 and Executive Vice President Metropolitan Life of Metropolitan Life Insurance Company since 1998; formerly, Insurance Company Director of Diversity Strategies and Development and an One Madison Avenue Associate Director of Human Resources of Paine Webber. New York, New York 10010
EXECUTIVE OFFICERS OF NELICO OTHER THAN DIRECTORS
PRINCIPAL BUSINESS EXPERIENCE NAME DURING THE PAST FIVE YEARS ---- ----------------------------- James M. Benson................... See Directors above. David W. Allen.................... Senior Vice President of NELICO since 1996 and Vice President of Metropolitan Life Insurance Company since 2000; formerly, Senior Vice President 1994-1996 and Vice President 1990-1994 of New England Mutual. Pauline V. Belisle................ Senior Vice President of NELICO since 1996 and Vice President of Metropolitan Life Insurance Company since 2000; formerly, Senior Vice President 1994-1996 of New England Mutual. Mary Ann Brown.................... President, New England Products and Services of NELICO since 1998 and Senior Vice President of Metropolitan Life Insurance Company since 2000; formerly, Director, Worldwide Life Insurance 1997-1998 of Swiss Reinsurance New Markets; President & Chief Executive Officer 1996-1998 of Atlantic International Reinsurance Company; Executive Vice President 1996-1997 of Swiss Re Atrium and Swiss Re Services and Principal 1987-1996 of Tillinghast/Towers Perrin. Anthony J. Candito................ President, NEF Information Services of NELICO and Chief Information Officer since 1998 and Senior Vice President of Metropolitan Life Insurance Company since 2000; formerly, Senior Vice President 1996-1998 of NELICO; Senior Vice President 1995-1996 and Vice President 1994-1995 of New England Mutual. Thom A. Faria..................... President, Career Agency System of NELICO since 1996 and President - NEF Distribution of Metropolitan Life Insurance Company since 2000; formerly, Executive Vice President in 1996; Senior Vice President 1993-1996 of New England Mutual. Anne M. Goggin.................... Senior Vice President and General Counsel of NELICO since 2000 and Chief Counsel - Individual Business of Metropolitan Life Insurance Company since 2000; formerly, Senior Vice President and Associate General Counsel 1997-2000; Vice President and Counsel of NELICO in 1996; Vice President and Counsel 1994-1996 of New England Mutual. Daniel D. Jordan.................. Second Vice President, Counsel, Secretary and Clerk of NELICO since 1996 and Associate General Counsel of Metropolitan Life Insurance Company since 2001; formerly, Counsel and Assistant Secretary 1990-1996 of New England Mutual. Alan C. Leland, Jr. .............. Senior Vice President of NELICO since 1996 and Vice President of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1984-1996 of New England Mutual.
A-45
PRINCIPAL BUSINESS EXPERIENCE NAME DURING THE PAST FIVE YEARS ---- ----------------------------- George J. Maloof.................. Senior Vice President of NELICO since 1996 and Senior Vice President - NEF Distribution of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1991-1996 of New England Mutual. Kenneth D. Martinelli............. Senior Vice President of NELICO since 1999 and Senior Vice President - NEF Distribution of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1997-1999 of NELICO and Vice President 1994-1997 of The Equitable Life Assurance Company. Thomas W. McConnell............... Senior Vice President of NELICO since 1996 and Director, Chief Executive Officer and President of New England Securities Corporation since 1993. Hugh C. McHaffie.................. Senior Vice President of NELICO since 1999 and Senior Vice President of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1994-1999 of Manufacturers Life Insurance Company of North America. Stephen J. McLaughlin............. Senior Vice President of NELICO since 1999 and Senior Vice President - NEF Distribution of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1996-1999 of NELICO and Vice President 1994-1996 of New England Mutual. Thomas W. Moore................... Senior Vice President of NELICO since 1996 and Senior Vice President - NEF Distribution of Metropolitan Life Insurance Company since 2000; formerly, Vice President 1990-1996 of New England Mutual. David Y. Rogers................... Executive Vice President and Chief Financial Officer of NELICO since 1999 and Senior Vice President of Metropolitan Life Insurance Company since 2000; formerly, Partner, Actuarial Consulting 1992-1999 of Price Waterhouse Coopers LLP. John G. Small, Jr. ............... President, New England Services of NELICO since 1997 and Vice President of Metropolitan Life Insurance Company since 2000; formerly, Senior Vice President 1996-1997 of NELICO and Senior Vice President 1990-1996 of New England Mutual.
The principal business address for each of the directors and executive officers is the same as NELICO's except where indicated. VOTING RIGHTS We own Eligible Fund shares held in the Variable Account and vote those shares at meetings of the Eligible Fund shareholders. Under Federal securities law, you currently have the right to instruct us how to vote shares that are attributable to your Policy. Policy Owners who are entitled to give voting instructions and the number of shares attributable to their Policies are determined as of the meeting record date. If we do not receive timely instructions, we will vote shares in the same proportion as (i) the aggregate cash value of policies giving instructions, respectively, to vote for, against, or withhold votes on a proposition, bears to (ii) the total cash value in that Sub-Account for all policies for which we receive voting instructions. No voting privileges apply to the Fixed Account or to cash value removed from the Variable Account due to a Policy loan. We will vote Eligible Fund shares held by our general account (or any unregistered separate account for which voting privileges were not extended) in the same proportion as the total of (i) shares for which voting instructions were received and (ii) shares that are voted in proportion to such voting instructions. The Eligible Funds' Boards of Trustees monitor events to identify conflicts that may arise from the sale of Eligible Fund shares to variable life and variable annuity separate accounts of affiliated and, if applicable, unaffiliated insurance companies. Conflicts could result from changes in state insurance law or Federal income tax law, changes in investment management of an Eligible Fund, or differences in voting instructions given by variable life and variable annuity contract owners. If there is a material conflict, the Board of Trustees will determine what action should be taken, including the removal of the affected Sub-Accounts from the Eligible Fund(s), if necessary. If we believe any A-46 Eligible Fund action is insufficient, we will consider taking other action to protect Policy Owners. There could, however, be unavoidable delays or interruptions of operations of the Variable Account that we may be unable to remedy. We may disregard voting instructions for changes in the investment policy, investment adviser or principal underwriter of an Eligible Fund portfolio if required by state insurance law, or if we (i) reasonably disapprove of the changes and (ii) in the case of a change in investment policy or investment adviser, make a good faith determination that the proposed change is prohibited by state authorities or inconsistent with a Sub-Account's investment objectives. If we do disregard voting instructions, the next annual report to Policy Owners will include a summary of that action and the reasons for it. RIGHTS RESERVED BY NELICO We and our affiliates may change the voting procedures described above, and vote Eligible Fund shares without Policy Owner instructions, if the securities laws change. We also reserve the right: (1) to add Sub-Accounts; (2) to combine Sub-Accounts; (3) to substitute shares of a new fund for shares of an Eligible Fund (the new fund may have different fees and expenses), to close a Sub-Account to allocations of premium payments or cash value or both at any time in our sole discretion, or to transfer assets to our general account as permitted by applicable law; (4) to operate the Variable Account as a management investment company under the Investment Company Act of 1940 or in any other form; (5) to deregister the Variable Account under the Investment Company Act of 1940; (6) to combine it with other Variable Accounts; and (7) to transfer its assets to other Variable Accounts. We will exercise these rights in accordance with applicable law, including approval of Policy Owners if required. We will notify you if exercise of any of these rights would result in a material change in the Variable Account or its investments. TOLL-FREE NUMBERS For information about historical values of the Variable Account Sub-Accounts, call 1-800-333-2501. For Sub-Account transfers, premium reallocations, or Statements of Additional Information for the Eligible Funds, call 1-800-200-2214. You may also call our Client TeleService Center at 1-800-388-4000 for current information about your Policy values, to change or update Policy information such as your address, billing mode, beneficiary or ownership, or for information about other Policy transactions. REPORTS We will send you an annual statement showing your Policy's death benefit, cash value and any outstanding Policy loan principal. We will also confirm Policy loans, subaccount transfers, lapses, surrenders and other Policy transactions when they occur. You will be sent semiannual reports containing the financial statements of the Variable Account and the Eligible Funds. ADVERTISING PRACTICES Professional organizations may endorse the Policies. We may use such endorsements in Policy sales material. We may pay the professional organization for the use of its customer or mailing lists to distribute Policy promotional materials. An endorsement by a third party does not predict the future performance of the Policies. Articles discussing the Variable Account's investment performance, rankings and other characteristics may appear in publications. Some or all of these publishers or ranking services (including, but not limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) may publish their own rankings or performance reviews of variable contract separate accounts, including the Variable Account. We may use references to, or reprints of such articles or rankings as sales material and may include rankings that indicate the names of other variable contract separate A-47 accounts and their investment experience. We may also use "unit values" to provide information about the Variable Account's investment performance in this prospectus, marketing materials, and historical illustrations. Publications may use articles and releases, developed by NELICO, the Eligible Funds and other parties, about the Variable Account or the Eligible Funds. We may use references to or reprints of such articles in sales material for the Policies or the Variable Account. Such literature may refer to personnel of the advisers, who have portfolio management responsibility, and their investment style, and include excerpts from media articles. We are a member of the Insurance Marketplace Standards Association ("IMSA"), and may include the IMSA logo and information about IMSA membership in our advertisements. Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities. Policy sales material may refer to historical, current and prospective economic trends. In addition, sales material may discuss topics of general investor interest for the benefit of registered representatives and prospective Policy Owners. These materials may include, but are not limited to, discussions of college planning, retirement planning, reasons for investing and historical examples of the investment performance of various classes of securities, securities markets and indices. LEGAL MATTERS Legal matters in connection with the Policies described in this prospectus have been passed on by Anne M. Goggin, General Counsel of NELICO. Sutherland Asbill & Brennan LLP, of Washington, D.C., has provided advice on certain matters relating to federal securities laws. REGISTRATION STATEMENT This prospectus omits certain information contained in the Registration Statement which has been filed with the SEC. Copies of such additional information may be obtained from the SEC upon payment of the prescribed fee. EXPERTS The financial statements of New England Variable Life Separate Account of New England Life Insurance Company ("NELICO") and the consolidated financial statements of NELICO and subsidiaries included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Actuarial matters included in this prospectus have been examined by James J. Reilly, F.S.A., M.A.A.A., Second Vice President and Actuary of NELICO, as stated in his opinion filed as an exhibit to the Registration Statement. A-48 APPENDIX A ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES, CASH SURRENDER VALUES AND ACCUMULATED PREMIUMS The tables in Appendix A illustrate the way the Policies work. They show how the death benefit, cash surrender value and cash value could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Variable Account equal to constant after tax annual rates of 0%, 6% and 12%. The tables are based on a face amount of $500,000 for a male aged 45. The insured is assumed to be in the nonsmoker preferred class. The Tables assume no rider benefits and assume that no allocations are made to the Fixed Account. Values are first given based on current mortality and other Policy charges and then based on guaranteed mortality and other Policy charges. Illustrations show the Option A death benefit with the guideline premium test. The illustrated death benefits, cash surrender values and cash values for a Policy would be different, either higher or lower, from the amounts shown if the actual gross rates of return averaged 0%, 6% or 12%, but varied above and below that average during the period, if premiums were paid in other amounts or at other than annual intervals. They would also be different depending on the allocation of cash value among the Variable Account's Sub-Accounts, if the actual gross rate of return for all Sub-Accounts averaged 0%, 6% or 12%, but varied above or below that average for individual Sub-Accounts. They would also differ if a Policy loan or partial withdrawal were made during the period of time illustrated, if the insured were female or in another risk classification, or if the Policies were issued at unisex rates. For example, as a result of variations in actual returns, additional premium payments beyond those illustrated may be necessary to maintain the Policy in force for the periods shown or to realize the Policy values shown on particular illustrations even if the average rate of return is achieved. The death benefits, cash surrender values and cash values shown in the tables reflect: (i) deductions from premiums for the sales charge and state and federal premium tax charge; and (ii) a Monthly Deduction (consisting of a Policy charge, an administration and issue expense charge, an asset charge, and a charge for the cost of insurance) from the cash value on the first day of each Policy month. The cash surrender values reflect a Surrender Charge deducted from the cash value upon surrender, face reduction or lapse during the first ten Policy years. (See "Charges and Expenses".) The illustrations reflect an average of the investment advisory fees and operating expenses of the Eligible Funds, at an annual rate of .75% of the average daily net assets of the Eligible Funds. This average reflects expense subsidies by the investment advisers of certain Eligible Funds that may be voluntary and of limited duration. Taking account of the average investment advisory fee and operating expenses of the Eligible Funds, the gross annual rates of return of 0%, 6% and 12% correspond to net investment experience at constant annual rates of - %, % and %, respectively. The second column of each table shows the amount which would accumulate if an amount equal to the annual premium were invested to earn interest, after taxes, of 5% per year, compounded annually. The internal rate of return on cash surrender value is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the cash surrender value of the Policy. The internal rate of return on the death benefit is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the death benefit of the Policy. The internal rate of return is compounded annually, and the premiums are assumed to be paid at the beginning of each Policy year. If you request, we will furnish a personalized illustration reflecting the proposed insured's age, sex, underwriting classification, and the face amount or premium payment schedule requested. Where applicable, we will also furnish on request an illustration for a Policy which is not affected by the sex of the insured. A-49 MALE ISSUE AGE 45 $6,900 ANNUAL PREMIUM FOR PREFERRED NONSMOKER UNDERWRITING RISK $500,000 FACE AMOUNT OPTION A DEATH BENEFIT GUIDELINE PREMIUM TEST THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF POLICY INTEREST ------------------------------ ---------------------------- ---------------------------- YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% - ------ ----------- -- -- --- -- -- --- -- -- --- 1 $ $ $ $ $ $ $ $ $ $ 2 3 4 5 6 7 8 9 10 15 20 25 30 35 INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN ON CASH SURRENDER VALUE ON DEATH BENEFIT ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF POLICY --------------------------- --------------------------------- YEAR 0% 6% 12% 0% 6% 12% - ------ -- -- --- -- -- --- 1 % % % -- -- -- 2 3 4 5 6 7 8 9 10 15 20 25 30 35
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-50 MALE ISSUE AGE 45 $6,900 ANNUAL PREMIUM FOR PREFERRED NONSMOKER UNDERWRITING RISK $500,000 FACE AMOUNT OPTION A DEATH BENEFIT GUIDELINE PREMIUM TEST THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
DEATH BENEFIT CASH SURRENDER VALUE CASH VALUE PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF POLICY INTEREST ------------------------------ ------------------------- ------------------------- YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12% - ------ ----------- -- -- --- -- -- --- -- -- --- 1 $ $ $ $ $ $ $ $ $ $ 2 3 4 5 6 7 8 9 10 15 20 25 30 35 INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN ON CASH SURRENDER VALUE ON DEATH BENEFIT ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF POLICY --------------------------- --------------------------------- YEAR 0% 6% 12% 0% 6% 12% - ------ -- -- --- -- -- --- 1 % % % -- -- -- 2 3 4 5 6 7 8 9 10 15 20 25 30 35
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. A-51 APPENDIX B INVESTMENT EXPERIENCE INFORMATION This Appendix gives hypothetical illustrations of the Variable Account's and the Policy's investment experience based on the historical investment experience of the Eligible Funds. It does not predict future performance. The Policies became available in . Except as noted, each Eligible Fund was made available to the Variable Account when that fund commenced operations. The Variable Account and the first three series of the Zenith Fund, the Capital Growth Series, the Back Bay Advisors Bond Income Series and the Back Bay Advisors Money Market Series, commenced operations on August 26, 1983. The Back Bay Advisors Managed Series of the Zenith Fund commenced operations on May 1, 1987. The Westpeak Growth and Income Series and Harris Oakmark Mid Cap Value Series of the Zenith Fund commenced operations on April 30, 1993. The Loomis Sayles Small Cap Series of the Zenith Fund commenced operations on May 2, 1994 and was made available to the Variable Account on December 19, 1994. The MFS Investors Trust Series and MFS Research Managers Series of the Zenith Fund commenced operations on April 30, 1999. The remaining Zenith Fund Series shown in this Appendix commenced operations on October 31, 1994 and were made available to the Variable Account on May 1, 1995. The commencement of operations for the following portfolios of the Metropolitan Series Fund, Inc. was: March 3, 1997 for the Janus Mid Cap Portfolio; November 9, 1998 for the Russell 2000 Index Portfolio; and May 1, 2000 for the Putnam Large Cap Growth Portfolio. These three Portfolios were made available to the Variable Account on May 1, 2000. The commencement of operations for the following Metropolitan Series Fund, Inc. Portfolios was: November 9, 1998 for the Lehman Brothers Aggregate Bond Index Portfolio and the Morgan Stanley EAFE Index Portfolio; and July 5, 2000 for the MetLife Mid Cap Stock Index Portfolio and State Street Research Aurora Small Cap Value Portfolio. The Janus Growth Portfolio commenced operations on May 1, 2001 and is not included in this Appendix. These Portfolios were made available to the Variable Account on May 1, 2001. The commencement of operations for the following Metropolitan Series Fund, Inc. Portfolios was: June 24, 1983 for the State Street Research Investment Trust Portfolio; and November 9, 1998 for the Neuberger Berman Partners Mid Cap Value Portfolio. The Franklin Templeton Small Cap Growth Portfolio commenced operations on May 1, 2001 and is not included in this Appendix. These Portfolios are scheduled to be made available to the Variable Account in the fourth quarter of 2001. On December 1, 2000, the Putnam International Stock Portfolio of the Metropolitan Series Fund, Inc. (which commenced operations on May 1, 1991) replaced the Morgan Stanley International Magnum Equity Series of the Zenith Fund (which commenced operations on October 31, 1994). Performance figures for dates on or before December 1, 2000 reflect the performance of the Morgan Stanley International Magnum Equity Series. On April 27, 2001, the MetLife Stock Index Portfolio of the Metropolitan Series Fund, Inc. (which commenced operations on May 1, 1990) replaced the Westpeak Stock Index Series of the Zenith Fund (which commenced operations on May 1, 1987). Performance figures for dates on or before April 27, 2001 reflect the performance of the Westpeak Stock Index Series. The MFS Mid-Cap Growth Portfolio and the PIMCO Innovation Portfolio of the Met Investors Series Trust commenced operations on February 12, 2001 and are not included in this Appendix. These Portfolios are scheduled to be added as investment options of the Variable Account in the fourth quarter of 2001. The commencement of operations for the following Funds of the American Funds Insurance Series was: February 8, 1984 for the American Funds Growth Fund and the American Funds Growth-Income Fund; and April 30, 1998 for the American Funds Global Small Capitalization Fund. These Funds were added as investment options of the Variable Account on May 1, 2001. The VIP Equity-Income Portfolio and VIP Overseas Portfolio commenced operations on October 9, 1986 and January 28, 1987, respectively, and were added as investment options of the Variable Account on April 30, 1993. The VIP High Income Portfolio and the VIP II Asset Manager Portfolio commenced operations on September 19, 1985 and September 6, 1989, respectively, and were added as investment options of the Variable Account on December 19, 1994. A-52 We base the illustrations on the actual investment experience of the relevant Eligible Funds for the periods shown (net of actual charges and expenses incurred by the Eligible Funds). The illustrations assume that premiums are paid at the beginning of each year and that no loans, transfers or other Policy Owner transactions were made during the periods shown. Many factors other than investment experience affect Policy values and benefits. These investment experience figures do not reflect the charges deducted from Premiums and Monthly Deductions from the cash value. (See "Charges and Expenses".) NET RATES OF RETURN The annual net rate is the effective earnings rate at which the investment Sub-Accounts increased or decreased over a one-year period, based on the investment experience of the relevant Eligible Funds. The rate is calculated by taking the difference between the Sub-Accounts' ending values and beginning values of the period and dividing it by the beginning values of the period. The effective annual net rate of return since inception is the annualized effective interest rate at which the Sub-Accounts increased or decreased since the inception dates of the Sub-Accounts. For each Sub-Account, we calculate the rate by taking the difference between the Sub-Account's ending value and the value on the date of its inception and dividing it by the value on the date of inception. This result is the total net rate of return since inception ("Total Return"). The effective annual net rate of return is the rate which, if compounded annually, would equal the total net rate of return since inception. A-53 SUB-ACCOUNTS INVESTING IN ZENITH FUND
ANNUAL NET RATE OF RETURN ----------------------------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 8/26/83- ------------------------------------------------------------------------------------------------ 12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Capital Growth*...... 8.77% -0.84% 67.68% 94.72% 52.32% -9.02% 30.43% -3.72% 53.60% -6.29% Back Bay Advisors Bond Income......... 2.96 12.32 18.46 14.55 2.01 8.10 12.02 7.82 17.66 7.91 Back Bay Advisors Money Market........ 3.21 10.45 7.99 6.54 6.26 7.25 8.98 7.92 5.95 3.54 ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------- 8/26/83- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 - ----------- ------------------------------------------------------------------------------------- TOTAL 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN -------- -------- -------- -------- -------- -------- -------- -------- -------- Capital Growth*...... 14.68% -7.30% 37.68% 20.77% 23.17% 33.76% 15.41% -4.89% 2,726.99% Back Bay Advisors Bond Income......... 12.33 -3.60 20.90 4.35 10.61 8.77 -0.71 7.88 367.78 Back Bay Advisors Money Market........ 2.71 3.71 5.44 4.87 5.08 5.00 4.70 5.96 177.75 8/26/83- SUB-ACCOUNT 12/31/00 - ----------- EFFECTIVE ANNUAL --------- Capital Growth*...... 21.24% Back Bay Advisors Bond Income......... 9.30 Back Bay Advisors Money Market........ 6.06
ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------------------ SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 5/1/87- ------------------------------------------------------------------------------------- 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 -------- -------- -------- -------- -------- -------- -------- -------- -------- Back Bay Advisors Managed................... -0.82% 9.21% 18.79% 2.95% 19.87% 6.43% 10.37% -1.36% 30.94% ANNUAL NET RATE OF RETURN ---------------------------------------------------- 5/1/87- 5/1/87- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- ---------------------------------------------------- TOTAL EFFECTIVE 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- --------- Back Bay Advisors Managed................... 14.74% 26.25% 19.36% 9.69% -3.62% 340.39% 11.45%
ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 4/30/93 -------------------------------------------------------------------------- 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 -------- -------- -------- -------- -------- -------- -------- -------- Westpeak Growth and Income......... 13.49% -1.45% 36.13% 17.80% 33.14% 24.14% 9.08% -5.39% Harris Oakmark Mid Cap Value**..... 13.33 -0.52 30.03 17.31 17.03 -5.70 0.10 20.13 4/30/93- 4/30/93- SUB-ACCOUNT 12/31/00 12/31/00 - ----------- TOTAL EFFECTIVE RETURN ANNUAL -------- --------- Westpeak Growth and Income......... 207.41% 15.76% Harris Oakmark Mid Cap Value**..... 130.68 11.51
ANNUAL NET RATE OF RETURN -------------------------------------------------------------------------- 5/2/94 5/2/94 SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 5/2/94- --------------------------------------------------------------- TOTAL EFFECTIVE 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- -------- -------- --------- Loomis Sayles Small Cap..... -4.17% 28.52% 30.36% 24.54% -1.94% 31.42% 4.99% 172.74% 16.24%
ANNUAL NET RATE OF RETURN --------------------------------------------------------------------------- 10/31/94- 10/31/94- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 10/31/94 ---------------------------------------------------------------- TOTAL EFFECTIVE 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- -------- --------- --------- Alger Equity Growth....... -5.54% 48.33% 12.89% 25.32% 47.41% 33.80% -13.90% 241.24% 22.02% Balanced***............... -0.24 24.48 16.62 15.89 8.84 -5.30 -2.16 69.42 8.92 Davis Venture Value....... -3.24 38.94 25.52 33.16 14.13 17.22 9.21 227.32 21.20
ANNUAL NET RATE OF RETURN 4/30/99- 4/30/99- ------------------------------- 12/31/00 12/31/00 4/30/99- FOR ONE YEAR ENDING TOTAL EFFECTIVE SUB-ACCOUNT 12/31/99 12/31/00 RETURN ANNUAL - ----------- -------- -------- -------- --------- MFS Investors Trust......................................... 1.08% -0.39% 2.27% 1.35% MFS Research Managers....................................... 17.90 -3.88 14.96 8.69
- ------------ * Rates of return reflect the Capital Growth Series' former investment advisory fee of .50% of average daily net assets for the period through December 31, 1987 and its current advisory fee schedule thereafter. ** The Harris Oakmark Mid Cap Value Series' Sub-adviser was Loomis Sayles until May 1, 1998, when Goldman Sachs Asset Management became the sub-adviser. Harris Associates became the sub-adviser on May 1, 2000. Rates of return reflect the Series' former investment advisory fee of .70% of average daily net assets for the period through April 30, 1998, and .75% thereafter. *** The Balanced Series' sub-adviser was Loomis, Sayles until May 1, 2000, when Wellington Management Company became the sub-adviser. SUB-ACCOUNTS INVESTING IN METROPOLITAN SERIES FUND, INC.
ANNUAL NET RATE OF RETURN -------------------------------------------- 3/3/97- 3/3/97- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 3/3/97- -------------------------------- TOTAL EFFECTIVE 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- --------- Janus Mid Cap............................................. 26.64% 36.85% 122.37% -31.41% 167.06% 29.23%
ANNUAL NET RATE OF RETURN -------------------------------- 11/9/98- 11/9/98- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 11/9/98- -------------------- TOTAL EFFECTIVE 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- --------- Russell 2000 Index.......................................... 5.44% 22.43% -4.04% 23.87% 10.50%
ANNUAL NET RATE OF RETURN 5/1/00- 5/1/00- -------------- 12/31/00 12/31/00 5/1/00- TOTAL EFFECTIVE SUB-ACCOUNT 12/31/00 RETURN ANNUAL - ----------- -------- -------- --------- Putnam Large Cap Growth............................................................... -27.12% -27.12% N/A
A-54
ANNUAL NET RATE OF RETURN --------------------------------------------------------------------------- FOR ONE YEAR ENDING 10/31/94- 10/31/94- SUB-ACCOUNT --------------------------------------------------------------- 12/31/00 12/31/00 - ----------- 10/31/94- TOTAL EFFECTIVE 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL --------- -------- -------- -------- -------- -------- -------- --------- --------- Putnam International Stock*..................... 2.16% 5.97% 6.41% -1.55% 7.01% 24.30% -10.42% 35.66% 5.07%
ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------------------ FOR ONE YEAR ENDING SUB-ACCOUNT ------------------------------------------------------------------------------------- - ----------- 5/1/87- 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 -------- -------- -------- -------- -------- -------- -------- -------- -------- MetLife Stock Index**...... -12.53% 16.05% 29.83% -4.38% 30.11% 7.03% 9.45% 0.86% 36.58% ANNUAL NET RATE OF RETURN ---------------------------------------------------- FOR ONE YEAR ENDING 5/1/87- 5/1/87- SUB-ACCOUNT ---------------------------------------------------- 12/31/00 12/31/00 - ----------- TOTAL EFFECTIVE 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- --------- MetLife Stock Index**...... 22.16% 32.16% 27.62% 20.08% -9.27% 492.26% 13.90%
SUB-ACCOUNT - ----------- ANNUAL NET RATE OF RETURN 7/5/00- 7/5/00- -------------- 12/31/00 12/31/00 7/5/00- TOTAL EFFECTIVE 12/31/00 RETURN ANNUAL -------- -------- --------- MetLife Mid Cap Stock Index................................. 6.71% 6.71% N/A
ANNUAL NET RATE OF RETURN ------------------------------ 11/9/98- 11/9/98- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 11/9/98- ------------------- TOTAL EFFECTIVE 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- --------- Morgan Stanley EAFE Index................................... 8.07% 24.59% -14.69% 14.46% 6.50% Lehman Brothers Aggregate Bond Index........................ 1.34 -1.62 11.13 11.70 4.90 Neuberger Berman Partners Mid Cap Value..................... 7.40 17.34 27.93 56.87 25.03
ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------------------------------ SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 6/24/83- -------------------------------------------------------------------------------------------------- 12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- State Street Research Investment Trust***............ -2.48% 0.28% 34.45% 9.93% 6.92% 11.82% 31.80% -5.64% 32.76% 11.29% 14.11% ANNUAL NET RATE OF RETURN -------------------------------------------------------------------- 6/24/83- 6/24/83- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- -------------------------------------------------------------------- TOTAL EFFECTIVE 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- -------- -------- --------- State Street Research Investment Trust***............ -3.50% 32.81% 21.87% 28.04% 28.42% 18.17% -6.41% 911.45% 14.91%
ANNUAL NET SUB-ACCOUNT RATE OF RETURN 7/5/00- 7/5/00- - ----------- -------------- 12/31/00 12/31/00 7/5/00 TOTAL EFFECTIVE 12/31/00 RETURN ANNUAL -------- -------- --------- State Street Research Aurora Small Cap Value................ 23.07% 20.05% N/A
- ------------ * On December 1, 2000, the Putnam International Stock Portfolio of the Metropolitan Series Fund, Inc. replaced the Morgan Stanley International Magnum Equity Series of the Zenith Fund (which commenced operations on October 31, 1994). Performance figures for dates on or before December 1, 2000 reflect the performance of the Morgan Stanley International Magnum Equity Series. ** On April 27, 2001, the MetLife Stock Index Portfolio of the Metropolitan Series Fund, Inc. replaced the Westpeak Stock Index Series of the Zenith Fund (which commenced operations on May 1, 1987). Performance figures for dates on or before April 27, 2001 reflect the performance of the Westpeak Stock Index Series. *** The State Street Research Investment Trust Portfolio commenced operations on June 24, 1983. Performance figures for the period from June 24, 1983 through September 6, 1994 are based on month-end net asset values, as daily net asset value information is not available. SUB-ACCOUNTS INVESTING IN VIP
ANNUAL NET RATE OF RETURN ----------------------------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 10/9/86- ------------------------------------------------------------------------------------------------ 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Equity-Income........ 1.54% -1.38% 22.40% 17.05% -15.50% 31.11% 16.59% 18.00% 6.80% 34.76% ANNUAL NET RATE OF RETURN ---------------------------------------------------- 10/9/86- 10/9/86- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- ---------------------------------------------------- TOTAL EFFECTIVE 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- --------- Equity-Income........ 14.00% 27.79% 11.35% 6.06% 8.15% 477.53% 13.12%
ANNUAL NET RATE OF RETURN ----------------------------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 1/28/87- ------------------------------------------------------------------------------------------------ 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Overseas............. -7.11% 7.86% 25.97% -1.91% 7.73% -10.94% 37.01% 1.47% 9.40% 12.93% ANNUAL NET RATE OF RETURN ------------------------------ 1/28/87- 1/28/87- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- ------------------------------ TOTAL EFFECTIVE 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- --------- Overseas............. 11.28% 12.47% 42.27% -19.31% 197.86% 8.15%
ANNUAL NET RATE OF RETURN ----------------------------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 9/19/85- ------------------------------------------------------------------------------------------------ 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- High Income.......... 6.20% 17.39% 0.96% 11.36% -4.41% -2.48% 34.74% 22.86% 20.10% -1.79% ANNUAL NET RATE OF RETURN --------------------------------------------------------------- 9/19/85- 9/19/85- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- --------------------------------------------------------------- TOTAL EFFECTIVE 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- -------- --------- High Income.......... 20.30% 13.75% 17.37% -4.57% 7.89% -22.67% 226.56% 8.05%
SUB-ACCOUNT INVESTING IN VIP II
ANNUAL NET RATE OF RETURN ------------------------------------------------------------------------------------------------ SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- 9/6/89- ------------------------------------------------------------------------------------- 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 -------- -------- -------- -------- -------- -------- -------- -------- -------- Asset Manager.................. 1.23% 6.45% 22.25% 11.43% 20.93% -6.32% 16.66% 14.32% 20.35% ANNUAL NET RATE OF RETURN ------------------------------ 9/6/89- 9/6/89- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- ------------------------------ TOTAL EFFECTIVE 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- --------- Asset Manager.................. 14.76% 10.81% -4.17% 223.71% 10.94%
A-55 SUB-ACCOUNTS INVESTING IN AMERICAN FUNDS INSURANCE SERIES
ANNUAL NET RATE OF RETURN ----------------------------------------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING - ----------- ------------------------------------------------------------------------------------------------ 2/8/84- 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Growth............... 1.64% 19.46% 29.72% 7.51% 13.99% 30.47% -4.91% 32.57% 10.20% 15.71% Growth-Income........ 8.71 36.57 21.52 0.05 13.73 24.70 -3.12 23.38 7.35 11.69 ANNUAL NET RATE OF RETURN -------------------------------------------------------------------------- SUB-ACCOUNT FOR ONE YEAR ENDING 2/8/84- 2/8/84- - ----------- -------------------------------------------------------------------------- 12/31/00 12/31/00 TOTAL EFFECTIVE 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- -------- -------- -------- -------- --------- Growth............... -0.02% 32.57% 12.78% 29.47% 34.90% 56.88% 4.21% 1,627.97% 18.37% Growth-Income........ 1.53 32.30 18.12 25.22 17.80 10.92 7.68 925.68 14.77
ANNUAL NET RATE OF RETURN ------------------------------ 4/30/98- 4/30/98- SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/00 12/31/00 - ----------- 4/30/98- ------------------- TOTAL EFFECTIVE 12/31/98 12/31/99 12/31/00 RETURN ANNUAL -------- -------- -------- -------- --------- Global Small Capitalization................................. 2.30% 90.89% -16.73% 59.51% 19.09%
A-56 POLICY PERFORMANCE The material below assumes a Policy was issued with a $500,000 face amount and Option A death benefit with the guideline premium test, with annual premiums paid on August 26 of each year (May 1 in the case of the Metropolitan MetLife Stock Index, Zenith Back Bay Managed and Metropolitan Putnam Large Cap Growth Sub-Accounts; May 2 in the case of the Zenith Loomis Sayles Small Cap Sub-Account; October 31 in the case of the Zenith Balanced, Zenith Davis Venture Value, Zenith Alger Equity Growth and Metropolitan Putnam International Stock Sub-Accounts; October 9 in the case of the VIP Equity-Income Sub-Account; January 28 in the case of the VIP Overseas Sub-Account; April 30 in the case of the Zenith Westpeak Growth and Income, Zenith Harris Oakmark Mid Cap Value, Zenith MFS Investors Trust and Zenith MFS Research Managers Sub-Accounts; September 19 in the case of the VIP High Income Sub-Account; September 6 in the case of the VIP II Asset Manager Sub-Account; March 3 in the case of the Metropolitan Janus Mid Cap Sub-Account; November 9 in the case of the Metropolitan Russell 2000 Index Sub-Account; June 24 in the case of the Metropolitan State Street Research Investment Trust Sub-Account; November 9 in the case of the Metropolitan Lehman Brothers Aggregate Bond Index, the Metropolitan Morgan Stanley EAFE Index and the Metropolitan Neuberger Berman Partners Mid Cap Value Sub-Accounts; July 5 in the case of the Metropolitan MetLife Mid Cap Stock Index and the Metropolitan State Street Research Aurora Small Cap Value Sub-Accounts; February 8 in the case of the American Funds Growth Sub-Account, and the American Funds Growth-Income Sub-Account; and April 30 in the case of the American Funds Global Small Capitalization Sub-Account), to a male age 45 in the nonsmoker preferred risk category. The death benefits, cash values and internal rates of return assume in each instance that the entire Policy value was invested in the particular Sub-Account for the period shown. The illustrations of Policy investment experience reflect all Policy charges based on NELICO's current rates. MALE NON-SMOKER PREFERRED RISK AGE 45 $500,000 FACE AMOUNT OPTION A DEATH BENEFIT GUIDELINE PREMIUM TEST ZENITH CAPITAL GROWTH SUB-ACCOUNT*
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- August 26, 1983.............. $ $ $ $ December 31, 1983............ December 31, 1984............ December 31, 1985............ December 31, 1986............ December 31, 1987............ December 31, 1988............ December 31, 1989............ December 31, 1990............ December 31, 1991............ December 31, 1992............ December 31, 1993............ December 31, 1994............ December 31, 1995............ December 31, 1996............ December 31, 1997............ December 31, 1998............ December 31, 1999............ December 31, 2000............
A-57 ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- August 26, 1983.............. $ $ $ $ December 31, 1983............ December 31, 1984............ December 31, 1985............ December 31, 1986............ December 31, 1987............ December 31, 1988............ December 31, 1989............ December 31, 1990............ December 31, 1991............ December 31, 1992............ December 31, 1993............ December 31, 1994............ December 31, 1995............ December 31, 1996............ December 31, 1997............ December 31, 1998............ December 31, 1999............ December 31, 2000............
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- August 26, 1983.............. $ $ $ $ December 31, 1983............ December 31, 1984............ December 31, 1985............ December 31, 1986............ December 31, 1987............ December 31, 1988............ December 31, 1989............ December 31, 1990............ December 31, 1991............ December 31, 1992............ December 31, 1993............ December 31, 1994............ December 31, 1995............ December 31, 1996............ December 31, 1997............ December 31, 1998............ December 31, 1999............ December 31, 2000............
A-58 ZENITH BACK BAY MANAGED SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- May 1, 1987.................... $ $ $ $ December 31, 1987.............. December 31, 1988.............. December 31, 1989.............. December 31, 1990.............. December 31, 1991.............. December 31, 1992.............. December 31, 1993.............. December 31, 1994.............. December 31, 1995.............. December 31, 1996.............. December 31, 1997.............. December 31, 1998.............. December 31, 1999.............. December 31, 2000..............
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------- -------- -------------- ------------- April 30, 1993.................... $ $ $ $ December 31, 1993................. December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
ZENITH HARRIS OAKMARK MID CAP VALUE SUB-ACCOUNT**
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------- -------- -------------- ------------- April 30, 1993.................... $ $ $ $ December 31, 1993................. December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------- -------- -------------- ------------- May 2, 1994....................... $ $ $ $ December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
A-59 ZENITH BALANCED SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- October 31, 1994.................. $ $ $ $ December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- October 31, 1994.................. $ $ $ $ December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- October 31, 1994.................. $ $ $ $ December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
ZENITH MFS INVESTORS TRUST SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------ -------- -------------- ------------- April 30, 1999...................... $ $ $ $ December 31, 1999................... December 31, 2000...................
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------ -------- -------------- ------------- April 30, 1999.................... $ $ $ $ December 31, 1999................. December 31, 2000.................
A-60 METROPOLITAN JANUS MID CAP SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- March 3, 1997..................... $ $ $ $ December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- November 9, 1998.................. $ $ $ $ December 31, 1998................. December 31, 1999................. December 31, 2000.................
METROPOLITAN PUTNAM LARGE CAP GROWTH SUB-ACCOUNT TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------ -------- -------------- ------------- May 1, 2000......................... $ $ $ $ December 31, 2000...................
METROPOLITAN PUTNAM INTERNATIONAL STOCK SUB-ACCOUNT*** TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- ------- -------- -------------- ------------- October 31, 1994.................. $ $ $ $ December 31, 1994................. December 31, 1995................. December 31, 1996................. December 31, 1997................. December 31, 1998................. December 31, 1999................. December 31, 2000.................
METROPOLITAN METLIFE STOCK INDEX SUB-ACCOUNT**** TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- May 1, 1987.................... $ $ $ $ December 31, 1987.............. December 31, 1988.............. December 31, 1989.............. December 31, 1990.............. December 31, 1991.............. December 31, 1992.............. December 31, 1993.............. December 31, 1994.............. December 31, 1995.............. December 31, 1996.............. December 31, 1997.............. December 31, 1998.............. December 31, 1999.............. December 31, 2000..............
A-61
METROPOLITAN METLIFE MID CAP STOCK INDEX SUB-ACCOUNT TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------ -------- -------------- ------------- July 5, 2000........................ $ $ $ $ December 31, 2000................... %
METROPOLITAN MORGAN STANLEY EAFE INDEX SUB-ACCOUNT TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------ -------- -------------- ------------- November 9, 1998.................... $ $ $ $ December 31, 1998................... % December 31, 1999................... % December 31, 2000...................
METROPOLITAN LEHMAN BROTHERS AGGREGATE BOND INDEX SUB-ACCOUNT TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------- -------- -------------- ------------- November 9, 1998.................. $ $ $ $ December 31, 1998................. % December 31, 1999................. % December 31, 2000.................
METROPOLITAN STATE STREET RESEARCH AURORA SMALL CAP VALUE SUB-ACCOUNT TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------ -------- -------------- ------------- July 5, 2000........................ $ $ $ $ December 31, 2000................... %
A-62 METROPOLITAN STATE STREET RESEARCH INVESTMENT TRUST SUB-ACCOUNT*****
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- -------- -------- -------------- ------------- June 24, 1983................... $ $ $ $ December 31, 1983............... December 31, 1984............... December 31, 1985............... December 31, 1986............... December 31, 1987............... December 31, 1988............... December 31, 1989............... December 31, 1990............... December 31, 1991............... December 31, 1992............... December 31, 1993............... December 31, 1994............... December 31, 1995............... December 31, 1996............... December 31, 1997............... December 31, 1998............... December 31, 1999............... December 31, 2000...............
METROPOLITAN NEUBERGER BERMAN PARTNERS MID CAP VALUE SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- -------- ------- -------- -------------- ------------- November 9, 1998.................. $ $ $ $ December 31, 1998................. December 31, 1999................. December 31, 2000.................
VIP EQUITY-INCOME SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- October 9, 1986................ $ $ $ $ December 31, 1986.............. December 31, 1987.............. December 31, 1988.............. December 31, 1989.............. December 31, 1990.............. December 31, 1991.............. December 31, 1992.............. December 31, 1993.............. December 31, 1994.............. December 31, 1995.............. December 31, 1996.............. December 31, 1997.............. December 31, 1998.............. December 31, 1999.............. December 31, 2000..............
A-63 VIP OVERSEAS SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- January 28, 1987............... $ $ $ $ December 31, 1987.............. December 31, 1988.............. December 31, 1989.............. December 31, 1990.............. December 31, 1991.............. December 31, 1992.............. December 31, 1993.............. December 31, 1994.............. December 31, 1995.............. December 31, 1996.............. December 31, 1997.............. December 31, 1998.............. December 31, 1999.............. December 31, 2000..............
VIP HIGH INCOME SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- September 19, 1985............. $ $ $ $ December 31, 1985.............. December 31, 1986.............. December 31, 1987.............. December 31, 1988.............. December 31, 1989.............. December 31, 1990.............. December 31, 1991.............. December 31, 1992.............. December 31, 1993.............. December 31, 1994.............. December 31, 1995.............. December 31, 1996.............. December 31, 1997.............. December 31, 1998.............. December 31, 1999.............. December 31, 2000..............
VIP II ASSET MANAGER SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT - ---- -------- -------- -------- -------- -------------- ------------- September 6, 1989............... $ $ $ $ December 31, 1989............... December 31, 1990............... December 31, 1991............... December 31, 1992............... December 31, 1993............... December 31, 1994............... December 31, 1995............... December 31, 1996............... December 31, 1997............... December 31, 1998............... December 31, 1999............... December 31, 2000...............
A-64 AMERICAN FUNDS GROWTH SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- ------- ----- -------- -------------- ------------- February 8, 1984................ $ $ $ $ December 31, 1984............... December 31, 1985............... December 31, 1986............... December 31, 1987............... December 31, 1988............... December 31, 1989............... December 31, 1990............... December 31, 1991............... December 31, 1992............... December 31, 1993............... December 31, 1994............... December 31, 1995............... December 31, 1996............... December 31, 1997............... December 31, 1998............... December 31, 1999............... December 31, 2000...............
AMERICAN FUNDS GROWTH-INCOME SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- ------- ----- -------- -------------- ------------- February 8, 1984................ $ $ $ $ December 31, 1984............... December 31, 1985............... December 31, 1986............... December 31, 1987............... December 31, 1988............... December 31, 1989............... December 31, 1990............... December 31, 1991............... December 31, 1992............... December 31, 1993............... December 31, 1994............... December 31, 1995............... December 31, 1996............... December 31, 1997............... December 31, 1998............... December 31, 1999............... December 31, 2000...............
A-65 AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION SUB-ACCOUNT
TOTAL INTERNAL RATE INTERNAL RATE PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT ---- -------- ------- ----- -------- -------------- ------------- April 30, 1998..................... $ December 31, 1998.................. December 31, 1999.................. December 31, 2000..................
- ------------ * Rates of return and Policy values and benefits shown reflect the Capital Growth Series' investment advisory fee of .50% of average daily net assets for the period through December 31, 1987 and its current advisory fee schedule thereafter. ** Rates of return and Policy values and benefits shown reflect the Harris Oakmark Mid Cap Value Series' investment advisory fee of .70% of average daily net assets for the period through April 30, 1998 and .75% thereafter. *** On December 1, 2000, the Putnam International Stock Portfolio of the Metropolitan Series Fund, Inc. replaced the Morgan Stanley International Magnum Equity Series of the Zenith Fund. Performance figures for dates on or before December 1, 2000 reflect the performance of the Morgan Stanley International Magnum Equity Series. **** On April 27, 2001, the MetLife Stock Index Portfolio of the Metropolitan Series Fund, Inc. replaced the Westpeak Stock Index Series of the Zenith Fund. Performance figures for dates on or before April 27, 2001 reflect the performance of the Westpeak Stock Index Series. ***** The State Street Research Investment Trust Portfolio commenced operations on June 24, 1983. Performance figures for the period from June 24, 1983 through September 6, 1994 are based on month-end net asset values, as daily net asset value information is not available. A-66 APPENDIX C LONG TERM MARKET TRENDS The information below compares the average annual returns of common stock, high grade corporate bonds and 30-day U.S. Treasury bills over 20-year and 30-year holding periods.* The average annual returns assume the reinvestment of dividends, capital gains and interest. This is an historical record and does not predict future performance. The information does not reflect Policy charges. The data indicates that, historically, the investment performance of common stocks over long periods has been positive and generally superior to that of long-term, high grade debt securities. Common stocks have, however, been subject to more dramatic market adjustments over short periods. Over the 56 20-year time periods beginning in 1926 and ending in 2000 (i.e., 1926-1945, 1927-1946, and so on through 1981-2000): -- The average annual return of common stocks was superior to that of high grade, long-term corporate bonds in 53 of the 56 periods. -- The average annual return of common stocks surpassed that of U.S. Treasury bills in each of the 56 periods. -- Common stock average annual returns exceeded the average annual rate of inflation in each of the 56 periods. Over the 46 30-year periods beginning in 1926 and ending in 2000, the average annual return of common stocks was superior to that of high grade, long-term corporate bonds, U.S. Treasury bills and inflation in all 46 periods. From 1926 through 2000 the average annual return for common stocks was 11.0%, compared to 5.7% for high grade, long-term corporate bonds, 3.8% for U.S. Treasury bills and 3.1% for the Consumer Price Index. - ------------ * Used with permission. (C)2001 Ibbotson Associates, Inc. All rights reserved. [Certain portions of this work were derived from copyrighted works of Roger G. Ibbotson and Rex Sinquefield.] ------------------------ SUMMARY: HISTORIC S&P STOCK INDEX RESULTS FOR SPECIFIC HOLDING PERIODS The following chart categorizes the historical results of the Standard & Poor's 500 Stock Index with dividends reinvested, over one-year, five-year and twenty-year periods beginning in 1926 and ending 2000. The chart does not predict future stock market results. It shows the historic performance of a broad index of stocks, and not the performance of any fund or investment. ------------------------ PERCENT OF HOLDING PERIODS WITH THE FOLLOWING RETURNS:
GREATER 0- 5.01- 10.01- 15.01- THAN HOLDING NEGATIVE 5.00% 10.00% 15.00% 20.00% 20.00% PERIOD RETURN RETURN RETURN RETURN RETURN RETURN - ------- -------- ------ ------ ------ ------ ------- 1 year.................................. 26% 4% 11% 7% 12% 40% 5 years................................. 10% 14% 14% 31% 18% 13% 10 years................................ 3% 10% 33% 24% 28% 2% 20 years................................ 0% 6% 31% 53% 10% 0%
- ------------ Used with permission. (C)2001 Ibbotson Associates, Inc. All rights reserved. [Certain portions of this work were derived from copyrighted works of Roger G. Ibbotson and Rex Sinquefield.] A-67 APPENDIX D USES OF LIFE INSURANCE These are examples of ways the Policy can be used to address certain financial objectives. FAMILY INCOME PROTECTION You may purchase life insurance on the lives of family income earners to provide a death benefit to cover final expenses, and continue current family income. The amount of insurance you purchase should be an amount which will provide a death benefit that, when invested outside the policy at a reasonable interest rate, will generate enough money to replace the individual's income. ESTATE PROTECTION A trust may purchase life insurance on the life of the person whose estate will incur federal estate taxes upon the person's death. The amount of insurance purchased should equal the amount of the estimated estate tax liability. On the insured's death, the trustee makes the death proceeds available to the estate for the payment of estate tax costs. EDUCATION FUNDING You may purchase life insurance on the life of the parent(s) or primary person funding an education. The amount of insurance you purchase should equal the total education cost projected at a reasonable inflation rate. In the event of death, the guaranteed death benefit is available to help pay the education costs. If the insured lives through the education years, cash value may be accessed to meet education costs. Loans or withdrawals reduce the Policy's death benefit. MORTGAGE PROTECTION You may purchase life insurance on the life of the person responsible for making mortgage payments. The amount of insurance you purchase should equal the mortgage amount. In the event of the insured's death, the guaranteed death benefit can be used to pay the mortgage balance. During the insured's lifetime, cash value may be accessed late in the mortgage term to help make the remaining mortgage payments. Loans or withdrawals reduce the Policy's death benefit. KEY PERSON PROTECTION A business may purchase life insurance on the life of a key person in an amount equal to the key person's value, considering salary, benefits, and contribution to the business. On the key person's death, the business uses the death benefit to ease the interruption of business operations and/or to provide a replacement fund for hiring a new executive. BUSINESS CONTINUATION PROTECTION You can insure each business owner in an amount equal to the value of each owner's business interest. In the event of death, the guaranteed death benefit provides funds for the purchase of the deceased's business interest by the business, or surviving owners, from the deceased owner's heirs. RETIREMENT INCOME You may purchase life insurance on the life of a family income earner during his or her working life. If the insured lives to retirement, cash value may be accessed to provide retirement payments. In the event of the insured's death, the proceeds may be used to provide retirement income to his or her spouse. Loans or withdrawals reduce the Policy's death benefit. A-68 Because the Policy provides a death benefit and cash value accumulation, you can use the Policy for various individual and business planning purposes. If you purchase the Policy for such purposes, you assume certain risks, particularly if the Policy's cash value, as opposed to its death benefit, will be the principal Policy feature used for such planning purposes. If the investment performance of the Sub-Accounts to which cash value is allocated is poorer than expected, or if you don't pay sufficient premiums or maintain cash values, the Policy may lapse or may not accumulate sufficient cash value or cash surrender value to fund the purpose for which you purchased the Policy. Because the Policy is designed to provide benefits on a long-term basis, before purchasing a Policy for a specialized purpose, you should consider whether the long-term nature of the Policy is consistent with your goals. If you wish to access your Policy's cash value, through loans or withdrawals, you should consult your tax adviser about possible tax consequences. (See "Tax Considerations".) A-69 APPENDIX E TAX INFORMATION The Office of Tax Analysis of the U.S. Department of the Treasury published a "Report to the Congress on the Taxation of Life Insurance Company Products" in March 1990. Page 4 of this report is Table 1.1, a "Comparison of Tax Treatment of Life Insurance Products and Other Retirement Savings Plans". Because it is a convenient summary of the relevant tax characteristics of these products and plans, we have reprinted it here, and added footnotes to reflect exceptions to the general rules. ------------------------ TABLE 1.1 COMPARISON OF TAX TREATMENT OF LIFE INSURANCE PRODUCTS AND OTHER RETIREMENT SAVINGS PLANS
CASH-VALUE LIFE NON-QUALIFIED QUALIFIED INSURANCE ANNUITIES IRA'S PENSION ---------- ------------- ----- --------- Annual Contribution Limits No No Yes Yes Income Eligibility Limits No No Yes** No Borrowing Treated as Distributions No* Yes Loans not allowed Yes, beyond $50,000 Income Ordering Rules (Income included in First Distribution) No* Yes Yes Yes Early Withdrawal Penalties No* Yes*** Yes*** Yes*** Minimum Distribution Rules by Age 70 1/2 No No Yes Yes Maximum Annual Distribution Rules No No Yes Yes Anti-discrimination Rules No No No Yes
- ------------ Department of the Treasury March 1990 Office of Tax Analysis * If the Policy is not a modified endowment contract. ** If amounts paid in to fund the IRA are deductible; once over the income eligibility limits amounts paid into an IRA are permitted but not deductible. *** There are several exceptions to the application of the early withdrawal penalties for annuities, IRAs and qualified pensions. This appendix is not tax advice. You should consult with your own tax advisor for more complete information. A-70 APPENDIX F GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST In order to meet the Internal Revenue Code's definition of life insurance, the Policies provide that the death benefit will not be less than what is required by the "cash value accumulation test" under Section 7702(a)(1) of the Internal Revenue Code, or the "guideline premium test" under Section 7702(a)(2) of the Internal Revenue Code, as selected by you when the Policy is issued. The test you choose at issue will be used for the life of the Policy. (See "Death Benefit".) For the cash value accumulation test, sample net single premiums for selected ages of male and female insureds are listed below.
NET SINGLE PREMIUM ------------------- AGE MALE FEMALE - --- -------- -------- 30.......................................................... 40.......................................................... 50.......................................................... 60.......................................................... 70.......................................................... 80.......................................................... 90.......................................................... 100.........................................................
For the guideline premium test, the table below shows the percentage of the Policy's cash value that is used to determine the death benefit.
AGE OF AGE OF INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF THE POLICY YEAR CASH VALUE THE POLICY YEAR CASH VALUE - ------------------- ------------- ------------------- ------------- 0 through 40 250 61 128 41 243 62 126 42 236 63 124 43 229 64 122 44 222 65 120 45 215 66 119 46 209 67 118 47 203 68 117 48 197 69 116 49 191 70 115 50 185 71 113 51 178 72 111 52 171 73 109 53 164 74 107 54 157 75 through 90 105 55 150 91 104 56 146 92 103 57 142 93 102 58 138 94 through 99 101 59 134 100+ 100 60 130
A-71 NEW ENGLAND LIFE INSURANCE COMPANY 501 BOYLSTON STREET BOSTON, MA 02116 RECEIPT This is to acknowledge receipt of a Zenith Flexible Life 2002 Prospectus dated May 1, 2002. This Variable Life Policy is offered by New England Life Insurance Company. - ----------------------------------------------------- ----------------------------------------------------- (Date) (Client's Signature)
Part II UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. RULE 484 UNDERTAKING Section 9 of NELICO's By-Laws provides that NELICO shall, to the extent legally permissible, indemnify its directors and officers against liabilities and expenses relating to lawsuits and proceedings based on such persons' roles as directors or officers. However, Section 9 further provides that no such indemnification shall be made with respect to any matter as to which a director or officer is adjudicated not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation. Section 9 also provides that in the event a matter is disposed of by a settlement payment by a director or officer, indemnification will be provided only if the settlement is approved as in the best interest of the corporation by (a) a disinterested majority of the directors then in office, (b) a majority of the disinterested directors then in office, or (c) the holders of a majority of outstanding voting stock (exclusive of any stock owned by any interested director or officer). Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of NELICO pursuant to the foregoing provisions, or otherwise, NELICO has been advised that in the opinion of the Securities and Exchange Commission such indemnification may be against public policy as expressed in the Act and may be, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by NELICO of expenses incurred or paid by a director, officer, or controlling person of NELICO in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, NELICO will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II - 1 REPRESENTATIONS New England Life Insurance Company hereby represents that the fees and charges deducted under the flexible premium adjustable variable life insurance policies described in this registration statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by New England Life Insurance Company. CONTENTS OF REGISTRATION STATEMENT This Registration Statement comprises the following papers and documents: The facing sheet. A reconciliation and tie-in of the information shown in the prospectus with the items of Form N-8B-2. The prospectus consisting of 74 pages. The undertaking to file reports. The undertaking pursuant to Rule 484(b) under the Securities Act of 1933. Representations. The signatures. Written consents of the following persons: Anne M. Goggin, Esq. (see Exhibit 3(i) below)(to be filed by amendment) James J. Reilly, Jr., F.S.A., M.A.A.A. (see Exhibit 3(ii) below)(to be filed by amendment) Sutherland Asbill & Brennan LLP (see Exhibit 6 below)(to be filed by amendment) Independent Auditor (see Exhibit 11 below)(to be filed by amendment) The following exhibits: 1.A.(1) January 31, 1983 resolution of the Board of Directors of NEVLICO 4 (2) None (3) (a) Distribution Agreement between NEVLICO and NELESCO 5 (b)(i) Form of Contract between NELICO and its General Agents 4
II - 2 (ii) Form of contract between NELICO and its Agents 5 (c) Commission Schedule for Policies (to be filed by amendment) (d) Form of contract among NES, NELICO and other broker dealers 3 (4) None (5) (a) Specimen of Policy (b) Riders to the Policy (6) (a) Amended and restated Articles of Organization of NELICO 2 (b) Amended and restated By-Laws of NELICO 3 (c) Amendments to Amended and restated Articles of Organization 7 (d) Amended and restated By-Laws of NELICO 11 (7) None (8) None (9) None (10) (a) Specimen of Application for Policy 6 (10) (b) Specimen of Application for Riders 2. See Exhibit 3(i) 3.(i) Opinion and Consent of Anne M. Goggin, Esquire (to be filed by amendment) (ii) Opinion and Consent of James J. Reilly, Jr., F.S.A., M.A.A.A.(to be filed by amendment) 4. None 5. Inapplicable 6. Consent of Sutherland Asbill & Brennan LLP (to be filed by amendment) 7. Powers of Attorney 10 8. Notice of Withdrawal Right for Policies (to be filed by amendment) 9. Inapplicable 10. Inapplicable 11. Consent of Independent Auditors (to be filed by amendment) 12. Schedule for computation of performance quotations 5 13. (i) Consolidated memorandum describing certain procedures, filed pursuant to Rule 6e-2(b)(12)(ii)and Rule 6e-3(T)(b)(12)(iii) 5
II - 3 (ii) Second Addendum to Consolidated Memorandum 8 14. (i) Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and New England Variable Life Insurance Company 5 (ii) Amendment No. 1 to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and New England Variable Life Insurance Company 1 (iii) Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and New England Variable Life Insurance Company 1 (iv) Participation Agreement among Metropolitan Series Fund, Inc., Metropolitan Life Insurance Company and New England Life Insurance Company 9 (v) Participation Agreement among New England Zenith Fund, New England Investment Management, Inc., New England Securities Corporation and New England Life Insurance Company 9 (vi) Amendment No. 2 to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and New England Life Insurance Company 10 (vii) Amendment No. 1 to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and New England Life Insurance Company 10 (viii) Participation Agreement among Met Investors Series Trust, Met Investors Advisory Corp., New England Securities and New England Life Insurance Company (ix) Participation Agreement among American Funds Insurance Series, Capital Research and Management Company, New England Securities and New England Life Insurance Company 12
1 Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Variable Account's Form S-6 Registration Statement, File No. 33-88082, filed June 22, 1995. 2 Incorporated herein by reference to the Variable Account's Form S-6 Registration Statement, File No. 333-21767, filed February 13, 1997. 3 Incorporated herein by reference to the Pre-effective Amendment No. 1 to the Variable Account's Form S-6 Registration Statement, File No. 333-21767, filed July 16, 1997. II - 4 4 Incorporated herein by reference to Post-Effective Amendment No. 9 to the Variable Account's Form S-6 Registration Statement, File No. 33-66864, filed February 25, 1998. 5 Incorporated herein by reference to Post-Effective Amendment No. 9 to the Variable Account's Form S-6 Registration Statement, File No. 33-52050, filed April 24, 1998. 6 Incorporated herein by reference to Post-Effective Amendment No. 4 to the Variable Account's Form S-6 Registration Statement, File No. 33-88082, filed January 20, 1999. 7 Incorporated herein by reference to the Post-Effective Amendment No.4 to the Variable Account's Form S-6 Registration Statement, File No. 33-65263, filed February 24, 1999. 8 Incorporated herein by reference to the Post-Effective Amendment No.10 to the Variable Account's Form S-6 Registration Statement, File No. 33-52050, filed April 26, 1999. 9 Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Variable Account's Form S-6 Registration Statement, File No. 33-88082, filed November 9, 2000. 10 Incorporated herein by reference to the Post-Effective Amendment No.2 to the Variable Account's Form S-6 Registration Statement, File No. 333-89409, filed February 26, 2001. 11 Incorporated herein by reference to the Post-Effective Amendment No.4 to the Variable Account's Form S-6 Registration Statement, File No. 333-21767, filed April 25, 2001. 12 Incorporated herein by reference to the Post-Effective Amendment No. 4 to the Variable Account's Form S-6 Registration Statement, File No. 333-89409, filed July 20, 2001. II - 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, New England Variable Life Separate Account, has duly caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the city of Boston, and the Commonwealth of Massachusetts, on the 19th day of November, 2001. New England Variable Life Separate Account (Registrant) By: New England Life Insurance Company (Depositor) By: /s/ Anne M. Goggin ------------------------------ Anne M. Goggin Senior Vice President and General Counsel Attest: /s/ John E. Connolly, Jr. - ------------------------- John E. Connolly, Jr. Counsel and Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, New England Life Insurance Company has duly caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the city of Boston, and the Commonwealth of Massachusetts, on the 19th day of November, 2001. New England Life Insurance Company (Seal) Attest: /s/John E. Connolly, Jr. By: /s/ Anne M. Goggin ------------------------ ------------------------ John E. Connolly, Jr. Anne M. Goggin Counsel and Assistant Senior Vice President Secretary and General Counsel Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on November 19, 2001. * Chairman, President and Chief - ---------------------- Executive Officer James M. Benson * Director - ---------------------- Susan C. Crampton * Director - ---------------------- Edward A. Fox * Director - ---------------------- George J. Goodman * Director - ---------------------- Evelyn E. Handler * Director - ---------------------- Philip K. Howard, Esq. * Director - ---------------------- Bernard A. Leventhal * Director - ---------------------- Thomas J. May * Director - ---------------------- Stewart G. Nagler * Director - ---------------------- Catherine A. Rein * Executive Vice President, - ---------------------- Chief Financial Officer and Chief David Y. Rogers Accounting Officer * Director - ---------------------- Rand N. Stowell * Director - ---------------------- Lisa M. Weber By: /s/ Marie C. Swift --------------------- Marie C. Swift, Esq. Attorney-in-fact * Executed by Marie C. Swift, Esquire on behalf of those indicated pursuant to powers of attorney filed with Post-Effective Amendment No. 2 to the Variable Account's Form S-6 Registration Statement, File No. 333-89409, on February 26, 2001. EXHIBIT LIST
Sequentially Exhibit Number Title Numbered Page* - -------------- ----- -------------- 1.A. 5(a) Specimen of Policy 1.A. 5(b) Riders to Policy 1.A (10)(b) Specimen of Application for Riders 14 (viii) Participation Agreement among Met Investors Series Trust, Met Investors Advisory Corp., New England Securities Corporation and New England Life Insurance Company
- --------- * Page numbers inserted on manually-signed copy only. EX-1.A.5(A) 3 b40975s6ex1-a_5a.txt SPECIMEN OF POLICY Exhibit 1.A.5(a) 2E-40-02 POLICY NUMBER: [16,000,001] NEW ENGLAND LIFE INSURANCE COMPANY BOSTON, MASSACHUSETTS 02116 INSURED: [JOHN DOE] FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE NON-PARTICIPATING Flexible Premiums are payable during the lifetime of the Insured to Attained Age 100. Upon our receipt of proof of the Insured's death, we will pay the Policy Proceeds to the Beneficiary. This Policy must be in force. We may request that the Policy be returned to us after death occurs. Any payment will be subject to all of the provisions and conditions on this and the following pages of this Policy. THE AMOUNT OF THE DEATH BENEFIT OR THE DURATION OF THE DEATH BENEFIT MAY INCREASE OR DECREASE UNDER THE CONDITIONS DESCRIBED IN THE POLICY BENEFITS SECTION. THE POLICY'S CASH VALUE CAN VARY FROM DAY TO DAY. IT CAN INCREASE OR DECREASE, DEPENDING ON THE VARIABLE ACCOUNT INVESTMENT EXPERIENCE AND ON THE FIXED ACCOUNT INTEREST. SEE THE VARIABLE ACCOUNT PROVISION AND THE FIXED ACCOUNT CASH VALUE PROVISION. RIGHT TO EXAMINE POLICY You may return this Policy or an increase in Face Amount to us or to one of our agents within [10] days from the date you receive it. If you return the Policy within this period, we will refund any premium paid and the Policy will be void from the start. If you return an increase in Face Amount within this period, we will restore to this Policy's Cash Value the Monthly Deductions plus any Face Amount Increase Administration Charge for the increase. This Policy is a legal contract between the Policy Owner and New England Life Insurance Company. PLEASE READ YOUR CONTRACT CAREFULLY. Signed for the Company at its Home Office, [501 Boylston Street, Boston, MA 02116)(1-800-388-4000)] PRESIDENT SECRETARY ALPHABETIC GUIDE TO YOUR CONTRACT
Section Section 4 Addition, Deletion or Substitution 3 Misstatement of Age or Sex and of Investments Corrections 6 Allocation of Net Premiums 8 Monthly Administration and Issue Expense 8 Asset Charge Charge 2 Assignments 8 Monthly Cost of Insurance 8 Basis of Computation 8 Monthly Cost of Insurance Rates 2 Beneficiary 8 Monthly Deduction 8 Cash Surrender Value 8 Monthly Policy Charge 8 Cash Values 8 Net Investment Factor 8 Cash Value After Attained Age 100 6 Net Premium 5 Change in Death Benefit Option 6 No Lapse Period 5 Change in Face Amount 2 Owner 3 Change of Insured 8 Partial Withdrawals 2 Change of Owner or Beneficiary 9 Payment of Policy Benefits 3 Claims of Creditors 6 Payment of Premiums 5 Continuation of the Policy Beyond 6 Percent of Premium Charge Attained Age 100 5 Policy Changes 3 Contract 1 Policy Date 3 Conversion Rights 5 Policy Proceeds 5 Death Benefit 8 Postponement of Payments or Transfers 1 Definitions 6 Premium Tax Charge 5 Definition of Life Insurance 6 Reinstatement 4 Sub-Accounts 2 Requests for Changes and/or 6 Federal Tax Charge Information 8 Fixed Account Cash Value 8 Variable Account Cash Value 8 Fixed Account Interest Rate 4 Variable Account Provisions 6 Grace Period 3 Statements in Application 3 Incontestability 3 Suicide Exclusion 9 Interest on Proceeds 8 Surrender 1 Issue Date 8 Surrender Charge 8 Loan Account Cash Value 4 Transfer 7 Loans 3 Unisex Basis 8 Variable Accumulation Units
Additional Benefit Riders, Modifications and Amendments, if any, and a copy of the Application are found following the final section. POLICY SPECIFICATIONS GENERAL POLICY SPECIFICATIONS INSURED [JOHN DOE] POLICY NUMBER [16,000,001] PLANNED ANNUAL PREMIUM: ISSUE DATE [JANUARY 1, 2002] 1ST YEAR [$732.50] POLICY DATE [JANUARY 1, 2002] YEARS 2+ [$732.50] FACE AMOUNT [$50,000] QUALIFIED ROLLOVER PREMIUM [$0.00] DEATH BENEFIT NO LAPSE ANNUAL PREMIUM [$732.50] OPTION [OPTION A] NO LAPSE PREMIUM INSURED AGE [35] DATE [JANUARY 1, 2007] SEX [MALE] MAXIMUM PREMIUM TAX CHARGE [2.5%] RISK CLASSIFICATION [STANDARD MAXIMUM FEDERAL TAX CHARGE [1.25%] SMOKER] MAXIMUM PERCENT OF PREMIUM CHARGE [5%] MAXIMUM PERCENT OF PREMIUM CHARGE QUALIFIED ROLLOVER PREMIUM [0%]
BENEFITS - AS SPECIFIED IN POLICY AND IN ANY RIDER POLICY PLAN: FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY SPECIFICATIONS (CONTINUED)
VARIABLE ACCOUNT [NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT ] MAXIMUM NUMBER OF ACCOUNTS [49] FIXED ACCOUNT CASH VALUE GUARANTEED INTEREST RATE [3%] FIXED ACCOUNT MAXIMUM ALLOCATION PERCENT [100%] FIXED ACCOUNT MAXIMUM WITHDRAWAL PERCENT LIMIT [25%] MONTHLY DISCOUNT FACTOR [1.0024663] MAXIMUM MONTHLY ASSET CHARGE PRECENTAGE: YEARS 1 - 10 [0.0583333%] YEARS 11 - 20 [0.0291667%] YEARS 21 + [0.0208333%] MAXIMUM ANNUAL ASSET CHARGE PERCENTAGE: YEARS 1 - 10 [0.70%] YEARS 11 - 20 [0.35%] YEARS 21 + [0.25%] MAXIMUM MONTHLY POLICY CHARGE: 1st YEAR [$25.00] YEARS 2 + [$6.00] MAXIMUM MONTHLY ADMINISTRATION AND ISSUE EXPENSE CHARGE RATE: YEARS 1 - 10 [$0.1501] YEARS 11 + [$0] MAXIMUM LOAN INTEREST CHARGE RATE [3.50%] MINIMUM LOAN AND WITHDRAWAL AMOUNT [$500.00] MAXIMUM NUMBER OF TRANSFERS OR WITHDRAWALS [12] MINIMUM FACE AMOUNT [$50,000] MINIMUM FACE AMOUNT INCREASE [$10,000] MINIMUM FACE AMOUNT DECREASE [$10,000] MAXIMUM FACE AMOUNT INCREASE ADMINISTRATION CHARGE [$100.00] MAXIMUM PROCESSING CHARGE [$25.00] GUARANTEED INTEREST RATE ON PROCEEDS [3.0%] 7702 TABLE [1980 CSO MORTALITY TABLE FOR A MALE SMOKER, AGE NEAREST BIRTHDAY] BASIS OF COMPUTATION [1980 CSO MORTALITY TABLE OF MINIMUM CASH VALUES FOR A MALE SMOKER, AGE NEAREST BIRTHDAY] BASIS OF COMPUTATION INTEREST RATE [4.0%]
IF THE INITIAL PREMIUM PAID AND SUBSEQUENT PREMIUMS PROVE TO BE TOO LOW, COVERAGE PROVIDED BY THIS POLICY MAY CEASE. TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES RATES ARE PER $1,000 INSURED: [JOHN DOE] COVERAGE: [FPVL] ISSUE DATE: [JANUARY 1, 2002] POLICY NUMBER: [16,000,001]
ATTAINED AGE RATE ATTAINED AGE RATE ATTAINED AGE RATE 35 0.2192 57 1.5075 79 9.4575 36 0.2342 58 1.6408 80 10.1325 37 0.2533 59 1.7792 81 10.8675 38 0.2750 60 1.9325 82 11.6833 39 0.3000 61 2.1050 83 12.5858 40 0.3283 62 2.2992 84 13.5408 41 0.3617 63 2.5192 85 14.5167 42 0.3958 64 2.7617 86 15.4817 43 0.4350 65 3.0242 87 16.4217 44 0.4758 66 3.2975 88 17.4475 45 0.5225 67 3.5842 89 18.4600 46 0.5692 68 3.8792 90 19.4742 47 0.6200 69 4.1933 91 20.5100 48 0.6733 70 4.5400 92 21.6108 49 0.7333 71 4.9242 93 23.0250 50 0.7967 72 5.3608 94 24.8458 51 0.8700 73 5.8525 95 27.4967 52 0.9517 74 6.3883 96 32.0458 53 1.0450 75 6.9808 97 40.0167 54 1.1500 76 7.5917 98 54.8317 55 1.2617 77 8.2100 99 83.3333 56 1.3825 78 8.8258 100+ 0.0000
THESE RATES ARE FOR THE BASE POLICY AT ISSUE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE [FOR A MALE SMOKER]. TABLE OF CORRIDOR FACTORS INSURED: [JOHN DOE] COVERAGE: [FPVL] ISSUE DATE: [JANUARY 1, 2002] POLICY NUMBER: [16,000,001] DEFINITION OF LIFE INSURANCE TEST: [GUIDELINE PREMIUM TEST] [TABLE OF GUIDELINE PREMIUM CORRIDOR FACTORS]
ATTAINED AGE FACTOR ATTAINED AGE FACTOR ATTAINED AGE FACTOR 35 2.50 57 1.42 79 1.05 36 2.50 58 1.38 80 1.05 37 2.50 59 1.34 81 1.05 38 2.50 60 1.30 82 1.05 39 2.50 61 1.28 83 1.05 40 2.50 62 1.26 84 1.05 41 2.43 63 1.24 85 1.05 42 2.36 64 1.22 86 1.05 43 2.29 65 1.20 87 1.05 44 2.22 66 1.19 88 1.05 45 2.15 67 1.18 89 1.05 46 2.09 68 1.17 90 1.05 47 2.03 69 1.16 91 1.04 48 1.97 70 1.15 92 1.03 49 1.91 71 1.13 93 1.02 50 1.85 72 1.11 94 1.01 51 1.78 73 1.09 95 1.01 52 1.71 74 1.07 96 1.01 53 1.64 75 1.05 97 1.01 54 1.57 76 1.05 98 1.01 55 1.50 77 1.05 99 1.01 56 1.46 78 1.05 100 1.00
SURRENDER CHARGE SCHEDULE INSURED: [JOHN DOE] COVERAGE: [FPVL] ISSUE DATE: [JANUARY 1, 2002] POLICY NUMBER: [16,000,001]
MAXIMUM MAXIMUM MAXIMUM POLICY SURRENDER POLICY SURRENDER POLICY SURRENDER MONTH CHARGE MONTH CHARGE MONTH CHARGE 1-12 $220.05 48 $146.70 84 $73.35 13 218.01 49 144.66 85 71.31 14 215.98 50 142.63 86 69.28 15 213.94 51 140.59 87 67.24 16 211.90 52 138.55 88 65.20 17 209.86 53 136.51 89 63.16 18 207.83 54 134.48 90 61.13 19 205.79 55 132.44 91 59.09 20 203.75 56 130.40 92 57.05 21 201.71 57 128.36 93 55.01 22 199.68 58 126.33 94 52.98 23 197.64 59 124.29 95 50.94 24 195.60 60 122.25 96 48.90 25 193.56 61 120.21 97 46.86 26 191.53 62 118.18 98 44.83 27 189.49 63 116.14 99 42.79 28 187.45 64 114.10 100 40.75 29 185.41 65 112.06 101 38.71 30 183.38 66 110.03 102 36.68 31 181.34 67 107.99 103 34.64 32 179.30 68 105.95 104 32.60 33 177.26 69 103.91 105 30.56 34 175.23 70 101.88 106 28.53 35 173.19 71 99.84 107 26.49 36 171.15 72 97.80 108 24.45 37 169.11 73 95.76 109 22.41 38 167.08 74 93.73 110 20.38 39 165.04 75 91.69 111 18.34 40 163.00 76 89.65 112 16.30 41 160.96 77 87.61 113 14.26 42 158.93 78 85.58 114 12.23 43 156.89 79 83.54 115 10.19 44 154.85 80 81.50 116 8.15 45 152.81 81 79.46 117 6.11 46 150.78 82 77.43 118 4.08 47 148.74 83 75.39 119 2.04 120 0.00
1. DEFINITIONS IN THIS POLICY WE, US AND OUR New England Life Insurance Company. YOU AND YOUR The Owner of this Policy. In the application the words "you" and "your" refer to the proposed Insured person(s). INSURED The person whose life is insured under this Policy. See the Policy Specifications page. ISSUE AGE The age of the Insured as of his or her nearest birthday to the Policy Date. ATTAINED AGE The Issue Age plus the number of completed policy years. This includes any period during which this Policy was lapsed. ISSUE DATE The effective date of the coverage under this Policy is the Issue Date shown on the Policy Specifications page. It is also the date from which the contestable and suicide periods are measured. POLICY DATE The date from which policy anniversaries, policy years, and policy months are measured. It is the Policy Date shown on the Policy Specifications page. INVESTMENT START DATE The date as of when the first premium is applied to the Fixed Account and/or the Sub-Accounts of the Variable Account. This date will be the later of: 1. The Policy Date of the Policy; and 2. The date we receive the first premium at our Home Office or any other office designated by us. QUALIFIED ROLLOVER The amount of premium, if any, that was paid as a PREMIUM result of replacing an existing life insurance policy or annuity contract issued by us or any of our affiliates we consent to with this Policy. This premium will not be less than that shown on the Policy Specifications page. MONTHLY ANNIVERSARY The same date in each succeeding month as the Policy Date except that whenever the monthly anniversary falls on a date other than a Valuation Date, the monthly anniversary will be deemed the next Valuation Date. If any monthly anniversary would be the 29th, 30th, or 31st day of a month that does not have that number of days, then the monthly anniversary will be the last day of that month. FIXED ACCOUNT The assets held by us, excluding any Loan, other than those allocated to the Sub-Accounts of the Variable Account or any other Variable Account. VARIABLE ACCOUNT A separate investment account created by us to receive and invest Net Premiums received for this Policy or other policies. LOAN ACCOUNT The account to which we will transfer from the Fixed Account and the Sub-Accounts of the Variable Account the amount of any Loan. LOAN SUB-ACCOUNT A Loan Sub-Account exists for the Fixed Account and each Sub-Account of the Variable Account. Any Cash Value transferred to the Loan Account will be allocated to the appropriate Loan Sub-Account to reflect the origin of the Cash Value. At any point in time, the Loan Account will equal the sum of all the Loan Sub-Accounts. VALUATION DATE Each day that the New York Stock Exchange is open for trading and the SEC has not restricted trading or declared an emergency. Each Valuation Date ends at the close of regular trading on the New York Stock Exchange. VALUATION PERIOD The period between the end of two successive Valuation Dates. SEC The United States Securities and Exchange Commission 2. PERSONS WITH AN INTEREST IN THE POLICY OWNER The Owner of the Policy is named in the Application (see copy attached); but, the Owner can be changed. The new owner will succeed to all rights of the Owner, including the right to make a further change of Owner. If there is more than one owner at a given time, all must exercise the rights of ownership by joint action. Ownership may be changed in accordance with the Change of Owner or Beneficiary provision. The Owner may be someone other than the Insured and may be a person, a partnership, a corporation, a fiduciary or any other legal entity. At the death of the Owner, his or her estate will be the Owner, unless a successor Owner has been named. The rights of the Owner will end at the death of the Insured, except for Payment of Policy Benefits. BENEFICIARY The Beneficiary is named in the Application (see copy attached); but the Beneficiary can be changed before the death of the Insured. An irrevocable beneficiary cannot be changed without his or her consent. The Beneficiary can be a person, a corporation, a partnership, a fiduciary or any other legal entity. A person must survive the Insured to qualify as Beneficiary. If none survives, the proceeds will be paid to the Owner. Any payment we make will terminate our liability with respect to such payment. CHANGE OF OWNER OR During the Insured's lifetime you may change the BENEFICIARY ownership and beneficiary designations, subject to any restrictions as stated in the Owner or Beneficiary provisions. You must make the change in written form satisfactory to us. If acceptable to us the change will take effect as of the time you signed the request, whether or not the Insured is living when we receive your request at our Home Office or any other office designated by us. The change will be subject to any assignment of this Policy or other legal restrictions. It will also be subject to any payment we made or action we took before we received your written notice of the change. ASSIGNMENTS An absolute assignment of the Policy by the Owner is a change of Owner and Beneficiary to the assignee. A collateral assignment of the Policy by the Owner is not a change of Owner or Beneficiary; but their rights will be subject to the terms of the assignment. Assignments will be subject to all payments made and actions taken by us before a signed copy of the assignment is received by us at our Home Office or any other office designated by us. We will not be responsible for determining whether or not an assignment is valid. DESIGNATION OF OWNER A numbered sequence can be used to name successive AND BENEFICIARY Owners or Beneficiaries. Co-Beneficiaries will receive equal shares unless otherwise stated. In naming Owners or Beneficiaries, unless otherwise stated: 1. "Child" includes an adopted or posthumous child; 2. "Provision for issue" means that if a Beneficiary does not survive the Insured, the share of that Beneficiary will be taken by his or her living issue by right of representation; and 3. A family relation such as "wife", "husband" or "child" means relation to the Insured. At the time for payment of benefits, the company can rely on an affidavit of any Owner or other responsible person to determine family relations or members of a class. REQUESTS FOR CHANGES Submit all requests for change and/or information in AND/OR INFORMATION writing to our Home Office or any office designated by us. 3. GENERAL PROVISIONS THE CONTRACT We have issued this Policy in consideration of the Application and payment of premiums. The Policy, the Application, any riders, any endorsements and any application for an increase in Face Amount constitute the entire contract and are made a part of the Policy when the insurance applied for is accepted. The Policy may be changed by mutual agreement. Any change must be in writing and approved by our President, Executive Vice-President or Secretary. our agents have no authority to alter or modify any terms, conditions, or agreements of this Policy, or to waive any of its provisions. STATEMENTS IN All statements made by the Insured or on his or her APPLICATION behalf, or by the applicant, will be deemed representations and not warranties, except in the case of fraud. Material misstatements will not be used to void the Policy, any rider or any increase in Face Amount or deny a claim unless made in the Application for the Policy, a rider or an increase in Face Amount. CLAIMS OF CREDITORS To the extent permitted by law, neither the Policy nor any payment under it will be subject to the claims of creditors or to any legal process. CONVERSION RIGHTS While your Policy is in force, you have a one time right during the first two policy years to transfer all of your Cash Value from the Sub-Accounts of Variable Account to the Fixed Account. If, at any time during the first two policy years, you request in writing the transfer of the Cash Value held in the Sub-Accounts of Variable Account to the Fixed Account and you indicate that you are making this transfer in exercise of your conversion rights, the transfer will not be subject to a transfer charge or transfer limits, if any. At the time of such transfer, there will not be any effect on the Policy's Death Benefit, Face Amount, Net Amount at Risk, Risk Classification or Issue Age. If you exercise your one time conversion right, we will automatically allocate all future Net Premiums to the Fixed Account. That allocation cannot be changed and no future transfers will be allowed. MISSTATEMENT OF AGE If there is a misstatement of age or sex in the OR SEX AND Application, the amount of the Death Benefit will be CORRECTIONS that which would be purchased by the most recent Monthly Deduction at the correct age and sex. If we make any payment or policy changes in good faith, relying on our records, or evidence supplied to us, our duty will be fully discharged. We reserve the right to correct any errors in the Policy. UNISEX BASIS If the Sex shown on the Policy Specifications pages indicates Unisex, each policy, endorsement or rider provision that contains any differences based on sex is modified to provide for males and females the same: rates; benefits; and values. INCONTESTABILITY We cannot contest this Policy after it has been in force during the lifetime of the Insured for two years from its Issue Date. We cannot contest an increase in Face Amount with regard to material misstatements made concerning such increase after it has been in force during the lifetime of the Insured for two years from its effective date. We cannot contest a Death Benefit increase caused by a premium payment which required evidence of insurability after a period of two years from the date We received the premium payment. This provision will not apply to any rider that contains its own incontestability clause. SUICIDE EXCLUSION If the Insured dies by suicide, while sane or insane, within two years from the Issue Date, the amount payable will be limited to the amount of premiums paid; less any outstanding Loan and Loan Interest to the date of death; and less any partial withdrawals. If the Insured, while sane or insane, commits suicide within two years after the effective date of any increase in Face Amount, the Death Benefit for that increase will be limited to the Monthly Deductions for the increase. CHANGE OF INSURED While this Policy is in force, you may change the Insured. To do this, you must meet the requirements established by us. Any rider attached to this Policy may be continued only with our consent. We reserve the right to charge a nominal fee for processing a change of Insured. This fee will not exceed the Maximum Processing Charge shown on the Policy Specifications page. There will be a change cost if there is an increase in the Net Cash Value as a result of the change. There will be a change credit payable to you if there is a decrease in the Net Cash Value as a result of the change. A detailed statement of the methods of computing the change cost and change credit have been filed, where required, with the Insurance Department of the state in which the Policy is delivered. PERIODIC REPORT Each year, or more often if required by law or regulation, a report will be sent to you which shows the current Policy values, premiums paid and deductions made since the last report, any outstanding Loan, and any other information required by law or regulation. ILLUSTRATION OF You may make a written request to us for an BENEFITS AND VALUES illustration of Cash Values and Death Benefits. We may charge a nominal fee for any requested illustration after the first in each policy year. This fee will not exceed the Maximum Processing Charge shown on the Policy Specifications page. 4. VARIABLE ACCOUNT PROVISIONS VARIABLE ACCOUNT The variable benefits under this Policy are provided through investments in the Variable Account. This account is used for flexible premium variable life insurance policies and, if permitted by law, may be used for other policies or contracts as well. We hold the assets of the Variable Account. These assets are held separately from the assets held in the Fixed Account. Income, gains and losses---whether or not realized---from assets allocated to the Variable Account will be credited to or charged against the account without regard to our other income, gains or losses. The portion of the assets held by the Variable Account equal to the reserves and other policy liabilities with respect to the Variable Account will not be charged with liabilities that arise from any other business we may conduct. We have the right to transfer to our Fixed Account any assets of the Variable Account which are in excess of the reserves and other policy liabilities of the Variable Account. Net Premium allocations and requests for transfers, future allocation changes, Loans, partial withdrawals, and surrenders will be effective as of the end of the Valuation Period during which we receive the premium payment or the request in a form satisfactory to us. The Variable Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. The Variable Account is also subject to the laws of the Commonwealth of Massachusetts, which regulate the operations of insurance companies incorporated in Massachusetts. The investment policy of the Variable Account will not be changed without the approval of the Insurance Commissioner of the Commonwealth of Massachusetts. The approval process is on file with the insurance commissioner of the state in which this Policy was delivered. SUB-ACCOUNTS The Variable Account has several Sub-Accounts. Each Sub-Account invests in shares of registered investment companies or other pools of investment assets. Income, gains and losses---whether or not realized---from the assets of each Sub-Account of the Variable Account are credited to or charged against that Sub-Account without regard to income, gains or losses in other Sub-Accounts of the Variable Account or in the Fixed Account. We will value the assets of each Sub-Account of the Variable Account at the end of each Valuation Period. The values and benefits of a policy depend on: the investment performance of the portfolios in which the Sub-Accounts are invested; and the interest credited to the Fixed Account. We do not guarantee the investment performance of the portfolios of the Sub-Accounts. You bear the investment risk for amounts invested in the Sub-Accounts for your Policy. TRANSFERS After the Right to Examine Policy period, and if you have not exercised your conversion rights, you may transfer amounts as follows: 1. Between the Fixed Account and the Sub-Accounts of Variable Account; or 2. Among the Sub-Accounts of Variable Account. These transfers will be subject to the following conditions: 1. We must receive a request for transfer in a form acceptable to us. 2. Except with our consent, the number of transfers in each policy year will be limited to the Maximum Number of Transfers or Withdrawals shown on the Policy Specifications page. If we consent to more than that in a policy year, we may impose a charge not to exceed the Maximum Processing Charge shown on the Policy Specifications page. 3. The maximum amount of all transfers and partial withdrawals from the Fixed Account (the Fixed Account Maximum) in any policy year will be the greater of a. and b. a. The Cash Surrender Value of the Fixed Account at the beginning of that policy year times the Fixed Account Maximum Withdrawal Percent Limit, as shown on the Policy Specifications page. b. The previous policy year's Fixed Account Maximum withdrawal amount. However, if less than $100 would remain in the Fixed Account after the transfer, you can transfer the remainder to the Sub-Accounts of the Variable Account. The Fixed Account Cash Value immediately after any transfer to the Fixed Account cannot exceed i., below, times ii., below: i. The Fixed Account Cash Value plus the Variable Account Cash Value. ii. The Fixed Account Maximum Allocation Percent as shown on the Policy Specifications page. ADDITION, DELETION OR We reserve the right, subject to compliance with SUBSTITUTION OF applicable law, to make additions to, deletions from, INVESTMENTS or substitutions for the shares of a fund that are held by the Variable Account or that the Variable Account may purchase. We reserve the right to eliminate the shares of any of the funds of this Policy and to substitute shares of another fund of a registered investment company if the shares or funds are no longer available for investment or if in our judgement, further investment in any fund should become inappropriate in view of the purpose of the Policy. We will not substitute any shares attributable to the Owner's interest in a Sub-Account of the Variable Account without notice to the Owner and compliance with the Investment Company Act of 1940. This will not prevent the Variable Account from purchasing other securities for other series or classes of policies or from permitting conversion between series or classes of policies or contracts on the basis of requests made by owners. We reserve the right to establish additional Sub-Accounts of the Variable Account which would invest in shares of registered investment companies or other pools of investment assets and to make such Sub-Accounts available to such class or series of policies as we deem appropriate. We also reserve the right to eliminate, close or combine existing Sub-Accounts of the Variable Account or to transfer assets between Sub-Accounts. If we consider it to be in the best interest of persons having voting rights under the policies, the Variable Account may be operated as a management company under the Investment Company Act of 1940; it may be deregistered under that Act in the event registration is no longer required; it may be combined with other separate accounts; or its assets may be transferred to other separate accounts. 5. POLICY BENEFITS POLICY PROCEEDS The Policy Proceeds are: 1. The Death Benefit under the Death Benefit Option then in effect; plus 2. The Monthly Cost of Insurance for the portion of the policy month from the date of death to the end of the policy month of death; less 3. Any payment due under the Grace Period provision as of the date of death; less 4. Any Loan and Loan Interest due. DEFINITION OF LIFE This Policy is intended to qualify as a life insurance INSURANCE contract under the Internal Revenue Code (called "the Code") and any interpretive regulation or rulings by the Internal Revenue Service. The Code provides two tests to determine whether the Policy meets the definition of a life insurance contract: the Cash Value Accumulation Test; and the Guideline Premium Test. The Test, as chosen in the Application, cannot be changed. The Table of Corridor Factors shows the Test chosen for this Policy. For either Test, the Death Benefit will not be less than: the Policy's Cash Value; times the applicable Attained Age Factor as shown on the Table of Corridor Factors page. If you choose the Cash Value Accumulation Test, the Table shown on the Table of Corridor Factors page will be the Table of Net Single Premium Corridor Factors. If you choose the Guideline Premium Test, the Table shown on the Table of Corridor Factors page will be the Table of Guideline Premium Factors. The Guideline Premium Corridor Factors are based on the percentages as currently described in Section 7702(d) of the Internal Revenue Code of 1986. DEATH BENEFIT Prior to the Insured's Attained Age 100, the Death Benefit depends upon the Death Benefit Option in effect on the date of the Insured's death. The Death Benefit Option in effect is shown on the Policy Specifications page or on the Policy Specifications page for Policy Change, if any. DEATH BENEFIT OPTION A: The Death Benefit is the greater of: 1. The Face Amount; and 2. The death benefit required by the Cash Value Accumulation Test or the Guideline Premium Test, depending on the Definition of Life Insurance Test chosen at the time of Application for the Policy. DEATH BENEFIT OPTION B: The Death Benefit is the greater of: 1. The Face Amount plus the Cash Value on the date of death; and 2. The death benefit required by the Cash Value Accumulation Test or the Guideline Premium Test, depending on the Definition of Life Insurance Test chosen at the time of Application for the Policy. CONTINUATION OF THE If this Policy is in force on or after the Insured's POLICY AFTER ATTAINED Attained Age 100 and if the age of the Insured on the AGE 100 Issue Date is Attained Age 80 or younger, the Death Benefit will be equal to the greater of: 1. The Cash Value on the date the Policy Proceeds become payable; and 2. The lesser of: the Face Amount of the Policy as of the policy anniversary on which the Insured is Attained Age 100; and the Face Amount of the Policy on the policy anniversary on which the Insured is Attained Age 80. If this Policy is in force on or after the Insured's Attained Age 100 and if the age of the Insured on the Issue Date is Attained Age 81 or older, the Death Benefit will be equal to the Cash Value on the date the Policy Proceeds become payable. PLEASE NOTE: THIS POLICY MAY NOT QUALIFY AS A LIFE INSURANCE CONTRACT UNDER THE CODE ON OR AFTER THE INSURED'S ATTAINED AGE 100 AND MAY BE SUBJECT TO TAX CONSEQUENCES. PLEASE CONSULT A TAX ADVISOR PRIOR TO CONTINUING THE POLICY BEYOND THE INSURED'S ATTAINED AGE 100. IT IS POSSIBLE THAT INSURANCE COVERAGE MAY NOT CONTINUE EVEN IF PLANNED PREMIUMS ARE PAID IN A TIMELY MANNER. POLICY CHANGES You may request policy changes at any time unless we specifically indicate otherwise within this Policy. We reserve the right to not allow policy changes in the first policy year and to limit the number of changes to one per policy year. The types of changes allowed are explained below. We will send you a Policy Specifications page for Policy Change when there is a policy change. No change will be permitted that would result in this Policy not satisfying the definition of a life insurance contract under the Internal Revenue Code of 1986 or any applicable successor provision. CHANGE IN FACE AMOUNT The Face Amount may be changed by sending us a written request. Any requested decrease in Face Amount will be subject to the following conditions: 1. A request for decrease cannot be made until after the first policy year. 2. The requested decrease will become effective on the monthly anniversary on or following receipt of the request at our Home Office or any other office designated by us. 3. The requested decrease will reduce the Face Amount in the following order: a. The Face Amount provided by the most recent applied for increase; b. Face Amounts provided by the next most recent applied for increases, successively; c. The Face Amount provided by any Adjustable Benefit Term Rider; and d. The initial Face Amount plus any increase in Face Amount provided by a change in Death Benefit Option. 4. The Face Amount remaining in force after any requested decrease may not be less than the Minimum Face Amount shown on the Policy Specifications page. 5. Any requested decrease must be at least the Minimum Face Amount Decrease as shown on the Policy Specifications page. 6. A decrease in Face Amount may require a decrease in the amounts provided by any riders attached to this Policy. A Surrender Charge will apply to any decrease in Face Amount as explained in the Surrender Charge provision. This Surrender Charge will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account. Any requested increase in Face Amount will be subject to the following conditions: 1. Proof that the Insured is insurable by our standards on the date of the requested increase must be submitted. 2. The increase, if approved by us, will become effective on the monthly anniversary on or following receipt of the request at our Home Office or any other office designated by us. 3. Each increase will be subject to the Maximum Face Amount Increase Administration Charge shown on the Policy Specifications page, unless the increase is not medically underwritten. This fee will be deducted as part of the Monthly Deduction. 4. Any increase must be at least the Minimum Face Amount Increase as shown on the Policy Specifications page. 5. New insurance for the amount of the increase must be available on the same plan at the age of the Insured on the effective date being allowed under our underwriting rules. 6. The amount of any rider which is attached to the Policy can be increased only as stated in the rider. We will amend your Policy to show the effective date of the decrease or increase. CHANGE IN DEATH After the first policy year, changes to the Death BENEFIT OPTION Benefit Option will be allowed. Proof that the Insured is insurable by our standards on the date of the change may be required. The effective date of the change will be the monthly anniversary on or following the date we receive your written request at our Home Office or any other office designated by us. On the effective date of this change the Death Benefit payable does not change, but the Face Amount may change. Changes are allowed as follows: 1. Change from Death Benefit Option A to Death Benefit Option B. The Face Amount of the Policy, any Supplemental Coverage Term Rider and any Adjustable Benefit Term Rider will be decreased, if necessary, to equal the Death Benefit less the Cash Value on the effective date of the change. This change may not be made if it would result in a Face Amount for the Policy that is less than the Minimum Face Amount shown on the Policy Specifications page. A Surrender Charge will apply to any decrease in the Face Amount of the Policy as explained in the Surrender Charge provision. The decrease will reduce the Face Amount in the following order: a. The Face Amount provided by the most recent applied for increase; b. Face Amounts provided by the next most recent applied for increases, successively; c. The Face Amount of any Supplemental Coverage Term Rider; and d. The Face Amount provided by any Adjustable Benefit Term Rider; and e. The initial Face Amount plus any increase in Face Amount provided by a change in Death Benefit Option. 2. Change from Death Benefit Option B to Death Benefit Option A. The Face Amount of the Policy will be increased, if necessary, to equal the Death Benefit on the effective date of the change. 6. PREMIUMS AND GRACE PERIOD PAYMENT OF PREMIUMS Your first premium is due as of the Policy Date. While the Insured is living, premiums after the first must be paid to us at our Home Office or any other office designated by us. A premium receipt will be furnished upon request. If this Policy is in your possession and you have not paid the first premium, it is not in force. It will be considered that you have the Policy for inspection only. After the first premium is paid, premiums may be paid in any amount and at any interval subject to the following conditions: 1. Any premium payment must be at least $10.00. 2. If you have selected the Guideline Premium Test for the Policy, total premiums paid in any policy year may not exceed an amount that would cause the Policy to fail the definition of a life insurance contract as defined by Section 7702 of the Internal Revenue Code of 1986, or any applicable successor provision thereto. 3. No planned premium can be increased if that increase would cause the Policy to fail the definition of a life insurance contract as defined by Section 7702 of the Internal Revenue Code of 1986, or any applicable successor provision thereto at any time. On any date that we receive a premium which causes the Death Benefit under any of the Death Benefit Options to increase by an amount that exceeds that Net Premium received, we reserve the right to refuse that premium payment. We may require additional evidence of insurability before we accept the premium. Unless you request otherwise in writing to us, any payment received by us will be used as a premium payment. NET PREMIUM The Net Premium is: 1. The premium paid; less 2. The premium paid times the Premium Tax Charge; less 3. The premium paid times the Federal Tax Charge; less 4. The premium paid times the Percent of Premium Charge. PREMIUM TAX CHARGE A charge will be deducted for premium taxes from each premium submitted. The Maximum Premium Tax Charge, as a percent of the premium, is shown on the Policy Specifications page. FEDERAL TAX CHARGE A charge will be deducted for federal taxes from each premium submitted. The Maximum Federal Tax Charge, as a percent of the premium, is shown on the Policy Specifications page. PERCENT OF PREMIUM A charge will be deducted from each premium submitted. CHARGE The Maximum Percent of Premium Charge is shown on the Policy Specifications page. ALLOCATION OF NET You determine the allocation of Net Premiums among the PREMIUMS Fixed Account and the Sub-Accounts of Variable Account. For any chosen allocation the minimum percentage that may be allocated is 1% of the Net Premium. Percentages must be in whole numbers. The total number of accounts (the Fixed Account plus the Sub-Accounts of the Variable Account) you may have Cash Value allocated to over the life of the Policy cannot exceed the Maximum Number of Accounts shown on the Policy Specifications page. The Fixed Account Cash Value immediately after payment of the premium cannot exceed 1., below, times 2., below: 1. The Fixed Account Cash Value plus the Variable Account Cash Value. 2. The Fixed Account Maximum Allocation Percent as shown on the Policy Specifications page. The initial allocation is shown on the Application, a copy of which is attached. We may modify the Fixed Account Maximum Allocation Percent at any time. The Policy's first investment of the Net Premium is made in the Money Market Sub-Account as of the Investment Start Date. The Policy's Cash Value will be transferred, based on your choice, to the Sub-Accounts and the Fixed Account 15 days after the initial premium is applied to the Policy. Before this transfer, the values and benefits of the Policy will depend on the net investment performance of the Money Market Sub-Account. After this transfer, each Net Premium allocated to the Variable Account will be applied to the Sub-Accounts you chose as of the date it is received by us at our Home Office or any other office designated by us. YOUR RIGHT TO CHANGE If you have not exercised your Conversion Rights, you ALLOCATION may change the allocation of future Net Premiums among the Fixed Account and/or the Sub-Accounts of the Variable Account subject to the conditions outlined in the Allocation of Net Premiums Provision. The change in allocation percentages will take effect immediately upon our receipt of your request in a form acceptable to us at our Home Office or any other office designated by us. NO LAPSE PERIOD If, on a monthly anniversary day prior to the No Lapse Premium Date, the sum of all premiums paid on this Policy less: 1. Any partial withdrawals; 2. Any Cash Value paid to you to allow the Policy to continue to qualify as a life insurance contract; and 3. Any outstanding Loan and Loan Interest is greater than or equal to the sum of the No Lapse Monthly Premiums for each monthly anniversary since the Policy Date, this Policy will not lapse. The No Lapse Premium Date and the No Lapse Annual Premium are shown on the Policy Specifications page. The No Lapse Monthly Premium is one twelfth of the No Lapse Annual Premium. The No Lapse Monthly Premium may change if any of the following events occur prior to the No Lapse Premium Date shown on the Policy Specifications page: 1. A change in the Policy's Face Amount; 2. The addition or deletion of or change to a rider attached to this Policy; 3. A change in the Risk Classification of the Insured; or 4. A misstatement of age or sex in the Application. The No Lapse Premium Date will not be changed. If the Policy lapses, the No Lapse Period will terminate and cannot be reinstated. GRACE PERIOD IF, ON A MONTHLY ANNIVERSARY DAY WHILE THE NO LAPSE PREMIUM PERIOD IS IN EFFECT: 1. The Cash Value less any Loan, Loan Interest due and any Surrender Charge that would apply upon surrender whether or not there is a surrender is insufficient to cover the Monthly Deduction, which is defined in the Cash Values Section; and 2. The sum of all premiums paid on this Policy, reduced by any partial withdrawals and any outstanding Loan and Loan Interest, is less than the sum of the No Lapse Monthly Premiums for each monthly anniversary since the Policy Date; then the Grace Period of 62 days will be allowed for the payment of a premium sufficient to keep your Policy in force. Notice of the Amount Due to keep this Policy in force through the end of the Grace Period will be sent at the beginning of the Grace Period to your last known address and to any assignee on record. The Amount Due is the amount required to satisfy the No Lapse Premium requirement or an amount sufficient to cover the Monthly Deduction, whichever is less. If we do not receive a premium large enough to cover the Monthly Deduction by the end of the Grace Period, your Policy will lapse at the end of that 62-day period and it will then terminate without Cash Surrender Value. If the Insured dies during the Grace Period, the Amount Due will be deducted from the Death Benefit. IF, ON A MONTHLY ANNIVERSARY DAY ON OR AFTER THE NO LAPSE PREMIUM PERIOD, the Cash Value less any Loan, Loan Interest due and any Surrender Charge that would apply upon surrender whether or not there is a surrender is insufficient to cover the next Monthly Deduction, a Grace Period of 62 days will be allowed for the payment of a premium sufficient to pay the Monthly Deduction. Notice of the amount of premium required to be paid to keep this Policy in force through the end of the Grace Period will be sent at the beginning of the Grace Period to your last known address and to any assignee on record. If we do not receive a premium large enough to cover the Monthly Deduction by the end of the Grace Period, your Policy will lapse at the end of that 62-day period and it will then terminate without Cash Surrender Value. If the Insured dies during the Grace Period, any past due Monthly Deductions will be deducted from the Death Benefit. REINSTATEMENT You may reinstate your lapsed Policy within three years after the date of lapse. This must be done prior to the Insured's Attained Age 100. The Policy cannot be reinstated, except with our consent, if more than three years have passed since the date of lapse. The Policy cannot be reinstated if it has been surrendered. To reinstate, you must submit the following items: 1. A written application for Reinstatement. 2. Proof satisfactory to us that the Insured is insurable by our standards. 3. Payment of a premium large enough to keep the Policy in force for at least three months. Upon Reinstatement, we will deduct any Monthly Deductions and Loan Interest due and unpaid at the time of lapse. The Insured must be alive on the date we approve the request for Reinstatement. If the Insured is not alive, such approval is void and of no effect. The reinstated policy will be in force from the date we approve the Reinstatement application. Any Loan may be repaid or reinstated. Any Loan reinstated will cause Cash Value of an equal amount to be reinstated. Any Loan repaid at the time of Reinstatement will cause an increase in Cash Value equal to the amount of the repaid Loan. The Maximum Asset Charge Percentage, the Maximum Monthly Policy Charge, the Maximum Monthly Administration and Issue Expense Charge and the Maximum Surrender Charge at the time of Reinstatement will be those in effect at the time of lapse. If only a portion of the coverage is reinstated then only the applicable portion of the Maximum Monthly Administration and Issue Expense Charge and Maximum Surrender Charge will be reinstated. If only a portion of the coverage is reinstated, the Cash Value following Reinstatement will be increased by a proportionate amount of the Surrender Charge imposed at the time of lapse. If only a portion of the coverage is reinstated then only a portion of any rider amounts attached to this Policy may also be reinstated. The No Lapse Period will not be applicable upon Reinstatement of the Policy. Riders can be reinstated only as stated in the rider or with our consent. 7. LOANS LOANS Upon written request to us, you may borrow an amount not in excess of the Loan Value of your Policy while it is in force. The amount of your net loan request at any one time must be at least the Minimum Loan and Withdrawal Amount shown on the Policy Specifications page. Your Policy will be the sole security for such Loan. The Loan Value is the Cash Value of your Policy at the date of the loan request plus interest to the next policy anniversary at the Fixed Account Cash Value Guaranteed Interest Rate, shown on the Policy Specifications page, reduced by: 1. Any existing Loan; and 2. Loan Interest to the next policy anniversary; and 3. The amount of the last Monthly Deduction processed times the number of policy months to the earliest of: the next planned premium due date; and the next policy anniversary, and 4. Any Surrender Charge that would apply upon surrender whether or not there is a surrender. You may allocate the Loan among the Fixed Account and the Sub-Accounts of the Variable Account. If you do not specify the allocation, then the Loan will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account, and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account, on the date of the Loan. Cash Value equal to the Loan allocated to the Fixed Account and each Sub-Account of the Variable Account will be transferred to the Loan Account, reducing the Cash Value accordingly. The transferred Cash Value: will be allocated to the appropriate Loan SubAccount; and will earn interest at the Fixed Account Cash Value Guaranteed Interest Rate shown on the Policy Specifications page. Interest earned on the Cash Value in the Loan Account will remain in the Loan Account until: a loan repayment is received by us; a new Loan is made; the Policy enters the Grace Period; or the next policy anniversary. Upon each of these events, the interest earned on the Loan Account will be transferred to the Fixed Account and the Sub-Accounts of Variable Account in the same proportion that the Cash Value in the Loan Account bears to the Cash Value allocated to each Loan SubAccount. LOAN INTEREST DUE The accrued Loan Interest will be due the earliest of: DATE 1. The next policy anniversary date; 2. The date of termination of the Policy; 3. The date the Loan is repaid in full; and 4. The date the Loan plus Loan Interest accrued exceeds the Cash Value less any Surrender Charge that would apply upon surrender whether or not there is a surrender. Loan Interest will be payable annually on each policy anniversary. If you do not pay the Loan Interest when it is due on a policy anniversary: an amount of Cash Value equal to the Loan Interest will be added to the Loan; interest will be charged on it; and it will be allocated to the appropriate Loan SubAccount. The amount transferred will be deducted from the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account. FIXED LOAN INTEREST Loan Interest will be charged on any Loan. The rate of RATES interest will not exceed the Maximum Loan Interest Rate shown on the Policy Specifications page. Loan Interest is payable in arrears. LOAN REPAYMENTS You may repay your Loan in whole or in part at any time before the death of the Insured while the Policy is in force. When a loan repayment is made, Cash Value securing the debt in the Loan Account equal to the loan repayment will be repaid to the Fixed Account and the Sub-Accounts of Variable Account in the same proportion that the Cash Value in the Loan Account bears to the Cash Value in each Loan SubAccount. Unpaid Loan and Loan Interest will be deducted from any settlement of your Policy. If you fail to make repayments when the total Loan and Loan Interest due would exceed the Cash Value, less any Surrender Charge that would apply upon surrender whether or not there is a surrender, (called "excess Loan") your Policy will terminate. We will allow you a Grace Period for payment of the amount of the excess due. In such event the Policy becomes void at the end of the Grace Period. We will mail notice to your last known address, and that of any assignee of record. This Grace Period will expire 62 days from the monthly anniversary immediately before the date of the excess Loan. Unless you request otherwise in writing to us, any payment received by us will be used as a premium payment. 8. CASH VALUES CASH VALUE The Cash Value of your Policy is equal to the total of: 1. The Cash Value in the Fixed Account; plus 2. The Cash Value in the Sub-Accounts of the Variable Account, plus 3. The Cash Value in the Loan Account. CASH VALUE ON OR If this Policy is in force on or after the Insured's AFTER ATTAINED AGE Attained Age 100, the Cash Value of your Policy will 100 be determined in the same manner as described below; except no Monthly Deductions will be made. Premiums cannot be paid on or after the Insured is Attained Age 100, except for payments required under the Grace Period. FIXED ACCOUNT CASH The Cash Value in the Fixed Account as of the VALUE Investment Start Date is equal to: 1. The portion of the initial Net Premium received and allocated to the Fixed Account; less 2. The portion of the Monthly Deductions due from the Policy Date through the Investment Start Date charged to the Fixed Account. The Cash Value in the Fixed Account on any day after the Investment Start Date is equal to: 1. The Cash Value on the preceding Valuation Date, with interest on such value at the current rate; plus 2. Any portion of Net Premium received and allocated to the Fixed Account on that day; plus 3. Any amounts transferred to the Fixed Account on that day; plus 4. Any loan repayments allocated to the Fixed Account on that day; plus 5. That portion of any interest credited on an outstanding Loan which is allocated to the Fixed Account on that day; less 6. Any amount transferred from the Fixed Account to the Sub-Accounts of the Variable Account on that day; less 7. Any partial withdrawal made from the Fixed Account on that day; less 8. Any portion of a Processing Charge taken from the Sub-Account; less 9. Any portion of the Surrender Charge incurred on that day attributed to the Fixed Account; less 10. Any amount transferred from the Fixed Account to the Loan Account on that day; less 11. IF THAT DAY IS A MONTHLY ANNIVERSARY, the portion of the Monthly Deduction charged to the Fixed Account, to cover the policy month that starts on that day. The Cash Value in the Fixed Account can be negative. Interest will not be charged on negative Cash Value. FIXED ACCOUNT The interest credited to the Fixed Account Cash Value INTEREST RATE for a specific day will be at an effective annual rate not less than the Fixed Account Cash Value Guaranteed Interest Rate shown on the Policy Specifications page. VARIABLE ACCOUNT CASH The Cash Value in each Sub-Account of the Variable VALUE Account on the Investment Start Date is equal to: 1. The portion of the initial Net Premium received and allocated to the Sub-Account; less 2. The portion of the Monthly Deductions due from the Policy Date through the Investment Start Date charged to the Sub-Account. The Cash Value in each Sub-Account of the Variable Account on subsequent Valuation Dates is equal to: 1. The Cash Value in the Sub-Account on the preceding Valuation Date times that Sub-Account's Net Investment Factor for the current Valuation Period; plus 2. Any portion of Net Premium received and allocated to the Sub-Account during the current Valuation Period; plus 3. Any amounts transferred to the Sub-Account from the Fixed Account or from another Sub-Account during the current Valuation Period; plus 4. Any Loan repayments allocated to the Sub-Account during the current Valuation Period; plus 5. That portion of any interest credited on an outstanding Loan which is allocated to the Sub-Account during the current Valuation Period; less 6. Any amounts transferred from the Sub-Account during the current Valuation Period; less 7. Any partial withdrawal from the Sub-Account during the current Valuation Period; less 8. Any portion of the Surrender Charge incurred during the current Valuation Period attributed to the Sub-Account; less 9. Any portion of a Processing Charge taken from the Sub-Account; less 10. Any amount transferred from the Sub-Account to the Loan Account during that Valuation Period; less 11. IF A MONTHLY ANNIVERSARY OCCURS DURING THE CURRENT VALUATION PERIOD, the portion of the Monthly Deduction charged to the Sub-Account during the current Valuation Period to cover the policy month which starts during that Valuation Period. The Cash Value in a Sub-Account can be negative. VARIABLE ACCUMULATION At the end of a Valuation Date, the current market UNITS value of a Sub-Account is determined by multiplying that Sub-Account's accumulation unit value times the number of Sub-Account units held under this Policy. The number of Sub-Account accumulation units will increase when: 1. Any portion of a Net Premium is allocated to that Sub-Account; 2. Amounts are transferred to that Sub-Account; or 3. Loans are repaid and credited to that Sub-Account. The number of Sub-Account accumulation units will decrease when: 1. Any portion of the Monthly Deduction is deducted from that Sub-Account; 2. A Loan is taken from that Sub-Account; 3. An amount is transferred from that Sub-Account; 4. A Processing Charge is taken from that Sub-Account; 5. A Surrender Charge is taken from that Sub-Account; or 6. A partial withdrawal is taken from that Sub-Account. VALUE OF EACH The value of an accumulation unit may increase or ACCUMULATION UNIT decrease from one Valuation Period to the next. For any Valuation Period the value is: 1. The value of an accumulation unit for the prior Valuation Period; times 2. The Net Investment Factor for that Sub-Account for the current Valuation Period. NET INVESTMENT FACTOR The Net Investment Factor measures the investment performance of a Sub-Account during a Valuation Period. The Net Investment Factor for each Sub-Account for a Valuation Period is calculated as follows: 1. The value of the assets at the end of the preceding Valuation Period; plus 2. The investment income and capital gains---realized or unrealized---credited to the assets in the Valuation Period for which the Net Investment Factor is being determined; less 3. The capital losses---realized or unrealized--- charged against those assets during the Valuation Period; less 4. Any amount charged against each Sub-Account for taxes, including any tax or other economic burden resulting from the application of tax laws that we determine to be properly attributable to the Sub-Accounts of the Variable Account, or any amount we set aside during the Valuation Period as a reserve for taxes attributable to the operation or maintenance of each Sub-Account; divided by 5. The value of the assets at the end of the preceding Valuation Period. LOAN ACCOUNT CASH The Cash Value in the Loan Account as of the VALUE Investment Start Date is equal to the amount transferred into the Loan Account on that day. The Cash Value in the Loan Account on any day after the Investment Start Date is equal to: 1. The Cash Value in the Loan Account on the preceding Valuation Date, with interest; plus 2. Any amount transferred to the Loan Account from the Fixed Account on that day; plus 3. Any amount transferred to the Loan Account from the Sub-Accounts of the Variable Account on that day; plus 4. IF THAT DAY IS A POLICY ANNIVERSARY, an amount due to cover the Loan Interest if not paid by you; less 5. Any amount transferred from the Loan Account to the Fixed Account on that day; less 6. Any amount transferred from the Loan Account to the Sub-Accounts of the Variable Account on that day. MONTHLY COST OF The Monthly Cost of Insurance for the following month INSURANCE is charged as part of the Monthly Deduction. The Monthly Cost of Insurance is equal to: 1. The Net Amount at Risk for the initial Face Amount times the Monthly Cost of Insurance Rate for the initial Face Amount; plus 2. The Net Amount at Risk for any increase in Face Amount due to a Death Benefit Option Change times the Monthly Cost of Insurance Rate for that increase; plus 3. If you request any increase in your Face Amount, the Net Amount at Risk for each requested Amount of Increase times the Monthly Cost of Insurance rate for each increase in Face Amount. The Net Amount at Risk for the initial Face Amount, for each increase in Face Amount due to a Death Benefit Option Change, and for any requested Amounts of Increase equals: 1. For Death Benefit Option A: a. The greater of: the Face Amount of that coverage divided by the Monthly Discount Factor shown on the Policy Specifications page; and the Cash Value (before the deduction of the Monthly Cost of Insurance) attributable to that coverage at the beginning of the policy month times the Attained Age Factor as shown on the Table of Corridor Factors. The Cash Value used in this calculation will not be less than zero; less b. Any Cash Value (before the deduction of the Monthly Cost of Insurance) attributable to that coverage. 2. For Death Benefit Option B: a. The greater of: the Face Amount for that coverage divided by the Monthly Discount Factor shown on the Policy Specifications page plus the Cash Value (before the deduction of the Monthly Cost of Insurance) attributable to that coverage at the beginning of the policy month; and the Cash Value (before the deduction of the Monthly Cost of Insurance) attributable to that coverage at the beginning of the policy month times the Attained Age Factor as shown on the Table of Corridor Factors. The Cash Value used in this calculation will not be less than zero; less b. Any Cash Value (before the deduction of the Monthly Cost of Insurance) attributable to that coverage. The Cash Value will be attributed to coverages in the following order: 1. To the coverage provided by the initial Face Amount plus any increase in Face Amount due to a Death Benefit Option change plus all Adjustable Benefit Term Rider Face Amount increases; then 2. To any Supplemental Coverage Term Rider Face Amount; and then 3. To all increases in Face Amount in the order they were effective. MONTHLY COST OF At the beginning of each policy year, the Monthly Cost INSURANCE RATES of Insurance rate is determined for the initial Face Amount and each increase in Face Amount. The Monthly Cost of Insurance rate is based on the Attained Age, Risk Classification, Sex and completed policy years from the Issue Date of the initial Face Amount and each increase in Face Amount. For the initial Face Amount, we will use the Risk Classification as of the Issue Date. For each increase, we will use the Risk Classification applicable to the increase. If the Death Benefit equals a percentage of the Cash Value, any increase in Cash Value will cause an automatic increase in the Death Benefit. The Risk Classification for such an increase will be the same as that used for the most recent increase, excluding any riders that required proof that the Insured was insurable by our standards. The Monthly Cost of Insurance rates will never exceed the rates shown on the Table of Maximum Monthly Cost of Insurance Rates page. Any change in the Cost of Insurance rates will apply to all persons of the same age, sex, and risk classification whose initial Face Amounts or increases in Face Amount have been in force for the same length of time. MONTHLY An Administration and Issue Expense Charge will be ADMINISTRATION AND deducted each policy month from the Cash Value as part ISSUE EXPENSE CHARGE of the Monthly Deduction. This charge equals the applicable Face Amount times an Administration and Issue Expense Charge Rate, divided by 1,000. The Administration and Issue Expense Charge Rate for the initial Face Amount of the Policy will never exceed the Maximum Monthly Administration and Issue Expense Charge Rate shown on the Policy Specifications page for the initial Face Amount. An Administration and Issue Expense Charge will also be applied to any increase in Face Amount. This charge will never exceed the Maximum Monthly Administration and Issue Expense Charge Rate shown on the Policy Specifications page for Policy Change for that increase. The Administration and Issue Expense Charge is based on the Insured's Age, Sex and Risk Classification on the effective date of the initial Face Amount or any increase in Face Amount. For the purpose of determining the applicable Administration and Issue Expense Charge on any date after Reinstatement, the period the Policy was lapsed will not count. MONTHLY POLICY CHARGE A Policy Charge will be deducted each policy month from the Cash Value as part of the Monthly Deduction. The amount of the Monthly Policy Charge will never exceed the amount shown on the Policy Specifications page. For the purpose of determining the applicable Monthly Policy Charge on any date after Reinstatement, the period the Policy was lapsed will not count. ASSET CHARGE An Asset Charge will be deducted from the Cash Value each policy month as part of the Monthly Deduction. A charge will be calculated on each monthly anniversary and will not exceed the Maximum Monthly Asset Charge Percentage shown on the Policy Specifications page times the Variable Account Cash Value at the beginning of the current day. If the Cash Value is negative on a monthly anniversary, the Asset Charge will not be deducted for that month. For the purpose of determining the applicable Asset Charge on any date after Reinstatement, the period the Policy was lapsed will not count. REDUCTION OF CHARGES We may reduce or eliminate certain charges. The extent and nature of reductions may change from time to time. The charge structure may vary. Variations are determined in a manner, not unfairly discriminatory to policy owners, which reflects differences in costs of services. MONTHLY DEDUCTION On the first day of each policy month, whether or not premiums are paid, we will make a Monthly Deduction for that policy month from the Cash Value of this Policy. The Monthly Deduction is: 1. The Monthly Asset Charge; plus 2. The Monthly Administration and Issue Expense Charge; plus 3. The Monthly Policy Charge; plus 4. The Monthly Cost of Rider, if any, for any rider included with this Policy; plus 5. The Maximum Face Amount Increase Administration Charge, if any; plus 6. The Monthly Cost of Insurance. The Monthly Deduction for a policy month will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account on the monthly anniversary. However, you can choose in writing, at any time, to have Monthly Deductions allocated among the Fixed Account or a specific Sub-Account until the Cash Value in the Policy's portion of the Fixed Account or that Sub-Account is insufficient to cover the entire Monthly Deduction; and then the Fixed Account and the remaining Sub-Accounts in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account on the monthly anniversary. We will allocate the Monthly Deduction according to your choice until you request otherwise in writing to us. DETERMINATION OF Cost of Insurance Rates, Percent of Premium Charges, NONGUARANTEED FACTORS Monthly Administration and Issue Expense Charges, Monthly Policy Charges, Monthly Asset Charges and interest rates will be determined by us based on expectations as to future mortality, tax, interest earnings, expense and persistency experience. We will not adjust such rates or charges as a means of recovering prior losses nor as a means of distributing prior profits. CASH SURRENDER VALUE The Cash Surrender Value of this Policy is: 1. The Cash Value at the time of surrender; less 2. Any Loan and Loan Interest accrued; less 3. Any Surrender Charge that would apply upon surrender whether or not there is a surrender. SURRENDER You may surrender your Policy for its Cash Surrender Value at any time during the lifetime of the Insured. We will determine the Cash Surrender Value as of the date we receive your request in a form acceptable to us at our Home Office or any other office designated by us. The Cash Surrender Value will not be reduced by any Monthly Deduction due on that date for a subsequent policy month. Any unused portion of the Monthly Cost of Insurance will be added to the Cash Surrender Value. PARTIAL WITHDRAWALS After the Right to Examine Policy period, upon our receipt of your request in a form acceptable to us at our Home Office or any other office designated by us, you can make a partial withdrawal of cash subject to the conditions listed below. Except with our consent, the number of partial withdrawals in a policy year will be limited to the Maximum Number of Transfers or Withdrawals shown on the Policy Specifications page. If we consent to more than that in a policy year, we may impose a charge not to exceed the Maximum Processing Charge shown on the Policy Specifications page. Except with our consent, the amount of your partial withdrawal request at any one time must be at least the Minimum Loan and Withdrawal Amount shown on the Policy Specifications page. We reserve the right to limit the total amount you may withdraw to 90% of the Cash Surrender Value of your Policy. (See the Allocation of Partial Withdrawals, Fixed Account Partial Withdrawals and Variable Account Partial Withdrawals provisions below.) No partial withdrawal will be processed which will result in the Face Amount, excluding riders, being decreased below the Minimum Face Amount shown on the Policy Specifications page. The Death Benefit of the Policy will be based on the Face Amount after the partial withdrawal and the reduced Cash Value. The Face Amount of the Policy will be decreased, if necessary, such that the amount at risk after the partial withdrawal is not greater than the amount at risk before the partial withdrawal. A Surrender Charge will apply if the Face Amount is decreased. This Surrender Charge will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the partial withdrawal was allocated among the Fixed Account and the Sub-Accounts of the Variable Account. (See Allocation of Partial Withdrawals provision below.) When the first partial withdrawal of each policy year is made, this Surrender Charge will not apply to: the first 10% of Cash Surrender Value withdrawn; or if the amount withdrawn is less than 10%, the amount of the partial withdrawal. The Face Amount will be decreased in the following order: 1. The initial Face Amount of the Policy, plus any increase in Face Amount provided by a change in Death Benefit Option ,to the Minimum Face Amount shown on the Policy Specifications page; 2. The Face Amount provided by any Adjustable Benefit Term Rider; 3. The Face Amount of any Supplemental Coverage Term Rider; and 4. Any increases in the same order in which they were issued. A decrease in Face Amount may require a decrease in the amounts provided by any riders attached to this Policy. ALLOCATION OF PARTIAL You may allocate the partial withdrawal plus any WITHDRAWALS applicable Surrender Charge, subject to the conditions below, among the Fixed Account and the Sub-Accounts of the Variable Account. If you do not specify the allocation, then the partial withdrawal will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account on the date of the partial withdrawal. If the Fixed Account conditions will not allow this proportionate allocation, we will request that you specify an acceptable allocation. FIXED ACCOUNT PARTIAL You may request a partial withdrawal be taken from WITHDRAWALS your Cash Surrender Value in the Fixed Account. The maximum amount of all partial withdrawals and transfers from the Fixed Account in a policy year will be the greater of 1. and 2: 1. The Cash Surrender Value of the Fixed Account at the beginning of that policy year times the Fixed Account Maximum Withdrawal Percentage Limit, as shown on the Policy Specifications page. 2. The previous year's Fixed Account Maximum withdrawal amount. However, if less than $100 would remain in the Fixed Account after the withdrawal, you can withdraw the entire amount of Cash Surrender Value in the Fixed Account. VARIABLE ACCOUNT You may request a partial withdrawal be taken from PARTIAL WITHDRAWALS your Cash Surrender Value in a Sub-Account of the Variable Account. The maximum amount of your partial withdrawal from any one of the Sub-Accounts of the Variable Account in a policy year will be the Cash Surrender Value of that Sub-Account. SURRENDER CHARGE A Surrender Charge will apply: upon surrender; upon lapse; upon some partial withdrawals that reduce the Face Amount (see Partial Withdrawals provision); upon a change in Death Benefit Option that reduces the Face Amount; or upon a decrease in Face Amount during the surrender charge period. The Surrender Charge for the initial Face Amount will never exceed the Maximum Surrender Charge shown on the Surrender Charge Schedule page. The Surrender Charge for any increase will never exceed the Maximum Surrender Charge shown on the Surrender Charge Schedule page included with the Policy Specifications page for Policy Change issued at the time of the increase. A decrease in Face Amount may decrease some or all of the initial Face Amount and increases in Face Amount as provided in the Policy Benefits Section. If a portion of the initial Face Amount or any increase in Face Amount is decreased, a proportionate amount of the Surrender Charge will apply to each decrease. The Surrender Charge will be allocated among the Fixed Account and the Sub-Accounts of the Variable Account in the same proportion that the Cash Value in the Fixed Account and the Cash Value in each Sub-Account bears to the total Cash Value of the Policy less the Cash Value in the Loan Account. If a Surrender Charge is imposed due to a partial withdrawal, you may allocate it among the Fixed Account and the Sub-Accounts of the Variable Account. For the purpose of determining the applicable Surrender Charge on any date after Reinstatement, the period the Policy was lapsed will not count. POSTPONEMENT OF We will usually pay any amounts payable on Loans, PAYMENTS OR TRANSFERS surrender or partial withdrawals allocated to the Sub-Accounts of the Variable Account within seven days after written request is received. We will usually pay any Death Benefit proceeds within seven days after we receive due proof of claim. Payment of any amount payable from the Sub-Accounts of the Variable Account on Loans (except when used to pay premiums on policies issued by us), surrender, partial withdrawals or death may be postponed whenever: 1. The New York Stock Exchange is closed (other than customary weekend and holiday closing) or trading on the New York Stock Exchange is restricted as determined by the SEC; 2. The SEC, by order, permits postponement for the protection of policy owners; or 3. 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 net assets of the Variable Account. We may defer payment of the portion of any amount payable from the Fixed Account on surrender or partial withdrawals for not more than six months. If we defer payment for 30 days or more, we will pay interest at the rate of 3% per year, or that required by law, for the period of deferment. Transfers may also be postponed under the circumstances listed above. We may defer payment of the portion of any Loan from the Fixed Account for not more than six months. No payment from the Fixed Account to pay premiums on any policy issued by us will be deferred. BASIS OF COMPUTATION The minimum cash values are based on: 1. The Basis of Computation of Minimum Cash Values table shown on the Policy Specifications page and any Policy Specifications page for Policy Change; and 2. For amounts allocated to the Fixed Account, compound interest at an annual rate of not less than the Basis of Computation Interest Rate shown on the Policy Specifications page. Net single premiums are based on: 1. The 7702 Table as shown on the Policy Specifications page and any Policy Specifications page for Policy Change; and 2. The Basis of Computation Interest Rate shown on the Policy Specifications page. All values are at least equal to those required by any applicable law of the state that governs your Policy. A detailed statement of the method of computing values has been filed, where required, with the Insurance Department of the state in which the Policy is delivered. 9. PAYMENT OF POLICY BENEFITS PAYMENT Unless otherwise requested, we may pay the Policy Proceeds when the Insured dies to the Payee in one sum or by placing the amount in an account that earns interest. The Payee will have immediate access to all or any part of the account. We will pay interest on the proceeds from the date they become payable to the date of payment as stated above. Interest will be payable at a rate that will be set each year by us and that will not be less than that required by law or 3% per year, if greater. On request, all or part of the proceeds payable in one sum at the death of the Insured can be applied to any Payment Option at the choice of the Payee. Further, with our consent, any Payee who is entitled to receive proceeds in one sum when a Payment Option ends, or at the death of a prior Payee, or when the proceeds are withdrawn, can choose to apply the proceeds to a Payment Option. CHOICE OF PAYMENT The choice of a Payment Option and the naming of the OPTIONS; OPTION DATE Payee must be in written form satisfactory to us. You can make or change or revoke the choice before the death of the Insured. The Option Date is the effective date of the Payment Option, as chosen. When a Payment Option starts, we will issue a contract that will describe the terms of the Option. We may require that you send us this Policy. PAYEE A Payee is a person, a corporation, a partnership, a fiduciary or any other legal entity entitled to receive payment in one sum or under a Payment Option. If the Payee is not a natural person, the choice of a Payment Option will be subject to our approval. A collateral assignment will modify a prior choice of a Payment Option. The amount due the assignee will be payable in one sum and the balance will be applied under the Payment Option. LIFE INCOME OPTIONS Guaranteed Life Income Options are based on the age of the Payee on the Option Date. We will require proof of age. The Life Income payments will be based on the rates shown in the Life Income Tables; or, if they are greater, our Payment Option rates on the Option Date. If the rates at a given age are the same for different periods certain, the longest period certain will be deemed to have been chosen. DEATH OF PAYEE Amounts to be paid after the death of a Payee under a Payment Option will be paid as due to the successor Payee. If there is no successor Payee, amounts will be paid in one sum to the estate of the last Payee to die. If a Payee under a Life Income Option dies within 30 days after the Option Date, the amount applied to the Option, less any payments made, will be paid in one sum, unless a Payment Option is chosen. LIMITATIONS If instalments under an Option would be less than $50, proceeds can be applied to a Payment Option only with our consent. 10. PAYMENT OPTIONS INTEREST INCOME The proceeds applied to this Option will earn interest. Interest on the proceeds: 1. Will be paid monthly; or 2. Will be added to the principal amount each year and will earn interest. Withdrawals of at least $500 each may be made at any time by written request. INSTALMENT INCOME FOR Monthly instalment payments will be made so that the A STATED PERIOD proceeds applied, with interest, will be paid over the period chosen (from 1 to 30 years). Any interest paid above 3% (See Payment Option Rates below) by us for any year will be added to the monthly payments for that year. INSTALMENT INCOME OF Monthly instalment payments of a chosen amount will be A STATED AMOUNT made until the entire proceeds applied, with interest, is paid. SINGLE LIFE INCOME - Monthly payments will be made during the lifetime of GUARANTEED PAYMENT the Payee with a chosen guaranteed payment period of PERIOD 10, 15 or 20 years. SINGLE LIFE INCOME - Monthly payments will be made during the lifetime of GUARANTEED RETURN the Payee. If the payee dies before the total amount applied under this plan has been paid, the remainder will be paid in one sum. JOINT AND SURVIVOR Monthly payments will be made: LIFE INCOME 1. While either of two Payees is living, but for at least 10 years, called "Joint and Survivor Life Income, 10 Years Certain"; or 2. While two Payees are living, and after the death of one Payee, two-thirds of the monthly amount while the other Payee is living, called "Joint and 2/3 to Survivor Life Income". OTHER FREQUENCIES AND Other Payment Options and payment frequencies may be OPTIONS arranged with us. PAYMENT OPTION RATES Amounts applied under the interest income and instalment payment plans will earn interest at a rate we set from time to time; but the rate will not be less than 3% per year. 11. LIFE INCOME TABLES MINIMUM PAYMENTS Monthly payments for each $1,000 applied will not be UNDER PAYMENT OPTIONS less than the amounts shown in the following Tables. On request, we will provide additional information about amounts of minimum payments. The rates shown below are based on an interest rate of 3% per year and based on the 1983 IAM Mortality Table with projection to 1992 using projection Scale G.
INSTALMENT INCOME FOR Years Chosen Monthly Payment Years Chosen Monthly Payment Years Chosen Monthly Payment A STATED PERIOD ------------ --------------- ------------ --------------- ------------ --------------- 1 $84.47 11 $ 8.86 21 $ 5.32 2 42.86 12 8.24 22 5.15 3 28.99 13 7.71 23 4.99 4 22.06 14 7.26 24 4.84 5 17.91 15 6.87 25 4.71 6 15.14 16 6.53 26 4.59 7 13.16 17 6.23 27 4.47 8 11.68 18 5.96 28 4.37 9 10.53 19 5.73 29 4.27 10 9.61 20 5.51 30 4.18
SINGLE LIFE INCOME Guaranteed Payment Period ----------------------------------------- Payee's Age 10 Years 15 Years 20 Years Guaranteed Return ----------- -------- -------- -------- ----------------- 50 $3.48 $3.47 $3.45 $3.41 55 3.72 3.70 3.66 3.61 60 4.02 3.98 3.92 3.86 65 4.40 4.33 4.21 4.17 70 4.90 4.76 4.54 4.57 75 5.55 5.25 4.87 5.06 80 6.34 5.77 5.13 5.69 85 and over 7.25 6.21 5.28 6.49
JOINT AND SURVIVOR Age of Both Payees Joint and Survivor, 10 Years Certain Joint and 2/3 to Survivor LIFE INCOME ------------------ ------------------------------------ ------------------------- 55 $3.36 $3.48 60 3.58 3.73 65 3.87 4.05 70 4.25 4.48 75 4.76 5.07
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE NON - PARTICIPATING NEW ENGLAND LIFE INSURANCE COMPANY 501 BOYLSTON STREET BOSTON, MASSACHUSETTS 02116 EX-1.A.5(B) 4 b40975s6ex1-a_5b.txt RIDERS TO POLICY Exhibit 1.A.5(b) 3E-5ACC-02 ACCELERATION OF DEATH BENEFIT RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY THE WAITING PERIODS FOR SUICIDE AND INCONTESTABILITY ARE DIFFERENT FROM THOSE IN THE POLICY AND BEGIN ON THE ISSUE DATE OF THE RIDER. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page or on the Policy Specifications page for Policy Change. A copy of the application for this Rider is attached to and made a part of the Rider. IMPORTANT: THE BENEFIT PAYMENTS UNDER THIS RIDER MAY BE TAXABLE OR MAY AFFECT ELIGIBILITY FOR BENEFITS UNDER STATE OR FEDERAL LAW. YOU SHOULD CONSULT YOUR TAX ADVISER TO DETERMINE THE EFFECT ON YOU. DEFINITIONS "Eligible Proceeds" are the Policy Proceeds as defined in your Policy plus any amount of benefit provided by a rider that we consent to apply to an Accelerated Death Benefit. "Accelerated Death Benefit" is the amount we will pay under this Rider if we receive proof that the Insured is terminally ill. We will compute the Accelerated Death Benefit based on the following: 1. The amount of Eligible Proceeds you choose to accelerate. (See Amount of Accelerated Death Benefit); 2. Reduced life expectancy; 3. An Interest Rate no greater than the greater of: a. The current yield on 90 day treasury bills; and b. The current maximum statutory adjustable policy loan interest rate; and 4. A processing charge not to exceed $150. This method of computation has been filed with the insurance supervisory official of the state that governs your Policy. We may change the assumptions we use from time to time. "Terminally ill" means having a life expectancy of 12 months or less. AMOUNT OF You may choose to accelerate all or part of the Eligible ACCELERATED Proceeds to your Accelerated Death Benefit subject to the DEATH BENEFIT following conditions: 1. You must apply at least $20,000. 2. You cannot apply more than the greater of: a. $250,000; and b. 10% of the Eligible Proceeds under this and all other similar riders issued by us and our affiliates. 3. The Face Amount of your Policy after payment of a partial Accelerated Death Benefit must be at least $50,000. CONDITIONS Your right to the Accelerated Death Benefit under this Rider is subject to the following: 1. You must provide proof satisfactory to us, including a statement signed by a physician, that the Insured is terminally ill. The physician may not be you, the Insured, or a member of the Insured's family. We have the right to have the Insured examined at our expense by a physician we choose. 2. You must make a written request for payment in a form acceptable to us. 3. Any irrevocable beneficiary must give written consent for payment in a form acceptable to us. 4. Any assignee must give written consent for payment in a form acceptable to us. 5. We may require the Policy for endorsement. 6. You may request only one Accelerated Death Benefit under this Rider. 7. Insurance subject to incontestability and suicide provisions will not be included in the Eligible Proceeds. 8. Your Policy is not eligible for this benefit if: a. You are required by law to use this Rider to meet the claims of creditors, whether in bankruptcy or otherwise; or b. You are required by a government agency to use this Rider to apply for, obtain, or keep a government benefit or entitlement. PAYMENT OF Unless otherwise requested, we may pay the Accelerated Death ACCELERATED Benefit in one sum or by placing the amount in an account that BENEFIT DEATH earns interest. You will have immediate access to all or any part of the account. EFFECT OF If you apply all of the Eligible Proceeds to your Accelerated BENEFIT Death Benefit, all policy benefits based on the Insured's ACCELERATION life, except for any benefit for accidental death, will end. ON POLICY AND Any accidental death benefit rider on the life of the Insured RIDERS will continue in force for 12 months from the date of any payment under this Rider. Any riders that provide a benefit on the life of someone other than the Insured will stay in effect pursuant to their terms as if the Insured had died. No further cost for those riders will be payable. All policy values and the Death Benefit on the remaining Policy, if any, will be reduced in the same proportion as the amount of Eligible Proceeds was applied to the Accelerated Death Benefit. Upon acceleration, future premiums and policy charges will be based on the reduced Death Benefit of the Policy. Insurance not included in the Eligible Proceeds will not be affected. INCONTESTABILITY This Rider will not be contestable after it has been in force during the life of the Insured for two years from the Issue Date of the Rider. SUICIDE This Rider does not apply if the Insured's terminal illness is EXCLUSION the result of an attempt to commit suicide, while sane or insane, within two years from the Issue Date of the Rider. TERMINATION This Rider will terminate at the earliest of: 1. When an Accelerated Death Benefit is paid; 2. The date on which the Policy would be disqualified as a life insurance contract because this Rider is attached, under the Internal Revenue Code as interpreted by the Internal Revenue Service; 3. When the Policy to which this Rider is attached terminates; and 4. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and the Policy are the same unless another Issue Date is shown below. ______________ Issue Date ADJUSTABLE BENEFIT TERM RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page. A copy of the application for this Rider is attached to and made part of the Rider. FACE AMOUNT The Face Amount of this Rider is shown on the Policy Specifications page. LIFE INSURANCE This Rider provides non-convertible term life insurance on the BENEFIT Insured shown on the Policy Specifications page. We will pay the Death Benefit of this Rider to the Beneficiary if the Insured dies while this Rider is in force. The Death Benefit provision in the Policy is modified so that where it states "Face Amount" it means the Policy's Face Amount plus this Rider's Face Amount. ADJUSTABLE While this Rider is in force an adjustment in the Face Amount BENEFIT TERM of this Rider may be requested. Except with our consent, such DATES request may be made once each Policy year. The adjustment will be effective on the Monthly Anniversary on or after our receipt of the request. ADJUSTABLE The Face Amount of this Rider may be increased subject to the BENEFIT TERM following conditions: AMOUNT 1. Written request, subject to our approval, to increase the Face Amount of this Rider; 2. Proof that the Insured is insurable based on our underwriting rules for this Rider; 3. An increase of at least $1,000, except with our consent. The Face Amount of this Rider may be decreased, subject to our approval, upon our receipt of a written request. MONTHLY COST OF The Monthly Cost of Insurance for this Rider for the following INSURANCE month is deducted as part of the Monthly Deduction. The Monthly Cost of Insurance is equal to the Net Amount at Risk for the Face Amount of this Rider times the Monthly Cost of Insurance Rate for this Rider. The Net Amount at Risk for the Face Amount of this Rider is equal to: 1. The Face Amount of this Rider divided by the Monthly Discount Factor shown on the Policy Specifications page; less 2. Any Cash Value (before the deduction of the Monthly Cost of Insurance for the base Policy) attributable to the Face Amount of this Rider. The Cash Value will be attributable to coverages in the following order: 1. To the coverage provided by the initial Face Amount plus any increase in Face Amount due to a Death Benefit Option change; then 2. To the Face Amount of this Rider; and then 3. To any increase in Face Amount in the order they were effective. This Rider will be considered an increase to the Policy's Face Amount when determining the Monthly Cost of Insurance for the Policy. MONTHLY COST OF The Monthly Cost of Insurance Rate for this benefit is based INSURANCE RATES on the Insured's Attained Age, risk classification and sex. Monthly Cost of Insurance Rates will be determined by us based on expectations as to future mortality, tax, interest earnings, expense and persistency experience. We will not adjust such rates as a means of recovering prior losses nor as a means of distributing prior profits. These rates will not exceed those shown in the Table of Maximum Monthly Cost of Insurance Rates for the Adjustable Benefit Term Rider. Each monthly anniversary this Rider is in force, the Monthly Cost of Insurance for this Rider (as determined above) will be added to the Monthly Deduction as defined in the Cash Values section of the Policy. This increased Monthly Deduction will be used to determine the Cash Value of the Policy on such monthly anniversary. TERMINATION This Rider will terminate on the first of the following events to occur: 1. The lapse of the Policy; or 2. The surrender of the Policy; or 3. The Insured's date of death; or 4. Attained Age 100 of the Insured. The Issue Date and effective date of this Rider and the Policy are the same. Secretary's signature President's signature NEF logo TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 INSURED: JOHN DOE COVERAGE: ADJUSTABLE BENEFIT TERM RIDER ISSUE DATE: JANUARY 1, 2002 POLICY NUMBER: 16,000,001
ATTAINED ATTAINED AGE RATE AGE RATE 35 71 36 72 37 73 38 74 39 75 40 76 41 77 42 78 43 79 44 80 45 81 46 82 47 83 48 84 49 85 50 86 51 87 52 88 53 89 54 90 55 91 56 92 57 93 58 94 59 95 60 96 61 97 62 98 63 99 64 65 66 67 68 69 70
THESE RATES ARE FOR THIS RIDER AT ISSUE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. CHILDREN'S LIFE INSURANCE RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY THE WAITING PERIODS FOR SUICIDE AND INCONTESTABILITY ARE DIFFERENT FROM THOSE IN THE POLICY AND BEGIN ON THE ISSUE DATE OF THE RIDER. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page or on the Policy Specifications page for Policy Change. A copy of the application for this Rider is attached to and made part of the Rider. FACE AMOUNT The Face Amount for this Rider on each Insured Child at and after age 6 months is the Face Amount shown for the Rider in the Policy Specifications page, or half of that amount before age 6 months. If the Rider is added after issue, the Policy Specifications page for Policy Change shows the Face Amount for the Rider. LIFE INSURANCE We will pay the Face Amount to the Beneficiary under this BENEFIT Rider upon the death of the Insured Child while this Rider is in force. We must receive proof that the death occurred before the Expiry Date of insurance on such Insured Child. DEFINITION OF The Insured, as shown on the Policy Specifications page, is INSURED the person whose life is covered under the Policy to which this Rider is attached. DEFINITION OF Any child, stepchild or legally adopted child of the Insured INSURED CHILD is an Insured Child if named in the application for this Rider. Any child of the Insured born after the date of the application for this Rider will become an Insured Child at age 15 days. Any child who is legally adopted by the Insured after the date of the application for this Rider but before the child's 18th birthday will become an Insured Child at age 15 days or on the date of adoption, if later. Each Insured Child will cease to be an Insured Child on the first to occur of: 1. His or her 25th birthday; 2. The Expiry Date of this Rider; 3. A conversion of the insurance provided by the Rider on that Insured Child; or 4. The death of the Insured Child. OWNER Unless otherwise provided, during the lifetime of the Insured, the Owner of the Policy will be the Owner of this Rider. Upon the death of the Insured, all such rights with respect to insurance then in force under this Rider on the life of an Insured Child, will, unless otherwise provided, vest in such Insured Child. THE BENEFICIARY The Beneficiary of any benefit payable as a result of the death of any Insured Child will be: the Insured, if living; if not then the estate of the person upon whose death payment is to be made; unless: otherwise provided in the application; or changed by you. You may change the beneficiary designation of the insurance on the life of any person insured under this Rider. This change must be done during the lifetime of such person. To make such a change you must file a proper written request with us. This request must be accepted by us at our Home Office or any other office designated by us. If we accept your request, the change will take effect as of the date of the request. This change will be subject to any payment or action we took before we received your written request for the change. The beneficiary designation and any changes made will be subject to any assignment of the Policy. MONTHLY COST OF The Monthly Cost of Rider for the following month is charged RIDER as part of the Monthly Deduction. The Monthly Cost of Rider for the Children's Life Insurance Rider is: 1. The Face Amount shown for the Rider on the Policy Specifications page or Policy Specifications page for Policy Change divided by $1,000; times 2. The Monthly Cost of Rider Rate - Children's Term Insurance shown on the Policy Specifications page or on the Policy Specifications page for Policy Change EXTRA AMOUNT OF We will provide an extra amount of insurance on an Insured INSURANCE Child for 90 days at no extra charge when: 1. That Insured Child marries; 2. A child is born to that Insured Child; or 3. A child is legally adopted by that Insured Child. The extra amount of insurance will be four times the Face Amount under this Rider. On receipt of proof that that Insured Child died within 90 days after the marriage, birth or adoption, we will pay the extra amount to the estate of that Insured Child. The extra insurance will expire at the end of 90 days after the marriage, birth or adoption. In no event will the amount of extra insurance on an Insured Child be more than four times the Face Amount if any 90-day periods overlap. Any extra amount of insurance provided under this provision is not convertible under the Conversion Rights provision. PAID-UP TERM Except as provided under the Suicide Exclusion provision of BENEFIT this Rider, if the insured's death occurs while this Rider is in force, this Rider will be continued as if the Insured had not died at no extra cost. This fully paid-up benefit will be subject to the terms of this Rider. We must receive proof of death of the Insured. Any child who would have become an Insured Child if the Insured's death had not occurred will become an insured child in accordance with the provisions of this Rider. CONVERSION The Owner may convert the term insurance in force under this RIGHTS Rider on each Insured Child for a new policy on that Insured Child's Date of Conversion. The Date of Conversion is the 25th birthday of that Insured Child or, if earlier, the Expiry Date of this Rider. An Insured Child's Date of Conversion can be advanced to the date any extra amount of insurance on that Insured Child expires under this Rider. The new policy will be issued: 1. On the life of the Insured Child; 2. Without proof of insurability; 3. With a Face Amount not more than 5 times the Face Amount of this Rider on the Insured Child; 4. Based on a standard nonsmoker risk classification or the risk classification the issuing company determines is closest to it if that classification is not available on the new policy; 5. With a current Policy Date; 6. By us or by an affiliate designated by us; 7. On a plan agreed to by the issuing company; 8. At the then current age of the Insured Child as calculated by the issuing company for that plan of insurance; 9. Subject to payment of the first premium for the new policy; 10. On a policy form and at rates in use by the issuing company on the Policy Date of the new policy; and 11. Subject to any assignments and limitations to which this Rider is subject. The conversion may be made only with our consent if the amount of insurance to be converted is less than the issuing company's published minimum limits of issue. REINSTATEMENT If this Rider lapses, you may reinstate it within three years after the date of lapse. The Rider cannot be reinstated, except with our consent, if more than three years have passed since the date of lapse. To reinstate, you must submit the following items: 1. A written application for reinstatement; 2. Proof satisfactory to us that each Insured Child is insurable by our standards; and 3. Payment, while each Insured Child is living, of a premium large enough to keep the Rider in force for at least three months. Upon Reinstatement, we will deduct any Monthly Cost of Rider due and unpaid at the time of lapse. The Insured must be alive on the date we approve the request for Reinstatement. If the Insured is not alive, such approval is void and of no effect. The reinstated rider will be in force from the date we approve the Reinstatement application. LIMITATIONS ON This Rider can be reinstated only if the Policy is also REINSTATEMENT reinstated or is in force. If only a portion of the Policy coverage is reinstated then only a portion of the Rider coverage may also be reinstated. INCONTESTABILITY This Rider will not be contestable after it has been in force during the life of the Insured for two years from the Issue Date of the Rider. SUICIDE If the Insured dies by suicide, while sane or insane, within EXCLUSION two years from the Issue Date of this Rider: 1. The Rider will not become paid-up under the Paid-up Benefit provision; 2. The Rider will terminate; and 3. The Cost of Rider paid for the Rider will be included in the policy proceeds. INCORRECT AGE The date that coverage under this Rider ceases, expires or terminates will be based on the correct age of each person insured. EXPIRATION OF The Expiry Date of this Rider is the policy anniversary INSURANCE nearest the 65th birthday of the Insured. If this Rider has not already expired or been cancelled, then insurance on each Insured Child will cease on the 25th birthday of such child. TERMINATION This Rider will terminate upon the earliest of: 1. Termination of the Policy other than by death of the Insured; 2. The Expiry Date for the Rider; and 3. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of the Owner's written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and Policy are the same unless another Issue Date is shown below. The insurance provided by this Rider will be in force from the Issue Date of the Rider. _____________ Issue Date CONVERTIBLE SUPPLEMENTAL COVERAGE TERM RIDER ISSUED BY NEW ENGLAND INSURANCE COMPANY This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page. A copy of the application for this Rider is attached to and made a part of the Rider. FACE AMOUNT The Face Amount of this Rider is shown on the Policy Specifications page. LIFE INSURANCE This Rider provides convertible term life insurance on the BENEFIT life of the Insured shown on the Policy Specifications page. We will pay the Face Amount of this Rider to the Beneficiary as part of the Policy Proceeds if the Insured dies while this Rider is in force. MONTHLY COST OF The Monthly Cost of Insurance for the following month is INSURANCE charged as part of the Monthly Deduction. The Monthly Cost of Insurance is the Monthly Cost of Insurance Rate for this Rider times the Face Amount of this Rider divided by 1,000. MONTHLY COST OF The Monthly Cost of Insurance Rate for this benefit is based INSURANCE RATES on the Insured's Attained Age, Risk Classification, sex and completed policy years from the Issue Date. Monthly Cost of Insurance Rates will be determined by us based on our expectations as to future mortality, tax, interest earnings, expense and persistency experience. We will not adjust such rates as a means of recovering prior losses nor as a means of distributing prior profits. These rates will not exceed those shown in the Table of Maximum Monthly Cost of Insurance Rates for the Convertible Supplemental Coverage Term Rider. DECREASES IN After the first policy year, the Face Amount of this Rider may RIDER FACE be decreased by sending us a written request. AMOUNT Any requested decrease in the Rider's Face Amount will be subject to the following conditions: 1. The decrease will become effective on the monthly anniversary on or following our receipt of the request at our Home Office or any other office designated by us; 2. The Face Amount after the decrease may not be less than $10,000; and 3. Any decrease must be at least the Minimum Face Amount Decrease as shown on the Policy Specifications page. CONVERSION After the first policy year, the Owner can, before the policy RIGHTS anniversary on which the Insured is Attained Age 80, convert any portion of this Rider to: a new policy; or an increase in Face Amount for the Policy: 1. If the Attained Age of the Insured meets the issuing company's issue age requirements on the date of the conversion; and 2. If the issuing company's underwriting class requirements on the date of the conversion can be met. CONVERSION TO A If the conversion is to a new policy, the new policy will be NEW POLICY issued: 1. Without proof of insurability; 2. With the same Insured as this Rider; 3. With the same underwriting class as this Rider, or the class we determine is closest to it if the class of this Rider is not offered on the new policy; 4. With a current Policy Date; 5. With a Face Amount equal to the amount of term insurance being converted; 6. By us or by an affiliate designated by us; 7. On a plan agreed to by the issuing company; 8. At the then current age of the Child as calculated by the issuing company for that plan of insurance; 9. On a policy form and at rates in use by the issuing company on the Policy Date of the new policy; 10. Subject to any assignments and limitations to which this Rider is subject; and 11. Subject to payment of the first premium for the new policy. 12. The conversion can be made only with our consent if: a. The amount of term insurance you want to convert is less than the issuing company's published minimum limits of issue; or b. Any rider is to be attached to the new policy. The Contestable and Suicide periods of the new policy will be measured from the Issue Date of this Rider. CONVERSION TO If the conversion is to an increase in Face Amount, any AN INCREASE IN increase in Face Amount is subject to: FACE AMOUNT 1. New insurance for the amount of the increase on the same plan at the Attained Age of the Insured on the date of the conversion being allowed under the underwriting rules of the issuing company; 2. The amount of the increase being at least the Minimum Face Amount Increase shown on the Policy Specifications page, except with our consent; and 3. A Monthly Deduction for that increase. An increase will be effective on the date shown in the Policy Specifications page for Policy Change. The Contestable and Suicide periods of the increase in Face Amount will be measured from the Issue Date of this Rider. TERMINATION This Rider will terminate on the first of the following events to occur: 1. The lapse of the Policy; 2. The surrender of the Policy; 3. The Insured's date of death; 4. A conversion of the entire Face Amount of the Rider to new insurance; 5. Attained Age 100 of the Insured; or 6. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and the Policy are the same. TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 INSURED: JOHN DOE COVERAGE:CONVERTIBLE SUPPLEMENTAL COVERAGE TERM RIDER RIDER ISSUE DATE: JANUARY 1, 2002 POLICY NUMBER: 16,000,001
ATTAINED ATTAINED AGE RATE AGE RATE 35 0.2192 71 4.9242 36 0.2342 72 5.3608 37 0.2533 73 5.8525 38 0.2750 74 6.3883 39 0.3000 75 6.9808 40 0.3283 76 7.5917 41 0.3617 77 8.2100 42 0.3958 78 8.8258 43 0.4350 79 9.4575 44 0.4758 80 10.1325 45 0.5225 81 10.8675 46 0.5692 82 11.6833 47 0.6200 83 12.5858 48 0.6733 84 13.5408 49 0.7333 85 14.5167 50 0.7967 86 15.4817 51 0.8700 87 16.4217 52 0.9517 88 17.4475 53 1.0450 89 18.4600 54 1.1500 90 19.4742 55 1.2617 91 20.5100 56 1.3825 92 21.6108 57 1.5075 93 23.0250 58 1.6408 94 24.8458 59 1.7792 95 27.4967 60 1.9325 96 32.0458 61 2.1050 97 40.0167 62 2.2992 98 54.8317 63 2.5192 99 83.3333 64 2.7617 65 3.0242 66 3.2975 67 3.5842 68 3.8792 69 4.1933 70 4.5400
THESE RATES ARE FOR THIS RIDER AT ISSUE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. EXCHANGE TO TERM INSURANCE ENDORSEMENT As of the Issue Date, this Endorsement is a part of the Policy and is subject to all applicable terms and provisions except as modified herein. EXCHANGE OF You can exchange this Policy for a policy which provides fixed POLICY FOR benefit term insurance: TERM INSURANCE 1. If the Policy has not lapsed; 2. If the Policy is in force under a corporate plan of deferred compensation; 3. If the purchase of insurance under the plan was not at the option of the Insured; and 4. If the exchange is made within three years of the Policy Date of the Policy. The new policy: 1. Will be issued by us or by an affiliate designated by us; 2. Will have the same Insured as this Policy; 3. Will have a Face Amount equal to the amount of coverage being exchanged; and 4. Will be on a plan agreed to by the issuing company. The new policy will have the same Issue Age and Policy Date as this Policy. This Policy will terminate after an exchange. The exchange will be subject to: an application to exchange the Policy; and proof that the Insured is then insurable. An exchange credit will be paid to you. The credit will be quoted by us on request. A detailed statement of the method of computing the exchange credit has been filed, where required, with the Insurance Department of the state in which the Policy is delivered. If you surrender this Policy for its Cash Surrender Value at a time when this Exchange of Policy for Term Insurance would have been available, we will automatically pay an amount equal to the exchange credit in lieu of the Cash Surrender Value if we determine that the exchange credit would be greater. OPTIONS TO PURCHASE ADDITIONAL LIFE INSURANCE RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. If this Rider is listed on the Policy Specifications page it is a part of the Policy. A copy of the application for this Rider is attached to and made a part of the Rider. PURCHASE OF Additional life insurance can be purchased on each Purchase ADDITIONAL Option Date shown on the Options to Purchase Additional Life LIFE INSURANCE Insurance Rider Schedule. The additional insurance can be: an increase in Face Amount for the Policy; or a new policy. (See the Increase in Face Amount and The New Policy provisions below.) Application for the additional insurance must be in writing, signed by the Owner and by the Insured and received at our Home Office or any other office designated by us within 60 days of the Purchase Option Date. MAXIMUM OPTION The Maximum Option Amount is the maximum amount of additional AMOUNT life insurance that can be purchased on each Purchase Option Date subject to the Maximum Total Option Amount below. The Maximum Option Amount is shown on the Options to Purchase Additional Life Insurance Rider Schedule. You may purchase less than the Maximum Option Amount on any Purchase Option Date. Any portion of the Maximum Option Amount not purchased within 60 days of a Purchase Option Date will be forfeited. MAXIMUM TOTAL The Maximum Total Option Amount is the lesser of: OPTION AMOUNT 1. The number of Purchase Option Dates shown on the Options to Purchase Additional Life Insurance Rider Schedule times the Maximum Option Amount shown on the Options to Purchase Additional Life Insurance Rider Schedule; and 2. $1,000,000. PURCHASE The Purchase Option Dates are shown on the Options to Purchase OPTION DATES Additional Life Insurance Rider Schedule. ADVANCEMENT OF After the second rider year, at your election, the next PURCHASE OPTION available Purchase Option Date can be advanced to the date on DATES which any of the following events occurs: 1. A child is born to the Insured; or 2. A child under 21 is legally adopted by the Insured; or 3. A home or other real estate is purchased by the Insured; or 4. The Insured marries; or 5. The Insured divorces; or 6. The Insured's Spouse dies. Proof, satisfactory to us, of the event may be required prior to advancement. INCREASE IN The increase will take effect on the Purchase Option Date FACE AMOUNT subject to the Change in Face Amount provision in your Policy, except that proof of insurability will not be required and the increase will not be subject to the Maximum Face Amount Increase Administration Charge. The underwriting class for the increase in Face Amount will be based on the Underwriting Class Basis for Purchase Options shown in the Options to Purchase Additional Life Insurance Rider Schedule. The Contestable and Suicide periods of each increase issued under this Rider will be measured from the Issue Date of this Rider. THE NEW POLICY The new policy will be issued: 1. With the same Insured as this Rider; 2. With the same underwriting class as the Underwriting Class Basis for Purchase Options shown in the Options to Purchase Additional Life Insurance Rider Schedule for this Rider or the class we determine is the closest to it if that class is not offered on the new policy; 3. Subject to any assignments and limitations to which this Rider is subject; 4. By us or by an affiliate designated by us; 5. On a plan agreed to by the issuing company; 6. At the then current age of the Insured as calculated for that plan of insurance by the issuing company; 7. On a policy form and at premium rates in use by the issuing company on the Policy Date of the new policy; and 8. With a Policy Date and Issue Date the same as the Purchase Option Date. The new policy will take effect on the Purchase Option Date: 1. During the life of the Insured; and 2. Not later than 60 days after the Purchase Option Date. The Contestable and Suicide periods of each new policy issued under this Rider will be measured from the Issue Date of this Rider. Riders can be attached to a new policy only with our consent. MONTHLY COST The Monthly Cost of Rider for the following month is charged OF RIDER as part of the Monthly Deduction. The Monthly Cost of Rider is the Guaranteed Monthly Cost of Rider Charge shown on the Options to Purchase Additional Life Insurance Rider Schedule. TERMINATION This Rider will terminate upon the earliest of: 1. Termination of the Policy other than by death; 2. Upon death of the Insured; 3. When the total amount of coverage issued under this Rider equals the Maximum Total Option Amount; 4. 60 days after the final Purchase Option Date; and 5. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and Policy are the same. OPTIONS TO PURCHASE ADDITIONAL LIFE INSURANCE RIDER SCHEDULE INSURED NAME: [JOHN DOE] ISSUE DATE: [NOVEMBER 1, 2001] AGE: [35] MAXIMUM OPTION AMOUNT: [$50,000] POLICY NUMBER: [16,000,001] UNDERWRITING CLASS BASIS FOR PURCHASE OPTIONS: [SMOKER STANDARD] GUARANTEED MONTHLY COST OF RIDER CHARGE: [$5.20] PURCHASE OPTION DATES: [11/01/2006] [11/01/2011] [11/01/2016] SECONDARY GUARANTEE RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY If this Rider is listed on the Policy Specifications page, it is part of the Policy. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. A copy of the application for this Rider is attached to and made part of the Rider. SECONDARY If, on a Monthly Anniversary day prior to the Secondary GUARANTEE Guarantee Date, shown on the Policy Specifications page: BENEFIT 1. The sum of all premiums paid on this Policy; less 2. Any partial withdrawals; less 3. Any outstanding loan and loan interest; less 4. Any pro rata surrender. is greater than or equal to the sum of the Secondary Guarantee Premium for each Monthly Anniversary since the Policy Date, this Policy will not lapse even if Your Cash Surrender Value is not sufficient to cover the Monthly Deduction on a Monthly Anniversary day. DEATH BENEFIT The Death Benefit is the greater of: 1. The Face Amount of the Policy including any increases; or 2. The Death Benefit otherwise provided by the Policy including any increases. Notwithstanding anything in this Policy, the Death Benefit will in no case be less than the amount necessary to cause the Policy to meet the requirements for the definition of life insurance under the Internal Revenue Code of 1986 or any applicable successor. COST OF RIDER The monthly Cost of Rider is the monthly Cost of Rider Rate shown on the Policy Specifications page, divided by 1000, multiplied by 1 below plus the difference between 2 and 3 below: 1. The Face Amount of any term rider not included in the Policy's Death Benefit; plus 2. An amount as follows: DEATH BENEFIT OPTION A: The greater of: a. The Face Amount divided by the Monthly Discount Factor shown on the Policy Specifications page; or b. The Policy's Cash Value at the beginning of the Policy month, multiplied by the Attained Age Factor as shown on the Table of Corridor Factors DEATH BENEFIT OPTION B: The greater of: a. The Face Amount divided by the Monthly Discount Factor shown on the Policy Specifications page plus the Policy's Cash Value at the beginning of the Policy month; or b. The Policy's Cash Value at the beginning of the Policy Month, multiplied by the Attained Age Factor as shown on the Table of Corridor Factors 3. The Policy's Cash Value at the beginning of the Policy month, before the deduction of the monthly Cost of this Rider. POLICY CHANGES The Secondary Guarantee Premium may change if any of the following events occur prior to the Secondary Guarantee Date shown on the Policy Specifications page: 1. A change in the Policy's Face Amount; 2. The addition of or an increase to a rider attached to this Policy; 3. A change in risk classification of the Insured; or 4. A change in death benefit option. The Secondary Guarantee Date will not change. GUARANTEE GRACE If on a Monthly Anniversary day prior to the Secondary PERIOD Guarantee Date, the sum of all premiums paid on this Policy, reduced by any partial withdrawals, pro rata surrenders and any outstanding Loan and loan interest, is less than the sum of the Secondary Guarantee Premiums for each monthly anniversary since the Policy Date, then the Guarantee Grace Period of 62 days will be allowed for the payment of a premium sufficient to keep this Rider in force. The Secondary Guarantee Date and the Secondary Guarantee Premium are shown on the Policy Specifications page. Notice of the amount of premium required to be paid to keep this Rider in force will be sent at the beginning of the Guarantee Grace Period to the last known address of the Owner and of any assignee of record. If We do not receive the premium required by the end of the Guarantee Grace Period, this Rider will terminate and the guarantee provided by this Rider will no longer be in effect. If the premium requirement is not met and death occurs during the Guarantee Grace Period, there is no deduction of the Rider premium required from the Death Benefit. MISSTATEMENT OF If there is a misstatement of age or sex in the application AGE OR SEX and such determination is made prior to the death of the Insured and while this Rider is in effect, then the Secondary Guarantee Premium will be that amount which corresponds to the Face Amount, as adjusted under the Policy, using the correct age and/or sex. The Secondary Guarantee Date will change based on the correct age. SECONDARY The date the Secondary Guarantee Rider expires. This date is GUARANTEE DATE shown on the Policy Specifications page. SECONDARY The premium required to keep the Secondary Guarantee Rider in GUARANTEE force. This premium is shown on the Policy Specifications PREMIUM page. PREMIUM We will restrict any premium payment that would cause the LIMITATIONS Policy to fail the definition of life insurance as defined by Section 7702 of the Internal Revenue Code of 1986 or any applicable successor. This limitation will not cause this Rider to terminate. We will not restrict payment of any premium, which is required to maintain this Rider in force because such payment will cause the Death Benefit to increase by an amount that exceeds the premium received. REINSTATEMENT If this Rider terminates it may not be reinstated. TERMINATION This Rider will terminate on the first of the following events to occur: 1. The death of the Insured; 2. The date of termination of the Policy to which this Rider is attached; 3. The end of the Guarantee Grace Period following Our notice to You that the premium requirement was not met; 4. The Secondary Guarantee Date shown on the Policy Specifications page; 5. The date a Change of Insured, on the Policy to which this Rider is attached, is executed. 6. The date a term rider on the life of someone other than the Insured is added if the Death Benefit Option chosen for the Policy is the Guideline Premium Test. or 7. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. CONTINUATION OF Once this Rider has terminated, the base Policy may continue INSURANCE in accordance with the provisions of the base Policy but without the benefit provided by this Rider. The Issue Date and the effective date of this Rider and the Policy are the same. Secretary's signature President's signature NEF logo SUPPLEMENTAL COVERAGE TERM RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page. A copy of the application for this Rider is attached to and made a part of the Rider. FACE AMOUNT The Face Amount of this Rider is shown on the Policy Specifications page. LIFE INSURANCE This Rider provides non-convertible term life BENEFIT insurance on the life of the Insured shown on the Policy Specifications page. We will pay the Death Benefit of this Rider to the Beneficiary if the Insured dies while this Rider is in force. The Death Benefit provision in the Policy is modified so that where it states "Face Amount" it means the Policy's Face Amount plus this Rider's Face Amount. MONTHLY COST OF The Monthly Cost of Insurance for the following month INSURANCE is charged as part of the Monthly Deduction. The Monthly Cost of Insurance is equal to the Net Amount at Risk for the Face Amount of the Rider times the Monthly Cost of Insurance Rate for the Rider. The Net Amount at Risk for the Face Amount of this Rider is equal to: 1. The Face Amount of this Rider divided by the Monthly Discount Factor shown on the Policy Specifications page; less 2. Any Cash Value (before the deduction of the Monthly Cost of Insurance for the base Policy) attributable to the Face Amount of the Rider. The Cash Value will be attributable to coverages in the following order: 1. To the coverage provided by the initial Face Amount plus any increase in Face Amount due to a Death Benefit Option change plus all Adjustable Benefit Term Rider Face Amount increases; then 2. To the Face Amount of this Rider; and then 3. To any increase in Face Amount in the order they were effective. MONTHLY COST OF The Monthly Cost of Insurance Rate for this benefit INSURANCE RATES is based on the Insured's Attained Age, Risk Classification, sex and completed policy years from the Issue Date. Monthly Cost of Insurance Rates will be determined by us based on our expectations as to future mortality, tax, interest earnings, expense and persistency experience. We will not adjust such rates as a means of recovering prior losses nor as a means of distributing prior profits. These rates will not exceed those shown in the Table of Maximum Monthly Cost of Insurance Rates for the Supplemental Coverage Term Rider. DECREASES IN After the first policy anniversary, the Face Amount RIDER FACE of this Rider may be decreased by sending us a AMOUNT written request. Any requested decrease in the Rider's Face Amount will be subject to the following conditions: 1. The decrease will become effective on the monthly anniversary on or following our receipt of the request at our Home Office or any other office designated by us; and 2. Any decrease must be at least the Minimum Face Amount Decrease as shown on the Policy Specifications page. If you request a change in Death Benefit Option, this Rider's Face Amount may be decreased. (See the Change in Death Benefit Option provision in your Policy.) If you request a partial withdrawal, this Rider's Face Amount may be decreased. (See the Partial Withdrawal provision in your Policy.) TERMINATION This Rider will terminate on the first of the following events to occur: 1. The lapse of the Policy; 2. The surrender of the Policy; 3. The Insured's date of death; 4. A decrease in Face Amount that causes this Rider's Face Amount to go to zero; 5. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement; and 6. Attained Age 100 of the Insured. The Issue Date and effective date of this Rider and the Policy are the same. TABLE OF MAXIMUM MONTHLY COST OF INSURANCE RATES PER $1,000 INSURED: JOHN DOE COVERAGE: SUPPLEMENTAL COVERAGE TERM RIDER RIDER ISSUE DATE: JANUARY 1, 2002 POLICY NUMBER: 16,000,001
ATTAINED ATTAINED AGE RATE AGE RATE 35 0.2192 71 4.9242 36 0.2342 72 5.3608 37 0.2533 73 5.8525 38 0.2750 74 6.3883 39 0.3000 75 6.9808 40 0.3283 76 7.5917 41 0.3617 77 8.2100 42 0.3958 78 8.8258 43 0.4350 79 9.4575 44 0.4758 80 10.1325 45 0.5225 81 10.8675 46 0.5692 82 11.6833 47 0.6200 83 12.5858 48 0.6733 84 13.5408 49 0.7333 85 14.5167 50 0.7967 86 15.4817 51 0.8700 87 16.4217 52 0.9517 88 17.4475 53 1.0450 89 18.4600 54 1.1500 90 19.4742 55 1.2617 91 20.5100 56 1.3825 92 21.6108 57 1.5075 93 23.0250 58 1.6408 94 24.8458 59 1.7792 95 27.4967 60 1.9325 96 32.0458 61 2.1050 97 40.0167 62 2.2992 98 54.8317 63 2.5192 99 83.3333 64 2.7617 65 3.0242 66 3.2975 67 3.5842 68 3.8792 69 4.1933 70 4.5400
THESE RATES ARE FOR THIS RIDER AT ISSUE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. TEMPORARY TERM INSURANCE RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY TERM We agree that the Policy and its Riders will be in INSURANCE force as temporary term insurance from the Issue Date BENEFIT to the Policy Date. During that period the amounts of insurance under the Policy and its Riders will be the same as the amounts on the Policy Date. During the temporary term insurance period the Policy will have no cash or loan value. This Rider is made a part of the Policy to which it is attached if the Rider is listed on the Policy Specifications page. The premium for this Rider is due on the Issue Date in the amount shown on the Policy Specifications page. TERM INSURANCE ON COVERED INSURED RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY THE WAITING PERIODS FOR SUICIDE AND INCONTESTABILITY ARE DIFFERENT FROM THOSE IN THE POLICY AND BEGIN ON THE ISSUE DATE OF THE RIDER. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page or on the Policy Specifications page for Policy Change. A copy of the application for this Rider is attached to and made part of the Rider. FACE AMOUNT The Face Amount for this Rider is the amount shown on the Table of Maximum Monthly Cost of Rider Rates per $1,000. LIFE INSURANCE If the Covered Insured dies while this Rider is in BENEFIT force, the Face Amount of the Rider will be paid in one sum to the Beneficiary of the Rider. COVERED INSURED The Covered Insured is named in the application for this Rider. OWNER OF THIS The Owner of this Rider is the Owner of the Policy RIDER and cannot be changed. MONTHLY COST OF RIDER The Monthly Cost of Rider for the following month is charged as part of the Monthly Deduction. The Monthly Cost of Rider is the Monthly Rate shown on the Table of Maximum Monthly Cost of Rider Rates per $1,000 times the Face Amount of this Rider divided by 1,000. MONTHLY COST OF The rates for the Rider are set by us each year on RIDER RATES the rider anniversary, based on our expectations as to future mortality, tax, interest earnings, expense and persistency experience. The rates for the Rider will never be more than the rates shown in the Table of Maximum Monthly Cost of Rider Rates per $1,000. DECREASE IN RIDER After the first policy year, the Face Amount of this FACE AMOUNT Rider can be decreased by sending us a written request; but only if the Face Amount of the Rider after the decrease is at least $50,000, except with our consent. The decrease will become effective on the monthly anniversary on or following receipt of the request by us at our Home Office or any other office designated by us. Upon a decrease, the new Face Amount will be shown on the Policy Specifications page for Policy Change. REINSTATEMENT If this Rider lapses, you may reinstate it within three years after the date of lapse. The Rider cannot be reinstated, except with our consent, if more than three years have passed since the date of lapse. To reinstate, you must submit the following items: 1. A written application for Reinstatement; 2. Proof satisfactory to us that the Covered Insured is insurable by our standards; and 3. Payment, while the Covered Insured is living, of a premium large enough to keep the Rider in force for at least three months. Upon Reinstatement, we will deduct any monthly Cost of Rider due and unpaid at the time of lapse. The Insured must be alive on the date we approve the request for Reinstatement. If the Insured is not alive, such approval is void and of no effect. The reinstated rider will be in force from the date we approve the Reinstatement application. LIMITATIONS ON This Rider can be reinstated only if the Policy is REINSTATEMENT also reinstated or is in force. If only a portion of the Policy coverage is reinstated then only a portion of the Rider coverage may also be reinstated. CONVERSION PRIVILEGE The Owner may, before the rider anniversary on which the Covered Insured is Attained Age 65, or if later, prior to the end of the fifth rider year, convert any portion of the insurance then in force under this Rider for a new policy. Except with our consent, any Face Amount of the Rider that will remain after a conversion must be at least $50,000. The new policy will be issued: 1. On the life of the Covered Insured; 2. Without proof of insurability; 3. With a Face Amount equal to the amount of term insurance being converted; 4. With the same underwriting class as this Rider, or the class we determine is closest to it if the class of this Rider is not offered on the new policy; 5. With a current Policy Date; 6. By us or by an affiliate designated by us; 7. On a plan agreed to by the issuing company; 8. At the then current age of the Covered Insured as calculated by the issuing company for that plan of insurance; 9. Subject to payment of the first premium for the new policy; 10. On a policy form and at premium rates in use by the issuing company on the Policy Date of the new policy; and 11. Subject to any assignments and limitations to which this Rider is subject. The conversion may be made only with our consent if: 1. The amount of term insurance you want to convert is less than the issuing company's published minimum limits of issue; or 2. Any rider is to be attached to the new policy. INCONTESTABILITY The insurance issued under this Rider will not be contestable after it has been in force during the life of the Covered Insured for two years from the Issue Date of the Rider. SUICIDE EXCLUSION If the Covered Insured dies by suicide, while sane or insane, within two years from the Issue Date of this Rider: 1. The Face Amount will not be paid; 2. The Rider will terminate; and 3. The Monthly Deductions paid for the Rider will be paid in one sum to the Beneficiary of the Rider. MISSTATEMENT OF AGE If the age or sex of the Covered Insured has not been OR SEX OF COVERED correctly stated in the application, the Death INSURED Benefit for this Rider will be corrected. The Death Benefit will be that which the most recent Monthly Deduction for the Rider would have purchased for the correct age or sex. TERMINATION This Rider will terminate upon the earliest of: 1. The conversion of the entire Face Amount of the Rider to a new policy; 2. The lapse of the Policy; 3. The surrender of the Policy; 4. The Insured's date of death; 5. The Expiry Date shown for the Rider in the Table of Maximum Monthly Cost of Rider Rates per $1,000 for the Term Insurance on Covered Insured Rider; and 6. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and the Policy are the same unless another Issue Date is shown below. The insurance provided by this Rider will be in force from the Issue Date of the Rider. - ----------------- Issue Date TABLE OF MAXIMUM MONTHLY COST OF RIDER RATES PER $1,000 COVERED INSURED: JOHN DOE COVERAGE: TERM INSURANCE ON COVERED INSURED RIDER ISSUE AGE: 35 RIDER ISSUE DATE: FEBRUARY 1, 2002 RISK CLASSIFICATION: STANDARD SMOKER RIDER EXPIRY DATE: JANUARY 1, 2067 POLICY NUMBER: 16,000,001 SEX: MALE
ATTAINED ATTAINED AGE RATE AGE RATE 35 0.2192 71 4.9242 36 0.2342 72 5.3608 37 0.2533 73 5.8525 38 0.2750 74 6.3883 39 0.3000 75 6.9808 40 0.3283 76 7.5917 41 0.3617 77 8.2100 42 0.3958 78 8.8258 43 0.4350 79 9.4575 44 0.4758 80 10.1325 45 0.5225 81 10.8675 46 0.5692 82 11.6833 47 0.6200 83 12.5858 48 0.6733 84 13.5408 49 0.7333 85 14.5167 50 0.7967 86 15.4817 51 0.8700 87 16.4217 52 0.9517 88 17.4475 53 1.0450 89 18.4600 54 1.1500 90 19.4742 55 1.2617 91 20.5100 56 1.3825 92 21.6108 57 1.5075 93 23.0250 58 1.6408 94 24.8458 59 1.7792 95 27.4967 60 1.9325 96 32.0458 61 2.1050 97 40.0167 62 2.2992 98 54.8317 63 2.5192 99 83.3333 64 2.7617 65 3.0242 66 3.2975 67 3.5842 68 3.8792 69 4.1933 70 4.5400
THESE RATES ARE FOR THIS RIDER WITH THE ABOVE ISSUE DATE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. WAIVER OF MONTHLY DEDUCTION RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY THE WAITING PERIOD FOR INCONTESTABILITY IS DIFFERENT FROM THAT IN THE POLICY AND BEGINS ON THE ISSUE DATE OF THIS RIDER. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page or on the Policy Specifications page for Policy Change. A copy of the application for this Rider is attached to and made part of the Rider. WAIVER OF MONTHLY We will waive the Monthly Deductions for this Policy DEDUCTION BENEFIT if: 1. You furnish us with written proof that the Insured is totally disabled, as defined in this Rider; 2. The Insured becomes disabled after age 5 and before age 65; 3. Disability has continued without interruption for at least six months; and 4. This Rider is in force. Monthly Deductions for this Policy will be waived as follows: Disability Beginning Before Age 60. If the Insured's disability begins before age 60, we will waive Monthly Deductions which were due during the six months of uninterrupted disability. After that, we will continue to waive Monthly Deductions. However, the Insured must continue to be totally disabled. Disability Beginning Between Ages 60 and 65. If the Insured's disability begins on or after age 60 but before age 65, we will waive Monthly Deductions which were due during the six months of uninterrupted disability. We will continue to waive Monthly Deductions after that, but no later than age 65. However, the Insured must continue to be totally disabled. DEFINITION OF AGE 5, "Age 5," "Age 60," and "Age 65" begin on the policy AGE 60, AND AGE 65 anniversary nearest the Insured's 5th, 60th, and 65th birthdays, respectively. INCREASE IN WAIVER Coverage under this Rider can be increased, subject COVERAGE to our underwriting rules, if the Face Amount of the Policy is increased and if the Insured is not totally disabled. The increase in waiver coverage is subject to: 1. The terms for a requested increase in Face Amount as stated in the Change in Face Amount provision of the Policy; 2. Our limits for Waiver of Monthly Deduction benefits; and 3. An increase in the cost of Rider. Application to increase the Face Amount of the Policy will also be deemed to be application to increase waiver coverage under this Rider, unless otherwise stated. COST OF RIDER The monthly Cost of Rider is the monthly Cost of Rider Rate times the Policy's Monthly Deduction not including the cost of this Rider. The Cost of Rider Rate for this benefit is based on the Insured's Attained Age. Each monthly anniversary this Rider is in force, the monthly Cost of Rider (as determined above) will be added to the Monthly Deduction as defined in the Cash Values section of the Policy. This increased Monthly Deduction will be used to determine the Cash Value of the Policy on such monthly anniversary. TOTAL DISABILITY "Total Disability" means the inability of the Insured to perform the substantial and material duties of his or her regular occupation. Such disability must be the result of an accidental bodily injury or a sickness. The injury or sickness must first manifest itself after the Issue Date of this Rider. However, after this period of disability has continued for 60 months, the Insured will be considered to be totally disabled only if he or she is unable to perform the substantial and material duties of any occupation for which he or she is reasonably fitted by education, training or experience. If after this Rider becomes effective, the Insured suffers the total and irrecoverable loss of: 1. The sight in both eyes; 2. The use of both hands or both feet; or 3. The use of one hand and one foot. this will be considered total disability as defined in this Rider. Upon such a loss the Insured will still be considered disabled even though working at an occupation RECURRENT TOTAL If, while the Policy and Rider are in force, the DISABILITY Insured becomes disabled again after having been totally disabled before, the new disability will be considered a continuation of the previous period unless: 1. It is due to an entirely different cause; or 2. The Insured has performed all of the material and substantial duties of a gainful occupation for a continuous period of six months or more between such periods of total disability. RISKS NOT ASSUMED We will not waive Monthly Deductions under this Rider if disability results from war or any act of war while the Insured is in the military, naval or air forces of any country at war. We will also not waive Monthly Deductions if the Insured becomes disabled while in a civilian non-combatant unit serving with such forces. "War" includes undeclared war and "any country" includes any international organization or combination of countries. NOTICE OF CLAIM AND Before we waive any Monthly Deductions, we must PROOF OF DISABILITY receive the following at our Home Office or any other office designated by us: 1. Written notice of claim for this benefit during the lifetime of the Insured. This notice must be submitted during the continuance of total disability. This notice must be submitted no later than six months after this Rider terminates; and 2. Written proof of total disability within six months after we receive written notice of claim. In no event should this proof be submitted later than the date when any of the following events first occurs: a. One year after age 65 of the Insured; b. Surrender of the Policy; and c. One year from the due date of the first unpaid Monthly Deduction. Failure to give such notice and proof within the time allowed will not void the claim. We will consider the claim if you show us that it was not reasonably possible to file notice and proof on time. However, you must file notice and proof as soon as reasonably possible. In no event will any Monthly Deduction be waived or refunded if its due date was more than one year before we received notice of claim at our Home Office or any other office designated by us. We will require no further proof of disability and we will automatically waive all further Monthly Deductions if: 1. The Insured is totally disabled at age 65; and 2. All Monthly Deductions for at least the five years preceding age 65 have been waived. EXAMINATION OF THE We have the right to have the Insured examined by our INSURED AND PROOF OF appointed examiner. Such exam will be at our expense. CONTINUED DISABILITY We also have the right to require written proof of continuance of disability from the Insured at the following times: 1. After receipt of notice of claim; 2. At reasonable intervals within two years after we receive proof of total disability; and 3. Not more than once each year after the first two years. We will not waive any further Monthly Deductions if the Insured refuses to be medically examined. Nor will we waive further Monthly Deductions if proof of continuance of disability is not furnished when we request it. INCONTESTABILITY We cannot contest this Rider after it has been in force during the lifetime of the Insured, excluding any period the Insured is totally disabled: 1. With respect to the original waiver coverage under this rider, for two years from the Issue Date of this Rider; and 2. With respect to each increase in waiver coverage under this Rider, for two years from the effective date of each increase in face amount under the Policy. GENERAL PROVISIONS If the Insured becomes totally disabled during the Grace Period and becomes eligible for the Waiver of Monthly Deduction Benefit, we will waive the Monthly Deductions that were due during the Grace Period. However, you will be liable for any Monthly Deductions that were due prior to the Grace Period. TERMINATION This Rider will terminate on the first of the following events to occur: 1. Attained Age 65 of the Insured. This will be without prejudice to any benefits granted for total disability occurring before age 65; 2. The date the Policy lapses; 3. The date the Policy is surrendered; 4. The date of death of the Insured; 5. The date an increase in Face Amount of the Policy which does not qualify for an increase in coverage under this Rider; 6. The date a Waiver of Specified Premium Rider is added to the Policy to which this Rider is attached; or 7. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and the Policy are the same unless another issue date is shown below. - --------------- Issue Date Secretary's signature President's signature NEF logo TABLE OF MAXIMUM MONTHLY COST OF RIDER RATES PER $1,000 INSURED: JOHN DOE COVERAGE: WAIVER OF MONTHLY DEDUCTION RIDER EFFECTIVE DATE OF RIDER: FEBRUARY 1, 2002 POLICY NUMBER: 16,000,001
ATTAINED ATTAINED AGE RATE AGE RATE 35 71 36 72 37 73 38 74 39 75 40 76 41 77 42 78 43 79 44 80 45 81 46 82 47 83 48 84 49 85 50 86 51 87 52 88 53 89 54 90 55 91 56 92 57 93 58 94 59 95 60 96 61 97 62 98 63 99 64 65 66 67 68 69 70
THESE RATES ARE FOR THIS RIDER WITH THE ABOVE EFFECTIVE DATE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. WAIVER OF SPECIFIED PREMIUM RIDER ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY THE WAITING PERIOD FOR INCONTESTABILITY IS DIFFERENT FROM THAT IN THE POLICY AND BEGINS ON THE ISSUE DATE OF THIS RIDER. This Rider is subject to all applicable terms and provisions of the Policy, except as modified herein. This Rider is a part of the Policy if it is listed on the Policy Specifications page or on the Policy Specifications page for Policy Change. A copy of the application for this Rider is attached to and made part of the Rider. WAIVER OF SPECIFIED We will credit to the Policy, as a premium payment, PREMIUM BENEFIT the amount shown as the monthly premium waived on the Policy Specifications page if: 1. You furnish us with written proof that the Insured is totally disabled, as defined in this Rider; 2. The Insured becomes disabled after age 5 and before age 65; 3. Disability has continued without interruption for at least six months; and 4. This Rider is in force. The monthly premium waived will be credited as premium to the Policy as long as the Policy remains in force as follows: Disability Beginning Before Age 60. If the Insured's disability begins before age 60, we will credit the monthly premiums waived which were due during the six months of uninterrupted disability. After that, we will continue to credit the monthly premiums waived. However, the Insured must continue to be totally disabled. Disability Beginning Between Ages 60 and 65. If the Insured's disability begins on or after age 60 but before age 65, we will credit the monthly premiums waived which were due during the six months of uninterrupted disability. We will continue to credit the monthly premiums waived after that, but no later than age 65. However, the Insured must continue to be totally disabled. The Policy to which this Rider is attached is intended to qualify as a life insurance contract under the Internal Revenue Code or any applicable successor provision or any interpretive regulation or rulings by the Internal Revenue Service. To that end, if you have selected the Guideline Premium Test for the Policy (See the Definition of Life Insurance provision of the Policy), premiums on the Policy are limited to an amount no greater than that allowing the Policy to continue to qualify. Therefore, the portion of any monthly premium waived that would disqualify the Policy will be paid to you in cash. DEFINITION OF AGE 5, "Age 5," "Age 60," and "Age 65" begin on the Policy AGE 60 AND AGE 65 anniversary nearest the Insured's 5th, 60th and 65th birthdays, respectively. INCREASE IN WAIVER Coverage under this Rider can be increased, subject to our underwriting rules, if the Face Amount of the Policy is increased and if the Insured is not COVERAGE totally disabled. The increase in waiver coverage is subject to: 1. The terms for a requested increase in Face Amount as stated in the Change in Face Amount provision of the Policy; 2. Our limits for Waiver of Specified Premium benefits; and 3. An increase in the Cost of Rider. POLICY LAPSE Crediting of the monthly premium waived to the Policy does not guarantee that the Policy will remain in force. COST OF RIDER The cost for this Rider is charged as part of the Monthly Deductions. The monthly Cost of Rider is calculated as (1) multiplied by (2) where: 1. Is the Cost of Rider rate for this Rider; and 2. Is the monthly premium waived. The Cost of Rider Rate for this benefit is based on the Insured's Attained Age. Each monthly anniversary this Rider is in force, the monthly Cost of Rider (as determined above) will be added to the Monthly Deduction as defined in the Cash Values section of the Policy. This increased Monthly Deduction will be used to determine the Cash Value of the Policy on such monthly anniversary. TOTAL DISABILITY "Total Disability" means the inability of the Insured to perform the substantial and material duties of his or her regular occupation. Such disability must be the result of an accidental bodily injury or a sickness. The injury or sickness must first manifest itself after the Issue Date of this Rider. However, after this period of disability has continued for 60 months, the Insured will be considered to be totally disabled only if he or she is unable to perform the substantial and material duties of any occupation for which he or she is reasonably fitted by education, training or experience. If, after this Rider becomes effective, the Insured suffers the total and irrecoverable loss of: 1. The sight in both eyes; 2. The use of both hands or both feet; or 3. The use of one hand and one foot. this will be considered total disability as defined in this Rider. Upon such a loss the Insured will still be considered disabled even though working at an occupation. RECURRENT TOTAL If, while the Policy and this Rider are in force, the DISABILITY Insured becomes disabled again after having been totally disabled before, the new disability will be considered a continuation of the previous period unless: 1. It is due to an entirely different cause; or 2. The Insured has performed all of the material and substantial duties of a gainful occupation for a continuous period of six months or more between such periods of total disability. RISKS NOT ASSUMED We will not credit the monthly premium waived under this Rider to the Policy if disability results from war or any act of war while the Insured is in the military, naval or air forces of any country at war. We will also not credit the monthly premium waived if the Insured becomes disabled while in a civilian non-combatant unit serving with such forces. "War" includes undeclared war and "any country" includes any international organization or combination of countries. NOTICE OF CLAIM AND Before we credit any monthly premium waived to the PROOF OF DISABILITY Policy, we must receive the following at our Home Office or any other office designated by us: 1. Written notice of claim for this benefit during the lifetime of the Insured. This notice must be submitted during the continuance of total disability. This notice must be submitted no later than six months after this Rider terminates; and 2. Written proof of total disability within six months after we receive written notice of claim. In no event should this proof be submitted later than the date when any of the following events first occurs: a. One year after age 65 of the Insured; b. Surrender of the Policy; and c. One year from the due date of the first unpaid Monthly Deduction. Failure to give such notice and proof within the time allowed will not void the claim. We will consider the claim if you show us that it was not reasonably possible to file notice and proof on time. However, you must file notice and proof as soon as reasonably possible. In no event will we credit any monthly premium waived if its due date was more than one year before we received notice of claim at our Home Office or any other office designated by us. We will require no further proof of disability and we will automatically credit further monthly premiums waived if: 1. The Insured is totally disabled at age 65; and 2. All monthly premiums waived for at least the five years preceding age 65 have been credited. EXAMINATION OF THE We have the right to have the Insured examined by our INSURED AND PROOF appointed examiner. Such exam will be at our expense. OF CONTINUED We also have the right to require written proof of DISABILITY continuance of disability from the Insured at the following times: 1. After receipt of notice of claim; 2. At reasonable intervals within two years after we receive proof of total disability; and 3. Not more than once each year after the first two years. We will not credit to the Policy any further monthly premiums waived if the Insured refuses to be medically examined. Nor will we credit to the Policy further monthly premiums waived if proof of continuance of disability is not furnished when we request it. INCONTESTABILITY We cannot contest this Rider after it has been in force during the lifetime of the Insured, excluding any period the Insured is totally disabled: 1. With respect to the original waiver coverage under this Rider, for two years from the Issue Date of this Rider; and 2. With respect to each increase in waiver coverage under this Rider, for two years from the effective date of each increase in Face Amount under the Policy. GENERAL PROVISIONS If the Insured becomes totally disabled during the Grace Period and becomes eligible for the Waiver of Specified Premium Benefit, we will credit to the Policy any monthly premiums that were due during the Grace Period. However, you will be liable for any monthly premiums that were due prior to the Grace Period. TERMINATION This Rider will terminate on the first of the following events to occur: 1. Attained Age 65 of the Insured. This will be without prejudice to any benefits granted for total disability occurring before age 65; 2. The date the Policy lapses; 3. The date the Policy is surrendered; 4. The date of death of the Insured; 5. The date an increase in Face Amount of the Policy which does not qualify for an increase in coverage under this Rider; 6. The date a Waiver of Monthly Deduction Rider is added to the Policy to which this Rider is attached; or 7. The monthly anniversary on or following receipt by us at our Home Office or any other office designated by us of your written request to terminate this Rider. We may require the Policy for endorsement. The Issue Date and effective date of this Rider and the Policy are the same unless another Issue Date is shown below. - ---------------- Issue Date Secretary's signature President's signature NEF logo TABLE OF MAXIMUM MONTHLY COST OF RIDER RATES PER $1,000 INSURED: JOHN DOE COVERAGE: WAIVER OF SPECIFIED PREMIUM RIDER EFFECTIVE DATE OF RIDER: FEBRUARY 1, 2002 POLICY NUMBER: 16,000,001
ATTAINED ATTAINED AGE RATE AGE RATE 35 71 36 72 37 73 38 74 39 75 40 76 41 77 42 78 43 79 44 80 45 81 46 82 47 83 48 84 49 85 50 86 51 87 52 88 53 89 54 90 55 91 56 92 57 93 58 94 59 95 60 96 61 97 62 98 63 99 64 65 66 67 68 69 70
THESE RATES ARE FOR THIS RIDER WITH THE ABOVE EFFECTIVE DATE. THEY ARE BASED ON THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE FOR A [MALE, SMOKER]. E-3GPO-00 - -------------------------------------------------------------------------------- Rider: Option to Purchase Long-Term Care Insurance THE COMPANY agrees that the Owner of the Policy can purchase long-term care insurance on the life of the Insured named in the attached Rider Schedule, without proof of insurability. PURCHASE OF LONG-TERM CARE INSURANCE A long-term care policy can be applied for within 60 days of a Purchase Option Date. Application for the long-term care policy must be in writing signed by the Owner and by the Insured and received by the company within 60 days of a Purchase Option Date. PURCHASE OPTION DATES The Purchase Option Dates are shown in the Rider Schedule. THE LONG-TERM CARE POLICY The long-term care policy will be issued: - - With the same Insured as this Rider; - - With the same underwriting class as this Rider or the class we determine is the closest to it if the class of this Rider is not offered on the long-term care policy; - - On any individual plan of long-term care insurance issued by the Company or by an affiliate designated by the Company on the date of purchase of the long-term care policy; - - On a policy form and at premium rates in use by the company on the date of purchase of the long-term care policy; - - Subject to any assignments and limitations to which this Rider is subject; - - At the insurance age of the Insured on the date of purchase of the long-term care policy; - - With a Daily Benefit Amount, available at the time you exercise this Option, up to the Amount shown in the Rider Schedule and with a Lifetime Benefit Amount up to the Amount shown in the Rider Schedule; - - With a minimum daily benefit amount based on the company's published minimum on the date of purchase; or the Maximum Daily Benefit Amount shown in the Rider Schedule for the Purchase Option Date, if less, except as otherwise required by law; and - - Subject to the New Policy Features as shown in the Rider Schedule . The long-term care policy will take effect on the effective date stated in the long-term care policy, but only if its initial premium is received by the company. The Company reserves the right to offer an option exercise credit. If an option exercise credit is paid, it will be deducted from the initial premium for the long-term care policy. If the long-term care policy is issued on a basis other than daily benefits, the Amounts shown in the long-term care policy will reflect the chosen benefit period. The contestable period of the long-term care policy issued under this Rider will be measured from the Date of Issue of this Rider. Optional features or riders can be attached to the long-term care policy only with the consent of the company. COST OF RIDER The monthly cost of insurance charge for this Rider is guaranteed and shown in the Rider Schedule. DATE OF ISSUE The Date of Issue of this Rider is the shown in the Rider Schedule. E-3GPO-00 - -------------------------------------------------------------------------------- NOT CONTESTABLE AFTER TWO YEARS This Rider will not be contestable after it has been in force during the life of the Insured for two years from its Date of Issue. CONTRACT A copy of the application for this Rider is attached to and made a part of the Rider. This Rider is made a part of the Policy to which it is attached, if the Rider is listed on the specifications page. This Rider has no cash value. TERMINATION This Rider will terminate upon the earliest of: (a) death of the Insured; (b) surrender of the policy to which this Rider is attached; (c) 60 days after the final Purchase Option Date; (d) the effective date of the long-term care policy; and (e) the Company's recording of a written request signed by the Owner to end the Rider. NEW ENGLAND LIFE INSURANCE COMPANY 501 Boylston Street, Boston, Massachusetts ABCD ABCD President Secretary E-3GPO-00 - -------------------------------------------------------------------------------- Rider Schedule INSURED NAME: John Doe POLICY NUMBER: Specimen DATE OF ISSUE: March 1, 2001 RIDER CLASS: Standard AGE: 35 GUARANTEED MONTHLY $4.17 COST OF INSURANCE CHARGE INITIAL DAILY $110.00 BENEFIT AMOUNT NEW POLICY FEATURES: WAITING PERIOD: 100 Days or if less, the minimum number of days required by law. - ---------------------------------------------------------- PURCHASE MAXIMUM DAILY MAXIMUM LIFETIME OPTION DATE BENEFIT AMOUNT BENEFIT AMOUNT - ---------------------------------------------------------- - ---------------------------------------------------------- 3/1/2006 120.00 $131,400 - ---------------------------------------------------------- 3/1/2011 140.00 153,300 - ---------------------------------------------------------- 3/1/2016 170.00 186,150 - ---------------------------------------------------------- 3/1/2021 190.00 208,050 - ---------------------------------------------------------- 3/1/2026 220.00 240,900 - ---------------------------------------------------------- - ---------------------------------------------------------- - ---------------------------------------------------------- - ---------------------------------------------------------- E-3GPO-00 EX-1.A.10(B) 5 b40975s6ex1-a_10b.txt SPECIMEN OF APPLICATION FOR RIDERS EXHIBIT 1.A.(10)(b) NEL APP-82-01 NEF NEW ENGLAND FINANCIAL(tm) A MetLife Affiliate 501 Boylston Street Boston, Massachusetts 02116-3700 POLICY NUMBER ------------------------------------------- To be attached to the Policy on the life of ------------- -------------------------------------------------------- APPLICATION TO NEW ENGLAND LIFE INSURANCE COMPANY FOR COVERED INSURED, CHILDREN'S INSURANCE, SPOUSE INSURANCE, OR APPLICANT WAIVER RIDERS - ------------------------------------------------------------------------------------------------------------------------------------ TYPE [ ] Covered Insured Rider [ ] Applicant's Waiver-Adult Insured [ ] Children's Insurance Rider [ ] Applicant's Waiver-Juvenile Insured [ ] Spouse Insurance Rider [ ] Death or Disability [ ] Death Only - ----------------------------------------------------------------------------------------------------------------------------------- PERSONS PROPOSED FOR INSURANCE Relation to Insured Birthplace Birth Date Height Weight Sex ------------ ------------- -------------- --------- ---------- ------ 1. Full Name of Covered Insured A. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- B. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- C. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- 2. Full Name of Spouse ----------------------------- ------------ -------------- -------------- --------- ---------- ------- 3. Full Name of Child A. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- B. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- C. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- D. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- E. ----------------------------- ------------ -------------- -------------- --------- ---------- ------- - ----------------------------------------------------------------------------------------------------------------------------------- AVIATION, AVOCATION, DRIVING, SMOKING FOREIGN TRAVEL AND OCCUPATION 5. Has any person proposed for coverage participated in, or does any intend to participate in: [ ] Yes [ ] No flights as a trainee, pilot or crew member; underwater sports (SCUBA diving, hardhat, skin diving, snorkeling); sky sports (skydiving, hang gliding, parachuting, ballooning); or racing sports (auto, motorcycle, motorboat) or other hazardous avocations? If Yes, complete supplemental form. 6. A. Has any person proposed for coverage been convicted of: driving under the influence of alcohol [ ] Yes [ ] No or drugs in the past 10 years; or two or more moving violations in the past 2 years? If Yes, complete supplemental form. B. Person # State Driver license # [ ] Check here if no license. --------------------------------------------------------------------------------------------------------------------------- Person # State Driver license # [ ] Check here if no license. --------------------------------------------------------------------------------------------------------------------------- Person # State Driver license # [ ] Check here if no license. ---------------------------------------------------------------------------------------------------------------------------
Application for Riders 1 7. A. Has any person proposed for coverage used any form of tobacco in the past year? [ ] Yes [ ] No B. If Yes, Person # [ ] Cigarettes [ ] Other Circle all that apply. (cigar, pipe, smokeless, chew, patch, ------ nicotine substitute) Person # [ ] Cigarettes [ ] Other Circle all that apply. (cigar, pipe, smokeless, chew, patch, ------ nicotine substitute) Person # [ ] Cigarettes [ ] Other Circle all that apply. (cigar, pipe, smokeless, chew, patch, ------ nicotine substitute) Person # [ ] Cigarettes [ ] Other Circle all that apply. (cigar, pipe, smokeless, chew, patch, ------ nicotine substitute) Person # [ ] Cigarettes [ ] Other Circle all that apply. (cigar, pipe, smokeless, chew, patch, ------ nicotine substitute) 8. Does any person proposed for coverage intend to travel or reside outside of the United States [ ] Yes [ ] No excluding Canada)? If Yes, give details in Remarks section. - ----------------------------------------------------------------------------------------------------------------------------------- Complete questions 9 and 10 for Applicant Waiver only. 9. Occupation: Give job title and duties. ---------------------------------------------------------------------------------------------------------------------------- Employed by. ---------------------------------------------------------------------------------------------------------------------------- 10. A. Annual Income $ B. Net worth $ ----------------------------------------------- --------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- EXISTING INSURANCE If none, so state. 11. Life insurance policies in force on Spouse Life insurance in force on Children ------------------------------------------------ ------------------------------------------------------------------------ AMOUNT COMPANY PERSON # AMOUNT COMPANY -------------- ----------------------------- ----------- ---------------- ----------------------------------- $ $ -------------- ----------------------------- ----------- ---------------- ----------------------------------- $ $ -------------- ----------------------------- ----------- ---------------- ----------------------------------- $ $ -------------- ----------------------------- ----------- ---------------- ----------------------------------- $ $ -------------- ----------------------------- ----------- ---------------- ----------------------------------- $ $ -------------- ----------------------------- ----------- ---------------- ----------------------------------- Life insurance in force on Covered Insured ------------------------------------------------ PERSON # AMOUNT COMPANY ----------- ------------------------------ ------------------------------------------------------------------------- $ ----------- ------------------------------ ------------------------------------------------------------------------- $ ----------- ------------------------------ ------------------------------------------------------------------------- $ ----------- ------------------------------ ------------------------------------------------------------------------- $ ----------- ------------------------------ ------------------------------------------------------------------------- $ ----------- ------------------------------ ------------------------------------------------------------------------- 12. Will any life insurance or annuity issued by this or any other company be replaced as a result of [ ] Yes [ ] No this Application for insurance? If Yes, complete the following and submit replacement forms if required. PERSON # COMPANY 1035 EXCHANGE POLICY DATE POLICY NUMBER AMOUNT ------------ -------------- ----------------- ----------------- ----------------- ----------------------- [ ] Yes [ ] No $ ------------ -------------- ----------------- ----------------- ----------------- ----------------------- [ ] Yes [ ] No $ ------------ -------------- ----------------- ----------------- ----------------- ----------------------- [ ] Yes [ ] No $ ------------ -------------- ----------------- ----------------- ----------------- ----------------------- [ ] Yes [ ] No ------------ -------------- ----------------- ----------------- ----------------- ----------------------- [ ] Yes [ ] No ------------ -------------- ----------------- ----------------- ----------------- -----------------------
Application for Riders 2 - ----------------------------------------------------------------------------------------------------------------------------------- MEDICAL DATA Give details to each Yes answer to Questions 10 through 15 in Question 16. 13. Has life or disability insurance on any person proposed for coverage ever been declined, postponed or [ ] Yes [ ] No modified as to plan, amount or rate? 14. Within the past 10 years has any person proposed for coverage been treated for or had any known [ ] Yes [ ] No indication of: frequent fatigue; frequent loss of appetite; frequent night sweats; chronic diarrhea; enlarged lymph nodes; unexplained infections; or unusual skin lesions? 15. Has any person proposed for coverage ever: A. Received treatment, advice or counseling from a physician, other practitioner or an [ ] Yes [ ] No organization for excess alcohol use? B. Used cocaine or other drugs except as prescribed by a physician or licensed practitioner? [ ] Yes [ ] No 16. Has any person proposed for coverage ever been treated by a member of the medical profession for, or [ ] Yes [ ] No been diagnosed by a member of the medical profession as having, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-Related Complex (ARC)? 17. Has any person proposed for coverage ever been treated for or diagnosed as having: A. Cancer; cyst; tumor; or diabetes? [ ] Yes [ ] No B. High blood pressure; stroke; heart murmur; disease or disorder of the heart, blood or [ ] Yes [ ] No circulatory system? C. Any mental or nervous disorder; epilepsy; any muscular or skeletal disorder; or any paralysis [ ] Yes [ ] No or deformity? D. Disease or disorder of: kidneys, lungs, stomach, liver, lymph glands; digestive system; or [ ] Yes [ ] No urinary system? 18. Other than the above, does any person proposed for coverage have any other physical disorders, or [ ] Yes [ ] No within the past 5 years has any person proposed for coverage: had any other diagnostic consultations, for other than AIDS or ARC; been a patient in a medical facility; or been advised to have any other diagnostic tests other than an HIV test, hospitalization or surgery? - ----------------------------------------------------------------------------------------------------------------------------------- 19. Give details to each Yes answer to questions 13 through 18 below. Attach additional sheet, if necessary. INITIAL LAST TYPE OF CONSULT, PERSON QUESTION CONSULT/ONSET CONSULT/RECOVERY DIAGNOSIS, TREATMENT, PHYSICIAN/FACILITY # # LETTER MONTH/YEAR MONTH/YEAR MEDICATION, ETC. NAME, ADDRESS & PHONE # --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- -------------------------- --------- ---------- -------------- ------------------ ---------------------------- --------------------------
Application for Riders 3 - ----------------------------------------------------------------------------------------------------------------------------------- REMARKS Attach additional sheet, if necessary. PERSON # REMARKS - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ---------------------------------------------------------------------------------------------------------------- - --------------- ----------------------------------------------------------------------------------------------------------------
Application for Riders 4 NEW ENGLAND LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- COMPANY USE ONLY: ADDITIONS AND AMENDMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT/DISCLOSURE I HAVE READ THIS APPLICATION INCLUDING ANY SUPPLEMENTS AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL STATEMENTS ARE TRUE AND COMPLETE. I ALSO AGREE THAT: - - My statements in this application and any Aviation/Avocation Supplement are the basis of any policy issued. - - In those states where written consent is required by law, my agreement in writing is required to any entry made by the Company in the Company Use Only section as to (a) age: (b) plan of insurance; or (c) riders; or (d) amounts; or (e) rate class. - - No Agent, Producer or Medical Examiner may (a) make or change any contract of insurance; (b) make a binding promise about insurance; (c) change or waive any term of an application, receipt or policy. - - No information will be deemed to have been given to the Company unless it is stated in this application or any required supplements. - - The policy will take effect only: (a) if this Application is approved by the Company at its Home Office or any other office designated by the Company; and (b) when the first premium is paid to the Company; provided that at the time of payment there has been no change in insurability since the date of this Application and, if the policy has more than one insured, each insured is living. - - I understand that paying my insurance premiums more frequently than annually may result in a larger annual out-of-pocket payment than a less frequent premium mode. - - If I intend to replace existing insurance or annuities I have so indicated in question 11 of this application o I have received the Company's Consumer Privacy Notice and the Life Insurance Buyer's Guide (If required). - ------------------------------------------------------------------------------------------------- SIGNATURES Signed at: City State Date / / - ------------------------------------------------------------------------------------------------- X Covered Insured a - ------------------------------------------------------------------------------------------------- X Covered Insured b - ------------------------------------------------------------------------------------------------- X Covered Insured c - ------------------------------------------------------------------------------------------------- X Covered Insured d - ------------------------------------------------------------------------------------------------- X Covered Insured e - ------------------------------------------------------------------------------------------------- X Applicant (for Waiver Rider) X Spouse - ------------------------------------------------------------------------------------------------- X Insured under Policy - ------------------------------------------------------------------------------------------------- X Producer - -------------------------------------------------------------------------------------------------
Application for Riders 5 PRODUCER'S CERTIFICATE Completion required with every Rider Application. - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- QUESTIONS 1. Are there any other negotiations for life insurance pending or contemplated on any Proposed [ ] Yes [ ] No Insured? 2. Do you have knowledge or reason to believe that any insurance or annuity in this or any [ ] Yes [ ] No other company has been or will be replaced as a result of this Application for insurance? Explain Yes answers. (Identify question numbers.) QUESTION # PERSON # -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- ----------------------------------------------------------------------------------------------- -------------- ------------- -----------------------------------------------------------------------------------------------
Signature I have personally observed each of the Proposed Insureds and they all appear healthy and normal. To the best of my knowledge, I have presented the Company with all pertinent facts regarding each Proposed Insured and this Application. Producer Date / / - -------------------------------------------------------------------------------- Application for Riders 6 NEF NEW ENGLAND FINANCIAL(tm) A MetLife Affiliate 501 Boylston Street Boston, Massachusetts 02116-3700 POLICY NUMBER ------------------------------------------- To be attached to the Policy on the life of ------------- -------------------------------------------------------- AUTHORIZATION AND ACKNOWLEDGMENT For underwriting and claim purposes about me or any children to be insured, I permit: - - Any medical practitioner or facility, insurer, consumer reporting agency or the Medical Information Bureau, Inc. (MIB) to give the Company personal data. I specially authorize the disclosure of medical data, including mental illness, sexually transmitted diseases, or test results and permit the redisclosure of such data as stated in this form or as the law permits. With regard to HIV test results, it is understood that this information will only be disclosed pursuant to the form required by law. Information about me may be used to determine the insurability of my family members. - - The Company to get consumer, investigative consumer or motor vehicle reports. - - Any employer, business associate, financial institution, or government unit to give the Company any data that they may have about the occupation, avocations, driving record, finances, character, reputation and aviation activities of myself or any children to be insured. I understand that: - - I permit the Company to get medical records and to redisclose that data as set forth on this form, except for alcohol and drug treatment in Federally funded programs covered by Federal Regulations (42CFR part 2). - - All or part of the data which the Company gets may be sent to MIB or be disclosed to and used by any Company reinsurer, employee, affiliate or contractor who performs a business service on insurance I apply for or have with the Company. If insurance is declined or offered in a substandard class, the Company MAY, MAY NOT provide the data to a broker or insurer who may be able to make a better offer of insurance. - - I may ask to be interviewed if an investigative consumer report is ordered. Please call me at ( ) time ----------- --------------------- - - My consent will end 30 months from the date on this form or sooner if prescribed by law. I may revoke my consent at any time. Any action taken before revocation will be valid. - - I have a right to receive a copy of this form. A PHOTOCOPY OF THIS FORM IS AS VALID AS THE ORIGINAL FORM. - ----------------------------------------------------------------------------------------------- SIGNATURES Signed at: City State Date / / - ----------------------------------------------------------------------------------------------- X Covered Insured a - ----------------------------------------------------------------------------------------------- X Covered Insured b - ----------------------------------------------------------------------------------------------- X Covered Insured c - ----------------------------------------------------------------------------------------------- X Covered Insured d - ----------------------------------------------------------------------------------------------- X Covered Insured e - ----------------------------------------------------------------------------------------------- X Applicant (for Waiver Rider) X Spouse - ----------------------------------------------------------------------------------------------- X Insured under Policy - ----------------------------------------------------------------------------------------------- X Producer - -----------------------------------------------------------------------------------------------
Application for Riders 7 EX-14.(VIII) 6 b40975s6ex14-viii.txt PARTICIPATION AGREEMENT Exhibit 14 (viii) PARTICIPATION AGREEMENT Among MET INVESTORS SERIES TRUST, MET INVESTORS ADVISORY CORP., METLIFE INVESTORS DISTRIBUTION COMPANY and NEW ENGLAND LIFE INSURANCE COMPANY This AGREEMENT is made and entered into as of the 1st day of May, 2001 by and among MET INVESTORS SERIES TRUST, a business trust organized under the laws of the State of Delaware (the "Fund"), NEW ENGLAND LIFE INSURANCE COMPANY (the "Company") on its own behalf and on behalf of each of its separate accounts set forth on Schedule A hereto, as amended from time to time (each an "Account"), MET INVESTORS ADVISORY CORP. (the "Adviser") and METLIFE INVESTORS DISTRIBUTION COMPANY (the "Underwriter"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, the Fund serves as an investment vehicle underlying variable life insurance policies and variable annuity contracts (collectively, "Variable Insurance Products") offered by insurance companies ("Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Fund is divided into several portfolios of shares, each representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Fund has applied for an order from the Securities and Exchange Commission ("SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from certain provisions of the 1940 Act and certain rules and regulations thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by both variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, the Adviser acts as the investment adviser to each portfolio of the Fund and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and WHEREAS, the Company has registered or will register certain variable life and/or variable annuity contracts under the 1933 Act, if required; 1 WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, if required; WHEREAS, the Underwriter is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of one or more portfolios of the Fund (the "Portfolios") on behalf of each Account to fund certain variable life and variable annuity contracts (each, a "Contract") and the Underwriter is authorized to sell such shares to each Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and the Underwriter agree as follows: 1. Sale of Fund Shares. 1.1 Subject to the terms of the Distribution Agreement in effect from time to time between the Fund and the Underwriter, the Underwriter agrees to sell to the Company those shares of each Portfolio which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company is the Fund's designee. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates the net asset value of shares of the Portfolios. The Company shall use commercially reasonable efforts to communicate notice of orders for the purchase of Shares of each Portfolio to the Fund's custodian by 10:00 a.m. Eastern time on the following business day (the "Next Business Day"), and the Company and the Fund shall each use commercially reasonable efforts to wire (or cause to be wired) funds to the other, for the purpose of settling net purchase orders or orders of redemption, by 3:00 p.m. of the Next Business Day. 1.2 The Fund agrees to make its shares available for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value. The Fund agrees to use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board" or the "Trustees") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio, if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Trustees acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, in the best interests of the shareholders of such Portfolio. 1.3 The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, or to other purchasers of 2 the kind specified in Treas. Reg. Section 1.817-5 (f)(3) (or any successor regulation) as from time to time in effect. 1.4 The Fund agrees to redeem, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. 1.5 The Company agrees that all purchases and redemptions by it of the shares of each Portfolio will be in accordance with the provisions of the then current prospectus and statement of additional information of the Fund for the respective Portfolio and in accordance with any procedures that the Fund, the Underwriter or the Fund's transfer agent may have established governing purchases and redemptions of shares of the Portfolio generally. 1.6 The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1. hereof. Payment shall be in federal funds transmitted by wire to the Fund's custodian. 1.7 Issuance and transfer of the Funds' shares will be by book entry only. Share certificates will not be issued. Shares ordered from the Fund will be recorded on the transfer records of the Fund in an appropriate title for each Account or the appropriate subaccount of each Account. 1.8 The Fund shall furnish same day notice (by e-mail, fax or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the shares of any Portfolio. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9 The Fund shall make the net asset value per share for each Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 7:00 p.m. Eastern time. The Fund shall furnish the Company's daily share balance to the Company as soon as reasonably practicable. 2. Representations and Warranties. 2.1 The Company represents and warrants that each Contract shall be either (i) registered, or prior to the purchase of shares of any Portfolio in connection with the funding of such Contract, will be registered under the 1933 Act or (ii) exempt from such registration; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws, including all applicable customer suitability 3 requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account pursuant to relevant state insurance law prior to any issuance or sale of any Contract by such Account and that each Account shall be either (i) registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act; or (ii) exempt from such registration. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of Delaware and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund agrees that it will amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to permit the continuous public offering of its shares in accordance with the 1933 Act. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3 The Fund represents that each Portfolio is currently qualified or will elect to qualify as a "regulated investment company" under subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and agrees that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company promptly upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4 Subject to Section 6.1, the Company represents that the Contracts are currently treated as endowment, annuity or life insurance contracts under applicable provisions of the Code and agrees that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states. 2.6 The Underwriter represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. 2.7 The Underwriter further represents that it will sell and distribute the Fund shares in accordance with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act and the 1940 Act. 4 2.8 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Delaware and that it does and will comply in all material respects with the 1940 Act. 2.9 Each of the Fund, the Adviser and the Underwriter represent and warrant that all of their directors, officers and employees dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount, in the case of the Adviser and the Underwriter, of not less than $5,000,000 and, in the case of the Fund, not less than the minimal coverage as required by Rule 17g-1 under the 1940 Act or any successor regulations as may be promulgated from time to time. Each aforesaid bond shall include coverage for larceny and embezzlement of Fund assets and shall be issued by a reputable bonding company. 2.10 The Company represents and warrants that all of its directors, officers, employees and other individuals/entities dealing with the money and/or securities representing amounts intended for the purchase of shares of the Fund or proceeds of the redemption of shares of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount not less than $5,000,000. The aforesaid Bond shall include coverage for larceny and embezzlement of Fund assets and shall be issued by a reputable bonding company. 2.11 The Company represents and warrants that it will not, without the prior written consent of the Fund and the Adviser, purchase Fund shares with Account assets derived from the sale of Contracts to individuals or entities which would cause the investment policies of any Portfolio to be subject to any limitations not in the Fund's then current prospectus or statement of additional information with respect to any Portfolio. 3. Prospectuses and Proxy Statements; Voting. 3.1 The Underwriter (or the Fund) shall provide the Company with as many copies of the Fund's current prospectus as the Company may reasonably request (at the Company's expense with respect to other than existing Contract owners). If requested by the Company in lieu thereof, the Underwriter (or the Fund) shall provide such documentation (including a final copy of the new prospectus as set in type at the Fund's expense) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Fund is amended) to have the prospectus for the Contracts and the Fund's prospectus printed together in one document (such printing to be at the Company's expense with respect to other than existing Contract owners). 3.2 The Underwriter (or the Fund), at its expense, shall print and provide the Fund's then current statement of additional information free of charge to the Company and to any owner of a Contract or prospective owner who requests such statement. 3.3 The Fund, at its expense, shall provide the Company with copies of its proxy material, reports to shareholders and other communications to shareholders in such quantity as the 5 Company shall reasonably require for distribution (at the Fund's expense) to Contract owners. 3.4 So long as and to the extent that the SEC or its staff continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners, or if and to the extent required by law, the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in the same proportion as Fund shares of such Portfolio for which instructions have been received. The Company reserves the right to vote Fund shares held in any Account in its own right, to the extent permitted by law. The Company shall be responsible for assuring that with respect to each Account participating in the Fund, all shares of each Portfolio attributable to policies and contracts for which no owner instructions have been received by the Company and all shares of the Portfolio attributable to charges assessed by the Company against such policies and contracts will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are the shares for which owner instructions have been received by the Company with respect to policies or contracts issued by such Account. To the extent the Company has so agreed with respect to an Account not registered with the SEC under the 1940 Act, all shares of each Portfolio held by the Account will be voted for, voted against or withheld from voting on any proposal in the same proportions as are the shares of such Portfolio for which contract owners' voting instructions have been received. If the Company has not so agreed, the shares of each Portfolio attributable to such unregistered Account will be voted for, voted against, or withheld from voting on any proposal in the same proportions as are all other shares for which the Company has received voting instructions. Such foregoing standards will also be applied to the other Participating Insurance Companies. The Fund shall pay for the costs of soliciting and tabulating such voting instructions. 4. Sales Material and Information. 4.1 The Company shall be solely responsible for sales literature or other promotional material, in which the Fund, a Portfolio, the Adviser, any subadviser to any Portfolio, or the Underwriter (in its capacity as distributor of the Fund) is named, the substance of which is contained in the then current prospectus or statement of additional information of the Fund. Other sales literature or other promotional material may also be used by the Company if such sales literature or other promotional material (or the substance thereof) has been previously approved by the Fund or its designee. All other sales literature or other promotional material shall not be used by the Company until it has been approved by the Fund or its designee. The Company shall deliver such draft sales literature or other promotional material to the Fund or its designee at least thirty Business days prior to its use. The Fund or such designee shall use commercially reasonable efforts to review sales literature so delivered within ten days. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts 6 other than the information or representations contained in the registration statement, prospectus or statement of additional information for the Fund shares, as such registration statement and prospectus or statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the approval of the Fund or the Underwriter or the designee of either. 4.3 The obligations set forth in Section 4.1 herein shall apply mutatis mutandis to the Fund and the Underwriter with respect to each piece of sales literature or other promotional material in which the Company and/or any Account is named. 4.4 The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, any Account or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5 The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, proxy statements, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to any Portfolio, promptly after the filing of each such document with the SEC or any other regulatory authority. 4.6 The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, statements of additional information, shareholder annual, semi-annual or other reports, solicitations for voting instructions, applications for exemptions, requests for no-action letters and any amendments to any of the above, that relate to the Contracts or any Account, promptly after the filing of such document with the SEC or any other regulatory authority. Each party hereto will provide to each other party, to the extent it is relevant to the Contracts or the Fund, a copy of any comment letter received from the staff of the SEC or the NASD, and the Company's response thereto, following any examination or inspection by the staff of the SEC or the NASD. 4.7 As used herein, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature 7 or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees. 5. Fees and Expenses. 5.1 The Fund, the Adviser and the Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter. Each party acknowledges that the Adviser may pay service or administrative fees to the Company and other Participating Insurance Companies pursuant to separate agreements. 6. Diversification. 6.1 The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and any Treasury Regulations thereunder relating to the diversification requirements for variable annuity, endowment or life insurance contracts, as from time to time in effect. 7. Potential Conflicts. 7.1 To the extent required by the Shared Funding Exemptive Order or by applicable law, the Board of Trustees of the Fund (the "Board") will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Fund shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2 The Company will report to the Board any potential or existing conflicts between the interests of contract owners of different separate accounts of which the Company is or becomes aware. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order and under applicable law, by providing the Board with all information reasonably necessary for the Board to consider any issues 8 raised. This includes, but is not limited to, an obligation of the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3 If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, which steps could include: (1) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question of whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the relevant Account's investment in the Fund and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination will take place within six (6) months after the Fund gives written notice that this provision is being implemented. 7.5 If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this 9 Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 8. Indemnification. 8.1 Indemnification by the Company (a) The Company agrees to indemnify and hold harmless the Fund and each of its Trustees and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the registration statement or prospectus or statement of additional information (if applicable) for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of 10 additional information (if applicable) or sales literature or other promotional material of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information (if applicable) or sales literature or other promotional material of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Section 8.1(b) and 8.1(c) hereof. (b) The Company shall not be liable under this Section 8.1 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. (c) Each Indemnified Party shall notify the Company of any claim made against an Indemnified Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Company's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Company from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to each Indemnified Party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An 11 Indemnified Party shall not settle any claim involving a remedy other than monetary damages without the prior written consent of the Company. (d) The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2 Indemnification by the Adviser and the Underwriter (a) The Adviser and the Underwriter agree to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information, or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Adviser, the Underwriter, or Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or statement of additional information or sales literature or other promotional material for the Contracts not supplied by the Adviser, the Underwriter or the Fund or persons under their control) or wrongful conduct of the Adviser, the Underwriter or the Fund or persons under their control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement, prospectus or statement of additional information or sales literature or other promotional material covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Adviser, the Underwriter, or the Fund; or (iv) arise as a result of any failure by the Adviser, the Underwriter or the Fund to provide the services and furnish the materials 12 under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Underwriter, or the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Underwriter, or the Fund; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. (b) Neither the Adviser nor the Underwriter shall be liable under this Section 8.2 with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject if such loss, claim, damage, liability or litigation is caused by or arises out of such Indemnified Party's willful misfeasance, bad faith or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or each Account, whichever is applicable. (c) Each Indemnified Party shall notify each of the Adviser, the Underwriter, and the Fund of any claim made against the Indemnified Party within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify each of the Adviser, the Underwriter, and the Fund of any such claim shall not relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought under this indemnification provision unless the Adviser or the Underwriter's ability to defend against the claim shall have been materially prejudiced by the Indemnified Party's failure to give such notice and shall not in any way relieve the Adviser or the Underwriter from any liability which it may have to the Indemnified Party against whom the action is brought otherwise than on account of this indemnification provision. In case any such action is brought against one or more Indemnified Parties, the Adviser and the Underwriter will be entitled to participate, at their own expense, in the defense thereof. The Adviser and/or the Underwriter shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Adviser and/or the Underwriter to such party of the election of the Adviser and/or the Underwriter to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser and/or the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. An Indemnified Party shall not settle any claim involving any remedy other than monetary damages without the prior written consent of the Adviser and/or the Underwriter. (d) The Company agrees promptly to notify the Adviser, the Underwriter and the Fund of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 13 9. Applicable Law. 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. 10. Termination. 10.1 This Agreement shall terminate: (a) at the option of any party upon 180 days' advance written notice to the other parties; provided, however, that such notice shall not be given earlier than one year following the date of this Agreement; or (b) at the option of the Company to the extent that shares of a Portfolio are not reasonably available to meet the requirements of the Contracts as determined by the Company, provided however, that such termination shall apply only to those Portfolios the shares of which are not reasonably available. Prompt notice of the election to terminate for such cause shall be furnished by the Company; or (c) at the option of the Fund in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, any state insurance department or commissioner or similar insurance regulator or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, with respect to the operation of any Account or the purchase by any Account of Fund shares, provided, however, that the Fund determines in its sole judgment, exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (d) at the option of the Company in the event that formal administrative proceedings are instituted against the Fund, the Adviser or the Underwriter by the NASD, the SEC or any state securities or insurance department or commissioner or any other regulatory body, provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Fund, the Adviser or the Underwriter to perform its obligations under this Agreement; or (e) with respect to any Account, upon requisite authority (by vote of the Contract owners having an interest in such Account or any subaccount thereof, or otherwise) to substitute the shares of another investment company (or separate Portfolio thereof) for the shares of 14 any Portfolio in accordance with the terms of the Contracts for which shares of that Portfolio had been selected to serve as the underlying investment medium. The Company will give 90 days' prior written notice to the Fund of the date of any proposed vote to replace the Fund's shares or of the filing by the Company with the SEC of any application relating to any such substitution; or (f) at the option of the Company, in the event any shares of any Portfolio are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment medium of the Contracts issued or to be issued by the Company; or (g) at the option of the Company, if any Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that any Portfolio may fail to so qualify; or (h) at the option of the Company, if the Fund fails to meet the diversification requirements specified in Section 6 hereof; or (i) at the option of the Fund, the Adviser or the Underwriter, if (1) the Fund, the Adviser or the Underwriter, as the case may be, shall determine, in its sole judgment reasonably exercised in good faith, that the Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact on the business and operations of the Fund, the Adviser or the Underwriter, as the case may be, (2) the Fund, the Adviser or the Underwriter shall notify the Company in writing of such determination and its intent to terminate this Agreement, and (3) after considering the actions taken by the Company and any other changes in circumstances since the giving of such notice, such determination of the Fund, the Adviser or the Underwriter shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or (j) at the option of the Company, if (1) the Company shall determine, in its sole judgment reasonably exercised in good faith, that the Fund, the Adviser or the Underwriter has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity will have a material adverse impact upon the business and operations of the Company, (2) the Company shall notify the Fund, the Adviser and the Underwriter in writing of such determination and its intent to terminate the Agreement, and (3) after considering the actions taken by the Fund, the Adviser and/or the Underwriter and any other changes in circumstances since the giving of such notice, such determination shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; or 15 (k) in the case of an Account not registered under the 1933 Act or 1940 Act, the Company shall give the Fund 90 days' prior written notice if the Company chooses to cease using any Portfolio as an investment vehicle for such Account. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1(a) may be exercised for any reason or for no reason. 10.2 Notice Requirement. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate which notice shall set forth the basis for such termination. Furthermore, in the event that any termination is based upon the provisions of Article VII, or the provision of Section 10.1(a), 10.1(i) or 10.1(j) of this Agreement, such prior written notice shall be given in advance of the effective date of termination as required by such provisions; and 10.3 In the event that any termination is based upon the provisions of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice shall be given at least ninety (90) days before the effective date of termination. 10.4 Effect of Termination. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall, at the option of the Company, continue to make available additional shares of each Portfolio pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.4 shall not apply to any terminations under Section 10.1(b) or Section 7, and in the case of terminations under Section 7 terminations, the effect of such terminations shall be governed by Section 7 of this Agreement. 11. Notices. Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund or to the Adviser: 22 Corporate Plaza Drive Newport Beach, CA 92660 Attention: Elizabeth M. Forget, President 16 If to the Company: 501 Boylston Street Boston, Massachusetts 02116-3700 Attention: President If to the Underwriter: 22 Corporate Plaza Drive Newport Beach, CA 92660 Attention: James A. Shepherdson 12. Miscellaneous. 12.1 A copy of the Agreement and Declaration of Trust establishing the Met Investors Series Trust is on file with the Secretary of the State of Delaware, and notice is hereby given that this Agreement is executed on behalf of the Fund by officers of the Fund as officers and not individually and that the obligations of or arising out of this Agreement are not binding upon any of the trustees, officers or shareholders of the Fund individually but are binding only upon the assets and property belonging to the Portfolio. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 17 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8 At the request of any party to this Agreement and no less than annually, each other party will make available to the requesting party's Board, independent auditors and/or representatives of the appropriate regulatory agencies, all records, reports, materials, data, and access to operating procedures that may be reasonably requested in connection with compliance and regulatory requirements related to this Agreement or any party's obligations under this Agreement. 18 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date first set forth above. NEW ENGLAND LIFE INSURANCE COMPANY By: /s/ Marie C. Swift -------------------------------- Name: Marie C. Swift Title: Second Vice President and Counsel MET INVESTORS SERIES TRUST By: /s/ Elizabeth M. Forget -------------------------------- Elizabeth M. Forget President MET INVESTORS ADVISORY CORP. By: /s/ Elizabeth M. Forget -------------------------------- Elizabeth M. Forget President METLIFE INVESTORS DISTRIBUTION COMPANY By: /s/ Richard C. Pearson -------------------------------- Richard C. Pearson Executive Vice President 19 PARTICIPATION AGREEMENT Among MET INVESTORS SERIES TRUST, MET INVESTORS ADVISORY CORP., METLIFE INVESTORS DISTRIBUTION COMPANY and NEW ENGLAND LIFE INSURANCE COMPANY SCHEDULE A ACCOUNTS AND ASSOCIATED VARIABLE INSURANCE CONTRACTS
Name of Account Variable Insurance Contracts Funded By Account - --------------- ---------------------------------------------- New England Variable Life Zenith Life Separate Account Zenith Life One Zenith Life Plus Zenith Life Plus II Zenith Life Executive 65 Zenith Survivorship Life Zenith Flexible Life Zenith Flexible Life 2001 American Gateway Series Zenith Variable Whole Life Zenith Executive Advantage 2000 Zenith Survivorship Life Plus Zenith Survivorship Life 2002 Zenith Flexible Life 2002 New England Variable Annuity American Growth Series Separate Account American Forerunner Series
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