Document

This document sets forth the administrative procedures that will be followed by The Prudential Insurance Company of America ("Prudential") in connection with the issuance of its Variable Appreciable Life® Insurance Contract ("Contract"), the increase in or addition of benefits, the transfer of assets held thereunder, and the redemption by Contract Owners of their interests in said Contracts. The document also explains the method that Prudential will follow in making a cash adjustment when a Contract is exchanged for a fixed benefit insurance policy pursuant to Rule 6e-3(T)(b)(13)(v)(B).

Scheduled Premiums on the Contract are payable during the insured's lifetime on an annual, semi‑annual, quarterly or monthly basis on due dates set forth in the Contract. If you pay premiums more often than annually, the aggregate annual premium will be higher to compensate us both for the additional processing costs and for the loss of interest (computed generally at an annual rate of 8%) incurred because premiums are paid throughout rather than at the beginning of each Contract Year. The premium amount depends on the Contract's initial Death Benefit and the insured's age at issue, sex (except where unisex rates apply), and risk classification.

Your Contract shows two Scheduled Premium amounts. The first or initial amount is payable from the time you purchase your Contract until the Contract Anniversary immediately following your 65th birthday or the Contract's seventh anniversary, whichever is later (the “Premium Change Date”). The second Scheduled Premium Amount will be lower than the maximum amount stated in your Contract if your Contract Fund, net of any excess premiums, on the Premium Change Date is higher than it would have been had: (1) all Scheduled Premiums been paid when due; (2) maximum Contractual charges been deducted; and (3) only a net rate of return of 4% been earned. We will tell you what your second Scheduled Premium amount will be. If you choose to add a “rider” to your Contract that provides additional benefits, the Scheduled Premium may be increased.

This Contract permits you to pay greater than Scheduled Premiums. You may make unscheduled premium payments occasionally or on a periodic basis. If you wish, you may select a higher contemplated premium than the Scheduled Premium. Prudential will then bill you for the chosen premium. In general, the regular payment of higher premiums will result in higher Cash Surrender Values and, at least under Form B, in higher Death Benefits.

Conversely, a Scheduled Premium does not need to be made if the Contract Fund is large enough to enable the charges due under the Contract to be made without causing the Contract to lapse. The payment of premiums in excess of Scheduled Premiums may cause the Contract to become a Modified Endowment Contract for federal income tax purposes. If this happens, loans and other distributions, which would otherwise not be taxable events, may be subject to federal income taxation.

You may choose a level premium option. In that case, the Scheduled Premium, (the amount of which can be quoted by your Prudential representative), will be higher and it will not increase at age 65 (or seven years after issue, if later). The Contract will not lapse because of unfavorable investment experience if the level Scheduled Premium is paid within 61 days after the Scheduled Premiums are due (or missed premiums are paid later with interest) and there are no withdrawals.

Upon receipt of a request for life insurance from a prospective Contract Owner, Prudential will follow certain insurance underwriting (i.e., evaluation of risk) procedures designed to determine whether the proposed insured is insurable. The process may involve such verification procedures as medical examinations and may require that further information be provided by the proposed insured before a determination can be made. A Contract cannot be issued, (i.e., physically issued through Pruco Life’s computerized issue system) until this underwriting procedure has been completed.

Since a Contract cannot be issued until after the underwriting process has been completed, we use a Limited Insurance Agreement to provide temporary life insurance coverage to prospective Contract Owners who pay the minimum initial premium at the time the request for coverage is submitted. This coverage is for the total Death Benefit applied for, up to the maximum described by the Limited Insurance Agreement, and is subject to the other terms of the Limited Insurance Agreement.

The Contract Date is the date specified in the Contract. This date is used to determine the insurance age of the proposed insured. It represents the first day of the Contract Year and therefore determines the Contract Anniversary and Monthly Dates. It also represents the commencement of the suicide and contestable periods for purposes of the Basic Insurance Amount.

If the minimum initial premium is paid with the application and no medical examination is required, the Contract Date will ordinarily be the date of the application. If a delay is encountered (e.g., if a request for further information is not met promptly), generally, the Contract Date will be 21 days prior to the date on which the Contract is physically issued. If a medical examination is required, the Contract Date will ordinarily be the date the examination is completed, subject to the same qualification as that noted above.

In general, (1) the invested portion of the initial scheduled premium will be placed in the Contract Fund and allocated to the selected variable investment options as of the Contract Date; and (2) the invested portion of any premiums in excess of the initial scheduled premium will be placed in the Contract Fund and allocated to the selected variable investment options as of the later of the Contract Date and the date received.

If, however, one or more premium due dates has passed before all requirements for the issuance of the Contract have been satisfied, (1) the invested portion of the initial scheduled premium will be placed in the Contract Fund as of the Contract Date, (2) scheduled premiums will be placed in the Contract Fund as of the intervening premium due dates, and (3) any premium payments in excess of the aggregate premiums due since the Contract Date will be placed in the Contract Fund as of the date of receipt.

Whenever a premium is received, we will subtract the front-end deductions from the initial premium. The remainder of the initial premium will be allocated among the selected variable investment option(s) or the fixed rate option according to the allocations specified in the application form on the date of receipt in Good Order at the Payment Office (or, if that is not a business day, on the next business day), but not earlier than the Contract date. There is an exception if the Contract is in default within its days of grace. Then, to the extent necessary to end the default, premiums will be credited as of the date of the default or the Monthly Date after default, and premiums greater than this amount will be credited when received. The Contract provides a grace period of 61 days from the date Prudential mails the Contract Owner a notice of default. As an administrative practice, Prudential extends the grace period by seven days to minimize manual processing required when premium payments are processed shortly after the 61st day.

The Contract has a Right to Cancel Contract provision, which gives Contract Owners the right to cancel the Contract within ten days of its delivery (or longer if required by state regulation). If the purchase of this Contract is a replacement under state law, this duration will be extended to a period required by such law.

Generally, for Contracts issued before September 1, 1988, a Contract that has lapsed may be reinstated within three years from the date of default (this period will be longer if required by state law) unless the Contract has been surrendered for its Cash Surrender Value. Please refer to your contract for exact dates. For Contracts issued after September 1, 1988, a Contract that has lapsed may be reinstated within five years from the date of default (this period will be longer if required by state law) unless the Contract has been surrendered for its Cash Surrender Value. A Contract will be reinstated upon our receipt of a written application for reinstatement, production of evidence of insurability satisfactory to Prudential and payment of at least the amount required to bring the premium account up to zero on the first monthly date on which a scheduled premium is due after the date of reinstatement. Any Contract debt under reduced paid-up insurance must be repaid with interest or carried over to the reinstated Contract. The Insured must be living at the time of reinstatement.

Prudential will treat the amount paid upon reinstatement as a premium. Prudential will deduct the front-end charges, plus any charges in arrears, other than mortality charges, with interest. The Contract Fund of the reinstated Contract will, immediately upon reinstatement, be equal to the net premium payment, plus the cash surrender value of the Contract immediately before reinstatement, plus a refund of that part of the deferred sales and administrative charges which would be charged if the Contract were surrendered immediately after reinstatement. An adjustment will be made for any termination dividend paid at the time of lapse. The original Contract Date still controls for purposes of calculating any contingent deferred sales and administrative charges, and any termination dividends.

Prudential may agree to accept a lower amount than described above. This lower amount must be at least equal to the amount necessary to bring the Contract Fund after reinstatement up to the Tabular Contract Fund, plus the scheduled premiums for the next three months. The Contract Fund after reinstatement will be calculated in the same way as described above. In this case, the premium account after reinstatement will be negative, so payment of future scheduled premiums does not guarantee that the Contract will not lapse at some time in the future.

A loan made under the Contract may be repaid with an amount equal to the monies borrowed plus interest which accrues daily, either at a fixed annual rate of 5.5% or, if a Contract Owner elected to have a variable loan interest rate applicable to loans made under the Contract, at the variable loan interest rate then applicable to the loan. The Contract Owner may switch from the fixed to variable interest loan provision, or vice-versa with our consent.

When a loan is made, an amount equal to the loan proceeds is transferred out of the variable investment options, and/or the fixed rate option as applicable. Under the fixed rate Contract loan provision, the amount of Contract Fund attributable to the outstanding loan will be credited with interest at an annual rate of 4%, and Prudential thus will realize the difference between that rate and the fixed loan interest rate, which will be used to cover the loan investment expenses, income taxes, if any, and processing costs. If so desired, the Contract Owner may elect to have a variable loan interest rate apply to the Contract loans, if any, that he or she may make. If this election is made:

Upon repayment of Contract debt, the loan portion of the payment (i.e., not the interest) will be added to the investment option(s). Amounts originally borrowed from the fixed rate option will be allocated to the fixed rate option, and the rest will be allocated among the variable investment option(s) in proportion to the amounts in each variable investment option attributable to the Contract as of the date of repayment.

The Prudential Variable Appreciable Account (the "Account") has Variable Investment Options, each of which is invested in shares of a corresponding portfolio of the Funds. The Funds are registered under the 1940 Act as open-end diversified management investment companies. In addition, a Fixed Rate Option is available.

Provided the Contract is not in default or is in-force as variable reduced paid-up insurance, the Contract Owner may, up to four times in each Contract year, transfer amounts from one variable investment option to another variable investment option or to the fixed rate option without charge. All or a portion of the amount credited to a variable investment option may be transferred.

In addition, the entire amount of the Contract Fund may be transferred to the fixed rate option at any time during the first two Contract years. A Contract Owner who wishes to convert his or her variable contract to a fixed benefit Contract in this manner must request a complete transfer of funds to the fixed rate option and should also change his or her allocation instructions regarding any future premiums.

Transfers among Variable Investment Options will take effect at the end of the valuation period in which a proper transfer request is received in Good Order at a Service Office. The request may be in terms of dollars, such as a request to transfer $5,000 from one Variable Investment Option to another, or may be in terms of a percentage reallocation among Variable Investment Options. In the latter case, as with premium reallocations, the percentages must be in whole numbers.

Transfers from the fixed rate option to other investment options are currently permitted only once each Contract year and only during the thirty-day period beginning on the Contract anniversary. The maximum amount which may currently be transferred out of the fixed rate option each year is the greater of: (a) 25% of the amount in the fixed rate option, and (b) $2,000. Such transfer requests received within the thirty-day period beginning on the Contract anniversary will be effected as of the end of the valuation period during which the request is received. These limits are subject to change in the future.

The Contract Owner may surrender the Contract, in whole or in part for its cash surrender value or a reduced paid-up insurance benefit while the Insured is living. To surrender a Contract, Prudential may require the Contract Owner to deliver or mail the following items in Good Order to a Service Office; the Contract, a signed request for surrender, and any tax withholding information required under federal or state law. Generally, Prudential will pay your Contract’s cash surrender value within seven days after all the documents required for such payment are received in Good Order at a Service Office. Surrender of all or part of a Contract may have tax consequences.

Prudential reserves the right to postpone paying that part of the cash surrender value that is to come from any variable investment option (provided by a separate account registered under the Investment Company Act of 1940) if: (1) the New York Stock Exchange is closed; or (2) the SEC requires that trading be restricted or declares an emergency. The payment of any cash surrender value attributable to the fixed‑rate option may be delayed up to six months. If we do so for more than 30 days, Prudential will pay interest at the rate of 3% a year (or as required by applicable law).

The deferred sales charge and deferred administrative charge are described in the prospectus. The deferred administrative charge is designed to recover the administrative expenses, such as underwriting expenses, incurred in connection with the issuance of a Contract. As a result, in the early months after issue, there may be no cash surrender value if only scheduled premiums are paid.

2. If the Contract is in default during its days of grace, Prudential will compute the cash surrender value as of the date the Contract went into default. It will adjust this value for any loan the Contract Owner took out or paid back or any premium payments or withdrawals made in the days of grace.

3. If the Contract is in default beyond its days of grace, the cash surrender value as of any date will be either the value on the date of any extended insurance benefit then in force, or the value on that date of any fixed or variable reduced paid-up insurance benefit then in force, less any Contract debt.

In lieu of the payment of the cash surrender value in a single sum upon surrender of a Contract, an election may be made by the Contract Owner to apply all or a portion of the proceeds under one of the fixed benefit settlement options described in the Contract or, with the approval of Prudential, a combination of options. An option is available only if the proceeds to be applied are $1,000 or more or would result in periodic payments of at least $20.00. The fixed benefit settlement options are subject to the restrictions and limitations set forth in the Contract.

A Contract Owner may surrender a Contract in part. Partial surrender involves splitting the Contract into two Contracts. One is surrendered for its cash surrender value; the other is continued in force on the same terms as the original Contract except that future scheduled premiums are reduced based upon the continued Contract's face amount and all values under the Contract are proportionately reduced based upon the reduction in the face amount of insurance. The Contract continued must have at least the minimum face amount of insurance stated in the Contract. An alternative to surrender or partial surrender of a Contract is a withdrawal of cash surrender value without splitting the Contract into two Contracts. A withdrawal may be made only if the following conditions are satisfied. First, the amount withdrawn, plus the cash surrender value after withdrawal, may not be more than the cash surrender value before withdrawal. Second, the Contract Fund after the withdrawal must not be less than the Tabular Contract Fund after the withdrawal. Third, the amount withdrawn must be at least $500 under a Form B Contract and at least $2,000 under a Form A Contract. A Contract Owner may make no more than four such withdrawals in a Contract year, and there is a fee of the lesser of $15 and 2% of the amount withdrawn for each such withdrawal. An amount withdrawn may not be repaid except as a premium subject to the Contract charges.

Whenever a withdrawal is made, the Death Benefit payable will immediately be reduced by at least the amount of the withdrawal. This will not change the Basic Insurance Amount (minimum face amount specified in the Contract) under a Type B (variable) Contract. However, under a Type A (fixed) Contract, the withdrawal may require a reduction in the Basic Insurance Amount. If a decrease in Basic Insurance Amount reduces coverage to below the surrender charge threshold, a surrender charge may be deducted. No withdrawal will be permitted under a Type A (fixed) Contract if it would result in a Basic Insurance Amount less than the minimum Basic Insurance Amount.

Prudential will pay a death benefit to the beneficiary at the Insured’s death if the Contract is in force at the time of death. The proceeds will be paid within seven days after receipt at Prudential Service Office of proof of death of the Insured and all other requirements necessary to make payment. State insurance laws impose various requirements, such as receipt of a tax waiver, before payment of the death benefit may be made.

Prudential reserves the right to postpone payment of that part of the proceeds that is to come from any variable investment option (provided by a separate account registered under the Investment Company Act of 1940) if: (1) the New York Stock Exchange is closed; or (2) the SEC requires that trading be restricted or declares an emergency. Prudential reserves the right to postpone paying the remainder for up to six months.

In addition, payment of the death benefit is subject to the provisions of the Contract regarding suicide and incontestability. In the event Prudential should contest the validity of a death claim, an amount up to the portion of the Contract Fund in the variable investment options will be withdrawn, if appropriate, and held in Prudential's general account.

The death benefit under a Form A Contract is the face amount less any Contract debt. The death benefit under a Form B Contract is the face amount, plus any excess of the Contract Fund over the Tabular Contract Fund, less any Contract debt. There may be an additional amount payable from an extra benefit added to the Contract by rider. Tabular Contract Funds on Contract anniversaries are shown in the contract data pages. Tabular Contract Funds at intermediate times can be obtained by interpolation.

If the Contract Fund grows to exceed the net single premium at the Insured's attained age for the death benefit described above, the death benefit will be the Contract Fund, divided by such net single premium. The death benefit will be adjusted for any Contract debt and any extra benefits in the same manner as above.

In lieu of payment of the death benefit in a single lump sum check, an election may be made to apply all or a portion of the proceeds under one of the fixed benefit settlement options described in the Contract or, with the approval of Prudential, a combination of options. The election of any available death benefit option may be made by the Contract Owner during the Insured's lifetime, or, at death, by the beneficiary. A death benefit option in effect at death may not be changed to another form of death benefit after death. An option is available only if the proceeds to be applied are $1,000 or more or would result in periodic payments of at least $20.00. The fixed benefit settlement options are subject to the restrictions and limitations set forth in the Contract.

The Contract is in default on any monthly date on which the premium account is less than zero and the Contract Fund is less than an amount, which will grow at the assumed net rate of return to the Tabular Contract Fund applicable on the next monthly date. Monthly dates occur on the Contract date and in each later month on the same day of the month as the Contract date. The Contract provides for a grace period commencing on the monthly date on which the Contract goes into default and extending at least 61 days after the mailing date of the notice of default. The insurance coverage continues in force during the grace period, but if the Insured dies during the grace period, any charges due during the grace period are deducted from the amount payable to the beneficiary.

Except for Contracts issued on certain Insureds in high risk rating classes, a lapsed Contract will normally provide extended term insurance at expiration of the grace period. The death benefit of the extended term insurance is equal to the death benefit of the Contract (excluding riders) as of the date of default, less any Contract debt. The extended term insurance will continue for a length of time that depends on the cash benefit of the extended term insurance is equal to the death benefit of the Contract (excluding riders) as of the due date of the premium in default, less any Contract debt. The extended term insurance will continue for a length of time that depends on the cash surrender value on the due date of first unpaid premium, the amount of insurance, and the age and sex of the Insured. However, extended term insurance may be exchanged, if the Contract Owner so elects, for fixed or variable reduced paid-up insurance within three months of the due date of the premium in default. The face amount of the reduced paid-up insurance will depend on the cash surrender value on the due date of the premium in default, and the age and sex of the Insured. Variable reduced paid-up is only available if the amount of such insurance is at least $5,000, and if the Insured is not in a high risk rating class.

The Contract provides that a Contract Owner, if no premium is in default beyond the grace period, may take out a loan at any time a loan value is available. The Contract also provides for a loan value if the Contract is in effect under the Contract Value option for fixed or variable reduced paid-up insurance, but not if it is in effect as extended term insurance. The Contract Owner may borrow money on completion of a form satisfactory to Prudential. The Contract is the only security for the loan. Disbursement of the amount of the loan will be made within seven days of receipt of the form in Good Order at Prudential's Service Office. The investment options will be debited in the amount of the loan on the date the form is received. The percentage of the loan withdrawn from each investment option will normally be equal to the percentage of the value of such assets held in the investment option. A Contract Owner may borrow up to the Contract's full loan value. During the first Contract year, the loan value is zero.

After the first Contract year, the loan value is 90% of the portion of cash value attributable to the variable investment options and 100% of the balance of the cash value less the portion of charges attributable to the fixed rate option that would be payable upon immediate surrender. The loan provision is described in the prospectus.

A loan does not affect charges. When a loan is made, the Contract Fund is not reduced, but the value of the assets relating to the Contract held in the investment option(s) is reduced. Accordingly, the daily changes in the cash surrender value will be different from what they would have been had no loan been taken. Cash Surrender Values, and possibly Death Benefits, are thus permanently affected by any Contract Debt, whether or not repaid.

The guaranteed minimum death benefit is not affected by Contract debt if premiums are duly paid. However, on settlement the amount of any Contract debt is subtracted from the insurance proceeds. If Contract debt ever becomes equal to or more than what the cash surrender value would be if there was no Contract debt, all the Contract's benefits will end 61 days after notice is mailed to the Contract Owner and any known assignee, unless payment of an amount sufficient to end the default is made within that period.

As described previously, at any time during the first 24 months after a Contract is issued, so long as the Contract is not in default, the Contract Owner may transfer all amounts in the variable investment options into the fixed rate option. This option is provided in lieu of the option to exchange to a comparable fixed benefit life insurance combined.