0001193125-16-581838.txt : 20160506
0001193125-16-581838.hdr.sgml : 20160506
20160506151703
ACCESSION NUMBER: 0001193125-16-581838
CONFORMED SUBMISSION TYPE: 497
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20160506
DATE AS OF CHANGE: 20160506
EFFECTIVENESS DATE: 20160506
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Metropolitan Life Separate Account UL
CENTRAL INDEX KEY: 0000858997
IRS NUMBER: 135581829
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 497
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-57320
FILM NUMBER: 161627550
BUSINESS ADDRESS:
STREET 1: METROPOLITAN LIFE INSURANCE COMPANY
STREET 2: 200 PARK AVENUE
CITY: NEW YORK
STATE: NY
ZIP: 10166
BUSINESS PHONE: 2125788717
MAIL ADDRESS:
STREET 1: METROPOLITAN LIFE INSURANCE COMPANY
STREET 2: 200 PARK AVENUE
CITY: NEW YORK
STATE: NY
ZIP: 10166
FORMER COMPANY:
FORMER CONFORMED NAME: METROPOLITAN LIFE SEPARATE ACCOUNT UL
DATE OF NAME CHANGE: 19920703
0000858997
S000004219
Metropolitan Life Separate Account UL
C000011872
MetFlex Flexible Premium Variable Life
497
1
d91574d497.txt
METLIFE METFLEX COLI
PROSPECTUS
FOR
METFLEX,
A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY ("POLICY")
ISSUED BY
METROPOLITAN LIFE INSURANCE COMPANY ("METLIFE")
MAY 1, 2016
This prospectus provides you with important information about MetLife's MetFlex
Policies. However, this prospectus is not the Policy. The Policy, rather, is a
separate written agreement that MetLife issues to you.
The Policy is designed to provide:
o Life insurance coverage
o Flexible premium payments
o A choice among three death benefit options
o A method of financing certain deferred compensation plans, post-retirement
benefits and payroll deduction programs
You may allocate premium payments to and transfer cash value among a fixed
interest account ("Fixed Account") and the Metropolitan Life Separate Account
UL investment divisions which invest in the following corresponding fund
("Fund") portfolios:
AB VARIABLE PRODUCTS SERIES FUND, INC.
AB VPS Global Thematic Growth Portfolio -- Class B
AB VPS Intermediate Bond Portfolio -- Class B
AB VPS International Value Portfolio -- Class A
AIM VARIABLE INSURANCE FUNDS (INVESCO VARIABLE INSURANCE FUNDS)
Invesco V.I. Comstock Fund -- Series II
Invesco V.I. Government Securities Fund -- Series II
Invesco V.I. International Growth Fund -- Series I
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. -- CLASS I
VP Capital Appreciation Fund
AMERICAN FUNDS INSURANCE SERIES(R) -- CLASS 2
American Funds Growth Fund
American Funds High-Income Bond Fund
American Funds International Fund
American Funds U.S. Government/AAA-Rated Securities Fund
DREYFUS VARIABLE INVESTMENT FUND -- SERVICE SHARES
International Value Portfolio
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
Asset Manager: Growth Portfolio -- Service Class
Contrafund(R) Portfolio -- Service Class
Equity-Income Portfolio -- Service Class
Freedom 2010 Portfolio -- Initial Class
Freedom 2015 Portfolio -- Initial Class
Freedom 2020 Portfolio -- Initial Class
Freedom 2025 Portfolio -- Initial Class
Freedom 2030 Portfolio -- Initial Class
Government Money Market Portfolio -- Initial Class
High Income Portfolio -- Initial Class
Investment Grade Bond Portfolio -- Service Class
Mid Cap Portfolio -- Service Class 2
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Mutual Global Discovery VIP Fund -- Class 2
Templeton Foreign VIP Fund -- Class 1
Templeton Global Bond VIP Fund -- Class 1
GOLDMAN SACHS VARIABLE INSURANCE TRUST -- INSTITUTIONAL SHARES
Goldman Sachs Small Cap Equity Insights Fund
JANUS ASPEN SERIES
Balanced Portfolio -- Service Shares
Enterprise Portfolio -- Service Shares
Forty Portfolio -- Service Shares
Janus Portfolio -- Institutional Shares
Overseas Portfolio -- Service Shares
MET INVESTORS SERIES TRUST
Clarion Global Real Estate Portfolio -- Class A
ClearBridge Aggressive Growth Portfolio -- Class A
Harris Oakmark International Portfolio -- Class A
Invesco Mid Cap Value Portfolio -- Class A
Invesco Small Cap Growth Portfolio -- Class B
JPMorgan Small Cap Value Portfolio -- Class A
Met/Aberdeen Emerging Markets Equity Portfolio -- Class B
Met/Wellington Large Cap Research Portfolio -- Class A
MetLife Asset Allocation 100 Portfolio -- Class B
MetLife Small Cap Value Portfolio -- Class B
MFS(R) Research International Portfolio -- Class B
Morgan Stanley Mid Cap Growth Portfolio -- Class A
Oppenheimer Global Equity Portfolio -- Class A
PIMCO Inflation Protected Bond Portfolio -- Class A
PIMCO Total Return Portfolio -- Class A
T. Rowe Price Large Cap Value Portfolio -- Class A
METROPOLITAN SERIES FUND
Baillie Gifford International Stock Portfolio -- Class A
Barclays Aggregate Bond Index Portfolio -- Class A
BlackRock Bond Income Portfolio -- Class A
BlackRock Capital Appreciation Portfolio -- Class A
BlackRock Ultra-Short Term Bond Portfolio -- Class A
Frontier Mid Cap Growth Portfolio -- Class A
Jennison Growth Portfolio -- Class A
Loomis Sayles Small Cap Core Portfolio -- Class A
Met/Artisan Mid Cap Value Portfolio -- Class B
Met/Wellington Balanced Portfolio -- Class A
Met/Wellington Core Equity Opportunities Portfolio -- Class A
MetLife Asset Allocation 20 Portfolio -- Class B
MetLife Asset Allocation 40 Portfolio -- Class B
MetLife Asset Allocation 60 Portfolio -- Class B
MetLife Asset Allocation 80 Portfolio -- Class B
MetLife Mid Cap Stock Index Portfolio -- Class A
MetLife Stock Index Portfolio -- Class A
MFS(R) Total Return Portfolio -- Class B
MFS(R) Value Portfolio -- Class A
MSCI EAFE(R) Index Portfolio -- Class A
Neuberger Berman Genesis Portfolio -- Class A
Russell 2000(R) Index Portfolio -- Class A
T. Rowe Price Large Cap Growth Portfolio -- Class A
T. Rowe Price Small Cap Growth Portfolio -- Class A
Western Asset Management Strategic Bond Opportunities Portfolio -- Class A
MFS(R) VARIABLE INSURANCE TRUST -- SERVICE CLASS
MFS(R) Global Equity Series
MFS(R) New Discovery Series
MFS(R) VARIABLE INSURANCE TRUST II -- SERVICE CLASS
MFS(R) High Yield Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS -- NON-SERVICE SHARES
Oppenheimer Main Street Small Cap Fund(R)/VA
PIMCO VARIABLE INSURANCE TRUST -- ADMINISTRATIVE CLASS
PIMCO All Asset Portfolio
PIMCO CommodityRealReturn(R) Strategy Portfolio
PIMCO Long-Term U.S. Government Portfolio
PIMCO Low Duration Portfolio
PIONEER VARIABLE CONTRACTS TRUST -- CLASS I
Pioneer Mid Cap Value VCT Portfolio
PUTNAM VARIABLE TRUST -- CLASS IB
Putnam VT International Value Fund
ROYCE CAPITAL FUND -- INVESTMENT CLASS
Royce Micro-Cap Portfolio
Royce Small-Cap Portfolio
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. -- CLASS I
Emerging Markets Debt Portfolio
Emerging Markets Equity Portfolio
2
TRUST FOR ADVISED PORTFOLIOS
1919 Variable Socially Responsive Balanced Fund
Certain Funds and/or Portfolios have been subject to a name change or
reorganization. Please see Appendix A-- "Additional Information
Regarding the Funds."
Separate prospectuses for the Metropolitan Series Fund, Met Investors Series
Trust, AIM Variable Insurance Funds (Invesco Variable Insurance Funds), AB
Variable Products Series Fund, Inc., American Century Variable Portfolios,
Inc., American Funds Insurance Series(R), Dreyfus Variable Investment Fund,
Fidelity(R) Variable Insurance Products, Franklin Templeton Variable Insurance
Products Trust, Goldman Sachs Variable Insurance Trust, Janus Aspen Series,
MFS(R) Variable Insurance Trust, MFS(R) Variable Insurance Trust II,
Oppenheimer Variable Account Funds, PIMCO Variable Insurance Trust, Pioneer
Variable Contracts Trust, Putnam Variable Trust, Royce Capital Fund, The
Universal Institutional Funds, Inc., Trust for Advised Portfolios and Wells
Fargo Variable Trust (each a "Fund") are available from us by calling
1-908-253-1400. They describe in greater detail an investment in the portfolios
listed above. Before purchasing a Policy, read the information in this
prospectus and in the prospectus for each Fund. Keep these prospectuses for
future reference. We do not guarantee how any of the portfolios will perform.
Since the Fixed Account is not registered under the federal securities laws,
this Prospectus contains only limited information about the Fixed Account. The
Policy gives you more information on the operation of the Fixed Account.
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.
Neither the Securities and Exchange Commission ("SEC") nor any state securities
authority has approved or disapproved of these securities, nor have they
determined if this Prospectus is accurate or complete. Any representation
otherwise is a criminal offense. This Prospectus does not constitute an
offering in any jurisdiction where such offering may not lawfully be made.
Interests in the Separate Account, the Fixed Account and the Portfolios are not
deposits, obligations of, or insured or guaranteed by, the U.S. Government, any
bank or other depository institution including the Federal Deposit Insurance
Corporation ("FDIC"), the Federal Reserve Board or any other agency or entity
or person. We do not authorize any representations about this offering other
than as contained in this Prospectus or its supplements or in our authorized
supplemental sales material.
3
TABLE OF CONTENTS
PAGE
IN THIS
SUBJECT PROSPECTUS
------------------------------------------------------------------------------- -----------
Contacting Us.................................................................. 5
Summary of Benefits and Risks.................................................. 5
Policy Benefits............................................................. 5
Risks of a Policy........................................................... 6
Fee Tables..................................................................... 7
Transaction Fees............................................................ 7
Periodic Charges Other Than Portfolio Operating Expenses.................... 9
Periodic Charges............................................................ 9
Portfolio Operating Expenses................................................ 10
MetLife........................................................................ 15
The Fixed Account........................................................... 15
Separate Account UL......................................................... 15
The Funds................................................................... 16
The Portfolio Share Classes that We Offer................................... 23
Substitution of Portfolios.................................................. 23
Purchase and Redemption of Portfolio Shares by the Separate Account......... 23
Voting Rights............................................................... 23
Issuing a Policy............................................................... 23
Payment and Allocation of Premiums............................................. 24
Paying Premiums............................................................. 24
Maximum and Minimum Premium Payments........................................ 25
Allocating Net Premium...................................................... 25
Insurance Proceeds............................................................. 25
Death Benefit Options....................................................... 26
Minimum Death Benefit....................................................... 27
Specified Face Amount....................................................... 27
Income Plans................................................................ 28
Cash Value, Transfers and Withdrawals.......................................... 29
Cash Value.................................................................. 29
Surrender and Withdrawal Privileges......................................... 33
Benefit at Final Date....................................................... 34
Loan Privileges................................................................ 34
Optional Rider Benefits........................................................ 35
Term Benefit................................................................ 35
Charges and Deductions......................................................... 36
Important Information Applicable to all Policy Charges and Deductions....... 36
Charges Deducted from Premiums.............................................. 36
Charges Included in the Monthly Deduction................................... 37
Charges for Certain Optional Rider Benefits................................. 38
Variations In Charges....................................................... 38
Portfolio Company Charges................................................... 39
Other Charges............................................................... 39
Policy Termination and Reinstatement........................................... 39
Federal Tax Matters............................................................ 39
Rights We Reserve.............................................................. 43
Other Policy Provisions........................................................ 44
Sales of Policies.............................................................. 46
Legal Proceedings.............................................................. 48
Restrictions on Financial Transactions......................................... 48
Financial Statements........................................................... 48
Appendix A..................................................................... 49
4
CONTACTING US
You can communicate all of your requests, instructions and notifications to us
by contacting us in writing at our Designated Office. We may require that
certain requests, instructions and notifications be made on forms that we
provide. To avoid delays, such requests, instructions and notifications
generally must be received by us in "good order" (see "Good Order" below).
These include: changing your beneficiary; taking a Policy loan; changing your
death benefit option; taking a partial withdrawal; surrendering your Policy;
making transfer requests (including elections with respect to the systematic
investment strategies); or changing your premium allocations. Our Designated
Office is MetLife--SBR, 501 Route 22, Bridgewater, NJ 08807. We may name
additional or alternate Designated Offices. If we do, we will notify you in
writing.
GOOD ORDER. A request or transaction generally is considered in "good order" if
it complies with our administrative procedures and the required information is
complete and accurate. A request or transaction may be rejected or delayed if
it is not in good order. If you have any questions about the procedures and
requirements for any requests, instructions or notifications, you should
contact us or your sales representative before submitting the form or request.
SUMMARY OF BENEFITS AND RISKS
This summary gives an overview of the Policy and is qualified by the more
detailed information in the balance of this Prospectus and the Policy. MetLife
issues the Policies. We offer the Policies to employers, employer sponsored
plans, or other organizations or individuals associated with such employers,
plans or organizations. We designed the Policies for financing nonqualified
deferred compensation plans, other post-employment benefits, certain employer
sponsored payroll deduction programs or other purposes.
POLICY BENEFITS
PREMIUM PAYMENT FLEXIBILITY. The Policy allows flexibility in making premium
payments. The Policy will remain in force as long as the cash surrender value
is large enough to cover one monthly deduction, regardless of whether or not
premium payments have been made.
CASH VALUE. Your cash value in the Policy reflects your premium payments, the
charges we deduct, interest we credit if you have cash value in our fixed
interest account, any investment experience you have in our Separate Account,
as well as your loan and withdrawal activity.
TRANSFERS AND SYSTEMATIC INVESTMENT STRATEGIES. You may transfer cash value
among the funding options, subject to certain limits, including restrictions on
frequent transfers (see "Cash Value, Transfers and Withdrawals"). If elected by
your employer, you may also choose among four systematic investment strategies:
the Equity Generator(SM), the Equalizer(SM), the Allocator(SM), and the
Rebalancer(SM).
SPECIFIED FACE AMOUNT OF INSURANCE. Within certain limits, you may choose your
specified face amount of insurance when the Policy is issued. You may also
change the amount at any time after the first Policy year, subject to our rules
and procedures.
DEATH BENEFIT OPTIONS. Generally, you have a choice among three options. These
range from an amount equal to the specified face amount to an amount equal to
the specified face amount plus the policy cash value at the date of death.
INCOME PLANS. The insurance proceeds can be paid under a variety of income
plans that are available under the Policy.
SURRENDERS, PARTIAL WITHDRAWALS AND LOANS. Within certain limits, you may take
partial withdrawals and loans from the Policy. You may also surrender your
Policy for its cash surrender value.
TAX ADVANTAGES. In general, you will not pay income taxes on any cash value
that accrues in your Policy prior to a distribution. If you meet certain
requirements, favorable distribution rules will apply. The death benefit may be
subject to Federal and state estate taxes, but your beneficiary will generally
not be subject to income tax on the death benefit. In the case of
employer-owned life insurance as defined in Section 101(j)
5
of the Internal Revenue Code, the amount of the death benefit excludable from
gross income is limited to premiums paid unless the Policy falls within certain
specified exceptions and a notice and consent requirement is satisfied before
the Policy is issued. As with any taxation matter, you should consult with and
rely on the advice of your own tax adviser.
TERM RIDER. This rider provides coverage on the insured to age 95. The amount
of sales charge you pay will be less if coverage is obtained through this rider
rather than as part of the Policy. The current charges for the cost of
insurance are lower for coverage under the term rider than under the base
Policy. For details, see "Optional Rider Benefits--Term Benefit."
OTHER OPTIONAL RIDER BENEFITS. You may be eligible for certain other benefits
provided by rider, subject to certain underwriting requirements and the payment
of additional premiums. We will deduct any charges for the rider(s) (other than
the charge for the interim term insurance rider) as part of the monthly
deduction.
RISKS OF A POLICY
This Prospectus discusses the risks associated with purchasing the Policy.
Prospectuses for the Funds discuss the risks associated with investment in the
Fund described therein. Each of the Separate Account UL investment divisions
that is available to you under the Policy invests solely in a corresponding
"Portfolio" of a Fund.
INVESTMENT RISK. MetLife does not guarantee the investment performance of the
variable investment options and you should consider your risk tolerance before
selecting any of these options. You will be subject to the risk that investment
performance will be unfavorable and that your cash value will decrease. In
addition, we deduct certain Policy fees and charges from your Policy's cash
value, which can significantly reduce your Policy's cash value. During times of
poor investment performance, these deductions may have an even greater impact
on your Policy's cash value. It is possible to lose your full investment and
your Policy could terminate without value, unless you pay additional premiums.
If you allocate cash value to the Fixed Account, then we credit such cash value
with a declared rate of interest. You assume the risk that the rate may
decrease, although it will never be lower than the guaranteed minimum annual
effective rate of 2.5% (4% for Policies issued prior to February 24, 2012).
SURRENDER AND WITHDRAWAL RISKS. The Policies are designed to provide lifetime
insurance protection. They are not offered primarily as an investment, and are
not suitable as a short-term savings vehicle. You should purchase the Policy
only if you have the financial ability to keep it in force for a substantial
period of time. You should not purchase the Policy if you intend to surrender
all or part of the Policy's cash value in the near future.
RISK OF POLICY TERMINATION. Your Policy may terminate without value if you have
paid an insufficient amount of premiums or if the investment experience of the
investment divisions is poor. If your cash surrender value is not enough to pay
the monthly deduction, your Policy will terminate without value unless you make
a premium payment sufficient to cover two monthly deductions within the 61-day
grace period. If your Policy does terminate, your insurance coverage will
terminate (although you will be given an opportunity to reinstate your coverage
if you satisfy certain requirements). Lapse of a policy on which there is an
outstanding loan may have adverse tax consequences.
POLICY CHARGE AND EXPENSE INCREASE. We have the right to increase certain
Policy charges.
TAX LAW RISKS. We anticipate that the Policy should generally be deemed a life
insurance contract under Federal tax law. The insurance proceeds payable upon
death of the insured under the Policy will never be less than the minimum
amount required for the Policy to be treated as life insurance under Section
7702 of the Internal Revenue Code, as in effect on the date the Policy was
issued. The guidance, however, is not entirely clear in certain circumstances,
for example, with respect to Policies issued on a substandard risk basis. In
general, you should not be deemed to be in receipt of any portion of your
Policy's cash value until there is an actual distribution from the Policy.
Although the beneficiary generally should not have to pay Federal income tax on
the insurance proceeds, other taxes, such as estate taxes, may apply. In the
case of
6
employer-owned life insurance as defined in Section 101(j), the amount of the
death benefit excludable from gross income is limited to premiums paid unless
the Policy falls within certain specified exceptions and a notice and consent
requirement is satisfied before the Policy is issued.
If you pay more than a certain amount of premiums, you may cause your Policy to
become a "modified endowment contract." If it does, you will pay income taxes
on loans and other amounts we pay out to you (except for payment of insurance
proceeds) to the extent of any gains in your Policy (which is generally the
excess of cash value over the premiums paid). In this case, an additional 10%
tax penalty may also apply.
If the Policy is not a modified endowment contract, distributions generally
will be treated first as a return of basis or investment in the contract and
then as taxable income. Moreover, loans will generally not be treated as
distributions prior to termination of your Policy, whether by lapse, surrender
or exchange. Finally, neither distributions nor loans from a Policy that is not
a modified endowment contract are subject to the 10% penalty tax.
If your Policy is part of an equity split dollar arrangement under the economic
benefit regime, there is a risk that some portion of the cash value may be
taxed prior to any Policy distribution.
Tax laws, regulations, and interpretations have often been changed in the past
and such changes continue to be proposed. As with any taxation matter, you
should consult with and rely on the advice of your own tax adviser.
FEE TABLES
The following tables describe the fees and expenses that you will pay when
buying, owning, and surrendering the Policy. The charges set forth in the first
two tables may vary by group, based on anticipated variations in our costs or
risks associated with the group or individuals in the group that the charge was
intended to cover. Our variations in the charges will be made in accordance
with our established and uniformly applied administrative procedures. Any
variations in charges will be reasonable and will not be unfairly
discriminatory to the interests of any Policy owner. In addition to the
following tables, certain charges that we don't currently impose (but which we
have the right to impose on your Policy in the future) are described under
"Charges and Deductions--Other Charges," further back in this Prospectus.
In certain cases, we have the right to increase our charges for new Policies,
as well as for Policies already outstanding. The maximum charges in such cases
are shown in the far right-hand columns of each of the first three tables
below.
TRANSACTION FEES
This table describes the fees and expenses that you will pay at the time that
you buy the Policy, surrender the Policy, or transfer cash value among the
variable investment options or the Fixed Account.
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT
CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT
Sales Charge 1,2 On payment of premium Policy Years 1 to 10, up Policy Years 1 to 10, up
to 6.5% of annual target to 9% of annual target
premium paid premium paid
Policy Years 11 and Policy Years 11 and
later, up to 3% of annual later, same as Current
target premium paid Amount for those years
0% on premiums paid in 0% on premiums paid in
excess of annual target excess of annual target
premium in all Policy premium in all Policy
years years
7
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT
CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT
Charge for average On payment of premium 2.25% of each premium Same as Current
expected state and local payment Amount
taxes attributable to
premiums
Charge for expected On payment of premium 1.2% of each premium Same as Current
federal taxes payment Amount
attributable to
premiums
Administrative Charge 1 On payment of premium Policy Years 1 to 10, up Up to 1.05% of annual
to 0.55% of annual target premium paid in
target premium paid all Policy years
Policy Years 11 and 0.05% of premiums paid
later, up to 1.05% of in excess of annual
annual target premium target premium in all
paid Policy years
0.05% on premiums paid
in excess of annual
target premium in all
Policy years
Transfer Fee On transfer of cash Not currently charged $25 per transfer, and
value among investment none for transfers under
divisions or to or from Systematic Investment
the Fixed Account Strategies
Interim Term Insurance On payment of first Highest: $13.93 per Highest: $24.65 per
Benefit3 (applies only if premium if rider is $1,000 of term insurance $1,000 of term insurance
you elected rider at elected amount amount
issue)
Highest and Lowest Lowest: $0.03 per $1,000 Lowest: $0.04 per $1,000
Charge Among All of term insurance of term insurance
Possible Insureds amount amount
Charge for male, issue $0.152 per $1,000 of $0.271 per $1,000 of
age 47, nonsmoker, term insurance amount term insurance amount
Guaranteed Issue
underwriting class
Enhanced Cash On premium payments 0.25% of each premium Same as Current
Surrender Value Rider 4 made during the first payment made during Amount
five Policy years the first five Policy
years
Underwriting Charge On face amount increase Not currently charged Up to $3 per $1,000 of
(applies only if you increase
request an increase in
your specified face
amount)
1 See "Charges and Deductions--Annual Target Premium" for a detailed discussion
of the determination of the annual target premium.
2 For Policies issued with the Refund of Sales Charge Rider, if you request a
full cash withdrawal during the first five Policy years, we will refund any
sales charges deducted within 365 days prior to the date the request is
received at our Designated Office. This rider is not available in New Jersey.
3 This charge varies based on individual characteristics of the insured or of
individuals in the group that the charge was intended to cover, and may not be
representative of the charge that you will pay. You can obtain more information
about the charges that would
8
apply by contacting your insurance sales representative. If you would like, we
will provide you with an illustration of the impact of these and other charges
under the Policy based on various assumptions.
4 For Policies issued with the Enhanced Cash Surrender Value Rider on or after
February 1, 2004, if you request a full cash withdrawal during the first ten
Policy years, we will refund (a) part of the cumulative charges we have
deducted from your premium payments and (b) part of the cost of term insurance
we have deducted in the current Policy year, as shown in Table A below.
However, we will not pay this refund if the full cash withdrawal is related to
an exchange pursuant to Section 1035 of the Internal Revenue Code. This rider
is subject to state approval.
TABLE A
PORTION OF
COST OF TERM
INSURANCE CHARGES DEDUCTED
PORTION OF DURING POLICY YEAR OF
POLICY YEAR OF CUMULATIVE PREMIUM FULL CASH WITHDRAWAL
FULL CASH WITHDRAWAL CHARGES TO BE REFUNDED* TO BE REFUNDED
---------------------- ------------------------- ---------------------------
1 100% 95%
2 95% 85%
3 90% 75%
4 85% 65%
5 80% 55%
6 75% 45%
7 70% 35%
8 65% 25%
9 60% 15%
10 55% 5%
11 and later None None
* The percent shown is applied to the cumulative sales, tax, and administrative
charges deducted from your premium.
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
These tables describe other fees and expenses that you will pay periodically
during the time that you own the Policy not including the fees and expenses of
the Portfolios.
PERIODIC CHARGES
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT
CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT
Cost of Term Insurance On each monthly Highest: $35.30 per Highest: $35.30 per
for coverage under base anniversary of the $1,000 of term insurance $1,000 of term insurance
policy 1, 2 Policy amount amount
Highest and Lowest Lowest: $0.02 per $1,000 Lowest: $0.04 per $1,000
Charge Among All of term insurance of term insurance
Possible Insureds amount amount
Charge for male, issue $0.152 per $1,000 of $0.271 per $1,000 of
age 47, nonsmoker, term insurance amount term insurance amount
Guaranteed Issue
underwriting class
Cost of Term Insurance On each monthly Highest: $26.48 per Highest: $35.30 per
for coverage under the anniversary of the $1,000 of term insurance $1,000 of term insurance
term benefit 1, 2 Policy amount amount
Highest and Lowest Lowest: $0.02 per $1,000 Lowest: $0.04 per $1,000
Charge Among All of term insurance of term insurance
Possible Insureds amount amount
9
WHEN CHARGE CURRENT AMOUNT MAXIMUM AMOUNT
CHARGE IS DEDUCTED DEDUCTED WE CAN DEDUCT
Charge for male, issue $0.114 per $1,000 of $0.271 per $1,000 of
age 47, nonsmoker, term insurance amount term insurance amount
Guaranteed Issue
underwriting class
Mortality and Expense On each monthly Effective annual rate of Effective annual rate up
Risk Charge 3 anniversary of the 0.40% of the cash value to 0.90%
Policy in the Separate
Account.
We intend to reduce this
charge after Policy year
9 to 0.20% and after
Policy year 20 to 0.10%.
Loan Interest Spread 4 Annually (or on loan Annual rate of 0.25% of Annual rate of 2% of the
termination, if earlier) the loan amount loan amount
1 The cost of term insurance charge varies based on anticipated variations in
our costs or risks associated with the group or individuals in the group that
the charge was intended to cover. See "Charges and Deductions--Cost of Term
Insurance" for a more detailed discussion of factors affecting this charge. For
Policies issued before January 1, 2009, the maximum cost of insurance charge
ranges from $0.09 to $30.45 per $1,000 of term insurance amount.
2 This charge varies based on individual characteristics of the insured or of
individuals in the group that the charge was intended to cover, and may not be
representative of the charge that you will pay. You can obtain more information
about the charges that would apply by contacting your insurance sales
representative. If you would like, we will provide you with an illustration of
the impact of these and other charges under the Policy, based on various
assumptions.
3 We are waiving the following amounts of the Mortality and Expense Risk Charge:
0.08% for the investment division investing in the WMC Large Cap Research
Portfolio; and an amount equal to the underlying portfolio expenses that are in
excess of 0.91% for the investment division investing in the Pioneer Fund
Portfolio (Class A), in excess of 1.34% for the investment division investing
in the Met/Artisan Mid Cap Value Portfolio (Class B), in excess of 1.15% for
the investment division investing in the MetLife Small Cap Value Portfolio
(Class B), and in excess of 0.62% for the investment division investing in the
Oppenheimer Global Equity Portfolio (Class A).
4 We charge interest on Policy loans but credit you with interest on the amount
of the cash value we hold as collateral for the loan. The loan interest spread
is the excess of the interest rate we charge over the interest rate we credit.
PORTFOLIO OPERATING EXPENSES
Each of the Funds pays an investment management fee to its investment manager.
Each of the Funds also incurs other direct expenses (see the applicable Fund
Prospectus and the Statement of Additional Information referred to therein for
each Fund). You bear indirectly your proportionate share of the fees and
expenses of the Portfolios of each Fund that correspond to the Separate Account
investment divisions you are using. Most of the Funds offer various classes of
shares, each of which has a different level of expenses, only one of which is
available under a Policy. The available class of each Portfolio is specified in
the expense table below and on the front cover pages of the Prospectus.
The first table below shows the lowest and highest fees and expenses charged by
any of the Portfolios for the fiscal year ended December 31, 2015.
MINIMUM AND MAXIMUM TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
TOTAL ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Portfolio assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses) 0.25% 1.63%
10
PORTFOLIO FEES AND EXPENSES
(as a percentage of average daily net assets)
The following table is a summary. For more complete information on Portfolio
fees and expenses, please refer to the prospectus for each Portfolio.
DISTRIBUTION
AND/OR
MANAGEMENT SERVICE OTHER
PORTFOLIO FEE (12B-1) FEES EXPENSES
AB VARIABLE PRODUCTS SERIES FUND,
INC.
AB VPS Global Thematic Growth
Portfolio -- Class B 0.75% 0.25% 0.26%
AB VPS Intermediate Bond Portfolio --
Class B 0.45% 0.25% 0.51%
AB VPS International Value Portfolio
-- Class A 0.75% -- 0.10%
AIM VARIABLE INSURANCE FUNDS
(INVESCO VARIABLE INSURANCE
FUNDS)
Invesco V.I. Comstock Fund -- Series II 0.56% 0.25% 0.27%
Invesco V.I. Government Securities
Fund -- Series II 0.47% 0.25% 0.30%
Invesco V.I. International Growth Fund
-- Series I 0.71% -- 0.30%
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC. -- CLASS I
VP Capital Appreciation Fund 1.00% -- --
AMERICAN FUNDS INSURANCE SERIES(R)
-- CLASS 2
American Funds Growth Fund 0.33% 0.25% 0.02%
American Funds High-Income Bond
Fund 0.46% 0.25% 0.02%
American Funds International Fund 0.50% 0.25% 0.04%
American Funds
U.S. Government/AAA-Rated
Securities Fund 0.34% 0.25% 0.01%
DREYFUS VARIABLE INVESTMENT FUND --
SERVICE SHARES
International Value Portfolio 1.00% 0.25% 0.38%
FIDELITY(R) VARIABLE INSURANCE
PRODUCTS
Asset Manager: Growth Portfolio --
Service Class 0.55% 0.10% 0.15%
Contrafund(R) Portfolio -- Service Class 0.55% 0.10% 0.08%
Equity-Income Portfolio -- Service
Class 0.45% 0.10% 0.09%
Freedom 2010 Portfolio -- Initial Class -- -- --
Freedom 2015 Portfolio -- Initial Class -- -- --
Freedom 2020 Portfolio -- Initial Class -- -- --
Freedom 2025 Portfolio -- Initial Class -- -- --
Freedom 2030 Portfolio -- Initial Class -- -- --
Government Money Market Portfolio --
Initial Class 0.17% -- 0.08%
ACQUIRED
FUND TOTAL FEE WAIVER NET TOTAL
FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
AB VARIABLE PRODUCTS SERIES FUND,
INC.
AB VPS Global Thematic Growth
Portfolio -- Class B -- 1.26% -- 1.26%
AB VPS Intermediate Bond Portfolio --
Class B -- 1.21% -- 1.21%
AB VPS International Value Portfolio
-- Class A -- 0.85% -- 0.85%
AIM VARIABLE INSURANCE FUNDS
(INVESCO VARIABLE INSURANCE
FUNDS)
Invesco V.I. Comstock Fund -- Series II -- 1.08% 0.05% 1.03%
Invesco V.I. Government Securities
Fund -- Series II -- 1.02% -- 1.02%
Invesco V.I. International Growth Fund
-- Series I 0.01% 1.02% 0.01% 1.01%
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC. -- CLASS I
VP Capital Appreciation Fund -- 1.00% 0.01% 0.99%
AMERICAN FUNDS INSURANCE SERIES(R)
-- CLASS 2
American Funds Growth Fund -- 0.60% -- 0.60%
American Funds High-Income Bond
Fund -- 0.73% -- 0.73%
American Funds International Fund -- 0.79% -- 0.79%
American Funds
U.S. Government/AAA-Rated
Securities Fund -- 0.60% -- 0.60%
DREYFUS VARIABLE INVESTMENT FUND --
SERVICE SHARES
International Value Portfolio -- 1.63% 0.52% 1.11%
FIDELITY(R) VARIABLE INSURANCE
PRODUCTS
Asset Manager: Growth Portfolio --
Service Class 0.01% 0.81% -- 0.81%
Contrafund(R) Portfolio -- Service Class -- 0.73% -- 0.73%
Equity-Income Portfolio -- Service
Class 0.08% 0.72% -- 0.72%
Freedom 2010 Portfolio -- Initial Class 0.55% 0.55% -- 0.55%
Freedom 2015 Portfolio -- Initial Class 0.58% 0.58% -- 0.58%
Freedom 2020 Portfolio -- Initial Class 0.60% 0.60% -- 0.60%
Freedom 2025 Portfolio -- Initial Class 0.63% 0.63% -- 0.63%
Freedom 2030 Portfolio -- Initial Class 0.66% 0.66% -- 0.66%
Government Money Market Portfolio --
Initial Class -- 0.25% -- 0.25%
11
DISTRIBUTION
AND/OR
MANAGEMENT SERVICE OTHER
PORTFOLIO FEE (12B-1) FEES EXPENSES
High Income Portfolio -- Initial Class 0.56% -- 0.12%
Investment Grade Bond Portfolio --
Service Class 0.31% 0.10% 0.11%
Mid Cap Portfolio -- Service Class 2 0.55% 0.25% 0.08%
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
Franklin Mutual Global Discovery VIP
Fund -- Class 2 0.94% 0.25% 0.08%
Templeton Foreign VIP Fund -- Class 1 0.75% -- 0.03%
Templeton Global Bond VIP Fund --
Class 1 0.46% -- 0.06%
GOLDMAN SACHS VARIABLE INSURANCE
TRUST -- INSTITUTIONAL SHARES
Goldman Sachs Small Cap Equity
Insights Fund 0.75% -- 0.24%
JANUS ASPEN SERIES
Balanced Portfolio -- Service Shares 0.55% 0.25% 0.09%
Enterprise Portfolio -- Service Shares 0.64% 0.25% 0.10%
Forty Portfolio -- Service Shares 0.65% 0.25% 0.09%
Janus Portfolio -- Institutional Shares 0.66% -- 0.10%
Overseas Portfolio -- Service Shares 0.44% 0.25% 0.13%
MET INVESTORS SERIES TRUST
Clarion Global Real Estate Portfolio --
Class A 0.60% -- 0.04%
ClearBridge Aggressive Growth
Portfolio -- Class A 0.55% -- 0.02%
Harris Oakmark International Portfolio
-- Class A 0.77% -- 0.06%
Invesco Mid Cap Value Portfolio --
Class A 0.64% -- 0.04%
Invesco Small Cap Growth Portfolio --
Class B 0.85% 0.25% 0.02%
JPMorgan Small Cap Value Portfolio --
Class A 0.77% -- 0.05%
Met/Aberdeen Emerging Markets
Equity Portfolio -- Class B 0.88% 0.25% 0.14%
Met/Wellington Large Cap Research
Portfolio -- Class A 0.56% -- 0.03%
MetLife Asset Allocation 100 Portfolio
-- Class B 0.07% 0.25% 0.01%
MetLife Small Cap Value Portfolio --
Class B 0.75% 0.25% 0.02%
MFS(R) Research International Portfolio
-- Class B 0.69% 0.25% 0.07%
Morgan Stanley Mid Cap Growth
Portfolio -- Class A 0.65% -- 0.03%
Oppenheimer Global Equity Portfolio --
Class A 0.66% -- 0.05%
PIMCO Inflation Protected Bond
Portfolio -- Class A 0.47% -- 0.15%
ACQUIRED
FUND TOTAL FEE WAIVER NET TOTAL
FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
High Income Portfolio -- Initial Class -- 0.68% -- 0.68%
Investment Grade Bond Portfolio --
Service Class -- 0.52% -- 0.52%
Mid Cap Portfolio -- Service Class 2 -- 0.88% -- 0.88%
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST
Franklin Mutual Global Discovery VIP
Fund -- Class 2 -- 1.27% -- 1.27%
Templeton Foreign VIP Fund -- Class 1 -- 0.78% -- 0.78%
Templeton Global Bond VIP Fund --
Class 1 -- 0.52% -- 0.52%
GOLDMAN SACHS VARIABLE INSURANCE
TRUST -- INSTITUTIONAL SHARES
Goldman Sachs Small Cap Equity
Insights Fund -- 0.99% 0.18% 0.81%
JANUS ASPEN SERIES
Balanced Portfolio -- Service Shares -- 0.89% -- 0.89%
Enterprise Portfolio -- Service Shares -- 0.99% -- 0.99%
Forty Portfolio -- Service Shares -- 0.99% -- 0.99%
Janus Portfolio -- Institutional Shares -- 0.76% -- 0.76%
Overseas Portfolio -- Service Shares -- 0.82% -- 0.82%
MET INVESTORS SERIES TRUST
Clarion Global Real Estate Portfolio --
Class A -- 0.64% -- 0.64%
ClearBridge Aggressive Growth
Portfolio -- Class A -- 0.57% 0.00% 0.57%
Harris Oakmark International Portfolio
-- Class A -- 0.83% 0.02% 0.81%
Invesco Mid Cap Value Portfolio --
Class A 0.08% 0.76% 0.02% 0.74%
Invesco Small Cap Growth Portfolio --
Class B -- 1.12% 0.02% 1.10%
JPMorgan Small Cap Value Portfolio --
Class A -- 0.82% 0.09% 0.73%
Met/Aberdeen Emerging Markets
Equity Portfolio -- Class B -- 1.27% 0.05% 1.22%
Met/Wellington Large Cap Research
Portfolio -- Class A -- 0.59% 0.04% 0.55%
MetLife Asset Allocation 100 Portfolio
-- Class B 0.68% 1.01% -- 1.01%
MetLife Small Cap Value Portfolio --
Class B 0.07% 1.09% 0.00% 1.09%
MFS(R) Research International Portfolio
-- Class B -- 1.01% 0.06% 0.95%
Morgan Stanley Mid Cap Growth
Portfolio -- Class A -- 0.68% 0.01% 0.67%
Oppenheimer Global Equity Portfolio --
Class A -- 0.71% 0.08% 0.63%
PIMCO Inflation Protected Bond
Portfolio -- Class A -- 0.62% 0.01% 0.61%
12
DISTRIBUTION
AND/OR
MANAGEMENT SERVICE OTHER
PORTFOLIO FEE (12B-1) FEES EXPENSES
PIMCO Total Return Portfolio --
Class A 0.48% -- 0.04%
T. Rowe Price Large Cap Value
Portfolio -- Class A 0.57% -- 0.02%
METROPOLITAN SERIES FUND
Baillie Gifford International Stock
Portfolio -- Class A 0.79% -- 0.07%
Barclays Aggregate Bond Index
Portfolio -- Class A 0.25% -- 0.03%
BlackRock Bond Income Portfolio --
Class A 0.32% -- 0.04%
BlackRock Capital Appreciation
Portfolio -- Class A 0.69% -- 0.02%
BlackRock Ultra-Short Term Bond
Portfolio -- Class A 0.34% -- 0.03%
Frontier Mid Cap Growth Portfolio --
Class A 0.71% -- 0.03%
Jennison Growth Portfolio -- Class A 0.60% -- 0.02%
Loomis Sayles Small Cap Core Portfolio
-- Class A 0.90% -- 0.06%
Met/Artisan Mid Cap Value Portfolio --
Class B 0.81% 0.25% 0.03%
Met/Wellington Balanced Portfolio --
Class A 0.46% -- 0.08%
Met/Wellington Core Equity
Opportunities Portfolio -- Class A 0.70% -- 0.02%
MetLife Asset Allocation 20 Portfolio --
Class B 0.09% 0.25% 0.02%
MetLife Asset Allocation 40 Portfolio --
Class B 0.06% 0.25% --
MetLife Asset Allocation 60 Portfolio --
Class B 0.05% 0.25% --
MetLife Asset Allocation 80 Portfolio --
Class B 0.05% 0.25% --
MetLife Mid Cap Stock Index Portfolio
-- Class A 0.25% -- 0.04%
MetLife Stock Index Portfolio --
Class A 0.25% -- 0.02%
MFS(R) Total Return Portfolio -- Class B 0.55% 0.25% 0.05%
MFS(R) Value Portfolio -- Class A 0.70% -- 0.02%
MSCI EAFE(R) Index Portfolio --
Class A 0.30% -- 0.10%
Neuberger Berman Genesis Portfolio --
Class A 0.81% -- 0.03%
Russell 2000(R) Index Portfolio --
Class A 0.25% -- 0.06%
T. Rowe Price Large Cap Growth
Portfolio -- Class A 0.60% -- 0.02%
T. Rowe Price Small Cap Growth
Portfolio -- Class A 0.47% -- 0.03%
ACQUIRED
FUND TOTAL FEE WAIVER NET TOTAL
FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
PIMCO Total Return Portfolio --
Class A -- 0.52% 0.04% 0.48%
T. Rowe Price Large Cap Value
Portfolio -- Class A -- 0.59% -- 0.59%
METROPOLITAN SERIES FUND
Baillie Gifford International Stock
Portfolio -- Class A -- 0.86% 0.12% 0.74%
Barclays Aggregate Bond Index
Portfolio -- Class A -- 0.28% 0.01% 0.27%
BlackRock Bond Income Portfolio --
Class A -- 0.36% 0.00% 0.36%
BlackRock Capital Appreciation
Portfolio -- Class A -- 0.71% 0.05% 0.66%
BlackRock Ultra-Short Term Bond
Portfolio -- Class A -- 0.37% 0.02% 0.35%
Frontier Mid Cap Growth Portfolio --
Class A -- 0.74% 0.02% 0.72%
Jennison Growth Portfolio -- Class A -- 0.62% 0.08% 0.54%
Loomis Sayles Small Cap Core Portfolio
-- Class A 0.04% 1.00% 0.08% 0.92%
Met/Artisan Mid Cap Value Portfolio --
Class B -- 1.09% -- 1.09%
Met/Wellington Balanced Portfolio --
Class A -- 0.54% 0.00% 0.54%
Met/Wellington Core Equity
Opportunities Portfolio -- Class A -- 0.72% 0.12% 0.60%
MetLife Asset Allocation 20 Portfolio --
Class B 0.52% 0.88% 0.01% 0.87%
MetLife Asset Allocation 40 Portfolio --
Class B 0.56% 0.87% -- 0.87%
MetLife Asset Allocation 60 Portfolio --
Class B 0.60% 0.90% -- 0.90%
MetLife Asset Allocation 80 Portfolio --
Class B 0.65% 0.95% -- 0.95%
MetLife Mid Cap Stock Index Portfolio
-- Class A 0.01% 0.30% 0.00% 0.30%
MetLife Stock Index Portfolio --
Class A -- 0.27% 0.01% 0.26%
MFS(R) Total Return Portfolio -- Class B -- 0.85% -- 0.85%
MFS(R) Value Portfolio -- Class A -- 0.72% 0.14% 0.58%
MSCI EAFE(R) Index Portfolio --
Class A 0.01% 0.41% 0.00% 0.41%
Neuberger Berman Genesis Portfolio --
Class A -- 0.84% 0.01% 0.83%
Russell 2000(R) Index Portfolio --
Class A 0.01% 0.32% 0.00% 0.32%
T. Rowe Price Large Cap Growth
Portfolio -- Class A -- 0.62% 0.02% 0.60%
T. Rowe Price Small Cap Growth
Portfolio -- Class A -- 0.50% -- 0.50%
13
ACQUIRED
DISTRIBUTION FUND TOTAL FEE WAIVER NET TOTAL
AND/OR FEES ANNUAL AND/OR ANNUAL
MANAGEMENT SERVICE OTHER AND OPERATING EXPENSE OPERATING
PORTFOLIO FEE (12B-1) FEES EXPENSES EXPENSES EXPENSES REIMBURSEMENT EXPENSES
Western Asset Management Strategic
Bond Opportunities Portfolio --
Class A 0.59% -- 0.04% -- 0.63% 0.04% 0.59%
MFS(R) VARIABLE INSURANCE TRUST --
SERVICE CLASS
MFS(R) Global Equity Series 0.90% 0.25% 0.26% -- 1.41% 0.16% 1.25%
MFS(R) New Discovery Series 0.90% 0.25% 0.06% -- 1.21% 0.02% 1.19%
MFS(R) VARIABLE INSURANCE TRUST II --
SERVICE CLASS
MFS(R) High Yield Portfolio 0.70% 0.25% 0.07% -- 1.02% 0.05% 0.97%
OPPENHEIMER VARIABLE ACCOUNT
FUNDS -- NON-SERVICE SHARES
Oppenheimer Main Street Small Cap
Fund(R)/VA 0.68% -- 0.12% -- 0.80% -- 0.80%
PIMCO VARIABLE INSURANCE TRUST --
ADMINISTRATIVE CLASS
PIMCO All Asset Portfolio 0.43% 0.15% -- 0.83% 1.41% 0.16% 1.25%
PIMCO CommodityRealReturn(R)
Strategy Portfolio 0.74% 0.15% 0.17% 0.11% 1.17% 0.11% 1.06%
PIMCO Long-Term U.S. Government
Portfolio 0.48% 0.15% 0.04% -- 0.67% -- 0.67%
PIMCO Low Duration Portfolio 0.50% 0.15% 0.01% -- 0.66% -- 0.66%
PIONEER VARIABLE CONTRACTS TRUST --
CLASS I
Pioneer Mid Cap Value VCT Portfolio 0.65% -- 0.06% -- 0.71% -- 0.71%
PUTNAM VARIABLE TRUST -- CLASS IB
Putnam VT International Value Fund 0.69% 0.25% 0.19% -- 1.13% -- 1.13%
ROYCE CAPITAL FUND -- INVESTMENT
CLASS
Royce Micro-Cap Portfolio 1.25% -- 0.07% -- 1.32% -- 1.32%
Royce Small-Cap Portfolio 1.00% -- 0.06% -- 1.06% -- 1.06%
THE UNIVERSAL INSTITUTIONAL FUNDS,
INC. -- CLASS I
Emerging Markets Debt Portfolio 0.75% -- 0.34% -- 1.09% -- 1.09%
Emerging Markets Equity Portfolio 0.95% -- 0.46% -- 1.41% 0.06% 1.35%
TRUST FOR ADVISED PORTFOLIOS
1919 Variable Socially Responsive
Balanced Fund 0.65% -- 0.58% -- 1.23% 0.34% 0.89%
The information shown in the table above was provided by the Portfolios and we
have not independently verified that information. Net Total Annual Operating
Expenses shown in the table reflect any current fee waiver or expense
reimbursement arrangement that will remain in effect for a period of at least
one year from the date of the Portfolio's 2016 prospectus. "0.00%" in the Fee
Waiver and/or Expense Reimbursement column indicates that there is such an
arrangement in effect for the Portfolio, but that the expenses of the Portfolio
are below the level that would trigger the waiver or reimbursement. Fee waiver
and expense reimbursement arrangements with a duration of less than one year,
or arrangements that may be terminated without the consent of the Portfolio's
board of directors or trustees, are not shown.
14
Certain Portfolios that have "Acquired Fund Fees and Expenses" are "funds of
funds." A fund of funds invests substantially all of its assets in other
underlying funds. Because the Portfolio invests in other funds, it will bear
its pro rata portion of the operating expenses of those underlying funds,
including the management fee.
Additional information about the management fees and expenses of the Funds can
be obtained in Funds' prospectuses and Statements of Additional Information.
For information concerning compensation paid for the sale of the Policies, see
"Sale of Policies."
METLIFE
Metropolitan Life Insurance Company ("MetLife") is a wholly-owned subsidiary of
MetLife, Inc., a publicly traded company. Our main office is located at 200
Park Avenue, New York, New York 10166.
MetLife has the legal obligation to pay all benefits and other amounts to which
you are entitled under the terms of your Policy.
THE FIXED ACCOUNT
The Fixed Account is part of our general assets that are not in any legally
segregated separate accounts. Amounts in the Fixed Account are credited with
interest at an effective annual rate of 2.5% (4% for Policies issued prior to
February 24, 2012). We may also credit excess interest on such amounts.
Different excess interest rates may apply to different amounts based upon when
such amounts were allocated to the Fixed Account.
Any partial amounts we remove from the Fixed Account (such as any portion of
your Policy's monthly deduction that is allocable to the Fixed Account) will be
taken from the most recently allocated amounts first. Any excess interest rate
will be credited for at least 12 months before a new rate is credited. We can
delay transfers, withdrawals, surrender and payment of Policy loans from the
Fixed Account for up to 6 months. Since the Fixed Account is not registered
under the federal securities laws, this Prospectus contains only limited
information about the Fixed Account. The Policy gives you more information on
the operation of the Fixed Account.
SEPARATE ACCOUNT UL
The Separate Account receives premium payments from the Policy described in
this Prospectus and other variable life insurance policies that we issue. The
assets in the Separate Account legally belong to us, but they are held solely
for the benefit of investors in the Separate Account and no one else, including
our other creditors. Income and realized and unrealized capital gains and
losses of the Separate Account are credited to the Separate Account without
regard to any of our other income or capital gains and losses. We will keep an
amount in the Separate Account that at least equals the value of our
commitments to policy owners that are based on their investments in the
Separate Account. We can also keep charges that we deduct and other excess
amounts in the Separate Account or we can transfer the excess out of the
Separate Account.
We are obligated to pay the death benefit under the Policy even if that amount
exceeds the Policy's cash value in the Separate Account. The amount of the
death benefit that exceeds the Policy's cash value in the Separate Account is
paid from our general account. Death benefits paid from the general account are
subject to the financial strength and claims-paying ability of the Company. For
other life insurance policies and annuity contracts that we issue, we pay all
amounts owed under the policies and contracts from the general account. MetLife
is regulated as an insurance company under state law, which generally imposes
restrictions on the amount and type of investments in the general account.
However, there is no guarantee that we will be able to meet our claims-paying
obligations. There are risks to purchasing any insurance product.
The investment adviser to certain of the Portfolios offered with the Policy or
with other variable life insurance policies issued through the Separate Account
may be regulated as Commodity Pool Operators. While it does not concede that
the Separate Account is a commodity pool, MetLife has claimed an exclusion from
the definition of the term "commodity pool operator" under the Commodities
Exchange Act ("CEA"), and is not subject to registration or regulation as a
pool operator under the CEA.
15
THE INVESTMENT DIVISIONS. The Separate Account has subdivisions, called
"investment divisions." Each investment division invests its assets exclusively
in shares of a corresponding Portfolio of a Fund. We can add new investment
divisions to or eliminate investment divisions from the Separate Account. You
can designate how you would like your net premiums and cash value to be
allocated among the available investment divisions and our Fixed Account. In
some cases, your employer retains the right to allocate the portion of any net
premium it pays (rather than any premium you pay). If so, Policy will state
this. Amounts you allocate to each investment division receive the investment
experience of the investment division, and you bear this investment risk.
THE FUNDS
Each of the Funds is a "series" type of mutual fund, which is registered as an
open-end management investment company under the Investment Company Act of 1940
(the "1940 Act"). Each Fund is divided into Portfolios, each of which
represents a different class of stock in which a corresponding investment
division of the Separate Account invests. PROSPECTUSES FOR THE FUNDS ARE
AVAILABLE BY CALLING 1-908-253-1400 OR THROUGH YOUR REGISTERED REPRESENTATIVE.
You should read each Fund prospectus carefully. They contain information about
each Fund and its Portfolios, including the investment objectives, strategies,
risks and investment advisers that are associated with each Portfolio.
Some of the Portfolios have names and investment objectives that are very
similar to certain publicly available mutual funds that are managed by the same
money managers. These Portfolios are not those publicly available mutual funds
and will not have the same performance. Different performance will result from
such factors as different implementation of investment policies, different cash
flows into and out of the Portfolios, different fees and different sizes.
CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS. An investment
adviser (other than our affiliate MetLife Advisers, LLC) or sub-adviser of a
Portfolio or its affiliates, may make payments to us and/or certain of our
affiliates. These payments may be used for a variety of purposes, including
payment for expenses for certain administrative, marketing and support services
with respect to the Policies and, in MetLife's role as intermediary, with
respect to the Portfolios. We and our affiliates may profit from these
payments. These payments may be derived, in whole or in part, from the advisory
fee deducted from Portfolio assets. Policy owners, through their indirect
investment in the Portfolios, bear the costs of these advisory fees (see the
Fund prospectuses for more information). The amount of the payments we receive
is based on a percentage of assets of the Portfolio attributable to the
Policies and certain other variable insurance products that we and our
affiliates issue. These percentages differ and some advisers or sub-advisers
(or other affiliates) may pay us more than others. These percentages currently
range up to .50%.
Additionally, an investment adviser (other than our affiliate MetLife Advisers,
LLC) or sub-adviser of a Portfolio or its affiliates may provide us with
wholesaling services that assist in the distribution of the Policies and may
pay us and/or certain of our affiliates amounts to participate in sales
meetings. These amounts may be significant and may provide the adviser or
sub-adviser (or their affiliate) with increased access to persons involved in
the distribution of the Policies.
We, and certain of our affiliated insurance companies, have joint ownership
interests in our affiliated investment adviser MetLife Advisers, LLC, which is
organized as a limited liability company. Our ownership interests in MetLife
Advisers, LLC entitle us to profit distributions if the adviser makes a profit
with respect to the advisory fees it receives from a Portfolio. We will benefit
accordingly from assets allocated to the Portfolios to the extent they result
in profits to the adviser. (See "Fee Tables--Portfolio Operating Expenses" for
information on the management fees paid to the adviser and the Statement of
Additional Information for the Funds for information on the management fees
paid by the adviser to sub-advisers.)
Certain Funds have adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act of 1940. A Fund's 12b-1 Plan, if any, is described in
more detail in each Fund's prospectus. (See also "Fee Tables--Portfolio
Operating Expenses.") Any payments we receive pursuant to those 12b-1 Plans are
paid to us or our distributor. Payments under a Fund's 12b-1 Plan decrease the
Portfolio's investment return.
16
SELECTION OF PORTFOLIOS. We select the Portfolios offered through the Policy
based on a number of criteria, including asset class coverage, the strength of
the adviser's or subadviser's reputation and tenure, brand recognition,
performance, and the capability and qualification of each investment firm.
Another factor we consider during the selection process is whether the
Portfolio's adviser or subadviser is one of our affiliates or whether the
Portfolio, its adviser, its subadviser(s), or an affiliate will make payments
to us or our affiliates. For additional information on these arrangements, see
"Certain Payments We Receive with Regard to the Portfolios" above. In this
regard, the profit distributions we receive from our affiliated investment
advisers are a component of the total revenue that we consider in configuring
the features and investment choices available in the variable insurance
products that we and our affiliated insurance companies issue. Since we and our
affiliated insurance companies may benefit more from the allocation of assets
to Portfolios advised by our affiliates than those that are not, we may be more
inclined to offer Portfolios advised by our affiliates in the variable
insurance products we issue. In some cases, we may include Portfolios based on
recommendations made by selling firms through which the Policy is sold. These
selling firms may receive payments from the Portfolios they recommend and may
benefit accordingly from the allocation of cash value to such Portfolios. We
review the Portfolios periodically and may remove a Portfolio or limit its
availability to new premium payments or transfers of cash value if we determine
that the Portfolio no longer meets one or more of the selection criteria,
and/or if the Portfolio has not attracted significant allocations from owners.
WE DO NOT PROVIDE INVESTMENT ADVICE AND DO NOT RECOMMEND OR ENDORSE ANY
PARTICULAR PORTFOLIO. YOU BEAR THE RISK OF ANY DECLINE IN THE CASH VALUE OF
YOUR POLICY RESULTING FROM THE PERFORMANCE OF THE PORTFOLIOS YOU HAVE CHOSEN.
As of the end of each Valuation Period (see "Valuation Period" description
below in "Other Policy Provisions--When Your Requests Become Effective"), we
purchase and redeem Fund shares for the Separate Account at their net asset
value without any sales or redemption charges. These purchases and redemptions
reflect the amount of any of the following transactions that take effect at the
end of the Valuation Period:
o The allocation of net premiums to the Separate Account.
o Dividends and distributions on Fund shares, which are reinvested as of the
dates paid (which reduces the value of each share of the Fund and increases
the number of Fund shares outstanding, but has no effect on the cash value
in the Separate Account).
o Policy loans and loan repayments allocated to the Separate Account.
o Transfers to and among investment divisions.
o Withdrawals and surrenders taken from the Separate Account.
The adviser, any sub-adviser and investment objective of each Portfolio are as
follows:
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
AB VARIABLE PRODUCTS SERIES FUND, INC.
AB VPS Global Thematic Growth Portfolio -- Seeks long-term growth of capital. AllianceBernstein L.P.
Class B
AB VPS Intermediate Bond Portfolio -- Class B Seeks to generate income and price AllianceBernstein L.P.
appreciation without assuming what
the Adviser considers undue risk.
AB VPS International Value Portfolio -- Class A Seeks long-term growth of capital. AllianceBernstein L.P.
AIM VARIABLE INSURANCE FUNDS (INVESCO
VARIABLE INSURANCE FUNDS)
Invesco V.I. Comstock Fund -- Series II Seeks capital growth and income Invesco Advisers, Inc.
through investments in equity
securities, including common stocks,
preferred stocks and securities
convertible into common and
preferred stocks.
Invesco V.I. Government Securities Fund -- Seeks total return, comprised of Invesco Advisers, Inc.
Series II current income and capital
appreciation.
Invesco V.I. International Growth Fund -- Series I Seeks long-term growth of capital. Invesco Advisers, Inc.
17
PORTFOLIO INVESTMENT OBJECTIVE
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. --
CLASS I
VP Capital Appreciation Fund Seeks capital growth.
AMERICAN FUNDS INSURANCE SERIES(R) -- CLASS 2
American Funds Growth Fund Seeks growth of capital.
American Funds High-Income Bond Fund Seeks a high level of current income.
Its secondary investment objective is
capital appreciation.
American Funds International Fund Seeks long-term growth of capital.
American Funds U.S. Government/AAA-Rated Seeks a high level of current income
Securities Fund consistent with preservation of
capital.
DREYFUS VARIABLE INVESTMENT FUND -- SERVICE
SHARES
International Value Portfolio Seeks long-term capital growth.
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
Asset Manager: Growth Portfolio -- Service Class Seeks to maximize total return by
allocating its assets among stocks,
bonds, short-term instruments, and
other investments.
Contrafund(R) Portfolio -- Service Class Seeks long-term capital appreciation.
Equity-Income Portfolio -- Service Class Seeks reasonable income. The fund
will also consider the potential for
capital appreciation. The fund's goal
is to achieve a yield which exceeds
the composite yield on the securities
comprising the S&P 500(R) Index.
Freedom 2010 Portfolio -- Initial Class Seeks high total return with a
secondary objective of principal
preservation as the fund approaches
its target date and beyond.
Freedom 2015 Portfolio -- Initial Class Seeks high total return with a
secondary objective of principal
preservation as the fund approaches
its target date and beyond.
Freedom 2020 Portfolio -- Initial Class Seeks high total return with a
secondary objective of principal
preservation as the fund approaches
its target date and beyond.
Freedom 2025 Portfolio -- Initial Class Seeks high total return with a
secondary objective of principal
preservation as the fund approaches
its target date and beyond.
Freedom 2030 Portfolio -- Initial Class Seeks high total return with a
secondary objective of principal
preservation as the fund approaches
its target date and beyond.
Government Money Market Portfolio -- Initial Seeks as high a level of current
Class income as is consistent with
preservation of capital and liquidity.
PORTFOLIO INVESTMENT ADVISER/SUBADVISER
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. --
CLASS I
VP Capital Appreciation Fund American Century Investment
Management, Inc.
AMERICAN FUNDS INSURANCE SERIES(R) -- CLASS 2
American Funds Growth Fund Capital Research and Management
Company
American Funds High-Income Bond Fund Capital Research and Management
Company
American Funds International Fund Capital Research and Management
Company
American Funds U.S. Government/AAA-Rated Capital Research and Management
Securities Fund Company
DREYFUS VARIABLE INVESTMENT FUND -- SERVICE
SHARES
International Value Portfolio The Dreyfus Corporation
FIDELITY(R) VARIABLE INSURANCE PRODUCTS
Asset Manager: Growth Portfolio -- Service Class Fidelity Management & Research
Company
Subadvisers: FMR Co., Inc. ; Fidelity
Investments Money Management,
Inc.
Contrafund(R) Portfolio -- Service Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Equity-Income Portfolio -- Service Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Freedom 2010 Portfolio -- Initial Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Freedom 2015 Portfolio -- Initial Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Freedom 2020 Portfolio -- Initial Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Freedom 2025 Portfolio -- Initial Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Freedom 2030 Portfolio -- Initial Class Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
Government Money Market Portfolio -- Initial Fidelity Management & Research
Class Company
Subadviser: Fidelity Investments
Money Management, Inc.
18
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
High Income Portfolio -- Initial Class Seeks a high level of current income, Fidelity Management & Research
while also considering growth of Company
capital. Subadviser: FMR Co., Inc.
Investment Grade Bond Portfolio -- Service Class Seeks as high a level of current Fidelity Management & Research
income as is consistent with the Company
preservation of capital. Subadviser: Fidelity Investments
Money Management, Inc.
Mid Cap Portfolio -- Service Class 2 Seeks long-term growth of capital. Fidelity Management & Research
Company
Subadviser: FMR Co., Inc.
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Franklin Mutual Global Discovery VIP Fund -- Seeks capital appreciation. Franklin Mutual Advisers, LLC
Class 2
Templeton Foreign VIP Fund -- Class 1 Seeks long-term capital growth. Templeton Investment Counsel, LLC
Templeton Global Bond VIP Fund -- Class 1 Seeks high current income, Franklin Advisers, Inc.
consistent with preservation of
capital, with capital appreciation as a
secondary consideration.
GOLDMAN SACHS VARIABLE INSURANCE TRUST --
INSTITUTIONAL SHARES
Goldman Sachs Small Cap Equity Insights Fund Seeks long-term growth of capital. Goldman Sachs Asset Management,
L.P.
JANUS ASPEN SERIES
Balanced Portfolio -- Service Shares Seeks long-term capital growth, Janus Capital Management LLC
consistent with preservation of
capital and balanced by current
income.
Enterprise Portfolio -- Service Shares Seeks long-term growth of capital. Janus Capital Management LLC
Forty Portfolio -- Service Shares Seeks long-term growth of capital. Janus Capital Management LLC
Janus Portfolio -- Institutional Shares Seeks long-term growth of capital. Janus Capital Management LLC
Overseas Portfolio -- Service Shares Seeks long-term growth of capital. Janus Capital Management LLC
MET INVESTORS SERIES TRUST
Clarion Global Real Estate Portfolio -- Class A Seeks total return through MetLife Advisers, LLC
investment in real estate securities, Subadviser: CBRE Clarion
emphasizing both capital appreciation Securities LLC
and current income.
ClearBridge Aggressive Growth Portfolio -- Seeks capital appreciation. MetLife Advisers, LLC
Class A Subadviser: ClearBridge
Investments, LLC
Harris Oakmark International Portfolio -- Class A Seeks long-term capital appreciation. MetLife Advisers, LLC
Subadviser: Harris Associates L.P.
Invesco Mid Cap Value Portfolio -- Class A Seeks high total return by investing MetLife Advisers, LLC
in equity securities of mid-sized Subadviser: Invesco Advisers, Inc.
companies.
Invesco Small Cap Growth Portfolio -- Class B Seeks long-term growth of capital. MetLife Advisers, LLC
Subadviser: Invesco Advisers, Inc.
JPMorgan Small Cap Value Portfolio -- Class A Seeks long-term capital growth. MetLife Advisers, LLC
Subadviser: J.P. Morgan Investment
Management Inc.
Met/Aberdeen Emerging Markets Equity Seeks capital appreciation. MetLife Advisers, LLC
Portfolio -- Class B Subadviser: Aberdeen Asset
Managers Limited
Met/Wellington Large Cap Research Portfolio -- Seeks long-term capital appreciation. MetLife Advisers, LLC
Class A Subadviser: Wellington Management
Company LLP
19
PORTFOLIO INVESTMENT OBJECTIVE
MetLife Asset Allocation 100 Portfolio -- Class B Seeks growth of capital.
MetLife Small Cap Value Portfolio -- Class B Seeks long-term capital appreciation.
MFS(R) Research International Portfolio -- Class B Seeks capital appreciation.
Morgan Stanley Mid Cap Growth Portfolio -- Seeks capital appreciation.
Class A
Oppenheimer Global Equity Portfolio -- Class A Seeks capital appreciation.
PIMCO Inflation Protected Bond Portfolio -- Seeks maximum real return,
Class A consistent with preservation of
capital and prudent investment
management.
PIMCO Total Return Portfolio -- Class A Seeks maximum total return,
consistent with the preservation of
capital and prudent investment
management.
T. Rowe Price Large Cap Value Portfolio -- Seeks long-term capital appreciation
Class A by investing in common stocks
believed to be undervalued. Income is
a secondary objective.
METROPOLITAN SERIES FUND
Baillie Gifford International Stock Portfolio -- Seeks long-term growth of capital.
Class A
Barclays Aggregate Bond Index Portfolio -- Seeks to track the performance of the
Class A Barclays U.S. Aggregate Bond
Index.
BlackRock Bond Income Portfolio -- Class A Seeks a competitive total return
primarily from investing in
fixed-income securities.
BlackRock Capital Appreciation Portfolio -- Seeks long-term growth of capital.
Class A
BlackRock Ultra-Short Term Bond Portfolio -- Seeks a high level of current income
Class A consistent with preservation of
capital.
Frontier Mid Cap Growth Portfolio -- Class A Seeks maximum capital appreciation.
Jennison Growth Portfolio -- Class A Seeks long-term growth of capital.
Loomis Sayles Small Cap Core Portfolio -- Class A Seeks long-term capital growth from
investments in common stocks or
other equity securities.
Met/Artisan Mid Cap Value Portfolio -- Class B Seeks long-term capital growth.
Met/Wellington Balanced Portfolio -- Class A Seeks long-term capital appreciation
with some current income.
PORTFOLIO INVESTMENT ADVISER/SUBADVISER
MetLife Asset Allocation 100 Portfolio -- Class B MetLife Advisers, LLC
MetLife Small Cap Value Portfolio -- Class B MetLife Advisers, LLC
Subadvisers: Delaware Investments
Fund Advisers; Wells Capital
Management Incorporated
MFS(R) Research International Portfolio -- Class B MetLife Advisers, LLC
Subadviser: Massachusetts Financial
Services Company
Morgan Stanley Mid Cap Growth Portfolio -- MetLife Advisers, LLC
Class A Subadviser: Morgan Stanley
Investment Management Inc.
Oppenheimer Global Equity Portfolio -- Class A MetLife Advisers, LLC
Subadviser: OppenheimerFunds, Inc.
PIMCO Inflation Protected Bond Portfolio -- MetLife Advisers, LLC
Class A Subadviser: Pacific Investment
Management Company LLC
PIMCO Total Return Portfolio -- Class A MetLife Advisers, LLC
Subadviser: Pacific Investment
Management Company LLC
T. Rowe Price Large Cap Value Portfolio -- MetLife Advisers, LLC
Class A Subadviser: T. Rowe Price
Associates, Inc.
METROPOLITAN SERIES FUND
Baillie Gifford International Stock Portfolio -- MetLife Advisers, LLC
Class A Subadviser: Baillie Gifford Overseas
Limited
Barclays Aggregate Bond Index Portfolio -- MetLife Advisers, LLC
Class A Subadviser: MetLife Investment
Advisors, LLC
BlackRock Bond Income Portfolio -- Class A MetLife Advisers, LLC
Subadviser: BlackRock Advisors,
LLC
BlackRock Capital Appreciation Portfolio -- MetLife Advisers, LLC
Class A Subadviser: BlackRock Advisors,
LLC
BlackRock Ultra-Short Term Bond Portfolio -- MetLife Advisers, LLC
Class A Subadviser: BlackRock Advisors,
LLC
Frontier Mid Cap Growth Portfolio -- Class A MetLife Advisers, LLC
Subadviser: Frontier Capital
Management Company, LLC
Jennison Growth Portfolio -- Class A MetLife Advisers, LLC
Subadviser: Jennison Associates
LLC
Loomis Sayles Small Cap Core Portfolio -- Class A MetLife Advisers, LLC
Subadviser: Loomis, Sayles &
Company, L.P.
Met/Artisan Mid Cap Value Portfolio -- Class B MetLife Advisers, LLC
Subadviser: Artisan Partners
Limited Partnership
Met/Wellington Balanced Portfolio -- Class A MetLife Advisers, LLC
Subadviser: Wellington Management
Company LLP
20
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
Met/Wellington Core Equity Opportunities Seeks to provide a growing stream of MetLife Advisers, LLC
Portfolio -- Class A income over time and, secondarily, Subadviser: Wellington Management
long-term capital appreciation and Company LLP
current income.
MetLife Asset Allocation 20 Portfolio -- Class B Seeks a high level of current income, MetLife Advisers, LLC
with growth of capital as a secondary
objective.
MetLife Asset Allocation 40 Portfolio -- Class B Seeks high total return in the form of MetLife Advisers, LLC
income and growth of capital, with a
greater emphasis on income.
MetLife Asset Allocation 60 Portfolio -- Class B Seeks a balance between a high level MetLife Advisers, LLC
of current income and growth of
capital, with a greater emphasis on
growth of capital.
MetLife Asset Allocation 80 Portfolio -- Class B Seeks growth of capital. MetLife Advisers, LLC
MetLife Mid Cap Stock Index Portfolio -- Class A Seeks to track the performance of the MetLife Advisers, LLC
Standard & Poor's MidCap 400(R) Subadviser: MetLife Investment
Composite Stock Price Index. Advisors, LLC
MetLife Stock Index Portfolio -- Class A Seeks to track the performance of the MetLife Advisers, LLC
Standard & Poor's 500(R) Composite Subadviser: MetLife Investment
Stock Price Index. Advisors, LLC
MFS(R) Total Return Portfolio -- Class B Seeks a favorable total return MetLife Advisers, LLC
through investment in a diversified Subadviser: Massachusetts Financial
portfolio. Services Company
MFS(R) Value Portfolio -- Class A Seeks capital appreciation. MetLife Advisers, LLC
Subadviser: Massachusetts Financial
Services Company
MSCI EAFE(R) Index Portfolio -- Class A Seeks to track the performance of the MetLife Advisers, LLC
MSCI EAFE(R) Index. Subadviser: MetLife Investment
Advisors, LLC
Neuberger Berman Genesis Portfolio -- Class A Seeks high total return, consisting MetLife Advisers, LLC
principally of capital appreciation. Subadviser: Neuberger Berman
Investment Advisers LLC
Russell 2000(R) Index Portfolio -- Class A Seeks to track the performance of the MetLife Advisers, LLC
Russell 2000(R) Index. Subadviser: MetLife Investment
Advisors, LLC
T. Rowe Price Large Cap Growth Portfolio -- Seeks long-term growth of capital. MetLife Advisers, LLC
Class A Subadviser: T. Rowe Price
Associates, Inc.
T. Rowe Price Small Cap Growth Portfolio -- Seeks long-term capital growth. MetLife Advisers, LLC
Class A Subadviser: T. Rowe Price
Associates, Inc.
Western Asset Management Strategic Bond Seeks to maximize total return MetLife Advisers, LLC
Opportunities Portfolio -- Class A consistent with preservation of Subadviser: Western Asset
capital. Management Company
MFS(R) VARIABLE INSURANCE TRUST -- SERVICE
CLASS
MFS(R) Global Equity Series Seeks capital appreciation. Massachusetts Financial Services
Company
MFS(R) New Discovery Series Seeks capital appreciation. Massachusetts Financial Services
Company
MFS(R) VARIABLE INSURANCE TRUST II -- SERVICE
CLASS
MFS(R) High Yield Portfolio Seeks total return with an emphasis Massachusetts Financial Services
on high current income, but also Company
considering capital appreciation.
21
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
OPPENHEIMER VARIABLE ACCOUNT FUNDS --
NON-SERVICE SHARES
Oppenheimer Main Street Small Cap Fund(R)/VA Seeks capital appreciation. OFI Global Asset Management, Inc.
Subadviser: OppenheimerFunds, Inc.
PIMCO VARIABLE INSURANCE TRUST --
ADMINISTRATIVE CLASS
PIMCO All Asset Portfolio Seeks maximum real return Pacific Investment Management
consistent with preservation of real Company LLC
capital and prudent investment Subadviser: Research Affiliates, LLC
management.
PIMCO CommodityRealReturn(R) Strategy Seeks maximum real return, Pacific Investment Management
Portfolio consistent with prudent investment Company LLC
management.
PIMCO Long-Term U.S. Government Portfolio Seeks maximum total return, Pacific Investment Management
consistent with preservation of Company LLC
capital and prudent investment
management.
PIMCO Low Duration Portfolio Seeks maximum total return, Pacific Investment Management
consistent with preservation of Company LLC
capital and prudent investment
management.
PIONEER VARIABLE CONTRACTS TRUST -- CLASS I
Pioneer Mid Cap Value VCT Portfolio Seeks capital appreciation by Pioneer Investment Management,
investing in a diversified portfolio of Inc.
securities consisting primarily of
common stocks.
PUTNAM VARIABLE TRUST -- CLASS IB
Putnam VT International Value Fund Seeks capital growth. Current Putnam Investment Management,
income is a secondary objective. LLC
Subadviser: The Putnam Advisory
Company, LLC
ROYCE CAPITAL FUND -- INVESTMENT CLASS
Royce Micro-Cap Portfolio Seeks long-term growth of capital. Royce & Associates, LLC
Royce Small-Cap Portfolio Seeks long-term growth of capital. Royce & Associates, LLC
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. --
CLASS I
Emerging Markets Debt Portfolio Seeks high total return by investing Morgan Stanley Investment
primarily in fixed income securities of Management Inc.
government and government-related
issuers and, to a lesser extent, of
corporate issuers in emerging market
countries.
Emerging Markets Equity Portfolio Seeks long-term capital appreciation Morgan Stanley Investment
by investing primarily in Management Inc.
growth-oriented equity securities of Subadvisers: Morgan Stanley
issuers in emerging market Investment Management Company;
countries. Morgan Stanley Investment
Management Limited
TRUST FOR ADVISED PORTFOLIOS
1919 Variable Socially Responsive Balanced Fund Seeks capital appreciation and 1919 Investment Counsel, LLC
retention of net investment income.
22
THE PORTFOLIO SHARE CLASSES THAT WE OFFER
The Funds offer various classes of shares, each of which has a different level
of expenses. The Fund prospectuses may provide information for share classes or
Portfolios that are not available through the Policy. When you consult the Fund
prospectus for a Portfolio, you should be careful to refer only to the
information regarding the Portfolio and class of shares that is available
through the Policy.
SUBSTITUTION OF PORTFOLIOS
If investment in the Portfolios or a particular Portfolio 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 portfolio without your consent. The substituted Portfolio 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
investment divisions to allocation of premium payments or cash value, or both,
for some or all classes of Policies, at any time in our sole discretion.
PURCHASE AND REDEMPTION OF PORTFOLIO SHARES BY THE SEPARATE ACCOUNT
As of the end of each Valuation Period (see "Valuation Period" description
below in "Other Policy Provisions--When Your Requests Become Effective"), we
purchase and redeem Fund shares for the Separate Account at their net asset
value without any sales or redemption charges. These purchases and redemptions
reflect the amount of any of the following transactions that take effect at the
end of the Valuation Period:
o The allocation of net premiums to the Separate Account.
o Dividends and distributions on Fund shares, which are reinvested as of the
dates paid (which reduces the value of each share of the Fund and increases
the number of Fund shares outstanding, but has no effect on the cash value
in the Separate Account).
o Policy loans and loan repayments allocated to the Separate Account.
o Transfers to and among investment divisions.
o Withdrawals and surrenders taken from the Separate Account.
VOTING RIGHTS
The Funds have shareholder meetings from time to time to, for example, elect
directors and approve some changes in investment management arrangements. You
can give us voting instructions on shares of each portfolio of a fund that are
attributed to your Policy. We will vote the shares of each Portfolio that are
attributed to your Policy based on your instructions. We will vote all shares
in proportion to the instructions received. If we do not receive your
instructions we will vote your shares in the same proportion as represented by
the votes received from other owners. The effect of this proportional voting is
that a small number of owners may control the outcome of a vote. Should we
determine that the 1940 Act no longer requires us to do this, we may decide to
vote Fund shares in our own right, without input from you or any other owners
of variable life insurance policies or variable annuity contracts that
participate in a Fund.
ISSUING A POLICY
If you want to own a Policy, then you must complete an application, which must
be received by the Designated Office. We reserve the right to reject an
application for any reason permitted by law, and our acceptance of an
application is subject to our insurance underwriting rules.
We offer other variable life insurance policies that have different death
benefits, policy features, Portfolio selections, and optional programs.
However, these other policies also have different charges that would affect
your performance and cash values. To obtain more information about these other
policies, contact our Designated Office or your sales representative.
23
There are three types of underwriting available under the Policy. We decide
which type to use based on the total number of eligible possible insureds
within the eligible group for whom a Policy could be purchased and the
percentage of those insureds for whom a Policy is actually purchased. The three
types of underwriting are:
GUARANTEED ISSUE--requires the least evidence of insurability and rating
classification
SIMPLIFIED UNDERWRITING--requires more evidence of insurability and rating
classification
FULL UNDERWRITING--requires the most evidence of insurability and rating
classification
An insured who is a standard risk under Simplified Underwriting or Guaranteed
Issue may have a higher cost of term insurance rate than would apply to the
same insured under Full Underwriting.
Generally, we will issue a Policy only for insureds that are age 70 or less
(although we may decide to permit an insured that is older) that have provided
evidence of insurability that we find acceptable. An "insured" is the person
upon whose life we issue the Policy. For the purpose of computing the insured's
age under the Policy, we start with the insured's age on the Date of Policy
which is set forth in the Policy. Age under the Policy at any other time is
then computed using that issue age and adding the number of full Policy years
completed.
The Date of Policy is usually the date the Policy application is approved and
premiums are accepted. We use the Date of Policy to calculate the Policy years
(and Policy months and monthly anniversaries). To preserve a younger age for
the insured, we may permit a Date of Policy that is earlier than the date the
application is approved if there have been no material misrepresentations in
the application. You may request that your Date of Policy be the same date the
planned periodic premium is received. In these cases, you would incur a charge
for insurance protection before insurance coverage starts.
Insurance coverage under the Policy will generally begin at the time the
application is approved. For coverage to be effective, the insured's health on
the date of such approval must be the same as stated in the application and, in
most states, we can require that the insured not have sought medical advice or
treatment between the date of the application and the date of approval.
PAYMENT AND ALLOCATION OF PREMIUMS
You can make voluntary planned periodic premium payments and unscheduled
premium payments. The payment of a given premium won't necessarily guarantee
that your Policy will remain in force. Rather, this depends on your Policy's
cash surrender value.
PAYING PREMIUMS
We accept premium payments made by check or cashier's check. We do not accept
cash, money orders or traveler's checks. You can make premium payments, subject
to certain limitations discussed below, through the:
VOLUNTARY PLANNED PERIODIC PREMIUM SCHEDULE. You choose the schedule on your
application. The schedule sets forth the amount of premiums, fixed payment
intervals and the period of time that you intend to pay premiums. The schedule
can be: (a) annual; (b) semi-annual; or (c) through another method to which we
agree. After payment of the first planned periodic premium, you do not have to
pay premiums in accordance with your voluntary planned period premium schedule.
UNSCHEDULED PREMIUM PAYMENT OPTION. You also can make other premium payments at
any time.
Premium payments sent by regular U.S. mail should be addressed to: MetLife,
P.O. Box 7369, Philadelphia, PA 19101-7369. Premium payments sent by express
mail or courier service should be addressed to: MetLife, Lockbox #7369, Wells
Fargo Bank Y1372-045, 401 Market Street, Philadelphia, PA 19106.
If you send premium payments or transaction requests to an address other than
the one we have designated for receipt of such payments or requests, we may
return the premium payment to you, or there may be a delay in applying the
payment or transaction to your Policy.
24
MAXIMUM AND MINIMUM PREMIUM PAYMENTS
o The first premium may not be less than the planned premium unless agreed to
by us.
o After the first Policy year, your voluntary planned periodic payments must be
at least $100, whether on an annual or semi-annual basis.
o Unscheduled premium payments must be at least $100 each. We may change this
minimum amount on 90 days notice to you.
o You may not pay premiums that exceed tax law premium limitations for life
insurance policies. We will return any amounts that exceed these limits,
except that we will keep any amounts that are required to keep the Policy
from terminating. We will let you make premium payments that would turn your
Policy into a modified endowment contract, but we will tell you of this
status in your annual statement, and if possible, we will tell you how to
reverse the status. ("See Tax Matters--Modified Endowment Contracts.")
o We reserve the right not to sell a Policy to any group or individual
associated with such group if the total amount of annual premium that is
expected to be paid in connection with all Policies sold to the group or
individuals associated with such group is less than $250,000.
o We may require evidence of insurability for premium payments that cause the
minimum death benefit to exceed the death benefit then in effect under the
death benefit option chosen.
ALLOCATING NET PREMIUM
Your allocations of net premiums to the Fixed Account are effective as of the
Investment Start Date. See "Investment Start Date" description below in "Other
Policy Provisions--When Your Requests Become Effective." Your allocations of
net premiums to the investment divisions of the Separate Account are effective
as of the end of the free look period. See "Other Policy Provisions--Free Look
Period." During the free look period, we allocate the net premium payments you
allocated to the investment divisions to a money market investment division. At
the end of the free look period, we will allocate your cash value in that
investment division among all the Separate Account investment divisions
according to your net premium allocation instructions.
For policies issued in California, we allocate net premiums to the investment
divisions of the Separate Account as of the Investment Start Date. If you are
age 60 or older, and you allocate 100% of your initial net premium to a money
market investment division in order to receive a refund of premiums should you
cancel the Policy during the free look period, we will not automatically
transfer your cash value or reallocate your future premiums once the free look
period has ended. You must contact us to request a transfer or reallocation.
You can instruct us to allocate your net premiums among the Fixed Account and
the investment divisions. You can change your allocations (effective after the
end of the free look period) at any time by giving us written notification at
our Designated Office or in any other manner that we permit. If you have cash
value of at least $60,000,000 in the Fixed Account for all Policies you own, we
will have to give prior approval to any allocation of net premium or transfer
of cash value to the Fixed Account.
INSURANCE PROCEEDS
If the Policy is in force, we will pay your beneficiary the insurance proceeds
as of the end of the Valuation Period that includes the insured's date of
death. We will pay this amount after we receive documents that we request as
due proof of the insured's death.
We will pay the proceeds in one sum, including either by check, by placing the
amount in an account that earns interest, or by any other method of payment
that provides the beneficiary with immediate and full access to the proceeds,
or under other settlement options that we may make available. None of these
options vary with the investment performance of the Separate Account. More
detailed information concerning settlement options is provided under "Income
Plans" and on request from our Designated Office. We will pay interest on the
proceeds as required by applicable state law.
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Unless otherwise requested and subject to state law, the Policy's death
proceeds will generally be paid to the beneficiary through a settlement option
called the Total Control Account. The Total Control Account is an
interest-bearing account through which the beneficiary has immediate and full
access to the proceeds, with unlimited draft writing privileges. We credit
interest to the account at a rate that will not be less than a guaranteed
minimum annual effective rate. You may also elect to have any Policy surrender
proceeds paid into a Total Control Account established for you.
The beneficiary has one year from the date the insurance proceeds are paid to
change the selection from a single sum payment to an income plan, as long as we
have made no payments from the interest-bearing account. If the terms of the
income plan permit the beneficiary to withdraw the entire amount from the plan,
the beneficiary can also name contingent beneficiaries.
The insurance proceeds equal:
o The death benefit under the death benefit option or minimum death benefit
that is in effect on the date of death; plus
o Any additional insurance proceeds provided by rider; minus
o Any unpaid Policy loans and accrued interest thereon, and any due and unpaid
charges accruing during a grace period.
Every state has unclaimed property laws which generally declare life insurance
policies to be abandoned after a period of inactivity of three to five years
from the date any death benefit is due and payable. For example, if the payment
of a death benefit has been triggered, and after a thorough search, we are
still unable to locate the beneficiary of the death benefit, the death benefit
will be paid to the abandoned property division or unclaimed property office of
the state in which the beneficiary or the policy owner last resided, as shown
on our books and records. ("Escheatment" is the formal, legal name for this
process.) However, the state is obligated to pay the death benefit (without
interest) if your beneficiary steps forward to claim it with the proper
documentation. To prevent your Policy's death benefit from being paid to the
state's abandoned or unclaimed property office, it is important that you update
your beneficiary designation--including complete names and complete address--if
and as they change. You should contact our Designated Office in order to make a
change to your beneficiary designation. (See "Contacting Us.")
DEATH BENEFIT OPTIONS
You can choose among three options. You select which option you want in the
Policy application. The three options are:
o Option A: The death benefit is a level amount and equals the specified face
amount of the Policy.
o Option B: The death benefit varies and equals the specified face amount of
the Policy plus the cash value on the date of death.
o Option C: The death benefit varies and equals the specified face amount of
the Policy plus the amount by which the Policy premiums paid exceed
withdrawals made.
There are issues that you should consider in choosing your death benefit
option. For example, under Options B and C, the cash value or other amounts are
added to the specified face amount. Therefore, the death benefit will generally
be greater under these options than under Option A, for Policies with the same
specified face amount and premium payments. By the same token, the cost of
insurance will generally be greater under Options B and C than under Option A.
You can change your death benefit option after the first Policy year, provided
that:
o Your cash surrender value after the change would be enough to pay at least
two monthly deductions.
o The specified face amount continues to be no less than the minimum we allow
after a decrease.
o The total premiums you have paid do not exceed the then current maximum
premium limitations permitted under Internal Revenue Service rules.
o You provide evidence satisfactory to us of the insured's insurability, as we
may require.
Any change will be effective on the monthly anniversary on or immediately
following the Date of Receipt of the request (or following the date we approve
it if we require evidence of insurability). A change in death benefit option
will cause us to automatically increase or decrease your specified face amount
so that the amount of the death benefit is not changed on the effective date of
the new death benefit option.
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Before you change your death benefit option you should consider the following:
o If the term insurance portion of your death benefit changes, as it may with a
change from Option A to B or C and vice versa, the term insurance charge
will also change. This will affect your cash value and, in some cases, the
death benefit levels.
o If your specified face amount changes because of the change in death benefit
option, consider also the issues presented by changing your specified face
amount that are described under "Specified Face Amount," below. These issues
include the possibility that your Policy would become a modified endowment
contract; that you would receive a taxable distribution; and that the
maximum premium amounts that you can pay would change.
MINIMUM DEATH BENEFIT
In no event will the Policy death benefit (plus the proceeds under any term
rider on the insured's life) be lower than the minimum amount required to
maintain the Policy as life insurance under the federal income tax laws as in
effect on the date your Policy is issued. We determine this minimum by applying
either the:
I. Cash Value Accumulation Test or
II. Guideline Premium/Cash Value Corridor Test.
You choose the Cash Value Accumulation Test or the Guideline Premium/Cash Value
Corridor Test before we issue your Policy, and the election cannot later be
changed. Under the Cash Value Accumulation Test, your death benefit is never
less than the amount of your Policy's cash value at the insured's date of
death, multiplied by a factor set forth in your Policy. This factor varies
depending upon the insured's age at the date of death, and it declines as the
insured grows older.
Under the Guideline Premium/Cash Value Corridor Test, there is a very similar
minimum death benefit based on your Policy's cash value at the date of death.
However, the factors set forth in your Policy are higher for the Guideline
Premium/Cash Value Corridor Test (which results in a higher minimum death
benefit, assuming the same cash value). Also, there are firm limits on the
amount of premiums you can pay for the amount of coverage you have in force
under the Guideline Premium/Cash Value Corridor Test, while the tax law imposes
no such firm limits under the Cash Value Accumulation Test.
Before choosing between these two Tests you should consider the following:
o The Cash Value Accumulation Test may allow you to pay a greater amount in
premiums for the same amount of death benefit under federal income tax laws
and still qualify as life insurance. This is the case because the Policy
will qualify as life insurance even though the Policy owner is paying a
higher level of premium than allowed under the Guideline Premium/Cash Value
Accumulation Test. However, the death benefit under the Cash Value
Accumulation Test (and thus the monthly cost of term insurance) could be
higher. You should ask for an illustration comparing results under both
tests. We reserve the right to return any premium to the extent it would
cause the death benefit to increase above certain limits.
o Increases in death benefits by operation of the Cash Value Accumulation Test
will result in a higher monthly cost of term insurance. Such increases can
also occur under the Guideline Premium/Cash Value Corridor Test, although
this is less likely.
o Any advantage of the Cash Value Accumulation Test may be eliminated if
premium payments exceed the 7-pay test limit. The 7-pay test sets a limit on
the amount of premiums which may be paid under a policy during the 7-pay
testing period (usually the first 7 Policy years after issue or after a
material modification of the Policy) without incurring possible adverse tax
consequences. If premiums paid exceed such limit during any 7-pay testing
period, any partial withdrawals, Policy loan and other distributions may be
subject to adverse federal income tax consequences. (See "Federal Tax
Matters--Modified Endowment Contracts" below.)
SPECIFIED FACE AMOUNT
CHOOSING YOUR INITIAL SPECIFIED FACE AMOUNT. The specified face amount is the
basic amount of insurance specified in your Policy. The Minimum Initial
Specified Face amount is the smallest amount of specified face amount for which
a Policy may be issued. Currently this amount is $100,000. If the term
27
insurance rider is purchased, the specified face amount and term rider amount
are combined to determine the Minimum Initial Specified Face Amount. You should
consider whether to take all of your coverage as specified face amount or
whether to take some coverage, if available, under our term insurance benefit.
The term insurance benefit provides coverage on the insured to age 95. You may
purchase this rider, if available, only at the time of Policy issue. By
electing to take part of your coverage under the term insurance rider, you can
reduce the amount of sales charges and current cost of insurance charges that
you otherwise would pay. For details, see "Optional Rider Benefits--Term
Benefit."
CHANGING YOUR SPECIFIED FACE AMOUNT. Generally, you may change your specified
face amount at any time after the first Policy year subject to certain criteria
specified below. Any change will be effective on: the monthly anniversary on or
next following the (a) Date of Receipt of your request; or (b) if we require
evidence of insurability, the date we approve your request.
The Specified Face Amount of insurance may not be reduced to less than $100,000
during the first five Policy years or to less than $50,000 after the fifth
Policy year. These minimums also apply to decreases that result from partial
withdrawals or changes in death benefit options. If there have been previous
specified face amount increases, any decreases in specified face amount will be
made in the following order: (i) the specified face amount provided by the most
recent increase; (ii) the next most recent increases successively; and (iii)
the initial specified face amount. You may increase the specified face amount
only if the cash surrender value after the change is large enough to cover at
least two monthly deductions based on your most recent cost of term insurance
charge. Any increase may require that we receive additional evidence of
insurability that is satisfactory to us. We may also impose a one-time
underwriting charge.
Before you change your specified face amount you should consider the following:
o The term insurance portion of your death benefit will change and so will the
term insurance charge. This will affect the insurance charges, cash value
and, in some cases, death benefit levels.
o Reducing your specified face amount may result in our returning an amount to
you which, if it occurs during the first 15 Policy years, could then be
taxed on an income first basis.
o The amount of additional premiums that the tax laws permit you to pay into
your Policy may increase or decrease. The additional amount you can pay
without causing your Policy to be a modified endowment contract for tax
purposes may also increase or decrease. (See "Tax Matters--Modified
Endowment Contracts.")
o In some circumstances, the Policy could become a modified endowment contract.
o For Policies issued on or after May 1, 1996 in connection with other than
certain employer sponsored plans that became effective prior to August 1,
2000, the sales charge and the administration charge may change. This is
because an increase or decrease in the specified face amount will result in
an increase or decrease in the annual target premium on which these charges
are based.
INCOME PLANS
Generally you can receive the policy's insurance proceeds, amounts payable at
the Final Date or amounts paid upon surrender under an income plan instead of
in a lump sum. The insurance proceeds can be paid under a variety of income
plans that are available under the Policy.
Generally, we currently make the following income plans available:
o Interest income
o Installment Income for a Stated Period
o Installment Income of a Stated Amount
o Single Life Income--Guaranteed Payment Period
o Single Life Income--Guaranteed Return
o Joint and Survivor Life Income
Before you choose an income plan you should consider:
o The tax consequences associated with the Policy proceeds, which can vary
considerably, depending on whether a plan is chosen. You or your beneficiary
should consult with a qualified tax adviser about tax consequences.
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o That your Policy will terminate at the time you commence an income plan and
you will receive a new contract, which describes the terms of the income
plan. You should carefully review the terms of the new contract, because it
contains important information about the terms and conditions of the income
plan.
o That the rates of return we credit under these plans are not based on the
investment performance of any of the Portfolios.
CASH VALUE, TRANSFERS AND WITHDRAWALS
CASH VALUE
Your Policy's CASH VALUE equals:
o The Fixed Account cash value, plus
o The Policy Loan Account cash value, plus
o The Separate Account cash value.
Your Policy's CASH SURRENDER VALUE equals your cash value minus any outstanding
Policy loans (plus any accrued and unpaid loan interest).
On your Investment Start Date, the Policy's cash value in an investment
division will equal the portion of any net premium allocated to the investment
division, reduced by the portion of any monthly deductions allocated to the
Policy's cash value in that investment division.
Thereafter, at the end of each Valuation Period the cash value in an investment
division will equal:
o The cash value in the investment division at the beginning of the Valuation
Period; plus
o All net premiums, loan repayments and cash value transfers into the
investment division during the Valuation Period; minus
o All partial cash withdrawals, loans and cash value transfers out of the
investment division during the Valuation Period; minus
o The portion of any charges and deductions allocated to the cash value in the
investment division during the Valuation Period; plus
o The net investment return for the Valuation Period on the amount of cash
value in the investment division at the beginning of the Valuation Period.
The net investment return currently equals the rate of increase or decrease
in the net asset value per share of the underlying Fund Portfolio over the
Valuation Period, adjusted upward to take appropriate account of any
dividends and other distributions paid by the Portfolio during the period.
CASH VALUE TRANSFERS
You can transfer your cash value among the investment divisions and the Fixed
Account at any time beginning after the end of the free look period. The
minimum amount you may transfer is $50 or, if less, the total amount in an
investment option. You may make transfers at any time. The maximum amount that
you may transfer or withdraw from the Fixed Account in any Policy year is the
greater of $50 and 25% of the largest amount in the Fixed Account over the last
four Policy years. Due to this limit, it could take a number of years to fully
transfer or withdraw a current balance from the Fixed Account. You should keep
this in mind when considering whether an allocation of cash value to the Fixed
Account is consistent with your risk tolerance and time horizon. This limit
does not apply to a full surrender, any loans taken, or any transfers under a
systematic investment strategy. We may also limit the number of investment
options to which you may transfer cash value, and, under certain conditions, we
may have to approve transfers to the Fixed Account. (See "Payment and
Allocation of Premiums--Allocating Net Premiums.")
RESTRICTIONS OF FREQUENT TRANSFERS. Frequent requests from Policy owners to
transfer cash value may dilute the value of a Portfolio's shares if the
frequent trading involves an attempt to take advantage of pricing
inefficiencies created by a lag between a change in the value of the securities
held by the Portfolio and the reflection of that change in the Portfolio's
share price ("arbitrage trading"). Frequent transfers involving arbitrage
trading may adversely affect the long-term performance of the Portfolios, which
may in turn adversely affect Policy owners and other persons who may have an
interest in the Policies (e.g., beneficiaries).
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We have policies and procedures that attempt to detect and deter frequent
transfers in situations where we determine there is a potential for arbitrage
trading. Currently, we believe that such situations may be presented in the
international, small-cap, and high-yield Portfolios. In addition, as
described below, we intend to treat all American Funds Insurance Series(R)
portfolios ("American Funds portfolios") as Monitored Portfolios. We monitor
transfer activity in the Portfolios below (the "Monitored Portfolios"):
AB VPS Global Thematic Growth Portfolio
AB VPS International Value Portfolio
American Funds High-Income Bond Fund
American Funds International Fund
Baillie Gifford International Stock Portfolio
Clarion Global Real Estate Portfolio
Emerging Markets Debt Portfolio
Emerging Markets Equity Portfolio
Franklin Mutual Global Discovery VIP Fund
Goldman Sachs Small Cap Equity Insights Fund
Harris Oakmark International Portfolio
High Income Portfolio
International Value Portfolio
Invesco Small Cap Growth Portfolio
Invesco V.I. International Growth Fund
JPMorgan Small Cap Value Portfolio
Loomis Sayles Small Cap Core Portfolio
Met/Aberdeen Emerging Markets Equity Portfolio
MetLife Small Cap Value Portfolio
MFS(R) Global Equity Series
MFS(R) High Yield Portfolio
MFS(R) New Discovery Series
MFS(R) Research International Portfolio
MSCI EAFE(R) Index Portfolio
Neuberger Berman Genesis Portfolio
Oppenheimer Global Equity Portfolio
Oppenheimer Main Street Small Cap Fund(R)/VA
Overseas Portfolio
Putnam VT International Value Fund
Royce Micro-Cap Portfolio
Royce Small-Cap Portfolio
Russell 2000(R) Index Portfolio
T. Rowe Price Small Cap Growth Portfolio
Templeton Foreign VIP Fund
Templeton Global Bond VIP Fund
Western Asset Management Strategic Bond Opportunities Portfolio
We employ various means to monitor transfer activity, such as examining the
frequency and size of transfers into and out of the Monitored Portfolios within
given periods of time. For example, we currently monitor transfer activity to
determine if, for each category of international, small-cap, and high-yield
Portfolios, in a 12-month period there were, (1) six or more transfers
involving the given category; (2) cumulative gross transfers involving the
given category that exceed the current cash value; and (3) two or more
"round-trips" involving any Monitored Portfolio in the given category. A
round-trip generally is defined as a transfer in followed by a transfer out
within the next seven calendar days or a transfer out followed by a transfer in
within the next seven calendar days, in either case subject to certain other
criteria. WE DO NOT BELIEVE THAT OTHER PORTFOLIOS PRESENT A SIGNIFICANT
OPPORTUNITY TO ENGAGE IN ARBITRAGE TRADING AND THEREFORE DO NOT MONITOR
TRANSFER ACTIVITY IN THOSE PORTFOLIOS. We may change the Monitored Portfolios
at any time without notice in our sole discretion.
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As a condition to making their portfolios available in our products, American
Funds requires us to treat all American Funds portfolios as Monitored
Portfolios under our current frequent transfer policies and procedures.
Further, American Funds requires us to impose additional specified monitoring
criteria for all American Funds portfolios available under the Policy,
regardless of the potential for arbitrage trading. We are required to monitor
transfer activity in American Funds portfolios to determine if there were two
or more transfers in followed by transfers out, in each case of a certain
dollar amount or greater, in any 30-day period. A first violation of the
American Funds monitoring policy will result in a written notice of violation;
each additional violation will result in the imposition of a six-month
restriction, during which period we will require all transfer requests to or
from an American Funds portfolio to be submitted with an original signature.
Further, as Monitored Portfolios, all American Funds portfolios also will be
subject to our current frequent transfer policies, procedures and restrictions
(described below), and transfer restrictions may be imposed upon a violation of
either monitoring policy.
Our policies and procedures may result in transfer restrictions being applied
to deter frequent transfers. Currently, when we detect transfer activity in the
Monitored Portfolios that exceeds our current transfer limits, we require
future transfer requests to or from any Monitored Portfolios under that Policy
to be submitted either (i) in writing with an original signature or (ii) by
telephone prior to 10:00 a.m. A first occurrence will result in the imposition
of this restriction for a six-month period; a second occurrence will result in
the permanent imposition of the restriction.
Transfers made under one of the systematic investment strategies described in
the prospectus are not treated as transfers when we monitor the frequency of
transfers.
The detection and deterrence of harmful transfer activity involves judgments
that are inherently subjective, such as the decision to monitor only those
Portfolios that we believe are susceptible to arbitrage trading, or the
determination of the transfer limits. Our ability to detect and/or restrict
such transfer activity may be limited by operational and technological systems,
as well as our ability to predict strategies employed by Policy owners to avoid
such detection. Our ability to restrict such transfer activity may also be
limited by provisions of the Policy. Accordingly, there is no assurance that we
will prevent all transfer activity that may adversely affect Policy owners and
other persons with interests in the Policies. We do not accommodate frequent
transfers in any Portfolios and there are no arrangements in place to permit
any Policy owner to engage in frequent transfers; we apply our policies and
procedures without exception, waiver, or special arrangement.
The Portfolios may have adopted their own policies and procedures with respect
to frequent transfers in their respective shares, and we reserve the right to
enforce these policies and procedures. For example, Portfolios may assess a
redemption fee (which we reserve the right to collect) on shares held for a
relatively short period. The prospectuses for the Portfolios describe any such
policies and procedures, which may be more or less restrictive than the
policies and procedures we have adopted. Although we may not have the
contractual authority or the operational capacity to apply the frequent
transfer policies and procedures of the Portfolios, we have entered into a
written agreement, as required by SEC regulation, with each Portfolio or its
principal underwriter that obligates us to provide to the Portfolio promptly
upon request certain information about the trading activity of individual
Policy owners, and to execute instructions from the Portfolio to restrict or
prohibit further purchases or transfers by specific Policy owners who violate
the frequent transfer policies established by the Portfolio.
In addition, Policy owners and other persons with interests in the Policies
should be aware that the purchase and redemption orders received by the
Portfolios generally are "omnibus" orders from intermediaries such as
retirement plans or separate accounts funding variable insurance contracts. The
omnibus orders reflect the aggregation and netting of multiple orders from
individual owners of variable insurance policies and/or individual retirement
plan participants. The omnibus nature of these orders may limit the Portfolios
in their ability to apply their frequent transfer policies and procedures. In
addition, the other insurance companies and/or retirement plans may have
different policies and procedures or may not have any such policies and
procedures because of contractual limitations. For these reasons, we cannot
guarantee that the Portfolios (and thus Policy owners) will not be harmed by
transfer activity relating to the other insurance companies and/or retirement
plans that may invest in the Portfolios. If a Portfolio believes that an
omnibus order reflects one or more transfer requests from Policy owners
engaged in frequent trading, the Portfolio may reject the entire omnibus order.
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In accordance with applicable law, we reserve the right to modify or terminate
the transfer privilege at any time. We also reserve the right to defer or
restrict the transfer privilege at any time that we are unable to purchase or
redeem shares of any of the Portfolios, including any refusal or restriction on
purchases or redemptions of their shares as a result of their own policies and
procedures on frequent transfers (even if an entire omnibus order is rejected
due to the frequent transfers of a single Policy owner). You should read the
Fund prospectuses for more details.
RESTRICTIONS ON LARGE TRANSFERS. Large transfers may increase brokerage and
administrative costs of the underlying Portfolios and may disrupt portfolio
management strategy, requiring a Portfolio to maintain a high cash position and
possibly resulting in lost investment opportunities and forced liquidations. We
do not monitor for large transfers to or from Portfolios except where the
manager of a particular underlying Portfolio has brought large transfer
activity to our attention for investigation on a case-by-case basis. For
example, some portfolio managers have asked us to monitor for "block transfers"
where transfer requests have been submitted on behalf of multiple owners by a
third party such as an investment adviser. When we detect such large trades, we
may impose restrictions similar to those described above where future transfer
requests from that third party must be submitted in writing with an original
signature. A first occurrence will result in the imposition of this restriction
for a six-month period; a second occurrence will result in the permanent
imposition of the restriction.
SYSTEMATIC INVESTMENT STRATEGIES. You can choose one of four currently
available strategies described below. You can also change or cancel your choice
at any time.
Equity Generator SM. Allows you to transfer the interest earned on amounts in
the Fixed Account in any Policy month equal to at least $20 to the MetLife
Stock Index investment division or the Frontier Mid Cap Growth investment
division. The transfer will be made at the beginning of the Policy month
following the Policy month in which the interest was earned.
Equalizer SM. Allows you to periodically equalize amounts in your Fixed Account
and either the MetLife Stock Index investment division or the Frontier Mid
Cap Growth investment division. We currently make equalization each quarter. We
will terminate this strategy if you make a transfer out of either of the
investment divisions or the Fixed Account. You may then reelect the Equalizer
on your next Policy anniversary.
Rebalancer SM. Allows you to periodically redistribute amounts in the Fixed
Account and investment divisions in the same proportion that the net premiums
are then being allocated. We currently make the redistribution at the
beginning of each quarter.
Allocator SM. Allows you to systematically transfer money from the BlackRock
Ultra-Short Term Bond investment division to the Fixed Account and/or any
investment division(s). When you elect the Allocator, you must have enough cash
value in the BlackRock Ultra-Short Term Bond investment division to enable the
election to be in effect for three months. The election can be to transfer each
month:
o A specific amount, until the cash value in the BlackRock Ultra-Short Term
Bond investment division is exhausted.
o A specific amount for a specific number of months.
o Amounts in equal installments until the total amount you have requested has
been transferred.
These transfer privileges allow you to take advantage of investment
fluctuations, but none assures a profit nor protects against a loss in
declining markets. Because the Allocator involves continuous investment in
securities regardless of the price levels of such securities, you should
consider your financial ability to continue purchases through periods of
fluctuating price levels.
TRANSFERS BY TELEPHONE: Subject to our frequent transfer procedures, we may, if
permitted by state law, decide in the future to allow you to make transfer
requests, changes to Systematic Investment Strategies and changes to
allocations of future net premium by phone. We may also allow you to authorize
your sales representative to make such requests. The following procedures would
apply:
o We must have received your authorization in writing satisfactory to us, to
act on instructions from any person that claims to be you or your sales
representative, as applicable, as long as that person follows our
procedures.
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o We will institute reasonable procedures to confirm that instructions we
receive are genuine. Our procedures will include receiving from the caller
your personalized data. Any telephone instructions that we reasonably
believe to be genuine are your responsibility, including losses arising from
such instructions. Because telephone transactions may be available to anyone
who provides certain information about you and your Policy, you should
protect that information. We may not be able to verify that you are the
person providing telephone instructions, or that you have authorized any
such person to act for you.
o All telephone calls will be recorded.
o You will receive a written confirmation of any transaction.
o Neither the Separate Account nor we will be liable for any loss, expense or
cost arising out of a telephone request if we reasonably believed the
request to be genuine.
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 sales 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 Designated Office.
SURRENDER AND WITHDRAWAL PRIVILEGES
You can surrender your Policy for its cash surrender value. We may ask you to
return the Policy before we honor your request to surrender your Policy. You
can choose to have the proceeds paid in a single sum, or under an income plan.
If the insured dies after you surrender the Policy but before the end of the
Policy month in which you surrendered the Policy, we will pay your beneficiary
an amount equal to the difference between the Policy's death benefit and its
cash value, computed as of the surrender date.
You can make partial withdrawals if:
o the withdrawal would not result in the cash surrender value being less than
sufficient to pay 2 monthly deductions;
o the withdrawal is at least $250;
o the withdrawal would not result in total premiums paid exceeding any then
current maximum premium limitation determined by Internal Revenue Code
rules; and
o the withdrawal would not result in your specified face amount falling below
the minimum allowable amount after a decrease, as described under "Insurance
Proceeds--Specified Amount--Changing Your Specified Face Amount," above.
If you make a request for a partial withdrawal that is not permitted, we will
tell you and you may then ask for a smaller withdrawal or surrender the Policy.
We will deduct your withdrawal from the Fixed Account and the investment
divisions in the same proportion that the Policy's cash value in each such
option bears to the total cash value of the Policy in the Fixed Account and the
investment divisions.
We may withhold payment of surrender, withdrawal or loan proceeds if any
portion of those proceeds would be derived from a check that has not yet
cleared (i.e., that could still be dishonored by your banking institution). We
may use telephone, fax, Internet or other means of communications to verify
that payment from the check has been or will be collected. We will not delay
payment longer than necessary for us to verify that payment has been or will be
collected. You may avoid the possibility of delay in the disbursement of
proceeds coming from a check that has not yet cleared by providing us with a
certified check.
Before surrendering your Policy or requesting a partial withdrawal, you should
consider the following:
o Amounts received may be taxable as income and, if your Policy is a modified
endowment contract, subject to certain tax penalties. (See "Tax
Matters--Modified Endowment Contracts.")
o Your Policy could become a modified endowment contract.
o For partial withdrawals, your death benefit will decrease, generally by the
amount of the withdrawal.
o For partial withdrawals, your specified face amount may also decrease. For
Option A Policies, your specified face amount will decrease by the amount of
the withdrawal. For Option B Policies, a withdrawal will not decrease the
specified face amount. For Option C Policies, your specified face amount
will decrease by the amount, if any, by which cumulative withdrawals exceed
cumulative premiums paid.
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In some cases you may be better off taking a Policy loan, rather than a partial
withdrawal.
BENEFIT AT FINAL DATE
The Final Date is the Policy anniversary on which the insured is Age 95.
Subject to certain conditions, we will allow you to extend that date where
permitted by state law. If the insured is living on the Final Date, we will pay
you the cash surrender value of the Policy. You can receive the cash surrender
value in a single sum, in an account that earns interest, or under an available
income plan.
LOAN PRIVILEGES
You can borrow from us and use your Policy as security for the loan. The amount
of each loan must be:
o At least $250.
o No more than the greater of the cash surrender value less two monthly
deductions and 75% of the cash surrender value (unless state law requires a
different percentage to be applied, as set forth in your Policy) when added
to all other outstanding Policy loans.
As of your loan request's Date of Receipt, we will:
o Remove an amount equal to the loan from your cash value in the Fixed Account
and each investment division of the Separate Account in the same proportion
as the Policy's cash value in each such option bears to the total cash value
of the Policy in the Fixed Account and the investment divisions.
o Transfer such cash value to the Policy loan account, where it will be
credited with interest at a rate equal to the loan rate charged less a
percentage charge, based on expenses associated with Policy loans,
determined by us. This percentage charge will not exceed 2%, and the minimum
rate we will credit to the Policy Loan Account will be 2.5% per year (4% for
Policies issued prior to February 24, 2012). At least once a year, we will
transfer any interest earned in your Policy loan account to the Fixed
Account and the investment divisions, according to the way that we then
allocate your net premiums.
o Charge you interest, which will accrue daily. We will tell you the initial
interest rate that applies to your loan and mail you advance notices of any
increases applicable to existing loans. The interest rate charged for a
Policy year will never be more than the maximum allowed by law and will
generally be the greater of:
o The published monthly average for the calendar month ending two months
before the start of such year; and
o The guaranteed rate used to credit interest to the cash value allocated to
the Fixed Account for the Policy, plus no more than 1%.
The published monthly average means (a) Moody's Corporate Bond Yield Average
Monthly Average Corporates, as published by Moody's Investors Service, Inc. or
any successor service; or (b) If the Moody's average is not published, a
substantially similar average established by regulation issued by the insurance
supervisory official of the state in which your Policy is delivered.
Your interest payments are due at the end of each Policy year and if you don't
pay the amount within 31 days after it is due, we will treat it as a new Policy
loan, which will be taken from the Fixed Account and the investment divisions
by the same method as other loans.
Repaying your loans (plus accrued interest) is done by sending in payments at
least equal to $25. You should designate whether a payment is intended as a
loan repayment or a premium payment, since we will treat any payment for which
no designation is made as a premium payment. We will allocate your repayment to
the Fixed Account and the investment divisions, in the same proportion that net
premiums are then allocated, except that amounts borrowed from the Fixed
Account will be repaid to the Fixed Account first.
Before taking a Policy loan you should consider the following:
o Interest payments on loans are generally not deductible for tax purposes.
o Under certain situations, Policy loans could be considered taxable
distributions.
o Amounts held in your Policy loan account do not participate in the investment
experience of the investment divisions or receive the interest rate credited
to the Fixed Account, either of which may be higher than the interest rate
credited on the amount you borrow.
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o If you surrender your Policy or if we terminate your Policy, or at the Final
Date, any outstanding loan amounts (plus accrued interest) will be taxed as
a distribution. (See "Federal Tax Matters--Loans" below.)
o A Policy loan increases the chances of our terminating your Policy due to
insufficient cash value. We will terminate your Policy with no value if: (a)
on a monthly anniversary your loans (plus accrued interest) exceed your cash
value minus the monthly deduction; and (b) we tell you of the insufficiency
and you do not make a sufficient payment within 61 days of the monthly
anniversary.
o Your Policy's death proceeds will be reduced by any unpaid loan (plus any
accrued and unpaid loan interest).
OPTIONAL RIDER BENEFITS
You may be eligible for certain benefits provided by rider, subject to certain
underwriting requirements and the payment of additional premiums. We will
deduct any charges for the rider(s) (other than the charge for the interim
term insurance rider) as part of the monthly deduction. Generally, we currently
make the following benefits available by rider:
o Accelerated Death Benefit 1 o Term Insurance Benefit 2
o Interim Term Insurance Benefit o Enhanced Cash Surrender Value Rider 3
1 Payment under this rider may affect eligibility for benefits under state or
federal law.
2 This rider is discussed in more detail under "Term Benefit" below.
3 This rider may be attached at issue if you request it, but not thereafter.
Each rider contains important information, including limits and conditions that
apply to the benefits. If you decide to purchase any of the riders, you should
carefully review their provisions to be sure the benefit is something that you
want.
You should also consider:
o That the addition of certain riders can restrict your ability to exercise
certain rights under the Policy.
o That the amount of benefits provided under the rider is not based on
investment performance of a separate account; but, if the Policy terminates
because of poor investment performance or any other reason, the rider
generally will also terminate.
o That there are tax consequences. You should consult with your tax adviser
before purchasing one of the riders.
TERM BENEFIT
You have the flexibility to include, at Policy issue, a rider that provides a
term benefit ("Term Rider"). The availability of the Term Rider is also subject
to governmental approval in your state.
The Term Rider is a rider to the Policy that, like the base Policy, provides
coverage on the insured to age 95. You may purchase this rider, if available,
only at Policy issue. Nevertheless, if you purchase the Term Rider, the amount
of coverage under the rider will automatically increase and decrease with any
changes to your specified face amount under the Policy, so that the ratio
between the Policy's specified face amount and the amount of Term Rider
coverage will always remain the same as you originally selected.
In almost all respects, coverage taken under the Term Rider has exactly the
same effect as coverage taken as specified face amount under the Policy. An
important difference, however, is that the sales charge depends on the amount
of the coverage provided under the base policy. The amount of Term Rider will
impact the sales charge. Thus, in comparing two Policies with identical total
insurance amounts, the one with the greater portion provided by the Term Rider
will have a lower sales charge. Conversely, the Policy with the higher amount
provided under the base policy will have a higher sales charge.
35
Additionally, the cost of term insurance rates currently applicable to coverage
provided under the Term Rider are lower than those currently charged for
coverage under the base policy. Therefore, the larger the portion of coverage
provided under the Term Rider, the lower the overall cost of insurance. Again
comparing two Policies with identical total insurance amounts, the cost of
insurance will be lower under the Policy with the higher portion of coverage
provided under the Term Rider.
To summarize, the lower sales charge and lower anticipated current cost of term
insurance rates resulting from a greater portion of total coverage provided by
the Term Rider will result in better overall performance under the Policy. You
may elect to have up to 95% of your total coverage provided by the Term Rider.
We are able to make these favorable terms available under the Term Rider
largely because our costs of selling it (principally the commissions we pay)
are lower than under the base policy. See "Sales of Policies".
CHARGES AND DEDUCTIONS
IMPORTANT INFORMATION APPLICABLE TO ALL POLICY CHARGES AND DEDUCTIONS
The charges discussed in the paragraphs that follow are all included in the Fee
Tables on pages 7 to 14 of this Prospectus. You should refer to these Fee
Tables for information about the rates and amounts of such charges, as well as
other information that is not covered below.
The Policy charges compensate us for the services and benefits we provide, the
costs and expenses we incur, and the risks we assume.
Services and benefits we provide:
o the death benefit, cash, and loan benefits under the Policy
o investment options, including premium allocations
o administration of elective options
o the distribution of reports to Policy owners
Costs and expenses we incur:
o costs associated with processing and underwriting applications, and with
issuing and administering the Policy (including any riders)
o overhead and other expenses for providing services and benefits
o sales and marketing expenses
o other costs of doing business, such as collecting premiums, maintaining
records, processing claims, effecting transactions, and paying federal,
state, and local premium and other taxes and fees
Risks we assume:
o that the cost of term insurance charges we may deduct are insufficient to
meet our actual claims because the insureds die sooner than we estimate
o that the charges of providing the services and benefits under the Policies
exceed the charges we deduct
We may profit from the charges, including the cost of term insurance charge and
the mortality and expense risk charge. Any distinctions we make about the
specific purposes of the different charges are imprecise, and we are free to
keep and use our revenues or profits for any other purpose, including paying
any of our costs and expenses in connection with the Policies. Our revenues
from any particular charge may be more or less than any costs or expenses that
charge may be intended primarily to cover. The following sets forth additional
information about Policy charges.
CHARGES DEDUCTED FROM PREMIUMS
ANNUAL TARGET PREMIUM. We use the concept of annual target premium to determine
certain limits on sales and administrative charges (discussed immediately
below). We define the annual target premium to be:
For Policies issued prior to May 1, 1996 or issued in connection with
certain employer sponsored plans that became effective prior to August 1,
2000, 50% of the estimated annual amount which satisfied the 7-Pay test
under federal tax law based on the issue age of the insured and the initial
specified face amount. (See "Federal Tax Matters--Modified Endowment
Contracts".)
36
For all other Policies, 100% of the estimated annual amount that satisfied
the 7-Pay test based on the issue age of the insured, the specified face
amount of insurance of the base Policy only (excluding the Term Rider) and
standard underwriting class. For such Policies, the annual target premium
amount is increased and decreased proportionately for increases and
decreases in the specified face amount of the Policy. This could, in turn,
increase or decrease sales and administrative charges.
SALES CHARGE. We deduct this charge primarily to help pay the cost of
compensating sales representatives and other direct and indirect expenses of
distributing the Policies. The charge is assessed directly against each
premium. For premiums received in Policy years 1 through 10, the current rate
is up to 6.5% of the premium paid until the total payments in each such year
equal the annual target premium, and for Policy years 11 and later the rate we
charge is up to 3% of each premium until the total payments in the year equal
the annual target premium. No sales charge is or will be assessed against any
premiums paid in any Policy year in excess of a total equal to the annual
target premium. The maximum rate we can charge for premiums received up to a
total equal to the annual target premium during Policy years 1 through 10 is
9%, and the maximum for Policy years 11 and later is the same as currently
charged in those years.
ADMINISTRATIVE CHARGE. We incur expenses in the administration of the Policy,
including our underwriting and start-up expenses. We deduct up to 1.05%
(currently, this deduction is .55% in Policy years 1-10) of each premium
payment primarily to cover this expense up to a total of payments in any Policy
year equal to the annual target premium, and .05% on any excess payments in any
Policy year exceeding that total amount. Our charge will never exceed this
rate.
CHARGE FOR AVERAGE EXPECTED STATE AND LOCAL TAXES ATTRIBUTABLE TO PREMIUMS. We
make this charge to reimburse us for the state premium taxes that we must pay
on premiums we receive. Premium taxes vary from state to state and currently
range from 0 to 3.5%. Our charge of 2.25% approximates the average tax rate we
expect to pay on premiums we receive from all states.
CHARGE FOR EXPECTED FEDERAL TAXES ATTRIBUTABLE TO PREMIUMS. Federal income tax
law requires us to pay certain amounts of taxes that are related to the amount
of premiums we receive. We deduct 1.2% of each premium payment to offset the
cost to us of those additional taxes, which may be more or less than the amount
we pay in respect of your premiums.
CHARGE FOR INTERIM TERM INSURANCE BENEFIT. This charge is deducted only from
your initial premium payment, and only if you elect the interim term insurance
benefit. The interim term insurance benefit provides temporary initial life
insurance coverage on the insured prior to the time that coverage under the
Policy takes effect. This coverage is provided by adding a "rider" and is
subject to several conditions and limitations. The charge for this benefit is
described in the rider form. This charge is primarily to compensate us for the
risk that the insured will die while coverage under this rider is in force.
LOAN INTEREST SPREAD. We charge interest on Policy loans but credit you with
interest on the amount of the cash value we hold as collateral for the loan.
The loan interest spread is the excess of the interest rate we charge over the
interest rate we credit. This charge is primarily to cover our expense in
providing the loan. The charge is guaranteed to never exceed 2%.
CHARGES INCLUDED IN THE MONTHLY DEDUCTION
We allocate the monthly deduction (except for the monthly mortality and expense
risk charge) among the Fixed Account and each investment division of the
Separate Account in the same proportion as the Policy's cash value in each such
option bears to the total cash value of the Policy in the Fixed Account and the
investment divisions. We deduct the monthly deductions as of each monthly
anniversary, commencing with the Date of Policy.
o COST OF TERM INSURANCE. This charge varies monthly based on many factors.
Each month, we determine the charge by multiplying your cost of insurance
rates by the term insurance amount. This is the amount that we are at risk
if the insured dies.
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The term insurance amount is the death benefit at the beginning of the
Policy month divided by a discount factor to account for an assumed return
during the month; minus the cash value at the beginning of the Policy month
after deduction of all other applicable charges. Factors that affect the
term insurance amount include the specified face amount, the cash value and
the death benefit option you choose (generally, the term insurance amount
will be higher for Options B and C).
The term insurance rate is based on our expectations as to future
experience, taking into account the insured's sex (if permitted by law and
applicable under your Policy), age, underwriting class and rate class. The
rates will never exceed the guaranteed rates. The guaranteed rates are based
on certain 2001 Commissioners Standard Ordinary Mortality Tables. For
Policies issued prior to January 1, 2009, the guaranteed rates are based on
the corresponding 1980 Commissioners Standard Ordinary Mortality Tables. Our
current rates are lower than the maximums in most cases. We review our rates
periodically and may adjust them, but we will apply the same rates to
everyone who has had their Policy for the same amount of time and who is the
same age, sex and rate class. As a general rule, the cost of insurance rate
increases each year you own your Policy, as the insured's age increases.
Rate class relates to the level of mortality risk we assume with respect to
an insured. It can be the standard rate class, or one that is higher (and
may be divided by smoking status). The insured's rate class will affect your
cost of term insurance.
You can also have more than one rate class in effect, if the insured's rate
class has changed and you change your specified face amount. A better rate
class will lower the cost of term insurance on your entire Policy and a
worse rate class will affect the portion of your cost of term insurance
charge attributable to the specified face amount increase.
o MORTALITY AND EXPENSE RISK CHARGE. We make this monthly charge primarily to
compensate us for mortality risks that insureds may live for a shorter
period than we expect; and expense risks that our issuing and administrative
expenses may be higher than we expect. This monthly charge is allocated
proportionately to the cash value in each investment division of the
Separate Account. The maximum rate we may charge is equivalent to an
effective annual rate of .90% of the cash value in the Separate Account.
CHARGES FOR CERTAIN OPTIONAL RIDER BENEFITS
The charge for an optional benefit that you add by rider to your Policy will
generally be deducted as part of the monthly deduction. This includes the
charge for the following rider:
o Term Benefit
The purpose of the charge for each rider is primarily to compensate us for our
direct and indirect costs and risks in providing that rider. The charge we
deduct for any such additional benefits you can add by rider is described in
the rider form.
VARIATIONS IN CHARGES
We may vary a charge by group, based on anticipated variations in our costs or
risks associated with the group or individuals in the group that the charge was
intended to cover. Our variations in the charges will be made in accordance
with our established and uniformly applied administrative procedures. We
consider a variety of factors in determining charges, including but not limited
to:
o The nature of the group and its organizational framework
o The method by which sales will be made to the individuals associated with the
group
o The facility by which premiums will be paid
o The group's capabilities with respect to administrative tasks
o Our anticipated persistency of the Policies
o The size of the group and the number or years it has been in existence
o The aggregate amount of premiums we expect to be paid on the Policies owned
by the group or by individuals associated with the group
Any variations in charges will be reasonable and will not be unfairly
discriminatory to the interests of any Policy owner.
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PORTFOLIO COMPANY CHARGES
Each of the Portfolios pays an investment management fee to its investment
manager. Each Portfolio also incurs other direct expenses. See the fuller
description contained in the Fee Table section of this Prospectus (also see the
Fund Prospectus and Statement of Additional Information referred to therein for
each Fund). You bear indirectly your proportionate share of the fees and
expenses of the Portfolios of each Fund that correspond to the Separate Account
investment divisions you are using.
OTHER CHARGES
ADDITIONAL TAXES. In general, we don't expect to incur federal, state or local
taxes upon the earnings or realized capital gains attributable to the assets in
the Separate Account relating to the cash surrender value of the Policies. If
we do incur such taxes, we reserve the right to charge cash value allocated to
the Separate Account for these taxes.
CASH VALUE TRANSFERS. We do not currently charge for any transfer amounts.
Except for transfers under Systematic Investment Strategies, we reserve the
right to assess up to a $25 charge in the future against all transfers.
Currently, transfers are not taxable transactions.
POLICY TERMINATION AND REINSTATEMENT
TERMINATION. We will terminate your Policy without any cash surrender value if:
o The cash surrender value is less than the monthly deduction; and
o We do not receive a sufficient premium payment within the 61-day grace period
to cover the monthly deduction. We will mail you notice if any grace period
starts.
Reinstatement: Upon your request, we will reinstate your Policy (without
reinstating any amounts in a Policy loan account), subject to certain terms and
conditions that the Policy provides. We must receive your request within 3
years (or any longer period required by state law) after the end of the grace
period and before the Final Date. You also must provide us:
o A written application for reinstatement (the date we approve the application
will be the effective date of the reinstatement).
o Evidence of insurability that we find satisfactory.
o An additional premium amount that the Policy prescribes for this purpose.
FEDERAL TAX MATTERS
The following is a brief summary of some tax rules that may apply to your
Policy. Such discussion does not purport to be complete or to cover every
situation. You must consult with and rely on the advice of your own tax or
ERISA counsel, especially where the Policy is being purchased in connection
with an employee benefit plan, such as a death benefit or deferred compensation
plan, or is being purchased for estate, tax planning or similar purposes. You
should also consult with your own tax adviser to find out how taxes can affect
your benefits and rights under your Policy. Such consultation is especially
important before you make unscheduled premium payments, change your specified
face amount, change your death benefit option, change coverage provided by
riders, take a loan or withdrawal, or assign or surrender the Policy. Under
current federal income tax law, the taxable portion of distributions from
variable life policies is taxed at ordinary income tax rates and does not
qualify for the reduced tax rate applicable to long-term capital gains and
dividends.
INSURANCE PROCEEDS
o Insurance proceeds are generally excludable from your beneficiary's gross
income to the extent provided in Section 101 of the Internal Revenue Code
("Code").
o In the case of employer-owned life insurance as defined in Section 101(j) of
the Code, the amount of the death benefit excludable from gross income is
limited to premiums paid unless the Policy falls within certain specified
exceptions and a notice and consent requirement is satisfied before the
Policy is issued. Certain specified exceptions are based on the status of an
employee as highly compensated, a director, or
39
recently employed. There are also exceptions for Policy proceeds paid to an
employee's heirs. These exceptions only apply if proper notice is given to
the insured employee and consent is received from the insured employee
before the issuance of the Policy. These rules apply to Policies issued
August 18, 2006 and later and also apply to policies issued before August
18, 2006 after a material increase in the death benefit or other material
change. An IRS reporting requirement applies to employer-owned life
insurance subject to these rules. Because these rules are complex and will
affect the tax treatment of death benefits, it is advisable to consult tax
counsel. The death benefit will also be taxable in the case of a
transfer-for-value unless certain exceptions apply.
o The death proceeds may be subject to federal estate tax: (i) if paid to the
insured's estate or (ii) if paid to a different beneficiary if the insured
possessed incidents of ownership at or within three years before death.
o If you die before the insured, the value of your Policy (determined under IRS
rules) is included in your estate and may be subject to federal estate tax.
o Whether or not any federal estate tax is due is based on a number of factors
including the estate size. Please consult your tax adviser for the
applicable estate tax rates.
o The insurance proceeds payable upon death of the insured will never be less
than the minimum amount required for the Policyissued on a standard risk
basis to be treated as life insurance under Section 7702 of the Internal
Revenue Code, as in effect on the date the Policy was issued. The rules with
respect to Policies issued on a substandard risk basis are not entirely
clear.
CASH VALUE (IF YOUR POLICY IS NOT A MODIFIED ENDOWMENT CONTRACT)
o You are generally not taxed on your cash value until you withdraw it or
surrender your Policy or receive a distribution (such as when your Policy
terminates on the Final Date). In these cases, you are generally permitted
to take withdrawals and receive other distributions up to the amount of
premiums paid without any tax consequences. However, withdrawals and other
distributions will be treated as gain subject to ordinary income tax after
you have received amounts equal to the total premiums you paid. Somewhat
different rules may apply if there is a death benefit reduction in the first
15 Policy years. Distributions during the first 15 Policy years accompanied
by a reduction in Policy benefits, including 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, are subject to different
tax rules and may be treated in whole or in part as taxable income.
LOANS
o Loan amounts you receive will generally not be subject to income tax, unless
your Policy is or becomes a modified endowment contract, is exchanged or
terminates.
o Interest on loans is generally not deductible. For businesses that own a
Policy, at least part of the interest deduction unrelated to the Policy may
be disallowed unless the insured is a 20% owner, officer, director or
employee of the business.
o If your Policy terminates (upon surrender, cancellation, lapse, the Final
Date or, in most cases, exchanges) while any Policy loan is outstanding, the
amount of the loan plus accrued interest thereon will be deemed to be a
"distribution" to you. Any such distribution will have the same tax
consequences as any other Policy distribution. Thus, there will generally be
federal income tax payable on the amount by which withdrawals and loans
exceed your remaining basis in the Policy. In the case of an exchange,
any outstanding Policy loan will generally be taxed to the extent of any
Policy gain. Please be advised that amounts borrowed and withdrawn reduce
the Policy's cash value and any remaining Policy cash value may be
insufficient to pay the income tax on your gains.
MODIFIED ENDOWMENT CONTRACTS
These contracts are life insurance policies where the premiums paid during the
first 7 years after the Policy is issued, or after a material change in the
Policy, exceeds tax law limits referred to as the "7-pay test." Material
changes in the Policy include changes in the level of benefits, receipt of an
unnecessary premium and certain other changes to your Policy after the issue
date. 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 most recent 7-pay testing period. Reductions in
benefits during a 7-pay testing period also may cause your Policy to become a
modified endowment contract. Generally, a life insurance
40
policy that is received in exchange for a modified endowment contract will also
be considered a modified endowment contract. The IRS has promulgated a
procedure for the correction of inadvertent modified endowment contracts that
may provide relief in limited circumstances.
Due to the flexibility of the Policies as to premiums and benefits, the
individual circumstances of each Policy will determine whether it is classified
as a Modified Endowment Contract.
If your Policy is considered a modified endowment contract the following
applies:
o The death benefit will still generally be income tax free to your
beneficiary, to the extent discussed above.
o Amounts withdrawn or distributed before the insured's death, including
(without limitation) loans taken from or secured by a Policy classified as a
modified endowment contact, assignments and pledges, are (to the extent of
any gain in your Policy) treated as income first and subject to income tax.
All modified endowment contracts you purchase from us and our affiliates
during the same calendar year are treated as a single contract for purposes
of determining the amount of any such income.
o An additional 10% income tax generally applies to the taxable portion of the
amounts you received before age 591/2 except if you are disabled or if the
distribution is part of a series of substantially equal periodic payments
for your life (or life expectancy) or the joint lives (or joint life
expectancies) of you and your beneficiary. The foregoing exceptions to the
10% additional tax generally do not apply to a Policy owner that is a
non-natural person, such as a corporation.
o If a Policy becomes a modified endowment contract, distributions that occur
during the Policy year 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.
DIVERSIFICATION
In order for your Policy to qualify as life insurance, we must comply with
certain diversification standards with respect to the investments underlying
the Policy. We believe that we satisfy and will continue to satisfy these
diversification standards. Inadvertent failure to meet these standards may be
able to be corrected. Failure to meet these standards would result in immediate
taxation to Policy owners of gains under their Policy. If Portfolio shares are
sold directly to tax-qualified retirement plans that later lose their
tax-qualified status, or to non-qualified plans, there could be adverse
consequences under the diversification rules.
INVESTOR CONTROL
In some circumstances, owners of variable policies who retain excessive
control over the investment of the underlying Separate Account assets may be
treated as the owners of those assets and may be subject to tax on income
produced by those assets. Although published guidance in this area does not
address certain aspects of the Policies, we believe that the Owner of a Policy
should not be treated as an owner of the assets in our Separate Account. We
reserve the right to modify the Policies to bring them into conformity with
applicable standards should such modification be necessary to prevent Owners of
the Policies from being treated as the owners of the underlying Separate
Account assets.
ESTATE, GIFT AND GENERATION-SKIPPING TRANSFER TAXES
The transfer of the Policy or the designation of a beneficiary may have
Federal, state, and/or local transfer and inheritance tax consequences,
including the imposition of gift, estate, and generation-skipping transfer
taxes. When the insured dies, the death proceeds will generally be includable
in the Policy owner's estate for purposes of the Federal estate tax if the
Policy owner was the insured. If the Policy owner was not the insured, the fair
market value of the Policy would be included in the Policy owner's estate upon
the Policy owner's death. The Policy would not be includable in the insured's
estate if the insured neither retained incidents of ownership at death nor had
given up ownership within three years before death.
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Moreover, under certain circumstances, the Internal Revenue Code may impose a
"generation-skipping transfer tax" when all or part of a life insurance policy
is transferred to, or a death benefit is paid to, an individual two or more
generations younger than the Policy owner. Regulations issued under the
Internal Revenue Code may require us to deduct the tax from your Policy, or
from any applicable payment, and pay it directly to the IRS.
Qualified tax advisers should be consulted concerning the estate and gift tax
consequences of Policy ownership and distributions under Federal, state and
local law. The individual situation of each Policy owner or beneficiary will
determine the extent, if any, to which Federal, state, and local transfer and
inheritance taxes may be imposed and how ownership or receipt of Policy
proceeds will be treated for purposes of Federal, state and local estate,
inheritance, generation-skipping transfer and other taxes.
In general, current rules provide for a $5 million estate, gift and
generation-skipping transfer tax exemption (as indexed for inflation) and a top
tax rate of 40 percent.
The complexity of the tax law, along with uncertainty as to how it might be
modified in coming years, underscores the importance of seeking guidance from a
qualified adviser to help ensure that your estate plan adequately addresses
your needs and those of your beneficiaries under all possible scenarios.
WITHHOLDING
To the extent that Policy distributions are taxable, they are generally subject
to withholding for the recipient's Federal income tax liability. Recipients can
generally elect however, not to have tax withheld from distributions.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
Policy Owners that are not U.S. citizens or residents will generally be subject
to U.S. federal withholding tax on taxable distributions from life insurance
policies at a 30% rate, unless a lower treaty rate applies. In addition,
Policy Owners may be subject to state and/or municipal taxes and taxes that may
be imposed by the Policy Owner's country of citizenship or residence.
Prospective purchasers that are not U.S. citizens or residents are advised to
consult with a qualified tax adviser regarding U.S. and foreign taxation with
respect to a Policy purchase.
BUSINESS USES OF POLICY
Businesses can use the Policies in various arrangements, including nonqualified
deferred compensation or salary continuation 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
contemplating a change to an existing Policy or purchasing the Policy for any
arrangement the value of which depends in part on its tax consequences, you
should consult a qualified tax adviser.
There may be an indirect tax upon the income in the Policy or the proceeds of a
Policy under the Federal corporate alternative minimum tax, if you are subject
to that tax.
The IRS has issued guidance on split dollar insurance plans. A tax adviser
should be consulted with respect to this guidance if you have purchased or are
considering the purchase of a Policy for a split dollar insurance plan.
The Sarbanes-Oxley Act of 2002 (the "Act"), which was signed into law on July
30, 2002, prohibits, with limited exceptions, publicly-traded companies,
including non-U.S. companies that have securities listed on exchanges in the
United States, from extending, directly or indirectly or through a subsidiary,
many types of personal loans to their directors or executive officers. It is
possible that this prohibition may be interpreted as applying to split-dollar
life insurance policies for directors and executive officers of such companies,
since at least some such arrangements can arguably be viewed as involving a
loan from the employer for at least some purposes.
Any affected business contemplating the payment of a premium on an existing
policy, or the purchase of a new policy in connection with a split dollar life
insurance arrangement should consult legal counsel.
42
Split dollar insurance plans that provide deferred compensation may be subject
to rules governing deferred compensation arrangements. Failure to adhere to
these rules will result in adverse tax consequences. A tax adviser should be
consulted with respect to such plans.
In the case of a business-owned Policy, the provisions of Section 101(j) of the
Code may limit the amount of the death benefit excludable from gross income
unless a specified exception applies and a notice and consent requirement is
satisfied, as discussed above.
CHANGES TO TAX RULES AND INTERPRETATIONS
Changes in applicable tax laws, rules and interpretations can adversely affect
the tax treatment of your Policy. These changes may take effect retroactively.
We reserve the right to amend the Policy in any way necessary to avoid any
adverse tax treatment. Examples of changes that could create adverse tax
consequences include:
o Possible taxation of cash value transfers between investment funds.
o Possible taxation as if you were the owner of your allocable portion of the
Separate Account's assets.
o Possible limits on the number of investment funds available or the frequency
of transfers among them.
o Possible changes in the tax treatment of Policy benefits and rights.
To the extent permitted under the federal tax law, we may claim the benefit of
certain foreign tax credits attributable to taxes paid by certain Funds to
foreign jurisdictions.
THE COMPANY'S INCOME TAXES
Under current federal income tax law we are not taxed on the Separate Account's
operations. Thus, currently we do not deduct a charge from the Separate Account
for company federal income taxes. (We do deduct a charge for federal taxes from
premiums.) We reserve the right to charge the Separate Account for any future
federal income taxes we may incur. Under current laws 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.
We may be entitled to certain tax benefits related to the assets of the
Separate Account. These tax benefits which may include foreign tax credits and
corporate dividends received deductions, are not passed back to the Separate
Account or to Policy owners since we are the owner of the assets from which the
tax benefits are derived.
RIGHTS WE RESERVE
We reserve the right to make certain changes if we believe the changes are in
the best interest of our Policy owners or would help carry out the purposes of
the Policy. We will make these changes in the manner permitted by applicable
law and only after getting any necessary owner and regulatory approval. We will
notify you of any changes that result in a material change in the underlying
investments in the investment divisions, and you will have a chance to transfer
out of the affected division (without charge). Some of the changes we may make
include:
o Operating the Separate Account in any other form that is permitted by
applicable law.
o Changes to obtain or continue exemptions from the 1940 Act.
o Transferring assets among investment divisions or to other separate accounts,
or our general account or combining or removing investment divisions from
the Separate Account.
o Substituting Fund shares in an investment division for shares of another
portfolio of a Fund or another fund or investment permitted by law.
o Changing the way we assess charges without exceeding the aggregate amount of
the Policy's guaranteed maximum charges.
o Making any necessary technical changes to the Policy to conform it to the
changes we have made.
Some such changes might require us to obtain regulatory or Policy owner
approval. Whether regulatory or Policy owner approval is required would depend
on the nature of the change and, in many cases, the manner in which the change
is implemented. You should not assume, therefore, that you necessarily will
have an opportunity to approve or disapprove any such changes. Circumstances
that could influence our
43
determination to make any change might include changes in law or
interpretations thereof; changes in financial or investment market conditions;
changes in accepted methods of conducting operations in the relevant market; or
a desire to achieve material operating economies or efficiencies.
OTHER POLICY PROVISIONS
FREE LOOK PERIOD
Carefully review your Policy, which contains a full discussion of all its
provisions. You can return the Policy during this period. The period ends on
the later of:
o 10 days after you receive the Policy (unless state law requires a longer
specified period); and
o the date we receive a receipt signed by you.
If you return your Policy, we will send you a complete refund of any premiums
paid (or cash value plus any charges deducted if state law requires) within
seven days.
FOR POLICIES ISSUED IN CALIFORNIA: If you are age 60 or older, you may cancel
the Policy within 30 days after you receive it. If you elected on the Policy
application to allocate 100% of your initial net premium to a money market
investment division, we will refund the premiums you paid; if you elected to
allocate your initial net premium to the other investment divisions and/or the
Fixed Account, we will refund the Policy's cash value.
SUICIDE
If the insured commits suicide within the first two Policy years (or any other
period required by state law), your beneficiary will receive all premiums paid
(without interest), less any outstanding loans (plus accrued interest) and
withdrawals taken. Similarly, we will pay the beneficiary only the cost of any
increase in specified face amount if the insured commits suicide within two
years of such increase.
ASSIGNMENT AND CHANGE IN OWNERSHIP
You can assign your Policy as collateral if you notify us in writing. The
assignment or release of the assignment is effective when it is recorded at the
Designated Office. We are not responsible for determining the validity of the
assignment or its release. Also, there could be serious adverse tax
consequences to you or your beneficiary, so you should consult with your tax
adviser before making any change of ownership or other assignment.
REPORTS
Generally, you will promptly receive statements confirming your significant
transactions such as:
o Change in specified face amount.
o Change in death benefit option.
o Transfers among investment divisions (including those through Systematic
Investment Strategies, which maybe confirmed quarterly).
o Partial withdrawals.
o Loan amounts you request.
o Loan repayments and premium payments.
If your premium payments are made through a systematic payment method, we will
not send you any confirmation in addition to the one you receive from your
employer.
We will also send you an annual statement generally within 30 days after a
Policy year. That statement will summarize the year's transactions and include
information on:
o Deductions and charges.
o Status of the death benefit.
o Cash and cash surrender values.
o Amounts in the investment divisions and Fixed Account.
o Status of Policy loans.
44
o Automatic loans to pay interest.
o Information on your modified endowment contract status (if applicable).
We will also send you a Fund's annual and semi-annual reports to shareholders.
WHEN YOUR REQUESTS BECOME EFFECTIVE
Generally, requests, premium payments and other instructions and notifications
are effective on the Date of Receipt. In those cases, the effective time is at
the end of the Valuation Period during which we receive them at our Designated
Office. (Some exceptions to this general rule are noted below and elsewhere in
this Prospectus.)
A Valuation Period is the period between two successive Valuation Dates. It
begins at the close of regular trading on the New York Stock Exchange on a
Valuation Date and ends at the close of regular trading on the New York Stock
Exchange on the next succeeding Valuation Date. The close of regular trading is
4:00 p.m., Eastern Time on most days.
The Valuation Date is each day on which the New York Stock Exchange is open for
trading.
Accordingly, if we receive your request, premium, or instructions after the
close of regular trading on the New York Stock Exchange, 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. These rules apply regardless
of the reason we did not receive your request, premium, or instructions by the
close of regular trading on the New York Stock Exchange, even if due to our
delay (such as a delay in answering your telephone call).
The end of the free look period is the effective time of the premium allocation
instructions you make in your Policy application (and any changes in allocation
or transfer requests you make on or before the end of the free look period).
Your Investment Start Date is the date the first net premium is applied to the
Fixed Account and/or the Separate Account and is the later of (1) the Date of
Policy and (2) the Date of Receipt of your first premium payment.
The effective date of your Systematic Investment Strategies will be that set
forth in the strategy chosen.
THIRD PARTY REQUESTS
Generally, we accept requests for transactions or information only from you.
Therefore, we reserve the right not to process transactions requested on your
behalf by your agent with a power of attorney or any other authorization. This
includes processing transactions by an agent you designate, through a power of
attorney or other authorization, who has the ability to control the amount and
timing of transfers for a number of other Policy owners, and who simultaneously
makes the same request or series of requests on behalf of other Policy owners.
EXCHANGE PRIVILEGE
If you decide that you no longer want to take advantage of the investment
divisions in the Separate Account, you may transfer all of your money into the
Fixed Account. No charge will be imposed on a transfer of your entire cash
value (or the cash value attributable to a specified face amount increase) to
the Fixed Account within the first 24 Policy months (or within 24 Policy months
after a specified face amount increase you have requested, as applicable). In
some states, in order to exercise your exchange privilege, you must transfer,
without charge, the Policy cash value (or the portion attributable to a
specified face amount increase) to a flexible premium fixed benefit life
insurance policy that we make available.
CYBERSECURITY
Our variable life insurance business is largely conducted through digital
communications and data storage networks and systems operated by us and our
service providers or other business partners (e.g., the Funds and the firms
involved in the distribution and sale of our variable life insurance policies).
For example, many routine operations, such as processing Policy owners'
requests and elections and day-to-day record keeping, are all executed through
computer networks and systems.
45
We have established administrative and technical controls and a business
continuity plan to protect our operations against cybersecurity breaches.
Despite these protocols, a cybersecurity breach could have a material, negative
impact on MetLife and the Separate Account, as well as individual Policy owners
and their Policies. Our operations also could be negatively affected by a
cybersecurity breach at a third party, such as a governmental or regulatory
authority or another participant in the financial markets.
Cybersecurity breaches can be intentional or unintentional events, and can
occur through unauthorized access to computer systems, networks or devices;
infection from computer viruses or other malicious software code; or attacks
that shut down, disable, slow or otherwise disrupt operations, business
processes or website access or functionality. Cybersecurity breaches can
interfere with our processing of Policy transactions, including the processing
of transfer orders from our website or with the Funds; impact our ability to
calculate cash values; cause the release and possible destruction of
confidential Policy owner or business information; or impede order processing
or cause other operational issues. Although we continually make efforts to
identify and reduce our exposure to cybersecurity risk, there is no guarantee
that we will be able to successfully manage this risk at all times.
SALES OF POLICIES
MetLife Investors Distribution Company ("MLIDC") is the principal underwriter
and distributor of the Policies. MLIDC, which is our affiliate, is registered
under the Securities Exchange Act of 1934 (the "'34 Act") as a broker-dealer
and is a member of the Financial Industry Regulatory Authority ("FINRA"). FINRA
provides background information about broker-dealers and their registered
representatives through FINRA BrokerCheck. You may contact the FINRA
BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org. An investor
brochure that includes information describing FINRA BrokerCheck is available
through the Hotline or on-line.
The Policies are sold through licensed life insurance sales representatives who
are associated with our affiliate MetLife Securities, Inc. ("MSI"). On February
29, 2016, MetLife, Inc. and Massachusetts Mutual Life Insurance Company
(MassMutual) announced they have entered into a definitive agreement for the
acquisition by MassMutual of MSI. The transaction is expected to close by
mid-2016, and is subject to certain closing conditions, including regulatory
approval. As a result of the transaction, MSI will no longer be affiliated with
Metropolitan Life Insurance Company. MSI is registered with the SEC as a
broker-dealer under the '34 Act and is also a member of FINRA. The Policies may
also be sold through licensed life insurance sales representatives associated
with unaffiliated broker-dealers with which MLIDC enters into a selling
agreement.
We reimburse MLIDC for expenses MLIDC incurs in distributing the Policies,
e.g., commissions payable to broker-dealers who sell the Policies, including
our affiliated broker-dealers. The payments described below do not result in a
charge against the Policy in addition to the charges already described
elsewhere in this prospectus. We may require all or part of the compensation to
be returned to us if you do not continue the Policy for at least five years.
MetLife sales representatives are sales representatives registered through MSI.
MetLife sales representatives may be career sales representatives who are
employees of MetLife or brokers who are not employees of MetLife. Our
affiliated sales representatives must meet a minimum level of sales production
in order to maintain their agent status with us. Sales representatives can meet
the minimum level of sales production through sales of proprietary and/or
non-proprietary products. (Proprietary products are those issued by us or our
affiliates.) However, sales representatives can meet a lower alternative
minimum level of sales production if the sales representative focuses on sales
of proprietary products. Therefore, a sales representative may have an
incentive to favor the sale of proprietary products. Moreover, because the
managers who supervise the representatives receive a higher level of
compensation based on sales of proprietary products, these sales managers have
an incentive to promote the sale of proprietary products.
Our affiliated sales representatives receive cash payments for the products
they sell and service based on a "gross dealer concession" model. A sales
representative is entitled to part or all of the gross dealer concession. The
percentage to which the representative is entitled is determined by a
sliding-scale formula that takes into account the total amount of proprietary
and non-proprietary products sold and serviced by the representative.
46
The gross dealer concession for the Policies varies based on the Policy year
and on whether the amount of premiums paid in a Policy year is greater or less
than the Policy's Target Premium. The Target Premium is shown in your Policy.
In the first Policy year, the gross dealer concession is 28% of premiums paid
up to the amount of the Target Premium, and 2.5% of premiums paid in excess of
the Target Premium; in Policy years 2 through 4, the gross dealer concession is
8.25% of premiums paid up to the amount of the Target Premium and 2.5% of any
excess; in Policy year 5 and later, the gross dealer concession is 2.5% of all
premiums paid; and in Policy year 8 and thereafter a gross dealer concession of
0.1% is paid on the Policy's cash value. Under alternative schedules that are
available, the gross dealer concession in the first Policy year ranges from 10%
to 21% premiums paid up to the Target Premium and 2% of any excess; in Policy
years 2 through 10, it ranges from 8.5% to 10% of premiums paid up to the
Target Premium and 1.5% of any excess; in Policy years 11 and later, it is 3%
of premiums paid up to the Target Premium and 1.5% of any excess; and in Policy
years 8 and thereafter, a gross dealer concession ranging from 0.1% to 0.15% is
paid on the Policy's cash value.
For Policies sold by representatives of unaffiliated broker-dealers, MLIDC pays
commissions to the broker-dealer with which the representative is registered.
The commissions paid to the broker-dealer are generally not expected to exceed,
on a present value basis, the aggregate amount of compensation that is paid
with respect to sales made through our sales representatives. (Total
compensation includes payments that we make to our business unit or the
business unit of our affiliate that is responsible for the operation of the
distribution systems through which the Policy is sold.) Broker-dealers pay
their sales representatives all or a portion of the commissions received for
their sales of the Policies. The portion of the commissions that the
broker-dealer passes through to its sales representatives is determined in
accordance with the broker-dealer's internal compensation program. Those
programs may also include other types of cash and non-cash compensation and
other benefits. Sales representatives of these broker-dealers may also receive
non-cash compensation pursuant to the firm's guidelines or directly from us or
MLIDC.
Our sales representatives and their managers may be eligible for additional
cash compensation, such as bonuses and expense allowances (that may be tied to
sales of specific products), equity awards (such as stock options), training
allowances, supplemental compensation, product level add-ons controlled at the
local and company levels, financing arrangements, special loan repayment
options, marketing support, medical and other insurance benefits, and
retirement benefits and other benefits. Since some of this additional
compensation, in particular, life insurance, disability and retirement
benefits, is based primarily on the amount of proprietary products sold, sales
representatives and their managers have an incentive to favor the sale of
proprietary products. Sales representatives who meet certain productivity,
persistency, and length of service standards and/or their managers may be
eligible for additional cash compensation. Moreover, managers may be eligible
for additional cash compensation based on the sales production of the sales
representatives that the manager supervises. The business unit responsible for
the operation of our distribution system is also eligible to receive an amount
of compensation.
MetLife sales representatives and their managers (and the sales representatives
and managers of our affiliates) are also eligible for various non-cash
compensation programs that we offer such as conferences, trips, prizes, and
awards. Other payments may be made for other services that do not directly
involve the sale of products. These services may include the recruitment and
training of personnel, production of promotional literature, and similar
services.
MLIDC also enters into selling agreements with other unaffiliated
broker-dealers for the sale of the Policies and other variable insurance
products, i.e., annuity contracts and life insurance policies, that we and our
affiliates issue. MLIDC may pay additional compensation to certain of these
broker-dealers, including marketing allowances, introduction fees, persistency
payments, preferred status fees and industry conference fees. Marketing
allowances are periodic payments to certain broker-dealers, the amount of which
depends on cumulative periodic (usually quarterly) sales of our insurance
products (including the Policies) and may also depend on meeting thresholds in
the sale of certain of our insurance products (other than the Policies). They
may also include payments we make to cover the cost of marketing or other
support services provided for or by registered representatives who may sell our
products. Introduction fees are payments to broker-dealers in connection with
the addition of these variable products to the broker-dealer's line of
investment products, including expenses relating to establishing the data
communications systems necessary for the broker-dealer to offer, sell and
administer these products. Persistency payments are periodic payments based on
account and/or cash values of these variable insurance products. Preferred
status fees are paid to obtain preferred treatment of these products in
broker-dealers' marketing programs,
47
which may include marketing services, participation in marketing meetings,
listings in data resources and increased access to their sales representatives.
Industry conference fees are amounts paid to cover in part the costs associated
with sales conferences and educational seminars for broker-dealers' sales
representatives.
The additional types of compensation discussed above are not offered to all
broker-dealers. The terms of any particular agreement governing compensation
may vary among broker-dealers and the amounts may be significant. We and MLIDC
may enter into similar arrangements with our affiliate MSI. The prospect of
receiving, or the receipt of, additional compensation as described above may
provide broker-dealers or their representatives with an incentive to favor
sales of the Policies over other variable insurance policies (or other
investments) with respect to which the broker-dealer does not receive
additional compensation, or lower levels of additional compensation. You may
wish to take such payment arrangements into account when considering and
evaluating any recommendation relating to the Policies. For more information
about any such arrangements, ask your sales representative for further
information about what your sales representative and the broker-dealer for
which he or she works may receive in connection with your purchase of a Policy.
We retain consultants who provide technical training and sales support to
MetLife and our other affiliated sales representatives with respect to certain
business planning strategies that may involve the sale of life insurance. We
pay these consultants fees that are not conditioned on the sale of any
insurance products. These consultants may also provide services directly to our
clients for a fee.
LEGAL PROCEEDINGS
In the ordinary course of business, MetLife, similar to other life insurance
companies, is involved in lawsuits (including class action lawsuits),
arbitrations and other legal proceedings. Also, from time to time, state and
federal regulators or other officials conduct formal and informal examinations
or undertake other actions dealing with various aspects of the financial
services and insurance industries. In some legal proceedings involving
insurers, substantial damages have been sought and/or material settlement
payments have been made.
It is not possible to predict with certainty the ultimate outcome of any
pending legal proceeding or regulatory action. However, MetLife does not
believe any such action or proceeding will have a material adverse effect upon
the Separate Account or upon the ability of MetLife Investors Distribution
Company to perform its contract with the Separate Account or of MetLife to meet
its obligations under the Policies.
RESTRICTIONS ON FINANCIAL TRANSACTIONS
Applicable laws designed to counter terrorism and prevent money laundering
might, in certain circumstances, require us to reject a premium payment and/ or
block or "freeze" your Policy. If these laws apply in a particular situation,
we would not be allowed to process any request for withdrawals, surrenders, or
death benefits, make transfers, or continue making payments under your death
benefit option until instructions are received from the appropriate regulator.
We also may be required to provide additional information about you or your
Policy to government regulators.
FINANCIAL STATEMENTS
The financial statements comprising each of the Investment Divisions of the
Separate Account and the financial statements of MetLife can be found in the
Statement of Additional Information. Our financial statements should be
considered only as bearing upon our ability to meet our obligations under the
Policy.
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APPENDIX A
ADDITIONAL INFORMATION REGARDING THE FUNDS
Certain Portfolios were subject to a name change, merger or liquidation. The
chart below identifies the former name and new name of these Portfolios, and
where applicable, the former name and new name of the Fund of which the
Portfolio is a part.
PORTFOLIO/FUND NAME CHANGES
FORMER NAME NEW NAME
------------------------------------------- -----------------------------------------------
MET INVESTORS SERIES TRUST MET INVESTORS SERIES TRUST
MFS(R) Emerging Markets Equity Portfolio Met/Aberdeen Emerging Markets Equity Portfolio
WMC Large Cap Research Portfolio Met/Wellington Large Cap Research Portfolio
METROPOLITAN SERIES FUND METROPOLITAN SERIES FUND
BlackRock Money Market Portfolio BlackRock Ultra-Short Term Bond Portfolio
WMC Balanced Portfolio Met/Wellington Balanced Portfolio
WMC Core Equity Opportunities Portfolio Met/Wellington Core Equity Opportunities
Portfolio
TRUST NAME CHANGE
FORMER NAME NEW NAME
---------------------------------------- ------------------------------------------
WELLS FARGO VARIABLE TRUST WELLS FARGO FUNDS
VT Total Return Bond Fund VT Total Return Bond Fund
PORTFOLIO MERGER
FORMER PORTFOLIO/FUND NEW PORTFOLIO/FUND
--------------------------------------- -----------------------------------------
MET INVESTORS SERIES TRUST METROPOLITAN SERIES FUND
Lord Abbett Bond Debenture Portfolio Western Asset Management Strategic Bond
Opportunities Portfolio
Pioneer Fund Portfolio Met/Wellington Core Equity Opportunities
Portfolio
PORTFOLIO LIQUIDATION
FORMER PORTFOLIO/FUND NEW PORTFOLIO/FUND
------------------------------------ ---------------------------------------------
WELLS FARGO FUNDS FIDELITY(R) VARIABLE INSURANCE FUNDS
VT Total Return Bond Fund Government Money Market Portfolio
49
In order to help you understand how the Policy's values would vary over time
under different sets of assumptions, we will provide you with personalized
illustrations of death benefits, cash surrender values and cash values upon
request. These will be based on the age and insurance risk characteristics of
the person insured under the Policy and such factors as the specified face
amount, premium payment amounts and rates of return (within limits) that you
request. You can request such illustrations at any time without charge. We have
filed an example of such an illustration as an exhibit to the registration
statement referred to below.
Additional information about the Policy and the Separate Account can be found
in the Statement of Additional Information. This Prospectus incorporates by
reference all of the information contained in the Statement of Additional
Information, which is legally part of this Prospectus. You may obtain, without
charge, a copy of the Statement of Additional Information or a personalized
illustration of death benefits, cash surrender values and cash values, by
calling us at 1-908-253-1400 or contacting us through our website at
www.metlife.com/sbr.
Information about the Policy and the Separate Account, including the Statement
of Additional Information, is available for viewing and copying at the SEC's
Public Reference Room in Washington, D.C. Information about the operation of
the public reference room may be obtained by calling the SEC at 202-942-8090.
The Statement of Additional Information, reports and other information about
the Separate Account are available on the SEC Internet site as www.sec.gov.
Copies of this information may be obtained upon payment of a duplicating fee,
by writing to the SEC's Public Reference Section at 100 F Street, NE,
Washington, DC 20549.
811-06025
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