0001193125-17-158021.txt : 20170504
0001193125-17-158021.hdr.sgml : 20170504
20170504125004
ACCESSION NUMBER: 0001193125-17-158021
CONFORMED SUBMISSION TYPE: 497
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20170504
DATE AS OF CHANGE: 20170504
EFFECTIVENESS DATE: 20170504
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: 333-147508
FILM NUMBER: 17812954
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
C000058203
Equity Advantage VUL (MetLife)
497
1
d309602d497.txt
EQUITY ADVANTAGE VUL
EQUITY ADVANTAGE VUL
Flexible Premium
Variable Life Insurance Policies
Issued by
Metropolitan Life Separate Account UL of
Metropolitan Life Insurance Company
MAY 1, 2017
This prospectus describes individual flexible premium variable life
insurance policies (the "Policies") issued by Metropolitan Life Insurance
Company ("MetLife"). The Policies are no longer offered for sale.
You allocate net premiums among the Investment Divisions of Metropolitan
Life Separate Account UL (the "Separate Account"). Each Investment Division of
the Separate Account invests in shares of one of the following "Portfolios":
AMERICAN FUNDS INSURANCE SERIES(R) -- CLASS 2
American Funds Bond Fund
American Funds Global Small Capitalization Fund
American Funds Growth Fund
American Funds Growth-Income Fund
BRIGHTHOUSE FUNDS TRUST I (FORMERLY MET INVESTORS SERIES TRUST)
AB Global Dynamic Allocation Portfolio -- Class B
Allianz Global Investors Dynamic Multi-Asset Plus Portfolio -- Class B
American Funds(R) Balanced Allocation Portfolio -- Class B
American Funds(R) Growth Allocation Portfolio -- Class B
American Funds(R) Moderate Allocation Portfolio -- Class B
AQR Global Risk Balanced Portfolio -- Class B
BlackRock Global Tactical Strategies Portfolio -- Class B
Brighthouse Asset Allocation 100 Portfolio (formerly MetLife Asset Allocation
100 Portfolio) -- Class A
Brighthouse Balanced Plus Portfolio (formerly MetLife Balanced Plus Portfolio)
-- Class B
Brighthouse/Aberdeen Emerging Markets Equity Portfolio (formerly Met/Aberdeen
Emerging Markets Equity Portfolio) -- Class A
Brighthouse/Templeton International Bond Portfolio (formerly Met/Templeton
International Bond Portfolio) -- Class A
Brighthouse/Wellington Large Cap Research Portfolio (formerly Met/Wellington
Large Cap Research Portfolio) -- Class A
Clarion Global Real Estate Portfolio -- Class A
ClearBridge Aggressive Growth Portfolio -- Class A
Harris Oakmark International Portfolio -- Class A
Invesco Balanced-Risk Allocation Portfolio -- Class B
Invesco Mid Cap Value Portfolio -- Class A
Invesco Small Cap Growth Portfolio -- Class A
JPMorgan Global Active Allocation Portfolio -- Class B
JPMorgan Small Cap Value Portfolio -- Class A
Loomis Sayles Global Markets Portfolio -- Class A
MetLife Multi-Index Targeted Risk Portfolio -- Class B
MFS(R) Research International Portfolio -- Class A
Morgan Stanley Mid Cap Growth Portfolio -- Class A
Oppenheimer Global Equity Portfolio -- Class A
PanAgora Global Diversified Risk Portfolio -- Class B
PIMCO Inflation Protected Bond Portfolio -- Class A
PIMCO Total Return Portfolio -- Class A
Pyramis(R) Managed Risk Portfolio -- Class B
Schroders Global Multi-Asset Portfolio -- Class B
SSGA Growth and Income ETF Portfolio -- Class A
SSGA Growth ETF Portfolio -- Class A
T. Rowe Price Mid Cap Growth Portfolio -- Class A
BRIGHTHOUSE FUNDS TRUST II (FORMERLY METROPOLITAN SERIES FUND) -- CLASS A
Baillie Gifford International Stock Portfolio
BlackRock Bond Income Portfolio
BlackRock Capital Appreciation Portfolio
BlackRock Large Cap Value Portfolio
Brighthouse Asset Allocation 20 Portfolio (formerly MetLife Asset Allocation 20
Portfolio)
Brighthouse Asset Allocation 40 Portfolio (formerly MetLife Asset Allocation 40
Portfolio)
Brighthouse Asset Allocation 60 Portfolio (formerly MetLife Asset Allocation 60
Portfolio)
Brighthouse Asset Allocation 80 Portfolio (formerly MetLife Asset Allocation 80
Portfolio)
Brighthouse/Artisan Mid Cap Value Portfolio (formerly Met/
Artisan Mid Cap Value Portfolio)
Brighthouse/Wellington Balanced Portfolio (formerly Met/
Wellington Balanced Portfolio)
Brighthouse/Wellington Core Equity Opportunities Portfolio (formerly
Met/Wellington Core Equity Opportunities Portfolio)
Frontier Mid Cap Growth Portfolio
Jennison Growth Portfolio
Loomis Sayles Small Cap Core Portfolio
Loomis Sayles Small Cap Growth Portfolio
MetLife Aggregate Bond Index Portfolio (formerly Barclays Aggregate Bond Index
Portfolio)
MetLife Mid Cap Stock Index Portfolio
MetLife MSCI EAFE(R) Index Portfolio (formerly MSCI EAFE(R) Index Portfolio)
MetLife Russell 2000(R) Index Portfolio (formerly Russell 2000(R) Index
Portfolio)
MetLife Stock Index Portfolio
MFS(R) Total Return Portfolio
MFS(R) Value Portfolio
Neuberger Berman Genesis Portfolio
T. Rowe Price Large Cap Growth Portfolio
T. Rowe Price Small Cap Growth Portfolio
VanEck Global Natural Resources Portfolio
Western Asset Management Strategic Bond Opportunities Portfolio
Western Asset Management U.S. Government Portfolio
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST -- CLASS 2
Franklin Income VIP Fund
Franklin Mutual Shares VIP Fund
You may also allocate net premiums to our Fixed Account. Special limits
may apply to Fixed Account transfers and withdrawals.
You receive Fixed Account performance until 20 days after we apply your
initial premium payment to the Policy. Thereafter, we invest the Policy's cash
value according to your instructions.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE POLICIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
WE DO NOT GUARANTEE HOW ANY OF THE INVESTMENT DIVISIONS OR PORTFOLIOS WILL
PERFORM. THE POLICIES AND THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY.
TABLE OF CONTENTS
PAGE
-----
SUMMARY OF BENEFITS AND RISKS............................................... A-5
Benefits of the Policy................................................... A-5
Risks of the Policy...................................................... A-6
Risks of the Portfolios.................................................. A-8
FEE TABLES.................................................................. A-8
Transaction Fees......................................................... A-8
Periodic Charges other than Portfolio Operating Expenses................. A-9
Annual Portfolio Operating Expenses...................................... A-12
THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS........................ A-18
The Company.............................................................. A-18
The Separate Account..................................................... A-18
The Portfolios........................................................... A-18
Share Classes of the Portfolios.......................................... A-23
Certain Payments We Receive with Regard to the Portfolios................ A-23
Selection of the Portfolios.............................................. A-24
Voting Rights............................................................ A-25
Rights Reserved by MetLife............................................... A-25
THE POLICIES................................................................ A-25
Purchasing a Policy...................................................... A-25
Replacing Existing Insurance............................................. A-26
Policy Owner and Beneficiary............................................. A-26
24 Month Conversion Right................................................ A-26
Exchange Right........................................................... A-27
PREMIUMS.................................................................... A-27
Flexible Premiums........................................................ A-27
Amount Provided for Investment under the Policy.......................... A-27
Right to Examine Policy.................................................. A-28
Allocation of Net Premiums............................................... A-28
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE....... A-28
Cybersecurity............................................................ A-29
Payment of Proceeds...................................................... A-30
CASH VALUE.................................................................. A-31
DEATH BENEFITS.............................................................. A-31
Death Proceeds Payable................................................... A-32
Change in Death Benefit Option........................................... A-33
Increase in Face Amount.................................................. A-33
Reduction in Face Amount................................................. A-33
SURRENDERS AND PARTIAL WITHDRAWALS.......................................... A-34
Surrender................................................................ A-34
Partial Withdrawal....................................................... A-34
TRANSFERS................................................................... A-36
Transfer Option.......................................................... A-36
AUTOMATED INVESTMENT STRATEGIES............................................. A-38
LOANS....................................................................... A-39
A-3
PAGE
-----
LAPSE AND REINSTATEMENT................................................................... A-40
Lapse.................................................................................. A-40
Reinstatement.......................................................................... A-41
ADDITIONAL BENEFITS BY RIDER.............................................................. A-41
THE FIXED ACCOUNT......................................................................... A-42
General Description.................................................................... A-42
Values and Benefits.................................................................... A-42
Policy Transactions.................................................................... A-43
CHARGES................................................................................... A-43
Deductions from Premiums............................................................... A-44
Surrender Charge....................................................................... A-44
Partial Withdrawal Charge.............................................................. A-45
Transfer Charge........................................................................ A-45
Illustration of Benefits Charge........................................................ A-46
Monthly Deduction from Cash Value...................................................... A-46
Loan Interest Spread................................................................... A-48
Charges Against the Portfolios and the Investment Divisions of the Separate Account.... A-48
TAX CONSIDERATIONS........................................................................ A-48
Introduction........................................................................... A-48
Tax Status of the Policy............................................................... A-49
Tax Treatment of Policy Benefits....................................................... A-49
MetLife's Income Taxes................................................................. A-53
DISTRIBUTION OF THE POLICIES.............................................................. A-53
LEGAL PROCEEDINGS......................................................................... A-54
RESTRICTIONS ON FINANCIAL TRANSACTIONS.................................................... A-55
FINANCIAL STATEMENTS...................................................................... A-55
GLOSSARY.................................................................................. A-56
APPENDIX A: GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST....................... A-57
A-4
SUMMARY OF BENEFITS AND RISKS
This summary describes the Policy's important benefits and risks. The
sections in the prospectus following this summary discuss the Policy in more
detail. The Glossary at the end of the prospectus defines certain words and
phrases used in this prospectus.
BENEFITS OF THE POLICY
----------------------
DEATH PROCEEDS. The Policy is designed to provide insurance protection.
Upon receipt of satisfactory proof of the death of the insured, we pay death
proceeds to the beneficiary of the Policy. Death proceeds generally equal the
death benefit on the date of the insured's death plus any additional insurance
provided by rider, less any outstanding loan and accrued loan interest.
CHOICE OF DEATH BENEFIT OPTION. You may choose among three death benefit
options:
-- a level death benefit that equals the Policy's face amount,
-- a variable death benefit that equals the Policy's face amount plus the
Policy's cash value, and
-- a combination variable and level death benefit that equals the Policy's
face amount plus the Policy's cash value until the insured attains age
65 and equals the Policy's face amount thereafter.
The death benefit under any option could increase to satisfy Federal tax
law requirements if the cash value reaches certain levels. After the first
Policy year you may change your death benefit option, subject to our
underwriting rules. A change in death benefit option may have tax consequences.
PREMIUM FLEXIBILITY. You can make premium payments based on a schedule you
determine, subject to some limits. You may change your payment schedule at any
time or make a payment that does not correspond to your schedule. We can,
however, limit or prohibit payments in some situations.
RIGHT TO EXAMINE THE POLICY. During the first ten days following your
receipt of the Policy, you have the right to return the Policy to us. If you
exercise this right, we will refund the premiums you paid.
INVESTMENT OPTIONS. You can allocate your net premiums and cash value
among your choice of sixty-seven Investment Divisions in the Separate Account,
each of which corresponds to a mutual fund portfolio, or "Portfolio." The
Portfolios available under the Policy include several common stock funds,
including funds which invest primarily in foreign securities, as well as bond
funds, balanced funds, asset allocation funds and funds that invest in
exchange-traded funds. You may also allocate premiums and cash value to our
Fixed Account which provides guarantees of interest and principal. You may
change your allocation of future premiums at any time.
PARTIAL WITHDRAWALS. You may withdraw cash surrender value from your
Policy at any time after the first Policy anniversary. The minimum amount you
may withdraw is $500. We reserve the right to limit partial withdrawals to no
more than 90% of the Policy's cash surrender value. We may limit the number of
partial withdrawals to 12 per Policy year or impose a processing charge of $25
for each partial withdrawal. Partial withdrawals may have tax consequences.
TRANSFERS AND AUTOMATED INVESTMENT STRATEGIES. You may transfer your
Policy's cash value among the Investment Divisions or between the Investment
Divisions and the Fixed Account. The minimum amount you may transfer is $50, or
if less, the total amount in the Investment Division or the Fixed Account. We
may limit the number of transfers among the Investment Divisions and the Fixed
Account to no more than four per Policy year. We may impose a processing charge
of $25 for each transfer. We may also impose restrictions on frequent
transfers. (See "Transfers" for additional information on such restrictions.)
We offer five automated investment strategies that allow you to periodically
transfer or reallocate your cash value among the Investment Divisions and the
Fixed Account. (See "Automated Investment Strategies.")
LOANS. You may borrow from the cash value of your Policy. The minimum
amount you may borrow is $500. The maximum amount you may borrow is an amount
equal to the Policy's cash value net of the Surrender Charge, reduced by
Monthly Deductions and interest charges through the next Policy anniversary,
increased by interest credits through the next Policy anniversary, less any
existing Policy loans. We charge you a maximum annual interest rate of 4.0% for
the first ten Policy years and 3.0% thereafter. We credit interest at an annual
rate of at least 3.0% on amounts we hold as collateral to support your loan.
Loans may have tax consequences. (See "Loans" for additional information.)
A-5
SURRENDERS. You may surrender the Policy for its cash surrender value at
any time. Cash surrender value equals the cash value reduced by any Policy loan
and accrued loan interest and by any applicable Surrender Charge. A surrender
may have tax consequences.
TAX BENEFITS. We anticipate that the Policy should be deemed to be a life
insurance contract under Federal tax law. Accordingly, undistributed increases
in cash value should not be taxable to you. As long as your Policy is not a
modified endowment contract, partial withdrawals should be non-taxable until
you have withdrawn an amount equal to your total investment in the Policy.
However, different rules apply in the first fifteen Policy years, when
distributions accompanied by benefit reductions may be taxable prior to a
complete withdrawal of your investment in the Policy. Always confirm in advance
the tax consequences of a particular withdrawal with a qualified tax adviser.
Death benefits paid to your beneficiary should generally be free of Federal
income tax. Death benefits may be subject to estate taxes. 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.
CONVERSION RIGHT. During the first two Policy years, you may convert the
Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit
life insurance policy that we agree to, and that is issued by us or an
affiliate that we name. We will make the exchange without evidence of
insurability.
SUPPLEMENTAL BENEFITS AND RIDERS. We offer a variety of riders that
provide supplemental benefits under the Policy. We generally deduct any monthly
charges for these riders as part of the Monthly Deduction. Your registered
representative can help you determine whether any of these riders are suitable
for you.
PERSONALIZED ILLUSTRATIONS. You will receive personalized illustrations in
connection with the purchase of this Policy that reflect your own particular
circumstances. These hypothetical illustrations may help you to understand the
long-term effects of different levels of investment performance, the
possibility of lapse, and the charges and deductions under the Policy. They
will also help you to compare this Policy to other life insurance policies. The
personalized illustrations are based on hypothetical rates of return and are
not a representation or guarantee of investment returns or cash value.
RISKS OF THE POLICY
-------------------
INVESTMENT RISK. If you invest your Policy's cash value in one or more of
the Investment Divisions, then you will be subject to the risk that investment
performance will be unfavorable and that your cash value will decrease. In
addition, we deduct 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, this deduction will have an even greater impact on your
Policy's cash value. It is possible to lose your full investment and your
Policy could lapse without value, unless you pay additional premium. 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 3%.
SURRENDER AND WITHDRAWAL RISKS. The Policies are designed to provide
lifetime insurance protection. They are not offered primarily as an investment,
and should not be used as a short-term savings vehicle. If you surrender the
Policy within the first ten Policy years (or within the first ten Policy years
following a face amount increase), you will be subject to a Surrender Charge as
well as income tax on any gain that is distributed or deemed to be distributed
from the Policy. You will also be subject to a Surrender Charge if you make a
partial withdrawal from the Policy within the first ten Policy years (or the
first ten Policy years following the face amount increase) if the partial
withdrawal reduces the face amount (or the face amount increase). If you
surrender the Policy in the first Policy year (or in the first year following a
face amount increase) we will also deduct an amount equal to the remaining
first year Coverage Expense Charges.
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. Even if you do not ask to surrender your Policy, surrender charges
may play a role in determining whether your Policy will lapse (terminate
without value), because surrender charges determine the cash surrender value,
which is a measure we use to determine whether your Policy will enter the grace
period (and possibly lapse).
RISK OF LAPSE. Your Policy may lapse 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 may enter a 62-day grace period. We will notify you that
the Policy will lapse unless you make a sufficient payment of additional
premium during the grace period. Your Policy generally will not lapse if you
pay certain required premium amounts
A-6
and you are therefore protected by a Guaranteed Minimum Death Benefit. If your
Policy does lapse, your insurance coverage will terminate, although you will be
given an opportunity to reinstate it. Lapse of a Policy on which there is an
outstanding loan may have adverse tax consequences.
TAX RISKS. We anticipate that the Policy should be deemed to be a life
insurance contract under Federal tax law. However, the rules are not entirely
clear in certain circumstances, for example, if your Policy is issued on a
substandard basis. The death benefit 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. If your Policy is not treated as a life insurance contract
under Federal tax law, increases in the Policy's cash value will be taxed
currently.
Even if your Policy is treated as a life insurance contract for Federal
tax purposes, it may become a modified endowment contract due to the payment of
excess premiums or unnecessary premiums, due to a material change or due to a
reduction in your death benefit. If your Policy becomes a modified endowment
contract, surrenders, partial withdrawals, loans, and use of the Policy as
collateral for a loan will be treated as a distribution of the earnings in the
Policy and will be taxable as ordinary income to the extent thereof. In
addition, if the Policy Owner is under age 59 1/2 at the time of the surrender,
partial withdrawal or loan, the amount that is included in income will
generally be subject to a 10% penalty tax.
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. However, different rules apply in the
first fifteen Policy years, when distributions accompanied by benefit
reductions may be taxable prior to a complete withdrawal of your investment in
the Policy. Moreover, loans will generally not be treated as distributions
prior to termination of your Policy, whether by lapse, surrender or exchange.
Additionally, the tax consequences of loans outstanding after the tenth Policy
year are uncertain. Finally, neither distributions nor loans from a Policy that
is not a modified endowment contract are subject to the 10% penalty tax.
See "Tax Considerations." You should consult a qualified tax adviser for
assistance in all Policy-related tax matters.
LOAN RISKS. A Policy loan, whether or not repaid, will affect the cash
value of your Policy over time because we subtract the amount of the loan from
the Investment Divisions and/or Fixed Account as collateral, and hold it in our
Loan Account. This loan collateral does not participate in the investment
experience of the Investment Divisions or receive any higher current interest
rate credited to the Fixed Account.
We also reduce the amount we pay on the insured's death by the amount of
any outstanding loan and accrued loan interest. Your Policy may lapse if your
outstanding loan and accrued loan interest reduce the cash surrender value to
zero.
If you surrender your Policy or your Policy lapses while there is an
outstanding loan, there will generally be Federal income tax payable on the
amount by which loans and partial withdrawals exceed the premiums paid. Since
loans and partial withdrawals reduce your Policy's cash value, any remaining
cash value may be insufficient to pay the income tax due.
LIMITATIONS ON CASH VALUE IN THE FIXED ACCOUNT. Transfers to and from the
Fixed Account must generally be in amounts of $50 or more. Partial withdrawals
from the Fixed Account must be in amounts of $500 or more. The total amount of
transfers and withdrawals from the Fixed Account in a Policy year may generally
not exceed the greater of 25% of the Policy's cash surrender value in the Fixed
Account at the beginning of the year, or the maximum transfer amount for the
preceding Policy year. We may also limit the number of transfers and partial
withdrawals and may impose a processing charge for transfers and partial
withdrawals. We are not currently imposing the maximum limit on transfers and
withdrawals from the Fixed Account, but we reserve the right to do so. It is
important to note that if we impose the maximum limit on transfers and
withdrawals from the Fixed Account, 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.
TAX LAW CHANGES. Tax laws, regulations, and interpretations have often
been changed in the past and such changes continue to be proposed. To the
extent that you purchase a Policy based on expected tax benefits, relative to
other financial or investment products or strategies, there is no certainty
that such advantages will always continue to exist.
A-7
RISKS OF THE PORTFOLIOS
-----------------------
A comprehensive discussion of the risks associated with each of the
Portfolios can be found in the Portfolio prospectuses, which you can obtain by
calling 1-800-638-5000. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL
ACHIEVE ITS STATED INVESTMENT OBJECTIVE.
FEE TABLES
The following tables describe the fees and expenses that a Policy Owner
will pay when buying, owning and surrendering the Policy. The first table
describes the fees and expenses that a Policy Owner will pay at the time he or
she buys the Policy, surrenders the Policy or transfers cash value among
accounts.
TRANSACTION FEES
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
Sales Charge Imposed on On payment of premium 2.25% of premiums paid 2.25% of each premium
Premiums up to the Target Premium paid
per Policy year1
Premium Tax Imposed on On payment of premium 2.0% in all Policy years 2.0% in all Policy years
Premiums
Federal Tax Imposed on On payment of premium 1.25% in all Policy years 1.25% in all Policy years
Premiums
1 The target premium varies based on individual characteristics, including
the insured's issue age, risk class and (except for unisex Policies) sex.
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
Surrender Charge1 On surrender, lapse, or
face amount reduction in
the first ten Policy years
(and, with respect to a face
amount increase, in the
first ten Policy years after
the increase)
Minimum and In Policy year 1, $3.75 to In Policy year 1, $3.75 to
Maximum Charge $38.25 per $1,000 of base $38.25 per $1,000 of base
Policy face amount2 Policy face amount2
Charge in the first Policy $14.00 per $1,000 of base $14.00 per $1,000 of base
year for a Representative Policy face amount Policy face amount
Insured 3
Transfer Charge4 On transfer of cash value Not currently charged $25 for each transfer
among the Investment
Divisions and to and from
the Fixed Account
Partial Withdrawal Charge On partial withdrawal of Not currently charged $25 for each partial
cash value withdrawal5
Illustration of Benefits On provision of each Not currently charged $25 per illustration
Charge illustration in excess of one
per year
A-8
1 The Surrender Charge varies based on individual characteristics,
including the insured's issue age, risk class, sex (except for unisex
Policies), smoker status, and the Policy's face amount. The Surrender
Charge may not be representative of the charge that a particular Policy
Owner would pay. You can obtain more information about the Surrender
Charge that would apply for a particular insured by contacting your
registered representative.
2 No Surrender Charge will apply on up to 10% of cash surrender value
withdrawn each year. The Surrender Charge will remain level for one to
three Policy years, and will then begin to decline on a monthly basis
until it reaches zero in the last month of the tenth Policy year. The
Surrender Charge applies to requested face amount reductions as well as
to face amount reductions resulting from a change in death benefit
option.
3 The Representative Insured is a male, age 35, in the preferred nonsmoker
risk class, under a Policy with a base Policy face amount of $375,000.
4 The Portfolios in which the Investment Divisions invest may impose a
redemption fee on shares held for a relatively short period.
5 If imposed, the partial withdrawal charge would be in addition to any
Surrender Charge that is imposed.
The next table describes the fees and expenses that a Policy Owner will
pay periodically during the time that he or she owns the Policy, not including
Portfolio fees and expenses.
PERIODIC CHARGES OTHER THAN PORTFOLIO OPERATING EXPENSES
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
Cost of Insurance1
Minimum and Monthly $.01 to $83.33 per $1,000 $.02 to $83.33 per $1,000
Maximum Charge of net amount at risk2 of net amount at risk2
Charge in the first Policy Monthly $.02 per $1,000 of net $.09 per $1,000 of net
year for a Representative amount at risk amount at risk
Insured 3
Policy Charge4
Policy face amount less Monthly $12 $12
than $50,000
Policy face amount Monthly $15 $15
between $50,000 and
$249,999
Mortality and Expense Risk Monthly .60% .80%
Charge (annual rate imposed
on cash value in the
Separate Account)5
Coverage Expense Charge6
Minimum and Monthly $.04 to $2.30 per $1,000 $.04 to $2.30 per $1,000
Maximum Charge of base Policy face of base Policy face amount
amount7
Charge for a Monthly $.16 per $1,000 of base $.16 per $1,000 of base
Representative Insured 3 Policy face amount7 Policy face amount
Loan Interest Spread8 Annually (or on loan 1.00% of loan collateral 1.00% of loan collateral
termination, if earlier)
1 The cost of insurance charge varies based on individual characteristics,
including the Policy's face amount and the insured's age, risk class, and
(except for unisex Policies) sex. The cost of insurance charge may not be
representative of the charge that a particular Policy Owner would pay.
You can obtain more information about the cost of insurance charge that
would apply for a particular insured by contacting your registered
representative.
2 The net amount at risk is the difference between the death benefit
(generally discounted at the monthly equivalent of 3% per year) and the
Policy's cash value.
A-9
3 The Representative Insured is a male, age 35, in the preferred nonsmoker
risk class, under a Policy with a base policy face amount of $375,000.
4 After the first Policy Year, the Policy Charge declines to $9 for a
Policy with a face amount of less than $50,000, and to $8 for a Policy
with a face amount between $50,000 and $249,999. No Policy Charge applies
if a Policy is issued with a face amount equal to or greater than
$250,000.
5 The Mortality and Expense Risk Charge declines over time in accordance
with the following schedule:
CURRENT CHARGE MAXIMUM CHARGE
---------------- ---------------
Policy years 1 - 10 .60% .80%
Policy years 11 - 19 .35% .35%
Policy years 20 - 29 .20% .20%
Policy years 30+ .05% .05%
The Current Charge Percentages shown above apply if the Policy's net cash
value is less than the equivalent of five Target Premiums. The percentages
decrease as the Policy's net cash value, measured as a multiple of Target
Premiums, increases, as shown below:
LESS THAN 5 TARGET AT LEAST 5 BUT LESS THAN AT LEAST 10 BUT LESS THAN 20 OR MORE TARGET
PREMIUMS 10 TARGET PREMIUMS 20 TARGET PREMIUMS PREMIUMS
-------------------- -------------------------- --------------------------- ------------------
Policy years 1- 10 .60% .55% .30% .15%
Policy years 11- 19 .35% .30% .15% .10%
Policy years 20- 29 .20% .15% .10% .05%
Policy years 30+ .05% .05% .05% .05%
6 The Coverage Expense Charge varies based on individual characteristics,
including the Policy's face amount and the Insured's age, risk class, and
(except for unisex Policies) sex. The Coverage Expense Charge may not be
representative of the charge that a particular Policy Owner would pay.
You can obtain more information about the Coverage Expense Charge that
would apply to a particular insured by contacting your registered
representative.
7 The Coverage Expense Charge is imposed in Policy years 1-8 and, with
respect to a requested face amount increase, during the first eight years
following the increase. If you surrender the Policy in the first Policy
year (or in the first year following a face amount increase), we will
deduct from the surrender proceeds an amount equal to the Coverage
Expense Charges due for the remainder of the first Policy year (or the
first year following the face amount increase). If the Policy's face
amount is reduced in the first year following a face amount increase, we
will deduct from the cash value an amount equal to the Coverage Expense
Charges due for the remainder of the first year following the face amount
increase.
8 The loan interest spread is the difference between the interest rates we
charge on Policy loans and the interest earned on cash value we hold as
security for the loan ("loan collateral"). We charge interest on Policy
loans at an effective rate of 4.0% per year in Policy years 1-10 and 3.0%
thereafter. Loan collateral earns interest at an effective rate of not
less than 3.0% per year.
A-10
CHARGES FOR OPTIONAL FEATURES (RIDERS):
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
Guaranteed Survivor Income
Benefit Rider1
Minimum and Monthly $.01 to $1.08 per $1,000 $.01 to $83.33 per $1,000
Maximum Charge of Eligible Death Benefit of Eligible Death Benefit
Charge for a Monthly $.02 per $1,000 of Eligible $.02 per $1,000 of Eligible
Representative Insured2 Death Benefit Death Benefit
Children's Term Insurance Monthly $.40 per $1,000 of rider $.40 per $1,000 of rider
Rider face amount face amount
Waiver of Monthly Deduction
Rider3
Minimum and Monthly $.00 to $61.44 per $100 of $.00 to $61.44 per $100 of
Maximum Charge Monthly Deduction Monthly Deduction
Charge in the first Policy Monthly $6.30 per $100 of Monthly $6.30 per $100 of Monthly
year for a Representative Deduction Deduction
insured4
Waiver of Specified Premium
Rider
Minimum and Monthly $.00 to $21.75 per $100 of $.00 to $21.75 per $100 of
Maximum Charge Specified Premium Specified Premium
Charge in the first Policy Monthly $3.00 per $100 of $3.00 per $100 of
year for a Representative Specified Premium Specified Premium
Insured4
1 The charge for the Guaranteed Survivor Income Benefit Rider varies based on
individual characteristics, including the rider's Eligible Death Benefit
and the insured's age, risk class, and (except for unisex Policies) sex.
The rider change may not be representative of the charge that a
particular Policy Owner would pay. You can obtain more information about
the rider charge that would apply for a particular insured by contacting
your registered representative.
2 The Representative Insured is a male, age 35, in the preferred nonsmoker risk
class, under a Policy with an Eligible Death Benefit of $375,000.
3 The charge for this rider varies based on individual characteristics,
including the insured's age, risk class, and (except for unisex Policies)
sex. The rider change may not be representative of the charge that a
particular Policy Owner would pay. You can obtain more information about
the rider charge that would apply for a particular insured by contacting
your registered representative.
4 The Representative Insured is a male, age 35, in the preferred nonsmoker risk
class.
A-11
CHARGE WHEN CHARGE IS DEDUCTED CURRENT AMOUNT DEDUCTED MAXIMUM AMOUNT DEDUCTIBLE
Options to Purchase
Additional Insurance
Coverage Rider1
Minimum and Monthly $.02 to $.25 per $1,000 of $.02 to $.25 per $1,000 of
Maximum Charge Option amount Option amount
Charge for a Monthly $.03 per $1,000 of Option $.03 per $1,000 of Option
Representative Insured2 amount amount
Accidental Death Benefit
Rider1
Minimum and Monthly $.00 to $.34 per $1,000 $.00 to $83.33 per $1,000
Maximum Charge of rider face amount of rider face amount
Charge in the first Policy Monthly $.05 per $1,000 of rider $.08 per $1,000 of rider
year for a Representative face amount face amount
Insured2
Guaranteed Minimum Death
Benefit Rider1,3
Minimum and Monthly $.03 to $.14 per $1,000 $.03 to $83.33 per $1,000
Maximum Charge of net amount at risk of net amount at risk
Charge for a Monthly $.03 per $1,000 of net $.03 per $1,000 of net
Representative Insured4 amount at risk amount at risk
Acceleration of Death Benefit At time of benefit payment Not currently charged One-time fee of $150
Rider
Overloan Protection Rider At time of exercise One-time fee of 3.5% of One-time fee of 3.5% of
Policy cash value Policy cash value
1 The charge for this rider varies based on individual characteristics,
including the insured's age, risk class, and (except for unisex Policies)
sex. The rider change may not be representative of the charge that a
particular Policy Owner would pay. You can obtain more information about
the rider charge that would apply for a particular insured by contacting
your registered representative.
2 The Representative Insured is a male, age 35, in the preferred nonsmoker risk
class.
3 The charge shown applicable to both the Guaranteed Minimum Death Benefit to
Age 85 Rider and the Guaranteed Minimum Death Benefit to Age 121 Rider.
4 The Representative Insured is a female, age 45, in the preferred nonsmoker
risk class.
ANNUAL PORTFOLIO OPERATING EXPENSES
The next table describes the Portfolio fees and expenses that a Policy
Owner may pay periodically during the time that he or she owns the Policy. The
table shows the minimum and maximum total operating expenses charged by the
Portfolios for the fiscal year ended December 31, 2016. Expenses of the
Portfolios may be higher or lower in the future. More detail concerning each
Portfolio's fees and expenses is contained in the table that follows and in the
prospectus for each Portfolio.
A-12
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
MINIMUM AND MAXIMUM TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
--------- --------
Total Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets, including management fees,
distribution and/or service (12b-1) fees, and other expenses).................. 0.27% 1.34%
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
------------------------------------------- ------------ -------------- ----------
AMERICAN FUNDS INSURANCE SERIES(R)
-- CLASS 2
American Funds Bond Fund................... 0.36% 0.25% 0.02%
American Funds Global Small
Capitalization Fund....................... 0.70% 0.25% 0.04%
American Funds Growth Fund................. 0.33% 0.25% 0.02%
American Funds Growth-Income Fund.......... 0.27% 0.25% 0.02%
BRIGHTHOUSE FUNDS TRUST I
AB Global Dynamic Allocation
Portfolio -- Class B...................... 0.61% 0.25% 0.03%
Allianz Global Investors Dynamic
Multi-Asset Plus Portfolio -- Class B..... 0.68% 0.25% 0.27%
American Funds(R) Balanced Allocation
Portfolio -- Class B...................... 0.06% 0.25% --
American Funds(R) Growth Allocation
Portfolio -- Class B...................... 0.06% 0.25% 0.01%
American Funds(R) Moderate Allocation
Portfolio -- Class B...................... 0.06% 0.25% 0.01%
AQR Global Risk Balanced Portfolio --
Class B................................... 0.61% 0.25% 0.03%
BlackRock Global Tactical Strategies
Portfolio -- Class B...................... 0.66% 0.25% 0.01%
Brighthouse Asset Allocation 100
Portfolio -- Class A...................... 0.07% -- 0.01%
Brighthouse Balanced Plus Portfolio --
Class B................................... 0.24% 0.25% 0.01%
Brighthouse/Aberdeen Emerging
Markets Equity Portfolio -- Class A....... 0.89% -- 0.11%
Brighthouse/Templeton International
Bond Portfolio -- Class A................. 0.60% -- 0.09%
Brighthouse/Wellington Large Cap
Research Portfolio -- Class A............. 0.56% -- 0.03%
Clarion Global Real Estate Portfolio --
Class A................................... 0.61% -- 0.04%
ACQUIRED TOTAL FEE WAIVER NET TOTAL
FUND FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
------------------------------------------- ----------- ----------- --------------- ----------
AMERICAN FUNDS INSURANCE SERIES(R)
-- CLASS 2
American Funds Bond Fund................... -- 0.63% -- 0.63%
American Funds Global Small
Capitalization Fund....................... -- 0.99% -- 0.99%
American Funds Growth Fund................. -- 0.60% -- 0.60%
American Funds Growth-Income Fund.......... -- 0.54% -- 0.54%
BRIGHTHOUSE FUNDS TRUST I
AB Global Dynamic Allocation
Portfolio -- Class B...................... 0.01% 0.90% 0.02% 0.88%
Allianz Global Investors Dynamic
Multi-Asset Plus Portfolio -- Class B..... 0.03% 1.23% -- 1.23%
American Funds(R) Balanced Allocation
Portfolio -- Class B...................... 0.42% 0.73% -- 0.73%
American Funds(R) Growth Allocation
Portfolio -- Class B...................... 0.43% 0.75% -- 0.75%
American Funds(R) Moderate Allocation
Portfolio -- Class B...................... 0.40% 0.72% -- 0.72%
AQR Global Risk Balanced Portfolio --
Class B................................... 0.06% 0.95% 0.01% 0.94%
BlackRock Global Tactical Strategies
Portfolio -- Class B...................... 0.09% 1.01% 0.03% 0.98%
Brighthouse Asset Allocation 100
Portfolio -- Class A...................... 0.68% 0.76% -- 0.76%
Brighthouse Balanced Plus Portfolio --
Class B................................... 0.42% 0.92% 0.01% 0.91%
Brighthouse/Aberdeen Emerging
Markets Equity Portfolio -- Class A....... -- 1.00% 0.06% 0.94%
Brighthouse/Templeton International
Bond Portfolio -- Class A................. -- 0.69% -- 0.69%
Brighthouse/Wellington Large Cap
Research Portfolio -- Class A............. -- 0.59% 0.04% 0.55%
Clarion Global Real Estate Portfolio --
Class A................................... -- 0.65% -- 0.65%
A-13
DISTRIBUTION
AND/OR
MANAGEMENT SERVICE OTHER
PORTFOLIO FEE (12B-1) FEES EXPENSES
-------------------------------------------- ------------ -------------- ----------
ClearBridge Aggressive Growth
Portfolio -- Class A....................... 0.56% -- 0.01%
Harris Oakmark International
Portfolio -- Class A....................... 0.77% -- 0.04%
Invesco Balanced-Risk Allocation
Portfolio -- Class B....................... 0.64% 0.25% 0.03%
Invesco Mid Cap Value Portfolio --
Class A.................................... 0.65% -- 0.03%
Invesco Small Cap Growth Portfolio --
Class A.................................... 0.85% -- 0.03%
JPMorgan Global Active Allocation
Portfolio -- Class B....................... 0.72% 0.25% 0.05%
JPMorgan Small Cap Value Portfolio --
Class A.................................... 0.78% -- 0.05%
Loomis Sayles Global Markets
Portfolio -- Class A....................... 0.70% -- 0.08%
MetLife Multi-Index Targeted Risk
Portfolio -- Class B....................... 0.17% 0.25% 0.01%
MFS(R) Research International
Portfolio -- Class A....................... 0.70% -- 0.04%
Morgan Stanley Mid Cap Growth
Portfolio -- Class A....................... 0.65% -- 0.05%
Oppenheimer Global Equity Portfolio --
Class A.................................... 0.66% -- 0.05%
PanAgora Global Diversified Risk
Portfolio -- Class B....................... 0.65% 0.25% 0.40%
PIMCO Inflation Protected Bond
Portfolio -- Class A....................... 0.47% -- 0.28%
PIMCO Total Return Portfolio -- Class A..... 0.48% -- 0.05%
Pyramis(R) Managed Risk Portfolio --
Class B.................................... 0.45% 0.25% 0.03%
Schroders Global Multi-Asset
Portfolio -- Class B....................... 0.64% 0.25% 0.07%
SSGA Growth and Income ETF
Portfolio -- Class A....................... 0.31% -- 0.01%
SSGA Growth ETF Portfolio -- Class A........ 0.32% -- 0.02%
T. Rowe Price Mid Cap Growth
Portfolio -- Class A....................... 0.75% -- 0.03%
BRIGHTHOUSE FUNDS TRUST II -- CLASS A
Baillie Gifford International Stock
Portfolio.................................. 0.80% -- 0.05%
BlackRock Bond Income Portfolio............. 0.33% -- 0.04%
BlackRock Capital Appreciation
Portfolio.................................. 0.70% -- 0.02%
BlackRock Large Cap Value Portfolio......... 0.63% -- 0.03%
Brighthouse Asset Allocation 20
Portfolio.................................. 0.09% -- 0.03%
ACQUIRED TOTAL FEE WAIVER NET TOTAL
FUND FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
-------------------------------------------- ----------- ----------- --------------- -----------
ClearBridge Aggressive Growth
Portfolio -- Class A....................... -- 0.57% 0.02% 0.55%
Harris Oakmark International
Portfolio -- Class A....................... -- 0.81% 0.02% 0.79%
Invesco Balanced-Risk Allocation
Portfolio -- Class B....................... 0.03% 0.95% 0.03% 0.92%
Invesco Mid Cap Value Portfolio --
Class A.................................... 0.05% 0.73% 0.02% 0.71%
Invesco Small Cap Growth Portfolio --
Class A.................................... -- 0.88% 0.02% 0.86%
JPMorgan Global Active Allocation
Portfolio -- Class B....................... -- 1.02% 0.04% 0.98%
JPMorgan Small Cap Value Portfolio --
Class A.................................... -- 0.83% 0.10% 0.73%
Loomis Sayles Global Markets
Portfolio -- Class A....................... -- 0.78% -- 0.78%
MetLife Multi-Index Targeted Risk
Portfolio -- Class B....................... 0.22% 0.65% -- 0.65%
MFS(R) Research International
Portfolio -- Class A....................... -- 0.74% 0.06% 0.68%
Morgan Stanley Mid Cap Growth
Portfolio -- Class A....................... -- 0.70% 0.01% 0.69%
Oppenheimer Global Equity Portfolio --
Class A.................................... -- 0.71% 0.10% 0.61%
PanAgora Global Diversified Risk
Portfolio -- Class B....................... 0.04% 1.34% -- 1.34%
PIMCO Inflation Protected Bond
Portfolio -- Class A....................... -- 0.75% 0.01% 0.74%
PIMCO Total Return Portfolio -- Class A..... -- 0.53% 0.03% 0.50%
Pyramis(R) Managed Risk Portfolio --
Class B.................................... 0.47% 1.20% 0.10% 1.10%
Schroders Global Multi-Asset
Portfolio -- Class B....................... 0.01% 0.97% -- 0.97%
SSGA Growth and Income ETF
Portfolio -- Class A....................... 0.22% 0.54% -- 0.54%
SSGA Growth ETF Portfolio -- Class A........ 0.24% 0.58% -- 0.58%
T. Rowe Price Mid Cap Growth
Portfolio -- Class A....................... -- 0.78% -- 0.78%
BRIGHTHOUSE FUNDS TRUST II -- CLASS A
Baillie Gifford International Stock
Portfolio.................................. -- 0.85% 0.12% 0.73%
BlackRock Bond Income Portfolio............. -- 0.37% -- 0.37%
BlackRock Capital Appreciation
Portfolio.................................. -- 0.72% 0.09% 0.63%
BlackRock Large Cap Value Portfolio......... -- 0.66% 0.03% 0.63%
Brighthouse Asset Allocation 20
Portfolio.................................. 0.53% 0.65% 0.02% 0.63%
A-14
DISTRIBUTION
AND/OR
MANAGEMENT SERVICE OTHER
PORTFOLIO FEE (12B-1) FEES EXPENSES
--------------------------------------------- ------------ -------------- ----------
Brighthouse Asset Allocation 40
Portfolio................................... 0.06% -- --
Brighthouse Asset Allocation 60
Portfolio................................... 0.05% -- --
Brighthouse Asset Allocation 80
Portfolio................................... 0.05% -- 0.01%
Brighthouse/Artisan Mid Cap Value
Portfolio................................... 0.82% -- 0.03%
Brighthouse/Wellington Balanced
Portfolio................................... 0.46% -- 0.09%
Brighthouse/Wellington Core Equity
Opportunities Portfolio..................... 0.70% -- 0.02%
Frontier Mid Cap Growth Portfolio............ 0.72% -- 0.03%
Jennison Growth Portfolio.................... 0.60% -- 0.02%
Loomis Sayles Small Cap Core Portfolio....... 0.90% -- 0.06%
Loomis Sayles Small Cap Growth
Portfolio................................... 0.90% -- 0.06%
MetLife Aggregate Bond Index Portfolio....... 0.25% -- 0.03%
MetLife Mid Cap Stock Index Portfolio........ 0.25% -- 0.05%
MetLife MSCI EAFE(R) Index Portfolio......... 0.30% -- 0.08%
MetLife Russell 2000(R) Index Portfolio...... 0.25% -- 0.06%
MetLife Stock Index Portfolio................ 0.25% -- 0.02%
MFS(R) Total Return Portfolio................ 0.56% -- 0.05%
MFS(R) Value Portfolio....................... 0.70% -- 0.02%
Neuberger Berman Genesis Portfolio........... 0.81% -- 0.04%
T. Rowe Price Large Cap Growth
Portfolio................................... 0.60% -- 0.02%
T. Rowe Price Small Cap Growth
Portfolio................................... 0.47% -- 0.03%
VanEck Global Natural Resources
Portfolio................................... 0.78% -- 0.03%
Western Asset Management Strategic
Bond Opportunities Portfolio................ 0.57% -- 0.03%
Western Asset Management
U.S. Government Portfolio................... 0.47% -- 0.03%
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST --
CLASS 2
Franklin Income VIP Fund..................... 0.45% 0.25% 0.02%
Franklin Mutual Shares VIP Fund.............. 0.69% 0.25% 0.03%
ACQUIRED TOTAL FEE WAIVER NET TOTAL
FUND FEES ANNUAL AND/OR ANNUAL
AND OPERATING EXPENSE OPERATING
PORTFOLIO EXPENSES EXPENSES REIMBURSEMENT EXPENSES
--------------------------------------------- ----------- ----------- --------------- -----------
Brighthouse Asset Allocation 40
Portfolio................................... 0.57% 0.63% -- 0.63%
Brighthouse Asset Allocation 60
Portfolio................................... 0.60% 0.65% -- 0.65%
Brighthouse Asset Allocation 80
Portfolio................................... 0.64% 0.70% -- 0.70%
Brighthouse/Artisan Mid Cap Value
Portfolio................................... -- 0.85% -- 0.85%
Brighthouse/Wellington Balanced
Portfolio................................... -- 0.55% -- 0.55%
Brighthouse/Wellington Core Equity
Opportunities Portfolio..................... -- 0.72% 0.11% 0.61%
Frontier Mid Cap Growth Portfolio............ -- 0.75% 0.02% 0.73%
Jennison Growth Portfolio.................... -- 0.62% 0.08% 0.54%
Loomis Sayles Small Cap Core Portfolio....... 0.04% 1.00% 0.08% 0.92%
Loomis Sayles Small Cap Growth
Portfolio................................... -- 0.96% 0.09% 0.87%
MetLife Aggregate Bond Index Portfolio....... -- 0.28% 0.01% 0.27%
MetLife Mid Cap Stock Index Portfolio........ 0.01% 0.31% -- 0.31%
MetLife MSCI EAFE(R) Index Portfolio......... 0.01% 0.39% -- 0.39%
MetLife Russell 2000(R) Index Portfolio...... 0.01% 0.32% -- 0.32%
MetLife Stock Index Portfolio................ -- 0.27% 0.01% 0.26%
MFS(R) Total Return Portfolio................ -- 0.61% -- 0.61%
MFS(R) Value Portfolio....................... -- 0.72% 0.14% 0.58%
Neuberger Berman Genesis Portfolio........... -- 0.85% 0.01% 0.84%
T. Rowe Price Large Cap Growth
Portfolio................................... -- 0.62% 0.02% 0.60%
T. Rowe Price Small Cap Growth
Portfolio................................... -- 0.50% -- 0.50%
VanEck Global Natural Resources
Portfolio................................... -- 0.81% 0.01% 0.80%
Western Asset Management Strategic
Bond Opportunities Portfolio................ 0.01% 0.61% 0.05% 0.56%
Western Asset Management
U.S. Government Portfolio................... -- 0.50% 0.01% 0.49%
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST --
CLASS 2
Franklin Income VIP Fund..................... 0.02% 0.74% 0.03% 0.71%
Franklin Mutual Shares VIP Fund.............. -- 0.97% -- 0.97%
The information shown in the table above was provided by the Portfolios.
Certain Portfolios and their investment adviser have entered into expense
reimbursement and/or fee waiver arrangements that will continue from May 1,
2017 through April 30, 2018. These arrangements can be terminated with respect
to these Portfolios only with the approval of the Portfolio's board of
directors or trustees. Please see the Portfolios' prospectuses for additional
information regarding these arrangements.
A-15
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.
The American Funds Insurance Series and the Franklin Templeton Variable
Insurance Products Trust are not affiliated with Metropolitan Life Insurance
Company. For information concerning compensation paid for the sale of the
Policies, see "Distribution of the Policies."
A-16
[GRAPHIC APPEARS HERE]
A-17
THE COMPANY, THE SEPARATE ACCOUNT
AND THE PORTFOLIOS
THE COMPANY
Metropolitan Life Insurance Company is a wholly-owned subsidiary of
MetLife, Inc., a publicly traded company. Our principal office is located at
200 Park Avenue, New York, New York 10166. MetLife is licensed to sell life
insurance in all states and the District of Columbia, but we only issue the
Policies in New York. We are obligated to pay all benefits under the Policies.
THE SEPARATE ACCOUNT
Metropolitan Life Separate Account UL is the funding vehicle for the
Policies and other variable life insurance policies that we issue. 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 or losses. Although we own the assets of the Separate Account,
applicable law provides that the portion of the Separate Account assets equal
to the reserves and other liabilities of the Separate Account may not be
charged with liabilities that arise out of any other business we conduct. This
means that the assets of the Separate Account are not available to meet the
claims of our general creditors, and may only be used to support the cash
values of the variable life insurance policies issued by 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.
THE PORTFOLIOS
Each Investment Division of the Separate Account invests in a
corresponding Portfolio. Each Portfolio is part of an open-end management
investment company, more commonly known as a mutual fund, that serves as an
investment vehicle for variable life insurance and variable annuity separate
accounts of various insurance companies. The mutual funds that offer the
Portfolios are -the American Funds Insurance Series(R), Brighthouse Funds Trust
I, Brighthouse Funds Trust II and the Franklin Templeton Variable Insurance
Products Trust. Each of these mutual funds has an investment adviser
responsible for overall management of the fund. Some investment advisers have
contracted with sub-advisers to make the day-to-day investment decisions for
the Portfolios.
The adviser, sub-adviser and investment objective of each Portfolio are as
follows:
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
----------------------------- ------------------------------------ --------------------------------
AMERICAN FUNDS INSURANCE
SERIES(R) -- CLASS 2
American Funds Bond Fund Seeks as high a level of current Capital Research and Management
income as is consistent with the Company
preservation of capital.
American Funds Global Small Seeks long-term growth of capital. Capital Research and Management
Capitalization Fund Company
A-18
PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
-------------------------------------- --------------------------------------- -----------------------------------------
American Funds Growth Fund Seeks growth of capital. Capital Research and Management
Company
American Funds Growth-Income Seeks long-term growth of capital Capital Research and Management
Fund and income. Company
BRIGHTHOUSE FUNDS TRUST I
AB Global Dynamic Allocation Seeks capital appreciation and Brighthouse Investment Advisers, LLC
Portfolio -- Class B current income. Subadviser: AllianceBernstein L.P.
Allianz Global Investors Dynamic Seeks total return. Brighthouse Investment Advisers, LLC
Multi-Asset Plus Portfolio -- Subadviser: Allianz Global Investors
Class B U.S. LLC
American Funds(R) Balanced Seeks a balance between a high Brighthouse Investment Advisers, LLC
Allocation Portfolio -- Class B level of current income and growth
of capital, with a greater emphasis
on growth of capital.
American Funds(R) Growth Allocation Seeks growth of capital. Brighthouse Investment Advisers, LLC
Portfolio -- Class B
American Funds(R) Moderate Seeks a high total return in the form Brighthouse Investment Advisers, LLC
Allocation Portfolio -- Class B of income and growth of capital, with
a greater emphasis on income.
AQR Global Risk Balanced Seeks total return. Brighthouse Investment Advisers, LLC
Portfolio -- Class B Subadviser: AQR Capital Management, LLC
BlackRock Global Tactical Strategies Seeks capital appreciation and Brighthouse Investment Advisers, LLC
Portfolio -- Class B current income. Subadviser: BlackRock Financial
Management, Inc.
Brighthouse Asset Allocation 100 Seeks growth of capital. Brighthouse Investment Advisers, LLC
Portfolio -- Class A
Brighthouse Balanced Plus Seeks a balance between a high Brighthouse Investment Advisers, LLC
Portfolio -- Class B level of current income and growth Subadviser: Overlay Portion: Pacific
of capital, with a greater emphasis Investment Management Company LLC
on growth of capital.
Brighthouse/Aberdeen Emerging Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Markets Equity Portfolio -- Subadviser: Aberdeen Asset Managers
Class A Limited
Brighthouse/Templeton International Seeks current income with capital Brighthouse Investment Advisers, LLC
Bond Portfolio -- Class A appreciation and growth of income. Subadviser: Franklin Advisers, Inc.
Brighthouse/Wellington Large Cap Seeks long-term capital Brighthouse Investment Advisers, LLC
Research Portfolio -- Class A appreciation. Subadviser: Wellington Management
Company LLP
Clarion Global Real Estate Seeks total return through Brighthouse Investment Advisers, LLC
Portfolio -- Class A investment in real estate securities, Subadviser: CBRE Clarion Securities LLC
emphasizing both capital
appreciation and current income.
ClearBridge Aggressive Growth Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: ClearBridge Investments, LLC
Harris Oakmark International Seeks long-term capital Brighthouse Investment Advisers, LLC
Portfolio -- Class A appreciation. Subadviser: Harris Associates L.P.
Invesco Balanced-Risk Allocation Seeks total return. Brighthouse Investment Advisers, LLC
Portfolio -- Class B Subadviser: Invesco Advisers, Inc.
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PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
-------------------------------------- -------------------------------------- ----------------------------------------
Invesco Mid Cap Value Portfolio -- Seeks high total return by investing Brighthouse Investment Advisers, LLC
Class A in equity securities of mid-sized Subadviser: Invesco Advisers, Inc.
companies.
Invesco Small Cap Growth Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: Invesco Advisers, Inc.
JPMorgan Global Active Allocation Seeks capital appreciation and Brighthouse Investment Advisers, LLC
Portfolio -- Class B current income. Subadviser: J.P. Morgan Investment
Management Inc.
JPMorgan Small Cap Value Seeks long-term capital growth. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: J.P. Morgan Investment
Management Inc.
Loomis Sayles Global Markets Seeks high total investment return Brighthouse Investment Advisers, LLC
Portfolio -- Class A through a combination of capital Subadviser: Loomis, Sayles & Company,
appreciation and income. L.P.
MetLife Multi-Index Targeted Risk Seeks a balance between growth of Brighthouse Investment Advisers, LLC
Portfolio -- Class B capital and current income, with a Subadviser: Overlay Portion: MetLife
greater emphasis on growth of Investment Advisors, LLC
capital.
MFS(R) Research International Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: Massachusetts Financial
Services Company
Morgan Stanley Mid Cap Growth Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: Morgan Stanley Investment
Management Inc.
Oppenheimer Global Equity Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: OppenheimerFunds, Inc.
PanAgora Global Diversified Risk Seeks total return. Brighthouse Investment Advisers, LLC
Portfolio -- Class B Subadviser: PanAgora Asset Management,
Inc.
PIMCO Inflation Protected Bond Seeks maximum real return, Brighthouse Investment Advisers, LLC
Portfolio -- Class A consistent with preservation of Subadviser: Pacific Investment
capital and prudent investment Management Company LLC
management.
PIMCO Total Return Portfolio -- Seeks maximum total return, Brighthouse Investment Advisers, LLC
Class A consistent with the preservation of Subadviser: Pacific Investment
capital and prudent investment Management Company LLC
management.
Pyramis(R) Managed Risk Portfolio -- Seeks total return. Brighthouse Investment Advisers, LLC
Class B Subadviser: FIAM LLC
Schroders Global Multi-Asset Seeks capital appreciation and Brighthouse Investment Advisers, LLC
Portfolio -- Class B current income. Subadvisers: Schroder Investment
Management North America Inc.; Schroder
Investment Management North America
Limited
SSGA Growth and Income ETF Seeks growth of capital and income. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: SSGA Funds Management, Inc.
SSGA Growth ETF Portfolio -- Seeks growth of capital. Brighthouse Investment Advisers, LLC
Class A Subadviser: SSGA Funds Management, Inc.
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PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
------------------------------------- ---------------------------------------- -------------------------------------------
T. Rowe Price Mid Cap Growth Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Portfolio -- Class A Subadviser: T. Rowe Price Associates, Inc.
BRIGHTHOUSE FUNDS TRUST II --
CLASS A
Baillie Gifford International Stock Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: Baillie Gifford Overseas
Limited
BlackRock Bond Income Portfolio Seeks a competitive total return Brighthouse Investment Advisers, LLC
primarily from investing in Subadviser: BlackRock Advisors, LLC
fixed-income securities.
BlackRock Capital Appreciation Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: BlackRock Advisors, LLC
BlackRock Large Cap Value Portfolio Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Subadviser: BlackRock Advisors, LLC
Brighthouse Asset Allocation 20 Seeks a high level of current income, Brighthouse Investment Advisers, LLC
Portfolio with growth of capital as a
secondary objective.
Brighthouse Asset Allocation 40 Seeks high total return in the form of Brighthouse Investment Advisers, LLC
Portfolio income and growth of capital, with a
greater emphasis on income.
Brighthouse Asset Allocation 60 Seeks a balance between a high Brighthouse Investment Advisers, LLC
Portfolio level of current income and growth
of capital, with a greater emphasis
on growth of capital.
Brighthouse Asset Allocation 80 Seeks growth of capital. Brighthouse Investment Advisers, LLC
Portfolio
Brighthouse/Artisan Mid Cap Value Seeks long-term capital growth. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: Artisan Partners Limited
Partnership
Brighthouse/Wellington Balanced Seeks long-term capital appreciation Brighthouse Investment Advisers, LLC
Portfolio with some current income. Subadviser: Wellington Management
Company LLP
Brighthouse/Wellington Core Equity Seeks to provide a growing stream Brighthouse Investment Advisers, LLC
Opportunities Portfolio of income over time and, Subadviser: Wellington Management
secondarily, long-term capital Company LLP
appreciation and current income.
Frontier Mid Cap Growth Portfolio Seeks maximum capital Brighthouse Investment Advisers, LLC
appreciation. Subadviser: Frontier Capital Management
Company, LLC
Jennison Growth Portfolio Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Subadviser: Jennison Associates LLC
Loomis Sayles Small Cap Core Seeks long-term capital growth from Brighthouse Investment Advisers, LLC
Portfolio investments in common stocks or Subadviser: Loomis, Sayles & Company,
other equity securities. L.P.
Loomis Sayles Small Cap Growth Seeks long-term capital growth. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: Loomis, Sayles & Company,
L.P.
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PORTFOLIO INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
-------------------------------------- --------------------------------------- -------------------------------------------
MetLife Aggregate Bond Index Seeks to track the performance of Brighthouse Investment Advisers, LLC
Portfolio the Bloomberg Barclays Subadviser: MetLife Investment Advisors,
U.S. Aggregate Bond Index. LLC
MetLife Mid Cap Stock Index Seeks to track the performance of Brighthouse Investment Advisers, LLC
Portfolio the Standard & Poor's MidCap 400(R) Subadviser: MetLife Investment Advisors,
Composite Stock Price Index. LLC
MetLife MSCI EAFE(R) Index Portfolio Seeks to track the performance of Brighthouse Investment Advisers, LLC
the MSCI EAFE(R) Index. Subadviser: MetLife Investment Advisors,
LLC
MetLife Russell 2000(R) Index Seeks to track the performance of Brighthouse Investment Advisers, LLC
Portfolio the Russell 2000(R) Index. Subadviser: MetLife Investment Advisors,
LLC
MetLife Stock Index Portfolio Seeks to track the performance of Brighthouse Investment Advisers, LLC
the Standard & Poor's 500(R) Subadviser: MetLife Investment Advisors,
Composite Stock Price Index. LLC
MFS(R) Total Return Portfolio Seeks a favorable total return Brighthouse Investment Advisers, LLC
through investment in a diversified Subadviser: Massachusetts Financial
portfolio. Services Company
MFS(R) Value Portfolio Seeks capital appreciation. Brighthouse Investment Advisers, LLC
Subadviser: Massachusetts Financial
Services Company
Neuberger Berman Genesis Portfolio Seeks high total return, consisting Brighthouse Investment Advisers, LLC
principally of capital appreciation. Subadviser: Neuberger Berman Investment
Advisers LLC
T. Rowe Price Large Cap Growth Seeks long-term growth of capital. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: T. Rowe Price Associates, Inc.
T. Rowe Price Small Cap Growth Seeks long-term capital growth. Brighthouse Investment Advisers, LLC
Portfolio Subadviser: T. Rowe Price Associates, Inc.
VanEck Global Natural Resources Seeks long-term capital appreciation Brighthouse Investment Advisers, LLC
Portfolio with income as a secondary Subadviser: Van Eck Associates
consideration. Corporation
Western Asset Management Seeks to maximize total return Brighthouse Investment Advisers, LLC
Strategic Bond Opportunities consistent with preservation of Subadviser: Western Asset Management
Portfolio capital. Company
Western Asset Management Seeks to maximize total return Brighthouse Investment Advisers, LLC
U.S. Government Portfolio consistent with preservation of Subadviser: Western Asset Management
capital and maintenance of liquidity. Company
FRANKLIN TEMPLETON VARIABLE
INSURANCE PRODUCTS TRUST --
CLASS 2
Franklin Income VIP Fund Seeks to maximize income while Franklin Advisers, Inc.
maintaining prospects for capital
appreciation.
Franklin Mutual Shares VIP Fund Seeks capital appreciation, with Franklin Mutual Advisers, LLC
income as a secondary goal.
FOR MORE INFORMATION REGARDING THE PORTFOLIOS AND THEIR INVESTMENT
ADVISERS AND SUBADVISERS, SEE THE PORTFOLIO PROSPECTUSES AND THEIR STATEMENTS
OF ADDITIONAL INFORMATION, WHICH YOU CAN OBTAIN BY CALLING 1-800-638-5000.
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The Portfolios' investment objectives may not be met. The investment
objectives and policies of certain Portfolios are similar to the investment
objectives and policies of other funds that may be managed by the same
investment adviser or sub-adviser. The investment results of the Portfolios may
be higher or lower than the results of these funds. There is no assurance, and
no representation is made, that the investment results of any of the Portfolios
will be comparable to the investment results of any other fund.
The Portfolios listed below are managed in a way that is intended to
minimize volatility of returns (referred to as a "managed volatility
strategy"):
o AB Global Dynamic Allocation Portfolio
o Allianz Global Investors Dynamic Multi-Asset Plus Portfolio
o AQR Global Risk Balanced Portfolio
o BlackRock Global Tactical Strategies Portfolio
o Invesco Balanced-Risk Allocation Portfolio
o JPMorgan Global Active Allocation Portfolio
o Brighthouse Balanced Plus Portfolio
o MetLife Multi-Index Targeted Risk Portfolio
o PanAgora Global Diversified Risk Portfolio
o Pyramis(R) Managed Risk Portfolio
o Schroders Global Multi-Asset Portfolio
Stock prices fluctuate, sometimes rapidly and dramatically, due to factors
affecting individual companies, particular industries or sectors or general
market conditions. Bond prices may fluctuate because they move in the opposite
direction of interest rates. Foreign investing carries additional risks such as
currency and market volatility. A managed volatility strategy is designed to
reduce volatility of returns to the above Portfolios from investing in stocks
and bonds. This strategy seeks to reduce such volatility by "smoothing"
returns, which may result in an Portfolio outperforming the general securities
market during periods of flat or negative market performance, and
underperforming the general securities market during periods of positive market
performance.
This means that in periods of high market volatility, this managed
volatility strategy could limit your participation in market gains; this may
conflict with your investment objectives by limiting your ability to maximize
potential growth of your Policy's cash value and, in turn, the value of any
guaranteed benefit that is tied to investment performance. Other Portfolios may
offer the potential for higher returns.
SHARE CLASSES OF THE PORTFOLIOS
The Portfolios offer various classes of shares, each of which has a
different level of expenses. The prospectuses for the Portfolios may provide
information for share classes that are not available through the Policy. When
you consult the prospectus for any Portfolio, you should be careful to refer to
only the information regarding the class of shares that is available through
the Policy. For the American Funds Insurance Series and the Franklin Templeton
Variable Insurance Products Trust, we offer Class 2 shares only; for
-Brighthouse Funds Trust I, -we offer Class A and Class B -shares; and for
Brighthouse Funds Trust II, we -offer Class A -shares only.
CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE PORTFOLIOS
An investment adviser (other than Brighthouse Investment Advisers, LLC,
known prior to March 6, 2017 as MetLife Advisers, LLC and as of the date of
this prospectus, our affiliate) or subadviser 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 our 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
A-23
investment in the Portfolios, bear the costs of these advisory fees (see the
Portfolio 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 subadvisers (or
other affiliates) may pay us more than others. These percentages currently
range up to 0.50%. Additionally, an investment adviser (other than Brighthouse
Investment Advisers, LLC) or subadviser 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 subadviser (or their affiliates) with increased access to persons involved
in the distribution of the Policies.
As of the date of this prospectus, we and/or certain of our affiliated
insurance companies have joint ownership interests in our affiliated investment
adviser Brighthouse Investment Advisers, LLC, which is formed as a "limited
liability company." Our ownership interests in Brighthouse Investment Advisers,
LLC entitle us to profit distributions if the adviser makes a profit with
respect to the advisory fees it receives from the Portfolios. We will benefit
accordingly from assets allocated to the Portfolios to the extent they result
in profits to the adviser. (See "Fee Tables--Annual Portfolio Operating
Expenses" for information on the management fees paid by the Portfolios and the
Statement of Additional Information for the Portfolios for information on the
management fees paid by the adviser to the subadvisers.) In 2016, MetLife, Inc.
announced plans to pursue the separation, through one or more transactions, of
a substantial portion of its U.S. retail business, including Brighthouse
Investment Advisers, LLC, then known as MetLife Advisers, LLC. The new separate
retail business will be organized under a holding company named Brighthouse
Financial, Inc. ("Brighthouse"). Following these transactions, Brighthouse
Investment Advisers, LLC will be a wholly-owned subsidiary of Brighthouse and
will no longer be affiliated with MetLife, and it is expected that MetLife
and/or certain of its affiliates will receive payments from Brighthouse
Investment Advisers, LLC and/or its affiliates of the type described in the
preceding paragraph. Additionally, it is expected that MetLife and/or certain
of its affiliates will receive payments from Brighthouse Investment Advisers,
LLC and/or its affiliates in an amount approximately equal to the profit
distributions they would have received had these transactions not occurred.
Certain Portfolios have adopted a Distribution Plan under Rule 12b-1 of
the Investment Company Act of 1940. A Portfolio's 12b-1 Plan, if any, is
described in more detail in the Portfolio's prospectus. (See "Fee
Tables--Annual Portfolio Expenses" and "Distribution of the Policies.") Any
payments we receive pursuant to those 12b-1 Plans are paid to us or our
Distributor. Payments under a Portfolio's 12b-1 Plan decrease the Portfolio's
investment return.
For more specific information on the amounts we may receive on account of
your investment in the Portfolios, you may call us toll free at 1-800-638-5000.
SELECTION OF THE 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. We
review the Portfolios periodically and may remove a Portfolio or limit its
availability to new premium payments and/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 Policy Owners. We may include Portfolios based on recommendations from
selling firms. In some cases, the selling firms may receive payments from the
Portfolios they recommend and may benefit accordingly from the allocation of
cash value to such Portfolios.
WE DO NOT PROVIDE ANY 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.
A-24
VOTING RIGHTS
We own the Portfolio shares held in the Separate Account and have the
right to vote those shares at meetings of the Portfolio shareholders. However,
to the extent required by Federal securities law, we will give you, as Policy
Owner, the right to instruct us how to vote the shares that are attributable to
your Policy.
We will determine, as of the record date, if you are entitled to give
voting instructions and the number of shares to which you have a right of
instruction. If we do not receive timely instructions from you, we will vote
your shares for, against, or withhold from voting on, any proposition in the
same proportion as the shares held in that Investment Division for all policies
for which we have received voting instructions. The effect of this proportional
voting is that a small number of Policy Owners may control the outcome of a
vote.
We will vote Portfolio shares held by our general account (or any
unregistered separate account for which voting privileges were not extended) in
the same proportion as the total of (i) shares for which voting instructions
were received and (ii) shares that are voted in proportion to such voting
instructions.
We may disregard voting instructions for changes in the investment policy,
investment adviser or principal underwriter of a Portfolio if required by state
insurance law, or if we (i) reasonably disapprove of the changes and (ii) in
the case of a change in investment policy or investment adviser, make a good
faith determination that the proposed change is prohibited by state authorities
or inconsistent with an Investment Division's investment objectives. If we do
disregard voting instructions, the next semi-annual report to Policy Owners
will include a summary of that action and the reasons for it.
RIGHTS RESERVED BY METLIFE
We and our affiliates may change the voting procedures and vote Portfolio
shares without Policy Owner instructions, if the securities laws change. We
also reserve the right: (1) to add Investment Divisions; (2) to combine
Investment Divisions; (3) to substitute shares of another registered open-end
management investment company, which may have different fees and expenses, for
shares of a Portfolio; (4) to substitute or close an Investment Division to
allocations of premium payments or cash value or both, and to existing
investments or the investment of future premiums, or both, for any class of
Policy or Policy Owner, at any time in our sole discretion; (5) to operate the
Separate Account as a management investment company under the Investment
Company Act of 1940 or in any other form; (6) to deregister the Separate
Account under the Investment Company Act of 1940; (7) to combine it with other
Separate Accounts; and (8) to transfer assets supporting the Policies from one
Investment Division to another or from the Separate Account to other Separate
Accounts, or to transfer assets to our general account as permitted by
applicable law. We will exercise these rights in accordance with applicable
law, including approval of Policy Owners if required. We will notify you if
exercise of any of these rights would result in a material change in the
Separate Account or its investments.
We will not make any changes without receiving any necessary approval of
the SEC and applicable state insurance departments. We will notify you of any
changes.
THE POLICIES
PURCHASING A POLICY
To purchase a Policy, you must submit a completed application and an
initial premium to us at our Designated Office. (See "Receipt of Communications
and Payments at MetLife's Designated Office.") The minimum face amount for the
base Policy is $50,000 unless we consent to a lower amount. For Policies
acquired through a pension or profit sharing plan qualified under Section 401
of the Internal Revenue Code of 1986, the minimum face amount is $25,000.
The Policies are available for insureds age 85 or younger. We can provide
you with details as to our underwriting standards when you apply for a Policy.
We reserve the right to modify our minimum face amount and underwriting
requirements at any time. We must receive evidence of insurability that
satisfies our underwriting standards before we will issue a Policy. We reserve
the right to reject an application for any reason permitted by law.
A-25
We offer other variable life insurance policies that have different death
benefits, policy features, and optional programs. However, these other policies
also have different charges that would affect your Investment Division
performance and cash values. To obtain more information about these other
policies, including their eligibility requirements, contact our Designated
Office or your registered representative.
REPLACING EXISTING INSURANCE
It may not be in your best interest to surrender, lapse, change, or borrow
from existing life insurance policies or annuity contracts in connection with
the purchase of the Policy. You should compare your existing insurance and the
Policy carefully. You should replace your existing insurance only when you
determine that the Policy is better for you. You may have to pay a surrender
charge on your existing insurance, and the Policy will impose a new surrender
charge period. You should talk to your financial professional or tax adviser to
make sure the exchange will be tax-free. If you surrender your existing policy
for cash and then buy the Policy, you may have to pay a tax, including possibly
a penalty tax, on the surrender. Because we may not issue the Policy until we
have received an initial premium from your existing insurance company, the
issuance of the Policy may be delayed.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time
to time. While the insured is living and the Policy is in force, the Policy
Owner may exercise all the rights and options described in the Policy, subject
to the terms of any beneficiary designation or assignment of the Policy. These
rights include selecting and changing the beneficiary, changing the owner,
changing the face amount of the Policy and assigning the Policy. At the death
of the Policy Owner who is not the insured, his or her estate will become the
Policy Owner unless a successor Policy Owner has been named. The Policy Owner's
rights (except for rights to payment of benefits) terminate at the death of the
insured.
The beneficiary is also named in the application. You may change the
beneficiary at any time before the death of the insured, unless the beneficiary
designation is irrevocable. The beneficiary has no rights under the Policy
until the death of the insured and must survive the insured in order to receive
the death proceeds. If no named beneficiary survives the insured, we pay
proceeds to the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made
and actions taken by us under the Policy before we receive a signed change
form. You can contact your registered representative or our Designated Office
for the procedure to follow.
You may assign (transfer) your rights in the Policy to someone else. An
absolute assignment of the Policy is a change of Policy Owner and beneficiary
to the assignee. A collateral assignment of the Policy does not change the
Policy Owner or beneficiary, but their rights will be subject to the terms of
the assignment. Assignments are subject to all payments made and actions taken
by us under the Policy before we receive a signed copy of the assignment form.
We are not responsible for determining whether or not an assignment is valid.
Changing the Policy Owner or assigning the Policy may have tax consequences.
(See "Tax Considerations" below.)
24 MONTH CONVERSION RIGHT
GENERAL RIGHT. Generally, during the first two Policy years, or in the
event of a material change in the investment policy of the Separate Account,
you may convert the Policy to fixed benefit coverage by exchanging the Policy
for a fixed benefit life insurance policy agreed to by us and issued by us or
an affiliate that we name provided that you repay any Policy loans and loan
interest, and the Policy has not lapsed. We make the exchange without evidence
of insurability. The new policy will have the same base Policy face amount as
that being exchanged. The new policy will have the same issue age, risk class
and Policy Date as the variable life Policy had.
Contact our Designated Office or your registered representative for more
specific information about the 24 Month Conversion Right. The exchange may
result in a cost or credit to you. On the exchange, you may need to make an
immediate premium payment on the new policy in order to keep it in force.
A-26
EXCHANGE RIGHT
At least once each year you have the option to transfer all of your cash
value to the Fixed Account and apply the cash surrender value to a new policy
issued by us or an affiliate which provides paid-up insurance. Paid-up
insurance is permanent insurance with no further premiums due. The face amount
of the new policy of paid-up insurance may be less than the face amount of the
Policy.
PREMIUMS
FLEXIBLE PREMIUMS
Subject to the limits described below, you choose the amount and frequency
of premium payments. You select a Planned Premium schedule, which consists of a
first-year premium amount and an amount for subsequent premium payments. This
schedule appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY
KEEP YOUR POLICY IN FORCE. You may skip Planned Premium payments or make
additional payments. Additional payments could be subject to underwriting. No
payment can be less than $50, except with our consent.
You can pay Planned Premiums on an annual, semi-annual or quarterly
schedule, or on a monthly schedule if payments are drawn directly from your
checking account under our pre-authorized checking arrangement. We will send
premium notices for annual, semi-annual or quarterly Planned Premiums. You may
make payments by check or through our pre-authorized checking arrangement. You
can change your Planned Premium schedule by sending your request to us at our
Designated Office. You may not make premium payments on or after the Policy
anniversary when the insured reaches age 121, except for premiums required
during the grace period.
If any payments under the Policy exceed the "7-pay limit" under Federal
tax law, your Policy will become a modified endowment contract and you may have
more adverse tax consequences with respect to certain distributions than would
otherwise be the case if premium payments did not exceed the "7-pay limit."
Information about your "7-pay limit" is found in your Policy illustration. If
we receive a premium payment 30 days or less before the anniversary of the
7-pay testing period that exceeds the "7-pay limit" and would cause the Policy
to become a modified endowment contract, and waiting until the anniversary to
apply that payment would prevent the Policy from becoming a modified endowment
contract, we may retain the premium payment in a non-interest bearing account
and apply the payment to the Policy on the anniversary. If we follow this
procedure, we will notify you and give you the option of having the premium
payment applied to the Policy before the anniversary. Otherwise, if you make a
premium payment that exceeds the "7-pay limit," we will apply the payment to
the Policy according to our standard procedures described below and notify you
that the Policy has become a modified endowment contract. In addition, if you
have selected the guideline premium test, Federal tax law limits the amount of
premiums that you can pay under the Policy. You need our consent if, because of
tax law requirements, a payment would increase the Policy's death benefit by
more than it would increase cash value. We may require evidence of insurability
before accepting the payment.
We allocate net premiums to your Policy's Investment Divisions as of the
date we receive the payments at our Designated Office (or at our Administrative
Office in Tampa, Florida), if they are received before the close of regular
trading on the New York Stock Exchange. Payments received after that time, or
on a day that the New York Stock Exchange is not open, will be allocated to
your Policy's Investment Divisions on the next day that the New York Stock
Exchange is open. (See "Receipt of Communications and Payments at MetLife's
Designated Office.")
Under our current processing, we treat any payment received by us as a
premium payment unless it is clearly marked as a loan repayment.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
INVESTMENT START DATE. Your initial net premium is credited with Fixed
Account interest as of the investment start date. The investment start date is
the later of the Policy Date and the date we first receive a premium payment
for the Policy at our Designated Office. (See "Receipt of Communications and
Payments at MetLife's Designated Office.")
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PREMIUM WITH APPLICATION. If you make a premium payment with the
application, unless you request otherwise, the Policy Date is the date the
policy application is approved. Monthly Deductions begin on the Policy Date.
You may only make one premium payment with the application. The minimum amount
you must pay is set forth in the application. If we decline an application, we
refund the premium payment made.
If you make a premium payment with the application, we will cover the
insured under a temporary insurance agreement beginning on the later of the
date the application is signed or on the date of any required medical
examination. (See "Death Benefits.")
PREMIUM ON DELIVERY. If you pay the initial premium upon delivery of the
Policy, unless you request otherwise, the Policy Date and the investment start
date are the date your premium payment is received at our Designated Office.
Monthly Deductions begin on the Policy Date.
BACKDATING. We may sometimes backdate a Policy, if you request, by
assigning a Policy Date earlier than the date the Policy application is
approved. You may wish to backdate so that you can obtain lower cost of
insurance rates, based on a younger insurance age. For a backdated Policy, you
must also pay the minimum premiums due for the period between the Policy Date
and the investment start date. As of the investment start date, we allocate the
net premiums to the Policy, adjusted for monthly Policy charges. For a
backdated Policy, the investment start date is the later of the date the policy
application is approved and the date your premium is received at our Designated
Office.
RIGHT TO EXAMINE POLICY
You may cancel the Policy within ten days after you receive it. You may
return the Policy to our Designated Office (see "Receipt of Communications and
Payments at MetLife's Designated Office") or your registered representative.
Insurance coverage ends as soon as you return the Policy (determined by
postmark, if the Policy is mailed). If you cancel the Policy, we refund any
premiums paid.
ALLOCATION OF NET PREMIUMS
We allocate your initial net premium to the Fixed Account as of the
investment start date. We will hold your initial net premium in the Fixed
Account for twenty days, and then we make the allocation among the Investment
Divisions as you choose. You may allocate any whole percentage to an Investment
Division.
You make the initial premium allocation when you apply for a Policy. You
can change the allocation of future premiums at any time thereafter. The change
will be effective for premiums applied on or after the date when we receive
your request. You may request the change by telephone, by written request
(which may be telecopied to us) or over the Internet. (See "Receipt of
Communications and Payments at MetLife's Designated Office.")
When we allocate net premiums to your Policy's Investment Divisions, we
convert them into accumulation units of the Investment Divisions. We determine
the number of accumulation units by dividing the dollar amount of the net
premium by the accumulation unit value. For your initial premium, we use the
accumulation unit value on the investment start date. For subsequent premiums,
we use the accumulation unit value next determined after receipt of the
payment. (See "Cash Value.")
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE'S DESIGNATED OFFICE
We will treat your request for a Policy transaction, or your submission of
a payment, as received by us if we receive a request conforming to our
administrative procedures or a payment at our Designated Office before the
close of regular trading on the New York Stock Exchange on that day (usually
4:00 p.m. Eastern Time). If we receive it after that time, or if the New York
Stock Exchange is not open that day, then we will treat it as received on the
next day when the New York Stock Exchange is open. These rules apply regardless
of the reason we did not receive your request 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 Designated Office for premium payments is printed on the billing
statement we mail to you. If you do not have your billing statement you may
call us at 1-800-638-5000 to obtain the address. The address to use depends on
whether you purchased the Policy through a registered representative of our
former affiliates MetLife Securities, Inc. or New England Securities
Corporation, or through another registered representative. If you purchased the
Policy through a registered representative of MetLife Securities, Inc. or New
England Securities Corporation, premium payments should be mailed to
A-28
MetLife, P.O. Box 371351, Pittsburgh, PA 15250-7351. If your representative was
not registered with one of these two former affiliates, premium payments should
be mailed to MetLife, P.O. Box 371862, Pittsburgh, PA 15250-7862. The
Designated Office for other transactions is as follows:
Payment Inquiries and MetLife
Correspondence P.O. Box 354
Warwick, RI 02887-0354
Beneficiary and Ownership MetLife
Changes P.O. Box 313
Warwick, RI 02887-0313
Surrenders, Loans, MetLife
Withdrawals and P.O. Box 543
Investment Division Transfers Warwick, RI 02887-0543
Cancellations (Right to Examine Policy MetLife
Period) Free Look Unit
500 Schoolhouse Road
Johnstown, PA 15904
Death Claims MetLife
P.O. Box 353
Warwick, RI 02887-0353
Investment Division Transfers and Other (800) 638-5000
Telephone Transactions and Inquiries
You may request a cash value transfer or reallocation of future premiums
by written request (which may be telecopied) to us, by telephoning us or over
the Internet (subject to our restrictions on frequent transfers). To request a
transfer or reallocation by telephone, you should contact your registered
representative or contact us at 1-800-638-5000. To request a transfer over the
Internet, you may log on to our website at www.metlife.com. We use reasonable
procedures to confirm that instructions communicated by telephone, facsimile or
Internet are genuine. Any telephone, facsimile or Internet instructions that we
reasonably believe to be genuine are your responsibility, including losses
arising from any errors in the communication of instructions. However, because
telephone and Internet 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 or Internet instructions, or that you have authorized any such person
to act for you.
Telephone, facsimile, and computer systems (including the Internet) may
not always be available. Any telephone, facsimile or computer system, whether
it is yours, your service provider's, your registered representative's, or
ours, can experience outages or slowdowns for a variety of reasons. These
outages or slowdowns may delay or prevent our processing of your request.
Although we have taken precautions to help our systems handle heavy use, we
cannot promise complete reliability under all circumstances. If you are
experiencing problems, you should make your request by writing to our
Designated Office.
If you send your 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 premium payment or transaction to your Policy.
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 Portfolios 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.
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
A-29
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 Portfolios; impact our ability
to calculate unit 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.
PAYMENT OF PROCEEDS
We ordinarily pay any cash surrender value, loan value or death benefit
proceeds from the Investment Divisions within seven days after we receive a
request, or satisfactory proof of death of the insured (and any other
information we need to pay the death proceeds). (See "Receipt of Communications
and Payments at MetLife's Designated Office.") However, we may delay payment
(except when a loan is made to pay a premium to us) or transfers from the
Investment Divisions: (i) if the New York Stock Exchange is closed (other than
customary weekend and holiday closing), or if trading on the New York Stock
Exchange is restricted as determined by the SEC; or (ii) if an emergency exists
as determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the net assets of the Separate Account.
We may withhold payment of surrender, withdrawal or loan proceeds if any
portion of those proceeds would be derived from a Policy Owner's check that has
not yet cleared (i.e., that could still be dishonored by your banking
institution). We may use telephone, facsimile, Internet or other means of
communications to verify that payment from the Policy Owner's 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. Policy Owners 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.
We will pay the proceeds in one sum, including either by check, by placing
the amount in an account that earns interest, 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 available in the
Statement of Information and on request from our Designated Office. We will pay
interest on the proceeds as required by applicable state law.
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.
Assets backing the Total Control Accounts are maintained in our general
account and are subject to the claims of our creditors. We will bear the
investment experience of such assets; however, regardless of the investment
experience of such assets, the interest credited to the Total Control Account
will never fall below the applicable guaranteed minimum annual effective rate.
Because we bear the investment experience of the assets backing the Total
Control Accounts, we may receive a profit from these assets. The Total Control
Account is not insured by the FDIC or any other governmental agency.
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
A-30
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 "Receipt of Communications and Payments at
MetLife's Designated Office.")
CASH VALUE
Your Policy's total cash value includes its cash value in the Separate
Account and in the Fixed Account. If you have a Policy loan, the cash value
also includes the amount we hold in the Loan Account as a result of the loan.
The cash value reflects:
-- net premium payments
-- the net investment experience of the Policy's Investment Divisions
-- interest credited to cash value in the Fixed Account
-- interest credited to amounts held in the Loan Account for a Policy loan
-- the death benefit option you choose
-- Policy charges
-- partial withdrawals
-- transfers among the Investment Divisions and the Fixed Account.
The Policy's total cash value in the Separate Account equals the number of
accumulation units credited in each Investment Division multiplied by that
Investment Division's accumulation unit value. We convert any premium, interest
earned on loan cash value, or cash value allocated to an Investment Division
into accumulation units of the Investment Division. Surrenders, partial
withdrawals, Policy loans, transfers and charges deducted from the cash value
reduce the number of accumulation units credited in an Investment Division. We
determine the number of accumulation units by dividing the dollar amount of the
transaction by the Investment Division's accumulation unit value next
determined following the transaction. (In the case of an initial premium, we
use the accumulation unit value on the investment start date.)
The accumulation unit value of an Investment Division depends on the net
investment experience of its corresponding Portfolio and reflects fees and
expenses of the Portfolio. We determine the accumulation unit value as of the
close of regular trading on the New York Stock Exchange on each day that the
Exchange is open for trading by multiplying the most recent accumulation unit
value by the net investment factor ("NIF") for that day (see below).
The NIF for an Investment Division reflects:
-- the change in net asset value per share of the corresponding Portfolio
(as of the close of regular trading on the Exchange) from its last
value,
-- the amount of dividends or other distributions from the Portfolio since
the last determination of net asset value per share, and
-- any deductions for taxes that we make from the Separate Account.
The NIF can be greater or less than one.
DEATH BENEFITS
If the insured dies while the Policy is in force, we pay a death benefit
to the beneficiary. Coverage under the Policy generally begins when you pay the
initial premium. If you make a premium payment with the application, we will
cover the insured under a temporary insurance agreement for a limited time that
begins on the later of the date we receive the premium payment or the date of
any required medical examination. Temporary coverage is not available for
proposed insureds who have received medical treatment for, or been diagnosed as
having, certain conditions or diseases specified in the temporary insurance
agreement. The maximum temporary coverage is the lesser of the amount of
insurance applied for and $1,000,000.
A-31
DEATH BENEFIT OPTIONS. When you apply for a Policy, you must choose among
three death benefit options. If you fail to select a death benefit option in
the application, we will seek the required information from you.
The Option A death benefit is equal to the face amount of the Policy. The
Option A death benefit is fixed, subject to increases required by the Internal
Revenue Code of 1986 (the "Code").
The Option B death benefit is equal to the face amount of the Policy, plus
the Policy's cash value, if any. The Option B death benefit is also subject to
increases required by the Code.
The Option C death benefit (available if the insured is age 60 or younger)
is equal to the face amount of the Policy plus the Policy's cash value until
the insured attains age 65, at which time we will increase the Policy's face
amount by the amount of the Policy's cash value and thereafter the death
benefit will remain level, at the increased face amount, subject to increases
required by the Code.
CHOICE OF TAX TEST. The Internal Revenue Code requires the Policy's death
benefit to be not less than an amount defined in the Code. As a result, if the
cash value grows to certain levels, the death benefit increases to satisfy tax
law requirements.
When you apply for your Policy, you select which tax test will apply to
the death benefit. You will choose between: (1) the guideline premium test, and
(2) the cash value accumulation test. The test you choose at issue cannot be
changed.
Under the GUIDELINE PREMIUM TEST, the amount of premium that can be paid
is subject to tax law limits. Additionally, the death benefit will not be less
than the cash value times the guideline premium factor. See Appendix A.
Under the CASH VALUE ACCUMULATION TEST, the death benefit will not be less
than the cash value times the net single premium factor set by the Code. Net
single premium factors are based on the age, smoking status, and sex (if not
unisex) of the insured at the time of the calculation. Sample net single
premium factors appear in Appendix A.
If cash value growth in the later Policy years is your main objective, the
guideline premium test may be the appropriate choice because it does not
require as high a death benefit as the cash value accumulation test, and
therefore cost of insurance charges may be lower, once the Policy's death
benefit is subject to increases required by the Code. If you select the cash
value accumulation test, you can generally make a higher amount of premium
payments for any given face amount, and a higher death benefit may result in
the long term. If cash value growth in the early Policy years is your main
objective, the cash value accumulation test may be the appropriate choice
because it allows you to invest more premiums in the Policy for each dollar of
death benefit.
AGE 121. The death benefit payable under Option A or Option C on or after
the insured's attained age 121 will be the greater of:
-- 101% of the cash value on the date of death, or
-- the face amount of the base Policy on the Policy anniversary at the
insured's attained age 121.
The death benefit payable under Option B on or after the insured's
attained age 121 will be the face amount of the base Policy on the Policy
anniversary at the insured's attained age 121, plus the cash value on the date
of death.
The tax consequences of keeping the Policy in force beyond the insured's
attained age 121 are unclear.
DEATH PROCEEDS PAYABLE
The death proceeds we pay are equal to the death benefit on the date of
the insured's death, reduced by any outstanding loan and accrued loan interest
on that date. If death occurs during the grace period, we reduce the proceeds
by the amount of unpaid Monthly Deductions. (See "Lapse and Reinstatement.") We
increase the death proceeds (1) by any rider benefits payable and (2) by any
cost of insurance charge made for a period beyond the date of death. Riders
that can have an effect on the amount of death proceeds payable are the
Accelerated Death Benefit Rider, the Accidental Death Benefit Rider and the
Options to Purchase Additional Insurance Coverage Rider. (See "Additional
Benefits by Rider.")
We may adjust the death proceeds if the insured's age or sex was misstated
in the application, if death results from the insured's suicide within two
years from the Policy's date of issue, or if a rider limits the death benefit.
A-32
SUICIDE. If the insured commits suicide within two years from the date of
issue, the death benefit will be limited to premiums paid, less any partial
withdrawals, less any loan and loan interest outstanding on the date of death.
If the insured commits suicide within two years after the effective date of an
increase in face amount, the death benefit for such increase may be limited to
the Monthly Deductions for the increase.
CHANGE IN DEATH BENEFIT OPTION
After the first Policy year you may change your death benefit option,
subject to our underwriting rules, by written request to our Designated Office.
The change will be effective on the monthly anniversary on or following the
date we approve your request. We may require proof of insurability. A change in
death benefit option may have tax consequences.
If you change from Option A (or from Option C after the insured's attained
age 65) to Option B (or to Option C on or before the insured's attained age
60), we reduce the Policy's face amount if necessary so that the death benefit
is the same immediately before and after the change. A face amount reduction
below $50,000 requires our consent. If we reduce the face amount, we will first
reduce any prior increases in face amount that you applied for, in the reverse
order in which the increases occurred, then any remaining initial face amount,
and then any increase in face amount from a prior change in death benefit
option, but not below the Policy minimum. A partial withdrawal of cash value
may be necessary to meet Federal tax law limits on the amount of premiums that
you can pay into the Policy. A Surrender Charge may apply to a Policy face
amount reduction or partial withdrawal that reduces the face amount on a change
from Option A (or from Option C after the insured's attained age 65) to Option
B (or to Option C on or before the insured's attained age 60). (See "Surrender
Charge.") In addition, if the face amount reduction occurs within 12 months
after a face amount increase, we will deduct a proportionate part of the
Coverage Expense Charges due with respect to the face amount increase for the
remainder of the 12-month period.
If you change from Option B (or from Option C on or before the insured's
attained age 65) to Option A, we increase the Policy's face amount, if
necessary, so that the death benefit is the same immediately before and after
the change. This increase in face amount is not subject to the Coverage Expense
Charge and will not be subject to any Surrender Charge.
INCREASE IN FACE AMOUNT
You may increase the Policy's face amount. We require satisfactory
evidence of insurability, and the insured's attained age must be 85 or less.
The minimum amount of increase permitted is $5,000. The increase is effective
on the monthly anniversary on or next following our approval of your request.
Requests for face amount increases should be submitted to our Designated
Office. An increase in face amount may have tax consequences.
The face amount increase will have its own Target Premium, as well as its
own Surrender Charge, current cost of insurance rates, Coverage Expense Charge
and Right to Examine Policy and suicide and contestability periods as if it
were a new Policy. (See "Surrender Charge", "Monthly Deduction from Cash
Value", "Partial Withdrawal" and "Reduction in Face Amount.") When calculating
the monthly cost of insurance charge, we attribute the Policy's cash value
first to any remaining initial face amount (including any increase in face
amount from a prior change in death benefit option), then to any face amount
increases in the order in which they were issued, for purposes of determining
the net amount at risk.
We reserve the right to (i) restrict certain Policy changes, such as death
benefit increases, or (ii) require the issuance of a new Policy in connection
with such Policy changes if we deem it administratively necessary or prudent to
do so in order to comply with applicable law, including applicable Federal
income tax law.
REDUCTION IN FACE AMOUNT
After the first Policy year, you may reduce the face amount of your Policy
without receiving a distribution of any Policy cash value. If you reduce the
face amount of your Policy, we deduct any Surrender Charge that applies from
the Policy's cash value in proportion to the amount of the face amount
reduction. If the face amount of your Policy is reduced in the first year
following a face amount increase, we will also deduct a proportionate part of
the Coverage Expense Charges due for the remainder of the first year following
the face amount increase.
A face amount reduction will decrease the Policy's death benefit unless we
are increasing the death benefit to satisfy Federal income tax laws, in which
case a face amount reduction will not decrease the death benefit unless we
deduct a
A-33
Surrender Charge from the cash value. A reduction in face amount in this
situation may not be advisable. The amount of any face reduction must be at
least $5,000, and the face amount remaining after a reduction must meet our
minimum face amount requirements for issue, except with our consent.
If you choose to reduce your Policy's face amount, unless you request
otherwise, we will first decrease any prior increases in base Policy face
amount that you applied for, in the reverse order in which the increases
occurred, then any remaining initial base Policy face amount, and then any
increase in face amount from a prior change in death benefit option.
A reduction in face amount reduces the Federal tax law limits on the
amount of premiums that you can pay under the Policy under the guideline
premium test. In these cases, a portion of the Policy's cash value may have to
be paid to you to comply with Federal tax law.
A face amount reduction takes effect on the monthly anniversary on or next
following the date we receive your request. You can contact your registered
representative or the Designated Office for information on face amount
reduction procedures.
A reduction in the face amount of a Policy may create a modified endowment
contract or have other adverse tax consequences. If you are contemplating a
reduction in face amount, you should consult your tax adviser regarding the tax
consequences of the transaction. (See "Tax Considerations.")
SURRENDERS AND PARTIAL WITHDRAWALS
SURRENDER
You may surrender the Policy for its cash surrender value at any time
while the insured is living. We determine the cash surrender value as of the
date when we receive the surrender request. (See "Receipt of Communications and
Payments at MetLife's Designated Office.") The cash surrender value equals the
cash value reduced by any Policy loan and accrued interest and by any
applicable Surrender Charge. (See "Surrender Charge.") If you surrender the
Policy in the first Policy year (or in the first year following a face amount
increase), we will also deduct an amount equal to the remaining first year
Coverage Expense Charges. We reserve the right to also deduct an amount equal
to the remaining first year Policy Charges.
If you surrender the Policy, coverage will terminate on the monthly
anniversary on or next following the date of surrender. If the insured dies on
or after the surrender date, but before the termination date, we will reverse
the surrender and will pay the Policy's death benefit to the beneficiary, but
we will deduct from the death proceeds an amount equal to the cash surrender
value paid to you.
You may apply all or part of the surrender proceeds to a payment option.
Once a Policy is surrendered, all coverage and benefits cease and cannot be
reinstated. A surrender may result in adverse tax consequences. (See "Tax
Considerations" below.)
The Policies are designed to be long-term investments. As a result, you
should be aware that if you surrender your Policy in the first Policy year, the
Surrender Charge is likely to exceed the cash value of your Policy and you will
receive no proceeds upon surrender.
PARTIAL WITHDRAWAL
After the first Policy anniversary you may withdraw a portion of the
Policy's cash surrender value. A partial withdrawal reduces the Policy's death
benefit and may reduce the Policy's face amount if necessary so that the amount
at risk under the Policy will not increase. A partial withdrawal may also
reduce rider benefits. The minimum amount of a partial withdrawal request must
be $500.
We have the right to limit partial withdrawals to no more than 90% of the
cash surrender value. In addition, a partial withdrawal will be limited by any
restriction that we currently impose on withdrawals from the Fixed Account.
(See "The Fixed Account.") Currently, we permit partial withdrawals equal to
the lesser of 100% of the Policy's cash surrender value in the Separate Account
as of the beginning of the year, or the maximum amount that can be withdrawn
without causing the Policy's face amount to fall below the minimum permitted.
(However, we may allow the face amount to fall below the minimum if the Policy
has been in force for at least 15 years and the insured's attained age is
greater than 55.) You may not make a partial withdrawal that would reduce your
cash surrender value to less than the amount of two Monthly Deductions.
A-34
We have the right to limit partial withdrawals to 12 per Policy year. Currently
we do not limit the number of partial withdrawals. We reserve the right to
impose a charge of $25 on each partial withdrawal.
If a partial withdrawal reduces your Policy's face amount, the amount of
the Surrender Charge that will be deducted from your cash value is an amount
that is proportional to the amount of the face reduction. The amount deducted
will reduce the remaining Surrender Charge payable under the Policy. No
Surrender Charge will apply on up to 10% of the cash surrender value withdrawn
each year, measured as a percentage of each withdrawal.
EXAMPLE. The following example assumes that a Policy Owner withdraws, in the
first month of the second Policy year, 20% of the cash surrender value of a
Policy. The insured under the Policy is assumed to be the representative
insured shown in the fee table on page A-8 of the prospectus. As shown in the
fee table, the Surrender Charge for that insured is $14.00 per $1,000 of Policy
face amount. The Policy is assumed to have the other characteristics shown
below:
Face Amount:................. $ 375,000
Death Benefit Option:........ Option A -- Level
Cash Value:.................. $ 12,000
Surrender Charge:............ $ -5,250 ($14.00 x $375,000/1,000)
-------------------
Cash Surrender Value:........ $ 6,750
x 20%
-------------------
Withdrawal Amount:........... $ 1,350
The first 10% of cash surrender value, or $675, can be withdrawn free of
Surrender Charge. The remaining $675 withdrawn is subject to a portion of the
Policy's Surrender Charge -- based on the ratio that such excess withdrawal
amount bears to the Policy's face amount less the Surrender Charge, as shown in
the formula below:
Withdrawal Amount in
Excess of Free Withdrawal
----------------------------------
Surrender Charge x = Surrender Charge On Withdrawal
Face Amount less Surrender Charge
$675
----
$5,250 x = $10
$375,000 - $5,250
Because the Policy has a level death benefit, the withdrawal will cause a
dollar for dollar reduction in the Policy's face amount, so that the cash value
and the face amount will both be reduced by the $1,350 withdrawal and by the
$10 Surrender Charge.
The effect of the withdrawal on the Policy would be as follows:
Face Amount before Withdrawal................ $375,000
Withdrawal.................................. - 1,350
Surrender Charge on Withdrawal.............. - 10
----------
Face Amount after Withdrawal................. $373,640
Surrender Charge before Withdrawal........... $ 5,250
Surrender Charge on Withdrawal.............. - 10
----------
Surrender Charge after Withdrawal............ $ 5,240
Cash Value before Withdrawal................. $ 12,000
Withdrawal.................................. - 1,350
Surrender Charge on Withdrawal.............. - 10
----------
Cash Value after Withdrawal.................. $ 10,640
Surrender Charge after Withdrawal............ - 5,240
----------
Cash Surrender Value after Withdrawal........ $ 5,400
A-35
Any face amount reduction resulting from a partial withdrawal will reduce
the face amount in the following order: any prior increases in base Policy face
amount that you applied for, in the reverse order in which the increases
occurred; any remaining initial face amount; and then any face amount increases
resulting from a change in death benefit option, down to the required minimum.
A partial withdrawal reduces the cash value in the Investment Divisions of
the Separate Account and the Fixed Account in the same proportion that the cash
value in each bears to the Policy's total unloaned cash value. We determine the
amount of cash surrender value paid upon a partial withdrawal as of the date
when we receive a request. You can contact your registered representative or
our Designated Office for information on partial withdrawal procedures. (See
"Receipt of Communications and Payments at MetLife's Designated Office.")
A reduction in the death benefit as a result of a partial withdrawal may
create a modified endowment contract or have other adverse tax consequences. If
you are contemplating a partial withdrawal, you should consult your tax adviser
regarding the tax consequences. (See "Tax Considerations.")
TRANSFERS
TRANSFER OPTION
You may transfer your Policy's cash value between and among the Investment
Divisions and the Fixed Account. Your right to transfer begins 20 days after we
apply your initial premium to the Policy. We reserve the right to limit
transfers to four per Policy year and to impose a charge of $25 per transfer.
Currently we do not limit the number of transfers per Policy year or impose a
charge on transfers. We treat all transfer requests made at the same time as a
single request. The transfer is effective as of the date when we receive the
transfer request, if the request is received before the close of regular
trading on the New York Stock Exchange. Transfer requests received after that
time, or on a day that the New York Stock Exchange is not open, will be
effective on the next day that the New York Stock Exchange is open. (See
"Receipt of Communications and Payments at MetLife's Designated Office.") For
special rules regarding transfers involving the Fixed Account, see "The Fixed
Account".
RESTRICTIONS ON 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).
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 treat all American Funds Insurance Series portfolios ("American Funds
portfolios") as Monitored Portfolios. We monitor the following portfolios:
American Funds Global Small Capitalization Fund
Baillie Gifford International Stock Portfolio
Brighthouse/Aberdeen Emerging Markets Equity Portfolio
Brighthouse/Templeton International Bond Portfolio
Clarion Global Real Estate Portfolio
Harris Oakmark International Portfolio
Invesco Small Cap Growth Portfolio
JPMorgan Small Cap Value Portfolio
Loomis Sayles Global Markets Portfolio
Loomis Sayles Small Cap Core Portfolio
Loomis Sayles Small Cap Growth Portfolio
MetLife MSCI EAFE(R) Index Portfolio
MetLife Russell 2000(R) Index Portfolio
MFS(R) Research International Portfolio
Neuberger Berman Genesis Portfolio
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Oppenheimer Global Equity Portfolio
T. Rowe Price Small Cap Growth Portfolio
VanEck Global Natural Resources Portfolio
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 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.
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 or
other identified 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 a warning letter; a second occurrence will
result in the imposition of the restriction for a six-month period; a third
occurrence will result in the permanent imposition of the restriction.
Transfers made under an Automated Investment Strategy 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 also may 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 Portfolio 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
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separate accounts funding variable insurance products. The omnibus orders
reflect the aggregation and netting of multiple orders from individual owners
of variable insurance products 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 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.
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 Portfolio 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
portfolio 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
Policy 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 either
(i) in writing with an original signature or (ii) by telephone prior to 10:00
a.m. A first occurrence will result in a warning letter; a second occurrence
will result in the imposition of the restriction for a six-month period; a
third occurrence will result in the permanent imposition of the restriction.
In addition to the foregoing, your right to make transfers is subject to
limitations or modifications by us if we determine, in our sole opinion, that
the exercise of the right by one or more owners with interests in the
Investment Divisions is, or would be, to the disadvantage of other owners.
Restrictions may be applied in any manner reasonably designed to prevent any
use of the transfer right that we consider to be to the disadvantage of other
owners. A limitation or modification could be applied to transfers to and from
one or more of the Investment Divisions and could include, but is not limited
to: (1) the requirement of a minimum time period between each transfer; (2) not
accepting a transfer request from a third party acting under authorization on
behalf of more than one owner; (3) limiting the dollar amount that may be
transferred by an owner between Investment Divisions at any one time; or (4)
requiring that a transfer request be provided in writing and signed by the
owner.
AUTOMATED INVESTMENT STRATEGIES
You can choose one of five automated investment strategies. You can change
or cancel your choice at any time.
EQUITY GENERATORSM. The Equity Generator allows you to transfer the
interest earned in the Fixed Account to any one of the Investment Divisions on
each monthly anniversary. The interest earned in the month must be at least $20
in order for the transfer to take place. If less than $20 is earned, no
transfer will occur, and the interest not transferred cannot be counted towards
the next month's minimum.
ALLOCATORSM. The Allocator allows you to systematically transfer cash
value from the Fixed Account or any one Investment Division (the "source fund")
to any number of Investment Divisions. The transfers will take place on each
monthly anniversary. You can choose to transfer a specified dollar amount (1)
for a specified number of months, or (2) until the source fund is depleted. In
either case, you must select a dollar amount that would allow transfers to
continue for at least three months.
ENHANCED DOLLAR COST AVERAGER. With the Enhanced Dollar Cost Averager,
cash value is transferred from the EDCA fixed account to the Investment
Divisions monthly. You elect the EDCA at issue and select the total dollar
amount of cash value to be transferred. The cash value earmarked for the
strategy is held in the EDCA fixed account where it may be credited with a rate
of interest that is higher than the Fixed Account's current crediting rate. The
amount transferred each month to the Investment Divisions equals the total
amount earmarked for the strategy divided by 12.
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REBALANCERSM. The Rebalancer allows your Policy's cash value to be
automatically redistributed on a quarterly basis among the Investment Divisions
and the Fixed Account in accordance with the allocation percentages you have
selected.
INDEX SELECTORSM. The Index Selector allows you to choose one of five
asset allocation models which are designed to correlate to various risk
tolerance levels. Based on your selection, we allocate 100% of your cash value
among the five Investment Divisions that invest in the five index Portfolios
available under the Policy (the MetLife Aggregate Bond Index, MetLife MSCI EAFE
Index, MetLife Stock Index, MetLife Mid Cap Stock Index and MetLife Russell
2000 Index Portfolios) and the Fixed Account. On a quarterly basis, we will
redistribute your cash value among these Investment Divisions and the Fixed
Account in order to return your cash value to the original allocation
percentages. If you change your allocation of net premiums the Index Selector
strategy, including the rebalancing feature, will be terminated.
We will continue to implement the Index Selector strategy using the
percentage allocations of the model that was in effect when you elected the
Index Selector strategy. You should consider whether it is appropriate for you
to continue using this strategy over time if your risk tolerance, time horizon
or financial situation changes. The asset allocation models used in Index
Selector may change from time to time. If you are interested in an updated
model, please contact your registered representative.
You may not elect Index Selector unless you purchased the Policy prior to
July 1, 2016 through a registered representative of one of our formerly
affiliated broker-dealers MetLife Securities, Inc. or New England Securities
Corporation. However, ask your registered representative how you might design a
similar investment strategy using Rebalancer.
These automated investment strategies allow you to take advantage of
investment fluctuations, but none assures a profit nor protects against a loss.
Because certain strategies involve continuous investment in securities
regardless of fluctuating price levels of such securities, you should consider
your financial ability to continue purchases through periods of fluctuating
price levels.
We reserve the right to modify or terminate any of the automated
investment strategies for any reason, including, without limitation, a change
in regulatory requirements applicable to such programs. For more information
about the automated investment strategies, please contact your registered
representative.
LOANS
You may borrow from your Policy at any time. The maximum amount you may
borrow, calculated as of the date of the loan, is the greater of 75% of the
Policy's cash surrender value or:
-- the Policy's cash value, less
-- any Policy loan balance, less
-- loan interest due to the next Policy anniversary, less
-- the most recent Monthly Deduction times the number of months to the
next Policy anniversary, less
-- any Surrender Charge, plus
-- interest credited on the cash value at the guaranteed interest rate to
the next Policy anniversary.
The minimum loan amount is $500. We make the loan as of the date when we
receive a loan request. (See "Receipt of Communications and Payments at
MetLife's Designated Office.") You may increase your risk of lapse if you take
a loan. You should contact our Designated Office or your registered
representative for information on loan procedures.
A Policy loan reduces the Policy's cash value in the Investment Divisions
and the Fixed Account by the amount of the loan. A loan repayment increases the
cash value in the Investment Divisions and the Fixed Account by the amount of
the repayment. We attribute Policy loans to the Investment Divisions and the
Fixed Account in proportion to the cash value in each. We transfer cash value
equal to the amount of the loan from the Investment Divisions and the Fixed
Account to the Loan Account (which is part of our general account).
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You may repay all or part of your loan at any time while the insured is
still alive. When you make a loan repayment, we transfer an amount of cash
value equal to the repayment from the Loan Account to the Divisions of the
Separate Account and to the Fixed Account in proportion to the cash value in
each. (See "Receipt of Communications and Payments at MetLife's Designated
Office.")
We guarantee that the interest rate charged on Policy loans will not be
more than 4.0% per year in Policy years 1-10 and 3.0% per year thereafter.
Policy loan interest is due and payable annually on each Policy
anniversary. If not paid when due, we add the interest accrued to the loan
amount, and we transfer an amount of cash value equal to the unpaid interest
from the Investment Divisions and the Fixed Account to the Loan Account in the
same manner as a new loan.
Cash value in the Loan Account earns interest at not less than 3.0% per
year and is transferred on each Policy anniversary to the Investment Divisions
and to the Fixed Account in proportion to the cash value in each. The interest
credited will also be transferred: (1) when you take a new loan; (2) when you
make a full or partial loan repayment; and (3) when the Policy enters the grace
period.
The amount taken from the Policy's Investment Divisions as a result of a
loan does not participate in the investment experience of the Investment
Divisions. Therefore, loans can permanently affect the death benefit and cash
value of the Policy, even if repaid. In addition, we reduce any proceeds
payable under a Policy by the amount of any outstanding loan plus accrued
interest.
If a Policy loan is outstanding, it may be better to repay the loan than
to pay a premium, because the payment is subject to sales and premium tax
charges, and the loan repayment is not subject to charges. (See "Deductions
from Premiums.") If you want us to treat a payment as a loan repayment, it
should be clearly marked as such.
A loan that is taken from, or secured by, a Policy may have tax
consequences. Although the issue is not free from doubt, we believe that a loan
from or secured by a Policy that is not classified as a modified endowment
contract should generally not be treated as a taxable distribution.
Nevertheless, the tax consequences associated with loans outstanding after the
tenth Policy year are uncertain. A tax adviser should be consulted when
considering a loan.
LAPSE AND REINSTATEMENT
LAPSE
In general, in any month that your Policy's cash surrender value is not
large enough to cover a Monthly Deduction, your Policy will be in default, and
may lapse. However, you can prevent your Policy from lapsing, regardless of the
amount of your cash surrender value, if the premiums you pay are sufficient to
keep the Guaranteed Minimum Death Benefit ("GMDB") in effect.
The base Policy offers, at no additional charge, a five-year GMDB, a
20-year GMDB and a GMDB that lasts until the insured's age 65. For an
additional charge, you can add a Policy rider at issue that provides a GMDB to
age 85 or a GMDB to age 121. All Policies are issued with a GMDB, which
guarantees that the Policy will remain in force for at least five years if the
required Guaranteed Minimum Death Benefit Monthly Premiums ("GMDB Monthly
Premiums") are paid when due. The five-year GMDB Monthly Premium is set forth
in your Policy. It is the minimum initial periodic premium you can pay into the
Policy. Policies will be issued with the 20-year GMDB or the GMDB to age 65 to
eligible Policy Owners who elect either of these GMDBs at issue.
The GMDB Monthly Premium varies depending on the guarantee period, the
insured's age, sex (except for unisex policies), smoking status and risk class,
the Policy's face amount and the death benefit option chosen. The GMDB Monthly
Premium may change in the event that any of the following events occur: an
increase or decrease in the base Policy face amount; adding, deleting or
changing a rider; a change in death benefit option or the insured's risk class;
or a misstatement of the insured's age or sex in the Policy application.
On each monthly anniversary we test the Policy to determine if the
cumulative premiums you have paid, less any partial withdrawals or outstanding
loans you have taken, equal or exceed the sum of the GMDB Monthly Premiums due
to date for the GMDB you selected. If you meet this test, the GMDB you selected
will be in effect. However, even if you have not elected the 20-year GMDB or
the GMDB to age 65, if the amount of premiums you pay into the Policy for each
Policy month since the
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Policy Date is sufficient to meet the requirements of the 20-year GMDB or the
GMDB to age 65, in your third annual statement we will notify you that the
applicable GMDB is in effect. Conversely, if you have elected the 20-year GMDB
or the GMDB to age 65 and your premium payments are insufficient to satisfy the
GMDB Monthly Premium requirements, we will notify you that your GMDB will be
reduced to the five-year GMDB, the GMDB to age 65, or the 20-year GMDB, as
applicable, unless you pay sufficient premiums within 62 days to meet the
requirements of the GMDB you originally selected. If, during the first five
Policy years, you fail to pay sufficient premiums to keep the five-year GMDB in
effect, we will notify you that the GMDB will terminate within 62 days if you
fail to pay the required Monthly Premiums. If the guarantee provided by the
GMDB terminates, the Policy will continue in force for as long as there is cash
surrender value sufficient to pay the Monthly Deduction. If the GMDB
terminates, you may reinstate it within nine months provided the Policy remains
in force. In order to reinstate the GMDB, you must pay sufficient premiums to
satisfy the cumulative premium requirement for the applicable GMDB (five-year,
20-year or to age 65) at the time of reinstatement.
If the GMDB is in effect and the Policy's cash surrender value is
insufficient to cover the Monthly Deduction, the Policy will not lapse. We will
take the Monthly Deduction from the Policy's cash value until the cash value
has been reduced to zero. At that point, future Monthly Deductions will be
waived for as long as the GMDB is in effect.
If the GMDB is not in effect and the cash surrender value is insufficient
to pay the Monthly Deduction, the Policy will enter a 62-day grace period
during which you will have an opportunity to pay a premium sufficient to keep
the Policy in force. The minimum amount you must pay is the lesser of three
Monthly Deductions or, if applicable, the amount necessary to reinstate the
GMDB. We will tell you the amount due. If you fail to pay this amount before
the end of the grace period, the Policy will terminate.
Your Policy may also lapse if Policy loans plus accrued interest exceed
the Policy's cash value less the Surrender Charge. Your Policy may be protected
against lapse in these circumstances if it has been in force for 15 years, the
insured has attained age 75, and the other requirements for coverage under the
Overloan Protection Rider are met. If your Policy is not so protected, we will
notify you that the Policy is going to terminate. The Policy terminates without
value unless you make a sufficient payment within the later of 62 days from the
monthly anniversary immediately before the date when the excess loan occurs or
31 days after we mail the notice. If the Policy lapses with a loan outstanding,
adverse tax consequences may result. (See "Tax Considerations" below.)
REINSTATEMENT
If your Policy has lapsed, you may reinstate it within three years after
the date of lapse if the insured has not attained age 121. If more than three
years have passed, you need our consent to reinstate. Reinstatement in all
cases requires payment of certain charges described in the Policy and usually
requires evidence of insurability that is satisfactory to us. If the Policy
lapses and is reinstated during the first five Policy years, only the five-year
GMDB will be reinstated. If the Policy lapses after the first five Policy
years, the GMDB will terminate and cannot be reinstated. Under no circumstances
can the GMDB provided by Policy rider be reinstated following a Policy lapse.
If we deducted a Surrender Charge on lapse, we credit it back to the
Policy's cash value on reinstatement. The Surrender Charge on the date of
reinstatement is the same as it was on the date of lapse. When we determine the
Surrender Charge and other charges except cost of insurance and the Policy loan
interest rate, we do not count the amount of time that a Policy was lapsed.
ADDITIONAL BENEFITS BY RIDER
You can add additional benefits to the Policy by rider, subject to our
underwriting and issuance standards. These additional benefits usually require
an additional charge as part of the Monthly Deduction from cash value. The
rider benefits available with the Policy provide fixed benefits that do not
vary with the investment experience of the Separate Account.
There is no limit on the number of riders you can elect to add to your
Policy at issue. However, you may not elect both the Waiver of Monthly
Deduction Rider and the Waiver of Specified Premium Rider.
The following riders, some of which have been described previously, are
available:
CHILDREN'S TERM INSURANCE RIDER, which provides term insurance on the
lives of children of the insured.
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WAIVER OF MONTHLY DEDUCTION RIDER, which provides for waiver of Monthly
Deductions in the event of the disability of the insured.
WAIVER OF SPECIFIED PREMIUM RIDER, which provides for waiver of a
specified amount of monthly premium in the event of the disability of the
insured.
OPTIONS TO PURCHASE ADDITIONAL INSURANCE COVERAGE RIDER, which allows the
Owner to purchase additional coverage on the insured without providing evidence
of insurability.
ACCELERATION OF DEATH BENEFIT RIDER, which allows a Policy Owner to
accelerate payment of all or part of the Policy's death benefit if the insured
is terminally ill. In calculating the Accelerated Death Benefit, we assume that
death occurs one year from the date of claim and we discount the future death
benefit using an interest rate not to exceed the greater of (1) the current
yield on 90-day Treasury bills, and (2) the maximum policy loan interest rate
under the Policy. The Policy Owner must accelerate at least $50,000 (or 25% of
the death benefit, if less), but not more than the greater of $250,000 or 10%
of the death benefit. As an example, if a Policy Owner accelerated the death
benefit of a Policy with a face amount of $1,000,000, the maximum amount that
could be accelerated would be $250,000. Assuming an interest rate of 6%, the
present value of the benefit would be $235,849. If we exercised our reserved
right to impose a $150 processing fee, the benefit payable would be $235,849
less $150, or $235,699.
GUARANTEED SURVIVOR INCOME BENEFIT RIDER, which provides the beneficiary
with the option of exchanging the Policy's death benefit for enhanced monthly
income payments for life.
ACCIDENTAL DEATH BENEFIT RIDER, which provides for the payment of an
additional death benefit in the event of the insured's death by accident.
GUARANTEED MINIMUM DEATH BENEFIT RIDER, which provides for a guaranteed
death benefit until the insured's age 85 or the insured's age 121.
OVERLOAN PROTECTION RIDER, which provides protection from Policy lapse due
to an excess Policy loan.
Riders in addition to those listed above may be made available. You should
consult your registered representative regarding the availability of riders.
THE FIXED ACCOUNT
You may allocate net premiums and transfer cash value to the Fixed
Account, which is part of MetLife's general account. Because of exemptive and
exclusionary provisions in the Federal securities laws, interests in the Fixed
Account are not registered under the Securities Act of 1933. Neither the Fixed
Account nor the general account is registered as an investment company under
the Investment Company Act of 1940. Therefore, neither the Fixed Account, the
general account nor any interests therein are generally subject to the
provisions of these Acts, and the SEC does not review Fixed Account disclosure.
This disclosure may, however, be subject to certain provisions of the Federal
securities laws on the accuracy and completeness of prospectuses.
GENERAL DESCRIPTION
Our general account includes all of our assets except assets in the
Separate Account or in our other separate accounts. We decide how to invest our
general account assets. Fixed Account allocations do not share in the actual
investment experience of the general account. Instead, we guarantee that the
Fixed Account will credit interest at an annual effective rate of at least 3%.
We may or may not credit interest at a higher rate. We declare the current
interest rate for the Fixed Account periodically. The Fixed Account earns
interest daily.
VALUES AND BENEFITS
Cash value in the Fixed Account increases from net premiums allocated and
transfers to the Fixed Account and Fixed Account interest, and decreases from
loans, partial withdrawals made from the Fixed Account, charges and transfers
from the Fixed Account. We deduct charges from the Fixed Account and the
Policy's Investment Divisions in proportion to the amount of cash value in
each. (See "Monthly Deduction from Cash Value.") A Policy's total cash value
includes cash value in the Separate Account, the Fixed Account, and any cash
value held in the Loan Account due to a Policy loan.
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Cash value in the Fixed Account is included in the calculation of the
Policy's death benefit in the same manner as the cash value in the Separate
Account. (See "Death Benefits.")
POLICY TRANSACTIONS
Except as described below, the Fixed Account has the same rights and
limitations regarding premium allocations, transfers, loans, surrenders and
partial withdrawals as the Separate Account. The following special rules apply
to the Fixed Account.
Twenty days after we apply the initial premium to the Policy you may
transfer cash value from the Fixed Account to the Separate Account. The amount
of any transfer must be at least $50, unless the balance remaining would be
less than $50, in which case you may withdraw or transfer the entire Fixed
Account cash value. After the first Policy year you may withdraw cash value
from the Fixed Account. The amount of any partial withdrawal, net of applicable
Surrender Charges, must be at least $500. No amount may be withdrawn from the
Fixed Account that would result in there being insufficient cash value to meet
any Surrender Charges that would be payable immediately following the
withdrawal upon the surrender of the remaining cash value in the Policy. We
reserve the right to only allow transfers and withdrawals from the Fixed
Account during the 30-day period that follows the Policy anniversary. The total
amount of transfers and withdrawals in a Policy year may not exceed the greater
of (a) 25% of the Policy's cash surrender value in the Fixed Account at the
beginning of the Policy year, (b) the previous Policy year's maximum allowable
withdrawal amount, and (c) 100% of the cash surrender value in the Fixed
Account if withdrawing the greater of (a) and (b) would result in a Fixed
Account balance of $50 or less. We are not currently imposing the maximum limit
on transfers and withdrawals from the Fixed Account, but we reserve the right
to do so.
There is currently no transaction charge for partial withdrawals or
transfers. We reserve the right to limit partial withdrawals to 12 and
transfers to four in a Policy year and to impose a charge of $25 for each
partial withdrawal or transfer. We may revoke or modify the privilege of
transferring amounts to the Fixed Account at any time. We may also modify the
privilege of transferring amounts from the Fixed Account at any time. Partial
withdrawals will result in the imposition of any applicable Surrender Charges.
Unless you request otherwise, a Policy loan reduces the Policy's cash
value in the Investment Divisions and the Fixed Account proportionately. We
allocate all loan repayments in the same proportion that the cash value in each
Investment Division and the Fixed Account bears to the Policy's total unloaned
cash value. The amount transferred from the Policy's Investment Divisions and
the Fixed Account as a result of a loan earns interest at an effective rate of
at least 3% per year, which we credit to the Policy's cash value in the
Investment Divisions and the Fixed Account in proportion to the Policy's cash
value in each on the day it is credited.
We take partial withdrawals from the Policy's Investment Divisions and the
Fixed Account in the same proportion that the cash value in each account bears
to the Policy's total unloaned cash value.
We can delay transfers, surrenders, withdrawals and Policy loans from the
Fixed Account for up to six months. We will not delay loans to pay premiums on
policies issued by us.
CHARGES
We make certain charges and deductions under the Policy. These charges and
deductions compensate us for: (1) services and benefits we provide; (2) costs
and expenses we incur; and (3) 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:
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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 insurance charges we may deduct are insufficient to meet
our actual claims because the insureds die sooner than we estimate
o that the cost of providing the services and benefits under the Policies
exceed the charges we deduct
The amount of a charge may not necessarily correspond to the costs of the
services or benefits that are implied by the name of the charge or that are
associated with the particular Policy. For example, the sales charge and
Surrender Charge may not fully cover all of our sales and distribution
expenses, and we may use proceeds from other charges, including the Mortality
and Expense Risk Charge and the cost of insurance charge, to help cover those
expenses. We may profit from certain Policy charges.
DEDUCTIONS FROM PREMIUMS
Prior to the allocation of a premium, we deduct a percentage of your
premium payment. We credit the remaining amount (the net premium) to the
Investment Divisions and the Fixed Account according to your allocation
instructions. The deductions we make from each premium payment are the sales
charge, the premium tax charge, and the federal tax charge.
SALES CHARGE. We deduct a 2.25% sales charge from each premium payment.
Currently, the sales charge is only deducted from premium payments that
are less than or equal to the Target Premium.
PREMIUM TAX CHARGE. We deduct 2.0% from each premium for premium taxes and
administrative expenses. Premium taxes vary from state to state, but we deduct
a flat 2.0%, which is based on an average of such taxes. Administrative
expenses covered by this charge include those related to premium tax and
certain other state filings.
FEDERAL TAX CHARGE. We deduct 1.25% from each premium for our Federal
income tax liability related to premiums.
--------------------------------------------------------------------------------
EXAMPLE: The following chart shows the net amount that we would allocate
to the Policy assuming a premium payment of $4,000 (and a Target Premium of
$2,000).
NET
PREMIUM PREMIUM
--------- ---------
$4,000 $4,000
-175 (2.25% x $2,000) + (3.25% x $4,000) = total sales, premium tax and Federal tax charges
------
$3,825 Net Premium
--------------------------------------------------------------------------------
SURRENDER CHARGE
If, during the first ten Policy years, or during the first ten Policy
years following a face amount increase, you surrender or lapse your Policy,
reduce the face amount, or make a partial withdrawal or change in death benefit
option that reduces the face amount, then we will deduct a Surrender Charge
from the cash value. The maximum Surrender Charge is shown in your Policy.
No Surrender Charge will apply on up to 10% of the cash surrender value
withdrawn each year.
The Surrender Charge depends on the face amount of your Policy and the
issue age, sex (except for unisex policies), risk class and smoker status of
the insured. The Surrender Charge remains level for an initial period following
Policy issue (or following an increase in face amount), and then declines
proportionately, on a monthly basis, until the last month of the tenth
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Policy year (or the tenth year following the face amount increase). The initial
period during which the Surrender Charge remains level before it begins to
decline will be at least one year, but no more than three years, and will be
specified in your Policy.
The table below shows the maximum Surrender Charge that could apply under
any Policy during the first Policy year (or the first year following a face
amount increase) and in the last month of each Policy year thereafter. If your
Policy is subject to the maximum Surrender Charge shown in the table for Policy
Year 1, your Surrender Charge will begin to decline in the second Policy year
(or the second year following the face amount increase), so that it will not
exceed, in the last month of the second Policy year, the amount shown in the
table for Policy Year 2. If your Policy is not subject to the maximum Surrender
Charge in the first Policy year, then your Surrender Charge will remain level
beyond the first Policy year (or the first year following a face amount
increase), but in no event for more than three years.
FOR POLICIES WHICH THE MAXIMUM
ARE SURRENDERED, SURRENDER CHARGE
LAPSED OR PER $1,000 OF BASE
REDUCED DURING POLICY FACE AMOUNT
-------------------- -------------------
Entire Policy Year 1 $38.25
Last Month of Policy Year 2 35.81
3 32.56
4 31.74
5 29.84
6 27.13
7 24.42
8 18.99
9 9.50
10 0.00
In the case of a face amount reduction or a partial withdrawal or change
in death benefit option that results in a face amount reduction, we deduct any
Surrender Charge that applies from the Policy's remaining cash value in an
amount that is proportional to the amount of the Policy's face amount
surrendered. (See "Reduction in Face Amount," "Partial Withdrawal" and "Change
in Death Benefit Option.")
If you surrender the Policy (or a face amount increase) in the first
Policy year (or in the first year following the face amount increase) we will
deduct from the surrender proceeds an amount equal to the remaining first year
Coverage Expense Charges. We reserve the right to also deduct an amount equal
to the remaining first year Policy Charges. If you reduce the face amount of
your Policy in the first year following a face amount increase, we will deduct
from your cash value a proportionate amount of the remaining first year
Coverage Expense Charges, based on the ratio of the face amount reduction to
the Policy's original face amount.
The Surrender Charge reduces the Policy's cash value in the Investment
Divisions and the Fixed Account in proportion to the amount of the Policy's
cash value in each. However, if you designate the accounts from which a partial
withdrawal is to be taken, the charge will be deducted proportionately from the
cash value of the designated accounts.
PARTIAL WITHDRAWAL CHARGE
We reserve the right to impose a $25 processing charge on each partial
withdrawal. If imposed, this charge would compensate us for administrative
costs in generating the withdrawn payment and in making all calculations that
may be required because of the partial withdrawal. We are currently waiving
this charge.
TRANSFER CHARGE
We reserve the right to impose a $25 processing charge on each transfer
between Investment Divisions or between an Investment Division and the Fixed
Account to compensate us for the costs of processing these transfers. If
imposed, transfers under one of our Automated Investment Strategies would not
count as transfers for the purpose of assessing this charge. We are currently
waiving this charge.
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ILLUSTRATION OF BENEFITS CHARGE
We reserve the right to impose a $25 charge for each illustration of
Policy benefits that you request in excess of one per year. If imposed, this
charge would compensate us for the cost of preparing and delivering the
illustration to you. We are currently waiving this charge.
MONTHLY DEDUCTION FROM CASH VALUE
On the first day of each Policy month, starting with the Policy Date, we
deduct the "Monthly Deduction" from your cash value.
-- If your Policy is protected against lapse by a Guaranteed Minimum Death
Benefit, we make the Monthly Deduction each month regardless of the
amount of your cash surrender value. If your cash surrender value is
insufficient to pay the Monthly Deduction in any month, your Policy
will not lapse, but the shortfall will, in effect, cause your cash
surrender value to have a negative balance. (See "Lapse and
Reinstatement.")
-- If a Guaranteed Minimum Death Benefit is not in effect, and the cash
surrender value is not large enough to cover the entire Monthly
Deduction, we will make the deduction to the extent cash value is
available, but the Policy will be in default, and it may lapse. (See
"Lapse and Reinstatement.")
There is no Monthly Deduction on or after the Policy anniversary when the
insured attains age 121.
The Monthly Deduction reduces the cash value in each Investment Division
and in the Fixed Account (and, if applicable, in the EDCA account) in
proportion to the cash value in each. However, you may request that we charge
the Monthly Deduction to a specific Investment Division or to the Fixed
Account. If, in any month, the designated account has insufficient cash value
to cover the Monthly Deduction, we will first reduce the designated account
cash value to zero and then charge the remaining Monthly Deduction to all
Investment Divisions and, if applicable, the Fixed Account, in proportion to
the cash value in each.
The Monthly Deduction includes the following charges:
POLICY CHARGE. The Policy Charge is equal to $15.00 per month in the first
Policy year and $8.00 per month thereafter. The Policy Charge is $12 per month
in the first Policy year and $9 per month thereafter for Policies issued with
face amounts of less than $50,000. No Policy Charge applies to Policies issued
with face amounts equal to or greater than $250,000. The Policy Charge
compensates us for administrative costs such as record keeping, processing
death benefit claims and policy changes, preparing and mailing reports, and
overhead costs.
COVERAGE EXPENSE CHARGE. We impose a monthly charge for the costs of
underwriting, issuing (including sales commissions), and administering the
Policy or the face amount increase. The monthly charge is imposed on the base
Policy face amount and varies by the base Policy's face amount and duration,
and by the insured's issue age, smoking status, risk class (at the time the
Policy or a face amount increase is issued), and, except for unisex Policies,
the insured's sex. Currently, we only impose the Coverage Expense Charge during
the first eight Policy years, and during the first eight years following a
requested face amount increase.
MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. The cost of insurance charge
for a Policy month is equal to the "amount at risk" under the Policy,
multiplied by the cost of insurance rate for that Policy month. We determine
the amount at risk on the first day of the Policy month. The amount at risk is
the amount by which the death benefit (generally discounted at the monthly
equivalent of 3% per year) exceeds the Policy's cash value. The amount at risk
is affected by investment performance, loans, premium payments, fees and
charges, partial withdrawals and face amount reductions.
The guaranteed cost of insurance rates for a Policy depend on the
insured's
-- smoking status
-- risk class
-- attained age
-- sex (if the Policy is sex-based).
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The current cost of insurance rates will depend on the above factors, plus
-- the insured's age at issue (and at the time of any face amount
increase)
-- the Policy year (and the year of any face amount increase)
-- the Policy's face amount.
We guarantee that the rates for underwritten Policies will not be higher
than rates based on
-- the 2001 Commissioners Standard Ordinary Mortality Tables (the "2001
CSO Tables") with smoker/ nonsmoker modifications, for Policies issued
on non-juvenile insureds (age 18 and above at issue), adjusted for
substandard ratings or flat extras, if applicable
-- the 2001 CSO Aggregate Tables (Nonsmoker Tables for attained age 16 and
older), for Policies issued on juvenile insureds (below age 18 at
issue).
The actual rates we use may be lower than the maximum rates, depending on
our expectations about our future mortality and expense experience, lapse
rates, taxes and investment earnings. We review the adequacy of our cost of
insurance rates and other non-guaranteed charges periodically and may adjust
them. Any change will apply prospectively.
The risk classes we use are
-- for Policies issued on non-juvenile insureds: preferred smoker,
standard smoker, rated smoker, elite nonsmoker, preferred nonsmoker,
standard nonsmoker, and rated nonsmoker.
-- for Policies issued on juvenile insureds: standard and rated (with our
consent).
Rated Policies have higher cost of insurance deductions. We base the
guaranteed maximum mortality charges for substandard ratings on multiples of
the 2001 CSO Tables.
The following standard or better smoker and non-smoker classes are
available for underwritten Policies:
-- elite nonsmoker for Policies with face amounts of $250,000 or more
where the issue age is 18 through 80;
-- preferred smoker and preferred nonsmoker for Policies with face amounts
of $100,000 or more where the issue age is 18 through 80;
-- standard smoker and standard nonsmoker for Policies with face amounts
of $50,000 or more ($25,000 for pension plans) where the issue age is
18 through 85.
The elite nonsmoker class generally offers the best current cost of
insurance rates, and the preferred classes generally offer better current cost
of insurance rates than the standard classes.
Cost of insurance rates are generally lower for nonsmokers than for
smokers and generally lower for females than for males. Within a given risk
class, cost of insurance rates are generally lower for insureds with lower
issue ages. For Policies sold in connection with some employee benefit plans,
cost of insurance rates (and Policy values and benefits) do not vary based on
the sex of the insured.
We may offer Policies on a guaranteed issue basis to certain group or
sponsored arrangements. We issue these Policies up to predetermined face amount
limits. Because we issue these Policies based on minimal underwriting
information, they may present a greater mortality cost to us than Policies
issued in a standard class. Therefore, these Policies will be issued with a
risk class of standard smoker or standard nonsmoker, but will be subject to an
additional flat extra charge. However, the overall cost of insurance deduction
for a Policy issued on a guaranteed issue basis will not exceed the maximum
cost of insurance deduction imposed under fully underwritten Policies.
CHARGES FOR ADDITIONAL BENEFITS. We charge monthly for the cost of any
additional rider benefits (other than for the Acceleration of Death Benefit and
the Overloan Protection Riders, for which we deduct a one-time fee at the time
of exercise) as described in the rider form.
MORTALITY AND EXPENSE RISK CHARGE. We impose a monthly charge for our
mortality and expense risks.
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The mortality risk we assume is that insureds may live for shorter periods
of time than we estimated. The expense risk is that our costs of issuing and
administering the Policies may be more than we estimated. The charge is imposed
on the cash value in the Separate Account, but the rate we charge is determined
by the cash value in the Separate Account and the Fixed Account. The rate is
determined on each monthly anniversary and varies based on the Policy year and
the Policy's net cash value in relation to the Policy's Target Premium. As
shown in the table below, the rate declines as the Policy's net cash value and
the Policy years increase. The charge is guaranteed not to exceed 0.80% in
Policy years 1-10, 0.35% in Policy years 11-19, 0.20% in Policy years 20-29 and
0.05% thereafter.
CHARGE APPLIED
TO CASH VALUE IN
POLICY YEAR NET CASH VALUE SEPARATE ACCOUNT
------------- ----------------------------- -----------------
< 5 target premiums 0.60%
5 but < 10 target premiums 0.55%
1 - 10 10 but < 20 target premiums 0.30%
20 target premiums or more 0.15%
---- ----------------------------- ----
< 5 target premiums 0.35%
5 but < 10 target premiums 0.30%
11 - 19 10 but < 20 target premiums 0.15%
20 target premiums or more 0.10%
---- ----------------------------- ----
< 5 target premiums 0.20%
5 but < 10 target premiums 0.15%
20 - 29 10 but < 20 target premiums 0.10%
20 target premiums or more 0.05%
---- ----------------------------- ----
30+ 0.05%
LOAN INTEREST SPREAD
We charge you interest on a loan at a maximum effective rate of 4.0% per
year in Policy years 1-10 and 3.0% per year thereafter, compounded daily. We
also credit interest on the amount we take from the Policy's accounts as a
result of the loan at a minimum annual effective rate of 3% per year,
compounded daily. As a result, the loan interest spread will never be more than
1.00%.
CHARGES AGAINST THE PORTFOLIOS AND THE INVESTMENT DIVISIONS OF THE SEPARATE
ACCOUNT
CHARGES FOR INCOME TAXES. We currently do not charge the Separate Account
for income taxes, but in the future we may make such a charge, if appropriate.
We have the right to make a charge for any taxes imposed on the Policies in the
future. (See "MetLife's Income Taxes".)
PORTFOLIO EXPENSES. There are daily charges against the Portfolio assets
for investment advisory services and fund operating expenses. These are
described in the Fee Table as well as in the Portfolio prospectuses.
TAX CONSIDERATIONS
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. The summary does not address state,
local or foreign tax issues related to the Policy. This discussion is not
intended as tax advice. Counsel or other competent tax advisers should be
consulted for more complete information. This discussion is based upon our
understanding of the present Federal income tax laws. No representation is made
as to the likelihood of continuation of the present Federal income tax laws or
as to how they may be interpreted by the Internal Revenue Service. It should be
further understood that the following discussion is not exhaustive and that
special rules not described herein may be applicable in certain situations.
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TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we anticipate that the
Policy should be deemed to be a life insurance contract under Federal tax law.
However, if your Policy is issued on a substandard basis, there is additional
uncertainty. Moreover, if you elect the Acceleration of Death Benefit Rider,
the tax qualification consequences associated with continuing the Policy after
a distribution is made under the rider are unclear. We may take appropriate
steps to bring the Policy into compliance with applicable requirements, and we
reserve the right to restrict Policy transactions in order to do so. The
insurance proceeds payable on the death of the insured 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.
In some circumstances, owners of variable contracts who retain excessive
control over the investment of the underlying separate account assets may be
treated as the owners of 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 the owner of the Separate Account assets. 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.
In addition, the Code requires that the investments of the Separate
Account be "adequately diversified" in order for the Policies to be treated as
life insurance contracts for Federal income tax purposes. It is intended that
the Separate Account, through the Portfolios, will satisfy these
diversification requirements. If Portfolio shares are sold directly to either
non-qualified plans or to tax-qualified retirement plans that later lose their
tax qualified status, there could be adverse consequences under the
diversification rules.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. The death benefit under a Policy should generally be
excludible from the gross income of the beneficiary for Federal income tax
purposes.
In the case of 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.
Certain specified exceptions are based on the status of an employee as highly
compensated, a director, or 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.
Federal, state and local estate, inheritance and other tax consequences of
ownership, or receipt of Policy proceeds, depend on the circumstances of each
Policy Owner or beneficiary. A tax adviser should be consulted on these
circumstances.
Generally, the Policy Owner will not be deemed to be in constructive
receipt of the Policy cash value until there is a distribution or a deemed
distribution. When distributions from a Policy occur, or when loans are taken
from or secured by a Policy, the tax consequences depend on whether the Policy
is classified as a modified endowment contract ("MEC").
MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain
life insurance contracts are classified as modified endowment contracts, with
less favorable income tax treatment than other life insurance contracts. Due to
the Policy's flexibility with respect to premium payments and benefits, each
Policy's circumstances will determine whether the Policy is a MEC. In general a
Policy will be classified as a modified endowment contract if the amount of
premiums paid into the Policy causes the Policy to fail the "7-pay test." A
Policy will fail the 7-pay test if at any time in the first seven Policy years,
A-49
or seven years after a material change, the amount paid into the Policy exceeds
the sum of the level premiums that would have been paid at that point under a
Policy that provided for paid-up future benefits after the payment of seven
level annual payments.
If there is a reduction in the benefits under the Policy during a 7-pay
testing period, for example, as a result of a partial withdrawal, the 7-pay
test will have to be reapplied as if the Policy had originally been issued at
the reduced face amount. If there is a "material change" in the Policy's
benefits or other terms, even after the first seven Policy years, the Policy
may have to be retested as if it were a newly issued Policy. A material change
can occur, for example, when there is an increase in the death benefit or the
receipt of an unnecessary premium. Unnecessary premiums are premiums paid into
the Policy which are not needed in order to provide a death benefit equal to
the lowest death benefit that was payable in the most recent 7-pay testing
period. To prevent your Policy from becoming a modified endowment contract, it
may be necessary to limit premium payments or to limit reductions in benefits.
A current or prospective Policy Owner should consult a tax adviser to determine
whether a Policy transaction will cause the Policy to be classified as a
modified endowment contract. The IRS has promulgated a procedure for the
correction of inadvertent modified endowment contracts that may provide relief
in limited circumstances.
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT
CONTRACTS. Policies classified as modified endowment contracts are subject to
the following tax rules:
(1) All distributions other than death benefits, including distributions
upon surrender and withdrawals, from a modified endowment contract will be
treated first as distributions of gain taxable as ordinary income and as
tax-free recovery of the Policy Owner's investment in the Policy only after
all gain has been distributed.
(2) Loans taken from or secured by a Policy classified as a modified
endowment contract are treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount subject
to tax except where the distribution or loan is made when the Policy Owner
has attained age 59 1/2 or is disabled, or where the distribution is part
of a series of substantially equal periodic payments for the life (or life
expectancy) of the Policy Owner or the joint lives (or joint life
expectancies) of the Policy Owner and the Policy Owner's beneficiary. The
foregoing exceptions generally do not apply to a Policy Owner which is a
non-natural person, such as a corporation.
If a Policy becomes a modified endowment contract, distributions will be
taxed as distributions from a modified endowment contract. In addition,
distributions from a Policy within two years before it becomes a modified
endowment contract will be taxed in this manner. This means that a distribution
made from a Policy that is not a modified endowment contract could later become
taxable as a distribution from a modified endowment contract.
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT
MODIFIED ENDOWMENT CONTRACTS. Distributions other than death benefits from a
Policy that is not classified as a modified endowment contract are generally
treated first as a non-taxable recovery of the Policy Owner's investment in the
Policy, and only after the recovery of all investment in the Policy as gain
taxable as ordinary income. However, 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 from or secured by a Policy that is not a modified endowment
contract are generally not treated as distributions. However, the tax
consequences associated with Policy loans that are outstanding after the first
ten Policy years are less clear and a tax adviser should be consulted about
such loans.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a modified endowment contract are subject to the 10 percent
additional income tax.
INVESTMENT IN THE POLICY. Your investment in the Policy is generally your
aggregate premiums. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax-free.
A-50
POLICY LOANS. In general, interest on a Policy loan will not be
deductible. If a Policy loan is outstanding when a Policy is canceled or
lapses, the amount of the outstanding indebtedness will be added to the amount
distributed and will be taxed accordingly. A loan may also be taxed when a
Policy is exchanged. Before taking out a Policy loan, you should consult a tax
adviser as to the tax consequences.
MULTIPLE POLICIES. All modified endowment contracts that are issued by
MetLife (or its affiliates) to the same Policy Owner during any calendar year
are treated as one modified endowment contract for purposes of determining the
amount includible in the Policy Owner's income when a taxable distribution
occurs.
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 are advised to consult with a qualified tax
adviser regarding taxation with respect to a purchase of the Policy.
ACCELERATION OF DEATH BENEFIT RIDER. Payments received under the
Acceleration of Death Benefit Rider should be excludable from the gross income
of the Policy Owner except in certain business contexts. However, you should
consult a qualified tax adviser about the consequences of adding this rider to
a Policy or requesting payment under this rider.
OVERLOAN PROTECTION RIDER. If you are contemplating the purchase of the
Policy with the Overloan Protection Rider, you should be aware that the tax
consequences of the Overloan Protection Rider have not been ruled on by the IRS
or the courts. It is possible that the IRS could assert that the outstanding
loan balance should be treated as a taxable distribution when the Overloan
Protection Rider causes the Policy to be converted into a fixed Policy. You
should consult a tax adviser as to the tax risks associated with the Overloan
Protection Rider.
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 insured possessed incidents of ownership in the Policy at the time of
death, or if the insured made a gift transfer of the Policy within three years
of death. 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.
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 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.
OTHER POLICY OWNER TAX MATTERS. The application of certain tax rules after
age 100 is not entirely clear. The tax consequences of continuing the Policy
beyond the insured's attained age 121 are also unclear. You should consult a
tax adviser if you intend to keep the Policy in force beyond the insured's
attained age 121.
A-51
If a trustee under a pension or profit-sharing plan, or similar deferred
compensation arrangement, owns a Policy, the Federal, state and estate tax
consequences could differ. The amounts of life insurance that may be purchased
on behalf of a participant in a pension or profit-sharing plan are limited.
Providing excessive life insurance coverage in a retirement plan will have
adverse tax consequences. The inclusion of riders, such as waiver of premium
riders, may also have adverse tax consequences. Therefore, it is important to
discuss with your tax adviser the suitability of the Policy, including the
suitability of coverage amounts and Policy riders, before any purchase by a
retirement plan. Any proposed distribution or sale of a Policy by a retirement
plan will also need to be discussed with a tax adviser. The current cost of
insurance for the net amount at risk is treated as a "current fringe benefit"
and must be included annually in the plan participant's gross income. If the
plan participant dies while covered by the plan and the Policy proceeds are
paid to the participant's beneficiary, then the excess of the death benefit
over the cash value is not income taxable. However, the cash value will
generally be taxable to the extent it exceeds the participant's cost basis in
the Policy. Policies owned under these types of plans may be subject to
restrictions under the Employee Retirement Income Security Act of 1974
("ERISA"). You should consult a qualified adviser regarding ERISA.
Department of Labor ("DOL") regulations impose requirements for
participant loans under retirement plans covered by ERISA. Plan loans must also
satisfy tax requirements to be treated as nontaxable. Plan loan requirements
and provisions may differ from the Policy loan provisions. Failure of plan
loans to comply with the requirements and provisions of the DOL regulations and
of tax law may result in adverse tax consequences and/or adverse consequences
under ERISA. Plan fiduciaries and participants should consult a qualified
adviser before requesting a loan under a Policy held in connection with a
retirement plan.
Businesses can use the Policies in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, tax exempt and nonexempt welfare
benefit plans, retiree medical benefit plans and others. The tax consequences
of such plans may vary depending on the particular facts and circumstances. If
you are 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.
Ownership of the Policy by a corporation, trust or other non-natural
person could jeopardize some (or all) of such entity's interest deduction under
Internal Revenue Code Section 264, even where such entity's indebtedness is in
no way connected to the Policy. In addition, under Section 264(f)(5), if a
business (other than a sole proprietorship) is directly or indirectly a
beneficiary of the Policy, the Policy could be treated as held by the business
for purposes of the Section 264(f) entity-holder rules. Therefore, it would be
advisable to consult with a qualified tax adviser before any non-natural person
is made an owner or holder of the Policy, or before a business (other than a
sole proprietorship) is made a beneficiary of the Policy.
GUIDANCE ON SPLIT DOLLAR PLANS. 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. If your Policy is part of an equity split dollar
arrangement taxed under the economic benefit regime, there is a risk that some
portion of the Policy cash value may be taxed prior to any Policy distribution.
If your split dollar plan provides deferred compensation, specific tax rules
governing deferred compensation arrangements may apply. Failure to adhere to
these rules will result in adverse tax consequences.
In addition, 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 U.S.
exchanges, 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 to apply to split-dollar life
insurance arrangements for directors and executive officers of such companies,
since 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.
CORPORATE ALTERNATIVE MINIMUM TAX. There may also be an indirect tax upon
the income in the Policy or the proceeds of a Policy under the Federal
corporate alternative minimum tax, if the Policy Owner is subject to that tax.
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POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes
is uncertain, there is always the possibility that the tax treatment of the
Policy could change by legislation or otherwise. Consult a tax adviser with
respect to legislative developments and their effect on the Policy.
METLIFE'S INCOME TAXES
Under current Federal income tax law, MetLife is 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 in several states, we may incur state and local taxes
(in addition to premium taxes). These taxes are not now significant and we are
not currently charging for them. If they increase, we may deduct charges for
such taxes.
TAX CREDITS AND DEDUCTIONS. MetLife 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 dividend received
deductions, are not passed back to the Separate Account or to Policy Owners
since MetLife is the owner of the assets from which the tax benefits are
derived.
DISTRIBUTION OF THE POLICIES
We have entered into a distribution agreement with our affiliate, MetLife
Investors Distribution Company ("Distributor"), for the distribution of the
Policies. Distributor's principal executive offices are located at 200 Park
Avenue, New York, New York 10166. Distributor is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934 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.
We and Distributor have entered into selling agreements with
broker-dealers ("selling firms") for the sale of the Policies through their
registered representatives. Prior to July 1, 2016, these broker-dealers
included our affiliate, MetLife Securities, Inc. ("MSI"). On July 1, 2016,
MetLife, Inc. completed the sale of MSI to Massachusetts Mutual Insurance Life
Insurance Company. As a result of the transaction, MSI is no longer affiliated
with MetLife.
The Policies are no longer offered for sale.
COMMISSIONS AND OTHER CASH COMPENSATION
All selling firms receive commissions. The portion of the commission
payments that selling firms pass on to their sales representatives is
determined in accordance with their internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits. A selling firm or a sales representative of a selling firm may
receive different compensation for selling one product over another and/or may
be inclined to favor one product provider over another due to differing
compensation rates.
The maximum commissions paid for sale of the Policies are as follows: 110%
of premiums paid up to the Commissionable Target Premium, and 4.5% of premiums
paid in excess of Commissionable Target Premium in Policy year 1; and 13.0% of
all premiums paid in Policy years 2 through 10; and 2.0% of all premiums paid
thereafter. In addition, commissions are payable based on the cash value of the
Policies in the following amounts: 0.10% in Policy years 2 through 10; 0.08% in
Policy years 11 through 20; and 0.06% thereafter. Commissionable Target Premium
is generally the Target Premium as defined in the Glossary, excluding the
portions associated with flat extras and certain riders, and is generally equal
to or less than the Target Premium. We and/or Distributor may also make bonus
payments to selling firms. The maximum amount of these bonus payments are as
follows: 9.0% of premiums paid up to the Commissionable Target Premium and 2.0%
of premiums paid in excess of the Commissionable Target Premium in Policy year
1; 19.75% of premiums paid up to the Commissionable Target Premium and 0.25% of
premiums paid in excess of the Commissionable Target Premium paid in Policy
year 2; and 0.25% of all premiums paid thereafter.
For Policies sold prior to July 1, 2016, our formerly affiliated sales
representatives received cash payments for the products they sold and serviced
based on a "gross dealer concession" model. The percentage of the gross dealer
concession
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to which the representative was entitled was based on a sliding-scale formula
that took into account the total amount of proprietary and non-proprietary
products sold and serviced by the representative. The gross dealer concession
amount in the first Policy year was 117% of premiums paid up to the
Commissionable Target Premium, and 5.0% of premiums paid in excess of the
Commissionable Target Premium. In Policy years 2 through 10, the gross dealer
concession amount is 8.0% of all premiums paid, and in Policy years 11 and
thereafter the gross dealer concession amount is 2.0% of all premiums.
OTHER PAYMENTS
We and Distributor may enter into preferred distribution arrangements with
selected selling firms under which we pay additional compensation, including
marketing allowances, introduction fees, persistency payments, preferred status
fees and industry conference fees. Marketing allowances are periodic payments
to certain selling firms, 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. 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
selling firms in connection with the addition of these variable products to the
selling firm's line of investment products, including expenses relating to
establishing the data communications systems necessary for the selling firm 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 selling firms' marketing programs, 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 selling firms' sales representatives.
These preferred distribution arrangements are not offered to all selling
firms. The terms of any particular agreement governing compensation may vary
among selling firms and the amounts may be significant. We and Distributor have
entered into preferred distribution arrangements with the selling firms listed
in the Statement of Additional Information. The prospect of receiving, or the
receipt of, additional compensation as described above may provide selling
firms 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 selling firm 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 selling firm for which he or she works may receive in
connection with your purchase of a Policy.
Commissions and other incentives or payments described above are not
charged directly to Policy Owners or the Separate Account. We intend to recoup
commissions and other sales expenses through fees and charges deducted under
the Policy.
The Statement of Additional Information contains additional information
about the compensation paid for the sale of the Policies.
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.
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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,
loans 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
You may find the financial statements of the Separate Account and the
financial statements of MetLife in the Statement of Additional Information.
MetLife's financial statements should be considered only as bearing on our
ability to meet our obligations under the Policies. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account.
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GLOSSARY
AGE. The age of an insured refers to the insured's age at his or her
nearest birthday.
ATTAINED AGE. The insured's issue age plus the number of completed Policy
years.
BASE POLICY. The Policy without riders.
CASH SURRENDER VALUE. The amount you receive if you surrender the Policy.
It is equal to the Policy's cash value reduced by any Surrender Charge that
would apply on surrender and by any outstanding Policy loan and accrued
interest.
CASH VALUE. A Policy's cash value includes the amount of its cash value
held in the Separate Account, the amount held in the Fixed Account, if there is
an outstanding Policy loan, the amount of its cash value held in the Loan
Account, and any amount held in the EDCA account.
FIXED ACCOUNT. The Fixed Account is a part of our general account to which
you may allocate net premiums. It provides guarantees of principal and
interest.
INVESTMENT DIVISION. A sub-account of the Separate Account that invests in
shares of an open-ended management investment company or other pools of
investment assets.
INVESTMENT START DATE. This is the later of the Policy Date and the date
we first receive a premium payment for the Policy.
ISSUE AGE. The age of the insured as of his or her birthday nearest to the
Policy Date.
LOAN ACCOUNT. The account to which cash value from the Separate and/or
Fixed Accounts is transferred when a Policy loan is taken.
NET CASH VALUE. The Policy's cash value less any outstanding loans and
accrued loan interest.
NET PREMIUM. The net premium is equal to the premium payment minus the
sales charge, the premium tax charge, and the federal tax charge.
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose to help meet your future goals under the Policy. The Planned Premium
consists of a first-year premium amount and an amount for premium payments in
subsequent Policy years. It is subject to certain limits under the Policy.
POLICY DATE. The date on which coverage under the Policy and Monthly
Deductions begin. If you make a premium payment with the application, unless
you request otherwise, the Policy Date is generally the date the Policy
application is approved. If you choose to pay the initial premium upon delivery
of the Policy, unless you request otherwise, the Policy Date is generally the
date on which we receive your initial payment. The Policy Date is used to
measure Policy years, Policy months, and Policy anniversaries.
PREMIUMS. Premiums include all payments under the Policy, whether a
Planned Premium or an unscheduled payment.
SEPARATE ACCOUNT. Metropolitan Life Separate Account UL, a separate
account established by MetLife to receive and invest premiums paid under the
Policies and certain other variable life insurance policies, and to provide
variable benefits.
TARGET PREMIUM. We use the Target Premium to determine the amount of
Mortality and Expense Risk Charge imposed on the Separate Account and the
amount of Sales Charge imposed on premium payments. The Target Premium varies
by issue age, sex (except for unisex Policies), smoking status and any flat
extras and substandard rating of the insured, and the Policy's base face
amount, with additional amounts for most riders.
YOU. "You" refers to the Policy Owner.
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APPENDIX A
GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than what is
required by the "guideline premium test" under Section 7702(a)(2) of the
Internal Revenue Code, or the "cash value accumulation test" under Section
7702(a)(1) of the Internal Revenue Code, as selected by you when the Policy is
issued. The test you choose at issue will be used for the life of the Policy.
(See "Death Benefits.")
For the guideline premium test, the table below shows the percentage of
the Policy's cash value that is used to determine the death benefit.
AGE OF AGE OF
INSURED AT START OF PERCENTAGE OF INSURED AT START OF PERCENTAGE OF
THE POLICY YEAR CASH VALUE THE POLICY YEAR CASH VALUE
--------------------- --------------- --------------------- --------------
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 121 101
59 134
60 130
For the cash value accumulation test, sample net single premium factors
for selected ages of male and female insureds, in a standard or better
nonsmoker risk class, are listed below.
NET SINGLE PREMIUM
FACTOR
--------------------
AGE MALE FEMALE
----------- --------- --------
30......... 5.82979 6.59918
40......... 4.11359 4.63373
50......... 2.93292 3.28706
60......... 2.14246 2.40697
70......... 1.64028 1.82665
80......... 1.32530 1.44515
90......... 1.15724 1.22113
100........ 1.08417 1.10646
120........ 1.02597 1.02597
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Additional information about the Policy and the Separate Account can be
found in the Statement of Additional Information, which you can obtain, without
charge, by calling our TeleService Center at 1-800-638-5000. You may also
obtain, without charge, a personalized illustration of death benefits, cash
surrender values and cash values by calling your registered representative.
For Investment Division transfers and premium reallocations, for current
information about your Policy values, to change or update Policy information
such as your billing address, billing mode, beneficiary or ownership, for
information about other Policy transactions, and to ask questions about your
Policy, you may call us at 1-800-638-5000.
This prospectus incorporates by reference all of the information contained
in the Statement of Additional Information, which is legally part of this
prospectus.
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
202-551-8090. The Statement of Additional Information, reports and other
information about the Separate Account are available on the SEC Internet site
at 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 20549-0102.
File No. 811-06025