485APOS 1 d485apos.txt FORM 485APOS As filed with the Securities and Exchange Commission on January 18, 2002 Registration No. 33-49998 811-7042 --------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. __ [ ] Post-Effective Amendment No. 18 [x] -- and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] Amendment No. 20 [x] -- SEPARATE ACCOUNT VA-2L ---------------------- (Exact Name of Registrant) TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY ---------------------------------------------- (Name of Depositor) 4333 Edgewood Road NE, Cedar Rapids, IA 52499 --------------------------------------------- (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including Area Code: (319) 297-8121 Name and Address of Agent for Service: Copy to: Frank A. Camp, Esquire Frederick R. Bellamy, Esquire Transamerica Occidental Life Insurance Co. Sutherland, Asbill & Brennan, LLP 4333 Edgewood Road, N.E. 1275 Pennsylvania Avenue, N.W. Cedar Rapids, Iowa 52499-0001 Washington, D.C. 20004-2402 Approximate date of proposed sale to the public: As soon as practicable after effectiveness of the Registration Statement. Title of Securities being registered: Variable Annuity Contracts It is proposed that this filing will become effective: [_] immediately upon filing pursuant to paragraph (b) [_] on ___________ pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(i) [X] on March 18, 2001 pursuant to paragraph (a)(1) If appropriate, check the following box: [_] This Post-Effective Amendment designates a new effective date for a previously filed Post-Effective Amendment. DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R) VARIABLE ANNUITY Issued Through SEPARATE ACCOUNT VA-2L by TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY Prospectus - May 1, 2002 This flexible purchase payment deferred variable annuity contract has many investment choices. There is a variable account that currently offers twenty- seven underlying fund portfolios. There is also a fixed account, which offers interest at rates that are guaranteed by Transamerica Occidental Life Insurance Company (Transamerica). You can choose any combination of these investment choices. You bear the entire investment risk for all amounts you put in the variable account. This prospectus and the underlying fund prospectuses give you important information about the contracts and the underlying funds. Please read them carefully before you invest and keep them for future reference. If you would like more information about the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity, you can obtain a free copy of the Statement of Additional Information (SAI) dated May 1, 2002. Please call us at (877) 717-8861 or write us at: Transamerica Occidental Life Insurance Company, Annuity Service Center, 4333 Edgewood Road NE, Cedar Rapids, Iowa, 52499-0111. A registration statement, including the SAI, has been filed with the Securities and Exchange Commission (SEC) and the SAI is incorporated herein by reference. Information about the variable annuity contract can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that contains the prospectus, the SAI, material incorporated by reference, and other information. The table of contents of the SAI is included at the end of this prospectus. Please note that the contracts and the variable account investment choices: . are not bank deposits . are not federally insured . are not endorsed by any bank or government agency . are not guaranteed to achieve their goal . are subject to risks, including loss of purchase payments DREYFUS VARIABLE INVESTMENT FUND - SERVICE CLASS Managed by The Dreyfus Corporation Appreciation Portfolio Balanced Portfolio Disciplined Stock Portfolio Growth and Income Portfolio International Equity Portfolio International Value Portfolio Limited Term High Income Portfolio Quality Bond Portfolio Small Cap Portfolio Small Company Stock Portfolio Special Value Portfolio DREYFUS VARIABLE INVESTMENT FUND Managed by The Dreyfus Corporation Money Market Portfolio DREYFUS STOCK INDEX FUND - SERVICE CLASS Managed by The Dreyfus Corporation and Mellon Equity Associates THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. - SERVICE CLASS Managed by The Dreyfus Corporation and NCM Capital Management Group DREYFUS INVESTMENT PORTFOLIOS - SERVICE CLASS Managed by The Dreyfus Corporation Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio MidCap Stock Portfolio Technology Growth Portfolio TRANSAMERICA VARIABLE INSURANCE FUND, INC. Managed by Transamerica Investment Management, LLC Transamerica VIF Growth Portfolio The Securities and Exchange Commission has not approved or disapproved these securities, or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. 1
TABLE OF CONTENTS Page GLOSSARY OF TERMS....................................... SUMMARY................................................. ANNUITY CONTRACT FEE TABLE.............................. EXAMPLES................................................ 1. THE ANNUITY CONTRACT................................ 2. PURCHASE............................................ Contract Issue Requirements......................... Purchase Payments................................... Initial Purchase Requirements....................... Additional Purchase Payments........................ Maximum Total Purchase Payments..................... Allocation of Purchase Payments..................... Account Value....................................... 3. INVESTMENT CHOICES.................................. The Variable Account................................ The Fixed Account................................... Transfers........................................... 4. PERFORMANCE......................................... 5. EXPENSES............................................ Surrender Charges................................... Excess Interest Adjustment.......................... Mortality and Expense Risk Fees..................... Administrative Charges.............................. Premium Taxes....................................... Federal, State and Local Taxes...................... Transfer Fee........................................ GMIB................................................ Initial Payment Guarantee........................... Tax Relief Rider.................................... Portfolio Fees and Expenses......................... 6. ACCESS TO YOUR MONEY................................ Surrenders.......................................... Delay of Payment and Transfers...................... Excess Interest Adjustment.......................... 7. ANNUITY PAYMENTS (THE INCOME PHASE).................................. Annuity Payment..................................... 8. DEATH BENEFIT....................................... When We Pay A Death Benefit......................... When We Do Not Pay A Death Benefit.................. Amount of Death Benefit............................. Guaranteed Minimum Death Benefit.................... Adjusted Partial Surrender.......................... 9. TAXES............................................... Annuity Contracts in General........................ Qualified and Nonqualified Contracts................ Surrenders - Qualified Contracts.................... Surrenders - 403(b) Contracts....................... Diversification and Distribution Requirements....... Surrenders - Nonqualified Contracts................. Taxation of Death Benefit Proceeds.................. Annuity Payments.................................... Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations.......................... Transfers, Assignments or Exchanges of Contracts.... Possible Tax Law Changes............................ Variable Account Charges............................ 10. ADDITIONAL FEATURES................................. Systematic Withdrawal Option........................ GMIB................................................ Initial Payment Guarantee........................... Tax Relief Rider.................................... Nursing Care and Terminal Condition Withdrawal Option................................. Unemployment Waiver................................. Telephone Transactions.............................. Dollar Cost Averaging Program....................... Asset Rebalancing................................... 11. OTHER INFORMATION................................... Ownership........................................... Assignment.......................................... Transamerica Occidental Life Insurance Company...... The Variable Account................................ Mixed and Shared Funding............................ Exchanges and Reinstatements........................ Voting Rights....................................... Distributor of the Contracts........................ IMSA................................................ Legal Proceedings................................... TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............................................. APPENDIX A Condensed Financial Information......................... APPENDIX B Historical Performance Data............................. APPENDIX C Contract Variations.....................................
2 GLOSSARY OF TERMS Account Value--On or before the annuity date, the account value is equal to the owner's: . purchase payments; minus . partial surrenders (including the net effect of any applicable excess interest adjustments and/or surrender charges on such surrenders); plus . interest credited in the fixed account; plus . accumulated gains in the variable account; minus . losses in the variable account; minus . service charges, rider fees, premium taxes, and transfer fees, and any other charges, if any. Adjusted Account Value--The account value increased or decreased by any excess interest adjustment. Annuitant--The person during whose life any annuity payments involving life contingencies will be based on. Annuity Date--The date upon which annuity payments are to commence. This date may be any date at least thirty days after the contract date and may not be later than the last day of the contract month starting after the annuitant attains age 85, except as expressly allowed by Transamerica. In no event will this date be later than the last day of the month following the month in which the annuitant attains age 95. The annuity date may have to be earlier for qualified contracts and may be earlier if required by state law. Annuity Payment--An amount paid by Transamerica at regular intervals to the annuitant and/or any other payee specified by the owner. It may be on a variable or fixed basis. Cash Value--The adjusted contract value less any applicable surrender charge and any rider fees (imposed upon surrender). Contract Year--A contract year begins on the date in which the contract becomes effective and on each contract anniversary. Excess Interest Adjustment--A positive or negative adjustment to amounts surrendered (both partial or full surrenders and transfers) or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by Transamerica since the date any payment was received by (or an amount was transferred to) the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon surrender (either full or partial) or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. Fixed Account--One or more investment choices under the contract that are part of Transamerica's general assets and are not in the variable account. Guaranteed Period Options--The various guaranteed interest rate periods of the fixed account which Transamerica may offer and into which purchase payments may be paid or amounts transferred. Owner (you, your)-- The person who may exercise all rights and privileges under the contract. The owner during the lifetime of the annuitant and prior to the annuity date is the person designated as the owner or a successor owner in the information provided to us to issue a contract. Subaccount--A subdivision within the variable account, the assets of which are invested in specified portfolios of the underlying funds. Variable Account--Separate Account VA-2L, a separate account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the "1940 Act"), to which purchase payments under the contracts may be allocated. Variable Accumulation Unit--An accounting unit of measure used in calculating the account value in the variable account before the annuity date. (Note: The SAI contains a more extensive Glossary.) 3 SUMMARY The sections in this summary correspond to sections in this prospectus, which discuss the topics in more detail. 1. THE ANNUITY CONTRACT The flexible premium deferred variable annuity contract offered by Transamerica Occidental Life Insurance Company (Transamerica, we, us, or our) provides a way for you to invest on a tax-deferred basis in the following investment choices: twenty-seven subaccounts of the variable account and the fixed account of Transamerica. The contract is intended to accumulate money for retirement or other long-term investment purposes. This contract currently offers twenty-seven subaccounts in the variable account that are listed in Section 3. Each subaccount invests exclusively in shares of one of the portfolios of the underlying funds. The account value may depend on the investment experience of the selected subaccounts. Therefore, you bear the entire investment risk with respect to all account value in any subaccount. You could lose the amount that you invest. The fixed account offers an interest rate that Transamerica guarantees. We guarantee to return your investment with at least 2% annual interest for all amounts allocated to the fixed account. The contract, like all deferred annuity contracts, has two phases: the "accumulation phase" and the "income phase." During the accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as ordinary income when you take them out of the contract. The income phase occurs when you begin receiving regular payments from your contract. The money you can accumulate during the accumulation phase will largely determine the income payments you receive during the income phase. 2. PURCHASE You can buy a nonqualified contract with $5,000 or more, and a qualified contract with $1,000 or more, under most circumstances. You can add as little as $50 at any time during the accumulation phase. 3. INVESTMENT CHOICES You can allocate your purchase payments to one or more of the following underlying fund portfolios described in the underlying fund prospectuses: Appreciation Portfolio Balanced Portfolio Disciplined Stock Portfolio Growth and Income Portfolio International Equity Portfolio International Value Portfolio Limited Term High Income Portfolio Quality Bond Portfolio Small Cap portfolio Small Company Stock Portfolio Special Value Portfolio Money Market Portfolio Stock Index Socially Responsible Growth Fund Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio MidCap Stock Portfolio Technology Growth Portfolio Transamerica VIF Growth Portfolio Depending upon their investment performance, you can make or lose money in any of the subaccounts. You can also allocate your purchase payments to the fixed account. We currently allow you to transfer money between any of the investment choices. While we currently do not charge for transfers, we reserve the right to impose a $10 fee for each transfer in excess of 18 transfers per contract year and to impose restrictions and limits on transfers. 4 4. PERFORMANCE The value of the contract will vary up or down depending upon the investment performance of the subaccounts you choose. We provide past performance information in Appendix B and in the SAI. This data does not indicate future performance. 5. EXPENSES Note: The following discussion only applies to contracts issued after May 1, 2002. See Appendix C for older contracts. No deductions are made from purchase payments at the time you buy the contract so that the full amount of each purchase payment is invested in one or more of your investment choices. We may deduct a surrender charge of up to 7% of purchase payments surrendered within seven years after the purchase payment is paid. We will calculate surrender charges by taking the earnings, if any, out before purchase payments. Full surrenders, partial surrenders, and transfers from a guaranteed period option of the fixed account may also be subject to an excess interest adjustment, which may increase or decrease the amount you receive. This adjustment may also apply to amounts applied to an annuity payment from a guaranteed period option of the fixed account. We deduct daily mortality and expense risk fees and administrative charges at an annual rate of 1.30% (if you choose the "Return of Premium Death Benefit") or 1.45% (if you choose the "Double Enhanced Death Benefit") from the assets in each subaccount. During the accumulation phase, we deduct an annual service charge of no more than $35 from the account value on each contract anniversary and at the time of surrender. The charge is waived if either the account value or the sum of all purchase payments, minus all partial surrenders, is at least $50,000. Upon total surrender, payment of a death benefit, or when annuity payments begin, we will deduct state premium taxes, which currently range from 0% to 3.50%. If you elect the "Guaranteed Minimum Income Benefit," there is an annual fee during the accumulation phase of 0.45% of the minimum annuitization value. If you receive annuity payments under the rider and elect the guaranteed minimum payment option, then there is a guaranteed payment fee at an annual rate of 1.25% of the daily net asset value in the subaccounts. If you elect the Initial Payment Guarantee, when you annuitize there is a daily fee equal to an annual rate of 1.25% of the daily net asset value in the subaccounts. If you elect the Tax Relief Rider, there is an annual fee during the accumulation phase of 0.25% of the account value. The value of the net assets of the subaccounts will reflect the management fee and other expenses incurred by the underlying portfolios. 6. ACCESS TO YOUR MONEY You can take out $500 or more anytime during the accumulation phase (except under certain qualified contracts). After one year, you may, free of surrender charges once each contract year, take out up to the greater of: . 10% of your purchase payments less surrenders deemed to be from purchase payments; or . any gains in the contract. Amounts surrendered in the first year, or in excess of this free amount, may be subject to a surrender charge and/or excess interest adjustment. You may have to pay income tax and a tax penalty on any money you take out. The gains in the contract are the amount equal to the account value, minus the sum of all purchase payments, reduced by all prior partial surrenders deemed to be from purchase payments. If you have account value in the fixed account, you may also take out cumulative interest credited free of excess interest adjustments. Access to amounts held in qualified contracts may be restricted or prohibited. 5 Unless you elect the Life with Emergency Cash(SM) annuity payment, you can not take money out during the income phase (although you will be receiving annuity payments). 7. ANNUITY PAYMENTS (THE INCOME PHASE) The contract allows you to receive income under one of several annuity payments. You may choose from fixed payment options, variable payment options, or a combination of both. If you select a variable payment option, the dollar amount of your payments may go up or down. However, the Guaranteed Minimum Income Benefit and Initial Payment Guarantee are available as optional riders and they guarantee a minimum amount for each payment. 8. DEATH BENEFIT If you are both the owner and the annuitant and you die before the income phase begins, then your beneficiary will receive a death benefit. Naming different persons as owner and annuitant can affect whether the death benefit is payable and to whom amounts will be paid. Use care when naming owners, annuitants and beneficiaries, and consult your agent if you have questions. You generally may choose one of the following guaranteed minimum death benefits when you purchase the contract: . Double Enhanced; or . Return of Premium. Charges are lower for the Return of Premium Death Benefit than they are for the other death benefit. These choices are restricted for annuitants and owners over age 80. If the owner is not the annuitant, no death benefit is paid if the owner dies. 9. TAXES Your earnings, if any, are generally not taxed until you take them out. If you take money out of a nonqualified contract during the accumulation phase, earnings come out first for federal tax purposes, and are taxed as ordinary income. Under qualified contracts, surrenders are prorated between taxable and nontaxable amounts. If you are younger than 59 1/2 when you take money out, you may be charged a 10% federal penalty tax on the earnings. For nonqualified contracts, payments during the income phase may be considered partly a return of your original investment so that part of each payment may not be taxable as income. 10. ADDITIONAL FEATURES This contract has additional features that might interest you. These include the following: . You can arrange to have money automatically sent to you monthly, quarterly, semi-annually or annually while your contract is in the accumulation phase. This feature is referred to as the "Systematic Withdrawal Option" or "SWO." Amounts you receive may be included in your gross income, and in certain circumstances, may be subject to penalty taxes. . You can elect an optional rider that guarantees you a minimum annuitization value. This feature is called the "Guaranteed Minimum Income Benefit" or "GMIB." There is an extra charge for this rider. . You can elect an optional rider at the time of annuitization that guarantees your variable annuity payments will never be less than 80% of the initial variable annuity payment. This feature is called the "Initial Payment Guarantee." There is an extra charge for this rider. . You can elect an optional rider that pays an amount in addition to the contract death benefit in certain circumstances. This feature is called the "Tax Relief Rider" or "TRR." There is an extra charge for this rider. . Under certain medically related circumstances, you may surrender all or part of the account value without a surrender charge and excess interest adjustment. This feature is called the "Nursing Care and Terminal Withdrawal Option." . Under certain unemployment circumstances, you may surrender all or a portion of the account value free of surrender charges and excess interest adjustments. This feature is called the "Unemployment Waiver." 6 . You may generally make transfers and/or change the allocation of additional purchase payments by telephone. . You can arrange to automatically transfer money (at least $250 per transfer) monthly or quarterly from certain investment options into one or more subaccounts. This feature is known as "Dollar Cost Averaging" or "DCA." . We will, upon your request, automatically transfer amounts among the subaccounts on a regular basis to maintain a desired allocation of the account value among the various subaccounts. This feature is called "Asset Rebalancing." These features may not be available in all states, may vary by state and may not be suitable for your particular situation. 11. OTHER INFORMATION Right to Cancel Period. You may return your contract for a refund, but only if you return it within a prescribed period, which is generally 10 days (after you receive the contract), or whatever longer time may be required by state law. The amount of the refund will generally be the account value. We will pay the refund within 7 days after we receive written notice of cancellation and the returned contract within the applicable time period. The contract will then be deemed void. No Probate. Usually, when the annuitant dies, the person you choose as your beneficiary will receive the death benefit under this contract without going through probate. State laws vary on how the amount that may be paid is treated for estate tax purposes. Who should purchase the Contract? This contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes; and for persons who have maximized their use of other retirement savings methods, such as 401(k) plans. The tax-deferred feature is most attractive to people in high federal and state tax brackets. The tax deferral features of variable annuities are unnecessary when purchased to fund a qualified plan. You should not buy this contract if you are looking for a short-term investment or if you cannot take the risk of losing money that you put in. There are various fees and charges associated with variable annuities. You should consider whether the features and benefits of this contract, unique to variable annuities, such as the opportunity for lifetime income payments, a guaranteed death benefit, the guaranteed level of certain charges, the Guaranteed Minimum Income Benefit, Tax Relief Rider and the Initial Payment Guarantee, make this contract appropriate for your needs. Older Contracts. This prospectus generally describes contracts issued after May 1, 2002. See Appendix C for information on how older contracts have different features and requirements, and sometimes different fees and deductions. State Variations. Certain provisions of the contracts may be different than the general description in this prospectus, and certain riders and options may not be available, because of legal restrictions in your state. See your contract for specific variations since any such state variations will be included in your contract or in riders or endorsements attached to your contract. See your agent or contact us for specific information that may be applicable to your state. Also see Appendix C for a summary of some variations. Financial Statements. Financial Statements for Transamerica and the subaccounts are in the SAI. Condensed financial information for the subaccounts (those in operation before January 1, 2002) is in Appendix A to this prospectus. 12. INQUIRIES If you need more information, please contact us at: Transamerica Annuity Service Center 4333 Edgewood Road NE Cedar Rapids, IA 52499-0001 1-877-717-8861 You may check your contract at www.transamericaservice.com. Follow the logon procedures. You will need your pre-assigned Personal Identification Number ("PIN") to access information about your contract. We cannot guarantee that you will be able to access this site. 7
==================================================================================================================================== ANNUITY CONTRACT FEE TABLE ==================================================================================================================================== Variable Account Annual Expenses Contract Owner Transaction Expenses (as a percentage of average account value) ------------------------------------------------------------------------------------------------------------------------------------ Sales Load On Purchase Payments......................... 0 Mortality and Expense Risk Charges/(6)/............ 1.15% Maximum Surrender Charge Administrative Charge.............................. 0.15% ----- (as a % of purchase payments surrendered)/(1)/........ 7% TOTAL VARIABLE ACCOUNT ANNUAL EXPENSES............. 1.30% Annual Service Charge /(2)/............. $0 - $35 Per Contract Transfer Fee /(3)/................................ $0 - $10 Optional Separate Account Expenses: ---------------------------------- Optional Rider Fees: Double Enhanced Death Benefit/(7)/................. 0.15% -------------------- ---- Guaranteed Minimum Income Benefit Rider Fee/(4)/........ 0.45% TOTAL SEPARATE ACCOUNT ANNUAL Tax Relief Rider Fee/(5)/............................... 0.25% EXPENSES WITH HIGHEST OPTIONAL SEPARATE ACCOUNT EXPENSES/(8)/................... 1.45% ==================================================================================================================================== Portfolio Annual Expenses /(9)/ (as a percentage of average net assets and after fee waivers and/or expense reimbursements) ------------------------------------------------------------------------------------------------------------------------------------ Total Rule Portfolio Management Other 12b-1 Annual Fees Expenses Fees Expenses ------------------------------------------------------------------------------------------------------------------------------------ Appreciation Balanced Disciplined Stock Growth and Income International Equity International Value Limited Term High Income Money Market Quality Bond Small Cap Small Company Stock Special Value Stock Index Socially Responsible Growth Core Bond Core Value Emerging Leaders Emerging Markets European Equity Founders Discovery Founders Growth Founders International Equity Founders Passport Japan MidCap Stock Technology Growth Transamerica VIF Growth ====================================================================================================================================
8 /(1)/ The surrender charge, if any is imposed, applies to each contract, regardless of how account value is allocated among the variable account and the fixed account. The surrender charge is decreased based on the number of years since the purchase payment was made, from 7% in the year in which the purchase payment was made, to 0% in the seventh year after the purchase payment was made. If applicable a surrender charge will only be applied to surrenders that exceed the amount available under certain listed exceptions. /(2)/ The service charge applies to the fixed account and the variable account, and is assessed on a pro rata basis relative to each account's account value as a percentage of the contract's total account value. The service charge is deducted on each contract anniversary and at the time of surrender. /(3)/ The transfer fee, if any is imposed, applies to each contract, regardless of how account value is allocated among the variable account and the fixed account. There is no fee for the first 18 transfers per year. For additional transfers, Transamerica may charge a fee of $10 per transfer, but currently does not charge for any transfers. /(4)/ The Guaranteed Minimum Income Benefit fee is 0.45% of the minimum annuitization value and is deducted only during the accumulation phase. If you annuitize under the rider, a guaranteed payment fee is deducted at an annual rate of 1.25%. See Section 5, Expenses. /(5)/ The annual Additional Death Distribution fee is 0.25% of the account value and is deducted only during the accumulation phase. /(6)/ The mortality and expense risk fee shown (1.15%) is for the "Return of Premium Death Benefit." /(7)/ The fee for the "Double Enhanced Death Benefit" is in addition to the mortality and expense risk fee of (1.15%). /(8)/ The Double Enhanced Death Benefit fee is included herein. /(9)/ The fee table information relating to the underlying funds is for the year 2001 (unless otherwise noted) and was provided to Transamerica by the underlying funds, their investment advisers or managers, and Transamerica has not and cannot independently verify the accuracy or completeness of such information. Actual future expenses of the portfolios may be greater or less than those shown in the Table. 9 EXAMPLES - TABLE A You would pay the following expenses on a $1,000 investment, assuming a hypothetical 5% annual return on assets, assuming the entire account value is in the applicable subaccount, and assuming no optional riders or features have been selected: The expenses reflect different mortality and expense risk fees depending on which death benefit you select: A = Return of Premium Death Benefit B = Double Enhanced Death Benefit
================================================================================================================================ If the Contract is annuitized at If the Contract is surrendered the end of the applicable time at the end of the applicable period or if the Contract is simply time period. kept in the accumulation phase. ----------------------------------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years -------------------------------------------------------------------------------------------------------------------------------- Appreciation A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Balanced A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Growth and Income A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- International Equity A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- International Value A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Money Market A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Quality Bond A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Small Cap A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Small Company Stock A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Special Value A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Stock Index A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Socially Responsible Growth Fund A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Core Bond A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Core Value A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- Emerging Markets A -------------------------------------------------------------------------------- B -------------------------------------------------------------------------------------------------------------------------------- European Equity A -------------------------------------------------------------------------------- B ================================================================================================================================
10 EXAMPLES - TABLE A - continued.....
================================================================================================================================== If the Contract is annuitized at If the Contract is surrendered the end of the applicable time period or at the end of the applicable if the Contract is simply kept in the time period. accumulation phase. -------------------------------------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years ------------------------------------------------------------------------------------------------------------------------------- Founders Discovery A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders Growth A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders International Equity A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders Passport A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Japan A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- MidCap Stock A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Technology Growth A -------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth A ------------------------------------------------------------------------------- B ================================================================================================================================
11 EXAMPLES - TABLE B You would the following expenses on a $1,000 investment, assuming a hypothetical 5% annual return on assets, assuming the entire account value is in the applicable subaccount, assuming both the Guaranteed Minimum Income Benefit and the Tax Relief Rider have been selected: The expenses reflect different mortality and expense risk fees depending on which death benefit you select: A = Return of Premium Death Benefit B = Double Enhanced Death Benefit
================================================================================================================================== If the Contract is annuitized at If the Contract is surrendered the end of the applicable time period or at the end of the applicable if the Contract is simply kept in the time period. accumulation phase. ------------------------------------------------------------------------------ Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years ------------------------------------------------------------------------------------------------------------------------------- Appreciation A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Balanced A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Disciplined Stock A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Growth and Income A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- International Equity A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- International Value A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Limited Term High Income A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Money Market A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Quality Bond A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Small Cap A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Small Company Stock A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Special Value A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Stock Index A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Socially Responsible Growth Fund A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Core Bond A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Core Value A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Emerging Leaders A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Emerging Markets A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- European Equity A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders Discovery A ------------------------------------------------------------------------------- B ===============================================================================================================================
12 EXAMPLES - TABLE B - continued.....
=============================================================================================================================== If the Contract is annuitized at If the Contract is surrendered the end of the applicable time period or at the end of the applicable if the Contract is simply kept in the time period. accumulation phase. ---------------------------------------------------------------------------- Subaccounts 1 3 5 10 1 3 5 10 Year Years Years Years Year Years Years Years ------------------------------------------------------------------------------------------------------------------------------- Founders Growth A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders International Equity A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Founders Passport A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Japan A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- MidCap Stock A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Technology Growth A ------------------------------------------------------------------------------- B ------------------------------------------------------------------------------------------------------------------------------- Transamerica VIF Growth A ------------------------------------------------------------------------------- B ===============================================================================================================================
Table A and Table B will assist you in understanding the costs and expenses that you will bear, directly or indirectly. These include the year 2001 expenses of the underlying portfolios, including any fee waivers and/or expense reimbursements (said fee waivers and expense reimbursements are assumed to continue throughout the periods shown in the examples). In addition to the expenses listed above, premium taxes may be applicable. These examples should not be considered a representation of past or future expenses, and actual expenses may be greater or less than those shown. The assumed 5% annual return is hypothetical and should not be considered a representation of past or future annual returns, which may be greater or less than the assumed rate. In the examples, the $35 annual service charge is reflected as a charge of ______% based on average account value of $_____________ (as of December 31, 2001). 13 1. THE ANNUITY CONTRACT This prospectus describes the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity contract offered by Transamerica Occidental Life Insurance Company. This prospectus generally describes contracts issued after May 1, 2002. Contracts issued before that date may have different features (such as different death benefits or annuity payments) and different charges. These differences are noted in Appendix C. An annuity is a contract between you, the owner, and an insurance company (in this case Transamerica), where the insurance company promises to pay you an income in the form of annuity payments. These payments begin on a designated date, referred to as the annuity date. Until the annuity date, your annuity is in the accumulation phase and the earnings (if any) are tax deferred. Tax deferral means you generally are not taxed until you take money out of your annuity. After the annuity date, your annuity switches to the income phase. The contract is a flexible premium variable annuity. You can use the contract to accumulate funds for retirement or other long-term financial planning purposes. Your individual investment and your rights are determined primarily by your own contract. The contract is a "flexible premium" contract because after you purchase it, you can generally make additional investments of any amount of $50 or more, until the annuity date. But you are not required to make any additional investments. The contract is a "variable" annuity because the value of your investments can go up or down based on the performance of your investment choices. If you invest in the variable account, the amount of money you are able to accumulate in your contract during the accumulation phase depends upon the performance of your investment choices. You could lose the amount you allocate to the variable portion. The amount of annuity payments you receive during the income phase from the variable account also depends upon the investment performance of your investment choices for the income phase. However, if you annuitize under the Guaranteed Minimum Income Benefit or the Initial Payment Guarantee, then Transamerica will guarantee a minimum amount of your annuity payments. The contract also contains a fixed account. The fixed account offers interest at rates that we guarantee will not decrease during the selected guaranteed period. There may be different interest rates for each different guaranteed period that you select. 2. PURCHASE Contract Issue Requirements Transamerica will not issue a contract unless: . Transamerica receives all information needed to issue the contract; . Transamerica receives a minimum initial purchase payment; and . The annuitant, owner, and any joint owner are age 90 or younger. We reserve the right to reject any application or purchase payment. Purchase payments You should make checks for purchase payments payable only to Transamerica Occidental Life Insurance Company and send them to the administrative and service office. Your check must be honored in order for Transamerica to pay any associated payments and benefits due under the contract. Initial Purchase Payment Requirements The initial purchase payment for nonqualified contracts must be at least $5,000, and at least $1,000 for qualified contracts. There is generally no minimum initial purchase payment for contracts issued under section 403(b) of the Internal Revenue Code; however, your purchase payments must be received within 90 days of the contract date or your contract will be canceled. We will credit your initial purchase payment to your contract within two business days after the day we receive it and your complete contract information. If we are unable to credit your initial purchase payment, we will contact you within five business days and explain why. We will also return your initial purchase payment at that time unless you let us keep it and credit it as soon as possible. The date on which we credit your initial purchase payment to your contract is generally the contract date. The contract 14 date is used to determine contract years, contract months and contract anniversaries. Additional Purchase payments You are not required to make any additional purchase payments. However, you can make additional purchase payments as often as you like during the accumulation phase. Additional purchase payments must be at least $50. We will credit additional purchase payments to your contract as of the business day we receive your purchase payment and required information. Additional purchase payments must be received before the New York Stock Exchange closes to get same-day pricing of the additional purchase payment. Maximum Total Purchase payments Cumulative purchase payments cannot exceed $1,000,000 without prior approval by Transamerica. Allocation of Purchase payments When you purchase a contract, we will allocate your purchase payment to the investment choices you select. Your allocation must be in whole percentages and must total 100%. We will allocate additional purchase payments the same way, unless you request a different allocation. If you allocate purchase payments to the Dollar Cost Averaging program, you must give us instructions regarding the subaccount(s) to which transfers are to be made or we cannot accept your purchase payment. You may change allocations for future additional purchase payments by sending us written instructions or by telephone, subject to the limitations described under "Telephone Transactions." The allocation change will apply to purchase payments received on or after the date we receive the change request. You could lose the amount you allocate to the variable subaccounts. Account Value You should expect your account value to change from valuation period to valuation period. A valuation period begins at the close of regular trading on the New York Stock Exchange on each business day and ends at the close of regular trading on the next succeeding business day. A business day is each day that the New York Stock Exchange is open. The New York Stock Exchange generally closes at 4:00 p.m. eastern time. Holidays are generally not business days. 3. INVESTMENT CHOICES The Variable Account There are currently twenty-seven variable subaccounts available under the contract for new investors. The subaccounts invest in shares of the various underlying fund portfolios. The companies that provide investment advice and administrative services for the underlying fund portfolios offered through this contract are listed below. The following variable investment choices are currently offered through this contract: DREYFUS VARIABLE INVESTMENT FUND - SERVICE CLASS Managed by The Dreyfus Corporation Appreciation Portfolio Balanced Portfolio Disciplined Stock Portfolio Growth and Income Portfolio International Equity Portfolio International Value Portfolio Limited Term High Income Portfolio Quality Bond Portfolio Small Cap Portfolio Small Company Stock Portfolio Special Value Portfolio DREYFUS VARIABLE INVESTMENT FUND Managed by The Dreyfus Corporation Money Market Portfolio DREYFUS STOCK INDEX FUND - SERVICE CLASS Managed by The Dreyfus Corporation and Mellon Equity Associates THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. - SERVICE CLASS Managed by The Dreyfus Corporation 15 DREYFUS INVESTMENT PORTFOLIOS - SERVICE CLASS Managed by The Dreyfus Corporation Core Bond Portfolio Core Value Portfolio Emerging Leaders Portfolio Emerging Markets Portfolio European Equity Portfolio Founders Discovery Portfolio Founders Growth Portfolio Founders International Equity Portfolio Founders Passport Portfolio Japan Portfolio MidCap Stock Portfolio Technology Growth Portfolio TRANSAMERICA VARIABLE INSURANCE FUND, INC. Managed by Transamerica Investment Management, LLC Transamerica VIF Growth Portfolio As of January 22, 2001, new contract owners may only invest in the Service Class sub-accounts, with the exception of the Money Market Sub-account and the Transamerica VIF Growth Sub-account. The Initial Class sub-accounts (other than the Money Market Sub-account and Transamerica VIF Growth Sub-account) are only available to contract owners that purchased the contract before January 22, 2001. The general public may not purchase shares of these underlying fund portfolios. The name and investment objectives and policies may be similar to other portfolios and underlying funds managed by the same investment adviser or manager that are sold directly to the public. You should not expect the investment results of the underlying fund portfolios to be the same as those of other portfolios or underlying funds. More detailed information, including an explanation of the portfolio's investment objectives, may be found in the current prospectus for the underlying funds, which accompany this prospectus. You should read the prospectuses for the underlying funds carefully before you invest. We may receive expense reimbursements or other revenues from the underlying funds or their managers. The amount of these reimbursements or revenues, if any, may be substantial and may be different for different funds or portfolios and may be based on the amount of assets that Transamerica or the variable account invests in the underlying fund portfolios. We do not guarantee that any of the subaccounts will always be available for purchase payments, allocations, or transfers. See the SAI for more information concerning the possible addition, deletion or substitution of investments. The Fixed Account Purchase payments allocated and amounts transferred to the fixed account become part of Transamerica's general account. Interests in the general account have not been registered under the Securities Act of 1933 (the "1933 Act"), nor is the general account registered as an investment company under the 1940 Act. Accordingly, neither the general account nor any interests therein are generally subject to the provisions of the 1933 or 1940 Acts. We guarantee that the interest credited to the fixed account will not be less than 2% per year. At the end of the guaranteed period option you selected, the value in that guaranteed period option will automatically be transferred into a new guaranteed period option of the same length (or the next shorter period if the same period is no longer offered) at the current interest rate for that period. You can transfer to another investment choice by giving us notice within 30 days before the end of the expiring guaranteed period. Full and partial surrenders and transfers from a guaranteed period option of the fixed account are subject to an excess interest adjustment (except at the end of the guaranteed period). This adjustment will also be to amounts that you apply to an annuity payment. This adjustment may increase or decrease the amount of interest credited to your contract. The excess interest adjustment will not decrease the interest credited to your contract below 2% per year, however. We determine credited rates, which are guaranteed for at least one year, in our sole discretion. You bear the risk that we will not credit interest greater than 2% per year. We also guarantee that upon full surrender your cash value attributable to the fixed account will not be less than 90% of your fixed account premiums accumulated at 3% less prior surrenders and transfers. If you select the fixed account, your money will be placed with Transamerica's other general assets. The amount of money you are able to accumulate in the fixed account during the accumulation phase depends upon the total 16 interest credited. The amount of annuity payments you receive during the income phase from the fixed portion of your contract will remain level for the entire income phase. Transfers During the accumulation phase, you may make transfers to or from any subaccount or to the fixed account as often as you wish within certain limitations. Transfers out of a guaranteed period option of the fixed account are limited to the following: . Transfers at the end of a guaranteed period, if you notify us within 30 days prior to the end of the guaranteed period that you wish to transfer the amount in that guaranteed period option to another investment choice. No excess interest adjustment will apply. . Transfers of amounts equal to interest credited. This may affect your overall interest-crediting rate, because transfers are deemed to come from the oldest purchase payment first. . Other than at the end of a guaranteed period, transfers of amounts from the guaranteed period option in excess of amounts equal to interest credited, are subject to an excess interest adjustment. If it is a negative adjustment, the maximum amount you can transfer in any one contract year is 25% of the amount in that guaranteed period option, less any previous transfers during the current contract year. If it is a positive adjustment, we do not limit the amount that you can transfer. Transfers out of a subaccount must be at least $500, or the entire subaccount value. Transfers of guaranteed period option amounts equal to interest credited must be at least $50. If less than $500 remains, then we reserve the right to either deny the transfer or include that amount in the transfer. Transfers must be received while the New York Stock Exchange is open to get same-day pricing of the transaction. Currently, there is no charge for transfers and no limit on the number of transfers during the accumulation phase. However, in the future, the number of transfers permitted may be limited and a $10 charge per transfer may apply. We reserve the right to prohibit transfers to the fixed account if we are crediting an effective annual interest rate of 2.0% (the guaranteed minimum). During the income phase, you may transfer values out of any subaccount; however, you cannot transfer values out of the fixed account in this phase. The minimum amount that can be transferred during this phase is the lesser of $10 of monthly income, or the entire monthly income of the annuity units in the subaccount from which the transfer is being made. Transfers may be made by telephone, subject to the limitations described below under "Telephone Transactions." The contract you are purchasing was not designed for professional market timing organizations or other persons that use programmed, large, or frequent transfers. The use of such transfers may be disruptive to an underlying fund portfolio. We reserve the right to reject any purchase payment or transfer request from any person, if, in our judgment, an underlying fund portfolio would be unable to invest effectively in accordance with its investment objectives and policies or would otherwise be potentially adversely affected or if an underlying portfolio would reject our purchase order. We may impose other limitations or restrictions on transfers by some or all contract owners, or specifically prohibit transfers for any owner who, in our view, has abused or appears likely to abuse the transfer privilege. 4. PERFORMANCE Transamerica periodically advertises performance of the various subaccounts. Performance figures might not reflect charges for options or riders. We may disclose at least three different kinds of performance. First, we may calculate performance by determining the percentage change in the value of an variable accumulation unit by dividing the increase (decrease) for that unit by the value of the variable accumulation unit at the beginning of the period. This performance number reflects the deduction of the mortality and expense risk fees and administrative charges. It does not reflect the deduction of any applicable premium taxes, surrender charges or fees for any optional riders. The deduction of any applicable premium taxes, surrender charges or rider fees would reduce the percentage increase or make greater any percentage decrease. Second, advertisements may also include total return figures, which reflect the deduction of the mortality and expense risk fees and administrative charges. These figures may also include or exclude surrender charges. 17 Third, in addition, for certain investment portfolios, performance may be shown for the period commencing from the inception date of the investment portfolio (i.e. before commencement of subaccount operations). These figures should not be interpreted to reflect actual historical performance of the subaccounts. We also may, from time to time, include in our advertising and sales materials, the performance of other funds or accounts managed by the subadviser, the performance of predecessors to the underlying fund portfolios, tax deferred compounding charts and other hypothetical illustrations, which may include comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets. Appendix B to this prospectus contains past performance information that you may find useful. It is divided into various parts, depending upon the type of performance information shown. Past performance is no indication of future performance; future performance will vary and future results will not be the same as the results shown. 5. EXPENSES There are charges and expenses associated with your contract that reduce the return on your investment in the contract. Surrender Charges During the accumulation phase, you can surrender part or all of the cash value (restrictions may apply to qualified contracts). Cash value is the adjusted account value less any applicable surrender charge and less any rider fees (imposed upon surrender). We may apply a surrender charge to compensate us for expenses relating to sales, including commissions to registered representatives and other promotional expenses. After the first year, you can surrender up to the greater of 10% of your purchase payments (less partial surrenders deemed to be from purchase payments) or any gains in the contract once each year free of surrender charges. This amount is referred to as the free percentage and is determined at the time of surrender. (The free percentage is not cumulative, so not surrendering anything in one year does not increase the surrender charge free amount in subsequent years.) If you surrender money in excess of this free amount, you might have to pay a surrender charge, which is a surrender charge, on the excess amount. The following schedule shows the surrender charges that apply during the seven years following payment of each purchase payment:
------------------------------------------------------ Number of Years Surrender Charge Since Purchase (as a percentage of Payment Date purchase payment surrendered) ------------------------------------------------------ 0 - 1 7% ------------------------------------------------------ 1 - 2 7% ------------------------------------------------------ 2 - 3 6% ------------------------------------------------------ 3 - 4 6% ------------------------------------------------------ 4 - 5 5% ------------------------------------------------------ 5 - 6 4% ------------------------------------------------------ 6 - 7 3% ------------------------------------------------------ 7 or more 0 ------------------------------------------------------
For example, assume your purchase payment is $100,000 and your account value is $106,000 at the beginning of the second contract year and you surrender $30,000. Since that amount is more than your free amount ($10,000), you would pay a surrender charge of $1,400 on the remaining $20,000 (7% of $30,000 - $10,000). Likewise, assume your account value is $80,000 (purchase payments $100,000) at the beginning of the second contract year and you surrender your contract. You would pay a surrender charge of $6,300 [7% of ($100,000 - ($100,000 x 10%))]. You can generally choose to receive the full amount of a requested partial surrender by directing us to deduct any applicable surrender charge (and any negative excess interest adjustment) from your remaining account value. You receive your cash value upon full surrender. For surrender charge purposes, earnings are considered to be surrendered first, then the oldest purchase payment is considered to be surrendered next. Surrender charges are waived if you surrender money under the Nursing Care and Terminal Withdrawal Option or the Unemployment Waiver. Keep in mind that surrenders may be taxable, and if made before age 59 1/2, may be subject to a 10% federal penalty tax. For tax purposes, surrenders from nonqualified contracts are considered to come from earnings first. Under 18 qualified contracts, surrenders may be prorated between taxable and nontaxable amounts. Excess Interest Adjustment Surrenders of cash value from the fixed account may be subject to an excess interest adjustment. This adjustment could retroactively reduce the interest credited in the fixed account to the guaranteed minimum of 2% per year or increase the amount credited. This adjustment may also apply to amounts applied to an annuity payment. See "The Fixed Account" in Section 3. Mortality and Expense Risk Fee We charge a fee as compensation for bearing certain mortality and expense risks under the contract. This fee is assessed daily based on the net asset value of each subaccount. Examples of such risks include a guarantee of annuity rates, the death benefits, certain expenses of the contract, and assuming the risk that the current charges will be insufficient in the future to cover costs of administering the contract. We may also pay distribution expenses out of this charge. For the Return of Premium Death Benefit the daily mortality and expense risk fee is at an annual rate of 1.15%. During the accumulation phase, for the Double Enhanced Death Benefit, the mortality and expense risk fee is at an annual rate of 1.30%. During the income phase, the mortality and expense risk fee is always at an annual rate of 1.10%. If this charge does not cover our actual costs, we absorb the loss. Conversely, if the charge more than covers actual costs, the excess is added to our surplus. We expect to profit from this charge. We may use any profit for any proper purpose, including distribution expenses. Administrative Charges We deduct a daily administrative charge to cover the costs of administering the contract. This charge is equal to an annual rate of 0.15% per year of the daily net asset value of the variable account during both the accumulation phase and the income phase. In addition, an annual service charge of $35 (but not more than 2% of the account value) is charged on each contract anniversary and at surrender. The service charge is waived if your account value or the sum of your purchase payments, less all partial surrenders, is at least $50,000. Premium Taxes Some states assess premium taxes on the purchase payments you make. We currently do not deduct for these taxes at the time you make a purchase payment. However, we will deduct the total amount of premium taxes, if any, from the account value when: . you begin receiving annuity payments; . you surrender the contract; or . you die and a death benefit is paid (you must also be the annuitant for the death benefit to be paid). Generally, premium taxes range from 0% to 3.50%, depending on the state. Federal, State and Local Taxes We may in the future deduct charges from the contract for any taxes we incur because of the contract. However, no deductions are being made at the present time. Transfer Fee You are allowed to make 18 free transfers per year before the annuity date. If you make more than 18 transfers per year, we reserve the right to charge $10 for each additional transfer. Purchase payments, Asset Rebalancing and Dollar Cost Averaging transfers do not count as one of your 18 free transfers per year. All transfer requests made at the same time are treated as a single request. Guaranteed Minimum Income Benefit If you elect the Guaranteed Minimum Income Benefit, there is an annual rider fee during the accumulation phase of 0.45% of the minimum annuitization value. If you receive annuity payments under the rider and you elect the guaranteed minimum payment option, then there is a guaranteed payment fee at an annual rate of 1.25% of the daily net asset value. The annual rider fee is also deducted if you surrender the contract. 19 Initial Payment Guarantee If you elect the Initial Payment Guarantee at the time of annuitization, there is a daily rider fee currently at an annual rate of 1.25% of the daily net asset value. This fee may be higher or lower at the time you annuitize and elect the rider. Tax Relief Rider If you elect the Tax Relief Rider, there is an annual rider fee during the accumulation phase of 0.25% of the account value. The rider fee will be deducted on each rider anniversary and upon termination of the rider (once we have received all necessary regulatory approvals) during the accumulation phase. The rider fee is deducted pro rata from each investment choice. Portfolio Fees and Expenses The value of the assets in each subaccount will reflect the fees and expenses paid by the underlying fund. A list of these expenses is found in the "Fee Table" section of this prospectus. See the prospectuses for the underlying funds for more information. 6. ACCESS TO YOUR MONEY During the accumulation phase, you can have access to the money in your contract in two ways: . by making a surrender (either a complete or partial surrender); or . by taking systematic payouts. Surrenders If you take a complete surrender, you will receive your cash value. If you want to take a partial surrender, in most cases it must be for at least $500. Unless you tell us otherwise, we will take the surrender from each of the investment choices in proportion to the account value. After one year, you may take up to the greater of 10% of your purchase payments (less partial surrenders deemed to be from purchase payments) or any gains in the contract free of surrender charges once each contract year. Remember that any surrender you take will reduce the account value, and will reduce the amount of the death benefit. See Section 8, Death Benefit, for more details. A surrender may also reduce other benefits. Surrenders may be subject to a surrender charge. Surrenders from the fixed account may also be subject to an excess interest adjustment. Income taxes, federal tax penalties and certain restrictions may apply to any surrenders you make. Surrenders from qualified contracts may be restricted or prohibited. During the income phase, you will receive annuity payments under the annuity payment you select; however, you generally may not take any other surrenders, either complete or partial, unless you elect a Life With Emergency Cash(SM) payment option. Delay of Payment and Transfers Payment of any amount due from the variable account for a surrender, a death benefit, or the death of the owner of a nonqualified contract, will generally occur within seven business days from the date Transamerica receives all required information. Transamerica may defer such payment from the variable account if: . the New York Stock Exchange is closed other than for usual weekends or holidays or trading on the Exchange is otherwise restricted; . an emergency exists as defined by the SEC or the SEC requires that trading be restricted; or . the SEC permits a delay for the protection of owners. In addition, transfers of amounts from the subaccounts may be deferred under these circumstances. Pursuant to the requirements of certain state laws, we reserve the right to defer payment of the cash value from the fixed account for up to six months. We may defer payment of any amount until your purchase payment check has cleared your bank. Excess Interest Adjustment Money that you transfer out of or surrender from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. At the time 20 you request a transfer or surrender (either full or partial), if interest rates set by Transamerica have risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value on surrender. However, if interest rates have fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value on surrender or transfer. Any amount surrendered in excess of the cumulative interest credited is generally subject to an excess interest adjustment. There will be no excess interest adjustment on any of the following: . surrenders or transfers of cumulative interest credited; . nursing care and terminal condition surrenders; . Unemployment Waiver; . surrenders to satisfy any minimum distribution requirements; and . Systematic Withdrawal Option payments, which do not exceed cumulative interest credited. Please note that in these circumstances you will not receive a higher cash value if interest rates have fallen nor will you receive a lower cash value if interest rates have risen. An excess interest adjustment may also be made on amounts applied to an annuity payment. The excess interest adjustment may vary by state and may not be applicable in all states. 7. ANNUITY PAYMENTS (THE INCOME PHASE) You choose the annuity date. You can change this date by giving us written notice 30 days before the current annuity date. The new annuity date must be at least 30 days after we receive notice of the change. The latest annuity date generally cannot be after the contract month following the month in which the annuitant attains age 85 (in certain cases, we may allow the date to be up to the last day of the month following the month in which the annuitant attains age 95). The earliest annuity date is 30 days after you purchase your contract. Election of Annuity Payment. Before the annuity date, if the annuitant is alive, --------------------------- you may choose an annuity payment or change your election. If the annuitant dies before the annuity date, the death benefit is payable in a lump sum or under one of the annuity payments (unless the surviving spouse continues the contract). Unless you specify otherwise, the annuitant will receive the annuity payments. After the annuitant's death, the beneficiary will receive any remaining guaranteed payments. Annuity Payments The contract provides several annuity payments that are described below (these options are not available under the Guaranteed Minimum Income Benefit). You may choose any combination of annuity payments. We will use your adjusted account value to provide these annuity payments. If the adjusted account value on the annuity date is less than $2,000, we reserve the right to pay it in one lump sum in lieu of applying it under an annuity payment. You can receive annuity payments monthly, quarterly, semi-annually, or annually. (We reserve the right to change the frequency if payments would be less than $50.) Unless you choose to receive variable payments under annuity payments 3 or 5, the amount of each payment will be set on the annuity date and will not change. You may, however, choose to receive variable payments under payment options 3 and 5. The dollar amount of the first variable payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the contract. The dollar amount of additional variable payments will vary based on the investment performance of the subaccount(s). The dollar amount of each variable payment after the first may increase, decrease, or remain constant. If the actual investment performance (net of fees and expenses) exactly matched the assumed investment return of 5% at all times, the amount of each variable annuity payment would remain equal. If actual investment performance (net of fees and expenses) exceeds the assumed investment return, the amount of the variable annuity payments would increase. Conversely, if actual investment performance (net of fees and expenses) is lower than the assumed investment return, the amount of the variable annuity payments would decrease. These changes only occur annually under the Guaranteed Minimum Income Benefit and Initial Payment Guarantee. A charge for premium taxes and an excess interest adjustment may be made when annuity payments begin. The annuity payments are explained below. Options 1, 2, and 4 are fixed only. Options 3 and 5 can be fixed or variable. 21 Payment Option 1--Interest Payments. We will pay the interest on the amount we ----------------------------------- use to provide annuity payments in equal payments, or this amount may be left to accumulate for a period of time you and Transamerica agree to. You and Transamerica will agree on surrender rights when you elect this option. Payment Option 2--Income for a Specified Period. We will make level payments ----------------------------------------------- only for the fixed period you choose. No funds will remain at the end of the period. Payment Option 3--Life Income. You may choose between: ----------------------------- . No Period Certain (fixed or variable)--Payments will be made only during the annuitant's lifetime. . 10 Years Certain (fixed or variable)--Payments will be made for the longer of the annuitant's lifetime or ten years. . Guaranteed Return of Contract Proceeds (fixed only)--Payments will be made for the longer of the annuitant's lifetime or until the total dollar amount of payments we made to you equals the amount applied to this option. . Life with Emergency Cash(SM) (fixed or variable)--Payments will be made during the annuitant's lifetime. With the Life with Emergency Cash(SM) feature, you are able to surrender all or a portion of the Life with Emergency Cash(SM) benefit. The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency Cash(SM) benefit schedule that will assist you in estimating the amount you have available to surrender. A partial surrender will reduce all future payments. A surrender charge may apply and there may be tax consequences (consult a tax advisor before requesting a full or partial surrender). The maximum surrender charge is 4% of the annuitized purchase payment. The Life with Emergency Cash(SM) benefit will continue through age 100 of the annuitant. The Life with Emergency Cash(SM) benefit is also a death benefit that is paid upon the death of the annuitant. (For qualified contracts the death benefit ceases at the date the annuitant reaches the IRS age limitation.) Payment Option 4--Income of a Specified Amount. Payments are made for any ---------------------------------------------- specified amount until the amount applied to this option, with interest, is exhausted. This will be a series of level payments followed by a smaller final payment. Payment Option 5--Joint and Survivor Annuity. You may choose between: -------------------------------------------- . No Period Certain (fixed or variable)--Payments are made during the joint -- lifetime of the annuitant and a joint annuitant of your selection. Payments will be made as long as either person is living. . Life with Emergency Cash(SM) (fixed or variable)--Payments will be made during the joint lifetime of the annuitant and a joint annuitant of your selection. Payments will be made as long as either person is living. With the Life with Emergency Cash(SM) feature, you are able to surrender all or a portion of the Life with Emergency Cash(SM) benefit. The amount you surrender must be at least $2,500. We will provide you with a Life with Emergency Cash(SM) benefit schedule that will assist you in estimating the amount you have available to surrender. A partial surrender will reduce all future payments. A surrender charge may apply and there may be tax consequences (consult a tax advisor before requesting a full or partial surrender). The maximum surrender charge is 4% of the annuitized purchase payment. The Life with Emergency Cash(SM) benefit will continue through age 100 of the annuitant. The Life with Emergency Cash(SM) benefit is also a death benefit that is paid upon the death of the last annuitant. (For qualified contracts the death benefit ceases at the date the annuitant reaches the IRS joint age limitation.) NOTE CAREFULLY: IF: . you choose Life Income with No Period Certain or a Joint and Survivor Annuity with No Period Certain; and . the annuitant dies before the due date of the second (third, fourth, etc.) annuity payment; THEN: . we may make only one (two, three, etc.) annuity payments. IF: . you choose Income for a Specified Period, Life Income with 10 years Certain, Life Income with Guaranteed Return of Contract Proceeds, or Income of a Specified Amount; and . the person receiving payments dies prior to the end of the guaranteed period; THEN: . the remaining guaranteed payments will be continued to that person's beneficiary, or their present value may be paid in a single sum. 22 However, IF: . You choose Life with Emergency Cash(SM); and . The annuitant dies before age 100. THEN: . A Life with Emergency Cash(SM) death benefit will be paid. We will not pay interest on amounts represented by uncashed annuity payment checks if the postal or other delivery service is unable to deliver checks to the payee's address of record. The person receiving payments is responsible for keeping Transamerica informed of their current address. Other annuity payments may be arranged by agreement with Transamerica. Certain annuity payments may not be available in all states. 8. DEATH BENEFIT We will pay a death benefit to your beneficiary, under certain circumstances, if the annuitant dies during the accumulation phase. If there is a surviving owner(s) when the annuitant dies, the surviving owner(s) will receive the death benefit instead of the listed beneficiary. The person receiving the death benefit may choose an annuity payment option, or may choose to receive a lump sum. When We Pay A Death Benefit We will pay a death benefit IF: . you are both the annuitant and sole owner of the contract; and . you die before the annuity date. We will pay a death benefit to you (owner) IF: . you are not the annuitant; and . the annuitant dies before the annuity date. If the only person receiving the death benefit is the surviving spouse, then he or she may elect to continue the contract as the new annuitant and owner, instead of receiving the death benefit. All current surrender charges will be waived. When We Do Not Pay A Death Benefit We will not pay a death benefit IF: . you are not the annuitant; and . you die prior to the annuity date; Please note the new owner (unless it is your spouse) must generally surrender the contract within five years of your death for the adjusted account value minus any applicable rider fees. Distribution requirements apply to the account value upon the death of any owner. These requirements are detailed in the SAI. Deaths After the Annuity Commencement Date The death benefit payable, if any, on or after the annuity date depends on the annuity payment option selected. IF: . you are not the annuitant; and . you die on or after the annuity date; and . the entire interest in the contract has not been paid to you; THEN: . the remaining portion of such interest in the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of your death. IF: . You are receiving annuity payments under the Life with Emergency Cash(SM); and . The annuitant dies before age 100. THEN: . A Life with Emergency Cash(SM) death benefit will be paid. Succession of Ownership If any owner dies during the accumulation phase, the annuitant will become the new owner. Amount of Death Benefit Death benefit provisions may differ from state to state. The death benefit may be paid as a lump sum or as annuity payments. The amount of the death benefit depends on the guaranteed minimum death benefit option you chose when you bought the contract. The death benefit will be the greatest of: . account value on the date we receive the required information; or . cash value on the date we receive the required information (this could be more than the account value 23 if there is a positive excess interest adjustment that exceeds the surrender charge); or . guaranteed minimum death benefit (discussed below), plus purchase payments, less partial surrenders from the date of death to the date the death benefit is paid. Guaranteed Minimum Death Benefit NOTE: The following generally applies, depending on the state of issue, to contracts issued after May 1, 2002. For other contracts, see Appendix C. On the contract application, you generally may choose one of the guaranteed minimum death benefit options listed below (age limitations may apply). After the contract is issued, you cannot make an election and the death benefit cannot be changed. There is an extra charge for guaranteed minimum death benefit A. A. Double Enhanced Death Benefit ----------------------------- The death benefit under this option is the greater of 1 or 2 below: 1. The 6% Annually Compounding through age 80 Death Benefit is: . the total purchase payments; less . any adjusted partial surrenders; plus . interest at an effective annual rate of 6% from the purchase payment date or surrender date to (a) the earlier of the annuitant's date of death or the annuitant's 81/st/ birthday; or (b) the date the total purchase payments, less any adjusted partial surrenders and any applicable premium taxes, has grown to two times its original amount as a result of the 6% interest accumulation. 2. The Monthly Step-Up through age 80 Death Benefit is equal to: . the largest account value on the contract date or on any monthly anniversary prior to the earlier of the annuitant's date of death or the annuitant's 81/st/ birthday; plus . any purchase payments subsequent to the date of any monthly anniversary with the largest account value; minus . any adjusted partial surrenders subsequent to the date of the monthly anniversary with the largest account value. This benefit is not available if the owner or annuitant is age 81 or older on the contract date. B. Return of Premium Death Benefit ------------------------------- The Return of Premium Death Benefit is: . total purchase payments; less . any adjusted partial surrenders (discussed below) as of the date of death. The Return of Premium Death Benefit will be in effect if you do not choose the other death benefit option on the contract application. The charges are lower for this option than for the other. Spousal Continuation -------------------- NOTE, IF, under either death benefit option: ---- . the surviving spouse (as beneficiary or sole surviving owner) elects to continue the contract instead of receiving the death benefit; and . the guaranteed minimum death benefit is greater than the account value; THEN: . we will increase the account value to be equal to the guaranteed minimum death benefit. This increase is made only at the time the surviving spouse elects to continue the contract and the guaranteed minimum death benefit will continue as applicable. Adjusted Partial Surrender When you request a partial surrender, your guaranteed minimum death benefit will be reduced by an amount called the adjusted partial surrender. Under certain circumstances, the adjusted partial surrender may be more than the dollar amount of your surrender request. This will generally be the case if the guaranteed minimum death benefit exceeds the account value at the time of the surrender. It is also possible that if a death benefit is paid after you have made a partial surrender, then the total amount paid could be less than the total purchase payments. We have included a detailed explanation of this adjustment in the SAI. This is referred to as "adjusted partial surrender" in you contract. 24 9. TAXES NOTE: Transamerica has prepared the following information on federal income taxes as a general discussion of the subject. It is not intended as tax advice to any individual. You should consult your own tax adviser about your own circumstances. Transamerica has included an additional discussion regarding taxes in the SAI. Annuity Contracts in General Deferred annuity contracts are a way of setting aside money for future needs like retirement. Congress recognized how important saving for retirement is and provided special rules in the Internal Revenue Code for annuities. Simply stated, these rules generally provide that generally you will not be taxed on the earnings, if any, on the money held in your annuity contract until you take the money out. This is referred to as tax deferral. There are different rules as to how you will be taxed depending on how you take the money out and the type of contract--qualified or nonqualified (discussed below). You will generally not be taxed on increases in the value of your contract until a distribution occurs--either as a surrender or as annuity payments and tax deferral will not apply. When a non-natural person (e.g., corporation or certain other entities other than tax-qualified trusts) owns a nonqualified contract, the contract will generally not be treated as an annuity for tax purposes. Qualified and Nonqualified Contracts If you purchase the contract under an individual retirement annuity, a pension plan, or specially sponsored program, your contract is referred to as a qualified contract. Qualified contracts are issued in connection with the following plans: . Individual Retirement Annuity (IRA): A traditional IRA allows individuals to make contributions, which may be deductible, to the contract. A Roth IRA also allows individuals to make contributions to the contract, but it does not allow a deduction for contributions, and distributions may be tax-free if the owner meets certain rules. . Tax-Sheltered Annuity (403(b) Plan): A 403(b) Plan may be made available to employees of certain public school systems and tax-exempt organizations and permits contributions to the contract on a pre-tax basis. . Corporate Pension and Profit-Sharing and H.R. 10 Plan: Employers and self- employed individuals can establish pension or profit-sharing plans for their employees or themselves and make contributions to the contract on a pre-tax basis. . Deferred Compensation Plan (457 Plan): Certain governmental and tax-exempt organizations can establish a plan to defer compensation on behalf of their employees through contributions to the contract. The contract contains death benefit features that in some cases may exceed the greater of the purchase payments or the account value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in any pension or profit-sharing plan or 403(b) plan. Because the death benefit may exceed this limitation, anyone using the contract in connection with such plans should consult their tax adviser. The Internal Revenue Service has not reviewed the contract for qualification as an IRA, and has not addressed in a ruling of general applicability whether the death benefit provision, such as the provisions in the contract, comports with IRA qualification requirements. If you purchase the contract as an individual and not under an individual retirement annuity, 403(b) plan, 457 plan, or pension or profit sharing plan, your contract is referred to as a nonqualified contract. Surrenders--Qualified Contracts The information herein describing the taxation of nonqualified contracts does not apply to qualified contracts. There are special rules that govern with respect to qualified contracts. Generally, these rules restrict: . the amount that can be contributed to the contract during any year; . the time when amounts can be paid from the contract; and . the amount of any death benefit that may be allowed. In addition, a penalty tax may be assessed on amounts surrendered from the contract prior to the date you reach age 59 1/2, unless you meet one of the exceptions to this rule. You may also be required to begin taking minimum distributions 25 from the contract by a certain date. The terms of the plan may limit the rights otherwise available to you under the contract. We have provided more information in the SAI. You should consult your legal counsel or tax adviser if you are considering purchasing a contract for use with any retirement plan. Surrenders--403(b) Contracts The Internal Revenue Code limits surrenders from certain 403(b) contracts. Surrenders can generally only be made when an owner: . reaches age 59 1/2; . leaves his/her job; . dies; . becomes disabled (as that term is defined in the Internal Revenue Code); or . declares hardship. However, in the case of hardship, the owner can only surrender the purchase payments and not any earnings. Diversification and Distribution Requirements The Internal Revenue Code provides that the underlying investments for a variable annuity must satisfy certain diversification requirements in order to be treated as an annuity. The contract must also meet certain distribution requirements at the death of an owner in order to be treated as an annuity. These diversification and distribution requirements are discussed in the SAI. Transamerica may modify the contract to attempt to maintain favorable tax treatment. Surrenders--Nonqualified Contracts If you make a surrender (including Systematic Payouts) from a nonqualified contract before the annuity date, the Internal Revenue Code treats that surrender as first coming from earnings and then from your purchase payments. When you make a surrender you are taxed on the amount of the surrender that is earnings. (The excess interest adjustment resulting from the surrender may affect the amount on which you are taxed, but the tax treatment of excess interest adjustments is uncertain. You should consult a tax advisor if a surrender results in an excess interest adjustment.) If you make a full surrender, you are generally taxed on the amount that your surrender proceeds exceeds the "investment in the contract," which is generally your purchase payments paid (adjusted for any prior surrenders or portions thereof that were not taxable). Different rules apply for annuity payments. See "Annuity Payments" below. The Internal Revenue Code also provides that surrendered earnings may be subject to a penalty tax. The amount of the penalty tax is equal to 10% of the amount that is includable in income. Some surrenders will be exempt from the penalty tax. They include any amounts: . paid on or after the taxpayer reaches age 59 1/2; . paid after an owner dies; . paid if the taxpayer becomes totally disabled (as that term is defined in the Internal Revenue Code); . paid in a series of substantially equal payments made annually (or more frequently) under a lifetime annuity; . paid under an immediate annuity; or . which come from purchase payments made prior to August 14, 1982. All nonqualified deferred annuity contracts that are issued by Transamerica (or its affiliates) to the same owner during any calendar year are treated as one annuity for purposes of determining the amount includable in the owner's income when a taxable distribution occurs. Taxation of Death Benefit Proceeds Amounts may be distributed from the contract because of the death the annuitant. Generally, such amounts should be includable in the income of the recipient: . if distributed in a lump sum, these amounts are taxed in the same manner as a full surrender; or . if distributed under an annuity payment, these amounts are taxed in the same manner as annuity payments. Annuity Payments Although the tax consequences may vary depending on the annuity payment you select, in general, for nonqualified contracts, only a portion of the annuity payments you receive will be includable in your gross income. In general, the excludable portion of each annuity payment you receive will be determined as follows: . Fixed payments--by dividing the "investment in the contract" on the annuity date by the total expected value of the annuity payments for the term of the 26 payments. This is the percentage of each annuity payment that is excludable. . Variable payments--by dividing the "investment in the contract" on the annuity date by the total number of expected periodic payments. This is the amount of each annuity payment that is excludable. The remainder of each annuity payment is includable in gross income. Once the "investment in the contract" has been fully recovered, the full amount of any additional annuity payments is includable in gross income. If you select more than one annuity payment, special rules govern the allocation of the contract's entire "investment in the contract" to each such option, for purposes of determining the excludable amount of each payment received under that option. We advise you to consult a competent tax adviser as to the potential tax effects of allocating amounts to any particular annuity payment. If, after the annuity date, annuity payments stop because an annuitant died, the excess (if any) of the "investment in the contract" as of the annuity date over the aggregate amount of annuity payments received that was excluded from gross income may possibly be allowable as a deduction for your last taxable year. It is unclear whether stabilized annuity payments under the Guaranteed Minimum Income Benefit or the Initial Payment Guarantee should be treated as fixed annuity payments or variable annuity payments for federal income tax purposes. You should consult a tax advisor on this issue. Annuity Contracts Purchased by Nonresident Aliens and Foreign Corporations The discussion above provided general information (but not tax advice) regarding U.S. federal income tax consequences to annuity owners that are U.S. persons. Taxable distributions made to owners who are not U.S. persons will generally be subject to U.S. federal income tax withholding at a 30% rate, unless a lower treaty rate applies. In addition, distributions may be subject to state and/or municipal taxes and taxes that may be imposed by the owner's country of citizenship or residence. Prospective foreign owners are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation for any annuity contract purchase. Transfers, Assignments or Exchanges of Contracts A transfer of ownership or assignment of a contract, the designation of an annuitant or payee or other beneficiary who is not also the owner, the selection of certain annuity dates, or a change of annuitant, may result in certain income or gift tax consequences to the owner that are beyond the scope of this discussion. An owner contemplating any such transfer, assignment, selection, or change should contact a competent tax adviser with respect to the potential tax effects of such a transaction. Possible Tax Law Changes Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the contract could change by legislation or otherwise. You should consult a tax adviser with respect to legal developments and their effect on the contract. Variable Account Charges It is possible that the Internal Revenue Service may take a position that fees for certain optional benefits (e.g., death benefits other than the Return of Premium death benefit) are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat fees associated with the Tax Relief Rider as a taxable surrender, which might also be subject to a tax penalty if the surrender occurs prior to age 59 1/2. Although we do not believe that the fees associated with the Tax Relief Rider or any other optional benefit provided under the contract should be treated as taxable surrenders, we advise that you consult your tax advisor prior to selecting any optional benefit under the contract. 10. ADDITIONAL FEATURES Systematic Withdrawal Option You can select at any time (during the accumulation phase) to receive regular payments from your contract by using the Systematic Withdrawal Option. Under this option, you can receive the greater of (1) and (2), divided by the number of payouts made per year, where: (1) is up to 10% (annually) of your purchase payments (less partial surrenders deemed to be purchase payments); and (2) is any gains in the contract. 27 This amount may be taken free of surrender charges. Payments can be made monthly, quarterly, semi-annually, or annually. Each payment must be at least $50. Monthly and quarterly payments must be made by electronic funds transfer directly to your checking or savings account. There is no charge for this benefit. Guaranteed Minimum Income Benefit The optional Guaranteed Minimum Income Benefit assures you of a minimum level of income in the future by guaranteeing a minimum annuitization value (discussed below) after seven years. You may elect to purchase this benefit, which provides a minimum amount you will have to apply to a Guaranteed Minimum Income Benefit payment option and which guarantees a minimum amount for those payments once you begin to receive them. By electing this benefit, you can participate in the gains of the underlying variable investment options you select while knowing that you are guaranteed a minimum level of income in the future, regardless of the performance of the underlying variable investment options. The Guaranteed Minimum Income Benefit rider will not be issued if you are 80 years old or older (earlier if required by state law). You can annuitize under the rider (subject to the conditions described below) at the greater of the adjusted account value or the minimum annuitization value. Minimum Annuitization Value. The minimum annuitization value on the rider date --------------------------- (the date the rider is added to your contract) is equal to the account value. After that, the minimum annuitization value is equal to the greater of the following: 1) the largest account value on the rider date or on any rider anniversary prior to the annuitant's 81st birthday, plus any subsequent purchase payments (less the sum of all subsequent withdrawals adjusted as below and any premium taxes after the date of the largest account value); or 2) the minimum annuitization value on the rider date plus the sum of all purchase payments received after the rider date, less withdrawals (adjusted as below) and premium taxes, plus interest thereon equal to the annual effective interest rate specified on page one of the rider up to: a) the rider anniversary prior to the annuitant's 81/st/ birthday; b) the date the sum of all purchase payments, (less the sum of all adjusted withdrawals and premium taxes), together with credited interest, has grown to two times the amount of all purchase payments (less all adjusted withdrawals and premium taxes) as a result of such interest accumulation, if earlier. You can annuitize under the Guaranteed Minimum Income Benefit (subject to the conditions described in this section) at the greater of the annuity purchase amount or the minimum annuitization value. The annual effective interest rate is current 6% per year; we may, at our discretion, change the rate in the future, but the rate will never be less than 3% per year, and once the rider is added to your contract, the annual rate will not vary during the life of that rider. Withdrawals may reduce the minimum annuitization value on a basis greater than dollar-for-dollar. See the SAI for more information. The Guaranteed Minimum Income Benefit does not establish or guarantee account value or guarantee performance of any investment option. The minimum annuitization value may only be used to annuitize using the Guaranteed Minimum Income Benefit payment options provided by the Guarantee Minimum Income Benefit and may not be used with any of the annuity payment options listed in Section 7 of this prospectus. The Guaranteed Minimum Income Benefit payment options are: . Life Income--An election may be made for "No Period Certain" or "10 Years Certain". In the event of the death of the annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. . Joint and Full Survivor--An election may be made for "No Period Certain" or "10 Years Certain". Payments will be made as long as either the annuitant or joint annuitant is living. In the event of the death of both the annuitant and joint annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. 28 NOTE CAREFULLY: IF: . You choose Life Income with No Period Certain or Joint and Full Survivor with No Period Certain; and . The annuitant(s) dies before the due date of the second (third, fourth, etc.) annuity payment; THEN: . We will make only one (two, three, etc.) annuity payments. The minimum annuitization value is used solely to calculate the Guaranteed Minimum Income Benefit annuity payments and does not establish or guarantee a account value or guarantee performance of any investment option. Because this benefit is based on conservative actuarial factors (such as the use of a 3.0% assumed investment return, to calculate the first annuity payment, which results in a lower dollar amount for that payment than would result from using the 5.0% assumed investment return that is used with the regular annuity payments described in Section 7 above), the level of lifetime income that it guarantees may be less than the level that would be provided by application of the adjusted account value at otherwise applicable annuity factors. Therefore, the Guaranteed Minimum Income Benefit should be regarded as a safety net. The costs of annuitizing under the Guaranteed Minimum Income Benefit include the guaranteed payment fee, and also the lower payout levels inherent in the annuity tables used for those minimum payouts (which may include an annuity age factor adjustment). These costs should be balanced against the benefits of a minimum payout level. Moreover, the Initial Payment Guarantee option described below also provides for a minimum payout level, and it uses actuarial factors (such as a 5.0% assumed investment return) that provide for higher payment levels for a given account value than the Guaranteed Minimum Income Benefit (which uses a 3.0% assumed investment return to calculate the first annuity payment and a 5.0% rate to calculate all subsequent payments). You should carefully consider these factors, since electing annuity payments under the Guaranteed Minimum Income Benefit will generally be advantageous only when the minimum annuitization value is sufficiently in excess of the adjusted account value to overcome these disadvantages. In addition to the annual growth rate, other benefits and fees under the rider (the rider fee, the fee waiver threshold, the guaranteed payment fee, and the waiting period before the rider can be exercised) are also guaranteed not to change after the rider is added. However, all of these benefit specifications may change if you elect to upgrade the minimum annuitization value. Minimum Annuitization Value Upgrade. You can upgrade your minimum annuitization ------------------------------------ value to the account value on a contract anniversary. This may be done within thirty days after any contract anniversary before your 88/th/ birthday (earlier if required by state law). For your convenience, we will put the last date to upgrade on page one of the rider. If you upgrade: . the current rider will terminate and a new one will be issued with its own specified guaranteed benefits and fees (the new rider will be what is currently offered for new sales); . the new fees, thresholds and factors may be higher (or lower) than before; . the new annual growth rate may be lower (or higher) than before; and . you will have a new seven year waiting period before you can annuitize under the rider. It generally will not be to your advantage to upgrade unless your adjusted account value exceeds your minimum annuitization value at the time you elect to upgrade. Conditions of Exercise of the Guaranteed Minimum Income Benefit. You can only ---------------------------------------------------------------- annuitize using the Guaranteed Minimum Income Benefit within the 30 days after the seventh or later contract anniversary after the Guaranteed Minimum Income Benefit is elected or, in the case of an upgrade of the minimum annuitization value, the seventh or later contract anniversary following the upgrade. Transamerica may, at its discretion, change the waiting period before the Guaranteed Minimum Income Benefit can be exercised in the future. You cannot, however, annuitize using the Guaranteed Minimum Income Benefit after the contract anniversary after your 94/th/ birthday (earlier if required by state law). For your convenience, we will put the first and last date to annuitize using the Guaranteed Minimum Income Benefit on page one of the rider. 29 NOTE CAREFULLY: If you annuitize at any time other than indicated above, you cannot use the Guaranteed Minimum Income Benefit. Guaranteed Minimum Payment Option. If you elect the guaranteed minimum payment ---------------------------------- option at the time of annuitization, annuity payments under the rider are guaranteed to never be less than the initial payment. See the SAI for information concerning the calculation of the initial payment. The payments will also be "stabilized" or held constant during each contract year. During the first contract year after annuitizing using the rider, each stabilized payment will equal the initial payment. On each contract anniversary thereafter, the stabilized payment will increase or decrease depending on the performance of the investment options you selected (but will never be less than the initial payment), and then be held constant at that amount for that contract year. The stabilized payment on each contract anniversary will equal the greater of the initial payment or the payment supportable by the annuity units in the selected investment options. See the SAI for additional information concerning stabilized payments. If you elect not to receive guaranteed minimum payments, your payments: ----------------------------------------------------------------------- . are not guaranteed and may be less than the initial payment; ------------------------------------------------------------ . will vary according to the investment performance of the investment options --------------------------------------------------------------------------- you select; and --------------- . will not be stabilized. ----------------------- Rider Fee. A rider fee, currently 0.45% of the minimum annuitization value on ---------- the contract anniversary, is charged annually prior to annuitization. We will also charge this fee if you take a complete surrender. The rider fee is deducted from each variable subaccount and the fixed account in proportion to the amount of account value in each variable subaccount and the fixed account. This fee is deducted even if the adjusted account value exceeds the minimum annuitization value. Guaranteed Minimum Payment Fee. If you elect the guaranteed minimum payment ------------------------------- option at the time of annuitization, a guaranteed minimum payment fee, currently equal to an effective annual rate of 1.25% of the daily net asset value in the variable account, is reflected in the amount of the variable payments you receive if you annuitize under the Guaranteed Minimum Income Benefit, in addition to the base product mortality and expense risk fee and administrative charge. The guaranteed minimum payment fee is included on page one of the rider. This option is irrevocable (you can not stop paying the fee once annuity payments begin). Termination. The rider is irrevocable. You have the option not to use the ------------ benefit but you will not receive a refund of any fees you have paid. The rider will terminate upon the earliest of the following: . annuitization (you will still get guaranteed minimum stabilized payments if you annuitize using the minimum annuitization value under the Guaranteed Minimum Income Benefit); . upgrade of the minimum annuitization value (although a new rider will be issued); . termination of your contract; or . 30 days after the contract anniversary after your 94/th/ birthday (earlier if required by state law). The Guaranteed Minimum Income Benefit described in this prospectus uses a 3.0% assumed investment return to calculate the first payment. Therefore, for a given dollar amount of account value applied to an annuity payment, the initial payment will be lower with the Guaranteed Minimum Income Benefit than with the Initial Payment Guarantee. The Guaranteed Minimum Income Benefit may vary by state and may not be available in all states. For contracts sold in New Jersey, certain provisions of the Guaranteed Minimum Income Benefit differ from the above description. New Jersey residents should see the separate supplement describing the Guaranteed Minimum Income Benefit for New Jersey. Initial Payment Guarantee You may only elect to purchase the Initial Payment Guarantee at the time you annuitize your contract. The guarantee only applies to variable annuity payments. There is an additional charge for this guarantee. The Initial Payment Guarantee does not establish or guarantee the performance of any subaccount. With the Initial Payment Guarantee, you receive stabilized annuity payments that are guaranteed to never be less than a percentage (currently 80%) of the initial payment (i.e., the guaranteed payment). Once the rider is added, the 30 guaranteed percentage will not change during the life of the rider. Rider Fee. There is a charge for the Initial Payment Guarantee, which is in --------- addition to the base product mortality and expense risk fee and administrative charge. This fee is reflected in the amount of the annuity payments that you receive if you select the Initial Payment Guarantee. It is reflected in the calculation of the annuity unit values. The Initial Payment Guarantee fee is currently equal to an annual rate of 1.25% of the daily net asset value in the subaccounts. Other Terms and Conditions. You may purchase the Initial Payment Guarantee only -------------------------- at the time you annuitize your contract. You cannot delete this payment guarantee (or eliminate the charge for it) after you have selected this option. The Initial Payment Guarantee uses a 5.0% assumed investment return to calculate your annuity payments. This means that the dollar amount of the annuity payments will remain level if the investment return (net of fees and expenses) exactly equals 5.0%. The payments will increase if actual investment performance exceeds the assumed investment return, and decrease if actual performance is below the assumed investment return (but not below the guaranteed level). Termination. The Initial Payment Guarantee is irrevocable. ----------- The Initial Payment Guarantee benefit may vary by state and may not be available in all states. Tax Relief Rider The optional Tax Relief Rider pays a Tax Relief Rider amount (based on earnings since the rider was issued) when a death benefit is payable under your contract, under certain circumstances. The Tax Relief Rider will not be paid unless (a) the rider in force, (b) a death benefit is payable on the contract, and (c) there are rider earnings when the death benefit is calculated. The Tax Relief Rider is available for issue ages through age 80. Tax Relief Rider Amount. The Tax Relief Rider is only payable if you elected the ------------------------ rider prior to the death triggering the payment of the contract death benefit and a death benefit is payable under the contract. The Tax Relief Rider is equal to: . the Tax Relief Rider factor (see below) multiplied by . the rider earnings on the date the death benefit is calculated. Rider earnings equal: . the contract death benefit; minus . account value on the rider date; minus . purchase payments after the rider date; plus . surrenders after the rider date that exceed the rider earnings on the date of the surrender. No benefit is payable under the Tax Relief Rider if there are no rider earnings on the date the death benefit is calculated. If you purchase your contract as part of a 1035 exchange or add the Tax Relief Rider after you purchase the contract, rider earnings do not include any gains before the 1035 exchange or the date the Tax Relief Rider is added to your contract. The Tax Relief Rider factor is currently 40% for issue ages under 71 and 25% for issue ages 71-80. For purposes of computing taxable gains, both the death benefit payable under the contract and the Tax Relief Rider will be considered. Please see the SAI for an example which illustrates the Tax Relief Rider payable as well as the effect of a surrender on the Tax Relief Rider. Spousal Continuation. If a spouse elects to continue the contract instead of --------------------- receiving a death benefit and Tax Relief Rider, the spouse has the following options: . Continue the contract and receive a one-time account value increase equal to the Tax Relief Rider. At this time the rider would terminate. The spouse would have the option of immediately re-electing the rider as long as he or she is under the age of 81, however, it would only cover gains from the time of such election going forward; or . Continue the contract without the one-time account value increase and continue the rider as is. When the next death benefit is payable, the rider will pay the Tax Relief Rider based on gains since the rider was issued, not just since the time of the first death. If the rider is 31 terminated prior to this death, no Tax Relief Rider distribution is payable. Rider Fee. A rider fee, currently 0.25% of the account value, is deducted ---------- annually on each rider anniversary prior to annuitization. We will also deduct this fee upon full surrender of the contract or other termination of the rider (once we have received all necessary regulatory approvals). The rider fee is deducted pro rata from each investment choice. The fee is deducted even during periods when the Tax Relief Rider would not pay any benefit because there are no rider earnings. Termination. The rider will remain in effect until: ------------ . you cancel it by notifying our service center in writing, . the contract is annuitized or surrendered, or . the Tax Relief Rider is paid or added to the account value under a spousal continuation. Once terminated, the Tax Relief Rider may be re-elected, however, a new rider will be issued and the additional death benefit will be re-determined. Please note that if the rider is terminated and then re-elected, it will only cover gains, if any, since it was re-elected and the terms of the new rider may be different than the terminated rider. The tax consequences associated with this rider are not clear. This rider may violate the requirements of certain qualified plans. Consult a competent tax adviser before electing this rider for any qualified plan. The Tax Relief Rider may vary by state and may not be available in all states. Nursing Care and Terminal Condition Withdrawal Option No surrender charges or excess interest adjustment will apply if you make a surrender, under certain circumstances, because you or your spouse has been: . confined in a hospital or nursing facility for 30 days in a row; or . diagnosed with a terminal condition (usually a life expectancy of 12 months or less). This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. You may select this benefit at any time (during the accumulation phase) and there is no charge for this benefit. This benefit may not be available in all states. See the contract or endorsement for details and conditions. Unemployment Waiver No surrender charges or excess interest adjustment will apply to surrenders after you or your spouse become unemployed in certain circumstances, because you were terminated or laid off or otherwise lost your job involuntarily. In order to qualify, you (or your spouse, whichever is applicable) must have been: . employed full time for at least two years prior to becoming unemployed; . employed full time on the contract date; . unemployed for at least 60 days in a row at the time of the surrender; . must have a minimum cash value at the time of surrender of $5,000; and . you (or your spouse) must be receiving unemployment benefits. You must provide written proof from your State's Department of Labor, which verifies that you qualify for and are receiving unemployment benefits at the time of surrender. You may select this benefit at any time (during the accumulation phase) and there is no charge for this benefit. This benefit is also available to the annuitant or annuitant's spouse if the owner is not a natural person. This benefit may not be available in all states. See the contract for details. Telephone Transactions You may generally make transfers and change the allocation of additional purchase payments by telephone. If you authorize your registered representative to make transfers and change the allocation of additional purchase payments by telephone: . select the Owner(s) and Owners Registered Representative box on the "Telephone Transfer Authorization" section of the contract enrollment form; or . later complete an authorization form. 32 You will be required to provide certain information for identification purposes when requesting a transaction by telephone and we may record your telephone call. We may also require written confirmation of your request. We will not be liable for following telephone requests that we believe are genuine. Transamerica reserves the right to revoke your telephone transaction privileges at any time without revoking all owner's telephone transfer privileges. Telephone requests must be received while the New York Stock Exchange is open to get same-day pricing of the transaction. We may discontinue this option at any time. We may deny the telephone transaction privileges to market timers. We cannot guarantee that telephone transactions will always be available. For example, our offices may be closed during severe circumstances or other emergencies. There may be interruptions in service beyond our control, and if the volume of calls is unusually high, we might not have anyone available, or lines available, to take your call. Dollar Cost Averaging Program During the accumulation phase, you may instruct us to automatically transfer money (portions of account value) from certain investment options into one or more variable subaccounts in accordance with your instructions. This is known as Dollar Cost Averaging. Dollar Cost Averaging buys more variable accumulation units when prices are low and fewer variable accumulation units when prices are high. It does not guarantee profits or assure that you will not experience a loss. You should consider your ability to continue the Dollar Cost Averaging program during all economic conditions. There are two Dollar Cost Averaging programs available under your contract: Traditional and Special. Traditional Dollar Cost Averaging. During the accumulation phase, you may ---------------------------------- instruct us to automatically transfer money from the Traditional Dollar Cost Averaging fixed account option, the Money Market Portfolio Subaccount, Quality Bond Portfolio Subaccount or the Limited Term High Income Portfolio Subaccount, into one or more variable subaccounts in the allocations you specified. You may specify the dollar amount to be transferred either monthly or quarterly; however each transfer must be at least $250. A minimum of 6 monthly or 4 quarterly transfers are required and a maximum of 24 monthly or 8 quarterly transfers are allowed. Transfers will begin as soon as the program is started. NOTE CAREFULLY: . If you attempt to begin a Traditional Dollar Cost Averaging program with less than the necessary minimum amount, no transfers will be made and any amount allocated to that program will remain where it is at until the minimum amount is reached or you transfer the funds out. . If you specify the number of transfers, up to two additional transfers may be necessary to complete a Traditional Dollar Cost Averaging program. Special Dollar Cost Averaging. During the accumulation phase, you may elect to ------------------------------ allocate purchase payments to either the six or twelve month Special Dollar Cost Averaging accounts of the fixed account. Amounts will then be transferred from the Special Dollar Cost Averaging account to the underlying fund subaccounts on a monthly basis for six or twelve months (depending on the option you select) in the allocations you specified. Each transfer must be at least $250. Both Dollar Cost Averaging Programs. If you elect Dollar Cost Averaging and ----------------------------------- have multiple sources funding your contract, the Dollar Cost Averaging program will begin with the first money received. As the money from the other sources is received, the amount of the Dollar Cost Averaging transfers will increase but the length of the program will not. If some of the money from the other sources is not received before the Dollar Cost Averaging program has ended, a new Dollar Cost Averaging program will start when we receive the money (assuming it meets the minimum Dollar Cost Averaging requirements). If you make additional purchase payments while a Dollar Cost Averaging Program is running, absent new instructions to the contrary, the amount of the Dollar Cost Averaging transfers will increase but the length of the program will not. If additional purchase payment is received after a Dollar Cost Averaging program is completed, absent new instructions to the contrary: . a new Dollar Cost Averaging program will be started using the previous instructions; or 33 . if the additional purchase payment does not meet the minimum requirements to start a new Dollar Cost Averaging program, then the additional purchase payment will be allocated as identified in the previous Dollar Cost Averaging program. NOTE CAREFULLY: If we do not receive all necessary information to begin a Special Dollar Cost Averaging program within 30 days of allocating purchase payment to the program, that purchase payment will be transferred to the Traditional Dollar Cost Averaging fixed account. If you discontinue a Dollar Cost Averaging program before its completion, then the interest credited on amounts in the Dollar Cost Averaging fixed account may be adjusted downward, but not below the minimum guaranteed effective annual interest rate of 2%. The Dollar Cost Averaging program may vary by state and may not be available in all states. See your contract for availability of the fixed account options. Asset Rebalancing During the accumulation phase you can instruct us to automatically rebalance the amounts in your subaccounts to maintain your desired asset allocation. This feature is called Asset Rebalancing and can be started and stopped at any time free of charge. However, we will not rebalance if you are in the Dollar Cost Averaging program or if any other transfer is requested. If a transfer is requested, we will honor the requested transfer and discontinue Asset Rebalancing. New instructions are required to start Asset Rebalancing. Asset Rebalancing ignores amounts in the fixed account. You can choose to rebalance monthly, quarterly, semi-annually, or annually. 11. OTHER INFORMATION Ownership You, as owner of the contract, exercise all rights under the contract. You can change the owner at any time by notifying us in writing. An ownership change may be a taxable event. Assignment You can also assign the contract any time during your lifetime. Transamerica will not be bound by the assignment until we receive written notice of the assignment. We will not be liable for any payment or other action we take in accordance with the contract before we receive notice of the assignment. There may be limitations on your ability to assign a qualified contract. An assignment may have tax consequences. Transamerica Occidental Life Insurance Company Transamerica Occidental Life Insurance Company is an Iowa stock life insurance company incorporated on June 30, 1906. It is mainly engaged in the sale of life insurance and annuity contracts. The address for Transamerica is 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499. Transamerica is a wholly owned subsidiary of Transamerica Insurance Corporation, which in turn is a direct subsidiary of Transamerica Corporation. Transamerica Corporation is an indirect subsidiary of AEGON N.V., one of the world's leading international insurance groups. All obligations arising under the contracts, including the promise to make annuity payments, are general corporate obligations of Transamerica. The Variable Account Transamerica established a separate account, called Separate Account VA-2L, under the laws of the State of California on May 22, 1992. The variable account receives and invests the purchase payments that are allocated to it for investment in shares of the underlying fund portfolios. The variable account is registered with the SEC as a unit investment trust under the 1940 Act. However, the SEC does not supervise the management, the investment practices, or the contracts of the variable account or Transamerica. Income, gains and losses, whether or not realized, from assets allocated to the variable account are, in accordance with the contracts, credited to or charged against the variable account without regard to Transamerica's other income, gains or losses. The assets of the variable account are held in Transamerica's name on behalf of the variable account and belong to Transamerica. However, those assets that underlie the contracts are not chargeable with liabilities arising out of 34 any other business Transamerica may conduct. The variable account may include other subaccounts that are not available under these contracts. Mixed and Shared Funding Before making a decision concerning the allocation of purchase payments to a particular subaccount, please read the prospectuses for the underlying funds. The underlying funds are not limited to selling their shares to this variable account and can accept investments from any variable account or qualified retirement plan. Since the portfolios of the underlying funds are available to registered variable accounts offering variable annuity products of Transamerica, as well as variable annuity and variable life products of other insurance companies, and qualified retirement plans, there is a possibility that a material conflict may arise between the interests of this variable account and one or more of the other accounts of another participating insurance company. In the event of a material conflict, the affected insurance companies, including Transamerica, agree to take any necessary steps to resolve the matter. This includes removing their variable accounts from the underlying funds. See the underlying funds' prospectuses for more details. Exchanges and Reinstatements You can generally exchange one annuity contract for another in a `tax-free exchange' under Section 1035 of the Internal Revenue Code. Before making an exchange, you should compare both annuities carefully. Remember that if you exchange another annuity for the one described in this prospectus, then you may pay a surrender charge on the other annuity and there will be a new surrender charge period and other charges may be higher (or lower) and the benefits may be different. You should not exchange another annuity for this one unless you determine, after knowing all the facts, that the exchange is in your best interest and not just better for the person trying to sell you this contract (that person will generally earn a commission if you buy this contract through an exchange or otherwise). You may surrender your contract and transfer your money directly to another life insurance company (sometimes referred to as a 1035 Exchange or a trustee-to- trustee transfer). You may also request us to reinstate your contract after such a transfer by returning the same total dollar amount of funds to the applicable investment choices. The dollar amount will be used to purchase new variable accumulation units at the then current price. Because of changes in market value, your new variable accumulation units may be worth more or less than the units you previously owned. We recommend that you consult a tax professional to explain the possible tax consequences of exchanges and/or reinstatements. Voting Rights Transamerica will vote all shares of the underlying funds held in the variable account in accordance with instructions we receive from you and other owners that have voting interests in the portfolios. We will send you and other owners written requests for instructions on how to vote those shares. When we receive those instructions, we will vote all of the shares in proportion to those instructions. If, however, we determine that we are permitted to vote the shares in our own right, we may do so. Each person having a voting interest will receive proxy material, reports, and other materials relating to the appropriate portfolio. Distributor of the Contract AFSG Securities Corporation is the principal underwriter of the policies. Like Transamerica, it is an wholly-owned indirect subsidiary of AEGON USA, Inc. It is located at 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001. AFSG Securities Corporation is registered as a broker/dealer under the Securities Exchange Act of 1934. It is a member of the National Association of Securities Dealers, Inc. Commissions paid to broker/dealers who sell the contracts under the agreements with AFSG Securities Corporation may vary, but will not exceed 7% of purchase payments. These commissions are not deducted from purchase payments. In addition, certain production, persistency and managerial bonuses may be paid. Transamerica may also pay compensation to financial institutions for their services in connection with the sale and servicing of the contracts. To the extent permitted by NASD rules, promotional incentives or payments may also be provided to broker/dealers based on sales volumes, the assumption of wholesaling functions or other sales-related criteria. Other payments may be made for other services that do not directly involve the sale of the contracts. These services may include the recruitment and training of personnel, production of promotional literature, and similar services. 35 Transamerica intends to recoup commissions and other sales expenses primarily, but not exclusively, through: . The administrative charge; . The surrender charge; . The mortality and expense risk fee; . Revenues, if any, that Transamerica receives from the underlying portfolios or their managers; and . Investment earnings on amounts allocated to the fixed account. Commissions paid on the contract, including other incentives or payments, are not charged to the contract owners or the variable account. Pending regulatory approvals, Transamerica intends to distribute the contract in all states, except New York, and in certain possessions and territories. IMSA Transamerica is a member of the Insurance Marketplace Standards Association (IMSA). IMSA is an independent, voluntary organization of life insurance companies. It promotes high ethical standards in the sales, advertising and servicing of individual life insurance and annuity products. Companies must undergo a rigorous self and independent assessment of their practices to become a member of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to these standards. Legal Proceedings There are no legal proceedings to which the variable account is a party or to which the assets of the variable account are subject. Transamerica, like other life insurance companies, is involved in lawsuits. In some class action and other lawsuits involving other insurers, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, Transamerica believes that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse impact on the variable account or Transamerica. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Glossary of Terms The Contract--General Provisions Certain Federal Income Tax Consequences Investment Experience Guaranteed Minimum Income Benefit-- Additional Information Tax Relief Rider - Additional Information Historical Performance Data Published Ratings State Regulation of Transamerica Administration Records and Reports Distribution of the Contracts Voting Rights Other Products Custody of Assets Legal Matters Independent Auditors Other Information Financial Statements 36 APPENDIX A CONDENSED FINANCIAL INFORMATION (For contracts purchased on or after May 1, 2002) The "Return of Premium Death Benefit" with Total Variable Account Annual Expenses of 1.30%, and the "Double Enhanced Death Benefit" with Total Variable Account Annual Expenses of 1.45%, were not offered as of December 31, 2001, therefore condensed financial data is not available that reflects those death benefits. CONDENSED FINANCIAL INFORMATION (For contracts purchased prior to May 1, 2002) The variable accumulation unit values and the number of variable accumulation units outstanding for each subaccount from the date of inception are shown in the following tables. Greater of 5% Annually Compounding through age 85 Death Benefit or Annual Step- Up through age 85 Death Benefit (with a cap of 200%) (Total Variable Account Annual Expenses: 1.40%)
==================================================================================================================================== Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Sub-account at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------------------------------------------------------ Appreciation* /(2)/ 2001....................................... $38.077 2000....................................... $38.862 $38.077 8,193,471.439 1999....................................... $ 35.36 $38.862 8,513,807.354 1998....................................... $27.532 $ 35.36 8,121,246.029 1997....................................... $21.802 $27.532 6,447,159.634 1996....................................... $17.610 $21.802 3,665,146.389 1995....................................... $13.373 $17.610 2,077,029.504 1994....................................... $13.160 $13.373 919,622.615 1993....................................... $12.500 $13.160 237,733.021 ------------------------------------------------------------------------------------------------------------------------------------ Balanced*/(6)/ 2001....................................... $14.450 2000....................................... $15.101 $14.450 5,776,345.909 1999....................................... $ 14.16 $15.101 4,426,908.448 1998....................................... $11.738 $ 14.16 2,280,501.753 1997....................................... $10.000 $11.738 647,855.304 ------------------------------------------------------------------------------------------------------------------------------------ Disciplined Stock*/(5)/ 2001....................................... $19.977 2000....................................... $22.295 $19.977 6,539,032.706 1999....................................... $ 19.09 $22.295 5,856,978.740 1998....................................... $15.272 $ 19.09 4,753,022.290 1997....................................... $11.776 $15.272 2,278,146.352 1996....................................... $ 10.00 $11.776 618,809.191 ====================================================================================================================================
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==================================================================================================================================== Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Sub-account at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------------------------------------------------------ Growth and Income* /(4)/ 2001....................................... $31.974 2000....................................... $33.694 $31.974 6,432,258.706 1999....................................... $ 29.23 $33.694 6,548,394.692 1998....................................... $26.509 $ 29.23 7,270,897.396 1997....................................... $23.131 $26.509 7,480,387.355 1996....................................... $19.426 $23.131 6,332,649.215 1995....................................... $12.167 $19.426 2,565,038.589 1994....................................... $12.177 $12.167 4,300.380 ------------------------------------------------------------------------------------------------------------------------------------ International Equity*/(4)/ 2001....................................... $20.643 2000....................................... $25.038 $20.643 2,629,168.557 1999....................................... $ 15.89 $25.038 2,296,712.753 1998....................................... $15.422 $ 15.89 2,456,885.911 1997....................................... $14.267 $15.422 2,176,230.247 1996....................................... $12.964 $14.267 1,480,395.223 1995....................................... $12.240 $12.964 530,374.642 1994....................................... $12.247 $12.240 8,552.073 ------------------------------------------------------------------------------------------------------------------------------------ International Value*/(5)/ 2001....................................... $14.101 2000....................................... $14.846 $14.101 1,377,476.194 1999....................................... $ 11.78 $14.846 1,432,408.023 1998....................................... $10.982 $ 11.78 1,380,692.935 1997....................................... $10.244 $10.982 1,047,389.002 1996....................................... $ 10.00 $10.244 230,868.491 ------------------------------------------------------------------------------------------------------------------------------------ Limited Term High Income*/(6)/ 2001....................................... $ 9.428 2000....................................... $10.422 $ 9.428 3,514,966.504 1999....................................... $ 10.73 $10.422 5,300,351.762 1998....................................... $10.852 $ 10.73 6,458,312.119 1997....................................... $10.000 $10.852 2,424,231.798 ------------------------------------------------------------------------------------------------------------------------------------ Money Market/(1)/ 2001....................................... $ 1.316 2000....................................... $ 1.258 $ 1.316 59,855,370.259 1999....................................... $ 1.22 $ 1.258 64,761,299.670 1998....................................... $ 1.175 $ 1.22 53,939,642.196 1997....................................... $ 1.132 $ 1.175 42,660,950.364 1996....................................... $ 1.093 $ 1.132 38,983,053.941 1995....................................... $ 1.048 $ 1.093 31,807,563.947 1994....................................... $ 1.018 $ 1.048 23,559,789.795 1993....................................... $ 1.021 $ 1.018 2,678,280.492 ------------------------------------------------------------------------------------------------------------------------------------ Quality Bond*/(1)/ 2001....................................... $17.199 2000....................................... $15.683 $17.199 4,333,498.116 1999....................................... $ 15.88 $15.683 5,010,813.856 1998....................................... $15.260 $ 15.88 5,030,446.431 1997....................................... $14.142 $15.260 4,020,220.452 1996....................................... $13.908 $14.142 3,072,774.847 1995....................................... $11.710 $13.908 2,052,313.888 1994....................................... $12.445 $11.710 931,527.691 1993....................................... $12.310 $12.445 86,752.856 ====================================================================================================================================
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==================================================================================================================================== Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Sub-account at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------------------------------------------------------ Small Cap*/(1)/ 2001....................................... $87.446 2000....................................... $78.255 $87.446 2,018,390.168 1999....................................... $ 64.44 $78.255 2,096,729.991 1998....................................... $67.668 $ 64.44 2,615,765.058 1997....................................... $58.773 $67.668 2,954,842.907 1996....................................... $51.121 $58.773 2,736,720.675 1995....................................... $40.064 $51.121 2,155,879.198 1994....................................... $37.702 $40.064 1,250,237.625 1993....................................... $39.620 $37.702 138,557.449 ------------------------------------------------------------------------------------------------------------------------------------ Small Company Stock*/(5)/ 2001....................................... $14.003 2000....................................... $13.083 $14.003 1,666,683.284 1999....................................... $ 11.99 $13.083 1,665,730.260 1998....................................... $12.935 $ 11.99 2,111,028.689 1997....................................... $10.772 $12.935 1,604,089.554 1996....................................... $ 10.00 $10.772 543,949.419 ------------------------------------------------------------------------------------------------------------------------------------ Special Value*/(1)/ 2001....................................... $17.848 2000....................................... $17.122 $17.848 1,959,903.631 1999....................................... $ 16.19 $17.122 2,347,756.875 1998....................................... $14.185 $ 16.19 2,764,173.241 1997....................................... $11.682 $14.185 2,649,561.005 1996....................................... $12.292 $11.682 1,232,530.711 1995....................................... $12.496 $12.292 1,288,429.555 1994....................................... $12.861 $12.496 1,486,438.137 1993....................................... $12.797 $12.861 167,686.797 ------------------------------------------------------------------------------------------------------------------------------------ Stock Index*/(1)/ 2001....................................... $47.264 2000....................................... $52.828 $47.264 5,610,267.635 1999....................................... $ 44.42 $52.828 5,113,716.960 1998....................................... $35.128 $ 44.42 4,443,711.383 1997....................................... $26.791 $35.128 3,357,236.245 1996....................................... $22.172 $26.791 2,030,280.057 1995....................................... $16.437 $22.172 977,271.816 1994....................................... $16.521 $16.437 348,937.285 1993....................................... $15.310 $16.521 93,536.733 ------------------------------------------------------------------------------------------------------------------------------------ Socially Responsible Growth*/(3)/ 2001....................................... $38.602 2000....................................... $43.996 $38.602 3,085,982.201 1999....................................... $ 34.30 $43.996 2,399,067.265 1998....................................... $26.879 $ 34.30 1,744,708.001 1997....................................... $21.221 $26.879 1,335,814.063 1996....................................... $17.752 $21.221 708,680.320 1995....................................... $13.377 $17.752 295,077.936 1994....................................... $13.364 $13.377 135,018.350 1993....................................... $12.490 $13.364 26,089.826 ------------------------------------------------------------------------------------------------------------------------------------ Core Bond */(10)/ 2001....................................... $10.762 2000....................................... $ 10.00 $10.762 401,440.673 ====================================================================================================================================
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==================================================================================================================================== Number of Accumulation Accumulation Accumulation Unit Value Unit Value Units Outstanding Subaccount at Beginning of Period at End of Period at End of Period ------------------------------------------------------------------------------------------------------------------------------------ Core Value*/(7)/ 2001....................................... $12.120 2000....................................... $10.967 $12.120 1,671,632.569 1999....................................... $ 9.29 $10.967 618,554.557 1998....................................... $ 10.00 $ 9.29 95,759.521 ------------------------------------------------------------------------------------------------------------------------------------ Emerging Leaders */(10)/ 2001....................................... $12.209 2000....................................... $ 10.00 $12.209 237,691.634 ------------------------------------------------------------------------------------------------------------------------------------ Emerging Markets */(10)/ 2001....................................... $ 7.149 2000....................................... $ 10.00 $ 7.149 68,080.097 ------------------------------------------------------------------------------------------------------------------------------------ European Equity*/(9)/ 2001....................................... $12.395 2000....................................... $12.824 $12.395 408,844.616 1999....................................... $ 10.00 $12.824 71,170.963 ------------------------------------------------------------------------------------------------------------------------------------ Founders Discovery */(10)/ 2001....................................... $ 7.474 2000....................................... $ 10.00 $ 7.474 1,566,915.606 ------------------------------------------------------------------------------------------------------------------------------------ Founders Growth*/(8)/ 2001....................................... $ 9.299 2000....................................... $12.632 $ 9.299 2,497,719.994 1999....................................... $ 10.00 $12.632 209,797.215 ------------------------------------------------------------------------------------------------------------------------------------ Founders International Equity*/(9)/ 2001....................................... $11.317 2000....................................... $13.894 $11.317 889,774.353 1999....................................... $ 10.00 $13.894 51,377.647 ------------------------------------------------------------------------------------------------------------------------------------ Founders Passport*/(8)/ 2001....................................... $11.820 2000....................................... $16.144 $11.820 1,743,018.957 1999....................................... $ 10.00 $16.144 230,853.270 ------------------------------------------------------------------------------------------------------------------------------------ Japan */(11)/ 2001....................................... $ 7.692 2000....................................... $ 10.00 $ 7.692 42,342.493 ------------------------------------------------------------------------------------------------------------------------------------ MidCap Stock*/(7)/ 2001....................................... $11.244 2000....................................... $10.529 $11.244 2,352,335.934 1999....................................... $ 9.63 $10.529 677,575.571 1998....................................... $ 10.00 $ 9.63 467,292.833 ------------------------------------------------------------------------------------------------------------------------------------ Technology Growth*/(9)/ 2001....................................... $11.078 2000....................................... $15.383 $11.078 9,024,925.748 1999....................................... $ 10.00 $15.383 2,898,342.133 ------------------------------------------------------------------------------------------------------------------------------------ Transamerica VIF Growth/(7)/ 2001....................................... $13.736 2000....................................... $15.422 $13.736 3,644,221.142 1999....................................... $ 11.35 $15.422 2,963,758.863 1998....................................... $ 10.00 $ 11.35 1,634,054.907 ====================================================================================================================================
40 /(1)/ Sub-Account inception January 4, 1993. /(2)/ Sub-Account inception April 5, 1993. /(3)/ Sub-Account inception October 7, 1993. /(4)/ Sub-Account inception December 15, 1994. /(5)/ Sub-Account inception May 1, 1996. /(6)/ Sub-Account inception May 1, 1997. /(7)/ Sub-Account inception May 1, 1998. /(8)/ Sub-Account inception May 3, 1999. /(9)/ Sub-Account inception October 1, 1999. /(10)/ Sub-Account inception May 1, 2000. * The figures shown reflect information for the Initial Class Shares. 41 APPENDIX B HISTORICAL PERFORMANCE DATA Standard Performance Data Transamerica may advertise historical yields and total returns for the subaccounts of the variable account. In addition, Transamerica may advertise the effective yield of the subaccount investing in the Money Market Portfolio (the "Money Market Subaccount"). These figures are calculated according to standardized methods prescribed by the SEC. They are based on historical earnings and are not intended to indicate future performance. Money Market Subaccount. The yield of the Money Market Subaccount for a contract ----------------------- refers to the annualized income generated by an investment under a contract in the subaccount over a specified seven-day period. The yield is calculated by assuming that the income generated for that seven-day period is generated each seven-day period over a 52-week period and is shown as a percentage of the investment. The effective yield is calculated similarly but, when annualized, the income earned by an investment under a contract in the subaccount is assumed to be reinvested. The effective yield will be slightly higher than the yield because of the compounding effect of this assumed reinvestment. Other Subaccounts. The yield of a subaccount (other than the Money Market ----------------- Subaccount) for a contract refers to the annualized income generated by an investment under a contract in the subaccount over a specified thirty-day period. The yield is calculated by assuming that the income generated by the investment during that thirty-day period is generated each thirty-day period over a 12-month period and is shown as a percentage of the investment. The total return of a subaccount refers to return quotations assuming an investment under a contract has been held in the subaccount for various periods of time including a period measured from the date the subaccount commenced operations. When a subaccount has been in operation for one, five, and ten years, respectively, the total return for these periods will be provided. The total return quotations for a subaccount will represent the average annual compounded rates of return that equate an initial investment of $1,000 in the subaccount to the redemption value of that investment as of the last day of each of the periods for which total return quotations are provided. The yield and total return calculations for a subaccount do not reflect the effect of any premium taxes that may be applicable to a particular contract and they may not reflect the charges for any optional rider. To the extent that any or all of a premium tax is applicable to a particular contract, or one or more riders are elected, the yield and/or total return of that contract will be reduced. For additional information regarding yields and total returns calculated using the standard formats briefly summarized above, please refer to the SAI, a copy of which may be obtained from the administrative and service office upon request. Based on the method of calculation described in the SAI, the average annual total returns for periods from inception of the subaccounts to December 31, 2001, and for the one and five year periods ended December 31, 2001 are shown in Table 1 below. Total returns shown reflect deductions for the mortality and expense risk fee and the administrative charges. Performance figures may reflect the 1.45% Total Variable Account Annual Expense for the Double Enhanced Death Benefit, or the 1.30% Total Variable Account Annual Expense for the Return of Premium Death Benefit. Standard total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. Table 1 figures do not reflect any charge for riders or other optional features. 42
------------------------------------------------------------------------------------------------------------ TABLE 1 - A Standard Average Annual Total Returns (Assuming A Surrender Charge and No Guaranteed Minimum Income Benefit or Tax Relief Rider) ------------------------------------------------------------------------------------------------------------ Double Enhanced Death Benefit (Total Variable Account Annual Expenses: 1.45%) ------------------------------------------------------------------------------------------------------------ Inception 1 Year 5 Year of the Subaccount Ended Ended Subaccount Inception Subaccount 12/31/01 12/31/01 to 12/31/01 Date ------------------------------------------------------------------------------------------------------------- Appreciation..................................... April 5, 1993 Balanced......................................... May 1, 1997 Disciplined Stock................................ May 1, 1996 Growth and Income................................ December 15, 1994 International Equity............................. December 15, 1994 International Value.............................. May 1, 1996 Limited Term High Income......................... April 30, 1997 Quality Bond..................................... January 4, 1993 Small Cap........................................ January 4, 1993 Small Company Stock.............................. May 1, 1996 Special Value.................................... January 4, 1993 Stock Index...................................... January 4, 1993 Socially Responsible Growth Fund................. October 7, 1993 Core Bond........................................ May 1, 2000 Core Value....................................... May 1, 1998 Emerging Leaders................................. May 1, 2000 Emerging Markets................................. May 1, 2000 European Equity.................................. October 1, 1999 Founders Discovery............................... May 1, 2000 Founders Growth.................................. May 3, 1999 Founders International Equity.................... October 1, 1999 Founders Passport................................ May 3, 1999 Japan............................................ May 1, 2000 MidCap Stock..................................... May 1, 1998 Technology Growth................................ October 1, 1999 Transamerica VIF Growth.......................... May 1, 1998 -------------------------------------------------------------------------------------------------------------
43
------------------------------------------------------------------------------------------------------------- TABLE 1 - B Standard Average Annual Total Returns (Assuming A Surrender Charge and No Guaranteed Minimum Income Benefit or Tax Relief Rider) ------------------------------------------------------------------------------------------------------------- Return of Premium Death Benefit (Total Variable Account Annual Expenses: 1.30%) ------------------------------------------------------------------------------------------------------------- Inception 1 Year 5 Year of the Subaccount Ended Ended Subaccount Inception Subaccount 12/31/01 12/31/01 to 12/31/01 Date ------------------------------------------------------------------------------------------------------------- Appreciation..................................... April 5, 1993 Balanced......................................... May 1, 1997 Disciplined Stock................................ May 1, 1996 Growth and Income................................ December 15, 1994 International Equity............................. December 15, 1994 International Value.............................. May 1, 1996 Limited Term High Income......................... April 30, 1997 Quality Bond..................................... January 4, 1993 Small Cap........................................ January 4, 1993 Small Company Stock.............................. May 1, 1996 Special Value.................................... January 4, 1993 Stock Index...................................... January 4, 1993 Socially Responsible Growth Fund................. October 7, 1993 Core Bond........................................ May 1, 2000 Core Value....................................... May 1, 1998 Emerging Leaders................................. May 1, 2000 Emerging Markets................................. May 1, 2000 European Equity.................................. October 1, 1999 Founders Discovery............................... May 1, 2000 Founders Growth.................................. May 3, 1999 Founders International Equity.................... October 1, 1999 Founders Passport................................ May 3, 1999 Japan............................................ May 1, 2000 MidCap Stock..................................... May 1, 1998 Technology Growth................................ October 1, 1999 Transamerica VIF Growth.......................... May 1, 1998 -------------------------------------------------------------------------------------------------------------
The figures in the above tables may reflect waiver of advisory fees and reimbursement of other expenses. In the absence of such waivers, the average annual total return figures above would have been lower. (See the Fee Table.) Non-Standard Performance Data In addition to the standard data discussed above, similar performance data for other periods may also be shown. Transamerica may also advertise or disclose average annual total return or other performance data in non-standard formats for a subaccount of the variable account. The non-standard performance data may assume that no surrender charge is applicable, and may also make other assumptions such as the amount invested in a subaccount, differences in time periods to be shown, or the effect of partial surrenders or annuity payments. All non-standard performance data will be advertised only if the standard performance data is also disclosed. For additional information regarding the calculation of other performance data, please refer to the SAI. The non-standard average annual total return figures shown in Table 2 are based on the assumption that the contract is not surrendered, and therefore the surrender charge is not imposed. Also, Table 2, like Table 1, does not reflect the charge for any optional rider. 44 -------------------------------------------------------------------------------- TABLE 2 - A Non-Standardized Average Annual Total Returns (Assuming No Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) -------------------------------------------------------------------------------- Double Enhanced Death Benefit (Total Variable Account Annual Expenses: 1.45%) --------------------------------------------------------------------------------
Inception 1 Year 5 Year of the Subaccount Ended Ended Subaccount Inception Subaccount 12/31/01 12/31/01 to 12/31/01 Date ------------------------------------------------------------------------------------------------------------- Appreciation...................................... April 5, 1993 Balanced.......................................... May 1, 1997 Disciplined Stock................................. May 1, 1996 Growth and Income................................. December 15, 1994 International Equity.............................. December 15, 1994 International Value............................... May 1, 1996 Limited Term High Income.......................... April 30, 1997 Quality Bond...................................... January 4, 1993 Small Cap......................................... January 4, 1993 Small Company Stock............................... May 1, 1996 Special Value..................................... January 4, 1993 Stock Index....................................... January 4, 1993 Socially Responsible Growth Fund.................. October 7, 1993 Core Bond......................................... May 1, 2000 Core Value........................................ May 1, 1998 Emerging Leaders.................................. May 1, 2000 Emerging Markets.................................. May 1, 2000 European Equity................................... October 1, 1999 Founders Discovery................................ May 1, 2000 Founders Growth................................... May 3, 1999 Founders International Equity..................... October 1, 1999 Founders Passport................................. May 3, 1999 Japan............................................. May 1, 2000 MidCap Stock...................................... May 1, 1998 Technology Growth................................. October 1, 1999 Transamerica VIF Growth........................... May 1, 1998 -------------------------------------------------------------------------------------------------------------
45 -------------------------------------------------------------------------------- TABLE 2 - B Non-Standardized Average Annual Total Returns (Assuming No Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) -------------------------------------------------------------------------------- Return of Premium Death Benefit (Total Variable Account Annual Expenses: 1.30%) --------------------------------------------------------------------------------
Inception 1 Year 5 Year of the Subaccount Ended Ended Subaccount Inception Subaccount 12/31/00 12/31/00 to 12/31/00 Date ------------------------------------------------------------------------------------------------------------- Appreciation................................. April 5, 1993 Balanced..................................... May 1, 1997 Disciplined Stock............................ May 1, 1996 Growth and Income............................ December 15, 1994 International Equity......................... December 15, 1994 International Value.......................... May 1, 1996 Limited Term High Income..................... April 30, 1997 Quality Bond................................. January 4, 1993 Small Cap.................................... January 4, 1993 Small Company Stock.......................... May 1, 1996 Special Value................................ January 4, 1993 Stock Index.................................. January 4, 1993 Socially Responsible Growth Fund............. October 7, 1993 Core Bond.................................... May 1, 2000 Core Value................................... May 1, 1998 Emerging Leaders............................. May 1, 2000 Emerging Markets............................. May 1, 2000 European Equity.............................. October 1, 1999 Founders Discovery........................... May 1, 2000 Founders Growth.............................. May 3, 1999 Founders International Equity................ October 1, 1999 Founders Passport............................ May 3, 1999 Japan........................................ May 1, 2000 MidCap Stock................................. May 1, 1998 Technology Growth............................ October 1, 1999 Transamerica VIF Growth...................... May 1, 1998 -------------------------------------------------------------------------------------------------------------
The figures in the above tables may reflect waiver of advisory fees and reimbursement of other expenses. In the absence of such waivers, the average annual total return figures above would have been lower. (See the Fee Table.) Adjusted Historical Performance Data of the Portfolios. The following ------------------------------------------------------ performance data for the periods prior to the date the subaccount commenced operations is based on the performance of the corresponding portfolio and the assumption that the applicable subaccount was in existence for the same period as the corresponding portfolio with a level of charges equal to those currently assessed against the subaccount or against owner's account values. In addition, Transamerica may present historic performance data for the portfolios since their inception reduced by some or all the fees and charges under the contract. Such adjusted historic performance includes data that precedes the inception dates on the subaccounts. This data is designed to show the performance that would have resulted if the contract had been in existence during that time. For instance, as shown in Tables 3 and 4 below, Transamerica may disclose average annual total returns for the portfolios reduced by some or all fees and charges under the contract, as if the contract had been in existence since the inception of the portfolios. Such fees and charges include the mortality and expense risk fee, the administrative charge and surrender charges. Table 3 assumes a complete surrender of the contract at the end of the period, and therefore the surrender charge is deducted. Table 4 assumes that the contract is not surrendered and therefore the surrender charge is not deducted. Also, Tables 3 and 4 do not reflect the charge of any optional riders. 46 The following information is based on the method of calculations as described in the SAI. The adjusted historical average annual total returns for periods ended December 31, 2001, were as follows: -------------------------------------------------------------------------------- TABLE 3 - A Hypothetical (Adjusted Historical) Average Annual Total Returns/(1)/ (Assuming A Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) -------------------------------------------------------------------------------- Double Enhanced Death Benefit (Total Variable Account Annual Expenses: 1.45%) --------------------------------------------------------------------------------
Corresponding 10 Year Portfolio Portfolio 1 Year 5 Year or Inception Inception Date ---------------------------------------------------------------------------------------------------------------- Appreciation......................................... April 5, 1993 Balanced............................................. May 1, 1997 Disciplined Stock.................................... April 30, 1996 Growth and Income.................................... May 2, 1994 International Equity................................. May 2, 1994 International Value.................................. May 1, 1996 Limited Term High Income............................. April 30, 1997 Quality Bond......................................... August 31, 1990 Small Cap............................................ August 31, 1990 Small Company Stock.................................. May 1, 1996 Special Value........................................ August 31, 1990 Stock Index.......................................... September 29, 1989 Socially Responsible Growth Fund..................... October 7, 1993 Core Bond............................................ May 1, 2000 Core Value........................................... May 1, 1998 Emerging Leaders..................................... December 15, 1999 Emerging Markets..................................... December 15, 1999 European Equity...................................... April 30, 1999 Founders Discovery................................... December 15, 1999 Founders Growth...................................... September 30, 1998 Founders International Equity........................ September 30, 1998 Founders Passport.................................... September 30, 1998 Japan................................................ December 15, 1999 MidCap Stock......................................... May 1, 1998 Technology Growth.................................... August 31, 1999 Transamerica VIF Growth.............................. February 26, 1969 ---------------------------------------------------------------------------------------------------------------- +Ten Year Date ----------------------------------------------------------------------------------------------------------------
47
--------------------------------------------------------------------------------------------------------------- TABLE 3 - B Hypothetical (Adjusted Historical) Average Annual Total Returns/(1)/ (Assuming A Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) --------------------------------------------------------------------------------------------------------------- Return of Premium Death Benefit (Total Variable Account Annual Expenses: 1.30%) --------------------------------------------------------------------------------------------------------------- Corresponding 10 Year Portfolio Portfolio 1 Year 5 Year or Inception Inception Date ---------------------------------------------------------------------------------------------------------------- Appreciation........................................... April 5, 1993 Balanced............................................... May 1, 1997 Disciplined Stock...................................... April 30, 1996 Growth and Income...................................... May 2, 1994 International Equity................................... May 2, 1994 International Value.................................... May 1, 1996 Limited Term High Income............................... April 30, 1997 Quality Bond........................................... August 31, 1990 Small Cap.............................................. August 31, 1990 Small Company Stock.................................... May 1, 1996 Special Value.......................................... August 31, 1990 Stock Index............................................ September 29, 1989 Socially Responsible Growth Fund....................... October 7, 1993 Core Bond.............................................. May 1, 2000 Core Value............................................. May 1, 1998 Emerging Leaders....................................... December 15, 1999 Emerging Markets....................................... December 15, 1999 European Equity........................................ April 30, 1999 Founders Discovery..................................... December 15, 1999 Founders Growth........................................ September 30, 1998 Founders International Equity.......................... September 30, 1998 Founders Passport...................................... September 30, 1998 Japan.................................................. December 15, 1999 MidCap Stock........................................... May 1, 1998 Technology Growth...................................... August 31, 1999 Transamerica VIF Growth................................ February 26, 1969 ---------------------------------------------------------------------------------------------------------------- +Ten Year Date ----------------------------------------------------------------------------------------------------------------
(1) The calculation of total return performance for periods prior to inception of the subaccounts reflects deductions for the mortality and expense risk fee and administrative charge on a monthly basis, rather than on a daily basis. The monthly deduction is made at the beginning of each month and generally approximates the performance that would have resulted if the subaccounts had actually been in existence since the inception of the portfolio. The figures in the above tables may reflect waiver of advisory fees and reimbursement of other expenses. In the absence of such waivers, the average annual total return figures above would have been lower. (See the Fee Table.) 48
--------------------------------------------------------------------------------------------------------------- TABLE 4 - A Hypothetical (Adjusted Historical) Average Annual Total Returns/(1)/ (Assuming No Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) --------------------------------------------------------------------------------------------------------------- Double Enhanced Death Benefit (Total Variable Account Annual Expenses: 1.45%) --------------------------------------------------------------------------------------------------------------- Corresponding 10 Year Portfolio Portfolio 1 Year 5 Year or Inception Inception Date --------------------------------------------------------------------------------------------------------------- Appreciation......................................... April 5, 1993 Balanced............................................. May 1, 1997 Disciplined Stock.................................... April 30, 1996 Growth and Income.................................... May 2, 1994 International Equity................................. May 2, 1994 International Value.................................. May 1, 1996 Limited Term High Income............................. April 30, 1997 Quality Bond......................................... August 31, 1990 Small Cap............................................ August 31, 1990 Small Company Stock.................................. May 1, 1996 Special Value........................................ August 31, 1990 Stock Index.......................................... September 29, 1989 Socially Responsible Growth Fund..................... October 7, 1993 Core Bond............................................ May 1, 2000 Core Value........................................... May 1, 1998 Emerging Leaders..................................... December 15, 1999 Emerging Markets..................................... December 15, 1999 European Equity...................................... April 30, 1999 Founders Discovery................................... December 15, 1999 Founders Growth...................................... September 30, 1998 Founders International Equity........................ September 30, 1998 Founders Passport.................................... September 30, 1998 Japan................................................ December 15, 1999 MidCap Stock......................................... May 1, 1998 Technology Growth.................................... August 31, 1999 Transamerica VIF Growth.............................. February 26, 1969 ---------------------------------------------------------------------------------------------------------------- +Ten Year Date ----------------------------------------------------------------------------------------------------------------
49
---------------------------------------------------------------------------------------------------------------- TABLE 4 - B Hypothetical (Adjusted Historical) Average Annual Total Returns/(1)/ (Assuming No Surrender Charge, Guaranteed Minimum Income Benefit or Tax Relief Rider) ---------------------------------------------------------------------------------------------------------------- Return of Premium Death Benefit (Total Variable Account Annual Expenses: 1.30%) ---------------------------------------------------------------------------------------------------------------- Corresponding 10 Year Portfolio Portfolio 1 Year 5 Year or Inception Inception Date ---------------------------------------------------------------------------------------------------------------- Appreciation.......................................... April 5, 1993 Balanced.............................................. May 1, 1997 Disciplined Stock..................................... April 30, 1996 Growth and Income..................................... May 2, 1994 International Equity.................................. May 2, 1994 International Value................................... May 1, 1996 Limited Term High Income.............................. April 30, 1997 Quality Bond.......................................... August 31, 1990 Small Cap............................................. August 31, 1990 Small Company Stock................................... May 1, 1996 Special Value......................................... August 31, 1990 Stock Index........................................... September 29, 1989 Socially Responsible Growth Fund...................... October 7, 1993 Core Bond............................................. May 1, 2000 Core Value............................................ May 1, 1998 Emerging Leaders...................................... December 15, 1999 Emerging Markets...................................... December 15, 1999 European Equity....................................... April 30, 1999 Founders Discovery.................................... December 15, 1999 Founders Growth....................................... September 30, 1998 Founders International Equity......................... September 30, 1998 Founders Passport..................................... September 30, 1998 Japan................................................. December 15, 1999 MidCap Stock.......................................... May 1, 1998 Technology Growth..................................... August 31, 1999 Transamerica VIF Growth............................... February 26, 1969 ---------------------------------------------------------------------------------------------------------------- +Ten Year Date ----------------------------------------------------------------------------------------------------------------
(1) The calculation of total return performance for periods prior to inception of the subaccounts reflects deductions for the mortality and expense risk fee and administrative charge on a monthly basis, rather than on a daily basis. The monthly deduction is made at the beginning of each month and generally approximates the performance that would have resulted if the subaccounts had actually been in existence since the inception of the portfolio. The figures in the above tables may reflect waiver of advisory fees and reimbursement of other expenses. In the absence of such waivers, the average annual total return figures above would have been lower. (See the Fee Table.) 50 APPENDIX C CONTRACT VARIATIONS The dates shown below are the approximate first issue dates of the various versions of the contract. These dates will vary by state in many cases. This Appendix describes certain of the more significant differences in features of the various versions of the contract. There may be additional variations. Please see your actual contract and any attachments for determining your specific coverage.
---------------------------------------------------------------------------------------------------------------------------- Contract Form/Endorsement Approximate First Issue Date ---------------------------------------------------------------------------------------------------------------------------- GNC-33-194 (Contract Form) January 1993 AV969 101 145 901 (Contract Form) May 1, 2002 RGMI 16 1101 (GMIB Rider) May 1, 2002 ----------------------------------------------------------------------------------------------------------------------------
51 ------------------------------------------------------------------- Product Feature GNC-33-194 ------------------------------------------------------------------- Excess Interest Adjustment Yes ------------------------------------------------------------------- Guaranteed Minimum Death Greater of 5% Annually Benefit Option(s) Compounding through age 85 Death Benefit or Annual Step- Up through age 85 Death Benefit (with a cap of 200%) ------------------------------------------------------------------- Guaranteed Period Options 1, 3, 5 and seven guaranteed (available in the fixed account) periods available. ------------------------------------------------------------------- Minimum effective annual 3% interest rate applicable to the fixed account ------------------------------------------------------------------- Asset Rebalancing Yes ------------------------------------------------------------------- Death Proceeds Greatest of (1) the account value; or (2) the guaranteed minimum death benefit, plus additional purchase payments received, less any partial withdrawals and any applicable premium taxes from the date of death to the date of payment of the death proceeds. ------------------------------------------------------------------- Distribution Financing Charge N/A ------------------------------------------------------------------- Is Mortality & Expense Risk No Fee different after the annuity date? ------------------------------------------------------------------- Dollar Cost Averaging Fixed Yes Account Option ------------------------------------------------------------------- Service Charge Assessed at the end of each contract year before the annuity date and at the time of surrender; Waived if the account value exceeds $50,000 on the last business day of the contract year or at the time of surrender. This service charge is deducted pro-rate from each investment option. ------------------------------------------------------------------- Nursing Care and Terminal Yes Condition Withdrawal Option ------------------------------------------------------------------- Unemployment Waiver No ------------------------------------------------------------------- Guaranteed Minimum Income Yes Benefit ------------------------------------------------------------------- Tax Relief Rider Yes ------------------------------------------------------------------- 52 THE DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R) VARIABLE ANNUITY Issued by TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY Supplement Dated May 1, 2002 to the Prospectus dated May 1, 2002 FOR NEW JERSEY ONLY For New Jersey residents, the optional guaranteed minimum income benefit is as described in this supplement and not as described in the prospectus. Guaranteed Minimum Income Benefit The optional guaranteed minimum income benefit ("GMIB") rider assures you of a minimum level of income in the future by guaranteeing you a minimum annuitization value (discussed below). You may elect to purchase this benefit, which provides a minimum amount you will have to apply to a GMIB payment option. Furthermore, if you elect the guaranteed minimum payment option, you will be guaranteed a minimum level of payments once you begin to receive them. By electing this benefit, you can participate in the gains of the underlying variable investment options you select while knowing that you are guaranteed a minimum level of income in the future, regardless of the performance of the underlying variable investment options. The GMIB will not be issued if you are 81 years old or older. You can annuitize under the GMIB (subject to the conditions described below) at the greater of the account value or the minimum annuitization value (subject to any applicable adjustment). Minimum Annuitization Value. If you add the GMIB in the first contract year, --------------------------- the minimum annuitization value on the rider date (i.e., the date the rider is added to the contract) is the total purchase payments paid less any prior withdrawals. If you add the GMIB after the first contract year, the minimum annuitization value on the rider date is the account value. After the rider date, the minimum annuitization value is equal to the greater of: . the greater of the minimum annuitization value on the Rider Date or the largest account value on any rider anniversary, prior to the earlier of any owner's or annuitant's 86/th/ birthday, adjusted for any subsequent purchase payments (less the sum of all subsequent withdrawals adjusted as described below and any premium taxes); or . the minimum annuitization value on the rider date, plus the sum of all purchase payments received after the rider date, less withdrawals (adjusted as described below) and premium taxes, plus interest thereon, equal to the annual effective interest rate specified on page one of the rider, up to: a) the rider anniversary prior to the earlier of any owner's or annuitant's 86/th/ birthday; or b) the date the sum of all purchase payments, (less the sum of all adjusted withdrawals and premium taxes), together with credited interest, has grown to two times the amount of all purchase payments, (less all adjusted withdrawals and premium taxes) as a result of such interest accumulation, if earlier. Please note that if you annuitize using the GMIB on any date other than the 30- day period following a rider anniversary, there may be a downward adjustment to your minimum annuitization value. However, if you annuitize within the 30-day period following any rider anniversary, no adjustment will be made. (See "Minimum Annuitization Value Adjustment" below.) This Prospectus Supplement must be accompanied by the Prospectus for The Dreyfus/Transamerica Triple Advantage(R) Variable Annuity dated May 1, 2002 Withdrawals may reduce the minimum annuitization value on a basis greater than dollar-for-dollar. (See the SAI for more information.) The minimum annuitization value may only be used to annuitize using the GMIB payment options and may not be used with any of the other annuity payment options listed in the prospectus. The GMIB payment options are: . Life Income--An election may be made for "No Period Certain" or "10 Years Certain". In the event of the death of the annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. . Joint and Full Survivor--An election may be made for "No Period Certain" or "10 Years Certain". Payments will be made as long as either the annuitant or joint annuitant is living. In the event of the death of both the annuitant and joint annuitant prior to the end of the chosen period certain, the remaining period certain payments will be continued to the beneficiary. Note Carefully: IF: . You chose Life Income with No Period Certain or Joint and Full Survivor with No Period Certain; and . The annuitant(s) dies before the due date of the second (third, fourth, etc.) annuity payment; THEN: . We will make only one (two, three, etc.) annuity payments. Please note that if you annuitize using the GMIB before the 7/th/ rider anniversary, the first payment will be calculated with an annuity factor age adjustment. (See "Annuity Factor Age Adjustment" below.) Minimum Annuitization Value Adjustment. If you annuitize under the GMIB on any -------------------------------------- date after a 30-day period following a rider anniversary, the minimum annuitization value will be adjusted downward if your account value (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary) is less than the account value on the last rider anniversary or Rider Date (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary or Rider Date). The adjusted minimum annuitization value will equal: . the account value on the date you annuitize; plus . the minimum annuitization value on the most recent rider anniversary (or the rider date for annuitizations within the first rider year); minus . the account value on the most recent rider anniversary (or the rider date for annuitizations within the first rider year). The minimum annuitization value will not be adjusted if: . you annuitize within 30 days following a rider anniversary; or . your account value (plus any purchase payments made and minus any amounts withdrawn from your account value since the last rider anniversary) is more than the account value on last rider anniversary (or the rider date for annuitizations within the first rider year). Annuity Factor Age Adjustment. If you annuitize using the GMIB before the 7/th/ ----------------------------- rider anniversary, the first payment will be calculated with an annuity factor age adjustment resulting in lower payments than if an annuity factor age adjustment was not used. (See the SAI for information concerning the calculation of the initial payment.) The age adjustment shown in the table below should be subtracted from your current age. The age adjustment is as follows: ---------------------------------------------- Number of Years Since the Rider Date Age Adjustment ---------------------------------------------- 0-1 7 ---------------------------------------------- 1-2 6 ---------------------------------------------- 2-3 5 ---------------------------------------------- 3-4 4 ---------------------------------------------- 4-5 3 ---------------------------------------------- 5-6 2 ---------------------------------------------- 6-7 1 ---------------------------------------------- 7 0 ---------------------------------------------- Please note that the minimum annuitization value is used solely to calculate the GMIB annuity payments. The GMIB does not establish or guarantee account value or guarantee performance of any investment option. Because this benefit is based on conservative actuarial factors, the level of lifetime income that it guarantees may be less than the level that would be provided by application of the account value at otherwise applicable adjusted annuity factors. Therefore, the GMIB should be regarded as a safety net. The costs of annuitizing under the GMIB include the guaranteed minimum payment fee (if the guaranteed minimum payment option is elected), and also the lower payout levels inherent in the annuity tables used for those minimum payouts (which may also include an annuity factor age adjustment). These costs should be balanced against the benefits of a minimum payout level. Benefits and fees under the GMIB rider (the rider fee and the guaranteed minimum payment fee) are guaranteed not to change after the rider is added. However, all of these benefits and fees may change if you elect to upgrade the minimum annuitization value. Minimum Annuitization Value Upgrade. You can upgrade your minimum annuitization ----------------------------------- value to the account value at any time before your 88th birthday. For your convenience, we will put the last date to upgrade on page one of the rider. If you upgrade: . the current rider will terminate and a new one will be issued with its own specified guaranteed benefits and fees; and . the new rider's specified benefits and fees may not be as advantageous as before. It generally will not be to your advantage to upgrade unless your account value exceeds your minimum annuitization value at that time. Conditions of Exercise of the Guaranteed Minimum Income Benefit. You can --------------------------------------------------------------- annuitize using the GMIB at any time. You cannot, however, annuitize using the GMIB after your 95th birthday. For your convenience, we will put the last date to annuitize using the GMIB on page one of the rider. Note Carefully: . If you annuitize at any time other than within a 30-day period following a rider anniversary, there may be a negative adjustment to your minimum annuitization value. (See "Minimum Annuitization Value Adjustment.") . If you annuitize before the 7th rider anniversary there will be an annuity factor age adjustment. (See "Annuity Factor Age Adjustment.") Guaranteed Minimum Payment Option. If you choose the guaranteed minimum payment --------------------------------- option on the election date, annuity payments are guaranteed to never be less than the initial payment. (See the SAI for information concerning the calculation of the initial payment.) The payments will also be "stabilized" or held constant during each year. During the first year after annuitizing using the guaranteed minimum payment option, each stabilized payment will equal the initial payment. On each anniversary thereafter, the stabilized payment will increase or decrease depending on the performance of the investment options you selected (but will never be less than the initial payment), and then be held constant at that amount for that year. The stabilized payment on each anniversary will equal the greater of the initial payment or the payment supportable by the annuity units in the selected investment options. (See the SAI for additional information concerning stabilized payments.) Guaranteed Minimum Income Benefit Rider Fee. A rider fee, currently 0.35% of the ------------------------------------------- minimum annuitization value on the contract anniversary, is charged annually prior to annuitization. We will also charge this fee if you take a complete withdrawal. The rider fee is deducted from each variable investment option in proportion to the amount of account value in each subaccount. Guaranteed Minimum Payment Option Fee. A guaranteed minimum payment option fee, -------------------------------------- currently equal to an effective annual rate of 1.25% of the daily net asset value in the separate account, is reflected in the amount of the variable payments you receive if you annuitize under the GMIB rider and choose the guaranteed minimum payment option. The guaranteed payment fee is included on page one of the rider. Termination. The GMIB will terminate upon the earliest of the following: ------------ . the date we receive written notice from you requesting termination of the GMIB; . annuitization (you will still get guaranteed minimum stabilized payments if you annuitize using the minimum annuitization value under the GMIB and you select the guaranteed minimum payment option); . upgrade of the minimum annuitization value (although we will issue a new rider to you ); . termination of your contract; or . 30 days after the last date to elect the benefit as shown on page 1 of the rider. STATEMENT OF ADDITIONAL INFORMATION DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE(R) VARIABLE ANNUITY Issued through SEPARATE ACCOUNT VA-2L Offered by TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY This statement of additional information expands upon subjects discussed in the current prospectus for the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity offered by Transamerica Occidental Life Insurance Company. You may obtain a copy of the prospectus dated May 1, 2002 by calling 1-877-717-8861, or by writing to the Annuity Service Center, 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001. Terms used in the current prospectus for the contract are incorporated in this Statement of Additional Information. This Statement of Additional Information (SAI) is not a prospectus and should be read only in conjunction with the prospectuses for the contract and the underlying fund portfolios. Dated: May 1, 2002 TABLE OF CONTENTS
Page ---- GLOSSARY OF TERMS................................................................................... THE CONTRACT--GENERAL PROVISIONS.................................................................... Owner............................................................................................. Entire Contract................................................................................... Misstatement of Age or Sex........................................................................ Addition, Deletion or Substitution of Investments................................................. Excess Interest Adjustment........................................................................ Reallocation of Variable Annuity Units After the Annuity Date..................................... Annuity Payment Options........................................................................... Death Benefit..................................................................................... Death of Owner.................................................................................... Assignment........................................................................................ Evidence of Survival.............................................................................. Non-Participating ................................................................................ Amendments........................................................................................ Employee and Agent Purchases...................................................................... Present Value of Future Variable Payments......................................................... Stabilized Payments............................................................................... CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................................................. Tax Status of the Contract........................................................................ Taxation of Transamerica.......................................................................... INVESTMENT EXPERIENCE............................................................................... Variable Accumulation Units....................................................................... Variable Annuity Unit Value and Annuity Payment Rates............................................. GUARANTEED MINIMUM INCOME BENEFIT--ADDITIONAL INFORMATION........................................... TAX RELIEF RIDER--ADDITIONAL INFORMATION............................................................ HISTORICAL PERFORMANCE DATA......................................................................... Money Market Yields............................................................................... Other Subaccount Yields........................................................................... Total Returns..................................................................................... Other Performance Data............................................................................ Adjusted Historical Performance Data.............................................................. PUBLISHED RATINGS................................................................................... STATE REGULATION OF TRANSAMERICA.................................................................... ADMINISTRATION...................................................................................... RECORDS AND REPORTS................................................................................. DISTRIBUTION OF THE CONTRACTS....................................................................... VOTING RIGHTS....................................................................................... OTHER PRODUCTS...................................................................................... CUSTODY OF ASSETS................................................................................... LEGAL MATTERS....................................................................................... INDEPENDENT AUDITORS................................................................................ OTHER INFORMATION................................................................................... FINANCIAL STATEMENTS................................................................................
2 GLOSSARY OF TERMS Account Value--On or before the annuity date, the account value is equal to the owner's: . purchase payments; minus . partial surrenders (including the net effect any applicable excess interest adjustments and/or surrender charges on such surrenders); plus . interest credited in the fixed account; plus . accumulated gains in the variable account; minus . losses in the variable account; minus . service charges, premium taxes, rider fees, and transfer fees, if any. Adjusted Account Value--An amount equal to the account value increased or decreased by any excess interest adjustments. Administrative and Service Office--Annuity Service Center, Transamerica Occidental Life Insurance Company, 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499-0001. Annuitant--The person during whose life any annuity payments involving life contingencies will continue. Annuity Date--The date upon which annuity payments are to commence. This date may be any date at least thirty days after the contract date and may not be later than the last day of the contract month starting after the annuitant attains age 85, except as expressly allowed by Transamerica. In no event will this date be later than the last day of the month following the month in which the annuitant attains age 95. Annuity Payment--An amount paid by Transamerica at regular intervals to the annuitant and/or any other payee specified by the owner. It may be on a variable or fixed basis. Annuity Unit--An accounting unit of measure used in the calculation of the amount of the second and each subsequent variable annuity payment. Beneficiary--The person who has the right to the death benefit as set forth in the contract. Business Day--A day when the New York Stock Exchange is open for business. Cash Value-- The adjusted account value less any applicable surrender charge and any rider fees (imposed upon surrender). Code--The Internal Revenue Code of 1986, as amended. Contract Year--A contract year begins on the date in which the contract becomes effective and on each contract anniversary thereof. Enrollment form--A written application, order form, or any other information received electronically or otherwise upon which the contract is issued and/or is reflected on the data or specifications page. Excess Interest Adjustment--A positive or negative adjustment to amounts surrendered (both partial and full surrenders and transfers) or applied to annuity payment options from the fixed account guaranteed period options prior to the end of the guaranteed period. The adjustment reflects changes in the interest rates declared by Transamerica since the date any payment was received by (or an amount was transferred to) the guaranteed period option. The excess interest adjustment can either decrease or increase the amount to be received by the owner upon surrender (either full or partial) or commencement of annuity payments, depending upon whether there has been an increase or decrease in interest rates, respectively. Fixed Account--One or more investment choices under the contract that are part of Transamerica's general assets and which are not in the variable account. 3 Guaranteed Period Options--The various guaranteed interest rate periods of the fixed account, which Transamerica may offer, into which purchase payments may be paid or amounts may be transferred. Nonqualified Contract--A contract other than a qualified contract. Owner-- The person who may exercise all rights and privileges under the contract. The owner during the lifetime of the annuitant and prior to the annuity date is the person designated as the owner or a successor owner in the information that we require to issue a contract. Purchase Payment--An amount paid to Transamerica by the owner or on the owner's behalf as consideration for the benefits provided by the contract. Qualified Contract--A contract issued in connection with retirement plans that qualify for special federal income tax treatment under the Code. Service Charge--An annual charge on each contract anniversary (and a charge at the time of surrender during any contract year) for contract maintenance and related administrative expenses. This annual charge is $35, but will not exceed 2% of the account value. Subaccount--A subdivision within the variable account, the assets of which are invested in a specified portfolio of the underlying funds. Surrender Charge--A percentage of each purchase payment in an amount from 7% to 0% depending upon the length of time from the date of each purchase payment. The surrender charge is assessed on full or partial surrenders from the contract. The surrender charge may also be referred to as a "contingent deferred sales charge." Valuation Period--The period of time from one determination of variable accumulation unit values and annuity unit values to the next subsequent determination of values. Such determination shall be made on each business day. Variable Account--Separate Account VA-2L, a separate account established and registered as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"), as amended, to which purchase payments under the contracts may be allocated. Variable Accumulation Unit--An accounting unit of measure used to determine the account value in the variable account before the annuity date. Variable Annuity Payments--Payments made pursuant to an annuity payment option which fluctuate as to dollar amount or payment term in relation to the investment performance of the specified subaccounts within the variable account. Written Notice or Written Request--Written notice, signed by the owner, that gives Transamerica the information it requires and is received at the administrative and service office. For some transactions, Transamerica may accept an electronic notice such as telephone instructions. Such electronic notice must meet the requirements Transamerica establishes for such notices. 4 In order to supplement the description in the prospectus, the following provides additional information about Transamerica and the contract, which may be of interest to a prospective purchaser. THE POLICY--GENERAL PROVISIONS Owner The contract shall belong to the owner upon issuance of the contract after completion of an enrollment form and delivery of the initial purchase payment. While the annuitant is living, the owner may: (1) assign the contract; (2) surrender the contract; (3) amend or modify the contract with Transamerica's consent; (4) receive annuity payments or name a payee to receive the payments; and (5) exercise, receive and enjoy every other right and benefit contained in the contract. The exercise of these rights may be subject to the consent of any assignee or irrevocable beneficiary; and of your spouse in a community or marital property state. Unless Transamerica has been notified of a community or marital property interest in the contract, it will rely on its good faith belief that no such interest exists and will assume no responsibility for inquiry. Note carefully. If the owner dies and no joint owner, primary beneficiary or -------------- contingent beneficiary is alive or in existence on the date of death, the owner's estate will become the new owner. If no probate estate is opened because the owner has precluded the opening of a probate estate by means of a trust or other instrument, that trust may not exercise ownership rights to the contract. It may be necessary to open a probate estate in order to exercise ownership rights to the contract. The owner may change the ownership of the contract in a written notice. When this change takes effect, all rights of ownership in the contract will pass to the new owner. A change of ownership may have tax consequences. When there is a change of owner or successor owner, the change will not be effective until it is recorded in our records. Once recorded, it will take effect as of the date the owner signs the written notice, subject to any payment Transamerica has made or action Transamerica has taken before recording the change. Changing the owner or naming a new successor owner cancels any prior choice of successor owner, but does not change the designation of the beneficiary or the annuitant. If ownership is transferred (except to the owner's spouse) because the owner dies before the annuitant, the cash value generally must be distributed to the successor owner within five years of the owner's death, or payments must be made for a period certain or for the successor owner's lifetime so long as any period certain does not exceed that successor owner's life expectancy, if the first payment begins within one year of your death. Entire Contract The contract, any endorsements thereon, the enrollment form, or information provided in lieu thereof, constitute the entire contract between Transamerica and the owner. All statements in the enrollment form are representations and not warranties. No statement will cause the contract to be void or to be used in defense of a claim unless contained in the enrollment form or information provided in lieu thereof. Misstatement of Age or Sex If the age or sex of the annuitant or owner has been misstated, Transamerica will change the annuity benefit payable to that which the purchase payments would have purchased for the correct age or sex. The dollar amount of any underpayment made by Transamerica shall be paid in full with the next payment due such person or the beneficiary. The dollar amount of any overpayment made by Transamerica due to any misstatement shall be deducted from payments subsequently accruing to such person or beneficiary. Any underpayment or overpayment will include interest at 5% per year, from the date of the wrong payment to the date of the adjustment. The age of the annuitant or owner may be established at any time by the submission of proof satisfactory to Transamerica. 5 Addition, Deletion, or Substitution of Investments Transamerica cannot and does not guarantee that any of the subaccounts will always be available for purchase payments, allocations, or transfers. Transamerica retains the right, subject to any applicable law, to make certain changes in the variable account and its investments. Transamerica reserves the right to eliminate the shares of any portfolio held by a subaccount and to substitute shares of another portfolio of the underlying funds, or of another registered open-end management investment company for the shares of any portfolio, if the shares of the portfolio are no longer available for investment or if, in Transamerica's judgment, investment in any portfolio would be inappropriate in view of the purposes of the variable account. To the extent required by the 1940 Act, as amended, substitutions of shares attributable to your interest in a subaccount will not be made without prior notice to you and the prior approval of the Securities and Exchange Commission ("SEC"). Nothing contained herein shall prevent the variable account from purchasing other securities for other series or classes of variable annuity contracts, or from effecting an exchange between series or classes of variable annuity contracts on the basis of your requests. New subaccounts may be established when, in the sole discretion of Transamerica, marketing, tax, investment or other conditions warrant. Any new subaccounts may be made available to existing owners on a basis to be determined by Transamerica. Each additional subaccount will purchase shares in a mutual fund portfolio, other investment vehicle. Transamerica may also eliminate one or more subaccounts if, in its sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any subaccount is eliminated, Transamerica will notify you and request a reallocation of the amounts invested in the eliminated subaccount. If no such reallocation is provided by you, Transamerica will reinvest the amounts in the subaccount that invests in the Money Market Portfolio (or in a similar portfolio of money market instruments), in another subaccount, or in the fixed account, if appropriate. In the event of any such substitution or change, Transamerica may, by appropriate endorsement, make such changes in the contracts as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the contracts, the separate account may be (i) operated as a management company under the 1940 Act or any other form permitted by law, (ii) deregistered under the 1940 Act in the event such registration is no longer required or (iii) combined with one or more other separate accounts. To the extent permitted by applicable law, Transamerica also may transfer the assets of the separate account associated with the contracts to another account or accounts. Excess Interest Adjustment Money that you surrender, transfer out of, or apply to an annuity payment option, from a guaranteed period option of the fixed account before the end of its guaranteed period (the number of years you specified the money would remain in the guaranteed period option) may be subject to an excess interest adjustment. At the time you request a surrender, if interest rates set by Transamerica have risen since the date of the initial guarantee, the excess interest adjustment will result in a lower cash value. However, if interest rates have fallen since the date of the initial guarantee, the excess interest adjustment will result in a higher cash value. Excess interest adjustments will not reduce the adjusted account value for a guaranteed period option below the purchase payments and transfers to that guaranteed period option, less any prior partial surrenders and transfers from the guaranteed period option, plus interest at the contract's minimum guaranteed effective annual interest rate (currently 2% per year). Also, upon full surrender the cash value attributable to the fixed account will not be less than 90% of your fixed account purchase payments and transfers to the fixed account accumulated at 3% per year less surrenders and transfers. This is referred to as the excess interest adjustment floor. The formula that will be used to determine the excess interest adjustment is: S* (G-C)* (M/12) S = Gross amount being surrendered that is subject to the excess interest adjustment G = Guaranteed interest rate in effect for the contract 6 C = Current guaranteed interest rate then being offered on new purchase payments for the next longer option period than "M". If this contract form or such an option period is no longer offered, "C" will be the U.S. Treasury rate for the next longer maturity (in whole years) than "M" on the 25th day of the previous calendar month, plus up to 2%. M = Number of months remaining in the current option period, rounded up to the next higher whole number of months. * = multiplication /\ = exponentiation Example 1 (Surrender, rates increase by 3%): ------------------------------------------------------------------------------------------------------------------------ Single purchase payment: $50,000.00 ------------------------------------------------------------------------------------------------------------------------ Guarantee period: 5 Years ------------------------------------------------------------------------------------------------------------------------ Guarantee rate: 5.50% per annum ------------------------------------------------------------------------------------------------------------------------ Surrender: Middle of annuity year 2 ------------------------------------------------------------------------------------------------------------------------ Policy value at middle of annuity year 2 = 50,000.00 * (1.055)/\ 1.5 = 54,181.21 ------------------------------------------------------------------------------------------------------------------------ Cumulative Earnings = 54,181.21 - 50,000.00 = 4,181.21 ------------------------------------------------------------------------------------------------------------------------ 10% of Purchase Payments = 50,000.00 * .10 = 5,000.00 ------------------------------------------------------------------------------------------------------------------------ Penalty free amount at middle of annuity year 2 = 5,000.00 ------------------------------------------------------------------------------------------------------------------------ Amount free of excess interest adjustment = 4,181.21 ------------------------------------------------------------------------------------------------------------------------ Amount subject to excess interest adjustment = 54,181.21 - 4,181.21 = 50,000.00 ------------------------------------------------------------------------------------------------------------------------ Excess interest adjustment floor = 50,000.00 * (1.02) /\ 1.5 = 51,507.48 ------------------------------------------------------------------------------------------------------------------------ Excess interest adjustment ------------------------------------------------------------------------------------------------------------------------ G = .055 ------------------------------------------------------------------------------------------------------------------------ C = .085 ------------------------------------------------------------------------------------------------------------------------ M = 42 ------------------------------------------------------------------------------------------------------------------------ Excess interest adjustment = S* (G-C)* (M/12) ------------------------------------------------------------------------------------------------------------------------ = 50,000.00 * (.055-.085) * (42/12) ------------------------------------------------------------------------------------------------------------------------ = -5,250.00, but excess interest adjustment cannot cause the adjusted account value to fall below the excess interest adjustment floor, so the adjustment is limited to 51,507.48 - 54,181.21 = -2,673.73 ------------------------------------------------------------------------------------------------------------------------ Adjusted account value = account value + excess interest adjustment = 54,181.21 + (-2,673.73) = 51,507.48 ------------------------------------------------------------------------------------------------------------------------ Portion of penalty-free amount which is deducted from = cumulative earnings cumulative earnings = 4,181.21 ------------------------------------------------------------------------------------------------------------------------ Portion of penalty-free amount which is deducted from = 5,000 - 4,181.21 purchase payments = 818.79 ------------------------------------------------------------------------------------------------------------------------ Surrender charges = (50,000.00 - 818.79)* .07 = 3,442.68 ------------------------------------------------------------------------------------------------------------------------ Net surrender value at middle of contract year 2 = 51,507.48 - 3,442.68 = 48,064.80 ------------------------------------------------------------------------------------------------------------------------ The net surrender value of $48,064.80 is greater than the minimum of $47,040.11 ------------------------------------------------------------------------------------------------------------------------
7 Example 2 (Surrender, rates decrease by 1%): ---------------------------------------------------------------------------------------------------------------------- Single purchase payment: $50,000.00 ---------------------------------------------------------------------------------------------------------------------- Guarantee period: 5 Years ---------------------------------------------------------------------------------------------------------------------- Guarantee rate: 5.50% per annum ---------------------------------------------------------------------------------------------------------------------- Surrender: Middle of contract year 2 ---------------------------------------------------------------------------------------------------------------------- Policy value at middle of contract year 2 = 50,000.00 * (1.055) /\ 1.5 = 54,181.21 ---------------------------------------------------------------------------------------------------------------------- Cumulative Earnings = 54,181.21 - 50,000.00 = 4,181.21 ---------------------------------------------------------------------------------------------------------------------- 10% of Purchase Payment = 50,000.00 * .10 = 5,000.00 ---------------------------------------------------------------------------------------------------------------------- Penalty free amount at middle of contract year 2 = 5,000.00 ---------------------------------------------------------------------------------------------------------------------- Amount free of excess interest adjustment = 4,181.21 ---------------------------------------------------------------------------------------------------------------------- Amount subject to excess interest adjustment = 54,181.21 - 4,181.21 = 50,000.00 ---------------------------------------------------------------------------------------------------------------------- Excess interest adjustment floor = 50,000.00 * (1.02) /\ 1.5 = 51,507.48 ---------------------------------------------------------------------------------------------------------------------- Excess interest adjustment ---------------------------------------------------------------------------------------------------------------------- G = .055 ---------------------------------------------------------------------------------------------------------------------- C = .045 ---------------------------------------------------------------------------------------------------------------------- M = 42 ---------------------------------------------------------------------------------------------------------------------- Excess interest adjustment = S* (G-C)* (M/12) ---------------------------------------------------------------------------------------------------------------------- = 50,000.00 * (.055-.045) * (42/12) = 1,750.00 ---------------------------------------------------------------------------------------------------------------------- Adjusted account value = 54,181.21 + 1,750.00 = 55,931.21 ---------------------------------------------------------------------------------------------------------------------- Portion of penalty-free amount which is deducted from = cumulative earnings cumulative earnings = 4,181.21 ---------------------------------------------------------------------------------------------------------------------- Portion of penalty-free amount which is deducted from = 5,000.00 - 4,181.21 purchase payments = 818.79 ---------------------------------------------------------------------------------------------------------------------- Surrender charges = (50,000.00 - 818.79) * .07 = 3,442.68 ---------------------------------------------------------------------------------------------------------------------- Net surrender value at middle of contract year 2 = 55,931.21 - 3,442.68 = 52,488.53 ---------------------------------------------------------------------------------------------------------------------- The net surrender value of 52,448.53 is greater than the minimum of 47,040.11 ----------------------------------------------------------------------------------------------------------------------
On a partial surrender, Transamerica will pay the owner the full amount of surrender requested (as long as the account value is sufficient). Amounts surrendered will reduce the account value by an amount equal to: R - E + SC R = the requested partial surrender; E = the excess interest adjustment; and SC = the surrender charges on (EPW - E); where EPW = the excess partial surrender amount. 8 Example 3 (Partial Surrender, rates increase by 1%): -------------------------------------------------------------------------------------------------------------------------- Single purchase payment: $50,000.00 -------------------------------------------------------------------------------------------------------------------------- Guarantee period: 5 Years -------------------------------------------------------------------------------------------------------------------------- Guarantee rate: 5.50% per annum -------------------------------------------------------------------------------------------------------------------------- Partial surrender: $20,000 (requested withdrawal amount after penalties); middle of contract year 2 -------------------------------------------------------------------------------------------------------------------------- Policy value at middle of contract year 2 = 50,000.00 * (1.055) /\ 1.5 = 54,181.21 -------------------------------------------------------------------------------------------------------------------------- Cumulative Earnings = 54,181.21 - 50,000.00 = 4,181.21 -------------------------------------------------------------------------------------------------------------------------- 10% of Purchase Payment = 50,000.00 * .10 = 5,000.00 -------------------------------------------------------------------------------------------------------------------------- Penalty free amount at middle of contract year 2 = 5,000.00 -------------------------------------------------------------------------------------------------------------------------- Amount free of excess interest adjustment = 4,181.21 -------------------------------------------------------------------------------------------------------------------------- Excess interest adjustment/surrender charge -------------------------------------------------------------------------------------------------------------------------- S = 20,000 - 4,181.21 = 15,818.79 -------------------------------------------------------------------------------------------------------------------------- G = .055 -------------------------------------------------------------------------------------------------------------------------- C = .065 -------------------------------------------------------------------------------------------------------------------------- M = 42 -------------------------------------------------------------------------------------------------------------------------- E = 15,818.79 * (.055 - .065) * (42/12) = -553.66 -------------------------------------------------------------------------------------------------------------------------- EPW = 20,000.00 - 5,000.00 = 15,000.00 -------------------------------------------------------------------------------------------------------------------------- To receive the full $20,000 partial surrender amount, we must "gross-up" the EPW amount to account for the surrender charges to be deducted. This is done by dividing the EPW by (1 - surrender charge), New EPW - 15/(1 - .07) = 16,129.03 -------------------------------------------------------------------------------------------------------------------------- SC = .07 * (16,129.03 - (-553.66) = 1,167.79 -------------------------------------------------------------------------------------------------------------------------- Remaining account value at middle of contract year 2 = 54,181.21 - (R - E + surrender charge) -------------------------------------------------------------------------------------------------------------------------- = 54,181.21 - (20,000.00 - (-553.66) + 1,167.79) = 32,459.76 --------------------------------------------------------------------------------------------------------------------------
9 Example 4 (Partial Surrender, rates decrease by 1%): -------------------------------------------------------------------------------------------------------------------------------- Single purchase payment: $50,000.00 -------------------------------------------------------------------------------------------------------------------------------- Guarantee period: 5 Years -------------------------------------------------------------------------------------------------------------------------------- Guarantee rate: 5.50% per annum -------------------------------------------------------------------------------------------------------------------------------- Partial surrender: $20,000; middle of contract year 2 -------------------------------------------------------------------------------------------------------------------------------- Policy value at middle of contract year 2 = 50,000.00 * (1.055) /\ 1.5 = 54,181.21 -------------------------------------------------------------------------------------------------------------------------------- Cumulative Earnings = 54,181.21 - 50,000.00 = 4,181.21 -------------------------------------------------------------------------------------------------------------------------------- 10% of Purchase Payment = 50,000.00 * .10 = 5,000.00 -------------------------------------------------------------------------------------------------------------------------------- Penalty free amount at middle of contract year 2 = 5,000.00 -------------------------------------------------------------------------------------------------------------------------------- Amount free of excess interest adjustment = 4,181.21 -------------------------------------------------------------------------------------------------------------------------------- Excess interest adjustment/surrender charge ---------------------------------------------------------------------------------------------------------------------------- S = 20,000 - 4,181.21 = 15,818.79 ---------------------------------------------------------------------------------------------------------------------------- G = .055 ---------------------------------------------------------------------------------------------------------------------------- C = .045 ---------------------------------------------------------------------------------------------------------------------------- M = 42 ---------------------------------------------------------------------------------------------------------------------------- E = 15,818.79 * (.055 - .045)* (42/12) = 553.66 ---------------------------------------------------------------------------------------------------------------------------- EPW = 20,000.00 - 5,000.00 = 15,000.00 ---------------------------------------------------------------------------------------------------------------------------- To receive the full $20,000 partial surrender amount, we must "gross-up" the EPW amount to account for the surrender charges to be deducted. This is done by dividing the EPW by (1 - surrender charge). New EPW - 15,000/(1 - .07) = 16,129.03 ---------------------------------------------------------------------------------------------------------------------------- SC = .07 * (16,129.03 - 553.66) = 1,090.28 ---------------------------------------------------------------------------------------------------------------------------- Remaining account value at middle of contract year 2 = 54,181.21 - (R - E + surrender charge) ---------------------------------------------------------------------------------------------------------------------------- = 54,181.21 - (20,000.00 - 553.66 + 1,090.28) = 33,644.59 ----------------------------------------------------------------------------------------------------------------------------
Reallocation of Annuity Units After the Annuity Date After the annuity date, you may reallocate the value of a designated number of annuity units of a subaccount then credited to a contract into an equal value of annuity units of one or more other subaccounts or the fixed account. The reallocation shall be based on the relative value of the annuity units of the account(s) or subaccount(s) at the end of the business day on the next payment date. The minimum amount which may be reallocated is the lesser of (1) $10 of monthly income or (2) the entire monthly income of the annuity units in the account or subaccount from which the transfer is being made. If the monthly income of the annuity units remaining in an account or subaccount after a reallocation is less than $10, Transamerica reserves the right to include the value of those annuity units as part of the transfer. The request must be in writing to Transamerica's administrative and service office. There is no charge assessed in connection with such reallocation. A reallocation of annuity units may be made up to four times in any given contract year. After the annuity date, no transfers may be made from the fixed account to the variable account. Annuity Payment Options Note: Portions of the following discussion do not apply to annuity payments under the Guaranteed Minimum Income Benefit or Initial Payment Guarantee. See the "Stabilized Payments" section of this SAI. During the lifetime of the annuitant and prior to the annuity date, the owner may choose an annuity payment option or change the election, but written notice of any election or change of election must be received by Transamerica at its administrative and service office at least thirty (30) days prior to the annuity date. If no election is made prior to the annuity date, annuity payments will be made under (i) Payment Option 3, life income with level payments for 10 years certain, using the existing adjusted account value of the fixed account, or (ii) under Payment Option 3, life 10 income with variable payments for 10 years certain using the existing account value of the variable account, or (iii) in a combination of (i) and (ii). The person who elects an annuity payment option can also name one or more successor payees to receive any unpaid amount Transamerica has at the death of a payee. Naming these payees cancels any prior choice of a successor payee. A payee who did not elect the annuity payment option does not have the right to advance or assign payments, take the payments in one sum, or make any other change. However, the payee may be given the right to do one or more of these things if the person who elects the option tells Transamerica in writing and Transamerica agrees. Variable Payment Options. The dollar amount of the first variable annuity ------------------------- payment will be determined in accordance with the annuity payment rates set forth in the applicable table contained in the contract. For annuity payments (other than payments under the Guaranteed Minimum Income Benefit) the tables are based on a 5% effective annual Assumed Investment Return and the "2000 Table", using an assumed annuity date of 2005 (static projection to this point) with dynamic projection using scale G from that point (100% of G for male, 50% of G for females). The dollar amount of additional variable annuity payments will vary based on the investment performance of the subaccount(s) of the variable account selected by the annuitant or beneficiary. Determination of the First Variable Payment. The amount of the first variable -------------------------------------------- payment depends upon the sex (if consideration of sex is allowed under state law) and adjusted age of the annuitant. For regular annuity payments, the adjusted age is the annuitant's actual age nearest birthday, on the annuity date, adjusted as follows:
Annuity Commencement Date Adjusted Age ------------------------- ------------ Before 2010 Actual Age 2010-2019 Actual Age minus 1 2020-2026 Actual Age minus 2 2027-2033 Actual Age minus 3 2034-2040 Actual Age minus 4 After 2040 As determined by Transamerica
This adjustment assumes an increase in life expectancy, and therefore it results in lower payments than without such an adjustment. Determination of Additional Variable Payments. All variable annuity payments ---------------------------------------------- other than the first are calculated using annuity units and are credited to the contract. The number of annuity units to be credited in respect of a particular subaccount is determined by dividing that portion of the first variable annuity payment attributable to that subaccount by the annuity unit value of that subaccount on the annuity date. The number of annuity units of each particular subaccount credited to the contract then remains fixed, assuming no transfers to or from that subaccount occur. The dollar value of variable annuity units in the chosen subaccount will increase or decrease reflecting the investment experience of the chosen subaccount. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant, and is equal to the sum of the amounts determined by multiplying the number of annuity units of each particular subaccount credited to the contract by the annuity unit value for the particular subaccount on the date the payment is made. Death Benefit Adjusted Partial Surrender. The amount of your guaranteed minimum death --------------------------- benefit is reduced due to a partial surrender called the adjusted partial surrender. The reduction amount depends on the relationship between your guaranteed minimum death benefit and account value. The adjusted partial surrender is equal to (1) multiplied by (2), where: (1) is the amount of the gross partial surrender; 11 (2) is the adjustment factor = current death benefit prior to the surrender divided by the account value prior to the surrender. The following examples describe the effect of a surrender on the guaranteed minimum death benefit and account value.
--------------------------------------------------------------------------------------------------------------------- Example 1 (Assumed Facts for Example) --------------------------------------------------------------------------------------------------------------------- $75,000 current guaranteed minimum death benefit before surrender --------------------------------------------------------------------------------------------------------------------- $50,000 current account value before surrender --------------------------------------------------------------------------------------------------------------------- $75,000 current death benefit (larger of account value, cash value and guaranteed minimum death benefit) --------------------------------------------------------------------------------------------------------------------- 6% current surrender charge percentage --------------------------------------------------------------------------------------------------------------------- $15,000 Requested surrender --------------------------------------------------------------------------------------------------------------------- $ 5,000 Surrender charge-free amount (assumes penalty free surrender is available) --------------------------------------------------------------------------------------------------------------------- $10,000 excess partial surrender (amount subject to surrender charge) --------------------------------------------------------------------------------------------------------------------- $ 100 excess interest adjustment (assumes interest rates have decreased since initial guarantee) --------------------------------------------------------------------------------------------------------------------- $ 594 Surrender charge on (excess partial surrender less excess interest adjustment) = 0.06* (10,000 - 100) --------------------------------------------------------------------------------------------------------------------- $10,494 Reduction in account value due to excess partial surrender = 10,000 - 100 + 594 --------------------------------------------------------------------------------------------------------------------- $15,494 Total Gross Partial Surrender = 5,000 + 10,494 --------------------------------------------------------------------------------------------------------------------- $23,241 adjusted partial surrender = 15,494 * (75,000/50,000) --------------------------------------------------------------------------------------------------------------------- $51,759 New guaranteed minimum death benefit (after surrender) = 75,000 - 23,241 --------------------------------------------------------------------------------------------------------------------- $34,506 New account value (after surrender) = 50,000 - 15,494 ---------------------------------------------------------------------------------------------------------------------
Summary: -------- Reduction in guaranteed minimum death benefit = $23,241 Reduction in account value = $15,494 Note, guaranteed minimum death benefit is reduced more than the account value since the guaranteed minimum death benefit was greater than the account value just prior to the surrender.
--------------------------------------------------------------------------------------------------------------------- Example 2 (Assumed Facts for Example) --------------------------------------------------------------------------------------------------------------------- $50,000 current guaranteed minimum death benefit before surrender --------------------------------------------------------------------------------------------------------------------- $75,000 current account value before surrender --------------------------------------------------------------------------------------------------------------------- $75,000 current death benefit (larger of account value, cash value and guaranteed minimum death benefit) --------------------------------------------------------------------------------------------------------------------- 6% current surrender charge percentage --------------------------------------------------------------------------------------------------------------------- $15,000 requested surrender --------------------------------------------------------------------------------------------------------------------- $ 7,500 surrender charge-free amount (assumes penalty free surrender is available) --------------------------------------------------------------------------------------------------------------------- $ 7,500 excess partial surrender (amount subject to surrender charge) --------------------------------------------------------------------------------------------------------------------- $ -100 excess interest adjustment (assumes interest rates have increased since initial guarantee) --------------------------------------------------------------------------------------------------------------------- $ 456 surrender charge on (excess partial surrender less excess interest adjustment) = 0.06*[(7500 - (- 100)] --------------------------------------------------------------------------------------------------------------------- $ 8,056 reduction in account value due to excess partial surrender = 7500 - (- 100) + 456 = 7500 + 100 + 456 --------------------------------------------------------------------------------------------------------------------- $15,556 Total Gross Partial Surrender = 7,500 + 8,056 --------------------------------------------------------------------------------------------------------------------- $15,556 adjusted partial surrender = 15,556 * (75,000/75,000) --------------------------------------------------------------------------------------------------------------------- $34,444 New guaranteed minimum death benefit (after surrender) = 50,000 - 15,556 --------------------------------------------------------------------------------------------------------------------- $59,444 New account value (after surrender) = 75,000 - 15,556 ---------------------------------------------------------------------------------------------------------------------
12 Summary: ------- Reduction in guaranteed minimum death benefit = $15,556 Reduction in account value = $15,556 Note, the guaranteed minimum death benefit and account value are reduced by the same amount since the account value was higher than the guaranteed minimum death benefit just prior to the surrender. Due proof of death of the annuitant is proof that the annuitant died prior to the commencement of annuity payments. A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by the attending physician, or any other proof satisfactory to Transamerica will constitute due proof of death. Upon receipt of this proof and an election of a method of settlement and return of the contract, the death benefit generally will be paid within seven days, or as soon thereafter as Transamerica has sufficient information about the beneficiary to make the payment. The beneficiary may receive the amount payable in a lump sum cash benefit, or, subject to any limitation under any state or federal law, rule, or regulation, under one of the annuity payment options described above, unless a settlement agreement is effective at the death of the owner preventing such election. Distribution Requirements. If the annuitant dies prior to the annuity date, the ------------------------- death benefit must (1) be distributed within five years of the date of the deceased's death, or (2) payments under an annuity payment option must begin no later than one year after the deceased owner's death and must be made for the beneficiary's lifetime or for a period certain (so long as any period certain does not exceed the beneficiary's life expectancy). Death proceeds, which are not paid to or for the benefit of a natural person, must be distributed within five years of the date of the deceased's death. If the sole beneficiary is the deceased's surviving spouse, however, such spouse may elect to continue the contract as the new annuitant and owner instead of receiving the death benefit. If an owner is not an annuitant, and dies prior to the annuity date, the new owner may surrender the contract at any time for the amount of the adjusted account value. If the new owner is not the deceased owner's spouse, however, the adjusted account value must be distributed: (1) within five years after the date of the deceased owner's death, or (2) payments under an annuity payment option must begin no later than one year after the deceased owner's death and must be made for the new owner's lifetime or for a period certain (so long as any period certain does not exceed the new owner's life expectancy). If the sole new owner is the deceased owner's surviving spouse, such spouse may elect to continue the contract as the new owner instead of receiving the death benefit. Beneficiary. The beneficiary designation in the enrollment form will remain in ------------ effect until changed. The owner may change the designated beneficiary by sending written notice to Transamerica. The beneficiary's consent to such change is not required unless the beneficiary was irrevocably designated or law requires consent. (If an irrevocable beneficiary dies, the owner may then designate a new beneficiary.) The change will take effect as of the date the owner signs the written notice, whether or not the owner is living when the notice is received by Transamerica. Transamerica will not be liable for any payment made before the written notice is received. If more than one beneficiary is designated, and the owner fails to specify their interests, they will share equally. If upon the death of the annuitant there is a surviving owner(s), the surviving owner(s) automatically takes the place of any beneficiary designations. Death of Owner Federal tax law requires that if any owner (including any joint owner or any successor owner who has become a current owner) dies before the annuity date, then the entire value of the contract must generally be distributed within five years of the date of death of such owner. Certain rules apply where (1) the spouse of the deceased owner is the sole beneficiary, (2) the owner is not a natural person and the primary annuitant dies or is changed, or (3) any owner dies after the annuity date. See "Certain Federal Income Tax Consequences" for more information about these rules. Other rules may apply to qualified contracts. 13 Assignment During the lifetime of the annuitant you may assign any rights or benefits provided by the contract if your contract is a nonqualified contract. An assignment will not be binding on Transamerica until a copy has been filed at its administrative and service office. Your rights and benefits and those of the beneficiary are subject to the rights of the assignee. Transamerica assumes no responsibility for the validity or effect of any assignment. Any claim made under an assignment shall be subject to proof of interest and the extent of the assignment. An assignment may have tax consequences. Unless you so direct by filing written notice with Transamerica, no beneficiary may assign any payments under the contract before they are due. To the extent permitted by law, no payments will be subject to the claims of any beneficiary's creditors. Ownership under qualified contracts is restricted to comply with the Code. Evidence of Survival Transamerica reserves the right to require satisfactory evidence that a person is alive if a payment is based on that person being alive. No payment will be made until Transamerica receives such evidence. Non-Participating The contract will not share in Transamerica's surplus earnings; no dividends will be paid. Amendments No change in the contract is valid unless made in writing by Transamerica and approved by one of Transamerica's officers. No registered representative has authority to change or waive any provision of the contract. Transamerica reserves the right to amend the contracts to meet the requirements of the Code, regulations or published rulings. You can refuse such a change by giving written notice, but a refusal may result in adverse tax consequences. Employee and Agent Purchases The contract may be acquired by an employee or registered representative of any broker/dealer authorized to sell the contract or their spouse or minor children, or by an officer, director, trustee or bona-fide full-time employee of Transamerica or its affiliated companies or their spouse or minor children. In such a case, Transamerica may credit an amount equal to a percentage of each purchase payment to the contract due to lower acquisition costs Transamerica experiences on those purchases. The credit will be reported to the Internal Revenue Service as taxable income to the employee or registered representative. Transamerica may offer certain employer sponsored savings plans, in its discretion reduced fees and charges including, but not limited to, the annual service charge, the surrender charges, the mortality and expense risk fee and the administrative charge for certain sales under circumstances which may result in savings of certain costs and expenses. In addition, there may be other circumstances of which Transamerica is not presently aware which could result in reduced sales or distribution expenses. Credits to the contract or reductions in these fees and charges will not be unfairly discriminatory against any owner. Present Value of Future Variable Payments The present value of future variable payments is calculated by taking (a) the supportable payment on the business day we receive the surrender request, times (b) the number of payments remaining, discounted using a rate equal to the AIR. 14 Stabilized Payments If you have selected a payout feature that provides for stabilized payments, please note that the stabilized payments remain constant throughout each year and are adjusted on your contract anniversary. Without stabilized payments, each payment throughout the year would fluctuate based on the performance of your selected subaccounts. To reflect the difference in these payments we adjust (both increase and decrease as appropriate) the number of annuity units. The units are adjusted when we calculate the supportable payment. Supportable payments are used in the calculation of surrender values, death benefits and transfers. On your contract anniversary we set the new stabilized payment equal to the current supportable payment. In the case of an increase in the number of variable annuity units, your participation in the future investment performance will be increased since more variable annuity units are credited to you. Conversely, in the case of a reduction of the number of variable annuity units, your participation in the future investment performance will be decreased since fewer variable annuity units are credited to you. The following table demonstrates, on a purely hypothetical basis, the changes in the number of variable annuity units. The changes in the variable annuity unit values reflect the investment performance of the applicable subaccounts as well as the separate account charge.
------------------------------------------------------------------------------------------------------- Hypothetical Changes in Annuity Units with Stabilized Payments* ------------------------------------------------------------------------------------------------------- AIR 5.00% ------------------------------------------------------------------------------------------------------- Life & 10 Years Certain ------------------------------------------------------------------------------------------------------- Male aged 65 ------------------------------------------------------------------------------------------------------- First Variable Payment $500 ------------------------------------------------------------------------------------------------------- Monthly Adjustments Cumulative Beginning Annuity Payment Monthly in Adjusted Annuity Unit Without Stabilized Annuity Annuity Units Values Stabilization Payment Units Units ------------------------------------------------------------------------------------------------------- At Issue: January 1 ------------------------------------------------------------------------------------------------------- February 1 ------------------------------------------------------------------------------------------------------- March 1 ------------------------------------------------------------------------------------------------------- April 1 ------------------------------------------------------------------------------------------------------- May 1 ------------------------------------------------------------------------------------------------------- June 1 ------------------------------------------------------------------------------------------------------- July 1 ------------------------------------------------------------------------------------------------------- August 1 ------------------------------------------------------------------------------------------------------- September 1 ------------------------------------------------------------------------------------------------------- October 1 ------------------------------------------------------------------------------------------------------- November 1 ------------------------------------------------------------------------------------------------------- December 1 ------------------------------------------------------------------------------------------------------- January 1 ------------------------------------------------------------------------------------------------------- February 1 -------------------------------------------------------------------------------------------------------
* Expenses included in the calculations are _____% Separate Account Charge and ____% portfolio expenses. If higher expenses were charged, the numbers would be lower. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary does not constitute tax advice. It is a general discussion of certain of the expected federal income tax consequences of investment in and distributions with respect to a contract, based on the Code, as amended, proposed and final Treasury Regulations thereunder, judicial authority, and current 15 administrative rulings and practice. This summary discusses only certain federal income tax consequences to "United States Persons," and does not discuss state, local, or foreign tax consequences. United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships and trusts or estates that are subject to United States federal income tax regardless of the source of their income. Tax Status of the Policy The following discussion is based on the assumption that the contract qualifies as an annuity contract for federal income tax purposes. Distribution Requirements. The Code requires that nonqualified contracts -------------------------- contain specific provisions for distribution of contract proceeds upon the death of any owner. In order to be treated as an annuity contract for federal income tax purposes, the Code requires that such contracts provide that if any owner dies on or after the annuity date and before the entire interest in the contract has been distributed, the remaining portion must be distributed at least as rapidly as under the method in effect on such owner's death. If any owner dies before the annuity date, the entire interest in the contract must generally be distributed within 5 years after such owner's date of death or be used to purchase an immediate annuity under which payments will begin within one year of such owner's death and will be made for the life of the beneficiary or for a period not extending beyond the life expectancy of the "designated beneficiary" as defined in section 72(s) of the Code. However, if upon such owner's death prior to the annuity date, such owner's surviving spouse becomes the sole new owner under the contract, then the contract may be continued with the surviving spouse as the new owner. Under the contract, the beneficiary is the designated beneficiary of an owner/annuitant and the successor owner is the designated beneficiary of an owner who is not the annuitant. If any owner is not a natural person, then for purposes of these distribution requirements, the primary annuitant shall be treated as an owner and any death or change of such primary annuitant shall be treated as the death of an owner. The nonqualified contracts contain provisions intended to comply with these requirements of the Code. No regulations interpreting these requirements of the Code have yet been issued and thus no assurance can be given that the provisions contained in the contracts satisfy all such Code requirements. The provisions contained in the contracts will be reviewed and modified if necessary to assure that they comply with the Code requirements when clarified by regulation or otherwise. Diversification Requirements. Section 817(h) of the Code provides that in order ---------------------------- for a variable contract which is based on a segregated asset account to qualify as an annuity contract under the Code, the investments made by such account must be "adequately diversified" in accordance with Treasury regulations. The Treasury regulations issued under Section 817(h) (Treas. Reg. (S)1.817-5) apply a diversification requirement to each of the subaccounts. The variable account, through its underlying funds and their portfolios, intends to comply with the diversification requirements of the Treasury. Transamerica has entered into agreements with each underlying fund company which requires the portfolios to be operated in compliance with the Treasury regulations. Owner Control. In certain circumstances, owners of variable annuity contracts ------------- may be considered the owners, for federal income tax purposes, of the assets of the variable account used to support their contracts. In those circumstances, income and gains from the variable account assets would be includable in the variable annuity contract owner's gross income. Several years ago, the IRS stated in published rulings that a variable annuity contract owner will be considered the owner of variable account assets if the contract owner possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. More recently, the Treasury Department announced in connection with the issuance of regulations concerning investment diversification, that those regulations "do not provide guidance concerning the circumstances in which investor control of the investments of a segregated asset account may cause the investor (i.e., you), rather than the insurance company, to be treated as the owner of the assets in the account." This announcement also stated that guidance would be issued by way of regulations or rulings on the "extent to which contractholders may direct their investments to particular subaccounts without being treated as owners of the underlying assets." The ownership rights under the contract are similar to, but different in certain respects from those described by the IRS in rulings in which it was determined that contract owners were not owners of variable account assets. For example, you have the choice of more subaccounts in which to allocate premiums and account values, and may be able to transfer among these accounts more frequently than in such rulings. These differences could result in you 16 being treated as the owner of the assets of the variable account. In addition, Transamerica does not know what standards will be set forth, if any, in the regulations or rulings that the Treasury Department has stated it expects to issue. Transamerica therefore reserves the right to modify the contracts as necessary to attempt to prevent you from being considered the owner of a pro rata share of the assets of the variable account. Withholding. The portion of any distribution under a contract that is ------------ includable in gross income will be subject to federal income tax withholding unless the recipient of such distribution elects not to have federal income tax withheld. Election forms will be provided at the time distributions are requested or made. The withholding rate varies according to the type of distribution and the owner's tax status. For qualified contracts, "eligible rollover distributions" from Section 401(a) plans, Section 403(a) annuities, and Section 403(b) tax-sheltered annuities are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is the taxable portion of any distribution from such a plan, except certain distributions such as distributions required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, if the owner chooses a "direct rollover" from the plan to another tax-qualified plan or IRA. Different withholding requirements may apply in the case of non-United States persons. Qualified Contracts. The qualified contract is designed for use with several -------------------- types of tax-qualified retirement plans. The tax rules applicable to participants and beneficiaries in tax-qualified retirement plans vary according to the type of plan and the terms and conditions of the plan. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from contributions in excess of specified limits; distributions prior to age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Some retirement plans are subject to distribution and other requirements that are not incorporated into the contracts or our contract administration procedures. Owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the contracts comply with applicable law. For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the owner (or plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year in which the owner (or plan participant) reaches age 70 1/2. Each owner is responsible for requesting distributions under the contract that satisfy applicable tax rules. Transamerica makes no attempt to provide more than general information about use of the contract with the various types of retirement plans. Purchasers of contracts for use with any retirement plan should consult their legal counsel and tax adviser regarding the suitability of the contract. Individual Retirement Annuities. In order to qualify as a traditional -------------------------------- individual retirement annuity under Section 408(b) of the Code, a contract must contain certain provisions: (i) the owner must be the annuitant; (ii) the contract generally is not transferable by the owner, e.g., the owner may not designate a new owner, designate a contingent owner or assign the contract as collateral security; (iii) the total purchase payments for any calendar year may not exceed $2,000, except in the case of a rollover amount or contribution under Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code; (iv) annuity payments or surrenders must begin no later than April 1 of the calendar year following the calendar year in which the annuitant attains age 70 1/2; (v) an annuity payment option with a period certain that will guarantee annuity payments beyond the life expectancy of the annuitant and the beneficiary may not be selected; and (vi) certain payments of death benefits must be made in the event the annuitant dies prior to the distribution of the account value. Contracts intended to qualify as traditional individual retirement annuities under Section 408(b) of the Code contain such provisions. Amounts in the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. Distributions prior to age 59 1/2 (unless certain exceptions apply) are subject to a 10% penalty tax. No part of the funds for an individual retirement account (including a Roth IRA) or annuity should be invested in a life insurance contract, but the regulations thereunder allow such funds to be invested in an annuity contract that provides a death benefit that equals the greater of the premiums paid or the cash value for the contract. The contract 17 provides an enhanced death benefit that could exceed the amount of such a permissible death benefit, but it is unclear to what extent such an enhanced death benefit could disqualify the contract as an IRA. The Internal Revenue Service has not reviewed the contract for qualification as an IRA, and has not addressed in a ruling of general applicability whether an enhanced death benefit provision, such as the provision in the contract, comports with IRA qualification requirements. Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section ------------------------------------------------ 408A of the Code, contains many of the same provisions as a traditional IRA. However, there are some differences. First, the contributions are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax and other special rules may apply to the rollover or conversion and to distributions attributable thereto. You should consult a tax adviser before combining any converted amounts with any other Roth IRA contributions, including any other conversion amounts from other tax years. The Roth IRA is available to individuals with earned income and whose modified adjusted gross income is under $110,000 for single filers, $160,000 for married filing jointly, and $10,000 for married filing separately. The amount per individual that may be contributed to all IRAs (Roth and traditional) is $2,000. Secondly, the distributions are taxed differently. The Roth IRA offers tax-free distributions when made 5 tax years after the first contribution to any Roth IRA of the individual and made after attaining age 59 1/2, to pay for qualified first time homebuyer expenses (lifetime maximum of $10,000) or due to death or disability. All other distributions are subject to income tax when made from earnings and may be subject to a premature surrender penalty tax unless an exception applies. Unlike the traditional IRA, there are no minimum required distributions during the owner's lifetime; however, required distributions at death are generally the same. Section 403(b) Plans. Under Section 403(b) of the Code, payments made by --------------------- public school systems and certain tax exempt organizations to purchase contracts for their employees are excludable from the gross income of the employee, subject to certain limitations. However, such payments may be subject to FICA (Social Security) taxes. The contract includes a death benefit that in some cases may exceed the greater of the purchase payments or the account value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in any tax-sheltered annuity under Section 403(b). Because the death benefit may exceed this limitation, employers using the contract in connection with such plans should consult their tax adviser. Additionally, in accordance with the requirements of the Code, Section 403(b) annuities generally may not permit distribution of (i) elective contributions made in years beginning after December 31, 1988, and (ii) earnings on those contributions and (iii) earnings on amounts attributed to elective contributions held as of the end of the last year beginning before January 1, 1989. Distributions of such amounts will be allowed only upon the death of the employee, on or after attainment of age 59 1/2, separation from service, disability, or financial hardship, except that income attributable to elective contributions may not be distributed in the case of hardship. Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans. Sections 401(a) ------------------------------------------------------------- and 403(a) of the Code permit corporate employers to establish various types of retirement plans for employees and self-employed individuals to establish qualified plans for themselves and their employees. Such retirement plans may permit the purchase of the contracts to accumulate retirement savings. Adverse tax consequences to the plan, the participant or both may result if the contract is assigned or transferred to any individual as a means to provide benefit payments. The contract includes a death benefit that in some cases may exceed the greater of the purchase payments or the account value. The death benefit could be characterized as an incidental benefit, the amount of which is limited in a pension or profit sharing plan. Because the death benefit may exceed this limitation, employers using the contract in connection with such plans should consult their tax adviser. Deferred Compensation Plans. Section 457 of the Code, while not actually ---------------------------- providing for a qualified plan as that term is normally used, provides for certain deferred compensation plans with respect to service for state governments, local governments, political sub-divisions, agencies, instrumentalities and certain affiliates of such entities, and tax exempt organizations. The contracts can be used with such plans. Under such plans a participant may specify the form of investment in which his or her participation will be made. For non-governmental Section 457 plans, all such investments, however, are owned by, and are subject to, the claims of the general creditors of the sponsoring employer. Depending on the terms of the particular plan, a non-government employer may be entitled to 18 draw on deferred amounts for purposes unrelated to its Section 457 plan obligations. In general, all amounts received under a Section 457 plan are taxable and are subject to federal income tax withholding as wages. Non-natural Persons. Pursuant to Section 72(u) of the Code, an annuity -------------------- contract held by a taxpayer other than a natural person generally will not be treated as an annuity contract under the Code; accordingly, an owner who is not a natural person will recognize as ordinary income for a taxable year the excess of (i) the sum of the account value as of the close of the taxable year and all previous distributions under the contract over (ii) the sum of the purchase payments paid for the taxable year and any prior taxable year and the amounts includable in gross income for any prior taxable year with respect to the contract. For these purposes, the account value at year-end may have to be increased by any positive excess interest adjustment, which could result from a full surrender at such time. There is, however, no definitive guidance on the proper tax treatment of excess interest adjustments, and the owner should contact a competent tax adviser with respect to the potential tax consequences of an excess interest adjustment. Notwithstanding the preceding sentences in this paragraph, Section 72(u) of the Code does not apply to (i) a contract where the nominal owner is not a natural person but the beneficial owner of which is a natural person, (ii) a contract acquired by the estate of a decedent by reason of such decedent's death, (iii) a qualified contract (other than one qualified under Section 457) or (iv) a single-payment annuity where the annuity date is no later than one year from the date of the single purchase payment; instead, such contracts are taxed as described above under the heading "Taxation of Annuities." Taxation of Transamerica Transamerica at present is taxed as a life insurance company under part I of Subchapter L of the Code. The variable account is treated as part of Transamerica and, accordingly, will not be taxed separately as "regulated investment companies" under Subchapter M of the Code. Transamerica does not expect to incur any federal income tax liability with respect to investment income and net capital gains arising from the activities of the variable account retained as part of the reserves under the contract. Based on this expectation, it is anticipated that no charges will be made against the variable account for federal income taxes. If, in future years, any federal income taxes are incurred by Transamerica with respect to the variable account, Transamerica may make a charge to that account. INVESTMENT EXPERIENCE A "net investment factor" is used to determine the value of accumulation units and annuity units, and to determine annuity payment rates. Accumulation Units Allocations of a purchase payment directed to a subaccount are credited in the form of accumulation units. Each subaccount has a distinct accumulation unit value. The number of units credited is determined by dividing the purchase payment or amount transferred to the subaccount by the accumulation unit value of the subaccount as of the end of the valuation period during which the allocation is made. For each subaccount, the accumulation unit value for a given business day is based on the net asset value of a share of the corresponding portfolio of the underlying funds less any applicable charges or fees. Upon allocation to the selected subaccount, purchase payments are converted into accumulation units of the subaccount. The number of accumulation units to be credited is determined by dividing the dollar amount allocated to each subaccount by the value of an accumulation unit for that subaccount as next determined after the purchase payment is received at the administrative and service office or, in the case of the initial purchase payment, when the enrollment form is completed, whichever is later. The value of an accumulation unit for each subaccount was arbitrarily established at $1 at the inception of each subaccount. Thereafter, the value of an accumulation unit is determined as of the close of trading on each day the New York Stock Exchange is open for business. An index (the "net investment factor") which measures the investment performance of a subaccount during a valuation period is used to determine the value of an accumulation unit for the next subsequent valuation period. The net investment factor may be greater or less than or equal to one; therefore, the value of an accumulation unit 19 may increase, decrease or remain the same from one valuation period to the next. You bear this investment risk. The net investment performance of a subaccount and deduction of certain charges affect the accumulation unit value. The net investment factor for any subaccount for any valuation period is determined by dividing (a) by (b) and subtracting (c) from the result, where: (a) is the net result of: (1) the net asset value per share of the shares held in the subaccount determined at the end of the current valuation period, plus (2) the per share amount of any dividend or capital gain distribution made with respect to the shares held in the subaccount if the ex-dividend date occurs during the current valuation period, plus or minus (3) a per share credit or charge for any taxes determined by Transamerica to have resulted during the valuation period from the investment operations of the subaccount; (b) is the net asset value per share of the shares held in the subaccount determined as of the end of the immediately preceding valuation period. (c) is an amount representing the variable account charge and any optional benefit fees, if applicable. Illustration of Variable Account Variable Accumulation Unit Value Calculations (Assumes Double Enhanced Death Benefit) Formula and Illustration for Determining the Net Investment Factor Net Investment Factor = (A + B - C) - E --------------- D Where: A = The net asset value of an underlying fund share as of the end of the current valuation period. Assume A = $11.57 B = The per share amount of any dividend or capital gains distribution since the end of the immediately preceding valuation period. Assume B = 0 C = The per share charge or credit for any taxes reserved for at the end of the current valuation period. Assume C = 0 D = The net asset value of an underlying fund share at the end of the immediately preceding valuation period. Assume D = $11.40 E = The daily deduction for the mortality and expense risk fee and the administrative charge, and any optional benefit fees. Assume E totals 1.45% on an annual basis; On a daily basis, this equals .000039442. Then, the net investment factor = (11.57 + 0 - 0) - .000039442=Z=1.014872839 --------------- (11.40) 20 Formula and Illustration for Determining Variable Accumulation Unit Value Variable Accumulation Unit Value = A * B Where: A = The variable accumulation unit value for the immediately preceding valuation period. Assume = $X B = The net investment factor for the current valuation period. Assume = Y Then, the variable accumulation unit value = $X * Y = $Z Annuity Unit Value and Annuity Payment Rates The amount of variable annuity payments will vary with annuity unit values. Annuity unit values rise if the net investment performance of the subaccount exceeds the assumed investment return of 5% annually. Conversely, annuity unit values fall if the net investment performance of the subaccount is less than the assumed investment return. The value of a variable annuity unit in each subaccount was established at $1.00 on the date operations began for that subaccount. For the variable account, the value of a variable annuity unit on any subsequent business day is equal to (a) multiplied by (b) multiplied by (c), where: (a) is the variable annuity unit value on the immediately preceding business day; (b) is the net investment factor for the valuation period; and (c) is the investment result adjustment factor for the valuation period. The investment result adjustment factor for the valuation period is the product of discount factors of .99986634 per day to recognize the 5% effective assumed investment return. The valuation period is the period from the close of the immediately preceding business day to the close of the current business day. The dollar amount of subsequent variable annuity payments will depend upon changes in applicable annuity unit values. The annuity payment rates vary according to the annuity option elected and the sex and adjusted age of the annuitant at the annuity date. The contract also contains a table for determining the adjusted age of the annuitant. Illustration of Calculations for Annuity Unit Value and Variable Annuity Payments Formula and Illustration for Determining Annuity Unit Value Annuity Unit Value = A * B * C Where: A = annuity unit value for the immediately preceding valuation period. Assume = $X B = Net investment factor for the valuation period for which the annuity unit value is being calculated. Assume = Y C = A factor to neutralize the assumed investment return of 5% built into the Annuity Tables used. Assume = Z Then, the annuity unit value is: $X * Y * Z = $Q 21 Formula and Illustration for Determining Amount of First Monthly Variable Annuity Payment First monthly variable annuity payment = A * B ----- $1,000 Where: A = The adjusted account value as of the annuity date. Assume = $X B = The Annuity purchase rate per $1,000 of adjusted account value based upon the option selected, the sex and adjusted age of the annuitant according to the tables contained in the contract. Assume = $Y Then, the first monthly variable annuity payment = $X * $Y = $Z ------- 1,000 Formula and Illustration for Determining the Number of Annuity Units Represented by Each Monthly Variable Annuity Payment Number of annuity units = A - B Where: A = The dollar amount of the first monthly variable annuity payment. Assume = $X B = The annuity unit value for the valuation date on which the first monthly payment is due. Assume = $Y Then, the number of annuity units = $X = Z --- $Y GUARANTEED MINIMUM INCOME BENEFIT -- ADDITIONAL INFORMATION The amounts shown below are hypothetical guaranteed minimum monthly payment amounts under the "Guaranteed Minimum Income Benefit" for a $100,000 premium when annuity payments do not begin until the contract anniversary indicated in the left-hand column. These figures assume the following: . there were no subsequent purchase payments or surrenders; . there were no premium taxes; . the $100,000 premium is subject to the Guaranteed Minimum Income Benefit; . the annuitant is (or both annuitants are) 60 years old when the rider is issued; . the annual growth rate is 6.0% (once established, an annual growth rate will not change during the life of the Guaranteed Minimum Income Benefit rider); . there was no upgrade of the minimum annuitization value; and . the account value did not grow higher than an annual growth rate of 6% (no annual step-ups are factored in). Six different annuity payment options are illustrated: a male annuitant, a female annuitant and a joint and survivor annuity, each on a Life Only and a Life with 10-Year Certain basis. The figures below, which are the amount of the first monthly payment, are based on an assumed investment return of 3%. If the guaranteed minimum payment option is also elected at the time of annuitization, subsequent payments will never be less than the amount of the first payment (although subsequent payments are calculated using a 5% assumed investment return). If the guaranteed minimum payment option is not elected, subsequent payments may fluctuate and may be less than the initial payment. 22 Life Only = Life Annuity with No Period Certain Life 10 = Life Annuity with 10 Years Certain
-------------------------------------------------------------------------------------------------------------------------- Rider Anniversary at Exercise Date Male Female Joint & Survivor -------------------------------------------------------------------------------------------------------------------------- Life Only Life 10 Life Only Life 10 Life Only Life 10 -------------------------------------------------------------------------------------------------------------------------- 7 (age 67) $ 953 $ 896 $ 819 $ 797 $ 717 $ 715 -------------------------------------------------------------------------------------------------------------------------- 15 1,833 1,634 1,562 1,469 1,332 1,318 -------------------------------------------------------------------------------------------------------------------------- 20 (age 80) 3,049 2,479 2,597 2,286 2,145 2,078 --------------------------------------------------------------------------------------------------------------------------
This hypothetical illustration should not be deemed representative of past or future performance of any underlying variable investment option. Surrenders will affect the minimum annuitization value as follows: Each contract year, surrenders will reduce the minimum annuitization value on a pro rata basis by an amount equal to the minimum annuitization value immediately prior to the surrender multiplied by the percentage reduction in the account value resulting from the surrender. Examples of the effect of surrenders on the minimum annuitization value are as follows:
-------------------------------------------------------------------------------------------------------------------------- EXAMPLE 1 -------------------------------------------------------------------------------------------------------------------------- Assumptions -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value on last contract anniversary: $ 10,000 -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value at time of distribution: $ 10,500 -------------------------------------------------------------------------------------------------------------------------- . account value at time of distribution: $ 15,000 -------------------------------------------------------------------------------------------------------------------------- . distribution amount: $ 1,500 -------------------------------------------------------------------------------------------------------------------------- Calculations -------------------------------------------------------------------------------------------------------------------------- . account value after distribution: $15,000 - $1,500 = $13,500 -------------------------------------------------------------------------------------------------------------------------- (since the account value is reduced 10% ($1,500/$15,000), the minimum annuitization value is also reduced 10%) -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value after distribution: $10,500 - (10% x $10,500) = $9,450 -------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------- EXAMPLE 2 -------------------------------------------------------------------------------------------------------------------------- Assumptions -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value on last contract anniversary: $ 10,000 -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value at time of distribution: $ 10,500 -------------------------------------------------------------------------------------------------------------------------- . account value at time of distribution: $ 7,500 -------------------------------------------------------------------------------------------------------------------------- . distribution amount: $ 1,500 -------------------------------------------------------------------------------------------------------------------------- Calculations -------------------------------------------------------------------------------------------------------------------------- . account value after distribution: $7,500 - $1,500 = $6,000 -------------------------------------------------------------------------------------------------------------------------- (since the account value is reduced 20% ($1,500/$7,500), the minimum annuitization value is also reduced 20%) -------------------------------------------------------------------------------------------------------------------------- . minimum annuitization value after distribution: $10,500 - (20% x $10,500) = $8,400 --------------------------------------------------------------------------------------------------------------------------
The amount of the first payment provided by the Guaranteed Minimum Income Benefit will be determined by multiplying each $1,000 of minimum annuitization value by the applicable annuity factor shown on Schedule I of the Guaranteed Minimum Income Benefit. The applicable annuity factor depends upon the annuitant's (and joint annuitant's, if any) sex (or without regard to gender if required by law), age, and the Guaranteed Minimum Income Benefit payment option selected and is based on a guaranteed interest rate of 3% and the "2000 Table", using an assumed annuity date of 2005 (static projection to this point) with dynamic projection using scale G from that point (100% of G for male, 50% of G for females). Subsequent payments will be calculated as described in the rider using a 5% assumed investment return. Subsequent payments may fluctuate annually in accordance with the investment performance of the annuity subaccounts if the guaranteed minimum payment option is elected at annuitization. However, subsequent payments are guaranteed to never be less than the initial payment. 23 If you elect the guaranteed minimum payment option, the stabilized payment on each subsequent contract anniversary after annuitization using the rider will equal the greater of the initial payment or the payment supportable by the annuity units in the selected subaccounts. The supportable payment is equal to the number of variable annuity units in the selected subaccounts multiplied by the variable annuity unit values in those subaccounts on the date the payment is made. The variable annuity unit values used to calculate the supportable payment will assume a 5% assumed investment return. If the supportable payment at any payment date during a contract year is greater than the stabilized payment for that contract year, the excess will be used to purchase additional annuity units. Conversely, if the supportable payment at any payment date during a contract year is less than the stabilized payment for that contract year, there will be a reduction in the number of annuity units credited to the contract to fund the deficiency. In the case of a reduction, you will not participate as fully in the future investment performance of the subaccounts you selected since fewer annuity units are credited to your contract. Purchases and reductions will be allocated to each subaccount on a proportionate basis. Transamerica bears the risk that it will need to make payments if all annuity units have been used in an attempt to maintain the stabilized payment at the initial payment level. In such an event, Transamerica will make all future payments equal to the initial payment. Once all the annuity units have been used, the amount of your payment will not increase or decrease and will not depend upon the performance of any subaccounts. To compensate Transamerica for this risk, a guaranteed minimum payment fee will be deducted. TAX RELIEF RIDER -- ADDITIONAL INFORMATION The following example illustrates the Tax Relief Rider additional death benefit payable by this rider as well as the effect of a partial surrender on the Tax Relief Rider benefit amount. Example 1 ------------------------------------------------------------------------------------------------------------------ account value on the rider date: $100,000 ------------------------------------------------------------------------------------------------------------------ premiums paid after the rider date before surrender: $ 25,000 ------------------------------------------------------------------------------------------------------------------ gross partial surrenders after the rider date: $ 30,000 ------------------------------------------------------------------------------------------------------------------ death benefit on date of surrender $150,000 ------------------------------------------------------------------------------------------------------------------ rider earnings on date of surrender (death benefit - account value on rider date - premiums $ 25,000 paid after rider date = $150,000 - $100,000 - $25,000): ------------------------------------------------------------------------------------------------------------------ amount of surrender that exceeds rider earnings ($30,000 - $25,000): $ 5,000 ------------------------------------------------------------------------------------------------------------------ base contract death benefit on the date of death benefit calculation: $200,000 ------------------------------------------------------------------------------------------------------------------ rider earnings (= death benefit - account value on rider date - premiums since rider date + $ 80,000 surrenders since rider date that exceeded rider earnings at time of surrender = $200,000 - $100,000 - $25,000 + $5,000): ------------------------------------------------------------------------------------------------------------------ additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $ 32,000 $80,000): ------------------------------------------------------------------------------------------------------------------ total death benefit paid (=base contract death benefit plus additional death benefit amount: $232,000 ------------------------------------------------------------------------------------------------------------------
24 Example 2 ------------------------------------------------------------------------------------------------------------------ account value on the rider date: $100,000 ------------------------------------------------------------------------------------------------------------------ premiums paid after the rider date before surrender: $ 0 ------------------------------------------------------------------------------------------------------------------ gross partial surrenders after the rider date: $ 0 ------------------------------------------------------------------------------------------------------------------ base contract death benefit on the date of death benefit calculation: $ 75,000 ------------------------------------------------------------------------------------------------------------------ rider earnings = (death benefit - account value on rider date - premiums since rider date + $ 0 surrenders since rider date that exceeded rider earnings at time of surrender = $75,000 - $100,000 - $0 + $0): ------------------------------------------------------------------------------------------------------------------ additional death benefit amount (= additional death benefit factor * rider earnings = 40%* $0): $ 0 ------------------------------------------------------------------------------------------------------------------ total death benefit paid (=base contract death benefit plus additional death benefit amount: $ 75,000 ------------------------------------------------------------------------------------------------------------------
HISTORICAL PERFORMANCE DATA Money Market Yields Transamerica may from time to time disclose the current annualized yield of the Money Market Subaccount, which invests in the Money Market Portfolio, for a 7- day period in a manner which does not take into consideration any realized or unrealized gains or losses on shares of the Money Market Portfolio or on its portfolio securities. This current annualized yield is computed by determining the net change (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) at the end of the 7-day period in the value of a hypothetical account having a balance of 1 unit of the Money Market Subaccount at the beginning of the 7-day period, dividing such net change in account value by the value of the account at the beginning of the period to determine the base period return, and annualizing this quotient on a 365-day basis. The net change in account value reflects (i) net income from the portfolio attributable to the hypothetical account; and (ii) charges and deductions imposed under a contract that are attributable to the hypothetical account. The charges and deductions include the per unit charges for the hypothetical account for (i) the administrative charges and (ii) the mortality and expense risk fee. Current yield will be calculated according to the following formula: Current Yield = ((NCS * ES)/UV) * (365/7) Where: NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of 1 subaccount unit. ES = Per unit expenses of the subaccount for the 7-day period. UV = The unit value on the first day of the 7-day period. Because of the charges and deductions imposed under a contract, the yield for the Money Market Subaccount will be lower than the yield for the Money Market Portfolio. The yield calculations do not reflect the effect of any premium taxes that may be applicable to a particular contract. Transamerica may also disclose the effective yield of the Money Market Subaccount for the same 7-day period, determined on a compounded basis. The effective yield is calculated by compounding the base period return according to the following formula: Effective Yield = (1 + ((NCS - ES)/UV))/365/7/ - 1 25 Where: NCS = The net change in the value of the portfolio (exclusive of realized gains and losses on the sale of securities and unrealized appreciation and depreciation and income other than investment income) for the 7-day period attributable to a hypothetical account having a balance of 1 subaccount unit. ES = Per unit expenses of the subaccount for the 7-day period. UV = The unit value on the first day of the 7-day period. The yield on amounts held in the Money Market Subaccount normally will fluctuate on a daily basis. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The Money Market Subaccount's actual yield is affected by changes in interest rates on money market securities, average portfolio maturity of the Money Market Portfolio, the types and quality of portfolio securities held by the Money Market Portfolio and its operating expenses. For the seven days ended December 31, 2001, the yield of the Money Market Subaccount was _____%, and the effective yield was _____% for the Greater of 5% Annually Compounding through age 85 Death Benefit or Annual Step-Up through age 85 Death Benefit. There is no yield or effective yield for the Double Enhanced Death Benefit or Return of Premium Death Benefit for the seven days ended December 31, 2001, because those death benefits were not available during that period. Other Subaccount Yields Transamerica may from time to time advertise or disclose the current annualized yield of one or more of the subaccounts (except the Money Market Subaccount) for 30-day periods. The annualized yield of a subaccount refers to income generated by the subaccount over a specific 30-day period. Because the yield is annualized, the yield generated by a subaccount during the 30-day period is assumed to be generated each 30-day period over a 12-month period. The yield is computed by: (i) dividing the net investment income of the subaccount less subaccount expenses for the period, by (ii) the maximum offering price per unit on the last day of the period times the daily average number of units outstanding for the period, (iii) compounding that yield for a 6-month period, and (iv) multiplying that result by 2. Expenses attributable to the subaccount include (i) the administrative charges and (ii) the mortality and expense risk fee. The 30-day yield is calculated according to the following formula: Yield = 2 * ((((NI - ES)/(U - UV)) + 1)/6/ -1) Where: NI = Net investment income of the subaccount for the 30-day period attributable to the subaccount's unit. ES = Expenses of the subaccount for the 30-day period. U = The average number of units outstanding. UV = The unit value at the close (highest) of the last day in the 30-day period. Because of the charges and deductions imposed by the variable account, the yield for a subaccount will be lower than the yield for its corresponding portfolio. The yield calculations do not reflect the effect of any premium taxes that may be applicable to a particular contract. The yield on amounts held in the subaccounts normally will fluctuate over time. Therefore, the disclosed yield for any given past period is not an indication or representation of future yields or rates of return. The types and quality of its investments and its operating expenses affect a subaccount's actual yield. Total Returns Transamerica may from time to time also advertise or disclose total returns for one or more of the subaccounts for various periods of time. One of the periods of time will include the period measured from the date the subaccount commenced operations. When a subaccount has been in operation for 1, 5 and 10 years, respectively, the total return for these periods will be provided. Total returns for other periods of time may from time to time also be disclosed. Total returns represent the average annual compounded rates of return that would equate an initial investment of $1,000 to the redemption value of that investment as of the last day of each of the periods. The ending date for each 26 period for which total return quotations are provided will be for the most recent month end practicable, considering the type and media of the communication and will be stated in the communication. Total returns will be calculated using subaccount unit values which Transamerica calculates on each business day based on the performance of the variable account's underlying portfolio and the deductions for the mortality and expense risk fee and the administrative charges. Total return calculations will reflect the effect of surrender charges that may be applicable to a particular period. The total return will then be calculated according to the following formula: P (1 + T)/N/ = ERV Where: T = The average annual total return net of subaccount recurring charges. ERV = The ending redeemable value of the hypothetical account at the end of the period. P = A hypothetical initial payment of $1,000. N = The number of years in the period. Other Performance Data Transamerica may from time to time also disclose average annual total returns in a non-standard format in conjunction with the standard format described above. The non-standard format will be identical to the standard format except that the surrender charge percentage will be assumed to be 0%. Transamerica may from time to time also disclose cumulative total returns in conjunction with the standard format described above. The cumulative returns will be calculated using the following formula. CTR = (ERV / P)-1 Where: CTR = The cumulative total return net of subaccount recurring charges for the period. ERV = The ending redeemable value of the hypothetical investment at the end of the period. P = A hypothetical initial payment of $1,000. All non-standard performance data will only be advertised if the standard performance data is also disclosed. Adjusted Historical Performance Data From time to time, sales literature or advertisements may quote average annual total returns for periods prior to the date a particular subaccount commenced operations. Such performance information for the subaccounts will be calculated based on the performance of the various portfolios and the assumption that the subaccounts were in existence for the same periods as those indicated for the portfolios, with the level of contract charges that are currently in effect. PUBLISHED RATINGS Transamerica may from time to time publish in advertisements, sales literature and reports to owners, the ratings and other information assigned to it by one or more independent rating organizations such as A.M. Best Company, Standard & Poor's Insurance Ratings Services, Moody's Investors Service and Fitch Financial Ratings. The purpose of the ratings is to reflect the financial strength of Transamerica. The ratings should not be considered as bearing on the safety or investment performance of assets held in the variable account or of the safety or riskiness of an investment in the variable account. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. In addition, these ratings may be referred to in advertisements or sales literature or in reports to 27 owners. These ratings are opinions of an operating insurance company's financial capacity to meet the obligations of its insurance contracts in accordance with their terms. STATE REGULATION OF TRANSAMERICA Transamerica is subject to the laws of Iowa governing insurance companies and to regulation by the Iowa Division of Insurance. An annual statement in a prescribed form is filed with the Division of Insurance each year covering the operation of Transamerica for the preceding year and its financial condition as of the end of such year. Regulation by the Division of Insurance includes periodic examination to determine Transamerica's contract liabilities and reserves so that the Division may determine the items are correct. Transamerica's books and accounts are subject to review by the Division of Insurance at all times and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. In addition, Transamerica is subject to regulation under the insurance laws of other jurisdictions in which it may operate. ADMINISTRATION Transamerica performs administrative services for the contracts. These services include issuance of the contracts, maintenance of records concerning the contracts, and certain valuation services. RECORDS AND REPORTS All records and accounts relating to the variable account will be maintained by Transamerica. As presently required by the 1940 Act, as amended, and regulations promulgated thereunder, Transamerica will mail to all owners at their last known address of record, at least annually, reports containing such information as may be required under that Act or by any other applicable law or regulation. Owners will also receive confirmation of each financial transaction and any other reports required by law or regulation. However, for certain routine transactions (for example, regular monthly premiums deducted from your checking account, or regular annuity payments Transamerica sends to you) you may only receive quarterly confirmations. DISTRIBUTION OF THE CONTRACTS The contracts are offered to the public through brokers licensed under the federal securities laws and state insurance laws. The offering of the contracts is continuous and Transamerica does not anticipate discontinuing the offering of the contracts, however, Transamerica reserves the right to do so. Prior to May 1, 2002, the co-principal underwriters of the contracts were Transamerica Securities Sales Corporation ("TSSC") and Transamerica Financial Resources, Inc. ("TFR"). During fiscal years 2001, 2000 and 1999, $________________, $40,610,303.06 and $17,147,205.77, respectively, in commissions was paid to TSSC and TFR as co-underwriters of the contracts; no amounts were retained by TSSC or TFR. As of May 1, 2002, AFSG Securities Corporation, an affiliate of Transamerica, is the principal underwriter of the contracts and may enter into agreements with broker-dealers for the distribution of the contracts. VOTING RIGHTS To the extent required by law, Transamerica will vote the underlying funds' shares held by the variable account at special shareholder meetings of the underlying funds in accordance with instructions received from persons having voting interests in the portfolios, although none of the underlying funds hold regular annual shareholder meetings. If, however, the 1940 Act or any regulation thereunder should be amended or if the present interpretation thereof should change, and as a result Transamerica determines that it is permitted to vote the underlying funds shares in its own right, it may elect to do so. Before the annuity date, you hold the voting interest in the selected portfolios. The number of votes that you have the right to instruct will be calculated separately for each subaccount. The number of votes that you have the right to instruct for a particular subaccount will be determined by dividing your account value in the subaccount by the net 28 asset value per share of the corresponding portfolio in which the subaccount invests. Fractional shares will be counted. After the annuity date, the person receiving annuity payments has the voting interest, and the number of votes decreases as annuity payments are made and as the reserves for the contract decrease. The person's number of votes will be determined by dividing the reserve for the contract allocated to the applicable subaccount by the net asset value per share of the corresponding portfolio. Fractional shares will be counted. The number of votes that you or the person receiving income payments has the right to instruct will be determined as of the date established by the underlying fund for determining shareholders eligible to vote at the meeting of the underlying fund. Transamerica will solicit voting instructions by sending you, or other persons entitled to vote, written requests for instructions prior to that meeting in accordance with procedures established by the underlying fund. Portfolio shares as to which no timely instructions are received and shares held by Transamerica in which you, or other persons entitled to vote, have no beneficial interest will be voted in proportion to the voting instructions that are received with respect to all contracts participating in the same subaccount. Each person having a voting interest in a subaccount will receive proxy material, reports, and other materials relating to the appropriate portfolio. OTHER PRODUCTS Transamerica makes other variable annuity contracts available that may also be funded through the variable account. These variable annuity contracts may have different features, such as different investment options or charges. CUSTODY OF ASSETS Transamerica holds assets of each of the subaccounts. The assets of each of the subaccounts are segregated and held separate and apart from the assets of the other subaccounts and from Transamerica's general account assets. Transamerica maintains records of all purchases and redemptions of shares of the underlying funds held by each of the subaccounts. Additional protection for the assets of the variable account is afforded by Transamerica's fidelity bond, presently in the amount of $5,000,000, covering the acts of officers and employees of Transamerica. LEGAL MATTERS Sutherland Asbill & Brennan LLP, of Washington D.C. has provided legal advice to Transamerica relating to certain matters under the federal securities laws applicable to the issue and sale of the contracts. INDEPENDENT AUDITORS The statutory-basis financial statements and schedules of Transamerica Occidental Life Insurance Company as of December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and the financial statements of certain subaccounts of Separate Account VA-2L, which are available for investment by the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity contract owners as of December 31, 2000, and for each of the two years in the period then ended, included in this Statement of Additional Information have been audited by Ernst & Young LLP, Independent Auditors, 801 Grand Avenue, Suite 3400, Des Moines, Iowa 50309. OTHER INFORMATION A registration statement has been filed with the SEC, under the Securities Act of 1933 as amended, with respect to the contracts discussed in this SAI. Not all of the information set forth in the Registration Statement, amendments and exhibits thereto has been included in the prospectus or this SAI. Statements contained in the prospectus and this SAI concerning the content of the contracts and other legal instruments are intended to be summaries. For a 29 complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC. FINANCIAL STATEMENTS The values of your interest in the variable account will be affected solely by the investment results of the selected subaccount(s). Financial statements of certain subaccounts of Separate Account VA-2L, which are available for investment by the Dreyfus/Transamerica Triple Advantage(R) Variable Annuity contract owners, are contained herein. The statutory-basis financial statements of Transamerica Occidental Life Insurance Company, which are included in this SAI, should be considered only as bearing on the ability of Transamerica to meet its obligations under the contracts. They should not be considered as bearing on the investment performance of the assets held in the variable account. 30 PART C Other Information Item 24. Financial Statements and Exhibits (a) Financial Statements All required financial statements are included in Parts A and B of this Registration Statement. (b) Exhibits (1) Resolution of the Board of Directors of Transamerica Occidental Life Insurance Company ("Transamerica") authorizing establishment of the Variable Account. (1) (2) Not Applicable. (3) (a) Master Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance, Transamerica Financial Resources, Inc., Dreyfus Service Corporation, and Dreyfus Service Organization, Inc. (4) (b) Principal Agency Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Organization, Inc. (4) (c) Distribution Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Corporation. (4) (d) Form of Sales Agreement among Dreyfus Service Corporation, Dreyfus Service Organization, Inc., and Broker-Dealers. (4) (e) Amendment Dated as of August 31, 1993, to Master Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Financial Resources, Inc., Dreyfus Service Corporation and Dreyfus Service Organization, Inc. (6) (f) Amendment Dated as of August 31, 1993 to Principal Agency Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Organization, Inc. (6) (g) Amendment Dated as of August 31, 1993 to Distribution Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Service Corporation. (6) (h) Distribution Agreement between Transamerica Occidental Life Insurance Company and Transamerica Insurance Securities Sales Corporation, dated as of August 24, 1994. (8) (i) Sales Agreement among Transamerica Insurance Securities Sales Corporation, Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (j) Services Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Insurance Securities Sales Corporation, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (k) Services Agreement among Transamerica Occidental Life Insurance Company, First Transamerica Life Insurance Company, Transamerica Insurance Securities Sales Corporation, Dreyfus Service Corporation, and Dreyfus Service Organization, Inc., dated as of August 24, 1994. (8) (l) Form of Sales Agreement between Transamerica Occidental Life Insurance Company, Transamerica Life Insurance and Annuity Company, First Transamerica Life Insurance Company and Transamerica Securities Sales Corporation. (10) (m) Principal Underwriting Agreement by and between Transamerica Occidental Life Insurance Company, on its own behalf and on the behalf of Mutual Fund Account, and AFSG Securities Corporation. (18) (n) Amendment to Principal Underwriting Agreement. (22) (4) Group Contract Form, Certificate Form, Individual Contract Form and Endorsements. (a) Contract form and Endorsements. (5) (i) Form of Flexible Purchase Payment Multi-Funded Deferred Master Group Annuity Contract. (5) (ii) Form of Automatic Payout Option Endorsement to Group Contract. (5) (iii) Form of Dollar Cost Averaging Option Endorsement to Group Contract. (5) (iv) Form of Systematic Withdrawal Option Endorsement to Group Contract. (5) (v) Form of Guaranteed Minimum Death Benefit Endorsement to Group Contract. (5) (vi) Form of Fixed Account Rider to Group Contract. (7) (vii) Form of Tax Relief Rider. (21) (b) Certificate of Participation Form and Endorsements. (5) (i) Form of Certificate of Participation. (5) (ii) Form of IRA Endorsement to Certificate. (5) (iii) Form of Dollar Cost Averaging Option Endorsement to Certificate. (5) (iv) Form of Systematic Withdrawal Option Endorsement to Certificate. (5) (v) Form of Automatic Payout Option Endorsement to Certificate. (5) (vi) Form of Benefit Distribution Endorsement to Certificate. (5) (vii) Form of Death Benefit Endorsement to Group Contract. (14) (viii) Form of Individual Purchase Payment Endorsement. (14) (ix) Form of Guaranteed Minimum Income Builder Rider. (14) (x) Form of Tax Relief Rider.(21) (c) Individual Contract Form and Endorsements. (6) (i) Form of Flexible Purchase Payment Multi-Funded Deferred Individual Annuity Contract. (6) (ii) Form of IRA Endorsement to Individual Contract. (6) (iii) Form of Benefit Distribution Endorsement. (6) (iv) Form of Dollar Cost Averaging Option Endorsement to Individual Contract. (6) (v) Form of Systematic Withdrawal Option Endorsement to Individual Contract. (6) (vi) Form of Automatic Payout Option Endorsement to Individual Contract. (6) (vii) Form of Guaranteed Minimum Death Benefit Endorsement to Individual Contract. (6) (viii) Form of Fixed Account Rider to Individual Contract. (7) (x) Form of Death Benefit Endorsement. (14) (xi) Form of Initial Purchase Payment Endoresment. (14) (xii) Form of Guaranteed Minimum Income Benefit Rider. (14) (xiii) Form of Tax Relief Rider.(21) (d) Individual Contract Form and Endorsements. (22) (5) (a) Form of Application for and Acceptance of Group Annuity Contract. (5) (b) Form of Application for Enrollment under Group Annuity Contract. (5) (c) Form of Application for Individual Annuity Contract. (6) (d) Form of Application for Individual Contract. (22) (6) (a) Restated Articles of Incorporation of Transamerica. (1) (a)(1) Articles of Redomestication and Reincorporation of Transamerica Occidental Life Insurance Company. (16) (b) Restated By-Laws of Transamerica. (1) (b)(1) Amended and Restated By-Laws of Transamerica Occidental Life Insurance Company. (16) (7) Not Applicable. (8) (a) Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (4) (b) Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Life and Annuity Index Fund, Inc. (4) (c) Participation Agreement between Transamerica Occidental Life Insurance Company and The Dreyfus Socially Responsible Growth Fund, Inc. (6) (d) Administrative Services Agreement between Transamerica Occidental Life Insurance Company and Vantage Computer Systems, Inc. (4) (e) Amendment Dated as of August 31, 1993 to Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (6) (f) Amendment Dated as of August 31, 1993 to Participation Agreement between Transamerica Occidental Life Insurance Company and Dreyfus Life and Annuity Index Fund, Inc. (6) (g) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of March 3, 1993, As Amended, between Transamerica Occidental Life Insurance Company and Dreyfus Variable Investment Fund. (8) (g)(1) Fund Participation Agreement (Dreyfus). (19) (2) Amendment to Fund Participation Agreement. (19) (h) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of August 31, 1993 between Transamerica Occidental Life Insurance Company and Dreyfus Socially Responsible Growth Fund, Inc. (8) (i) Amendment Dated as of August 24, 1994 to Participation Agreement Dated as of March 3, 1993, As Amended, between Transamerica Occidental Life Insurance Company and Dreyfus Stock Index Fund. (8) (j) Form of Participation Agreement (Transamerica). (20) (9) (a) Opinion and Consent of Counsel. (9) (b) Consent of Counsel. (11) (10) (a) Consent of Independent Auditors. (22) (b) Opinion and Consent of Actuary. (22) (11) No financial statements are omitted from item 23. (12) Not applicable. (13) Performance Data Calculations. (6) (14) Not applicable. (15) Powers of Attorney. Frank Beardsley (12) Richard N. Latzer (15) Thomas J. Cusak (11) Karen MacDonald (15) James W. Dederer (15) Gary U. Rolle' (15) Paul E. Rutledge III (15) T. Desmond Sugrue (11) George A. Foegele (15) Nooruddin S. Veerjee (15) David E. Gooding (15) Robert A. Watson (11) Edgar H. Grubb (11) Frank C. Herringer (11) Patrick S. Baird (15) Brenda K. Clancy (15) Douglas C. Kolsrud (15) Craig D. Vermie (15) Ron F. Wagley (17) Bruce Clark (17) (1) Filed with initial filing of this form N-4 Registration Statement, File No. 33-49998 (July 24, 1992). (2) Incorporated by reference to Exhibit 7(c) of Post-Effective Amendment No.1 to the Registration Statement of Transamerica Occidental Life Insurance Company's Separate Account VL on Form S-6, File No. 33-28107 (April 30, 1990) (3) Incorporated by reference to Exhibit 7(d) of Post-Effective Amendment No. 2 to the Registration Statement of Transamerica Occidental Life Insurance Company's Separate Account VL on Form S-6, File No. 33-28107 (April 30, 1991) (4) Filed with Post-Effective Amendment No. 1 to this Form N-4 Registration Statement, File No. 33-49998 (April 30, 1993). (5) Filed with Post-Effective Amendment No. 3 to this Form N-4 Registration Statement, File No. 33-49998 (March 8, 1994). (6) Filed with Post-Effective Amendment No. 4 to this Form N-4 Registration Statement, File No. 33-49998 (April 29, 1994). (7) Filed with Post-Effective Amendment No. 5 to this Form N-4 Registration Statement, File No. 33-49998 (March 1, 1995). (8) Filed with Post-Effective Amendment No. 6 to this Form N-4 Registration Statement File No. 33-49998 (April 28, 1995). (9) Filed with Post-Effective Amendment No. 7 to this Form N-4 Registration Statement File No. 33-49998 (April 26, 1996). (10) Filed with Post-Effective Amendment No. 8 to this Form N-4 Registration Statement File No. 33-49998 (April 28, 1997). (11) Filed with Post-Effective Amendment No. 9 to this Form N-4 Registration Statement file No. 33-49998 (April 28, 1998). (12) Filed with Post-Effective Amendment No. 10 to this Form N-4 Registration Statement file No. 33-49998 (February 26, 1999). (13) Filed with Post-Effective Amendment No. 11 to this Form N-4 Registration Statement file No. 33-49998 (April 28, 1999). (14) Filed with Post-Effective Amendment No. 13 to this Form N-4 Registration Statement file No. 33-49998 (December 6, 1999). (15) Filed with Post-Effective Amendment No. 14 to this Form N-4 Registration Statement file No 33-49998 (April 28, 2000) (16) Filed with Post-Effective Amendment No 16 to this Form N-4 Registration Statement file No. 33-49998 (February 9, 2001) (17) Filed with Post-Effective Amendment No. 17 to this Form N-4 Registration Statement file No. 33-49998 (April 27, 2001) (18) Incorporated by reference to the Initial Filing of Form S-6 Registration Statement (File No. 333-91851) filed on November 30, 1999. (19) Incorporated by reference to Pre-Effective Amendment No. 1 to N-4 Registration Statement (File No. 333-63086) filed on September 13, 2001. (20) Incorporated by reference to Post-Effective Amendment No. 26 to N-4 Registration Statement (file No. 33-33085) filed on October 2, 2001. (21) Filed herewith. (22) To be filed by Amendment. Item 25. List of Directors and Officers of the Depositor Principal Positions and Name Offices with Depositor ---- ---------------------- Patrick S. Baird Director Ron F. Wagley Director, President - Insurance Products Division Brenda K. Clancy Director, Senior Vice President, Corporate Douglas C. Kolsrud Director, Senior Vice President, Investment Division Karen MacDonald Executive Vice President and Chief Operating Officer Craig D. Vermie Director, Vice President and Counsel, Corporate Bruce Clark Chief Financial Officer and Senior Vice President Frank A. Camp Vice President and Financial Markets Division General Counsel Item 26. Persons Controlled by or under Common Control With the Depositor or Registrant.
Jurisdiction of Percent of Voting Name Incorporation Securities Owned Business ---- --------------- ----------------- -------- AEGON N.V. Netherlands 51.16% of Vereniging Holding company AEGON Netherlands Membership Association Groninger Financieringen B.V. Netherlands 100% AEGON N.V. Holding company AEGON Netherland N.V. Netherlands 100% AEGON N.V. Holding company AEGON Nevak Holding B.V. Netherlands 100% AEGON N.V. Holding company AEGON International N.V. Netherlands 100% AEGON N.V. Holding company Voting Trust Trustees: Delaware Voting Trust K.J.Storm Donald J. Shepard H.B. Van Wijk Dennis Hersch AEGON U.S. Holding Corporation Delaware 100% Voting Trust Holding company Short Hills Management Company New Jersey 100% AEGON U.S. Holding company Holding Corporation COPRA Reinsurance Company New York 100% AEGON U.S. Holding company Holding Corporation AEGON Management Company Indiana 100% AEGON U.S. Holding company Holding Corporation AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company RCC North America Inc. Delaware 100% AEGON U.S. Real estate Transamerica Holding Company Delaware 100% AEGON USA, Inc. Holding company AEGON Funding Corp. Delaware 100% Transamerica Issue debt Holding Corporation securities-net proceeds used to make loans to affiliates First AUSA Life Insurance Maryland 100% Transamerica Holding Insurance holding Company Company company AUSA Life Insurance New York 82.33% First AUSA Life Insurance Company, Inc. Insurance Company 17.67% Veterans Life Insurance Company Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance Company of America
Life Investors Alliance, LLC Delaware 100% LIICA Purchase, own, and hold the equity interest of other entities Great American Insurance Iowa 100 % LIICA Marketing Agency, Inc. Bankers United Life Iowa 100% Life Investors Insurance Assurance Company Insurance Company of America Transamerica Life Insurance Iowa 100% First AUSA Life Ins. Co. Insurance Company AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing Group, Inc. AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of of Kentucky Services Group, Inc. structured settlements AEGON Assignment Corporation Illinois 100% AEGON Financial Administrator of Services Group, Inc. structured settlements Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance First AUSA Life Ins. Co. Iowa Fidelity Life Insurance Arizona 100% of Common Voting Stock Insurance Co. First AUSA Life Ins. Co. Western Reserve Life Ohio 100% First AUSA Life Ins. Co. Insurance Assurance Co. of Ohio WRL Series Fund, Inc. Maryland Various Mutual fund WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides Assurance Co. of Ohio administration for affiliated mutual fund WRL Investment Florida 100% Western Reserve Life Registered Management, Inc. Assurance Co. of Ohio Investment advisor ISI Insurance Agency, Inc. California 100% Western Reserve Life Insurance agency and Subsidiaries Assurance Co. of Ohio ISI Insurance Agency Alabama 100% ISI Insurance Agency, Insurance agency of Alabama, Inc. Inc. ISI Insurance Agency Ohio 100% ISI Insurance Agency, Insurance agency of Ohio, Inc. Inc. ISI Insurance Agency Massachusetts 100% ISI Insurance Agency, Insurance agency of Massachusetts, Inc. Inc. ISI Insurance Agency Texas 100% ISI Insurance Agency, Insurance agency of Texas, Inc. Inc.
ISI Insurance Agency Hawaii 100% ISI Insurance Agency, Insurance agency of Hawaii, Inc. Inc. ISI Insurance Agency New Mexico 100% ISI Insurance Agency, Insurance agency of New Mexico, Inc. Inc. AEGON Equity Group, Inc. Florida 100% Western Reserve Life Insurance agency Assurance Co. of Ohio Monumental General Casualty Maryland 100% First AUSA Life Ins. Co. Insurance Co. United Financial Services, Maryland 100% First AUSA Life Ins. Co. General agency Inc. Bankers Financial Life Ins. Arizona 100% First AUSA Life Ins. Co. Insurance Co. The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency Cadet Holding Corp. Iowa 100% First AUSA Life Ins. Co. Holding company Monumental General Life Puerto Rico 51% First AUSA Life Insurance Insurance Company of Insurance Company Puerto Rico 49% Baldrich & Associates of Puerto Rico AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company Group, Inc. Trip Mate Insurance Agency, Kansas 100% Monumental General Sale/admin. of Inc. Insurance Group, Inc. travel insurance Monumental General Maryland 100% Monumental General Provides management Administrators, Inc. Insurance Group, Inc. srvcs. to unaffiliated third party administrator National Association Maryland 100% Monumental General Provides actuarial Management and Consultant Administrators, Inc. consulting services Services, Inc. Monumental General Mass Maryland 100% Monumental General Marketing arm for Marketing, Inc. Insurance Group, Inc. sale of mass marketed insurance coverage Transamerica Capital, Inc. California 100% AUSA Holding Co. Broker/Dealer Endeavor Management Company California 100% AUSA Holding Co. Investment Management Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of America, Inc. automobile extended maintenance contracts Massachusetts Fidelity Trust Iowa 100% AUSA Holding Co. Trust company Co. Money Service, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling for employees and agents of affiliated companies ADB Corporation, L.L.C. Delaware 100% Money Services, Inc. Special purpose limited Liability company ORBA Insurance Services, Inc. California 26.91% Money Services, Inc. Insurance agency Great Companies, L.L.C. Iowa 30% Money Services, Inc. Markets & sells mutual funds & individually managed accounts Roundit, Inc. Maryland 50% AUSA Holding Co. Financial services Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency Zahorik Texas, Inc. Texas 100% Zahorik Company, Inc. Insurance agency Long, Miller & Associates, California 33-1/3% AUSA Holding Co. Insurance agency L.L.C. AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment Services, Inc. advisor InterSecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer Associated Mariner Financial Michigan 100% InterSecurities, Inc. Holding company/ Group, Inc. management services Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency of Massachusetts, Inc. Agency, Inc. Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency Ohio, Inc. Agency, Inc. Associated Mariner Agency Texas 100% Associated Mariner Insurance agency Texas, Inc. Agency, Inc. PIA 2000-A, L.P. Delaware Intersecurities, Inc. is the Private placement General Partner investment limited partnership Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services Idex Management, Inc. Delaware 100% AUSA Holding Co. Investment advisor
IDEX Mutual Funds Massachusetts Various Mutual fund Diversified Investment Delaware 100% AUSA Holding Co. Registered investment Advisor, Inc. advisor Diversified Investors Delaware 100% Diversified Investment Broker-Dealer Securities Corp. Advisors, Inc. George Beram & Company, Inc. Massachusetts 100% Diversified Investment Employee benefit and Advisors, Inc. actuarial consulting AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer (De-registered) Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency Canadian Dealer Network Inc. AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor Management, Inc. AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate Advisors, Inc. administrative and real estate investment AEGON USA Real Estate Delaware 100% AEGON USA Realty Real estate and Services, Inc. Advisors, Inc. mortgage holding company QSC Holding, Inc. Delaware 100% AEGON USA Realty Real estate and Advisors, Inc. financial software production and sales Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling Advisors, Inc. Landauer Realty Associates, Texas 100% Landauer Associates, Inc. Real estate counseling Inc. Realty Information Systems, Iowa 100% AEGON USA Realty Information Systems Inc. Advisors, Inc. for real estate investment management USP Real Estate Investment Iowa 12.89% First AUSA Life Ins. Co. Real estate Trust 13.11% PFL Life Ins. Co. investment trust 4.86% Bankers United Life Assurance Co. RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership Partnership Inc. is General Partner and 5% owner. Commonwealth General Delaware 100% Transamerica Holding Holding company Corporation ("CGC") Company AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life Insurance Company AEGON Alliances, Inc. Virginia 100% Benefit Plans, Inc. General agent Capital 200 Block Corporation Delaware 100% CGC Real estate holdings Commonwealth General Kentucky 100% CGC Administrator of Assignment Corporation structured settlements AEGON Institutional Markets, Delaware 100% CGC Provider of Inc. investment, marketing and admin. services to ins. cos. Monumental Agency Group, Inc. Kentucky 100% CGC Provider of services to insurance companies Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of (EIN 23-1720755) management support services Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose Corporation Agency, Inc. subsidiary Financial Planning Services, Dist. Columbia 100% Ampac Insurance Special-purpose Inc. Agency, Inc. subsidiary Frazer Association Illinois 100% Ampac Insurance TPA license-holder Consultants, Inc. Agency, Inc. National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose Agency, Inc. subsidiary Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment Agency, Inc. lessor Veterans Benefit Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of Agency, Inc. group insurance programs Veterans Insurance Services, Delaware 100% Ampac Insurance Special-purpose Inc. Agency, Inc. subsidiary Academy Insurance Group, Inc. Delaware 100% CGC Holding company Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company Group, Inc. Pension Life Insurance New Jersey 100% Academy Life Insurance company Company of America Insurance Company FED Financial, Inc. Delaware 100% Academy Insurance Special-purpose Group, Inc. subsidiary
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose Group, Inc. subsidiary Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent Group, Inc. Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose Insurance Agency, Inc. Group, Inc. subsidiary Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose Group, Inc. subsidiary Ampac, Inc. Texas 100% Academy Insurance Managing general agent Group, Inc. Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose (EIN 23-2364438) Group, Inc. subsidiary Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose Group, Inc. subsidiary Force Financial Services, Inc. Massachusetts 100% Force Financial Group, Special-purpose Inc. subsidiary Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose Group, Inc. subsidiary NCOAA Management Company Texas 100% Academy Insurance Special-purpose Group, Inc. subsidiary NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club Group, Inc. Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. Services, Inc. Group, Inc. services Unicom Administrative Germany 100% Unicom Administrative Provider of admin. Services, GmbH Services, Inc. services Capital General Development Delaware 100% CGC Holding company Corporation Monumental Life Maryland 73.33% Capital General Insurance company Insurance Company Development Company 26.77% First AUSA Life Insurance Company AEGON Special Markets Maryland 100% Monumental Life Marketing company Group, Inc. Insurance Company Peoples Benefit Life Iowa 3.7% CGC Insurance company Insurance Company 20.0% Capital Liberty, L.P. 76.3% Monumental Life Insurance Company
Veterans Life Insurance Co. Illinois 100% Peoples Benefit Insurance company Life Insurance Company Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Insurance Special-purpose Company subsidiary Coverna Direct Insurance Maryland 100% Peoples Benefit Insurance agency Services, Inc. Life Insurance Company Ammest Realty Corporation Texas 100% Monumental Life Special-purpose Insurance Company subsidiary JMH Operating Company, Inc. Mississippi 100% People's Benefit Life Real estate holdings Insurance Company Capital Liberty, L.P. Delaware 99.0% Monumental Life Holding company Insurance Company 1.0% CGC Transamerica Corporation Delaware 100% AEGON NV Major interest in ("TAC") insurance and finance AEGON Funding Company II Delaware 100% TAC Commercial paper insurance Transamerica Pacific Hawaii 100% TAC Life insurance Insurance Company, Ltd. TREIC Enterprises, Inc. Delaware 100% TFC Investments ARC Reinsurance Corporation Hawaii 100% Transamerica Corp. Property & Casualty Insurance Transamerica Management, Inc. Delaware 100% ARC Reinsurance Corp. Asset management Inter-America Corporation California 100% Transamerica Corp. Insurance Broker Pyramid Insurance Company, Hawaii 100% Transamerica Corp. Property & Casualty Ltd. Insurance Transamerica Business Tech Delaware 100% Transamerica Corp. Telecommunications Corp. and data processing Transamerica CBO I, Inc. Delaware 100% Transamerica Corp. Owns and manages a pool of high-yield bonds Transamerica Corporation Oregon 100% Transamerica Corp. Name holding only - (Oregon) Inactive Transamerica Finance Corp. Delaware 100% Transamerica Corp. Commercial & Consumer Lending & equipment leasing TA Leasing Holding Co., Inc. Delaware 100% Transamerica Finance Corp. Holding company
Trans Ocean Ltd. Delaware 100% TA Leasing Holding Co. Holding company Inc. Trans Ocean Container Corp. Delaware 100% Trans Ocean Ltd. Intermodal leasing ("TOCC") SpaceWise Inc. Delaware 100% TOCC Intermodal leasing Trans Ocean Container Delaware 100% TOL Intermodal leasing Finance Corp. Trans Ocean Leasing Germany 100% TOCC Intermodal leasing Deutschland GmbH Trans Ocean Leasing PTY Ltd. Austria 100% TOCC Intermodal leasing Trans Ocean Management S.A. Switzerland 100% TOCC Intermodal leasing Trans Ocean Regional California 100% TOCC Holding company Corporate Holdings Trans Ocean Tank Services Delaware 100% TOCC Intermodal leasing Corp. Transamerica Leasing Inc. Delaware 100% TA Leasing Holding Co. Leases & Services intermodal equipment Transamerica Leasing Holdings Delaware 100% Transamerica Leasing Inc. Holding company Inc. ("TLHI") Greybox Logistics Services Delaware 100% TLHI Intermodal leasing Inc. Greybox L.L.C. ("G") Delaware 100% TLHI Intermodal freight container interchange facilitation service Transamerica Trailer France 100% Greybox L.L.C. Leasing Leasing S.N.C. Greybox Services Limited U.K. 100% TLHI Intermodal leasing Intermodal Equipment, Inc. Delaware 100% TLHI Intermodal leasing Transamerica Leasing N.V. Belg. 100% Intermodal Equipment Inc. Leasing Transamerica Leasing SRL Italy 100% Intermodal Equipment Inc. Leasing Transamerica Distribution Delaware 100% TLHI Dormant Services, Inc. Transamerica Leasing Belg. 100% TLHI Leasing Coordination Center Transamerica Leasing do Braz. 100% TLHI Container Leasing Brasil Ltda.
Transamerica Leasing GmbH Germany 100% TLHI Leasing Transamerica Trailer Leasing Poland 100% TLHI Leasing Sp. z.o.o Transamerica Leasing Limited U.K. 100% TLHI Leasing ICS Terminals (UK) Limited U.K. 100% Transamerica Leasing Leasing Limited Transamerica Leasing Pty. Ltd. Australia 100% TLHI Leasing Transamerica Leasing (Canada) Canada 100% TLHI Leasing Inc. Transmerica Leasing (HK) Ltd. H.K. 100% TLHI Leasing Transamerica Leasing S. Africa 100% TLHI In Liquidation - (Proprietary) Limited Intermodal leasing Transamerica Trailer Holdings Delaware 100% TLHI Holding company I Inc. Transamerica Trailer Holdings Delaware 100% TLHI Holding company II Inc. Transamerica Trailer Holdings Delaware 100% TLHI Holding company III Inc. Transamerica Trailer Leasing Swed. 100% TLHI Leasing AB Transamerica Trailer Leasing Switzerland 100% TLHI Leasing AG Transamerica Trailer Leasing Denmark 100% TLHI Leasing A/S Transamerica Trailer Leasing Germany 100% TLHI Leasing GmbH Transamerica Trailer Leasing Belgium 100% TLHI Leasing (Belgium) N.V. Transamerica Trailer Leasing Netherlands 100% TLHI Leasing (Netherlands) B.V. Transamerica Alquiler de Spain 100% TLHI Leasing Trailer Spain S.L. Transamerica Transport Inc. New Jersey 100% TLHI Dormant Transamerica Commercial Delaware 100% Transamerica Finance Corp. Holding company Finance Corporation, I ("TCFCI") Transamerica Equipment Delaware 100% TCFCI Investment in Various Financial Services equipment leases and Corporation loans
BWAC Credit Corporation Delaware 100% TCFCI Inactive BWAC International Corporation Delaware 100% TCFCI Retail Appliance and furniture stores BWAC Twelve, Inc. Delaware 100% TCFCI Holding company TIFCO Lending Corporation Illinois 100% BWAC Twelve, Inc. General financing Transamerica Insurance Maryland 100% BWAC Twelve, Inc. Insurance premium Finance Corporation ("TIFC") financing Transamerica Insurance California 100% TIFC Insurance premium Finance Corporation, California Transamerica Insurance Ontario 100% TIFC Insurance premium Finance Corporation, Canada financing Transamerica Business Credit Delaware 100% TCFCI Lending, leasing & Corporation ("TBCC") equipment financing Transamerica Mezzanine Delaware 100% TBCC Holding company Financing, Inc. Bay Capital Corporation Delaware 100% TBCC Special purpose corporation Coast Funding Corporation Delaware 100% TBCC Special purpose corporation Transamerica Small Business Delaware 100% TBCC Holding company Capital, Inc. ("TSBC") Transamerica Emergent Delaware 100% SBCI Dormant Business Capital Holdings, Inc. Gulf Capital Corporation Delaware 100% TBCC Special purpose corporation Direct Capital Equity Delaware 100% TBCC Small business loans Investment, Inc. TA Air East, Corp. Delaware 100% TBCC Special purpose corporation TA Air I, Corp. Delaware 100% TEFS Special purpose corporation TA Air II, Corp. Delaware 100% TEFS Special purpose corporation TA Air III, Corp. Delaware 100% TBCC Special purpose corporation
TA Air IV, Corp. Delaware 100% TBCC Special purpose corporation TA Air V, Corp. Delaware 100% TBCC Special purpose corporation TA Air VI, Corp. Delaware 100% TBCC Special purpose corporation TA Air VII, Corp. Delaware 100% TBCC Special purpose corporation TA Air VIII, Corp. Delaware 100% TBCC Special purpose corporation TA Air IX, Corp. Delaware 100% TBCC Special purpose corporation TA Air X, Corp. Delaware 100% TBCC Special purpose corporation TA Air XI, Corp. Delaware 100% TEFS Special purpose corporation TA Air XII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIV, Corp. Delaware 100% TEFS Special purpose corporation TA Air XV, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVI, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XVIII, Corp. Delaware 100% TEFS Special purpose corporation TA Air XIX, Corp. Delaware 100% TEFS Special purpose corporation TA Air XX, Corp. Delaware 100% TEFS Special purpose corporation TA Heli I, Inc. Delaware 100% TEFS Special purpose corporation
TA Marine I, Inc. Delaware 100% TBCC Special purpose corporation TA Marine II, Inc. Delaware 100% TBCC Special purpose corporation TA Marine IV, Inc. Delaware 100% TEFS Special purpose corporation TA Marine VI, Inc. Delaware 100% TEFS Special purpose corporation TA Marine V, Inc. Delaware 100% TEFS Special purpose corporation TA Marine III, Corp. Delaware 100% TEFS Special purpose corporation TA Public Finance Air I, Corp. Delaware 100% TEFS Special purpose corporation TBC I, Inc. Delaware 100% TBCC Special purpose corporation TBC II, Inc. Delaware 100% TBCC Special purpose corporation TBC III, Inc. Delaware 100% TBCC Special purpose corporation TBC IV, Inc. Delaware 100% TBCC Special purpose corporation TBC V, Inc. Delaware 100% TBCC Special purpose corporation TBC VI, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax I, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax II, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax III, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax IV, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax V, Inc. Delaware 100% TBCC Special purpose corporation
TBC Tax VI, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax VII, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax VIII, Inc. Delaware 100% TBCC Special purpose corporation TBC Tax IX, Inc. Delaware 100% TBCC Special purpose corporation The Plain Company Delaware 100% TBCC Special purpose corporation Transamerica Distribution Delaware 100% TCFCI Holding company Finance Corporation ("TDFC") Transamerica Accounts Holding Delaware 100% TDFC Holding company Corp. Transamerica Commercial Delaware 100% TIFC Finance company Finance Corporation ("TCFC") Transamerica Acquisition Canada 100% TCFCC Holding company Corporation, Canada Transamerica Distribution Delaware 100% TCFC Commercial Finance Finance Corporation - Overseas, Inc. ("TDFOI") TDF Mauritius Limited Mauritius 100% TDFOI Mauritius holding company Inventory Funding Trust Delaware 100% TCFC Delaware Business Trust Inventory Funding Company, LLC Delaware 100% Inventory Funding Trust Holding company TCF Asset Management Colorado 100% TCFC A depository for Corporation foreclosed real and personal property Transamerica Joint Ventures, Delaware 100% TCFC Holding company Inc. Transamerica Inventory Delaware 100% TDFC Holding company Finance Corporation ("TIFC") Transamerica GmbH, Inc. Delaware 100% TIFC Holding company Transamerica Netherlands 100% Trans. GmbH, Inc. Commercial lending in Fincieringsmaatschappij B.V. Europe BWAC Seventeen, Inc. Delaware 100% TIFC Holding company
Transamerica Commercial Ontario 100% BWAC Seventeen, Inc. Dormant Finance Canada, Limited Transamerica Commercial Canada 100% BWAC Seventeen, Inc. Commercial finance Finance Corporation, Canada TCF Commercial Leasing Ontario 100% TCFCC Dormant Corporation, Canada Cantrex Group Inc. Quebec 76% TACC Buying group and retail merchant services BWAC Twenty-One, Inc. Delaware 100% TIFC Holding company Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Commercial lending Finance Limited ("TCFL") TDF Credit Insurance Services U.K. 100% TCFL Credit insurance Limited brokerage Whirlpool Financial Poland 100% TCFL Inactive - commercial Corporation Polska Spozoo finance Transamerica Commercial U.K. 100% BWAC Twenty-One Inc. Holding company Holdings Limited Transamerica Commercial France 100% TIFC Factoring company Finance France S.A. Transamerica GmbH Frankfurt, 100% GmbH Commercial lending in Germany Germany Transamerica Retail Financial Delaware 100% TIFC Provides retail Services Corporation financing ("TRFSC") Transamerica Bank, NA Delaware 100% TRFSC Bank Transamerica Consumer Finance Delaware 100% TRFSC Consumer finance Holding Company ("TCFHC") holding company Transamerica Mortgage Company Delaware 100% TCFHC Consumer mortgages Transamerica Consumer Delaware 100% TCFHC Securitization company Mortgage Receivables Company Metropolitan Mortgage Company Florida 100% TCFHC Consumer mortgages Easy Yes Mortgage, Inc. Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Easy Yes Mortgage, Inc. Georgia 100% Metropolitan Mtg. Co. No active business/Name holding only
First Florida Appraisal Florida 100% Metropolitan Mtg. Co. Appraisal and Services, Inc. inspection services First Georgia Appraisal Georgia 100% First FL App. Srvc, Inc. Appraisal services Services, Inc. Freedom Tax Services, Inc. Florida 100%. Metropolitan Mtg. Co. Property tax information services J.J. & W. Advertising, Inc. Florida 100% Metropolitan Mtg. Co. Advertising and marketing services J.J. & W. Realty Corporation Florida 100% Metropolitan Mtg. Co. To hold problem REO properties Liberty Mortgage Company of Florida 100% Metropolitan Mtg. Co. No active Ft. Myers, Inc. business/Name holding only Metropolis Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Perfect Mortgage Company Florida 100% Metropolitan Mtg. Co. No active business/Name holding only Transamerica Vendor Financial Delaware 100% TDFC Provides commercial Service Corporation leasing Transamerica Distribution Mexico 99% TCFC Holding company in Finance Corporation de Mexican subsidiaries Mexico S. de R.L. de C.V. TDF de Mexico S. de R.L. de Mexico 99% TDFC Mex Service company for C.V. Whirlpool receivables Transamerica Corporate Mexico 99% TDFC Mex Holds employees Services De Mexico S. de R.L. de CV Transamerica Distribution Mexico 99% TCFC Finance company Finance Factorje S.A. de C.V. Transamerica Distribution Finance Insurance Services, Illinois 100% TCFC Finance company Inc. Transamerica Flood Hazard Delaware 100% TAC Flood Zone Certification, Inc. certification service Transamerica Home Loan California 100% TFC Consumer mortgages Transamerica Lending Company Delaware 100% TFC In liquidation - lending Transamerica Public Finance, Delaware 70% TFC Financial Services LLC Transamerica Financial California 100% Transamerica Corp. Investments Products, Inc.
Transamerica Insurance Iowa 100% TIHI Holding company Corporation ("TIC") Arbor Life Insurance Company Arizona 100% TIC Life insurance, disability insurance Plaza Insurance Sales Inc. California 100% TIC Casualty insurance placement Transamerica Advisors, Inc. California 100% TIC Retail sale of investment advisory services Transamerica Annuity Services New Mexico 100% TIC Performs services Corp. required for structured settlements Transamerica Financial Delaware 100% TIC Retail sale of Resources, Inc. securities products Financial Resources Insurance Texas 100% Transamerica Fin. Res. Retail sale of Agency of Texas securities products TBK Insurance Agency Ohio 100% Transamerica Fin. Res. Variable insurance of Ohio, Inc. contract sales in state of Ohio Transamerica Financial Alabama 100% Transamerica Fin. Res. Insurance agent & Resources Agency of Alabama, broker Inc. Transamerica Financial Massachusetts 100% Transamerica Fin. Res. Insurance agent & Resources Ins. Agency of broker Massachusetts, Inc. Transamerica International Delaware 100% TIC Holding & Insurance Services, Inc. administering foreign ("TIISI") operations AEGON Canada Inc. ("ACI") Canada 100% TIHI Holding company Transamerica Life Canada Canada 100% ACI Life insurance company Home Loans and Finance Ltd. U.K. 100% TIISI Inactive Transamerica Occidental Life Iowa 100% TIC Life insurance Insurance Company ("TOLIC") NEF Investment Company California 100% TOLIC Real estate development Transamerica China Hong Kong 99% TOLIC Holding company Investments Holdings Limited Transamerica Life Insurance N. Carolina 100% TOLIC Life insurance and Annuity Company ("TALIAC") Transamerica Assurance Company Missouri 100% TALIAC Life and disability insurance
Gemini Investments, Inc. Delaware 100% TALIAC Investment subsidiary Transamerica Life Insurance Canada 100% TOLIC Sells individual life Company of Canada insurance & investment products in all provinces and territories of Canada Transamerica Life Insurance New York 100% TOLIC Insurance sales Company of New York Transamerica South Park Delaware 100% TOLIC Market analysis Resources, Inc. Transamerica Variable Maryland 100% TOLIC Mutual Fund Insurance Fund USA Administration Services, Kansas 100% TOLIC Third party Inc. administrator Transamerica Products, Inc. California 100% TIC Holding company ("TPI") Transamerica Products II, Inc. California 100% TPI Co-general partner Transamerica Products IV, Inc. California 100% TPI Co-general partner Transamerica Products I, Inc. California 100% TPI Co-general partner Transamerica Securities Sales Maryland 100% TIC Life insurance sales Corp. Transamerica Service Company Delaware 100% TIC Passive loss tax service Transamerica International RE Bermuda 100% TAC Reinsurance (Bermuda) Ltd. Transamerica Intellitech, Inc. Delaware 100% TFC Real estate information and technology services Transamerica International Delaware 100% TAC Holding company Holdings, Inc. ("TIHI") Transamerica Investment Delaware 100% TAC Investment adviser Services, Inc. ("TISI") Transamerica Income Shares, Maryland 100% TISI Mutual fund Inc. Transamerica LP Holdings Corp. Delaware 100% TAC Limited partnership investment Transamerica Real Estate Tax Delaware 100% TFC Real estate tax Service, Inc. reporting and processing services Transamerica Realty Services, Delaware 100% TAC Real estate Inc. ("TRS") investments Bankers Mortgage Company of CA California 100% TRS Investment management
Pyramid Investment Corporation Delaware 100% TRS Real estate company The Gilwell Company California 100% TRS Ground lessee of 517 Washington Street, San Francisco Transamerica Affordable California 100% TRS General partner LHTC Housing, Inc. Partnership Transamerica Minerals Company California 100% TRS Owner and lessor of oil and gas properties Transamerica Oakmont California 100% TRS General partner Corporation retirement properties Transamerica Senior Delaware 100% TAC Owns retirement Properties, Inc. ("TSPI") properties Transamerica Senior Living, Delaware 100% TSPI Manages retirement Inc. properties
Item 27. Number of Certificate Owners As of December 31, 2001 there were______ Owners of Contracts. Item 28. Indemnification The Iowa Code (Sections 490.850 et. seq.) provides for permissive indemnification in certain situations, mandatory indemnification in other situations, and prohibits indemnification in certain situations. The code also specifies procedures for determining when indemnification payments can be made. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Depositor pursuant to the foregoing provisions, or otherwise, the Depositor has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in connection with the securities being registered), the Depositor will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be goverened by the final adjudication of such issue. Item 29. Principal Underwriter AFSG Securities Corporation 4333 Edgewood Road N.E. Cedar Rapids, IA 52499-0001 The directors and officers of AFSG Securities Corporation are as follows/(5)/: Larry N. Norman Anne Spaes Director and President Director and Vice President Lisa Wachanedorf Darin Smith Director, Vice President and Vice President and Chief Compliance Officer Assistant Secretary Thomas R. Moriarty Emily Bates Vice President Assistant Treasurer Priscilla Hechler Clifton Flenniken Assistant Vice President and Assistant Treasurer Assistant Secretary Thomas Pierpan Assistant Vice President and Assistant Secretary /(5)/ The principal business address of each person listed is AFSG Securities Corporation, 4333 Edgewood Road, N.E., Cedar Rapids, IA 52499-0001. Prior to May 1, 2002, Transamerica Securities Sales Corporation ("TSSC") and Transamerica Financial Resources ("TFR") were co-principal underwriters of the contracts. TSSC and TFR received $_______________, $40,610,303.26 and $17,147,205.77 from the Registrant for the years ending December 31, 2001, December 31, 2000 and December 31, 1999 respectively, for its services in distributing the policies. No other commission or compensation was received by TSSC or TFR, directly or indirectly, from the Registrant during the fiscal year. As of May 1, 2002, AFSG Securities Corporation, an affiliate of Transamerica, is the principal underwriter of the contracts and may enter into agreements with broker-dealers for the distribution of the contracts. AFSG Securities Corporation serves as the principal underwriter for Separate Account VA B, the Retirement Builder Variable Annuity Account, Separate Account VA A, Separate Account VA C, Separate Account VA D, Separate Account VA E, Separate Account VA F, Separate Account VA I, Separate Account VA J, Separate Account VL A and Legacy Builder Variable Life Separate Account. These accounts are separate accounts of Transamerica Life Insurance Company. AFSG Securities Corporation serves as principal underwriter for Separate Account VA BNY, Separate Account C and AUSA Series Life Account. These accounts are separate accounts of AUSA Life Insurance Company, Inc. AFSG Securities Corporation serves as principal underwriter for Separate Account I, Separate Account II and Separate Account V. These accounts are accounts of Peoples Benefit Life Insurance Company. AFSG Securities Corporation serves as principal underwriter for WRL Series Life Account, WRL Series Annuity Account and WRL Series Annuity Account B. These accounts are separate accounts of Western Reserve Life Assurance Co. of Ohio. AFSG Securities Corporation also serves as principal underwriter for Transamerica Occidental Life Separate Account VUL-3 and Separate Account VA-2L. These accounts are separate accounts of Transamerica Occidental Life Insurance Company. Item 30. Location and Accounts and Records All accounts and records required to be maintained by Section 31(a) of the 1940 Act and the rules under it are maintained by Transamerica or the Service Office at their administrative offices. Item 31. Management Services All management contracts are discussed in Parts A or B. Items 32. Undertakings (a) Registrant undertakes that it will file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes that it will include either (1) as part of any application to purchase a Certificate or an Individual Contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. (c) Registrant undertakes to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request to Transamerica at the address or phone number listed in the Prospectus. (d) Registrant represents that it is relying on a no-action letter dated November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(i) and 27(d) of the Investment Company Act of 1940, in connection with redeemability restrictions on Section 403(b) policies, and that paragraphs numbered (1) through (4) of that letter will be complied with. (e) Transamerica hereby represents that the fees and the charges deducted under the Contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Transamerica. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, in the City of Cedar Rapids and State of Iowa, on this 16th day of January, 2002. SEPARATE ACCOUNT VA-2L TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (DEPOSITOR) /s/ Frank A. Camp ------------------------------ Frank A. Camp Vice President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
Signatures Titles Date ---------- ------ ---- * Director ____________, 2002 ------------------------ Patrick S. Baird * Director ____________, 2002 ------------------------ Brenda K. Clancy * Director ____________, 2002 ------------------------ Douglas C. Kolsrud * Director ____________, 2002 ------------------------ Craig D. Vermie * Director and President ____________, 2002 ------------------------ Ron F. Wagley * Chief Financial Officer and ____________, 2002 ------------------------ Bruce Clark Senior Vice President /s/ Frank A. Camp Attorney -in-Fact pursuant to powers of January 16, 2002 ------------------------ *By: Frank A. Camp attorney filed herewith, and in his own capacity as Vice President.
Registration No. 33-49998 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________ EXHIBITS TO FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FOR DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE _______________ EXHIBIT INDEX ------------- Exhibit No. Description of Exhibit Page No.* ----------- ---------------------- --------- (4)(a)(vii) Form of Tax Relief Rider (Contract) (4)(b)(x) Form of Tax Relief Rider (Certificate) (4)(c)(xiii) Form of Tax Relief Rider (Individual) ___________________________ * Page numbers included only in manually executed original.