-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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As filed with the Securities and Exchange Registration No. 333-117329 Commission on September 10, 2004 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. 1 [X] Post-Effective Amendment No. ___ [ ] AMENDMENT TO REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (Check appropriate box or boxes.) Security Life Separate Account L1 (Exact Name of Registrant) Security Life of Denver Insurance Company (Name of Depositor) 1290 Broadway Denver, Colorado 80203-5699 (Address of Depositor's Principal Executive Offices) (800) 525-9852 Depositor's Telephone Number, including Area Code J. Neil McMurdie, Counsel ING Americas (U.S. Legal Services) 151 Farmington Avenue, TS31, Hartford Connecticut 06156 (Name and Address of Agent for Service) Jeffery R. Berry, Chief Counsel ING Americas (U.S. Legal Services) 151 Farmington Avenue, TS31, Hartford Connecticut 06156 Approximate Date of Proposed Public Offering: Continuous It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on September XX, 2004, pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on ____________ pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. PART A INFORMATION REQUIRED IN A PROSPECTUS
[X]
ASSET ACCUMULATOR |
The Policy |
The Fund Families |
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;Funds from the following fund families are available through the policy. |
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Premium Payments |
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Are flexible, so the premium amount and frequency may vary. |
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The Policy Value |
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Death Benefit Proceeds |
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This prospectus describes what you should know before purchasing the Asset Accumulator variable universal life insurance policy. Please read it carefully and keep it for future reference. |
Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. |
The policy described in this prospectus is not a deposit with, obligation of or guaranteed or endorsed by any bank, nor is it insured or guaranteed by the FDIC, the Federal Reserve Board or any other government agency. |
;The date of this prospectus is September XX, 2004 ; |
TABLE OF CONTENTS |
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POLICY SUMMARY ............................. |
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Termination of Coverage ................................ |
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The Policy's Features and Benefits ............... |
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TAX CONSIDERATIONS ............................ |
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Factors You Should Consider Before |
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Tax Status of the Company .............................. |
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Purchasing a Policy ............................ |
Tax Status of the Policy ................................. |
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Fees and Charges .................................... |
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Diversification and Investor Control Requirements . |
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THE COMPANY, THE FIXED ACCOUNT |
Tax Treatment of Policy Death Benefits .............. |
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AND THE VARIABLE ACCOUNT ...... |
Distributions Other than Death Benefits ............... |
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Security Life of Denver Insurance Company .... |
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Other Tax Matters ........................................ |
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The Investment Options ............................ |
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ADDITIONAL INFORMATION .................... |
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DETAILED INFORMATION ABOUT THE |
General Policy Provisions ............................... |
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POLICY ........................................ |
Distribution of the Policies .............................. |
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Purchasing a Policy ................................. |
Trading - Industry Developments....................... |
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Fees and Charges .................................... |
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Legal Proceedings ........................................ |
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Death Benefits ....................................... |
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Financial Statements ..................................... |
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Additional Insurance Benefits ..................... |
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APPENDIX A ............................................ |
A-1 |
Policy Value .......................................... |
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APPENDIX B ............................................ |
B-1 |
Special Features and Benefits....................... |
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MORE INFORMATION IS AVAILABLE ........ |
Back Cover |
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TERMS TO UNDERSTAND |
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The following is a list of some of the key defined terms and the page number on which each is defined: |
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Term |
Page Where Defined |
Term |
Page Where Defined |
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Age |
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Policy Date |
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Fixed Account . |
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Policy Value |
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Fixed Account Value |
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Segment or Coverage Segment |
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Loan Account |
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Surrender Value |
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Loan Account Value |
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Target Premium |
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Monthly Processing Date |
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Valuation Date |
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Net Premium |
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Variable Account |
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Net Policy Value |
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Variable Account Value |
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"Security Life," "we," "us," "our" and the "company" refer to Security Life of Denver Insurance Company. "You" and "your" refer to the policy owner. The owner is the individual, entity, partnership, representative or party who may exercise all rights over the policy and receive the policy benefits during the insured person's lifetime. |
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State Variations - State variations are covered in a special policy form used in that state. This prospectus provides a general description of the policy. Your actual policy and any riders are the controlling documents. If you would like to review a copy of the policy and riders, contact our customer service center or your agent/registered representative. |
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You may contact us about the policy at our: |
Customer Service Center |
2 - Asset Accumulator |
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This summary highlights the features and benefits of the policy, the risks that you should consider before purchasing a policy and the fees and charges associated with the policy and its benefits. More detailed information is included in the other sections of this prospectus which should be read carefully before you purchase the policy. |
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The Policy |
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Premium Payments See Premium Payments, page XX. |
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Free Look Period See Free Look Period, page XX. |
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The free look refund that applies in your state with be stated in your policy. |
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Death Benefits See Death Benefits, page XX. |
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Asset Accumulator - 3 |
4 - Asset Accumulator |
Asset Accumulator - 5 |
Surrenders (continued) |
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Reinstatement See Reinstatement, page XX. |
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The decision to purchase a policy should be discussed with your agent/registered representative. Make sure you understand the policy's investment options, its other features and benefits, its risks and the fees and charges you will incur. Consider, among others, the following matters. |
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Life Insurance Coverage |
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Fees and Charges See Fees and Charges, page XX. |
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Lapse
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6 - Asset Accumulator |
Investment Risk See The Variable Account, page XX. |
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Exchanges See Purchasing a Policy, page XX. |
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Taxation See TAX CONSIDERATIONS, page XX. |
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Sales Compensation
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Other Products |
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Asset Accumulator - 7 |
Charge |
When Deducted |
Amount Deducted |
Premium Expense Charge |
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Partial Withdrawal Fee |
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Surrender Charge 1 |
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Excess Illustration Fee |
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1 |
;The surrender charge rates shown are for the second segment year. The rates that apply to you depend on the insured person's gender and age. The rates for the representative insured person listed above may be more or less than you will pay, and you should contact your agent/registered representative for information about the rates that apply to you. Surrender charge rates increase after the first segment year, remain level during segment years two through five and then decrease uniformly each segment year thereafter to zero at the beginning of the tenth segment year. ; |
8 - Asset Accumulator |
Charge |
When Deducted |
Amount Deducted |
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Cost of Insurance Charge 2 |
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Mortality & Expense Risk Charge 3 |
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Policy Charge 4 |
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Administrative |
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Loan Interest Charge |
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2 |
The cost of insurance rates shown are for the first policy year. The rates have been rounded to the nearest penny. Consequently, the actual rates are either more or less than these rounded rates. The rates that apply to you depend on the amount of your basic insurance coverage and the insured person's age, gender, policy duration and risk class and generally increase each year after the first segment year. Different cost of insurance rates will apply to each segment of basic insurance coverage. A segment or coverage segment is a block of insurance coverage. The rates for the representative insured person listed above may be more or less than you will pay, and you should contact your agent/registered representative for information about the rates that apply to you. |
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The monthly mortality and expense risk charge rate has been rounded to the nearest one hundredth of one percent. Consequently, the actual rates are either more or less than these rounded rates. See Periodic Fees and Charges - Mortality and Expense Risk Charge, page XX for the monthly rate without rounding. |
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;For fully underwritten policies this charge is $15 per month during the first ten policy years and lower thereafter. |
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The administrative charge applies to the first $10 million of coverage and decreases after the tenth policy year. The rates shown have been rounded to the nearest penny. Consequently, the actual rates are either more or less than these rounded rates. The rates vary depending on the issue age of the insured person and the rates for the representative insured person listed above may be more or less than you will pay. You should contact your agent/registered representative for information about the rates that apply to you. ; |
Asset Accumulator - 9 |
Optional Rider Fees and Charges The following table describes the charges deducted if you elect any of the optional rider benefits. See Fees and Charges - Optional Rider Fees and Charges, page XX. |
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When Deducted |
Amount Deducted |
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Adjustable Term Insurance Rider 6 |
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20-Year/Age 65 Death Benefit Guarantee Rider Charge 7 |
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Lifetime Death Benefit Guarantee Rider Charge 7 |
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Waiver of Cost of Insurance Rider 8 |
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Waiver of Specified Premium Rider 8 |
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The rates shown are for the first policy year and have been rounded to the nearest penny. Consequently, the actual rates are either more or less than these rounded rates. The rates for a particular rider depend on various factors that may include the insured person's age, gender, policy duration and/or risk class. Rates generally increase each year after the first policy year. The rates for the representative insured person listed above may be more or less than you will pay, and you should contact your agent/registered representative for information about the rates that apply to you. |
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The rates for these guarantees depend on the insured person's age at issue. The minimum rate and the representative rate for the 20-year/Age 65 Death Benefit Guarantee Rider have been rounded up to the nearest penny, and the actual rates may be more or less than these rounded rates. The other rates stated have been rounded to the nearest penny, consequently, the actual rates may be more or less than these rounded rates. The rates for the representative insured person listed above may be more or less than you will pay, and you should contact your agent/registered representative for information about the rates that apply to you. |
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The rates shown are for the first policy year. The rates for a particular rider depend on various factors that may include the insured person's age, gender, policy duration and/or risk class. Rates generally increase each year after the first policy year. The rates for the representative insured person listed above may be more or less than you will pay, and you should contact your agent/registered representative for information about the rates that apply to you. |
10 - Asset Accumulator |
Annual Total Fund Expenses (expenses deducted from fund assets) |
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Maximum |
Total Gross Annual Fund Expenses 9 |
0.28% |
2.40% |
Total Net Annual Fund Expenses 9, 10 |
0.28% |
1.49% |
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Total Gross Annual Fund Expenses include management fees, distribution (12b-1) fees and other expenses. |
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The Total Net Annual Fund Expense figures take into account contractual arrangements that require reimbursement or waiver of certain fund fees and expenses at least through the end of this year. Out of all funds available through the policy, 17 have contractual arrangements to reimburse or waive certain fees and expenses. Generally, these arrangements provide that fees and expenses will be reimbursed or waived above a certain levels for a specific period of time. See the Fund Expense Table on page XX for more detailed information about these contractual arrangements. The minimum and maximum total net annual fund expenses shown take into account all of the available funds, not just those with contractual arrangements. |
Asset Accumulator - 11 |
Fund Expense Table.1 The following table shows the investment advisory fees and other expenses charged annually by each fund. Fund fees are one of the factors that impact the value of a fund share. To learn about additional factors, please see the fund prospectuses. See also Fees and Charges - Fund Fees and Expenses, page XX. The following figures are a percentage of the average net assets of each fund as of December 31, 2003. |
Fund Name |
Management Fees |
Distribution (12b-1) Fees |
Other Expenses |
Total Gross Annual Fund Expenses |
Fees and Expenses Waived or Reimbursed |
Total Net Annual Fund Expenses |
;AIM V.I. Capital Appreciation Fund - Series I |
0.61% |
-- |
0.24% |
0.85% |
-- |
0.85% |
AIM V.I. Government Securities Fund - Series I |
0.47% |
-- |
0.29% |
0.76% |
-- |
0.76% |
AIM V.I. High Yield Fund - Series I 2, 3 |
0.63% |
-- |
0.43% |
1.06% |
0.01% |
1.05% |
Alger American Growth Portfolio - Class O Shares |
0.75% |
-- |
0.10% |
0.85% |
-- |
0.85% |
Alger American Leveraged AllCap Portfolio - |
0.85% |
-- |
0.12% |
0.97% |
-- |
0.97% |
Alger American MidCap Growth Portfolio - Class |
0.80% |
-- |
0.13% |
0.93% |
-- |
0.93% |
American Funds Insurance Series - Growth Fund - |
0.37% |
0.25% |
0.02% |
0.64% |
N/A |
0.64% |
American Funds Insurance Series - Growth - |
0.33% |
0.25% |
0.01% |
0.59% |
N/A |
0.59% |
American Funds Insurance Series - International |
0.57% |
0.25% |
0.06% |
0.88% |
N/A |
0.88% |
Fidelity Ò VIP Asset Manager SM Portfolio -Service Class |
0.53% |
0.10% |
0.11% |
0.74% |
-- |
0.74% |
Fidelity Ò VIP Growth Portfolio - Service Class |
0.58% |
0.10% |
0.09% |
0.77% |
-- |
0.77% |
Fidelity Ò VIP Overseas Portfolio - Service Class |
0.73% |
0.10% |
0.17% |
1.00% |
-- |
1.00% |
ING Hard Assets Portfolio - Class I 4, 5, 6 |
0.68% |
-- |
0.01% |
0.69% |
-- |
0.69% |
ING JPMorgan Small Cap Equity Portfolio - |
0.90% |
-- |
-- |
0.90% |
-- |
0.90% |
ING Legg Mason Value Portfolio - Class I 4, 5, 7, 8 |
0.81% |
-- |
-- |
0.81% |
-- |
0.81% |
ING Liquid Assets Portfolio - Class S 5, 9 |
0.27% |
-- |
0.26% |
0.53% |
-- |
0.53% |
ING Marsico Growth Portfolio - Class I 4, 5, 6, 8 |
0.79% |
-- |
-- |
0.79% |
-- |
0.79% |
ING Mercury Focus Value Portfolio - Class I 4, 5, 7 |
0.80% |
-- |
-- |
0.80% |
-- |
0.80% |
ING MFS Mid Cap Growth Portfolio - |
0.64% |
-- |
0.01% |
0.65% |
-- |
0.65% |
ING MFS Total Return Portfolio - Class I 4, 5, 6, 8, 10 |
0.64% |
-- |
0.01% |
0.65% |
-- |
0.65% |
ING Salomon Brothers Investors Portfolio - |
0.75% |
-- |
-- |
0.75% |
-- |
0.75% |
ING Stock Index Portfolio - Class I 4, 5, 11 |
0.27% |
-- |
0.01% |
0.28% |
-- |
0.28% |
ING T. Rowe Price Capital Appreciation Portfolio - |
0.68% |
-- |
0.01% |
0.69% |
-- |
0.69% |
ING T. Rowe Price Equity Income Portfolio - |
0.68% |
-- |
0.01% |
0.69% |
-- |
0.69% |
12 - Asset Accumulator |
Fund Name |
Management Fees |
Distribution (12b-1) Fees |
Other Expenses |
Total Gross Annual Fund Expenses |
Fees and Expenses Waived or Reimbursed |
Total Net Annual Fund Expenses |
ING Van Kampen Equity Growth Portfolio - |
0.65% |
-- |
0.02% |
0.67% |
-- |
0.67% |
ING JP Morgan Mid Cap Value Portfolio - |
0.75% |
-- |
0.35% |
1.10% |
-- |
1.10% |
ING PIMCO Total Return Portfolio - Initial Class |
0.50% |
-- |
0.35% |
0.85% |
-- |
0.85% |
ING Salomon Brothers Aggressive Growth |
0.70% |
-- |
0.13% |
0.83% |
-- |
0.83% |
ING UBS U.S. Allocation Portfolio - |
0.85% |
-- |
0.20% |
1.05% |
-- |
1.05% |
ING Van Kampen Comstock Portfolio - |
0.60% |
-- |
0.35% |
0.95% |
0.07% |
0.88% |
ING VP Intermediate Bond Portfolio - Class I Shares 14 |
0.40% |
-- |
0.10% |
0.50% |
-- |
0.50% |
ING VP Index Plus LargeCap Portfolio - |
0.35% |
-- |
0.08% |
0.43% |
-- |
0.43% |
ING VP Index Plus MidCap Portfolio - |
0.40% |
-- |
0.10% |
0.50% |
-- |
0.50% |
ING VP Index Plus SmallCap Portfolio - |
0.40% |
-- |
0.16% |
0.56% |
-- |
0.56% |
ING VP Strategic Allocation Balanced Portfolio (Class I) 16, 17 |
0.60% |
-- |
0.14% |
0.74% |
0.04% |
0.70% |
ING VP Strategic Allocation Growth Portfolio (Class I) 16, 17 |
0.60% |
-- |
0.15% |
0.75% |
-- |
0.75% |
ING VP Strategic Allocation Income Portfolio (Class I) 16, 17 |
0.60% |
-- |
0.14% |
0.74% |
0.09% |
0.65% |
ING VP MagnaCap Portfolio - Class I |
0.75% |
-- |
0.39% |
1.14% |
0.24% |
0.90% |
ING VP MidCap Opportunities Portfolio - Class I |
0.75% |
-- |
0.46% |
1.21% |
0.31% |
0.90% |
ING VP SmallCap Opportunities Portfolio - Class |
0.75% |
-- |
0.32% |
1.07% |
0.17% |
0.90% |
INVESCO VIF-Core Equity Fund - |
0.75% |
N/A |
0.38% |
1.13% |
0.00% |
1.13% |
INVESCO VIF-Health Sciences Fund - |
0.75% |
N/A |
0.33% |
1.08% |
00.0% |
1.08% |
INVESCO VIF-Small Company Growth |
0.75% |
N/A |
0.64% |
1.39% |
0.09% |
1.30% |
INVESCO VIF-Total Return Fund - |
0.75% |
N/A |
0.98% |
1.73% |
0.43% |
1.30% |
INVESCO VIF-Utilities Fund - Series I 22, 23, 25 |
0.60% |
N/A |
0.55% |
1.15% |
0.00% |
1.15% |
Janus Aspen International Growth Portfolio - |
0.64% |
0.25% |
0.11% |
1.00% |
-- |
1.00% |
Neuberger Berman AMT Growth Portfolio - |
0.85% |
-- |
0.08% |
0.93% |
-- |
0.93% |
Neuberger Berman AMT Limited Maturity Bond |
0.65% |
-- |
0.09% |
0.74% |
-- |
0.74% |
Pioneer Mid Cap Value VCT Portfolio - |
0.65% |
-- |
0.11% |
0.76% |
-- |
0.76% |
Pioneer Small Cap Value VCT Portfolio - |
0.75% |
-- |
1.65% |
2.40% |
1.15% |
1.25% |
Putnam VT Growth and Income Fund - |
0.48% |
0.25% |
0.05% |
0.78% |
N/A |
0.78% |
Asset Accumulator - 13 |
Fund Name |
Management Fees |
Distribution (12b-1) Fees |
Other Expenses |
Total Gross Annual Fund Expenses |
Fees and Expenses Waived or Reimbursed |
Total Net Annual Fund Expenses |
Putnam VT New Opportunities Fund - |
0.59% |
0.25% |
0.08% |
0.92% |
N/A |
0.92% |
Putnam VT Small Cap Value Fund - |
0.79% |
0.25% |
0.12% |
1.16% |
N/A |
1.16% |
Putnam VT Voyager Fund - Class IB Shares |
0.55% |
0.25% |
0.07% |
0.87% |
N/A |
0.87% |
Van Eck Worldwide Bond Fund 29 |
1.00% |
0.00% |
0.21% |
1.21% |
0.00% |
1.21% |
Van Eck Worldwide Emerging Markets Fund 30 |
1.00% |
0.00% |
0.43% |
1.43% |
0.00% |
1.43% |
Van Eck Worldwide Hard Assets Fund 31 |
1.00% |
0.00% |
0.23% |
1.23% |
0.00% |
1.23% |
Van Eck Worldwide Real Estate Fund |
1.00% |
0.00% |
0.49% |
1.49% |
0.00% |
1.49% |
1 |
We may receive compensation from each of the funds or their affiliates based on an annual percentage of the average net assets held in that fund by the company. The percentage paid may vary from one fund to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in this Fund Expense Table and the fund prospectuses. We may also receive additional payments for administrative, recordkeeping or other services which we provide to the funds or their affiliates or as an incentive for us to make the funds available through the policy. These additional payments are not disclosed in this Fund Expense Table and do not increase, directly or indirectly, the fees and expenses shown below. See Fees and Charges - Fund Fees and Expenses on page XX for additional information. |
2 |
The Fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) to 1.05%. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the 1.05% cap: (i) interest; (ii) taxes; (iii) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), as defined in the Financial Accounting Standard's Board's Generally Accepted Accounting Principles or as approved by the Fund's board of trustees; (iv) expenses related to a merger or reorganization, as approved by the Fund's board of trustees; and (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the only expense offset a rrangements from which the Fund benefits are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. The expense limitation agreement is in effect through April 30, 2005. |
3 |
As a result of a reorganization of another fund into the Fund, which occurred on April 30, 2004, the Fund's Total Annual Operating Expenses have been restated to reflect current expenses. |
4 |
The table above shows the estimated operating expenses for Class I Shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates, unless otherwise noted, are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any. |
5 |
Through a "bundled fee" arrangement, Directed Services, Inc. (DSI), the Trust's manager, is paid a single fee for advisory, administrative, custodial, transfer agency, auditing and legal services necessary for the ordinary operation of the Portfolio. The Portfolios would bear any extraordinary expenses. |
6 |
Because the Class I Shares of these Portfolios had not had a full year's performance during the fiscal year ended December 31, 2003, expenses are estimated based on the expenses of the Portfolio's Class S Shares for the most recently completed fiscal year. |
14 - Asset Accumulator |
7 |
Because the Class I Shares of these Portfolios had not commenced operations prior to December 31, 2003, the Portfolios' fiscal year end, expenses are estimated based on the expenses of the Portfolio's Class S Shares for the most recently completed fiscal year. |
8 |
A portion of the brokerage commissions that the Portfolios pay is used to reduce each Portfolio's expenses. Including these reductions and the MFS voluntary management fee waiver the "Total Annual Fund Operating Expenses" for the year ended December 31, 2003 would have been 0.89% for ING JPMorgan Small Cap Equity, 0.80% for ING Legg Mason Value, 0.77% for ING Marsico Growth, 0.61% for ING MFS Mid Cap Growth, 0.64% for ING MFS Total Return, and 0.68% for ING T. Rowe Price Capital Appreciation and ING T. Rowe Price Equity Income Portfolios. This arrangement may be discontinued at any time. |
9 |
The table above shows the estimated operating expenses for Class S Shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates, unless otherwise noted, are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any. "Other Expenses" shown in the table above includes a Shareholder Service Fee of 0.25%. |
10 |
DSI has voluntarily agreed to waive a portion of its management fee for certain Portfolios. Including these waivers, the "Total Annual Fund Operating Expenses" for the year ended December 31, 2003, would have been 0.64% for ING MFS Mid Cap Growth Portfolio and 0.65% for ING MFS Total Return Portfolio. This arrangement may be discontinued by DSI at any time. |
11 |
Because the Portfolio is new, expenses, shown above, are estimated. |
12 |
Management/(Advisory) Fees have been restated to reflect a decrease from 0.90% to 0.85% effective May 1, 2004. Effective November 8, 2004, this portfolio's name will change to the ING Van Kampen Equity and Income Portfolio, and then effective December 1, 2004, the Management Fees and Other Expenses will be reduced to 0.55% and 0.02%, respectively. |
13 |
The Administrator of the Fund has contractually agreed to waive all or a portion of its administrative services fees and/or reimburse administrative expenses so that the Total Net Fund Annual Operating Expenses for this Portfolio shall not exceed 0.88%, through April 30, 2005. Without this waiver, the Total Net Fund Annual Operating Expenses would be 0.95%. |
14 |
The table above shows the estimated operating expenses for Class I shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates are based on each Portfolio's actual operating expenses for its most recently completed fiscal year and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. |
15 |
ING Investments, LLC, the investment adviser to each Portfolio, entered into written expense limitation agreements with each Portfolio under which it will limit expenses of the Portfolios, excluding interest, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under "Fees and Expenses Waived or Reimbursed" in the table above. The expense limit for each Portfolio is shown as "Net Annual Fund Operating Expenses" in the table above. For each Portfolio, the expense limits will continue through at least December 31, 2004. For further information regarding the expense limitation agreements, see the Fund's prospectus. |
16 |
These Portfolios are available effective October 1, 2004. The table above shows estimated operating expenses for Class I shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates are based on each Portfolio's actual operating expenses for its most recently completed fiscal year and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. |
17 |
ING Investments, LLC, the investment adviser to each portfolio, entered into written expense limitation agreements with each Portfolio under which it will limit expenses of the Portfolios, except interest, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under "Fees and Expenses Waived or Reimbursed" in the table above. The expense limit for each Portfolio is shown as "Total Net Annual Fund Expenses" in the table above. For each Portfolio, the expense limits will continue through at least December 31, 2004. For further information regarding the expense limitation agreements, see each Portfolio's prospectus. |
18 |
The above table shows the estimated operating expenses for Class I shares of each Portfolio as a ratio of expenses to average daily net assets. These estimates are based on each Portfolio's actual operating expenses for its most recently completed fiscal year, as adjusted for contractual changes, if any, and fee waivers to which the Portfolio's investment adviser has agreed for each Portfolio. |
19 |
ING Funds Services, LLC receives an annual administration fee equal to 0.10% of average daily net assets which is included in Other Expenses in the above table. Estimated Other Expenses are based on each Portfolio's actual Other Expenses for its most recently completed fiscal year. |
Asset Accumulator - 15 |
20 |
ING Investments, LLC, the investment adviser to each Portfolio, has entered into a written expense limitation agreement with each Portfolio under which it will limit expenses of the Portfolio, excluding interest, taxes, brokerage and extraordinary expenses, subject to possible recoupment by the adviser within three years. The amount of each Portfolio's expenses waived, reimbursed or recouped during the last fiscal year by the adviser is shown under Fees and Expenses Waived or Reimbursed in the above table. For each Portfolio except ING VP MidCap Opportunities Portfolio, the expense limits will continue through at least December 31, 2004. For ING VP MidCap Opportunities Portfolio, the expense limits will continue through at least December 31, 2005. For further information regarding the expense limitation agreements, see the Fund's prospectus. |
21 |
Other Expenses, Total Annual Fund Operating Expenses and Net Annual Fund Operating Expenses in the above table exclude a one-time merger fee of 0.05% incurred in connection with the merger of another investment company into ING VP MagnaCap Portfolio. |
22 |
The Fund has adopted a new form of administrative services and transfer agency agreements which will be effective May 1, 2004. As a result, Other Expenses have been restated to reflect the changes in fees under the new agreements. |
23 |
The Fund's advisor is entitled to receive reimbursement from the Fund for fees and expenses paid for by the Fund's advisor pursuant to expense limitation commitments between the Fund's advisor and the Fund if such reimbursement does not cause the Fund to exceed its then-current expense limitations and the reimbursement is made within three years after the Fund's advisor incurred the expense. |
24 |
The Fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Fund Operating Expenses (excluding certain items discussed below) to 1.30%. In determining the advisor's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the Total Annual Fund Operating Expenses to exceed the 1.30% cap: (i) interest; (ii) taxes; (iii) extraordinary items (these are expenses that are not anticipated to arise from the Fund's day-to-day operations), as defined in the Financial Accounting Standard's Board's Generally Accepted Accounting Principles or as approved by the Fund's board of trustees; (iv) expenses related to a merger or reorganization, as approved by the Fund's board of trustees; and (v) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, the only expense offset a rrangements from which the Fund benefits are in the form of credits that the Fund receives from banks where the Fund or its transfer agent has deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Fund. This expense limitation agreement is in effect through December 31, 2005. |
25 |
As a result of a reorganization of another fund into the Fund, which occurred on April 30, 2004, the Fund's Total Annual Operating Expenses have been restated to reflect current expenses. |
26 |
All of the fees and expenses shown were determined based on net assets as of the fiscal year ended December 31, 2003, restated to reflect reductions in the portfolios' management fees effective July 1, 2004. All expenses are shown without the effect of expense offset arrangements. |
27 |
Neuberger Berman Management Inc. ("NBMI") has undertaken through December 31, 2007 to waive fees and/or reimburse certain operating expenses, including the compensation of NBMI (except with respect to Growth, Limited Maturity Bond, and Partners Portfolios) and excluding taxes, interest, extraordinary expenses, brokerage commissions and transaction costs, that exceed, in the aggregate, 1% of the Growth, Limited Maturity Bond, and Partners Portfolio's average daily net asset value. The expense limitation arrangements for the Portfolios are contractual and any excess expenses can be repaid to NBMI within three years of the year incurred, provided such recoupment would not cause a Portfolio to exceed its respective limitation. |
28 |
The expenses in the table above reflect the contractual expense limitation in effect through May 1, 2005 under which Pioneer has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce Class I expenses to 1.25% (Pioneer Small Cap Value VCT Portfolio) of the average daily net assets attributable to Class I shares. |
29 |
Expenses excluding interest expense: 1.19%. |
30 |
Expenses excluding interest expense: 1.30%. Net effect of expense reimbursement by Adviser to average net assets was 0.09%. ; |
31 |
Expenses excluding interest expense. |
16 - Asset Accumulator |
How the Policy Works |
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Your Premium You make a premium payment. |
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Net Premium We allocate the net premium to the investment options you choose. |
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Variable Account Amounts you allocate are held in sub-accounts of the variable account. The sub-accounts invest in the funds. |
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Policy Value Your policy value equals the sum of your fixed account, variable account and loan account values. |
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We deduct periodic fees and charges from your policy value: |
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Loans We charge interest on any outstanding loan amount. |
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We deduct fees and charges from your policy value for the optional rider benefits you select. |
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Asset Accumulator - 17 |
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We are a stock life insurance company organized in 1929 and incorporated under the laws of the State of Colorado. We are admitted to do business in the District of Columbia and all states except New York. Our headquarters is at 1290 Broadway, Denver, Colorado 80203-5699. |
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We are a wholly-owned indirect subsidiary of ING Groep N.V. ("ING"), a global financial institution active in the fields of insurance, banking and asset management. ING is headquartered in Amsterdam, The Netherlands. |
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You may allocate your premium payments to any of the available investment options. These options include the fixed account and sub-accounts of the variable account. The investment performance of a policy depends on the performance of the investment options you choose. |
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In the policy the "fixed account" is referred to as the "Guaranteed Interest Division." |
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You may allocate all or a part of your net premium and transfer your net policy value into the fixed account. We declare the interest rate that applies to all amounts in the fixed account. Although the interest rate will change over time, the interest rate will never be less than 3.00%. Additionally, we guarantee that the interest rate will not change more frequently than every policy anniversary. Interest compounds daily at an effective annual rate that equals the declared rate. We credit interest to the fixed account on a daily basis. We pay interest regardless of the actual investment performance of our general account. We bear all of the investment risk for the fixed account. |
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Your fixed account value equals the net premium you allocate to the fixed account, plus interest earned, minus amounts you transfer out or withdraw. It may be reduced by fees and charges assessed against your policy value. |
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The fixed account guarantees principal and is part of our general account. The general account supports our non-variable insurance and annuity obligations. We have not registered interests in the fixed account under the Securities Act of 1933, as amended ("1933 Act"). Also, we have not registered the fixed account or the general account as an investment company under the Investment Company Act of 1940, as amended ("1940 Act") (because of exemptive and exclusionary provisions). This means that the general account, the fixed account and interests in it are generally not subject to regulation under these Acts. |
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The SEC staff has not reviewed the disclosures in this prospectus relating to the general account and the fixed account. These disclosures, however, may be subject to certain requirements of the federal securities law regarding accuracy and completeness of statements made. |
18 - Asset Accumulator |
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We established Security Life Separate Account L1 (the "variable account") on November 3, 1993, as one of our separate accounts under the laws of the State of Colorado. It is a unit investment trust, registered with the SEC under the 1940 Act. |
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In the policy the "variable account" is referred to as the "Separate Account." |
We own all of the assets of the variable account and are obligated to pay all amounts due under a policy according to the terms of the policy. Income, gains and losses credited to, or charged against, the variable account reflect the investment experience of the variable account and not the investment experience of our other assets. Additionally, Colorado law provides that we cannot charge the variable account with liabilities arising out of any other business we may conduct. This means that if we ever became insolvent, the variable account assets will be used first to pay variable account policy claims. Only if variable account assets remain after these claims have been satisfied can these assets be used to pay owners of other policies and creditors. |
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The variable account is divided into sub-accounts. Each sub-account invests in a corresponding fund. When you allocate premium payments to a sub-account, you acquire accumulation units of that sub-account. You do not invest directly in or hold shares of the funds when you allocate premium payments to the sub-accounts of the variable account. See Appendix B for a list of the funds available through the variable account along with information about each fund's investment adviser/subadviser and investment objective. See the Fund Expense Table on page XX for fund expense information. |
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More detailed information about a fund, including information about the risks associated with investing in the fund, is located in the fund's prospectus. Read the fund prospectuses in conjunction with this prospectus, and retain the prospectuses for future reference. |
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A fund available through the variable account is not the same as a retail mutual fund with the same or similar name. Accordingly, the management, expenses and performance of a fund available through the variable account is likely to differ from a similarly named retail mutual fund. |
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Voting Privileges. We invest each sub-account's assets in shares of a corresponding fund. We are the legal owner of the fund shares held in the variable account, and we have the right to vote on certain issues. Among other things, we may vote on issues described in the fund's current prospectus or issues requiring a vote by shareholders under the 1940 Act. |
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Even though we own the shares, we give you the opportunity to tell us how to vote the number of shares attributable to your policy. We count fractional shares. If you have a voting interest, we send you proxy material and a form on which to give us your voting instructions. |
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Each fund share has the right to one vote. The votes of all fund shares are cast together on a collective basis, except on issues for which the interests of the funds differ. In these cases, voting is on a fund-by-fund basis. |
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Examples of issues that require a fund-by-fund vote are changes in the fundamental investment policy of a particular fund or approval of an investment advisory agreement. |
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We vote the shares in accordance with your instructions at meetings of the fund's shareholders. We vote any fund shares that are not attributable to policies and any fund shares for which the owner does not give us instructions in the same proportion as we vote the shares for which we did receive voting instructions. |
Asset Accumulator - 19 |
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We reserve the right to vote fund shares without getting instructions from policy owners if the federal securities laws, regulations or their interpretations change to allow this. |
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You may instruct us only on matters relating to the funds corresponding to the sub-accounts in which you have invested assets as of the record date set by the fund's Board for the shareholders meeting. We determine the number of fund shares in each sub-account of your policy by dividing your variable account value in that sub-account by the net asset value of one share of the matching fund. |
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Right to Change the Variable Account. Subject to state and federal law and the rules and regulations thereunder, we may, from time to time, make any of the following changes to our variable account with respect to some or all classes of policies: |
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We will not make a change until it is effective with the SEC and approved by the appropriate state insurance departments, if necessary. We will notify you of changes. If you wish to transfer the amount you have in the affected sub-account to another sub-account or to the fixed account, you may do so free of charge. Just notify us at our customer service center. |
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This prospectus describes our standard Asset Accumulator variable universal life insurance policy. The policy provides death benefits, policy values and other features of traditional life insurance contracts. There may be variations in policy features, benefits and charges because of requirements of the state where we issue your policy. We describe all such differences in your policy. |
20 - Asset Accumulator |
Asset Accumulator -- 21 |
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Scheduled Premium. You may select your scheduled (planned) premium (within our limits) when you apply for your policy. The scheduled premium, shown in your policy and schedule, is the amount you choose to pay over a stated time period. This amount may or may not be enough to keep your policy in force. You may receive premium reminder notices for the scheduled premium on a quarterly, semi-annual or annual basis. You are not required to pay the scheduled premium. |
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You can change the amount of your scheduled premium within our minimum and maximum limits at any time. If you fail to pay your scheduled premium or if you change the amount of your scheduled premium, your policy performance will be affected. |
If you have an optional death benefit guarantee, your scheduled premium should not be less than the guarantee period annual premium shown in your policy. See Death Benefits - Death Benefit Guarantees, page XX. |
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Unscheduled Premium Payments. Generally speaking, you may make unscheduled premium payments at any time, however: |
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;Target Premium. Target premium is not based on your scheduled premium. Target premium is actuarially determined based on the age and gender of the insured person. The target premium is used to determine your premium expense charge and the sales compensation we pay. It may or may not be enough to keep your policy in force. You are not required to pay the target premium and there is no penalty for paying more or less. The target premium for your policy and additional segments is listed in your policy schedule pages. ; |
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Unless you have an optional death benefit guarantee, your coverage lasts only as long as you have a positive net policy value which is enough to pay the periodic fees and charges due each month. If you do not meet this requirement, your policy will enter a 61-day grace period and you must make a sufficient premium payment to keep your policy from lapsing. See Termination of Coverage - Lapse, page XX. | |
If you have an optional death benefit guarantee, we guarantee that your policy will not lapse during the guarantee period provided your cumulative premium payments minus any partial withdrawals and any outstanding loan amount and accrued loan interest are at least equal to the guarantee period annual premium and your net policy value meets certain diversification requirements. See Death Benefits - Death Benefit Guarantees, page XX. |
22 - Asset Accumulator |
Allocation of Net Premium. We apply the initial net premium to your policy after all of the following conditions have been met: |
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Amounts you designate for the fixed account will be allocated to that account on the investment date. If your state requires return of your premium during the free look period, we initially invest amounts you have designated for the sub-accounts of the variable account in the sub-account which invests in the ING Liquid Assets Portfolio. We later transfer these amounts from this sub-account to your selected sub-accounts, based on your most recent premium allocation instructions, at the earlier of the following dates: |
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If your state provides for return of your policy value during the free look period (or provides no free look period), we allocate amounts you designated for the sub-accounts of the variable account directly into those sub-accounts. |
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All net premium we receive after the applicable period are allocated to your policy on the valuation date of receipt. We will use your most recent premium allocation instructions specified in percentages stated to the nearest tenth and totaling 100%. |
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You have the right to examine your policy and return it to us (for any reason) within the period shown in the policy. The period during which you have this right is called the free look period and starts on the date you receive your policy. If you return your policy to us within the free look period, we cancel it as of your policy date. |
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If you cancel your policy during the free look period, you will receive a refund as determined by state law. Generally, there are two types of free look refunds: |
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The type of refund that applies in your state will be specified in your policy. The type of free look refund will affect when premium received before the end of the free look period is allocated to the sub-accounts. See Premium Payments - Allocation of Net Premium, page XX. |
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If you apply and qualify, we may issue temporary insurance in an amount equal to the amount of insurance coverage for which you applied, up to $4.5 million, which includes other in-force coverage you have with us. |
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Temporary insurance coverage begins when all of the following events have occurred: |
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Asset Accumulator - 23 |
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Unless otherwise provided by state law, temporary insurance coverage ends on the earliest of: |
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There is no death benefit under the temporary insurance coverage if any of the following events occur: |
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During the period of temporary insurance coverage your premium payments are held by us in a general suspense account until underwriting is completed and the policy is issued or the temporary insurance coverage otherwise ends. Premiums held in this suspense account do not earn interest and they are not allocated to the investment options available under the policy until a policy is issued. See Premium Payments - Allocation of Net Premium, page XX. |
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We deduct fees and charges under the policy to compensate us for: |
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The amount of a fee or charge may be more or less than the cost associated with the service or benefit. Accordingly, excess proceeds from one fee or charge may be used to make up a shortfall on another fee or charge, and we may earn a profit on one or more of these fees and charges. We may use any such profits for any proper corporate purpose, including, among other things, payment of sales expenses. |
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We deduct the following transaction fees and charges from your policy value each time you make certain transactions. |
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Premium Expense Charge. We deduct a premium expense charge from each premium payment we receive. |
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Premium Expense Charge for Amounts in Excess of |
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24 - Asset Accumulator |
This charge helps offset: |
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We deduct a partial withdrawal fee each time you take a partial withdrawal from your policy. The amount of this fee is $10. We deduct the partial withdrawal fee proportionately from your remaining fixed and variable account values. |
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This fee helps offset the expenses we incur when processing a partial withdrawal. |
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We deduct a surrender charge during the first nine segment years when you: ; | |
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The amount of the surrender charge depends on the amount of basic insurance coverage surrendered or decreased and the surrender charge rates. |
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When you purchase a policy or increase your basic insurance coverage, we set surrender charge rates based on the gender and age of the insured person. Surrender charges apply for the first nine years of each segment of basic insurance coverage. The surrender charge rates increase after the first segment year, remain level during segment years two through five and then decrease uniformly each year to zero at the beginning of the tenth segment year. Each coverage segment will have its own set of surrender charge rates which will apply only to that segment. See Death Benefits - Changes in the Amount of Your Insurance Coverage, page XX. The rates that apply to you will be set forth in your policy. See the Fees and Charges - Transaction Fees and Charges table on page XX for the minimum and maximum surrender charge rates and the rates for a representative insured person. |
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For full surrenders, you will receive the surrender value of your policy. For decreases in the amount of basic insurance coverage, the surrender charge will reduce your policy value. If there are multiple segments of basic insurance coverage, the coverage decreases and surrender charges assessed will be processed on a pro rata basis. |
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In the early policy years the surrender charge may exceed the policy value because the surrender charge may be more than the cumulative premiums minus policy fees and charges. Therefore, you should purchase a policy only if you intend and have the financial capability to keep the policy in force for a substantial period of time. |
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The surrender charge helps offset the expenses we incur in issuing and distributing the policy. |
Asset Accumulator - 25 |
26 - Asset Accumulator |
;Administrative Charge. Each month we deduct an administrative charge equal to our current monthly administrative charge rates multiplied by the amount of your basic insurance coverage (or total insurance coverage, if greater) divided by 1,000. The rates apply to the first $10 million of coverage and vary based on the insured person's age at issue. The rates decrease after the tenth policy year. The rates that apply to you will be set forth in your policy. See the Fees and Charges - Periodic Fees and Charges table on page XX for the minimum and maximum administrative charge rates and the rates for a representative insured person. ; |
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This charge helps offset the costs we incur in administering the policy, including costs associated with: |
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Each month we deduct a cost of insurance charge equal to our current monthly cost of insurance rates multiplied by the net amount at risk for each segment of your basic insurance coverage. The net amount at risk as calculated on each monthly processing date equals the difference between: |
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Monthly cost of insurance rates are based on the insured person's age at issue, gender, risk class and amount of insurance coverage on the policy date and each date you increase your insurance coverage (a "segment date") and the segment year. They will not, however, be greater than the guaranteed cost of insurance rates shown in the policy, which are based on the 1980 Commissioner's Standard Ordinary Sex Distinct Mortality Tables. We will apply unisex rates where appropriate under the law. This currently includes policies issued in the state of Montana and policies issued to employers or employee organizations in connection with employment related insurance or benefit programs. For fully underwritten policies, we make lower current cost of insurance rates available for total death benefit amounts of $250,000 or more. The rates that apply to you will be set forth in your policy. See the Fees and Charges - Periodic Fees and Charges table on page XX for the minimum and maximum cost of insurance rates and the rates for a representative insured person. |
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Separate cost of insurance rates apply to each segment of your insurance coverage and your riders. The maximum rates for the initial segment and each new segment of your insurance coverage will be printed in your policy schedule pages. |
Asset Accumulator - 27 |
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The cost of insurance charge varies from month to month because of changes in your net amount at risk, changes in your death benefit and the increasing age of the insured person. The net amount at risk is affected by the same factors that affect your policy value, namely: |
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We calculate the net amount at risk separately for each segment of your insurance coverage. We allocate the net amount at risk to segments of the base death benefit in the same proportion that each segment has to the total base death benefit for all insurance coverage as of the monthly processing date. |
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There are no cost of insurance charges during the continuation of coverage period. |
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The cost of insurance charge compensates us for the ongoing costs of providing insurance coverage, including the expected cost of paying death benefit proceeds that may be more than your policy value. |
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There may be separate fees and charges for optional rider benefits. See the Fees and Charges - Optional Rider Fees and Charges table on page XX, and the Additional Insurance Benefits - Optional Rider Benefits section on page XX for more information about the optional rider benefits and the applicable fees and charges. |
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Waiver and Reduction of Fees and Charges |
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We may waive or reduce any of the fees and charges under the policy, as well as the minimum amount of insurance coverage set forth in this prospectus. Any waiver or reduction will be based on expected economies that result in lower sales, administrative or mortality expenses. For example, we may expect lower expenses in connection with sales to: |
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Any variation in fees and charges will be based on differences in costs or services and our rules in effect at the time. We may change our rules from time to time, but we will not unfairly discriminate in any waiver or reduction. |
28 - Asset Accumulator |
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Each fund deducts management fees from the amounts invested in the fund. In addition, certain funds deduct a distribution or 12b-1 fee which is used to finance any activity that is primarily intended to result in the sale of fund shares, and certain funds deduct a service fee which is used to compensate service providers for administrative and policy owner services provided on behalf of the funds. A fund's management fees, distribution (12b-1) fees, as applicable and other expenses are set by the fund and may change from year to year. They are deducted from the fund's assets and are not direct charges against a sub-account's assets or policy values. Rather, they are included when each underlying fund computes its net asset value, which is the share price used to calculate the unit values of the sub-accounts. See the Fund Expense Table on page XX for details about each fund's management fees, distribution (12b-1) fees, other expenses and total annual fund expenses. |
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In addition to the fees and charges shown in the Fund Expense Table, we may, from time to time, receive other compensation from the funds or their affiliates. For example, the funds or their affiliates may make cash payments or provide expense reimbursements to us as an incentive for us to include the funds among the investment options available under the policy and to provide certain services to policy owners that relate to the investment options. More specifically, we may receive compensation from the investment advisers, administrators or distributors of the funds in connection with administrative, distribution, or other services and cost savings experienced by the investment advisers, administrators or distributors of the funds. It is anticipated that such compensation will be based on assets of the particular funds attributable to the policy. Some funds or their affiliates pay us more than others and some of the amounts we receive may be significant. The payments and expe nse reimbursements made to us by the funds do not increase, directly or indirectly, the expenses shown in the Fund Expense Table. |
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For a more complete description of the funds' fees and expenses, review each fund's prospectus. |
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;You decide the amount of life insurance protection you need, now and in the future. Generally, we require a minimum of $100,000 ($50,000 for guaranteed issue policies) of total insurance coverage to issue your policy. We may lower this minimum for certain group, sponsored or corporate purchasers. The amount of insurance coverage in effect on your policy date is your initial coverage segment. ; |
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In the policy the amount of insurance coverage you select is referred to as the "Face Amount." |
You can combine the long-term advantages of permanent life insurance with the flexibility and short-term advantages of term life insurance through the policy. The base policy provides the permanent element of your coverage. The adjustable term insurance rider provides the term insurance element of your coverage. |
Asset Accumulator - 29 |
30 - Asset Accumulator |
Requested reductions in the amount of insurance coverage will first decrease your total insurance coverage amount. We decrease your basic insurance coverage amount only after your adjustable term insurance rider coverage is reduced to zero. If you have more than one segment, we divide decreases in basic coverage among your coverage segments pro rata unless law requires differently. |
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We reserve the right not to approve a requested change in your insurance coverage that would disqualify your policy as life insurance under Section 7702 of the Internal Revenue Code. In addition, we may refuse to approve a requested change in your insurance coverage that would cause your policy to become a modified endowment contract under Section 7702A of the Internal Revenue Code without your prior written acknowledgment accepting your policy as a modified endowment contract. Decreasing the amount of insurance coverage under your policy could cause your policy to be considered a modified endowment contract. If this happens, prior and subsequent distributions from the policy (including loans) may be subject to adverse tax treatment. You should consult a tax adviser before changing your amount of insurance coverage. See Distributions Other than Death Benefits - Modified Endowment Contracts, page XX. |
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The continuation of coverage feature automatically continues your insurance coverage in force beyond the policy anniversary nearest the insured person's 100th birthday (the "continuation of coverage period"), unless prohibited by state law. If you do not surrender your policy before this date, on this date: |
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Your insurance coverage continues in force until the death of the insured person, unless the policy lapses or is surrendered. However: |
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Partial withdrawals and loans are allowed during the continuation of coverage period. If you have an outstanding loan, interest continues to accrue. If you fail to make sufficient loan or loan interest payments, it is possible that the outstanding loan amount plus accrued loan interest may become greater than your policy value and cause your policy to lapse. To avoid lapse, you may repay the loan and loan interest during the continuation of coverage period. |
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If you wish to stop coverage during the continuation of coverage period, you may surrender your policy and receive the net policy value. There is no surrender charge during this period. All other normal consequences of surrender apply. See Termination of Coverage - Surrender, page XX. |
Asset Accumulator - 31 |
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The continuation of coverage feature is not available in all states. If a state has approved this feature, it is automatic under your policy. In certain states the death benefit during the continuation of coverage period is the net policy value. Contact your agent/registered representative or our customer service center to find out if this feature is available in your state and which type of death benefit applies in your state. |
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The tax consequences of coverage continuing beyond the insured person's 100th birthday are uncertain. You should consult a tax adviser as to those consequences. See Other Tax Matters - Continuation of a Policy, page XX. |
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In the policy the "guideline premium test" is referred to as the "Guideline Premium/Cash Value Corridor Test." |
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Death Benefit Qualification Tests |
The death benefit proceeds are generally not subject to federal income tax if your policy continues to meet the federal income tax definition of life insurance. Your policy will meet this definition of life insurance provided that it meets the requirements of either the guideline premium test or the cash value accumulation test. |
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When you apply for a policy you must choose either the guideline premium test or the cash value accumulation test to make sure your policy complies with the Internal Revenue Code's definition of "life insurance." You cannot change this choice once the policy is issued. |
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Guideline Premium Test. The guideline premium test requires that premium payments do not exceed certain statutory limits and your death benefit is at least equal to your policy value multiplied by a factor defined by law. The guideline premium test provides for a maximum amount of premium in relation to the death benefit and a minimum amount of death benefit in relation to policy value. The factors for the guideline premium test can be found in Appendix A to this prospectus. |
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Cash Value Accumulation Test. The cash value accumulation test requires a policy's surrender value not to exceed the net single premium necessary to fund the policy's future benefits. Under the cash value accumulation test, there is generally no limit to the amount that may be paid in premiums as long as there is enough death benefit in relation to policy value at all times. The death benefit at all times must be at least equal to an actuarially determined factor, depending on the insured person's age and gender at any point in time, multiplied by the policy value. A description of how the cash value accumulation test factors are determined can be found in Appendix A to this prospectus. |
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Which Death Benefit Qualification Test to Choose. The guideline premium test limits the amount of premium that may be paid into a policy. If you do not desire to pay premiums in excess of the guideline premium test limitations, you should consider the guideline premium test. |
32 - Asset Accumulator |
The cash value accumulation test does not limit the amount of premium that may be paid into a policy. If you desire to pay premiums in excess of the guideline premium test limitations you should elect the cash value accumulation test. However, any premium that would increase the net amount at risk is subject to evidence of insurability satisfactory to us. Required increases in the death benefit due to growth in policy value will generally be greater under the cash value accumulation test than under the guideline premium test. Required increases in the death benefit will increase the cost of insurance under the policy, thereby reducing the policy value. |
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Death Benefit Options |
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There are three death benefit options available under the policy. You choose the option you want when you apply for the policy. You may change that choice after your first monthly processing date and before age 100. |
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Option 1. Under death benefit Option 1, the base death benefit is the greater of: |
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Under this option your base death benefit will remain level unless your policy value multiplied by the appropriate factor described in Appendix A exceeds the amount of basic insurance coverage. In this case, your death benefit will vary as the policy value varies. |
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With Option 1, positive investment performance generally reduces your net amount at risk, which lowers your policy's cost of insurance charge. Option 1 also offers insurance coverage at a set amount with potentially lower cost of insurance charges over time. |
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Option 2. Under death benefit Option 2, the base death benefit is the greater of: |
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Under this option your base death benefit will vary as the policy value varies and investment performance is reflected in your insurance coverage. |
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Option 2 is not available after age 100. If Option 2 is in effect at age 100, it automatically converts to death benefit Option 1. See Death Benefits - Continuation of Coverage, page XX. |
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Option 3 . Under death benefit Option 3, the base death benefit is the greater of: |
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Asset Accumulator - 33 |
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Under this option your base death benefit will vary as you pay premiums and take withdrawals or if your policy value multiplied by the appropriate factor described in Appendix A exceeds the amount of basic insurance coverage plus premiums paid minus withdrawals taken. |
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Option 3 is not available after age 100. If Option 3 is in effect at age 100, it automatically converts to death benefit Option 1. See Death Benefits - Continuation of Coverage, page XX. |
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Which Death Benefit Option to Choose. If you are satisfied with the amount of your basic insurance coverage and prefer to have premium payments and favorable investment performance reflected to the maximum extent in the policy value and lower cost of insurance charges, you should choose death benefit Option 1. If you prefer to have premium payments and favorable investment performance reflected partly in the form of an increasing death benefit, you should choose death benefit Option 2. If you require a specific death benefit which would include a return of the premium paid, death benefit Option 3 may best meet your needs. |
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Changing Death Benefit Options. On or after the first monthly processing date and before age 100 you may change death benefit options as described below. We may require evidence of insurability under our normal rules of underwriting for some death benefit option changes. |
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Changing your death benefit option may reduce or increase your basic and total insurance coverage amounts but it will not change the amount of your base and total death benefits. We may not approve a death benefit option change if it reduces the amount of insurance coverage below the minimum we require to issue your policy. The following death benefit option changes are allowed, and on the effective date of the change the amount of your basic insurance coverage will change as follows: |
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Change From: |
Change To: |
Basic Insurance Coverage Following the Change: |
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Option 1 |
Option 2 |
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Option 2 |
Option 1 |
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Option 3 |
Option 1 |
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Your death benefit option change is effective on your next monthly processing date after we approve it. |
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After we approve your request, we send a new policy schedule page to you. You should attach it to your policy. We may ask you to return your policy to our customer service center so that we can make this change for you. |
34 - Asset Accumulator |
If a death benefit option change causes the amount of insurance coverage to change, no new coverage segment(s) is (are) created. Instead, the size of each existing segment(s) is (are) changed. If you change death benefit options, there is no change to the amount of term insurance if you have the adjustable term insurance rider. See Optional Rider Benefits - Adjustable Term Insurance Rider, page XX. |
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We do not impose a surrender charge if a death benefit option change results in a decrease in the amount of your basic insurance coverage. Additionally, we do not adjust the target premium when you change your death benefit option. See Transaction Fees and Charges - Surrender Charge, page XX. |
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Changing your death benefit option may have tax consequences. You should consult a tax adviser before making changes. |
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Death Benefit Proceeds |
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After the insured person's death, if your policy is in force we pay the death benefit proceeds to the beneficiaries. The beneficiaries are the people you name to receive the death benefit proceeds from your policy. The death benefit proceeds are equal to: |
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The death benefit is calculated as of the date of the insured person's death and will vary depending on the death benefit option you have chosen. |
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The following optional death benefit guarantee riders may be available and provide that the policy will not lapse even if the net policy value is not enough to pay the periodic fees and charges each month: |
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If available, these optional rider benefits may be selected only when you apply for the policy. There may be a separate monthly charge for these rider guarantees. See Optional Rider Benefits - 20-Year/Age 65 Benefit Guarantee Rider, page XX and Lifetime Death Benefit Guarantee Rider, page XX. |
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Your policy may include additional insurance benefits, attached by rider. There are two types of riders: |
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Asset Accumulator - 35 |
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The following information does not include all of the terms and conditions of each rider, and you should refer to the rider to fully understand its benefits and limitations. We may offer riders not listed here. Not all riders may be available under your policy. Contact your agent/registered representative for a list of riders and their availability. |
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The following riders may have an additional cost, but you may cancel optional riders at any time. Adding or canceling riders may have tax consequences. See Distributions Other than Death Benefits - Modified Endowment Contracts, page XX. |
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In the policy "basic insurance coverage" or "basic coverage" is referred to as the "Stated Death Benefit"; the "total insurance coverage" or "total coverage" is referred to as the "Target Death Benefit." |
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;Adjustable Term Insurance Rider. You may increase the amount of your total insurance coverage under the policy by adding coverage under the adjustable term insurance rider. This rider allows you to schedule the pattern of insurance coverage appropriate for your anticipated needs. As the name suggests, the adjustable term insurance rider adjusts over time to maintain your desired level of total coverage. ; |
You specify your amount of total insurance coverage when you apply for this rider. The amount of total insurance coverage can be level for the life of your policy or can be scheduled to change at the beginning of a selected policy year(s). |
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Generally, the minimum amount of total insurance coverage under a policy is $100,000 ($50,000 for guaranteed issue policies). |
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The adjustable term insurance rider benefit is the difference between the amount of your total death benefit and your base death benefit, but not less than zero. The rider's benefit automatically adjusts daily as the amount of your base death benefit changes. Your death benefit proceeds depend on which death benefit option is in effect. |
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Under death benefit Option 1, the total death benefit is the greater of: |
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Under death benefit Option 2, the total death benefit is the greater of: |
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Under death benefit Option 3, the total death benefit is the greater of: |
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36 - Asset Accumulator |
For example, under death benefit Option 1, assume your base death benefit changes as a result of a change in your policy value. The adjustable term insurance rider adjusts to provide death benefit proceeds equal to your total insurance coverage in each year: |
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Base Death Benefit |
Amount of |
Adjustable Term |
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$201,500 |
$250,000 |
$48,500 |
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$202,500 |
$250,000 |
$47,500 |
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$202,250 |
$250,000 |
$47,750 |
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It is possible that the amount of your adjustable term insurance may be zero if your base death benefit increases enough. Using the same example, if the base death benefit under your policy grew to $250,000 or more, the adjustable term insurance benefit would be zero. |
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Even when the adjustable term insurance benefit is reduced to zero, your rider remains in effect until you remove it from your policy. Therefore, if later the base death benefit drops below the amount of your total insurance coverage, the adjustable term insurance rider coverage reappears to maintain the amount of your total insurance coverage. |
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You may change the amount of your total insurance coverage, according to our rules. See Death Benefits - Changes in the Amount of Your Insurance Coverage, page XX. |
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We may deny future, scheduled increases to the amount of your total insurance coverage if you cancel a scheduled change or if you ask for an unscheduled decrease in your total insurance coverage. |
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Partial withdrawals, changes from death benefit Option 1 to Option 2, and decreases in the amount of your basic insurance coverage may reduce the amount of your total insurance coverage. See Special Features and Benefits - Partial Withdrawals, page XX; and Death Benefits - Changes in the Amount of Your Insurance Coverage, page XX. |
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There is no defined premium for a given amount of adjustable term insurance benefit. Instead, we deduct a separate monthly cost of insurance charge from your policy value. The cost of insurance for this rider is calculated as the monthly cost of insurance rate for the rider benefit multiplied by the amount of adjustable term insurance benefit in effect at the monthly processing date. The cost of insurance rates are determined by us from time to time. They are based on the issue age, gender and risk class of the insured person, as well as the length of time since your policy date. See the Fees and Charges - Optional Rider Fees and Charges table on page XX for the minimum rates, maximum rates and the rates for a representative insured person. |
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The only charge for this rider is the cost of insurance charge. The total charges that you pay may be more or less if you have some coverage under an adjustable term insurance rider rather than just basic insurance coverage. There are no premium expense charges or surrender charges for this coverage. |
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Asset Accumulator - 37 |
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If the total insurance coverage is increased by you after the adjustable term insurance rider is issued, we use the same cost of insurance rate schedule for the entire coverage for this rider. These rates are based on the original risk class even though satisfactory new evidence of insurability is required for the increased schedule. Although the maximum cost of insurance rates for this rider are greater than the maximum cost of insurance rates for the basic insurance coverage, the current rates for this rider may be lower than current cost of insurance rates for the basic insurance coverage. See Periodic Fees and Charges - Cost of Insurance, page XX. |
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Not all policy features apply to the adjustable term insurance rider. The rider does not contribute to the policy value nor to the surrender value. It does not affect investment performance and cannot be used for a loan. The adjustable term insurance rider provides benefits only at the insured person's death. |
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This rider will terminate on the earliest of the following dates: |
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If this rider terminates, it cannot be reinstated. |
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20-Year/Age 65 Death Benefit Guarantee Rider. The 20-Year/Age 65 death benefit guarantee rider provides a guarantee that your policy and any adjustable term insurance rider coverage will not lapse for the greater of 20 years or to age 65 provided: |
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Each month during the guarantee period we deduct a charge for this rider based on a rate that varies depending on the issue age of the insured person. See Fees and Charges - Optional Rider Fees and Charges table, page XX. The amount of this charge will be determined by dividing the amount of guaranteed coverage by 1,000 and multiplying the result by the rate set forth in your policy. The amount of guaranteed coverage equals the amount of your total insurance coverage minus your policy value. |
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You should consider the following factors when deciding whether to add the 20-Year/Age 65 death benefit guarantee rider to your policy: |
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38 - Asset Accumulator |
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We will notify you if on any monthly processing date you have not paid enough premium to keep this rider in force or your policy is not sufficiently diversified. This notice will show the amount of premium required to maintain this rider benefit and, if applicable, explain the diversification requirement. If we do not receive the required premium payment or you do not adequately diversify your policy within 61 days from the date of our notice, this rider will terminate. If this rider terminates, it cannot be reinstated. |
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Lifetime Death Benefit Guarantee Rider. The lifetime death benefit guarantee rider provides a guarantee that your policy and any adjustable term insurance rider will not lapse during your lifetime: |
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Each month during the guarantee period we deduct a charge for this rider based on a rate that varies depending on the issue age of the insured person. See Fees and Charges - Optional Rider Fees and Charges table, page XX. The amount of this charge will be determined by dividing the amount of guaranteed coverage by 1,000 and multiplying the result by the rate set forth in your policy. The amount of guaranteed coverage equals the amount of your total insurance coverage minus your policy value. |
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Asset Accumulator - 39 |
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You should consider the following factors when deciding whether to add the lifetime death benefit guarantee rider to your policy: |
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We will notify you if on any monthly processing date you have not paid enough premium to keep this rider in force or your policy is not sufficiently diversified. This notice will show the amount of premium required to maintain this rider guarantee and, if applicable, explain the diversification requirement. If we do not receive the required premium payment or you do not adequately diversify your policy by the second monthly processing date following the notice, this rider will terminate. If this rider terminates, it cannot be reinstated. |
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Waiver of Cost of Insurance Rider. If the insured person becomes totally disabled while your policy is in force, this rider provides that we waive the periodic fees and charges and rider charges during the disability period. The insured person must be no less than age 10 and no more than age 55. See the Fees and Charges - Optional Rider Fees and Charges table on page XX for the minimum rates, maximum rates and the rates for a representative insured person. The cost of this rider is included as part of the monthly cost of insurance charge. |
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If you add this rider to your policy, you may not add the waiver of specified premium rider. This rider is not available if your policy is issued based on guaranteed issue underwriting. |
40 - Asset Accumulator |
Waiver of Specified Premium Rider. If the insured person becomes totally disabled while your policy is in force, this rider provides that after a waiting period, we credit a specified premium amount monthly to your policy during the disability period. Subject to our underwriting, you specify this amount on the application for the policy. The insured person must be no less than age 10 and no more than age 55. The minimum coverage under this rider is $25 per month. See the Fees and Charges - Optional Rider Fees and Charges table on page XX for the minimum rates, maximum rates and the rates for a representative insured person. |
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A policy may contain either the waiver of cost of insurance rider or the waiver of specified premium rider, but not both. |
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Automatic Rider Benefit |
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The following rider benefit may come with your policy automatically. Exercising this benefit may have tax consequences. See Other Tax Matters - Accelerated Death Benefit Rider, page XX. |
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Accelerated Death Benefit Rider. Under certain circumstances, the accelerated death benefit rider allows you to accelerate payment of the death benefit that we otherwise would pay upon the insured person's death. Generally, we will provide an accelerated benefit under this rider if the insured person has a terminal illness that will result in his or her death within 12 months, as certified by a physician. The accelerated benefit will be the lesser of 75% of the amount that would be payable at the death of the insured person or $1 million. The accelerated benefit will first be used to pay off any outstanding loans and interest due. The remainder of the accelerated benefit will be paid to you in a lump sum. There is no charge for this rider. |
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Consider the following factors when deciding whether to accelerate the death benefit under this rider: |
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Certain limitations and restrictions are described in the rider. Additionally, the benefit may vary by state. You should consult your agent/registered representative as to whether and to what extent the rider is available in your particular state and on any particular policy. |
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Asset Accumulator - 41 |
42 - Asset Accumulator |
We redeem accumulation units: |
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To calculate the number of accumulation units purchased or sold we divide the dollar amount of your transaction by the accumulation unit value for the sub-account calculated at the close of business on the valuation date of the transaction. |
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The date of a transaction is the date we receive your premium or transaction request at our customer service center, so long as the date of receipt is a valuation date. We use the accumulation unit value which is next calculated after we receive your premium or transaction request and we use the number of accumulation units attributable to your policy on the date of receipt. |
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We deduct the periodic fees and charges each month from your policy value on the monthly processing date. If your monthly processing date is not a valuation date, the monthly deduction is processed on the next valuation date. |
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The value of amounts allocated to the sub-accounts goes up or down depending on investment performance of the corresponding funds. There is no guaranteed minimum value of amounts invested in the sub-accounts of the variable account. |
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How We Calculate Accumulation Unit Values. We determine the accumulation unit value for each sub-account on each valuation date. |
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We generally set the accumulation unit value for a sub-account at $10 when the sub-account is first opened. After that, the accumulation unit value on any valuation date is: |
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;Every valuation period begins at 4:00 p.m. Eastern time on a valuation date and ends at 4:00 p.m. Eastern time on the next valuation date. We reserve the right to revise the definition of valuation period as needed in accordance with applicable federal securities laws and regulations. ; |
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We calculate an accumulation experience factor for each sub-account every valuation date as follows: |
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Asset Accumulator - 43 |
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In the policy the "loan account" is referred to as the "Loan Division." |
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When you take a loan from your policy we transfer an amount equal to your loan to the loan account as collateral for your loan. The loan account is part of our general account and we credit interest to the amount held in the loan account. Your loan account value is equal to your outstanding loan amount plus accrued interest in the loan account. See Special Features and Benefits - Loans, page XX. |
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You may borrow money from us at any time after the first policy month, by using your policy as collateral for the loan. Unless state law requires otherwise, a new loan amount must be at least $100 and the maximum amount you may borrow is limited to the surrender value of your policy minus the monthly periodic fees and charges to your next policy anniversary or the monthly periodic fees and charges for the next thirteen months if you take a loan within thirty days before your next policy anniversary. |
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Your loan request must be directed to our customer service center. When you request a loan you may specify the investment options from which the loan collateral will be taken. If you do not specify the investment options, the loan collateral will be taken proportionately from each active investment option you have, including the fixed account. |
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If you request an additional loan, we add the new loan amount to your existing loan. This way, there is only one loan outstanding on your policy at any time. |
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Loan Interest. We credit amounts held in the loan account with interest at an annual rate of 3.00%. Interest which we credit to the loan account becomes part of your loan account value until the next policy anniversary when it is transferred to the investment options according to your most recent allocation instructions. |
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We also charge interest on loans you take. The annual interest rate charged is 3.75% in policy years 1-5 and currently 3.00% in all years thereafter. Loans with this reduced interest rate are called preferred loans. Interest accrues daily but is due in arrears on each policy anniversary. If you do not pay the interest when it is due, we add it to your loan amount. |
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Loan Repayment. You may repay your loan at any time. We assume that payments you make, other than scheduled premium payments, are loan repayments. You must tell us if you want unscheduled payments to be premium payments. |
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When you make a loan repayment, we transfer an amount equal to your payment from the loan account to the sub-accounts and fixed account in the same proportion as your current premium allocation, unless you tell us otherwise. |
44 - Asset Accumulator |
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Transfers |
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;You currently may make an unlimited number of transfers of your variable account value between the sub-accounts and to the fixed account. Transfers are subject to any conditions, limits or charges (including redemption fees) that we or the funds whose shares are involved may impose, including: ; |
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Any conditions or limits we impose on transfers between the sub-accounts or to the fixed account will generally apply equally to all policy owners. However, we may impose different conditions or limits on third parties acting on behalf of policy owners, such as market timing services. |
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Transfers from the fixed account to the sub-accounts of the variable account may be made only during the first 30 days of each policy year and are limited to the greater of: |
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Asset Accumulator - 45 |
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We reserve the right to liberalize these restrictions on transfers from the fixed account, depending on market conditions. Any such liberalization will generally apply equally to all policy owners. However, we may impose different restrictions on third parties acting on behalf of policy owners, such as market timing services. |
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We process all transfers and determine all values in connection with transfers on the valuation date we receive your request, except as described below for the dollar cost averaging or automatic rebalancing programs. |
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Dollar Cost Averaging. Anytime you have at least $10,000 invested in a sub-account which invests in either the ING Liquid Assets Portfolio or the Neuberger Berman AMT Limited Maturity Bond Portfolio (the "source sub-account"), you may elect dollar cost averaging. There is no charge for this feature. |
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Dollar cost averaging is a long-term investment program through which you direct us to automatically transfer at regular intervals a specific dollar amount or percentage of sub-account value from the source sub-account to one or more of the other sub-accounts. We do not permit transfers to the fixed account or the loan account under this program. You may request that the dollar cost averaging transfers occur on a monthly, quarterly, semi-annual or annual basis. |
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This systematic plan of transferring policy values is intended to help reduce the risk of investing too much when the price of a fund's shares is high. It also helps reduce the risk of investing too little when the price of a fund's shares is low. Because you transfer the same dollar amount to the sub-accounts each period, you purchase more units when the unit value is low and you purchase fewer units when the unit value is high. |
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You may add dollar cost averaging to your policy at any time. The first dollar cost averaging date must be at least one day after we receive your dollar cost averaging request. If your state requires a refund of all premium received during the free look period, dollar cost averaging begins after the end of your free look period. |
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You may have both dollar cost averaging and automatic rebalancing at the same time. However, your dollar cost averaging source sub-account cannot be included in your automatic rebalancing program. |
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Dollar cost averaging does not assure a profit nor does it protect you against a loss in a declining market. |
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You may discontinue your dollar cost averaging program at any time. We reserve the right to discontinue, modify or suspend this program, and dollar cost averaging will automatically terminate on: |
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46 - Asset Accumulator |
Automatic Rebalancing. Automatic rebalancing is a program for simplifying the process of asset allocation and maintaining a consistent allocation of your variable and fixed account values among your chosen investment options. There is no charge for this feature. |
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If you elect automatic rebalancing, we periodically transfer amounts among the investment options to match the asset allocation percentages you have chosen. This action rebalances the amounts in the investment options that do not match your set allocation percentages. This mismatch can happen if an investment option outperforms another investment option over the time period between automatic rebalancing transfers. |
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Automatic rebalancing may occur on the same day of the month on a monthly, quarterly, semi-annual or annual basis. If you do not specify a frequency, automatic rebalancing will occur quarterly. |
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The first transfer occurs on the date you select (after your free look period if your state requires return of premium during the free look period). If you do not request a date, processing is on the last valuation date of the calendar quarter in which we receive your request. |
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You may have both automatic rebalancing and dollar cost averaging at the same time. However, the source sub-account for your dollar cost averaging program cannot be included in your automatic rebalancing program. You may not include the loan account. |
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Automatic rebalancing does not assure a profit nor does it protect you against a loss in a declining market. |
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You may change your allocation percentages for automatic rebalancing at any time. Your allocation change is effective on the valuation date that we receive it at our customer service center. If you reduce the amount allocated to the fixed account, it is considered a transfer from that account. You must meet the requirements for the maximum transfer amount and time limitations on transfers from the fixed account. |
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If you have a death benefit guarantee and you ask for an automatic rebalancing allocation which does not meet the death benefit guarantee diversification requirements, we will notify you and ask you for revised instructions. If you have a death benefit guarantee and you terminate automatic rebalancing, you still must meet the diversification requirements for the guarantee period to continue. See Death Benefits - Death Benefit Guarantees, page XX. |
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You may discontinue your automatic rebalancing program at any time. We reserve the right to discontinue, modify or suspend this program, and automatic rebalancing will automatically terminate if the policy is in the grace period on any date when automatic rebalancing transfers are scheduled. |
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Effects of a Partial Withdrawal. We will reduce your policy value by the amount of the partial withdrawal plus the partial withdrawal fee. Your policy value may also be reduced by the amount of a surrender charge if you take a partial withdrawal which decreases your basic insurance coverage. |
A partial withdrawal may also cause the termination of the death benefit guarantee because we deduct the amount of the partial withdrawal from the total premiums paid when calculating whether you have paid sufficient premiums in order to maintain the death benefit guarantee. |
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The amount of your basic insurance coverage is not reduced by the amount of a partial withdrawal when the base death benefit has been increased to qualify your policy as life insurance under the Internal Revenue Code and the amount withdrawn is not greater than that which reduces your policy value to the level which no longer requires that the base death benefit be increased for Internal Revenue Code purposes. Otherwise, depending upon the death benefit option in effect, a partial withdrawal may reduce the amount of your basic insurance coverage. |
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Under death benefit Option 1, a partial withdrawal will reduce the amount of your basic insurance coverage by the amount of the partial withdrawal. |
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Under death benefit Option 2, a partial withdrawal will not reduce the amount of your basic insurance coverage. |
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Under death benefit Option 3, a partial withdrawal will reduce the amount of your basic insurance coverage by the amount of a partial withdrawal in excess of the total premium we have received from you minus the sum of all your prior partial withdrawals. |
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If a partial withdrawal reduces the amount of basic insurance coverage, the total amount of insurance coverage will also be reduced for the current year and all future years by an equal amount. Therefore, a partial withdrawal can affect the amount of pure insurance protection under the policy. |
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We will not allow a partial withdrawal if the amount of total insurance coverage after the withdrawal would be less than $100,000 ($50,000 for guaranteed issue policies). |
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A reduction in the amount of basic insurance coverage as a result of a partial withdrawal will be pro-rated among the existing coverage segments, unless state law requires otherwise. |
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A partial withdrawal may have adverse tax consequences depending on the circumstances. See TAX CONSIDERATIONS - Tax Status of the Policy, page XX. |
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Your insurance coverage will continue under the policy until you surrender your policy or it lapses. |
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You may surrender your policy for its surrender value at any time after the free look period while the insured person is alive. Your surrender value is your policy value minus any surrender charge and any outstanding loan amount and accrued loan interest. |
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In the policy the "surrender value" is referred to as the "Net Cash Surrender Value." |
You may take your surrender value in other than one payment. |
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We compute your surrender value as of the valuation date we receive your written surrender request and policy (or lost policy form) at our customer service center. All insurance coverage ends on the date we receive your surrender request and policy. |
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If you surrender your policy we may deduct a surrender charge. See Transaction Fees and Charges - Surrender Charge, page XX. Surrender of your policy may have adverse tax consequences. See TAX CONSIDERATIONS - Distributions Other than Death Benefits, page XX. |
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Your policy will not lapse and your insurance coverage under the policy will continue if on any monthly processing date: |
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Grace Period. If on a monthly processing date you do not meet any of these conditions, your policy will enter the 61-day grace period during which you must make a sufficient premium payment to avoid having your policy lapse and insurance coverage terminate. |
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We will notify you that your policy is in a grace period at least 30 days before it ends. We will send this notice to you (or a person to whom you have assigned your policy) at your last known address in our records. We will notify you of the premium payment necessary to prevent your policy from lapsing. This amount generally equals the past due charges, plus the estimated periodic fees and charges and charges of any optional rider benefits for the next two months. If we receive payment of the required amount before the end of the grace period, we apply it to your policy in the same manner as your other premium payments, then we deduct the overdue amounts from your policy value. |
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If you do not pay the full amount within the 61-day grace period, your policy and its riders lapse without value. We withdraw your remaining variable and fixed account values, deduct amounts you owe us and inform you that your coverage has ended. |
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If the insured person dies during the grace period we pay death benefit proceeds to your beneficiaries with reductions for your outstanding loan amount, accrued loan interest and periodic fees and charges owed. |
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Asset Accumulator - 51 |
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During the early policy years your net policy value may not be enough to cover the periodic fees and charges due each month, and you may need to pay sufficient premium to keep the death benefit guarantee in force. See Purchasing a Policy - Premium Payments, page XX. |
If your policy lapses, any distribution of policy value may be subject to current taxation. See TAX CONSIDERATIONS - Distributions Other than Death Benefits, page XX. |
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Reinstatement means putting a lapsed policy back in force. You may reinstate a lapsed policy and its riders (other than a death benefit guarantee) by written request any time within five years after it has lapsed. A policy that was surrendered may not be reinstated. |
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To reinstate the policy and any riders, you must submit evidence of insurability satisfactory to us and pay a premium large enough to keep the policy and any rider benefits in force during the grace period and for at least two months after reinstatement. When we reinstate your policy, we reinstate the surrender charges for the amount and time remaining when your coverage lapsed. If you had a loan existing when coverage lapsed, we will reinstate it with accrued loan interest to the date of the lapse. |
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The following summary provides a general description of the federal income tax considerations associated with the policy and does not purport to be complete or to cover federal estate, gift and generation-skipping tax implications, state and local taxes or other tax situations. This discussion is not intended as tax advice. Counsel or other qualified tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present federal income tax laws. No representation is made as to the likelihood of continuation of the present federal income tax laws or as to how they may be interpreted by the Internal Revenue Service ("IRS"). |
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The following discussion generally assumes that the policy will qualify as a life insurance contract for federal tax purposes. |
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We are taxed as a life insurance company under the Internal Revenue Code. The variable account is not a separate entity from us. Therefore, it is not taxed separately as a "regulated investment company," but is taxed as part of the company. We automatically apply investment income and capital gains attributable to the separate account to increase reserves under the policy. Because of this, under existing federal tax law we believe that any such income and gains will not be taxed to us. In addition, any foreign tax credits attributable to the separate account will first be used to reduce any income taxes imposed on the variable account before being used by the company. |
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We do not expect that we will incur any federal income tax liability attributable to the variable account and we do not intend to make provisions for any such taxes. However, if changes in the federal tax laws or their interpretation result in our being taxed on income or gains attributable to the variable account, then we may impose a charge against the variable account (with respect to some or all of the policies) to set aside provisions to pay such taxes. |
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This policy is designed to qualify as a life insurance contract under the Internal Revenue Code. All terms and provisions of the policy shall be construed in a manner which is consistent with that design. In order to qualify as a life insurance contract for federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under federal tax law, a policy must satisfy certain requirements which are set forth in Section 7702 of the Internal Revenue Code. While there is very little guidance as to how these requirements are applied, we believe it is reasonable to conclude that our policies satisfy the applicable requirements. If it is subsequently determined that a policy does not satisfy the applicable requirements, we will take appropriate and reasonable steps to bring the policy into compliance with such requirements and we reserve the right to restrict policy transactions or modify your policy in order to do so. |
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Section 7702 provides that if one of two alternate tests is met, a policy will be treated as a life insurance policy for federal income tax purposes. These tests are referred to as the "cash value accumulation test" and the "guideline premium test." |
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We will at all times strive to assure that the policy meets the statutory definition which qualifies the policy as life insurance for federal income tax purposes. See TAX CONSIDERATIONS - Tax Treatment of Policy Death Benefits, page XX. |
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Diversification and Investor Control Requirements |
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In addition to meeting the Internal Revenue Code Section 7702 tests, Internal Revenue Code Section 817(h) requires separate account investments, such as our variable account, to be adequately diversified. The Treasury has issued regulations which set the standards for measuring the adequacy of any diversification. To be adequately diversified, each sub-account must meet certain tests. If your variable life policy is not adequately diversified under these regulations, it is not treated as life insurance under Internal Revenue Code Section 7702. You would then be subject to federal income tax on your policy income as you earn it. Each sub-account's corresponding fund has represented that it will meet the diversification standards that apply to your policy. If it is determined that your variable life policy does not satisfy the applicable diversification regulations, we will take appropriate and reasonable steps to bring your policy into compliance with such regulations and we re serve the right to modify your policy as necessary in order to do so. |
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Asset Accumulator - 53 |
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In certain circumstances, owners of a variable life insurance policy have been considered, for federal income tax purposes, to be the owners of the assets of the separate account supporting their policies, due to their ability to exercise investment control over such assets. When this is the case, the policy owners have been currently taxed on income and gains attributable to the separate account assets. |
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Your ownership rights under your policy are similar to, but different in some ways from those described by the IRS in rulings in which it determined that policy owners are not owners of separate account assets. For example, you have additional flexibility in allocating your premium payments and in your policy values. These differences could result in the IRS treating you as the owner of a pro rata share of the variable account assets. We do not know what standards will be set forth in the future, if any, in Treasury regulations or rulings. We reserve the right to modify your policy, as necessary, to try to prevent you from being considered the owner of a pro rata share of the variable account assets, or to otherwise qualify your policy for favorable tax treatment. |
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The death benefit, or an accelerated death benefit, under a policy is generally excludable from the gross income of the beneficiary(ies) under Section 101(a)(1) of the Internal Revenue Code. However, there are exceptions to this general rule. Additionally, federal and local transfer, estate inheritance and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary(ies). A tax adviser should be consulted about these consequences. |
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Generally, the policy owner will not be taxed on any of the policy value until there is a distribution. When distributions from a policy occur, or when loan amounts are taken from or secured by a policy, the tax consequences depend on whether or not the policy is a "modified endowment contract." |
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Under the Internal Revenue Code, certain life insurance contracts are classified as "modified endowment contracts" and are given less favorable tax treatment than other life insurance contracts. Due to the flexibility of the policies as to premiums and benefits, the individual circumstances of each policy will determine whether or not it is classified as a modified endowment contract. The rules are too complex to be summarized here, but generally depend on the amount of premiums we receive during the first seven policy years. Certain changes in a policy after it is issued, such as reduction in benefits, could also cause it to be classified as a modified endowment contract. A current or prospective policy owner should consult with a qualified adviser to determine whether or not a policy transaction will cause the policy to be classified as a modified endowment contract. |
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If a policy becomes a modified endowment contract, distributions that occur during the policy year will be taxed as distributions from a modified endowment contract. In addition, distributions from a policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. |
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Additionally, all modified endowment contracts that are issued by us (or our affiliates) to the same policy owner during any calendar year are treated as one modified endowment contract for purposes of determining the amount includible in the policy owner's income when a taxable distribution occurs. |
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Once a policy is classified as a modified endowment contract, the following tax rules apply both prospectively and to any distributions made in the prior two years: |
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Policies That Are Not Modified Endowment Contracts |
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Distributions other than death benefits from a policy that is not classified as a modified endowment contract are generally treated first as a recovery of the policy owner's investment in the policy. Only after the recovery of all investment in the policy is there taxable income. However, certain distributions made in connection with policy benefit reductions during the first fifteen policy years may be treated in whole or in part as ordinary income subject to tax. Consult a tax adviser to determine whether or not any distributions made in connection with a reduction in policy benefits will be subject to tax. |
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Loan amounts from or secured by a policy that is not a modified endowment contract are generally not taxed as distributions. However, the tax consequences of preferred loans are uncertain and a tax adviser should be consulted about such loans. Finally, neither distributions from, nor loan amounts from or secured by, a policy that is not a modified endowment contract are subject to the 10% additional income tax. |
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Investment in the Policy |
Your investment in the policy is generally the total of your aggregate premiums. When a distribution is taken from the policy, your investment in the policy is reduced by the amount of the distribution that is tax free. |
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Policy Loans |
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In general, interest on a loan will not be deductible. A limited exception to this rule exists for certain interest paid in connection with certain "key person" insurance. You should consult a tax adviser to determine whether you qualify under this exception. |
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Moreover, the tax consequences associated with a preferred loan available in the policy are uncertain. Before taking out a loan, you should consult a tax adviser as to the tax consequences. |
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If a loan from a policy is outstanding when the policy is surrendered or lapses, then the amount of the outstanding indebtedness will be added to the amount treated as a distribution from the policy and will be taxed accordingly. |
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We believe that payments under the accelerated death benefit rider should be fully excludable from the gross income of the beneficiary if the beneficiary is the insured under the policy, or is an individual who has no business or financial connection with the insured. (See Automatic Rider Benefits - Accelerated Death Benefit Rider on page XX for more information about this rider.) However, you should consult a qualified tax adviser about the consequences of adding this rider to a policy or requesting payment under this rider. |
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The tax consequences of continuing the policy beyond the policy anniversary nearest the insured person's 95th birthday (if using the guideline premium test) or 100th birthday (if using the cash value accumulation test) are unclear. For example, in certain situations it is possible that after the insured person reaches age 95 under a policy using the guideline premium test (or age 100 under a policy using the cash value accumulation test), the IRS could treat you as being in constructive receipt of the policy value if the policy value becomes equal to the death benefit. If this happens, an amount equal to the excess of the policy value over the investment in the policy would be includible in your income at that time. Because we believe the policy will continue to constitute life insurance at that time and the IRS has not issued any guidance on this issue, we do not intend to tax report any earnings due to the possibility of constructive receipt in this cir cumstance. You should consult a tax adviser if you intend to keep the policy in force after the insured person reaches age 95 if using the guideline premium test (or age 100 under a policy using the cash value accumulation test). |
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Section 1035 Exchanges |
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Internal Revenue Code Section 1035 provides, in certain circumstances, that no gain or loss will be recognized on the exchange of one life insurance policy for another life insurance policy or an endowment or annuity contract. We accept 1035 exchanges with outstanding loans. Special rules and procedures apply to 1035 exchanges. These rules can be complex, and if you wish to take advantage of Section 1035, you should consult your tax adviser. |
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Tax-exempt Policy Owners |
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Special rules may apply to a policy that is owned by a tax-exempt entity. Tax-exempt entities should consult their tax adviser regarding the consequences of purchasing and owning a policy. These consequences could include an effect on the tax-exempt status of the entity and the possibility of the unrelated business income tax. |
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Tax Law Changes |
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Although the likelihood of legislative action is uncertain, there is always the possibility that the tax treatment of the policy could be changed by legislation or otherwise. You should consult a tax adviser with respect to legislative developments and their effect on the policy. |
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Policy Changes to Comply with the Law |
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So that your policy continues to qualify as life insurance under the Internal Revenue Code, we reserve the right to refuse to accept all or part of your premium payments or to change your death benefit. We may refuse to allow you to make partial withdrawals that would cause your policy to fail to qualify as life insurance. We also may make changes to your policy or its riders or make distributions from your policy to the degree that we deem necessary to qualify your policy as life insurance for tax purposes. |
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If we make any change of this type, it applies the same way to all affected policies. |
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Any increase in your death benefit will cause an increase in your cost of insurance charges. |
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Policy Availability and Qualified Plans |
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Policy owners may use the policy with various arrangements, including: |
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The tax consequences of these plans may vary depending on the particular facts and circumstances of each arrangement. If you want to use your policy with any of these various arrangements, you should consult a qualified tax adviser regarding the tax issues of your particular arrangement. |
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Life Insurance Owned by Businesses |
In recent years, Congress has adopted new rules relating to life insurance owned by businesses. For example, in the case of a policy issued to a nonnatural taxpayer, or held for the benefit of such an entity, a portion of the taxpayer's otherwise deductible interest expenses may not be deductible as a result of ownership of a policy even if no loans are taken under the policy. (An exception to this rule is provided for certain life insurance contracts which cover the life of an individual who is a 20-percent owner, or an officer, director, or employee of a trade or business.) As another example, special rules apply if you are subject to the alternative minimum tax. Any business contemplating the purchase of a new policy or a change in an existing policy should consult a tax adviser. |
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Income Tax Withholding |
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The IRS requires us to withhold income taxes from any portion of the amounts individuals receive in a taxable transaction. We do not withhold income taxes if you elect in writing not to have withholding apply. If the amount withheld for you is insufficient to cover income taxes, you will have to pay income taxes and possibly penalties later. |
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Policy Transfers |
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The transfer of the policy or designation of a beneficiary may have federal, state and/or local transfer and inheritance tax consequences, including the imposition of gift, estate and generation-skipping transfer taxes. The individual situation of each policy owner or beneficiary will determine the extent, if any, to which federal, state and local transfer and inheritance taxes may be imposed and how ownership or receipt of policy proceeds will be treated for purposes of federal, state and local estate, inheritance, generation skipping and other taxes. |
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You should consult qualified legal or tax advisers for complete information on federal, state, local and other tax considerations. |
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Your Policy |
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The policy is a contract between you and us and is the combination of: |
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If you make a change to your coverage, we give you a copy of your changed application and new policy schedules. If you send your policy to us, we attach these items to your policy and return it to you. Otherwise, you need to attach them to your policy. |
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Unless there is fraud, we consider all statements made in an application to be representations and not guarantees. We use no statement to deny a claim, unless it is in an application. |
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A president or other officer of our company and our secretary or assistant secretary must sign all changes or amendments to your policy. No other person may change its terms or conditions. |
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Guaranteed Issue |
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We may offer policies on a guaranteed issue basis for certain individuals, groups or sponsored arrangements. We issue these policies up to a preset face amount with reduced evidence of insurability. Guaranteed issue policies carry a different mortality risk compared with policies that are fully underwritten, and we may charge different cost of insurance rates for guaranteed issue policies. The cost of insurance rates under these circumstances may depend on the: |
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Generally, most guaranteed issue policies have higher overall charges for insurance than similar underwritten policies issued in the standard rate classes. This means that an insured person in a group or sponsored arrangement could get individual or fully underwritten insurance coverage at a lower overall cost. |
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Age |
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We issue your policy at the insured person's age (stated in your policy schedule) based on the nearest birthday to the policy date. On the policy date, the insured person can generally be no more than age 85 (age 70 for guaranteed issue policies). |
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We often use age to calculate rates, charges and values. We determine the insured person's age at a given time by adding the number of completed policy years to the age calculated at issue and shown in the schedule. |
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Ownership |
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The original owner is the person named as the owner in the policy application. The owner can exercise all rights and receive benefits during the life of the insured person. These rights include the right to change the owner, beneficiaries or the method designated to pay death benefit proceeds. |
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As a matter of law, all rights of ownership are limited by the rights of any person who has been assigned rights under the policy and any irrevocable beneficiaries. |
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Asset Accumulator - 59 |
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You may name a new owner by giving us written notice. The effective date of the change to the new owner is the date the prior owner signs the notice. However, we will not be liable for any action we take before a change is recorded at our customer service center. A change in ownership may cause the prior owner to recognize taxable income on gain under the policy. |
Beneficiaries |
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You, as owner, name the beneficiaries when you apply for your policy. The primary beneficiaries who survive the insured person receive the death benefit proceeds. Other surviving beneficiaries receive death benefit proceeds only if there are no surviving primary beneficiaries. If more than one beneficiary survives the insured person, they share the death benefit proceeds equally, unless you specify otherwise. If none of your policy beneficiaries has survived the insured person, we pay the death benefit proceeds to you or to your estate, as owner. |
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You may name new beneficiaries during the insured person's lifetime. We pay death benefit proceeds to the beneficiaries whom you have most recently named according to our records. We do not make payments to multiple sets of beneficiaries. The designation of certain beneficiaries may have tax consequences. See TAX CONSIDERATIONS - Other Tax Matters, page XX. |
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Collateral Assignment |
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You may assign your policy by sending written notice to us. After we record the assignment, your rights as owner and the beneficiaries' rights (unless the beneficiaries were made irrevocable beneficiaries under an earlier assignment) are subject to the assignment. It is your responsibility to make sure the assignment is valid. The transfer or assignment of a policy may have tax consequences. See TAX CONSIDERATIONS - Other Tax Matters, page XX. |
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Incontestability |
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After your policy has been in force and the insured person is alive for two years from the policy date and from the effective date of any new coverage segment, an increase in any other benefit or reinstatement, we will not question the validity of statements in your applicable application. |
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Misstatements of Age or Gender |
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Notwithstanding the Incontestability provision above, if the insured person's age or gender has been misstated, we adjust the death benefit to the amount which would have been purchased for the insured person's correct age and gender. We base the adjusted death benefit on the cost of insurance charges deducted from your policy value on the last monthly processing date before the insured person's death, or as otherwise required by law. |
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If unisex cost of insurance rates apply, we do not make any adjustments for a misstatement of gender. |
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Suicide |
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If the insured person commits suicide (while sane or insane), within two years of your policy date, unless otherwise required by law, we limit death benefit proceeds to: |
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We make a limited payment to the beneficiaries for a new coverage segment or other increase if the insured person commits suicide (while sane or insane), within two years of the effective date of a new coverage segment or within two years of an increase in any other benefit, unless otherwise required by law. The limited payment is equal to the cost of insurance and periodic fees and charges which were deducted for the increase. |
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In order to protect against the possible misuse of our products in money laundering or terrorist financing, we have adopted an anti-money laundering program satisfying the requirements of the USA PATRIOT Act. Among other things, this program requires us, our agents and customers to comply with certain procedures and standards that serve to assure that our customers' identities are properly verified and that premiums are not derived from improper sources. |
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Under our anti-money laundering program, we may require policy owners, insured persons and/or beneficiaries to provide sufficient evidence of identification, and we reserve the right to verify any information provided to us by accessing information databases maintained internally or by outside firms. |
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We may also refuse to accept certain forms of premium payments or loan repayments (travelers cheques, for example) or restrict the amount of certain forms of premium payments or loan repayments (money orders totaling more than $5,000, for example). In addition, we may require information as to why a particular form of payment was used (third party checks, for example) and the source of the funds of such payment in order to determine whether or not we will accept it. Use of an unacceptable form of payment may result in your policy entering a 61-day grace period during which you must make a sufficient payment, in an acceptable form, to keep your policy from lapsing. See Premium Payments - Premium Payments Affect Your Coverage, page *. |
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Our anti-money laundering program is subject to change without notice to take account of changes applicable in laws or regulations and our ongoing assessment of our exposure to illegal activity. |
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Transaction Processing |
Generally, within seven days of when we receive all information required to process a payment, we pay: |
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We may delay processing these transactions if: |
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SEC rules and regulations generally determine whether or not these conditions exist. |
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We execute transfers among the sub-accounts as of the valuation date of our receipt of your request at our customer service center. |
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We determine the death benefit as of the date of the insured person's death. The death benefit proceeds are not affected by subsequent changes in the value of the sub-accounts. |
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We may delay payment from our fixed account for up to six months, unless law requires otherwise, of surrender proceeds, withdrawal amounts or loan amounts. If we delay payment more than 30 days, we pay interest at our declared rate (or at a higher rate if required by law) from the date we receive your complete request. |
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Notification and Claims Procedures |
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Except for certain authorized telephone requests, we must receive in writing any election, designation, change, assignment or request made by the owner. |
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You must use a form acceptable to us. We are not liable for actions taken before we receive and record the written notice. We may require you to return your policy for changes to your policy or if you surrender it. |
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If the insured person dies while your policy is in force, please let us know as soon as possible. We will send you instructions on how to make a claim. As proof of the insured person's death, we may require proof of the deceased insured person's age and a certified copy of the death certificate. |
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The beneficiaries and the deceased insured person's next of kin may need to sign authorization forms. These forms allow us to get information such as medical records of doctors and hospitals used by the deceased insured person. |
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Telephone Privileges |
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Telephone privileges are automatically provided to you and your agent/registered representative, unless you decline it on the application or contact our customer service center. Telephone privileges allow you or your agent/registered representative to call our customer service center to: |
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Our customer service center uses reasonable procedures to make sure that instructions received by telephone are genuine. These procedures may include: |
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By accepting telephone privileges, you authorize us to record your telephone calls with us. If we use reasonable procedures to confirm instructions, we are not liable for losses from unauthorized or fraudulent instructions. We may discontinue this privilege at any time. See Transfers - Limits on Frequent or Disruptive Transfers, page XX. |
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Telephone and facsimile privileges may not always be available. Telephone or fax systems, whether yours, your service provider's or your agent's, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may prevent or delay our receipt of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your transfer request by written request. |
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Non-participation |
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Your policy does not participate in the surplus earnings of Security Life of Denver Insurance Company. |
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Advertising Practices and Sales Literature |
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We may use advertisements and sales literature to promote this product, including: |
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We may use information regarding the past performance of the sub-accounts and funds. Past performance is not indicative of future performance of the sub-accounts or funds and is not reflective of the actual investment experience of policy owners. |
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We may feature certain sub-accounts, the underlying funds and their managers, as well as describe asset levels and sales volumes. We may refer to past, current, or prospective economic trends, and, investment performance or other information we believe may be of interest to our customers. |
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Settlement Options |
You may elect to take the surrender value in other than one lump-sum payment. Likewise, you may elect to have the beneficiaries receive the death benefit proceeds other than in one lump-sum payment, if you make this election during the insured person's lifetime. If you have not made this election, the beneficiaries may do so within 60 days after we receive proof of the insured person's death. |
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The investment performance of the sub-accounts does not affect payments under these settlement options. Instead, interest accrues at a fixed rate based on the option you choose. Payment options are subject to our rules at the time you make your selection. Currently, a periodic payment must be at least $20 and the total proceeds must be at least $2,000. |
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The following settlement options are available: |
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If none of these settlement options have been elected, your surrender value or the death benefit proceeds will be paid in one lump-sum payment. |
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Unless you request otherwise, death benefit proceeds generally will be paid into an interest bearing account which is backed by our general account and can be accessed by the beneficiary through a checkbook feature. The beneficiary may access the death benefit proceeds at any time without penalty. Interest earned on this account may be less than interest paid on other settlement options. |
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Reports |
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Annual Statement. We will send you an annual statement once each policy year showing the amount of insurance coverage under your policy as well as your policy's death benefit, policy and surrender values, the amount of premiums you have paid, the amounts you have withdrawn, borrowed or transferred and the fees and charges we have imposed since the last statement. |
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We send semi-annual reports with financial information on the funds, including a list of investment holdings of each fund. |
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We send confirmation notices to you throughout the year for certain policy transactions such as transfers between investment options, partial withdrawals and loans. You are responsible for reviewing the confirmation notices to verify that the transactions are being made as requested. |
64 - Asset Accumulator |
Illustrations. To help you better understand how your policy values will vary over time under different sets of assumptions, we will provide you with a personalized illustration projecting future results based on the age and risk classification of the insured person and other factors such as the amount of insurance coverage, death benefit option, planned premiums and rates of return (within limits) you specify. We may assess a charge not to exceed $25 for each illustration you request after the first in a policy year. See Transaction Fees and Charges - Excess Illustration Fee, page XX. |
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Other Reports. We will mail to you at your last known address of record at least annually a report containing such information as may be required by any applicable law. To reduce expenses, only one copy of most financial reports and prospectuses, including reports and prospectuses for the funds, will be mailed to your household, even if you or other persons in your household have more than one policy issued by us or an affiliate. Call our customer service center toll-free at 1-877-253-5050 if you need additional copies of financial reports, prospectuses, historical account information or annual or semi-annual reports or if you would like to receive one copy for each policy in all future mailings. |
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Distribution of the Policies |
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We sell our policies through licensed insurance agents who are registered representatives of affiliated and unaffiliated broker/dealers. All broker/dealers who sell this policy have entered into selling agreements with us. Under these selling agreements, we pay a distribution allowance to broker/dealers, who in turn pay commissions to their agents/registered representatives who sell this policy. |
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;During the first policy year, we pay a distribution allowance of up to 100% of the target premium we receive. For premium over target we pay less. The distribution allowance we pay is up to 3% of gross premiums received in the second through tenth policy years and lower thereafter. |
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Additionally, broker/dealers also receive renewal commissions (trail commissions) of up to 0.10% annually of the net policy value on each monthly processing date after the first policy year. ; |
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In addition to these distribution allowances/commissions, we may also pay other amounts to broker/dealers and/or their agents/registered representatives. These amounts may include: |
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Asset Accumulator - 65 |
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We pay dealer concessions, wholesaling fees, overrides, other allowances and benefits and the costs of all other incentives or training programs from our resources which include premium expense charges. |
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As with many financial services companies, the company and affiliates of the company have received requests for information from various governmental and self-regulatory agencies in connection with investigations related to trading in investment company shares. In each case, full cooperation and responses are being provided. The company is also reviewing its policies and procedures in this area. |
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We are not aware of any pending legal proceedings which involve the variable account as a party. |
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We are, or may be in the future, a defendant in various legal proceedings in connection with the normal conduct of our insurance operations. Some of these cases may seek class action status and may include a demand for punitive damages as well as for compensatory damages. In the opinion of management, the ultimate resolution of any existing legal proceeding is not likely to have a material adverse effect on our ability to meet our obligations under the policy. |
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Financial statements of the variable account and the company are contained in the Statement of Additional Information. To request a free Statement of Additional Information, please contact our Customer Service Center at the address or telephone number on the back of this prospectus. |
66 - Asset Accumulator |
APPENDIX A |
Definition of Life Insurance Factors |
|
Guideline Premium Test Factors |
Attained Age |
Factor |
Attained Age |
Factor |
Attained Age |
Factor |
Attained Age |
Factor |
Attained Age |
Factor |
0-40 |
2.50 |
48 |
1.97 |
56 |
1.46 |
64 |
1.22 |
72 |
1.11 |
41 |
2.43 |
49 |
1.91 |
57 |
1.42 |
65 |
1.20 |
73 |
1.09 |
42 |
2.36 |
50 |
1.85 |
58 |
1.38 |
66 |
1.19 |
74 |
1.07 |
43 |
2.29 |
51 |
1.78 |
59 |
1.34 |
67 |
1.18 |
75 - 90 |
1.05 |
44 |
2.22 |
52 |
1.71 |
60 |
1.30 |
68 |
1.17 |
91 |
1.04 |
45 |
2.15 |
53 |
1.64 |
61 |
1.28 |
69 |
1.16 |
92 |
1.03 |
46 |
2.09 |
54 |
1.57 |
62 |
1.26 |
70 |
1.15 |
93 |
1.02 |
47 |
2.03 |
55 |
1.50 |
63 |
1.24 |
71 |
1.13 |
94 |
1.01 |
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95 + |
1.00 |
Cash Value Accumulation Test Factors |
The cash value accumulation test factors vary depending on the age and gender of the insured person. |
Generally, the cash value accumulation test requires that a policy's death benefit must be sufficient so that the policy value does not at any time exceed the net single premium required to fund the policy's future benefits. The net single premium for a policy is calculated using the greater of 4.00% or the rates of interest guaranteed in the Guaranteed Interest Division of the policy and the 1980 Commissioner's Standard Ordinary Mortality Table and will vary according to the age and gender of the insured person. The factors for the cash value accumulation test are then equal to 1 divided by the net single premium per dollar of paid up whole life insurance for the applicable age and gender. |
A-1 |
The following chart lists the funds, the investment advisers and subadvisers to the funds and summary information regarding the investment objective of each fund. For information about each fund's expenses, see the Fund Expense Table on page * of this prospectus. More detailed information about the funds can be found in the current prospectus and Statement of Additional Information for each fund. |
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There is no assurance that the stated objectives and policies of any of the funds will be achieved. Shares of the funds will rise and fall in value and you could lose money by investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any financial institution, the Federal Deposit Insurance Corporation or any other government agency. Except as noted, all funds are diversified, as defined under the 1940 Act. |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
AIM V.I. Capital Appreciation Fund - Series I |
Investment Adviser :A I M Advisors, Inc. |
Seeks growth of capital. |
AIM V.I. Government Securities Fund - Series I |
Investment Adviser :A I M Advisors, Inc. |
Seeks to achieve a high level of current income consistent with reasonable concern for safety of principal. |
AIM V.I. High Yield Fund - |
Investment Adviser :A I M Advisors, Inc. |
Seeks to achieve a high level of current income. |
Alger American Growth Portfolio - Class O Shares |
Investment Adviser :Fred Alger Management, Inc. |
Seeks long-term capital appreciation. |
Alger American Leveraged AllCap Portfolio - Class O Shares |
Investment Adviser :Fred Alger Management, Inc. |
Seeks long-term capital appreciation. |
Alger American MidCap Growth Portfolio - Class O Shares |
Investment Adviser :Fred Alger Management, Inc. |
Seeks long-term capital appreciation. |
American Funds Insurance Series - Growth Fund - Class 2 |
Investment Adviser :Capital Research and Management Company |
Seeks growth of capital. |
American Funds Insurance Series - Growth - Income Fund - Class 2 |
Investment Adviser :Capital Research and Management Company |
Seeks capital growth and income over time. |
American Funds Insurance Series - International Fund - Class 2 |
Investment Adviser :Capital Research and Management Company |
Seeks growth of capital over time. |
Fidelity® VIP Asset Manager SM Portfolio - Service Class |
Investment Adviser :Fidelity Management & Research Company Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management & Research (Far East) Inc.; Fidelity Investments Japan Limited; Fidelity Investments Money Management, Inc.; FMR Co., Inc. |
Seeks to obtain high total return with reduced risk over the long term. |
Fidelity® VIP Growth Portfolio - Service Class |
Investment Adviser :Fidelity Management & Research Company Subadviser: FMR Co., Inc. |
Seeks to achieve capital appreciation. |
B-1 |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
Fidelity® VIP Overseas Portfolio - Service Class |
Investment Adviser :Fidelity Management & Research Company Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management & Research (Far East) Inc.; Fidelity International Investment Advisors (U.K.) Limited; Fidelity Investments Japan Limited; FMR Co., Inc. |
Seeks long-term growth of capital. |
ING Hard Assets Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Baring International Investment Limited |
A nondiversified Portfolio that seeks long-term capital appreciation. |
ING JPMorgan Small Cap Equity Portfolio (formerly ING JPMorgan Fleming Small Cap Equity Portfolio) - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: J.P. Morgan Investment Management Inc. |
A nondiversified Portfolio that seeks capital growth over the long term. |
ING Legg Mason Value Portfolio (formerly ING Janus Growth and Income Portfolio) - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Legg Mason Funds Management, Inc. |
Seeks long-term growth of capital. |
ING Liquid Assets Portfolio - Class S Shares |
Investment Adviser :Directed Services, Inc. Subadviser: ;ING Investment Management Co. ; |
Seeks high level of current income consistent with the preservation of capital and liquidity. |
ING Marsico Growth Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Marsico Capital Management, LLC |
Seeks capital appreciation. |
ING Mercury Focus Value Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Mercury Advisors |
Seeks long-term growth of capital |
ING MFS Mid-Cap Growth Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Massachusetts Financial Services Company |
Seeks long-term growth of capital. |
ING MFS Total Return Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Massachusetts Financial Services Company |
Seeks above-average income (compared to a portfolio entirely invested in equity securities) consistent with the prudent employment of capital. |
B-2 |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
ING Salomon Brothers Investors Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Salomon Brothers Asset Management, Inc. |
Seeks long-term growth of capital. |
ING Stock Index Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: ;ING Investment Management Co. ; |
Seeks total return. |
ING T. Rowe Price Capital Appreciation Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: T. Rowe Price Associates, Inc. |
Seeks, over the long-term, a high total investment return, consistent with the preservation of capital and prudent investment risk. |
ING T. Rowe Price Equity Income Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: T. Rowe Price Associates, Inc. |
Seeks substantial dividend income as well as long-term growth of capital. |
ING Van Kampen Equity Growth Portfolio - Class I Shares |
Investment Adviser :Directed Services, Inc. Subadviser: Van Kampen |
Seeks long-term capital appreciation. |
ING JP Morgan Mid Cap Value Portfolio - Initial Class |
Investment Adviser :ING Life Insurance and Annuity Company. Subadviser: J.P. Morgan Investment Management Inc. |
Seeks growth from capital appreciation. |
ING PIMCO Total Return Portfolio - Initial Class |
Investment Adviser :ING Life Insurance and Annuity Company Subadviser: Pacific Investment Management Company LLC |
Seeks maximum total return, consistent with capital preservation and prudent investment management. |
ING Salomon Brothers Aggressive Growth Portfolio - Initial Class |
Investment Adviser :ING Life Insurance and Annuity Company Subadviser: Salomon Brothers Asset Management Inc. |
Seeks long-term growth of capital. |
ING UBS U.S. Allocation |
Investment Adviser :ING Life Insurance and Annuity Company Sub-Adviser: UBS Global Asset Management (US) Inc. |
Seeks total return, consisting of long-term capital appreciation and current income. |
* |
Effective November 8, 2004, ING UBS U.S. Allocation Portfolio will be renamed ING Van Kampen Equity and Income Portfolio and Morgan Stanley Investment Management, Inc. (d/b/a Van Kampen) will replace UBS Global Asset Management (US) Inc. as sub-adviser. |
B-3 |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
ING Van Kampen Comstock Portfolio - Initial Class |
Investment Adviser :ING Life Insurance and Annuity Company Sub-Adviser: Van Kampen |
Seeks capital growth and income. |
;ING VP Intermediate Bond Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ING Investment Management Co. ; |
Seeks to maximize total return. |
ING VP Index Plus LargeCap Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. ; |
Seeks to outperform the total return performance of the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), while maintaining a market level of risk. |
ING VP Index Plus MidCap Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. ; |
Seeks to outperform the total return performance of the Standard & Poor's MidCap 400 Index (S&P MidCap 400 Index), while maintaining a market level of risk. |
ING VP Index Plus SmallCap Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. ; |
Seeks to outperform the total return performance of the Standard and Poor's SmallCap 600 Index (S&P 600 Index), while maintaining a market level of risk. |
;ING VP Strategic Allocation Balanced Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ING Investment Management Co. |
Seeks to provide total return (i.e., income and capital appreciation, both realized and unrealized). |
ING VP Strategic Allocation Growth Portfolio -Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ING Investment Management Co. |
Seeks to provide capital appreciation. |
ING VP Strategic Allocation Income Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ING Investment Management Co. |
Seeks to provide total return consistent with preservation of capital. ; |
ING VP MagnaCap Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. ; |
Seeks growth of capital with dividend income as a secondary consideration. |
ING VP MidCap Opportunities Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. ; |
Seeks long-term capital appreciation. |
ING VP SmallCap Opportunities Portfolio - Class I Shares |
Investment Adviser :ING Investments, LLC Sub-Adviser: ;ING Investment Management Co. |
Seeks long-term capital appreciation. |
INVESCO VIF-Core Equity Fund - Series I shares |
Investment Adviser :A I M Advisors, Inc. Investment Sub-Adviser: INVESCO Institutional (N.A.), Inc. |
Seeks to provide a high total return. |
B-4 |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
INVESCO VIF-Health Sciences Fund - Series I shares |
Investment Adviser :A I M Advisors, Inc. Investment Sub-Adviser: INVESCO Institutional (N.A.), Inc. |
Seeks capital growth. |
INVESCO VIF-Small Company Growth Fund - Series I shares |
Investment Adviser :A I M Advisors, Inc. Investment Sub-Adviser: INVESCO Institutional (N.A.), Inc. |
Seeks long-term capital growth. |
INVESCO VIF-Total Return Fund - Series I shares |
Investment Adviser :A I M Advisors, Inc. Investment Sub-Adviser: INVESCO Institutional (N.A.), Inc. |
Seeks to provide high total return. |
INVESCO VIF-Utilities Fund - Series I shares |
Investment Adviser :A I M Advisors, Inc. Investment Sub-Adviser: INVESCO Institutional (N.A.), Inc. |
Seeks capital growth. |
;Janus Aspen International Growth Portfolio - Service Shares |
Investment Adviser: |
Seeks long-term growth of capital. ; |
Neuberger Berman AMT Growth Portfolio - Class I Shares |
Investment Adviser :Neuberger Berman Management Inc. Sub-Adviser: Neuberger Berman, LLC |
Seeks growth of capital. |
Neuberger Berman AMT Limited Maturity Bond Portfolio - Class I Shares |
Investment Adviser :Neuberger Berman Management Inc. Sub-Adviser: Neuberger Berman, LLC |
Seeks the highest available current income consistent with liquidity and low risk to principal; total return is a secondary goal. |
Pioneer Mid Cap Value VCT Portfolio - Class I Shares |
Investment Adviser :Pioneer Investment Management, Inc. |
Seeks capital appreciation. |
Pioneer Small Cap Value VCT Portfolio - Class I Shares |
Investment Adviser :Pioneer Investment Management, Inc. |
Seeks capital growth. |
Putnam VT Growth and Income Fund - Class IB Shares |
Investment Adviser :Putnam Investment Management, LLC |
Seeks capital growth and current income. |
Putnam VT New Opportunities Fund - Class IB Shares |
Investment Adviser :Putnam Investment Management, LLC |
Seeks long-term capital appreciation. |
Putnam VT Small Cap Value Fund - Class IB Shares |
Investment Adviser :Putnam Investment Management, LLC |
Seeks capital appreciation. |
Putnam VT Voyager Fund - Class IB Shares |
Investment Adviser :Putnam Investment Management, LLC |
Seeks capital appreciation. |
Van Eck Worldwide Bond Fund |
Investment Adviser :Van Eck Associates Corporation |
Seeks high total return--income plus capital appreciation. |
B-5 |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
Van Eck Worldwide Emerging Markets Fund |
Investment Adviser :Van Eck Associates Corporation |
Seeks long-term capital appreciation. |
Van Eck Worldwide Hard Assets Fund |
Investment Adviser :Van Eck Associates Corporation |
Seeks long-term capital appreciation. |
Van Eck Worldwide Real Estate Fund |
Investment Adviser :Van Eck Associates Corporation |
Seeks to maximize return. |
B-6 |
MORE INFORMATION IS AVAILABLE |
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If you would like more information about us, the variable account or the policy, the following documents are available free upon request: |
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Page |
General Information and History |
2 |
Performance Reporting and Advertising |
2 |
Experts |
3 |
Financial Statements |
4 |
Financial Statements of Security Life Separate Account L1 |
S-1 |
Statutory Basis Financial Statements of Security Life of Denver Insurance Company |
F-1 |
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To request a free SAI or personalized illustration of policy benefits or to make other inquiries about the policy, please contact us at our: |
Customer Service Center |
P.O. Box 5065 |
Minot, ND 58702-5065 |
1-877-253-5050 |
Additional information about us, the variable account or the policy (including the SAI) can be reviewed and copied from the SEC's Internet website (www.sec.gov) or at the SEC's Public Reference Room in Washington, DC. Copies of this additional information may also be obtained, upon payment of a duplicating fee, by writing the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549-0102. More information about operation of the SEC's Public Reference Room can be obtained by calling 202-942-8090. |
1940 Act File No. 811-08292 |
ASSET ACCUMULATOR |
This Supplement adds certain information to your Prospectus, dated September XX, 2004. Please read it carefully and keep it with your Prospectus for future reference. ; |
______________________________________________________________________ |
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Variable Investment Options. Four additional funds are currently available through your Policy: |
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For a more complete description of these funds' investments, risks, costs and expenses, please see the accompanying prospectus for each fund. |
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Your policy's prospectus and the fund prospectuses can be requested by calling our Customer Service Center toll-free at 1-877-253-5050. These prospectuses contain information about your policy's investment options and the various fund fees and charges. Please read your policy's prospectus and the fund prospectuses carefully before investing. |
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* * * * * * * * * * * * * * * * * |
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The following information is added to the Fund Expense Table which begins on page 12 of the prospectus: |
Fund Name |
Management Fees |
Distribution (12b-1) Fees |
Other Expenses |
Total Gross Annual Fund Expenses |
Fees and Expenses Waived or Reimbursed |
Total Net Annual Fund Expenses |
M Fund, Inc. Brandes International Equity Fund 1 |
0.72% |
N/A |
0.25% |
0.97% |
0.00% |
0.97% |
M Fund, Inc. Business Opportunity Value Fund 1 |
0.65% |
N/A |
0.88% |
1.53% |
0.63% |
0.90% |
M Fund, Inc. Frontier Capital Appreciation Fund 1 |
0.90% |
N/A |
0.21% |
1.11% |
0.00% |
1.11% |
M Fund, Inc. Turner Core Growth Fund 1 |
0.45% |
N/A |
0.27% |
0.72% |
0.02% |
0.70% |
1 |
For the period ending May 1, 2004 to April 30, 2005, the adviser has contractually agreed to reimburse the Fund for any expenses (other than advisory fees, brokerage or other portfolio transaction expenses or expenses for litigation, indemnification, taxes or other extraordinary expenses) to the extent that such expenses exceed 0.25% of the Fund's annualized average daily net assets. Fees and expenses shown are for the year ended December 31, 2003. Future fees and expenses may be different. |
133294 |
Page 1 of 2 |
September 2004 |
The following information is added to Appendix B of the prospectus: |
Fund Name |
Investment Adviser/Subadviser |
Investment Objective |
M Fund Brandes International Equity Fund |
Investment Adviser :M Financial Investment Advisers, Inc. Sub-Adviser: Brandes Investment Partners, LLC |
Seeks to provide long-term capital appreciation. |
M Fund Business Opportunity Value Fund |
Investment Adviser :M Financial Investment Advisers, Inc. Sub-Adviser: Iridian Asset Management LLC |
Seeks to provide long-term capital appreciation. |
M Fund Frontier Capital Appreciation Fund |
Investment Adviser :M Financial Investment Advisers, Inc. Sub-Adviser: Frontier Capital Management Company, LLC |
Seeks to provide maximum capital appreciation. |
M Fund Turner Core Growth Fund |
Investment Adviser :M Financial Investment Advisers, Inc. Sub-Adviser: Turner Investment Partners, Inc. |
Seeks to provide long-term capital appreciation. |
133294 |
Page 2 of 2 |
September 2004 |
PART B |
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION |
SECURITY LIFE SEPARATE ACCOUNT L1 |
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;Statement of Additional Information dated September XX, 2004 ; |
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ASSET ACCUMULATOR |
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This Statement of Additional Information is not a prospectus and should be read in conjunction with the current Asset Accumulator prospectus dated September XX, 2004. The policy offered in connection with the prospectus is a flexible premium variable universal life insurance policy funded through the Security Life Separate Account L1. |
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A free prospectus is available upon request by contacting the Security Life of Denver Insurance Company Customer Service P.O. Box 5065, Minot, ND 58702-5065, by calling 1-877-253-5050 or by accessing the SEC's web site at www.sec.gov. |
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Read the prospectus before you invest. Unless otherwise indicated, terms used in this Statement of Additional Information shall have the same meaning as in the prospectus. |
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TABLE OF CONTENTS |
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Page |
General Information and History |
2 |
Performance Reporting and Advertising |
3 |
Experts |
4 |
Financial Statements |
5 |
Financial Statements of Security Life Separate Account L1 |
S-1 |
Statutory-Basis Financial Statements of Security Life of Denver Insurance Company |
F-1 |
Security Life of Denver Insurance Company (the "company," "we," "us," "our") issues the policy described in the prospectus and is responsible for providing each policy's insurance benefits. We are a stock life insurance company organized in 1929 and incorporated under the laws of the State of Colorado and an indirect, wholly-owned subsidiary of ING Groep N.V. ("ING"), a global financial institution active in the fields of insurance, banking and asset management. ING is headquartered in Amsterdam, The Netherlands. We are engaged in the business of issuing insurance policies. Our headquarters is at 1290 Broadway, Denver, Colorado 80203-5699. |
We established the Security Life Separate Account L1 (the "variable account") on November 3, 1993, as one of our separate accounts under the laws of the State of Colorado for the purpose of funding variable life insurance policies issued by us. The variable account is registered with the Securities and Exchange Commission ("SEC") as a unit investment trust under the Investment Company Act of 1940, as amended. Premium payments may be allocated to one or more of the available sub-accounts of the variable account. Each sub-account invests in shares of a corresponding fund at net asset value. We may make additions to, deletions from or substitutions of available funds as permitted by law and subject to the conditions of the policy. |
Other than the policy owner fees and charges described in the prospectus, all expenses incurred in the operations of the variable account are borne by the company. We do, however, receive compensation for certain recordkeeping, administration or other services from the funds or affiliates of the funds available through the policies. See "Fees and Charges" in the prospectus. |
The company maintains custody of the assets of the variable account. As custodian, the company holds cash balances for the variable account pending investment in the funds or distribution. The funds in whose shares the assets of the sub-accounts of the variable account are invested each have custodians, as discussed in the respective fund prospectuses. |
Information regarding the past, or historical, performance of the sub-accounts of the variable account and the funds available for investment through the sub-accounts of the variable account may appear in advertisements, sales literature or reports to policy owners or prospective purchasers. SUCH PERFORMANCE INFORMATION FOR THE SUB-ACCOUNTS WILL REFLECT THE DEDUCTION OF ALL FUND FEES AND CHARGES, INCLUDING INVESTMENT MANAGEMENT FEES, DISTRIBUTION (12B-1) FEES AND OTHER EXPENSES BUT WILL NOT REFLECT DEDUCTIONS FOR ANY POLICY FEES AND CHARGES. IF THE POLICY'S PREMIUM EXPENSE, COST OF INSURANCE, MORTALITY AND EXPENSE RISK, POLICY AND ADMINISTRATIVE CHARGES AND THE OTHER TRANSACTION, PERIODIC OR OPTIONAL BENEFITS FEES AND CHARGES WERE DEDUCTED, THE PERFORMANCE SHOWN WOULD BE SIGNIFICANTLY LOWER. |
With respect to performance reporting it is important to remember that past performance does not guarantee future results. Current performance may be higher or lower than the performance shown and actual investment returns and principal values will fluctuate so that shares and/or units, at redemption, may be worth more or less than their original cost. |
2 |
Performance history of the sub-accounts of the variable account and the corresponding funds is measured by comparing the value at the beginning of the period to the value at the end of the period. Performance is usually calculated for periods of one month, three months, year-to-date, one year, three years, five years, ten years (if the fund has been in existence for these periods) and since the inception date of the fund (if the fund has been in existence for less than ten years). We may provide performance information showing average annual total returns for periods prior to the date a sub-account commenced operation. We will calculate such performance information based on the assumption that the sub-accounts were in existence for the same periods as those indicated for the funds, with the level of charges at the variable account level that were in effect at the inception of the sub-accounts. Performance information will be specific to the class of fund shares offered through the policy, however, for periods prior to the date a class of fund shares commenced operations, performance information may be based on a different class of shares of the same fund. In this case, performance for the periods prior to the date a class of fund shares commenced operations will be adjusted by the fund fees and expenses associated with the class of fund shares offered through the policy. |
We may compare performance of the sub-accounts and/or the funds as reported from time to time in advertisements and sales literature to other variable life insurance issuers in general; to the performance of particular types of variable life insurance policies investing in mutual funds; or to investment series of mutual funds with investment objectives similar to each of the sub-accounts, whose performance is reported by Lipper Analytical Services, Inc. ("Lipper") and Morningstar. Inc. ("Morningstar") or reported by other series, companies, individuals or other industry or financial publications of general interest, such as Forbes, Money, The Wall Street Journal, Business Week, Barron's, Kiplinger's and Fortune. Lipper and Morningstar are independent services which monitor and rank the performances of variable life insurance issuers in each of the major categories of investment objectives on an industry-wide basis. |
Lipper's and Morningstar's rankings include variable annuity issuers as well as variable life insurance issuers. The performance analysis prepared by Lipper and Morningstar ranks such issuers on the basis of total return, assuming reinvestment of distributions, but does not take sales charges, redemption fees or certain expense deductions at the separate account level into consideration. We may also compare the performance of each sub-account in advertising and sales literature to the Standard & Poor's Index of 500 common stocks and the Dow Jones Industrials, which are widely used measures of stock market performance. We may also compare the performance of each sub-account to other widely recognized indices. Unmanaged indices may assume the reinvestment of dividends, but typically do not reflect any "deduction" for the expense of operating or managing an investment portfolio. |
To help you better understand how your policy's death benefits, policy value and surrender value will vary over time under different sets of assumptions, we encourage you to obtain a personalized illustration. Personalized illustrations will assume deductions for fund expenses and policy and variable account charges. We will base these illustrations on the age and risk classification of the insured person and other factors such as the amount of insurance coverage, death benefit option, premiums and rates of return (within limits) you specify. These personalized illustrations will be based on either a hypothetical investment return of the funds of 0% and other percentages not to exceed 12% or on the actual historical experience of the funds as if the sub-accounts had been in existence and a policy issued for the same periods as those indicated for the funds. Subject to regulatory approval, personalized illustrations may be based upon a weighted average of fund expenses rather t han an arithmetic average. A personalized illustration is available upon request by contacting our Customer Service Center at P.O. Box 5065, Minot, ND 58702-5065 or by calling 1-877-253-5050. |
;The statements of assets and liabilities of Security Life Separate Account L1 as of December 31, 2003 and the related statement of operations for the year then ended and statements of changes in net assets for each of the two years in the period then ended and the statutory-basis financial statements of Security Life of Denver Insurance Company as of December 31, 2003 and 2002 and for the years then ended, appearing in this Statement of Additional Information, have been audited by _____________________, independent auditors, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing. ; |
3 |
The financial statements of the variable account reflect the operations of the variable account as of December 31, 2003, and for the year then ended and are audited. |
The statutory-basis financial statements of the company as of December 31, 2003 and 2002 and for the years then ended are audited. The financial statements of the company should be distinguished from the financial statements of the variable account and should be considered only as bearing upon the ability of the company to meet its obligations under the policies. They should not be considered as bearing on the investment performance of the assets held in the variable account. The periods covered are not necessarily indicative of the longer term performance of the company. |
;The primary business address of _______________________ is ________________________________________. ; |
4 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
|
SEPARATE ACCOUNT L1 |
|
Financial Statements |
|
Year ended December 31, 2003 |
|
|
|
|
|
|
|
Contents |
|
|
|
|
|
Report of Independent Auditors |
S-2 |
|
|
Audited Financial Statements |
|
|
|
Statements of Assets and Liabilities |
S-5 |
|
|
Statements of Operations |
S-19 |
|
|
Statements of Changes in Net Assets |
S-33 |
|
|
Notes to Financial Statements |
S-50 |
S-1 |
|
|
|
|
|
|
|
Report of Independent Auditors |
|
|
The Board of Directors and Participants |
Security Life of Denver Insurance Company |
|
We have audited the accompanying statements of assets and liabilities of Security Life of Denver Insurance Company Separate Account L1 (the "Account") as of December 31, 2003, and the related statements of operations and changes in net assets for the periods disclosed in the financial statements. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. The Account is comprised of the following Divisions: |
AIM Variable Insurance Funds: |
Fidelity® VIP Overseas Portfolio - Initial Class |
S-2 |
ING Variable Portfolios, Inc.: |
M Fund, Inc: |
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the transfer agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. |
S-3 |
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the Divisions of the Security Life of Denver Insurance Company Separate Account L1 at December 31, 2003, and the results of their operations and changes in their net assets for the periods disclosed in the financial statements, in conformity with accounting principles generally accepted in the United States. |
|
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|
/s/ __________________ |
|
_______________ |
_______________ |
S-4 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Alger |
Alger |
|||||||||||||
AIM VI |
AIM VI |
Alger |
American |
American |
||||||||||
Capital |
Government |
American |
Leveraged |
MidCap |
||||||||||
Appreciation |
Securities |
Growth |
AllCap |
Growth |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 10,989 |
$ 29,800 |
$ 44,540 |
$ 18,180 |
$ 43,924 |
|||||||||
Total assets |
10,989 |
29,800 |
44,540 |
18,180 |
43,924 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 10,989 |
$ 29,800 |
$ 44,540 |
$ 18,180 |
$ 43,924 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
944,437.260 |
2,017,586.972 |
1,922,128.600 |
579,069.968 |
1,272,167.837 |
|||||||||
Class B |
102,125.603 |
270,861.713 |
339,052.152 |
122,901.103 |
352,070.795 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 10.65 |
$ 13.01 |
$ 21.74 |
$ 29.61 |
$ 30.91 |
|||||||||
Class B |
$ 9.11 |
$ 13.11 |
$ 8.12 |
$ 8.41 |
$ 13.07 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
516,383 |
2,436,615 |
1,337,945 |
647,200 |
2,387,189 |
|||||||||
Cost of mutual fund shares |
$ 9,880 |
$ 29,728 |
$ 53,013 |
$ 17,706 |
$ 37,439 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-5 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Alger |
||||||||||||||
American |
American |
American |
American |
Fidelity® VIP |
||||||||||
Small |
Funds |
Funds |
Funds |
Asset |
||||||||||
Capitalization |
Growth |
Growth-Income |
International |
Manager SM |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 19,376 |
$ 3,929 |
$ 3,463 |
$ 2,412 |
$ 21,003 |
|||||||||
Total assets |
19,376 |
3,929 |
3,463 |
2,412 |
21,003 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 19,376 |
$ 3,929 |
$ 3,463 |
$ 2,412 |
$ 21,003 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
1,366,912.242 |
225,349.476 |
185,194.154 |
102,569.110 |
1,159,746.952 |
|||||||||
Class B |
79,486.668 |
79,266.687 |
82,606.086 |
71,120.487 |
- |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 13.76 |
$ 12.88 |
$ 12.91 |
$ 13.86 |
$ 18.11 |
|||||||||
Class B |
$ 7.14 |
$ 12.95 |
$ 12.98 |
$ 13.93 |
$ - |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
1,114,859 |
86,352 |
103,437 |
180,024 |
1,452,491 |
|||||||||
Cost of mutual fund shares |
$ 14,541 |
$ 3,680 |
$ 3,238 |
$ 2,199 |
$ 19,253 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-6 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Fidelity® VIP |
Fidelity® VIP |
|||||||||||||
Asset |
Fidelity® VIP |
Fidelity® VIP |
Fidelity® VIP |
Money |
||||||||||
Manager SM SC |
Growth |
Growth SC |
Index 500 |
Market |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 1,056 |
$ 53,751 |
$ 2,000 |
$ 195,682 |
$ 68,318 |
|||||||||
Total assets |
1,056 |
53,751 |
2,000 |
195,682 |
68,318 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 1,056 |
$ 53,751 |
$ 2,000 |
$ 195,682 |
$ 68,318 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
- |
2,323,048.766 |
- |
7,056,176.390 |
4,914,978.848 |
|||||||||
Class B |
99,266.388 |
61,069.091 |
252,804.825 |
2,380,264.503 |
- |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ - |
$ 22.92 |
$ - |
$ 24.75 |
$ 13.90 |
|||||||||
Class B |
$ 10.64 |
$ 8.29 |
$ 7.91 |
$ 8.84 |
$ - |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
73,500 |
1,731,654 |
64,673 |
1,551,430 |
68,318,206 |
|||||||||
Cost of mutual fund shares |
$ 967 |
$ 50,314 |
$ 1,635 |
$ 199,626 |
$ 68,317 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-7 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
ING Limited |
||||||||||||||
Fidelity® VIP |
Fidelity® VIP |
ING VP |
ING Hard |
Maturity |
||||||||||
Overseas |
Overseas SC |
Bond |
Assets |
Bond |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 38,294 |
$ 1,641 |
$ 5,775 |
$ 61 |
$ 465 |
|||||||||
Total assets |
38,294 |
1,641 |
5,775 |
61 |
465 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 38,294 |
$ 1,641 |
$ 5,775 |
$ 61 |
$ 465 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
2,625,421.903 |
- |
330,623.842 |
2,681.885 |
- |
|||||||||
Class B |
49,330.145 |
188,658.881 |
174,719.213 |
1,466.933 |
35,577.884 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 14.41 |
$ - |
$ 11.38 |
$ 15.45 |
$ - |
|||||||||
Class B |
$ 9.35 |
$ 8.70 |
$ 11.52 |
$ 13.11 |
$ 13.08 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
2,456,290 |
105,688 |
408,146 |
4,072 |
39,945 |
|||||||||
Cost of mutual fund shares |
$ 31,499 |
$ 1,324 |
$ 5,664 |
$ 55 |
$ 462 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-8 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
ING MFS |
ING MFS |
|||||||||||||
ING Liquid |
ING Marisco |
Mid Cap |
ING MFS |
Total |
||||||||||
Assets |
Growth |
Growth |
Research |
Return |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 20,993 |
$ 1,870 |
$ 2,923 |
$ 7 |
$ 1,246 |
|||||||||
Total assets |
20,993 |
1,870 |
2,923 |
7 |
1,246 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 20,993 |
$ 1,870 |
$ 2,923 |
$ 7 |
$ 1,246 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
- |
91,871.834 |
247,475.560 |
- |
29,404.864 |
|||||||||
Class B |
1,827,077.212 |
89,645.416 |
133,424.028 |
794.548 |
70,057.945 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ - |
$ 12.78 |
$ 6.79 |
$ - |
$ 11.57 |
|||||||||
Class B |
$ 11.49 |
$ 7.76 |
$ 9.31 |
$ 8.22 |
$ 12.93 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
20,993,117 |
144,831 |
288,503 |
439 |
72,361 |
|||||||||
Cost of mutual fund shares |
$ 20,993 |
$ 1,819 |
$ 2,608 |
$ 6 |
$ 1,159 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-9 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
ING |
ING Salomon |
|||||||||||||
ING T. Rowe |
ING T. Rowe |
JPMorgan |
ING PIMCO |
Brothers |
||||||||||
Price Capital |
Price Equity |
Mid Cap |
Total |
Aggressive |
||||||||||
Appreciation |
Income |
Value |
Return |
Growth |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 22,308 |
$ 2,734 |
$ 1,139 |
$ 5,884 |
$ 123 |
|||||||||
Total assets |
22,308 |
2,734 |
1,139 |
5,884 |
123 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 22,308 |
$ 2,734 |
$ 1,139 |
$ 5,884 |
$ 123 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
1,223,705.521 |
157,946.036 |
47,421.972 |
520,349.537 |
5,398.709 |
|||||||||
Class B |
461,983.799 |
62,189.463 |
41,853.534 |
55,721.030 |
4,186.085 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 13.16 |
$ 12.70 |
$ 12.73 |
$ 10.21 |
$ 12.77 |
|||||||||
Class B |
$ 13.43 |
$ 11.71 |
$ 12.80 |
$ 10.26 |
$ 12.83 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
1,044,890 |
225,404 |
95,668 |
554,093 |
3,369 |
|||||||||
Cost of mutual fund shares |
$ 18,836 |
$ 2,492 |
$ 1,079 |
$ 5,927 |
$ 116 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-10 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
ING UBS |
||||||||||||||
ING Salomon |
Tactical |
ING |
ING VP Index |
ING VP Index |
||||||||||
Brothers |
Asset |
Van Kampen |
Plus |
Plus |
||||||||||
Investors |
Allocation |
Comstock |
Large Cap |
Mid Cap |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 161 |
$ 143 |
$ 4,034 |
$ 4,224 |
$ 7,802 |
|||||||||
Total assets |
161 |
143 |
4,034 |
4,224 |
7,802 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 161 |
$ 143 |
$ 4,034 |
$ 4,224 |
$ 7,802 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
9,425.543 |
9,596.183 |
214,534.918 |
226,365.623 |
278,489.976 |
|||||||||
Class B |
2,946.635 |
4,881.472 |
157,806.996 |
195,624.913 |
433,647.315 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 13.02 |
$ 9.85 |
$ 10.78 |
$ 9.95 |
$ 10.87 |
|||||||||
Class B |
$ 13.09 |
$ 9.97 |
$ 10.91 |
$ 10.08 |
$ 11.01 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
15,347 |
4,718 |
380,600 |
311,982 |
498,826 |
|||||||||
Cost of mutual fund shares |
$ 147 |
$ 130 |
$ 3,514 |
$ 3,633 |
$ 6,477 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-11 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
ING VP Index |
ING VP |
ING VP |
ING VP |
|||||||||||
Plus |
Growth |
ING VP |
MidCap |
SmallCap |
||||||||||
Small Cap |
Opportunities |
MagnaCap |
Opportunities |
Opportunities |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 2,906 |
$ 281 |
$ 1,281 |
$ 1,404 |
$ 2,743 |
|||||||||
Total assets |
2,906 |
281 |
1,281 |
1,404 |
2,743 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 2,906 |
$ 281 |
$ 1,281 |
$ 1,404 |
$ 2,743 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
149,254.314 |
27,649.204 |
86,895.751 |
37,427.115 |
244,164.180 |
|||||||||
Class B |
112,197.465 |
8,484.742 |
44,048.862 |
114,164.269 |
120,896.212 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 11.05 |
$ 7.75 |
$ 9.71 |
$ 9.12 |
$ 7.46 |
|||||||||
Class B |
$ 11.20 |
$ 7.91 |
$ 9.92 |
$ 9.31 |
$ 7.62 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
214,931 |
56,392 |
144,878 |
228,326 |
185,819 |
|||||||||
Cost of mutual fund shares |
$ 2,330 |
$ 251 |
$ 1,054 |
$ 1,104 |
$ 2,487 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-12 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
INVESCO |
||||||||||||||
INVESCO |
INVESCO |
INVESCO |
VIF - Small |
INVESCO |
||||||||||
VIF - Core |
VIF - Health |
VIF - High |
Company |
VIF - Total |
||||||||||
Equity |
Sciences |
Yield |
Growth |
Return |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 27,110 |
$ 631 |
$ 27,768 |
$ 13,864 |
$ 10,471 |
|||||||||
Total assets |
27,110 |
631 |
27,768 |
13,864 |
10,471 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 27,110 |
$ 631 |
$ 27,768 |
$ 13,864 |
$ 10,471 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
1,036,512.551 |
45,231.327 |
1,629,863.630 |
959,716.789 |
583,565.243 |
|||||||||
Class B |
230,372.665 |
15,443.595 |
213,277.916 |
141,139.985 |
55,869.316 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 23.99 |
$ 10.37 |
$ 15.79 |
$ 12.99 |
$ 16.94 |
|||||||||
Class B |
$ 9.74 |
$ 10.50 |
$ 9.53 |
$ 9.90 |
$ 10.47 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
1,513,666 |
35,925 |
3,501,650 |
1,024,686 |
825,753 |
|||||||||
Cost of mutual fund shares |
$ 26,644 |
$ 549 |
$ 26,260 |
$ 11,582 |
$ 10,000 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-13 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Janus Aspen |
Janus Aspen |
|||||||||||||
INVESCO |
Janus Aspen |
International |
Mid Cap |
Janus Aspen |
||||||||||
VIF - Utilities |
Growth |
Growth |
Growth |
Worldwide |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 8,951 |
$ 4,019 |
$ 6,883 |
$ 2,203 |
$ 3,806 |
|||||||||
Total assets |
8,951 |
4,019 |
6,883 |
2,203 |
3,806 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 8,951 |
$ 4,019 |
$ 6,883 |
$ 2,203 |
$ 3,806 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
581,378.008 |
470,135.461 |
691,879.328 |
469,269.981 |
473,178.664 |
|||||||||
Class B |
111,563.193 |
210,606.487 |
358,207.136 |
90,389.303 |
153,209.052 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 14.13 |
$ 5.86 |
$ 6.50 |
$ 3.92 |
$ 6.04 |
|||||||||
Class B |
$ 6.60 |
$ 6.00 |
$ 6.66 |
$ 4.02 |
$ 6.19 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
690,678 |
211,063 |
300,694 |
104,651 |
148,108 |
|||||||||
Cost of mutual fund shares |
$ 7,876 |
$ 3,265 |
$ 5,482 |
$ 1,908 |
$ 3,503 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-14 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Brandes |
Business |
Frontier |
Neuberger |
|||||||||||
International |
Opportunity |
Capital |
Turner |
Berman AMT |
||||||||||
Equity |
Value |
Appreciation |
Core Growth |
Growth |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 8,330 |
$ 1,103 |
$ 5,926 |
$ 1,538 |
$ 14,408 |
|||||||||
Total assets |
8,330 |
1,103 |
5,926 |
1,538 |
14,408 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 8,330 |
$ 1,103 |
$ 5,926 |
$ 1,538 |
$ 14,408 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
694,748.601 |
94,450.619 |
480,047.285 |
154,179.884 |
868,224.752 |
|||||||||
Class B |
18,625.190 |
18,210.257 |
11,090.065 |
11,806.988 |
37,817.543 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 11.67 |
$ 9.77 |
$ 12.06 |
$ 9.25 |
$ 16.26 |
|||||||||
Class B |
$ 11.91 |
$ 9.90 |
$ 12.32 |
$ 9.44 |
$ 7.68 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
572,084 |
109,323 |
300,507 |
116,575 |
1,382,704 |
|||||||||
Cost of mutual fund shares |
$ 6,401 |
$ 911 |
$ 4,111 |
$ 1,357 |
$ 13,794 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-15 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Neuberger |
||||||||||||||
Berman AMT |
Neuberger |
Pioneer |
Pioneer |
Putnam VT |
||||||||||
Limited |
Berman AMT |
Mid-Cap |
Small Cap |
Growth and |
||||||||||
Maturity Bond |
Partners |
Value VCT |
Value VCT |
Income |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 30,686 |
$ 32,014 |
$ 7,115 |
$ 2,455 |
$ 5,300 |
|||||||||
Total assets |
30,686 |
32,014 |
7,115 |
2,455 |
5,300 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 30,686 |
$ 32,014 |
$ 7,115 |
$ 2,455 |
$ 5,300 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
1,741,581.543 |
1,320,840.811 |
503,980.540 |
175,680.751 |
358,889.858 |
|||||||||
Class B |
350,662.826 |
82,196.064 |
112,190.778 |
54,150.389 |
167,623.992 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 15.32 |
$ 23.62 |
$ 11.52 |
$ 10.65 |
$ 10.00 |
|||||||||
Class B |
$ 11.42 |
$ 9.93 |
$ 11.67 |
$ 10.79 |
$ 10.21 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
2,324,667 |
2,078,861 |
347,588 |
196,423 |
227,874 |
|||||||||
Cost of mutual fund shares |
$ 30,970 |
$ 29,352 |
$ 6,360 |
$ 2,166 |
$ 4,389 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-16 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Van Eck |
||||||||||||||
Putnam VT |
Putnam VT |
Van Eck |
Worldwide |
|||||||||||
New |
Small Cap |
Putnam VT |
Worldwide |
Emerging |
||||||||||
Opportunities |
Value |
Voyager |
Bond |
Markets |
||||||||||
Assets |
||||||||||||||
Investments in mutual funds |
||||||||||||||
at fair value |
$ 776 |
$ 15,925 |
$ 1,455 |
$ 5,371 |
$ 10,998 |
|||||||||
Total assets |
776 |
15,925 |
1,455 |
5,371 |
10,998 |
|||||||||
|
|
|
|
|
||||||||||
Net assets |
$ 776 |
$ 15,925 |
$ 1,455 |
$ 5,371 |
$ 10,998 |
|||||||||
Number of units outstanding: |
||||||||||||||
Class A |
61,451.587 |
890,057.696 |
111,431.062 |
341,154.529 |
877,628.981 |
|||||||||
Class B |
27,552.729 |
244,791.712 |
56,514.600 |
53,206.281 |
89,707.761 |
|||||||||
Value per unit: |
||||||||||||||
Class A |
$ 8.66 |
$ 13.97 |
$ 8.60 |
$ 13.61 |
$ 11.29 |
|||||||||
Class B |
$ 8.84 |
$ 14.26 |
$ 8.78 |
$ 13.68 |
$ 12.15 |
|||||||||
Total number of |
||||||||||||||
mutual fund shares |
50,935 |
878,854 |
56,029 |
403,529 |
905,216 |
|||||||||
Cost of mutual fund shares |
$ 657 |
$ 12,107 |
$ 1,237 |
$ 4,841 |
$ 7,953 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-17 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Assets and Liabilities |
December 31, 2003 |
(Dollars in thousands, except for unit data) |
Van Eck |
Van Eck |
|||||||
Worldwide |
Worldwide |
|||||||
Hard Assets |
Real Estate |
|||||||
Assets |
||||||||
Investments in mutual funds at fair value |
$ 7,224 |
$ 6,614 |
||||||
Total assets |
7,224 |
6,614 |
||||||
|
|
|||||||
Net assets |
$ 7,224 |
$ 6,614 |
||||||
Number of units outstanding: |
||||||||
Class A |
519,376.187 |
425,644.792 |
||||||
Class B |
25,996.030 |
67,342.566 |
||||||
Value per unit: |
||||||||
Class A |
$ 13.28 |
$ 13.19 |
||||||
Class B |
$ 12.57 |
$ 14.84 |
||||||
Total number of mutual fund shares |
485,816 |
499,518 |
||||||
Cost of mutual fund shares |
$ 5,877 |
$ 5,442 |
||||||
The accompanying notes are an integral part of these financial statements. |
S-18 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Alger |
Alger |
|||||||||||||
AIM VI |
AIM VI |
Alger |
American |
American |
||||||||||
Capital |
Government |
American |
Leveraged |
MidCap |
||||||||||
Appreciation |
Securities |
Growth |
AllCap |
Growth |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ - |
$ 735 |
$ - |
$ - |
$ - |
|||||||||
Total investment income (loss) |
- |
735 |
- |
- |
- |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
68 |
243 |
270 |
114 |
244 |
|||||||||
Total expenses |
68 |
243 |
270 |
114 |
244 |
|||||||||
Net investment income (loss) |
(68) |
492 |
(270) |
(114) |
(244) |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(465) |
857 |
(8,251) |
(803) |
(1,579) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
3,013 |
(1,265) |
19,787 |
5,464 |
15,543 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
2,548 |
(408) |
11,536 |
4,661 |
13,964 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 2,480 |
$ 84 |
$ 11,266 |
$ 4,547 |
$ 13,720 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-19 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Alger |
||||||||||||||
American |
American |
American |
American |
Fidelity® VIP |
||||||||||
Small |
Funds |
Funds |
Funds |
Asset |
||||||||||
Capitalization |
Growth |
Growth-Income |
International |
Manager SM |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ - |
$ 3 |
$ 24 |
$ 24 |
$ 767 |
|||||||||
Total investment income (loss) |
- |
3 |
24 |
24 |
767 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
121 |
4 |
4 |
3 |
161 |
|||||||||
Total expenses |
121 |
4 |
4 |
3 |
161 |
|||||||||
Net investment income (loss) |
(121) |
(1) |
20 |
21 |
606 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(928) |
2 |
33 |
20 |
(876) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
6,948 |
249 |
225 |
213 |
3,655 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
6,020 |
251 |
258 |
233 |
2,779 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 5,899 |
$ 250 |
$ 278 |
$ 254 |
$ 3,385 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-20 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Fidelity® VIP |
Fidelity® VIP |
|||||||||||||
Asset |
Fidelity® VIP |
Fidelity® VIP |
Fidelity® VIP |
Money |
||||||||||
Manager SM SC |
Growth |
Growth SC |
Index 500 |
Market |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 23 |
$ 121 |
$ 1 |
$ 2,471 |
$ 862 |
|||||||||
Total investment income (loss) |
23 |
121 |
1 |
2,471 |
862 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
- |
357 |
- |
1,178 |
647 |
|||||||||
Total expenses |
- |
357 |
- |
1,178 |
647 |
|||||||||
Net investment income (loss) |
23 |
(236) |
1 |
1,293 |
215 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(9) |
(5,562) |
(43) |
(10,631) |
1 |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
111 |
19,283 |
436 |
52,584 |
(1) |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
102 |
13,721 |
393 |
41,953 |
- |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 125 |
$ 13,485 |
$ 394 |
$ 43,246 |
$ 215 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-21 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
ING Limited |
||||||||||||||
Fidelity® VIP |
Fidelity® VIP |
ING VP |
ING Hard |
Maturity |
||||||||||
Overseas |
Overseas SC |
Bond |
Assets |
Bond |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 230 |
$ 5 |
$ 78 |
$ - |
$ 5 |
|||||||||
Total investment income (loss) |
230 |
5 |
78 |
- |
5 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
223 |
- |
26 |
- |
- |
|||||||||
Total expenses |
223 |
- |
26 |
- |
- |
|||||||||
Net investment income (loss) |
7 |
5 |
52 |
- |
5 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
3,817 |
(16) |
108 |
- |
- |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
7,962 |
373 |
105 |
6 |
6 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
11,779 |
357 |
213 |
6 |
6 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 11,786 |
$ 362 |
$ 265 |
$ 6 |
$ 11 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-22 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
ING MFS |
ING MFS |
|||||||||||||
ING Liquid |
ING Marisco |
Mid Cap |
ING MFS |
Total |
||||||||||
Assets |
Growth |
Growth |
Research |
Return |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 161 |
$ - |
$ - |
$ - |
$ 7 |
|||||||||
Total investment income (loss) |
161 |
- |
- |
- |
7 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
- |
3 |
9 |
- |
1 |
|||||||||
Total expenses |
- |
3 |
9 |
- |
1 |
|||||||||
Net investment income (loss) |
161 |
(3) |
(9) |
- |
6 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
- |
52 |
(41) |
- |
1 |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
- |
51 |
639 |
1 |
86 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
- |
103 |
598 |
1 |
87 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 161 |
$ 100 |
$ 589 |
$ 1 |
$ 93 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-23 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
ING |
ING Salomon |
|||||||||||||
ING T. Rowe |
ING T. Rowe |
JPMorgan |
ING PIMCO |
Brothers |
||||||||||
Price Capital |
Price Equity |
Mid Cap |
Total |
Aggressive |
||||||||||
Appreciation |
Income |
Value |
Return |
Growth |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 123 |
$ 12 |
$ 12 |
$ 181 |
$ - |
|||||||||
Total investment income (loss) |
123 |
12 |
12 |
181 |
- |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
88 |
5 |
1 |
12 |
- |
|||||||||
Total expenses |
88 |
5 |
1 |
12 |
- |
|||||||||
Net investment income (loss) |
35 |
7 |
11 |
169 |
- |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
64 |
19 |
11 |
(12) |
- |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
3,883 |
244 |
60 |
(43) |
7 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
3,947 |
263 |
71 |
(55) |
7 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 3,982 |
$ 270 |
$ 82 |
$ 114 |
$ 7 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-24 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
ING UBS |
||||||||||||||
ING Salomon |
Tactical |
ING |
ING VP Index |
ING VP Index |
||||||||||
Brothers |
Asset |
Van Kampen |
Plus |
Plus |
||||||||||
Investors |
Allocation |
Comstock |
Large Cap |
Mid Cap |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ - |
$ - |
$ 92 |
$ 32 |
$ 22 |
|||||||||
Total investment income (loss) |
- |
- |
92 |
32 |
22 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
- |
- |
11 |
9 |
15 |
|||||||||
Total expenses |
- |
- |
11 |
9 |
15 |
|||||||||
Net investment income (loss) |
- |
- |
81 |
23 |
7 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
- |
2 |
75 |
32 |
37 |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
14 |
12 |
498 |
607 |
1,415 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
14 |
14 |
573 |
639 |
1,452 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 14 |
$ 14 |
$ 654 |
$ 662 |
$ 1,459 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-25 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
ING VP Index |
ING VP |
ING VP |
ING VP |
|||||||||||
Plus |
Growth |
ING VP |
MidCap |
SmallCap |
||||||||||
Small Cap |
Opportunities |
MagnaCap |
Opportunities |
Opportunities |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 3 |
$ - |
$ 14 |
$ - |
$ - |
|||||||||
Total investment income (loss) |
3 |
- |
14 |
- |
- |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
7 |
1 |
7 |
4 |
11 |
|||||||||
Total expenses |
7 |
1 |
7 |
4 |
11 |
|||||||||
Net investment income (loss) |
(4) |
(1) |
7 |
(4) |
(11) |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
29 |
(12) |
(57) |
2 |
(234) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
574 |
75 |
387 |
361 |
861 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
603 |
63 |
330 |
363 |
627 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 599 |
$ 62 |
$ 337 |
$ 359 |
$ 616 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-26 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
INVESCO |
||||||||||||||
INVESCO |
INVESCO |
INVESCO |
VIF - Small |
INVESCO |
||||||||||
VIF - Core |
VIF - Health |
VIF - High |
Company |
VIF - Total |
||||||||||
Equity |
Sciences |
Yield |
Growth |
Return |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 286 |
$ - |
$ 1,564 |
$ - |
$ 253 |
|||||||||
Total investment income (loss) |
286 |
- |
1,564 |
- |
253 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
171 |
2 |
174 |
88 |
72 |
|||||||||
Total expenses |
171 |
2 |
174 |
88 |
72 |
|||||||||
Net investment income (loss) |
115 |
(2) |
1,390 |
(88) |
181 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(1,400) |
10 |
1,159 |
(1,601) |
(291) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
6,164 |
89 |
2,950 |
5,254 |
1,609 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
4,764 |
99 |
4,109 |
3,653 |
1,318 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 4,879 |
$ 97 |
$ 5,499 |
$ 3,565 |
$ 1,499 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-27 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Janus Aspen |
Janus Aspen |
|||||||||||||
INVESCO |
Janus Aspen |
International |
Mid Cap |
Janus Aspen |
||||||||||
VIF - Utilities |
Growth |
Growth |
Growth |
Worldwide |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 98 |
$ - |
$ 61 |
$ - |
$ 34 |
|||||||||
Total investment income (loss) |
98 |
- |
61 |
- |
34 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
56 |
18 |
31 |
13 |
23 |
|||||||||
Total expenses |
56 |
18 |
31 |
13 |
23 |
|||||||||
Net investment income (loss) |
42 |
(18) |
30 |
(13) |
11 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(1,619) |
(27) |
(462) |
(222) |
(459) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
2,797 |
942 |
2,249 |
832 |
1,268 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
1,178 |
915 |
1,787 |
610 |
809 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 1,220 |
$ 897 |
$ 1,817 |
$ 597 |
$ 820 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-28 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Brandes |
Business |
Clifton |
Frontier |
|||||||||||
International |
Opportunity |
Enhanced |
Capital |
Turner |
||||||||||
Equity |
Value |
US Equity |
Appreciation |
Core Growth |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 74 |
$ 7 |
$ 1 |
$ - |
$ 3 |
|||||||||
Total investment income (loss) |
74 |
7 |
1 |
- |
3 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
50 |
4 |
6 |
35 |
7 |
|||||||||
Total expenses |
50 |
4 |
6 |
35 |
7 |
|||||||||
Net investment income (loss) |
24 |
3 |
(5) |
(35) |
(4) |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(30) |
13 |
(437) |
71 |
(43) |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
2,892 |
200 |
520 |
2,127 |
347 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
2,862 |
213 |
83 |
2,198 |
304 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 2,886 |
$ 216 |
$ 78 |
$ 2,163 |
$ 300 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-29 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Neuberger |
||||||||||||||
Neuberger |
Berman AMT |
Neuberger |
Pioneer |
Pioneer |
||||||||||
Berman AMT |
Limited |
Berman AMT |
Mid-Cap |
Small Cap |
||||||||||
Growth |
Maturity Bond |
Partners |
Value VCT |
Value VCT |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ - |
$ 1,475 |
$ - |
$ 6 |
$ - |
|||||||||
Total investment income (loss) |
- |
1,475 |
- |
6 |
- |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
78 |
219 |
200 |
18 |
12 |
|||||||||
Total expenses |
78 |
219 |
200 |
18 |
12 |
|||||||||
Net investment income (loss) |
(78) |
1,256 |
(200) |
(12) |
(12) |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(1,610) |
295 |
(624) |
279 |
363 |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
4,515 |
(988) |
8,947 |
788 |
301 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
2,905 |
(693) |
8,323 |
1,067 |
664 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 2,827 |
$ 563 |
$ 8,123 |
$ 1,055 |
$ 652 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-30 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Putnam VT |
Putnam VT |
Putnam VT |
Van Eck |
|||||||||||
Growth and |
New |
Small Cap |
Putnam VT |
Worldwide |
||||||||||
Income |
Opportunities |
Value |
Voyager |
Bond |
||||||||||
Net investment income (loss) |
||||||||||||||
Income: |
||||||||||||||
Dividends from mutual funds |
$ 97 |
$ - |
$ 39 |
$ 5 |
$ 69 |
|||||||||
Total investment income (loss) |
97 |
- |
39 |
5 |
69 |
|||||||||
Expenses: |
||||||||||||||
Mortality, expense risk and other charges |
34 |
4 |
79 |
8 |
32 |
|||||||||
Total expenses |
34 |
4 |
79 |
8 |
32 |
|||||||||
Net investment income (loss) |
63 |
(4) |
(40) |
(3) |
37 |
|||||||||
Realized and unrealized gain (loss) |
||||||||||||||
on investments |
||||||||||||||
Net realized gain (loss) on investments |
(331) |
(18) |
(449) |
(133) |
439 |
|||||||||
Net unrealized appreciation (depreciation) |
||||||||||||||
on invesments |
1,699 |
225 |
5,709 |
463 |
237 |
|||||||||
Net realized and unrealized gain (loss) on |
||||||||||||||
investments |
1,368 |
207 |
5,260 |
330 |
676 |
|||||||||
Net increase (decrease) in net assets resulting |
||||||||||||||
from operations |
$ 1,431 |
$ 203 |
$ 5,220 |
$ 327 |
$ 713 |
|||||||||
The accompanying notes are an integral part of these financial statements. |
S-31 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Operations |
For the year ended December 31, 2003 |
(Dollars in thousands) |
Van Eck |
||||||||||
Worldwide |
Van Eck |
Van Eck |
||||||||
Emerging |
Worldwide |
Worldwide |
||||||||
Markets |
Hard Assets |
Real Estate |
||||||||
Net investment income (loss) |
||||||||||
Income: |
||||||||||
Dividends from mutual funds |
$ 7 |
$ 16 |
$ 109 |
|||||||
Total investment income (loss) |
7 |
16 |
109 |
|||||||
Expenses: |
||||||||||
Mortality, expense risk and other charges |
51 |
25 |
36 |
|||||||
Total expenses |
51 |
25 |
36 |
|||||||
Net investment income (loss) |
(44) |
(9) |
73 |
|||||||
Realized and unrealized gain (loss) |
||||||||||
on investments |
||||||||||
Net realized gain (loss) on investments |
95 |
(247) |
94 |
|||||||
Net unrealized appreciation (depreciation) on invesments |
3,331 |
1,623 |
1,497 |
|||||||
Net realized and unrealized gain (loss) on investments |
3,426 |
1,376 |
1,591 |
|||||||
Net increase (decrease) in net assets resulting from operations |
$ 3,382 |
$ 1,367 |
$ 1,664 |
|||||||
The accompanying notes are an integral part of these financial statements. |
S-32 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Alger |
||||||||||||
AIM VI |
AIM VI |
Alger |
American |
|||||||||
Capital |
Government |
American |
Leveraged |
|||||||||
Appreciation |
Securities |
Growth |
AllCap |
|||||||||
Net assets at January 1, 2002 |
$ 12,831 |
$ 25,665 |
$ 48,752 |
$ 23,276 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(78) |
399 |
(280) |
(127) |
||||||||
Net realized gain (loss) on investments |
(5,115) |
1,189 |
(6,345) |
(2,673) |
||||||||
Net unrealized appreciation (depreciation) of investments |
2,021 |
940 |
(10,080) |
(4,956) |
||||||||
Net increase (decrease) in net assets from operations |
(3,172) |
2,528 |
(16,705) |
(7,756) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
2,549 |
7,728 |
7,917 |
4,163 |
||||||||
Administrative expenses |
(873) |
(1,439) |
(2,550) |
(1,500) |
||||||||
Benefit payments |
- |
- |
(1) |
- |
||||||||
Surrenders and withdrawals |
(1,234) |
(6,688) |
(2,421) |
(1,602) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(1,277) |
6,169 |
(2,016) |
(3,494) |
||||||||
Other |
29 |
25 |
45 |
25 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(806) |
5,795 |
974 |
(2,408) |
||||||||
Total increase (decrease) in net assets |
(3,978) |
8,323 |
(15,731) |
(10,164) |
||||||||
Net assets at December 31, 2002 |
8,853 |
33,988 |
33,021 |
13,112 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(68) |
492 |
(270) |
(114) |
||||||||
Net realized gain (loss) on investments |
(465) |
857 |
(8,251) |
(803) |
||||||||
Net unrealized appreciation (depreciation) of investments |
3,013 |
(1,265) |
19,787 |
5,464 |
||||||||
Net increase (decrease) in net assets from operations |
2,480 |
84 |
11,266 |
4,547 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
1,728 |
5,571 |
5,806 |
2,732 |
||||||||
Administrative expenses |
(686) |
(1,627) |
(2,346) |
(1,176) |
||||||||
Benefit payments |
(18) |
(74) |
(19) |
(51) |
||||||||
Surrenders and withdrawals |
(825) |
(1,682) |
(2,314) |
(1,475) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(546) |
(6,466) |
(916) |
486 |
||||||||
Other |
3 |
6 |
42 |
5 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(344) |
(4,272) |
253 |
521 |
||||||||
Total increase (decrease) in net assets |
2,136 |
(4,188) |
11,519 |
5,068 |
||||||||
Net assets at December 31, 2003 |
$ 10,989 |
$ 29,800 |
$ 44,540 |
$ 18,180 |
The accompanying notes are an integral part of these financial statements. |
S-33 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Alger |
Alger |
|||||||||||
American |
American |
American |
American |
|||||||||
MidCap |
Small |
Funds |
Funds |
|||||||||
Growth |
Capitalization |
Growth |
Growth-Income |
|||||||||
Net assets at January 1, 2002 |
$ 42,563 |
$ 19,928 |
$ - |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(245) |
(113) |
- |
- |
||||||||
Net realized gain (loss) on investments |
(3,522) |
(8,952) |
- |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
(8,891) |
4,514 |
- |
- |
||||||||
Net increase (decrease) in net assets from operations |
(12,658) |
(4,551) |
- |
- |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
6,366 |
3,070 |
- |
- |
||||||||
Administrative expenses |
(2,098) |
(1,130) |
- |
- |
||||||||
Benefit payments |
(1) |
(3) |
- |
- |
||||||||
Surrenders and withdrawals |
(2,479) |
(881) |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(4,241) |
(4,898) |
- |
- |
||||||||
Other |
(4) |
22 |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(2,457) |
(3,820) |
- |
- |
||||||||
Total increase (decrease) in net assets |
(15,115) |
(8,371) |
- |
- |
||||||||
Net assets at December 31, 2002 |
27,448 |
11,557 |
- |
- |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(244) |
(121) |
(1) |
20 |
||||||||
Net realized gain (loss) on investments |
(1,579) |
(928) |
2 |
33 |
||||||||
Net unrealized appreciation (depreciation) of investments |
15,543 |
6,948 |
249 |
225 |
||||||||
Net increase (decrease) in net assets from operations |
13,720 |
5,899 |
250 |
278 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
4,837 |
2,210 |
384 |
590 |
||||||||
Administrative expenses |
(1,926) |
(1,226) |
(47) |
(33) |
||||||||
Benefit payments |
(61) |
- |
(1) |
- |
||||||||
Surrenders and withdrawals |
(4,046) |
(1,842) |
(22) |
(18) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
3,931 |
2,790 |
3,366 |
2,644 |
||||||||
Other |
21 |
(12) |
(1) |
2 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
2,756 |
1,920 |
3,679 |
3,185 |
||||||||
Total increase (decrease) in net assets |
16,476 |
7,819 |
3,929 |
3,463 |
||||||||
Net assets at December 31, 2003 |
$ 43,924 |
$ 19,376 |
$ 3,929 |
$ 3,463 |
The accompanying notes are an integral part of these financial statements. |
S-34 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
American |
Fidelity® VIP |
Fidelity® VIP |
||||||||||
Funds |
Asset |
Asset |
Fidelity® VIP |
|||||||||
International |
Manager SM |
ManagerSM SC |
Growth |
|||||||||
Net assets at January 1, 2002 |
$ - |
$ 19,842 |
$ 314 |
$ 59,751 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
- |
573 |
14 |
(247) |
||||||||
Net realized gain (loss) on investments |
- |
(1,528) |
(22) |
(12,171) |
||||||||
Net unrealized appreciation (depreciation) of investments |
- |
(1,215) |
(31) |
(5,863) |
||||||||
Net increase (decrease) in net assets from operations |
- |
(2,170) |
(39) |
(18,281) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
- |
3,523 |
200 |
9,687 |
||||||||
Administrative expenses |
- |
(1,108) |
(20) |
(3,111) |
||||||||
Benefit payments |
- |
- |
- |
(5) |
||||||||
Surrenders and withdrawals |
- |
(849) |
- |
(4,250) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
- |
2,583 |
131 |
(2,511) |
||||||||
Other |
- |
18 |
2 |
128 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
- |
4,167 |
313 |
(62) |
||||||||
Total increase (decrease) in net assets |
- |
1,997 |
274 |
(18,343) |
||||||||
Net assets at December 31, 2002 |
- |
21,839 |
588 |
41,408 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
21 |
606 |
23 |
(236) |
||||||||
Net realized gain (loss) on investments |
20 |
(876) |
(9) |
(5,562) |
||||||||
Net unrealized appreciation (depreciation) of investments |
213 |
3,655 |
111 |
19,283 |
||||||||
Net increase (decrease) in net assets from operations |
254 |
3,385 |
125 |
13,485 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
450 |
2,634 |
62 |
6,192 |
||||||||
Administrative expenses |
(28) |
(1,215) |
(11) |
(2,957) |
||||||||
Benefit payments |
- |
(18) |
- |
(64) |
||||||||
Surrenders and withdrawals |
- |
(2,683) |
- |
(4,045) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
1,715 |
(2,942) |
73 |
(69) |
||||||||
Other |
21 |
3 |
219 |
(199) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
2,158 |
(4,221) |
343 |
(1,142) |
||||||||
Total increase (decrease) in net assets |
2,412 |
(836) |
468 |
12,343 |
||||||||
Net assets at December 31, 2003 |
$ 2,412 |
$ 21,003 |
$ 1,056 |
$ 53,751 |
The accompanying notes are an integral part of these financial statements. |
S-35 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Fidelity® VIP |
||||||||||||
Fidelity® VIP |
Fidelity® VIP |
Money |
Fidelity® VIP |
|||||||||
Growth SC |
Index 500 |
Market |
Overseas |
|||||||||
Net assets at January 1, 2002 |
$ 209 |
$ 200,404 |
$ 94,833 |
$ 35,065 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
- |
1,101 |
1,023 |
21 |
||||||||
Net realized gain (loss) on investments |
(40) |
(6,959) |
- |
(10,669) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(82) |
(38,607) |
- |
4,006 |
||||||||
Net increase (decrease) in net assets from operations |
(122) |
(44,465) |
1,023 |
(6,642) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
292 |
37,207 |
53,434 |
5,185 |
||||||||
Administrative expenses |
(37) |
(10,712) |
(5,168) |
(2,001) |
||||||||
Benefit payments |
- |
(1) |
(2,393) |
- |
||||||||
Surrenders and withdrawals |
(14) |
(24,347) |
(8,732) |
(2,484) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
200 |
(6,640) |
(32,033) |
(3,497) |
||||||||
Other |
2 |
(75) |
55 |
10 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
443 |
(4,568) |
5,163 |
(2,787) |
||||||||
Total increase (decrease) in net assets |
321 |
(49,033) |
6,186 |
(9,429) |
||||||||
Net assets at December 31, 2002 |
530 |
151,371 |
101,019 |
25,636 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
1 |
1,293 |
215 |
7 |
||||||||
Net realized gain (loss) on investments |
(43) |
(10,631) |
1 |
3,817 |
||||||||
Net unrealized appreciation (depreciation) of investments |
436 |
52,584 |
(1) |
7,962 |
||||||||
Net increase (decrease) in net assets from operations |
394 |
43,246 |
215 |
11,786 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
554 |
28,806 |
22,900 |
3,447 |
||||||||
Administrative expenses |
(106) |
(9,582) |
(4,335) |
(1,642) |
||||||||
Benefit payments |
- |
(73) |
(1,308) |
(1) |
||||||||
Surrenders and withdrawals |
(21) |
(13,138) |
(12,457) |
(2,219) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
649 |
(4,801) |
(37,817) |
1,286 |
||||||||
Other |
- |
(147) |
101 |
1 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
1,076 |
1,065 |
(32,916) |
872 |
||||||||
Total increase (decrease) in net assets |
1,470 |
44,311 |
(32,701) |
12,658 |
||||||||
Net assets at December 31, 2003 |
$ 2,000 |
$ 195,682 |
$ 68,318 |
$ 38,294 |
The accompanying notes are an integral part of these financial statements. |
S-36 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING Limited |
||||||||||||
Fidelity® VIP |
ING VP |
ING Hard |
Maturity |
|||||||||
Overseas SC |
Bond |
Assets |
Bond |
|||||||||
Net assets at January 1, 2002 |
$ 151 |
$ - |
$ - |
$ 54,671 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
1 |
69 |
- |
50 |
||||||||
Net realized gain (loss) on investments |
(27) |
7 |
- |
(1,338) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(48) |
6 |
- |
2,006 |
||||||||
Net increase (decrease) in net assets from operations |
(74) |
82 |
- |
718 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
279 |
433 |
- |
101 |
||||||||
Administrative expenses |
(31) |
(52) |
- |
(681) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(1) |
(21) |
- |
(1,250) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
244 |
2,096 |
- |
(53,230) |
||||||||
Other |
- |
1 |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
491 |
2,457 |
- |
(55,060) |
||||||||
Total increase (decrease) in net assets |
417 |
2,539 |
- |
(54,342) |
||||||||
Net assets at December 31, 2002 |
568 |
2,539 |
- |
329 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
5 |
52 |
- |
5 |
||||||||
Net realized gain (loss) on investments |
(16) |
108 |
- |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
373 |
105 |
6 |
6 |
||||||||
Net increase (decrease) in net assets from operations |
362 |
265 |
6 |
11 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
349 |
1,571 |
15 |
141 |
||||||||
Administrative expenses |
(79) |
(322) |
(1) |
(18) |
||||||||
Benefit payments |
- |
- |
- |
(1) |
||||||||
Surrenders and withdrawals |
(16) |
(562) |
- |
(26) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
455 |
2,257 |
41 |
29 |
||||||||
Other |
2 |
27 |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
711 |
2,971 |
55 |
125 |
||||||||
Total increase (decrease) in net assets |
1,073 |
3,236 |
61 |
136 |
||||||||
Net assets at December 31, 2003 |
$ 1,641 |
$ 5,775 |
$ 61 |
$ 465 |
The accompanying notes are an integral part of these financial statements. |
S-37 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING MFS |
||||||||||||
ING Liquid |
ING Marisco |
Mid Cap |
ING MFS |
|||||||||
Assets |
Growth |
Growth |
Research |
|||||||||
Net assets at January 1, 2002 |
$ 7,832 |
$ 4 |
$ 465 |
$ 3 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
453 |
- |
(6) |
- |
||||||||
Net realized gain (loss) on investments |
- |
(1) |
(235) |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
- |
- |
(345) |
(1) |
||||||||
Net increase (decrease) in net assets from operations |
453 |
(1) |
(586) |
(1) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
33,093 |
5 |
602 |
1 |
||||||||
Administrative expenses |
(2,669) |
- |
(71) |
- |
||||||||
Benefit payments |
(17) |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(57,125) |
- |
(17) |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
38,747 |
(3) |
1,081 |
1 |
||||||||
Other |
- |
- |
5 |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
12,029 |
2 |
1,600 |
2 |
||||||||
Total increase (decrease) in net assets |
12,482 |
1 |
1,014 |
1 |
||||||||
Net assets at December 31, 2002 |
20,314 |
5 |
1,479 |
4 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
161 |
(3) |
(9) |
- |
||||||||
Net realized gain (loss) on investments |
- |
52 |
(41) |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
- |
51 |
639 |
1 |
||||||||
Net increase (decrease) in net assets from operations |
161 |
100 |
589 |
1 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
23,396 |
531 |
713 |
2 |
||||||||
Administrative expenses |
(1,852) |
(21) |
(125) |
- |
||||||||
Benefit payments |
(17) |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(1,387) |
(6) |
(35) |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(19,618) |
1,245 |
296 |
- |
||||||||
Other |
(4) |
16 |
6 |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
518 |
1,765 |
855 |
2 |
||||||||
Total increase (decrease) in net assets |
679 |
1,865 |
1,444 |
3 |
||||||||
Net assets at December 31, 2003 |
$ 20,993 |
$ 1,870 |
$ 2,923 |
$ 7 |
The accompanying notes are an integral part of these financial statements. |
S-38 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING |
||||||||||||
ING MFS |
ING T. Rowe |
ING T. Rowe |
JPMorgan |
|||||||||
Total |
Price Capital |
Price Equity |
Mid Cap |
|||||||||
Return |
Appreciation |
Income |
Value |
|||||||||
Net assets at January 1, 2002 |
$ 53 |
$ 3,909 |
$ 6 |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
3 |
240 |
2 |
- |
||||||||
Net realized gain (loss) on investments |
(14) |
(31) |
(1) |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
4 |
(325) |
(2) |
- |
||||||||
Net increase (decrease) in net assets from operations |
(7) |
(116) |
(1) |
- |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
111 |
2,873 |
22 |
- |
||||||||
Administrative expenses |
(4) |
(472) |
(3) |
- |
||||||||
Benefit payments |
- |
(2) |
- |
- |
||||||||
Surrenders and withdrawals |
- |
(229) |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
- |
5,249 |
75 |
- |
||||||||
Other |
(2) |
10 |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
105 |
7,429 |
94 |
- |
||||||||
Total increase (decrease) in net assets |
98 |
7,313 |
93 |
- |
||||||||
Net assets at December 31, 2002 |
151 |
11,222 |
99 |
- |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
6 |
35 |
7 |
11 |
||||||||
Net realized gain (loss) on investments |
1 |
64 |
19 |
11 |
||||||||
Net unrealized appreciation (depreciation) of investments |
86 |
3,883 |
244 |
60 |
||||||||
Net increase (decrease) in net assets from operations |
93 |
3,982 |
270 |
82 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
204 |
3,685 |
207 |
230 |
||||||||
Administrative expenses |
(18) |
(981) |
(29) |
(18) |
||||||||
Benefit payments |
- |
(349) |
- |
- |
||||||||
Surrenders and withdrawals |
(1) |
(448) |
(4) |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
817 |
5,198 |
2,188 |
839 |
||||||||
Other |
- |
(1) |
3 |
6 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
1,002 |
7,104 |
2,365 |
1,057 |
||||||||
Total increase (decrease) in net assets |
1,095 |
11,086 |
2,635 |
1,139 |
||||||||
Net assets at December 31, 2003 |
$ 1,246 |
$ 22,308 |
$ 2,734 |
$ 1,139 |
The accompanying notes are an integral part of these financial statements. |
S-39 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING Salomon |
ING UBS |
|||||||||||
ING PIMCO |
Brothers |
ING Salomon |
Tactical |
|||||||||
Total |
Aggressive |
Brothers |
Asset |
|||||||||
Return |
Growth |
Investors |
Allocation |
|||||||||
Net assets at January 1, 2002 |
$ - |
$ - |
$ - |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
- |
- |
- |
- |
||||||||
Net realized gain (loss) on investments |
- |
- |
- |
- |
||||||||
Net unrealized appreciation (depreciation) of investments |
- |
- |
- |
- |
||||||||
Net increase (decrease) in net assets from operations |
- |
- |
- |
- |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
- |
- |
- |
3 |
||||||||
Administrative expenses |
- |
- |
- |
- |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
- |
- |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
- |
- |
- |
12 |
||||||||
Other |
- |
- |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
- |
- |
- |
15 |
||||||||
Total increase (decrease) in net assets |
- |
- |
- |
15 |
||||||||
Net assets at December 31, 2002 |
- |
- |
- |
15 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
169 |
- |
- |
- |
||||||||
Net realized gain (loss) on investments |
(12) |
- |
- |
2 |
||||||||
Net unrealized appreciation (depreciation) of investments |
(43) |
7 |
14 |
12 |
||||||||
Net increase (decrease) in net assets from operations |
114 |
7 |
14 |
14 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
705 |
14 |
1 |
23 |
||||||||
Administrative expenses |
(72) |
(4) |
(2) |
(7) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(3) |
- |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
5,143 |
106 |
148 |
95 |
||||||||
Other |
(3) |
- |
- |
3 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
5,770 |
116 |
147 |
114 |
||||||||
Total increase (decrease) in net assets |
5,884 |
123 |
161 |
128 |
||||||||
Net assets at December 31, 2003 |
$ 5,884 |
$ 123 |
$ 161 |
$ 143 |
The accompanying notes are an integral part of these financial statements. |
S-40 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING |
ING VP Index |
ING VP Index |
ING VP Index |
|||||||||
Van Kampen |
Plus |
Plus |
Plus |
|||||||||
Comstock |
Large Cap |
Mid Cap |
Small Cap |
|||||||||
Net assets at January 1, 2002 |
$ - |
$ - |
$ - |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
6 |
- |
(1) |
- |
||||||||
Net realized gain (loss) on investments |
(16) |
(1) |
(50) |
(3) |
||||||||
Net unrealized appreciation (depreciation) of investments |
21 |
(17) |
(90) |
2 |
||||||||
Net increase (decrease) in net assets from operations |
11 |
(18) |
(141) |
(1) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
177 |
166 |
1,088 |
118 |
||||||||
Administrative expenses |
(19) |
(6) |
(29) |
(7) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(13) |
- |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
1,108 |
244 |
2,275 |
519 |
||||||||
Other |
1 |
3 |
- |
1 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
1,254 |
407 |
3,334 |
631 |
||||||||
Total increase (decrease) in net assets |
1,265 |
389 |
3,193 |
630 |
||||||||
Net assets at December 31, 2002 |
1,265 |
389 |
3,193 |
630 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
81 |
23 |
7 |
(4) |
||||||||
Net realized gain (loss) on investments |
75 |
32 |
37 |
29 |
||||||||
Net unrealized appreciation (depreciation) of investments |
498 |
607 |
1,415 |
574 |
||||||||
Net increase (decrease) in net assets from operations |
654 |
662 |
1,459 |
599 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
779 |
1,165 |
1,538 |
576 |
||||||||
Administrative expenses |
(144) |
(117) |
(204) |
(68) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(75) |
(5) |
(8) |
(30) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
1,553 |
2,129 |
1,824 |
1,198 |
||||||||
Other |
2 |
1 |
- |
1 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
2,115 |
3,173 |
3,150 |
1,677 |
||||||||
Total increase (decrease) in net assets |
2,769 |
3,835 |
4,609 |
2,276 |
||||||||
Net assets at December 31, 2003 |
$ 4,034 |
$ 4,224 |
$ 7,802 |
$ 2,906 |
The accompanying notes are an integral part of these financial statements. |
S-41 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
ING VP |
ING VP |
ING VP |
||||||||||
Growth |
ING VP |
MidCap |
SmallCap |
|||||||||
Opportunities |
MagnaCap |
Opportunities |
Opportunities |
|||||||||
Net assets at January 1, 2002 |
$ 147 |
$ 202 |
$ 294 |
$ 730 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(1) |
5 |
(4) |
(7) |
||||||||
Net realized gain (loss) on investments |
(5) |
(36) |
(124) |
(50) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(48) |
(163) |
(79) |
(634) |
||||||||
Net increase (decrease) in net assets from operations |
(54) |
(194) |
(207) |
(691) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
71 |
305 |
367 |
474 |
||||||||
Administrative expenses |
(7) |
(47) |
(39) |
(74) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(52) |
(7) |
(11) |
(5) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
25 |
765 |
466 |
867 |
||||||||
Other |
- |
2 |
(2) |
(4) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
37 |
1,018 |
781 |
1,258 |
||||||||
Total increase (decrease) in net assets |
(17) |
824 |
574 |
567 |
||||||||
Net assets at December 31, 2002 |
130 |
1,026 |
868 |
1,297 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(1) |
7 |
(4) |
(11) |
||||||||
Net realized gain (loss) on investments |
(12) |
(57) |
2 |
(234) |
||||||||
Net unrealized appreciation (depreciation) of investments |
75 |
387 |
361 |
861 |
||||||||
Net increase (decrease) in net assets from operations |
62 |
337 |
359 |
616 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
76 |
235 |
406 |
391 |
||||||||
Administrative expenses |
(10) |
(78) |
(73) |
(112) |
||||||||
Benefit payments |
- |
- |
- |
(40) |
||||||||
Surrenders and withdrawals |
- |
(98) |
(327) |
(20) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
23 |
(142) |
167 |
635 |
||||||||
Other |
- |
1 |
4 |
(24) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
89 |
(82) |
177 |
830 |
||||||||
Total increase (decrease) in net assets |
151 |
255 |
536 |
1,446 |
||||||||
Net assets at December 31, 2003 |
$ 281 |
$ 1,281 |
$ 1,404 |
$ 2,743 |
The accompanying notes are an integral part of these financial statements. |
S-42 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
INVESCO |
||||||||||||
INVESCO |
INVESCO |
INVESCO |
VIF - Small |
|||||||||
VIF - Core |
VIF - Health |
VIF - High |
Company |
|||||||||
Equity |
Sciences |
Yield |
Growth |
|||||||||
Net assets at January 1, 2002 |
$ 29,102 |
$ - |
$ 10,708 |
$ 14,861 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
198 |
- |
2,405 |
(87) |
||||||||
Net realized gain (loss) on investments |
(3,035) |
- |
(4,183) |
(4,354) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(3,654) |
(7) |
2,133 |
(225) |
||||||||
Net increase (decrease) in net assets from operations |
(6,491) |
(7) |
355 |
(4,666) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
5,261 |
34 |
2,440 |
3,357 |
||||||||
Administrative expenses |
(1,973) |
(5) |
(855) |
(884) |
||||||||
Benefit payments |
(7) |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(4,217) |
- |
(694) |
(301) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
1,610 |
112 |
11,220 |
(275) |
||||||||
Other |
(20) |
- |
5 |
(63) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
654 |
141 |
12,116 |
1,834 |
||||||||
Total increase (decrease) in net assets |
(5,837) |
134 |
12,471 |
(2,832) |
||||||||
Net assets at December 31, 2002 |
23,265 |
134 |
23,179 |
12,029 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
115 |
(2) |
1,390 |
(88) |
||||||||
Net realized gain (loss) on investments |
(1,400) |
10 |
1,159 |
(1,601) |
||||||||
Net unrealized appreciation (depreciation) of investments |
6,164 |
89 |
2,950 |
5,254 |
||||||||
Net increase (decrease) in net assets from operations |
4,879 |
97 |
5,499 |
3,565 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
3,661 |
82 |
2,268 |
1,876 |
||||||||
Administrative expenses |
(1,564) |
(25) |
(1,270) |
(702) |
||||||||
Benefit payments |
(68) |
- |
(3) |
(6) |
||||||||
Surrenders and withdrawals |
(1,817) |
(1) |
(899) |
(1,374) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(1,232) |
345 |
(1,021) |
(1,514) |
||||||||
Other |
(14) |
(1) |
15 |
(10) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(1,034) |
400 |
(910) |
(1,730) |
||||||||
Total increase (decrease) in net assets |
3,845 |
497 |
4,589 |
1,835 |
||||||||
Net assets at December 31, 2003 |
$ 27,110 |
$ 631 |
$ 27,768 |
$ 13,864 |
The accompanying notes are an integral part of these financial statements. |
S-43 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
INVESCO |
Janus Aspen |
|||||||||||
VIF - Total |
INVESCO |
Janus Aspen |
International |
|||||||||
Return |
VIF - Utilities |
Growth |
Growth |
|||||||||
Net assets at January 1, 2002 |
$ 15,247 |
$ 7,928 |
$ 3,099 |
$ 5,140 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
182 |
(18) |
(21) |
(1) |
||||||||
Net realized gain (loss) on investments |
(2,686) |
(2,975) |
(1,208) |
(977) |
||||||||
Net unrealized appreciation (depreciation) of investments |
715 |
1,279 |
182 |
(519) |
||||||||
Net increase (decrease) in net assets from operations |
(1,789) |
(1,714) |
(1,047) |
(1,497) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
1,999 |
2,641 |
986 |
1,452 |
||||||||
Administrative expenses |
(1,180) |
(491) |
(181) |
(231) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(4,083) |
(624) |
(126) |
(745) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(237) |
(733) |
(201) |
346 |
||||||||
Other |
23 |
(61) |
30 |
19 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(3,478) |
732 |
508 |
841 |
||||||||
Total increase (decrease) in net assets |
(5,267) |
(982) |
(539) |
(656) |
||||||||
Net assets at December 31, 2002 |
9,980 |
6,946 |
2,560 |
4,484 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
181 |
42 |
(18) |
30 |
||||||||
Net realized gain (loss) on investments |
(291) |
(1,619) |
(27) |
(462) |
||||||||
Net unrealized appreciation (depreciation) of investments |
1,609 |
2,797 |
942 |
2,249 |
||||||||
Net increase (decrease) in net assets from operations |
1,499 |
1,220 |
897 |
1,817 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
1,240 |
971 |
812 |
1,263 |
||||||||
Administrative expenses |
(684) |
(450) |
(195) |
(311) |
||||||||
Benefit payments |
(12) |
(3) |
- |
(1) |
||||||||
Surrenders and withdrawals |
(1,377) |
(168) |
(299) |
(403) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(175) |
435 |
241 |
39 |
||||||||
Other |
- |
- |
3 |
(5) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(1,008) |
785 |
562 |
582 |
||||||||
Total increase (decrease) in net assets |
491 |
2,005 |
1,459 |
2,399 |
||||||||
Net assets at December 31, 2003 |
$ 10,471 |
$ 8,951 |
$ 4,019 |
$ 6,883 |
The accompanying notes are an integral part of these financial statements. |
S-44 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Janus Aspen |
Brandes |
Business |
||||||||||
Mid Cap |
Janus Aspen |
International |
Opportunity |
|||||||||
Growth |
Worldwide |
Equity |
Value |
|||||||||
Net assets at January 1, 2002 |
$ 1,858 |
$ 3,235 |
$ 1,895 |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(11) |
- |
244 |
1 |
||||||||
Net realized gain (loss) on investments |
(362) |
(317) |
(234) |
(4) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(245) |
(787) |
(877) |
(8) |
||||||||
Net increase (decrease) in net assets from operations |
(618) |
(1,104) |
(867) |
(11) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
641 |
1,087 |
1,623 |
2 |
||||||||
Administrative expenses |
(138) |
(214) |
(172) |
(3) |
||||||||
Benefit payments |
- |
(1) |
- |
- |
||||||||
Surrenders and withdrawals |
(107) |
(130) |
(108) |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(119) |
727 |
3,363 |
212 |
||||||||
Other |
22 |
9 |
23 |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
299 |
1,478 |
4,729 |
211 |
||||||||
Total increase (decrease) in net assets |
(319) |
374 |
3,862 |
200 |
||||||||
Net assets at December 31, 2002 |
1,539 |
3,609 |
5,757 |
200 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(13) |
11 |
24 |
3 |
||||||||
Net realized gain (loss) on investments |
(222) |
(459) |
(30) |
13 |
||||||||
Net unrealized appreciation (depreciation) of investments |
832 |
1,268 |
2,892 |
200 |
||||||||
Net increase (decrease) in net assets from operations |
597 |
820 |
2,886 |
216 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
547 |
866 |
598 |
108 |
||||||||
Administrative expenses |
(145) |
(235) |
(277) |
(45) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(44) |
(258) |
(266) |
(110) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(299) |
(995) |
(378) |
731 |
||||||||
Other |
8 |
(1) |
10 |
3 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
67 |
(623) |
(313) |
687 |
||||||||
Total increase (decrease) in net assets |
664 |
197 |
2,573 |
903 |
||||||||
Net assets at December 31, 2003 |
$ 2,203 |
$ 3,806 |
$ 8,330 |
$ 1,103 |
The accompanying notes are an integral part of these financial statements. |
S-45 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Clifton |
Frontier |
Neuberger |
||||||||||
Enhanced |
Capital |
Turner |
Berman AMT |
|||||||||
US Equity |
Appreciation |
Core Growth |
Growth |
|||||||||
Net assets at January 1, 2002 |
$ 1,194 |
$ 1,727 |
$ 296 |
$ 13,020 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
71 |
(20) |
(3) |
(80) |
||||||||
Net realized gain (loss) on investments |
(112) |
(346) |
(22) |
(5,011) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(500) |
(426) |
(172) |
1,016 |
||||||||
Net increase (decrease) in net assets from operations |
(541) |
(792) |
(197) |
(4,075) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
425 |
804 |
77 |
2,514 |
||||||||
Administrative expenses |
(109) |
(115) |
(28) |
(729) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(23) |
(53) |
(5) |
(757) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
1,106 |
1,804 |
479 |
(265) |
||||||||
Other |
1 |
15 |
(3) |
14 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
1,400 |
2,455 |
520 |
777 |
||||||||
Total increase (decrease) in net assets |
859 |
1,663 |
323 |
(3,298) |
||||||||
Net assets at December 31, 2002 |
2,053 |
3,390 |
619 |
9,722 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(5) |
(35) |
(4) |
(78) |
||||||||
Net realized gain (loss) on investments |
(437) |
71 |
(43) |
(1,610) |
||||||||
Net unrealized appreciation (depreciation) of investments |
520 |
2,127 |
347 |
4,515 |
||||||||
Net increase (decrease) in net assets from operations |
78 |
2,163 |
300 |
2,827 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
62 |
304 |
99 |
1,879 |
||||||||
Administrative expenses |
(51) |
(191) |
(55) |
(585) |
||||||||
Benefit payments |
- |
- |
- |
(2) |
||||||||
Surrenders and withdrawals |
- |
(366) |
(159) |
(388) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(2,146) |
621 |
732 |
954 |
||||||||
Other |
4 |
5 |
2 |
1 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(2,131) |
373 |
619 |
1,859 |
||||||||
Total increase (decrease) in net assets |
(2,053) |
2,536 |
919 |
4,686 |
||||||||
Net assets at December 31, 2003 |
$ - |
$ 5,926 |
$ 1,538 |
$ 14,408 |
The accompanying notes are an integral part of these financial statements. |
S-46 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Neuberger |
||||||||||||
Berman AMT |
Neuberger |
Pioneer |
Pioneer |
|||||||||
Limited |
Berman AMT |
Mid-Cap |
Small Cap |
|||||||||
Maturity Bond |
Partners |
Value VCT |
Value VCT |
|||||||||
Net assets at January 1, 2002 |
$ 22,975 |
$ 32,191 |
$ - |
$ - |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
989 |
(62) |
6 |
(1) |
||||||||
Net realized gain (loss) on investments |
384 |
(201) |
(20) |
(12) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(37) |
(7,506) |
(33) |
(12) |
||||||||
Net increase (decrease) in net assets from operations |
1,336 |
(7,769) |
(47) |
(25) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
7,105 |
4,428 |
158 |
58 |
||||||||
Administrative expenses |
(1,242) |
(1,809) |
(15) |
(14) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(1,153) |
(1,326) |
- |
- |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
3,685 |
(2,676) |
768 |
741 |
||||||||
Other |
(2) |
38 |
- |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
8,393 |
(1,345) |
911 |
785 |
||||||||
Total increase (decrease) in net assets |
9,729 |
(9,114) |
864 |
760 |
||||||||
Net assets at December 31, 2002 |
32,704 |
23,077 |
864 |
760 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
1,256 |
(200) |
(12) |
(12) |
||||||||
Net realized gain (loss) on investments |
295 |
(624) |
279 |
363 |
||||||||
Net unrealized appreciation (depreciation) of investments |
(988) |
8,947 |
788 |
301 |
||||||||
Net increase (decrease) in net assets from operations |
563 |
8,123 |
1,055 |
652 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
4,261 |
3,291 |
916 |
317 |
||||||||
Administrative expenses |
(1,471) |
(1,593) |
(159) |
(73) |
||||||||
Benefit payments |
(48) |
(9) |
- |
- |
||||||||
Surrenders and withdrawals |
(2,195) |
(1,954) |
(263) |
(42) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(3,127) |
1,065 |
4,711 |
843 |
||||||||
Other |
(1) |
14 |
(9) |
(2) |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(2,581) |
814 |
5,196 |
1,043 |
||||||||
Total increase (decrease) in net assets |
(2,018) |
8,937 |
6,251 |
1,695 |
||||||||
Net assets at December 31, 2003 |
$ 30,686 |
$ 32,014 |
$ 7,115 |
$ 2,455 |
The accompanying notes are an integral part of these financial statements. |
S-47 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Putnam VT |
Putnam VT |
Putnam VT |
||||||||||
Growth and |
New |
Small Cap |
Putnam VT |
|||||||||
Income |
Opportunities |
Value |
Voyager |
|||||||||
Net assets at January 1, 2002 |
$ 3,383 |
$ 397 |
$ 6,191 |
$ 852 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
49 |
(3) |
30 |
(1) |
||||||||
Net realized gain (loss) on investments |
(334) |
(10) |
296 |
(39) |
||||||||
Net unrealized appreciation (depreciation) of investments |
(848) |
(146) |
(2,372) |
(255) |
||||||||
Net increase (decrease) in net assets from operations |
(1,133) |
(159) |
(2,046) |
(295) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
1,199 |
198 |
2,075 |
417 |
||||||||
Administrative expenses |
(208) |
(26) |
(387) |
(38) |
||||||||
Benefit payments |
- |
- |
(1) |
- |
||||||||
Surrenders and withdrawals |
(111) |
(1) |
(919) |
(4) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
2,058 |
170 |
4,788 |
342 |
||||||||
Other |
25 |
- |
11 |
1 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
2,963 |
341 |
5,567 |
718 |
||||||||
Total increase (decrease) in net assets |
1,830 |
182 |
3,521 |
423 |
||||||||
Net assets at December 31, 2002 |
5,213 |
579 |
9,712 |
1,275 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
63 |
(4) |
(40) |
(3) |
||||||||
Net realized gain (loss) on investments |
(331) |
(18) |
(449) |
(133) |
||||||||
Net unrealized appreciation (depreciation) of investments |
1,699 |
225 |
5,709 |
463 |
||||||||
Net increase (decrease) in net assets from operations |
1,431 |
203 |
5,220 |
327 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
940 |
122 |
1,940 |
311 |
||||||||
Administrative expenses |
(301) |
(39) |
(679) |
(67) |
||||||||
Benefit payments |
(42) |
- |
(1) |
- |
||||||||
Surrenders and withdrawals |
(1,248) |
(16) |
(1,270) |
(9) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
(682) |
(75) |
1,001 |
(382) |
||||||||
Other |
(11) |
2 |
2 |
- |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
(1,344) |
(6) |
993 |
(147) |
||||||||
Total increase (decrease) in net assets |
87 |
197 |
6,213 |
180 |
||||||||
Net assets at December 31, 2003 |
$ 5,300 |
$ 776 |
$ 15,925 |
$ 1,455 |
The accompanying notes are an integral part of these financial statements. |
S-48 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Statements of Changes in Net Assets |
For the years ended December 31, 2003 and 2002 |
(Dollars in thousands) |
Van Eck |
||||||||||||
Van Eck |
Worldwide |
Van Eck |
Van Eck |
|||||||||
Worldwide |
Emerging |
Worldwide |
Worldwide |
|||||||||
Bond |
Markets |
Hard Assets |
Real Estate |
|||||||||
Net assets at January 1, 2002 |
$ 1,225 |
$ 4,516 |
$ 1,727 |
$ 2,826 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
(16) |
(28) |
(3) |
73 |
||||||||
Net realized gain (loss) on investments |
144 |
(493) |
72 |
82 |
||||||||
Net unrealized appreciation (depreciation) of investments |
341 |
288 |
(154) |
(445) |
||||||||
Net increase (decrease) in net assets from operations |
469 |
(233) |
(85) |
(290) |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
470 |
1,518 |
284 |
1,312 |
||||||||
Administrative expenses |
(186) |
(322) |
(151) |
(213) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(216) |
(437) |
(200) |
(74) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
2,054 |
691 |
559 |
1,312 |
||||||||
Other |
4 |
7 |
14 |
13 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
2,126 |
1,457 |
506 |
2,350 |
||||||||
Total increase (decrease) in net assets |
2,595 |
1,224 |
421 |
2,060 |
||||||||
Net assets at December 31, 2002 |
3,820 |
5,740 |
2,148 |
4,886 |
||||||||
Increase (decrease) in net assets |
||||||||||||
Operations: |
||||||||||||
Net investment income (loss) |
37 |
(44) |
(9) |
73 |
||||||||
Net realized gain (loss) on investments |
439 |
95 |
(247) |
94 |
||||||||
Net unrealized appreciation (depreciation) of investments |
237 |
3,331 |
1,623 |
1,497 |
||||||||
Net increase (decrease) in net assets from operations |
713 |
3,382 |
1,367 |
1,664 |
||||||||
Changes from principal transactions: |
||||||||||||
Contract purchase payments |
917 |
981 |
257 |
717 |
||||||||
Administrative expenses |
(382) |
(338) |
(198) |
(285) |
||||||||
Benefit payments |
- |
- |
- |
- |
||||||||
Surrenders and withdrawals |
(355) |
(321) |
(422) |
(273) |
||||||||
Transfer payments from (to) other Divisions (including |
||||||||||||
the GID), net |
662 |
1,543 |
4,065 |
(100) |
||||||||
Other |
(4) |
11 |
7 |
5 |
||||||||
Increase (decrease) in net assets derived from principal |
||||||||||||
transactions |
838 |
1,876 |
3,709 |
64 |
||||||||
Total increase (decrease) in net assets |
1,551 |
5,258 |
5,076 |
1,728 |
||||||||
Net assets at December 31, 2003 |
$ 5,371 |
$ 10,998 |
$ 7,224 |
$ 6,614 |
The accompanying notes are an integral part of these financial statements. |
S-49 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
1. Organization |
Security Life of Denver Insurance Company Separate Account L1 (the "Account") was established on November 3, 1993, by Security Life of Denver Insurance Company ("SLD" or the "Company") to support the operations of variable universal life policies ("Policies"). The Company is an indirect wholly owned subsidiary of ING America Insurance Holdings ("ING AIH"), an insurance holding company domiciled in the State of Delaware. ING AIH is a wholly owned subsidiary of ING Groep, N.V., a global financial services holding company based in The Netherlands. |
|
The Account supports the operations of the FirstLine Variable Universal Life, FirstLine II Variable Universal Life, Strategic Advantage Variable Universal Life, Strategic Advantage II Variable Universal Life, Variable Survivorship Universal Life, Corporate Benefits Variable Universal Life, Strategic Benefits Variable Universal Life, Asset Portfolio Manager Variable Universal Life, and Estate Designer Policies offered by the Company. Corporate Benefits Variable Universal Life and Strategic Benefits Variable Universal Life became effective in 2000 and are defined as Class B Policies due to their mortality and expense charge structure. Asset Portfolio Manager Variable Universal Life became effective in 2001 and is also defined as a Class B Policy. All other Policies are defined as Class A Policies. |
|
The Account is organized as a unit investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940. The Policies allow the Policyholders to specify the allocation of their net premium to the various Funds. They can also transfer their account values among the Funds. The Policies also provide the Policyholders the option to allocate their net premiums, or to transfer their account values, to a guaranteed interest division ("GID") in the Company's general account. The GID guarantees a rate of interest to the Policyholder, and it is not variable in nature. Therefore, it is not included in the Account's statements. The Account may be used to support other variable life policies as the Company offers them. SLD provides for variable accumulation and benefits under the Policies by crediting premium payments to one or more divisions within the Account or the GID, as directed by the Policyholders. The portion of the Account's assets applicable to Pol icies will not be charged with liabilities arising out of any other business SLD may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of SLD. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of SLD. |
|
At December 31, 2003, the Account had, sixty-seven investment divisions (the "Divisions") forty-four of which invest in independently managed mutual funds and twenty-three of which invest in mutual funds managed by an affiliate, either Direct Services, Inc., ING Investments, LLC, or ING Life Insurance and Annuity Company. The assets in each Division are invested in shares of a designated Fund ("Fund") of various investment trusts (the "Trusts"). |
S-50 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment Divisions at December 31, 2003 and related Trusts are as follows: |
AIM Variable Insurance Funds: |
ING Investors Trust (continued): |
S-51 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Janus Aspen Series: |
Pioneer Variable Contracts Trust: Pioneer Mid-Cap Value VCT Portfolio - Class I Shares * Pioneer Small Cap Value VCT Portfolio - Class I Shares * Putnam Variable Trust: Putnam VT Growth and Income Fund - Class IB Shares Putnam VT New Opportunities Fund - Class IB Shares Putnam VT Small Cap Value Fund - Class IB Shares Putnam VT Voyager Fund - Class IB Shares Van Eck Worldwide Insurance Trust: Van Eck Worldwide Bond Fund Van Eck Worldwide Emerging Markets Fund Van Eck Worldwide Hard Assets Fund Van Eck Worldwide Real Estate Fund * Division added in 2002. ** Division added in 2003. |
The names of certain Divisions were changed during 2003. The following is a summary of current and former names for those Divisions: |
Current Name |
Former Name |
|||||||||
Fidelity® Variable Insurance Products Funds: |
Fidelity® Variable Insurance Products Fund II: |
|||||||||
Fidelity® VIP Asset ManagerSM Portfolio - Initial Class |
Fidelity® VIP II Asset ManagerSM Portfolio |
|||||||||
Fidelity® VIP Asset ManagerSM Portfolio - Service Class |
Fidelity® VIP II Asset ManagerSM Portfolio - Service Class |
|||||||||
Fidelity® VIP Index 500 Portfolio - Initial Class |
Fidelity® VIP II Index 500 Portfolio |
|||||||||
ING Investors Trust: |
The GCG Trust: |
|||||||||
ING Limited Maturity Bond Portfolio - Institutional |
GCG Trust Limited Maturity Bond Portfolio |
|||||||||
Class |
||||||||||
ING Liquid Assets Portfolio - Institutional Class |
GCG Trust Liquid Assets Portfolio |
|||||||||
ING Marisco Growth Portfolio - Institutional Class |
GCG Trust Growth Portfolio |
|||||||||
ING MFS Mid Cap Growth Portfolio - Institutional |
GCG Trust Midcap Growth Portfolio |
|||||||||
Class |
||||||||||
ING MFS Research Portfolio - Institutional Class |
GCG Trust Research Portfolio |
|||||||||
ING MFS Total Return Portfolio - Institutional Class |
GCG Trust Total Return Portfolio |
|||||||||
ING T. Rowe Price Capital Appreciation Portfolio - |
GCG Trust Fully Managed Portfolio |
|||||||||
Institutional Class |
||||||||||
ING T. Rowe Price Equity Income Portfolio - |
GCG Trust Equity Income Portfolio |
|||||||||
Institutional Class |
||||||||||
Janus Aspen Series: |
Janus Aspen Series: |
|||||||||
Janus Aspen Mid Cap Growth Portfolio - Service Shares |
Janus Aspen Aggressive Growth Portfolio |
During 2003, the Clifton Enhanced US Equity Fund was closed to Contractowners. |
S-52 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
2. Significant Accounting Policies |
The following is a summary of the significant accounting policies of the Account: |
|
Use of Estimates |
|
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
|
Investments |
|
Investments are made in shares of a Fund and are recorded at fair value, determined by the net asset value per share of the respective Fund. Investment transactions in each Fund are recorded on the date the order to buy or sell is confirmed. Distributions of net investment income and capital gains from each Fund are recognized on the ex-distribution date. Realized gains and losses on redemptions of the shares of the Fund of the Trusts are determined on a first-in, first-out basis. The difference between cost and current market value of investments owned on the day of measurement is recorded as unrealized appreciation or depreciation of investments. |
|
Federal Income Taxes |
|
Operations of the Account form a part of, and are taxed with, the total operations of SLD, which is taxed as a life insurance company under the Internal Revenue Code. Earnings and realized capital gains of the Account attributable to the Policyholders are excluded in the determination of the federal income tax liability of SLD. |
|
Policyholder Reserves |
|
Policyholder reserves are presented as net assets on the Statement of Assets and Liabilities and are equal to the aggregate account values of the Policyholders invested in the Account Divisions. To the extent that benefits to be paid to the Policyholders exceed their account values, SLD will contribute additional funds to the benefit proceeds. Conversely, if amounts allocated exceed amounts required, transfers may be made to SLD. |
S-53 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
3. Charges and Fees |
Under the terms of the Policies, certain charges are allocated to the Policies to cover SLD's expenses in connection with the issuance and administration of the Policies. Following is a summary of these charges: |
|
Mortality, Expense Risk, and Other Charges |
|
For FirstLine, FirstLine II, Strategic Advantage, Strategic Advantage II, Variable Survivorship, Estate Designer Policies, and Strategic Investor (Class A Policies), charges are made directly against the assets of the Account Divisions and are reflected daily in the computation of the unit values of the Divisions. A daily deduction, at an annual rate of 0.75% of the daily asset value of the Separate Account Divisions, is charged to the Account for mortality and expense risks assumed by the Company. |
|
For the Corporate Benefits, Strategic Benefits, and Asset Portfolio Manager Policies (Class B Policies), mortality and expense charges result in the redemption of units rather than a deduction in the daily computation of unit values. |
|
For Corporate Benefits Policies, a monthly deduction, at an annual rate of 0.20% of the Policyholder account value, is charged. For Strategic Benefits Policies, a monthly deduction, at an annual rate of 0.85%, 0.60%, and 0.50%, of the Policyholder account value, is charged during policy years 1 through 10, 11 through 20, and 21 and later, respectively. For Asset Portfolio Manager Policies, a monthly deduction, at an annual rate of 0.90% and 0.45% of the Policyholder account value, is charged during policy years 1 through 10 and 11 through 20, respectively. There is no mortality and expense charge after year 20 for Asset Portfolio Manager Policies. |
4. Related Party Transactions |
During the year ended December 31, 2003, management and service fees were paid indirectly to Direct Services, Inc., an affiliate of the Company, in its capacity as investment manager to ING Investors Trust. The Fund's advisory agreement provided for fees at annual rates ranging from 0.53% to 1.02% of the average net assets of each respective Portfolio. Management fees were paid to ING Investments, LLC, an affiliate of the Company, in its capacity as investment advisor to ING Variable Products Trust, ING Income Shares, and ING Variable Portfolios, Inc. The Fund's advisory agreement provides for fees at annual rates ranging from 0.35% to 0.75% of the average net assets of each respective Portfolio. Additionally, management fees were paid to ING Life Insurance and Annuity Company in its capacity as investment advisor to ING Partners, Inc. The Funds' advisory agreement provides for fees at annual rats of 0.90% of the average net assets of the ING UBS Tactical Asset Allocation Portfolio and 0.6 0% of the average net assets of the ING Van Kampen Comstock Portfolio. |
S-54 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
5. Purchases and Sales of Investment Securities |
The aggregate cost of purchases and proceeds from sales of investments follow: |
Year ended December 31 |
||||||||||||||||||
2003 |
2002 |
|||||||||||||||||
Purchases |
Sales |
Purchases |
Sales |
|||||||||||||||
(Dollars in thousands) |
||||||||||||||||||
AIM Variable Insurance Funds: |
||||||||||||||||||
AIM VI Capital Appreciation |
$ 1,621 |
$ 2,033 |
$ 6,247 |
$ 7,112 |
||||||||||||||
AIM VI Government Securities |
9,856 |
13,637 |
20,789 |
14,636 |
||||||||||||||
Alger American Funds: |
||||||||||||||||||
Alger American Growth |
6,981 |
6,998 |
8,078 |
7,473 |
||||||||||||||
Alger American Leveraged AllCap |
3,899 |
3,491 |
17,554 |
20,006 |
||||||||||||||
Alger American Midcap Growth |
12,863 |
10,351 |
27,910 |
30,512 |
||||||||||||||
Alger American Small Capitalization |
11,574 |
9,773 |
11,368 |
15,363 |
||||||||||||||
American Funds Insurance Series: |
||||||||||||||||||
American Funds Growth |
3,698 |
20 |
- |
- |
||||||||||||||
American Funds Growth Income |
3,542 |
337 |
- |
- |
||||||||||||||
American Funds International |
2,289 |
110 |
- |
- |
||||||||||||||
Fidelity® Variable Insurance Products Funds: |
||||||||||||||||||
Fidelity® VIP Asset ManagerSM |
5,393 |
9,008 |
9,450 |
4,828 |
||||||||||||||
Fidelity® VIP Asset ManagerSM SC |
496 |
131 |
530 |
203 |
||||||||||||||
Fidelity® VIP Growth |
10,724 |
12,102 |
18,112 |
18,615 |
||||||||||||||
Fidelity® VIP Growth SC |
1,285 |
208 |
952 |
509 |
||||||||||||||
Fidelity® VIP Index 500 |
32,715 |
30,359 |
46,237 |
49,592 |
||||||||||||||
Fidelity® VIP Money Market |
101,090 |
133,793 |
189,817 |
183,873 |
||||||||||||||
Fidelity® VIP Overseas |
46,550 |
45,671 |
47,539 |
50,148 |
||||||||||||||
Fidelity® VIP Overseas SC |
871 |
155 |
676 |
184 |
||||||||||||||
ING Income Shares: |
||||||||||||||||||
ING VP Bond |
7,339 |
4,316 |
2,858 |
332 |
||||||||||||||
ING Investors Trust: |
||||||||||||||||||
ING Hard Assets |
55 |
- |
- |
- |
||||||||||||||
ING Limited Maturity Bond |
184 |
54 |
565 |
55,574 |
||||||||||||||
ING Liquid Assets |
21,390 |
20,711 |
89,560 |
77,078 |
||||||||||||||
ING Marisco Growth |
2,365 |
603 |
9 |
7 |
||||||||||||||
ING MFS Mid Cap Growth |
2,731 |
1,884 |
1,957 |
364 |
||||||||||||||
ING MFS Research |
2 |
1 |
2 |
- |
||||||||||||||
ING MFS Total Return |
1,026 |
17 |
230 |
122 |
||||||||||||||
ING T. Rowe Price Capital Appreciation |
9,506 |
2,366 |
8,666 |
997 |
||||||||||||||
ING T. Rowe Price Equity Income |
2,563 |
191 |
103 |
8 |
||||||||||||||
ING Partners, Inc.: |
||||||||||||||||||
ING JPMorgan Midcap Value |
1,200 |
132 |
- |
- |
||||||||||||||
ING PIMCO Total Return |
6,594 |
655 |
- |
- |
||||||||||||||
ING Salomon Brothers Aggressive Growth |
138 |
22 |
- |
- |
||||||||||||||
ING Salomon Brothers Investors |
153 |
6 |
- |
- |
||||||||||||||
ING UBS Tactical Asset Allocation |
130 |
17 |
15 |
- |
||||||||||||||
ING Van Kampen Comstock |
3,135 |
940 |
1,401 |
141 |
||||||||||||||
ING Variable Portfolios, Inc.: |
||||||||||||||||||
ING VP Index Plus Large Cap |
3,771 |
575 |
410 |
4 |
||||||||||||||
ING VP Index Plus Mid Cap |
3,754 |
597 |
4,022 |
690 |
||||||||||||||
ING VP Index Plus Small Cap |
1,927 |
254 |
978 |
347 |
S-55 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Year ended December 31 |
||||||||||||
2003 |
2002 |
|||||||||||
Purchases |
Sales |
Purchases |
Sales |
|||||||||
(Dollars in thousands) |
||||||||||||
ING Variable Products (VP) Trust: |
||||||||||||
ING VP Growth Opportunities |
$ 172 |
$ 85 |
54 |
18 |
||||||||
ING VP MagnaCap |
456 |
531 |
1,372 |
348 |
||||||||
ING VP MidCap Opportunities |
1,332 |
1,159 |
2,781 |
2,004 |
||||||||
ING VP SmallCap Opportunities |
3,361 |
2,542 |
1,490 |
238 |
||||||||
INVESCO Variable Investment Funds, Inc.: |
||||||||||||
INVESCO VIF-Core Equity |
4,773 |
5,692 |
10,391 |
9,571 |
||||||||
INVESCO VIF-Health Sciences |
520 |
123 |
152 |
11 |
||||||||
INVESCO VIF-High Yield |
31,568 |
31,089 |
30,976 |
16,382 |
||||||||
INVESCO VIF-Small Company Growth |
5,044 |
6,862 |
8,222 |
6,322 |
||||||||
INVESCO VIF-Total Return |
1,536 |
2,363 |
4,962 |
8,246 |
||||||||
INVESCO VIF Utilities |
5,195 |
4,368 |
4,162 |
3,442 |
||||||||
Janus Aspen Series: |
||||||||||||
Janus Aspen Growth |
1,744 |
1,201 |
3,946 |
3,458 |
||||||||
Janus Aspen International Growth |
4,551 |
3,939 |
2,903 |
2,077 |
||||||||
Janus Aspen Mid Cap Growth |
760 |
706 |
922 |
633 |
||||||||
Janus Aspen Worldwide |
1,171 |
1,783 |
2,284 |
804 |
||||||||
M Fund, Inc: |
||||||||||||
Brandes International Equity |
2,893 |
3,181 |
6,639 |
1,667 |
||||||||
Business Opportunity Value |
875 |
185 |
226 |
14 |
||||||||
Clifton Enhanced US Equity |
258 |
2,393 |
1,847 |
377 |
||||||||
Frontier Capital Appreciation |
3,236 |
2,899 |
5,567 |
3,131 |
||||||||
Turner Core Growth |
1,101 |
486 |
743 |
226 |
||||||||
Neuberger Berman Advisers Management Trust: |
||||||||||||
Neuberger Berman AMT Growth |
4,474 |
2,692 |
4,672 |
3,913 |
||||||||
Neuberger Berman AMT Limited Maturity Bond |
10,195 |
11,520 |
29,378 |
19,988 |
||||||||
Neuberger Berman AMT Partners |
7,575 |
6,961 |
21,642 |
22,944 |
||||||||
Pioneer Variable Contracts Trust: |
||||||||||||
Pioneer Mid-Cap Value VCT |
7,385 |
2,201 |
998 |
82 |
||||||||
Pioneer Small Cap Value VCT |
6,867 |
5,837 |
852 |
68 |
||||||||
Putnam Variable Trust: |
||||||||||||
Putnam VT Growth and Income |
2,314 |
3,595 |
15,166 |
12,154 |
||||||||
Putnam VT New Opportunities |
242 |
251 |
409 |
73 |
||||||||
Putnam VT Small Cap Value |
7,350 |
6,396 |
11,031 |
5,447 |
||||||||
Putnam VT Voyager |
626 |
777 |
932 |
216 |
||||||||
Van Eck Worldwide Insurance Trust: |
||||||||||||
Van Eck Worldwide Bond |
5,046 |
4,172 |
4,255 |
2,145 |
||||||||
Van Eck Worldwide Emerging Markets |
5,761 |
3,929 |
4,932 |
3,506 |
||||||||
Van Eck Worldwide Hard Assets |
7,008 |
3,307 |
3,395 |
2,893 |
||||||||
Van Eck Worldwide Real Estate |
2,690 |
2,552 |
4,095 |
1,673 |
S-56 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
6. Changes in Units |
The changes in units outstanding were as follows: |
Year ended December 31 |
||||||||||||
2003 |
2002 |
|||||||||||
Net Increase |
Units |
Units |
Net Increase |
|||||||||
(Decrease) |
Issued |
Redeemed |
(Decrease) |
|||||||||
AIM Variable Insurance Funds: |
||||||||||||
AIM VI Capital Appreciation |
(31,717) |
671,980 |
(767,467) |
(95,487) |
||||||||
AIM VI Government Securities |
(331,976) |
1,631,978 |
(1,167,870) |
464,108 |
||||||||
Alger American Funds: |
||||||||||||
Alger American Growth |
135,320 |
485,568 |
(413,022) |
72,546 |
||||||||
Alger American Leveraged AllCap |
48,184 |
719,086 |
(761,594) |
(42,508) |
||||||||
Alger American MidCap Growth |
213,809 |
1,159,357 |
(1,193,765) |
(34,408) |
||||||||
Alger American Small Capitalization |
248,657 |
1,030,015 |
(1,369,035) |
(339,020) |
||||||||
American Funds Insurance Series: |
||||||||||||
American Funds Growth |
304,616 |
- |
- |
- |
||||||||
American Funds Growth-Income |
267,800 |
- |
- |
- |
||||||||
American Funds International |
173,690 |
- |
- |
- |
||||||||
Fidelity® Variable Insurance Products Funds: |
||||||||||||
Fidelity® VIP Asset ManagerSM |
(252,877) |
558,460 |
(315,246) |
243,214 |
||||||||
Fidelity® VIP Asset ManagerSM SC |
34,159 |
55,774 |
(22,376) |
33,398 |
||||||||
Fidelity® VIP Growth |
(23,426) |
939,972 |
(976,157) |
(36,185) |
||||||||
Fidelity® VIP Growth SC |
163,961 |
130,925 |
(66,483) |
64,442 |
||||||||
Fidelity® VIP Index 500 |
651,104 |
2,803,034 |
(2,871,953) |
(68,919) |
||||||||
Fidelity® VIP Money Market |
(2,368,327) |
13,655,846 |
(13,293,811) |
362,035 |
||||||||
Fidelity® VIP Overseas |
127,738 |
4,181,509 |
(4,409,294) |
(227,785) |
||||||||
Fidelity® VIP Overseas SC |
95,278 |
100,315 |
(26,715) |
73,600 |
||||||||
ING Income Shares: |
||||||||||||
ING VP Bond |
270,092 |
266,604 |
(31,353) |
235,251 |
||||||||
ING Investors Trust: |
||||||||||||
ING Hard Assets |
4,149 |
- |
- |
- |
||||||||
ING Limited Maturity Bond |
9,681 |
41,829 |
(4,626,328) |
(4,584,499) |
||||||||
ING Liquid Assets |
46,702 |
7,872,674 |
(6,788,789) |
1,083,885 |
||||||||
ING Marisco Growth |
180,719 |
1,521 |
(1,167) |
354 |
||||||||
ING MFS Mid Cap Growth |
103,975 |
291,972 |
(61,886) |
230,086 |
||||||||
ING MFS Research |
159 |
302 |
(30) |
272 |
||||||||
ING MFS Total Return |
85,768 |
20,468 |
(11,340) |
9,128 |
||||||||
ING T. Rowe Price Capital Appreciation |
628,124 |
783,217 |
(94,217) |
689,000 |
||||||||
ING T. Rowe Price Equity Income |
209,576 |
10,741 |
(781) |
9,960 |
||||||||
ING Partners, Inc.: |
||||||||||||
ING JPMorgan Midcap Value |
89,276 |
- |
- |
- |
||||||||
ING PIMCO Total Return |
576,071 |
- |
- |
- |
||||||||
ING Salomon Brothers Aggressive Growth |
9,585 |
- |
- |
- |
||||||||
ING Salomon Brothers Investors |
12,372 |
- |
- |
- |
||||||||
ING UBS Tactical Asset Allocation |
12,521 |
1,970 |
(14) |
1,956 |
||||||||
ING Van Kampen Comstock |
221,095 |
168,184 |
(16,937) |
151,247 |
S-57 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Year ended December 31 |
||||||||||||
2003 |
2002 |
|||||||||||
Net Increase |
Units |
Units |
Net Increase |
|||||||||
(Decrease) |
Issued |
Redeemed |
(Decrease) |
|||||||||
ING Variable Portfolios, Inc.: |
||||||||||||
ING VP Index Plus Large Cap |
373,301 |
49,112 |
(422) |
48,690 |
||||||||
ING VP Index Plus Mid Cap |
327,236 |
469,065 |
(84,163) |
384,902 |
||||||||
ING VP Index Plus Small Cap |
184,566 |
119,061 |
(42,175) |
76,886 |
||||||||
ING Variable Products (VP) Trust: |
||||||||||||
ING VP Growth Opportunities |
14,018 |
7,836 |
(2,699) |
5,137 |
||||||||
ING VP MagnaCap |
(6,046) |
155,659 |
(39,325) |
116,334 |
||||||||
ING VP MidCap Opportunities |
23,300 |
360,810 |
(264,590) |
96,220 |
||||||||
ING VP SmallCap Opportunities |
126,618 |
195,279 |
(32,103) |
163,176 |
||||||||
INVESCO Variable Investment Funds, Inc.: |
||||||||||||
INVESCO VIF-Core Equity |
(33,732) |
562,797 |
(500,598) |
62,199 |
||||||||
INVESCO VIF-Health Sciences |
44,260 |
17,637 |
(1,222) |
16,415 |
||||||||
INVESCO VIF-High Yield |
(20,222) |
2,379,761 |
(1,348,324) |
1,031,437 |
||||||||
INVESCO VIF-Small Company Growth |
(144,187) |
770,084 |
(557,896) |
212,188 |
||||||||
INVESCO VIF-Total Return |
(62,665) |
331,008 |
(563,130) |
(232,122) |
||||||||
INVESCO VIF Utilities |
107,999 |
336,251 |
(276,809) |
59,442 |
||||||||
Janus Aspen Series: |
||||||||||||
Janus Aspen Growth |
112,287 |
762,951 |
(696,080) |
66,871 |
||||||||
Janus Aspen International Growth |
132,985 |
543,365 |
(406,029) |
137,336 |
||||||||
Janus Aspen Mid Cap Growth |
35,124 |
268,234 |
(195,305) |
72,929 |
||||||||
Janus Aspen Worldwide |
(105,015) |
391,136 |
(143,837) |
247,299 |
||||||||
M Fund, Inc: |
||||||||||||
M Fund Brandes International Equity |
(8,769) |
712,942 |
(190,657) |
522,285 |
||||||||
M Fund Business Opportunity Value |
86,388 |
28,142 |
(1,869) |
26,273 |
||||||||
M Fund Clifton Enhanced US Equity |
(278,008) |
203,877 |
(46,123) |
157,754 |
||||||||
M Fund Frontier Capital Appreciation |
56,601 |
615,532 |
(345,254) |
270,278 |
||||||||
M Fund Turner Core Growth |
76,626 |
84,796 |
(26,594) |
58,202 |
||||||||
Neuberger Berman Advisers Management Trust: |
||||||||||||
Neuberger Berman AMT Growth |
117,907 |
345,906 |
(274,109) |
71,797 |
||||||||
Neuberger Berman AMT Limited Maturity Bond |
(136,301) |
1,978,216 |
(1,352,449) |
625,767 |
||||||||
Neuberger Berman AMT Partners |
56,632 |
1,057,013 |
(1,093,740) |
(36,727) |
||||||||
Pioneer Variable Contracts Trust: |
||||||||||||
Pioneer Mid-Cap Value VCT |
514,051 |
112,011 |
(9,891) |
102,120 |
||||||||
Pioneer Small Cap Value VCT |
133,936 |
103,586 |
(7,691) |
95,895 |
||||||||
Putnam Variable Trust: |
||||||||||||
Putnam VT Growth and Income |
(131,784) |
1,582,793 |
(1,268,532) |
314,261 |
||||||||
Putnam VT New Opportunities |
1,494 |
55,618 |
(9,667) |
45,951 |
||||||||
Putnam VT Small Cap Value |
103,288 |
976,783 |
(480,224) |
496,559 |
||||||||
Putnam VT Voyager |
(15,210) |
120,993 |
(27,423) |
93,570 |
S-58 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Year ended December 31 |
||||||||||||
2003 |
2002 |
|||||||||||
Net Increase |
Units |
Units |
Net Increase |
|||||||||
(Decrease) |
Issued |
Redeemed |
(Decrease) |
|||||||||
Van Eck Worldwide Insurance Trust: |
||||||||||||
Van Eck Worldwide Bond |
65,283 |
402,004 |
(200,418) |
201,586 |
||||||||
Van Eck Worldwide Emerging Markets |
190,357 |
623,320 |
(434,374) |
188,946 |
||||||||
Van Eck Worldwide Hard Assets |
312,284 |
329,392 |
(276,899) |
52,493 |
||||||||
Van Eck Worldwide Real Estate |
3,160 |
372,743 |
(153,825) |
218,918 |
S-59 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
7. Financial Highlights |
A summary of unit values and units outstanding for Policies, expense ratios, excluding expenses of underlying Funds, investment income ratios, and total return for the years ended December 31, 2003, 2002, and 2001, along with units outstanding and unit values for the year ended December 31, 2000, follows: |
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense Ratio |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
AIM VI Capital Appreciation |
||||||||||||||||||
2003 |
1,047 |
$9.11 to $10.65 |
$ 10,989 |
- |
% |
0% to .75% |
28.47% to 29.59% |
|||||||||||
2002 |
1,078 |
$7.03 to $8.29 |
8,853 |
- |
0% to .75% |
-25.05% to -24.41% |
||||||||||||
2001 |
1,174 |
$9.30 to $11.06 |
12,831 |
7.26 |
0% to .75% |
-23.83% to -23.27% |
||||||||||||
2000 |
4,082 |
$12.12 to $14.52 |
51,039 |
* |
* |
* |
||||||||||||
AIM VI Government Securities |
||||||||||||||||||
2003 |
2,288 |
$13.01 to $13.11 |
29,800 |
2.30 |
0% to .75% |
0.31% to 1.00% |
||||||||||||
2002 |
2,620 |
$12.97 to $12.98 |
33,988 |
2.03 |
0% to .75% |
9.08% to 9.82% |
||||||||||||
2001 |
2,156 |
$11.81 to $11.90 |
25,665 |
1.35 |
0% to .75% |
5.40% to 6.11% |
||||||||||||
2000 |
1,492 |
$11.13 to $11.29 |
16,764 |
* |
* |
* |
||||||||||||
Alger American Growth |
||||||||||||||||||
2003 |
2,261 |
$8.12 to $21.74 |
44,540 |
- |
0% to .75% |
34.11% to 35.11% |
||||||||||||
2002 |
2,126 |
$6.01 to $16.21 |
33,021 |
0.04 |
0% to .75% |
-33.35% to -33.07% |
||||||||||||
2001 |
2,053 |
$8.98 to $24.32 |
48,752 |
12.91 |
0% to .75% |
-12.74% to -11.61% |
||||||||||||
2000 |
1,807 |
$10.16 to $27.87 |
50,118 |
* |
* |
* |
||||||||||||
Alger American Leveraged AllCap |
||||||||||||||||||
2003 |
702 |
$8.41 to $29.61 |
18,180 |
- |
0% to .75% |
33.68% to 34.78% |
||||||||||||
2002 |
654 |
$6.24 to $22.15 |
13,112 |
0.01 |
0% to .75% |
-34.62% to -33.97% |
||||||||||||
2001 |
696 |
$9.45 to $33.88 |
23,276 |
3.72 |
0% to .75% |
-16.30% |
||||||||||||
2000 |
602 |
$40.48 |
24,378 |
* |
* |
* |
||||||||||||
Alger American MidCap Growth |
||||||||||||||||||
2003 |
1,624 |
$13.07 to $30.91 |
43,924 |
- |
0% to .75% |
46.70% to 47.85% |
||||||||||||
2002 |
1,410 |
$8.84 to $21.07 |
27,448 |
- |
0% to .75% |
-30.25% to -29.67% |
||||||||||||
2001 |
1,445 |
$12.57 to $30.21 |
42,563 |
46.27 |
0% to .75% |
-7.2% to -6.40% |
||||||||||||
2000 |
1,028 |
$13.43 to $32.49 |
33,294 |
* |
* |
* |
S-60 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
Alger American Small Capitalization |
||||||||||||||||||
2003 |
1,446 |
$7.14 to $13.76 |
$ 19,376 |
- |
% |
0% to .75% |
41.27% to 42.23% |
|||||||||||
2002 |
1,198 |
$5.02 to $9.74 |
11,557 |
- |
0% to .75% |
-26.55% to -26.18 |
||||||||||||
2001 |
1,537 |
$6.80 to $13.26 |
19,928 |
0.05 |
0% to .75% |
-30.10% to -29.53% |
||||||||||||
2000 |
1,407 |
$9.65 to $18.97 |
26,169 |
* |
* |
* |
||||||||||||
American Funds Growth |
||||||||||||||||||
2003 |
305 |
$12.88 to $12.95 |
3,929 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
American Funds Growth-Income |
||||||||||||||||||
2003 |
268 |
$12.91 to $12.98 |
3,463 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
American Funds International |
||||||||||||||||||
2003 |
174 |
$13.86 to $13.93 |
2,412 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
Fidelity® VIP Asset ManagerSM |
||||||||||||||||||
2003 |
1,160 |
$18.11 |
21,003 |
3.58 |
0.75% |
17.14% |
||||||||||||
2002 |
1,413 |
$15.46 |
21,839 |
3.51 |
0.75% |
-8.90% |
||||||||||||
2001 |
1,201 |
$16.97 |
19,842 |
4.74 |
0.75% |
-5.35% |
||||||||||||
2000 |
879 |
$17.93 |
15,755 |
* |
* |
* |
||||||||||||
Fidelity® VIP Asset ManagerSM SC |
||||||||||||||||||
2003 |
99 |
$10.64 |
1,056 |
2.80 |
0% |
17.83% |
||||||||||||
2002 |
65 |
$9.03 |
588 |
2.94 |
0% |
-8.79% |
||||||||||||
2001 |
32 |
$9.90 |
314 |
** |
0% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
S-61 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
Fidelity® VIP Growth |
||||||||||||||||||
2003 |
2,384 |
$8.29 to $22.92 |
$ 53,751 |
0.25 |
% |
0% to .75% |
31.88% to 32.85% |
|||||||||||
2002 |
2,408 |
$6.24 to $17.38 |
41,408 |
0.24 |
0% to .75% |
-30.40% to -30.12% |
||||||||||||
2001 |
2,444 |
$8.93 to $24.97 |
59,751 |
7.38 |
0% to .75% |
-18.45% to -17.62% |
||||||||||||
2000 |
2,264 |
$10.84 to $30.62 |
68,506 |
* |
* |
* |
||||||||||||
Fidelity® VIP Growth SC |
||||||||||||||||||
2003 |
253 |
$7.91 |
2,000 |
0.08 |
0% |
32.72% |
||||||||||||
2002 |
88 |
$5.96 |
530 |
0.08 |
0% |
-30.54% |
||||||||||||
2001 |
24 |
$8.58 |
209 |
** |
0% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Fidelity® VIP Index 500 |
||||||||||||||||||
2003 |
9,436 |
$8.84 to $24.75 |
195,682 |
1.42 |
0% to .75% |
27.45% to 28.49% |
||||||||||||
2002 |
8,785 |
$6.88 to $19.42 |
151,371 |
1.34 |
0% to .75% |
-22.88% to -22.26% |
||||||||||||
2001 |
8,854 |
$8.85 to $25.18 |
200,404 |
1.05 |
0% to .75% |
-12.72% to -12.12% |
||||||||||||
2000 |
6,730 |
$10.07 to $28.85 |
180,940 |
* |
* |
* |
||||||||||||
Fidelity® VIP Money Market |
||||||||||||||||||
2003 |
4,915 |
$13.90 |
68,318 |
1.02 |
0.75% |
0.22% |
||||||||||||
2002 |
7,283 |
$13.87 |
101,019 |
1.70 |
0.75% |
1.24% |
||||||||||||
2001 |
6,921 |
$13.70 |
94,833 |
3.88 |
0.75% |
3.63% |
||||||||||||
2000 |
4,690 |
$13.22 |
62,015 |
* |
* |
* |
||||||||||||
Fidelity® VIP Overseas |
||||||||||||||||||
2003 |
2,675 |
$9.35 to $14.41 |
38,294 |
0.72 |
0% to .75% |
42.25% to 43.40% |
||||||||||||
2002 |
2,547 |
$6.52 to $10.13 |
25,636 |
0.78 |
0% to .75% |
-21.23% to -20.29% |
||||||||||||
2001 |
2,775 |
$8.18 to $12.86 |
35,065 |
13.45 |
0% to .75% |
-21.63% to -21.19% |
||||||||||||
2000 |
2,670 |
$10.38 to $16.41 |
43,322 |
* |
* |
* |
||||||||||||
Fidelity® VIP Overseas SC |
||||||||||||||||||
2003 |
189 |
$8.70 |
1,641 |
0.45 |
0% |
43.09% |
||||||||||||
2002 |
93 |
$6.08 |
568 |
0.34 |
0% |
-20.32% |
||||||||||||
2001 |
19 |
$7.63 |
151 |
** |
0% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
S-62 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
ING VP Bond |
||||||||||||||||||
2003 |
505 |
$11.38 to $11.52 |
$ 5,775 |
1.88 |
% |
0% to .75% |
5.57% to 6.27% |
|||||||||||
2002 |
235 |
$10.78 to $10.84 |
2,539 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
ING Hard Assets |
||||||||||||||||||
2003 |
4 |
$13.11 to $15.45 |
61 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
ING Limited Maturity Bond |
||||||||||||||||||
2003 |
36 |
$13.08 |
465 |
1.26 |
0% |
2.83% |
||||||||||||
2002 |
26 |
$12.72 |
329 |
0.23 |
0% |
7.25% |
||||||||||||
2001 |
4,610 |
$11.86 |
54,671 |
16.29 |
0% |
8.91% |
||||||||||||
2000 |
80 |
$10.89 |
877 |
* |
* |
* |
||||||||||||
ING Liquid Asset |
||||||||||||||||||
2003 |
1,827 |
$11.49 |
20,993 |
0.78 |
0% |
0.70% |
||||||||||||
2002 |
1,780 |
$11.41 |
20,314 |
1.47 |
0% |
1.42% |
||||||||||||
2001 |
696 |
$11.25 |
7,832 |
3.74 |
0% |
3.88% |
||||||||||||
2000 |
184 |
$10.83 |
1,992 |
* |
* |
* |
||||||||||||
ING Marisco Growth |
||||||||||||||||||
2003 |
182 |
$7.76 to $12.78 |
1,870 |
- |
0% to .75% |
32.88% |
||||||||||||
2002 |
1 |
$5.84 |
5 |
- |
0% |
-29.55% |
||||||||||||
2001 |
- |
$8.29 |
4 |
- |
0% |
-30.28% |
||||||||||||
2000 |
- |
$11.89 |
1 |
* |
* |
* |
||||||||||||
ING MFS Mid Cap Growth |
||||||||||||||||||
2003 |
381 |
$6.79 to $9.31 |
2,923 |
- |
0% to .75% |
38.57% to 39.58% |
||||||||||||
2002 |
277 |
$4.90 to $6.67 |
1,478 |
- |
0% to .75% |
-49.38% to -48.85% |
||||||||||||
2001 |
46 |
$9.68 to $13.04 |
465 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
S-63 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
ING MFS Research |
||||||||||||||||||
2003 |
1 |
$8.22 |
$ 7 |
- |
% |
0% |
24.73% |
|||||||||||
2002 |
1 |
$6.59 |
4 |
0.57 |
0% |
-24.94% |
||||||||||||
2001 |
- |
$8.78 |
3 |
** |
0% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING MFS Total Return |
||||||||||||||||||
2003 |
99 |
$11.57 to $12.93 |
1,246 |
1.00 |
0% to .75% |
16.91% |
||||||||||||
2002 |
14 |
$11.06 |
151 |
3.30 |
0% |
-5.06% |
||||||||||||
2001 |
5 |
$11.65 |
53 |
13.37 |
0% |
0.43% |
||||||||||||
2000 |
1 |
$11.60 |
11 |
* |
* |
* |
||||||||||||
ING T. Rowe Price Capital Appreciation |
||||||||||||||||||
2003 |
1,686 |
$13.16 to $13.43 |
22,308 |
0.73 |
0% to .75% |
24.39% to 25.28% |
||||||||||||
2002 |
1,058 |
$10.58 to $10.72 |
11,222 |
3.65 |
0% to .75% |
-0.19% to 0.56% |
||||||||||||
2001 |
369 |
$10.60 to $10.66 |
3,909 |
9.39 |
0% to .75% |
- |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING T. Rowe Price Equity Income |
||||||||||||||||||
2003 |
220 |
$11.71 to $12.70 |
2,734 |
0.85 |
0% to .75% |
25.37% |
||||||||||||
2002 |
11 |
$9.34 |
99 |
4.45 |
0% |
-13.20% |
||||||||||||
2001 |
1 |
$10.76 |
6 |
** |
0% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING JPMorgan Mid Cap Value |
||||||||||||||||||
2003 |
89 |
$12.73 to $12.80 |
1,139 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
ING PIMCO Total Return |
||||||||||||||||||
2003 |
576 |
$10.21 to $10.26 |
5,884 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
S-64 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
ING Salomon Brothers Aggressive Growth |
||||||||||||||||||
2003 |
10 |
$12.77 to $12.83 |
123 |
**** |
% |
0% to .75% |
**** |
|||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
ING Salomon Brothers Investors |
||||||||||||||||||
2003 |
12 |
$13.02 to $13.09 |
161 |
**** |
0% to .75% |
**** |
||||||||||||
2002 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2001 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
2000 |
**** |
**** |
**** |
**** |
**** |
**** |
||||||||||||
ING UBS Tactical Asset Allocation |
||||||||||||||||||
2003 |
14 |
$9.85 to $9.97 |
143 |
- |
0% to .75% |
26.44% to 27.33% |
||||||||||||
2002 |
2 |
$7.79 to $7.83 |
15 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
ING Van Kampen Comstock |
||||||||||||||||||
2003 |
372 |
$10.78 to $10.91 |
4,034 |
3.47 |
0% to .75% |
28.95% to 29.88% |
||||||||||||
2002 |
151 |
$8.36 to $8.40 |
1,265 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
ING VP Index Plus Large Cap |
||||||||||||||||||
2003 |
422 |
$9.95 to $10.08 |
4,224 |
1.39 |
0% to .75% |
25.16% to 26.16% |
||||||||||||
2002 |
49 |
$7.95 to $7.99 |
389 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
ING VP Index Plus Mid Cap |
||||||||||||||||||
2003 |
712 |
$10.87 to $11.01 |
7,802 |
0.40 |
0% to .75% |
31.44% to 32.49% |
||||||||||||
2002 |
385 |
$8.27 to $8.31 |
3,193 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
S-65 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
ING VP Index Plus Small Cap |
||||||||||||||||||
2003 |
261 |
$11.05 to $11.20 |
$ 2,906 |
0.17 |
% |
0% to .75% |
35.09% to 36.09% |
|||||||||||
2002 |
77 |
$8.18 to $8.23 |
630 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
ING VP Growth Opportunities |
||||||||||||||||||
2003 |
36 |
$7.75 to $7.91 |
281 |
- |
0% to .75% |
32.25% to 33.16% |
||||||||||||
2002 |
22 |
$5.86 to $5.94 |
130 |
- |
0% to .75% |
-32.18% to -31.57% |
||||||||||||
2001 |
17 |
$8.64 to $8.68 |
147 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING VP MagnaCap |
||||||||||||||||||
2003 |
131 |
$9.71 to $9.92 |
1,281 |
1.21 |
0% to .75% |
29.99% to 31.04% |
||||||||||||
2002 |
137 |
$7.47 to $7.57 |
1,026 |
1.31 |
0% to .75% |
-23.46% to -22.76% |
||||||||||||
2001 |
21 |
$9.76 to $9.80 |
202 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING VP MidCap Opportunities |
||||||||||||||||||
2003 |
152 |
$9.12 to $9.31 |
1,404 |
- |
0% to .75% |
35.71% to 36.71% |
||||||||||||
2002 |
128 |
$6.72 to $6.81 |
868 |
- |
0% to .75% |
-26.80% to -25.82% |
||||||||||||
2001 |
32 |
$9.18 |
294 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
ING VP SmallCap Opportunities |
||||||||||||||||||
2003 |
365 |
$7.46 to $7.62 |
2,743 |
- |
0% to .75% |
37.64% to 38.80% |
||||||||||||
2002 |
238 |
$5.42 to $5.49 |
1,297 |
- |
0% to .75% |
-44.07% to -43.63% |
||||||||||||
2001 |
75 |
$9.69 to $9.74 |
730 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
INVESCO VIF-Core Equity |
||||||||||||||||||
2003 |
1,267 |
$9.74 to $23.99 |
27,110 |
1.14 |
0% to .75% |
21.65% to 22.52% |
||||||||||||
2002 |
1,301 |
$7.95 to $19.72 |
23,265 |
1.41 |
0% to .75% |
-19.64% to -19.04% |
||||||||||||
2001 |
1,238 |
$9.82 to $24.54 |
29,102 |
1.59 |
0% to .75% |
-9.75% to -8.99% |
||||||||||||
2000 |
806 |
$10.79 to $27.19 |
21,536 |
* |
* |
* |
S-66 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
INVESCO VIF-Health Sciences |
||||||||||||||||||
2003 |
61 |
$10.37 to $10.50 |
$ 631 |
- |
% |
0% to .75% |
26.93% to 27.74% |
|||||||||||
2002 |
16 |
$8.17 to $8.22 |
134 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
INVESCO VIF-High Yield |
||||||||||||||||||
2003 |
1,843 |
$9.53 to $15.79 |
27,768 |
6.14 |
0% to .75% |
24.14% to 25.07% |
||||||||||||
2002 |
1,863 |
$7.62 to $12.72 |
23,179 |
18.57 |
0% to .75% |
-2.75% to -1.30% |
||||||||||||
2001 |
832 |
$7.72 to $13.08 |
10,708 |
10.78 |
0% to .75% |
-15.06% to -14.88% |
||||||||||||
2000 |
682 |
$9.07 to $15.40 |
10,496 |
* |
* |
* |
||||||||||||
INVESCO VIF-Small Company Growth |
||||||||||||||||||
2003 |
1,101 |
$9.90 to $12.99 |
13,864 |
- |
0% to .75% |
32.42% to 33.42% |
||||||||||||
2002 |
1,245 |
$7.42 to $9.81 |
12,029 |
- |
0% to .75% |
-32.30% to -31.11% |
||||||||||||
2001 |
1,033 |
$10.77 to $14.49 |
14,861 |
- |
0% to .75% |
-19.32% to -18.53% |
||||||||||||
2000 |
660 |
$13.22 to $17.96 |
11,848 |
* |
* |
* |
||||||||||||
INVESCO VIF-Total Return |
||||||||||||||||||
2003 |
639 |
$10.47 to $16.94 |
10,471 |
2.47 |
0% to .75% |
16.11% to 16.98% |
||||||||||||
2002 |
702 |
$8.95 to $14.59 |
9,980 |
2.00 |
0% to .75% |
-10.98% to -10.23% |
||||||||||||
2001 |
934 |
$9.97 to $16.39 |
15,247 |
2.57 |
0% to .75% |
-2.15% |
||||||||||||
2000 |
698 |
$16.75 |
11,695 |
* |
* |
* |
||||||||||||
INVESCO VIF-Utilities |
||||||||||||||||||
2003 |
693 |
$6.60 to $14.13 |
8,951 |
1.23 |
0% to .75% |
16.58% to 17.44% |
||||||||||||
2002 |
585 |
$5.62 to $12.12 |
6,946 |
0.49 |
0% to .75% |
-20.94% to -20.28% |
||||||||||||
2001 |
526 |
$7.05 to $15.33 |
7,928 |
1.02 |
0% to .75% |
-32.91% |
||||||||||||
2000 |
342 |
$22.85 |
7,812 |
* |
* |
* |
||||||||||||
Janus Aspen Growth |
||||||||||||||||||
2003 |
681 |
$5.86 to $6.00 |
4,019 |
- |
0% to .75% |
30.51% to 31.58% |
||||||||||||
2002 |
568 |
$4.49 to $4.56 |
2,560 |
- |
0% to .75% |
-27.23% to -26.81% |
||||||||||||
2001 |
501 |
$6.17 to $6.23 |
3,099 |
0.24 |
0% to .75% |
-25.48% |
||||||||||||
2000 |
29 |
$8.28 |
244 |
* |
* |
* |
S-67 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
Janus Aspen International Growth |
||||||||||||||||||
2003 |
1,050 |
$6.50 to $6.66 |
$ 6,883 |
1.07 |
% |
0% to .75% |
33.47% to 34.55% |
|||||||||||
2002 |
917 |
$4.87 to $4.95 |
4,484 |
0.64 |
0% to .75% |
-26.10% to -25.79% |
||||||||||||
2001 |
780 |
$6.59 to $6.67 |
5,140 |
0.87 |
0% to .75% |
-24.17% to -23.42% |
||||||||||||
2000 |
48 |
$8.69 to $8.71 |
421 |
* |
* |
* |
||||||||||||
Janus Aspen Mid Cap Growth |
||||||||||||||||||
2003 |
560 |
$3.92 to $4.02 |
2,203 |
- |
0% to .75% |
33.79% to 34.90% |
||||||||||||
2002 |
525 |
$2.93 to $2.98 |
1,539 |
- |
0% to .75% |
-28.71% to -28.19% |
||||||||||||
2001 |
452 |
$4.11 to $4.15 |
1,858 |
- |
0% to .75% |
-40.00% to -39.50% |
||||||||||||
2000 |
77 |
$6.85 to $6.86 |
526 |
* |
* |
* |
||||||||||||
Janus Aspen Worldwide |
||||||||||||||||||
2003 |
626 |
$6.04 to $6.19 |
3,806 |
0.92 |
0% to .75% |
22.76% to 23.55% |
||||||||||||
2002 |
731 |
$4.92 to $5.01 |
3,609 |
0.66 |
0% to .75% |
-26.35% to -25.67% |
||||||||||||
2001 |
484 |
$6.68 to $6.74 |
3,325 |
0.37 |
0% to .75% |
-23.13% to -22.62% |
||||||||||||
2000 |
37 |
$8.69 to $8.71 |
319 |
* |
* |
* |
||||||||||||
Brandes International Equity |
||||||||||||||||||
2003 |
713 |
$11.67 to $11.91 |
8,330 |
1.05 |
0% to .75% |
46.42% to 47.40% |
||||||||||||
2002 |
722 |
$7.97 to $8.08 |
5,757 |
6.53 |
0% to .75% |
-15.93% to -15.30% |
||||||||||||
2001 |
200 |
$9.48 to $9.54 |
1,895 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Business Opportunity Value |
||||||||||||||||||
2003 |
113 |
$9.77 to $9.90 |
1,103 |
1.07 |
0% to .75% |
28.72% to 29.58% |
||||||||||||
2002 |
26 |
$7.59 to $7.64 |
200 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
Frontier Capital Appreciation |
||||||||||||||||||
2003 |
491 |
$12.06 to $12.32 |
5,926 |
- |
0% to .75% |
54.62% to 55.95% |
||||||||||||
2002 |
435 |
$7.80 to $7.90 |
3,390 |
- |
0% to .75% |
-25.79% to -25.26% |
||||||||||||
2001 |
164 |
$10.51 to $10.57 |
1,727 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
S-68 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
Turner Core Growth |
||||||||||||||||||
2003 |
166 |
$9.25 to $9.44 |
$ 1,538 |
0.28 |
% |
0% to .75% |
33.67% to 34.47% |
|||||||||||
2002 |
89 |
$6.92 to $7.02 |
619 |
0.28 |
0% to .75% |
-27.08% to -26.49% |
||||||||||||
2001 |
31 |
$9.49 to $9.55 |
296 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Neuberger Berman AMT Growth |
||||||||||||||||||
2003 |
906 |
$7.68 to $16.26 |
14,408 |
- |
0% to .75% |
30.39% to 31.28% |
||||||||||||
2002 |
788 |
$5.85 to $12.47 |
9,722 |
- |
0% to .75% |
-31.93% to -31.18% |
||||||||||||
2001 |
716 |
$8.50 to $18.32 |
13,020 |
50.01 |
0% to .75% |
-30.66% |
||||||||||||
2000 |
755 |
$26.42 |
19,945 |
* |
* |
* |
||||||||||||
Neuberger Berman AMT Limited Maturity Bond |
||||||||||||||||||
2003 |
2,092 |
$11.42 to $15.32 |
30,686 |
4.65 |
0% to .75% |
1.66% to 2.42% |
||||||||||||
2002 |
2,229 |
$11.15 to $15.07 |
32,704 |
4.04 |
0% to .75% |
4.44% to 5.39% |
||||||||||||
2001 |
1,603 |
$10.58 to $14.43 |
22,975 |
5.37 |
0% to .75% |
8.01% |
||||||||||||
2000 |
1,085 |
$13.36 |
14,494 |
* |
* |
* |
||||||||||||
Neuberger Berman AMT Partners |
||||||||||||||||||
2003 |
1,403 |
$9.93 to $23.62 |
32,014 |
- |
0% to .75% |
34.05% to 35.10% |
||||||||||||
2002 |
1,346 |
$7.35 to $17.62 |
23,077 |
0.51 |
0% to .75% |
-24.93% to -24.15% |
||||||||||||
2001 |
1,383 |
$9.69 to $23.47 |
32,191 |
4.12 |
0% to .75% |
-3.61% to -2.81% |
||||||||||||
2000 |
1,132 |
$9.97 to $24.35 |
27,556 |
* |
* |
* |
||||||||||||
Pioneer Mid-Cap Value VCT |
||||||||||||||||||
2003 |
616 |
$11.52 to $11.67 |
7,115 |
0.15 |
0% to .75% |
36.33% to 37.46% |
||||||||||||
2002 |
102 |
$8.45 to $8.49 |
864 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
Pioneer Small Cap Value VCT |
||||||||||||||||||
2003 |
229 |
$10.65 to $10.79 |
2,455 |
- |
0% to .75% |
34.47% to 35.55% |
||||||||||||
2002 |
96 |
$7.92 to $7.96 |
760 |
*** |
0% to .75% |
*** |
||||||||||||
2001 |
*** |
*** |
*** |
*** |
*** |
*** |
||||||||||||
2000 |
*** |
*** |
*** |
*** |
*** |
*** |
S-69 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
|||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
||||||||||||
Putnam VT Growth and Income |
||||||||||||||||||
2003 |
527 |
$10.00 to $10.21 |
$ 5,300 |
1.85 |
% |
0% to .75% |
26.58% to 27.47% |
|||||||||||
2002 |
658 |
$7.90 to $8.01 |
5,213 |
1.82 |
0% to .75% |
-19.63% to -19.01% |
||||||||||||
2001 |
344 |
$9.83 to $9.89 |
3,383 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Putnam VT New Opportunities |
||||||||||||||||||
2003 |
89 |
$8.66 to $8.84 |
776 |
- |
0% to .75% |
31.41% to 32.34% |
||||||||||||
2002 |
88 |
$6.59 to $6.68 |
579 |
- |
0% to .75% |
-31.07% to -30.49% |
||||||||||||
2001 |
42 |
$9.56 to $9.61 |
397 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Putnam VT Small Cap Value |
||||||||||||||||||
2003 |
1,135 |
$13.97 to $14.26 |
15,925 |
0.30 |
0% to .75% |
76.39% to 79.15% |
||||||||||||
2002 |
1,032 |
$7.92 to $7.96 |
9,712 |
1.05 |
0% to .75% |
-18.76% to -18.27% |
||||||||||||
2001 |
535 |
$11.57 to $11.66 |
6,191 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Putnam VT Voyager |
||||||||||||||||||
2003 |
168 |
$8.60 to $8.78 |
1,455 |
0.37 |
0% to .75% |
23.92% to 24.89% |
||||||||||||
2002 |
183 |
$6.94 to $7.03 |
1,275 |
0.50 |
0% to .75% |
-27.02% to -26.54% |
||||||||||||
2001 |
90 |
$9.51 to $9.57 |
852 |
** |
0% to .75% |
** |
||||||||||||
2000 |
** |
** |
** |
** |
** |
** |
||||||||||||
Van Eck Worldwide Bond |
||||||||||||||||||
2003 |
394 |
$13.61 to $13.68 |
5,371 |
0.02 |
0% to .75% |
17.23% to 18.13% |
||||||||||||
2002 |
329 |
$11.58 to $11.61 |
3,820 |
- |
0% to .75% |
20.81% to 21.64% |
||||||||||||
2001 |
127 |
$9.52 to $9.61 |
1,225 |
3.92 |
0% to .75% |
-5.78% to -4.99% |
||||||||||||
2000 |
91 |
$10.02 to $10.20 |
931 |
* |
* |
* |
||||||||||||
Van Eck Worldwide Emerging Markets |
||||||||||||||||||
2003 |
967 |
$11.29 to $12.15 |
10,998 |
0.08 |
0% to .75% |
53.19% to 54.19% |
||||||||||||
2002 |
777 |
$7.37 to $7.88 |
5,740 |
0.17 |
0% to .75% |
-3.67% to -2.96% |
||||||||||||
2001 |
588 |
$7.65 to $8.12 |
4,516 |
- |
0% to .75% |
-2.55% to -1.81% |
||||||||||||
2000 |
579 |
$7.85 to $8.27 |
4,562 |
* |
* |
* |
S-70 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
SEPARATE ACCOUNT L1 |
Notes to Financial Statements |
|
Investment |
|||||||||||||||||||||
Units |
Unit Fair Value |
Net Assets |
Income |
Expense RatioB |
Total ReturnC |
||||||||||||||||
Division |
(000's) |
(lowest to highest) |
(000's) |
RatioA |
(lowest to highest) |
(lowest to highest) |
|||||||||||||||
Van Eck Worldwide Hard Assets |
|||||||||||||||||||||
2003 |
545 |
$12.57 to $13.28 |
$ 7,224 |
0.34 |
% |
0% to .75% |
44.03% to 45.15% |
||||||||||||||
2002 |
233 |
$8.66 to $9.22 |
2,148 |
0.62 |
0% to .75% |
-3.66% to -2.81% |
|||||||||||||||
2001 |
181 |
$8.91 to $9.57 |
1,727 |
1.15 |
0% to .75% |
-11.06% |
|||||||||||||||
2000 |
215 |
$10.76 |
2,313 |
* |
* |
* |
|||||||||||||||
Van Eck Worldwide Real Estate |
|||||||||||||||||||||
2003 |
493 |
$13.19 to $14.84 |
6,614 |
1.90 |
0% to .75% |
33.50% to 34.42% |
|||||||||||||||
2002 |
490 |
$9.88 to $11.04 |
4,886 |
2.47 |
0% to .75% |
-5.18% to -4.42% |
|||||||||||||||
2001 |
271 |
$10.42 to $11.55 |
2,826 |
1.98 |
0% to .75% |
4.51% to 5.29% |
|||||||||||||||
2000 |
131 |
$9.97 to $10.97 |
1,312 |
* |
* |
* |
|||||||||||||||
* |
Not provided for 2000. |
||||||||||||||||||||
** |
As investment Division was not available until 2001, this data is not meaningful and is therefore not presented. |
||||||||||||||||||||
*** |
As investment Division was not available until 2002, this data is not meaningful and is therefore not presented. |
||||||||||||||||||||
**** |
As investment Division was not available until 2003, this data is not meaningful and is therefore not presented. |
||||||||||||||||||||
A |
The Investment Income Ratio represents dividends received by the Division, excluding capital gains distributions, divided by the average net assets. |
||||||||||||||||||||
The recognition of investment income is determined by the timing of the declaration of dividends by the underlying fund in which the Division invests. |
|||||||||||||||||||||
B |
The Expense Ratio considers only the expenses borne directly by the Account and is equal to the mortality and expense charge, |
||||||||||||||||||||
as defined in Note 3. Certain items in this table are presented as a range of minimum and maximum values; however, |
|||||||||||||||||||||
such information is calculated independently for each column in the table. |
|||||||||||||||||||||
C |
Total Return is calculated as the change in unit value for each Contract presented in the Statements of Assets and Liabilities. Certain items in this table are presented as a range of |
||||||||||||||||||||
minimum and maximum values; however, such information is calculated independently for each column in the table. |
S-71 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
|
Financial Statements - Statutory Basis |
|
Years ended December 31, 2003 and 2002 |
|
|
|
|
|
|
|
Contents |
|
|
|
Report of Independent Auditors |
F-2 |
|
|
Audited Financial Statements - Statutory Basis |
|
|
|
Balance Sheets - Statutory Basis |
F-4 |
|
|
Statements of Operations - Statutory Basis |
F-6 |
|
|
Statements of Changes in Capital and Surplus - Statutory Basis |
F-7 |
|
|
Statements of Cash Flows - Statutory Basis |
F-8 |
Notes to Financial Statements - Statutory Basis |
F-9 |
F-1 |
|
|
|
|
|
|
Report of Independent Auditors |
|
|
Board of Directors and Stockholder |
Security Life of Denver Insurance Company |
|
We have audited the accompanying statutory basis balance sheets of Security Life of Denver Insurance Company ("the Company" and an indirect, wholly-owned subsidiary of ING America Insurance Holdings, Inc.) as of December 31, 2003 and 2002, and the related statutory basis statements of operations, changes in capital and surplus, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. |
|
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. |
|
As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Division of Insurance of the Department of Regulatory Agencies of the State of Colorado ("Colorado Division of Insurance"), which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material. |
|
In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of Security Life of Denver Insurance Company at December 31, 2003 and 2002 or the results of its operations or its cash flows for the years then ended. |
F-2 |
However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Security Life of Denver Insurance Company at December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting practices prescribed or permitted by the Colorado Division of Insurance. |
|
|
|
/s/ __________________ |
|
|
|
______________ |
F-3 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
Balance Sheets - Statutory Basis |
|
|
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Admitted assets |
||||||||
Cash and invested assets: |
||||||||
Bonds |
$ 11,999,561 |
$ 11,414,565 |
||||||
Preferred stocks |
12,418 |
18,915 |
||||||
Common stocks |
77,957 |
72,427 |
||||||
Subsidiaries |
76,187 |
73,186 |
||||||
Mortgage loans |
2,856,476 |
2,776,223 |
||||||
Real estate, less accumulated depreciation (2003-$13,109; 2002-$12,553) |
31,971 |
32,612 |
||||||
Contract loans |
1,092,751 |
1,073,803 |
||||||
Other invested assets |
128,678 |
149,642 |
||||||
Cash and short-term investments |
408,212 |
290,080 |
||||||
Total cash and invested assets |
16,684,211 |
15,901,453 |
||||||
Deferred and uncollected premiums, less loading (2003- $2,052; 2002- $1,926) |
193,102 |
130,982 |
||||||
Accrued investment income |
226,236 |
241,378 |
||||||
Reinsurance balances recoverable |
(4,022) |
67,177 |
||||||
Data processing equipment, less accumulated |
||||||||
depreciation (2003-$3,838; 2002-$1,817) |
31 |
75 |
||||||
Indebtedness from related parties |
14 |
8,420 |
||||||
Federal income tax recoverable, (including $66,660 and $56,985 |
||||||||
net deferred tax assets at December 31, 2003 and 2002, respectively) |
66,660 |
57,059 |
||||||
Separate account assets |
1,730,272 |
1,526,548 |
||||||
Other assets |
13,407 |
12,825 |
||||||
Total admitted assets |
$ 18,909,911 |
$ 17,945,917 |
The accompanying notes are an integral part of these financial statements. |
F-4 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
Balance Sheets - Statutory Basis |
|
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands, |
||||||||
except share amounts) |
||||||||
Liabilities and capital and surplus |
||||||||
Liabilities: |
||||||||
Policy and contract liabilities: |
||||||||
Life and annuity reserves |
$ 7,603,507 |
$ 8,022,919 |
||||||
Accident and health reserves |
8 |
15 |
||||||
Deposit type contracts |
7,330,821 |
6,710,709 |
||||||
Policyholders' funds |
6,493 |
7,302 |
||||||
Dividends payable |
3,981 |
3,871 |
||||||
Unpaid claims |
145,231 |
191,423 |
||||||
Total policy and contract liabilities |
15,090,041 |
14,936,239 |
||||||
Interest maintenance reserve |
19,517 |
2,444 |
||||||
Accounts payable and accrued expenses |
126,551 |
126,479 |
||||||
Reinsurance balances due |
515,895 |
43,312 |
||||||
Indebtedness to related parties |
40,051 |
1,802 |
||||||
Contingency reserve |
16,955 |
18,087 |
||||||
Asset valuation reserve |
95,649 |
74,863 |
||||||
Borrowed money, net |
268,245 |
168,884 |
||||||
Other liabilities |
126,027 |
30,480 |
||||||
Separate account liabilities |
1,711,770 |
1,512,075 |
||||||
Total liabilities |
18,010,701 |
16,914,665 |
||||||
Capital and surplus: |
||||||||
Common stock: $20,000 par value; authorized 149 shares; |
||||||||
issued and outstanding 144 shares |
2,880 |
2,880 |
||||||
Surplus notes |
165,032 |
165,032 |
||||||
Paid-in and contributed surplus |
837,378 |
837,378 |
||||||
Unassigned (deficit) surplus |
(106,080) |
25,962 |
||||||
Total capital and surplus |
899,210 |
1,031,252 |
||||||
Total liabilities and capital and surplus |
$ 18,909,911 |
$ 17,945,917 |
The accompanying notes are an integral part of these financial statements. |
F-5 |
Security Life of Denver Insurance Company |
Statements of Operations - Statutory Basis |
|
Year ended December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Premiums and other revenues: |
||||||||
Life, annuity, and accident and health premiums |
$ 1,182,093 |
$ 2,063,758 |
||||||
Policy proceeds and dividends left on deposit |
51 |
31 |
||||||
Net investment income |
707,739 |
858,455 |
||||||
Amortization of interest maintenance reserve |
(16,687) |
(13,414) |
||||||
Commissions, expense allowances and reserve adjustments |
||||||||
on reinsurance ceded |
260,286 |
53,339 |
||||||
Other income |
84,275 |
71,964 |
||||||
Total premiums and other revenues |
2,217,757 |
3,034,133 |
||||||
Benefits paid or provided: |
||||||||
Death benefits |
503,663 |
402,381 |
||||||
Annuity benefits |
13,450 |
12,001 |
||||||
Surrender benefits |
1,312,580 |
1,276,798 |
||||||
Interest on policy or contract funds |
233,660 |
296,017 |
||||||
Other benefits |
26 |
(1,896) |
||||||
Change in life, annuity, and accident and health reserves |
(419,362) |
290,893 |
||||||
Net transfers to separate accounts |
49,745 |
60,825 |
||||||
Total benefits paid or provided |
1,693,762 |
2,337,019 |
||||||
Insurance expenses: |
||||||||
Commissions |
357,779 |
307,117 |
||||||
General expenses |
133,682 |
98,192 |
||||||
Insurance taxes, licenses and fees, excluding federal income taxes |
21,451 |
18,890 |
||||||
Miscellaneous deductions |
2,373 |
995 |
||||||
Total insurance expenses |
515,285 |
425,194 |
||||||
Gain from operations before policyholder dividends, |
||||||||
federal income taxes and net realized capital losses |
8,710 |
271,920 |
||||||
Dividends to policyholders |
2,766 |
2,564 |
||||||
Gain from operations before federal income taxes and |
||||||||
net realized capital losses |
5,944 |
269,356 |
||||||
Federal income taxes |
103,127 |
88,773 |
||||||
(Loss) gain from operations before net realized capital losses |
(97,183) |
180,583 |
||||||
Net realized capital losses net of income taxes 2003 - $(14,400) and |
||||||||
2002 - $(11,366); and excluding net transfers to the interest maintenance |
||||||||
reserve 2003- $(387) and 2002- $(20,691) |
(45,280) |
(43,391) |
||||||
Net (loss) income |
$ (142,463) |
$ 137,192 |
The accompanying notes are an integral part of these financial statements. |
F-6 |
Security Life of Denver Insurance Company |
Statements of Changes in Capital and Surplus-Statutory Basis |
|
Year ended December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Common stock: |
||||||||
Balance at beginning and end of year |
$ 2,880 |
$ 2,880 |
||||||
Surplus note: |
||||||||
Balance at beginning and end of year |
165,032 |
165,032 |
||||||
Paid-in and contributed surplus: |
||||||||
Balance at beginning of year |
837,378 |
737,378 |
||||||
Capital contributions |
- |
100,000 |
||||||
Balance at end of year |
837,378 |
837,378 |
||||||
Unassigned (deficit) surplus: |
||||||||
Balance at beginning of year |
25,962 |
(136,246) |
||||||
Net income |
(142,463) |
137,192 |
||||||
Change in net unrealized capital gains or losses |
12,014 |
(5,149) |
||||||
Change in nonadmitted assets |
(43,372) |
42,134 |
||||||
Change in liability for reinsurance in unauthorized companies |
1,999 |
(5,474) |
||||||
Change in asset valuation reserve |
(20,786) |
1,136 |
||||||
Change in net deferred income tax |
57,094 |
(7,631) |
||||||
Dividends to stockholder |
(136,055) |
- |
||||||
Deferral of gain on reinsurance transaction |
139,527 |
- |
||||||
Balance at end of year |
(106,080) |
25,962 |
||||||
Total capital and surplus |
$ 899,210 |
$ 1,031,252 |
The accompanying notes are an integral part of these financial statements. |
F-7 |
Security Life of Denver Insurance Company |
Statements of Cash Flows-Statutory Basis |
Year ended December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Operations |
||||||||
Premiums, policy proceeds, and other |
||||||||
considerations received, net of reinsurance paid |
$ 1,329,758 |
$ 2,078,398 |
||||||
Net investment income received |
915,235 |
1,018,160 |
||||||
Commission, expenses paid and other miscellaneous expenses |
(475,494) |
(393,052) |
||||||
Benefits paid |
(1,430,859) |
(1,920,378) |
||||||
Net transfers from (to) separate accounts |
31,408 |
(770,703) |
||||||
Dividends paid to policyholders |
(2,656) |
(2,758) |
||||||
Federal income taxes paid |
(105,554) |
(48,565) |
||||||
Other revenues |
420,220 |
18,692 |
||||||
Net cash provided by (used in) operations |
682,058 |
(20,206) |
||||||
Investment activities |
||||||||
Proceeds from sales, maturities, or repayments of investments: |
||||||||
Bonds |
9,537,940 |
9,417,153 |
||||||
Stocks |
10,286 |
23,243 |
||||||
Mortgage loans |
523,538 |
452,644 |
||||||
Real estate |
1,375 |
- |
||||||
Other invested assets |
9,622 |
29,086 |
||||||
Net gain on cash and short term investments |
9,607 |
56 |
||||||
Miscellaneous proceeds |
61,278 |
- |
||||||
Net proceeds from sales, maturities, or repayments of investments |
10,153,646 |
9,922,182 |
||||||
Cost of investments acquired: |
||||||||
Bonds |
10,348,589 |
10,434,664 |
||||||
Stocks |
3,954 |
37,494 |
||||||
Mortgage loans |
604,826 |
795,589 |
||||||
Real estate |
- |
- |
||||||
Other invested assets |
13,237 |
10,853 |
||||||
Miscellaneous applications |
- |
188,187 |
||||||
Total cost of investments acquired |
10,970,606 |
11,466,787 |
||||||
Net change in contract loans |
(18,948) |
50,306 |
||||||
Net cash used in investment activities |
(835,908) |
(1,494,299) |
||||||
Financing and miscellaneous activities |
||||||||
Cash provided: |
||||||||
Capital and surplus paid-in |
10,620 |
91,733 |
||||||
Borrowed money received (repaid) |
99,364 |
(142,383) |
||||||
Net deposits on deposit-type contract funds |
47,934 |
1,770,838 |
||||||
Dividends to stockholders |
(136,055) |
- |
||||||
Other sources (uses) |
250,119 |
(483,025) |
||||||
Net cash provided by financing and miscellaneous activities |
271,982 |
1,237,163 |
||||||
Net change in cash and short-term investments |
118,132 |
(277,342) |
||||||
Cash and short-term investments |
||||||||
Beginning of year |
290,080 |
567,422 |
||||||
End of year |
$ 408,212 |
$ 290,080 |
The accompanying notes are an integral part of these financial statements. |
F-8 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
1. Nature of Operations and Significant Accounting Policies |
|
Security Life of Denver Insurance Company (the "Company") is domiciled in Colorado and is a wholly owned subsidiary of Lion Connecticut Holdings Inc., which is a wholly-owned subsidiary of ING America Insurance Holdings, Inc. ("ING AIH"). The Company focuses on three markets: the advanced market, reinsurance to other insurers, and the investment products market. The life insurance products offered for the advanced market include wealth transfer and estate planning, executive benefits, charitable giving and corporate-owned life insurance. These products include traditional life, interest-sensitive life, universal life, and variable life. Operations are conducted almost entirely on the general agency basis and the Company is presently licensed in all states (approved for reinsurance only in New York and Puerto Rico), the District of Columbia and the U.S. Virgin Islands. In the reinsurance market, the Company offers financial security to clients through a mix of total risk management and trad itional life insurance services. In the investment products market, the Company offers guaranteed investment contracts, funding agreements, and trust notes to institutional buyers. |
|
The Company merged with First Columbine Life Insurance Company ("First Columbine"), an affiliate, on December 31, 2002. The transaction was approved by the Division of Insurance of the Department of Regulatory Agencies of the State of Colorado ("Colorado Division of Insurance") and was accounted for as a statutory merger. No consideration was paid and no common stock was issued in exchange for all of the common shares of First Columbine. The accompanying financial statements have been restated as though the merger took place prior to all periods presented. Pre-merger separate company revenue, net income, and other surplus adjustments for the twelve months ended December 31, 2002 were $2,784,460,000, $116,057,000 and $107,979,000, respectively, for the Company and $249,673,000, $21,137,000, and $17,035,000, respectively, for First Columbine. |
|
The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. |
|
Basis of Presentation |
|
The accompanying financial statements of the Company have been prepared in conformity with accounting practices prescribed or permitted by the Colorado Division of Insurance, which practices differ from accounting principles generally accepted in the United States ("GAAP"). The most significant variances from GAAP are as follows: |
F-9 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Investments: Investments in bonds and mandatorily redeemable preferred stocks are reported at amortized cost or market value based on the National Association of Insurance Commissioners ("NAIC") rating; for GAAP, such fixed maturity investments are designated at purchase as held-to-maturity, trading or available-for-sale. Held-to-maturity investments are reported at amortized cost, and the remaining fixed maturity investments are reported at fair value with unrealized capital gains and losses reported in operations for those designated as trading and as a separate component of other comprehensive income in stockholder's equity for those designated as available-for-sale. |
|
For structured securities, when a negative yield results from a revaluation based on new prepayment assumptions (i.e., undiscounted cash flows are less than current book value), an other than temporary impairment is considered to have occurred and the asset is written down to the value of the undiscounted cash flows. For GAAP, assets are re-evaluated based on the discounted cash flows using a current market rate. Impairments are recognized when there has been an adverse change in cash flows and the fair value is less than book value. The asset is then written down to fair value. |
|
Investments in real estate are reported net of related obligations rather than on a gross basis. Real estate owned and occupied by the Company is included in investments rather than reported as an operating asset as under GAAP, and investment income and operating expenses include rent for the Company's occupancy of those properties. Changes between depreciated cost and admitted asset investment amounts are credited or charged directly to unassigned surplus rather than income as would be required under GAAP. |
|
SSAP 31 applies to derivative transactions prior to January 1, 2003. The Company also follows the newly adopted hedge accounting guidance in SSAP 86 for derivative transactions entered into or modified on or after January 1, 2003. Under this guidance, derivatives that are deemed effective hedges are accounted for in a manner which is consistent with the underlying hedged item. Derivatives used in hedging transactions that do not meet the requirements of SSAP 86 as an effective hedge are carried at fair value with the change in value recorded in surplus as unrealized gains or losses. Embedded derivatives are not accounted for separately from the host contract. Under GAAP, the effective and ineffective portions of a single hedge are accounted for separately, an embedded derivative within a contract that is not clearly and closely related to the economic characteristics and risk of the host contract is accounted for separately from the host contract and valued and reported at fair value, and the change in fair value for cash flow hedges is credited or charged directly to a separate component of shareholder's equity rather than to income as required for fair value hedges. |
|
Redeemable preferred stocks rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or market value and nonredeemable preferred stocks are reported at market value or the lower of cost or market value as determined by the Securities Valuation Office of the NAIC ("SVO"). |
F-10 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Common stocks are reported at market value as determined by the SVO and the related unrealized capital gains/losses are reported in unassigned surplus along with adjustment for federal income taxes. |
|
Valuation Reserves: The asset valuation reserve ("AVR") is determined by an NAIC-prescribed formula and is reported as a liability rather than as a valuation allowance or an appropriation of surplus. The change in AVR is reported directly to unassigned surplus. |
|
Under a formula prescribed by the NAIC, the Company defers the portion of realized gains and losses on sales of fixed-income investments, principally bonds and mortgage loans, attributable to changes in the general level of interest rates, and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands. The net deferral or interest maintenance reserve ("IMR") is reported as a component of other liabilities in the accompanying balance sheets. |
|
Realized gains and losses on investments are reported in operations net of federal income tax and transfers to the IMR. Under GAAP, realized capital gains and losses are reported in the statements of operations on a pretax basis in the period that the asset giving rise to the gain or loss is sold and valuation allowances are provided when there has been a decline in value deemed other than temporary, in which case the provision for such declines is charged to income. |
|
Valuation allowances, if necessary, are established for mortgage loans based on the difference between the net value of the collateral, determined as the fair value of the collateral less estimated costs to obtain and sell, and the recorded investment in the mortgage loan. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan's effective interest rate or, if foreclosure is probable, on the estimated fair value of the collateral. |
|
The initial valuation allowance and subsequent changes in the allowance for mortgage loans as a result of a temporary impairment are charged or credited directly to unassigned surplus, rather than being included as a component of earnings as would be required under GAAP. |
|
Policy Acquisition Costs: The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance, to the extent recoverable from future policy revenues, are deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves. For universal life insurance and investment products, to the extent recoverable from future gross profits, acquisition costs are amortized generally in proportion to the present value of expected gross margins from surrender charges and investment, mortality, and expense margins. |
F-11 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Premiums: Life premiums are recognized as revenue when due. Premiums for annuity policies with mortality and morbidity risk, except for guaranteed interest and group annuity contracts, are also recognized as revenue when due. Premiums received for annuity policies without mortality or morbidity risk and for guaranteed interest and group annuity contracts are recorded using deposit accounting. |
|
Under GAAP, premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits and consist primarily of whole life insurance policies, are recognized as revenue when due. Group insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Revenues for universal life, annuities and guaranteed interest contracts consist of policy charges for the cost of insurance, policy administration charges, amortization of policy initiation fees and surrender charges assessed during the period. |
|
Benefit and Contract Reserves: Life policy and contract reserves under statutory accounting practices are calculated based upon both the net level premium and Commissioners' Reserve Valuation methods using statutory rates for mortality and interest. GAAP requires that policy reserves for traditional products be based upon the net level premium method utilizing reasonably conservative estimates of mortality, interest, and withdrawals prevailing when the policies were sold. For interest-sensitive products, the GAAP policy reserve is equal to the policy fund balance plus an unearned revenue reserve which reflects the unamortized balance of early year policy loads over renewal year policy loads. |
|
Reinsurance: For business ceded to unauthorized reinsurers, statutory accounting practices require that reinsurance credits permitted by the treaty be recorded as an offsetting liability and charged against unassigned surplus. Under GAAP, an allowance for amounts deemed uncollectible would be established through a charge to earnings. Statutory income recognized on certain reinsurance treaties representing financing arrangements is not recognized on a GAAP basis. |
|
Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets as required under GAAP. |
|
Commissions allowed by reinsurers on business ceded are reported as income when received rather than being deferred and amortized with deferred policy acquisition costs as required under GAAP. |
|
Subsidiaries: The accounts and operations of the Company's subsidiaries are not consolidated with the accounts and operations of the Company as would be required under GAAP. |
F-12 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Nonadmitted Assets: Certain assets designated as "nonadmitted," principally deferred federal income tax assets, disallowed interest maintenance reserves, non-operating software, past-due agents' balances, furniture and equipment, intangible assets, and other assets not specifically identified as an admitted asset within the NAIC Accounting Practices and Procedures Manual are excluded from the accompanying balance sheets and are charged directly to unassigned surplus. |
|
Employee Benefits: For purposes of calculating the Company's pension and postretirement benefit obligation, only vested participants and current retirees are included in the valuation. Under GAAP, active participants not currently vested are also included. |
|
Universal Life and Annuity Policies: Revenues for universal life and annuity policies consist of the entire premium received and benefits incurred represent the total of death benefits paid and the change in policy reserves. Under GAAP, premiums received in excess of policy charges would not be recognized as premium revenue and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values. |
|
Policyholder Dividends: Policyholder dividends are recognized when declared rather than over the term of the related policies. |
|
Deferred Income Taxes: Deferred tax assets are provided for and admitted to an amount determined under a standard formula. This formula considers the amount of differences that will reverse in the subsequent year, taxes paid in prior years that could be recovered through carrybacks, surplus limits, and the amount of deferred tax liabilities available for offset. Any deferred tax assets not covered under the formula are non-admitted. Deferred taxes do not include any amounts for state taxes. Under GAAP, a deferred tax asset is recorded for the amount of gross deferred tax assets that are expected to be realized in future years and a valuation allowance is established for the portion that is not realizable. |
|
Surplus Notes: Surplus notes are reported as a component of surplus. Under statutory accounting practices, no interest is recorded on the surplus notes until payment has been approved by the Colorado Division of Insurance. Under GAAP, surplus notes are reported as liabilities and the related interest is reported as a charge to earnings over the term of the notes. |
|
Statements of Cash Flows: Cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding caption of cash and cash equivalents includes cash balances and investments with initial maturities of three months or less. |
F-13 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Reconciliation to GAAP: The effects of the preceding variances from GAAP on the accompanying statutory basis financial statements have not been determined, but are presumed to be material. |
|
Other significant accounting practices are as follows: |
|
Investments |
|
Investments are stated at values prescribed by the NAIC, as follows: |
|
Bonds not backed by other loans are principally stated at amortized cost using the interest method. |
|
Single class and multi-class mortgage-backed/asset-backed securities are valued at amortized cost using the interest method including anticipated prepayments. Prepayment assumptions are obtained from dealer surveys or internal estimates and are based on the current interest rate and economic environment. The retrospective adjustment method is used to value all such securities except for higher-risk asset backed securities, which are valued using the prospective method. The Company has elected to use the book value as of January 1, 1994, as the cost for applying the retrospective method to securities purchased prior to that date where historical cash flows are not readily available. |
|
Redeemable preferred stocks rated as high quality or better are reported at cost or amortized cost. All other redeemable preferred stocks are reported at the lower of cost, amortized cost, or market value and nonredeemable preferred stocks are reported at market value or the lower of cost or market value as determined by the SVO. |
|
Common stocks are reported at market value as determined by the SVO and the related unrealized capital gains/losses are reported in unassigned surplus along with adjustment for federal income taxes. |
|
The Company analyzes the general account investments to determine whether there has been an other than temporary decline in fair value below the amortized cost basis. Management considers the length of time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the issuer, future economic conditions and market forecasts, and the Company's intent and ability to retain the investment in the issuer for a period of time sufficient to allow for recovery in market value. If it is probable that all amounts due according to the contractual terms of a debt security will not be collected, an other than temporary impairment is considered to have occurred. |
F-14 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The Company uses derivatives such as interest rate swaps, caps and floors as part of its overall interest rate risk management strategy for certain life insurance and annuity products. As the Company only uses derivatives for hedging purposes, the Company values all derivative instruments on a consistent basis with the hedged item. Upon termination, gains and losses on instruments are included in the carrying values of the underlying hedged items and are amortized over the remaining lives of the hedged items as adjustments to investment income or benefits from the hedged items. Any unamortized gains or losses are recognized when the underlying hedged items are sold. |
|
Interest rate swap contracts are used to convert the interest rate characteristics (fixed or variable) of certain investments to match those of the related insurance liabilities that the investments are supporting. The net interest effect of such swap transactions is reported as an adjustment of interest income from the hedged items as incurred. |
|
Interest rate caps and floors are used to limit the effects of changing interest rates on yields of variable rate or short-term assets or liabilities. The initial cost of any such agreement is amortized to net investment income over the life of the agreement. Periodic payments that are receivable as a result of the agreements are accrued as an adjustment of interest income or benefits from the hedged items. |
|
The derivatives are reported in a manner that is consistent with the hedged asset or liability. All derivatives are reported at amortized cost. Upon termination of a derivative that qualified for hedge accounting, the gain or loss is deferred in IMR or adjusts the basis of the hedged item. |
|
The Company's insurance subsidiaries are reported at their underlying statutory basis net assets plus the admitted portion of goodwill, and the Company's noninsurance subsidiary is reported at the GAAP basis of its net assets. Dividends from subsidiaries are included in net investment income. The remaining net change in the subsidiaries' equity is included in the change in net unrealized capital gains or losses. |
|
Mortgage loans are reported at amortized cost, less allowance for impairments. |
|
Contract loans are reported at unpaid principal balances. |
|
Land is reported at cost. Real estate occupied by the Company is reported at depreciated cost; other real estate is reported at the lower of depreciated cost or fair value. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. |
F-15 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
For reverse repurchase agreements, Company policies require a minimum of 95% of the fair value of securities purchased under reverse repurchase agreements to be maintained as collateral. Cash collateral received is invested in short-term investments and the offsetting collateral liability is included in miscellaneous liabilities. |
|
Reverse dollar repurchase agreements are accounted for as collateral borrowings, where the amount borrowed is equal to the sales price of the underlying securities. |
|
The Company engages in securities lending whereby certain domestic bonds from its portfolio are loaned to other institutions for short periods of time. Collateral, primarily cash, which is in excess of the market value of the loaned securities, is deposited by the borrower with a lending agent, and retained and invested by the lending agent to generate additional income for the Company. The Company does not have access to the collateral. The Company's policy requires a minimum of 102% of the fair value of securities loaned to be maintained as collateral. The market value of the loaned securities is monitored on a daily basis with additional collateral obtained or refunded as the market value fluctuates. |
|
Short-term investments are reported at amortized cost. Short-term investments include investments with maturities of less than one year at the date of acquisition. |
|
Partnership interests, which are included in other invested assets, are reported at the underlying audited GAAP equity of the investee. |
|
Residual collateralized mortgage obligations, which are included in other invested assets, are reported at amortized cost using the effective interest method. |
|
Realized capital gains and losses are determined using the specific identification method. |
|
Cash on hand includes cash equivalents. Cash equivalents are short-term investments that are both readily convertible to cash and have an original maturity date of three months or less. Short-term investments are carried at amortized cost, which approximates market value. |
|
Aggregate Reserve for Life Policies and Contracts |
|
Life, annuity, and accident and health reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that will provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash value or the amounts required by law. Interest rates range from 2.0% to 11.25%. |
F-16 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The Company waives the deduction of deferred fractional premiums upon the death of the insured. It is the Company's practice to return a pro rata portion of any premium paid beyond the policy month of death, although it is not contractually required to do so for certain issues. |
|
The methods used in valuation of substandard policies are as follows: |
|
For life, endowment and term policies issued substandard, the standard reserve during the premium-paying period is increased by 50% of the gross annual extra premium. Standard reserves are held on Paid-Up Limited Pay contracts. |
|
For reinsurance accepted with table rating, the reserve established is a multiple of the standard reserve corresponding to the table rating. |
|
For reinsurance with flat extra premiums, the standard reserve is increased by 50% of the flat extra. |
|
The tabular interest has been determined from the basic data for the calculation of policy reserves for all direct ordinary life insurance and for the portion of group life insurance classified as group Section 79. The method of determination of tabular interest of funds not involving life contingencies is as follows: current year reserves, plus payments, less prior year reserves, less funds added. |
|
Reinsurance |
|
Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reserves are based on the terms of the reinsurance contracts and are consistent with the risks assumed. Premiums and benefits ceded to other companies have been reported as a reduction of premium revenue and benefits expense. Amounts applicable to reinsurance ceded for reserves and unpaid claim liabilities have been reported as reductions of these items, and expense allowances received in connection with reinsurance ceded have been reflected in operations. |
|
Data Processing Equipment |
|
Electronic data processing equipment is carried at cost less accumulated depreciation. Depreciation for major classes of such assets is calculated on a straight-line basis over the estimated useful life of the asset. |
F-17 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Participating Insurance |
|
Participating business approximates less than 1.0% of the Company's ordinary life insurance in force and 0.8% of premium income. The amount of dividends to be paid to participating policyholders is determined annually by the Board of Directors. Amounts allocable to participating policyholders are based on published dividend projections or expected dividend scales. |
|
Pension Plans |
|
The Company provides noncontributory retirement plans for substantially all employees and certain agents. Pension costs are charged to operations as contributions are made to the plan. The Company also provides a contributory retirement plan for substantially all employees. |
|
Nonadmitted Assets |
|
Nonadmitted assets are summarized as follows: |
December 31 |
|||
2003 |
2002 |
||
(In Thousands) |
|||
Deferred federal income taxes |
$ 231,293 |
$ 188,721 |
|
Agents' debit balances |
3,335 |
4,232 |
|
Furniture and equipment |
1,555 |
2,217 |
|
Deferred and uncollected premium |
872 |
2,801 |
|
Non-operating software asset in progress |
11,582 |
14,187 |
|
Other |
12,265 |
5,372 |
|
Total nonadmitted assets |
$ 260,902 |
$ 217,530 |
Changes in nonadmitted assets are generally reported directly in surplus as an increase or decrease in nonadmitted assets. Certain changes are reported directly in surplus as a change in unrealized capital gains or losses. |
|
Claims and Claims Adjustment Expenses |
|
Claims expenses represent the estimated ultimate net cost of all reported and unreported claims incurred through December 31, 2003. The Company does not discount claims and claims adjustment expense reserves. Such estimates are based on actuarial projections applied to historical claim payment data. Such liabilities are considered to be reasonable and adequate to discharge the Company's obligations for claims incurred but unpaid as of December 31, 2003. |
F-18 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Cash Flow Information |
|
Cash and short-term investments include cash on hand, demand deposits and short-term fixed maturity instruments with a maturity of less than one year at date of acquisition. |
|
Separate Accounts |
|
More than half of the separate account assets and liabilities held by the Company represent funds held for the benefit of the Company's variable life and annuity policy and contract holders who bear all of the investment risk associated with the policies. Such policies are of a non-guaranteed nature. All net investment experience, positive or negative, is attributed to the policy and contract holders' account values. The assets of these accounts are carried at fair value. |
|
Certain other separate accounts relate to experience-rated group annuity contracts that fund defined contribution pension plans. These contracts provide guaranteed interest returns for one year only, where the guaranteed interest rate is re-established each year based on the investment experience of the separate account. In no event can the interest rate be less than zero. The assets and liabilities of these separate accounts are carried at book value. |
|
Reserves related to the Company's mortality risk associated with these policies are included in life and annuity reserves. The operations of the separate accounts are not included in the accompanying financial statements. |
|
Reclassifications |
|
Certain prior year amounts in the Company's statutory basis financial statements have been reclassified to conform to the 2003 financial statement presentation. |
|
|
2. Permitted Statutory Basis Accounting Practices |
The financial statements of the Company are presented on the basis of accounting practices prescribed or permitted by the State of Colorado. The Colorado Division of Insurance recognizes only statutory accounting practices prescribed or permitted by the State of Colorado for determining and reporting the financial condition and results of operations of an insurance company and for determining its solvency under the Colorado Insurance Laws. The NAIC Accounting Practices and Procedures Manual has been adopted as a component of prescribed or permitted practices by the State of Colorado. The Commissioner of Insurance has the right to permit other specific practices that deviate from prescribed practices. |
|
The Company is required to identify those significant accounting practices that are permitted, and obtain written approval of the practices from the Colorado Division of |
F-19 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Insurance. As of December 31, 2003 and 2002, the Company had no such permitted accounting practices. |
3. Investments |
The amortized cost and fair value of bonds and equity securities are as follows: |
Gross |
Gross |
|||||||||||
Amortized |
Unrealized |
Unrealized |
Fair |
|||||||||
Cost |
Gains |
Losses |
Value |
|||||||||
(In Thousands) |
||||||||||||
At December 31, 2003 : |
||||||||||||
U.S. Treasury securities and |
||||||||||||
obligations of U.S. government |
||||||||||||
corporations and agencies |
$ 57,644 |
$ 4,974 |
$ 171 |
$ 62,447 |
||||||||
States, municipalities, |
||||||||||||
and political subdivisions |
4,334 |
173 |
- |
4,507 |
||||||||
Foreign government |
216,521 |
25,015 |
1,302 |
240,234 |
||||||||
Public utilities securities |
1,002,225 |
57,149 |
3,739 |
1,055,635 |
||||||||
Corporate securities |
5,865,468 |
311,413 |
30,691 |
6,146,190 |
||||||||
Mortgage-backed securities |
3,848,729 |
65,627 |
60,488 |
3,853,868 |
||||||||
Commercial mortgage-backed securities |
199,516 |
9,520 |
2,711 |
206,325 |
||||||||
Other asset-backed securities |
813,888 |
7,433 |
39,932 |
781,389 |
||||||||
Total fixed maturities |
12,008,325 |
481,304 |
139,034 |
12,350,595 |
||||||||
Preferred stocks |
12,467 |
- |
2,832 |
9,635 |
||||||||
Common stocks |
74,981 |
2,988 |
12 |
77,957 |
||||||||
Total equity securities |
87,448 |
2,988 |
2,844 |
87,592 |
||||||||
Total |
$ 12,095,773 |
$ 484,292 |
$ 141,878 |
$ 12,438,187 |
||||||||
At December 31, 2002 : |
||||||||||||
U.S. Treasury securities and |
||||||||||||
obligations of U.S. government |
||||||||||||
corporations and agencies |
$ 546,121 |
$ 8,966 |
$ 195 |
$ 554,892 |
||||||||
States, municipalities, |
||||||||||||
and political subdivisions |
19,823 |
293 |
- |
20,116 |
||||||||
Foreign government |
623,583 |
35,806 |
14,017 |
645,372 |
||||||||
Public utilities securities |
526,221 |
22,868 |
4,875 |
544,214 |
||||||||
Corporate securities |
4,920,736 |
251,230 |
65,077 |
5,106,889 |
||||||||
Mortgage-backed securities |
3,792,945 |
137,393 |
68,814 |
3,861,524 |
||||||||
Commercial mortgage-backed securities |
142,215 |
11,515 |
2,837 |
150,893 |
||||||||
Other asset-backed securities |
864,431 |
10,074 |
59,909 |
814,596 |
||||||||
Total fixed maturities |
11,436,075 |
478,145 |
215,724 |
11,698,496 |
||||||||
Preferred stocks |
18,954 |
302 |
1,918 |
17,338 |
||||||||
Common stocks |
71,856 |
584 |
13 |
72,427 |
||||||||
Total equity securities |
90,810 |
886 |
1,931 |
89,765 |
||||||||
Total |
$ 11,526,885 |
$ 479,031 |
$ 217,655 |
$ 11,788,261 |
F-20 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Reconciliation of bonds from amortized cost to carrying value is as follows: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Amortized cost |
$ 12,008,325 |
$ 11,436,075 |
||||||
Less: nonadmitted bonds |
(8,764) |
(21,510) |
||||||
Carrying value |
$ 11,999,561 |
$ 11,414,565 |
As of December 31, 2003, the aggregate market value of debt securities with unrealized losses and the time period that cost exceeded fair value are as follows: |
More than 6 |
||||||||
months and less |
||||||||
Less than 6 |
than 12 months |
More than 12 |
||||||
months below cost |
below cost |
months below cost |
Total |
|||||
(In Thousands) |
||||||||
Fair value |
$ 1,298,604 |
$ 1,016,714 |
$ 466,032 |
$ 2,781,350 |
||||
Unrealized loss |
16,475 |
46,060 |
76,500 |
139,035 |
Of the unrealized losses more than 6 months and less than 12 months in duration of $46,060,000 there were $10,390,000 in unrealized losses that were primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining unrealized losses of $35,670,000 as of December 31, 2003 included the following significant items: |
|
$28,305,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP No. 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $497,256,000. |
|
$2,759,000 of unrealized losses related to the energy/utility industry, for which the fair value was $100,270,000. During 2003, the energy sector recovered due to a gradually improving economic picture. Current analysis indicates the debt will be serviced in accordance with the contractual terms. |
|
$2,482,000 of unrealized losses related to non-domestic issues, with no unrealized loss exposure per country in excess of $873,000 for which the fair value was $50,047,000. Credit exposures are well diversified in these markets including banking, beverage, healthcare, and sovereign companies. |
F-21 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
$1,306,000 of unrealized losses related to the telecommunications/cable/media industry, for which the fair value was $31,220,000. During 2003, the sector recovered somewhat due to a gradually improving economy. Credit exposure is primarily focused in what Company management believes to be the largest and most financially secure companies in the sector. |
|
The remaining unrealized losses totaling $818,000 relate to a fair value of $6,638,000. |
|
Of the unrealized losses more than 12 months in duration of $76,500,000, there were $3,017,000 in unrealized losses that were primarily related to interest rate movement or spread widening for other than credit-related reasons. Business and operating fundamentals are performing as expected. The remaining unrealized losses of $73,483,000 as of December 31, 2003 included the following significant items: |
|
$63,195,000 of unrealized losses related to mortgage-backed and structured securities reviewed for impairment under the guidance prescribed by SSAP No. 43 Loan-backed and Structured Securities. This category includes U.S. government-backed securities, principal protected securities and structured securities which did not have an adverse change in cash flows for which the fair value was $242,380,000. |
|
$4,633,000 of unrealized losses related to the airline industry, for which the fair value was $35,286,000. During 2003, the airline industry continued to suffer from decreased passenger volumes offset by a gradually improving economy. The majority of the airline investments are comprised of Enhanced Equipment Trust Certificates ("EETC"). Current analysis indicates the specific collateral backing EETC investments is predominantly represented by newer models that are expected to be retained as individual airlines reduce their fleets. |
|
$1,823,000 of unrealized losses related to the energy/utility industry, for which the fair value was $20,862,000. During 2003, the energy sector recovered due to a gradually improving economic picture. Current analysis indicates the debt will be serviced in accordance with the contractual terms. |
|
$2,444,000 of unrealized losses related to non-domestic issues, with no unrealized loss exposure per country in excess of $1,700,000 for which the fair value was $35,813,000. Credit exposures are well diversified in these markets, including banking and other asset-backed securities. |
|
$1,143,000 of unrealized losses related to the telecommunications/cable/media industry, for which the fair value was $39,531,000. During 2003, the sector recovered somewhat due to a gradually improving economy. Credit exposure is primarily focused in what Company management believes to be the largest and most financially secure companies in the sector. |
F-22 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The remaining unrealized losses totaling $245,000 relate to a fair value of $1,394,000. |
|
The amortized cost and fair value of investments in bonds at December 31, 2003, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. |
Amortized |
Fair |
|||||||
Cost |
Value |
|||||||
(In Thousands) |
||||||||
December 31, 2003 |
||||||||
Maturity: |
||||||||
Due in 1 year or less |
$ 418,595 |
$ 425,646 |
||||||
Due after 1 year through 5 years |
2,811,537 |
2,968,703 |
||||||
Due after 5 years through 10 years |
2,349,746 |
2,468,666 |
||||||
Due after 10 years |
1,566,314 |
1,645,998 |
||||||
7,146,192 |
7,509,013 |
|||||||
Mortgage-backed securities |
3,848,729 |
3,853,868 |
||||||
Commercial mortgage-backed securities |
199,516 |
206,325 |
||||||
Other structured securities |
813,888 |
781,389 |
||||||
Total |
$ 12,008,325 |
$ 12,350,595 |
At December 31, 2003, investments in certificates of deposit and bonds, with an admitted asset value of $23,849,000, were on deposit with state insurance departments to satisfy regulatory requirements. |
|
The Company had loaned securities, which are reflected as invested assets on the balance sheets with a market value of approximately $22,867,000 and $28,903,000, at December 31, 2003 and 2002, respectively. |
|
Proceeds from sales of investments in bonds and other fixed maturity interest securities were $4,985,299,000 and $5,990,714,000 in 2003 and 2002, respectively. Gross gains of $84,185,000 and $139,524,000 and gross losses of $29,923,000 and $114,222,000 during 2003 and 2002, respectively, were realized on those sales. A portion of the gains and losses realized in 2003 and 2002 has been deferred to future periods in the IMR. |
|
In the course of the Company's asset management, securities are sold and reacquired within 30 days of the sale date to enhance the Company's return on the investment portfolio or to manage interest rate risk. |
F-23 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The table below summarizes the number of transactions, book value, and gain/loss of the Company's financial instruments with securities sold and reacquired within 30 days of the sale date: |
Cost of |
||||||||
Number of |
Securities |
|||||||
Bonds |
Transactions |
Book Value |
Repurchased |
Gain |
||||
NAIC 3 |
19 |
$ 14,652,948 |
$ 15,738,289 |
$ 177,741 |
||||
NAIC 4 |
5 |
3,726,012 |
3,250,881 |
52,369 |
||||
NAIC 6 |
3 |
251,210 |
266,502 |
- |
Major categories of net investment income are summarized as follows: |
Year ended December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Income: |
||||||||
Equity securities-unaffiliated |
$ 8,330 |
$ 4,666 |
||||||
Bonds |
674,425 |
753,050 |
||||||
Mortgage loans |
175,395 |
170,803 |
||||||
Contract loans |
71,453 |
72,183 |
||||||
Real estate |
4,661 |
4,950 |
||||||
Derivative investments |
(176,141) |
(109,067) |
||||||
Other |
7,080 |
12,633 |
||||||
Total investment income |
765,203 |
909,218 |
||||||
Investment expenses |
(57,464) |
(50,763) |
||||||
Net investment income |
$ 707,739 |
$ 858,455 |
As part of its overall investment strategy, the Company has entered into agreements to purchase securities as follows: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Investment purchase commitments |
$ 348,720 |
$ 218,743 |
F-24 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The Company entered into reverse dollar repurchase transactions to increase its return on investments and improve liquidity. Reverse dollar repurchases involve a sale of securities and an agreement to repurchase substantially the same securities as those sold. The reverse dollar repurchases are accounted for as short-term collateralized financing and the repurchase obligation is reported in borrowed money. The repurchase obligation totaled $166,089,000 and $161,878,000 at December 31, 2003 and 2002, respectively. The securities underlying these agreements are mortgage-backed securities with a book value of $164,591,000 and $160,784,000 and fair value of $166,580,000 and $163,139,000 at December 31, 2003 and 2002, respectively. At December 31, 2003, the securities have a weighted average coupon rate of 5.8% and have maturities ranging from December 2018 through December 2033. The primary risk associated with short-term collateralized borrowings is that the counterparty may be unable to perf orm under the terms of the contract. The Company's exposure is limited to the excess of the net replacement cost of the securities over the value of the short-term investments, which was not material at December 31, 2003. The Company believes that the counterparties to the reverse dollar repurchase agreements are financially responsible and that counterparty risk is minimal. |
|
The Company participates in reverse repurchase transactions. Such transactions include the sale of corporate securities to a major securities dealer and a simultaneous agreement to repurchase the same security in the near term. The proceeds are invested in new securities of intermediate durations. The terms of the reverse repurchase agreements call for payment of interest at a rate of 1.07%. The agreements mature prior to the end of January 2004. As of December 31, 2003 and 2002, the amount outstanding on these agreements was $15,800,000. The securities underlying these agreements are mortgage-backed securities with a book value of $15,938,000 and $7,276,000 and fair value of $16,098,000 and $7,355,000 at December 31, 2003 and 2002, respectively. The securities have a weighted average coupon of 5.0% and have a maturity of December 2033. |
|
The maximum and minimum lending rates for long-term mortgage loans during 2003 were 7.26% and 2.32%. Fire insurance is required on all properties covered by mortgage loans and must at least equal the excess of the loan over the maximum loan which would be permitted by law on the land without the buildings. |
|
The maximum percentage of any loan to the value of collateral at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 76.0% on commercial properties. As of December 31, 2003, the Company held no mortgages with interest more than 180 days overdue. Total interest due on mortgages is $57,000, and $251,000 as of December 31, 2003 and 2002, respectively. |
F-25 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
4. Derivative Financial Instruments Held for Purposes Other than Trading |
The Company enters into derivatives such as swaps, caps, floors, and options to reduce and manage risks, which include the risk of a change in the value, yield, price, cash flows, exchange rates or quantity of, or a degree of exposure with respect to, assets, liabilities, or future cash flows which the Company has acquired or incurred. Hedge accounting practices are supported by cash flow matching, scenario testing and duration matching. |
|
The Company uses interest rate swaps to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities. Interest rate swap agreements generally involve the exchange of fixed and floating interest payments over the life of the agreement without an exchange of the underlying principal amount. Currency swap agreements generally involve the exchange of local and foreign currency payments over the life of the agreements without an exchange of the underlying principal amount. |
|
Interest rate cap and interest rate floor agreements owned entitle the Company to receive payments to the extent reference interest rates exceed or fall below strike levels in the contracts based on the notional amounts. |
|
Premiums paid for the purchase of interest rate contracts are included in other invested assets on the balance sheets and are being amortized to interest expense over the remaining terms of the contracts or in a manner consistent with the financial instruments being hedged. |
|
Amounts paid or received, if any, from such contracts are included in interest expense or income on the statements of operations. Accrued amounts payable to or receivable from counterparties are included in other liabilities or other invested assets. |
|
Gains or losses realized as a result of early terminations of interest rate contracts are amortized to investment income over the remaining term of the items being hedged to the extent the hedge is considered to be effective; otherwise, they are recognized upon termination. Changes in the fair value of effective hedge derivatives are recorded as investment income. Changes in the fair value of ineffective hedge derivatives are recorded as unrealized gains and losses in surplus. The Company manages the potential credit exposure from interest rate contracts through careful evaluation of the counterparties' credit standing, collateral agreements, and master netting agreements. |
|
Interest rate contracts that are matched or otherwise designated to be associated with other financial instruments are recorded at fair value if the related financial instruments mature, are sold, or are otherwise terminated or if the interest rate contracts cease to be effective hedges. Changes in the fair value of derivatives are recorded as unrealized gains and losses. The Company manages the potential credit exposure from interest rate contracts through careful evaluation of the counterparties' credit standing, collateral agreements, and master netting agreements. |
F-26 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The Company is exposed to credit loss in the event of nonperformance by counterparties on interest rate contracts; however, the Company does not anticipate nonperformance by any of these counterparties. The amount of such exposure is generally the unrealized gains in such contracts. |
|
The table below summarizes the Company's interest rate contracts included in other invested assets at December 31, 2003 and 2002: |
Notional |
Carrying |
Fair |
||||||||
Amount |
Value |
Value |
||||||||
(In Thousands) |
||||||||||
December 31, 2003 |
||||||||||
Swaps |
$ 9,977,615 |
$ 5,533 |
$ (233,030) |
|||||||
Caps owned |
525,151 |
4,498 |
747 |
|||||||
|
|
|
||||||||
Total derivatives |
$ 10,502,766 |
$ 10,031 |
$ (232,283) |
|||||||
December 31, 2002 |
||||||||||
Swaps |
$ 10,995,346 |
$ 15,626 |
$ (272,911) |
|||||||
Caps owned |
672,372 |
7,313 |
1,920 |
|||||||
Total derivatives |
$ 11,667,718 |
$ 22,939 |
$ (270,991) |
5. Concentrations of Credit Risk |
The Company held less-than-investment-grade corporate bonds with an aggregate book value of $773,297,000 and $679,704,000 and an aggregate market value of $800,996,000 and $633,205,000 at December 31, 2003 and 2002, respectively. Those holdings amounted to 6.4% of the Company's investments in bonds and 4.5% of total admitted assets at December 31, 2003. The holdings of less-than-investment-grade bonds are widely diversified and of satisfactory quality based on the Company's investment policies and credit standards. |
|
The Company held unrated bonds of $252,037,000 and $208,820,000 with an aggregate NAIC market value of $255,766,000 and $209,386,000 at December 31, 2003 and 2002, respectively. The carrying value of these holdings amounted to 2.1% of the Company's investment in bonds and 1.5% of the Company's total admitted assets at December 31, 2003. |
|
At December 31, 2003, the Company's commercial mortgages involved a concentration of properties located in California (17.0%) and Florida (9.5%). The remaining commercial mortgages relate to properties located in 41 other states. The portfolio is well diversified, covering many different types of income-producing properties on which the Company has first mortgage liens. The maximum mortgage outstanding on any individual property is $51,425,000. |
F-27 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
6. Annuity Reserves |
At December 31, 2003 and 2002, the Company's annuity reserves, including those held in separate accounts and deposit fund liabilities that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal without adjustment, and not subject to discretionary withdrawal provisions are summarized as follows: |
Amount |
Percent |
||||||||
(In Thousands) |
|||||||||
December 31, 2003 |
|||||||||
Subject to discretionary withdrawal (with adjustment): |
|||||||||
With market value adjustment |
$ 2,954,534 |
28.7 |
% |
||||||
At book value less surrender charge |
31,416 |
0.3 |
|||||||
Subtotal |
2,985,950 |
29.0 |
|||||||
Subject to discretionary withdrawal (without adjustment): |
|||||||||
At book value with minimal or no charge or adjustment |
264,407 |
2.6 |
|||||||
Not subject to discretionary withdrawal |
7,039,545 |
68.4 |
|
||||||
Total annuity reserves and deposit fund liabilities |
|||||||||
before reinsurance |
10,289,902 |
100.0 |
% |
||||||
Less reinsurance ceded |
- |
||||||||
Net annuity reserves and deposit fund liabilities |
$ 10,289,902 |
||||||||
December 31, 2002 |
|||||||||
Subject to discretionary withdrawal (with adjustment): |
|||||||||
With market value adjustment |
$ 4,035,938 |
39.9 |
% |
||||||
At book value less surrender charge |
34,035 |
0.4 |
|
||||||
Subtotal |
4,069,973 |
40.3 |
|||||||
Subject to discretionary withdrawal (without adjustment): |
|||||||||
At book value with minimal or no charge or adjustment |
266,917 |
2.6 |
|||||||
Not subject to discretionary withdrawal |
5,774,312 |
57.1 |
|
||||||
Total annuity reserves and deposit fund liabilities |
|||||||||
before reinsurance |
10,111,202 |
100.0 |
% |
||||||
Less reinsurance ceded |
- |
||||||||
Net annuity reserves and deposit fund liabilities |
$ 10,111,202 |
The amount of insurance in force for which the gross premiums are less than the net premiums, according to the standard of valuation required by the Colorado Division of Insurance, is $426,738,180,000 at December 31, 2003. The amount of premium deficiency reserves for policies on which gross premiums are less than the net premiums is $687,716,000 at December 31, 2003. The Company anticipates investment income as a factor in the premium deficiency calculation, in accordance with Statement of Statutory Accounting Principles ("SSAP") No. 54, Individual and Group Accident and Health Contracts. |
F-28 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
7. Employee Benefit Plans |
Pension Plan and Postretirement Benefits |
|
The Company sponsors non-contributory defined benefit pension plans covering United States employees. |
|
The Company also provides certain health care and life insurance benefits for retired employees. |
|
A summary of assets, obligations and assumptions of the pension and other postretirement benefits plans are as follows: |
Pension Benefits |
Other Benefits |
|||||||||||
2003 |
2002 |
2003 |
2002 |
|||||||||
(In Thousands) |
|
|
|
|||||||||
Change in benefit obligation |
||||||||||||
Benefit obligation at beginning of year |
$ 11,433 |
$ 14,880 |
$ 5,658 |
$ 5,742 |
||||||||
Service cost |
- |
26 |
430 |
445 |
||||||||
Interest cost |
752 |
1,098 |
359 |
451 |
||||||||
Contribution by plan participants |
- |
- |
1,442 |
265 |
||||||||
Actuarial (loss) gain |
(1,002) |
(3,880) |
926 |
844 |
||||||||
Benefits paid |
(1,024) |
(691) |
(1,878) |
(597) |
||||||||
Plan amendments |
- |
- |
- |
(1,492) |
||||||||
Benefit obligation at end of year |
$ 10,159 |
$ 11,433 |
$ 6,937 |
$ 5,658 |
||||||||
Change in plan assets |
||||||||||||
Fair value of plan assets at beginning of year |
$ - |
$ - |
$ - |
$ - |
||||||||
Actual return on plan assets |
- |
- |
- |
- |
||||||||
Employer contribution |
1,024 |
691 |
436 |
332 |
||||||||
Plan particpants' contributions |
- |
- |
1,442 |
265 |
||||||||
Benefits paid |
(1,024) |
(691) |
(1,878) |
(597) |
||||||||
Fair value of plan assets at end of year |
$ - |
$ - |
$ - |
$ - |
F-29 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Pension Benefits |
Other Benefits |
|||||||||||
2003 |
2002 |
2003 |
2002 |
|||||||||
(In Thousands) |
|
|
|
|||||||||
Funded status |
$ (10,159) |
$ (11,433) |
$ (6,937) |
$ (5,658) |
||||||||
Unamortizated prior service credit |
(402) |
(438) |
(1,971) |
(2,094) |
||||||||
Unrecognized net gain/(loss) |
(3,667) |
(2,872) |
27 |
(963) |
||||||||
Remaining net obligation |
10,959 |
11,603 |
- |
- |
||||||||
Net amount recorded |
$ (3,269) |
$ (3,140) |
$ (8,881) |
$ (8,715) |
||||||||
Components of net periodic benefit cost |
||||||||||||
Service cost |
$ - |
$ 26 |
$ 430 |
$ 445 |
||||||||
Interest cost |
752 |
1,098 |
359 |
451 |
||||||||
Amortization of unrecognized transition |
||||||||||||
obligation or transition asset |
645 |
645 |
- |
490 |
||||||||
Amount of recognized gains and losses |
(208) |
- |
(64) |
(150) |
||||||||
Amount of prior service cost recognized |
(36) |
(35) |
(123) |
483 |
||||||||
Total net periodic benefit cost |
$ 1,153 |
$ 1,734 |
$ 602 |
$ 1,719 |
In addition, the Company has pension benefit obligation and other benefit obligation for non-vested employees as of December 31, 2003 and 2002 in the amount of $59,000 and $219,000 and $3,376,000 and $2,956,000, respectively. |
|
Assumptions used in determining the accounting for the supplemental employees retirement plan and other post-retirement benefit plans as of December 31, 2003 and 2002 were as follows: |
2003 |
2002 |
|||||||||
Weighted-average discount rate |
6.25 |
% |
6.75 |
% |
||||||
Rate of increase in compensation level |
3.75 |
% |
3.75 |
% |
||||||
Expected long-term rate of return on assets |
8.75 |
% |
9.00 |
% |
F-30 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The annual assumed rate of increase in the per capita cost of covered benefits (i.e. health care cost trend rate) for the medical plan is 10%, graded to 5% thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation for the medical plan as of December 31, 2003 by $88,000. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation for the medical plan as of December 31, 2003 by $85,000. |
|
401(k) Plan |
|
The ING Savings Plan is a defined contribution plan, which is available to substantially all employees. Participants may make contributions to the plan through salary reductions up to a maximum of $12,000 for 2003 and $11,000 for 2002. Such contributions are not currently taxable to the participants. The Company matches up to 6% of pre-tax eligible pay at 100%. Company matching contributions were $1,893,000 and $1,807,000 for 2003 and 2002, respectively. |
|
|
8. Separate Accounts |
Separate account assets and liabilities represent funds segregated by the Company for the benefit of certain policy and contract holders who bear the investment risk. Revenues and expenses on the separate account assets and related liabilities equal the benefits paid to the separate account policy and contract holders. |
|
Premiums, deposits, and other considerations received for the years ended December 31, 2003 and 2002 were $161,513,000 and $213,479,000, respectively. In addition, $0 and $750,860,000 in deposit type contracts were received in 2003 and 2002, respectively. |
F-31 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The general nature and characteristics of the separate accounts business follows: |
Non-Indexed |
Non- |
|||||||||
Guarantee |
Guaranteed |
|||||||||
Less than/ |
Separate |
|||||||||
equal to 4% |
Accounts |
Total |
||||||||
(In Thousands) |
||||||||||
December 31, 2003 |
||||||||||
Premium, consideration or deposits for the year |
$ - |
$ 161,513 |
$ 161,513 |
|||||||
Reserves for separate accounts with assets at: |
||||||||||
Fair value |
$ - |
$ 960,041 |
$ 960,041 |
|||||||
Amortized cost |
750,901 |
- |
750,901 |
|||||||
Total reserves |
$ 750,901 |
$ 960,041 |
$ 1,710,942 |
|||||||
Reserves for separate accounts by |
||||||||||
withdrawal characteristics: |
||||||||||
Subject to descretionary withdrawal: |
||||||||||
With market value adjustment |
$ - |
$ - |
$ - |
|||||||
At book value without market value adjustment |
||||||||||
and with current surrender charge of 5% or more |
- |
449,685 |
449,685 |
|||||||
At market value |
- |
- |
- |
|||||||
At book value without market value adjustment |
||||||||||
and with current surrender charge less than 5% |
- |
510,356 |
510,356 |
|||||||
Subtotal |
- |
960,041 |
960,041 |
|||||||
Not subject to discretionary withdrawal |
750,901 |
- |
750,901 |
|||||||
Total separate account aggregate reserves |
$ 750,901 |
$ 960,041 |
$ 1,710,942 |
|||||||
December 31, 2002 |
||||||||||
Premium, consideration or deposits for the year |
$ - |
$ 213,479 |
$ 213,479 |
|||||||
Reserves for separate accounts with assets at: |
||||||||||
Fair value |
$ - |
$ 699,743 |
$ 699,743 |
|||||||
Amortized cost |
750,860 |
- |
750,860 |
|||||||
Total reserves |
$ 750,860 |
$ 699,743 |
$ 1,450,603 |
|||||||
Reserves for separate accounts by |
||||||||||
withdrawal characteristics: |
||||||||||
Subject to descretionary withdrawal: |
||||||||||
With market value adjustment |
$ - |
$ - |
$ - |
|||||||
At book value without market value adjustment |
||||||||||
and with current surrender charge of 5% or more |
- |
363,187 |
363,187 |
|||||||
At market value |
- |
- |
- |
|||||||
At book value without market value adjustment |
||||||||||
and with current surrender charge less than 5% |
- |
336,195 |
336,195 |
|||||||
Subtotal |
- |
699,382 |
699,382 |
|||||||
Not subject to discretionary withdrawal |
750,860 |
361 |
751,221 |
|||||||
Total separate account aggregate reserves |
$ 750,860 |
$ 699,743 |
$ 1,450,603 |
F-32 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
A reconciliation of the amounts transferred to and from the separate accounts is presented below: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Transfers as reported in the Summary of Operations |
||||||||
of the Separate Accounts Statement: |
||||||||
Transfers to separate accounts |
$ 161,513 |
$ 234,907 |
||||||
Transfers from separate accounts |
(111,768) |
(174,584) |
||||||
Net transfers to separate accounts |
49,745 |
60,323 |
||||||
Reconciling adjustments: |
||||||||
Miscellaneous transfers |
- |
502 |
||||||
Transfers as reported in the Statement of Operations |
$ 49,745 |
$ 60,825 |
9. Reinsurance |
The Company is involved in both ceded and assumed reinsurance with other companies for the purpose of diversifying risk and limiting exposure on larger risks. To the extent that the assuming companies become unable to meet their obligations under these treaties, the Company remains contingently liable to its policyholders for the portion reinsured. To minimize its exposure to significant losses from retrocessionaire insolvencies, the Company evaluates the financial condition of the retrocessionaire and monitors concentrations of credit risk. |
|
Assumed premiums amounted to $1,008,909,000 and $895,515,000 for the years ended December 31, 2003 and 2002, respectively. |
|
The Company's ceded reinsurance arrangements reduced certain items in the accompanying financial statements by the following amounts: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Premiums |
$ 1,136,439 |
$ 392,723 |
||||||
Benefits paid or provided |
373,139 |
216,044 |
||||||
Policy and contract liabilities at year end |
2,140,008 |
2,623,310 |
During 2003 and 2002, the Company had ceded blocks of insurance under reinsurance treaties to provide funds for financing and other purposes. These reinsurance transactions, generally known as "financial reinsurance," represent financing arrangements. Financial reinsurance has the effect of increasing current statutory surplus while reducing future statutory surplus as the reinsurers recapture amounts. |
F-33 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
10. Federal Income Taxes |
The Company and its subsidiaries file a consolidated federal income tax return with its parent, ING AIH, and other U.S. affiliates and subsidiaries. The method of tax allocation is governed by a written tax sharing agreement. The tax sharing agreement provides that each member of the consolidated return shall reimburse ING AIH for its respective share of the consolidated federal income tax liability and shall receive a benefit for its losses at the statutory rate. |
|
The components of the net deferred tax asset (liability) are as follows: |
December 31 |
||||
2003 |
2002 |
|||
(In Thousands) |
||||
Total deferred tax assets |
$ 325,643 |
$ 260,262 |
||
Total deferred tax liabilities |
(27,691) |
(14,556) |
||
Net deferred tax assets |
297,952 |
245,706 |
||
Deferred tax asset nonadmitted |
(231,293) |
(188,721) |
||
Net admitted deferred tax asset |
$ 66,659 |
$ 56,985 |
||
(Increase) decrease in nonadmitted asset |
$ (42,572) |
$ 15,311 |
Current income taxes incurred consisted of the following major components: |
Year ended December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Federal taxes on operations |
$ 103,127 |
$ 88,773 |
||||||
Federal taxes on capital gains |
14,400 |
11,366 |
||||||
Total current taxes incurred |
$ 117,527 |
$ 100,139 |
F-34 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The main components of deferred tax assets and deferred tax liabilities are as follows: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Deferred tax assets resulting from book/tax differences in: |
||||||||
Deferred acquisition costs |
$ 128,958 |
$ 100,924 |
||||||
Insurance reserves |
73,157 |
37,406 |
||||||
Investments |
65,107 |
58,691 |
||||||
Compensation and employee benefits |
22,431 |
18,045 |
||||||
Due and deferred premium |
13,343 |
11,964 |
||||||
Nonadmitted assets |
7,659 |
9,284 |
||||||
Unrealized loss on investments |
3,060 |
6,607 |
||||||
Litigation accruals |
5,934 |
6,330 |
||||||
Depreciable assets |
4,737 |
5,861 |
||||||
Other |
1,257 |
5,150 |
||||||
Total deferred tax assets |
325,643 |
260,262 |
||||||
Deferred tax assets nonadmitted |
(231,293) |
(188,721) |
||||||
Admitted deferred tax assets |
94,350 |
71,541 |
||||||
Deferred tax liabilities resulting from book/tax differences in: |
||||||||
Investments |
5,184 |
10,959 |
||||||
Due and deferred premiums |
21,789 |
- |
||||||
Other |
717 |
3,597 |
||||||
Total deferred tax liabilities |
27,690 |
14,556 |
||||||
Net admitted deferred tax asset |
$ 66,660 |
$ 56,985 |
The change in net deferred income taxes is comprised of the following: |
December 31 |
||||||||||
2003 |
2002 |
Change |
||||||||
(In Thousands) |
||||||||||
Total deferred tax assets |
$ 325,643 |
$ 260,262 |
$ 65,381 |
|||||||
Total deferred tax liabilities |
27,691 |
14,556 |
13,135 |
|||||||
Net deferred tax asset |
$ 297,952 |
$ 245,706 |
52,246 |
|||||||
Remove current year change in unrealized gains |
4,848 |
|||||||||
Change in net deferred income tax |
57,094 |
|||||||||
Remove other items in surplus: |
||||||||||
Current year change in non-admitted assets |
1,670 |
|||||||||
Other |
(1,346) |
|||||||||
Change in deferred taxes for rate reconciliation |
$ 57,418 |
F-35 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The provision for federal income taxes expense and change in deferred taxes differs from the amount from that which would be obtained by applying the statutory federal income tax rate to income (including capital items) before income taxes for the following reasons: |
Year Ended |
||||||
December 31, |
||||||
2003 |
||||||
(In Thousands) |
||||||
Ordinary income |
$ 5,943 |
|||||
Capital losses |
(30,493) |
|||||
|
||||||
Total pre-tax book loss |
$ (24,550) |
|||||
Provision computed at statutory rate |
$ (8,592) |
|||||
Refinement of deferred tax balances |
15,221 |
|||||
Interest maintenance reserve |
5,840 |
|||||
Dividend received deduction |
(1,299) |
|||||
Amortization of reinsurance gain |
48,834 |
|||||
Other |
105 |
|||||
Total |
$ 60,109 |
|||||
Federal income taxes incurred |
$ 117,526 |
|||||
Change in net deferred income taxes |
(57,418) |
|||||
Total statutory income taxes |
$ 60,108 |
The amount of federal income taxes incurred that will be available for recoupment in the event of future net losses is $99,153,372 and $113,183,297 from 2003 and 2002, respectively. |
|
Under the inter-company tax sharing agreement, the Company has a receivable from ING AIH of $21,850,000 and $9,951,000 for federal income taxes as of December 31, 2003 and 2002, respectively. |
F-36 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Prior to 1984, the Company was allowed certain special deductions for federal income tax reporting purposes that were required to be accumulated in a "policyholders' surplus account" ("PSA"). In the event those amounts are distributed to shareholders, or the balance of the account exceeds certain limitations prescribed by the Internal Revenue Code, the excess amounts would be subject to income tax at current rates. Income taxes also would be payable at current rates if the Company ceases to qualify as a life insurance company for tax reporting purposes, or if the income tax deferral status of the PSA is modified by future tax legislation. Management does not intend to take any actions nor does management expect any events to occur that would cause income taxes to become payable on the PSA balance. Accordingly, the Company has not accrued income taxes on the PSA balance of $60,490,000 at December 31, 2003. However, if such taxes were assessed, the amount of the taxes payable would be $21,17 1,000. No deferred tax liabilities are recognized related to the PSA. |
11. Investment in and Advances to Subsidiaries |
The Company has one wholly owned insurance subsidiary at December 31, 2003, Midwestern United Life Insurance Company ("Midwestern United"). The Company also has two wholly owned noninsurance subsidiaries, First Secured Mortgage Deposit Corporation and ING America Equities, Inc ("IAE"). |
|
IAE is a wholesale broker/dealer whose business activities consist only of the distribution of variable life and annuity contracts. IAE does not hold customer funds or securities. |
|
Amounts invested in and advanced to the Company's subsidiaries are summarized as follows: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Common stock (cost-$40,746 in 2003 and $40,756 in 2002) |
$ 76,187 |
$ 73,186 |
Summarized financial information for these subsidiaries is as follows: |
December 31 |
||||||||
2003 |
2002 |
|||||||
(In Thousands) |
||||||||
Revenues |
$ 56,962 |
$ 69,254 |
||||||
Income before net realized gains on investments |
2,884 |
18,896 |
||||||
Net income |
3,267 |
13,640 |
||||||
Admitted assets |
258,403 |
255,957 |
||||||
Liabilities |
182,216 |
182,771 |
Midwestern United paid no common stock dividend to the Company in 2003 and paid a dividend of $1,159,000 in 2002. |
F-37 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
12. Capital and Surplus |
Under Colorado insurance regulations, the Company is required to maintain a minimum total capital and surplus of $1,500,000. Additionally, the amount of dividends which can be paid by the Company to its shareholder without prior approval of the Colorado Division of Insurance is limited to the greater of the net gain from operations or 10% of surplus at December 31 of the preceding year. |
|
Life and health insurance companies are subject to certain Risk-Based Capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2003, the Company meets the RBC requirements. |
|
The Company has two surplus notes to a related party for $65,032,000 and $100,000,000, which represent the cumulative cash draws on two $100,000,000 commitments issued by ING AIH through December 31, 2003, less principal payments. The surplus notes bear interest at a variable rate equal to the prevailing rate for 10-year U.S. Treasury bonds plus 1/4%, adjusted annually. The principal sum plus accrued interest shall be repaid in five annual installments beginning April 15, 2017 and continuing through April 15, 2021 ("Repayment Period"). The repayment amount shall be determined and adjusted annually on the last day of December, commencing December 31, 2016, and shall be an amount calculated to amortize any unpaid principal plus accrued interest over the years remaining in the Repayment Period. In the event that the Commissioner of Insurance of the State of Colorado does not grant approval for repayment, any unpaid annual installments shall be considered unpaid principal plus accrued int erest for purposes of calculating subsequent annual installments. Repayment of principal and payment of interest shall be subordinated to the prior payment of, or provision for, all liabilities of the Company, but shall rank superior to the claim, interest and equity of the shares held by the shareholder of the Company. Such subordination shall be equally applicable in the case of any merger, consolidations, liquidation, rehabilitations, reorganization, dissolution, sale or other disposal of all, or substantially all, of a Company's assets, including the assumption, whether by reinsurance or otherwise, of the major portion of the Company's in force business pursuant to the reinsurance agreement or agreements approved by the Commissioner of Insurance of the State of Colorado. |
|
The repayment of these notes are payable only out of surplus funds of the Company and only at such time as the surplus of the Company, after payment is made, does not fall below the prescribed level. There were no principal or interest payments in 2003 or 2002. |
F-38 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
13. Fair Values of Financial Instruments |
In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the financial instrument. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying value of the Company. |
|
Life insurance liabilities that contain mortality risk and all nonfinancial instruments have been excluded from the disclosure requirements. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Company's overall management of interest rate risk, such that the Company's exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. |
|
The carrying amounts and fair values of the Company's financial instruments are summarized as follows: |
December 31 |
||||||||||||
2003 |
2002 |
|||||||||||
Carrying |
Fair |
Carrying |
Fair |
|||||||||
Amount |
Value |
Amount |
Value |
|||||||||
(In Thousands) |
||||||||||||
Assets: |
||||||||||||
Bonds |
$ 11,999,561 |
$ 12,350,595 |
$ 11,414,565 |
$ 11,698,496 |
||||||||
Preferred stocks |
12,418 |
9,635 |
18,915 |
17,338 |
||||||||
Unaffiliated common stocks |
77,957 |
77,957 |
72,427 |
72,427 |
||||||||
Mortgage loans |
2,856,476 |
3,046,538 |
2,776,223 |
3,012,179 |
||||||||
Contract loans |
1,092,751 |
1,092,751 |
1,073,803 |
1,073,804 |
||||||||
Derivative securities |
10,031 |
(232,283) |
22,939 |
(270,991) |
||||||||
Short-term investments |
278,270 |
278,270 |
234,588 |
234,588 |
||||||||
Cash |
129,942 |
129,942 |
55,492 |
55,492 |
||||||||
Investment in surplus notes |
35,000 |
45,677 |
35,000 |
51,784 |
||||||||
Indebtedness from related parties |
14 |
14 |
8,420 |
8,420 |
||||||||
Separate account assets |
1,730,272 |
1,730,272 |
1,526,548 |
1,526,548 |
||||||||
Receivable for securities |
45,452 |
45,452 |
45,764 |
45,764 |
||||||||
Liabilities: |
||||||||||||
Individual and group annuities |
2,174,633 |
2,255,688 |
2,612,948 |
2,596,131 |
||||||||
Deposit type contract |
7,330,821 |
8,096,950 |
6,710,709 |
6,705,823 |
||||||||
Policyholder funds |
6,493 |
6,493 |
7,302 |
7,302 |
||||||||
Indebtedness to related parties |
40,051 |
40,051 |
1,802 |
1,802 |
||||||||
Separate account liabilities |
1,711,770 |
1,711,770 |
1,512,075 |
1,512,075 |
||||||||
Payable for securities |
65,097 |
65,097 |
2,522 |
2,522 |
F-39 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
The following methods and assumptions were used by the Company in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto: |
|
Cash and short-term investments: The carrying amounts reported in the accompanying balance sheets for these financial instruments approximate their fair values. |
|
Fixed maturities and equity securities: The fair values for bonds, preferred stocks and common stocks reported herein are based on quoted market prices, where available. For securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, collateralized mortgage obligations and other mortgage derivative investments, are estimated by discounting the expected future cash flows. The discount rates used vary as a function of factors such as yield, credit quality, and maturity, which fall within a range between 2% and 12% over the total portfolio. Fair values determined on this basis can differ from values published by the SVO. Fair value as determined by the SVO as of December 31, 2003 and 2002 is $12,210,917,000 and $11,605,230,000, respectively. |
|
Mortgage loans: Estimated fair values for commercial real estate loans were generated using a discounted cash flow approach. Loans in good standing are discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on new loans with similar characteristics. The amortizing features of all loans are incorporated in the valuation. Where data on option features is available, option values are determined using a binomial valuation method, and are incorporated into the mortgage valuation. Restructured loans are valued in the same manner; however, these loans were discounted at a greater spread to reflect increased risk. All residential loans are valued at their outstanding principal balances, which approximate their fair values. |
|
Derivative financial instruments: Fair values for on-balance-sheet derivative financial instruments (caps and floors) and off-balance-sheet derivative financial instruments (swaps) are based on broker/dealer valuations or on internal discounted cash flow pricing models, taking into account current cash flow assumptions and the counterparties' credit standing. |
|
Investment in surplus notes: Estimated fair values in surplus notes were generated using a discounted cash flow approach. Cash flows were discounted using interest rates determined by U.S. Treasury yields on December 31 and spreads applied on surplus notes with similar characteristics. |
|
Guaranteed investment contracts: The fair values of the Company's guaranteed investment contracts are estimated using discounted cash flow calculations, based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. |
F-40 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Off-balance-sheet instruments: The Company accepted additional deposits on existing synthetic guaranteed investment contracts in the amounts of $283,806,000 and $233,300,000 in 2003 and 2002, respectively, from trustees of 401(k) plans. Pursuant to the terms of these contracts, the trustees own and retain the assets related to these December 31, 2003 contracts. Such assets had a book value of $1,086,097,000 and $1,008,456,000 at December 31, 2003 and 2002, respectively. Under synthetic guaranteed investment contracts, the synthetic issuer may assume interest rate risk on individual plan participant initiated withdrawals from stable value options of 401(k) plans. Approximately 100% of the synthetic guaranteed investment contract book values are on a participating basis and have a credited interest rate reset mechanism, which passes such interest rate risk to plan participants. |
|
Other investment-type insurance contracts: The fair values of the Company's deferred annuity contracts are estimated based on the cash surrender values. The carrying values of other policyholder liabilities, including immediate annuities, dividend accumulations, supplementary contracts without life contingencies, and premium deposits, approximate their fair values. |
|
The carrying value of all other financial instruments approximates their fair value. |
14. Commitments and Contingencies |
The Company is a party to threatened or pending lawsuits arising from the normal conduct of business. Due to the climate in insurance and business litigation, suits against the Company sometimes include claims for substantial compensatory, consequential or punitive damages and other types of relief. Moreover, certain claims are asserted as class actions, purporting to represent a group of similarly situated individuals. While it is not possible to forecast the outcome of pending lawsuits, in light of existing insurance, reinsurance and established reserves, it is the opinion of management that the disposition of such lawsuits will not have a materially adverse effect on the Company's operations or financial position. |
|
The Company guarantees certain contractual policy obligations of its subsidiary, Midwestern United. In the unlikely event that Midwestern United was unable to fulfill its obligations to policyholders, the Company would be obligated to assume the guaranteed policy obligations, but any ultimate contingent losses in connection with such guarantees will not have a material adverse impact on the Company's future operations or financial position. |
|
The Company is a member of the Federal Home Loan Bank of Topeka ("FHLB"). As a member of the FHLB, the Company has issued non-putable funding agreements with the FHLB. Assets with a book value of $1,711,488,000 collateralize these agreements. The reserves on these agreements were $1,460,459,000 at December 31, 2003. |
F-41 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
Guarantee Agreement |
|
The Company, effective January 2002, entered into a Guarantee Agreement with two other ING Affiliates whereby it is jointly and severally liable for $250,000,000 obligation of another ING affiliate, Security Life of Denver International Limited ("SLDI"). The Company's Board of Directors approved this transaction on April 25, 2002. The three affiliated life insurers were ReliaStar Life Insurance Company, Security-Connecticut (subsequently merged into ReliaStar Life Insurance Company, on October 1, 2003) and the Company. The joint and several guarantees of the two insurers are capped at $250,000,000. The States of Colorado and Minnesota did not disapprove the guarantee. |
|
Assets and liabilities, and the related revenues and expenses recorded as a result of transactions and agreements with affiliates may not be the same as those recorded if the Company was not a wholly-owned subsidiary of its parent. |
|
Leases and Other Commitments |
|
The Company leases office space under various non-cancelable operating lease agreements that expire July 2009. During the years ended December 31, 2003 and 2002, rent expense totaled $1,817,000 and $1,082,000, respectively. At December 31, 2003, the minimum aggregate rental commitments for the upcoming five years are: 2004 - $583,000; 2005 - $406,000; 2006 - $206,000; 2007 - $110,000; 2008 - $9,000. |
|
Certain rental commitments have renewal options extending through the year 2009 subject to adjustments in the future periods. The Company is not involved in any material sale-leaseback transactions. |
|
At December 2003, the Company had committed to provide additional capital contributions of $20,231,000 in partnerships reported in other invested assets on the balance sheets. |
|
Other Matters |
|
Like many financial services companies, certain U.S. affiliates of ING Groep N.V. ("ING"), the Company's ultimate parent, have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. ING has cooperated fully with each request. |
F-42 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
In addition to responding to regulatory requests, ING management initiated an internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review has been to identify whether there have been any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. This internal review is being conducted by independent special counsel and auditors. Additionally, ING reviewed its controls and procedures in a continuing effort to deter improper frequent trading in ING products. ING's internal reviews related to mutual fund trading are continuing. |
|
The internal review has identified several arrangements allowing third parties to engage in frequent trading of mutual funds within the Company's variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. Most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question. In each arrangement identified, ING has terminated the inappropriate trading, taken steps to discipline or terminate employees who were involved, and modified policies and procedures to deter inappropriate activity. While the review is not completed, management believes the activity identified does not represent a systemic problem in the businesses involved. |
|
These instances included agreements (initiated in 1998) that permitted one variable life insurance customer of ReliaStar Life Insurance Company ("ReliaStar"), an affiliate of the Company, to engage in frequent trading, and to submit orders until 4pm Central Time, instead of 4pm Eastern Time. ReliaStar was acquired by ING in 2000. The late trading arrangement was immediately terminated when current senior management became aware of it in 2002. ING believes that no profits were realized by the customer from the late trading aspect of the arrangement. |
|
In addition, the review has identified five arrangements that allowed frequent trading of funds within variable insurance products issued by ReliaStar and by ING USA Annuity & Life Insurance Company, an affiliate of the Company, and in certain ING Funds. ING entities did not receive special benefits in return for any of these arrangements, which have all been terminated. The internal review also identified two investment professionals who engaged in improper frequent trading in ING Funds. |
|
ING will reimburse any ING Fund or its shareholders affected by inappropriate trading for any profits that accrued to any person who engaged in improper frequent trading for which ING is responsible. Management believes that the total amount of such reimbursements will not be material to ING or its U.S. business. |
F-43 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
|
15. Financing Agreements |
The Company maintains a revolving loan agreement with SunTrust Bank, Atlanta (the "Bank"). Under this agreement, which expires July 30, 2004, the Company can borrow up to $125,000,000 from the Bank. Interest on any borrowing accrues at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.225% or (2) a rate quoted by the Bank to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $7,000 and $71,000 for the years ended December 31, 2003 and 2002, respectively. Additionally, there were no amounts payable to the Bank at December 31, 2003 or 2002. |
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The Company also maintains a revolving loan agreement with Bank of New York, New York ("BONY"). Under this agreement, the Company can borrow up to $100,000,000 from BONY. Interest on any of the Company borrowing accrues at an annual rate equal to: (1) the cost of funds for BONY for the period applicable for the advance plus 0.35% or (2) a rate quoted by BONY to the Company for the borrowing. Under this agreement, the Company incurred interest expense of $10,000 and $25,000 for the years ended December 31, 2003 and 2002, respectively. Additionally, there were no amounts payable to BONY at December 31, 2003 or 2002. |
|
The Company borrowed $3,854,865,000 and repaid $3,768,515,000 in 2003 and borrowed $6,638,185,000 and repaid $6,638,185,000 in 2002. These borrowings were on a short-term basis, at an interest rate that approximated current money market rates and excludes borrowings from reverse dollar repurchase transactions. Interest paid on borrowed money was $530,000 and $1,161,000, during 2003 and 2002, respectively. |
16. Related Party Transactions |
Affiliates |
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Management and service contracts and all cost sharing arrangements with other affiliated ING United States Life Insurance Companies are allocated among companies in accordance with normal, generally accepted expense and cost allocation methods. |
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Investment Management: The Company has entered into an asset management agreement and an administrative services agreement with ING Investment Management, LLC ("IIM") under which IIM provides the Company with investment management and asset/liability management services. Total fees under the agreement were approximately $47,025,000 and $37,147,000 for the years ended December 31, 2003 and 2002, respectively. |
F-44 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
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Inter-insurer Services Agreement: The Company has entered into a services agreement with certain of its affiliated insurance companies in the United States ("affiliated insurers") whereby the affiliated insurers provide certain administrative, management, professional, advisory, consulting and other services to each other. Net amount paid under these agreements was $49,500,000 and $55,054,000 for the years ended December 31, 2003 and 2002, respectively. |
|
Reciprocal Loan Agreement: The Company has entered into a reciprocal loan agreement with ING AIH to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which expires July 1, 2011, the Company and ING AIH can borrow up to $538,400,000 from one another. Interest on any of the Company's borrowing is charged at the rate of ING AIH cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, the Company incurred interest expense of $512,000 and interest income of $2,818,000 for the year ended December 31, 2003. At December 31, 2003, the Company had $86,350,000 payable to ING AIH and $106,700,000 receivable from ING AIH. The payable balance is included in borrowed money on the accompanying balance sheets, while the receivable is recorded in cash and short-ter m investments. |
|
Tax Sharing Agreements: The Company has entered into federal tax sharing agreements with members of an affiliated group as defined in Section 1504 of the Internal Revenue Code of 1986, as amended. The agreement provides for the manner of calculation and the amounts/timing of the payments between the parties as well as other related matters in connection with the filing of consolidated federal income tax returns. The Company has also entered into a state tax sharing agreement with ING AIH and each of the specific subsidiaries that are parties to the agreement. The state tax agreement applies to situations in which ING AIH and all or some of the subsidiaries join in the filing of a state or local franchise, income tax or other tax return on a consolidated, combined or unitary basis. |
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Service Agreement with ING Financial Advisors, LLC: The Company has entered into a services agreement with ING Financial Advisors, LLC ("ING FA") to provide certain administrative, management, professional advisory, consulting and other services to the Company for the benefit of its customers. Charges for these services are to be determined in accordance with fair and reasonable standards with neither party realizing a profit nor incurring a loss as a result of the services provided to the Company. |
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Global Medium Term Note Program: In December 2002, the Company established a Global Medium Term Note program secured by funding agreements issued by the Company. The notes, which are offered by ING Security Life Institutional Funding, a special purpose statutory trust, are offered only to U.S. qualified institutional buyers pursuant to Rule 144A of the Securities Act or to foreign buyers pursuant to Regulation S of the Securities Act. During 2003, the program issued notes with an aggregate outstanding principal balance of $1.9 billion as of December 31, 2003. |
F-45 |
Security Life of Denver Insurance Company |
Notes to Financial Statements - Statutory Basis |
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Assets and liabilities, along with related revenues and expenses recorded as a result of transactions and agreements with affiliates, may not be the same as those recorded if the Company was not a wholly-owned subsidiary of its parent. |
17. Guaranty Fund Assessments |
Insurance companies are assessed the costs of funding the insolvencies of other insurance companies by the various state guaranty associations, generally based on the amount of premium companies collect in that state. |
|
The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations and the amount of premiums written in each state. The Company has estimated this liability to be $1,986,000 and $2,305,000 as of December 31, 2003 and 2002, respectively, and has recorded a liability. The Company has also recorded an asset of $141,000 and $3,035,000 as of December 31, 2003 and 2002, respectively, for future credits to premium taxes for assessments already paid. |
F-46 |
;333-117328 |
September 2004 ; |
Part C |
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OTHER INFORMATION |
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Item 26 |
Exhibits |
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(a) |
(1) |
Resolution of the Executive Committee of the Board of Directors of Security Life of Denver Insurance Company ("Security Life of Denver") authorizing the establishment of the Registrant. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
(b) |
Not Applicable. |
|
(c) |
(1) |
Security Life of Denver Distribution Agreement. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(2) |
Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to Pre-Effective Amendment No. 2 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on May 10, 1999; File No. 333-72753.) |
|
(3) |
Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to the Post-Effective Amendment No. 10 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 23, 1999; File No. 33-74190.) |
|
(4) |
Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(5) |
Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(6) |
Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(7) |
First Amendment to Security Life of Denver Insurance Company Distribution Agreement. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(8) |
Specimen Broker/Dealer Supervisory and Selling Agreement for Variable Contracts with Compensation Schedule. (Incorporated herein by reference to Post-Effective Amendment No. 6 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on March 2, 1998; File No. 33-74190.) |
|
(9) |
Broker/Dealer Supervisory and Selling Agreement for Variable Contracts with Paine Webber Incorporated. (Incorporated herein by reference to Post-Effective Amendment No. 4 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 30, 1997; File No. 33-88148.) |
|
(10) |
Compensation Schedule. (Incorporated herein by reference to the Post-Effective Amendment No. 2 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 10, 2002; File No. 333-50278.) |
|
(11) |
Commission Schedule for Policies. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(12) |
Specimen Master Sales and Supervisory Agreement with Compensation Schedule. (Incorporated herein by reference to the Post-Effective Amendment No. 12 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 25, 2000; File No. 33-74190.) |
(d) |
(1) |
Specimen Variable Universal Life Insurance Policy (Form No. (2514(VUL)-9/04). |
|
(2) |
Adjustable Term Insurance Rider (Form No. R2026-9/04). |
|
(3) |
Waiver of Cost of Insurance Rider (Form No. R-1505). (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(4) |
Waiver of Specified Premium Total Disability Rider (Form No. R-1506). (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(5) |
Accelerated Death Benefit Rider. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(6) |
Guaranteed Death Benefit Rider (Form No. R2025-4/04). |
(e) |
(1) |
Specimen Variable Life Insurance Application (Form No. Q-2006-9/97). (To be used on or before May 1, 1998.) (Incorporated herein by reference to the Post-Effective Amendment No. 5 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 29, 1997; File No. 33-74190.) |
|
(2) |
Variable Life Application Insert. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(3) |
Investment Feature Selection Form (Form No. V-166-00 Rev. 5/1/03). (Incorporated herein by reference to the Post-Effective Amendment No. 5 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 14, 2003; File No. 333-50278.) |
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(4) |
Investment Feature Selection Form (Form No. V-175-01 Rev. 5/1/03). (Incorporated herein by reference to the Post-Effective Amendment No. 5 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 14, 2003; File No. 333-50278.) |
|
(5) |
Specimen Application for Life Insurance Fixed and Variable Products (Form No. 110945). (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
(f) |
(1) |
Amendments to Articles of Incorporation through June 12, 1987. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(2) |
Amendments to Articles of Incorporation through November 12, 2001. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(3) |
Security Life of Denver's By-Laws. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(4) |
Bylaws of Security Life of Denver Insurance Company (Restated with Amendments through September 30, 1997). (Incorporated herein by reference to Post-Effective Amendment No. 5 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 29, 1997; File No. 33-74190.) |
(g) |
Not Applicable. |
|
(h) |
(1) |
Participation Agreement by and among AIM Variable Insurance Funds, Inc., Life Insurance Company, on Behalf of Itself and its Separate Accounts and Name of Underwriter of Variable Contracts and Policies. (Incorporated herein by reference to Post-Effective Amendment No. 6 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on March 2, 1998; File No. 33-74190.) |
|
(2) |
Sales Agreement by and among The Alger American Fund, Fred Alger Management, Inc., and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(3) |
Sales Agreement by and among Neuberger & Berman Advisers Management Trust, Neuberger & Berman Management Incorporated, and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(4) |
Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(5) |
Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(6) |
Participation Agreement among INVESCO Variable Investment Funds, Inc., INVESCO Funds Group, Inc., and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(7) |
Participation Agreement between Van Eck Investment Trust and the Trust's investment adviser, Van Eck Associates Corporation, and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(8) |
Participation Agreement among Security Life of Denver Insurance Company, The GCG Trust and Directed Services, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(9) |
Participation Agreement among M Fund, Inc., M Financial Advisers, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(10) |
Participation Agreement among Security Life of Denver Insurance Company, Pilgrim Variable Products Trust and ING Pilgrim Investments, LLC. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(11) |
Participation Agreement among Security Life of Denver Insurance Company and Southland Life Insurance Company, Putnam Variable Trust and Putnam Retail Management, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 333-50278.) |
|
(12) |
Participation Agreement among Security Life of Denver Insurance Company, ING Partners, Inc., ING Life Insurance and Annuity Company, and ING Financial Advisers, LLC. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(13) |
Participation Agreement among Security Life of Denver Insurance Company, ING Variable Portfolios, Inc. and ING Funds Distributor, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(14) |
Participation Agreement among Security Life of Denver Insurance Company, Pioneer Variable Contracts Trust, Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(15) |
Participation Agreement among Security Life of Denver Insurance Company, ING VP Bond Portfolio and ING Funds Distributor, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(16) |
First Amendment to Fund Participation Agreement between Security Life of Denver, Van Eck Investment Trust and Van Eck Associates Corporation. (Incorporated herein by reference to Post-Effective Amendment No. 6 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on March 2, 1998; File No. 33-74190.) |
|
(17) |
Second Amendment to Fund Participation Agreement between Security Life of Denver, Van Eck Worldwide Insurance Trust and Van Eck Associates Corporation. (Incorporated herein by reference to Post-Effective Amendment No. 6 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on March 2, 1998; File No. 33-74190.) |
|
(18) |
Assignment and Modification Agreement between Neuberger & Berman Advisers Management Trust, Neuberger & Berman Management Incorporated, Neuberger & Berman Advisers Management Trust, Advisers Managers Trust and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 6 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on March 2, 1998; File No. 33-74190.) |
|
(19) |
First Amendment to Participation Agreement by and among The Alger American Fund, Fred Alger Management, Inc., Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(20) |
First Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(21) |
Second Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(22) |
First Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(23) |
Second Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(24) |
First Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(25) |
Third Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(26) |
Third Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(27) |
Fourth Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(28) |
Fourth Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(29) |
Amendment No. 2 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(30) |
Fourth Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(31) |
Amendment No. 3 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(32) |
Fifth Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(33) |
Fifth Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(34) |
Amendment No. 4 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 29, 2000; File No. 333-72753.) |
|
(35) |
Sixth Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(36) |
Sixth Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(37) |
Fifth Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 29, 2000; File No. 333-72753.) |
|
(38) |
Seventh Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 12 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 25, 2000; File No. 33-74190.) |
|
(39) |
Seventh Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 13 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 13, 2000; File No. 33-74190.) |
|
(40) |
Eighth Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 13 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 13, 2000; File No. 33-74190.) |
|
(41) |
Addendum to Fund Participation Agreement among Security Life of Denver Insurance Company, Neuberger Berman Advisers Management Trust, Advisers Managers Trust and Neuberger Berman Management Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 13 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 13, 2000; File No. 33-74190.) |
|
(42) |
Fund Participation Agreement between Janus Aspen Series and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 13 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on October 13, 2000; File No. 33-74190.) |
|
(43) |
Amendment to Janus Aspen Series Fund Participation Agreement. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(44) |
Amendment No. 5 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(45) |
Amendment to Participation Agreement among Security Life of Denver Insurance Company, The GCG Trust and Directed Services, Inc. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on January 30, 2001; File No. 333-50278.) |
|
(46) |
Sixth Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(47) |
Eighth Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(48) |
Ninth Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(49) |
Amendment to Participation Agreement among M Fund, Inc., M Financial Advisers, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(50) |
Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Form S-6 Initial Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on November 15, 2001; File No. 333-73464.) |
|
(51) |
Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Form S-6 Initial Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on November 15, 2001; File No. 333-73464.) |
|
(52) |
Form of Amendment to Participation Agreement among Security Life of Denver Insurance Company, The GCG Trust and Directed Services, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(53) |
Amendment to Participation Agreement among M Fund, Inc., M Financial Advisers, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(54) |
Second Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(55) |
Third Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(56) |
Amendment No. 1 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(57) |
Amendment to Sales Agreement by and among The Alger American Fund, Fred Alger Management, Inc., Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(58) |
Addendum to Alger Sales Agreement. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(59) |
Amendment No. 6 to Participation Agreement among AIM Variable Insurance Funds, Inc., Security Life of Denver Insurance Company and ING America Equities, Inc. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(60) |
Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(61) |
Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(62) |
Seventh Amendment to Participation Agreement among Security Life of Denver Insurance Company, INVESCO Variable Investment Funds, Inc. and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(63) |
Amendment to Janus Aspen Series Fund Participation Agreement. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(64) |
Amendment to Participation Agreement among Security Life of Denver Insurance Company, Pilgrim Variable Products Trust and ING Pilgrim Securities, Inc. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(65) |
Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(66) |
Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(67) |
Amendment to Participation Agreement among M Fund, Inc., M Financial Advisers, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(68) |
Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(69) |
Amendment to Participation Agreement among ING Variable Products Trust, ING Funds Distributor, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(70) |
Amendment to Participation Agreement among Security Life of Denver Insurance Company and Southland Life Insurance Company, Putnam Variable Trust and Putnam Retail Management, L.P. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(71) |
Service Agreement between Fred Alger Management, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(72) |
Expense Allocation Agreement between A I M Advisors, Inc., AIM Distributors, Inc. and Security Life of Denver. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(73) |
Amendment No. 1 to Expense Allocation Agreement between AIM Advisors, Inc., A I M Distributors, Inc. and Security Life of Denver. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(74) |
Service Agreement between INVESCO Funds Group, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(75) |
First Amendment to Service Agreement between Security Life of Denver Insurance Company and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(76) |
Amendment to Service Agreement between Security Life of Denver Insurance Company and INVESCO Funds Group, Inc. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(77) |
Service Agreement between Neuberger & Berman Management Incorporated and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(78) |
Service Agreement between Fidelity Investments Institutional Operations Company, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(79) |
Side Letter between Van Eck Worldwide Insurance Trust and Security Life of Denver. (Incorporated herein by reference to the Post-Effective Amendment No. 11 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 29, 1999; File No. 33-74190.) |
|
(80) |
Distribution and Shareholder Services Agreement between Janus Distributors, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 15 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 9, 2002; File No. 33-74190.) |
|
(81) |
Administrative and Shareholder Service Agreement between Directed Services, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 14 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 19, 2001; File No. 33-74190.) |
|
(82) |
Administrative and Shareholder Service Agreement between ING Pilgrim Group, LLC and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(83) |
Amendment to Administrative and Shareholder Services Agreement between Security Life of Denver Insurance Company and ING Funds Services, LLC. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(84) |
Letter of Agreement between Security Life of Denver and Janus Capital Corporation. (Incorporated herein by reference to the Pre-Effective Amendment No. 1 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on December 19, 2001; File No. 333-73464.) |
|
(85) |
Service Agreement with Investment Advisor between ING Life Insurance and Annuity Company and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 3 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 7, 2003; File No. 333-50278.) |
|
(86) |
Administrative Services Agreement between Security Life of Denver and Financial Administrative Services Corporation. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(87) |
Amendment to Administrative Services Agreement between Security Life of Denver and Financial Administrative Services Corporation. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 27, 1998; File No. 33-74190.) |
|
(88) |
Amendment to Participation Agreement among M Fund, Inc., M Financial Advisers, Inc. and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 5 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 14, 2003; File No. 333-50278.) |
|
(89) |
Amendment to Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post Effective Amendment No. 9 to the Form N 6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 27, 2004; File No. 333 50278.) |
|
(90) |
Amendment to Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post Effective Amendment No. 9 to the Form N 6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on February 27, 2004; File No. 333 50278.) |
|
(91) |
Participation Agreement among Golden American Life Insurance Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance Company of New York, Security Life of Denver Insurance Company, Southland Life Insurance Company, ING Life Insurance and Annuity Company, ING Insurance Company of America, American Funds Insurance Series and Capital Research and Management Company. (Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form N-6, File No. 333-105319, as filed on July 17, 2003.) |
|
(92) |
Amendment to Participation Agreement among ING Partners, Inc., ING Life Insurance and Annuity Company, and ING Financial Advisers, LLC and Security Life of Denver Insurance Company. (Incorporated herein by reference to the Post-Effective Amendment No. 5 to the Form N-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed on April 14, 2003; File No. 333-50278.) |
|
(93) |
Business Agreement among Golden American Life Insurance Company, ReliaStar Life Insurance Company, ReliaStar Life Insurance Company of New York, Security Life of Denver Insurance Company, Southland Life Insurance Company, ING Life Insurance and Annuity Company, ING Insurance Company of America, ING America Equities, Inc., Directed Services, Inc., American Funds Distributors, Inc. and Capital Research and Management Company. (Incorporated by reference to the Pre-Effective Amendment No. 1 to the Registration Statement on Form N-6, File No. 333-105319, as filed on July 17, 2003.) |
(i) |
Not Applicable. |
|
|
||
(j) |
Not Applicable. |
|
|
||
(k) |
Opinion and Consent of Counsel. [To be filed by amendment.] |
|
|
||
(l) |
Not Applicable. |
|
|
||
(m) |
Not Applicable. |
|
|
|
|
(n) |
Consent of Independent Registered Public Accounting Firm. [To be filed by amendment.] |
|
|
|
|
(o) |
All financial statements are included in the Statement of Additional Information, as indicated therein. |
|
|
|
|
(p) |
Not Applicable. |
|
|
||
(q) |
Not Applicable. |
|
|
|
|
(r) |
Powers of Attorney. (Incorporated by reference to Initial Registration Statement on Form N-6, File No. 333-117329, as filed on July 1, 2004.) |
Item 27 |
Directors and Officers of the Depositor |
|
Name and Principal Business Address |
Positions and Offices with Depositor |
|
Mark A. Tullis, 5780 Powers Ferry Road, NW, Atlanta, |
President |
|
Boyd G. Combs, 5780 Powers Ferry Road, NW, Atlanta, |
Senior Vice President, Tax |
|
James R. Gelder, 20 Washington Avenue South, |
Senior Vice President |
|
Keith Gubbay, 5780 Powers Ferry Road, NW, |
Director |
|
Thomas J. McInerney, 5780 Powers Ferry Road, NW, |
Director |
|
Shaun P. Mathews, 151 Farmington Avenue, Hartford, |
Senior Vice President |
|
Kathleen A. Murphy, 5780 Powers Ferry Road, NW, |
Director |
|
Stephen J. Preston, 1475 Dunwoody Drive, West |
Senior Vice President |
|
Jacques de Vaucleroy, 5780 Powers Ferry Road, NW, |
Director and Senior Vice President |
|
David A. Wheat, 5780 Powers Ferry Road, NW, |
Director, Senior Vice President and Chief Financial |
|
Roger W. Fisher, 5780 Powers Ferry Road, NW., Atlanta, GA 30327 |
Vice President and Chief Accounting Officer |
|
Paula Cludray-Engelke, 20 Washington Avenue South, |
Secretary |
|
|
|
|
Item 28 |
Persons Controlled by or Under Common Control with the Depositor or the Registrant |
|
Incorporated by reference to Item No. 26 in Post-Effective Amendment No. 2 to Registration Statement on Form N-4 for Separate Account B of ING USA Annuity and Life Insurance Company (File No. 333-90516), as filed on April 9 2004. |
Item 29 |
Indemnification |
|||||||
Under its Bylaws, Sections 1 through 8, Security Life of Denver Insurance Company ("Security Life") indemnifies, to the full extent permitted by the laws of the State of Colorado, any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation), by reason of the fact that he or she is or was a director, member of a committee appointed by the Board of Directors, officer, salaried employee, or fiduciary of Security Life or is or was serving at the request of Security Life (whether or not as a representative of Security Life) as a director, officer, employee, or fiduciary of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorney fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to in the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. |
||||||||
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Security Life pursuant to such provisions of the bylaws or statutes or otherwise, Security Life has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in said Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Security Life of expenses incurred or paid by a director or officer or controlling person of Security Life in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person of Security Life in connection with the securities being registered, Security Life will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the que stion of whether or not such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
||||||||
A corporation may procure indemnification insurance on behalf of an individual who was a director of the corporation. Consistent with the laws of the State of Colorado, ING Groep N.V. maintains an umbrella insurance policy issued by an international insurer. The policy covers ING Groep N.V. and any company in which ING Groep N.V. has an ownership control of over 50%. This would encompass Security Life, as depositor, as well as ING America Equities, Inc., as the principal underwriter. The policy provides for the following types of coverage: errors and omissions, directors and officers, employment practices, fiduciary and fidelity. |
||||||||
Additionally, Section 13 of the Security Life Distribution Agreement with ING America Equities, Inc. (INGAE) generally provides that each party will indemnify and hold harmless the officers, directors and employees of the other party (and the variable account with respect to indemnity by INGAE) against any expenses (including legal expenses), losses, claims, damages, or liabilities arising out of or based on certain claims or circumstances in connection with the offer or sale of the policies. Under this agreement neither party is entitled to indemnity if the expenses (including legal expenses), losses, claims, damages, or liabilities resulted from their own willful misfeasance, bad faith, negligence, misconduct or wrongful act. |
||||||||
Item 30 |
Principal Underwriters |
|||||||
(a) |
Other Activity . ING America Equities, Inc., the principal underwriter for the policies, is also the principal underwriter for policies issued by ReliaStar Life Insurance Company of New York, ReliaStar Life Insurance Company and Southland Life Insurance Company. |
|||||||
(b) |
Management of ING America Equities, Inc . |
|||||||
Name and Principal Business Address |
Positions and Offices with Underwriter |
|||||||
David P. Wilken, 20 Washington Avenue South, |
Director, President and Chief Executive Officer |
|||||||
Daniel P. Mulheran, Sr., 20 Washington Avenue South, |
Director |
|||||||
Mark A. Smith, 2001 21st Avenue N.W., Minot, ND |
Director and Vice President |
|||||||
Anita F. Woods, 5780 Powers Ferry Road, NW, Atlanta, |
Chief Financial Officer |
|||||||
Beth G. Shanker, 1290 Broadway, Denver, CO 80203 |
Chief Compliance Officer |
|||||||
Pamela S. Anson, 2001 21st Avenue N.W., Minot, ND |
Vice President |
|||||||
Nathan E. Eshelman, 1290 Broadway, Denver, CO |
Vice President |
|||||||
Frederick C. Litow, 5780 Powers Ferry Road, NW, |
Vice President |
|||||||
David S. Pendergrass, 5780 Powers Ferry Road, NW, |
Vice President and Treasurer |
|||||||
Deborah C. Hancock, 1290 Broadway, Denver, CO |
Assistant Vice President |
|||||||
Paula Cludray-Engelke, 20 Washington Avenue South, |
Secretary |
|||||||
Eric G. Banta, 1290 Broadway, Denver, CO 80203 |
Assistant Secretary |
|||||||
|
||||||||
(c) |
Compensation From the Registrant. |
|||||||
(1) |
(2) |
(3) |
(4) |
(5) |
||||
Name of Principal Underwriter |
2003 Net Underwriting Discounts and Commissions |
Compensation on Events Occasioning the Deduction of a Deferred Sales Load |
Brokerage Commissions |
Other Compensation* |
||||
ING America |
$0 |
$0 |
$25,934,458 |
$926,418 |
||||
* |
Compensation shown in column 5 includes: marketing allowances. |
Item 31 |
Location of Accounts and Records |
Accounts and records are maintained by Security Life of Denver Insurance Company at 1290 Broadway, Denver, CO 80203-5699 and by ING Americas Finance Shared Services, an affiliate, at 5780 Powers Ferry Road, NW, Atlanta, GA 30327. |
|
Item 32 |
Management Services |
None. |
|
Item 33 |
Fee Representations |
Security Life of Denver Insurance Company represents that the fees and charges deducted under the variable life insurance policy described in this registration statement, in the aggregate, are reasonable in relation to the services rendered, expenses expected to be incurred, and the risks assumed by Security Life of Denver Insurance Company under the policies. Security Life of Denver Insurance Company bases this representation on its assessment of such factors as the nature and extent of such services, expenses and risks, the need for the Security Life of Denver Insurance Company to earn a profit and the range of such fees and charges within the insurance industry. |
SIGNATURES |
|||
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act, the Registrant, Security Life Separate Account L1 of Security Life Insurance Company, has duly caused this Pre-Effective Amendment No. 1 on Form N-6 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford and in the State of Connecticut on the 10 th day of September, 2004. |
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|||
|
SECURITY LIFE SEPARATE ACCOUNT L1 |
||
|
|
(Registrant) |
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|
||
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||
|
By: SECURITY LIFE OF DENVER INSURANCE COMPANY |
||
|
|
(Depositor) |
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|
|
||
|
|
By: |
Mark A. Tullis* |
|
|
|
President |
|
|
|
(principal executive officer) |
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective Amendment No. 1 has been signed below by the following persons in the capacities indicated and on the date indicated. |
|||
|
|||
Signature |
Title |
|
|
|
|
|
|
Mark A. Tullis* |
President |
|
|
Mark A. Tullis |
(principal executive officer) |
|
|
|
|
|
|
Keith Gubbay* |
Director |
|
|
Keith Gubbay |
|
|
|
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September |
Thomas J. McInerney* |
Director |
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10, 2004 |
Thomas J. McInerney |
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Kathleen A. Murphy* |
Director |
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Kathleen A. Murphy |
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Jacques de Vaucleroy * |
Director |
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Jacques de Vaucleroy |
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David A. Wheat* |
Director, Senior Vice President and Chief Financial Officer |
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David A. Wheat |
(principal financial officer) |
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Roger W. Fisher* |
Vice President and Chief Accounting Officer |
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Roger W. Fisher |
(principal accounting officer) |
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By: |
/s/ J. Neil McMurdie |
|
J. Neil McMurdie |
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* Attorney-in-Fact |
SECURITY LIFE SEPARATE ACCOUNT L1 |
|
EXHIBIT INDEX |
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|
Exhibit No. |
Exhibit |
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|
26(d)(1) |
Specimen Variable Universal Life Insurance Policy (Form No. (2514(VUL)-9/04) |
|
|
26(d)(2) |
Adjustable Term Insurance Rider (Form No. R2026-9/04) |
|
|
26(d)(6) |
Guaranteed Death Benefit Rider (Form No. R2025-4/04) |
|
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26(k) |
Opinion and Consent of Counsel [To be filed by amendment.] |
|
|
26(n) |
Consent of Independent Registered Accounting Firm [To be filed by amendment.] |
Exhibit 26(d)(1): Specimen Variable Universal Life Insurance Policy Form (Form No. (2514(VUL)-9/04) |
Security Life of Denver Insurance Company |
A Stock Company |
INSURED: |
JOHN DOE |
POLICY DATE: |
September 15, 2004 |
POLICY NUMBER: |
67000001 |
WE AGREE TO PAY the death benefit to the beneficiary upon the death of the insured while this policy is in force. |
WE ALSO AGREE to provide the other rights and benefits of the policy. These agreements are subject to the provisions of the policy. |
Please Read Your Policy Carefully |
RIGHT TO EXAMINE PERIOD. You have the right to examine and return this policy. You may return it by mail or other delivery to the agent/registered representative who sold it to you or to our Customer Service Center within 10 days after you receive it. It will then be void from the beginning. Upon return of the policy during the right to examine period, we will refund all premiums paid. |
|
This policy is signed for Security Life of Denver Insurance Company by |
/s/ Mark A. Tullis |
/s/ Paula Cludray-Engelke |
President |
Secretary |
In this policy "you" and "your" refer to the owner of the policy. "We", "us" and "our" refer to Security Life of Denver Insurance Company. |
This policy is a FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY. |
This is a NON-PARTICIPATING policy. |
Death benefits and other values provided by this contract, when based on the investment experience of the Separate Account, are variable. These values may increase or decrease, based on investment experience of the divisions of the Separate Account and are not guaranteed as to a fixed dollar amount. Death benefits are payable by us upon the death of the insured. There is no maturity date. Flexible premiums are payable by you during the lifetime of the insured until the policy anniversary nearest the insured's 100th birth date. |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
Customer Service Center |
P. O. Box 5065 |
Minot, ND 58702-5065 |
V00025140001 |
2514(VUL)-9/04 |
TABLE OF CONTENTS |
SCHEDULE 4 |
DEFINITIONS 5 |
INSURANCE COVERAGE PROVISIONS 6 |
POLICY DATE 6 |
BASE DEATH BENEFIT 6 |
CHANGE IN REQUESTED INSURANCE COVERAGE 6 |
Requested Increases in Coverage 7 |
Requested Decreases in Coverage 7 |
Death Benefit Option Changes 7 |
CONTINUATION OF COVERAGE BEYOND AGE 100 8 |
PAYOUT OF PROCEEDS 8 |
PREMIUM PROVISIONS 9 |
SCHEDULED PREMIUMS 9 |
UNSCHEDULED PREMIUMS 9 |
PREMIUM LIMITATIONS 9 |
FAILURE TO PAY PREMIUM 9 |
INITIAL PREMIUM ALLOCATION 9 |
SUBSEQUENT PREMIUM ALLOCATIONS 9 |
NET PREMIUM 10 |
CHANGES TO PREMIUM ALLOCATIONS 10 |
SEPARATE ACCOUNT PROVISIONS 10 |
THE SEPARATE ACCOUNT 10 |
SEPARATE ACCOUNT DIVISIONS 10 |
CHANGES WITHIN THE SEPARATE ACCOUNT 11 |
GENERAL ACCOUNT PROVISIONS 12 |
THE GENERAL ACCOUNT 12 |
GUARANTEED INTEREST DIVISION 12 |
LOAN DIVISION 12 |
TRANSFER PROVISIONS 12 |
ACCOUNT VALUE PROVISIONS 12 |
VALUES ON THE INVESTMENT DATE 13 |
ACCUMULATION UNIT VALUE 13 |
ACCUMULATION EXPERIENCE FACTOR 13 |
VALUE OF THE DIVISIONS OF THE SEPARATE ACCOUNT 14 |
VALUE OF THE GUARANTEED INTEREST DIVISION 14 |
VALUE OF THE LOAN DIVISION 15 |
DEDUCTIONS 15 |
MONTHLY DEDUCTION 15 |
COST OF INSURANCE 15 |
REDEMPTION FEES 16 |
V00025140002 |
2514(VUL)-9/04 2 |
LOAN PROVISIONS 16 |
POLICY LOANS 16 |
LOAN INTEREST 16 |
LOAN DIVISION 16 |
PARTIAL WITHDRAWAL PROVISIONS 17 |
SURRENDER PROVISIONS 18 |
BASIS OF COMPUTATIONS 18 |
NET CASH SURRENDER VALUE 18 |
SURRENDER CHARGES 18 |
FULL SURRENDERS 18 |
GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS 19 |
GRACE PERIOD 19 |
TERMINATION 19 |
REINSTATEMENT 19 |
DEFERRAL OF PAYMENT 20 |
GENERAL POLICY PROVISIONS 20 |
THE POLICY 20 |
CONTRACT CHANGES 20 |
AGE 20 |
PROCEDURES 20 |
OWNERSHIP 21 |
BENEFICIARIES 21 |
CHANGE RIGHT 21 |
COLLATERAL ASSIGNMENT 21 |
INCONTESTABILITY 21 |
MISSTATEMENT OF AGE OR GENDER 22 |
RECLASSIFICATION OF SMOKER AND/OR TOBACCO USE STATUS 22 |
SUICIDE EXCLUSION 22 |
PERIODIC REPORTS 22 |
ILLUSTRATION OF BENEFITS AND VALUES 22 |
NONPARTICIPATING 22 |
CUSTOMER SERVICE CENTER 22 |
PAYOUTS OTHER THAN AS ONE SUM 23 |
ELECTION 23 |
PAYOUT OPTIONS 23 |
CHANGE AND WITHDRAWAL 23 |
EXCESS INTEREST 24 |
MINIMUM AMOUNTS 24 |
SUPPLEMENTARY POLICY 24 |
INCOME PROTECTION 24 |
DEATH OF PRIMARY PAYEE 24 |
PAYMENTS OTHER THAN MONTHLY 24 |
SETTLEMENT OPTION TABLES 25 |
Any supplementary amendments, endorsements or riders and a copy of the application follow the final policy provisions and are to be considered part of the Policy. |
V00025140003 |
2514(VUL)-9/04 3 |
SCHEDULE |
POLICY NUMBER 67000001 |
POLICY DATE SEPTEMBER 15, 2004 |
INSURED JOHN Q. DOE |
AGE/GENDER 35, MALE |
PREMIUM CLASS: STANDARD NONSMOKER |
RATING FACTOR: 1.00 |
|
INITIAL STATED DEATH BENEFIT [$100,000] |
[ADJUSTABLE TERM INSURANCE [$150,000*] |
DEATH BENEFIT] |
[TARGET DEATH BENEFIT] [$250,000**] |
MINIMUM DEATH BENEFIT AMOUNT [$100,000] |
ADDITIONAL BENEFITS AND RIDERS: |
DEATH BENEFIT OPTION 1 |
MONTHLY PROCESSING DATE 15th |
|
DEFINITION OF LIFE INSURANCE TEST [GUIDELINE PREMIUM TEST] |
Coverage will expire prior to the policy anniversary nearest the insured's 100th birth date if premiums are insufficient to continue coverage. Coverage will also be affected by partial withdrawals, policy loans, changes in the current cost of insurance rates, the investment experience of the divisions of the Separate Account, and the interest rate credited to amounts allocated to the Guaranteed Interest Division. |
*This amount is the amount of adjustable term death benefit on the policy date. This death benefit will vary from time to time, and may depend on your account value. See the rider and policy for details. |
**This amount is the target death benefit on the policy date. It may change at the beginning of each policy year. See the Schedule and rider for details. |
CUSTOMER SERVICE CENTER: P.O. Box 5065, Minot, ND 58702-5065 |
Toll Free Number 1-877-253-5050 |
|
V00025140004 |
2514(VUL)-9/04 4 |
Schedule (Continued) |
SEGMENT Benefit Profile |
Benefit Amount |
Segment Effective Date |
Segment Target Premium |
|
Segment #1 |
$250,000 |
9/15/04 |
$1,100 |
ADDITIONAL BENEFITS AND RIDERS: |
Adjustable Term Insurance Rider premium class or rating is the same as Segment #1 |
A segment is a block of death benefit coverage. The stated death benefit shown on the Schedule at issue is Segment #1. Additional segments may be added to the policy after issue to increase the death benefit. Each individual segment added to the policy has its own cost of insurance charges and expense charges as shown in the Schedule. This is further defined in the Definition of Terms section of your policy. |
V0002514004A |
2514(VUL)-9/04 4A |
(Print for FUW Version) |
SCHEDULE (Continued) |
EXPENSE CHARGES |
A. Premium Expense Charge. This charge is a percent of all premiums. The premium expense charge in segment year 1 is 9.5% of premium up to the segment target premium and 8.5% for amounts in excess of the segment target premium. In segment year 2 and thereafter the premium expense charge is 8.5% of premium up to the segment target premium and 5.5% for amounts in excess of the segment target premium. See the Net Premium provision for details. |
B . Guaranteed Maximum Monthly Expense Charges: |
1. Per Policy Charge: $15 per policy month in years 1-10. |
$ 7.50 per policy month in year 11 and thereafter. |
2. Monthly Administrative $[0.04] per thousand of stated death benefit (or target |
Expense Charge: death benefit, if greater), for years 1-10 and $0.01 thereafter. This charge applies to the first $10,000,000 of death benefit. |
3. Monthly Mortality and See table below. |
Expense Risk Charge: |
Policy Years |
Annual Percentage |
Monthly Percentage |
1 through 5 |
0.45% |
0.0375% |
6 through 10 |
0.30% |
0.025% |
11 and Thereafter |
0.0% |
0.0% |
This charge is multiplied by the net account value held in the Separate Account and is deducted each policy month. |
VFUW2514004B |
2514(VUL)-9/04 4B |
SCHEDULE (Continued) |
EXPENSE CHARGES |
A. Premium Expense Charge. This charge is a percent of all premiums. The premium expense charge in segment year 1 is 9.5% of premium up to the segment target premium and 8.5% for amounts in excess of the segment target premium. In segment year 2 and thereafter the premium expense charge is 8.5% of premium up to the segment target premium and 5.5% for amounts in excess of the segment target premium. See the Net Premium provision for details. |
B . Guaranteed Maximum Monthly Expense Charges: |
1. Per Policy Charge: $20 per policy month in years 1-10. |
$7.50 per policy month in year 11 and thereafter. |
2. Monthly Administrative $[0.04] per thousand of stated death benefit (or target |
Expense Charge: death benefit, if greater), for years 1-10 and $0.01 thereafter. This charge applies to the first $10,000,000 of death benefit. |
3. Monthly Mortality and See table below. |
Expense Risk Charge: |
Policy Years Annual Percentage Monthly Percentage 1 through 5 0.45% 0.0375% 6 through 10 0.30% 0.025% 11 and Thereafter 0.0% 0.0%
|
This charge is multiplied by the net account value held in the Separate Account and is deducted each policy month. |
VGI02514004B |
2514(VUL)-9/04 4B |
(Print for Lower Load Version) |
SCHEDULE (Continued) |
EXPENSE CHARGES |
A. Premium Expense Charge. This charge is a percent of all premiums. The premium expense charge is 5.0% of each premium in all years. |
B . Guaranteed Maximum Monthly Expense Charges: |
1. Per Policy Charge: $7.50 per policy month in years 1-10. |
$0.00 per policy month in year 11 and thereafter. |
|
2. Monthly Mortality and See table below. |
Expense Risk Charge: |
Policy Years |
Annual Percentage |
Monthly Percentage |
1 through 5 |
0.45% |
0.0375% |
6 through 10 |
0.30% |
0.025% |
11 and Thereafter |
0.0% |
0.0% |
This charge is multiplied by the net account value held in the Separate Account and is deducted each policy month. |
VPL02514004B |
2514(VUL)-9/04 4B |
(Print FUW, GI and Lower Load Versions) |
SURRENDER CHARGES |
The maximum surrender charges that pertain to the insurance coverages shown in the Schedule are shown in the following table. This table may change upon any increase and/or decrease in the policy's stated death benefit. |
SURRENDERS DURING THE POLICY YEAR ENDING |
TOTAL SURRENDER CHARGE |
2004 |
$[1125.00] |
2005 |
$[1250.00] |
2006 |
$[1250.00] |
2007 |
$[1250.00] |
2008 |
$[1250.00] |
2009 |
$[1000.00] |
2010 |
$[750.00] |
2011 |
$[500.00] |
2012 |
$[250.00] |
2013 |
$0 |
V0002514004C |
2514(VUL)-9/04 4C |
Schedule (Continued) |
Policy Illustrations: |
$25 for each illustration after the 1st in a policy year. |
POLICY LOANS |
Policy Loan Interest Rate Charged: |
3.75% per year in the first 5 policy years; 3.15% per year thereafter. |
Guaranteed Interest Rate Credited To Loan Division: |
3.00% per year |
Minimum Loan Amount: |
$100 |
Maximum Loan Amount: |
See Loan Provisions section. |
Minimum Partial Withdrawal Amount: |
$100 |
Maximum Partial Withdrawal Amount: |
Amount which will leave $500 as the net cash surrender value. |
Partial Withdrawal Service Fee: |
$10 for each partial withdrawal. |
Limit On Partial Withdrawals: |
Twelve (12) in a policy year. |
Guaranteed Minimum Interest Rate Credited to amounts allocated to the Guaranteed Interest Division: |
3.00% per year |
V0002514004D |
|
2514(VUL)-9/04 4D |
Schedule (Continued)
The policy's base death benefit at any time will be at least equal to the account value times the appropriate factor from this table. |
DEFINITION OF LIFE INSURANCE |
GUIDELINE PREMIUM TEST/ CASH VALUE CORRIDOR TEST |
Insured's Attained Age |
Factor |
Insured's Attained Age |
Factor |
0-40 |
2.50 |
||
41 |
2.43 |
71 |
1.13 |
42 |
2.36 |
72 |
1.11 |
43 |
2.29 |
73 |
1.09 |
44 |
2.22 |
74 |
1.07 |
45 |
2.15 |
75 |
1.05 |
46 |
2.09 |
76 |
1.05 |
47 |
2.03 |
77 |
1.05 |
48 |
1.97 |
78 |
1.05 |
49 |
1.91 |
79 |
1.05 |
50 |
1.85 |
80 |
1.05 |
51 |
1.78 |
81 |
1.05 |
52 |
1.71 |
82 |
1.05 |
53 |
1.64 |
83 |
1.05 |
54 |
1.57 |
84 |
1.05 |
55 |
1.50 |
85 |
1.05 |
56 |
1.46 |
86 |
1.05 |
57 |
1.42 |
87 |
1.05 |
58 |
1.38 |
88 |
1.05 |
59 |
1.34 |
89 |
1.05 |
60 |
1.30 |
90 |
1.05 |
61 |
1.28 |
91 |
1.04 |
62 |
1.26 |
92 |
1.03 |
63 |
1.24 |
93 |
1.02 |
64 |
1.22 |
94 |
1.01 |
65 |
1.20 |
95 |
1.00 |
66 |
1.19 |
96 |
1.00 |
67 |
1.18 |
97 |
1.00 |
68 |
1.17 |
98 |
1.00 |
69 |
1.16 |
99 |
1.00 |
70 |
1.15 |
100 and older |
1.00 |
VGL02514004E |
2514(VUL)-9/04 4E |
SCHEDULE (Continued) |
DEFINITION OF LIFE INSURANCE |
CASH VALUE ACCUMULATION TEST |
DEATH BENEFIT FACTORS |
The Cash Value Accumulation Test factor is determined by dividing One by a net single premium rate for the gender, rating class, and attained age of the insured(s). This calculation is made using the greater of 4% or the interest rate guaranteed in the policy, and the mortality factors and calculation rules specified in Internal Revenue Code Sections 7702(b)(2) and 7702(e) and the regulations thereunder that are in effect at the time this policy is issued. The net single premium rate will remain level during the policy year and will equal the rate at the beginning of the policy year. The net single premium will be calculated assuming a level death benefit endowment at age 100. |
VCV02514004E |
2514(VUL)-9/04 4E |
Schedule (Continued) |
|||||
TABLE OF GUARANTEED RATES-Segment #1 |
|||||
Guaranteed Maximum Cost of Insurance Rates Per $1,000 of Net Amount at Risk |
|||||
(These rates apply to the Base Policy.) |
|||||
Attained Age |
Monthly Cost of Insurance Rate |
Attained Age |
Monthly Cost of Insurance Rate |
Attained Age |
Monthly Cost of Insurance Rate |
0 |
0.34845 |
34 |
0.16669 |
68 |
2.77350 |
1 |
0.08917 |
35 |
0.17586 |
69 |
3.02328 |
2 |
0.08251 |
36 |
0.18670 |
70 |
3.30338 |
3 |
0.08167 |
37 |
0.20004 |
71 |
3.62140 |
4 |
0.07917 |
38 |
0.21505 |
72 |
3.98666 |
5 |
0.07501 |
39 |
0.23255 |
73 |
4.40599 |
6 |
0.07167 |
40 |
0.25173 |
74 |
4.87280 |
7 |
0.06667 |
41 |
0.27424 |
75 |
5.37793 |
8 |
0.06334 |
42 |
0.29675 |
76 |
5.91225 |
9 |
0.06167 |
43 |
0.32260 |
77 |
6.46824 |
10 |
0.06084 |
44 |
0.34929 |
78 |
7.04089 |
11 |
0.06417 |
45 |
0.37931 |
79 |
7.64551 |
12 |
0.07084 |
46 |
0.41017 |
80 |
8.30507 |
13 |
0.08251 |
47 |
0.44353 |
81 |
9.03761 |
14 |
0.09584 |
48 |
0.47856 |
82 |
9.86724 |
15 |
0.11085 |
49 |
0.51777 |
83 |
10.80381 |
16 |
0.12585 |
50 |
0.55948 |
84 |
11.82571 |
17 |
0.13919 |
51 |
0.60870 |
85 |
12.91039 |
18 |
0.14836 |
52 |
0.66377 |
86 |
14.03509 |
19 |
0.15502 |
53 |
0.72636 |
87 |
15.18978 |
20 |
0.15836 |
54 |
0.79730 |
88 |
16.36948 |
21 |
0.15919 |
55 |
0.87326 |
89 |
17.57781 |
22 |
0.15752 |
56 |
0.95591 |
90 |
18.82881 |
23 |
0.15502 |
57 |
1.04192 |
91 |
20.14619 |
24 |
0.15169 |
58 |
1.13378 |
92 |
21.57655 |
25 |
0.14752 |
59 |
1.23235 |
93 |
23.20196 |
26 |
0.14419 |
60 |
1.34180 |
94 |
25.28174 |
27 |
0.14252 |
61 |
1.46381 |
95 |
28.27411 |
28 |
0.14169 |
62 |
1.60173 |
96 |
33.10677 |
29 |
0.14252 |
63 |
1.75809 |
97 |
41.68475 |
30 |
0.14419 |
64 |
1.93206 |
98 |
58.01259 |
31 |
0.14836 |
65 |
2.12283 |
99 |
83.33333 |
32 |
0.15252 |
66 |
2.32623 |
||
33 |
0.15919 |
67 |
2.54312 |
The rates shown above are for a standard premium class. If the policy is based on a special premium class (other than standard), the maximum cost of insurance rates will be adjusted using the rating factor shown in the Segment Benefit Profile of the Schedule for the special premium class. If the special premium class is a stated percentage increase, the maximum cost of insurance rates will be determined by multiplying the rates for a standard rate class shown above by the rating factor shown in the Schedule. If the special premium class is a flat amount per $1,000, the maximum cost of insurance will be determined by adding the extra premium per month per $1,000 shown in the Schedule to the rate per $1,000 for the standard rate shown above. The rates shown above are based on the 1980 U.S. Commissioner's Standard Ordinary Smoker Composite, Male, Ultimate Mortality Table, age nearest birthday. |
|||||
VM002514004F |
|||||
2514(VUL)-9/04 4F |
|||||
TABLE OF GUARANTEED RATES-Segment #1 |
|||||
Guaranteed Maximum Cost of Insurance Rates Per $1,000 of Rider Benefit |
|||||
(Adjustable Term Insurance Rider) |
|||||
Attained Age |
Monthly Cost of Insurance Rate |
Attained Age |
Monthly Cost of Insurance Rate |
Attained Age |
Monthly Cost of Insurance Rate |
0 |
0.43602 |
34 |
0.20838 |
68 |
3.46950 |
1 |
0.11168 |
35 |
0.22005 |
69 |
3.78175 |
2 |
0.10334 |
36 |
0.23339 |
70 |
4.13284 |
3 |
0.10251 |
37 |
0.25006 |
71 |
4.53127 |
4 |
0.09918 |
38 |
0.26924 |
72 |
4.98809 |
5 |
0.09418 |
39 |
0.29092 |
73 |
5.51357 |
6 |
0.09001 |
40 |
0.31510 |
74 |
6.09863 |
7 |
0.08334 |
41 |
0.34262 |
75 |
6.73168 |
8 |
0.07917 |
42 |
0.37097 |
76 |
7.40104 |
9 |
0.07751 |
43 |
0.40350 |
77 |
8.09839 |
10 |
0.07584 |
44 |
0.43686 |
78 |
8.81706 |
11 |
0.08001 |
45 |
0.47439 |
79 |
9.57498 |
12 |
0.08834 |
46 |
0.51276 |
80 |
10.40294 |
13 |
0.10334 |
47 |
0.55447 |
81 |
11.32260 |
14 |
0.12001 |
48 |
0.59869 |
82 |
12.36434 |
15 |
0.13835 |
49 |
0.64709 |
83 |
13.54176 |
16 |
0.15752 |
50 |
0.69966 |
84 |
14.82576 |
17 |
0.17420 |
51 |
0.76141 |
85 |
16.19045 |
18 |
0.18587 |
52 |
0.82985 |
86 |
17.60542 |
19 |
0.19420 |
53 |
0.90832 |
87 |
19.05982 |
20 |
0.19837 |
54 |
0.99683 |
88 |
20.54615 |
21 |
0.19921 |
55 |
1.09202 |
89 |
22.06903 |
22 |
0.19671 |
56 |
1.19559 |
90 |
23.64710 |
23 |
0.19420 |
57 |
1.30253 |
91 |
25.31065 |
24 |
0.19004 |
58 |
1.41784 |
92 |
27.11674 |
25 |
0.18420 |
59 |
1.54070 |
93 |
29.17188 |
26 |
0.18003 |
60 |
1.67781 |
94 |
31.80363 |
27 |
0.17837 |
61 |
1.83085 |
95 |
35.59424 |
28 |
0.17753 |
62 |
2.00317 |
96 |
41.72906 |
29 |
0.17837 |
63 |
2.19899 |
97 |
52.65466 |
30 |
0.18003 |
64 |
2.41666 |
98 |
73.58341 |
31 |
0.18587 |
65 |
2.65537 |
99 |
83.33333 |
32 |
0.19087 |
66 |
2.90927 |
||
33 |
0.19921 |
67 |
3.18092 |
||
The rates shown above are for a standard premium class. If the policy is based on a special premium class (other than standard), the maximum cost of insurance rates will be adjusted using the rating factor shown in the Segment Benefit Profile of the Schedule for the special premium class. If the special premium class is a stated percentage increase, the maximum cost of insurance rates will be determined by multiplying the rates for a standard rate class shown above by the rating factor shown in the Schedule. If the special premium class is a flat amount per $1,000, the maximum cost of insurance will be determined by adding the extra premium per month per $1,000 shown in the Schedule to the rate per $1,000 for the standard rate shown above. The rates shown above are based on the 1980 U.S. Commissioner's Standard Ordinary Smoker Composite, Male, Ultimate Mortality Table, age nearest birthday. |
|||||
VMATR2514004G |
|||||
2514(VUL)-9/04 4G |
|||||
ADJUSTABLE TERM INSURANCE RIDER SCHEDULE |
|||||
TABLE OF TARGET DEATH BENEFITS |
POLICY YEAR |
TARGET DEATH BENEFIT |
POLICY YEAR |
TARGET DEATH BENEFIT |
1 |
250,000.00 |
44 |
500,000.00 |
2 |
250,000.00 |
45 |
500,000.00 |
3 |
250,000.00 |
46 |
500,000.00 |
4 |
250,000.00 |
47 |
500,000.00 |
5 |
250,000.00 |
48 |
500,000.00 |
6 |
250,000.00 |
49 |
500,000.00 |
7 |
250,000.00 |
50 |
500,000.00 |
8 |
250,000.00 |
51 |
500,000.00 |
9 |
250,000.00 |
52 |
500,000.00 |
10 |
250,000.00 |
53 |
500,000.00 |
11 |
250,000.00 |
54 |
500,000.00 |
12 |
250,000.00 |
55 |
500,000.00 |
13 |
250,000.00 |
56 |
500,000.00 |
14 |
250,000.00 |
57 |
500,000.00 |
15 |
250,000.00 |
58 |
500,000.00 |
16 |
250,000.00 |
59 |
500,000.00 |
17 |
250,000.00 |
60 |
500,000.00 |
18 |
250,000.00 |
61 |
500,000.00 |
19 |
250,000.00 |
62 |
500,000.00 |
20 |
250,000.00 |
63 |
500,000.00 |
21 |
500,000.00 |
64 |
500,000.00 |
22 |
500,000.00 |
65 |
500,000.00 |
23 |
500,000.00 |
66 |
500,000.00 |
24 |
500,000.00 |
67 |
500,000.00 |
25 |
500,000.00 |
68 |
500,000.00 |
26 |
500,000.00 |
69 |
500,000.00 |
27 |
500,000.00 |
70 |
500,000.00 |
28 |
500,000.00 |
71 |
500,000.00 |
29 |
500,000.00 |
72 |
500,000.00 |
30 |
500,000.00 |
73 |
500,000.00 |
31 |
500,000.00 |
74 |
500,000.00 |
32 |
500,000.00 |
75 |
500,000.00 |
33 |
500,000.00 |
76 |
500,000.00 |
34 |
500,000.00 |
77 |
500,000.00 |
35 |
500,000.00 |
78 |
500,000.00 |
36 |
500,000.00 |
79 |
500,000.00 |
37 |
500,000.00 |
80 |
500,000.00 |
38 |
500,000.00 |
81 |
500,000.00 |
39 |
500,000.00 |
82 |
500,000.00 |
40 |
500,000.00 |
83 |
500,000.00 |
41 |
500,000.00 |
84 |
500,000.00 |
42 |
500,000.00 |
85 |
500,000.00 |
43 |
500,000.00 |
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REFER TO YOUR RIDER FOR MORE INFORMATION. |
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V0002514ATR01 |
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2514(VUL)-9/04 |
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Account value: The sum of the amounts allocated to the divisions of the Separate Account and to the Guaranteed Interest Division, as well as any amount set aside in the Loan Division. |
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Accumulation unit: A unit of measurement used to calculate the account value in each division of the Separate Account. |
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Accumulation unit value: The value of the accumulation units of each division of the Separate Account. The accumulation unit value is determined as of each valuation date. |
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Age: The policy is issued at the age shown in the Schedule. The issue age is based on the age on the birthday nearest to the policy date. |
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Base death benefit: The base death benefit depends on the death benefit option you choose. This is defined in the Base Death Benefit provision of the policy. |
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Cash surrender value: Cash surrender value on any valuation date is the account value minus the surrender charge, if any. |
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Customer Service Center: Our Customer Service Center is located at P.O. Box 5065, Minot, ND 58702-5065. For overnight delivery, the address is 2000 21st Ave NW, Minot, ND 58703-0890. |
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Divisions of the Separate Account: The investment divisions available in the Separate Account, each of which invests in a corresponding mutual fund. |
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General Account: The account containing all of our assets other than those held in a separate account. |
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Guaranteed Interest Division: Part of our General Account to which all or part of the account value may be allocated and which provides guarantees of principal and interest. |
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Initial period: The initial period ends on the earlier of: (a) the date this policy was delivered to you plus the right to examine period, so long as we receive notice of the delivery date at our Customer Service Center before the date defined in (b), or (b) the date this policy is mailed from our Customer Service Center plus 5 days plus the right to examine period. |
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Investment date: The first date we apply your net premium payment to your policy. We will allocate the initial net premium to your policy at the end of the valuation period during which the latest of the following requirements is satisfied: |
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Loan Division: Part of our General Account in which funds are set aside to secure any outstanding policy loan and accrued loan interest when due. |
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Minimum death benefit: The minimum death benefit is the stated death benefit if there is no Adjustable Term Insurance Rider attached to your policy. If there is an Adjustable Term Insurance Rider attached to your policy, the minimum death benefit is the target death benefit. The minimum death benefit is shown on the Schedule. |
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V00025140005 |
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2514(VUL)-9/04 5 |
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Monthly Processing Date: The date each month on which the monthly deductions from the account value are due. The first monthly processing date will be the policy date or the date on which the initial net premium is allocated to your policy, if later. Subsequent monthly processing dates will be the same date as the policy date each month thereafter. If that date is not a valuation date, the monthly processing date will be the next valuation date. |
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Net account value: The amount of the account value minus any policy loan including accrued but unpaid loan interest. |
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Net cash surrender value: The amount of the cash surrender value minus any policy loan including accrued but unpaid loan interest. |
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Net premium: The premium amount paid minus the premium expense charge shown in the Schedule. This charge is deducted from each premium before the premium is applied to your account value. |
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Partial withdrawal: The withdrawal of a portion of your net cash surrender value from the policy. The partial withdrawal may cause a surrender charge to be incurred and may reduce the death benefit. |
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Policy loan: The sum of amounts you have borrowed from your policy, increased by any policy loan interest capitalized when due, and reduced by any policy loan repayments. |
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Right to examine period: The number of days after delivery during which you have the right to examine your policy and return it for a refund. See the cover page for a description of your right to examine period. |
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Scheduled premium: The premium amount that you specify on the application as the amount you intend to pay at fixed intervals over a specified period of time. Premiums may be paid monthly, quarterly, semiannually, or annually, as you determine. You need not pay the scheduled premium and you may change it at any time. Also, within limits, you may pay less or more than the scheduled premium. |
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Segment: A segment is a block of death benefit coverage. The stated death benefit shown on the Segment Benefit Profile of the Schedule is the initial segment, or Segment #1. Each increase in the stated death benefit (other than due to an option change) is a new segment. Each new segment will be shown separately on the Segment Benefit Profile of the Schedule. The first year for a segment begins on the effective date of the segment and ends one year later. Each new segment may be subject to a new premium expense charge, new surrender charge, new cost of insurance charges and new incontestability and suicide exclusion periods. |
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Segment premium: The actual premium received allocated to existing segments. Premium is allocated in the same proportion that the segment target premium bears to the sum of all segment target premium. If there is only one segment target premium, the entire premium is allocated to the segment. Segment target premium is shown in the Schedule. Because each segment has unique segment years, each segment premium is associated with a segment year. |
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Separate Account: The Separate Account is an account established by us, pursuant to the laws of the State of Colorado, to separate the assets funding the benefits for the class of policies to which this policy belongs from our other assets. |
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Stated death benefit: The sum of the segments under the policy. The stated death benefit changes when there is an increase or a decrease or when a transaction on the policy causes it to change (for example, a partial withdrawal under an Option 1 base death benefit may cause the stated death benefit to change). |
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V0002514005A |
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2514(VUL)-9/04 5A |
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Surrender charge: The charge made against your account value in the event of surrender, policy lapse, requested reductions in the stated death benefit or certain partial withdrawals. |
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Target death benefit: The target death benefit is the stated death benefit plus the amount of Adjustable Term Insurance Rider benefit, if any. Refer to the Adjustable Term Insurance Rider for more information. |
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Target premium: Target premium is used to determine your premium expense charge and is actuarially determined based on the age and gender of the insured person. Target premium is not based on your scheduled premium. |
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Valuation date: Each date on which the accumulation unit value of the divisions of the Separate Account and the net asset value of the shares of the corresponding mutual funds are determined. |
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Currently, these values are determined after the close of business of the New York Stock Exchange ("NYSE") on any normal business day, Monday through Friday, that the NYSE is open for trading. The valuation date may be revised as needed in accordance with applicable federal securities laws and regulations. |
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Valuation period: The period which begins at 4:00 p.m. Eastern time on a valuation date and ends at 4:00 p.m. Eastern time on the next succeeding valuation date. The valuation period may be revised as needed in accordance with applicable federal securities laws and regulations. |
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V0002514005B |
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2514(VUL)-9/04 5B |
INSURANCE COVERAGE PROVISIONS |
POLICY DATE |
The policy date shown in the Schedule is the effective date for all coverage provided in the original application. The policy date is the date from which we measure policy years and determine the monthly processing date. The first monthly processing date is the investment date. Future monthly processing dates are the same calendar day of each month as the policy date unless this is not a valuation date in which case the monthly processing date occurs on the next valuation date. A policy anniversary occurs each year on the same month and day as the policy date unless this is not a valuation date in which case the policy anniversary occurs on the next valuation date. The effective date for new segments and additional benefits is shown in the Schedule. |
The base death benefit will be determined, at any time, as follows: |
Option 1: Under Option 1, the base death benefit is the greater of: |
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Option 2: Under Option 2, the base death benefit is the greater of: |
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Option 3: Under Option 3, the base death benefit is the greater of: |
(a) The stated death benefit plus premiums received less partial withdrawals, or |
(b) The account value multiplied by the appropriate factor from the Death Benefit Factors described in the Schedule. |
The stated death benefit and the death benefit option are shown in the Schedule. |
This policy is designed to qualify as a life insurance contract under the Internal Revenue Code. All terms and provisions of the policy shall be construed in a manner consistent with that design. The base death benefit in force at any time shall not be less than the amount of insurance necessary to achieve such qualification under the applicable provisions of the Internal Revenue Code in existence at the time the policy is issued. We reserve the right to amend the policy or adjust the amount of insurance when required to maintain this tax qualification. We will send you a copy of any policy amendment. |
You may request that the insurance coverage be increased or decreased. Decreases are not allowed before the first policy anniversary. The change in coverage may not be for an amount less than $1,000. The effective date of the change will be the monthly processing date immediately following the date your written application is approved by us. After any change to the stated death benefit, you will receive an amended Schedule reflecting the change, the benefit under any riders, if applicable, the new target premium and the new surrender charge. |
V00025140006 |
2514(VUL)-9/04 6 |
Subject to our limits, you may request an increase in the stated death benefit after the first monthly processing date through attained age 85 (age 75 when this policy is issued as part of a group or sponsored plan). An increase will become effective as of the monthly processing date immediately following the date your written application is approved by us. You must provide evidence satisfactory to us that the insured is insurable according to our normal rules of underwriting for the applicable premium class for this type of policy. This evidence will include an application and may include required medical information. An increase will consist of a new segment of stated death benefit. Each new segment will result in a new premium expense charge which will be deducted from the premium allocated to the new segment. The new segment may also be subject to new surrender charges; new monthly expense charges; new cost of insurance charges and new incontestab ility and suicide exclusion periods. |
After the first policy anniversary, you may request a decrease in the stated death benefit. We will limit the decrease such that immediately after the requested decrease, the stated death benefit is at least the minimum amount we require to issue this policy. The minimum amount is shown in the Schedule. |
A decrease will be effective as of the monthly processing date immediately following the date your written application is approved by us. A decrease will first reduce Adjustable Term Insurance Rider coverage, if attached to your policy, and will then reduce each of the stated death benefit segments in the same proportion as the stated death benefit is reduced. A surrender charge will apply if the stated death benefit is decreased and the decrease occurs during the 9 years following the policy date or the date of the prior increase. If a surrender charge applies, it will be deducted from your account value and future surrender charges will be reduced. |
The stated death benefit after any change must be greater than or equal to the minimum we require to issue this policy. |
Beginning with the first monthly processing date and ending with the policy anniversary nearest the insured's 100th birth date, you may request to change the death benefit option. This change will be effective as of the next monthly processing date following approval. A death benefit option change applies to the entire stated death benefit. We may not allow any change if it would reduce the stated death benefit below the minimum we require to issue this policy at the time of reduction. Death benefit option changes from Option 1 to Option 3, from Option 2 to Option 3 and from Option 3 to Option 2 are not allowed. After the effective date of the change, the stated death benefit will be changed according to the following table: |
OPTION CHANGE |
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FROM |
TO |
STATED DEATH BENEFIT FOLLOWING THE CHANGE EQUALS: |
Option 1 |
Option 2 |
Stated death benefit prior to such change minus your account value as of the effective date of the change. |
Option 2 |
Option 1 |
Stated death benefit prior to such change plus your account value as of the effective date of the change. |
Option 3 |
Option 1 |
Stated death benefit prior to such change plus the sum of all the premiums received minus all partial withdrawals taken prior to the effective date of the change. |
To determine the segment stated death benefit after an option change, your account value will be allocated to each segment in the same proportion that segment bears to the stated death benefit as of the effective date of the change. |
V00025140007 |
2514(VUL)-9/04 7 |
CONTINUATION OF COVERAGE BEYOND AGE 100 |
If the policy is in force on the policy anniversary nearest the insured's 100th birth date, the policy will continue pursuant to the terms of the policy. On this date, the following will occur: |
(a) If there is no Adjustable Term Insurance Rider on the policy, the stated death benefit for the policy remains unchanged as of the policy anniversary nearest the insured's 100th birth date. If there is an Adjustable Term Insurance Rider attached to the policy, the stated death benefit for the policy will equal the target death benefit on the policy anniversary nearest the insured's 100th birth date. Any Adjustable Term Insurance Rider will then terminate; |
(b) All other riders attached to the policy also will terminate; |
(c) The portion of your account value invested in the divisions of the Separate Account will be transferred into the Guaranteed Interest Division and no further investment in the divisions of the Separate Account will be allowed; and |
(d) If the death benefit option in force on the policy is Option 2 or Option 3, the policy will be converted to death benefit Option 1 in accordance with the procedures outlined in the Death Benefit Option Changes provision of the policy. No further changes will be allowed to the death benefit option. |
After the policy anniversary nearest the insured's 100th birth date, no further premiums will be accepted and no monthly deductions will be made. Policyholder transaction charges continue to be deducted at the time of the applicable transaction. We will continue to credit interest to the account value in the Guaranteed Interest Division. Policy loans and withdrawals continue to be available. Any existing policy loan will continue. Policy loan interest will continue to accrue and if not paid, may cause your policy to lapse. Payments on policy loans will be accepted. The policy will enter the 61-day grace period if the net account value is zero or less. |
If you do not want coverage to continue past the policy anniversary nearest the insured's 100th birth date, the policy may be surrendered. |
Proceeds refer to the amount we will pay: |
(a) Upon surrender of the policy; or |
(b) Upon the insured's death. |
The proceeds upon surrender of this policy will be the net cash surrender value. The amount of proceeds payable upon the insured's death will be the base death benefit in effect on the date of the insured's death; plus any amounts payable from any additional benefits provided by rider; minus any outstanding policy loan including accrued but unpaid interest; minus any unpaid monthly deductions incurred prior to the date of the insured's death. The calculation of the death proceeds will be computed as of the date of the insured's death. |
We will determine the amount of death proceeds payable when we have received due proof of the insured's death and any other information which is necessary to process the claim. Any proceeds we pay are subject to adjustments as provided in the Misstatement of Age or Gender, Suicide Exclusion and Incontestability provisions. |
We will pay proceeds in one lump sum unless you request an alternate method of payment. There are many possible methods of payment. The available payout methods are described in the Payouts Other Than As One Sum provision. Contact us or your agent/registered representative for additional information. Interest will be paid on the one lump sum death proceeds from the date of the insured's death to the date of payment, or until a payout option is selected. Interest will be at the rate we declare, or at any higher rate required by law. |
V00025140008 |
2514(VUL)-9/04 8 |
PREMIUM PROVISIONS |
The scheduled premium as shown in the Schedule may be paid while this policy is in force prior to the policy anniversary nearest the insured's 100th birth date. You may increase or decrease the amount of the scheduled premium, subject to limits we may set and provisions in the Premium Limitation section. Under conditions provided in the Grace Period provision you may be required to make premium payments to keep the policy in force. You may pay premiums on a monthly basis through an automated payment facility. |
You may make unscheduled premium payments at any time the policy is in force prior to the policy anniversary nearest the insured's 100th birth date, subject to the Premium Limitation section. Unless you tell us otherwise, these premium payments will first be applied to reduce or pay off any existing policy loan and, as such, premium expense charges will not be deducted. We may limit the amount of such unscheduled premium payments if the payment would result in an increase in the base death benefit. |
We will refund any premium that causes your policy not to qualify as a life insurance policy under the Internal Revenue Code. No premium may be paid after the death of the insured. No premium may be paid after the policy anniversary nearest the insured's 100th birth date. |
FAILURE TO PAY PREMIUM |
If you stop paying premiums prior to the policy anniversary nearest the insured's 100th birth date, your coverage may lapse. See your Grace Period provision for details. |
INITIAL PREMIUM ALLOCATION |
If the initial period has not ended by the investment date, net premium amounts designated for allocation to divisions of the Separate Account will be allocated to the money market division and any net premium amount designated for allocation to the Guaranteed Interest Division will be allocated to that division. Any additional net premium amounts received after the investment date and before the end of the initial period will be allocated in the same manner as the initial net premium at the end of the valuation period during which we receive the premium at our Customer Service Center. On the valuation date immediately following the end of the initial period, the balance of the amount in the money market division will be transferred to other divisions of the Separate Account according to your allocation instructions. The amounts allocated to the Guaranteed Interest Division will remain in that division. |
If the initial period has ended on the investment date, initial net premium amounts will be allocated on the investment date to divisions of the Separate Account and/or to the Guaranteed Interest Division in accordance with your allocation instructions. |
After the initial period, all future scheduled and unscheduled premiums will be allocated to the divisions of the Separate Account and/or the Guaranteed Interest Division in accordance with your allocation instructions. This allocation will occur at the end of the valuation date during which we receive the premium at our Customer Service Center. |
V00025140009 |
2514(VUL)-9/04 9 |
Net premium equals the premium paid minus the premium expense charge shown in the Schedule. |
Each time we receive a premium we determine the premium expense charge by multiplying the applicable percentage times the segment premium. There is a different percentage for the segment year in which the premium is received. Premiums allocated to a new segment will be subject to a new premium expense charge. |
The Schedule shows: (1) the target premium for each segment; and (2) the premium expense charge percentage. Segment premium is defined in the Definitions section of your policy. |
You may change your premium allocation in accordance with instructions included in your policy prospectus. |
THE SEPARATE ACCOUNT |
The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940. All income, gains and losses, whether or not realized, from assets allocated to the Separate Account are credited to or charged against the Separate Account without regard to income, gains or losses of our General Account. The assets of the Separate Account are our property but are separate from our General Account and our other Separate Accounts. That portion of the assets of the Separate Account equal to the reserves and other policy liabilities with respect to the Separate Account is not chargeable with liabilities arising out of any other business we may conduct or subject to creditor claims against us. |
SEPARATE ACCOUNT DIVISIONS |
The Separate Account is divided into divisions, each of which invests in a corresponding underlying mutual fund. The current eligible divisions are shown in your policy prospectus. We may, from time to time, add additional divisions. If we do, you may be permitted to select from these other divisions subject to the terms and conditions we may impose on those allocations. |
We reserve the right to limit the number of divisions in which you may invest over the life of the policy. This limit, if any, will be listed in the updated policy prospectus provided to you each year. |
V00025140010 |
2514(VUL)-9/04 10 |
Subject to state and federal law and the rules and regulations thereunder, we may, from time to time make any of the following changes to the Separate Account: |
(a) Make additional divisions available. These divisions will invest in corresponding mutual funds we find suitable for the policy. |
(b) Close or eliminate divisions from the Separate Account or combine 2 or more divisions. |
(c) Substitute a new mutual fund for the existing mutual fund in which a division invests. A substitution may become necessary if, in our judgment, a mutual fund no longer suits the purposes of the policy, there is a change in laws or regulations, there is a change in a mutual fund's investment objectives or restrictions, the mutual fund is no longer available for investment, or for any other reason, such as a declining asset base, we deem a substitution appropriate |
(d) Transfer assets of the Separate Account, which we determine to be associated with the class of policies to which your policy belongs, to another Separate Account. |
(e) Withdraw the Separate Account from registration under the Investment Company Act of 1940. |
(f) Operate the Separate Account as a management investment company under the Investment Company Act of 1940. |
(g) Invest one or more divisions in a mutual fund other than, or in addition to, the existing mutual funds. |
(h) Discontinue the sale of policies. |
(i) Terminate any employer or plan trustee agreement with us pursuant to its terms. |
(j) Restrict or eliminate any voting rights as to the Separate Account. |
(k) Make any changes required by the Investment Company Act of 1940 or the rules or regulations thereunder. |
We will not make a change until it is effective with the SEC and approved by the appropriate state insurance departments, if necessary. We will notify you of any changes to the Separate Account. |
V00025140011 |
2514(VUL)-9/04 11 |
THE GENERAL ACCOUNT |
The General Account holds all of our assets other than those held in the Separate Account or our other separate accounts. The Guaranteed Interest Division is a part of our General Account. |
GUARANTEED INTEREST DIVISION |
The Guaranteed Interest Division is another investment option to which you may allocate premiums or make transfers. The account value of the Guaranteed Interest Division is equal to amounts allocated to this division plus any earned interest minus deductions taken from this division. Interest is credited at the guaranteed rate shown in the Schedule or may be credited at a higher rate. Any higher rate is guaranteed not to change more frequently than every policy anniversary. |
The Loan Division is the account used to hold collateral for a policy loan, if any. See the Loan Provisions section for information. |
TRANSFER PROVISIONS |
After the initial premium allocation and until the policy anniversary nearest the insured's 100th birth date, your account value in each division may be transferred to any other division of the Separate Account or to the Guaranteed Interest Division upon your request. One transfer from the Guaranteed Interest Division into the separate account divisions may be made during the first 30 days of each policy year. The minimum required for transfer is $100. |
We monitor transfer activity and may restrict or reject transfers that constitute Frequent Trading. Our current definition of Frequent Trading is more than one purchase and sale of the same underlying mutual fund within a 30-day period. We may modify this definition, or the definition as it applies to a particular underlying mutual fund, and any other transfer limitations or requirements we may establish at any time without prior notice. Additional limitations and requirements will be listed in and governed by your policy prospectus in effect at the time of the transfer. |
On the policy anniversary nearest the insured's 100th birth date, your account value in each division of the Separate Account will be transferred into the Guaranteed Interest Division and no further transfers will be allowed. Likewise, if you exercise your Change Right during the first two policy years, your account value in each division of the Separate Account will be transferred into the Guaranteed Interest Division and no further transfers will be allowed. |
The account value is the sum of the current amounts allocated to the divisions of the Separate Account and to the Guaranteed Interest Division plus your balance in the Loan Division. |
The account value is based on premiums paid, policy and rider charges assessed, loans and withdrawals taken, monthly deductions, premium expense charges, transaction charges, any surrender charges, and the investment experience or credited interest of the divisions to which your account value is allocated. |
Your net account value is equal to your account value minus any policy loan including accrued but unpaid loan interest. |
V00025140012 |
2514(VUL)-9/04 12 |
The value of each division of the Separate Account and the Guaranteed Interest Division as of the investment date is equal to: |
(a) The allocation to that division of the first net premium paid; minus |
(b) The portion of any monthly deductions due on the investment date allocated to that division. |
The investment experience of a division of the Separate Account is determined as of each valuation date. We use an accumulation unit value to measure the experience of each of the Separate Account divisions during a valuation period. We generally set the accumulation unit value at $10 when each division is opened. The accumulation unit value for a valuation date equals the accumulation unit value for the preceding valuation date multiplied by the accumulation experience factor defined below for the valuation period ending on the valuation date. |
The number of units for a given transaction related to a division of the Separate Account as of a valuation date is determined by dividing the dollar value of that transaction by that division's accumulation unit value for that date. |
For each division of the Separate Account, the accumulation experience factor reflects the investment experience of the corresponding mutual funds in which that division invests and the charges assessed against that division for a valuation period. The accumulation experience factor is calculated as follows: |
(a) The net asset value of the corresponding mutual funds in which that division invests as of the end of the current valuation period; plus |
(b) The amount of any dividend or capital gains distribution declared and reinvested in the corresponding mutual funds in which that division invests during the current valuation period; minus |
(c) A charge for taxes, if any. |
(d) The result of (a), (b) and (c) is then divided by the net asset value of the corresponding mutual fund in which that division invests as of the end of the preceding valuation period. |
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V00025140013 |
2514(VUL)-9/04 13 |
VALUE OF THE DIVISIONS OF THE SEPARATE ACCOUNT |
On valuation dates after the investment date, the value of each division of the Separate Account is calculated as follows: |
(a) The number of accumulation units in that division as of the beginning of the current valuation period multiplied by that division's accumulation unit value for the current valuation period; plus |
(b) Any additional net premiums allocated to that division during the current valuation period; plus |
(c) Any value transferred to that division during the current valuation period; minus |
(d) Any value transferred from that division during the current valuation period; minus |
(e) Any partial withdrawals taken and any applicable withdrawal service fees which are allocated to that division during the current valuation period; plus |
(f) Any amounts transferred into that division from the Loan Division as a result of a loan or loan interest payment; minus |
(g) Any amounts transferred to the Loan Division as a result of any loans which are allocated to that division during the current valuation period; minus |
(h) The portion of any surrender charge resulting from a decrease in stated death benefit allocated to that division; minus |
(i) The portion of the monthly deduction allocated to that division, if a monthly processing date occurs during the current valuation period; minus |
(j) The portion of any transaction charges and mutual fund redemption fees allocated to that division during the current valuation period. |
On valuation dates after the investment date, the value of the Guaranteed Interest Division is calculated as follows: |
(a) The value of the Guaranteed Interest Division at the end of the preceding valuation period plus interest at the declared rate credited during the current valuation period; plus |
(b) Any additional net premiums allocated to the Guaranteed Interest Division plus interest credited to these premiums during the current valuation period; plus |
(c) Any value transferred to the Guaranteed Interest Division during the current valuation period; minus |
(d) Any value transferred from the Guaranteed Interest Division during the current valuation period; minus |
(e) Any partial withdrawals taken and any applicable withdrawal service fees which are allocated to the Guaranteed Interest Division during the current valuation period; plus |
(f) Any amounts transferred from the Loan Division as a result of a loan or loan interest payment; minus |
(g) Any amounts transferred to the Loan Division as a result of any loans which are allocated to the Guaranteed Interest Division during the current valuation period; minus |
(h) The portion of any surrender charge resulting from a decrease in stated death benefit allocated to the Guaranteed Interest Division, minus |
(i) The portion of the monthly deduction allocated to the Guaranteed Interest Division, if a monthly processing date occurs during the current valuation period; minus |
(j) The portion of any transaction charges and mutual fund redemption fees allocated to the Guaranteed Interest Division during the current valuation period. |
V00025140014 |
2514(VUL)-9/04 14 |
On valuation dates after the investment date, the value of the Loan Division is calculated as follows: |
(a) The value of the Loan Division on the prior valuation date; plus |
(b) Any interest credited to the Loan Division during the valuation period; plus |
(c) An amount equal to any additional loans since the prior valuation date; minus |
(d) Any loan repayments, including payment of loan interest; plus |
(e) The amount of accrued loan interest if the valuation date is a policy anniversary; minus |
(f) The amount of interest credited to the Loan Division during the year if the valuation date is a policy anniversary. |
On policy anniversaries, any amount of interest credited to the Loan Division during the year is transferred from the Loan Division to the divisions of the Separate Account and Guaranteed Interest Division according to your premium allocation instructions then in effect. |
The monthly deduction is equal to: |
(a) The cost of insurance charges for this policy; plus |
(b) The monthly charges for any other additional benefits provided by rider; plus |
(c) The monthly expense charges shown in the Schedule. |
Monthly deductions are taken from the divisions of the Separate Account and Guaranteed Interest Division as described in the prospectus in effect at the time of the transaction. You may designate a single source from which deductions will be taken. This deduction is taken from your account value as of the monthly processing date. These deductions will be displayed in periodic reports that we send you at least once per policy year. After the policy anniversary nearest the insured's 100th birth date, no further monthly deductions will be made except policyholder transaction charges incurred after this date. |
Policyholder transaction charges, as described in the Schedule, are deducted at the time of the applicable transaction. |
The cost of insurance for the policy is the sum of the cost of insurance for all segments. A segment's cost of insurance is the cost of insurance rate for the premium class for the segment multiplied by the net amount at risk allocated to the segment. It is determined on a monthly basis. |
The net amount at risk is (a) minus (b) where: |
(a) is the sum of (i) the base death benefit for each segment as of the monthly processing date after the monthly deductions (other than cost of insurance charges for the base death benefit and any riders), divided by (ii) the result of 1 plus the monthly equivalent of the guaranteed interest rate for the Guaranteed Interest Division as shown in the Schedule; and |
(b) is your account value as of the monthly processing date after the monthly deductions (other than the cost of insurance charges for the base death benefit and any riders). |
The net amount at risk will be allocated to a segment in the same proportion as that segment's stated death benefit bears to the sum of the stated death benefits for all segments. |
V00025140015 |
2514(VUL)-9/04 15 |
The cost of insurance rate for each segment will be determined by us from time to time. Different rates will apply to each segment. They will be based on the gender and age of the insured as of the effective date of segment coverage, the duration since the coverage began, and the segment premium class. Any change in rates will apply to all individuals of the same premium class and whose policies have been in effect for the same length of time. The rates will never exceed those rates shown in the Table of Guaranteed Rates for the segment. These tables are in the Schedule. |
REDEMPTION FEES |
If applicable, we may deduct the amount of any redemption fees imposed by the underlying mutual funds as a result of withdrawals, transfers or other transactions you initiate. Redemption fees, if any, are separate and distinct from any transaction charges or any other charges deducted from your account value. |
You may obtain a policy loan on or after the first monthly processing date. The maximum amount you may borrow at any time equals the cash surrender value on the date of the loan request less any outstanding policy loan including accrued but unpaid loan interest to the next policy anniversary and less all monthly deductions to the next policy anniversary, or 13 monthly deductions if you take a loan within the 30-day period before your next policy anniversary. The policy loan is a first lien on your policy. The outstanding policy loan amount is equal to the loan amount as of the beginning of the policy year plus new loans and minus loan repayments, plus accrued interest. The minimum amount you may borrow is shown in the Schedule. |
The maximum annual policy loan interest rates are shown in the Schedule. The current interest rates may be less than these maximum rates and may change from time to time. If a loan is made, interest is due and payable at the end of the policy year. Thereafter, interest on the loan amount is due annually at the end of each policy year until the loan is repaid. If interest is not paid when due, it is added to the policy loan. |
If the policy loan amount and any accrued interest equals or exceeds the account value, a premium sufficient to keep this policy in force must be paid as provided in the Grace Period provision. |
When a policy loan is taken or when interest is not paid in cash when due, an amount equal to the loan (or unpaid loan interest) respectively, is transferred from the divisions of the Separate Account and the Guaranteed Interest Division to the Loan Division to secure the loan. This amount will be deducted from the divisions of the Separate Account and the Guaranteed Interest Division in the same proportion that your value in each division bears to your net account value as of the date the transfer is effective unless otherwise specified in your instructions to us. Your value in the Loan Division will be credited with interest at an annual interest rate for the Loan Division no less than the rate shown in the Schedule. |
When a loan repayment is made an amount equal to the repayment is transferred from the Loan Division to the Guaranteed Interest Division and the divisions of the Separate Account in the same proportion as your current premium allocation unless you request a different allocation in writing. |
V00025140016 |
2514(VUL)-9/04 16 |
You may request a partial withdrawal from your account value on any valuation date after the first policy anniversary by writing to us at our Customer Service Center. The minimum and maximum partial withdrawal amounts are shown in the Schedule. When we process a partial withdrawal, the amount of the withdrawal plus a service fee is deducted from your account value. The amount of the service fee is shown in the Schedule. We limit the number of partial withdrawals in a policy year. This number is shown in the Schedule. |
The stated death benefit is not reduced by a partial withdrawal taken when the base death benefit has been increased to qualify your policy as life insurance under the Internal Revenue Code and the amount withdrawn is not greater than that which reduces your account value to the level which no longer requires the base death benefit to be increased for Internal Revenue Code purposes. |
Otherwise, the stated death benefit may be reduced by the amount of the partial withdrawal depending on the death benefit option in effect. |
For a policy with an Option 1 death benefit, a partial withdrawal reduces your stated death benefit by the amount of the partial withdrawal. |
For a policy with an Option 2 death benefit, a partial withdrawal does not reduce your stated death benefit. |
For a policy with an Option 3 death benefit, a partial withdrawal reduces your stated death benefit by any amount of the partial withdrawal in excess of premiums paid, less prior withdrawals, to the date of the partial withdrawal. |
Any reduction in death benefit or account value will occur as of the date the partial withdrawal occurs. We will limit the amount of the partial withdrawal such that, immediately after the requested withdrawal, the death benefit is at least equal to the minimum death benefit we require to issue this policy. The minimum amount is shown in the Schedule. |
You may specify how much of the withdrawal you wish taken from each division of the Separate Account or from the Guaranteed Interest Division. You may not withdraw from the Guaranteed Interest Division more than the total withdrawal times the ratio of your account value in the Guaranteed Interest Division to your net account value immediately prior to the withdrawal. Unless you indicate otherwise, we will take the withdrawal from amounts in the Guaranteed Interest Division and the divisions of the Separate Account in the same proportion that your value in each division bears to your net account value immediately prior to the withdrawal. The withdrawal service fee and any surrender charge deducted from your account value is deducted from each division of the Separate Account and the Guaranteed Interest Division as described in the prospectus in effect at the time of the transaction. |
We will send you a new Schedule to reflect the effect of the withdrawal if there is any change to the stated death benefit and surrender charges. We may ask you to return your policy to our Customer Service Center to make this change. The withdrawal and the reductions in death benefits will be effective as of the valuation date after we receive your request. |
V00025140017 |
2514(VUL)-9/04 17 |
BASIS OF COMPUTATIONS |
The cash surrender value under the policy is not less than the minimums required as of the policy date by the state in which your policy was delivered. A detailed statement of the method of computation of policy values under the policy has been filed with the insurance department of the state in which the policy was delivered, if required. |
NET CASH SURRENDER VALUE |
The net cash surrender value on any date will be your account value minus any applicable surrender charge and minus any policy loan including accrued but unpaid loan interest. |
A separate surrender charge will apply to each stated death benefit coverage segment. The surrender charge for this policy is the sum of the surrender charge for each coverage segment of stated death benefit. |
The surrender charge for each segment is determined from the surrender charge table in the Schedule. It depends on the segment year, age on the segment effective date, and the effective date and initial stated death benefit as shown in the Schedule. The surrender charge is based on the amount of stated death benefit surrendered and may change upon any increase or decrease in the policy's death benefit. |
During the first 9 policy years or within 9 years of the effective date of an increase in the stated death benefit segment, if you request a decrease to the stated death benefit or take a partial withdrawal which causes the stated death benefit to decrease, the surrender charge will decrease in the same proportion that the stated death benefit decreases. |
Upon a decrease in the stated death benefit, a portion of the surrender charge will be deducted from your account value. The amount of the surrender charge which will be deducted from your account value will equal the surrender charge in effect before the decrease minus the surrender charge in effect after the decrease. A surrender charge is not deducted from your account value if the stated death benefit is decreased because the death benefit option is changed. If the surrender charge deducted from your account value causes your net account value to become zero or less, you may enter the Grace Period (see Grace Period). |
You may surrender your policy after the right to examine period or at any time before the death of the insured and receive the net cash surrender value. We will compute the net cash surrender value as of the valuation date we receive both your request and the policy at our Customer Service Center. This policy will be canceled as of the date we receive your request, and there will be no further benefits under this policy. Once you surrender this policy, it cannot be reinstated. |
V00025140018 |
2514(VUL)-9/04 18 |
On a monthly processing date, if the net account value is zero or less, the policy will enter into a 61-day grace period: |
During the grace period you must make the required premium payment then due to keep the policy in force. If this amount is not received in full by the end of the grace period, the policy will lapse without value. The required premium payment will be equal to past due charges plus an amount we expect to be sufficient to keep the policy and any riders in force for 2 months following receipt of the required premium payment. If we receive at least the required premium payment during the grace period we will apply the net premium payment to the policy and make deductions for the past due amounts. |
Notice of the amount of the required premium payment will be mailed to you and any assignee at the last known address at least 30 days before the end of the grace period. |
If the death of the insured occurs during the grace period, we will deduct any overdue monthly charges from the death proceeds of the policy. |
TERMINATION |
All coverage provided by this policy will end as of the earliest of: |
(a) The date the policy is surrendered; |
(b) The date of the insured's death; or |
(c) The date the grace period ends without payment of the required premium. |
The policy and certain riders may be reinstated within five years after the beginning of the grace period. The reinstatement will be effective as of the monthly processing date on or next following the date we approve your written application for reinstatement. |
We will reinstate the policy and any riders if the following conditions are met: |
(a) You have not surrendered the policy for its net cash surrender value; |
(b) You submit evidence satisfactory to us that the insured and those insured under any riders are still insurable according to our normal rules of underwriting for the applicable underwriting class for this type of policy; and |
(c) We receive payment of the amount of premium sufficient to keep the policy and any riders in force from the beginning of the grace period to the end of the expired grace period and for 2 months after the date of reinstatement. We will let you know at the time you request reinstatement, the amount of premium needed for this purpose. |
The surrender charge as of the date of reinstatement will equal the surrender charge as of the beginning of the grace period. |
We will reinstate any policy loan, with accrued loan interest to the end of the grace period, which existed when coverage ended. |
Upon reinstatement, the net premium received minus past due amounts will be allocated to the divisions of the Separate Account and the Guaranteed Interest Division according to the premium allocation percentages in effect at the start of the grace period or as directed by you in writing at the time of reinstatement. |
V00025140019 |
2514(VUL)-9/04 19 |
Requests for withdrawals, policy loans or payment of proceeds for a full surrender will be mailed within 7 days of receipt of the request in a form acceptable to us. However, we may postpone the processing of any such Separate Account transactions for any of the following reasons: |
(a) The NYSE is closed, other than customary weekend and holiday closings. |
(b) Trading on the NYSE is restricted by the SEC. |
(c) The SEC declares that an emergency exists as a result of which disposal of securities in the Separate Account is not reasonably practicable to determine your account value in the divisions. |
(d) A governmental body having jurisdiction over the Separate Account by order permits such suspension. |
Rules and regulations of the SEC, if any, are applicable and will govern as to whether conditions described in (b), (c), or (d) exist. |
Death proceeds will be paid within 7 days of determination of the proceeds and are not subject to deferment. We may defer for up to 6 months payment of any surrender proceeds, withdrawal or loan amounts from the Guaranteed Interest Division. |
GENERAL POLICY PROVISIONS |
The policy, including the original application and applications for any increases, decreases, riders, endorsements, any Schedule pages, and any reinstatement applications make up the entire contract between you and us. A copy of the original application will be attached to the policy at issue or at delivery. A copy of any application as well as a new Schedule will be attached or furnished to you for attachment to the policy at the time of any change in coverage. In the absence of fraud, all statements made in any application will be considered representations and not warranties. No statement will be used to deny a claim unless it is in an application. |
CONTRACT CHANGES |
All changes made by us must be signed by our president or an officer and by our secretary or assistant secretary. No other persons can change any of this policy's terms and conditions. |
The policy is issued at the age shown in the Schedule. This is the insured's age on the birthday nearest to the policy date. The insured's age at any time is the age shown in the Schedule increased by the number of completed policy years. |
We must receive any election, designation, assignment or any other change request you make in writing, except those specified on the application. It must be in a form acceptable to us. We may require a return of the policy for any change or for a full surrender. We are not liable for any action we take before we receive and record the written request at our Customer Service Center. |
V00025140020 |
2514(VUL)-9/04 20 |
In the event of the death of the insured, please let us or our agent/registered representative know as soon as possible. Upon notification to us or our agent/registered representative, instructions will promptly be sent to you or the beneficiary. We may require proof of age and a certified copy of the death certificate. We may require the beneficiary and next of kin to sign authorizations as part of due proof. These authorization forms allow us to obtain information about the decedent, including, but not limited to, medical records of physicians and hospitals used by the decedent. Settlement will be made upon receipt of due proof of death. |
The original owner is the person or entity named as the owner in the application. You, as the owner, can exercise all rights and receive the benefits until the insured's death. This includes the right to change the owner, beneficiaries, and methods for the payment of proceeds. All rights of the owner are subject to the rights of any assignee and any irrevocable beneficiary. |
You may name a new owner by sending written notice to us. The effective date of the change to the new owner will be the date you sign the notice. The change will not affect any payment made or action taken by us before we record the change at our Customer Service Center. |
The primary beneficiary surviving the insured's death will receive any death proceeds which become payable. Surviving contingent beneficiaries are paid death proceeds only if no primary beneficiary has survived the insured's death. If more than one beneficiary in a class survives the insured's death, they will share the death proceeds equally, unless your designation provides otherwise. If there is no designated beneficiary surviving, you or your estate will be paid the death proceeds. The beneficiary designation will be on file with us or at a location designated by us. Until the insured's death, you may name a new beneficiary. The effective date of the change will be the date the request was signed. We will pay proceeds to the most recent beneficiary designation on file. We will not be subject to multiple payments. |
If, for any reason within the first 2 policy years you no longer want a policy in which values vary with the investment experience of the Separate Account, we will change this policy. The change will be implemented by transferring your account value in all the divisions of the Separate Account into the Guaranteed Interest Division and removing your future right to choose to allocate funds to the divisions of the Separate Account. |
You may assign this policy as collateral security by written notice to us. Once it is recorded with us, the rights of the owner and beneficiary are subject to the assignment. It is your responsibility to make sure the assignment is valid. |
After this policy has been in force while the insured is alive for 2 years from the policy date, we will not contest the statements in the application attached at issue. |
After this policy has been in force while the insured is alive for 2 years from the effective date of any new segment or from the effective date of an increase in any other benefit, we will not contest the statements in the application for the new segment or other increase. |
After this policy has been in force while the insured is alive for 2 years from the effective date of any reinstatement, we will not contest the statements in the application for such reinstatement. |
V00025140021 |
2514(VUL)-9/04 21 |
If the insured's age or gender has been misstated, the death benefit will be adjusted. Notwithstanding the Incontestability provision above, the death benefit will be that which the cost of insurance which was deducted from your account value on the last monthly processing date prior to the death of the insured would have purchased for the insured's correct age and gender. |
RECLASSIFICATION OF SMOKER AND/OR TOBACCO USE STATUS |
If there is a change in the insured's smoking and/or tobacco use habits during the time this policy is in force, you may apply for a reclassification of the insured's premium rate class by sending a written request to us at our Customer Service Center. This policy must have been in force for one year from the earlier of its issue date or policy date before any such request may be made. Any reclassification will be based upon our general underwriting rules in effect at the time your request is submitted, and may include criteria other than smoking and/or tobacco use status. The insured may be required to undergo a new medical examination prior to any such reclassification. Our definitions of smoker and/or tobacco use at that time may also be different than our definitions at the time this policy was issued. This policy's CONTESTABILITY and SUICIDE provisions will not begin again upon the insured's reclassification. |
If the insured commits suicide, while sane or insane, within 2 years of the policy date, we will make a limited payment to the beneficiary. We will pay in one sum the amount of all premiums paid to us during that time, minus any outstanding policy loan (including accrued but unpaid interest) and partial withdrawals. Coverage under the policy and all riders will then terminate. |
If the insured commits suicide, while sane or insane, within 2 years of the effective date of a new segment or of an increase in any other benefit, we will make a limited payment to the beneficiary for the new segment or other increase. This payment will equal the cost of insurance and any applicable monthly expense charges deducted for such increase. Coverage under that segment will then terminate. |
We will send you, without charge, at least once each year a report that shows the current account value, cash surrender value and premiums paid since the last report. The report will also show the allocation of your account value as of the date of the report and the amounts added to or deducted from your account value of each division since the last report. The report will include any other information that may be currently required by the insurance supervisory official of the jurisdiction in which this policy is delivered. |
We will send you, upon written request, a hypothetical illustration of future death benefits and account values. This illustration will include the information as required by the laws or regulations where this policy is delivered. If you request more than one illustration during a policy year, we reserve the right to charge a reasonable fee for each additional illustration. The maximum amount of this fee is shown in the Schedule. |
The policy does not participate in our surplus earnings. |
Our Customer Service Center is at the address shown in the Schedule. Unless otherwise provided in this policy or you are otherwise notified: |
(a) All requests and payments should be sent to us at our Customer Service Center; and |
(b) All transactions are effective as of the valuation date the required information is received at our Customer Service Center. |
V00025140022 |
2514(VUL)-9/04 22 |
PAYOUTS OTHER THAN AS ONE SUM |
Before the insured's death, you may elect to have the beneficiary receive the proceeds other than in one lump sum. If you have not made an election, the beneficiary may do so within 60 days after we receive due proof satisfactory to us of the insured's death. You may also elect to take the net cash surrender value of the policy upon its surrender other than in one lump sum. Satisfactory written request must be received at our Customer Service Center before payment can be made. A payee that is not a natural person may not be named without our consent. The various methods of settlement are described in the following Payout Options section. |
OPTION I. Payouts for a Designated Period. Payouts will be made in annual, semi-annual, quarterly or monthly installments per year as elected for a designated period, which may be 5 to 30 years. The installment dollar amounts will be equal except for any excess interest as described below. The amount of the first monthly payout for each $1,000 of account value applied is shown in Settlement Option Table I. |
OPTION II. Life Income With Payouts for Designated Period. Payouts will be made in annual, semi-annual, quarterly or monthly installments per year throughout the payee's lifetime, or if longer, for a period of 5, 10, 15 or 20 years as elected. The installment dollar amounts will be equal except for any excess interest, as described below. The amount of the first monthly payout for each $1,000 of account value applied is shown in Settlement Option Table II. This option is available only for ages shown in the table. |
Payouts for Payout Option II will be determined by using the 2000 Individual Annuity Mortality Table for the appropriate gender at 1.5% interest. |
OPTION III. Hold at Interest. Amounts may be left on deposit with us to be paid upon the death of the payee or at any earlier date elected. Interest on any unpaid balance will be at the rate declared by us or at any higher rate required by law. Interest may be accumulated or paid in 1, 2, 4, or 12 installments per year, as elected. Money may not be left on deposit for more than 30 years. |
OPTION IV. Payouts of a Designated Amount. Payouts will be made until proceeds, together with interest, which will be at the rate declared by us or at any higher rate required by law, are exhausted. Payouts will be made in annual, semi-annual, quarterly or monthly equal installments per year, as elected. |
OPTION V. Other. Settlement may be made in any other manner as agreed upon in writing between you (or the beneficiary) and us. |
You may change any payout election at any time before the insured's death. If you have given the beneficiary the right to make changes or withdrawals, or if the beneficiary has elected the option, the beneficiary (as primary payee) may take the actions below. |
(a) Changes may be made from Payout Options I, III, and IV to another option. |
(b) Full withdrawals may be made under Payout Option III or IV. Partial withdrawals of not less than $300 may be made under Payout Option III. |
(c) Remaining installments under Payout Option I may be commuted at 3% interest and received in one sum. |
(d) Changes in any contingent payee designation may be made. |
V00025140023 |
2514(VUL)-9/04 23 |
A written request must be sent to our Customer Service Center to make a change or withdrawal. We also may require that you send in the supplementary policy. We may defer payment of commuted and withdrawable amounts for a period up to 6 months. |
If we declare that Payout Options are to be credited with an interest rate above that guaranteed, it will apply to Payout Options I, II, III, and IV. The crediting of excess interest for one period does not guarantee the higher rate for other periods. |
The minimum amount which may be applied under any option is $2,000. If the payments to the payee are ever less than $20, we may change the frequency of payments so as to result in payments of at least that amount. |
When a payout option becomes effective, the policy will be surrendered in exchange for a supplementary policy. It will provide for the manner of settlement and rights of the payees. The supplementary policy's effective date will be the date of the insured's death or the date of other settlement. The first payment under Options I, II, and IV will be payable as of the effective date. The first interest payment under Option III will be made as of the end of the interest payment period elected. Subsequent payments will be made in accordance with the frequency of payment elected. The supplementary policy may not be assigned or payments made to another without our consent. |
INCOME PROTECTION |
Unless otherwise provided in the election, a payee does not have the right to commute, transfer or encumber amounts held or installments to become payable. To the extent provided by law, the proceeds, amount retained, and installments are not subject to any payee's debts, policies, or engagements. |
DEATH OF PRIMARY PAYEE |
Upon the primary payee's death, any payments certain under Option I or II, interest payments under Option III, or payments under Option IV will be continued to the contingent payee, or, amounts may be released in one sum if permitted by the policy. The final payee will be the estate of the last to die of the primary payee and any contingent payee. |
PAYMENTS OTHER THAN MONTHLY |
The tables that follow show monthly installments for Options I and II. To arrive at annual, semiannual, or quarterly payments, multiply the appropriate figures by 11.813, 5.957 or 2.991 respectively. Factors for other periods certain or for other options that may be provided by mutual agreement will be provided upon reasonable request. |
V00025140024 |
2514(VUL)-9/04 24 |
SETTLEMENT OPTION TABLES |
SETTLEMENT OPTION TABLE I |
(Per $1,000 of Net Proceeds) |
No. of Years Payable |
Monthly Installments |
No. of Years Payable |
Monthly Installments |
1 |
$83.90 |
16 |
$5.85 |
2 |
$42.26 |
17 |
$5.55 |
3 |
$28.39 |
18 |
$5.27 |
4 |
$21.45 |
19 |
$5.03 |
5 |
$17.28 |
20 |
$4.81 |
6 |
$14.51 |
21 |
$4.62 |
7 |
$12.53 |
22 |
$4.44 |
8 |
$11.04 |
23 |
$4.28 |
9 |
$9.89 |
24 |
$4.13 |
10 |
$8.96 |
25 |
$3.99 |
11 |
$8.21 |
26 |
$3.86 |
12 |
$7.58 |
27 |
$3.75 |
13 |
$7.05 |
28 |
$3.64 |
14 |
$6.59 |
29 |
$3.54 |
15 |
$6.20 |
30 |
$3.44 |
These monthly income factors are based on an interest rate of 1.5% per year. |
V00025140025 |
2514(VUL)-0/04 25 |
SETTLEMENT OPTION TABLE II |
Female |
( Per $1,000 of Net Proceeds) |
|||||||||
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
||||||
Female |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
Female |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
15 |
1.92 |
1.92 |
1.92 |
1.92 |
41 |
2.57 |
2.56 |
2.56 |
2.55 |
16 |
1.94 |
1.94 |
1.94 |
1.94 |
42 |
2.61 |
2.60 |
2.60 |
2.59 |
17 |
1.95 |
1.95 |
1.95 |
1.95 |
43 |
2.65 |
2.64 |
2.64 |
2.63 |
18 |
1.97 |
1.97 |
1.97 |
1.97 |
44 |
2.69 |
2.69 |
2.68 |
2.67 |
19 |
1.99 |
1.99 |
1.99 |
1.99 |
45 |
2.74 |
2.73 |
2.73 |
2.71 |
20 |
2.01 |
2.01 |
2.01 |
2.00 |
46 |
2.79 |
2.78 |
2.77 |
2.76 |
21 |
2.02 |
2.02 |
2.02 |
2.02 |
47 |
2.84 |
2.83 |
2.82 |
2.80 |
22 |
2.04 |
2.04 |
2.04 |
2.04 |
48 |
2.89 |
2.88 |
2.87 |
2.85 |
23 |
2.06 |
2.06 |
2.06 |
2.06 |
49 |
2.94 |
2.94 |
2.92 |
2.90 |
24 |
2.08 |
2.08 |
2.08 |
2.08 |
50 |
3.00 |
2.99 |
2.98 |
2.95 |
25 |
2.10 |
2.10 |
2.10 |
2.10 |
51 |
3.06 |
3.05 |
3.03 |
3.00 |
26 |
2.13 |
2.12 |
2.12 |
2.12 |
52 |
3.12 |
3.11 |
3.09 |
3.06 |
27 |
2.15 |
2.15 |
2.15 |
2.14 |
53 |
3.19 |
3.18 |
3.16 |
3.12 |
28 |
2.17 |
2.17 |
2.17 |
2.17 |
54 |
3.26 |
3.25 |
3.22 |
3.18 |
29 |
2.19 |
2.19 |
2.19 |
2.19 |
55 |
3.33 |
3.32 |
3.29 |
3.24 |
30 |
2.22 |
2.22 |
2.22 |
2.21 |
56 |
3.41 |
3.39 |
3.36 |
3.30 |
31 |
2.25 |
2.24 |
2.24 |
2.24 |
57 |
3.49 |
3.47 |
3.43 |
3.37 |
32 |
2.27 |
2.27 |
2.27 |
2.27 |
58 |
3.58 |
3.56 |
3.51 |
3.44 |
33 |
2.30 |
2.30 |
2.30 |
2.29 |
59 |
3.67 |
3.65 |
3.59 |
3.51 |
34 |
2.33 |
2.33 |
2.32 |
2.32 |
60 |
3.77 |
3.74 |
3.68 |
3.58 |
35 |
2.36 |
2.36 |
2.35 |
2.35 |
61 |
3.87 |
3.84 |
3.77 |
3.66 |
36 |
2.39 |
2.39 |
2.39 |
2.38 |
62 |
3.98 |
3.94 |
3.86 |
3.73 |
37 |
2.42 |
2.42 |
2.42 |
2.41 |
63 |
4.10 |
4.05 |
3.96 |
3.81 |
38 |
2.46 |
2.45 |
2.45 |
2.44 |
64 |
4.22 |
4.16 |
4.06 |
3.88 |
39 |
2.49 |
2.49 |
2.49 |
2.48 |
65 |
4.35 |
4.29 |
4.16 |
3.96 |
40 |
2.53 |
2.53 |
2.52 |
2.51 |
66 |
4.49 |
4.42 |
4.27 |
4.04 |
Rates for ages not shown will be furnished upon request. |
These monthly income factors are based on the 2000 Individual Annuitant Mortality Table and interest at the rate of 1.5% per year. |
V00025140026 |
2514(VUL)-9/04 26 |
SETTLEMENT OPTION TABLE II/Female
(Continued)
(Per $1,000 of Net Proceeds) |
||||
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
|||
Female |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
67 |
4.64 |
4.55 |
4.38 |
4.11 |
68 |
4.80 |
4.69 |
4.49 |
4.19 |
69 |
4.97 |
4.85 |
4.61 |
4.26 |
70 |
5.15 |
5.00 |
4.73 |
4.33 |
71 |
5.35 |
5.17 |
4.85 |
4.39 |
72 |
5.56 |
5.35 |
4.97 |
4.45 |
73 |
5.78 |
5.53 |
5.09 |
4.51 |
74 |
6.03 |
5.72 |
5.20 |
4.56 |
75 |
6.28 |
5.92 |
5.31 |
4.604.60 |
76 |
6.56 |
6.12 |
5.42 |
4.64 |
77 |
6.85 |
6.32 |
5.52 |
4.68 |
78 |
7.17 |
6.53 |
5.62 |
4.70 |
79 |
7.50 |
6.74 |
5.70 |
4.73 |
80 |
7.86 |
6.95 |
5.78 |
4.75 |
81 |
8.23 |
7.15 |
5.85 |
4.76 |
82 |
8.63 |
7.35 |
5.91 |
4.78 |
83 |
9.04 |
7.54 |
5.97 |
4.79 |
84 |
9.47 |
7.71 |
6.01 |
4.80 |
85 |
9.91 |
7.88 |
6.05 |
4.80 |
86 |
10.36 |
8.03 |
6.08 |
4.81 |
87 |
10.82 |
8.17 |
6.11 |
4.81 |
88 |
11.28 |
8.29 |
6.13 |
4.81 |
89 |
11.73 |
8.40 |
6.15 |
4.81 |
90 |
12.17 |
8.50 |
6.16 |
4.81 |
Rates for ages not shown will be furnished upon request. |
These monthly income factors are based on the 2000 Individual Annuitant Mortality Table and interest at the rate of 1.5% per year. |
V00025140027 |
2514(VUL)-9/04 27 |
SETTLEMENT OPTION TABLE II |
Male |
( Per $1,000 of Net Proceeds) |
|||||||||
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
||||||
Male |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
Male |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
15 |
1.99 |
1.99 |
1.99 |
1.99 |
41 |
2.73 |
2.73 |
2.72 |
2.70 |
16 |
2.01 |
2.01 |
2.01 |
2.01 |
42 |
2.78 |
2.78 |
2.76 |
2.74 |
17 |
2.03 |
2.03 |
2.03 |
2.03 |
43 |
2.83 |
2.82 |
2.81 |
2.79 |
18 |
2.05 |
2.05 |
2.05 |
2.04 |
44 |
2.88 |
2.87 |
2.86 |
2.83 |
19 |
2.07 |
2.07 |
2.07 |
2.06 |
45 |
2.94 |
2.93 |
2.91 |
2.88 |
20 |
2.09 |
2.09 |
2.09 |
2.08 |
46 |
2.99 |
2.98 |
2.96 |
2.93 |
21 |
2.11 |
2.11 |
2.11 |
2.10 |
47 |
3.05 |
3.04 |
3.02 |
2.98 |
22 |
2.13 |
2.13 |
2.13 |
2.12 |
48 |
3.11 |
3.10 |
3.07 |
3.03 |
23 |
2.15 |
2.15 |
2.15 |
2.15 |
49 |
3.18 |
3.16 |
3.13 |
3.09 |
24 |
2.17 |
2.17 |
2.17 |
2.17 |
50 |
3.24 |
3.22 |
3.19 |
3.14 |
25 |
2.20 |
2.20 |
2.19 |
2.19 |
51 |
3.31 |
3.29 |
3.26 |
3.20 |
26 |
2.22 |
2.22 |
2.22 |
2.22 |
52 |
3.39 |
3.36 |
3.32 |
3.26 |
27 |
2.25 |
2.25 |
2.24 |
2.24 |
53 |
3.47 |
3.44 |
3.39 |
3.32 |
28 |
2.27 |
2.27 |
2.27 |
2.27 |
54 |
3.55 |
3.52 |
3.47 |
3.39 |
29 |
2.30 |
2.30 |
2.30 |
2.29 |
55 |
3.63 |
3.60 |
3.54 |
3.45 |
30 |
2.33 |
2.33 |
2.33 |
2.32 |
56 |
3.73 |
3.68 |
3.62 |
3.52 |
31 |
2.36 |
2.36 |
2.35 |
2.35 |
57 |
3.82 |
3.77 |
3.70 |
3.58 |
32 |
2.39 |
2.39 |
2.38 |
2.38 |
58 |
3.92 |
3.87 |
3.79 |
3.65 |
33 |
2.42 |
2.42 |
2.42 |
2.41 |
59 |
4.03 |
3.97 |
3.87 |
3.72 |
34 |
2.46 |
2.45 |
2.45 |
2.44 |
60 |
4.15 |
4.08 |
3.97 |
3.79 |
35 |
2.49 |
2.49 |
2.48 |
2.47 |
61 |
4.27 |
4.19 |
4.06 |
3.86 |
36 |
2.53 |
2.52 |
2.52 |
2.51 |
62 |
4.40 |
4.30 |
4.16 |
3.93 |
37 |
2.56 |
2.56 |
2.56 |
2.54 |
63 |
4.54 |
4.43 |
4.26 |
4.01 |
38 |
2.60 |
2.60 |
2.59 |
2.58 |
64 |
4.69 |
4.56 |
4.36 |
4.07 |
39 |
2.65 |
2.64 |
2.63 |
2.62 |
65 |
4.85 |
4.69 |
4.46 |
4.14 |
40 |
2.69 |
2.68 |
2.68 |
2.66 |
Rates for ages not shown will be furnished upon request. |
These monthly income factors are based on the 2000 Individual Annuitant Mortality Table and interest at the rate of 1.5% per year. |
V00025140028 |
2514(VUL)-9/04 28 |
SETTLEMENT OPTION TABLE II/Male |
(Continued) |
(Per $1,000 of Net Proceeds) |
||||
Age of Payee Nearest Birth date When First Installment is Payable |
Monthly Installment |
|||
Male |
Life With 5 Years Certain |
Life With 10 Years Certain |
Life With 15 Years Certain |
Life With 20 Years Certain |
66 |
4.98 |
4.83 |
4.57 |
4.21 |
67 |
5.15 |
4.98 |
4.68 |
4.27 |
68 |
5.34 |
5.13 |
4.78 |
4.33 |
69 |
5.53 |
5.29 |
4.89 |
4.39 |
70 |
5.74 |
5.45 |
5.00 |
4.45 |
71 |
5.95 |
5.62 |
5.10 |
4.50 |
72 |
6.18 |
5.80 |
5.21 |
4.54 |
73 |
6.42 |
5.97 |
5.31 |
4.58 |
74 |
6.68 |
6.15 |
5.40 |
4.62 |
75 |
6.95 |
6.33 |
5.49 |
4.66 |
76 |
7.23 |
6.52 |
5.58 |
4.68 |
77 |
7.53 |
6.70 |
5.66 |
4.71 |
78 |
7.85 |
6.88 |
5.73 |
4.73 |
79 |
8.17 |
7.06 |
5.80 |
4.75 |
80 |
8.52 |
7.24 |
5.86 |
4.76 |
81 |
8.87 |
7.41 |
5.92 |
4.78 |
82 |
9.24 |
7.57 |
5.97 |
4.79 |
83 |
9.62 |
7.73 |
6.01 |
4.80 |
84 |
10.01 |
7.88 |
6.05 |
4.80 |
85 |
10.41 |
8.02 |
6.08 |
4.81 |
86 |
10.81 |
8.14 |
6.10 |
4.81 |
87 |
11.22 |
8.26 |
6.13 |
4.81 |
88 |
11.63 |
8.37 |
6.14 |
4.81 |
89 |
12.04 |
8.47 |
6.16 |
4.81 |
90 |
12.45 |
8.55 |
6.17 |
4.81 |
Rates for ages not shown will be furnished upon request. |
These monthly income factors are based on the 2000 Individual Annuitant Mortality Table and interest at the rate of 1.5% per year. |
V00025140029 |
2514(VUL)-9/04 29 |
This policy is a FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY, |
This is a NON-PARTICIPATING policy. |
Death benefits and other values provided by this contract, when based on the investment experience of the Separate Account, are variable. These values may increase or decrease based on investment experience of the divisions of the Separate Account and are not guaranteed as to a fixed dollar amount. Death benefits are payable by us upon the death of the insured. There is no maturity date. Flexible premiums are payable by you during the lifetime of the insured until the policy anniversary nearest the insured's 100th birth date. |
To obtain information or make a complaint, contact |
Security Life of Denver Insurance Company |
Customer Service Center |
P.O. Box 5065 |
Minot, ND 58702-5065 |
Toll Free Number: 1-877-253-5050 |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
A Stock Company |
V00025140030 |
2514(VUL)-9/04 |
Exhibit 26(d)(2): Adjustable Term Insurance Rider Form (Form No. R2026-9/04) |
ADJUSTABLE TERM INSURANCE RIDER |
This rider is a part of the policy to which it is attached if this rider is shown in the Schedule. This rider must be read with all policy provisions. This rider does not participate in our surplus earnings. The insured under this rider is listed in the Schedule. This rider has no loan value. There is no surrender charge applicable to this rider. The rider effective date is the policy date or, if added later, the monthly processing date on or next following the date your application for this rider is approved by us. The owner of the policy is the owner of this rider. |
THE DEATH BENEFIT . Subject to this rider's terms, we will pay the term death benefit in force on the date of the insured's death. This benefit is payable to the beneficiary. |
The amount of term death benefit is the difference between the total death benefit and the base death benefit provided in the policy. Total death benefit depends on which death benefit option is in effect. |
Option 1: If option 1 is in effect, the total death benefit is the greater of |
|
|
Option 2: If option 2 is in effect, the total death benefit is the greater of: |
|
|
Option 3: If option 3 is in effect, the total death benefit is the greater of: |
|
|
In no event will the term death benefit be less than zero while the policy is in force. It is also not increased or decreased by policy loan activity. |
In your application for this rider you may request a pattern of increasing or decreasing target death benefits. The actual target death benefit is subject to our approval. |
The target death benefit is shown in the Schedule attached to your policy. It may be a constant amount or it may change at the beginning of a policy year. The target death benefit may be reduced if there is a partial withdrawal. If a partial withdrawal reduces the stated death benefit, the target death benefit for the current year and all future years will be reduced by an amount equal to the reduction in the stated death benefit. You will receive a new Schedule reflecting the new target death benefit. See your policy for details. The stated death benefit is defined in your policy. |
Any requested decreases in the stated death benefit in the policy will cancel any future scheduled increases in the target death benefit. We may choose not to cancel these increases upon submission of evidence satisfactory to us that the insured is still insurable according to our normal rules of underwriting for the current premium class. |
V000R20260001 |
R2026-9/04 |
COST OF INSURANCE. The cost of insurance for this rider is determined on a monthly basis. The cost is added to the policy's monthly deduction from the account value as of each monthly processing date until this rider terminates. The cost of insurance rates will be determined by us from time to time and may differ from the cost of insurance rates applicable to the base policy coverage segments. The Company will refer to the issue age, gender and premium class of the insured as of the rider effective date as well as the duration since the rider effective date in applying its current rates for each insured. The cost of insurance for this rider is calculated as the monthly cost of insurance rate for this rider multiplied by the death benefit (in thousands) for this rider. The monthly guaranteed maximum cost of insurance rates per $1,000 for this rider are shown in the Schedule on the applicable table of guaranteed rates attached to your policy. |
INCONTESTABILITY . After this rider has been in force while the insured is alive for two years from the rider effective date, we will not contest the statements in the application for this rider attached at the time the rider is issued. |
After this rider has been in force while the insured is alive for two years from the effective date of any applied-for increase in the amount of insurance, we will not contest the statements in the application for the increase. |
After this rider has been in force while the insured is alive for two years from the effective date of any reinstatement of this rider, we will not contest the statements in the application for such reinstatement of this rider. |
SUICIDE EXCLUSION . If the policy terminates for suicide, this rider will then terminate without value. |
If the insured commits suicide, while sane or insane, within two years of the rider effective date, we will terminate this rider and make a limited payment to the beneficiary for the rider. We will pay in one lump sum the amount of the cost of insurance for this rider which was deducted from the policy. |
If the insured commits suicide, while sane or insane, within two years of the effective date of an applied-for increase, we will terminate the increase and pay the cost of insurance associated with the increase. |
MISSTATEMENT OF AGE OR GENDER . If the insured's age or gender has been misstated, the death benefit will be adjusted . Notwithstanding the Incontestability provision above, the death benefit will be that which the cost of insurance which was deducted from the policy value on the last monthly processing date prior to the death of the insured would have purchased for the insured's correct age and gender. |
CHANGE IN AMOUNT OF COVERAGE . You may request that the target death benefit be increased or decreased by sending a written request to our Customer Service Center. A supplemental Schedule will be issued for any change in coverage. |
|
Decreases in Amount of Coverage . Decreases are not allowed before the first rider anniversary. You may decrease the target death benefit only once each policy year. Any decrease in coverage may not be for an amount less than $1,000. Any requested decrease in target death benefit is subject to our approval. Our approval may be conditioned on eliminating any future increases to the target death benefit that are shown in the Schedule. A decrease in coverage will be effective as of the monthly processing date immediately following the date your written request is accepted by us. Any decrease in the total death benefit will first reduce adjustable term insurance before stated death benefit is reduced. |
V000R20260002 |
R2026-9/04 2 |
Increases in Amount of Coverage. You may request an increase in the target death benefit after the first monthly processing date following this rider's effective date through attained age 85 (age 75 when the policy is issued as part of a group or sponsored plan. Any increase in coverage may not be for an amount less than $1,000. Any request for an increased death benefit will automatically be an increase to the stated death benefit as well as to the target death benefit unless you specifically request an increase only to the target death benefit. You may increase the target death benefit only once each policy year. |
Any request for an increase of coverage must be applied for on a supplemental application. The increase is subject to evidence satisfactory to us that the insured is still insurable according to our normal rules of underwriting for the current premium class for this type of rider. |
An increase in coverage will be effective as of the monthly processing date immediately following the date your written request is accepted by us. |
TERMINATION . This rider will terminate on the earliest of: |
a) The date the policy is surrendered or terminated; |
b) The date the grace period ends without payment of the required premium; |
c) The monthly processing date immediately following the date your written request to cancel this rider is received by us; or |
d) The policy anniversary nearest the insured's 100th birth date. |
Any deduction for the cost of insurance after termination of this rider will not be considered a reinstatement of this rider nor a waiver by us of the termination. Any such deduction will be credited to the account value of the policy as of the date of the deduction. |
REINSTATEMENT . If you reinstate your policy under the Reinstatement provision in the policy, this rider will be reinstated. |
Signed for the company at Denver, Colorado |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
/s/ Mark A. Tullis |
/s/ Paula Cludray-Engelke |
President |
Secretary |
V000R20260003 |
|
R2026-9/04 3 |
Exhibit 26(d)(6): Guaranteed Death Benefit Rider (Form No. R2025-4/04) |
GUARANTEED DEATH BENEFIT RIDER |
This rider is a part of the policy to which it is attached if this rider is shown in the Schedule. This rider must be read with all policy provisions. The owner of the policy is the owner of this rider. |
The effective date of this rider is the policy date. |
GUARANTEED DEATH BENEFIT |
If you elect an optional Guaranteed Death Benefit Rider, your policy will not terminate during the guarantee period you select even if the net account value is zero except as provided below. If an Adjustable Term Insurance Rider is attached to your policy, it also will not terminate during the guarantee period even if the net account value is zero except as provided below. All other riders will terminate when your policy is kept in force under this guarantee. |
The Guaranteed Death Benefit Rider may not be available in conjunction with certain other policy features and/or benefits, including policies issued for certain rate classes and policies where death benefit Option 3 has been selected. |
Guarantee Period |
The guaranteed death benefit period will terminate on the earlier of the guarantee period expiration date, as shown in the Schedule, or on any monthly processing date when: |
a) The sum of the actual premiums paid, minus the amount of any partial withdrawals and any policy loan including accrued but unpaid interest, is less than the sum of the guarantee period monthly premiums to the next monthly processing date; or |
b) Your account value is not diversified according to the requirements described below. |
Guarantee Period Monthly Premium |
The guarantee period monthly premium equals 1/12th of the guarantee period annual premium as shown in the Schedule. We use the guarantee period annual premium for each policy year until the effective date of a change. The guarantee period annual premium may be affected by changes in the stated death benefit, by death benefit option changes and by changes in the target death benefit, if any. If there is a change, a new Schedule will show the new guarantee period annual premium that will apply from the date of the change. |
Diversification Requirements |
The guarantee period will terminate if your account value, on any monthly processing date, is not diversified according to the following rules: |
a) No more than 35% of your net account value may be invested in any one division; and |
b) Your net account value must be invested in at least 5 divisions. |
If you are participating in the automatic rebalancing program or dollar cost averaging program as defined in and governed by the policy prospectus on the policy date, you will satisfy these diversification requirements if: (i) your automatic rebalancing allocations comply with the diversification requirements specified above; or (ii) you direct your dollar cost averaging transfers into at least four other divisions with no more than 35% of any transfer being to any one division. |
V000R2025FL01V000R20250001 |
R2025-FL-4/04 Page 1 |
Guaranteed Death Benefit Charge |
There is a charge for the Guaranteed Death Benefit Rider. The charge is assessed on each monthly processing date during the guaranteed death benefit period. This charge is based on a rate which varies depending on the issue age of the insured person. The rate applicable to you will be shown in the Schedule. |
The amount of the Guaranteed Death Benefit Rider charge is determined by dividing the amount of guaranteed coverage by 1,000 and multiplying the result by the rate shown in the Schedule. The amount of guaranteed coverage equals the greater of the Stated Death Benefit or the Target Death Benefit, minus your Account Value. |
Notice |
If on any monthly processing date, the guarantee period monthly premium requirement or the diversification requirement is not met, we will send you notice of the premium required and/or the need to diversity your account value. If the required premium is not received or your account value is not properly diversified by the second monthly processing date following this notice, this benefit will terminate. Once the Guaranteed Death Benefit Rider terminates, it cannot be reinstated. |
SECURITY LIFE OF DENVER INSURANCE COMPANY |
/s/ Paula Cludray-Engelke |
Secretary |
V000R20250002 |
R2025-4/04 Page 2 |
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