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PART A INFORMATION REQUIRED IN A PROSPECTUS ING CORPORATE ADVANTAGE VUL A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY This prospectus describes what you should know before purchasing the ING Corporate Advantage 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 April 30, 2007.
As filed with the Securities and Exchange
Registration No. 333-120889
Commission on April 16, 2007
Registration No. 811-08292
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]
Pre-Effective Amendment No.
[ ]
Post-Effective Amendment No. 4
[X]
AMENDMENT TO REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
[X]
(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 Depositors Principal Executive Offices) (Zip Code)
(800) 525-9852
(Depositors Telephone Number, including Area Code)
J. Neil McMurdie, Counsel
ING Americas (U.S. Legal Services)
151 Farmington Avenue, TS31, Hartford, CT 06l56
(Name and Address of Agent for Service)
Jeffery R. Berry, Chief Counsel
ING Americas (U.S. Legal Services)
151 Farmington Avenue, Hartford, Connecticut 06156
It is proposed that this filing will become effective (check appropriate box):
[ ]
immediately upon filing pursuant to paragraph (b) of Rule 485
[X]
on April 30 2007, pursuant to paragraph (b) of Rule 485
[ ]
60 days after filing pursuant to paragraph (a)(1)
[ ]
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.
issued by
Security Life of Denver Insurance Company and its Security Life Separate Account L1
The Policy
· Is issued by Security Life of Denver Company.
· Is returnable by you during the free look period if you are not satisfied.
Premium Payments
· Are flexible, so the premium amount and frequency may vary.
· Are allocated to the variable account and the fixed account, based on your
instructions.
· Are subject to specified fees and charges.
The Policy Value
· Is the sum of your holdings in the fixed account, the variable account and the loan
account.
· Has no guaranteed minimum value under the variable account. The value varies
with the value of the subaccounts you select.
· Has a minimum guaranteed rate of return for amounts in the fixed account.
· Is subject to specified fees and charges.
Death Benefit Proceeds
· Are paid if your policy is in force when the insured person dies.
· Are calculated under your choice of options:
- Option 1 - the base death benefit is the greater of (1) the amount of base
insurance coverage and Term Insurance Rider coverage you have selected, or
(2) your policy value plus the refund of premium expense and base policy
acquisition charges, if any, multiplied by the appropriate factor described in
Appendix A; or
- Option 2 - the total death benefit is the greater of (1) the amount of base
insurance coverage and Term Insurance Rider coverage you have selected plus
your policy value, or (2) you policy value plus the refund of premium expense
and base policy acquisition charges, if any, multiplied by the appropriate factor
from the definition of life insurance factors described in Appendix A; or
- Option 3 - the total death benefit is the greater of (1) the amount of base
insurance coverage and Term Insurance Rider coverage you have selected plus
premiums paid minus withdrawals taken and partial withdrawal fees assessed,
or (2) your policy value plus the refund of premium expense and base policy
acquisition charges, if any, multiplied by the appropriate factor from the
definition of life insurance factors described in Appendix A.
· Are equal to the base death benefit plus any rider benefits minus any outstanding
policy loans, accrued loan interest and unpaid fees and charges.
· Are generally not subject to federal income tax if your policy continues to meet the
federal income tax definition of life insurance.
Sales Compensation
· We pay compensation to broker/dealers whose registered representatives sell
the policy. See Distribution of the Policy, page 60, for further information about
the amount of compensation we may pay.
Fund Managers
Funds managed by the following
investment managers are available
through the policy:
· AllianceBernstein, L.P.
· BAMCO, Inc.
· BlackRock Investment Management,
LLC
· Capital Research and Management
Company
· Columbia Management Advisors,
LLC
· Evergreen Investment Management
Company, LLC.
· Fidelity Management & Research Co.
· Ibbotson Associates
· ING Clarion Real Estate Securities
L.P.
· ING Investment Management
Advisors, B.V.
· ING Investment Management Co.
· J.P. Morgan Investment Management
Inc.
· Julius Baer Investment Management,
LLC
· Legg Mason Capital Management,
Inc.
· Lord, Abbett & Co. LLC
· Marsico Capital Management, LLC
· Massachusetts Financial Services
Company
· Morgan Stanley Investment
Management, Inc. (d/b/a Van
Kampen)
· Neuberger Berman, LLC
· Neuberger Berman Management Inc.
· OppenheimerFunds, Inc.
· Pacific Investment Management
Company LLC
· Pioneer Investment Management, Inc.
· T. Rowe Price Associates, Inc.
· UBS Global Asset Management
(Americas) Inc.
· Wells Capital Management, Inc.
TABLE OF CONTENTS
Page
Page
POLICY SUMMARY
3
Termination of Coverage
45
The Policys Features and Benefits
3
TAX CONSIDERATIONS
46
Factors You Should Consider Before Purchasing a
Tax Status of the Company
47
Policy
6
Tax Status of the Policy
47
Fees and Charges
8
Diversification and Investor Control Requirements
48
THE COMPANY, THE VARIABLE ACCOUNT
Tax Treatment of Policy Death Benefits
48
AND THE FIXED ACCOUNT
13
Distributions Other than Death Benefits
48
Security Life of Denver Insurance Company
13
Other Tax Matters
50
The Investment Options
15
ADDITIONAL INFORMATION
53
DETAILED INFORMATION ABOUT
General Policy Provisions
53
THE POLICY
19
Distribution of the Policy
60
Purchasing a Policy
20
Legal Proceedings
62
Fees and Charges
24
Financial Statements
63
Death Benefits
29
APPENDIX A
A-1
Optional Term Insurance Rider Benefit
34
APPENDIX B
B-1
Policy Value
36
APPENDIX C
C-1
Special Features and Benefits
38
MORE INFORMATION IS AVAILABLE
Back Cover
TERMS TO UNDERSTAND
The following is a list of some of the key defined terms and the page number on which each is defined:
Page Where | Page Where | |||||
Term | Defined | Term | Defined | |||
Age | 20 | Net Policy Value | 5 | |||
Fixed Account | 3 | Policy Date | 20 | |||
Fixed Account Value | 36 | Policy Value | 36 | |||
Loan Account | 38 | Surrender Value | 45 | |||
Loan Account Value | 38 | Valuation Date | 36 | |||
Monthly Processing Date | 25 | Variable Account | 3 | |||
Net Premium | 3 | Variable Account Value | 36 |
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 persons lifetime.
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.
The ING Corporate Advantage variable universal life policy is administered by McCamish Systems, LLC (licensed in the State of California as McCamish Systems Insurance Administrators), 6425 Powers Ferry Road, Third Floor, Atlanta, GA 30339.
You may contact us about the policy at our: | ING Customer Service Center | |
McCamish Systems, LLC | ||
P.O. Box 724927 | ||
Atlanta, GA 30119 | ||
1-866-790-1988 |
ING Corporate Advantage
2
POLICY SUMMARY |
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 that should be read carefully before you purchase the policy.
The Policys Features and Benefits
Temporary | · If you apply and qualify, we may issue temporary insurance equal to the total amount | |
Insurance | of insurance coverage for which you applied. | |
· The maximum amount of temporary insurance is $1 million per insured person, which | ||
includes other in-force coverage you have with us. | ||
See Temporary | · Temporary insurance may not be available in all states. | |
Insurance, page 23. | ||
| ||
Free Look Period | · During the free look period, you have the right to examine your policy and return it | |
for a refund if you are not satisfied for any reason. | ||
See Free Look Period, | · The free look period is generally ten days from your receipt of the policy, although | |
page 22. | certain states may allow more than ten days. | |
· Generally, there are two types of free look refunds: | ||
- Some states require a return of all premium we have received; and | ||
- Other states require that we return your policy value plus a refund of all fees and | ||
charges deducted. | ||
· The length of the free look period and the free look refund that applies in your state | ||
will be stated in your policy. | ||
· During the free look period, your net premium will be allocated among the | ||
investment options you have selected unless your state requires a return of premium | ||
as the free look refund. In these states your net premium directed to the subaccounts | ||
will be allocated to the ING Liquid Assets Portfolio until after the free look period | ||
ends. | ||
| ||
Premium | · You choose when to pay and how much to pay. | |
Payments | · You will need to pay sufficient premiums to keep the policy in force. Failure to pay | |
sufficient premiums may cause your policy to lapse. | ||
See Premium | · You cannot pay additional premiums after age 100. | |
Payments, page 21. | · We may refuse any premium that would disqualify your policy as life insurance under | |
Section 7702 of the Internal Revenue Code. | ||
· We deduct a premium expense charge from each premium payment and credit the | ||
remaining premium (the net premium) to the variable account or the fixed account | ||
according to your instructions. | ||
| ||
Investment | · You may allocate your net premiums to the subaccounts of the Security Life Separate | |
Options | Account L1 (the variable account) and to our fixed account. | |
· The variable account is one of our separate accounts and consists of subaccounts | ||
See The Investment | that invest in corresponding funds. When you allocate premiums to a subaccount, we | |
Options, page 15. | invest any net premiums in shares of the corresponding fund. | |
· Your variable account value will vary with the investment performance of the funds | ||
underlying the subaccounts and the charges we deduct from your variable account | ||
value. | ||
· The fixed account is part of our general account which consists of all of our assets | ||
other than those in our separate accounts (including the variable account). | ||
· We credit interest of at least 3.00% per year on amounts allocated to the fixed | ||
account, and we may, in our sole discretion, credit interest in excess of this amount. | ||
|
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3
Death Benefits | · Death benefits are paid if your policy is in force when the insured person dies. | |
· Until age 100, the amount of the death benefit will depend on which death benefit | ||
See Death Benefits, | option is in effect when the insured person dies. | |
page 29. | · There are three death benefit options available under your policy: | |
- Option 1 - the total death benefit is the greater of (1) the amount of base insurance | ||
coverage and Term Insurance Rider coverage you have selected, or (2) your policy | ||
value plus the refund of premium expense and base policy acquisition charges, if | ||
any, multiplied by the appropriate factor from the definition of life insurance | ||
factors described in Appendix A; | ||
- Option 2 - the total death benefit is the greater of (1) the amount of base insurance | ||
coverage and Term Insurance Rider coverage you have selected plus your policy | ||
value, or (2) your policy value plus the refund of premium expense and base | ||
policy acquisition charges, if any, multiplied by the appropriate factor from the | ||
definition of life insurance factors described in Appendix A; or | ||
- Option 3 - the total death benefit is the greater of (1) the amount of base insurance | ||
coverage and Term Insurance Rider coverage you have selected plus premiums | ||
paid minus withdrawals taken and partial withdrawal fees assessed, or (2) your | ||
policy value plus the refund of premium expense and base policy acquisition | ||
charges, if any, multiplied by the appropriate factor from the definition of life | ||
insurance factors described in Appendix A. | ||
· After age 100 the death benefit will equal 100% of the policy value, regardless of | ||
which death benefit option is in effect. | ||
· We will reduce the death benefit proceeds payable under any death benefit option by | ||
any outstanding loans, accrued loan interest and unpaid fees and charges. | ||
· The death benefit is generally not subject to federal income tax if your policy | ||
continues to meet the federal income tax definition of life insurance. | ||
| ||
Transfers | · You currently may make an unlimited number of transfers between the subaccounts | |
and to the fixed account each policy year. Transfers are, however, subject to any | ||
See Transfers, | limits, conditions and restrictions that we or the funds whose shares are involved may | |
page 39. | impose. | |
· There are certain restrictions on transfers from the fixed account. | ||
· We do not charge for transfers. | ||
| ||
Asset Allocation | · Dollar cost averaging is a systematic program of transferring policy values to selected | |
Programs | subaccounts of the variable account. It is intended to help reduce the risk of investing | |
too much when the price of a funds shares is high. It also helps to reduce the risk of | ||
investing too little when the price of a funds shares is low. | ||
See Dollar Cost | · Automatic rebalancing is a systematic program through which your variable and fixed | |
Averaging, page 40. | account values are periodically reallocated among your selected investment options to | |
maintain the allocation percentages you have chosen. | ||
See Automatic | · There is no charge to participate in these asset allocation programs. There are, | |
Rebalancing, | however, certain conditions on participation in these asset allocation programs. | |
page 41. | · Neither of these asset allocation programs assures a profit nor do they protect | |
you against a loss in a declining market. | ||
|
ING Corporate Advantage
4
Loans | · After the first policy month, you may take loans against the value of your policy. | |
· A loan is generally limited to your policy value minus any outstanding loan amount | ||
See Loans, page 38. | and accrued loan interest (the net policy value) less the periodic fees and charges | |
and loan interest on any existing loan amount to your next policy anniversary. | ||
· When you take a loan 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. | ||
· We credit amounts held in the loan account with interest at an annual rate no less than | ||
3.00%. | ||
· We also charge interest on loans. Interest is due in arrears on each policy anniversary | ||
and accrues daily at a current annual rate of 3.75% in policy years 1-10, 3.25% in | ||
policy years 11-20 and 3.00% in all years thereafter. The annual interest rate charged | ||
may change at any time but is guaranteed not to exceed 3.75% in policy years 1-10, | ||
3.50% in policy years 11-20 and 3.25% in all years thereafter. | ||
· Loans reduce your policys death benefit and may cause your policy to lapse. | ||
· Loans may have tax consequences, and you should consult with a qualified tax | ||
adviser before taking a loan against your policys value. | ||
| ||
Partial | · A partial withdrawal must be at least $500. | |
Withdrawals | · We currently charge a fee of $10 for each partial withdrawal. | |
· Partial withdrawals reduce your policys death benefit and policy value and may | ||
See Partial | cause your policy to lapse. | |
Withdrawals, page 44. | · Partial withdrawals may also have tax consequences, and you should consult with a | |
qualified tax adviser before taking a partial withdrawal from your policy. | ||
| ||
Surrenders | · You may surrender your policy for its surrender value at any time before the death of | |
the insured person. | ||
See Surrender, | · Your surrender value is your policy value plus any refund of premium expense and | |
page 45. | base policy acquisition charges due minus any outstanding loan amount and accrued | |
loan interest. | ||
· All insurance coverage ends on the date we receive your surrender request in | ||
good order. | ||
· If you surrender your policy it cannot be reinstated. | ||
· Surrendering the policy may have tax consequences, and you should consult with a | ||
qualified tax adviser before surrendering your policy. | ||
| ||
Reinstatement | · Reinstatement means putting a lapsed policy back in force. | |
· You may reinstate your policy and riders within five years of the beginning date of | ||
See Reinstatement, | the grace period if you still own the policy and did not surrender it and the insured | |
page 46. | person is still insurable. | |
· You will need to pay the required reinstatement premium. | ||
· If you had an outstanding loan when coverage lapsed, we will reinstate it with | ||
accrued loan interest to the date of the lapse. | ||
· A policy that is reinstated more than 90 days after lapsing may be considered a | ||
modified endowment contract for tax purposes. | ||
· Reinstating your policy may have tax consequences, and you should consult with a | ||
qualified tax adviser before reinstating your policy. | ||
| ||
Term Insurance | · You may add the optional Term Insurance Rider benefit to your policy. | |
Rider | · We deduct additional monthly charges for this rider benefit. | |
· This rider may not be available under your policy or in your state. | ||
See Optional Term | ||
Insurance Rider | ||
Benefit, page 34. | ||
|
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5
Factors You Should Consider Before Purchasing a Policy
The decision to purchase a policy should be discussed with your agent/registered representative. Make sure you understand the policys investment options, its other features and benefits, its risks and the fees and charges you will incur when, together with your agent/representative, you consider an investment in the policy.
Life Insurance | · The policy is not a short-term savings vehicle and should be purchased only if you | |
Coverage | need life insurance coverage. Evaluate your need for life insurance coverage before | |
purchasing a policy. | ||
· 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. | ||
| ||
Fees and Charges | · The policys fees and charges reflect the costs associated with its features and | |
benefits, the services we render, the expenses we expect to incur and the risks we | ||
See Fees and Charges, | assume under the policy. | |
page 24. | · We believe that the policys fees and charges, in the aggregate, are reasonable, but | |
before purchasing a policy you should compare the value that the policys various | ||
features and benefits and the available services have to you, given your particular | ||
circumstances, with the fees and charges associated with those features, benefits | ||
and services. | ||
| ||
Lapse | · Your policy may lapse and your insurance coverage under the policy may terminate | |
if on any monthly processing date your net policy value is not enough to pay the | ||
See Lapse, page 45. | periodic fees and charges when due. | |
· If you meet this condition, we will send you notice and give you a 61 day grace | ||
period to make a sufficient premium payment. | ||
· If you do not make a sufficient premium payment by the end of the 61 day grace | ||
period, your life insurance coverage will terminate and your policy will lapse | ||
without value. | ||
· Partial withdrawals and loans have an adverse impact on your net policy value. | ||
Before taking a partial withdrawal or loan consider its effect on your ability to keep | ||
your policy from lapsing. | ||
| ||
Exchanges | · Replacing your existing life insurance policy(ies) and/or annuity contract(s) with | |
the policy described in this prospectus may not be beneficial to you. | ||
See Purchasing a Policy, | · Before purchasing a policy, determine whether your existing policy(ies) and/or | |
page 20. | contract(s) will be subject to fees or penalties upon surrender or cancellation. | |
· Also compare the fees, charges, coverage provisions and limitations, if any, of your | ||
existing policy(ies) and/or contract(s) with those of the policy described in this | ||
prospectus. | ||
| ||
Investment Risk | · You should evaluate the policys long-term investment potential and risks before | |
purchasing a policy. | ||
See The Variable | · For amounts you allocate to the subaccounts of the variable account: | |
Account, page 15. | - Your values will fluctuate with the markets, interest rates and the performance | |
of the underlying funds; | ||
- You assume the risk that your values may decline or may not perform to your | ||
expectations; | ||
- Your policy could lapse without value or you may be required to pay additional | ||
premium because of poor fund performance; | ||
- Each fund has various investment risks, and some funds are riskier than others; | ||
- You should read each funds prospectus and understand the risks associated | ||
with the fund before allocating your premiums to its corresponding subaccount; | ||
and | ||
- There is no assurance that any fund will achieve its stated investment objective. | ||
|
ING Corporate Advantage
6
Investment Risk | · For amounts you allocate to the fixed account: | |
(continued) | - Interest rates we declare will change over time; and | |
- You assume the risk that interest rates may decline, although never below the | ||
guaranteed minimum annual rate of 3.00%. | ||
| ||
Taxation | · Under current federal income tax law, death benefits of life insurance policies | |
enerally are not subject to income tax. In order for this treatment to apply, the | ||
See TAX | policy must qualify as a life insurance contract. We believe it is reasonable to | |
CONSIDERATIONS, | conclude that the policy will qualify as a life insurance contract. | |
page 46. | · Assuming the policy qualifies as a life insurance contract under current federal | |
income tax law, your policy earnings are generally not subject to income tax as | ||
long as they remain within your policy. Depending on your circumstances, | ||
however, the following events may have tax consequences for you: | ||
- Reduction in the amount of your insurance coverage; | ||
- Partial withdrawals; | ||
- Loans; | ||
- Surrender; | ||
- Lapse; and | ||
- Reinstatement. | ||
· In addition, if your policy is a modified endowment contract, a partial withdrawal, | ||
surrender or a loan against or secured by the policy will cause income taxation to | ||
the extent of any gain in the policy. A penalty tax may be imposed on a distribution | ||
from a modified endowment contract as well. | ||
· There is always the possibility that the tax treatment of the policy could be changed | ||
by legislation or otherwise. You should consult a qualified tax adviser with respect | ||
to legislative developments and their effect on the policy. | ||
· Consult with a qualified legal or tax adviser before you purchase a policy. | ||
| ||
Sales Compensation | · We pay compensation to broker/dealers whose registered representatives sell the | |
policy, but this compensation will not affect the fees and charges you will pay for | ||
See Distribution of | the policy. | |
the Policy, page 60. | · We generally pay more compensation on premiums paid for base insurance | |
coverage than we do on premiums paid for coverage under the Term Insurance | ||
Rider. Talk to your agent/registered representative about the right blend of base and | ||
Term Insurance Rider coverage for you. | ||
| ||
Other Products | · We and our affiliates offer other insurance products that may have different | |
features, benefits, fees and charges. These other products may better match your | ||
needs. | ||
· Contact your agent/registered representative if you would like information about | ||
these other products. | ||
|
ING Corporate Advantage
7
Fees and Charges
The following tables describe the fees and charges you will pay when buying, owning and surrendering the policy.
Transaction Fees and Charges. The following table describes the fees and charges deducted at the time you make a premium payment, make a partial withdrawal or request an excess illustration. See Transaction Fees and Charges, page 24.
Charge | When Deducted | Amount Deducted | ||
| ||||
Premium Expense | · Deducted when you make a | · Tax Charge | ||
Charge | premium payment. | · 4.00% of each premium payment. | ||
· Sales Charge | ||||
- 7.00% of each premium payment - | ||||
guaranteed. | ||||
- 7.00% of each premium payment during | ||||
policy years 1-10, and 1.00% of each | ||||
premium payment thereafter - current. | ||||
| ||||
Partial Withdrawal | · Deducted when you take a | · $10. | ||
Fee | partial withdrawal. | |||
| ||||
Excess Illustration | · Deducted each time you request | · $25 - maximum. | ||
Fee | an illustration after the first | · $0 - current. | ||
each policy year. | ||||
|
Periodic Fees and Charges. The following table describes the fees and charges deducted each month on the monthly processing date, not including fund fees and expenses. See Periodic Fees and Charges, page 25.
Charge | When Deducted | Amount Deducted | ||
| ||||
Cost of Insurance | · On the monthly processing | · Minimum Rates per $1,000 of base insurance | ||
Charge 1 | date. | coverage - | ||
- $0.09 - guaranteed. | ||||
- $0.01 - current. | ||||
· Maximum Rates per $1,000 of base insurance | ||||
coverage - | ||||
- $5.51 - guaranteed. | ||||
- $2.72 - current. | ||||
· Rates for a representative insured person per | ||||
$1,000 of base insurance coverage - | ||||
- $0.56 - guaranteed. | ||||
- $0.13 - current. | ||||
- The representative insured person is a male, | ||||
age 50 in the standard nontobacco risk class | ||||
with guaranteed issue underwriting. | ||||
|
1 | The amount of base insurance coverage is shown on the policy forms Schedule page. The minimum and maximum rates shown are for an insured person in the standard risk class. The cost of insurance rates shown are for the first policy year. Guaranteed rates are for policies with guaranteed issue underwriting and current rates are for policies that are fully underwritten. 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 base insurance coverage, the type of underwriting used to issue the policy and the insured persons age, gender, policy duration and risk class and 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 r epresentative for information about the rates that apply to you. The guaranteed maximum cost of insurance rates for an insured person in the substandard risk class is $83.33 per $1,000 of base insurance coverage. |
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8
Periodic Fees and Charges, continued. | ||||
Charge | When Deducted | Amount Deducted | ||
| ||||
Base Policy | · On the monthly processing | · Minimum Rates per $1,000 of initial base | ||
Acquisition Charge 2 | date. | insurance coverage - | ||
- $0.24 - guaranteed and current. | ||||
· Maximum Rates per $1,000 of initial base | ||||
insurance coverage - | ||||
- $1.19 - guaranteed and current. | ||||
· Rates for a representative insured person per | ||||
$1,000 of initial base insurance coverage - | ||||
- $0.53 - guaranteed and current. | ||||
- The representative insured person is age 50. | ||||
| ||||
Mortality & Expense | · On the monthly processing | · Percentage of policy value invested in the | ||
Risk Charge 3 | date. | variable account - | ||
- 0.03% (0.35% annually) - guaranteed. | ||||
- 0.01% (0.10% annually) - current. | ||||
| ||||
Policy Charge | · On the monthly processing | · $10. | ||
date. | ||||
| ||||
Loan Interest Charge | · Accrues daily but is due in | · 3.75% (guaranteed and current) per annum of | ||
arrears on each policy | the loan amount in policy years 1-10, and lower | |||
anniversary. | thereafter. | |||
|
2 | The base policy acquisition charge rates shown currently apply only in policy years 1-10, but they may apply in all policy years. 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 initial base insurance coverage and the insured persons 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. |
3 | The monthly mortality and expense risk charge rate has been rounded up to the nearest one hundredth of one percent. See Mortality and Expense Risk Charge, page 26, for the monthly rate without rounding. |
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Optional Term Insurance Rider Charges. The following table describes the charges deducted if you elect the optional Term Insurance Rider benefit. See Optional Term Insurance Rider Charges, page 26.
Charge | When Deducted | Amount Deducted | ||
| ||||
Term Rider Cost of | · On the monthly processing | · Minimum Rates per $1,000 of rider benefit - | ||
Insurance Charge 4 | date. | - $0.09 - guaranteed. | ||
- $0.01 - current. | ||||
· Maximum Rates per $1,000 of rider benefit - | ||||
- $5.51 - guaranteed. | ||||
- $2.72 - current. | ||||
· Rates for a representative insured person per | ||||
$1,000 of rider benefit - | ||||
- $0.56 - guaranteed. | ||||
- $0.13 - current. | ||||
- The representative insured person is a male, | ||||
age 50 in the standard nontobacco risk class. | ||||
| ||||
Term Rider | · On the monthly processing | · Minimum Rates per $1,000 of rider benefit - | ||
Acquisition Charge 5 | date. | - $0.27 - guaranteed. | ||
- $0.00 - current | ||||
· Maximum Rates per $1,000 of rider benefit - | ||||
- $1.31 - guaranteed. | ||||
- $0.00 - current | ||||
· Rates for a representative insured person per | ||||
$1,000 of rider benefit - | ||||
- $0.59 - guaranteed. | ||||
- $0.00 - current. | ||||
- The representative insured person is a male, | ||||
- age 50 in the standard nontobacco risk class. | ||||
|
4 | The Term Rider cost of insurance rates shown are for the first policy year for policies with guaranteed issue underwriting. 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 Term Insurance Rider coverage, the type of underwriting used to issue the policy and the insured persons age, gender, policy duration and risk class and 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. |
5 | We currently do not assess the Term Rider acquisition charge, however, we reserve the right to assess this charge on future policies. The guaranteed rates have been rounded to the nearest penny. Consequently, the actual guaranteed rates are either more or less than these rounded rates. The rates that apply to you depend on the initial amount of your Term Insurance Rider coverage and the insured persons age. The guaranteed rates for the representative insured person listed above may be more or less than you would pay, and you should contact your agent/registered representative for information about the guaranteed rates that would apply to you. |
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Fund Fees and Expenses. The following table shows the minimum and maximum total gross annual fund expenses that you may pay during the time you own the policy. Fund expenses vary from fund to fund and may change from year to year. For more detail about a funds fees and expenses, review the funds prospectus. See also Fund Fees and Expenses, page 27.
Minimum | Maximum | |||
Total Gross Annual Fund Expenses 6 (deducted from fund assets) | 0.27% | 1.93% |
Total gross annual fund expenses are deducted from amounts that are allocated to the fund. They include management fees and other expenses and may include distribution (12b-1) fees. Other expenses may include service fees that may be used to compensate service providers, including the company and its affiliates, for administrative and policy owner services provided on behalf of the fund. Distribution (12b-1) fees are used to finance any activity that is primarily intended to result in the sale of fund shares.
If a fund is structured as a fund of funds, total gross annual fund expenses also include the fees associated with the fund or funds in which it invests. Because of this a fund that is structured as a fund of funds may have higher fees and expenses than a fund that invests directly in debt and equity securities. For a list of the fund of funds available through the policy, see the chart of funds available through the variable account on page 16.
6 | Some funds which are available through the policy have contractual arrangements to waive and/or reimburse certain fund fees and expenses. The minimum and maximum total gross annual fund expenses shown above do not reflect any of these waiver and/or reimbursement arrangements. |
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THE COMPANY, THE VARIABLE ACCOUNT
AND THE FIXED ACCOUNT
Security Life of Denver Insurance Company
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.
We are a wholly owned indirect subsidiary of ING Groep N.V., a global financial institution active in the fields of insurance, banking and asset management. ING Groep N.V. is headquartered in Amsterdam, The Netherlands. Although we are a subsidiary of ING Groep N.V., ING Groep N.V. is not responsible for the obligations under the policy. The obligations under the policy are solely the responsibility of Security Life of Denver Insurance Company.
We are also a charter member of the Insurance Marketplace Standards Association (IMSA). Companies that belong to IMSA subscribe to a rigorous set of standards that cover the various aspects of sales and service for individually sold life insurance and annuities. IMSA members have adopted policies and procedures that demonstrate a commitment to honesty, fairness and integrity in all customer contacts involving sales and service of individual life insurance and annuity products.
Regulatory Developments -- The Company and the Industry
As with many financial services companies, Security Life and its affiliates have received informal and formal requests for information from various state and federal governmental agencies and self-regulatory organizations in connection with inquiries and investigations of the products and practices of the financial services industry. In each case, the company and its affiliates have been and are providing full cooperation.
<
FONT face="TimesNewRomanPS-BoldMT,Times New Roman,Times,serif" size=1> Insurance and Retirement Plan Products and Other Regulatory Matters
FONT> The New York Attorney General (the NYAG), other federal and state regulators and self-regulatory agencies are also conducting broad inquiries and investigations involving the insurance and retirement industries. These initiatives currently focus on, among other things, compensation, revenue sharing, and other sales incentives; potential conflicts of interest; potential anti-competitive
These initiatives also may result in new legislation and regulation that could significantly affect the financial services industry, including businesses in which the company is engaged.
In light of these and other developments, U.S. affiliates of ING, including the company, periodically review whether modifications to their business practices are appropriate.
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Investment Product Regulatory Issues. Since 2002, there has been increased governmental and regulatory activity relating to mutual funds and variable insurance products. This activity has primarily focused on inappropriate trading of fund shares; compensation; sales practices, suitability and supervision; arrangements with service providers; pricing; compliance and controls; adequacy of disclosure; and document retention.
In addition to responding to governmental and regulatory requests on fund trading issues, ING management, on its own initiative, conducted, through special counsel and a national accounting firm, an extensive internal review of mutual fund trading in ING insurance, retirement and mutual fund products. The goal of this review was to identify any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel.
The internal review identified several isolated arrangements allowing third parties to engage in frequent trading of mutual funds within the variable insurance and mutual fund products of certain subsidiaries of ING, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. Each of the arrangements has been terminated and disclosed to regulators, to the independent trustees of ING Funds (U.S.) and in reports previously filed by affiliates of the company with the SEC pursuant to the Securities Exchange Act of 1934, as amended.
Action may be taken by regulators with respect to the company or certain affiliates before investigations relating to fund trading are completed. The potential outcome of such action is difficult to predict but could subject the company or certain affiliates to adverse consequences, including, but not limited to, settlement payments, penalties and other financial liability. It is not currently anticipated, however, that the actual outcome of any such action will have a material adverse effect on ING or INGs U.S.-based operations, including the company.
ING has agreed to indemnify and hold harmless the ING Funds from all damages resulting from wrongful conduct by ING or the employees of its subsidiaries or from INGs internal investigation, any investigations conducted by any governmental or self-regulatory agencies, litigation or other formal proceedings, including any proceedings by the SEC. Management reported to the ING Funds Board that ING management believes that the total amount of any indemnification obligations will not be material to ING or INGs U.S.-based operations, including the company.