-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S9rdYlr65NVceJs6d7BI+MetuxKLkHGLh0d8AWnq8t9D5JZpijbK0rWSxjodCjuN fTDAddIzfxBNMWSLT9rHag== 0000917677-99-000015.txt : 19990331 0000917677-99-000015.hdr.sgml : 19990331 ACCESSION NUMBER: 0000917677-99-000015 CONFORMED SUBMISSION TYPE: S-6/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURITY LIFE SEPARATE ACCOUNT L1 CENTRAL INDEX KEY: 0000917677 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 840499703 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-6/A SEC ACT: SEC FILE NUMBER: 333-72753 FILM NUMBER: 99578195 BUSINESS ADDRESS: STREET 1: 1290 BROADWAY STREET 2: C/O SECURITY LIFE CENTER CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 3038601290 MAIL ADDRESS: STREET 1: 1290 BROADWAY CITY: DENVER STATE: CO ZIP: 80203-5699 S-6/A 1 VSUL PROSPECTUS As filed with the Securities and Exchange Commission on March 30, 1999 Registration No. 333-72753 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM S-6 FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 Pre-Effective Amendment No. 1 ----------------- SECURITY LIFE SEPARATE ACCOUNT L1 (Exact Name of Trust) SECURITY LIFE OF DENVER INSURANCE COMPANY (Name of Depositor) 1290 Broadway Denver, Colorado 80203-5699 (Address of Depositor's Principal Executive Offices) Copy to: GARY W. WAGGONER, ESQ. KIMBERLY J. SMITH, ESQ. Security Life of Denver Insurance Company Sutherland Asbill & Brennan LLP 1290 Broadway 1275 Pennsylvania Avenue, NW Denver, Colorado 80203-5699 Washington, D.C. 20004-2415 (202) 383-0314 (Name and Address of Agent for Service) ---------------------------- Title of securities being registered: Variable last survivor life insurance policies. Approximate date of proposed public offering: as soon as practicable after the effective date of this Registration Statement. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Form V-91-99 SECURITY LIFE SEPARATE ACCOUNT L1 (File No. 333-72753) Cross-Reference Table
Form N-8B-2 Item No. Caption in Prospectus 1, 2 Cover; Security Life of Denver Insurance Company; Security Life Separate Account L1 3 Inapplicable 4 Security Life of Denver Insurance Company 5, 6 Security Life Separate Account L1 7 Inapplicable 8 Financial Statements 9 Inapplicable 10(a), (b), (c), (d), (e) Policy Summary; Policy Values, Determining the Value of Amounts in the Divisions of the Variable Account; Charges, Deductions and Refunds; Surrender; Partial Withdrawals; The Guaranteed Interest Division; Transfers of Account Value; Right to Exchange Policy; Lapse; Reinstatement; Premiums 10(f) Voting Privileges; Right to Change Operations 10(g), (h) Right to Change Operations 10(i) Tax Considerations; Detailed Information about the Variable Last Survivor Universal Life Policy; General Policy Provisions; The Guaranteed Interest Division 11, 12 Security Life Separate Account L1 13 Policy Summary; Charges, Deductions and Refunds; and Group or Sponsored Arrangements or Corporate Purchasers
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Form N-8B-2 Item No. Caption in Prospectus 14, 15 Policy Summary; Free Look Period or Right to Examine Period; General Policy Provisions; Applying for a Policy 16 Premiums; Allocation of Net Premiums; How We Calculate Accumulation Unit Values for Each Division 17 Premium Payments Affect Your Coverage; Surrender; Partial Withdrawal 18 Policy Summary; Tax Considerations; Detailed Information about the Variable Last Survivor Universal Life Policy; Security Life Separate Account L1; Persistency Refund 19 Reports to Owners; Notification and Claims Procedures; Performance Information (Appendix C) 20 See 10(g) & 10(a) 21 Policy Loans 22 Policy Summary; Premiums; Grace Period; Security Life Separate Account L1; Detailed Information about the Variable Last Survivor Universal Life Policy 23 Inapplicable 24 Inapplicable 25 Security Life of Denver Insurance Company 26 Inapplicable 27, 28, 29, 30 Security Life of Denver Insurance Company 31, 32, 33, 34 Inapplicable 35 Inapplicable 36 Inapplicable
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Form N-8B-2 Item No. Caption in Prospectus 37 Inapplicable 38, 39, 40, 41(a) General Policy Provisions; Distribution of the Policies; Security Life of Denver Insurance Company 41(b), 41(c), 42, 43 Inapplicable 44 Determining the Value in the Variable Divisions; How We Calculate Accumulation Unit Values for Each Division 45 Inapplicable 46 Partial Withdrawals; Detailed Information about the Variable Last Survivor Universal Life Policy 47, 48, 49, 50 Inapplicable 51 Detailed Information about the Variable Last Survivor Universal Life Policy 52 Determining the Value in the Variable Divisions; Right to Change Operations 53(a) Tax Considerations 53(b), 54, 55 Inapplicable 56, 57, 58 Inapplicable 59 Financial Statements
iv Prospectus VARIABLE LAST SURVIVOR UNIVERSAL LIFE A FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY issued by SECURITY LIFE OF DENVER INSURANCE COMPANY AND SECURITY LIFE SEPARATE ACCOUNT L1 Consider carefully the policy charges, deductions, and refunds beginning on page 48 in this prospectus. You should read this prospectus and keep it for future reference. A prospectus for each underlying investment portfolio must accompany and should be read together with this prospectus. This policy is not available in all jurisdictions. This policy is not offered in any jurisdiction where this type of offering is not legal. Depending on the state where it is issued, policy features may vary. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different. Replacing your existing life insurance policy(ies) with this policy may not be beneficial to you. YOUR POLICY o is a flexible premium variable joint and survivor universal life insurance policy; o is issued on two lives on whom insurance coverage may continue, in whole or in part, until both have died; o is issued by Security Life of Denver Insurance Company; and o is returnable by you during the free look period or right to examine period if you are not satisfied. YOUR POLICY PREMIUM PAYMENTS o are flexible, so the premium amount and frequency may vary; o are allocated to variable investment divisions and the guaranteed interest division, based on your instructions; o are invested in shares of the underlying investment portfolios under each variable division; and o can be invested in up to eighteen investment options over the policy's lifetime. YOUR ACCOUNT VALUE o is the sum of your holdings in the variable divisions, the guaranteed interest division and the loan division; o has no guaranteed minimum cash value under the variable divisions. The value varies with the value of the matching investment portfolio; o has a minimum guaranteed rate of return if you have an amount in the guaranteed interest division; and o is subject to various expenses and charges, including possible surrender charges. DEATH PROCEEDS o are paid if the policy is still in force at the second death of the two insured people; o are equal to the death benefit minus outstanding policy loans, accrued loan interest and unpaid charges incurred before the second insured person dies; o are calculated under your choice of options; * Option 1- a fixed minimum death benefit * Option 2- a stated death benefit plus your account value; and o enhanced death benefit corridor option - available with either option 1 or option 2 to increase death benefit coverage based on life expectancy with sufficient funding; and o are generally not federally income taxed if your policy continues to meet the federal income tax definition of life insurance. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. DATE OF PROSPECTUS ________________ ____, 1999 Form V-91-99 ISSUED BY: Security Life of Denver UNDERWRITTEN BY: ING America Equities, Inc. Insurance Company 1290 Broadway Security Life Center Denver, CO 80203-5699 1290 Broadway (303) 860-2000 Denver, CO 80203-5699 (800) 525-9852 THROUGH ITS: Security Life Separate Account L1 ADMINISTERED BY: Customer Service Center P.O. Box 173888 Denver, CO 80217-3888 (800) 848-6362
- -------------------------------------------------------------------------------- Variable Last Survivor 2 TABLE OF CONTENTS POLICY SUMMARY.................................................................8 Your Policy...........................................................8 Free Look Period or Right to Examine Period...........................8 Your Policy Premiums..................................................8 Allocation of Net Premiums...................................8 Variable Divisions....................................................8 Policy Values.........................................................9 Your Account Value in the Variable Divisions.................9 Transfers of Account Values..........................................10 Special Policy Features..............................................10 Additional Benefits.........................................10 Dollar Cost Averaging.......................................10 Automatic Rebalancing.......................................10 Loans ...................................................10 Partial Withdrawals.........................................10 Persistency Refund..........................................10 Policy Modification, Termination and Continuation Features...........10 Right to Exchange Policy....................................10 Policy Split Option.........................................10 Surrender...................................................10 Lapse ...................................................10 Reinstatement...............................................11 Continuation of Coverage....................................11 Death Benefits.......................................................11 Charges and Deductions...............................................11 Deductions from Premium.....................................11 Deductions from the Variable Divisions......................11 Monthly Deductions from Your Account Value..................12 Policy Transaction Fees.....................................12 Administrative Fees.........................................12 Allocation Change Fee.......................................12 Surrender Charges...........................................12 Charges from Investment Portfolios..........................12 Tax Considerations...................................................12 INFORMATION ABOUT SECURITY LIFE, THE VARIABLE ACCOUNT, THE INVESTMENT OPTIONS AND THE GUARANTEED INTEREST DIVISION.................................13 Security Life of Denver Insurance Company............................13 Year 2000 Preparedness...............................................13 Security Life Separate Account L1....................................14 Variable Account Structure..................................14 Order of Variable Account Liabilities.......................14 Variable Divisions..........................................14 Investment Portfolios.......................................14 Objectives of the Investment Portfolios..............................15 The Guaranteed Interest Division.....................................19 Maximum Number of Investment Divisions...............................19 DETAILED INFORMATION ABOUT THE VARIABLE LAST SURVIVOR UNIVERSAL LIFE POLICY...20 Applying for a Policy................................................20 Policy Issuance.............................................20 Definition of Life Insurance................................20 - -------------------------------------------------------------------------------- Variable Last Survivor 3 Temporary Insurance..................................................20 Premiums ............................................................21 Scheduled Premiums..........................................21 Unscheduled Premium Payments................................21 Minimum Annual Premium......................................21 Special Continuation Period.................................22 Allocation of Net Premiums..................................22 Premium Payments Affect Your Coverage................................22 Modified Endowment Contracts................................23 Death Benefits.......................................................23 Base Death Benefit..........................................24 Death Benefit Options.......................................25 Changes in Death Benefit Option 1 or 2......................25 Enhanced Death Benefit Corridor Option......................26 Changes in Death Benefit Amounts............................26 Guaranteed Minimum Death Benefit............................27 Requirements to Maintain the Guarantee Period...............28 Additional Benefits..................................................28 Adjustable Term Insurance Rider.............................29 Single Life Term Rider......................................30 Special Features.....................................................30 Policy Maturity.............................................30 Policy Split Option.........................................30 Right to Exchange Policy....................................31 Continuation of Coverage....................................31 Policy Values........................................................32 Account Value...............................................32 Net Account Value...........................................32 Cash Surrender Value........................................32 Net Cash Surrender Value....................................32 Determining the Value in the Variable Divisions.............32 How We Calculate Accumulation Unit Values for Each Division.33 Transfers of Account Value...........................................34 Excessive Trading...........................................34 Guaranteed Interest Division Transfers......................34 Dollar Cost Averaging................................................34 Changing Dollar Cost Averaging..............................35 Terminating Dollar Cost Averaging...........................35 Automatic Rebalancing................................................35 Changing Automatic Rebalancing..............................36 Terminating Automatic Rebalancing...........................36 Policy Loans.........................................................36 Loan Repayment..............................................37 Loans and Your Benefits.....................................37 Partial Withdrawals..................................................37 Partial Withdrawals under Death Benefit Option 1............38 Partial Withdrawals under Death Benefit Option 2............38 Stated Death Benefit and Target Death Benefit Reductions....38 Partial Withdrawal Mechanics................................38 Lapse ............................................................38 Grace Period................................................38 Reinstatement........................................................40 Surrender............................................................41 General Policy Provisions............................................41 Free Look Period or Right to Examine Policy Period..........41 - -------------------------------------------------------------------------------- Variable Last Survivor 4 Your Policy.................................................41 Age ...................................................42 Ownership...................................................42 Beneficiary(ies)............................................42 Collateral Assignment.......................................42 Incontestability............................................43 Misstatements of Age or Gender..............................43 Suicide ...................................................43 Transaction Processing......................................43 Notification and Claims Procedures..........................43 Telephone Privileges........................................44 Non-participation...........................................44 Distribution of the Policies................................44 Settlement Provisions.......................................45 Administrative Information About the Policy..........................46 Voting Privileges...........................................46 Material Conflicts..........................................46 Right to Change Operations..................................47 Reports to Owners...........................................47 CHARGES, DEDUCTIONS AND REFUNDS...............................................48 Deductions from Premiums.............................................48 Tax Charges.................................................48 Sales Charge................................................48 Daily Deductions from the Variable Account...........................48 Mortality and Expense Risk Charge...........................48 Monthly Deductions from Your Account Value...........................49 Policy Charge...............................................49 Monthly Administrative Charge...............................49 Cost of Insurance Charge....................................50 Guaranteed Minimum Death Benefit Charge.....................50 Charges for Additional Benefits.............................50 Changes in Monthly Charges..................................50 Continuation of Coverage Administrative Fee.................50 Policy Transaction Fees..............................................50 Partial Withdrawals.........................................50 Transfers...................................................51 Illustrations...............................................51 Allocation Change...........................................51 Persistency Refund...................................................51 Surrender Charge.....................................................51 Fees and Expenses of the Investment Portfolios.......................52 Investment Portfolio Annual Expenses........................53 Group or Sponsored Arrangements or Corporate Purchasers..............55 Other Charges........................................................55 TAX CONSIDERATIONS............................................................55 Tax Status of the Policy.............................................55 Diversification Requirements.........................................56 Tax Treatment of Policy Death Benefits...............................56 Modified Endowment Contracts.........................................56 Multiple Policies....................................................57 Distributions Other than Death Benefits from Modified Endowment Contracts........................................................57 Distributions Other than Death Benefits from Policies That Are Not Modified Endowment Contracts.....................................57 Investment in the Policy.............................................57 - -------------------------------------------------------------------------------- Variable Last Survivor 5 Policy Loans.........................................................57 Section 1035 Exchanges...............................................57 Tax-exempt Policy Owners.............................................57 Changes to Comply with the Law.......................................58 Other ............................................................58 ILLUSTRATIONS.................................................................59 ADDITIONAL INFORMATION........................................................63 Directors and Officers...............................................63 Regulation...........................................................66 Legal Matters........................................................66 Legal Proceedings....................................................66 Experts ............................................................66 Registration Statement...............................................66 FINANCIAL STATEMENTS..........................................................67 APPENDIX A....................................................................68 APPENDIX B....................................................................69 APPENDIX C....................................................................70 - -------------------------------------------------------------------------------- Variable Last Survivor 6 INDEX OF SPECIAL TERMS The following special terms are used in this prospectus. We explain each term on the page(s) listed in the body of this prospectus and in the summary, if applicable: Account value..................................................................9 Accumulation unit.............................................................33 Accumulation unit value.......................................................33 Adjustable term insurance rider...............................................23 Adjustable term insurance rider benefit.......................................23 Age...........................................................................20 Base death benefit............................................................24 Beneficiary(ies)..............................................................11 Cash surrender value...........................................................9 Customer service center........................................................2 Continuation of coverage......................................................31 Effective date.................................................................? Death proceeds................................................................24 Free look period..............................................................41 General account...............................................................14 Guarantee period..............................................................28 Guarantee period annual premium...............................................28 Guaranteed interest division..................................................19 Guaranteed minimum death benefit..............................................27 Initial premium...............................................................20 Insured.......................................................................20 Investment date...............................................................20 Joint equivalent age..........................................................42 Loan division..................................................................9 Minimum annual premium........................................................21 Net account value.............................................................32 Net amount at risk.............................................................9 Net cash surrender value......................................................32 Net premium................................................................8, 22 Owner......................................................................8, 42 Partial withdrawal............................................................22 Policy.....................................................................8, 14 Policy date...................................................................20 Policy loan...................................................................36 Portfolios.................................................................9, 14 Rider.....................................................................10, 28 Scheduled benefits............................................................21 Scheduled premium.............................................................21 Segment.......................................................................27 Special continuation period...................................................22 Stated death benefit..........................................................20 Surrender charge...............................................................9 Target death benefit..........................................................29 Total death benefit...........................................................29 Transaction date..............................................................33 Valuation date.................................................................9 Valuation period...........................................................9, 33 Variable account..............................................................14 Variable division(s)..........................................................14 Younger insured person's 100th birth date.....................................42 - -------------------------------------------------------------------------------- Variable Last Survivor 7 POLICY SUMMARY THIS SUMMARY HIGHLIGHTS SOME OF THE IMPORTANT POINTS ABOUT YOUR POLICY. THE POLICY IS MORE FULLY DESCRIBED IN THE ATTACHED, COMPLETE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY. "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 PEOPLE'S LIFETIMES. ANY STATE VARIATIONS ARE COVERED IN A SPECIAL POLICY FORM FOR USE 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. YOUR POLICY Your policy provides life insurance protection on the lives of two insured people. It is issued based on both insured people's lives and insurance coverage may continue, in whole or in part, until both have died. The policy includes the basic policy, applications, and riders or endorsements. As long as the policy remains in force, we pay a death benefit at the second death of the insured people. While your policy is in force, you may access a portion of your policy value by taking loans or partial withdrawals. You may also surrender your policy for its net cash surrender value. At the younger insured person's 100th birth date, the policy can be surrendered or continued under the continuation of coverage option. SEE CONTINUATION OF COVERAGE, PAGE 31. Life insurance is not a short-term investment. You should evaluate your need for life insurance coverage and this policy's long-term investment potential and risks before purchasing a policy. FREE LOOK PERIOD OR RIGHT TO EXAMINE PERIOD You have the right to examine your policy and return it for a refund of premiums paid or the account value, as specified by state law, if you are not satisfied for any reason. The policy is then void. SEE FREE LOOK PERIOD OR RIGHT TO EXAMINE POLICY, PAGE 41. YOUR POLICY PREMIUMS The policy is a flexible premium policy because the amount and frequency of the premium payments you make may vary within limits. You must make premium payments: o for us to issue your policy; o sufficient to keep your policy in force; and o as necessary to continue certain benefits. On your application, you choose how much and how often you want to pay premiums. Depending on your choices, it may not be enough to keep your policy or certain riders in force. The amount of premium you pay affects the length of time your policy stays in force. SEE PREMIUMS, PAGE 21. ALLOCATION OF NET PREMIUMS This policy has premium-based charges which are subtracted from your payments. We add the balance, or the net premium, to your policy based on your investment instructions. You may allocate the net premiums among one or more variable divisions, the guaranteed interest division, or both. You may not invest in more than eighteen investment divisions, including the guaranteed interest division, over the life of your policy. We allocate your initial net premium to the investment divisions you specify after we: o receive your initial premium; o approve your policy application; and o have the information we require. You need to allocate your premiums to your investment choices in percentages that are whole numbers and which total 100%. SEE ALLOCATION OF NET PREMIUMS, PAGE 22. VARIABLE DIVISIONS Any amount you direct into the guaranteed interest division is credited with interest at a fixed rate set by us. If you invest in any of the following variable divisions, depending on market conditions, you may make or lose money. The variable divisions are described in the prospectuses for the underlying investment portfolios. - -------------------------------------------------------------------------------- Variable Last Survivor 8 Each variable division investment portfolio has its own investment objective. SEE OBJECTIVE OF THE INVESTMENT PORTFOLIOS, PAGE 15. A I M VARIABLE INSURANCE FUNDS AIM V.I. Capital Appreciation Fund AIM V.I. Government Securities Fund THE ALGER AMERICAN FUND Alger American Growth Portfolio Alger American Leveraged AllCap Portfolio Alger American MidCap Growth Portfolio Alger American Small Capitalization Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND & VARIABLE INSURANCE PRODUCTS FUND II VIP Growth Portfolio VIP Money Market Portfolio VIP Overseas Portfolio VIP II Asset Manager Portfolio VIP II Index 500 Portfolio INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-Equity Income Fund INVESCO VIF-High Yield Fund INVESCO VIF-Small Company Growth Fund INVESCO VIF-Total Return Fund INVESCO VIF-Utilities Fund NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST Neuberger Berman AMT Growth Portfolio Neuberger Berman AMT Limited Maturity Bond Portfolio Neuberger Berman AMT Partners Portfolio 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 POLICY VALUES Your policy account value is the amount you have in the guaranteed interest division, plus the amount you have in each variable division. If you have outstanding policy loans, your account value includes the amount in the loan division. The loan division is part of our general account specifically designed to hold money for loans and loan interest. The general account contains all of our assets other than those held in the variable account, or our other separate accounts. Your account value reflects: o net premiums; o deductions for charges; o the investment performance of the amounts you have in the variable divisions; o interest earned on the amount you have in the guaranteed interest division; o interest earned and charged on the amount you have in the loan division; and o partial withdrawals. We subtract charges and partial withdrawals you take from your account value. You make a partial withdrawal when you withdraw part of your net cash surrender value. Partial withdrawals may reduce the amount of base death benefit which may trigger a surrender charge. We may deduct a surrender charge from your account value in the event of: o surrender; o policy lapse; o requested reductions in the stated death benefit; or o certain partial withdrawals. SEE SURRENDER CHARGE, PAGE 12. Your cash surrender value is equal to your account value minus any surrender charge. Your net cash surrender value is equal to the cash surrender value minus outstanding policy loans and accrued loan interest, if any. YOUR ACCOUNT VALUE IN THE VARIABLE DIVISIONS Accumulation units are the way we measure value in the variable divisions. Accumulation unit value is the value of a unit of a variable division on the valuation date. Each variable division has a different accumulation unit value. SEE DETERMINING THE VALUE OF THE VARIABLE DIVISIONS, PAGE 32. On each valuation date, we determine the accumulation unit values. The accumulation unit value for each variable division reflects the investment performance of the matching investment portfolio during the valuation period. The valuation period is the time beginning at 4:00 p.m. Eastern Time on a valuation date and ending at 4:00 p.m. Eastern Time on the next valuation date. Each accumulation unit value reflects asset-based charges under the policy, and the expenses of the investment portfolios. SEE HOW WE CALCULATE ACCUMULATION UNIT VALUES FOR EACH DIVISION, PAGE 33. - -------------------------------------------------------------------------------- Variable Last Survivor 9 TRANSFERS OF ACCOUNT VALUES You may make up to twelve free transfers among the variable divisions or to the guaranteed interest division per policy year. We charge $25 for each transfer over twelve you make in a policy year. This charge does not apply to any automatic rebalancing or dollar cost averaging transfers: they are free. There are restrictions on transfers to or from the guaranteed interest division. SEE TRANSFERS OF ACCOUNT VALUES, PAGE 34. SPECIAL POLICY FEATURES ADDITIONAL BENEFITS You may attach certain additional benefits to your policy by rider. A rider changes benefits under your policy. In most cases, we deduct a monthly charge from your account value for these benefits. SEE ADDITIONAL BENEFITS, PAGE 28. DOLLAR COST AVERAGING You may choose dollar cost averaging on your application or complete a customer service form. Dollar cost averaging is a systematic plan of transferring account values to selected investment divisions. It is intended to protect your policy's value from short-term price fluctuations. However, dollar cost averaging does not assure a profit, nor does it protect against a loss in a declining market. Dollar cost averaging is free. SEE DOLLAR COST AVERAGING, PAGE 34. AUTOMATIC REBALANCING You may choose automatic rebalancing on your policy. Automatic rebalancing periodically reallocates your net account value among the investment divisions to maintain your specified distribution of account value among those divisions. Automatic rebalancing is free. SEE AUTOMATIC REBALANCING, PAGE 35. LOANS You may take loans against your policy's net cash surrender value. The net cash surrender value is your account value minus any surrender charges, loans and accrued loan interest. We charge an annual loan interest rate of 3.75%. We credit an annual interest rate of 3.0% on amounts held as collateral in the loan division as collateral for your loan. Beginning in your eleventh policy year, where permitted by law, we may include amounts in the loan division for calculation of your policy's persistency refund. SEE POLICY LOANS, PAGE 36. PARTIAL WITHDRAWALS You may withdraw part of your cash surrender value any time after your first policy year. You may make only one partial withdrawal per policy year. Partial withdrawals may reduce the death benefit and will reduce your account value. Surrender charges may apply. SEE PARTIAL WITHDRAWALS, PAGE 37. PERSISTENCY REFUND After your tenth policy anniversary, where permitted by state law, we credit your account value with a persistency refund on every monthly processing date. SEE PERSISTENCY REFUND, PAGE 51. POLICY MODIFICATION, TERMINATION AND CONTINUATION FEATURES RIGHT TO EXCHANGE POLICY For 24 months after the policy date you can exchange your policy for a guaranteed policy, unless state law requires differently. Right to exchange policy is free. SEE RIGHT TO EXCHANGE POLICY, PAGE 31. POLICY SPLIT OPTION You may split your policy into two separate life insurance policies each insuring the life of one insured person, under certain circumstances. This split may occur upon divorce between the two insured people, business dissolution, or a possible adverse future change in the tax law. The policy split option is free. SEE POLICY SPLIT OPTION, PAGE 30. SURRENDER You may surrender your policy for its net cash surrender value at any time while an insured person is living. We calculate your net cash surrender value on the valuation date we receive your request and policy at our customer service center. All insurance coverage ends on that date. You must return your policy to us. SEE SURRENDER, PAGE 41. LAPSE - -------------------------------------------------------------------------------- Variable Last Survivor 10 In general, insurance coverage continues as long as your policy's net cash surrender value is enough to pay the monthly deductions. However, your policy and its riders are guaranteed not to lapse during the first five years of your policy if the conditions of the special continuation period have been met. SEE LAPSE, PAGE 38. REINSTATEMENT You may reinstate your policy and its riders within five years of its lapse if the insured people meet the same underwriting requirements as were met at policy issue. You will need to give proof of insurability as at policy issue. You will also need to pay required reinstatement premiums. If the guaranteed minimum death benefit lapses and you do not correct it, this feature terminates. Once it terminates, you cannot reinstate this feature. We will reinstate any policy loans existing when coverage ended, with accrued loan interest to the date of the lapse. SEE REINSTATEMENT, PAGE 40. CONTINUATION OF COVERAGE At the younger insured person's 100th birth date, you may choose to let the continuation of coverage feature become effective. If the continuation of coverage feature becomes effective, we will deduct a one-time administrative fee of $400 and keep your policy in force. SEE CONTINUATION OF COVERAGE, PAGE 31. DEATH BENEFITS At the second death of the two insured people, we pay death proceeds to the beneficiary(ies) if your policy is still in force. The beneficiary(ies) is(are) the person or people you name to receive the death proceeds. The death proceeds equal the base death benefit plus amounts payable by rider, minus the amount of your outstanding policy loan and accrued loan interest. The base death benefit varies according to which death benefit option you have chosen. The base death benefit does not include any adjustable term insurance rider you may have on your policy. The target death benefit includes any adjustable term insurance rider you may have on your policy plus your base death benefit. The total death benefit is at least equal to or greater than your target death benefit. The minimum target death benefit to issue your policy is $250,000. If you have an adjustable term rider, the minimum stated death benefit to issue your policy is $100,000. However, we may lower this minimum for group or sponsored arrangements, or corporate purchasers. SEE DEATH BENEFIT, PAGE 23. You may change your base death benefit amount while your policy is in force, subject to certain restrictions. SEE CHANGES IN DEATH BENEFIT AMOUNTS, PAGE 26. CHARGES AND DEDUCTIONS DEDUCTIONS FROM PREMIUM We make the following deductions from each premium payment you make: 1. Tax charges -- We currently deduct a charge of 2.5% of premiums for state and local taxes. We currently deduct a charge of 1.5% of each premium to cover our estimated cost of the federal income tax treatment of deferred acquisition costs. SEE TAX CHARGES, PAGE 48. 2. Sales charge -- We deduct a percentage of each premium to cover a portion of our expenses in selling your policy. This charge is based on the length of time since your policy or a segment became effective. Sales Charge Percentage ----------------------- To Segment Above Segment Segment Target Target Year Premium Premium ------- ---------- ------------- 1 - 5 5.5% 2% 6 + 2% 2% SEE DEDUCTIONS FROM PREMIUMS, PAGE 48. DEDUCTIONS FROM THE VARIABLE DIVISIONS We assess a mortality and expense risk charge of 0.75% per year or 0.002055% per day against the variable divisions. This charge compensates us for mortality and expense risks under the policies. SEE DAILY DEDUCTIONS FROM THE VARIABLE ACCOUNT, PAGE 48. - -------------------------------------------------------------------------------- Variable Last Survivor 11 MONTHLY DEDUCTIONS FROM YOUR ACCOUNT VALUE We deduct the following charges from your account value at the beginning of each policy month: 1. Policy charge -- $15 per month for the first ten policy years and $9 per month for each policy year after the tenth. 2. Monthly administrative charge-- A charge of no less than $0.07 and no more than $0.095 per $1,000 for the first ten policy years. We charge $0.023 per $1,000 for each policy year after the tenth. The exact per $1,000 charge for your policy is based on the insured people's issue ages and policy duration. 3. Cost of insurance charge -- Based on the net amount at risk on the lives of the insured people. The amount of this charge differs for the segments of the base death benefit and the adjustable term insurance rider. 4. Guaranteed minimum death benefit (if applicable) -- $0.005 per $1,000 of stated death benefit per month. 5. Charges for additional benefits -- The cost of additional benefits you choose. The adjustable term insurance rider charge is included in the cost of insurance charge. SEE MONTHLY DEDUCTIONS FROM THE ACCOUNT VALUE, PAGE 49. POLICY TRANSACTION FEES We deduct policy transaction fees from the variable and guaranteed interest divisions. We deduct these fees proportionately based on the account value in each investment division in which you have amounts invested immediately before the transaction. The following are the current transaction fees. SEE POLICY TRANSACTION FEES, PAGE 50. 1. Partial withdrawal fee -- $25. 2. Transfer fee -- We allow twelve free transfers among investment divisions per policy year. For each transfer beyond that, a $25 fee applies. 3. Illustrations -- You may request one free illustration per policy year. For each illustration beyond that, a $25 fee may apply. ADMINISTRATIVE FEES Continuation of Coverage -- To activate continued coverage, we will deduct a one-time $400 administrative fee from your account value at the younger insured person's 100th birth date. ALLOCATION CHANGE FEE You may make five free premium and five free automatic rebalancing allocation changes per policy year. We charge you $25 for each additional allocation change per policy year. The $25 fee is withdrawn from your investment divisions on a pro-rata basis. SURRENDER CHARGES During the first nine years of your policy or of a new coverage segment, we assess a surrender charge if you: o surrender the policy; o reduce the stated death benefit (other than by changing the death benefit option); o let your policy lapse; or o take a partial withdrawal which reduces your stated death benefit. The surrender charge is a percentage of your target premium. It depends upon the insured people's ages at the policy date. SEE SURRENDER CHARGE, PAGE 51. CHARGES FROM INVESTMENT PORTFOLIOS The investment portfolios have investment management fees, 12(b)(1) fees and other expenses which are deducted by the portfolio managers. SEE CHARGES FROM PORTFOLIOS, PAGE 52. TAX CONSIDERATIONS Under current federal income tax law, death benefits of life insurance policies generally are not subject to income tax. In order for this treatment to apply, the policy must qualify as a life insurance contract. We believe it is reasonable to conclude that the policy will qualify as a life insurance contract. SEE TAX STATUS OF THE POLICY, PAGE 55. - -------------------------------------------------------------------------------- Variable Last Survivor 12 Assuming the policy qualifies as a life insurance contract, under current federal income tax law, your account value earnings are generally not subject to income tax as long as they remain within your policy. However depending on circumstances, the following events may cause taxable consequences for you: o partial withdrawals; o surrender; or o lapse. In addition to the events listed above, if your policy is a modified endowment contract, loans against or secured by the policy may cause income taxation. A penalty tax may be imposed on a distribution from a modified endowment contract as well. SEE MODIFIED ENDOWMENT CONTRACTS, PAGE 56. You should consult a qualified legal or tax adviser before you purchase your policy. INFORMATION ABOUT SECURITY LIFE, THE VARIABLE ACCOUNT, THE INVESTMENT OPTIONS AND THE GUARANTEED INTEREST DIVISION SECURITY LIFE OF DENVER INSURANCE COMPANY Security Life of Denver Insurance Company ("Security Life") is a stock life insurance company organized under the laws of the State of Colorado in 1929. Our headquarters are located at 1290 Broadway, Denver, Colorado 80203-5699. We are admitted to do business in the District of Columbia and all states. At the close of 1998, the company and its consolidated subsidiaries had over $XXX.X billion of life insurance in force. As of December 31, 1998, our total assets were over $X.X billion, and our shareholder's equity was over $XXX million. We have a complete line of life insurance products, including: o annuities; o individual life; o group life; o pension products; and o market life reinsurance. Security Life is a wholly owned indirect subsidiary of ING Groep, N.V. ("ING"). ING is one of the world's three largest diversified financial services organizations. ING is headquartered in Amsterdam, The Netherlands. It has consolidated assets over $XXX.X billion on a Dutch (modified U.S.) generally accepted accounting principles basis, as of December 31, 1998. The principal underwriter and distributor for our policies is ING America Equities, Inc. ING America Equities is a stock corporation organized under the laws of the State of Colorado in 1993. It is a wholly owned subsidiary of Security Life and is a registered broker-dealer with the SEC and the NASD. ING America Equities, Inc. is located at 1290 Broadway, Denver, Colorado 80203-5699. YEAR 2000 PREPAREDNESS Security Life of Denver Insurance Company is aware of the computer problems that may exist surrounding the Year 2000. Our senior management projects information processing and delivery systems to have a Year 2000 readiness interim target completion date of June 29, 1999 with a final completion date of December 31, 1999. The Year 2000 problem originates from the predominant use in computer programs of a two-digit field to capture the year, for example 99 instead of 1999. When we reach the year 2000 many of these programs will assume the year 00 is actually 1900 rather than 2000. This incorrect assumption can lead to erroneous results, false calculations or system failures. This is not only a computer problem, but also applies to other machinery or equipment containing computer chips which calculate dates for correct performance, the so-called "embedded systems". That is why errors, ranging from telephone shutdown to other services may occur as well. This potential risk is often referred to as the "Millennium Bug" or the "Year 2000 problem". The problem is made more complex by the many lines of code that can be affected in a single system, the number of systems required to support business activities and the interdependence of both the internal and external systems involved in exchanging data. This is particularly true for the financial services industry, where information is at the heart of the business and which depends heavily on the uninterrupted transfer of data world-wide, bank-to- bank and with clearing houses, exchanges and agencies. If the potential problems are not addressed, - -------------------------------------------------------------------------------- Variable Last Survivor 13 this could in some cases result in business system failure. From a financial perspective, this could, for instance, lead to incorrect interest calculations or over/under payments. A project plan has been implemented and our project team has analyzed and remediated our in-house source code. We completed the remediation in December, 1998. The project plan covers Security Life, ING America Equities, Inc., Midwestern United Life Insurance Company, and First ING Life Insurance Company of New York. We will follow our normal project management methodology including communication with senior management on a monthly and as-needed basis. Our targeted completion date is scheduled for June 28, 1999, but there is no assurance that Security Life will be successful, or that interaction with other service providers will not impact our services at that time. Security Life has completed an inventory and assessment of all vendor products. We are in the process of verifying that each vendor product is Year 2000 ready. Funds have been allocated for the 1999 efforts, and we believe we have sufficient resources to ensure Year 2000 processing capabilities. SECURITY LIFE SEPARATE ACCOUNT L1 VARIABLE ACCOUNT STRUCTURE We established Security Life Separate Account L1 (the "variable account") on November 3, 1993, under Colorado's insurance law. It is a unit investment trust, registered with the SEC under the Investment Company Act of 1940. The SEC does not supervise our management of the variable account or Security Life. The variable account is a separate investment account. It is used to support our variable life insurance policies and for other purposes allowed by law and regulation. We keep the variable account assets separate from our general account and other separate accounts. We may offer other variable life insurance contracts, with different charges and benefits, that invest in the variable account. We do not discuss these contracts in this prospectus. The variable account may invest in other securities not available for the policy described in this prospectus. The general account contains all of our assets other than those held in the variable account (variable divisions) or other separate accounts. The company owns all the assets in the variable account. We credit gains to or charge losses against the variable account without regard to performance of other investment accounts. ORDER OF VARIABLE ACCOUNT LIABILITIES State law provides that we may not charge general account liabilities against variable account assets equal to its reserves and other liabilities. The variable account may have liabilities from assets credited to other variable life policies offered by the variable account. If the assets of the variable account are greater than required reserves and policy liabilities, we may transfer the excess to our general account. VARIABLE DIVISIONS The variable account has several divisions. Each division invests in shares of a matching investment portfolio. This means that the investment performance of a policy depends on the performance of the investment portfolios you choose. Each investment portfolio has its own investment objective. These investment portfolios are not available directly to individual investors. They are only available as the underlying investments for variable annuity and variable life insurance contracts and certain pension accounts. INVESTMENT PORTFOLIOS Each of the investment portfolios is a separate series of an open-end management investment company. The investment company receives investment advice from a registered investment adviser who is not associated with us. The investment portfolios sell shares to separate accounts of insurance companies. These insurance companies may or may not be affiliated with us. This is known as "shared funding." Investment portfolios may sell shares as the underlying investment for both variable annuity and variable life insurance contracts. This process is known as "mixed funding." The investment portfolios may sell shares to certain qualified pension and retirement plans that qualify under Section 401 of the Internal Revenue Code ("IRC"). As a result, a material conflict of interest may arise between insurance companies, owners of - -------------------------------------------------------------------------------- Variable Last Survivor 14 different types of contracts and retirement plans, or their participants. If there is a material conflict, we will consider what should be done, including removing the investment portfolio from the variable account. There are certain risks with mixed and shared funding, and with selling shares to qualified pension and retirement plans. See the investment portfolios' prospectuses. OBJECTIVES OF THE INVESTMENT PORTFOLIOS Each investment portfolio has a different investment objective that it tries to achieve by following its own investment strategy. The objectives and policies of each investment portfolio affect its return and its risks. With this prospectus, you must receive the current prospectus for each investment portfolio. We summarize the investment objectives for each investment portfolio here. You should read each investment portfolio prospectus. Certain investment portfolios offered under this policy have investment objectives and policies similar to other funds managed by the portfolio's investment adviser. The investment results of a portfolio may be higher or lower than those of other funds managed by the same adviser. There is no assurance, and no representation is made, that the investment results of any investment portfolio will be comparable to those of another fund managed by the same investment adviser. Some investment portfolio advisers (or their affiliates) may pay us compensation for servicing, administration or other expenses. Currently, these advisers include A I M Management Group, Inc.; Fidelity Investments; Fred Alger Management, Inc.; INVESCO Funds; Neuberger Berman Management, Inc.; and Van Eck Global. The amount of compensation is usually based on the aggregate assets of the investment portfolio from contracts that we issue or administer. Some advisers may pay us more than others. We have agreements with the investment portfolio advisers under which we receive certain fees in return for providing certain services. These fees are commonly known as 12(b)(1) fees. These fees are usually charged by the advisers to the investment portfolios, but are in some cases absorbed by the investment portfolio. A I M VARIABLE INSURANCE FUNDS, INC. A I M Variable Insurance Funds, Inc. is a registered, open-end, series, management investment company. A I M Advisors, Inc., ("AIM") serves as each fund's investment advisor. AIM has acted as an investment advisor since its organization in 1976. Today, AIM, together with its subsidiaries, advises or manages over 110 investment portfolios encompassing a broad range of investment objectives. AIM V.I. Capital Appreciation Fund -- seeks growth of capital through investment in common stocks, with emphasis on medium- and small-sized growth companies. AIM V.I. Government Securities Fund -- seeks to achieve high, current income consistent with reasonable concern for safety of principal by investing in debt securities issued, guaranteed or otherwise backed by the United States Government. THE ALGER AMERICAN FUND The Alger American Fund is a registered investment company organized on April 6, 1988. It is a multi- series Massachusetts business trust. The Fund's investment manager is Fred Alger Management, Inc., which has provided investment advisory services since 1964. Alger American Growth Portfolio -- seeks long-term capital appreciation. The portfolio focuses on companies that generally have broad product lines, markets, financial resources and depth of management. Under normal circumstances, the portfolio invests primarily in equity securities of large companies The portfolio considers a large company to have a market capitalization of $1 billion or greater. Alger American Leveraged AllCap Portfolio -- seeks long-term capital appreciation. Under normal circumstances, the portfolio invests in the equity securities of companies of any size which demonstrate promising growth potential. The portfolio can leverage, that is, borrow money, to buy additional securities. By borrowing money, the portfolio has the potential to increase its returns if the increase in the value of the securities purchased exceeds the cost of borrowing, including interest paid for the money borrowed. - -------------------------------------------------------------------------------- Variable Last Survivor 15 Alger American MidCap Growth Portfolio -- seeks long-term capital appreciation. The portfolio focuses on midsize companies with promising growth potential. Under normal circumstances, the portfolio invests primarily in equity securities of companies having a market capitalization within the range of companies in the S&P(R) MidCap 400 Index. This may not be true during temporary defensive periods. Alger American Small Capitalization Portfolio -- seeks long-term capital appreciation. The portfolio focuses on small, fast-growing companies that offer innovative products, services or technologies to a rapidly expanding marketplace. Under normal circumstances, the portfolio invests primarily in equity securities of small capitalization companies. A small capitalization company is one that has a market capitalization within the range of companies included in the Russell(R) 2000 Growth Index or the S&P(R) SmallCap 600 Index. FIDELITY VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II Fidelity Variable Insurance Products Fund ("VIP" established November 13, 1981) and Variable Insurance Products Fund II ("VIP II" established March 21, 1988) are open-end, diversified, management investment companies. These funds are organized as Massachusetts business trusts. Fidelity Management & Research Company ("FMR") generally manages and runs the funds named here. However, Bankers Trust Company sub-advises VIP II Index 500 Portfolio. FMR is the management arm of Fidelity Investments, which was established in 1946 and is now America's largest mutual fund manager. VIP Growth Portfolio -- seeks capital appreciation. FMR's principal investment strategies include: o Investing primarily in common stocks. o Investing in companies that it believes have above-average growth potential (stocks of these companies are often called "growth" stocks). o Investing in domestic and foreign issuers. o Using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. VIP Money Market Portfolio -- seeks as high a level of current income as is consistent with the preservation of capital and liquidity. FMR's principal investment strategies include: o Investing in U.S. dollar-denominated money market securities, including U.S. Government securities and repurchase agreements, and entering into reverse repurchase agreements. o Investing more than 25% of total assets in the financial services industry. o Investing in compliance with industry- standard requirements for money market funds for the quality, maturity and diversification of investments. VIP Overseas Portfolio -- seeks long term growth of capital. FMR's principal investment strategies include: o Investing at least 65% of total assets in foreign securities. o Investing primarily in common stocks. o Allocating investments across countries and regions considering the size of the market in each country and region relative to the size of the international market as a whole. o Using fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. VIP II Asset Manager Portfolio -- seeks high total return with reduced risk over the long term by allocating its assets among stocks, bonds, and short-term instruments. FMR's principal investment strategies include: o Allocating the fund's assets among stocks, bonds, and short-term and money market instruments. o Maintaining a neutral mix over time of 50% of assets in stocks, 40% of assets in bonds, and 10% of assets in short-term and money market instruments. o Adjusting allocation among asset classes gradually within the following ranges: stock class (30 - 70%), bond class (20 - 60%), and short-term/money market class (0 - 50%). o Investing in domestic and foreign issuers. o Analyzing an issuer using fundamental and/or quantitative factors and evaluating each security's current price relative to estimated long-term value in selecting instruments. - -------------------------------------------------------------------------------- Variable Last Survivor 16 VIP II Index 500 Portfolio -- seeks investment results that correspond to the total return of common stocks publicly traded in the United States as represented by the S&P 500. Bankers Trust Company (BT)'s principal investment strategies include: o Investing at least 80% of assets in common stocks included in the S&P 500. o Lending securities to earn income for the fund. INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO Variable Investment Funds, Inc. is a registered, open-end management investment company. It was organized as a Maryland corporation on August 19, 1993. It is currently made up of ten diversified investment portfolios. We describe five of these investment portfolios here. INVESCO Funds Group, Inc. is the Funds' investment adviser. As the adviser, it is mostly responsible for providing the portfolios with investment management, various administrative services, and supervising the Fund's daily business affairs. INVESCO Capital Management, Inc. sub-advises the Total Return Fund. "VIF" refers to INVESCO Variable Investment Fund. INVESCO Distributors, Inc. ("IDI"), provides distribution services for the INVESCO Variable Investment Funds, Inc. INVESCO VIF-Equity Income Fund -- seeks high current income, with growth of capital as a secondary objective. The fund normally invests at least 65% of its assets in dividend-paying common and preferred stocks, although in recent years that percentage has been somewhat higher. Stocks held by the fund generally are expected to produce a relatively high level of income and a consistent, stable return. Although it focuses on the stocks of larger companies with a strong record of paying dividends, the fund also may invest in companies that have not paid regular dividends. The fund's equity investments are limited to stocks that can be traded easily in the United States; it may, however, invest in foreign securities in the form of American Depository Receipts (ADRs). The rest of the fund's assets are invested in debt securities, generally corporate bonds that are rated investment grade or better. The fund also may invest up to 15% of its assets in lower-grade debt securities commonly known as "junk bonds", which generally offer higher interest rates, but are riskier investments than investment grade securities. INVESCO VIF-High Yield Fund -- seeks to provide a high level of current income. It invests substantially all of its assets in lower- rated debt securities, commonly called "junk bonds," and preferred stock, including securities issued by foreign companies. Although these securities carry with them higher risks, they generally provide higher yields-- and therefore higher income--than higher-rated debt securities. INVESCO VIF-Small Company Growth Fund -- seeks to make your investment grow over the long term. The fund normally invests at least 80% of its assets in equity securities of companies with market capitalizations of $1 billion or less. INVESCO use a bottom-up investment approach to the fund's investment portfolio, focusing on companies that are in the developing stages of their life cycles. Using this approach, we try to identify companies that we believe are undervalued in the marketplace, have earnings which may be expected to grow faster than the U.S. economy in general, and/or offer the potential for accelerated earnings growth due to rapid growth of sales, new products, management changes, or structural changes in the economy. The prices of securities issued by these small companies tend to rise and fall more rapidly than those of more established companies. The remainder of the fund's assets can be invested in a wide range of securities that may or may not be issued by small companies. In addition to equity securities, the fund can invest in foreign securities and debt securities, including so-called "junk bonds." INVESCO VIF-Total Return Fund -- seeks to provide you with high total return through both growth and current income from those investments. It normally invests at least 30% of its assets in common stocks of companies with a - -------------------------------------------------------------------------------- Variable Last Survivor 17 strong history of paying regular dividends and 30% of its assets in debt securities. Debt securities include obligations of the U.S. Governments and government agencies. The remaining 40% of the fund is allocated among these and other investments at INVESCO's discretion, based upon current business, economic and market conditions. INVESCO VIF-Utilities Fund -- seeks capital appreciation and income. The fund is aggressively managed. Although the fund can invest in debt securities, it primarily invests in equity securities that INVESCO believes will rise in price faster than other investments, as well as options and other investments whose value is based upon the values of equity securities. The fund normally invests at least 80% of its assets in companies doing business in the utilities economic sector. The remainder of the fund's assets are not required to be invested in the sector. NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST The Neuberger Berman Advisers Management Trust (the "Trust," formerly known as Neuberger & Berman) is a registered, open-end management investment company. It is organized as a Delaware business trust dated May 23, 1994. The Trust is made up of separate portfolios, each of which invests all of its net investable assets in a matching series of Advisers Managers Trust ("AMT" or "Managers Trust"). The Managers Trust is a diversified, open-end management investment company organized as a New York common law trust on May 24, 1994. This master feeder structure is different from that of many other investment companies. Many other investment companies directly purchase and manage their own securities portfolios. Neuberger Berman Management Incorporated acts as investment manager to Managers Trust. Neuberger Berman, L.L.C. is the sub-adviser. The investments for the Portfolio are managed by the same portfolio manager(s) who manage one or more other mutual funds that have similar names, investment objectives and investment styles as the Portfolio. You should be aware that the Portfolio is likely to differ from the other mutual funds in size, cash flow pattern and tax matters. Accordingly, the holdings and performance of the Portfolio can be expected to vary from those of the other mutual funds. Shares of the separate Portfolios of Neuberger Berman Advisers Management Trust are sold only through the currently effective prospectus and are not available to the general public. Shares of the AMT Portfolios may be purchased only by life insurance companies to be used with their separate accounts which fund variable annuity and variable life insurance policies. Neuberger Berman Growth Portfolio -- seeks capital appreciation, regardless of income. It may invest in small, medium and large capitalization securities believed to have maximum potential for long-term capital appreciation. The portfolio managers currently focus on the securities of medium-capitalization companies. The managers use a growth-oriented investment approach. A growth-oriented approach seeks stocks of companies that are expected to grow at above-average rates. Neuberger Berman Limited Maturity Bond Portfolio -- seeks highest current income consistent with low risk to principal, and liquidity; and secondarily, total return. The Limited Maturity Bond Portfolio invests in a diversified portfolio of U.S. Government and Agency securities and investment grade debt issued by financial institutions, corporations and others. The Limited Maturity Bond Portfolio may invest up to 10% of its net assets, measured at the time of investment, in below investment grade fixed income securities, or comparable unrated securities. The Limited Maturity Bond Portfolio's dollar weighted average portfolio duration may range up to four years. However, the series may invest in securities of any duration. Neuberger Berman Partners Portfolio -- seeks capital growth through an investment approach designed to increase capital with reasonable risk. Its investment program seeks securities believed to be undervalued based on strong fundamentals, including low price to earnings ratio, consistent cash flow, and the company's track record through all points of the market cycle. The portfolio may invest up to 15% of the series' - -------------------------------------------------------------------------------- Variable Last Survivor 18 net assets, measured at the time of investment, in below investment grade corporate debt securities or comparable unrated securities. VAN ECK WORLDWIDE INSURANCE TRUST Van Eck Worldwide Insurance Trust is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on January 7, 1987. On April 12, 1995, Van Eck Investment Trust changed its name to Van Eck Worldwide Insurance Trust. Van Eck Associates Corporation serves as investment adviser and manager to the funds. Van Eck Worldwide Bond Fund -- seeks high total return--income plus capital appreciation--by investing globally, primarily in a variety of debt securities. Van Eck Worldwide Emerging Markets Fund -- seeks long term capital appreciation by investing in equity securities in emerging markets around the world. Van Eck Worldwide Hard Assets Fund -- seeks long term capital appreciation by investing primarily in "hard assets securities." Income is a secondary consideration. Hard assets include: o precious metals; o forest products; o ferrous and non-ferrous metals; o gas, petroleum, petrochemical or other hydrocarbons; o real estate; and o other basic non-agricultural commodities. Van Eck Worldwide Real Estate Fund -- seeks high total return by investing in equity securities of companies that own significant real estate or principally do business in real estate. THE GUARANTEED INTEREST DIVISION You may allocate all or a part of the net premiums and transfers of your net account value into the guaranteed interest division. The guaranteed interest division is part of our general account which guarantees principal. It pays interest at a fixed rate that we declare. The general account supports our non-variable insurance and annuity obligations. We have not registered interests in the guaranteed interest division under the Securities Act of 1933. Also, we have not registered the guaranteed interest division or the general account as an investment company under the Investment Company Act of 1940 (because of exemptive and exclusionary provisions). This means that the general account, the guaranteed interest division and its interests are generally not subject to regulation under these Acts. The SEC staff has not reviewed the disclosures included in this prospectus relating to the general account and the guaranteed interest division. These disclosures, however, may be subject to certain requirements of the federal securities law regarding accuracy and completeness of statements made in this prospectus. The amount you have in the guaranteed interest division is the sum of net premiums you allocate to that division, plus transfers you made to the guaranteed interest division, plus interest earned. Amounts you transfer out of or withdraw from the guaranteed interest division reduce this amount. It is also reduced by deductions for charges from your account value allocated to the guaranteed interest division. We declare the interest rate that applies to all amounts in the guaranteed interest division. These interest rates are never less than the minimum guaranteed interest rate of 4.0% and will be in effect for periods of at least twelve months. Interest compounds daily at an effective annual rate that equals the declared rate. We credit interest to the guaranteed interest division on a daily basis. We pay interest regardless of the actual investment performance of our account. We bear all of the investment risk for the guaranteed interest division. MAXIMUM NUMBER OF INVESTMENT DIVISIONS You may invest in a total of eighteen divisions over the lifetime of your policy. Investment divisions include the variable and the guaranteed interest divisions. The loan division does not count toward the eighteen division maximum. As an example, if you have had funds in seventeen variable divisions and the guaranteed interest division (or eighteen variable divisions), these are the only divisions to which you may later add or transfer - -------------------------------------------------------------------------------- Variable Last Survivor 19 funds. You may want to use fewer divisions in the early years of your policy, so that you can invest in other divisions in the future. Further, if you invest in eighteen variable divisions, you will not be able to invest in the guaranteed interest division. DETAILED INFORMATION ABOUT THE VARIABLE LAST SURVIVOR UNIVERSAL LIFE POLICY This prospectus describes our standard Variable Last Survivor Universal Life insurance policy. There may be differences in the policy because of state requirements where we issue your policy. We will describe any such differences in your policy. The illustrations beginning on page 60 show how the Variable Last Survivor policies work. APPLYING FOR A POLICY You may purchase a Variable Last Survivor policy by submitting an application to us. On the policy date, the joint equivalent age of the two insured people must be no older than age 85. The insured people are the two people on whose lives we issue the policy. The insured people share some relationship and commonly include, among others: husband and wife; business partners; parent and child; grandparent and grandchild; and siblings. Upon the second death of the insured people we pay the death proceeds. Age is each insured person's age on the birthday nearest the policy date plus the number of completed policy years since the policy date. The individual age of each insured person must be no more than 90 years of age on the policy date. There is no maximum age difference between the two insured people. We may back-date the policy up to six months to allow either or both of the insured people to give proof of a younger age for the purposes of your policy. POLICY ISSUANCE Before we issue a policy or apply your net premium to the investment divisions, we require satisfactory evidence of insurability of both insured people and payment of your initial premium. This evidence may include a medical examination and completion of all underwriting and issue requirements. The investment date is the date we apply your initial net premium to the policy. It is the valuation date when we have received your initial premium, your policy is issued, and all issue requirements have been met. Your initial premium is the premium we must receive before coverage can begin. The initial premium is the first premium we receive and apply to your policy. It must be at least equal to the sum of the scheduled premiums which are due from your policy date through your investment date. If you have a policy with no adjustable term insurance rider, your stated death benefit may be no less than $250,000. If you choose to have an adjustable term insurance rider, your stated death benefit may be as little as $100,000, as long as your target death benefit is at least $250,000. SEE CHANGES IN DEATH BENEFIT AMOUNTS, PAGE 26. We may reduce the minimum stated death benefit for group or sponsored arrangements or corporate purchasers. Our underwriting and reinsurance procedures in effect at the time you apply limit the maximum stated death benefit. The policy date as shown on your policy schedule determines: o monthly processing dates; o policy months; o policy years; and o policy anniversaries. It is not affected by the date you receive the policy. The policy date may be different from the date we receive your first premium payment. If the policy date is earlier, we charge monthly deductions from the policy date. DEFINITION OF LIFE INSURANCE We apply a test to make sure that your policy meets the federal tax definition of life insurance. The Guideline Premium/Cash Value Corridor Test applies to your policy. We may limit premium payments relative to your policy death benefit under this test. SEE TAX STATUS OF THE POLICY, PAGE 55. TEMPORARY INSURANCE If you apply and qualify, we may issue temporary insurance in an amount equal to the face amount of insurance for which you applied. The maximum - -------------------------------------------------------------------------------- Variable Last Survivor 20 amount of temporary insurance for binding limited life insurance coverage is $3 million, which includes any in force coverage with us. This temporary insurance is in force as long as you meet all requirements. Coverage begins when: 1. you have completed and signed our binding limited life insurance coverage form; 2. we receive and accept a premium payment of at least your scheduled premium (selected on your application); and 3. part I of the application is completed. Binding limited life insurance coverage ends on the earliest of: o the date we return your premiums; o five days after we mail notice of termination to the address on your application; o the date your policy coverage starts; o the date we refuse to issue you a policy based on your application; or o 90 days after you sign our binding limited life insurance coverage form. There is no death benefit under the temporary insurance agreement if: o there is a material misrepresentation in your answers on the binding limited life insurance coverage form; o there is a material misrepresentation in statements on your application; o the person or persons intended to be the insured people die by suicide or self- inflicted injury; or o the bank does not honor your premium check. PREMIUMS You may choose the amount and frequency of premium payments, within limits. During the continuation of coverage period premium payments will not be accepted or scheduled. SEE CONTINUATION OF COVERAGE, PAGE 31. SCHEDULED PREMIUMS Your premiums are flexible. You may select your scheduled 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 monthly, quarterly, semiannual, or annual basis. You are not required to pay the scheduled premium. Alternatively, you may choose to pay your premium by electronic funds transfer each month. This option is not available for your initial premium. The financial institution that makes your electronic funds transfer may charge for this service. 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. During the special continuation period, your scheduled premium should not be less than the special continuation premium shown in your policy. If you want the guaranteed minimum death benefit, your scheduled premium should not be less than the guarantee period annual premium shown in your policy. SEE GUARANTEED MINIMUM DEATH BENEFIT, PAGE 27. UNSCHEDULED PREMIUM PAYMENTS Generally speaking, you may make unscheduled premium payments at any time, however, we will return all or part of premium payments which are greater than the "seven-pay" limit for your policy if your payment would cause your policy to become a modified endowment contract, unless you send us notice acknowledging the new modified endowment contract status for your policy. SEE MODIFIED ENDOWMENT CONTRACTS, PAGE 56 AND CHANGES TO COMPLY WITH LAW, PAGE 58. If you have an outstanding policy loan and you make an unscheduled payment, we will consider this payment a loan repayment, unless you tell us otherwise. If your payment is a loan repayment, we do not take out the tax and sales charges which apply to premium payments. MINIMUM ANNUAL PREMIUM You must pay a minimum annual premium during your first five policy years to qualify for the special continuation period discussed below. - -------------------------------------------------------------------------------- Variable Last Survivor 21 Your minimum annual premium is based on: o each insured person's age, gender, premium class and any rating; o the stated death benefit of your policy; and o any additional benefits you select. Your minimum annual premium is shown in the schedule pages of your policy. We may reduce the minimum annual premium for group, or sponsored arrangements, or for corporate purchasers. SPECIAL CONTINUATION PERIOD During the special continuation period, we guarantee that your policy will not lapse, regardless of its net cash surrender value, if on a monthly processing date during the first five policy years the sum of: o all premiums that you have paid; minus o partial withdrawals that you have taken; minus o policy loans that you have taken, including accrued loan interest is greater than or equal to; o the minimum monthly premiums for each policy month, starting with the first month of your policy through the current policy monthly processing date. The minimum monthly premium is one-twelfth of the minimum annual premium. During the first five years of your policy, we do not permanently waive certain charges. Instead, we continue to deduct these charges. This deduction may result in your policy having a negative net cash surrender value, unless you pay enough premium to prevent this. The negative balance is your unpaid monthly deductions owing. At the end of the special continuation period to avoid lapse of your policy, you must pay enough premium to bring the net cash surrender value to zero. SEE LAPSE, PAGE 38. ALLOCATION OF NET PREMIUMS The net premium is the balance remaining after we take premium-based charges from your premium payment. We add the net premium to your account value according to your instructions. On the investment date, we will apply the net premium payments we have received from you to your policy. Your initial net premium is allocated to your allocation investment choices on the valuation date when: a) we receive the amount of premium required for your insurance coverage to begin; and b) all issue requirements have been met and received by our customer service center. All amounts you designated for the guaranteed interest division will be allocated to that division. If your state requires return of your premium during the free look period, we invest amounts you have designated for the variable divisions into the Fidelity VIP Money Market Division until 15 days after we issue your policy (deemed delivery time, plus an average free look period, which varies by state). If your state provides for return of account value during the free look period, we invest amounts you designated for the variable divisions directly into your selected investment portfolios. SEE FREE LOOK PERIOD OR RIGHT TO EXAMINE POLICY, PAGE 41. After you make your initial net premium, we allocate net premiums among your investment choices on the valuation date of receipt. We always use your most recent premium allocation instructions. Your instructions must specify percentages that are whole numbers totaling 100%. You may invest in a maximum of eighteen divisions over the lifetime of your policy. This eighteen investment division maximum includes the variable divisions and the guaranteed interest division, but not the loan division. SEE MAXIMUM NUMBER OF INVESTMENT DIVISIONS, PAGE 19. You may make five free premium allocation changes per year. After the five free premium allocation changes, we charge you $25 for each additional allocation change per policy year. The $25 fee is withdrawn from each investment division pro rata to the amount in each division. PREMIUM PAYMENTS AFFECT YOUR COVERAGE Unless you have the guaranteed minimum death benefit feature or are in the special continuation period, your policy continues in effect only until your net cash surrender value no longer covers the monthly deductions for your benefits. If this happens, your policy will enter the 61-day grace period and you must make a premium payment to avoid lapse. SEE LAPSE, PAGE 38, AND SEE GRACE PERIOD, PAGE 38. If you pay your minimum annual premium each year during the first five policy years, we guarantee your policy and riders will not lapse during the special - -------------------------------------------------------------------------------- Variable Last Survivor 22 continuation period, regardless of your net cash surrender value. SEE SPECIAL CONTINUATION PERIOD, PAGE 22. Under the guaranteed minimum death benefit, the stated or base death benefit portion of your policy remains effective until the end of the guarantee period. The guaranteed minimum death benefit feature does not apply to riders which can lapse and terminate during the guarantee period. You must meet all conditions of the guarantee. SEE GUARANTEED MINIMUM DEATH BENEFIT PROVISION, PAGE 27. MODIFIED ENDOWMENT CONTRACTS There are special federal income tax rules for distributions from certain life insurance policies known as "modified endowment contracts." These rules apply to distributions such as policy loans, surrenders, and partial withdrawals. Whether or not these rules apply depends upon whether or not the premiums you paid are greater than the "seven-pay" limit. SEE MODIFIED ENDOWMENT CONTRACTS, PAGE 56. If we find that your scheduled premium causes your policy to be a modified endowment contract on your policy date, we will require you to acknowledge that you know the policy is a modified endowment contract. We will issue your policy based on the scheduled premium you selected. If you do not want your policy to be issued as a modified endowment contract, you may reduce your scheduled premium to a level which does not cause your policy to be a modified endowment contract. We will then issue your policy based on the revised scheduled premium. DEATH BENEFITS You can decide the amount of insurance you need, now and in the future. You can combine the long-term advantages of permanent life insurance base coverage with the flexibility and short-term advantages of term life insurance. Both permanent and term life insurance are available under your variable last survivor policy. When we issue your policy, we base the initial insurance coverage on the instructions in your application. The initial death benefit is the stated death benefit amount. You can add an adjustable term insurance rider or single life term rider for additional insurance coverage. The stated death benefit is the permanent element of your policy. The adjustable term insurance rider is the term insurance element of your policy. As a variable last survivor policy, your policy has a joint nature to the death benefits. This means that we do not pay death proceeds until the second death of the insured people. Your death benefit is calculated as of the date of the second death of the insured people. The adjustable term insurance rider acts as a bridge. It provides term insurance coverage which automatically adjusts to fill the gap between your total death benefit and your base death benefit depending on which death benefit option you choose. If you have a policy with no term rider, your stated death benefit may be no less than $250,000. If you choose to have an adjustable term insurance rider, your stated death benefit may be as low as $100,000, as long as your target death benefit is at least $250,000. We do not guarantee coverage provided by the adjustable term insurance rider under the guaranteed minimum death benefit. It may be to your economic advantage to include part of your insurance coverage under the adjustable term insurance rider. Both the cost of insurance under the adjustable term insurance rider and the cost of insurance for the base death benefit are deducted monthly from your account value and generally increase with the age of the insured people. Use of the adjustable term insurance rider may reduce sales compensation. SEE ADJUSTABLE TERM INSURANCE RIDER, PAGE 29. - -------------------------------------------------------------------------------- Variable Last Survivor 23
DEATH BENEFIT SUMMARY Option 1 Option 2 Stated Death The amount of policy death benefit at issue, The amount of policy death benefit at issue, Benefit not including rider coverage. A death not including rider coverage. A death benefit benefit increase causes a new death benefit increase causes a new death benefit segment to segment to be added after issue; the amount be added after issue; the amount of the increase of the increase (the stated increase amount) (the stated increase amount) is added to the is added to thestated death benefit. stated death benefit. Base Death The greater of the stated death benefit, or The greater of the stated death benefit, plus the Benefit the account value multiplied by the death account value or the account value multiplied benefit corridor factor. by the death benefit corridor factor. Target Death Stated death benefit plus adjustable term Stated death benefit plus adjustable term Benefit insurance rider benefit. insurance rider benefit. Adjustable This amount is set at issue and can be This amount is set at issue and can be Term Insurance scheduled to change each year. If the base scheduled to change each year. If the base Rider Benefit death benefit increases to meet the death benefit increases to meet the requirements of the Guideline requirements of the Guideline Premium/Cash Premium/Cash Value Corridor Test, the Value Corridor Test, the adjustable term adjustable term insurance benefit will be insurance rider benefit will be decreased. It decreased so that the sum of the base death will be decreased so that the total death benefit benefit and the adjustable term insurance is the greater of the target death benefit plus rider benefit is not greater than the target the account value, or the account value death benefit. If the base death benefit multiplied by the death benefit corridor factor. becomes greater than the target death In other words, the adjustable term insurance benefit, the adjustable term insurance rider rider benefit can be defined as the total death benefit is zero. In other words, the benefit minus the base death benefit, but it will adjustable term insurance rider benefit can not be less than zero. be defined as the target death benefit minus base death benefit, but it will not be less than zero. Total Death The greater of the target death benefit and The greater of the target death benefit plus the Benefit the base death benefit. account value, or the base death benefit plus the adjustable term insurance rider benefit.
BASE DEATH BENEFIT Your base death benefit can be different from your stated death benefit as a result of: o your choice of death benefit option; o your choice of the enhanced death benefit corridor option; o a change in your death benefit option; o increases to satisfy the federal income tax law definition of life insurance; o partial withdrawals; o increases or decreases in the stated death benefit; or o a transaction which causes the base death benefit to change. As long as your policy is in force, we will pay the death proceeds to your beneficiary(ies) at the second death of the insured people. The beneficiary(ies) is(are) the person (people) you name to receive the death proceeds from your policy. The death proceeds are: o your base death benefit; plus o any rider benefits; minus o your outstanding policy loan with accrued loan interest; minus o outstanding policy charges due before the second death of the insured people. There could be outstanding policy charges if the - -------------------------------------------------------------------------------- Variable Last Survivor 24 second death of the insured people happens while your policy is in the grace period or in the five-year special continuation period. DEATH BENEFIT OPTIONS You have a choice of two death benefit options in addition to the enhanced death benefit corridor option: option 1 or option 2 (described below). Your choice may result in your having a base death benefit, which is greater than your stated death benefit. Your death benefit is calculated as of the date of the second death of the insured people. You may change your death benefit option after the policy date and before the continuation of coverage feature begins. You may not change your enhanced death benefit corridor option. You must choose whether or not you want the enhanced death benefit corridor option before we issue your policy. SEE CHANGES IN DEATH BENEFIT OPTION 1 OR 2, PAGE 25. Under death benefit option 1, your base death benefit is the greater of: 1. your stated death benefit; or 2. your account value multiplied by the appropriate factor from the "Definition of Life Insurance Factors" shown in Appendix A or B depending on whether or not you elect the enhanced death benefit option. Under death benefit option 2, your base death benefit is the greater of: 1. your stated death benefit plus your account value; or 2. your account value multiplied by the appropriate factor from the "Definition of Life Insurance Factors" shown in Appendix A or B depending on whether or not you elect the enhanced death benefit option. Under option 1 positive investment performance is generally reflected in a reduced net amount at risk. This lowers your policy's total cost of insurance charges. Option 1 offers insurance coverage that is a set amount with potentially lower cost of insurance charges over time. You should choose option 2 if you want to have investment performance reflected in your insurance coverage. Federal income tax law requires that your death benefit be at least as much as your account value multiplied by a factor defined by law. This factor is based on: o the younger insured person's age; and o the Guideline Premium/Cash Value Corridor Test for the federal income tax law definition of life insurance; and o the enhanced death benefit corridor option, if elected. We will adjust your policy to continue to qualify as life insurance under the federal income tax laws in existence at the time the policy was issued. CHANGES IN DEATH BENEFIT OPTION 1 OR 2 You may request a change in your death benefit option 1 or 2 after your first policy year and before the continuation of coverage feature begins. Your death benefit option change is effective on your next monthly anniversary after we accept and approve your requested change, so long as at least five days remain before your monthly anniversary. If fewer than five days remain before your monthly anniversary, your death benefit option change is effective on your next monthly anniversary. 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 note the change in your schedule. A death benefit option change applies to your entire stated or base death benefit. Changing your death benefit option may reduce or increase your target death benefit, as well as your stated death benefit. We may not allow you to change the death benefit option if it reduces the target or stated death benefit below the minimum we require to issue your policy. On the effective date of your option change, your stated death benefit is changed as follows: Change Change Stated Death Benefit From To Following Change: Option 1 Option 2 your stated death benefit before the change minus your gross account value as of the effective date of the change. Option 2 Option 1 your stated death benefit before the change plus your gross account value as of the effective date of the change. - -------------------------------------------------------------------------------- Variable Last Survivor 25 We increase or decrease your stated death benefit to keep the net amount at risk the same on the date you change your death benefit option. Additionally, there is no change to the amount of term insurance if you have an adjustable term insurance rider. SEE COST OF INSURANCE CHARGES, PAGE 50. If you change your death benefit option, we adjust the stated death benefit for each of your segments by allocating your account value to each benefit segment. If you change from death benefit option 1 to option 2, your stated death benefit is decreased by the amount of your account value allocation to that segment. If you change from death benefit option 2 to option 1, your stated death benefit is increased by the amount allocated to that segment. We do not impose a surrender charge for any decrease in your stated death benefit due to your changing your death benefit option. There is no change to the target premium. SEE SURRENDER CHARGE, PAGE 51. Death benefit option 2 is not available during the continuation of coverage period. If you select this on your policy, it automatically converts to death benefit option 1 upon the younger insured person's 100th birth date. ENHANCED DEATH BENEFIT CORRIDOR OPTION You may elect, at any time prior to the issuance of your policy, the enhanced death benefit corridor option. This option generally provides an opportunity for you to have an increased death benefit on the lives of the insured people at certain ages. Under death benefit options 1 and 2, to calculate your base death benefit value, your account value is multiplied by a factor shown in Appendix A or B depending on whether or not you elect this option. The result of this calculation is your base death benefit if it exceeds your stated death benefit. Under the enhanced death benefit corridor option, we calculate your base death benefit using the factors shown on Appendix B. SEE DEATH BENEFIT OPTIONS, PAGE 25. There is no separate charge for this feature. However, the same account value may generate a higher base death benefit under policies with this option than on policies where you do not elect the option. Cost of insurance charges are based on the net amount at risk, which is the difference between the account value and the base death benefit. Therefore, as a result of the increased death benefit, the cost of insurance charges may be higher for policies where you elect this option. Your registered representative/agent can provide you with a personalized illustration to show the difference between a policy with this option and one without it. If your policy does not have sufficient account value, electing this option may have no effect on your base death benefit. Adding this option to your policy does not affect the operation of your policy's riders, including the adjustable term insurance rider. When the base death benefit is more than the stated death benefit, transactions which reduce your account value (such as a partial withdrawal) also reduce your death benefit. The dollar reduction to the death benefit under these circumstances is greater for policies with the enhancement option than on those without the option. Once elected, this option cannot be deleted from your policy. You may lose the benefit of this option if your account value falls below the minimum level needed to keep it in effect. Once elected, this option continues as long as coverage on the original insured people continues. CHANGES IN DEATH BENEFIT AMOUNTS You may want to increase the target or stated death benefit under your policy. You may do this while your policy is in force and before the policy anniversary when the joint equivalent age of the insured people is 85. You must provide satisfactory evidence that each insured person is still insurable to increase your death benefit. You may request a decrease in the stated death benefit only after your first policy anniversary. Contact our customer service center to request an increase or decrease in your policy death benefit. The request is effective as of the next monthly processing date after we receive your request and approve it, unless there are underwriting or other requirements which must be met before your request is effective. Any requested change in your coverage must be for at least $1,000. After we approve your request, we will send you a new schedule page for your policy which includes the: o stated death benefit; o benefit under applicable riders; o guaranteed cost of insurance rates of each segment; - -------------------------------------------------------------------------------- Variable Last Survivor 26 o new surrender charge; and o target death benefit schedule. Keep the new schedule with your policy. We may ask you to send your policy to us so that we can note the change in your schedule. We may not approve a requested change because it will disqualify your policy as life insurance under the applicable federal income tax law. If we disapprove a change for any reason, we provide you with a notice of our decision. SEE TAX CONSIDERATIONS, PAGE 55. If your policy does not have an adjustable term insurance rider, your stated death benefit may be no less than $250,000. If you choose to have an adjustable term insurance rider, your stated death benefit may be as low as $100,000 as long as your target death benefit is at least $250,000. There may be tax consequences as a result of a decrease in your death benefit, as well as a possible surrender charge. SEE TAX STATUS OF THE POLICY, PAGE 55 AND MODIFIED ENDOWMENT CONTRACTS, PAGE 56. Requested reductions in the death benefit will first be applied to decrease the target death benefit. We decrease your stated death benefit only after your adjustable term insurance rider coverage is reduced to zero. If you have more than one segment (see below), we divide subsequent decreases in stated death benefit among your benefit segments pro rata unless state law requires differently. Unless you tell us differently, we assume any request you make for an increase in your target death benefit is also a request for an increase to the stated death benefit. Thus, the amount of your adjustable term insurance rider will not change. You may change the target death benefit only once in a policy year. The initial, or first segment, is the stated death benefit on the effective date of the policy. An increase in the stated death benefit (other than one caused by an option change) will cause a new segment to be created. The segment year begins on the segment effective date and ends one year later. The following may apply to each new segment: o a new minimum annual premium during the first five years of your policy; o a new sales charge; o new surrender charges; o new cost of insurance charges, guaranteed and current; o a new incontestability period; o a new suicide exclusion period; and o a new target premium. A requested increase in your stated death benefit creates a new segment. Once we create a new segment, it is permanent unless state law requires differently. If an option change causes the stated death benefit to increase, no new segment is created. Instead, the size of each existing segment(s) is(are) changed. If it causes the stated death benefit to decrease, each segment is decreased. To determine the applicable sales charge, premiums you pay after an increase are applied to your policy segments in the same proportion as the target premium for each segment bears to the sum of the target premium for all segments. We allocate the net amount at risk among segments in the same proportion that each segment bears to the total stated death benefit. GUARANTEED MINIMUM DEATH BENEFIT Usually, how long your policy remains in force depends on your policy's net cash surrender value. Because we deduct charges monthly from your net cash surrender value, your coverage lasts only as long as your net cash surrender value is enough to pay these charges and your account value is more than your loan interest due during the special continuation period. Your account value and the length of time your policy remains in force depends on: 1. timing and amount of any premium payments; 2. the investment performance of the variable divisions; 3. the interest you earn in the guaranteed interest division; 4. the amount of your monthly charges; and 5. partial withdrawals you take. You can choose whether or not to put the guaranteed minimum death benefit feature in force only at the issue of your policy. This feature extends the period that your policy's stated death benefit remains in effect even if the variable divisions have poor investment performance. It has a guarantee period - -------------------------------------------------------------------------------- Variable Last Survivor 27 that lasts until the younger insured person's 100th birth date, so long as you have met all requirements. The guaranteed minimum death benefit coverage does not apply to any riders, including the adjustable term insurance rider. Therefore, if your net cash surrender value is not enough to pay the deductions as they come due on your policy and if your policy is outside the special continuation period, only the stated death benefit portion of your coverage is guaranteed to stay in force. All riders will end. The guaranteed minimum death benefit feature is not available in some states. If you choose the guaranteed minimum death benefit feature, we currently charge the guaranteed rate of $0.005 per $1,000 of your stated death benefit each month during the guarantee period. REQUIREMENTS TO MAINTAIN THE GUARANTEE PERIOD To qualify for the guaranteed minimum death benefit you must pay an annual premium higher than the minimum annual premium. This higher premium is called the guarantee period annual premium. The guarantee period monthly premium is equal to one-twelfth of the guarantee period annual premium. Your net account value must also meet certain diversification requirements. Your guarantee period annual premium depends on: o your policy's stated death benefit; o each insured person's age, gender, premium class and underwriting characteristics; o the death benefit option you chose; o additional rider coverage on your policy; and o other additional benefits on your policy. At each monthly processing date we test to see if you have paid enough premium to keep your guarantee in place. We calculate: o actual premiums paid; minus o the amount of any partial withdrawals you make; minus o policy loans you take with accrued loan interest. This amount must equal or exceed; o the sum of the guarantee period monthly premium payments for each policy month starting with your first policy month through the end of the policy month that begins on the current monthly processing date. You must continually meet the requirements of the guarantee period for this feature to remain in effect. We show the guarantee period annual premium on your policy schedule. If your policy benefits increase, the guarantee period annual premium increases. If your policy fails to meet this test on any monthly processing date, the guarantee period ends, and thus the guaranteed minimum death benefit lapses. The guarantee period ends if your net account value on any monthly processing date is not diversified as follows: 1. you must invest your net account value in at least five investment divisions; and 2. you may invest no more than 35.0% of your net account value in any one division. Your policy will continue to meet the diversification requirements if: 1. you have automatic rebalancing and you meet the two diversification tests listed above; or 2. you have dollar cost averaging which results in transfers into at least four additional investment divisions with no more than 35.0% of any transfer directed to any one division. SEE DOLLAR COST AVERAGING, PAGE 34, AND AUTOMATIC REBALANCING, PAGE 35. If you fail to satisfy either the premium test or the diversification test and you do not correct it, this feature terminates. Once it terminates, you cannot reinstate the guaranteed minimum death benefit feature. The guaranteed period annual premium no longer applies. ADDITIONAL BENEFITS Your policy may include additional benefits, which we attach by rider. A rider changes benefits under your policy and may or may not add an additional cost to your policy. We deduct a monthly charge from your account value for each rider you choose. You may cancel these rider benefits at any time. If you choose any of these benefits your policy will include the details. Not all riders are available for all policies. You may schedule your term rider coverage to increase or decrease at issue. If you want to increase your scheduled benefits after issue of your - -------------------------------------------------------------------------------- Variable Last Survivor 28 rider, new guidelines may apply. Scheduled benefits are the kind and amount of benefits you choose under your policy over a stated period of time. Periodically we may offer other riders than those listed here. You should contact your registered representative for a complete list of the riders now available. SEE MODIFIED ENDOWMENT CONTRACTS, PAGE 56, FOR INFORMATION ON THE POSSIBLE TAX EFFECTS OF ADDING OR CANCELING THESE BENEFITS. ADJUSTABLE TERM INSURANCE RIDER You may increase your death proceeds by adding an adjustable term insurance rider. The amount we pay is the term death benefit in force at the time of the second death of the two people. As the name suggests, the adjustable term insurance rider adjusts over time. You specify a target death benefit when you apply for this rider. The target death benefit can be level or can be scheduled to change at the beginning of any policy year. We generally restrict your target death benefit to an amount not more than four times your stated death benefit at issue. Under certain circumstances, we will be willing to allow you to specify a target death benefit of up to eight times your stated death benefit during the first four policy years. After this four-year period, the normal target death benefit maximum would apply. The death benefit for the adjustable term insurance rider is the difference between your total death benefit and your base death benefit. The death benefit automatically adjusts daily as your base death benefit changes. 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: a. the target death benefit, or b. the account value multiplied by the appropriate factor from the death benefit corridor factors in the policy. OPTION 2: If option 2 is in effect the total death benefit is the greater of: a. the target death benefit plus the account value; or b. the account value multiplied by the appropriate factor from the death benefit corridor factors in the policy. For example, under option 1, assume your base death benefit increases because of or as a result of an increase in your account value. The adjustable term insurance rider adjusts to provide death proceeds equal to your total death benefit in each year: Base Death Total Death Adjustable Term Benefit Benefit Insurance Rider Amount ---------- ----------- ---------------------- 201,500 250,000 48,500 202,500 250,000 47,500 202,250 250,000 47,750 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, the adjustable term insurance would be zero. The adjustable term insurance can never be less than zero. Even when the adjustable term insurance is reduced to zero, your rider remains in effect until you remove it from your policy. Therefore, if later the base death benefit is reduced below your target death benefit, the adjustable term insurance rider amount reappears to maintain the total death benefit. You may change the target death benefit schedule after it is issued, based on our rules. SEE CHANGES IN DEATH BENEFIT AMOUNTS, PAGE 26. We may deny any future, scheduled increases to your target death benefit if you cancel a scheduled change, or if you ask for an unscheduled decrease in your target death benefit. Partial withdrawals, changes from death benefit option 1 to death benefit option 2, and base decreases may reduce the amount of your target death benefit. SEE PARTIAL WITHDRAWALS, PAGE 37 AND CHANGES IN DEATH BENEFIT OPTION, PAGE 25. There is no defined premium for a given amount of adjustable term insurance coverage. Instead, we deduct a monthly cost of insurance charge from your account value. The cost of insurance for this rider is calculated as the monthly cost of insurance rate for the rider coverage multiplied by the adjustable term death benefit in effect that month. The cost of insurance rates will be determined by us from time to - -------------------------------------------------------------------------------- Variable Last Survivor 29 time. They will be based on the issue ages, genders and premium classes of the insureds, as well as the length of time since your policy date. The monthly guaranteed maximum cost of insurance rates for this rider will be in the policy. SEE COST OF INSURANCE CHARGES, PAGE 50. There are no sales or surrender charges for this coverage. This means that an increase in your target death benefit which does not increase your stated death benefit does not increase the total surrender charge for your policy. Further, a decrease in your adjustable term insurance rider coverage does not cause a surrender charge to be assessed. If the target death benefit schedule is increased by you after the rider is issued, we use the same rates for the entire coverage for this rider. These rates are based on the original premium classes even though satisfactory new evidence of insurability is given to us for the increased schedule. SINGLE LIFE TERM RIDER This rider provides a benefit upon the death of one of the primary insured people under your policy. You may choose to add a single life term rider to just one insured person; or, you may add two single life term riders: one for each insured person under your policy. You may add this rider when your policy is issued or at a later time. The insured person must be insurable according to our rules. We will issue the single life term rider for an insured person who is age 85 or younger. Coverage may continue under this rider until the earlier of when: o the insured person covered by this rider reaches age 100; o the continuation of coverage provision becomes effective; and o the insured person covered by this rider dies. SEE CONTINUATION OF COVERAGE, PAGE 31. The minimum amount of coverage for each single life term rider is $1,000. The maximum coverage for an insured person under this rider is subject to our underwriting determinations. We can schedule the death benefit for your single life term rider when we issue it. You may increase or decrease coverage under this rider. Your request for an increase or decrease in coverage is effective as of the next monthly processing date after we approve your request, unless there are underwriting or other requirements which must be met before your request is effective. Any requested change in your coverage must be for at least $1,000. If you schedule or request an increase after issue, the insured person under this rider will again be subject to our underwriting requirements. The charge for this rider is based on the age, gender, premium class, and underwriting characteristics of the insured person covered by this rider. The charge for this rider is deducted on each monthly processing date. It is charged as a cost per each $1,000 of the net amount at risk under this rider. See the schedule pages attached to your policy for information on your actual cost. There are no surrender charges for decreases in the amount of coverage under the single life term rider. SPECIAL FEATURES POLICY MATURITY You can surrender your policy at anytime. However, at the younger insured person's 100th birth date, if you do not want the continuation of coverage feature, you should surrender the policy, otherwise continuation of coverage will become effective. Your policy then ends. Some part of this payment may be taxable. You should consult your tax adviser. POLICY SPLIT OPTION Under certain circumstances, you may exchange your policy for a single life insurance policy on each person insured under your policy. You do not need to provide evidence of insurability on either insured person to make this exchange if there is no overall increase in death benefit amounts, and neither single life policy coverage is greater than 50% of the original death benefit. On the effective date of the exchange, the available death benefit under your policy will be divided between the two single life insurance policies. The maximum amount you may allocate to each single life policy without underwriting is 50% of your available death benefit amount. The sum of the face amounts for the two single life insurance policies may not be more than the total death benefit amount under your original policy. You are not required to use the maximum death benefit amount available for either insured person. You may split your policy to provide coverage of more than 50% of the total death benefit under your - -------------------------------------------------------------------------------- Variable Last Survivor 30 original policy for one insured person. To do so, you must provide proof that the insured person is insurable at the time of the policy split. For coverage of 50% or less of the total death benefit under your original policy, you do not need to provide proof of insurability. You may use the policy split option if: a) there is a final divorce decree regarding the marriage of the two insured people; b) there is a change to the federal estate tax law which results in either: i) removal of the unlimited marital deduction provision; or ii) a reduction in the current maximum federal estate tax of at least a 50% reduction after your policy date; or c) there is a dissolution of business carried on or owned by the two insured people. You must send us written notice of your election to split your policy under the policy split option within 180 days of the occurrence of these stated events. You must provide satisfactory evidence that the contingent event has occurred. The effective date of the exchange is the first monthly processing date after we have approved your policy exchange. The insurance under the two individual life insurance policies will start on the effective date of your exchange only if both insured people are alive on that date. The new single life insurance policies will not provide insurance coverage until that time. If either insured person is not alive on that date, your exchange is void. All terms and conditions under the new policies apply once your policy is split. Consult your new single life insurance policies upon split. The premiums under each new policy will be based on each insured person's age, gender and premium class at the time of the split of your policy. Premiums will be due for each new policy under the terms of the new policy as of the effective date of the exchange. The surrender value of the old policies will be allocated to the new policies on the effective date of the exchange in the same proportion that the face amount was divided between the two single life insurance policies, unless we agree to a different allocation. If this allocation would cause an increase in the face amount of either new single life insurance policy, we may limit the amount of surrender value you may apply to each new policy. Any remaining surrender value will be paid to you in cash, and may be taxable. Any loan on your policy will be divided and transferred to each new single life insurance policy in the same proportion as your cash value is allocated. Any remaining outstanding loan balance must be paid in cash before the effective date of the exchange. Any person or entity to which you have assigned your policy must agree to the exchange. Any assignment of your policy will apply to each new single life insurance policy. If you have a single life term insurance rider on your policy at the date of the policy split, you may have a term insurance rider insuring the same insured person if such a rider is available on the new policy. Any other riders on new policies are subject to the availability of the riders under the new policy and new proof of insurability of the insured people. Your right to split your policy into two single life insurance policies ends on the earliest of: a) the policy anniversary nearest the younger insured person's 100th birth date; or b) the first death of the insured people; c) the end of your policy grace period; or d) the termination or surrender of your policy. Exercising the policy split option may be treated as a taxable transaction. Moreover, the two single life insurance policies that result from a policy split could be treated as a Modified endowment contract. SEE TAX CONSIDERATIONS, PAGE 55. You should consult a tax adviser when exercising the policy split option. RIGHT TO EXCHANGE POLICY During the first 24 months after your policy date, you have the right to exchange your policy to a guaranteed policy, unless state law requires differently. To do this, we transfer the amount you have in the variable divisions to the guaranteed interest division. We allocate all of your future net premiums only to the guaranteed interest division. We do not allow any future payments or transfers to the variable divisions when you exercise this right. We will not charge you for the transfer to make this exchange. SEE THE GUARANTEED INTEREST DIVISION, PAGE 19. CONTINUATION OF COVERAGE The continuation of coverage feature allows insurance coverage to continue in force beyond the younger insured person's 100th birth date. If you choose to allow the continuation of coverage feature to become effective, we: - -------------------------------------------------------------------------------- Variable Last Survivor 31 o transfer your net account value (excluding the amount in the loan division) into the guaranteed interest division; o charge a one-time $400 administrative fee to your policy to cover future expenses; o terminate all riders; o convert death benefit option 2 to death benefit option 1, if applicable; and o terminate investment features such as dollar cost averaging and automatic rebalancing. At the younger insured person's 100th birth date, if you have then in effect, an adjustable term insurance rider, the target death benefit becomes the stated death benefit. The adjustable term insurance rider then terminates. If you have no adjustable term insurance rider coverage, your stated death benefit is unchanged. You may make no further premium payments. Your insurance coverage continues in force until the second death of the insured people, unless the policy lapses or is surrendered. However, we deduct no further cost of insurance charges. Your monthly deductions also cease when continuation of coverage begins. SEE CONTINUATION OF COVERAGE ADMINISTRATIVE FEE, PAGE 50. Your net account value may not be transferred into the variable divisions after the younger insured person's 100th birth date. During the continuation of coverage period, you may take policy loans or partial withdrawals from your policy. If we are paying a persistency refund on the guaranteed interest division, and your policy is in the continuation of coverage period, we credit you with the persistency refund. SEE PERSISTENCY REFUND, PAGE 51. If you have outstanding policy loans, interest continues to accrue. If you fail to make any loan payments or loan interest payments, it is possible that the loan plus accrued interest may become greater than your account value and cause your policy to lapse. To avoid this, you may repay loans and make loan interest payments during the continuation of coverage period. However, we will not accept any additional premium payments. If you wish to stop coverage after the continuation of coverage feature begins, you may surrender your policy and receive the net account value. There is no surrender charge after the younger insured person's 100th birth date. All normal consequences apply. SEE SURRENDER, PAGE 41, AND SURRENDER CHARGE, PAGE 51. The continuation of coverage feature may not be available in all states. If a state has approved this feature, it is an automatic feature and you do not need to take any action to activate it. The tax consequences of coverage continuing beyond the younger insured's person's 100th birth date are uncertain. You should consult a tax adviser as to those consequences. POLICY VALUES ACCOUNT VALUE Your account value is the total amount you have in the guaranteed interest division, the variable divisions, and the loan division. Your account value reflects: o net premiums; o deductions for charges; o partial withdrawals; o investment performance of the variable divisions; o interest earned on the amount you have in the guaranteed interest division; and o interest earned and charged on the amounts you have in the loan division. NET ACCOUNT VALUE Your policy's net account value is your account value minus the amount of your outstanding policy loans (including accrued loan interest). CASH SURRENDER VALUE Your cash surrender value is your account value minus any surrender charge. NET CASH SURRENDER VALUE Your net cash surrender value is your cash surrender value minus the amount of your outstanding policy loans, and accrued loan interest. DETERMINING THE VALUE IN THE VARIABLE DIVISIONS The amounts included in the variable divisions are measured by accumulation units and accumulation unit values. On any given day, the value of a variable division is the accumulation unit value for that division times - -------------------------------------------------------------------------------- Variable Last Survivor 32 the number of accumulation units you own in that division. Each variable division has a different accumulation unit value. You purchase accumulation units of a division whenever you allocate premium or make transfers to that division. This includes transfers from the loan division. We redeem accumulation units from the variable divisions: o when you take a partial withdrawal; o when amounts are transferred from a variable division (including transfers to the loan division); o for the monthly deductions from your account value; o for policy transaction charges; o for surrender charges; o on surrender; and o to pay the death benefit upon the second death of the insured people. We calculate the number of variable division accumulation units purchased or redeemed as of any valuation date by: 1. dividing the dollar amount of your transaction by: 2. the division's accumulation unit value calculated at the close of business on the valuation date of the transaction. The accumulation unit value is the value of an accumulation unit determined as of each valuation date. The accumulation unit value of each division varies with the investment performance of the matching portfolio. It reflects: o investment income; o realized and unrealized capital gains and losses; o investment portfolio expenses; and o daily mortality and expense risk charges we make to the variable account. SEE HOW WE CALCULATE ACCUMULATION UNIT VALUES FOR EACH DIVISION, PAGE 33. The date of a transaction is the valuation date we receive your premium or an acceptable request at our customer service center. If your premium or request reaches our customer service center on a day that is not a valuation date, or after the close of business on a valuation date, the transaction is processed on the next valuation date. Otherwise, your transaction is processed on the valuation date. We take monthly deductions from your account value as of the monthly processing date. If your monthly processing date is not a valuation date, the monthly deduction is processed on the next valuation date. We take transaction charges or surrender charges as of the effective date of your transaction. The value of amounts allocated to the variable divisions goes up or down depending on investment performance. For amounts in the variable divisions, there is no guaranteed minimum cash value. HOW WE CALCULATE ACCUMULATION UNIT VALUES FOR EACH DIVISION We determine accumulation unit values for the variable divisions on each valuation date. We perform all policy transactions as of a valuation date. We generally set the accumulation unit value for a division at $10 on the date when the division is first opened and begins accepting amounts. After that, the accumulation unit value on any valuation date is: 1. the accumulation unit value for the preceding valuation date multiplied by 2. the accumulation experience factor for that division for the valuation period. 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 calculate an accumulation experience factor for each investment division every valuation date as follows: 1. We take the share value of the underlying portfolio shares in the division as reported to us by the investment portfolio managers as of the close of business on that valuation date. 2. We add dividends or capital gain distributions declared per share and reinvested by the investment portfolio on the date that the share value is affected. If applicable, we subtract a charge for taxes from this amount. - -------------------------------------------------------------------------------- Variable Last Survivor 33 3. We divide the remaining amount by the value of the shares in the underlying investment portfolio for the variable division at the close of business on the previous valuation date. 4. We then subtract a charge for the mortality and expense risk which we assume under your policy. The daily charge is .002055% of the accumulation unit value. This is an annual rate of .75% of the accumulation unit value. If the previous day was not a valuation date, the charge is multiplied by the number of days between the two valuation dates. The result of these calculations is the accumulation experience factor for the valuation period. TRANSFERS OF ACCOUNT VALUE You may make up to twelve free transfers among the variable divisions, or the guaranteed interest division, in each policy year. We do not limit your number of transfers, but we charge a $25 fee for each transfer that you make after the first twelve in each policy year. We do not include transfers for automatic rebalancing or dollar cost averaging toward your twelve free transfers. You may make transfer requests in writing, or by telephone if you have telephone privileges, to our customer service center. Your transfer takes effect on the valuation date we receive your request. The minimum amount you may transfer is $100. This minimum does not need to come from one division or be transferred to one division as long as the total amount you transfer is at least $100. However, if the amount remaining in a variable division is less than $100 when you make a transfer request, we transfer the entire amount out of that division. If you elect telephone privileges, you may make transfers by calling our customer service center. You may not make transfers during the continuation of coverage period. SEE TELEPHONE PRIVILEGES, PAGE 44. EXCESSIVE TRADING Excessive trading activity can disrupt investment portfolio management strategies and increase portfolio expenses. Thus, we limit excessive transfer activity. Excessive transfers may cause: o increased trading and transaction costs; o disruption of planned investment strategies; o forced and unplanned portfolio turnover; o lost opportunity costs; and o the investment portfolios to have large asset swings that decrease their ability to provide maximum investment return to all policyowners. In response to excessive trading, we may place restrictions or refuse transfers made by third-party agents acting on behalf of owners such as a market timing service. We will refuse or place restrictions on transfers when we determine, in our sole discretion, that transfers are harmful to the investment portfolios, or to policyowners as a whole. GUARANTEED INTEREST DIVISION TRANSFERS You may transfer from the guaranteed interest division only in the first 30 days of each policy year. Transfer requests received within 30 days before your policy anniversary are deemed to occur on your policy anniversary. Transfer requests made at any other time will not be processed. Transfers from the guaranteed interest division are limited to the largest of: o 25% of your guaranteed interest division balance at the time of your first transfer or withdrawal out of it in that policy year; o the sum of the amounts you have transferred and withdrawn from the guaranteed interest division in the prior policy year; or o $100. Transfers of your account value into the guaranteed interest division are not restricted. DOLLAR COST AVERAGING If your policy has at least $10,000 invested in either the Fidelity VIP Money Market Portfolio, or the Neuberger Berman AMT Limited Maturity Bond Portfolio, you can elect dollar cost averaging. The main goal of dollar cost averaging is to protect your policy values from short-term price changes. DOLLAR COST AVERAGING DOES NOT ASSURE A PROFIT NOR DOES IT PROTECT YOU AGAINST A LOSS IN A DECLINING MARKET. This systematic plan of transferring account values is - -------------------------------------------------------------------------------- Variable Last Survivor 34 intended to reduce the risk of investing too much when the price of an investment portfolio's shares is high. It also reduces the risk of investing too little when the price of an investment portfolio's shares is low. Since you transfer the same dollar amount to other divisions each period, you purchase more units in a division if the unit value is low, and you purchase fewer units if the unit value is high. You may add dollar cost averaging to your policy at any time. The first dollar cost averaging date must be at least five days after we receive your dollar cost averaging request. Dollar cost averaging cannot begin before the end of your free look period, if your state requires return of all premiums paid during the free look period. With dollar cost averaging, you designate either a dollar amount, or a percentage of your account value, for automatic transfer from either the division invested in either the Fidelity VIP Money Market Portfolio or the Neuberger Berman AMT Limited Maturity Bond Portfolio for automatic transfer. Each period, we automatically transfer the amount you select from your chosen source division to one or more other variable divisions. You may not make transfers to or from the guaranteed interest division or the loan division under dollar cost averaging. The minimum percentage you may transfer to any one division is 1.0% of the total amount you transfer to all divisions you select. You must transfer at least $100 for each dollar cost averaging transfer. Dollar cost averaging may occur on the same day of the month either monthly, quarterly, semi-annually, or annually. Unless you tell us otherwise, dollar cost averaging automatically takes place monthly, on the monthly processing date. We do not count dollar cost averaging transfers toward your twelve free transfers per policy year. There is no charge for this feature. You may have both dollar cost averaging and automatic rebalancing at the same time. The dollar cost averaging division from which your transfer will be taken cannot be included in your automatic rebalancing program. CHANGING DOLLAR COST AVERAGING You may change your dollar cost averaging program one time per policy year. If you have telephone privileges, you may make changes to the dollar cost averaging program by telephoning our customer service center. SEE TELEPHONE PRIVILEGES, PAGE 44. TERMINATING DOLLAR COST AVERAGING You may cancel dollar cost averaging by sending satisfactory notice to our customer service center. We must receive it at least five days before the next dollar cost averaging date. Dollar cost averaging will terminate if: 1. you specify a termination date; or 2. your balance remaining in the division from which your dollar cost averaging transfers are taken reaches a dollar amount you set; or 3. on any dollar cost averaging date, the amount in the division from which you want to make a transfer is equal to or less than the amount to be transferred. We will transfer the remaining amount and dollar cost averaging ends. AUTOMATIC REBALANCING Automatic rebalancing provides you with a method for maintaining a consistent approach to investing account values over time, and simplifying the process of asset allocation (by dividing amounts among the investment options you have chosen.) Transfers made for automatic rebalancing do not count toward your twelve free transfers per policy year. There is no charge for this feature. If you choose this feature, on each rebalancing date we transfer amounts among the divisions to match your pre-set automatic rebalancing allocation percentages. After the transfers, the ratio of your account value in each division to your total account value for all divisions included in automatic rebalancing matches the automatic rebalancing allocation percentage for that division. This action rebalances the amounts in the investment divisions that do not match your set allocation. This happens if an investment division outperforms other divisions for that time period. You may choose the automatic rebalancing feature on your application or later by completing our - -------------------------------------------------------------------------------- Variable Last Survivor 35 customer service form. Automatic rebalancing may occur on the same day of the month either monthly, quarterly, semi-annually, or annually. If you do not specify, automatic rebalancing will occur quarterly. If you choose automatic rebalancing on your policy application, the first transfer occurs on the date you select (after your free look period). If you elect this feature after your policy date, we process the first transaction on the date you have requested. If you requested no date, processing is on the last valuation date of the calendar quarter we receive your notice at our customer service center. When you choose automatic rebalancing allocations, you may choose up to eighteen total investment divisions. SEE MAXIMUM NUMBER OF INVESTMENT DIVISIONS, PAGE 19. You may have both automatic rebalancing and dollar cost averaging at the same time. The division from which your dollar cost averaging transfers are taken cannot be included in your automatic rebalancing allocating program. You may not include the loan division in your automatic rebalancing allocations. CHANGING AUTOMATIC REBALANCING 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 guaranteed interest division, it is considered a transfer from that division. You must meet the requirements for the maximum transfer amount and time limitations on transfers from the guaranteed interest division. SEE TRANSFERS OF ACCOUNT VALUES ON PAGE 34. If you have automatic rebalancing and the guaranteed minimum death benefit and you ask for an allocation which does not meet the guaranteed minimum death benefit diversification requirements, we will notify you that the allocation needs to be changed and ask you for revised instructions. TERMINATING AUTOMATIC REBALANCING You may terminate automatic rebalancing at any time, as long as we receive your notice of termination at least five days before the next automatic rebalancing date. If you have the guaranteed minimum death benefit and you terminate the automatic rebalancing feature, you still must meet the diversification requirements of your net account value for the guarantee period to continue. SEE GUARANTEED MINIMUM DEATH BENEFIT, PAGE 27. POLICY LOANS You may borrow against your policy at any time after the first monthly processing date, by using your policy as security for a loan, or as otherwise required by law. The amount you borrow is called a policy loan. Your policy loan is: 1. the total amount you borrow from your policy; plus 2. any policy loan interest that is capitalized when due; minus 3. policy loan repayments you make. Unless state law requires differently, any new policy loan you take must be at least $100. The maximum amount you can borrow on any valuation date, unless required differently by state law, is your net cash surrender value minus the monthly deductions to your next policy anniversary. Your request for a policy loan must be directed to our customer service center. If you have telephone privileges, you may request a policy loan for less than $25,000 by telephoning our customer service center. SEE TELEPHONE PRIVILEGES, PAGE 44. Based on our administrative system, we may have other rules for policy loans. For example, we may require that your loan request be for a dollar amount rather than a percentage to be taken from a specific division. Loan interest charges on your policy loan accrue daily at an annual interest rate of 3.75%. Interest is due in arrears on each policy anniversary. If you do not pay your interest when it is due, we add it to your policy loan on your policy anniversary. If you request an additional loan, we add the amount you request to your existing outstanding policy loan. This way, there is only one loan outstanding on your policy at any time. You may repay all or part of your policy loan at any time while your policy is in force. We assume that any payments you make, other than your scheduled premiums, are policy loan repayments. You must tell us otherwise if you want us to consider additional payments as premiums. - -------------------------------------------------------------------------------- Variable Last Survivor 36 When you request a loan you may specify one investment division from which the loan will be taken. If you do not specify one, the loan will be taken proportionately from each active investment division you have. When you take a policy loan, we transfer an amount equal to your policy loan amount from the variable and the guaranteed interest divisions in the same proportion they represent of your total net account value to the loan division. We follow this same process for loan interest in the amount due at your policy anniversary. We credit the loan division with interest at an annual rate of 3.0%. After your tenth policy year, the loan division is credited with a persistency refund at an annual rate of 0.60%. The loan division is part of our general account, separate from the guaranteed interest division. When we make transfers to the loan division, we redeem sufficient units of the variable divisions to cover the amount of the loan which you take from the variable account. Unless you tell us otherwise, we deduct the amount transferred from each division in the same proportion that your account value in that division has to your net account value immediately before the loan transaction. We determine the amounts in each division as of the valuation date when we receive your loan request. Policy loans may cause your policy to lapse if your net cash surrender value is not enough to pay all deductions each month. SEE LAPSE, PAGE 38. Any policy loans you take may have tax consequences. SEE DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS, PAGE 57, AND DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS, PAGE 57. LOAN REPAYMENT We transfer the amount of interest credited to the loan division for a policy year from the loan division on your policy anniversary. When you make a loan repayment, we transfer an amount equal to your repayment from the loan division up to the amount of your policy loan. Unless you tell us otherwise, we allocate these transfers among the variable divisions and the guaranteed interest division in the same proportion as your current premium allocation. LOANS AND YOUR BENEFITS Taking a loan decreases the amount you have in the variable divisions. Accruing loan interest will change your net account value as compared to what it would have been if you did not take a loan. Even if you repay your loan, it has a permanent effect on your account value. This means that the benefits under your policy may be affected. The loan is a first lien on your policy. This means we deduct your outstanding policy loan and accrued loan interest from the death benefit payable and the cash surrender value payable on surrender. Failure to repay your loan may affect the guaranteed minimum death benefit feature and the length of time your policy remains in force. The policy lapses (FOR EXCEPTIONS, SEE SPECIAL CONTINUATION PERIOD, PAGE 21 AND GUARANTEED MINIMUM DEATH BENEFITS, PAGE 26) when the cash surrender value minus policy loans and accrued loan interest is not enough to cover your monthly deductions. If your policy lapses with a loan outstanding, you may have adverse tax consequences. SEE DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS, PAGE 57, AND DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS, PAGE 57. If you use the continuation of coverage feature and you have a policy loan, loan interest continues to accrue. If you do not make loan payments your policy could lapse. If you do not repay your policy loan, we deduct the outstanding policy loan amount and accrued loan interest from the death benefits payable, or the cash surrender value payable upon surrender. PARTIAL WITHDRAWALS You may request a partial withdrawal on any valuation date after your first policy anniversary by contacting our customer service center. You may request partial withdrawals by telephone, but the partial withdrawal must be for an amount less than $25,000. SEE TELEPHONE PRIVILEGES, PAGE 44. You may take only one partial withdrawal per policy year. We may set rules on partial withdrawals, based on our administrative system. For example, we may require that you specify a dollar amount rather than a percentage to be taken from a specific division. The minimum partial withdrawal you may take is $100. The maximum partial withdrawal you may - -------------------------------------------------------------------------------- Variable Last Survivor 37 take is the amount which leaves $500 as your net cash surrender value. If you request a withdrawal of more than this maximum, we require you to surrender your policy. When you take a partial withdrawal, we deduct your withdrawal amount plus a service fee from your account value. If applicable, we deduct a surrender charge from your account value if your partial withdrawal causes a reduction in your stated death benefit. SEE CHARGES, DEDUCTIONS AND REFUNDS, PAGE 48. Partial withdrawals may have adverse tax consequences. SEE MODIFIED ENDOWMENT CONTRACTS, PAGE 56. PARTIAL WITHDRAWALS UNDER DEATH BENEFIT OPTION 1 If you selected death benefit option 1, and if no more than fifteen years have passed since your policy date and the joint equivalent age of the insured people is not yet age 81, you may make a partial withdrawal of up to the greater of 10.0% of your account value, or 5.0% of your stated death benefit without decreasing the stated death benefit. Any additional amounts you withdraw will reduce your stated death benefit by the amount of the withdrawal. PARTIAL WITHDRAWALS UNDER DEATH BENEFIT OPTION 2 If you have selected death benefit option 2, a partial withdrawal does not reduce your stated death benefit or target death benefit. However, we reduce the total death benefit by at least the partial withdrawal amount because your account value is reduced. STATED DEATH BENEFIT AND TARGET DEATH BENEFIT REDUCTIONS Generally, we reduce the stated death benefit by the amount of the partial withdrawal. A partial withdrawal may reduce your target death benefit. Partial withdrawals do not reduce the stated death benefit if your base death benefit has been increased to qualify your policy as life insurance under the federal income tax laws, if you withdraw an amount that is no greater than the amount that reduces your account value to a level which no longer requires your base death benefit to be increased to qualify as life insurance for federal income tax law purposes. SEE TAX STATUS OF THE POLICY, PAGE 55. We require a minimum stated death benefit and a minimum target death benefit to issue your policy. You are not allowed to take a partial withdrawal if it reduces your stated death benefit or target death benefit below this minimum. SEE GROUP OR SPONSORED ARRANGEMENTS OR CORPORATE PURCHASERS, PAGE 55. PARTIAL WITHDRAWAL MECHANICS Unless you tell us otherwise, we will make a partial withdrawal from the guaranteed interest division and the variable divisions in the same proportion that each division has to your net account value immediately before your withdrawal. The amount withdrawn from the guaranteed interest division may not be for more than your total withdrawals multiplied by the ratio of your account value in the guaranteed interest division to your total net account value immediately before the partial withdrawal transaction. We will send a new schedule page for your policy showing the effect of your withdrawal if there is any change to your stated death benefit or your target death benefit. To make this change, we may ask that you return the policy to our customer service center. Your withdrawal and any reductions in the death benefits are effective as of the valuation date on which we receive your request. SEE DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS, PAGE 57, AND DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS, PAGE 57. LAPSE Your insurance coverage continues as long as your net cash surrender value is enough to pay all deductions each month. Lapse does not apply if either the guaranteed minimum death benefit or the special continuation period is in effect and you have met all requirements. SEE SPECIAL CONTINUATION PERIOD, PAGE 22 AND GUARANTEED MINIMUM DEATH BENEFIT, PAGE 27. If the continuation of coverage feature is active, the policy could lapse even though there are no further monthly deductions. If there is an outstanding policy loan, your policy will lapse if the loan plus the accrued interest owed is more than the account value. GRACE PERIOD - -------------------------------------------------------------------------------- Variable Last Survivor 38 Your policy enters the 61-day lapse grace period if, on a monthly processing date: 1. your net cash surrender value is zero (or less); and 2. the five-year special continuation period has expired, or you have not paid the required special continuation period premium; and 3. you do not have the guaranteed minimum death benefit rider or it has expired or terminated. We notify you that the policy is in a grace period at least 30 days before the grace period ends. We provide this notice to you, or a person to whom you have assigned your policy, at the last address in our records. We will send you a lapse notice if the guaranteed minimum death benefit is going to lapse. We also notify you of the required premium payment necessary to reinstate your policy. This amount is generally the amount of past due charges, plus the amount that covers your estimated monthly policy and rider deductions for the next two months. If the second death of the insured people occurs during the grace period, we will deduct overdue monthly charges from your policy's death proceeds. If we receive your payment of the required amount before the end of the grace period, we apply it to your account value in the same manner as your other premium payments, then we make the overdue deductions from your account balance. If you do not pay the full amount we request within the 61-day grace period, your policy and all of its riders lapse without value. We then withdraw your remaining account balance from the variable divisions and the guaranteed interest division. We deduct amounts which you owe us, including any surrender charge and inform you that the policy has ended. If the second death of the insured people occurs during the grace period, we pay death proceeds to your beneficiary(ies) with reductions for policy loans, accrued loan interest, and monthly deductions owed. IF YOU HAVE THE GUARANTEED MINIMUM DEATH BENEFIT IN EFFECT After the special continuation period has ended, and if the guaranteed minimum death benefit is in effect, your policy's stated death benefit will not lapse during the guarantee period. This is true even if your net cash surrender value is not enough to cover all of the deductions from your account value on any monthly processing date. SEE GUARANTEED MINIMUM DEATH BENEFIT, PAGE 27. The guaranteed minimum death benefit does not protect benefits you may have under riders attached to your policy. Nor does it protect any amount of the base death benefit which is more than the stated death benefit. These benefits lapse if on any monthly processing date, your policy net cash surrender value is not enough to pay all monthly deductions from your account value (unless your policy is in the five-year special continuation period and your account value is more than the interest due on your loan). While the guaranteed minimum death benefit applies, we reduce your account value by monthly deductions, but not below zero. We permanently waive monthly deductions during the guarantee period which would reduce your account value below zero. The guaranteed minimum death benefit terminates if your policy does not meet the monthly premium or diversification tests. If your guaranteed minimum death benefit terminates, the normal test for lapse then resumes. SEE REQUIREMENTS TO MAINTAIN THE GUARANTEE PERIOD, PAGE 28. - -------------------------------------------------------------------------------- Variable Last Survivor 39
LAPSE SUMMARY SPECIAL CONTINUATION PERIOD GUARANTEED MINIMUM DEATH BENEFIT If you meet the If you do not meet the If you meet the If you do not meet the requirements requirements requirements requirements Your policy does not Your policy enters the Your policy does not Your policy enters the lapse if you do not have grace period if your net lapse if you do not have grace period if your net enough net cash cash surrender value is enough net cash cash surrender value is surrender value to pay the not enough to pay the surrender value to pay the not enough to pay the monthly charges. The monthly charges, or if monthly deductions. monthly charges. If you charges are delayed until your loan interest due is However, if you have any do not pay enough the earlier of: 1) the date more than your account riders, they lapse after the premium to cover the past you have enough net cash value. If you do not pay grace period and only due monthly charges, surrender value to cover enough premium to cover your base coverage plus the monthly charges the monthly charge the past due monthly remains in force. through the end of the deduction, or 2) until the charges and interest due, Charges for your base grace period (at the end end of the special plus the monthly charges coverage are deducted of the following two continuation period. and interest due through each month until your months), your policy the end of the grace remaining account value lapses. period (at the end of the is not enough to pay these following two months), charges. At this point, your policy lapses. we permanently waive the monthly charges.
REINSTATEMENT If you do not pay enough premium before the end of the grace period, your policy lapses. You may still reinstate your policy and its riders (other than the guaranteed minimum death benefit) within five years after the grace period ends. Unless state law requires differently, we will reinstate your policy and riders if: 1. you have not surrendered your policy for its net cash surrender value; 2. you provide satisfactory evidence to us that both insured people are alive and that each insured person (and any people insured under your riders) is still insurable according to our normal rules of underwriting for your type of policy; and 3. we receive enough premium from you to keep your policy and its riders in force from the beginning to the end of the grace period and for two months after the reinstatement date. If one insured person has either died or has become uninsurable since your policy date, when your policy lapses, we will not reinstate your policy. If one insured person was uninsurable at the issue of your policy and remains uninsurable, we will review underwriting requirements applicable to each insured person at the time of reinstatement to determine whether your policy may be reinstated. Each surviving insured person may apply for individual insurance coverage at that point with proof of insurability. Reinstatement is effective as of the monthly processing date following our approval of your reinstatement application. When we reinstate your policy, we also reinstate the surrender charges for the amount and time remaining when your policy lapsed. If you had a policy loan when coverage ended, we reinstate it with accrued loan interest to the date of lapse. The cost of insurance charges in effect at the time of reinstatement for the age of each insured person are adjusted to reflect the time since the lapse. We apply the net premiums received after reinstatement according to the premium allocation instructions in effect at the start of the grace period, unless you tell us otherwise. - -------------------------------------------------------------------------------- Variable Last Survivor 40 SURRENDER You may surrender your policy for its net cash surrender value any time before the second death of the insured people. You do this by sending a written request and your policy to our customer service center. Your policy net cash surrender value is your cash surrender value, minus policy loans you have taken including accrued loan interest. We compute your net cash surrender value as of the valuation date we receive your surrender request and policy at our customer service center. All insurance coverage ends on that date. We do not pro-rate or add back charges and expenses deducted from your account value on the monthly anniversary before the date your surrender is processed. If you surrender your policy during the first nine policy years or segment years we deduct a surrender charge from your net account value. SEE SURRENDER CHARGE, PAGE 51. A surrender of your policy may have adverse tax consequences. SEE DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS, PAGE 57, AND DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS, PAGE 57. GENERAL POLICY PROVISIONS FREE LOOK PERIOD OR RIGHT TO EXAMINE POLICY PERIOD You have the right to examine your policy. If for any reason you do not want it, you may return your policy to us or your registered representative within the period shown in the policy. If you return your policy to us within your state's specified time limit, we will consider it canceled as of your policy date. If you cancel your policy during this free look period, you will receive a refund as determined under state law. Generally, there are two types of free look refunds. Some states require a return of all premiums paid while others permit payment of the account value plus a refund of all charges deducted. Your policy will specify what free look refund applies in your state. The type of free look refund allowed in your state will affect when your initial net premium is invested into the variable divisions you selected. That portion of your initial net premium that you have allocated to the variable divisions will be held in the division investing in the Fidelity Money Market Portfolio for 15 days after we issue your policy (five days deemed delivery time plus a typical free look period of 10 days), unless state law requires otherwise, if: o you made a premium payment before we issued your policy; o you have provided all information and documents we have requested; and o your state requires us to return your premiums paid if you cancel your policy during the free look period. At the end of 15 days, your account value will be allocated among your chosen variable divisions, based on your most recent premium allocation instructions. The investment date is the date we apply the net premium payment we have received from you to your policy. This is after you have provided all information and documents we have requested. That portion of your initial net premium that you have allocated to the variable divisions will be invested according to your most recent premium allocation instructions on the date we issue your policy if: o you made a premium payment before we issued your policy; o you have provided all information and documents we have requested; and o your state permits us to return the account value plus a refund of all charges deducted. Amounts you allocated to the guaranteed interest division will be invested into that division when we issue your policy if you have made a premium payment and have no outstanding information or document requests from us. Once we have applied your net premium to your selected investment divisions, you may transfer funds between investment divisions and activate policy investment features such as automatic rebalancing or dollar cost averaging. YOUR POLICY - -------------------------------------------------------------------------------- Variable Last Survivor 41 The entire contract between you and us is the combination of: o your policy; o a copy of your original application and any applications for benefit increases or decreases; o all of your riders; o endorsements; o schedule pages; and o reinstatement applications. If you make a change to your coverage, we give you a copy of your changed application and new schedules. If you sent us your policy, we attach these items to your policy and return it to you. Otherwise, you need to attach them to your policy. 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. A president or an officer of our company and our secretary or assistant secretary must sign all changes or amendments we make to your policy. No other person may change the terms or conditions of your policy. AGE We issue your policy at the joint equivalent age of the insured people stated in your policy schedule. The joint equivalent age of the insured people is based on the sum of both insured people's ages adjusted for the difference in ages and gender, divided by two and rounded up. The younger insured person's 100th birth date is the 100th anniversary of the younger insured person's birth regardless if he/she has survived. The policy anniversary nearest to this date is the date used for policy purposes. The insured people must each be less than 90 years of age at policy issue. The maximum joint equivalent age of the insured people must be no more than 85. There is no limit to the difference in the insured people's ages. Age is measured as the age of the insured person on the birth date nearest the policy anniversary. To process joint life insurance, we use the joint equivalent age to calculate rates, charges and values. We determine the joint equivalent age at any given time by adding the number of completed policy years to the age calculated at issue and shown in the schedule. OWNERSHIP The original owner is the person named as the owner in the policy application. The owner can exercise all rights and receive the benefits until the second death of the insured people. This includes the right to change the owner, beneficiaries, or method to pay proceeds. 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 beneficiary(ies). 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. BENEFICIARY(IES) You, as owner, name the beneficiary(ies) when you apply for your policy. The primary beneficiary(ies) who survives both of the insured people receives the death proceeds. Other surviving beneficiary(ies) receive death proceeds only if there is no surviving primary beneficiary(ies). If more than one beneficiary(ies) survives both insured people, they share the death proceeds equally, unless you have told us otherwise. If none of your policy beneficiaries has survived both insured people, we pay the death proceeds to you or to your estate, as owner. Once you tell us who the beneficiary(ies) is/are, we keep this information on file. You may name a new beneficiary(ies) any time before the second death of the insured people. We pay the death proceeds to the most recent beneficiary(ies) whom you have named. We do not make multiple payments. COLLATERAL ASSIGNMENT You may assign your policy as security by sending written notice to us. After we record the assignment, your rights as owner and the beneficiary's(ies') rights (unless the beneficiary(ies) were made an irrevocable beneficiary(ies) under an earlier assignment) are subject to the assignment. It is your responsibility to make sure the assignment is valid. - -------------------------------------------------------------------------------- Variable Last Survivor 42 INCONTESTABILITY After your policy has been in force while both insured people are alive for two years from your policy date, we will not question the validity of the statements in your application. After your policy has been in force while both insured people are alive for two 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 your application for the new segment or other increase. After this policy has been in force while both insured people are alive for two years from the effective date of any reinstatement, we will not contest the statements in your application for reinstatement. MISSTATEMENTS OF AGE OR GENDER If either insured person's age or gender has been misstated, we adjust the death benefit. We adjust death benefits to the amount which would have been purchased for each insured person's correct age and gender. We base the adjusted death benefit on the cost of insurance charges deducted from your account value on the last monthly processing date before the second death of the insured people, or as otherwise required by state law. SUICIDE If either insured person commits suicide, while that insured person is sane or insane within two years of your policy date, as required by state law, we will make a limited death benefit payment to the beneficiary(ies). We will pay in one sum: 1. the total of all premiums paid to the time of death; minus 2. the amount of outstanding policy loans and accrued loan interest; minus 3. any partial withdrawals you have taken, unless state law requires otherwise. We make a limited payment to the beneficiary(ies) for a new segment or other increase if the second death of the insured people is due to suicide, while that insured person is sane or insane within two years of the effective date of a new segment, or within two years of an increase in any other benefit, as required by state law. The limited payment we make is equal to the cost of insurance and monthly expense charges which were deducted for such increase. TRANSACTION PROCESSING Generally, within seven days of when we receive all information required to process a payment, we pay: o death proceeds; o net cash surrender value upon surrender; o partial withdrawals; and o loan proceeds. We may delay processing these transactions if: o the NYSE is closed for trading; o trading on the NYSE is restricted by the SEC; o there is an emergency so that it is not reasonably possible to sell securities in the variable divisions or to determine the value of an investment division's assets; or o a governmental body with jurisdiction over the separate account allows suspension by its order. Any SEC rules and regulations that apply determine whether or not these conditions exist. We execute transfers among the variable divisions as of the valuation date of our receipt of your request at our customer service center. We determine death proceeds as of the date of the second death of the insured people. The death proceeds are not affected by changes in the value of the variable divisions after the second death of the insured people. We pay interest at our stated rate (or at a higher rate if required by law) from the date of the second death of the insured people to the date of payment. We may delay payment from our guaranteed interest division for up to six months, unless state law requires otherwise, of: o surrender proceeds; o withdrawal amounts; or o loan amounts. We pay interest at our declared rate (or at a higher rate if required by law) from the date we receive the request if we delay payment more than 30 calendar days. NOTIFICATION AND CLAIMS PROCEDURES Except for certain authorized telephone requests, we must receive in writing any election, designation, change, assignment or request made by the owner. You must use a form acceptable to us. We are not - -------------------------------------------------------------------------------- Variable Last Survivor 43 liable for actions taken before we receive and record the written notice. We may require you to return your policy for policy change, or at the time of surrender. If an insured person dies while your policy is in force, please let us or your registered representative know as soon as possible. We will immediately send you instructions on how to make a claim upon the second death of the insured people, or at either insured person's death if you have a single life term rider. As proof of a deceased insured person's death, we may require you to provide proof of the deceased insured person's age, and a certified copy of the deceased insured person's death certificate. The beneficiary(ies) and the deceased insured person's next of kin may need to sign authorization forms. These forms allow us to get information about the deceased insured person. This information may include medical records of doctors and hospitals used by the deceased insured person. TELEPHONE PRIVILEGES Telephone privileges are automatically provided to you. If you do not wish to have this feature, contact our customer service center. Telephone privileges allow you to call our customer service center to: o make transfers; o change premium allocations; o change features in your dollar cost averaging and automatic rebalancing programs; o request partial withdrawals; or o request a policy loan. Our customer service center uses reasonable procedures to make sure that instructions received by telephone are genuine. These procedures may include: 1. requiring some form of personal identification; 2. providing written confirmation of any transactions; and 3. tape recording telephone calls. By accepting automatic telephone privileges, you authorize us to record your telephone calls to us. If we use reasonable procedures to confirm instructions, we are not liable for losses due to unauthorized or fraudulent instructions. We may discontinue this privilege at any time. NON-PARTICIPATION Your policy does not participate in the surplus earnings of Security Life. DISTRIBUTION OF THE POLICIES The principal underwriter (distributor) for our policies is ING America Equities, Inc. ING America Equities, Inc. is a wholly owned subsidiary of Security Life. It is registered as a broker-dealer with the SEC and the NASD. We pay ING America Equities, Inc. for acting as the principal underwriter under a distribution agreement. We sell our policies through registered representatives of other broker-dealers including, but not limited to: 1. VESTAX Securities Corporation, a subsidiary of ING America Insurance Holdings, Inc.; 2. Locust Street Securities, Inc., an affiliate of Security Life of Denver Insurance Company; and 3. Multi-Financial Services, Inc., an affiliate of Security Life of Denver Insurance Company. 4. IFG Network Securities, Inc., a subsidiary of Investors Financial Group, Inc., which is a subsidiary of ING America Insurance Holdings, Inc. These broker-dealers have entered into selling agreements with us. They are registered with the SEC and the NASD. State insurance officials also license the registered representatives to sell our variable life policies. Under these selling agreements, we pay a distribution allowance to other broker-dealers, who then pay commissions to the registered representative who sells this policy. The distribution allowance may be up to 90.0% of the first target premium that you pay. For premiums that you pay over your first target premium, the distribution allowance may be up to 5.0% in policy years one through five, and up to 2.0% after the fifth policy year. Broker-dealers may receive annual renewal payments of up to 0.2% of the net account value in policy years five through twenty. - -------------------------------------------------------------------------------- Variable Last Survivor 44 Compensation arrangements may vary among broker-dealers and depend on particular circumstances. In addition to the above-described compensation, we may pay: o override payments; o expense allowances; o bonuses; o special marketing fees; o wholesaler fees and marketing allowances; and o training allowances. Under our sales incentive programs, to the extent permitted by law, registered representatives who meet set production levels may qualify to receive other compensation such as: o expense-paid trips; o expense-paid educational seminars; and o merchandise. We pay the distribution allowance from our own resources which includes sales charges deducted from premiums and surrender charges. SETTLEMENT PROVISIONS You may elect to have the beneficiary(ies) receive the death proceeds other than in one payment. If you make this election, you must do so before the second death of the insured people. If you have not made this election, the beneficiary(ies) may do so within 60 days after we receive proof of the second death of the insured people. You may take your net cash surrender value in other than one payment. The investment performance of the variable divisions 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. A periodic payment must be at least $20. Currently, these alternate payment options are available if the proceeds are $2,000 or more. Option I: PAYOUTS FOR A DESIGNATED PERIOD: Payout payments may be made monthly, quarterly, semi-annually, or annually. These payments may last for a period from five to thirty years. The installment dollar amounts are equal except for any excess interest. Settlement Option Table I in your policy shows the amount of the first monthly payout for each $1,000 of account value applied. Option II: LIFE INCOME WITH PAYOUTS GUARANTEED FOR A DESIGNATED PERIOD: Payout payments may be made monthly, quarterly, semi-annually, or annually. We make these payments throughout the lifetime of the person receiving the payment, or if longer for guaranteed periods of five, ten, fifteen, or twenty years. You may choose the length of time to receive the guaranteed payments. If you choose a longer guaranteed period, this will decrease the amount of your periodic payments. The installment dollar amounts are equal except for any excess interest. The Settlement Option Table II in your policy shows the amount of the first monthly payout for each $1,000 of account value applied. This option is available only for the insured people's ages shown in this table. Option III: HOLD AT INTEREST: Amounts may be left on deposit with us to be paid at the death of the person you choose to receive the payment, or at a chosen earlier date. We will pay interest at our declared rate on any unpaid balance (or at a higher rate if required by law). You may choose interest to be accumulated or be paid monthly, quarterly, semi-annual, or annual basis. You may not leave money on deposit for more than 30 years. - -------------------------------------------------------------------------------- Variable Last Survivor 45 Option IV: PAYOUTS OF A DESIGNATED AMOUNT: Payouts will be made until proceeds, including interest, are exhausted. Interest is at a rate we declare (or at a higher rate as required by law). Payout payment choices are on a monthly, quarterly, semi-annual, or annual basis. Option V: OTHER: You, as owner, may ask us to apply money under any options we offer at the time we pay the benefit. The beneficiary(ies) or other person (successor to the beneficiary(ies)) who has the right to receive payments may name someone else to receive amounts that we would otherwise pay to the beneficiary's(ies') estate if he/she/they die(s). The person who has the right to receive payment may name another person, at any time. Designating another person to receive payment may have income, gift or estate tax consequences. Consult a professional tax adviser before making this designation. We must approve an arrangement that involves someone who is to receive payment who is not a human being (for example, a corporation). We must approve a situation involving a person who is to receive payment while acting on behalf of another, called a fiduciary. We base the details of all arrangements on our rules at the time the arrangements are effective. This includes rules on the: o minimum amount we pay under an option; o minimum amounts for installment payments; o withdrawal rights; o right to receive payments over time, which we may offer as a lump sum payment; o naming of people who have the right to receive payment and their successors; and o proof of age and survival. ADMINISTRATIVE INFORMATION ABOUT THE POLICY VOTING PRIVILEGES We invest the variable divisions' assets in shares of investment portfolios. We are the legal owner of the 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 Investment Company Act of 1940. Even though we own the shares, we give you the opportunity to tell us how to vote the number of shares attributable to your account value. 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. Each investment portfolio's shares have the right to one vote. The votes of all investment portfolios are cast together on a collective basis, except on issues for which the interests of the portfolios differ. In these cases, voting is done on a portfolio-by-portfolio basis. Examples of issues that require a portfolio-by- portfolio vote are: 1. changes in the fundamental investment policy of a particular investment portfolio; or 2. approval of an investment advisory agreement. We vote the shares in accordance with your instructions at meetings of investment portfolio shareholders. We vote any investment portfolio shares that are not attributable to policies, and any investment portfolio shares for which the owner does not give us instructions, the same way we vote as if we did receive owner instructions. We reserve the right to vote investment portfolio shares without getting instructions from policy owners if the federal securities laws, regulations, or their interpretations change to allow this. You may only instruct us on matters relating to the investment portfolios corresponding to divisions in which you have invested assets as of the record date set by the investment portfolio's Board for the portfolio's shareholders meeting. We determine the number of investment portfolio shares in each division that we attribute to your policy by dividing your account value allocated to that division by the net asset value of one share of the matching investment portfolio. MATERIAL CONFLICTS We are required to track events to identify any material conflicts arising from using investment portfolios for both variable life and variable annuity separate accounts. The boards of the investment portfolios, Security Life, and other insurance companies participating in the investment portfolios, - -------------------------------------------------------------------------------- Variable Last Survivor 46 have this same duty. There may be a material conflict if: o state insurance law or federal income tax law changes; o investment management of an investment portfolio changes; or o voting instructions given by owners of variable life insurance policies and variable annuity contracts differ. The investment portfolios may sell shares to certain qualified pension and retirement plans qualifying under Code Section 401. These include cash or deferred arrangements under Code Section 401(k). Therefore, there is a possibility that a material conflict may arise between the interests of owners in general, or between certain classes of owners, and these retirement plans or participants in these retirement plans. If there is a material conflict, we have the duty to determine appropriate action, including removing the portfolios involved from our variable investment options. We may take other action to protect policy owners. This could mean delays or interruptions of the variable operations. When state insurance regulatory authorities require us, we may ignore voting instructions relating to changes in an investment portfolio's adviser or its investment policies. If we do ignore voting instructions, we give you a summary of our actions in the next semi-annual report to owners. Under the Investment Company Act of 1940, we must get your approval for certain actions involving our separate account. In this case, you have one vote for every $100 of value you have in the variable divisions. We cast votes credited to amounts in the variable divisions, but not credited to policies in the same proportion as votes cast by owners. RIGHT TO CHANGE OPERATIONS Subject to state limitations, we may from time to time make any of the following changes to our separate account. 1. Change the investment objective. 2. Offer additional divisions which will invest in portfolios we find appropriate for policies we issue. 3. Eliminate variable divisions. 4. Combine two or more variable divisions. 5. Substitute a new investment portfolio for a portfolio in which the division currently invests. A substitution may become necessary if, in our judgment: o a portfolio no longer suits the purposes of your policy; o there is a change in laws or regulations; o there is a change in a portfolio's investment objectives or restrictions; o the portfolio is no longer available for investment; or o another reason we deem a substitution is appropriate. 6. Transfer assets related to your policy class to another separate account. 7. Withdraw the separate account from registration under the 1940 Act. 8. Operate the separate account as a management investment company under the 1940 Act. 9. Cause one or more divisions to invest in a mutual fund other than, or in addition to, the investment portfolios. 10. Stop selling these policies. 11. End any employer or plan trustee agreement with us under the agreement's terms. 12. Limit or eliminate any voting rights for the separate account. 13. Make any changes required by the 1940 Act, or its rules or regulations. 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 then wish to transfer the amount you have in the affected division to another variable division, or to the guaranteed interest division, you may do so free of charge. Just notify us at our customer service center. REPORTS TO OWNERS At the end of each policy year we send a report to you that shows: o your total policy death benefit (your stated death benefit plus adjustable term insurance - -------------------------------------------------------------------------------- Variable Last Survivor 47 rider death benefit, if any); o your account value; o your policy loans, if any, plus accrued interest; o your net cash surrender value; o information about the variable divisions; and o your account transactions during the previous year showing net premiums, transfers, deductions, loans, or withdrawals. We also send semi-annual reports with financial information on the investment portfolios, including a list of the investment holdings of each portfolio to you. We send confirmation notices to you throughout the year for certain policy transactions. CHARGES, DEDUCTIONS AND REFUNDS The amount of a charge may not exactly correspond to the cost incurred by us to provide the service or benefits associated with the particular policy. Many charges are not at "cost". For example, the sales charges may not cover all of the sales and distribution expenses actually incurred by us. Proceeds from other charges, including the mortality and expense risk charge or cost of insurance charges, may be used in part to cover such expenses. DEDUCTIONS FROM PREMIUMS We consider any payment we receive to be a premium if the younger insured person's 100th birth date has not occurred and you do not have an outstanding loan. After we deduct certain expenses from your premium payment, we add the remaining net premium to your account value. TAX CHARGES We pay state and local taxes in almost all states. These taxes vary in amount from state to state and may vary from jurisdiction to jurisdiction within a state. Currently, state and local taxes range from 0.5% to 5.0% with some states not imposing these types of taxes. We currently deduct an amount equal to 2.5% of each premium payment you make to cover these taxes. The 2.5% rate approximates the average tax rate we expect to pay in all states. We also currently deduct an amount equal to 1.5% of each premium payment you make to cover our estimated costs for the federal income tax treatment of deferred acquisition costs. This cost is determined solely by the amount of life insurance premiums we receive. We reserve the right to increase or decrease your premium expense charge for taxes as a result of changes in the tax law, within limits set by state law. We also reserve the right to increase or decrease your premium expense charge for the federal income tax treatment of deferred acquisition costs based on any change in that cost to us. SALES CHARGE We deduct a percentage from each of your premium payments to compensate us for the costs we incur in selling the policies. We base the percentage on the time expired since your policy date or addition of a segment and on your premium up to and above a target premium: Sales Charge Percentage ----------------------- Up to Segment Above Segment Segment Target Target Year Premium Premium ------- ------- ------- 1 - 5 5.5% 2% 6 + 2% 2% To determine your applicable sales charge, premiums you pay after an increase in stated death benefit are allocated to your policy segments in the same proportion as the target premium for each segment bears to the sum of the target premium for all segments. The sales charge covers the costs of distribution, preparing our sales literature, promotional expenses, and other direct and indirect expenses. The amount charged is not specifically related to sales expenses in a particular year. We may reduce or waive the sales charge for certain group or sponsored arrangements or for corporate purchasers. DAILY DEDUCTIONS FROM THE VARIABLE ACCOUNT MORTALITY AND EXPENSE RISK CHARGE - -------------------------------------------------------------------------------- Variable Last Survivor 48 We deduct a charge each day for the mortality and expense risks we assume. This charge is 0.002055% per day of the amount you have in the variable divisions. This is an annual rate of 0.75%. The mortality risk we assume is that insured people, as a group, may live less time than we estimated. We assume risk that expenses we incur in issuing and administering the policies and in operating the variable divisions are greater than the amount we estimated when we set these charges. The mortality and expense risk charge does not apply to your account value which is invested in the guaranteed interest division or the loan division. MONTHLY DEDUCTIONS FROM YOUR ACCOUNT VALUE We deduct charges from your account value on each monthly processing date. On or after November 1, 1999, when you apply for a policy or later, you may designate a single withdrawal investment division from which we will take your monthly deductions. You may choose to have us withdraw the monthly deduction from the guaranteed interest division or the variable divisions in which you have amounts. You may not use the loan division as your designated withdrawal investment division from which to deduct monthly deductions. If you do not choose a withdrawal investment division from which to deduct monthly deductions, or if the amount you have in your designated withdrawal investment division is not enough to cover the monthly deductions, these charges are taken from the variable and guaranteed interest divisions in the same proportion that your account value in each division has to your total net account value as of the monthly processing date. If you change your designated withdrawal investment division from which to deduct monthly deductions, we consider this an allocation change.
VARIABLE DIVISIONS FROM WHICH WE DEDUCT CHARGES MONTHLY CHARGES: COST OF INSURANCE LOANS AND CHARGES, RIDER CHARGES, ADMINISTRATION FEES TRANSACTION FEES PARTIAL SURRENDERS - --------------- ---------------------------------------------- --------------------- ------------------------------- Default Pro-rata Pro-rata Pro-rata - --------------- ---------------------------------------------- --------------------- ------------------------------- Choice May choose one fund, including GID Pro-rata May choose any fund or combination of funds - --------------- ---------------------------------------------- --------------------- -------------------------------
POLICY CHARGE The initial policy charge is $15 per month for the first ten years of your policy. After the first ten years of your policy, the policy charge is $9 per month. This charge compensates us for such costs as: o application processing; o medical examinations; o establishment of policy records; and o insurance underwriting costs. MONTHLY ADMINISTRATIVE CHARGE For this policy, we charge a per month administrative charge of no less than $0.07 and no more than $0.095 per $1,000 for the greater of the stated death benefit, or the target death benefit, for the first ten policy years. We charge $0.023 per $1,000 for each policy year after the tenth for the greater of the stated death benefit or the target death benefit. The exact per $1,000 charge for your policy is based on the insured people's issue ages and policy duration. This charge is designed to compensate us for ongoing costs such as: o premium billing and collections; o claim processing; o policy transactions; o record keeping; o reporting and communications with policy - -------------------------------------------------------------------------------- Variable Last Survivor 49 owners; and o other expenses and overhead. COST OF INSURANCE CHARGE The cost of insurance charge compensates us for the ongoing costs of providing insurance coverage, including the expected cost of paying death proceeds that are more than your account value at the second death of the insured people. The cost of insurance charge is based in part on the risk class to which the insured people belong. The cost of insurance charge is equal to our current monthly cost of insurance rate times the net amount at risk for each portion of your death benefit. We calculate the net amount at risk monthly, at the beginning of each policy month. We determine your account value after we deduct your policy and rider charges due on that date, and other cost of insurance charges for the base death benefit, adjustable term insurance rider and single life term riders. If your base death benefit at the beginning of a month increases (due to requirements of the federal income tax law definition of life insurance), the net amount at risk for your base death benefit for that month also increases. Similarly, the net amount at risk for your adjustable term insurance rider decreases. This means that the amount of your cost of insurance charge varies from month to month with changes in your net amount at risk, changes in the death benefit and with the increasing age of the insured people. We allocate the net amount at risk to any segments in the same proportion that each segment has to the total stated death benefit for all coverage segments as of the monthly processing date. We base your cost of insurance rates on the insured people's ages, genders, ratings and premium classes on the policy for each segment date, or on the date you add a base coverage segment. Separate cost of insurance rates apply to: o each segment of the base death benefit; o your adjustable term insurance rider; and o single life term riders. These rates are never more than the guaranteed maximum rates shown in your policy; however, they may change from time to time. The guaranteed maximum rates are based on the 1980 Commissioner's Standard Ordinary Sex Distinct Mortality Table. There are no cost of insurance charges after the younger insured person's 100th birth date. GUARANTEED MINIMUM DEATH BENEFIT CHARGE If you choose the guaranteed minimum death benefit feature, we currently charge $0.005 per $1,000 of stated death benefit each month during the guarantee period. We guarantee it never to exceed $0.005 per $1,000 of death benefit. CHARGES FOR ADDITIONAL BENEFITS On each monthly processing date, we deduct the cost of additional benefits under your riders, including the adjustable term insurance rider and the single life term rider. SEE ADDITIONAL BENEFITS, PAGE 28. CHANGES IN MONTHLY CHARGES Changes we make in the cost of insurance charges or charges for additional benefits are for a class of insured persons. We base the new charge on changes in expectations about: o investment earnings; o mortality; o the time policies remain in effect; o expenses; and o taxes. New monthly charges will never be more than the guaranteed maximum rates shown in your policy. CONTINUATION OF COVERAGE ADMINISTRATIVE FEE At the younger insured person's 100th birth date, if your policy has not been surrendered, the continuation of coverage period begins. We will charge a one-time administrative fee of $400. This charge compensates us for maintaining and servicing your policy until the second death of the insured people. We then no longer charge you a monthly administrative fee. POLICY TRANSACTION FEES We also charge fees for certain transactions you may make under your policy. We take these fees from the variable and the guaranteed interest divisions in the same proportion that your account value in each division has to your net account value immediately after the transaction. PARTIAL WITHDRAWALS - -------------------------------------------------------------------------------- Variable Last Survivor 50 For our costs, we charge a service fee of $25 against your account value for each partial withdrawal you take. We may also deduct a surrender charge from your account value. SEE PARTIAL WITHDRAWALS, PAGE 37. TRANSFERS There is a $25 fee for each additional transfer over twelve per policy year. If you include multiple transfers in one transfer request, it counts as one transfer. There is no transfer fee if you are transferring your account value into the guaranteed interest division under the right to exchange feature in your policy. SEE TRANSFERS OF ACCOUNT VALUES, PAGE 34, AND RIGHT TO EXCHANGE POLICY, PAGE 31. ILLUSTRATIONS The first policy illustration you request in a policy year is free. After that, we may charge a fee of up to $25 for each additional policy illustration you request. ALLOCATION CHANGE You may make five free premium allocation changes per policy year. After the five free premium allocation changes, we charge you $25 for each additional premium allocation change per policy year. PERSISTENCY REFUND Where state law allows us, we pay long-term policy owners a persistency refund. Each month your policy remains in force after your tenth policy anniversary, we credit your account value with a refund. This refund equals 0.6% of your account value on an annual basis. On a monthly basis, this equals 0.05%. We do not guarantee that we will pay a persistency refund on the guaranteed interest division. We add the persistency refund to the variable and guaranteed interest divisions in the same proportion that your account value in each division has to your net account value as of the monthly processing date. If we pay a persistency refund on the guaranteed interest division, we will pay it to you if your policy is in the continuation of coverage period. Here are two examples of how the persistency refund may affect your account value each month: EXAMPLE 1: YOUR POLICY HAS NO LOAN: o account value = $10,000 (all in the variable divisions) o monthly persistency refund rate = .0005 o persistency refund = 10,000 x .0005 = $5.00 Before After Persistency Persistency Refund Refund ------ ------ Variable divisions $10,000.00 $10,005.00 EXAMPLE 2: YOUR POLICY DOES HAVE A LOAN: o account value = $10,000 o account value in the variable divisions = $6,000 o account value in the loan division = $4,000 o monthly persistency refund rate = .0005 o persistency refund = 10,000 x .0005 = $5.00 Before After Persistency Persistency Refund Refund ------ ------ Variable divisions $6,000.00 $6,005.00 Loan $4,000.00 $4,000.00 SURRENDER CHARGE We may deduct a surrender charge from your account value during the first nine years of your policy or coverage segment if you: o surrender your policy; o reduce your stated death benefit; o allow your policy to lapse; or o take a partial withdrawal which decreases your stated death benefit during the first nine years of your policy or during the first nine years of your policy after you increase your stated death benefit. - -------------------------------------------------------------------------------- Variable Last Survivor 51 The surrender charge compensates us for issuing and distributing policies. We deduct surrender charges proportionately based on the account value in each investment division in which you have amounts invested immediately following the transaction. If you change your death benefit option, this may decrease your stated death benefit. Under these circumstances, we do not deduct a surrender charge from your account value, and we do not reduce future surrender charges. If you change your death benefit option, this may increase the stated death benefit. We do not increase your surrender charge in this case. However, all other increases in your stated death benefit create a new segment which will be subject to its own nine year surrender charge period. If your surrender charge changes, we send you a new schedule showing the change. The surrender charge remains level for the first five years of each coverage segment and then decreases through the ninth year. Thereafter, the surrender charge is zero. For purposes of calculating surrender charges, target premium is premium attributable to base death benefit coverage. SURRENDER CHARGES AS A PERCENTAGE OF SURRENDER TARGET PREMIUM
JOINT EQUIVALENT AGE YEARS 1 - 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 -------------------- ----------- ------ ------ ------ ------ 15 - 78 100% 80% 60% 40% 20% 79 93% 80% 60% 40% 20% 80 85% 70% 55% 40% 20% 81 78% 65% 50% 35% 20% 82 72% 60% 45% 30% 20% 83 65% 50% 40% 30% 20% 84 60% 45% 35% 25% 15% 85 54% 40% 30% 20% 10%
You should review the surrender charge table in the schedule pages of your policy for your specific surrender charge amount each year. If you increase your stated death benefit (other than by a death benefit option change), we will send a new schedule page to you. You should attach this new page to your policy. In some instances, we may ask you to send your policy to us so that we can make this change for you. FEES AND EXPENSES OF THE INVESTMENT PORTFOLIOS The variable account purchases shares of the investment portfolios at net asset value. This price reflects investment management fees and other direct expenses that are deducted from the portfolio assets. The following table describes these investment management fees and other direct expenses of the investment portfolios. - -------------------------------------------------------------------------------- Variable Last Survivor 52
INVESTMENT PORTFOLIO ANNUAL EXPENSES (AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS) /1/ Investment Total Portfolio Portfolio Management Fees Other Expenses Expenses A I M VARIABLE INSURANCE FUNDS, INC. AIM V.I. - Capital Appreciation AIM V.I. - Government Securities THE ALGER AMERICAN FUND Alger American Growth Portfolio Alger American Leveraged AllCap Portfolio Alger American MidCap Growth Portfolio Alger American Small Capitalization Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND VIP Growth Portfolio VIP Money Market Portfolio VIP Overseas Portfolio FIDELITY VARIABLE INSURANCE PRODUCTS FUND II VIP II Asset Manager Portfolio VIP II Index 500 Portfolio INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Equity Income Fund INVESCO VIF - High Yield Fund INVESCO VIF - Small Company Growth Fund INVESCO VIF - Total Return Fund INVESCO VIF - Utilities Fund NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST /2/ Growth Portfolio Limited Maturity Bond Portfolio Partners Portfolio VAN ECK WORLDWIDE INSURANCE TRUST Worldwide Bond Fund Worldwide Emerging Markets Fund Worldwide Hard Assets Fund Worldwide Real Estate Fund
- -------------------------------------------------------------------------------- Variable Last Survivor 53 /1/ The investment portfolios provided this portfolio expense information. We have not independently verified this information. These portfolio expenses are not direct charges against division assets or reductions from contract values. Rather, we factor these portfolio expenses when computing each underlying portfolio's net asset value. We use the share price to calculate the unit values of the divisions. For a more complete description of the portfolios' costs and expenses, see the prospectuses for the portfolios. /2/ We have agreements with the investment portfolio advisers under which we receive certain fees in return for providing certain services. These fees are commonly known as 12(b)(1) fees. These fees are usually charged by the advisers to the investment portfolios, but are in some cases absorbed by the investment portfolio. - -------------------------------------------------------------------------------- Variable Last Survivor 54 GROUP OR SPONSORED ARRANGEMENTS OR CORPORATE PURCHASERS Individuals, corporations or other institutions may purchase this policy. For group or sponsored arrangements (including our home office employees), corporate purchases, or special exchange programs which we may offer from time to time, we may reduce or waive the: o surrender charge, including the surrender charge on partial withdrawals; o length of time a surrender charge applies; o administrative charge; o minimum stated death benefit; o minimum target death benefit; o minimum annual premium; o target premium; o sales charges; o cost of insurance charges; or o other charges normally assessed. We can reduce or waive these items due to expected economies under a group or sponsored arrangement or with a corporate purchaser. Group arrangements include those in which there is a trustee, an employer or an association. The group either purchases policies covering a group of individuals on a group basis or endorses a policy to a group of individuals. Sponsored arrangements include those in which an employer or association allows us to offer policies to its employees or members on an individual basis. Our sales, administration and mortality costs generally vary with the size and stability of the group, among other factors. We take all these factors into account when we reduce charges. A group or sponsored arrangement must meet certain requirements to qualify for reduced charges. We make reductions to charges based on our rules in effect when we approve a policy application form. We may change these rules from time to time. Sponsored arrangements or corporations may have different group premium payments and premium requirements. We will not be unfairly discriminatory in any variation in the surrender charge, administrative charge, or other charges, fees and privileges. These variations are based on differences in costs or services. OTHER CHARGES Under current law, we pay no tax on investment income and capital gains included in variable life insurance policy reserves. This means that no charge is currently made to any variable division for our federal income taxes. If the tax law changes and we have federal income tax chargeable to the variable divisions, we may make such a charge in the future. In most states, we must pay state and local taxes. If these taxes increase, we may charge for such taxes. TAX CONSIDERATIONS The following summary provides a general description of the federal income tax considerations associated with the policy and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax advice. Counsel or other competent tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present federal income tax laws. No representation is made as to the likelihood of continuation of the present federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. TAX STATUS OF THE POLICY 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 the Internal Revenue Code. Specifically, the policy must meet the requirements of the "Guideline Premium/Cash Value Corridor Test," as specified in Code section 7702. The Guideline Premium/Cash Value Corridor Test provides for a maximum premium in relation to the death benefit, and a minimum "corridor" of death benefit in relation to account value. SEE APPENDIX B, PAGE 69 FOR A TABLE OF THE GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST FACTORS. There is very little guidance with respect to policies issued on a last survivor basis, however, we believe it is reasonable to conclude that our policies satisfy the - -------------------------------------------------------------------------------- Variable Last Survivor 55 applicable requirements. If it is subsequently determined that a policy does not satisfy the applicable requirements, we will take appropriate 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. DIVERSIFICATION REQUIREMENTS In addition to meeting the Code Section 7702 Guideline Premium/Cash Corridor Test, 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 variable division must meet certain tests. If your variable life policy is not adequately diversified under these regulations, it is not treated as life insurance under Code Section 7702. You would then be subject to federal income tax on your policy income as you earn it. Our variable divisions' investment portfolios have promised they will meet the diversification standards that apply to your policy. In certain circumstances, you, as owner of a variable life insurance contract, may be considered the owner for federal income tax purposes of the separate account assets used to support your contract. Any income and gains from the separate account assets are includable in the gross income from your policy under these circumstances. The IRS has stated in published rulings that a variable contract owner is considered the owner of separate account assets if the contract owner has "indicia of ownership" in those assets. "Indicia of ownership" includes the ability to exercise investment control over the assets. 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 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 the Treasury's regulations or rulings that it expects to issue. 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. The following discussion assumes that the policy will qualify as a life insurance contract for federal income tax purposes. TAX TREATMENT OF POLICY DEATH BENEFITS We believe that the death benefit under a policy is generally excludable from the gross income of the beneficiary(ies) under section 10(a)(1) of the 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. Generally, the policy owner will not be taxed on any of the policy cash value until there is a distribution. When distributions from a policy occur, or when loans are taken from or secured by a Policy, the tax consequences depend on whether or not the policy is a "modified endowment contract." Special rules also apply if you are subject to the alternative minimum tax. You should consult a tax adviser if you are subject to the alternative minimum tax. MODIFIED ENDOWMENT CONTRACTS 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 paid during the first seven policy years. Certain changes in a policy after it is issued could also cause it to be classified as a modified endowment contract. A current or prospective policy owner should consult with a competent advisor to determine whether or not a policy transaction will cause the policy to be classified as a modified endowment contract. - -------------------------------------------------------------------------------- Variable Last Survivor 56 MULTIPLE POLICIES 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 includable in the policy owner's income when a taxable distribution occurs. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT CONTRACTS 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: 1. All distributions other than death benefits, including distributions upon surrender and withdrawals, from a modified endowment contact will be treated first as distributions of gain taxable as ordinary income and as tax-free recovery of the policy owner's investment in the policy only after all gain has been distributed. 2. Loans taken from or secured by a policy classified as a modified endowment contract are treated as distributions and taxed first as distributions of gain taxable as ordinary income and as tax-free recovery of the policy owner's investment in the policy only after all gain has been distributed. 3. A 10.0% additional income tax penalty may be imposed on distribution amount subject to income tax. Consult a tax adviser to determine whether or not you may be subject to this penalty tax. DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED ENDOWMENT CONTRACTS Distributions other than death benefits from a policy that is not classified as a modified endowment contract are generally treated first as a 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 which must be made in order to enable the policy to continue to qualify as a life insurance contract for federal income tax purposes, if policy benefits are reduced during the first fifteen policy years, may be treated in whole or in part as ordinary income subject to tax. Loans from or secured by a policy that is not a modified endowment contract are generally not treated as distributions. However, the tax consequences of a loan from such a policy after the ninth policy year are uncertain. You should consult a tax adviser as to such consequences. Finally, neither distributions from, nor loans from or secured by, a policy that is not a modified endowment contract are subject to the 10.0% additional income tax. 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 other than a policy loan, your investment in the policy is reduced by the amount of the distribution that is tax free. POLICY LOANS In general, interest on a policy loan will not be deductible. Before taking out a policy loan, you should consult a tax adviser as to the tax consequences. SECTION 1035 EXCHANGES Code Section 1035 generally provides that no gain or loss shall be recognized on the exchange of one life insurance policy for another life insurance policy, or for an endowment or annuity contract. We accept 1035 exchanges with outstanding loans. Special rules and procedures apply to Section 1035 exchanges. If you wish to take advantage of Section 1035, you should consult your tax adviser. TAX-EXEMPT POLICY OWNERS 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- - -------------------------------------------------------------------------------- Variable Last Survivor 57 exempt status of the entity and the possibility of the unrelated business income tax. POSSIBLE TAX LAW CHANGES 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. CHANGES TO COMPLY WITH THE LAW So that your policy continues to qualify as life insurance under the 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: o make changes to your policy or its riders; or o take distributions from your policy to the degree that we deem necessary to qualify your policy as life insurance for tax purposes. If we make any change of this type, it applies the same way to all affected policies. We will give you advance notice of this change. The tax law limits the amount we can charge for mortality costs and other expenses used to calculate whether your policy qualifies as life insurance for federal income tax purposes. We must base these calculations on reasonable mortality charges and other charges reasonably expected to be paid. The Treasury issued proposed regulations on what it considers reasonable mortality charges. We believe that the charges used for your policy should meet the Treasury's current requirement for "reasonableness." We reserve the right to make changes to the mortality charges if future regulations have standards which make changes necessary in order to continue to qualify your policy as life insurance for federal income tax purposes. Additionally, assuming that you do not want your policy to be or to become a modified endowment contract, we include a policy endorsement under which we have the right to amend your policy, including riders. We do this to attempt to enable your policy to continue to meet the seven-pay test for federal income tax purposes. If the policy premium you pay is more than the seven-pay limit, we have the right to remove any excess premium or to make any appropriate adjustments to your policy's account value and death benefit. It is not clear, however, whether we can take effective action pursuant to this endorsement under all possible circumstances to prevent a policy that has exceeded the premium limitation from being classified as a modified endowment contract. Any increase in your death benefit will cause an increase in your cost of insurance charges. OTHER Policy owners may use our policies in various arrangements, including: o qualified plans; o non-qualified deferred compensation or salary continuance plans; o split dollar insurance plans; o executive bonus plans; o retiree medical benefit plans; and o other plans. The tax consequences of these plans may vary depending on the particular facts and circumstances of each arrangement. If you want to use any of your policies in this type of arrangement, you should consult a qualified tax adviser regarding the tax issues of your particular arrangement. In recent years, Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new policy or a change in an existing policy should consult a tax adviser. 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 may have to pay income taxes and possibly penalties later. 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. For example, the transfer of the policy to, or the designation as a beneficiary of, or the payment of proceeds to, a person who is assigned to - -------------------------------------------------------------------------------- Variable Last Survivor 58 a generation which is two or more generations below the generation assignment of the policy owner may have generation skipping transfer tax consequences under federal tax law. The individual situation of each policy owner or beneficiary will determine the extent, if any, to which federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of policy proceeds will be treated for purposes of federal, state and local estate, inheritance, generation skipping and other taxes. YOU SHOULD CONSULT QUALIFIED LEGAL OR TAX ADVISERS FOR COMPLETE INFORMATION ON FEDERAL, STATE, LOCAL, AND OTHER TAX CONSIDERATIONS. ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES, AND ACCUMULATED PREMIUMS The following tables are intended to show how the policy works. This includes how benefits and values can vary over a long period of time. Each table also compares these values with total premiums paid with interest. The policies illustrated include:
Definition Death of Life Stated Target Tobacco User Benefit Insurance Death Death Gender Age Status Option Test Benefit Premium Benefit ------ --- ------ ------ ---- ------- ------- ------- Male 50 Non-tobacco User 1 GP 1,000,000 $12,500 1,000,000 Preferred Female 50 Non-tobacco User Preferred
The tables show how death benefits, account values, and cash surrender values of a hypothetical policy could vary over an extended period of time, assuming the variable divisions had constant hypothetical gross annual investment returns of 0.0%, 6.0%, or 12.0% over the periods indicated in each table. Various expenses of the investment portfolios were voluntarily absorbed by the portfolio's investment manager. Absent such reimbursement, the fees and expenses used in this illustration would be higher. We have agreements with the investment portfolio advisers under which we receive certain fees in return for providing certain services. These fees are commonly known as 12(b)(1) fees. These fees are usually charged by the advisers to the investment portfolios, but are in some cases absorbed by the investment portfolio. Values would differ from those shown in the tables if the annual investment returns were not constant. These illustrations assume there are no policy loans. The amounts shown would differ if we had used two females or two males. The third column of each table shows what would happen if an amount equal to the assumed premiums earned interest, after taxes, of 5.0% compounded annually. We illustrate premium payments as if they were made at the beginning of the year. The difference between the account value and the cash surrender value in the first nine years of the policy shows the effect of the surrender charge. The net investment return on your policy is lower than the gross investment return on the variable divisions. We show this effect in the amounts for death benefits, account values and cash surrender values. This effect is due to deductions from premiums, the mortality and expense risk charge, monthly deductions, cost of insurance rider - -------------------------------------------------------------------------------- Variable Last Survivor 59 charges, and surrender charges. The tables show charges at our current rates. SEE MONTHLY DEDUCTIONS FROM YOUR ACCOUNT VALUE, PAGE 49. The tables also show charges at the maximum rates we guarantee in our policies. The mortality and expense risk investment fee is 0.75% annually on a guaranteed basis. These illustrations show current rates, which include a persistency refund of 0.6% of the annual account value beginning after the tenth policy anniversary. The tables also reflect the effect on each division's investment performance of the portfolio charge for management fees and portfolio expenses. The tables reflect annual management fees of 0.7126% of the portfolios' aggregate average daily net assets. This hypothetical rate is a simple average of the investment advisory fees applying to the investment portfolios for the year ending December 31, 1998. We assume other portfolio expenses at the rate of 0.1939% of the portfolios' average daily net assets. This is an average of all the portfolios' other expenses for the year ending December 31, 1998. These charges total 0.9065%. Actual fees vary by portfolio. The sponsor may have agreements to waive or otherwise pay each investment division for operating expenses which are greater than certain limits. The tables assume that the current expense reimbursement arrangements will continue. However, they may not continue. The effect of these charges and expenses, and mortality and expense risk charges results in a net rate of return of: o (1.53)% on a 0% gross rate of return; o 4.42% on a 6% gross rate of return; and o 10.38% on a 12% gross rate of return. The tables assume that charges have been deducted. This includes administrative and sales charges. The tables show that we do not currently charge against the variable account for state or federal taxes. If we charge for the taxes in the future, it will take a higher gross rate of return than the rates shown to produce the same death benefits, account values, and cash surrender values. If we are asked to do so, we will give you a comparable personal illustration based on: o the insured people's ages and genders; o standard premium class assumptions; o initial stated death benefit; o the chosen death benefit option; o scheduled premiums consistent with your policy form; and o special features elected on your policy. At issue, we deliver an individualized illustration showing the scheduled premium you chose and the insured people's actual risk classes. After we issue the policy, if you ask us to, we will give you an illustration of future policy benefits. We base these hypothetical future benefits on both guaranteed and current cost factor assumptions and actual account value. - -------------------------------------------------------------------------------- Variable Last Survivor 60
PROSPECT: INSURED PERSON NO. 1'S NAME MALE 50 NON-TOBACCO USER PRESENTED BY: INSURED PERSON NO. 2'S NAME FEMALE 50 NON-TOBACCO USER SECURITY LIFE VARIABLE LAST SURVIVOR UNIVERSAL LIFE STATED DEATH BENEFIT: $1,000,000 DEATH BENEFIT OPTION 1 ANNUAL PREMIUM: $13,000.00 GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST SUMMARY PAGE ASSUMING GUARANTEED CHARGES Assuming Hypothetical Gross Investment Return of: -----------0.00%-------- ---------12.00%--------- -----------6.00%---------- PREMIUM CASH CASH CASH ACCUMULATED ACCOUNT SURR DEATH ACCOUNT SURR DEATH ACCOUNT SURR DEATH YEAR PREMIUMS AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 13000 13650 10653 1767 1000000 12005 3119 1000000 11328 2443 1000000 2 13000 27983 21056 12171 1000000 25163 16278 1000000 23069 14183 1000000 3 13000 43032 31200 22314 1000000 39579 30694 1000000 35224 26339 1000000 4 13000 58833 41069 32183 1000000 55363 46477 1000000 47793 38908 1000000 5 13000 75425 50646 41761 1000000 72634 63749 1000000 60773 51888 1000000 6 13000 92846 60190 53082 1000000 91834 84726 1000000 74451 67343 1000000 7 13000 111138 69398 64067 1000000 112830 107499 1000000 88541 83210 1000000 8 13000 130345 78254 74699 1000000 135790 132236 1000000 103040 99486 1000000 9 13000 150513 86735 84958 1000000 160898 159121 1000000 117941 116164 1000000 10 13000 171688 94816 94816 1000000 188358 188358 1000000 133237 133237 1000000 15 13000 294547 134338 134338 1000000 384580 384580 1000000 224507 224507 1000000 20 13000 451350 153792 153792 1000000 705991 705991 1000000 324402 324402 1000000 25 13000 651475 133462 133462 1000000 1253479 1253479 1341222 423618 423618 1000000 30 13000 906890 15550 15550 1000000 2167665 2167665 2276048 496693 496693 1000000 AGE 65 13000 322925 140234 140234 1000000 436554 436554 1000000 243989 243989 1000000
THE EXPENSE CHARGES AND COST OF INSURANCE RATES WILL NEVER BE GREATER THAN THOSE WHICH WERE USED TO CALCULATE THE ABOVE VALUES. THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE GUARANTEED INTEREST DIVISION AND THE INVESTMENT EXPERIENCE OF THE DIVISIONS. NO REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL GROSS INVESTMENT RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0.00%, 12.00% AND 6.00% OVER A PERIOD OF YEARS BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN A DIFFERENT FREQUENCY THAN SHOWN. - -------------------------------------------------------------------------------- Variable Last Survivor 61
PROSPECT: INSURED PERSON NO. 1'S NAME: MALE 50 NON-TOBACCO USER PRESENTED BY: INSURED PERSON NO. 2'S NAME FEMALE 50 NON-TOBACCO USER SECURITY LIFE VARIABLE LAST SURVIVOR UNIVERSAL LIFE STATED DEATH BENEFIT: $1,000,000 DEATH BENEFIT OPTION 1 ANNUAL PREMIUM: $13,000.00 GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST SUMMARY PAGE ASSUMING CURRENT CHARGES Assuming Hypothetical Gross Investment Return of: --------0.00%------ ---------12.00%--------- ----------6.00%--------- PREMIUM CASH CASH CASH ACCUMULATED ACCOUNT SURR DEATH ACCOUNT SURR DEATH ACCOUNT SURR DEATH YEAR PREMIUMS AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT 1 13000 13650 10653 1767 1000000 12005 3119 1000000 11328 2443 1000000 2 13000 27983 21056 12171 1000000 25163 16278 1000000 23069 14183 1000000 3 13000 43032 31200 22314 1000000 39579 30694 1000000 35224 26339 1000000 4 13000 58833 41150 32265 1000000 55448 46563 1000000 47876 38991 1000000 5 13000 75425 50933 42047 1000000 72944 64058 1000000 61071 52186 1000000 6 13000 92846 60824 53716 1000000 92540 85432 1000000 75121 68013 1000000 7 13000 111138 70543 65211 1000000 114141 108810 1000000 89769 84437 1000000 8 13000 130345 80088 76534 1000000 137949 134395 1000000 105035 101481 1000000 9 13000 150513 89457 87680 1000000 164186 162409 1000000 120941 119164 1000000 10 13000 171688 98645 98645 1000000 193097 193097 1000000 137509 137509 1000000 15 13000 294547 148809 148809 1000000 403872 403872 1000000 241358 241358 1000000 20 13000 451350 193607 193607 1000000 756919 756919 1000000 371116 371116 1000000 25 13000 651475 228244 228244 1000000 1350529 1350529 1445066 530841 530841 1000000 30 13000 906890 242734 242734 1000000 2345328 2345328 2462595 727244 727244 1000000 AGE 65 13000 322925 158321 158321 1000000 460703 460703 1000000 265130 265130 1000000
THE CURRENT COST OF INSURANCE RATES ARE SUBJECT TO CHANGE. ACCOUNT VALUES WILL VARY FROM THOSE ILLUSTRATED IF ACTUAL RATES DIFFER FROM THOSE ASSUMED. CURRENT MORTALITY CHARGE RATES ARE BASED ON CURRENT MORTALITY EXPERIENCE AND ARE NOT DEPENDENT UPON FUTURE IMPROVEMENTS IN UNDERLYING MORTALITY. THE HYPOTHETICAL GROSS RATES OF RETURN SHOWN ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED AS A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS AND POLICY CHARGES MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE TO THE DIVISIONS OF THE VARIABLE ACCOUNT AND THE GUARANTEED INTEREST DIVISION AND THE INVESTMENT EXPERIENCE OF THE DIVISIONS. NO REPRESENTATION CAN BE MADE THAT THESE HYPOTHETICAL GROSS INVESTMENTS RETURNS CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS ANNUAL RATES OF RETURN AVERAGED 0.00%, 12.00% AND 6.00% OVER A PERIOD OF YEARS BUT VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE DIFFERENT IF PREMIUMS WERE PAID IN A DIFFERENT FREQUENCY THAN SHOWN. - -------------------------------------------------------------------------------- Variable Last Survivor 62 ADDITIONAL INFORMATION DIRECTORS AND OFFICERS Set forth below is information regarding the directors and principal officers of Security Life of Denver Insurance Company. Security Life's address, and the business address of each person named, except as noted with one or two asterisks (*/**), is Security Life Center, 1290 Broadway, Denver, Colorado 80203-5699. The business address of each person denoted with one asterisk (*) is ING North America Insurance Corporation, 5780 Powers Ferry Road, Atlanta, Georgia 30327-4390. The business address of each person denoted with two asterisks (**) is Security Life of Denver Insurance Company, 9140 Arrowpoint Blvd., Suite 400, Charlotte, North Carolina 28273. Name and Principal Business and Address Position and Offices with Security Life of Denver - -------------------- ------------------------------------------------- Stephen M. Christopher Director, President and Chief Executive Officer Thomas F. Conroy Director, President Security Life Reinsurance Michael W. Cunningham* Director, Executive Vice President Linda B. Emory* Director, Executive Vice President and Appointed Actuary James L. Livingston, Jr. Executive Vice President and Chief Operating Officer Jeffrey R. Messner Executive Vice President and Chief Marketing Officer Jess A. Skriletz President, ING Institutional Markets John R. Barmeyer* Senior Vice President, Chief Legal Officer Wayne D. Bidelman Senior Vice President, CCRC Eugene L. Copeland Senior Vice President and General Counsel, Security Life Reinsurance and ING Institutional Markets Michael Fisher* Senior Vice President, Litigation Carol D. Hard Senior Vice President, Variable Products Philip R. Kruse Senior Vice President Charles LeDoyen** Senior Vice President, Structured Settlements Timothy P. McCarthy Senior Vice President, Marketing Services Gregory G. McGreevey Senior Vice President, New Product and Market Development - -------------------------------------------------------------------------------- Variable Last Survivor 63 Name and Principal Business and Address Position and Offices with Security Life of Denver - -------------------- ------------------------------------------------- Jeffery W. Seel* Senior Vice President, Chief Investment Officer Lawrence D. Taylor Senior Vice President, Chief Actuary Louis N. Trapolino Senior Vice President, Distribution William D. Tyler* Senior Vice President, Chief Information Officer Katherine Anderson Vice President Carole A. Baumbusch Vice President, Special Projects Evelyn A. Bentz Vice President, M Financial Sales Thomas Kirby Brown, Jr. Vice President, Operations, ING Institutional Markets Douglas W. Campbell Vice President, Agency Sales Daniel S. Clements Vice President and Chief Underwriter Stanley F. Eckert Vice President, National Marketing Larry D. Erb Vice President, Information Technology Martha K. Evans Vice President, Variable Operations Fitz Fisher Vice President, Information Technology Deborah B. Holden* Vice President, Corporate Benefits Brian Holland Vice President, Sales and International Risk Management Kenneth R. Kiefer** Vice President, Operations, Structured Settlements Richard D. King Vice President, Medical Director C. Lynn McPherson* Vice President Sue A. Miskie Vice President, Corporate Services David S. Pendergrass* Vice President and Treasury Officer Stephen R. Pryde Vice President, Administration Christiaan M. Rutten Vice President, Structured Reinsurance - -------------------------------------------------------------------------------- Variable Last Survivor 64 Name and Principal Business and Address Position and Offices with Security Life of Denver - -------------------- ------------------------------------------------- Casey J. Scott Vice President, National Marketing Alan C. Singer Vice President, Customer Relations and Regulatory Compliance Mark A. Smith Vice President, Insurance Services Jerome M. Strop Vice President, Strategic Marketing Gary W. Waggoner Vice President, General Counsel and Corporate Secretary William Wojciechowski* Vice President, CCRC Amy L. Winsor Treasurer and Finance Officer Eric G. Banta Assistant Secretary Roger O. Beebe Actuarial Officer Marsha K. Crest Agency Administration Officer John B. Dickinson Actuarial Officer Relda A. Fleshman Deputy General Counsel Shirley A. Knarr Actuarial Officer Glen E. Stark Actuarial Officer William J. Wagner Actuarial Officer - -------------------------------------------------------------------------------- Variable Last Survivor 65 REGULATION We are regulated and supervised by the Division of Insurance of the Department of Regulatory Agencies of the State of Colorado which periodically examines our financial condition and operations. In addition, we are subject to the insurance laws and regulations in every jurisdiction in which we do business. As a result, the provisions of this policy may vary somewhat from jurisdiction to jurisdiction. We are required to submit annual statements, including financial statements, of our operations and finances to the insurance departments of the various jurisdictions in which we do business to determine solvency and compliance with state insurance laws and regulations. We are also subject to various federal securities laws and regulations. LEGAL MATTERS The legal matters in connection with the policy described in this prospectus have been passed on by the General Counsel of Security Life. Sutherland Asbill & Brennan LLP has provided advice on matters relating to the federal securities laws. LEGAL PROCEEDINGS Security Life, as an insurance company, is ordinarily involved in litigation. We do not believe that any current litigation is material to Security Life's ability to meet its obligations under the policy or to the variable account, and we do not expect to incur significant losses from such actions. ING America Equities, Inc., the principal underwriter and distributor of the policy, is not engaged in any litigation of any material nature. EXPERTS The consolidated financial statements of Security Life of Denver Insurance Company and Subsidiaries at December 31, 1998 and 1997, and for each of the three years in the period ended December 31, 1998, and the financial statements of the Separate Account L1 at December 31, 1998, and for each of the three years in the period ended December 31, 1998, appearing in this prospectus and registration statement 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 upon the authority of such firm as experts in accounting and auditing. [to be filed by amendment.] Actuarial matters in this prospectus have been examined by Lawrence D. Taylor, F.S.A., M.A.A.A., who is Senior Vice President and Chief Actuary of Security Life. His opinion on actuarial matters is filed as an exhibit to the Registration Statement we filed with the SEC. [to be filed by amendment.] REGISTRATION STATEMENT We have filed a Registration Statement relating to the Variable Account and the variable life insurance policy described in this prospectus with the SEC. The Registration Statement, which is required by the Securities Act of 1933, includes additional information that is not required in this prospectus under the rules and regulations of the SEC. The additional information may be obtained from the SEC's principal office in Washington, DC. There is a charge for this material. - -------------------------------------------------------------------------------- Variable Last Survivor 66 FINANCIAL STATEMENTS [to be filed by amendment] - -------------------------------------------------------------------------------- Variable Last Survivor 67 APPENDIX A FACTORS FOR THE GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST FOR A LIFE INSURANCE POLICY
Attained Attained Attained Attained Age of Younger Factor Age of Younger Age of Younger Age of Younger Insured Insured Factor Insured Factor Insured Factor 0 2.50 25 2.50 50 1.85 75 1.05 1 2.50 26 2.50 51 1.78 76 1.05 2 2.50 27 2.50 52 1.71 77 1.05 3 2.50 28 2.50 53 1.64 78 1.05 4 2.50 29 2.50 54 1.57 79 1.05 5 2.50 30 2.50 55 1.50 80 1.05 6 2.50 31 2.50 56 1.46 81 1.05 7 2.50 32 2.50 57 1.42 82 1.05 8 2.50 33 2.50 58 1.38 83 1.05 9 2.50 34 2.50 59 1.34 84 1.05 10 2.50 35 2.50 60 1.30 85 1.05 11 2.50 36 2.50 61 1.28 86 1.05 12 2.50 37 2.50 62 1.26 87 1.05 13 2.50 38 2.50 63 1.24 88 1.05 14 2.50 39 2.50 64 1.22 89 1.05 15 2.50 40 2.50 65 1.20 90 1.05 16 2.50 41 2.43 66 1.19 91 1.04 17 2.50 42 2.36 67 1.18 92 1.03 18 2.50 43 2.29 68 1.17 93 1.02 19 2.50 44 2.22 69 1.16 94 1.01 20 2.50 45 2.15 70 1.15 95 1.00 21 2.50 46 2.09 71 1.13 96 1.00 22 2.50 47 2.03 72 1.11 97 1.00 23 2.50 48 1.97 73 1.09 98 1.00 24 2.50 49 1.91 74 1.07 99 1.00 100 1.00
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. - -------------------------------------------------------------------------------- Variable Last Survivor 68 APPENDIX B ENHANCED DEATH BENEFIT CORRIDOR FACTORS FOR THE GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST FOR A LIFE INSURANCE POLICY
Attained Attained Attained Attained Age of Younger Age of Younger Age of Younger Age of Younger Insured Factor Insured Factor Insured Factor Insured Factor 0 2.50 25 2.50 50 1.85 75 1.05 1 2.50 26 2.50 51 1.78 76 1.05 2 2.50 27 2.50 52 1.71 77 1.05 3 2.50 28 2.50 53 1.64 78 1.05 4 2.50 29 2.50 54 1.57 79 1.09 5 2.50 30 2.50 55 1.50 80 1.14 6 2.50 31 2.50 56 1.46 81 1.18 7 2.50 32 2.50 57 1.42 82 1.22 8 2.50 33 2.50 58 1.38 83 1.26 9 2.50 34 2.50 59 1.34 84 1.31 10 2.50 35 2.50 60 1.30 85 1.35 11 2.50 36 2.50 61 1.28 86 1.33 12 2.50 37 2.50 62 1.26 87 1.31 13 2.50 38 2.50 63 1.24 88 1.29 14 2.50 39 2.50 64 1.22 89 1.27 15 2.50 40 2.50 65 1.20 90 1.26 16 2.50 41 2.43 66 1.19 91 1.24 17 2.50 42 2.36 67 1.18 92 1.22 18 2.50 43 2.29 68 1.17 93 1.19 19 2.50 44 2.22 69 1.16 94 1.16 20 2.50 45 2.15 70 1.15 95 1.12 21 2.50 46 2.09 71 1.13 96 1.11 22 2.50 47 2.03 72 1.11 97 1.09 23 2.50 48 1.97 73 1.09 98 1.06 24 2.50 49 1.91 74 1.07 99 1.03 100 1.00
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. - -------------------------------------------------------------------------------- Variable Last Survivor 69 APPENDIX C PERFORMANCE INFORMATION POLICY PERFORMANCE The following hypothetical illustrations demonstrate how the actual investment experience of each Division of the Variable Account affects the Cash Surrender Value, Account Value and Death Benefit of a policy. These hypothetical illustrations are based on the actual historical return of each portfolio as if a policy had been issued on the date indicated. Each portfolio's Annual Total Return is based on the total return calculated for each fiscal year. These Annual Total Return figures reflect the portfolio's management fees and other operating expenses but do not reflect the policy level or Variable Account asset-based charges and deductions, which if reflected, would result in lower total return figures than those shown. The illustrations are based on the payment of a $12,500 annual premium, paid at the beginning of each year, for a hypothetical policy with a $1,000,000 face amount death benefit Option 1, issued on a preferred, nonsmoker male, Age 50 and a preferred, nonsmoker female, age 50. It is assumed that all premiums are allocated to the Division illustrated for the period shown. The benefits are calculated for a specific date. The amount and timing of Premium Payments and the use of other policy features, such as policy loans, would affect individual policy benefits. The amounts shown for the Cash Surrender Values, Account Values and Death Benefits take into account the charges against premiums, current cost of insurance and monthly deductions, the daily charge against the Variable Account for mortality and expense risks, and each portfolio's charges and expenses. SEE CHARGES, DEDUCTIONS AND REFUNDS, PAGE 48. This prospectus also contains illustrations based on assumed rates of return. SEE ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES, SURRENDER VALUES AND ACCUMULATED PREMIUMS, PAGE 59. - -------------------------------------------------------------------------------- Variable Last Survivor 70 HYPOTHETICAL ILLUSTRATIONS [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- AIM V.I. CAPITAL APPRECIATION FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/94 2.50% 2,151 11,036 1,000,000 12/31/95 35.69% 20,673 29,559 1,000,000 12/31/96 17.58% 38,171 47,056 1,000,000 12/31/97 13.51% 56,208 65,093 1,000,000 12/31/98 19.30% 80,917 89,802 1,000,000 AIM V.I. GOVERNMENT SECURITIES FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/94 (3.73)% 1,450 10,335 1,000,000 12/31/95 15.56% 15,397 24,282 1,000,000 12/31/96 2.29% 26,616 35,501 1,000,000 12/31/97 8.16% 40,703 49,589 1,000,000 12/31/98 7.66% 55,522 64,407 1,000,000 ALGER AMERICAN GROWTH PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/90 4.14% 2,336 11,221 1,000,000 12/31/91 40.39% 21,976 30,861 1,000,000 12/31/92 12.38% 37,516 46,401 1,000,000 12/31/93 22.47% 60,600 69,485 1,000,000 12/31/94 1.45% 71,811 80,696 1,000,000 12/31/95 36.37% 117,130 124,238 1,000,000 12/31/96 13.35% 146,812 152,143 1,000,000 12/31/97 25.75% 200,125 203,679 1,000,000 12/31/98 48.07% 313,916 315,693 1,000,000 ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/96 12.04% 3,226 12,111 1,000,000 12/31/97 19.68% 18,394 27,279 1,000,000 12/31/98 57.83% 50,930 59,815 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. * These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 71 HYPOTHETICAL ILLUSTRATION (Continued) [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- ALGER AMERICAN MIDCAP GROWTH PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/94 (1.54)% 1,696 10,581 1,000,000 12/31/95 44.45% 21,969 30,854 1,000,000 12/31/96 11.90% 37,307 46,192 1,000,000 12/31/97 15.01% 56,090 64,976 1,000,000 12/31/98 30.30% 89,105 97,990 1,000,000 ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/89 64.48% 9,158 18,043 1,000,000 12/31/90 8.71% 22,242 31,127 1,000,000 12/31/91 57.54% 56,838 65,723 1,000,000 12/31/92 3.55% 69,632 78,518 1,000,000 12/31/93 13.28% 91,451 100,336 1,000,000 12/31/94 (4.38)% 98,461 105,569 1,000,000 12/31/95 44.31% 161,802 167,133 1,000,000 12/31/96 4.18% 180,581 184,135 1,000,000 12/31/97 11.39% 213,927 215,704 1,000,000 12/31/98 15.53% 259,929 259,929 1,000,000 FIDELITY VIP GROWTH PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/89 31.51% 5,425 14,310 1,000,000 12/31/90 (11.73)% 13,018 21,903 1,000,000 12/31/91 45.51% 38,443 47,328 1,000,000 12/31/92 9.32% 54,078 62,963 1,000,000 12/31/93 19.37% 78,445 87,331 1,000,000 12/31/94 (0.02)% 90,393 97,501 1,000,000 12/31/95 35.36% 140,552 145,883 1,000,000 12/31/96 14.71% 175,056 178,611 1,000,000 12/31/97 23.48% 230,639 232,416 1,000,000 12/31/98 39.49% 337,128 337,128 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. * These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 72 HYPOTHETICAL ILLUSTRATION (Continued) [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- FIDELITY VIP MONEY MARKET PORTFOLIO Year Annual Total Cash Surrender Account Benefit Ended Return * Value Value Death 12/31/89 9.12% 2,897 11,782 1,000,000 12/31/90 8.04% 15,332 24,218 1,000,000 12/31/91 6.09% 27,888 36,774 1,000,000 12/31/92 3.90% 40,039 48,924 1,000,000 12/31/93 3.23% 52,166 61,051 1,000,000 12/31/94 4.25% 67,385 74,493 1,000,000 12/31/95 5.87% 84,445 89,776 1,000,000 12/31/96 5.41% 101,807 105,361 1,000,000 12/31/97 5.51% 119,987 121,764 1,000,000 12/31/98 5.46% 138,853 138,853 1,000,000 FIDELITY VIP OVERSEAS PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/89 26.28% 4,834 13,719 1,000,000 12/31/90 (1.67)% 14,997 23,883 1,000,000 12/31/91 8.00% 28,202 37,087 1,000,000 12/31/92 (10.72)% 33,350 42,235 1,000,000 12/31/93 37.35% 63,435 72,320 1,000,000 12/31/94 1.72% 76,942 84,050 1,000,000 12/31/95 9.74% 98,161 103,493 1,000,000 12/31/96 13.15% 124,999 128,553 1,000,000 12/31/97 11.56% 152,694 154,471 1,000,000 12/31/98 12.75% 185,110 185,110 1,000,000 FIDELITY VIP II ASSET MANAGER PORTFOLIO Year Annual Total Cash Surrender Account Benefit Ended Return * Value Value Death 12/31/90 6.72% 2,626 11,512 1,000,000 12/31/91 22.56% 18,334 27,219 1,000,000 12/31/92 11.71% 33,197 42,082 1,000,000 12/31/93 21.23% 54,692 63,577 1,000,000 12/31/94 (6.09)% 60,262 69,147 1,000,000 12/31/95 16.96% 85,943 93,051 1,000,000 12/31/96 14.60% 113,014 118,345 1,000,000 12/31/97 20.65% 151,354 154,908 1,000,000 12/31/98 15.05% 187,651 189,428 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. * These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 73 HYPOTHETICAL ILLUSTRATION (Continued) [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- FIDELITY VIP II INDEX 500 PORTFOLIO Year Annual Total Cash Surrender Account Benefit Ended Return * Value Value Death 12/31/93 9.74% 2,967 11,852 1,000,000 12/31/94 1.04% 13,798 22,683 1,000,000 12/31/95 37.19% 36,761 45,646 1,000,000 12/31/96 22.82% 59,880 68,765 1,000,000 12/31/97 32.82% 96,010 104,895 1,000,000 12/31/98 28.31% 140,573 147,682 1,000,000 INVESCO VIF-EQUITY INCOME FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/95 29.25% 5,169 14,054 1,000,000 12/31/96 22.28% 21,357 30,243 1,000,000 12/31/97 28.17% 43,336 52,221 1,000,000 12/31/98 15.30% 63,157 72,042 1,000,000 INVESCO VIF-HIGH YIELD FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/95 19.76% 4,097 12,982 1,000,000 12/31/96 16.59% 18,683 27,568 1,000,000 12/31/97 17.33% 35,751 44,636 1,000,000 12/31/98 1.42% 46,773 55,659 1,000,000 INVESCO VIF-SMALL COMPANY GROWTH FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/98 16.38% 3,716 12,601 1,000,000 INVESCO VIF-TOTAL RETURN FUND Year Annual Total Cash Surrender Account Benefit Ended Return * Value Value Death 12/31/95 22.79% 4,439 13,325 1,000,000 12/31/96 12.18% 17,999 26,885 1,000,000 12/31/97 22.91% 37,070 45,955 1,000,000 12/31/98 9.56% 52,724 61,609 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. * These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 74 HYPOTHETICAL ILLUSTRATION (Continued) [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- INVESCO VIF-UTILITIES FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/95 9.08% 2,892 11,778 1,000,000 12/31/96 12.76% 16,410 25,295 1,000,000 12/31/97 23.41% 35,312 44,197 1,000,000 12/31/98 25.48% 59,578 68,463 1,000,000 NEUBERGER BERMAN GROWTH PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/89 29.47% 5,194 14,079 1,000,000 12/31/90 (8.19)% 13,707 22,592 1,000,000 12/31/91 29.73% 34,127 43,012 1,000,000 12/31/92 9.54% 49,512 58,397 1,000,000 12/31/93 6.79% 64,336 73,221 1,000,000 12/31/94 (4.99)% 72,208 79,316 1,000,000 12/31/95 31.73% 112,839 118,170 1,000,000 12/31/96 9.14% 136,324 139,878 1,000,000 12/31/97 29.01% 191,467 193,244 1,000,000 12/31/98 15.53% 234,166 234,166 1,000,000 NEUBERGER BERMAN LIMITED MATURITY BOND PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/89 10.77% 3,083 11,968 1,000,000 12/31/90 8.32% 15,597 24,482 1,000,000 12/31/91 11.34% 30,030 38,915 1,000,000 12/31/92 5.18% 42,885 51,771 1,000,000 12/31/93 6.63% 57,210 66,095 1,000,000 12/31/94 (0.15)% 69,215 76,323 1,000,000 12/31/95 10.94% 90,790 96,121 1,000,000 12/31/96 4.31% 107,272 110,826 1,000,000 12/31/97 6.74% 127,206 128,983 1,000,000 12/31/98 4.39% 144,919 144,919 1,000,000 NEUBERGER BERMAN PARTNERS PORTFOLIO Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/95 36.47% 5,985 14,871 1,000,000 12/31/96 29.57% 24,245 33,130 1,000,000 12/31/97 31.25% 48,369 57,254 1,000,000 12/31/98 4.21% 61,375 70,260 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. * These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 75 HYPOTHETICAL ILLUSTRATION (Continued) [to be filed by amendment] Nonsmoker Male Age 50 Nonsmoker Female Age 50 Preferred Risk Class Death Benefit Option 1 Stated Death Benefit $1,000,000 Annual Premium $12,500 - -------------------------------------------------------------------------------- VAN ECK WORLDWIDE BOND FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/90 11.25% 3,137 12,022 1,000,000 12/31/91 18.39% 17,989 26,874 1,000,000 12/31/92 (5.25)% 26,394 35,279 1,000,000 12/31/93 7.79% 40,294 49,180 1,000,000 12/31/94 (1.32)% 49,699 58,584 1,000,000 12/31/95 17.30% 73,915 81,023 1,000,000 12/31/96 2.53% 88,240 93,571 1,000,000 12/31/97 2.38% 102,617 106,172 1,000,000 12/31/98 12.75% 129,295 131,072 1,000,000 VAN ECK WORLDWIDE EMERGING MARKETS FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/96 26.82% 4,895 13,780 1,000,000 12/31/97 (11.61)% 12,583 21,469 1,000,000 12/31/98 (34.15)% 11,937 20,822 1,000,000 VAN ECK WORLDWIDE HARD ASSETS FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/91 (2.93)% 1,540 10,425 1,000,000 12/31/92 (4.09)% 11,260 20,146 1,000,000 12/31/93 64.83% 41,942 50,827 1,000,000 12/31/94 (4.78)% 49,187 58,072 1,000,000 12/31/95 10.99% 66,881 75,766 1,000,000 12/31/96 18.04% 94,565 101,674 1,000,000 12/31/97 (1.67)% 104,541 109,872 1,000,000 12/31/98 (30.93)% 79,064 82,618 1,000,000 VAN ECK WORLDWIDE REAL ESTATE FUND Year Annual Total Cash Surrender Account Death Ended: Return* Value Value Benefit 12/31/98 (11.35)% 593 9,478 1,000,000 The assumptions underlying these values are described in Performance Information, page 70. *These Annual Total Return figures reflect the Portfolio's management fees and other operating expenses but do not reflect the Policy level or Variable Account asset-based charges and deductions which, if reflected, would result in lower total return figures than those shown. - -------------------------------------------------------------------------------- Variable Last Survivor 76 PART II UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section. UNDERTAKING REGARDING INDEMNIFICATION Please refer to the Articles of Incorporation listed as Exhibits 1.A(6)(a) and 1.A(6)(b-g) and the By-Laws listed as Exhibits 1.A(6)(h) and 1.A(6)(h)(i). Security Life of Denver's (the "corporation") Certificate of Incorporation and bylaws provide that the corporation shall have every power and duty of indemnification of directors, officers, employees and agents, without limitation, provided by the laws of the state of Colorado. Under Colorado law, the corporation has the power to indemnify such persons against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed action, suit or proceeding, if such person acted in good faith and in a manner which that person reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of actions by or in the right of the corporation, such indemnification cannot be made where such person is adjudged liable to the corporation, except pursuant to a court order. The corporation is required to indemnify directors, officers, employees and agents against expense actually and reasonably incurred in connection with actions where such persons have been successful on the merits or otherwise in defense of such actions. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the securities and Exchange commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling preceding, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. UNDERTAKING REQUIRED BY SECTION 26(E)(2)(A) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED Security Life of Denver Insurance Company represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks assumed by the Company. CONTENTS OF REGISTRATION STATEMENT This Registration Statement comprises the following papers and documents: The facing sheet. Cross-Reference table. The prospectus. - -------------------------------------------------------------------------------- Variable Last Survivor II - 1 The undertaking to file reports. The undertaking regarding indemnification. The undertaking required by Section 26(e)2(A) of the Investment Company Act of 1940, as amended. The signatures. Written consents of the following persons: Lawrence D. Taylor (See Exhibit 6B). [To be filed by amendment] Ernst & Young, L.L.P. (See Exhibit 7A). [To be filed by amendment] Sutherland Asbill & Brennan, LLP (See Exhibit 7B). [To be filed by amendment] The following exhibits: 1.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. /1/ (2) Not Applicable. (3) (a) Security Life of Denver Distribution Agreement./1/ (b) Specimen Amendment to Broker/Dealer Supervisory and Selling Agreement for Variable Contracts with Compensation Schedule. (c) Commission Schedule for Policies. (4) Not Applicable. (5) (a) Specimen Variable Last Survivor Universal Life Insurance Policy (Form No.2504 (JTVUL)-8/99). (b) Adjustable Term Insurance Rider (Form No. R2003-8/99)./4/ (c) Single Life Term Insurance Rider (Insured #1) (Form No. R2004-8/99)./4/ (d) Single Life Term Insurance Rider (Insured #2) (Form No. R2005-8/99)./4/ (e) Aviation Exclusion Rider (Form No. S-9622). (6) (a) Security Life of Denver's Restated Articles of Incorporation./1/ (b-g) Amendments to Articles of Incorporation through June 12, 1987./1/ (h) Security Life of Denver's By-Laws./1/ (i) Bylaws of Security Life of Denver Insurance Company (Restated with Amendments through September 30, 1997)./2/ (7) Not Applicable. (8) (a) Participation Agreements (i) 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./3/ (ii) Sales Agreement by and among The Alger American Fund, Fred Alger Management, Inc., and Security Life of Denver Insurance Company./1/ (iii)Sales Agreement by and among Neuberger & Berman Advisers Management Trust, Neuberger & Berman Management Incorporated, and Security Life of Denver Insurance Company./1/ (iv) Participation Agreement among Variable Insurance Products Fund, Fidelity Distributors Corporation and Security Life of Denver Insurance Company./1/ (v) Participation Agreement among Variable Insurance Products Fund II, Fidelity Distributors Corporation and Security Life of Denver Insurance Company./1/ (vi) Participation Agreement among INVESCO Variable Investment Funds, Inc., INVESCO - -------------------------------------------------------------------------------- Variable Last Survivor II - 2 Funds Group, Inc., and Security Life of Denver Insurance Company./1/ (vii)Participation Agreement between Van Eck Investment Trust and the Trust's investment adviser, Van Eck Associates Corporation, and Security Life of Denver Insurance Company./1/ (9) Not Applicable. (10) Specimen Variable Last Survivor Life Insurance Application with Binding Limited Life Insurance Coverage Form (Form No. Q-2006-9/97). 2. Included as Exhibit 1.A(5) above. 3.A Opinion and consent of Gary W. Waggoner as to securities being registered. 4. Not Applicable. 5. Not Applicable. 6.A Opinion and consent of Lawrence D. Taylor.[To be filed by amendment] 7.A Consent of Ernst & Young L.L.P. [To be filed by amendment] B Consent of Sutherland Asbill & Brennan LLP. [To be filed by amendment] 8. Not Applicable. - ----------- /1/ 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 with the Securities and Exchange Commission on April 27, 1998 (File No. 33-74190). /2/ 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 with the Securities and Exchange Commission on October 29, 1998 (File No. 33-74190). /3/ 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 with the Securities and Exchange Commission on March 2, 1998 (File No. 33-74190). /4/ Incorporated herein by reference to the Initial Registration to the Form S-6 Registration Statement of Security Life of Denver Insurance Company and its Security Life Separate Account L1, filed with the Securities and Exchange Commission on February 22, 1999 (File No. 333-72753). - -------------------------------------------------------------------------------- Variable Last Survivor II - 3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Security Life of Denver Insurance Company and the Registrant, Security Life Separate Account L1, have duly caused this Registration Statement to be signed on their behalf by the undersigned, hereunto duly authorized, and their seal to be hereunto fixed and attested, all in the City and County of Denver and the State of Colorado on the 30th day of March, 1999. SECURITY LIFE OF DENVER INSURANCE COMPANY (Depositor) BY: /s/ Stephen M. Christopher --------------------------------- Stephen M. Christopher President (Seal) ATTEST: /s/ Gary W. Waggoner - ---------------------------- Gary W. Waggoner SECURITY LIFE SEPARATE ACCOUNT L1 (Registrant) BY: SECURITY LIFE OF DENVER INSURANCE COMPANY (Depositor) BY: /s/ Stephen M. Christopher --------------------------------- Stephen M. Christopher President (Seal) ATTEST: /s/ Gary W. Waggoner - ----------------------------- Gary W. Waggoner - -------------------------------------------------------------------------------- Variable Last Survivor II - 4 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities with Security Life of Denver Insurance Company and on the date indicated. PRINCIPAL EXECUTIVE OFFICERS: /s/ Stephen M. Christopher - ----------------------------- Stephen M. Christopher President, Chief Executive Officer and Director /s/ Jim Livingston - ----------------------------- Jim Livingston Chief Operations Officer PRINCIPAL ACCOUNTING OFFICER: /s/ Amy L. Winsor - ----------------------------- Amy L. Winsor Treasurer and Finance Officer DIRECTORS: /s/ Thomas F. Conroy - ----------------------------- Thomas F. Conroy /s/ Linda B. Emory - ----------------------------- Linda B. Emory - ----------------------------- Michael W. Cunningham - -------------------------------------------------------------------------------- Variable Last Survivor II - 5 EXHIBIT INDEX Exhibit No. Description of Exhibit - ----------- ---------------------- 1.A(3)(b) Amendment to the Broker-Dealer Supervisory and Selling Agreement for Variable Contracts with Compensation Schedule. 1.A(3)(c) Commission Schedule for Policies. 1.A(5)(a) Specimen Variable Last Survivor Universal Life Insurance Policy (Form No. 2504 (JTVUL)-8/99). 1.A(5)(e) Aviation Exclusion Rider (Form No. S-9622). 1.A(10) Specimen Variable Last Survivor Life Insurance Application with Binding Limited Life Insurance Coverage Form(Form No. Q-2006-9/97). 3.A Opinion and consent of Gary W. Waggoner as to securities being registered. - -------------------------------------------------------------------------------- Variable Last Survivor II - 6 EX-1.A(3)(B) 2 AMNDMNT TO BD SELLING AGMT WITH COMP SCHED EXHIBIT 1.a(3)(b) AMENDMENT TO THE BROKER-DEALER SUPERVISORY AND SELLING AGREEMENT FOR VARIABLE CONTRACTS This Amendment is made by and among Security Life of Denver Insurance Company ("Security Life"), ING America Equities, Inc. ("INGAE") and Selling Broker-Dealer and Agency, collectively known as the Parties. WHEREAS, the Parties have executed a Broker-Dealer Supervisory and Selling Agreement for Variable Contracts ("the Agreement") which provides that Selling Broker-Dealer and Agency will enable and supervise its registered representatives to solicit and sell the Contracts issued by Security Life and distributed by INGAE. WHEREAS, the Agreement also provides for certain compensation to be paid to Selling Broker-Dealer or Agency for the sales of such Contracts, the Agreement is modified as follows: 1. The Schedule H, "Compensation Schedule to Selling Agreement for Security Life Last Survivor Universal Life" is hereby added. This Amendment is effective August 1, 1999, and shall be deemed to be accepted by Broker-Dealer and Agency by Security Life and INGAE by submission of an application for the Variable Last Survivor Universal Life product by Selling Broker-Dealer or Agency on or after that date. SCHEDULE H COMPENSATION SCHEDULE TO SELLING AGREEMENT FOR SECURITY LIFE VARIABLE LAST SURVIVOR UNIVERSAL LIFE This Schedule is an attachment to the ING America Equities, Inc. ("ING AMERICA EQUITIES") Selling Agreement by and among the parties pursuant to paragraph 17 of that Selling Agreement, effective as of August 1, 1999, or the date that Selling Broker-Dealer submits an application for this product, whichever is later. The provisions of this Schedule shall apply only to Security Life Variable Last Survivor Universal Life policies solicited and issued while this Schedule is in effect. All compensation payable under this Schedule shall be subject to the terms and conditions contained herein at the time of issue of the policy by Security Life of Denver Insurance Company ("SECURITY LIFE"). 1. Commission Structure: | RCA | TRAIL ----------------------------------------------------------------------- PCA | SCA | YEARS 2 - 5 | YEARS 6 + | YEARS 5 - 20 ----------------------------------------------------------------------- 90% | 5% | 5% | 2% | 0.20% net | | | | account value PCA (PRIMARY COMMISSIONABLE AMOUNT) is equal to the first year commission target premium (shown on policy schedule pages and illustrations). Gross premiums paid up to the PCA in any year are commissioned at the full PCA rate. If the gross premium paid in year one is less than the PCA, that difference is carried over to the second year. Premiums received in year two or later up to this difference, if any, are commissioned at the full PCA commission rate. A new PCA is generated any time a new base coverage segment is created. Note that a death benefit option change does not create a new PCA. Premium dollars are allocated first to PCA, then to SCA, and then to RCA. SCA (SECONDARY COMMISSIONABLE AMOUNT) is equal to the difference between the gross premiums paid in segment year one and the PCA. RCA (RENEWABLE COMMISSIONABLE AMOUNT) equals zero in the first policy year. In renewal years, the RCA equals the gross premium paid per segment less the remaining PCA for that year, but never less than zero. Schedule H 2. Trail Commissions: for policy years 5 through 20, a trail commission of 0.20% for Variable Last Survivor Universal Life on an annualized basis is calculated at the end of each month based on the policy's net account value at the end of the prior month. The trail commission is payable annually at the end of a policy year provided the policy is in force, and not subject to grace period provisions, on that date. 3. Riders: Commissionable riders will have a separate target premium which is set at issue and is level thereafter. The Adjustable Term Insurance Rider has no target premium associated with it. 4. Commission Calculation: Commissions shall be calculated only on premium actually received and accepted by SECURITY LIFE. Commissions shall be paid only on an earned basis. Outstanding loan amounts carried over are not considered commissionable premium. 5. Premium Allocation: If the Stated Death Benefit has been increased since the policy date, premiums received are allocated to the coverage segments in the same proportion that the commission target premium for each segment bears to the total commission target premium of the policy. 6. Compensation Payments: Compensation on initial premium shall be due to the SELLING BROKER-DEALER at the time of the issuance of the policy and for all other premium payments at the time of the receipt and acceptance of premium by SECURITY LIFE, except that the amount, if any, and the time of payment of compensation on replacements, reissues, changes, conversions, exchanges, term renewals, term conversions, premiums paid in advance, policies issued on a "guaranteed issue" basis, policies requiring facultative reinsurance arrangements, and other special cases and programs shall be governed by SECURITY LIFE'S underwriting and administrative rules then in effect. The Compensation shall be payable to the SELLING BROKER-DEALER in accordance with the Schedule H in effect at the time of issue of the policy. 7. Commission Chargeback: In the event that a policy for which a commission has been paid is lapsed or surrendered by the Policy Owner during the first six months, or is returned to SECURITY LIFE for refund of premium during the Free Look Period as described in the policy, SECURITY LIFE and ING AMERICA EQUITIES shall require reimbursement from SELLING BROKER-DEALER equal to 100% of the commission paid. If a premium payment for which a commission has been paid is refunded by SECURITY LIFE, a reimbursement of the commission paid on the amount refunded will be due from the SELLING BROKER-DEALER. The reimbursement may be deducted by ING AMERICA EQUITIES from the next, or any subsequent, commission payment to SELLING BROKER-DEALER. If the amount to be reimbursed exceeds compensation otherwise due, SELLING BROKER-DEALER shall promptly reimburse ING AMERICA EQUITIES before the next commission cycle. Schedule H 8. Internal Exchanges: Commissions on the exchange of any SECURITY LIFE policy for Variable Last Survivor Universal Life, if any, will be paid in accordance with the exchange procedures in effect at SECURITY LIFE on the date the exchange is completed. The commission rates and/or target premiums may be adjusted in accordance with the rules in effect at the time of the exchange. If the Representative responsible for the exchange is not the producer of the original policy, and the original producer is still active with SECURITY LIFE, no commission will be payable to the Representative or the SELLING BROKER-DEALER. Schedule H EX-1.A(3)(C) 3 COMMISSION SCHEDULE FOR POLICIES EXHIBIT 1.a(3)(c) Commissions: EXPRESSED AS A PERCENT OF PREMIUM ASSET YEAR UP TO TARGET ABOVE TARGET TRAIL ---- ------------ ------------ ----- 1 90% 5% n/a 2-5 5% 5% n/a 6-10 2% 2% n/a 11-20 2% 2% 20bp* 21+ 2% 2% n/a * Paid on account value on an annualized basis EX-1.A(5)(A) 4 VSUL CONTRACT EXHIBIT 1.A (5)(a) SECURITY LIFE OF DENVER INSURANCE COMPANY INSURED (1): JOHN DOE INSURED (2): MARY DOE POLICY DATE: August 1, 1999 POLICY NUMBER: 67000001 WE AGREE TO PAY the death benefit to the beneficiary upon the second death of the two insureds 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. [RIGHT TO EXAMINE PERIOD. You have the right to examine and return this policy within [10] days after receipt. The policy may be returned by delivering or mailing it to us at our Customer Service Center or to your registered representative. Immediately upon return it will be deemed void as of the policy date. Upon return of the policy to us, we will refund all premiums paid. If this policy is a replacement policy as defined by state law where this policy is delivered, you have the right to examine and return this policy within [10] days.] /s/ Gary W. Waggoner /s/ Stephen M. Christopher Secretary President 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 IS A NON-PARTICIPATING POLICY. [THIS POLICY IS A LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.] THIS POLICY INCLUDES PERSISTENCY BONUS. [DEATH BENEFITS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THESE VALUES MAY INCREASE OR DECREASE BASED ON INVESTMENT EXPERIENCE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. DEATH BENEFITS ARE PAYABLE BY US UPON THE SECOND DEATH OF THE TWO INSUREDS. THERE IS NO MATURITY DATE. FLEXIBLE PREMIUMS ARE PAYABLE BY YOU DURING THE LIFETIME OF EITHER INSURED UNTIL THE POLICY ANNIVERSARY NEAREST THE YOUNGER INSURED'S 100TH BIRTH DATE.] The death benefit is payable following the second death. However, you should give us notice of the first death at the time it occurs. [ ] SECURITY LIFE OF DENVER INSURANCE COMPANY A Stock Company Customer Service Center, P.O. Box 173888, Denver, Colorado 80217 Toll Free Number: 1(800) 848-6362 Form 2504 (JTVUL)-8/99 TABLE OF CONTENTS SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 DEFINITION OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . 6 INSURANCE COVERAGE PROVISIONS . . . . . . . . . . . . . . . . . . . 7 EFFECTIVE DATE OF COVERAGE . . . . . . . . . . . . . . . . . . 7 BASE DEATH BENEFIT . . . . . . . . . . . . . . . . . . . . . . 7 CHANGE IN REQUESTED INSURANCE COVERAGE . . . . . . . . . . . . 7 Requested Increases in Coverage . . . . . . . . . . . . . 8 Requested Decreases in Coverage . . . . . . . . . . . . . 8 Death Benefit Option Changes . . . . . . . . . . . . . . 8 CONTINUATION OF COVERAGE AFTER AGE 100 . . . . . . . . . . . . 9 PAYOUT OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . 10 PREMIUM PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 10 INITIAL PREMIUM ALLOCATION . . . . . . . . . . . . . . . . . . 10 SUBSEQUENT PREMIUM ALLOCATION . . . . . . . . . . . . . . . . 11 CHANGES TO PREMIUM ALLOCATIONS . . . . . . . . . . . . . . . . 11 [SCHEDULED PREMIUMS] . . . . . . . . . . . . . . . . . . . . . 11 [UNSCHEDULED PREMIUMS] . . . . . . . . . . . . . . . . . . . . 11 NET PREMIUM . . . . . . . . . . . . . . . . . . . . . . . . . 11 PREMIUM LIMITATION . . . . . . . . . . . . . . . . . . . . . . 12 FAILURE TO PAY PREMIUM . . . . . . . . . . . . . . . . . . . . 12 VARIABLE ACCOUNT PROVISIONS . . . . . . . . . . . . . . . . . . . . 12 THE VARIABLE ACCOUNT . . . . . . . . . . . . . . . . . . . . . 12 VARIABLE ACCOUNT DIVISIONS . . . . . . . . . . . . . . . . . . 12 CHANGES WITHIN THE VARIABLE ACCOUNT. . . . . . . . . . . . . . 13 GENERAL ACCOUNT PROVISIONS . . . . . . . . . . . . . . . . . . . . 14 THE GENERAL ACCOUNT . . . . . . . . . . . . . . . . . . . . . 14 GUARANTEED INTEREST DIVISION . . . . . . . . . . . . . . . . . 14 LOAN DIVISION . . . . . . . . . . . . . . . . . . . . . . . . 14 Form 2504 (JTVUL)-8/99 Page 2 TRANSFER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 14 ACCOUNT VALUE PROVISIONS . . . . . . . . . . . . . . . . . . . . . 14 ACCOUNT VALUES ON THE INVESTMENT DATE . . . . . . . . . . . . 15 ACCUMULATION UNIT VALUE . . . . . . . . . . . . . . . . . . . 15 ACCUMULATION EXPERIENCE FACTOR . . . . . . . . . . . . . . . . 15 ACCOUNT VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT . . . . 16 ACCOUNT VALUE OF THE GUARANTEED INTEREST DIVISION. . . . . . . 16 ACCOUNT VALUE OF THE LOAN DIVISION . . . . . . . . . . . . . . 17 MONTHLY DEDUCTION AND REFUND . . . . . . . . . . . . . . . . . . . 17 MONTHLY DEDUCTION. . . . . . . . . . . . . . . . . . . . . . . 17 COST OF INSURANCE. . . . . . . . . . . . . . . . . . . . . . . 18 PERSISTENCY REFUND . . . . . . . . . . . . . . . . . . . . . . 18 LOAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 19 POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 19 LOAN INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 19 LOAN DIVISION . . . . . . . . . . . . . . . . . . . . . . . . 19 PARTIAL WITHDRAWAL PROVISIONS . . . . . . . . . . . . . . . . . . . 19 SURRENDER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 21 SURRENDER VALUE. . . . . . . . . . . . . . . . . . . . . . . . 21 SURRENDER CHARGES. . . . . . . . . . . . . . . . . . . . . . . 21 BASIS OF COMPUTATIONS. . . . . . . . . . . . . . . . . . . . . 21 FULL SURRENDERS. . . . . . . . . . . . . . . . . . . . . . . . 21 GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS. . . . . . . 22 GRACE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 22 SPECIAL CONTINUATION PERIOD. . . . . . . . . . . . . . . . . . 22 [GUARANTEE PERIOD] . . . . . . . . . . . . . . . . . . . . . . 23 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 23 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 23 DEFERRAL OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . 24 Form 2504 (JTVUL)-8/99 Page 3 GENERAL POLICY PROVISIONS . . . . . . . . . . . . . . . . . . . . . 25 THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . 25 CONTRACT CHANGES . . . . . . . . . . . . . . . . . . . . . . . 25 PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . 25 OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . 25 BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . 25 EXCHANGE RIGHT . . . . . . . . . . . . . . . . . . . . . . . . 26 POLICY SPLIT . . . . . . . . . . . . . . . . . . . . . . . . . 26 COLLATERAL ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . 27 INCONTESTABILITY . . . . . . . . . . . . . . . . . . . . . . . 27 MISSTATEMENT OF AGE OR SEX . . . . . . . . . . . . . . . . . . 28 SUICIDE EXCLUSION. . . . . . . . . . . . . . . . . . . . . . . 28 PERIODIC REPORTS . . . . . . . . . . . . . . . . . . . . . . . 28 ILLUSTRATION OF BENEFITS AND VALUES. . . . . . . . . . . . . . 28 NONPARTICIPATING . . . . . . . . . . . . . . . . . . . . . . . 29 CUSTOMER SERVICE CENTER . . . . . . . . . . . . . . . . . . . 29 PAYOUTS OTHER THAN AS ONE SUM . . . . . . . . . . . . . . . . . . . 29 ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PAYOUT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . 29 CHANGE AND WITHDRAWAL. . . . . . . . . . . . . . . . . . . . . 30 EXCESS INTEREST. . . . . . . . . . . . . . . . . . . . . . . . 30 MINIMUM AMOUNTS. . . . . . . . . . . . . . . . . . . . . . . . 30 SUPPLEMENTARY POLICY . . . . . . . . . . . . . . . . . . . . . 30 INCOME PROTECTION. . . . . . . . . . . . . . . . . . . . . . . 31 DEATH OF PRIMARY PAYEE . . . . . . . . . . . . . . . . . . . . 31 PAYMENTS OTHER THAN MONTHLY. . . . . . . . . . . . . . . . . . 31 SETTLEMENT OPTION TABLES. . . . . . . . . . . . . . . . . . . . . . 32 ADDITIONAL BENEFITS OR RIDERS, IF ANY, WILL BE LISTED IN THE SCHEDULE. THE ADDITIONAL PROVISIONS WILL BE INSERTED IN THE POLICY. Form 2504 (JTVUL)-8/99 Page 4 SCHEDULE (Schedule Effective Date: August 1,1999)
POLICY INFORMATION Policy Number 67000001 Initial Stated Death Benefit $250,000.00 Policy Date August 1, 1999 INSURED (1) JOHN DOE Issue Age and Sex 35, Male INSURED (2) MARY DOE Issue Age and Sex 35, Female Death Benefit Option OPTION 1 Joint Equivalent Issue Age 35 Minimum Annual Premium $675.36 [Scheduled] Premium $2,000.00, Annually Definition of Life Insurance Test: Guideline Premium Test/Cash Value Corridor Test
[Coverage will expire 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 actual credited interest rate for the Guaranteed Interest Division and the investment experience of the Variable Account.] CUSTOMER SERVICE CENTER: P.O. BOX 173888, DENVER, COLORADO 80217 TOLL FREE NUMBER 1(800) 848-6362 Form 2504 (JTVUL)-8/99 Page 5 SCHEDULE (CONTINUED) SEGMENT BENEFIT PROFILE (SCHEDULE EFFECTIVE DATE: AUGUST 1, 1999)
- --------------------------------------------------------------------------------------------------------- Segment Segment Stated Segment Segment Segment Death Benefit Effective Target Premium Premium Class Date Insured #1 Insured #2 - --------------------------------------------------------------------------------------------------------- (Segment #1) $250,000.00 August 1, 1999 $971.92 Std NonSmkr Std NonSmkr - ---------------------------------------------------------------------------------------------------------
A segment is a block of death benefit coverage. The stated death benefit shown on the schedule page 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 loads as shown in the schedule. This is further defined in the Definition section of your policy. Form 2504 (JTVUL)-8/99 Page 5A SCHEDULE (CONTINUED) EXPENSE CHARGES A. PREMIUM EXPENSE CHARGE. This charge will equal the sum of a sales load plus a tax charge. See Net Premium provision for details. 1. SALES LOAD: Segment Premium Paid up to Segment Premium Paid in Excess Segment Target Premium Of Segment Target Premium Segment Years 1-5 5.5% 2.0% Segment Years 6+ 2.0% 2.0% 2. FEDERAL DEFERRED ACQUISITION COST TAX CHARGE AND OTHER CHARGES (TAX CHARGE): 4.0% of each premium. [We reserve the right to increase or decrease the tax charges due to any change in tax laws. We further reserve the right to increase or decrease the tax charge for federal deferred acquisition cost tax due to any change in the cost to us.] B. MONTHLY EXPENSE CHARGES: The monthly expense charges will equal the sum of the following two charges: PER POLICY CHARGE: $15 per month for the first 120 months (10 policy years). $ 9 per month thereafter. MONTHLY ADMINISTRATIVE CHARGE: $0.[0700] per unit for the first 10 policy years (120 months). $0.023 per unit for each policy month thereafter. Unit is the greater of stated death benefit or target death benefit then in force for the policy, divided by 1000. ANNUAL MORTALITY AND EXPENSE RISK CHARGE ANNUAL MORTALITY AND EXPENSE RISK CHARGE: 0.75% (0.002055% per day) Form 2504 (JTVUL)-8/99 Page 5B SCHEDULE (CONTINUED) SURRENDER CHARGES TOTAL SURRENDER CHARGE TABLE The surrender charges which pertain to the insurance coverage shown in the Schedule are shown in the following table. This table may change upon any increase or decrease in the policy's stated death benefit. SURRENDERS SEGMENT #1 DURING THE TOTAL SURRENDER POLICY YEAR CHARGE ENDING 2000 $1077.39 2001 $1077.39 2002 $1077.39 2003 $1077.39 2004 $1077.39 2005 $861.91 2006 $646.43 2007 $430.96 2008 $215.48 2009 $0.00 Surrender charges for each Segment are level in the first five policy years. They decrease each year after the fifth policy year until they reach zero at the beginning of the tenth policy year. Surrender charges shall not exceed the applicable amount shown in this table. Form 2504 (JTVUL)-8/99 Page 5C SCHEDULE (CONTINUED) POLICYHOLDER TRANSACTION CHARGES [Requests for Sales Illustrations:]We reserve the right to charge a $25 fee for each policy illustration over one illustration per policy year. Partial Withdrawal Service Fee: See below. [Other Policy Transaction Charges: The charges for transfers between divisions of the Variable Account or between the Guaranteed Interest Division and the Variable Account Divisions; charges for allocation changes; and charges for other Variable Account management functions are governed by the prospectus in effect at the time of the transaction.] POLICY LOANS Policy Loan Interest Rate: 3.75% per year Guaranteed Interest Rate Credited To Loan Division: 3.00% per year Minimum Loan Amount: $100 Maximum Loan Amount: See the Loan Provisions section. PARTIAL WITHDRAWALS Minimum Partial Withdrawal Amount: $100 Maximum Partial Withdrawal Amount: Amount which will leave $500 as the net cash surrender value Partial Withdrawal Service Fee: $25 Limit On Partial Withdrawals: One per policy year GUARANTEED INTEREST DIVISION Guaranteed Interest Rate For Guaranteed Interest Division: 3.00% per year PERSISTENCY REFUND FACTOR Persistency Refund Factor: .0005 monthly Form 2504 (JTVUL)-8/99 Page 5D 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 DEATH BENEFIT FACTORS
Younger Factor Younger Factor Younger Factor Younger Factor Insured's Insured's Insured's Insured's Attained Age Attained Age Attained Age Attained Age 0-40 2.50 41 2.43 56 1.46 71 1.13 86 1.05 42 2.36 57 1.42 72 1.11 87 1.05 43 2.29 58 1.38 73 1.09 88 1.05 44 2.22 59 1.34 74 1.07 89 1.05 45 2.15 60 1.30 75 1.05 90 1.05 46 2.09 61 1.28 76 1.05 91 1.04 47 2.03 62 1.26 77 1.05 92 1.03 48 1.97 63 1.24 78 1.05 93 1.02 49 1.91 64 1.22 79 1.05 94 1.01 50 1.85 65 1.20 80 1.05 95 1.00 51 1.78 66 1.19 81 1.05 96 1.00 52 1.71 67 1.18 82 1.05 97 1.00 53 1.64 68 1.17 83 1.05 98 1.00 54 1.57 69 1.16 84 1.05 99 1.00 55 1.50 70 1.15 85 1.05 100 and older 1.00
Form 2504 (JTVUL)-8/99 Page 5E SCHEDULE (CONTINUED) TABLE OF GUARANTEED RATES-SEGMENT #1 Guaranteed Maximum Cost of Insurance Rates Per $1000 of Net Amount at Risk (These rates apply to the Base Policy.)
Segment Monthly Cost of Segment Monthly Cost of Segment Monthly Cost of Segment Monthly Cost of Year Insurance Rate Year Insurance Rate Year Insurance Rate Year Insurance Rate 1 0.00029 27 0.27881 52 10.56782 77 2 0.00094 28 0.32514 53 11.82596 78 3 0.00174 29 0.38176 54 13.14547 79 4 0.00270 30 0.44922 55 14.52703 80 5 0.00390 31 0.52778 56 15.97964 81 6 0.00537 32 0.61724 57 17.52244 82 7 0.00720 33 0.71747 58 19.19650 83 8 0.00937 34 0.82806 59 21.07894 84 9 0.01195 35 0.95316 60 23.37773 85 10 0.01498 36 1.09872 61 26.51949 86 11 0.01858 37 1.27190 62 31.35742 12 0.02272 38 1.48191 63 39.59830 13 0.02754 39 1.73698 64 54.65492 14 0.03315 40 2.04020 65 83.33333 15 0.03974 41 2.39109 66 16 0.04741 42 2.78822 67 17 0.05649 43 3.22853 68 18 0.06725 44 3.71109 69 19 0.08016 45 4.24541 70 20 0.09527 46 4.84859 71 21 0.11272 47 5.53770 72 22 0.13268 48 6.33237 73 23 0.15492 49 7.24554 74 24 0.17972 50 8.26516 75 25 0.20783 51 9.37750 76 26 0.24032
The above Table of Guaranteed Rates is based on the 1980 U.S. Commissioner's Standard Ordinary Sex Distinct Mortality Table. These rates include substandard rates, if applicable. Form 2504 (JTVUL)-8/99 Page 5F DEFINITION OF TERMS ACCOUNT VALUE - The sum of the amounts allocated to the Divisions of the Variable Account and to the Guaranteed Interest Division, as well as any amount set aside in the Loan Division to secure a policy loan. ACCUMULATION UNIT - A unit of measurement used to calculate the account value in each Division of the Variable Account. ACCUMULATION UNIT VALUE - The value of an accumulation unit of each Division of the Variable Account. The accumulation unit value is determined as of each valuation date. AGE/JOINT EQUIVALENT ISSUE AGE/YOUNGER INSURED'S BIRTH DATE - AGE - The policy is issued at the ages shown in the Schedule. Each issue age is the age nearest birthday on the policy date. JOINT EQUIVALENT ISSUE AGE - This age is determined on the policy date. The attained joint equivalent age is the joint equivalent issue age on the policy date increased by the number of completed policy years. YOUNGER INSURED'S BIRTH DATE - The younger insured's 100th birth date is the date on which the younger of the two insureds reaches attained age 100 or the date the younger insured would have reached attained age 100 if that insured dies before actually reaching that date. Any other birth date of the younger insured is determined in the same manner. The younger insured's attained age is the issue age of the younger of the two insureds as shown in the Schedule, increased by the number of completed policy years. BASE DEATH BENEFIT - The base death benefit is defined in the Base Death Benefit provision of the policy. CASH SURRENDER VALUE - The amount of your account value minus the surrender charge, if any. CUSTOMER SERVICE CENTER - Our administrative office whose address is P. O. Box 173888, Denver, CO 80217. DIVISION(S) OF THE VARIABLE ACCOUNT - The investment options available, each of which invests in shares of one of the portfolios. FIRST DEATH - The first death is the death of the first to die of the two insureds. GENERAL ACCOUNT - The account which contains all of our assets other than those held in the Variable Account or our other separate accounts. GUARANTEED INTEREST DIVISION - Part of our General Account to which a portion of the account value may be allocated and which provides guarantees of principal and interest. [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 five days plus the Right to Examine Period.] INVESTMENT DATE -The first time we allocate funds 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: 1) we receive the amount of premium required for coverage to begin under the policy; 2) we have approved the policy for issue, and 3) all issue requirements have been met and received in our Customer Service Center. 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. Form 2504 (JTVUL)-8/99 Page 6 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 investment date, 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, monthly processing will use the next calculated accumulation unit value. NET ACCOUNT VALUE - The amount of the account value minus any policy loan and accrued loan interest. NET CASH SURRENDER VALUE - The amount of the cash surrender value minus any policy loan and accrued loan interest. NET PREMIUM - The net premium equals the premium paid minus the premium expense charges shown in the Schedule. These charges are deducted from the premium before the premium is applied to your account value. [PARTIAL WITHDRAWAL - The withdrawal of a portion of your net cash surrender value from the policy. The partial withdrawal may reduce the amount of base death benefit in force, which in turn may cause a surrender charge to be incurred.] 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. [RIGHT TO EXAMINE PERIOD - The period of time within which the owner may examine the policy and return it for a refund.] [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 on a monthly, quarterly, semiannual, or annual basis, 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.] SECOND DEATH - The second death is the death of the second to die of the two insureds. SEGMENT - The stated death benefit shown on the 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 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 subsequent year begins at the end of the prior segment year. Each new segment may be subject to a new minimum annual premium, new sales load, new surrender charges, new cost of insurance charges and new incontestability and suicide exclusion periods. 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). 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. TARGET DEATH BENEFIT - The target death benefit for your policy is defined in the Adjustable Term Insurance Rider, if any, attached to the policy. VALUATION DATE - Each date as of which the net asset value of the shares of the portfolios and unit values of the divisions are determined. Except for days that a division's corresponding portfolio does not value its shares, a valuation date is any day: (a) The New York Stock Exchange ("NYSE") is open for trading and on which Security Life's Customer Service Center is open for business; or (b) as may be required by law. 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. Form 2504 (JTVUL)-8/99 Page 6a INSURANCE COVERAGE PROVISIONS EFFECTIVE 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. BASE DEATH BENEFIT The base death benefit will be, at any time, determined as follows: Option 1: Under Option 1, the base death benefit is the greater of: (a) The stated death benefit; or (b) The account value multiplied by the appropriate factor from the Death Benefit Factors shown in the Schedule. Option 2: Under Option 2, the base death benefit is the greater of: (a) The stated death benefit plus the account value, or (b) The account value multiplied by the appropriate factor from the Death Benefit Factors shown 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.] We will send you a copy of any policy amendment. [If we do not receive your written acceptance or rejection notice within 60 days of our mailing date, such amendment(s) will automaticaly become effective and be part of the contract. CHANGE IN REQUESTED INSURANCE COVERAGE 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 Form 2504 (JTVUL)-8/99 Page 7 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 guaranteed cost of insurance rates, the new target premium and the new surrender charge. REQUESTED INCREASES IN COVERAGE [Subject to our limits, you may request an increase in the stated death benefit through attained joint equivalent age 85. 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 insureds are 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 sales load which will be deducted from the premium allocated to the new segment. The new segment may also be subject to a new minimum annual premium, new surrender charges, new per thousand of stated death benefit charges, new cost of insurance charges and new incontestability and suicide exclusion periods.] REQUESTED DECREASES IN COVERAGE 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: a) The stated death benefit is at least $250,000 if there is no adjustable term insurance on the policy. b) If there is adjustable term insurance on the policy, the stated death benefit is at least $100,000 and the target death benefit is at least $250,000. [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.] DEATH BENEFIT OPTION CHANGES [Beginning with the first monthly processing date and ending with the policy anniversary nearest the younger insured's 100th birth date, you may request to change the death benefit option. This change will be effective as of the monthly processing date next 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. After the effective date of the change, the stated death benefit will be changed according to the following table:] Form 2504 (JTVUL)-8/99 Page 8 OPTION CHANGE FROM TO STATED DEATH BENEFIT FOLLOWING THE OPTION 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. 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. CONTINUATION OF COVERAGE AFTER AGE 100 If the policy is in force on the policy anniversary nearest the younger insured's 100th birth date, the policy will continue pursuant to the terms of the policy. On this date, the following will occur: (a) The target death benefit on the policy anniversary nearest the younger insured's 100th birth date will then become the stated death benefit for the policy and any remaining death benefit in force under the Adjustable Term Insurance Rider will 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 Variable Account will be transferred into the Guaranteed Interest Division and no further investment in the Divisions of the Variable Account will be allowed. (d) If the death benefit option in force on the policy is Option 2, 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 younger insured's 100th birth date, no further premiums will be accepted and no monthly deductions will be made. However, a one-time administrative fee of $400 will be charged against the policy's account value. 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. Payments on policy loans and policy loan interest will be accepted. The policy will enter the 61-day grace period if the net cash surrender value is zero or less. If you do not want coverage to continue past the policy anniversary nearest the younger insured's 100th birth date, the policy may be surrendered at that time, or earlier. Form 2404 (JTVUL)-8/99 Page 9 PAYOUT OF PROCEEDS Proceeds refer to the amount we will pay: a) Upon surrender of the policy; or b) Upon the second death of the two insureds. The proceeds upon surrender of this policy will be the net cash surrender value. The amount of proceeds payable upon the second death will be the base death benefit in effect on the date of the second 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 second death. The calculation of the death proceeds will be computed as of the date of the second death. The second death is the death of the second to die of the two insureds. [We will determine the amount of proceeds payable upon the second death when we have received due proof of both deaths 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 sum unless you request an alternate form of payment. There are many possible methods of payment. The available payout options are described in the Payouts Other Than As One Sum provision. Contact us or your registered representative for additional information. Interest will be paid on the one sum death proceeds from the date of second 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. PREMIUM PROVISIONS INITIAL PREMIUM ALLOCATION [If the initial period has not ended on the investment date, net premium amounts designated for allocation to Divisions of the Variable Account will be allocated on the investment date 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 Variable 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 Variable Account and/or to the Guaranteed Interest Division in accordance with your allocation instructions.] Form 2504 (JTVUL)-8/99 Page 10 SUBSEQUENT PREMIUM ALLOCATIONS After the initial premium allocation, all future scheduled and unscheduled premiums will be allocated to the investment divisions in accordance with your allocation instructions. This allocation will occur at the end of the valuation period during which we receive the premium at our Customer Service Center. CHANGES TO PREMIUM ALLOCATIONS [You may change your premium allocation in accordance with instructions included in your annual policy prospectus. If the change causes a premium allocation charge to be incurred according to the Schedule, we will deduct a charge from the Divisions of the Variable Account and from the Guaranteed Interest Division as described in the prospectus in effect at the time of the transaction.] [SCHEDULED PREMIUMS The scheduled premium as shown in the Schedule may be paid while this policy is in force prior to the policy anniversary nearest the younger 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 and the Guarantee 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. All payment modes are subject to our minimum requirements for the payment mode selected.] [UNSCHEDULED PREMIUMS You may make unscheduled premium payments at any time the policy is in force prior to the policy anniversary nearest the younger 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.] NET PREMIUM The net premium equals the premium paid minus the premium expense charge shown in the Schedule. The premium expense charge is the sales load plus the tax charge. The tax charge is the applicable tax percentage times the premium. To determine the sales load, we multiply the applicable percentage sales load times the premium allocated to the segment. There is a different percentage sales load for the allocated premium that is below the segment target premium and that above that segment target premium. The Form 2504 (JTVUL)-8/99 Page 11 applicable percentage sales load also depends on the segment year the premium is received. Each premium received is allocated to the existing segments. (If there is only one segment the entire premium is allocated to that segment.) Premiums are allocated in the same proportion that the target premium of each segment bears to the sum of the target premiums of all segments. The Schedule shows: (1) the target premium for each segment; (2) the percentage sales loads; and (3) the tax percentage. PREMIUM LIMITATION 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 second death. No premium may be paid after the policy anniversary nearest the younger insured's 100th birth date. FAILURE TO PAY PREMIUM If you stop paying premiums prior to the policy anniversary nearest the younger insured's 100th birth date, your coverage may lapse. See your Grace Period provision for details. VARIABLE ACCOUNT PROVISIONS THE VARIABLE ACCOUNT The Variable 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 the other assets of Security Life of Denver Insurance Company. [The Variable 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 Variable Account are credited to or charged against the Variable Account without regard to income, gains or losses of our General Account. The assets of the Variable Account are our property but are separate from our General Account and our other Variable Accounts. That portion of the assets of the Variable Account which is equal to the reserves and other policy liabilities with respect to the Variable Account is not chargeable with liabilities arising out of any other business we may conduct or subject to creditor claims against us.] VARIABLE ACCOUNT DIVISIONS [The Variable Account is divided into divisions, each of which invests in a fund portfolio designed to meet the objectives of the division. The current eligible divisions are shown in your annual 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.] Form 2504 (JTVUL)-8/99 Page 12 [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.] CHANGES WITHIN THE VARIABLE ACCOUNT When permitted by law, and subject to any required notice to you and approval of the Securities and Exchange Commission ("SEC"), state regulatory authorities or policy owners, we may from time to time make the following changes to the Variable Account: * Make additional divisions available. These divisions will invest in investment portfolios we find suitable for the policy. * Eliminate divisions from the Variable Account or combine 2 or more divisions. * Substitute a new portfolio for the portfolio in which a division invests. A substitution may become necessary if, in our judgment, a portfolio no longer suits the purposes of the policy. This may happen due to a change in laws or regulations, or a change in a portfolio's investment objectives or restrictions. This may also happen if the portfolio is no longer available for investment, or for some other reason, such as a declining asset base. * Transfer assets of the Variable Account, which we determine to be associated with the class of policies to which your policy belongs, to another Variable Account. * Withdraw the Variable Account from registration under the Investment Company Act of 1940. * Operate the Variable Account as a management investment company under the Investment Company Act of 1940. * Invest one or more divisions in a mutual fund other than, or in addition to, the portfolios. [ * Discontinue the sale of policies. * Terminate any employer or plan trustee agreement with us pursuant to its terms. * Restrict or eliminate any voting rights as to the Variable Account. * Make any changes required by the Investment Company Act of 1940 or the rules or regulations thereunder.] Form 2504 (JTVUL)-8/99 Page 13 GENERAL ACCOUNT PROVISIONS THE GENERAL ACCOUNT [The General Account holds all of our assets other than those held in the Variable 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 division 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 to be in effect for at least a 12-month period.] LOAN DIVISION The Loan Division is the account that is set aside to secure the 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 younger insured's 100th birth date, your account value in each division may be transferred to any other Division of the Variable Account or to the Guaranteed Interest Division upon your request. One transfer from the Guaranteed Interest Division into the variable divisions may be made during the first 30 days of each policy year. Additional limitations, requirements and charges for transfers will be listed in and governed by your annual policy prospectus in effect at the time of the transfer. We reserve the right to modify these limitations, requirements and charges from time to time. On the policy anniversary nearest the younger insured's 100th birth date, your account value in each Division of the Variable Account will be transferred into the Guaranteed Interest Division and no further transfers will be allowed.] ACCOUNT VALUE PROVISIONS The account value is the sum of the current amounts allocated to the Divisions of the Variable Account and to the Guaranteed Interest Division plus your balance in the Loan Division. Form 2504 (JTVUL)-8/99 Page 14 The account value is based on the 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 division to which your account value is allocated. Your net account value is equal to your account value minus any policy loan and accrued but unpaid loan interest. ACCOUNT VALUES ON THE INVESTMENT DATE The account value of each division of the Variable 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. ACCUMULATION UNIT VALUE The investment experience of a division of the Variable Account is determined as of each valuation date. We use an accumulation unit value to measure the experience of each of the Variable Account Divisions during a valuation period. We generally set the accumulation unit value at $10 when each divisions 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 Variable 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. ACCUMULATION EXPERIENCE FACTOR For each Division of the Variable Account, the accumulation experience factor reflects the investment experience of the portfolio 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 portfolio 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 portfolio 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 portfolio in which that division invests as of the end of the preceding valuation period. e) The daily equivalent of the annual mortality and expense risk charge shown in the Schedule for each day in the current valuation period is then subtracted from the result obtained in (d). Form 2504 (JTVUL)-8/99 Page 15 ACCOUNT VALUE OF THE DIVISIONS OF THE VARIABLE ACCOUNT On subsequent valuation dates after the investment date, your account value of each Division of the Variable 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 account value transferred to or minus any account value transferred from the Variable Division during the current valuation period (including the applicable portion of any transfer fee); minus d) Any partial withdrawals allocated to that division and any applicable withdrawal service fees which are allocated to the Variable Division during the current valuation period; plus e) Any amounts released from the Loan Division as a result of a loan or loan interest payment, or minus amounts transferred to the Loan Division as a result of any loans which are allocated to the Variable Division during the current valuation period; minus f) The portion of any surrender charge resulting from a decrease in stated death benefit allocated to the division; minus g) The portion of the monthly deduction allocated to the Variable Division, if a monthly processing date occurs during the current valuation period. ACCOUNT VALUE OF THE GUARANTEED INTEREST DIVISION On valuation dates after the investment date, your account value of the Guaranteed Interest Division is calculated as follows: a) The account 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 account value transferred to or minus any account value transferred from the Guaranteed Interest Division during the current valuation period (including the applicable portion of any transfer fee); minus d) Any partial withdrawals taken and any applicable withdrawal service fees which are allocated to the Guaranteed Interest Division during the current valuation period; plus e) Any amounts released from the Loan Division as a result of a loan or loan interest payment, or minus 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 f) The portion of any surrender charge resulting from a decrease in stated death benefit allocated to the Guaranteed Interest Division; minus g) The portion of the monthly deduction allocated to the Guaranteed Interest Division, if a monthly processing date occurs during the current valuation period. Form 2504 (JTVUL)-8/99 Page 16 ACCOUNT VALUE OF THE LOAN DIVISION On valuation dates after the investment date, your account value of the Loan Division is equal to: a) The account 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 Variable Account and Guaranteed Interest Division according to your premium allocation then in effect. MONTHLY DEDUCTION AND REFUND MONTHLY DEDUCTION 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 riders in force under the policy; plus c) The monthly expense charges shown in the Schedule; plus d) The charge for the Guaranteed Minimum Death Benefit option, if elected; plus e) The policyholder transaction charges as described in the Schedule as applicable. The monthly deductions are allocated to the divisions of the Variable Account and Guaranteed Interest Division as described in the prospectus in effect at the time of the transaction. This deduction is taken from your account value as of the monthly processing date. These deductions will display in periodic reports that we send you at least once per policy year. After the policy anniversary nearest the younger insured's 100th birth date no further monthly deductions will be made, except policy transaction charges incurred after this date. Form 2504 (JTVUL)-8/99 Page 17 COST OF INSURANCE [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 base death benefit for all segments as of the monthly processing date after the monthly deductions (other than cost of insurance charges for the base death benefit, any Adjustable Term Insurance Rider and any Single Life Term Insurance Rider), divided by 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, any Adjustable Term Insurance Rider and any Single Life Term Insurance Rider). 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. 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 each of the insureds as of the effective date of segment coverage, the duration since the coverage began and the segment premium classes. 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. PERSISTENCY REFUND We will calculate a monthly persistency refund by multiplying the monthly persistency refund factor times the account value allocated to the Loan Division and Divisions of the Variable Account. The persistency refund factor is shown in the Schedule. We may increase this persistency refund by an amount based on the amount in the Guaranteed Interest Division. Each month after the policy is in force for 120 months, we will credit the net account value held in the Divisions of the Variable Account and in the Guaranteed Interest Division with a persistency refund. The monthly persistency refund will be allocated to the divisions of the Variable Account and the Guaranteed Interest Division in the same proportion that your account value in each division bears to your net account value as of the monthly processing date. Form 2504 (JTVUL)-8/99 Page 18 LOAN PROVISIONS POLICY LOANS [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 net cash surrender value on the date of the loan request less all monthly deductions to the next policy anniversary. The policy loan is a first lien on your policy. The minimum amount you may borrow is shown in the Schedule. 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.] LOAN INTEREST [The annual policy loan interest rate is shown in the Schedule. 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 cash surrender value, a premium sufficient to keep this policy in force must be paid as provided in the Grace Period provision. LOAN DIVISION 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 Variable Account and the Guaranteed Interest Division to the Loan Division to secure the loan. This amount will be deducted from the Divisions of the Variable Account and the Guaranteed Interest Division in the same proportion that your account 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 account value in the Loan Division will be credited with interest at the interest rate for the Loan Division 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 Variable Account in the same proportion as your current premium allocation unless you request a different allocation in writing. PARTIAL WITHDRAWAL PROVISIONS You may apply for a partial withdrawal from your account value on any monthly processing 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 a partial withdrawal is made, 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. If a surrender charge is applicable, we will deduct it from your account value. We limit the number of partial withdrawals in a policy year. This number is shown in the Schedule. Form 2504 (JTVUL)-8/99 Page 19 The stated death benefit is reduced by the amount of the partial withdrawal unless one of the following exceptions applies. 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. For a policy under an Option 1 death benefit, the stated death benefit is not reduced by a partial withdrawal: a) If no more than 15 years have elapsed since the policy date; b) If the joint equivalent age is not yet age 81; and c) If the partial withdrawal taken is less than the greater of 10% of your account value or 5% of the stated death benefit, calculated immediately before the partial withdrawal. Any additional amount withdrawn reduces your stated death benefit by that additional amount. For a policy under an Option 2 death benefit, a partial withdrawal does not reduce your stated death benefit. If the stated death benefit is reduced by a partial withdrawal during the first 9 years following the policy date or following an increase in the stated death benefit, a surrender charge will be deducted from your account value. (See your Surrender Charges provision.) 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: a) The stated death benefit is at least $250,000 if there is no adjustable term insurance on the policy. b) If there is adjustable term insurance on the policy, the stated death benefit is at least $100,000 and the target death benefit is at least $250,000. You may specify how much of the withdrawal you wish taken from each division of the Variable 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 make the withdrawal from the amounts in the Guaranteed Interest Division and the Divisions of the Variable Account in the same proportion that your account 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 are deducted from each Variable Division and the Guaranteed Interest Division as described in the prospectus in effect at the time of the transaction. We may 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. Form 2504 (JTVUL)-8/99 Page 20 SURRENDER PROVISIONS 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. SURRENDER CHARGES [A separate surrender charge may apply to each stated death benefit segment for each policy year. The surrender charge for this policy is the sum of the surrender charge for each segment of stated death benefit. The surrender charge is shown in the Schedule.] Upon a decrease in the stated death benefit, a portion of the surrender charge will be deducted from your account value, unless the stated death benefit is decreased because the death benefit option is changed. The amount we deduct will equal the applicable surrender charge for the policy year of the decrease times the percentage reduction in the stated death benefit. The surrender charges after the decrease will equal the surrender charges shown in the Schedule less the amount deducted from your account value. If the amount deducted from your account value causes your net cash surrender value to become zero or less, you may enter the grace period. (See Grace Period provision.) We will send you a new Schedule to reflect the effect of any transaction that changes the stated death benefit or the surrender charges. 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.] FULL SURRENDERS [You may surrender your policy after the Right to Examine Period or at any time before the second death and receive the net cash surrender value. We will compute the net cash surrender value as of the next valuation date after 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.] Form 2504 (JTVUL)-8/99 Page 21 GRACE PERIOD, TERMINATION AND REINSTATEMENT PROVISIONS GRACE PERIOD [If the following three conditions occur on a monthly processing date, the policy will enter into a 61-day grace period: a) The net cash surrender value is zero or less; and b) The special continuation period described below has expired or the required premium for the special continuation period has not been paid; and c) The guarantee period described below was not elected, has expired or been terminated.] [We will give you a 61-day grace period from this monthly processing date to make the required premium payment. The required premium payment then due must be paid 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 or any assignee at the last known address at least 30 days before the end of the grace period. If the second death occurs during the grace period, we will deduct any overdue monthly charges from the death proceeds of the policy.] SPECIAL CONTINUATION PERIOD During the first 5 policy years your policy will remain in force regardless of the net cash surrender value if, on a monthly processing date, the sum of your premiums paid minus the sum of your partial withdrawals, policy loans and accrued but unpaid policy loan interest is not less than the sum of the applicable minimum monthly premiums for each policy month starting with the first policy month to and including the policy month which begins on the current monthly processing date. Each minimum monthly premium equals 1/12 of the minimum annual premium. The minimum annual premium is shown in the Schedule. We use this premium for each policy month until the effective date of a change in the stated death benefit. If there is a change, the new Schedule will show the applicable minimum annual premium that applies to subsequent policy months during the remainder of the 5-year period. If the policy is kept in force under this provision, the charges are not permanently waived. Instead, the charges continue to be deducted. This will result in a negative net cash surrender balance unless sufficient premium is received. This negative balance is your unpaid monthly deductions. At the end of the special continuation period, sufficient premium to bring your net cash surrender balance to zero will be due. Form 2504 (JTVUL)-8/99 Page 22 [GUARANTEE PERIOD If you elect the Guaranteed Minimum Death Benefit option, the policy will not terminate during the guarantee period even if the net account value is zero except as provided below. When your policy is kept in force under this option, all riders will terminate.] [Each monthly guarantee period premium equals 1/12 of the guarantee period annual premium. The guarantee period annual premium is shown in the Schedule. We use this premium for each policy year until the effective date of a change in the stated death benefit. If there is a change, a new Schedule will show the applicable minimum guarantee period annual premium that applies to subsequent policy months.] [The guarantee period will expire on the policy anniversary nearest the younger insured's 100th birth date. The guarantee period will terminate prior to the guarantee period expiration date if, on any monthly processing date, the actual premiums paid (minus the amount of any partial withdrawals and any policy loan including accrued but unpaid interest) are less than the sum of the guarantee monthly premiums for each policy month starting with the first policy month to, and including, the policy month that begins on the current monthly processing date.] [The guarantee period will also terminate if your account value, on any monthly processing date, is not diversified. Diversification requires that no more than 35% of your net account value is invested in any one division, and that your net account value is invested in at least 5 divisions.] [You will satisfy these diversification requirements if: (i) you are participating in the automatic rebalancing feature defined in and governed by the policy prospectus in effect on the policy effective date and your automatic rebalancing allocations comply with the diversifications specified above; or (ii) you elect dollar cost averaging and direct the resulting transfers into at least four other divisions with no more than 35% of any transfer going to any one division.] [If, at the end of the guarantee period, the net account value of your policy is negative, your policy will terminate without value. The charge for this option is shown in the Schedule. Once the guarantee period has terminated, it cannot be reinstated.] 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 second death; or c) The date the grace period ends without payment of the required premium. REINSTATEMENT The policy and its 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. Form 2504 (JTVUL)-8/99 Page 23 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 insureds 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 Variable 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. DEFERRAL OF PAYMENT [Requests for transfers, 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 Variable Account transactions for any of the following reasons: a) The New York Stock Exchange (NYSE) is closed, other than customary weekend and holiday closings. b) Trading on the NYSE is restricted by the Securities and Exchange Commission (SEC). c) The SEC declares that an emergency exists as a result of which disposal of securities in the Variable Account is not reasonably practicable to determine your account value in the divisions. d) A governmental body having jurisdiction over the Variable 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.] Form 2504 (JTVUL)-8/99 Page 24 GENERAL POLICY PROVISIONS THE POLICY [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.] PROCEDURES 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. [In the event of the death of an insured, please let us or our agent know as soon as possible. This includes the first and second death. Upon notification to us or our agent, instructions will be sent to you or the beneficiary immediately. 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.] OWNERSHIP The original owner or entity is the person named as the owner in the application. You, as the owner, can exercise all rights and receive the benefits until the second 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 recording the change at our Customer Service Center. Form 2504 (JTVUL)-8/99 Page 25 BENEFICIARIES The primary beneficiary surviving the second death will receive any death proceeds which become payable. Surviving contingent beneficiaries are paid death proceeds only if no primary beneficiary has survived the second death. If more than one beneficiary in a class survives the second 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 second 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. EXCHANGE RIGHT [If, for any reason within the first 2 policy years you want to exchange this policy for a policy in which values do not vary with the investment experience of the Variable Account, we will exchange this policy. The exchange will be implemented by transferring your account value in all the Divisions of the Variable Account to the Guaranteed Interest Division and removing your future right to choose to allocate funds to the Divisions of the Variable Account. This transfer will not be subject to the excess transfer charge. We will require a return of this policy before this change will be processed.] POLICY SPLIT This benefit is available unless any segment rating on either insured is higher than 3.0 times the standard premium class. Any rating is shown on the Segment Benefit Profile page of the Schedule. If this benefit is available, you may exchange this policy for two individual policies, upon the occurrence of at least one of the contingent events listed below. The exchange must be to two single whole life or flexible premium universal life policies of the kind made available by us for exchange. One policy will be on Insured #1 and the other policy will be on Insured #2. No evidence of insurability will be required. On the effective date of the exchange, you must split the available death benefit provided by this policy between the two single life policies. The maximum you may allocate to each single life policy is 50% of the available death benefit. The sum of the face amounts of two single life policies cannot exceed the available death benefit; however, there is no requirement that the maximum available amount on each life be used. The available death benefit is the amount of base death benefit plus any term insurance provided by the Adjustable Term Insurance Rider on the effective date of the exchange. The policy split may be exercised upon the occurrence of any of the following contingent events: a) Three months following the effective date of a final divorce decree with respect to the marriage of the two insureds. b) The effective date of a change to Federal Estate Tax Law which results in either: 1) Removal of the unlimited marital deduction provision; or 2) A reduction in the current maximum Federal Estate Tax of at least 50% after the policy effective date. c) The effective date of a dissolution of any business which is being conducted or owned by the two insureds covered under this policy at the time this policy is issued. Form 2504 (JTVUL)-8/99 Page 26 You must send us written notice of your election to split the policy within 180 days following the occurrence of any contingent event. Your notice must provide satisfactory evidence to us that the contingent event has occurred. The insurance under the two individual policies will start on the effective date of the exchange only if both insureds are alive on the effective date of the exchange. The new policies will not provide any insurance until such time. If either insured is not alive on that date, the exchange shall be void. The effective date of the exchange will be the first monthly processing date after we have approved the exchange. The premiums under each new policy will be based on each insured's attained age, gender and premium class at the time of the split. Premiums will be due for each new policy in accordance with the terms of the new policy as of the effective date of the exchange. The surrender value of the old policy will be allocated to the new policies in the same proportion that the face amount was divided between the two policies unless we agree to a different allocation. Such allocation will be made to each new policy on the effective date of the exchange. If such allocation would cause an increase in the face amount of the new policy, we reserve the right to limit the amount of surrender value that may be applied to the new policies. Any remaining surrender value will be paid to you in cash. Any loan on the policy will be divided and transferred to each new policy in the same proportion as the cash value is apportioned. Any remaining outstanding loan balance must be paid in cash prior to the effective date of the exchange. Any assignee must agree to the exchange. Any assignment of the policy will apply to each new policy. If there is a Single Life Term Insurance Rider on the original policy on the date of the exchange, you may have a term insurance rider insuring that life on the new policy if such a rider is available on the new policy. The amount of the insurance cannot be more than the amount under the Single Life Term Insurance Rider on that life under the original policy. Any other riders on the new policies are subject to availability and satisfactory evidence of insurability. This policy provision ends on the earliest of: a) The policy anniversary nearest the younger insured's 100th birth date; or b) The death of the first of the two insureds; or c) The expiration of the grace period of the policy; or d) The termination or surrender of the policy. COLLATERAL ASSIGNMENT [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.] INCONTESTABILITY [After this policy has been in force while both insureds are alive for 2 years from the policy date, we will not contest the statements in the application attached at issue.] Form 2504 (JTVUL)-8/99 Page 27 [After this policy has been in force while both insureds are 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 both insureds are alive for 2 years from the effective date of any reinstatement, we will not contest the statements in the application for such reinstatement.] MISSTATEMENT OF AGE OR GENDER [If either insured's age or gender has been misstated, the death benefit will be adjusted. 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 second death of the two insureds, would have purchased for the insured's correct age and gender. If the death benefit adjustment is made prior to the second death, the adjusted benefit will be to an equitable amount determined by us. This adjustment will reflect the death benefit for the correct age or gender.] SUICIDE EXCLUSION [If either 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 either 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.] PERIODIC REPORTS 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. ILLUSTRATION OF BENEFITS AND VALUES 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. Form 2504 (JTVUL)-8/99 Page 28 NONPARTICIPATING The policy does not participate in our surplus earnings. CUSTOMER SERVICE CENTER Our Customer Service Center is at the address shown in the Schedule. Unless 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. PAYOUTS OTHER THAN AS ONE SUM ELECTION Before the second death, you may elect to have the beneficiary receive the proceeds other than in one 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 second death. You may also elect to take the net cash surrender value of the policy upon its surrender other than in one 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. [PAYOUT OPTIONS] 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 A 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 1983 Individual Annuity Mortality Table for the appropriate Gender at 3 1/2% 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.] Form 2504 (JTVUL)-8/99 Page 29 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. CHANGE AND WITHDRAWAL You may change an election at any time before the second 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 1/2% interest and received in one sum. d) Changes in any contingent payee designation may be made. A written request must be sent to our Customer Service Center in writing 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. EXCESS INTEREST [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. Any declared interest rate will be in effect for at least 12 months.] MINIMUM AMOUNTS 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. SUPPLEMENTARY POLICY 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 second 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. Form 2504 (JTVUL)-8/99 Page 30 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. Form 2504 (JTVUL)-8/99 Page 31 SETTLEMENT OPTION TABLES SETTLEMENT OPTION TABLE I (Per $1,000 of Net Proceeds)
No. of Monthly No. of Monthly Years Payable Installments Years Payable Installments 1 $84.65 16 6.76 2 43.05 17 6.47 3 29.19 18 6.20 4 22.27 19 5.97 5 18.12 20 5.75 6 15.35 21 5.56 7 13.38 22 5.39 8 11.90 23 5.24 9 10.75 24 5.09 10 9.83 25 4.96 11 9.09 26 4.84 12 8.46 27 4.73 13 7.94 28 4.63 14 7.49 29 4.53 15 7.10 30 4.45
Form 2504 (JTVUL)-8/99 Page 32 SETTLEMENT OPTION TABLE II FEMALE (Per $1,000 of Net Proceeds)
Age of Payee Nearest Monthly Age of Payee Nearest Monthly Birth Date When First Installment Birth Date When First Installments Installment is Payable Installment is Payable 5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years Female Certain Certain Certain Certain Female Certain Certain Certain Certain 15 3.19 3.19 3.19 3.19 41 3.76 3.76 3.75 3.73 16 3.20 3.20 3.20 3.20 42 3.80 3.80 3.78 3.77 17 3.22 3.22 3.21 3.21 43 3.84 3.84 3.82 3.81 18 3.23 3.23 3.23 3.23 44 3.88 3.88 3.86 3.84 19 3.24 3.24 3.24 3.24 45 3.93 3.92 3.91 3.88 20 3.26 3.26 3.26 3.25 46 3.98 3.97 3.95 3.92 21 3.27 3.27 3.27 3.27 47 4.03 4.02 4.00 3.97 22 3.29 3.29 3.29 3.28 48 4.08 4.07 4.05 4.01 23 3.31 3.30 3.30 3.30 49 4.13 4.12 4.10 4.06 24 3.32 3.32 3.32 3.32 50 4.19 4.18 4.15 4.11 25 3.34 3.34 3.34 3.33 51 4.25 4.24 4.21 4.16 26 3.36 3.36 3.35 3.35 52 4.32 4.30 4.26 4.21 27 3.38 3.38 3.37 3.37 53 4.38 4.36 4.33 4.27 28 3.40 3.40 3.39 3.39 54 4.46 4.43 4.39 4.32 29 3.42 3.42 3.41 3.41 55 4.53 4.51 4.46 4.38 30 3.44 3.44 3.43 3.43 56 4.61 4.58 4.53 4.44 31 3.46 3.46 3.46 3.45 57 4.70 4.66 4.60 4.51 32 3.49 3.48 3.48 3.48 58 4.79 4.75 4.68 4.57 33 3.51 3.51 3.51 3.50 59 4.88 4.84 4.76 4.64 34 3.54 3.54 3.53 3.52 60 4.99 4.93 4.84 4.70 35 3.57 3.56 3.56 3.55 61 5.09 5.03 4.93 4.77 36 3.60 3.59 3.59 3.58 62 5.21 5.14 5.02 4.84 37 3.63 3.62 3.62 3.61 63 5.33 5.25 5.12 4.91 38 3.66 3.65 3.65 3.64 64 5.46 5.37 5.21 4.98 39 3.69 3.69 3.68 3.67 65 5.60 5.50 5.31 5.05 40 3.73 3.72 3.71 3.70 66 5.75 5.63 5.42 5.12
Form 2504 (JTVUL)-8/99 Page 33 SETTLEMENT OPTION TABLE II/FEMALE (Continued)
(Per $1,000 of Net Proceeds) Age of Payee Nearest Monthly Age of Payee Nearest Monthly Birth Date When First Installment Birth Date When First Installment Installment is Payable Installment is Payable 5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years Female Certain Certain Certain Certain Female Certain Certain Certain Certain 67 5.91 5.77 5.53 5.19 92 14.45 9.61 7.09 5.75 68 6.08 5.91 5.63 5.25 93 14.81 9.66 7.10 5.75 69 6.26 6.07 5.74 5.32 94 15.16 9.70 7.10 5.75 70 6.46 6.23 5.86 5.37 95 15.49 9.73 7.10 5.75 71 6.67 6.40 5.97 5.43 96 15.80 9.76 7.10 72 6.89 6.58 6.08 5.48 97 16.11 9.79 7.10 73 7.13 6.76 6.18 5.52 98 16.40 9.80 7.10 74 7.39 6.95 6.29 5.57 99 16.68 9.82 7.10 75 7.67 7.14 6.39 5.60 100 16.95 9.82 7.10 76 7.96 7.34 6.48 5.63 101 17.20 9.83 77 8.28 7.54 6.57 5.66 102 17.43 9.83 78 8.61 7.74 6.65 5.68 103 17.62 9.83 79 8.97 7.94 6.72 5.70 104 17.78 9.83 80 9.34 8.13 6.79 5.71 105 17.91 9.83 81 9.73 8.32 6.84 5.72 106 18.00 82 10.14 8.50 6.89 5.73 107 18.06 83 10.57 8.67 6.94 5.74 108 18.09 84 11.01 8.83 6.97 5.74 109 18.11 85 11.46 8.97 7.00 5.75 110 18.11 86 11.91 9.10 7.02 5.75 87 12.36 9.22 7.04 5.75 88 12.81 9.32 7.06 5.75 89 13.25 9.41 7.07 5.75 90 13.67 9.48 7.08 5.75 91 14.07 9.55 7.09 5.75
Form 2504 (JTVUL)-8/99 Page 34 SETTLEMENT OPTION TABLE II MALE (Per $1,000 of Net Proceeds)
Age of Payee Nearest Monthly Age of Payee Nearest Monthly Birth Date When First Installment Birth Date When First Installment Installment is Payable Installment is Payable 5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years Male Certain Certain Certain Certain Male Certain Certain Certain Certain 15 3.28 3.28 3.27 3.27 41 4.01 4.00 3.97 3.94 16 3.29 3.29 3.29 3.28 42 4.06 4.04 4.01 3.98 17 3.31 3.31 3.30 3.30 43 4.11 4.09 4.06 4.02 18 3.32 3.32 3.32 3.32 44 4.16 4.14 4.11 4.06 19 3.34 3.34 3.34 3.33 45 4.22 4.20 4.16 4.11 20 3.36 3.36 3.35 3.35 46 4.28 4.25 4.21 4.16 21 3.38 3.38 3.37 3.37 47 4.34 4.31 4.27 4.21 22 3.40 3.40 3.39 3.39 48 4.41 4.38 4.33 4.26 23 3.42 3.42 3.41 3.41 49 4.48 4.44 4.39 4.31 24 3.44 3.44 3.43 3.43 50 4.55 4.51 4.45 4.36 25 3.46 3.46 3.45 3.45 51 4.62 4.58 4.52 4.42 26 3.49 3.48 3.48 3.47 52 4.70 4.66 4.58 4.48 27 3.51 3.51 3.50 3.49 53 4.79 4.74 4.65 4.54 28 3.54 3.53 3.53 3.52 54 4.88 4.82 4.73 4.60 29 3.56 3.56 3.55 3.54 55 4.97 4.91 4.80 4.66 30 3.59 3.59 3.58 3.57 56 5.07 5.00 4.88 4.72 31 3.62 3.62 3.61 3.60 57 5.17 5.10 4.97 4.78 32 3.65 3.65 3.64 3.62 58 5.29 5.20 5.05 4.85 33 3.68 3.68 3.67 3.65 59 5.41 5.31 5.14 4.91 34 3.72 3.71 3.70 3.68 60 5.53 5.42 5.23 4.97 35 3.75 3.75 3.73 3.72 61 5.67 5.54 5.33 5.04 36 3.79 3.78 3.77 3.75 62 5.81 5.67 5.42 5.10 37 3.83 3.82 3.81 3.78 63 5.97 5.80 5.52 5.16 38 3.87 3.86 3.85 3.82 64 6.13 5.94 5.62 5.22 39 3.92 3.90 3.89 3.86 65 6.31 6.08 5.72 5.28 40 3.96 3.95 3.93 3.90
Form 2504 (JTVUL)-8/99 Page 35 SETTLEMENT OPTION TABLE II/MALE (Continued) (Per $1,000 of Net Proceeds)
Age of Payee Nearest Monthly Age of Payee Nearest Monthly Birth Date When First Installment Birth Date When First Installment Installment is Payable Installment is Payable 5 Years 10 Years 15 Years 20 Years 5 Years 10 Years 15 Years 20 Years Male Certain Certain Certain Certain Male Certain Certain Certain Certain 66 6.49 6.23 5.82 5.33 91 14.64 9.64 7.09 5.75 67 6.69 6.38 5.92 5.38 92 15.00 9.68 7.10 5.75 68 6.90 6.54 6.02 5.43 93 15.34 9.72 7.10 5.75 69 7.12 6.71 6.12 5.48 94 15.68 9.75 7.10 5.75 70 7.35 6.87 6.21 5.52 95 16.00 9.78 7.10 5.75 71 7.60 7.05 6.30 5.55 96 16.30 9.80 7.10 72 7.86 7.22 6.39 5.59 97 16.59 9.81 7.10 73 8.13 7.40 6.47 5.62 98 16.86 9.82 7.10 74 8.42 7.57 6.55 5.64 99 17.11 9.83 7.10 75 8.72 7.75 6.62 5.66 100 17.33 9.83 7.10 76 9.04 7.92 6.69 5.68 101 17.53 9.83 77 9.37 8.09 6.75 5.70 102 17.69 9.83 78 9.72 8.26 6.81 5.71 103 17.82 9.83 79 10.08 8.42 6.86 5.72 104 17.92 9.83 80 10.44 8.57 6.90 5.73 105 18.00 9.83 81 10.82 8.71 6.94 5.74 106 18.05 82 11.21 8.85 6.97 5.74 107 18.08 83 11.59 8.97 7.00 5.75 108 18.10 84 11.99 9.09 7.02 5.75 109 18.11 85 12.38 9.20 7.04 5.75 110 18.11 86 12.76 9.29 7.05 5.75 87 13.15 9.38 7.07 5.75 88 13.53 9.46 7.08 5.75 89 13.91 9.53 7.08 5.75 90 14.28 9.59 7.09 5.75
Form 2504 (JTVUL)-8/99 Page 36 THIS IS A NON-PARTICIPATING POLICY [THIS POLICY IS A LAST SURVIVOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY] THIS POLICY INCLUDES PERSISTENCY BONUS. [DEATH BENEFITS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE. THESE VALUES MAY INCREASE OR DECREASE BASED ON INVESTMENT EXPERIENCE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. DEATH BENEFITS ARE PAYABLE BY US UPON THE SECOND DEATH OF THE TWO INSUREDS. THERE IS NO MATURITY DATE. FLEXIBLE PREMIUMS ARE PAYABLE BY YOU DURING THE LIFETIME OF EITHER INSURED UNTIL THE POLICY ANNIVERSARY NEAREST THE YOUNGER INSURED'S 100TH BIRTH DATE.] TO OBTAIN INFORMATION OR MAKE A COMPLAINT, CONTACT SECURITY LIFE OF DENVER INSURANCE COMPANY AT: Customer Service Center P. O. Box 173888 Denver, Colorado 80217 Toll Free Number: 1(800)848-6362 SECURITY LIFE OF DENVER INSURANCE COMPANY A Stock Company Form 2504 (JTVUL)-8/99 EX-1.A(5)(E) 5 AVIATION EXCL RIDER EXHIBIT 1.A(5)(e) AVIATION EXCLUSION RIDER This Rider is a part of the Policy to which it is attached if the Rider is shown in the Schedule. EXCLUSION. The Policy is subject to the condition that no benefit will be paid if the Insured's death results directly or indirectly from any of the causes stated below. The exclusion also applies to any rider attached to the Policy. No benefit is payable if death results from flight on or parachute or descent from any kind of air or space craft if the Insured: a. is a pilot, officer, or member of the crew; or b. is giving or receiving any kind of instruction or training; or c. has any duties aboard such craft. REFUND. If the Insured's death results from one of the excluded causes, our liability will be limited to a refund of the greater of: a. the premium paid on the Policy, reduced by any policy loan, any partial surrenders, and any benefits already paid; or b. the surrender value on the date of death. In no event will we refund more than the amount which would have been payable if there had been no exclusion. GENERAL. This rider will be included in any new policy to which the Policy is changed. This Exclusion will continue to apply after the expiration of the contestable period in the Policy. The effective date of this Rider (Rider Date) is the same as the Date of Issue of the Policy unless a different effective date is shown on this Rider. Signed for the Company at Denver, Colorado. SECURITY LIFE OF DENVER INSURANCE COMPANY /s/ Gary W. Waggoner SECRETARY EX-1.A(10) 6 VSUL APPLICATION EXHIBIT 1.A (10) FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE APPLICATION ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ [Logo of Security Life appears here] Q2006-9/97 FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE APPLICATION INSTRUCTIONS FOR ALL APPLICATIONS o Use the application approved for the state in which the applicant owner will sign the application. o Use dark ink to complete the application. o Print LEGIBLY to avoid issue errors. o Attach a complete illustration and all schedules associated with this application to expedite policy issue process and ensure that the policy is issued accordingly. o Incomplete applications may require an amendment to be signed upon delivery, or may be returned, which will delay the issue process. o The issue state and appropriate application form will be determined by the state in which the application was signed by the owner-applicant. - -------------------------------------------------------------------------------- SIGNATURES REQUIRED, PAGE 10: o The signature of all proposed insureds (parent or guardian of the proposed insured if below age 15). o The signature(s) of the owner. If a corporation is the owner, one officer, other than the proposed insured, should sign and indicate name of corporation and title of signing officer. o The signature of all agent/registered representative(s) included in the sale. (Page 10 and Registered Representative's Report.) APPLICATION -- PART I - -------------------------------------------------------------------------------- SECTION A: A-3: Exercise Right of Exchange Rider -- complete this box to identify policy to be exchanged and return the policy along with the application and medical information on the new proposed insured. A-4: If the application is employer sponsored, and the policy will be CORPORATE owned, this question should be answered "No." - -------------------------------------------------------------------------------- SECTION B: PROPOSED INSURED INFORMATION B-1: The legal name of the insured will appear on the policy as indicated in this space. B-4 Insurance age is calculated as age nearest birthday. - -------------------------------------------------------------------------------- SECTION C AND SECTION D: OWNER AND BENEFICIARY DESIGNATIONS o If you are designating more than one owner and/or beneficiary, use Special Instructions, Section O, and indicate the second owner's name and/or percentage of the beneficiary split. For example: John Doe, Husband, 70% Mary Doe, Mother, 30% NOTE: The amount must be stated in percentages. A dollar amount may not be specified. o If you are designating a trust as the owner and/or beneficiary, include the name of the Trustee, the name of the Trust and the date of the Trust. For example: John Doe, Trustee, of the Revocable Life Insurance Trust of James Doe, dated November 1, 1991. o When you are designating more than one owner, include the social security number or tax identification number for each respective owner in Special Instructions, Section O. o If you have children as owners or beneficiaries, please refer to the brochure entitled "Your Minor Child." - -------------------------------------------------------------------------------- SECTION F: SPECIAL DATING REQUESTED o This section provides an option for indicating a specific age and date on which the policy applied for will be issued. This date is the POLICY DATE only, and may differ from the INVESTMENT DATE. - -------------------------------------------------------------------------------- SECTION J: PREMIUM INFORMATION J-1: Consult your Service Guide for List Bill and EFT guidelines. J-2: Electronic Funds Transfer (EFT) is a premium payment method which the payor may elect. If selected, the scheduled premium will automatically be drafted from the payor's checking account. J-3: If any Authorized Withdrawal/EFT is collected with this application, the required premium amount as outlined in the prospectus must be collected in order to put the policy inforce. - -------------------------------------------------------------------------------- SECTION K: SUITABILITY o Must be completed or application will be returned. o The prospectus date should reflect the date printed on the cover of the prospectus provided at the time of solicitation. - -------------------------------------------------------------------------------- SECTION L: 1035 EXCHANGE INFORMATION L-4: For purposes of 1035 Exchanges, this information is required to carry over the correct cost basis and loan amount. - -------------------------------------------------------------------------------- SECTION O: SPECIAL INSTRUCTIONS o Used for any additional information (for example, billing and mailing instructions) and continuing your answers for owner and beneficiary designations. o If you are requesting child rider(s) and need to request beneficiary(ies) other than shown in Section D, please indicate here. Include name(s)of beneficiary(ies) and relationship. o May be used to continue answers to question L-12, if necessary. o Payor, accepting rating on formal application only. APPLICATION -- PART II - -------------------------------------------------------------------------------- MEDICAL INFORMATION This part of the application must be completed for each person proposed for coverage unless the person is medically examined. ATTACHMENTS - -------------------------------------------------------------------------------- VARIABLE LIFE SERVICE REQUEST FORM This form communicates to us the owner's instructions regarding the financial administration of the policy, with respect to Dollar Cost Averaging, Automatic Rebalancing and Telephone Privileges/Pin Number. This form must be returned to us if the policyowner desires any of these features. Instructions for this form can be found on the page preceding the form. - -------------------------------------------------------------------------------- TEAR OFF AND DELIVER TO APPLICANT State and Federal law require the Fair Credit Summary of Rights and Notice of Information Procedures be given to the owner/ applicant at the time of application. Detach the last two pages of the application and leave with the owner/applicant BEFORE submitting the application to us. - -------------------------------------------------------------------------------- [Logo of Security Life appears here] Security Life of Denver Insurance Company Variable Life Customer Service Center P.O. Box 173888 Denver, CO 80217-3885 1-800-848-6362 APPLICATION FOR FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE TO SECURITY LIFE OF DENVER INSURANCE COMPANY - -------------------------------------------------------------------------------- PART I - -------------------------------------------------------------------------------- Please Print All Information Using Dark Ink - -------------------------------------------------------------------------------- SECTION A -- GENERAL INFORMATION (Complete for all cases) A-1 [ ] Check here if insurance is for PENSION or similar tax qualified ERISA plan. A-2 If above statement checked, list plan type________________________________ (Example: Profit-Sharing; Defined Contribution; etc.)
A-3 [ ] Exercise Right of Exchange Rider A-4 Employer Sponsored Plans check one: Name of Insured under Policy to be Exchanged Policy Number Employee Owned? [ ] Yes [ ] No ____________________________________________ _______________
- -------------------------------------------------------------------------------- SECTION B -- PROPOSED INSURED (Complete for all cases. To apply for additional insureds complete Section G) B-1 Name (Print full name, include suffix) (First, Middle, Last, Suffix) ___________________________________________________________________________ B-2 Sex B-3 Birthdate B-4 Insurance Age B-5 Birthplace [ ] Male Month Day Year (Age Nearest Birthday) (State) [ ] Female [ | ] [ | ] [ | | | ] [ | ] __________ B-6 Social Security Number B-7 Telephone Number B-8 Height ________ [ | | ]-[ | ]-[ | | | ] [ | | ]-[ | | ]-[ | | | ] B-9 Weight ________ B-10 Address (Street, Apt. No.) ___________________________________________________________________________ (City) (State) (Zip Code) ________________________________________ _____ [ | | | | ]-[ | | | ] B-11 Occupation B-12 Describe duties _______________________________ ____________________________________ B-13 Employer Name Month Year _____________________________________ B-14 Employment date: [ | ] [ | ] - -------------------------------------------------------------------------------- SECTION C -- OWNER (Complete only if other than Proposed Insured) C-1 Owner Name (Print full name, include suffix - if name to appear differently on policy, indicate in Section O) (First, Middle, Last, Suffix) --------------------------------------------------------------------------- C-2 Relationship to Proposed Insured C-3 Social Security Number or Tax I.D. No. (Include any hyphens) -------------------------------- [ | | | | | | | | | | ] C-4 Owner Address (Street, Apt. No.) ___________________________________________________________________________ (City) (State) (Zip Code) ________________________________________ _____ [ | | | | ]-[ | | | ] - -------------------------------------------------------------------------------- SECTION D -- BENEFICIARIES (Complete for all cases)
D-1 Primary Beneficiary(ies) (Print Full Names) Relationship to Proposed Insured Birth date _______________________________________________ ____________________________________ _____________ Contingent Beneficiary(ies) (Print Full Names) Relationship to Proposed Insured Birth date _______________________________________________ ____________________________________ _____________
Q2006-9/97 1 - -------------------------------------------------------------------------------- SECTION E -- PLAN INFORMATION (Complete for all cases) E-1 FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY a. Product Name ___________________________________________ b. Stated Death Benefit $ ________________ c. Adjustable Term Rider [ ] Yes [ ] No If Yes: Initial Target Death Benefit $ _______________ (Attach Schedule from Illustration for subsequent Target Death Benefit changes.) d. Scheduled Periodic Premium $ ________________ (If premium varies from year to year attach schedule) e. [ ] Option 1 (Stated Death Benefit. If no option selected, Option 1 will apply.) [ ] Option 2 (Stated Death Benefit plus Account Value.) f. [ ] Guideline Premium Cash Value Corridor Test [ ] Cash Value Accumulation Test g. First Year Pour-In (if any) $ _______________ h. Additional Riders [ ] Accidental Death $ ________________ [ ] Additional Insured $ _______________(Complete section G) [ ] Right to Exchange [ ] Waiver of Cost of Insurance [ ] Waiver of Specified Premium $ ______________ [ ] Child's Insurance Rider (# of Units) ______ (Complete section H) [ ] Guaranteed Insurability Rider _________________ [ ] Other _____________________________________________________________ - -------------------------------------------------------------------------------- SECTION F -- SPECIAL DATING REQUESTED (If neither box checked below, policy will be issued at age nearest birthday as of issue date.)
Mo Day Year F-1 [ ] Date to Save Age Specify Requested Age ____ F-2 [ ] Specific Date [ | ] [ | ] [ | | | ]
- -------------------------------------------------------------------------------- SECTION G -- ADDITIONAL INSURED RIDER G-1 Name of Proposed Additional Insured (If more than one additional insured, specify details in special instructions, Section O) (First, Middle, Last, Suffix) ___________________________________________________________________________ G-2 Relationship to proposed insured _________________________________________
Month Day Year G-3 Birthdate [ | ] [ | ] [ | | | ] G-4 Social Security Number [ | | ]-[ | ]-[ | | | ]
G-5 Height _____ G-6 Weight _____ G-7 Insurance Age (Age nearest birthday)[ | ] G-8 Show beneficiary for additional insured if different from beneficiary named in Section D. Name: __________________ Relationship: ______________ Birth date: _______ - -------------------------------------------------------------------------------- SECTION H -- CHILD RIDER Birthdate Mo/Day/Yr Height Weight H-1 Child ____________________________|_____/______/________|_________|________ H-2 Child ____________________________|_____/______/________|_________|________ H-3 Child ____________________________|_____/______/________|_________|________ H-4 Child ____________________________|_____/______/________|_________|________ 2 - -------------------------------------------------------------------------------- SECTION I -- GUARANTEED MINIMUM DEATH BENEFIT OPTION
I-1 GUARANTEE PERIOD (SELECT ONE, IF OPTION DESIRED; OTHERWISE THERE WILL BE NO GUARANTEED PERIOD) [ ] Later of ten years or proposed insured's age 65 [ ] Lifetime of proposed insured
Note: The Guarantee Period will terminate if: 1. You fail to pay the required Guarantee Period Annual premium defined in your prospectus; or 2. 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 five divisions. You will satisfy these diversification requirements if: (i) you participate in the Automatic Rebalancing feature defined in and governed by the policy prospectus in effect at the time you elect the Guarantee Period and your Automatic Rebalancing allocations comply with the diversifications specified above; or (ii) you elect Dollar Cost Averaging and direct the resulting transfers into at least four other Divisions with no more than 35% of any transfer being to any one division. There may be other circumstances that will cause the Guarantee Period to terminate before its scheduled expiration date. See your prospectus for further information. - ------------------------------------------------------------------------------- SECTION J -- PREMIUM INFORMATION J-1 PREMIUM MODE (If no option selected - Premium mode will be quarterly) [ ] Annual [ ] Quarterly [ ] Semi-Annual [ ] Monthly (only available for List Bill and Authorized Withdrawal/EFT) J-2 PAYMENT METHOD (If no option selected - Payment Method will be Direct Bill for Annual, Semi-Annual or Quarterly Premium Mode or EFT for Monthly Mode) [ ] Direct Bill (not available for monthly) [ ] Single Premium [ ] List Bill Existing List Bill Number _________________________ [ ] Authorized Withdrawal (Complete Authorized Withdrawal/EFT Form) J-3 PREMIUM COLLECTED WITH APPLICATION The agent is not authorized to collect any premium before delivering a policy unless the Binding Limited Life Insurance Coverage form has been completed and signed by the agent, applicant and proposed insured and a copy given to the applicant. THERE IS NO COVERAGE BEFORE DELIVERY OF THE POLICY EXCEPT AS PROVIDED BY THAT FORM. Yes No [ ] [ ] a. Has agent collected any premium (including any Authorized Withdrawal/EFT Form) with this application? If yes, total premium (including any pour-in) collected $ _____________ [ ] [ ] b. If answer to (a) is "Yes," has agent complied with the Binding Limited Life Insurance Coverage requirements? [ ] [ ] c. Has the applicant signed and received a Binding Limited Life Insurance Coverage form in connection with this application? Attach signed copy of Binding Limited Life Insurance Coverage form. NOTE: If any Authorized Withdrawal/EFT is collected with this application, the required premium amount as outlined in the prospectus must be collected in order to put the policy inforce. 3 - -------------------------------------------------------------------------------- SECTION J -- PREMIUM INFORMATION (continued) J-4 INITIAL PREMIUM ALLOCATION. Please allocate your Initial Premium to the Guaranteed Interest Division and/or among the Variable Account Divisions. Please use whole number percentages for each Division elected. You must allocate at least 1% of your Premium Allocation to each Division in which you elect to invest. The total must equal 100%. _______% GUARANTEED INTEREST DIVISION
VARIABLE ACCOUNT DIVISIONS AIM Invesco Van Eck ____% V.I. Government Securities ____% Industrial Income ____% Worldwide Hard Assets ____% V.I. Capital Appreciation ____% High Yield ____% Worldwide Emerging Markets ____% Utilities ____% Worldwide Bond Alger American ____% Total Return ____% Worldwide Real Estate ____% Small Capitalization ____% VIF Small Company Growth ____% MidCap Growth ____% Growth Neuberger & Berman ____% Leveraged AllCap ____% Limited Maturity Bond ____% Growth Portfolio Fidelity Investments ____% Partners Portfolio ____% Asset Manager ____% Growth Portfolio ____% Money Market ____% Index 500
- -------------------------------------------------------------------------------- SECTION K -- SUITABILITY a. Have you, the Proposed Insured, and the Owner, if other than the Proposed Insured, received a current Prospectus dated _________________ for the Variable Life Insurance policy applied for and current prospectus for each of the Variable Account Divisions? [ ] Yes [ ] No b. Do you understand that under the policy applied for the amount or duration of the death benefit may vary under specified conditions; policy values may increase or decrease in accordance with the investment experience of investment divisions in a Separate Account, and may increase in accordance with the interest credited in the Guaranteed Interest Division; and the amount payable at the Final Policy Date is not guaranteed but is dependent on the amount then in the Account Value? [ ] Yes [ ] No c. Do you understand that any personalized illustrations received are based on hypothetical interest assumptions which may not be indicative of actual future investment experience of our Separate Account or of actual interest credited in our Guaranteed Interest Division? [ ] Yes [ ] No d. With this in mind, is the policy in accord with your insurance objectives and your anticipated financial needs? [ ] Yes [ ] No 4 - -------------------------------------------------------------------------------- SECTION L -- PERSONAL INFORMATION L-1 List life insurance policies on all persons proposed for coverage (1) now in force or (2) applied for within the last 12 months, or (3) pending now. If NONE, Check this box [ ]
Name of Year A.D. Business or Indicate if Inforce, Proposed Insured Company Issued Amount Amount Personal Applied for, or Pending --------------------|---------------------|-----------|-----------|---------|-------------|-----------------------------| --------------------|---------------------|-----------|-----------|---------|-------------|-----------------------------| --------------------|---------------------|-----------|-----------|---------|-------------|-----------------------------|
Yes No L-2 Has any proposed insured ever been declined for insurance (or reinstatement) or been offered insurance with restricted benefits or at other than standard rates? (If "Yes" give details in section L-12) [ ] [ ] L-3 Is this insurance to replace, or will it cause any change in, any insurance or annuity on any person proposed for coverage? (If "Yes" submit a completed replacement form with this application.) [ ] [ ] L-4 a. Is this insurance intended to be a tax free exchange - 1035 Exchange? (If "Yes" indicate Company in section L-12) [ ] [ ] b. If "Yes" will any policy loan be carried over? [ ] [ ] L-5 Has any person proposed for coverage: a. ever smoked cigarettes? (If "Yes," give name and details in section L-12) [ ] [ ] b. ever used tobacco in any form other than cigarettes? (If "Yes" give name and details in section L-12) [ ] [ ] c. ever stopped smoking cigarettes? (If "Yes" give name and date last smoked in section L-12) [ ] [ ] d. ever stopped using tobacco in any form other than cigarettes. (If "Yes" give name, type and date last used in section L-12) [ ] [ ] L-6 Within the last 3 years or within the next 12 months, has any person proposed for coverage: a. flown (or planned to fly) other than as a passenger on a regularly scheduled airline? (If "Yes" complete Aviation Supplement.) [ ] [ ] b. had a drivers license denied, revoked, or suspended; had three or more moving violations; been convicted of an alcohol or drug related driving offense; been involved in two or more auto accidents? (If "Yes" give details in section L-12) [ ] [ ] c. participated in (or intend to participate in) vehicle racing (on land or water), ballooning, bobsledding, hang gliding, ultralight aviation, horse racing, mountaineering, rodeo, scuba/skin diving, skydiving/parachuting, or bungee cord jumping? (If "Yes" complete Avocation Supplement) [ ] [ ] L-7 List Driver's License No. here [ | | | | | | | | | | | ] State _____ L-8 Does any person proposed for coverage contemplate traveling or residing outside the U.S.A. or Canada within the next 12 months? (If "Yes" give details in section L-12) [ ] [ ] L-9 Has any person proposed for coverage been convicted of a felony within the last 5 years? (If "Yes" give details in section L-12) [ ] [ ] L-10 Has any person proposed for coverage: a. ever had, or now have, any type of heart disease, cancer, leukemia, or malignant tumor? (If "Yes" give details in section L-12) [ ] [ ] b. ever been diagnosed by a licensed member of the medical profession as having Acquired Immune Deficiency Syndrome (AIDS) or any immune deficiency or disorder? (DO NOT ANSWER THIS QUESTION IF YOU RESIDE IN NEVADA.) (If "Yes" give details in section L-12) [ ] [ ] L-11 Does any person proposed for coverage now participate in any regular physical exercise program? [ ] [ ]
L-12 Details of "YES" Answers to Questions L-2 through L-11 5 - -------------------------------------------------------------------------------- SECTION M -- MEDICAL EXAM CERTIFICATE (Complete when submitting medical examination of another insurance company.) M-1 The attached examination is on the life of: _______________________________ M-2 Name of insurance company for which examination was made and date of examination: Company Date of Examination ________________________________________________ _________________________ M-3 To the best of the proposed insured's knowledge and belief, are the statements in the examination true as of today? [ ] Yes [ ] No (If "No," explain in "Remarks") M-4 Has the proposed insured consulted a doctor or other practitioner or received medical or surgical advice since the date of the examination? [ ] Yes [ ] No (If "Yes," explain in "Remarks") Remarks to No. M-3 and M-4 - -------------------------------------------------------------------------------- SECTION N -- FINANCIAL INFORMATION Must be completed where the face amount exceeds (1) $200,000 for business insurance, (2) $300,000 for an insured 65 and under, or (3)$100,000 for an insured over 65. N-1 What is the purpose of the insurance applied for? _________________________ If the insurance applied for is personal, what is the proposed insured's: Annual Earned Income $ __________ Total Assets $ ___________ Annual Interest & Other Income $ __________ Total Liabilities $ ___________ Total Net Worth $ ___________ N-2 If Business Insurance: Last Year 2 Years Ago a. Annual net profit (before taxes, past two years) $ _______________ $ ________________ b. Business reason for insurance (check at least one box and furnish details) [ ]Key Person [ ]Stock Redemption/Buy and Sell [ ]Other _____________ c. If Key Person insurance: (1) Are all partners or key people to be covered? [ ] Yes [ ] No (If "No," explain) (2) Does proposed insured have an ownership interest in the business? [ ] Yes [ ] No If "Yes," what is proposed insured's percent of ownership? ______% (3) What is proposed insured's annual income? $ _______________ 6 - -------------------------------------------------------------------------------- SECTION N -- FINANCIAL INFORMATION (Continued) Must be completed where the face amount exceeds (1) $200,000 for business insurance, (2) $300,000 for an insured 65 and under, or (3)$100,000 for an insured over 65. d. If to fund stock redemption, is there a written agreement? [ ] Yes [ ] No (1) What is the book value of the business? $ ____________________ (2) What is the market value of the business? $ _____________________ (3) How was the value determined? ____________________________________ N-3 Is this insurance to guarantee a loan? [ ] Yes [ ] No a. If "Yes," is the lender requiring this insurance? [ ] Yes [ ] No b. Is the loan finalized? [ ] Yes [ ] No c. What is the term of the loan? (Months) _____________ d. Name of lender: ______________________________________________________ e. Amount of loan: ______________________________________________________ f. Purpose of loan: ______________________________________________________ g. Are others being insured for the same purpose? [ ] Yes [ ] No If Yes, who and for what amount? ________________________________________ Amount $ ____________________ ________________________________________ Amount $_____________________ N-4 Additional remarks about purpose of the insurance and how the amount of insurance was determined. Remarks to Section N - -------------------------------------------------------------------------------- SECTION O -- SPECIAL INSTRUCTIONS 7 - -------------------------------------------------------------------------------- PART II - -------------------------------------------------------------------------------- Please Print All Information Using Dark Ink Part II MUST be completed for EACH person proposed for coverage unless the person is medically examined. - -------------------------------------------------------------------------------- SECTION A -- PERSONAL PHYSICIANS A-1 For each person proposed for coverage, give the name and address of the personal physicians and the date and reason the physician was last seen. IF NONE, CHECK HERE [ ]
Proposed Insured's Name Name and Address of Physician Date and Reason Last Seen |---------------------------------------|------------------------------- |---------------------------------------|------------------------------- - -------------------------|---------------------------------------|------------------------------- |---------------------------------------|------------------------------- |---------------------------------------|------------------------------- - -------------------------|---------------------------------------|------------------------------- |---------------------------------------|------------------------------- |---------------------------------------|------------------------------- - -------------------------|---------------------------------------|-------------------------------
- -------------------------------------------------------------------------------- SECTION B -- MEDICAL INFORMATION (Complete for each person proposed for coverage.) (For all of Section B, circle each specific condition and give details of all "Yes" answers in the Details Section following question B-11. Give name of disease, symptoms, etc.; the date of onset; the duration; number of attacks; and name and addresses of medical professional or hospital providing services.) B-1 Has any person proposed for coverage ever been treated for, or been told by a member of the medical profession that the person has:
Yes No a. pain, pressure, or discomfort in the chest or arms; high blood pressure; heart murmur; irregular heartbeat; or any other disease or disorder of the heart? [ ] [ ] b. anemia; leukemia; or any other disorder of the blood, veins or arteries? [ ] [ ] c. asthma; bronchitis; pneumonia; tuberculosis; emphysema; shortness of breath; chronic cough, or any other disorder of the lungs or respiratory system? [ ] [ ] d. mental or emotional disorder, nervous breakdown; epilepsy; convulsions; chronic fatigue; fainting spells; paralysis; stroke; or any other disorder of the brain or nervous system? [ ] [ ] e. significant weight loss; ulcer; colitis; diverticulitis; hepatitis; cirrhosis; persistent diarrhea; or other disease of the liver, gall bladder, pancreas, stomach or intestines? [ ] [ ] f. diabetes; thyroid; recurrent enlarged glands; or other glandular disease or disorder? [ ] [ ] g. arthritis; gout; or any bone, joint, muscle, or skin disorder? [ ] [ ] h. polyp, tumor, or cancer? [ ] [ ] i. disorder of the urinary tract or kidneys; urethritis; cystitis; sugar, albumin, or blood in the urine? [ ] [ ] j. prostate or testicular disease; venereal disease; herpes; or disease of the uterus, ovaries or breasts? [ ] [ ] k. any disorder of the eyes; ears; nose; or throat? [ ] [ ] l. any other health impairment or medically or surgically treated condition within the last 5 years not mentioned above? [ ] [ ]
8
Yes No B-2 Has any person proposed for coverage ever been treated for or been told by a licensed member of the medical profession that the person has Acquired Immune Deficiency Syndrome (AIDS) or any disorder or deficiency of the Immune System? (DO NOT ANSWER THIS QUESTION IF YOU RESIDE IN NEVADA.) [ ] [ ] B-3 Within the past 10 years, has any person proposed for coverage: a. tested positive in a test to detect antibodies to the AIDSvirus (Human T-Cell Lymphotrophic virus type III; HTLV-III, Human Immunodeficiency Virus [HIV])? (DO NOT ANSWER THIS QUESTION IF YOU RESIDE IN CONNECTICUT OR MAINE.) [ ] [ ] b. had a blood transfusion? [ ] [ ] B-4 Within the past 5 years, has any person proposed for coverage been a patient in or had treatment at a hospital, clinic, sanitarium or other medical facility? [ ] [ ] B-5 Is any person proposed for coverage now under regular medical observation by, or taking treatment from, a member of the medical profession? [ ] [ ] B-6 Other than as stated in the answers above, has any person proposed for coverage, within the last 5 years: a. had a checkup or consultation with a member of the medical profession? [ ] [ ] b. had an electrocardiogram, x-ray, blood test or other test? [ ] [ ] c. been advised by a member of the medical profession to have any diagnostic test, hospitalization, or surgery which was not completed? [ ] [ ] B-7 Does any person proposed for coverage have a deformity or an amputation? [ ] [ ] B-8 Does any person proposed for coverage now take any medicine prescribed by a member of the medical profession? [ ] [ ] B-9 Except as legally prescribed by a physician, has any person proposed for coverage ever used narcotics, cocaine, marijuana, or any hallucinatory or mind altering substances in the past 10 years? [ ] [ ] B-10 In the last 5 years, has any person proposed for coverage received treatment for or joined an organization because of the alcoholism or drug addiction of that person? [ ] [ ] B-11 Has any parent, brother, or sister of any person proposed for coverage ever had cancer; diabetes; high blood pressure; heart or kidney disease; nervous or mental disorder; tuberculosis; or hereditary disorder? [ ] [ ]
Details of "Yes" answers to questions B-1 through B-11 Ques. Name of No. Proposed Insured Complete Details (including, if any, name of physician noted in Section A-1) - ------|--------------------|----------------------------------------------------------------------------------------------- - ------|--------------------|----------------------------------------------------------------------------------------------- - ------|--------------------|----------------------------------------------------------------------------------------------- - ------|--------------------|----------------------------------------------------------------------------------------------- - ------|--------------------|----------------------------------------------------------------------------------------------- - ------|--------------------|-----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- SECTION C -- FAMILY HISTORY Living Deceased Family Member Age State of Health Age at Death/Cause - ------------- --- --------------- ------------------ Father Mother Brothers Sisters 9 AGREEMENTS All statements and answers in this application (which includes Part I, Part II, and supplements and amendments) are true and complete to the best of my knowledge and belief. I also agree that: 1. The statements and answers in this application will be relied upon and form the basis of any insurance. 2. No information will be considered as having been given to Security Life unless it is written in this application. (THIS PARAGRAPH DOES NOT APPLY IN THE STATES OF MAINE, MISSOURI, OREGON, SOUTH CAROLINA, AND SOUTH DAKOTA.) 3. No agent or any other unauthorized person can make or change any insurance contract or give up any of Security Life's rights or requirements. Any change must be in writing and signed by an officer of Security Life. 4. Security Life may amend this application by an appropriate notation in the space designated "Home Office Corrections" in order to correct errors or omissions or to conform the application with any policy that may be issued. The acceptance of the policy constitutes a ratification of such amendments. In those states, including Maryland, where change in amount, classification, plan, premium, or benefit requires the written consent of the applicant, no change may be ratified except by a written acceptance. We reserve the right to make any changes required by law. 5. INSURANCE UNDER POLICY APPLIED FOR - EXCEPT AS MAY BE PROVIDED IN ANY BINDING LIMITED LIFE INSURANCE COVERAGE, NO POLICY OF INSURANCE WILL BE IN FORCE UNTIL (1) THE FIRST POLICY PREMIUM IS PAID AND (2) THE POLICY IS DELIVERED WHILE THE FACTS AND HEALTH CONDITION OF THE PROPOSED INSURED(S) ARE AS REPRESENTED IN THIS APPLICATION. WHEN THESE CONDITIONS ARE SATISFIED, THE POLICY AS DELIVERED WILL THEN TAKE EFFECT. 6. Binding Limited Life Insurance Coverage - Any pre-delivery insurance coverage is provided in the Binding Limited Life Insurance Coverage form. That coverage is available only if: a premium is accepted by the agent; the agent has authority to accept premium as set out in that form; and the form is completed and signed by the agent, applicant, and proposed insured. 7. If the contract applied for is for a pension, profit-sharing, HR10, or other tax qualified plan, any policy issued shall not be transferable other than to the Insurer, except as directed by the Plan Administrator. Other applicable provisions may be added to the contract. 8. I certify, under penalty of perjury, that my social security/tax identification number(s) is shown and is correct and that I am not subject to back up withholding. AUTHORIZATION TO OBTAIN AND DISCLOSE INFORMATION Security Life of Denver Insurance Company ("Security Life") may obtain information about me or my minor children from: any physicians; medical practitioner; hospital, clinic or other medical facility; employer; other insurance companies or institutions; consumer reporting agency; or Medical Information Bureau, Inc. (MIB, Inc.). The purpose is to evaluate my application for insurance or benefits. Security Life may obtain an investigative consumer report and any records or other information available as to diagnosis, treatment and prognosis of any physical or mental condition. Security Life may obtain any drug, physical and mental health, and alcohol-related information which may be protected by federal or state laws and regulations. As it pertains to alcohol and drug information covered by federal regulation, this authorization may be revoked at any time by written notice to Security Life. But any action taken before my written revocation is received by Security Life will not be affected. Security Life may make a brief report about me or my children to MIB, Inc. Security Life may disclose information to: its reinsurers; those who perform services for Security Life on my application for insurance or benefits: or those companies to which I have applied or may apply for life or health insurance or benefits. Disclosure may be made when required or permitted by law. This is valid for two and one-half years from the date below. An original or copy may be used by Security Life or its authorized representatives to obtain information. I have read and received a copy of this authorization. I also have a copy of the Notice of Information Procedures. It includes the MIB, Inc. and Fair Credit Reporting Notices. NOTICE: Any person who knowingly and with intent to injure, defraud, or deceive any insurance company, files an application, statement or claim containing any false, incomplete, or misleading information may be guilty of insurance fraud. Signature of Proposed Insured ________________________________________ Date ________________ (If below age 15, signature of parent or guardian) Signature of Owner (If other than proposed insured) OR (IF APPLICABLE) Corporate Owner Signature ___________________________________ (If a firm or corporation is to be owner, the signature and title of an officer other than the proposed insured is required.) Signed by Owner at (State) _______________ Signature of Spouse _________________________________ Signature of Additional Insured(s) (If proposed for coverage) _____________________________________________
Except for any medical exam form, I certify that I have asked and recorded completely and accurately the answers to all questions on this application. I know of nothing else affecting the risk. Signature of Agent/Registered Rep. ______________________________________ Reg.Rep. Number ________________________ Signature of Agent/Registered Rep. ______________________________________ Reg.Rep. Number ________________________ Signature of Agent/Registered Rep. ______________________________________ Reg.Rep. Number ________________________
_______________________________________ ______________________________________ Name of Broker/Dealer/Branch/OSJ Address of Broker/Dealer/Branch/OSJ HOME OFFICE CORRECTIONS (FOR HOME OFFICE USE ONLY) (Not applicable in West Virginia) 10 REGISTERED REPRESENTATIVE'S REPORT (Must be completed and signed for every application)
Yes No Yes No 1) Do you have knowledge or reason to 5) What is the amount of insurance in force believe that replacement of existing on the spouse of the proposed insured? insurance or annuity may be involved? [ ] [ ] $_______________________ If Yes, explain:_________________________ 6) If any proposed insured is a minor, what 2) How long have you known the proposed is the amount of insurance on: insured? ______ Years Are you related? [ ] [ ] Father $___________ Mother $__________ If so, how? ____________________________ Brothers $___________ Sisters $__________ 3) Does the proposed insured speak English? [ ] [ ] 7) Will the applicant accept this policy if it Was the application interpreted for and is a "Modified Endowment" at issue? [ ] [ ] understood by the proposed insured? [ ] [ ] 8) If a medical exam is required, has it been ordered? [ ] [ ] Are all persons proposed for coverage 9) What is the source of the first premium payment: U.S. citizens? [ ] [ ] [ ] Applicant check If not, how long in U.S.? _____Mos. _____Yrs. [ ] Other (specify):________________________ 4) Did proposed insured approach you for this insurance? [ ] [ ]
- -------------------------------------------------------------------------------- 10) Writing Registered Representative (Print) ______________________________________ Production Credit Split Variable Writing Registered Representative (Sign) Agent Number Percent _______________ _______ Date _________________________ Registered Representative Number: [ | | | | | ] _______________ _______ _______________ _______
- -------------------------------------------------------------------------------- 11) What was the PRIMARY purpose of the insurance? PERSONAL PLANNING Business Planning A [ ] Estate/Death Tax J [ ] Executive Bonus B [ ] Family Protection K [ ] Qualified Plan C [ ] Mortgage Protection L [ ] Deferred Compensation D [ ] College Funding M [ ] Buy-Sell E [ ] Gift/Charitable N [ ] Key Executive F [ ] Retirement Maximizer O [ ] Employee Benefit G [ ] IRP/PPP/PRO P [ ] Other ______________________ H [ ] Savings I [ ] Other _________________________ - -------------------------------------------------------------------------------- 12) Who was the PRIMARY decision-maker involved?
PERSONAL PLANNING BUSINESS PLANNING A [ ] Insured D [ ] Grandparent G [ ] Businessowner J [ ] Board of Directors B [ ] Insured and Spouse E [ ] Child(ren) H [ ] Attorney K [ ] Trustee C [ ] Parent F [ ] Other ______________ I [ ] Accountant L [ ] Other __________________
- --------------------------------------------------------------------------------
13) Did the Home Office or Regional Staff assist you? [ ]Yes [ ]No (If yes, check all that apply.) A [ ] Illustration D [ ] Template design G [ ] Family Asset Review J [ ] Other __________________ B [ ] Case design E [ ] Estate Analysis H [ ] Competition Services C [ ] Sample Documents F [ ] Business Analysis I [ ] Legal Consultation
11 INSTRUCTIONS FOR COMPLETING VARIABLE LIFE SERVICE REQUESTS FORM SECTION 1 -- SECTIONS TO BE COMPLETED - ------------------------------------------------------------- > Complete each of the sections indicated for each option. > Obtain signatures and date in Section 9. SECTION 2 -- POLICY INFORMATION: - ------------------------------------------------------------- > New Policies. If the service request is in connection with a new policy application please enter the name of the proposed insured, the proposed policyowner, the policy face amount and the date the application was signed in Section 2A. > Existing Policies. If the service request is for an existing policy, please enter the policy number in Section 2B. SECTION 3 -- PREMIUM PAYMENT ALLOCATION CHANGE REQUEST - ------------------------------------------------------------- o Enter your future premium allocation. o Premium allocations must be made only in whole percentages. o The sum of all premium allocations must equal 100%. SECTION 4 -- TELEPHONE PRIVILEGE AUTHORIZATION OR REVOCATION: - ------------------------------------------------------------- > You may give each policyowner and your Registered Representative the authority to transfer policy values among the divisions or to request a partial withdrawal by telephone. If you elect telephone privileges, you must also have a PIN number. If you wish to use a specific PIN number, please indicate that number on the request form in Section 6. o Mark the boxes indicating the individuals for whom telephone authority is granted. o To revoke telephone privileges for a specific individual, mark the box next to the persons for whom privileges are to be revoked. o If you are revoking telephone privileges for your registered representative, the PIN number will be changed. SECTION 5 -- AUTOMATIC REBALANCING OPTION: - ------------------------------------------------------------- > GENERAL o The total of all automatic rebalancing allocations must equal 100%. o Automatic rebalancing may be done at the same time as dollar cost averaging. If you do these simultaneously, exclude the division from which the dollar cost averaging transfers will be taken. o Automatic rebalancing percentages may be different from the premium allocation percentages. > TO INITIATE AUTOMATIC REBALANCING OPTION: o Enter the percentage for each Division you wish to include in automatic rebalancing. The total of all percentages must equal 100%. [IMPORTANT REMINDER: If you also have elected the Guaranteed Minimum Death Benefit, you must invest your funds in at least 5 Divisions with no more than 35% in any one Division.] o Indicate the frequency and date with which you wish automatic rebalancing to occur. > TO CHANGE YOUR AUTOMATIC REBALANCING PERCENTAGES OR FREQUENCY: o Enter the percentage for each division you wish to include in automatic rebalancing. The total of all percentages must equal 100%. o Indicate the frequency and date with which you wish automatic rebalancing to occur. SECTION 6 -- PIN NUMBER CHANGE: - ------------------------------------------------------------- o You must have a PIN number if you elect the telephone privilege option. o If you wish to use a specific PIN number, please indicate that number in this section. SECTION 7 -- DOLLAR COST AVERAGING OPTION: - ------------------------------------------------------------- > TO INITIATE OR CHANGE DOLLAR COST AVERAGING: o Changes to Dollar Cost Averaging allocations are allowed once each policy year. o Enter the total percentage/dollar amount you wish to have transferred from either the Money Market or the Bond Division into the Divisions of the Variable Account. o Enter the percentage/dollar amount you wish to have transferred into each selected Division of the Variable Account. [IMPORTANT NOTE: When transferring funds from one Division to another, you may: -- transfer dollar amounts to dollar amounts -- transfer dollar amounts to percentages -- transfer percentages to percentages You may not transfer percentages to dollar amounts.] o Percentages must add up to 100%. o Dollar amounts must add up to the total dollar amount to be transferred. o Indicate the frequency and date with which you wish dollar cost averaging to occur. o You may specify a date for Dollar Cost Averaging to terminate. You may also specify a dollar amount so that when the Accumulation value reaches this dollar amount, Dollar Cost Averaging will terminate. SECTION 8 -- DIVISION TRANSFER REQUEST: - ------------------------------------------------------------- > Fund Transfers Among Divisions o Enter the dollar/percentage you wish to transfer in the "Transfer From" column. Enter the dollar/percentage you wish to transfer into a Division in the "Transfer To" column. [IMPORTANT NOTE: When transferring funds from one Division to another, you may: -- transfer dollar amounts to dollar amounts -- transfer dollar amounts to percentages -- transfer percentages to percentages You may not transfer percentages to dollar amounts.] o A minimum of $100 must be transferred. This minimum need not come from any one Division or be transferred to any one Division as long as the total amount requested to be transferred equals at least $100. o The total dollar amount shown in the "Transfer To" column must equal the total dollar amount shown in the "Transfer From" column. o The total percentages shown in the "Transfer To" column must equal 100%. o Transfers to or from the Guaranteed Interest Division have specific time and amount limitations. Please refer to your policy or prospectus for additional information. VARIABLE LIFE SECURITY LIFE OF DENVER INSURANCE COMPANY [Logo of Security Life appears here] SERVICE REQUESTS FORM Variable Life Customer Service Center FOR NEW AND EXISTING VARIABLE LIFE POLICIES P. O. Box 173888, Denver, CO 80217-3885 1-800-848-6362
- -------------------------------------------------------------------------------- SECTION 1: SECTIONS TO BE COMPLETED - -------------------------------------------------------------------------------- For Automatic Rebalancing Option-- Complete Sections 2, 5 & 9 For Division Transfer Requests-- Complete Sections 2, 8 & 9 For Dollar Cost Averaging Option-- Complete Sections 2, 7 & 9 For Telephone Transfer Authorization/Revocation - Complete Sections 2, 4 & 9 For Premium Allocation Change Requests-- Complete Sections 2, 3 & 9 For PIN Number Changes-- Complete Sections 2, 6 & 9
- -------------------------------------------------------------------------------- SECTION 2: POLICY INFORMATION - -------------------------------------------------------------------------------- A. [ ] FOR NEW POLICIES: Proposed Policyowner Name:___________________________ Proposed Insured's Name:___________________________ Policy Face Amount:___________________________ Policy Application Date:___________________________ B. [ ] FOR EXISTING POLICIES: Policyowner Name:___________________________ Policy No.:___________________________ - -------------------------------------------------------------------------------- SECTION 3: PREMIUM ALLOCATION CHANGE REQUEST - -------------------------------------------------------------------------------- NEUBERGER & BERMAN ALGER AMERICAN _____% Limited Maturity Bond _____% Small Capitalization _____% Growth Portfolio _____% MidCap Growth _____% Partners Portfolio _____% Growth VAN ECK _____% Leveraged AllCap _____% Worldwide Hard Assets FIDELITY INVESTMENTS _____% Worldwide Real Estate _____% Growth Portfolio _____% Worldwide Bond Fund _____% Overseas _____% Worldwide Emerging _____% Money Market Markets _____% Index 500 INVESCO _____% Asset Manager _____% Industrial Income AIM _____% High Yield _____% V.I. Government _____% Utilities Securities _____% Total Return _____% V.I. Capital _____% Small Company Growth Appreciation _____% GUARANTEED INTEREST DIVISION - -------------------------------------------------------------------------------- SECTION 4: TELEPHONE PRIVILEGE AUTHORIZATION OR REVOCATION - -------------------------------------------------------------------------------- [ ] TELEPHONE PRIVILEGE AUTHORIZATION: I/We authorize Security Life of Denver to accept telephone instructions from the Owners/ Registered Representative of the policy listed above: [ ] Owners Only [ ] Owner and Registered Representative [ ] REVOCATION OF TELEPHONE PRIVILEGE AUTHORIZATION: I/We revoke all telephone privilege authorization in place on the policy listed above for the following persons: [ ] Owners and Registered Representative [ ] Registered Representative Only By signing this form, I/we agree to hold harmless and indemnify Security Life for any losses arising from such authorization/revocation instructions. We further authorize Security Life to record telephone conversations with any person utilizing telephone privileges on the policy listed in Section 2. I/We understand that Security Life reserves the right to discontinue the telephone privilege at any time. - -------------------------------------------------------------------------------- SECTION 5: AUTOMATIC REBALANCING OPTION - -------------------------------------------------------------------------------- [ ] INITIATE AUTOMATIC REBALANCING (complete below) [ ] CHANGE AUTOMATIC REBALANCING (complete below) AUTOMATIC REBALANCING ALLOCATION NEUBERGER & BERMAN ALGER AMERICAN _____% Limited Maturity Bond _____% Small Capitalization _____% Growth Portfolio _____% MidCap Growth _____% Partners Portfolio _____% Growth VAN ECK _____% Leveraged AllCap _____% Worldwide Hard Assets FIDELITY INVESTMENTS _____% Worldwide Real Estate _____% Growth Portfolio _____% Worldwide Bond Fund _____% Overseas _____% Worldwide Emerging _____% Money Market Markets _____% Index 500 INVESCO _____% Asset Manager _____% Industrial Income AIM _____% High Yield _____% V.I. Government _____% Utilities Securities _____% Total Return _____% V.I. Capital _____% Small Company Growth Appreciation _____% GUARANTEED INTEREST DIVISION FREQUENCY AND DATE OF AUTOMATIC REBALANCING: (If no options are marked, frequency will be quarterly and/or date will be last valuation date of calendar period.) FREQUENCY: [ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually DATE: [ ] Policy Processing Date - Date on which processing will occur based on frequency selected beginning______________________________ (Month/Date) [ ] Last Valuation Date of Calendar Period [ ] Specific Date each Period beginning_______________________ (Specify Date) - -------------------------------------------------------------------------------- SECTION 6: PIN NUMBER CHANGE - -------------------------------------------------------------------------------- [ ] Please issue a new Personal Identification Number (PIN #) for the policy listed above. [ ] Use the following specific number ____________________ I/We understand that only individuals with telephone privilege authority will be notified of the PIN Number change. FOR HOME OFFICE USE ONLY. - -------------------------------------------------------------------------------- SECTION 7: DOLLAR COST AVERAGING OPTION - -------------------------------------------------------------------------------- [ ] INITIATE DOLLAR COST AVERAGING (complete below) [ ] CHANGE DOLLAR COST AVERAGING (complete below) Please transfer $_________ or _________% from: (check one only) [ ] Fidelity Investment Money Market Division [ ] Neuberger & Berman Limited Maturity Bond Division into: the Variable Account Division(s) selected below. DOLLAR COST AVERAGING ALLOCATION NEUBERGER & BERMAN $________or________% Limited Maturity $________or________% Growth $________or________% Partners ALGER AMERICAN $________or________% Small Capitalization $________or________% Midcap Growth $________or________% Growth $________or________% Leveraged AllCap FIDELITY INVESTMENTS $________or________% Asset Manager $________or________% Growth Portfolio $________or________% Overseas $________or________% Money Market $________or________% Index 500 INVESCO $________or________% Industrial Income $________or________% High Yield $________or________% Utilities $________or________% Total Return $________or________% Small Company Growth VAN ECK $________or________% Worldwide Hard Assets $________or________% Worldwide Emerging Markets $________or________% Worldwide Real Estate $________or________% Worldwide Bond AIM $________or________% V.I. Government Securities $________or________% V.I. Capital Appreciation $________or________% GUARANTEED INTEREST DIVISION FREQUENCY AND DATE OF DOLLAR COST AVERAGING: (If no options are marked, frequency will be monthly and/or date will be policy processing date.) FREQUENCY: [ ] Monthly [ ] Quarterly [ ] Semi-annually [ ] Annually DATE: [ ] Policy Processing Date - Date on which processing will occur based on frequency selected beginning_________________________ (Month/Date) [ ] Specific Date each Period beginning__________________ (Specify Date) TERMINATE: [ ] Terminate Dollar Cost Averaging on (date)___________________ [ ] Terminate Dollar Cost Averaging when Division from which money is being transferred reaches $______________________ - -------------------------------------------------------------------------------- SECTION 8: DIVISION TRANSFER REQUEST - -------------------------------------------------------------------------------- [ ] CHANGE PREMIUM PAYMENT ALLOCATION [ ] TRANSFER BETWEEN DIVISIONS TRANSFER FROM DIVISION TRANSFER TO NEUBERGER & BERMAN $_______or_______% Limited Maturity $_______or_______% $_______or_______% Growth $_______or_______% $_______or_______% Government Income $_______or_______% Partners $_______or_______% ALGER AMERICAN $_______or_______% Small Capitalization $_______or_______% $_______or_______% Midcap Growth $_______or_______% $_______or_______% Growth $_______or_______% $_______or_______% Leveraged AllCap $_______or_______% FIDELITY INVESTMENTS $_______or_______% Asset Manager $_______or_______% $_______or_______% Growth Portfolio $_______or_______% $_______or_______% Overseas $_______or_______% $_______or_______% Money Market $_______or_______% $_______or_______% Index 500 $_______or_______% INVESCO $_______or_______% Industrial Income $_______or_______% $_______or_______% High Yield $_______or_______% $_______or_______% Utilities $_______or_______% $_______or_______% Total Return $_______or_______% $_______or_______% Small Company Growth $_______or_______% VAN ECK $_______or_______% Worldwide Balanced $_______or_______% Worldwide Hard Assets $_______or_______% $_______or_______% Worldwide Emerging Markets $_______or_______% $_______or_______% Worldwide Real Estate $_______or_______% $_______or_______% Worldwide Bond $_______or_______% AIM $_______or_______% V.I. Government Securities $_______or_______% $_______or_______% V.I. Capital Appreciation $_______or_______% $_______or_______% GUARANTEED INTEREST $_______or_______% DIVISION - -------------------------------------------------------------------------------- SECTION 9: SIGNATURES - -------------------------------------------------------------------------------- I/We acknowledge that we have read and understand: 1. the terms and conditions listed in the instructions to this form, the Prospectus and the Policy for each of the options or changes requested. 2. I/we can cancel or change any elections requested in Sections 5 and 7 above by sending written notice to the Customer Service Center at least 7 days before the next transfer date. 3. that dollar cost averaging and automatic rebalancing will begin on the date specified only if Security Life has received this signed form at least 7 days before the date specified. Signature of Owner(s): ________________________________________ Date_________________________ ________________________________________ Date_________________________ ________________________________________ Date_________________________ Daytime Phone Number:___________________________________ - - - - - - - - - - - - - - - Detach and Give to Applicant - - - - - - - - - - - [Logo of Security Life appears here] Security Life of Denver Insurance Company P.O. Box 173888 Denver, CO 80217-3885 SUMMARY OF YOUR RIGHTS UNDER THE FAIR CREDIT REPORTING ACT The Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every "Consumer Reporting Agency" (CRA). Most CRAs are credit bureaus that gather and sell information about you--such as if you pay your bills on time or have filed bankruptcy--to creditors, employers, landlords, and other businesses. You can find the complete text of the FCRA, 15 U.S.C. 1681-1681u, at the Federal Trade Commission's website (HTTP://WWW.FTC.GOV). The FCRA gives you specific rights as outlined below. You may have additional rights under state law. You may contact a state or local consumer protection agency or a state attorney general to learn those rights. o YOU MUST BE TOLD IF INFORMATION IN YOUR FILE HAS BEEN USED AGAINST YOU. Anyone who uses information from a CRA to take action against you--such as denying an application for credit, insurance, or employment--must give you the name, address, and phone number of the CRA that provided the report. o YOU CAN FIND OUT WHAT IS IN YOUR FILE. At your request, a CRA must give you the information in your file, and a list of everyone who has requested it recently. There is no charge for the report if a company/person has taken action against you because of information supplied by the CRA, if you request the report within 60 days of receiving the notice of action. You are also entitled to one free report every twelve months upon request if you certify that (1) you are unemployed and plan to seek employment within 60 days, (2) you are on welfare, or (3) your report is inaccurate due to fraud. Otherwise, a CRA may charge you a fee of up to eight dollars. o YOU CAN DISPUTE INACCURATE INFORMATION WITH THE CRA. If you tell a CRA that your file contains inaccurate information, the CRA must reinvestigate the items (usually within 30 days) by presenting to its information source all relevant evidence you submit, unless your dispute is frivolous. The source must review your evidence and report its findings to the CRA. (The source also must advise national CRAs--to which it has provided the data--of any error.) The CRA must give you a written report of the investigation, and a copy of your report if the investigation results in any changes. If the CRAs investigation does not resolve the dispute, you may add a brief statement to your file. The CRA must normally include a summary of your statement in future reports. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change. o INACCURATE INFORMATION MUST BE CORRECTED OR DELETED. A CRA must remove or correct inaccurate or unverified information from its files, usually within 30 days after you dispute it. HOWEVER, THE CRA IS NOT REQUIRED TO REMOVE DATA FROM YOUR FILE THAT IS ACCURATE UNLESS IT IS OUTDATED (AS DESCRIBED BELOW) OR CANNOT BE VERIFIED. If your dispute results in any change to your report, the CRA cannot reinsert into your file a disputed item unless the information source verifies its accuracy and completeness. In addition, the CRA must give you a written notice telling you it has reinstated the item. The notice must include the name, address, and phone number of the information source. o YOU CAN DISPUTE INACCURATE ITEMS WITH THE SOURCE OF THE INFORMATION. If you tell anyone--such as a creditor who reports to a CRA--that you dispute an item, they may not then report the information to a CRA without including a notice of your dispute. In addition, once you've notified the source of the error in writing, it may not continue to report it if it is, in fact, an error. o OUTDATED INFORMATION MAY NOT BE REPORTED. In most cases, a CRA may not report negative information that is more than seven years old; ten years for bankruptcies. o ACCESS TO YOUR FILE IS LIMITED. A CRA may provide information about you only to those who have a need recognized by the FCRA--usually to consider an application you have submitted to a creditor, insurer, employer, landlord, or other business. o YOUR CONSENT IS REQUIRED FOR REPORTS THAT ARE PROVIDED TO EMPLOYERS, OR REPORTS THAT CONTAIN MEDICAL INFORMATION. A CRA may not report to your employer, or prospective employer, about you without your written consent. A CRA may not divulge medical information about you without your consent. o YOU MAY CHOOSE TO EXCLUDE YOUR NAME FROM CRA LISTS FOR UNSOLICITED CREDIT AND INSURANCE OFFERS. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free number for you to call if you want your name and address removed from future lists. If you call, you must be kept off the lists for two years. If you request, complete, and return the CRA form provided for this purpose, you must be taken off the lists indefinitely. o YOU MAY SEEK DAMAGES FROM VIOLATORS. You may sue a CRA or other party in state or federal court for violations of the FCRA. S-5044A-97
THE FCRA GIVES SEVERAL DIFFERENT FEDERAL AGENCIES AUTHORITY TO ENFORCE ITS PROVISIONS: - -------------------------------------------------------------------------------- For Questions or Concerns Regarding: Please Contact: - -------------------------------------------------------------------------------- CRAs, creditors, and others not listed below Federal Trade Commission Consumer Response Center - FCRA Washington, DC 20580 Phone: 202-326-3761 - -------------------------------------------------------------------------------- National banks, federal branches/agencies of Office of the Comptroller of the Currency foreign banks (word "National" or initials "N.A." Compliance Management, Mail Stop 6-8 appear in or after bank's name) Washington, DC 20219 Phone: 800-613-7643 - -------------------------------------------------------------------------------- Federal Reserve System member banks Federal Reserve Board (except national banks, and federal Division of Consumer & Community Affairs branches/agencies of foreign banks) Washington, DC 20551 Phone: 202-452-3693 - -------------------------------------------------------------------------------- Savings associations and federally chartered Office of Thrift Supervision savings banks (word "Federal" or initials "F.S.B." Consumer Programs appear in federal institution's name) Washington, DC 20552 Phone: 800-842-6929 - -------------------------------------------------------------------------------- Federal credit unions (words "Federal Credit National Credit Union Administration Union" appear in institution's name) 1775 Duke Street Alexandria, VA 22314 Phone: 703-518-6360 - -------------------------------------------------------------------------------- State-chartered banks that are not members Federal Deposit Insurance Corporation of the Federal Reserve System Division of Compliance & Consumer Affairs Washington, DC 20429 Phone: 800-934-FDIC - -------------------------------------------------------------------------------- Air, surface, or rail common carriers regulated Department of Transportation by former Civil Aeronautics Board or Office of Financial Management Interstate Commerce Commission Washington, DC 20590 Phone: 202-366-1306 - -------------------------------------------------------------------------------- Activities subject to the Packers and Stockyards Department of Agriculture Act, 1921 Office of Deputy Administrator - GIPSA Washington, DC 20250 Phone: 202-720-7051 - --------------------------------------------------------------------------------
- - - - - - - - - - - - - - DETACH AND GIVE TO APPLICANT - - - - - - - - - - - - - AGREEMENTS All statements and answers in this application (which includes Part I, Part II, and supplements and amendments) are true and complete to the best of my knowledge and belief. I also agree that: 1. The statements and answers in this application will be relied upon and form the basis of any insurance. 2. No information will be considered as having been given to Security Life unless it is written in this application. (THIS PARAGRAPH DOES NOT APPLY IN THE STATES OF MAINE, MISSOURI, OREGON, SOUTH CAROLINA, AND SOUTH DAKOTA.) 3. No agent or any other unauthorized person can make or change any insurance contract or give up any of Security Life's rights or requirements. Any change must be in writing and signed by an officer of Security Life. 4. Security Life may amend this application by an appropriate notation in the space designated "Home Office Corrections" in order to correct errors or omissions or to conform the application with any policy that may be issued. The acceptance of the policy constitutes a ratification of such amendments. In those states, including Maryland, where change in amount, classification, plan, premium, or benefit requires the written consent of the applicant, no change may be ratified except by a written acceptance. We reserve the right to make any changes required by law. 5. INSURANCE UNDER POLICY APPLIED FOR - EXCEPT AS MAY BE PROVIDED IN ANY BINDING LIMITED LIFE INSURANCE COVERAGE, NO POLICY OF INSURANCE WILL BE IN FORCE UNTIL (1) THE FIRST POLICY PREMIUM IS PAID AND (2) THE POLICY IS DELIVERED WHILE THE FACTS AND HEALTH CONDITION OF THE PROPOSED INSURED(S) ARE AS REPRESENTED IN THIS APPLICATION. WHEN THESE CONDITIONS ARE SATISFIED, THE POLICY AS DELIVERED WILL THEN TAKE EFFECT. 6. Binding Limited Life Insurance Coverage - Any pre-delivery insurance coverage is provided in the Binding Limited Life Insurance Coverage form. That coverage is available only if: a premium is accepted by the agent; the agent has authority to accept premium as set out in that form; and the form is completed and signed by the agent, applicant, and proposed insured. 7. If the contract applied for is for a pension, profit-sharing, HR10, or other tax qualified plan, any policy issued shall not be transferable other than to the Insurer, except as directed by the Plan Administrator. Other applicable provisions may be added to the contract. 8. I certify, under penalty of perjury, that my social security/tax identification number(s) is shown and is correct and that I am not subject to back up withholding. NOTICE OF INFORMATION PROCEDURES OUR UNDERWRITING PROCESS This process is an evaluation of information about you. It is to see if you qualify for the insurance requested. The information we review may vary with the insurance applied for. We look at information about you such as: your age; occupation; health; mode of living; avocation; and other personal information. Answers on the application are the principal source of information. We may contact other people or institutions personally, by phone, or by letter. The purpose is to confirm or add to information you have provided. For example, we may obtain information from your doctor, clinic, hospital, or other insurers. In some cases, your Security Life agent may obtain information on our behalf. A medical examination or laboratory tests may be requested. NOTICE Any person who knowingly and with intent to injure, defraud, or deceive any insurance company, files an application, statement or claim containing any false, incomplete, or misleading information may be guilty of insurance fraud. MIB, INC. Medical Information Bureau, Inc. ("MIB, Inc.") may provide Security Life with a brief report about you. This is a nonprofit organization of life insurance companies which has an information exchange for its members. Information that is sent to MIB, Inc. by one member may be given to their member companies who have a business need for it. Upon your written request, MIB, Inc. will arrange for disclosure of any information it may have in your file. If you question the accuracy of MIB's information, you may request a correction according to the procedures in the Federal Fair Credit Reporting Act. MIB's address is: P.O. Box 105, Essex Station, Boston, Massachusetts 02112, telephone 617/426-3660. CONSUMER REPORTS In some cases, a Security Life representative may prepare a consumer report or investigative consumer report about you or, Security Life may ask an independent agency to prepare a consumer report or an investigative consumer report about you. These reports may include information on your character; general reputation; personal characteristics such as health, finances, and job, and mode of living except as may be related directly or indirectly to your sexual orientation. Any information obtained by the agency may be kept in its file and later given to others who have a business need for it If an investigative consumer report is ordered by Security Life, the report will include information obtained through interviews with your neighbors, friends, or others you know. You may request a personal interview. The agency will make a reasonable attempt to talk to you. It will include that information in its report. The Federal Fair Credit Reporting Act gives you the right to make a written request within a reasonable period of time, to receive additional information from Security Life about the nature and scope of an investigation, if one is made. We will provide the name, address, and phone number of any agency we ask to prepare such a report. You may contact the agency directly to learn about the contents of the report. DISCLOSURE OF INFORMATION Information we obtain about you is confidential. As permitted by law, we may disclose information without further authorization to others such as: consumer reporting agencies hired to prepare investigative reports; insurance companies to which you have applied for coverage or benefits; those providing services for us; those conducting bona fide actuarial, marketing, or scientific studies or audits; and your attending doctor. Upon written request, we will give you more information about these procedures. YOUR RIGHT TO REVIEW INFORMATION These are procedures by which you can make a written request to review personal information in our policy file. However, Security Life will not disclose information to you that was prepared for any anticipated claim or any civil or criminal proceeding. We also have procedures by which you may request correction, amendment, or deletion of any information in our files which you believe to be inaccurate or irrelevant. Upon written request, we will provide you with further information about these procedures. We hope this notice helps explain our underwriting process. If you have any additional questions, discuss them with your agent or contact us directly. Security Life of Denver Insurance Company P.O. Box 173888 Denver, CO 80217-3885 1-800-848-6362 [Logo of Security Life appears here] P.O. Box 173888 Denver, CO 80217-3885 SECURITY LIFE OF DENVER INSURANCE COMPANY IMPORTANT INFORMATION INSTRUCTIONS FOR SUBMITTING APPLICATIONS FOR LAST SURVIVOR VARIABLE LIFE INSURANCE o Two individual variable life applications are required - one for each insured. They must be submitted at the same time. If not received at the same time, we will delay underwriting and processing until the second application is received. o Each application should reference the other application. Sample wording could be, "This application is taken in conjunction with John Doe, SSN #123-45-6789." o Each proposed insured must sign his/her respective application and the owner must sign BOTH applications. o If a trust is the owner and/or beneficiary, be sure to name the trustee and give the date of the trust. o The first insured's application must be completed in full. On the SECOND INSURED'S APPLICATION, you only need to complete the following sections: o Part I o Sections A, B and C o Section L o Setion M, if applicable o Part II o Sections A, B and C o Signatures o Available riders are Adjustable Term Insurance and Single Life Term Insurance SINGLE LIFE TERM INSURANCE RIDER. IN SECTION E, ITEM H "ADDITIONAL RIDERS", indicate whether Single Life Term Insurance is requested. Check the box titled "Other" and write in language similar to the following: "Single Life Term Insurance Rider on John Doe in the amount of $300,000." DESIGNATED WITHDRAWAL INVESTMENT DIVISION. You can designate a specific investment division from which your monthly charges will be deducted. This feature will be available no later than November 1, 1999. Please indicate the name of the division in "Special Instructions." THE INFORMATION BELOW AND SIGNATURES MUST BE PROVIDED WHEN EITHER THE ENHANCED DEATH BENEFIT CORRIDOR OPTION OR THE GUARANTEED MINIMUM DEATH BENEFIT ARE ELECTED. YOU MAY WRITE THIS INFORMATION IN "SPECIAL INSTRUCTIONS" ON THE APPLICATION IF YOU PREFER. PROPOSED INSUREDS' NAMES ________________________________________________ I. ENHANCED DEATH BENEFIT CORRIDOR OPTION. THIS OPTION IS AVAILABLE ONLY AT ISSUE. IF YOU DO NOT INDICATE THAT YOU WANT THE ENHANCED DEATH BENEFIT CORRIDOR OPTION, WE WILL ISSUE THE POLICY WITH THE REGULAR FACTORS. [ ] ENHANCED DEATH BENEFIT CORRIDOR OPTION. II. GUARANTEED MINIMUM DEATH BENEFIT (GMDB) OPTION. THIS OPTION IS AVAILABLE ONLY AT ISSUE. IF GMDB IS NOT INDICATED THE POLICY WILL BE ISSUED WITHOUT THIS BENEFIT. THIS OPTION IS AVAILABLE ONLY AT ISSUE. IF ELECTED, GMDB WILL CONTINUE UNTIL THE YOUNGER INSURED'S AGE 100. THERE IS A MONTHLY CHARGE FOR THIS OPTION. [ ] GMDB TO YOUNGER INSURED'S AGE 100. Signature of Owner ______________________________________________________________Date:___________ [Logo of Security Life appears here] Security Life of Denver Insurance Company 1290 Broadway Denver, CO 80203-5699 BINDING LIMITED LIFE INSURANCE COVERAGE FORM For premium(s) received in connection with the Application(s) listed below, Security Life provides a limited amount of life insurance coverage for a short time while it decides whether to issue and deliver the policy or certificate applied for (the "policy"). This coverage is subject to the terms and conditions set out below. (For second to die coverage, use two Application # ____________ Proposed Insured ________________________________________ applications and show both application Application # ____________ Proposed Insured ________________________________________ numbers and name both insureds.)
I. REPRESENTATIONS -- Applicable to each Proposed Insured named above 1. Has the Proposed Insured(s): Yes No a. had unintentional weight loss, or any symptoms of a disease or an impairment for which the Proposed Insured(s) has not consulted a physician? [ ] [ ] b. ever had, or now have, any type of heart disease, stroke, or other vascular disease? [ ] [ ] c. ever had, or now have, any type of cancer, leukemia, malignant tumor, or disorder of the immune system? [ ] [ ] d. attained age 70? [ ] [ ] 2. For each Proposed Insured, is the initial amount of life insurance applied for on all applications pending with Security Life plus the current amount of all existing life insurance with Security Life and Midwestern United Life Insurance Company more than $3,000,000? [ ] [ ] 3. For each Proposed Insured, does existing life insurance with all insurers plus amount applied for in pending application(s) with all insurers exceed $10,000,000? [ ] [ ] (For #2 and #3 amount of insurance calculations, include all policies, term riders, and accidental death coverage and second to die coverage for each Proposed Insured.)
If any of the above questions are answered YES or LEFT BLANK, the agent is not authorized to accept a premium, and there will be NO COVERAGE. Premium is either cash, check or authorized withdrawal. Make all checks payable to Security Life, not the agent. II. TERMS AND CONDITIONS AMOUNT OF COVERAGE If the Proposed Insured(s) dies while this coverage is in effect, Security Life will pay to the beneficiary named in the Application the lesser of: (a) the amount of death benefit, if any, which would be payable under the policy and any riders if issued as applied for under the Application; or (b) $3,000,000. This coverage is subject to any limits or exclusions which would be part of the issued coverage. If for any reason Security Life is liable for any coverage as a result of any other pending applications or Binding Limited Insurance Coverage on the lives of Proposed Insured(s), Security Life's total liability shall not exceed $3,000,000; and the $3,000,000 will be prorated among the respective coverages. There is no premium waiver coverage, or coverage for the death of any person other than the Proposed Insured(s). No death benefit is payable for a second to die or last survivorship policy unless both Proposed Insureds die while this coverage is in effect. GENERAL Premium(s) will be returned if no policy is delivered and no benefit is paid under this coverage. If a policy is delivered, premium(s) will be applied to the first policy premium. All the above representations are true and complete to the best of my knowledge and belief. I agree that they are to be relied on for this coverage. No agent can waive or modify this coverage in any way. Agreed to on _____________________________________________, 199__ Signature of Proposed Insured(s) ________________________________ _________________________________________________________________ (If below age 15, signature of parent or guardian required) Agent/Witness ___________________________________________________ DATE COVERAGE BEGINS Coverage under this Agreement starts when: Part I of the Application is completed; a premium has been accepted; and this form has been completed and signed. DATE COVERAGE ENDS This coverage will end automatically on the EARLIEST of the date: o Premium(s) are returned. o Five days after a notice of termination is mailed to the owner's address on the application. o Coverage starts under any policy resulting from the Application. o A policy resulting from the Application is refused. o 90 days after the date this form is signed. Security Life may send a notice or return premium terminating this coverage any time before delivery of the policy. NO COVERAGE There is no insurance coverage if: o There is a material misrepresentation in the answers to the questions above or any question or statement in the Application. o A Proposed Insured dies by suicide or intentional self-inflicted injury. o The premium check or authorized withdrawal is not honored. Signed at _______________________________________________________ Applicant-Owner _________________________________________________ (If not signing as Proposed Insured) _________________________________________________________________ If a firm or corporation is owner, print company name and have corporate officer sign. Q-1134 1/98 EX-3.A 7 OPINION & CONSENT EXHIBIT 3.A [logo of Security Life appears here] March 30, 1999 Security Life of Denver Insurance Company Security Life Center 1290 Broadway Denver, Colorado 80203-5699 Dear Sirs: This opinion is furnished in connection with the Form S-6 Registration Statement being filed by Security Life of Denver Insurance Company ("Security Life") under the Securities Act of 1933, as amended (the "Act"), for the offering of interests ("Interests") in Security Life Separate Account L1 ("Separate Account L1") under the Flexible Premium Variable Life Insurance Policies ("Policies") to be issued by Security Life. The securities being registered under the Act are to be offered in the manner described in the Registration Statement. I have examined or supervised the examination of all such corporate records of Security Life and such other documents and such laws as I consider appropriate as a basis for the opinion hereinafter expressed. On the basis of such examination, it is my opinion that: 1. Security Life is a corporation duly organized and validly existing under the laws of the State of Colorado. 2. Separate Account L1 was duly created as a separate investment account of Security Life pursuant to the laws of the State of Colorado. 3. The assets of Separate Account L1 will be owned by Security Life. Under Colorado law and the provisions of the Policies, the income, gains and losses, whether or not realized, from assets allocated to Separate Account L1 must be credited to or charged against such Account, without regard to the other income, gains or losses of Security Life. 4. The Policies provide that the assets of Separate Account L1 may not be charged with liabilities arising out of any other business Security Life may conduct, except to the extent that assets of Separate Account L1 exceed its liabilities arising under the Policies. March 30, 1998 Page 2 5. The Policies and the Interests in Separate Account L1 to be issued under the Policies have been duly authorized by Security Life; and the Policies, including the Interests therein, when issued and delivered, will constitute validly issued and binding obligations of Security Life in accordance with their terms. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus contained in the Registration Statement. Very truly yours, /s/ Gary W. Waggoner Gary W. Waggoner Vice President, General Counsel and Corporate Secretary -----END PRIVACY-ENHANCED MESSAGE-----