See All of This Company's Exhibits
-----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,
KLHFZazIwTGKyiPamxeK+YJg+p/3JzNrVOdFf69Cw4XCFugaFhWqN68LwAjXFpHp
qGjdfMJDYxGf0s0RDouIKg==
0000897101-98-000448.txt : 19980421
0000897101-98-000448.hdr.sgml : 19980421
ACCESSION NUMBER: 0000897101-98-000448
CONFORMED SUBMISSION TYPE: 485BPOS
PUBLIC DOCUMENT COUNT: 21
FILED AS OF DATE: 19980420
EFFECTIVENESS DATE: 19980420
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SEPARATE ACCOUNT ONE OF NORTHERN LIFE INSURANCE CO
CENTRAL INDEX KEY: 0000942323
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
IRS NUMBER: 411295933
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 485BPOS
SEC ACT:
SEC FILE NUMBER: 033-90474
FILM NUMBER: 98597336
FILING VALUES:
FORM TYPE: 485BPOS
SEC ACT:
SEC FILE NUMBER: 811-09002
FILM NUMBER: 98597337
BUSINESS ADDRESS:
STREET 1: 1110 THIRD AVE
STREET 2: NORTHERN LIFE INSURANCE CO
CITY: SEATTLE
STATE: WA
ZIP: 98101
BUSINESS PHONE: 2062921111
MAIL ADDRESS:
STREET 1: PO BOX 12530
CITY: SEATTLE
STATE: WA
ZIP: 98111
485BPOS
1
FILE NO. 33-90474
811-9002
As Filed with the Securities and Exchange Commission
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 5 [X]
and /or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 6 [X]
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
NORTHERN LIFE INSURANCE COMPANY
(Name of Depositor)
1110 Third Avenue, Seattle, Washington 98101
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (206) 292-1111
James E. Nelson
Northern Life Insurance Company
1110 Third Avenue
Seattle, Washington 98101
(Name and Address of Agent for Service)
Approximate date of proposed Public Offering:
As soon as practicable after the Registration Statement becomes effective.
It is proposed that this filing will become effective
(check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date), pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
[ ] This Post-Effective Amendment designates a new effective date of a
previously filed Post-Effective Amendment.
Title of Securities Being Registered: Variable Annuity Contracts Issued by a
Registered Separate Account
SEPARATE ACCOUNT ONE
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
FORM N-4
ITEM NUMBER PART A HEADING IN PROSPECTUS
----------- ----------------------------
1 Cover Page
2 Definitions
3 Summary
4 Condensed Financial Information
5 The Company; The Variable Account; Investments
of the Variable Account
6 Charges Made by the Company
7 The Contracts
8 Annuity Provisions
9 The Contracts
10 The Contracts
11 The Contracts
12 Federal Tax Status
13 Legal Proceedings
14 Statement of Additional Information Table of
Contents
PART B HEADING IN STATEMENT OF ADDITIONAL INFORMATION
------------------------------------------------------
15 Cover Page
16 Table of Contents
17 Introduction
18 Not Applicable
19 Distribution of the Contracts
20 Distribution of the Contracts
21 Calculation of Yields and Total Returns
22 Annuity Provisions (In Prospectus)
23 Financial Statements
PART C HEADINGS
---------------
24 Financial Statements and Exhibits
25 Directors and Officers of the Depositor
26 Persons Controlled by or Under Common Control
with the Depositor or Registrant
27 Number of Contract Owners
28 Indemnification
29 Principal Underwriter
30 Location of Accounts and Records
31 Not Applicable
32 Undertakings
i
VARIABLE ANNUITY
PROSPECTUS
THE NORTHERN LIFE
ADVANTAGE
[PROSPECTUS COVER PHOTO/GRAPHIC]
MAY 1, 1998
NORTHERN LIFE
A RELIASTAR COMPANY
SEPARATE ACCOUNT ONE
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
NORTHERN LIFE INSURANCE COMPANY
1110 THIRD AVENUE, SEATTLE, WASHINGTON 98101
TELEPHONE: (206) 292-1111
The Individual Deferred Variable/Fixed Annuity Contracts described in this
Prospectus ("Contracts") are offered by Northern Life Insurance Company (the
"Company") for use in connection with retirement plans qualifying for special
tax treatment under Sections 401(a), 403(b), 408, 408A and 457 of the Internal
Revenue Code of 1986, as amended (the "Code"). In addition, one of the Contracts
described in this Prospectus is offered on a non-qualified basis.
This Prospectus offers two series of flexible premium annuity Contracts
(the "Flex Series" and the "Transfer Series") which differ in the amount of
Purchase Payments required, when Purchase Payments can be made and certain
charges imposed under the Contracts. The Transfer Series is not available in
Massachusetts.
The Contracts provide for accumulation of Contract Value and payment of
annuity benefits on a variable or fixed basis, or a combination variable and
fixed basis. Annuity Payouts under the Contracts are deferred until a selected
later date.
Purchase Payments may be allocated to one or more of the available
Sub-Accounts of Separate Account One (the "Variable Account"), a separate
account of the Company and/or to one or both Fixed Account options, Fixed
Account A and Fixed Account B, which are part of the general account of the
Company. Information about Fixed Account A and Fixed Account B is contained in
Appendix A, on page A-1.
Additional information about the Contracts, the Company and the Variable
Account is contained in a Statement of Additional Information dated May 1, 1998,
which has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by writing to Northern Life Insurance
Company, P.O. Box 12530, Seattle, Washington 98111, by calling (800) 426-7050
(ext. 2505), or by accessing the SEC's internet web site (http://www.sec.gov).
The Statement of Additional Information is incorporated by reference in this
Prospectus. The Table of Contents for the Statement of Additional Information
may be found on page 41 of this Prospectus.
(Continued on next page)
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE CONTRACTS
THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING AND SHOULD BE
RETAINED FOR FUTURE REFERENCE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ACCOMPANYING
FUND PROSPECTUSES AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUNDS AND INTERESTS IN THE CONTRACTS AND FIXED ACCOUNTS ARE
NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY DEPOSITORY
INSTITUTION, AND THE SHARES AND INTERESTS ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY. ANY INVESTMENT IN
THE CONTRACT INVOLVES CERTAIN RISK WHICH MAY INCLUDE THE POSSIBLE LOSS OF
PRINCIPAL.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
15500 4-98
Purchase Payments allocated to one or more of the available Sub-Accounts of
the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds (the
"Funds"). The Funds are currently four portfolios of The Alger American Fund,
four portfolios of the Fidelity Variable Insurance Products Fund, four
portfolios of the Fidelity Variable Insurance Products Fund II, four portfolios
of Janus Aspen Series, two portfolios of Neuberger&Berman Advisers Management
Trust, five portfolios of the Northstar Variable Trust, and four portfolios of
the OCC Accumulation Trust. The Variable Account Contract Value and the amount
of Variable Annuity Payouts will vary, depending on the investment performance
of the Funds whose shares are held in the Sub-Accounts selected. This Prospectus
is valid only when accompanied by Prospectuses for the Funds, which are attached
hereto.
TABLE OF CONTENTS
Definitions................................................................ 5
Summary Of Contract Expenses............................................... 8
Summary................................................................... 12
Purpose of Contracts..................................................... 12
Series of Contracts...................................................... 12
Investment Alternatives.................................................. 12
Purchasing a Contract.................................................... 12
Withdrawals.............................................................. 13
Withdrawal Charge........................................................ 13
Other Charges............................................................ 13
Reallocations............................................................ 13
Fixed and Variable Annuity Payouts....................................... 13
Revocation............................................................... 13
Condensed Financial Information........................................... 14
Performance Information................................................... 16
The Company............................................................... 18
The Variable Account...................................................... 18
Investments Of The Variable Account....................................... 18
Investment Advisors of the Funds......................................... 19
Fund Descriptions........................................................ 20
Reinvestment............................................................. 21
Addition, Deletion or Substituion of Fund Shares......................... 21
Charges Made By The Company............................................... 21
Withdrawal Charge (Contingent Deferred Sales Charge)..................... 21
Partial Waiver of Withdrawal Charge...................................... 22
Reduction of Withdrawal Charge........................................... 23
Annual Contract Charge................................................... 23
Mortality Risk Charge.................................................... 23
Expense Risk Charge...................................................... 24
Administrative Charge.................................................... 24
Sufficiency of Charges................................................... 24
Premium and Other Taxes.................................................. 24
Reduction of Charges..................................................... 24
Expenses of the Funds.................................................... 25
Administration............................................................ 25
The Contracts............................................................. 25
Contract Application and Purchase Payments............................... 25
Revocation............................................................... 25
Allocation of Purchase Payments.......................................... 25
Accumulation Unit Value.................................................. 26
Net Investment Factor.................................................... 26
Death Benefit Before the Start Date...................................... 26
Payment of Death Benefit Before the Start Date........................... 27
Death Benefit After Start Date........................................... 27
Withdrawal (Redemption).................................................. 27
Systematic Withdrawals................................................... 28
Loans Available from Certain Qualified Contracts......................... 28
Reallocations............................................................ 29
Written Reallocations................................................... 29
Telephone/Reallocations................................................. 29
Automatic Reallocations................................................. 30
Dollar Cost Averaging Reallocations..................................... 30
Reallocations from the Fixed Accounts................................... 30
Assignments.............................................................. 31
Contract Owner and Beneficiaries......................................... 31
Contract Inquiries....................................................... 31
Annuity Provisions........................................................ 32
Start Date............................................................... 32
Annuity Payout Selection................................................. 32
Forms of Annuity Payouts................................................. 32
Frequency and Amount of Annuity Payouts.................................. 32
Annuity Payouts.......................................................... 33
Sub-Account Annuity Unit Value........................................... 33
Assumed Investment Rate.................................................. 33
Partial Annuitization.................................................... 33
Federal Tax Status........................................................ 34
Introduction............................................................. 34
Tax Status of the Contract............................................... 34
Taxation of Annuities.................................................... 35
Transfers, Assignments or Exchanges of a Contract........................ 36
Withholding.............................................................. 36
Multiple Contracts....................................................... 36
Taxation of Qualified Plans.............................................. 36
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans............. 37
Individual Retirement Annuities.......................................... 37
Tax Sheltered Annuities.................................................. 37
Section 457 Plans........................................................ 38
Possible Charge for the Company's Taxes.................................. 38
Other Tax Consequences................................................... 38
Possible Changes in Taxation............................................. 38
Voting of Fund Shares..................................................... 38
Distribution Of The Contracts............................................. 39
Reports To Contract Owners................................................ 39
Legal Proceedings......................................................... 39
Preparing for the Year 2000............................................... 39
Financial Statements And Experts.......................................... 40
Further Information....................................................... 40
Statement of Additional Information Table of Contents..................... 41
Appendix A............................................................... A-1
INVESTMENT OPTION PROSPECTUSES
The Alger American Fund:
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
Fidelity Variable Insurance Products Fund (VIP):
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Money Market Portfolio
VIP Overseas Portfolio
Fidelity Variable Insurance Products Fund II
(VIP II):
VIP II Asset Manager: Growth Portfolio
VIP II Asset Manager Portfolio
VIP II Contrafund Portfolio
VIP II Index 500 Portfolio
Janus Aspen Series:
Agressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
Neuberger&Berman Advisers Management Trust:
Limited Maturity Bond Portfolio
Partners Portfolio
Northstar Variable Trust:
Growth Portfolio
High Yield Bond Portfolio
Income and Growth Portfolio
International Value Portfolio
Multi-Sector Bond Portfolio
OCC Accumulation Trust:
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
DEFINITIONS
ACCUMULATION UNIT. A unit of measure used to determine the Variable Account
Contract Value.
ALGER. The Alger American Fund.
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Growth Portfolio
Small Capitalization Portfolio
ANNUITANT. The person whose life determines the annuity payouts payable at the
Start Date under a Contract.
ANNUITY PAYOUT DATE. Unless otherwise agreed to by the Company, the first
business day of any calendar month in which a Fixed or Variable Annuity
Payout is made under a Contract.
ANNUITY UNIT. A unit of measure used to determine the amount of a Variable
Annuity Payout after the first Variable Annuity Payout.
BENEFICIARY. The person(s) named by the Contract Owner to receive the Death
Benefit upon the death of the Contract Owner or Annuitant, if applicable,
before the Start Date and to receive the balance of annuity payouts, if any,
under the annuity payout(s) in effect at the Annuitant's death.
CODE. The Internal Revenue Code of 1986, as amended.
COMPANY. Northern Life Insurance Company, a stock life insurance company
incorporated under the laws of the State of Washington.
CONTINGENT BENEFICIARY. The person(s) named to become the Beneficiary if the
Beneficiary dies, if applicable.
CONTRACT ANNIVERSARY. The same day and month as the Issue Date each year.
CONTRACT EARNINGS. For a Transfer Series Contract, the Contract Value on any
Valuation Date, plus the aggregate Purchase Payments withdrawn up to that
date, minus the aggregate Purchase Payments made up to that date.
CONTRACT OWNER. The person who controls all the rights and privileges under a
Contract.
CONTRACT VALUE. The sum of the Variable Account Contract Value, plus the sum of
the Fixed Account A and Fixed Account B Contract Values.
CONTRACT YEAR. Each twelve-month period starting with the Issue Date and each
Contract Anniversary thereafter.
DEATH BENEFIT. The amount payable, if any, upon the death, before the Start Date
of the Contract Owner of a qualified Contract or the Annuitant or Contract
Owner in the case of a non-qualified Contract.
DEATH BENEFIT VALUATION DATE. The Valuation Date next following the date the
Company receives proof of death and an appropriate written request for
payment of the Death Benefit from the Beneficiary.
FIDELITY VIP. Variable Insurance Products Fund.
VIP Equity-Income Portfolio
VIP Growth Portfolio
VIP Money Market Portfolio
VIP Overseas Portfolio
FIDELITY VIP II. Variable Insurance Products Fund II.
VIP II Asset Manager: Growth Portfolio
VIP II Asset Manager Portfolio
VIP II Contrafund 500 Portfolio
VIP II Index 500 Portfolio
FIXED ACCOUNT A. Part of the general account of the Company, which consists of
all assets of the Company, other than those assets allocated to separate
accounts of the Company.
FIXED ACCOUNT A CONTRACT VALUE. An amount equal to the sum of Purchase Payments
allocated to Fixed Account A, increased by reallocations made to Fixed
Account A (including amounts reallocated to the Loan Account) and interest
credited to Fixed Account A, less reallocations out of Fixed Account A,
withdrawals from Fixed Account A (including amounts applied to purchase
annuity payouts, withdrawal charges and applicable premium taxes) and
deductions for the Annual Contract Charge.
FIXED ACCOUNT B. Part of the general account of the Company, which consists of
all assets of the Company, other than those assets allocated to separate
accounts of the Company.
FIXED ACCOUNT B CONTRACT VALUE. An amount equal to the sum of Purchase Payments
allocated to Fixed Account B, increased by reallocations made to Fixed
Account B and interest credited to Fixed Account B, less reallocations out of
Fixed Account B, withdrawals from Fixed Account B (including amounts applied
to purchase annuity payouts, withdrawal charges and applicable premium taxes)
and deductions for the Annual Contract Charge.
FIXED ANNUITY PAYOUT. A series of periodic payments to the Payee which do not
vary in amount, are guaranteed as to principal and interest, and are paid
from the general account of the Company.
FUND. Any open-end management investment company (or portfolio thereof) or unit
investment trust (or series thereof) in which a Sub-Account invests as
described herein.
ISSUE DATE. The date on which the Contract is issued as shown on the Contract
data page.
JANUS ASPEN SERIES.
Agressive Growth Portfolio
Growth Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
LOAN ACCOUNT. The portion, if any, of Contract Value segregated within Fixed
Account A which is designated as security for a loan under the Contract.
NEUBERGER&BERMAN AMT: Advisers Management Trust.
Limited Maturity Bond Portfolio
Partners Portfolio
NORTHSTAR VARIABLE TRUST.
Growth Portfolio
High Yield Bond Portfolio
Income and Growth Portfolio
International Value Portfolio
Multi-Sector Bond Portfolio
OCC ACCUMULATION TRUST.
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Cap Portfolio
OUTSTANDING LOAN BALANCE. The aggregate value, if any, of all existing loans,
plus any accumulated loan interest, less any loan repayments.
PAYEE. The person to whom the Company will make Annuity Payouts.
PURCHASE PAYMENT. A payment made to the Company under a Contract which, if
permitted under a Contract includes periodic, single lump sum, rollover and
transfer payments.
QUALIFIED PLAN. A retirement plan under Sections 401(a), 403(b), 408, 408A or
457 of the Code.
SEC. The Securities and Exchange Commission.
SPECIFIED CONTRACT ANNIVERSARY. Each sixth Contract Anniversary.
START DATE. The date on which all of the Contract Value is used to purchase a
Fixed and/or Variable Annuity Payout.
SUB-ACCOUNT. A subdivision of the Variable Account available under a Contract
which invests in shares of a specific Fund.
SUB-ACCOUNT CONTRACT VALUE. For any Sub-Account, an amount equal to the number
of accumulation units of that Sub-Account under a Contract when the
Sub-Account Contract Value is computed, multiplied by the accumulation unit
value for that Sub-Account.
WITHDRAWAL VALUE. The Contract Value less any applicable Withdrawal Charge, any
Outstanding Loan Balance and in the case of a full withdrawal, less the
Annual Contract Charge.
VALUATION DATE. Each day on which the New York Stock Exchange is open for
business except for a day that a Sub-Account's corresponding Fund does not
value its shares. The New York Stock Exchange is currently closed on weekends
and on the following holidays: Martin Luther King Holiday; New Year's Day;
President's Day; Good Friday; Memorial Day; July Fourth; Labor Day;
Thanksgiving Day; and Christmas Day.
VALUATION PERIOD. The period of time between a Valuation Date and the next
Valuation Date.
VARIABLE ACCOUNT. Separate Account One, which is a separate investment account
of the Company.
VARIABLE ACCOUNT CONTRACT VALUE. The sum of all Sub-Account Contract Values
under a Contract.
VARIABLE ANNUITY PAYOUT. A series of periodic payments to the Payee which will
vary in amount based on the investment performance of the Sub-Accounts
selected under a Contract.
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases ................................. None
Maximum Withdrawal Charge Transfer Series (a) ..................... 6%
Maximum Withdrawal Charge Flex Series (a) ......................... 8%
Reallocation Charge (b) ........................................... None
ANNUAL CONTRACT CHARGE (c) ........................................ $30
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charges ................................ 1.25%
Other Account Fees and Expenses
(See "Administrative Charge" on page 24.)..................... .15%
Total Variable Account Annual Expenses ............................ 1.40%
ANNUAL INVESTMENT FUND EXPENSES AFTER REIMBURSEMENTS (d)*
(as a percentage of Fund average net assets)
MANAGEMENT TOTAL FUND
(ADVISORY) ANNUAL
FEES(d) OTHER EXPENSES EXPENSE
------------ ---------------- -----------
Alger American Growth Portfolio (d) ....................... 0.75% 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (d) ............. 0.85% 0.15% 1.00%
Alger American MidCap Growth Portfolio (d) ................ 0.80% 0.04% 0.84%
Alger American Small Capitalization Portfolio (d) ......... 0.85% 0.04% 0.89%
Fidelity VIP Equity-Income Portfolio (d)(e) ............... 0.50% 0.08% 0.58%
Fidelity VIP Growth Portfolio (d)(e) ...................... 0.60% 0.09% 0.69%
Fidelity VIP Money Market Portfolio (d) ................... 0.21% 0.10% 0.31%
Fidelity VIP Overseas Portfolio (d)(e) .................... 0.75% 0.17% 0.92%
Fidelity VIP II Asset Manager: Growth
Portfolio (d)(e) ......................................... 0.60% 0.17% 0.77%
Fidelity VIP II Asset Manager Portfolio (d)(e) ............ 0.55% 0.10% 0.65%
Fidelity VIP II Contrafund Portfolio (d)(e) ............... 0.60% 0.11% 0.71%
Fidelity VIP II Index 500 Portfolio (d)(f) ................ 0.24% 0.04% 0.28%
Janus Aggressive Growth Portfolio (d)(g) .................. 0.73% 0.03% 0.76%
Janus Growth Portfolio (d)(g) ............................. 0.65% 0.05% 0.70%
Janus International Growth Portfolio (d)(g) ............... 0.67% 0.29% 0.96%
Janus Worldwide Growth Portfolio (d)(g) ................... 0.66% 0.08% 0.74%
Neuberger&Berman AMT Limited Maturity
Bond Portfolio (d)(j) .................................... 0.65% 0.12% 0.77%
Neuberger&Berman AMT Partners Portfolio (d)(j) ............ 0.80% 0.06% 0.86%
Northstar Variable Trust Growth Portfolio (h) ............. 0.75% 0.05% 0.80%
Northstar Variable Trust High Yield Bond
Portfolio (h) ............................................ 0.75% 0.05% 0.80%
Northstar Variable Trust Income and Growth
Portfolio (h) ............................................ 0.75% 0.05% 0.80%
Northstar Variable Trust International Value
Portfolio (h) ............................................ 0.75% 0.05% 0.80%
Northstar Variable Trust Multi-Sector Bond
Portfolio (h) ............................................ 0.75% 0.05% 0.80%
OCC Equity Portfolio (d)(i) ............................... 0.80% 0.19% 0.99%
OCC Global Equity Portfolio (d)(i) ........................ 0.79% 0.40% 1.19%
OCC Managed Portfolio (d)(i) .............................. 0.80% 0.07% 0.87%
OCC Small Cap Portfolio (d)(i) ............................ 0.80% 0.17% 0.97%
- ------------------
* The Fees and Expense information regarding the Funds was provided by the
Funds. Except for the Northstar Variable Trust, neither the Funds nor their
advisers are affiliated with the Company.
EXAMPLES
If a full withdrawal of the Contract Value is made at the end of the
applicable time period, the following expenses on a $1,000 investment, assuming
a 5% annual return on assets, would be paid:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------- -------------------- -------------------- -------------------
TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
---------- -------- ---------- -------- ---------- -------- ---------- -------
Alger American Growth Portfolio .......... $79 $ 99 $121 $144 $149 $182 $279 $279
Alger American Leveraged
AllCap Portfolio ........................ 81 101 128 150 159 192 300 300
Alger American MidCap
Growth Portfolio ........................ 79 99 123 146 151 184 284 284
Alger American Small
Capitalization Portfolio ................ 80 100 124 147 154 186 289 289
Fidelity VIP Equity-Income Portfolio ..... 77 100 115 138 138 172 258 258
Fidelity VIP Growth Portfolio ............ 78 98 118 142 144 177 269 269
Fidelity VIP Money Market Portfolio ...... 74 94 107 131 124 159 230 230
Fidelity VIP Overseas Portfolio .......... 80 100 125 148 155 188 292 292
Fidelity VIP II Asset Manager:
Growth Portfolio ........................ 79 98 121 144 148 181 277 277
Fidelity VIP II Asset Manager
Portfolio ............................... 77 97 117 140 142 175 265 265
Fidelity VIP II Contrafund Portfolio ..... 78 98 119 142 145 178 271 271
Fidelity VIP II Index 500 Portfolio ...... 74 94 106 130 123 157 227 227
Janus Aggresive Growth Portfolio ......... 79 98 121 144 147 180 276 276
Janus Growth Portfolio ................... 78 98 119 142 144 177 270 270
Janus International Growth Portfolio ..... 81 100 127 149 157 190 296 296
Janus Worldwide Growth Portfolio ......... 78 98 120 143 146 179 274 274
Neuberger&Berman AMT
Limited Maturity Bond Portfolio ......... 79 98 121 144 148 181 277 277
Neuberger&Berman AMT
Partners Portfolio ...................... 80 99 124 146 152 185 286 286
Northstar Variable Trust Growth
Portfolio ............................... 79 99 122 145 149 182 280 280
Northstar Variable Trust High Yield
Bond Portfolio .......................... 79 99 122 145 149 182 280 280
Northstar Variable Trust Income and
Growth Portfolio ........................ 79 99 122 145 149 182 280 280
Northstar Variable Trust International
Value Portfolio ......................... 79 99 122 145 149 182 280 280
Northstar Variable Trust Multi-Sector
Bond Portfolio .......................... 79 99 122 145 149 182 280 280
OCC Equity Portfolio ..................... 81 101 127 150 159 191 299 299
OCC Global Equity Portfolio .............. 83 102 133 156 169 201 318 318
OCC Managed Portfolio .................... 80 99 124 147 153 186 287 287
OCC Small Cap Portfolio .................. 81 100 127 149 158 190 297 297
If the Contract is annuitized at the end of the applicable time period or
if it is not surrendered, the following cumulative expenses on an initial $1,000
investment assuming a 5% annual return would be paid:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------- -------------------- -------------------- -------------------
TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX TRANSFER FLEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
---------- -------- ---------- -------- ---------- -------- ---------- -------
Alger American Growth Portfolio .......... $25 $25 $76 $76 $131 $131 $279 $279
Alger American Leveraged AllCap
Portfolio ............................... 27 27 83 83 141 141 300 300
Alger American MidCap
Growth Portfolio ........................ 25 25 78 78 133 133 284 284
Alger American Small
Capitalization Portfolio ................ 26 26 79 79 136 136 289 289
Fidelity VIP Equity-Income Portfolio ..... 23 23 70 70 120 120 258 258
Fidelity VIP Growth Portfolio ............ 24 24 73 73 126 126 269 269
Fidelity VIP Money Market Portfolio ...... 20 20 62 62 106 106 230 230
Fidelity VIP Overseas Portfolio .......... 26 26 80 80 137 137 292 292
Fidelity VIP II Asset Manager:
Growth Portfolio ........................ 25 25 76 76 130 130 277 277
Fidelity VIP II Asset Manager
Portfolio ............................... 23 23 72 72 124 124 265 265
Fidelity VIP II Contrafund Portfolio ..... 24 24 74 74 127 127 271 271
Fidelity VIP II Index 500 Portfolio ...... 20 20 61 61 105 105 227 227
Janus Aggressive Growth Portfolio ........ 25 25 76 76 129 129 276 276
Janus Growth Portfolio ................... 24 24 74 74 126 126 270 270
Janus International Growth Portfolio ..... 27 27 82 82 139 139 296 296
Janus Worldwide Growth Portfolio ......... 24 24 75 75 128 128 274 274
Neuberger&Berman AMT
Limited Maturity Bond Portfolio ......... 25 25 76 76 130 130 277 277
Neuberger&Berman AMT
Partners Portfolio ...................... 26 26 79 79 134 134 286 286
Northstar Variable Trust Growth
Portfolio ............................... 25 25 77 77 131 131 280 280
Northstar Variable Trust High Yield
Bond Portfolio .......................... 25 25 77 77 131 131 280 280
Northstar Variable Trust Income and
Growth Portfolio ........................ $25 $25 $77 $77 $131 $131 $280 $280
Northstar Variable Trust International
Value Portfolio ......................... 25 25 77 77 131 131 280 280
Northstar Variable Trust Multi-Sector
Bond Portfolio .......................... 25 25 77 77 131 131 280 280
OCC Equity Portfolio ..................... 27 27 82 82 141 141 299 299
OCC Global Equity Portfolio .............. 29 29 88 88 151 151 318 318
OCC Managed Portfolio .................... 26 26 79 79 135 135 287 287
OCC Small Cap Portfolio .................. 27 27 82 82 140 140 297 297
- ------------------
(a) The Withdrawal Charge for the Transfer Series Contracts applies to each
Purchase Payment. The Withdrawal Charge is 6% in the Contract Year a
Purchase Payment is received by the Company and the Contract Year
immediately following. It decreases to 0% beginning the sixth year after a
Purchase Payment was received by the Company. For the Flex Series Contracts,
the Withdrawal Charge is based on Contract Years. It decreases from 8% in
the first three Contract Years to 0% after the tenth Contract Year. Under
certain situations amounts may be withdrawn free of any Withdrawal Charge or
the Withdrawal Charge may be reduced or waived. For more information on the
Withdrawal Charge, see "Withdrawal Charge (Contingent Deferred Sales
Charge)" on page 21. The Company reserves the right to charge a partial
withdrawal processing fee not to exceed the lesser of 2% of the partial
withdrawal amount or $25. For more information on the processing fee, see
"Withdrawal Charge (Contingent Deferred Sales Charge)" on page 21.
(b) The Company currently does not assess a charge on reallocations between
Sub-Accounts or to or from the Fixed Accounts, although the Company reserves
the right to assess a charge not to exceed $25 per each reallocation.
(c) The Company currently deducts an Annual Contract Charge of $30 from the
Contract Value, but reserves the right to waive the charge where the
Contract Value exceeds $25,000.
(d) The Company or its affiliates may receive compensation from an affiliate or
affiliates of certain of the Funds based upon an annual percentage of the
average net assets held in that Fund by the Company and by certain of the
Company's insurance company affiliates. These amounts are intended to
compensate the Company or the Company's affiliates for administrative,
recordkeeping, and in some cases, distribution, and other services provided
by the Company and its affiliates to Funds and/or the Funds' affiliates.
Payments of such amounts by an affiliate or affiliates of the Funds do not
increase the fees paid by the Funds or their shareholders. The percentage
paid may vary from one fund company to another.
(e) A portion of the brokerage commissions that certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian whereby credits realized as a result of
uninvested cash balances were used to reduce custodian expenses. Including
these reductions, the total operating expenses presented in the table would
have been .57% for VIP Equity Income Portfolio, .67% for VIP Growth
Portfolio, .90% for VIP Overseas Portfolio, .64% for VIP II Asset Manager
Portfolio, .71% for VIP II Asset Manager: Growth Portfolio, and .68% for VIP
II Contrafund Portfolio.
(f) Fidelity Management & Research Company agreed to reimburse a portion of VIP
II Index 500 Portfolio's expenses during the period. Without this
reimbursement, the funds' management fee, other expenses and total expenses
would have been .27%, .13% and .40% respectively. Expense reimbursements are
voluntary. There is no assurance of ongoing reimbursement.
(g) Management fees for Growth, Aggressive Growth, International Growth, and
Worldwide Growth Portfolios reflect a reduced fee schedule effective July 1,
1997. The management fee for each of these Portfolios reflects the new rate
applied to net assets as of December 31, 1997. Other expenses are based on
gross expenses of the Shares before expense offset arrangements for the
fiscal year ended December 31, 1997. The information for each Portfolio is
net of fee reductions from Janus Capital. Fee reductions for the Growth,
Aggressive Growth, International Growth, and Worldwide Growth Portfolios
reduce the management fee to the level of the corresponding Janus retail
fund. Without such reductions, the Management Fee, Other Expenses and Total
Operating Expenses for the Shares would have been 0.74%, 0.04%, and 0.78%
for Growth Portfolio; 0.74%, 0.04%, and 0.78% for Aggressive Growth
Portfolio; 0.79%, 0.29%, and 1.08% for International Growth Portfolio; and
0.72%, 0.09% and 0.81% for Worldwide Growth Portfolio, respectively. Janus
Capital may modify or terminate the reductions at any time upon at least 90
days' notice to the Trustees.
(h) The investment adviser to the Northstar variable trust has agreed to
reimburse the five Northstar Portfolios for any expenses in excess of 0.80%
of each Portfolio's average daily net assets. In the absence of the
investment adviser's expense reimbursements, the actual expenses that would
have been paid by each Portfolio during its fiscal year ended December 31,
1997 would have been: Income and Growth Portfolio -- 1.11%; Growth Portfolio
-- 1.09%; Multi-Sector Bond Portfolio -- 1.36%; High Yield Bond Portfolio --
1.35%; and International Value Portfolio -- 2.61%. Expense reimbursements
are voluntary. There is no assurance of ongoing reimbursement.
(i) The annual expenses of the OCC Accumulation Trust (the "Portfolios") reflect
effective management fees after taking into effect any waiver. Other
Expenses are shown gross of expense offsets afforded the Portfolios which
effectively lowered overall custody expenses. Total Portfolio Expenses for
the Equity, Small Cap and Managed Portfolios are limited by OpCap Advisors
so that their respective annualized operating expenses (net of any expense
offsets) do not exceed 1.00% of average daily net assets. Total Portfolio
Expenses for the Global Equity Portfolio are limited to 1.25% of average
daily net assets. Without such limitation and without giving effect to any
expense offsets, the Management Fees, Other Expenses and Total Portfolio
Expenses incurred for the fiscal year ended December 31, 1997 would have
been: .80%, .19% and .99%, respectively, for the Equity Portfolio, .80%,
.17% and .97%, respectively, for the Small Cap Portfolio, .80%, .07% and
.87%, respectively, for the Managed Portfolio and .80%, .40% and 1.20%,
respectively, for the Global Equity Portfolio.
(j) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust. The figures
reported under "Investment Management and Administration Fees" include the
aggregate of the administration fees paid by the Portfolio and the
management fees paid by its corresponding Series. Similarly, "Other
Expenses" includes all other expenses of the Portfolio and its corresponding
Series.
THE EXAMPLES SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED
REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN. THE 5% ANNUAL RETURN ASSUMED IS HYPOTHETICAL AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED RATE.
The purpose of this table is to assist a Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear either directly
or indirectly. The table reflects the anticipated expenses of the Variable
Account as well as the actual expenses of the Funds. The $30 Annual Contract
Charge is reflected as an annual percentage charge in this table based on an
anticipated average Contract Value of $10,000.
In addition to the costs and expenses shown in this table, state premium
taxes may also be applicable. For more information on state premium taxes, see
page 24, "Premium and Other Taxes".
SUMMARY
PURPOSE OF CONTRACTS
The Contracts are designed to provide individuals with retirement benefits
through the accumulation of Purchase Payments on a fixed or variable basis, and
by applying such accumulations to provide Fixed, Variable, or combination Fixed
and Variable Annuity Payouts. The purpose of variable accumulation and Variable
Annuity Payouts is to provide returns to Contract Owners which offset or exceed
the effects of inflation. There is, however, no assurance that this purpose will
be achieved.
SERIES OF CONTRACTS
This Prospectus describes two series of individual deferred variable/fixed
annuity Contracts. Transfer Series Contracts include an individual deferred tax
sheltered annuity contract, an individual deferred retirement annuity contract
and an individual deferred annuity contract ("Transfer Series"). The Flex Series
Contracts include a flexible premium individual deferred tax sheltered annuity
contract and a flexible premium individual retirement annuity contract ("Flex
Series"). For Transfer Series Contracts and Flex Series Contracts which are
Qualified Plans, the Company will accept periodic, single sum, rollover and
transfer Purchase Payments as permitted by the Code which are not less than the
specific contract minimum Purchase Payment. For the non-qualified Transfer
Series Contract, the Company will accept periodic and single sum Purchase
Payments, as well as amounts transferred under Section 1035 of the Code, which
are not less than the specified Contract minimum Purchase Payment. The Transfer
Series and Flex Series Contracts differ in terms of the amount of Purchase
Payments required, when Purchase Payments can be made and certain charges. (See
"Contract Application and Purchase Payments" on page 25, and "Charges Made by
the Company" on page 21.)
INVESTMENT ALTERNATIVES
Purchase Payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account and to Fixed Account A and/or Fixed Account
B. Purchase Payments allocated to one or more Sub-Accounts will be invested in
shares of one or more of the Funds at net asset value. The Variable Account
Contract Value and the amount of Variable Annuity Payouts will vary, primarily
based on the investment performance of the Funds whose shares are held in the
Sub-Accounts selected. (See "Investments of the Variable Account" on page 18.)
Amounts in Fixed Account A and Fixed Account B earn various rates of interest,
with the minimum being the guaranteed rate.
PURCHASING A CONTRACT
Individuals who want to purchase a Contract must complete an application
and provide an initial Purchase Payment which will be sent to the Company's Home
Office. The minimum and maximum amount of Purchase Payments vary depending on
the type and series of Contract purchased. (See "Contract Application and
Purchase Payments" on page 25.)
WITHDRAWALS
The Contract Owner may, subject to applicable law, make a total or partial
withdrawal at any time prior to the Start Date by giving a written request to
the Company. (See "Withdrawal (Redemption)" on page 27, and "Taxation of
Annuities" on page 35.) No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
WITHDRAWAL CHARGE
No deduction for a sales charge is made from Purchase Payments. A
Withdrawal Charge (Contingent Deferred Sales Charge) may, however, apply to full
or partial withdrawals, with certain exceptions. The maximum Withdrawal Charge
on a full or partial withdrawal under a Transfer Series Contract is 6% of the
amount withdrawn. The maximum Withdrawal Charge on a full or partial withdrawal
under a Flex Series Contract is 8% of the amount withdrawn. The Company may
decrease or eliminate the Withdrawal Charge applicable to Contracts sold in
certain circumstances if it estimates that its sales expenses will be lower.
(See "Withdrawal Charge (Contingent Deferred Sales Charge)" on page 21.)
OTHER CHARGES
On each Contract Anniversary before the Start Date (and upon full
withdrawal of the Contract Value on a date other than a Contract Anniversary)
the Company will deduct from the Contract Value an Annual Contract Charge of
$30. The Company reserves the right to waive the Annual Contract Charge where
the Contract Value exceeds $25,000. The Annual Contract Charge is to reimburse
the Company for administrative expenses relating to the issue and maintenance of
the Contracts. The Company may decrease or eliminate the Annual Contract Charge
applicable to a particular Contract sold in certain circumstances if it
estimates that its administrative expenses will be lower. (See "Annual Contract
Charge" on page 23.)
The Company also deducts a Mortality Risk Charge, an Expense Risk Charge
and an Administrative Charge, equal to an annual rate of 1.40% of the daily net
assets of the available Sub-Accounts of the Variable Account. (See "Mortality
Risk Charge", "Expense Risk Charge" and "Administrative Charge" on page 23 and
24.) Additionally, in certain states a deduction for premium tax is made. (See
"Premium and Other Taxes" on page 24.)
A daily charge, based on a percentage of average daily net assets, is paid
by each Fund to its investment adviser for investment management. These charges,
and other Fund charges and expenses, are more fully described in the
prospectuses for the Funds and are summarized in the Summary of Contract
Expenses on page 8. All of these charges and expenses are borne indirectly by
Contract Owners.
REALLOCATIONS
The Contract Owner may reallocate Contract Value among the Sub-Accounts,
and from one or more Sub-Accounts to the Fixed Accounts. Reallocations may also
be made from the Fixed Accounts subject to certain limitations. After Annuity
Payouts begin, Annuity Unit Values may be reallocated among the Sub-Accounts,
but no reallocations may be made to or from the Fixed Accounts. The Company
reserves the right to impose a charge of up to $25 for each reallocation and to
limit the amount and number of reallocations that may be made. (See
"Reallocations" on page 29.)
FIXED AND VARIABLE ANNUITY PAYOUTS
At the Contract Owner's option, the Annuitant may receive Fixed Annuity
Payouts, Variable Annuity Payouts or a combination of Fixed and Variable
Annuity Payouts.
REVOCATION
The Contract Owner may return the Contract within ten days after it was
delivered to the Contract Owner. In such cases the Company will refund the
Contract Value. However, if required by applicable law, the Company will refund
all Purchase Payments it has received under the Contract. (See "Revocation" on
page 25.)
CONDENSED FINANCIAL INFORMATION
The following table shows, for each Sub-Account of the Variable Account,
the value of a Sub-Account Accumulation Unit as it is invested in portfolios at
the dates shown, and the total number of Sub-Account Accumulation Units
outstanding at the end of each period:
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31 DECEMBER 31
------------- ------------- ------------
1995 1996 1997
------------- ------------- ------------
THE ALGER AMERICAN FUND:
(From October 20, 1995):
Growth Portfolio
Beginning of period ........................ $ 10.0000 $ 10.0072 $ 11.1841
End of period .............................. $ 10.0072 $ 11.1841 $ 13.8683
Units outstanding at end of period ......... 7,531 162,852 402,925
Leveraged AllCap Portfolio
Beginning of period ........................ $ 10.0000 $ 10.2636 $ 11.3381
End of period .............................. $ 10.2636 $ 11.3381 $ 13.3808
Units outstanding at end of period ......... 3,864 130,393 260,380
MidCap Growth Portfolio
Beginning of period ........................ $ 10.0000 $ 9.8937 $ 10.9156
End of period .............................. $ 9.8937 $ 10.9156 $ 12.3790
Units outstanding at end of period ......... 2,208 227,029 405,580
Small Capitalization Portfolio
Beginning of period ........................ $ 10.0000 $ 9.8255 $ 10.0929
End of period .............................. $ 9.8255 $ 10.0929 $ 11.0863
Units outstanding at end of period ......... 9,498 261,902 527,947
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
(From October 20, 1995):
VIP Equity-Income Portfolio
Beginning of period ........................ $ 10.0000 $ 10.7172 $ 12.0764
End of period .............................. $ 10.7172 $ 12.0764 $ 15.2559
Units outstanding at end of period ......... 3,922 370,036 1,040,329
VIP Growth Portfolio
Beginning of period ........................ $ 10.0000 $ 9.8237 $ 11.1103
End of period .............................. $ 9.8237 $ 11.1103 $ 13.5285
Units outstanding at end of period ......... 5,112 210,258 624,734
VIP Money Market Portfolio
Beginning of period ........................ $ 10.0000 $ 10.0743 $ 10.4712
End of period .............................. $ 10.0743 $ 10.4712 $ 10.8925
Units outstanding at end of period ......... -- 104,844 446,458
VIP Overseas Portfolio
Beginning of period ........................ $ 10.0000 $ 10.3139 $ 11.5134
End of period .............................. $ 10.3139 $ 11.5134 $ 12.6653
Units outstanding at end of period ......... 1,765 106,840 297,560
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
(From October 20, 1995):
VIP II Asset Manager: Growth Portfolio
Beginning of period ........................ $ 10.0000 $ 10.3997 $ 12.2981
End of period .............................. $ 10.3997 $ 12.2981 $ 15.1675
Units outstanding at end of period ......... 6,432 58,201 293,160
VIP II Asset Manager Portfolio
Beginning of period ........................ $ 10.0000 $ 10.4586 $ 11.8181
End of period .............................. $ 10.4586 $ 11.8181 $ 14.0605
Units outstanding at end of period ......... 1,960 64,183 208,315
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31 DECEMBER 31
------------- ------------- ------------
1995 1996 1997
------------- ------------- ------------
VIP II Contrafund Portfolio
Beginning of period ........................ $ 10.0000 $ 10.2935 $ 12.3118
End of period .............................. $ 10.2935 $ 12.3118 $ 15.0718
Units outstanding at end of period ......... 7,417 314,103 1,124,760
VIP II Index 500 Portfolio
Beginning of period ........................ $ 10.0000 $ 10.5862 $ 12.8201
End of period .............................. $ 10.5862 $ 12.8201 $ 16.7757
Units outstanding at end of period ......... 702 231,904 1,310,992
JANUS ASPEN SERIES:
(All Sub-Accounts From August 8, 1997)
Aggressive Growth Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.8992
Units outstanding at end of period ......... N/A N/A 17,506
Growth Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.1306
Units outstanding at end of period ......... N/A N/A 82,286
International Growth Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A 9.5719
Units outstanding at end of period ......... N/A N/A 81,884
Worldwide Growth Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 9.7817
Units outstanding at end of period ......... N/A N/A 295,875
NEUBERGER&BERMAN AMT:
(All Sub-Accounts From August 8, 1997)
Limited Maturity Bond Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.1973
Units outstanding at end of period ......... N/A N/A 22,029
Partners Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.2686
Units outstanding at end of period ......... N/A N/A 255,773
NORTHSTAR VARIABLE TRUST:
Growth Portfolio
(From October 20, 1995):
Beginning of period ........................ $ 10.0000 $ 10.1010 $ 12.2600
End of period .............................. $ 10.1010 $ 12.2600 $ 13.8613
Units outstanding at end of period ......... 1,068 318,138 1,118,716
High Yield Bond Portfolio
(From August 8, 1997)
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.1765
Units outstanding at end of period ......... N/A N/A 105,615
Income and Growth Portfolio
(From October 20, 1995):
Beginning of period ........................ $ 10.0000 $ 10.3844 $ 11.6518
End of period .............................. $ 10.3844 $ 11.6518 $ 13.2844
Units outstanding at end of period ......... 2,292 62,237 270,968
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31 DECEMBER 31
------------- ------------- ------------
1995 1996 1997
------------- ------------- ------------
International Value Portfolio
(From August 8, 1997):
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.0733
Units outstanding at end of period ......... N/A N/A 57,507
Multi-Sector Bond Portfolio
(From October 20, 1995):
Beginning of period ........................ $ 10.0000 $ 10.2402 $ 11.4373
End of period .............................. $ 10.2402 $ 11.4373 $ 12.0693
Units outstanding at end of period ......... 1,937 52,791 238,691
OCC ACCUMULATION TRUST
(All Sub-Accounts From August 8, 1997)
Equity Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.6409
Units outstanding at end of period ......... N/A N/A 45,654
Global Equity Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 9.4592
Units outstanding at end of period ......... N/A N/A 18,968
Managed Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.0801
Units outstanding at end of period ......... N/A N/A 274,773
Small Cap Portfolio
Beginning of period ........................ N/A N/A --
End of period .............................. N/A N/A $ 10.1958
Units outstanding at end of period ......... N/A N/A 48,630
The Sub-Accounts investing in The Alger American Fund, Fidelity Variable
Insurance Products Fund, Fidelity Variable Insurance Products Fund II and
Northstar Variable Trust were not available under the Contracts prior to 1995.
The Sub-Accounts investing in the Janus Aspen Series, Neuberger&Berman AMT, the
Northstar Variable Trust High Yield Bond Fund, the Northstar Variable Trust
International Value Fund and OCC Accumulation Trust were not available under the
contracts prior to August 8, 1997.
PERFORMANCE INFORMATION
From time to time, the Company may advertise or include in sales literature
yields, effective yields, and total returns for the available Sub-Accounts.
THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT INDICATE OR PROJECT
FUTURE PERFORMANCE. Each Sub-Account may, from time to time, advertise or
include in sales literature performance relative to certain performance rankings
and indices compiled by independent organizations. More detailed information as
to the calculation of performance information, and comparisons with unmanaged
market indices appears in the Statement of Additional Information.
Yields, effective yields and total returns for the Sub-Accounts are based
on the investment performance of the corresponding portfolios of the Funds. The
performance, in part, reflects the Funds' expenses. See the Prospectuses for the
Funds.
The yield of the Sub-Account investing in the VIP Money Market Portfolio
refers to the annualized income generated by an investment in the Sub-Account
over a specified seven-day period. The yield is calculated by assuming that the
income generated for that seven-day period is generated each seven-day period
over a 52-week period and is shown as a percentage of the investment. The
effective yield is calculated similarly but, when annualized, the income earned
by an investment in the Sub-Account is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account investing
in the VIP Money Market Portfolio) refers to the annualized income generated by
an investment in the Sub-Account over
a specified 30 day or one-month period. The yield is calculated by assuming that
the income generated by the investment during that 30-day or one-month period is
generated each period over a 12-month period and is shown as a percentage of the
investment.
The total return of a Sub-Account refers to return quotations assuming an
investment under a Contract has been held in the Sub-Account for various periods
of time including, but not limited to, a period measured from the date the
Sub-Account commenced operations. Average annual total return refers to total
return quotations that are annualized based on an average return over various
periods of time.
The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of the investment as of the last day of
each of the periods for which total return quotations are provided. Average
annual total return information shows the average percentage change in the value
of an investment in the Sub-Account from the beginning date of the measuring
period to the end of that period. This version of average annual total return
reflects all historical investment results, less all charges and deductions
applied against the Sub-Account (including any Withdrawal Charge that would
apply if a Contract Owner terminated the Contract at the end of each period
indicated, but excluding any deductions for premium taxes).
When a Sub-Account has been in operation for one, five, and ten years,
respectively, the average annual total return for these periods will be
provided. For periods prior to the date the Sub-Account commenced operations,
performance information for Contracts funded by the Sub-Accounts will be
calculated based on the performance of the Funds' Portfolios and the assumption
that the Sub-Accounts were in existence for the same periods as those indicated
for the Funds' Portfolios, with the level of Contract Charges that were in
effect at the inception of the Sub-Accounts for the Contracts.
Average total return information may be presented, computed on the same
basis as described above, except deductions will not include the Withdrawal
Charge. In addition, the Company may from time to time disclose average annual
total return in non-standard formats and cumulative total return for Contracts
funded by the Sub-Accounts.
The Company may, from time to time, also disclose yields and total returns
for the Portfolios of the Funds, including such disclosure for periods prior to
the dates the Sub-Accounts commenced operations.
For additional information regarding the calculation of other performance
data, please refer to the Statement of Additional Information.
In advertising and sales literature, the performance of each Sub-Account
may be compared to the performance of other variable annuity issuers in general
or to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the Sub-Accounts. Lipper Analytical Services, Inc.
("Lipper"), Morningstar, Inc. ("Morningstar") and the Variable Annuity Research
Data Service ("VARDS") are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's and Morningstar's rankings include variable life insurance issuers
as well as variable annuity issuers. VARDS rankings compare only variable
annuity issuers. The performance analyses prepared by Lipper, Morningstar and
VARDS each rank such issuers on the basis of total return, assuming reinvestment
of distributions, but do not take sales charges, redemption fees, or certain
expense deductions at the separate account level into consideration. In
addition, VARDS prepares risk adjusted rankings, which consider the effects of
market risk on total return performance. This type of ranking provides data as
to which funds provide the highest total return within various categories of
funds defined by the degree of risk inherent in their investment objectives.
Advertising and sales literature may also compare the performance of each
Sub-Account to the Standard & Poor's Composite Index of 500 Common Stocks, a
widely used measure of stock performance. This unmanaged index assumes the
reinvestment of dividends but does not reflect any "deduction" for the expense
of operating or managing an investment portfolio. Other independent ranking
services and indices may also be used as a source of performance comparison.
The Company may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs,
or charts. The Company may also illustrate the accumulation of Contract Value
and payment of annuity benefits on a variable or fixed basis, or a combination
variable and fixed basis, based on hypothetical rates of return, and compare
those illustrations to mutual fund hypothetical illustrations, using charts,
tables, and graphs, including software programs utilizing such charts, tables,
and graphs. All income and capital gains derived from Sub-Account investments
are reinvested and can lead to substantial long-term accumulation of assets,
provided that the underlying portfolio's investment experience is positive.
THE COMPANY
The Company, organized in 1906, is a stock life insurance company
incorporated under the laws of the State of Washington. The Company is an
indirect, wholly-owned subsidiary of ReliaStar Financial Corp., a
publicly-traded holding company incorporated under the laws of the State of
Delaware, whose subsidiaries specialize in the life insurance and related
financial services businesses. The Company offers individual and group annuity
contracts. The Company is admitted to do business in the District of Columbia
and all states except New York. Its Home Office is at 1110 Third Avenue,
Seattle, Washington 98101.
THE VARIABLE ACCOUNT
The Variable Account is a separate account of the Company established under
the insurance laws of the State of Washington on March 22, 1994. The Variable
Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended ("1940 Act"). Such registration does
not involve supervision by the SEC of the management or investment policies or
practices of the Variable Account, the Company or the Funds. The Company has
complete ownership and control of the assets in the Variable Account, but these
assets are held separately from the Company's other assets and are not part of
the Company's general account.
The portion of the assets of the Variable Account equal to its reserves and
other Contract liabilities will not be chargeable with liabilities arising out
of any other business of the Company. The income, gains and losses, realized or
unrealized, from assets allocated to the Variable Account will be credited to or
charged against the Variable Account, without regard to the other income, gains,
or losses of the Company.
Purchase Payments allocated to the Variable Account are allocated to one or
more Sub-Accounts selected by the Contract Owner. Each Sub-Account invests in
shares of a specific Fund at net asset value. The future Variable Account
Contract Value will depend, primarily, on the investment performance of the
Funds whose shares are held in the Sub-Accounts.
INVESTMENTS OF THE VARIABLE ACCOUNT
When a Contract is applied for, the Contract Owner may elect to have
Purchase Payments allocated to one or more of the available Sub-Accounts. The
Contract Owner may also, subject to the limits discussed below, change a
Purchase Payment allocation for future Purchase Payments and may reallocate all
or part of any Sub-Account Contract Value to another Sub-Account that invests in
shares of another Fund.
There are currently twenty-seven Sub-Accounts, each of which invests in
shares of one of the Funds. The Company reserves the right, subject to
compliance with applicable law, to offer additional Sub-Accounts, each of which
could invest in a new fund with a specified investment objective. A Contract
Owner is limited to participating in a maximum of sixteen Sub-Accounts over the
lifetime of the Contract. The Contract Owner would not be required to select the
Sub-Accounts in advance, but upon reaching participation in sixteen Sub-Accounts
since issue of the Contract, the Contract Owner would only be able to transfer
within the sixteen Sub-Accounts already selected and which are still available
under the Variable Account.
For example, assume a Contract Owner selects six Sub-Accounts. Later, the
Contract Owner transfers out of all of the six initial selections and chooses
ten different Sub-Accounts, none of which are the same as the original six
selections. The Contract Owner has now used the maximum selection of sixteen
Sub-Accounts. The Contract Owner may still allocate Purchase Payments or
transfer Contract Values among any of the sixteen Sub-Accounts that were
previously selected. However, the Contract Owner may not allocate funds to the
remaining Sub-Accounts at any time. A Contract Owner may transfer partial or
complete Contract Values from the Variable Account to Fixed Accounts A and B at
any time.
The Company has entered into service agreements with the managers or
distributors of certain of the Funds pursuant to which the Company or its
affiliates may receive from affiliates of the Funds compensation for providing
administrative, recordkeeping, and in some cases distribution services to the
Funds or their affiliates. Such compensation is paid based upon assets invested
in the particular Funds, or based upon aggregated net asset goals. Currently,
the Company has service arrangements with Alger, Fidelity, Janus, Neuberger, and
OpCap Advisors.
The Funds currently offered are described below. A brief summary of
investment objectives is contained in the description of each Fund. In addition,
you should read the prospectuses of the Funds for more detailed information and
particularly, a more thorough explanation of investment objectives of the Funds.
THE FUND PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS OR REALLOCATIONS AMONG THE
SUB-ACCOUNTS. There is no assurance that any Fund will achieve its investment
objective(s). There is a possibility that one Fund might become liable for any
misstatement, inaccuracy or incomplete disclosure in another Fund's prospectus.
INVESTMENT ADVISERS OF THE FUNDS
Fred Alger Management, Inc. ("Alger Management") is the investment manager
for the four Alger American Portfolios and is responsible for the overall
administration of The Alger American Fund, subject to the supervision of its
Board of Trustees.
Fidelity Management & Research Company ("FMR") is the investment adviser
for the VIP Funds' four portfolios and for the VIP II Funds' four portfolios.
Janus Capital Corporation ("Janus Capital") is the investment adviser of
the four portfolios of Janus Aspen Series.
Neuberger&Berman Management Inc., with the assistance of Neuberger&Berman,
LLC as sub-adviser, is the investment manager of AMT Partners Portfolio and AMT
Limited Maturity Bond Portfolio.
Northstar Investment Management Corporation, an affiliate of the Company,
is the investment adviser for the five portfolios of the Northstar Variable
Trust Account. The Northstar Variable Trust Growth Portfolio is sub-advised by
Navellier Fund Management, Inc., and the Northstar Variable Trust International
Value Portfolio is sub-advised by Brandes Investment Partners, L.P.
OpCap Advisors is the investment manager for each of the four OCC
Accumulation Trust Portfolios and is a subsidiary of Oppenheimer Capital, a
registered investment adviser.
FUND DESCRIPTIONS
INVESTMENT FUNDS INVESTMENT OBJECTIVE
- ---------------- --------------------
THE ALGER AMERICAN FUND:
Growth Portfolio Long-term capital appreciation
MidCap Growth Portfolio Long-term capital appreciation
Small Capitalization Portfolio Long-term capital appreciation
Leveraged AllCap Portfolio Long-term capital appreciation
FIDELITY VARIABLE INSURANCE PRODUCTS FUND (VIP):
VIP Equity-Income Portfolio Reasonable income; capital appreciation
VIP Growth Portfolio Capital appreciation
VIP Money Market Portfolio Income while maintaining stable $1.00 share
price
VIP Overseas Portfolio Long-term capital growth
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II (VIP II):
VIP II Asset Manager Portfolio High total return with reduced risk over the
long-term
VIP II Asset Manager: Growth Portfolio Maximum long-term total return with less risk
than pure stock investment
VIP II Contrafund Portfolio Capital appreciation
VIP II Index 500 Portfolio Total return that corresponds to that of the
Standard & Poor's 500 Index
JANUS ASPEN SERIES:
Aggressive Growth Portfolio Long-term capital growth
Growth Portfolio Long-term capital growth
International Growth Portfolio Long-term capital growth
Worldwide Growth Portfolio Long-term capital growth
NEUBERGER&BERMAN AMT:
Limited Maturity Bond Portfolio Highest current income consistent with low
risk to principal and liquidity, and
secondarily, total return.
Partners Portfolio Capital growth
NORTHSTAR VARIABLE TRUST:
Growth Portfolio Long-term capital growth
High Yield Bond Portfolio High current yield and capital appreciation
Income and Growth Portfolio Consistent level of income; capital
appreciation
International Value Portfolio Long-term capital appreciation
Multi-Sector Bond Portfolio Current income; capital preservation
OCC ACCUMULATION TRUST:
Equity Portfolio Long-term capital appreciation
Global Equity Portfolio Long-term capital appreciation
Managed Portfolio Capital growth
Small Cap Portfolio Capital appreciation
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED.
The Funds are available to registered separate accounts of insurance companies,
other than the Company, offering variable annuity Contracts and variable life
insurance policies. The Company currently does not foresee any disadvantages to
Contract Owners resulting from the Funds selling shares to fund products other
than the Contracts. However, there is a possibility that a material conflict may
arise between Contract Owners whose Contract Values are allocated to the
Variable Account and the Contract Owners of variable life insurance policies and
variable annuity Contracts issued by the
Company or by such other companies whose assets are allocated to one or more
other separate accounts investing in any one of the Funds. In the event of a
material conflict the Company will take any necessary steps, including removing
the Variable Account's investment in the Fund, to resolve the matter. The Board
of Directors or Trustees of each Fund will monitor events in order to identify
any material conflicts that possibly may arise and determine what action, if
any, should be taken in response to those events or conflicts. See each
individual Fund prospectus for more information.
REINVESTMENT
The Funds described above have as a policy the distribution of income
dividends and capital gains. However, under the Contracts described in this
Prospectus there is an automatic reinvestment of such distributions.
ADDITION, DELETION OR SUBSTITUTION OF FUND SHARES
The Company reserves the following rights:
* The Company may add to, delete from or substitute shares that may be
purchased for or held in the Variable Account. If the shares of a Fund
are no longer available for investment or if in the Company's judgment
further investment in a Fund should become inappropriate in view of
the purposes of the Variable Account, the Company may redeem the
shares, if any, of that portfolio and substitute shares of another
registered open-end management investment company.
* The Company may establish additional Sub-Accounts, each of which would
invest in shares of a new portfolio of a Fund or in shares of another
investment company having a specified investment objective. The
Company may, in its sole discretion, establish new Sub-Accounts or
eliminate one or more Sub-Accounts if marketing, tax considerations or
investment conditions warrant. Any new Sub-Accounts may be made
available to existing Contract Owners on a basis to be determined by
the Company.
* The Company may, if it deems it to be in the best interests of
Contract Owners and Annuitants:
(a) manage the Variable Account as a management investment company
under the 1940 Act;
(b) deregister the Variable Account under the 1940 Act if registration
is no longer required;
(c) combine the Variable Account with other separate account(s) of the
Company; or
(d) reallocate assets of the Variable Account to another Separate
Account.
* Make any changes required by the 1940 Act.
* Restrict or eliminate any voting privileges of Contract Owners or
other persons who have voting privileges as to the Variable Account.
* In the event any of the foregoing changes or substitutions are made,
the Company may endorse the Contracts to reflect the change or
substitution.
The Company's reservation of rights is expressly subject to the following
when required:
* Applicable Federal and state laws and regulations.
* Notice to Contract Owners.
* Approval of the SEC and/or state insurance authorities.
The Company may eliminate certain of the Funds as investment options. It is
anticipated that this will occur in the first half of 1999, subject to and
contingent upon receipt of various approvals. It is expected that any
policyholder monies that are invested in Sub-Accounts investing in the
discontinued Funds will be transferred to alternate Funds with similar
investment objectives. Policyholders who have investments in any of the
discontinued Funds will be permitted for a period of 30 days to transfer their
investment into a non-discontinued Fund without payment of any transfer charge.
CHARGES MADE BY THE COMPANY
WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)
No deduction for a sales charge is made from Purchase Payments. However, if
part or all of the Purchase Payments made under a Transfer Series Contract, or
part or all of Contract Value under a Flex Series Contract, are withdrawn, a
Withdrawal Charge (Contingent Deferred Sales Charge) may be made by the Company.
Withdrawal Charges are deducted from the amount being withdrawn and are
considered a part of the withdrawal.
The Withdrawal Charge is intended to reimburse the Company for expenses
relating to the sale of the Contracts, including commissions to sales personnel,
costs of sales material and other promotional activities and sales
administration costs.
TRANSFER SERIES CONTRACT. For purposes of determining Withdrawal Charges,
withdrawals will be taken first from Purchase Payments on a first-in, first-out
basis, then from Contract Earnings as of the Valuation Date next following the
date of the Company's receipt of the withdrawal request.
The Withdrawal Charge for full or partial withdrawal is determined by
multiplying the amount of each Purchase Payment withdrawn that is not eligible
for a free withdrawal, by the applicable Withdrawal Charge percentage as set
forth in the following table:
WITHDRAWAL CHARGE PERCENTAGE TABLE
-----------------------------------------------------
CONTRACT YEAR OF
WITHDRAWAL MINUS WITHDRAWAL CHARGE AS A
CONTRACT YEAR OF PURCHASE PERCENTAGE OF EACH
PAYMENT PURCHASE PAYMENT
--------------------------- -----------------------
0 6%
1 6
2 5
3 5
4 4
5 2
6 and later 0
FLEX SERIES CONTRACTS. If a Flex Series Contract is withdrawn in full or in
part before the eleventh Contract Year, the Company may deduct a Withdrawal
Charge from the Contract Value. The Withdrawal Charge is determined by
multiplying the Contract Value subject to the charge by the applicable
Withdrawal Charge percentage as set forth in the following table:
CONTRACT YEAR WITHDRAWAL CHARGE
--------------- ------------------
1 8%
2 8
3 8
4 7
5 6
6 5
7 4
8 3
9 2
10 1
11+ 0
PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any 12-month period after the Issue Date, the Contract Owner may
withdraw a portion of the Contract Value without a Withdrawal Charge. The
12-month period begins with the Contract Owner's first withdrawal. For the first
withdrawal, the amount available without a Withdrawal Charge will be determined
on the date of the requested withdrawal and will be the greater of:
1. 10% of the Contract Value less any Outstanding Loan Balance; or
2. For Transfer Series Contracts, the Purchase Payments remaining which are no
longer subject to a Withdrawal Charge, and for Flex Series Contracts, the
Contract Value no longer subject to a Withdrawal Charge.
We call this amount the "Free Surrender Amount".
If the first withdrawal equals the Free Surrender Amount, other withdrawals
during the 12-month period are subject to the Withdrawal Charge. If the first
withdrawal exceeds the Free Surrender Amount, the excess is subject to the
Withdrawal Charge, as are all other Withdrawals requested during the 12-month
period.
If the first withdrawal is less than the Free Surrender Amount, the Company
will keep track of the unused portion of the Free Surrender Amount for the
12-month period. The unused portion of the Free Surrender Amount may be applied
against no more than three (3) additional withdrawals during the 12-month
period.
The unused portion of the Free Surrender Amount available for withdrawal
will be computed by the Company on the date of any withdrawal request made after
the first withdrawal in the 12-month period and will be based upon:
10% x [(Greater of A or B) - C] D
Where:
A= Contract Value on the date of the first withdrawal in the 12-month
period;
B= Contract Value on the date of the withdrawal request;
C= Outstanding Loan Balance on the date of the withdrawal request;
D= Any prior withdrawals made during the same 12-month period.
GENERAL INFORMATION. The Withdrawal Charges described above will be waived
in the event of the death of the Contract Owner or in the case of a
non-qualified Contract, the death of the Annuitant. In addition, for Contracts
qualified under Section 403(b) of the Code only, Withdrawal Charges may be
waived under certain circumstances.
The Company reserves the right to charge a partial withdrawal processing
fee not to exceed the lesser of 2% of the amount withdrawn or $25.
Withdrawals may be subject to a 10% federal penalty tax if made by the
Contract Owner before age 591|M/2. (See "Taxation of Annuities" on page 35.)
Contracts purchased as "tax sheltered annuities", and Contracts purchased
under state optional retirement programs are subject to certain withdrawal
restrictions. (See "Withdrawal (Redemption)" on page 27.)
REDUCTION OF WITHDRAWAL CHARGE
The Company may, at its option, provide a reduction in the Withdrawal
Charge for specific classes of Contract purchasers. Currently, the Company
provides a reduced Withdrawal Charge for purchasers of Tax Sheltered Annuities
issued pursuant to Section 403(b) of the Code to employees of certain school
districts which, in the judgment of the company, have provided cost reduction
benefits to the Company in the distribution of its contracts. For such
purchasers, the Withdrawal Charge on Flex Series contracts is reduced to 5% in
each of the first five Contract Years. The withdrawal charge on the transfer
series contract is reduced to 5% in each of the first two contract years
following receipt of a purchase payment.
ANNUAL CONTRACT CHARGE
On each Contract Anniversary prior to the Start Date, the Company deducts
an Annual Contract Charge of $30 from the Contract Value to reimburse it for
administrative expenses relating to the Contract, the Variable Account and the
Sub-Accounts. The Company will not increase the Annual Contract Charge. The
Company reserves the right to waive the Annual Contract Charge where the
Contract Value exceeds $25,000, however, the Company reserves the right to
reinstate the Charge on Contracts qualifying for the waiver. For all Contract
Values, in any Contract Year when a full withdrawal of Contract Value is made on
other than the Contract Anniversary, the Annual Contract Charge will be deducted
at the time of such withdrawal.
MORTALITY RISK CHARGE
The Variable Annuity Payouts made to Annuitants will vary in accordance
with the investment performance of the Sub-Account selected by the Contract
Owner. However, they will not be affected by the mortality experience (death
rate) of persons receiving Variable Annuity Payouts. The Company assumes this
"mortality risk" and has guaranteed the annuity rates incorporated in the
Contract, which cannot be changed.
To compensate the Company for assuming this mortality risk and the
mortality risk that Beneficiaries of Annuitants dying before the Start Date may
receive amounts in excess of the then current Contract Value, the Company
deducts a Mortality Risk Charge from the Variable Account Contract Value. (See
"Death Benefit Before Start Date" on page 26.) This deduction is made daily in
an amount that is equal to an annual rate of .85% of the daily Contract Values
under the Variable Account. The Company may not increase the rate charged for
the Mortality Risk Charge under any Contract.
EXPENSE RISK CHARGE
The Company will not increase charges for administrative expenses
regardless of its actual expenses. To compensate the Company for assuming this
expense risk, the Company deducts an Expense Risk Charge from the Variable
Account Contract Value. This deduction is made daily in an amount that is equal
to an annual rate of .40% of the daily Variable Account Contract Values. The
Company may not increase the rate of the Expense Risk Charge under any Contract.
ADMINISTRATIVE CHARGE
The Company deducts a daily Administrative Charge from the Variable Account
Contract Value in an amount equal to an annual rate of .15% of the daily
Variable Account Contract Values. This charge is deducted to reimburse the
Company for the cost of providing administrative services under the Contracts
and the Variable Account. The Company may not increase the rate of the
Administrative Charge under any Contract. Although there is not necessarily a
relationship between the amount of the Administrative Charge imposed on a given
Contract and the amount of expenses that may be attributable to that Contract.
SUFFICIENCY OF CHARGES
If the amount of the Withdrawal Charge assessed in connection with the
Contracts is not enough to cover all distribution expenses incurred in
connection therewith, the loss will be borne by the Company. Any excess
distribution expenses borne by the Company will be paid out of its general
account which may include, among other things, proceeds derived from the
Mortality Risk Charge and the Expense Risk Charge deducted from the Variable
Account.
The Company does not currently believe that the Withdrawal Charges imposed
will cover the expected costs of distributing the Contracts.
If the amount derived from the Mortality Risk Charge and the Expense Risk
Charge is not sufficient to cover the actual cost of the mortality and expense
risks assumed by the Company, the Company will bear the shortfall. Conversely,
if the charges prove more than sufficient, the excess will be profit to the
Company and will be available for any proper corporate purpose including, among
other things, payment of distribution expenses.
PREMIUM AND OTHER TAXES
Various states and other governmental entities levy a premium tax,
currently ranging up to 3.50%, on annuity Contracts issued by insurance
companies. If a Contract Owner lives in a jurisdiction that levies such a tax,
the Company will pay the taxes when due and reserves the right to deduct the
amount of the tax either from Purchase Payments as they are received or from the
Contract Value immediately before Contract Value is applied to an Annuity Payout
as permitted or required by applicable law.
The current range of premium tax rates is a guide only and should not be
relied on to determine actual premium taxes on any Purchase Payment or Contract
because the taxes are subject to change from time to time by legislative and
other governmental action. The timing of tax levies also varies from one taxing
authority to another. Consequently, in many cases the Contract Owner will not be
able to accurately determine the premium tax applicable to the Contract by
reference to the range of tax rates described above. The Company reserves the
right to deduct charges for any other tax or economic burden resulting from the
application of the tax laws that it determines to be applicable to the Contract.
REDUCTION OF CHARGES
The Withdrawal and Contract Charges described above (except the Mortality
Risk Charge) may be reduced or eliminated for Contracts issued in circumstances
where the Company estimates that it will incur lower distribution or
administrative expenses or perform fewer sales or administrative services than
those originally contemplated in establishing the level of those charges. Lower
distribution and administrative expenses may be the result of economics
associated with (a) the use of mass enrollment procedures, (b) the performance
of administrative or enrollment functions by an employer, (c) the use by an
employer of automated techniques in submitting Purchase Payments or information
related to Purchase Payments on behalf of its employees, or (d) any other
circumstances which reduce distribution or administrative expenses. The exact
amount of Withdrawal and Contract Charges applicable to a particular Contract
will be stated in that Contract.
EXPENSES OF THE FUNDS
There are investment advisory fees, direct operating expenses and
investment related expenses of the Funds that are reflected in each Fund's daily
share price. These fees and expenses are described in the accompanying
prospectuses for the Funds.
ADMINISTRATION
The Company has primary responsibility for all administration of the
Contracts and the Variable Account. The Company's Administrative Service Center
is located at the Home Office of the Company, P.O. Box 12530, Seattle,
Washington 98111-4530, and its telephone number is 1-800-426-7050.
The administrative services provided include, but are not limited to:
issuance of the Contracts; maintenance of Contract Owner records; Contract Owner
services; calculation of Accumulation Unit Values; and preparation of Contract
Owner reports.
THE CONTRACTS
CONTRACT APPLICATION AND PURCHASE PAYMENTS
Individuals who want to purchase a Contract must complete an application
and provide an initial Purchase Payment which will be sent to the Company's Home
Office. The initial Purchase Payment will be credited within two business days
after receipt at the Company's Home Office if accompanied by a complete
application. The Company may retain Purchase Payments for up to five business
days while attempting to complete an incomplete application. If an incomplete
application cannot be completed within five days of its receipt, the applicant
will be notified of the reasons for the delay and any Purchase Payments received
will be returned immediately unless the applicant specifically consents to have
the Company retain them pending completion of the application.
For Transfer Series Contracts and Flex Series Contracts which are Qualified
Plans, the Company will accept periodic, single sum, rollover and transfer
Purchase Payments as permitted by the Code. For the non-qualified Transfer
Series Contract, the Company will accept periodic and single sum Purchase
Payments, as well as amounts transferred under Section 1035 of the Code. The
minimum initial Purchase Payment the Company will accept under a Transfer Series
Contract is $15,000 and subsequent payments may not be less than $5,000. The
minimum amount of the initial and subsequent Purchase Payments the Company will
accept under a Flex Series Contract is $50.
The Company may choose not to accept any subsequent Purchase Payment under
the Transfer Series Contracts and Flex Series Contracts if the Purchase Payment,
together with the Contract Value at the next Valuation Date, exceeds $1,000,000.
Any Purchase Payment not accepted by the Company will be refunded. The Company
reserves the right to accept smaller or larger initial and subsequent Purchase
Payments in connection with special circumstances, including, but not limited to
sales through group or sponsored arrangements.
REVOCATION
The Contract Owner may revoke a Contract by sending the Contract and
written notice of revocation to the Company, P.O. Box 12530, Seattle, Washington
98111-4530, or to the agent from whom a Contract was purchased, no later than
the 10th day after the Contract Owner's receipt of the Contract. As soon as the
Company receives the Contract, it will be deemed void. The Company will refund
the Contract Value as of the next Valuation Date after receipt of the Contract
and written notice of revocation. If required by applicable law, the Company
will refund all Purchase Payments it has received under the Contract.
The liability of the Variable Account under this provision is limited to
the Contract Value in each Sub-Account on the date of revocation. Any additional
amounts refunded to the Contract Owner will be paid by the Company.
ALLOCATION OF PURCHASE PAYMENTS
The Contract Owner may allocate Purchase Payments among Sub-Accounts,
Fixed Account A and/or Fixed Account B. (See Appendix A.)
Upon allocation to Sub-Accounts of the Variable Account, a Purchase Payment
is converted into Accumulation Units of the Sub-Account, by dividing the amount
of the Purchase Payment allocated to the Sub-Account by the value of an
Accumulation Unit for the Sub-Account.
ACCUMULATION UNIT VALUE
Each Accumulation Unit of a Sub-Account was initially valued at $10 when
the first Fund shares were purchased. Thereafter the value of each Accumulation
Unit will vary up or down according to a Net Investment Factor, described below.
Dividend and capital gain distributions from a Fund will be automatically
reinvested in additional shares of such Fund and allocated to the appropriate
Sub-Account. The number of Accumulation Units does not increase because of the
additional shares, but the Accumulation Unit value may increase.
NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges under
the Contract and the investment performance during a Valuation Period of the
Fund whose shares are held in the particular Sub-Account. If the Net Investment
Factor is greater than one, the Accumulation Unit or Annuity Unit value has
increased. If the Net Investment Factor is less than one, Accumulation Unit or
Annuity Unit value has decreased. The Net Investment Factor for a Sub-Account is
determined by dividing (1) by (2) then subtracting (3) from the result, where:
(1) Is the net result of:
(a) The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the current Valuation Period;
(b) PLUS the per share amount of any dividend or capital gain
distributions made on the Fund shares held in the Sub-Account during
the current Valuation Period;
(c) PLUS a per share credit or minus a per share charge for any taxes
reserved for which the Company determines to have resulted from the
operations of the Sub-Account and to be applicable to a Contract.
(2) Is the net result of:
(a) The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the last prior Valuation Period;
(b) PLUS a per share credit or minus a per share charge for any taxes
reserved for the last prior Valuation Period which the Company
determines to have resulted from the investment operations of the
Sub-Account and to be applicable to the Contract.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense Risk
Charge and the Administrative Charge adjusted for the number of days in the
period, which is equal to, on an annual basis, 1.40% of the daily net asset
value of the Sub-Account.
DEATH BENEFIT BEFORE THE START DATE
Before the Start Date, the Beneficiary will be entitled to receive the
Death Benefit described below. The Death Benefit will be:
(1) If the Contract owner dies before the first day of the month following the
Contract owner's 80th birthday, or in the case of a non-qualified Contract,
the Annuitant dies on or before the first day of the month following the
Annuitant's 80th birthday, then as of the Death Benefit Valuation Date, the
greatest of:
(a) The Contract Value less any Outstanding Loan Balance;
(b) The sum of the Purchase Payments received by the Company under the
Contract, less any withdrawals, amounts used to purchase annuity
payouts, any Outstanding Loan Balance, and the amount of previously
deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary immediately
preceding the Contract Owner's or the Annuitant's death, whichever is
applicable, plus any Purchase Payments since that Anniversary, less
any withdrawals or amounts used to purchase annuity payouts since that
Anniversary, less the amount of any previously deducted Annual
Contract Charges since that Anniversary and less the Outstanding Loan
Balance.
(2) If the Contract Owner, or in the case of a non-qualified Contract, the
Annuitant, dies after the first day of the month following the Contract
Owner's or Annuitant's 80th birthday, the Contract Value less the
Outstanding Loan Balance as of the Death Benefit Valuation Date.
(3) If the Contract Owner of a non-qualified Contract dies, the Withdrawal
Value as of the Death Benefit Valuation Date.
PAYMENT OF DEATH BENEFIT BEFORE THE START DATE
The Beneficiary may elect to have any portion of the Death Benefit:
(1) Paid in a single sum;
(2) Applied to any of the annuity payouts (in no event may annuity payouts to a
Beneficiary extend beyond the Beneficiary's life expectancy or any period
certain greater than the Beneficiary's life expectancy); or
(3) Paid by another distribution method acceptable to the Company.
The timing and manner of payment must satisfy certain requirements under
the Code. In general, the Death Benefit must either be applied to an annuity
payout within one year of the Contract Owner's or Annuitant's death, or the
entire Contract Value must be distributed within five years of the Contract
Owner's or Annuitant's date of death. An exception to this provision applies if
the Beneficiary is the surviving spouse, in which case the Beneficiary may
continue the Contract as the Contract Owner and generally may exercise all
rights to the Contract. (See "Federal Tax Status" on page 34.)
If the Beneficiary requests payment of the Death Benefit in a single sum,
it will be paid to the Beneficiary within seven days after the Death Benefit
Valuation Date. An annuity payout selection or request for another form of
distribution method must be in writing and received by the Company within a time
period permitted under the Code, or the Death Benefit as of the Death Benefit
Valuation Date will be paid in a single sum to the Beneficiary and the Contract
will be canceled.
DEATH BENEFIT AFTER START DATE
If the Annuitant dies after the Start Date, remaining annuity payouts, if
any, will be as stated in the form of annuity payout in effect.
WITHDRAWAL (REDEMPTION)
If permitted by law or any applicable Qualified Plan, the Contract Owner
may withdraw all or part of the Withdrawal Value of the Contract by sending a
properly completed withdrawal request to the Company. (See "Federal Tax Status"
on page 34.) The Contract Owner may request withdrawal of either (a) a gross
amount, in which case the applicable Withdrawal Charge and taxes will be
deducted from the gross amount requested, or (b) a specific amount after
deduction of the applicable Withdrawal Charge and taxes. If a full withdrawal
occurs on a date other than the Contract Anniversary, a deduction will be made
for the Annual Contract Charge in addition to the deduction made on the previous
Contract Anniversary. (See "Withdrawal Charge (Contingent Deferred Sales
Charge)" on page 21, and "Annual Contract Charge" on page 23.) Partial
withdrawals may be made in amounts not less than $1,000 and no partial
withdrawal may cause the Contract Value to fall below the greater of (a) $1,000,
or (b) the Outstanding Loan Balance divided by 85%. The Company will not honor
requests that do not meet these requirements.
A withdrawal will be processed on the next Valuation Date after a properly
completed withdrawal request is received by the Company and payment will be made
within seven days after such Valuation Date. Unless otherwise agreed to by the
Company, a partial withdrawal will be taken proportionately from the Fixed
Accounts and Sub-Accounts on a basis that reflects their proportionate
percentage of the Withdrawal Value.
The Company reserves the right to assess a processing fee not to exceed the
lesser of 2% of the partial withdrawal amount or $25. No processing fee will be
charged in connection with full withdrawals.
The Company may cancel the Contract when: (a) the entire Withdrawal Value
is withdrawn on or before the Start Date or (b) the Outstanding Loan Balance is
equal to or greater than the Contract Value less applicable Withdrawal Charges.
If a Contract is purchased as a "tax-sheltered annuity" under Code Section
403(b), it is subject to certain restrictions on withdrawals imposed by Section
403(b)(11) of the Code. (See "Tax-Sheltered Annuities" on page 37.) Section 403
(b)(11) of the Code restricts the distribution under Section 403(b) annuity
contracts of: (i) contributions made pursuant to a salary reduction agreement in
years beginning after December 31, 1988; (ii) earnings on those contributions;
and (iii) earnings in such years
on amounts held as of the first year beginning before January 1, 1989.
Distributions of the foregoing amounts may only occur upon the death of the
employee, attainment of age 591|M/2, separation from service, disability or
hardship. In addition, income attributable to salary reduction contributions may
not be distributed in the case of hardship. Similar restrictions may apply on
distributions from Contracts used in connection with state optional retirement
programs.
Withdrawal payments may be taxable. For tax purposes such payments shall be
deemed to be from earnings until cumulative withdrawal payments equal all
accumulated earnings and thereafter from Purchase Payments received by the
Company. Consideration should be given to the tax implications of a withdrawal
prior to making a withdrawal request, including a withdrawal in connection with
a Qualified Plan.
SYSTEMATIC WITHDRAWALS
A Systematic Withdrawal is an automatic form of partial withdrawal. (See
"Withdrawal (Redemption)" on page 27.) The Contract Owner may elect to take
Systematic Withdrawals by withdrawing a specified dollar amount or percentage of
the Contract Value on a monthly, quarterly, semi-annual or annual basis.
Withdrawal Charges are not waived on Systematic Withdrawals. (See "Withdrawal
Charge (Contingent Deferred Sales Charge)" on page 21.) Systematic Withdrawals
may be discontinued by the Contract Owner at any time by notifying the Company
in writing.
The Company reserves the right to modify or discontinue offering Systematic
Withdrawals, however, any such modification or discontinuation will not affect
any Systematic Withdrawal programs already commenced. While the Company does not
currently charge a processing fee for partial withdrawals under this program, it
reserves the right to charge a processing fee not to exceed the lesser of 2% of
each Systematic Withdrawal payment or $25.
Systematic Withdrawals may be included in the Contract Owner's gross income
in the year in which the Systematic Withdrawal occurs. Systematic Withdrawals
occurring before the Contract Owner reaches age 591|M/2 may also be subject to a
10% Federal tax penalty. The Contract Owner should consult with his or her tax
adviser before requesting any Systematic Withdrawal. (See "Taxation of
Annuities" on page 35.)
Contract Owners interested in participating in the Systematic Withdrawal
program may obtain a separate application form and full information concerning
the program and its restrictions from their registered representative.
LOANS AVAILABLE FROM CERTAIN QUALIFIED CONTRACTS
Loans may be available from Contracts issued for use with Qualified Plans
qualified under Section 403(b) of the Code. A loan generally will not be treated
as a taxable distribution provided that the term is no longer than five years
(except for certain home loans) and the loan amount does not exceed certain
limits discussed below. Loans are subject to the limitations, interest rates,
and repayment procedures set forth in the loan document and Contract. The loan
must be repaid, in substantially equal payments, by the earlier of five years
from the date of approval of the loan or the Start Date, or if used to purchase
a primary residence of the Contract Owner, the earlier of 20 years or the Start
Date.
Under the Code, the maximum amount that may be borrowed, including loans
from other Qualified Plans of the employer, generally may not exceed the lesser
of $50,000 or 50% of the current value of an employee's interest in the Plans.
For Plans other than Plans subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), up to $10,000 may be borrowed even if it is
more than 50% of the value of the employee's accrued benefit under the Qualified
Plans. The $50,000 dollar limit is reduced by the highest loan balances owed
during the prior one-year period. The Company allows loan amounts (minimum
$1,000) that do not exceed the Withdrawal Value less an amount representing
annual loan interest, provided such amount does not exceed the maximum loan
amount set by law.
Upon the Company's receipt of a properly completed loan document, an amount
equal to the loan will be reallocated from the Contract Value, on a pro rata
basis, to the Loan Account, which is part of Fixed Account A. The Contract Value
reallocated to the Loan Account will be used to secure the loan. Amounts
reallocated from the Sub-Accounts to the Loan Account will be valued on the next
Valuation Date following the Company's receipt of the loan document. Amounts
transferred from the Sub-Accounts to the Loan Account will result in a reduction
of Variable Account Contract Value and will not
participate in the investment experience of any Sub-Account. A loan document
can be obtained by writing to the Company at P.O. Box 12530, Seattle,
Washington 98111-4530.
The amounts reallocated to the Loan Account may earn an interest rate less
than that credited to other amounts allocated to Fixed Account A, but it will
never earn less than the guaranteed rate of three percent (3%). The annual
interest rate assessed by the Company on the loan will not exceed 8% in arrears
and will never be less than 5.5% in arrears.
If any loan repayment due under a loan is not paid within 90 days of the
scheduled payment date, the Company will declare the Outstanding Loan Balance
immediately due and payable without notice to the Contract Owner. Unless
prohibited by law, the Outstanding Loan Balance, along with any applicable
Withdrawal Charges will be withdrawn from the Loan Account. Such forfeiture of
Contract Value is a taxable event, and may be subject to a 10% penalty tax for
early withdrawal or adversely affect the treatment of the Contract under Section
403(b) of the Code. (See "Tax Sheltered Annuities" on page 37.)
The Company reserves the right to charge a loan service fee not to exceed
$25 for each loan and to limit loans in the first Contract Year and after the
Contract Owner reaches age 701|M/2.
The foregoing discussion of Contract loans is general and does not address
the tax consequences resulting from all situations in which a person may receive
a Contract loan. A competent tax adviser should be consulted before obtaining a
Contract loan.
REALLOCATIONS
Prior to the Start Date, the Contract Owner may transfer Variable Account
Contract Value among and between the Sub-Accounts and may transfer Fixed Account
Contract Value to various Sub-Accounts. Likewise, Variable Contract Value may be
transferred from a Sub-Account to either Fixed Account A or Fixed Account B.
Transfers of Variable Contract Values from one Sub-Account to another involve
the exchange of accumulation units of one Sub-Account for another on a
dollar-equivalent basis. Subject to certain limitations, Fixed Account Contract
Value may be transferred from either Fixed Account to the other Fixed Account or
to a Sub-Account. (See "Reallocations from the Fixed Accounts", on page 30.)
Currently, there are four methods by which a Contract Owner may make the
transfers described above ("Reallocations"): in writing, by telephone, Automatic
Reallocations and by Dollar Cost Averaging.
WRITTEN REALLOCATIONS. The Contract Owner may request a reallocation in
writing. All or part of a Sub-Account's value may be reallocated to other
Sub-Accounts or to the Fixed Accounts. The reallocations will be made by the
Company on the first Valuation Date after the request for such a reallocation is
received by the Company. Currently, there is no charge for such a reallocation.
The Company reserves the right, however, to charge a reallocation fee not to
exceed $25 per reallocation and to limit the amount and number of reallocations
made by the Contract Owner. After the Start Date, an Annuitant who has selected
Variable Annuity Payouts may request reallocation of Annuity Unit values in the
same manner and subject to the same requirements as for a reallocation of
Accumulation Unit values. However no reallocations of Annuity Unit values may be
made to or from the Fixed Accounts after the Start Date.
The conditions applicable to written reallocations also apply to telephone
reallocations, Automatic Reallocations and Dollar Cost Averaging Reallocations.
TELEPHONE REALLOCATIONS. Telephone reallocations are available when the
Contract Owner completes a telephone reallocation form and a personal
identification number has been assigned. If the Contract Owner elects to
complete the telephone reallocation form, the Contract Owner thereby agrees that
the Company will not be liable for any loss, liability, cost or expense when the
Company acts in accordance with the telephone reallocation instructions which
are received and recorded on voice recording equipment. If a telephone
reallocation, processed after the Contract Owner has completed the telephone
reallocation form is later determined not to have been made by the Contract
Owner or was made without the Contract Owner's authorization, and a loss results
from such unauthorized reallocation, the Contract Owner bears the risk of this
loss. The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. In the event the Company does not employ
such procedures, the Company may be liable for any losses due to unauthorized or
fraudulent instructions. Such procedures may include, among others, requiring
forms of personal identification prior
to acting upon telephone instructions, providing written confirmation of such
instructions and/or tape recording telephone instructions.
AUTOMATIC REALLOCATIONS. The Contract Owner may elect to have the Company
automatically reallocate Contract Value on each quarterly anniversary of the
Issue Date or other date as permitted by Company practice to maintain a certain
percentage of Contract Value in particular Sub-Accounts. The Contract Value
allocated to each Sub-Account, as selected by the Contract Owner, will grow or
decline in value at different rates during the quarter. Automatic reallocation
is intended to reallocate Contract Value from those Sub-Accounts that have
increased in value to those Sub-Accounts that have declined in value or
increased at a slower rate. This investment method does not guarantee profits
nor does it assure that a Contract Owner will avoid losses.
To elect automatic reallocations, the Contract Value must be at least
$10,000 and an automatic reallocation application in proper form must be
received at the Home Office of the Company. An automatic reallocation
application can be obtained by writing to the Company's Home Office at P.O. Box
12530, Seattle, Washington 98111-4530. The Contract Owner must indicate on the
application the applicable Sub-Accounts and the percentage of Contract Value to
be maintained on a quarterly basis in each Sub-Account. All Contract Value in a
selected Sub-Account will be available for the automatic reallocations.
Automatic reallocation of Contract Value will occur on each quarterly
anniversary of the Issue Date or other date as permitted by Company practice,
which the Company received the automatic reallocation application in proper
form. The amounts reallocated will be credited at the Accumulation Unit value as
of the end of the Valuation Dates on which the reallocations are made.
A Contract Owner may instruct the Company at any time to terminate
automatic reallocations by written request to the Company's Home Office. Any
Contract Value in a Sub-Account that has not been reallocated will remain in
that Sub-Account regardless of the percentage allocation unless the Contract
Owner instructs otherwise. If a Contract Owner wants to continue automatic
reallocations after they have been terminated, a new automatic reallocation
application must be completed and sent to the Company's Home Office and the
Contract Value at the time the request is made must be at least $10,000.
The Company reserves the right to discontinue, modify or suspend automatic
reallocations and it reserves the right to charge a fee not to exceed $25 per
each reallocation between Sub-Accounts or from the unencumbered portion of Fixed
Account A Contract Value. Contract Value in Fixed Account B is not eligible for
automatic reallocations.
DOLLAR COST AVERAGING REALLOCATIONS. The Contract Owner may direct the
Company to automatically transfer a fixed dollar amount or a specified
percentage of Sub-Account Contract Value or Fixed Account A Contract Value to
any one or more other Sub-Accounts or to the Fixed Accounts. No reallocations
from Fixed Account B are permitted under this service. Reallocations of this
type may be made on a monthly, quarterly, semi-annual or annual basis. This
service is intended to allow the Contract Owner to utilize "Dollar Cost
Averaging," a long term investment method which provides for regular investments
over time in a level or variable amount. The Company makes no guarantees that
dollar cost averaging will result in a profit or protect against loss. The
Contract Owner may discontinue dollar cost averaging at any time by notifying
the Company in writing.
Contract Owners interested in dollar cost averaging may obtain a separate
application form and full information concerning this service and its
restrictions from their registered representatives.
The Company reserves the right to discontinue, modify or suspend dollar
cost averaging. Although the Company currently charges no fees for reallocations
made under the dollar cost averaging program, the Company reserves the right to
charge a processing fee not to exceed $25 for each dollar cost averaging
reallocation between Sub-Accounts or from Fixed Account A.
REALLOCATIONS FROM THE FIXED ACCOUNTS. Subject to the conditions applicable
to reallocations among Sub-Accounts, reallocations of amounts from Fixed Account
A not designated to the Loan Account may be made to the Sub-Accounts or to Fixed
Account B any time before the Start Date. After the Start Date, amounts
supporting Fixed Annuity Payouts cannot be reallocated.
Reallocations of Fixed Account B Contract Value to the Sub-Accounts or to
Fixed Account A are subject to the following conditions:
(a) Reallocations may only be made during the period starting 30 days before
and ending 30 days after the Contract Anniversary, and only one
reallocation may be made during such period;
(b) The Company must receive the reallocation request no more than 30 days
before the start of the reallocation period and not later than 10 days
before the end of the reallocation;
(c) Reallocations not in excess of the greater of 25% of Fixed Account B
Contract Value or $1,000 may be made (unless the balance after such
reallocation would be less than $1,000, in which case the full Fixed
Account B Contract Value may be reallocated); and
(d) Such reallocation must involve at least $250 of the total Fixed Account B
Contract Value (or the total Fixed Account B Contract Value, if less).
After the Start Date, reserves supporting Fixed Annuity Payouts cannot be
reallocated.
The Company reserves the right to permit reallocations from Fixed Accounts
A and B in excess of the limits described above on a non-discriminatory basis.
ASSIGNMENTS
Except for Section 457 plans, if the Contract is issued pursuant to or in
connection with a Qualified Plan, it may not be sold, transferred, pledged or
assigned to any person or entity other than the Company. With respect to Section
457 plans, for such plans maintained by tax exempt organizations, all rights and
benefits remain the exclusive property of the organization and are subject to
its general creditors. For such plans maintained by state or local governments,
however, all plan assets are maintained for the exclusive benefit of plan
participants in accordance with Section 457(g). In other circumstances, an
assignment of the Contract is permitted, but only before the Start Date, by
giving the Company the original or a certified copy of the assignment. The
Company shall not be bound by any assignment until it is actually received by
the Company and shall not be responsible for the validity of any assignment. Any
payments made or actions taken by the Company before the Company actually
receives any assignment shall not be affected by the assignment.
CONTRACT OWNER AND BENEFICIARIES
Unless someone else is named as the Contract Owner in the application for
the Contract, the applicant is the Contract Owner of the Contract and before the
Start Date may exercise all of the Contract Owner's rights under the Contract.
The Contract Owner may name a Beneficiary and a Contingent Beneficiary. In
the event a Contract Owner or the Annuitant in the case of a non-qualified
Contract, dies before the Start Date, the Beneficiary shall receive a Death
Benefit as provided in the Contract. In the event the Payee dies on or after the
date Annuity Payouts commence, the Beneficiary, if the Annuity Payout in effect
at the Contract Owner's death so provides, may continue receiving payouts or be
paid a lump sum. If the Beneficiary or Contingent Beneficiary is not living on
the date payment is due or if no Beneficiary or Contingent Beneficiary has been
named, the Payee's estate will receive the applicable proceeds.
A person named as an Annuitant, a Payee, a Beneficiary or a Contingent
Beneficiary shall not be entitled to exercise any rights relating to the
Contract or to receive any payments or settlements under the Contract or any
Annuity Payout, unless such person is living on the day due proof of death of
the Contract Owner, the Annuitant or the Beneficiary, whichever is applicable,
is received by the Company.
Unless different arrangements have been made with the Company by the
Contract Owner, if more than one Beneficiary is entitled to payments from the
Company the payments shall be in equal shares.
Before the Start Date, the Contract Owner may change the Beneficiary or the
Contingent Beneficiary by giving the Company written notice of the change, but
the change shall not be effective until actually received by the Company. Upon
receipt by the Company of a notice of change, it will be effective as of the
date it was signed but shall not affect any payments made or actions taken by
the Company before the Company received the notice, and the Company shall not be
responsible for the validity of any change.
CONTRACT INQUIRIES
Inquiries regarding a Contract may be made by writing to the Company's Home
Office, P.O. Box 12530, Seattle, Washington 98111-4530.
ANNUITY PROVISIONS
START DATE
Unless otherwise agreed to by the Company, the Start Date must be the first
business day of any calendar month. The Contract Owner may change the Start Date
by giving written notice received by the Company at least 30 days before the
Start Date currently in effect and the new Start Date. The new Start Date must
satisfy the requirements for a Start Date. If the Contract Owner does not select
a Start Date, the Start Date will be the Contract Owner's 85th birthday. If the
Start Date selected by the Contract Owner does not occur on a Valuation Date at
least 60 days after the date on which the Contract was issued, the Company
reserves the right to adjust the Start Date to the first Valuation Date after
the Start Date selected by the Contract Owner which is at least 60 days after
the Contract issue date. For Contracts issued in connection with Qualified
Plans, the Start Date and form of payout must satisfy certain requirements under
the Code. (See "Federal Tax Status" on page 34.)
ANNUITY PAYOUT SELECTION
The Contract Owner may select a Variable Annuity Payout, a Fixed Annuity
Payout, or both, with payments starting at the Start Date selected by the
Contract Owner. The Contract Owner may change the form of Annuity Payout(s) by
giving written notice received by the Company before the Start Date. If the
Contract Owner has not selected the form of Annuity Payout(s) before the Start
Date, the Company will apply the Fixed Account Contract Value to provide Fixed
Annuity Payouts and the Variable Account Contract Value to provide Variable
Annuity Payouts, both in the form of a Life Annuity with Payments Guaranteed for
10 years (120 months) which will be automatically effective.
FORMS OF ANNUITY PAYOUTS
Variable Annuity Payouts and Fixed Annuity Payouts are available in any of
the following Annuity Forms:
LIFE ANNUITY. Unless otherwise agreed to by the Company, an annuity payable
on the first business day of each calendar month during the Annuitant's life,
starting with the first payment due according to the Contract. Payments cease
with the payment made on the first business day of the calendar month in which
the Annuitant's death occurs. IT WOULD BE POSSIBLE UNDER THIS ANNUITY PAYOUT FOR
THE ANNUITANT TO RECEIVE ONLY ONE PAYMENT IF HE OR SHE DIED BEFORE THE SECOND
ANNUITY PAYMENT, ONLY TWO PAYMENTS IF HE OR SHE DIED BEFORE THE THIRD ANNUITY
PAYMENT, ETC.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS (120 MONTHS). Unless
otherwise agreed to by the Company, an annuity payable on the first business day
of each calendar month during the Annuitant's life, starting with the first
payment due according to the Contract. If the Annuitant receives all of the
guaranteed payments, payments will continue thereafter but cease with the
payment made on the first business day of the calendar month in which the
Annuitant's death occurs. If all of the guaranteed payments have not been made
before the Annuitant's death, the unpaid installments of the guaranteed payments
will be continued to the Beneficiary.
JOINT AND FULL SURVIVOR ANNUITY. Unless otherwise agreed to by the Company,
an annuity payable on the first business day of each month during the
Annuitant's life and the life of a named person (the "Joint Annuitant"),
starting with the first payment due according to the Contract. Payments will
continue while either the Annuitant or the Joint Annuitant is living and cease
with the payment made on the first business day of the calendar month in which
the death of the Annuitant or the Joint Annuitant, whichever lives longer,
occurs. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED UNDER THIS ANNUITY
PAYOUT. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVOR OF THE ANNUITANT AND
THE JOINT ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
The Company will pay Fixed and Variable Annuity Payouts under other Annuity
Forms that may be offered by the Company. Your registered representative can
provide you with the details.
FREQUENCY AND AMOUNT OF ANNUITY PAYOUTS
Annuity Payouts will be paid as monthly installments, unless the Annuitant
and the Company agree to a different payout schedule. However, if the Contract
Value less any Outstanding Loan Balance at the Start Date is less than $5,000,
the Company may pay the difference in a single sum and the Contract will be
canceled. Also if a monthly payout would be or become less than $100, the
Company may change the frequency of payouts to intervals that will result in
payouts of at least $100 each.
ANNUITY PAYOUTS
The amount of the first Fixed Annuity Payout is determined by applying the
Contract Value to be used for a fixed annuity at the Start Date to the annuity
table in the Contract for the Fixed Annuity Payout selected. The table shows the
minimum guaranteed amount of the initial annuity payment for each $1,000
applied. All subsequent payments shall be equal to the initial annuity payment.
The amount of the first Variable Annuity Payout is determined by applying
the Contract Value to be used for a variable annuity at the Start Date to the
annuity table in the Contract for the Annuity Payout selected. Subsequent
Variable Annuity Payouts vary in amount in accordance with the investment
performance of the applicable Sub-Account. Assuming annuity payouts are based on
the Annuity Unit Values of a single Sub-Account, the dollar amount of the first
annuity payout, determined as set forth above, is divided by the Sub-Account
Annuity Unit Value as of the Start Date to establish the number of Annuity Units
representing each annuity payout. This number of Annuity Units remains fixed
during the annuity payout period. The dollar amount of the second and subsequent
payouts is not predetermined and may change from month to month. The dollar
amount of the second and each subsequent annuity payout is determined by
multiplying the fixed number of Annuity Units by the Sub-Account Annuity Unit
Value for the Valuation Period with respect to which the annuity payout is due.
If the monthly payout is based upon the Annuity Unit Values of more than one
Sub-Account, the foregoing procedure is repeated for each applicable Sub-Account
and the sum of the payments based on each Sub-Account is the amount of the
monthly annuity payout.
The annuity tables in the Contracts are based upon the 1983 Mortality Table
a and a 3% interest rate. Unisex rates will apply for Contracts issued under
Qualified Plans and will be derived by calculating the weighted average of
fifteen percent (15%) male mortality and eighty-five percent (85%) female
mortality. Sex-distinct rates will apply for non-qualified Contracts.
The Company guarantees that the dollar amount of each Variable Annuity
Payout after the first payout will not be affected by variations in expenses
(including those related to the Variable Account) or in mortality experience
from the mortality assumptions used to determine the first payout.
SUB-ACCOUNT ANNUITY UNIT VALUE
Each Sub-Account's Annuity Units were initially valued at $10 each at the
time Accumulation Units with respect to the Sub-Account were first converted
into Annuity Units. The Sub-Account Annuity Unit value for any subsequent
Valuation Period is determined by multiplying the Sub-Account Annuity Unit value
for the immediately preceding Valuation Period by the Net Investment Factor for
the Sub-Account for the Valuation Period for which the Sub-Account Annuity Unit
Value is being calculated, and multiplying the result by an interest factor to
neutralize the assumed investment rate of 3% per annum built into the annuity
tables contained in the Contracts. (See "Net Investment Factor" on page 26.)
ASSUMED INVESTMENT RATE
A 3% assumed investment rate is built into the annuity tables contained in
the Contracts. If the actual net investment rate on the assets of the Variable
Account is equal to the assumed investment rate, Variable Annuity Payouts will
remain level. If the actual net investment rate exceeds the assumed investment
rate, Variable Annuity Payouts will increase and conversely, if it is less, then
the payouts will decrease.
PARTIAL ANNUITIZATION
Any time before the Start Date, a Contract Owner may apply a portion of the
Contract Value to the purchase of Fixed or Variable Annuity Payouts or to a
combination of Fixed and Variable Annuity Payouts. This is called a partial
annuitization and occurs in the same manner as described above for application
of the entire Contract Value to Annuity Payouts at the Start Date except that
values as of the Valuation Date immediately following receipt by the Company of
a written request for a partial annuitization are used in place of values as of
the Start Date.
Upon the occurrence of a partial annuitization, the Contract Value applied
to purchase Annuity Payouts is considered a withdrawal from the Contract. (See
"Withdrawals (Redemptions)" on page 27 and "Taxation of Annuities" on page 35.)
The Company reserves the right to deduct the amount of any premium taxes not
already paid under a Contract.
After a partial annuitization, Annuity Payouts based on the Contract Value
applied and the annuity options selected are made in the same manner as if the
Start Date had occurred and no Contract Value remained under the Contract. Any
remaining Contract Value not applied to purchase Annuity Payouts, the Contract
continues as if no partial annuitization had occurred.
FEDERAL TAX STATUS
INTRODUCTION
THIS DISCUSSION IS GENERAL AND NOT INTENDED AS TAX ADVICE. This discussion
is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under a Contract. The Contracts are generally designed for use by individuals in
connection with retirement plans which may or may not be Qualified Plans under
the provisions of the Code. The ultimate effect of federal income taxes on the
Contract Value, on Annuity Payouts and on the economic benefit to the Contract
Owner, the Annuitant, as Payee or the Beneficiary depends upon the type of
retirement plan for which the Contract is purchased, and upon the tax and
employment status of the individual concerned. No attempt is made to consider
any applicable state or other tax laws. The discussion is based on the Company's
understanding of Federal Income Tax Laws as currently interpreted. No
representation is made regarding the likelihood of the continuation of the
present Federal Income Tax Laws or the current interpretation by the Internal
Revenue Service ("IRS").
A Contract may be purchased on a non-qualified basis ("Non-Qualified
Contract") or purchased and used in connection with plans qualifying for
favorable tax treatment ("Qualified Contract"). Generally, a Qualified Contract
is designed for use where Purchase Payments are comprised solely of proceeds
from and/or contributions under retirement plans which are intended to qualify
as plans entitled to special income tax treatment under Sections 401(a), 403(b),
408, 408A or 457 of the Code. The ultimate effect of federal income taxes on the
amounts held under a Contract, or Annuity Payouts, and on the economic benefit
to the Contract Owner, the Annuitant, the Payee or the Beneficiary depends on
the type of retirement plan, on the tax and employment status of the individual
concerned, and on the Company's tax status. In addition, certain requirements
must be satisfied in purchasing a Qualified Contract with proceeds from a
Qualified Plan and receiving distributions from a Qualified Contract in order to
continue receiving favorable tax treatment. Therefore, purchasers of Qualified
Contracts should seek competent legal and tax advice regarding the suitability
of a Contract for their situation, the applicable requirements, and the tax
treatment of the rights and benefits of a Contract. The following discussion
assumes that Qualified Contracts are purchased and proceeds from and/or
contributions under retirement plans that qualify for the intended special
federal income tax treatment.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Code provides that separate account investments
underlying a Contract must be "adequately diversified" in accordance with
Treasury regulations in order for the Contract to qualify as an annuity Contract
under Section 72 of the Code. The Variable Account, through each of the Funds,
intends to comply with the diversification requirements prescribed in
regulations under Section 817(h) of the Code, which affect how the assets in the
various Sub-Accounts may be invested. The Company expects that each Fund in
which the Variable Account owns shares will meet the diversification
requirements and that the Contract will be treated as an annuity Contract under
the Code.
The Treasury has also announced that the diversification regulations do not
provide guidance concerning the extent to which Contract Owners may direct their
investments to particular Sub-Accounts of the Variable Account or how
concentrated the investments of the Funds underlying a variable account may be.
The number of underlying investment options available under a variable contract
may also be relevant in determining whether the product qualifies for the
desired tax treatment. It is possible that if additional rules, regulations or
guidance in this regard are issued, the Contract may need to be modified to
comply with such additional rules or guidance. For these reasons, the Company
reserves the right to modify the Contracts as necessary to attempt to prevent
the Contract Owner from being considered the owner of the assets of the Funds or
otherwise to qualify the Contract for favorable tax treatment.
REQUIRED DISTRIBUTIONS
In order to be treated as an annuity Contract for federal income tax
purposes, Section 72(s) of the Code also requires any Non-Qualified Contract to
provide that: (a) if any Contract Owner dies on or
after the Start Date but prior to the time the entire interest in the Contract
has been distributed, the remaining portion of such interest will be distributed
at least as rapidly as under the method of distribution being used as of the
date of that Contract Owner's death; and (b) if any Contract Owner dies prior to
the Start Date, the entire interest in the Contract will be distributed within
five years after the date of the Contract Owner's death. These requirements will
be considered satisfied as to any portion of the Contract Owner's interest which
is payable to or for the benefit of a "designated Beneficiary" and which is
distributed over the life of such Beneficiary or over a period not extending
beyond the life expectancy of that Beneficiary, provided that such distributions
begin within one year of that Contract Owner's death. The Contract Owner's
"designated Beneficiary" is the person designated by such Contract Owner as a
Beneficiary and to whom ownership of the Contract passes by reason of death and
must be a natural person. However, if the Contract Owner's "designated
Beneficiary" is the surviving spouse of the Contract Owner, the Contract may be
continued with the surviving spouse as the new Contract Owner. If the Contract
Owner is not an individual, any change in the primary Annuitant is treated as a
change of Contract Owner for tax purposes.
The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code Section 72(s) when clarified by regulation or
otherwise. Other rules may apply to Qualified Contracts.
TAXATION OF ANNUITIES
IN GENERAL
Section 72 of the Code governs taxation of annuities in general. The
Company believes that a Contract Owner who is a natural person generally is not
taxed on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the Contract Value (e.g., partial withdrawals and
complete withdrawals) or as Annuity Payouts under the form of Annuity Payout
selected. For this purpose, the assignment, pledge, or agreement to assign or
pledge any portion of the Contract Value (and in the case of a Qualified
Contract, any portion of an interest in the qualified plan) generally will be
treated as a distribution. The taxable portion of a distribution (in the form of
a single sum payment or annuity) is taxable as ordinary income.
Except as provided in the Code, a Contract Owner who is not a natural
person generally must include in income any increase in the excess of the net
withdrawal value over the "investment in the Contract" during the taxable year.
WITHDRAWALS
In the case of a withdrawal from a Qualified Contract, under Section 72(e)
of the Code a ratable portion of the amount received is taxable, generally based
on the ratio of the "investment in the Contract" to the participant's total
accrued benefit or balance under the retirement plan. The "investment in the
Contract" generally equals the portion, if any, of any Purchase Payments paid by
or on behalf of any individual under a Contract which was not under excluded
from the individual's gross income. For Contracts issued in connection with
Qualified Plans, the "investment in the Contract" can be zero. Special tax rules
may be available for certain distributions from Qualified Contracts.
In the case of a withdrawal (including Systematic Withdrawals) from a
Non-Qualified Contract before the Start Date, under Code Section 72(e) amounts
received are generally first treated as taxable income to the extent that the
Contract Value immediately before withdrawal exceeds the "investment in the
Contract" at that time. Any additional amount withdrawn is not taxable.
In the case of a full withdrawal under a Qualified or Non-Qualified
Contract, the amount received generally will be taxable only to the extent it
exceeds the "investment in the Contract."
A Federal penalty tax may apply to certain withdrawals from Qualified and
Non-Qualified Contracts. (See "Penalty Tax on Certain Distributions" below.)
ANNUITY PAYOUTS
Although tax consequences may vary depending on the annuity form selected
under the Contract, in general, only the portion of the Annuity Payout that
represents the amount by which the Contract
Value exceeds the investment in the Contract will be taxed; after the investment
in the Contract is recovered, the full amount of any additional Annuity Payouts
is taxable. For Variable Annuity Payouts, the taxable portion is generally
determined by an equation that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
investment in the Contract by the total number of expected periodic Annuity
Payouts. However, the entire distribution will be taxable once the recipient has
recovered the dollar amount of his or her investment in the Contract. For Fixed
Annuity Payouts, in general there is no tax on the portion of each payout which
represents the same ratio that the investment in the Contract bears to the total
expected value of the Annuity Payouts for the term of the payouts; however, the
remainder of each Annuity Payout is taxable until the recovery of the investment
in the Contract, and thereafter the full amount of each Annuity Payout is
taxable.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of a
Contract Owner or an Annuitant. Generally, such amounts are includible in the
income of the recipient as follows: (i) if distributed in a lump sum, they are
taxed in the same manner as a full withdrawal from the Contract; or (ii) if
distributed under a payout option, they are taxed in the same way as Annuity
Payouts.
PENALTY TAX ON CERTAIN DISTRIBUTIONS
In the case of a distribution pursuant to a Non-Qualified Contract, a
Federal penalty equal to 10% of the amount treated as taxable income may be
imposed. In general, however, there is no penalty on distributions:
1. Made on or after the taxpayer reaches age 591|M/2;
2. Made on or after the death of the holder (a holder is considered a
Contract Owner) (or if the holder is not an individual, the death of
the primary annuitant);
3. Attributable to the taxpayer becoming disabled;
4. A part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the
taxpayer and his or her designated beneficiary;
5. Made under an annuity Contract that is purchased with a single premium
when the annuity starting date is no later than a year from purchase
of the annuity and substantially equal periodic payments are made, not
less frequently than annually, during the annuity period; and
6. Made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified
Contract, as well as to certain contributions to, loans from, and other
circumstances, applicable to the Qualified Plan of which the Qualified Contract
is part.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT
A transfer of ownership or assignment of a Contract, the designation of an
Annuitant, Payee or other Beneficiary who is not also the Contract Owner, or the
exchange of a Contract may result in certain tax consequences to the Contract
Owner that are not discussed herein. A Contract Owner contemplating any such
transfer, assignment, or exchange of a Contract should contact a competent tax
adviser with respect to the potential tax effects of such a transaction.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for
the recipient's Federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Some recipients may elect
not to have tax withheld from distributions. Distributions from certain
qualified plans are generally subject to mandatory withholding. Withholding for
Contracts issued to retirement plans established under Section 401 of the Code
is the responsibility of the plan trustee.
MULTIPLE CONTRACTS
Section 72(e)(11) of the Code treats all non-qualified deferred annuity
Contracts entered into after October 21, 1988 that are issued by the Company (or
its affiliates) to the same Contract Owner during any calendar year as one
annuity Contract for purposes of determining the amount includible in gross
income under Code Section 72(e). The effects of this rule are not clear;
however, it could affect the time
when income is taxable and the amount that might be subject to the 10% penalty
tax described above. In addition, the Treasury Department has specific authority
to issue regulations that prevent the avoidance of Section 72(e) through the
serial purchase of annuity Contracts or otherwise. There may also be other
situations in which the Treasury may conclude that it would be appropriate to
aggregate two or more annuity Contracts purchased by the same Contract Owner.
Accordingly, a Contract Owner should consult a competent tax adviser before
purchasing more than one annuity Contract.
TAXATION OF QUALIFIED PLANS
The Contracts are designed for use with several types of Qualified Plans.
The tax rules applicable to participants in these Qualified Plans vary according
to the type of Plan and the terms and conditions of the Plan itself. Special
favorable tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 591|M/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances. Therefore, no attempt is
made to provide more than general information about the use of the Contracts
with the various types of Qualified Plans. Contract Owners, Annuitants, Payees
and Beneficiaries are cautioned that the rights of any person to any benefits
under these Qualified Plans will be subject to the terms and conditions of the
Plans themselves, regardless of the terms and conditions of the Contracts issued
in connection with the Plans. The Company shall not be bound by the terms and
conditions of such Qualified Plans to the extent such terms contradict the
Contract, unless the Company consents. Some retirement plans are subject to
distribution and other requirements that are not incorporated into the Company's
Contract administration procedures. Contract Owners, participants and
Beneficiaries are responsible for determining that contributions, distributions
and other transactions with respect to the Contracts comply with applicable law.
Brief descriptions follow of the various types of Qualified Plans in connection
with a Contract.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS
Code Section 401(a) permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These retirement
plans may permit the purchase of the Contracts to accumulate retirement savings
under the plans. Adverse tax consequences to the plan, to the participant or to
both may result if this Contract is assigned or transferred to any individual as
a means to provide benefit payments.
INDIVIDUAL RETIREMENT ANNUITIES
Sections 408 and 408A of the Code permit eligible individuals to contribute
to an individual retirement program known as an "Individual Retirement Annuity"
or "IRA." All IRAs are subject to limits on the amount that may be contributed,
the persons who may be eligible, and on the time when distributions may
commence.
Section 408 governs "traditional" IRAs. Subject to certain income limits,
contributions to a traditional IRA may be tax deductible. Distributions from a
traditional IRA, if attributable to deductible contributions, are generally
subject to income tax. Distributions must begin in the year the contract owner
reaches age 701|M/2. Distributions from certain other types of qualified
retirement plans may be "rolled over" on a tax-deferred basis into a traditional
IRA.
Section 408A of the Code permits individuals to contribute to a special
type of IRA called a Roth IRA. The IRA must be designated as a "Roth IRA" at the
time it is established, in accordance with IRS rules. Contributions to a Roth
IRA are not deductible. If certain conditions are met, qualified distributions
from a Roth IRA are tax free. Subject to special limitations, a distribution
from a traditional IRA or another Roth IRA may be rolled over to a Roth IRA.
Sales of a Contract for use with traditional or Roth IRAs may be subject to
special requirements of the IRS. The IRS has not reviewed the Contract for
qualification as an IRA, and has not addressed in a ruling of general
applicability whether a death benefit provision such as the provision in the
Contract comports with IRS qualification retirements.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section 501(c)(3)
organizations and public schools to exclude from their gross income the Purchase
Payments paid, within certain limits, on a Contract that will provide an annuity
for the employee's retirement. Code Section 403(b)(11) restricts
the distribution under Code Section 403(b) annuity Contracts of: (i) elective
contributions made in years beginning after December 31, 1988; (ii) earnings on
those contributions; and (iii) earnings in such years on amounts held as of the
last year beginning before January 1, 1989. Distribution of those amounts may
only occur upon death of the employee, attainment of age 591|M/2, separation
from service, disability, or financial hardship. In addition, income
attributable to elective contributions may not be distributed in the case of
hardship.
SECTION 457 PLANS
Code Section 457 allows tax exempt organizations and state and local
governments to establish deferred compensation plans that allow individuals who
perform services for them as employees or independent contractors to
participate. Plans maintained by tax exempt organizations require that all
rights and benefits provided thereunder remain the property of the employer,
subject to its general creditors. Plans maintained by state and local
governments, however, must be maintained for the exclusive benefit of plan
participants. Section 457 plans are subject to rules and limits on the timing of
deferrals and amount that may be contributed. The Code also regulates when
distributions may (or must) commence. Sale of a Contract for use with Section
457 plans may be subject to special IRS requirements. The IRS has not reviewed
the Contract for qualification purposes.
POSSIBLE CHARGE FOR THE COMPANY'S TAXES
At the present time, the Company makes no charge to the Sub-Accounts for
any Federal, state, or local taxes that the Company incurs which may be
attributable to such Sub-Accounts or to the Contracts. The Company, however,
reserves the right in the future to make a charge for any such tax that it
determines to be properly attributable to the Sub-Accounts of the Contracts.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the Federal tax consequences
under these Contracts are not exhaustive, and special rules are provided with
respect to other tax situations not discussed in this Prospectus. Further, the
Federal income tax consequences discussed herein reflect the Company's
understanding of current law and the law may change. Federal estate and state
and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under a Contract depend on the individual circumstances
of each Contract Owner or recipient of the distribution. A competent tax adviser
should be consulted for further information.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely
modified the Federal taxation of certain annuities. There is always the
possibility that tax treatment of annuities could change by legislation or other
means (such as IRS regulations, revenue rulings, judicial decisions, etc.).
Moreover, it is also possible that any change could be retroactive (that is,
effective prior to the date of the change).
The President's 1999 Budget Proposal has recommended legislation in 1998
that, if enacted, would adversely modify the federal taxation of certain
insurance and annuity contracts. For example, one proposal would tax transfers
among investment options and tax exchanges involving variable contracts. A
second proposal would reduce the "investment in the contract" under cash value
life insurance and certain annuity contracts, thereby increasing the amount of
income for purposes of computing gain. Although the likelihood of legislative
changes is uncertain, there is always the possibility that the tax treatment of
the Contract could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change). You should consult a tax adviser with respect to
legislative developments and their effect on the Contract.
VOTING OF FUND SHARES
As long as the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 and the assets of the Variable Account
are allocated to Sub-Accounts that are invested in Fund shares, the Fund shares
held in the Sub-Accounts will be voted by the Company in accordance with the
instructions received from the person having voting interests under the
Contracts as described below. If the Company determines pursuant to applicable
law or regulation that Fund shares held in the Sub-Accounts and attributable to
the Contracts need not be voted pursuant to instructions received from persons
otherwise having the voting interests, then the Company may vote such Fund
shares held in the Sub-Accounts in its own right.
Before Variable Annuity Payouts begin, the Contract Owner will have the
voting interest with respect to the Fund shares attributable to a Contract.
After Variable Annuity Payouts begin, the Annuitant will have the voting
interest with respect to the Fund shares attributable to the Annuity Units under
a Contract. Such voting interest will generally decrease during the Variable
Annuity Payout period.
Any Fund shares held in the Variable Account for which the Company does not
receive timely voting instructions, or which are not attributable to Contract
Owners, will be voted by the Company in proportion to the instructions received
from all Contract Owners having a voting interest in the Fund. Any Fund shares
held by the Company or any of its affiliates in general accounts will, for
voting purposes, be allocated to all separate accounts having voting interests
in the Fund in proportion to each account's voting interest in the respective
Fund and will be voted in the same manner as are the respective account's votes.
All Fund proxy material will be sent to persons having voting interests
together with appropriate forms which may be used to give voting instructions.
Persons entitled to voting interests and the number of votes which they may cast
shall be determined as of a record date, to be selected by the Fund.
Persons having voting interests under the Contracts as described above will
not, as a result thereof, have voting interests with respect to meetings of the
stockholders of the Company.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by the Principal Underwriter, Washington
Square Securities, Inc., 20 Washington Avenue South, Minneapolis, Minnesota
55401, which is an affiliate of the Company. Commissions and other distribution
compensation will be paid by the Company. Generally such payments will not
exceed 7.00% of the Purchase Payments. In some cases a trail commission based on
the Contract Value may also be paid.
REPORTS TO CONTRACT OWNERS
The Company will mail to the Contract Owner, at the last known address of
record at the Home Office of the Company, a statement showing the Contract
Value. The Company will also provide to Contract Owners immediate written
confirmation of every financial transaction made under their Contracts; however,
Contract Owners who make Purchase Payments through salary reduction arrangements
with their employers will receive quarterly confirmations of Purchase Payments
made to their Contracts.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party.
The Company and its affiliates, like other life insurance companies, are
periodically involved in lawsuits, including class action lawsuits. In some
class action and other lawsuits involving insurers, substantial damages have
been sought and/or material settlement payments have been made. Although the
outcome of any litigation cannot be predicted with certainty, the Company
believes that at the present time there are not pending or threatened lawsuits
that are reasonably likely to have a material adverse impact on the Variable
Account or the Company.
PREPARING FOR THE YEAR 2000
Like all financial services providers, the Company utilizes systems that
may be affected by Year 2000 transition issues and it relies on service
providers, including the Funds, that also may be affected. The Company has
developed, and is in the process of implementing, a Year 2000 transition plan,
and is confirming that its service providers are also so engaged. The resources
that are being devoted to this effort are substantial. It is difficult to
predict with precision whether the amount of resources ultimately devoted, or
the outcome of these efforts, will have any negative impact on the Company.
However, as of the date of this prospectus, it is not anticipated that Contract
owners will experience negative effects on their investment, or on the services
provided in connection therewith, as a result of Year 2000 transition
implementation. The Company currently anticipates that its systems will be Year
2000 compliant on or about January 1, 1999, but there can be no assurance that
the Company will be successful, or that interaction with other service providers
will not impair the Company's services at that time.
FINANCIAL STATEMENTS AND EXPERTS
The annual financial statements of Separate Account One as of December 31,
1997 and the annual financial statements of Northern Life Insurance Company,
which are contained in the Statement of Additional Information, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are included herein, and have been so included in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
FURTHER INFORMATION
A Registration Statement under the Securities Act of 1933 has been filed
with the Securities and Exchange Commission, with respect to the Contracts
described herein. The Prospectus does not contain all of the information set
forth in the Registration Statement and exhibits thereto, to which reference is
hereby made for further information concerning the Variable Account, the Company
and the Contracts. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C., upon payment of the fee
prescribed by the Commission, or examined there without charge. Statements
contained in this Prospectus as to the provisions of the Contracts and other
legal documents are summaries, and reference is made to the documents as filed
with the Commission for a complete statement of the provisions thereof.
SEPARATE ACCOUNT ONE
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Introduction .................................... 2
Custody of Assets ............................... 2
Independent Auditors ............................ 2
Distribution of the Contracts ................... 2
Calculation of Yields and Total Returns ......... 3
Company Holidays ................................ 11
Financial Statements ............................ 11
If you would like to receive a copy of the Separate Account One Statement of
Additional Information, please call 1-800-333-6965 or return this request to:
WASHINGTON SQUARE SECURITIES, INC.
20 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55401
Your name
----------------------------------------------------------------------
Address
------------------------------------------------------------------------
City State Zip
-------------------------------- ----------------- --------------
Please send me a copy of the Separate Account One Statement of Additional
Information.
- --------------------------------------------------------------------------------
APPENDIX A
THE FIXED ACCOUNTS
CONTRIBUTIONS AND REALLOCATIONS TO FIXED ACCOUNT A AND FIXED ACCOUNT B
(COLLECTIVELY, THE "FIXED ACCOUNTS") UNDER THE CONTRACTS BECOME PART OF THE
GENERAL ACCOUNT OF THE COMPANY (THE "GENERAL ACCOUNT"), WHICH SUPPORTS INSURANCE
AND ANNUITY OBLIGATIONS. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("1933 ACT") NOR ARE THE FIXED ACCOUNTS REGISTERED AS INVESTMENT
COMPANIES UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). ACCORDINGLY,
NEITHER THE FIXED ACCOUNTS NOR ANY INTERESTS THEREIN ARE GENERALLY SUBJECT TO
THE PROVISIONS OF THE 1933 OR 1940 ACTS AND THE COMPANY HAS BEEN ADVISED THAT
THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURES IN THIS PROSPECTUS WHICH RELATE TO THE FIXED PORTION OF THE
CONTRACTS. DISCLOSURES REGARDING THE FIXED PORTION OF THE CONTRACTS AND THE
FIXED ACCOUNTS, HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF STATEMENTS MADE IN PROSPECTUSES.
The Fixed Accounts are part of the General Account, which is made up of all
of the general assets of the Company other than those allocated to any separate
account. We offer the option of having all or a portion of Purchase Payments
allocated to the Fixed Accounts as selected by the Contract Owner at the time of
purchase or as subsequently changed. The Company will invest the assets
allocated to the Fixed Accounts in those assets chosen by the Company and
allowed by applicable law. Investment income from such Fixed Accounts' assets
will be allocated between the Company and the Contracts participating in the
Fixed Accounts, in accordance with the terms of such Contracts.
Fixed Annuity Payouts made to Annuitants under the Contracts will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this "mortality risk"
by virtue of annuity rates incorporated in the Contracts which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Accounts allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The Company expects to derive a profit from this
compensation.
The Company may credit interest in excess of the guaranteed rate of 3%. Any
interest rate in effect when an amount is allocated or reallocated to the Fixed
Accounts is guaranteed for that amount until the end of the calendar year in
which it is received. After the end of that calendar year, the Company may
change the amount of interest credited at its discretion. All amounts in the
Fixed Accounts after the end of the calendar years referenced above are credited
with excess interest at the rates then in effect for the then current calendar
year. Such rates are established at the beginning of each calendar year and are
guaranteed for the entire calendar year. There is no specific formula for the
determination of excess interest credits. Such credits, if any, will be
determined by the Company based on many factors, including, but not limited to:
investment yield rates, taxes, Contract persistency, and other experience
factors. ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNTS IN
EXCESS OF 3% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY.
THE CONTRACT OWNER ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT
ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
Contractholders and Contract Owners and to its stockholder.
Excess interest, if any, will be credited on the Fixed Account Contract
Value. The Company guarantees that, at any time, the Fixed Account Contract
Value will not be less than the amount of Purchase Payments and transfers
allocated to the Fixed Accounts, plus interest at the rate of 3% per year,
compounded annually, plus any additional interest which the Company may, in its
discretion, credit to the Fixed Accounts, less the sum of all annual
administrative charges or Withdrawal Charges levied, any applicable premium
taxes, and less any amounts withdrawn or reallocated from the Fixed Accounts. If
the Contract Owner makes a full withdrawal, the amount available from the Fixed
Accounts will be reduced by any applicable Withdrawal Charge and Annual Contract
Charge. (See "Charges Made by the Company" on page 21).
NORTHERN LIFE
A RELIASTAR COMPANY
P.O. Box 12530
Seattle, WA 98111-4530
For marketing information call:
1-800-426-7050
For policy administration call:
1-800-870-0453
A Variable Annuity Issued by Northern Life Insurance Company
FORM NO. 15500 R4-98
STATEMENT OF ADDITIONAL INFORMATION
FOR NORTHERN
------------------
INDIVIDUAL DEFERRED VARIABLE/FIXED ANNUITY CONTRACTS
ISSUED BY
SEPARATE ACCOUNT ONE
AND
NORTHERN LIFE INSURANCE COMPANY
This Statement of Additional Information is not a Prospectus, but should be
read in conjunction with the Prospectus dated May 1, 1998 (the "Prospectus")
relating to the Individual Deferred Variable/Fixed Annuity Contracts issued by
Separate Account One (the "Variable Account") and Northern Life Insurance
Company (the "Company"). Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the Prospectus. A copy
of the Prospectus may be obtained from Washington Square Securities, Inc., 20
Washington Avenue South, Minneapolis, Minnesota 55401.
Capitalized terms used in this Statement of Additional Information that are
not otherwise defined herein shall have the meanings given to them in the
Prospectus.
------------------
TABLE OF CONTENTS
PAGE
-----
Introduction ..................................... 2
Custody of Assets ................................ 2
Independent Auditors ............................. 2
Distribution of the Contracts .................... 2
Calculation of Yields and Total Returns .......... 3
Company Holidays ................................. 11
Financial Statements ............................. 11
------------------
The date of this Statement of Additional Information is May 1, 1998.
INTRODUCTION
The Individual Deferred Variable/Fixed Annuity Contracts described in the
Prospectus are flexible Purchase Payment Contracts. The Contracts are sold to or
in connection with retirement plans which may or may not qualify for special
federal tax treatment under the Internal Revenue Code. (See "Federal Tax Status"
on page 34 of the Prospectus.) Annuity Payouts under the Contracts are deferred
until a later date selected by the Contract Owner.
Purchase Payments may be allocated to one or more of the available
Sub-Accounts of the Variable Account, a separate account of the Company, and/or
to Fixed Account A and/or Fixed Account B (which are part of the general account
of the Company).
Purchase payments allocated to one or more of the available Sub-Accounts of
the Variable Account, as selected by the Contract Owner, will be invested in
shares at net asset value of one or more of a group of investment funds
("Funds"). The Funds currently are: the Growth Portfolio, Leveraged AllCap
Portfolio, MidCap Growth Portfolio and Small Capitalization Portfolio of The
Alger American Fund which are managed by Fred Alger Management, Inc.; the VIP
Equity-Income Portfolio, VIP Growth Portfolio, VIP Money Market Portfolio and
VIP Overseas Portfolio of the Variable Insurance Products Fund and the VIP II
Asset Manager: Growth Portfolio, VIP II Asset Manager Portfolio, VIP II
Contrafund Portfolio and VIP II Index 500 Portfolio of the Variable Insurance
Products Fund II, all of which are managed by Fidelity Management & Research
Company; the Aggressive Growth Portfolio, Growth Portfolio, International Growth
Portfolio and Worldwide Growth Portfolio of the Janus Aspen Series which are
managed by Janus Capital Corporation; the Limited Maturity Bond Portfolio and
Partners Portfolio of the Neuberger&Berman Advisers Management Trust, which are
managed by Neuberger&Berman Management with assistance of Neuberger&Berman LLC
as sub-adviser; the Growth Portfolio, High Yield Bond Portfolio, Income and
Growth Portfolio, International Value Portfolio and Multi-Sector Bond Portfolio
of the Northstar Variable Trust which are managed by Northstar Investment
Management Corporation; and the Equity Portfolio, Global Equity Portfolio,
Managed Portfolio and Small Cap Portfolio of the OCC Accumulation Trust which
are managed by OpCapAdvisers, a subsidiary of Oppenheimer Capital.
Purchase Payments allocated to Fixed Account A or Fixed Account B, which
are part of the general account of the Company, will be credited with interest
at a rate not less than 3% per year. Interest credited in excess of 3%, if any,
will be determined at the sole discretion of the Company. That part of the
Contract relating to Fixed Account A and Fixed Account B is not registered under
the Securities Act of 1933 and the Fixed Accounts are not subject to the
restrictions of the Investment Company Act of 1940. (See Appendix A to the
Prospectus.)
CUSTODY OF ASSETS
The Company, whose address appears on the cover of the Prospectus,
maintains custody of the assets of the Variable Account.
INDEPENDENT AUDITORS
The financial statements of Separate Account One and Northern Life
Insurance Company, which are contained in this Statement of Additional
Information, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports which are included herein, and have been so included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by Washington Square Securities, Inc.
("WSSI"), the principal underwriter which is an affiliate of the Company.
For the years ended December 31, 1995, 1996 and 1997, WSSI was paid fees by
the Company in connection with distribution of the Contracts aggregating $750,
$1,123,993 and $5,551,624, respectively.
The offering of the Contracts is continuous.
There are no special purchase plans or exchange privileges not described in
the Prospectus. (See "Reduction of Charges" at page 24 of the Prospectus.)
No deduction for a sales charge is made from the Purchase Payments for the
Contracts. However, if part or all of a Contract's value is withdrawn,
Withdrawal Charges (which may be deemed to be Contingent Deferred Sales Charges)
may be made by the Company. The method used to determine the amount of such
charges is described in the Prospectus under the heading "Charges Made By The
Company -- Withdrawal Charge (Contingent Deferred Sales Charge)" on page 21.
There is no difference in the amount of this charge or any of the other charges
described in the Prospectus as between Contracts purchased by members of the
public as individuals or groups, and Contracts purchased by any class of
individuals, such as officers, directors or employees of the Company or of the
Principal Underwriter.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, the Company may disclose yields, total returns, and
other performance data pertaining to the Contracts for a Sub-Account. Such
performance data will be computed, or accompanied by performance data computed,
in accordance with the standards defined by the Securities and Exchange
Commission.
Because of the charges and deductions imposed under a Contract, the yield
for the Sub-Accounts will be lower than the yield for their respective
portfolios. The calculations of yields, total returns, and other performance
data do not reflect the effect of any premium tax that may be applicable to a
particular Contract. Premium taxes currently range from 0% to 3.5% of premium
based on the state in which the Contract is sold.
VIP MONEY MARKET PORTFOLIO SUB-ACCOUNT YIELD. From time to time,
advertisements and sales literature may quote the current annualized yield of
the Money Market Sub-Account for a seven-day period in a manner which does not
take into consideration any realized or unrealized gains or losses on shares of
the VIP Money Market Portfolio or on its portfolio securities.
The current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven-day period in the value
of a hypothetical account under a Contract having a balance of one Accumulation
Unit of the Money Market Sub-Account at the beginning of the period dividing
such net change in account value of the hypothetical account to determine the
base period return, and annualizing this quotient on a 365-day basis. The net
change in account value reflects: 1) net income from the Portfolio attributable
to the hypothetical account; and 2) charges and deductions imposed under the
Contract which are attributable to the hypothetical account. The charges and
deductions include the per unit charges for the hypothetical account for: 1) the
Annual Contract Charge; 2) Administration Charge; and 3) the Mortality and
Expense Risk Charges. For purposes of calculating current yields for a Contract,
an average per unit administration fee is used based on the $30 Annual Contract
Charge deducted at the end of each Contract Year. Current Yield will be
calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) x (365/7)
Where:
NCS = the net change in the value of the Portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation) for the seven-day period
attributable to a hypothetical account having a balance of 1
Sub-Account Accumulation Unit.
ES = per unit expenses attributable to the hypothetical account for the
seven-day period.
UV = The Accumulation Unit value on the first day of the seven-day
period.
The current yield of the sub-account for the seven day period ended
December 31, 1997 was 3.90%.
EFFECTIVE YIELD. The effective yield of the Money Market Sub-Account
determined on a compounded basis for the same seven-day period may also be
quoted.
The effective yield is calculated by compounding the unannualized base
period return according to the following formula:
Effective Yield = (1 + ((NCS - ES)/UV)) 365/7 - 1
Where:
NCS = the net change in the value of the Portfolio (exclusive of
realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) for the seven-day period
attributable to a hypothetical account having a balance of 1
Sub-Account unit.
ES = per Accumulation Unit expenses attributable to the hypothetical
account for the seven-day period.
UV = the Accumulation Unit value for the first day of the seven-day
period.
The effective yield of the sub-account for the seven day period ended
December 31, 1997 was 3.97%.
Because of the charges and deductions imposed under the Contracts, the
yield for the Money Market Sub-Account will be lower than the yield for the VIP
Money Market Portfolio.
The current and effective yields on amounts held in the Money Market
Sub-Account normally will fluctuate on a daily basis. THEREFORE, THE DISCLOSED
YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION OF FUTURE
YIELDS OR RATES OF RETURN. The Money Market Sub-Account's actual yield is
affected by changes in interest rates on money market securities, average
portfolio maturity of the VIP Money Market Portfolio, the types and quality of
portfolio securities held by VIP Money Market Portfolio and the VIP Money Market
Portfolio's operating expenses. Yields on amounts held in the Money Market
Sub-Account may also be presented for periods other than a seven-day period.
OTHER SUB-ACCOUNT YIELDS. From time to time, sales literature or
advertisements may quote the current annualized yield of one or more of the
Sub-Accounts (except the Money Market Sub-Account) for a Contract for 30-day or
one-month periods. The annualized yield of a Sub-Account refers to income
generated by the Sub-Account over a specific 30-day or one-month period. Because
the yield is annualized, the yield generated by a Sub-Account during a 30-day or
one-month period is assumed to be generated each period over a 12-month period.
The yield is computed by: 1) dividing the net investment income of the Fund
attributable to the Sub-Account Accumulation Units less Sub-Account expenses for
the period; by 2) the maximum offering price per Accumulation Unit on the last
day of the period times the daily average number of units outstanding for the
period; by 3) compounding that yield for a six-month period; and by 4)
multiplying that result by 2. Expenses attributable to the Sub-Account include
the Administration Charge and the Mortality and Expense Risk Charges. The yield
calculation assumes an Annual Contract Charge of $30 per year per Contract
deducted at the end of each Contract Year. For purposes of calculating the
30-day or one-month yield, an average Annual Contract Charge per dollar of
Contract Value in the Variable Account is used to determine the amount of the
charge attributable to the Sub-Account for the 30-day or one-month period. The
30-day or one-month yield is calculated according to the following formula:
Yield = 2 x [(((NI - ES)/(U x UV)) + 1) 6 - 1]
Where:
NI = net income of the Portfolio for the 30-day or one-month period
attributable to the Sub-Account's Accumulation Units.
ES = expenses of the Sub-Account for the 30-day or one-month period.
U = the average number of Accumulation Units outstanding.
UV = the Accumulation Unit value of the close (highest) of the last day
in the 30-day or one-month period.
The annualized yield for the Northstar Multi-Sector Bond Portfolio
Sub-Account for the month ended December 31, 1997 was 5.51%. The annualized
yield for the Northstar Variable Trust High Yield Bond Portfolio Sub-Account for
the month ended December 31, 1997 was 7.77%. The annualized yield
for the Neuberger&Berman Advisers Management Trust Limited Maturity Bond
Portfolio Sub-Account for the month ended December 31, 1997 was 2.81%.
Because of the charges and deductions imposed under the Contract, the yield
for the Sub-Account will be lower than the yield for the corresponding Fund.
The yield on the amounts held in the Sub-Accounts normally will fluctuate
over time. THEREFORE, THE DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN
INDICATION OR REPRESENTATION OF FUTURE YIELDS OR RATES OF RETURN. The
Sub-Account's actual yield is affected by the types and quality of portfolio
securities held by the Fund and its operating expenses.
Yield calculations do not take into account the Withdrawal Charges under
the Contracts. The Withdrawal Charge for Transfer Series Contracts is equal to
2% to 6% of Purchase Payments paid during the six years prior to the withdrawal
(including the year in which the withdrawal is made) on amounts withdrawn or
withdrawn under the Contract. The Withdrawal Charge for Flex Series Contracts is
equal to 1% to 8% of amounts withdrawn under the Contracts during the first 10
Contract Years.
AVERAGE ANNUAL TOTAL RETURNS. From time to time, sales literature or
advertisements may also quote average annual total returns for one or more of
the Sub-Accounts for various periods of time, excluding the money market
Sub-Account.
Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month-end practicable, considering the type
and media of the communication and will be stated in the communication.
Average annual total returns will be calculated using Sub-Account
Accumulation Unit values which the Company calculates on each Valuation Date
based on the performance of the Sub-Account's underlying Fund, the deductions
for the Mortality and Expense Risk Charges, the Administration Charge, and the
Annual Contract Charge. The calculation assumes that the Annual Contract Charge
is $30 per year per Contract deducted at the end of each Contract Year. For
purposes of calculating average annual total return, an average per dollar
Annual Contract Charge attributable to the hypothetical account for the period
is used. The calculation also assumes full withdrawal of the Contract at the end
of the period for the return quotation. Total returns will therefore reflect a
deduction of the Withdrawal Charge in the case of the Transfer Series Contracts,
for any period less than six years and in the case of the Flex Series Contracts,
for any period less than 11 years. The total return will then be calculated
according to the following formula:
TR = ((ERV/P) 1/N) - 1
Where:
TR = The average annual total return net of Sub-Account recurring
charges.
ERV = the ending redeemable value (net of any applicable surrender
charge) of the hypothetical account at the end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
Following are the Average Annual Total Returns for Sub-Accounts as of
December 31, 1997.
FOR THE PERIOD FOR THE PERIOD
FROM DATE OF FROM DATE OF
FOR THE 1-YEAR FOR THE 1-YEAR INCEPTION OF INCEPTION OF
PERIOD ENDED PERIOD ENDED SUB-ACCOUNT TO SUB-ACCOUNT TO
SUB-ACCOUNT 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- --------------- ---------------- ---------------- ---------------
++T.S. F.S. T.S. F.S.
Alger American Growth Portfolio 18.26% 14.76% 13.38% 11.28%
(Sub-Account Inception: 10/20/95)
Alger American Leveraged AllCap Portfolio 12.29% 9.22% 11.14% 9.16%
(Sub-Account Inception: 10/20/95)
Alger American MidCap Growth Portfolio 7.70% 4.96% 25.82% 23.11%
(Sub-Account Inception: 10/20/95)
Alger American Small Capitalization Portfolio 4.14% 1.65% 1.44% (0.02)%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Equity-Income Portfolio 20.58% 16.91% 18.47% 16.12%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Growth Portfolio 16.03% 12.69% 11.95% 9.93%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Overseas Portfolio 4.31% 1.81% 8.80% 6.93%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager: Growth Portfolio 17.59% 14.14% 18.06% 15.73%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Portfolio 13.25% 10.10% 14.21% 12.06%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Contrafund Portfolio 16.68% 13.29% 17.77% 15.45%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Index 500 Portfolio 25.22% 21.21% 24.10% 21.47%
(Sub-Account Inception: 10/20/95)
Janus Aggressive Growth Portfolio N/A N/A 8.86% 2.52%
(Sub-Account Inception: 8/8/97)
Janus Growth Portfolio N/A N/A (10.34)% (14.71)%
(Sub-Account Inception: 8/8/97)
Janus International Growth Portfolio N/A N/A (22.92)% (26.07)%
(Sub-Account Inception: 8/8/97)
Janus Worldwide Growth Portfolio N/A N/A (18.33)% (21.92)%
(Sub-Account Inception: 8/8/97)
Neuberger&Berman AMT Limited Maturity Bond N/A N/A (8.99)% (13.50)%
Portfolio (Sub-Account Inception: 8/8/97)
Neuberger&Berman AMT Partners Portfolio N/A N/A (7.06)% (11.76)%
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Growth Portfolio 7.36% 4.64% 14.60% 12.44%
(Sub-Account Inception: 10/20/95)
Northstar Variable Trust High Yield Bond Portfolio N/A N/A (15.00) (18.91)
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Income and Growth Portfolio 8.49% 5.69% 11.64% 9.62%
(Sub-Account Inception: 10/20/95)
Northstar Variable Trust International Value Portfolio N/A N/A (11.58) (15.83)
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio (1.01)% (3.13)% 6.42% 4.68%
(Sub-Account Inception: 10/20/95)
OCC Equity Portfolio N/A N/A 2.00% (3.62)%
(Sub-Account Inception: 8/8/97)
OCC Global Equity Portfolio N/A N/A (25.27)% (28.20)%
(Sub-Account Inception: 8/8/97)
OCC Managed Portfolio N/A N/A (11.66)% (15.90)%
(Sub-Account Inception: 8/8/97)
OCC Small Cap Portfolio N/A N/A (8.93)% (13.44)%
(Sub-Account Inception: 8/8/97)
- -----------------
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 21 of the
Prospectus.)
From time to time, sales literature or advertisements may quote average
annual total returns for periods prior to the date the Sub-Accounts commenced
operations. Such performance information for the Sub-Accounts will be calculated
based on the performance of the Funds and the assumption that the Sub-Accounts
were in existence for the same periods as those indicated for the Funds, with
the level of Contract charges currently in effect.
Such average annual total return information for the Sub-Accounts is as
follows:
FOR THE 1-YEAR FOR THE 5-YEAR
PERIOD ENDED PERIOD ENDED
SUB-ACCOUNT 12/31/97 12/31/97
- ----------- ----------------------- -----------------------
++T.S. F.S. T.S. F.S.
Alger American Growth Portfolio 18.26% 14.76% 16.92% 16.01%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 12.29% 9.22% N/A N/A
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 7.70% 4.96% N/A N/A
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 4.14% 1.65% 10.30% 9.56%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 20.58% 16.91% 17.79% 16.86%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 16.03% 12.69% 15.65% 14.76%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 4.31% 1.81% 11.77% 10.98%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth Portfolio 17.59% 14.14% N/A N/A
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 13.25% 10.10% 10.63% 9.88%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 16.68% 13.29% N/A N/A
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 25.22% 21.21% 17.55% 16.62%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 5.39% 2.81% N/A N/A
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 15.31% 12.02% N/A N/A
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 11.14% 8.15% N/A N/A
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 14.72% 11.47% N/A N/A
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited (0.43)% (2.59)% 3.25% 2.73%
Maturity Bond Portfolio (a)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (a) 23.67% 19.78% N/A N/A
(Portfolio Inception: 3/22/94)
Northstar Variable Trust Growth Portfolio 7.36% 4.64% N/A N/A
(Portfolio Inception: 5/6/94)
Northstar Variable Trust High Yield Bond Portfolio 1.79% (0.53)% N/A N/A
(Portfolio Inception: 5/6/94)
Northstar Variable Trust Income and Growth Portfolio 8.49% 5.69% N/A N/A
(Portfolio Inception: 5/6/94)
Northstar Variable Trust International Value Portfolio N/A N/A N/A N/A
(Portfolio Inception: 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio (1.01)% (3.13)% N/A N/A
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (b) 19.13% 15.56% 17.05% 16.14%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 6.73% 4.05% N/A N/A
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 14.86% 11.60% 17.51% 16.58%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (b) 14.81% 11.56% 12.27% 11.47%
(Portfolio Inception: 8/1/88)
- -----------------
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 21 of the
Prospectus.)
[WIDE TABLE CONTINUED FROM ABOVE]
FOR THE PERIOD FROM
FOR THE 10-YEAR DATE OF INCEPTION OF
PERIOD ENDED PORTFOLIO TO
SUB-ACCOUNT 12/31/97 12/31/97
- ----------- ----------------------- ---------------------------
T.S. F.S. T.S. F.S.
Alger American Growth Portfolio N/A N/A 17.44% 17.20%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio N/A N/A 30.42% 30.42%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio N/A N/A 19.67% 18.65%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio N/A N/A 17.25% 17.13%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 14.79% 14.68% 12.76% 12.76%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 15.24% 15.14% 13.64% 13.64%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 7.80% 7.70% 6.42% 6.42%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth Portfolio N/A N/A 19.66% 17.73%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio N/A N/A 10.86% 10.62%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio N/A N/A 25.09% 22.94%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio N/A N/A 17.71% 16.87%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio N/A N/A 16.95% 15.93%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio N/A N/A 15.39% 14.41%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio N/A N/A 16.50% 15.25%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio N/A N/A 20.68% 19.56%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited 5.29% 5.20% 6.37% 6.37%
Maturity Bond Portfolio (a)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (a) N/A N/A 21.43% 20.03%
(Portfolio Inception: 3/22/94)
Northstar Variable Trust Growth Portfolio N/A N/A 15.00% 13.80%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust High Yield Bond Portfolio N/A N/A 8.52% 7.57%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust Income and Growth Portfolio N/A N/A 11.44% 10.37%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust International Value Portfolio N/A N/A (11.58)% (15.83)%
(Portfolio Inception: 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio N/A N/A 6.64% 5.76%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (b) N/A N/A 15.61% 15.50%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio N/A N/A 13.75% 12.00%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) N/A N/A 18.33% 18.22%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (b) N/A N/A 13.54% 13.43%
(Portfolio Inception: 8/1/88)
- -----------------
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 21 of the
Prospectus.)
The Company may also disclose average annual total returns for the Funds
since their inception, including such disclosure for periods prior to the date
the Variable Account commenced operations.
Such average annual total return information for the Funds is as follows:
FOR THE PERIOD
FROM DATE OF
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR INCEPTION OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
PORTFOLIO 12/31/97 12/31/97 12/31/97 12/31/97
- --------- ---------------- ---------------- ----------------- ---------------
Alger American Growth Portfolio 25.75% 19.28% N/A 19.42%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 19.68% N/A N/A 33.55%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 15.01% N/A N/A 22.09%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 11.39% 12.65% N/A 19.22%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 28.11% 20.16% 16.72% 14.66%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 23.48% 18.00% 17.19% 15.56%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 11.56% 14.12% 9.62% 8.22%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth Portfolio 25.07% N/A N/A 22.74%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 20.65% 12.98% N/A 12.73%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 24.14% N/A N/A 28.17%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 32.82% 19.91% N/A 19.87%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 12.66% N/A N/A 19.44%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 22.75% N/A N/A 17.87%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 18.51% N/A N/A 19.29%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 22.15% N/A N/A 23.18%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited 6.74% 5.63% 7.07% 8.17%
Maturity Bond Portfolio (a)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (a) 31.25% N/A N/A 24.18%
(Portfolio Inception: 3/22/94)
Northstar Variable Trust Growth Portfolio 14.66% N/A N/A 17.80%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust High Yield Bond Portfolio 9.00% N/A N/A 11.35%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust Income and Growth Portfolio 15.81% N/A N/A 14.25%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust International Value Portfolio N/A N/A N/A 3.30%
(Since Inception 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio 6.15% N/A N/A 9.48%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (b) 26.63% 19.42% N/A 17.56%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 14.02% N/A N/A 16.93%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 22.29% 19.88% N/A 20.33%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (b) 22.24% 14.62% N/A 15.46%
(Portfolio Inception: 8/1/88)
- -----------------
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 21 of the
Prospectus.)
OTHER TOTAL RETURNS. From time to time, sales literature or advertisements
may quote average annual total returns that do not reflect the Withdrawal
Charge. These returns are calculated in exactly the same way as average annual
total returns described above, except that the ending redeemable value of the
hypothetical account for the period is replaced with an ending value for the
period that does not take into account any charges on amounts
withdrawn. Because the Withdrawal Charge will not be reflected in those
quotations, there is no differentiation between the Transfer Series Contracts
and the Flex Series Contracts. Listed in the chart below are the Average Annual
Total Returns for the Sub-Accounts for the indicated periods.
FOR THE PERIOD
FROM DATE OF
FOR THE 1-YEAR INCEPTION OF
PERIOD ENDED SUB-ACCOUNT TO
SUB-ACCOUNT 12/31/97 12/31/97
- ----------- ---------------- ---------------
Alger American Growth Portfolio 23.66% 15.13%
(Sub-Account Inception: 10/20/95)
Alger American Leveraged AllCap Portfolio 17.69% 12.93%
(Sub-Account Inception: 10/20/95)
Alger American MidCap Growth Portfolio 13.10% 27.36%
(Sub-Account Inception: 10/20/95)
Alger American Small Capitalization Portfolio 9.54% 3.43%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Equity-Income Portfolio 25.98% 20.13%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Growth Portfolio 21.43% 13.72%
(Sub-Account Inception: 10/20/95)
Fidelity VIP Overseas Portfolio 9.71% 10.63%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Growth Portfolio 22.99% 19.72%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Asset Manager Portfolio 18.65% 15.94%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Contrafund Portfolio 22.08% 19.44%
(Sub-Account Inception: 10/20/95)
Fidelity VIP II Index 500 Portfolio 30.62% 25.66%
(Sub-Account Inception: 10/20/95)
Janus Aggressive Growth Portfolio N/A 23.74%
(Sub-Account Inception: 8/8/97)
Janus Growth Portfolio N/A 2.94%
(Sub-Account Inception: 8/8/97)
Janus International Growth Portfolio N/A (10.77)%
(Sub-Account Inception: 8/8/97)
Janus Worldwide Growth Portfolio N/A (5.76)%
(Sub-Account Inception: 8/8/97)
Neuberger&Berman AMT Limited Maturity Bond Portfolio N/A 4.40%
(Sub-Account Inception: 8/8/97)
Neuberger&Berman AMT Partners Portfolio N/A 6.50%
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Growth Portfolio 12.76% 16.32%
(Sub-Account Inception: 10/20/95)
Northstar Variable Trust High Yield Bond Portfolio N/A (2.13)
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Income and Growth Portfolio 13.89% 13.41%
(Sub-Account Inception: 10/20/95)
Northstar Variable Trust International Value Portfolio N/A 1.59
(Sub-Account Inception: 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio 4.39% 8.29%
(Sub-Account Inception: 10/20/95)
OCC Equity Portfolio N/A 16.33%
(Sub-Account Inception: 8/8/97)
OCC Global Equity Portfolio N/A (13.34)%
(Sub-Account Inception: 8/8/97)
OCC Managed Portfolio N/A 1.51%
(Sub-Account Inception: 8/8/97)
OCC Small Cap Portfolio N/A 4.47%
(Sub-Account Inception: 8/8/97)
The Average Annual Total Returns listed below do not reflect deduction of
the withdrawal charge and are calculated based on the assumption that the
Sub-Accounts were in existence for the same periods as those indicated for the
funds:
FOR THE PERIOD
FROM DATE OF
FOR THE 1-YEAR FOR THE 5-YEAR FOR THE 10-YEAR INCEPTION OF
PERIOD ENDED PERIOD ENDED PERIOD ENDED PORTFOLIO TO
SUB-ACCOUNT 12/31/97 12/31/97 12/31/97 12/31/97
- ----------- --------------- ---------------- ----------------- ---------------
Alger American Growth Portfolio 23.66% 17.30% N/A 17.44%
(Portfolio Inception: 1/9/89)
Alger American Leveraged AllCap Portfolio 17.69% N/A N/A 31.34%
(Portfolio Inception: 1/25/95)
Alger American MidCap Growth Portfolio 13.10% N/A N/A 20.07%
(Portfolio Inception: 5/3/93)
Alger American Small Capitalization Portfolio 9.54% 10.78% N/A 17.25%
(Portfolio Inception: 9/21/88)
Fidelity VIP Equity-Income Portfolio 25.98% 18.17% 14.79% 12.76%
(Portfolio Inception: 10/9/86)
Fidelity VIP Growth Portfolio 21.43% 16.05% 15.24% 13.64%
(Portfolio Inception: 10/9/86)
Fidelity VIP Overseas Portfolio 9.71% 12.22% 7.80% 6.42%
(Portfolio Inception: 1/28/87)
Fidelity VIP II Asset Manager: Growth Portfolio 22.99% N/A N/A 20.70%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Asset Manager Portfolio 18.65% 11.11% N/A 10.86%
(Portfolio Inception: 9/6/89)
Fidelity VIP II Contrafund Portfolio 22.08% N/A N/A 26.04%
(Portfolio Inception: 1/3/95)
Fidelity VIP II Index 500 Portfolio 30.62% 17.92 N/A 17.88%
(Portfolio Inception: 8/27/92)
Janus Aggressive Growth Portfolio 10.79% N/A N/A 17.46%
(Portfolio Inception: 9/13/93)
Janus Growth Portfolio 20.71% N/A N/A 15.92%
(Portfolio Inception: 9/13/93)
Janus International Growth Portfolio 16.54% N/A N/A 17.31%
(Portfolio Inception: 5/2/94)
Janus Worldwide Growth Portfolio 20.12% N/A N/A 21.13%
(Portfolio Inception: 9/13/93)
Neuberger&Berman AMT Limited 4.97% 3.87% 5.29% 6.37%
Maturity Bond Portfolio (a)
(Portfolio Inception: 9/10/84)
Neuberger&Berman AMT Partners Portfolio (a) 29.07% N/A N/A 22.11%
(Portfolio Inception: 3/22/94)
Northstar Variable Trust Growth Portfolio 12.76% N/A N/A 15.84%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust High Yield Bond Portfolio 7.19% N/A N/A 9.50%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust Income and Growth Portfolio 13.89% N/A N/A 12.35%
(Portfolio Inception: 5/6/94)
Northstar Variable Trust International Value Portfolio N/A N/A N/A 1.59%
(Portfolio Inception: 8/8/97)
Northstar Variable Trust Multi-Sector Bond Portfolio 4.39% N/A N/A 7.66%
(Portfolio Inception: 5/6/94)
OCC Equity Portfolio (b) 24.53% 17.44% N/A 15.61%
(Portfolio Inception: 8/1/88)
OCC Global Equity Portfolio 12.13% N/A N/A 14.99%
(Portfolio Inception: 3/1/95)
OCC Managed Portfolio (b) 20.26% 17.89% N/A 18.33%
(Portfolio Inception: 8/1/88)
OCC Small Cap Portfolio (b) 20.21% 12.72% N/A 13.54%
(Portfolio Inception: 8/1/88)
- -----------------
++ Key: T.S. = Transfer Series Contract; F.S. = Flex Series Contract. (See
"Withdrawal Charge (Contingent Deferred Sale Charge)" on page 21 of the
Prospectus.)
a) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust. The figures
reported under "Investment Management and Administration Fees" include the
aggregate of the administration fees paid by the Portfolio and the
management fees paid by its corresponding Series. Similarly, "Other
Expenses" includes all other expenses of the Portfolio and its
corresponding Series.
(b) On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two
investment funds, the Old Trust and the present OCC Accumulation Trust (the
"Trust") at which time the Trust commenced operations. The total net assets
for the Equity, Managed, and Small Cap Portfolios immediately after the
transaction were $86,789,755, $682,601,380, and $139,812,573, respectively,
with respect to the Old Trust and for the Equity, Managed, and Small Cap
Portfolios, $3,764,598, $51,345,102, and $8,129,274, respectively with
respect to the Trust. For the period prior to September 14, 1994, the
performance figures for the Equity, Managed, and Small Cap Portfolios of
the Trust reflect the performance of the Equity, Managed, and Small Cap
Portfolios of the Old Trust.
The Company may disclose Cumulative Total Returns in conjunction with the
standard formats described above. The Cumulative Total Returns will be
calculated using the following formula:
CTR = ERV/P - 1
Where:
CTR = the Cumulative Total Return net of Sub-Account recurring charges
for the period.
ERV = the ending redeemable value of the hypothetical investment at the
end of the period.
P = a hypothetical single payment of $1,000.
EFFECT OF THE ANNUAL CONTRACT CHARGE ON PERFORMANCE DATA. The Contract
provides for a $30 Annual Contract Charge to be deducted annually at the end of
each Contract Year, from the Sub-Accounts and the Fixed Accounts based on the
proportion that the value of each such account bears to the total Contract
Value. For purposes of reflecting the Annual Contract Charge in yield and total
return quotations, the annual charge is converted into a per-dollar of per-day
charge based on the Annual Contract Charges collected from the average total
assets of the Variable Account and the Fixed Accounts during the calendar year.
COMPANY HOLIDAYS
The Company is closed on the following holidays: New Year's Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Holidays
that fall on a Saturday will be recognized on the previous Friday. Holidays that
fall on a Sunday will be recognized on the following Monday.
FINANCIAL STATEMENTS
The Statement of Additional Information contains the Financial Statements
for the Separate Account One as of December 31, 1997, December 31, 1996 and for
the period of October 20, 1995 (the date on which the Separate Account One
commenced operations) to December 31, 1995. Deloitte & Touche LLP serves as
independent auditors for the Separate Account One. Although the financial
statements are audited, the period they cover is not necessarily indicative of
the longer term performance of the assets held in the Separate Account One.
The financial statements for the Company for the years ended December 31,
1997 and 1996 have been prepared on the basis of statutory accounting principles
("STAT") rather than generally accepted accounting principles ("GAAP"). The
financial statements of the Company, which are contained in this Statement of
Additional Information, should be considered only as bearing on the ability of
the Company to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account One.
INDEPENDENT AUDITORS' REPORT
Board of Directors
Northern Life Insurance Company and
Contract Owners of Northern Life Separate Account One:
We have audited the accompanying combined statement of assets and
liabilities of Northern Life Separate Account One as of December 31, 1997 and
the related combined statements of operations and changes in contract owners'
equity for the years ended December 31, 1997 and 1996. These financial
statements are the responsibility of the management of Northern Life Insurance
Company. Our responsibility is to express an opinion on these financial
statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of the securities owned as of December 31, 1997, by correspondence
with the account custodians. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northern Life Separate
Account One as of December 31, 1997 and the results of its operations and
changes in its contract owners' equity for the years ended December 31, 1997 and
1996, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
February 20, 1998
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARES)
ASSETS:
Investments in mutual funds at market value:
SHARES COST MARKET VALUE
----------- ----------- -------------
Fidelity Variable Insurance Products Fund (VIP) and
Variable Insurance Products Fund II (VIP II):
VIP Money Market Portfolio ............................. 4,867,378 $ 4,867 $ 4,867
VIP II Asset Manager Portfolio ......................... 162,838 2,709 2,933
VIP II Asset Manager: Growth Portfolio ................. 272,248 4,003 4,454
VIP Equity-Income Portfolio ............................ 654,538 14,094 15,892
VIP Growth Portfolio ................................... 228,084 7,515 8,462
VIP Overseas Portfolio ................................. 196,537 3,738 3,773
VIP II Index 500 Portfolio ............................. 192,559 20,278 22,027
VIP II Contrafund Portfolio ............................ 851,237 14,916 16,974
The Alger American Fund:
Small Capitalization ................................... 133,944 5,476 5,860
Growth Portfolio ....................................... 130,839 4,875 5,595
MidCap Growth Portfolio ................................ 207,888 4,539 5,027
Leverage AllCap Portfolio .............................. 150,550 3,090 3,488
Janus Aspen Series:
Aggressive Growth Portfolio ............................ 9,293 184 191
Growth Portfolio ....................................... 45,158 833 834
International Growth Portfolio ......................... 42,464 789 785
Worldwide Growth Portfolio ............................. 123,876 2,899 2,897
Neuberger&Berman Advisers Management Trust (AMT):
Limited Maturity Bond Portfolio ........................ 15,924 224 225
Partners Portfolio ..................................... 127,758 2,602 2,632
Northstar Variable Trust:
Growth Portfolio ....................................... 979,561 14,407 15,526
High Yield Bond Portfolio .............................. 196,125 1,052 1,039
Income & Growth Portfolio .............................. 277,744 3,535 3,611
International Value Portfolio .......................... 57,424 582 580
Multi-Sector Bond Portfolio ............................ 558,808 2,929 2,872
OCC Accumulation Trust:
Equity Portfolio ....................................... 13,317 473 486
Global Equity Portfolio ................................ 12,547 192 180
Managed Portfolio ...................................... 65,708 2,786 2,785
Small Cap Portfolio .................................... 18,846 499 497
-------- --------
Total Investments ...................................... $124,086
Total Assets ......................................... $134,492
========
LIABILITIES AND CONTRACT OWNERS' EQUITY:
Due to Northern Life Insurance Company for
contract charges ...................................... $ 145
Contract Owners' Equity ................................ 134,347
--------
Total Liabilities and Contract Owners' Equity ......... $134,492
========
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY
For the years ended December 31, 1997 and 1996
(In Thousands)
TOTAL ALL FUNDS FIDELITY VIP
COMBINED MONEY MARKET PORTFOLIO
----------------------------------------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
Net investment income (loss):
Reinvested dividend income ............. $ 763 $ 67 $ 150 $ 15
Reinvested capital gains ............... 1,327 122 -- --
Administrative expenses ................ (1,154) (146) (41) (4)
------------- ------------- ------------- -------------
Net investment income (loss)
and capital gains: .................... 936 43 109 11
------------- ------------- ------------- -------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares ............ 1,570 70 -- --
Increase (decrease) in unrealized
appreciation of investments ........... 9,174 1,220 -- --
------------- ------------- ------------- -------------
Net realized and unrealized
gains (losses) ...................... 10,744 1,290 -- --
------------- ------------- ------------- -------------
Additions (reductions) from operations 11,680 1,333 109 11
------------- ------------- ------------- -------------
Contract Owners' transactions:
Net premium payments ................... 85,886 27,327 5,425 1,181
Surrenders ............................. (2,114) (94) (249) --
Policy loans ........................... (746) (87) (26) (22)
Transfers between sub-accounts
and/or fixed account .................. 8,613 2,053 (1,494) (72)
Death benefits ......................... (75) -- -- --
Loan collateral interest ............... 5 -- -- --
------------- ------------- ------------- -------------
Additions for Contract Owners'
transactions ........................ 91,569 29,199 3,656 1,087
------------- ------------- ------------- -------------
Net additions for the year ........... 103,249 30,532 3,765 1,098
Contract Owners' Equity,
beginning of the year .................. 31,098 566 1,098 --
------------- ------------- ------------- -------------
Contract Owners' Equity,
end of the year ........................ $ 134,347 $ 31,098 $ 4,863 $ 1,098
============= ============= ============= =============
Units Outstanding, beginning of the year 2,675,715.216 55,709.004 104,844.463 --
Units Outstanding, end of the year ...... 9,878,013.401 2,675,715.216 446,457.715 104,844.463
Net Asset Value per Unit: ............... -- -- $ 10.892569 $ 10.471216
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
FIDELITY VIP II FIDELITY VIP II FIDELITY VIP
ASSET MANAGER PORTFOLIO ASSET MANAGER: GROWTH PORTFOLIO EQUITY-INCOME PORTFOLIO
---------------------------------------- ---------------------------------------- -------------------------------------------
1997 1996 1997 1996 1997 1996
------------------- -------------------- ------------------- -------------------- --------------------- ---------------------
$ 32 $ 2 $ 1 $ 11 $ 89 $ --
82 2 -- 21 449 3
(26) (5) (36) (4) (145) (19)
--------------- ---------------- --------------- ---------------- ----------------- --------------
88 (1) (35) 28 393 (16)
--------------- ---------------- --------------- --------------- ----------------- --------------
24 4 50 3 143 4
178 45 431 21 1,551 246
--------------- --------------- --------------- --------------- ----------------- --------------
202 49 481 24 1,694 250
--------------- --------------- --------------- --------------- ----------------- --------------
290 48 446 52 2,087 234
--------------- --------------- --------------- --------------- ----------------- --------------
1,800 662 2,802 584 8,372 3,514
(21) (2) (55) (2) (156) (12)
(23) -- (29) -- (100) (2)
125 29 582 15 1,198 693
-- -- (16) -- -- --
-- -- -- -- 1 --
--------------- --------------- --------------- --------------- ----------------- ----------------
1,881 689 3,284 597 9,315 4,193
--------------- --------------- --------------- --------------- ----------------- ----------------
2,171 737 3,730 649 11,402 4,427
758 21 716 67 4,469 42
--------------- --------------- --------------- --------------- ----------------- ----------------
$ 2,929 $ 758 $ 4,446 $ 716 $ 15,871 $ 4,469
=============== =============== =============== =============== ================= ================
64,182.784 1,959.639 58,201.338 6,432.006 370,036.342 3,922.397
208,314.653 64,182.784 293,160.469 58,201.338 1,040,329.208 370,036.342
$ 14.060575 $ 11.818133 $ 15.167515 $ 12.298185 $ 15.255943 $ 12.076424
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1997 and 1996
(In Thousands)
FIDELITY VIP FIDELITY VIP
GROWTH PORTFOLIO OVERSEAS PORTFOLIO
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Net investment income (loss):
Reinvested dividend income ........... $ 19 $ 1 $ 25 $ 1
Reinvested capital gains ............. 83 5 99 1
Administrative expenses .............. (84) (11) (42) (6)
------------ ------------ ------------ ------------
Net investment income (loss)
and capital gains: .................. 18 (5) 82 (4)
------------ ------------ ------------ ------------
Realized and unrealized gains (losses):
Net realized gains (losses) on
redemptions of fund shares .......... 40 2 64 2
Increase (decrease) in unrealized
appreciation of investments ......... 864 83 (27) 62
------------ ------------ ------------ ------------
Net realized and unrealized
gains (losses) .................... 904 85 37 64
------------ ------------ ------------ ------------
Additions (reductions) from
operations ........................ 922 80 119 60
------------ ------------ ------------ ------------
Contract Owners' transactions:
Net premium payments ................. 4,762 1,996 2,624 1,162
Surrenders ........................... (103) (7) (143) (4)
Policy loans ......................... (49) (14) (33) (1)
Transfers between sub-accounts
and/or fixed account ................ 594 231 (25) (4)
Death benefits ....................... (10) -- (3) --
Loan collateral interest ............. 1 -- -- --
------------ ------------ ------------ ------------
Additions for Contract Owners'
transactions ...................... 5,195 2,206 2,420 1,153
------------ ------------ ------------ ------------
Net additions for the year ......... 6,117 2,286 2,539 1,213
Contract Owners' Equity,
beginning of the year ................ 2,336 50 1,231 18
------------ ------------ ------------ ------------
Contract Owners' Equity,
end of the year ...................... $ 8,453 $ 2,336 $ 3,770 $ 1,231
============ ============ ============ ============
Units Outstanding, beginning of the year 210,258.492 5,111.723 106,840.466 1,765.385
Units Outstanding, end of the year .... 624,733.968 210,258.492 297,559.671 106,840.466
Net Asset Value per Unit: ............. $ 13.528573 $ 11.110374 $ 12.665346 $ 11.513477
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
FIDELITY VIP II FIDELITY VIP II ALGER AMERICAN
INDEX 500 PORTFOLIO CONTRAFUND PORTFOLIO SMALL CAPITALIZATION PORTFOLIO
- ---------------------------------- ---------------------------------- ----------------------------------
1997 1996 1997 1996 1997 1996
- --------------- --------------- --------------- --------------- --------------- ---------------
$ 42 $ 1 $ 39 $ -- $ -- $ --
86 2 103 1 138 2
(163) (13) (151) (17) (67) (15)
- --------------- --------------- --------------- --------------- --------------- ---------------
(35) (10) (9) (16) 71 (13)
- --------------- --------------- --------------- --------------- --------------- ---------------
842 4 134 10 (39) 11
1,533 216 1,759 298 387 (7)
- --------------- --------------- --------------- --------------- --------------- ---------------
2,375 220 1,893 308 348 4
- --------------- --------------- --------------- --------------- --------------- ---------------
2,340 210 1,884 292 419 (9)
- --------------- --------------- --------------- --------------- --------------- ---------------
14,610 2,607 10,713 3,027 2,917 2,623
(244) (7) (169) (12) (90) (13)
(146) (1) (102) (2) (16) (9)
2,460 157 768 486 (21) (42)
-- -- (11) -- -- --
1 -- 1 -- -- --
- --------------- --------------- --------------- --------------- --------------- ---------------
16,681 2,756 11,200 3,499 2,790 2,559
- --------------- --------------- --------------- --------------- --------------- ---------------
19,021 2,966 13,084 3,791 3,209 2,550
2,973 7 3,868 77 2,643 93
- --------------- --------------- --------------- --------------- --------------- ---------------
$ 21,994 $ 2,973 $ 16,952 $ 3,868 $ 5,852 $ 2,643
=============== =============== =============== =============== =============== ===============
231,904.126 702.335 314,102.807 7,416.671 261,902.389 9,498.434
1,310,991.579 231,904.126 1,124,760.300 314,102.807 527,947.156 261,902.389
$ 16.775721 $ 12.820118 $ 15.071819 $ 12.311895 $ 11.086367 $ 10.092908
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1997 and 1996
(In Thousands)
ALGER AMERICAN ALGER AMERICAN
GROWTH PORTFOLIO MIDCAP GROWTH PORTFOLIO
------------------------------ ------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
Net investment income (loss):
Reinvested dividend income ............... $ 10 $ -- $ 2 $ --
Reinvested capital gains ................. 19 11 49 5
Administrative expenses .................. (56) (11) (61) (10)
------------- ------------- ------------- -------------
Net investment (loss) income and
capital gains: .......................... (27) -- (10) (5)
------------- ------------- ------------- -------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions
of fund shares .......................... 40 8 27 3
Increase (decrease) in unrealized
appreciation of investments ............. 629 88 416 71
------------- ------------- ------------- -------------
Net realized and unrealized
gains (losses) ........................ 669 96 443 74
------------- ------------- ------------- -------------
Additions (reductions) from operations . 642 96 433 69
------------- ------------- ------------- -------------
Contract Owners' transactions:
Net premium payments ..................... 2,855 1,738 1,777 2,034
Surrenders ............................... (64) (5) (65) (8)
Policy loans ............................. (21) (10) (24) (3)
Transfers between sub-accounts and/or
fixed account ........................... 362 (73) 421 364
Death benefits ........................... (7) -- -- --
Loan collateral interest ................. -- -- -- --
------------- ------------- ------------- -------------
Additions for Contract
Owners' transactions .................. 3,125 1,650 2,109 2,387
------------- ------------- ------------- -------------
Net additions for the year ............. 3,767 1,746 2,542 2,456
Contract Owners' Equity,
beginning of the year .................... 1,821 75 2,478 22
------------- ------------- ------------- -------------
Contract Owners' Equity,
end of the year .......................... $ 5,588 $ 1,821 $ 5,020 $ 2,478
============= ============= ============= =============
Units Outstanding, beginning of the year .. 162,852.097 7,530.562 227,029.231 2,208.390
Units Outstanding, end of the year ........ 402,924.566 162,852.097 405,579.543 227,029.231
Net Asset Value per Unit: ................. $ 13.868396 $ 11.184155 $ 12.379085 $ 10.915641
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
ALGER AMERICAN JANUS ASPEN SERIES JANUS ASPEN SERIES
LEVERAGE ALLCAP PORTFOLIO AGGRESSIVE GROWTH PORTFOLIO GROWTH PORTFOLIO
- ------------------------------ ----------------------------- ------------------------------
1997 1996 1997 1996 1997 1996
- ------------- ------------- ------------- ------------- ------------- -------------
$ -- $ -- $ -- $ -- $ 2 $ --
-- 2 -- -- --
(43) (7) -- -- (2) --
- ------------- ------------- ------------- ------------- ------------- -------------
(43) (5) -- -- -- --
- ------------- ------------- ------------- ------------- ------------- -------------
69 3 -- -- 2 --
360 36 7 -- 1 --
- ------------- ------------- ------------- ------------- ------------- -------------
429 39 7 -- 3 --
- ------------- ------------- ------------- ------------- ------------- -------------
386 34 7 -- 3 --
- ------------- ------------- ------------- ------------- ------------- -------------
2,042 1,400 178 -- 737 --
(207) (11) -- -- -- --
(27) (7) -- -- (9) --
(184) 23 6 -- 102 --
(4) -- -- -- -- --
-- -- -- -- -- --
- ------------- ------------- ------------- ------------- ------------- -------------
1,620 1,405 184 -- 830 --
- ------------- ------------- ------------- ------------- ------------- -------------
2,006 1,439 191 -- 833 --
1,478 39 -- -- -- --
- ------------- ------------- ------------- ------------- ------------- -------------
$ 3,484 $ 1,478 $ 191 -- $ 833 --
============= ============= ============= ============= ============= =============
130,393.355 3,863.604 -- -- -- --
260,379.569 130,393.355 17,505.521 -- 82,286.238 --
$ 13.380857 $ 11.338130 $ 10.899289 -- $ 10.130654 --
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1997 and 1996
(In Thousands)
JANUS ASPEN SERIES
INTERNATIONAL GROWTH JANUS ASPEN SERIES
PORTFOLIO WORLDWIDE GROWTH PORTFOLIO
------------------------------ ----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -----------
Net investment income (loss):
Reinvested dividend income ....................... $ 1 $ -- $ 6 $ --
Reinvested capital gains ......................... -- -- -- --
Administrative expenses .......................... (2) -- (6) --
------------- ------------- ------------- -----------
Net investment (loss) income
and capital gains: .............................. (1) -- -- --
------------- ------------- ------------- -----------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund
shares .......................................... -- -- -- --
(Decrease) increase in unrealized appreciation of
investments ..................................... (4) -- (2) --
------------- ------------- ------------- -----------
Net realized and unrealized
(losses) gains ................................ (4) -- (2) --
------------- ------------- ------------- -----------
(Reductions) additions from operations ......... (5) -- (2) --
------------- ------------- ------------- -----------
Contract Owners' transactions:
Net premium payments ............................. 608 -- 2,492 --
Surrenders ....................................... -- -- (2) --
Policy loans ..................................... (11) -- (13) --
Transfers between sub-accounts
and/or fixed account ............................ 192 -- 419 --
Death benefits ................................... -- -- -- --
Loan collateral interest ......................... -- -- -- --
------------- ------------- ------------- -----------
Additions for Contract
Owners' transactions .......................... 789 -- 2,896 --
------------- ------------- ------------- -----------
Net additions for the year ..................... 784 -- 2,894 --
Contract Owners' Equity, beginning of the year ... -- -- -- --
------------- ------------- ------------- -----------
Contract Owners' Equity, end of the year ......... $ 784 -- $ 2,894 --
============= ============= ============= ===========
Units Outstanding, beginning of the year .......... -- -- -- --
Units Outstanding, end of the year ................ 81,884.298 -- 295,875.300 --
Net Asset Value per Unit: ......................... $ 9.571986 -- $ 9.781783 --
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
NEUBERGER&BERMAN AMT
LIMITED MATURITY BOND NEUBERGER&BERMAN AMT NORTHSTAR VARIABLE TRUST
PORTFOLIO PARTNERS PORTFOLIO GROWTH PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------
1997 1996 1997 1996 1997 1996
- ------------- ------------- ------------- ------------- ------------- -------------
$ -- $ -- $ -- $ -- $ 76 $ 7
-- -- -- -- 166 11
-- -- (5) -- (156) (17)
- ------------- ------------- ------------- ------------- -------------- -------------
-- -- (5) -- 86 1
- ------------- ------------- ------------- ------------- -------------- -------------
-- -- 4 -- 43 11
1 -- 30 -- 1,049 70
- ------------- ------------- ------------- ------------- -------------- -------------
1 -- 34 -- 1,092 81
- ------------- ------------- ------------- ------------- -------------- -------------
1 -- 29 -- 1,178 82
- ------------- ------------- ------------- ------------- -------------- -------------
196 -- 1,813 -- 10,705 3,699
(1) -- (3) -- (304) (9)
-- -- -- -- (89) (16)
29 -- 787 -- 122 134
-- -- -- -- (7) --
-- -- -- -- 1 --
- ------------- ------------- ------------- ------------- -------------- -------------
224 -- 2,597 -- 10,428 3,808
- ------------- ------------- ------------- ------------- -------------- -------------
225 -- 2,626 -- 11,606 3,890
-- -- -- -- 3,901 11
- ------------- ------------- ------------- ------------- -------------- -------------
$ 225 -- $ 2,626 -- $ 15,507 $ 3,901
============= ============= ============= ============= ============== =============
-- -- -- -- 318,137.812 1,068.330
22,028.741 -- 255,773.135 -- 1,118,715.737 318,137.812
$ 10.197317 -- $ 10.268611 -- $ 13.861318 $ 12.260050
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1997 and 1996
(In Thousands)
NORTHSTAR VARIABLE TRUST NORTHSTAR VARIABLE TRUST
HIGH YIELD BOND PORTFOLIO INCOME & GROWTH PORTFOLIO
------------------------------ ------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
Net investment income (loss):
Reinvested dividend income ................... $ 28 $ -- $ 80 $ 15
Reinvested capital gains ..................... 8 -- 22 46
Administrative expenses ...................... (5) -- (27) (4)
------------- ------------- ------------- -------------
Net investment income (loss)
and capital gains: ......................... 31 -- 75 57
------------- ------------- ------------- -------------
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of
fund shares ................................. 49 -- 54 3
(Decrease) increase in unrealized appreciation
of investments .............................. (13) -- 83 (7)
------------- ------------- ------------- -------------
Net realized and unrealized gains (losses) . 36 -- 137 (4)
------------- ------------- ------------- -------------
Additions (reductions) from operations ..... 67 -- 212 53
------------- ------------- ------------- -------------
Contract Owners' transactions:
Net premium payments ......................... 853 -- 1,983 507
Surrenders ................................... (3) -- (34) (1)
Policy loans ................................. -- -- (15) --
Transfers between sub-accounts and/or
fixed account ............................... 158 -- 745 142
Death benefits ............................... -- -- (17) --
Loan collateral interest ..................... -- -- -- --
------------- ------------- ------------- -------------
Additions for Contract Owners' transactions 1,008 -- 2,662 648
------------- ------------- ------------- -------------
Net additions for the year ................. 1,075 -- 2,874 701
Contract Owners' Equity, beginning of the year -- -- 725 24
------------- ------------- ------------- -------------
Contract Owners' Equity, end of the year ...... $ 1,075 -- $ 3,599 $ 725
============= ============= ============= =============
Units Outstanding, beginning of the year ...... -- -- 62,237.333 2,292.052
Units Outstanding, end of the year ............ 105,615.457 -- 270,967.530 62,237.333
Net Asset Value per Unit: ..................... $ 10.176584 -- $ 13.284489 $ 11.651860
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
NORTHSTAR VARIABLE TRUST NORTHSTAR VARIABLE TRUST OCC ACCUMULATION TRUST
INTERNATIONAL VALUE PORTFOLIO MULTI-SECTOR BOND PORTFOLIO EQUITY PORTFOLIO
- ------------------------------ ------------------------------ ------------------------------
1997 1996 1997 1996 1997 1996
- ------------- ------------- ------------- ------------- ------------- -------------
$ 1 $ -- $ 159 $ 14 $ -- $ --
-- -- 15 10 -- --
(1) -- (28) (3) (1) --
- ------------- ------------- ------------- ------------- ------------- -------------
-- -- 146 21 (1) --
- ------------- ------------- ------------- ------------- ------------- -------------
4 -- 16 2 1 --
(2) -- (55) (2) 13 --
- ------------- ------------- ------------- ------------- ------------- -------------
2 -- (39) -- 14 --
- ------------- ------------- ------------- ------------- ------------- -------------
2 -- 107 21 13 --
- ------------- ------------- ------------- ------------- ------------- -------------
453 -- 2,493 593 425 --
(1) -- (176) (1) (20) --
-- -- (4) -- (2) --
126 -- (143) (30) 70 --
-- -- -- -- -- --
-- -- -- -- -- --
- ------------- ------------- ------------- ------------- ------------- -------------
578 -- 2,170 562 473 --
- ------------- ------------- ------------- ------------- ------------- -------------
580 -- 2,277 583 486 --
-- -- 603 20 -- --
- ------------- ------------- ------------- ------------- ------------- -------------
$ 580 -- $ 2,880 $ 603 $ 486 --
============= ============= ============= ============= ============= =============
-- -- 52,792.181 1,937.476 -- --
57,506.716 -- 238,690.820 52,792.181 45,654.119 --
$ 10.073394 -- $ 12.069396 $ 11.437367 $ 10.640989 --
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
For the years ended December 31, 1997 and 1996
(In Thousands)
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
------------------------------
1997 1996
-------------------- -------
Net investment income (loss):
Reinvested dividend income ............................................ $ 1 $ --
Reinvested capital gains .............................................. 8 --
Administrative expenses ............................................... -- --
------------- ----
Net investment income (loss) and capital gains: ..................... 9 --
------------- ----
Realized and unrealized gains (losses):
Net realized gains (losses) on redemptions of fund shares ............. -- --
(Decrease) increase in unrealized appreciation of investments ......... (12) --
------------- ----
Net realized and unrealized gains (losses) .......................... (12) --
------------- ----
Additions (reductions) from operations .............................. (3) --
------------- ----
Contract Owners' transactions:
Net premium payments .................................................. 169 --
Surrenders ............................................................ -- --
Policy loans .......................................................... -- --
Transfers between sub-accounts and/or fixed account ................... 13 --
Death benefits ........................................................ -- --
Loan collateral interest .............................................. -- --
------------- ----
Additions for Contract Owners' transactions ......................... 182 --
------------- ----
Net additions for the year .......................................... 179 --
Contract Owners' Equity, beginning of the year ......................... -- --
------------- ----
Contract Owners' Equity, end of the year ............................... $ 179 --
============= ====
Units Outstanding, beginning of the year ............................... -- --
Units Outstanding, end of the year ..................................... 18,968.362 --
Net Asset Value per Unit: .............................................. $ 9.459272 --
The accompanying notes are an integral part of the financial statements.
COMBINED STATEMENTS OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
OCC ACCUMULATION TRUST OCC ACCUMULATION TRUST
MANAGED PORTFOLIO SMALL CAP PORTFOLIO
- ----------------------------- -----------------------------
1997 1996 1997 1996
- --------------------- ------ -------------------- -------
$ -- $ -- $ -- $ --
-- -- -- --
(5) -- (1) --
----------------- ---- ---------------- ----
(5) -- (1) --
----------------- ---- ---------------- ----
1 -- 2 --
(1) -- (2) --
----------------- ---- ---------------- ----
-- -- -- --
---------------- ---- --------------- ----
(5) -- (1) --
----------------- ---- ---------------- ----
1,734 -- 348 --
(2) -- (2) --
(4) -- (3) --
1,047 -- 154 --
-- -- -- --
-- -- -- --
---------------- ---- --------------- ----
2,775 -- 497 --
---------------- ---- --------------- ----
2,770 -- 496 --
-- -- -- --
---------------- ---- --------------- ----
$ 2,770 -- $ 496 --
================ ==== =============== ====
-- -- -- --
274,772.663 -- 48,630.367 --
$ 10.080149 -- $ 10.195889 --
The accompanying notes are an integral part of the financial statements.
NORTHERN LIFE SEPARATE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
Northern Life Separate Account One (the "Account") is a separate account of
Northern Life Insurance Company ("Northern Life"), an indirect, wholly-owned
subsidiary of ReliaStar Financial Corp. The Account commenced operations on
October 20, 1995 and is registered as a unit investment trust under the
Investment Company Act of 1940.
Payments received under the contracts are allocated to sub-accounts of the
Account, each of which is invested in one of the funds listed below during
the year:
THE ALGER AMERICAN FUND FIDELITY VIP
----------------------------------- -----------------------------
Small Capitalization Portfolio VIP Equity-Income Portfolio
Growth Portfolio VIP Growth Portfolio
MidCap Growth Portfolio VIP Money Market Portfolio
Leverage AllCap Portfolio VIP Overseas Portfolio
NORTHSTAR VARIABLE TRUST
------------------------------
Growth Portfolio
High Yield Bond Portfolio
Income & Growth Portfolio
International Value Portfolio
Multi-Sector Bond Portfolio
JANUS ASPEN SERIES FIDELITY VIP II
----------------------------------- --------------------------------
Aggressive Growth Portfolio VIP II Asset Manager Portfolio
Growth Portfolio VIP II Asset Manager: Growth
International Growth Portfolio Portfolio
Worldwide Growth Portfolio VIP II Index 500 Portfolio
VIP II Contrafund Portfolio
OCC ACCUMULATION TRUST
------------------------
Equity Portfolio
Global Equity Portfolio
Managed Portfolio
Small Capitalization
Portfolio
NEUBERGER&BERMAN ADVISERS MANAGEMENT TRUST
-------------------------------------------
Limited Maturity Bond Portfolio
Partners Portfolio
Fred Alger Management, Inc. is the investment adviser for the four portfolios
of The Alger American Fund and is paid fees for its services by The Alger
American Funds Portfolios. Fidelity Management & Research Company is the
investment adviser for Fidelity Variable Insurance Products Fund (VIP) and
Variable Insurance Products Fund II (VIP II) and is paid for its services by
the VIP and VIP II Portfolios. Northstar Investment Management Corporation,
an affiliate of Northern Life, is the investment adviser for the five
portfolios offered through the Northstar Variable Trust and is paid for its
services by the Northstar Funds. Janus Capital Corporation is the investment
adviser for the four portfolios of Janus Aspen Series and is paid fees for
its services by the Janus Aspen Series Portfolios. Neuberger&Berman
Management is the investment adviser for the two portfolios of the Advisers
Management Trust and is paid fees for its services by the Neuberger&Berman
Advisers Management Trust (AMT) Funds. OpCap Advisors is the investment
adviser for the four portfolios of the OCC Accumulation Trust and is paid
fees for its services by the OCC Accumulation Trust Funds. On August 8, 1997,
sub-accounts investing in Northstar Variable Trust Growth Portfolio,
Northstar Variable Trust High Yield Bond Portfolio, Northstar Variable Trust
International Value Portfolio, Alger American, Janus Aspen Series, OCC
Accumulation Trust and Neuberger&Berman AMT were made available to the
Account.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION TRANSACTIONS AND RELATED INVESTMENT INCOME:
The market value of investments in the sub-accounts is based on the closing
net asset values of the fund shares held at the end of the year. Investment
transactions are accounted for on the trade date (date the order to purchase
or redeem is executed) and dividend income and capital gain distributions are
recorded on the ex-dividend date. Net realized gains and losses on
redemptions of shares of the funds are determined on the basis of specific
identification of fund share costs.
NORTHERN LIFE SEPARATE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
VARIABLE ANNUITY RESERVES:
The amount of the reserves for contracts in the distribution year is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by Northern Life, are offset by transfers to or from
Northern Life.
3. FEDERAL INCOME TAXES:
Under current tax law, the income, gains, and losses from the separate
account investments are not taxable to either the Account or Northern Life.
4. CONTRACT CHARGES:
No deduction is made for a sales charge from the purchase payments made for
the contracts. However, on certain surrenders Northern Life will deduct from
the contract value a surrender charge as set forth in the contract.
Certain charges are made by Northern Life to Contract Owners' Variable
Account Contract Value in accordance with the terms of the contracts. These
charges may include: an annual contract charge of $30 from each contract on
the anniversary date or at the time of surrender, if surrender is at a time
other than the anniversary date; a daily administrative charge; and a daily
charge for mortality and expense risk assumed by Northern Life.
Various states and other governmental units levy a premium tax on annuity
contracts issued by insurance companies. If the owner of a contract lives in
a state which levies such a tax, Northern Life may deduct the amount of the
tax from the purchase payments received or the Contract Value immediately
before it is applied to an annuity payout.
NORTHERN LIFE SEPARATE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS:
For the year ended December 31, 1997, investment activity in the funds was as
follows (in thousands):
COST OF PROCEEDS
INVESTING FUND PURCHASES FROM SALES
--------------------------------------------------- ----------- -----------
Fidelity VIP and VIP II:
VIP Money Market Portfolio . ..................... $ 6,632 $ 2,864
VIP II Asset Manager Portfolio . ................. 2,496 524
VIP II Asset Manager: Growth Portfolio . ......... 3,555 299
VIP Equity-Income Portfolio . .................... 10,740 1,016
VIP Growth Portfolio . ........................... 5,625 405
VIP Overseas Portfolio . ......................... 3,089 585
VIP II Index 500 Portfolio ....................... 22,896 6,220
VIP II Contrafund Portfolio ...................... 11,762 553
The Alger American Fund:
Small Capitalization ............................. 3,277 411
Growth Portfolio ................................. 3,330 227
MidCap Growth Portfolio . ........................ 2,556 453
Leverage AllCap Portfolio ........................ 1,975 396
Janus Aspen Series:
Aggressive Growth Portfolio . .................... 185 1
Growth Portfolio . ............................... 862 31
International Growth Portfolio ................... 812 23
Worldwide Growth Portfolio . ..................... 2,929 30
Neuberger&Berman AMT:
Limited Maturity Bond Portfolio . ................ 224 --
Partners Portfolio ............................... 2,825 227
Northstar Variable Trust:
Growth Portfolio ................................. 11,394 865
High Yield Bond Portfolio ........................ 5,179 4,176
Income & Growth Portfolio ........................ 3,639 891
International Value Portfolio .................... 647 69
Multi-Sector Bond Portfolio ...................... 4,422 2,115
OCC Accumulation Trust:
Equity Portfolio ................................. 516 44
Global Equity Portfolio . ........................ 211 19
Managed Portfolio . .............................. 2,852 67
Small Cap Portfolio . ............................ 773 276
-------- -------
Total ............................................ $115,403 $22,787
======== =======
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
Statutory Basis Financial Statements
For the Years Ended December 31, 1997 and 1996
and
Independent Auditors' Report
NORTHERN LIFE INSURANCE COMPANY
TABLE OF CONTENTS
PAGE(S)
INDEPENDENT AUDITORS' REPORT 1
STATUTORY BASIS FINANCIAL STATEMENTS:
Statutory Basis Statements of Admitted Assets,
Liabilities, Surplus and Other Funds 2
Statutory Basis Statements of Operations 3
Statutory Basis Statements of Changes in Capital and Surplus 4
Statutory Basis Statements of Cash Flows 5
Notes to Statutory Basis Financial Statements 6-18
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL
SCHEDULE OF ASSETS AND LIABILITIES 19
SUPPLEMENTAL SCHEDULE OF ASSETS AND
LIABILITIES 20-23
DELOITTE & TOUCHE LLP [LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Northern Life Insurance Company
Seattle, Washington
We have audited the accompanying statutory-basis statements of admitted assets,
liabilities, surplus and other funds of Northern Life Insurance Company (a
wholly owned subsidiary of ReliaStar Life Insurance Company) (the Company) as of
December 31, 1997 and 1996, and the related statutory-basis statements of
operations, changes in capital and surplus, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Washington, which
practices differ from generally accepted accounting principles. The effects on
the financial statements of the variances between the statutory basis of
accounting and generally accepted accounting principles are described in Note
11.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements do not present fairly, in accordance with
generally accepted accounting principles, the financial position of the Company
as of December 31, 1997 and 1996, or the results of its operations or its cash
flows for the years then ended.
In our opinion, such statutory-basis financial statements present fairly, in all
material respects, the assets, liabilities, and surplus and other funds of the
Company as of December 31, 1997 and 1996, and the results of its operations and
its cash flows for the years then ended, on the basis of accounting described in
Note 1.
/s/ DELOITTE & TOUCHE LLP
February 6, 1998
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
Statutory Basis Statements of Admitted Assets,
Liabilities, Surplus and Other Funds
December 31
(IN MILLIONS) 1997 1996
- ----------------------------------------------------------------------------------------------------------------
ASSETS
Bonds, at NAIC Value (Market: 1997, $4,302.7; 1996, $4,066.8) $4,144.4 $3,979.8
Stocks, at NAIC Value (Cost: 1997, $6.5; 1996, $12.6) 6.0 13.2
Mortgage Loans on Real Estate 997.8 760.1
Real Estate .7 2.0
Policy Loans 323.7 289.8
Cash on Hand and on Deposit 12.3 11.6
Short-Term Investments 33.6 31.5
Other Invested Assets 54.1 37.8
Aggregate Write-in for Invested Assets 4.5 .1
- ----------------------------------------------------------------------------------------------------------------
Total Cash and Investments 5,577.1 5,125.9
- ----------------------------------------------------------------------------------------------------------------
Reinsurance Recoverable .5 1.3
Life Insurance Premiums and Annuity Considerations Deferred
and Uncollected 6.1 6.4
Investment Income Due and Accrued 73.6 66.9
Other Assets 5.6 7.3
From Separate Account Statement 141.9 37.9
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $5,804.8 $5,245.7
================================================================================================================
LIABILITIES, SURPLUS AND OTHER FUNDS
Aggregate Reserves for Policies and Contracts $5,230.8 $4,807.3
Policy and Contract Claims 3.4 3.5
Policyholders' Dividends 10.8 10.7
Liability for Premiums and Other Deposit Funds 1.0 1.2
Other Policy and Contract Liabilities 8.6 7.0
Commissions Payable 2.5 4.0
General Expenses Due or Accrued 6.9 4.7
Taxes, Licenses, and Fees Due or Accrued, Excluding
Federal Income Taxes .7 1.1
Federal Income Taxes Due or Accrued (.4) .4
Unearned Investment Income 1.6 1.6
Asset Valuation Reserve 57.7 58.1
Other Liabilities 30.9 32.3
From Separate Account Statement 141.9 37.9
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 5,496.4 4,969.8
- ----------------------------------------------------------------------------------------------------------------
SURPLUS AND OTHER FUNDS
Common Capital Stock 1.5 1.5
Gross Paid In and Contributed Surplus 126.5 126.5
Unassigned Surplus 180.4 147.9
- ----------------------------------------------------------------------------------------------------------------
Total Surplus and Other Funds 308.4 275.9
- ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, SURPLUS AND OTHER FUNDS $5,804.8 $5,245.7
================================================================================================================
The accompanying notes are an integral part of the statutory basis financial
statements.
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
Statutory Basis Statements of Operations
Year Ended December 31
(IN MILLIONS) 1997 1996
- -------------------------------------------------------------------------------------------------------
REVENUES
Premiums and Annuity Considerations $86.4 $74.2
Deposit-Type Funds 693.7 597.2
Considerations for Supplementary Contracts and Dividend
Accumulations 9.9 3.5
Net Investment Income 407.9 382.1
Amortization of Interest Maintenance Reserve 1.9 1.7
Other Income 1.2 1.4
- ------------------------------------------------------------------------------------------------------
Total Revenues $1,201.0 $1,060.1
- ------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Death Benefits $12.5 $12.1
Matured Endowments .3 .2
Annuity Benefits 39.8 29.8
Disability and Accident and Health Benefits .2 .1
Surrender Benefits and Other Fund Withdrawals 456.9 376.2
Interest on Policy or Contract Funds .2 .3
Payments on Supplementary Contracts and Dividend
Accumulations 9.2 3.0
Increase in Reserve for Policies and Contracts 422.1 442.0
Increase in Reserve for Supplementary Contracts Without Life
Contingencies and Dividend and Coupon Accumulations 1.5 1.3
- ------------------------------------------------------------------------------------------------------
Total Benefits 942.7 865.0
Commissions 56.0 66.0
General Insurance Expenses 48.4 42.2
Insurance Taxes, Licenses and Fees, Excluding Federal
Income Taxes 4.1 4.4
Other Disbursements 1.5 1.3
Net Transfers to Separate Accounts 90.4 29.1
- ------------------------------------------------------------------------------------------------------
Total Benefits and Expenses 1,143.1 1,008.0
- ------------------------------------------------------------------------------------------------------
Net Gain from Operations before Dividends to Policyholders
and Federal Income Taxes 57.9 52.1
Dividends to Policyholders .5 .6
- ------------------------------------------------------------------------------------------------------
Net Gain from Operations before Federal Income Taxes 57.4 51.5
Federal Income Taxes (Excluding Tax Expense on
Capital Gains) 17.5 17.6
- ------------------------------------------------------------------------------------------------------
Net Gain from Operations before Net Realized Capital Gains 39.9 33.9
Net Realized Capital Gains (Net of Tax Expense: 1997,$5.3;
1996, $3.6)(Net of IMR Transfers: 1997, $3.5; 1996, $2.3) 1.0 1.5
- ------------------------------------------------------------------------------------------------------
NET INCOME $40.9 $35.4
======================================================================================================
The accompanying notes are an integral part of the statutory basis financial
statements.
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
Statutory Basis Statements of Changes in Capital and Surplus
Year Ended December 31
(IN MILLIONS) 1997 1996
- ----------------------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS, BEGINNING OF YEAR $275.9 $250.9
Net Income 40.9 35.4
Change in Net Unrealized Capital Gains (Losses) (1.4) 3.1
Change in Non-Admitted Assets and Related Items (7.4) .4
Change in Asset Valuation Reserve .4 (13.9)
- ----------------------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS, END OF YEAR $308.4 $275.9
===============================================================================================================
The accompanying notes are an integral part of the statutory basis financial
statements.
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
Statutory Basis Statements of Cash Flows
Year Ended December 31
(IN MILLIONS) 1997 1996
- ----------------------------------------------------------------------------------------------------------------
CASH FROM OPERATIONS
Premiums and Annuity Considerations $86.7 $73.4
Deposit-Type Funds 693.7 597.2
Other Premiums, Considerations and Deposits 9.9 3.5
Allowances and Reserve Adjustments Received on Reinsurance Ceded .1 .2
Investment Income Received 403.2 384.5
Other Income Received 1.0 1.2
Life and Accident and Health Claims Paid (12.4) (12.2)
Surrender Benefits and Other Fund Withdrawals Paid (457.0) (376.5)
Other Benefits to Policyholders Paid (49.1) (33.0)
Commissions, Other Expenses and Taxes Paid (108.3) (109.4)
Net Transfers to Separate Accounts (90.5) (29.1)
Dividends to Policyholders Paid (.6) (.6)
Federal Income Taxes Paid (19.3) (18.1)
Other Operating Expenses Paid (.1) (.1)
- ---------------------------------------------------------------------------------------------------------------
Net Cash from Operations $457.3 $481.0
- --------------------------------------------------------------------------------------------------------------
CASH FROM INVESTMENTS
Proceeds from Investments Sold, Matured or Repaid
Bonds $567.3 $519.5
Stocks 7.9 9.6
Mortgage Loans 155.5 158.4
Real Estate 1.3 6.2
Other Invested Assets 6.6 9.2
Taxes on Capital Gains (4.3) -
- ---------------------------------------------------------------------------------------------------------------
Total Investment Proceeds 734.3 702.9
- --------------------------------------------------------------------------------------------------------------
Cost of Investments Acquired
Bonds 728.9 872.6
Stocks .5 3.2
Mortgage Loans 393.0 249.3
Real Estate .1 -
Other Invested Assets 19.6 16.3
- --------------------------------------------------------------------------------------------------------------
Total Investments Acquired 1,142.1 1,141.4
- --------------------------------------------------------------------------------------------------------------
Net Change in Policy Loans and Premium Notes (33.9) (39.1)
- ---------------------------------------------------------------------------------------------------------------
Net Cash from Investments $(441.7) $(477.6)
- ---------------------------------------------------------------------------------------------------------------
CASH FROM FINANCING AND MISCELLANEOUS SOURCES
Other Sources (Applications), Net $(12.8) $7.4
- --------------------------------------------------------------------------------------------------------------
Net Cash from Financing and Miscellaneous Sources (12.8) 7.4
- --------------------------------------------------------------------------------------------------------------
Net Change in Cash and Short-Term Investments 2.8 10.8
Cash and Short-Term Investments at Beginning of Year 43.1 32.3
- --------------------------------------------------------------------------------------------------------------
Cash and Short-Term Investments at End of Year $45.9 $43.1
==============================================================================================================
The accompanying notes are an integral part of the statutory basis financial
statements.
NORTHERN LIFE INSURANCE COMPANY
(A Wholly Owned Subsidiary of ReliaStar Life Insurance Company)
NOTES TO STATUTORY BASIS FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying financial statements of Northern Life Insurance Company (the
Company) have been prepared in conformity with accounting practices prescribed
or permitted by the National Association of Insurance Commissioners (NAIC) and
the State of Washington. Such statutory insurance accounting practices differ
from generally accepted accounting principles and are intended to reflect a more
conservative perspective by, for example, requiring the immediate recognition of
acquisition costs, providing only for income taxes currently payable, recording
assets considered non-admitted as a reduction of surplus and recording an asset
valuation reserve. The amounts in these financial statements pertain to the
entire Company's business including, as appropriate, its Separate Account
business.
All outstanding shares of the Company are owned by ReliaStar Life Insurance
Company, a Minnesota domiciled insurance company. ReliaStar Life Insurance
Company is in turn a wholly owned subsidiary of ReliaStar Financial Corp.
(ReliaStar) a holding and management company domiciled in Delaware.
NOTE 2. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
NATURE OF OPERATIONS
The Company is principally engaged in the business of providing annuities and
life insurance. The Company operates primarily in the United States and is
authorized to do business in all states except New York.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting practices
prescribed or permitted by the NAIC and the State of Washington requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
INVESTMENTS
Security investments are valued in accordance with the requirements of the NAIC,
as follows:
Bonds not backed by other loans at amortized cost using the interest
method; loan-backed bonds and structured securities at amortized cost
using the interest method including anticipated prepayments at the date
of purchase; significant changes in estimated cash flows from the
original purchase assumptions are accounted for using the interest
method. Prepayment assumptions for loan-backed bonds and structured
securities were obtained from broker-dealer survey values or internal
estimates. These assumptions are consistent with the current interest
rate and economic environment. The retrospective adjustment method is
used to value all securities.
Derivative instruments are valued in accordance with the NAIC
Accounting Practices and Procedures manual and the Purposes and
Procedures manual of the Securities Valuation Office. All derivative
instruments are valued consistently with the hedged items.
Preferred stocks in good standing are valued at cost, which
approximates market.
Common Stocks are valued at estimated market value.
All other security investments are presented at values prescribed by or
deemed acceptable to the NAIC, generally market value.
Mortgage loans are valued at amortized cost. Real estate acquired in
satisfaction of debt is stated at the lower of appraised value of the asset
foreclosed or book value of the mortgage at the date of foreclosure.
Policy loans are valued at the aggregate unpaid balance.
Short-term investments are carried at amortized cost which approximates market.
Other investments, principally limited partnerships, are carried on the cost
basis.
The Company uses straight-line depreciation for all of its depreciable assets,
with useful lives varying depending on the asset.
Realized investment gains and losses on sales of securities are included in the
determination of net income and are determined on the specific identification
method. Unrealized investment gains and losses are accounted for as direct
increases or decreases in surplus. Income tax effects of unrealized gains and
losses are not recognized.
Due and accrued income was excluded from investment income on mortgage loans,
bonds and short-term investments where interest is past due more than 90 days.
The total amount excluded at December 31, 1997 and 1996 was $1.2 million and
$1.1 million, respectively. The Company recognizes investment income on
derivative instruments in accordance with the NAIC Accounting Practices and
Procedures manual whereby the difference between amounts paid and amounts
received are accrued on interest rate swap agreements as reflected in net
investment income.
NONADMITTED ASSETS
Assets of the Company designated as "nonadmitted" are excluded from the balance
sheets. The change in such assets, net of amortization, is reflected as a direct
increase or decrease in surplus.
SEPARATE ACCOUNTS
The Company operates separate accounts. The assets and liabilities of the
separate accounts are primarily related to variable annuity contracts and
represent policyholder directed funds that are separately administered. The
assets (principally investments) and liabilities (principally to
contractholders) of each account are clearly identifiable and distinguishable
from other assets and liabilities of the Company. Assets are valued at fair
value.
PREMIUM REVENUE AND BENEFITS TO POLICYHOLDERS
Premiums on life insurance contracts are generally recognized as revenue over
the life of the contract on the anniversary date. Contract benefits are
associated with premium revenue over the life of the contract by providing for
liabilities for future policy and contract benefits.
POLICY ACQUISITION COSTS
Costs of acquiring new business are charged to operating expenses in the year
incurred.
AGGREGATE RESERVES FOR POLICIES AND CONTRACTS
Liabilities for future policy and contract benefits for life insurance are
computed by the net level premium and preliminary term and other modified
reserve methods on the basis of interest rates and mortality assumptions
prescribed by state regulatory authorities. Annuity liabilities are computed
using interest rates and mortality assumptions where needed as prescribed by
state regulatory authorities. Liabilities for waiver of premium reserves were
primarily based on the 1952 Disability Study (Period 2) combined with 1958 CSO
using 3% interest.
The Company waives deduction of deferred fractional premiums upon the death of
the insured and returns any portion of the final premium beyond the date of
death. Surrender values are not promised in excess of the legally computed
reserves.
Extra premiums in addition to the basic gross premium are charged for
substandard lives. Mean reserves are determined by computing the regular mean
reserves and holding in addition the unearned portion of the extra premium
charge for the year.
All substandard policies except Adjustable Life and Universal Life are valued as
standard plus an amount determined by valuation representing the excess amount
of the multiple table reserves over the standard reserves. All Adjustable Life
and Universal Life policies are valued directly on a multiple table basis.
As of December 31, 1997, the Company had insurance in force of $72.0 million for
which the gross premiums are less than the net premiums according to the
standard valuation set by the State of Washington. Reserves to cover this
insurance totaled $1.0 million at December 31, 1997.
Of the total net annuity actuarial reserves and deposit fund liabilities at
December 31, 1997, approximately 60% are subject to discretionary withdrawal at
book value less current surrender charge of 5% or more; approximately 26% are
subject to discretionary withdrawal at book value with minimal adjustment of
less than 5% but greater than zero; approximately 11% are subject to
discretionary withdrawal at book value without adjustment; and approximately 3%
are not subject to discretionary withdrawal.
INCOME TAXES DUE AND ACCRUED
The provision for income taxes is based upon income that is estimated to be
currently taxable.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year
presentation.
NOTE 3. INVESTMENTS
Investment income summarized by type of investment was as follows:
Year Ended December 31
(IN MILLIONS) 1997 1996
- ----------------------------------------------------------------------------------------------
Bonds $312.3 $293.2
Preferred Stocks .4 .4
Common Stocks .1 1.4
Mortgage Loans on Real Estate 70.9 59.6
Real Estate .2 1.0
Policy Loans 17.5 15.5
Short-term Investments 2.4 3.1
Derivative Instruments 8.2 10.0
Other 3.8 5.3
- ----------------------------------------------------------------------------------------------
Gross Investment Income 415.8 389.5
Investment Expenses 7.9 7.4
- ----------------------------------------------------------------------------------------------
Net Investment Income $407.9 $382.1
==============================================================================================
Net realized capital gains (losses) were as follows:
Year Ended December 31
(IN MILLIONS) 1997 1996
- ------------------------------------------------------------------------------------------------
Bonds $4.2 $1.9
Preferred Stocks (.1) (.4)
Common Stocks 1.4 .9
Mortgage Loans on Real Estate 1.1 (.3)
Real Estate (.2) (.2)
Other 3.4 5.5
- ----------------------------------------------------------------------------------------------
Pretax Realized Capital Gains (Losses) 9.8 7.4
Income Tax Expense (5.3) (3.6)
Net Pretax Realized Capital Gains Transferred to
Interest Maintenance Reserve (IMR) (5.3) (3.6)
Income Tax Expense Transferred to IMR 1.8 1.3
- ----------------------------------------------------------------------------------------------
Net Realized Capital Gains (Losses) (Net of Tax) $1.0 $1.5
==============================================================================================
Gross realized capital gains of $7.1 million and $5.5 million and gross realized
capital losses of $2.8 million and $3.5 million were recognized on sales of
bonds during the years ended December 31, 1997 and 1996, respectively.
The statement value and estimated market values of investments in bonds by type
of investment were as follows:
December 31, 1997
Estimated
Statement Gross Unrealized Market
(IN MILLIONS) Value Gains (Losses) Value
United States Government and Governmental
Agencies and Authorities $3.9 $.2 - $4.1
States, Municipalities and Political Subdivisions 33.3 2.3 $(.2) 35.4
Foreign Governments 33.8 3.0 - 36.8
Public Utilities 246.9 10.5 (.6) 256.8
Corporate Securities 2,698.1 117.8 (4.0) 2,811.9
Mortgage-Backed/Structured Finance Securities 1,128.4 30.7 (1.4) 1,157.7
- ----------------------------------------------------------------------------------------------------------------
Total $4,144.4 $164.5 $(6.2) $4,302.7
================================================================================================================
December 31, 1996
Estimated
Statement Gross Unrealized Market
(IN MILLIONS) Value Gains (Losses) Value
United States Government and Governmental
Agencies and Authorities $3.8 $.2 - $4.0
States, Municipalities and Political Subdivisions 26.9 1.2 $(.2) 27.9
Foreign Governments 35.1 1.8 - 36.9
Public Utilities 283.6 7.6 (2.2) 289.0
Corporate Securities 2,469.4 78.2 (14.1) 2,533.5
Mortgage-Backed/Structured Finance Securities 1,161.0 20.3 (5.8) 1,175.5
- ----------------------------------------------------------------------------------------------------------------
Total $3,979.8 $109.3 $(22.3) $4,066.8
================================================================================================================
The statement value and estimated market value of bonds, by contractual
maturity, are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
December 31, 1997 December 31, 1996
------------------------ ---------------------
Estimated Estimated
Statement Market Statement Market
(IN MILLIONS) Value Value Value Value
Due in One Year or Less $70.6 $70.9 $59.6 $60.1
Due After One Year Through Five Years 1,216.7 1,256.8 1,073.1 1,098.0
Due After Five Years Through Ten Years 1,273.5 1,329.5 1,170.0 1,198.0
Due After Ten Years 455.2 487.8 516.1 535.2
Mortgage-Backed/Structured Finance Securities 1,128.4 1,157.7 1,161.0 1,175.5
- ----------------------------------------------------------------------------------------------------------------
Total $4,144.4 $4,302.7 $3,979.8 $4,066.8
================================================================================================================
The estimated market values for the marketable bonds are determined based upon
the quoted market prices for bonds actively traded. The estimated market values
for marketable bonds without an active market are obtained through several
commercial pricing services which provide the estimated market values. Estimated
market values of privately placed bonds are determined utilizing a matrix-based
model. The model considers the current level of risk-free interest rates,
current corporate spreads, the credit quality of the issuer and cash flow
characteristics of the security. Utilizing this data, the model generates
estimated market values which the Company considers reflective of the market
value of each privately placed bond.
At December 31, 1997, the largest industry concentration of the private
placement portfolio was financial services, where 19.9% of the portfolio was
invested, and the largest industry concentration of the marketable bond
portfolio was mortgage-backed/structured securities, where 41.8% of the
portfolio was invested. At December 31, 1997, the largest geographic
concentration of commercial mortgage loans was in the pacific region of the
United States, where approximately 33.0% of the commercial and residential
mortgage loan portfolio was invested.
At December 31, 1997 and 1996, gross unrealized appreciation of unaffiliated
stocks was $.1 million and $1.2 million, respectively, and gross unrealized
depreciation was $.6 million and $.7 million, respectively.
The maximum and minimum lending rates for all mortgage loans issued during 1997
were 8.875% and 5.375%.
During 1997 the Company did not reduce interest rates of outstanding mortgage
loans.
The maximum percentage of any one loan to the value of security at the time of
the loan was 80%. Fire insurance is required on all properties covered by
mortgage loans at least equal to the excess of the loan over the maximum loan
which would be permitted by law on the land without buildings. As of year-end,
the Company held no mortgages with interest more than one year overdue.
DERIVATIVE INSTRUMENTS
The Company has an established program prescribing the use of derivatives in its
asset/liability management activity. The investment policy of the Company
expressly precludes the use of such instruments for speculative purposes. The
policy details permissible uses and instruments and contains accounting and
management controls designed to assure compliance with these policies. The
Company is not a party to leveraged derivatives.
The insurance liabilities of the Company are sensitive to changes in market
interest rates. The Company has established procedures for evaluating these
liabilities and structures investment asset portfolios with compatible
characteristics. Investment assets are selected which provide yield, cash flow
and interest rate sensitivities appropriate to support the insurance products.
The Company uses interest rate swaps as part of this asset/liability management
program. The Company has acquired a significant amount of certain shorter
duration investments, such as floating rate or adjustable rate investments.
Acquisition of these assets shortens the duration of an asset portfolio. The
Company uses interest rate swaps to extend the duration of these portfolios as
an alternative to purchasing longer duration investments.
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to financial instruments, but it does not expect any
counterparties to fail to meet their obligations given their high credit
ratings. In addition, the Company has established an issuer holder limitation
program whereby the maximum credit exposure to a single issuer is established
based upon the credit rating of the issuer and the structure of the investment.
The positive market value of swap positions is included in the computation of
the maximum issuer limitation.
NOTE 4. INCOME TAXES
The Company's federal income tax return is consolidated with the following
entities: ReliaStar Financial Corp., ReliaStar Life Insurance Company, Norlic,
Inc., Nova, Inc., NWNL Benefits Corporation, NWNL Health Management Corp.,
Washington Square Advisers, Inc., ReliaStar Investment Research, Inc., ReliaStar
Mortgage Corporation, James Mortgage Company, Washington Square Securities,
Inc., Northstar Holding, Inc., Northstar Investment Management Corporation,
Northstar Distributors, Inc., Northstar Administrators Corporation, Northstar
Funding, Inc. Bankers Centennial Management Corp., IB Holdings, Inc.,
International Risks, Inc., Northeastern Corporation, IB Resolution, Inc.,
ReliaStar Financial Marketing Corporation, Successful Money Management Seminars,
Inc., Successful Money Management Software, Inc., PrimeVest Financial Services,
Inc., PrimeVest Mortgage, Inc., PrimeVest Insurance Agency of Alabama, Inc.,
PrimeVest Insurance Agency of New Mexico, Inc., PrimeVest Insurance Agency of
Oklahoma, Inc., PrimeVest Insurance Agency of Texas, Inc., PrimeVest Insurance
Agency of Ohio, Inc., Branson Insurance Agency, Inc., Granite Investment
Services, Inc., Washington Square Insurance Agency, Inc. (Massachusetts),
Washington Square Insurance Agency Inc. (Texas), Washington Square Insurance
Agency, Inc. (New Mexico), and ReliaStar Payroll Agent, Inc.
The method by which the total consolidated federal income tax for each entity is
allocated to each of these companies is subject to a written agreement approved
by the Company's Board of Directors. Allocation is based on separate return
calculations such that each company in the consolidated return pays the same tax
or receives the same refunds it would have paid or received had it consistently
filed separate federal income tax returns. Intercompany tax balances are settled
within a reasonable time after filing of the consolidated federal income tax
returns with the Internal Revenue Service.
Federal income tax regulations allowed certain special deductions for 1983 and
prior years which are accumulated in a memorandum tax account designated as
"policyholders' surplus." Generally, this policyholders' surplus account will
become subject to tax at the then current rates only if the accumulated balance
exceeds certain maximum limitations or if certain cash distributions are deemed
to be paid out of the account. At December 31, 1997, the Company had accumulated
approximately $5.5 million in its separate policyholders' surplus account.
The difference between the U.S. federal income tax rate and the tax provision
rate is summarized as follows:
Year Ended December 31
1997 1996
----------------------
Statutory Tax Rate 35.0% 35.0%
Accrual of Market Discount on Bonds (4.9) (4.8)
Prior Year Provision True-up (.5) 2.0
Deferred Acquisition Cost Tax .7 0.9
Reserve Adjustments (2.8) (0.3)
Other 3.0 1.4
- -----------------------------------------------------------------------------
Effective Tax Rate 30.5% 34.2%
=============================================================================
Cash paid to ReliaStar for federal income taxes was $23.6 million and $18.1
million for 1997 and 1996, respectively.
NOTE 5. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company's parent, ReliaStar Life Insurance Company, sponsors a
noncontributory defined benefit pension plan covering substantially all
employees. The plan, which may be terminated as to accrual of additional
benefits at any time by the Board of Directors, provides benefits to employees
upon retirement.
The benefits under the plan are based on years of service and the employee's
average compensation during the last five years of employment. The parent
company's policy is to fund the minimum required contribution necessary to meet
the present and future obligations of the plan. Contributions are intended to
provide not only for benefits attributed to service to date but also for those
expected to be earned in the future. Contributions are made to a tax-exempt
trust established by the parent company. Plan assets consist principally of
investments in stock and bond mutual funds, common stock and corporate bonds. As
of January 1, 1997, plan assets included 1,232,982 shares of ReliaStar common
stock with a fair value of $35.6 million.
Annual pension expense recorded by the Company was $.5 and $.7 million in 1997
and 1996, respectively. Annual pension expense is equal to the funding for the
plan year which is determined under the projected unit credit actuarial cost
method, including amortization of prior service costs and considering ERISA
minimum and maximum funding requirements. Each subsidiary is charged its
allowable share of such expense based on a percentage of payroll. At January 1,
1997 (the date of the most recent actuarial valuation), the plan's accumulated
benefit obligation/present value of accrued benefits and the amount of vested
benefits was $156.6 million and $152.6 million, respectively, based on an
assumed 8.5% interest rate. The fair value of plan assets was $186.9 million at
January 1, 1997.
The Company and ReliaStar also have unfunded noncontributory defined benefit
plans providing for benefits to employees in excess of limits for qualified
retirement plans and for benefits to non-employee members of the ReliaStar Board
of Directors.
POSTRETIREMENT BENEFIT PLAN
The Company provides certain health care and life insurance benefits to retired
employees (and their eligible dependents). Substantially all of the Company's
employees will become eligible for those benefits if they meet specified age and
service requirements and reach retirement age while working for the Company,
unless the plans are terminated or amended. The postretirement health care plan
is contributory, with retiree contributions adjusted annually; the life
insurance plan provides a flat amount of noncontributory life benefits and
optional contributory coverage.
The unamortized transition obligation for retirees and fully eligible or vested
employees was $209,000 and $223,000 at December 31, 1997 and 1996, respectively.
The unamortized transition obligation is being amortized over 20 years. The
accumulated postretirement obligation was $453,000 and $390,000 at December 31,
1997 and 1996, respectively.
Net postretirement benefit costs for the years ended December 31, 1997 and 1996
were $83,000 and $68,000, respectively, and include the expected cost of such
benefits for newly eligible or vested employees, interest cost and amortization
of the transition obligation.
The unfunded postretirement benefit obligation for retirees and other fully
eligible or vested plan participants was $497,000 and $435,000 at December 31,
1997 and 1996, respectively. The estimated benefit obligation for active
non-vested employees was $164,000 at December 31, 1997.
The discount rate used in determining the accumulated postretirement benefit
obligation at December 31, 1997 was 7.25% and the health care cost trend rate
was 6.0%, decreasing gradually to 5.0% in the year 1999. The discount rate used
in determining the accumulated postretirement benefit obligation at December 31,
1996 was 7.5% and the health care cost trend rate was 7.0%, decreasing gradually
to 5.0% in the year 1999. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rate by one percentage point in each year would
increase the postretirement benefit obligation as of December 31, 1997 by
$29,000 and the estimated eligibility cost and interest cost components of net
periodic postretirement benefit cost for 1997 by $8,000.
SUCCESS SHARING PLAN AND ESOP
The Success Sharing Plan and ESOP (Success Sharing Plan) was designed to
increase employee ownership and reward employees when certain Company
performance objectives are met. Essentially all employees of the Company are
eligible to participate in the Success Sharing Plan. The Success Sharing Plan
has both qualified and nonqualified components. The nonqualified component is
equal to 25% of the annual award and is paid in cash to employees. The qualified
component is equal to 75% of the annual award, with 25% contributed to a
deferred investment account and the remaining 50% contributed to the ESOP
portion of the Success Sharing Plan. Costs charged to operations for the Success
Sharing Plan were $1.2 million and $1.1 million in 1997 and 1996, respectively.
STOCK-BASED COMPENSATION
Employees of the Company participate in stock-based compensation plans of
ReliaStar. The Company has recorded no compensation expense for these
stock-based compensation plans other than for restricted stock and
performance-based awards.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company maintains intercompany loan agreements with its parent company.
There were no loans taken from or made to the parent company during 1997 and
1996. In addition, there were no intercompany loans outstanding at December 31,
1997 or 1996.
The Company and its affiliates have entered into agreements whereby certain
management, administrative, legal and other services are provided to each other.
The net expense amounts resulted in the Company making payments of $15.2 million
and $9.8 million to its parent and other affiliated companies in 1997 and 1996,
respectively. The costs allocated to the Company under these agreements may not
be indicative of costs the Company might incur if these services were not
provided by the Company's affiliates.
NOTE 7. CAPITAL AND SURPLUS
The ability of the Company to pay cash dividends to its parent is restricted by
law or subject to approval of the insurance regulatory authorities of
Washington. These authorities recognize only statutory accounting practices for
the ability of an insurer to pay dividends to its shareholders.
Under the laws of the State of Washington, the Company can pay dividends to
shareholders only from earned statutory surplus, and the distribution in any
year is limited, by law, to the greater of the prior year's net income or 10% of
prior year-end statutory surplus.
Total unassigned surplus at December 31, 1997 was $180.4 million and has no
restrictions, except as described above.
NOTE 8. REINSURANCE
The Company is a member of reinsurance associations established for the purpose
of ceding the excess of life, waiver of premium, and accidental death insurance
over retention limits. Reinsurance contracts do not relieve the Company from its
obligations to policyholders. Failure of reinsurers to honor their obligations
could result in losses to the Company. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk to
minimize its exposure to significant losses from reinsurer insolvencies. The
Company's retention limit is $135,000 per life for individual coverage for most
plans of insurance. As of December 31, 1997, $553.4 million of life insurance in
force was ceded to other companies of which $45.0 million was ceded to ReliaStar
Life Insurance Company. The Company has assumed $1.4 billion of life insurance
in force as of December 31, 1997 (including $732.2 million of reinsurance
assumed pertaining to Federal Employees' Group Life Insurance and Servicemans'
Group Life Insurance and $685.7 million from ReliaStar Life Insurance Company).
The effect of reinsurance on premiums and benefits is as follows:
Year Ended December 31
(IN MILLIONS) 1997 1996
- ---------------------------------------------------------------------
Direct Premiums $86.9 $75.3
Reinsurance Assumed 2.4 2.4
Reinsurance Ceded (2.9) (3.5)
- ----------------------------------------------------------------------
Net Premiums $86.4 $74.2
======================================================================
Reinsurance Recoveries $3.3 $1.4
======================================================================
NOTE 9. COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is a defendant in a number of lawsuits arising out of the normal
course of the business of the Company, some of which include claims for punitive
damages. In the opinion of management, the ultimate resolution of such
litigation will not result in any material adverse impact to the financial
condition of the Company.
FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet its financing needs and to reduce its
exposure to fluctuations in interest rates. These financial instruments include
commitments to extend credit and interest rate swaps. Those instruments involve,
to varying degrees, elements of credit, interest rate or liquidity risk in
excess of the amounts recognized in the Statutory Basis Statements of Admitted
Assets, Liabilities, Surplus and Other Funds.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Company uses the
same credit policies in making commitments and conditional obligations as it
does for on-balance-sheet instruments. For interest rate swap transactions, the
contract or notional amounts do not represent exposure to credit loss. For
swaps, the Company's exposure to credit loss is limited to those swaps where the
Company has an unrealized gain.
Unless otherwise noted, the Company does not require collateral or other
security to support financial instruments with credit risk.
Contract or
Notional Amount
December 31
(IN MILLIONS) 1997 1996
- ---------------------------------------------------------------------------------------------------------------
Financial Instruments Whose Contract Amounts Represent Credit Risk:
Commitments to Extend Credit $ 84.8 $ 118.4
Financial Instruments Whose Notional or Contract Amounts Exceed the
Amount of Credit Risk:
Interest Rate Swap Agreements 571.0 606.0
- --------------------------------------------------------------------------------------------------------------
COMMITMENTS TO EXTEND CREDIT - Commitments to extend credit are legally binding
agreements to lend to a customer. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. They
generally may be terminated by the Company in the event of deterioration in the
financial condition of the borrower. Since some of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future liquidity requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis.
INTEREST RATE SWAP AGREEMENTS - The Company also enters into interest rate swap
agreements to manage interest rate exposure. The primary reason for the interest
rate swap agreements is to extend the duration of adjustable rate investments.
Interest rate swap transactions generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange of the
underlying principal amounts. Changes in market interest rates impact income
from adjustable rate investments and have an opposite (and approximately
offsetting) effect on the reported income from the swap portfolio. The risks
under interest rate swap agreements are generally similar to those of futures
contracts. Notional principal amounts are often used to express the volume of
these transactions but do not represent the much smaller amounts potentially
subject to credit risk.
LEASES
The Company occupies its home office facility under a lease agreement that
commits it to pay rentals of $2,425,000 in 1998. Lease payments in 1997 under
this lease were $2,114,000. This lease is accounted for as an operating lease.
In 1997, the Company entered into a ten-year lease agreement beginning December
1, 1998 and ending November 30, 2008. Future minimum rental payments required
under this lease are as follows:
(In Millions)
1998 $.2 2001 $2.6
1999 $2.5 2002 $2.6
2000 $2.5 2003 and thereafter $16.0
NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures are made in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures about
Fair Value of Financial Instruments." SFAS No. 107 requires disclosure of fair
value information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value
estimates, in many cases, could not be realized in immediate settlement of the
instrument.
SFAS No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1997 and 1996. Although management is
not aware of any factors that would significantly affect the estimated fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since that date; therefore, current estimates of
fair value may differ significantly from the amounts presented herein.
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
BONDS - The estimated market value disclosures for bonds satisfy the fair value
disclosure requirements of SFAS No. 107 (see Note 3).
STOCKS - Fair value equals carrying value for common stocks as these securities
are carried at NAIC value which approximates quoted market value. Preferred
stocks are carried primarily at cost.
MORTGAGE LOANS ON REAL ESTATE - The fair values for mortgage loans on real
estate are estimated using discounted cash flow analyses, using interest rates
currently being offered in the marketplace for similar loans to borrowers with
similar credit ratings. Loans with similar characteristics are aggregated for
purposes of the calculations.
OTHER FINANCIAL INSTRUMENTS REPORTED AS ASSETS - The carrying amounts for these
financial instruments (primarily premiums and other accounts receivable and
accrued investment income) approximate those assets' fair values.
INVESTMENT CONTRACT LIABILITIES - The fair value for deferred annuities was
estimated to be the amount payable on demand at the reporting date as those
investment contracts have no defined maturity and are similar to a deposit
liability. The amount payable at the reporting date was calculated as the
account balance less applicable surrender charges.
The fair values for supplementary contracts without life contingencies and
immediate annuities were estimated using discounted cash flow analyses. The
discount rate was based upon treasury rates plus a pricing margin.
The carrying amounts reported for other investment contracts approximate those
liabilities' fair value.
OTHER FINANCIAL INSTRUMENTS REPORTED AS LIABILITIES - The carrying amounts for
other financial instruments (primarily normal payables of a short-term nature)
approximate those liabilities' fair values.
INTEREST RATE SWAPS - The fair value for interest rate swaps was estimated using
discounted cash flow analyses. The discount rate was based upon rates currently
being offered for similar interest rate swaps available from similar
counterparties.
The carrying amounts and estimated fair values of the Company's financial
instruments were as follows:
December 31
-----------
1997 1996
---- ----
Carrying Fair Carrying Fair
(IN MILLIONS) Amount Value Amount Value
- ------------- ------ ----- ------ -----
Financial Instruments Recorded as Assets:
Bonds $4,144.4 $4,302.7 $3,979.8 $4,066.8
Stocks 6.0 6.1 13.2 12.9
Mortgage Loans on Real Estate:
Commercial 653.5 692.7 529.4 541.7
Residential and Other 344.3 348.9 230.7 234.9
Policy Loans 323.7 323.7 289.8 289.8
Cash and Short-Term Investments 45.9 45.9 43.1 43.1
Other Financial Instruments Recorded as Assets 89.1 89.1 77.9 77.9
Financial Instruments Recorded as Liabilities:
Investment Contracts:
Deferred Annuities (4,710.9) (4,677.8) (4,305.1) (4,273.7)
Supplementary Contracts and Immediate Annuities (99.0) (100.9) (75.9) (76.1)
Other Investment Contracts (1.0) (1.0) (1.2) (1.2)
Other Financial Instruments Recorded as Liabilities (23.1) (23.1) (28.6) (28.6)
Off-Balance Sheet Financial Instruments:
Interest Rate Swaps - 7.5 - 7.5
- ----------------------------------------------------------------------------------------------------------------
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on judgments regarding
future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in the estimates.
NOTE 11: RECONCILIATION OF STATUTORY NET INCOME AND EQUITY TO GAAP NET INCOME
AND EQUITY (IN MILLIONS) (UNAUDITED)
Year Ended December 31,
1997 1996
Statutory Net Income as Reported $40.9 $35.4
Adjustments Concerning:
Deferred Acquisition Costs 56.2 43.2
Deferred Federal Income Taxes (22.6) (13.9)
Reserves for Future Benefits (8.0) (12.3)
Net Adjustments to Investments 10.1 9.8
Capitalization of Software Costs 1.0 1.8
Nonadmitted Assets (.5) (.1)
Interest Maintenance Reserve (1.9) (1.7)
Other (.9) (3.5)
Net Income in Conformity with Generally
Accepted Accounting Principles $74.3 $58.7
===== =====
Year Ended December 31,
1997 1996
Statutory Capital and Surplus as Reported $308.4 $275.9
Adjustments Concerning:
Deferred Acquisition Costs 486.9 444.8
Deferred Federal Income Taxes (85.6) (47.4)
Reserves for Future Benefits (325.3) (317.2)
Net Adjustments to Investments 154.0 83.2
Capitalization of Software Costs 5.3 4.3
Pension Plan Agreements 1.3 1.3
Nonadmitted Assets 18.2 11.2
Asset Valuation Reserve 57.7 58.1
Interest Maintenance Reserve 8.6 7.0
Other (7.1) (7.2)
Shareholder's Equity in conformity with Generally
Accepted Accounting Principles $622.4 $514.0
====== ======
NORTHERN LIFE INSURANCE COMPANY
(a wholly owned subsidiary of ReliaStar Life Insurance Company)
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
Our audits were conducted for the purpose of forming an opinion on the basic
statutory-basis financial statements taken as a whole. The supplemental schedule
of selected assets and liabilities financial data for the year ended December
31, 1997, is presented for complying with the National Association of Insurance
Commissioners' instructions to Annual Audited Financial Reports and is not a
required part of the basic statutory-basis financial statements. This additional
information is the responsibility of the Company's management. Such information
has been subjected to the auditing procedures applied in our audit of the basic
statutory-basis financial statements and, in our opinion, is fairly stated in
all material respects when considered in relation to the basic statutory basis
financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Seattle, Washington
February 6, 1998
NORTHERN LIFE INSURANCE COMPANY
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(in millions)
The following is a summary of certain financial data included in other exhibits
and schedules subject to audit procedures by independent auditors and utilized
by actuaries in the determination of reserves.
Investment Income Earned:
Government Bonds $ .3
Other bonds (Unaffiliated) 312.0
Bonds of Affiliates -
Preferred Stocks (Unaffiliated) .4
Preferred Stocks of Affiliates -
Common Stocks (Unaffiliated) .1
Common Stocks of Affiliates -
Mortgage Loans 70.9
Real Estate .2
Premium Notes, Policy Loans and Liens 17.5
Collateral Loans -
Cash on Hand and on Deposit -
Short-Term Investments 2.4
Other Invested Assets 3.7
Derivative Instruments 8.2
Aggregate Write-Ins for Investment Income .1
------------
Gross Investment Income 415.8
==========
Real Estate Owned - Book Value Less Encumbrances .7
==========
Mortgage Loans - Book Value:
Farm Mortgages -
Residential Mortgages 344.3
Commercial Mortgages 653.5
------------
Total Mortgage Loans 997.8
==========
Mortgage Loans by Standing - Book Value:
Good Standing 995.3
==========
Good Standing with Restructured Terms 1.8
==========
Interest Overdue More Than Three Months, Not in Foreclosure -
==========
Foreclosure in Process .7
==========
Other Long Term Assets - Statement Value 54.1
==========
Collateral Loans -
==========
Bonds and Stock of Parents, Subsidiaries and Affiliates - Book Value
Bonds -
Preferred stocks -
Common stocks .1
==========
Bonds and Short-Term Investments by Class and Maturity:
Bonds by Maturity - Statement Value
Due within one year or less 308.6
Over 1 year through 5 years 1,546.7
Over 5 years through 10 years 1,907.6
Over 10 years through 20 years 309.1
Over 20 years 106.0
------------
Total by Maturity 4,178.0
==========
Bonds by Class - Statement Value
Class 1 2,377.0
Class 2 1,530.1
Class 3 203.1
Class 4 63.4
Class 5 4.2
Class 6 .2
----------
Total by Class 4,178.0
==========
Total Bonds Publicly Traded 2,596.7
==========
Total Bond Privately Placed 1,581.3
==========
Preferred Stocks - Statement Value 4.8
==========
Common Stocks - Market Value 1.2
==========
Short-Term Investments - Book Value 33.6
==========
Financial Options Owned - Statement Value -
==========
Financial Options Written and In force - Statement Value -
==========
Financial Futures Contracts Open - Current Price 7.5
==========
Cash on Deposit 12.3
==========
Life Insurance in Force:
Industrial -
==========
Ordinary 2.2
==========
Credit Life -
==========
Group Life 1.4
==========
Amount of Accidental Death Insurance in Force Under Ordinary Policies 54.1
==========
Life Insurance Policies with Disability Provisions in Force:
Industrial -
Ordinary .3
==========
Credit Life -
==========
Group Life -
==========
Supplementary Contracts in Force:
Ordinary - Not Involving Life Contingencies
Amount on Deposit 2.7
==========
Income Payable .3
==========
Ordinary - Involving Life Contingencies
Income Payable .1
==========
Group - Not Involving Life Contingencies
Amount of Deposit -
==========
Income Payable -
==========
Group - Involving Life Contingencies
Income Payable -
==========
Annuities:
Ordinary
Immediate - Amount of Income Payable 23.4
==========
Deferred - Fully Paid Account Balance 11.7
==========
Deferred - Not Fully Paid - Account Balance 2,636.7
==========
Group
Amount of Income Payable 14.6
==========
Fully Paid Account Balance -
==========
Not Fully Paid - Account Balance 2,372.3
==========
Accident and Health Insurance - Premiums in Force:
Ordinary -
==========
Group -
==========
Credit -
==========
Deposit Funds and Dividend Accumulations:
Deposit Funds - Account Balance .1
==========
Dividend Accumulations - Account Balance 10.3
==========
Claim Payments 1997:
Group Accident and Health, Year - Ended December 31, 1997
1997 -
==========
1996 -
==========
1995 -
==========
Other Accident & Health
1997 -
==========
1996 -
==========
1995 -
==========
Other Coverage's that use Developmental Methods to
Calculate Claims Reserves
1997 -
==========
1996 -
==========
1995 -
==========
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Part A: None
Part B: SEPARATE ACCOUNT ONE
Independent Auditors' Report
Statement of Assets and Liabilities, December 31, 1997
Combined Statements of Operations and Changes in Contract
Owners' Equity, Year Ended December 31, 1997, December 31,
1996 and Period from October 20, 1995 to December 31, 1995
Notes to Financial Statements
NORTHERN LIFE INSURANCE COMPANY
Independent Auditors' Report
Statutory-Basis Balance Sheets, Years Ended December 31, 1997
and 1996 Statutory-Basis Statements of Operations, Years
Ended December 31, 1997 and 1996
Statutory-Basis Statements of Changes in Capital and Surplus,
Years Ended December 31, 1997 and 1996
Statutory-Basis Statement of Cash Flows, Years Ended December
31, 1997 and 1996
Independent Auditor's Report on Supplemental Schedule of
Assets and Liabilities
Supplemental Schedule of Assets and Liabilities, Year Ended
December 31, 1997
(b) Exhibits:
1. Resolution of the Executive Committee of the Board of Directors of
Northern Life Insurance Company ("Depositor") authorizing the
establishment of Separate Account One ("Registrant").
2. Not Applicable.
3. (a) Form of Distribution and Administrative Services Agreement
between Washington Square Securities, Inc. and Depositor.
(b) Form of selling group (or distribution) agreement between
Washington Square Securities, Inc. and selling group members.
4. (a) Individual Deferred Tax Sheltered Annuity Contract (Transfer
Series).
(b) Individual Deferred Annuity Contract (Transfer Series) for use
with non-qualified plans.
(c) Individual Deferred Retirement Annuity Contract (Transfer
Series).
(d) Flexible Premium Individual Deferred Tax-Sheltered Annuity
Contract.
(e) Flexible Premium Individual Deferred Retirement Annuity Contract.
(f) ERISA Endorsement.(1)
(g) TSA Endorsement.(2)
(h) Contract Data Page Form No. 13000 (FL-PBC) 2-95 for use with Form
No. 13000 (FL) 2-95 in Florida.(3)
(i) Table of Sample Values Endorsement Form No. 13058 3-97 for use
with Form No. 13000 (FL-PBC) 2-95 in Florida.(3)
(j) Flexible Premium Individual Deferred Annuity Contract (457
Variable Annuity Contract).
(k) Roth IRA Endorsement.
5. Contract Application Form.
6. (a) Articles of Incorporation of Depositor.
(b) Bylaws of Depositor.
7. Not Applicable.
8. (a) Participation Agreement with The Alger American Fund and Fred
Alger and Company.
(b) Participation Agreement among Fidelity Variable Insurance
Products Fund, Fidelity Distributors Corporation, and Northern
Life Insurance Company.
(c) Amendment to Participation Agreement among Fidelity Variable
Insurance Products Fund, Fidelity Distributors Corporation, and
Northern Life Insurance Company, dated July 24, 1997.(3)
(d) Participation Agreement among Fidelity Variable Insurance
Products Fund II, Fidelity Distributors Corporation, and Northern
Life Insurance Company.
(e) Amendment to Participation Agreement among Fidelity Variable
Insurance Products Fund II, Fidelity Distributors Corporation,
and Northern Life Insurance Company, dated July 24, 1997.(3)
(f) Participation Agreement by and between the Janus Aspen Series and
Northern Life Insurance Company, dated August 8, 1997.(3)
(g) Participation Agreement by and among Northern Life Insurance
Company, Neuberger&Berman Advisers Management Trust, Advisers
Managers Trust and Neuberger&Berman Management Incorporated,
dated August 8, 1997.(3)
(h) Participation Agreement by and among OCC Accumulation Trust,
Northern Life Insurance Company and OCC Distributors, dated
August 8, 1997.(3)
(i) Service Agreement by and between Fred Alger Management, Inc. and
Northern Life Insurance Company, dated as of August 8, 1997.(3)
(j) Service Agreement by and between Janus Capital Corporation and
Northern Life Insurance Company, dated August 8, 1997.(3)
(k) Service Agreement by and between Neuberger&Berman Management Inc.
and Northern Life Insurance Company, effective August 8, 1997.(3)
(l) Service Agreement by and between OpCap Advisors and Northern Life
Insurance Company, dated as of August 8, 1997.(3)
9. Consent and Opinion of James E. Nelson as to the legality of the
securities being registered.
10. Consent of Deloitte & Touche LLP, dated April 14, 1998.
11. No financial statements are omitted from Item 23.
12. Not Applicable.
13. Schedule of computation of performance data.
14. Financial Data Schedule. Not required.
15. Powers of Attorney for Richard R. Crowl, Michael J. Dubes, John H.
Flittie, Wayne R. Huneke, Kenneth U. Kuk, Robert C. Salipante, John G.
Turner, Ronald D. Jarvis, Mark S. Jordahl, James R. Miller and R.
Michael Conley.
- ------------------
(1) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registrant's Form N-4 Registration Statement File No. 33-90474, filed April
23, 1996.
(2) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's Form N-4 Registration Statement File No. 33-90474, filed April
28, 1997.
(3) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registrant's Form N-4 Registration Statement File No. 33-90474, filed July
29, 1997.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
DIRECTORS
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
- ---------------- ------------------------------------
John G. Turner Director; Chairman
20 Washington Avenue South
Minneapolis, Minnesota 55401
Michael J. Dubes Director; President and Chief Executive Officer
1110 Third Avenue
Seattle, Washington 98111
Richard R. Crowl Director; Senior Vice President, General
20 Washington Avenue South Counsel and Assistant Secretary
Minneapolis, Minnesota 55401
John H. Flittie Director; Vice Chairman
20 Washington Avenue South
Minneapolis, Minnesota 55401
Wayne R. Huneke Director; Assistant Treasurer
20 Washington Avenue South
Minneapolis, Minnesota 55401
Kenneth U. Kuk Director; Assistant Treasurer
20 Washington Avenue South
Minneapolis, Minnesota 55401
Mark S. Jordahl Director; Assistant Treasurer
20 Washington Avenue South
Minneapolis, Minnesota 55401
James R. Miller Director
20 Washington Avenue South
Minneapolis, Minnesota 55401
R. Michael Conley Director
20 Washington Avenue South
Minneapolis, Minnesota 55401
Ronald D. Jarvis Director
20 Security Drive
Avon, Connecticut 06001
Robert C. Salipante Director
20 Washington Avenue South
Minneapolis, Minnesota 55401
EXECUTIVE OFFICERS
NAME POSITIONS AND OFFICES WITH DEPOSITOR
- ---- ------------------------------------
Michael J. Dubes President and Chief Executive Officer
Richard R. Crowl Senior Vice President, General Counsel and Assistant
Secretary
Jeryl A. Millner Vice President, Chief Financial Officer and Treasurer
John A. Johnson Vice President
Novian Junus Vice President
Richard Contreras Vice President, Marketing
Douglas R. Kaufman Vice President and Chief Information Officer
Jerome A. Mills Vice President, Strategic Marketing
Brad J. Corbin Vice President, Sales
Elisabeth R. Bennett Vice President and Medical Director
The principal business address of each of the foregoing executive officers
is 1110 Third Avenue, Seattle, Washington 98101, with the exception of Mr.
Crowl, Ms. Bennett and Mr. Johnson whose principal business address is 20
Washington Avenue South, Minneapolis, Minnesota 55401.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Registrant is a separate account of Depositor. Depositor is an indirect,
wholly-owned subsidiary of ReliaStar Financial Corp., formerly known as The NWNL
Companies, Inc., a Delaware corporation.
The following chart identifies the subsidiaries of ReliaStar Financial
Corp. and their relationship to one another, all of which, except where
indicated, are either directly or indirectly wholly-owned by ReliaStar
Financial Corp., except for directors' qualifying shares.
ORGANIZATIONAL CHART
ReliaStar Financial Corp. owns, directly or indirectly, capital stock of
subsidiary companies as follows as of March 3, 1998 (second and third tier
subsidiaries are listed, indented, directly below their parent company):
Owner and
Company Percentage
------- ----------
ReliaStar Life Insurance Company ("RLIC") RLR-100%
Northern Life Insurance Company ("NLIC") RLIC-100%
Norlic, Inc. NLIC-100%
Nova, Inc. NLIC-100%
ReliaStar United Services Life Insurance Company ("RUSL") RLIC-100%
Security-Connecticut Life Insurance Company ("SCL") RUSL-100%
ReliaStar Life Insurance Company of New York ("RLNY") SCL-100%
North Atlantic Life Agency, Inc. RLNY-100%
Delaware Administrators, Inc. RUSL-100%
USL Services, Inc. RUSL-100%
NWNL Benefits Corporation ("NBC") RLIC-100%
NWNL Health Management Corp. NBC-100%
Select Care Health Network, Inc. NBC-50%
ReliaStar Mortgage Corporation ("RMC") RLIC-100%
James Mortgage Company RMC-100%
ReliaStar Reinsurance Group (UK), LTD. RLIC-100%
Washington Square Advisers, Inc. RLR-100%
ReliaStar Investment Research, Inc. RLR-100%
Washington Square Securities, Inc. RLR-100%
Northstar Holding, Inc. ("NI") RLR-100%
Northstar Investment Management Corp. NI-100%
Northstar Distributors, Inc. ("NDI") NI-100%
Northstar Funding, Inc. NDI-100%
Northstar Administrators Corporation NI-100%
Bankers Centennial Management Corp. RLR-100%
IB Holdings, Inc. ("IB") RLR-100%
International Risks, Inc. IB-100%
Northeastern Corporation IB-100%
The New Providence Insurance Company, Limited IB-100%
IB Resolution, Inc. IB-100%
Successful Money Management Seminars, Inc. ("SMMS") RLR-100%
Successful Money Management Software, Inc. SMMS-100%
PrimeVest Financial Services, Inc. ("PVF") RLR-100%
PrimeVest Mortgage, Inc. PVF-100%
PrimeVest Insurance Agency of Alabama, Inc. PVF-100%
PrimeVest Insurance Agency of New Mexico, Inc. PVF-100%
PrimeVest Insurance Agency of Ohio, Inc. Class A Robert Chapman-100%
Class B PVF-100%
Branson Insurance Agency, Inc. PVF-100%
Granite Investment Services, Inc. PVF-100%
Arrowhead, Ltd. RLR-100%
ReliaStar Payroll Agent, Inc. RLR-100%
ReliaStar Bancshares, Inc. ("RBS") RLR-100%
ReliaStar Bank ("RB") RBS-100%
ReliaStar Investment Services, Inc. RB-100%
LaMar & Phillips, Inc. RLR-100%
ITEM 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1998, there were 15,185 owners of the Contracts, 14,279
which were owners of qualified Contracts.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Article VII, Section 6 of Depositor's Bylaws,
filed as an Exhibit to this registration statement filed on Form N-4. The Bylaws
of Depositor mandate indemnification by Depositor of its directors, officers and
certain others, and permit indemnification of directors, officers, employees and
agents of Washington Square Securities, Inc. ("WSSI") under certain conditions.
Section 4.01 of the Bylaws of WSSI mandates indemnification by WSSI of its
directors and officers under certain conditions.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Depositor or WSSI, pursuant to the foregoing provisions or otherwise, Depositor
and WSSI have 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 Depositor of expenses
incurred or paid by a director or officer or controlling person of Depositor or
WSSI in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person of Depositor or WSSI in connection
with the securities being registered, Depositor or WSSI, as the case may be,
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether or not such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
An insurance company blanket bond is maintained providing $25,000,000
coverage for Depositor and the Principal Underwriter, subject to a $500,000
deductible.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) WSSI is the distributor and underwriter of variable life contracts
issued by ReliaStar Life Insurance Company of New York (formerly ReliaStar
Bankers Security Life Insurance Company) through ReliaStar Life Insurance
Company of New York Variable Life Separate Account I (formerly ReliaStar Bankers
Security Variable Life Separate Account I) and of variable annuity contracts
issued by ReliaStar Life Insurance Company of New York through Separate Accounts
M, P, and Q. WSSI also acts as distributor of (i) USLICO Series Funds, which
funds variable life insurance policies of related companies; (ii) Select*Life
II, Select*Life III, Select* Annuity III, and SVUL I variable life insurance
policies and variable annuity contracts issued by the Company's affiliate,
ReliaStar Life Insurance Company; (iii) Northern Life Advantage Variable
Annuity, a variable annuity issued by the Company's affiliate, Northern Life
Insurance Company; and (iv) Select*Life NY contracts, a variable life policy
issued by ReliaStar Life Insurance Company of New York.
(b) The directors and officers of WSSI are as follows:
DIRECTORS
NAME PRINCIPAL OCCUPATION
- ---- --------------------
John H. Flittie President and Chief Operating Officer of ReliaStar
Financial Corp.; Vice Chairman, President and Chief
Operating Officer of ReliaStar Life Insurance Company
Anne W. Dowdle Vice President, ReliaStar Life Insurance Company
Michael J. Dubes President and Chief Executive Officer of Depositor
James R. Gelder Vice President, ReliaStar Life Insurance Company
Robert C. Salipante Senior Vice President of Personal Financial Services of
ReliaStar Financial Corp.
Wayne R. Huneke Senior Vice President, ReliaStar Financial Corp.
and ReliaStar Life Insurance Company
EXECUTIVE OFFICERS
NAME POSITIONS AND OFFICES WITH WSSI
- ---- -------------------------------
John H. Flittie Chairman
Jeffrey A. Montgomery President and Chief Operating Officer
David Braun Assistant Vice President
Karen Callanan Assistant Vice President
Timothy J. Lyle Assistant Vice President and Chief Compliance Officer
Margaret B. Wall Treasurer and Chief Financial Officer
Susan M. Bergen Secretary
(c) For the year ended December 31, 1997 WSSI received $5,551,624 in fees,
including gross concessions, in connection with distribution of the Contracts.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of Registrant are located at the offices of
Depositor at 1110 Third Avenue, Seattle, Washington 98101.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Registrant will file a post-effective amendment to this Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in this Registration Statement are never more than 16 months old for
so long as payments under the Contracts may be accepted.
Registrant will include either (1) as part of any application to purchase a
Contract offered by the Prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional Information.
Registrant will deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly upon
written or oral request.
The Depositor and the Registrant rely on a no-action letter issued by the
Division of Investment Management to the American Council of Life Insurance on
November 28, 1988 and represent that the conditions enumerated therein have been
or will be complied with.
The Depositor represents that the fees and charges deducted under the
Advantage series variable annuity contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by the Company.
The Depositor and Registrant rely on SEC regulation (section)270.6c-7 with
respect to offering variable annuity contracts under the Texas Optional
Retirement Program and represent that the provisions of paragraphs (a)-(d) of
that regulation have been or will be complied with.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Registrant certifies that it meets the requirements of Securities Act Rule
485 for effectiveness of this Registration Statement and has caused this
Post-Effective Amendment No. 6 to the Registration Statement to be signed on its
behalf, in the City of Seattle and State of Washington, on this 14th day of
April, 1998.
SEPARATE ACCOUNT ONE
(Registrant)
By NORTHERN LIFE INSURANCE COMPANY
(Depositor)
By /S/ MICHAEL J. DUBES
-------------------------------------
Michael J. Dubes
President and Chief Executive Officer
As required by the Securities Act of 1933 and the Investment Company Act of
1940, Depositor has caused this Post-Effective Amendment No. 6 to the
Registration Statement to be signed on its behalf, in the City of Seattle and
State of Washington, on this 14th day of April, 1998.
NORTHERN LIFE INSURANCE COMPANY
By /S/ MICHAEL J. DUBES
-------------------------------------
Michael J. Dubes
President and Chief Executive Officer
As required by the Securities Act of 1933, Post-Effective Amendment No. 5 to the
Registration Statement has been signed on this 14th day of April, 1998 by the
following directors and officers of Depositor in the capacities indicated:
SIGNATURE TITLE
--------- -----
/S/ MICHAEL J. DUBES President and Chief Executive Officer
-------------------------------------
Michael J. Dubes
/S/ JERYL A. MILLNER Vice President, Chief Financial
------------------------------------- Officer and Treasurer
Jeryl A. Millner
R. Michael Conley Wayne R. Huneke James R. Miller
Richard R. Crowl Ronald D. Jarvis Robert C. Salipante
Michael J. Dubes Mark S. Jordahl John G. Turner
John H. Flittie Kenneth U. Kuk
A majority of the Board of Directors.
James E. Nelson, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named directors of Northern Life Insurance Company
pursuant to powers of attorney duly executed by such persons.
/S/ JAMES E. NELSON
-----------------------------------
James E. Nelson, Attorney-In-Fact
EX-99.1
2
BOARD RESOLUTION
EXHIBIT 99.1
NORTHERN LIFE INSURANCE COMPANY
MINUTES OF ACTION BY WRITTEN CONSENT OF
THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
The undersigned, being all the members of the Executive Committee of the Board
of Directors of Northern Life Insurance Company, consent to the adoption of the
following resolutions:
WHEREAS, the Company desires to develop and to become licensed to sell
variable annuities in all jurisdictions where it is licensed to do business.
BE IT RESOLVED, that the President and Secretary of the Company or their
designees are hereby authorized and directed to take whatever actions and to
execute whatever documents are necessary to become licensed to sell variable
annuities in all jurisdictions where the Company is licensed to do business.
BE IT RESOLVED, that pursuant to RCW 48.18A.020, as amended, the Company
establish and operate, and the Company hereby establishes, a separate account,
under the name Separate Account One (the "Account"), for assets to be held and
applied exclusively for the benefit of the holders of variable annuity contracts
issued by the Company and designated by the Company as contracts under which the
dollar amount of benefits or other contractual payments or values shall vary so
as to reflect the investment results of the Account, and the assets held in the
Account shall not be chargeable with liabilities arising out of any other
business the Company may conduct but shall be held and applied exclusively for
the benefit of the holders of such contracts.
BE IT RESOLVED, that the Account be registered as a unit investment trust
form of investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and that application be made for exemptions from such
provisions of the 1940 Act as the President or any Vice President of the Company
may deem necessary or advisable.
BE IT RESOLVED, that the President, any Vice President or Secretary of the
Company are hereby authorized, for and on behalf of the Company, to execute and
file with the Securities and Exchange Commission a registration statement on
Form N-4, or other applicable forms, for the registration of the Account under
the 1940 Act and to execute and file notification of claim of exemptions, or
application for exemptions, from provisions of the 1940 Act, all in such form as
such officer may approve, with such amendments, exhibits and other supporting
documents thereto, and to execute and deliver all such other and further
instruments and to take such other and further action in connection therewith,
as such officer may deem necessary or advisable.
BE IT RESOLVED, that the President, any Vice President or Secretary of the
Company are hereby authorized, for and on behalf of the Company to execute and
file with the Securities and Exchange Commission a registration statement on
Form N-4, or other applicable form, for the registration under the Securities
Act of 1933, as amended (the "1933 Act"), of variable annuity contracts to be
issued by the Company in connection with the Account and accumulation units and
other interests in the Account, in such form as such officer may approve, with
such amendments, exhibits and other supporting documents thereto, and to execute
and deliver all such other and further instruments and to take such other and
further action in connection therewith, as such officer may deem necessary or
advisable.
BE IT RESOLVED, that Emily Davis and Michael S. Fischer are hereby
designated as the persons authorized to receive notices and communications from
the Securities and Exchange Commission with respect to such registration
statements to be filed under the 1933 Act and 1940 Act, with the powers
conferred upon them as such persons by the 1933 Act and 1940 Act and the rules
and regulations of such Commission issued thereunder.
BE IT RESOLVED, that Craig R. Rodby, Emily Davis, Michael S. Fischer and
James E. Nelson, and each or any one of them, are hereby made, constituted and
appointed attorneys-in-fact, with full power of substitution, for and on behalf
of the Company, to execute and file with the Securities and Exchange Commission
such notifications and registration statements to be filed under the 1940 Act
and the 1933 Act, and such amendments, exhibits and other supporting documents
thereto, and such other documents in connection therewith, as such
attorneys-in-fact, or any one of them, may deem necessary or advisable, and the
President, any Vice President and Secretary of the Company are hereby
authorized, for and on behalf of the Company, to execute a power of attorney in
favor of said attorneys-in-fact.
BE IT RESOLVED, that the President, any Vice President and Secretary of the
Company, and such other officers and employees of the Company as the President
of the Company may designate, and each of them, are hereby authorized, for and
on behalf of the Company, to execute such other and further instruments and to
take such other and further action as they, or any of them, may deem necessary
or advisable to carry out the purposes of the foregoing resolutions.
Dated the 22nd day of March 1994
EXECUTIVE COMMITTEE
/s/ Craig R. Rodby
-----------------------
Craig R. Rodby
/s/ John H. Flittie
-----------------------
John H. Flittie
/s/ John G. Turner
-----------------------
John G. Turner
EX-99.3A
3
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
EXHIBIT 99.3a
DISTRIBUTION AND ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 10th day of January 1995, by and between Northern Life
Insurance Company, a Washington corporation, ("Northern") on its own behalf and
on behalf of Separate Account One ("Variable Account") and Washington Square
Securities, Inc. a Minnesota corporation ("WSSI") which is a member of the
National Association of Securities Dealers, Inc. ("NASD") and is registered as a
broker-dealer with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "1934 Act").
WHEREAS, Northern has established and maintains the Variable Account, a separate
investment account, for the purpose of issuing variable annuity contracts
("Contracts"), to commence on the effective date of the Registration Statement
relating to the Contract and Variable Account filed with the Securities and
Exchange Commission on Form N-4 pursuant to the Securities Act of 1933, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the
"l940 Act"); and
WHEREAS, Northern and WSSI are affiliated as direct wholly owned subsidiaries of
Northwestern National Life Insurance Company, a direct wholly owned subsidiary
of The NWNL Companies, Inc.; and
WHEREAS, Northern desires to retain WSSI as the Distributor and Principal
Underwriter for the sale and distribution of the Contracts to the public
directly and through other broker-dealers and WSSI is willing to render such
services; and
WHEREAS, Northern as issuer of the Contracts will retain certain records
regarding the Contracts, some of which are also required to be kept by WSSI,
since the Contracts are securities under federal law; and
WHEREAS, the parties desire Northern to act as recordkeeping and servicing agent
for WSSI with respect to the distribution of the Contracts by and through WSSI
and thus obtain a mutually advantageous economic result without the necessity
and expense of keeping a dual set of records for the Contracts;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
I. DISTRIBUTION OF CONTRACTS
A. PRINCIPAL UNDERWRITER. Northern hereby appoints WSSI, during the term of
this Agreement, subject to the registration requirements of the 1933 Act and the
1940 Act and the provisions of the 1934 Act, to be the Distributor and Principal
Underwriter for the sale of Contracts to the public in each state and other
jurisdictions in which the Contracts may be lawfully sold. WSSI shall offer the
Contracts for sale and distribution at prices set by Northern.
B. SELLING AGREEMENTS. WSSI is hereby authorized to enter into separate
written agreements ("Selling Agreements"), on such terms and conditions as WSSI
and Northern determine are not inconsistent with this Agreement, with such
organizations that agree to participate as a broker-dealer in the distribution
of the Contracts and to use their best efforts to solicit applications for
Contracts. Any such broker-dealer (hereinafter "Broker"), shall be both
registered as a broker-dealer under the 1934 Act and a member of the NASD. The
Selling Agreement shall require Broker and its agents or representatives
soliciting applications for Contracts to be duly and appropriately licensed,
registered and otherwise qualified for the sale of the Contracts (and the riders
offered in connection therewith) under the insurance laws and any applicable
blue sky laws of each state or other jurisdiction in which such Contracts may be
lawfully sold and in which Northern is licensed to sell such Contracts. Northern
shall undertake to appoint Broker's qualified agents or representatives as life
insurance agents of Northern, provided that Northern reserves the right to
refuse to appoint any proposed representative or agent, or once appointed, to
terminate such appointment. All Selling Agreements shall require Brokers to
supervise their agents or representatives.
WSSI now serves, and may hereafter serve as general distributor of variable
annuity contracts and variable life insurance policies issued by other life
insurance company issuers under common control with Northern and WSSI. In such
case, provided such other issuers consent, WSSI may amend existing selling
agreements (which are substantially equivalent to those described herein), or
prepare new ones, which include the right to distribute the Contracts hereunder.
C. SUITABILITY. Northern desires to ensure that Contracts will be sold to
purchasers for whom the Contracts will be suitable. WSSI shall require that
Brokers and their representatives make recommendations to an applicant for the
purchase of a Contract based on reasonable grounds that the purchase of the
Contract is suitable for such applicant.
D. CONFORMITY WITH REGISTRATION STATEMENT AND APPROVED SALES MATERIALS. In
performing its duties as Distributor, WSSI will act in conformity with the
Prospectus and with the instructions and directions of Northern, the
requirements of the 1933 Act, the 1934 Act, the 1940 Act, and all other
applicable federal and state laws and regulations. WSSI shall not give any
information nor make any representations concerning any aspect of the Contract
or of Northern's operations to any persons or entity unless such information or
representations are contained in the Registration Statement and the pertinent
prospectus filed with the Securities and Exchange Commission, or are contained
in sales or promotional literature approved by Northern. WSSI will not use any
sales promotion material and advertising which has not been previously approved
by Northern and will impose this same requirement upon all Brokers with whom
WSSI enters into Selling Agreements.
E. REVIEW OF ADVERTISING AND SALES MATERIALS. WSSI will provide Northern
with at least one copy of all sales presentations, mailings, sales promotion
materials, advertising and any other marketing materials in connection with the
distribution or sale of the Contracts, regardless of by whom prepared, for
approval prior to their first use.
F. APPLICATIONS. Completed applications for contracts solicited by a Broker
through its agents or representatives shall be transmitted directly to Northern,
P.O. Box 12530, Seattle, Washington 98111, or such other address as it may
direct in writing. All payments under the Contracts shall be made by check
payable to Northern or by other method acceptable to Northern, and if received
by WSSI, shall be held at all times in a fiduciary capacity and remitted
promptly to Northern. All such payments will be the property of Northern.
Northern has the sole authority to approve or reject such applications or
payments.
II. RECORDKEEPING AND ADMINISTRATIVE SERVICES
A. COMMITMENT TO KEEP RECORDS. Northern hereby undertakes to maintain and
preserve on behalf of WSSI the books and records required to be maintained and
preserved by WSSI pursuant to Rules 17a-3 and 17a-4 under the Act and to permit
examination of such books and records at any time or from time to time during
business hours by WSSI, its auditors and attorneys and by examiners or other
representatives of the Securities and Exchange Commission, and to furnish to
said Commission at its principal office in Washington, D.C., or at any Regional
Office of said Commission specified in demand made by or on behalf of said
Commission for copies of books and records, true, correct, complete and current
copies of any or all, or any part, of such books and records. This undertaking
shall be binding upon Northern, its successors and assigns. Nothing herein
contained shall be deemed to relieve WSSI from the responsibility that such
books and records be accurately maintained and preserved as specified in Rule
17a-3 and Rule 17a-4.
B. ADMINISTRATIVE SERVICES. Northern will provide the services enumerated
in Schedule A with respect to the Contracts. To the extent such services include
the payment of commissions to the sales personnel of WSSI or dealer concessions
to Brokers, Northern will provide such services to WSSI as a purely ministerial
act and the records in respect of such payments will be reflected on the books
and records maintained by or for WSSI.
III. GENERAL PROVISIONS
A. COMPENSATION. Northern agrees to compensate WSSI for the services WSSI
performs under this Agreement as determined from time to time by mutual
agreement between Northern and WSSI. WSSI will not make any payment to Northern
for the services Northern performs hereunder in recognition of the fact that
Northern must keep all the enumerated records set forth in Exhibit A and that
this Agreement provides for the economic keeping of such records by affiliated
companies.
B. TERMINATION. This Agreement may be terminated at any time, for any
reason, by either party on 60 days' written notice to the other party, without
the payment of any penalty. Upon termination of this Agreement, all
authorizations, rights and obligations shall cease except the obligation to
settle accounts hereunder,
including commissions on purchase payments subsequently received for contracts
in effect at time of termination.
C. ASSIGNMENT. Either party may assign or transfer this Agreement or
contract with others to perform or provide any of the services to be provided
hereunder only with the prior written consent of a duly authorized officer of
the other party.
D. REGULATION. This Agreement shall be subject to the provisions of the
1940 Act and the 1934 Act and the rules, regulations and rulings thereunder, and
of the applicable rules and regulations of the NASD and applicable state
insurance law and other applicable law, from time to time in effect, and the
terms hereof shall be interpreted and construed in accordance therewith.
E. SEVERABILITY. If any provisions of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
F. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
NORTHERN LIFE INSURANCE COMPANY
By:
Title: Vice President, Marketing
WASHINGTON SQUARE SECURITIES, INC.
By: /s/ Michael Fanning
Michael R. Fanning
Title: President and Chief Operating Officer
EXHIBIT A
A. ISSUANCE OF CONTRACT
1. Reviews form of application, applies issuance criteria to application
for annuity Contract.
2. For applications submitted by registered representative of WSSI,
refers same to a registered principal of WSSI for review of
suitability materials and new account information and sign-off by a
registered principal that this has occurred.
3. Notifies dealer/agent of any error or missing data needed to establish
participant, annuitant or Contract owner records.
4. If issuance criteria are met, prepares Contract data page, prepares
issued Contract, and mails to Contract owners or registered to
representatives/agents.
5. Establishes and maintains participant, annuitant, and Contract owner
records, as applicable, on authorized storage/retrieval systems.
6. Causes to have printed and maintains supply of confirmation
statements. Prepares and mails confirmation statements of purchases to
Contract owners with copies to registered representatives/agents, if
required.
7. Deposits monies received with application into the designated Account
(see "Banking" below).
8. Causes to have printed and maintains inventory of issue related forms,
Contracts and endorsements.
B. BILLING AND COLLECTION
1. Receives purchases payments and reconciles amount paid with returned
billing statements or other remittance media.
2. Prepares and mails confirmation statement of purchase payments to
Contract owners with copies to registered representatives/ agents, if
requested.
3. Updates the Contract owner master records and other records to reflect
payments received, and performs accounting distribution of each
payment received.
4. Deposits cash received under the Contracts into a designated bank
account (see "Banking" below).
5. Transmits daily accounting and bank transfer authorization summaries
prepared for each valuation period.
6. Prepares individual bills or group billing lists for all periodic
payment Contracts (confirmation can double as billing statement, if
desired).
7. Prepares pre-authorized checks ("PAC"). Causes to have printed and
maintains supply of PAC authorization forms. Generates and deposits
PAC's on appropriate schedule.
C. BANKING
1. Microfilms all checks. Balances, edits, endorses and prepares daily
deposit.
2. Deposits are placed into depository account.
3. Transfer funds from the depository account to the applicable Account.
4. On dishonored items, reverses transactions, prepares reports, and
communicates with Contract owner.
5. Receives funds from Accounts for transfer into disbursement account
and tax withholding account.
6. Prepares disbursement checks (see "Disbursement" below).
7. Prepares daily cash journal summary reports and transmits by facsimile
transmission. Mails detail of activity.
D. ACCOUNTING/AUDITING
1. Provides information necessary to post accounting entries to the
general account ledger, including amounts withheld from annuity
payments for taxes.
2. Generates accounting information necessary to post entries to Separate
Account ledgers.
3. Prepares daily accounting reports for Contracts maintained on the
system.
4. Determines the "Net Amount Available for Investment."
5. Retains systems generated reports in accordance with a retention
schedule mutually established. Provides access to such reports for
internal and external auditing.
6. Assists with annual audit of Variable Account financials conducted for
purposes of financial statement certification and publication.
Accommodates WSSI or regulatory audits, as required.
E. PRICING/VALUATION
1. Receives information needed in determining Variable Account unit
values from the Investment Company transfer agent. This information
includes the daily net asset value of the underlying Investment
Company and any capital gains or dividend distribution made by the
Investment Company.
2. Performs unit valuation procedure for accumulation and annuity
(payout) unit values for the Separate Account based upon valuation
information from the Investment Company.
3. Performs valuation of annuity reserves, minimum death benefits
contingency reserves, etc., associated with the variable annuity
contracts.
4. Collect the number of Investment Company shares from the Investment
Company transfer agent. Compares assets (Investment Company market
value, accrued dividend/ capital gains) to liability (participant
value which is total amount multiplied by Variable Account unit
value). Calculates daily asset charge. Redeems asset charges
periodically.
F. CONTRACT OWNER SERVICE/RECORD MAINTENANCE
1. Processes Contract owner service requests, including information
requests, beneficiary changes, transfer of assets between eligible
investment vehicles, and changes of any other information maintained
on the system.
2. Researches inquiries using both data stored in the system and
microfilm records. Responds directly to questions or inquiries
relating to transaction records or current account value.
3. Prepares a set of daily journals confirming changes made to
participant, annuitant, or Contract owner accounts. Microfilms copies
of communications from and to participants, annuitants, and Contract
owners.
G. DISBURSEMENT (SURRENDERS, BORROWINGS, CLAIMS)
1. Notifies Contract owners of qualified minimum distribution regulations
at appropriate time.
2. Receives requests for partial or full surrenders, minimum
distributions, partial withdrawals and death claims from Contract
owners and beneficiaries. Accounts for any Contract administrative
charge.
3. Processes minimum distribution, surrender and partial withdrawal
requests and death claims against the participant master files.
4. Prepares checks for surrenders, partial withdrawals, and death claims
and forwards to Contract owner, annuitant, and designated payee.
5. Prepares and mails confirmation statements of disbursement
transactions to Contract owners with copies to registered
representatives/agents, if requested.
6. Prepares report on surrenders, partial withdrawals, and death claims.
7. Reviews, causes to have printed, and maintains adequate supply of
checks.
H. COMMISSIONS
1. Creates and maintains detailed commission transaction records for each
financial transaction processed.
2. Creates commission adjustment transactions, as necessary, due to
cancellations, lapses, and the like.
3. Prepares commission statements and checks, if required.
4. Prepares commission interface to WSSI in machine readable form, as
required.
5. Creates agent tax reporting forms, as required.
I. ANNUITY BENEFIT PROCESSING
1. Receives information with respect to annuities going into the annuity
(payout) phase.
2. Calculates the amount of the initial annuity payment for variable
payout.
3. Deducts applicable premium taxes.
4. Calculates annuity reserves.
5. Processes annuity reserve adjustments.
J. PROXY PROCESSING
1. Receives record date information and proxy solicitation from
Investment Companies.
2. Prepares proxy cards.
3. Mails annual solicitations (and Resolicitations, if necessary).
4. Maintains proxy registers and other required proxy material.
K. PERIODIC REPORTS TO CONTRACT OWNERS
1. Collates information necessary to prepare semi-annual reports for
Variable Account.
2. Inserts and mails statement of Account to each participant, annuitant,
or Contract owner.
3. Prepares and mails statement of Account to each participant,
annuitant, or Contract owner.
L. REGULATORY STATEMENT REPORTS
1. Collates relevant financial information for preparation of convention
blanks for Variable Account.
2. Prepares IRS Reports 1099-R, W-2P, and 5498 as required for Contract
owners who made contributions or received annuity payments or
distributions. Mail to Contract owners and file with IRS.
3. Maintains Taxpayer Identification Numbers for Contract owners and
performs withholding and backup withholding as required by the
Internal Revenue Code and regulations thereunder.
4. Responds to requests from plan administrators or trustees for
information affecting the plan or participants for qualified plans.
5. Provides relevant financial data for preparation of the Annual SEC
Report for Separate Accounts under the Investment Company Act of 1940.
M. PREMIUM TAXES
1. Collects and accounts for premium taxes as appropriate.
2. Prepares and maintains premium tax records by Contract owner and by
state.
N. FINANCIAL AND MANAGEMENT REPORTS
1. Prepares and makes available to WSSI upon request the reports listed
below.
ITEMS PRODUCTION DATES
General Distributor Compensation
Statement.................................1st and 15th of each month
Commission Statement........................1st and 15th of each month
Commissions Check Register..................1st and 15th of each month
Commission Proofs...........................1st and 15th of each month
Cash Recap Report...........................Daily
Agents' Negative Balance Listing............1st and 15th of each month
Commissions Suspended File Listing..........1st and 15th of each month
Agent Balance Forward Net Change
Report....................................1st and 15th of each month
Annuity Commissions Transactions not
Processed.................................1st and 15th of each month
Agent Summary Listing.......................1st and 15th of each month
NWNL Detail Production Report by
Region/Division...........................End of each month
Report Listing contracts where Owner
and Annuitant differ......................End of each month
Daily Price Report..........................Daily
Daily Production Report.....................Daily
As of Transaction Report....................Daily
Annuity Masterfile Update ..................Daily
Annuity New Policy Register ................Daily
Gain and Loss Report .......................Daily
Cash Recap Supersheet ......................Daily
Unit Value Supersheet ......................Daily
Address Change Report ......................Daily
Nightly Pricing Sheet ......................Daily
Cash Transfers on Fixed Account.............Daily
Checks for Asset Charges, Sales
Charges, Liquidations and State Taxes ....Daily
0. AGENT LICENSING RECORDKEEPING
1. Appoints and terminates appointments of agents for state insurance
licensing purposes, maintains agent license status information as
required:
(a) New Agents
(b) Changes in Status
(c) Agents Terminated
2. Establishes, maintains, or deletes agent records on computer system,
as required.
3. Edits against agent records when processing transactions against a
Contract.
EX-99.3B
4
SELLING AGREEMENT
EXHIBIT 99.3b
"A"
BROKER/DEALER AGENCY
SELLING AGREEMENT
THIS AGREEMENT is made among the following three parties:
1. NORTHERN LIFE INSURANCE COMPANY
1110 Third Avenue
Seattle, Washington 98101-2930
a Washington domiciled stock life insurance company (hereinafter
"Insurer"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") and a member of the National
Association of Securities Dealers, Inc. ("NASD") (hereinafter General
Distributor); and
3. _________________________________________________________
_________________________________________________________
Street
_________________________________________________________
City State Zip
registered as a broker-dealer with the SEC and a member of the NASD and
licensed as an insurance agency (hereinafter "Broker/Dealer").
This Agreement shall be effective as of the _____ day of ______________, 19_____
[LOGO] NORTHERN LIFE
P.O. BOX 12530 * SEATTLE, WA 98111-4530
A RELIASTAR COMPANY
SELLING AGREEMENT
- --------------------------------------------------------------------------------
RECITALS:
Whereas, Broker/Dealer is licensed as an insurance agency in order to satisfy
state insurance law requirements with respect to the sale of Traditional
Policies as well as variable insurance products which are registered securities
with the SEC; and
Whereas, the parties wish to enter into an agreement for the distribution of
Variable Contracts and Traditional Policies by Broker/Dealer; and
Whereas, Insurer has appointed General Distributor as principal underwriter and
distributor (as those terms are defined by the Investment Company Act of 1940)
of the Variable Contracts and has authorized General Distributor to enter into
selling agreements with registered broker/dealers for the solicitation and sale
of Variable Contracts; and,
Whereas, Insurer and General Distributor propose to have Broker/Dealer's
registered representatives who are licensed as life insurance/variable
contract agents in appropriate jurisdictions ("Representatives") solicit and
sell Variable Contracts and Traditional Policies; and,
Whereas, Insurer and General Distributor propose to have Broker/Dealer provide
certain supervisory and administrative services as hereinafter described with
respect to the solicitation and sales of Variable Contracts and Traditional
Policies.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. DEFINITIONS
In this Agreement
(a) The words "Variable Contract" shall mean those variable life insurance
policies and variable annuity contracts identified in Section 1 of
Compensation Schedule attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker/Dealer, suspend sales of any Variable Contracts or amend any
policies or contracts evidencing such Variable Contracts if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker/Dealer prior to suspending
sales of any Variable Contracts or amending any policies or contracts
evidencing such Variable Contracts.
Insurer may issue and propose additional or successor products, in
which event Broker/Dealer will be informed of the product and its
related Commission Schedule. If Broker/Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Commission Schedule for such product(s).
If Broker/Dealer does not indicate disapproval of the new product(s)
or the terms contained in the related Commission Schedule,
Broker/Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Commission Schedule which shall
be attached to and made a part of this Agreement.
(b) The words "Traditional Policy" shall mean those life insurance
policies and annuity contracts identified in Section 2 of Compensation
Schedule attached hereto, and as may hereafter be amended.
Insurer may in its sole discretion and without notice to
Broker/Dealer, suspend sales of any Traditional Policies or amend any
policies or contracts evidencing such, Traditional Policies if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker/Dealer prior to suspending
sales of any Traditional, Policies or amending any policies or
contracts evidencing such Traditional Policies.
Insurer may issue and propose additional or successor products, in
which event Broker/Dealer will be informed of the product and its
related Compensation Schedule. If Broker/Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Compensation Schedule for such product(s).
If Broker/Dealer does not indicate disapproval of the new product(s)
or the terms contained in the related Compensation Schedule,
Broker/Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Compensation Schedule which shall
be attached to and made a part of this Agreement.
2. AGENCY APPOINTMENTS
On the effective date, Insurer and General Distributor appoint
Broker/Dealer and Broker/Dealer accepts, the appointment to solicit sales
of and to sell Variable Contracts and Traditional Policies, pursuant to the
terms of this Agreement.
3. DUTIES OF BROKER/DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker/Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker/Dealer with respect to such persons'
securities-regulated activities in connection with the Variable
Contracts. Broker/Dealer will cause the Representatives to be trained
in the sale of the Variable Contracts, will cause such Representatives
to qualify under applicable federal and state laws to engage in the
sale of the Variable Contracts; will cause such Representatives to be
registered representatives of Broker/Dealer before such
Representatives engage in the solicitation of applications for the
Variable Contracts; and will cause such Representatives to limit
solicitation of applications for the Variable Contracts to
jurisdictions where Insurer has authorized such solicitation.
Broker/Dealer shall cause such Representatives' qualifications to be
certified to the satisfaction of General Distributor and shall notify
General Distributor if any Representative ceases to be a registered
representative of Broker/Dealer or ceases to maintain the proper
licensing required for the sale of the Variable Contracts. All parties
shall be liable for their own negligence and misconduct under this
paragraph.
SELLING AGREEMENT
- --------------------------------------------------------------------------------
(b) REPRESENTATIVES' INSURANCE COMPLIANCE. Broker/Dealer, prior to
allowing its Representatives to solicit for sales or sell the Variable
Contracts and Traditional Policies, shall require such representatives
to be validly insurance licensed, registered and appointed by Insurer
as a variable contract/life insurance agent in accordance with the
jurisdictional requirements of the place where the solicitations and
sales take place as well as the solicited person's or entity's place
of residence.
Broker/Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell the
Variable Contracts and Traditional Policies. Broker/Dealer shall
fulfill all Insurer requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its designee by Broker/Dealer. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker/Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934, and all other applicable federal
and state laws. In addition, Broker/Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker/Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker/Dealer or otherwise fails to meet the rules and standards
imposed by Broker/Dealer on its Representatives, Broker/Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts or Traditional Policies and Broker/Dealer shall
take whatever additional action may be necessary to terminate the
sales activities of such Representative relating to such contracts and
policies.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker/Dealer
will be provided, without any expense to Broker/Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts, and Traditional Policies.
No sales promotion materials or any advertising relating to the
Variable Contracts and Traditional Policies, including without
limitation generic advertising material which does not refer to
Insurer by name, will be used by Broker Dealer unless the specific
item has been approved in writing by General Distributor prior to such
use.
In addition, Broker/Dealer shall not print, publish or distribute any
advertisement, circular or document relating to Insurer unless such
advertisement, circular or document has been approved in writing by
Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars documents and software relating to
the sales of the Insurer's contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker/Dealer.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker/Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker/Dealer agrees to hold harmless and indemnify Insurer and
General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker/Dealer shall maintain complete records indicating the manner
and extent of distribution of any such solicitation material, shall
make such records and files available to staff of Insurer or its
designated agent in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or
other regulatory agencies, including the SEC, which have regulatory
authority over Insurer or General Distributor. Broker/Dealer holds
Insurer, General Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has
not been specifically approved in writing, or (b) although previously
approved, has been disapproved, in writing, for further use or (c) has
been used beyond any time limit that may be established by Insurer.
(f) SECURING APPLICATIONS. All applications for Variable Contracts and
Traditional Policies shall be made on application forms supplied by
Insurer and all payments collected by Broker/Dealer or any
Representative thereof shall be remitted promptly in full, together
with such application forms and any other required documentation,
directly to Insurer at the address indicated on such application or to
such other address as Insurer may, from time-to-time, designate in
writing. Broker/Dealer shall review all such applications for
accuracy, suitability, and completeness. Checks or money orders in
payment on any such Variable Contract or Traditional Policy shall be
drawn to the order of "Northern Life Insurance Company." All
applications are subject to acceptance or rejection by Insurer at its
sole discretion. All records or information obtained hereunder by
Broker/Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker/Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker/Dealer agrees that all money
or other consideration tendered with or in
SELLING AGREEMENT
- --------------------------------------------------------------------------------
respect of any application for a Variable Contract or Traditional
Policy and the Variable Contract or Traditional Policy when issued is
the property of Insurer and shall be promptly remitted in full to
Insurer without deduction or offset for any reason, including by way
of example but not limitation, any deduction or offset for
compensation claimed by Broker/Dealer.
(h) FIDELITY BOND. Broker/Dealer represents that all directors, officers,
employees and Representatives of Broker/Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance
law purposes or who have access to funds of Insurer, including but
not limited to funds submitted with applications for the Variable
Contracts and Traditional Policies or funds being returned to owners,
are and shall be covered by a blanket fidelity bond, including
coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by Broker/Dealer at
Broker/Dealer expense. Such bond shall be, at least, of the form, type
and amount required under the NASD Rules of Fair Practice. Insurer may
require evidence satisfactory to it that such coverage is in force and
Broker/Dealer shall give prompt written notice to Insurer of any
notice of cancellation or change of coverage.
Broker/Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker/Dealer shall promptly pay Insurer
such amount on demand and Broker/Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker/Dealer on all sales of Variable
Contracts through such Representatives, in accordance with the form of
Compensation Schedule attached hereto, which is in effect when
purchase payments on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker/Dealer's Representatives unless otherwise indicated
in Compensation Schedule. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker/Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due to Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker/Dealer. Broker/Dealer agrees to hold Insurer and General
Distributor harmless from all claims of its Representatives for
compensation in respect of such Representative's sales of Variable
Contracts.
(b) TRADITIONAL POLICIES. Insurer shall pay commissions to Broker/Dealer
on all sales of Traditional Policies through its Representatives in
accordance with the form of Compensation Schedule attached hereto,
which is in effect when purchase payments on such Traditional Policies
are received by Insurer. Commissions will be paid as a percentage of
premiums received in cash or other legal tender and accepted by
Insurer on applications obtained by Broker/Dealer's Representatives
unless otherwise indicated in Compensation Schedule. Upon termination
of this Agreement, all compensation payable hereunder shall cease;
however, Broker/Dealer shall continue to be liable for any chargebacks
or for any other amounts advanced by or otherwise due Insurer
hereunder.
Insurer will pay all such Compensation to and in the name of
Broker/Dealer. Broker/Dealer agrees to hold Insurer harmless from all
claims of its Representatives for compensation in respect of
Representative's sales of Traditional Policies.
(c) COMMISSION STATEMENTS. Broker/Dealer will be provided with copies of
its Representatives' commission statements together with
Broker/Dealer's own commission statements for each commission payment
period in which commissions are payable. Except as to clerical errors
and material undisclosed facts, such statement constitutes a complete
and accurate statement of the commission account unless written notice
is provided to Insurer within 120 days after the date of the
statement, which notice specifically sets forth the objections or
exceptions thereto.
(d) COMPENSATION SCHEDULES. The initial Compensation Schedule is attached
and incorporated herein.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker/Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the date
the notice is mailed, or transmitted by some other means, including
but not limited to facsimilies.
(e) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker/Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker/Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker/Dealer as applicable agrees to promptly repay the credited
amount.
5. TERMINATION
This Agreement may be terminated without cause by any party upon thirty
(30) days prior written notice; and may be terminated for failure to
perform satisfactorily or other cause, by any party immediately; and shall
be terminated if Broker/Dealer ceases to be registered as a broker/dealer
under the Securities Exchange Act of 1934 and a member of the NASD or, if
Broker/Dealer ceases to maintain its insurance agent license(s) in good
standing in the jurisidictions in which it conducts business.
6. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration procedures. If the subject matter of the dispute, claim or
controversy is not
SELLING AGREEMENT
- --------------------------------------------------------------------------------
within the scope of matters which may arbitrated through the NASD
arbitration procedures, then such dispute, claim or controversy shall, upon
the written request of any party, be submitted to three arbitrators, one
to be chosen by each party, and the third by the two so chosen. If either
party refuses or neglects to appoint an arbitrator within thirty (30) days
after the receipt of the written notice from the other party requesting it
to do so, the requesting party may appoint two arbitrators. If the two
arbitrators fail to agree in the selection of a third arbitrator within
thirty (30) days of their appointment, each of them shall name two, of whom
the other shall decline one and the decision shall be made by drawing lots.
All arbitrators shall be active or retired executive officers of insurance
companies not under the control of any party to this Agreement. Each party
shall submit its case to the arbitrators within thirty (30) days of the
appointment of the third arbitrator. The arbitration shall be held in
Minneapolis, Minnesota at the times agreed upon by the arbitrators. The
decision in writing of any two arbitrators, when filed with the parties
hereto, shall be final and binding on both parties. Judgment may be entered
upon the final decision of the arbitrators in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and
shall jointly and equally bear with the other party the expense of the
third arbitrator and of the arbitration.
7. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application by either
Broker/Dealer after notice of any such amendment has been sent shall
constitute Broker/Dealer's agreement to any such amendment. No
additions, amendments or modifications of this Agreement or any waiver
of any provision will be valid unless approved, in writing, by one of
Insurer's duly authorized officers. In addition, no approved waiver of
any default, or failure of performance by Broker/Dealer will affect
Insurer's or General Distributor's rights with respect to any later
default or failure of performance.
(b) INDEPENDENT CONTRACTORS RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker/Dealer and its Representatives.
(c) ASSIGNMENTS. Broker/Dealer will not assign or transfer either wholly
or partially, this Agreement or any of the benefits accrued or to
accrue under it, without the written prior consent of a duly
authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker/Dealer receives or is served with any
notice or other paper concerning any legal action against Insurer or
General Distributor, Broker/Dealer agrees to notify General
Distributor immediately (in any event not later than the first
business day after receipt) by telephone and transmit any papers that
are served or received by facsimile to (612) 342-7531 and by overnight
mail to the General Counsel of the General Distributor.
(e) SEVERABILITY. it is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and
enforced as if this Agreement did not contain the particular part,
term or provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer has the authority on behalf
of Insurer to make, alter, or discharge any policy, contract, or
certificate issued by Insurer, to waive any forfeiture or to grant,
permit, or extend the time for making any payments or to guarantee
earnings or rates, or to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, or
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, or to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
(h) CONTRACT DELIVERY. Insurer will mail Variable Contracts directly to
Contract Owner.
8. TERRITORY
Broker/Dealer's territory is limited geographically to those jurisdictions
in which the Variable Contracts and Traditional Policies may lawfully be
offered, provided that Broker/Dealer's right to solicit sales of and to
sell the Variable Contracts and Traditional Policies in such jurisdictions
is not exclusive.
SELLING AGREEMENT
- --------------------------------------------------------------------------------
In Witness whereof, we set our hands this ____ day of ________________, 19_____.
INSURER: BROKER/DEALER:
NORTHERN LIFE INSURANCE COMPANY _____________________________________
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
GENERAL DISTRIBUTOR:
WASHINGTON SQUARE SECURITIES, INC.
By:__________________________________
Title:_______________________________
SELLING AGREEMENT
- --------------------------------------------------------------------------------
"B"
BROKER/DEALER AGENCY
SELLING AGREEMENT
THIS AGREEMENT is made among the following three parties:
1. NORTHERN LIFE INSURANCE COMPANY
1110 Third Avenue
Seattle, Washington 98101-2930
a Washington domiciled stock life insurance company (hereinafter
"Insurer"); and,
2. WASHINGTON SQUARE SECURITIES, INC.
20 Washington Avenue South
Minneapolis, Minnesota 55401-1900
an affiliate of Insurer, registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") and a member of the National
Association of Securities Dealers, Inc. ("NASD") (hereinafter General
Distributor); and
3. _________________________________________________________
_________________________________________________________
Street
_________________________________________________________
City State Zip
registered as a broker-dealer with the SEC and a member of the NASD
(hereinafter "Broker/Dealer").
4. _________________________________________________________
_________________________________________________________
Street
_________________________________________________________
City State Zip
an affiliate of Broker/Dealer and a licensed insurance agency (hereinafter
"Agency").
This Agreement shall be effective as of the _____ day of ______________, 19_____
[LOGO] NORTHERN LIFE
P.O. BOX 12530 * SEATTLE, WA 98111-4530
A RELIASTAR COMPANY
SELLING AGREEMENT
- --------------------------------------------------------------------------------
RECITALS:
Whereas, Broker/Dealer has become affiliated with Agency in order to satisfy
state insurance law requirements with respect to the sale of variable insurance
products which are registered securities with the SEC; and
Whereas, the parties wish to enter into an agreement for the distribution of
Variable Contracts and Traditional Policies by Broker/Dealer and Agency; and
Whereas, Insurer has appointed General Distributor as principal underwriter and
distributor (as those terms are defined by the investment Company Act of 1940)
of the Variable Contracts and has authorized General Distributor to enter into
selling agreements with registered broker/dealers for the solicitation and sale
of Variable Contracts; and,
Whereas, Insurer and General Distributor propose to have Broker/Dealer's
registered representatives who are affiliated with Agency and who are licensed
as life insurance/variable contract agents in appropriate jurisdictions
("Representatives") solicit and sell Variable Contracts and Traditional
Policies; and,
Whereas, Insurer proposes to authorize Agency's employees who are not registered
representatives of Broker/Dealer but who are licensed as life insurance agents
in appropriate jurisdictions ("Agents") to solicit and sell Traditional
Policies; and,
Whereas, Insurer and General Distributor propose to have Broker/Dealer provide
certain supervisory and administrative services as hereinafter described with
respect to the solicitation and sales of Variable Contracts; and,
Whereas, Insurer proposes to have Agency provide certain supervisory and
administrative services as hereinafter described with respect to the
solicitation and sales of Traditional Policies by its Agents and by
Representatives who are affiliated with Agency.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties now agree as follows:
1. DEFINITIONS
In this Agreement
(a) The words "Variable Contract" shall mean those variable life insurance
policies and variable annuity contracts identified in Section 1 of
Compensation Schedule attached hereto, and as may hereafter be
amended.
Insurer may in its sole discretion and without notice to
Broker/Dealer, suspend sales of any Variable Contracts or amend any
policies or contracts evidencing such Variable Contracts if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker/Dealer prior to suspending
sales of any Variable Contracts or amending any policies or contracts
evidencing such Variable Contracts.
Insurer may issue and propose additional or successor products, in
which event Broker/Dealer will be informed of the product and its
related Commission Schedule. If Broker/Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Commission Schedule for such product(s). If
Broker/Dealer does not indicate disapproval of the new product(s) or
the terms contained in the related Commission Schedule, Broker/Dealer
will be deemed to have thereby agreed to distribute such product(s)
and agreed to the related Commission Schedule which shall be attached
to and made a part of this Agreement.
(b) The words "Traditional Policy" shall mean those life insurance
policies and annuity contracts identified in Section 2 of Compensation
Schedule attached hereto, and as may hereafter be amended.
Insurer may in its sole discretion and without notice to
Broker/Dealer, suspend sales of any Traditional Policies or amend any
policies or contracts evidencing such Traditional Policies if, in
Insurer's opinion, such suspension or amendment is: (1) necessary for
compliance with federal, state, or local laws, regulations, or
administrative order(s); or, (2) necessary to prevent administrative
or financial hardship to Insurer. In all other situations, Insurer
shall provide 30 days notice to Broker/Dealer prior to suspending
sales of any Traditional Policies or amending any policies or
contracts evidencing such Traditional Policies.
Insurer may issue and propose additional or successor products, in
which event Broker/Dealer will be informed of the product and its
related Compensation Schedule. If Broker/Dealer does not agree to
distribute such product(s), it must notify Insurer in writing within
30 days of receipt of the Compensation Schedule for such product(s).
If Broker/Dealer does not indicate disapproval of the new product(s)
or the terms contained in the related Compensation Schedule,
Broker/Dealer will be deemed to have thereby agreed to distribute such
product(s) and agreed to the related Compensation Schedule which shall
be attached to and made a part of this Agreement.
2. AGENCY APPOINTMENTS
On the effective date,
(a) Insurer and General Distributor appoint Broker/Dealer and
Broker/Dealer accepts the appointment to solicit sales of and to sell
Variable Contracts only, pursuant to the terms of this Agreement.
(b) Insurer appoints Agency, and Agency accepts the appointment to solicit
sales of and to sell Traditional Policies only, pursuant to the terms
of this Agreement.
3. DUTIES OF BROKER/DEALER
(a) SUPERVISION OF REPRESENTATIVES. Broker/Dealer shall have full
responsibility for the training and supervision of all Representatives
who are engaged directly or indirectly in the offer or sale of the
Variable Contracts, and all such persons shall be subject to the
control of Broker/Dealer with respect to such persons'
securities-regulated activities in connection with the Variable
Contracts. Broker/Dealer will cause the Representatives to be trained
in the sale of the Variable Contracts, will cause such Representatives
to qualify under applicable federal and state laws to engage in the
sale of the Variable Contracts; will cause such Representatives to be
registered representatives of Broker/Dealer before such
Representatives engage in the solicitation of applications for the
Variable Contracts; and will cause such Representatives to limit
solicitation of applications for the Variable Contracts to
jurisdictions where Insurer has authorized such solicitation.
Broker/Dealer shall cause
SELLING AGREEMENT
- --------------------------------------------------------------------------------
such Representatives' qualifications to be certified to the
satisfaction of General Distributor and shall notify General
Distributor if any Representative ceases to be a registered
representative of Broker/Dealer or ceases to maintain the proper
licensing required for the sale of the Variable Contracts. All parties
shall be liable for their own negligence and misconduct under this
paragraph.
(b) REPRESENTATIVES INSURANCE COMPLIANCE. Broker/Dealer, prior to allowing
its Representatives to solicit for sales or sell the Variable
Contracts, shall require such representatives to be validly insurance
licensed, registered and appointed by Insurer as a variable contract
agent in accordance with the jurisdictional requirements of the place
where the solicitations and sales take place as well as the solicited
person's or entity's place of residence.
Broker/Dealer shall assist Insurer in the appointment of
Representatives under the applicable insurance laws to sell the
Variable Contracts. Broker/Dealer shall fulfill all Insurer
requirements in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of
Insurer. All such licensing/appointment papers shall be submitted to
Insurer or its designee by Broker/Dealer. Notwithstanding such
submission, Insurer shall have sole discretion to appoint, refuse to
appoint, discontinue, or terminate the appointment of any
Representative as an insurance agent of Insurer.
(c) COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS. Broker/Dealer shall fully comply with the
requirements of the National Association of Securities Dealers, Inc.,
the Securities Exchange Act of 1934 and all other applicable federal
and state laws. In addition, Broker/Dealer will establish and maintain
such rules and procedures as may be necessary to cause diligent
supervision of the securities activities of the Representatives as
required by applicable law or regulation. Upon request by General
Distributor, Broker/Dealer shall furnish such records as may be
necessary to establish such diligent supervision.
(d) NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE. In the event a
Representative fails or refuses to submit to supervision of
Broker/Dealer or otherwise fails to meet the rules and standards
imposed by Broker/Dealer on its Representatives, Broker/Dealer shall
advise General Distributor of this fact and shall immediately notify
such Representative that he or she is no longer authorized to sell the
Variable Contracts and Broker/Dealer shall take whatever additional
action may be necessary to terminate the sales activities of such
Representative relating to the Variable Contracts.
(e) PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING. Broker/Dealer
will be provided, without any expense to Broker/Dealer, with
prospectuses relating to the Variable Contracts and such other
supplementary sales material as General Distributor determines is
necessary or desirable for use in connection with sales of the
Variable Contracts.
No sales promotion materials or any advertising relating to the
Variable Contracts, including without limitation generic advertising
material which does not refer to Insurer by name, will be used by
Broker/Dealer unless the specific item has been approved in writing by
General Distributor prior to such use.
In addition, Broker/Dealer shall not print, publish or distribute
any advertisement, circular or document relating to Insurer unless
such advertisement, circular or document has been approved in writing
by Insurer prior to such use.
Upon termination of this Agreement, all prospectuses, sales promotion
material, advertising, circulars, documents and software relating to
the sales of the Variable Contracts shall be promptly turned over to
Insurer free from any claim or retention of rights by the
Broker/Dealer.
Insurer represents that the prospectus and registration statement
relating to the Variable Contracts contain no untrue statements of
material fact or omission to state material fact, the omission of
which makes any statement contained in the prospectus and registration
statement misleading. Insurer agrees to indemnify Broker/Dealer from
and against any claims, liabilities and expenses which may be incurred
under the Securities Act of 1933, the Investment Company Act of 1940,
common law or otherwise arising out of a breach of the agreement in
this paragraph.
Broker/Dealer agrees to hold harmless and indemnify Insurer and
General Distributor against any and all claims, liabilities and
expenses which Insurer or General Distributor may incur from
liabilities arising out of or based upon any alleged or untrue
statement other than statements contained in the registration
statement, prospectus or approved sales material of any Variable
Contract.
In accordance with the requirements of the laws of the several states,
Broker/Dealer shall maintain complete records indicating the manner
and extent of distribution of any such solicitation material, shall
make such records and files available to staff of Insurer or its
designated agent in field inspections and shall make such material
available to personnel of state insurance departments, the NASD or
other regulatory agencies, including the SEC, which have regulatory
authority over Insurer or General Distributor. Broker/Dealer holds
Insurer, General Distributor and their affiliates harmless from any
liability arising from the use of any material which either (a) has
not been specifically approved in writing, or (b) although previously
approved, has been disapproved, in writing, for further use, or (c)
has been used beyond any time limit that may be established by
Insurer.
(f) SECURING APPLICATIONS. All applications for Variable Contracts shall
be made on application forms supplied by Insurer and all payments
collected by Broker/Dealer or any Representative thereof shall be
remitted promptly in full, together with such application forms and
any other required documentation, directly to Insurer at the address
indicated on such application or to such other address as Insurer may,
from time-to-time, designate in writing. Broker/Dealer shall review
all such applications for accuracy, suitability and completeness.
Checks or money orders in payment on any such Variable Contract shall
be drawn to the order of "Northern Life Insurance Company." All
applications are subject to acceptance or rejection by Insurer at its
sole discretion. All records or information obtained hereunder by
Broker/Dealer shall not be disclosed or used except as expressly
authorized herein, and Broker/Dealer will keep such records and
information confidential, to be disclosed only as authorized or if
SELLING AGREEMENT
- --------------------------------------------------------------------------------
expressly required by federal or state regulatory authorities.
(g) COLLECTION OF PURCHASE PAYMENTS. Broker/Dealer agrees that all money
or other consideration tendered with or in respect of any application
for a Variable Contract and the Variable Contract when issued is the
property of Insurer and shall be promptly remitted in full to Insurer
without deduction or offset for any reason, including by way of
example but not limitation, any deduction or offset for compensation
claimed by Broker/Dealer.
(h) FIDELITY BOND. Broker/Dealer represents that all directors, officers,
employees and Representatives of Broker/Dealer who are licensed
pursuant to this Agreement as Insurer's agents for state insurance law
purposes or who have access to funds of Insurer, including but not
limited to funds submitted with applications for the Variable
Contracts or funds being returned to owners, are and shall be covered
by a blanket fidelity bond, including coverage for larceny and
embezzlement, issued by a reputable bonding company. This bond shall
be maintained by Broker/Dealer at Broker/Dealer's expense. Such bond
shall be, at least, of the form, type and amount required under the
NASD Rules of Fair Practice. Insurer may require evidence satisfactory
to it that such coverage is in force and Broker/Dealer shall give
prompt written notice to Insurer of any notice of cancellation or
change of coverage.
Broker/Dealer assigns any proceeds received from the fidelity bonding
company to Insurer to the extent of Insurer's loss due to activities
covered by the bond. If there is any deficiency amount, whether due to
a deductible or otherwise, Broker/Dealer shall promptly pay Insurer
such amount on demand and Broker/Dealer hereby indemnifies and holds
harmless Insurer from any such deficiency and from the costs of
collection thereof (including reasonable attorneys' fees).
4. DUTIES OF AGENCY
(a) SUPERVISION OF AGENTS AND REPRESENTATIVES. Agency shall have full
responsibility for the training and supervision of all Agents and
Representatives who are engaged directly or indirectly in the offer or
sale of Traditional Policies. Agency will cause the Agents and
Representatives to be trained in the sale of Traditional Policies,
will cause such Agents and Representatives to qualify under applicable
state insurance laws to engage in the sale of life insurance before
such Agents and Representatives engage in the solicitation of
applications for Traditional Policies; and will cause such Agents and
Representatives to limit solicitation of applications for Traditional
Policies to jurisdictions where Insurer has authorized such
solicitation. Agency shall cause such Agents' and Representatives'
qualifications to be certified to the satisfaction of Insurer and
shall notify Insurer if any Agent or Representative ceases to be an
employee of Agency or ceases to maintain the proper licensing required
for the sale of Traditional Policies. All parties shall be liable for
their own negligence and misconduct under this paragraph.
(b) AGENT INSURANCE COMPLIANCE. Agency, prior to allowing Agents or
Representatives to solicit for sales or sell Traditional Policies,
shall require such agents to be validly insurance licensed, registered
and appointed by Insurer as a life insurance agent in accordance with
the jurisdictional requirements of the place where the solicitations
and sales take place as well as the solicited person's or entity's
place of residence.
Agency shall assist Insurer in the appointment of Agents and
Representatives under the applicable insurance laws to sell
Traditional Policies. Agency shall fulfill all Insurer requirements in
conjunction with the submission of licensing/appointment papers for
all applicants as insurance agents of Insurer. All such
licensing/appointment papers shall be submitted to Insurer or its duly
appointed agent by Agency. Notwithstanding such submission, Insurer
shall have sole discretion to appoint, refuse to appoint, discontinue,
or terminate the appointment of any Agent or Representative as an
insurance agent of Insurer.
(c) SALES PROMOTION MATERIAL AND ADVERTISING. Agency will provided,
without any expense to Agency, such sales promotion and advertising
materials as Insurer determines is necessary or desirable for use in
connection with sales of Traditional Policies.
No sales promotion materials or any advertising relating to
Traditional Policies, including without limitation generic advertising
material which does not refer to Insurer by name, will be used by
Agency unless the specific item has been approved in writing by
Insurer prior to such use.
In addition, Agency shall not print, publish or distribute any
advertisement, circular or any document relating to Insurer unless
such advertisement, circular or document has been approved in writing
by Insurer prior to such use.
Upon termination of this Agreement, all sales promotion material,
advertising, circulars, documents and software relating to the sales
of Traditional Policies shall promptly turned over to Insurer free
from any claim or retention of rights by the Agency.
In accordance with the requirements of the laws of the several states,
Agency shall maintain complete records indicating the manner and
extent of distribution of any such solicitation material, shall make
such records and files available to staff of Insurer or its designated
agent in field inspections and shall make such material available to
personnel of state insurance departments and other regulatory agencies
which have regulatory authority over Insurer. Agency holds Insurer and
its affiliates harmless from any liability arising from the use of any
material which either (a) has not been specifically approved in
writing, or (b) although previously approved, has been disapproved, in
writing, for further use, or (c) has been used beyond any time limit
that may be established by Insurer.
(d) SECURING APPLICATIONS. All applications for Traditional Policies shall
be made on application forms supplied by Insurer and all payments
collected by Agency or any Agent, Broker/Dealer or any Representative
thereof shall be remitted promptly in full, together with such
application forms and any other required documentation, directly to
Insurer at the address indicated on such application or to such other
address as Insurer may, from time-to-time, designate in writing.
Agency shall review all such applications for accuracy, suitability,
and completeness. Checks or money orders in payment on any such
Traditional Policy shall be drawn to the order of "Northern Life
Insurance Company." All applications are subject to acceptance or
rejection by Insurer at its sole
SELLING AGREEMENT
- --------------------------------------------------------------------------------
discretion. All records or information obtained hereunder by Agency
shall not be disclosed or used except as expressly authorized herein,
and Agency will keep such records and information confidential, to be
disclosed only as authorized or if expressly required by federal or
state regulatory authorities.
(e) COLLECTION OF PURCHASE PAYMENTS. Agency agrees that all money or other
consideration tendered with or in respect of any application for a
Traditional Policy and the Traditional Policy when issued is the
property of Insurer and shall be promptly remitted in full to Insurer
without deduction or offset for any reason, including by way of
example but not limitation, any deduction or offset for compensation
claimed by Agency.
(f) POLICY DELIVERY. Insurer may, in its discretion, transmit Traditional
Policies to Agency or Broker/Dealer for delivery to Policyowners.
Agency and Broker/Dealer hereby agree to deliver all such Traditional
Policies to Policyowners within ten (10) days of their receipt by
Agency or Broker/Dealer from Insurer. Agency and Broker/Dealer agree
to indemnify and hold harmless Insurer for any and all losses caused
by Agency's or Broker/Dealer's failure to perform the undertakings
described in this paragraph. Agency and Broker/Dealer hereby authorize
Insurer to set off any amount either might owe Insurer under this
paragraph against any and all amounts otherwise payable to Agency or
Broker/Dealer by Insurer.
5. COMPENSATION
(a) VARIABLE CONTRACTS. Insurer, on behalf of General Distributor, shall
pay a dealer concession to Broker/Dealer on all sales of Variable
Contracts through such Representatives, in accordance with the form
of Compensation Schedule attached hereto, which is in effect when
purchase payments on such Variable Contracts are received by Insurer.
Dealer concessions will be paid as a percentage of premiums received
in cash or other legal tender and accepted by Insurer on applications
obtained by Broker/Dealer's Representatives unless otherwise indicated
in Compensation Schedule. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker/Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due to Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker/Dealer. Broker/Dealer agrees to hold Insurer and General
Distributor harmless from all claims of its Representatives for
compensation in respect of such Representative's sales of Variable
Contracts.
(b) TRADITIONAL POLICIES. Insurer shall pay commissions to Broker/Dealer
on all sales of Traditional Policies through Agents and
Representatives in accordance with the form of Compensation Schedule
attached hereto, which is in effect when purchase payments on such
Traditional Policies are received by Insurer. Commissions will be paid
as a percentage of premiums received in cash or other legal tender and
accepted by Insurer on applications obtained by Agency's Agents or
Broker/Dealer's Representatives unless otherwise indicated in
Compensation Schedule. Upon termination of this Agreement, all
compensation payable hereunder shall cease; however, Broker/Dealer
shall continue to be liable for any chargebacks or for any other
amounts advanced by or otherwise due Insurer hereunder.
Insurer will pay all such Compensation to and in the name of
Broker/Dealer. Agency hereby assigns to Broker/Dealer all compensation
which would otherwise be paid to Agency in respect of Representative's
and Agent's sales of Traditional Policies. Agency agrees to hold
Insurer harmless from all claims Agents or Representatives have for
compensation in respect of Agent's or Representative's sales of
Traditional Policies.
(c) COMMISSION STATEMENTS. Broker/Dealer will be provided with copies of
its Representatives' commission statements together with
Broker/Dealer's own commission statements for each commission payment
period in which commissions are payable. Except as to clerical errors
and material undisclosed facts, such statement constitutes a complete
and accurate statement of the commission account unless written notice
is provided to Insurer within 120 days after the date of the
statement, which notice specifically sets forth the objections or
exceptions thereto.
(d) COMPENSATION SCHEDULES. The initial Compensation Schedule is attached
and incorporated herein.
Insurer and General Distributor reserve the right to change, amend, or
cancel any Compensation Schedule as to business produced after such
change by mailing notice of such change in the form of a new
Compensation Schedule to Broker/Dealer. Such change shall be
effective, unless otherwise specified, ten (10) days after the date
the notice is mailed, or transmitted by some other means, including
but not limited to facsimile.
(e) RIGHTS OF REJECTION AND SETTLEMENT. Insurer reserves the right to
reject any and all applications and collections submitted, to
discontinue writing any form of policy, to take possession of and
cancel any policy and return the premium or any part of it, and to
make any compromise settlement in respect of a policy. Broker/Dealer
will not be entitled to receive or retain any compensation on premiums
or parts of premiums Insurer does not receive and retain because of
such rejection, discontinuance, cancellation, or compromise
settlement. If compensation has been paid to which Broker/Dealer is
not entitled, any amount credited will be charged back, and if the
account balance is insufficient to cover the credited amount,
Broker/Dealer as applicable agrees to promptly repay the credited
amount.
6. TERMINATION
This Agreement may be terminated without cause by any party upon thirty
(30) days prior written notice; and may be terminated for failure to
perform satisfactorily or other cause, by any party immediately; and shall
be terminated if Broker/Dealer ceases to be registered as a broker/dealer
under the Securities Exchange Act of 1934 and a member of the NASD or, if
Agency ceases to maintain its insurance agent license(s) in good standing
in the jurisdictions in which it conducts business.
7. ARBITRATION
Any dispute, claim or controversy arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the NASD's
arbitration procedures. If the subject matter of the dispute, claim or
controversy is not within the scope of matters which may be arbitrated
through
SELLING AGREEMENT
- --------------------------------------------------------------------------------
the NASD arbitration procedures, then such dispute, claim or controversy
shall, upon the written request of any party, be submitted to three
arbitrators, one to be chosen by each party, and the third by the two so
chosen. If either party refuses or neglects to appoint an arbitrator within
thirty (30) days after the receipt of the written notice from the other
party requesting it to do so, the requesting party may appoint two
arbitrators. If the two arbitrators fail to agree in the selection of a
third arbitrator within thirty (30) days of their appointment, each of them
shall name two, of whom the other shall decline one and the decision shall
be made by drawing lots. All arbitrators shall be active or retired
executive officers of insurance companies not under the control of any
party to this Agreement. Each party shall submit its case to the
arbitrators within thirty (30) days of the appointment of the third
arbitrator. The arbitration shall be held in Minneapolis, Minnesota at the
times agreed upon by the arbitrators. The decision in writing of any two
arbitrators, when filed with the parties hereto, shall be final and binding
on both parties. Judgment may be entered upon the final decision of the
arbitrators in any court having jurisdiction. Each party shall bear the
expense of its own arbitrator and shall jointly and equally bear with the
other party the expense of the third arbitrator and of the arbitration.
8. GENERAL PROVISIONS
(a) ADDITIONS, AMENDMENTS, MODIFICATIONS & WAIVERS. This Agreement shall
not be effective until approved by Insurer and General Distributor.
Insurer and General Distributor reserve the right to amend this
Agreement at any time, and the submission of an application by either
Broker/Dealer or Agency after notice of any such amendment has been
sent shall constitute Broker/Dealer's or Agency's, as applicable,
agreement to any such amendment. No additions, amendments or
modifications of this Agreement or any waiver of any provision will be
valid unless approved, in writing, by one of Insurer's duly authorized
officers. In addition, no approved waiver of any default, or failure
of performance by Broker/Dealer or Agency will affect Insurer's or
General Distributor's rights with respect to any later default or
failure of performance.
(b) INDEPENDENT CONTRACTORS RELATIONSHIP. This Agreement does not create
the relationship of employer and employee between the parties to this
Agreement. Insurer and General Distributor are independent contractors
with respect to Broker/Dealer, its Representatives, Agency and its
Agents.
(c) ASSIGNMENTS. Neither Broker/Dealer nor Agency will assign or transfer,
either wholly or partially, this Agreement or any of the benefits
accrued or to accrue under it, without the written prior consent of a
duly authorized officer of the Insurer and General Distributor.
(d) SERVICE OF PROCESS. If Broker/Dealer or Agency receives or is served
with any notice or other paper concerning any legal action against
Insurer or General Distributor, Broker/Dealer or Agency agrees to
notify General Distributor immediately (in any event not later than
the first business day after receipt) by telephone and transmit any
papers that are served or received by facsimile to (612) 342-7531 and
by overnight mail to the General Counsel of the General Distributor.
(e) SEVERABILITY. It is understood and agreed by the parties to this
Agreement that if any part, term or provision of this Agreement is
held to be invalid or in conflict with any law or regulation, the
validity of the remaining portions or provisions will not be affected,
and the parties' rights and obligations will be construed and enforced
as if this Agreement did not contain the particular part, term or
provision held to be invalid.
(f) GOVERNING LAW. It is agreed by the parties to this Agreement that the
Agreement and all of its provisions will be governed by the laws of
the State of Minnesota.
(g) LIMITATIONS. No party other than Insurer has the authority on behalf
of Insurer to make, alter, or discharge any policy, contract, or
certificate issued by Insurer, to waive any forfeiture or to grant,
permit, or extend the time for making any payments or to guarantee
earnings or rates, or to alter the forms which Insurer may prescribe
or substitute other forms in place of those prescribed by Insurer, or
to enter into any proceeding in a court of law or before a regulatory
agency in the name of or on behalf of Insurer, or to open any bank
account in the full legal name of Insurer, any derivation thereof or
any tradename thereof.
(h) CONTRACT DELIVERY. Insurer will mail Variable Contracts directly to
Contract Owner.
9. TERRITORY
Broker/Dealer's territory is limited geographically to those jurisdictions
in which the Variable Contracts may lawfully be offered, provided that
Broker/Dealer's right to solicit sales of and to sell the Variable
Contracts in such jurisdictions is not exclusive.
Agency's territory is limited geographically to those jurisdictions in
which the Traditional Policies may lawfully be offered, provided that
Agency's and Broker/Dealer's right to solicit sales of and to sell the
Traditional Policies in such territory is not exclusive.
SELLING AGREEMENT
- --------------------------------------------------------------------------------
In Witness whereof, we set our hands this ____ day of ________________, 19_____.
INSURER: BROKER/DEALER:
NORTHERN LIFE INSURANCE COMPANY _____________________________________
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
GENERAL DISTRIBUTOR: AGENCY:
WASHINGTON SQUARE SECURITIES, INC. _____________________________________
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
BROKER/DEALER [LOGO] NORTHERN LIFE
VARIABLE ANNUITY COMPENSATION SCHEDULE A RELIASTAR COMPANY
- --------------------------------------------------------------------------------
Your dealer concession will be the following percentage of the premium received
by us. No dealer concessions are payable on a policy after the 20th policy
year. This Schedule is effective with business written 1/1/97.
PERIODIC SERIES
% OF PAID PREMIUM
--------------------------------------------------
PERIODIC & INCREASE OPTION A OPTION B* OPTION C**
- ------------------- -------- --------- ----------
Year 1 5 4 .50
Years 2-5 5 4 .50
Years 6-20 5 4 .50
TRANSFER
Year 1 5 4 .50
Years 2-5 5 4 .50
Years 6-20 0 0 0
TRANSFER SERIES
% OF PAID PREMIUM
--------------------------------------------------
OPTION A OPTION B* OPTION C**
TRANSFER - YEAR 1-20 6 4.75 1
*% of accumulation value
Policy Years 2-20
Monthly 2.083 basis points Annual
Payout of 25 basis points
**% of accumulation value
Policy Years 2-20
Monthly 8.333 basis points
Annual Payout of 100 basis points
By:______________________________________________
Printed
Name:____________________________________________
Title:___________________________________________
(If corporation)
GENERAL RULES PERTAINING TO VARIABLE CONTRACTS
1. CHANGE OF DEALER AUTHORIZATION. No compensation of any kind shall be
payable in respect of Variable Contracts following Insurer's or General
Distributor's receipt of a change of dealer authorization applicable to
such Variable Contract.
2. CHANGE IN REPRESENTATIVE'S STATUS. Broker/Dealer agrees that in the event a
Representative ceases to be an associated person of Broker/Dealer or ceases
to be validly licensed or registered, Broker/Dealer shall not receive any
compensation based on any Variable Contract, its values, or on premium or
purchase payments thereafter received by Northern Life and/or WSSI from
such former Representative's customers. Provided, however, if within 60
days after such Representative ceases to be a representative of
Broker/Dealer, Broker/Dealer designates another registered representative
of Broker/Dealer to service the former Representative's business, the
compensation not paid shall be payable to Broker/Dealer. If an assigned
Representative's replacement is not designated within such 60 day period,
Broker/Dealer may not thereafter designate a replacement Representative for
such variable contracts and shall not be entitled to such compensation.
3. EXCLUSIVE COMPENSATION. Broker/Dealer agrees that no compensation of any
kind other than as described herein is payable by Insurer or General
Distributor in respect of Broker/Dealer's sales of Variable Contracts.
4. REPLACEMENT BUSINESS. The amount and time of payment of commissions on
replacements, changes, transfers, or exchanges from a policy previously
issued by Insurer or an affiliate shall be governed by Insurer's rules and
regulations.
5. COMMISSIONS. Commissions shall accrue on Variable Contracts issued as and
when premium is received by Insurer and applied as premium due or payable
on such policies, except as Insurer's practices may otherwise provide.
6. CHARGE BACKS. In any case where Insurer has credited a commission to
Broker/Dealer on the basis of a premium on a Variable Contract issued and
the premium is returned to the purchaser, Insurer will charge back such
commissions.
7. ISSUE AGE. Issue age is based upon the annuitant's age on last birthday.
EX-99.4A
5
INDIVIDUAL DEFERRED TSA CONTRACT
EXHIBIT 99.4a
NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Issue Date: See page 2A
/s/ Emily Davis
Secretary
If you die while this contract is in effect, we will pay the Death Benefit when
we receive written notice of your death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Contract No.: See page 2A
/s/ Michael J. Dubes
President
APPROVED ______________________
INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
PAGE
Definitions..................................................................3
The Contract.................................................................5
Purchase Payments............................................................5
Reallocations of Contract Value..............................................6
Fixed Account................................................................7
Variable Account.............................................................8
Withdrawals.................................................................11
Annuity Benefits............................................................14
General Provision...........................................................18
Payments at Death...........................................................20
Restrictions on Distributions...............................................20
Loans.......................................................................22
Amendment and Disclaimer....................................................24
Termination.................................................................24
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA
PAGE(S).
CONTRACT DATA PAGE
INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment $15,000
Minimum Subsequent Payment(s) $5,000
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
--------------------------------------------------------------
Total Allocation 100%
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF TOTAL/PARTIAL WITHDRAWAL CHARGE AS
WITHDRAWAL MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
0-1 6%
2-3 5%
4 4%
5 2%
6+ 0%
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: John Doe
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
Section 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT EARNINGS
On any Valuation Date, the Contract Value plus the aggregate Purchase Payments
withdrawn up to that date minus the aggregate Purchase Payments made up to that
date.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
DISTRIBUTEE
You or your surviving spouse as Beneficiary or your former spouse as alternate
payee under a qualified domestic relations order ("QDRO") within the meaning of
IRC Section 414(p), as applicable.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate amount.
OUTSTANDING LOAN BALANCE
The total of all existing loans, plus any accumulated loan interest, less any
loan repayments.
OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
REQUIRED DISTRIBUTION DATE
April 1 of the year following the year in which you reach age 70 1/2, or later
if permitted by law or regulation.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange closes on each
day on which the New York Stock Exchange is open for business except federal and
other holidays and days on which we are not otherwise open for business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
Section 1 DEFINITIONS (CONTINUED)
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT
The entire contract is the contract (Form No. 13000 9-94), the Contract Data
Page(s); any application(s); and attached endorsements. Unless fraudulent, all
statements made by or on behalf of anyone covered by this contract are
representations and not warranties. Only statements found in the attached
application(s) may be used to cancel this contract or as our defense if we
refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office. We consider any payment we receive to be a Purchase Payment unless
you tell us that it is a loan repayment.
You may make Purchase Payments at any time before the Start Date while the
contract is in force. The initial Purchase Payment must equal or exceed the
minimum as shown on the Contract Data Page(s). On a nondiscriminatory basis, we
may choose not to accept an additional Purchase Payment if it is less than
$5,000, or if the additional Purchase Payment plus the Contract Value at the
next Valuation Date exceed $1,000,000.
B. TRANSFERS AND ROLLOVERS
Purchase Payments that are transfers or rollovers must be from another tax
sheltered annuity or custodial account for regulated investment company stock
that qualifies under Section 403(b) of the Code.
C. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we reserve the
right to impose a charge of up to $25 for each reallocation on Contract Value,
to limit the number of reallocations you can make, to establish minimum and
maximum amounts for reallocations, and to reallocate entire Contract Value
remaining in a Sub-Account or either Account in the event that a reallocation
request would bring such remaining Contract Value below a specified amount.
Allocation of Purchase Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value that is not serving as
security for a loan may be reallocated at any time to Fixed Account B or to the
Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Section 4 RELOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied to
purchase annuity payouts, the remaining Contract Value may be reallocated as
described above for periods prior to the Start Date.
Section 5 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive your Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and compounded daily to the
Fixed Account Contract Value using the daily equivalents of effective yearly
interest rates.
There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
We will continue to credit interest to any portion of the Fixed Account A
Contract Value that is used as security for a loan from us. The interest
credited to the portion of Fixed Account A Contract Value represented by the
loan may be less than credited to the rest of such Fixed Amount Contract Value.
Taking a loan may also affect the rate of interest credited in the future to the
Fixed Account A Contract Value, either up or down. Interest credited to the
loaned portion of Fixed Account A will never be less than three percent (3%).
Section 5 FIXED ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase partial
annuity payouts and Annual Contract Charges applied to the Fixed Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable Account, but these
assets are held separately from our other assets and are not part of our General
Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the Fund in which your
selected Sub-Accounts are invested. We do not guarantee the investment
performance of the Funds. You bear the full investment risk for amounts applied
to the selected Sub-Accounts.
C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the current Valuation Period;
b. Plus the per share amount of any dividend or capital gain
distributions made on the Fund shares held in the Sub-Account during
the current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations of
the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the last prior Valuation Period;
b. Plus a per share credit or minus a per share charge for any reserved
for the last prior Valuation Period which we determine to have
resulted from the investment operations of the Sub-Account and to be
applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense Risk
Charge, and the Administrative Charge, adjusted for the number of days in
the period, which are shown on an annual basis on the Contract Data
Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge in included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new Sub-Accounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL
If permitted by law, you may request a full or partial withdrawal by sending us
a written request. We reserve the right to deduct applicable premium taxes and
other state or federal taxes from the Contract Value on the date the withdrawal
is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of our receipt of your
written request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. REQUIREMENTS FOR WITHDRAWALS
The IRS permits withdrawals of Purchase Payments made by salary reduction and
earnings credited on those Purchase Payments only if you have:
1. Attained age 59 1/2; or
2. Separated from service (termination); or
3. Died; or
4. Become disabled within the meaning of IRC Section 72(m)(7); or
5. Qualified for a hardship distribution under IRS regulations. If a
hardship is shown, only the Purchase Payments may be withdrawn and no
minimum value need be maintained.
If required by law and a loan is available, you must take a loan before you take
a hardship distribution.
Under certain circumstances, withdrawals may be subject to IRS tax penalties.
This section applies only to Purchase Payments made by salary reduction after
December 31, 1988, to amounts transferred from IRC Section 403(b)(7) custodial
accounts, and to earnings credited on either.
This section does not apply to any transfer payments which are attributable to
contributions made and/or earnings credited to another IRC Section 403(b) tax
sheltered annuity before January 1, 1989.
This section does not apply to transfers to another qualified plan as provided
in Section 7J. However, we require verification from a qualified plan that the
funds will be transferred to that plan.
This section does not restrict your ability to obtain a loan in accordance with
Section 12 of this contract.
C. ORDER OF WITHDRAWAL
For purposes of calculating Withdrawal Charges, withdrawals will be taken first
from Purchase Payments on a first-in, first-out basis, then from Contract
Earnings as of the Valuation Date next following our receipt of your request.
Contract Earnings are not available under a hardship distribution as described
in Section 7B.
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
D. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn Allocable to Purchase Payments
X
Withdrawal Charge Percentage(s)
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be of the
withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
E. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus outstanding Loan Balance
minus Withdrawal Charge
minus Annual Contract Charge
We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
The Outstanding Loan Balance is subject to any applicable Withdrawal Charges.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 14A, and we have no further obligation.
F. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7G.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7G. Following a partial
withdrawal, the remaining Contract Value must be at least the greater of a or b,
where:
a = $1,000; and
b = Outstanding Loan Balance/85%
The Outstanding Loan Balance, Withdrawal Charges, and any applicable taxes will
not be included in the amount payable to you.
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
G. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is the greater of:
1. Ten percent (10%) of the unloaned Contract Value; or
2. The remaining Purchase Payments no longer subject to a Withdrawal Charge.
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7D. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7D.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Section 7E and 7F.
H. TOTAL WAIVER OF WITHDRAWAL CHARGE
On a basis which does not discriminate among Owners of the class, we reserve the
right to waive Withdrawal Charges on full and partial withdrawals for anyone
eligible for a withdrawal under Section 7B.
I. REDUCTION IN WITHDRAWAL CHARGE
On a basis which does not discriminate among Owners of the same class, we
reserve the eight to reduce the Withdrawal Charges shown on the Contract Data
Page(s).
J. DIRECT ROLLOVER OR TRANSFER TO ANOTHER PLAN
The Distributee may elect in writing, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution with respect to
the Distributee's interest in the contract paid directly by us as direct
rollover to:
1. An individual retirement account described in IRC Section 408(a);
2. An individual retirement annuity described in IRC Section account
described in IRC Section 408(b);
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
3. Or, except in the case of a surviving spouse as Beneficiary, another
annuity or custodial account described in IRC Section 403(b) that direct
rollovers.
An eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the Distributee, other than:
1. Any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life or life
expectancy of the Distributee or for the joint lives or life expectancies
of the Distributee and his or her beneficiary or for a specified period
of ten (10) years or more;
2. Any distribution to the extent it is a required minimum distribution
under IRC Section 403(b)(10); and
3. The portion of any distribution that is not includible in gross income.
In order to be eligible for a direct rollover, funds must be eligible for a
distribution as described in Section 7B. This provision shall be interpreted in
accordance with IRC Section 403(b)(10), the regulations thereunder, and
successor provisions thereto.
If eligible, the Distributee or your Beneficiary may request a transfer of
Withdrawal Value to another annuity or custodial account described in IRC
Section 403(b).
Eligible rollover distributions and transfers are subject to any applicable
Withdrawal Charges.
K. QUALIFIED DOMESTIC RELATIONS ORDER
As permitted by the Code and applicable regulations and subject to any
applicable Withdrawal Charges, we may permit withdrawals to an alternate payee
pursuant to a QDRO described in IRC Section 414(p), as determined by the
administrator for each plan.
L. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
The following options are available for annuity payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different payment
schedule. We reserve the right to change the frequency of either Fixed or
Variable Annuity Payouts so that each payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the terms of
the fixed Annuity Payout.
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout selected is
shown in the Annuity Payout Tables on pages 17 and 18 for each $1,000 of
Contract Value applied, based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contact into Annuity Units at the Unit
Value on the Valuation Date immediately preceding the seventh (7th) day before
the Annuity Payout Date. The number of Annuity Units of each Sub-Account remains
constant, as long as an annuity payout remains in force and allocation among the
Sub-Accounts has not changed. Reallocations among Sub-Accounts is governed by
Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income for Each $1,000 of Contract
Value
FIXED PERIOD IN MONTHS
AGE NONE 120
--- ---- ---
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.90 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semi-annual or quarterly installments
may be selected.
Amounts for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
Joint Payee's Age
Payee's Age 45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force; and
2. We have the written consent of each irrevocable Beneficiary.
If there is more than one Beneficiary, we pay them in equal shares unless you
have requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you, we will pay your
estate.
If a Beneficiary survives you, but dies before receiving his/her full share, we
pay his/her share in the following order, unless you requested otherwise in
writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
C. EFFECT OF LAW AND PLAN DOCUMENTS
This contract shall be subject to and interpreted in conformity with the
provisions, terms, and conditions of the tax-sheltered annuity plan document of
which this contract is a part, if any, and with the terms and conditions of IRC
Section 403(b), the regulations thereunder, and other applicable law (including,
without limitation, the Employee Retirement Income Safety Act of 1974, as
amended, if applicable), as determined by the plan administrator or other
designated plan fiduciary or, if none, you.
Section 9 GENERAL PROVISION (CONTINUED)
- --------------------------------------------------------------------------------
D. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
E. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 14.
F. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
G. MISSTATEMENT OF AGE
If your age is misstated, the Required Distribution Date and/or Start Date will
be adjusted to reflect the true age.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
H. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
I. NONTRANSFERABLE
This contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or security for the performance of an obligation
or for any other purpose, to any person or entity other than us.
J. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
K. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
L. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
M. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
N. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value and, if applicable, any Outstanding Loan Balance.
Section 10 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If you die on or before the first day of the month following your 80th
birthday, as of the Death Benefit Valuation Date the greatest of:
(a) The Contract Value less the amount of any Outstanding Loan
Balance ; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
the Outstanding Loan Balance, and the amount of previously
deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts
since that anniversary, less the amount of previously deducted
Annual Contract Charges since that anniversary, and less the
Outstanding Loan Balance.
2. If you die after the first day of the month following your 80th birthday,
the Contract Value less the Outstanding Loan Balance on the Death Benefit
Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or a payout
permitted by IRC Section 401(a)(9) and of which we approve.
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8 and which is permitted by IRC Sections 401(a)(9),
403(b)(10) and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS
- --------------------------------------------------------------------------------
A. GENERAL
This section restricts how distributions may be made under the contact both
before and after your death. It refers to IRC Sections 401(a)(9) and 403(b)(10)
and modifies any other provision in the contract to the contrary.
B. REQUIRED DISTRIBUTIONS WHILE LIVING
You must elect payments under Section 7, Section 8, or a combination of both
that commence on or before the Required Distribution Date and are payable in
substantially equal amounts, no less frequently than annually. Your entire
interest in the contract must be distributed in the following manner:
1. In one lump sum;
2. Over your life;
3. Over your life and the life of your Beneficiary;
4. Over a period certain not exceeding your life expectancy; or
5. Over the joint and last survivor expectancy of you and your Beneficiary.
If your entire interest is to be distributed in other than one lump sum, then
the amount to be distributed each year (commencing with the Required
Distribution Date and each year thereafter) shall be determined in accordance
with IRC Section 403(b)(10) and the regulations thereunder.
C. REQUIRED DISTRIBUTION UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
If you die before distribution has commenced, or distribution has commenced for
only a portion of your interest, the Death Benefit must be distributed no law
than December 31 of the calendar year in which the fifth anniversary of your
death occurs. However, proceeds which are payable to a Beneficiary who is a
natural person may be distributed in substantially equal installments over his
or her lifetime or a period certain not exceeding the life expectancy of the
Beneficiary provided such distribution commences not later than December 31 of
the calendar year following the calendar year in which your death occurred. If
the sole Beneficiary is your surviving spouse, he or she may elect no later than
December 31 of the calendar year in which the fifth anniversary of your death
occurs to receive equal or substantially equal payments over his or her life
expectancy commencing at any date prior to the date on which you would have
attained age 70 1/2. Payments shall be calculated in accordance with IRC
Sections 401(a)(9), 403(b)(10) and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTION (CONTINUED)
- --------------------------------------------------------------------------------
For the purpose of this requirement, any amount paid to your child shall be
treated as if it had been paid to your surviving spouse if the remainder of the
interest becomes payable to the surviving spouse when the child reaches the age
of majority.
D. MINIMUM INCIDENTAL DEATH BENEFIT REQUIREMENT
If your spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the present value of the amount
available for distribution is paid within your life expectancy and that such
method of distribution complies with the requirements of IRC Sections 401(a)(9),
403(b)(10) and the regulations thereunder.
E. LIFE EXPECTANCY
For purposes of this Section, life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treasury Regulation Section 1.72-9 in accordance with IRC Section
403(b)(10) and the regulations thereunder. In the case of distributions under
Section 11B, your life expectancy or, if applicable, the joint and the last
survivor expectancy of you and your Beneficiary, will be initially determined on
the basis of attained ages in the year you reach age 70 1/2. In the case of
distributions under Section 11C, life expectancy shall be initially determined
on the basis of the Beneficiary's attained age in the age in the year
distributions are required to commence. Unless you (or your spouse) elects
otherwise prior to the date distributions are required to commence, your fife
expectancy and, if applicable, your spouse's life expectancy shall be
recalculated annually based on attained ages in the year for which the required
distribution is being determined. The life expectancy of a nonspouse beneficiary
shall not be recalculated.
In the case of a distribution other than in the form of life income or joint
life income, the annual distribution required to be made by the Required
Distribution Date is for the calendar year in which you reach age 70 1/2. Annual
payments for subsequent years, including the year in which the Required
Distribution Date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the annuity value as of the
close of business on December 31 of the preceding year, divided by the
applicable life expectancy or joint and last survivor expectancy.
Section 12 LOANS
- --------------------------------------------------------------------------------
A. GENERAL
Before the Start Date, you may ask us in writing for a cash loan using the
contract as security. You will be required to complete a loan application. We
will loan you up to the Withdrawal Value, less an amount representing annual
loan interest, provided such amount does not exceed the maximum loan amount set
by law. Loans must be for a minimum of $1,000. On a nondiscriminatory basis, we
reserve the rights to charge a loan service fee not to exceed $25 for each loan
and to restrict loans in the first contract year and after you attain age 70
1/2.
We have the right to delay payment for up to six (6) months.
B. SECURITY OF LOAN
An amount of Contract Value equal to the amount of a loan will be segregated
within Fixed Account A as security for the loan. Amounts held as security for
the loan will be reallocated to Fixed Account A from the unloaned portion of the
Fixed Account Contract Value and the Variable Account Contract Value on a pro
rata basis. Amounts equal to the portion of the loan reallocated from the
Sub-Accounts of the Variable Account to Fixed Account A are valued on the next
Valuation Date following our receipt of your written request for a loan, thus
reducing the Variable Account Contract Value. Amounts segregated to secure the
loan are not treated as reallocations for the purpose of the reallocation charge
or the limit on the number of reallocations in a Contract Year.
Section 12 LOANS (CONTINUED)
- --------------------------------------------------------------------------------
C. REPAYMENT OF LOAN
Loans shall be repaid in substantially equal monthly installments over a period
not to exceed five (5) years. If the loan is used to purchase your principal
residence, you may take up to twenty (20) years to repay the loan. You may repay
a loan in a lump sum only with our prior approval. All repayment amounts will
reduce the Outstanding Loan Balance by the amount of each payment and will be
allocated in the same manner as Purchase Payments in Section 3C.
If any installment is ninety (90) days in arrears, the loan will be due and
payable at once, without notice to you. We will repay the loan using a partial
withdrawal. We will deduct the Outstanding Loan Balance and applicable
Withdrawal Charges from the Contract Value, unless such a distribution is
prohibited by law. In the event such a distribution is prohibited by law, we
will treat the Outstanding Loan Balance as permitted by federal tax law.
Even if not in default, any Outstanding Loan Balance and applicable Withdrawal
Charges will not be included in the amount available under the contract for
payment upon death, withdrawal, or purchase of an annuity payout.
If at any time, the Outstanding Loan Balance equals or exceeds the Withdrawal
Value, less applicable taxes, the contract may terminate without value. We will
use the Contract Value to repay the Outstanding Loan Balance, applicable
Withdrawal Charges and taxes.
We have a prior lien against the contract for any money owed to us under it. Our
lien is superior to the claim of any assignee or other person.
D. INTEREST
We may charge up to eight percent (8%) interest in arrears on loans. But, we
have the right to charge a lower rate of interest. The interest rate will never
be less than five and one-half percent (5.5%) in arrears.
Interest on the loan is included in each monthly repayment. If the contract
terminates, a rata amount of interest will be due based upon the monthly
interest accrued to date.
The portion of the Contract Value which is security for the loan may earn less
interest than is credited to the unloaned portion, but it will never earn less
than the guaranteed rate of three percent (3%).
A loan may affect the interest credited to the Fixed Account in the future,
either up or down.
E. TAX CONSEQUENCES
If the loan requirements are not satisfied, or if your interest in the contract
terminates while a loan is outstanding, the Outstanding Loan Balance will be
treated as a taxable distribution and may be subject to penalty tax, and the
treatment of the contract under IRC Section 403(b) may be adversely affected.
You should seek tax and legal advice before requesting a loan.
Section 13 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, loan, distribution or transfer
under the contact complies with the provisions, terms and conditions of
each plan or with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 14 TERMINATION
- --------------------------------------------------------------------------------
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date;
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date; or
3. If permitted by law, when the Outstanding Loan Balance is equal to or
greater than the Contract Value less applicable Withdrawal Charges.
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
Then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to:
1. You, if you qualify under Section 7B;
2. Another insurance company issuing an IRC Section 403(b) contract; or
3. A custodial account for regulated investment company stock that qualifies
under IRC Section 403(b).
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company.
This Endorsement is a part of the contract to which it is attached.
"IRS Rules" are defined as the minimum distribution rules of IRC Section
401(a)(9) and applicable regulations. IRC Section 401(a)(9) describes minimum
distribution requirements for Contract Owners.
The following is added to the contract:
On the Required Distribution Date, we will waive the Withdrawal Charge on cash
withdrawals made to comply with IRS Rules, subject to the following:
1. The maximum amount available for withdrawal within a twelve (12) month
period without a Withdrawal Charge under all provisions of the contract,
including this Endorsement, will not be less than the amount needed for
this contract to comply with IRS Rules.
2. The waiver applies only to cash withdrawals needed for this contract to
meet IRS Rules. If individuals with other contracts withdraw an amount
needed for the combined contracts to meet IRS Rules, we will waive the
Withdrawal Charge only on the amount needed for this contract to meet IRS
Rules.
3. If IRS Rules change from those in effect on the date this Endorsement is
made a part of this contract, we have the right to change or withdraw
this Endorsement.
We will calculate the cash withdrawal needed for this contract to meet IRS
Rules. We guarantee the calculation will meet IRS Rules subject to the accuracy
of the data given to us.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of this contract.
/s/ Emily Davis
Secretary
IRS MINIMUM DISTRIBUTION ENDORSEMENT
INDIVIDUAL DEFERRED
TAX SHELTERED
ANNUITY CONTRACT
Nonparticipating VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
NOTICE
To make Purchase Payments, make a claim, or exercise your rights under this
contract, please write or call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(800) 426-7050
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
EX-99.4B
6
INDIVIDUAL DEFERRED ANNUITY CONTRACT
EXHIBIT 99.4b
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contact by giving written notice of cancellation to Northern
Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to the agent
from whom you bought the contract and by returning the contract before midnight
of the tenth (10th) day after the date you receive the contract. As soon as you
return it, we will consider it void from the start and refund the Contract Value
as of the next Valuation Date after receiving your request. However, if
applicable law so requires, the full amount of any Purchase Payments we receive
will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Annuitant: See page 2A
If you or the Annuitant, if different, die(s) while this contract is in effect,
we will pay the Death Benefit when we receive written notice of death.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Issue Date: See page 2A
Contract No.: See page 2A
/s/ Michael J. Dubes
President
/s/ Emily Davis
Secretary
APPROVED ______________________________
INDIVIDUAL DEFERRED ANNUITY CONTRACT
Nonparticipating
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
Page
Definitions..................................................................3
The Contract.................................................................5
Purchase Payments............................................................5
Reallocations of Contract Value..............................................5
Fixed Account................................................................7
Variable Account.............................................................7
Withdrawals.................................................................10
Annuity Benefits............................................................12
General Provisions..........................................................16
Payments at Death...........................................................18
Restrictions on Payments at Death...........................................19
Amendment and Disclaimer....................................................19
Termination.................................................................20
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA
PAGE(S).
CONTRACT DATA PAGE
INDIVIDUAL DEFERRED ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment $15,000
Minimum Subsequent Payment(s) $5,000
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
-----------------------------------------------------------
Total Allocation 100%
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF TOTAL/PARTIAL WITHDRAWAL CHARGE AS
WITHDRAWAL MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
0-1 6%
2-3 5%
4 4%
5 2%
6+ 0%
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: John Doe
ANNUITANT: Jane Doe
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
Section 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT EARNINGS
On any Valuation Date, the Contract Value plus the aggregate Purchase Payments
withdrawn up to that date minus the aggregate Purchase Payments made up to that
date.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
Section 1 DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate amount.
OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee. The Annuitant will be the Payee
unless either the Owner or Annuitant (if different) has died while the policy is
in force, in which case the Beneficiary will the payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange which the New
York Stock Exchange is open and other holidays and days on which we open for
business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT
The entire contract is the contract (Form No. 13001 1-95), the Page(s); any
application(s); and attached endorsements. Unless fraudulent, all statements
made by or on behalf of anyone covered by this contract are representations and
not warranties. Only statements found in the attached application(s) may be used
to cancel this contract or as our defense if we refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office. We consider any payment we receive to be a Purchase Payment unless
you tell us that it is a loan repayment.
You may make Purchase Payments at any time before the Start Date while the
contract is in force. The initial Purchase Payment must equal or exceed the
minimum as shown on the Contract Data Page(s). On a nondiscriminatory basis, we
may choose not to accept an additional Purchase Payment if it is less than
$5,000, or if the additional Purchase Payment plus the Contract Value at the
next Valuation Date exceed $1,000,000.
B. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we a charge of
Section 4 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
up to $25 for each reallocation on Contract Value, to limit the number of
reallocations you can make, to establish minimum and maximum amounts for
reallocations, and to relocate entire Contract Value remaining in a Sub-Account
or either Account in the event that a reallocation request would bring such
remaining Contract Value below a specified amount. Allocation of Purchase
Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value that is not serving as
security for a loan may be reallocated at any time to Fixed Account B or to the
Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied purchase
annuity payouts, the remaining Contract as described above for periods prior to
the Start Date.
Section 5 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive our Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and Account Contract Value
using the daily interest rates.
There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase
partial annuity payouts and Annual Contract Charges applied to the Fixed
Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable, Account, but these
assets are held separately from our other assets and are not part of our General
Account.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the selected
Sub-Accounts are invested. We do not the investment performance of the Funds.
You bear the full investment risk for amounts applied to the selected
Sub-Accounts.
C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the current Valuation Period;
b. Plus the per share amount of any dividend or capital gain distri-
butions made on the Fund shares held in the Sub-Account during the
current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations
of the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the last prior Valuation Period;
b. Plus a per share credit or minus a per share charge for any
reserved for the last prior Valuation Period which we determine to
have resulted from the investment operations of the Sub-Account
and to be applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge, and the Administrative Charge, adjusted for the number of
days in the period, which are shown on an annual basis on the Contract
Data Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge is included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new SubAccounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL
You may request a full or partial withdrawal by sending us a written request. We
reserve the right to deduct applicable premium taxes and other state or federal
taxes from the Contract Value on the date the withdrawal is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of our receipt of your
written request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. ORDER OF WITHDRAWAL
For purposes of calculating Withdrawal Charges, withdrawals will be taken first
from Purchase Payments on a first-in, first-out basis, then from Contract
Earnings as of the Valuation Date next following our receipt of your request.
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
C. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn Allocable to Purchase Payments
X
Withdrawal Charge Percentage(s)
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be of the
withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
D. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus Withdrawal Charge
minus Annual Contract Charge
We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 14A, and we have no further obligation.
E. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7G.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7G. Following a partial
withdrawal, the remaining Contract Value must be at least $1,000.
Withdrawal Charges, and any applicable taxes will not be included in the amount
payable to you.
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
Section 7 WITHDRAWAL (CONTINUED)
- --------------------------------------------------------------------------------
F. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is the greater of:
1. Ten percent (10%) of the Contract Value; or
2. The remaining Purchase Payments which are no longer subject to a
Withdrawal Charge.
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7C. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7C.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Section 7D and 7E.
G. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
The following options are available for annuity payouts:
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different payment
schedule. We reserve the right to change the frequency of either Fixed or
Variable Annuity Payouts so that each payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the Annuity
Payout.
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout in the Annuity
Payout Tables on pages 17 and 18 for each $1,000 of Contract Value applied,
based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contact into Annuity Units at the Unit
Value on the Valuation Date immediately preceding the seventh (7th) day before
the Annuity Payout Date. The number of Annuity Units of each Sub-Account remains
constant, as long as an annuity payout remains in force and allocation among the
Sub-Accounts has not changed. Reallocations among Sub-Accounts is governed by
Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income
for Each $1,000 of Contract Value
FIXED PERIOD IN MONTHS
MALE FEMALE
AGE NONE 120 NONE 120
50 4.27 4.22 3.90 3.89
51 4.34 4.29 3.97 3.95
52 4.43 4.37 4.03 4.01
53 4.51 4.45 4.10 4.08
54 4.60 4.54 4.18 4.15
55 4.70 4.62 4.25 4.22
56 4.80 4.72 4.34 4.30
57 4.91 4.82 4.42 4.38
58 5.03 4.92 4.52 4.47
59 5.15 5.03 4.61 4.56
60 5.28 5.14 4.72 4.66
61 5.42 5.26 4.83 4.76
62 5.57 5.39 4.95 4.86
63 5.74 5.52 5.07 4.98
64 5.91 5.66 5.21 5.10
65 6.10 5.81 5.35 5.22
66 6.29 5.96 5.51 5.36
67 6.50 6.11 5.67 5.50
68 6.73 6.28 5.85 5.65
69 6.97 6.44 6.04 5.80
70 7.23 6.61 6.25 5.96
71 7.51 6.78 6.47 6.14
72 7.80 6.96 6.71 6.31
73 8.12 7.14 6.97 6.50
74 8.45 7.32 7.26 6.69
75 8.82 7.49 7.56 6.89
76 9.21 7.67 7.90 7.09
77 9.62 7.84 8.26 7.29
78 10.07 8.01 8.65 7.49
79 10.55 8.17 9.07 7.69
80 11.06 8.33 9.53 7.89
Instead of monthly installments, yearly, semi-annual or quarterly installments
may be selected.
Amounts for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
MALE AGE FEMALE AGE
50 55 60 65 70 75 80
50 3.60 3.75 3.88 3.99 4.08 4.15 4.20
55 3.69 3.88 4.06 4.23 4.38 4.50 4.58
60 3.76 3.99 4.25 4.49 4.72 4.91 5.06
65 3.81 4.07 4.38 4.72 5.07 5.39 5.65
70 3.84 4.14 4.50 4.93 5.40 5.89 6.34
75 3.87 4.18 4.58 5.08 5.68 6.37 7.07
80 3.88 4.21 4.64 5.19 5.90 6.78 7.77
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force;
2. The Annuitant is alive; and
3. We have the written consent of each irrevocable Beneficiary.
If you are not the Annuitant, you may name yourself as a Beneficiary. If there
is more than one Beneficiary, we pay them in equal shares unless you have
requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you or the Annuitant
(if different), we will pay you or your estate.
If a Beneficiary dies before receiving his/her full share, if any, we will pay
his/her share in the following order, unless you requested otherwise in writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
Section 9 GENERAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
C. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
D. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 13.
E. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
F. MISSTATEMENT OF AGE OR SEX
If the Annuitant's age or sex is misstated, the Start Date will be adjusted to
reflect the true age or sex.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
G. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
H. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
I. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
J. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
K. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
L. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value.
Section 10 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If the Annuitant dies on or before the first day of the month following
your 80th birthday, as of the Death Benefit Valuation Date the greatest
of:
(a) The Contract Value; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
and the amount of previously deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts since
that anniversary, and less the amount of previously deducted
Annual Contract Charges since that anniversary.
2. If the Annuitant dies after the first day of the month following your
80th birthday, the Contract Value on the Death Benefit Valuation Date.
3. If you die, the Withdrawal Value on the Death Benefit Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or an annuity
payout of which we approve.
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8.
Section 11 RESTRICTIONS ON PAYMENT AT DEATH
A. GENERAL
This section restricts how distributions may be made at death. It refers to IRC
Section 72(s) and the regulations thereunder. This section modifies any other
provision in the contract to the contrary.
B. REQUIRED DISTRIBUTIONS UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
If you die before distribution has commenced, or distribution has commenced or
distribution has commenced for only a portion of your interest, the Death
Benefit must be distributed within five (5) years of your death. However,
proceeds which are payable to a Beneficiary who is a natural person may be
distributed in substantially equal installments over his or her lifetime or a
period certain not exceeding the life expectancy of the Beneficiary provided
such distribution commences not later than one year after your death occurred.
If you die either before or after distributions have commenced and the sole
Beneficiary is your surviving spouse, he or she may continue the contract as
Owner. If your surviving spouse chooses to continue the contract, all provisions
will apply to him or her as if he or she were the original Owner. These
provisions include application of the Withdrawal Charge Percentage in Section 7.
Section 12 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, distribution or transfer under
the contract complies with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 13 TERMINATION
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date;
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date; or
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to you or, if you request, to another annuity.
INDIVIDUAL DEFERRED
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY
PAYOUTS
- --------------------------------------------------------------------------------
NOTICE
To make Purchase Payments, make a claim, or exercise your rights under this
contract, please write or call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(800) 426-7050
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
EX-99.4C
7
INDIVIDUAL DEFERRED RETIREMENT ANNUITY CONTRACT
EXHIBIT 99.4c
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Issue Date: See page 2A
/s/ Emily Davis
Secretary
If you die while this contract is in effect, we will pay the Death Benefit when
we receive written notice of your death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Contract No.: See page 2A
/s/ Michael J. Dubes
President
APPROVED ______________________
INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
Page
Definitions..................................................................3
The Contract.................................................................5
Purchase Payments............................................................5
Reallocations of Contract Value..............................................6
Fixed Account................................................................7
Variable Account.............................................................8
Withdrawals.................................................................11
Annuity Benefits............................................................13
General Provisions..........................................................17
Payments at Death...........................................................19
Restrictions on Distributions...............................................19
Amendment and Disclaimer....................................................22
Termination.................................................................22
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA
PAGE(S).
CONTRACT DATA PAGE
INDIVIDUAL DEFERRED RETIREMENT ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Initial Purchase Payment $15,000
Minimum Subsequent Payment(s) $5,000
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
------------------------------------------------------------
Total Allocation 100%
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF TOTAL/PARTIAL WITHDRAWAL CHARGE AS
WITHDRAWAL MINUS CONTRACT YEAR OF PERCENTAGE OF EACH
PURCHASE PAYMENT PURCHASE PAYMENT
0-1 6%
2-3 5%
4 4%
5 2%
6+ 0%
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: John Doe
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
Section 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT EARNINGS
On any Valuation Date, the Contract Value plus the aggregate Purchase Payments
withdrawn up to that date minus the aggregate Purchase Payments made up to that
date.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate account.
Section 1 DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
REQUIRED DISTRIBUTION DATE
April 1 of the year following the year in which you reach age 70 1/2, or later
if permitted by law or regulation.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange closes on each
day on which the New York Stock Exchange is open for business except federal and
other holidays and days on which we open for business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT
The entire contract is the contract (Form No. 13002 12-94), the Contract Data
Page(s); any application(s); and attached endorsements. Unless fraudulent, all
statements made by or on behalf of anyone covered by this contract are
representations and not warranties. Only statements found in the attached
application(s) may be used to cancel this contract or as our defense if we
refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office.
Subject to Section 3C, you may make Purchase Payments at any time before the
Start Date while the contract is in force. The initial Purchase Payment must
equal or exceed the minimum as shown on the Contract Data Page(s). On a
nondiscriminatory basis, we may choose not to accept an additional Purchase
Payment if it is less than $5,000, or if the additional Purchase Payment plus
the Contract Value at the next Valuation Date exceeds $1,000,000.
B. TRANSFERS AND ROLLOVERS
Purchase Payments that are transfers or rollovers will only be accepted from:
1. Rollover contributions described in Sections 402(c), 403(a)(4),
403(b)(8), and 408(d)(3) of the Code; or
2. Amounts transferred from another individual retirement account or annuity
("IRA").
C. PURCHASE PAYMENT LIMITS
Except in the case of transfer or rollover contributions described in Section 3B
or a contribution made in accordance with the terms of a Simplified Employee
Pension ("SEP") as described in Section 408(k) of the Code, Purchase Payments
made to this contract may not exceed $2,000 for any taxable year.
We will accept SEP Purchase Payments from any employer even if you are age
seventy-and-one-half (70 1/2) or older, and we will accept Purchase Payments
made for a nonworking spouse who is under age 70 1/2 at the end of a tax year,
even if the working spouse is age 70 1/2 or older. No other Purchase Payments
may be made on your behalf for the tax year in which you reach age 70 1/2 and
thereafter.
Section 3 PURCHASE PAYMENTS (CONTINUED)
- --------------------------------------------------------------------------------
D. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we a charge of
up to $25 for each reallocation on Contract Value, to limit the number of
reallocations you can make, to establish minimum and maximum amounts for
reallocations, and to relocate entire Contract Value remaining in a Sub-Account
or either Account in the event that a reallocation request would bring such
remaining Contract Value below a specified amount. Allocation of Purchase
Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value may be reallocated at any
time to Fixed Account B or to the Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
Section 4 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied purchase
annuity payouts, the remaining Contract as described above for periods prior to
the Start Date.
Section 5 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive our Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and Account Contract Value
using the daily interest rates.
Section 5 FIXED ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase
partial annuity payouts and Annual Contract Charges applied to the Fixed
Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable, Account, but these
assets are held separately from our other assets and are not part of our General
Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the selected
Sub-Accounts are invested. We do not the investment performance of the Funds.
You bear the full investment risk for amounts applied to the selected
Sub-Accounts.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the current Valuation Period;
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
b. Plus the per share amount of any dividend or capital gain distri-
butions made on the Fund shares held in the Sub-Account during the
current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations
of the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the last prior Valuation Period;
b. Plus a per share credit or minus a per share charge for any
reserved for the last prior Valuation Period which we determine to
have resulted from the investment operations of the Sub-Account
and to be applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge, and the Administrative Charge, adjusted for the number of
days in the period, which are shown on an annual basis on the Contract
Data Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge in included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new SubAccounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL
If permitted by law, you may request a full or partial withdrawal by sending us
a written request. We reserve the right to deduct applicable premium taxes and
other state or federal taxes from the Contract Value on the date the withdrawal
is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of of our receipt of
your written request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. ORDER OF WITHDRAWAL
For purposes of calculating Withdrawal Charges, withdrawals will be taken first
from Purchase Payments on a first-in, first-out basis, then from Contract
Earnings as of the Valuation Date next following our receipt of your request.
C. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn Allocable to Purchase Payments
X
Withdrawal Charge Percentage(s)
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be of the
withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
D. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus Withdrawal Charge
minus Annual Contract Charge
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 13, and we have no further obligation.
E. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7F.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7F. Following a partial
withdrawal, the remaining Contract Value must be at least $1,000.
Withdrawal Charges, and any applicable taxes will not be included in the amount
payable to you.
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
F. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is the greater of:
1. Ten percent (10%) of the unloaned Contract Value; or
2. The remaining Purchase Payments which are no longer subject to a
Withdrawal Charge.
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7C. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7C.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Sections 7D and 7E.
G. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
The following options are available for annuity payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different payment
schedule. We reserve the right to change the frequency of either Fixed or
Variable Annuity Payouts so that each payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the terms of
the fixed Annuity Payout.
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout selected is
shown in the Annuity Payout Tables on pages 16 and 17 for each $1,000 of
Contract Value applied, based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contract into Annuity Units at the
Unit Value on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date. The number of Annuity Units of each Sub-Account
remains constant, as long as an annuity payout remains in force and allocation
among the Sub-Accounts has not changed. Reallocations among Sub-Accounts is
governed by Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income
for Each $1,000 of Contract Value
FIXED PERIOD IN MONTHS
AGE NONE 120
--- ---- ---
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.90 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semiannual, or quarterly installments
may be selected.
Amounts for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
JOINT PAYEE'S AGE
PAYEE'S AGE
45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force; and
2. We have the written consent of each irrevocable Beneficiary.
If there is more than one Beneficiary, we pay them in equal shares unless you
have requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you, we will pay your
estate.
If a Beneficiary survives you, but dies before receiving his/her full share, we
pay his/her share in the following order, unless you requested otherwise in
writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
C. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
D. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 13.
Section 9 GENERAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
E. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
F. MISSTATEMENT OF AGE
If your age is misstated, the Required Distribution Date and/or Start Date will
be adjusted to reflect the true age.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
G. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
H. NONTRANSFERABLE
This contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or security for the performance of an obligation
or for any other purpose, to any person or entity other than us.
I. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
J. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
K. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
L. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
M. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value.
Section 10 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If you die on or before the first day of the month following your 80th
birthday, as of the Death Benefit Valuation Date the greatest of:
(a) The Contract Value; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
and the amount of previously deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts since
that anniversary, less the amount of previously deducted Annual
Contract Charges since that anniversary.
2. If you die after the first day of the month following your 80th birthday,
the Contract Value on the Death Benefit Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or a payout
permitted by IRC Section 408(b)(3) and of which we approve.
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8 and which is permitted by IRC Sections 401(a)(9),
408(b)(3), and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS
- --------------------------------------------------------------------------------
A. GENERAL
This section restricts how distributions may be made under the contact both
before and after your death. It refers to IRC Sections 401(a)(9) and 403(b)(3),
and the regulations thereunder, including the incidental death benefit
provisions of Treasury Regulation Section 4.10(a)(9)-2, all of which are
incorporated herein by reference. This section modifies any other provision in
the contract to the contrary.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
- --------------------------------------------------------------------------------
B. REQUIRED DISTRIBUTIONS WHILE LIVING
You must elect payments under Section 7, Section 8, or a combination of both
that commence on or before the Required Distribution Date and are payable in
substantially equal amounts, no less frequently than annually. Your entire
interest in the contract must be distributed in the following manner:
1. In one lump sum;
2. Over your life;
3. Over your life and the life of your Beneficiary;
4. Over a period certain not exceeding your life expectancy; or
5. Over the joint and last survivor expectancy of you and your Beneficiary.
Payments must be nonincreasing or may increase only as provided in Q & A F-3 of
Treasury Regulation Section 1.401(a)(9)-1. If your entire interest is to be
distributed in other than one lump sum, then the amount to be distributed each
year (commencing with the Required Distribution Date and each year thereafter)
shall be determined in accordance with IRC Section 408(b)(3) and the regulations
thereunder.
C. REQUIRED DISTRIBUTION UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
- --------------------------------------------------------------------------------
If you die before distribution has commenced, or distribution has commenced for
only a portion of your interest, the Death Benefit must be distributed no law
than December 31 of the calendar year in which the fifth anniversary of your
death occurs. However, proceeds which are payable to a Beneficiary who is a
natural person may be distributed in substantially equal installments over his
or her lifetime or a period certain not exceeding the life expectancy of the
Beneficiary provided such distribution commences not later than December 31 of
the calendar year following the calendar year in which your death occurred.
If the sole Beneficiary is your surviving spouse, he or she may elect no later
than December 31 of the calendar year in which the fifth anniversary of your
death occurs to receive equal or substantially equal payments over his or her
life expectancy commencing at any date prior to the date on which you would have
attained age 70 1/2. Alternatively, your surviving spouse may continue the
contract as Owner.
Payments shall be calculated in accordance with IRC Section 408(b)(3) and the
regulations thereunder.
For the purpose of this requirement, any amount paid to your child should be
treated as if it had been paid to your surviving spouse if the remainder of the
interest becomes payable to the surviving spouse when the child reaches the age
of majority.
If you die before the Required Distribution Date, no additional Purchase
Payments will be accepted under this Contract after your death unless the sole
Beneficiary is your surviving spouse.
D. MINIMUM INCIDENTAL DEATH BENEFIT REQUIREMENT
If your spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the present value of the amount
available for distribution is paid within your life expectancy and that such
method of distribution complies with the requirements of IRC Sections 401(a)(9),
408(b)(3) and the regulations thereunder.
E. LIFE EXPECTANCY
For purposes of this Section, life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treasury Regulation Section 1.72-9 in accordance with IRC Section
408(b)(3) and the regulations thereunder. In the case of distributions under
Section 11B, your life expectancy or, if applicable, the joint and the last
survivor expectancy of you and your Beneficiary, will be initially determined on
the basis of attained ages in the year you reach age 70 1/2. In the case of
distributions under Section 11C, life expectancy shall be initially determined
on the basis of the Beneficiary's attained age in the age in the year
distributions are required to commence. Unless you (or your spouse) elects
otherwise prior to the date distributions are required to commence, your fife
expectancy and, if applicable, your spouse's life expectancy shall be
recalculated annually based on attained ages in the year for which the required
distribution is being determined. The life expectancy of a nonspouse beneficiary
shall not be recalculated.
In the case of a distribution other than in the form of life income or joint
life income, the annual distribution required to be made by the Required
Distribution Date is for the calendar year in which you reach age 70 1/2. Annual
payments for subsequent years, including the year in which the Required
Distribution Date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the annuity value as of the
close of business on December 31 of the preceding year, divided by the
applicable life expectancy or joint and last survivor expectancy.
F. MINIMUM DISTRIBUTION REQUIREMENTS OF MULTIPLE IRAs
You or your Beneficiary may satisfy the minimum distribution requirements under
IRC Section 408(b)(3) by receiving a distribution from one IRA that is equal to
the amount required to satisfy the minimum distribution requirements for two or
more IRAs. For this purpose, the Owner of two or more IRAs may use the
"alternative method" described in Notice 88-38, 1988-1 C.B.524, to satisfy the
minimum distribution requirements described above.
Section 12 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, loan, distribution or transfer
under the contact complies with the provisions, terms and conditions of
each plan or with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 13 TERMINATION
- --------------------------------------------------------------------------------
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date; or
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date.
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to you or, if you request, to another IRA.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company.
This Endorsement is a part of the contract to which it is attached.
"IRS Rules" are defined as the minimum distribution rules of IRC Section
401(a)(9) and applicable regulations. IRC Section 401(a)(9) describes minimum
distribution requirements for Contract Owners.
The following is added to the contract:
On the Required Distribution Date, we will waive the Withdrawal Charge on cash
withdrawals made to comply with IRS Rules, subject to the following:
1. The maximum amount available for withdrawal within a twelve (12) month
period without a Withdrawal Charge under all provisions of the contract,
including this Endorsement, will not be less than the amount needed for
this contract to comply with IRS Rules.
2. The waiver applies only to cash withdrawals needed for this contract to
meet IRS Rules. If individuals with other contracts withdraw an amount
needed for the combined contracts to meet IRS Rules, we will waive the
Withdrawal Charge only on the amount needed for this contract to meet IRS
Rules.
3. If IRS Rules change from those in effect on the date this Endorsement is
made a part of this contract, we have the right to change or withdraw
this Endorsement.
We will calculate the cash withdrawal needed for this contract to meet
IRS Rules. We guarantee the calculation will meet IRS Rules subject to
the accuracy of the data given to us.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of this contract.
/s/ Emily Davis
Secretary
IRS MINIMUM DISTRIBUTION ENDORSEMENT
INDIVIDUAL DEFERRED
RETIREMENT
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY
PAYOUTS
- --------------------------------------------------------------------------------
NOTICE
To make Purchase Payments, make a claim, or exercise your rights under this
contract, please write or call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(800) 426-7050
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
EX-99.4D
8
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED TSA CONTRACT
EXHIBIT 99.4d
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Issue Date: See page 2A
/s/ Emily Davis
Secretary
If you die while this contract is in effect, we will pay the Death Benefit when
we receive written notice of your death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Contract No.: See page 2A
/s/ Michael J. Dubes
President
APPROVED ______________________
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED TAX SHELTERED ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
Page
Definitions..................................................................3
The Contract.................................................................5
Purchase Payments............................................................5
Reallocations of Contract Value..............................................6
Fixed Account................................................................7
Variable Account.............................................................8
Withdrawals.................................................................11
Annuity Benefits............................................................14
General Provisions..........................................................18
Payments at Death...........................................................20
Restrictions on Distributions...............................................21
Loans.......................................................................22
Amendment and Disclaimer....................................................24
Termination.................................................................24
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA
PAGE(S).
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
TAX SHELTERED ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Purchase Payment $50
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
-------------------------------------------------------------
Total Allocation 100%
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: John Doe
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
CONTRACT DATE PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
TAX SHELTERED ANNUITY CONTRACT
TABLE OF WITHDRAWAL CHARGES
Contract Year of Withdrawal Charge
Withdrawal Percentage
1 8%
2 8%
3 8%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 1%
11+ 0
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
Section 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
DISTRIBUTEE
You or your surviving spouse as Beneficiary or your former spouse as a qualified
domestic relations order ("QDRO") within the meaning of IRC Section 414(p), as
applicable.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate account.
Section 1 DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
OUTSTANDING LOAN BALANCE
The total of all existing loans, plus any accumulated loan interest, less any
loan repayments.
OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
REQUIRED DISTRIBUTION DATE
April 1 of the year following the year in which you reach age 70 1/2, or later
if permitted by law or regulation.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange closes on each
day on which the New York Stock Exchange is open for business except federal and
other holidays and days on which we open for business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT
The entire contract is the contract (Form No. 13004 1-95), the Contract Data
Page(s); any application(s); and attached endorsements. Unless fraudulent, all
statements made by or on behalf of anyone covered by this contract are
representations and not warranties. Only statements found in the attached
application(s) may be used to cancel this contract or as our defense if we
refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office. We consider any payment we receive to be a Purchase Payment unless
you tell us that it is a loan payment.
You may make Purchase Payments at any time before the Start Date while the
contract is in force. You may vary the amount and frequency of Purchase
Payments, within IRS limitations, but they must be least $50 unless we waive
this minimum on a nondiscriminatory basis. We may choose not to accept an
additional Purchase Payment on a nondiscriminatory basis if the additional
Purchase Payment plus the Contract Value at the next any Valuation Date exceeds
$1,000,000.
Within IRS limitations, you may change how often Purchase Payments are made.
B. TRANSFERS AND ROLLOVERS
After the first five (5) Contract Years, we have the right to refuse Purchase
Payments that are transfers or rollovers from another tax sheltered annuity or
custodial account for regulated investment company stock that qualifies under
Section 403(b) of the Code.
C. FAILURE TO MAKE PURCHASE PAYMENTS
If you fail to make Purchase Payments, the contract will stay in force unless
terminated in accordance with Section 14. Until termination, the Fixed Account
Contract Value will continue to earn interest in accordance with Section 5B.
D. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we reserve the
right to impose a charge of up to $25 for each reallocation of Contract Value,
to limit the number of reallocations you can make, to establish minimum and
maximum amounts for reallocations, and to relocate entire Contract Value
remaining in a Sub-Account or either Account in the event that a reallocation
request would bring such remaining Contract Value below a specified amount.
Allocation of Purchase Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value that is not serving as
security for a loan may be reallocated at any time to Fixed Account B or to the
Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Section 4 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied purchase
annuity payouts, the remaining Contract Value may be reallocated as described
above for periods prior to the Start Date.
Section 5 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive our Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and compounded daily to the
Fixed Account Contract Value using the daily equivalents of effective yearly
interest rates.
There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
We will continue to credit interest to any portion of the Fixed Account A
Contract Value that is used as security for a loan from us. The interest
credited to the portion of Fixed Account A Contract Value represented by the
loan may be less than credited to the rest of such Fixed Amount Contract Value.
Taking a loan may also affect the rate of interest credited in the future to the
Fixed Account A Contract Value, either up or down. Interest credited to the
loaned portion of Fixed Account A will never be less than three percent (3%).
Section 5 FIXED ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase
partial annuity payouts and Annual Contract Charges applied to the Fixed
Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable, Account, but these
assets are held separately from our other assets and are not part of our General
Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the selected
Sub-Accounts are invested. We do not the investment performance of the Funds.
You bear the full investment risk for amounts applied to the selected
Sub-Accounts.
C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the current Valuation
Period;
b. Plus the per share amount of any dividend or capital gain
distributions made on the Fund shares held in the Sub-Account
during the current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations
of the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the
Sub-Account, determined at the end of the last prior Valuation
Period;
b. Plus a per share credit or minus a per share charge for any
reserved for the last prior Valuation Period which we determine to
have resulted from the investment operations of the Sub-Account
and to be applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge, and the Administrative Charge, adjusted for the number of
days in the period, which are shown on an annual basis on the Contract
Data Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge in included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new SubAccounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL
If permitted by law, you may request a full or partial withdrawal by sending us
a written request. We reserve the right to deduct applicable premium taxes and
other state or federal taxes from the Contract Value on the date the withdrawal
is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of our receipt of your
written request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. REQUIREMENTS FOR WITHDRAWALS
The IRS permits withdrawals of Purchase Payments made by salary reduction and
earnings credited on those Purchase Payments only if you have:
1. Attained age 59 1/2; or
2. Separated from service (termination); or
3. Died; or
4. Become disabled within the meaning of IRC Section 72(m)(7); or
5. Qualified for a hardship distribution under IRS regulations. If a
hardship is shown, only the Purchase Payments may be withdrawn and no
minimum value need be maintained.
If required by law and a loan is available, you must take a loan before you take
a hardship distribution.
Under certain circumstances, withdrawals may be subject to IRS tax penalties.
This section applies only to Purchase Payments made by salary reduction after
December 31, 1988, to amounts transferred from IRC Section 403(b)(7) custodial
accounts, and to earnings credited on either.
This section does not apply to any transfer payments which are attributable to
contributions made and/or earnings credited to another IRC Section 403(b) tax
sheltered annuity before January 1, 1989.
This section does not apply to transfers to another qualified plan as provided
in Section 7I. However, we require verification from a qualified plan that the
funds will be transferred to that plan.
This section does not restrict your ability to obtain a loan in accordance with
Section 12 of this contract.
C. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn
X
Withdrawal Charge Percentage
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be of the
withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
D. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus outstanding Loan Balance
minus Withdrawal Charge
minus Annual Contract Charge
We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
The Outstanding Loan Balance is subject to any applicable Withdrawal Charges.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 14A, and we have no further obligation.
E. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7F.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7F. Following a partial
withdrawal, the remaining Contract Value must be at least the greater of a or b,
where:
a = $1,000; and
b = Outstanding Loan Balance/85%
The Outstanding Loan Balance, Withdrawal Charges, and any applicable taxes will
not be included in the amount payable to you.
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
F. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is 10% of the unloaned Contract Value; or
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7C. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7C.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Section 7D and 7E.
G. TOTAL WAIVER OF WITHDRAWAL CHARGE
On a basis which does not discriminate among Owners of the class, we reserve the
right to waive Withdrawal Charges on full and partial withdrawals for anyone
eligible for a withdrawal under Section 7B.
H. REDUCTION IN WITHDRAWAL CHARGE
On a basis which does not discriminate among Owners of the same class, we
reserve the eight to reduce the Withdrawal Charges shown on the Contract Data
Page(s).
I. DIRECT ROLLOVER OR TRANSFER TO ANOTHER PLAN
The Distributee may elect in writing, at the time and in the manner prescribed
by us, to have any portion of an eligible rollover distribution the
Distributee's interest in the contract paid directly rollover to:
1. An individual retirement account described in IRC Section 408(a);
2. An individual retirement annuity described in IRC Section account
described in IRC 408(b);
3. Or, except in the case of a surviving spouse as Beneficiary, another
annuity or custodial account described in IRC Section 403(b) that direct
rollovers.
An eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the Distributee, other than:
1. Any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life or life
expectancy of the Distributee or for the joint lives or life expectancies
of the Distributee and his or her beneficiary or for a specified period
of ten (10) years or more;
2. Any distribution to the extent it is a required minimum distribution
under IRC Section 403(b)(10); and
3. The portion of any distribution that is not includible in gross income.
In order to be eligible for a direct rollover, funds must be eligible for a
distribution as described in Section 7B. This provision shall be interpreted in
accordance with IRC Section 403(b)(10), the regulations thereunder, and
successor provisions thereto.
If eligible, the Distributee or your Beneficiary may request a transfer of
Withdrawal Value to another annuity or custodial account described in IRC
Section 403(b).
Eligible rollover distributions and transfers are subject to any applicable
Withdrawal Charges.
J. QUALIFIED DOMESTIC RELATIONS ORDER
As permitted by the Code and applicable regulations and subject to any
applicable Withdrawal Charges, we may permit withdrawals to an alternate payee
pursuant to a QDRO described in IRC Section 414(p), as determined by the
administrator for each plan.
K. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
The following options are available for annuity payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different the right to
change the frequency of either Fixed or Variable Annuity Payouts so that each
payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the Annuity
Payout.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout in the Annuity
Payout Tables on pages 17 and 18 for each $1,000 of Contract Value applied,
based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contact into Annuity Units at the Unit
Value on the Valuation Date immediately preceding the seventh (7th) day before
the Annuity Payout Date. The number of Annuity Units of each Sub-Account remains
constant, as long as an annuity payout remains in force and allocation among the
Sub-Accounts has not changed. Reallocations among Sub-Accounts is governed by
Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income for Each $1,000 of Contract
Value
FIXED PERIOD IN MONTHS
AGE NONE 120
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.80 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semi-annual or quarterly installments
may be selected.
Rates for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
JOINT PAYEE'S AGE
PAYEE'S AGE
45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force; and
2. We have the written consent of each irrevocable Beneficiary.
If there is more than one Beneficiary, we pay them in equal shares unless you
have requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you, we will pay your
estate.
If a Beneficiary survives you, but dies before receiving his/her full share, we
pay his/her share in the following order, unless you requested otherwise in
writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
Section 9 GENERAL PROVISION (CONTINUED)
- --------------------------------------------------------------------------------
C. EFFECT OF LAW AND PLAN DOCUMENTS
This contract shall be subject to and interpreted in conformity with the
provisions, terms, and conditions of the tax-sheltered annuity plan document of
which this contract is a part, if any, and with the terms and conditions of IRC
Section 403(b), the regulations thereunder, and other applicable law (including,
without limitation, the Employee Retirement Income Safety Act of 1974, as
amended, if applicable), as determined by the plan administrator or other
designated plan fiduciary or, if none, you.
D. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
E. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 14.
F. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
G. MISSTATEMENT OF AGE
If your age is misstated, the Required Distribution Date and/or Start Date will
be adjusted to reflect the true age.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
H. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
I. NONTRANSFERABLE
This contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or security for the performance of an obligation
or for any other purpose, to any person or entity other than us.
J. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
K. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
Section 9 GENERAL PROVISION (CONTINUED)
- --------------------------------------------------------------------------------
L. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
M. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
N. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value and, if applicable, any Outstanding Loan Balance.
Section 10 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If you die on or before the first day of the month following your 80th
birthday, as of the Death Benefit Valuation Date the greatest of:
(a) The Contract Value less the amount of any Outstanding Loan
Balance; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
the Outstanding Loan Balance, and the amount of previously
deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts since
that anniversary, less the amount of previously deducted Annual
Contract Charges since that anniversary, and less the Outstanding
Loan Balance.
2. If you die after the first day of the month following your 80th birthday,
the Contract Value less the Outstanding Loan Balance on the Death Benefit
Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or a payout
permitted by IRC Section 401(a)(9) and of which we approve.
Section 10 PAYMENTS AT DEATH (CONTINUED)
- --------------------------------------------------------------------------------
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8 and which is permitted by IRC Sections 401(a)(9),
403(b)(10) and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS
- --------------------------------------------------------------------------------
A. GENERAL
This section restricts how distributions may be made under the contact both
before and after your death. It refers to IRC Sections 401(a)(9) and 403(b)(10)
and modifies any other provision in the contract to the contrary.
B. REQUIRED DISTRIBUTIONS WHILE LIVING
You must elect payments under Section 7, Section 8, or a combination of both
that commence on or before the Required Distribution Date and are payable in
substantially equal amounts, no less frequently than annually. Your entire
interest in the contract must be distributed in the following manner:
1. In one lump sum;
2. Over your life;
3. Over your life and the life of your Beneficiary;
4. Over a period certain not exceeding your life expectancy; or
5. Over the joint and last survivor expectancy of you and your Beneficiary.
If your entire interest is to be distributed in other than one lump sum, then
the amount to be distributed each year (commencing with the Required
Distribution Date and each year thereafter) shall be determined in accordance
with IRC Section 403(b)(10) and the regulations thereunder.
C. REQUIRED DISTRIBUTION UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
If you die before distribution has commenced, or distribution has commenced for
only a portion of your interest, the Death Benefit must be distributed no law
than December 31 of the calendar year in which the fifth anniversary of your
death occurs. However, proceeds which are payable to a Beneficiary who is a
natural person may be distributed in substantially equal installments over his
or her lifetime or a period certain not exceeding the life expectancy of the
Beneficiary provided such distribution commences not later than December 31 of
the calendar year following the calendar year in which your death occurred. If
the sole Beneficiary is your surviving spouse, he or she may elect no later than
December 31 of the calendar year in which the fifth anniversary of your death
occurs to receive equal or substantially equal payments over his or her life
expectancy commencing at any date prior to the date on which you would have
attained age 70 1/2. Payments shall be calculated in accordance with IRC
Sections 401(a)(9), 403(b)(10) and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
- --------------------------------------------------------------------------------
For the purpose of this requirement, any amount paid to your child should be
treated as if it had been paid to your surviving spouse if the remainder of the
interest becomes payable to the surviving spouse when the child reaches the age
of majority.
D. MINIMUM INCIDENTAL DEATH BENEFIT REQUIREMENT
If your spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the present value of the amount
available for distribution is paid within your life expectancy and that such
method of distribution complies with the requirements of IRC Sections 401(a)(9),
403(b)(10) and the regulations thereunder.
E. LIFE EXPECTANCY
For purposes of this Section, life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treasury Regulation Section 1.72-9 in accordance with IRC Section
403(b)(10) and the regulations thereunder. In the case of distributions under
Section 11B, your life expectancy or, if applicable, the joint and the last
survivor expectancy of you and your Beneficiary, will be initially determined on
the basis of attained ages in the year you reach age 70 1/2. In the case of
distributions under Section 11C, life expectancy shall be initially determined
on the basis of the Beneficiary's attained age in the age in the year
distributions are required to commence. Unless you (or your spouse) elects
otherwise prior to the date distributions are required to commence, your fife
expectancy and, if applicable, your spouse's life expectancy shall be
recalculated annually based on attained ages in the year for which the required
distribution is being determined. The life expectancy of a nonspouse beneficiary
shall not be recalculated.
In the case of a distribution other than in the form of life income or joint
life income, the annual distribution required to be made by the Required
Distribution Date is for the calendar year in which you reach age 70 1/2. Annual
payments for subsequent years, including the year in which the Required
Distribution Date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the annuity value as of the
close of business on December 31 of the preceding year, divided by the
applicable life expectancy or joint and last survivor expectancy.
Section 12 LOANS
- --------------------------------------------------------------------------------
A. GENERAL
Before the Start Date, you may ask us in writing for a cash loan using the
contract as security. You will be required to complete a loan application. We
will loan you up to the Withdrawal Value, less an amount representing annual
loan interest, provided such amount does not exceed the amount loan amount set
by law. Loans must be for a minimum of $1,000. On a nondiscriminatory basis, we
reserve the rights to charge a loan service fee not to exceed $25 for each loan
and to restrict loan in the first contract year and after you attain age 70 1/2.
We have the right to delay payment for up to six (6) months.
Section 12 LOANS (CONTINUED)
- --------------------------------------------------------------------------------
B. SECURITY OF LOAN
An amount of Contract Value equal to the amount of a loan will be segregated
within Fixed Account A as security for the loan. Amounts held as security for
the loan will be reallocated to Fixed Account A from the unloaned portion of the
Fixed Account Contract Value and the Variable Account Contract Value on a pro
rata basis. Amounts equal to the portion of the loan reallocated from the
Sub-Accounts of the Variable Account to Fixed Account A are valued on the next
Valuation Date following our receipt of your written request for a loan, thus
reducing the Variable Account Contract Value. Amounts segregated to secure the
loan are not treated as reallocations for the purpose of the reallocation charge
or the limit on the number of reallocations in a Contract Year.
C. REPAYMENT OF LOAN
Loans shall be repaid in substantially equal monthly installments over a period
not to exceed five (5) years. If the loan is used to purchase your principal
residence, you may take up to twenty (20) years to repay the loan. You may repay
a loan in a lump sum only with our prior approval. All repayment amounts will
reduce the Outstanding Loan Balance by the amount of each payment and will be
allocated in the same manner as Purchase Payments in Section 3D.
If any installment is ninety (90) days in arrears, the loan will be due and
payable at once, without notice to you. We will repay the loan using a partial
withdrawal. We will deduct the Outstanding Loan Balance and applicable
Withdrawal Charges from the Contract Value, unless such a distribution is
prohibited by law. In the event such a distribution is prohibited by law, we
will treat the Outstanding Loan Balance as permitted by federal tax law.
Even if not in default, any Outstanding Loan Balance and applicable Withdrawal
Charges will not be included in the amount available under the contract for
payment upon death, withdrawal, or purchase of an annuity payout.
If at any time, the Outstanding Loan Balance equals or exceeds the Withdrawal
Value, less applicable taxes, the contract may terminate without value. We will
use the Contract Value to repay the Outstanding Loan Balance, applicable
Withdrawal Charges and taxes.
We have a prior lien against the contract for any money owed to us under it. Our
lien is superior to the claim of any assignee or other person.
D. INTEREST
We may charge up to eight percent (8%) interest in arrears on loans. But, we
have the right to charge a lower rate of interest. The interest rate will never
be less than five and one-half percent (5.5%) in arrears.
Interest on the loan is included in each monthly repayment. If the contract
terminates, a rata amount of interest will be due based upon the monthly
interest accrued to date.
The portion of the Contract Value which is security for the loan may earn less
interest than is credited to the unloaned portion, but it will never earn less
than the guaranteed rate of three percent (3%).
A loan may affect the interest credited to the Fixed Account in the future,
either up or down.
Section 12 LOANS (CONTINUED)
- --------------------------------------------------------------------------------
E. TAX CONSEQUENCES
If the loan requirements are not satisfied, or if your interest in the contract
terminates while a loan is outstanding, the Outstanding Loan Balance will be
treated as a taxable distribution and may be subject to penalty tax, and the
treatment of the contract under IRC Section 403(b) may be adversely affected.
You should seek tax and legal advice before requesting a loan.
Section 13 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, loan, distribution or transfer
under the contact complies with the provisions, terms and conditions of
each plan or with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 14 TERMINATION
- --------------------------------------------------------------------------------
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date;
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date; or
3. If permitted by law, when the Outstanding Loan Balance is equal to or
greater than the Contract Value less applicable Withdrawal Charges.
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to:
1. You, if you qualify under Section 7B;
2. Another insurance company issuing an IRC Section 403(b) contract; or
3. A custodial account for regulated investment company stock that qualifies
under IRC Section 403(b).
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company.
This Endorsement is a part of the contract to which it is attached.
"IRS Rules" are defined as the minimum distribution rules of Section 401(a)(9)
and applicable regulations. IRC Section 401(a)(9) describes minimum distribution
requirements for Contract Owners.
The following is added to the contract:
On the Required Distribution Date, we will waive the Withdrawal Charge on cash
withdrawals made to comply with IRS Rules, subject to the following:
1. The maximum amount available for withdrawal within a twelve (12) month
period without a Withdrawal Charge under all provisions of the contract,
including this Endorsement, will not be less than the amount needed for
this contract to comply with IRS Rules.
2. The waiver applies only to cash withdrawals needed for this contract to
meet IRS Rules. If individuals with other contracts withdraw an amount
needed for the combined contracts to meet IRS Rules, we will waive the
Withdrawal Charge only on the amount needed for this contract to meet IRS
Rules.
3. If IRS Rules change from those in effect on the date this Endorsement is
made a part of this contract, we have the right to change or withdraw
this Endorsement.
We will calculate the cash withdrawal needed for this contract to meet
IRS Rules. We guarantee the calculation will meet IRS Rules subject to
the accuracy of the data given to us.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of this contract.
/s/ Emily Davis
Secretary
IRS MINIMUM DISTRIBUTION ENDORSEMENT
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
TAX SHELTERED
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY
PAYOUTS
- --------------------------------------------------------------------------------
NOTICE
To make Purchase Payments under this contract, please write or call us at:
Northern Life Insurance Company
P.O. Box 34148 FAB #11
Seattle, Washington 98124-1148
(800) 426-7050
To make a claim or exercise your rights under this contract, please write or
call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(800) 426-7050
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
EX-99.4E
9
FLEX PREM INDIV DEFR'D RETIREMENT ANNUITY CONTRACT
EXHIBIT 99.4e
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED RETIREMENT ANNUITY CONTRACT
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company
Home Office
Seattle, Washington 98101
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
We will make Fixed and/or Variable Annuity Payouts subject to the terms of this
contract. You may change the Start Date, the annuity payout option, or both, as
shown in the contract.
Owner: See page 2A
Issue Date: See page 2A
/s/ Emily Davis
Secretary
If you die while this contract is in effect, we will pay the Death Benefit when
we receive written notice of your death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
Contract No.: See page 2A
/s/ Michael J. Dubes
President
APPROVED ______________________
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED RETIREMENT ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
TABLE OF CONTENTS
Page
Definitions.................................................................3
The Contract................................................................5
Purchase Payments...........................................................5
Reallocations of Contract Value.............................................6
Fixed Account...............................................................7
Variable Account............................................................8
Withdrawals................................................................11
Annuity Benefits...........................................................13
General Provisions.........................................................17
Payments at Death..........................................................19
Restrictions on Distributions..............................................20
Amendment and Disclaimer...................................................22
Termination................................................................22
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA PAGE(S).
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
RETIREMENT ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Purchase Payment $50
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
Northstar/NWNL Trust
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
Fidelity: Variable Insurance Product Fund
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
Fidelity: Variable Insurance Product Fund II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
Total Allocation 100%
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
OWNER: John Doe
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
CONTRACT DATE PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
RETIREMENT ANNUITY CONTRACT
TABLE OF WITHDRAWAL CHARGES
Contract Year of Withdrawal Charge
Withdrawal Percentage
1 8%
2 8%
3 8%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 1%
11+ 0%
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
Section 1 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT
A unit of measure, used to determine the Variable Account Contract Value.
ANNUITANT
The person whose life determines the annuity payouts payable under the contract
at the Start Date. The Owner is always the Annuitant unless an Owner's surviving
spouse or former spouse is the Annuitant.
ANNUITY PAYOUT DATE
Unless we agree otherwise, the first business day of any calendar month in which
a Fixed or Variable Annuity Payout is made under the contract.
ANNUITY UNIT
A unit of measure used to determine the amount of a Variable Annuity Payout
after the first annuity payout.
BENEFICIARY
The person(s) named by you to receive any payments after your death.
CODE
The Internal Revenue Code of 1986 ("IRC"), as amended.
CONTINGENT BENEFICIARY
The person(s) you name to become the Beneficiary if the Beneficiary dies.
CONTRACT ANNIVERSARY
The same day and month as the Issue Date each year that this contract remains in
force.
CONTRACT VALUE
The sum of the Fixed Account Contract Value as defined in Section 5C plus the
Variable Account Contract Value as defined in Section 6D on a Valuation Date.
CONTRACT YEAR
Each twelve (12) month period starting with the Issue Date and each Contract
Anniversary after that.
FIXED ACCOUNT
One or more accounts under this contract that guarantee both principal and
interest. Fixed Account Values are held in our General Account. We have complete
ownership and control of the assets in the General Account.
FIXED ANNUITY PAYOUT
A series of periodic payments to the Payee which do not vary in amount, are
guaranteed as to principal and interest, and are paid from the General Account.
FUND
Any open-end management investment company (or portfolio thereof) or any unit
investment trust (or series thereof) listed on the Contract Data Page(s) on the
Issue Date or thereafter made available.
GENERAL ACCOUNT
Our assets other than those allocated to the Variable Account or any other
separate account.
OWNER (YOU, YOUR)
The person named on the Contract Data Page(s) to hold this contract and to
exercise all rights and privileges under it.
Section 1 DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
PAYEE
The person to receive payments under a Fixed or Variable Annuity Payout. Only
the Annuitant or a Beneficiary may be the Payee.
PURCHASE PAYMENTS
These include periodic, single lump sum, rollover, and transfer payments paid to
us on your behalf, less applicable premium taxes, if any, as required by law.
REQUIRED DISTRIBUTION DATE
April 1 of the year following the year in which you reach age 70 1/2, or later
if permitted by law or regulation.
START DATE
The date on which the entire Contract Value is used to purchase a Fixed and/or
Variable Annuity Payout. As required by law, the Start Date will not be earlier
than the date on which you reach age 59 1/2, unless you meet a permitted
exception.
SUB-ACCOUNT
A subdivision of the Variable Account. Each Sub-Account's assets are invested
exclusively in one of the Funds. The Sub-Accounts available on the Issue Date
and the percentage of Purchase Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data Page(s), other Sub-Accounts may
be available after the Issue Date.
VALUATION DATE
The time at which regular trading on the New York Stock Exchange closes on each
day on which the New York Stock Exchange is open for business except federal and
other holidays and days on which we open for business.
VALUATION PERIOD
The period of time between a Valuation Date and the next Valuation Date.
VARIABLE ACCOUNT
A separate investment account of ours identified on page 2A, which has been
established under the State of Washington insurance laws and is divided into
Sub-Accounts.
VARIABLE ANNUITY PAYOUT
A series of periodic payments to the Payee which will vary in amount based on
the investment performance of the Variable Account Sub-Accounts under this
contract.
WE, US, OUR
Northern Life Insurance Company at its Home Office in Seattle, Washington.
WRITTEN, IN WRITING
A written request or notice signed, dated, and received at an address designated
by us in a form we accept. You may ask us for the forms.
Section 2 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT
The entire contract is the contract (Form No. 13005 1-95), the Contract Data
Page(s); any application(s); and attached endorsements. Unless fraudulent, all
statements made by or on behalf of anyone covered by this contract are
representations and not warranties. Only statements found in the attached
application(s) may be used to cancel this contract or as our defense if we
refuse to pay a claim.
B. MODIFICATION OF CONTRACT
Only our President or Secretary may change this contract on our behalf. No agent
or any other person may change this contract. Any change must be in writing.
Section 3 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL
Purchase Payments must be in cash or a cash equivalent and are payable at our
Home Office.
Subject to Section 3D, you may make Purchase Payments at any time before the
Start Date while the contract is in force. You may vary the amount and frequency
of Purchase Payments, but they must be at least $50 unless we waive this minimum
on a nondiscriminatory basis. We may choose not to accept an additional Purchase
Payment if the additional Purchase Payment plus the Contract Value at the next
Valuation Date exceeds $1,000,000.
B. TRANSFERS AND ROLLOVERS
After the first five (5) Contract Years, we have the right to refuse Purchase
Payments that are transfers or rollovers from:
1. Rollover contributions described in Sections 402(c), 403(a)(4),
403(b)(8), and 408(d)(3) of the Code; or
2. Amounts transferred from another individual retirement account or annuity
("IRA").
We reserve the right to waive these rules on a nondiscriminatory basis.
C. FAILURE TO MAKE PURCHASE PAYMENTS
If you fail to make Purchase Payments, the contract will stay in force unless
terminated in accordance with Section 14. Until termination, the Fixed Account
Contract Value will continue to earn interest in accordance with Section 5B.
D. PURCHASE PAYMENT LIMITS
Except in the case of transfer or rollover contributions described in Section 3B
or a contribution made in accordance with the terms of a Simplified Employee
Pension ("SEP") as described in Section 408(k) of the Code, Purchase Payments
made to this contract may not exceed $2,000 for any taxable year.
We will accept SEP Purchase Payments from any employer even if you are age
seventy-and-one-half (70 1/2) or older, and we will accept Purchase Payments
made for a nonworking spouse who is under age 70 1/2 at the end of a tax year,
even if the working spouse is age 70 1/2 or older. No other Purchase Payments
may be made on your behalf for the tax year in which you reach age 70 1/2 and
thereafter.
Section 3 PURCHASE PAYMENTS (CONTINUED)
- --------------------------------------------------------------------------------
E. ALLOCATION OF PURCHASE PAYMENTS
You specified the initial allocation of Purchase Payments on your application
for this contract. This allocation is shown on the Contract Data Page(s). The
allocation of future Purchase Payments will remain the same unless you change
it. You may change the percentage allocation between or among available
Sub-Accounts and the Fixed Account at any time by written notice. Changes in the
allocation will not be effective until the date we receive your notice and will
only affect Purchase Payments we receive after that date. The allocation may be
one hundred percent (100%) to any account or may be divided between the accounts
in whole percentage points totaling one hundred percent (100%).
Reallocations of the Contract Value are governed by Section 4.
Section 4 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL
You may reallocate Contract Value between or among Sub-Accounts, from one or
more Sub-Accounts to the Fixed Account, and from the Fixed Account to one or
more Sub-Accounts, subject to certain limitations. Subject to the restrictions
in Section 4B, we make a reallocation on the next Valuation Date after we
receive your written instructions requesting the reallocation or as of a
Valuation Date you request which occurs thereafter. Reallocations are subject to
the availability of Sub-accounts. On a non-discriminatory basis, we a charge of
up to $25 for each reallocation on Contract Value, to limit the number of
reallocations you can make, to establish minimum and maximum amounts for
reallocations, and to relocate entire Contract Value remaining in a Sub-Account
or either Account in the event that a reallocation request would bring such
remaining Contract Value below a specified amount. Allocation of Purchase
Payments is governed by Section 3.
B. REALLOCATIONS FROM FIXED ACCOUNT
Before the Start Date, Fixed Account A Contract Value may be reallocated at any
time to Fixed Account B or to the Variable Account.
Before the Start Date, you may request in writing the reallocation of part of
Fixed Account B Contract Value to the Variable Account or to Fixed Account A
under the following conditions:
1. You may only reallocate Contract Value during the reallocation period
which begins thirty (30) days before and ends thirty (30) days after each
Contract Anniversary. Only one reallocation is allowed during each
reallocation period;
2. We must receive the request to reallocate no more than thirty (30) days
before the start of the reallocation period and not later than ten (10)
days before the end of the reallocation period;
3. You may not reallocate more than the greater of $1,000 or twenty five
percent (25%) of Fixed Account B Contract Value unless Fixed Account B
Contract Value would be less than $1,000 after the reallocation, in which
case the full Fixed Account B Contract Value must be reallocated; and
Section 4 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
4. You must reallocate at least $250 or the total Fixed Account B Contract
Value, if less.
We reserve the right to permit reallocations in excess of these limits on a
discriminatory basis.
C. ALL OTHER REALLOCATIONS
Before the Start Date, you may request in writing the reallocation of all or
part of a Sub-Account's Accumulation Units to other SubAccounts or to Fixed
Account A or Fixed Account B. To accomplish the reallocation, appropriate
Accumulation Units will be redeemed and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A or Fixed Account B as directed
in your request.
Subject to the restrictions in the following paragraph, after a Variable Annuity
Payout has begun, you may request in writing the reallocation of the Annuity
Units in the same manner and subject to the same requirements as for a
reallocation of the Accumulation Units. However, we reserve the right to
restrict these reallocations.
No reallocations to or from Fixed Account A or Fixed Account B may be made after
the Start Date. In the event that part of the Contract Value is applied purchase
annuity payouts, the remaining Contract as described above for periods prior to
the Start Date.
Section 5 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Fixed Account consists of Fixed Account A and Fixed Account B. Purchase
Payments allocated and Contract Value reallocated to either of these Fixed
Accounts will be credited with interest at rates we determine from time to time,
but never less than an effective yearly interest rate of three percent (3%).
B. INTEREST CREDITING
We may credit interest in excess of the guaranteed rate of three percent (3%).
Any interest rate in effect when an amount is allocated or reallocated to the
Fixed Account is guaranteed until the end of the calendar year in which it is
received. After the end of that calendar year, we may change the amount of
interest credited at our discretion. All amounts in the Fixed Account after the
end of the calendar years referenced above, are credited with excess interest at
the rates then in effect for the then current calendar year. Such rates are
established at the beginning of each calendar year and are guaranteed for the
entire calendar year. In setting interest rates, we consider many factors,
including, but not limited to: investment yield rates, taxes, contract
persistency, and other experience factors.
We will credit interest to the Fixed Account Contract Value beginning on the
date we receive our Purchase Payment or reallocation until it is withdrawn or
otherwise reallocated. Interest will be credited and Account Contract Value
using the daily interest rates.
Section 5 FIXED ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
There may be more than one interest rate in effect at any time for both A and
Fixed Account B. At any time while this contract is in effect, interest rates
declared for Fixed Account A will not be more than the interest rates declared
for Fixed Account B.
C. FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value on any Valuation Date is:
1. The sum of your Purchase Payments allocated to Fixed Account A and Fixed
Account B;
2. Plus any reallocations from the Variable Account;
3. Plus interest credited as specified above;
4. Minus any previous partial withdrawals, amounts applied to purchase
partial annuity payouts and Annual Contract Charges applied to the Fixed
Account;
5. Minus any previous reallocations to the Variable Account;
6. Minus premium tax deducted, if any.
Section 6 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL
The Variable Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. We have
complete ownership and control of the assets in the Variable, Account, but these
assets are held separately from our other assets and are not part of our General
Account.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be chargeable with
liabilities arising out of any other business that we may conduct. The income,
gains and losses, realized or unrealized, from assets allocated to the Variable
Account will be credited to or charged against the Variable Account, without
regard to our other income, gains, or losses.
B. SUB-ACCOUNTS
The Variable Account is divided into Sub-Accounts, some of which are available
under the contract. Each Sub-Account that is available under this contract
invests in shares of a Fund. Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be purchased and redeemed for a
Sub-Account at their net asset value. We will reinvest the net asset value of
the income, dividends, and gains distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses define the net asset value and
describe the Funds.
The dollar amounts of values and benefits of this contract provided by the
Variable Account depend on the investment performance of the selected
Sub-Accounts are invested. We do not the investment performance of the Funds.
You bear the full investment risk for amounts applied to the selected
Sub-Accounts.
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
C. ACCUMULATION UNITS
Purchase Payments received under this contract and allocated to, and any amounts
reallocated to, the Variable Account will be credited in the form of
Accumulation Units. The number of Accumulation Units credited is found by
dividing the amount of the Purchase Payment allocated to, or any amount
reallocated to, the Sub-Account by the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The number of Accumulation Units
canceled upon withdrawal or reallocation from a Sub-Account is determined by
dividing the amount withdrawn or reallocated by the Accumulation Unit Value on
the next Valuation Date.
Each Accumulation Unit Value is set at ten dollars ($10) when the Sub-Account
first purchases investment shares. Subsequent values on any Valuation Date are
equal to the previous Accumulation Unit Value times the Net Investment Factor
for that Sub-Account for the Valuation Date.
D. VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the total of the values of your interest
in each Sub-Account, which for each Sub-Account is equal to:
1. The number of Accumulation Units;
2. Multiplied by the Accumulation Unit Value.
The Variable Account Contract Value will vary from Valuation Date to Valuation
Date.
E. NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges to this
contact and the investment performance during a Valuation Period of the Fund in
which a Sub-Account is invested. If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased. If the Net Investment Factor is
less than one, the Accumulation Unit Value has decreased. The Net Investment
Factor for a Sub-Account is determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
(1) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the current Valuation Period;
b. Plus the per share amount of any dividend or capital gain distri-
butions made on the Fund shares held in the Sub-Account during the
current Valuation Period;
c. Plus a per share credit or minus a per share charge for any taxes
reserved which we determine to have resulted from the operations
of the Sub-Account and to be applicable to this contract.
(2) Is the net result of:
a. The net asset value per share of the Fund shares held in the Sub-
Account, determined at the end of the last prior Valuation Period;
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
b. Plus a per share credit or minus a per share charge for any
reserved for the last prior Valuation Period which we determine to
have resulted from the investment operations of the Sub-Account
and to be applicable to this contact.
(3) Is a daily factor representing the Mortality Risk Charge, the Expense
Risk Charge, and the Administrative Charge, adjusted for the number of
days in the period, which are shown on an annual basis on the Contract
Data Page(s).
F. MORTALITY RISK CHARGE
The Mortality Risk Charge pays us for assuming the mortality risk under this
contract. This charge is included in the calculation of the Net Investment
Factor and is shown on the Contract Data Page(s).
G. EXPENSE RISK CHARGE
The Expense Risk Charge pays us for guaranteeing that we will not increase the
Annual Contract Charge or the Administrative Charge even though our cost of
administering this contract and the accounts may increase. This Expense Risk
Charge is included in the calculation of the Net Investment Factor and is shown
on the Contract Data Page(s).
H. ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT CHARGE
The Administrative Charge and the Annual Contract Charge shown on the Contract
Data Page(s) pay us for the administrative expenses of the contract.
The Administrative Charge in included in the calculation of the Net Investment
Factor.
The Annual Contract Charge will be deducted from the Contract Value on each
Contract Anniversary before the Start Date. We make the deduction from the Fixed
Account and the Variable Account on a basis that reflects each account's
proportionate percentage of the unloaned Contract Value. If you request a full
withdrawal of this contract on other than the Contract Anniversary, the Annual
Contract Charge will be deducted at the time of the withdrawal.
I. RESERVED RIGHTS
We reserve the right, if permitted by applicable law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the Variable Account;
3. Remove, add, or combine Sub-Accounts and make the new SubAccounts
available to contract Owners at our discretion;
4. Substitute shares of one Fund for another;
5. Reallocate assets of the Variable Account, which we determine to be
associated with the class of contracts to which this contract belongs, to
another variable account (if this type of reallocation is made, the term
"Variable Account" as used in this contract will then mean the variable
account to which the assets were reallocated.
6. Deregister the Variable Account under the Investment Company Act of 1940,
if registration is no longer required;
7. Make any changes required by the Investment Company Act of 1940;
Section 6 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
8. Operate the Variable Account as a management investment company under the
Investment Company Act of 1940, or any other form permitted by law; and
9. Restrict or eliminate any voting privileges of contract Owners or other
persons who have voting privileges as to the Variable Account.
Section 7 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL
You may request a full or partial withdrawal by sending us a written request. We
reserve the right to deduct applicable premium taxes and other state or federal
taxes from the Contract Value on the date the withdrawal is taken.
The amount withdrawn from the Sub-Accounts will be determined on the next
Valuation Date following our receipt of your written request. This amount, minus
any charges, will normally be sent within seven (7) days of your written
request.
By law, we have the right to defer payment of withdrawals from the Fixed Account
for up to six (6) months from the date we receive your request.
B. WITHDRAWAL CHARGE
For any amounts withdrawn that are subject to the Withdrawal Charge, we
calculate the Withdrawal Charge this way:
Withdrawal Charge =
Contract Value Withdrawn
X
Withdrawal Charge Percentage(s)
The Withdrawal Charge Percentage(s) is determined from the Table of Withdrawal
Charges shown on the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge, if any, will be deemed a part
of the withdrawal, but will not be received by you.
We will not apply the Withdrawal Charge to any portion of the unloaned Contract
Value used to purchase an annuity payout.
C. FULL WITHDRAWAL
For a full withdrawal of the Contract Value, we calculate the Withdrawal Value
this way:
Withdrawal Value = Contract Value
minus Withdrawal Charge
minus Annual Contract Charge
We will pay the Withdrawal Value to you in a lump sum, less any applicable
taxes.
Withdrawal of the entire Contract Value will result in termination of the
contract in accordance with Section 13, and we have no further obligation.
Section 7 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
D. PARTIAL WITHDRAWAL
You may withdraw a portion of the unloaned Contract Value. For a partial
withdrawal, we calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
minus Withdrawal Charge
Some or all of the amount withdrawn may be eligible for a waiver of the
Withdrawal Charge as described in Section 7E.
On a nondiscriminatory basis, we reserve the right to impose a charge $25 for
each partial withdrawal and to limit the number of partial withdrawals you may
make. Unless we agree, on a nondiscriminatory basis, each partial withdrawal
must be at least $1,000, including those under Section 7E. Following a partial
withdrawal, the remaining Contract Value must be at least $1,000.
Withdrawal Charges, and any applicable taxes will not be included in the amount
payable to you.
Unless we agree otherwise, the withdrawal will be made on a pro-rata basis from
all unloaned portions of Sub-Accounts, Fixed Account A and Fixed Account B
immediately prior to the withdrawal.
E. PARTIAL WAIVER OF WITHDRAWAL CHARGE
During any twelve (12) month period, you may withdraw a portion of the Contract
Value without a Withdrawal Charge. Each twelve (12) month period begins with the
first withdrawal of that period. For each twelve (12) month period, the amount
available without a Withdrawal Charge is ten percent (10%) of the Contract
Value.
If your first withdrawal exceeds this amount, the excess is subject to the
Withdrawal Charge in Section 7B. If your first withdrawal equals this amount,
other withdrawals during the twelve (12) month period are subject to the
Withdrawal Charge in Section 7B.
If your first withdrawal is less than this amount, the remaining portion may be
applied against no more than three (3) additional withdrawals during the twelve
(12) month period. The maximum amount available for withdrawal remains subject
to the limitations in Sections 7C and 7D.
F. FEDERAL TAXES
Some or all of the withdrawal may be income on which you must pay tax. We must
report such income according to the tax laws; this may differ from the way we
charge withdrawals against the contract for purposes of interest crediting. We
may also be required to withhold taxes from amounts otherwise payable. In
addition, there may be tax penalties if you make a withdrawal before age 59 1/2.
Section 8 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT VALUE
Upon receipt of your written request for an annuity payout, we apply all or a
portion of the unloaned Contract Value to provide a Fixed Annuity Payout or a
Variable Annuity Payout or both. If the amount to be annuitized on the date the
annuity payout is scheduled to begin is less than $5,000, instead we may pay the
Withdrawal Value in a lump sum. We reserve the right to deduct applicable
premium taxes and other state or federal taxes from the Contract Value on any
Annuity Payout Date is required by law.
B. ANNUITY PAYOUT OPTIONS
You may select an annuity payout by sending us a written request. Your request
must be received by us at least thirty (30) days before the is scheduled to
begin. If you have not selected a required minimum distribution payment method,
we will provide an annuity payout option to you at age eighty-five (85), unless
you notify us otherwise in writing.
The following options are available for annuity payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE WITH OR WITHOUT A FIXED PERIOD
CERTAIN. We will pay the proceeds in equal installments for as long as the Payee
lives. If a Fixed Period Certain is chosen, we guarantee to make payments for at
least 120 months. If the Payee dies before the end of the Fixed Period Certain,
we will pay the remaining guaranteed payments in accordance with Section 11.
For each $1,000 of Contract Value applied, the Annuity Payout Option 1 Table
shows the guaranteed minimum rate for each installment under a Fixed Annuity
Payout, or the rate used to determine the first installment under a Variable
Annuity Payout using an assumed yield of three percent (3%). The rate depends
upon:
1. Whether the 120-month Fixed Period Certain is chosen; and
2. The Payee's age on his/her birthday nearest the date the first
installment is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR ANNUITY PAYOUT. We will pay the
proceeds in equal installments for as long as either the Payee or the joint
Payee is alive.
For each $1,000 of Contract Value applied, the Annuity Payout Option 2 Table
shows the guaranteed minimum rate for each installment at various ages under a
Fixed Annuity Payout, or the rate used to determine the first installment under
a Variable Annuity Payout using an assumed yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND VARIABLE ANNUITY PAYOUTS. We will pay
the proceeds under any other Fixed and Variable Annuity Payouts that we may
offer. Contact us for details.
C. CHANGE OF ANNUITY PAYOUT DATE
Unless we agree otherwise, the first Annuity Payout Date must be at least sixty
(60) days after the Issue Date and is the first business day of the first
calendar month in which an annuity payout will be made to you.
You may change the date an annuity payout is scheduled to begin, including the
Start Date, by giving us at least thirty (30) days written notice.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
D. FREQUENCY AND AMOUNT OF PAYMENTS
Annuity payouts will be made monthly unless we agree to a different the right to
change the frequency of either Fixed or Variable Annuity Payouts so that each
payment will be at least $100.
E. FIXED ANNUITY PAYOUTS
The dollar amount of all payments are fixed during the entire period of annuity
payments, according to the provisions of the Annuity Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2 rates for Fixed Annuity Payouts
an based upon three percent (3%) yearly interest and unisex rates derived from
1983 Table a.
Other Fixed Annuity Payout rates may be available, but rates will never be less
than those shown in the Annuity Payout Option 1 and 2 Tables. Contact us for
details. In setting Fixed Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield rates; taxes; contract
persistency; and other experience factors.
F. PAYMENT OF PRESENT VALUE
Following the death of the Payee and any joint Payee under a Fixed Annuity
Payout, we may offer the Beneficiary payment of the present value of the unpaid
remaining payments if he/she chooses not to continue annuity payouts. If the
present value is payable, we calculate it this way:
1. We determine the number of unpaid remaining payments when we receive
proof of death.
2. We discount the remaining payments at the rate specified in the Annuity
Payout.
G. VARIABLE ANNUITY PAYOUTS
The amount of the first payment for the Variable Annuity Payout in the Annuity
Payout Tables on pages 16 and 17 for each $1,000 of Contract Value applied,
based upon an assumed yield of three percent (3%).
Payments after the first payment will vary in amount and may either increase or
decrease. Payments are determined on the Valuation Date immediately preceding
the seventh (7th) day before each Annuity Payout Date. If the payment under the
annuity payout selected is based on the Annuity Unit Value of a single
Sub-Account, the payment is found by multiplying the Annuity Unit Value for that
Sub-Account on the Valuation Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of Annuity Units under this
contract in the Sub-Account.
If the monthly payment under the annuity payout selected is based upon an
Annuity Unit of more than one Sub-Account, the above procedure is repeated for
each applicable Sub-Account. The sum of these payments is the total payment
under the Variable Annuity Payout.
We guarantee that the amount of each payment after the first payment will not be
affected by variations in expense or mortality experience.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
H. CONVERSION OF ACCUMULATION UNITS TO ANNUITY UNITS
After deductions for any applicable premium tax or Withdrawal Charge, we convert
the Accumulation Units applicable to this contact into Annuity Units at the Unit
Value on the Valuation Date immediately preceding the seventh (7th) day before
the Annuity Payout Date. The number of Annuity Units of each Sub-Account remains
constant, as long as an annuity payout remains in force and allocation among the
Sub-Accounts has not changed. Reallocations among Sub-Accounts is governed by
Section 4C.
For each Sub-Account, the Annuity Unit Value was set at ten dollars ($10) when
Accumulation Units were first converted into Annuity Units. Subsequent Annuity
Unit Values for any Valuation Period are equal to:
1. The Net Investment Factor for the Valuation Period for which the Annuity
Unit Value is being calculated;
2. Multiplied by the Annuity Unit Value for the preceding Valuation Period;
and
3. Divided by the daily factor at the assumed yield (designed to offset the
assumed yield we agree to use to determine the first payment) adjusted
for the number of days in the Valuation Period.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or Without a Fixed
Period Certain
Monthly Income
for Each $1,000 of Contract Value
FIXED PERIOD IN MONTHS
AGE NONE 120
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.90 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semiannual, or quarterly installments
may be selected.
Amounts for ages not shown in this table may be obtained upon request.
Section 8 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
JOINT PAYEE'S AGE
PAYEE'S AGE
45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
Section 9 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. BENEFICIARY CHANGE
You have the right to name a Beneficiary on the application. You may name a
Beneficiary who cannot be changed without his/her consent. This is an
irrevocable Beneficiary.
You may add a Beneficiary or change the Beneficiary by written request during
your lifetime, if:
1. The contract is in force; and
2. We have the written consent of each irrevocable Beneficiary.
If there is more than one Beneficiary, we pay them in equal shares unless you
have requested otherwise in writing.
Any addition or change of Beneficiary should be sent to our Home Office in
Seattle, Washington. The addition or change will take effect on the date you
signed the request. But, it will not affect any payment or action we make before
we receive and record that request.
B. BENEFICIARIES' SUCCESSION OF INTEREST
If no Beneficiary is named or if no Beneficiary survives you, we will pay your
estate.
If a Beneficiary survives you, but dies before receiving his/her full share, we
pay his/her share in the following order, unless you requested otherwise in
writing:
1. To any surviving Beneficiary, in the same class of Beneficiary;
2. To any contingent Beneficiary;
3. To the Beneficiary's surviving spouse;
4. Equally to the Beneficiary's surviving children; or
5. To the Beneficiary's estate.
C. EVIDENCE OF SURVIVAL
We may require proof that a person is alive on the Required Distribution Date,
the Start Date, or at any time thereafter.
Section 9 GENERAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
D. INCONTESTABILITY
This contract has a two-year Contestable period running from its Issue Date.
After this contract has been in force for two years from its Issue Date, we
cannot claim that the contract is void unless the contract has been terminated
in accordance with Section 13.
E. INTEREST ON DEATH BENEFIT
Any Death Benefit paid under this contract from the Fixed Account will include
interest from the Death Benefit Valuation Date until the Death Benefit is paid
at a rate not less than that required by law. Any Death Benefit paid under this
contract from the Variable Account will not include interest.
F. MISSTATEMENT OF AGE
If your age is misstated, the Required Distribution Date and/or Start Date will
be adjusted to reflect the true age.
If age has been misstated and payments have begun under a Fixed or Variable
Annuity Payout, we will change the amounts payable to what the Payee is entitled
to at the true age. If the misstatement caused us to make an overpayment, we
will deduct that amount from future payments. If the misstatement caused us to
make an underpayment, we will pay that amount immediately.
We have the right to require proof of a person's age before we make payment
under any Fixed or Variable Annuity Payout.
G. NONPARTICIPATING
The contract does not share in our profits or surplus. No dividends are paid
under this contract.
H. NONTRANSFERABLE
This contract may not be transferred, sold, assigned, discounted or pledged
either as collateral for a loan or security for the performance of an obligation
or for any other purpose, to any person or entity other than us.
I. PAYMENTS AND SETTLEMENTS
All payments and settlements we make are payable from our Home Office. We may
require that this contract be returned before payments and settlements are made.
J. PROOF OF DEATH
We accept any of the following as proof of death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court of competent jurisdiction as to
the finding of death; or
3. Any other proof satisfactory to us.
K. PROTECTION OF PROCEEDS
Payments we make under this contract may not be assigned before they are due
and, except as permitted by law, are not subject to claims of creditors or legal
process.
L. TAX WITHHOLDING
We will withhold taxes from any payment made when required by law or regulation.
M. YEARLY STATEMENT
At least once each Contract Year, we will send you a report showing the Contract
Value.
Section 10 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL
At the Beneficiary's election, distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or IRS regulation.
B. DEATH BENEFIT
The amount of the Death Benefit before the Start Date is defined as follows:
1. If you die on or before the first day of the month following your 80th
birthday, as of the Death Benefit Valuation Date the greatest of:
(a) The Contract Value; or
(b) The sum of the Purchase Payments we received under this contact,
less any withdrawals, amounts used to purchase annuity payouts,
and the amount of previously deducted Annual Contract Charges; or
(c) The Contract Value on the Specified Contract Anniversary
(immediately preceding your death) shown on the Contract Data
Page(s), plus any Purchase Payments since that anniversary, less
any withdrawals or amounts used to purchase annuity payouts since
that anniversary, less the amount of previously deducted Annual
Contract Charges since that anniversary.
2. If you die after the first day of the month following your 80th birthday,
the Contract Value on the Death Benefit Valuation Date.
The amount of the Death Benefit, if any, following the Start Date, is governed
by the annuity payout in effect on your death.
C. DEATH BENEFIT VALUATION DATE
The Death Benefit Valuation Date is the Valuation Date next following the date
we receive:
1. Proof of death; and
2. The Beneficiary's written request for a single sum payment or a payout
permitted by IRC Section 408(b)(3) and of which we approve.
D. PAYMENT OF DEATH BENEFIT
If the Beneficiary elects a single sum payment of the Death Benefit, we will
make payment within seven (7) days after the Death Benefit Valuation Date. If an
annuity payout is requested, it may be any annuity payout that could have been
selected under Section 8 and which is permitted by IRC Sections 401(a)(9),
408(b)(3), and the regulations thereunder.
Section 11 RESTRICTIONS ON DISTRIBUTIONS
- --------------------------------------------------------------------------------
A. GENERAL
This section restricts how distributions may be made under the contact both
before and after your death. It refers to IRC Sections 401(a)(9) and 403(b)(3),
and the regulations thereunder, including the incidental death benefit
provisions of Treasury Regulation Section 4.10(a)(9)-2, all of which are
incorporated herein by reference. This section modifies any other provision in
the contract to the contrary.
B. REQUIRED DISTRIBUTIONS WHILE LIVING
You must elect payments under Section 7, Section 8, or a combination of both,
that commence on or before the Required Distribution Date and are payable in
substantially equal amounts, no less frequently than annually. Your entire
interest in the contract must be distributed in the following manner:
1. In one lump sum;
2. Over your life;
3. Over your life and the life of your Beneficiary;
4. Over a period certain not exceeding your life expectancy; or
5. Over the joint and last survivor expectancy of you and your Beneficiary.
Payments must be nonincreasing or may increase only as provided in Q & A F-3 of
Treasury Regulation Section 1.401(a)(9)-1. If your entire interest is to be
distributed in other than one lump sum, then the amount to be distributed each
year (commencing with the Required Distribution Date and each year thereafter)
shall be determined in accordance with IRC Section 408(b)(3) and the regulations
thereunder.
C. REQUIRED DISTRIBUTION UPON DEATH
If you die after distribution of your entire interest has commenced, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used immediately preceding
your death.
If you die before distribution has commenced, or distribution has commenced for
only a portion of your interest, the Death Benefit must be distributed no law
than December 31 of the calendar year in which the fifth anniversary of your
death occurs. However, proceeds which are payable to a Beneficiary who is a
natural person may be distributed in substantially equal installments over his
or her lifetime or a period certain not exceeding the life expectancy of the
Beneficiary provided such distribution commences not later than December 31 of
the calendar year following the calendar year in which your death occurred.
If the sole Beneficiary is your surviving spouse, he or she may elect no later
than December 31 of the calendar year in which the fifth anniversary of your
death occurs to receive equal or substantially equal payments over his or her
life expectancy commencing at any date prior to the date on which you would have
attained age 70 1/2. Alternatively, your surviving spouse may continue the
contract as Owner.
If you die either before or after distributions have commenced, and your
surviving spouse chooses to continue the contract, all contract provisions will
apply to him or her as if he or she were the original Owner.
Section 11 RESTRICTIONS ON DISTRIBUTIONS (CONTINUED)
- --------------------------------------------------------------------------------
Payments shall be calculated in accordance with IRC Section 408(b)(3) and the
regulations thereunder.
For the purpose of this requirement, any amount paid to your child should be
treated as if it had been paid to your surviving spouse if the remainder of the
interest becomes payable to the surviving spouse when the child reaches the age
of majority.
If you die before the Required Distribution Date, no additional Purchase
Payments will be accepted under this Contract after your death unless the sole
Beneficiary is your surviving spouse.
D. MINIMUM INCIDENTAL DEATH BENEFIT REQUIREMENT
If your spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty percent (50%) of the present value of the amount
available for distribution is paid within your life expectancy and that such
method of distribution complies with the requirements of IRC Sections 401(a)(9),
408(b)(3) and the regulations thereunder.
E. LIFE EXPECTANCY
For purposes of this Section, life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treasury Regulation Section 1.72-9 in accordance with IRC Section
408(b)(3) and the regulations thereunder. In the case of distributions under
Section 11B, your life expectancy or, if applicable, the joint and the last
survivor expectancy of you and your Beneficiary, will be initially determined on
the basis of attained ages in the year you reach age 70 1/2. In the case of
distributions under Section 11C, life expectancy shall be initially determined
on the basis of the Beneficiary's attained age in the age in the year
distributions are required to commence. Unless you (or your spouse) elects
otherwise prior to the date distributions are required to commence, your fife
expectancy and, if applicable, your spouse's life expectancy shall be
recalculated annually based on attained ages in the year for which the required
distribution is being determined. The life expectancy of a nonspouse beneficiary
shall not be recalculated.
In the case of a distribution other than in the form of life income or joint
life income, the annual distribution required to be made by the Required
Distribution Date is for the calendar year in which you reach age 70 1/2. Annual
payments for subsequent years, including the year in which the Required
Distribution Date occurs, must be made by December 31 of each year. The amount
distributed for each year shall equal or exceed the annuity value as of the
close of business on December 31 of the preceding year, divided by the
applicable life expectancy or joint and last survivor expectancy.
F. MINIMUM DISTRIBUTION REQUIREMENTS OF MULTIPLE IRAs
You or your Beneficiary may satisfy the minimum distribution requirements under
IRC Section 408(b)(3) by receiving a distribution from one IRA that is equal to
the amount required to satisfy the minimum distribution requirements for two or
more IRAs. For this purpose, the Owner of two or more IRAs may use the
"alternative method" described in Notice 88-38, 1988-1 C.B.524, to satisfy the
minimum distribution requirements described above.
Section 12 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT
We reserve the right to amend this contract in order to include any future
changes relating to this contract's remaining qualified for treatment as an
annuity contract under the following:
1. The Code; and
2. IRS rulings, regulations, and requirements.
B. DISCLAIMER
We shall be under no obligation for any of the following:
1. To determine whether a Purchase Payment, loan, distribution or transfer
under the contact complies with the provisions, terms and conditions of
each plan or with applicable law;
2. To administer such plan, including, without limitation, any provisions
required by the Retirement Equity Act of 1984; or
3. For any tax penalties owed by any party resulting from failure to comply
with the Code and IRS rulings, regulations, and requirements applicable
to this contract.
Section 13 TERMINATION
- --------------------------------------------------------------------------------
A. TERMINATION
This contract will end on the earliest of the following:
1. When the entire Withdrawal Value is withdrawn on or before the Start
Date; or
2. When the Contract Value is paid in a lump sum as the Death Benefit before
the Start Date.
In addition, if:
1. You have not made any Purchase Payments for a period of two full years;
and
2. The guaranteed monthly benefit under the Life Annuity with payments for
ten (10) years or twenty (20) years would be less than $20 per month when
you reach age seventy-one (71), or at the beginning of Contract Year
eleven (11), whichever is later;
then, we may terminate the contract by payment of the current Withdrawal Value.
This payment may be made to you or, if you request, to another IRA.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
P.O. Box 12530, Seattle, Washington 98111-4530
"We" are the Northern Life Insurance Company.
This Endorsement is a part of the contract to which it is attached.
"IRS Rules" are defined as the minimum distribution rules of Section 401(a)(9)
and applicable regulations. IRC Section 401(a)(9) describes minimum distribution
requirements for Contract Owners.
The following is added to the contract:
On the Required Distribution Date, we will waive the Withdrawal Charge on cash
withdrawals made to comply with IRS Rules, subject to the following:
1. The maximum amount available for withdrawal within a twelve (12) month
period without a Withdrawal Charge under all provisions of the contract,
including this Endorsement, will not be less than the amount needed for
this contract to comply with IRS Rules.
2. The waiver applies only to cash withdrawals needed for this contract to
meet IRS Rules. If individuals with other contracts withdraw an amount
needed for the combined contracts to meet IRS Rules, we will waive the
Withdrawal Charge only on the amount needed for this contract to meet IRS
Rules.
3. If IRS Rules change from those in effect on the date this Endorsement is
made a part of this contract, we have the right to change or withdraw
this Endorsement.
We will calculate the cash withdrawal needed for this contract to meet
IRS Rules. We guarantee the calculation will meet IRS Rules subject to
the accuracy of the data given to us.
All other terms and conditions of this contract remain unchanged.
The Effective Date of this Endorsement is the Issue Date of this contract.
/s/ Emily Davis
Secretary
IRS MINIMUM DISTRIBUTION ENDORSEMENT
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
RETIREMENT
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY
PAYOUTS
- --------------------------------------------------------------------------------
NOTICE
To make Purchase Payments, please write or call us at:
Northern Life Insurance Company
P.O. Box 34148 FAB #11
Seattle, Washington 98124-1148
(800) 426-7050
To make a claim or exercise your rights under this contract, please write or
call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-453077
Please include your contract number in all correspondence.
[LOGO]
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
EX-99.4J
10
457 VARIABLE ANNUITY CONTRACT
EXHIBIT 99.4j
NORTHERN LIFE
A RELIASTAR COMPANY
P.O. Box 12530
Seattle, WA 98111-4530
/s/ Michael J. Dubes /s/ Susan M. Bergen
A Stock Company Michael J. Dubes - President Susan M. Bergen - Secretary
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED ANNUITY CONTRACT
NONPARTICIPATING
VARIABLE AND/OR FIXED ACCUMULATION
VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
- --------------------------------------------------------------------------------
RIGHT TO EXAMINE AND CANCEL CONTRACT
You may cancel this contract by giving written notice of cancellation to
Northern Life Insurance Company, P.O. Box 12530, Seattle, WA 98111-4530, or to
the agent from whom you bought the contract and by returning the contract before
midnight of the tenth (10th) day after the date you receive the contract. As
soon as you return it, we will consider it void from the start and refund the
Contract Value as of the next Valuation Date after receiving your request.
However, if applicable law so requires, the full amount of any Purchase Payments
we receive will be refunded.
- --------------------------------------------------------------------------------
NOTICE
ANNUITY PAYOUTS AND CONTRACT VALUES PROVIDED BY THIS CONTRACT ARE VARIABLE AND
MAY INCREASE OR DECREASE IN VALUE BASED ON THE INVESTMENT EXPERIENCE OF THE
VARIABLE ACCOUNT.
This contract is a legal contract between you and Northern Life Insurance
Company. READ YOUR CONTRACT CAREFULLY.
This contract funds a deferred compensation plan established underss.457 of the
Code. For plans maintained by tax exempt organizations, all rights and benefits
hereunder remain the property of the Owner shown on the Contract Data Page.
Plans maintained by state or local governments, however, must be maintained for
the exclusive benefit of the plan participants in accordance with ss.457(g) of
the Code. We will make Fixed and/or Variable Annuity Payouts subject to the
terms of this contract. You may change the Start Date, the annuity payout
option, or both, as shown in the contract.
If the Annuitant dies while this contract is in effect, we will pay the Death
Benefit when we receive written notice of death.
Your rights under this contract cannot be forfeited.
We issue this contract in consideration of the attached application and the
payment of Purchase Payments according to the terms of this contract.
The provisions on the following pages are a part of this contract, which is
issued at Seattle, Washington.
The Plan .......................................... 3
Definitions ....................................... 3
The Contract ...................................... 5
Purchase Payments ................................. 5
Reallocations of Contract Value ................... 6
Fixed Account ..................................... 7
Variable Account .................................. 8
Withdrawals .......................................11
Annuity Benefits ..................................12
General Provisions ................................16
Payments at Death .................................17
Restrictions on Distributions .....................18
Amendment and Disclaimer ..........................19
Termination .......................................19
ADDITIONAL BENEFITS, IF ANY, ARE LISTED ON THE CONTRACT DATA PAGE(S).
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
ANNUITY CONTRACT
PURCHASE PAYMENTS:
Minimum Purchase Payment $50
Purchase Payments are allocated to the Fixed Account and Separate
Account One (the "Variable Account") as shown below unless changed as
provided in this contract:
VARIABLE ACCOUNT
MUTUAL FUNDS INITIAL ALLOCATION
NORTHSTAR/NWNL TRUST
Northstar Income and Growth Fund 0%
Northstar Multi-Sector Bond Fund 0%
Northstar Growth Fund 0%
FIDELITY: VARIABLE INSURANCE PRODUCT FUND
Money Market Portfolio 0%
Equity Income Portfolio 0%
Growth Portfolio 0%
Overseas Portfolio 0%
FIDELITY: VARIABLE INSURANCE PRODUCT FUND II
Asset Manager Portfolio 0%
Asset Manager: Growth Portfolio 0%
Index 500 Portfolio 0%
Contrafund Portfolio 0%
JANUS
Janus Aggressive Growth Portfolio 0%
Janus Growth Portfolio 0%
Janus International Growth Portfolio 0%
Janus Worldwide Growth Portfolio 0%
OPPENHEIMER CAPITAL
OCC Manged Portfolio 0%
OCC Small Cap Portfolio 0%
OCC Equity Portfolio 0%
OCC Global Equity Portfolio 0%
FIXED ACCOUNT
Fixed Account A 100%
Fixed Account B 0%
------------------------------------------------------------------
Total Allocation 100%
OWNER: John Doe Employer
ANNUITANT: John Doe Employee
ISSUE DATE: December 1, 1995
CONTRACT NO.: VA00123456
CONTRACT DATA PAGE
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
RETIREMENT ANNUITY CONTRACT
SPECIFIED CONTRACT ANNIVERSARY: Consecutive six year anniversary dates measured
from the Issue Date.
TABLE OF WITHDRAWAL CHARGES
CONTRACT YEAR OF WITHDRAWAL CHARGE
WITHDRAWAL PERCENTAGE
1 8%
2 8%
3 8%
4 7%
5 6%
6 5%
7 4%
8 3%
9 2%
10 1%
11+ 0
OTHER CHARGES:
Mortality Risk Charge: .85% of the daily net asset value
Expense Risk Charge: .40% of the daily net asset value
Administrative Charge: .15% of the daily net asset value
Annual Contract Charge: $30
Section 1 THE PLAN
- --------------------------------------------------------------------------------
A. PLAN INFORMATION This contract funds a Deferred Compensation Plan
("Plan") established by the Owner under Code
ss.457.
The Annuitant performs or has performed services
for the Owner as an employee or independent
contractor.
Any terms or provisions not defined or explained
in this contract which govern the interpretation
or administration of the Owner's Plan shall be
as provided in the Plan. We are not a party to
the Plan and are not liable to provide benefits
under the Plan.
Section 2 DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT A unit of measure used to determine the Variable
Account Contract Value.
ANNUITANT The person whose life determines the annuity
payouts payable under the contract at the Start
Date. The Annuitant is the person named in the
Application who performs or has performed
services for the Owner and who participates
under this contract pursuant to the Owner's
Plan.
ANNUITY PAYOUT DATE Unless we agree otherwise, the first business
day of any calendar month in which a Fixed or
Variable Annuity Payout is made under the
contract.
ANNUITY UNIT A unit of measure used to determine the amount
of a Variable Annuity Payout after the first
annuity payout.
BENEFICIARY The Owner will always be the sole Beneficiary
unless the law requires otherwise.
CODE The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY The same day and month as the Issue Date each
year that this contract remains in force.
CONTRACT VALUE The sum of the Fixed Account Contract Value as
defined in Section 6C plus the Variable Account
Contract Value as defined in Section 7D on a
Valuation Date.
CONTRACT YEAR Each twelve (12) month period starting with the
Issue Date and each Contract Anniversary after
that.
FIXED ACCOUNT One or more accounts under this contract that
guarantee both principal and interest. Fixed
Account Values are held in our General Account.
We have complete ownership and control of the
assets in the General Account.
FIXED ANNUITY PAYOUT A series of periodic payments to the Payee which
does not vary in amount, is guaranteed as to
principal and interest, and is paid from the
General Account.
Section 2 DEFINITIONS (CONTINUED)
- --------------------------------------------------------------------------------
FUND Any open-end management investment company (or
portfolio thereof) or any unit investment trust
(or series thereof) listed on the Contract Data
Page(s) on the Issue Date or thereafter made
available.
GENERAL ACCOUNT Our assets other than those allocated to the
Variable Account or any other separate account.
OWNER (YOU, YOUR) The person or entity named on the Application to
hold this contract and to exercise all rights
and privileges under it, as limited by
applicable law.
PAYEE The person to receive payments under a Fixed or
Variable Annuity Payout.
PURCHASE PAYMENTS Amounts paid to us to fund the benefits under
this contract. These include periodic, single
lump sum and transfer payments.
REQUIRED DISTRIBUTION DATE April 1 of the year following the year in which
the Annuitant reaches age 70 1/2, or retires,
whichever is later.
START DATE Pursuant to the Plan, the date on which the
entire Contract Value is used to purchase a
Fixed and/or Variable Annuity Payout. The Start
Date must comply with the Code and applicable
regulations.
SUB-ACCOUNT A subdivision of the Variable Account. Each
Sub-Account's assets are invested exclusively in
one of the Funds. The Sub-Accounts available on
the Issue Date and the percentage of Purchase
Payments you have allocated to each Sub-Account
on the Issue Date are shown on the Contract Data
Page(s). Other Sub-Accounts may be available
after the Issue Date.
VALUATION DATE The time at which regular trading on the New
York Stock Exchange closes on each day on which
the New York Stock Exchange is open for business
except federal and other holidays and days on
which we are not otherwise open for business.
VALUATION PERIOD The period of time between a Valuation Date and
the next Valuation Date.
VARIABLE ACCOUNT A separate investment account of ours, which has
been established under the State of Washington
insurance laws and is divided into Sub-Accounts.
VARIABLE ANNUITY PAYOUT A series of periodic payments to the Payee which
will vary in amount based on the investment
performance of the Variable Account Sub-Accounts
under this contract.
WE, US, OUR Northern Life Insurance Company at its Home
Office in Seattle, Washington.
WRITTEN, IN WRITING A written request or notice signed, dated, and
received at an address designated by us in a
form we accept. You may ask us for the forms.
Section 3 THE CONTRACT
- --------------------------------------------------------------------------------
A. THE CONTRACT The entire contract is this contract, the
Contract Data Page(s), the application(s), and
any attached endorsements. Unless fraudulent,
all statements made by or on behalf of anyone
covered by this contract are representations and
not warranties. Only statements found in the
attached application(s) may be used to cancel
this contract or as our defense if we refuse to
pay a claim.
You shall be the sole representative to us under
this contract. We will deal only with you except
as otherwise specified in the contract or agreed
to by us, and we shall be entitled to rely upon
any action taken or omitted by you pursuant to
the terms of the contract.
We may rely on your written directives and shall
not be liable for any failure to question or
challenge such directives regarding Annuity
Payouts or the payment of cash distributions.
B. MODIFICATION OF CONTRACT Only our President or Secretary may change this
contract on our behalf. No agent or any other
person may change this contract. Any change must
be in writing.
Section 4 PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
A. GENERAL Purchase Payments must be in cash or a cash
equivalent and are payable at our Home Office.
Subject to Section 4E, you may make Purchase
Payments at any time before the Start Date while
the contract is in force. Within Code
limitations, you may vary the amount and
frequency of Purchase Payments, but they must be
at least $50 unless we waive this minimum on a
nondiscriminatory basis. We may choose not to
accept an additional Purchase Payment on a
nondiscriminatory basis if the additional
Purchase Payment plus the Contract Value at the
next Valuation Date exceeds $1,000,000.
B. TRANSFERS After the first five (5) Contract Years, we have
the right to refuse Purchase Payments that are
transfer payments from another Codess.457 plan.
We reserve the right to waive these rules on a
nondiscriminatory basis.
C. FAILURE TO MAKE If you fail to make a Purchase Payment, the
PURCHASE PAYMENTS contract will stay in force unless terminated in
accordance with Section 14. Until termination,
the Fixed Account Contract Value will continue
to earn interest in accordance with Section 6B.
D. PREMIUM TAXES Some states impose a premium tax that may affect
the Contract Value. If premium taxes are
applicable in your state, we reserve the right
to deduct those taxes from Purchase Payments
upon receipt or from the Contract Value at a
later date.
E. PURCHASE PAYMENT LIMITS Purchase Payments may not exceed the limits
imposed under Code ss.457(b) and can be made
only to the extent that other requirements
imposed under Code ss.457(b) are satisfied.
Section 4 PURCHASE PAYMENTS (CONTINUED)
- --------------------------------------------------------------------------------
F. ALLOCATION OF PURCHASE You specified the initial allocation of Purchase
PAYMENTS Payments on your application for this contract.
This allocation is shown on the Contract Data
Page(s). The allocation of future Purchase
Payments will remain the same unless you change
it. You may change the percentage allocation
between or among available Sub-Accounts and the
Fixed Account at any time by written notice.
Changes in the allocation will not be effective
until the date we receive your notice and will
only affect Purchase Payments we receive after
that date. The allocation may be one hundred
percent (100%) to any account or may be divided
between the accounts in whole percentage points
totaling one hundred percent (100%).
Reallocations of the Contract Value are governed
by Section 5.
Section 5 REALLOCATIONS OF CONTRACT VALUE
- --------------------------------------------------------------------------------
A. GENERAL You may reallocate Contract Value between or
among Sub-Accounts, from one or more
Sub-Accounts to the Fixed Account, and from the
Fixed Account to one or more Sub-Accounts,
subject to certain limitations. Subject to the
restrictions in Section 5B, we make a
reallocation on the next Valuation Date after we
receive your written instructions requesting the
reallocation or on a Valuation Date you request
which occurs thereafter. Reallocations are
subject to the availability of Sub-Accounts. On
a non-discriminatory basis, we reserve the right
to impose a charge of up to $25 for each
reallocation of Contract Value, to limit the
number of reallocations you can make, to
establish minimum and maximum amounts for
reallocations, and to reallocate the entire
Contract Value remaining in a Sub-Account or
either Fixed Account in the event that a
reallocation request would bring such remaining
Contract Value below a specified amount.
Allocation of Purchase Payments is governed by
Section 4.
B. REALLOCATIONS FROM Before the Start Date, Fixed Account A Contract
FIXED ACCOUNT Value may be reallocated at any time to Fixed
Account B or to the Variable Account.
Before the Start Date, you may request in
writing the reallocation of part of Fixed
Account B Contract Value to the Variable Account
or to Fixed Account A under the following
conditions:
1. You may reallocate Contract Value only
during the reallocation period which
begins thirty (30) days before and ends
thirty (30) days after each Contract
Anniversary. Only one reallocation is
allowed during each reallocation period;
2. We must receive the request to
reallocate no more than thirty (30) days
before the start of the reallocation
period and not later than ten (10) days
before the end of the reallocation
period;
3. You may not reallocate more than the
greater of $1,000 or twenty-five percent
(25%) of Fixed Account B Contract Value
unless Fixed Account B Contract Value
would be less than $1,000 after the
reallocation, in which case the full
Fixed Account B Contract Value must be
reallocated; and
Section 5 REALLOCATIONS OF CONTRACT VALUE (CONTINUED)
- --------------------------------------------------------------------------------
4. You must reallocate at least $250 or the
total Fixed Account B Contract Value, if
less.
We reserve the right to permit reallocations in
excess of these limits on a nondiscriminatory
basis.
C. ALL OTHER REALLOCATIONS Before the Start Date, you may request in
writing the reallocation of all or part of a
Sub-Account's Accumulation Units to other
Sub-Accounts or to Fixed Account A or Fixed
Account B. To accomplish the reallocation,
appropriate Accumulation Units will be redeemed
and their value will be reinvested in other
Sub-Accounts, or reallocated to Fixed Account A
or Fixed Account B as directed in your request.
Subject to the restrictions in the following
paragraph, after a Variable Annuity Payout has
begun, you may request in writing the
reallocation of the Annuity Units in the same
manner and subject to the same requirements as
for a reallocation of the Accumulation Units.
However, we reserve the right to restrict these
reallocations.
No reallocations to or from Fixed Account A or
Fixed Account B may be made after the Start
Date. In the event that part of the Contract
Value is applied to purchase annuity payouts,
the remaining Contract Value may be reallocated
as described above for periods prior to the
Start Date.
Section 6 FIXED ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL The Fixed Account consists of Fixed Account A
and Fixed Account B. Purchase Payments allocated
and Contract Value reallocated to either of
these Fixed Accounts will be credited with
interest at rates we determine from time to
time, but never less than an effective yearly
interest rate of three percent (3%).
B. INTEREST CREDITING We may credit interest in excess of the
guaranteed rate of three percent (3%). Any
interest rate in effect when an amount is
allocated or reallocated to the Fixed Account is
guaranteed until the end of the calendar year in
which it is received. After the end of that
calendar year, we may change the amount of
interest credited at our discretion. All amounts
in the Fixed Account after the end of the
calendar years referenced above, are credited
with excess interest at the rates then in effect
for the then current calendar year. Such rates
are established at the beginning of each
calendar year and are guaranteed for the entire
calendar year. In setting interest rates, we
consider many factors, including, but not
limited to: investment yield rates, taxes,
contract persistency, and other experience
factors.
We will credit interest to the Fixed Account
Contract Value beginning on the date we receive
your Purchase Payment or reallocation until it
is withdrawn or otherwise reallocated. Interest
will be credited and compounded daily to the
Fixed Account Contract Value using the daily
equivalents of effective yearly interest rates.
Section 6 FIXED ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
There may be more than one interest rate in
effect at any time for both Fixed Account A and
Fixed Account B. At any time while this contract
is in effect, interest rates declared for Fixed
Account A will not be more than the interest
rates declared for Fixed Account B.
C. FIXED ACCOUNT CONTRACT The Fixed Account Contract Value on any
VALUE Valuation Date is:
1. The sum of your Purchase Payments
allocated to Fixed Account A and Fixed
Account B;
2. PLUS any reallocations from the Variable
Account;
3. PLUS interest credited as specified
above;
4. MINUS any previous partial withdrawals,
amounts applied to purchase partial
annuity payouts and Annual Contract
Charges applied to the Fixed Account;
5. MINUS any previous reallocations to the
Variable Account;
6. MINUS premium tax deducted, if any.
Section 7 VARIABLE ACCOUNT
- --------------------------------------------------------------------------------
A. GENERAL The Variable Account is registered with the
Securities and Exchange Commission as a unit
investment trust under the Investment Company
Act of 1940. We have complete ownership and
control of the assets in the Variable Account,
but these assets are held separately from our
other assets and are not part of our General
Account.
The portion of the assets of the Variable
Account equal to the reserves and other contract
liabilities of the Variable Account will not be
chargeable with liabilities arising out of any
other business that we may conduct. The income,
gains and losses, realized or unrealized, from
assets allocated to the Variable Account will be
credited to or charged against the Variable
Account, without regard to our other income,
gains, or losses.
B.SUB-ACCOUNTS The Variable Account is divided into
Sub-Accounts, some of which are available under
the contract. Each Sub-Account that is available
under this contract invests in shares of a Fund.
Funds initially available are set forth on the
Contract Data Page(s). Shares of a Fund will be
purchased and redeemed for a Sub-Account at
their net asset value. We will reinvest the net
asset value of the income, dividends, and gains
distributed from shares of a Fund in additional
shares of that Fund. The Fund prospectuses
define the net asset value and describe the
Funds.
The dollar amounts of values and benefits of
this contract provided by the Variable Account
depend on the investment performance of the Fund
in which your selected Sub-Accounts are
invested. We do not guarantee the investment
performance of the Funds. You bear the full
investment risk for amounts applied to the
selected Sub-Accounts.
Section 7 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
C. ACCUMULATION UNITS Purchase Payments received under this contract
and allocated to, and any amounts reallocated
to, the Variable Account will be credited in the
form of Accumulation Units. The number of
Accumulation Units credited is found by dividing
the amount of the Purchase Payment allocated to,
or any amount reallocated to, the Sub-Account by
the value of an Accumulation Unit for that
Sub-Account on the next Valuation Date. The
number of Accumulation Units canceled upon
withdrawal or reallocation from a Sub-Account is
determined by dividing the amount withdrawn or
reallocated by the Accumulation Unit Value on
the next Valuation Date.
Each Accumulation Unit Value is set at ten
dollars ($10) when the Sub-Account first
purchases investment shares. Subsequent values
on any Valuation Date are equal to the previous
Accumulation Unit Value times the Net Investment
Factor for that Sub-Account for the Valuation
Date.
D. VARIABLE ACCOUNT The Variable Account Contract Value is the total
CONTRACT VALUE of the values of your interest in each
Sub-Account, which for each Sub-Account is equal
to:
1. The number of Accumulation Units;
2. MULTIPLIED BY the Accumulation Unit
Value.
The Variable Account Contract Value will vary
from Valuation Date to Valuation Date.
E. NET INVESTMENT FACTOR The Net Investment Factor is an index number
which reflects charges to this contract and the
investment performance during a Valuation Period
of the Fund in which a Sub-Account is invested.
If the Net Investment Factor is greater than
one, the Accumulation Unit Value has increased.
If the Net Investment Factor is less than one,
the Accumulation Unit Value has decreased. The
Net Investment Factor for a Sub-Account is
determined by dividing (1) by (2) and then
subtracting (3) from the result, where:
1. Is the net result of:
a. The net asset value per share of the
Fund shares held in the Sub-Account,
determined at the end of the current
Valuation Period;
b. PLUS the per share amount of any
dividend or capital gain
distributions made on the Fund shares
held in the Sub-Account during the
current Valuation Period;
c. PLUS a per share credit or MINUS a
per share charge for any taxes
reserved which we determine to have
resulted from the operations of the
Sub-Account and to be applicable to
this contract.
2. Is the net result of:
a. The net asset value per share of the
Fund shares held in the Sub-Account,
determined at the end of the last
prior Valuation Period;
b. PLUS a per share credit or MINUS a
per share charge for any taxes
reserved for the last prior
Valuation Period which we determine
to have resulted from the investment
operations of the Sub-Account and to
be applicable to this contract.
Section 7 VARIABLE ACCOUNT (CONTINUED)
- --------------------------------------------------------------------------------
3. Is a daily factor representing the
Mortality Risk Charge, the Expense Risk
Charge, and the Administrative Charge,
adjusted for the number of days in the
period, which are shown on an annual
basis on the Contract Data Page(s).
F. MORTALITY RISK CHARGE The Mortality Risk Charge pays us for assuming
the mortality risk under this contract. This
charge is included in the calculation of the Net
Investment Factor and is shown on the Contract
Data Page(s).
G. EXPENSE RISK CHARGE The Expense Risk Charge pays us for guaranteeing
that we will not increase the Annual Contract
Charge or the Administrative Charge even though
our cost of administering this contract and the
accounts may increase. This Expense Risk Charge
is included in the calculation of the Net
Investment Factor and is shown on the Contract
Data Page(s).
H. ADMINISTRATIVE CHARGE AND The Administrative Charge and the Annual
ANNUAL CONTRACT CHARGE Contract Charge shown on the Contract Data
Page(s) pay us for the administrative expenses
of the contract.
The Administrative Charge is included in the
calculation of the Net Investment Factor.
The Annual Contract Charge will be deducted from
the Contract Value on each Contract Anniversary
before the Start Date. We make the deduction
from the Fixed Account and the Variable Account
on a basis that reflects each account's
proportionate percentage of the Contract Value.
If you request a full withdrawal of this
contract on other than the Contract Anniversary,
the Annual Contract Charge will be deducted at
the time of the withdrawal.
I. RESERVED RIGHTS We reserve the right, if permitted by applicable
law, to:
1. Create new variable accounts;
2. Combine variable accounts, including the
Variable Account;
3. Remove, add, or combine Sub-Accounts and
make the new Sub-Accounts available to
Contract Owners at our discretion;
4. Substitute shares of one Fund for
another;
5. Reallocate assets of the Variable
Account, which we determine to be
associated with the class of contracts
to which this contract belongs, to
another variable account (if this type
of reallocation is made, the term
"Variable Account" as used in this
contract will then mean the variable
account to which the assets were
reallocated);
6. Deregister the Variable Account under
the Investment Company Act of 1940, if
registration is no longer required;
7. Make any changes required by the
Investment Company Act of 1940;
8. Operate the Variable Account as a
management investment company under the
Investment Company Act of 1940, or any
other form permitted by law; and
9. Restrict or eliminate any voting
privileges of Contract Owners or other
persons who have voting privileges as to
the Variable Account.
Section 8 WITHDRAWALS
- --------------------------------------------------------------------------------
A. GENERAL You may request a full or partial withdrawal by
sending us a written request. We reserve the
right to deduct applicable premium taxes and
other state or federal taxes from the Contract
Value on the date the withdrawal is taken.
The amount withdrawn from the Sub-Accounts will
be determined on the next Valuation Date
following our receipt of your written request.
This amount, minus any charges, will normally be
sent within seven (7) days of our receipt of
your written request.
By law, we have the right to defer payment of
withdrawals from the Fixed Account for up to six
(6) months from the date we receive your
request.
B. WITHDRAWAL CHARGE For any amounts withdrawn that are subject to
the Withdrawal Charge, we calculate the
Withdrawal Charge this way:
WITHDRAWAL CHARGE =
Contract Value Withdrawn
X
Withdrawal Charge Percentage
The Withdrawal Charge Percentage is determined
from the Table of Withdrawal Charges shown on
the Contract Data Page(s).
In computing withdrawals, the Withdrawal Charge,
if any, will be deemed a part of the withdrawal,
but will not be received by you.
We will not apply the Withdrawal Charge to any
portion of the Contract Value used to purchase
an annuity payout.
C. FULL WITHDRAWAL For a full withdrawal of the Contract Value, we
calculate the Withdrawal Value this way:
Withdrawal Value = Contract Value
MINUS Withdrawal Charge
MINUS Annual Contract Charge
We will pay the Withdrawal Value to you in a
lump sum less any applicable taxes.
Withdrawal of the entire Contract Value will
result in termination of the contract in
accordance with Section 14, and we have no
further obligation.
D. PARTIAL WITHDRAWAL You may withdraw a portion of the Contract
Value. For a partial withdrawal, we calculate
the Withdrawal Value this way:
Withdrawal Value = Contract Value Withdrawn
MINUS Withdrawal Charge
Some or all of the amount withdrawn may be
eligible for a waiver of the Withdrawal Charge
as described in Section 8E.
Section 8 WITHDRAWALS (CONTINUED)
- --------------------------------------------------------------------------------
On a nondiscriminatory basis, we reserve the
right to impose a charge not to exceed $25 for
each partial withdrawal and to limit the number
of partial withdrawals you may make. Unless we
agree, on a non-discriminatory basis, each
partial withdrawal must be at least $1,000,
including those under Section 8E. Following a
partial withdrawal, the remaining Contract Value
must be at least $1,000.
Withdrawal Charges and any applicable taxes will
not be included in the amount payable to you.
Unless we agree otherwise, the withdrawal will
be made on a pro rata basis from the
Sub-Accounts, Fixed Account A and Fixed Account
B immediately prior to the withdrawal.
E. PARTIAL WAIVER OF During any twelve (12) month period, you may
WITHDRAWAL CHARGE withdraw a portion of the Contract Value without
a Withdrawal Charge. Each twelve (12) month
period begins with the first withdrawal of that
period. For each twelve (12) month period, the
amount available without a Withdrawal Charge is
ten percent (10%) of the Contract Value.
If your first withdrawal exceeds this amount,
the excess is subject to the Withdrawal Charge
in Section 8B. If your first withdrawal equals
this amount, other withdrawals during the twelve
(12) month period are subject to the Withdrawal
Charge in Section 8B.
If your first withdrawal is less than this
amount, the remaining portion may be applied
against no more than three (3) additional
withdrawals during the twelve (12) month period.
The maximum amount available for withdrawal
remains subject to the limitations in Sections
8C and 8D.
F. TRANSFER TO ANOTHER PLAN You may ask us in writing to pay the Withdrawal
Value to another entity that sponsors a Code
ss.457 Plan.
G. FEDERAL TAXES Some or all of the withdrawal may be income on
which the Payee must pay tax. We must report
such income according to the tax laws. We may
also be required to withhold taxes from amounts
otherwise payable.
Section 9 ANNUITY BENEFITS
- --------------------------------------------------------------------------------
A. APPLICATION OF CONTRACT Upon receipt of your written request for an
VALUE annuity payout, we apply all or a portion of the
Contract Value to provide a Fixed Annuity Payout
or a Variable Annuity Payout, or both. If the
amount to be annuitized on the date the annuity
payout is scheduled to begin is less than
$5,000, instead we may pay the Withdrawal Value
in a lump sum. We reserve the right to deduct
applicable premium taxes and other state or
federal taxes from the Contract Value on any
Annuity Payout Date as required by law.
B. ANNUITY PAYOUT OPTIONS You may select an annuity payout by sending us a
written request. Your request must be received
by us at least thirty (30) days before the
annuity payout is scheduled to begin. If you
have not selected a required minimum
distribution payment method, we will provide an
annuity payout option to you at age eighty-five
(85), unless you notify us otherwise in writing.
Section 9 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
The following options are available for annuity
payouts:
ANNUITY PAYOUT OPTION 1. INSTALLMENTS FOR LIFE
WITH OR WITHOUT A FIXED PERIOD CERTAIN. We will
pay the proceeds in equal installments for as
long as the Payee lives. If a Fixed Period
Certain is chosen, we guarantee to make payments
for at least 120 months. If the Payee dies
before the end of the Fixed Period Certain, we
will pay the remaining guaranteed payments in
accordance with Section 12.
For each $1,000 of Contract Value applied, the
Annuity Payout Option 1 Table shows the
guaranteed minimum rate for each installment
under a Fixed Annuity Payout, or the rate used
to determine the first installment under a
Variable Annuity Payout using an assumed yield
of three percent (3%). The rate depends upon:
1. Whether the 120-month Fixed Period
Certain is chosen; and
2. The Payee's age on his/her birthday
nearest the date the first installment
is due.
ANNUITY PAYOUT OPTION 2. JOINT AND SURVIVOR
ANNUITY PAYOUT. We will pay the proceeds in
equal installments for as long as either the
Payee or the joint Payee is alive.
For each $1,000 of Contract Value applied, the
Annuity Payout Option 2 Table shows the
guaranteed minimum rate for each installment at
various ages under a Fixed Annuity Payout, or
the rate used to determine the first installment
under a Variable Annuity Payout using an assumed
yield of three percent (3%).
ANNUITY PAYOUT OPTION 3. OTHER FIXED AND
VARIABLE ANNUITY PAYOUTS. We will pay the
proceeds under any other Fixed and Variable
Annuity Payouts that we may offer. Contact us
for details.
C. CHANGE OF ANNUITY PAYOUT Unless we agree otherwise, the first Annuity
DATE Payout Date must be at least sixty (60) days
after the Issue Date and is the first business
day of the first calendar month in which an
annuity payout will be made to you.
You may change the date an annuity payout is
scheduled to begin, including the Start Date, by
giving us at least thirty (30) days written
notice.
D. FREQUENCY AND AMOUNT Annuity payouts will be made monthly unless we
OF PAYMENTS agree to a different payment schedule. We
reserve the right to change the frequency of
either Fixed or Variable Annuity Payouts so that
each payment will be at least $100.
E. FIXED ANNUITY PAYOUTS The dollar amount of all payments are fixed
during the entire period of annuity payments,
according to the provisions of the Annuity
Payout Option selected.
Guaranteed minimum Annuity Payout Option 1 and 2
rates for Fixed Annuity Payouts are based upon
three percent (3%) yearly interest and unisex
rates derived from 1983 Table a.
Other Fixed Annuity Payout rates may be
available, but rates will never be less than
those shown in the Annuity Payout Option 1 and 2
Tables. Contact us for details. In setting Fixed
Annuity Payout rates, we consider many factors,
including, but not limited to: investment yield
rates; taxes; contract persistency; and other
experience factors.
Section 9 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
F. PAYMENT OF PRESENT VALUE Following the death of the Payee and any joint
Payee under a Fixed Annuity Payout, we may offer
the Beneficiary payment of the present value of
the unpaid remaining payments if annuity payouts
are discontinued. If the present value is
payable, we calculate it this way:
1. We determine the number of unpaid
remaining payments when we receive proof
of death.
2. We discount the remaining payments at
the rate specified in the terms of the
Fixed Annuity Payout.
G. VARIABLE ANNUITY PAYOUTS The amount of the first payment for the Variable
Annuity Payout selected is shown in the Annuity
Payout Tables for each $1,000 of Contract Value
applied, based upon an assumed yield of three
percent (3%).
Payments after the first payment will vary in
amount and may either increase or decrease.
Payments are determined on the Valuation Date
immediately preceding the seventh (7th) day
before each Annuity Payout Date. If the payment
under the annuity payout selected is based on
the Annuity Unit Value of a single Sub-Account,
the payment is found by multiplying the Annuity
Unit Value for that Sub-Account on the Valuation
Date immediately preceding the seventh (7th) day
before the Annuity Payout Date by the number of
Annuity Units under this contract in the
Sub-Account.
If the monthly payment under the annuity payout
selected is based upon an Annuity Unit of more
than one Sub-Account, the above procedure is
repeated for each applicable Sub-Account. The
sum of these payments is the total payment under
the Variable Annuity Payout.
We guarantee that the amount of each payment
after the first payment will not be affected by
variations in expense or mortality experience.
H. CONVERSION OF ACCUMULATION After deductions for any applicable premium tax
UNITS TO ANNUITY UNITS or Withdrawal Charge, we convert the
Accumulation Units applicable to this contract
into Annuity Units at the Unit Value on the
Valuation Date immediately preceding the seventh
(7th) day before the Annuity Payout Date. The
number of Annuity Units of each Sub-Account
remains constant, as long as an annuity payout
remains in force and allocation among the
Sub-Accounts has not changed. Reallocations
among Sub-Accounts is governed by Section 5C.
For each Sub-Account, the Annuity Unit Value was
set at ten dollars ($10) when Accumulation Units
were first converted into Annuity Units.
Subsequent Annuity Unit Values for any Valuation
Period are equal to:
1. The Net Investment Factor for the
Valuation Period for which the Annuity
Unit Value is being calculated;
2. MULTIPLIED BY the Annuity Unit Value for
the preceding Valuation Period; and
3. DIVIDED BY the daily factor at the
assumed yield (designed to offset the
assumed yield we agree to use to
determine the first payment) adjusted
for the number of days in the Valuation
Period.
Section 9 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 1 TABLE
Installments for Life With or
Without a Fixed Period Certain
Monthly Income
for Each $1,000 of Contract Value
FIXED PERIOD IN MONTHS
AGE NONE 120
---- ---- ----
50 3.96 3.94
51 4.03 4.00
52 4.09 4.07
53 4.17 4.14
54 4.24 4.21
55 4.32 4.28
56 4.41 4.36
57 4.50 4.45
58 4.59 4.54
59 4.70 4.63
60 4.80 4.73
61 4.92 4.84
62 5.04 4.95
63 5.18 5.06
64 5.32 5.19
65 5.47 5.32
66 5.63 5.45
67 5.80 5.59
68 5.98 5.74
69 6.18 5.90
70 6.39 6.07
Instead of monthly installments, yearly, semiannual or quarterly
installments may be selected.
Amounts for ages not shown in this table may be obtained upon
request.
Section 9 ANNUITY BENEFITS (CONTINUED)
- --------------------------------------------------------------------------------
ANNUITY PAYOUT OPTION 2 TABLE
Joint and Survivor Annuity
Monthly Income for Each $1,000 of Contract Value
PAYEE'S AGE JOINT PAYEE'S AGE
- ----------- ------------------------------------------------------------
45 50 55 60 65 70
50 3.43 3.55 3.65 3.74 3.81 3.87
55 3.50 3.65 3.81 3.94 4.06 4.15
60 3.56 3.74 3.94 4.15 4.33 4.49
65 3.60 3.81 4.06 4.33 4.61 4.86
70 3.63 3.87 4.15 4.49 4.86 5.25
Amounts for ages not shown in this table may be obtained upon request.
- --------------------------------------------------------------------------------
Section 10 GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. EVIDENCE OF SURVIVAL We may require proof that a person is alive on
the Required Distribution Date, the Start Date,
or at any time thereafter.
B. INCONTESTABILITY This contract has a two-year contestable period
running from its Issue Date. After this contract
has been in force for two years from its Issue
Date, we cannot claim that the contract is void
unless the contract has been terminated in
accordance with Section 14.
C. INTEREST ON DEATH BENEFIT Any Death Benefit paid under this contract from
the Fixed Account will include interest from the
Death Benefit Valuation Date until the Death
Benefit is paid at a rate not less than that
required by law. Any Death Benefit paid under
this contract from the Variable Account will not
include interest.
D. MINIMUM BENEFITS This contract is governed by the laws of the
state in which it is delivered. We guarantee
that all annuity values, cash withdrawal values
and death proceeds will always be as much as
required by the laws of that state.
E. MISSTATEMENT OF AGE If the Payee's age is misstated, the Required
Distribution Date and/or Start Date will be
adjusted to reflect the true age.
If age has been misstated and payments have
begun under a Fixed or Variable Annuity Payout,
we will change the amounts payable to what the
Payee is entitled to at the true age. If the
misstatement caused us to make an overpayment,
we will deduct that amount from future payments.
If the misstatement caused us to make an
underpayment, we will pay that amount
immediately.
We have the right to require proof of a person's
age before we make payment under any Fixed or
Variable Annuity Payout.
F. NONPARTICIPATING The contract does not share in our profits or
surplus. No dividends are paid under this
contract.
Section 10 GENERAL PROVISIONS (CONTINUED)
- --------------------------------------------------------------------------------
G. NONTRANSFERABLE This contract may not be transferred, sold,
assigned, discounted or pledged either as
collateral for a loan or security for the
performance of an obligation or for any other
purpose, to any person or entity other than us.
H. PAYMENTS AND SETTLEMENTS All payments and settlements we make are payable
from our Home Office. We may require that this
contract be returned before payments and
settlements are made.
I. PROOF OF DEATH We accept any of the following as proof of
death:
1. A certified copy of a death certificate;
2. A certified copy of a decree of a court
of competent jurisdiction as to the
finding of death; or
3. Any other proof satisfactory to us.
J. PROTECTION OF PROCEEDS Payments we make under this contract may not be
assigned before they are due and, except as
required or permitted by law, are not subject to
claims of creditors or legal process.
K. TAX WITHHOLDING We will withhold taxes from any payment made
when required by law or regulation.
L. YEARLY STATEMENT At least once each Contract Year, we will send
you a report showing the Contract Value.
Section 11 PAYMENTS AT DEATH
- --------------------------------------------------------------------------------
A. GENERAL Distribution of all or part of the Death Benefit
may be deferred to the extent allowed by law or
IRS regulation.
B. DEATH BENEFIT The amount of the Death Benefit before the Start
Date is defined as follows:
1. If the Annuitant dies on or before the
first day of the month following his/her
80th birthday, as of the Death Benefit
Valuation Date the greatest of:
(a) The Contract Value; or
(b) The sum of the Purchase Payments
we received under this contract,
less any withdrawals, amounts used
to purchase annuity payouts, and the
amount of previously deducted Annual
Contract Charges; or
(c) The Contract Value on the Specified
Contract Anniversary (immediately
preceding the Annuitant's death)
shown on the Contract Data Page(s),
plus any Purchase Payments since
that anniversary, less any
withdrawals or amounts used to
purchase annuity payouts since that
anniversary less the amount of
previously deducted Annual Contract
Charges since that anniversary.
Section 11 PAYMENTS AT DEATH (CONTINUED)
- --------------------------------------------------------------------------------
2. If the Annuitant dies after the first
day of the month following his/her 80th
birthday, the Contract Value on the
Death Benefit Valuation Date.
The amount of the Death Benefit, if any,
following the Start Date, is governed by the
annuity payout in effect on the date of death.
C. DEATH BENEFIT VALUATION The Death Benefit Valuation Date is the
DATE Valuation Date next following the date we
receive:
1. Proof of death; and
2. Written request for a single sum payment
or a payout permitted by Code
ss.457(d)(2) and of which we approve.
D. PAYMENT OF DEATH BENEFIT If a single sum payment of the Death Benefit is
elected, we will make payment within seven (7)
days after the Death Benefit Valuation Date. If
an annuity payout is requested, it may be any
annuity payout that could have been selected
under Section 9 and which is permitted by Code
ss.ss.401(a)(9), 457(d)(2), and the regulations
thereunder.
Section 12 RESTRICTIONS ON DISTRIBUTIONS
- --------------------------------------------------------------------------------
A. GENERAL This section restricts how distributions may be
made under the contract both before and after
the Annuitant's death. It refers to Code
ss.ss.401(a)(9) and 457(d)(2), and the
regulations thereunder, including the incidental
death benefit provisions of Proposed Treasury
Regulation ss.1.401(a)(9)-2, all of which are
incorporated herein by reference. Generally,
distributions must satisfy the minimum required
distribution rules of Code ss.401(a)(9), and, if
payable other than in a lump sum, must be made
in substantially nonincreasing amounts, paid not
less frequently than annually.
B. REQUIRED DISTRIBUTIONS Payments must be elected under Section 8,
WHILE LIVING Section 9, or a combination of both, that
commence on or before the Required Distribution
Date and are payable at times specified by the
IRS which are not later than the time determined
under the Code ss.401(a)(9)(G), relating to the
incidental death benefits.
C. REQUIRED DISTRIBUTION If the Annuitant dies before his/her entire
UPON DEATH interest has been distributed but after
distributions have begun, the amount not
distributed during the Annuitant's life will be
distributed after death at least as rapidly as
under the method of distribution used during the
Annuitant's life.
In the case of a distribution which does not
begin before the death of the Annuitant, the
entire amount payable will be paid over a period
not in excess of fifteen (15) years, unless the
beneficiary is the Annuitant's surviving spouse.
If the beneficiary is the Annuitant's surviving
spouse, payment can be made over the life
expectancy of the surviving spouse.
Any distribution payable over a period of more
than one year can only be made in substantially
nonincreasing amounts paid not less frequently
than annually.
Section 13 AMENDMENT AND DISCLAIMER
- --------------------------------------------------------------------------------
A. AMENDMENT We reserve the right to amend this contract in
order to include any future changes relating to
this contract's remaining qualified for
treatment as an annuity contract under the
following:
1. The Code; and
2. IRS rulings, regulations, and
requirements.
B. DISCLAIMER We shall be under no obligation for any of the
following:
1. To determine whether a Purchase Payment,
distribution or transfer under the
contract complies with the provisions,
terms and conditions of each plan or
with applicable law;
2. To administer such plan, including,
without limitation, any provisions
required by the Retirement Equity Act of
1984; or
3. For any tax penalties owed by any party
resulting from failure to comply with
the Code and IRS rulings, regulations,
and requirements applicable to this
contract.
Section 14 TERMINATION
- --------------------------------------------------------------------------------
A. TERMINATION This contract will end on the earlier of the
following:
1. When the entire Withdrawal Value is
withdrawn on or before the Start Date;
or
2. When the Contract Value is paid in a
lump sum as the Death Benefit before the
Start Date.
In addition, if:
1. You have not made any Purchase Payments
for a period of two full years; and
2. The guaranteed monthly benefit under the
Life Annuity with payments for ten (10)
or twenty (20) years would be less than
$20 per month when you reach age
seventy-one (71), or at the beginning of
Contract Year eleven (11), whichever is
later;
then, we may terminate the contract by payment
of the current Withdrawal Value. This payment
may be made to you or, if you request, to
another entity sponsoring a Code ss.457 Plan.
FLEXIBLE PREMIUM INDIVIDUAL DEFERRED
ANNUITY CONTRACT
VARIABLE AND/OR FIXED ACCUMULATION
Nonparticipating VARIABLE AND/OR FIXED DOLLAR ANNUITY PAYOUTS
- --------------------------------------------------------------------------------
NOTICE
To make Purchase Payments, please write or call us at:
Northern Life Insurance Company
P.O. Box 34148 FAB #11
Seattle, Washington 98124-1148
(800) 426-7050
To make a claim or exercise your rights under this contract,
please write or call us at:
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-453077
Please include your contract number in all correspondence.
NORTHERN LIFE INSURANCE COMPANY
A Stock Company * 1110 Third Avenue, Seattle, Washington 98101
Form No. 13008 12-97
EX-99.4K
11
IRA ENDORSEMENT
EXHIBIT 99.4k
NORTHERN LIFE INSURANCE COMPANY
A ReliaStar Company
P.O. Box 12530, Seattle, Washington 98111-4530
This Endorsement is part of your Contract. The provisions of this Endorsement
supersede any conflicting provisions in your Contract or in any prior
endorsements.
"We" are the Northern Life Insurance Company. "You" are the Owner of the
Contract according to our records. "IRC" means the Internal Revenue Code of
1986, as amended from time to time. "IRS" means the Internal Revenue Service.
I. Roth IRA Designation. Your Individual Retirement Annuity Contract is intended
to qualify as a Roth IRA. The Roth IRA is defined in IRC ss 408A. By accepting
this Endorsement, you designate your Contract to be a Roth IRA. In addition, you
agree to do whatever the IRS requires in order to maintain your Contract as a
Roth IRA. Your Contract can be used as either a Roth Conversion IRA or a Roth
Non-Conversion IRA. The conversion and non-conversion Roth IRAs are defined in
IRC ss 408A.
II. General Contribution Rules. You may vary the amount of your annual
contributions. Contributions are subject to the limitations described in Section
III. You may make contributions after you have attained age 70 1/2. Other than
conversion IRAs or rollover contributions, only cash contributions will be
accepted. Qualified rollover contributions, as defined in IRC ss 408A(e),
conversions and transfers from other Roth IRAs will be accepted. Such
contributions are subject to any limitations set forth in your Contract. No
other contributions will be accepted.
III. Limitations on Contributions. Contributions are subject to the following
limitations:
A. Your contributions may not exceed the lesser of $2,000 or 100% of your
compensation per tax year, or as may be limited by law. Contributions to other
Roth IRAs or non-Roth IRAs may reduce your allowable contribution. This
reduction is on a dollar-for-dollar basis.
B. The contribution limit for any tax year gradually reduces to $0 between
certain levels of adjusted gross income ("AGI"). If you are single, the limit is
phased out between AGI of $95,000 and $110,000. If you are married and file
jointly, the limit is between AGI of $150,000 and $160,000. If you are married
and file separately, the limit is between $0 and $10,000. AGI is defined in IRC
ss 408A(c)(3).
C. The contribution limitations above do not apply to qualified rollover
contributions. Nor do they apply to transfers from other Roth IRAs or
conversions from non-Roth IRAs.
D. Taxpayers who are married, filing separately, with AGI in excess of $100,000
in a year, may not effect a conversion. Also, they will not be allowed to make a
qualified rollover contribution to a Roth IRA for that year.
E. Future statutory changes to the above compensation limits shall be applied by
substituting the revised limits, if any, for the limits described herein.
F. Active participation (as defined at IRC ss 219(g)) in an employer's qualified
plan does not reduce the amount of your permissible contribution.
IV. Required Distributions. You may begin distributions from your Roth IRA
during your lifetime, although you are not required to. Upon your death,
distributions must be paid to your Beneficiary as follows:
A. If your surviving spouse is not your sole Beneficiary, the remaining interest
in your Contract must be redistributed. The Beneficiary must elect to take his
or her distribution in one of the following ways:
1. The Beneficiary's entire interest must be distributed by December 31 of the
year containing the fifth anniversary of your death.
2. The Beneficiary's entire interest must be distributed over a period not
exceeding his or her life expectancy. If this alternative is selected, payments
must begin by December 31 of the year following your death. Use the following
method to calculate the minimum annual payment under this alternative:
Obtain the value of your entire interest in the Contract as of close of business
December 31 of the preceding year.
Divide this value by the life expectancy of the Beneficiary using his or her
attained age. The attained age is the Beneficiary's age as of his or her
birthday in the year distributions must begin. Subtract one for each subsequent
year.
Life expectancy is computed by use of the return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
3. If your surviving spouse is the sole Beneficiary, no distribution is required
at your death. The surviving spouse may choose to become the Owner of your
Contract.
B. Notwithstanding the above, distributions will be made to your Beneficiary in
accordance with IRS rules for minimum required distributions relating to Roth
IRAs.
V. No Option Chosen. If no form of payment to the Beneficiary is chosen, we will
pay the death proceeds in a lump sum to whomever is entitled to them.
VI. Penalty for Premature Distributions. If distributions under this Contract
are not "qualified distributions", a penalty tax may result. Qualified
distributions are defined at IRC ss 408A(d) and other applicable rules.
VII. Non-Transferability. Neither you nor your Beneficiary may transfer or
assign your Contract.
VIII. Ownership Interest. Your ownership interest in your Contract is
nonforfeitable.
IX. Reports. We will send you annual information as required under the IRC.
Notwithstanding anything else in your Contract, the provisions of this
Endorsement are controlling. Other provisions not consistent with IRC ss 408A,
related regulations, and other published guidance, will be invalid. All other
terms and conditions of your Contract remain unchanged. If any terms of this
Endorsement conflict with any provision of the IRC applicable to ss 408A
annuities, the IRC provisions will govern.
You are responsible for compliance with IRC requirements relating to a Roth IRA.
We are not liable for any tax or tax penalties on amounts paid out or applied to
the Contract.
The Effective Date of this Endorsement is ______________________________________
Secretary.
ROTH IRA ENDORSEMENT
Page 2
Form No. 03710 2-98
EX-99.5
12
CONTRACT APPLICATION
EXHIBIT 99.5
FORM NO. 13003 2-95
NORTHERN LIFE VARIABLE ANNUITY APPLICATION
[LOGO] P. O. Box 12530 CERTIFICATE/POLICY NO.
Seattle, WA 98111
1-800-426-7050
HOME OFFICE USE ONLY
ER GROUP POLICY NO. ___________
EFFECTIVE DATE ________________
BILLING NO. ___________________
PLAN TYPE
CHOOSE ONE:
[ ] Transfer Only
[ ] Periodic
(or Flexible)
CHOOSE ONE:
[ ] Group
[ ] allocated
[ ] unallocated
[ ] Individual
CHOOSE ONE:
[ ] TSA [ ] Nonqualified
[ ] IRA [ ] 457
[ ] SEP
[ ] 401(a)
[ ] Other: __________________
ANNUITANT
NAME
TELEPHONE NO. ( )
ADDRESS
CITY
STATE
ZIP
SOCIAL SECURITY NUMBER
OCCUPATION
SEX [ ] M [ ] F
DATE OF BIRTH
EMPLOYER
NAME
MAILING ADDRESS
CITY
STATE
ZIP CODE
CONTACT PERSON
TELEPHONE NO. ( )
OWNER (If other than annuitant)
NAME
ADDRESS
CITY
STATE
ZIP CODE
TAX I.D. OR SOCIAL SECURITY NO.
DATE OF BIRTH
TELEPHONE NO. ( )
BENEFICIARY
If additional beneficiary designations are needed, please include in Special
Instructions or on attachment to the application. Contingent beneficiaries do
not receive proceeds unless all primary beneficiaries are deceased when proceeds
become due. (Louisiana requires address and Social Security No.)
PRIMARY
ADDRESS (If different from Annuitant's)
CITY
STATE
ZIP CODE
SOCIAL SECURITY NO.
RELATIONSHIP
CONTINGENT
ADDRESS (if different from Annuitant's)
CITY
STATE
ZIP CODE
SOCIAL SECURITY NO.
RELATIONSHIP
PAYMENT SCHEDULE
[ ] PERIODIC PAYMENT PAYMENT ANNUAL 1ST REMITTANCE
AMOUNT #PYMNTS PREMIUM DATE
Salary Reduction [ ] EE $ X = $ ______________
Agreement or [ ] ER $ X = $ ______________
Amendment to
Employment Contract [ ] EE $ X = $ ______________
required for TSA. [ ] ER $ X = $ ______________
TOTAL ANNUAL PREMIUM
(FOR 12-MONTH PERIOD ONLY) $
[ ] Monthly Preauthorized Checking (PAC)
(Does not apply to TSA; attach PAC form)
BILLING MODE OTHER
1 2 4 9 10 12 20 22 24 26
NON-BILLING MONTHS
J F M A M J J A S O N D
PAYMENT SCHEDULE
[ ] SINGLE SUM PAYMENT $ CHECK ENCLOSED
[ ] YES [ ] NO
[ ] ROLLOVER/TRANSFER PAYMENT
CHECK ENCLOSED ACCEPTANCE LETTER PAYOR
[ ] YES [ ] NO REQ'D [ ] YES [ ] NO
POLICY NUMBER AMOUNT
$
CHECK ENCLOSED ACCEPTANCE LETTER PAYOR
[ ] YES [ ] NO REQ'D [ ] YES [ ] NO
POLICY NUMBER AMOUNT
$
- --------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
(If necessary, attach a separate sheet)
================================================================================
Form No. 13003 2-95
Owner/Annuitant Entries
Page 1 of 2
NORTHSTAR - NORTHSTAR/NWNL TRUST
PURCHASE PAYMENT ALLOCATION (WHOLE %)
NORTHSTAR: NORTHSTAR/NWNL TRUST
------ % 020 Northstar Income and Growth Fund
------ % 021 Northstar Multi-sector Bond Fund
------ % 022 Northstar Growth Fund
FIXED ACCOUNT
------ % 180 Fixed Account A
------ % 181 Fixed Account B
FIDELITY: VARIABLE PRODUCTS FUND
------ % 070 Money Market Portfolio
------ % 071 Growth Portfolio
------ % 072 Equity-Income Portfolio
------ % 073 Overseas Portfolio
FIDELITY: VARIABLE PRODUCTS FUND II
------ % 080 Asset Manager Portfolio
------ % 081 Asset Manager: Growth Portfolio
------ % 082 Index 500 Portfolio
------ % 083 Contrafund Portfolio
OTHER:
--- % -----------------
--- % -----------------
--- % -----------------
--- % -----------------
If no allocations are indicated or the total allocation percentages do not equal
100%, the total Purchase Payment(s) will be allocated to the Fidelity Money
Market Portfolio Fund pending allocation instructions from the Owner.
- --------------------------------------------------------------------------------
* I hereby represent my answers to the questions on this application to be
correct and true to the best of my knowledge and belief and agree that this
application shall be a part of any annuity contract issued by the Company.
* Under penalties of perjury, I certify (1) that the number shown on this
form is my correct taxpayer identification number and (2) that I am not
subject to backup withholding either because I have not been notified that
I am subject to backup withholding as a result of a failure to report all
interest or dividends, or the Internal Revenue Service has notified me that
I am no longer subject to backup withholding.
* I UNDERSTAND THAT ANNUITY PAYMENTS AND WITHDRAWAL VALUES, WHEN BASED UPON
INVESTMENT EXPERIENCE OF A SUBACCOUNT OF A SEPARATE ACCOUNT, ARE VARIABLE
AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT. I HEREBY ACKNOWLEDGE
RECEIPT OF A VARIABLE ANNUITY PROSPECTUS DATED __________________ AND
PROSPECTUSES OF THE CURRENT VARIABLE ACCOUNT FUNDS.
REPLACEMENT: Will this annuity replace or change in whole or in part any life
insurance or annuity(ies) you now have in force? [ ] Yes [ ] No If yes,
complete: Company _________________________ Year Issued ______ [ ] life
insurance or [ ] annuity, [ ] group or [ ] individual (If necessary, attach a
separate sheet for additional contracts.)
================================================================================
SIGNATURES
DATED AT (CITY AND STATE)
DATE
ANNUITANT SIGNATURE
OWNER SIGNATURE (if other than annuitant)
AGENT'S REPLACEMENT QUESTION: Do you have knowledge or reason to
believe that replacement of existing life insurance or annuities may be
involved in connection with this transaction? [ ] YES [ ] NO If yes,
attach a list of policies ans a Replacement Form where required by
state law.
AGENT NAME
AGENT SIGNATURE
LICENSE I.D. NO.
AGENT NO. SPLIT %
AGENT NAME
AGENT SIGNATURE
LICENSE I.D. NO.
AGENT NO. SPLIT %
AGENT NAME
AGENT SIGNATURE
LICENSE I.D. NO.
AGENT NO. SPLIT %
AGENT REMARKS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
FOR DEALER ONLY
DEALER NAME
BRANCH OFFICE
DEALER SYMBOL
AUTHORIZED SIGNATURE
DEALER: Make check payable to:
NORTHERN LIFE INSURANCE COMPANY
and mail check and application to:
Variable Payment Processing Department
P.O. Box 12530, Seattle, WA 98111-4530
Page 2 of 2
EX-99.6A
13
ARTICLES OF INCORPORATION
EXHIBIT 99.6a
...and further certify that the following amendment to the Bylaws was adopted by
the Sole Shareholder of Northern Life Insurance Company by Written Consent on
the third Tuesday of March, 1991, and is now in full force and effect.
Dated this 10th day of April 1991.
---------------
Brent M. Sampson
RESOLVED, That Article II, Section 2, of the Bylaws of the Company be
amended to read as follows:
The Board of Directors of the Company shall be comprised of
ten members. Directors need not be shareholders of the Company
or residents of the State of Washington.
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
Brent M. Sampson, being duly sworn, deposes and says:
That he is an Assistant Secretary of Northern Life Insurance Company and is
authorized to certify to the validity of the above resolution; that he has read
the foregoing certification, including the resolution, knows the contents
thereof and knows the same to be true.
------------------
Brent M. Sampson
Assistant Secretary
SUBSCRIBED AND SWORN to before me this 10th day of April 1991.
Karin L. Larson
NOTARY PUBLIC in and for the
State of Washington; residing
at Seattle
ARTICLES OF AMENDMENT
Pursuant to the provisions of RCW 48.07.070 of the Revised Code of
Washington, the following Articles of Amendment to Articles of Incorporation are
hereby submitted for filing.
ARTICLE 1. The name of record of the corporation is:
Northern Life Insurance Company
ARTICLE 2. The amendments to the Articles of Incorporation as adopted are as
follows:
New Articles XI and XII shall be added, as follows:
ARTICLE XI
Limitation of Directors' Liability
A Director shall have no liability to the corporation or its
shareholders for monetary damages for conduct as a director, except for
acts or omissions that involve intentional misconduct by the director,
or a knowing violation of law by the director, or for conduct violating
RCW 23A.08.450, or for any transaction from which the director will
personally receive a benefit in money, property or services to which
the director is not legally entitled. If the Washington Business
Corporation Act is hereafter amended to authorize corporate action
further eliminating or limiting the personal liability of directors,
then the liability of a director shall be eliminated or limited to the
full extent permitted by the Washington Business Corporation Act, as so
amended. Any repeal or modification of this Article shall not adversely
affect any right or protection of a director of the corporation
existing at the time of such repeal or modification for or with respect
to an act or omission of such director occurring prior to such repeal
or modification.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. RIGHT TO INDEMNIFICATION. Each person who was, or is
threatened to be made a party to or is otherwise involved (including, without
limitation, as a witness) in any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director or officer of the corporation
or, while a director or officer, he or she is or was serving at the request of
the corporation as a director, trustee, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
trustee, officer, employee or agent or in any other capacity while serving as a
director, trustee, officer, employee or agent, shall be indemnified and held
harmless by the corporation, to the full extent permitted by applicable law as
then in effect, against all expense, liability and loss (including attorney's
fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid
in settlement) actually and reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a person who
has ceased to be a director, trustee, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that except as provided in Section 2 of this Article with respect to
proceedings seeking to enforce rights to indemnification, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the corporation.
The right to indemnification conferred in this Section 1 shall be a contract
right and shall include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that the payment of such expenses in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately determined that such director or
officer entitled to be indemnified under this Section 1 or otherwise.
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1
of this Article is not paid in full by the corporation within sixty (60) days
after a written claim has been received by the corporation, except in the case
of a claim for expenses incurred in defending a proceeding in advance of its
final disposition, in which case the applicable period shall be twenty (20)
days, the claimant may at any time thereafter bring suit against the corporation
to recover the unpaid amount of the claim and, to the extent successful in whole
or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. The claimant shall be presumed to be entitled to
indemnification under this Article upon submission of a written claim (and, in
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition, where the required undertaking
has been tendered to the corporation), and thereafter the corporation shall have
the burden of proof to overcome the presumption that the claimant is not so
entitled. Neither the failure of the corporation (including its board of
directors, independent legal counsel or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances nor an actual determination by the corporation (including its
board of directors, independent legal counsel or its shareholders) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses shall be a defense to the action or create a presumption
that the claimant is not so entitled.
Section 3. NONEXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise.
Section 4. INSURANCE, CONTRACTS AND FUNDING. The corporation may
maintain insurance, at its expense, to protect itself and any director, trustee,
officer, employee or agent of the corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the
Washington Business Corporation Act. The corporation may, without further
shareholder action, enter into contracts with any director or officer of the
corporation in furtherance of the provisions of this Article and may create a
trust fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this Article.
Section 5. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.
The corporation may, by action of its board of directors from time to time,
provide indemnification and pay expenses in advance of the final disposition of
a proceeding to employees and agents of the corporation with the same scope and
effect as the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the corporation or pursuant
to rights granted pursuant to, or provided by, the Washington Business
Corporation Act or otherwise.
ARTICLE 3. The amendments were adopted by Action by Written Consent of
the Sole Shareholder of the company dated the ____ day of November 1987. All of
the outstanding shares of every class of stock entitled to vote were voted in
favor of the amendment. No exchange, reclassification or cancellation of issued
shares shall be affected.
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
The undersigned, being first duly sworn, on oath depose and say that
they are the President and Secretary of Northern Life Insurance Company, that
they are authorized to, and hereby do, make this verification for and on behalf
of said corporation; and that they have read the within and foregoing Articles
of Amendment, know the contents thereof, and believe the same to be true.
----------------------
PRESIDENT
----------------------
SECRETARY
SUBSCRIBED AND SWORN to before me this 10th day of February 1987.
- ----------------------
Nomia L. McNeal
NOTARY PUBLIC in and for the State
of Washington, residing at Seattle
My appointment expires 10-28-89
ARTICLES OF INCORPORATION
OF
NORTHERN LIFE INSURANCE COMPANY
Amended August 30, 1979
ARTICLE I
NAME AND DURATION
The name of the Company shall be NORTHERN LIFE INSURANCE COMPANY and
its duration shall be perpetual.
ARTICLE II
PURPOSES
The Company is formed for the purpose of doing any and all business and
exercising every power and authority now or hereafter granted or authorized to
be done or exercised by a life insurance company under the laws of the State of
Washington, including but not limited to the following:
A. LIFE INSURANCE. Issuing insurance on human lives and insurance
appertaining thereto or connected therewith, including but not limited to the
granting of annuities and endowment benefits, additional benefits in the event
of death by accident, additional benefits in the event of the total and
permanent disability of the insured, and optional modes of settlement of
proceeds.
B. DISABILITY INSURANCE. Issuing insurance against bodily injury,
disablement or death by accident, disablement resulting from sickness, and every
insurance appertaining thereto.
The Company shall operate as a stock insurance company and may issue
policies upon both the participating plan and the non-participating plan.
The Company may make all investments authorized by law, including
investments in real property for its home and branch offices; lease, manage and
control as a landlord such space in its office buildings as is not immediately
required by the Company for its own use; borrow money and issue its notes, bonds
or debentures to evidence such indebtedness and mortgage and pledge its property
to secure such indebtedness; and do any and all acts and things necessary or
appropriate for carrying into effect any of the foregoing.
ARTICLE III
LOCATION
The principal office and place of business of the Company shall be in
the City of Seattle, or its suburbs, incorporated or not, within the County of
King, and State of Washington.
ARTICLE IV
CAPITAL STOCK
The capital stock of the Company shall be $1,500,000 divided into
100,000 shares of the par value of $15 each.
ARTICLE V
DIRECTORS
The Company shall be governed by a Board of Directors of not less than
five nor more than 15 members whose number, qualifications, terms of office,
manner of election, power and duties and compensation shall be as stated in the
Bylaws of the Company. The names and addresses of the directors who shall
constitute the Board of Directors for an initial term of six months are as
follows:
NAME ADDRESS
John S. Pillsbury, Jr., 315 Woodhill Road
Chairman of the Board Wayzata, Minnesota 55391
John E. Pearson 5027 Wooddale Lane
Edina, Minnesota 55424
Donald E. Jondahl 302 Parkers Lake Road
Wayzata, Minnesota 55391
George F. O'Leary 12811 Excelsior Blvd.
Hopkins, Minnesota 55343
William F. Spanton 4816 Roycar Road
Edina, Minnesota 55435
ARTICLE VI
SHAREHOLDER DIVIDENDS
Dividends to shareholders may be declared from time to time by the
Board of Directors subject to any restrictions imposed by the statutes of the
State of Washington.
ARTICLE VII
POLICY DIVIDENDS
The Board of Directors shall determine from time to time what
distribution out of the earnings of the Company shall be made to policyholders
according to the terms of the various forms of policy contracts. Such
distribution of earnings may be made by an equitable apportionment of holders of
participating policies issued by the Company irrespective of the class and
character of the risks, insureds or types of policies involved, or the Board of
Directors may in its discretion classify the risks of the Company according to
the various hazards covered or types of policies or insureds involved or
otherwise as to the Board may appear equitable and distribute such earnings or
any portion thereof to the holders of participating policies in each
classification according to the experience of the Company in such classes or
otherwise as the Board shall see fit.
ARTICLE VIII
BYLAWS
The authority to make Bylaws for the Company is hereby vested in the
Board of Directors subject to the power of the shareholders to change or repeal
such Bylaws, but the Board of Directors shall not make or alter any Bylaws
fixing their qualification, classification, term of office or compensation.
ARTICLE IX
EXECUTIVE COMMITTEE
Any number of the directors may be empowered by the Board of Directors
to act as an Executive Committee subject to the pleasure of the Board, and such
other committees, including a Finance Committee, may be empowered as provided in
the Bylaws or by resolution of the Board of Directors.
ARTICLE X
INCORPORATORS
The names and addresses of the incorporators of the Company are as
follows:
NAMES ADDRESS
1. John M. Davis 7662 S.E. 22nd
Mercer Island, Washington 98040
2. Ralph L. Hawkins, Jr. 2545 104th S.E.
Bellevue, Washington 98004
3. James R. Madison 10515 S.E. 27th
Bellevue, Washington 98004
4. C. Keith Allred 9411 N.E. 126th Place
Kirkland, Washington 98033
5. James W. Bates, Jr. 10632 S.E. 29th
Bellevue, Washington 98004
Item 24(b)6(b)
CERTIFICATION
I, Brent M. Sampson, do hereby certify that I am the Assistant Secretary of the
Northern Life Insurance Company, and further certify that the following
amendment to the bylaws was adopted by the Board of Directors at a meeting held
February 26, 1988, and is now in full force and effect.
Dated this 7th day of March 1988.
------------------
Brent M. Sampson
RESOLVED, That Article II, Section 2, of the Bylaws of the Company be
amended to read as follows:
The Board of Directors of the Company shall be comprised of
nine members. Directors need not be shareholders of the
Company or residents of the State of Washington.
STATE OF WASHINGTON
COUNTY OF KING
Brent M. Sampson, being duly sworn, deposes and says:
This he is Assistant Secretary of the Northern Life Insurance Company and is
authorized to certify to the validity of the above resolution; that he has read
the foregoing certification, including the resolution, knows the contents
thereof and knows the same to be true.
----------------
Brent M. Sampson
SUBSCRIBED AND SWORN to before me this 7th day of March 1988.
Nomia L. McNeal
-----------------------------
NOTARY PUBLIC in and for the
state of Washington;
residing at Seattle
FILED
IN THE OFFICE OF THE
INSURANCE COMMISSIONER
STATE OF WASHINGTON
MAR 9 1988
- --------------------
RICHARD G. MARQUARDT
INSURANCE COMMISSIONER
CERTIFICATION
I, Brent M. Sampson, do hereby certify that I am the Assistant Secretary of the
Northern Life Insurance Company, and further certify that the following
amendment to the bylaws was adopted by the Board of Directors at a meeting held
February 26, 1987, and is now in full force and effect.
Dated this 26th of August 1987.
-----------------
Brent M. Sampson
RESOLVED, That Article II, Section 2, of the Bylaws of the Company be
amended to read as follows:
The Board of Directors of the Company shall be comprised of
ten members. Directors need not be shareholders of the Company
or residents of the State of Washington.
STATE OF WASHINGTON
COUNTY OF KING
Brent M. Sampson, being duly sworn, deposes and says:
That he is Assistant Secretary of the Northern Life Insurance Company and is
authorized to certify to the validity of the above resolution; that he has read
the foregoing certification, including the resolution, knows the contents
thereof and knows the same to be true.
------------------
Brent M. Sampson
SUBSCRIBED AND SWORN to before me this 26th day of August 1987.
Beth Milanpay
-----------------------------
NOTARY PUBLIC in and for the
state of Washington;
residing at Seattle
EX-99.6B
14
BYLAWS
EXHIBIT 99.6b
BYLAWS
OF
NORTHERN LIFE INSURANCE COMPANY
6th Amendment 8/18/81
ARTICLE I
MEETING OF SHAREHOLDERS
Section 1. ANNUAL MEETINGS.
A. WHERE AND WHEN HELD. The annual meeting of shareholders entitled to
vote shall be held either within or without the State of Washington on the third
Tuesday of March, if not a legal holiday, and if a legal holiday then on the
next succeeding business day, at 10:00 a.m.
B. NOTICE OF ANNUAL MEETING. Notice of an annual meeting shall be sent
by mail, not less than ten (10) nor more than fifty (50) days before such
meeting, to each shareholder of record entitled to vote at his address as shown
in the stock record books of the Company.
Section 2. SPECIAL MEETINGS.
A. HOW CALLED. Special meetings of the shareholders entitled to vote
may be called at any time by the Chairman of the Board, the Board of Directors,
the President, or any Executive Vice President. The Board of Directors shall
call a special meeting of the shareholders whenever so requested in a writing
directed to the President or the Secretary by the holders of not less than ten
percent (10%) of all of the shares entitled to vote at the meeting.
B. WHEN AND WHERE HELD. A special meeting shall be held at the time and
place, either within or without the State of Washington, designated in the
notice thereof. Any such meeting may adjourn to a place and time fixed, without
notice, unless otherwise directed by vote of a majority of the shares present
and represented. Any such meeting called by request of ten percent (10%) of the
shareholders entitled to vote as above provided must be held within thirty (30)
days from the receipt of such request.
C. NOTICE OF SPECIAL MEETINGS. Notice of a special meeting shall be
sent by mail not less than ten (10) nor more than fifty (50) days before such
meeting, to each shareholder of record entitled to vote at his address as shown
in the stock record books of the Company. Such notice shall indicate that it is
being issued at the direction of the person or persons calling the meeting and
shall briefly state the purpose of such meeting, and no business other than that
specified in the notice shall be transacted at any such special meeting except
by unanimous consent of all the shareholders entitled to vote and represented.
Section 3. VOTING.
A. VOTING POWER OF STOCK. At any meeting of shareholders, every holder
of stock entitled to vote shall have one vote for each share of such stock
standing in his name on the books of the Company. Neither treasury stock nor
stock held by another corporation, if a majority of the stock entitled to vote
for the election of directors of such other corporation is held by the Company,
shall be voted or counted in determining the total number of outstanding shares
at any given time.
B. MANNER OF VOTING. At all meetings of shareholders, any shareholder
entitled to vote may demand a vote by ballot upon any question; if no such
demand is made the vote shall be viva voce unless otherwise required by law.
C. PROXIES. Each shareholder entitled to vote may vote in person or by
proxy. Every proxy must be signed by the shareholder in person or by his duly
authorized attorney-in-fact and filed with the Secretary at or before the
meeting. No such proxy shall be valid after the expiration of eleven (11) months
from the date of execution thereof, unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the person executing it.
Section 4. CHAIRMAN. The Chairman of the Board, or in his absence the
President, shall be the chairman of all meetings of shareholders unless another
is elected to serve.
Section 5. ORDER OF BUSINESS FOR SHAREHOLDERS' MEETINGS. The order of
business at any meeting of shareholders shall be determined by the chairman of
the meeting.
Section 6. QUORUM; ADJOURNMENT. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the meeting. The shareholders present at a duly called or held meeting
at which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. REQUIRED VOTE. When a quorum is present at any meeting, the
vote of the holders of a simple majority of the shares represented at the
meeting in person or by proxy and entitled to vote shall decide any question
brought before such meeting, unless a greater number or voting by classes is
required by statute or the Articles of Incorporation.
Section 8. ACTION BY UNANIMOUS WRITTEN CONSENT. Any action required to
be taken or any action which may be taken at a meeting of the shareholders may
be taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to vote with respect
to such action. Such consent shall have the same effect as a unanimous vote of
shareholders.
ARTICLE II
BOARD OF DIRECTORS
Section 1. POWERS. The business of the Company shall be managed by the
Board of Directors which may exercise all such power of the Company and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors of the
Company shall be comprised of nine (9) members. Directors need not be
shareholders of the Company or residents of the State of Washington.
Section 3. ELECTION OF DIRECTORS. The directors shall be elected at
the annual meeting of shareholders by a plurality vote. The shareholders of the
Company do not have cumulative voting rights.
Section 4. TERM OF OFFICE. The term of office for each director shall
be until the next annual meeting of shareholders and until his successor has
been elected and qualified.
Section 5. FILLING OF VACANCIES. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced.
Section 6. PLACE OF MEETING. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Washington.
Section 7. ORGANIZATIONAL MEETINGS. The organizational meeting of each
newly elected Board of Directors shall be held at such time and place as shall
be fixed by the Board and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event such meeting is not held at the time and
place so fixed by the Board, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors. At such organizational meeting, the Board of
Directors shall choose officers of the Company specified in Article V, Section
1, of these Bylaws and transact such other business as may properly be brought
before the meetings.
Section 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board at any time; and upon the written
request of one-third (1/3) of the whole Board of Directors, he shall call a
special meeting to be held not more than (20) days after the receipt of such
request by him. At least five (5) days' notice of each special meeting shall be
given by the Secretary by mailing a notice to the last known address of each
director. Any director may waive notice of any special meeting at any time.
Section 9. QUORUM. At all meetings of the Board of Directors a majority
of directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by the Articles of Incorporation or these Bylaws.
Section 10. REMOVAL OF DIRECTORS. Any director may be removed, either
for or without cause, by a vote of the shareholders holding a majority of the
shares then entitled to vote at an election of directors, at any special meeting
of the shareholders called expressly for that purpose.
Section 11. RESIGNATION OF DIRECTORS. Any director may resign his
office at any time by giving oral or written notice of such resignation, and
such resignation shall take effect at the time of its receipt by the Company and
without formal acceptance.
Section 12. COMPENSATION OF DIRECTORS. Each director shall be
reimbursed for travel and other out-of-pocket expenses incurred to attend
meetings of the Board of Directors and committees of which he is a member. No
fees shall be paid directors who are employed by the Company or its affiliates.
Reasonable fees may be paid to directors who are not employed by the Company or
any of its affiliates. Such fees shall be established from time to time by the
Board of Directors.
Section 13. SPECIAL COMMITTEES. A majority of the full Board of
Directors may appoint from among its members any special committee deemed
advisable by it and shall fix the duties and powers of any committee so
appointed. The Board of Directors shall not delegate any responsibilities to any
such committee where such a delegation is in violation of the terms of RCW
23A.08.400.
Section 14. ACTION BY UNANIMOUS WRITTEN CONSENT. Any action required to
be taken or any action which may be taken at a meeting of the Board of
Directors, the Executive Committee, the Investment Committee, or any other
committee, may be taken without a meeting if a consent in writing, setting forth
the action to be taken, shall be signed before such action by all of the
directors, or all of the members of the committee, as the case may be. Such
consent shall have the same effect as a unanimous vote.
Section 15. MEETINGS BY CONFERENCE TELEPHONE. Members of the Board of
Directors, or members of a committee of directors may participate in their
respective meetings by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time; participation in a meeting by such means shall
constitute presence in person at such meeting.
ARTICLE III
STANDING COMMITTEES
Section 1. EXECUTIVE COMMITTEE.
A. NUMBER. A majority of the full Board of Directors shall annually
elect an Executive Committee composed of three members of the Board of Directors
and may elect one or more alternate members to the Executive Committee who shall
have no right to vote unless the alternate member is substituting for a regular
member. The Committee shall appoint a secretary.
(1) RESIGNATIONS. Any member of the Executive Committee may resign
therefrom without affecting his status as a director, without formal acceptance
in any case.
(2) VACANCIES. A majority of the full Board of Directors may
fill any vacancy in the Executive Committee for the unexpired term.
B. MEETINGS. The Executive Committee shall meet at such time or times
and at such place or places as may be determined by the Chairman of the Board or
the President. Notice of each meeting shall be mailed to each member at least
three (3) days prior to the date of the meeting or shall be given to each member
either personally or by telephone at least one day prior to the date of the
meeting.
(1) QUORUM. A majority of the Committee shall constitute a quorum.
(2) CORPORATE RECORD. The proceedings of the Committee shall be
recorded in the regular Minute Book of the Corporation.
C. POWERS AND AUTHORITY. During the intervals between the meetings of
the Board of Directors, except as otherwise provided from time to time by
resolution passed by a majority of the full Board, and except as provided by
these Bylaws, the Executive Committee shall have and may exercise all powers of
the Board of Directors in the management of the business and affairs of the
Corporation and shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. The Executive Committee shall have
all power and authority which the full Board may exercise under the terms of
these Bylaws and the Articles of Incorporation except that the Executive
Committee cannot declare dividends or distributions, except at the rate or in a
periodic amount determined by the full Board of Directors; approve or recommend
to shareholders actions or proposals required by the laws under which this
corporation is formed to be approved by shareholders; fill vacancies on the
Board of Directors or any committee thereof; amend the Bylaws; authorize or
approve the reacquisition of shares unless pursuant to a general formula or
method approved by the full Board of Directors; fix compensation of any director
for serving on the Board of Directors or on any committee; approve a plan of
merger, consolidation or exchange of shares not requiring shareholder approval;
reduce earned or capital surplus; or appoint other committees of the Board of
Directors or the members thereof.
Section 2. INVESTMENT COMMITTEE
A. NUMBER. A majority of the full Board of Directors shall annually
elect an Investment Committee composed of six (6) members and may elect one or
more alternate members to the Investment Committee who shall have no right to
vote unless the alternate member is substituting for a regular member. Members
and alternate members of the Investment Committee need not be directors of the
Corporation.
(1) RESIGNATIONS. Any member of the Investment Committee may
resign therefrom without formal acceptance in any case.
(2) VACANCIES. A majority of the full Board of Directors may fill
any vacancy in the Investment Committee for the unexpired term.
B. MEETINGS. The Investment Committee shall meet at such time or times
and at such place or places as determined by the Chairman of the Board or the
Chairman of the Investment Committee.
(1) QUORUM. The Board of Directors may by resolution establish a
quorum of less than a majority of the Committee for the purpose of making such
investment decisions as shall be stated in such resolution.
(2) MINUTES. The proceedings of the Committee shall be recorded and
a report shall be submitted to the Board of Directors for approval at the next
meeting of the Board.
C. POWERS AND AUTHORITY. The Investment Committee shall have charge of
all investments of the Corporation with full power to buy, sell, foreclose,
extend, improve, and to otherwise change the investment holdings of the
Corporation, subject to the laws of the State of Washington. No investment,
loan, sale or exchange thereof, other than a policy loan, shall be made unless
the same has been authorized in advance or subsequently approved by the
Committee.
ARTICLE IV
NOTICES
Section 1. MEANS OF GIVING NOTICE. Whenever, under the provisions of
the statutes or of the Articles of Incorporation or of these Bylaws, notice is
required to be given to any director or shareholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at his address as it appears on the
records of the Company, with postage thereon prepaid. Such notice shall be
deemed to be delivered at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by telegram.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Articles of Incorporation
or of these Bylaws, a waiver thereof in writing, signed by the person or person
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Attendance at a meeting
without protest shall constitute a waiver of notice.
ARTICLE V
OFFICERS
Section 1. REQUIRED OFFICERS; OPTIONAL OFFICERS. A President, a
Secretary, and a Treasurer shall be elected annually by the Board of Directors
at its organizational meeting following the annual meeting of shareholders. The
Board of Directors may also elect a Chairman of the Board. The Board of
Directors or the Executive Committee may also elect or appoint one or more
Executive Vice Presidents and Vice Presidents, and one or more Assistant
Secretaries and Assistant Treasurers, and such other officers and agents as may
be appointed in accordance with Section 3 of this Article.
Section 2. TERM OF OFFICE; QUALIFICATIONS. Each officer shall hold
office until his successor is chosen and qualified or until his death, or until
he shall resign in the manner provided in Section 4 of this Article, or shall be
removed in the manner provided in Section 5 of this Article. The Chairman of the
Board and the President shall be chosen from the directors of the Company. Any
other officer may but need not be a director of the Company. Any two or more
offices may be held by the same person, except the offices of President and
Secretary may not be held by the same person.
Section 3. SUBORDINATE OFFICERS; APPOINTMENT. The Board of Directors or
the Executive Committee may appoint such other officers or agents as it may deem
necessary or advisable to hold office for such period, have such authority, and
perform such duties as the Board of Directors or the Executive Committee may
determine. The Board of Directors or the Executive Committee may delegate to any
officer the power to appoint subordinate officers or agents and to prescribe
their respective terms of office, authorities, and duties.
Section 4. RESIGNATIONS. Any officer may resign his office at any time
by giving oral or written notice of such resignation to the Board of Directors,
the President, or the Secretary of the Company. Unless otherwise specified in
such notice, such resignation shall take effect upon receipt thereof.
Section 5. REMOVAL. Any officer or agent of the Company elected or
appointed pursuant to this Article may be removed, either for or without cause,
by the Board of Directors whenever in its judgment the best interests of the
Company will be served thereby.
Section 6. VACANCIES. A vacancy in any office by reason of death,
resignation, removal, disqualification, or any other cause, shall be filled in
the manner provided in this Article for regular election or appointment to such
office.
Section 7. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
be vested with and shall perform all such powers and duties as are incident to
his office which are not by these Bylaws specifically allocated to other
officers. He shall preside at the meetings of shareholders, the Board of
Directors, and the Executive Committee, if present, and shall be vested with and
shall perform such other powers and duties as may be assigned to him by the
Board of Directors.
Section 8. THE PRESIDENT. The President shall be the chief executive
and administrative officer of the Company. Subject to the authority of the Board
of Directors, he shall have the general direction of the affairs of the Company.
He shall have charge of the employed personnel of the Company, and of its
contracts with operating agencies. In the absence or inability of the Chairman
of the Board, he shall preside at meetings of shareholders, the Board of
Directors, and the committees of the Board. Subject to the authority of the
Board, he shall see that all orders and resolutions of the Board of Directors
and the Executive Committee and other committees of the Board are carried into
effect. He may sign certificates representing stock of the Company, the issuance
of which shall have been authorized by the Board of Directors. He shall report
to the Board of Directors and to the Executive Committee all the matters within
his knowledge which the interests of the Company may require to be brought to
their attention. The President at his discretion and with the approval of the
Board may delegate to other officers and employees duties, responsibilities, and
authority not inconsistent with any which may be vested in them by these Bylaws,
the Board, or any appropriate committee. The President shall have the right to
attend all committee meetings and he shall have the prerogatives of a member
including the right to vote at such meetings unless otherwise specifically
provided by resolution of the Board.
Section 9. VICE PRESIDENTS. The Executive Vice Presidents and other
Vice Presidents of which there may be more than one (1) and with such titles as
the Board may see fit to confer shall be vested with such authority and shall
perform such duties as may be assigned to them by the Board of Directors or by
the President within his delegated authority, provided such authority shall not
be inconsistent with any which has been otherwise vested by the Board, by these
Bylaws, or any appropriate committee of the Board.
In the absence of the President and the Chairman of the Board or in the
event of the disability of both, the Executive Vice Presidents in the order
determined by the Board of Directors, (or, in the event of their absence or
disability, the Vice Presidents in the order determined by the Board of
Directors) shall perform the duties of the President, and when so acting, shall
exercise the powers of the President.
Section 10. THE SECRETARY. The Secretary shall:
A. Record all the proceedings of the meetings of the shareholders,
Board of Directors and Executive Committee in a book to be kept for that
purpose;
B. Cause all notices to be duly given in accordance with the provisions
of these Bylaws and as required by statute;
C. Whenever any committee shall be appointed in pursuance of a
resolution of the Board of Directors, furnish the chairman of such committee
with a copy of such resolution;
D. Be custodian of the records and of the seal of the Company, and
cause such seal to be affixed to all certificates representing stock of the
Company prior to the issuance thereof and to all instruments, the execution of
which on behalf of the Company under its seal shall have been duly authorized in
accordance with these Bylaws;
E. See that the lists, books, reports, statements, certificates, and
other documents and records required by statute are properly prepared, kept, and
filed;
F. Have charge of the stock books of the Company and cause the stock
and transfer books to be kept in such manner as to show at any time the amount
of stock of the Company of each class issued and outstanding, the names
alphabetically arranged and the addresses of the holders of record thereof, the
number of shares held by each and the time when each became such holder of
record; and exhibit at all reasonable times to any director, upon application,
the original or duplicate stock register;
G. Sign certificates representing stock of the Company the issuance of
which shall have been authorized by the Board of Directors; and
H. In general, perform all duties incident to the office of Secretary
and such other duties as are given to him by these Bylaws or may be assigned to
him by the Board of Directors or the President.
Section 11. ASSISTANT SECRETARIES. The Assistant Secretary, or, if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
Section 12. THE TREASURER. The Treasurer shall:
A. Have charge of and supervision over and be responsible for the
funds, securities, receipts and disbursements of the Company;
B. Cause the moneys and other valuable effects of the Company to be
deposited in the name and to the credit of the Company in such banks or trust
companies or with such bankers or other depositories as shall be selected by the
Board of Directors;
C. Cause the funds of the Company to be disbursed by checks or drafts
upon the authorized depositories of the Company in such banks or trust companies
or with such bankers or other depositories as shall be selected by the Board of
Directors;
D. Render to the proper officers or the Board of Directors or any
standing committee whenever requested a statement of the financial condition of
the Company and of all his transactions as Treasurer, and render a full
financial report at the annual meeting of the shareholders, if called up to do
so;
E. Cause to be kept at the principal business office of the Company
correct books of account of all its business and transactions; and
F. In general, perform all duties incident to the office of Treasurer
and such other duties as are given by these Bylaws or as may be assigned to him
by the Board of Directors or the President.
ARTICLE VI
CAPITAL STOCK AND SHAREHOLDERS
Section 1. CERTIFICATES. Every holder of stock in the Company shall be
entitled to have a certificate in the form approved by the Board of Directors
and signed by the President or a Vice President and the Secretary or an
Assistant Secretary and sealed with the seal of the Company, certifying to the
number of shares owned by him in the Company.
Section 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of stock of the Company, and may require
all such certificates to bear the signature of either or both.
Section 3. FACSIMILE SIGNATURES. Where a certificate is countersigned
(a) by a transfer agent other than the Company or its employee, or (b) by a
registrar other than the Company or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Company with the same effect as
if he were such officer, transfer agent or registrar at the date of issue.
Section 4. LOST OR DESTROYED CERTIFICATES. The holder of any shares of
stock of the Company shall immediately notify the Company and its transfer
agents and registrars, if any, of any loss or destruction of the certificates
representing the same. The Company may issue a new certificate in the place of
any certificate theretofore issued by it alleged to have been lost or destroyed
and the Board of Directors may require the owner of the lost or destroyed
certificate, or his legal representatives, to give the Company a bond in such
sum as the Board of Directors may direct, not exceeding double the value of the
stock, and with such surety or sureties as may be satisfactory to the Board of
Directors to indemnify the Company and its transfer agents and registrars, if
any, against any claims that may be made against it or any such transfer agent
or registrar on account of the alleged loss or destruction of any such
certificates. A new certificate may be issued without requiring any bond when,
in the judgment of the Board of Directors, it is proper to do so.
Section 5. TRANSFERS OF STOCK. Upon surrender to the Company or the
transfer agent of the Company of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Company to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books.
Section 6. FIXING RECORD DATE. In order that the Company may determine
the shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent or dissent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than fifty (50) nor less than ten (10)
days before the date of such meeting, nor more than fifty (50) days prior to any
other action. A determination of shareholders of record entitled to notice or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 7. VOTING LIST. At least ten (10) days before each meeting of
shareholders, the officer or transfer agent having charge of the stock transfer
books of the Company shall make a complete list of shareholders entitled to vote
at such meeting arranged in alphabetical order with the address and the number
of shares held by each. The list shall be kept on file at the registered office
of the Company for a period of ten (10) days prior to such meeting. The list
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting.
Section 8. REGISTERED SHAREHOLDERS. The Company shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Washington.
ARTICLE VII
Section 1. DIVIDENDS. Dividends upon the capital stock of the Company,
subject to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any meeting in accordance with the
provisions of all applicable statutes.
Section 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Company available for dividends such sum or sums
as the Board of Directors from time to time, in their absolute discretion,
except as may be required by law, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Company, or for such other purpose as the Board of Directors
shall think conducive to the interests of the Company, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
Section 3. CHECKS. All checks or demands for money and notes of the
Company shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the corporation shall begin
January 1 and end December 31 of each year.
Section 5. CERTIFIED PUBLIC ACCOUNTANTS. The Board of Directors shall
designate one or more certified public accountants to be employed to make a
detailed examination and audit of the books of accounts, funds, and securities
of the Company.
Section 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Each director and
officer, as those terms are defined in RCW 23A.08.025, shall be indemnified to
the fullest extent permitted by the Washington Business Corporation Act. Each
person who serves as a trustee of any employee benefit plan shall be indemnified
to the fullest extent permitted by the laws under which this corporation is
formed. Further, the corporation shall have the power to indemnify each employee
and each person other than a director of this corporation serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the same
extent as directors are indemnified pursuant to the first sentence above, and to
such further extent as authorized by the Board of Directors. The Board of
Directors may obtain insurance on behalf of any person who is or was a director,
officer, employee or other person serving at the request of the corporation,
against any liability arising out of that person's status as such, whether or
not the corporation would have the power to indemnify that person against such
liability.
ARTICLE VIII
AMENDMENTS
These Bylaws, or any of them, may be amended or repealed and new Bylaws
may be adopted, either (a) by the Board of Directors, by vote of a majority of
the directors present at any organizational meeting of the Board, without
previous notice, or at any special meeting of the Board, provided that notice of
such proposed amendment, repeal or adoption of new Bylaws is given in the notice
of such special meeting, or by written consent without a meeting signed by all
directors pursuant to Article II, Section 14, of these Bylaws; or (b) by the
shareholders at any annual meeting of shareholders, without previous notice, or
at any special meeting of the shareholders, provided that notice of such
proposed amendment, repeal or adoption is given in the notice of such special
meeting, or by written consent without a meeting signed by all shareholders
pursuant to Article I, Section 8 of these Bylaws.
Any Bylaws amended or adopted by the shareholders may be amended or
repealed by the Board of Directors, and any Bylaws amended or adopted by the
Board of Directors may be amended or repealed by the shareholders, but the Board
of Directors shall not adopt, amend or repeal any Bylaws fixing their
qualification, classification, term of office or compensation.
EX-99.8A
15
PARTICIPATION AGREEMENT WITH ALGER
EXHIBIT 99.8a
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 30 day of June 1995, by and among The Alger
American Fund (the "Trust"), an open-end management investment company organized
as a Massachusetts business trust, Northern Life Insurance Company, a life
insurance company organized as a corporation under the laws of the State of
Washington, (the "Company"), on its own behalf and on behalf of each segregated
asset amount of the Company set forth in Schedule A, as may be amended from time
to time (the "Accounts"), and Fred Alger and Company, Incorporated, a Delaware
corporation, the Trust's distributor (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used
as an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into
the following series which are available for purchase by the Company for the
Accounts: Alger American Small Capitalization Portfolio, Alger American Growth
Portfolio, Alger American Income & Growth Portfolio, Alger American Balanced
Portfolio, Alger American MidCap Growth Portfolio, and Alger American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and/or variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of one or more Portfolios as
investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1. For purposes of this Article I the Company shall be the Trusts agent
for the receipt from each account of purchase orders and requests for
redemption pursuant to the Contracts relating to each Portfolio,
provided that the Company notifies the Trust of such purchase orders
and requests for redemption by 10:30 a.m. Eastern time on the next
following Business Day, as defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the Accounts
at the net amount value next computed after receipt of a purchase order
by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust describing
Portfolio purchase procedures. The Company will transmit orders from
time to time to the Trust for the purchase and redemption of shares of
the Portfolios. The Trustees of the Trust (the "Trustees") may refuse
to sell shares of any Portfolio to any person, or suspend or terminate
the offering of shares of any Portfolio if such action is required by
law or by regulatory author- ities having jurisdiction or if, in the
sole discretion of the Trustees acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws,
such action is deemed in the best interests of the shareholders of such
Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on
behalf of an Account with federal funds to be transmitted by wire to
the Trust, with the reasonable expectation of receipt by the Trust by
2:00 p.m. Eastern time on the next Business Day after the Trust (or its
agent) receives the purchase order. Upon receipt by the Trust of the
federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Trust for this purpose. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Commission.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at
the net asset value next computed after receipt by the Trust (or its
agent) of the request for redemption, as established in accordance with
the provisions of the then current prospectus of the Trust describing
Portfolio redemption procedures. The Trust shall make payment for such
shares in the manner established from time to time by the Trust.
Proceeds of redemption with respect to a Portfolio will normally be
paid to the Company for an Account in federal funds transmitted by wire
to the Company by order of the Trust with the reasonable expectation of
receipt by the Company by 2:00 p.m. Eastern time on the next Business
Day after the receipt by the Trust (or its agent) of the request for
redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires or if extra- ordinary market
conditions exist but in no event shall payment be delayed for a greater
period than is permitted by the 1940 Act. The Trust reserves the right
to suspend the right of redemption, consistent with Section 22(e) of
the 1940 Act and any rules thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of
the Trust's Portfolios under Section 1.4 on any Business Day may be
netted against one another for the purpose of determining the amount of
any wire transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio Shares purchased from the Trust will be recorded in
the appropriate tide for each Account or the appropriate subaccount of
each Account.
1.7. The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions
payable on the shares of any Portfolio of the Trust. The Company hereby
elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Trust shall notify the Company of the
number of shares so issued as payment of such dividends and
distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net
asset value per share for each Portfolio available to the Company or
its designated agent on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available to the
Company by 6:30 p.m. Eastern time each Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts,
to the Fund Sponsor or its affiliates and to such other entities as may
be permitted by Section 817(h) of the Code, the regulations hereunder,
or judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public. The Company
agrees that it will use Trust shares only for the purposes of funding
the Contracts through the Accounts listed in Schedule A, as amended
from time to time.
1.10. The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in
Section 2.9 and Article IV of this Agreement.
ARTICLE II
OBLIGATIONS OF THE PARTIES
2.1. The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all
shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and
statements of additional information of the Trust. The Trust shall bear
the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance
and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state
law.
2.3. The Trust shall provide such documentation (including a final copy of
the Trust's prospectus as set in type or in camera-ready copy) and
other assistance as is reasonably necessary in order for the Company to
print together in one document the current prospectus for the Contracts
issued by the Company and the current prospectus for the Trust. The
Trust shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Contract owners, and
the Company shall bear the expense of printing copies of the Trust's
prospectus that are used in connection with offering the Contracts
issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense,
one copy of the Trust's current Statement of Additional Information
("SAI") to the Company and to any Contract owner who requests such SAI,
(2) at the Company's expense, such additional copies of the Trust's
current SAI as the Company shall reasonably request and that the
Company shall require in accordance with applicable law in connection
with offering the Contracts issued by the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other
communications to shareholders in such quantity as the Company shall
reasonably require for purposes of distributing to Contract owners. The
Trust, at the Company's expense, shall provide the Company with copies
of its periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably request
for use in connection with offering the Contracts issued by the
Company. If requested by the Company in lieu thereof, the Trust shall
provide such documentation (including a final copy of the Trust's proxy
materials, periodic reports to shareholders and other communications to
shareholders, as set in type or in camera-ready copy) and other
assistance as reasonably necessary in order for the Company to print
such share- holder communications for distribution to Contract owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole
owner of the name and mark "Alger" and that all use of any designa-
tion comprised in whole or part of such name or mark under this
Agreement shall insure to the benefit of the Distributor. Except as
provided in Section 2.5, the Company shall not use any such name or
mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other
materials relating to the Accounts or Contracts without the prior
written consent of the Distributor. Upon termination of this
Agreement for any reason, the Company shall cease all use of any such
name or mark as soon as reasonably practicable.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or
its designee a copy of each Contract prospectus and/or statement of
additional information describing the Contracts, each report to
Contract owners, proxy statement, application for exemption or request
for no-action letter in which the Trust or the Distributor is named
contemporaneously with the filing of such document with the Commission.
The Company shall furnish, or shall cause to be furnished, to the Trust
or its designee each piece of sales litera- ture or other promotional
material in which the Trust or the Distributor is named, at least five
Business Days prior to its use. No such material shall be used if the
Trust or its designee reasonably objects to such use within three
Business Days after receipt of such material.
2.8. The Company shall not give any information or make any representa-
tions or statements on behalf of the Trust or concerning the Trust or
the Distributor in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from
the registration statement or prospectus for the Trust shares (as such
registration statement and prospectus may be amended or supplemented
from time to time), annual and semi-annual reports of the Trust,
Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the prior
written permission of the Trust, the Distributor or their respective
designees. The Trust and the Distributor agree to respond to any
request for approval on a prompt and timely basis. The Company shall
adopt and implement procedures reasonably designed to ensure that
"broker only" materials including information therein about the Trust
or the Distributor are not distributed to existing or prospective
Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information Amount the Trust, the Portfolios
and the Distributor, in such form as the Company may reasonably
require, as the Company shall reasonably request in connection with the
preparation of registration statements, prospectuses and annual and
semi-annual reports pertaining to the Contracts.
2.10. The Trust and the Distributor shall not give, and agree that no
affiliate of either of them shall give, any information or make any
representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the regis-
tration statement or prospectus for the Contracts (as such registra-
tion statement and prospectus may be amended or supplemented from time
to time), or in materials approved by the Company for distribution
including sales literature or other promotional materials, except as
required by legal process or regulatory authorities or with the prior
written permission of the Company. The Company agrees to respond to any
request for approval on a prompt and timely basis.
2.11. So long as, and to the extent that, the Commission interprets the 1940
Act to require passthrough voting privileges for Contract owners, the
Company will provide pass-through voting privileges to Contract owners
whose cash values are invested, through the registered Accounts, in
shares of one or more Portfolios of the Trust. The Trust shall require
all Participating Insurance Companies to calculate voting privileges in
the same manner and the Company shall be responsible for assuring that
the Accounts calculate voting privileges in the manner established by
the Trust. With respect to each registered Account, the Company will
vote shares of each Portfolio of the Trust held by a registered Account
and for which no timely voting instructions from Contract owners are
received in the same proportion as those shares for which voting
instructions are received. The Company and its agents will in no way
recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contacts without the prior written
consent of the Trust, which consent may be withheld in the Trust's sole
discretion. The Company reserves the right, to the extent permitted by
law, to vote shares held in any Account in its sole discretion.
2.12. The Company and the Trust will each provide to the other information
about the results of any regulatory examination relating to the
Contracts or the Trust, including relevant portions of any "deficiency
letter" and any response thereto.
2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified
expense reimbursements). However, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust, the
Accounts or both.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of
Washington and than it has legally and validly established each Account
as a segregated out account under such law as of the date set forth in
Schedule A, and that Washington Square Securities, Inc., the principal
underwriter for the Contracts, is registered as a broker-dealer under
the Securities Exchange Act of 1934 and is a member in good standing of
the National Association of Securities Dealers, Inc.
3.2. The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act
and cause each Account to remain so registered to serve as a segregated
asset account for the Contracts, unless an exemption from registration
is available.
3.3. The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is
available prior to any issuance or sale of the Contracts; the Contracts
will be issued and sold in compliance in all materials respects with
all applicable federal and state laws; and the sale of the Contracts
shall comply in all material respects with state insurance law
suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act and
the rules and regulations thereunder.
3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered
under the 1933 Act and sold in accordance with all applicable federal
and state laws, and the Trust shall be registered under the 1940 Act
prior to and at the time of any issuance or sale of such shares. The
Trust shall amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify
its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Trust.
3.6. The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements for
variable annuity, endowment or life insurance contracts set forth in
Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and will notify the Company
immediately upon having a reasonable basis for believing any Portfolio
has ceased to comply or might not so comply and will immediately take
all reasonable steps to adequately diversify the Portfolio to achieve
compliance within the grace period afforded by Regulation 1.817-5.
3.7. The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it
will make every effort to maintain such qualification and will notify
the Company immediately upon having a reasonable basis for believing it
has ceased to so qualify or might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of
a Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less
than the minimum coverage required by Rule 17g-1 or other applicable
regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and validly
existing under the laws of the State of Delaware and that it is
registered, and will remain registered, during the term of this
Agreement, as a broker-dealer under the Securities Exchange Act of 1934
and is a member in good standing of the National Association of
Securities Dealers, Inc.
ARTICLE IV
POTENTIAL CONFLICTS
4.1. The parties acknowledge that a Portfolio's shares may be made available
for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all Participating Insurance Companies. A material
irreconcilable conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an adminis-
trative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract
and variable life insurance contract owners; or (f) a decision by an
insurer to disregard the voting instructions of contract owners. The
Trust shall promptly inform the Company of any determination by the
Trustees that a material irreconcilable conflict exists and of the
implications thereof.
4.2. The Company agrees to report promptly any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist
the Trustees in carrying out their responsibilities under the Shared
Funding Exemptive Order by providing the Trustees with all information
reasonably necessary for and requested by the Trustees to consider any
issues raised including, but not limited to, information as to a
decision by the Company to disregard Contract owner voting
instructions. All communications from the Company to the Trustees may
be made in care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
that affects the interests of contract owners, the Company shall, in
cooperation with other Participating Insurance Companies whose contract
owners are also affected, at its own expense and to the extent
reasonably practicable (as determined by the Trustees) take whatever
steps are necessary to remedy or eliminate the material irreconcilable
conflict, which steps could include: (a) withdrawing the assets
allocable to some or all of the Accounts from the Trust or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or
submitting the question of whether or not such segregation should be
implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw
the affected Account's investment in the Trust and terminate this
Agreement with respect to such Account; provided, however that such
withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end
of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw
the affected Accounts investment in the Trust and terminate this
Agreement with aspect to such Account within six (6) months after the
Trustees inform the Company in writing that the Trust has determined
that such decision has created a material irreconcilable conflict;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees.
Until the end of such six (6) month period, the Trust shall continue to
accept and implement orders by the Company for the purchase and
redemption of shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in
no event will the Trust be required to establish a new funding medium
for any Contract. The Company shall not be required to establish a new
funding medium for the Contracts if an offer to do so has been declined
by vote of a majority of Contract owners materially adversely affected
by the material irreconcilable conflict. In the event that the Trustees
determine that any proposed action does not adequately remedy any
material irreconcilable conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within
six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested Trustees.
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so
that the Trustees may fully carry out the duties imposed upon them by
the Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if reasonably deemed
appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or Rule 6e-3 is
adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared
Funding Exemptive Order, then the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-3(T), as amended, or Rule 6e-3, as
adopted, to the extent such rules are applicable.
ARTICLE V
INDEMNIFICATION
5.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless the Distributor, the Trust and each of its Trustees,
officers, employees and agents and each person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
5.1) against any and all losses, claim, damages, liabilities (including
amounts paid in settlement with the written consent of the Company,
which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal
counsel fees incurred in connection therewith) (collectively,
"Losses"), to which the Indemnified Parties may become subject under
any statute or regulation, or at common law or otherwise, insofar as
such Losses are related to the sale or acquisition of the Contracts or
Trust shares and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in
the Contracts themselves or in sales literature generated or
approved by the Company on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing)
(collectively, "Company Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written
information furnished to the Company by or on behalf of the
Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section
5.2(a)) or wrongful conduct of the Company or persons under
its control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such statement or omission was made in
reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under
the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other breach of
this Agreement by the Company; or
(f) arise out or result from the provision by the Company to the
Trust of insufficient or incorrect information regarding the
purchase or sale of shares of any Portfolio, or the failure of
the Company to provide such information on a timely basis.
5.2. INDEMNIFICATION BY THE DISTRIBUTOR AND THE TRUST. The Distributor and
the Trust, jointly and severally, agree to indemnify and hold harmless
the Company and each of its directors, officers, employees, and agents
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
the purposes of this Section 5.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the
written consent of the Distributor, which consent shall not be
unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability
or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or
acquisition of the Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement or prospectus for the Trust (or any
amendment or supplement thereto) (collectively, "Trust
Documents" for the purposes of this Article V), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
was accurately derived from written information furnished to
the Distributor or the Trust by or on behalf of the Company
for use in Trust Documents or otherwise for use in connection
with the sale of the Contracts or Trust shares and; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived form Company Documents) or wrongful conduct
of the Distributor or persons under its control, with respect
to the sale or acquisition of the Contracts or Portfolio
shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a fact contained in Company Documents or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf
of the Trust; or
(d) arise out of or result from any failure by the Distributor or
the Trust to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor or the
Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Distributor or
the Trust.
5.3. None of the Company, the Trust or the Distributor shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as applicable,
with respect to any Losses incurred or assessed against an Indemnified
Party that arise from such Indemnified Party's willful misfeasance, bad
faith or negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
5.4. None of the Company, the Trust or the Distributor shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as applicable,
with respect to any claim made against an Indemnified party unless such
Indemnified Party shall have notified the other party in writing within
a reasonable time after the summons, or other first written
notification, giving information of the nature of the claim shall have
been served upon or otherwise received by such Indemnified Party (or
after such Indemnified Party shall have received notice of service upon
or other notification to any designated agent), but failure to notify
the party against whom indemnification is sought of any such claim
shall not relieve that party from any liability which it may have to
the Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also
shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After notice
from the indemnifying party to the Indemnified Party of an election to
assume such defense, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
ARTICLE VI
TERMINATION
6.1. This Agreement shall terminate:
(a) at the option of any party upon 60 days advance written notice
to the other parties, unless a shorter time is agreed to by
the parties;
(b) at the option of the Trust or the Distributor if the Company
issued by the Company cease to qualify as annuity contracts or
life contracts, as applicable, under the Code or if the
Contracts are not registered, issued or sold in accordance
with applicable state and/or federal law; or
(c) at the option of any party upon a determination by a majority
of the Trustees of the Trust, or a majority of its
disinterested Trustees, that a material irreconcilable
conflict exists; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Distributor by the NASD,
the SEC, or any state securities or insurance department or
any other regulatory body regarding the Trusts or the
Distributor's duties under this Agreement or related to the
sale of Trust shares or the operation of the Trust; or
(e) at the option of the Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section
3.6 hereof; or
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company,
and upon prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of
the Portfolio are not registered, issued or sold in accordance
with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the
Company; or
(h) at the option of the Company, if the Portfolio fails to
qualify as a Regulated Investment Company under Subchapter M
of the Code; or
(i) at the option of the Distributor if it shall determine in its
sole judgment exercised in good faith, that the Company and/or
its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or
prospect since the date of this Agreement or is the subject of
material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio pursuant to the
terms and conditions of this Agreement for all Contracts in effect on
the effective date of on of this Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall
survive the termination of this Agreement as long as shares of the
Trust are held on behalf of Contract owners in accordance with Section
6.2.
ARTICLE VII
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust or its Distributor:
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, NJ 07302
Attn: Gregory S. Duch
If to the Company:
Northern Life Insurance Company
1110 Third Avenue
Seattle, WA 98101
Attn: Emily Davis
ARTICLE VIII
MISCELLANEOUS
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
8.2. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof under and
in accordance with the laws of the State of New York. It shall also be
subjoin to the provisions of the federal securities laws and the rules
and regulations thereunder and to any orders of the Commission granting
exemptive relief therefrom and the conditions of such orders. Copies of
any such orders shall be promptly forwarded by the Trust to the
Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and no Trustee, officer, agent or
holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission,
the National Association of Securities Dealers, Inc. and state
insurance regulators) and shall permit such authorities reasonable
access to its books and records in connection with any investigation or
inquiry relating to this Agreement or the transactions contemplated
hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the
other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by all parties.
8.11. Each party hereto shall, except as required by law or otherwise
permitted by this Agreement, treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto, and
shall not disclose such confidential information without the written
consent of the affected party unless such information has become
publicly available.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
Fred Alger and Company, Incorporated
By: Gregory Duch
Name: Gregory Duch
Title: Executive VP
Alger American Fund
By: Gregory Duch
Name: Gregory Duch
Title: Treasurer
Northern Life Insurance Company
By: Jerome Mills
Name: Jerome A. Mills
Title: Vice President, Marketing
SCHEDULE A
Separate Account One
(Established March 22, 1994)
EX-99.8B
16
PARTICIPATION AGREEMENT WITH FIDELITY VIP
EXHIBIT 99.8b
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
NORTHERN LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of January,
1995 by and among NORTHERN LIFE INSURANCE COMPANY, (hereinafter the "Company"),
a Washington corporation, on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the "Account"),
and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable the insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE 1. SALE OF FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 10:30 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article B
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available as
a funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a
list of such funds appearing on Schedule C to this Agreement); or (d) the Fund
or Underwriter consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 48.18A.020 of the Revised Code of Washington and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Washington and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Washington and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Washington to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of Washington and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Washington and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individual/entities dealing with the money and/or securities of the Fund are and
shall continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, in an amount not less $5
million. The aforesaid includes coverage for larceny and embezzlement is issued
by a reputable bonding company. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Fund and the Underwriter in the event
that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to exiting owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such portfolio for which instructions have been
received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its
designee, each piece of sales literature or other promotional material in which
the Fund or its investment adviser or the Underwriter is named, at least fifteen
Business Days prior to its use. No such material shall be used if the Fund or
its designee reasonably objects to such use within fifteen Business Days after
receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance with the
grace period afforded by Regulation 817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of
the Fund for use in the Registration Statement or prospectus for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on behalf
of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any
other material breach of this Agreement by the Company, as limited by
and in accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law, or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the
Underwriter the written notice specified in Section 1.6(b)
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of
this Agreement;
provided, however any termination under this Section 10.1(h)
shall be effective forty five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request, the
Company will promptly furnish to the Fund and the Underwriter the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory to the
Fund and the Underwriter) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption, or (iii) as permitted by an order
of the SEC pursuant to Section 26(b) of the 1940 Act. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Northern Life Insurance Company
1110 Third Avenue
Seattle, WA 98101
Attention: Emily Davis
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any
affiliate of or company under common control with the Underwriter, if such
assignee is duly licensed and registered to perform the obligations of the
Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under
statutory accounting principles) and if any, as soon
as practical and in any event within 90 days after
the end of each fiscal year;
(b) the Company's quarterly statements (statutory), as
soon as practical and in any event within 45 days
after the end of each quarterly period:
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the
delivery thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after the
filing thereof,
(e) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of the
books of the Company, as soon as practical after the
receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
NORTHERN LIFE INSURANCE COMPANY
By: /s/ Jerome Mills
Name: Jerome A. Mills
Title: Vice President, Marketing
VARIABLE INSURANCE PRODUCTS FUND
By: /s/ J. Gary Burkhead
Name: J. Gary Burkhead
Title: Senior V. P.
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Kurt
Name: Kurt A. Lange
Title: President
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
Name of Separate Account and Policy Form Numbers of
Date Established by Board Contracts Funded
of Directors By Separate Account
Separate Account One 13000
(March 22, 1994) 13001
13002
13004
13005
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the Fund for
the shareholder meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform the Company of the
Record, Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Legal Department of the Underwriter or its affiliate ("Fidelity
Legal") must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Insurance Company). Contents of
envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund MUST allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g., mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. Fidelity Legal will provide a standard form for each
Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
SCHEDULE C
Investment Advisers of other insurance-dedicated investment companies under
discussion or currently available under variable annuities or variable life
insurance issued by the Company:
Oppenheimer
Janus
Dreyfus
AIM
American Funds
Alger
Vanguard
Northstar
EX-99.8D
17
PARTICIPATION AGREEMENT WITH FIDELITY VIP II
EXHIBIT 99.8d
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
NORTHERN LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 1st day of January,
1995 by and among NORTHERN LIFE INSURANCE COMPANY, (hereinafter the "Company"),
a Washington corporation, on its own behalf and on behalf of each segregated
asset account of the Company set forth on Schedule A hereto as may be amended
from time to time (each such account hereinafter referred to as the "Account"),
and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter the
"Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a
Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers Act of
1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account
and receipt by such designee shall constitute receipt by the Fund; provided that
the Fund receives notice of such order by 10:30 a.m. Boston time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that all
net amounts available under the variable annuity contracts with the form
number(s) which are listed on Schedule A attached hereto and incorporated herein
by this reference, as such Schedule A may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, or in the Company's general
account, provided that such amounts may also be invested in an investment
company other than the Fund if (a) such other investment company, or series
thereof, has investment objectives or policies that are substantially different
from the investment objectives and policies of all the Portfolios of the Fund;
or (b) the Company gives the Fund and the Underwriter 45 days written notice of
its intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was available as
a funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Fund and Underwriter prior to their signing this
Agreement (a
list of such funds appearing on Schedule C to this Agreement); or (d) the Fund
or Underwriter consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under Section 48.18A.020 of the Revised Code of Washington and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
Issuance and sold in compliance with the laws of the State of Washington and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of the
Code and that it will make every effort to maintain such treatment and that it
will notify the Fund and the Underwriter immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. The Fund has adopted a "no
fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for
distribution expenses. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of
trustees, a majority of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Washington and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Washington to the extent required to perform this
Agreement.
2.7. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the Laws of the State of Washington and all applicable state
and federal securities laws, including without limitation the 1933 Act, the 1934
Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Washington and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individual/entities dealing with the money and/or securities of the Fund are and
shall continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individual/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund, in an amount not less $5
million. The aforesaid includes coverage for larceny and embezzlement is issued
by a reputable bonding company. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Fund and the Underwriter in the event
that such coverage no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional Information
as the Company may reasonably request. If requested by the Company in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or Statement of Additional
Information for the Fund is amended during the year) to have the prospectus for
the Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Except as provided in the following three sentences, all expenses of printing
and distributing Fund prospectuses and Statements of Additional Information
shall be the expense of the Company. For prospectuses and Statements of
Additional Information provided by the Company to its existing owners of
Contracts in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes in lieu of receiving
printed copies of the Fund's prospectus, the Fund will reimburse the Company in
an amount equal to the product of A and B where A is the number of such
prospectuses distributed to owners of the Contracts, and B is the Fund's per
unit cost of typesetting and printing the Fund's prospectus. The same procedures
shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to exiting owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company (or in
the Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications (except
for prospectuses and Statements of Additional Information, which are covered in
Section 3.1) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of
such portfolio for which instructions have been
received,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its
investment adviser or the Underwriter is named, at least fifteen Business Days
prior to its use. No such material shall be used if the Fund or its designee
reasonably objects to such use within fifteen Business Days after receipt of
such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or
make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing and such payments will be made out of existing fees otherwise payable to
the Underwriter, past profits of the Underwriter or other resources available to
the Underwriter. No such payments shall be made directly by the Fund. Currently,
no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing
the Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract owners.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event of a breach of this Article VI by the Fund, it will take all reasonable
steps (a) to notify Company of such breach
and (b) to adequately diversify the Fund so as to achieve compliance with the
grace period afforded by Regulation 817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Underwriter and Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use
in the Registration Statement or prospectus for the Contracts
or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in
reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any
other material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Sections
8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Regis-
tration Statement or prospectus or sales literature of the
Fund (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
8.3. INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements result from the gross
negligence, bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.l. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event any
of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such
law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
the Company; or
(d) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof, or
(f) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or
the Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its
affiliated companies has suffered a material adverse change in
its business, operations, financial condition or prospects
since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the
Underwriter the written notice specified in Section 1.6(b)
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision of
this Agreement;
provided, however any termination under this Section 10.1(h)
shall be effective forty five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon request, the
Company will promptly furnish to the Fund and the Underwriter the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory to the
Fund and the Underwriter) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption, or (iii) as permitted by an order
of the SEC pursuant to Section 26(b) of the 1940 Act. Furthermore, except in
cases where permitted under the terms of the Contracts, the Company shall not
prevent Contract Owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Northern Life Insurance Company
1110 Third Avenue
Seattle, WA 98101
Attention: Emily Davis
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the insurance operations
of the Company are being conducted in a manner consistent with the California
Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Underwriter may assign this Agreement or any
rights or obligations hereunder to any
affiliate of or company under common control with the Underwriter, if such
assignee is duly licensed and registered to perform the obligations of the
Underwriter under this Agreement.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and if any, as soon as practical and in
any event within 90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory), as soon as
practical and in any event within 45 days after the end of
each quarterly period:
(c) any financial statement, proxy statement, notice or report of
the Company sent to stockholders and/or policyholders, as soon
as practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof,
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
NORTHERN LIFE INSURANCE COMPANY
By: /s/ Jerome Mills
Name: Jerome A. Mills
Title: Vice President, Marketing
VARIABLE INSURANCE PRODUCTS FUND II
By: /s/ J. Gary Burkhead
Name: J. Gary Burkhead
Title: Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Kurt Lange
Name: Kurt A. Lange
Title: President
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
NAME OF SEPARATE ACCOUNT AND POLICY FORM NUMBERS OF
DATE ESTABLISHED BY BOARD CONTRACTS FUNDED
OF DIRECTORS BY SEPARATE ACCOUNT
Separate Account One 13000
(March 22, 1994) 13001
13002
13004
13005
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the
Underwriter as early as possible before the date set by the Fund for
the shareholder meeting to facilitate the establishment of tabulation
procedures. At this time the Underwriter will inform the Company of the
Record, Mailing and, Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Legal Department of the Underwriter or its affiliate ("Fidelity
Legal") must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Insurance Company). Contents of
envelope sent to Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund MUST allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal names on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g., mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. Fidelity Legal will provide a standard form for each
Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
SCHEDULE C
Investment Advisers of other insurance-dedicated investment companies under
discussion or currently available under variable annuities or variable life
insurance issued by the Company:
Oppenheimer
Janus
Dreyfus
AIM
American Funds
Alger
Vanguard
Northstar
EX-99.9
18
OPINION
EXHIBIT 99.9
NORTHERN LIFE
A ReliaStar Company
Northern Life Insurance Company
P.O. Box 12530
Seattle, Washington 98111-4530
(206) 292-1111
April 17, 1998
Northern Life Insurance
1110 Third Avenue
Seattle, WA 98101
Dear Madam/Sir:
In connection with the proposed registration under the Securities Act of 1933,
as amended, of variable/fixed annuity contracts ("the Contract") and interests
in Separate Account One (the "Variable Account") I have examined documents
relating to the establishment of the Variable Account by the Board of Directors
of Northern Life Insurance Company (the "Company") as a separate account for
assets applicable to variable contracts, pursuant to RCW 48.18A.010 et seq., as
amended, and the Registration Statement, on Form N-4, amended by Post-Effective
Amendment No. 5 thereto, File No. 33-90474 (the "Registration Statement"), and I
have examined such other documents and have reviewed such matters of law as I
deemed necessary for this opinion, and I advise you that in my opinion:
1. The Variable Account is a separate account of the Company duly created
and validly existing pursuant to the laws of the State of Washington.
2. The Contracts, when issued in accordance with the Prospectus constituting
a part of the Registration Statement and upon compliance with applicable
local law, will be legal and binding obligations of the Company in
accordance with their respective terms.
3. The portion of the assets held in the Variable Account equal to reserves
and other contract liabilities with respect to the Variable Account are
not chargeable with liabilities arising out of any other business the
Company might conduct.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ James E. Nelson
James E. Nelson
Counsel
JEN:pl:8149z
EX-99.10
19
INDEPENDENT AUDITORS' CONSENT
EXHIBIT 99.10
INDEPENDENT AUDITORS' CONSENT
Board of Directors and Contract Holders
Northern Life Separate Account One
We consent to the incorporation by reference in this Post-Effective Amendment
No. 5 to the Registration Statement on Form N-4 (File No. 33-90474) of the
Northern Life Separate Account One filed under the Securities Act of 1933 and
Amendment No. 6 to the Registration Statement filed under the Investment Company
Act of 1940, respectively, of our report dated February 20, 1998 on the audit of
the financial statements of Northern Life Separate Account One as of December
31, 1997 and for the two years ended December 31, 1997, and our report dated
February 6, 1998, on the audit of the statutory-basis financial statements of
Northern Life Insurance Company as of and for the years ended December 31, 1997
and 1996 incorporated by reference in the Statement of Additional Information of
such Registration Statement, and to the references to us under the heading
"Financial Statements and Experts" appearing in the Prospectus and under the
headings "Independent Auditors" and "Financial Statements" appearing in the
Statement of Additional Information, all of which are part of such Registration
Statement.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
April 14, 1998
EX-99.13
20
PORTFOLIOS
EXHIBIT 99.13
FUND: FEI VIPF EQUITY INCOME PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 365.04%
Total Return incl M&E 296.91% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 285.32% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
09-Oct-86 $1,000 10.000000 100.00 $3,969.11 $3,853.22 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $3,853.22 $3,853.22 $3,853.22
Total Return Inception 365.04% 285.32% 285.32% 285.32%
Average Annual Return 14.66% 12.76% 12.76% 12.76%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund 369.43%
Total Return incl M&E 307.70%
Total Return incl M&E and Cont Fee 297.09%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 $4,076.99 $3,970.86 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $3,970.86 $3,970.86 $3,935.13
Total Return 10 Years 369.43% 297.09% 297.09% 293.51%
Average Annual Return 16.72% 14.79% 14.79% 14.68%
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 150.50%
Total Return incl M&E 133.45%
Total Return incl M&E and Cont Fee 130.39%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,334.49 $2,303.91 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,303.91 $2,267.91 $2,179.50
Total Return 5 Years 150.50% 130.39% 126.79% 117.95%
Average Annual Return 20.16% 18.17% 17.79% 16.86%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 28.11%
Total Return incl M&E 26.32%
Total Return incl M&E and Cont Fee 25.98%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,263.16 $1,259.84 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,259.84 $1,205.84 $1,169.13
Total Return 1 Year 28.11% 25.98% 20.58% 16.91%
Average Annual Return 28.11% 25.98% 20.58% 16.91%
-----------------------------------------------------------------------------------------
FUND: FGP VIPF GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 407.79%
Total Return incl M&E 333.40% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 320.74% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
09-Oct-86 $1,000 10.000000 100.00 $4,333.99 $4,207.43 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $4,207.43 $4,207.43 $4,207.43
Total Return Inception 407.79% 320.74% 320.74% 320.74%
Average Annual Return 15.56% 13.64% 13.64% 13.64%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund 388.38%
Total Return incl M&E 324.16%
Total Return incl M&E and Cont Fee 313.12%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 $4,241.57 $4,131.16 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $4,131.16 $4,131.16 $4,093.98
Total Return 10 Years 388.38% 313.12% 313.12% 309.40%
Average Annual Return 17.19% 15.24% 15.24% 15.14%
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 128.82%
Total Return incl M&E 113.24%
Total Return incl M&E and Cont Fee 110.45%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,132.45 $2,104.51 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,104.51 $2,068.51 $1,990.87
Total Return 5 Years 128.82% 110.45% 106.85% 99.09%
Average Annual Return 18.00% 16.05% 15.65% 14.76%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 23.48%
Total Return incl M&E 21.75%
Total Return incl M&E and Cont Fee 21.43%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,217.51 $1,214.31 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,214.31 $1,160.31 $1,126.88
Total Return 1 Year 23.48% 21.43% 16.03% 12.69%
Average Annual Return 23.48% 21.43% 16.03% 12.69%
-----------------------------------------------------------------------------------------
FUND: FOS VIPF OVERSEAS PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 137.09%
Total Return incl M&E 103.23% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 97.45% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
28-Jan-87 $1,000 10.000000 100.00 $2,032.26 $1,974.50 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,974.50 $1,974.50 $1,974.50
Total Return Inception 137.09% 97.45% 97.45% 97.45%
Average Annual Return 8.22% 6.42% 6.42% 6.42%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund 150.57%
Total Return incl M&E 117.62%
Total Return incl M&E and Cont Fee 111.95%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 $2,176.20 $2,119.55 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,119.55 $2,119.55 $2,100.47
Total Return 10 Years 150.57% 111.95% 111.95% 110.05%
Average Annual Return 9.62% 7.80% 7.80% 7.70%
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 93.54%
Total Return incl M&E 80.37%
Total Return incl M&E and Cont Fee 78.00%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $1,803.66 $1,780.03 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,780.03 $1,744.03 $1,683.91
Total Return 5 Years 93.54% 78.00% 74.40% 68.39%
Average Annual Return 14.12% 12.22% 11.77% 10.98%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 11.56%
Total Return incl M&E 10.00%
Total Return incl M&E and Cont Fee 9.71%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,099.98 $1,097.08 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,097.08 $1,043.08 $1,018.09
Total Return 1 Year 11.56% 9.71% 4.31% 1.81%
Average Annual Return 11.56% 9.71% 4.31% 1.81%
-----------------------------------------------------------------------------------------
FUND: FAM VIPF II ASSET MANAGER PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 171.19%
Total Return incl M&E 141.16% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 135.93% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
06-Sep-89 $1,000 10.000000 100.00 $2,411.62 $2,359.26 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,359.26 $2,359.26 $2,316.79
Total Return Inception 171.19% 135.93% 135.93% 131.68%
Average Annual Return 12.73% 10.86% 10.86% 10.62%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 84.11%
Total Return incl M&E 71.58%
Total Return incl M&E and Cont Fee 69.33%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $1,715.78 $1,693.30 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,693.30 $1,657.30 $1,601.86
Total Return 5 Years 84.11% 69.33% 65.73% 60.19%
Average Annual Return 12.98% 11.11% 10.63% 9.88%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 20.65%
Total Return incl M&E 18.96%
Total Return incl M&E and Cont Fee 18.65%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,189.61 $1,186.48 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,186.48 $1,132.48 $1,101.05
Total Return 1 Year 20.65% 18.65% 13.25% 10.10%
Average Annual Return 20.65% 18.65% 13.25% 10.10%
-----------------------------------------------------------------------------------------
FUND: FMG VIPF II ASSET MANAGER: GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 84.69%
Total Return incl M&E 77.05% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 75.66% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
03-Jan-95 $1,000 10.000000 100.00 $1,770.55 $1,756.62 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,756.62 $1,711.62 $1,630.14
Total Return Inception 84.69% 75.66% 71.16% 63.01%
Average Annual Return 22.74% 20.70% 19.66% 17.73%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 25.07%
Total Return incl M&E 23.32%
Total Return incl M&E and Cont Fee 22.99%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,233.19 $1,229.94 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,229.94 $1,175.94 $1,141.39
Total Return 1 Year 25.07% 22.99% 17.59% 14.14%
Average Annual Return 25.07% 22.99% 17.59% 14.14%
-----------------------------------------------------------------------------------------
FUND: FCF VIPF II CONTRAFUND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 110.26%
Total Return incl M&E 101.57% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 99.98% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
03-Jan-95 $1,000 10.000000 100.00 $2,015.68 $1,999.82 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,999.82 $1,954.82 $1,855.83
Total Return Inception 110.26% 99.98% 95.48% 85.58%
Average Annual Return 28.17% 26.04% 25.09% 22.94%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 24.14%
Total Return incl M&E 22.40%
Total Return incl M&E and Cont Fee 22.08%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,224.02 $1,220.80 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,220.80 $1,166.80 $1,132.90
Total Return 1 Year 24.14% 22.08% 16.68% 13.29%
Average Annual Return 24.14% 22.08% 16.68% 13.29%
-----------------------------------------------------------------------------------------
FUND: FIN VIPF II INDEX 500 PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 163.56%
Total Return incl M&E 144.42% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 140.99% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
27-Aug-92 $1,000 10.000000 100.00 $2,444.18 $2,409.95 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,409.95 $2,391.95 $2,301.50
Total Return Inception 163.56% 140.99% 139.19% 130.15%
Average Annual Return 19.87% 17.88% 17.71% 16.87%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 147.93%
Total Return incl M&E 131.05%
Total Return incl M&E and Cont Fee 128.03%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,310.54 $2,280.27 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,280.27 $2,244.27 $2,157.13
Total Return 5 Years 147.93% 128.03% 124.43% 115.71%
Average Annual Return 19.91% 17.92% 17.55% 16.62%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 32.82%
Total Return incl M&E 30.96%
Total Return incl M&E and Cont Fee 30.62%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,309.61 $1,306.16 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,306.16 $1,252.16 $1,212.11
Total Return 1 Year 32.82% 30.62% 25.22% 21.21%
Average Annual Return 32.82% 30.62% 25.22% 21.21%
-----------------------------------------------------------------------------------------
FUND: ASC ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 411.47%
Total Return incl M&E 348.73% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 337.88% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
21-Sep-88 $1,000 10.000000 100.00 $4,487.29 $4,378.77 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $4,378.77 $4,378.77 $4,339.36
Total Return Inception 411.47% 337.88% 337.88% 333.94%
Average Annual Return 19.22% 17.25% 17.25% 17.13%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 81.41%
Total Return incl M&E 69.06%
Total Return incl M&E and Cont Fee 66.85%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $1,690.62 $1,668.47 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,668.47 $1,632.47 $1,578.37
Total Return 5 Years 81.41% 66.85% 63.25% 57.84%
Average Annual Return 12.65% 10.78% 10.30% 9.56%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 11.39%
Total Return incl M&E 9.83%
Total Return incl M&E and Cont Fee 9.54%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,098.31 $1,095.41 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,095.41 $1,041.41 $1,016.54
Total Return 1 Year 11.39% 9.54% 4.14% 1.65%
Average Annual Return 11.39% 9.54% 4.14% 1.65%
-----------------------------------------------------------------------------------------
FUND: AGR ALGER AMERICAN GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 392.34%
Total Return incl M&E 333.79% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 323.63% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
09-Jan-89 $1,000 10.000000 100.00 $4,337.85 $4,236.31 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $4,236.31 $4,236.31 $4,160.05
Total Return Inception 392.34% 323.63% 323.63% 316.01%
Average Annual Return 19.42% 17.44% 17.44% 17.20%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 141.48%
Total Return incl M&E 125.04%
Total Return incl M&E and Cont Fee 122.09%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,250.43 $2,220.95 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,220.95 $2,184.95 $2,101.02
Total Return 5 Years 141.48% 122.09% 118.49% 110.10%
Average Annual Return 19.28% 17.30% 16.92% 16.01%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 25.75%
Total Return incl M&E 23.99%
Total Return incl M&E and Cont Fee 23.66%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,239.90 $1,236.63 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,236.63 $1,182.63 $1,147.59
Total Return 1 Year 25.75% 23.66% 18.26% 14.76%
Average Annual Return 25.75% 23.66% 18.26% 14.76%
-----------------------------------------------------------------------------------------
FUND: AMG ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 153.80%
Total Return incl M&E 137.64% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 134.74% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
03-May-93 $1,000 10.000000 100.00 $2,376.42 $2,347.35 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,347.35 $2,311.35 $2,220.60
Total Return Inception 153.80% 134.74% 131.14% 122.06%
Average Annual Return 22.09% 20.07% 19.67% 18.65%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 15.01%
Total Return incl M&E 13.40%
Total Return incl M&E and Cont Fee 13.10%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,134.00 $1,131.01 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,131.01 $1,077.01 $1,049.58
Total Return 1 Year 15.01% 13.10% 7.70% 4.96%
Average Annual Return 15.01% 13.10% 7.70% 4.96%
-----------------------------------------------------------------------------------------
FUND: ALA ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 133.72%
Total Return incl M&E 124.25% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 122.52% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
25-Jan-95 $1,000 10.000000 100.00 $2,242.48 $2,225.20 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,225.20 $2,180.20 $2,064.98
Total Return Inception 133.72% 122.52% 118.02% 106.50%
Average Annual Return 33.55% 31.34% 30.42% 28.03%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 19.68%
Total Return incl M&E 18.00%
Total Return incl M&E and Cont Fee 17.69%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,180.04 $1,176.94 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,176.94 $1,122.94 $1,092.20
Total Return 1 Year 19.68% 17.69% 12.29% 9.22%
Average Annual Return 19.68% 17.69% 12.29% 9.22%
-----------------------------------------------------------------------------------------
FUND: JAG JANUS AGGRESSIVE GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 112.92%
Total Return incl M&E 100.52% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 98.29% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
30-Sep-93 $1,000 10.000000 100.00 $2,005.23 $1,982.85 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,982.85 $1,946.85 $1,875.78
Total Return Inception 112.92% 98.29% 94.69% 87.58%
Average Annual Return 19.44% 17.46% 16.95% 15.93%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 12.66%
Total Return incl M&E 11.08%
Total Return incl M&E and Cont Fee 10.79%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,110.83 $1,107.90 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,107.90 $1,053.90 $1,028.13
Total Return 1 Year 12.66% 10.79% 5.39% 2.81%
Average Annual Return 12.66% 10.79% 5.39% 2.81%
-----------------------------------------------------------------------------------------
FUND: JGP JANUS GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 101.30%
Total Return incl M&E 89.58% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 87.46% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
30-Sep-93 $1,000 10.000000 100.00 $1,895.79 $1,874.64 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,874.64 $1,838.64 $1,773.41
Total Return Inception 101.30% 87.46% 83.86% 77.34%
Average Annual Return 17.87% 15.92% 15.39% 14.41%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.75%
Total Return incl M&E 21.03%
Total Return incl M&E and Cont Fee 20.71%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,210.32 $1,207.13 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,207.13 $1,153.13 $1,120.21
Total Return 1 Year 22.75% 20.71% 15.31% 12.02%
Average Annual Return 22.75% 20.71% 15.31% 12.02%
-----------------------------------------------------------------------------------------
FUND: JIG JANUS INTERNATIONAL GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 91.09%
Total Return incl M&E 81.45% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 79.70% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-May-94 $1,000 10.000000 100.00 $1,814.51 $1,797.02 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,797.02 $1,752.02 $1,683.81
Total Return Inception 91.09% 79.70% 75.20% 68.38%
Average Annual Return 19.29% 17.31% 16.50% 15.25%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 18.51%
Total Return incl M&E 16.85%
Total Return incl M&E and Cont Fee 16.54%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,168.51 $1,165.43 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,165.43 $1,111.43 $1,081.52
Total Return 1 Year 18.51% 16.54% 11.14% 8.15%
Average Annual Return 18.51% 16.54% 11.14% 8.15%
-----------------------------------------------------------------------------------------
FUND: JWG JANUS WORLDWIDE GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 142.78%
Total Return incl M&E 128.64% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 126.09% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
30-Sep-93 $1,000 10.000000 100.00 $2,286.44 $2,260.93 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,260.93 $2,224.93 $2,138.84
Total Return Inception 142.78% 126.09% 122.49% 113.88%
Average Annual Return 23.18% 21.13% 20.68% 19.56%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.15%
Total Return incl M&E 20.44%
Total Return incl M&E and Cont Fee 20.12%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,204.40 $1,201.23 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,201.23 $1,147.23 $1,114.74
Total Return 1 Year 22.15% 20.12% 14.72% 11.47%
Average Annual Return 22.15% 20.12% 14.72% 11.47%
-----------------------------------------------------------------------------------------
FUND: NLM NEUBERGER & BERMAN LIMITED MATURITY BOND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 184.43%
Total Return incl M&E 135.75% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 127.61% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
10-Sep-84 $1,000 10.000000 100.00 $2,357.47 $2,276.11 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,276.11 $2,276.11 $2,276.11
Total Return Inception 184.43% 127.61% 127.61% 127.61%
Average Annual Return 8.17% 6.37% 6.37% 6.37%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund 98.02%
Total Return incl M&E 71.98%
Total Return incl M&E and Cont Fee 67.50%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 $1,719.80 $1,675.03 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,675.03 $1,675.03 $1,659.96
Total Return 10 Years 98.02% 67.50% 67.50% 66.00%
Average Annual Return 7.07% 5.29% 5.29% 5.20%
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 31.49%
Total Return incl M&E 22.54%
Total Return incl M&E and Cont Fee 20.93%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $1,225.40 $1,209.34 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,209.34 $1,173.34 $1,144.04
Total Return 5 Years 31.49% 20.93% 17.33% 14.40%
Average Annual Return 5.63% 3.87% 3.25% 2.73%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 6.74%
Total Return incl M&E 5.25%
Total Return incl M&E and Cont Fee 4.97%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,052.46 $1,049.68 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,049.68 $995.68 $974.11
Total Return 1 Year 6.74% 4.97% -0.43% -2.59%
Average Annual Return 6.74% 4.97% -0.43% -2.59%
-----------------------------------------------------------------------------------------
FUND: NPP NEUBERGER & BERMAN PARTNERS PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 126.74%
Total Return incl M&E 114.97% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 112.84% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
22-Mar-94 $1,000 10.000000 100.00 $2,149.70 $2,128.37 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,128.37 $2,083.37 $1,994.28
Total Return Inception 126.74% 112.84% 108.34% 99.43%
Average Annual Return 24.18% 22.11% 21.43% 20.03%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 31.25%
Total Return incl M&E 29.41%
Total Return incl M&E and Cont Fee 29.07%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,294.13 $1,290.72 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,290.72 $1,236.72 $1,197.78
Total Return 1 Year 31.25% 29.07% 23.67% 19.78%
Average Annual Return 31.25% 29.07% 23.67% 19.78%
-----------------------------------------------------------------------------------------
FUND: NGF NORTHSTAR GROWTH PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 82.06%
Total Return incl M&E 72.91% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 71.25% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
06-May-94 $1,000 10.000000 100.00 $1,729.10 $1,712.50 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,712.50 $1,667.50 $1,604.61
Total Return Inception 82.06% 71.25% 66.75% 60.46%
Average Annual Return 17.80% 15.84% 15.00% 13.80%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 14.66%
Total Return incl M&E 13.05%
Total Return incl M&E and Cont Fee 12.76%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,130.55 $1,127.57 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,127.57 $1,073.57 $1,046.38
Total Return 1 Year 14.66% 12.76% 7.36% 4.64%
Average Annual Return 14.66% 12.76% 7.36% 4.64%
-----------------------------------------------------------------------------------------
FUND: NHY NORTHSTAR HIGH YIELD BOND FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 48.15%
Total Return incl M&E 40.70% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 39.35% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
06-May-94 $1,000 10.000000 100.00 $1,407.04 $1,393.53 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,393.53 $1,348.53 $1,305.74
Total Return Inception 48.15% 39.35% 34.85% 30.57%
Average Annual Return 11.35% 9.50% 8.52% 7.57%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 9.00%
Total Return incl M&E 7.47%
Total Return incl M&E and Cont Fee 7.19%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,074.74 $1,071.91 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,071.91 $1,017.91 $994.73
Total Return 1 Year 9.00% 7.19% 1.79% -0.53%
Average Annual Return 9.00% 7.19% 1.79% -0.53%
-----------------------------------------------------------------------------------------
FUND: NIG NORTHSTAR INCOME AND GROWTH FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 62.78%
Total Return incl M&E 54.60% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 53.11% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
06-May-94 $1,000 10.000000 100.00 $1,545.99 $1,531.14 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,531.14 $1,486.14 $1,434.68
Total Return Inception 62.78% 53.11% 48.61% 43.47%
Average Annual Return 14.25% 12.35% 11.44% 10.37%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 15.81%
Total Return incl M&E 14.19%
Total Return incl M&E and Cont Fee 13.89%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,141.89 $1,138.88 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,138.88 $1,084.88 $1,056.88
Total Return 1 Year 15.81% 13.89% 8.49% 5.69%
Average Annual Return 15.81% 13.89% 8.49% 5.69%
-----------------------------------------------------------------------------------------
FUND: NIV NORTHSTAR INTERNATIONAL VALUE FUND
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 1.30%
Total Return incl M&E 0.73% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 0.63% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
08-Aug-97 $1,000 10.000000 100.00 $1,007.34 $1,006.29 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,006.29 $952.29 $933.83
Total Return Inception 1.30% 0.63% -4.77% -6.62%
Average Annual Return 3.30% 1.59% -11.58% -15.83%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 1 Year #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
FUND: NMS NORTHSTAR MULTI-SECTOR BOND PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 39.27%
Total Return incl M&E 32.27% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 31.00% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
06-May-94 $1,000 10.000000 100.00 $1,322.70 $1,310.00 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,310.00 $1,265.00 $1,227.47
Total Return Inception 39.27% 31.00% 26.50% 22.75%
Average Annual Return 9.48% 7.66% 6.64% 5.76%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 6.15%
Total Return incl M&E 4.66%
Total Return incl M&E and Cont Fee 4.39%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,046.64 $1,043.88 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,043.88 $989.88 $968.72
Total Return 1 Year 6.15% 4.39% -1.01% -3.13%
Average Annual Return 6.15% 4.39% -1.01% -3.13%
-----------------------------------------------------------------------------------------
FUND: OEP OCC EQUITY PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 359.20%
Total Return incl M&E 302.08% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 292.21% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Aug-88 $1,000 10.000000 100.00 $4,020.78 $3,922.09 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $3,922.09 $3,922.09 $3,886.79
Total Return Inception 359.20% 292.21% 292.21% 288.68%
Average Annual Return 17.56% 15.61% 15.61% 15.50%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 142.85%
Total Return incl M&E 126.32%
Total Return incl M&E and Cont Fee 123.35%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,263.20 $2,233.55 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,233.55 $2,197.55 $2,112.94
Total Return 5 Years 142.85% 123.35% 119.75% 111.29%
Average Annual Return 19.42% 17.44% 17.05% 16.14%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 26.63%
Total Return incl M&E 24.86%
Total Return incl M&E and Cont Fee 24.53%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,248.57 $1,245.28 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,245.28 $1,191.28 $1,155.62
Total Return 1 Year 26.63% 24.53% 19.13% 15.56%
Average Annual Return 26.63% 24.53% 19.13% 15.56%
-----------------------------------------------------------------------------------------
FUND: OGE OCC GLOBAL EQUITY PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 55.88%
Total Return incl M&E 49.77% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 48.65% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Mar-95 $1,000 10.000000 100.00 $1,497.65 $1,486.48 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,486.48 $1,441.48 $1,379.46
Total Return Inception 55.88% 48.65% 44.15% 37.95%
Average Annual Return 16.93% 14.99% 13.75% 12.00%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 5 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 14.02%
Total Return incl M&E 12.42%
Total Return incl M&E and Cont Fee 12.13%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,124.24 $1,121.28 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,121.28 $1,067.28 $1,040.54
Total Return 1 Year 14.02% 12.13% 6.73% 4.05%
Average Annual Return 14.02% 12.13% 6.73% 4.05%
-----------------------------------------------------------------------------------------
FUND: OMP OCC MANAGED PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 471.80%
Total Return incl M&E 400.67% [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 388.38% [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Aug-88 $1,000 10.000000 100.00 $5,006.72 $4,883.83 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $4,883.83 $4,883.83 $4,839.87
Total Return Inception 471.80% 388.38% 388.38% 383.99%
Average Annual Return 20.33% 18.33% 18.33% 18.22%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 147.55%
Total Return incl M&E 130.70%
Total Return incl M&E and Cont Fee 127.68%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $2,307.00 $2,276.77 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $2,276.77 $2,240.77 $2,153.83
Total Return 5 Years 147.55% 127.68% 124.08% 115.38%
Average Annual Return 19.88% 17.89% 17.51% 16.58%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.29%
Total Return incl M&E 20.58%
Total Return incl M&E and Cont Fee 20.26%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,205.78 $1,202.60 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,202.60 $1,148.60 $1,116.02
Total Return 1 Year 22.29% 20.26% 14.86% 11.60%
Average Annual Return 22.29% 20.26% 14.86% 11.60%
-----------------------------------------------------------------------------------------
FUND: OSC OCC SMALL CAP PORTFOLIO
ASSUMPTIONS:
Contract Fee $30
Avg Contract Fee per $ 0.263%
M&E and Admin Charge 1.40%
SINCE FUND INCEPTION:
Total Return of Fund 287.45%
Total Return incl M&E 239.25% % [(1+TOTAL RETURN)*((1-M&E)^(# days/365))]-1
Total Return incl M&E and Cont Fee 230.93% % [(1+TOTAL RETURN incl M&E)*((1-Cont fee per $)^(# days/365))]-1
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Aug-88 $1,000 10.000000 100.00 $3,392.54 $3,309.27 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $3,309.27 $3,309.27 $3,279.48
Total Return Inception 287.45% 230.93% 230.93% 227.95%
Average Annual Return 15.46% 13.54% 13.54% 13.43%
-----------------------------------------------------------------------------------------
OVER 10 YEARS:
Total Return of Fund #N/A
Total Return incl M&E #N/A
Total Return incl M&E and Cont Fee #N/A
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-88 $1,000 10.000000 100.00 #N/A #N/A 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A #N/A #N/A #N/A
Total Return 10 Years #N/A #N/A #N/A #N/A
Average Annual Return #N/A #N/A #N/A #N/A
-----------------------------------------------------------------------------------------
OVER 5 YEARS:
Total Return of Fund 97.84%
Total Return incl M&E 84.37%
Total Return incl M&E and Cont Fee 81.96%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-93 $1,000 10.000000 100.00 $1,843.74 $1,819.58 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,819.58 $1,783.58 $1,721.32
Total Return 5 Years 97.84% 81.96% 78.36% 72.13%
Average Annual Return 14.62% 12.72% 12.27% 11.47%
-----------------------------------------------------------------------------------------
OVER 1 YEAR:
Total Return of Fund 22.24%
Total Return incl M&E 20.53%
Total Return incl M&E and Cont Fee 20.21%
BEGINNING CONTRACT LESS "AVG" Yearend ENDING
DATE DEPOSIT NQ UV # UNITS VALUE CONT FEE Units DATE
01-Jan-97 $1,000 10.000000 100.00 $1,205.29 $1,202.11 100.00 31-Dec-97
---------------------------------
Less Surrender Charge
-----------------------------------------------------------------------------------------
Fund Contract Value T.S. F.S.
Ending Value #N/A $1,202.11 $1,148.11 $1,115.56
Total Return 1 Year 22.24% 20.21% 14.81% 11.56%
Average Annual Return 22.24% 20.21% 14.81% 11.56%
-----------------------------------------------------------------------------------------
EX-99.15
21
POWERS OF ATTORNEY
EXHIBIT 99.15
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ John G. Turner
--------------------------------------
John G. Turner
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ John H. Flittie
--------------------------------------
John H. Flittie
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ Michael J. Dubes
--------------------------------------
Michael J. Dubes
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ Wayne R. Huneke
--------------------------------------
Wayne R. Huneke
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ Robert C. Salipante
--------------------------------------
Robert C. Salipante
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ Richard R. Crowl
--------------------------------------
Richard R. Crowl
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX AND DEBORAH A. LJUNGKULL, and
each or any one of them, the undersigned's true and lawful attorneys-in-fact,
with full power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as such director
and/or officer of said Company to a Registration Statement or Registration
Statements, under the Securities Act of 1933 (1933 Act) and the Investment
Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this 19th day of February, 1997.
/s/ Kenneth U. Kuk
--------------------------------------
Kenneth U. Kuk
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX, LORI SOMMERFELD, AND DEBORAH
A. LJUNGKULL, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this __4th___ day of ____March________________, 1998.
/s/ R. Michael Conley
--------------------------------------
R. Michael Conley
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX, LORI SOMMERFELD, AND DEBORAH
A. LJUNGKULL, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this __4th___ day of ___March_________________, 1998.
/s/ Ronald D. Jarvis
--------------------------------------
Ronald D. Jarvis
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX, LORI SOMMERFELD, AND DEBORAH
A. LJUNGKULL, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this __4th___ day of ___March_________________, 1998.
/s/ Mark S. Jordahl
--------------------------------------
Mark S. Jordahl
NORTHERN LIFE INSURANCE COMPANY
POWER OF ATTORNEY
OF DIRECTOR AND/OR OFFICER
The undersigned director and/or officer of NORTHERN LIFE INSURANCE
COMPANY, a Washington corporation, does hereby make, constitute and appoint
RICHARD R. CROWL, MICHAEL S. FISCHER, STEWART D. GREGG, JAMES E. NELSON, ROBERT
B. SAGINAW, KRISTEN K. LINDBERG, JEFFREY A. PROULX, LORI SOMMERFELD, AND DEBORAH
A. LJUNGKULL, and each or any one of them, the undersigned's true and lawful
attorneys-in-fact, with full power of substitution, for the undersigned and in
the undersigned's name, place and stead, to sign and affix the undersigned's
name as such director and/or officer of said Company to a Registration Statement
or Registration Statements, under the Securities Act of 1933 (1933 Act) and the
Investment Company Act of 1940 (1940 Act) and any other forms applicable to such
registrations, and all amendments, including post-effective amendments, thereto,
to be filed by said Company with the Securities and Exchange Commission,
Washington, DC, in connection with the registration under the 1933 and 1940
Acts, as amended, of variable annuity contracts and accumulation units in
Separate Account One and to file the same, with all exhibits thereto and other
supporting documents, with said Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the
powers herein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set the undersigned's
hand this _4th____ day of ____March________________, 1998.
/s/ James R. Miller
--------------------------------------
James R. Miller
-----END PRIVACY-ENHANCED MESSAGE-----