Post-Effective Amendment
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 485BPOS Post-Effective Amendment 268 1.48M
2: EX-1 Exhibit 1 Resolutions of Board of Directors 2 14K
18: EX-1.10 Exhibit 1(10) Application 33± 115K
3: EX-1.3A Exhibit 1(3)(A) Underwriting Agreement 4 24K
4: EX-1.3B Exhibit 1(3)(B) Registered Rep/Agent Agreement 5± 22K
5: EX-1.3C Exhibit 1(3)(C) Sales Agreements (Select) 18 81K
6: EX-1.3D Exhibit 1(3)(D) Sales Agreement 9 45K
7: EX-1.3E Exhibit 1(3)(E) Commission Schedule 2 13K
8: EX-1.3F Exhibit 1(3)(F) General Agents Agreement 3 20K
9: EX-1.3G Exhibit 1(3)(G) Faflic Career Agents Agreement 10 51K
10: EX-1.5 Exhibit 1(5) Policy and Guaranteed Death Benefit 36 177K
11: EX-1.8A Exhibit 1(8)(A) Part Agmt W/Allmerica Inv Trust 23 98K
12: EX-1.8B Exhibit 1(8)(B) Part Agmt W/Var Ins Products Fund 27 110K
13: EX-1.8C Exhibit 1(8)(C) Part Agmt W/Var Ins Product Fundii 27 109K
14: EX-1.8D Exhibit 1(8)(D) Part Agmt W/Del Group Premium 46 103K
15: EX-1.8E Exhibit 1(8)(E) Part Agmt W/T.Rowe Price Int 20 106K
16: EX-1.8I Exhibit 1(8)(I) Service Agmt W/Rowe-Price Fleming 4 22K
17: EX-1.8J Exhibit 1(8)(J) Bfds Agreements 12 46K
19: EX-3 Exhibit 3 Consent of Counsel 1 11K
20: EX-6 Exhibit 6 Actuarial Consent 1 10K
21: EX-7 Exhibit 7 Procedures Memo 9 48K
22: EX-8 Exhibit 8 Consent of Independent Accountants 1 9K
EX-7 — Exhibit 7 Procedures Memo
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Description of Issuance, Transfer
and Redemption Procedures for Policies
Offered by the Inheiritage Account of
State Mutual Life Assurance Company of America
Pursuant to Rule 6e-3(T)(b)(12)(ii)
under the Investment Company Act of 1940
The Inheiritage Account of State Mutual Life Assurance Company of America
("Company") is registered under the Investment Company Act of 1940 ("1940 Act")
as a unit investment trust. Within the Inheiritage Account are 14 Sub-Accounts.
Procedures apply equally to each subaccount and for purposes of this description
are defined in terms of the Inheiritage Account, except where a discussion of
both the Inheiritage Account and the individual Sub-Accounts is necessary. Each
Sub-Account invests in shares of a corresponding investment division of the
Allmerica Investment Trust ("Trust"), Variable Insurance Products Fund ("VTPF"),
or Delaware Group Premium Fund, Inc. ("DGPF"), each of which is a "series" type
of mutual fund registered under the 1940 Act. The investment experience of a
Sub-Account of the Inheiritage Account depends on the market performance of its
corresponding investment division of the Trust, VIPF or DGPF. Although flexible
premium variable life insurance policies funded through the Inheiritage Account
may also provide for fixed benefits supported by the Company's General Account,
this description assumes that net premiums are allocated exclusively to the
Inheiritage Account and that all transactions involve only the Sub-Accounts of
the Inheiritage Account, except as otherwise explicitly stated herein.
I. "Public Offering Price": Purchase and Related Transactions -- Section
22(d) and Rule 22c-1
This section outlines Policy provisions and administrative procedures
which might be deemed to constitute, either directly or indirectly, a
"purchase" transaction. Because of the insurance nature of the policies,
the procedures involved necessarily differ in certain significant respects
from the purchase procedures for mutual funds and annuity plans. The chief
differences revolve around the structure of the cost of insurance charges
and the insurance underwriting process. Certain Policy provisions, such as
reinstatement and loan repayment, do not result in the issuance of a
Policy but require certain payments by the Policyowner and involve a
transfer of assets supporting Policy reserve into the Inheiritage Account.
a. Insurance Charges and Underwriting Standards
Premium payments are not limited as to frequency and number, but
there are limitations as to amount. No premium payment may be less
than $100 without the Company's consent, and the total of all
premiums paid can never exceed the then current maximum premiums
determined by Internal Revenue Service rules. If at any time a
premium is paid which would result in total premiums exceeding the
current maximum premium limitations, the Company will return the
amount in excess of such maximums to the Policyowner.
The Policy will remain in force so long as the Policy value less any
outstanding debt is sufficient to pay certain monthly charges
imposed in connection with the Policy. Cost of insurance charges for
the policies will not be the same for all Policyowners. The
insurance principle of pooling and distribution of mortality risks
is based upon the assumption that each Policyowner pays a cost of
insurance charge commensurate with the Insured's mortality risk,
which is actuarially determined based upon factors such as age,
health and occupation. In the context of life insurance, a uniform
mortality charge (the "cost of insurance charge") for all Insureds
would discriminate unfairly in favor of those Insureds representing
greater mortality risks to the disadvantage of those representing
lesser risks. Accordingly, there will be a different "price" for
each actuarial category of Policyowners because different cost of
insurance rates will apply. Accordingly, while not all Policyowners
will be subject to the same cost of insurance rate, there will be a
single "rate" for all Policyowners in a given actuarial category.
The policies will be offered and sold pursuant to the Company's
underwriting standards and in accordance with state insurance laws.
Such laws prohibit unfair discrimination among Insureds, but
recognize that premiums must be based upon factors such as age,
health and occupation. Tables showing the maximum cost of insurance
charges will be delivered as part of the Policy.
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b. Application and Initial Premium Processing
Upon receipt of a completed application from a prospective
Policyowner, the Company will follow certain insurance underwriting
procedures designed to determine whether the proposed Insured is
insurable. This process may involve such verification procedures as
medical examinations and may require that further information be
provided by the proposed Policyowner before a determination can be
made. A Policy cannot be issued until this underwriting procedure
has been completed.
If at the time of Application a prospective Policyowner makes a
payment equal to at least one monthly deduction for the Policy as
applied for, the Company will provide fixed conditional insurance in
the amount of insurance applied for, up to a maximum of $500,000,
pending underwriting approval. If the application is approved, the
Policy will be issued as of the date the terms of the Conditional
Insurance Agreement were met. If the prospective Policyowner does
not wish to make any payment until the Policy is issued, upon
delivery of the Policy the Company will require payment of
sufficient premium to place the insurance in-force.
Pending completion of insurance underwriting and Policy issuance
procedures, the initial premium will be held in the Company's
General Account. If the application is approved and the Policy is
issued and accepted, the initial premium held in the General Account
will be credited with interest not later than the date of receipt of
the premium at the Company's Principal Office. Not later than three
days of underwriting approval of the Policy, the amounts held in the
Company's General Account will be allocated to the Sub-Accounts
according to Policyowner's instructions, for that part of the total
amount allocated to the Inheiritage Account which is less than
$10,000. If the amount allocated to the Inheiritage Account exceeds
$10,000 or if the Policy provides for planned premium payments
during the first year of $5,000 semi-annually, $2,500 quarterly or
$1,000 monthly, the entire amount will remain in the General Account
until expiration of the Free Look Period, as evidenced by a delivery
receipt. Amounts remaining in the General Account will continue to
be credited interest from date of receipt of the premium at the
Principal Office.
If a Policy is not issued, the premiums will be returned to the
Applicant without interest.
These processing procedures are designed to provide insurance,
starting with the date of the application, to the proposed
Policyowner in connection with payment of the initial premium and
will not dilute any benefit payable to any existing Policyowner.
Although a Policy cannot be issued until the underwriting process
has been completed, the proposed Policyowner will receive immediate
insurance coverage, if he has paid an initial premium and proves to
be insurable. If the initial premium is not paid with the
application, variability of benefits will commence within three days
of underwriting approval, subject to the restrictions indicated
above.
The Company will require that the Policy be delivered within a
specific delivery period to protect itself against anti-selection by
the prospective Policyowner resulting from a deterioration of the
health of the proposed Insured. Generally, the period will not
exceed the shorter of 30 days from the date the Policy is issued and
75 days from the date of Part 2 of the Application.
c. Premium Allocation
"Net premiums" are credited to the Policy as of the date the premium
payments are received by the Company, with the possible exception of
the first net premium. Net premiums are equal to the gross premiums
minus the tax expense charge. The tax expense charge compensates the
Company for applicable state and local taxes on premiums paid for
the Policy and for federal taxes imposed for deferred acquisition
costs ("DAC taxes"). It will be adjusted to reflect any increase or
decrease in the applicable state or local premium tax rate.
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The Policyowner may allocate net premiums among the Company's
General Account and up to seven Sub-Accounts of the Inheiritage
Account. The Policyowner may change the allocation of net premiums
without charge at any time by providing written notice to the
Principal Office. The change will be effective as of the date of
receipt of the notice at the Principal Office. The Policyowner may
transfer amounts among all of the Sub-Accounts and the General
Account, subject to certain restrictions, but at no time may have
allocations in more than seven Subaccounts.
d. Repayment of Loan
A loan made under this Policy may be repaid with an amount equal to
the original loan plus loan interest.
When a loan is made, the Company will transfer from each Sub-Account
of the Inheiritage Account to the General Account an amount of that
Sub-Account's Policy value equal to the loan amount allocated to the
Sub-Account. Since the Company will credit such assets with interest
at 6%, which is below the 8% interest rate charged on the loan, the
Company will retain the difference between these rates in order to
cover certain expenses and contingencies. Upon repayment of debt,
the Company will reduce the Policy value in the general account
attributable to the loan and transfer assets supporting
corresponding reserves to the Sub-Accounts according to either
Policyowner's instruction or, if none, the premium payment
allocation percentages then in effect. Loan repayments allocated to
the Inheiritage Account cannot exceed Policy value previously
transferred from the Inheiritage Account to secure the debt.
e. Policy Reinstatement
If the surrender value is insufficient to cover the next monthly
deduction plus loan interest accrued, or if Policy debt exceeds the
Policy value less surrender charges, the Company will notify the
Policyowner and any assignee of record. The Policyowner will then
have a grace period of 62 days, measured from the date the notice is
mailed, to make sufficient payments to prevent termination.
Failure to make a sufficient payment within the grace period will
result in termination of the Policy without any Policy value. The
death benefit payable during the grace period will be reduced by any
overdue charges. If the Insured dies during the grace period, the
death proceeds will still be payable, but any monthly deductions due
and unpaid through the Policy month in which the Insured dies will
be deducted from the death proceeds.
If the Policy has not been surrendered and the Insured is alive, the
terminated Policy may be reinstated anytime within three years after
the date of default by submitting the following to the Company: (1)
a written application for reinstatement; (2) evidence of
insurability satisfactory to the Company; and (3) a premium that,
after the deduction of the premium expense charges, is large enough
to cover the minimum amount payable, as described below.
If reinstatement is requested less than 48 months after the date of
issue or an increase in the face amount, the Policyowner must pay
the lesser of the amount shown in 1 or 2:
1. The minimum amount payable is the minimum monthly factor for
the three-month period beginning on the date of reinstatement.
2. The minimum amount payable is the sum of the amount by which
the surrender charge as of the date of the reinstatement
exceeds the Policy value on the date of default, plus
mortality deductions for the three-month period beginning on
the date of reinstatement.
If reinstatement is requested 48 months or more after the date of
issue or an increase in the face amount, the Policyowner must pay
the amount shown in 2 above.
-3-
The surrender charge on the date of reinstatement is the surrender
charge which would have been in effect had the Policy remained in
force from the date of issue. The Policy value less debt on the date
of default will be restored to the Policy to the extent it does not
exceed the surrender charge on the date of reinstatement. Any policy
value less debt as of the date of default which exceeds the
surrender charge on the date of reinstatement will be forfeited to
the Company.
Policy Value on Reinstatement - The Policy value on the date of
reinstatement is:
(a) the net premium paid to reinstate the Policy increased by
interest from the date the payment was received at the
Company's Principal Office; plus
(b) an amount equal to the Policy value less debt on the date of
default to the extent it does not exceed the surrender charge
on the date of reinstatement; minus
(c) the monthly deduction due on the date of reinstatement.
The Policyowner may not repay or reinstate any debt outstanding on
the date of default or foreclosure.
f. Correction of Misstatement of Age
If the Company discovers that the age of the Insured has been
misstated, the death benefit and any rider benefits will be those
which would be purchased by the most recent deduction for the cost
of insurance and the cost of rider benefits at the correct age.
g. Contestability
A Policy is contestable for two years, measured from the issue date,
for material misrepresentations made in the initial application for
the Policy. Policy changes may be contested for two years after the
effective date of a change, and a reinstatement may be contested for
two years after the effective date of reinstatement. No statement
will be used to contest a Policy unless it is contained in an
application.
h. Reduction in Cost of Insurance Rate Classification
By administrative practice, the Company will reduce the cost of
insurance rate classification for an outstanding Policy if new
evidence of insurability demonstrates that the Policyowner qualifies
for a lower classification. After the reduced rating is determined,
the Policyowner will pay a lower monthly cost of insurance charge
each month. If new evidence of insurability provided in connection
with an increase in face amount demonstrates that the Policyowner is
in a higher risk classification, the higher cost of insurance rate
will apply only to the increase in face amount.
II. "Redemption Procedures": Surrender and Related Transactions
The policies provide for the payment of monies to a Policyowner or
beneficiary upon presentation of a Policy. Generally, except for the
payments of death proceeds, the imposition of cost of insurance and
administrative charges, and the possible effect of a contingent surrender
charge, the payee will receive a pro rata or proportionate share of the
Inheiritage Account's assets, within the meaning of the 1940 Act, in any
transaction involving "redemption procedures". The amount received by the
payee will depend upon the particular benefit for which the Policy is
presented, including, for example, the cash surrender value or death
benefit. There are also certain Policy provisions (e.g., partial
withdrawals or the loan privilege) under which the Policy will not be
presented to the Company but which will affect the Policyowner's benefits
and may involve a transfer of the assets supporting the Policy reserve out
of the Inheiritage Account. Any combined transactions on the same day
which counteract the effect of each other will be allowed. The Company
will assume the Policyowner is aware of the possible conflicting nature of
the transactions and desires their combined result. If a transaction is
requested which the Company will not allow (e.g., a request for a decrease
in face amount which
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lowers the face amount below the stated minimum) the Company will reject
the whole transaction and not just the portion which causes the
disallowance. The Policyowner will be informed of the rejection and will
have an opportunity to give new instructions.
a. Surrender for Cash Values
The Company will pay the net cash surrender value within seven days
after receipt, at its Principal Office, of the Policy and a signed
request for surrender. Computations with respect to the investment
experience of each Sub-Account will be made at the close of trading
of the New York Stock Exchange on each day in which the degree of
trading in the corresponding portfolio might materially affect the
net return of the Sub-Account and on which the Company is open. This
will enable the Company to pay a net cash value on surrender based
on the next computed value after the surrender request is received.
For valuation purposes, the surrender is effective on the date the
Company receives the request at its Principal Office (although
insurance coverage ends the day the request is mailed).
The Policy value (equal to the value of all accumulations in the
Inheiritage Account) may increase or decrease from day to day
depending on the investment experience of the Inheiritage Account.
Calculation of the Policy value for any given day will reflect the
actual premiums paid, expenses charged and deductions taken. The
Company will deduct a charge for premium taxes and DAC taxes from
each premium payment. The balance (net premium) is allocated to the
Inheiritage Account according to Policyowner's instructions. The
Company will also make monthly deductions from a Policy to cover the
cost of insurance and administrative expenses for the following
month. The monthly administration charge is only $5 and is designed
to compensate the Company for administering and maintaining a
Policy. Other possible deductions from the Policy (which will occur
on a Policy-specific basis) include a charge for partial
withdrawals, a charge for increases in face amount and a charge for
certain transfers.
In calculating the cash surrender value, a surrender charge
comprised of a contingent deferred sales load and a contingent
deferred administrative charge will be deducted from the Policy. The
duration of the surrender charge is 15 years for issue ages 0
through 50, grading down to ten years for issue ages 55 and above.
The Company will make the payment of net cash surrender value out of
its General Account and, at the same time, transfer assets from the
Inheiritage Account to the General Account in an amount equal to the
Policy reserves in the Inheiritage Account. If the Policy is
surrendered in the first Policy year, any unpaid first year monthly
administrative charges will be deducted at surrender, in addition to
any contingent surrender charges which may be applicable.
The maximum surrender charge calculated upon issuance of the Policy
is equal to the sum of $8.50 per thousand dollars of the initial
face amount plus 49% of premiums received up to a maximum number of
the Guideline Annual Premiums subject to the deferred sales charge
that varies by issue age from 1.660714 (for ages 0 through 55) to
0.948980 (for age 80); provided, however, that in accordance with
limitations under state insurance regulations, the amount of the
Surrender Charge will not exceed a specified amount per one thousand
dollars of initial face amount, as indicated on the Policy and in
the prospectus. The maximum Surrender Charge remains level for the
first 40 Policy months and reduces by 0.5% or more per month
(depending on usage) thereafter. During the first two Policy years
following the date of issue, the actual Surrender Charge will be the
sum of $8.50 per thousand dollars of initial face amount plus an
amount not to exceed 29% of premiums received, up to one Guideline
Annual Premium, plus 9% of premiums received in excess of one
Guideline Annual Premium, but less than the maximum number of
Guideline Annual Premiums subject to the deferred sales charge.
A separate Surrender Charge is imposed for each increase in face
amount. The maximum Surrender Charge for the increase is $8.50 per
thousand dollars of increase plus 49% of premiums associated with
the increase, up to a maximum number of Guideline Annual Premiums
(for the increase) subject to the deferred sales charge that varies
by age (at the time of increase) from 1.660714 (for ages 0 through
55) to 0.948980 (for age 80);
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provided, however, that the amount of the Surrender Charge will not
exceed a specified amount per one thousand dollars of increase, as
indicated in the Policy and prospectus. This maximum Surrender
Charge remains level for the first 40 Policy months following the
increase and reduces by 0.5% or more (depending on age at increase)
thereafter. During the first two Policy years following an increase
in Face Amount, the actual Surrender Charge is the sum of $8.50 per
thousand dollars of increase, plus an amount not to exceed 29% of
premiums associated with the increase, up to one Guideline Annual
Premium (for the increase), plus 9% of premiums associated with the
increase in excess of one Guideline Annual Premium, but less than
the maximum number of Guideline Annual Premiums (for the increase)
subject to the deferred sales charge. For purposes of calculating
actual Surrender Charges, premium and Policy value will be allocated
to the initial face amount and subsequent increases in face amount
according to the ratio of the respective Guideline Annual Premiums.
A Surrender Charge also will be made on a decrease in the face
amount. In the event of a decrease, the Surrender Charge imposed is
proportional to the charge that would apply to a full surrender of
the Policy. If more than one Surrender Charge is in effect, (i.e.,
pursuant to one or more increases in the face amount of a Policy),
partial surrenders will deemed attributable to that portion of the
face amount governed by the most recent Surrender Charge. Such
charges will be the Surrender Charge applicable to any increased
face amount plus a pro rata share of the Surrender Charge applicable
to a partial reduction in the initial face amount.
b. Charges on Partial Withdrawal
After the first Policy year, partial withdrawals of surrender value
may be made. The minimum withdrawal is $500. Under Option 1, the
face amount is reduced by the amount of the partial withdrawal, and
a partial withdrawal will not be allowed if it would reduce the face
amount below $40,000. A transaction charge which is the smaller of
2% of the amount withdrawn or $25 will be assessed on each partial
withdrawal.
A Partial Withdrawal Charge will also be deducted from Policy value
when more than 10% of the Policy value is withdrawn in a Policy year
("excess withdrawal"). Thus, for each partial withdrawal the
Policyowner may withdraw an amount equal to 10% of the Policy value
at that time less the total of any prior withdrawals in that Policy
year which were not subject to the Partial Withdrawal Charge,
without incurring a Partial Withdrawal Charge. Any excess withdrawal
will be subject to the Partial Withdrawal Charge. The Partial
Withdrawal Charge is equal to 5 percent of the excess withdrawal up
to the amount of the surrender charge(s) on the date of withdrawal.
There will be no Partial Withdrawal Charge if there is no surrender
charge on the date of withdrawal.
This amount is not cumulative from Policy year to Policy year. In
other words, if only 8% of Policy value were withdrawn in Policy
year two, the amount the Policyowner could withdraw in subsequent
Policy years would not be increased by the amount the Policyowner
did not withdraw in the second Policy year.
The Policy's outstanding surrender charge will be reduced by the
amount of the Partial Withdrawal Charge deducted. The Partial
Withdrawal Charge deducted will decrease existing surrender charges
in the following order:
o first, the surrender charge for the most recent increase in
Face Amount;
o second, the surrender charges for the next most recent
increase successively;
o last, the surrender charge for the initial face amount.
c. Death Benefit
The Company will pay a death benefit to the beneficiary within seven
days after receipt, at its Principal Office, of the Policy, due
proof of death of the Insured, and all other requirements necessary
to make payment.
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The death proceeds payable will depend on the option in effect at
the time of death. Under Option 1, the death benefit is the greater
of either the face amount of insurance or the guideline minimum sum
Insured. Under Option 2, the death benefit is the greater of either
the face amount of insurance plus Policy value or the guideline
minimum sum Insured. The guideline minimum sum Insured is calculated
by multiplying the applicable percentage from the following table
for the Insured person's age (nearest birthday) at the beginning of
the Policy year of determination to the Policy value.
GUIDELINE MINIMUM SUM Insured
TABLE
Age
of Insured on Percentage of
Date of Death Policy Value
------------- ------------
40 and less ............................... 250%
45: ....................................... 215%
50: ....................................... 185%
55: ....................................... 150%
60: ....................................... 130%
65: ....................................... 120%
70: ....................................... 115%
75: ....................................... 105%
80: ....................................... 105%
85: ....................................... 105%
90: ....................................... 105%
95: ....................................... 100%
For the ages not listed, the progression between the listed ages is
linear.
The Company will make payment of the death proceeds out of its
general account, and will transfer assets from the Inheiritage
Account to the general account in an amount equal to the reserve in
the Inheiritage Account attributable to the Policy. The excess, if
any, of the death proceeds over the amount transferred will be paid
out of the general account reserve maintained for that purpose.
d. Default and Options on Lapse
The duration of insurance coverage depends upon the Policy value
being sufficient to cover the monthly deductions plus loan interest
accrued. If the surrender value at the beginning of a month is less
than the deductions for that month plus loan interest accrued, a
grace period of 62 days will begin. Written notice will be sent to
the Policyowner and any assignee on the Company's records stating
that such a grace period has begun and giving the amount of premium
payment necessary to prevent termination. If sufficient payment is
not received during the grace period, the Policy will terminate
without value. Notice of such termination will be sent to the owner
and any assignee. If the Insured should die during the grace period,
an amount sufficient to cover the overdue monthly deductions and
other charges will be deducted from the death proceeds.
e. Policy Loan
The policies provide that in the first Policy year, a Policyowner
may take a loan of up to 75% of "a minus b", where "a' is Policy
value less surrender charges and "b" is monthly deductions plus
interest on loans accrued to the end of the Policy year. Thereafter,
90% of an amount equal to Policy value less surrender charges may be
borrowed. The Policy value for this purpose will be that next
computed after receipt, at the Principal Office, of a loan request.
Payment of the loan amount will be made to the Policyowner within
seven days after such receipt.
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The amount of any outstanding loan plus accrued interest is called
"debt". When a loan is made, the portion of the assets in the
Inheiritage Account (which is a portion of the surrender value and
which also constitutes a portion of the reserves for the death
benefit) equal to the debt created thereby is transferred by the
Company from the Inheiritage Account to the general account.
Allocation of the loan among Sub-Accounts will be according to the
Policyowner's request. If this allocation is not specified or not
possible, the loan will be allocated based on the proportion the
Policy value in the General Account, less debt, and the Policy value
in each Sub-Account bears to the total Policy value, less debt.
Policy value in each Sub-Account equal to the Policy loan allocated
to such Subaccount will be transferred to the General Account, and
the number of Accumulation Units equal to the Policy value so
transferred will be cancelled. Because of the transfer, a portion of
the Policy is not variable during the loan period and, therefore,
the death benefit and the surrender value are permanently affected
by any debt, whether or not repaid in whole or in part. The Company
credits the Policy value in the General Account attributable to the
loan with a rate of return equal to an effective annual yield of 6%,
which is 2% lower than the fixed interest rate charged on the loan.
Interest is payable in arrears at the annual rate of 8%. Interest is
payable at the end of each Policy year or on a pro rata basis for
such shorter period as the ma exist. Loan interest is due on each
Policy anniversary. If not paid when due, it is added to the loan
principal and bears interest at the same rate of interest. If the
resulting loan principal exceeds the Policy value in the General
Account the Company will transfer Policy value equal to the excess
debt from the Policy value in each Sub-Account to the General
Account; as security for the excess debt. The Company will allocate
the amount transferred among the Sub-Accounts in the same proportion
that the Policy value in each Sub-Account bears to the total Policy
values in all Sub-Accounts.
Failure to repay a loan will not necessarily terminate the Policy.
If the surrender value is not sufficient to cover the monthly
deductions for the cost of insurance and administrative expenses,
the Policy will go into a 62 day grace period as described above.
f. Transfers Among Subaccounts
Amounts may be transferred, upon request, at any time from any
Sub-Account of the Inheiritage Account to one or more other
Sub-Accounts. Transfers from a Sub-Account of the Inheiritage
Account will take effect as of the receipt of a written request at
the Principal Office. The minimum amount allowed for a transfer is
the lesser of $500 or the total value in the Sub-Account. The first
six transfers are free of charge; however, the Company will make an
administrative charge not to exceed $25 for additional transfers in
a Policy year. Transfers resulting from Policy loans, the exercise
of conversion rights, and reallocation of Policy value within 20
days of issue, will not be subject to a transfer charge, and will
not be counted for purposes of the limitation on the number of
"free" transfers allowed in each Policy year. If a Policy owner
elects to have automatic transfers made each month, the first
automatic transfer counts as one transfer towards the six free
transfers allowed in each Policy year; each subsequent automatic
transfer does not reduce the remaining number of transfers which may
be made without charge.
Transfer charges, if any, are allocated by Policyowner request to
one Sub-Account. If an allocation is not specified or not possible
the allocations will be based on the proportion that the values in
each of the Sub-Accounts of the Inheiritage Account bears to the
total unloaned Policy value.
g. Right of Withdrawal Procedures
The Policy provides that the Policyowner may cancel it by returning
the Policy along with a written request for cancellation to the
Principal Office by the latest of 1) 45 days after Part I of the
application was signed, 2) 10 days after the Policyowner receives
the Policy, or 3) 10 days after the Company mails or personally
delivers a written Notice of Withdrawal Right. Upon returning the
Policy, the Policyowner will receive within seven days a refund
equal to the sum of (1) the difference between the premium,
including fees, paid and any amount allocated to the Inheiritage
Account, and (2) the value of the amounts allocated to the
Inheiritage Account, and (3) any fees or charges imposed on the
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amounts allocated to the Inheiritage Account. Where required by
State law, the Policyowner will receive a refund equal to the sum of
the premium payments made under the Policy. The postmark date on the
envelope containing the Policy will determine whether the Policy has
been surrendered within the Company's withdrawal period.
A free look privilege also applies after a requested increase in
Face Amount. After an increase, the Company will mail or deliver
notice of the "Free Look" with respect to the increase. The
Policyowner will have the right to cancel the increase within 10
days, and receive a credit for charges which would not have been
deducted but for the increase. Such charges with respect to the
increase will be added to Policy value, unless the Policyowner
requests a refund of such charges.
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Filing Submission 0001047469-98-015388 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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