EX-99.(26)(D)(1) 2 dex9926d1.htm FORM OF POLICY Form of Policy
LOGO    John Hancock Life Insurance Company of New York A Stock Company
  

 

LIFE INSURED    [John J Doe]
POLICY NUMBER    [12 345 678]
PLAN NAME    [Majestic VULX]

FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY

ADJUSTABLE DEATH BENEFIT

BENEFIT PAYABLE ON LIFE INSURED’S DEATH

FLEXIBLE PREMIUMS PAYABLE TO AGE 121 DURING THE LIFE INSURED’S LIFETIME

NON-PARTICIPATING (NOT ELIGIBLE FOR DIVIDENDS)

Subject to the conditions and provisions of this policy, while the policy is in force and upon the death of the Life Insured, John Hancock Life Insurance Company of New York (“the Company”) agrees to pay the Insurance Benefit to the Beneficiary in a lump sum, and to provide the other benefits, rights, and privileges, if any, of the policy.

The Insurance Benefit is described in Section 6. If the Company makes other plans of payment available other than a lump sum, then a Beneficiary may request written election of any such other plans in lieu of a lump sum.

Your Net Premiums are added to your Policy Value. You may allocate them to one or more of the Investment Accounts and to the Fixed Account, subject to Section 17, and any other applicable provisions of the policy.

The portion of your Policy Value that is in an Investment Account will vary from day to day. The amount is not guaranteed; it may increase or decrease, depending on the investment experience of the underlying Subaccounts for the Investment Accounts that you have chosen.

The portion of your Policy Value that is in the Fixed Account will accumulate, after deductions, at rates of interest we determine. Such rates will not be less than the Fixed Account Annual Rate shown in Section 1.

The amount of the Insurance Benefit, or the duration of the insurance coverage, or both, may be variable or fixed under specified conditions and may increase or decrease as described in Section 6.

READ YOUR POLICY CAREFULLY. It is a contract between you and us.

RIGHT TO RETURN POLICY. If for any reason you are not satisfied with your policy, you may return it for cancellation by delivering or mailing it to us or to the agent who sold it. If this policy does not replace another policy, you may return it within TEN days after receiving it and we will refund in full the payment made. If it replaces another policy, you may return it within SIXTY days after receiving it and we will refund the Policy Value as of the date we receive the policy, plus any charges and deductions taken for the policy. The policy will be void from the beginning.

Signed for the Company by:

 

LOGO     LOGO

President

    

Secretary

     Policy Provisions
     Section
1.    Policy Specifications
2.    Table of Rates
3.    Definitions
4.    Qualification as Life Insurance
5.    Total Face Amount
6.    Insurance Benefit
7.    Interest on Proceeds
8.    Premiums
9.    Early Lapse Protection
10.    Grace Period
11.    Policy Termination
12.    Reinstatement
13.    Coverage at and after Age 121
14.    Policy Value
15.    Loan Account, Fixed Account, Investment Accounts
16.    Separate Account and Subaccounts
17.    Allocations and Transfers
18.    Loans
19.    Surrenders and Withdrawals
20.    Owner and Beneficiary
21.    Assignment
22.    Misstatements
23.    Suicide
24.    Incontestability
25.    The Contract
26.    Right to Postpone Payment of Benefits
27.    Claims of Creditors
28.    Reports to Owner
29.    How Values are Computed
30.    Flexible Factors

 

2

1. POLICY SPECIFICATIONS

 

Life Insured   [John Doe]    Plan Name    [Majestic VULX]
Age at Policy Date   [35]    Policy Number    [12 345 678]
[Sex]   [Male]    Issue Date    [May 1, 2008]
Risk Classification   [Standard]  [Non Smoker]    Policy Date    [May 1, 2008]
Additional Ratings   [not applicable]      
Owner, Beneficiary   As designated in the application or subsequently changed   
Death Benefit Option at Issue   [Option 1]      

Life Insurance Qualification

Test Elected

  

[Guideline Premium Test]

      
     Base Face Amount at Issue    $[500,000]
     Supplemental Face Amount at Issue    $[600,000]
         
     Total Face Amount at Issue    $[1,100,000]
Governing Law   [New York]      

PREMIUMS AT ISSUE

 

Premium Mode    [Annual]
Planned Premium    $ [                 per year]
Minimum Initial Premium    $ [                 ]
Early Lapse Protection Premium    $ [                 per year]

Notice: This policy provides life insurance coverage for the lifetime of the Life Insured if sufficient premiums are paid. Premium payments in addition to the Planned Premium shown may need to be made to keep this policy and coverage in force. Keeping the policy and coverage in force will be affected by factors such as: changes in the current cost of insurance rates; administrative charge and premium charge; the amount, timing and frequency of premium payments; the interest rate being credited to the Fixed Account; the investment experience of the Investment Accounts; changes to the death benefit option; changes in the Total Face Amount; loan activity; withdrawals; and deductions for any applicable Supplementary Benefit riders that are attached to, and made a part of, this policy. Also refer to the Grace Period and Policy Termination provisions in Sections 10 and 11.

 

3

1. POLICY SPECIFICATIONS (continued) – Policy [12 345 678]

SCHEDULE OF SUPPLEMENTAL FACE AMOUNTS

 

Supplemental Face Amount At Issue

    $ [600,000 ]

Maximum Increasing Supplemental Face Amount

    $ [1,050,000 ]

Maximum Total Supplemental Face Amount

    $ [1,650,000 ]

The Supplemental Face Amount will increase at the beginning of each Policy Year for Policy Years 2 to [ XX ] by [ XX.XX ]% of the Total Face Amount that is in effect immediately prior to the beginning of each such Policy Year. The Total Supplemental Face Amount will not exceed the Maximum Total Supplemental Face Amount shown above.

The Supplemental Face Amount will increase at the beginning of each Policy Year for Policy Years 2 to [ XX ] by $ [XX,XXX.XX ]. The Total Supplemental Face Amount will not exceed the Maximum Total Supplemental Face Amount shown above.

 

Effective at

Beginning of

Policy Year

    Supplemental
Face Amount
Increases		    Total
Supplemental
Face Amount

1

    $ 0    $ 600,000

2

    $ 50,000    $ 650,000

3

    $ 50,000    $ 700,000

4

    $ 75,000    $ 775,000

5

    $ 75,000    $ 850,000

6

    $ 100,000    $ 950,000

7

    $ 100,000    $ 1,050,000

8

    $ 100,000    $ 1,150,000

9

    $ 150,000    $ 1,300,000

10

    $ 150,000    $ 1,450,000

11

    $ 200,000    $ 1,650,000

12 to 86

    $ 0    $ 1,650,000

 

4

1. POLICY SPECIFICATIONS (continued) – Policy [12 345 678]

OTHER BENEFITS AND SPECIFICATIONS

[Not Applicable]

 

5

1. POLICY SPECIFICATIONS (continued) – Policy [12 345 678]

MAXIMUM EXPENSE CHARGES

Deductions from Premium Payments

 

Premium Charge    A percentage of each premium payment, the percentages as shown below
    

Policy Years

   

Up to Target Premium

   

Excess of Target Premium

     1*    20%    6%
     2-10    10%    6%
     11+    6%    6%

Monthly Deductions: the following charges are deducted monthly from the Policy Value

 

Administrative Charge

    $xx

Base Face Amount Charge

    $[0.xxxx] per $1000 of Base Face Amount at issue for the first 10 Policy Years

Cost of Insurance Charge

    Determined in accordance with Section 14. Maximum monthly rates per $1,000 are shown in Section 2.

Asset-Based Risk Charge

    Percentage of Investment Account assets deducted monthly as shown below:

 

     

Policy Years

    Percentage of Investment

Account assets
   [1-10]    [0.xxxxx]%
   [11-15]    [0.xxxxx]%
   [15+]    [0.xxxxx]%

Other Charges

 

Unscheduled Supplemental Face Amount Increase Charge    $0.xxx per $1000 of Unscheduled Supplemental Face Amount Increase deducted monthly for 10 Policy Years from the date of the increase
Supplementary Benefit Rider Charges    Charges for applicable riders are shown under Supplementary Benefits of this Section 1.

 

6

1. POLICY SPECIFICATIONS (continued) – Policy [12 345 678]

TABLE OF VALUES

Refer to your policy provisions for details on the terms and values shown in this table.

 

Minimum Total Face Amount

    $ 250,000

Minimum Base Face Amount

    $100,000

Minimum Total Face Amount Decrease

    $10,000

Early Lapse Protection Period Base Face Amount

   

First 10 Policy Years

Allocation Date

    [10TH day after the Issue Date]

Fixed Account Annual Rate

    Not less than 3%

Loan Interest Credited Annual Rate

    3%

Maximum Loan Interest Charged Annual Rate

   

Policy Years 1-10

    4.25%

Policy Years 11+

    3.25%

Minimum Loan Amount

    $500

Minimum Withdrawal Amount

    $500

Death Benefit Discount Factor

    1.0024663

Maximum Transfer Fee (See Section 17 for Transfer Restrictions)

    $25

Fixed Account Maximum Transfer Percentage

    15%

Fixed Account Maximum Transfer Amount

    $2,000

Investment Account Maximum Transfer Amount

    $1,000,000

Target Premium

    $[x,xxx.xx]

Additional amount may be payable on the Fixed Account. These amounts are not guaranteed and we have the right to change the amount of interest credited to the policy, the amount of cost of insurance and other expense charges deducted under the policy which may require more premium to be paid than was illustrated or the cash values may be less than those illustrated. No additional amounts are being paid on the Loan Interest Account.

Maximum Monthly Rates are based on 2001 Commissioners Standard Ordinary Smoker or Nonsmoker Mortality Table, as the case may be. We have the right to change the Monthly Rate per $1,000 of Net Amount at Risk imposed, never to exceed the maximums shown in Section 2. Such changes may require additional premium payments other than those illustrated and may result in policy values being less than those illustrated.

 

7

2. TABLE OF RATES– Policy [12 345 678]

A. RATE TABLE

 

Age

    Maximum Monthly
Rates per $1,000 of
Net Amount at Risk		    Minimum
Death
Benefit
Factors		    Age    Maximum Monthly
Rates per $1,000 of
Net Amount at Risk		    Minimum
Death
Benefit
Factors

35

    0.000065    2.5000    79    1.836538    1.0500

36

    0.000210    2.5000    80    2.141923    1.0500

37

    0.000382    2.5000    81    2.494601    1.0500

38

    0.000595    2.5000    82    2.883591    1.0500

39

    0.000842    2.5000    83    3.320668    1.0500

40

    0.001144    2.5000    84    3.856890    1.0500

41

    0.001481    2.5000    85    4.472583    1.0500

42

    0.001901    2.5000    86    5.135239    1.0500

43

    0.002411    2.5000    87    5.870950    1.0500

44

    0.003025    2.4300    88    6.686208    1.0500

45

    0.003775    2.3600    89    7.485260    1.0500

46

    0.004665    2.2900    90    8.503924    1.0500

47

    0.005748    2.2200    91    9.547360    1.0500

48

    0.006909    2.1500    92    10.656121    1.0500

49

    0.008293    2.0900    93    11.715278    1.0500

50

    0.010072    2.0300    94    12.382287    1.0400

51

    0.012237    1.9700    95    13.394913    1.0300

52

    0.014977    1.9100    96    14.768206    1.0200

53

    0.018341    1.8500    97    16.513843    1.0100

54

    0.022601    1.7800    98    18.720329    1.0000

55

    0.028024    1.7100    99    20.903597    1.0000

56

    0.034498    1.6400    100    23.224251    1.0000

57

    0.042245    1.5700    101    23.647030    1.0000

58

    0.050970    1.5000    102    24.980699    1.0000

59

    0.061682    1.4600    103    27.156381    1.0000

60

    0.074625    1.4200    104    29.562185    1.0000

61

    0.090509    1.3800    105    32.351836    1.0000

62

    0.109737    1.3400    106    35.523851    1.0000

63

    0.132626    1.3000    107    39.181042    1.0000

64

    0.159475    1.2800    108    43.340312    1.0000

65

    0.190919    1.2600    109    47.841525    1.0000

66

    0.226572    1.2400    110    52.725765    1.0000

67

    0.267202    1.2200    111    57.948884    1.0000

68

    0.314332    1.2000    112    63.760982    1.0000

69

    0.368308    1.1900    113    70.155147    1.0000

70

    0.432734    1.1800    114    76.798937    1.0000

71

    0.508368    1.1700    115    83.333333    1.0000

72

    0.601657    1.1600    116    83.333333    1.0000

73

    0.709032    1.1500    117    83.333333    1.0000

74

    0.833547    1.1300    118    83.333333    1.0000

75

    0.978332    1.1100    119    83.333333    1.0000

76

    1.144500    1.0900    120    83.333333    1.0000

77

    1.339339    1.0700    121      0    1.0000

78

    1.568726    1.0500         

For attained Age 121 and above, the Maximum Monthly Rate per $1,000 of Net Amount at Risk is 0 and the Minimum Death Benefit Factor is 1.0000.

Maximum Monthly Rates are the same for the Base Face Amount and the Supplemental Face Amount and have been adjusted for any applicable Additional Ratings that are applied to the Cost of Insurance rates as shown in Section 1.

 

8

3. DEFINITIONS

The term “Additional Rating” is an increase in the Cost of Insurance that is applied when the Life Insured does not meet, at a minimum, our underwriting requirements for the standard Risk Classification.

The term “Age” means, on any Policy Anniversary, the age of the person in question at his or her birthday nearest that date.

The term “Annual Processing Date” means every 12th Processing Date starting with the Processing Date next after the Policy Date.

The term “Business Day” means any day that we are open for business and the New York Stock Exchange is open for trading. The net asset value of the underlying shares of a Subaccount will be determined at the end of each Business Day. We will deem each Business Day to end at the close of regularly scheduled trading of the New York Stock Exchange (currently 4:00 p.m. Eastern time) on that day.

The term “date” means a calendar day ending at midnight local time at our Service Office.

The term “Fixed Account” is that part of the Policy Value which reflects the value you have in our general account.

The term “Fund” means each division, with a specific investment objective, of a Series Fund.

The term “in force” means that the policy has not terminated in accordance with Sections 9, 10, 11, or surrendered in accordance with Section 19.

The term “Investment Account” means that part of the Policy Value which reflects the value you have in one of our Subaccounts.

The term “Issue Date” is the date shown in Section 1 of this policy from which the Suicide and Incontestability provisions are applied. Issue Date is also used to determine the Allocation Date shown in Section 1.

The term “Loan Account” is that part of the Policy Value which reflects amounts transferred from the Fixed Account or the Investment Accounts as collateral for a policy loan.

The term “Minimum Initial Premium” means the minimum premium needed to put the policy in force and is shown in Section 1.

The term “Net Cash Surrender Value” equals the Policy Value less the Policy Debt.

The term “Net Policy Value” equals the Policy Value less the value in the Loan Account.

The term “Net Premium” is the gross premium paid less any Premium Charge. It is the amount of premium allocated to the Fixed Account and or to the Investment Accounts.

The term “Planned Premium” means the premium that is selected in the application for the policy, which is intended to be paid on a regular modal basis. It is shown in Section 1.

The term “Policy Date” is the date from which charges for the first Monthly Deductions are calculated. The Policy Date is shown in Section 1. Policy Years, Policy Months, and Policy Anniversaries are determined from the Policy Date.

The term “Policy Debt” as of any date equals (a) plus (b) plus (c), minus (d), where:

 

  (a) is the total amount of loans borrowed as of such date;

 

  (b) is the total amount of any unpaid loan interest charges borrowed against the policy on a Policy Anniversary;

 

  (c) is any interest charges accrued from the last Policy Anniversary to the current date; and

 

  (d) is the total amount of loan repayments as of such date.

The term “Policy Value” is the sum of the values in the Loan Account, the Investment Accounts, and the Fixed Account.

The term “Policy Year” means (a) or (b) below, whichever is applicable.

 

  (a) The first Policy Year is the period beginning on the Policy Date and ending on the Business Day immediately preceding the first Annual Processing Date.

 

  (b) Each subsequent Policy Year is the period beginning on an Annual Processing Date and ending on the Business Day immediately preceding the next Annual Processing Date.

 

9

3. DEFINITIONS (continued)

The term “Processing Date” means the first day of a Policy Month. A Policy Month shall begin on the day in each calendar month that corresponds to the day of the calendar month on which the Policy Date occurred. If the Policy Date is the 29th, 30th, or 31st day of a calendar month, then for any calendar month that has fewer days, the first day of the Policy Month will be the last day of such calendar month. The Policy Date is not a Processing Date.

The term “Separate Account” means Separate Account A of the John Hancock Life Insurance Company of New York.

The term “Series Fund” means a series type mutual fund registered under the Investment Company Act of 1940 as an open-end diversified management investment company.

The term “Service Office” is the office that we designate to service this policy as shown on the back cover of your policy.

The term “Subaccount” refers to one of the subaccounts of the Separate Account.

The term “Surrender Date” means the end of the Business Day on which we receive at our Service Office your written request for full surrender of the policy.

The terms “we”, “us”, and “our” refer only to the Company.

The term “written request” is your request to us which must be in a form satisfactory to us, signed and dated by you, and filed at our Service Office or, if permitted by our administrative practices, an electronic mail message (“e-mail”) received by us at the internet address specified by us for receipt of such messages.

The terms “you” and “your” refer only to the Owner of this policy.

 

4. QUALIFICATION AS LIFE INSURANCE

It is the intent that this policy be considered as life insurance for federal income tax purposes. In order to comply with the Internal Revenue Code definition of “life insurance” we reserve the right to make any reasonable adjustments to the terms or conditions of this policy. This provision should not be construed to guarantee that this policy will receive tax treatment as life insurance or that the tax treatment of life insurance will never be changed by the future actions of any tax authority. One of the following tax qualification tests will apply to the policy. The test you elected is shown in Section 1. Your election cannot be changed after issue.

Guideline Premium Test

Under this test, if at any time the premiums received under the policy exceed the amount allowable for such tax qualification, such excess amount shall be removed from the policy together with interest and/or investment experience thereon from the date of its payment, and any appropriate adjustment in the Death Benefit shall be made as of such date. This excess amount shall be refunded to you no later than 60 days after the end of the applicable Policy Year. If this excess amount is not refunded by then, the Total Face Amount under the policy shall be increased retroactively so that at no time is the Death Benefit ever less than the amount necessary to ensure or maintain such tax qualification. In no event, however, will we refuse to accept any premium necessary to prevent the policy from terminating but only if such premium payment would result in a zero Policy Value at the end of the Policy Year. In addition, the Minimum Death Benefit, as described in Section 6, must be maintained.

Cash Value Accumulation Test

Under this test, the Minimum Death Benefit, as described in Section 6, must be maintained. We reserve the right to modify the Minimum Death Benefit Factors shown in Section 2, retroactively if necessary, to ensure or maintain qualification of this policy as a life insurance contract for federal income tax purposes, notwithstanding any other provisions of this policy to the contrary. In no event will we refuse to accept any premium necessary to prevent the policy from terminating.

Effect on Life Insurance Qualification Tests

A change in Death Benefit Option or Total Face Amount, or certain other policy changes, will often change the policy’s limits under the life insurance qualification test that you elected.

We reserve the right to refuse or limit any request for a change if the change would cause the policy to fail to qualify as life insurance for tax purposes.

 

10

5. TOTAL FACE AMOUNT

The Total Face Amount is made up of two components: (i) the Base Face Amount, and (ii) any Supplemental Face Amount. Minimum Base Face Amount and the Minimum Total Face Amount limits are shown in Section 1. Scheduled increases in any Supplemental Face Amount are elected on the application and if approved, these amounts, when they are to become effective, and the Maximum Increasing Supplemental Face Amount will be shown in Section 1. If you later request that an approved scheduled increase should not become effective or request a decrease in your Supplemental Face Amount coverage, we will abide by your request but we reserve the right to not put into effect all approved scheduled increases for subsequent policy years.

Increase in Supplemental Face Amount

After the first Policy Year, while the Life Insured is alive and the policy is in force, unscheduled changes to the Supplemental Face Amount may be requested in writing. Such increases will not be approved if the Life Insured does not continue to qualify for their same Risk Classification that applied when this policy was issued. We reserve the right to limit the number of such unscheduled changes to one per Policy Year. We also reserve the right to limit the maximum and minimum amounts of unscheduled changes. All requested changes will be subject to our approval. You may not increase your Base Face Amount of insurance under this policy.

Approval of any unscheduled increase in Supplemental Face Amount is subject to our normal underwriting practices, including evidence of insurability. All requested and approved unscheduled increases in Supplemental Face Amount will be subject to a monthly charge deducted as described in Section 1, not to exceed the Unscheduled Supplemental Face Amount increase Charge shown in Section 1, under Maximum Expense Charges. A minimum premium payment may also be required. When a requested change becomes effective, a change in future Planned Premiums will automatically be effected. Any change will be effective on the next Annual Processing Date after our approval.

Reduction of Total Face Amount

You may request a reduction in Total Face Amount while this policy is in force. The minimum Total Face Amount Decrease is shown in Section 1. Any reduction in the Total Face Amount generally will be implemented by first reducing any Supplemental Face Amount, although we reserve the right to allow a reduction in Base Face Amount first. Without our prior approval, the Base Face Amount cannot be reduced below the minimum as shown in Section 1. Any reduction in Supplemental Face Amount or Base Face Amount will be effective on the next Processing Date after our approval.

 

6. INSURANCE BENEFIT

If the Life Insured dies while the policy is in force, we will pay the Insurance Benefit upon receipt of due proof of death of the Life Insured, subject to any applicable provisions of the policy. If the Life Insured dies on or after the date we receive a written request from you to surrender the policy, no Insurance Benefit will be paid. We will pay the amount payable under the Surrenders and Withdrawals provision instead.

Insurance Benefit

The Insurance Benefit payable is:

 

  (a) the Death Benefit as described below; plus

 

  (b) any amounts payable under any Supplementary Benefit riders as a result of the Life Insured’s death that form part of the policy; less

 

  (c) any outstanding Policy Debt at the date of death.

If the Life Insured dies during a grace period, the Policy Value used in the calculation of the Death Benefit will be the Policy Value as of the date of death of the Life Insured, and the Insurance Benefit will be reduced by any outstanding Monthly Deductions due.

Death Benefit

The Death Benefit will depend on whether Option 1 or Option 2 is in effect on the date of the Life Insured’s death.

 

11

6. INSURANCE BENEFIT (continued)

Death Benefit Options

Under Option 1, the Death Benefit is equal to the Total Face Amount at the date of death of the Life Insured. Under Option 2, the Death Benefit is equal to the Total Face Amount at the date of death of the Life Insured plus the Policy Value at the date of death of the Life Insured.

The Death Benefit after the Age 121 will be as described in Section 13.

If any withdrawals are made, the Death Benefit, whether Option 1 or Option 2 is in effect, will be less than it would have been if no withdrawals were made. Withdrawals reduce the Death Benefit by reducing:

 

  (a) the Total Face Amount if Option 1 is in effect, as specified in Section 19; or

 

  (b) the Policy Value if Option 2 is in effect.

Change of Death Benefit Options

You may request in writing to change your Death Benefit Option from Option 2 to Option 1 at any time after the first Policy Year, while the policy is in force. The change will be effective on the next Processing Date following the date we approve the request, and the Total Face Amount after the change will be equal to the Total Face Amount immediately before the change plus the Policy Value as of the effective date of the change.

Minimum Death Benefit

The sum of the Death Benefit as described above and any amounts payable under any Supplementary Benefit riders will never be less than the Minimum Death Benefit. The Minimum Death Benefit is equal to the Policy Value on the date of death multiplied by the Minimum Death Benefit Factor for the Age of the Life Insured. The Minimum Death Benefit Factors are shown in Section 2. If the Minimum Death Benefit that results from this calculation exceeds the Total Face Amount, , we reserve the right to:

 

  (a) distribute to you a portion of the Policy Value such that the resulting Minimum Death Benefit does not exceed the Total Face Amount; or

 

  (b) if we should decide to accept the additional death benefit, it will be subject to our normal underwriting practices including evidence of insurability.

 

7. INTEREST ON PROCEEDS

We will pay interest on the Insurance Benefit proceeds as stipulated by the state. If the state does not specify the interest rate, we will use the rate for insurance benefits left on deposit with us.

 

8. PREMIUMS

The Minimum Initial Premium is shown in Section 1. No insurance will take effect under this policy until our underwriters approve issuance of this policy and the conditions specified in the application form have been satisfied, including receipt of at least the Minimum Initial Premium at our Service Office.

Subsequent premiums can be paid at any time at our Service Office, and in any amount subject to the limits described below. On request, we will give you a receipt signed by one of our officers.

If coverage under the policy takes effect in accordance with the provisions of the application, we will process any premium payment as of the end of the Business Day the payment is received at our Service Office, subject to the limitations of the life insurance qualification test elected by you and to our maximum limits then in effect, unless one of the following exceptions applies.

 

  (i) We will process a payment received prior to the Policy Date as if received on the Policy Date.

 

  (ii) We will process the portion of any premium payment for which we require evidence of the Life Insured’s continued insurability on the first Business Day after we have received such evidence and found it satisfactory to us.

 

  (iii) If our receipt of any premium payment (or portion thereof) would cause the policy not to qualify as a “life insurance contract” under the federal income tax laws, we will not process such payment or portion. However, in the case of certain other tax situations, we will process the payment (or portion thereof) on the first Business Day after we have received satisfactory written instructions from you.

 

12

8. PREMIUMS (continued)

You may pay premiums until the Life Insured reaches Age 121, at which time Monthly Deductions cease and no further premiums may then be paid as described in Section 13.

If any premium payment would result in the Minimum Death Benefit exceeding the Total Face Amount, we reserve the right to either refund the premium or to require additional underwriting, including evidence of insurability, for any increase in the Minimum Death Benefit.

Continuation of Insurance Upon Discontinuance of Premium Payments

If you discontinue paying premiums, we will continue taking the Monthly Deductions from the Policy Value. Your insurance coverage will continue subject to the Early Lapse Protection, Grace Period, and Policy Termination provisions in Sections 9, 10, and 11.

 

9. EARLY LAPSE PROTECTION

Your policy includes an Early Lapse Protection feature, which applies to the Base Face Amount only. The Early Lapse Protection Period is shown in the Table of Values in Section 1. During your Early Lapse Protection Period, if the Net Cash Surrender Value falls to zero or below, your policy will not go into default provided it satisfies the Cumulative Premium Test.

Cumulative Premium Test

The test will be performed on any Processing Date that your policy would otherwise be in default in the absence of the Early Lapse Protection feature. Your policy will satisfy the test if the sum of the premiums received, less any Policy Debt and less any withdrawals taken on or before the date of the test, is equal to or greater than the sum of the monthly Early Lapse Protection Premiums due from the Policy Date to the date of the test. The Early Lapse Protection Premium is shown as an annualized amount in the Table of Values in Section 1.

The Early Lapse Protection Premium may change if any of the following changes occur under your policy:

 

  (a) you add, terminate, or change a Supplementary Benefit rider;

 

  (b) you change the Death Benefit Option under your policy;

 

  (c) there is a change in the Base Face Amount or the Supplemental Face Amount; or

 

  (d) there is a change in the Life Insured’s Risk Classification or, if applicable, Additional Rating.

We will inform you of any change to the Early Lapse Protection Premium resulting from any such change. The revised Early Lapse Protection Premium will be effective from the date of the change. For the purpose of performing the Cumulative Premium Test, we will use the Early Lapse Protection Premium in effect as of the Policy Date up to the date of the change, including any revised premium in effect as of the date of a prior change.

 

10. GRACE PERIOD

Default

Subject to the Early Lapse Protection feature of the policy, the policy and any Supplementary Benefit riders will go into default if, at the beginning of any Policy Month, the Net Cash Surrender Value is less than or equal to zero after we take the Monthly Deduction that is due for that month.

Grace Period Duration

We will allow 61 days from the date the policy goes into default for you to pay the amount that is required to bring the policy out of default. At least 15 and not more than 45 days prior to termination of coverage, we will send notice to your last known address, specifying the amount you must pay to bring the policy out of default. If we have notice of a policy assignment on file at our Service Office, we will also mail a copy of the notice of the amount due to the assignee on record.

Default Payment

The amount required to bring the policy out of default, referred to as the Default Payment, is equal to (a) plus (b) plus (c) where:

 

  (a) is the amount necessary to bring the Net Cash Surrender Value to zero if it is less than zero, at the date of default;

 

  (b) is an amount equal to 3 times the Monthly Deduction due on the date of default;

 

  (c) is the applicable Premium Charge.

 

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10. GRACE PERIOD (continued)

When payment is received, any expense charges which are past due and unpaid will be immediately deducted from the Net Policy Value. If the Default Payment has not been paid by the end of the grace period, the policy will terminate. Upon termination of the policy, the remaining Net Cash Surrender Value, if any, will be paid to the Owner. If the Life Insured dies during the grace period, then we will deduct from the Insurance Benefit proceeds all Monthly Deductions due and unpaid as of the date of the Life Insured's death. No Insurance Benefit under the policy or any Supplementary Benefit riders will be in effect after the policy terminates.

Early Lapse Protection

If the policy is in the Early Lapse Protection Period and the Cumulative Premium Test has been met, then the Base Face Amount will remain in effect. Any Supplemental Face Amount and any Supplementary Benefit riders (unless otherwise stated therein) will be subject to termination. The amount required to maintain any Supplemental Face Amount and any applicable Supplementary Benefit riders is equal to the Default Payment specified above. If a payment at least equal to the Default Payment is not received by the end of the grace period, then any Supplemental Face Amount, and any Supplementary Benefit riders (unless otherwise stated therein), will cease to be in effect and will be terminated from the policy.

Failure to Meet Cumulative Premium Test

If the policy is in the Early Lapse Protection Period, and the Cumulative Premium Test has not been met, then the Base Face Amount, any Supplemental Face Amount, and any Supplementary Benefit may go into default, as described above. The Grace Period Duration and Default Payment provisions described above will apply. In lieu of the Default Payment, however, you may pay the shortfall needed to meet the Cumulative Premium Test, in which case, only the Base Face Amount will remain in effect.

The shortfall will be equal to the amount necessary to satisfy the Cumulative Premium Test as of the date of default, plus the Early Lapse Protection Premium for the next three Policy Months.

 

11. POLICY TERMINATION

This policy terminates on the earliest of the following events:

 

  (a) the end of the grace period for which we have not received the amount necessary to bring the policy out of default;

 

  (b) surrender of the policy for its Net Cash Surrender Value; or

 

  (c) the death of the Life Insured.

 

12. REINSTATEMENT

If the policy terminates at the end of a grace period in which you did not make a required payment, the policy may be reinstated within 3 years from the date of default. The policy cannot be reinstated if it has been surrendered for its Net Cash Surrender Value.

The requirements for reinstatement are as follows:

 

  (1) we must receive written request for reinstatement;

 

  (2) reinstatement is subject to our normal underwriting practices including evidence of insurability for the Life Insured and for any insureds covered under any Supplementary Benefit rider that you wish to reinstate;

 

  (3) we must receive at our Service Office a premium equal to the amount that was required to bring the policy out of default immediately prior to termination, plus the amount needed to keep the policy in force for the next 3 Policy Months.

Requirements (2) and (3) must be satisfied within 60 days after the date we receive written request for reinstatement.

 

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12. REINSTATEMENT (continued)

If we approve your request,

 

  (a) the reinstatement date will be the date we receive the required payment at our Service Office;

 

  (b) the Base Face Amount, and any Supplemental Face Amount will be reinstated to the same amounts as they were on the date the policy terminated;

 

  (c) the Policy Value on the date of reinstatement, prior to the crediting of any Net Premium paid on the reinstatement, will be equal to the Policy Value on the date the policy terminated, and,

 

  (d) the period during which coverage was in force prior to policy termination will be applied towards satisfying the time period of the suicide provision under the reinstated policy.

If a Schedule of Supplemental Face Amounts is shown in Section 1 which includes increases that would have otherwise become effective except for this policy having been terminated after being in default, such increases in Supplemental Face Amount will be effective on the next Annual Processing Date after the reinstatement date.

 

13. COVERAGE AT AND AFTER AGE 121

Provided the policy is in force at and after the Life Insured reaches Age 121, we will continue the policy subject to the stipulations stated below.

Death Benefit

Any Supplemental Face Amount will be terminated, thereby reducing the Death Benefit by such amount. Apart from this change, the Death Benefit will be determined in the same respect as specified in Section 6.

Premiums and Monthly Deductions

We will not accept any further premium payments. We will cease to take Monthly Deductions for charges listed in Section 1.

Credited Interest

We will continue to credit interest monthly to the Fixed Account portion of the Policy Value.

Policy Debt and Default

New loans will not be allowed. Loan interest will continue to be charged if there is an outstanding loan. Loan repayments will be accepted. The policy will go into default at any time the Policy Debt exceeds the Policy Value, and Section 10, Grace Period, and Section 18, Loans, will apply.

Withdrawals

Withdrawals will not be allowed.

Transfers

Transfers can continue to be made as described in Section 16.

NOTE: After the Life Insured reaches Age 121, this policy may not qualify as life insurance for tax purposes, and may, therefore, be subject to adverse tax consequences. Please consult a tax advisor before choosing to continue the policy after Age 121.

 

14. POLICY VALUE

Net Premiums Added

When we receive your premium payments at our Service Office, we deduct a Premium Charge which will not exceed the amount shown in Section 1 and add the balance remaining (the Net Premium) to your Policy Value. We will do this before we take any deductions due on that Business Day.

For any premiums received prior to the Issue Date, we will credit interest at the rate of return then being earned on allocations to the current money market Investment Account, but will not deduct a Premium Charge. The Premium Charge will be deducted on the Issue Date, and the balance remaining will be your Policy Value from which deductions will be taken and to which any subsequent Net Premiums will be added.

Investment allocation of the initial premium payment and any subsequent premium payments will be in accordance with the Allocations provision of Section 17.

While a loan exists, we will treat the amounts you pay as premiums unless you request in writing that they be treated as loan repayments. If you instruct us in writing to do so, we will first deduct from such payments the amount of accrued interest on loans and then deduct the amount specified as a loan repayment before applying any balance remaining as a premium payment.

 

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14. POLICY VALUE (continued)

Monthly Deductions

A deduction is due and will be taken from your Policy Value as of the Policy Date and as of each applicable subsequent Processing Date. Monthly Deductions are calculated from the Policy Date. If, at your request, we set the Policy Date to a date which precedes the date on which we receive the initial premium, Monthly Deductions due for the period prior to receipt of the initial premium will be taken on the later of the date we receive the initial premium and the date our underwriters approve issuance of this policy.

Unless we agree otherwise, or you do not have sufficient funds in an account, we will take Monthly Deductions from the Investment Accounts and the Fixed Account in the same proportion that the Policy Value in each of these accounts bears to the Net Policy Value immediately prior to the deduction.

Monthly Deductions are due until the Policy Anniversary on which the Life Insured reaches Age 121, at which time we will cease to take any further Monthly Deductions as described in Section 13.

The Monthly Deduction for any Policy Month that will be deducted from your Policy Value consists of charges (a) through (f) listed below, where:

 

  (a) is the Asset-Based Risk Charge;

 

  (b) is the Base Face Amount Charge, if any;

 

  (c) is the Supplemental Face Amount Charge, if any;

 

  (d) is the Administrative Charge;

 

  (e) is the sum of the charges for riders which are part of the policy, if any, provided such charges are deducted from the Policy Value; and

 

  (f) is the Cost of Insurance Charge, as described below.

Cost of Insurance Charge

The rates for the Cost of Insurance Charge, as of the Policy Date and subsequently for each increase in Total Face Amount, are based on the Life Insured’s Sex, if applicable, Age, Risk Classification, Net Amount at Risk, and duration that the coverage has been in force.

The Cost of Insurance Charge for a specific Policy Month is the charge for the Net Amount at Risk, including any Additional Ratings and any Supplementary Benefit riders which are part of the policy. The charge for the Net Amount at Risk is an amount equal to the per dollar cost of insurance rate for that month multiplied by the Net Amount at Risk, and will be based on our expectations of future mortality, persistency, investment earnings, expense experience, capital and reserve requirements, and tax assumptions. The Maximum Monthly Rates for any Age are shown in Section 2 as a rate per $1,000 of Net Amount at Risk. To get the maximum rate per dollar, the rate shown must be divided by 1,000. Each Cost of Insurance Charge is deducted in advance of the applicable insurance coverage for which we are at risk.

The Cost of Insurance calculation will reflect any adjustment for the Minimum Death Benefit.

We review our Cost of Insurance rates from time to time, and may re-determine Cost of Insurance rates at that time on a basis that does not discriminate unfairly within any class of lives insured.

Net Amount at Risk

The Net Amount at Risk is the amount determined by subtracting (a) from the greater of (b) or (c) where:

 

  (a) is the Policy Value at the end of the immediately preceding Business Day less all charges due on the Policy Date or subsequent Processing Date;

 

  (b) is the Total Face Amount plus the death benefit payable under any Supplementary Benefit riders where charges are deducted from the Policy Value and are based on the Net Amount at Risk, divided by the Death Benefit Discount Factor shown in Section 1, plus the Policy Value for policies electing Death Benefit Option 2; and

 

  (c) is the amount defined in (a) multiplied by the Minimum Death Benefit Factor for the applicable Age as shown in Section 2.

Mortality and expense risks are borne by us.

 

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15. LOAN ACCOUNT, FIXED ACCOUNT, INVESTMENT ACCOUNTS

The Policy Value at any time is equal to the sum of the values you have in the Loan Account, the Fixed Account, and the Investment Accounts, as described below.

Loan Account Value

The amount you have in the Loan Account at any time equals:

 

  (a) amounts transferred to it for loans and borrowed loan interest; plus

 

  (b) interest credited to it; less

 

  (c) amounts transferred from it for loan repayment.

For details regarding the Loan Account, see Section 18.

Fixed Account Value

The amount you have in the Fixed Account at any time equals:

 

  (a) Net Premiums allocated to it; plus

 

  (b) amounts transferred to it; plus

 

  (c) interest credited to it; less

 

  (d) amounts deducted from it; less

 

  (e) amounts transferred from it; less

 

  (f) amounts withdrawn from it.

We will determine the rate or rates of interest to be credited to the Fixed Account. Any additional interest will be credited no less frequently than annually. Additional interest is nonforfeitable after crediting. The rate or rates of interest will be determined prospectively and will be based on our expectations for the Fixed Account’s future investment earnings, persistency, mortality, expense and reinsurance costs and future tax, reserve, and capital requirements, but in no event will the minimum credited interest be less than the Fixed Account Annual Rate shown in Section 1. The rate or rates of interest will be determined on a uniform basis for life insureds with the same timing and amount of premium, same amount of Policy Debt, and whose policies have been in force for the same length of time. For all transactions, interest is calculated from the date of the transaction.

Investment Account Value

The amount you have in an Investment Account at any time equals the number of units in that Investment Account multiplied by the unit value of the corresponding Subaccount at that time.

The number of units in an Investment Account at any time equals (a) minus (b), where:

 

  (a) is the number of units credited to the Investment Account because of:

 

  (1) Net Premiums allocated to it; and

 

  (2) amounts transferred to it; and

 

  (b) is the number of units canceled from the Investment Account because of:

 

  (1) amounts deducted from it;

 

  (2) amounts transferred from it; and

 

  (3) amounts withdrawn from it.

The number of units credited or canceled for a given transaction is equal to the dollar amount of the transaction, divided by the unit value on the Business Day of the transaction. See the Unit Value Calculation provision in Section 16 for details on how unit values are determined.

 

16. SEPARATE ACCOUNT AND SUBACCOUNTS

Each Subaccount of the Separate Account purchases shares of corresponding funds of a Series Fund. The assets of the Separate Account are the property of the Company. They are used to support the Policy Values of variable life insurance policies. Income, gains, and losses of the Separate Account are credited to, or charged against, the Separate Account without regard to other income, gains, and losses. The part of the assets that is equal to the Investment Account values in respect of all variable life insurance policies will not be charged with liabilities from any other business we conduct. We can transfer to our general account Separate Account assets in excess of the liabilities of the Separate Account arising under the variable life insurance policies supported by the Separate Account.

Right to Make Changes

We reserve the right to make certain changes if, in our judgment, they would best serve the interests of the owners of policies such as this or would be appropriate in carrying out the purposes of such policies. Any changes will be made only to the extent and in the manner permitted by applicable laws. Also, when required by law, we will obtain your approval of the changes and approval from any appropriate regulatory authority.

 

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16. SEPARATE ACCOUNT AND SUBACCOUNTS (continued)

Examples of the changes we may make include the following:

 

  (a) To operate a Separate Account in any form permitted under the Investment Company Act of 1940, or in any other form permitted by law.

 

  (b) To take any action necessary to comply with or obtain and continue any exemptions from the Investment Company Act of 1940.

 

  (c) To create new separate accounts, or to combine any two or more separate accounts including the Separate Account, or to de-register the Separate Account under the Investment Company Act of 1940, or to transfer assets between the Separate Account and other separate accounts.

 

  (d) To transfer any assets in a Subaccount to another Subaccount, or to add, combine, or remove Subaccounts.

 

  (e) To substitute, for the investment company shares held in any Subaccount, another class of shares of the investment company or the shares of another investment company or any other investment permitted by law.

 

  (f) To make any other necessary technical changes in this policy in order to conform with any action this provision permits us to take.

The investment policy of a Subaccount within the Separate Account shall not be materially changed unless a statement of the change is first filed with any jurisdiction requiring such a filing. In the event of such a change in investment policy, and while this policy is in force, you may elect a transfer to the Fixed Account as described in Section 17.

Unit Value Calculation

We will determine the unit values for each Subaccount as of the end of each Business Day.

The unit value for each Subaccount was established at $10 for the first Business Day that an amount was allocated, or transferred to the particular Subaccount. For any subsequent Business Day, the unit value for that Subaccount is obtained by multiplying the unit value for the immediately preceding Business Day by the net investment factor for the particular Subaccount on such subsequent Business Day.

Net Investment Factor

The net investment factor for a Subaccount on any Business Day is equal to (a) divided by (b) where:

 

  (a) is the net asset value of the underlying Fund shares held by that Subaccount as of the end of such Business Day before any policy transactions are made on that day; and

 

  (b) is the net asset value of the underlying Fund shares held by that Subaccount as of the end of the immediately preceding Business Day after all policy transactions were made for that day.

We reserve the right to adjust the above formula for any taxes determined by us to be attributable to the operations of the Subaccount.

 

17. ALLOCATIONS AND TRANSFERS

Allocations

We process Net Premiums as described in Section 14. Any Net Premium credited to the Policy Value prior to the Allocation Date, as shown in Section 1, will automatically be invested in the current money market Investment Account. On the Allocation Date (or on the date such Net Premium is received, if later), we will reallocate the amount in the current money market Investment Account attributable to any such Net Premium in accordance with the allocation instructions then in effect. We will allocate all other Net Premiums and credits to the Fixed Account and to any Investment Accounts in accordance with the allocation instructions then in effect. Initial allocation instructions are elected in your application for this policy. With regard to the first and subsequent Net Premiums, we reserve the right to limit the dollar amount that may be allocated to any Investment Account or Fixed Account.

You may elect to change your allocation instructions at any time. A change can be elected by written request or by internet notification if a currently valid written authorization to make changes in this manner is on file with us. A change will be effective as of the end of the Business Day on which we receive notice satisfactory to us. Instructions to us must express allocation percentages as greater than or equal to zero and less than or equal to 100%, and the sum of the allocation percentages must equal 100%. Allocation percentages must be whole numbers.

The date for allocation percentage changes will be as of the end of the Business Day on which we are contacted, as described above, to make the changes.

 

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17. ALLOCATIONS AND TRANSFERS (continued)

Transfers

In the same way as described above in the Allocations provision, instructions may be given to us at any time while the policy is in force to transfer portions of your Policy Value among the Investment Accounts and the Fixed Account. Transfers are subject to the restrictions described below.

General Restrictions on Transfers

You can make up to 2 transfers per calendar month. You can transfer 100% of the Policy Value to the current money market Investment Account after this limit has been reached. If such transfer to the current money market Investment Account is made, no subsequent transfers from the current money market Investment Account to another Investment Account may be made within 30 days.

There is no charge for the first 12 transfers in any Policy Year. If you make more than 12 transfers in any Policy Year, a transfer fee not to exceed the Maximum Transfer Fee shown in Section 1 will apply to each subsequent transfer in the Policy Year. We will consider all transfer requests made on the same day as one transfer. Transfers made pursuant to the Asset Allocation Balancer or Dollar Cost Averaging options described below are not subject to the foregoing general restrictions. Without our approval, the maximum amount that may be transferred to or from an Investment Account in any Policy Year may not exceed the Investment Account Maximum Transfer Amount shown in Section 1.

This policy was not designed for professional market timing organizations or other persons or entities that use short-term or frequent transfers among investment accounts. If in our judgment it is necessary to avoid harm to long-term investors in an Investment Account that may result from such activity, we may terminate transfer privileges and impose additional restrictions beyond those described above to discourage disruptive short-term and frequent transfers. These additional restrictions may include, but are not limited to restricting:

 

  (a) the number of transfers made during a defined period, but not less than one transfer per month;

 

  (b) the dollar amount of transfers, with the exception of amounts less than $10,000 per transfer;

 

  (c) the method used to submit transfers (for example, we may require that all transfer requests be submitted in writing via U.S. mail); and

 

  (d) transfers into and out of any/all Investment Accounts, except the money market investment account.

Should any of the above restrictions be applied, they will be applied uniformly to all policy owners with this type of policy that are subject to the restrictions.

We, or a Series Fund in which the Separate Account invests, may impose additional restrictions to restrict or terminate transfer privileges at any time.

Restrictions on Transfers or Payments to the Fixed Account

We reserve the right to impose restrictions on the number, frequency, and amount of transfers and premium payments into the Fixed Account. Currently, the maximum amount that may be transferred or paid into the Fixed Account in any Policy Year is $1,000,000 less premiums previously paid or transferred to the Fixed Account in such Policy year. Upon request, we will consider waiving this restriction.

You may transfer the Policy Value from any of the Investment Accounts to the Fixed Account without incurring any transfer charges, regardless of the number of transfers previously made, provided such transfers occur:

 

  (a) within 18 months after the Issue Date, as shown in Section 1; or

 

  (b) within the later of (i) or (ii) where (i) is 60 days from the effective date of a material change in the investment objectives of the Subaccount, from which the Policy Value will be transferred, and (ii) is 60 days from the notification date of such change.

Restrictions on Transfers out of the Fixed Account

The maximum amount that you can transfer out of the Fixed Account in any one Policy Year is limited to the greater of:

 

  (a) the Fixed Account Maximum Transfer Percentage shown in Section 1 multiplied by the value in the Fixed Account at the previous Annual Processing Date; and

 

  (b) the Fixed Account Maximum Transfer Amount shown in Section 1.

Any transfer out of the Fixed Account may not involve a transfer to the current money market Investment Account.

Asset Allocation Balancer Transfers

If you elect this option, we will automatically transfer amounts among your specified Investment Accounts in order to maintain your designated percentage in each account. We will effect the transfers at specified intervals you select which may be either annually, semi-annually, quarterly, or monthly. When you change your premium allocation instructions, your Asset Allocation Balancer will change so the two are identical. This change will automatically occur unless you instruct us otherwise, or a Dollar Cost Averaging request is in effect. We reserve the right to cease to offer this option as of 90 days after we send you written notice.

 

19

17. ALLOCATIONS AND TRANSFERS (continued)

Dollar Cost Averaging Transfers

If you elect this option, we will automatically transfer amounts each month from one Investment Account to one or more of the other Investment Accounts or the Fixed Account. You must select the amount to be transferred and the accounts. If the value in the Investment Account from which the transfer is being made is insufficient to cover the transfer amount, we will not effect the transfer and we will notify you. We reserve the right to cease to offer this option as of 90 days after we send you written notice.

 

18. LOANS

At any time while this policy is in force and there is Available Loan Value, you can get a loan by written request. Each loan must be for at least the Minimum Loan Amount shown in Section 1. We may require a loan agreement from you as the policy is the only security for the loan. We may defer loans as provided by law or as provided in Section 26. Loans, except those used to pay premiums on policies with us, may not be made if the policy is in the Grace Period as described in Section 10.

Available Loan Value

The Available Loan Value on any date will be an amount equal to (i) the Net Cash Surrender Value, less (ii) the Monthly Deductions then being deducted from the Policy Value multiplied by the number of months remaining in the Policy Year, less (iii) an amount determined as follows:

 

  (a) Deduct (ii) above from (i) above.

 

  (b) Multiply the result by the difference between the effective annual rate then being charged on loans and the effective annual rate then being credited on the Loan Account.

In no event, however, will the Available Loan Value be less than 90% of the Net Cash Surrender Value. Values will be determined, subject to Section 26, as of the end of the Business Day on which the loan application is received at our Service Office.

Loan Account

When you take out a loan, or when loan charges are borrowed, we will transfer amounts from the Fixed Account and the Investment Accounts, as applicable, into the Loan Account. Amounts we transfer into the Loan Account cover the loan principal. A Loan Subaccount exists for each Investment Account and for the Fixed Account. Amounts transferred to the Loan Account are allocated to the appropriate Loan Subaccount to reflect the account from which the transfer was made. We will allocate the amounts to be transferred in the same proportion that your value in the Subaccounts bears to the new Policy Value, unless you request otherwise, designate different proportions. When an amount to be transferred is allocated to an Investment Account, we will redeem units of that Investment Account sufficient in value to cover the allocated amount. These transfers do not count as a transfer for the purposes of the Transfer provisions described in Section 17.

Interest is credited to the Loan Account and interest is also charged on the Policy Debt, as described in the Loan Interest Charged and the Loan Interest Credited provisions.

Loan Interest Charged

Interest will accrue daily on loans. Loan interest will be payable on each Annual Processing Date and on the date the loan is settled. Accrued interest may be paid at any time at the equivalent effective rate. In the event that you do not pay the loan interest charged in any Policy Year, it will be borrowed against the policy and added to the Policy Debt in arrears at the Policy Anniversary. We will allocate the amount borrowed for interest payment in the same proportion that your value in the Fixed Account and the Investment Accounts bears to the Net Policy Value as of the Policy Anniversary.

The effective loan interest charged rate will not exceed the Maximum Loan Charge Annual Rate shown in Section 1, unless it is determined that the rate being charged would cause a loan to be taxable under any applicable ruling, regulation, or court decision. In that case, we reserve the right to increase the rate charged in order for the transaction to be treated as a loan under federal tax law. Loan interest will continue to be charged, as described in Section 13, when Monthly Deductions and premium payments cease when the Life Insured reaches Age 121.

Loan Interest Credited

Loan interest will accrue daily to amounts in the Loan Account. The effective loan interest credited rate is shown in Section 1.

Loan Repayment

You may repay the Policy Debt in whole or in part at any time prior to the death of the Life Insured and while the policy is in force. When you make a loan payment or repay a loan, we credit the amount remaining after deduction of the loan interest charges, specified above, to the Loan Account, and make a transfer to the Fixed Account and the Investment Accounts, as applicable.

 

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18. LOANS (continued)

Upon loan repayment, the same proportionate amount of the entire loan as was borrowed from the Fixed Account will be repaid to the Fixed Account. The remainder of the loan repayment will be allocated to the appropriate Investment Accounts in accordance with the allocation instructions then in effect (unless our then current rules allow you to designate a different allocation with your repayment and you in fact do so).

Subject to any rider, endorsement, or other provisions, while a loan exists, we will treat any amounts you pay as premiums, unless you request in writing that they be treated as loan repayments. However, when a portion of the Loan Account is allocated to the Fixed Account, we reserve the right, where permitted by state law, to require that premium payments be applied as loan repayments.

Excess Indebtedness

Excess Indebtedness is the amount, if any, by which Policy Debt exceeds Policy Value. We will determine Policy Values as of the close of Business Day. If Excess Indebtedness occurs on any date, the policy, including all policy benefits (i.e., the Base Face Amount, any Supplemental Face Amount, and any Supplementary Benefit riders), will be in default, as of the date in question. At least 15 and not more than 45 days prior to termination of coverage, we will send notice of your Policy Excess Indebtedness to your last known address and to the last known address of any assignee on record with us. The policy will terminate on the 31st day after we send notice of your Policy Excess Indebtedness if not repaid to us by that date.

 

19. SURRENDERS AND WITHDRAWALS

Surrender of the Policy

You may surrender this policy upon written request for its Net Cash Surrender Value at any date prior to the death of the Life Insured. We will determine the Net Cash Surrender Value as of the end of the Business Day on which we have received at our Service Office your written request for full surrender of the policy (the “Surrender Date”). We will process the request and pay the Net Cash Surrender Value only if we have not received due proof that the Life Insured died prior to the Surrender Date. After we receive your written request to surrender the policy, no insurance will be in force.

Withdrawals

Once per Policy Month you may request a withdrawal of part of the Net Cash Surrender Value if available. Withdrawals are subject to the following conditions:

 

  (a) without our approval, each withdrawal must be for at least the Minimum Withdrawal Amount shown in Section 1;

 

  (b) after the withdrawal, the remaining Net Cash Surrender Value must be at least equal to 3 times the Monthly Deductions at the time of the withdrawal;

 

  (c) we will process the withdrawal, thereby reducing the Policy Value, as of the end of the Business Day on which we receive your written request;

 

  (d) you may specify which Investment Accounts as well as the Fixed Account from which we should make the withdrawal. If we do not receive such instructions, we will allocate the deduction of the withdrawal in the same proportion that the value in the Fixed Account and the Investment Accounts bears to the Net Policy Value; and

 

  (e) we will reduce the amount of the withdrawal if it would otherwise cause the Base Face Amount to fall below the Minimum Base Face Amount shown in Section 1.

If Death Benefit Option 1 is in effect at the time of the withdrawal, the Total Face Amount of the policy will be reduced:

 

  (a) by the amount of the withdrawal, if at the time of the withdrawal the Death Benefit equals the Total Face Amount; otherwise

 

  (b) by the amount, if any, by which the withdrawal exceeds the difference between the Minimum Death Benefit and the Total Face Amount, divided by the applicable Minimum Death Benefit Factor for the applicable Age as shown in the Table of Rates in Section 2.

Withdrawals will reduce the Supplemental Face Amount first, and then the Base Face Amount. We reserve the right to allow a reduction in Base Face Amount prior to fully reducing the Supplemental Face Amount. If the Death Benefit on any given day is equal to the Policy Value times the applicable Minimum Death Benefit Factor, withdrawals on such day will reduce the Death Benefit by the amount withdrawn times the applicable Minimum Death Benefit Factor until the Death Benefit is equal to the total Face Amount. Your Death Benefit will continue to be determined in accordance with Sections 6 and 12, subject to these provisions.

If Death Benefit Option 2 is in effect, an amount equal to any withdrawal will be deducted from the Policy Value. Withdrawals will not affect the Total Face Amount. Your Death Benefit will continue to be determined in accordance with Sections 6 and 12.

 

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19. SURRENDERS AND WITHDRAWALS (continued)

Change to a Fixed Paid-Up Benefit

At any time after the first Policy Anniversary, while this policy has a Net Cash Surrender Value, you may choose to continue your coverage under this policy as guaranteed paid-up life insurance. We will apply the entire Net Cash Surrender Value of your policy to provide an amount of guaranteed paid-up life insurance calculated using the guaranteed maximum mortality charges and 4% interest, subject to the following conditions:

 

  (a) the Net Cash Surrender Value will be determined as of the end of the Business Day on which we receive your Written Request for this option; and

 

  (b) the Cash Surrender Value after this determination will be the net single premium for the amount of paid-up life insurance using 4% of the guaranteed maximum mortality charges, and

 

  (c) for policyholder tax compliance purposes, the definition of life insurance test will be the Cash Value Accumulation Test, and

 

  (d) withdrawals and policy loans are not allowed after the date you elect this option, and

 

  (e) the Flexible Premium Variable Universal Life coverage cannot be reinstated after the date you elect this option.

The Net Cash Surrender Value and paid-up nonforfeiture benefits are not less than the minimum values and benefits required by any statute of the state in which the policy is delivered.

 

20. OWNER AND BENEFICIARY

Until the Life Insured’s death, with the written consent of any irrevocable beneficiaries, you can receive any amount payable under the policy and exercise all rights and privileges granted by the policy.

Change of Owner

Until the Life Insured's death, you can change the ownership of the policy by written request. The change will take effect as of the date you signed the written request. It will not apply to any payments we made or any action we may have taken before we received your written request.

Trustee Owner

Should the owner be a trustee, payment to the trustee(s) of any amount to which the trustee(s) is (are) entitled under the policy, either by death or otherwise, will fully discharge us from all liability under the policy to the extent of the amount so paid.

Joint Ownership

Two or more owners will own the policy as joint tenants with right of survivorship, unless otherwise requested on the application or in any subsequent assignment of the policy. On death of any of the owners, the deceased owner's interest in the policy passes to the surviving owner(s).

Successor Owner

If an owner dies prior to the death of the Life Insured, a named successor owner will, if then living, have all the owner’s rights and interest in the policy. The owner with the consent of any irrevocable beneficiary can cancel or change the designation of successor by agreement in writing with us.

The following four provisions will apply unless there is a beneficiary designation in force that provides otherwise.

Beneficiary Classification

You can appoint beneficiaries for the Insurance Benefit in three classes: primary, secondary, and final. Beneficiaries in the same class will share equally in the Insurance Benefit payable to them.

Payment To Beneficiaries

We will pay the Insurance Benefit:

 

  (a) to any primary beneficiaries who are alive when the Life Insured dies; or

 

  (b) if no primary beneficiary is then alive, to any secondary beneficiaries who are then alive; or

 

  (c) if no primary or secondary beneficiary is then alive, to any final beneficiaries who are then alive.

Change Of Beneficiary

Until the Life Insured's death, you can change the beneficiary by written request unless you make an irrevocable designation. An irrevocable designation cannot be changed without the consent of the irrevocable beneficiary. We are not responsible if the change does not achieve your purpose. The change will take effect as of the date you signed such request. It will not apply to any payments we made or any action we may have taken before we received your written request.

 

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20. OWNER AND BENEFICIARY (continued)

Death Of Beneficiary

If no beneficiary is alive when the Life Insured dies, the Insurance Benefit will be payable to you, or if you are the Life Insured, to your estate. Unless otherwise provided, if a beneficiary dies before the seventh day after the death of the Life Insured, we will pay the Insurance Benefit as if the beneficiary had died before the Life Insured.

 

21. ASSIGNMENT

Your interest in this policy may be assigned with the written consent of any irrevocable beneficiary. Your interest, any interest of the Life Insured and of any revocable beneficiary shall be subject to the terms of the assignment, but such assignment shall not affect the interest of any irrevocable beneficiary.

We will not be on notice of any assignment unless it is in writing, nor will we be on notice until a duplicate of the original assignment has been filed at our Service Office. We assume no responsibility for the validity or sufficiency of any assignment.

 

22. MISSTATEMENTS

If the age or sex of the Life Insured was misstated in the application, we will, if necessary, change the Base Face Amount, any Supplemental Face Amount, and every other benefit to that which would have been purchased at the correct age or sex by the most recent Cost of Insurance Charge.

 

23. SUICIDE

If the Life Insured commits suicide, within 2 years from the Issue Date, the policy will terminate on the date of such suicide and we will pay (in place of all other benefits, if any) an amount equal to the premiums paid less the amount of any Policy Debt on the date of death and less any withdrawals.

If Life Insured commits suicide, after 2 years from the Issue Date or within 2 years from:

 

  (a) the date we approve a schedule of increasing Supplemental Face Amount;

 

  (b) the effective date of any unscheduled increase in Supplemental Face Amount; or

 

  (c) the date of an increase in Death Benefit resulting from any payment of premium we are authorized to refuse under Section 4;

the benefits payable under the policy will not include the amount of such Death Benefit increase but will include the amount of premium that pertains to the increase.

We reserve the right under this provision to obtain evidence of the manner and cause of death of the Life Insured.

 

24. INCONTESTABILITY

This policy shall be incontestable after it has been in force during the lifetime of the Life Insured for two years from the Issue Date, except for policy termination, or any provision for reinstatement or policy change requiring evidence of insurability. Any contest will be based on material misrepresentation.

In the case of reinstatement or any policy change requiring evidence of insurability, the contestable period shall be two years from the effective date of such reinstatement or policy change. In addition, for a policy change involving the approval of a schedule of increasing Supplemental Face Amount, the contestable period shall be two years from the date we approve such schedule.

Any premium payment which we accept subject to insurability, and any increase in the Death Benefit resulting from such payment, shall be considered a policy change for purposes of this Section and will be subject to contest for a period of two Policy Years from the date of the policy change.

We reserve the right under this provision to obtain evidence of the manner and cause of death of the Life Insured.

 

25. THE CONTRACT

The written application for the policy is attached at issue. The entire contract between the applicant and us consists of the policy, such application, and any riders and endorsements. However, additional written requests or applications for policy changes or acceptance of excess payment may be submitted to us after issue and such additional requests may become part of the policy. Nothing is incorporated by reference. All statements made in any application shall be deemed representations and not warranties. We will use no statement made by or on behalf of the Life Insured to defend a claim under the policy unless it is in a written application.

An exchange of this policy for a new policy on a different plan may be made by agreement between you and us in accordance with our published rules in effect at that time.

 

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25. THE CONTRACT (continued)

We reserve the right to make any changes necessary in order to keep this policy in compliance with any changes in federal or state tax laws. Other changes in this policy may be made by agreement between you and us. Only the President, Vice President, the Secretary, or an Assistant Secretary of the Company has authority to waive or agree to change in any respect any of the conditions or provisions of the policy, or to extend credit or to make an agreement for us.

 

26. RIGHT TO POSTPONE PAYMENT OF BENEFITS

We reserve the right to postpone the payment of Net Cash Surrender Values, policy loans or partial withdrawals, except when used to make a premium payment, and the portion of the Insurance Benefit that depends on Investment Account values, for any period during which:

 

  (a) the New York Stock Exchange is closed for trading (other than customary week-end and holiday closings), or trading on the Exchange is otherwise restricted;

 

  (b) an emergency exists as defined by the Securities and Exchange Commission (SEC), or the SEC requires that trading be restricted; or

 

  (c) the SEC permits a delay for the protection of policyholders.

Except when used to make a premium payment, we also reserve the right to postpone payments, including loans, for up to 6 months if such payments are based on values that do not depend on the investment performance of the Investment Accounts. We may also postpone payments for up to 6 months when coverage is provided under paid-up life insurance, as outlined in Section 18.

In addition, we may defer transfers under the circumstances stated in (a), (b), and (c) above, and in the Allocations and Transfers provision.

 

27. CLAIMS OF CREDITORS

The proceeds and any income payments under the policy will be exempt from the claims of creditors to the extent permitted by law. These proceeds and payments may not be assigned or withdrawn before becoming payable without our agreement.

 

28. REPORTS TO OWNER

Within 30 days after each Policy Anniversary, we will send you a report at no charge showing:

 

  (a) the Death Benefit;

 

  (b) the Policy Value;

 

  (c) the current allocation in the Fixed Account, the Loan Account, and each of the Investment Accounts;

 

  (d) the value of the units in each chosen Investment Account;

 

  (e) the Loan Account balance and loan interest charged since the last report;

 

  (f) the premiums paid and policy transactions for the year; and

 

  (g) any further information required by law.

Upon request, we will provide you with a report of projected future values. We will provide one report annually without charge. For additional reports you request, we reserve the right to charge a reasonable fee, not to exceed $50.

 

29. HOW VALUES ARE COMPUTED

We provide Net Cash Surrender Values that are at least equal to those required by law. We base minimum Net Cash Surrender Values on the Commissioners 2001 Standard Ordinary Sex Distinct ANB Aggregate Ultimate Mortality Tables, with substandard ratings as applicable. We also use these tables in determining Guaranteed Maximum Cost of Insurance Charges. Reserves will be at least as great as the minimum required by law.

A detailed statement of the method of computing the values of this policy has been filed with the State of New York Insurance Department.

 

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30. FLEXIBLE FACTORS

When determining the rate of interest to be used in crediting interest to the portion of the Policy Value in the Fixed Account, and any changes in that rate, we will consider the following factors: expected mortality and persistency experience; expected general account investment earnings; and expected operating expenses. We will consider the same factors when we determine the actual cost of insurance; the deductions from premiums for premium charge; administrative charge; Face Amount charge; Asset-Based Risk charge; and whenever changes are made to any of these charges. We will not try to recover any losses in earlier years by increasing your charges in later years.

Adjustments to flexible factors will be by class and be determined by us from time to time based on future expectations for such factors.

 

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Communications about this policy may be sent to the Company's Service Office, which is currently at [197 Clarendon Street, Boston, Massachusetts 02117. Our toll-free number is 1-800-521-1234].

Flexible Premium Variable Universal Life Insurance policy

Adjustable Death Benefit

Benefit payable on Life Insured’s death

Flexible premiums payable to Age 121

Non-Participating (Not eligible for dividends)