-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cqg2NImENRV9MAuxV5CiWIYZKNUoRgB99tbICjHIV1QMvH9FWAPuVPyty0jULCFz lfD3TXTFCuu18UG1Lo8dbg== 0000950124-96-001875.txt : 19960501 0000950124-96-001875.hdr.sgml : 19960501 ACCESSION NUMBER: 0000950124-96-001875 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 24 FILED AS OF DATE: 19960430 EFFECTIVENESS DATE: 19960430 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACKSON NATIONAL SEPARATE ACCOUNT I CENTRAL INDEX KEY: 0000927730 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 381659853 STATE OF INCORPORATION: MI FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-82080 FILM NUMBER: 96553483 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08664 FILM NUMBER: 96553484 BUSINESS ADDRESS: STREET 1: PO BOX 24068 CITY: LANSING STATE: MI ZIP: 48909-4068 BUSINESS PHONE: 5173943400 MAIL ADDRESS: STREET 1: P O BOX 25127 CITY: LANSING STATE: MI ZIP: 48909-4068 FORMER COMPANY: FORMER CONFORMED NAME: JACKSON NATIONAL SEPARATE ACOUNT I DATE OF NAME CHANGE: 19940729 485BPOS 1 485BPOS 1 1933 Act File No: 33-82080 1940 Act File No: 811-8664 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. [ ] ------ Post-Effective Amendment No. 3 [X] ------ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 5 [X] ------ Jackson National Separate Account - I ------------------------------------------------------------ (Exact Name of Registrant) Jackson National Life Insurance Company ------------------------------------------------------------ (Name of Depositor) 5901 Executive Drive, Lansing, Michigan 48911 ------------------------------------------------------------ (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including Area Code: (517) 394-3400 ------------------------------------------------------------ With a copy to: Thomas J. Meyer Judith A. Hasenauer Vice Pres. & General Counsel Principal Jackson National Life Blazzard, Grodd & Insurance Company Hasenauer, P.C. 5901 Executive Dr. P.O. Box 5108 Lansing, MI 48911 Westport, CT 06881 (Name and Address of Agent for Service) It is proposed that this filing will become effective immediately upon filing pursuant to paragraph (b) ----- X on May 1, 1996 pursuant to paragraph (b) ----- 60 days after filing pursuant to paragraph (a)(1) ----- on (date) pursuant to paragraph (a)(1) ----- If appropriate, check the following box: ----- This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Calculation of Registration Fee Under the Securities Act of 1933 The Registrant has registered an indefinite number of securities in accordance with Rule 24f-2 under the Investment Company Act of 1940. Registrant's Rule 24f-2 notice for its fiscal year ended December 31, 1995, was filed on or about February 28, 1996. 2 JACKSON NATIONAL SEPARATE ACCOUNT - I REFERENCE TO ITEMS REQUIRED BY FORM N-4
N-4 Item Caption in Prospectus or Statement of Additional Information relating to each Item ------------------------ Part A. Information Required in a Prospectus Prospectus - -------- ------------------------------------ ----------------------------- 1. Cover Page Cover Page 2. Definitions Definitions 3. Synopsis Fee Tables; Underlying Fund Expenses; Highlights 4. Condensed Financial Information Condensed Financial Information; Advertising 5. General Description of Registrant, Description of the Depositor and Portfolio Companies Company and the Separate Account; Separate Account Investments; Appendix B; Administration 6. Deductions Contract Charges; Purchases, Withdrawals and Contract Value 7. General Description of Variable Description of the Annuity Contracts Contracts; Purchases, Withdrawals and Contract Value; Administration 8. Annuity Period Annuity Period; Annuity Payments 9. Death Benefit Death Benefit; Annuity Period 10. Purchases and Contract Value Purchases, Withdrawals and Contract Value
3 11. Redemptions Purchases, Withdrawals and Contract Value; Highlights 12. Taxes Taxes 13. Legal Proceedings Legal Proceedings 14. Table of Contents of the Statement of Table of Contents of Additional Information Statement of Additional Information Information Required in a Statement of Statement of Part B. Additional Information Additional Information - -------- ---------------------------------- ----------------------------- 15. Cover Page Cover Page 16. Table of Contents Table of Contents 17. General Information and History General Information and History 18. Services Services 19. Purchase of Securities Being Offered Purchase of Securities Being Offered 20. Underwriters Underwriters 21. Calculation of Performance Data Calculation of Performance 22. Annuity Payments Annuity Payments; Net Investment Factor 23. Financial Statements Financial Statements
Part C. Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C of this Amendment to Registration Statement. 4 [LOGO] PERSPECTIVE FIXED AND VARIABLE ANNUITY PROSPECTUS MAY 1, 1996 Issued by Jackson National Life Insurance Company 5901 Executive Drive, Lansing, Michigan 48911 5 - -------------------------------------------------------------------------------- INDIVIDUAL DEFERRED FIXED AND VARIABLE ANNUITY CONTRACTS - -------------------------------------------------------------------------------- Issued By Jackson National Life Insurance Company in connection with the Jackson National Separate Account -- I Annuity Service Center: P.O. Box 30389 Lansing, MI 48909-7889 Telephone Number: 1 (800) 766-4683 The Individual Deferred Fixed and Variable Annuity Contracts ("Contract(s)") offered by this Prospectus are flexible premium contracts. Reference throughout this Prospectus to Contracts shall also mean certificates issued under Group Deferred Fixed and Variable Annuity Contracts. The Contracts are available for retirement plans which may or may not qualify for Federal tax advantages available under the Internal Revenue Code. Annuity payments under the Contracts are deferred until a selected later date. Premiums are allocated to the Jackson National Separate Account -- I ("Separate Account"), a separate account of Jackson National Life Insurance Company ("Company"), and the General Account, as directed by the Owner. The Separate Account uses its assets to purchase shares of one or more of the following Series of mutual fund(s): JNL(R) SERIES TRUST JNL AGGRESSIVE GROWTH SERIES JNL CAPITAL GROWTH SERIES JNL GLOBAL EQUITIES SERIES JNL/ALGER GROWTH SERIES JNL/PHOENIX INVESTMENT COUNSEL BALANCED SERIES JNL/PHOENIX INVESTMENT COUNSEL GROWTH SERIES PPM AMERICA/JNL HIGH YIELD BOND SERIES PPM AMERICA/JNL MONEY MARKET SERIES PPM AMERICA/JNL VALUE EQUITY SERIES SALOMON BROTHERS/JNL GLOBAL BOND SERIES SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND SERIES T. ROWE PRICE/JNL ESTABLISHED GROWTH SERIES T. ROWE PRICE/JNL INTERNATIONAL EQUITY INVESTMENT SERIES T. ROWE PRICE/JNL MID-CAP GROWTH SERIES The value of the Separate Account will vary in accordance with the investment performance of the underlying mutual funds. Therefore, the Owner bears the investment risk under this Contract for all amounts allocated to the Separate Account. Amounts allocated to the General Account are guaranteed by the Company and will earn a specified rate of interest declared periodically. A Statement of Additional Information dated May 1, 1996, containing further information about the Contracts and the Separate Account has been filed with the Securities and Exchange Commission, and is available without charge upon request from the Company at its Annuity Service Center at the address and telephone number given above. The Statement of Additional Information, dated May 1, 1996, is incorporated herein by reference. The Table of Contents for the Statement of Additional Information appears on Page 30 of the Prospectus. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Please read this Prospectus carefully and retain it for your future reference. The Prospectus sets forth the information about the Contracts and Separate Account that the investor should know before investing. The Contracts offered by this Prospectus are not available in all states. An interest in the Contract is not a deposit or obligation of, or guaranteed or endorsed by any bank or financial institution, nor is the Contract federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency. Investment in a Contract is subject to investment risk, including the possible loss of principal. This Prospectus is dated May 1, 1996. 1 6 - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- DEFINITIONS.......................................................................................................... 3 FEE TABLES........................................................................................................... 5 Owner Transaction Expenses......................................................................................... 5 Separate Account Expenses.......................................................................................... 5 UNDERLYING FUND EXPENSES............................................................................................. 6 HIGHLIGHTS........................................................................................................... 8 CONDENSED FINANCIAL INFORMATION...................................................................................... 9 Accumulation Unit Values........................................................................................... 9 Financial Statements............................................................................................... 10 DESCRIPTION OF THE COMPANY AND THE SEPARATE ACCOUNT.................................................................. 11 SEPARATE ACCOUNT INVESTMENTS......................................................................................... 12 Underlying Fund.................................................................................................... 12 Voting Rights...................................................................................................... 12 Substitution of Securities......................................................................................... 12 CONTRACT CHARGES..................................................................................................... 13 Mortality and Expense Risk Charge.................................................................................. 13 Contract Maintenance Charge........................................................................................ 13 Administration Charge.............................................................................................. 13 Transfer Fee....................................................................................................... 13 Withdrawal Charge.................................................................................................. 14 Premium Taxes...................................................................................................... 14 Deduction for Separate Account Income Taxes........................................................................ 15 Other Expenses..................................................................................................... 15 Reduction of Charges for Sales to Certain Groups................................................................... 15 DESCRIPTION OF THE CONTRACTS......................................................................................... 15 Summary............................................................................................................ 15 Owner.............................................................................................................. 15 Annuitant.......................................................................................................... 15 Modification of the Contract....................................................................................... 15 Assignment......................................................................................................... 15 DEATH BENEFIT........................................................................................................ 16 Death of Contract Owner Before the Annuity Date.................................................................... 16 Death Benefit Amount Before the Annuity Date....................................................................... 16 Death Benefit Options Before the Annuity Date...................................................................... 16 Death of Contract Owner After the Annuity Date..................................................................... 17 Death of Annuitant................................................................................................. 17 Beneficiary........................................................................................................ 17 PURCHASES, WITHDRAWALS AND CONTRACT VALUE............................................................................ 17 Premiums........................................................................................................... 17 Automatic Payment Plan............................................................................................. 17 Automatic Dollar Cost Averaging Program............................................................................ 17 Rebalancing........................................................................................................ 18 Allocation of Premiums............................................................................................. 18 Transfer During Accumulation Period................................................................................ 18 Separate Account Accumulation Unit Value........................................................................... 19 Distribution of Contracts.......................................................................................... 19 Withdrawals (Redemptions).......................................................................................... 19 Systematic Withdrawal Program...................................................................................... 20 ERISA Plans........................................................................................................ 20 Minimum Contract Value............................................................................................. 20 ANNUITY PERIOD....................................................................................................... 21 Annuity Date....................................................................................................... 21 Annuity Options.................................................................................................... 21 ANNUITY PAYMENTS..................................................................................................... 23 Initial Monthly Annuity Payment.................................................................................... 23 Subsequent Monthly Payments........................................................................................ 23 Annuity Unit Value................................................................................................. 23 ADMINISTRATION....................................................................................................... 23 Statements and Reports............................................................................................. 23 Market Timing and Asset Allocation Services........................................................................ 24 TAXES................................................................................................................ 24 General............................................................................................................ 24 Withholding Tax on Distributions................................................................................... 24 Diversification -- Separate Account Investments.................................................................... 25 Multiple Contracts................................................................................................. 26 Contracts Owned by Other than Natural Persons...................................................................... 26 Tax Treatment of Assignments....................................................................................... 26 Qualified Plans.................................................................................................... 26 Tax Treatment of Withdrawals....................................................................................... 26 ADVERTISING.......................................................................................................... 28 LEGAL PROCEEDINGS.................................................................................................... 29 TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION............................................................. 30 APPENDIX A........................................................................................................... A-1 APPENDIX B........................................................................................................... B-1 APPENDIX C........................................................................................................... C-1
2 7 - -------------------------------------------------------------------------------- DEFINITIONS - -------------------------------------------------------------------------------- The following terms, as used in this Prospectus, have the indicated meanings: ACCUMULATION PERIOD. The period between the Issue Date and the Annuity Date; the build-up phase under the Contract. ACCUMULATION UNIT. A unit of measurement which the Company uses to calculate the Separate Account Contract Value during the Accumulation Period. ANNUITY SERVICE CENTER. The address and telephone number are: P.O. Box 30389, Lansing, Michigan 48909-7889, (800) 766-4683. The Company will notify Contract Owners of any change in address or telephone number. ANNUITANT. The natural person on whose life the annuity benefit for this Contract is based. ACCOUNT VALUE. An accounting maintained by the Company indicating an Owner's Contract Value under a Contract. ANNUITIZATION. The process by which an Annuitant converts from the Accumulation Period to the Annuity Period. Upon Annuitization, the Contract is converted from the build-up phase to the phase during which the Annuitant or other payee(s) receive periodic annuity payments. ANNUITY DATE. The date on which annuity payments are to begin. ANNUITY PERIOD. The period beginning on the Annuity Date. ANNUITY UNIT. A unit of measurement which the Company uses to calculate the amount of Variable Annuity payments. BENEFICIARY(IES). The person(s) designated to receive any benefits under a Contract upon the death of the Owner. CODE. The Internal Revenue Code of 1986, as amended, or as the same may be amended or superseded. CONTRACT VALUE. The Contract Value is the sum of: (1) the Separate Account Contract Value; and (2) the General Account Contract Value. CONTRACT YEAR. A year starting from the Issue Date in one calendar year and ending on the anniversary of the Issue Date in the succeeding calendar year. DEFERRED ANNUITY. An annuity contract under which the start of annuity payments is deferred to a future date. DUE PROOF OF DEATH. A certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, and any other proof or documentation required by the Company. FIXED ANNUITY. An Annuity providing for a series of payments which are guaranteed by the Company as to dollar amount during annuitizations. FUND. A collective term used to represent an investment entity which may be selected to be an underlying investment of the Contract. GENERAL ACCOUNT. This General Account is made up of all assets under the Contract, other than those in the Separate Account. GENERAL ACCOUNT CONTRACT VALUE. This will be: (1) the sum of all amounts credited to the General Account under the Contract; less (2) any amounts cancelled or withdrawn for charges, deductions, surrenders, or transfers. HOME OFFICE. The Company's headquarters is located at 5901 Executive Drive, Lansing, Michigan 48911. ISSUE DATE. The date a Contract is issued. LATEST ANNUITY DATE. The date on which the Owner attains age 90 under a Non-Qualified Plan Contract or such earlier date as required by the applicable Qualified Plan, unless otherwise approved by the Company. NON-QUALIFIED PLAN. A retirement plan which does not receive favorable tax treatment under Section 401, 403, 408 or 457 of the Code. OWNER ("YOU," "YOUR"). The person or entity named in the application who is entitled to exercise all rights and privileges under this Contract. Usually, but not always, the Owner is also the Annuitant. If Joint Owners are named, the Joint Owner must be the spouse of the other Joint Owner. Joint Owners share ownership in all respects. PORTFOLIO. A subdivision of the Separate Account invested wholly in shares of one of the corresponding Series of the Underlying Funds. PREMIUM. Amounts paid to the Company for the Contract by or on behalf of an Owner. 3 8 QUALIFIED PLAN. A retirement plan which receives favorable tax treatment under Sections 401, 403, 408 or 457 of the Code. SEPARATE ACCOUNT. A segregated asset account of the Company, named "Jackson National Separate Account -- I," consisting of several Portfolios, each investing in a corresponding Series of the Funds. SEPARATE ACCOUNT CONTRACT VALUE. The Separate Account Contract Value is the sum of the value of all Portfolio Accumulation Units under this Contract. SERIES. A separate investment portfolio of a Fund which has distinct investment objectives. Each Series serves as an underlying investment medium for Premiums and allocations made to one of the Portfolios of the Separate Account. UNDERLYING FUND(S). The underlying entities in which the Portfolios invest. VALUATION DATE. Each day the New York Stock Exchange ("NYSE") is open for business. VALUATION PERIOD. The period commencing at the close of normal trading on the NYSE (currently 4:00 p.m. Eastern time) on each Valuation Date and ending at the close of the NYSE on the next succeeding Valuation Date. VARIABLE ANNUITY. A series of payments made during the Annuity Period to a payee under a Contract which vary in amount in accordance with the investment experience of the Portfolios to which Contract Values have been allocated. WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE). A charge which may be imposed upon certain withdrawals. WITHDRAWAL VALUE. The Contract Value minus any premium tax payable and minus any applicable Contract charges. 4 9 - -------------------------------------------------------------------------------- FEE TABLES - -------------------------------------------------------------------------------- OWNER TRANSACTION EXPENSES - -------------------------------------------------------------------------------- Contingent Deferred Sales Charge (Withdrawal Charge) (as a percentage of Premiums)
NUMBER OF COMPLETE CONTRACT YEARS SINCE PREMIUM BEING WITHDRAWN WAS MADE - ------------------------------------------------------ Year.................................................. 0 1 2 3 4 5 6 7+ Applicable Charge:.................................... 7% 6% 5% 4% 3% 2% 1% 0% Annual Contract Maintenance Charge........................................................................... $35.00 Transfer Fee (Applies solely to transfers in excess of 15 in a Contract Year)................................ $25.00 - -----------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT EXPENSES - -------------------------------------------------------------------------------- (As an annual percentage of average net asset value. The daily equivalent is deducted from each of the Portfolios of the Separate Account.) - -------------------------------------------------------------------------------- Mortality and Expense Risk Charges.......................................................... 1.25% Administration Charge....................................................................... .15% ----- Total Separate Account Annual Expenses.................................................... 1.40%
5 10 - -------------------------------------------------------------------------------- UNDERLYING FUND EXPENSES - -------------------------------------------------------------------------------- JNL SERIES TRUST (As an annual percentage of average net assets based on estimates for fiscal year.) - --------------------------------------------------------------------------------
OTHER EXPENSES MANAGEMENT (AFTER TOTAL FUND FEE REIMBURSEMENT) ANNUAL EXPENSES - ---------------------------------------------------------------------------------------------------------------- JNL Aggressive Growth Series.................................. .95% .15% 1.10% JNL Capital Growth Series..................................... .95% .15% 1.10% JNL Global Equities Series.................................... 1.00% .15% 1.15% JNL/Alger Growth Series....................................... .975% .15% 1.125% JNL/Phoenix Investment Counsel Balanced Series................ .90% .15% 1.05% JNL/Phoenix Investment Counsel Growth Series.................. .90% .15% 1.05% PPM America/JNL High Yield Bond Series........................ .75% .15% .90% PPM America/JNL Money Market Series........................... .60% .15% .75% PPM America/JNL Value Equity Series........................... .75% .15% .90% Salomon Brothers/JNL Global Bond Series....................... .85% .15% 1.00% Salomon Brothers/JNL U.S. Government & Quality Bond Series.... .70% .15% .85% T. Rowe Price/JNL Established Growth Series................... .85% .15% 1.00% T. Rowe Price/JNL International Equity Investment Series...... 1.10% .15% 1.25% T. Rowe Price/JNL Mid-Cap Growth Series....................... .95% .15% 1.10%
- -------------------------------------------------------------------------------- The expenses shown above are assessed at the Underlying Fund level and are not direct charges against Separate Account assets or reductions from Contract Values. These expenses are taken into consideration in computing each Series' net asset value, which is the share price used to calculate the Portfolio's unit value. Currently, all expenses (excluding Management Fees) in excess of .15% are reimbursed. Prior to reimbursement Total Fund Annual Expenses as a percentage of net assets are expected to be 2.77%; 2.08%; 2.25%; 1.89%; 3.71%; 5.38%; 1.50%; 1.30%; 2.28%; 2.14%; 2.53%; 2.09%; 2.14%; and 2.10%; respectively. Voluntary reimbursements to these Series may be modified or discontinued at any time. EXAMPLE -- If you surrender your contract at the end of the applicable time period: You would pay the following expenses on a $1,000 investment, assuming 5% annual return on assets: - --------------------------------------------------------------------------------
1 YEAR 3 YEARS - ----------------------------------------------------------------------------------------------------------- JNL Aggressive Growth Portfolio........................................................ $ 97 $ 134 JNL Capital Growth Portfolio........................................................... 97 134 JNL Global Equities Portfolio.......................................................... 98 136 JNL/Alger Growth Portfolio............................................................. 98 135 JNL/Phoenix Investment Counsel Balanced Portfolio...................................... 97 133 JNL/Phoenix Investment Counsel Growth Portfolio........................................ 97 133 PPM America/JNL High Yield Bond Portfolio.............................................. 95 128 PPM America/JNL Money Market Portfolio................................................. 94 123 PPM America/JNL Value Equity Portfolio................................................. 95 128 Salomon Brothers/JNL Global Bond Portfolio............................................. 96 131 Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio.......................... 95 126 T. Rowe Price/JNL Established Growth Portfolio......................................... 96 131 T. Rowe Price/JNL International Equity Investment Portfolio............................ 99 139 T. Rowe Price/JNL Mid-Cap Growth Portfolio............................................. 97 134
- -------------------------------------------------------------------------------- 6 11 If you do not surrender or if you annuitize your contract at the end of the applicable time period: You would pay the following expenses on a $1,000 investment, assuming 5% annual return on assets: - --------------------------------------------------------------------------------
1 YEAR 3 YEARS - ----------------------------------------------------------------------------------------------------------- JNL Aggressive Growth Portfolio........................................................ $ 27 $84 JNL Capital Growth Portfolio........................................................... 27 84 JNL Global Equities Portfolio.......................................................... 28 86 JNL/Alger Growth Portfolio............................................................. 28 85 JNL/Phoenix Investment Counsel Balanced Portfolio...................................... 27 83 JNL/Phoenix Investment Counsel Growth Portfolio........................................ 27 83 PPM America/JNL High Yield Bond Portfolio.............................................. 25 78 PPM America/JNL Money Market Portfolio................................................. 24 73 PPM America/JNL Value Equity Portfolio................................................. 25 78 Salomon Brothers/JNL Global Bond Portfolio............................................. 26 81 Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio.......................... 25 76 T. Rowe Price/JNL Established Growth Portfolio......................................... 26 81 T. Rowe Price/JNL International Equity Investment Portfolio............................ 29 89 T. Rowe Price/JNL Mid-Cap Growth Portfolio............................................. 27 84
- -------------------------------------------------------------------------------- EXPLANATION OF FEE TABLES AND EXAMPLES 1. The purpose of the foregoing table and examples is to assist an investor in understanding the various costs and expenses that he or she will bear directly or indirectly by investing in the Separate Account. For additional information see "Contract Charges," beginning on Page 12 of this Prospectus; see also the sections relating to management of the Underlying Funds in their respective prospectuses. The examples do not illustrate the tax consequences of surrendering a Contract. 2. The examples assume that there were no transactions which would result in the imposition of the Transfer Fee. The amount of the Transfer Fee is $25, except that the first 15 transfers per Contract Year are not subject to the fee. Premium taxes, which range from 0% to 4% of Premiums, are not reflected. 3. For purposes of the amounts reported in the examples, the Contract Maintenance Charge is reflected by applying a percentage equivalent charge, obtained by dividing the total amount of such charges anticipated to be collected during the year by the total estimated average net assets of the Portfolios attributable to the Contracts. 4. A Withdrawal Charge is imposed upon annuitizations which occur within one year of the Issue Date. 5. NEITHER THE FEE TABLES NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 7 12 - -------------------------------------------------------------------------------- HIGHLIGHTS - -------------------------------------------------------------------------------- This Prospectus contains information about the Contract, which provides variable and fixed benefits. It describes the uses, costs and objectives of the Contract, and the rights and privileges of the Owner. It also provides information about the Company and the Separate Account. Premiums for the Contracts may be allocated to one or more Portfolios of the Separate Account, and/or the General Account under the Contracts. The Separate Account invests in shares of the corresponding Series of the Underlying Fund: JNL SERIES TRUST JNL Aggressive Growth Series JNL Capital Growth Series JNL Global Equities Series JNL/Alger Growth Series JNL/Phoenix Investment Counsel Balanced Series JNL/Phoenix Investment Counsel Growth Series PPM America/JNL High Yield Bond Series PPM America/JNL Money Market Series PPM America/JNL Value Equity Series Salomon Brothers/JNL Global Bond Series Salomon Brothers/JNL U.S. Government & Quality Bond Series T. Rowe Price/JNL Established Growth Series T. Rowe Price/JNL International Equity Investment Series T. Rowe Price/JNL Mid-Cap Growth Series The Individual Deferred Fixed and Variable Annuity Contracts offered by this Prospectus are flexible premium contracts. The Contracts can be purchased on a non-tax qualified basis ("Non-Qualified Plan Contract") or in connection with certain plans qualifying for favorable federal income tax treatment ("Qualified Plan Contract"). This Prospectus describes only the variable portion of the Contract. A Withdrawal Charge may be imposed upon withdrawals from the Contract. Withdrawal Charges will vary in amount depending upon the number of completed years in the Contract from the date of Premium deposit at the time of its withdrawal. The Withdrawal Charge is found in the Fee Tables. The maximum Withdrawal Charge is 7%. (See "Withdrawal Charge".) For purposes of determining federal income tax liability, withdrawals are deemed to be interest and earnings, first-out basis, which means taxable income is withdrawn first. There is a 10% penalty tax on the taxable amount of any premature distribution from Non-Qualified and certain Qualified Plan Contracts. The penalty tax generally applies to any distribution made prior to the Owner attaining age 59 1/2. (See "Taxes".) Withdrawals of amounts attributable to contributions made pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of the Code) are limited to circumstances only when the Owner attains age 59 1/2, separates from service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of hardship. Hardship withdrawals do not include any earnings on salary reduction contributions. Owners should consult their tax adviser regarding the consequences of withdrawals or distributions. The initial Premium must be at least $5,000 for Non-Qualified Plan Contracts and $2,000 for Qualified Plan Contracts. Subsequent Premiums must be at least $500 ($50 if made in connection with an Automatic Payment Plan). The cumulative total of all Premiums under a Contract may not exceed $1,000,000 without the prior consent of the Company. (See "Purchases, Withdrawals and Contract Value".) The Company may waive any of these minimums or maximums at any time. To be sure that the Owner is satisfied with the Contract, the Owner has a ten day free look (or longer if required by state law). Within ten days of the day the Contract is received, it may be returned to the Company's Annuity Service Center, at the address shown on page 1 of this Prospectus. When the Contract is received by the Company, the Company will void the Contract and refund the Contract Value in full unless otherwise required by state and/or federal law. 8 13 - -------------------------------------------------------------------------------- CONDENSED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- ACCUMULATION UNIT VALUES The following table presents Accumulation Unit values at the commencement of operations of the Separate Account and end of the Separate Account's fiscal year as well as ending Accumulation Units outstanding under each Portfolio of the Separate Account. This data has been taken from the Separate Account's financial statements. The Separate Account's financial statements for the period have been audited by Price Waterhouse LLP, independent accountants. This information should be read in conjunction with the Separate Account's financial statements and related notes thereto.
- ------------------------------------------------------------ DECEMBER 31, PORTFOLIOS 1995(A) - ------------------------------------------------------------ JNL Aggressive Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.20 Accumulation units outstanding at the end of period 4,008 JNL Capital Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.34 Accumulation units outstanding at the end of period 1,587 JNL Global Equities Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.48 Accumulation units outstanding at the end of period 4,778 JNL/Alger Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $ 9.93 Accumulation units outstanding at the end of period 12,285 JNL/Phoenix Investment Counsel Balanced Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.34 Accumulation units outstanding at the end of period 12,871 - ------------------------------------------------------------ DECEMBER 31, PORTFOLIOS 1995(A) - ------------------------------------------------------------ JNL/Phoenix Investment Counsel Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.58 Accumulation units outstanding at the end of period 571 PPM America/JNL High Yield Bond Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.11 Accumulation units outstanding at the end of period 100 PPM America/JNL Money Market Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.03 Accumulation units outstanding at the end of period 14,608 PPM America/JNL Value Equity Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.59 Accumulation units outstanding at the end of period 3,944 Salomon Brothers/JNL Global Bond Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.41 Accumulation units outstanding at the end of period 3,128
(a) The Separate Account commenced operations on October 16, 1995. 9 14
- ------------------------------------------------------------ DECEMBER 31, PORTFOLIOS 1995(A) - ------------------------------------------------------------ Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.21 Accumulation units outstanding at the end of period 1,275 T. Rowe Price/JNL Established Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.36 Accumulation units outstanding at the end of period 10,564 - ------------------------------------------------------------ DECEMBER 31, PORTFOLIOS 1995(A) - ------------------------------------------------------------ T. Rowe Price/JNL International Equity Investment Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.49 Accumulation units outstanding at the end of period 3,096 T. Rowe Price/JNL Mid-Cap Growth Portfolio Accumulation unit value: Beginning of period $10.00 End of period $10.37 Accumulation units outstanding at the end of period 5,120
(a) The Separate Account commenced operations on October 16, 1995. FINANCIAL STATEMENTS The full financial statements of the Separate Account, the financial statements of the Company and the auditor's report thereon are contained in the Statement of Additional Information. 10 15 - -------------------------------------------------------------------------------- DESCRIPTION OF THE COMPANY AND THE SEPARATE ACCOUNT - -------------------------------------------------------------------------------- COMPANY The Company is a stock life insurance company organized under the laws of the state of Michigan in June 1961. Its legal domicile and principal business address is 5901 Executive Drive, Lansing, Michigan 48911. The Company is a wholly-owned subsidiary of Prudential Corporation, plc, London, England. The Company is admitted to conduct life insurance and annuity business in the District of Columbia and all states except New York. It intends to market the Contract in all jurisdictions in which it is admitted to conduct variable annuity business. The Contracts offered by this Prospectus are issued by the Company and will be funded by the Separate Account. SEPARATE ACCOUNT The Separate Account was originally established by the Company on June 14, 1993, pursuant to the provisions of Michigan law, as a segregated asset account of the Company. The Separate Account meets the definition of a "separate account" under the Federal securities laws and is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. This registration does not involve supervision of the management of the Separate Account or the Company by the Securities and Exchange Commission. The assets of the Separate Account are the property of the Company. However, the assets of the Separate Account, equal to its reserves and other Contract liabilities, are not chargeable with liabilities arising out of any other business the Company may conduct. Income, gains, and losses, whether or not realized, from assets allocated to the Separate Account are credited to or charged against the Separate Account without regard to other income, gains, or losses of the Company. The Separate Account is divided into Portfolios, with the assets of each Portfolio pertaining to Account Value invested in the shares of the corresponding Series of the Underlying Fund. The Company does not guarantee the investment performance of the Separate Account, its Portfolios or the Series of the Underlying Fund. Values allocated to the Separate Account and the amount of Variable Annuity payments will vary with the values of shares of the Underlying Fund, and are also reduced by Contract charges. The Separate Account may also fund other contracts issued by the Company, which will be accounted for separately from the Contracts. The basic objective of a variable annuity contract is to provide payments which will be to some degree responsive to changes in the economic environment, including inflationary forces and changes in rates of return available from various types of investments. However, the Owner bears the entire investment risk that the basic objective of the Contract may not be realized, and that the adverse effects of inflation may not be lessened. There can be no assurance that the aggregate amount of variable annuity payments will equal or exceed the Premiums made with respect to a Contract. 11 16 - -------------------------------------------------------------------------------- SEPARATE ACCOUNT INVESTMENTS - -------------------------------------------------------------------------------- UNDERLYING FUND Each of the Portfolios of the Separate Account invests in the shares of one of the following corresponding Series, which are separate investment series of an open-end management investment company registered under the Investment Company Act of 1940 (commonly known as a "mutual fund"): JNL SERIES TRUST JNL Aggressive Growth Series JNL Capital Growth Series JNL Global Equities Series JNL/Alger Growth Series JNL/Phoenix Investment Counsel Balanced Series JNL/Phoenix Investment Counsel Growth Series PPM America/JNL High Yield Bond Series PPM America/JNL Money Market Series PPM America/JNL Value Equity Series Salomon Brothers/JNL Global Bond Series Salomon Brothers/JNL U.S. Government & Quality Bond Series T. Rowe Price/JNL Established Growth Series T. Rowe Price/JNL International Equity Investment Series T. Rowe Price/JNL Mid-Cap Growth Series A summary description of the investment objectives of the Series of the Underlying Fund in which the Portfolios invest is contained in Appendix B to this Prospectus. However, there is no assurance that the investment objective of any of the Series will be met. Contract Owners bear the complete investment risk for Premiums allocated to a Portfolio. Contract Values will fluctuate in accordance with the investment performance of the Portfolio(s) to which Premiums are allocated, and in accordance with the imposition of the fees and charges assessed under the Contracts. DETAILED INFORMATION ABOUT THE JNL SERIES TRUST IS CONTAINED IN ITS ACCOMPANYING CURRENT PROSPECTUS. AN INVESTOR SHOULD CAREFULLY REVIEW THE TRUST'S PROSPECTUS BEFORE ALLOCATING AMOUNTS TO BE INVESTED IN THE PORTFOLIOS OF THE SEPARATE ACCOUNT. VOTING RIGHTS To the extent required by applicable law, the Company will vote the shares of the Underlying Fund held in the Separate Account at meetings of the shareholders of the Underlying Funds in accordance with instructions received from persons having the voting interest in the corresponding Portfolios. The Company will vote shares for which it has not received instructions in the same proportion as it votes shares for which it has received instructions. The number of shares which a person has a right to vote will be determined as of a date to be chosen by the Trust not more than 60 days prior to the meeting of the respective Underlying Fund's shareholders. Voting instructions will be solicited by written communication in advance of such meeting. Except as may be limited by the terms of the retirement plan pursuant to which the Contract was issued, the person having such voting rights will be the Owner before the Annuity Date; thereafter the payee entitled to receive payments under the Contract. SUBSTITUTION OF SECURITIES If the shares of any of the Series should no longer be available for investment by the Separate Account or if, in the judgment of the Company's Board of Directors, further investment in the shares of a Series is no longer appropriate in view of the purposes of the Contract, the Company may substitute shares of another mutual fund (or Series thereof) for Underlying Fund shares already purchased and/or to be purchased in the future by Premiums under the Contract. No such substitution of securities may take place without prior approval of the Securities and Exchange Commission and under such requirements as the Commission may impose. 12 17 - -------------------------------------------------------------------------------- CONTRACT CHARGES - -------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK CHARGE The Company deducts a Mortality and Expense Risk Charge from each Portfolio during each Valuation Period. The aggregate Mortality and Expense Risk Charge is equal, on an annual basis, to 1.25% of the daily net asset value of each Portfolio. The mortality risks assumed by the Company arise from its contractual obligations: (1) to make annuity payments after the Annuity Date for the life of the Annuitant(s); (2) to waive the Withdrawal Charge in the event of the death of the Owner; and (3) to provide both a standard and an enhanced Death Benefit prior to the Annuity Date. A detailed explanation of the standard and Enhanced Death Benefits may be found under "Death Benefit." The expense risk assumed by the Company is that the costs of administering the Contracts and the Separate Account will exceed the amount received from the Administration Charge and the Contract Maintenance Charge. The Expense Risk Charge is guaranteed by the Company and cannot be increased. The Mortality and Expense Risk Charge is assessed during both the Accumulation Period and the Annuity Period. CONTRACT MAINTENANCE CHARGE An annual Contract Maintenance Charge of $35 is charged against each Contract. The amount of this charge is guaranteed and cannot be increased by the Company. This charge reimburses the Company for expenses incurred in establishing and maintaining records relating to a Contract. The Contract Maintenance Charge will be assessed on each anniversary of the Contract Date that occurs on or prior to the Annuity Date. In the event that a total surrender of the Contract Value is made, the Charge will be assessed as of the date of surrender without proration. This charge is not assessed during the Annuity Period. The total Contract Maintenance Charge is allocated between the Portfolio(s) and the General Account in proportion to the respective Contract Values similarly allocated. The Contract Maintenance Charge is at cost with no margin included for profit. The Company will monitor this charge to ensure that it does not exceed annual administrative expenses. This charge may be a lesser amount where required by state law. ADMINISTRATION CHARGE The Company assesses an Administration Charge equal, on an annual basis, to 0.15% of the daily net asset value of the Separate Account. The Administration Charge is designed only to reimburse the Company for administrative expenses related to the Separate Account and the issuance and maintenance of the Contract, and the Company will monitor this charge to ensure that it does not exceed annual administration expenses. TRANSFER FEE A Transfer Fee of $25.00 will apply to transfers in excess of 15 in a Contract Year. The Company may waive the Transfer Fee in connection with pre-authorized automatic transfer programs, or in those states where a lesser fee is required. This fee will be deducted from Contract Values which remain in the Portfolio(s) from which the transfer was made. If such remaining Contract Value is insufficient to pay the Transfer Fee, then the fee will be deducted from transferred Contract Values. 13 18 WITHDRAWAL CHARGE Federal tax law places a number of constraints on withdrawals from annuity contracts. Subject to those limitations, the Contract Value may be withdrawn at any time during the Accumulation Period. Owners should consult their own tax counsel or other tax advisers regarding any withdrawals. (See "Withdrawals"). A contingent deferred sales charge, which is referred to as the Withdrawal Charge, may be imposed upon certain withdrawals. Withdrawal Charges will vary in amount depending upon the number of completed years in the Contract from the date of Premium deposit at the time of withdrawal in accordance with the Withdrawal Charge table shown below. WITHDRAWAL CHARGE TABLE - --------------------------------------------------------------------------------
NUMBER OF COMPLETE CONTRACT YEARS APPLICABLE WITHDRAWAL SINCE PREMIUM BEING WITHDRAWN WAS MADE CHARGE PERCENTAGE - ----------------------------------------------------------------------------------------------------------- Zero............................................................................... 7% First.............................................................................. 6% Second............................................................................. 5% Third.............................................................................. 4% Fourth............................................................................. 3% Fifth.............................................................................. 2% Sixth.............................................................................. 1% Seventh and later.................................................................. 0% - -----------------------------------------------------------------------------------------------------------
The Withdrawal Charge is deducted from the remaining Contract Value so that the actual reduction in Contract Value as a result of the withdrawal will be greater than the withdrawal amount requested and paid. For purposes of determining the Withdrawal Charge, withdrawals will be allocated first to earnings, if any (which may generally be withdrawn free of Withdrawal Charge), and then to Premium on a first-in, first-out basis so that all withdrawals are allocated to Premium to which the lowest (if any) Withdrawal Charge applies. Premiums that are no longer subject to the Withdrawal Charge (and not previously withdrawn), plus earnings in the Owner's Account may be withdrawn free of Withdrawal Charges at any time ("Initial Free Withdrawal"). Further, there may be an additional free withdrawal amount for the first withdrawal during a Contract Year ("Additional Free Withdrawal"). The Additional Free Withdrawal amount is equal to 10% of Premium that remains subject to the Withdrawal Charge, less earnings in the Owner's account. An Owner will not receive the benefit of an Additional Free Withdrawal in a full surrender. For an example of the Additional Free Withdrawal calculation see Appendix C. If the withdrawal request does not specify from which Portfolio(s) the withdrawal is to be made, the request will be processed by reducing the Contract Values in each Portfolio in proportion to their allocations. The Company will waive the Withdrawal Charge on any withdrawal necessary to satisfy the minimum distribution requirements of the Code. In addition, where legally permitted, the Withdrawal Charge may be eliminated when a Contract is issued to an agent, officer, director or employee of the Company or its affiliates. The amounts obtained from the Withdrawal Charge will be used to pay sales commissions and other promotional or distribution expenses associated with the marketing of the Contracts. To the extent that the Withdrawal Charge is insufficient to cover all sales commissions and other promotional or distribution expenses, the Company may use any of its corporate assets, including potential profit which may arise from the Mortality and Expense Risk Charge, to make up any difference. PREMIUM TAXES The Company will charge against the Contract Value the amount of any premium taxes levied by a state or any other governmental entity upon Premiums received by the Company. To the best of the Company's present knowledge, premium taxes currently imposed by certain jurisdictions range from 0% to 4.0%. This range is subject to change. The method used to recoup premium tax expense will be determined by the Company at its sole discretion and in compliance with applicable state law. The Company may deduct such charges from an Owner's Contract Value either: (1) at the time the Contract is surrendered, (2) at Annuitization, or (3) in those states which require, at the time Premiums are made to the Contract. 14 19 DEDUCTION FOR SEPARATE ACCOUNT INCOME TAXES While the Company is not currently maintaining a provision for taxes, the Company has reserved the right to establish such a provision for taxes in the future if it determines, in its sole discretion, that it will incur a tax as a result of the operation of the Separate Account. The Company will deduct for any taxes incurred by it as a result of the operation of the Separate Account whether or not there was a provision for taxes and whether or not it was sufficient. OTHER EXPENSES The charges and expenses applicable to the various Series of the Underlying Funds are borne indirectly by Owners having Contract Values allocated to the Portfolios that invest in the respective Series. For a summary of current estimates of those charges and expenses, see "Fee Tables." REDUCTION OF CHARGES FOR SALES TO CERTAIN GROUPS The Company may reduce the Withdrawal and/or Administration charges on Contracts sold to certain groups or individuals, or to a trustee, employer or other entity representing a group, where it is expected that such sales will result in savings of sales or administrative expenses. The entitlement to such reductions will be determined by the Company by considering the following factors: (1) the size of the group; (2) the total amount of Premiums expected to be received; (3) the nature of the group for which the Contracts are purchased, and the persistency expected in that group; (4) the purpose for which the Contracts are purchased and whether that purpose makes it likely that expenses will be reduced; and (5) any other circumstances which the Company believes to be relevant in determining whether reduced sales or administrative expenses may be expected. None of the reductions in charges for such sales is contractually guaranteed. Such reductions may be withdrawn or modified by the Company on a uniform basis. The Company's reductions in charges for such sales will not be unfairly discriminatory to the interests of any Owners. - -------------------------------------------------------------------------------- DESCRIPTION OF THE CONTRACTS - -------------------------------------------------------------------------------- SUMMARY The Contracts provide for the accumulation of Contract Values during the Accumulation Period. Upon Annuitization, benefits are payable under the Contracts in the form of an annuity, either for the life of the Annuitant or for a fixed number of years, as permitted by state law. (See "Annuity Period -- Annuity Options.") OWNER The Owner is the person who is entitled to exercise all rights and privileges of ownership under the Contract. If Joint Owners are named, the Joint Owner must be the spouse of the other Joint Owner. The Joint Owner will possess an undivided interest in the Contract. The Contract Owner retains sole rights in the Contract upon the other's death prior to the Annuity Date. Unless otherwise provided, when Joint Owners are named, the exercise of any ownership right in the Contract shall require a written indication of an intent to exercise that right, which must be signed by both Owners. Upon the death of a Joint Contract Owner, the surviving Joint Owner, if any, will be treated as the primary Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. ANNUITANT The Annuitant is the person on whose life annuity payments under a Contract depend. (In the case of a Contract issued in connection with a plan qualified under Section 403(b) or 408 of the Code, the Owner is the Annuitant.) MODIFICATION OF THE CONTRACT Only the Company's President, a Vice President, Secretary or Assistant Secretary may approve a change or waive any provisions of the Contract. Any change or waiver must be in writing. No agent has the authority to change or waive the provisions of the Contract. The Company reserves the right to change the terms of the Contract as may be necessary to comply with changes in applicable law, or otherwise deemed necessary by the Company. ASSIGNMENT Where permitted, the Owner may assign the Contract at any time during the lifetime of the Annuitant. Such assignment will take effect upon receipt by the Company of written notice thereof executed by the Owner. The Company assumes no responsibility for the validity or sufficiency of any assignment. The Company shall not be liable as to any payment or other settlement made by the 15 20 Company before receipt of the assignment. Qualified Plan Contracts may not be assigned, pledged or otherwise transferred except under such conditions as may be allowed by applicable law. If this Contract is a Non-Qualified Plan Contract, any portion which is pledged or assigned shall be treated as a distribution and shall be included in gross income to the extent that the cash value exceeds the investment in the Contract, for the taxable year in which the assignment or pledge occurs. In addition, any portion assigned may, under certain conditions, be subject to a tax penalty equal to 10% of the amount which is included in gross income. - -------------------------------------------------------------------------------- DEATH BENEFIT - -------------------------------------------------------------------------------- DEATH OF CONTRACT OWNER BEFORE THE ANNUITY DATE Upon the death of the Owner, or any Joint Contract Owner, before the Annuity Date, the death benefit will be paid to the Beneficiary(ies) designated by the Owner. Upon the death of a Joint Contract Owner, the surviving Joint Contract Owner, if any, will be treated as the primary Beneficiary. Any other Beneficiary designation on record at the time of death will be treated as a contingent Beneficiary. DEATH BENEFIT AMOUNT BEFORE THE ANNUITY DATE The standard death benefit is equal to the greater of: 1. the Contract Value at the end of the Valuation Period during which due proof of death and an election of the type of payment to the Beneficiary is received by the Company, at the Home Office, or 2. the total Premiums paid prior to the death of the Owner, minus the sum of: a) the total withdrawals and any Withdrawal Charges assessed; and b) premium taxes incurred. In addition, where permitted by state law, the Company will provide an enhanced death benefit. The enhanced death benefit is determined by (A) re-computing the standard death benefit by accumulating all amounts under (2) above annually at 5% (4% if the Owner was age 70 or older on the Issue Date) to the date of death, and (B) paying the greater of the amount so determined and the following amount, which is deemed to be $0 if the Owner dies prior to the seventh Contract Year: the Contract Value at the seventh Contract Year, plus any Premiums paid since that time and prior to death, minus the sum of: a) total withdrawals and any Withdrawal Charges assessed since such seventh Contract Year; and b) premium taxes incurred since the seventh Contract Year, all accumulated annually at 5% (4% if the Owner was age 70 or older on the Issue Date) to the date of death. The enhanced death benefit shall never exceed 250% of all Premiums paid to the Contract, reduced by the amount of any withdrawals. NOTE: The portion of the Mortality and Expense Risk Charge attributable to the enhanced death benefit will be assessed against Separate Account allocations pursuant to all Contracts issued, whether or not applicable state laws permit the Contract to offer the enhanced death benefit. DEATH BENEFIT OPTIONS BEFORE THE ANNUITY DATE In the event of the death of the Owner, or any Joint Contract Owner, before the Annuity Date, a Beneficiary must request that the death benefit be paid under one of the Death Benefit Options below. In addition, if the Beneficiary is the spouse of the Contract Owner, he or she may elect to continue the Contract at the then Contract Value in his or her own name and exercise all the Contract Owner's rights under the Contract. The following are the Death Benefit Options: Option 1 -- lump sum payment of the death benefit; or Option 2 -- the payment of the entire death benefit within 5 years of the date of the death of the Contract Owner or any Joint Contract Owner; or Option 3 -- payment of the death benefit under an Annuity Option over the lifetime of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary with distribution beginning within one year of the date of Your death or any Joint Contract Owner. 16 21 Any portion of the death benefit not applied under Option 3 within one year of the date of a Contract Owner's death, must be distributed within five years of the date of death. If a lump sum payment is requested, the amount will be paid within seven (7) days of receipt of proof of death and the election, unless the Suspension or Deferral of Payments Provision is in effect. Payment to the Beneficiary, other than in a single sum, may only be elected during the sixty-day period beginning with the date of receipt of proof of death. DEATH OF CONTRACT OWNER AFTER THE ANNUITY DATE If the Owner, or any Joint Contract Owner, dies after the Annuity Date, and the Owner is not an Annuitant, any remaining payments under the Annuity Option elected will continue at least as rapidly as under the method of distribution in effect at such Contract Owner's death. Upon Your death after the Annuity Date, the Beneficiary becomes the Contract Owner. DEATH OF ANNUITANT Upon the death of an Annuitant, who is not a Contract Owner, before the Annuity Date, the Owner may designate a new Annuitant, subject to the Company's underwriting rules then in effect. If no designation is made within 30 days of the death the Annuitant, You will become the Annuitant. If the Contract Owner is a non-natural person, the death of the Annuitant will be treated as the death of the Contract Owner and a new Annuitant may not be designated. Upon the death of the Annuitant after the Annuity Date, the death benefit, if any, will be as specified in the Annuity Option elected. Death benefits will be paid at least as rapidly as under the method of distribution in effect at the Annuitant's death. BENEFICIARY The Owner may designate the Beneficiary(ies) to receive any amount payable on Owner's death. The original Beneficiary(ies) will be named in the application. If two or more persons are named, those surviving the Owner will share equally unless otherwise stated. The Owner may change the Beneficiary(ies) by filing a written request with the Company at its Annuity Service Center, unless an irrevocable Beneficiary(ies) designation was previously filed. Any change will take effect when recorded by the Company. The Company is not liable for any payment made or action taken before it records the change. - -------------------------------------------------------------------------------- PURCHASES, WITHDRAWALS AND CONTRACT VALUE - -------------------------------------------------------------------------------- PREMIUMS Premiums are flexible. This means that the Owner, subject to Company declared minimums and maximums, may change the amounts, frequency or timing of Premiums. The initial Premium must be at least $5,000 for Non-Qualified Plan Contracts and $2,000 for Qualified Plan Contracts. Subsequent Premiums must be at least $500 ($50 if made in connection with an Automatic Payment Plan). Total Premiums under a Contract may not exceed $1,000,000 without the prior consent of the Company. The Company will not issue a Contract to an individual under a Non-Qualified Plan who is age 80 or older or under a Qualified Plan who is age 70 1/2 or older, without prior Company approval. The Company may waive any of the maximums or minimums contained in this Section. The Company reserves the right to refuse any Premium at any time. AUTOMATIC PAYMENT PLAN Automatic bank drafts through the Company's Automatic Payment Plan for scheduled subsequent Premiums may be made at a minimum of $50 or more per month. An enrollment form for this program is available through the Company's Annuity Service Center. AUTOMATIC DOLLAR COST AVERAGING PROGRAM Units of the Portfolios may be purchased over a period of time through the Automatic Dollar Cost Averaging ("DCA") Program. Under this Program, the Owner may authorize the automatic transfer of a fixed dollar amount ($100 minimum) of his or her choice at regular intervals from a source account to one or more of the Portfolios (other than the source account) at the unit values determined on the dates of the transfers. Currently, all Portfolios are available as source accounts. The 17 22 intervals between transfers may be monthly, quarterly, semi-annually or annually, at the option of the Owner. This service is intended to allow the Owner to utilize DCA, a long-term investment program which provides for regular, level investments over time. The Company makes no guarantees that DCA will result in a profit or protect against loss in a declining market. To qualify for the DCA Program, there must be a minimum total Contract Value of $15,000, unless such minimum is waived by the Company. Another option under the DCA Program is the periodic transfer of a selected percentage of the value of the source account to one of the Portfolios (other than the source account). A third option is to transfer the entire Contract Value in the source account in a stated number of transfers as selected by the Owner. Although the various options under the DCA Program will allow transfers to be made from any of the Portfolios, the Owner must elect to have the transfers made exclusively from one of these source accounts. A written election of this service, on a form provided by the Company, must be completed by the Contract Owner in order to begin transfers. Once elected, transfers from the source account will be processed periodically until either the value of the source account is completely depleted or the Contract Owner instructs the Company in writing to cancel the transfers. The Company also reserves the right to assess a processing fee for this service. REBALANCING A Contract Owner may elect, on a form provided by the Company, to have his/her Separate Account Value reallocated among Portfolios in designated percentages on a periodic basis (monthly, quarterly, semi-annual or annual basis, or at such other time interval as approved by the Company). The Company reserves the right to assess a processing fee for this service. ALLOCATION OF PREMIUMS Premiums are allocated to the Portfolio(s) selected by the Owner. Owners making initial Premiums should specify their allocations on the application for a Contract. If the application is in good order, the Company will apply the initial Premium to the Portfolio(s), as selected, and credit the Contract with Accumulation Units within two business days of receipt at the Annuity Service Center. The number of Accumulation Units in a Portfolio attributable to a Premium is determined by dividing that portion of the Premium which is allocated to the Portfolio by that Portfolio's Accumulation Unit value as of the end of the Valuation Period when the allocation occurs. IF THE APPLICATION DOES NOT SPECIFY AN ALLOCATION, THE APPLICATION IS NOT IN GOOD ORDER. If the application for a Contract is not in good order, the Company will attempt to rectify it within five business days of its receipt at the Annuity Service Center. The Company will credit the initial Premium within two business days after the application has been rectified. Unless the prospective Owner consents otherwise, the application and the initial Premium will be returned if the application cannot be put in good order within five business days of such receipt. Just like initial Premiums, Owners making subsequent Premium payments should specify how they want their Premiums allocated. Otherwise the Company will automatically process the Premium based on the most recent allocation on record with the Company. TRANSFER DURING ACCUMULATION PERIOD During the Accumulation Period, the Owner may transfer Contract Values among Portfolios, by written request or if the Owner makes such an election on the Contract application, by telephone authorization. The Company has in place procedures which are designed to provide reasonable assurance that telephone authorizations are genuine, including tape recording of telephone communications and requesting identifying information. Accordingly, the Company and its affiliates disclaim all liability for any claim, loss or expense resulting from any alleged error or mistake in connection with a telephone transfer which was not properly authorized by the Owner. However, if the Company fails to employ reasonable procedures to ensure that all telephone transfers are properly authorized, the Company may be held liable for such losses. The Company reserves the right to modify or discontinue at any time and without notice the use of telephone transfers and accepting transfer instructions from someone other than the Owner. Telephone calls authorizing transfers must be completed by the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time) on a Valuation Date in order to be effected at the price determined on such date. Transfer authorizations, whether written or by telephone, which are received after such close of regular trading will be processed as of the next Valuation Date. A Transfer Fee may be assessed (See "Transfer Fee".) This transfer privilege may be suspended, modified or terminated at any time without notice. The minimum partial transfer amount is $100. Also, no partial transfer may be made if the value of the Owner's interest in the Portfolio from which a transfer is being 18 23 made would be less than $100 after the transfer. The Company may waive the minimum partial transfer amount in connection with pre-authorized automatic transfer programs. SEPARATE ACCOUNT ACCUMULATION UNIT VALUE Accumulation Unit value is determined Monday through Friday on each day that the NYSE is open for business. A separate Accumulation Unit value is determined for each Portfolio. If the Company elects or is required to assess a charge for taxes, a separate Accumulation Unit value may be calculated for Contracts issued in connection with Non-Qualified and Qualified Plans, respectively, within each Portfolio. The Accumulation Unit value for each Portfolio will vary with the price of a share in the corresponding Series and in accordance with the Mortality and Expense Risk Charge, Administration Charge, and any provision for taxes. Assessments of Withdrawal Charges, Transfer Fees and Contract Maintenance Charges are effected by redemption of Accumulation Units and do not affect Accumulation Unit value. The Accumulation Unit Value of a Portfolio for any Valuation Period is calculated by subtracting (2) from (1) and dividing the result by (3) where: 1) is the total value at the end of the given Valuation Period of the assets attributable to the Accumulation Units of the Portfolio minus the total liabilities; 2) is the cumulative unpaid charge for assumptions of Mortality and Expense Risk Charge, and for Administration Charge; and 3) is the number of Accumulation Units outstanding at the end of the given Valuation Period. DISTRIBUTION OF CONTRACTS Contracts are sold by registered representatives of broker-dealers who are licensed insurance agents of the Company, either individually or through an incorporated insurance agency. Commissions may vary, but are not anticipated to exceed 8.00% of any Premium (including any promotional and sales incentives). Under certain circumstances, certain sellers of the Contracts may be paid persistency incentives which will take into account, among other things, the length of time Premiums have been held under a Contract, and Contract Values. A persistency incentive is not anticipated to exceed 1.50%, on an annual basis, of the Contract Values considered in connection with the incentive. All such commissions and incentives are paid by the Company. Jackson National Financial Services, Inc., located at 5901 Executive Drive, Lansing, Michigan 48911, serves as distributor of the Contract. Jackson National Financial Services, Inc. is a wholly owned subsidiary of the Company and is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the National Association of Securities Dealers, Inc. WITHDRAWALS (REDEMPTIONS) Except as explained below, an Owner may redeem a Contract for all or a portion of its Contract Value during the Accumulation Period. Withdrawal Charges may be applicable, however, which would reduce the Contract Value upon redemption. Withdrawals and distributions from Contracts issued in connection with certain Qualified Plans may be subject to a mandatory 20% withholding requirement, in addition, certain tax withdrawal penalties may apply (see "Taxes"). Withdrawals of amounts attributable to contributions made pursuant to a salary reduction agreement (in accordance with Section 403(b)(11) of the Code) are limited to the following: when the Owner attains age 59 1/2, separates from service, dies, becomes disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of hardship. Hardship withdrawals do not include any earnings on salary reduction contributions. These limitations on withdrawals apply to: (1) salary reduction contributions made after December 31, 1988; (2) income attributable to such contributions; and (3) income attributable to amounts held as of December 31, 1988. The limitations on withdrawals do not affect rollovers or exchanges between certain Qualified Plans. Tax penalties may also apply. While the foregoing limitations only apply to certain Contracts issued in connection with Section 403(b) Qualified Plans, all Owners should seek competent tax advice regarding any withdrawals or distributions. Except in connection with a Systematic Withdrawal Program, described below, the minimum partial withdrawal amount is $500, or, if less, the Owner's entire interest in the Portfolio from which a withdrawal is requested. The Owner's interest in the Portfolio from which the withdrawal is requested must be at least $100 after the withdrawal is completed. A written withdrawal request or Systematic Withdrawal Program enrollment form, as the case may be, must be sent to the Company at its Annuity Service Center. The required program form will not be in good 19 24 order unless it includes the Owner's Tax I.D. Number (e.g., Social Security Number) and provides instructions regarding withholding of income taxes. The Company provides the required forms. The Company may also accept telephone requests for certain partial withdrawals from Owners who elect this option either through the Contract application or by completing a Telephone Redemption Authorization Form provided by the Company. The Company reserves the right to impose maximum withdrawal amounts and procedural requirements regarding this privilege. The proceeds of a telephone withdrawal will be sent by check to the Owner at the address of record only. Telephone calls authorizing withdrawals must be completed by the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time) on a Valuation Date in order to be effected at the price determined on such date. The Company reserves the right to terminate or modify the telephone withdrawal service at any time. If the request is for total withdrawal, the Contract, or a Lost Contract Affidavit, must be submitted as well. The Withdrawal Value is determined on the basis of the Contract Values next computed following receipt of a request in proper order. The Withdrawal Value will normally be paid within seven days after the day a proper request is received by the Company at its Annuity Service Center. However, the Company may suspend the right of withdrawal from the Separate Account or delay payment for such withdrawal more than seven days: (1) during any period when the NYSE is closed (other than customary weekend and holiday closings); (2) when trading on the NYSE is restricted or an emergency exists as determined by the Securities and Exchange Commission so that disposal of the Separate Account's investments or determination of Accumulation Unit value is not reasonably practicable; or (3) for such other periods as the Securities and Exchange Commission, by order, may permit for protection of Owners. SYSTEMATIC WITHDRAWAL PROGRAM A Contract Owner may elect in writing on a form provided by the Company to take Systematic Withdrawals by surrendering a specified dollar amount (of at least $50) on a monthly, quarterly, semiannual, or annual basis. Unless otherwise directed by the Contract Owner, the Company will process the withdrawals by surrendering on a pro-rata basis Accumulation Units from all Portfolios in which the Contract Owner has an interest. A Withdrawal Charge may apply to Systematic Withdrawals in accordance with the considerations under "Withdrawal Charge." Each Systematic Withdrawal is subject to federal income taxes on the taxable portion. In addition, a 10% federal penalty tax may be assessed on Systematic Withdrawals if the Contract Owner is under age 59 1/2. If directed by the Contract Owner, the Company will withhold federal taxes from each Systematic Withdrawal. The Contract Owner may discontinue Systematic Withdrawals at any time by notifying the Company in writing. The Company reserves the right to discontinue offering Systematic Withdrawals upon 30 days' written notice to Contract Owners; however, any such discontinuation would not affect Systematic Withdrawal programs already commenced. The Company also reserves the right to assess a processing fee for this service. ERISA PLANS Spousal consent may be required when a married Owner seeks a distribution from a Contract that has been issued in connection with a Qualified Plan (or a Non-Qualified Plan that is subject to Title 1 of ERISA). Owners should obtain competent legal and/or tax advice. MINIMUM CONTRACT VALUE If the Contract Value is less than $500 and no Premiums have been made during the previous three full calendar years, the Company reserves the right, after 60 days' written notice to the Owner, to terminate the Contract and distribute its Withdrawal Value to the Owner. This privilege will be exercised only if the Contract Value has been reduced to less than $500 as a result of withdrawals, and state law permits. In no instance shall such termination occur if the value has fallen below $500 due to either decline in Accumulation Unit value or the imposition of fees and charges. 20 25 - -------------------------------------------------------------------------------- ANNUITY PERIOD - -------------------------------------------------------------------------------- ANNUITY DATE The Owner selects an Annuity Date (the date on which annuity payments are to begin) at the time of application. In selecting an Annuity Date, the Owner may wish to consider the applicability of a Withdrawal Charge, which is imposed upon Annuitizations which occur within one year of the Issue Date. Annuity payments will begin no later than the Latest Annuity Date. If no Annuity Date is selected, the Annuity Date will be the Latest Annuity Date. The Owner may change the Annuity Date, at any time at least seven days prior to the Annuity Date then indicated on the Company's records, by written notice to the Company at its Annuity Service Center. ANNUITY OPTIONS The Owner, or any Beneficiary who is so entitled, may elect to receive a lump sum at the end of the Accumulation Period. However, a lump sum distribution may be deemed to be a withdrawal, and at least a portion of it may be subject to applicable Contract charges and income tax. Alternatively, an Annuity Option may be elected. The Owner may, upon prior written notice to the Company, elect an Annuity Option at any time prior to the Annuity Date. A change of Annuity Option is permitted if made at least 7 days before the Annuity Date. If no other Annuity Option is elected, monthly annuity payments will be made in accordance with Option 3 below, a Life annuity with a 120-month period certain. Annuity payments will be made in monthly, quarterly, semi-annual or annual installments as selected by the Owner. However, if the amount available to apply under an Annuity Option is less than $5,000, and state law permits, the Company has the right to pay the annuity in one lump sum. In addition, if the first payment provided would be less than $50, and state law permits, the Company shall have the right to require the frequency of payments be at quarterly, semi-annual or annual intervals so as to result in an initial payment of at least $50. NO WITHDRAWALS OF CONTRACT VALUE ARE PERMITTED DURING THE ANNUITY PERIOD FOR ANY ANNUITY OPTION UNDER WHICH PAYMENTS ARE BEING MADE PURSUANT TO LIFE CONTINGENCIES. The following Annuity Options are generally available under the Contract. However, there may be restrictions in the retirement plan pursuant to which a Contract has been purchased. OPTION 1 -- LIFE INCOME An annuity payable monthly during the lifetime of the Annuitant. Under this Option, no further payments are payable after the death of the Annuitant and there is no provision for a death benefit payable to the Beneficiary. Therefore, it is possible under Option 1 for the payee to receive only one monthly annuity payment under this Contract. OPTION 2 -- JOINT AND SURVIVOR ANNUITY An annuity payable monthly while both the Annuitant and a designated second person are living. Upon the death of either person, the monthly income payable will continue during the lifetime of the survivor at either the full amount previously payable or as a percentage (either one-half or two-thirds) of the full amount, as chosen at the time of election of this Option. 21 26 Annuity payments terminate automatically and immediately upon the death of the surviving person without regard to the number or total amount of payments received. There is no minimum number of guaranteed payments and it is possible to have only one annuity payment if both the Annuitant and the designated second person die before the due date of the second payment. OPTION 3 -- LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED An annuity payable monthly during the lifetime of the Annuitant, with the guarantee that if, at the death of the Annuitant, payments have been made for fewer than the guaranteed 120 or 240 monthly periods, as elected by the Owner, the balance of the guaranteed number of payments will be made to the Beneficiary. OPTION 4 -- INCOME FOR A SPECIFIED PERIOD Under this Option, as permitted by state law, a payee can elect an annuity payable monthly for any period of years from 5 to 30. This election must be made for full 12 month periods. In the event the payee dies before the specified number of payments has been made, the Beneficiary may elect to continue receiving the scheduled payments or may alternatively elect to receive the discounted present value of any remaining guaranteed payments in a lump sum. OTHER OPTIONS At the sole discretion of the Company, other annuity options may be made available. However, to the extent that Withdrawal Charges would otherwise apply to a withdrawal or termination, the identical Withdrawal Charge may apply with respect to any additional options. 22 27 - -------------------------------------------------------------------------------- ANNUITY PAYMENTS - -------------------------------------------------------------------------------- INITIAL MONTHLY ANNUITY PAYMENT The initial annuity payment attributable to investment in a Portfolio is determined by taking the Contract Value allocated to that Portfolio, less any premium tax and any applicable Contract changes, and then applying it to the annuity table specified in the Contract. Those tables are based on a set amount per $1,000 of proceeds applied. The appropriate rate must be determined by the sex (except where, as in the case of certain Qualified Plans and other employer-sponsored retirement plans, such classification is not permitted) and age of the Annuitant and designated second person, if any. The dollars applied are then divided by 1,000 and the result multiplied by the appropriate annuity factor appearing in the table to compute the amount of the first monthly annuity payment. That amount is divided by the value of an Annuity Unit as of the Annuity Date to establish the number of Annuity Units representing each Variable Annuity payment. The number of Annuity Units determined for the first Variable Annuity payment remains constant for the second and subsequent monthly Variable Annuity payments, assuming that no reallocation of Contract Values is made. The total Variable Annuity payment is equal to the sum of the annuity payments as determined above for each Portfolio to which Contract Value is allocated on the Annuity Date. SUBSEQUENT MONTHLY PAYMENTS The amount of the second and each subsequent monthly Variable Annuity payment is determined by multiplying the number of Annuity Units, as determined in connection with the determination of the initial monthly payment, above, by the Annuity Unit Value as of the Valuation Period next preceding the date on which each annuity payment is due. ANNUITY UNIT VALUE The initial value of an Annuity Unit of each Portfolio was set when the Portfolios were established. The value may increase or decrease from one Valuation Period to the next. The annuity tables contained in the Contract are based on a 3.0% per annum assumed investment rate. If the actual net investment rate experienced by a Portfolio exceeds 3.0%, Variable Annuity payments derived from allocations to that Portfolio will increase over time. Conversely, if the actual rate is less than 3.0%, Variable Annuity payments will decrease over time. If the net investment rate equals 3.0%, the Variable Annuity payments will remain constant. If a higher assumed investment rate had been used, the initial monthly payment would be higher, but the actual net investment rate would also have to be higher in order for annuity payments to increase (or not to decrease). The payee receives the value of a fixed number of Annuity Units each month. The value of a fixed number of Annuity Units will reflect the investment performance of the Portfolios elected, and the amount of each annuity payment will vary accordingly. For each Portfolio, the value of an Annuity Unit for any Valuation Period is determined by multiplying the Annuity Unit Value for the immediately preceding Valuation Period by the Net Investment Factor for the Valuation Period for which the Annuity Unit Value is being calculated. The result is then multiplied by a second factor which offsets the effect of the assumed net investment rate of 3.0% per annum which is assumed in the annuity tables contained in the Contract. The Net Investment Factor, which reflects changes in the net asset value of the shares of the Series in which the Portfolio invests, is described in greater detail in the Statement of Additional Information. - -------------------------------------------------------------------------------- ADMINISTRATION - -------------------------------------------------------------------------------- Please direct all service inquiries to the Company at (800) 766-4683. Be sure to provide the policy number and Owner's name. STATEMENTS AND REPORTS The Company will mail to Contract Owners, at their last known address of record, any statements and reports required by applicable law or regulation. Contract Owners should therefore give the Company prompt notice of any address change. The Company will send a confirmation statement to Contract Owners each time a transaction is made affecting the Owner's Contract Value, such as making additional Premiums, transfers, exchanges or withdrawals. Quarterly statements are also mailed detailing the Contract activity during the calendar quarter. Instead of 23 28 receiving an immediate confirmation of transactions made pursuant to some types of periodic payment plans (such as a Dollar Cost Averaging Program) or salary reduction arrangement, the Contract Owner may receive confirmation of such transactions in their quarterly statements. The Contract Owner should review the information in these statements carefully. All errors or corrections must be reported to the Company immediately to assure proper crediting to the Owner's Contract. The Company will assume all transactions are accurate unless the Contract Owner notifies the Company otherwise within thirty (30) days after receipt of the statement. The Company will also send to Contract Owners such additional reports and information as may be required by Federal securities laws. MARKET TIMING AND ASSET ALLOCATION SERVICES Certain third parties offer market timing and asset allocation services in connection with the Contracts. In certain situations, the Company will honor transfer instructions from such third parties provided such market timing and asset allocation services comply with the Company's administrative systems, rules and procedures, which may be modified by the Company at any time. PLEASE NOTE that fees and charges assessed for such market timing and asset allocation services are separate and distinct from the Contract fees and charges set forth herein. The Company neither recommends nor discourages such market timing and asset allocation services. - -------------------------------------------------------------------------------- TAXES - -------------------------------------------------------------------------------- NOTE: INFORMATION CONTAINED HEREIN SHOULD NOT BE SUBSTITUTED FOR THE ADVICE OF A PERSONAL TAX ADVISER. THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACTS. GENERAL Section 72 of the Code governs taxation of annuities in general. An individual Owner is not taxed on increases in the value of a Contract until distribution occurs, either in the form of a non-annuity distribution or as annuity payments under the Annuity Option elected. For a lump sum payment received as a total surrender (total redemption), the recipient is taxed on the portion of the payment that exceeds the cost basis of the Contract. For a payment received as a withdrawal (partial redemption), Federal tax liability is determined on a last-in, first-out basis, meaning taxable income is withdrawn before the cost basis of the Contract is withdrawn. For Contracts issued in connection with Non-Qualified Plans, the cost basis is generally the Premiums, while for Contracts issued in connection with Qualified Plans there may be no cost basis. The taxable portion of the lump sum payment is taxed at ordinary income tax rates. Tax penalties may also apply. For annuity payments, a portion of each payment in excess of an exclusion amount is includable in taxable income. The exclusion amount for payments based on a fixed annuity option is determined by multiplying the payment by the ratio that the cost basis of the Contract (adjusted for any period certain or refund feature) bears to the expected return under the Contract. The exclusion amount for payments based on a variable annuity option is determined by dividing the cost basis of the Contract (adjusted for any period certain or refund guarantee) by the number of years over which the annuity is expected to be paid. Payments received after the investment in the Contract has been recovered (i.e. when the total of the excludable amounts equal the investment in the Contract) are fully taxable. The taxable portion is taxed at ordinary income tax rates. Owners, Annuitants and Beneficiaries under the Contracts should seek competent financial advice about the tax consequences of distributions under the retirement plan for which the Contracts are purchased. Generally, the amount of any payment of interest to a non-resident alien of the United States shall be subject to withholding of a tax equal to thirty (30%) percent of such amount or, if applicable, a lower treaty rate. A payment may not be subject to withholding where the recipient sufficiently establishes that such payment is effectively connected to the recipient's conduct of a trade or business in the United States and such payment is included in recipient's gross income. The Company is taxed as a life insurance company under the Code. For Federal income tax purposes, the Separate Account is not a separate entity from the Company and its operations form a part of the Company. WITHHOLDING TAX ON DISTRIBUTIONS The Code generally requires the Company (or, in some cases, a plan administrator) to withhold tax on the taxable portion of any distribution or withdrawal from a Contract. For "eligible rollover distributions" from Contracts issued under certain types of Qualified Plans, 20% of 24 29 the distribution must be withheld, unless the payee elects to have the distribution "rolled over" to another eligible plan in a direct transfer. This requirement is mandatory and cannot be waived by the Owner. Withholding on other types of distributions can be waived. An "eligible rollover distribution" is the estimated taxable portion of any amount received by a covered employee from a plan qualified under Section 401(a) or 403(a) of the Code, or from a tax sheltered annuity qualified under Section 403(b) of the Code (other than (1) annuity payments for the life (or life expectancy) of the employee, or joint lives (or joint life expectancies) of the employee and his or her designated beneficiary, or for a specified period of ten years or more; and (2) minimum distributions required to be made under the Code). Failure to "rollover" the entire amount of an eligible rollover distribution (including an amount equal to the 20% portion of the distribution that was withheld) could have adverse tax consequences, including the imposition of a penalty tax on premature withdrawals, described later in this section. Withdrawals or distributions from a Contract other than eligible rollover distributions are also subject to withholding on the estimated taxable portion of the distribution, but the Owner may elect in such cases to waive the withholding requirement. If not waived, withholding is imposed (1) for periodic payments, at the rate that would be imposed if the payments were wages, or (2) for other distributions, at the rate of 10%. If no withholding exemption certificate is in effect for the payee, the rate under (1) above is computed by treating the payee as a married individual claiming 3 withholding exemptions. DIVERSIFICATION -- SEPARATE ACCOUNT INVESTMENTS Section 817(h) of the Code imposes certain diversification standards on the underlying assets of variable annuity contracts. The Code provides that a variable annuity contract will not be treated as an annuity contract for any period (and any subsequent period) for which the investments are not adequately diversified, in accordance with regulations prescribed by the United States Treasury Department ("Treasury Department"). Disqualification of the Contract as an annuity contract would result in imposition of Federal income tax to the Owner with respect to earnings allocable to the Contract prior to the receipt of payments under the Contract. The Code contains a safe harbor provision which provides that annuity contracts such as the Contracts meet the diversification requirements if, as of the close of each calendar quarter, the underlying assets meet the diversification standards for a regulated investment company, and no more than 55% of the total assets consist of cash, cash items, U.S. government securities and securities of other regulated investment companies. The Treasury Department has issued Regulations establishing diversification requirements for the investment portfolios underlying variable contracts such as the Contract. The Regulations amplify the diversification requirements for variable contracts set forth in the Code and provide an alternative to the safe harbor provision described above. Under the Regulations, an investment portfolio will be deemed adequately diversified if (1) no more than 55% of the value of the total assets of the portfolio is represented by any one investment; (2) no more than 70% of the value of the total assets of the portfolio is represented by any two investments; (3) no more than 80% of the value of the total assets of the portfolio is represented by any three investments; and (4) no more than 90% of the value of the total assets of the portfolio is represented by any four investments. The Company intends that each Series of the Underlying Funds will be managed by its respective investment adviser in such a manner as to comply with these diversification requirements. The Treasury Department has indicated that the diversification Regulations do not provide guidance regarding the circumstances in which Contract Owner control of the investments of the Separate Account will cause the Contract Owner to be treated as the owner of the assets of the Separate Account, thereby resulting in the loss of favorable tax treatment for the Contract. At this time it cannot be determined whether additional guidance will be provided and what standards may be contained in such guidance. The amount of Contract Owner control which may be exercised under the Contract is different in some respects from the situations addressed in published rulings issued by the Internal Revenue Service in which it was held that the policy owner was not the owner of the assets of the separate account. It is unknown whether these differences, such as the Contract Owner's ability to transfer among investment choices or the number and type of investment choices available, would cause the Contract Owner to be considered as the owner of the assets of the Separate Account resulting in the imposition of federal income tax to the Contract Owner with respect to earnings allocable to the Contract prior to receipt of payments under the Contract. In the event any forthcoming guidance or ruling is considered to set forth a new position, such guidance or ruling will generally be applied only prospectively. 25 30 However, if such ruling or guidance was not considered to set forth a new position, it may be applied retroactively resulting in the Contract Owner being retroactively determined to be the owner of the assets of the Separate Account. Due to the uncertainty in this area, the Company reserves the right to modify the Contract in any attempt to maintain favorable tax treatment. MULTIPLE CONTRACTS The Code provides that multiple annuity contracts which are issued within a calendar year to the same contract owner by one company or its affiliates are treated as one annuity contract for purposes of determining the tax consequences of any distribution. Such treatment may result in adverse tax consequences including more rapid taxation of the distributed amounts from such multiple contracts. The Company believes that Congress intended to affect the purchase of multiple deferred annuity contracts which may have been purchased to avoid withdrawal income tax treatment. Owners should consult a tax adviser prior to purchasing more than one annuity contract in any calendar year. CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS Under Section 72(u) of the Code, the investment earnings on premiums for Contracts will be taxed currently to the Contract Owner if the Owner is a non-natural person, e.g., a corporation or certain other entities. Such Contracts generally will not be treated as annuities for federal income tax purposes. However, this treatment is not applied to Contracts held by a trust or other entity as an agent for a natural person nor to Contracts held by Qualified Plans. Purchasers should consult their own tax counsel or other tax adviser before purchasing a Contract to be owned by a non-qualified person. TAX TREATMENT OF ASSIGNMENTS An assignment of a Contract may have tax consequences, and may also be prohibited by ERISA in some circumstances. Owners should, therefore, consult competent legal advisers should they wish to assign their Contracts. QUALIFIED PLANS The Contracts offered by this Prospectus are designed to be suitable for use under various types of Qualified Plans. Taxation of Owners in each Qualified Plan varies with the type of plan and terms and conditions of each specific plan. Owners, Annuitants and Beneficiaries are cautioned that benefits under a Qualified Plan may be subject to the terms and conditions of the plan, regardless of the terms and conditions of the contracts issued to fund the plan. For a more detailed description of the various types of plans under which the Contracts may be purchased, see the Statement of Additional Information. TAX TREATMENT OF WITHDRAWALS QUALIFIED PLANS Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of any early distribution from qualified retirement plans, including contracts issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and Profit Sharing Plans), 403(b) (tax-sheltered annuities) and 408(b) (IRAs). The tax penalty will not apply to the following distributions: (1) if distribution is made on or after the date on which the Owner or Annuitant (as applicable) reaches age 59 1/2; (2) distributions following the death or disability of the Owner or Annuitant (as applicable) (for this purpose "disability" is defined in Section 72(m)(7) of the Code); (3) distributions that are part of substantially equal periodic payments made not less frequently than annually for the life (or life expectancy) of the Owner or Annuitant (as applicable) or the joint lives (or joint life expectancies) of such Owner or Annuitant (as applicable) and his or her designated beneficiary; (4) distributions to an Owner or Annuitant (as applicable) who has separated from service after he has attained age 55; (5) distributions made to the Owner or Annuitant (as applicable) to the extent such distributions do not exceed the amount allowable as a deduction under Code Section 213 to the Owner or Annuitant (as applicable) for amounts paid during the taxable year for medical care; and (6) distributions made to an alternate payee pursuant to a qualified domestic relations order. The exceptions stated in items (4), (5) and (6) above do not apply in the case of an IRA. Limitations imposed by the Code on withdrawals from tax-sheltered annuities are described above under "Purchases, Withdrawals and Contract Value -- Withdrawals (Redemptions)." The taxable portion of a withdrawal or distribution from Contracts issued under certain types of plans may, under some circumstances, be "rolled over" into another eligible plan so as to continue to defer income tax on the taxable portion. Effective January 1, 1993, such treatment is available for any "eligible rollover distribution" made by certain types of plans (as described above under "Taxes -- Withholding Tax on Distributions") that is transferred 26 31 within 60 days of receipt into a plan qualified under section 401(a) or 403(a) of the Code, a tax-sheltered annuity, an IRA, or an individual retirement account described in section 408(a) of the Code. Plans making such eligible rollover distributions are also required, with some exceptions specified in the Code, to provide for a direct transfer of the distribution to the transferee plan designated by the recipient. Amounts received from IRAs may also be rolled over into other IRAs, individual retirements accounts or certain other plans, subject to limitations set forth in the Code. NON-QUALIFIED PLANS Section 72 of the Code governs treatment of distributions from annuity contracts. It provides that if the Contract Value exceeds the aggregate Premiums made, any amount withdrawn not in form of an annuity payment will be treated as coming first from the earnings and then, only after the income portion is exhausted, as coming from the principal. Withdrawn earnings are included in a taxpayer's gross income. Section 72 further provides that a 10% penalty will apply to the income portion of any distribution. The penalty is not imposed on amounts received: (1) after the taxpayer reaches 59 1/2; (2) upon the death of the Owner; (3) if the taxpayer is totally disabled as defined in Section 72(m)(7); (4) in a series of substantially equal periodic payments made at least annually for the life of the taxpayer or for the joint lives of the taxpayer and his Beneficiary; (5) under an immediate annuity; or (6) which are allocable to premium payments made prior to August 14, 1982. 27 32 - -------------------------------------------------------------------------------- ADVERTISING - -------------------------------------------------------------------------------- The Company may from time to time advertise several types of historical performance for the Portfolios of the Separate Account. The Company may advertise for the Portfolios standardized "average annual total return", calculated in a manner prescribed by the Securities and Exchange Commission, and non-standardized "total return". "Average annual total return" will show the percentage rate of return of a hypothetical initial investment of $1,000 for at least the most recent one, five and ten year period, or for a period covering the time the mutual fund held in the Portfolio has been in existence, if the Portfolio has not been in existence for one of the prescribed periods. This calculation reflects the deduction of all applicable charges made to the Contracts except for premium taxes, which may be imposed by certain states. Nonstandardized total return may be for periods other than those required to be presented or may otherwise differ from standardized total return. If a Series or mutual fund has been in existence for a longer period of time than the corresponding Portfolio, the standardized average annual total return and non-standardized total return quotations will show the investment performance such Series or mutual fund would have achieved (reduced by the applicable charges) had they been held in a Portfolio for the period quoted. A "yield" may also be advertised for a Portfolio (other than the PPM America/JNL Money Market Portfolio). "Yield" refers to the annualized income generated by an investment in the Portfolio over a specified thirty-day period. The "yield" is calculated by assuming that the income generated by the investment during that thirty-day period is generated each thirty-day period over a twelve-month period and is shown as a percentage of the investment. A "yield" and "effective yield" may also be advertised for the PPM America/JNL Money Market Portfolio. "Yield" is a measure of the net dividend and interest income earned over a specific seven-day period (which period will be stated in the advertisement) expressed as a percentage of the offering price of the Portfolio's units. Yield is an annualized figure, which means that it is assumed that the Portfolio generates the same level of net income over a 52-week period. The "effective yield" is calculated under rules prescribed by the Securities and Exchange Commission and assumes a weekly reinvestment of income earned. The effective yield will be slightly higher than the yield due to this compounding effect. The Company may also from time to time advertise the performance of the Portfolios of the Separate Account relative to the performance of variable annuities or mutual funds of other companies with similar or different objectives, or the investment industry as a whole. Other investments to which the Portfolios may be compared include, but are not limited to: precious metals; real estate; stocks and bonds; closed-end funds; CD's; bank money market deposit accounts and passbook savings; and the Consumer Price Index. The Portfolios of the Separate Account may also be compared to certain market indexes, which may include, but are not limited to: S&P 500; Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S. Treasury Note Index; Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and Dow Jones Industrial Average. Normally these rankings and ratings are published by independent tracking services and publications of general interest including, but not limited to: Lipper Analytical Services, Inc., CDA Technologies, Morningstar, Donoghue's, Weisenberger; magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine, Financial World, Consumer Reports, Business Week, Time, Newsweek, U.S. News & World Report, National Underwriter; rating services such as LIMRA, Value, Best's Agent Guide, Western Annuity Guide, Comparative Annuity Reports; and other publications such as the Wall Street Journal, Barron's, Investor's Daily, and Standard & Poor's Outlook. In addition, Variable Annuity Research & Data Service (The VARDS Report) is an independent rating service that ranks over 500 variable annuity funds based upon total return performance. These rating services and publications rank the performance of the Series against all funds over specified periods and against funds in specified categories. The rankings may or may not include the effects of sales or other charges. The Company is also ranked and rated by independent financial rating services, among which are Standard & Poor's, A. M. Best Company and Duff & Phelps. The purpose of these ratings is to reflect the financial strength or claims-paying ability of the Company. The ratings are not intended to reflect the investment experience or financial strength of the Separate Account. The 28 33 Company may advertise these ratings from time to time. In addition, the Company may include in certain advertisements, endorsements in the form of a list of organizations, individuals or other parties which recommend the Company or the Contracts. Furthermore, the Company may occasionally include in advertisements comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets, or discussions of alternative investment vehicles and general economic conditions. All performance information and comparative material advertised by the Company is historical in nature and is not intended to represent or guarantee future results. A CONTRACT OWNER'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS THAN ORIGINAL COST. - -------------------------------------------------------------------------------- LEGAL PROCEEDINGS - -------------------------------------------------------------------------------- There are no material legal proceedings, other than ordinary routine litigation incidental to the business to which the Company and the Separate Account are parties or to which any of their property is the subject. The General Distributor, Jackson National Financial Services, Inc., is not engaged in any litigation of any material nature. 29 34 - -------------------------------------------------------------------------------- TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION - --------------------------------------------------------------------------------
PAGE ---- General Information and History................................................................. 2 Services........................................................................................ 2 Purchase of Securities Being Offered............................................................ 2 Underwriters.................................................................................... 2 Calculation of Performance...................................................................... 2 Additional Tax Information...................................................................... 6 Annuity Payments; Net Investment Factor......................................................... 8 Financial Statements............................................................................ 10 - -------------------------------------------------------------------------------------------------------
30 35 - -------------------------------------------------------------------------------- APPENDIX A - -------------------------------------------------------------------------------- GENERAL ACCOUNT Because of exemptive and exclusionary provisions, interests in the General Account have not been registered under the Securities Act of 1933 ("1933 Act"), nor is the General Account registered as an investment company under the Investment Company Act of 1940 ("1940 Act"). Accordingly, neither the General Account nor any interest therein is generally subject to the provisions of the 1933 or 1940 Acts, and the staff of the Securities and Exchange Commission, typically, does not review the disclosures in a prospectus which relate to the General Account portion. Disclosures regarding the General Account portion of the Contract may be subject to certain generally applicable provisions of the Federal securities laws relating to accuracy and completeness of statements made in prospectuses. Investors should review Jackson National Life Insurance Company's Contract for a full description of the General Account portion of the Contract. Any questions regarding these Contracts should be directed to the Company's Annuity Service Center. A-1 36 [This Page Intentionally Left Blank] 37 - -------------------------------------------------------------------------------- APPENDIX B - -------------------------------------------------------------------------------- Below are the investment objectives of each Series of the Underlying Funds available through the Separate Account. There can be no assurance that any Series will achieve its investment objectives. JNL SERIES TRUST The JNL Series Trust (the "Trust") is an open-end management investment company created under the laws of Massachusetts, by a Declaration of Trust, dated June 1, 1994. Shares of the Trust will be sold primarily to life insurance companies to fund the benefits under variable insurance or annuity policies. Jackson National Financial Services, Inc. ("JNFSI"), a wholly owned subsidiary of Jackson National Life Insurance Company, serves as investment adviser for all the Series of the Trust. Janus Capital Corporation ("Janus Capital") serves as sub-adviser for JNL Aggressive Growth, JNL Capital Growth and JNL Global Equities Series; Fred Alger Management, Inc. ("Alger Management") serves as sub-adviser for the JNL/Alger Growth Series; Phoenix Investment Counsel, Inc. ("PIC") serves as sub-adviser for the JNL/Phoenix Investment Counsel Balanced and JNL/Phoenix Investment Counsel Growth Series; PPM America, Inc. ("PPM") serves as sub-adviser for the PPM America/JNL High Yield Bond, PPM America/JNL Money Market and PPM America/JNL Value Equity Series; Salomon Brothers Asset Management Inc ("Salomon Brothers") serves as sub-adviser for the Salomon Brothers/JNL Global Bond and Salomon Brothers/JNL U.S. Government & Quality Bond Series; T. Rowe Price Associates, Inc. ("T. Rowe") serves as sub-adviser for the T. Rowe Price/JNL Established Growth and T. Rowe Price/JNL Mid-Cap Growth Series; and Rowe Price-Fleming International, Inc. ("Price-Fleming") serves as sub-adviser for the T. Rowe Price/JNL International Equity Investment Series. JNL AGGRESSIVE GROWTH SERIES is a non-diversified Series that seeks as its investment objective long-term growth of capital by investing primarily in common stocks of issuers of any size, including larger, well-established companies and smaller, emerging growth companies. JNL CAPITAL GROWTH SERIES is a non-diversified Series that seeks as its investment objective long-term growth of capital by emphasizing investments in common stocks of companies with an average market capitalization between $1 billion and $5 billion. Although the Series expects to emphasize such securities, it may also invest in smaller or larger companies. JNL GLOBAL EQUITIES SERIES seeks as its investment objective long-term growth of capital by investing primarily in common stocks of foreign and domestic issuers of any size. This Series normally invests in issuers from at least five different countries including the United States. JNL/ALGER GROWTH SERIES seeks as its investment objective long-term capital appreciation by investing in a diversified, actively managed portfolio of equity securities, primarily of companies with total market capitalization of $1 billion or greater. JNL/PHOENIX INVESTMENT COUNSEL BALANCED SERIES seeks as its investment objective reasonable income, long-term capital growth and preservation of capital. It is intended that this Series will invest in common stocks and fixed income securities, with emphasis on income-producing securities which appear to have some potential for capital enhancement. JNL/PHOENIX INVESTMENT COUNSEL GROWTH SERIES seeks as its investment objective long-term appreciation of capital. Since income is not an objective, any income generated by the investment of this Series' assets will be incidental to its objective. It is intended that this Series will invest primarily in the common stocks of companies believed by the sub-adviser to have appreciation potential. PPM AMERICA/JNL HIGH YIELD BOND SERIES seeks as its investment objective a high level of current income; its secondary investment objective is capital appreciation by investing in fixed-income securities, with emphasis on higher-yielding, higher-risk, lower-rated or unrated corporate bonds. PPM AMERICA/JNL MONEY MARKET SERIES seeks as its investment objective as high a level of current income as is consistent with the preservation of capital and maintenance of liquidity by investing in high quality, short-term money market instruments. PPM AMERICA/JNL VALUE EQUITY SERIES seeks as its investment objective a high total return by investing in common stocks which the sub-adviser believes to be undervalued relative to the stock market in general at the time of purchase. B-1 38 SALOMON BROTHERS/JNL GLOBAL BOND SERIES seeks as its investment objective a high level of current income. As a secondary objective, the Series will seek capital appreciation. The Series seeks to achieve its objectives by investing in a globally diverse portfolio of fixed income investments and by giving the sub-adviser broad discretion to deploy the Series assets among certain segments of the fixed income market that the sub-adviser believes will best contribute to achievement of the Series' investment objectives. In pursuing its investment objectives, the Series reserves the right to invest predominantly in securities rated in medium or lower rated categories or as determined by the sub-adviser to be of comparable quality. Although the Series has the ability to invest up to 100% of the Series' assets in lower-rated securities, the Series does not anticipate investing in excess of 75% of the Series' assets in such securities. SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND SERIES seeks as its investment objective a high level of current income, by investing primarily in debt obligations and mortgage-backed securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities including collateralized mortgage obligations backed by such securities. The Series may also invest a portion of its assets in investment-grade bonds. T. ROWE PRICE/JNL ESTABLISHED GROWTH SERIES seeks as its investment objective long-term growth of capital and increasing dividend income through investment primarily in common stocks of well-established growth companies. T. ROWE PRICE/JNL INTERNATIONAL EQUITY INVESTMENT SERIES seeks as its investment objective long-term growth of capital through investments primarily in common stocks of established, non-U.S. companies. T. ROWE PRICE/JNL MID-CAP GROWTH SERIES seeks as its investment objective long-term growth of capital by investing primarily in the common stock of companies with medium-sized market capitalizations ("mid-cap") and the potential for above average growth. B-2 39 - -------------------------------------------------------------------------------- APPENDIX C - -------------------------------------------------------------------------------- EXAMPLES OF CALCULATION OF WITHDRAWAL CHARGE EXAMPLE 1 -- Assume a single premium of $50,000 is paid into the contract, no transfers are made, no additional premiums are paid and there are no partial withdrawals. The table below illustrates three examples of the Withdrawal Charges that would be imposed if the contract is completely surrendered, based on hypothetical contract values.
- --------------------------------------------------------- WITHDRAWAL COMPLETE HYPOTHETICAL CHARGES CONTRACT CONTRACT PREMIUMS --------------- YEARS VALUE LIQUIDATED PERCENT AMOUNT - --------------------------------------------------------- 1 $ 55,000 $ 50,000(1) 6% $3,000 4 45,000 50,000(2) 3% 1,500 7 70,000 50,000 0%(3) 0 - ---------------------------------------------------------
NOTES: (1) Earnings are withdrawn free of Withdrawal Charge. (2) On full surrender, premium payments are fully liquidated, even if the contract value is less than unliquidated premiums. (3) There is no Withdrawal Charge on any premiums liquidated that have been in the Contract for at least seven years. - -------------------------------------------------------------------------------- EXAMPLE 2 -- Assume a single premium of $50,000 is paid into the contract, no transfers are made, no additional premiums are paid and that there are a series of four partial withdrawals of $2,000, $7,000, $4,000 and $10,000 made mid-year in the second, third, fourth and seventh contract years. The table below illustrates the Withdrawal Charges that would be imposed based on hypothetical contract values.
- ------------------------------------------------------------------------------------------------------------------------------ COMPLETE HYPOTHETICAL PARTIAL FREE WITHDRAWAL CHARGE CONTRACT CONTRACT UNLIQUIDATED EARNINGS(6) WITHDRAWAL WITHDRAWAL PREMIUMS ------------------ YEARS VALUE PREMIUM (LOSS) REQUESTED AMOUNT LIQUIDATED PERCENT AMOUNT - ------------------------------------------------------------------------------------------------------------------------------ 2 $ 65,000 $ 50,000 $15,000 $ 2,000 $ 15,000(1) $ 0 5% $ 0(2) 3 54,000 50,000 4,000 7,000 5,000(3) 2,000(4) 4% 80(5) 4 47,000 48,000 (1,000) 4,000 4,800 0 3% 0(7) 7 50,000 48,000 2,000 10,000 2,000(8) 8,000 0%(9) 0 - ------------------------------------------------------------------------------------------------------------------------------
NOTES: (1) Earnings exceed 10% of unliquidated premium, accordingly there was no Additional Free Withdrawal amount. (2) Earnings could be withdrawn free of Withdrawal Charges. (3) The Additional Free Withdrawal amount is 10% of unliquidated premium ($5,000) less earnings ($4,000), giving a total Free Withdrawal amount of $5,000. (4) The Additional Free Withdrawal amount is treated as an advance of earnings, accordingly only $2,000 is liquidated. (5) The Withdrawal Charge is liquidated premium multiplied by the Withdrawal Charge. (6) Earnings is the difference between the Contract Value and unliquidated premium. (7) If the contract was fully surrendered shortly after the partial withdrawal, then the Withdrawal Charge would be 3% of $4,800 ($144). (8) There were no premium payments made in the last seven years, accordingly there would be no Additional Free Withdrawal amount. (9) There is no Withdrawal Charge on premium payments made over seven years ago. C-1 40 STATEMENT OF ADDITIONAL INFORMATION MAY 1, 1996 INDIVIDUAL DEFERRED FIXED AND VARIABLE ANNUITY CONTRACTS ISSUED BY THE JACKSON NATIONAL SEPARATE ACCOUNT - I OF JACKSON NATIONAL LIFE INSURANCE COMPANY This Statement of Additional Information is not a prospectus. It contains information in addition to and more detailed than set forth in the Prospectus and should be read in conjunction with the Prospectus dated May 1, 1996. The Prospectus may be obtained from Jackson National Life Insurance Company by writing P. O. Box 30389 Lansing, MI 48909-7889, or calling 1-800-766-4683. TABLE OF CONTENTS
PAGE General Information and History 2 Services 2 Purchase of Securities Being Offered 2 Underwriters 2 Calculation of Performance 2 Additional Tax Information 6 Annuity Payments; Net Investment Factor 8 Financial Statements 10
GENERAL INFORMATION AND HISTORY The Jackson National Separate Account - I ("Separate Account") is a separate investment account of Jackson National Life Insurance Company ("Company"). The Company is a wholly-owned subsidiary of Brooke Life Insurance Company, and is ultimately a wholly-owned subsidiary of Prudential Corporation, plc, London, England. SERVICES The Company, which has responsibility for administration of the Contracts and the Separate Account, maintains records of the name, address, taxpayer identification number, and other pertinent information for each Contract Owner and the number and type of Contract issued to each Contract Owner, and records with respect to the Contract Value of each Contract. The Custodian of the assets of the Separate Account is the Company. The Company maintains a record of all purchases and redemptions of shares of the underlying mutual funds. 1 41 Price Waterhouse LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, audits and reports on the Company's financial statements, including the financial statements of the Separate Account, and perform other professional accounting, auditing and advisory services when engaged to do so by the Company. PURCHASE OF SECURITIES BEING OFFERED The Contracts will be sold by licensed insurance agents in the states where the Contracts may be lawfully sold. Such agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc., ("NASD"). UNDERWRITERS The Contracts, which are offered continuously, are distributed by Jackson National Financial Services, Inc. ("JNFSI"), 5901 Executive Drive, Lansing, Michigan 48911, a subsidiary of the Company. CALCULATION OF PERFORMANCE All performance advertising (except for performance advertising pertaining to the PPM America/JNL Money Market Portfolio) will include quotations of standardized total return, calculated in accordance with standard methods prescribed by rules of the Securities and Exchange Commission, to facilitate comparison with standardized total return advertised by other variable annuity separate accounts. Standardized total return advertised for a specific period is found by first taking a hypothetical $1,000 investment in each of the Portfolios' units on the first day of the period at the offering price, which is the Accumulation Unit value per unit ("initial investment") and computing the ending redeemable value ("redeemable value") of that investment at the end of the period. The redeemable value is then divided by the initial investment which is then expressed as a percentage, carried to at least the nearest hundredth of a percent. Standardized total return reflects the deduction of a Contract Maintenance Charge and a Mortality 2 42 and Expense Risk and Administration Charge. The redeemable value also reflects the effect of any applicable Withdrawal Charge that may be imposed at the end of the period. No deduction is made for premium taxes which may be assessed by certain states. The standardized total return for each Portfolio (except the PPM America/JNL Money Market Portfolio) for the period from commencement of operations of the corresponding Series of the JNL Series Trust to December 31, 1995, is as follows: JNL Aggressive Growth Portfolio* 15.62% JNL Capital Growth Portfolio* 25.07% JNL Global Equities Portfolio* 20.79% JNL/Alger Growth Portfolio** -9.39% JNL/Phoenix Investment Counsel Balanced Portfolio* 7.13% JNL/Phoenix Investment Counsel Growth Portfolio* 19.02% PPM America/JNL High Yield Bond Portfolio* -1.82% PPM America/JNL Value Equity Portfolio* 14.42% Salomon Brothers/JNL Global Bond Portfolio* -0.97% Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio* -1.13% T. Rowe Price/JNL Established Growth Portfolio* 13.09% T. Rowe Price/JNL International Equity Investment Portfolio* -1.05% T. Rowe Price/JNL Mid-Cap Growth Portfolio* 20.60%
* Corresponding Series of JNL Series Trust commenced operations on May 15, 1995. ** Corresponding Series of JNL Series Trust commenced operations on October 16, 1995. Nonstandardized total return may also be advertised. Nonstandardized total return may be for periods other than those required to be presented or may otherwise differ from standardized total return. Because the Contract is designed for long term investment, nonstandardized total return that does not reflect the deduction of the Withdrawal Charge may be advertised. Reflecting the deduction of the Withdrawal Charge decreases the level of performance advertised. Nonstandardized total return may also assume a larger initial investment which more closely approximates the size of a typical Contract. The nonstandardized total return for each Portfolio (except the PPM America/JNL Money Market Portfolio), calculated in a manner similar to standardized total return but assuming a hypothetical initial investment of $10,000, deducting a maximum $35 Contract Maintenance Charge, and without deducting the Withdrawal Charge, for the period from 3 43 commencement of operations of the Corresponding Series of the JNL Series Trust to December 31, 1995, is as follows: JNL Aggressive Growth Portfolio* 22.92% JNL Capital Growth Portfolio* 32.31% JNL Global Equities Portfolio* 28.05% JNL/Alger Growth Portfolio** -2.26% JNL/Phoenix Investment Counsel Balanced Portfolio* 14.42% JNL/Phoenix Investment Counsel Growth Portfolio* 26.19% PPM America/JNL High Yield Bond Portfolio* 5.27% PPM America/JNL Value Equity Portfolio* 21.54% Salomon Brothers/JNL Global Bond Portfolio* 6.16% Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio* 5.96% T. Rowe Price/JNL Established Growth Portfolio* 20.40% T. Rowe Price/JNL International Equity Investment Portfolio* 6.21% T. Rowe Price/JNL Mid-Cap Growth Portfolio* 28.01%
* Corresponding Series of the JNL Series Trust commenced operations on May 15, 1995. ** Corresponding Series of the JNL Series Trust commenced operations on October 16, 1995. The standardized total return quotations will be current to the last day of the calendar quarter preceding the date on which an advertisement is submitted for publication. Both the standardized total return and the nonstandardized total return will be based on the rolling calendar quarters and will cover at least periods of one, five, and ten years, or a period covering the time the Portfolio has been in existence, if it has not been in existence for one of the prescribed periods. If a Series has been in existence for longer than the corresponding Portfolio, the standardized total return and nonstandardized total return quotations will show the investment performance such Series would have achieved (reduced by the applicable charges) had they been held in a Portfolio for the period quoted. Quotations of standardized total return and nonstandardized total return are based upon historical earnings and will fluctuate. Any quotation of performance, therefore, should not be considered a guarantee of future performance. Factors affecting the performance of a Series include general market conditions, operating expenses and investment management. A Contract Owner's withdrawal value upon surrender of a Contract may be more or less than original cost. The current annualized yield for 30-day periods may also be advertised for the JNL/Phoenix Investment Counsel Balanced Portfolio, the PPM America/JNL High Yield Bond Portfolio, the Salomon Brothers/JNL Global Bond Portfolio and the Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio. The annualized yield of a Portfolio refers to the income generated by the Portfolio over a specified 30-day period. Because this yield is annualized, the yield generated by a Portfolio during the 30-day period is assumed to be generated each 30-day period. The yield is computed by dividing the net investment income per accumulation unit earned during the period by the price per unit on the last day of the period, according to the following formula: 4 44 6 YIELD = 2[ ((a - b) + 1) - 1] ---------- cd Where: a = net investment income earned during the period by the Series. b = expenses for the Portfolio accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period. d = the maximum offering price per share on the last day of the period. Net investment income will be determined in accordance with rules established by the Securities and Exchange Commission. Accrued expenses will include all recurring fees that are charged to all Contracts. The yield for the 30-day period ended December 31, 1995, for each of the above-referenced Portfolios is as follows: JNL/Phoenix Investment Counsel Balanced Portfolio 0.83% PPM America/JNL High Yield Bond Portfolio 7.61% Salomon Brothers/JNL Global Bond Portfolio 7.81% Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio 4.87%
Because of the charges and deductions imposed by the Separate Account, the yield for the Portfolio will be lower than the yield for the corresponding Series. The yield on amounts held in the Portfolios normally will fluctuate over time. Therefore, the disclosed yield for any given period is not an indication or representation of future yields or rates of return. A Portfolio's actual yield will be affected by the types and quality of portfolio securities held by the Series and its operating expenses. Any current yield quotations of the PPM America/JNL Money Market Portfolio, subject to Rule 482 of the Securities Act of 1933, shall consist of a seven calendar day historical yield, carried at least to the nearest hundredth of a percent. The yield shall be calculated by determining the net change, exclusive of capital changes, in the value of a hypothetical pre-existing account having a balance of one accumulation unit at the beginning of the base period, subtracting a hypothetical charge reflecting deductions from Contract Owner Accounts, and dividing the net change in account value by the value of the account at the beginning of the 5 45 period to obtain a base period return and multiplying the base period return by (365/7). The PPM America/JNL Money Market Portfolio's yield and effective yield is computed similarly but includes the effect of assumed compounding on an annualized basis of the current yield quotations of the Portfolio. The PPM America/JNL Money Market Portfolio's yield and effective yield for the seven day period ended December 31, 1995 were 2.91% and 2.95%, respectively. The PPM America/JNL Money Market Portfolio's yield and effective yield will fluctuate daily. Actual yields will depend on factors such as the type of instruments in the Series' portfolio, portfolio quality and average maturity, changes in interest rates, and the Series' expenses. Although the corresponding Portfolio determines its yield on the basis of a seven calendar day period, it may use a different time period on occasion. The yield quotes may reflect the expense limitations described in the Series' Prospectus or Statement of Additional Information. There is no assurance that the yields quoted on any given occasion will be maintained for any period of time and there is no guarantee that the net asset values will remain constant. It should be noted that neither a Contract Owner's investment in the PPM America/JNL Money Market Portfolio nor that Portfolio's investment in the PPM America/JNL Money Market Series, is guaranteed or insured. Yield of other money market funds may not be comparable if a different base or another method of calculation is used. ADDITIONAL TAX INFORMATION The following are general descriptions of the types of Qualified Plans with which the Contracts may be used. Such descriptions are not exhaustive and are for general information purposes only. The tax rules regarding Qualified Plans are very complex and will have differing applications depending on individual facts and circumstances. Each purchaser should obtain competent tax advice prior to purchasing a Contract issued under a Qualified Plan. Contracts issued pursuant to Qualified Plans include special provisions restricting Contract provisions that may otherwise be available and described in this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are not transferable except upon surrender or annuitization. Various penalty and excise taxes may apply to contributions or distributions made in violation of applicable limitations. Furthermore, certain withdrawal penalties and restrictions may apply to surrenders from Qualified Plan Contracts. (A) H.R. 10 PLANS Section 401 of the Code permits self-employed individuals to establish Qualified Plans for themselves and their employees, commonly referred to as "H.R. 10" or "Keogh" Plans. Contributions made to the Plan for the benefit of the employees will not be included in the gross income of the employees until distributed from the Plan. The tax consequences to Owners may vary depending upon the particular Plan design. However, the Code places limitations and restrictions on all Plans on such items as: amounts of 6 46 allowable contributions; form, manner and timing of distributions; vesting and non-forfeitability of interests; nondiscrimination in eligibility and participation; and the tax treatment of distributions, withdrawals and surrenders. Purchasers of Contracts for use with an H.R. 10 Plan should obtain competent tax advice as to the tax treatment and suitability of such an investment. (B) TAX-SHELTERED ANNUITIES Section 403(b) of the Code permits the purchase of "tax-sheltered annuities" by public schools and certain charitable, educational and scientific organizations described in Section 501(c) (3) of the Code. These qualifying employers may make contributions to the Contracts for the benefit of their employees. Such contributions are not included in the gross income of the employee until the employee receives distributions from the Contract. The amount of contributions to the tax-sheltered annuity is limited to certain maximums imposed by the Code. Furthermore, the Code sets forth additional restrictions governing such items as transferability, distributions, non-discrimination and withdrawals. Any employee should obtain competent tax advice as to the tax treatment and suitability of such an investment. (C) INDIVIDUAL RETIREMENT ANNUITIES Section 408(b) of the Code permits eligible individuals to contribute to an individual retirement program known as an "Individual Retirement Annuity" ("IRA"). Under applicable limitations, certain amounts may be contributed to an IRA which will be deductible from the individual's gross income. These IRAs are subject to limitations on eligibility, contributions, transferability and distributions. Sales of Contracts for use with IRAs are subject to special requirements imposed by the Code, including the requirement that certain informational disclosure be given to persons desiring to establish an IRA. Purchasers of Contracts to be qualified as IRAs should obtain competent tax advice as to the tax treatment and suitability of such an investment. (D) CORPORATE PENSION AND PROFIT-SHARING PLANS Sections 401(a) and 401(k) of the Code permit corporate employers to establish various types of retirement plans for employees. These retirement plans may permit the purchase of the Contracts to provide benefits under the plan. Contributions to the plan for the benefit of employees will not be included in the gross income of the employee until distributed from the plan. The tax consequences to Owners may vary depending upon the particular plan design. However, the Code places limitations on all plans on such items as amount of allowable contributions; form, manner and timing of distributions; vesting and non-forfeitability of interests; nondiscrimination in eligibility and participation; and the tax treatment of distributions, withdrawals and surrenders. Purchasers of Contracts 7 47 for use with corporate pension or profit sharing plans should obtain competent tax advice as to the tax treatment and suitability of such an investment. (E) NON-QUALIFIED DEFERRED COMPENSATION PLANS -- SECTION 457 Under Section 457 of the Code, governmental and certain other tax-exempt employers may establish, for the benefit of their employees, deferred compensation plans which may invest in annuity contracts. The Code, as in the case of qualified plans, establishes limitations and restrictions on eligibility, contributions and distributions. Under these plans, contributions made for the benefit of the employees will not be included in the employees' gross income until distributed from the plan. However, under a 457 plan all the plan assets shall remain solely the property of the employer, subject only to the claims of the employer's general creditor until such time as made available to an Owner or a Beneficiary. ANNUITY PAYMENTS; NET INVESTMENT FACTOR See "Annuity Payments" on page 20 of the Prospectus. The Net Investment Factor is an index applied to measure the net investment performance of a Portfolio from one Valuation Date to the next. Since the Net Investment Factor may be greater or less than or equal to one, and the factor that offsets the 3% investment rate assumed is slightly less than one, the value of an Annuity Unit (which changes with the product of that factor) and the net investment may increase, decrease or remain the same. The Net Investment Factor for any Portfolio for any Valuation Period is determined by dividing (a) by (b) and then subtracting (c) from the result where: (a) is the net result of: (1) the net asset value of a Series share held in the Portfolio determined as of the Valuation Date at the end of the Valuation Period, plus (2) the per share amount of any dividend or other distribution declared by the Series if the "ex-dividend" date occurs during the Valuation Period, plus or minus (3) a per share credit or charge with respect to any taxes paid or reserved for by the Company during the Valuation Period which are determined by the Company to be attributable to the operation of the Portfolio (no federal income taxes are applicable under present law ); 8 48 (b) is the net asset value of the Series share held in the Portfolio determined as of the Valuation Date at the end of the preceding Valuation Period; and (c) is the asset charge factor determined by the Company for the Valuation Period to reflect the charges for assuming the mortality and expense risks and the administration charge. 9 49 JACKSON NATIONAL SEPARATE ACCOUNT - I FINANCIAL STATEMENTS DECEMBER 31, 1995 50 REPORT OF INDEPENDENT ACCOUNTANTS TO JACKSON NATIONAL LIFE INSURANCE COMPANY AND CONTRACT OWNERS OF JACKSON NATIONAL SEPARATE ACCOUNT - I IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING THE SCHEDULE OF INVESTMENTS, AND THE RELATED STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS PRESENT FAIRLY, IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF JACKSON NATIONAL SEPARATE ACCOUNT - I AND THE JNL AGGRESSIVE GROWTH DIVISION, JNL CAPITAL GROWTH DIVISION, JNL GLOBAL EQUITIES DIVISION, JNL/ALGER GROWTH DIVISION, JNL/PHOENIX INVESTMENT COUNSEL BALANCED DIVISION, JNL/PHOENIX INVESTMENT COUNSEL GROWTH DIVISION, PPM AMERICA/JNL HIGH YIELD BOND DIVISION, PPM AMERICA/JNL MONEY MARKET DIVISION, PPM AMERICA/JNL VALUE EQUITY DIVISION, SALOMON BROTHERS/JNL GLOBAL BOND DIVISION, SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND DIVISION, T. ROWE PRICE/JNL ESTABLISHED GROWTH DIVISION, T. ROWE PRICE/JNL INTERNATIONAL EQUITY INVESTMENT DIVISION AND T. ROWE PRICE/JNL MID-CAP GROWTH DIVISION THEREOF AT DECEMBER 31, 1995, THE RESULTS OF THEIR OPERATIONS AND THE CHANGES IN THEIR NET ASSETS FOR THE PERIOD OCTOBER 16, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1995 IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THESE FINANCIAL STATEMENTS ARE THE RESPONSIBILITY OF JACKSON NATIONAL LIFE INSURANCE COMPANY'S MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL STATEMENTS BASED ON OUR AUDIT. WE CONDUCTED OUR AUDIT OF THESE STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS WHICH REQUIRE THAT WE PLAN AND PERFORM THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS, EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS, ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY MANAGEMENT, AND EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE BELIEVE THAT OUR AUDIT PROVIDES A REASONABLE BASIS FOR THE OPINION EXPRESSED ABOVE. /S/ PRICE WATERHOUSE LLP FEBRUARY 22, 1996 51 JACKSON NATIONAL SEPARATE ACCOUNT - I STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
Division ------------------------------------------------------------------------------------ JNL/Phoenix JNL/Phoenix PPM JNL JNL JNL Investment Investment America/JNL Aggressive Capital Global JNL/Alger Counsel Counsel High Yield Growth Growth Equities Growth Balanced Growth Bond ---------- --------- ---------- --------- ----------- ----------- ---------- ASSETS: Investments in JNL Series Trust, at market value (See schedule of investments) $ 39,018 $ 14,665 $ 50,054 $122,027 $133,052 $ 6,042 $ 1,011 -------- -------- -------- -------- -------- -------- -------- Due from Jackson National Life Insurance Company 1,850 1,750 - - - - - -------- -------- -------- -------- -------- -------- -------- Total assets 40,868 16,415 50,054 122,027 133,052 6,042 1,011 LIABILITIES: Due to Jackson National Life Insurance Company 1 1 2 5 5 - - -------- -------- -------- -------- -------- -------- -------- NET ASSETS $ 40,867 $ 16,414 $ 50,052 $122,022 $133,047 $ 6,042 $ 1,011 ======== ======== ======== ======== ======== ======== ======== Number of units outstanding 4,008 1,587 4,778 12,285 12,871 571 100 ======== ======== ======== ======== ======== ======== ======== Unit value (net assets divided by units outstanding) $ 10.20 $ 10.34 $ 10.48 $ 9.93 $ 10.34 $ 10.58 $ 10.11 ======== ======== ======== ======== ======== ======== ======== Division ------------------------------------------------------------------------------------ Salomon PPM PPM Salomon Brothers/ T. Rowe T. Rowe T. Rowe America/ America/ Brothers/ JNL Price/ Price/ Price/ JNL JNL JNL U.S. Gov't. JNL JNL JNL Money Value Global & Quality Established International Mid-Cap Market Equity Bond Bond Growth Equity Growth ---------- --------- ---------- ----------- ----------- ----------- ---------- ASSETS: Investments in JNL Series Trust, at market value (See schedule of investments) $109,323 $ 41,762 $ 32,557 $ 13,023 $109,472 $ 32,488 $ 49,496 ---------- --------- ---------- ----------- ----------- ----------- ---------- Due from Jackson National Life Insurance Company 37,260 - - - - - 3,600 ---------- --------- ---------- ----------- ----------- ----------- ---------- Total assets 146,583 41,762 32,557 13,023 109,472 32,488 53,096 LIABILITIES: Due to Jackson National Life Insurance Company 4 2 1 1 4 1 2 ---------- --------- ---------- ----------- ----------- ----------- ---------- NET ASSETS $146,579 $ 41,760 $ 32,556 $ 13,022 $109,468 $ 32,487 $ 53,094 ========== ========= ========== =========== =========== =========== ========== Number of units outstanding 14,608 3,944 3,128 1,275 10,564 3,096 5,120 ========== ========= ========== =========== =========== =========== ========== Unit value (net assets divided by units outstanding) $ 10.03 $ 10.59 $ 10.41 $ 10.21 $ 10.36 $ 10.49 $ 10.37 ========== ========= ========== =========== =========== =========== ==========
The accompanying notes are an integral part of the financial statements. 52 JACKSON NATIONAL SEPARATE ACCOUNT - I STATEMENT OF OPERATIONS For the Period from October 16, 1995 (commencement of operations) to December 31, 1995
Divisions ---------------------------------------------------------------------------------------- JNL/Phoenix JNL/Phoenix PPM JNL JNL JNL Investment Investment America/JNL Aggressive Capital Global JNL/Alger Counsel Counsel High Yield Growth Growth Equities Growth Balanced Growth Bond ---------- ------- -------- --------- ----------- ------------ ------------ NET REALIZED GAIN/(LOSS) ON INVESTMENTS: Proceeds from sales $ 8,031 $ 11 $ 23 $ 9,873 $ 4,945 $ 15 $ 1 Cost of investments sold 7,815 11 22 9,672 4,950 15 1 --------- ------- -------- --------- --------- -------- -------- Net realized gain/(loss) on investments 216 - 1 201 (5) - - NET UNREALIZED GAIN ON INVESTMENTS: Unrealized gain/(loss) beginning of year - - - - - - - Unrealized gain end of year 620 554 891 2,552 1,640 301 12 --------- ------- -------- --------- --------- -------- -------- Net unrealized gain on investments 620 554 891 2,552 1,640 301 12 --------- ------- -------- --------- --------- -------- -------- NET GAIN ON INVESTMENTS 836 554 892 2,753 1,635 301 12 EXPENSES: Administrative charge 3 1 3 6 5 1 - Mortality and expense charge 25 5 22 49 46 7 1 --------- ------- -------- --------- --------- -------- -------- Total expenses 28 6 25 55 51 8 1 --------- ------- -------- --------- --------- -------- -------- Increase in net assets resulting from operations $ 808 $ 548 $ 867 $ 2,698 $ 1,584 $ 293 $ 11 ========= ======= ======== ========= ========= ======== ======== Divisions ---------------------------------------------------------------------------------------- PPM PPM Salomon Salomon T. Rowe T. Rowe T. Rowe America/JNL America/JNL Brothers/JNL Brothers/JNL Price/JNL Price/JNL Price/JNL Money Value Global U.S. Gov't & Established International Mid-Cap Market Equity Bond Quality Bond Growth Equity Growth ----------- ----------- ------------ ------------ ----------- ------------- ---------- NET REALIZED GAIN/(LOSS) ON INVESTMENTS: Proceeds from sales $ 50,018 $ 1,252 $ 1,029 $ 9 $ 3,109 $ 20 $ 27 Cost of investments sold 50,018 1,246 1,017 9 3,105 20 27 --------- ------- -------- --------- --------- -------- -------- Net realized gain/(loss) on investments - 6 12 - 4 - - NET UNREALIZED GAIN ON INVESTMENTS: Unrealized gain/(loss) beginning of year - - - - - - - Unrealized gain end of year 393 1,099 494 111 3,012 671 1,039 --------- ------- -------- --------- --------- -------- -------- Net unrealized gain on investments 393 1,099 494 111 3,012 671 1,039 --------- ------- -------- --------- --------- -------- -------- NET GAIN ON INVESTMENTS 393 1,105 506 111 3,016 671 1,039 EXPENSES: Administrative charge 11 4 2 1 8 2 3 Mortality and expense charge 90 34 13 9 68 19 26 --------- ------- -------- --------- --------- -------- -------- Total expenses 101 38 15 10 76 21 29 --------- ------- -------- --------- --------- -------- -------- Increase in net assets resulting from operations $ 292 $ 1,067 $ 491 $ 101 $ 2,940 $ 650 $ 1,010 ========= ======= ======== ========= ========= ======== ========
The accompanying notes are an integral part of the financial statements. 53 JACKSON NATIONAL SEPARATE ACCOUNT - I STATEMENT OF CHANGES IN NET ASSETS For the Period from October 16, 1995 (commencement of operations) to December 31, 1995
Divisions ---------------------------------------------------------------------------------------- JNL/Phoenix JNL/Phoenix PPM JNL JNL JNL Investment Investment America/JNL Aggressive Capital Global JNL/Alger Counsel Counsel High Yield Growth Growth Equities Growth Balanced Growth Bond ---------- ------- -------- --------- ----------- ------------ ------------ OPERATIONS: Net realized gain/(loss) on investments $ 216 $ - $ 1 $ 201 $ (5) $ - $ - Net unrealized gain on investments 620 554 891 2,552 1,640 301 12 Administrative charge (3) (1) (3) (6) (5) (1) - Mortality and expense charge (25) (5) (22) (49) (46) (7) (1) --------- ------- -------- --------- --------- -------- -------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 808 548 867 2,698 1,584 293 11 NET DEPOSITS INTO SEPARATE ACCOUNT (NOTE 6) 40,059 15,866 49,185 119,324 131,463 5,749 1,000 --------- ------- -------- --------- --------- -------- -------- Increase in net assets 40,867 16,414 50,052 122,022 133,047 6,042 1,011 NET ASSETS: BEGINNING OF PERIOD - - - - - - - --------- ------- -------- --------- --------- -------- -------- END OF PERIOD $ 40,867 $16,414 $ 50,052 $ 122,022 $ 133,047 $ 6,042 $ 1,011 ========= ======= ======== ========= ========= ======== ======== Divisions ---------------------------------------------------------------------------------------- PPM PPM Salomon Salomon T. Rowe T. Rowe T. Rowe America/JNL America/JNL Brothers/JNL Brothers/JNL Price/JNL Price/JNL Price/JNL Money Value Global U.S. Gov't & Established International Mid-Cap Market Equity Bond Quality Bond Growth Equity Growth ----------- ----------- ------------ ------------ ----------- ------------- ---------- OPERATIONS: Net realized gain/(loss) on investments $ - $ 6 $ 12 $ - $ 4 $ - $ - --------- ------- -------- --------- --------- -------- -------- Net unrealized gain on investments 393 1,099 494 111 3,012 671 1,039 Administrative charge (11) (4) (2) (1) (8) (2) (3) Mortality and expense charge (90) (34) (13) (9) (68) (19) (26) --------- ------- -------- --------- --------- -------- -------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 292 1,067 491 101 2,940 650 1,010 NET DEPOSITS INTO SEPARATE ACCOUNT (NOTE 6) 146,287 40,693 32,065 12,921 106,528 31,837 52,084 --------- ------- -------- --------- --------- -------- -------- Increase in net assets 146,579 41,760 32,556 13,022 109,468 32,487 53,094 NET ASSETS: BEGINNING OF PERIOD - - - - - - - --------- ------- -------- --------- --------- -------- -------- END OF PERIOD $ 146,579 $41,760 $ 32,556 $ 13,022 $ 109,468 $ 32,487 $ 53,094 ========= ======= ======== ========= ========= ======== ========
The accompanying notes are an integral part of the financial statements. 54 JACKSON NATIONAL SEPARATE ACCOUNT - I SCHEDULE OF INVESTMENTS December 31, 1995
NUMBER MARKET OF SHARES COST VALUE --------- ------------- ----------- JNL Series Trust: JNL Aggressive Growth Portfolio 3,252 $ 38,398 $ 39,018 JNL Capital Growth Portfolio 1,172 14,111 14,665 JNL Global Equities Portfolio 3,985 49,163 50,054 JNL/Alger Growth Portfolio 12,401 119,475 122,027 JNL/Phoenix Investment Counsel Balanced Portfolio 12,030 131,412 133,052 JNL/Phoenix Investment Counsel Growth Portfolio 523 5,741 6,042 PPM America/JNL High Yield Bond Portfolio 100 999 1,011 PPM America/JNL Money Market Portfolio 109,322 108,930 109,323 PPM America/JNL Value Equity Portfolio 3,498 40,663 41,762 Salomon Brothers/JNL Global Bond Portfolio 3,217 32,063 32,557 Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio 1,263 12,912 13,023 T. Rowe Price/JNL Established Growth Portfolio 10,174 106,460 109,472 T. Rowe Price/JNL International Equity Investment Portfolio 3,031 31,817 32,488 T. Rowe Price/JNL Mid-Cap Growth Portfolio 3,995 48,457 49,496
See Accompanying Notes to Financial Statements 55 JACKSON NATIONAL SEPARATE ACCOUNT - I NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 1 - ORGANIZATION Jackson National Life Insurance Company (JNL) established Jackson National Separate Account - I (the Separate Account) on October 16, 1995, pursuant to the laws of the State of Michigan. The Separate Account commenced operations on October 16, 1995 and is registered under the Investment Company Act of 1940 as a unit investment trust. The Separate Account receives and invests net premiums for individual flexible premium variable annuity contracts issued by JNL. The contracts can be purchased on a non-tax qualified basis or in connection with certain plans qualifying for favorable federal income tax treatment. The Separate Account contains fourteen Divisions, each of which invests in the following corresponding portfolios of the JNL Series Trust (the Funds): JNL Aggressive Growth Portfolio JNL Capital Growth Portfolio JNL Global Equities Portfolio JNL/Alger Growth Portfolio JNL/Phoenix Investment Counsel Balanced Portfolio JNL/Phoenix Investment Counsel Growth Portfolio PPM America/JNL High Yield Bond Portfolio PPM America/JNL Money Market Portfolio PPM America/JNL Value Equity Portfolio Salomon Brothers/JNL Global Bond Portfolio Salomon Brothers/JNL U.S. Government & Quality Bond Portfolio T. Rowe Price/JNL Established Growth Portfolio T. Rowe Price/JNL International Equity Investment Portfolio T. Rowe Price/JNL Mid-Cap Growth Portfolio NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Separate Account in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and 56 - 2 - liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investments The Separate Account's investments in the Funds of the JNL Series Trust are stated at the net asset values of the respective Funds. The average cost method is used in determining the cost of the shares sold on withdrawals by the Separate Account. Fund share transactions are recorded on trade date (same as settlement date). The Funds follow the accounting practice known as consent dividending, whereby all of its net investment income and realized gains are treated as being distributed daily to the Separate Account and are immediately reinvested in the Funds. Federal Income Taxes The operations of the Separate Account are included in the federal income tax return of JNL, which is taxed as a "life insurance company" under the provisions of the Internal Revenue Code. JNL anticipates no tax liability resulting from the operations of the Separate Account. Therefore, no federal income tax has been provided. NOTE 3 - POLICY CHARGES Charges are deducted from the Separate Account to compensate JNL for providing the insurance benefits set forth in the contracts, administering the contracts, distributing the contracts and assuming certain risks in connection with the contract. Contract Maintenance Charge An annual contract maintenance charge of $35 is charged against each contract to reimburse JNL for expenses incurred in establishing and maintaining records relating to the contract. The contract maintenance charge is assessed on each anniversary of the contract date that occurs on or prior to the annuity date. The charge is deducted by redeeming shares. For the period ended December 31, 1995, no contract maintenance charges were assessed. 57 - 3 - Transfer Fee Charge A transfer fee of $25 will apply to transfers in excess of 15 transfers in a contract year. JNL may waive the transfer fee in connection with pre-authorized automatic transfer programs, or in those states where a lesser fee is required. This fee will be deducted from contract values which remain in the portfolio(s) from which the transfers were made. If such remaining contract value is insufficient to pay the transfer fee, then the fee will be deducted from transferred contract values. For the period ended December 31, 1995, no transfer fees were assessed. Surrender or Contingent Deferred Sales Charge During the first contract years, certain contracts include a provision for a charge upon the surrender or partial surrender of the contract. The amount assessed under the contract terms, if any, depends upon the cost associated with distributing the particular contracts. The amount, if any, depends on a number of factors, including the amount withdrawn, the contract year of surrender, or the number and amount of withdrawals in a calendar year. For the period ended December 31, 1995, no contracts were assessed this charge. Administration Charge JNL deducts a daily charge for administrative expenses from the net assets of the Separate Account equivalent to an annual rate of 0.15%. The administration charge is designed to reimburse JNL for administrative expenses related to the Separate Account and the issuance and maintenance of contracts. Mortality and Expense Charge A daily charge is made for the mortality and expense risks assumed by JNL. JNL deducts a daily charge from the net assets of the Separate Account equivalent to an annual rate of 1.25% for the assumption of mortality and expense risks. The mortality risk assumed by JNL is that the insured may receive benefits greater than those anticipated by JNL. The expense risk assumed by JNL is that the costs of administering the contracts of the Separate Account will exceed the amount received from the administration charge and the contract maintenance charge. 58 - 4 - NOTE 4 - PURCHASES AND SALES OF INVESTMENTS During the period October 16, 1995 (commencement of operations) to December 31, 1995, purchases and proceeds from sales of investments in the JNL Series Trust were as follows:
Division Purchases Sales --------------------------------------- --------- ----- JNL Aggressive Growth $46,213 $8,031 JNL Capital Growth 14,122 11 JNL Global Equities 49,185 23 JNL/Alger Growth 129,147 9,873 JNL/Phoenix Investment Counsel Balanced 136,362 4,945 JNL/Phoenix Investment Counsel Growth 5,756 15 PPM America/JNL High Yield Bond 1,000 1 PPM America/JNL Money Market 158,948 50,018 PPM America/JNL Value Equity 41,909 1,252 Salomon Brothers/JNL Global Bond 33,080 1,029 Salomon Brothers/JNL U.S. Government & Quality Bond 12,921 9 T. Rowe Price/JNL Established Growth 109,565 3,109 T. Rowe Price/JNL International Equity Investment 31,837 20 T. Rowe Price/JNL Mid-Cap Growth 48,484 27
NOTE 5 - ACCUMULATION OF UNIT ACTIVITY The following is a reconciliation of the accumulation of unit activity for the period October 16, 1995 (commencement of operations) to December 31, 1995:
Units Units Outstanding Units Units Outstanding at 10/16/95 Issued Redeemed at 12/31/95 ----------- ------ -------- ----------- JNL Aggressive Growth - 4,794 (786) 4,008 JNL Capital Growth - 1,587 - 1,587 JNL Global Equities - 4,778 - 4,778 JNL/Alger Growth - 13,268 (983) 12,285 JNL/Phoenix Investment
59 - 5 - Counsel Balanced - 13,361 (490) 12,871 JNL/Phoenix Investment Counsel Growth - 572 (1) 571 PPM America/JNL High Yield Bond - 100 - 100 PPM America/JNL Money Market - 19,600 (4,992) 14,608 PPM America/JNL Value Equity - 4,064 (120) 3,944 Salomon Brothers/JNL Global Bond - 3,226 (98) 3,128 Salomon Brothers/JNL U.S. Government & Quality Bond - 1,275 - 1,275 T. Rowe Price/JNL Established Growth - 10,866 (302) 10,564 T. Rowe Price/JNL International Equity Investment - 3,096 - 3,096 T. Rowe Price/JNL Mid-Cap Growth - 5,120 - 5,120
60 JACKSON NATIONAL SEPARATE ACCOUNT - I NOTE 6 - RECONCILIATION OF GROSS AND NET DEPOSITS INTO THE SEPARATE ACCOUNT Deposits into the Separate Account purchase shares of the JNL Series Trust. Net deposits represent the amounts available for investment in such shares after the deduction of applicable policy charges. The following is a summary of net deposits made for the period October 16, 1995 (commencement of operations) to December 31, 1995:
Divisions ---------------------------------------------------------------------------------------- JNL/Phoenix JNL/Phoenix PPM JNL JNL JNL Investment Investment America/JNL Aggressive Capital Global JNL/Alger Counsel Counsel High Yield Growth Growth Equities Growth Balanced Growth Bond ---------- ------- -------- --------- ----------- ------------ ------------ Proceeds from units issued $ 48,063 $15,872 $ 49,185 $ 129,147 $ 136,362 $ 5,756 $ 1,000 Value of units redeemed (8,004) (6) - (9,823) (4,899) (7) - Transfers between funds and general account - - - - - - - ---------- ------- -------- --------- ----------- ------------ ------------ Total gross deposits net of transfers to general account 40,059 15,866 49,185 119,324 131,463 5,749 1,000 DEDUCTIONS: Policyholder charges - - - - - - - ---------- ------- -------- --------- ----------- ------------ ------------ Total deductions - - - - - - - Net deposits from policyholders $ 40,059 $15,866 $ 49,185 $ 119,324 $ 131,463 $ 5,749 $ 1,000 ========== ======= ======== ========= =========== ============ ============ Divisions ---------------------------------------------------------------------------------------- PPM PPM Salomon Salomon T. Rowe T. Rowe T. Rowe America/JNL America/JNL Brothers/JNL Brothers/JNL Price/JNL Price/JNL Price/JNL Money Value Global U.S. Gov't & Established International Mid-Cap Market Equity Bond Quality Bond Growth Equity Growth ---------- ------- -------- --------- ----------- ------------ ------------ Proceeds from units issued $ 196,208 $41,909 $ 33,080 $ 12,921 $ 109,565 $ 31,837 $ 52,084 Value of units redeemed (49,921) (1,216) (1,051) - (3,037) - - Transfers between funds and general account - - - - - - - --------- ------- -------- --------- --------- -------- -------- Total gross deposits net of transfers to general account 146,287 40,693 32,065 12,921 106,528 31,837 52,084 DEDUCTIONS: Policyholder charges - - - - - - - ---------- ------- -------- --------- ----------- ------------ ------------ Total deductions - - - - - - - Net deposits from policyholders $ 146,287 $40,693 $ 32,065 $ 12,921 $ 106,528 $ 31,837 $ 52,084 ========= ======= ======== ========= ========= ======== ========
61 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES [JACKSON NATIONAL LIFE LOGO] CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 62 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholder of Jackson National Life Insurance Company In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholder's equity and of cash flows present fairly, in all material respects, the financial position of Jackson National Life Insurance Company and subsidiaries (the "Company") at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 2 to the financial statements, effective January 1, 1994 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. /s/ Price Waterhouse LLP February 21, 1996 63 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------- DECEMBER 31, ASSETS 1995 1994 ----------- ----------- Fixed maturities held to maturity, at amortized cost (market value: 1995, $4,199,528; 1994, $3,125,866) $ 4,118,883 $ 3,353,067 Investments available for sale, at market value: Fixed maturities (amortized cost: 1995, $18,248,600; 1994, $16,767,035) 19,252,534 15,774,009 Equities (cost: 1995, $191,908; 1994, $183,719) 236,095 193,292 Short-term investments 64,406 261,702 Mortgage loans, net of reserves 174,463 37,936 Policy loans 527,041 437,690 Other invested assets 45,567 48,475 ----------- ----------- Total investments 24,418,989 20,106,171 Cash 23,682 19,342 Accrued investment income 327,022 311,553 Deferred policy acquisition costs 891,355 1,686,725 Fixed assets, at cost less accumulated depreciation 30,981 22,820 Reinsurance recoverable 5,143 2,675 Value of acquired insurance in force 196,563 208,942 Deferred income taxes 63,287 451,192 Other assets and receivables 37,642 35,794 ----------- ----------- Total assets $25,994,664 $22,845,214 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES Policy reserves and liabilities: Reserves for future policy benefits $ 490,142 $ 446,462 Deposits on investment contracts 22,827,836 20,875,785 Other policyholder funds 20,215 26,855 Guaranteed interest contracts 100,080 Claims payable 130,067 94,640 Payable for securities purchased - 108,893 Commissions payable 7,034 9,849 General expense and administrative fees payable 27,548 12,986 Liability for guaranty fund assessments 94,853 71,143 Income taxes currently payable to Parent 102,047 43,375 Other liabilities 301,607 242,663 ----------- ----------- Total liabilities 24,101,429 21,932,651 ----------- ----------- Contingencies STOCKHOLDER'S EQUITY Capital stock, $1.15 par value; authorized 50,000 shares; outstanding 12,000 shares 13,800 13,800 Additional paid-in capital 603,982 603,982 Net unrealized gain(loss) on debt and equity securities available for sale, net of tax of $209,937 in 1995 and ($190,447) in 1994 389,883 (353,692) Retained earnings 885,570 648,473 ----------- ----------- Total stockholder's equity 1,893,235 912,563 ----------- ----------- Total liabilities and stockholder's equity $25,994,664 $22,845,214 =========== ===========
See accompanying notes to consolidated financial statements. 64 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS) ________________________________________________________________________________
YEAR ENDED DECEMBER 31, 1995 1994 1993 --------- ---------- ---------- REVENUES Premiums and other considerations $ 310,231 $ 303,759 $ 305,713 Net investment income 1,836,372 1,617,557 1,527,332 Net realized investment gain (loss) 84,626 (18,820) 156,996 Fee income on interest sensitive products: Mortality charges 128,695 115,460 108,981 Expense charges 20,308 20,349 19,546 Surrender charges 54,380 42,168 38,830 ---------- ---------- ---------- Total fee income 203,383 177,977 167,357 Other income 40 214 2,918 ---------- ---------- ---------- Total revenues 2,434,652 2,080,687 2,160,316 ---------- ---------- ---------- BENEFITS AND EXPENSES Death benefits 281,011 247,310 229,351 Interest credited on deposit liabilities 1,379,435 1,266,497 1,311,527 Increase in reserves 43,680 62,206 62,556 Other policyholder benefits 17,511 11,496 9,788 Commissions 209,694 225,097 192,990 General and administrative expenses 122,658 90,878 85,826 Taxes, licenses and fees 56,472 45,334 29,902 Deferral of policy acquisition costs (227,093) (220,633) (181,790) Amortization of policy acquisition costs 142,308 144,506 113,144 Amortization of insurance in force 12,379 11,464 10,469 ---------- ---------- ---------- Total benefits and expenses 2,038,055 1,884,155 1,863,763 ---------- ---------- ---------- Income before income tax expense 396,597 196,532 296,553 Income tax expense 140,000 41,450 100,700 ---------- ---------- ---------- Net income $ 256,597 $ 155,082 $ 195,853 ========== ========== ==========
See accompanying notes to consolidated financial statements. 65 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (IN THOUSANDS) ________________________________________________________________________________
DECEMBER 31, 1995 1994 1993 ---------- ---------- --------- CAPITAL STOCK, beginning and end of year $ 13,800 $ 13,800 $ 13,800 ---------- ---------- ---------- ADDITIONAL PAID-IN CAPITAL, beginning and end of year 603,982 603,982 603,982 ---------- ---------- ---------- UNREALIZED GAIN (LOSS) ON INVESTMENTS Beginning of year (353,692) 22,027 13,867 Net effect of adoption of SFAS 115 (See Note 2) - 321,547 - Unrealized gain (loss) on securities available for sale net of taxes and related deferred acquisition costs 743,575 (697,266) - Net unrealized gains on equity securities - - 8,160 ---------- ---------- ---------- End of year 389,883 (353,692) 22,027 ---------- ---------- ---------- RETAINED EARNINGS Beginning of year 648,473 512,891 336,538 Net income 256,597 155,082 195,853 Dividends paid to stockholder (19,500) (19,500) (19,500) ---------- ---------- ---------- End of year 885,570 648,473 512,891 ---------- ---------- ---------- Total stockholder's equity $1,893,235 $ 912,563 $1,152,700 ========== ========== ==========
See accompanying notes to consolidated financial statements. 66 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) ________________________________________________________________________________
YEAR ENDED DECEMBER 31, 1995 1994 1993 ----------- ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 256,597 $ 155,082 $ 195,853 Adjustments to reconcile net income to net cash provided by operating activities: Net realized investment (gains) losses (84,626) 18,820 (156,996) Interest credited on deposit liabilities 1,379,435 1,266,497 1,311,527 Other charges (203,383) (177,977) (167,357) Amortization of discount and premium on investments (32,261) (32,411) (33,348) Change in: Deferred income taxes (364) 6,105 (30,128) Accrued investment income (15,469) (12,634) (13,871) Deferred policy acquisition costs (84,785) (76,127) (68,646) Value of acquired insurance in force 12,379 11,464 10,469 Income taxes currently payable to Parent 58,672 (52,997) (23,656) Other assets and liabilities, net (46,171) 74,612 264 ----------- ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,240,024 1,180,434 1,024,111 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Cash from investments sold or matured: Sales of: Fixed maturities and equities available for sale 2,994,755 4,438,513 - Fixed maturities held to maturity - - 2,146,719 Principal repayments, maturities, calls and redemptions available for sale 257,793 1,725,628 - Principal repayments, maturities, calls and redemptions held to maturity 289,266 211,878 4,195,573 Purchases of: Fixed maturities and equities available for sale (4,782,081) (6,947,423) - Fixed maturities held to maturity (1,050,039) (1,666,194) (8,575,620) Short-term investments, net 197,296 (244,472) 121,152 ----------- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (2,093,010) (2,482,070) (2,112,176) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Policyholders account balances: Deposits 2,589,863 2,491,506 1,974,791 Withdrawals (1,713,037) (1,159,070) (881,795) Payment of cash dividends to Parent (19,500) (19,500) (19,500) ----------- ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 857,326 1,312,936 1,073,496 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,340 11,300 (14,569) CASH AND CASH EQUIVALENTS, beginning of period 19,342 8,042 22,611 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 23,682 $ 19,342 $ 8,042 =========== =========== ===========
See accompanying notes to consolidated financial statements. 67 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 1. DESCRIPTION OF THE BUSINESS Jackson National Life Insurance Company, Inc. ("the Company" or "JNL") is a wholly-owned subsidiary of Brooke Life Insurance Company ("Brooke Life" or the "Parent") and is ultimately a wholly-owned subsidiary of Prudential Corporation, plc ("Prudential"), London, England. JNL is licensed to sell individual annuity products and individual life insurance products in 48 states and the District of Columbia. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION Effective December 31, 1995, Jackson National Life Insurance Company of Michigan ("JNL-M"), a former wholly-owned subsidiary, was merged into its parent, Jackson National Life Insurance Company. The accompanying consolidated financial statements include JNL and its wholly-owned subsidiaries, Chrissy Corporation, an advertising agency; Jackson National Financial Services, Inc., an investment advisor and broker dealer, and Jackson National Life Distributors, Inc., a limited broker dealer. The Company also consolidates Jackson National Compania De Seguros De Vida S.A. ("Argentina"), a Life Insurance Company of which the Company retains 90% of the common stock. All significant intercompany accounts and transactions have been eliminated. BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") which differ in some respects from statutory accounting practices required by regulatory authorities for life insurance companies. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results may differ from those estimates. INVESTMENTS The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," as of January 1, 1994. The cumulative effect of implementing SFAS 115 was to report appreciation on available for sale fixed maturities of $887,174, less the effect on related deferred policy acquisition costs of $(392,486) and deferred income taxes of $(173,141), for a net increase to stockholder's equity of $321,547. Fixed maturities, (including bonds, redeemable preferred stocks, and mortgage-backed securities) which the Company has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at amortized cost. Fixed maturities classified as available for sale and all equity securities (common and nonredeemable preferred stocks) are carried at estimated market value, with changes in unrealized gains and losses recorded directly to stockholder's equity, net of applicable income taxes and related deferred acquisition costs. As of December 31, 1995, the Company had no trading portfolio. Fixed maturities, whether available for sale or held to maturity, are reduced to estimated net realizable value for declines in market value considered to be other than temporary. Gains or losses on the sale of securities are computed on the specific identification method. Fixed maturity purchase premiums and discounts are amortized to call or maturity dates. 68 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Mortgage loans and policy loans are carried at the unpaid principal balance less unamortized discounts and net of valuation reserves. Real estate owned is carried at cost less allowances for impairment in value. Limited partnership investments are carried using the equity method of accounting. Short-term investments are stated at cost which approximates market value. DERIVATIVES The Company hedges certain portions of its exposure to fluctuations in interest rate risks by entering into interest rate swap and put-swaption transactions. With the use of put-swaptions, JNL obtains the right, but not the obligation to require the writers to pay JNL the present value of a ten year swap. As consideration for this right, JNL pays a premium. The net differential to be paid or received on interest rate swaps is recognized over the lives of the agreements and is classified as investment income in the statement of operations. The premium on the put-swaptions is amortized ratably into investment income over the term of the options. Both interest rate swaps and put-swaptions are held for purposes other than trading and hedge fixed maturity available for sale securities, and are carried at fair value with the change in fair value reflected in stockholder's equity. The fair value is based on estimates received from financial institutions. Realized gain (loss) from the settlement or termination of the interest rate swaps are deferred and amortized over the life of the specific hedged assets as an adjustment to the yield. Realized gain (loss) from the settlement of the put-swaptions is included in realized gain (loss) in the statement of operations in the period of settlement. DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring new business, principally commissions and certain costs associated with policy issue and underwriting which vary with and are primarily related to the production of new business, have been capitalized as deferred policy acquisition costs. Deferred policy acquisition costs are increased by interest thereon and amortized in proportion to anticipated premium revenues for traditional life policies and in proportion to estimated gross profits for annuities and interest-sensitive life products. As certain debt and equity securities are carried at aggregate fair value, an adjustment is made to deferred policy acquisition costs equal to the change in amortization that would have occurred if such securities had been sold at their stated aggregate fair value and the proceeds reinvested at current yields. At December 31, 1995 and 1994, deferred acquisition costs have been decreased by $440.8 million and increased $439.3 million, respectively, to reflect this change. VALUE OF ACQUIRED INSURANCE IN FORCE AT ACQUISITION DATE The value of acquired insurance in force at acquisition date ("VOB") represents the present value of anticipated profits of the business in force on November 25, 1986 (the date the Company was acquired by Prudential) net of amortization. The VOB is being amortized in proportion to anticipated premium revenues for traditional life insurance contracts and estimated gross profits for annuities and interest-sensitive life products over a period of 20 years. FEDERAL INCOME TAXES The Company provides deferred income taxes on the temporary differences between the tax and financial statement basis of assets and liabilities as required by SFAS No. 109, "Accounting for Income Taxes". JNL files a consolidated federal income tax return with Brooke Life. The non-life insurance company subsidiaries file separate federal income tax returns. Income tax expense is calculated on a separate company basis. 69 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) POLICY RESERVES AND LIABILITIES For traditional life insurance contracts, reserves for future policy benefits are determined using the net level premium method and assumptions as to mortality, interest, policy lapsation and expenses. Mortality assumptions, based upon the 1975-1980 Basic Select and Ultimate tables, range from 59% to 90% depending on underwriting classification and policy duration. Interest rate assumptions range from 6.0% to 9.5%. Lapse and expense assumptions are based on Company experience. For the Company's universal life-type contracts, reserves approximate the policyholder's accumulation account. For deferred annuity and other investment contracts, the reserve is the policyholder's account value. SEPARATE ACCOUNTS The Company established Jackson National Separate Account - I (the "Separate Account") which commenced operations on October 16, 1995, and is registered under the Investment Company Act of 1940 as a unit investment trust. The Separate Account receives and invests net premiums for individual flexible premium annuity contracts issued by JNL. Separate account assets and separate account liabilities total $.8 million and are included in other assets and liabilities at December 31, 1995. Investment income and gains and losses of the Separate Accounts accrue directly to the contractholders and are, therefore, not included in the Company's consolidated statement of operations. REVENUE AND EXPENSE RECOGNITION Premiums for traditional life insurance are reported as revenues when due. Benefits, claims and expenses are associated with earned revenues in order to recognize profit over the lives of the contracts. This association is accomplished by provisions for future policy benefits and the deferral and amortization of deferred policy acquisition costs. Deposits on interest sensitive life products are credited to the policyholder account. Revenues consist of amounts assessed against the policyholder's account value, including mortality, contract initiation and administration (expense charges) and surrender charges. Surrender benefits are treated as repayments of the policyholder account. Death benefits, net of the policyholder account, are recognized as an expense when incurred. Expenses are associated with gross profit in order to recognize profit over the life of the business. This is accomplished by deferral and amortization of policy acquisition costs. Deposits on investment contracts, principally deferred annuities, are treated as policyholder deposits and excluded from revenue. Revenues consist primarily of the investment income earned on those deposits. Benefit payments for such contracts are treated as reductions to the policyholder account. Expenses consist primarily of the interest credited to the policyholder deposit. 3. FAIR VALUE OF FINANCIAL INSTRUMENTS The following summarizes the basis used by the Company in estimating its fair value disclosures for financial instruments: FIXED MATURITIES AND EQUITY SECURITIES - Fair values are based upon quoted market prices, if available. For securities not actively traded, fair values are estimated using independent pricing services or analytically determined values. POLICY LOANS - The carrying amount reported in the balance sheet approximates fair value since policy loans reduce the amount payable at death or at surrender of the contract. SHORT-TERM INVESTMENTS, CASH AND ACCRUED INVESTMENT INCOME - The carrying amounts reported in the balance sheet approximate fair value. 70 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 3. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) SEPARATE ACCOUNT ASSETS - Separate account assets are carried at the market value of the underlying securities. ANNUITY RESERVES (without mortality features) - Fair values for immediate and deferred annuities are derived by discounting the future estimated cash flows using current interest rates with similar maturities. At December 31, 1995, the carrying value and fair value of such annuities approximated $18.2 billion and $17.2 billion, respectively, and $16.4 billion and $15.4 billion, respectively, at December 31, 1994. GUARANTEED INTEREST CONTRACTS RESERVES - Fair value is based on the present value of future cash flows at current pricing rates. LIABILITY FOR GUARANTEE FUND ASSESSMENTS - It is not practical to estimate the fair value of liabilities for guarantee fund assessments. Such liabilities are based on current estimates of the Company's portion of the undiscounted liability at the time of a known insolvency. OTHER LIABILITIES - Payables for securities purchased, commissions payable, general expense and administrative fees payable and other liabilities represent net transactions of a short term nature for which the carrying amounts reported in the balance sheet approximate fair value. SEPARATE ACCOUNT LIABILITIES - Fair value of contracts in the accumulation phase are based on net surrender values. Fair values of contracts in the payout phase are based on the present value of future cash flows at assumed investment rates. At December 31,1995, all separate account contracts are in the accumulation phase. 4. INVESTMENTS Investments are comprised primarily of fixed-interest securities, primarily publicly-traded industrial, mortgage-backed, utility and government bonds. The Company generates the vast majority of its premium from interest-sensitive individual annuity and life insurance products, on which it has committed to pay a declared rate of interest. The Company's strategy of investing in fixed-interest securities aims to ensure matching of the asset yield with the interest-sensitive insurance liabilities and to earn a stable return on its investments. The Company's holdings of non-investment grade bonds at December 31, 1995 constituted approximately 9% of total assets. Approximately 2% of its total assets are invested in common stocks or commercial real estate and mortgages. Approximately 69% of the Company's investment grade bonds have Standard and Poors ("S&P") ratings of A and higher, while 19% is rated BBB. The fixed-interest portfolio has a weighted average S&P rating of AA-. The amortized cost and estimated market value of fixed maturity investments held to maturity are as follows (dollars in thousands):
GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1995 COST GAINS LOSSES VALUE ---------- ---------- ------------- ---------- U.S. Government agencies and foreign governments $ 134,893 $ 839 $2,233 $ 133,499 Corporate securities 809,925 15,108 3,029 822,005 Collateralized mortgage obligations 3,174,065 76,362 6,403 3,244,024 ---------- ---------- ------- ---------- Total $4,118,883 $92,309 $11,665 $4,199,528 ========== ========== ======= ==========
71 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 4. INVESTMENTS (CONTINUED)
GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1994 COST GAINS LOSSES VALUE ----------- ---------- ---------- ----------- U.S. Government agencies and foreign governments $1,239,102 $ - $144,697 $1,094,405 Corporate securities 670,835 17 3,511 667,341 Collateralized mortgage obligations 1,443,130 7 79,017 1,364,120 ---------- --- -------- ---------- Total $3,353,067 $24 $227,225 $3,125,866 ========== === ======== ==========
The amortized cost and estimated market value of fixed maturity investments available for sale are as follows (dollars in thousands):
GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1995 COST GAINS LOSSES VALUE --------- ------------------- ------------ ---------------- U.S. Treasury securities $ 354,506 $3,136 $ 2 $ 357,640 U.S. Government agencies and foreign governments 1,543,055 68,360 940 1,610,475 Public utilities 954,297 59,767 5,441 1,008,623 Corporate securities 9,013,057 699,519 27,386 9,685,190 Collateralized mortgage obligations 6,383,685 239,881 32,960 6,590,606 ----------- ---------- ------- ----------- Total $18,248,600 $1,070,663 $66,729 $19,252,534 =========== ========== ======= =========== GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET DECEMBER 31, 1994 COST GAINS LOSSES VALUE ----------- -------------------- ------------- ----------------- U.S. Treasury securities $ 368,134 $ 6 $ 8,089 $ 360,051 U.S. Government agencies and foreign governments 1,703,266 7,147 90,628 1,619,785 Public utilities 947,588 17,993 41,769 923,812 Corporate securities 8,317,602 96,893 466,939 7,947,556 Collateralized mortgage obligations 5,430,445 12,750 520,390 $ 4,922,805 ----------- -------- ---------- ----------- Total $16,767,035 $134,789 $1,127,815 $15,774,009 =========== ======== ========== ===========
Gross unrealized gains pertaining to equity securities at December 31, 1995 were $51.2 million and $19.7 million, respectively. Gross unrealized losses at December 31, 1995 and 1994 were $7.0 million and $10.1 million, respectively. 72 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 4. INVESTMENTS (CONTINUED) The amortized cost and estimated market value of fixed maturities at December 31, 1995, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Fixed maturities held to maturity (dollars in thousands):
AMORTIZED ESTIMATED COST MARKET VALUE ----------------- ------------ Due after 1 year through 5 years $ 393,820 $ 405,900 Due after 5 years through 10 years 416,105 416,104 Mortgage-backed securities 3,308,958 3,377,524 ---------- ---------- Total $4,118,883 $4,199,528 ========== ==========
Fixed maturities available for sale (dollars in thousands):
AMORTIZED ESTIMATED COST MARKET VALUE ----------------- ------------ Due within 1 year or less $ 187,355 $ 188,750 Due after 1 year through 5 years 2,708,297 2,915,856 Due after 5 years through 10 years 3,836,308 4,055,629 Due after 10 years through 20 years 1,255,804 1,386,772 Due after 20 years 2,578,495 2,770,406 Mortgage-backed securities 7,682,341 7,935,121 ---------- ----------- Total $18,248,600 $19,252,534 =========== ===========
Discounts and premiums on collateralized mortgage obligations are amortized over the estimated redemption period using the effective interest method. Yields which are used to calculate premium/discount amortization are adjusted periodically for prepayments. At December 31, 1995, fixed maturities with a carrying value of $5.3 million were on deposit with regulatory authorities as required by law in various states in which the insurance operations conduct business. At December 31, 1995, New American Holdings with a carrying value and estimated market value of $192.8 million and $218.7 million, respectively, was the only entity (other than the United States government agencies and authorities) in which the Company's investment exceeded ten percent of stockholder's equity. The security was rated a Class 2 by the National Association of Insurance Commissioners ("NAIC") and a "BBB" by S&P. The Company held two types of derivative instruments at December 31, 1995; interest rate swaps and put-swaptions. At December 31, 1995, the notional amount of the interest rate swaps outstanding was $1.0 billion, with unexpired terms of these agreements varying from 32 to 111 months and interest rates ranging from 6.25% to 8.59%. The fair value of the swap agreements was $68.0 million. During 1995, the Company recorded $14.4 million in net interest income from swaps. The termination of swaps in 1994 resulted in a $18.3 million loss (net of tax) which was to be amortized over the remaining life of the underlying assets being hedged. During 1995, the Company recognized $5.6 million in losses relating to those swaps. 73 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 5. INVESTMENT INCOME AND REALIZED GAINS AND LOSSES The Company entered into six put-swaption agreements during 1995. These swaptions were entered into as a hedge against significant upward fluctuations in interest rates. The notional amount of these securities at December 31, 1995 was $12 billion, with a fair value of $7.3 million. The unexpired terms of these agreements vary from 23 to 47 months. The Company has entered into a securities lending agreement whereby large blocks of securities are loaned to third parties, primarily major brokerage firms. As of December 31, 1995 the estimated fair value of loaned securities was $572.6 million. The Company's policy requires a minimum of 102 percent of the fair value of the loaned securities as collateral, calculated on a daily basis. The collateral and related amounts due to counterparties are not reflected in the consolidated balance sheet. To further minimize the credit risks related to this program, the financial condition of counterparties are monitored on a regular basis. Major categories of investment income are summarized below (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 1993 ---------- ---------- ----------- Fixed maturities $1,766,654 $1,550,367 $1,458,918 Other investment income 82,614 79,802 78,974 ---------- ---------- ---------- Total investment income 1,849,268 1,630,169 1,537,892 Less - investment expenses 12,896 12,612 10,560 ---------- ---------- ---------- Net investment income $1,836,372 $1,617,557 $1,527,332 ========== ========== ==========
Proceeds from principal payments and maturities of fixed maturities held to maturity were $.3 billion and $.2 billion in 1995 and 1994, respectively. Proceeds from sales, principal payments and maturities of fixed maturities available for sale were $3.3 billion and $6.2 billion in 1995 and 1994, respectively. Net realized investment gains (losses) are as follows (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 1993 -------- ------------ ------------ Sales of fixed maturities Gross gains $101,682 $ 131,620 $197,008 Gross losses (27,897) (200,135) (18,851) Sales of equity securities Gross gains 47,883 58,270 18,192 Gross losses (1,576) (6,082) (2,947) Impairment losses (29,824) (123) (35,276) Other invested assets, net (5,642) (2,370) (1,130) -------- ------------ ------------ Total $ 84,626 $ (18,820) $156,996 ======== ============ ============
74 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 6. VALUE OF ACQUIRED INSURANCE IN FORCE The VOB was determined by using assumptions as to interest, persistency and mortality. Profits were then discounted to arrive at the value of the insurance in force. The balances and amortization of insurance in force are summarized as follows (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 ----------- ----------- Balance, beginning of year $ 208,942 $ 220,406 Amortization, net of interest (12,379) (11,464) ----------- ----------- Balance, end of year $ 196,563 $ 208,942 =========== ==========
The VOB is expected to be amortized as follows (dollars in thousands): 1996 $ 13,000 1997 14,000 1998 15,000 1999 16,000 Thereafter 138,563 ------------- $ 196,563 =============
7. POLICY RESERVES AND LIABILITIES A summary of the components of policy reserves and liabilities is as follows (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 ------------- -------------- Term life and other traditional life $ 490,142 $ 446,462 Interest sensitive life 4,323,805 4,091,546 Deferred and immediate annuities 18,504,031 16,784,239 Guaranteed interest contracts 100,080 - ------------- ------------- Subtotal 23,418,058 21,322,247 Claims payable and other policyholder funds 150,282 121,495 ------------- ------------- Total $ 23,568,340 $ 21,443,742 ============= =============
8. REINSURANCE The Company assumes and cedes reinsurance from and to other insurance companies in order to limit losses from large exposures; however, if the reinsurer is unable to meet its obligations, the originating issuer of the coverage assumes the liability. The maximum amount of life insurance risk retained by the Company on any one life is generally $1.5 million. Amounts not retained are ceded to other companies on a yearly renewable-term or a coinsurance basis. 75 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 8. REINSURANCE (CONTINUED) Policy reserves and liabilities are stated net of reinsurance ceded to other companies. At December 31, 1995 and 1994, reserves were reduced by approximately $163.2 million and $157.7 million, respectively, of which $18.5 million and $16.9 million, respectively, was reinsured with Mercantile and General Reinsurance Company, a wholly-owned subsidiary of Prudential. Additionally $91.6 million and $93.0 million was reinsured through Brooke Life at December 31, 1995 and 1994, respectively. Premiums and other considerations are stated net of premiums on reinsurance assumed from and ceded to other companies. Net premiums ceded during 1995 and 1994 approximated $62.5 million and $65.0 million, respectively. 9. FEDERAL INCOME TAXES The components of the provision for federal income taxes as computed in accordance with SFAS 109 are as follows (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 1993 ----------- ---------- ------------ Current tax expense $ 152,480 $ 26,835 $ 135,545 Deferred tax expense (benefit) (12,480) 14,615 (34,845) ---------- --------- ----------- Provision for income taxes $ 140,000 $ 41,450 $ 100,700 ========== ========= ===========
The federal income tax provisions differ from the amounts determined by multiplying pre-tax income by the statutory federal income tax rate of 35% for 1995, 1994 and 1993 as follows (dollars in thousands):
YEAR ENDED DECEMBER 31, 1995 1994 1993 ------------ ---------- ------------ Income taxes at statutory rate $ 138,809 $ 68,786 $ 103,794 Increase (reduction) in taxes resulting from: Release of accrued Federal tax due to IRS settlement - (27,000) - Enacted rate changes - - (7,178) Other 1,191 (336) 4,084 ------------ ---------- ------------- Provision for income taxes $ 140,000 $ 41,450 $ 100,700 ============ ========== ============= Effective tax rate 35.3% 21.1% 34.0% ====== ====== ======
The Company made income tax payments of $116.1 million in 1995, $79.9 million in 1994 and $159.2 million in 1993. 76 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 ________________________________________________________________________________ 9. FEDERAL INCOME TAXES (CONTINUED) The significant temporary differences included in the deferred tax asset as of December 31, 1995 and 1994 are as follows (dollars in thousands):
DECEMBER 31, 1995 1994 ---------- -------------- GROSS DEFERRED TAX ASSET Policy reserves and other insurance items $ 669,247 $ 644,999 Difference between financial reporting and the tax basis of: Assets acquired 17,483 17,597 Insolvency fund assessments 32,483 23,251 Other, net 12,688 11,086 Net unrealized losses on available for sale securities - 344,209 ---------- ------------- Total deferred tax asset $ 731,901 $ 1,041,142 ---------- ------------- GROSS DEFERRED TAX LIABILITY Deferred policy acquisition costs (216,636) (507,155) Difference between financial reporting and the tax basis of the value of the insurance in-force (68,797) (69,296) Difference between financial reporting and the tax basis of other assets (7,468) (9,444) Net unrealized gains on available for sale securities (364,116) - Other, net (11,597) (4,055) ---------- ------------- Total deferred tax liability (668,614) (589,950) ---------- ------------- Net deferred tax asset $ 63,287 $ 451,192 ========== =============
In 1994, the Company reached settlements with the Internal Revenue Service ("IRS") under which the IRS agreed to changes in the Company's federal income tax liability for the tax years through 1990. Based on these and subsequent settlements, federal income tax returns are closed to further assessment through 1991. 10. CONTINGENCIES The Company and its subsidiaries are involved in litigation arising in the ordinary course of business. It is the opinion of management that the ultimate disposition of such litigation will not have a material adverse affect on the Company's financial condition or results of operations. During 1994, the Company undertook an initiative to improve the quality of service to policyholders. The Company expects to incur approximately $31 million in costs associated with this project, of which $19 million was incurred through 1995. The remaining expense is expected to be incurred in 1996. 77 JACKSON NATIONAL LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, A 11. STOCKHOLDER'S EQUITY DIVIDEND RESTRICTIONS Under Michigan State Insurance Law, dividends on capital stock can only be distributed out of earned surplus. Furthermore, without the prior approval of the Commissioner, dividends cannot be declared or distributed which exceed the greater of 10% of the Company's statutory surplus as of December 31 next preceding or the Company's statutory net gain from operations for such period. On January 1, 1996 the maximum amount of dividends that can be paid by the Company without prior approval of the Commissioner under this limitation approximated $156.6 million. Statutory capital and surplus of the Company at December 31, 1995 and 1994 was $1,196.1 million and $1,050.8 million, respectively. Statutory net income of the Company was $156.6 million, $125.3 million and $149.2 million in 1995, 1994 and 1993, respectively. 12. RELATED PARTY TRANSACTIONS The Company's investment portfolio is managed by PPM America ("PPM"), a registered investment advisor and a wholly-owned subsidiary of Prudential. The Company paid $6.8 million, $5.8 million and $4.9 million to PPM for investment advisory services during 1995, 1994, and 1993, respectively. On August 26, 1987, Brooke Life issued a ten-year $180 million note to Prudential as part of an exchange whereby 100% of the common stock of JNL was transferred to Brooke Life. On December 28, 1988, Brooke Life issued an additional ten-year $20 million note to Prudential. Each note contains repayment options and accrues interest at 12% per annum. On October 31, 1991, Brooke Life issued an additional $200 million note to Prudential Finance BV, a Prudential subsidiary, due October 31, 2001 with interest of 9.75% payable on October 31 of each year. In 1995, 1994, and 1993, JNL made dividend payments to Brooke Life of $19.5 million to pay down the accrued interest on the notes. At December 31, 1995, the amount outstanding on these notes was as follows (in millions): Principal $ 400 Accrued interest 155 ----- Total $ 555 =====
13. BENEFIT PLANS The Company has a defined contribution plan covering substantially all employees. To be eligible, an employee must have attained the age of 21 and completed at least 1,000 hours of service in a 12-month period. The Company's annual contributions, as declared by the board of directors, are based on a percentage of covered compensation paid to participating employees during the year. The Company expensed $2.3 million related to this plan during 1995 and $2.2 million during both 1994 and 1993. 78 PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: (1) Financial statements and schedules included in Part A: Condensed Financial Information (2) Financial statements and schedules included in Part B: Jackson National Separate Account - I: Report of Independent Accountants Statement of Assets and Liabilities as of December 31, 1995 Statement of Operations for the Period from October 16, 1995 (commencement of operations) to December 31, 1995 Statement of Changes in Net Assets for the period from October 16, 1995 (commencement of operations) to December 31, 1995 Schedule of Investments as of December 31, 1995 Notes to Financial Statements Jackson National Life Insurance Company: Report of Independent Accountants Consolidated Balance Sheet at December 31, 1995 and 1994 Consolidated Statement of Operations for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Stockholder's Equity for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Cash flows for the years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements 1 79 Item 24.(b) Exhibits Exhibit No. Description - ---- ----------- 1. Resolution of Depositor's Board of Directors authorizing the establishment of the Registrant, attached hereto (refiling by EDGAR) 2. Not Applicable 3. Distribution Agreement dated May 24,1995, attached hereto (refiling by EDGAR) 4. Form of the Perspective Fixed and Variable Annuity Contract, attached hereto (refiling by EDGAR) 5. Form of the Perspective Fixed and Variable Annuity Application, attached hereto (refiling by EDGAR) 6.a. Articles of Incorporation of Depositor, attached hereto (refiling by EDGAR) b. Bylaws of Depositor, attached hereto (refiling by EDGAR) 7. Not Applicable 8. Not Applicable 9. Opinion and Consent of Counsel, attached hereto 10. Consent of Independent Accountants, attached hereto 11. Not Applicable 12. Not Applicable 13. Schedule of Computation of Performance, attached hereto 27. Financial Data Schedule, attached hereto 2 80 Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices Business Address with Depositor ----------------------------- -------------------------------- Carla J. Beatty Vice President - Telephone 5901 Executive Drive Service Center Lansing, Michigan 48911 Alan R. Cook Senior Vice President - 5901 Executive Drive Operations Lansing, Michigan 48911 Peter Davis Chairman and Director 142 Holborn Bars London, England EC1N 2NH Connie J. Dalton Vice President - 5901 Executive Drive Variable Annuity Lansing, Michigan 48911 Administration Gerald W. Decius Vice President - Life Client 5901 Executive Drive Services Lansing, Michigan 48911 Lisa C. Drake Vice President & Actuary 5901 Executive Drive Lansing, Michigan 48911 Jay A. Elliott Senior Vice President - 5901 Executive Drive National Sales Manager Lansing, Michigan 48911 Robert A. Fritts, CPA Vice President & 5901 Executive Drive Controller - Financial Lansing, Michigan 48911 Operations William A. Gray Senior Vice President - 5901 Executive Drive Corporate Communications Lansing, Michigan 48911 Alan C. Hahn Senior Vice President - 5901 Executive Drive Deal Direct Marketing Lansing, Michigan 48911 Andrew B. Hopping Senior Vice President - 5901 Executive Drive Reengineering
3 81 Lansing, Michigan 48911 Victor Gallo Vice President - 5901 Executive Drive Group Pension Lansing, Michigan 48911 Terry R. Johns Vice President - 5901 Executive Drive Systems & Programming Lansing, Michigan 48911 Brion S. Johnson Vice President - 5901 Executive Drive Financial Operations Lansing, Michigan 48911 Larry C. Jordan, FLMI Vice President and Asst. 5901 Executive Drive Secretary Lansing, Michigan 48911 John A. Knutson Senior Vice President, Chief 5901 Executive Drive Operating Officer and Director Lansing, Michigan 48911 Everett W. Kunzelman Vice President - Underwriting 5901 Executive Drive Lansing, Michigan 48911 David B. LeRoux Senior Vice President - 5901 Executive Drive Guaranteed Investment Lansing, Michigan 48911 Contracts Lynn W. Lopes Vice President - Guaranteed 5901 Executive Drive Investment Contracts Lansing, Michigan 48911 Clark P. Manning Senior Vice President - 5901 Executive Drive Chief Actuary Lansing, Michigan 48911 Thomas J. Meyer Secretary, Vice President 5901 Executive Drive and General Counsel Lansing, Michigan 48911 J. George Napoles Senior Vice President and 5901 Executive Drive Chief Information Officer Lansing, Michigan 48911
4 82 Paul (Pete) B. Pheffer Senior Vice President, Chief 5901 Executive Drive Financial Officer and Lansing, Michigan 48911 Treasurer Lee Pledger Vice President - Planning & 5901 Executive Drive Human Resources Lansing, Michigan 48911 Bradley J. Powell Vice President - Institutional 5901 Executive Drive Marketing Group Lansing, Michigan 48911 Robert P. Saltzman President, Chief Executive 5901 Executive Drive Officer and Director Lansing, Michigan 48911 Robert M. Tucker Vice President - Technical 5901 Executive Drive Support Lansing, Michigan 48911
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant.
State of Control/ Company Organization Ownership Principal Business -------------- ------------- ----------------- ------------------- Brooke Delaware 100% Organized for the Holdings, Inc. Prudential purpose of acquiring Corporation holding, Holdings encumbering, Limited transferring, or otherwise disposing of shares, bonds, and other evidences of indebtedness, securities, and contracts of other persons, associations, corporations, domestic or foreign and to form or acquire the control of other
5 83 corporations. Brooke Life Michigan 100% Brooke Life Insurance Insurance Holdings, Inc. Company Bucyrus-Erie Delaware 42% Jackson Steel Company National Life Insurance Company Carolina North 95% Jackson Steel Company Steel Carolina National Life Insurance Company Chrissy Delaware 100% Jackson Advertising Agency Corporation National Life Insurance Company First Jackson New York 100% Jackson Life Insurance National Life National Life Insurance Insurance Company Company Jackson Massachusetts Common Law Investment Company National Trust with Capital Contractual Management association Funds with Jackson National Life Insurance Company Jackson Argentina 90% Jackson Life Insurance National National Compania de Life Insurance Sequiros de Company VIDA S.A. Jackson Delaware 100% Jackson Investment Adviser National National Life and Broker/Dealer Financial Insurance Services, Inc. Company
6 84 Jackson Delaware 100% Jackson Advertising/ National National Life Marketing Life Insurance Corporation Distributors, Company Inc. Jackson Michigan 100% Brooke Life Insurance National Life Life Insurance Insurance Company Company JNL Series Massachusetts Common Law Investment Company Trust Trust with contractual association with Jackson National Life Insurance Company Prudential United 100% Holding Company Corporation Kingdom Prudential Holdings Corporation Limited PLC Prudential United Publicly Financial Corporation Kingdom Traded Institution PLC Peebles, Inc. Virginia 20% Jackson Manufacturing National Life Corporation Insurance Company
Item 27. Number of Contract Owners as of March 31, 1996. 922 Item 28. Indemnification Provision is made in the Company's Amended By-Laws for indemnification by the Company of any person who was or is a party or is threatened to be made a party to civil, criminal, administrative or investigative action by reason of the fact that 7 85 such person is or was a director, officer or employee of the Company, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceedings, to the extent and under the circumstances permitted by the General Corporation Law of the State of Michigan. Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriter (a) Jackson National Financial Services, Inc. acts as general distributor for the Jackson National Separate Account - I. Jackson National Financial Services, Inc. also acts as investment adviser and principal underwriter for the Jackson National Capital Management Funds, and investment adviser for the JNL Series Trust. (b) Directors and Officers of Jackson National Financial Services, Inc.:
Name and Positions and Offices Business Address with Underwriter ------------------ -------------------------- Larry C. Jordan Chief Operating Officer,
8 86 5901 Executive Dr. Treasurer and Director Lansing, MI 48911 John A. Knutson President, Chief 5901 Executive Dr. Financial Officer Lansing, MI 48911 and Director Thomas J. Meyer Secretary, Chief 5901 Executive Dr. Legal Officer and Lansing, MI 48911 Director (c)
Net Underwriting Compensation on Name of Principal Discounts and Redemption or Brokerage Underwriter Commissions Annuitization Commissions Compensation - -------------------- -------------------- -------------------- -------------------- ------------ Jackson National Financial Services, Inc. Not Applicable Not Applicable Not Applicable Not Applicable
Item 30. Location of Accounts and Records Jackson National Life Insurance Company 5901 Executive Drive Lansing, Michigan 48911 Item 31. Management Services Not Applicable Item 32. Undertakings Not Applicable 9 87 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment to its Registration Statement, and has caused this Post-Effective Amendment to be signed on its behalf, in the City of Lansing, and State of Michigan, on this 26th day of April, 1996. Jackson National Separate Account - I ------------------------------------------ (Registrant) Jackson National Life Insurance Company ------------------------------------------ (Depositor) By: /s/ Thomas J. Meyer --------------------------------------- Thomas J. Meyer Vice President and General Counsel As required by the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed by the following persons in the capacities indicated. /s/ Peter Davis by Thomas J. Meyer April 26, 1996 ------------------------------------------ ------------------------- Peter Davis, Chairman and Director /s/ John A. Knutson by Thomas J. Meyer April 26, 1996 ------------------------------------------ ------------------------- John A. Knutson, Senior Vice President, Chief Operating Officer and Director /s/ Paul B. Pheffer by Thomas J. Meyer April 26, 1996 ------------------------------------------ ------------------------- Paul B. Pheffer, Senior Vice President, Chief Financial Officer and Treasurer /s/ Robert P. Saltzman by Thomas J. Meyer April 26, 1996 ------------------------------------------ ------------------------- Robert P. Saltzman, President, Chief Executive Officer and Director /s/ Thomas J. Meyer April 26, 1996 ------------------------------------------ ------------------------- Thomas J. Meyer, Attorney-in-Fact
88 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as directors and/or officers of JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan corporation, which has filed or will file with the Securities and Exchange Commission under the provisions of the Securities Act of 1933 and Investment Company Act of 1940, as amended, various Registration Statements and amendments thereto for the registration under said Acts of the sale of Individual Deferred Fixed and Variable Annuity Contracts in connection with the Jackson National Separate Account - I and other separate accounts of Jackson National Life Insurance Company, hereby constitute and appoint John A. Knutson, Thomas J. Meyer and Robert P. Saltzman, his attorney, with full power of substitution and resubstitution, for and in his name, place and stead, in any and all capacities to approve and sign such Registration Statements and any and all amendments thereto, with power where appropriate to affix the corporate seal of said corporation thereto and to attest with seal and to file the same, with all exhibits thereto and other granting unto said attorneys, each of them, full power and authority to do and perform all and every act and thing requisite to all intents and purposes as he might or could do in person, hereby ratifying and confirming that which said attorneys, or any of them, may lawfully do or cause to be done by virtue hereof. This instrument may be executed in one or more counterparts. IN WITNESS WHEREOF, the undersigned have herewith set their names as of the dates set forth below. /s/ Peter Davis August 11, 1995 - --------------------------------------- ------------------ Peter Davis, Chairman and Director Date /s/ John A. Knutson August 15, 1995 - --------------------------------------- ------------------ John A. Knutson, Senior Vice President, Date Chief Operating Officer and Director /s/ Pete Pheffer August 15, 1995 - --------------------------------------- ------------------ Paul (Pete) B. Pheffer, Senior Vice Date President, Chief Financial Officer and Treasurer /s/ Robert P. Saltzman August 15, 1995 - --------------------------------------- ------------------ Robert P. Saltzman, President, Chief Date Executive Officer and Director 89 EXHIBIT LIST Exhibit Number Description - ------- ----------- 1. Resolution of Depositor's Board of Directors authorizing the establishment of the Registrant, attached hereto as EX-99.B1-resol 3. Distribution Agreement dated May 24, 1995, attached hereto as EX-99.B3-dist 4. Form of the Perspective Fixed and Variable Annuity Contract, attached hereto as EX-99.B4-policy 5. Form of the Perspective Fixed and Variable Annuity Application, attached hereto as EX-99.B5-app 6.a. Articles of Incorporation of Depositor, attached hereto as EX-99.B6-art 6.b. Bylaws of Depositor, attached hereto as EX-99.B6-bylaws 9. Opinion and Consent of Counsel, attached hereto as EX-99.B9-blazz 10. Consent of Independent Accountants, attached hereto as EX-99.B10-pricew 13. Schedule of Computation of Performance, attached hereto as EX-99.B13-perf 27. Financial Data Schedule, attached hereto as EX-27.B14-fds EX-99.B1 2 EX-99.B1 1 EXHIBIT-99.B1-resol CERTIFICATE OF SECRETARY JACKSON NATIONAL LIFE INSURANCE COMPANY I, Larry C. Jordan, do hereby certify that I am the duly elected and qualified Assistant Secretary of Jackson National Life Insurance Company, a Michigan insurance corporation ("Corporation') and am the keeper of its records and corporate seal and that the following is a true and complete copy of a resolution unanimously adopted at a meeting of the Board of Directors of said Corporation, duly convened and held in accordance with the By-Laws of said Corporation, at which meeting a majority and quorum of the Board of Directors were present, on the 14th day of June, 1993: RESOLVED: That the Company take all steps necessary to develop and offer for sale variable annuities and that the Company's officers are directed to take all steps, including establishment of the necessary separate accounts, necessary to do so in full compliance with all federal and state laws. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Corporation this 12th day of July, 1993. (Corporate Seal) /s/ Larry C. Jordan ----------------------- Larry C. Jordan Assistant Secretary EX-99.B3 3 EX-99.B3 1 EXHIBIT-99.B3-dist GENERAL DISTRIBUTOR AGREEMENT IT IS HEREBY AGREED by and between JACKSON NATIONAL LIFE INSURANCE COMPANY ("COMPANY") and JACKSON NATIONAL FINANCIAL SERVICES, INC. ("JNFSI") as follows: I COMPANY proposes to issue and sell certain annuity contracts ("Annuity Contracts") to the public through JNFSI. JNFSI agrees to provide sales services subject to the terms and conditions hereof. Annuity Contracts to be sold hereunder are the Jackson National Variable and Fixed Annuity Contracts and such other contracts as may hereafter be agreed upon by the parties. Such Annuity Contracts will be issued by COMPANY and the Jackson National Separate Account - I (the "Separate Account"). JNFSI is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the National Association of Securities Dealers, Inc. II COMPANY grants to JNFSI the right, during the term of this Agreement, subject to registration requirements of the relevant Federal securities laws, to be the distributor of Annuity Contracts referred to above. JNFSI will distribute Annuity Contracts at a price to be set by COMPANY and will make such distributions to purchasers permitted to buy such Annuity Contracts as specified in the prospectus. III 1 2 JNFSI is hereby authorized, subject to disapproval by COMPANY, to enter into separate agreements with broker-dealers registered under the Securities Exchange Act of 1934, as amended, and members of the National Association of Securities Dealers, Inc., to participate in the distribution of Annuity Contracts as JNFSI shall deem appropriate. COMPANY reserves the right to review and accept or reject all applications for Annuity Contracts. All premium payments for such Annuity Contracts shall be sent to the office designated for such by COMPANY. IV COMPANY shall furnish JNFSI with copies of such information, financial statements and other documents requested by JNFSI for use in connection with the distribution of Annuity Contracts, as may be deemed by reasonable by COMPANY. COMPANY shall provide to JNFSI such number of copies of the currently effective prospectus as JNFSI and COMPANY shall agree upon from time to time. V JNFSI is not authorized to give any information, or to make any representations concerning the Separate Account or COMPANY, other than as contained in the current registration statement or prospectus filed with the Securities and Exchange Commission or such sales literature as may be authorized by COMPANY. VI Both parties to this Agreement agree to keep necessary records as indicated by applicable state and federal law and to render the necessary assistance to one another for the accurate and timely preparation of such records. 2 3 VII Commissions payable with respect to Annuity Contracts shall be paid by COMPANY, and nothing herein shall obligate JNFSI to pay any commissions or other remuneration to the registered representatives selling the Annuity Contracts or to reimburse such registered representatives for expenses incurred by them, nor shall JNFSI have any interest whatsoever in any commissions or other remuneration payable to registered representative by COMPANY. VIII Each party (the "Indemnifying Party") hereby agrees to release, indemnify, and hold harmless the other party, its officers, directors, employees, agents, servants, predecessors or successors from any claims or liability arising out of the breach of this Agreement by the Indemnifying Party or arising out of acts or omissions of the Indemnifying Party or its agents, appointees, independent contractors or employees not authorized by this Agreement, including the violation of the federal and state securities laws and ERISA or arising from acts of misrepresentation or false declaration concerning the products sold hereunder. IX This Agreement shall remain in effect unless terminated as hereinafter provided. This Agreement shall automatically terminate in the event of its assignment by JNFSI. This Agreement may at any time be terminated by either party hereto upon not less than 60 days' written notice to the other party. 3 4 X All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if sent by first class mail, registered or certified, postage prepaid and properly addressed as follows: TO COMPANY: Jackson National Life Insurance Company 5901 Executive Drive Lansing, Michigan 48911 Attention: John A. Knutson TO JNFSI: Jackson National Financial Services, Inc. 5901 Executive Drive Lansing, Michigan 48911 Attention: Larry C. Jordan IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their respective officers thereunto duly authorized. This Agreement is effective as of the 24th day of May, 1995. JACKSON NATIONAL LIFE INSURANCE COMPANY By: /s/ John A. Knutson --------------------- John A. Knutson Its: Sr. Vice President & Chief Operating Officer JACKSON NATIONAL FINANCIAL SERVICES, INC. By: /s/ Larry C. Jordan ---------------------- Larry C. Jordan Its: Chief Operating Officer 4 EX-99.B4 4 EX-99.B4 1 EXHIBIT-99B.4-policy JACKSON NATIONAL LIFE INSURANCE COMPANY ("the Company" or Jackson National) agrees to provide benefits to the Contract Owner subject to the provisions set forth in this Contract and in consideration of the application and Premiums We receive. THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION AND ANNUITY PERIODS IS NOT GUARANTEED AND MAY INCREASE OR DECREASE BASED UPON THE INVESTMENT EXPERIENCE OF THE FUND UNDERLYING THE SEPARATE ACCOUNT. INFORMATION ON VARIABLE BENEFITS MAY BE FOUND ON PAGE 8-13. THE GUARANTEED ACCOUNT OPTIONS ARE SUBJECT TO AN INTEREST RATE ADJUSTMENT WHICH MAY INCREASE OR DECREASE AMOUNTS PAYABLE OR WITHDRAWN, BUT THE GUARANTEED ACCOUNT CONTRACT VALUE WILL NEVER DECREASE TO LESS THAN THE GUARANTEED ACCOUNT MINIMUM VALUE. NOTICE OF TWENTY-DAY RIGHT TO EXAMINE POLICY YOU MAY RETURN THIS CONTRACT TO THE SELLING AGENT OR JACKSON NATIONAL WITHIN 20 DAYS AFTER YOU RECEIVE IT. THE COMPANY WILL REFUND THE CONTRACT VALUE FOR THE VALUATION PERIOD IN WHICH THE CONTRACT IS RECEIVED. UPON SUCH REFUND, THE CONTRACT SHALL BE VOID. THIS IS A LEGAL CONTRACT BETWEEN YOU AND THE COMPANY. READ YOUR CONTRACT CAREFULLY. EXECUTED FOR THE COMPANY ON THE ISSUE DATE. INDIVIDUAL DEFERRED VARIABLE AND FIXED THIS CONTRACT IS SIGNED AT THE ANNUITY CONTRACT (FLEXIBLE PREMIUM). HOME OFFICE OF JACKSON MONTHLY INCOME AT MATURITY. NATIONAL LIFE, LANSING, DEATH BENEFIT PRIOR TO MATURITY. MICHIGAN NON-PARTICIPATING. /S/ ROBERT P. SALTZMAN PRESIDENT /S/ THOMAS J. MEYER SECRETARY 2 TABLE OF CONTENTS PAGE CONTRACT DATA PAGE .............................................. 2 PREMIUM ALLOCATION .............................................. 3 DEFINITIONS ..................................................... 4 GENERAL PROVISIONS .............................................. 6 CHARGES AND DEDUCTIONS .......................................... 7 ACCUMULATION PROVISIONS ......................................... 8 TRANSFER PROVISIONS.............................................. 9 WITHDRAWAL PROVISIONS ........................................... 10 DEATH BENEFIT PROVISIONS ........................................ 11 ANNUITY PROVISIONS .............................................. 12 ANNUITY OPTIONS ................................................. 12 TABLE OF ANNUITY OPTIONS ........................................ 14 3 CONTRACT DATA PAGE Contract Number: Annuitant: Owner: Issue Date: Issue State: Annuity Date: First Premium: Annual Contract Maintenance Charge: $35.00 Subsequent Guaranteed Rate: 3% Separate Account: Jackson National Separate Account - I Expense Risk Charge: On an annual basis, this charge equals 0.23% of the daily net asset value of the Portfolios. Administration Charge: On an annual basis, this charge equals 0.15% of the daily net asset value of the Portfolios. Mortality Risk Charge: On an annual basis, this charge equals 0.9% of the daily net asset value of the Portfolios. Enhanced Death Benefit Charge: On an annual basis, the charge equals 0.12% of the daily net asset value of the Portfolios.
Contingent Deferred Sales Charge: CONTRIBUTION YEAR PERCENT ----------------- ------- 0 7 1 6 2 5 3 4 4 3 5 2 6 1 7 0
Home Offices: Jackson National Life Insurance Company Annuity Service Center: 5901 Executive Drive P.O. Box 30389 Lansing, Michigan 48911 Lansing, Michigan 48909-7889 517/394-3400 800/766-4683 All payments and values in the Guaranteed Account are subject to an Interest Rate Adjustment, the calculation of which may result in an increase or decrease in amounts payable. In no event will the values be less than the Guaranteed Account Minimum Value. 4 PREMIUM ALLOCATION PORTFOLIO OPTIONS ______________________________________________________________ GUARANTEED ACCOUNT OPTIONS ______________________________________________________________ 5 DEFINITIONS ACCUMULATION UNIT. A unit of measurement used to compute the Contract Value prior to the Annuity Date. ANNUITY SERVICE CENTER. The address and telephone number are as specified on the Contract Data Page. The Company will notify Contract Owners of any change in address or telephone number. ANNUITANT. The natural person on whose life the annuity benefit for this Contract is based. ANNUITY DATE. The date on which annuity payments are to start. The latest possible Annuity date will be set by us. ANNUITY UNIT. A unit of measurement used to compute the amount of Variable Annuity payments. BENEFICIARY(IES). The person(s) designated to receive any benefits under a contract upon the death of the Annuitant. CODE. The Internal Revenue Code of 1986, as amended, or as the same may be amended or superseded. CONTRACT VALUE. The sum of the Separate Account Contract Value and the Guaranteed Account Contract Value. CONTRACT YEAR. A year starting from the Issue Date in one calendar year and ending on the Issue Date in the succeeding calendar year. CONTRIBUTION YEAR. A year beginning from the date of the payment of a Premium in one calendar year and ending on the anniversary of such date in the succeeding calendar year. The Contribution Year in which a Premium is made is "Contribution Year 0." Subsequent Contribution Years are successively numbered beginning with Contribution Year 1. CURRENT INTEREST RATE. The rate of interest established by the Company for a specified Guaranteed Period. In no event will the Current Interest Rate be less than the Subsequent Guaranteed Rate shown on the Contract Data Page. DEFERRED ANNUITY. An annuity contract under which the start of annuity payments is deferred to a future date. FIXED ANNUITY. A series of periodic payments made during the annuity period to a payee under the Contract that are fixed in amount. FUND. A collective term used to represent an investment entity which may be selected to be an underlying investment of the Contract. GUARANTEED ACCOUNT. Contract Values allocated to one or more of the Guaranteed Account Options under the Contract. GUARANTEED ACCOUNT CONTRACT VALUE. The sum of all amounts credited to the Guaranteed Account Options under the Contract, less any amounts canceled or withdrawn for charges, deductions, surrenders or transfers. GUARANTEED ACCOUNT MINIMUM VALUE. Premiums, less premium tax, and transfers allocated to the Guaranteed Account, less Withdrawal Amounts and associated Withdrawal Charges from the Guaranteed Account, accumulated at 3%, less any Withdrawal Charge or Premium Tax due. GUARANTEED ACCOUNT OPTION. A Premium or transfer allocated to a subaccount of the Guaranteed Account for a specific Guaranteed Period and associated expiration date. GUARANTEED PERIOD. A period for which the Current Interest Rate is credited. The available Guaranteed Periods are listed on the Contract application. HOME OFFICE. The address and telephone number are as specified on the Contract Data Page. INTEREST RATE ADJUSTMENT. An adjustment applied, with certain exceptions, to amounts withdrawn, transferred or annuitized from the Guaranteed Account prior to the end of the applicable Guaranteed Account Option. ISSUE DATE. The date Your Contract is issued, shown on the Contract Data Page. 6 LATEST ANNUITY DATE. The date on which the Owner attains age 90 under a Non-Qualified Plan Contract, or age 70 1/2 under a Qualified Plan Contract, unless otherwise approved by the Company. NONQUALIFIED PLAN. A retirement plan which does not receive favorable tax treatment under Section 401, 403, 408 or 457 of the Internal Revenue Code. OWNER ("YOU," "YOUR"). The person or entity named in the application who is entitled to exercise all rights and privileges under this Contract. Usually, but not always, the Owner is also the Annuitant. The Owner is responsible for taxes, regardless of who receives annuity benefits. IF JOINT OWNERS ARE NAMED, THE JOINT OWNER MUST BE A SPOUSE. Joint Owners share ownership in all respects. PAYEE. Any person receiving payment of annuity benefits under this Contract during the Annuity Period. PORTFOLIO. A subdivision of the Separate Account invested wholly in shares of one of the investment series of the Underlying Funds. PREMIUMS. Payments made by or on behalf of the Owner to the Company for the Contract. QUALIFIED PLAN. A retirement plan which receives favorable tax treatment under Section 401, 403, 408 or 457 of the Internal Revenue Code. SEPARATE ACCOUNT. A segregated asset account named on the Contract Data Page, established by the Company in accordance with Michigan law. The Separate Account consists of several Portfolios, each investing in a separate series of the Underlying Funds. The Prospectus should be read for complete details regarding the Separate Account and Contracts. SEPARATE ACCOUNT CONTRACT VALUE. The sum of the value of all Portfolio Accumulation Units under the Contract. SUBSEQUENT GUARANTEED RATE. The rate of interest established by the Company for the applicable subsequent Guaranteed Period, but in not event less than the rate set forth on the Contract Date Page. UNDERLYING FUNDS(S). The underlying entities in which the Portfolios invest. VALUATION DATE. Each day of the New York Stock Exchange is open for business. VALUATION PERIOD. The period beginning at the close of business of the New York Stock Exchange (NYSE) on each Valuation Date and ending at the close of the NYSE on the next succeeding Valuation Date. VARIABLE ANNUITY. A series of periodic payments which vary in amount according to the investment experience of the Portfolios to which Contract Values have been allocated. WE, OUR, US, THE COMPANY. Jackson National Life Insurance Company. WITHDRAWAL AMOUNT. The amount transferred to a Guaranteed Account Option or Portfolio in the event of a transfer or the amount paid to a Contract Owner in the event of a withdrawal, annuitization or death. WITHDRAWAL CHARGE. The Contingent Deferred Sales Charge assessed against certain withdrawals. WITHDRAWAL VALUE. The Contract Value, less any premium tax payable, minus any applicable Contract charges, including the Interest Rate Adjustment. 7 GENERAL PROVISION ASSIGNMENT. The Owner may assign this Contract before the Annuity Date, but we will not be bound by an assignment unless it is in writing and has been recorded at our Annuity Service Center. We are not responsible for any payments made before an assignment is recorded. The Owner may exercise these rights subject to the interest of any assignee or irrevocable beneficiary. We assume no responsibility for the validity or tax consequences of any assignment. If the Contract is issued pursuant to a Qualified Plan (or a Nonqualified Plan that is subject to ERISA), it may not be assigned except under such conditions as may be allowed under applicable law. CONFORMITY WITH STATE LAWS. This Contract will be interpreted under the law of the state in which it is issued. Any provision which, on the Issue Date, is in conflict with the law of such state, is amended to conform to the minimum requirements of such law. CREDITING OF INTEREST. Interest will be credited to the Guaranteed Account Contract Value during the Guaranteed Period from the date premium is received by the Company. The rate of interest for the Guaranteed Period selected will be as declared in advance by the Company's Board of Directors. The rate of interest will never be less than the rate shown on the Contract Data Page. DEFERMENT OF PAYMENTS. We may defer making payments from the Guaranteed Account for up to 6 months. Interest, subject to state requirements, will be credited during the deferral period. ENTIRE CONTRACT. The policy is a Contract. The Contract, Contract Data Page, application and any applicable endorsements together make up the entire Contract. MISSTATEMENT OF AGE. If the age of the Annuitant has been misstated, the benefits will be those which the Premiums paid would have purchased at the correct age. Any underpayments will be made up immediately by the Company. Overpayments will be deducted from future payments. MODIFICATION OF CONTRACT. Any change or waiver of the provisions of this Contract must be in writing and signed by the President, a Vice President, the Secretary or Assistant Secretary or the Company. No agent has authority to change or waive any provision of this Contract. NONPARTICIPATING. This Contract does not share in our surplus or earnings. PREMIUMS. Premiums are flexible. This means that you, subject to Company declared minimums and maximums, may change the amounts, frequency or timing of Premiums. The initial Premium must be at least $5,000 for Nonqualified Plan Contracts and $2,000 for Qualified Plan Contracts. Subsequent Premiums must be at least $500 ($50 if made in connection with an automatic payment plan). Total Premiums under a contract may not exceed $1,000,000. The Company may waive the minimums or maximums at any time. Premiums may be allocated among one or more of the Guaranteed Account Options and one or more of the Portfolios of the Separate Account in accordance with instructions from you. Such election may be made in any percent from 0% to 100% in whole percentages. The minimum that may be allocated to a Guaranteed Account Option or a Portfolio under the Contract is $100. PREMIUM TAXES. The Company may deduct from the Contract Value any premium taxes or other taxes payable to a state or other government entity. Should we advance any amount so due, we are not waiving any right to collect such amounts at a later day. The Company will deduct any withholding taxes required by applicable law. PROOF OF AGE OR SURVIVAL. The Company may require satisfactory proof of correct age upon annuitization. If any payment under this Contract depends on the Annuitant being alive, the Company may require satisfactory proof of survival. QUARTERLY REPORTS. The Company will furnish each Owner with a statement of the Contract Value and Portfolio balances at least quarterly. 8 SEPARATE ACCOUNT. The Separate Account is a Separate investment account of the Company. It is shown on the Contract Data Page. The assets of the Separate Account are the property of the Company. However, they are not credited with earnings or chargeable with liabilities arising out of any other business the Company may conduct. Each Portfolio is not chargeable with liabilities arising out of any other Portfolio. SUSPENSION OF PAYMENTS. We may suspend or postpone any payments from the Portfolios if any of the following occur: a) The New York Stock Exchange is closed. b) Trading on the New York Stock Exchange is restricted. c) An emergency exists such that it is not reasonably practical to dispose of securities in the Separate Account or to determine the value of its assets, or d) The Securities and Exchange Commission, by order, so permits the protection of security holders. SUBSTITUTION OF FUND. If the shares of any of the Funds or any series of the Fund should no longer be available for investment by the Separate Account or if, in the judgment of the Company's Board of Directors, further investment in the shares of a Fund is no longer appropriate in view of the purpose of the Contract, the Company may substitute shares of another mutual fund or series within a mutual fund for Fund shares already purchased or to be purchased in the future by Premiums under the Contract. No substitution of securities may take place without prior approval of the Securities and Exchange Commission and under such requirements as it may impose. WRITTEN NOTICE. Any notice we send to the Owner will be sent to the Owner's address shown in the application unless the Owner requests otherwise. Any written request or notice to us must be sent to our Annuity Service Center. CHARGES AND DEDUCTIONS We will deduct the following charges from the Contract: ADMINISTRATION CHARGE. The charge specified on the Contract Data Page. This charge is to compensate Us for all administrative expenses associated with the Contract. ANNUAL CONTRACT MAINTENANCE CHARGE. The charge specified on the Contract Data Page will be deducted on each Contract anniversary that occurs on or prior to the Annuity Date. It will also be deducted when the Contract Value is withdrawn in full if withdrawal is not on a Contract anniversary. We reserve the right to assess a charge on a class basis which is less than the charge specified on the Contract Data Page. CONTINGENT DEFERRED SALES CHARGE. This charge may be deducted upon withdrawal of the Contract Value, in whole or in part. See WITHDRAWAL PROVISIONS. ENHANCED DEATH BENEFIT CHARGE. The charge specified on the Contract Data Page. This charge is to compensate Us for the risk assumed as a result of contractual obligations to provide an Enhanced Death Benefit prior to the Annuity Date. This charge is applicable in all states. EXPENSE RISK CHARGE. The charge specified on the Contract Data Page. This charge is to compensate Us for assuming the expense risks under the Contract. INTEREST RATE ADJUSTMENT. See INTEREST RATE ADJUSTMENT section. MORTALITY RISK CHARGE. The charge specified on the Contract Data Page. This charge is to compensate Us for assuming the mortality risks under the Contract. TRANSFER FEE. A transfer fee of $25.00 will apply to transfers in excess of 15 in a Contract Year. The Company may waive the transfer fee in connection with preauthorized automatic transfer programs. 9 ACCUMULATION PROVISIONS ACCUMULATION UNIT VALUE (AUV). Accumulation Unit Value is determined Monday through Friday on each day that the New York Stock Exchange is open for business. A separate Accumulation Unit Value is determined for each Portfolio. If the Company elects or is required to assess a charge for taxes, a separate Accumulation Unit Value may be calculated for Contracts issued in connection with Nonqualified and Qualified Plans, respectively, within each Portfolio. The Accumulation Unit Value for each Portfolio will vary with the price of a share in the Underlying Fund and in accordance with the Mortality (including the Enhanced Death Benefit Charge) and Expense Risk Charge, Administration, and any provision for taxes. Assessments of Withdrawal Charges, Transfer Fees and Contract Maintenance Charges are effected by redemption of Accumulation Units and do not affect Accumulation Unit Value. The Accumulation Unit Value of a Portfolio for any Valuation Period is calculated by subtracting (2) from (1) and dividing the result by (3) where: 1) is the total value at the end of the given Valuation Period of the assets attributable to the Accumulation Units of the Portfolio minus the total liabilities; 2) is the cumulative unpaid charge for assumptions of Mortality and Expense Risk Charge, and for Administration Charge; and 3) is the number of Accumulation Units outstanding at the end of the given Valuation Period. GUARANTEED ACCOUNT CONTRACT VALUE. The Guaranteed Account Value under the contract shall be the sum of all monies allocated or transferred to the Guaranteed Account, reduced by any applicable premium taxes, plus all interest credited to the Guaranteed Account during the period that the Contract has been in effect. This amount shall be adjusted for withdrawals, annuitizations, transfers, and charges. GUARANTEED ACCOUNT OPTIONS. For any amounts allocated to the Guaranteed Account, the Owner will select the duration of the Guaranteed Account Option from those made available by the Company. Such amounts will earn interest at the Current Interest Rate for the chosen duration, compounded annually during the entire Guaranteed Period. In no event will the Current Interest Rate be less than the Subsequent Guaranteed Rate specified on the Contract Data Page. You may allocate Premiums, or make transfers from the Portfolios, to the Guaranteed Account at any time prior to the latest Annuity Date. However, no Guaranteed Period other than one year may be chosen which extends beyond the latest Annuity Date. Withdrawals from a Guaranteed Account Options may take place thirty (30) days following the end of the corresponding Guaranteed Period without being subject to an Interest Rate Adjustment. If the Owner does not specify a Guaranteed Period at the time of renewal, We will select the same Guaranteed Period as has just expired, so long as such Guaranteed Period does not extend beyond the Annuity Date. If such Guaranteed Period does extend beyond the Annuity Date, We will choose the longest period that will not extend beyond such date. If a renewal occurs within one year of the Annuity Date, We will credit interest up to the Annuity Date at the then Current Interest Rate for the one-year Guaranteed Period. INTEREST RATE ADJUSTMENT. Except in the 30-day period following the end of a Guaranteed Period, any amount withdrawn or transferred from a Guaranteed Account Option will be subject to an Interest Rate Adjustment. The Interest Rate Adjustment will be calculated by multiplying the amount withdrawn, transferred or annuitized by the formula described below: [1 + I](m/12) -1 ------- [1 + J](m/12) 10 where: I = The base rate credited to the current Guaranteed Period. J = The base rate that would be credited to the Guaranteed Account Option of the same duration at the time of withdrawal or transfer, increased by 0.5%. When no Guaranteed Account Option of the same duration is available, the rate will be established by linear interpolation. M = The number of complete months remaining to the end of the Guaranteed Account Option. There will be no Interest Rate Adjustment when J is greater than 1 but by less than 0.5%. In addition, the Interest Rate Adjustment will be be applied to amounts withdrawn for: a) the payment of death benefit proceeds, b) the payment of charges or fees; or c) transfers relating to Dollar Cost Averaging from the one-year Guaranteed Account Option. In no event will the total Withdrawal Amount available be less than the Guaranteed Account Minimum Value. TRANSFER PROVISIONS TRANSFERS. Transfers between Portfolios and Guaranteed Account Options may be made as described below. Such transfers are not subject to Withdrawal Charges. Transfers from the Guaranteed Account will be subject to applicable Interest Rate Adjustments. The minimum transfer amount is $100. The remaining Contract Value of a Portfolio or Guaranteed Account Option after a transfer must be at least $100. If a transfer would cause a remaining value to be less than $100, all of the value must be transferred, or no transfer can take place. The Company reserves the right to waive the minimum transfer amount in connection with preauthorized automatic transfer programs. FROM PORTFOLIO TO PORTFOLIO. Both prior to and after the Annuity Date, You may transfer all or a portion of Your investment in one Portfolio to another Portfolio. A transfer will result in the purchase of Accumulation Units in a Portfolio and redemption of Accumulation Units in the other Portfolio. Transfers will be effected at the end of the Valuation Period in which We receive Your request for the transfer. FROM PORTFOLIO TO THE GUARANTEED ACCOUNT. Prior to the Annuity Date, You may transfer all or a portion of the value of Your Portfolio(s) to a Guaranteed Account Option. This will result in the redemption of Accumulation Units and will be effected at the end of the Valuation Period in which We receive Your request for transfer. FROM GUARANTEED ACCOUNT TO GUARANTEED ACCOUNT OR PORTFOLIO. Other than on renewal of a Guaranteed Account Option (see GUARANTEED ACCOUNT OPTIONS), transfers made between Guaranteed Account Options or from a Guaranteed Account Option to a Portfolio are subject to an Interest Rate Adjustment. 11 WITHDRAWAL PROVISIONS Prior to the Annuity Date, you may withdraw all or part of the Contract Value amounts under this Contract by informing us at our Annuity Service Center. For full withdrawal, this Contract, or a Lost Contract Affidavit, must be returned to Our Annuity Service Center. Except in connection with a systematic withdrawal program, the minimum partial withdrawal amount is $500, or if less, the Owner's entire interest in the Portfolio or Guaranteed Account Option from which a withdrawal is requested. The Owner's interest in the Portfolio or Guaranteed Account Option from which the withdrawal is requested must be at least $100 after the withdrawal is completed if anything is left in that Portfolio or Guaranteed Account Option. Absent written notification to the contrary, withdrawals and any applicable charge will be deducted from the Contract Value in proporation to their allocation among the Portfolios and Guaranteed Account Options. Withdrawals will be based on values at the end of the Valuation Period in which the request for withdrawal and the Contract, or a Lost Contract Affidavit, (in a case of a full withdrawal), are received at the Annuity Service Center. Withdrawals are subject to applicable Interest Rate Adjustments. CONTINGENT DEFERRED SALES CHARGE. A Contingent Deferred Sales Charge, which is referred to as the Withdrawal Charge, may be imposed upon certain withdrawals. Withdrawal Charges will vary in amount depending upon the Contribution Year of the Premium at the time of withdrawal in accordance with the Withdrawal Charge table shown below. The Withdrawal Charge schedule is: CONTRIBUTION YEAR PERCENT 0 7 1 6 2 5 3 4 4 3 5 2 6 1 7 0 The Withdrawal Charge is deducted from the remaining Contract Value so that the actual reduction in Contract Value as a result of the withdrawal will be greater than the withdrawal amount requested and paid. For purposes of determining the Withdrawal Charge, withdrawals will be allocated first to earnings, if any (which may be withdrawn free to Withdrawal Charge), and then to Premium on a first-in, first-out basis so that all withdrawals are allocated to Premium to which the lower (if any) Withdrawal Charge applies. Premiums that are no longer subject to the Withdrawal Charge (and not previously withdrawn), plus earnings in the Owner's account may be withdrawn free of Withdrawal Charges at any time. In addition, there may be a free withdrawal amount for the first withdrawal during a Contract Year ("Additional Free Withdrawal"). The Additional Free Withdrawal amount is equal to 10% of Premium that remains subject to the Withdrawal Charge and that has not previously been withdrawn, less earnings in the Owner's account. Although Additional Free Withdrawal amounts reduce principal in an Owner's account, they do not reduce Premium for purposes of calculating the Withdrawal Charge. As a result, an Owner will not receive the benefit of an Additional Free Withdrawal in a full surrender. If the withdrawal request does not specify from which Portfolio(s) or Guaranteed Account Option(s) the withdrawal is to be made, the request will be processed by making withdrawals from each Portfolio and each Guaranteed Account Option in proportion to their allocations. In no event shall the amount withdrawn exceed the Withdrawal Value. The Company will waive the Withdrawal Charge on any withdrawal necessary to satisfy the minimum distribution requirements of the Code. In addition to a Withdrawal Charge, a withdrawal from the Guaranteed Account may also incur an Interest Rate Adjustment. See INTEREST RATE ADJUSTMENT for further details. 12 DEATH BENEFIT PROVISIONS DEATH OF CONTRACT OWNER BEFORE THE ANNUITY DATE: Upon Your death, or the death of any Joint Contract Owner, before the Annuity Date, the Death Benefit will be paid to the Beneficiary(ies) designated by You. Upon the death of a Joint Contract Owner, the surviving Joint Contract Owner, if any, will be treated as the primary Beneficiary. Any other Beneficiary designation on record at the Company's Home Office at the time of death will be treated as a contingent Beneficiary DEATH BENEFIT AMOUNT BEFORE THE ANNUITY DATE: The standard Death Benefit is equal to the greater of: 1) the Contract Value at the end of the Valuation Period during which due proof of death and an election of the type of payment to the Beneficiary is received by the Company, at Home Office; or 2) the total Premiums paid prior to the death of the Owner, minus the sum of: a) the total withdrawals and any Withdrawal Charges assessed; and b) premium taxes incurred. In addition, where permitted by state law, the Company will provide an Enhanced Death Benefit. The Enhanced Death Benefit is determined by (A) recomputing the standard Death Benefit by accumulating all amounts under (2) above annually at 5% (4% if the Owner was age 70 or older on the Issue Date) to the date of death, and (B) paying the greater of the amount so determined and the following amount, which is deemed to be $0 if the Owner dies prior to the seventh Contract Year: The Contract Value at the seventh Contract Year, plus any Premiums paid since that time and prior to death, minus the sum of: a) total withdrawals and any Withdrawal Charges assessed since such seventh Contract Year; and b) premium taxes incurred since the seventh Contract Year, all accumulated annually at 5% (4% if the Owner was age 70 or older on the Issue Date) to the date of death. The Enhanced Death Benefit shall never exceed 250% of all Premiums paid to the Contract, reduced by the amount of any withdrawals. DEATH BENEFIT OPTIONS BEFORE ANNUITY DATE: In the event of Your death or any Joint Contract Owner's death before the Annuity Date, a Beneficiary must request that the Death Benefit be paid under one of the Death Benefit Options below. In addition, if the Beneficiary is the spouse of the Contract Owner, he or she may elect to continue the Contract, at the then Contract Value, in his or her own name and exercise all the Contract Owner's rights under the Contract. The following are the Death Benefit Options: * Option 1 - lump-sum payment of the Death Benefit; or * Option 2 - the payment of the entire Death Benefit within 5 years of the date of the death of the Contract Owner or any Joint Contract Owner; or * Option 3 - payment of the Death Benefit under an Annuity Option over the lifetime of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary, with distribution beginning within one year of the date of Your death or the death of any Joint Contract Owner. Any portion of the death benefit not applied under Option 3 within one year of the date of a Contract Owner's death, must be distributed within five years of the date of death. If a lump-sum payment is requested, the amount will be paid within seven (7) days of receipt of proof of death and the election unless the Suspension or Deferral of Payments Provision is in effect. Payment to the Beneficiary, other than in a single sum, may only be elected during the sixty-day period beginning with the date of receipt of proof of death. DEATH OF CONTRACT OWNER AFTER THE ANNUITY DATE: If You, or any Joint Contract Owner, die after the Annuity Date, and You are not an Annuitant, any remaining payments under the Annuity Option elected will continue at least as rapidly as under the method of distribution in effect at the Contract Owner's death. Upon Your death after the Annuity Date, the Beneficiary becomes the Contract Owner. 13 DEATH OF ANNUITANT: Upon the death of an Annuitant, who is not a Contract Owner, before the Annuity Date, You may designate a new Annuitant, subject to the Company's underwriting rules then in effect. If no designation is made within 30 days of the death of the Annuitant, You will become the Annuitant. If the Contract Owner is a non-natural person, the death of the Annuitant will be treated as the death of the Contract Owner and a new Annuitant may not be designated. Upon the death of the Annuitant after the Annuity Date, the death benefit, if any, will be as specified in the Annuity Option elected. Death benefits will be paid at least as rapidly as under the method of distribution in effect at the Annuitant's death. 14 ANNUITY PROVISIONS ANNUITY DATE. The date on which annuity payments are to begin. In selecting an Annuity Date, the Owner may wish to consider the applicability of a Withdrawal Charge, which is imposed upon annuitizations which occur within one year of the Issue Date. Annuity payments will begin no later than the Latest Annuity Date. If no Annuity Date is selected, the Annuity Date will be the Latest Annuity Day. The Owner may change the Annuity Date at any time, at least seven days prior to the Annuity Date then indicated on the Company's records, by written notice to the Company at its Annuity Service Center. ANNUITY OPTIONS. The Owner, or any Beneficiary who is so entitled, may elect to receive a lump sum at the end of the accumulation period. However, a lump-sum distribution may be deemed to be a withdrawal, and at least a portion of it may be subject to income tax. Alternatively, an Annuity Option may be elected. The Owner may, upon prior written notice to the Company at its Annuity Service Center, elect an Annuity Option at any time prior to the Annuity Date. A change of Annuity Options is permitted if made at least 7 days before the Annuity Date. If no other Annuity Option is elected, monthly annuity payments will be made in accordance with Option 3 below, a Life annuity with 120-month period certain. Annuity payments will be made in monthly, quarterly, semi-annual or annual installments as selected by the Owner. However, if the amount available to apply under an Annuity Option is less than $5,000, and state law permits, the Company has the right to pay the annuity in one lump sum. In addition, if the first payment provided would be less than $50, and state law permits, the Company shall have the right to require the frequency of payments be at quarterly, semiannual or annual intervals so as to result in an initial payment of at least $50. NO WITHDRAWALS OF CONTRACT VALUE ARE PERMITTED DURING THE ANNUITY PERIOD FOR ANY ANNUITY OPTION UNDER WHICH PAYMENTS ARE BEING MADE PURSUANT TO LIFE CONTINGENCIES. Upon written election filed with The Company at its Annuity Service Center, all of the Contract Value will be applied to provide one of the following Annuity Options. The portion of the Contract Value which is in the Guaranteed Account immediately prior to the Annuity Date, applied to an Annuity Option, will be subject to applicable Interest Rate Adjustments. OPTION 1 - LIFE INCOME An annuity payable monthly during the lifetime of the Annuitant. Under this option, no further payments are payable after the death of the Annuitant, and there is not provision for a death benefit payable to the Beneficiary. Therefore, it is possible under Option 1 for the payee to receive only one monthly annuity payment under this Contract. OPTION 2 - JOINT AND SURVIVOR An annuity payable monthly while both the Annuitant and a designated second person are living. Upon the death of either person, the monthly income payable will continue during the lifetime of the survivor. If a reduced payment to the survivor is desired, variable annuity payments will be determined using either one-half or two-thirds of the number of each type of Annuity Unit credited. Fixed payments will be equal to either one-half or two-thirds of the fixed payment payable during the joint life of the Annuitant and the designated second person. Annuity payments terminate automatically and immediately upon the death of the surviving person without regard to the number or total amount of payments received. There is no minimum number of guaranteed payments, and it is possible to have only one annuity payment if both the Annuitant and the designated second person die before the due date of the second payment. OPTION 3 - LIFE ANNUITY WITH 120 OR 240 MONTH PAYMENTS GUARANTEED An annuity payable monthly during the lifetime of the Annuitant with the guarantee that if, at the death of the Annuitant, payments have been made for fewer than the guaranteed 120 or 240 monthly periods, as elected by the Owner, the balance of the guaranteed number of payments will be made to the Beneficiary. 15 OPTION 4 - INCOME FOR A SPECIFIED PERIOD Under this option, a payee can elect an annuity payable monthly for any period of years from 5 to 30. This election must be made for full 12-month periods. In the event the payee dies before the specified number of payments has been made, the Beneficiary may elect to continue receiving the scheduled payments or may alternatively elect to receive the discounted present value of any remaining guaranteed payments in a lump sum. ADDITIONAL OPTIONS. Other Annuity Options may be made available by the Company. FIXED ANNUITY PAYMENTS. To the extent a fixed Annuity Option has been elected, the proceeds payable under this Contract, less any applicable premium taxes, shall be applied to the payment of the Annuity Option elected at whichever of the following is more favorable to the Payee; (a) the annuity rates based upon the applicable tables in the contract; (b) the then current rates provided by the Company on contracts of this type on the Annuity Date. In no event will the Fixed Annuity payments be changed once they begin. AMOUNT OF FIXED ANNUITY PAYMENTS. The amount of each Fixed Annuity payment will be determined by applying the portion of the Contract Value allocated by Fixed Annuity payments less any applicable premium taxes, charges and any Interest Rate Adjustment that may apply in the case of premature annuitizations, to the annuity table applicable to the Annuity Option chosen. AMOUNT OF VARIABLE ANNUITY PAYMENTS. First Variable Payment. The dollar amount of the first monthly annuity payment will be determined by applying the portion of the Contract Value allocated to Variable Annuity payments, less any applicable premiums taxes, to the annuity table applicable to the Annuity Option chosen. Those tables are based on a set amount per $1,000 of proceeds applied. The dollars applied are then divided by 1,000 and the result multiplied by the appropriate annuity factor appearing in the table to compute the amount o the First monthly annuity payment. That amount is divided by the value of an Annuity Unit as the Annuity Date to establish the number of Annuity Units representing each Variable Annuity payment. The number of Annuity Units determined for the first Variable Annuity payment remains constant for the second and subsequent monthly Variable Annuity payments, assuming that no reallocation of Contract Values is made. The total Variable Annuity payment is equal to the sum of the annuity payments as determined above for each Portfolio to which the Contract Value is allocated on the Annuity Date. Number of Variable Units. The number of Annuity Units for each applicable Portfolio is the amount of the first annuity payment attributable to that Portfolio divided by the value of the applicable Annuity Unit for that Portfolio as of the Annuity Date. The number will not change as a result of investment experience. Annuity Unit Value. The initial value of an Annuity Unit of each Portfolio was set when the Portfolios were established. The value may increase or decrease from one Valuation Period to the next. For any Valuation Period, the value of an Annuity Unit of a particular Portfolio is the value of that Annuity Units. during the last Valuation Period multiplied by the net investment factor for that Portfolio for the current Valuation Period. The Net Investment Factor for any Portfolio for any Valuation Period is determined by dividing (a) by (b) and then subtracting (c) from the result where: a) is the net result of: 1) the net asset value of the Fund share held in the Portfolio determined as of the end of the Valuation Period, plus 2) the per share amount of any dividend or other distribution declared by the Fund on the shares held in the Portfolio if the "ex-dividend" date occurs during the Valuation Period, plus or minus 3) a per share credit or charge with respect to any taxes paid or reserved for by the Company during the Valuation Period which are determined by the Company to be attributable to the operation of the Portfolio. (No federal income taxes are applicable under present law.) 16 b) is the net asset value of the Fund share held in the Portfolio determined as of the end of the preceding Valuation Period; and c) is the asset charge factor determined by the Company for the Valuation Period to reflect the Expense Risk Charge, Administration Charge, Mortality Risk Charge and Enhanced Death Benefit Charge. The result is then multiplied by a factor that neutralizes the assumed investment rate. Subsequent Variable Annuity Payments. After the first Variable Annuity payment, payments will vary in amount according to the investment performance of the applicable Portfolios. The amount may change from month to month. The amount of each subsequent payment is the sum of: The number of Annuity Units for each Portfolio as determined for the first annuity payment, multiplied by the value of an Annuity Unit for that Portfolio at the end of the Valuation Period immediately preceding in which payment is due. The Company guarantees that the amount of each Variable Annuity payment will not be affected by variations in expenses or mortality experience. BASIS OF COMPUTATION. The actuarial basis for the Table of Guaranteed Annuity Rates is the 1983a Annuity Mortality Table, without projection with interest at 3.0%. The Table of Guaranteed Annuity Rates does not include any applicable premium tax. 17 TABLE OF ANNUITY OPTIONS The following table is for a contract whose net proceeds are $1,000, and will apply pro rata to the amount payable under this contract.
UNDER OPTION 4 MONTHLY INSTALLMENT UNDER OPTIONS 1 or 3 - ---------------- -------------------------------------------------------------------------------------------------------- No. of Age of No. of Mos. Age of No. of Mos. Age of No. of Mos. Age of No. of Mos. Monthly Monthly Payee Certain Payee Certain Payee Certain Payee Certain Install- Install- -------------------- -------------------- ----------------- ------------------ ments ments Male Life 120 240 Male Life 120 240 Female Life 120 240 Female Life 120 240 - ----------------------------------------------------------------------------------------------------------------------------------- 60 17.95 40 3.67 3.66 3.61 70 7.28 6.64 5.28 40 3.44 3.43 3.42 70 6.29 5.99 5.14 74 15.17 41 3.72 3.71 3.68 71 7.56 6.82 5.33 41 3.48 3.47 3.45 71 6.52 6.17 5.20 84 13.19 42 3.77 3.76 3.70 72 7.86 7.00 5.36 42 3.52 3.51 3.48 72 6.78 6.35 5.24 96 11.71 43 3.82 3.81 3.74 73 8.19 7.17 5.39 43 3.56 3.55 3.52 73 7.02 6.54 5.30 108 10.56 44 3.89 3.86 3.79 74 8.52 7.35 5.41 44 3.60 3.59 3.56 74 7.31 6.73 5.34 120 9.64 45 3.95 3.92 3.83 75 8.90 7.53 5.43 45 3.64 3.63 3.60 75 7.82 6.92 5.37 132 8.89 46 4.00 3.98 3.89 76 9.30 7.71 5.45 46 3.70 3.69 3.64 76 7.96 7.12 5.40 144 8.26 47 4.07 4.04 3.94 77 9.71 7.89 5.47 47 3.75 3.74 3.69 77 8.32 7.33 5.43 156 7.73 48 4.14 4.10 3.99 78 10.71 8.05 5.48 48 3.80 3.79 3.74 78 8.72 7.53 5.45 168 7.28 49 4.21 4.17 4.04 79 10.66 8.21 5.49 49 3.86 3.84 3.79 79 9.16 7.73 5.46 180 6.88 50 4.28 4.24 4.10 80 11.19 8.37 5.50 50 3.92 3.91 3.83 80 9.62 7.93 5.48 192 6.55 51 4.37 4.31 4.16 81 11.75 8.51 5.50 51 3.98 3.96 3.89 81 10.13 8.11 5.49 204 6.25 52 4.45 4.39 4.22 82 12.34 8.65 5.51 52 4.05 4.02 3.95 82 10.68 8.30 5.50 216 5.97 53 4.53 4.47 4.27 83 12.97 8.77 5.51 53 4.11 4.09 4.00 83 11.28 8.47 5.50 228 5.74 54 4.63 4.55 4.33 84 13.65 8.90 5.52 54 4.20 4.17 4.06 84 11.93 8.83 5.51 240 5.52 55 4.72 4.65 4.40 85 14.36 9.00 5.52 55 4.27 4.24 4.13 85 12.64 8.77 5.51 252 5.34 56 4.83 4.74 4.47 86 15.11 9.10 5.52 56 4.36 4.31 4.19 86 13.39 8.91 5.52 264 5.16 57 4.94 4.84 4.53 87 15.91 9.19 5.52 57 4.44 4.40 4.25 87 14.20 9.02 5.52 288 5.00 58 5.05 4.94 4.60 88 16.74 9.26 5.52 58 4.53 4.49 4.31 88 15.07 9.13 5.52 300 4.86 59 5.18 5.05 4.68 89 17.84 9.34 5.52 59 4.64 4.57 4.39 89 15.99 9.21 5.52 4.72 60 5.31 5.17 4.73 90 18.59 9.39 5.52 60 4.74 4.68 4.45 90 16.96 9.30 5.52 61 5.45 5.28 4.79 91 19.61 9.44 5.52 61 4.86 4.78 4.52 91 17.97 9.36 5.52 62 5.61 5.42 4.86 92 20.71 9.49 5.52 62 4.97 4.89 4.60 92 19.04 9.41 5.52 63 5.77 5.56 4.92 93 21.89 9.52 5.52 63 5.10 5.00 4.67 93 20.15 9.46 5.52 64 5.94 5.69 4.98 94 23.16 9.56 5.52 64 5.23 5.12 4.74 94 21.31 9.50 5.52 65 6.13 5.84 5.04 95 24.55 9.58 5.52 65 5.38 5.25 4.81 95 22.51 9.54 5.52 66 6.33 5.98 5.10 96 26.07 9.60 5.52 66 5.54 5.38 4.88 96 23.78 9.57 5.52 67 6.55 6.14 5.15 97 27.73 9.62 5.52 67 5.70 5.52 4.95 97 25.14 9.59 5.52 68 6.78 6.31 5.20 98 29.58 9.62 5.52 68 5.88 5.67 5.01 98 26.62 9.61 5.52 69 7.02 6.48 5.24 99 31.63 9.63 5.52 69 6.08 5.83 5.08 99 28.27 9.62 5.52
18 TABLE OF ANNUITY OPTIONS The following table is for this contract whose net proceeds are $1,000, and will apply pro rata to the amount payable under this contract.
UNDER OPTION 4 MONTHLY INSTALLMENT UNDER OPTIONS 1 or 3 - ---------------- ------------------------------------------------------------------------------------ No. of No. of No. of Mos. No. of Mos. No. of Mos. Monthly Monthly Certain Certain Certain Install- Install- Age of -------------------- Age of -------------------- Age of --------------------- ments ments Payee Life 120 240 Payee Life 120 240 Payee Life 120 240 - --------------------------------------------------------------------------------------------------------------- 60 17.95 40 3.53 3.52 3.50 60 4.97 4.88 4.57 80 10.23 8.11 5.49 72 15.17 41 3.57 3.56 3.53 61 5.10 4.99 4.64 81 10.77 8.29 5.50 84 13.91 42 3.62 3.61 3.57 62 5.23 5.11 4.71 82 11.33 8.45 5.50 96 11.71 43 3.67 3.66 3.61 63 5.37 5.23 4.78 83 11.95 8.61 5.51 108 10.56 44 3.72 3.71 3.66 64 5.52 5.36 4.85 84 12.61 8.74 5.51 120 9.64 45 3.77 3.75 3.70 65 5.68 5.49 4.91 85 13.31 8.88 5.52 132 8.89 46 3.82 3.80 3.75 66 5.86 5.63 4.98 86 14.07 8.99 5.52 144 8.26 47 3.89 3.86 3.79 67 6.04 5.79 5.04 87 14.87 9.10 5.52 156 7.73 48 3.94 3.92 3.84 68 6.23 5.93 5.10 88 15.73 9.18 5.52 168 7.28 49 4.00 3.98 3.90 69 6.45 6.10 5.16 89 16.65 9.26 5.52 180 6.88 50 4.07 4.04 3.95 70 6.68 6.27 5.20 90 17.61 9.34 5.52 192 6.55 51 4.14 4.10 4.00 71 6.92 6.44 5.25 91 18.63 9.40 5.52 204 6.25 52 4.21 4.18 4.06 72 7.20 6.62 5.30 92 19.71 9.45 5.52 216 5.97 53 4.29 4.25 4.11 73 7.48 6.80 5.34 93 20.85 9.49 5.52 228 5.74 54 4.37 4.32 4.18 74 7.79 6.99 5.37 94 22.05 9.52 5.52 240 5.52 55 4.46 4.41 4.24 75 8.13 7.19 5.40 95 23.33 9.56 5.52 252 5.34 56 4.54 4.49 4.30 76 8.48 7.37 5.42 96 24.69 9.59 5.52 264 5.16 57 4.65 4.57 4.37 77 8.87 7.56 5.45 97 26.17 9.60 5.52 276 5.00 58 4.74 4.67 4.44 78 9.30 7.75 5.46 98 27.79 9.62 5.52 288 4.86 59 4.86 4.77 4.50 79 9.74 7.94 5.48 99 29.61 9.63 5.52 300 4.72
EX-99.B5 5 EX-99.B5 1 EXHIBIT 99.B5-app APPLICATION FOR THE PERSPECTIVE FIXED AND VARIABLE ANNUITY [LOGO] USE DARK INK ONLY PERSPECTIVE FIXED AND VARIABLE ANNUITY [GRAPHIC] ANNUITANT INFORMATION ________________________________________________________________________ Name (Print as desired in policy) ________________________________________________________________________ Social Security Number/Federal I.D. ________________________________________________________________________ Date of Birth Age Sex ________________________________________________________________________ Address (Number and Street) ________________________________________________________________________ City State ZIP ________________________________________________________________________ Phone ________________________________________________________________________ Employer ________________________________________________________________________ Policy Number (Home Office Use Only) [GRAPHIC] JOINT ANNUITANT ________________________________________________________________________ Name ________________________________________________________________________ Social Security Number/Federal I.D. ________________________________________________________________________ Date of Birth Relationship THE OWNER (if other than Proposed Annuitant) ________________________________________________________________________ Name ________________________________________________________________________ Social Security Number/Federal I.D. Date of Birth ________________________________________________________________________ Address (Number and Street) ________________________________________________________________________ City State ZIP CONTINGENT OWNER / / JOINT OWNER / / ________________________________________________________________________ Name ________________________________________________________________________ Social Security Number/Federal I.D. Date of Birth [GRAPHIC] THE BENEFICIARY ________________________________________________________________________ PRIMARY NAME ________________________________________________________________________ Date of Birth Relationship ________________________________________________________________________ CONTINGENT NAME ________________________________________________________________________ Date of Birth Relationship [GRAPHIC] PREMIUM ALLOCATION (whole percentages) (Must total 100%) JNL Capital Growth _______% JNL Aggressive Growth _______% JNL/Alger Growth _______% JNL Global Equities _______% JNL/Phoenix Growth _______% JNL/Phoenix Balanced _______% PPM/JNL Value Equity _______% PPM/JNL Money Market _______% PPM/JNL High Yield Bond _______% T. Rowe Price/JNL Established Growth _______% T. Rowe Price/JNL Mid-Cap Growth _______% T. Rowe Price/JNL Internat'l Equity _______% Salomon Bros/JNL Global Bond _______% Salomon Bros/JNL US Gov't & Qlty Bond _______% Guaranteed Options 1 year _______% 5 year _______% 3 year _______% 7 year _______% CAPITAL PROTECTION PROGRAM If a Guaranteed Option was selected, is this selection intended as part of the Capital Protection Program? / / Yes / / No If more than one Guaranteed Option is indicated. Which Guaranteed Period do you intend for the Capital Protection Program? / / 1 year / / 3 Year / / 5 Year / / 7 Year [GRAPHIC] PREMIUM PAYMENT Initial Premium With Application $___________________ ________________________________________________________________________ Will this annuity replace any existing life insurance or annuity? / / Yes / / No Details: Company ________________________________________________________________ Policy No. _____________________________________________________________ [GRAPHIC] ANNUITY TYPE TAX YEAR ______ IRC 1035 Exchange? / / Yes / / No / / Non Tax Qualified / / 408 Individual Retirement Annuity / / Regular / / Rollover / / Transfer / / Direct Rollover / / Rollover / / 401(k) Qualified Savings Plan / / Other ______________________________________________________________ ________________________________________________________________________ 2 [GRAPHIC] TELEPHONE TRANSFER/WITHDRAWAL PRIVILEGE I (We) authorize and direct Jackson National Life Insurance Company (JNL(R)) to act on instructions given by telephone from any person who can furnish proper identification. Telephone transfers/withdrawals are subject to the terms and provisions in the Prospectus. Neither JNL nor its agents or representatives who act on its behalf shall be subject to any claim, loss, liability, cost or INITIAL expense in connection with a telephone transfer/withdrawal if JNL or such other person acted on telephone instructions in good faith in reliance on this authorization. [GRAPHIC] REBALANCING / / I (We) request the accounts be REBALANCED as designated on the application. / / monthly / / quarterly / / semiannually / / annually [GRAPHIC] PRE-AUTHORIZED CHECK (attach voided check) I authorize JNL to withdraw $ _________________________ starting __________ (month), 19 ______ from my checking account for future premiums to the Contract with the following frequency: / / Monthly / / 5th or / / 20th / / Quarterly (20th of January, April, July and October) LIST OF ADDITIONAL FORMS: V2310: Request for tax-free Funds Transfer/Rollover/Exchange V2401: Dollar-cost Averaging, Rebalancing, Transfer V2410: Surrender Request V2411: Service Request (change in: ownership, beneficiary, address, name; partial withdrawal, withholding) V2480: Systematic Withdrawal IMPORTANT: MAKE ALL CHECKS PAYABLE ONLY TO JACKSON NATIONAL LIFE INSURANCE CO. 1. I hereby represent to the best of my knowledge that each of the statements and answers contained above are full, complete and true. 2. The taxpayer identification number shown above is certified to be correct. 3. I KNOW THAT ANNUITY PREMIUMS AND SURRENDER VALUES, IF ANY, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT OF JNL ARE VARIABLE, AND DOLLAR AMOUNTS ARE NOT GUARANTEED. 4. I have been given a current Prospectus for this variable annuity and for each Series listed above. 5. The Contract I (we) have applied for is suitable for my (our) insurance investment objective, financial situation and needs. Agent statement. To the best of my knowledge, this application _____________________________________________________________ / / WILL / / WILL NOT Signature of Annuitant replace any life insurance or annuities. I have complied with _____________________________________________________________ requirements for disclosure and/or replacement as necessary. Signature of Owner if other than Annuitant Title _____________________________________________________________ Dated and signed Joint Owner or Joint Annuitant at ______________________________________ on ____________ 19 ________ City State REGISTERED REPRESENTATIVE STATEMENT I certify that I am authorized and qualified to discuss the Contract herein applied for. ___________________________________________________________________________________________________________________________________ Agent/Representative's Full Name (Please Print) Phone No. ___________________________________________________________________________________________________________________________________ Signature of Agent/Representative Date ___________________________________________________________________________________________________________________________________ Broker/Dealer Name and No.
[JACKSON NATIONAL LOGO] Jackson National Life Insurance Company --------------------------------------- Insuring your financial future.(TM) Home Office: Lansing, Michigan P.O. Box 30389, Lansing, Michigan 48909-7889 1/800/766-4683 EX-99.B6A 6 EX-99.B6A 1 EXHIBIT 99.B6-art ARTICLES OF INCORPORATION OF THE JACKSON NATIONAL LIFE INSURANCE COMPANY We, the undersigned, desiring to become incorporated under the provisions of Act No. 218 of the Public Acts of 1956, "The Insurance Code," do hereby make, execute, and adopt the following Articles of Association, to-wit: ARTICLE I. The names of the incorporators and their respective places of residence are as follows:
=============================================================================== NAME PLACE OF RESIDENCE - ------------------------------------------------------------------------------- A. J. Pasant 3226 Hartzell, Evanston, Illinois Leslie W. Scott 304 W. Washington, Ilinsdale, Illinois Charles H. Bruce 3445 W. 97th St., Evergreen Park, Illinois Herbert J. Schoen 9520 Central Park, Evanston, Illinois Joseph J. Pernick 19801 Monte Vista, Detroit, Michigan Solomon A. Weisgal 3222, Hartzell, Evanston, John G. Schafer 43 Beaconhill, Grosse Pointe, Michigan Philip J. May 829 Southlawn, East Lansing, Michigan Jordan J. Popkin 1500 W. Hillsdale, Lansing, Michigan Jane B. Hart Mackinac Island, Michigan Frank H. Lindquist 3128 N. Ernst St., Franklin Post, Illinois Bert Nielsen 14018 Stahelin Avenue, Detroit, Michigan Ira L. Grinnell 1195 Haslett Road, Williamston, Michigan Morrice Henderson 533 Grove Street, East Lansing, Michigan Edgar L. Harden 537 W. Kaye Avenue, Marquette, Michigan Maurus J. Schumacher 164 Ridgemont Rd., Grosse Pte Farms, Michigan Howard J. Grimes 403 Southlawn, East Lansing, Michigan Richard A. McNichol 92 Shadywood Lane, Battle Creek, Michigan Raymond Crouse 2626 Court Street, Saginaw, Michigan Erik G. Dall Route #2, Berrien Springs, Michigan Peter F. Hurst 5500 Browns Lake Road, Jackson, Michigan John J. Collins 2339 Jefferson Road, Clarklake, Michigan Apex Investment Co. 3001 Cadillac Tower, Detroit, Michigan - -------------------------------------------------------------------------------
2 ARTICLE II. The name assumed by this Corporation and by which it shall be known in law is JACKSON NATIONAL LIFE INSURANCE COMPANY and its principal office for the transaction of business shall be in the City of Lansing, State of Michigan. ARTICLE III. This corporation is organized for the following purposes, as authorized by Chapter 6, Act No. 218 of the Public Acts of 1956, as amended, namely: To make insurance upon the lives and health of persons and every insurance pertaining thereto, and to grant, purchase or dispose of annuities and endowments of every kind and description whatsoever and to reinsure any risk authorized to be undertaken by it and to grant reinsurance upon any similar risk undertaken by any other insurer. To make insurance upon any person against bodily injury or death by accident or against disability on account of sickness or accident, including also the granting of specific hospital benefits and medical surgical and sick care benefits to any person, family or group, subject to such limitations as may be prescribed with respect thereto, and to reinsure any risk authorized to be undertaken by it and to grant reinsurance upon any similar risk undertaken by any other insurer. The corporation may issue Founders Policies not to exceed an aggregate face amount of $30,000,000 to be held by not more than 3,000 holders. The corporation shall not issue any of the aforementioned Founders Policies after five (5) years from the date the corporation receives its certificate of authority. The Founders Policies are subject to the rights and provisions hereinafter set forth. The corporation may issue participating and non-participating policies or contracts provided that any participating policy or contract to be issued by the corporation shall, by its terms, give the right to participate in the divisible surplus earnings of the corporation as provided by law and as more particularly provided by Section 4020 of The Insurance Code of 1956. ARTICLE IV. The term of existence of the corporation shall be perpetual. ARTICLE V. The annual meeting of the Shareholders shall be held each year at a time and place as the Board of Directors deems advisable. 3 ARTICLE VI. The capital stock of the corporation shall be Fifty Seven Million Five Hundred Thousand ($57,500,000.00) Dollars, divided into fifty million (50,000,000) shares of Common Stock, one dollar and fifteen cents ($1.15) per value per share. VOTING RIGHTS Each holder of Common Stock of the Corporation shall be entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation and may vote the same in person or by proxy. NO PRE-EMPTIVE RIGHTS No holder of the Common Stock shall have any pre-emptive or preferential right of subscription to any shares of stock of this Corporation heretofore or hereafter authorized or to any obligations convertible into stock issued or sold, and the Board of Directors may issue stock of this Corporation or obligations convertible into stock without offering such issue of stock either in whole or in part to the holders of the Common Stock of this Corporation, upon such terms and conditions as the Board of Directors shall prescribe: provided, however, that any offering of shares of stock not be at a price per share less than the par value thereto. ARTICLE VII. 1. In each and every calendar year commencing with the calendar year 1965, an amount equal to twenty-five (25%) per cent of the net gain from operations before dividends to policyholders and excluding capital gains and losses of the corporation for such year, after making provisions for all taxes and after deduction of the sum of Fifty-Six Thousand ($56,000.00) Dollars, all as reflected in the annual statement for such year filed by the Corporation with the Insurance Department of the State of Michigan, shall be set aside and make available to eligible Founders Policyholders for the purpose and subject to the limitation hereinafter set forth. 1.01 Eligible Founders Policyholders shall be holders of such Founders Policies as may be sold and issued by the Corporation from time to time, who shall have currently paid premiums on their respective Founders Policies for the current year and who shall have paid in full all premiums on their respective Founders Policies for the preceding three (3) years. 1.02 Each eligible Founders Policyholder shall be entitled to receive a proportion of the amount allocated as provided in paragraph 1 hereof, which proportion shall be the proportion which the amount of the annual premium for said individual Founders Policy shall be the total amount of the annual premiums for all Founders 4 Policies, except those Founders Policies on which premiums have not been paid for three (3) full years, at any time issued by the Corporation; provided, however, that no eligible Founders Policyholder shall be entitled to receive in any one year an amount in excess of the amount of the annual premium for said Founders Policy. ARTICLE VIII. The corporate powers of the Corporation shall be exercised by a Board of Directors consisting of not less than three (3), and at least one (1) members of the Directors shall be a resident of the State of Michigan. ARTICLE IX. The Directors shall hold a meeting immediately following the Annual Shareholders Meeting in each year; at which time they shall elect from their membership a President and may elect a Chairman of the Board of Directors. At such meeting, the Directors shall also elect one or more Vice Presidents, a Secretary, a Treasurer, and such other officers and committees as the By-Laws may require, none of whom need be Directors of the corporation, and whose appointments shall be during the pleasure of the Board. The President shall be the Chief Executive Officer of the corporation and the duties and responsibilities of all other officers shall be such as may be assigned to them from time to time by the Chief Executive Officer, or the Board of Directors in accordance with the By-Laws of the corporation. ARTICLE X. The time for holding the annual meeting of the corporation shall be as above provided and notice of all meetings of the shareholders shall be given by mailing to each shareholder a copy of such notice, postage prepaid, directed to his last known place of residence, at least twenty-one (21) days prior to the time fixed for such meeting. Such notice shall state the time and place, and if it be a Special Meeting, the purpose of such meeting. ARTICLE XI. The Directors may adopt By-Laws and amend the same from time to time for the proper conduct and operation of the business of the corporation not inconsistent with these Articles of Incorporation. EX-99.B6B 7 EX-99.B6B 1 EXHIBIT 99.B6-bylaws BY-LAWS OF THE JACKSON NATIONAL LIFE INSURANCE COMPANY (Enacted 8/61; Amended 8/64, 9/64, 2/70, 1/71, 4/72, 2/73, 4/76) ARTICLE I Meetings Section 1. Place of Meeting. The meetings of the shareholders and of the Board of Directors of this corporation shall be held at the principal office of the corporation, in the City of Jackson, Michigan, and such other places as the Board of Directors may from time to time determine. Section 2. Annual Meeting of Shareholders. The annual meeting of the shareholders shall be held in each year on the fourth Wednesday of April, at 10:30 o'clock in the morning, one of purposes of which shall be the election of a Board of Directors. The first annual meeting shall be held in 1962. Section 3. Notice of Annual Meeting of Shareholders. At least twenty-one (21) days prior to the date fixed by Section 2 of this Article for the holding of the annual meeting of shareholders, written notice of the time, place and purpose of such meeting shall be mailed, as hereinafter provided, to each shareholder entitled to vote at such meeting. Section 4. Delay Annual Meeting. If for any reason the annual meeting of the shareholders shall not be held on the day designated in Section 2 of this Article, such meeting may be called and held as a special meeting, and the same proceedings may be had thereat as at the annual meeting; provided, however, that the notice of such meeting shall be the same herein required for the annual meeting, namely, not less than a twenty-one (21) day notice. Section 5. Order of Business at Annual Meeting. At all meetings of shareholders the order of business shall first be the calling of the roll, and if a quorum is found to be present, the order of business shall then continue and be observed as follows, as far as applicable and consistent with the purposes of the meeting; viz: (a) Report of notice of meeting (b) Reading minutes of preceding meeting (c) Report of President (d) Report of Secretary (e) Report of Treasurer (f) Report of Committees 2 (g) Election of Directors (h) Unfinished Business (i) New Business (j) Adjournment provided that in the absence of any objection the presiding officer may vary the order of business at his discretion. Section 6. Special Meeting of Shareholders. A special meeting of the shareholders may be called at any time by the President, or by a majority of the Board of Directors, or by shareholders entitled to vote upon not less that an aggregate of twenty (20%) per cent of outstanding shares of the corporation having the right to vote at such special meeting. The method by which such meeting may be called is as follows: Upon receipt of a specification in writing setting forth the date and objects of such proposed special meeting, signed by the President, or by a majority of the Board of Directors, or by shareholders as above provided, the notices requisite to such meeting. Section 7. Notice of Special Meeting of Shareholders. At least twenty-one (21) days prior to the date fixed for the holding of any special meeting of shareholders, written notice of the time, place and purposes of such meeting shall be mailed, as hereinafter provided, to each shareholder entitled to vote at such meeting. No business not mentioned in the notice shall be transacted at the meeting. Section 8. Organization Meeting of the Board. At the place of holding the annual meeting of shareholders, and immediately following the same, the Board of Directors as constituted upon final adjournment of such annual meeting shall convene for the purpose of electing officers and transacting any other business properly brought before it. Section 9. Regular Meetings of the Board. Regular meetings of the Board of Directors may be held at such times and places as the Board of Directors shall from time to time determine. No notice of regular meetings of the Board shall be required. Section 10. Special Meetings of the Board. The special meetings of the Board of Directors may be called by the President at any time and shall be called by the President upon the written request of three members of the Board of Directors. At least three days written notice setting forth the time, place and purpose of the meeting shall be mailed to each Director, but action taken at any such time shall not be invalid for want of notice if such notice shall be waived as hereinafter provided. Section 11. Notices and Mailing. All notices required to be given by any provision of these By-Laws shall state the authority pursuant to which they are issued (as "by order of the President," or "by order of the Board of Directors," or "by order of the shareholders," as the case may be) and shall bear the written or printed signature of the Secretary. Every notice shall be deemed duly served when the same has been deposited 3 in the United States mail, with postage full prepaid, plainly addressed to the sendee at his, her or its last address appearing upon the original or duplicate stock ledger of this corporation at its registered office in Michigan. Section 12. Waiver of Notice. Notice of the time, place and purpose of any meeting of the Board of Directors, may be waived by telegram, radiogram, cablegram, or other writing, either before or after such meeting has been held. ARTICLE II Quorum Section 1. Quorum of Shareholders. A majority of the outstanding shares of this corporation entitled to vote, present by the record holders thereof in person or by proxy, shall constitute a quorum at any meeting of the shareholders. In case there is no quorum present on the day fixed for the meeting, the shareholders present may adjourn said meeting from time to time without further notice until said quorum is obtained, or may adjourn Sine Die. Section 2. Quorum of Directors. A majority of the Directors shall constitute a quorum for the transaction of business. ARTICLE III Voting, Elections and Proxies Section 1. Who Entitled to Vote. Except as the Articles of Association, or amendment or amendments thereto otherwise provide, each shareholder of this corporation shall at every meeting of the shareholders be entitled to one vote in person or by proxy for each share of Common Stock of this corporation, held by such shareholder, subject, however, to the full effect of the limitations imposed by a fixed record date for determination of shareholders set forth in Section 2 of this Article III. Section 2. Record Date for Determination of Shareholders. The Board of Directors in each instance shall fix a date preceding (a) the date of any meeting of shareholders, (b) the date for the payment of any dividends, (c) the date for the allotment of rights, (d) the date when any change or conversion or exchange of stock shall go into effect as the record date for the determination of the shareholders entitled to notice of and to vote at any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of common stock and in such case shareholders and only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or exercise such rights, as the case may be, 4 notwithstanding any transfer of any stock on the books of the corporation or otherwise after any such record date fixed as after any such record date fixed as aforesaid. Section 3. Proxies. No proxy shall be deemed operative unless and until signed by the shareholder and filed with the corporation. Section 4. Vote by Shareholder Corporation. Any other corporation owning voting share in this corporation may vote upon such shares, or by proxy appointed by it, unless some other person shall be appointed to vote upon such shares by resolution of the Board of Directors of such shareholder corporation. Section 5. Inspectors of Election. Whenever any person entitled to vote at a meeting of the shareholders shall request the appointment of inspectors, a majority of the shareholders present at such meeting and entitled to vote thereat shall appoint not more than three inspectors, who need not be shareholders. If the right of any person to vote at such meeting shall be challenged, the inspectors shall determine such right. The inspectors shall receive and count the vote either upon an election or for the decision of any question and shall determine the result. Their certificate of any vote shall be prima facie evidence thereof. ARTICLE IV Board of Directors Section 1. Number and Term of Directors. The business property and affairs of this corporation shall be managed by a Board of Directors composed of not less than seven (7), nor more than twenty-five (25) members. No person shall be eligible to the office of Director who is not the owner in his own right of at least ten (10) shares of the capital stock of the corporation. At least a majority of the Directors shall be residents of the State of Michigan. Section 2. Vacancies. Any vacancy in the Board of Directors shall be filled by appointment made by the remaining Directors, except that any vacancy caused by reason of an increase in the number of Directors shall be filled by the shareholders at an annual meeting, or at a special meeting called for that purpose. Each person so elected to fill a vacancy shall remain a Director until his successor has been elected by the shareholders, who may make such election at their next annual meeting or at a special meeting duly called for that particular purpose held prior thereto. Section 3. Action by Unanimous Written Consent. If and when the Directors shall severally or collectively consent in writing to any action to be taken by the corporation, such action shall be as valid corporate action as though it has been authorized at a meeting of the Board of Directors. 5 Section 4. Power to Make By-Laws. Subject to the provisions of the Articles of Association, the Board of Directors shall have power to make and alter any By-Laws or By-Law, including the fixing and altering of the number of the Directors, provided that the Board shall not make or alter any By-Law or By-Laws fixing the qualifications, classifications, or term of office of any member or members of the then existing Board. Section 5. Power to Elect Officers. At the organization meeting of the Board, provided for in Article I, Section 8 hereof, the Board of Directors shall elect from their membership a President and may elect a Chairman of the Board of Directors. At such meeting, the Directors shall also elect one or more Vice Presidents, a Secretary, and a Treasurer. No officer except the Chairman of the Board and the President need be a member of the Board of Directors, but a Vice President who is not a Director shall not succeed to, nor fill, the office of President. Section 6. Power to Appoint Other Officers and Agents. The Board of Directors shall have power to appoint such other officers and agents as the Board may deem necessary for transaction of the business of the corporation. Section 7. Removal of Officers and Agents. Any officer or agent may be removed by the Board of Directors whenever in the judgement of the Board the business interests of the corporation will be served thereby. Section 8. Power to Fill Vacancies. The Board shall have power to fill any vacancy in any office occurring from any reason whatsoever. Section 9. Delegation of Powers. For any reason deemed sufficient by the Board of Directors, whether occasioned by absence or otherwise, the Board may delegate all or any of the powers and duties of any officer to any other officer or Director, but no officer or Directors shall execute, acknowledge, or verify any instrument in more one capacity. Section 10. Power to Appoint Executive Committee. The Board of Directors shall have power to appoint by resolution an executive committee composed of two or more Directors who, to the extent provided in such resolution, shall have and exercise the authority of the Board of Directors in the management of the business of the corporation between meetings of the Board. Section 11. Power to Require Bonds. The Board of Directors may require any officer or agent to file with the corporation a satisfactory bond conditioned for faithful performance of his duties. Section 12. Compensation. The Board of Directors shall fix the salaries of all officers of the corporation. 6 ARTICLE V Officers Section 1. Chairman of the Board. The Board of Directors may select a Chairman of the Board, who shall be selected by and from the membership of the Board of Directors, and shall preside at all meetings of the shareholders, directors, and the executive committee. He shall also perform such other duties as may be delegated to him from time to time by the Board of Directors or the Executive Committee. Section 2. President. The President shall be selected by and from the membership of the Board of Directors. He shall be the Chief Executive Officer of the corporation, and shall see that all orders and resolutions of the Board are carried into effect. He shall be ex-officio a member of all standing committees, and shall have the general powers and duties of supervision and management usually vested in the office of President and Chief Executive Officer of a corporation. Section 3. Vice President. There shall be such Vice Presidents as shall be chosen from time to time by the Board. At least one Vice President shall be chosen from the membership of the Board, who shall succeed to the office of President in case of vacancy of such office. Other Vice Presidents may be selected by the Board from time to time with such authority and duties as shall be prescribed by the Board. Section 4. Secretary. The Secretary shall attend all meetings of the shareholders and of the Board of Directors, and of the executive committee, and shall preserve in books of the corporation true minutes of the proceedings of all such meetings. He shall safely keep in his custody the seal of the corporation and shall have authority to affix the same to all instruments where its use is required. He shall give all notices required by statue, By-Law, or resolution. He shall perform such other duties as may be delegated to him by the Board of Directors or by the executive committee. Section 5. Treasurer. The Treasurer shall have custody of all corporate funds and securities and shall keep in books belonging to the corporation full and accurate accounts of all receipts and disbursements; he shall deposit all moneys, securities and other valuable effects in the name of the corporation in such depositories as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and Directors at the regular meetings of the Board, and whenever requested by them, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board, he shall deliver to the President of the corporation, and shall keep in force, a bond in form, amount and with a surety or sureties satisfactory to the Board, conditioned for faithful performance of the duties of his office, and for restoration to the corporation in case of his death, resignation, retirement, or removal from office, of all books, papers, vouchers, money and property of whatever kind in his possession or under his control belonging to the corporation. 7 Section 6. Assistant Secretary and Assistant Treasurer. The Assistant Secretary, in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. The Assistant Treasurer, in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. Section 7. Other Officers. Any other officers appointed by the Board of Directors pursuant to Section 6 of Article IV hereof shall have such power and perform such duties as shall be delegated to them by the Board of Directors. ARTICLE VI Shares and Transfers Section 1. Certificates for Shares. Every shareholder shall be entitled to a certificate of his shares signed by the President or a Vice President and the Secretary or the Treasurer, or by the Assistant Secretary or the Assistant Treasurer, under the seal of the corporation, certifying the number and class of shares represented by such certificates; provided, that where such certificate is signed (1) by a transfer agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf of the corporation, and a registrar, the signature of any such President, Vice President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer, and the seal of the corporation, may be a facsimile. Section 2. Transfers of Stock. Transfers of stock shall be made on the books of the corporation only by the person named in certificate or by attorney lawfully constituted in writing and upon surrender of the certificate therefor. Section 3. Registered Shareholders. The corporation shall have the right to treat the registered holder of any share as the absolute owner thereof, and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the corporation shall have express or other notice thereof save as may be otherwise provided by the Statutes of Michigan. Section 4. Lost Certificates. In case of loss or destruction of any certificate of stock, the owner shall not be entitled to receive a new certificate in lieu thereof until proof satisfactory to the Secretary of such loss or destruction is made and ample indemnity, by bond or otherwise, as the President and Secretary may prescribe has been given to the company. At the option of the company, a new certificate may not be issued until sixty days after notice of loss is received. Any such new certificate, issued in lieu of one lost or destroyed, shall be marked "Duplicate" on its face. Section 5. Transfer Agent and Registrar. The Board of Directors may appoint a transfer agent and a registrar of transfers and may require all certificates of shares to bear the signature of such transfer agent and of such registrar of transfers, or as the Board may otherwise direct. 8 Section 6. Regulations. The Board of Directors shall have power and authority to make all such rules and regulations as the Board shall deem expedient regulating the issue, transfer and registration of certificates for shares in this corporation. ARTICLE VII Dividends and Reserves Section 1. Sources of Dividends. The Board of Directors shall have power and authority to declare dividends from any source permitted by law. In determining earned surplus the judgment of the Board shall be conclusive in the absence of bad faith or gross negligence. Section 2. Manner of Payment of Dividend. Dividends may be paid in cash, in property, in obligations of the corporation, or in shares of the stock of the corporation. Section 3. Reserves. The Board of Directors shall have power and authority to set apart, out of any funds available for dividends, such reserve or reserves, for any proper purpose, as the Board in its discretion shall approve and the Board shall have power and authority to abolish any reserve created by the Board. ARTICLE VIII Right of Inspection Section 1. Inspection of List of Shareholders. At least ten (10) days before every election of Directors a complete list of shareholders entitled to vote at such election shall be open to examination by any registered shareholder entitled to vote at such election, provided that no shareholder holding less than two (2%) per cent of the outstanding common stock of the corporation shall be entitled to exercise such privilege of inspection in advance of such meeting. Section 2. Inspection of Books of Account and Stock Books. The books of account and stock books of this corporation shall be open to inspection at all reasonable times and for any proper purpose by the shareholders, provided that no shareholder holding of record in the aggregate less than two (2%) per cent of the outstanding shares of such class of the stock of this corporation, and no person, whatever his or her holdings, who has not been a shareholder of record of this corporation for at least three (3) months prior to making such application, shall be permitted to exercise such privilege of inspection, except pursuant to resolution of the Board of Directors. 9 ARTICLE IX Execution of Instruments Section 1. Checks, Etc. All checks, drafts, and orders for payment of money shall be signed in the name of the corporation by such officers or agents as the Board of Directors shall from time to time designate for that purpose. Section 2. Contracts, Conveyances, Etc. When the execution of any contract, conveyance, or other instrument has been authorized without specification of the executing officers, the President, or any Vice President, and the Secretary, or Assistant Secretary, may execute the same in the name and behalf of this corporation any may affix the corporate seal thereto. The Board of Directors shall have the power to designate the officers and agents who shall have authority to execute any instrument in behalf of this corporation. ARTICLE X Seal The seal of this corporation shall be the seal, an imprint of which is affixed to the margin of these Articles. ARTICLE XI Indemnification of Directors and Officers This Corporation shall indemnify to the full extent permitted by law any person who was or is a party or is threatened to be made a party to civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably believed to be in or not opposed to the best interests of the Corporation or its shareholders, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her contract was unlawful. The foregoing right of indemnification shall not be exclusive of other rights to which such person may be entitled. 10 ARTICLE XII Amendment of By-Laws These By-Laws may be amended, altered, changed, added to, or repealed, by the majority vote of the Board of Directors. ARTICLE XIII Fiscal Year The Fiscal Year of the corporation shall be determined and fixed from time to time by the Board of Directors. EX-99.B9 8 EX-99.B9 1 EX-99.B9-blazz Blazzard, Grodd & Hasenauer, P.C. ATTORNEYS AT LAW 943 POST ROAD EAST * P.O. BOX 5108 NORSE N. BLAZZARD WESTPORT, CONNECTICUT 06881-5108 LESLIE E. GRODD TELEPHONE (203) 226-7866 JUDITH A. HASENAUER FACSIMILE (203) 454-4206 WILLIAM E. HASENAUER RAYMOND A. O'HARA III SUITE 213, OCEANWALK MALL LYNN KORMAN STONE 101 NORTH OCEAN DRIVE HOLLYWOOD, FLORIDA 33019 TELEPHONE (305) 920-4004 FACSIMILE (305) 920-6902 April 25, 1996 Board of Directors Jackson National Life Insurance Company 5901 Executive Drive Lansing, MI 48911 Re: Opinion of Counsel - Jackson National Separate Account - I Gentlemen: You have requested our Opinion of Counsel in connection with the filing with the Securities and Exchange Commission of a Post-Effective Amendment to a Registration Statement on Form N-4 for the Individual Deferred Fixed and Variable Annuity Contracts (the "Contracts") to be issued by Jackson National Life Insurance Company and its separate account, Jackson National Separate Account - I. We have made such examination of the law and have examined such records and documents as in our judgment are necessary or appropriate to enable us to render the opinions expressed below. We are of the following opinions: 2 1. Jackson National Life Insurance Company is a valid and existing stock life insurance company of the state of Michigan. 2. Jackson National Separate Account - I is a separate investment account of Jackson National Life Insurance Company created and validly existing pursuant to the Michigan Laws and the Regulations thereunder. 3. Upon the acceptance of purchase payments made by an Owner pursuant to a Contract issued in accordance with the Prospectus contained in the Registration Statement and upon compliance with applicable law, such an Owner will have a legally issued, fully paid, non-assessable contractual interest under such Contract. You may use this opinion letter, or a copy thereof, as an exhibit to the Registration Statement. We consent to the reference to our Firm under the caption "Legal Opinions" contained in the Statement of Additional Information which forms a part of the Registration Statement. Sincerely, BLAZZARD, GRODD & HASENAUER, P.C. By: /s/ Judith A. Hasenauer ------------------------------- Judith A. Hasenauer EX-99.B10 9 EX-99.B10 1 EXHIBIT 99B.10-pricew CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Statement of Additional Information constituting part of this Post-Effective Amendment No. 3 to the registration statement on Form N-4 (the "Registration Statement") of our report dated February 21, 1996, relating to the financial statements of Jackson National Life Insurance Company, and of our report dated February 22, 1996, relating to the financial statements of Jackson National Separate Account - I, which appear in such Statement of Additional Information, and to the incorporation by reference of our report into the Prospectus which constitutes part of this Registration Statement. We also consent to the reference to us under the heading "Services" in such Statement of Additional Information and to the reference to us under the heading "Condensed Financial Information" in such Prospectus. /s/ Price Waterhouse PRICE WATERHOUSE LLP Milwaukee, Wisconsin April 25, 1996 EX-99.B13 10 EX-99.B13 1 EXHIBIT 99.B13-perf JACKSON NATIONAL SEPARATE ACCOUNT - I SCHEDULE OF CALCULATION OF PERFORMANCE Yield: PPM America/JNL Money Market Portfolio This example illustrates the yield quotation for the PPM America/JNL Money Market Portfolio for the seven-day period ended December 31, 1995: Value of hypothetical pre-existing account with exactly one Accumulation Unit at the beginning of the period ........................................ $1.02292 Value of same account (excluding capital changes) at the end of the seven-day period ......................................... $1.02349 Net change in account value ..................................................... $0.00057 Base Period Return: Net change in account value divided by beginning account value 0.055723% Annualized Current Yield [0.055723% X (365/7) .................................... 2.91% 365/7 Effective Yield (0.055723% +1) -1 ........................................... 2.95% Other Portfolios The following example illustrates the annualized current yield calculation for the Salomon Brothers/JNL Global Bond Portfolio for the 30 day base period ended December 31, 1995: Dividends and interest earned by the Salomon Brothers/JNL Global Bond Series during the base period ..................................................... $43,136 Expenses accrued for the base period ............................................ $ 4,879 ------- $38,257(A) ======= Product of the maximum public offering price on the last day of the base period and the average daily number of Shares outstanding during the base period that were entitled to receive dividends ($10.13 X 501,173.9218 Shares)= ............................................. $5,076,892(B) ========== Quotient of dividends and interest earned minus expenses accrued divided by product of maximum public offering price multiplied by average Shares outstanding (A divided by B) = .7535587%(C) 6 Adding one and raising total to the 6th power (C + 1) = ......................... 1.0460474(D) Annualized current yield [2(D -1) X 100] = ....................................... 9.21% Reducing the yield by the annual effective Mortality and Expense Charge and the Administrative Charge (1.40%) ...................................... 7.81%
2 Total Return: Standardized The following example illustrates the total return for the JNL Capital Growth Portfolio of a hypothetical Contract invested in the JNL Capital Growth Series of the JNL Series Trust from the date the Series was first available for investment through December 31, 1995: Hypothetical $1,000 initial investment on May 15, 1995................. $ 1,000 Ending redeemable value of the investment on December 31, 1995 (after deferred sales charge and contract maintenance charge) $ 1,251 Total return for the period is the difference between the ending redeemable value and the hypothetical $1,000 initial investment divided by the hypothetical $1,000 initial investment; the result is expressed in terms of a percentage (For example, 2 equals 200%).................................... 25.07% Non Standardized The following example illustrates the total return for the JNL Capital Growth Portfolio of a hypothetical Contract invested in the JNL Capital Growth Series of the JNL Series Trust from the date the Series was first available for investment through December 31, 1995: Hypothetical $10,000 initial investment on May 15, 1995................ $10,000 Ending redeemable value of the investment on December 31, 1995 (after contract maintenance charge)............................. $13,231 Total return for the period is the difference between the ending redeemable value and the hypothetical $10,000 initial investment divided by the hypothetical $10,000 initial investment; the result is expressed in terms of a percentage (For example, 2 equals 200%).................................... 32.31% EX-27.1 11 EX-27.1
6 1 JNL AGGRESSIVE GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 38,398 39,018 1,850 0 0 40,868 0 0 1 1 0 0 0 0 0 0 0 0 0 40,867 0 0 0 28 (28) 216 620 808 0 0 0 0 48,063 (8,004) 0 40,867 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.2 0 0 0
EX-27.2 12 EX-27.2
6 2 JNL CAPITAL GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 14,111 14,665 1,750 0 0 16,415 0 0 1 1 0 0 0 0 0 0 0 0 0 16,414 0 0 0 6 (6) 0 554 548 0 0 0 0 15,872 (6) 0 16,414 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.34 0 0 0
EX-27.3 13 EX-27.3
6 3 JNL GLOBAL EQUITIES DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 49,163 50,054 0 0 0 50,054 0 0 2 2 0 0 0 0 0 0 0 0 0 50,052 0 0 0 25 (25) 1 891 867 0 0 0 0 49,185 0 0 50,052 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.48 0 0 0
EX-27.4 14 EX-27.4
6 4 JNL/ALGER GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 119,475 122,027 0 0 0 122,027 0 0 5 5 0 0 0 0 0 0 0 0 0 122,022 0 0 0 55 (55) 201 2,552 2,698 0 0 0 0 129,147 (9,823) 0 122,022 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 9.93 0 0 0
EX-27.5 15 EX-27.5
6 5 JNL/PHOENIX INVESTMENT COUNSEL BALANCED DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 131,412 133,052 0 0 0 133,052 0 0 5 5 0 0 0 0 0 0 0 0 0 133,047 0 0 0 51 (51) (5) 1,640 1,584 0 0 0 0 136,362 (4,899) 0 133,047 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.34 0 0 0
EX-27.6 16 EX-27.6
6 6 JNL/PHOENIX INVESTMENT COUNSEL GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 5,741 6,042 0 0 0 6,042 0 0 0 0 0 0 0 0 0 0 0 0 0 6,042 0 0 0 8 (8) 0 301 293 0 0 0 0 5,756 (7) 0 6,042 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.58 0 0 0
EX-27.7 17 EX-27.7
6 7 PPM AMERICA/JNL HIGH YIELD BOND DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 999 1,011 0 0 0 1,011 0 0 0 0 0 0 0 0 0 0 0 0 0 1,011 0 0 0 1 (1) 0 12 11 0 0 0 0 1,000 0 0 1,011 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.11 0 0 0
EX-27.8 18 EX-27.8
6 8 PPM AMERICA/JNL MONEY MARKET DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 108,930 109,323 37,260 0 0 146,583 0 0 4 4 0 0 0 0 0 0 0 0 0 146,579 0 0 0 101 (101) 0 393 292 0 0 0 0 196,208 (49,921) 0 146,579 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.03 0 0 0
EX-27.9 19 EX-27.9
6 9 PPM AMERICA/JNL VALUE EQUITY DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 40,663 41,762 0 0 0 41,762 0 0 2 2 0 0 0 0 0 0 0 0 0 41,760 0 0 0 38 (38) 6 1,099 1,067 0 0 0 0 41,909 (1,216) 0 41,760 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.59 0 0 0
EX-27.10 20 EX-27.10
6 10 SALOMON BROTHERS/JNL GLOBAL BOND DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 32,063 32,557 0 0 0 32,557 0 0 1 1 0 0 0 0 0 0 0 0 0 32,556 0 0 0 15 (15) 12 494 491 0 0 0 0 33,080 (1,015) 0 32,556 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.41 0 0 0
EX-27.11 21 EX-27.11
6 11 SALOMON BROTHERS/JNL U.S. GOVERNMENT & QUALITY BOND DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 12,912 13,023 0 0 0 13,023 0 0 1 1 0 0 0 0 0 0 0 0 0 13,022 0 0 0 10 (10) 0 111 101 0 0 0 0 12,921 0 0 13,022 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.21 0 0 0
EX-27.12 22 EX-27.12
6 12 T. ROWE PRICE/JNL ESTABLISHED GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 106,460 109,472 0 0 0 109,472 0 0 4 4 0 0 0 0 0 0 0 0 0 109,468 0 0 0 76 (76) 4 3,012 2,940 0 0 0 0 109,565 (3,037) 0 109,468 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.36 0 0 0
EX-27.13 23 EX-27.13
6 13 T. ROWE PRICE/JNL INTERNATIONAL EQUITY INVESTMENTS DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1996 31,817 32,488 0 0 0 32,488 0 0 1 1 0 0 0 0 0 0 0 0 0 32,487 0 0 0 21 (21) 0 671 650 0 0 0 0 31,837 0 0 32,487 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.49 0 0 0
EX-27.14 24 EX-27.14
6 14 T. ROWE PRICE/JNL MID-CAP GROWTH DIVISION 1 YEAR DEC-31-1995 OCT-16-1995 DEC-31-1995 48,457 49,496 3,600 0 0 53,096 0 0 2 2 0 0 0 0 0 0 0 0 0 53,094 0 0 0 29 (29) 0 1,039 1,010 0 0 0 0 52,084 0 0 53,094 0 0 0 0 0 0 0 0 10.00 0 0 0 0 0 10.37 0 0 0
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