-----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, BcNYl2cy4LHdT5aDFomI0MTuUQs+Mxwh/hddk5z+QFmHpsJ1gG+PnPjOiBQH1K9z SePUmQsa+km/XfXxLXEofQ== 0000933094-98-000004.txt : 19980407 0000933094-98-000004.hdr.sgml : 19980407 ACCESSION NUMBER: 0000933094-98-000004 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 19980406 EFFECTIVENESS DATE: 19980406 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERITAS LIFE INSURANCE CORP SEPARATE ACCOUNT LLVL CENTRAL INDEX KEY: 0000933094 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 470098400 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-86500 FILM NUMBER: 98587740 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-08868 FILM NUMBER: 98587741 BUSINESS ADDRESS: STREET 1: 5900 O ST P O BOX 81889 STREET 2: C/O AMERITAS LIFE INSURANCE CORP CITY: LINCOLN STATE: NE ZIP: 68510 BUSINESS PHONE: 402467112 MAIL ADDRESS: STREET 1: 5900 0 STREET STREET 2: P O BOX 81889 CITY: LINCOLN STATE: NE ZIP: 68510 485BPOS 1 POST-EFFECTIVE AMENDMENT NO. 4 As filed with the Securities and Exchange Commission on April 3, 1998 Registration No. 33-86500 ====================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- Post-Effective Amendment No. 4 to Form S-6 --------------- FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 ---------------- AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL (EXACT NAME OF REGISTRANT) ---------------- AMERITAS LIFE INSURANCE CORP. (Depositor) 5900 "O" Street Lincoln, Nebraska 68510 ---------------- NORMAN M. KRIVOSHA Secretary Ameritas Life Insurance Corp. 5900 "O" Street Lincoln, Nebraska 68510 ----------------- Title of Securities Being Registered: Securities of Unit Investment Trust ------------------------------------ Approximate Date of Proposed Public Offering: As soon as practicable after effective date. It is proposed that this filing will become effective: []immediate upon filing pursuant to paragraph b [ ]on pursuant to paragraph a of Rule 485 ----------- [x]on May 1, 1998 pursuant to paragraph b of Rule 485 -----------
RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2 AND THE PROSPECTUS ITEM NO. OF FORM N-8B-2 CAPTION IN PROSPECTUS - ----------- --------------------- 1 Cover Page 2 Cover Page 3 Not Applicable 4 Distribution of the Policies 5 Ameritas Life Insurance Corp. - Separate Account LLVL 6 Ameritas Life Insurance Corp. - Separate Account LLVL 7 Not Required 8 Not Required 9 Legal Proceedings 10 Summary; Addition, Deletion or Substitution of Investments; Policy Benefits; Policy Rights; Payment and Allocation of Premiums; General Provisions; Additional Insurance Benefits (Riders); Voting Rights 11 Summary; The Funds 12 Summary; The Funds 13 Summary; The Funds; Charges and Deductions 14 Summary; Payment and Allocation of Premiums 15 Summary; Payment and Allocation of Premiums 16 Summary; The Funds 17 Summary, Policy Rights 18 Vanguard Variable Insurance Fund; Neuberger & Berman Advisers Management Trust; Berger Institutional Products Trust; Fixed Account 19 General Provisions; Voting Rights 20 Not Applicable 21 Summary; Policy Rights; General Provisions 22 Not Applicable 23 Safekeeping of the Separate Account's Assets 24 General Provisions 25 Ameritas Life Insurance Corp. 26 Not Applicable 27 Ameritas Life Insurance Corp. 28 Executive Officers and Directors of ALIC; Ameritas Life Insurance Corp. 29 Ameritas Life Insurance Corp. 30 Not Applicable 31 Not Applicable 32 Not Applicable 33 Not Applicable 34 Not Applicable 35 Not Applicable 36 Not Required 37 Not Applicable 38 Distribution of the Policies 39 Distribution of the Policies 40 Distribution of the Policies 41 Distribution of the Policies 42 Not Applicable 43 Not Applicable 44 The Funds; Accumulation Value
ITEM NO. OF FORM N-8B-2 CAPTION IN PROSPECTUS - ----------- --------------------- 45 Not Applicable 46 The Funds; Accumulation Value; Surrender Charge 47 Not Applicable 48 State Regulation of ALIC 49 Not Applicable 50 Ameritas Life Insurance Corp. Separate Account LLVL 51 Cover Page; Summary; Policy Benefits; Charges and Deductions 52 Addition, Deletion or Substitution of Investments 53 Summary; Federal Tax Matters 54 Not Applicable 55 Not Applicable 56 Not Required 57 Not Required 58 Not Required 59 Financial Statements
- -------------------------------------------------------------------------------- PROSPECTUS Ameritas Life Insurance Corp. Logo FLEXIBLE PREMIUM 5900 "O" Street VARIABLE UNIVERSAL LIFE P.O. Box 81889/Lincoln, NE 68501 - -------------------------------------------------------------------------------- This Prospectus describes a flexible premium variable universal life insurance policy ("Policy") offered by Ameritas Life Insurance Corp. ("ALIC"), a stock life insurance company. The Policy is designed to provide insurance protection until the Policy Anniversary nearest the Insured's 100th birthday and at the same time provide flexibility to vary the frequency and amount of premium payments and to increase or decrease the level of death benefits payable under the Policy. This flexibility allows a Policyowner to provide for changing insurance needs under a single insurance policy. The Policy guarantees the Death Benefit as long as the Policy remains in force. The Policyowner may choose death benefit Option A (generally, a level benefit that equals the Specified Amount of the Policy) or Option B (a variable benefit that generally equals the Specified Amount plus the Policy's Accumulation Value). The minimum initial Specified Amount for a policy is generally $100,000, lower specified amounts may be requested. The Policy provides for an Accumulation Value that can be obtained through Partial Withdrawals, surrender of the Policy, or through policy loans. There is no minimum guaranteed Accumulation Value. During the first three years, ALIC agrees to keep the Policy in force and provide a Guaranteed Death Benefit during that time, so long as the cumulative monthly minimum Guaranteed Death Benefit Premium is paid. The Policyowner has the right to examine the Policy and return it for a refund for a limited time (see page 20). The initial premium payment will be allocated to the Money Market portfolio of the Vanguard Variable Insurance Fund, as of the Issue Date, for 13 days, after deducting premium charges of no greater than 5% (currently, 3.5%) to pay for premium taxes and the expense of deferring the tax deduction of policy acquisition costs. After the 13-day period (see page 22), the Accumulation Value will be allocated to the Subaccounts of ALIC Separate Account LLVL ("Separate Account") or the Fixed Account as selected by the Policyowner. The Accumulation Value, the duration of the death benefit and, if Option B is selected, the amount of the death benefit above the Specified Amount, will vary with the investment experience of the selected Subaccounts or the Fixed Account. The Accumulation Value will also be adjusted for other factors, including the amount of charges imposed and the premium payments made. The Policy will continue in force so long as the Net Cash Surrender Value is sufficient to pay certain monthly charges imposed in connection with the Policy. The assets of each Subaccount are invested in shares of a corresponding portfolio of Vanguard Variable Insurance Fund ("Vanguard"), Neuberger & Berman Advisers Management Trust ("Neuberger & Berman AMT") or Berger Institutional Products Trust ("Berger IPT") (collectively the "Funds"). In this Separate Account, Vanguard offers nine portfolios: Money Market, High-Grade Bond, High Yield Bond, Balanced, Equity Income, Equity Index, Growth, Small Company Growth and International; Neuberger & Berman AMT offers four portfolios: Limited Maturity Bond, Growth, Partners, and Balanced; Berger IPT offers two portfolios: Berger IPT-100 Fund and Berger IPT - Small Company Growth Fund. The accompanying prospectuses for the various funds describe the investment objectives and policies and the risks of each of the portfolios of the Funds. The investment gains or losses of the monies placed in the various portfolio Subaccounts will be experienced by the Policyowner. Replacing existing insurance with a Policy or purchasing a Policy as a means to obtain additional insurance protection if the purchaser already owns another flexible premium variable life insurance policy may not be advantageous. This Prospectus Must Be Accompanied or Preceded By Current Prospectuses For Vanguard, Neuberger & Berman AMT and Berger IPT. These securities are not deposits with, or obligations of, or guaranteed or endorsed by, any financial institution; and the securities are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency. These securities involve investment risk, including the possible loss of principal. The Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains other information regarding registrants that file electronically with the Securities and Exchange Commission. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, OR BY ANY STATE SECURITIES REGULATORY AUTHORITY, NOR HAS THE COMMISSION, OR ANY STATE SECURITIES REGULATORY AUTHORITY, 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 Future Reference. The Date of This Prospectus is May 1, 1998. - -------------------------------------------------------------------------------- LLVL 1 - -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE Definitions................................................................ 3 Summary.................................................................... 5 Ameritas Life Insurance Corp. and the Separate Account .................... 9 Ameritas Life Insurance Corp...................................... 9 Ameritas Life Insurance Corp. Separate Account LLVL............... 9 The Funds......................................................... 10 Investment Objectives and Policies Of The Funds' Portfolios....... 10 Fund Management Fees ............................................. 11 Addition, Deletion or Substitution of Investments................. 13 Fixed Account..................................................... 13 Policy Benefits............................................................ 14 Purposes of the Policy............................................ 14 Death Benefit Proceeds............................................ 14 Death Benefit Options............................................. 14 Methods of Affecting Insurance Protection......................... 16 Duration of Policy................................................ 16 Accumulation Value................................................ 16 Benefits at Maturity.............................................. 17 Payment of Policy Benefits........................................ 17 Policy Rights.............................................................. 18 Loan Benefits..................................................... 18 Surrenders........................................................ 18 Partial Withdrawals............................................... 19 Transfers......................................................... 19 Systematic Programs............................................... 20 Refund Privilege.................................................. 20 Exchange Privilege................................................ 20 Payment and Allocation of Premiums......................................... 21 Issuance of a Policy.............................................. 21 Premiums.......................................................... 21 Allocation of Premiums and Accumulation Value..................... 22 Policy Lapse and Reinstatement.................................... 22 Charges and Deductions..................................................... 23 Deductions From Premium Payment................................... 23 Charges Deducted from Accumulation Value.......................... 23 Surrender Charge.................................................. 24 Transfer Charge................................................... 24 Partial Withdrawal Charge......................................... 25 Daily Charges Against the Separate Account........................ 25 General Provisions......................................................... 25 Additional Insurance Benefits (Riders)..................................... 26 Distribution of the Policies............................................... 27 Federal Tax Matters........................................................ 28 Safekeeping of the Separate Account's Assets............................... 30 Third Party Services....................................................... 30 Voting Rights.............................................................. 30 State Regulation of ALIC................................................... 31 Executive Officers and Directors of ALIC................................... 31 Legal Matters.............................................................. 33 Legal Proceedings.......................................................... 33 Experts.................................................................... 34 Additional Information..................................................... 34 Financial Statements....................................................... 34 Ameritas Life Insurance Corp. Separate Account LLVL........................ 35 Ameritas Life Insurance Corp............................................... 51 Appendices................................................................. 71 The Policy, certain funds, and/or certain riders are not available in all Sates. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. - -------------------------------------------------------------------------------- 2 LLVL - -------------------------------------------------------------------------------- DEFINITIONS ACCUMULATION VALUE - The total amount that a Policy provides for investment at any time. It is equal to the total of the Accumulation Value held in the Separate Account, the Fixed Account, and any Accumulation Value held in the general account which secures policy loans. ALIC - Ameritas Life Insurance Corp., a stock life insurance company. ATTAINED AGE - The Issue Age of the Insured plus the number of complete Policy Years that the policy has been in force. BENEFICIARY - The person or persons designated in the application, unless later changed, to receive the Death Benefit (see page 25 for "Beneficiary" and "Change of Beneficiary"). DECLARED RATES - The interest rate declared by ALIC to be earned on amounts in the Fixed Account, which ALIC guarantees to be no less than 3.5%. DEATH BENEFITS - The amount of insurance coverage provided under the Policy. DEATH BENEFIT PROCEEDS - The proceeds payable to the beneficiary upon receipt by ALIC of Satisfactory Proof of Death of the Insured while the Policy is in force. It is equal to: (l) the Death Benefit; plus (2) additional life insurance proceeds provided by any riders; minus (3) any outstanding policy debt; minus (4) any overdue monthly deduction, including the deduction for the month of death. FIXED ACCOUNT - An account that is a part of ALIC's General Account to which all or a portion of net premiums and transfers may be allocated for accumulation at fixed rates of interest. GENERAL ACCOUNT - The General Account of ALIC includes all of ALIC assets except those assets segregated into separate accounts. GUARANTEED DEATH BENEFIT PREMIUM - A specified optional premium amount for the first three policy years which, if paid in advance on a monthly or yearly cumulative basis, after adjustment for policy loans or Partial Withdrawals, will keep the Policy in force during the first three policy years, so long as other policy provisions are met, even if the Net Cash Surrender Value is insufficient to cover monthly deductions. This benefit is provided without an additional policy charge. INSURED - The person whose life is insured under the Policy. ISSUE AGE - The age of the Insured at the Insured's birthday nearest the Policy Date. ISSUE DATE - The date that all financial, contractual and administrative requirements have been met and processed for the Policy. MATURITY DATE - The date ALIC pays any net cash surrender value, if the Insured is still living. MONTHLY ACTIVITY DATE - The same date in each succeeding month as the Policy Date except should such monthly activity date fall on a date other than a valuation date, the monthly activity date will be the next valuation date. NET AMOUNT AT RISK - The amount by which the death benefit that would be payable on a Monthly Activity Date exceeds the Accumulation Value on that date. NET CASH SURRENDER VALUE - The Accumulation Value on the date of surrender less any outstanding policy debt. NET PREMIUM - Premium paid less the premium charges (See Premiums, page 21; Charges and Deductions, page 23). OUTSTANDING POLICY DEBT - The sum of all unpaid policy loans and accrued interest on policy loans. - -------------------------------------------------------------------------------- LLVL 3 - -------------------------------------------------------------------------------- PARTIAL WITHDRAWAL - A Policyowner's means of accessing a portion of the Accumulation Value without terminating coverage under the Policy. A Partial Withdrawal has limitations, is irrevocable, and has several policy cost and coverage implications (See pages 19 and 25). PLANNED PERIODIC PREMIUMS - A selected schedule of equal premiums payable at fixed intervals. The Policyowner is not required to follow this schedule, nor does following this schedule ensure that the Policy will remain in force unless the payments meet the requirements of the Guaranteed Death Benefit Premium. POLICY - The Flexible Premium Variable Universal Life Insurance Policy offered by ALIC and described in this Prospectus. POLICYOWNER - The owner of the Policy, as designated in the application or as subsequently changed. If a Policy has been absolutely assigned, the assignee is the Policyowner. A collateral assignee is not the Policyowner. POLICY ANNIVERSARY DATE - The same day as the Policy Date for each year the Policy remains in force. POLICY DATE - As set forth in the Policy, the effective date for all coverage provided in the application. The Policy Date is used to determine policy anniversary dates, policy years and monthly activity dates. Policy anniversaries are measured from the Policy Date. The Policy Date and the Issue Date will be the same unless: 1) an earlier Policy Date is specifically requested, or 2) the Issue Date is later because additional premiums or application amendments are required at time of delivery. (See Issuance of a Policy, page 21). POLICY YEAR - The period from one Policy Anniversary Date until the next Policy Anniversary Date. SATISFACTORY PROOF OF DEATH - Means all of the following must be submitted: (1) A certified copy of the death certificate; (2) A Claimant Statement; (3) The Policy; and (4) Any other information that ALIC may reasonably require to establish the validity of the claim. SEPARATE ACCOUNT - Ameritas Life Insurance Corp. Separate Account LLVL, a separate investment account established by ALIC to receive and invest the net premiums paid under the Policy and allocated by the Policyowner to the Separate Account. SPECIFIED AMOUNT - The minimum death benefit under the Policy, as selected by the Policyowner, which must be $100,000 or more at the Issue Date. SUBACCOUNT - A subdivision of the Separate Account. Each Subaccount invests exclusively in the shares of a specified portfolio of the Funds. SURRENDER - Occurs when the policy is terminated before the maturity date during the Insured's life for its net cash surrender value. Coverage under the policy will terminate as of the date of a surrender. VALUATION DATE - Any day on which the New York Stock Exchange is open for trading. VALUATION PERIOD - The period between two successive Valuation Dates, commencing at the close of the New York Stock Exchange ("NYSE") on one Valuation Date and ending at the close of the NYSE on the next succeeding Valuation Date. - -------------------------------------------------------------------------------- 4 LLVL - -------------------------------------------------------------------------------- SUMMARY The following summary of Prospectus information and diagram of the Policy should be read in conjunction with the detailed information appearing elsewhere in this Prospectus. Unless otherwise indicated, the description of the Policy contained in this Prospectus assumes that the Policy is in force, current charges were used, and there is no outstanding indebtedness. Diagram of Policy PREMIUM PAYMENTS You can vary amount and frequency. DEDUCTIONS FROM PREMIUMS Premium taxes and the expense of deferring the tax deduction of policy acquisition costs - 3.5% This charge is guaranteed not to exceed 5% There is no premium load to cover sales and distribution expenses. NET PREMIUM You direct the net premium to be invested in the Fixed Account or to the Separate Account which offers fifteen different Subaccounts. The fifteen Subaccounts invest in the corresponding portfolios (Funds) of the Vanguard Variable Insurance Fund, the Neuberger & Berman Advisers Management Trust, or the Berger Institutional Products Trust. DEDUCTIONS FROM ASSETS Monthly charge for cost of insurance and cost of any riders. Monthly charge for administrative expenses ($9.00 per month the first policy year and the 12-month period following an increase in specified amount, $4.50 per month currently thereafter). This charge is guaranteed not to exceed $9.00 per month. Daily charge, at an annual rate of 0.75%, from the Subaccounts for mortality and expense risks. This charge is guaranteed not to exceed .90%. This charge is not deducted from Fixed Account assets.
LIVING BENEFITS RETIREMENT BENEFITS DEATH BENEFITS Partial Withdrawals may be made (subject to Loans may be taken at a Income tax free to certain restrictions). The death benefit will be net zero interest rate after beneficiary. reduced by the amount of the Partial Withdrawal. ten years or when the Available as lump Up to fifteen free transfers may be made each year policyholder reaches 55 sum or under the between the investment portfolios. (whichever occurs later). five payment meth- Accelerated payment of up to 50% of the lowest Should the policy lapse ods available as scheduled death benefit is available under certain while loans are outstanding retirement benefits. conditions for Insureds suffering from terminal the portion of the loan illness. attributable to earnings will The policy may be surrendered at any time for its become taxable distributions. Net Cash Surrender Value. The policy has no (See page 18). surrender charge. However, there is a charge for Payments can be taken Partial Withdrawals. under one or more of five different payment options.
- -------------------------------------------------------------------------------- LLVL 5 - -------------------------------------------------------------------------------- THE ISSUER The Policy is issued by Ameritas Life Insurance Corp. ("ALIC"), a Nebraska stock life insurance company. A separate account of ALIC, Separate Account LLVL ("Separate Account"), has been established to hold the assets supporting the Policy. The Separate Account has fifteen Subaccounts which correspond to, and are invested in, the portfolios of the Funds discussed herein. (See ALIC and the Separate Account, page 9, and The Funds, page 10). The financial statements for ALIC can be found beginning on page 51. THE POLICY The policy is available for individuals and for corporations and other institutions who wish to provide coverage and benefits for key employees. This flexible premium variable universal life insurance policy ("Policy") allows the Policyowner, within limitations, to choose: (a) the amount and frequency of premium payments; (b) the manner in which the Policyowner's Accumulation Values are invested; and (c) a choice of two death benefit options unless the Extended Maturity Rider is in effect. As long as the Policy remains in force, it will provide for: (1) life insurance coverage on the Insured up to age 100; (2) an Accumulation Value; (3) surrender rights (including Partial Withdrawals and Surrender); (4) policy loan privileges; and (5) a variety of optional benefits and riders that may be added to the Policy for an additional charge or without charge if certain minimum premiums are paid. PREMIUMS This Policy differs in two important respects from a conventional life insurance policy. First, the failure to pay a Planned Periodic Premium will not in itself cause the Policy to lapse. Second, a Policy can lapse even if Planned Periodic Premiums have been paid unless the Guaranteed Death Benefit Premium requirements have been met. (See Payment and Allocation of Premiums, page 21). AMOUNTS. A minimum initial premium of at least 25% of the total first year monthly deductions including charges for riders, and any substandard risk adjustments must be paid in order to put the Policy in force. The minimum initial premium is less than the Guaranteed Death Benefit Premium. After the minimum initial premium is paid, unscheduled premiums may be paid in any amount and at any frequency, subject only to the maximum and minimum limitations set by ALIC and the maximum limitations set by Federal Income Tax Law. A Policyowner may also choose a Planned Periodic Premium which may include the minimum cumulative premiums necessary to keep in force the Guaranteed Death Benefit Provision. A Policy will lapse when the Net Cash Surrender Value is insufficient to pay the monthly deduction unless the Guaranteed Death Benefit Provision is in effect. A period of 61 days from the date written notice of lapse is mailed to the Policyowner's last known address will be allowed for the Policyowner to make sufficient payment to keep the Policy in force for the Policyowner (grace period). ALLOCATION OF NET PREMIUMS The Policyowner may select the manner in which the new premiums are allocated between the Fixed Account (See Fixed Account, page 13) and to one or more of the Subaccounts. Net premiums, which equal the premiums paid less the premium charges, are first allocated for 13 days, as of the Issue Date, to the Subaccount for the Money Market Portfolio of Vanguard. After the 13-day period the Accumulation Value will be allocated as selected by the Policyowner. The Policyowner may change the allocation instructions for premiums and may also make a special designation for unscheduled premiums. Subject to certain charges and restrictions, a Policyowner may also transfer amounts among the Subaccounts and the Fixed Account. (See Allocation of Premiums and Accumulation Value, page 22). - -------------------------------------------------------------------------------- 6 LLVL - -------------------------------------------------------------------------------- The various Subaccounts available invest in a corresponding portfolio of the Funds. In this Separate Account, Vanguard offers nine portfolios: Money Market, High-Grade Bond, High Yield Bond, Balanced, Equity Income, Equity Index, Growth, Small Company Growth and International; Neuberger & Berman AMT offers four portfolios: Limited Maturity Bond, Growth, Partners and Balanced; and Berger IPT offers two portfolios: Berger IPT-100 Fund and Berger IPT-Small Company Growth Fund. A summary of the investment objectives for these portfolios is set forth at page 10 of this Prospectus, and detailed objectives of these portfolios are described in the accompanying prospectuses for the Funds. There is no assurance that these objectives will be met. The Policyowner bears the entire investment risk for amounts allocated to the Subaccounts. POLICY BENEFITS DEATH BENEFIT PROCEEDS AND DEATH BENEFIT OPTIONS. While the Policy remains in force, ALIC will pay the Death Benefit Proceeds to the Beneficiary upon receipt of Satisfactory Proof of Death of the Insured. These proceeds may be paid in a lump sum or in accordance with an optional payment plan. The Policy provides for two death benefit options unless the Extended Maturity Rider is in effect. Under either option, so long as the Policy remains in force, the death benefit will not be less than the current Specified Amount of the Policy adjusted for any policy indebtedness and any overdue monthly deductions. The death benefit may, however, exceed the Specified Amount, depending upon the investment experience of the Policy. Death Benefit Option A provides for a level benefit equal to the current Specified Amount of the Policy, unless the Accumulation Value of the Policy on the date of the Insured's death multiplied by the applicable percentage set forth in the Policy is greater, in which case the death benefit is equal to that larger amount. Death Benefit Option B provides for a variable benefit equal to the current Specified Amount of the Policy plus the Policy's Accumulation Value on the date of the Insured's death, or if greater, the Accumulation Value of the Policy on the date of the Insured's death multiplied by the applicable percentage set forth in the Policy. (See Death Benefit Options, page 14). If the Extended Maturity Rider is in effect, the Death Benefit will be the Accumulation Value. Optional insurance benefits offered under the Policy include: Guaranteed Death Benefit provision; Children's Protection Rider; Cost Recovery Rider; Guaranteed Insurability Rider; Payor Waiver of Monthly Deductions on Disability; Accelerated Benefit Rider for Terminal Illness, Waiver of Monthly Deductions on Disability. These riders are not available in every state. The cost, if any, of these additional insurance benefits will be deducted from the Policy's Accumulation Value as a part of the monthly deduction. The Guaranteed Death Benefit provision is provided without cost but requires the described premium payments. BENEFITS AT MATURITY. On the Maturity Date of the Policy, if the Insured is still living, the Policyowner will be paid the Net Cash Surrender Value of the Policy. ACCUMULATION VALUE BENEFITS. The Policy's Accumulation Value in the Separate Account will reflect the amount and frequency of premium payments, the investment experience of the chosen Subaccounts and the Fixed Account, policy loans, any Partial Withdrawals, and any charges imposed in connection with the Policy. The entire investment risk of the Separate Account is borne by the Policyowner. ALIC does not guarantee a minimum Accumulation Value in the Separate Account. (See Accumulation Value, page 16). It does guarantee the Fixed Account. The Policyowner may surrender the Policy at any time and receive its Net Cash Surrender Value. Subject to certain limitations, the Policyowner may also make a Partial Withdrawal from the Policy and obtain a portion of the Accumulation Value at any time prior to the maturity date. Partial Withdrawals will reduce both the Accumulation Value and the Death Benefit payable under the Policy. (See Partial Withdrawals, page 19). A charge will be deducted from the amount paid upon Partial Withdrawal. (See Partial Withdrawal Charge, page 25). POLICY LOANS. Policy loans, secured by the Accumulation Value of the Policy, are available. After the first policy anniversary, the Policyowner may obtain a loan at "regular" loan interest rates, which shall not exceed 6% annually. After the later of age 55 or the tenth policy anniversary, the Policyowner can borrow against a limited amount of the Accumulation Value of the Policy at a "reduced" interest rate, which reduced rate is currently 3.5% and shall not exceed 4% annually ("reduced rate loan"). While the loan is outstanding, the Policyowner earns 3.5% interest on the Accumulation Values securing the loans. (For details concerning policy loan provisions, see page 18). - -------------------------------------------------------------------------------- LLVL 7 - -------------------------------------------------------------------------------- Policy loans may have tax consequences and will affect earnings and Policy Accumulation Values. Should the policy lapse while loans are outstanding the portion of the loans attributable to earnings will become taxable distributions. Should the Policy become a modified endowment contract, loans (including loans to pay loan interest) will be taxable to the extent of any gain under the Policy. Further, a 10% penalty tax also applies to the taxable portion of any distribution prior to the Insured's age 59 1/2. (See Federal Tax Matters, page 28). CHARGES SALES CHARGE. There is no premium load to cover sales and distribution expenses. PREMIUM CHARGES. Generally, a charge of no greater than 5% (currently 3.5%) of each premium will be deducted to compensate ALIC for premium tax charges (currently 2.5%) and the expenses of deferring the tax deduction of policy acquisition costs (currently 1.0%) before placing any amount in a Subaccount or the Fixed Account. ALIC does not expect to derive a profit from the premium charges. (See Deductions From Premium Payment, page 23). MONTHLY CHARGES AGAINST THE ACCUMULATION VALUE. a) A monthly maintenance charge of up to $9.00 [currently ALIC is charging $9.00 per month ($108.00 per year) during the first Policy Year and during the 12-month period after an increase in specified amount, and $4.50 per month ($54.00 per year) thereafter] to compensate ALIC for the continuing administrative costs of the Policy; plus b) A monthly charge for the cost of insurance including the cost for any riders. (See Charges Deducted from Accumulation Value, page 23). SURRENDER CHARGE. This policy has no surrender charge. However, there is a charge for Partial Withdrawals. (See below). TRANSFER CHARGE. Fifteen transfers of Accumulation Value per policy year will be permitted free of charge. A $10 administrative charge may be assessed for each additional transfer. The transfer charge will be deducted from the amount transferred. (See Transfer Charge, page 24). PARTIAL WITHDRAWAL CHARGE. A maximum charge, not to exceed the lesser of $50 or 2% of the amount withdrawn may be deducted for each Partial Withdrawal. (Currently, the charge is the lesser of $25 or 2%.) The charge will be deducted from the amount paid as a result of the Partial Withdrawal and will compensate ALIC for the administrative costs of Partial Withdrawals. A Partial Withdrawal charge is not assessed when a Policy is surrendered. (See Partial Withdrawal Charge, page 25). DAILY CHARGES AGAINST THE SEPARATE ACCOUNT. A daily charge at an annual rate not to exceed .90% (currently .75%) of the average daily net assets of each Subaccount, but not the Fixed Account. This charge compensates ALIC for mortality and expense risks assumed in connection with the Policy. (See Daily Charges Against the Separate Account, page 25). No additional charges are currently made against the Separate Account for federal, state or local taxes. If there is a material change from the expected treatment of ALIC under federal, state or local tax laws, ALIC may determine to make deductions from the Separate Account to pay those taxes. (See Taxes, page 25). In addition, because the Separate Account purchases shares of the Funds, the value of the units in each Subaccount will reflect the net asset value of shares of the various Funds held therein, and therefore, the investment advisory fee and other expenses incurred by the Funds. (See The Funds, page 10). TAX TREATMENT OF THE POLICY Like death benefits payable under conventional life insurance policies, life insurance proceeds payable under the Policy are excludable from the taxable income of the Beneficiary. Should the Policy be deemed a modified endowment contract (see Federal Tax Matters-Tax Status of the Policy, page 28), Partial Withdrawals or Surrenders, assignments, policy pledges, and loans under the Policy will be taxable to the Policyowner to the extent of any gain under the Policy. Generally, a 10% penalty tax also applies to the taxable portion of any distribution prior to the Insured reaching age 59 1/2. (For further detail regarding taxation, see Federal Tax Matters, page 28). - -------------------------------------------------------------------------------- 8 LLVL - -------------------------------------------------------------------------------- REFUND PRIVILEGE The Policyowner is granted a period of time (a "free look period") to examine a Policy and return it for a refund. The Policyowner may cancel the Policy within 45 days after Part I of the application is signed, within 10 days after the Policyowner receives the Policy, or 10 days after ALIC delivers a notice concerning cancellation, whichever is later. The amount of the refund is the greater of the premium paid or the premium paid adjusted by investment gains and losses. (See Refund Privilege, page 20). EXCHANGE PRIVILEGE During the first 24 months after the policy date of the Policy, subject to certain restrictions, the Policyowner may exchange the Policy for a flexible premium adjustable life insurance policy issued and made available for exchange by ALIC. The policy provisions and applicable charges for the new Policy will be based on the same Policy Date and Issue Age as under the Policy. (See Exchange Privilege, page 20). ALIC AND THE SEPARATE ACCOUNT AMERITAS LIFE INSURANCE CORP. Ameritas Life Insurance Corp. ("ALIC") is a stock life insurance company domiciled in Nebraska since 1887. ALIC is currently licensed to sell life insurance in 49 states, and the District of Columbia. The Home Office of ALIC is at 5900 "O" Street, Lincoln, Nebraska 68501. ALIC and subsidiaries had total assets at December 31, 1997 of over $3.4 billion. ALIC enjoys a long standing A+ (Superior) rating from A.M. Best, an independent firm that analyzes insurance carriers. ALIC also has been rated A ("Excellent") by Weiss Research, Inc., and has an AA ("Excellent") rating from Standard & Poor's for claims-paying ability. Effective January 1, 1998, ALIC converted from a mutual insurance company structure to a mutual insurance holding company structure pursuant to the Nebraska Mutual Insurance Holding Company Act. The conversion was approved by the Nebraska State Department of Insurance and the policy owners of the mutual company. As a result of the conversion, ALIC is wholly owned by Ameritas Holding Company, which is wholly owned by Ameritas Mutual Insurance Holding Company. There are no other owners of 5% or more of the outstanding voting securities of ALIC. Ameritas Investment Corp. ("AIC"), the principal underwriter of the policies, may publish in advertisements and reports to Policyowners, the ratings and other information assigned to ALIC by one or more independent rating services and charts and other information concerning dollar cost averaging, portfolio rebalancing, earnings sweep, tax-deference, diversification, asset allocation, long term market trends, index performance, and other investment methods. ALIC may also publish information about Veritas, ALIC's wholly owned, direct-to-consumer subsidiary. The purpose of the ratings is to reflect the financial strength and/or claims-paying ability of ALIC. The ratings do not relate to the performance of the Separate Account. AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVL Ameritas Life Insurance Corp. Separate Account LLVL ("the Separate Account") was established under Nebraska law on August 24, 1994. The assets of the Separate Account are held by ALIC and are segregated from all of ALIC's other assets. These assets are not chargeable with liabilities arising out of any other business which ALIC may conduct, including any income, gains, or losses of ALIC. Although the assets maintained in the Separate Account will not be charged with any liabilities arising out of ALIC's other business, all obligations arising under the Policies are liabilities of ALIC who will maintain assets in the Separate Account of a total market value at least equal to the reserve and other contract liabilities of the Separate Account. Nevertheless, to the extent assets in the Separate Account exceed ALIC's liabilities in the Separate Account, the assets are available to cover the liabilities of ALIC's General Account. ALIC may, from time to time, withdraw assets available to cover the General Account obligations. The Separate Account is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit investment trust, which - -------------------------------------------------------------------------------- LLVL 9 - -------------------------------------------------------------------------------- is a type of investment company. This does not involve any SEC supervision of the management or investment policies or practices of the Separate Account. For state law purposes, the Separate Account is treated as a Division of ALIC. THE FUNDS There are currently fifteen Subaccounts within the Separate Account available to Policyowners for new allocations. Each Subaccount of the Separate Account will invest only in the shares of a corresponding portfolio of Vanguard, Neuberger & Berman AMT, or Berger IPT (collectively the "Funds"). Each fund is registered with the SEC under the 1940 Act as an open-end diversified management investment company. The assets of each portfolio of the Funds are held separate from the assets of the other portfolios. Thus, each portfolio operates as a separate investment portfolio, and the income or losses of one portfolio generally have no effect on the investment performance of any other portfolio. The investment objectives and policies of each portfolio are summarized below. There is no assurance that any of the portfolios will achieve their stated objectives. More detailed information, including a description of investment objectives, policies, restrictions, expenses and risks, is in the prospectuses for each of the Funds, which must accompany or precede this Prospectus. These Prospectuses should be read carefully together with this Prospectus and retained. All underlying fund information, including Fund prospectuses, has been provided to ALIC by the underlying Funds. ALIC has not independently verified this information. Each Policyowner should periodically consider the allocation among the Subaccounts in light of current market conditions and the investment risks attendant to investing in the Funds' various portfolios. The Separate Account will purchase and redeem shares from the Portfolios at the net asset value. Shares will be redeemed to the extent necessary for ALIC to collect charges, pay the surrender values, Partial Withdrawals, and make policy loans or to transfer assets from one Subaccount to another, or to the Fixed Account, as requested by Policyowners. Any dividend or capital gain distribution received is automatically reinvested in the corresponding Subaccount. Since Vanguard, Neuberger & Berman AMT and Berger IPT are each designed to provide investment vehicles for variable annuity or variable life insurance contracts of various insurance companies and will be sold to separate accounts of other insurance companies as investment vehicles for various types of variable life insurance policies or variable annuity contracts, there is a possibility that a material conflict may arise between the interests of the Separate Account and one or more of the separate accounts of another participating insurance company. In the event of a material conflict, the affected insurance companies agree to take any necessary steps, including removing its separate accounts from the Funds, to resolve the matter. The risks of such mixed and shared funding are described further in the prospectuses of the Funds. INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS' PORTFOLIOS VANGUARD MONEY MARKET PORTFOLIO seeks to provide a current income and a stable net asset value of $1.00 per share. The Portfolio invests primarily in high-quality money market instruments issued by financial institutions, nonfinancial corporations, and the U.S. Government, state and municipal governments and their agencies or instrumentalities, as well as repurchase agreements collateralized by such securities. HIGH-GRADE BOND PORTFOLIO seeks to parallel the investment results (income plus capital change) of publicly-traded investment graded fixed-income securities in the aggregate by attempting to duplicate the investment performance of a broad investment grade bond index. The Portfolio invests primarily in a diversified portfolio of U.S. Government, corporate and foreign dollar-denominated bonds and mortgage-backed securities. - -------------------------------------------------------------------------------- 10 LLVL - -------------------------------------------------------------------------------- HIGH YIELD BOND PORTFOLIO seeks to provide a high level of current income by investing in a diversified portfolio of lower quality, high-yielding corporate debt securities (commonly referred to as "junk bonds"). BALANCED PORTFOLIO seeks to provide capital growth and a reasonable level of current income by investing in a diversified portfolio of common stocks and bonds. EQUITY INCOME PORTFOLIO seeks to provide a high level of current income by investing principally in dividend-paying equity securities. EQUITY INDEX PORTFOLIO seeks to parallel the investment results of the Standard & Poor's 500 Composite Stock Price Index (the "S & P 500"). The Portfolio invests primarily in common stocks included in the S & P 500. GROWTH PORTFOLIO seeks to provide long-term capital appreciation by investing primarily in equity securities of seasoned U.S. companies with above-average prospects for growth. SMALL COMPANY GROWTH PORTFOLIO seeks to provide long-term growth in capital by investing primarily in equity securities of small companies deemed to have favorable prospects for growth. INTERNATIONAL PORTFOLIO seeks to provide long-term capital appreciation by investing primarily in equity securities of seasoned companies located outside the United States. NEUBERGER & BERMAN AMT LIMITED MATURITY BOND PORTFOLIO seeks the highest current income consistent with low risk to principal and liquidity; and secondarily, total return. Principal series investments are short-to-intermediate term debt securities, primarily investment grade. GROWTH PORTFOLIO seeks capital appreciation, without regard to income. Principal series investments are common stocks. PARTNERS PORTFOLIO seeks capital growth. Principal series investments are common stocks and other equity securities of established companies. BALANCED PORTFOLIO seeks long-term capital growth and reasonable current income without undue risk to principal. Principal series investments are common stocks and short-to-intermediate term debt securities, primarily investment grade. BERGER IPT BERGER IPT-100 FUND seeks long-term capital appreciation. Current income is not an investment objective. The Fund places primary emphasis on established companies which it believes to have favorable growth prospects, regardless of the company's size. Common stock usually constitutes all or most of the Fund's investment portfolio, but the Fund remains free to invest in securities other than common stocks. BERGER IPT-SMALL COMPANY GROWTH FUND seeks capital appreciation. It invests principally in a diversified group of equity securities of small growth companies with market capitalization of less than $1 billion at the time of initial purchase. FUND MANAGEMENT FEES Fee information relating to the underlying funds was provided to ALIC by the underlying funds. ALIC has not independently verified the information received from the underlying funds. Vanguard's Fixed Income Group provides advisory services to the Money Market and High-Grade Bond portfolios. Vanguard's Core Management Group provides advisory services to the Equity Index portfolio. Newell Associates, Lincoln Capital Management, and Granahan Investment Management, Inc., serve as independent investment advisors to the Equity Income, Growth, and Small Company Growth portfolios, respectively. Wellington Management Company serves as investment advisor to the Balanced and High Yield Bond portfolios. The International portfolio employs Schroder Capital Management International, Inc. as the adviser. Vanguard charges a fee to each portfolio for providing corporate management, administrative, distribution and shareholder accounting services. - -------------------------------------------------------------------------------- LLVL 11 - -------------------------------------------------------------------------------- Neuberger & Berman Advisers Management Trust (the "Trust") is divided into portfolios ("Portfolios"), each of which invests all of its net investable assets in a corresponding series ("Series") of Advisers Managers Trust. The figures reported under "Investment Management and Administration Fees" include the aggregate of the administration fees paid by the Portfolio and the management fees paid by its corresponding Series. Similarly, "Other Expenses" includes all other expenses of the Portfolio and its corresponding Series. Neuberger & Berman Management, Inc. ("NBMI") provides investment management services to each Series that include, among other things, making and implementing investment decisions and providing facilities and personnel necessary to operate the Series. NBMI provides administrative services to each Portfolio that include furnishing similar facilities and personnel to the Portfolio. With the Portfolio's consent, NBMI is authorized to subcontract some of its responsibilities under its administration agreement with the Portfolio to third parties. Each Portfolio bears all expenses of its operations other than those borne by NBMI as administrator of the Portfolio and as distributor of its shares. Each Series bears all expenses of its operations other than those borne by NBMI as investment manager of the Series. These expenses include, but are not limited to, for the Portfolios and the Series, legal and accounting fees and compensation for trustees who are not affiliated with NBMI; for the Portfolios, transfer agent fees and the cost of printing and sending reports and proxy materials to shareholders; and for the Series, custodial fees for securities. Any expenses which are not directly attributable to a specific Series are allocated on the basis of the net assets of the respective Series. NBMI has voluntarily undertaken to limit the listed Portfolio's expenses by reimbursing each Portfolio for its operating expenses and its pro rata share of its corresponding Series' operating expenses, excluding the compensation of NBMI, taxes, interest, extraordinary expenses, brokerage commissions and transaction costs, that exceed, in the aggregate, 1% per annum of the Portfolio's average daily net asset value. This undertaking is subject to termination on 60 days' prior written notice to the Portfolio. The effect of any expense limitation by NBMI is to reduce operating expenses of a portfolio and its corresponding Series and thereby increase total return. Berger Associates provides investment advisory services to the Berger IPT Funds available in the Separate Account. Berger Associates has voluntarily agreed to waive its advisory fee and has voluntarily reimbursed the Funds for additional expenses to the extent that normal operating expenses in any fiscal year, including the management fee but excluding brokerage commissions, interest, taxes and extraordinary expenses, of Berger IPT-100 Fund exceed 1.00%, and the normal operating expenses in any fiscal year of the Berger IPT-Small Company Growth Fund exceed 1.15%, of the respective Fund's average daily net assets.
EXPENSES INVESTMENT ADVISORY PORTFOLIO & MANAGEMENT OTHER EXPENSES TOTAL VANGUARD(1) Money Market .17% .04% .21% High-Grade Bond .23% .06% .29% High Yield Bond .27% .04% .31% Balanced .29% .03% .32% Equity Income .33% .04% .37% Equity Index .20% .03% .23% Growth .35% .03% .38% Small Company Growth .35% .04% .39% International .38% .08% .46% NEUBERGER & BERMAN(2) INVESTMENT MANAGEMENT PORTFOLIO & ADMINISTRATION FEES OTHER EXPENSES TOTAL Limited Maturity .65% .12% .77% Balanced .85% .19% 1.04% Partners .80% .06% .86% Growth .83% .07% .90%
- -------------------------------------------------------------------------------- 12 LLVL - --------------------------------------------------------------------------------
BERGER IPT INVESTMENT MANAGEMENT PORTFOLIO & ADMINISTRATION FEES OTHER EXPENSES TOTAL (reflect reimbursement) (reflect reimbursement) 100 Fund .00% 1.00%(3) 1.00%(3) Small Company Growth .00% 1.15%(4)) 1.15%(4)
(1) 9/30/97 fiscal year end. (2) 12/31/97 fiscal year end. (3) Expenses reflect fee waiver and expense reimbursement. Absent such waiver and reimbursement, "Other" Expenses would have been 8.43%; and "Total" Expenses would have been 9.18%. (4) Expenses reflect fee waiver and expense reimbursement. Absent such waiver and reimbursement, "Other" Expenses would have been 4.91%; and "Total" Expenses would have been 5.81%. ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS ALIC reserves the right, subject to applicable law, and, if necessary, after notice to and prior approval from the SEC and/or state insurance authorities, to make additions to, deletions from, or substitutions for the shares that are held in the Separate Account or that the Separate Account may purchase. The Separate Account may, to the extent permitted by law, purchase other securities for other contracts or permit a conversion between contracts upon request by the Policyowners. ALIC may, in its sole discretion, also establish additional Subaccounts of the Separate Account, each of which would invest in shares corresponding to a new portfolio of the Funds or in shares of another investment company having a specified investment objective. ALIC may, in its sole discretion, establish new Subaccounts or eliminate one or more Subaccounts if marketing needs, tax considerations or investment conditions warrant. Any new Subaccounts may be made available to existing Policyowners on a basis to be determined by ALIC. If any of these substitutions or changes are made, ALIC may by appropriate endorsement change the Policy to reflect the substitution or change. If ALIC deems it to be in the best interest of Policyowners, and subject to any approvals that may be required under applicable law, the Separate Account may be operated as a management company under the 1940 Act, it may be deregistered under that Act if registration is no longer required, or it may be combined with other ALIC separate accounts. To the extent permitted by applicable law, ALIC may also transfer the assets of the Separate Account associated with the Policies to another separate account. In addition, ALIC may, when permitted by law, restrict or eliminate any voting rights of Policyowners or other persons who have voting rights as to the Separate Account. The Policyowner will be notified of any material change in the investment policy of any portfolio in which the Policyowner has an interest. FIXED ACCOUNT Policyowners may elect to allocate all or a portion of their premium payments to the Fixed Account, and they may also transfer monies from the Separate Account to the Fixed Account or from the Fixed Account to the Separate Account. (See Transfers, page 19). Payments allocated to the Fixed Account and transferred from the Separate Account to the Fixed Account are placed in the General Account of ALIC, which supports insurance and annuity obligations. The General Account includes all of ALIC's assets, except those assets segregated in the separate accounts. ALIC has the sole discretion to invest the assets of the General Account, subject to applicable law. ALIC bears an investment risk for all amounts allocated or transferred to the Fixed Account and interest credited thereto, less any deduction for charges and expenses, whereas the Policyowner bears the investment risk that the declared rate described below, may fall to a lower rate after the expiration of a declared rate period. Because of exemptive and exclusionary provisions, interests in the General Account have not been registered under the Securities Act of 1933 (the "1933 Act") nor is the General Account registered as an investment company under the Investment Company Act of 1940 (the "1940 Act"). Accordingly neither the General Account nor any interest therein is generally subject to the provisions of the 1933 Act or 1940 Act. We understand that the staff of the SEC has not reviewed the disclosures in this Prospectus relating to the Fixed Account portion of the Contract; however, disclosures regarding the Fixed Account portion of the Contract may be subject to generally applicable provisions of the Federal Securities Laws regarding the accuracy and completeness of statements made in prospectuses. - -------------------------------------------------------------------------------- LLVL 13 - -------------------------------------------------------------------------------- ALIC guarantees that it will credit interest at an effective annual rate of at least 3.5%. ALIC may, at its discretion, declare higher interest rate(s) for amounts allocated or transferred to the General Account ("Declared Rate(s)"). Amounts allocated to the Fixed Account receive an interest rate declared effective for the month of issue. The declared interest rate is guaranteed for the remainder of the Policy Year. During subsequent Policy Years, all amounts in the Fixed Account will earn the interest rate that was declared in the month of the last Policy anniversary. Declared interest rates may be lower or higher than the previous period. POLICY BENEFITS PURPOSES OF THE POLICY The Policy is designed to provide the Policyowner with both lifetime insurance protection to the policy anniversary nearest the Insured's 100th birthday and flexibility in connection with the amount and frequency of premium payments and with the level of life insurance proceeds payable under the Policy. The Policyowner is not required to pay scheduled premiums to keep a Policy in force, but may, subject to certain limitations, vary the frequency and amount of premium payments. Moreover, the Policy allows a Policyowner to adjust the level of death benefits payable under the Policy without having to purchase a new Policy by increasing (with evidence of insurability) or decreasing the Specified Amount. An increase in the Specified Amount will increase the optional Guaranteed Death Benefit Premium required. Thus, as insurance needs or financial conditions change, the Policyowner has the flexibility to adjust life insurance benefits and vary premium payments. The Death Benefit may, and the Accumulation Value will, vary with the investment experience of the chosen Subaccounts of the Separate Account. Thus the Policyowner benefits from any appreciation in value of the underlying assets, but bears the investment risk of any depreciation in value. As a result, whether or not a Policy continues in force may depend in part upon the investment experience of the chosen Subaccounts. The failure to pay a planned periodic premium will not necessarily cause the Policy to lapse, but the Policy could lapse even if planned periodic premiums have been paid, depending upon the investment experience of the Separate Account. ALIC agrees to keep the Policy in force during the first three years and provide a Guaranteed Death Benefit during that period so long as the cumulative monthly Guaranteed Death Benefit Premium is paid even though the Guaranteed Death Benefit Premium allowed by contract may not, after the payment of monthly insurance and administrative charges, generate positive Net Cash Surrender Values. DEATH BENEFIT PROCEEDS As long as the Policy remains in force, ALIC will, upon satisfactory proof of the Insured's death, pay the Death Benefit Proceeds of a Policy in accordance with the death benefit option in effect at the time of the Insured's death. The amount of the death benefits payable will be determined at the end of the Valuation Period during which the Insured's death occurred. The Death Benefit Proceeds may be paid in a lump sum or under one or more of the payment options set forth in the Policy. (See Payment Options, page 17). Death Benefit Proceeds will be paid to the surviving beneficiary or beneficiaries specified in the application or as subsequently changed. If no beneficiary is chosen, the proceeds will be paid to the Policyowner's estate. DEATH BENEFIT OPTIONS The Policy provides two Death Benefit options, unless the Extended Maturity Rider is in effect, and the Policyowner selects one of the options in the application. The Death Benefit under either option will never be less than the current Specified Amount of the Policy as long as the Policy remains in force (see Policy Lapse and Reinstatement, page 22). The minimum initial Specified Amount is generally $100,000, lower Specified Amounts may be requested. Defined differences, assisted by graphic illustrations are as follows: OPTION A. Omitted graph illustrates payout under Death Benefit Option A, specifically by showing the relationship over time, between the Specified Amount and the Accumulation Value. Death Benefit Option A. Pays a Face Amount of Death Benefit equal to the Specified Amount or the Accumulation Value multiplied by the Death Benefit Ratio (as illustrated at Point A) whichever is greater. - -------------------------------------------------------------------------------- 14 LLVL - -------------------------------------------------------------------------------- Under Option A, the Death Benefit is the current Specified Amount of the Policy or, if greater, the applicable percentage of Accumulation Value on the date of death. The applicable percentage is 250% for Insureds with an attained age 40 or younger on the policy anniversary prior to the date of death. For Insureds with an attained age over 40 on that policy anniversary, the percentage declines. For example, the percentage at age 40 is 250%, at age 50 is 185%, at age 60 is 130%, at age 70 is 115%, at age 80 is 105%, and at age 95 is 100%. Accordingly, under Option A the Death Benefit will remain level at the Specified Amount unless the applicable percentage of Accumulation Value exceeds the current Specified Amount, in which case the amount of the Death Benefit will vary as the Accumulation Value varies. Policyowners who prefer to have favorable investment performance, if any, reflected in higher Accumulation Value, rather than increased insurance coverage, generally should select Option A. OPTION B. Omitted graph illustrates payout under Death Benefit Option B, specifically by showing the relationships over time, between the Specified Amount and the Accumulated Value. Death Benefit Option B. Pays a Face Amount of Death Benefit equal to the Specified Amount plus the Policy's Accumulation Value or the Accumulation Value multiplied by the Death Benefit Ratio, whichever is greater. Under Option B, the death benefit is equal to the current Specified Amount plus the Accumulation Value of the Policy or, if greater, the applicable percentage of the Accumulation Value on the date of death. The applicable percentage is the same as under Option A: 250% for Insureds with an attained age 40 or younger on the policy anniversary prior to the date of death, and for Insureds with an attained age over 40 on that policy anniversary the percentage declines. Accordingly, under Option B the amount of the death benefit will always vary as the Accumulation Value varies (but will never be less than the Specified Amount). Policyowners who prefer to have favorable investment performance, if any, reflected in increased insurance coverage, rather than higher Accumulation Values, generally should select Option B. EXTENDED MATURITY. If the Extended Maturity Rider is in effect, the Death Benefit will be the Accumulation Value. CHANGE IN DEATH BENEFIT OPTION. The Death Benefit option may be changed once per year after the first policy year by sending ALIC a written request. The effective date of such a change will be the monthly activity date on or following the date the change is approved by ALIC. A change may have Federal Tax consequences. If the Death Benefit option is changed from Option A to Option B, the Death Benefit after the change will equal the Specified Amount before the change plus the Accumulation Value on the effective date of the change and will require evidence of insurability before the change is made. If the death benefit option is changed from Option B to Option A, the Specified Amount under Option A after the change will equal the death benefit under Option B on the effective date of change. No charges will be imposed upon a change in Death Benefit option, nor will such a change in and of itself result in an immediate change in the amount of a Policy's Accumulation Value. However, a change in the Death Benefit option may affect the monthly cost of insurance charge since this charge varies with the Net Amount at Risk, which is the amount by which the Death Benefit that would be payable on a monthly activity date exceeds the Accumulation Value on that date. Changing from Option B to Option A will generally decrease, in the future, the Net Amount at Risk, and therefore the cost of insurance charges. Changing from Option A to Option B will increase the Net Amount at Risk. Such a change will result in an immediate increase in the cost of insurance charges because of the increased coverage. (See Charges and Deductions, page 23 and Federal Tax Matters, page 28). CHANGE IN SPECIFIED AMOUNT. Subject to certain limitations, after the first policy year, a Policyowner may increase or decrease the Specified Amount of a Policy. A change in Specified Amount may affect the cost of insurance rate and the Net Amount at Risk, both of which may affect a Policyowner's cost of insurance charge and have Federal Tax consequences. (See Charges and Deductions, page 23 and Federal Tax Matters, page 28). Any increase or decrease in the Specified Amount will become effective on the Monthly Activity Date on or next following the date a written request is approved by ALIC. The Specified Amount of a Policy may be changed only once per year and ALIC may limit the size of a change in a policy year. The Specified Amount remaining in force after any requested decrease may not be less than $100,000 in the first three policy years and $75,000 thereafter. In addition, if following the decrease in Specified Amount, the Policy would not comply with the maximum premium limitations required by Federal Tax Law - -------------------------------------------------------------------------------- LLVL 15 - -------------------------------------------------------------------------------- (See Premiums, page 21), the decrease may be limited or Accumulation Value may be returned to the Policyowner at the Policyowner's election, to the extent necessary to meet these requirements. Increases in the Specified Amount will be allowed after the first policy year. For an increase in the Specified Amount, a written supplemental application must be submitted. ALIC may also require additional evidence of insurability. Although an increase need not necessarily be accompanied by an additional premium, in certain cases an additional premium will be required to effect the requested increase. (See Premiums Upon Increases in Specified Amount, page 22). The minimum amount of any increase is $25,000, and an increase cannot be made if the Insured's attained age is over 80. An increase in the Specified Amount will result in certain increased charges, which will be deducted from the Accumulation Value of the Policy on each Monthly Activity Date. An increase in the Specified Amount during the time the Guaranteed Death Benefit provision is in effect will increase the premium requirements for that provision. (See Charges and Deductions, page 23). METHODS OF AFFECTING INSURANCE PROTECTION A Policyowner may increase or decrease the pure insurance protection (Net Amount at Risk) provided by a Policy - the difference between the Death Benefit and the Accumulation Value - in several ways as insurance needs change. These ways include increasing or decreasing the Specified Amount of insurance, changing the level of premium payments, and making a Partial Withdrawal of the Policy's Accumulation Value. Certain of these changes may have Federal Tax consequences. The consequences of each of these methods will depend upon the individual circumstances. DURATION OF THE POLICY The duration of the Policy generally depends upon the Accumulation Value. The Policy will remain in force so long as the Net Cash Surrender Value is sufficient to pay the monthly deduction. (See Charges Deducted from Accumulation Value, page 23). Where, however, the Net Cash Surrender Value is insufficient to pay the monthly deduction and the grace period expires without an adequate payment by the Policyowner, the Policy will lapse and terminate without value. (See Policy Lapse and Reinstatement, page 22). ALIC agrees to keep the policy in force during the first three years and provide a Guaranteed Death Benefit so long as the cumulative Guaranteed Death Benefit premium is paid. (See Additional Insurance Benefits, page 26). ACCUMULATION VALUE The Policy's Accumulation Value in the Separate Account or the Fixed Account will reflect the investment performance of the chosen Subaccounts of the Separate Account or the Fixed Account, the net premiums paid, any Partial Withdrawals, and the charges assessed in connection with the Policy. A Policyowner may at any time surrender the Policy and receive the Policy's Net Cash Surrender Value. (See Surrenders, page 18). There is no guaranteed minimum Accumulation Value. DETERMINATION OF ACCUMULATION VALUE. Accumulation Value is determined on each Valuation Date. On the policy Issue Date, the Accumulation Value in a Subaccount will equal the portion of any net premium allocated to the Subaccount, reduced by the portion of the first monthly deductions allocated to that Subaccount. (See Allocation of Premiums and Accumulation Value, page 22). Thereafter, on each Valuation Date, the Accumulation Value of a Policy will equal: (a) The aggregate of the values attributable to the Policy in each of the Subaccounts on the Valuation Date, determined for each Subaccount by multiplying the Subaccount's unit value by the number of Subaccount units allocated to the Policy; plus (b) The value of the Fixed Account; plus (c) Any Accumulation Value impaired by policy debt held in the General Account; plus (d) Any net premiums received on that Valuation Date; less (e) Any Partial Withdrawal, and its charge, made on that Valuation Date; less (f) Any monthly deduction to be made on that Valuation Date; less (g) Any federal or state income taxes charged against the Accumulation Value. - -------------------------------------------------------------------------------- 16 LLVL - -------------------------------------------------------------------------------- In computing the Policy's Accumulation Value, the number of Subaccount units allocated to the Policy is determined after any transfers among Subaccounts, or the Fixed Account, (and deduction of transfer charges) but before any other Policy transactions, such as receipt of net premiums and Partial Withdrawals, on the Valuation Date. Because the Accumulation Value is dependent upon a number of variables, a Policy's Accumulation Value cannot be predetermined. THE UNIT VALUE. The unit value of each Subaccount reflects the investment performance of that Subaccount. The unit value of each Subaccount shall be calculated by (i) multiplying the per share net asset value of the corresponding Fund portfolio on the Valuation Date times the number of shares held by the Subaccount, before the purchase or redemption of any shares on that date; minus (ii) a charge not exceeding an annual rate of .90% for mortality and expense risk; and (iii) dividing the result by the total number of units held in the Subaccount on the Valuation Date, before the purchase or redemption of any units on that date. (See Daily Charges Against the Separate Account, page 25). BENEFITS AT MATURITY If the Insured is living, ALIC will pay the Net Cash Surrender Value of the Policy on the Maturity Date to the Policyowner. The Policy will mature on the policy anniversary nearest the Insured's 100th birthday, if living, unless the maturity has been extended by election of the Extended Maturity Rider. PAYMENT OF POLICY BENEFITS Death Benefit Proceeds under the Policy will usually be paid within seven days after ALIC receives Satisfactory Proof of Death. Accumulation Value benefits will ordinarily be paid within seven days of receipt of a written request. Payments may be postponed in certain circumstances. (See Postponement of Payments, page 26). The Policyowner may decide the form in which the benefits will be paid. During the Insured's lifetime, the Policyowner may arrange for the Death Benefit Proceeds to be paid in a lump sum or under one or more of the optional methods of payment described below. Changes must be in writing and will revoke all prior elections. These choices are also available if the Policy is surrendered or matures. If no election is made, ALIC will pay the benefits in a lump sum. When death benefits are payable in a lump sum and no election for an optional method of payment is in force at the death of the Insured, the beneficiary may select one or more of the optional methods of payment. Further, if the Policy is assigned, any amounts due to the assignee will first be paid in one sum. The balance, if any, may be applied under any payment option. Once payments have begun, the payment option may not be changed. PAYMENT OPTIONS. The minimum amount of each payment is $100. If a payment would be less than $100 ALIC has the right to make payments less often so that the amount of each payment is at least $100. Once a payment option is in effect, the proceeds will be transferred to ALIC's general account. ALIC may make other payment options available in the future. For additional information concerning these options, see the Policy itself. The following payment options are currently available: OPTION AI--INTEREST PAYMENT OPTION. ALIC will hold any amount applied under this option. Interest on the unpaid balance will be paid or credited each month at a rate determined by ALIC. OPTION AII--FIXED AMOUNT PAYABLE OPTION. Each payment will be for an agreed fixed amount. Payments continue until the amount ALIC holds runs out. OPTION B--FIXED PERIOD PAYMENT OPTION. Equal payments will be made for any period selected up to 20 years. OPTION C--LIFETIME PAYMENT OPTION. Equal monthly payments are based on the life of a named person. Payments will continue for the lifetime of that person. Variations provide for guaranteed payments for a period of time. OPTION D--JOINT LIFETIME PAYMENT OPTION. Equal monthly payments are based on the lives of two named persons. While both are living, one payment will be made each month. When one dies, the same payment will continue for the lifetime of the other. As an alternative to the above payment options, the proceeds may be paid in any other manner approved by ALIC. - -------------------------------------------------------------------------------- LLVL 17 - -------------------------------------------------------------------------------- POLICY RIGHTS LOAN BENEFITS LOAN PRIVILEGES. After the first policy anniversary, the Policyowner may borrow up to 100% of the Net Cash Surrender Value after adjustment for loan interest and guaranteed monthly deductions for the remainder of the policy year. The loans will be made at regular and, as described below, reduced loan interest rates. Loans usually are funded within seven days after receipt of a written request. The loan may be repaid at any time while the Insured is living, prior to the Maturity Date. Loans may have a tax consequence. (See Federal Tax Matters, page 28). LOAN INTEREST. ALIC charges interest to Policyowners at regular and reduced rates. Regular loans will accrue interest on a daily basis at a rate of up to 6% per year. ALIC is currently charging 5.5% on regular loans. If unpaid when due, interest will be added to the amount of the loan and bear interest at the same rate. After the later of age 55 or the tenth policy anniversary, the Policyowner may borrow each year a limited amount of the Accumulation Value of the Policy at a reduced interest rate. Interest will accrue on a daily basis at a rate of up to 4% per year. ALIC is currently charging 3.5% interest on reduced rate loans. The amount available at the reduced rate is 10% of the Accumulation Value as of the later of age 55 or the 10th policy anniversary (the start date) times the number of years since the start date, increased by the accrued interest charges on the reduced loan amount. EFFECT OF POLICY LOANS. When a loan is made, Accumulation Value equal to the amount of the loan will be transferred from the Separate Account and/or the Fixed Account to the General Account of ALIC as security for the indebtedness. The Policyowner earns 3.5% interest on the Accumulation Values securing the loans. The Accumulation Value transferred out of the Separate Account will be allocated among the Subaccounts or the Fixed Account in accordance with the instructions given when the loan is requested. The minimum amount which can remain in a Subaccount or the Fixed Account as a result of a loan is $100. If no instructions are given the amounts will be withdrawn in proportion to the various Accumulation Values in the Subaccounts or the Fixed Account. If loan interest is not paid when due in any Policy Year, on the Policy Anniversary thereafter, ALIC will loan the interest and allocate the amount transferred to secure the excess indebtedness among the Subaccounts and the Fixed Account as set out just above. No charge will be imposed for these transfers. A policy loan will permanently affect the Accumulation Value of a Policy, and may permanently affect the amount of the Death Benefit Proceeds, even if the loan is repaid. Interest earned on amounts held in the general account will be allocated to the Subaccounts and the Fixed Account on each policy anniversary in the same proportion that net premiums are being allocated to those Subaccounts and the Fixed Account at the time. Upon repayment of indebtedness, the portion of the repayment allocated in accordance with the repayment of indebtedness provision (see below) will be transferred to increase the Accumulation Value in that Subaccount or the Fixed Account. OUTSTANDING POLICY DEBT. The outstanding policy debt equals the total of all policy loans and accrued interest on policy loans. If the policy debt exceeds the Accumulation Value, and any accrued expenses, the Policyowner must pay the excess. ALIC will send a notice of the amount which must be paid. If the Policyowner does not make the required payment within the 61 days after ALIC sends the notice, the Policy will terminate without value. Should the policy lapse while policy loans are outstanding the portion of the loans attributable to earnings will become taxable. A Policyowner may lower the risk of a policy lapsing while loans are outstanding as a result of a reduction in the market value of investments in the various Subaccounts by investing in a diversified group of lower risk investment portfolios and/or transferring the funds to the Fixed Account and receiving a guaranteed rate of return. Should a substantial reduction be experienced, the Policyowner may need to lower anticipated Partial Withdrawals and loans, repay loans, make additional premium payments, or take other action to avoid policy lapse. A lapsed Policy may later be reinstated. (See Policy Lapse and Reinstatement, page 22). REPAYMENT OF INDEBTEDNESS. Unscheduled premiums paid while a policy loan is outstanding are treated as repayment of indebtedness only if the Policyowner so requests. As indebtedness is repaid, the Accumulation Value in the general account securing the indebtedness repaid will be allocated among the Subaccounts and the Fixed Account in the same proportion that net premiums are being allocated at the time of repayment. SURRENDERS At any time during the lifetime of the Insured and prior to the Maturity Date, the Policyowner may Surrender the Policy by sending a written request to ALIC. The amount available for Surrender is the Net Cash Surrender Value at the end of the Valuation Period during which the Surrender request is received at ALIC's Home Office. Surrenders will generally be paid within seven days of receipt of the written request. (See Postponement of Payments, page 26). Surrenders may have tax consequences. (See Tax Treatment of Policy Proceeds, page 29). - -------------------------------------------------------------------------------- 18 LLVL - -------------------------------------------------------------------------------- If the Policy is being surrendered, the Policy itself must be returned to ALIC along with the request. ALIC will pay the Net Cash Surrender Value. Coverage under the Policy will terminate as of the date of a Surrender. A Policyowner may elect to have the amount paid in a lump sum or under a payment option. (See Payment Options, page 17). PARTIAL WITHDRAWALS Partial withdrawals are irrevocable. The amount of a Partial Withdrawal may not exceed the Net Cash Surrender Value on the date the request is received and may not be less than $500. The Net Cash Surrender Value after a Partial Withdrawal must be the greater of $1,000 or an amount sufficient to maintain the policy in force for the remainder of the policy year. The amount paid will be deducted from the Subaccounts or the Fixed Account according to the instructions of the Policyowner when the Partial Withdrawal is requested, provided that the minimum amount remaining in a Subaccount as a result of the allocation is $100. If no instructions are given, the amounts will be withdrawn in proportion to the various Accumulation Values in the Subaccounts and/or Fixed Account. The Death Benefit will be reduced by the amount of any Partial Withdrawal and may affect the way in which the cost of insurance charge is calculated and the Net Amount at Risk under the Policy. (See Monthly Deduction - Cost of Insurance, page 24; Death Benefit Options - Methods of Affecting Insurance Protection, page 16). If Option B is in effect, the Specified Amount will not change, but the Accumulation Value will be reduced. The Specified Amount remaining in force after a Partial Withdrawal may not be less than $100,000 during the first three policy years and $75,000 thereafter. Any request for a Partial Withdrawal that would reduce the Specified Amount below this amount will not be implemented. A Partial Withdrawal charge not to exceed the lesser of $50 or 2% of the amount withdrawn is deducted from each Partial Withdrawal amount paid. Currently, the charge is the lesser of $25 or 2% of the amount withdrawn. (See Partial Withdrawal Charge, page 25). TRANSFERS Accumulation Value may be transferred among the Subaccounts of the Separate Account and to the Fixed Account as often as desired. The transfers may be ordered in person, by mail or by telephone. The total amount transferred each time must be at least $250, or the balance of the Subaccount, if less. During the 30-day period following the Policy Anniversary Date, transfers may be made from the Fixed Account to various Subaccounts. The amount that may be transferred is limited to the greater of: 25% of the Accumulation Value of the Fixed Account; the amount of any transfer from the Fixed Account during the prior thirteen months; or $1,000. This provision is not available while dollar cost averaging from the Fixed Account. The minimum amount that may remain in a Subaccount or the Fixed Account after a transfer is $100. The privilege to initiate transactions by telephone will be made available to Policyowners automatically. ALIC will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and if it does not, ALIC may be liable for any losses due to unauthorized or fraudulent instructions. The procedures ALIC follows for transactions initiated by telephone include requiring the Policyowner to provide the policy number at the time of giving transfer instructions; ALIC's tape recording of all telephone transfer instructions; and the provision, by ALIC, of written confirmation of telephone transactions. The first fifteen transfers per policy year will be permitted free of charge. Thereafter, a transfer charge of $10 may be imposed each additional time amounts are transferred. This charge will be deducted pro rata from each Subaccount (and, if applicable, the Fixed Account) in which the Policyowner is invested. (See Transfer Charge, page 24). Transfers resulting from policy loans or exercise of the exchange privilege will not be subject to a transfer charge and will not be counted towards the fifteen free transfers per policy year. ALIC may at any time revoke or modify the transfer privilege, including the minimum amount transferable. The Policy's transfer privilege is not intended to afford Policyowners a way to speculate on short-term movements in the market. Accordingly, in order to prevent excessive use of the transfer privilege that may potentially disrupt the management of the Separate Account and increase transaction costs, the Separate Account has established a policy of limiting excessive transfer activity. You may make two substantive transfers from each Portfolio (at least 30 days apart) during any calendar year. A substantive transfer is a transfer from a Subaccount which exceeds the lesser of: i) 51% of the Accumulation Value or ii) $100,000. This restriction does not limit non-substantive transfers and does not apply to transfers from the Money Market portfolio. All transfers must be for at least $250, or, if less, the balance of the Subaccount. Transfers may be subject to additional restrictions at the fund level. - -------------------------------------------------------------------------------- LLVL 19 - -------------------------------------------------------------------------------- SYSTEMATIC PROGRAMS ALIC may offer systematic programs as discussed below. Transfers of Accumulation Value made pursuant to these programs will be counted in determining whether the transfer fee applies. Lower minimum amounts may be allowed to transfer as part of a systematic program. There is no separate charge for participation in these programs at this time. All other normal transfer restrictions, as described above, apply. PORTFOLIO REBALANCING. Under the Portfolio Rebalancing program, the Owner can instruct ALIC to allocate Accumulation Value among the Subaccounts of the Separate Account, on a systematic basis, in accordance with allocation instructions specified by the Owner. The Fixed Account can not be used in this program. DOLLAR COST AVERAGING. Under the Dollar Cost Averaging program, the Owner can instruct ALIC to automatically transfer, on a systematic basis, a predetermined amount or percentage specified by the Owner from the Fixed Account or the Money Market Subaccount to any other Subaccount(s). Dollar cost averaging is permitted from the Fixed Account, if no more than 1/36th of the value of the Fixed Account at the time dollar cost averaging is established is transferred each month. EARNING SWEEP. Permits systematic redistribution of earnings among Subaccounts. The Owner can request participation in the available programs when purchasing the Policy or at a later date. The Owner can change the allocation percentage or discontinue any program by sending written notice or calling the Home Office. Other scheduled programs may be made available. ALIC reserves the right to modify, suspend or terminate such programs at any time. Use of Systematic Programs may not be advantageous, and does not guarantee success. REFUND PRIVILEGE The Policyowner may cancel the Policy within 10 days after the Policyowner receives it, within 10 days after ALIC delivers a notice of the Policyowner's right of cancellation, or within 45 days of completing Part I of the application, whichever is later. If a Policy is canceled within this time period the refund will be the greater of the premium paid or the premium paid adjusted by investment gains or losses. To cancel the Policy, the Policyowner must mail or deliver the policy and the notice of cancellation to the selling agent, or to ALIC at the Home Office. A refund of premiums paid by check may be delayed until the check has cleared the Policyowner's bank. (See Postponement of Payments, page 26). EXCHANGE PRIVILEGE During the first 24 policy months after the Policy Date of the Policy, the Policyowner may exchange the Policy for a flexible premium adjustable life insurance policy approved for exchange and issued by ALIC. No new evidence of insurability will be required. The Policy Date, Issue Age and risk classification for the Insured will be the same under the new Policy as under the old. In addition, the policy provisions and applicable charges for the new Policy and its riders will be based on the same Policy Date and Issue Age as under the Policy. Accumulation Values for the exchange and payments will be established after making adjustments for investment gains or losses and after recognizing variance, if any, between payment or charges, dividends or Accumulation Values under the flexible contract and under the new Policy. The Policyowner may elect either the same Specified Amount or the same net amount at risk for the new Policy as under the old. To make the change, the Policy, a completed application for exchange and any required payment must be received by ALIC. The exchange will be effective on the Valuation Date when all financial and contractual arrangements for the new Policy have been completed. - -------------------------------------------------------------------------------- 20 LLVL - -------------------------------------------------------------------------------- PAYMENT AND ALLOCATION OF PREMIUMS ISSUANCE OF A POLICY The policy is available for individuals and for corporations and other institutions who wish to provide coverage and benefits for key employees. Individuals wishing to purchase a Policy must complete an application and submit it to ALIC. A Policy will generally be issued only to individuals 80 years of age or less on their nearest birthday who supply satisfactory evidence of insurability to ALIC. ALIC may, at its sole discretion, issue a Policy to an individual above the age of 80. Acceptance is subject to ALIC's underwriting rules, and ALIC reserves the right to reject an application for any reason. The Policy Date is the effective date of coverage for all coverage applied for in the original application. The Policy Date is used to determine policy anniversary dates, policy years and policy months. The Policy Date and the Issue Date will be the same unless: 1) an earlier Policy Date is specifically requested, or 2) the Issue Date is later because additional premiums or application amendments were needed. When there are additional requirements before issue (see below) the Policy Date will be the date it is sent for delivery and the Issue Date will be the date the requirements are met. The Issue Date is the date that all financial, contractual and administrative requirements have been met and processed for the Policy. When all required premiums and application amendments have been received by ALIC in its Home Office, the Issue Date will be the date the Policy is mailed to the Policyowner or sent to the agent for delivery to the Policyowner. When application amendments or additional premiums need to be obtained upon delivery of the Policy, the Issue Date will be when the policy receipt and Federal Funds are received; and the application amendments are received and reviewed in ALIC's Home Office. The initial premium payment will be allocated to the Money Market Portfolio of the Vanguard Variable Insurance Fund as of the issue date, for 13 days. After the expiration of the refund period, the Accumulation Value will be allocated to the Subaccounts or the Fixed Account as selected by the Policyowner. Subject to approval, a Policy may be backdated, but the Policy Date may not be more than six months prior to the date of the application. Backdating can be advantageous if the Insured's lower Issue Age results in lower cost of insurance rates. If a Policy is backdated, the minimum initial premium required will include sufficient premium to cover the backdating period. Monthly deductions will be made for the period the Policy Date is backdated. Interim conditional insurance coverage may be issued prior to the policy date, provided that certain conditions are met. Upon the completion of an application and the payment of the required amount at the time of the application, the amount of the interim coverage is limited to the smaller of: (a) the amount of insurance applied for, (b) $100,000, or (c) $25,000 if the proposed Insured is under age 10 or over age 60 at nearest birthday. PREMIUMS No insurance will take effect before an amount equal to or greater than the minimum initial premium is received by ALIC in Federal Funds. The minimum initial premium is 25% of the total first year charges and deductions including charges for riders and any substandard risk adjustments. The minimum initial premium is less than the Guaranteed Death Benefit Premium. Subsequent premiums are payable at ALIC's Home Office. Subject to certain limitations, a Policyowner has flexibility in determining the frequency and amount of premiums. However, unless the Policyowner has paid sufficient premiums to pay the cost of insurance, the monthly maintenance and mortality and expense risk charges, the Policy may have a zero Net Cash Surrender Value and lapse. ALIC agrees to keep the Policy in force during the first three years and provide a Guaranteed Death Benefit so long as the cumulative monthly Guaranteed Death Benefit Premium is paid even though, in certain instances, these premiums may not, after the payment of monthly insurance and administrative charges, generate positive Net Cash Surrender Values. (See Additional Insurance Benefits (Riders), page 26). PLANNED PERIODIC PREMIUMS. At the time the Policy is issued each Policyowner may determine a Planned Periodic Premium schedule that provides for the payment of level premiums at selected intervals. The Planned Periodic Premium schedule may include the Guaranteed Death Benefit Premium. The Policyowner is not required to pay premiums in accordance with this schedule. The Policyowner has considerable flexibility to alter the amount and frequency of premiums paid. ALIC does reserve the right to limit the number and amount of additional or unscheduled premium payments. - -------------------------------------------------------------------------------- LLVL 21 - -------------------------------------------------------------------------------- Policyowners can also change the frequency and amount of Planned Periodic Premiums by sending a written request to the Home Office, although ALIC reserves the right to limit any increase. Premium payment notices will be sent annually, semi-annually or quarterly, depending upon the frequency of the Planned Periodic Premiums. Payment of the Planned Periodic Premiums does not guarantee that the Policy remains in force unless the Guaranteed Death Benefit provision is in effect. Instead, the duration of the Policy depends upon the Policy's Net Cash Surrender Value. (See Duration of the Policy, page 16). Unless the Guaranteed Death Benefit provision is in effect, even if Planned Periodic Premiums are paid by the Policyowner, the Policy will lapse any time the Net Cash Surrender Value is insufficient to pay certain monthly charges, and a grace period expires without a sufficient payment. (See Policy Lapse and Reinstatement, below). PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both planned and unscheduled, exceed the current maximum premium limitations established by federal tax laws. If at any time a premium is paid which would result in total premiums exceeding the current maximum premium limitation, ALIC will only accept that portion of the premium which will make total premiums equal the maximum. Any part of the premium in excess of that amount will be returned or applied as otherwise agreed and no further premiums will be accepted until allowed by the current maximum premium limitations prescribed by law. ALIC may require additional evidence of insurability if any premium payment would result in an increase in the Policy's net amount at risk on the date the premium is received. PREMIUMS UPON INCREASES IN SPECIFIED AMOUNT. Depending upon the Accumulation Value of the Policy at the time of an increase in the Specified Amount of the Policy and the amount of the increase requested by Policyowner, an additional premium payment may be required. ALIC will notify the Policyowner of any premium required to fund the increase. This required premium must be made as a single payment. The Accumulation Value of the Policy will immediately be increased by the amount of the payment, less the applicable premium charge. ALLOCATION OF PREMIUMS AND ACCUMULATION VALUE ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policyowner allocates net premiums to one or more Subaccounts of the Separate Account or to the Fixed Account. Allocations must be whole number percentages and must total 100%. The allocation for future net premiums may be changed without charge by providing proper notification to the Home Office. If there is any outstanding policy debt at the time of a payment, ALIC will treat the payment as a premium payment unless otherwise instructed in proper written notice. The initial premium payment will be allocated to the Money Market portfolio of the Vanguard Variable Insurance Fund as of the Issue Date, for 13 days. Thereafter, the Accumulation Value will be allocated to the Subaccounts or the Fixed Account as selected by the Policyowner. Premium payments received by ALIC prior to the Issue Date are held in the General Account until the Issue Date and are credited with interest at a rate determined by ALIC for the period from the date the payment has been converted into Federal Funds (monies of member banks within the Federal Reserve System which are held on deposit at a Federal Reserve Bank) that are available to ALIC. In no event will interest be credited prior to the Policy Date. ACCUMULATION VALUE. The value of the Subaccounts of the Separate Account will vary with the investment performance of these Subaccounts and the Policyowner bears the entire investment risk. This will affect the Policy's Accumulation Value, and may affect the Death Benefit as well. Policyowners should periodically review their allocations of premiums and values in light of market conditions and overall financial planning requirements. POLICY LAPSE AND REINSTATEMENT LAPSE. Unlike conventional life insurance policies, the failure to make a Planned Periodic Premium payment will not itself cause the Policy to lapse. Lapse will occur when the Net Cash Surrender Value is insufficient to cover the monthly deduction and a grace period expires without a sufficient payment unless the Guaranteed Death Benefit provision is in effect. The grace period is 61 days from the date ALIC mails a notice that the grace period has begun. ALIC will notify the Policyowner at the beginning of the grace period by mail addressed to the last known address on file with ALIC. The notice will specify the premium required to keep the Policy in force. Failure to pay the required amount within the grace period will result in lapse of the Policy. If the Insured dies during the grace period, any overdue monthly deductions and outstanding policy debt will be deducted from the proceeds. - -------------------------------------------------------------------------------- 22 LLVL - -------------------------------------------------------------------------------- If the Net Cash Surrender Value is insufficient to cover the monthly deduction, the Policyowner must pay a premium during the grace period sufficient to cover the monthly deductions and premium charges for the three policy months after commencement of the grace period to avoid lapse. (See Charges and Deductions, page 23). REINSTATEMENT. A lapsed Policy may be reinstated any time within three years (five years in Missouri) from the beginning of the grace period, but before the Maturity Date. Reinstatement will be effected based on the Insured's underwriting classification at the time of the reinstatement. Reinstatement is subject to the following: a. Evidence of insurability of the Insured satisfactory to ALIC (including evidence of insurability of any person covered by a rider to reinstate the rider); b. Any policy debt will be reinstated with interest due and accrued; c. The Policy cannot be reinstated if it has been surrendered for its full surrender value; d. The payment of a premium sufficient to pay monthly and other policy deductions for the three months following reinstatement and to pay premium charges on the premiums paid; and e. If the reinstatement occurs during the first three Policy Years, you may pay premiums in the amount necessary to meet the cumulative monthly requirements of the Guaranteed Death Benefit Premium as of the date of reinstatement. The amount of Accumulation Value on the date of reinstatement will be equal to the amount of the Net Cash Surrender Value on the date of lapse, increased by the premium paid at reinstatement, less the premium charges and the amounts stated above. If any policy debt was reinstated, that debt will be held in ALIC's General Account. Accumulation Value calculations will then proceed as described under "Accumulation Value" on page 16. The effective date of reinstatement will be the first Monthly Activity Date on or next following the date of approval by ALIC of the application for reinstatement. CHARGES AND DEDUCTIONS Charges will be deducted in connection with the Policy to compensate ALIC for: (1) providing the insurance benefits set forth in the Policy and any optional insurance benefits added by rider; (2) administering the Policy; (3) assuming certain risks in connection with the Policy; and (4) incurring expenses in distributing the Policy. The nature and amount of these charges are described more fully below. DEDUCTIONS FROM PREMIUM PAYMENT SALES CHARGE. There is no premium load to cover sales and distribution expenses. PREMIUM CHARGES. A deduction of up to 5% (currently 3.5%) of the premium will be made from each premium payment to pay state premium taxes (currently 2.5%) and the expense of deferring the tax deduction of policy acquisition costs (currently 1.0%). The deduction represents an amount ALIC considers necessary to pay all premium taxes imposed by the states and their subdivisions and to defray the cost of capitalizing certain policy acquisition expenses as required by Internal Revenue Code Section 848. ALIC does not expect to derive a profit from the premium charges. As to state premium taxes, these vary from state to state and currently range from .75 percent to 3.5 percent. Therefore, the deduction ALIC makes from each premium payment may be higher or lower than the actual premium tax imposed by a particular jurisdiction. The rate of tax imposed is subject to change by governmental entity. CHARGES DEDUCTED FROM ACCUMULATION VALUE MONTHLY DEDUCTION. Charges will be deducted as of the Policy Date and on each Monthly Activity Date thereafter from the Accumulation Value of the Policy to compensate ALIC for administrative expenses and insurance provided. These charges - -------------------------------------------------------------------------------- LLVL 23 - -------------------------------------------------------------------------------- will be allocated among the Subaccounts, and the Fixed Account on a pro rata basis. Each of these charges is described in more detail below. MAINTENANCE CHARGE. To compensate ALIC for the ordinary administrative expenses expected to be incurred in connection with a Policy, the monthly deduction includes a $9.00 per policy charge (currently $9.00 the first policy year and the first 12 months following an increase in Specified Amount and $4.50 during all other months). This maintenance charge is levied throughout the life of the Policy and is guaranteed not to increase above $9.00 per month. ALIC does not expect to make any profit from the monthly maintenance charge. COST OF INSURANCE. Because the cost of insurance depends upon several variables, the cost for each policy month can vary from month to month. ALIC will determine the monthly cost of insurance charges by multiplying the applicable cost of insurance rate by the Net Amount at Risk for each policy month. The Net Amount at Risk on any Monthly Activity Date is the amount by which the Death Benefit which would have been payable on that Monthly Activity Date exceeds the Accumulation Value on that date. COST OF INSURANCE RATE. The annual cost of insurance rate is based on the Insured's sex, attained age, policy duration, Specified Amount, and risk class. The rate will vary if the Insured is a smoker, non-smoker, a preferred non-smoker or is considered a substandard risk and rated with a tabular extra rating. For the initial Specified Amount, the cost of insurance rate will not exceed those shown in the Table of Policy Charges shown in the schedule pages of the Policy. These guaranteed rates are based on the Insured's age nearest birthday and are equal to the 1980 Commissioners Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. The current rates range between 40% and 100% of the rates based on the 1980 Commissioners Standard Ordinary Tables, based on ALIC's own mortality experience. Policies issued on a unisex basis are based upon the 1980 Commissioners Standard Ordinary Table B assuming 80% male and 20% female lives. The cost of insurance rates, and payment options for policies issued in Montana and certain other states, or issued in connection with certain employer sponsored arrangements are on a sex-neutral (unisex) basis. Any change in the cost of insurance rates will apply to all persons of the same age, sex, Specified Amount and risk class and whose policies have been in effect for the same length of time. If the underwriting class for any increase in the Specified Amount or for any increase in Death Benefit resulting from a change in Death Benefit option from A to B is not the same as the underwriting class at issue, the cost of insurance rate for the increase will reflect the underwriting class which would apply for such increase. Decreases will also be reflected in the cost of insurance rate as discussed earlier. The actual charges made during the policy year will be shown in the annual report delivered to Policyowners. RATE CLASS. The rate class of an Insured may affect the cost of insurance rate. ALIC currently places Insureds into both standard rate classes and substandard classes that involve a higher mortality risk. In an otherwise identical policy, an Insured in the standard rate class will have a lower cost of insurance than an Insured in a rate class with higher mortality risks. If a Policy is rated at issue with a tabular extra rating, the guaranteed rate is a multiple of the guaranteed rate for a standard issue. This multiple factor is shown in the Schedule of Benefits in the Policy, and may be from 1.37 to 4 times the guaranteed rate for a standard issue. Insureds may also be assigned a flat extra rating to reflect certain additional risks. The cost of insurance rate will be increased by the flat extra rating. SURRENDER CHARGE The policy has no surrender charge and may be surrendered at any time during the Insured's lifetime for the policy's Net Cash Surrender Value. There is a charge, however, for Partial Withdrawals. (See Partial Withdrawal Charge, page 25). TRANSFER CHARGE A transfer charge of $10.00 (guaranteed not to increase) may be imposed for each additional transfer among the Subaccounts after fifteen per policy year to compensate ALIC for the costs of effecting the transfer. Since the charge reimburses ALIC for the cost of effecting the transfer only, ALIC does not expect to make any profit from the transfer charge. This charge will be deducted pro rata from each Subaccount (and, if applicable, the Fixed Account) in which the Policyowner is invested. The transfer charge will not be imposed on transfers that occur as a result of policy loans or the exercise of exchange rights. - -------------------------------------------------------------------------------- 24 LLVL - -------------------------------------------------------------------------------- PARTIAL WITHDRAWAL CHARGE A charge currently not greater than the lesser of $25 or 2% of the amount withdrawn (guaranteed not to be greater than the lesser of $50 or 2% of the amount withdrawn) will be imposed for each Partial Withdrawal to compensate ALIC for the administrative costs in effecting the requested payment and in making necessary calculations for any reductions in Specified Amount which may be required by reason of the Partial Withdrawal. A Partial Withdrawal charge is not assessed when a Policy is surrendered. DAILY CHARGES AGAINST THE SEPARATE ACCOUNT A daily charge will be deducted from the value of the net assets of the Separate Account to compensate ALIC for mortality and expense risks assumed in connection with the Policy. This daily charge from the Separate Account is currently at the rate of 0.002049% (equivalent to an annual rate of 0.75%) and will not exceed 0.002459% (equivalent to an annual rate of .90%) of the average daily net assets of the Separate Account. The daily charge will be deducted from the net asset value of the Separate Account, and therefore the Subaccounts, on each Valuation Date. Where the previous day or days was not a Valuation Date, the deduction on the Valuation Date will be 0.002049% (or 0.002459%, if applicable) multiplied by the number of days since the last Valuation Date. No mortality and expense charges will be deducted from the amounts in the Fixed Account. ALIC believes that this level of charge is within the range of industry practice for comparable flexible premium variable universal life policies. The mortality risk assumed by ALIC is that Insureds may live for a shorter time than assumed, and that an aggregate amount of death benefits greater than that assumed accordingly will be paid. The expense risk assumed is that expenses incurred in issuing and administering the policies will exceed the administrative charges provided in the policies. In addition to the charges against the Separate Account described just above, management fees and expenses will be assessed by the Vanguard Variable Insurance Fund, Neuberger & Berman Advisers Management Trust, and Berger Institutional Products Trust against the amounts invested in the various portfolios. No portfolio fees will be assessed against amounts placed in the Fixed Account. TAXES. Currently, no additional charges are made against the Separate Account for federal, state or local income taxes. ALIC may, however, make such a charge in the future if income or gains within the Separate Account will incur any federal, or any significant state or local income tax liability, or if the federal, state or local tax treatment of ALIC changes. Charges for such taxes, if any, would be deducted from the Separate Account and/or the Fixed Account. (See Federal Tax Matters, page 28). GENERAL PROVISIONS THE CONTRACT. The Policy, the application, any supplemental applications, and any riders, amendments or endorsements make up the entire contract. Only the President, Vice President, Secretary or Assistant Secretary can modify the Policy. Any changes must be made in writing, and approved by ALIC. No agent has the authority to alter or modify any of the terms, conditions or agreements of the Policy or to waive any of its provisions. CONTROL OF POLICY. The Policyowner is as shown in the application or subsequent written endorsement. Subject to the rights of any irrevocable beneficiary and any assignee of record, all rights, options, and privileges belong to the Policyowner, if living; otherwise to any successor-owner or owners, if living; otherwise to the estate of the last owner to die. BENEFICIARY. The Policyowner may name both primary and contingent beneficiaries in the application. Payments will be shared equally among beneficiaries of the same class unless otherwise stated. If a beneficiary dies before the Insured, payments will be made to any surviving beneficiaries of the same class; otherwise to any beneficiary(ies) of the next class; otherwise to the owner; otherwise to the estate of the owner. CHANGE OF BENEFICIARY. The Policyowner may change the beneficiary by written request at any time during the Insured's lifetime unless otherwise provided in the previous designation of beneficiary. The change will take effect as of the date the change is recorded at the Home Office. ALIC will not be liable for any payment made or action taken before the change is recorded. - -------------------------------------------------------------------------------- LLVL 25 - -------------------------------------------------------------------------------- CHANGE OF OWNER OR ASSIGNMENT. In order to change the owner of the Policy or assign Policy rights, an assignment of the Policy must be made in writing and filed with ALIC at its Home Office. The change will take effect as of the date the change is recorded at the Home Office, and ALIC will not be liable for any payment made or action taken before the change is recorded. Payment of proceeds is subject to the rights of any assignee of record. A collateral assignment is not a change of ownership. PAYMENT OF PROCEEDS. The proceeds are subject first to any indebtedness to ALIC and then to the interest of any assignee of record. The balance of any Death Benefit Proceeds shall be paid in one sum to the designated beneficiary unless an Optional Method of Payment is selected. If no beneficiary survives the Insured, the proceeds shall be paid in one sum to the Policyowner, if living; otherwise to any successor-owner, if living; otherwise to the Policyowner's estate. Any proceeds payable on the Maturity Date or upon full surrender shall be paid in one sum unless an Optional Method of Payment is elected. INCONTESTABILITY. The Policy or reinstated Policy is incontestable after it has been in force for two years from the policy date (or reinstatement effective date) during the lifetime of the Insured. An increase in the Specified Amount or addition of a rider after the Policy Date shall be incontestable after such increase or addition has been in force for two years from its effective date during the lifetime of the Insured. However, this two year provision shall not apply to riders that provide disability or accidental death benefits. MISSTATEMENT OF AGE OR SEX. If the age or sex of the Insured or any person insured by rider has been misstated, the amount of the death benefit will be adjusted. The Death Benefit will be adjusted to the amount that would be purchased by the most recent cost of insurance deductions using the correct cost of insurance rate. SUICIDE. Suicide within two years of the Policy Date is not covered by the Policy unless otherwise provided by a state's Insurance law. If the Insured, while sane or insane, commits suicide within two years after the policy date, ALIC will pay only the premiums received less any Partial Withdrawals, the cost for riders and any outstanding policy debt. If the Insured, while sane or insane, commits suicide within two years after the effective date of any increase in the Specified Amount, ALIC's liability with respect to such increase will only be its total cost of insurance applied to the increase. The laws of Missouri provide that death by suicide at any time is covered by the Policy, and further that suicide by an insane person may be considered an accidental death. POSTPONEMENT OF PAYMENTS. Payment of any amount upon Surrender, Partial Withdrawals, policy loans, benefits payable at death or maturity, and transfers may be postponed whenever: (i) the New York Stock Exchange is closed other than customary weekend and holiday closings, or trading on the New York Stock Exchange is restricted as determined by the Securities and Exchange Commission; (ii) the Commission by order permits postponement for the protection of Policyowners; (iii) an emergency exists, as determined by the Commission, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Separate Account's net assets; or (iv) Surrender, loans or Partial Withdrawals from the Fixed Account may be deferred for up to 6 months from the date of written request. Payments under the Policy of any amounts derived from premiums paid by check may be delayed until such time as the check has cleared the Policyowner's bank. REPORTS AND RECORDS. ALIC will maintain all records relating to the Separate Account and will mail to the Policyowner, at the last known address of record, within 30 days after each Policy Anniversary, an annual report which shows the current Accumulation Value, Net Cash Surrender Value, Death Benefit, premiums paid, outstanding policy debt and other information. Quarterly statements are also mailed detailing Policy activity during the calendar quarter. Instead of receiving an immediate confirmation of transactions made pursuant to some types of periodic payment plan (such as a dollar cost averaging program, or payment made by automatic bank draft or salary reduction arrangement), the Policyowner may receive confirmation of such transactions in their quarterly statements. The Policyowner should review the information in these statements carefully. All errors or corrections must be reported to ALIC immediately to assure proper crediting to the Policy. ALIC will assume all transactions are accurately reported on quarterly statements unless ALIC is otherwise notified within 30 days after receipt of the statement. The Policyowner will also be sent a periodic report for the Funds and a list of the portfolio securities held in each portfolio of the Funds. ADDITIONAL INSURANCE BENEFITS (RIDERS) Subject to certain requirements, one or more of the following additional insurance benefits may be added to a Policy by rider. All riders are not available in all states. The cost, if any, of additional insurance benefits will be deducted as part of the monthly deduction. (See Charges Deducted From Accumulation Value-Monthly Deduction, page 23). - -------------------------------------------------------------------------------- 26 LLVL - -------------------------------------------------------------------------------- ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS (LIVING BENEFIT RIDER). Upon satisfactory proof of terminal illness after the two-year contestable period (no waiting period in certain states) ALIC will accelerate the payment of up to 50% of the lowest scheduled Death Benefit as provided by eligible coverages, less an amount up to two guideline level premiums. Future premium allocations after the payment of the benefit must be allocated to the Fixed Account. Payment will not be made for amounts less than $4,000 or more than $250,000 on all policies issued by ALIC or its affiliates. ALIC may charge the lesser of 2% of the benefit or $50 as a Partial Withdrawal charge to cover the costs of administration. Satisfactory proof of terminal illness must include a written statement from a licensed physician who is not related to the Insured or the Policyowner stating that the Insured has a non-correctable medical condition that, with a reasonable degree of medical certainty, will result in the death of the Insured in less than 12 months (6 months in certain states) from the physician's statement. Further, the condition must first be diagnosed while the Policy was in force. The accelerated benefit first will be used to repay any outstanding policy loans and unpaid loan interest, and will also affect future loans, Partial Withdrawals, and Surrender. The accelerated benefit will be treated as a lien against the policy Death Benefit and will thus reduce the proceeds payable on the death of the Insured. There is no extra premium for this rider. CHILDREN'S PROTECTION RIDER. Provides for term insurance on the Insured's children, as defined in the rider. Under the terms of the rider, the Death Benefit will be payable to the named beneficiary upon the death of any insured child. Upon receipt of proof of the Insured's death before the rider terminates, the rider will be considered paid up for the term of the rider. GUARANTEED INSURABILITY RIDER. Provides that the Policyowner can purchase additional insurance for the Insured by increasing the Specified Amount of the Policy at certain future dates without evidence of insurability. WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY. Provides, while the Insured is disabled, for the waiver of monthly deduction for expense charges and the cost of insurance charges including table ratings and flat extras for the policy and all riders. PAYOR WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY. Provides, while the covered person is disabled, for the waiver of monthly deductions for expense charges and the cost of insurance charges including table ratings and flat extras for the policy and all riders. This rider is available for Insureds ages 0 to 14. COST RECOVERY RIDER. This rider allows a one time special Partial Withdrawal without reducing the Specified Amount. There is no charge for this rider. EXTENDED MATURITY RIDER. This rider may be elected by submitting a written request to ALIC during the 90 days prior to Maturity Date. If elected, as long as the Surrender Value is greater than zero, the policy will remain in force for purposes of providing a benefit at the time of the Insured's death. Once this rider becomes effective, no further premium payments will be accepted, and no monthly charges will be made for cost of insurance, riders or flat extra rating. All other policy provisions not specifically noted herein will remain in effect while the policy continues in force. Interest on policy loans will continue to accrue and become part of the policy debt. This rider does not extend the Maturity Date for purposes of determining benefits under any other riders. Death Benefit Proceeds are payable to the beneficiary. There is no extra premium for this rider. This rider is not available in all states. The Internal Revenue Service has not issued a ruling regarding the tax consequences of this rider. DISTRIBUTION OF THE POLICIES Ameritas Investment Corp. ("AIC"), a wholly owned subsidiary of AMAL Corporation, will act as the principal underwriter of the Policies, pursuant to an Underwriting Agreement between itself and ALIC. AIC was organized under the laws of the State of Nebraska on December 29, 1983 and is a registered broker/dealer pursuant to the Securities Exchange Act of 1934 and a member of the National Association of Securities Dealers. In 1997, AIC received gross variable universal life compensation of $320,059, and retained $57,129 in underwriting fees, and $23 in brokerage commissions on ALIC's variable universal life policies. - -------------------------------------------------------------------------------- LLVL 27 - -------------------------------------------------------------------------------- There is no premium load to cover sales and distribution expenses. To the extent that sales and distribution expenses are paid, if at all, ALIC will pay them from its other assets or surplus in its General Account, which include amounts derived from mortality and expense risk charges and other charges made under the Policy. Policies can be purchased directly from ALIC through Veritas, ALIC's wholly owned, direct-to-consumer subsidiary, with salaried employees who are Registered Representatives of AIC and who will not receive compensation related to the purchase. Policies can be purchased from field representatives who are Registered Representatives of AIC, or from Registered Representatives of other registered broker-dealers authorized to sell the policies subject to applicable law. In these situations, AIC or the other broker-dealer may receive compensation in an amount no greater than 9% of the target first year premium paid plus the first year cost of any riders, and 2% of excess first year premium. In years thereafter, AIC or the other broker-dealer may receive asset based compensation at an annualized rate of .1% per policy year of the Net Cash Surrender Value. AIC or the other broker-dealer may pass a portion of this compensation on to the Registered Representative or the manager of the Registered Representative. Upon any subsequent increase in Specified Amount or any subsequent increase in riders, marketing allowances will also be paid based on the amount of the increase in Specified Amount or increase in rider. FEDERAL TAX MATTERS The following discussion provides a general description of the federal income tax considerations associated with the Policy, and does not purport to be complete or cover all situations. This discussion is not intended as tax advice. No attempt has been made to consider in detail any applicable state or other tax (except premium taxes, see discussion "Premium Charges," page 23) laws. This discussion is based upon ALIC's understanding of the relevant laws at the time of filing. Counsel and other competent advisors should be consulted for more complete information before a Policy is purchased. ALIC makes no representation as to the likelihood of the continuation of present federal income tax laws nor of the interpretations by the Internal Revenue Service. Federal tax laws are subject to change and thus tax consequences to the Insured, Policyowner or Beneficiary may be altered. (a) TAXATION OF ALIC. ALIC is taxed as a life insurance company under Part I of Subchapter L of the Internal Revenue Code of 1986 (the "Code"). At this time, since the Separate Account is not an entity separate from ALIC, and its operations form a part of ALIC, it will not be taxed separately as a "regulated investment company" under Subchapter M of the Code. Net investment income and realized net capital gains on the assets of the Separate Account are reinvested and automatically retained as a part of the reserves of the Policy and are taken into account in determining the Death Benefit and Accumulation Value of the Policy. ALIC believes that Separate Account net investment income and realized net capital gains will not be taxable to the extent that such income and gains are retained as reserves under Policy. ALIC does not currently expect to incur any additional federal income tax liability attributable to the Separate Account with respect to the sale of the Policies. Accordingly, no charge is being made currently to the Separate Account for federal income taxes. If, however, ALIC determines that it may incur such taxes attributable to the Separate Account, it may assess a charge for such taxes against the Separate Account. ALIC may also incur state and local taxes (in addition to premium taxes for which a deduction from premiums is currently made). At present, they are not charges against the Separate Account. If there is a material change in state or local tax laws, charges for such taxes attributable to the Separate Account, if any, may be assessed against the Separate Account. (b) TAX STATUS OF THE POLICY. The Code (section 7702) includes a definition of a life insurance contract for federal tax purposes, which places limitations on the amount of premiums that may be paid for the Policy and the relationship of the Accumulation Value to the Death Benefit. ALIC believes that the Policy meets the statutory definition of a life insurance contract. If the Death Benefit of a Policy is changed, the applicable definitional limitations may change. In the case of a decrease in the death benefit, a Partial Withdrawal, a change in Death Benefit option, or any other such change that reduces future benefits under the Policy during the first 15 years after a Policy is issued and that results in a cash distribution to the Policyowners in order for the Policy to continue complying with the section 7702 definitional limitations on premiums and Accumulation Values, such distributions will be taxable as ordinary income to the Policyowner (to the extent of any gain in the Policy) as prescribed in section 7702. - -------------------------------------------------------------------------------- 28 LLVL - -------------------------------------------------------------------------------- The Code (section 7702A) also defines a "modified endowment contract" for federal tax purposes. If a life insurance policy is classified as a modified endowment contract, distributions from it (including loans) are taxed as ordinary income to the extent of any gain. This Policy will become a "modified endowment contract" if the premiums paid into the Policy fail to meet a 7-pay premium test as outlined in Section 7702A of the Code. Certain benefits the Insured may elect under this Policy may be material changes affecting the 7-pay premium test. These include (but are not limited to) changes in Death Benefits and changes in the Specified Amount. Should the Policy become a "modified endowment contract", Partial Withdrawal or Surrenders, assignments, pledges, and loans (including loans to pay loan interest) under the Policy will be taxable to the extent of any gain under the Policy. A 10% penalty tax also applies to the taxable portion of any distribution prior to the taxpayer's age 59 1/2 . The 10% penalty tax does not apply if the taxpayer is disabled as defined under the Code or if the distribution is paid out in the form of a life annuity on the life of the Insured or the joint lives of the taxpayer and beneficiary. One may avoid a Policy becoming a modified endowment contract by, among other things, not making excessive payments or reducing benefits. Should one deposit excessive premiums during a policy year, that portion that is returned by ALIC within 60 days after the Policy Anniversary will reduce the premiums paid to avoid the Policy becoming a modified endowment contract. All modified endowment policies issued by ALIC to the same Policyowner in any 12 month period are treated as one modified endowment contract for purposes of determining taxable gain under Section 72(e) of the Code. Any life insurance policy received in exchange for a modified endowment contract will also be treated as a modified endowment contract. A Policyowner should contact a competent tax professional before paying additional premiums or making other changes to the Policy to determine whether such payments or changes would cause the Policy to become a modified endowment contract. The Code (Section 817(h)) also authorizes the Secretary of the Treasury (the "Treasury") to set standards by regulation or otherwise for the investments of the Separate Account to be "adequately diversified" in order for the Policy to be treated as a life insurance contract for federal tax purposes. The Separate Account, through the Funds, intends to comply with the diversification requirements prescribed by the Treasury in temporary regulations published in the Federal Register on March 2, 1989, which affect how the Fund's assets may be invested. ALIC does not have control over the Funds or their investments. However, ALIC believes that the Funds will be operated in compliance with the diversification requirements of the Internal Revenue Code. Thus, ALIC believes that the Policy will be treated as a life insurance contract for federal tax purposes. In connection with the issuance of temporary regulations relating to the diversification requirements, the Treasury announced that such regulations do not provide guidance concerning the exten to which owners may direct their investments to particular divisions of a separate account. Regulations in this regard may be issued in the future. It is not clear what these regulations will provide nor whether they will be prospective only. It is possible that when regulations are issued, the Policy may need to be modified to comply with such regulations. For these reasons, the Company reserves the right to modify the Policy as necessary to prevent the Policyowner from being considered the owner of the assets of the Separate Account or otherwise to qualify the Policy for favorable tax treatment. The following discussion assumes that the Policy will qualify as a life insurance contract for federal tax purposes. (c) TAX TREATMENT OF POLICY PROCEEDS. ALIC believes that the Policy will be treated in a manner consistent with a fixed benefit life insurance policy for federal income tax purposes. Thus, ALIC believes that the death benefit payable prior to the original maturity date will be generally excludable from the gross income of the beneficiary under Section 101(a)(1) of the Code and the Policyowner will not be deemed to be in constructive receipt of the Accumulation Value under the Policy until its actual Surrender. However, in the event of certain cash distributions under the Policy resulting from any change which reduces future benefits under the Policy, the distribution will be taxed in whole or in part as ordinary income (to the extent of gain in the Policy). See discussion page 28, "Tax Status of the Policy." ALIC also believes that loans received under a Policy will be treated as indebtedness of the Policyowner and that no part of any loan under a Policy will constitute income to the Policyowner so long as the Policy remains in force, unless the Policy becomes a modified endowment contract. Should the policy lapse while policy loans are outstanding, the portion of the loans attributable to earnings will become taxable. Generally, interest paid on any loan under a Policy owned by an individual will not be tax-deductible. Except for Policies with respect to a limited number of key persons of an employer (both as defined in the Internal Revenue Code), and subject to applicable interest rate caps, the Health Insurance Portability and Accountability Act of 1996 (the "Health Insurance Act") generally repeals the deduction for interest paid or accrued after October 13, 1995 on loans from corporate owned life insurance Policies on the lives of individuals who are or were officers, employees or persons financially interested in the taxpayer's trade or business. Certain transitional rules for existing indebtedness are included in the Health Insurance Act. The transitional rules include a phase-out of the deduction for indebtedness - -------------------------------------------------------------------------------- LLVL 29 - -------------------------------------------------------------------------------- incurred (1) before January 1, 1996, (or) (2) before January 1, 1997, for Policies entered into in 1994 or 1995. The phase-out of the interest expense deduction occurs over a transition period between October 13, 1995 and January 1, 1999. There is also a special rule for pre-June 21, 1986 Policies. The Taxpayer Relief Act of 1997 ("TRA '97"), further expanded the interest deduction disallowance for businesses by providing, with respect to policies issued after June 8, 1997, that no deduction is allowed for interest paid or accrued on any indebtedness with respect to life insurance covering the life of any individual (except as noted above under pre-'97 law with respect to key persons and pre-June 21, 1986 policies). TRA '97 also provides that no deduction is permissible for premiums paid on a life insurance policy if the taxpayer is directly or indirectly a beneficiary under the policy. Also under TRA '97 and subject to certain exceptions, for contracts issued after June 8, 1997, no deduction is allowed for that portion of a taxpayer's interest expense that's allocable to unborrowed policy cash values. This disallowance generally does not apply to policies owned by natural persons. Policyowners should consult a competent tax advisor concerning the tax implications of these changes for their Policies. The right to exchange the Policy for a flexible premium adjustable life insurance policy (See Exchange Privilege, page 20), the right to change owners (See General Provisions, page 25), and the provision for Partial Withdrawals (See Surrenders, page 18) may have tax consequences depending on the circumstances of such exchange, change, or Partial Withdrawal. Upon Surrender or when maturity benefits are paid, if the amount received plus any outstanding policy debt exceeds the total premiums paid, (the "basis"), that are not treated as previously withdrawn by the Policyowner, the excess generally will be taxed as ordinary income. Federal estate and state and local estate, inheritance, and other tax consequences of ownership or receipt of Policy proceeds depend on applicable law and the circumstances of each Policyowner or beneficiary. In addition, if the Policy is used in connection with tax-qualified retirement plans, certain limitations prescribed by the Internal Revenue Service on, and rules with respect to the taxation of, life insurance protection provided through such plans may apply. The advice of competent tax counsel should be sought in connection with the use of life insurance in a qualified plan. SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS ALIC holds the assets of the Separate Account. The assets are kept physically segregated and held separate and apart from the General Account assets, except for the Fixed Account. ALIC maintains records of all purchases and redemptions of Funds shares by each of the Subaccounts. THIRD PARTY SERVICES ALIC is aware that certain third parties are offering investment advisory services in connection with the contracts. ALIC does not engage any such third parties to offer such services of any type as part of the contract. Firms or persons offering such services do so independently from any agency relationship they may have with ALIC for the sale of contracts. ALIC takes no responsibility for the investment allocations and transfers transacted on a contract owner's behalf by such third parties or any investment allocation recommendations made by such parties. Contract owners should be aware that fees paid for such services are separate and in addition to fees paid under the contracts. VOTING RIGHTS ALIC is the legal holder of the shares held in the Subaccounts of the Separate Account and as such has the right to vote the shares; to elect Directors of the Funds, to vote on matters that are required by the 1940 Act and upon any other matter that may be voted upon at a shareholders' meeting. To the extent required by law, ALIC will vote all shares of the Funds held in the Separate Account at regular and special shareholder meetings of the Funds in accordance with instructions received from Policyowners based on the number of shares held as of the record date declared by the Fund's Board of Directors. The number of Fund shares in a Subaccount for which instructions may be given by a Policyowner is determined by dividing the Policy's Accumulation Value held in that Subaccount by the net asset value of one share in the corresponding portfolio of the Fund. Fractional shares will be counted. Fund shares held in each Subaccount for which no timely instructions from Policyowners are received and Fund shares held in each Subaccount which do not support Policyowner interests will be voted by ALIC in the same proportion as those shares in that Subaccount for which timely instructions are received. Voting instructions to abstain on any item to be voted will be applied on a pro rata basis to reduce the votes eligible to be cast. Should applicable federal securities laws or regulations permit, ALIC may elect to vote shares of the Fund in its own right. DISREGARD OF VOTING INSTRUCTION. ALIC may, if required by state insurance officials, disregard voting instructions if those instructions would require shares to be voted to cause a change in the subclassification or investment objectives or policies of one or more of the Funds' Portfolios, or to approve or disapprove an investment adviser or principal underwriter for the Funds. In addition, ALIC itself may disregard voting instructions that would require changes in the investment objectives - -------------------------------------------------------------------------------- 30 LLVL - -------------------------------------------------------------------------------- or policies of any portfolio or in an investment adviser or principal underwriter for the Funds, if ALIC reasonably disapproves those changes in accordance with applicable federal regulations. If ALIC does disregard voting instructions, it will advise Policyowners of that action and its reasons for the action in the next annual report or proxy statement to Policyowners. STATE REGULATION OF ALIC ALIC, a stock life insurance company organized under the laws of Nebraska, is subject to regulation by the Nebraska Department of Insurance. On or before March 1 of each year an NAIC convention blank covering the operations and reporting on the financial condition of ALIC and the Separate Account as of December 31 of the preceding year must be filed with the Nebraska Department of Insurance. Periodically, the Nebraska Department of Insurance examines the liabilities and reserves of ALIC and the Separate Account. In addition, ALIC is subject to the insurance laws and regulations of other states within which it is licensed or may become licensed to operate. The policies offered by the Prospectus are available in the various states as approved. Generally, the Insurance Department of any other state applies the laws of the state of domicile in determining permissible investments. EXECUTIVE OFFICERS AND DIRECTORS OF ALIC Shows name and position(s) with ALIC followed by the principal occupations for the last five years.*** LAWRENCE J. ARTH, DIRECTOR, CHAIRMAN OF THE BOARD, & CHIEF EXECUTIVE OFFICER* Director, Chairman of the Board, Chief Executive Officer: Ameritas Variable Life Insurance Company; also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. KENNETH C. LOUIS, DIRECTOR, PRESIDENT AND CHIEF OPERATING OFFICER* Director, Executive Vice President: Ameritas Variable Life Insurance Company; also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. NORMAN M. KRIVOSHA, EXECUTIVE VICE PRESIDENT, SECRETARY AND CORPORATE GENERAL COUNSEL* Secretary and General Counsel: Ameritas Variable Life Insurance Company; also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. JON C. HEADRICK, EXECUTIVE VICE PRESIDENT-INVESTMENTS AND TREASURER* Treasurer: Ameritas Variable Life Insurance Company; also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. JAMES P. ABEL, DIRECTOR** President: NEBCO, Inc. DUANE W. ACKLIE, DIRECTOR** Chairman: Crete Carrier Corporation; Director: AMAL Corporation ROBERT C. BARTH, SECOND VICE PRESIDENT AND ASSISTANT CONTROLLER* ELDON BOHMONT, SECOND VICE PRESIDENT-INDIVIDUAL CLIENT SERVICES* ROXANN BRENNFOERDER, VICE PRESIDENT-PENSIONS* WAYNE E. BREWSTER, VICE PRESIDENT-VARIABLE SALES* Senior Vice President-Variable Sales: Ameritas Variable Life Insurance Company. ROBERT W. BUSH, EXECUTIVE VICE PRESIDENT-INDIVIDUAL INSURANCE* Director, Senior Vice President Variable Operations and Administration: Ameritas Variable Life Insurance Company; also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp.; Senior Vice President: CUNA Mutual Insurance Group; also served as officer and/or director of other subsidiaries and/or affiliates of CUNA. JAN M. CONNOLLY, VICE PRESIDENT-CORPORATE OPERATIONS, PLANNING AND QUALITY* WILLIAM W. COOK, JR., DIRECTOR** Chairman, President, Chief Executive Officer: The Beatrice National Bank and Trust Co. - -------------------------------------------------------------------------------- LLVL 31 - -------------------------------------------------------------------------------- GERALD B. DIMON, VICE PRESIDENT-HUMAN RESOURCES* BERT A. GETZ, DIRECTOR** President, Director: Globe Corporation; Director: Security Pacific Bank Arizona, Security Pacific Bancorp Southwest, Bancwest Mortgage Corp., Security Pacific Corporation, Security Pacific National Bank, Ellsworth Financial Corp., Iliff, Thorn & Co., CalMat Co., Dean Foods Company, Continental Bank, Continental Bank Corp.; Advisory Director: Myers Craig Vallone Co.; Trustee: Mayo Foundation WILLIAM R. GIOVANNI, SENIOR VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER-AIC* Also serves as officer and director of an affiliate of Ameritas Life Insurance Corp.; President: FirsTier Securities LORI S. GOHDE, VICE PRESIDENT-GROUP UNDERWRITING AND PLANNING* Vice President-Group: Woodmen Accident & Life Co. THOMAS D. HIGLEY, VICE PRESIDENT - INDIVIDUAL FINANCIAL OPERATIONS AND ACTUARY* Also serves as an officer of a subsidiary of Ameritas Life Insurance Corp. LESLIE D. INMAN, VICE PRESIDENT - GROUP MARKETING AND PLANNING* National Sales Director, VP and National Marketing Manager: American Bankers Insurance MIKE JASKOLKA, VICE PRESIDENT - INFORMATION SERVICES* MARTY L. JOHNSON, SECOND VICE PRESIDENT - INDIVIDUAL UNDERWRITING* KENNETH R. JONES, VICE PRESIDENT, CORPORATE COMPLIANCE AND ASSISTANT SECRETARY* Vice President-Corporate Compliance and Assistant Secretary: Ameritas Variable Life Insurance Company, also serves as officer of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. JAMES R. KNAPP, DIRECTOR** President: The Brookhollow Group; General Partner: Windsor Associates ROBERT F. KROHN, DIRECTOR** Vice Chairman and Chief Executive Officer: PSI Group, Inc.; President: Krohn Corporation; Chairman of the Board: Commercial Federal Corporation WILLIAM W. LESTER, VICE PRESIDENT-SECURITIES* Also serves as an officer of a subsidiary of Ameritas Life Insurance Corp. WILFRED J. MADDUX, DIRECTOR** President, Manager: Maddux Cattle Company JOANN M. MARTIN, SENIOR VICE PRESIDENT - CONTROLLER AND CHIEF FINANCIAL OFFICER* Controller: Ameritas Variable Life Insurance Company; also serves as an officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. BRUCE R. MCMULLEN, M.D., VICE PRESIDENT AND MEDICAL DIRECTOR* DAVID C. MOORE, EXECUTIVE VICE PRESIDENT - GROUP AND PENSIONS* Also serves as officer and/or director of other subsidiaries and/or affiliates of Ameritas Life Insurance Corp. WILLIAM W. NELSON, VICE PRESIDENT - GROUP ADMINISTRATION AND CLAIMS* Also serves as an officer of a subsidiary of Ameritas Life Insurance Corp. - -------------------------------------------------------------------------------- 32 LLVL - -------------------------------------------------------------------------------- DALE K. NIEBUHR, SECOND VICE PRESIDENT - AUDIT SERVICES* GARY R. RAYMOND, VICE PRESIDENT - GROUP ACTUARY* BARRY C. RITTER, SENIOR VICE PRESIDENT - INFORMATION SERVICES* PAUL C. SCHORR, III, DIRECTOR** President and CEO: ComCor Holding, Inc.; Chairman: Ebco/Commonwealth, Inc.; President, Chief Executive Officer: Fishbach Corp., Commonwealth Companies, Inc. WILLIAM C. SMITH, DIRECTOR** Director: AMAL Corporation; President: William C. Smith & Co.; President, Chairman, Chief Executive Officer: FirsTier Bank, N.A.; President, Chief Operating Officer, Chairman, Chief Executive Officer: FirsTier Financial, Inc. DONALD R. STADING, VICE PRESIDENT AND GENERAL COUNSEL - INSURANCE AND ASSISTANT SECRETARY* Also serves as officer and director of an affiliate of Ameritas Life Insurance Corp. NEAL E. TYNER, DIRECTOR, CHAIRMAN EMERITUS** NET Consultants, Formerly Chairman of the Board and CEO of Ameritas Life Insurance Corp. KENNETH L. VANCLEAVE, VICE PRESIDENT - GROUP MANAGED CARE AND PARTNERING* Also serves as officer and director of an affiliate of Ameritas Life Insurance Corp. WINSTON J. WADE, DIRECTOR** Vice President-Network Infrastructure: U.S. West Communications; Vice President-Technical Services: U.S. West Communication, Inc. JON B. WEINBERG, VICE PRESIDENT-MORTGAGE LOANS AND REAL ESTATE* Also serves as an officer of a subsidiary of Ameritas Life Insurance Corp. STEVEN L. WELTON, VICE PRESIDENT-INDIVIDUAL MARKETING* Assistant Vice President-Marketing Services: Northwestern National Life Insurance Co. * Principal business address: Ameritas Life Insurance Corp, 5900 "O" Street, P.O. Box 81889, Lincoln, Nebraska 68501. ** Principal address for: James P. Abel, NEBCO, Inc., P.O. Box 80268, Lincoln, Nebraska 68501; Duane W. Acklie, Crete Carrier Corporation, P.O. Box 81228, Lincoln, Nebraska 68501; William W. Cook, Jr., The Beatrice National Bank and Trust Company, P.O. Box 100, Beatrice, Nebraska 68310; Bert A. Getz, Globe Corporation, Scottsdale Spectrum, 6730 N. Scottsdale Road, Suite 250, Scottsdale, Arizona 85253; James R. Knapp, Brookhollow Group, One Brookhollow Drive, Santa Ana, California 92705; Robert F. Krohn; PSI Group, Inc., 10011 J Street, Omaha, Nebraska 68127; Wilfred Maddux, Maddux Cattle Company, P.O. Box 217, Wauneta, Nebraska 69045; Paul C. Schorr, III, ComCor Holding, Inc., 6940 "O" Street, Suite 336, P.O. Box 57310, Lincoln, Nebraska 68505, William C. Smith, William C. Smith & Co., Cornhusker Plaza, Suite 401, 301 So. 13th Street, Lincoln, Nebraska 68508; Neal E. Tyner, NET Consultants, 6940 O Street, Suite 324, Lincoln, Nebraska 68510; Winston J. Wade, c/o PMI-USW 843-1, P.O. Box 311, Mendham, New Jersey 07945-0311. *** Where an individual as held more than one position with an organization during the last 5-year period, the last position held has been given. LEGAL MATTERS All matters of Nebraska law pertaining to the Policy, including the validity of the Policy and ALIC's right to issue the Policy under Nebraska Insurance Law, have been passed upon by Norman M. Krivosha, Executive Vice President, Secretary and Corporate General Counsel. LEGAL PROCEEDINGS There are no legal proceedings to which the Separate Account is a party or to which the assets of the Separate Account are subject. ALIC is not involved in any litigation that is of material importance in relation to its ability to meet its obligations under the Policies, or that relates to the Separate Account. AIC is not involved in any litigation that is of material importance in relation to its ability to perform under its underwriting agreement. - -------------------------------------------------------------------------------- LLVL 33 - -------------------------------------------------------------------------------- EXPERTS The consolidated financial statements of ALIC as of December 31, 1997 and 1996, and for each of the three years in the period ended December 31, 1997 , and the financial statements of Separate Account LLVL as of December 31, 1997, and for the two years then ended, included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports appearing herein, and are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Actuarial matters included in this Prospectus have been examined by Thomas P. McArdle, Assistant Vice President-Associate Actuary of Ameritas Life Insurance Corp., as stated in the opinion filed as an exhibit to the registration statement. ADDITIONAL INFORMATION A registration statement has been filed with the Securities and Exchange Commission, under the Securities Act of 1933, as amended, with respect to the Policy offered hereby. This Prospectus does not contain all the information set forth in the registration statement and the amendments and exhibits to the registration statement, to all of which reference is made for further information concerning the Separate Account, ALIC and the Policy offered hereby. Statements contained in this Prospectus as to the contents of the Policy and other legal instruments are summaries. For a complete statement of the terms thereof reference is made to such instruments as filed. FINANCIAL STATEMENTS The financial statements of ALIC which are included in this Prospectus should be considered only as bearing on the ability of ALIC to meet its obligations under the Policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account. - -------------------------------------------------------------------------------- 34 LLVL - -------------------------------------------------------------------------------- This page left blank intentionally. - -------------------------------------------------------------------------------- LLVL 35 - -------------------------------------------------------------------------------- Independent Auditors' Report Board of Directors Ameritas Life Insurance Corp. Lincoln, Nebraska We have audited the accompanying statement of net assets of Ameritas Life Insurance Corp. Separate Account LLVL as of December 31, 1997, and the related statements of operations and changes in net assets for each of the two years in the period then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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. Our procedures included confirmation of securities owned at December 31, 1997. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Ameritas Life Insurance Corp. Separate Account LLVL as of December 31, 1997, and the results of its operations and changes in its net assets for each of the two years in the period then ended, in conformity with generally accepted accounting principles. /s/Deloite & Touche LLP Lincoln, Nebraska February 2, 1998 - -------------------------------------------------------------------------------- 36 LLVL - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- STATEMENT OF NET ASSETS ----------------------- DECEMBER 31, 1997 ----------------- ASSETS INVESTMENTS AT NET ASSET VALUE: VANGUARD VARIABLE INSURANCE FUND: --------------------------------- Money Market Portfolio - 7,218,268.940 shares at $1.0000 per share (cost $7,218,269) $ 7,218,269 Equity Index Portfolio - 160,571.157 shares at $25.4215 per share (cost $3,376,563) 4,081,960 Equity Income Portfolio - 81,200.304 shares at $18.7780 per share (cost $1,321,458) 1,524,779 Growth Portfolio - 148,714.710 shares at $21.5954 per share (cost $2,919,979) 3,211,554 Balanced Portfolio - 119,858.700 shares at $17.0016 per share (cost $1,955,975) 2,037,790 High-Grade Bond Portfolio - 46,139.367 shares at $10.7030 per share (cost $480,683) 493,830 International Portfolio - 159,524.666 shares at $12.8538 per share (cost $2,125,629) 2,050,498 High Yield Bond Portfolio - 21,777.881 shares at $10.5909 per share (cost $227,636) 230,647 Small Company Growth Portfolio - 34,377.906 shares at $10.9626 per share (cost $364,647) 376,871 NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST: --------------------------------------------- Balanced Portfolio - 10,448.294 shares at $17.80 per share (cost $166,271) 185,980 Growth Portfolio - 21,832.699 shares at $30.54 per share (cost $563,170) 666,771 Partners Portfolio - 95,195.374 shares at $20.60 per share (cost $1,627,667) 1,961,025 Limited Maturity Bond Portfolio - 4,291.165 shares at $14.12 per share (cost $59,021) 60,591 BERGER INSTITUTIONAL PRODUCTS TRUST: ------------------------------------ 100 Fund Portfolio - 1,781.412 shares at $11.11 per share (cost $21,607) 19,791 Small Company Growth Portfolio - 17,219.256 shares at $12.06 per share (cost $203,772) 207,664 ---------------- NET ASSETS REPRESENTING EQUITY OF POLICYOWNERS $ 24,328,020 ================ The accompanying notes are an integral part of these financial statements.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 ---------------------------------------------- VANGUARD VARIABLE INSURANCE FUND ---------------------------------------------------- MONEY MARKET EQUITY INDEX EQUITY INCOME TOTAL PORTFOLIO (1) PORTFOLIO (2) PORTFOLIO (3) ---------------- --------------- ---------------- --------------- 1997 ---- INVESTMENT INCOME: Dividend distributions received $ 462,801 $ 245,562 $ 47,557 $ 24,444 Mortality and expense risk charge 110,634 33,383 20,371 5,918 ---------------- --------------- ---------------- --------------- NET INVESTMENT INCOME(LOSS) 352,167 212,179 27,186 18,526 ---------------- --------------- ---------------- --------------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS: Net realized gain(loss) on investments 303,704 ----- 33,570 22,916 Net change in unrealized appreciation(depreciation) 1,466,662 ----- 633,010 181,981 ---------------- --------------- ---------------- --------------- NET GAIN(LOSS) ON INVESTMENTS 1,770,366 ----- 666,580 204,897 ---------------- --------------- ---------------- --------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,122,533 $ 212,179 $ 693,766 $ 223,423 ================ =============== ================ =============== 1996 ---- INVESTMENT INCOME: Dividend distributions received $ 34,810 $ 32,053 $ ----- $ ----- Mortality and expense risk charge 14,813 4,536 2,639 867 ---------------- --------------- ---------------- --------------- NET INVESTMENT INCOME(LOSS) 19,997 27,517 (2,639) (867) ---------------- --------------- ---------------- --------------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS: Net realized gain(loss) on investments 73,977 ----- 12,616 6,453 Net change in unrealized appreciation(depreciation) 229,011 ----- 72,387 21,339 ---------------- --------------- ---------------- --------------- NET GAIN(LOSS) ON INVESTMENTS 302,988 ----- 85,003 27,792 ---------------- --------------- ---------------- --------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 322,985 $ 27,517 $ 82,364 $ 26,925 ================ =============== ================ =============== (1) Commenced business 01/09/96 (6) Commenced business 02/12/96 (2) Commenced business 01/31/96 (7) Commenced business 01/22/96 (3) Commenced business 02/06/96 (8) Commenced business 03/10/97 (4) Commenced business 01/22/96 (9) Commenced business 01/29/97 (5) Commenced business 02/12/96 The accompanying notes are an integral part of these financial statements.
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(CONTINUED) VANGUARD VARIABLE INSURANCE FUND - ----------------------------------------------------------------------------------------------------------- SMALL HIGH-GRADE HIGH YIELD COMPANY GROWTH BALANCED BOND INTERNATIONAL BOND GROWTH PORTFOLIO (4) PORTFOLIO (5) PORTFOLIO (6) PORTFOLIO (7) PORTFOLIO (8) PORTFOLIO (9) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 24,821 $ 62,554 $ 17,945 $ 24,884 $ 7,800 $ 1,148 13,622 8,857 2,094 10,213 670 1,158 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 11,199 53,697 15,851 14,671 7,130 (10) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 70,741 86,534 ----- 19,354 254 ----- 269,256 73,173 12,105 (87,836) 3,011 12,224 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 339,997 159,707 12,105 (68,482) 3,265 12,224 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 351,196 $ 213,404 $ 27,956 $ (53,811) $ 10,395 $ 12,214 ================ ================ ================ ================ ================ ================ $ ----- $ ----- $ 2,757 $ ----- $ ----- $ ----- 1,524 964 316 1,479 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (1,524) (964) 2,441 (1,479) ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 22,375 17,899 ----- 14,166 ----- ----- 22,319 8,642 1,042 12,704 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 44,694 26,541 1,042 26,870 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 43,170 $ 25,577 $ 3,483 $ 25,391 $ ----- $ ----- ================ ================ ================ ================ ================ ================
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AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 ---------------------------------------------- NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST ------------------------------------------------------------------- LIMITED MATURITY BALANCED GROWTH PARTNERS BOND PORTFOLIO (1) PORTFOLIO (2) PORTFOLIO (3) PORTFOLIO (4) ---------------- ---------------- ---------------- --------------- 1997 ---- INVESTMENT INCOME: Dividend distributions received $ 2,227 $ ----- $ 1,903 $ 1,514 Mortality and expense risk charge 1,062 3,818 8,694 289 ---------------- ---------------- ---------------- --------------- NET INVESTMENT INCOME(LOSS) 1,165 (3,818) (6,791) 1,225 ---------------- ---------------- ---------------- --------------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS: Net realized gain(loss) on investments 5,717 34,617 29,308 ---- Net change in unrealized appreciation(depreciation) 16,398 83,104 267,038 1,122 ---------------- ---------------- ---------------- --------------- NET GAIN(LOSS) ON INVESTMENTS 22,115 117,721 296,346 1,122 ---------------- ---------------- ---------------- --------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 23,280 $ 113,903 $ 289,555 $ 2,347 ================ ================ ================ =============== 1996 ---- INVESTMENT INCOME: Dividend distributions received $ ----- $ ----- $ ----- $ ---- Mortality and expense risk charge 294 814 1,338 42 ---------------- ---------------- ---------------- --------------- NET INVESTMENT INCOME(LOSS) (294) (814) (1,338) (42) ---------------- ---------------- ---------------- --------------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS: Net realized gain(loss) on investments 92 253 115 8 Net change in unrealized appreciation(depreciation) 3,312 20,498 66,320 448 ---------------- ---------------- ---------------- --------------- NET GAIN(LOSS) ON INVESTMENTS 3,404 20,751 66,435 456 ---------------- ---------------- ---------------- --------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,110 $ 19,937 $ 65,097 $ 414 ================ ================ ================ =============== (1) Commenced business 01/31/96 (4) Commenced business 01/31/96 (2) Commenced business 01/22/96 (5) Commenced business 06/11/97 (3) Commenced business 02/06/96 (6) Commenced business 05/21/97 The accompanying notes are an integral part of these financial statements.
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(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST ---------------------------------- SMALL COMPANY 100 FUND GROWTH PORTFOLIO (5) PORTFOLIO (6) ---------------- ---------------- $ 442 $ ----- 54 431 ---------------- ---------------- 388 (431) ---------------- ---------------- 693 ----- (1,816) 3,892 ---------------- ---------------- (1,123) 3,892 ---------------- ---------------- $ (735) $ 3,461 ================ ================ $ ----- $ ----- ----- ----- ---------------- ---------------- ----- ----- ---------------- ---------------- ----- ----- ----- ----- ---------------- ---------------- ----- ----- ---------------- ---------------- $ ----- $ ----- ================ ================
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AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- STATEMENTS OF CHANGES IN NET ASSETS ----------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 ---------------------------------------------- VANGUARD VARIABLE INSURANCE FUND --------------------------------------------------- MONEY MARKET EQUITY INDEX EQUITY INCOME TOTAL PORTFOLIO (1) PORTFOLIO (2) PORTFOLIO (3) ---------------- ---------------- ---------------- ---------------- 1997 INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS: Net Investment income(loss) $ 352,167 $ 212,179 $ 27,186 $ 18,526 Net realized gain(loss) on investments 303,704 ----- 33,570 22,916 Net change in unrealized appreciation(depreciation) 1,466,662 ----- 633,010 181,981 ---------------- ---------------- ---------------- ---------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,122,533 212,179 693,766 223,423 NET INCREASE(DECREASE) FROM POLICYHOLDER TRANSACTIONS 16,472,031 5,731,104 2,039,686 984,196 ---------------- ---------------- ---------------- ---------------- TOTAL INCREASE(DECREASE) IN NET ASSETS 18,594,564 5,943,283 2,733,452 1,207,619 ---------------- ---------------- ---------------- ---------------- NET ASSETS AT JANUARY 1, 1997 5,733,456 1,274,986 1,348,508 317,160 ---------------- ---------------- ---------------- ---------------- NET ASSETS AT DECEMBER 31, 1997 $ 24,328,020 $ 7,218,269 $ 4,081,960 $ 1,524,779 ================ ================ ================ ================ 1996 INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS: Net Investment income(loss) $ 19,997 $ 27,517 $ (2,639)$ (867) Net realized gain(loss) on investments 73,977 ----- 12,616 6,453 Net change in unrealized appreciation(depreciation) 229,011 ----- 72,387 21,339 ---------------- ---------------- ---------------- ---------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 322,984 27,517 82,364 26,925 NET INCREASE(DECREASE) FROM POLICYHOLDER TRANSACTIONS 5,410,471 1,247,469 1,266,144 290,235 ---------------- ---------------- ---------------- ---------------- TOTAL INCREASE(DECREASE) IN NET ASSETS 5,733,456 1,274,986 1,348,508 317,160 ---------------- ---------------- ---------------- ---------------- NET ASSETS AT JANUARY 1, 1996 ----- ----- ----- ----- ---------------- ---------------- ---------------- ---------------- NET ASSETS AT DECEMBER 31, 1996 $ 5,733,456 $ 1,274,986 $ 1,348,508 $ 317,160 ================ ================ ================ ================ (1) Commenced business 01/09/96 (6) Commenced business 02/12/96 (2) Commenced business 01/31/96 (7) Commenced business 01/22/96 (3) Commenced business 02/06/96 (8) Commenced business 03/10/97 (4) Commenced business 01/22/96 (9) Commenced business 01/29/97 (5) Commenced business 02/12/96 The accompanying notes are an integral part of these financial statements.
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(CONTINUED) VANGUARD VARIABLE INSURANCE FUND -------------------------------------------------------------------------------------------------------- SMALL HIGH-GRADE HIGH YIELD COMPANY GROWTH BALANCED BOND INTERNATIONAL BOND GROWTH PORTFOLIO (4) PORTFOLIO (5) PORTFOLIO (6) PORTFOLIO (7) PORTFOLIO (8) PORTFOLIO (9) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 11,199 $ 53,697 $ 15,851 $ 14,671 $ 7,130 $ (10) 70,741 86,534 ----- 19,354 254 ----- 269,256 73,173 12,105 (87,836) 3,011 12,224 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 351,196 213,404 27,956 (53,811) 10,395 12,214 2,154,152 1,428,768 357,373 1,524,915 220,252 364,657 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,505,348 1,642,172 385,329 1,471,104 230,647 376,871 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 706,206 395,618 108,501 579,394 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 3,211,554 $ 2,037,790 $ 493,830 $ 2,050,498 $ 230,647 $ 376,871 ================ ================ ================ ================ ================ ================ $ (1,524)$ (964)$ 2,441 $ (1,479)$ ----- $ ----- 22,375 17,899 ----- 14,166 ----- ----- 22,319 8,642 1,042 12,704 ----- ----- ---------------- ---------------- ---------------- --------------------------------------------------- 43,170 25,577 3,483 25,391 ----- ----- 663,036 370,041 105,018 554,003 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 706,206 395,618 108,501 579,394 ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----- ----- ----- ----- ----- ----- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 706,206 $ 395,618 $ 108,501 $ 579,394 $ ----- $ ----- ================ ================ ================ ================ ================ ================
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AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- STATEMENTS OF CHANGES IN NET ASSETS ----------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 ---------------------------------------------- NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST --------------------------------------------------------------------- LIMITED MATURITY BALANCED GROWTH PARTNERS BOND PORTFOLIO (1) PORTFOLIO (2) PORTFOLIO (3) PORTFOLIO (4) -------------- ---------------- ---------------- ---------------- 1997 INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS: Net Investment income(loss) $ 1,165 $ (3,818)$ (6,791)$ 1,225 Net realized gain(loss) on investments 5,717 34,617 29,308 ----- Net change in unrealized appreciation(depreciation) 16,398 83,104 267,038 1,122 -------------- ---------------- ---------------- ---------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 23,280 113,903 289,555 2,347 NET INCREASE(DECREASE) FROM POLICYHOLDER TRANSACTIONS 74,276 228,396 1,107,185 32,342 -------------- ---------------- ---------------- ---------------- TOTAL INCREASE(DECREASE) IN NET ASSETS 97,556 342,299 1,396,740 34,689 -------------- ---------------- ---------------- ---------------- NET ASSETS AT JANUARY 1, 1997 88,424 324,472 564,285 25,902 -------------- ---------------- ---------------- ---------------- NET ASSETS AT DECEMBER 31, 1997 $ 185,980 $ 666,771 $ 1,961,025 $ 60,591 ============== ================ ================ ================ 1996 INCREASE(DECREASE) IN NET ASSETS FROM OPERATIONS: Net Investment income(loss) $ (294)$ (814)$ (1,338)$ (42) Net realized gain(loss) on investments 92 253 115 8 Net change in unrealized appreciation(depreciation) 3,312 20,498 66,320 448 -------------- ---------------- ---------------- ---------------- NET INCREASE(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,110 19,937 65,097 414 NET INCREASE(DECREASE) FROM POLICYHOLDER TRANSACTIONS 85,314 304,535 499,188 25,488 -------------- ---------------- ---------------- ---------------- TOTAL INCREASE(DECREASE) IN NET ASSETS 88,424 324,472 564,285 25,901 -------------- ---------------- ---------------- ---------------- NET ASSETS AT JANUARY 1, 1996 ----- ----- ----- ----- -------------- ---------------- ---------------- ---------------- NET ASSETS AT DECEMBER 31, 1996 $ 88,424 $ 324,472 $ 564,285 $ 25,901 ============== ================ ================ ================ (1) Commenced business 01/31/96 (4) Commenced business on 01/31/96 (2) Commenced business 01/22/96 (5) Commenced business on 06/11/97 (3) Commenced business 02/06/96 (6) Commenced business on 05/21/97 The accompanying notes are an integral part of these financial statements.
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(CONTINUED) BERGER INSTITUTIONAL PRODUCTS TRUST - ------------------------------------- SMALL COMPANY 100 FUND GROWTH PORTFOLIO (5) PORTFOLIO (6) ---------------- ---------------- $ 388 $ (431) 693 ----- (1,816) 3,892 ---------------- ---------------- (735) 3,461 20,526 204,203 ---------------- ---------------- 19,791 207,664 ---------------- ---------------- ----- ----- ================ ================ $ 19,791 $ 207,664 ================ ================ $ -----$ ----- ----- ----- ----- ----- ---------------- ---------------- ----- ----- ----- ----- ---------------- ---------------- ----- ----- ---------------- ---------------- ----- ----- ---------------- ---------------- $ -----$ ----- ================ ================
- -------------------------------------------------------------------------------- LLVL 45 - -------------------------------------------------------------------------------- This page left blank intentionally - -------------------------------------------------------------------------------- 46 LLVL - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------------------------------------------ Ameritas Life Insurance Corp. Separate Account LLVL (the Account) was established under Nebraska law on August 24, 1994. The assets of the Account are held by Ameritas Life Insurance Corp. (ALIC) and are segregated from all of ALIC's other assets. The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. At December 31, 1997, there are fifteen subaccounts within the Account. Nine of the subaccounts invest only in a corresponding Portfolio of the Vanguard Variable Insurance Fund which is a diversified open-end management investment company managed by The Vanguard Group. Four of the subaccounts invest only in a corresponding Portfolio of the Neuberger & Berman Advisers Management Trust which is a diversified open-end management investment company managed by Neuberger & Berman Management Incorporated. Two of the subaccounts invest only in a corresponding Portfolio of the Berger Institutional Products Trust which is a diversified open-end management investment company managed by Berger Associates. Each Portfolio pays the manager a monthly fee for managing its investments and business affairs. The assets of the Account are carried at the net asset value of the underlying Portfolios of the funds, and the value of the policyowners' units corresponds to the Account's investment in the underlying subaccounts. USE OF ESTIMATES 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 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. VALUATION OF INVESTMENTS The assets of the account are carried at the net asset value of the underlying Portfolios of the Funds. The value of the policyowners' units corresponds to the Account's investment in the underlying subaccounts. The availability of investment portfolio and subaccount options may vary between products. Share transactions and security transactions are accounted for on a trade date basis. FEDERAL AND STATE TAXES The operations of the Account are included in the federal income tax return of ALIC, which is taxed as a life insurance company under the Internal Revenue Code. ALIC has the right to charge the Account any federal income taxes, or provision for federal income taxes, attributable to the operations of the Account or to the policies funded in the Account. Currently, ALIC does not make a charge for income or other taxes. Charges for state and local taxes, if any, attributable to the Account may also be made. 2. POLICYHOLDER CHARGES - ------------------------ ALIC charges the account for mortality and expense risks assumed. A daily charge is made on the average daily value of the net assets representing equity of policyowners held in each subaccount per each product's current policy provisions. Additional charges are made at intervals and in amounts per each product's current policy provisions. These charges are prorated against the balance in each investment option of the policyowner, including the Fixed Account option which is not reflected in this separate account. - -------------------------------------------------------------------------------- LLVL 47 - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 3. SHARES OWNED - ---------------- The Account invests in shares of mutual funds. Share activity and total shares owned are as follows: VANGUARD VARIABLE INSURANCE FUND -------------------------------------------------------------------------------------- MONEY MARKET EQUITY INDEX EQUITY INCOME GROWTH BALANCED PORTFOLIO (1) PORTFOLIO (2) PORTFOLIO (3) PORTFOLIO (4) PORTFOLIO (5) ---------------- --------------- ---------------- ---------------- ---------------- Shares owned at January 1, 1997 1,274,985.810 68,977.369 21,723.303 39,921.198 26,356.946 Shares acquired 33,061,438.440 132,217.038 71,066.379 135,646.593 103,263.991 Shares disposed 27,118,155.310 40,623.250 11,589.378 26,853.081 9,762.237 ---------------- --------------- ---------------- ---------------- ---------------- Shares owned at December 31, 1997 7,218,268.940 160,571.157 81,200.304 148,714.710 119,858.700 ================ =============== ================ ================ ================ Shares owned at January 1, 1996 ----- ----- ----- ----- ----- Shares acquired 6,549,300.150 81,127.644 25,593.798 43,455.725 27,155.684 Shares disposed 5,274,314.340 12,150.275 3,870.495 3,534.527 798.738 ---------------- --------------- ---------------- ---------------- ---------------- Shares owned at December 31, 1996 1,274,985.810 68,977.369 21,723.303 39,921.198 26,356.946 ================ =============== ================ ================ ================ (1) Commenced business 01/09/96 (8) Commenced business 03/10/97 (2) Commenced business 01/31/96 (9) Commenced business 01/29/97 (3) Commenced business 02/06/96 (10) Commenced business 01/31/96 (4) Commenced business 01/22/96 (11) Commenced business 01/22/96 (5) Commenced business 02/12/96 (12) Commenced business 02/06/96 (6) Commenced business 02/12/96 (13) Commenced business 01/31/96 (7) Commenced business 01/22/96
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(CONTINUED) VANGUARD VARIABLE INSURANCE FUND NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST - --------------------------------------------------------------- ------------------------------------------------------------------ SMALL LIMITED HIGH-GRADE HIGH-YIELD COMPANY MATURITY BOND INTERNATIONAL BOND GROWTH BALANCED GROWTH PARTNERS BOND PORTFOLIO (6) PORTFOLIO (7) PORTFOLIO (8) PORTFOLIO (9) PORTFOLIO (10) PORTFOLIO (11) PORTFOLIO (12) PORTFOLIO (13) - ------------- ------------- --------------- ---------------- -------------- ---------------- ---------------- ---------------- 10,402.808 45,478.330 ----- ----- 5,554.279 12,586.203 34,240.606 1,843.518 48,976.148 175,097.691 57,152.830 58,091.174 7,945.804 20,902.519 87,117.912 7,782.264 13,239.589 61,051.355 35,374.949 23,713.268 3,051.789 11,656.023 26,163.144 5,334.617 - ------------- ------------- --------------- ---------------- -------------- ---------------- ---------------- ---------------- 46,139.367 159,524.666 21,777.881 34,377.906 10,448.294 21,832.699 95,195.374 4,291.165 ============= ============= =============== ================ ============== ================ ================ ================ ----- ----- ----- ----- ----- ----- ----- ----- 16,079.128 54,688.548 ----- ----- 5,783.296 13,583.830 40,372.867 2,210.932 5,676.320 9,210.218 ----- ----- 229.017 997.627 6,132.261 367.414 - ------------- ------------- --------------- ---------------- -------------- ---------------- ---------------- ---------------- 10,402.808 45,478.330 ----- ----- 5,554.279 12,586.203 34,240.606 1,843.518 ============= ============= =============== ================ ============== ================ ================ ================
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AMERITAS LIFE INSURANCE CORP. ----------------------------- SEPARATE ACCOUNT LLVL --------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- 3. SHARES OWNED (CONTINUED) - ---------------------------- The Account invests in shares of mutual funds. Share activity and total shares owned are as follows: BERGER INSTITUTIONAL PRODUCTS TRUST ------------------------------------- SMALL COMPANY 100 FUND GROWTH PORTFOLIO (1) PORTFOLIO (2) ---------------- ------------------- Shares owned at January 1, 1997 ----- ----- Shares acquired 2,859.270 38,912.582 Shares disposed 1,077.858 21,693.326 ---------------- ------------------- Shares owned at December 31, 1997 1,781.412 17,219.256 ================ =================== Shares owned at January 1, 1996 ----- ----- Shares acquired ----- ----- Shares disposed ----- ----- ---------------- ------------------- Shares owned at December 31, 1996 ----- ----- ================ =================== (1) Commenced business 06/11/97 (2) Commenced business 05/21/97
- -------------------------------------------------------------------------------- 50 LLVL - -------------------------------------------------------------------------------- Independent Auditors' Report Board of Directors Ameritas Life Insurance Corp. Lincoln, Nebraska We have audited the accompanying consolidated balance sheets of Ameritas Life Insurance Corp. and subsidiaries as of December 31, 1997 and 1996, and the related statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Ameritas Life Insurance Corp. and subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP Lincoln, Nebraska February 2, 1998 - -------------------------------------------------------------------------------- LLVL 51 - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (in thousands) DECEMBER 31 ---------------------------- ASSETS 1997 1996 ----------- ----------- Investments: Fixed maturity securities held to maturity (fair value $792,856 - 1997, $ 754,581 $ 775,875 $798,991 - 1996) Fixed maturity securities available for sale (amortized cost $462,831 - 1997, $408,467 - 1996) 479,990 415,705 Equity securities (cost $59,383 - 1997, $43,079 - 1996) 108,744 75,215 Mortgage loans on real estate 228,709 226,776 Loans on insurance policies 70,638 68,017 Real estate, less accumulated depreciation ($18,324 - 1997, $11,589 - 43,085 33,636 1996) Other investments 33,971 46,295 Short-term investments 655 1,541 ------------ ------------ Total investments 1,720,373 1,643,060 Cash and cash equivalents 83,139 77,142 Accrued investment income 25,186 25,176 Deferred policy acquisition costs 164,564 146,405 Property and equipment, less accumulated depreciation ($29,199 - 1997, $29,910 - 1996) 20,191 17,532 Other assets 16,668 13,453 Separate accounts 1,437,165 1,037,359 ------------ ------------ Total $ 3,467,286 $ 2,960,127 ============ ============ LIABILITIES AND EQUITY Policy and contract reserves $ 364,168 $ 367,614 Policy and contract claims 27,467 21,420 Accumulated contract values 1,039,938 1,007,734 Unearned policy charges 13,177 13,492 Unearned reinsurance ceded allowance 1,763 1,252 Federal income taxes-- Current 339 9,351 Deferred 46,236 36,083 Dividends payable 10,134 10,317 Other liabilities 41,467 35,532 Separate accounts 1,436,677 1,037,359 ------------ ------------ Total Liabilities 2,981,366 2,540,154 ------------ ------------ Commitments and contingencies Minority interest in subsidiary 24,483 20,809 Policyowners' contingency reserves 419,797 373,923 Net unrealized investment gain 41,640 25,241 ------------ ------------ Total Equity 461,437 399,164 ------------ ------------ Total $ 3,467,286 $ 2,960,127 ============ ============ The accompanying notes to consolidated financial statements are an integral part of these statements.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (in thousands) YEARS ENDED DECEMBER 31 ----------------------------------------------- 1997 1996 1995 ---------------- --------------- ------------ INCOME: Insurance revenues: Premiums: Life insurance $ 26,794 $ 26,855 $ 30,857 Accident and health insurance 181,952 163,557 163,659 Contract charges 57,199 49,667 38,629 Reinsurance, net (1,037) (6,205) (5,559) Reinsurance ceded allowance 2,475 1,746 1,446 Investment revenues: Investment income, net 137,744 126,862 124,549 Realized gains, net 10,295 13,103 4,471 Other 14,987 8,961 6,936 ---------------- --------------- ------------ 430,409 384,546 364,988 ---------------- --------------- ------------ BENEFITS AND EXPENSES: Policy benefits: Death benefits 20,710 18,402 17,072 Surrender benefits 10,084 10,708 9,401 Accident and health benefits 130,908 112,005 112,935 Interest credited 66,788 65,494 64,598 Increase (decrease) in policy and contract reserves (3,307) (5,060) 959 Other 13,589 12,849 13,265 Sales and operating expenses 90,737 77,086 70,414 Amortization of deferred policy acquisition costs 16,441 16,790 9,405 ---------------- -------------- ------------ 345,950 308,274 298,049 ---------------- -------------- ------------ INCOME BEFORE DIVIDENDS, FEDERAL INCOME TAXES AND MINORITY INTEREST IN EARNINGS OF SUBSIDIARY 84,459 76,272 66,939 Dividends appropriated for policyowners 10,158 10,367 10,543 ---------------- -------------- ------------ INCOME BEFORE FEDERAL INCOME TAXES AND MINORITY INTEREST IN EARNINGS OF SUBSIDIARY 74,301 65,905 56,396 Income taxes - current 26,401 29,081 16,954 Income taxes - deferred 39 (1,560) 694 Total federal income taxes ---------------- -------------- ------------ 26,440 27,521 17,648 ---------------- -------------- ------------ INCOME BEFORE MINORITY INTEREST IN EARNINGS OF SUBSIDIARY 47,861 38,384 38,748 Minority interest in earnings of subsidiary (1,987) (1,259) - ---------------- -------------- ------------ NET INCOME $ 45,874 $ 37,125 $ 38,748 ================ ============== ============ The accompanying notes to consolidated financial statements are an integral part of these statements.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- CONSOLIDATED STATEMENTS OF EQUITY --------------------------------- (IN THOUSANDS) POLICYOWNERS' NET UNREALIZED CONTINGENCY INVESTMENT TOTAL RESERVES GAIN/(LOSS) EQUITY ---------------- ---------------- --------------- BALANCE, January 1, 1995 $ 298,050 $ 977 $ 299,027 Net unrealized investment gains, net - 30,683 30,683 Net income 38,748 - 38,748 ---------------- ---------------- --------------- BALANCE, December 31, 1995 336,798 31,660 368,458 Net unrealized investment losses, net - (6,446) (6,446) Minority interest in net unrealized investment losses, net - 27 27 Net income 37,125 - 37,125 ---------------- ---------------- --------------- BALANCE, December 31, 1996 373,923 25,241 399,164 Net unrealized investment gains, net - 16,557 16,557 Minority interest in net unrealized investment gains, net - (158) (158) Net income 45,874 - 45,874 ---------------- ---------------- --------------- BALANCE, December 31, 1997 $ 419,797 $ 41,640 $ 461,437 ================ ================ =============== The accompanying notes to consolidated financial statements are an integral part of these statements.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (in thousands) YEARS ENDED DECEMBER 31 ------------------------------------------------- 1997 1996 1995 -------------- -------------- -------------- OPERATING ACTIVITIES - -------------------- Net income $ 45,874 $ 37,125 $ 38,748 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 5,275 4,231 4,346 Amortization of deferred policy acquisition costs 16,441 16,790 9,405 Policy acquisition costs deferred (36,117) (30,611) (20,954) Interest credited to contract values 66,788 65,494 64,598 Amortization of discounts or premiums (1,747) (1,513) (1,630) Net realized gains on investment transactions (10,295) (13,103) (4,471) Deferred income taxes 39 (1,560) 694 Minority interest in earnings of subsidiary 1,987 1,259 - Change in assets and liabilities: Accrued investment income (10) (1,071) 1,088 Other assets (3,239) (1,372) (1,583) Policy and contract reserves (3,446) 2,266 1,001 Policy and contract claims 6,047 2,538 (506) Unearned policy charges (315) (2,141) (657) Unearned reinsurance ceded allowance 511 373 103 Federal income taxes payable - current (7,977) 1,300 (1,698) Dividends payable (183) (111) 100 Other liabilities 6,509 5,445 (911) -------------- -------------- -------------- Net cash from operating activities 86,142 85,339 87,673 -------------- -------------- -------------- INVESTING ACTIVITIES - -------------------- Purchase of investments: Fixed maturity securities held to maturity (39,522) (122,182) (105,019) Fixed maturity securities available for sale (115,864) (40,572) (40,468) Equity securities (29,432) (19,925) (13,017) Mortgage loans on real estate (56,251) (57,248) (28,841) Real estate (1,676) (642) (589) Short-term investments (2,124) (5,844) (14,884) Other investments (6,026) (23,073) (12,569) Proceeds from sale of investments: Fixed maturity securities available for sale 16,419 4,774 2,919 Equity securities - unaffiliated 19,914 18,676 13,167 Equity securities - affiliated - 190 - Real estate 1,723 951 737 Other investments 649 7,949 7,828 The accompanying notes to consolidated financial statements are an integral part of these statements.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (in thousands) YEARS ENDED DECEMBER 31 ----------------------------------------------- 1997 1996 1995 -------------- -------------- ------------ INVESTING ACTIVITIES (CONTINUED) - -------------------------------- Proceeds from maturities or repayment of investments: Fixed maturity securities held to maturity $ 68,069 $ 71,317 $ 102,794 Fixed maturity securities available for sale 45,942 36,519 15,868 Mortgage loans on real estate 49,750 34,594 25,120 Real estate - - 219 Other investments 6,278 15,106 4,955 Short-term investments 3,050 16,571 4,022 Purchase of property and equipment (5,413) (3,711) (1,803) Proceeds from sale of property and equipment 45 78 99 Net change in loans on insurance policies (2,622) 1,252 310 -------------- -------------- ------------ Net cash from investing activities (47,091) (65,220) (39,152) -------------- -------------- ------------ FINANCING ACTIVITIES - -------------------- Contribution for minority interest in subsidiary 1,530 22,445 - Net change in accumulated contract values (34,584) (47,186) (17,286) -------------- -------------- ------------ Net cash from financing activities (33,054) (24,741) (17,286) -------------- -------------- ------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,997 (4,622) 31,235 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 77,142 81,764 50,529 -------------- -------------- ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 83,139 $ 77,142 $ 81,764 ============== ============== ============ SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income taxes $ 34,397 $ 27,748 $ 18,652 The accompanying notes to consolidated financial statements are an integral part of these statements.
- -------------------------------------------------------------------------------- 56 LLVL - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) . 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------------------------------------------ NATURE OF OPERATIONS Ameritas Life Insurance Corp. is a mutual life insurance company chartered by the State of Nebraska. Its operations consist of life and health insurance and annuity and pension contracts. The Company operates in the United States and, including its subsidiaries, is authorized to do business in all 50 states and the District of Columbia. Wholly owned insurance subsidiaries include First Ameritas Life Insurance Corp. of New York and Pathmark Assurance Company. The Company is also a 66% owner of AMAL Corporation (incorporated March 8, 1996), which owns 100% of Ameritas Variable Life Insurance Company and Ameritas Investment Corp. In addition to the insurance subsidiaries, the Company conducts other diversified financial-service-related operations through the following wholly owned subsidiaries: Veritas Corp. (a marketing organization for low-load insurance products); Ameritas Investment Advisors, Inc. (an advisor providing investment management services to the Company and other insurance companies); and Ameritas Managed Dental Plan, Inc. (a prepaid dental organization). PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Ameritas Life Insurance Corp. (Ameritas or the Company) and its majority-owned subsidiaries. References to the Company relate to Ameritas and all subsidiaries. These consolidated financial statements exclude the effects of all material intercompany transactions. USE OF ESTIMATES 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 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. The principal accounting and reporting practices followed are: INVESTMENTS The Company classifies its securities into categories based upon the Company's intent relative to the eventual disposition of the securities. The first category, held to maturity securities, includes fixed maturity securities which the Company has the positive intent and ability to hold to maturity. These securities are carried at amortized cost. The second category, available for sale securities, may be sold to address the liquidity and other needs of the Company. Securities classified as available for sale are carried at fair value on the balance sheet with unrealized gains and losses excluded from income and reported as a separate component of equity net of related deferred acquisition costs and income tax effects. The third category, trading securities, is for debt and equity securities acquired for the purpose of selling them in the near term. The Company has not classified any of its securities as trading securities. Equity securities (common stock and nonredeemable preferred stock) are valued at fair value. Mortgage loans on real estate are carried at amortized cost less an allowance for estimated uncollectible amounts. SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," which was amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures," requires that an impaired loan be measured at the present value of expected future cash flows, or alternatively, the observable market price or the fair value of the collateral. The Company adopted these standards as of January 1, 1995, with no material impact on its financial position or results of operations. - -------------------------------------------------------------------------------- LLVL 57 - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ----------------------------------------------------------------------- (CONTINUED) - ----------- Investment real estate owned directly by the Company is carried at cost less accumulated depreciation and allowances for estimated losses. Real estate acquired through foreclosure is carried at the lower of cost or fair value minus estimated costs to sell. Other investments primarily include investments in venture capital partnerships and real estate joint ventures accounted for using the equity method, and securities owned by the broker dealer subsidiary valued at fair value. Changes in the fair value of the securities owned by the broker dealer are included in investment income. Short-term investments are carried at amortized cost, which approximates fair value. Realized investment gains and losses on sales of securities are determined on the specific identification method. Write-offs of investments that decline in value below cost on other than a temporary basis and the change in the allowances for mortgage loans and wholly owned real estate are included with realized investment gains and losses in the consolidated statements of operations. The Company records write-offs or allowances for its investments based upon an evaluation of specific problem investments. The Company reviews, on a continual basis, all invested assets to identify investments where the Company may have credit concerns. Investments with credit concerns include those the Company has identified as experiencing a deterioration in financial condition. CASH EQUIVALENTS The Company considers all highly liquid debt securities purchased with a remaining maturity of less than three months to be cash equivalents. PROPERTY AND EQUIPMENT Property and equipment are carried at cost less accumulated depreciation. The Company provides for depreciation of property and equipment using straight-line and accelerated methods over the estimated useful lives of the assets. SEPARATE ACCOUNTS The Company operates separate accounts on which the earnings or losses accrue exclusively to contractholders. The assets (principally investments) and liabilities of each account are clearly identifiable and distinguishable from other assets and liabilities of the Company. The separate accounts are an investment alternative for pension, variable life, and variable annuity products which the Company markets. Amounts are reported at fair value. PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS RECOGNITION OF PARTICIPATING AND TERM LIFE, ACCIDENT AND HEALTH AND ANNUITY PREMIUM REVENUE AND BENEFITS TO POLICYOWNERS Participating life insurance products include those products with fixed and guaranteed premiums and benefits on which dividends are paid by the Company. Premiums on participating and term life products and certain annuities with life contingencies (immediate annuities) are recognized as premium revenue when due. Accident and health insurance premiums are recognized as premium revenue over the time period to which the premiums relate. Benefits and expenses are associated with earned premiums so as to result in recognition of profits over the premium-paying period of the contracts. This association is accomplished by means of the provision for liabilities for future policy benefits and the amortization of deferred policy acquisition costs. RECOGNITION OF UNIVERSAL LIFE-TYPE CONTRACTS REVENUE AND BENEFITS TO POLICYOWNERS Universal life-type policies are insurance contracts with terms that are not fixed and guaranteed. The terms that may be changed could include one or more of the amounts assessed the policyowner, premiums paid by the policyowner or interest accrued to policyowners' balances. Amounts received as payments for such contracts are reflected as deposits and are not reported as premium revenues. - -------------------------------------------------------------------------------- 58 LLVL - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------------------------------------------- (CONTINUED) - ----------- Revenues for universal life-type policies consist of charges assessed against policy account values for deferred policy loading, mortality risk expense, the cost of insurance and policy administration. Policy benefits and claims that are charged to expense include interest credited to contracts and benefit claims incurred in the period in excess of related policy account balances. RECOGNITION OF INVESTMENT CONTRACT REVENUE AND BENEFITS TO POLICYOWNERS Contracts that do not subject the Company to risks arising from policyowner mortality or morbidity are referred to as investment contracts. Deposit administration plans and certain deferred annuities are considered investment contracts. Amounts received as payments for such contracts are reflected as deposits and are not reported as premium revenues. Revenues for investment products consist of investment income and policy administration charges. Contract benefits that are charged to expense include benefit claims incurred in the period in excess of related contract balances, and interest credited to contract balances. POLICY ACQUISITION COSTS Those costs of acquiring new business, which vary with and are directly related to the production of new business, have been deferred to the extent that such costs are deemed recoverable from future premiums. Such costs include commissions, certain costs of policy issuance and underwriting, and certain agency expenses. Costs deferred related to term life insurance are amortized over the premium-paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. Such anticipated premium revenues are estimated using the same assumptions used for computing liabilities for future policy benefits. Costs deferred related to participating life, universal life-type policies and investment-type contracts are amortized generally over the lives of the policies, in relation to the present value of estimated gross profits from mortality, investment and expense margins. The estimated gross profits are reviewed periodically based on actual experience and changes in assumptions. A roll-forward of the amounts reflected in the consolidated balance sheets as deferred policy acquisition costs is as follows:
DECEMBER 31 ------------------------------------------- 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------- Beginning balance $ 146,405 $ 130,420 $ 126,619 Acquisition costs deferred 36,117 30,611 20,954 Amortization of deferred policy acquisition costs (16,441) (16,790) (9,405) Adjustment for unrealized investment (gain)/loss (1,517) 2,164 (7,748) - ------------------------------------------------------------------------------------------------------------------ Ending balance $ 164,564 $ 146,405 $ 130,420 - ------------------------------------------------------------------------------------------------------------------
To the extent that unrealized gains or losses on available for sale securities would result in an adjustment of deferred policy acquisition costs had those gains or losses actually been realized, the related unamortized deferred policy acquisition costs are recorded as an adjustment of the unrealized investment gains or losses included in policyowners' contingency reserves. - -------------------------------------------------------------------------------- LLVL 59 - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------------------------------------------ (CONTINUED) - ----------- FUTURE POLICY AND CONTRACT BENEFITS Liabilities for future policy benefits for participating and term life contracts and additional coverages offered under policy riders are calculated using the net level premium method and assumptions as to investment yields, mortality, withdrawals and dividends. The assumptions are based on projections of past experience and include provisions for possible unfavorable deviation. These assumptions are made at the time the contract is issued. These liabilities are shown as policy and contract reserves. Liabilities for future policy and contract benefits on universal life-type and investment-type contracts are based on the policy account balance, and are shown as accumulated contract values. The liabilities for future policy and contract benefits for group disabled life reserves and long-term disability reserves are based upon interest rate assumptions and morbidity and termination rates from published tables, modified for Company experience. DIVIDENDS TO POLICYOWNERS A portion of the Company's business has been issued on a participating basis. The amount of policyowners' dividends to be paid is determined annually by the Board of Directors. INCOME TAXES The Company, with the exception of AMAL and its subsidiaries, files a consolidated life/non-life tax return. An agreement among the members of the consolidated group provides for distribution of consolidated tax results as if filed on a separate return basis. The provision for income taxes includes amounts currently payable and deferred income taxes resulting from the cumulative differences in assets and liabilities determined on a tax return and financial statement basis at the current enacted tax rates. RECLASSIFICATIONS Certain items on the prior year financial statements have been restated to conform to current year presentation. 2. INVESTMENTS - --------------- Investment income summarized by type of investment was as follows: YEARS ENDED DECEMBER 31 ---------------------------------------- 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Fixed maturity securities held to maturity $ 59,700 $ 59,366 $ 58,937 Fixed maturity securities available for sale 32,605 30,039 30,160 Equity securities 1,899 1,571 1,508 Mortgage loans on real estate 19,866 19,376 17,948 Real estate 12,317 9,699 9,644 Loans on insurance policies 4,341 4,265 4,290 Other investments 15,494 8,572 6,906 Short-term investments and cash and cash equivalents 4,266 5,069 5,083 - ------------------------------------------------------------------------------------------------------------------------- Gross investment income 150,488 137,957 134,476 Investment expenses 12,744 11,095 9,927 - ------------------------------------------------------------------------------------------------------------------------- Net investment income $ 137,744 $ 126,862 $ 124,549 - -------------------------------------------------------------------------------------------------------------------------
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AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 2. INVESTMENTS (CONTINUED) - --------------------------- Net pretax realized investment gains (losses) were as follows: YEARS ENDED DECEMBER 31 --------------------------------------- 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on disposals, including calls, of investments Fixed maturity securities held to maturity $ 1,059 $ 237 $ 2,944 Fixed maturity securities available for sale 494 802 175 Equity securities 6,787 11,439 1,131 Mortgage loans on real estate 959 66 138 Real estate 502 136 224 Other 564 503 (91) - ------------------------------------------------------------------------------------------------------------------------ 10,365 13,183 4,521 - ------------------------------------------------------------------------------------------------------------------------ Provisions for losses on investments Mortgage loans on real estate (20) (80) (50) Real estate (50) -- -- - ------------------------------------------------------------------------------------------------------------------------ Net pretax realized investment gains $ 10,295 $ 13,103 $ 4,471 - ------------------------------------------------------------------------------------------------------------------------ Proceeds from sales of securities and gross gains and losses realized on those sales were as follows: YEAR ENDED DECEMBER 31, 1997 -------------------------------------- Proceeds Gains Losses - ------------------------------------------------------------------------------------------------------------------------ Fixed maturity securities available for sale $ 16,419 $ 161 $ 8 Equity securities 19,914 7,725 938 - ------------------------------------------------------------------------------------------------------------------------ $ 36,333 $ 7,886 $ 946 - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1996 ------------------------------------- Proceeds Gains Losses - ------------------------------------------------------------------------------------------------------------------------ Fixed maturity securities available for sale $ 4,774 $ 30 $ 247 Equity securities 18,676 11,796 357 - ------------------------------------------------------------------------------------------------------------------------ $ 23,450 $ 11,826 $ 604 - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1995 ------------------------------------- Proceeds Gains Losses - ------------------------------------------------------------------------------------------------------------------------ Fixed maturity securities available for sale $ 2,919 $ -- $ 66 Equity securities 13,167 2,601 1,470 - ------------------------------------------------------------------------------------------------------------------------ $ 16,086 $ 2,601 $ 1,536 - ------------------------------------------------------------------------------------------------------------------------
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AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 2. INVESTMENTS (CONTINUED) - --------------------------- The amortized cost and fair value of investments in securities by type of investment were as follows: DECEMBER 31, 1997 ------------------------------------------------------ GROSS UNREALIZED AMORTIZED -------------------------- FAIR COST GAINS LOSSES VALUE - ------------------------------------------------------------------------------------------------------------------------- Fixed maturity securities held to maturity U.S. Corporate $ 448,344 $ 23,764 $ 423 $ 471,685 Mortgage-backed 147,741 6,523 14 154,250 U.S. Treasury securities and obligations of U.S. government agencies 82,107 5,764 -- 87,871 Foreign 76,389 2,769 108 79,050 - ------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities held to maturity 754,581 38,820 545 792,856 - ------------------------------------------------------------------------------------------------------------------------- Fixed maturity securities available for sale U.S. Corporate 282,265 11,742 280 293,727 Mortgage-backed 86,370 1,957 165 88,162 Asset-backed 7,997 169 -- 8,166 U.S. Treasury securities and obligations of U.S. government agencies 67,342 3,455 242 70,555 Foreign 18,857 524 1 19,380 - ------------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities available for sale 462,831 17,847 688 479,990 - ------------------------------------------------------------------------------------------------------------------------- Equity securities 59,383 49,893 532 108,744 Short-term investments 655 -- -- 655 - ------------------------------------------------------------------------------------------------------------------------- Total available for sale securities 522,869 67,740 1,220 589,389 - ------------------------------------------------------------------------------------------------------------------------- Total $ 1,277,450 $ 106,560 $ 1,765 $ 1,382,245 - ------------------------------------------------------------------------------------------------------------------------- The December 31, 1997, equity balance was increased by $16,557 (including an increase in the carrying value of the securities of $27,152, decreased by $1,517 of related adjustments to deferred acquisition costs and $9,078 in deferred income taxes) to reflect the net 1997 unrealized gain on securities classified as available for sale previously carried at amortized cost.
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AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 2. INVESTMENTS (CONTINUED) - --------------------------- DECEMBER 31, 1996 ---------------------------------------------------- GROSS UNREALIZED AMORTIZED -------------------------- FAIR COST GAINS LOSSES VALUE - ----------------------------------------------------------------------------------------------------------------------- Fixed maturity securities held to maturity U.S. Corporate $ 457,030 $ 17,953 $ 3,001 $ 471,982 Mortgage-backed 165,847 5,087 847 170,087 U.S. Treasury securities and obligations of U.S. government agencies 84,418 3,611 249 87,780 Foreign 68,580 1,380 818 69,142 - ------------------------------------------------------------------------------------------------------------------------ Total fixed maturity securities held to maturity 775,875 28,031 4,915 798,991 - ------------------------------------------------------------------------------------------------------------------------ Fixed maturity securities available for sale U.S. Corporate 241,022 7,944 2,780 246,186 Mortgage-backed 77,964 969 875 78,058 U.S. Treasury securities and obligations of U.S. government agencies 70,627 2,765 1,023 72,369 Foreign 18,854 410 172 19,092 - ------------------------------------------------------------------------------------------------------------------------ Total fixed maturity securities available for sale 408,467 12,088 4,850 415,705 - ------------------------------------------------------------------------------------------------------------------------ Equity securities 43,079 33,236 1,100 75,215 Short-term investments 1,541 -- -- 1,541 - ------------------------------------------------------------------------------------------------------------------------ Total available for sale securities 453,087 45,324 5,950 492,461 - ------------------------------------------------------------------------------------------------------------------------ Total $ 1,228,962 $ 73,355 $ 10,865 $ 1,291,452 - ------------------------------------------------------------------------------------------------------------------------ The December 31, 1996, equity balance was decreased by $6,446 (including a decrease in the carrying value of the securities of $12,246, increased by $2,164 of related adjustments to deferred acquisition costs and $3,636 in deferred income taxes) to reflect the net 1996 unrealized gain on securities classified as available for sale previously carried at amortized cost. The amortized cost and fair value of fixed maturity securities by contractual maturity at December 31, 1997, 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. AVAILABLE FOR SALE HELD TO MATURITY --------------------------------------------------------------------- AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE - ----------------------------------------------------------------------------------------------------------------------------------- Due in one year or less $ 22,495 $ 22,560 $ 15,437 $ 15,620 Due after one year through five years 122,517 127,006 122,983 128,111 Due after five years through ten years 169,090 174,075 327,442 343,013 Due after ten years 54,362 68,018 140,978 151,862 Mortgage-backed and asset-backed securities 94,367 88,331 147,741 154,250 - ----------------------------------------------------------------------------------------------------------------------------------- Total $ 462,831 $ 479,990 $ 754,581 $ 792,856 - -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- LLVL 63 - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 3. INCOME TAXES - ---------------- The items that give rise to deferred tax assets and liabilities relate to the following: YEARS ENDED DECEMBER 31 ----------------------------- 1997 1996 - ------------------------------------------------------------------------------------------------------------------------ Net unrealized investment gains $ 29,569 $ 20,116 Equity in subsidiaries 9,992 7,905 Deferred policy acquisition costs 47,713 43,247 Prepaid expenses 3,246 2,373 Other 2,327 2,234 - ------------------------------------------------------------------------------------------------------------------------- Gross deferred tax liability 92,847 75,875 - ------------------------------------------------------------------------------------------------------------------------- Future policy and contract benefits 30,593 24,386 Deferred future revenues 6,091 6,126 Policyowner dividends 3,547 3,610 Pension and postretirement benefits 2,715 2,643 Other 3,665 3,027 - ------------------------------------------------------------------------------------------------------------------------- Gross deferred tax asset 46,611 39,792 - ------------------------------------------------------------------------------------------------------------------------- Net deferred tax liability $ 46,236 $ 36,083 - ------------------------------------------------------------------------------------------------------------------------- The difference between the U.S. federal income tax rate and the consolidated tax provision rate is summarized as follows: YEARS ENDED DECEMBER 31 ------------------------------------------ 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------- Federal statutory tax rate 35.0 % 35.0 % 35.0 % Equity in subsidiaries 2.4 1.2 1.0 Surplus tax (2.7) 7.1 (5.2) Other 0.9 (1.5) 0.5 - ------------------------------------------------------------------------------------------------------------------------- Effective tax rate 35.6 % 41.8 % 31.3 % - ------------------------------------------------------------------------------------------------------------------------- The "surplus tax," IRC Section 809, is an imputation of income to mutual life insurance companies according to a formula based on a comparison of the returns of equity of the mutual and stock segments of the life insurance industry. The Company's provision for its surplus tax is based on the Company's best estimate of what its final surplus tax will be. 4. EMPLOYEE AND AGENT BENEFIT PLANS - ------------------------------------ PENSION PLANS The Company has a noncontributory defined benefit retirement plan covering substantially all employees. Plan benefits are based on years of credited service and the employee's compensation during the last five years of employment. The Company's funding policy is to make contributions each year at least equal to the minimum funding requirements for tax-qualified retirement plans. Pension costs include current service costs, which are accrued and funded on a current year basis, and past service costs, which are amortized over the average remaining service life of all employees on the adoption date. The assets of this plan are not segregated.
- -------------------------------------------------------------------------------- 64 LLVL - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 4. EMPLOYEE AND AGENT BENEFIT PLANS (CONTINUED) - ------------------------------------------------ Periodic pension expense for the Company included the following components: YEARS ENDED DECEMBER 31 --------------------------------------------- 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Service cost - benefits earned during the year $ 1,408 $ 1,223 $ 1,349 Interest cost on projected benefit obligation 1,496 1,866 1,894 Actual return on plan assets (3,329) (2,817) (2,844) Net amortization and deferral 1,836 932 1,148 - --------------------------------------------------------------------------------------------------------------------------- Net periodic pension expense $ 1,411 $ 1,204 $ 1,547 - --------------------------------------------------------------------------------------------------------------------------- The following table sets forth the funded status of the Company's plans: DECEMBER 31 -------------------------------- 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Accumulated benefit obligation Vested $ 15,184 $ 13,173 Nonvested 1,099 323 Effect of projected future compensation increases 6,949 5,761 - --------------------------------------------------------------------------------------------------------------------------- Projected benefit obligation 23,232 19,257 Plan assets at fair value 24,271 20,153 - --------------------------------------------------------------------------------------------------------------------------- Plan assets in excess of projected benefit obligation 1,039 896 Unrecognized net loss (875) (1,159) Unrecognized transition obligation 1,236 1,331 - --------------------------------------------------------------------------------------------------------------------------- Net pension asset $ 1,400 $ 1,068 - ---------------------------------------------------------------------------------------------------------------------------
The projected benefit obligation was determined using an assumed discount rate of 7.25% and 7.5% for 1997 and 1996, respectively, and a weighted-average assumed long-term rate of compensation increase of 4.5% for 1997 and 1996. The assumed long-term rate of return on plan assets was 8.0% for 1997 and 1996. The Company has generally funded annually the maximum allowed under IRS regulations. The Company made contributions totaling $1,744 in 1997, $1,600 in 1996, and $1,500 in 1995. The Company's employees and agents also participate in defined contribution plans that cover substantially all full-time employees and agents. Company contributions were $868 in 1997 and $800 in both 1996 and 1995. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company provides certain health care and life insurance benefits to retired employees. These benefits are a specified percentage of premium until age 65 and a flat dollar amount thereafter. Employees become eligible for these benefits upon the attainment of age 55, 15 years of service and participation in the Company medical plan for the immediately preceding five years. - -------------------------------------------------------------------------------- LLVL 65 - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 4. EMPLOYEE AND AGENT BENEFIT PLANS (CONTINUED) - ------------------------------------------------ The Company has adopted a 401(h) plan to fund its postretirement benefit obligation. Funding of $425, $440 and $300 was made in 1997, 1996 and 1995, respectively. The accumulated postretirement benefit obligation and the accrued postretirement benefit liability were as follows: DECEMBER 31 --------------------------- 1997 1996 - ------------------------------------------------------------------------------------------------------------------------ Retirees $ 2,145 $ 2,451 Fully eligible active plan participants 462 396 Other active plan participants 1,891 1,899 - ------------------------------------------------------------------------------------------------------------------------ Accumulated postretirement benefit obligation 4,498 4,746 Plan assets (1,767) (1,252) Unrecognized gain 1,516 1,040 - ------------------------------------------------------------------------------------------------------------------------ Accrued postretirement benefit liability $ 4,247 $ 4,534 - ------------------------------------------------------------------------------------------------------------------------ Net periodic postretirement benefit costs consisted of the following components: YEARS ENDED DECEMBER 31 -------------------------------------------- 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------ Service costs $ 158 $ 177 $ 200 Interest cost on accumulated postretirement benefit plan 304 315 310 Net amortization and deferral (77) (35) (10) Expected return on assets (89) (57) (34) - ------------------------------------------------------------------------------------------------------------------------- Net periodic postretirement benefit costs $ 296 $ 400 $ 466 - -------------------------------------------------------------------------------------------------------------------------
The assumed health care cost trend line rate used in measuring the accumulated postretirement benefit obligation, for pre-65 employees, was 9.5% in 1995 decreasing linearly each successive year until it reaches 5.5% after 1999, after which it remains constant. A one-percentage-point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement health care cost by approximately 3%, the current service cost by 7%, and interest costs by 3%. The assumed discount rate used in determining the accumulated postretirement benefit obligation was 7.25% and 7.5% in 1997 and 1996, respectively. 5. POLICYOWNERS' CONTINGENCY RESERVES - -------------------------------------- STATUTORY SURPLUS AND NET INCOME Net income of Ameritas and its insurance subsidiaries, as determined in accordance with statutory accounting practices, was $47,200, $44,100 and $29,700 for 1997, 1996 and 1995, respectively. The Company's statutory surplus was $311,300, $257,300 and $204,700 at December 31, 1997, 1996 and 1995, respectively. The Company is required to maintain a certain level of policyowners' contingency reserves to be in compliance with state laws and regulations. Company policyowners' contingency reserves are monitored by state regulators to ensure compliance with risk based capital requirements. - -------------------------------------------------------------------------------- 66 LLVL - --------------------------------------------------------------------------------
AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 6. REINSURANCE - --------------- In the ordinary course of business, the Company assumes and cedes reinsurance with other insurers and reinsurers. These arrangements provide greater diversification of business and limit the maximum net loss potential on large risks. The effect of reinsurance on premiums earned is as follows: YEARS ENDED DECEMBER 31 ----------------------------------------------- 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Assumed $ 9,740 $ 6,344 $ 2,725 Ceded (10,777) (12,549) (8,284) - --------------------------------------------------------------------------------------------------------------------------------- $ (1,037) $ (6,205) $ (5,559) - --------------------------------------------------------------------------------------------------------------------------------- The Company remains contingently liable in the event that a reinsurer is unable to meet the obligations ceded under the reinsurance agreement. 7. RESERVE FOR UNPAID CLAIMS - ----------------------------- The change in the liability for unpaid accident and health claims and claim adjustment expenses is summarized as follows: 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Balance at January 1 $ 17,957 $ 14,925 $ 15,383 Reinsurance reserves (net) (89) 121 (86) - -------------------------------------------------------------------------------------------------------------------------------- 17,868 15,046 15,297 - -------------------------------------------------------------------------------------------------------------------------------- Incurred related to: Current year 132,940 117,610 119,116 Prior year (4,675) (2,051) (2,030) - -------------------------------------------------------------------------------------------------------------------------------- Total incurred 128,265 115,559 117,086 - -------------------------------------------------------------------------------------------------------------------------------- Paid related to: Current year 112,255 99,742 104,492 Prior year 13,193 12,995 12,845 - -------------------------------------------------------------------------------------------------------------------------------- Total paid 125,448 112,737 117,337 - -------------------------------------------------------------------------------------------------------------------------------- 20,685 17,868 15,046 Reinsurance reserves (net) 1,748 89 (121) - -------------------------------------------------------------------------------------------------------------------------------- Balance at December 31 $ 22,433 $ 17,957 $ 14,925 - --------------------------------------------------------------------------------------------------------------------------------- The liability for unpaid accident and health claims and claim adjustment expenses is included in policy and contract claims on the consolidated balance sheets.
- -------------------------------------------------------------------------------- LLVL 67 - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 8. COMMITMENTS AND CONTINGENCIES - --------------------------------- INVESTMENTS Securities commitments of $25,848 and $16,935, and mortgage loan and real estate commitments of $17,742 and $14,247 were outstanding for investments to be purchased in subsequent years as of December 31, 1997 and 1996, respectively. These commitments have been made in the normal course of investment operations and are not reflected in the accompanying financial statements. The Company's exposure to credit loss is represented by the contractual notional amount of those instruments. The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance sheet instruments. STATE LIFE AND HEALTH GUARANTY FUNDS As a condition of doing business, all states and jurisdictions have adopted laws requiring membership in life and health insurance guaranty funds. Member companies are subject to assessments each year based on life, health or annuity premiums collected in the state. In some states these assessments may be applied against premium taxes. The Company has estimated its costs related to past insolvencies and has provided a reserve included in other liabilities of $2,325 and $2,250 as of December 31, 1997 and 1996, respectively. LITIGATION From time to time, the Company and its subsidiaries is subject to litigation in the normal course of business. Management does not believe that the Company is party to any such pending litigation which would have a material adverse effect on its financial statements or future operations. 9. FAIR VALUE OF FINANCIAL INSTRUMENTS - --------------------------------------- The following disclosures are made regarding fair value information about certain financial instruments for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates, in many cases, could not be realized in immediate settlement of the instrument. All nonfinancial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The fair value estimates presented herein are based on pertinent information available to management as of December 31, 1997 and 1996. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date; therefore, current estimates of fair value may differ significantly from the amounts presented herein. The following methods and assumptions were used by the Company in estimating its fair value disclosures for each class of financial instrument for which it is practicable to estimate a value: FIXED MATURITY SECURITIES -- For publicly traded securities, fair value is determined using an independent pricing source. For securities without a readily ascertainable fair value, the value has been determined using an interest rate spread matrix based upon quality, weighted average maturity and Treasury yields. EQUITY SECURITIES -- For publicly traded securities, fair value is determined using prices from an independent pricing source. - -------------------------------------------------------------------------------- 68 LLVL - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 9. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) - --------------------------------------------------- LOANS ON INSURANCE POLICIES -- Fair values for loans on insurance policies are estimated using a discounted cash flow analysis at interest rates currently offered for similar loans. Loans on insurance policies with similar characteristics are aggregated for purposes of the calculations. MORTGAGE LOANS ON REAL ESTATE -- Mortgage loans in good standing are valued on the basis of discounted cash flow. The interest rate that is assumed is based upon the weighted average term of the mortgage and appropriate spread over Treasuries. OTHER INVESTMENTS -- Fair values for venture capital partnerships are estimated based on values as last reported by the partnership and discounted for their lack of marketability. Real estate partnerships are carried on the equity method and are excluded from the fair value disclosure. SHORT-TERM INVESTMENTS -- The carrying amount approximates fair value because of the short maturity of these instruments. CASH AND CASH EQUIVALENTS -- The carrying amounts equal fair value. ACCRUED INVESTMENT INCOME -- Fair value equals book value. ACCUMULATED CONTRACT VALUES -- Funds on deposit with a fixed maturity are valued at discounted present value using market interest rates. Funds on deposit which do not have fixed maturities are carried at the amount payable on demand at the reporting date, which approximates fair value. COMMITMENTS -- The estimated fair value of commitments approximates carrying value because the fees currently charged for these arrangements and the underlying interest rates approximate market.
Estimated fair values are as follows: DECEMBER 31 ---------------------------------------------------------------- 1997 1996 ----------------------------- --------------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE - ----------------------------------------------------------------------------------------------------------------------------- Financial assets: Fixed maturity securities Held to maturity $ 754,581 $ 792,856 $ 775,875 $ 798,991 Available for sale 479,990 479,990 415,705 415,705 Equity securities 108,744 108,744 75,215 75,215 Loans on insurance policies 70,638 63,356 68,017 60,743 Mortgage Loans on real estate 228,709 240,583 226,776 234,750 Other investments 22,717 32,466 24,143 33,301 Short-term investments 655 655 1,541 1,541 Cash and cash equivalents 83,139 83,139 77,142 77,142 Accrued investment income 25,186 25,186 25,176 25,176 Financial liabilities: Accumulated contract values excluding amounts held under insurance contracts 764,505 764,998 756,029 756,194
- -------------------------------------------------------------------------------- LLVL 69 - -------------------------------------------------------------------------------- AMERITAS LIFE INSURANCE CORP. ----------------------------- NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 ---------------------------------------------------- (IN THOUSANDS) (continued) 10. SUBSEQUENT EVENT - -------------------- Effective January 1, 1998, the Company converted from a mutual insurance company structure to a mutual insurance holding company structure pursuant to the Nebraksa Mutual Insurance Holding Company Act. The conversion was approved by the Nebraska State Department of Insurance and the policyowners of the mutual company. - -------------------------------------------------------------------------------- 70 LLVL - -------------------------------------------------------------------------------- APPENDIX A ILLUSTRATIONS OF DEATH BENEFITS AND NET CASH SURRENDER VALUES The following tables illustrate how the Net Cash Surrender Values and Death Benefits of a Policy may change with the investment experience of the Fund. The tables show how the Net Cash Surrender Values and Death Benefits of a Policy issued to an Insured of a given age and specified underwriting risk classification who pays the given premium at issue would vary over time if the investment return on the assets held in each portfolio of the Funds were a uniform, gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages 72 through 75 illustrate a Policy issued to a male, age 45, under a Preferred rate non-smoker underwriting risk classification. This policy provides for a standard smoker and non-smoker, and preferred non-smoker classification and different rates for certain Specified Amounts. The Net Cash Surrender Values and Death Benefits would be different from those shown if the gross annual investment rates of return averaged 0%, 6%, and 12% over a period of years, but fluctuated above and below those averages for individual policy years, or if the Insured were assigned to a different underwriting risk classification. The second column of the tables shows the accumulated value of the premiums paid at 5%. The following columns show the Net Cash Surrender Values and the Death Benefits for uniform hypothetical rates of return shown in these tables. The tables on pages 72 and 74 are based on the current cost of insurance rates, current expense deductions and the current percent of premium loads. These reflect the basis on which ALIC currently sells its Policies. The maximum cost of insurance rates allowable under the Policy are based upon the 1980 Commissioner's Standard Ordinary Smoker and Non-Smoker, Male and Female Mortality Tables. ALIC anticipates reflecting future improvements in actual mortality experience through adjustments in the current cost of insurance rates actually applied. ALIC also anticipates reflecting any future improvements in expenses incurred by applying lower percent of premiums of loads and other expense deductions. The death benefits and cash values shown in the tables on pages 73 and 75 are based on the assumption that the maximum allowable cost of insurance rates as described above ("guaranteed cost") and maximum allowable expense deductions are made throughout the life of the Policy. The amounts shown for the Net Cash Surrender Values and Death Benefits reflect the fact that the net investment return of the Subaccounts is lower than the gross, after-tax return of the assets held in the Funds as a result of expenses paid by the Fund and charges levied against the Subaccounts. The values shown take into account an average of the daily expenses paid by each portfolio available for investment (the equivalent to an annual rate of .58% of the aggregate average daily net assets of the Fund), and the daily charge by ALIC to each Subaccount for assuming mortality and expense risks (which is equivalent to a charge at an annual rate of 0.75% on pages 72 and 74 and at an annual rate of .90% on pages 73 and 75 of the average net assets of the Subaccounts). Berger Associates has voluntarily agreed to waive its advisory fee and has voluntarily reimbursed the Funds for additional expenses to the extent that normal operating expenses in any fiscal year, including the management fee but excluding brokerage commissions, interest, taxes and extraordinary expenses, of Berger IPT-100 Fund exceed 1.00%, and the normal operating expenses in any fiscal year of the Berger IPT-Small Company Growth Fund exceed 1.15%, of the respective Fund's average daily net assets. NBMI has agreed to reimburse each Neuberger & Berman Portfolio for its operating expenses and its pro rata share of its corresponding series' operating expenses, excluding the compensation of NBMI, taxes, interest, extraordinary expenses, brokerage commissions, and transaction costs that exceed 1% of the portfolio's average daily net asset value. These agreements are expected to continue in future years but may be terminated at any time. The illustrated gross annual investment rates of return of 0%, 6%, and 12% were computed after deducting these amounts and correspond to approximate net annual rates of -1.33%, 4.67%, and 10.67% on page 72 and 74 and -1.48%, 4.52%, and 10.52% respectively, on pages 73 and 75. The hypothetical values shown in the tables do not reflect any additional charges for Federal Income tax burden attributable to the Separate Account, since ALIC is not currently making such charges. However, such charges may be made in the future and, in that event, the gross annual investment rate of return would have to exceed 0 percent, 6 percent, or 12 percent by an amount sufficient to cover the tax charges in order to produce the Death Benefits and values illustrated. (See Federal Tax Matters, page 28). The tables illustrate the policy values that would result based upon the hypothetical investment rates of return if premiums are paid as indicated, if all net premiums are allocated to the Separate Account, and if no policy loans have been made. The tables are also based on the assumptions that the policyowner has not requested an increase or decrease in the initial Specified Amount, that no Partial Withdrawals have been made, and that no more than fifteen transfers have been made in any policy year so that no transfer charges have been incurred. Illustrated values would be different if the proposed Insured were female, a smoker, in substandard risk classification, or were another age, or if a higher or lower premium was illustrated. Upon request, ALIC will provide comparable illustration based upon the proposed Insured's age, sex and underwriting classification, the Specified Amount, the Death Benefit option, and Planned Periodic Premium schedule requested, and any available riders requested. In addition, upon client request, illustrations may be furnished reflecting allocation of premiums to specified Subaccounts. Such illustrations will reflect the expenses of the portfolio in which the Subaccount invests. - -------------------------------------------------------------------------------- LLVL 71 - --------------------------------------------------------------------------------
Illustration of Policy Values Ameritas Life Insurance Corp. ENDOWMENT AT AGE 100 Male Issue Age: 45 Non-Smoker Preferred Underwriting Class PLANNED PERIODIC ANNUAL PREMIUM: $4800 INITIAL SPECIFIED AMOUNT: $250000 DEATH BENEFIT OPTION: A USING CURRENT SCHEDULE OF COST OF INSURANCE RATES 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross Annual Investment Return Annual Investment Return Annual Investment Return (-1.33% Net) ( 4.67% Net) ( 10.67% Net) ------------------------- ------------------------- ------------------------- Accumulated End Of Premiums At Net Cash Net Cash Net Cash Policy 5% Interest Surrender Death Surrender Death Surrender Death Year Per Year Value Benefit Value Benefit Value Benefit ---- -------- ----- ------- ----- ------- ----- ------- 1 5040 4162 250000 4426 250000 4691 250000 2 10332 8231 250000 9022 250000 9846 250000 3 15888 12154 250000 13739 250000 15455 250000 4 21723 15952 250000 18603 250000 21561 250000 5 27849 19631 250000 23628 250000 28318 250000 6 34281 23202 250000 28832 250000 35713 250000 7 41035 26665 250000 34225 250000 43852 250000 8 48127 30076 250000 39872 250000 52873 250000 9 55573 33441 250000 45790 250000 62879 250000 10 63392 36761 250000 51994 250000 73981 250000 15 108755 52273 250000 87475 250000 150429 250000 20 166652 63934 250000 130372 250000 277997 339156 Ages 70 240544 70042 250000 183313 250000 487121 565060 75 334851 67753 250000 252318 269980 830058 888162 80 455213 51003 250000 340157 357165 1396196 1466006 85 608830 2036 250000 446649 468982 2312360 2427978
1) Assumes an annual $4800 premium is paid at the beginning of each policy year. Values would be different if premiums with a different frequency or in different amounts. 2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient cash value. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. - -------------------------------------------------------------------------------- 72 LLVL - --------------------------------------------------------------------------------
Illustration of Policy Values Ameritas Life Insurance Corp. ENDOWMENT AT AGE 100 Male Issue Age: 45 Non-Smoker Preferred Underwriting Class PLANNED PERIODIC ANNUAL PREMIUM: $4800 INITIAL SPECIFIED AMOUNT: $250000 DEATH BENEFIT OPTION: A USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross Annual Investment Return Annual Investment Return Annual Investment Return (-1.48% Net) ( 4.52% Net) ( 10.52% Net) ------------------------- ------------------------- ------------------------- Accumulated End Of Premiums At Net Cash Net Cash Net Cash Policy 5% Interest Surrender Death Surrender Death Surrender Death Year Per Year Value Benefit Value Benefit Value Benefit ---- -------- ----- ------- ----- ------- ----- ------- 1 5040 4162 250000 4426 250000 4691 250000 2 10332 7627 250000 8397 250000 9200 250000 3 15888 10985 250000 12492 250000 14129 250000 4 21723 14234 250000 16715 250000 19523 250000 5 27849 17367 250000 21065 250000 25425 250000 6 34281 20385 250000 25548 250000 31893 250000 7 41035 23274 250000 30157 250000 38977 250000 8 48127 26022 250000 34888 250000 46739 250000 9 55573 28622 250000 39739 250000 55248 250000 10 63392 31057 250000 44704 250000 64583 250000 15 108755 40396 250000 71202 250000 127459 250000 20 166652 43372 250000 100334 250000 232932 284177 Ages 70 240544 35554 250000 131723 250000 405232 470069 75 334851 7577 250000 166402 250000 683141 730960 80 455213 0* 0* 209133 250000 1136522 1193348 85 608830 0* 0* 275018 288768 1851843 1944435
* In the absence of an additional premium the Policy would lapse. 1) Assumes an annual $4800 premium is paid at the beginning of each policy year. Values would be different if premiums with a different frequency or in different amounts. 2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient cash value. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. - -------------------------------------------------------------------------------- LLVL 73 - --------------------------------------------------------------------------------
Illustration of Policy Values Ameritas Life Insurance Corp. ENDOWMENT AT AGE 100 Male Issue Age: 45 Non-Smoker Preferred Underwriting Class PLANNED PERIODIC ANNUAL PREMIUM: $14500 INITIAL SPECIFED AMOUNT: $250000 DEATH BENEFIT OPTION: B USING CURRENT SCHEDULE OF COST OF INSURANCE RATES 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross Annual Investment Return Annual Investment Return Annual Investment Return (-1.33% Net) ( 4.67% Net) ( 10.67% Net) ------------------------- ------------------------- ------------------------- Accumulated End Of Premiums At Net Cash Net Cash Net Cash Policy 5% Interest Surrender Death Surrender Death Surrender Death Year Per Year Value Benefit Value Benefit Value Benefit ---- -------- ----- ------- ----- ------- ----- ------- 1 15225 13392 263392 14218 264218 15045 265045 2 31211 26561 276561 29054 279054 31646 281646 3 47996 39451 289451 44475 294475 49909 299909 4 65621 52083 302083 60528 310528 70028 320028 5 84127 64463 314463 77243 327243 92205 342205 6 103559 76602 326602 94659 344659 116667 366667 7 123962 88500 338500 112808 362808 143654 393654 8 145385 100221 350221 131784 381784 173501 423501 9 167879 111771 361771 151631 401631 206516 456516 10 191498 123152 373152 172389 422389 243039 493039 15 328533 177079 427079 290848 540848 492241 742241 20 503428 223371 473371 434966 684966 900627 1150627 Ages 70 726644 259561 509561 607882 857882 1569356 1820453 75 1011530 282014 532014 812107 1062107 2664810 2914810 80 1375125 284930 534930 1048101 1298101 4461152 4711152 85 1839174 256380 506380 1309239 1559239 7383420 7752591
1) Assumes an annual $14500 premium is paid at the beginning of each policy year. Values would be different if premiums with a different frequency or in different amounts. 2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient cash value. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. - -------------------------------------------------------------------------------- 74 LLVL - --------------------------------------------------------------------------------
Illustration of Policy Values Ameritas Life Insurance Corp. ENDOWMENT AT AGE 100 Male Issue Age: 45 Non-Smoker Preferred Underwriting Class PLANNED PERIODIC ANNUAL PREMIUM: $14500 INITIAL SPECIFED AMOUNT: $250000 DEATH BENEFIT OPTION: B USING MAXIMUM ALLOWABLE SCHEDULE OF COST OF INSURANCE RATES 0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross Annual Investment Return Annual Investment Return Annual Investment Return (-1.48% Net) ( 4.52% Net) ( 10.52% Net) ------------------------- ------------------------- ------------------------- Accumulated End Of Premiums At Net Cash Net Cash Net Cash Policy 5% Interest Surrender Death Surrender Death Surrender Death Year Per Year Value Benefit Value Benefit Value Benefit ---- -------- ----- ------- ----- ------- ----- ------- 1 15225 13392 263392 14218 264218 15045 265045 2 31211 25771 275771 28232 278232 30793 280793 3 47996 37894 287894 42805 292805 48121 298121 4 65621 49762 299762 57957 307957 67191 317191 5 84127 61368 311368 73706 323706 88176 338176 6 103559 72710 322710 90072 340072 111271 361271 7 123962 83776 333776 107065 357065 136680 386680 8 145385 94553 344553 124698 374698 164629 414629 9 167879 105030 355030 142982 392982 195369 445369 10 191498 115188 365188 161924 411924 229170 479170 15 328533 160774 410774 266949 516949 455912 705912 20 503428 195807 445807 389620 639620 820295 1070295 Ages 70 726644 215809 465809 528292 778292 1404857 1654857 75 1011530 213810 463810 677821 927821 2342539 2592539 80 1375125 177419 427419 824857 1074857 3845234 4095234 85 1839174 93371 343371 951110 1201110 6248110 6560515
1) Assumes an annual $14500 premium is paid at the beginning of each policy year. Values would be different if premiums with a different frequency or in different amounts. 2) Assumes that no policy loan has been made. Excessive loans or withdrawals may cause this policy to lapse because of insufficient cash value. THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, DEATH BENEFIT OPTION SELECTED, PREVAILING INTEREST RATES AND RATES OF INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY ALIC OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME. - -------------------------------------------------------------------------------- LLVL 75 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 76 LLVL - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LLVL 77 - -------------------------------------------------------------------------------- INCORPORATION BY REFERENCE The Registrant, ALIC Separate Account LLVL, Registration 33-86500 purchases or will purchase units from the portfolios of three funds at the direction of its policyholders. The prospectuses of these funds will be distributed with this prospectus and are hereby incorporated by reference. The prospectuses incorporated by reference are as follows: The Vanguard Variable Insurance Fund Registration No. 33-32216 Neuberger & Berman Advisers Management Trust Registration No. 2-88566 Berger Institutional Products Trust Registration No. 33-63493 UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore, or hereafter duly adopted pursuant to authority conferred in that section. Registrant makes the following representation pursuant to the National Securities Markets Improvements Act of 1996: Ameritas Life Insurance Corp. represents that the fees and charges deducted under the contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company. RULE 484 UNDERTAKING ALIC's By-laws provide as follows: The Company shall indemnify any person who was, or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he is or was a director, officer, or employee of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding to the full extent authorized by the laws of Nebraska. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling 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. REPRESENTATION PURSUANT TO RULE 6E-3(T) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Ameritas Life Insurance Corp. Separate Account LLVL, certifies that it meets all the requirements of effectiveness of this Post-Effective Amendment No. 4 to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized in the City of Lincoln, County of Lancaster, State of Nebraska on this 3rd day of April, 1998. AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA, Registrant AMERITAS LIFE INSURANCE CORP., Depositor Attest: /s/Norman M. Krivosha By: /s/Lawrence J. Arth ------------------------ ----------------------- Secretary Chairman of the Board Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the Directors and Principal Officers of Ameritas Life Insurance Corp. on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- /s/Lawrence J. Arth Director, Chairman of the Board April 3, 1998 - -------------------- and Chief Executive Officer Lawrence J. Arth /s/Kenneth C. Louis Director, President and April 3, 1998 - -------------------- Chief Operating Officer Kenneth C. Louis /s/Norman M. Krivosha Executive Vice President, Secretary April 3, 1998 - --------------------- and Corporate General Counsel Norman M. Krivosha /s/Jon C. Headrick Executive Vice President-Investments April 3, 1998 - ------------------- and Treasurer Jon C. Headrick /s/JoAnn M. Martin Senior Vice President-Controller April 3, 1998 - ------------------- and Chief Financial Officer JoAnn M. Martin /s/James P. Abel - ------------------- Director April 3, 1998 James P. Abel /s/Duane W. Acklie - --------------------- Director April 3, 1998 Duane W. Acklie /s/William W. Cook, Jr. - ----------------------- Director April 3, 1998 William W. Cook, Jr. SIGNATURE TITLE DATE --------- ----- ---- - ------------------ Director April 3, 1998 Bert A. Getz /s/James R. Knapp - ------------------- Director April 3, 1998 James R. Knapp /s/Robert F. Krohn - ------------------- Director April 3, 1998 Robert F. Krohn /s/Wilfred J. Maddux - -------------------- Director April 3, 1998 Wilfred J. Maddux /s/Paul C. Schoor, III - ---------------------- Director April 3, 1998 Paul C. Schorr, III /s/William C. Smith - -------------------- Director April 3, 1998 William C. Smith /s/Neal E. Tyner - ------------------ Director April 3, 1998 Neal E. Tyner - ------------------- Director April 3, 1998 Winston J. Wade SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Ameritas Life Insurance Corp. Separate Account LLVL, certifies that it meets all the requirements of effectiveness of this Post-Effective Amendment No. 4 to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized in the City of Lincoln, County of Lancaster, State of Nebraska on this 3rd day of April, 1998. AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA, Registrant AMERITAS LIFE INSURANCE CORP., Depositor Attest: By: ----------------------- ----------------------------- Secretary Chairman of the Board Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the Directors and Principal Officers of Ameritas Life Insurance Corp. on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- - -------------------- Director, Chairman of the Board April 3, 1998 Lawrence J. Arth and Chief Executive Officer - ------------------- Director, President and April 3, 1998 Kenneth C. Louis Chief Operating Officer - -------------------- Executive Vice President, Secretary April 3, 1998 Norman M. Krivosha and Corporate General Counsel - ------------------- Executive Vice President-Investments April 3, 1998 Jon C. Headrick and Treasurer - -------------------- Senior Vice President-Controller April 3, 1998 JoAnn M. Martin and Chief Financial Officer Director April 3, 1998 - ----------------- James P. Abel - -------------------- Director April 3, 1998 Duane W. Acklie - ---------------------- Director April 3, 1998 William W. Cook, Jr. SIGNATURE TITLE DATE --------- ----- ---- /s/Bert A. Getz - ----------------- Director April 3, 1998 Bert A. Getz - ------------------- Director April 3, 1998 James R. Knapp - ------------------- Director April 3, 1998 Robert F. Krohn - -------------------- Director April 3, 1998 Wilfred J. Maddux - --------------------- Director April 3, 1998 Paul C. Schorr, III - -------------------- Director April 3, 1998 William C. Smith - ------------------- Director April 3, 1998 Neal E. Tyner - ------------------- Director April 3, 1998 Winston J. Wade SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant, Ameritas Life Insurance Corp. Separate Account LLVL, certifies that it meets all the requirements of effectiveness of this Post-Effective Amendment No. 4 to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized in the City of Lincoln, County of Lancaster, State of Nebraska on this 3rd day of April, 1998. AMERITAS LIFE INSURANCE CORP. SEPARATE ACCOUNT LLVA, Registrant AMERITAS LIFE INSURANCE CORP., Depositor Attest: By: ----------------------- ----------------------------- Secretary Chairman of the Board Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the Directors and Principal Officers of Ameritas Life Insurance Corp. on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- - -------------------- Director, Chairman of the Board April 3, 1998 Lawrence J. Arth and Chief Executive Officer - ------------------- Director, President and April 3, 1998 Kenneth C. Louis Chief Operating Officer - -------------------- Executive Vice President, Secretary April 3, 1998 Norman M. Krivosha and Corporate General Counsel - ------------------- Executive Vice President-Investments April 3, 1998 Jon C. Headrick and Treasurer - -------------------- Senior Vice President-Controller April 3, 1998 JoAnn M. Martin and Chief Financial Officer - ------------------- Director April 3, 1998 James P. Abel - ------------------- Director April 3, 1998 Duane W. Acklie - ---------------------- Director April 3, 1998 William W. Cook, Jr. SIGNATURE TITLE DATE --------- ----- ---- - ----------------- Director April 3, 1998 Bert A. Getz - ------------------- Director April 3, 1998 James R. Knapp - ------------------- Director April 3, 1998 Robert F. Krohn - -------------------- Director April 3, 1998 Wilfred J. Maddux - --------------------- Director April 3, 1998 Paul C. Schorr, III - -------------------- Director April 3, 1998 William C. Smith - ------------------- Director April 3, 1998 Neal E. Tyner /s/Winston J. Wade - ------------------- Director April 3, 1998 Winston J. Wade CONTENTS OF REGISTRATION STATEMENT This Registration Statement comprises the following Papers and Documents: The facing sheet. The prospectus consisting of 75 pages. The undertaking to file reports. The undertaking pursuant to Rule 484. Representations pursuant to Rule 6e-3(T) and the National Securities Markets Improvements Act of 1996. The signatures. Written consents of the following: (a) Thomas P. McArdle (b) Norman M. Krivosha (c) Deloitte & Touche LLP Independent Auditors The following exhibits: 1. The following exhibits correspond to those required by paragraph A of the instructions as to exhibits in Form N-8B-2. (1) Resolution of the Board of Directors of ALIC authorizing establishment of the Separate Account. (2) Not applicable. (3) (a) Proposed form of Principal Underwriting Agreement. (b) Proposed form of Selling Agreement.* (c) Commission schedule.* (4) Not applicable. (5) (a) Form of Policy. (b) Form of Policy riders. (6) (a) Articles of Incorporation of ALIC. (b) Bylaws of ALIC.* (7) (a) Participation Agreement in the Vanguard Variable Insurance Fund.* (b) Participation Agreement in the Neuberger & Berman Advisers Management Trust.* (c) Participation Agreement (Berger IPT).** (9) Not applicable. (10) Application for Policy. (11) Memorandum describing ALIC's exchange procedure. (12) Memorandum describing ALIC's issuance, transfer, and redemption procedures for the Policy. 2. (a)(b)Opinion and Consent of Norman M. Krivosha, Executive Vice President, Secretary and Corporate General Counsel of Ameritas Life Insurance Corp. 3. No financial statements are omitted from the Prospectus pursuant to Instruction 1(b) or (c) of Part I. 4. Not applicable 5. See Financial Data Schedules. 7. (a)(b) Opinion and Consent of Thomas P. McArdle. 8. Consent of Deloitte & Touche LLP. 9. Form of Notice of Withdrawal Right and Refund pursuant to Rule 6e-3(T)(b)(13)(viii) under the Investment Company Act of 1940. 10. Actuary Opinion in Support of Exemptive Application * Incorporated by reference to the initial registration statement for Ameritas Life Insurance Corp.Separate Account LLVA (File No. 333-5529), filed on June 7, 1996. ** Incorporated by reference to the Pre-Effective Amendment No. 1 for the Ameritas Life Insurance Corp. Separate Account LLVA (File No. 333-5529), filed on October 3, 1996. EXHIBIT INDEX EXHIBIT PAGE 99.1.(1) Resolution of the Board of Directors of ALIC authorizing establishment of the Separate Account 99.1.(3)(a) Proposed form of Principal Underwriting Agreement 99.1.(5)(a) Form of Policy 99.1.(5)(b) Form of Policy riders 99.1.(6)(a) Articles of Incorporation of ALIC 99.1.(10) Application of Policy 99.1.(11) Memorandum describing ALIC's exchange procedure 99.1.(12) Memorandum describing ALIC's issuance, transfer, and redemption procedures for the Policy 99.2.(a)(b) Opinion and Consent of Norman M. Krivosha, Executive Vice President, Secretary and Corporate General Counsel of Ameritas Life Insurance Corp. 99.7.(a)(b) Opinion and Consent of Thomas P. McArdle. 99.8. Consent of Deloitte & Touche LLP. 99.9. Form of Notice of Withdrawl Right and Refund pursuant to Rule 6e-3(T)(b)(13)(viii)under the Investment Company Act of 1940. 99.10. Actuary Opinion in Support of Exemptive Application EX-99.1(1) 2 RESOLUTION OF THE BOARD OF DIRECTORS OF ALIC CERTIFICATION I Norman M. Krivosha, duly elected and qualified Secretary of Ameritas Life Insurance Corp., Lincoln, Nebraska, hereby certify that the attached resolution is a true and exact copy of a resolution adopted by the Executive Committee of Ameritas Life Insurance Corp., on August 24, 1994. I further certify that the attached resolution is in full force and effect. IN WITNESS WHEREOF, I have affixed my name as Secretary and have caused the corporate seal of said corporation to be hereunto affixed this 9 day of November, 1994. /s/ Norman M. Krivosha ---------------------- Secretary AMERITAS LIFE INSURANCE CORP. CORPORATE SEAL RESOLUTION #2 BE IT RESOLVED, that the Board of Directors of Ameritas Life Insurance Corp. ("Company"), pursuant to the provisions of Section 44-402.01 of the Nebraska Insurance Code, hereby establishes a separate account designated "Ameritas Life Insurance Corp. Separate Account LLVL" (hereinafter "Separate Account") for the following use and purposes, and subject to such conditions as hereinafter set forth: FURTHER RESOLVED, that Separate Account is established for the purpose of providing for the issuance by the Company of variable life insurance contracts, and shall constitute a separate account into which are allocated amounts paid to or held by the Company under such life insurance contracts; FURTHER RESOLVED, that the income, gains and losses, whether or not realized, from assets allocated to Separate Account shall, in accordance with the life insurance contracts, be credited to or charged against such account without regard to other income, gains, or losses of the company; and FURTHER RESOLVED, that Separate Account shall be divided into Investment Subdivisions, each Investment Subdivision in Separate Account shall invest in the shares of a designated mutual fund portfolio and net premiums under life insurance contracts shall be allocated to the eligible portfolios set forth in the life insurance contracts in accordance with instructions received from owners of the life insurance contracts; and FURTHER RESOLVED, that the Board of Directors expressly reserves the right to add or remove any Investment Subdivision of Separate Account as it may hereafter deem necessary or appropriate; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, be and they hereby are, severally authorized to invest such amount or amounts of the Company's cash in Separate Account or in any Investment Subdivision thereof as may be deemed necessary or appropriate to facilitate the commencement of Separate Account's operations and/or to meet any minimum capital requirements under the Investment Company Act of 1940; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, be, and they hereby are, severally authorized to transfer cash from time to time between the Company's general account and Separate Account as deemed necessary or appropriate and consistent with the terms of the life insurance contracts; and FURTHER RESOLVED, that the Board of Directors of the Company reserves the right to change the designation of Separate Account hereafter to such other designation as it may deem necessary or appropriate; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, with such assistance from the Company's independent certified public accountants, legal counsel and independent consultants or others as they may require, be and they hereby are, severally authorized and directed to take all action necessary to: (a) Register Separate Account as a unit investment trust under the Investment Company Act of 1940, as amended; (b) Register the life insurance contracts in such amounts, which may be an indefinite amount, as the said officers of the Company shall from time to time deem appropriate under the Securities Act of 1933; and (c) Take all other actions which are necessary in connection with the offering of said life insurance contracts for sale and the operation of Separate Account in order to comply with the Investment Company Act of 1940, the Securities Exchange Act of 1934, and the Securities Act of 1933, and other federal laws, including the filing of any amendments to registration statements, any undertakings, and any applications for exemptions from the Investment Company Act of 1940 or other applicable federal laws as the said officers of the Company shall deem necessary or appropriate; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, hereby are severally authorized and empowered to prepare, execute and cause to be filed with the Securities and Exchange Commission on behalf of Separate Account and by the Company as sponsor and depositor a Form of Notification of Registration Statement under the Securities Act of 1933 registering the life insurance contracts and any and all amendments to the foregoing on behalf of Separate Account and the Company and on behalf of and as attorneys-in-fact for the principal executive officer and/or the principal financial officer and/or the principal accounting officer and/or any other officer of the Company; and FURTHER RESOLVED, that Norman M. Krivosha, Secretary, is appointed as agent for service under any such registration statement, duly authorized to receive communications and notices from the Securities and Exchange Commission with respect thereto; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, hereby is severally authorized on behalf of Separate Account and on behalf of the Company to take any and all action that each of them may deem necessary or advisable in order to offer an sell the life insurance contracts, including any registrations, filings and qualifications both of the Company, its officers, agents and employees, and of the policies, under the insurance and securities laws of any of the states of the United States of America or other jurisdictions, and in connection therewith to prepare, execute, deliver and file all such applications, reports, covenants, resolutions, applications for exemptions, consents to service of process and other papers and instruments as may be required under such laws, and to take any and all further action which the said officers or legal counsel of the Company may deem necessary or desirable (including entering into whatever agreements and contracts may be necessary) in order to maintain such registrations or qualifications for as long as the said officer or legal counsel deem it to be in the best interests of Separate Account and the Company; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, be, and they hereby are, severally authorized in the names and on behalf of Separate Account and the Company to execute and file irrevocable written consents on the part of Separate Account and of the Company to be used in such states wherein such consents to service of process may be requisite under the insurance or securities laws therein in connection with said registration or qualification of the life insurance contracts and to appoint the appropriate state official, or such other person as may be allowed by said insurance or securities laws, agent of Separate Account and of the Company for the purpose of receiving and accepting process; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, be, and hereby is, severally authorized to establish procedures under which the Company will institute procedures for providing voting rights for owners of the life insurance contracts with respect to securities owned by Separate Account; and FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others, is hereby severally authorized to execute such agreement or agreements as deemed necessary and appropriate (i) with Ameritas Investment Corp. ("AIC") or other qualified entity under which AIC or such other entity will be appointed principal underwriter and distributor for the life insurance contracts and (ii) with one or more qualified banks or other qualified entities to provide administrative and/or custodial services in connection with the establishment and maintenance of Separate Account and the design, issuance, and administration of the life insurance contracts. FURTHER RESOLVED, that because Separate Account will invest solely in the securities issued by specific mutual fund corporations registered under the Investment Company Act of 1940, the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, without full power to act without the others, are hereby severally authorized to execute whatever agreements as may be necessary or appropriate to enable such investments to be made. FURTHER RESOLVED, that the Chairman of the Board, President, any Vice President, the Treasurer, the Secretary, or any Assistant Vice President, and each of them, with full power to act without the others are hereby severally authorized to execute and deliver such agreements and other documents and do such acts and things as each of them may deem necessary or desirable to carry out the foregoing resolutions and the intent and purposes thereof. EXECUTIVE COMMITTEE AUGUST 24, 1994 EX-99.1.(3)(A) 3 PROPOSED FORM OF PRINCIPAL UNDERWRITING AGREEMENT PRINCIPAL UNDERWRITING AGREEMENT UNDERWRITING AGREEMENT made this 1st day of November, 1995, by and ---- --------- -- between Ameritas Investment Corp., (hereinafter the "Underwriter") and Ameritas Life Insurance Corp. hereinafter the "Insurance Company"), on its own behalf and on behalf of Ameritas Life Insurance Corp. Separate Account LLVL (hereinafter the "Account"), separate account of the Insurance Company, as follows: WHEREAS, the Account was established under authority of resolution of the Insurance Company's Board of Directors on August 24, 1994, in order to set aside and invest assets attributable to certain flexible premium variable universal life contracts (hereinafter "Contracts") issued by the Insurance Company; WHEREAS, the Insurance Company has registered or will register the Account as a unit investment trust under the Investment Company Act of 1940 (the "Investment Company Act") and has registered or will register the Contracts under the Securities Act of 1933; WHEREAS, the Underwriter is registered as a broker-dealer with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, the Insurance Company and the Account desire to have Contracts sold and distributed through the Underwriter and the Underwriter is willing to sell and distribute such Contracts under the terms stated herein. NOW, THEREFORE, the parties hereto agree as follows: 1. The Insurance Company grants to the Underwriter the right to be, and the Underwriter agrees to serve as distributor and principal underwriter of the Contracts during the term of this Agreement. The Underwriter agrees to use its best efforts to solicit applications for the Contracts at its own expense, and otherwise to perform all duties and functions which are necessary and proper for the distribution of the Policies. 2. All premiums for Contracts shall be remitted promptly in full together with such application, forms, and any other required documentation to the Insurance Company. Checks or money orders in payment of premiums shall be drawn to the order of "Ameritas Life Insurance Corp.". 3. The Underwriter agrees to offer the Contracts for sale in accordance with the prospectuses in effect. The Underwriter is not authorized to give any information or to make any representations concerning the contracts other than those contained in the current prospectuses filed with the Securities and Exchange Commission or in such sales literature as may be developed and authorized by the Insurance Company in conjunction with the Underwriter. 4. On behalf of the Account, the Insurance Company shall furnish the Underwriter with copies of all prospectuses, financial statements and other documents which the Underwriter reasonably requests for use in connection with the distribution of the Contracts. 1 5. The Underwriter represents that it is duly registered as a broker-dealer under the 1934 Act and is a member in good standing of the NASD and, to the extent necessary to offer the Contracts, shall be duly registered or otherwise qualified under the securities laws and insurance laws of any state or other jurisdiction. The Underwriter shall be responsible for carrying out its sales and underwriting obligations hereunder in continued compliance with the NASD Rules of Fair Practice and federal and state securities laws and regulations. Without limiting the generality of the foregoing, the Underwriter agrees that it shall be fully responsible for: (a) ensuring that no person shall offer or sell the Contracts on its behalf until such person is duly registered as a representative of the Underwriter, duly licensed and appointed by the Insurance Company, and appropriately licensed, registered or otherwise qualified to offer and sell such Contracts under the federal securities laws and any applicable securities laws and insurance laws of each state or other jurisdiction in which such Contracts may be lawfully sold, in which the Insurance Company is licensed to sell the Contracts and in which such persons shall offer or sell the Contracts; and (b) training, supervising, and controlling all such persons for purposes of complying on a continuous basis with the NASD Rules of Fair Practice and with federal and state securities law requirements applicable in connection with the offer and sale of the Contracts. In this connection, the Underwriter shall: (1) conduct such training (including the preparation and utilization of training materials) as in the opinion of the Underwriter is necessary to accomplish the purposes of this Agreement; (2) establish and implement reasonable written procedures for supervision of sales practices of agents, representatives or brokers selling the Contracts; and (3) take reasonable steps to ensure that its associated persons shall not make recommendations to an applicant to purchase a Contract and shall not sell a Contract in the absence of reasonable grounds to believe that the purchase of the Contract is suitable for such applicant. 6. Notwithstanding anything in this Agreement to the contrary, the Underwriter is hereby authorized to enter into sales agreements with other independent broker-dealers for the sale of the Contracts. All such sales agreements entered into by the Underwriter shall provide that each independent broker- dealer will assume full responsibility for continued compliance by itself and its associated persons with the NASD Rules of Fair Practice and applicable federal and state securities laws. All associated persons of such independent broker-dealers soliciting applications for the Contracts shall be duly and appropriately licensed or appointed for the sale of the Contracts under the Federal and state securities laws and the insurance laws of the applicable states or jurisdictions in which such Contracts may be lawfully sold. 7. The Insurance Company shall apply for the proper insurance licenses in the appropriate states or jurisdictions for the designated persons associated with the Underwriter or with other independent broker-dealers which have entered into agreements with the Underwriter for the sale of the Contracts, provided that the Insurance Company reserves the right to refuse to appoint any proposed registered representative as an agent or broker, and to terminate an agent or broker once appointed. 2 8. The Insurance Company and the Underwriter shall cause to be maintained and preserved for the periods prescribed such accounts, books, and other documents as are required of them by the Investment Company Act of 1940, the 1934 Act, and any other applicable laws and regulations. The books, accounts and records of the Insurance Company, the Account, and the Underwriter as to all transactions hereunder shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. The Insurance Company shall maintain such books and records of the Underwriter pertaining to the sale of the Contracts and required by the 1934 Act as may be mutually agreed upon from time to time by the Insurance Company and the Underwriter; provided that such books and records shall be the property of the Underwriter, and shall at all times be subject to such reasonable periodic, special or other examination by the SEC and all other regulatory bodies having jurisdiction. The Insurance Company shall be responsible for sending all required confirmations on customer transactions in compliance with applicable regulations, as modified by any exemption or other relief obtained by the Insurance Company. The Underwriter shall cause the Insurance Company to be furnished with such reports as the Insurance Company may reasonably request for the purpose of meeting its reporting and recordkeeping requirements under the insurance laws of the State of Nebraska and any other applicable states or jurisdictions. 9. The Insurance Company shall have the responsibility for paying (i) all commissions or other fees to associated persons of the Underwriter which are due for the sale of the Contracts and (ii) any compensation to other independent broker-dealers and their associated persons due under the terms of any sales agreements between the Underwriter and such broker-dealers. Notwithstanding the preceding sentence, no associated person or broker-dealer shall have an interest in any deductions or other fees payable to the Underwriter pursuant to the terms of this Agreement. 10. The Insurance Company shall reimburse the Underwriter for all costs and expenses incurred by the Underwriter in furnishing the services, materials, and supplies required by the terms of this Agreement and may pay Underwriter a concession for sales of the policies as may be agreed by the parties from time to time. 11. The Insurance Company agrees to indemnify the Underwriter for any losses incurred as a result of any action taken or omitted by the Underwriter, or any of its officers, agents or employees, in performing their responsibilities under this Agreement in good faith and without willful misfeasance, gross negligence, or reckless disregard of such obligations. 12. (a) This Agreement may be terminated by either party hereto upon 60 days' written notice to the other party. (b) This Agreement may be terminated upon written notice of one party to the other party hereto in the event of bankruptcy or insolvency of the party to which notice is given. (c) This Agreement may be terminated at any time upon the mutual written consent of the parties thereto. (d) The Underwriter shall not assign or delegate its responsibilities under this Agreement without the written consent of the Insurance Company. (e) Upon termination of this Agreement, all authorizations, right and obligations shall cease except the obligations to settle accounts hereunder, including payments of premiums or contributions subsequently received for Contracts in 3 effect at the time of termination or issued pursuant to applications received by the Insurance Company prior to termination. 13. This Agreement is subject to and its terms are to be interpreted and construed in accordance with the provisions of the Investment Company Act and the 1934 Act, and the rules, regulations, and rulings thereunder and is subject to the provisions of the NASD Rules of Fair Practice. Without limiting the generality of the foregoing, the term "assigned" shall not include any transaction exempted from section 15(b)(2) of the Investment Company Act. The Underwriter shall submit to all regulatory and administrative entities having jurisdiction over the operations of the Accounts, present or future; and will provide any information, reports or other material which any such entity by reason of this Agreement may request or require pursuant to applicable laws or regulations. 14. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 15. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Nebraska. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed, and seals to be affixed, as of the day and year first above written. AMERITAS INVESTMENT CORP Attest: /s/Lori J. Streeter By: /s/Jon C. Headrick - -------------------- -------------------- AMERITAS LIFE INSURANCE CORP. Attest: /s/Lori J. Streeter By: /s/Norman M. Krivosha - -------------------- ----------------------- 4 EX-99.1.(5)(A) 4 FORM OF POLICY INSURED FIELD (1) POLICY NUMBER FIELD (3) POLICY TYPE LOW LOAD VARIABLE UNIVERSAL LIFE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY. NET CASH SURRENDER VALUE, IF ANY, PAYABLE AT MATURITY. DEATH BENEFIT PROCEEDS PAYABLE AT DEATH OF INSURED PRIOR TO MATURITY DATE. FLEXIBLE PREMIUMS PAYABLE DURING LIFETIME OF INSURED UNTIL MATURITY DATE (AGE 100). SOME BENEFITS REFLECT INVESTMENT RESULTS. NON-PARTICIPATING. THIS POLICY'S ACCUMULATION VALUE IN THE SEPARATE ACCOUNT IS BASED ON THE INVESTMENT EXPERIENCE OF THAT ACCOUNT, AND MAY INCREASE OR DECREASE DAILY. IT IS NOT GUARANTEED AS TO DOLLAR AMOUNT. SEE SECTION 7. THE AMOUNT OR THE DURATION OF THE DEATH BENEFIT (OR BOTH) MAY BE FIXED OR MAY VARY UNDER THE CONDITIONS DESCRIBED IN SECTIONS 9 AND 10. Ameritas Life Insurance Corp. agrees to pay the death benefit proceeds of this policy to the Beneficiary on receipt of satisfactory proof of death of the Insured while this policy is in force. /s/ Kenneth C. Louis /s/ Norman M. Krivosha President Secretary "NOTICE OF TEN-DAY RIGHT TO EXAMINE POLICY" YOU ARE URGED TO READ THIS POLICY CAREFULLY. IF, AFTER EXAMINATION, YOU ARE DISSATISFIED WITH IT FOR ANY REASON, YOU MAY RETURN IT TO THE SELLING AGENT OR TO AMERITAS LIFE INSURANCE CORP. AT ONE AMERITAS WAY, P.O. BOX 81889, LINCOLN, NEBRASKA 68501-1889, FOR A REFUND WITHIN (1) TEN DAYS FROM THE DATE OF DELIVERY OF THE POLICY, (2) TEN DAYS AFTER MAILING OR DELIVERY OF A CANCELLATION NOTICE, OR (3) FORTY-FIVE DAYS AFTER PART I OF THE APPLICATION IS SIGNED, WHICHEVER IS LATER. IF ALLOWED BY STATE LAW, THE AMOUNT OF THE REFUND WILL EQUAL THE GREATER OF THE PREMIUMS PAID OR THE PREMIUMS PAID ADJUSTED BY INVESTMENT GAINS AND LOSSES. OTHERWISE, THE AMOUNT OF THE REFUND WILL EQUAL THE GROSS PREMIUMS PAID. PLEASE READ AND CAREFULLY CHECK THE COPY OF THE APPLICATION ATTACHED TO THIS POLICY. THIS APPLICATION IS A PART OF YOUR POLICY AND THIS POLICY WAS ISSUED ON THE BASIS THAT THE ANSWERS TO ALL QUESTIONS AND THE INFORMATION SHOWN ON THIS APPLICATION ARE TRUE AND COMPLETE. IF ANY INFORMATION SHOWN ON IT IS NOT TRUE AND COMPLETE, TO THE BEST OF YOUR KNOWLEDGE, OR IF ANY PAST MEDICAL HISTORY HAS BEEN OMITTED, PLEASE NOTIFY AMERITAS LIFE INSURANCE CORP. OF LINCOLN, NEBRASKA, WITHIN TEN DAYS FROM THE DATE OF DELIVERY OF THE POLICY TO YOU. AMERITAS LIFE INSURANCE CORP. LOGO A STOCK COMPANY LINCOLN, NEBRASKA Form 4055 POLICY SCHEDULE Insured: John D Specimen Policy Number: 1103839710 Initial Specified Policy Date: October 1, 1997 Amount of Insurance: $100,000 *Planned Annual Issue Age - Sex: 35 Male Periodic Premium: $802.08 Owner: John D Specimen Initial Premium: $802.08 Initial Death Benefit Option is A, current specified amount. Guaranteed Death Benefit Premium For Policy $802.08 Minimum Initial Premium $69.00 Underwriting Class The Insured was a Nonsmoker when this policy was issued. The underwriting class is Standard. First Year Values The current annual cost of insurance rate per $1000 is $1.05. Loans The maximum loan interest rate is 6.00%. The interest credited on any loaned part of the values will be 3.50%. Modes of Payment for Planned Periodic Premiums: Annual Semi-Annual Quarterly Monthly $802.08 $401.04 $200.52 $66.84 * This reflects the planned premium and mode you selected at issue. For further information, see policy SECTION 3. PREMUIM PAYMENTS. Form 4055-1 SCHEDULE OF BENEFITS Insured: John D Specimen Policy Number: 1103839710 Initial Specified Amount Maturity or Benefit of Insurance Expiration Date* - ------- ------------ ---------------- Flexible Premium Variable $100,000 October 1, 2062 Life With Adjustable Death Benefit Form 4055** * NOTE: It is possible that coverage may not continue to the maturity date (age 100) if premium payments are not sufficient. Even if coverage continues to the maturity date, there may, in fact, be little or no net cash surrender value to be paid. ** Form number corresponds to form number in the lower left hand corner of each benefit description. Form 4055 1.1 SCHEDULE OF BENEFITS (Continued) Insured: John D Specimen Policy Number: 1103839710 Initial Specified Amount Annual Maturity or Benefit of Insurance Premium* Expiration Year - ------- ------------ -------- --------------- Cost Recovery Rider 2062 Form CRR 4094** Reduced Loan Interest Rate Rider 2062 Form PLR 4094** Accelerated Benefit Rider 2062 For Terminal Illness Form TIR 45** * For any rider, this is the annual rider cost of insurance at issue. (NOTE: These amounts shown are not additional premiums due but are the amounts deducted from the accumulation value.) See each rider for further information. ** Form number corresponds to form number in the lower left hand corner of each benefit description. Form 4055 1.2 LIST OF SUBACCOUNTS AND PORTFOLIOS Each subaccount of the Ameritas Life Insurance Company (ALIC) Separate Account LLVL invests in a specific portfolio of the following funds: Vanguard Variable Insurance Fund ("Vanguard") Neuberger & Berman Advisors Management Trust ("Neuberger & Berman AMT") Berger Institution Products Trust ("Berger IPT") INITIAL CORRESPONDING ALLOCATION OF FUND PORTFOLIO SUBACCOUNT NET PREMIUMS Vanguard Money Market Money Market Subaccount 0% High-Grade Bond High-Grade Bond Subaccount 0% High Yield Bond High Yield Bond Subaccount 0% Balanced Balanced Subaccount 50% Equity Income Equity Income Subaccount 0% Equity Index Equity Index Subaccount 50% Growth Growth Subaccount 0% Small Company Growth Small Company Growth Subaccount 0% International International Subaccount 0% Neuberger & Limited Maturity Bond Limited Maturity Bond Subaccount 0% Berman Balanced Balanced Subaccount 0% AMT Partners Partners Subaccount 0% Growth Growth Subaccount 0% Berger IPT 100 Fund 100 Fund Subaccount 0% Small Company Growth Fund Small Company Growth Fund Subaccount 0% Net premiums may also be allocated to the ALIC Fixed Account. INITIAL ALLOCATION OF NET PREMIUMS 0% ALIC Fixed Account Form 4055 1.3 SCHEDULE OF CHARGES ADMINISTRATIVE EXPENSE CHARGE: The maximum annual administrative expense charge is $108. PREMIUM CHARGES: The maximum percent of premium charge for premium taxes is 5% of premiums received. The current percent of premium charge for the first policy year is 3 1/2%. TRANSFER CHARGE: The first 15 transfers per year are free. Thereafter, there may be a $10 charge for each transfer. MAXIMUM PARTIAL WITHDRAWAL CHARGE: The maximum charge for each partial withdrawal is the lesser of $50 or 2% of amount withdrawn. The current charge in the first policy year is the lesser of $25 or 2% of the amount withdrawn. Form 4055 1.4 TABLE OF POLICY CHARGES ANNUAL BASIS Insured: John D Specimen Policy Number: 1103839710 Issue Age - Sex: 35 Male Policy Date: October 1, 1997 SCHEDULE OF GUARANTEED ANNUAL COST OF INSURANCE RATES* Policy Year Rate Per $1,000 Policy Year Rate Per $1,000 Beginning Of Amount Beginning Of Amount October 1 At Risk October 1 At Risk - ----------- --------------- ----------- --------------- 1995 $1.05 2028 $28.50 1996 $1.77 2029 $31.38 1997 $1.88 2030 $34.63 1998 $2.00 2031 $38.91 1999 $2.14 2032 $42.56 2000 $2.29 2033 $47.44 2001 $2.47 2034 $52.92 2002 $2.65 2035 $58.80 2003 $2.86 2036 $65.06 2004 $3.07 2037 $71.64 2005 $3.32 2038 $78.47 2006 $3.59 2039 $85.72 2007 $3.88 2040 $93.67 2008 $4.19 2041 $102.52 2009 $4.54 2042 $112.52 2010 $4.91 2043 $123.79 2011 $5.35 2044 $136.11 2012 $5.86 2045 $149.20 2013 $6.43 2046 $162.80 2014 $7.09 2047 $176.79 2015 $7.82 2048 $190.89 2016 $8.63 2049 $205.29 2017 $9.49 2050 $220.19 2018 $10.42 2051 $235.84 2019 $11.47 2052 $252.75 2020 $12.64 2053 $271.63 2021 $13.94 2054 $295.65 2022 $15.42 2055 $329.96 2023 $17.11 2056 $384.55 2024 $19.02 2057 $480.20 2025 $21.13 2058 $657.98 2026 $23.40 2059 $1,000.00 2027 $25.86 * The rates shown are annual rates per $1000 of insurance. To calculate the monthly rate, the annual rate is divided by 12 and rounded to the nearest five decimal places. These rates apply to the basic policy and do not include cost for riders. The rates shown have been adjusted if this policy was issued with a tabular and/or flat rating as shown on the schedule page. Form 4055 1.5 TABLE OF CONTENTS SCHEDULE PAGES SECTION 1. DEFINITIONS SECTION 2. GENERAL PROVISIONS 2.1 Meaning of In Force 2.2 When This Policy Terminates 2.3 The Policy and its Parts 2.4 Representations and Contestability 2.5 Misstatement of Age or Sex 2.6 Suicide 2.7 The Owner 2.8 The Beneficiary 2.9 Changing the Beneficiary 2.10 Assigning the Policy 2.11 Non-Participating SECTION 3. PREMIUM PAYMENTS 3.1 Initial Premium 3.2 Guaranteed Death Benefit Premium 3.3 Planned Periodic Premiums 3.4 Unscheduled Premiums 3.5 Premium Limits 3.6 Where to Pay Premiums 3.7 Premium Charges 3.8 Allocation of Net Premiums SECTION 4. GRACE PERIOD AND REINSTATEMENT 4.1 Grace Period 4.2 Continuation of Insurance 4.3 Reinstating the Policy SECTION 5. SEPARATE ACCOUNT 5.1 The Account 5.2 The Subaccounts 5.3 Valuation of Assets 5.4 Transfer Among Subaccounts 5.5 The Funds 5.6 Portfolio Changes SECTION 6. THE FIXED ACCOUNT 6.1 The Fixed Account 6.2 Transfers Among the Fixed Account and the Subaccounts FORM 4055-2 SECTION 7. ACCUMULATION VALUE 7.1 How Accumulation Value of the Policy is Determined 7.2 Accumulation Value of the Subaccounts 7.3 Net Asset Value 7.4 Subaccount Unit Value 7.5 Accumulation Value of the Fixed Account 7.6 Interest Credits 7.7 Administrative Expense Charge 7.8 Monthly Deduction 7.9 Cost of Insurance 7.10 Cost of Insurance Rates 7.11 Annual Report 7.12 Illustrative Reports SECTION 8. POLICY SURRENDER AND PARTIAL WITHDRAWAL 8.1 Surrender of the Policy 8.2 Net Cash Surrender Value 8.3 Partial Withdrawal 8.4 Postponement of Payments SECTION 9. DEATH BENEFIT 9.1 Death Benefit Proceeds 9.2 Interest on Proceeds 9.3 Death Benefit 9.4 Postponement of Payment SECTION 10. POLICY CHANGES AND EXCHANGE OF POLICY 10.1 Change in Death Benefit Options 10.2 Change in the Specified Amount 10.3 Decreasing the Specified Amount 10.4 Increasing the Specified Amount 10.5 Time Period for Exchange SECTION 11. LOAN BENEFITS 11.1 Making a Policy Loan 11.2 Interest 11.3 Other Borrowing Rules 11.4 Repaying a Policy Debt SECTION 12. PAYMENT OPTIONS 12.1 Payment Option Rules 12.2 Description of Options SECTION 13. NOTES ON OUR COMPUTATIONS 13.1 Basis of Computations 13.2 Methods of Computing Values TABLES OF SETTLEMENT OPTIONS SECTION 1. DEFINITIONS "ACCUMULATION VALUE" means the total amount of value held in your accounts at any time. It is equal to the total of the accumulation value held in the Account, the Fixed Account, and the accumulation value held in the general account which secures policy loans. "BENEFICIARY" means the person to whom the death benefit proceeds are payable upon the death of the Insured. The beneficiary is named by the Owner in the application. If changed, the beneficiary is as shown in the latest change filed and recorded with us. If no beneficiary survives the Insured, the Owner or the Owner's estate will be the beneficiary. The interest of any beneficiary is subject to that of any assignee. "DEATH BENEFIT" means the total amount of insurance coverage provided under the selected death benefit option of the policy. "DEATH BENEFIT PROCEEDS" means the proceeds payable to the beneficiary upon receipt by us of the satisfactory proof of the death of the Insured while the policy is in force. It is equal to: (1) the death benefit; plus (2) any additional life insurance proceeds provided by any riders; minus (3) any outstanding policy debt; minus (4) any overdue monthly deductions, including the deduction for the month of death. "GUARANTEED DEATH BENEFIT PREMIUM" is an optional premium amount shown on the policy schedule pages. If the owner makes cumulative premium payments, less any partial withdrawals or policy loans, equal to or greater than cumulative Guaranteed Death Benefit Premiums, we will guarantee that this policy remains in force on each monthly activity date during the first three policy years. See Section 3 for further discussion of the Guaranteed Death Benefit Premium, planned periodic premiums and your options for guaranteeing coverage in the first three policy years. "INITIAL PREMIUM" as shown on the schedule pages is the greater of the amount received with the application or the Minimum Initial Premium. "INSURED" means the person upon whose life the policy is issued. "ISSUE AGE" means the age at the Insured's nearest birthday on the policy date. "ISSUE DATE" means the date that all financial, contractual, and administrative requirements have been completed and processed. The issue date will be shown in a confirmation notice sent to you. "MATURITY DATE" means the date we pay any net cash surrender value, if the Insured is still living. This date is shown on the schedule pages. "MINIMUM INITIAL PREMIUM" as shown on the schedule pages is the minimum premium required to put this policy in force. "MONTHLY ACTIVITY DATE" means the same date in each succeeding month as the policy date except that whenever the monthly activity date falls on a date other than a valuation date, the monthly activity date will be deemed the next valuation date. "MONTHLY DEDUCTIONS" means the deductions taken from the Accumulation Value on the monthly activity date. These deductions are equal to: 1) the current cost of insurance charge; 2) the administrative expense charge; 3) any flat extra rating charge; and 4) rider charges. "NET CASH SURRENDER VALUE" means the accumulation value on any valuation date less any outstanding policy debt. "NET PREMIUM" means the premium paid less the percent of premium charges. "OUTSTANDING POLICY DEBT" means the sum of all unpaid policy loans and accrued interest on policy loans. "OWNER" means the owner of the policy, as designated in the application or as subsequently changed. If a policy has been absolutely assigned, the assignee is the Owner. A collateral assignee is not the Owner. See Section 2.7 for the rights and privileges of the Owner. Form 4055-3 "PERCENT OF PREMIUM CHARGE" is an amount deducted from each premium received to cover certain expenses. This charge is a percentage of the premium. The applicable percentage can be found in Section 3.7 of the policy. "PLANNED PERIODIC PREMIUM" means a selected scheduled premium of a level amount at a fixed interval. The initial planned periodic premium you selected is shown on the schedule page. See Section 3.3 of the policy. "POLICY DATE" means the effective date for all coverage provided in the application. The policy date is used to determine policy anniversary dates, policy years and monthly activity dates. Policy anniversaries are measured from the policy date. The policy date and the issue date will be the same unless: 1) an earlier policy date is specifically requested, or 2) the issue date will be later if additional premiums or application amendments are required at the time of delivery. "POLICY YEAR" means the period from one policy anniversary date until the next policy anniversary date. "SEC" means the Securities and Exchange Commission. "SATISFACTORY PROOF OF DEATH" means all of the following must be submitted: (1) A certified copy of the death certificate; (2) A Notice of Death Claim; (3) The Policy; and (4) Any other information that we may reasonably require to establish the validity of the claim. "SPECIFIED AMOUNT" means the minimum death benefit under the policy while the policy remains in force. The initial specified amount is shown on the schedule pages. Adjustments and changes to the specified amount can occur as discussed in Section 10. "SURRENDER" means this policy may be terminated before the maturity date during the Insured's life for its net cash surrender value. See Section 8 of the policy. "VALUATION DATE" is as of the close of trading of the New York Stock Exchange on each day on which the Exchange is open for trading. "YOU" AND "YOUR" refer to the Owner of this policy. The Insured may or may not be the Owner. "WE", "US" AND "OUR" refer to Ameritas Life Insurance Corp. Our Home Office means our administrative office at One Ameritas Way, P.O. Box 81889, Lincoln, Nebraska 68501-1889. SECTION 2. GENERAL PROVISIONS 2.1 MEANING OF IN FORCE The policy will remain in force as long as on each monthly activity date the net cash surrender value is sufficient to cover monthly deductions. However, this policy will remain in force during the first three policy years, even if the net cash surrender value is insufficient to cover monthly deductions, if cumulative premiums paid, less any partial withdrawals or policy loans, equal or exceed cumulative Guaranteed Death Benefit Premiums. 2.2 WHEN THIS POLICY TERMINATES This policy will terminate on the earliest of: (1) Any monthly activity date when the net cash surrender value is insufficient to cover monthly deductions and the grace period ends without sufficient premium being paid. However, if this occurs during the first three policy years and cumulative premiums paid, less any partial withdrawals or policy loans, equal or exceed cumulative Guaranteed Death Benefit Premiums, then the policy will not terminate; (2) The Insured dies; (3) You request the coverage be terminated and you return this policy; or (4) This policy matures. 2.3 THE POLICY AND ITS PARTS This policy is a legal contract between you and us. It is issued in return for the application and payment in advance of the initial premium as described in Section 3.1. The policy, application, any supplemental applications, riders, endorsements, and amendments are the entire contract. No change in this policy will be valid unless it is in writing, attached to this policy, and approved by either the president or secretary of the company. No agent may change this policy or waive any of its provisions. 2.4 REPRESENTATIONS AND CONTESTABILITY We rely on statements made in the application. In the absence of fraud, they are considered representations and not warranties. We can contest this policy for any material misrepresentation of fact. The misrepresentation must have been made in the application attached to the policy when issued or in a supplemental application made a part of the policy when a change in coverage went into effect. We cannot contest this policy after it has been in force during the Insured's life for two years from the policy date. Nor can we contest any increased benefits later than two years after the effective date of the increased benefits during the Insured's life. Any increase or reinstatement will be contestable, within the two year period, only with regard to statements made in the supplemental application. This provision does not apply to riders with their own contestability provision. 2.5 MISSTATEMENT OF AGE OR SEX If the age or sex of the Insured or any person insured by rider has been misstated on the application, the death benefit and any additional benefits provided will be those which would be purchased by the most recent deduction for the cost of insurance and the cost of any additional benefits at the Insured person's correct age or sex. 2.6 SUICIDE If the Insured commits suicide while sane or insane, within two years from the policy date, we will limit the proceeds. The limited amount will equal all premiums paid for this policy, less outstanding policy debt, partial withdrawals, and the cost for riders. If the Insured commits suicide, while sane or insane, within two years from the effective date of any increase in the specified amount, we will limit the proceeds payable with respect to the increase. The proceeds thus limited will equal the total cost of insurance applicable to the increase. 2.7 THE OWNER While the Insured is living you have all the benefits, rights and privileges under this policy. These include naming a successor owner, changing the beneficiary, assigning this policy, enjoying all policy benefits, and exercising all policy options. If you are not the Insured, you should name a successor-owner who will become the Owner if you die before the Insured. If you die before the Insured and there is no successor-owner, ownership will pass to your estate. 2.8 THE BENEFICIARY You can name primary and contingent beneficiaries. Your original beneficiary choice is shown in the attached application. Unless a payment plan is chosen, the proceeds payable at the Insured's death will be paid in a lump sum to the primary beneficiary. If the primary beneficiary dies before the Insured, the proceeds will be paid to the contingent beneficiary. If no beneficiary survives the Insured, the proceeds will be paid to your estate. 2.9 CHANGING THE BENEFICIARY You may change the beneficiary during the Insured's lifetime. We do not limit the number of changes that may be made. To make the change, we must receive a completed Change of Beneficiary form and Form 4055-4 any other forms required by the Home Office. The change will take effect as of the date we record it at the Home Office, even if the Insured dies before we do so. Each change will be subject to any payment we made or any other action we took before the change is recorded. 2.10 ASSIGNING THE POLICY You may assign this policy. For an assignment to bind us, we must receive a signed copy in the Home Office. We are not responsible for the validity of any assignment. An assignment is subject to any policy debt. Policy debt is discussed in Section 11. 2.11 NON-PARTICIPATING This policy is non-participating. In other words, no dividends will be paid under this policy. SECTION 3. PREMIUM PAYMENTS 3.1 INITIAL PREMIUM An initial premium at least equal to the Minimum Initial Premium must be paid on or before delivery of the policy. The initial premium shown on the schedule pages is the greater of the amount received with the application or the Minimum Initial Premium. 3.2 GUARANTEED DEATH BENEFIT PREMIUM You have the option to pay a planned premium based on the annual Guaranteed Death Benefit Premium. This premium is shown on the schedule pages. During the first three policy years, if cumulative premiums paid, less any partial withdrawals or policy loans, equal or exceed cumulative Guaranteed Death Benefit Premiums, then this policy will not terminate even if the net cash surrender value is insufficient to cover monthly deductions. This guarantee option is only available during the first three policy years. See Sections 2.1 and 2.2. 3.3 PLANNED PERIODIC PREMIUM This is a flexible premium policy. You may choose to pay planned periodic premiums, and as indicated in Section 3.2, you may elect to base your planned periodic premiums on the Guaranteed Death Benefit Premium. However, planned periodic premiums are not required. The amount and frequency of the planned periodic premiums you selected when the policy was issued is shown on the schedule pages. You can change the frequency of the payments or the amount by sending a written request to the Home Office. Premiums may not be paid after the maturity date. We reserve the right to limit the amount and frequency of the planned periodic premiums you choose to pay. 3.4 UNSCHEDULED PREMIUMS Any premium we receive under this policy in an amount different from the planned periodic premiums will be considered an unscheduled premium. Unscheduled premiums can be made at any time while the policy is in force. 3.5 PREMIUM LIMITS We reserve the right to limit the amount and frequency of premium payments. We will not accept that portion of a premium payment which affects the tax qualifications of this policy as described in Section 7702 of the Internal Revenue Code, as amended. This excess amount will be returned to you. 3.6 WHERE TO PAY PREMIUMS Each premium after the first one is payable at our Home Office. Upon request, a receipt signed by our Secretary or an Assistant Secretary will be given for any premium payment. 3.7 PREMIUM CHARGES The percent of premium charge is deducted from each premium payment received. The percent of premium charge is a maximum of 5%. We have the option of charging the current percent of premium charge which can be less than the maximum. The premium charge will be shown in the annual report. 3.8 ALLOCATION OF NET PREMIUMS As of the issue date, net premiums then received will be allocated to a money market Subaccount. As of the 13th day after the issue date, the accumulation value will be allocated to the Subaccounts or to the Fixed Account which you have selected on the application. Any additional premium received will be allocated in accordance with your instructions. You may change the allocation of later premiums without charge. The allocation will apply to future premiums after we receive the change. The Subaccounts and the Fixed Account are discussed in Sections 5 and 6. SECTION 4. GRACE PERIOD AND REINSTATEMENT 4.1 GRACE PERIOD If the net cash surrender value on any monthly activity date is not sufficient to cover monthly deductions, a grace period of 61 days will be allowed for the payment of a premium sufficient to cover these deductions. However, if this occurs during the first three policy years and you have paid cumulative premiums, less any partial withdrawals or policy loans, equal to or in excess of cumulative Guaranteed Death Benefit Premiums as defined in Section 3.2, this policy will remain in force as long as you continue to meet the Guaranteed Death Benefit Premium requirement. The 61 day grace period will begin on the day we mail a notice of the necessary premium. We will mail this notice to you at your last known address and to any assignee of record. If sufficient premium is not paid by the end of the grace period, this policy will terminate without value. If the Insured dies during the grace period, the overdue monthly deductions will be deducted from the death proceeds. 4.2 CONTINUATION OF INSURANCE Insurance coverage under this policy and any benefits provided by any rider(s) will be continued through the grace period. 4.3 REINSTATING THE POLICY If the Insured is living and application is made within three years from the beginning of any grace period, this policy can be considered for reinstatement if it terminated because a grace period ended without sufficient premium being paid. To apply for reinstatement, you must send evidence satisfactory to us that the Insured is insurable. The effective date of the reinstatement will be the first monthly activity date on or next following the date the application for reinstatement is approved. Reinstatement will require you to pay a premium at least equal to three times the current month's monthly deductions. However, we will accept a larger premium. If reinstatement occurs during the first three policy years, you may pay a premium equal to the monthly prorata portion of the Guaranteed Death Benefit Premium that would have been due if the policy had not lapsed in order to continue to meet the Guaranteed Death Benefit Premium requirement. This policy cannot be reinstated if it has been surrendered for its net cash surrender value, nor can it be reinstated after the maturity date. Any policy debt will be reinstated. Form 4055-5 SECTION 5. SEPARATE ACCOUNT 5.1 THE ACCOUNT The word Account, where we use it in this policy without qualification, means the Ameritas Life Insurance Corp. Separate Account LLVL. This is a unit investment trust registered with the SEC under the Investment Company Act of 1940. It is also subject to the laws of Nebraska. We own the assets of the Account and keep them separate from the assets of our general account. The Account is used only to fund the variable benefits provided under this policy and any other variable life policies supported by the Account. The assets of the Account will be available to cover the liabilities of our general account only to the extent that the assets of the Account exceed the liabilities of the Account arising under the variable life policies supported by the Account. 5.2 THE SUBACCOUNTS The Account has several Subaccounts. We list them in the schedule pages. You determine, using percentages, how the net premium will be allocated among the Subaccounts. You may choose to allocate nothing to a particular Subaccount, but any allocation you make must be at least 10%. You may not choose a fractional percent. The allocations to the Subaccounts along with allocations to the Fixed Account must total 100%. The assets of each Subaccount will be used to buy shares in a corresponding portfolio of the funding vehicles designated in the policy schedule pages. (See "The Funds" below.) Income and realized and unrealized gains or losses from the assets of each Subaccount of the Account are credited to or charged against that Subaccount without regard to income, gains or losses in the other Subaccounts of the Account, our general account or any other separate accounts. 5.3 VALUATION OF ASSETS We will determine the value of the assets of each Subaccount at the end of each valuation date. 5.4 TRANSFER AMONG SUBACCOUNTS You may transfer amounts among Subaccounts as often as you wish in a policy year. The transfer will take effect on the later of the date designated in the request or on the valuation date following receipt of the written request at our Home Office. Each transfer must be for a minimum of $250 or the balance in the Subaccount, if less. The first 15 transfers per policy year will be allowed free of charge. Thereafter, a $10.00 transfer charge may be deducted from the accumulation value. The minimum amount which can remain in a Subaccount or in the Fixed Account as a result of a transfer is $100.00. Any amount below this minimum must be included in the amount transferred. 5.5 THE FUNDS The word Funds, where we use it in this policy without qualification, means the funding vehicles designated in the policy schedule pages. The Funds are registered with the SEC under the Investment Company Act of 1940 as diversified open-end management investment companies. The Funds bear their own expenses. The Funds have several portfolios; there is a portfolio that corresponds to each of the Subaccounts of the Account. We list these portfolios in the schedule pages. 5.6 PORTFOLIO CHANGES A portfolio of the Funds might, in our judgement, become unsuitable for investment by a Subaccount. This might happen because of a change in investment policy, because of a change in laws or regulations, because the shares are no longer available for investment, or for some other reason. If that occurs, we have the right to substitute another portfolio of the Funds, or to invest in another fund. But we would first notify and receive approval from the SEC and the Nebraska Insurance Department. This approval process is on file with the insurance commissioner of the state where this policy is delivered. If the SEC requires that such action receive approval from a majority of the policyholders in the Account, then you will be notified of your right to vote. You will be notified of any material change in the investment policy of any portfolio in which you have an interest. If you are dissatisfied with any change, you always have the option to transfer all or a portion of your accumulation value to the Fixed Account (See Section 6.2) or to one of the other available Subaccounts (See Section 5.4). SECTION 6. THE FIXED ACCOUNT 6.1 THE FIXED ACCOUNT Net premiums allocated to and transfers to the Fixed Account under the policy become part of the general account assets of Ameritas Life Insurance Corp. which support annuity and insurance obligations. The Fixed Account includes all of Ameritas Life Insurance Corp.'s assets, except those assets segregated in separate accounts. Ameritas Life Insurance Corp. maintains the sole discretion to invest the assets of the Fixed Account, subject to applicable law. You determine, using percentages, how the premium will be allocated to the Fixed Account. You may choose to allocate nothing to the Fixed Account. The minimum allocation must be at least 10%; you may not choose a fractional percentage. The allocations to the Fixed Account along with allocations to the Subaccounts must total 100%. 6.2 TRANSFERS AMONG THE FIXED ACCOUNT AND THE SUBACCOUNTS You may transfer into the Fixed Account from the Subaccounts at any time during the policy year. You may make one transfer out of the Fixed Account to any of the other Subaccounts only during the 30 day period following each policy anniversary. ---- The allowable transfer amount out of the Fixed Account is limited to the greater of: 1. 25% of the Fixed Account Balance; or 2. any Fixed Account transfer which occurred during the prior 13 months; or 3. $1,000. Transfers into or from the Fixed Account will be subject to the same transfer charges and minimums that are applied to transfers among the Subaccounts. See Section 5.4. SECTION 7. ACCUMULATION VALUE 7.1 HOW ACCUMULATION VALUE OF THE POLICY IS DETERMINED The accumulation value of the policy on the issue date is: a. The net premiums received by us on or before the issue date; minus b. Any monthly deductions due on or before the issue date. The accumulation value of this policy on a valuation date is equal to the total of the values in each Subaccount and the Fixed Account, plus the accumulation value impaired by policy debt which is held in the general account, plus any net premium received on that valuation date but not yet allocated. 7.2 ACCUMULATION VALUE OF THE SUBACCOUNTS To compute the accumulation value held in the Subaccounts on any valuation date, we multiply each Subaccount's unit value (defined in Section 7.4 below) by the number of Subaccount units allocated to the policy. The number of Subaccount units will increase when: a. Net premiums are credited to that Subaccount; b. Transfers from other Subaccounts are credited to that Subaccount; or c. Policy debt (principal or interest) is repaid, or interest is credited from the amount held in the general account to secure the policy debt. Form 4055-6 The number of Subaccount units will decrease when: a. A policy loan is taken from that Subaccount; b. A partial withdrawal, and its charge, is taken from that Subaccount; c. A portion of the monthly deduction is taken from that Subaccount; d. A transfer, and its charge, is made from that Subaccount to other Subaccounts; or e. Policy loan interest not paid when due is taken from that Subaccount. Each transaction above will increase or decrease the number of Subaccount units allocated to the policy by an amount equal to the dollar value of the transaction divided by the current unit value. 7.3 NET ASSET VALUE The net asset value of the shares of each portfolio of the Fund is determined once daily as of the close of business of the New York Stock Exchange on days when the Exchange is open for business. The net asset value is determined by adding the values of all securities and other assets of the portfolio, subtracting liabilities and expenses and dividing by the number of outstanding shares of the portfolio. Expenses, including the investment advisory fee payable to the Investment Advisor, are accrued daily. 7.4 SUBACCOUNT UNIT VALUE For each Subaccount, the value of an accumulation unit (unit value) was set when the Subaccount was established. These initial unit values can be found in the schedule pages. The unit value of each Subaccount reflects the investment performance of that Subaccount. The unit value may increase or decrease from one valuation date to the next. The unit value of each Subaccount on any valuation date shall be calculated as follows: a. The per share net asset value of the corresponding Fund portfolio on the valuation date times the number of shares held by the Subaccount, before the purchase or redemption of any shares on that date; minus b. A charge not exceeding an annual rate of .90% times the value of the assets of each subaccount on the valuation date for mortality and expense risk; divided by c. The total number of units held in the Subaccount on the valuation date before the purchase or redemption of any units on that date. When transactions are made, the actual dollar amounts are converted to accumulation units. The number of accumulation units for a transaction is found by dividing the dollar amount of the transaction by the current unit value. 7.5 ACCUMULATION VALUE OF THE FIXED ACCOUNT The accumulation value of the Fixed Account on a valuation date is equal to: a. The net premiums credited to the Fixed Account; plus b. Any transfers from the Subaccounts credited to the Fixed Account; plus c. Any policy debt (principal or interest) repaid, or interest credited from the amount held in the general account to secure the policy debt; minus d. Any policy loan taken from the Fixed Account; minus e. Any partial withdrawal and its charge taken from the Fixed Account; minus f. The portion of the monthly deduction taken from the Fixed Account; minus g. Any transfer and its charge made from the Fixed Account; minus h. Any policy loan interest not paid when due taken from the Fixed Account; plus i. Interest credits. 7.6 INTEREST CREDITS We guarantee that the accumulation value in the Fixed Account will be credited with an effective annual interest rate of at least 3.5%. We may, at our discretion, credit a higher current rate of interest. 7.7 ADMINISTRATIVE EXPENSE CHARGE On each monthly activity date, one-twelfth of an annual charge called the administrative expense charge will be deducted from the accumulation value. The guaranteed maximum amount we can charge is $108 per policy for each policy year. This charge is guaranteed. We have the option of charging current administrative expense charges, which can be less than the guaranteed, and will be stated in the annual report. We will charge the guaranteed amount during the first 12 policy months following an increase in the specified amount. 7.8 MONTHLY DEDUCTION The monthly deduction is a charge made each policy month against the accumulation value allocated to the Account and to the Fixed Account. Monthly deductions will be deducted from the Subaccounts and the Fixed Account in the same proportion as the balances held in the Subaccounts and the Fixed Account. The monthly deduction is equal to: a. The administrative expense charge; plus b. The cost of insurance for the current policy month, including the cost for any riders; plus c. One-twelfth of any flat extra rating charge. Refer to the "Table of Policy Charges" and the "Schedule of Charges" in the schedule pages for further details. 7.9 COST OF INSURANCE The cost of insurance will be figured each month. It is the cost for this policy (including any increases in the specified amount) plus the cost for any riders. The cost for this policy is equal to: a. the death benefit on the monthly activity date, discounted at the guaranteed rate of interest for the Fixed Account for one month; less b. the accumulation value on the monthly activity date, after all monthly deductions have been taken except for the cost of insurance; c. the above result multiplied by the monthly cost per $1,000 of insurance (as described below in the Cost of Insurance Rates section); divided d. by $1,000. The charge made during the policy year will be shown on the annual report. 7.10 COST OF INSURANCE RATES For the initial specified amount, the cost of insurance rates will not exceed those shown in the column of guaranteed cost of insurance rates. These annual rates are shown in the "Table of Policy Charges" in the schedule pages. To calculate the monthly rates, divide by 12 and round to the nearest five decimal places. Each year, the annual cost of insurance rates will be declared for the next policy year. These rates will be based on the issue age, specified amount, policy year, and sex of the Insured. The rate will vary by the Insured's underwriting class. Insureds will be considered smokers on the policy anniversary nearest the Insured's 20th birthday and charged smoker cost of insurance rates. Prior to reaching this anniversary, the Insured will be sent a notification and forms to be completed and returned to the Home Office providing evidence of a non-smoker status. If the Insured cannot qualify as a non-smoker or fails to return the forms giving evidence of a non-smoker status, then that Insured will continue to be charged current smoker rates. If the policy is rated at issue with extra premiums, the guaranteed rates shown are a multiple of the guaranteed rates for a standard issue. This multiple factor is shown on the schedule page. The cost of insurance rate for the first policy year is shown on the schedule page. Any change in the cost of insurance rates will apply to all policies having the same issue age, specified amount, policy year, sex, plan, issue month, classification and guaranteed cost of insurance rates as this policy. 7.11 ANNUAL REPORT Each year the Owner will be mailed an annual report that shows the progress of the policy. This report will show for the last policy year: a. premiums paid; b. expense charges; c. interest credits; and d. cost of insurance. As of the date of the report, the following values will be shown: a. accumulation value; b. specified amount of insurance; c. death benefit; and d. outstanding debt, if any. 7.12 ILLUSTRATIVE REPORTS The Owner may request a report illustrating future values of the policy under both guaranteed and current assumptions. A reasonable fee not to exceed $50 may be charged for this report. SECTION 8. POLICY SURRENDER AND PARTIAL WITHDRAWALS 8.1 SURRENDER OF THE POLICY The policy may be surrendered before the maturity date at any time during the Insured's life for its net cash surrender value. 8.2 NET CASH SURRENDER VALUE The amount payable upon surrender is the accumulation value on the valuation date we receive your written request, less any outstanding policy debt. The net cash surrender value is payable in one lump sum or under one of the payment options. See Section 12. 8.3 PARTIAL WITHDRAWAL A partial withdrawal of this policy may be made after the first three months for any amount of at least $500 subject to the following rules: a. The net cash surrender value remaining after a partial withdrawal must be at least $1,000 or an amount sufficient to maintain the policy in force for the remainder of the policy year. b. A partial withdrawal is irrevocable. c. Request must be made to us in writing on a form approved by us. d. A partial withdrawal will not be allowed if the resulting specified amount after the withdrawal is less than $100,000 in the first three years and $75,000 thereafter. e. A withdrawal charge will be deducted from the amount withdrawn. The charge will not exceed the lesser of $50 and 2% of the amount withdrawn. f. Only one withdrawal is permitted per policy year. Partial withdrawals will affect other policy values. The accumulation value will be reduced by the amount of the partial withdrawal. If Death Benefit Option A is in effect on the date of a partial withdrawal, the specified amount will also be reduced by the amount of the partial withdrawal. These reductions will also reduce the death benefits. See Section 9. You may tell us how to allocate the partial withdrawal among the Subaccounts and the Fixed Account, provided that the minimum amount remaining in a Subaccount and the Fixed Account as a result of the allocation is $100. If you do not, or if there is not enough value in any Subaccount or the Fixed Account, the partial withdrawal will be allocated among the Subaccounts and the Fixed Account in the same proportion that the policy's accumulation value in each Subaccount and the Fixed Account bears to the total accumulation value in all Subaccounts and the Fixed Account on the date we receive the request in our Home Office. 8.4 POSTPONEMENT OF PAYMENTS We will usually pay any amounts payable from the Subaccounts as a result of surrender, partial withdrawals, or policy loans within seven (7) days after we receive written request in our Home Office in a form satisfactory to us. We can postpone such payments or any transfers of amounts between Subaccounts if: a. The New York Stock Exchange is closed other than customary weekend and holiday closings or trading on the New York Stock Exchange is restricted as determined by the SEC; or b. The SEC by order permits the postponement for the protection of policyowners; or c. An emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonable, practicable, or it is not reasonable or practicable to determine the value of the net assets of the Account. We may defer the payment of a full surrender, partial withdrawals or policy loans from the Fixed Account for up to six months from the date we receive your written request. SECTION 9. DEATH BENEFIT 9.1 DEATH BENEFIT PROCEEDS The death benefit proceeds payable to the beneficiary upon our receipt of satisfactory proof of the death of the Insured while this policy is in force will equal: a. The death benefit; plus b. Any additional life insurance proceeds provided by any rider; minus c. Any outstanding policy debt; minus d. Any overdue monthly deductions including the deduction for the month of death. 9.2 INTEREST ON PROCEEDS Death benefit proceeds that are paid in one lump sum will include interest at a rate of 3% per annum (or higher if required by state law) from the date of death to the date of payment. 9.3 DEATH BENEFIT Subject to the provisions of this policy, the death benefit at any time prior to the maturity date shall be either Option A or Option B. Option A: Basic Coverage The death benefit will be the greater of: a. The current specified amount; or b. A percentage of the accumulation value on the date of death, where the applicable percentage is determined from the table shown below. Option B: Basic Coverage Plus Accumulation Value The death benefit will be the greater of: a. The current specified amount plus the accumulation value on the date of death; or b. A percentage of the accumulation value on the date of death, where the applicable percentage is determined from the table shown below. Insured's Applicable Insured's Applicable Age* Percentage Age* Percentage - --------- ---------- --------- ---------- 40 or less 250% 51 178% 41 243 52 171 42 236 53 164 43 229 54 157 44 222 55 150 45 215 56 146 46 209 57 142 47 203 58 138 48 197 59 134 49 191 60 130 50 185 61 128 (CONTINUED AT TOP OF NEXT COLUMN) Insured's Applicable Insured's Applicable Age* Percentage Age* Percentage - --------- ---------- ------ ---------- 62 126 72 111 63 124 73 109 64 122 74 107 65 120 75-90 105 66 119 91 104 67 118 92 103 68 117 93 102 69 116 94 101 70 115 95-100 100 71 113 *Insured's Age means the attained age at the beginning of the policy year. The initial death benefit option is shown in the schedule pages. It may be changed as described in Section 10.1. 9.4 POSTPONEMENT OF PAYMENT We will usually pay any death benefit proceeds within seven (7) days after we receive satisfactory proof of death. SECTION 10. POLICY CHANGES AND EXCHANGE OF POLICY 10.1 CHANGE IN DEATH BENEFIT OPTIONS You may change the death benefit option which is shown on the schedule pages and is referred to in Section 9. The death benefit option may not be changed in the first policy year and may only be changed once a year thereafter. The change will become effective on the first monthly activity date on or next following the date we approve your requested change. A change from Option A to Option B will require satisfactory evidence of insurability. If you change from Option A to Option B, the death benefit after the change will equal the specified amount prior to the change, plus the accumulation account as of the date of change. A change from Option B to Option A will change the specified amount to an amount equal to the death benefit as of the date of change. 10.2 CHANGE IN THE SPECIFIED AMOUNT After the policy has been in effect for one year, you can increase or decrease the specified amount. To make a change, send a written request to our Home Office. Any change will be effective on the monthly activity date on or next following the date we approve the request, unless you specify a later date. You may only change the specified amount once a year. 10.3 DECREASING THE SPECIFIED AMOUNT A decrease in the specified amount is subject to the following conditions: a. A decrease may not be made during the first policy year nor during the first 12 policy months following an increase in specified amount. b. The specified amount in effect after any decrease may not be less than $100,000 in the first three policy years and $75,000 thereafter. c. The resulting specified amount after a decrease may not affect the tax qualifications of this policy as described in Section 7702 of the Internal Revenue Code, as amended. A decrease in the specified amount will reduce the specified amount in the following order: a. The specified amount provided by the most recent increase; b. the next most recent increases successively; and c. the initial specified amount. 10.4 INCREASING THE SPECIFIED AMOUNT Any increase of the specified amount is subject to the following conditions: a. An increase may not be made in the first policy year. b. A supplemental application for the increase and satisfactory evidence of insurability of the Insured must be received. c. The minimum amount of any increase is $25,000. d. An increase cannot be made if the Insured's age nearest birthday is over 80. e. If an increase occurs during the second or third policy years, the Guaranteed Death Benefit Premium for the policy will be recalculated for future periods based on the current specified amount. f. At the time of the increase, the accumulation value less any outstanding policy debt must be at least equal to 12 times the current month's monthly deduction reflecting the increase in specified amount. If this value is not sufficient to support these monthly deductions for at least one year beyond the effective date of the increase, additional premiums may be required. You will be notified of any additional premium due. 10.5 TIME PERIOD FOR EXCHANGE You may exchange this policy while it is in force for a new policy on the life of the Insured, without new evidence of insurability, at any time within 24 months of the policy date shown in the schedule pages. The new policy will be issued on the following basis: 1. The policy date, issue age, specified amount, and risk class of the Insured will be the same as for this policy. 2. It will be a flexible premium adjustable life insurance policy available for exchange issued by Ameritas Life Insurance Corp. on the exchange date. 3. The policy provisions and applicable charges for the new policy and its riders will be the same as those which would have applied had the policy been issued originally. 4. Any outstanding policy debt must be repaid. 5. It will be subject to: -any assignments; -any partial withdrawals; -any accumulation value adjustment required; and -any cost or credit of exchange. To make the change, you must send this policy, a completed application for exchange, and any required payment to our Home Office. The change will be effective on the valuation date when all financial and contractual arrangements for the new policy have been completed. Form 4055-9 SECTION 11. LOAN BENEFITS This policy has loan benefits that are described below. The amount of outstanding loans plus accrued interest is called outstanding policy debt. Any outstanding policy debt will be deducted from proceeds payable at the Insured's death, on maturity, or on surrender. 11.1 MAKING A POLICY LOAN After the first policy anniversary, you may obtain a policy loan from us. This policy is the only security required. The maximum available loan amount is equal to the net cash surrender value at the time of the loan less the guaranteed monthly deductions remaining for the balance of the policy year, less interest on the policy debt including the requested loan to the next policy anniversary date. 11.2 INTEREST The maximum interest rate on any loan is 6% per year. We have the option of charging less. It accrues daily and becomes a part of the policy debt. Interest payments are due on each anniversary date. If interest is not paid when due, it will be added to the policy debt and will bear interest at the rate charged on the loan. 11.3 OTHER BORROWING RULES When a policy loan is made, or when interest is not paid when due, an amount sufficient to secure the policy debt is transferred out of the Account and the Fixed Account and into our general account. You may tell us how to allocate that accumulation value among the Subaccounts and the Fixed Account provided that the amount remaining in a Subaccount or the Fixed Account as a result of the allocation is $100. Without specific direction, the accumulation value will be allocated among the Subaccounts and the Fixed Account in the same proportion that the policy's accumulation value in each Subaccount and the Fixed Account bears to the total accumulation value in all Subaccounts and the Fixed Account on the date we make the loan. Accumulation value in the general account will be credited with 3.5% interest annually. The interest earned will be allocated to the Subaccounts and the Fixed Account in the same manner as net premiums. If the policy debt exceeds the accumulation value less any accrued expenses and charges, you must pay the excess. We will send you a notice of the amount you must pay. If you do not pay this amount within 61 days after we send notice, the policy will terminate without value. We will send the notice to you and to any assignee of record at our Home Office. Any loan transaction will permanently affect the values of this policy. 11.4 REPAYING A POLICY DEBT You can repay a policy debt in part or in full anytime during the Insured's life prior to the maturity date while this policy is in force. Repayment must be specifically identified as such by you. When a loan repayment is made, accumulation value in the general account related to that payment will be transferred into the Subaccounts and the Fixed Account in the same proportion that net premiums are being allocated. SECTION 12. PAYMENT OPTIONS Life insurance proceeds, the net cash surrender value, or benefits at maturity will be paid in one lump sum if no option is chosen. Subject to the rules stated below, all or part of the proceeds can be paid under a payment option. During the Insured's life, you can choose a payment option. A beneficiary can choose a payment option if you have not chosen one at the Insured's death. 12.1 PAYMENT OPTION RULES There are several important payment option rules: a. An association, corporation, partnership or fiduciary can only receive a lump sum payment or a payment under Option b. b. If this policy is assigned, any amount due to the assignee will first be paid in one sum. The balance, if any, may be applied under any payment option. c. If the payments under any option come to less than $100 each, we have the right to make payments at less frequent intervals. d. The rate of interest payable under Options a(i), a(ii) and b is guaranteed at 3% compounded annually. Payments under Option c and d are based on the 1983 A-G Individual Annuity Tables projected 17 years at 3-1/2% interest. To choose an option, you must send a written request satisfactory to us to our Home Office. 12.2 DESCRIPTION OF OPTIONS Option ai Interest Payment Option. We will hold any amount applied under this option. Interest on the unpaid balance will be paid or credited each month at a rate determined by us. Option aii Fixed Amount Payable Option. Each payment will be for an agreed fixed amount. Payments continue until the amount we hold runs out. Option b Fixed Period Payment Option. Equal payments will be made for any period selected, up to 20 years. Option c Lifetime Payment Option. Equal monthly payments are based on the life of a named person. Payments will continue for the lifetime of that person. Variations provide for guaranteed payments for a period of time or a lump sum refund. Option d Joint Lifetime Payment Option. Equal monthly payments are based on the lives of two named persons. While both are living, one payment will be made each month. When one dies, payments will continue for the lifetime of the other. Variations provide for a reduced amount of payment during the lifetime of the surviving person. SECTION 13. NOTES ON OUR COMPUTATIONS 13.1 BASIS OF COMPUTATION In our computations, we assume that the minimum values and reserves held for benefits guaranteed in the Fixed Account will earn interest at an annual rate of 3.5%. We use mortality rates from the Commissioners 1980 Standard Ordinary Smoker and Nonsmoker, Male and Female Continuous Function Mortality Tables in computing minimum values and reserves for this policy. For ages 0-19 we use rates based on the aggregate table. For ages above 19, the nonsmoker values from these Tables are used when the Insured is a nonsmoker and the smoker values from these Tables are used where the Insured is a smoker. The male values from these Tables are used where the Insured is a male. The female values from these Tables are used where the Insured is a female. 13.2 METHODS OF COMPUTING VALUES We have filed a detailed statement of the method we use to compute policy values and benefits with the state where this policy was delivered. All these values and benefits are not less than those required by the laws of that state. Reserves are calculated in accordance with the Standard Non-Forfeiture Law and Valuation Law of the state in which this policy is delivered. In no instance will reserves be less than the net cash surrender values. Form 4055-10
TABLES OF SETTLEMENT OPTIONS TABLE B (OPTION B) TABLE D (OPTION D) MONTHLY INSTALLMENTS FOR MONTHLY INSTALLMENTS FOR EACH $1,000 OF NET PROCEEDS EACH $1,000 OF NET PROCEEDS MALE & MALE & MALE & MALE& MALE & YEARS MONTHLY YEARS MONTHLY AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE AGE FEMALE - ------------------------------- ---------------------------------------------------------------------------------------- 1 84.47 11 8.86 40 3.56 50 3.94 60 4.60 70 5.88 80 8.76 2 42.86 12 8.24 41 3.59 51 3.99 61 4.69 71 6.07 81 9.21 3 28.99 13 7.71 42 3.62 52 4.04 62 4.78 72 6.27 82 9.71 4 22.06 14 7.26 43 3.65 53 4.10 63 4.89 73 6.50 83 10.25 5 17.91 15 6.87 44 3.69 54 4.16 64 5.00 74 6.74 84 10.81 - ------------------------------ --------------------------------------------------------------------------- 6 15.14 16 6.53 45 3.72 55 4.22 65 5.12 75 7.01 85 11.51 7 13.16 17 6.23 46 3.76 56 4.29 66 5.25 76 7.30 8 11.68 18 5.96 47 3.80 57 4.36 67 5.39 77 7.62 9 10.53 19 5.73 48 3.84 58 4.43 68 5.54 78 7.96 10 9.61 20 5.51 49 3.89 59 4.51 69 5.70 79 8.34 - ------------------------------ -----------------------------------------------------------
INCOME FOR PAYMENTS OTHER THAN MONTHLY WILL BE FURNISHED BY THE HOME OFFICE UPON REQUEST. TABLE D VALUES FOR COMBINATIONS OF AGES NOT SHOWN AND VALUES FOR 2 MALES OR 2 FEMALES WILL BE FURNISHED BY THE HOME OFFICE UPON REQUEST. TABLE C (OPTION C) MONTHLY INSTALLMENTS FOR EACH $1,000 OF NET PROCEEDS
MALE FEMALE - ---------------------------------------------------- ---------------------------------------------------- LIFE MONTHS CERTAIN CASH LIFE MONTHS CERTAIN CASH AGE ONLY 60 120 180 240 REF AGE ONLY 60 120 180 240 REF. - ---------------------------------------------------- ---------------------------------------------------- 40 3.84 3.84 3.83 3.82 3.80 3.77 40 3.64 3.64 3.63 3.63 3.62 3.60 41 3.88 3.88 3.87 3.86 3.83 3.81 41 3.67 3.67 3.66 3.66 3.65 3.63 42 3.93 3.93 3.92 3.90 3.87 3.84 42 3.70 3.70 3.70 3.69 3.68 3.66 43 3.98 3.97 3.96 3.94 3.91 3.88 43 3.74 3.74 3.73 3.73 3.71 3.70 44 4.02 4.02 4.01 3.99 3.95 3.92 44 3.78 3.78 3.77 3.76 3.75 3.73 - ----------------------------------------------------- -------------------------------------------------- 45 4.08 4.07 4.06 4.03 3.99 3.97 45 3.82 3.82 3.81 3.80 3.78 3.77 46 4.13 4.13 4.11 4.08 4.04 4.01 46 3.86 3.86 3.85 3.84 3.82 3.80 47 4.19 4.18 4.16 4.13 4.09 4.06 47 3.90 3.90 3.89 3.88 3.86 3.84 48 4.25 4.24 4.22 4.18 4.13 4.11 48 3.95 3.95 3.94 3.93 3.90 3.88 49 4.31 4.30 4.28 4.24 4.18 4.16 49 4.00 4.00 3.99 3.97 3.95 3.93 - ----------------------------------------------------- -------------------------------------------------- 50 4.37 4.37 4.34 4.30 4.23 4.21 50 4.05 4.05 4.04 4.02 3.99 3.97 51 4.44 4.43 4.40 4.36 4.29 4.27 51 4.10 4.10 4.09 4.07 4.04 4.02 52 4.51 4.50 4.47 4.42 4.34 4.32 52 4.16 4.16 4.15 4.12 4.09 4.07 53 4.59 4.58 4.54 4.48 4.40 4.38 53 4.22 4.22 4.20 4.18 4.14 4.12 54 4.67 4.66 4.62 4.55 4.45 4.45 54 4.29 4.28 4.26 4.23 4.19 4.17 - ----------------------------------------------------- -------------------------------------------------- 55 4.76 4.74 4.70 4.62 4.51 4.52 55 4.35 4.35 4.33 4.30 4.24 4.23 56 4.85 4.83 4.78 4.70 4.57 4.59 56 4.42 4.42 4.40 4.36 4.30 4.29 57 4.94 4.92 4.87 4.77 4.64 4.66 57 4.50 4.49 4.47 4.43 4.36 4.35 58 5.04 5.02 4.96 4.85 4.70 4.74 58 4.58 4.57 4.54 4.50 4.42 4.42 59 5.15 5.13 5.06 4.94 4.76 4.82 59 4.67 4.66 4.62 4.57 4.48 4.48 - ----------------------------------------------------- -------------------------------------------------- 60 5.27 5.24 5.16 5.02 4.83 4.90 60 4.76 4.74 4.71 4.65 4.55 4.56 61 5.39 5.36 5.27 5.11 4.89 4.99 61 4.85 4.84 4.80 4.73 4.62 4.63 62 5.52 5.49 5.38 5.20 4.95 5.08 62 4.95 4.94 4.89 4.81 4.68 4.71 63 5.66 5.62 5.50 5.30 5.02 5.18 63 5.06 5.05 4.99 4.90 4.75 4.80 64 5.81 5.77 5.63 5.39 5.08 5.29 64 5.18 5.16 5.10 4.99 4.82 4.89 - ----------------------------------------------------- -------------------------------------------------- 65 5.98 5.92 5.76 5.49 5.14 5.39 65 5.30 5.28 5.21 5.08 4.89 4.98 66 6.15 6.09 5.90 5.59 5.20 5.51 66 5.44 5.41 5.33 5.18 4.96 5.08 67 6.33 6.26 6.04 5.69 5.26 5.62 67 5.58 5.55 5.45 5.28 5.03 5.19 68 6.53 6.45 6.19 5.79 5.32 5.75 68 5.73 5.70 5.59 5.39 5.10 5.30 69 6.74 6.64 6.34 5.89 5.37 5.88 69 5.90 5.86 5.73 5.50 5.17 5.42 - ----------------------------------------------------- -------------------------------------------------- 70 6.96 6.85 6.50 5.99 5.42 6.02 70 6.07 6.03 5.87 5.61 5.24 5.54 71 7.20 7.06 6.66 6.09 5.46 6.16 71 6.26 6.21 6.03 5.72 5.30 5.67 72 7.46 7.29 6.83 6.18 5.51 6.31 72 6.47 6.40 6.19 5.83 5.36 5.81 73 7.73 7.53 7.00 6.28 5.54 6.47 73 6.69 6.62 6.36 5.94 5.42 5.96 74 8.02 7.79 7.17 6.36 5.58 6.63 74 6.94 6.84 6.54 6.05 5.47 6.11 - ----------------------------------------------------- -------------------------------------------------- 75 8.32 8.05 7.34 6.45 5.61 6.81 75 7.20 7.08 6.72 6.16 5.51 6.28 76 8.66 8.34 7.52 6.53 5.64 6.99 76 7.48 7.34 6.91 6.27 5.56 6.45 77 9.01 8.63 7.69 6.60 5.66 7.19 77 7.78 7.61 7.10 6.37 5.59 6.64 78 9.39 8.94 7.87 6.67 5.68 7.39 78 8.11 7.90 7.30 6.46 5.63 6.83 79 9.80 9.27 8.04 6.74 5.70 7.60 79 8.47 8.21 7.50 6.55 5.65 7.03 - ----------------------------------------------------- -------------------------------------------------- 80 10.23 9.61 8.20 6.79 5.71 7.83 80 8.85 8.54 7.70 6.63 5.68 7.25 81 10.70 9.96 8.37 6.85 5.72 8.06 81 9.27 8.89 7.90 6.71 5.70 7.48 82 11.20 10.32 8.52 6.89 5.73 8.31 82 9.72 9.26 8.09 6.78 5.71 7.72 83 11.72 10.69 8.67 6.93 5.74 8.57 83 10.21 9.64 8.28 6.84 5.73 7.98 84 12.29 11.07 8.81 6.97 5.75 8.84 84 10.74 10.05 8.46 6.89 5.74 8.25 85 12.89 11.46 8.95 7.00 5.75 9.13 85 11.32 10.47 8.63 6.94 5.74 8.53 - ----------------------------------------------------- --------------------------------------------------
INCOME FOR PAYMENTS OTHER THAN MONTHLY WILL BE FURNISHED BY THE HOME OFFICE UPON REQUEST. TABLE C VALUES FOR AGES BELOW 40 AND ABOVE 85, AND VALUES FOR 300 AND 360 MONTHS CERTAIN WILL BE FURNISHED BY THE HOME OFFICE UPON REQUEST. Form 4055-11 FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY. NET CASH SURRENDER VALUE IF ANY, PAYABLE AT MATURITY. DEATH BENEFIT PROCEEDS PAYABLE AT DEATH OF INSURED PRIOR TO MATURITY DATE. FLEXIBLE PREMIUMS PAYABLE DURING LIFETIME OF INSURED UNTIL MATURITY DATE (AGE 100). SOME BENEFITS REFLECT INVESTMENT RESULTS. NON-PARTICIPATING. Form 4055 EX-99.1.(5)(B) 5 FORM OF POLICY RIDERS NOTICE: AS OF THE EFFECTIVE DATE OF THIS RIDER, IT IS UNCERTAIN WHAT EFFECT THE RECEIPT OF BENEFITS UNDER THIS RIDER WILL HAVE ON YOUR TAX STATUS. PLEASE CONSULT YOUR PERSONAL TAX ADVISOR PRIOR TO REQUESTING SUCH BENEFITS. ACCELERATED BENEFIT RIDER FOR TERMINAL ILLNESS CONSIDERATION This rider is attached to and made a part of your policy and is issued in consideration of the application. A copy of the application is attached to the policy. PREMIUMS There are no additional premiums or cost of insurance deductions for this rider. BENEFITS We will pay an accelerated benefit to you if the Applicant is terminally ill, subject to the provisions of this rider. This amount will be paid as a lump sum. Payments other than as a lump sum may be made at your request, subject to our approval. DEFINITIONS APPLICANT: The Applicant is the person who is terminally ill. The Applicant may be the insured under the base policy or may be an insured who has coverage under a rider attached to the base policy. EFFECTIVE DATE: The effective date of coverage under this rider will be as follows: 1. The policy date will be the effective date for all coverage provided in the original application. 2. For any rider issued after the policy date, the effective date will be the date shown on a supplement to the schedule pages. ELIGIBLE COVERAGES: Eligible Coverages under this rider will be as follows: 1. When the Applicant is the base insured, Eligible Coverages will be the base policy and any life insurance riders attached to the policy which provide coverage on the base insured. 2. When the Applicant is other than the base insured, Eligible Coverages will be the rider which is providing coverage. Eligible Coverages will be determined as of the date we receive satisfactory proof of terminal illness at the Home Office. Coverage will only be considered eligible when it is outside its two year contestable period and has more than two years until its maturity or final expiration date. Eligible Coverages will also not include any possible future coverages provided by an optional purchase or guaranteed insurability rider. ELIGIBLE AMOUNT: Eligible Amount is that portion of the current specified amount of the base policy considered "eligible" under Eligible Coverages. For any Eligible Coverages which are provided by life insurance riders, the Eligible Amount will be the lowest scheduled death benefit within two years after satisfactory proof of terminal illness is received at the Home Office. MAXIMUM ACCELERATED BENEFIT: For each Applicant, the maximum benefit if 50% of the Eligible Amount for each Applicant, less an amount up to two guideline level premiums for the base policy and any riders. This maximum benefit is subject to the limitations described in the Total Accelerated Benefit provision. TERMINAL ILLNESS: A non-correctable medical condition that, with a reasonable degree of medical certainty, will result in the death of the Applicant in less than 12 months from the date of the physician's statement and that was first diagnosed while the policy was in force. "YOU" AND "YOUR" refer to the owner of the policy to which this rider is attached. The Owner may also be the Applicant. "WE", "US" or "OUR" refer to Ameritas Life Insurance Corp. Our Home Office is 5900 "O" Street, Lincoln, Nebraska 68510. SATISFACTORY PROOF OF TERMINAL ILLNESS Before payment of any accelerated benefit, we will require you to provide us with proof, satisfactory to us, that the Applicant has a terminal illness. Satisfactory proof will include a properly completed claim form and a written statement from a duly licensed physician who is licensed in the United States and who is not yourself or the Applicant, nor related to either the Applicant or yourself. We reserve the right to obtain a second medical opinion at our expense. TIR 45 Rev. 12-90 EFFECT ON YOUR POLICY The accelerated benefit first will be used to repay any outstanding policy loans and unpaid loan interest. The accelerated benefit will be treated as a lien against your policy values. Death proceeds which are payable on the death of the Applicant will be reduced by the amount of the lien and any policy loans, plus accrued interest. After payment of the accelerated benefit, we will require that future premium allocations be made to the Fixed Account. If sufficient premium to keep the policy in force is not paid by the end of the grace period, premiums will be paid by an addition to the lien for up to two years from the date we receive satisfactory proof of terminal illness. After this two year period, you are required to pay premiums when due to keep the policy in force. If the policy lapses, the lien, any policy loans, and accrued interest will be deducted from any cash values. Your access to the cash surrender value of your policy and to the cash surrender value of any riders through policy loans, partial withdrawals, if permitted, or full surrender is limited to any excess of the cash surrender value over the lien including any accrued interest. INTEREST We will charge interest on the amount of the lien. The interest accrues daily at the same interest rate as the policy's loan interest rate. If a loan provision is not included in the policy, interest accrues daily at an effective annual interest rate of 8%. Accrued interest will be added to the lien on the policy anniversary. Interest does not continue to accrue on the lien when the lien and any policy loans, plus accrued interest, equals the death benefit (prior to the deduction of the lien, policy loans and accrued interest) of the policy and any riders. CONDITIONS The payment of any accelerated benefit is subject to the following conditions: 1. Any Eligible Coverages must be in force on the date we receive satisfactory proof of terminal illness. 2. Any cash surrender value, without considering the effect of any outstanding policy loans, must be less than the maximum accelerated benefit. 3. We will not make payment of any accelerated benefit if that payment would be less than $4,000. 4. The release of any collateral assignees, the release of all parties to any "split dollar" agreements and the approval of any irrevocable beneficiaries is required. 5. The policy must be collaterally assigned to us for an amount equal to the lien and accrued interest. No changes to the policy are permitted without our consent. 6. This rider allows for the accelerated payment of death benefit proceeds, which would otherwise be payable to your beneficiary. This is not meant to cause you to involuntarily be required to access and exhaust these benefits. Therefore, you are not eligible for this benefit: a. If you are required by law to use this benefit to meet the claims of creditors, whether in bankruptcy or otherwise; or b. If you are required by a government agency to use this benefit in order to apply for, obtain, or otherwise keep a government benefit or entitlement. ADDITIONAL BENEFIT If the maximum accelerated benefit for each Applicant is not paid initially and it has been less than 12 months from the date we receive satisfactory proof of terminal illness, an additional accelerated benefit may be paid up to the difference, but for not less than $4,000. We may require additional satisfactory proof of terminal illness at this time. TOTAL ACCELERATED BENEFIT The total amount we will pay as an accelerated benefit will not exceed $250,000 due to the terminal illness of any one Applicant even if there is more than one policy with us or one of our affiliates which provides coverage on the Applicant. ADMINISTRATIVE CHARGE We may charge a one-time administrative charge which will be deducted from the accelerated benefit. This charge will not exceed $50. GENERAL PROVISIONS INCONTESTABILITY: The validity of this rider cannot be contested after it has been in force while the Applicant is alive for a period of two years from the effective date of the rider. REINSTATEMENT: This rider may be reinstated with the policy. It will be reinstated if you meet the requirements for policy reinstatement. If you have received benefits under this rider, the lien with accrued interest may be paid or it will be reinstated as if the policy had never terminated. TERMINATION OF RIDER: This rider will automatically terminate on the earliest of these conditions: 1. On surrender of this rider to us; or 2. On termination of the policy to which this rider is attached. NONPARTICIPATING: This rider is nonparticipating. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are hereby referred to and made a part of this rider unless otherwise specified in this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President TIR 45 Rev. 12-90 CHILDREN'S PROTECTION RIDER LEVEL TERM INSURANCE CONSIDERATION This rider is issued in consideration of the application and the payment of its cost of insurance. A copy of the application is attached to the policy. The cost of insurance for this rider is deducted from the accumulation value at the same time and in the same manner as the cost of insurance for this policy. DEFINITIONS COST OF INSURANCE: The cost of insurance for this rider is shown on the schedule page. DEPENDENT CHILD: A dependent child is a child born of a marriage, a stepchild, a legally adopted child of the Insured or any child for which the Insured is legally responsible. To qualify as a dependent child, the child must be at least 15 days of age and have not yet reached the rider anniversary nearest his or her 25th birthday. The child must either: 1. Be named in the application and the date of such application must be before the child's 18th birthday; or 2. Qualify as a dependent child after the date of the application but before the child's 18th birthday. EFFECTIVE DATE: The effective date of coverage under this rider shall be as follows: 1. The policy date shall be the effective date for all coverage provided in the original application. 2. For any rider issued after the policy date, the effective date shall be the date shown on a supplement to the schedule page. 3. For any insurance that has been reinstated, the effective date shall be the monthly activity date that falls on or next follows the date we approve the reinstatement. EXPIRATION DATE: The date is also shown on the schedule page. It is the date on which this rider is no longer effective. RIDER BENEFICIARY: Unless otherwise provided, the owner will be the rider beneficiary. If the owner is not living, then the beneficiary will be the owner's spouse. If the spouse becomes the beneficiary and then dies, the beneficiary will be the estate of the spouse. If there is no spouse when the owner dies, the beneficiary will be the estate of the owner. RIDER OWNER: The owner of the policy is the owner of this rider unless otherwise provided. If the owner dies, the owner's spouse will become the owner. If the spouse becomes the owner, and then dies, ownership will pass to the spouse's estate. If there is no spouse at the owner's death, then ownership will pass to the owner's estate. RIDER SPECIFIED AMOUNT OF INSURANCE: The rider specified amount of insurance is the insurance payable under this rider. The amount is shown on the schedule page. BENEFITS We agree to pay the rider specified amount of insurance if a dependent child dies while the policy and this rider are in force. The rider beneficiary will receive the proceeds. Satisfactory proof of death of the dependent child is required. GENERAL PROVISIONS INCONTESTABILITY: While the Insured and any dependent children covered are alive, the validity of this rider cannot be contested after it has been in force for a period of 2 years from the effective date of the rider or from the date of reinstatement. REINSTATEMENT: This rider may be reinstated with the policy if no more than 3 years have passed since the beginning of the grace period. Reinstatement must occur before the expiration date of this rider. The requirements for reinstatement are: 1. Receipt by us of satisfactory evidence of insurability of the Insured and of each dependent child for whom coverage is being reinstated. 2. Payment of the minimum cost of insurance sufficient to keep the rider in force for 3 months. CPR 45 DEATH OF THE INSURED: On the death of the Insured, the insurance under this rider becomes paid-up term insurance. It will expire for each dependent child on the earliest of the expiration date of this rider or the rider anniversary nearest the child's 25th birthday. The paid-up insurance may be surrendered for any or all of the dependent children. It may be surrendered for its cash value which is the present value of future guaranteed benefits. If surrender is within 30 days after a rider anniversary, the cash value will not be less than the value on that anniversary. The amounts will be furnished by the company on request. SUICIDE PROVISION: If any dependent child covered under this rider commits suicide while sane or in sane or takes his or her own life while insane within 2 years of the effective date of this rider or any reinstatement of this rider, the total liability shall be the cost of insurance for such child. Payment under this provision will not affect the coverage of any other dependent child under this rider. The cost of insurance for this rider will not be increased. If the Insured commits suicide while sane or insane or takes his or her own life while insane, this rider will become paid-up for each covered dependent child as provided in "Death of the Insured". TERMINATION OF RIDER: This rider will automatically terminate for all dependent children on the earliest of these conditions: 1. The expiration date of this rider, 2. The monthly activity date on or next following the date we receive your written request. 3. The surrender of this rider to us, 4. Termination of this policy; or 5. The policy maturity date. Coverage under this rider will terminate for each dependent child on the earliest of these conditions: 1. The rider anniversary nearest the dependent child's 25th birthday. 2. On conversion of this coverage. See "Conversion". CONVERSION While the policy and this rider are in full force, this rider may be converted (exchanged) for a different policy. Evidence of insurability will not be required. Conversion can be made to a permanent nonpension policy subject to the following rules: 1. No riders may be added to the new policy without satisfactory evidence of insurability. 2. Application must be made and the first premium for the new policy paid to us before this rider terminates for the dependent child on whom coverage is being converted. 3. The dependent child on whom coverage is being converted must be alive on the policy date of the new policy (the date of conversion). 4. The policy date of the new policy will be the date of conversion. 5. The new policy must be subject to our then current rules as to the amount and the kind of policy issued and premiums charged. Coverage under this rider for each dependent child may be converted at any time: a. on or before the expiration date of this rider; or b. the rider anniversary nearest the child's 25th birthday, whichever occurs first. The amount of the new policy will depend on when this rider is converted. If coverage under this rider is converted before the termination of the rider for a dependent child, the new policy will be for a face amount of insurance not greater than the rider face amount of insurance. If coverage is converted at the time of termination, the new policy will be for a face amount of insurance not greater than 5 times the rider face amount of insurance. NONPARTICIPATING: This rider is nonparticipating. COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable for the cost of insurance payments paid on this rider after it terminates except to return them. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are hereby referred to and made a part of this rider unless otherwise specified in this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President CPR 45 AMERTIAS LIFE INSURANCE CORP. LOGO COST RECOVERY RIDER CONSIDERATION This rider is issued in consideration of the application. A copy of the application is attached to the policy. COST OF INSURANCE There is no cost of insurance for this rider. DEFINITIONS OPTION DATE: The option date is the date on which you may choose to make a special partial withdrawal. It is the first policy anniversary after (1) no premium payments have been made for 6 policy years, and (2) the policy has been in force for 10 years. EFFECTIVE DATE: The effective date of coverage under this rider shall be as follows: 1. The Policy Date shall be the effective date for all coverage provided in the original application. 2. For any insurance that has been reinstated, the effective date shall be the monthly activity date on or next following the date we approve the reinstatement. EXPIRATION DATE: This date is also shown in the schedule pages. It is the date on which this rider is no longer effective. While the policy and this rider are in force, you may elect to make a special partial withdrawal. The specified amount of insurance will not be reduced by this special partial withdrawal. The following conditions must be met in order to make the special partial withdrawal: 1. There must be no policy debt on the date of the withdrawal. 2. The option may only be elected once and must be elected on the option date defined above. 3. The amount which may be withdrawn cannot exceed the lesser of: a. The sum of premiums paid, b. $100,000, or c. The net cash surrender value at the time of the withdrawal. 4. The amount of the partial withdrawal will be reduced by any partial withdrawals made prior to the option date. It will also be reduced by a withdrawal charge not to exceed $50. 5. We may delay making payment for up to six (6) months. ELECTION OF OPTION To elect to make this special partial withdrawal, you must give us propoer written notice sixty (60) days prior to the option date. The regular partial withdrawal provisions in the policy will not apply to his special partial withdrawal. GENERAL PROVISIONS INCONTESTABILITY: The validity of this rider may be contested at any time. REINSTATEMENT: This rider may be reinstated with the policy if no more than 3 years have passed since the date of termination if you meet the requirements for reinstatement for the policy. TERMINATION OF RIDER: This reider will automatically terminate on the earliest of these conditions: 1. On the option date regardless of whether the option is elected; 2. On the expiration date of this rider; 3. On termination of the policy; or 4. On the policy maturity date. NONPARTICIPATING: This ride is nonparticipating. CRR 4094 INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of this policy are hereby referred to and made a part of this rider unless otherwise specified in this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President AMERITAS LIFE INSURANCE CORP. LOGO NOTICE: PLEASE CONSULT YOUR TAX ADVISOR. THERE MAY BE TAX CONSEQUENCES TO THE ELECTION OF THIS BENEFIT. EXTENDED MATURITY RIDER BENEFITS The Maturity Date of your policy may be extended beyond the date shown in the policy schedule pages by your written election. The election must be made during the 90-day period prior to the Maturity Date. PREMIUMS There are no extra premiums or cost of insurance deductions for this rider. EFFECT ON YOUR POLICY AND ANY RIDERS During the extension period: 1. We will not accept further premium payments. 2. We will not make the monthly deduction from your accumulation value for the cost of insurance for the policy, for any riders, nor for any flat extra rating charges. 3. The new Maturity Date will be the date of death of the Insured. 4. The death benefit will be the accumulation value. 5. This rider will not extend benefits past the original Maturity Date on any other rider attached to your policy. All other provisions of your policy and of any riders attached to your policy not noted above will remain in effect while your policy and riders continue in force. TERMINATION OF RIDER This rider will automatically terminate on the earliest of these conditions: 1. On your written request. 2. On surrender of this rider to us. 3. On termination of your policy. 4. On the date your surrender value is zero or less. EFFECTIVE DATE This rider will become effective on the policy date. However, if this rider is added to an in-force policy, this rider will not become effective until the effective date shown below. EFFECTIVE DATE OF RIDER: ________________________________________________________ APPLIES ONLY WHEN RIDER IS ADDED TO AN IN-FORCE POLICY). AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivsosha /s/ Kenneth C. Louis Secretary President EMR 4095-A AMERITAS LIFE INSURANCE CORP. LOGO GUARANTEED INSURABILITY RIDER CONSIDERATION This rider is issued in consideration of the application and payment of its cost of insurance. A copy of the application is attached to the policy. The cost of insurance for this rider is deducted from the accumulation value at the same time and in the same manner as the cost of insurance for the policy. BENEFITS You may buy additional insurance on the life of the Insured by increasing the specified amount of insurance of the policy, subject to the provisions below. Evidence of insurability is not required. The amount of the increase is equal to the election amount. The policy and this rider must be in force and all due premiums must have been paid during the option period before an option can be effective. DEFINITIONS ELECTION AMOUNT: The election amount is the amount of the additional insurance which is issued as an increase in the specified amount of insurance of the policy. You must choose the election amount at the time this rider is issued. The election amount you have chosen and the regular option dates are shown on the schedule pages. REGULAR OPTION DATES: The regular option dates are the policy anniversaries on which the Insured's age at nearest birthday is 25, 28, 31, 34, 37 and 40. ALTERNATE OPTION DATES: You may also choose an alternate option date in lieu of a regular option date after: 1. the first marriage of the Insured after the effective date of this rider; or 2. the birth of a child born of a marriage of the Insured, or for which the Insured is legally responsible; or 3. the legal adoption of a child by the Insured. Only one alternate option date may be chosen between the effective date of the rider and the first regular option date and between each pair of successive regular option dates. Election of an alternative option will replace the next regular option date. Therefore, the next regular option cannot be elected. OPTION PERIOD: The option period is the time during which you may choose to elect an option. For a regular option date, the option period is the 31 day period on either side of such date. For an alternate option date, the option period is the 60 days immediately after such date. EFFECTIVE DATE: This date of coverage under this rider shall be as follows: 1. The policy date shall be the effective date for all coverage provided in the original application. 2. For any instance that has been reinstated, the effective date shall be the monthly activity date that falls on or next follows the date we approve the reinstatement. EXPIRATION DATE: This date is shown on the schedule page. It is the date on which this rider is no longer effective. CONDITIONS Options elected under this rider are subject to the following conditions: 1. The increased specified amount will be subject to any ratings and restrictions under the policy. 2. If any rider which provides total and permanent disability benefits is attached to the policy, the disability benefits may be increased to cover the increased specified amount without evidence of insurability. No other riders may be added without satisfactory evidence of insurability. 3. If an option is effective while disability benefits are currently being provided by a rider, GIR 4093 the disability benefit will be increased. This increase in disability benefits will reflect any necessary higher minimum premium requirements for the policy as if the increased insurance were issued as a separate policy at the attained age of the Insured. 4. If a regular option is chosen, the effective date of the increased specified amount will be the later of the regular option date or the effective date of the election. If an alternate option is chosen, the effective date will be the effective date of the election. 5. The election of an option will be effective when any required premium is paid and written application signed by both you and the Insured is made to us during an option period. 6. The Insured must be alive on the effective date. 7. The increase in specified amount will be treated in the same manner as an increase granted under the terms of the policy to which this rider is attached, except that the requirement of evidence of insurability will be waived. Please see the Death Benefit provision in the policy for more information. GENERAL PROVISIONS REINSTATEMENT: Coverage under this rider may be reinstated with the policy if no more than 3 years have passed since the beginning of the policy grace period. Reinstatement must occur before the expiration date of this rider. Such reinstatement may occur any time before the last regular option date. The requirements for reinstatement are: 1. Receipt by us of satisfactory evidence of insurability for the Insured. 2. Payment of the minimum cost of insurance sufficient to keep the rider in force for 3 months. RIDER TERMINATION DATE: This rider will terminate on the earliest of these conditions: 1. The expiration date of this rider which is the policy anniversary nearest the Insured's 40th birthday. 2. The effective date of an alternate option if between ages 37 and 40. 3. The surrender of this rider to us. 4. On the monthly activity date on or next following the date we receive written request from you. 5. The termination of the policy. NONPARTICIPATING: This rider is nonparticipating. COST OF INSURANCE DEDUCTIONS AFTER RIDER TERMINATION DATE: We will not be liable for the cost of insurance deductions on this rider after it terminates except to return them. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are hereby referred to and made a part of this rider unless otherwise specified in this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President AMERITAS LIFE INSURANCE CORP. LOGO PAYOR WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY OF A COVERED PERSON CONSIDERATION This rider is issued in return for the application and payment of its cost of insurance. A copy of the application is attached to the policy. The cost of insurance for this rider is deducted from the accumulation value at the same time and in the same manner as the cost of insurance for the policy. COST OF INSURANCE The calculation of the monthly cost of insurance for this rider is described in the attached table. DEFINITIONS DISABILITY BENEFIT: For purposes of this rider, the disability benefit refers to the monthly deduction on each monthly activity date for the base policy and any riders and is equal to: 1. the current cost of insurance charge for the base policy and any riders; 2. the expense charges; and 3. the charges for specified amount increases, if any. TOTAL DISABILITY: Total disability must begin after the effective date and before the expiration date of this rider. It must result from bodily injury which occurs or sickness which first manifests itself while this rider is in force. Total Disability means: 1. Total loss of the sight of both eyes. This loss must be irrecoverable; or 2. Total loss of the use of both hands, both feet, or one hand and one foot. This loss must be irrecoverable; or 3. The incapacity of the Covered Person to engage in any substantial duties of his or her occupation for at least six consecutive months. (Substantial duties includes managerial or supervisory functions.) During the first 24 months of total disability, occupation means the usual work, employment, business or profession in which the Covered Person was engaged immediately before the date of disability. This includes attendance at school or college as a full-time student. After 24 months of total disability a Covered Person who is engaged in any occupation for remuneration or profit will not be considered totally disabled. COVERED PERSON: The Covered Person is the person on whom disability benefit coverage is being offered. The applicant is the Covered Person until the automatic substitution date. On and after this date, the Insured is the Covered Person. AUTOMATIC SUBSTITUTION DATE: The automatic substitution date is the policy anniversary nearest the Insured's 23rd birthday. ELECTION PERIOD: The election period begins on the policy anniversary nearest the Insured's 18th birthday and ends on the automatic substitution date. EFFECTIVE DATE: The effective date of coverage under this ride shall be as follows: 1. The policy date shall be the effective date for all coverage provided in the original application. 2. For any rider issued after the policy date, the effective date shall be the date shown on a supplement to the schedule pages. 3. For any insurance that has been reinstated, the effective date shall be the monthly activity date on or next following the date we approve the reinstatement. EXPIRATION DATE: This date is also shown on the schedule pages. It is the date on which this rider is no longer effective. PDIS 4094 BENEFITS While the Covered Person is totally disabled, the disability benefit will not be deducted from the accumulation value. During this time, the policy and any rider(s) will continue to be in force. Monthly deductions falling due before we approve a claim for benefits will continue to be deducted from the accumulation value. However, after total disability has continued for six (6) consecutive months and we approve the claim, any disability benefit which otherwise could have been paid under the provisions of this rider will be credited to the accumulation value. If total disability begins after the grace period, no benefit under this rider will be paid. COVERAGE CHANGES We will provide disability benefit coverage on the applicant until the automatic substitution date. At that time, the coverage automatically shifts to the Insured. During the election period, on written request, coverage may be shifted from the applicant to the Insured. This will be subject to evidence of insurability of the Insured. This election, once we accept it, is irrevocable (it cannot be changed). If the applicant is the Covered Person and becomes totally disabled, the disability benefit continues during a period of total disability until the automatic substitution date. At that time, the Insured automatically becomes the Covered Person. The disability benefit will cease and we will resume deducting the cost of insurance for this rider from the accumulation value. If the Insured is the Covered Person and becomes totally disabled, the disability benefit continues so long as the disability continues. If the Insured becomes totally disabled before the automatic substitution date, the disability benefit will begin as of that date. It will continue as long as the disability continues. If the applicant dies before the beginning of the election period, no benefits will be payable except that the disability benefit will not be deducted from the accumulation value until the first day of the election period. At that time, the Insured automatically becomes the Covered Person. If the applicant dies during the election period, the Insured automatically becomes the Covered Person. GENERAL PROVISIONS NOTICE OF DISABILITY: To receive this benefit, written notice of claim must be received at the Home Office. It must be received: (a) while the Covered Person is living; (b) while the Covered Person is totally disabled; and (c) not later than 9 months after the Covered Person has become totally disabled. If such notice is not furnished in the required time limit, the claim will not be accepted. But a late claim will be accepted if it can be shown that it was not reasonably possible to meet the requirements and that notice was given as soon as was reasonably possible. In no event, however, will the Covered Person receive any benefit under this rider for a period beyond one year before the date on which notice was received. PROOF OF TOTAL DISABILITY: The disability benefit will not commence until we receive satisfactory written proof that the Covered Person is totally disabled. Proof must be presented at the Home Office: (a) while the Covered Person is living; (b) before total disability has ended or been interrupted; and (c) within 12 months after we receive the notice of total disability. Forms approved by us must be used. Similar proof that the total disability is continuing may be required at reasonable intervals. If the Covered Person fails to furnish such proof, the disability benefit will cease. INCONTESTABILITY: While the Covered Person is alive, the validity of this rider cannot be contested after it has been in force for a period of 2 years from the effective date of the rider. REINSTATEMENT: This rider may be reinstated with the policy subject to the policy reinstatement provision. Reinstatement must occur before the expiration date of this rider. Such reinstatement may occur before the policy anniversary nearest the Covered Person's 60th birthday. The requirements for reinstatement are: 1. Evidence of insurability is required on both the applicant and the Insured, if the applicant is the Covered Person. Otherwise, evidence of insurability will be required only on the Insured. This evidence must be satisfactory to us. 2. Payment of the minimum cost of insurance sufficient to keep this rider in force for 3 months. EXCLUSIONS: The Covered Person will not be eligible for the disability benefit if the total disability on which the claim is based results from: 1. Self-inflicted bodily injury while sane or insane; other than accidental injury; or 2. War or any act of war, whether declared or not, regardless of whether the Covered Person is in the military, naval or air service. TERMINATION OF RIDER: This rider will automatically terminate on the earliest of these conditions: 1. On the expiration date of this rider; 2. On the monthly activity date on or next following the date we receive your written request; 3. On surrender of this rider to us; 4. On termination of the policy; 5. On assignment of the policy; or 6. On the policy maturity date. TERM RIDERS: If a renewable and convertible term rider is attached to the policy during a benefit period, the cost of insurance for that rider will be waived until the expiration date. If the Owner elects to convert that term rider, no benefits will be paid under this rider on the conversion policy. CHANGE OF POLICY: Once the disability benefit commences, you cannot change the specified amount of insurance (except for any increases(s) which result from exercising options under any Guaranteed Insurability Rider), the death benefit option, the mode of the planned periodic premium payments, or change the policy to another form of insurance. NONPARTICIPATING: This rider is nonparticipating. COST OF INSURANCE PAYMENTS AFTER THE RIDER HAS TERMINATED: We will not be liable for the cost of insurance payments on this rider after it terminates except to return them. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are hereby referred to and made a part of this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President PDIS 4094 COST OF INSURANCE TABLE On each monthly activity date, the monthly cost of insurance for this rider is equal to the product of A times B where: A is a factor based on the attained age, sex and smoking habit of the Covered Person and is shown in the table below. (Note: If this rider is issued with a special rating, this factor will be increased based on that rating. Any special rating will be shown on the Policy Schedule.) B is the monthly deduction for the policy, including any table ratings and any riders attached to the policy except for this rider. - --------------------------------------------------------------------------------
MALE RATES FEMALE RATES MALE RATES FEMALE RATES Ages Non-Smoker Smoker Non-Smoker Smoker Ages Non-Smoker Smoker Non-Smoker Smoker 0 0.0362 0.0328 30 0.0361 0.0525 0.0414 0.0523 1 0.0362 0.0328 31 0.0361 0.0525 0.0414 0.0523 2 0.0362 0.0328 32 0.0361 0.0525 0.0414 0.0537 3 0.0362 0.0328 33 0.0361 0.0525 0.0414 0.0559 4 0.0362 0.0328 34 0.0361 0.0525 0.0414 0.0575 5 0.0362 0.0328 35 0.0369 0.0531 0.0414 0.0611 6 0.0362 0.0328 36 0.0390 0.0551 0.0415 0.0628 7 0.0362 0.0338 37 0.0409 0.0573 0.0435 0.0641 8 0.0362 0.0352 38 0.0433 0.0595 0.0457 0.0661 9 0.0362 0.0371 39 0.0459 0.0618 0.0479 0.0661 10 0.0362 0.0381 40 0.0467 0.0621 0.0460 0.0661 11 0.0362 0.0388 41 0.0472 0.0628 0.0478 0.0661 12 0.0362 0.0374 42 0.0479 0.0632 0.0483 0.0661 13 0.0362 0.0370 43 0.0505 0.0639 0.0513 0.0668 14 0.0362 0.0419 44 0.0543 0.0645 0.0551 0.0704 15 0.0362 0.0419 45 0.0547 0.0666 0.0564 0.0719 16 0.0362 0.0419 46 0.0554 0.0681 0.0576 0.0731 17 0.0362 0.0419 47 0.0603 0.0702 0.0629 0.0797 18 0.0362 0.0419 48 0.0659 0.0763 0.0691 0.0875 19 0.0362 0.0419 49 0.0730 0.0840 0.0777 0.0979 20 0.0253 0.0362 0.0243 0.0413 50 0.0797 0.0855 0.0849 0.0992 21 0.0253 0.0362 0.0267 0.0456 51 0.0903 0.0960 0.0971 0.1116 22 0.0253 0,0362 0.0289 0.0489 52 0.1028 0.1030 0.1120 0.1149 23 0.0253 0.0362 0.0308 0.0523 53 0.1014 0.1081 0.1146 0.1177 24 0.0253 0.0365 0.0322 0.0523 54 0.1044 0.1115 0.1299 0.1376 25 0.0253 0.0409 0.0348 0.0523 55 0.1133 0.1281 0.1517 0.1609 26 0.0283 0.0447 0.0356 0.0523 56 0.1297 0.1421 0.1540 0.1819 27 0.0308 0.0484 0.0377 0.0523 57 0.1425 0.1571 0.1695 0.2058 28 0.0336 0.0525 0.0393 0.0523 58 0.1564 0.1731 0.1917 0.1917 29 0.0361 0.0525 0.0414 0.0523 59 0.1700 0.1700 0.2150 0.2150 - ---------------------------------------------------------------------------------------------------------------------------
PDIS 4094 AMERITAS LIFE INSURANCE CORP. LOGO WAIVER OF MONTHLY DEDUCTIONS ON DISABILITY CONSIDERATION This rider is issued in return for the application and payment of its cost of insurance. A copy of the application is attached to the policy. The cost of insurance for this rider is deducted from the accumulation value at the same time and in the same manner as the cost of insurance for the policy. COST OF INSURANCE The calculation of the monthly cost of insurance for this rider is described in the attached table. DEFINITIONS DISABILITY BENEFIT: For purposes of this rider, the disability benefit refers to the monthly deduction on each monthly activity date for the base policy and any riders and is equal to: 1. the current cost of insurance charge for the base policy and any riders; 2. the expense charges; and 3. the charges for specified amount increases, if any. TOTAL DISABILITY: Total disability must begin after the effective date and before the expiration date of this rider. It must result from bodily injury which occurs or sickness which first manifests itself while this rider is in force. Total Disability means: 1. Total loss of the sight of both eyes. This loss must be irrecoverable; or 2. Total loss of the use of both hands, both feet, or one hand and one foot. This loss must be irrecoverable; or 3. The incapacity of the Insured to engage in any substantial duties of his or her occupation for at least six consecutive months. (Substantial duties includes managerial or supervisory functions.) During the first 24 months of total disability, occupation means the usual work, employment, business or profession in which the Insured was engaged immediately before the date of disability. This includes attendance at school or college as a full-time student. After 24 months of total disability, an Insured who is engaged in any occupation for remuneration or profit will not be considered totally disabled. EFFECTIVE DATE: The effective date of coverage under this rider shall be as follows: 1. The policy date shall be the effective date for all coverage provided in the original application. 2. For any rider issued after the policy date, the effective date shall be the date shown on a supplement to the schedule pages. 3. For any insurance that has been reinstated, the effective date shall be the monthly activity date on or next following the date we approve the reinstatement. EXPIRATION DATE: This date is also shown on the schedule pages. It is the date on which this rider is no longer effective. BENEFITS While the Insured is totally disabled, the disability benefit will not be deducted from the accumulation value. During this time, the policy and any rider(s) will continue to be in force. Monthly deductions falling due before we approve a claim for benefits will continue to be deducted from the accumulation value. However, after total disability has continued for six (6) consecutive months and we approve the claim, any disability benefit which otherwise could have been paid under the provisions of this rider will be credited to the accumulation value. If the total disabilty begins after the grace period, no benefit under this rider will be paid. WDIS 4094 GENERAL PROVISIONS NOTICE OF DISABILITY: To receive this benefit, written notice of claim must be received at the Home Office. It must be received: (a) while the Insured is living; (b) while the Insured is totally disabled; and (c) not later than 9 months after the Insured has become totally disabled. If such notice is not furnished in the required time limit, the claim will not be accepted. But a late claim will be accepted if it can be shown that it was not reasonably possible to meet the requirements and that notice was given as soon as was reasonably possible. In no event, however, will the Insured receive any benefit under this rider for a period beyond one year before the date on which notice was received. PROOF OF TOTAL DISABILITY: The disability benefit will commence once we receive satisfactory written proof that the Insured is totally disabled. Proof must be presented at the Home Office: (a) while the Insured is living; (b) before total disability has ended or been interrupted; and (c) within 12 months after we receive the notice of total disability. Forms approved by us must be used. Similar proof that the total disability is continuing may be required at reasonable intervals. If the Insured fails to furnish such proof, the disability benefit will cease. INCONTESTABILITY: While the Insured is alive, the validity of this rider cannot be contested after it has been in force for a period of 2 years from the effective date of this rider. REINSTATEMENT: Coverage under this rider may be reinstated with the policy subject to the policy reinstatement provision. Reinstatement must occur before the expiration date of this rider. Such reinstatement may occur any time before the policy anniversary nearest the Insured's 60th birthday. The requirements for reinstatement are: 1. Receipt of satisfactory evidence of insurability. 2. Payment of the minimum cost of insurance sufficient to keep this rider in force for 3 months. Exclusions: The insured will not be eligible for the disability benefit if the total disability on which the claim is based results from: 1. Self-inflicted bodily injury while sane or insane, other than accidental injury; or 2. War or any act of war, whether declared or not, regardless of whether the Insured is in the military, naval or air service. TERMINATION OF RIDER: This rider will automatically terminate on the earliest of these conditions: 1. On the expiration date of this rider; 2. On the monthly activity date on or next following the date we receive your written request; 3. On surrender of this rider to us; 4. On termination of this policy; or 5. On the policy maturity date. TERM RIDERS: If a renewable and convertible term rider is attached to the policy during a benefit period, the cost of insurance for that rider will be waived until the expiration date. If the Owner elects to convert that term rider, no benefits will be paid under this rider on the conversion policy. CHANGE OF POLICY: Once the disability benefit commences, you cannot change the specified amount of insurance (except for any increase(s) which result from exercising options under any Guaranteed Insurability Rider), the death benefit option, the mode of the planned periodic premium payments, or change the policy to another form of insurance. NONPARTICIPATING: This rider is nonparticipating. COST OF INSURANCE PAYMENTS AFTER THE RIDER HAS TERMINATED: We will not be liable for the cost of insurance payments on this rider after it terminates except to return them. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of the policy are hereby referred to and made a part of this rider. AMERITAS LIFE INSURANCE CORP. /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President COST OF INSURANCE TABLE On each monthly activity date, the monthly cost of insurance for this rider is equal to the product of A times B where: A is a factor based on the attained age, sex and smoking habit of the Insured and is shown in the table below. (Note: If this rider is issued with a special rating, this factor will be increased based on that rating. Any special rating will be shown on the Policy Schedule). B is the monthly deduction for the policy, including any table ratings and any riders attached to the policy except for this rider. - --------------------------------------------------------------------------------
MALE RATES FEMALE RATES MALE RATES FEMALE RATES Ages Non-Smoker Smoker Non-Smoker Smoker Ages Non-Smoker Smoker Non-Smoker Smoker 15 0.0362 0.0419 40 0.0467 0.0621 0.0460 0.0661 16 0.0362 0.0419 41 0.0472 0.0628 0.0478 0.0661 17 0.0362 0.0419 42 0.0479 0.0632 0.0483 0.0661 18 0.0362 0.0419 43 0.0505 0.0639 0.0513 0.0668 19 0.0362 0.0419 44 0.0543 0.0645 0.0551 0.0704 20 0.0253 0.0362 0.0243 0.0413 45 0.0547 0.0666 0.0564 0.0719 21 0.0253 0.0362 0.0267 0.0456 46 0.0554 0.0681 0.0576 0.0731 22 0.0253 0.0362 0.0289 0.0489 47 0.0603 0.0702 0.0629 0.0797 23 0.0253 0.0362 0.0308 0.0523 48 0.0659 0.0763 0.0691 0.0875 24 0.0253 0.0365 0.0322 0.0523 49 0.0730 0.0840 0.0777 0.0979 25 0.0253 0.0409 0.0348 0.0523 50 0.0797 0.0855 0.0849 0.0992 26 0.0283 0.0447 0.0356 0.0523 51 0.0903 0.0960 0.0971 0.1116 27 0.0308 0.0484 0.0377 0.0523 52 0.1028 0.1030 0.1120 0.1149 28 0.0336 0.0525 0.0393 0.0523 53 0.1014 0.1081 0.1146 0.1177 29 0.0361 0.0525 0.0414 0.0523 54 0.1044 0.1115 0.1299 0.1376 30 0.0361 0.0525 0.0414 0.0523 55 0.1133 0.1281 0.1517 0.1609 31 0.0361 0.0525 0.0414 0.0523 56 0.1297 0.1421 0.1540 0.1819 32 0.0361 0.0525 0.0414 0.0537 57 0.1425 0.1571 0.1695 0.2058 33 0.0361 0.0525 0.0414 0.0559 58 0.1564 0.1731 0.1917 0.1917 34 0.0361 0.0525 0.0414 0.0575 59 0.1700 0.1700 0.2150 0.2150 35 0.0369 0.0531 0.0414 0.0611 36 0.0390 0.0551 0.0415 0.0628 37 0.0409 0.0573 0.0435 0.0641 38 0.0433 0.0595 0.0457 0.0661 39 0.0459 0.0618 0.0479 0.0661 - --------------------------------------------------------------------------------
WDIS 4094 AMERITAS LIFE INSURANCE CORP. LOGO REDUCED LOAN INTEREST RATE RIDER CONSIDERATION This rider is issued in consideration of the application. A copy of the application is attached to the policy. COST There is no cost for this rider. DEFINITIONS START DATE: The 10th policy anniversary or the policy anniversary nearest the Insured's 55th birthday, whichever is later. RIDER AMOUNT: For the policy year following the Start Date, the Rider Amount is equal to 10% of the accumulation value on the Start Date. For each subsequent policy year, the Rider Amount is equal to the Rider Amount in the prior policy year times 1.04 plus 10% of the accumulation value on the Start Date. EXAMPLE: For issue age 35, the Start Date is the policy anniversary nearest the 55th birthday. Assume that at age 55, the accumulation value is $100,000. Policy Year After Age Rider Amount --------------------- ------------ 55 $10,000.00 56 20,400.00 57 31,216.00 58 42,444.64 59 54,163.23 60 66,329.75 61 78,982.94 62 92,142.26 63 105,827.95 64 120,061.07 65 134,863.51 66 150,258.05 67 166,268.38 For subsequent ages continue with above formula BENEFITS On and after the Start Date, the total loan up to the Rider Amount will be charged a reduced interest rate. Total loan means any outstanding policy debt plus new loans. Total loans up to the Rider Amount are subject to the availability of loans as described in the loan provisions of the policy. INTEREST After the Start Date, the total loan up to the Rider Amount will be charged an effective loan interest rate not to exceed 4% per year. Loans in excess of the Rider Amount will be charged the interest rate as stated in the loan provisions of the policy. The interest credited on the borrowed portion of the accumulation value will be 3.5%. GENERAL PROVISIONS EFFECTIVE DATE: The effective date of this rider shall be the policy date. For any insurance that has been reinstated, the effective date shall be the monthly activity date on or next following the date we approved the reinstatement. INCONTESTABILITY: The validity of this rider cannot be contested. REINSTATEMENT: This rider may be reinstated with the policy if no more than 3 years have passed since the date of termination. You must meet the requirements for reinstatement of the policy as described in the policy. TERMINATION OF RIDER: This rider will automatically terminate on the earliest of these conditions: 1. On surrender of this rider to us; 2. On termination of the policy; 3. On the policy maturity date. INCORPORATION OF POLICY PROVISIONS INTO RIDER: The provisions of this policy are hereby referred to and made apart of this rider unless otherwise specified in this rider. AMERITAS LIFE INSURANCE CORP. LOGO /s/ Norman M. Krivosha /s/ Kenneth C. Louis Secretary President PLR 4094 EX-99.1.(6)(A) 6 ARTICLES OF INCORPORATION OF ALIC RESTATED ARTICLES OF INCORPORATION OF AMERITAS LIFE INSURANCE CORP. MARCH 31, 1998 ARTICLE I Section 1 Name ---- The name of the Corporation is Ameritas Life Insurance Corp. (the "Corporation"). The principal place of business of the Corporation shall be at Lincoln, Lancaster County, Nebraska. Section 2 Resident Agent -------------- The resident agent to the Corporation shall be Norman M. Krivosha whose address is the Corporation office located at 5900 "O" Street, Lincoln, Nebraska. ARTICLE II Section 1 The Restated Articles of Incorporation shall commence and be in existence on January 1, 1998 at 12:01 a.m. Section 2 Duration -------- The period of the Corporation's duration is perpetual. ARTICLE III Purposes -------- The purposes for which the Corporation is organized are: (a) To transact a life, including variable life, and accident and health insurance business to the extent and in the manner permitted by law and in accordance with such licenses, certificates of authority, and permits as the regulatory agencies of the states and jurisdictions in which the Corporation may transact business, shall issue to it; (b) To issue policies, certificates, bonds and other contracts of insurance conforming in all particulars with the laws and regulations relating thereto; (c) To enter into reinsurance contracts and treaties; and (d) To do everything necessary, proper, advisable or convenient for the accomplishment of the purposes hereinabove set forth, and to do all other things incidental thereto or connected therewith which are not forbidden by the laws of the State of Nebraska or by these Articles of Incorporation. ARTICLE IV Section 1 Authorized Shares ----------------- The total number of shares which the Corporation has authority to issue is 25 million shares of capital stock, having a par value of $0.10 per share. Section 2 The Board of Directors may determine, in whole or in part, the preferences, limitations, and relative rights within the limits set forth in Neb. Rev. Stat. Section 21-2035, of (a) any class of shares before the issuance of any share of that class or (b) one or more series within a class before the issuance of any shares of that series. ARTICLE V Section 1 The business and affairs of the Corporation shall be conducted by a Board of Directors numbering not less than nine (9) nor more than twenty-one (21) divided into three classes as nearly equal in number as may be, as the By-laws of the Corporation shall provide. At least three (3) directors shall be residents of Nebraska. The term of office of each director shall be three (3) years and until his or her successor shall be elected and qualified. -2- Section 2 The Board of Directors shall exercise all of the corporate powers of the Corporation, except as otherwise provided by law, and shall manage all the property, business, and affairs of the Corporation. The majority of the Board of Directors shall constitute a quorum. The Board of Directors may provide for the appointment of an Executive Committee from among its number and may, to the extent allowed by law, delegate to such Committee any or all of its powers and authority not reserved or restricted by these Articles. Such delegation of powers and authority shall be set out in the By-laws of the Corporation. Section 3 The Board of Directors shall have full power from time-to-time to make, alter, amend or rescind by-laws, rules, and regulations for the conduct of the business and affairs of the Corporation in conformity with the provisions of these Articles of Incorporation and to employ or provide for the employment of such officers and agents and appoint such committees as it may, in its discretion, find appropriate for the conduct of such business and affairs. Section 4 The initial Board of Directors shall consist of thirteen (13) members. The initial Board of Directors who shall serve a term expiring at the annual meeting of the Corporation in year set forth following their respective names above and until their successors are elected and qualified shall be: James P. Abel 2000 Duane W. Acklie 1998 Lawrence J. Arth 1998 William W. Cook, Jr. 1998 Bert A. Getz 1999 James R. Knapp 2000 Robert F. Krohn 1999 Kenneth C. Louis 1998 Wilfred J. Maddux 1999 Paul C. Schorr, III 2000 William C. Smith 1999 Neal E. Tyner 2000 Winston J. Wade 1998 Section 5 Any vacancy in the Board of Directors occurring during the term of any director may be filled by the Board of Directors for the period from and after the appointment of such individual until the next regular election of directors, at which time the newly appointed director shall stand for election for the remaining unexpired term of such -3- director. Such a selection shall be made by a majority vote of the full number of directors. Section 6 The Board of Directors shall annually elect either a Chairman of the Board or a President or both, either of whom may be designated by the Board of Directors as the Chief Executive Officer or Chief Operating Officer, or both, a Secretary, a Treasurer, and such Vice Presidents as may be provided for by the By-laws, and shall appoint or employ or provide for the appointment or employment of such additional officers and employees as the Board of Directors shall determine to be desirable. One person may hold more than one executive office at a time, except that the Chairman of the Board or the President may not hold the office of Secretary, Treasurer or Vice President. ARTICLE VI Section 1 The annual meeting of the shareholders shall be held at the Home Office of the Corporation on such day and at such time of day as may be determined by the Board of Directors, but in no event later than June 30, of each year. Special meetings of Corporation may be called at any time by the Chief Executive Officer and shall be called by the Chief Executive Officer upon request from the majority of the Board of Directors. Notice of every special meeting of Corporation shall be delivered to each of the shareholders entitled to vote at his or her last known address not less than ten (10) nor more than fifty (50) days prior to the date set for the meeting. Such notice shall state the date and place of the special meeting, as well as the purpose for which it is called. Section 2 A quorum at any annual or special meeting of the members of the Corporation shall consist of a majority of the outstanding shares. ARTICLE VII Pursuant to the provisions of Neb. Rev. Stat. Section 21-20,110, the Corporation obligates itself in advance to provide indemnification in accordance with the provisions of Neb. Rev. Stat. Section 21-20,105 and shall be obligated to provide indemnification to the fullest extent permitted by law, including the provisions of Neb. Rev. Stat. Sections 21-20,102 to 21-20,111. -4- ARTICLE VIII Except as otherwise provided by law, these Articles may be amended at any annual meeting of the members by a vote of two-thirds of the qualified voters present and voting in person or by proxy or at a special meeting of the members by a like vote, but no amendment shall be acted upon at a special meeting unless the notice of such meeting includes a copy of the proposed amendment. -5- CERTIFICATION I, Norman M. Krivosha, duly elected and qualified Secretary of Ameritas Life Insurance Corp., Lincoln, Nebraska, hereby certify that the attached Restated Articles of Incorporation, is a true and exact copy of the Restated Articles of Incorporation duly adopted by the Board of Directors of Ameritas Life Insurance Corp. on February 27, 1998, and that said Restated Articles of Incorporation are in full force and effect. IN WITNESS WHEREOF, I have affixed my name as Secretary and have caused the corporate seal of said corporation to be hereunto affixed this 1st day ---------- of April, 1998. ------------- /s/Norman M. Krivosha --------------------------- Secretary Ameritas Life Insurance Corp. Corporate Seal EX-99.1(10) 7 APPLICATION OF POLICY APPLICATION FOR AMERITAS LIFE INSURANCE CORP. 1010-L VARIABLE UNIVERSAL (HEREINAFTER REFERRED TO AS ALIC) LIFE (LL-VUL) ONE AMERITAS WAY P.O. BOX 81889 Part 1 LINCOLN, NE 68501-1889 - -------------------------------------------------------------------------------- Instructions: Please print clearly in black ink. This form will be photocopied. - -------------------------------------------------------------------------------- 1 INSURED If no policy owner _________________________ __________________________ is specified in Name: Last/First/MI Social Security # section 2, the Insured will be _________________________ __________________________ the policy owner. Address Date of Birth: mo. day yr. _________________________ __________________________ City/State/Zip Birthplace (State) _________________________ [ ] Male [ ] Female Occupation Employer Is this insurance part of an employer-sponsored plan? [ ] Yes [ ] No - -------------------------------------------------------------------------------- 2 POLICY OWNER Complete only if _________________________ ____________________________ different from Full Name Social Security #/Tax ID # the Insured. _________________________ ____________________________ (IF A TRUST, GIVE Relationship to Insured Date of Birth: mo. day yr. TRUSTEE, TRUST NAME & TRUST DATE) _________________________ Occupation Employer ____________________________ Trust Date: mo. day yr. - -------------------------------------------------------------------------------- 3 MAILING ADDRESS ______________________________________________________ OF OWNER Address All notices will be ______________________________________________________ sent to this address. City/State/Zip - -------------------------------------------------------------------------------- 4 BENEFICIARY Unless otherwise _________________________ ____________________________ indicated, multiple Primary Relationship to Insured beneficiaries shall be paid equally or _________________________ ____________________________ to the survivor(s). Contingent Relationship to Insured - ------------------------------------------------------------------------------- 5 DEATH BENEFIT Amount of Insurance $ _____ Death Benefit Option (select only one) [] Option A (DEATH BENEFIT IS THE AMOUNT OF INSURANCE) [] Option B (DEATH BENEFIT IS THE AMOUNT OF INSURANCE PLUS THE ACCUMULATION VALUE) - -------------------------------------------------------------------------------- 6 TOBACCO USE Has the Proposed Insured smoked one or [ ] Yes [ ] No more cigarettes in the past twelve months? Has the Proposed Insured used any form [ ]Yes [ ] No of tobacco in the past twelve months? (IF YES, PLEASE EXPLAIN THE TYPE OF USE AND FREQUENCY) ____________________________________________________________ - -------------------------------------------------------------------------------- 7 OPTIONAL RIDERS [] Waiver of Monthly [] Children's Protection Rider Deductions [] Payor Waiver of Monthly [] Guaranteed Insurability Deductions (ONLY IF Option (ONLY IF INSURED IS INSURED IS AGE 14 & AGE 37 & UNDER) UNDER) $ ______________________________ [] _______________________ Election Amount (MIN. $25,000, MAX. $50,000) - -------------------------------------------------------------------------------- 8 PREMIUM [] Annual [] Semi-Annual [] Quarterly [] Monthly Bank MODE [] Single $ _______ [] Payroll Deduction Draft* Please select (COMPLETE THE which frequency AUTOMATIC BANK you would like to DRAFT SECTION make payments. FOUND ON THE OPTIONAL PROGRAMS PAGE) []1035 Exchange $___ from _______________ (COMPLETE ABSOLUTE (NAME OF COMPANY) ASSIGNMENT FORM INCLUDED IN BOOKLET) Planned Modal Premium $___ Initial Premium (paid with application $ ________________ - -------------------------------------------------------------------------------- ALL PREMIUM CHECK MUST BE MADE PAYABLE TO AMERITAS LIFE INSURANCE CORP. DO NOT LEAVE THE PAYEE BLANK OR MAKE CHECK PAYABLE TO THE REPRESENTATIVE. 041197P LL-VUL REV. 10-96 Page 1 of 4 Pages - --------------------------------------------------------------------------------
9 ALLOCATION VANGUARD NEUBERGER & BERMAN BERGER Whole VARIABLE INSURANCE FUND ADVISORS MANAGEMENT TRUST INSTITUTIONAL PRODUCTS TRUST percentages only, must Money Market ______% Limited Maturity Bond ________% IPT-100 Fund ________% total 100%. High Grade Bond ______% Balanced ________% IPT Small Co. Growth Fund ____% High Yield Bond ______% Partners ________% ______________________________% Balanced ______% Growth ________% ______________________________% Equity Income ______% ______________________________% ______________________________% Equity Index ______% ______________________________% ALIC Growth ______% ______________________________% Fixed Account ________________% Small Company Growth ______% ______________________________% International ______% ______________________________% Total______________________100%
- -------------------------------------------------------------------------------- 10 TELEPHONE I hereby authorize and direct ALIC to make allowable AUTHORIZATION transfers of funds or reallocation of net premiums among available subaccounts or to complete other financial Unless waived, transactions as may be allowed by the ALIC at the time the policy owner of request, based upon instructions received from the will have Policy Owner by phone. ALIC will not be liable automatic for following instructions communicated by telephone that telephone it reasonably believes to be genuine. ALIC will employ transfer reasonable procedures, including requiring the policy authorization. number to be stated, tape recording all instructions, and mailing written confirmations. If ALIC does not employ reasonable procedures to confirm that instructions communicated by telephone are genuine, ALIC may be liable for any losses due to unauthorized or fraudulent instructions. I understand: a) all telephone transactions will be recorded; and b) this authorization will continue to be in force until the earlier of (1) written revocation by the Policy Owner is received by ALIC or (2) ALIC discontinues this privilege. [] I elect NOT to have telephone transfer authorization. - -------------------------------------------------------------------------------- 11 EXISTING LIFE YEAR TYPE OF INSURANCE AMOUNT PURCHASED POLICY NAME OF COMPANY List all life a. ___________ __________ ___________ __________________ insurance existing on b. ___________ __________ ___________ __________________ life of Insured. (If c. ___________ __________ ___________ __________________ "None" so state) - -------------------------------------------------------------------------------- 12 REPLACEMENT Will the proposed policy replace or change any [] YES []NO existing annuity or insurance policy? (IF YES, PLEASE NOTE BELOW WHICH OF THE COVERAGES LISTED IN Q.11 ABOVE ARE INTENDED TO BE REPLACED. IF AN ANNUITY IS BEING REPLACED, PROVIDE COMPANY NAME AND YEAR ISSUED.) - -------------------------------------------------------------------------------- 13 OTHER a. Has any company declined, postponed, []Yes [] No COVERAGE modified, cancelled or refused to renew, reinstate or issue insurance on the life Please explain of the Proposed Insured? (IF YES, PLEASE any yes answers. EXPLAIN) _____________________________________________ NAME OF COMPANY REASON b. Is any other life insurance application []Yes [] No now pending or contemplated for the Proposed Insured with any other company? (IF YES, PLEASE EXPLAIN) _____________________________________________ NAME OF COMPANY - -------------------------------------------------------------------------------- 14 OTHER Has the Proposed Insured: INFORMATION a. Been charged with a driving violation, []Yes [] No Please explain had their licensed suspended or had any any yes answers. restriction placed on their license within the past 5 years? (IF YES, GIVE DRIVER'S LICENSE NUMBER) __________ STATE OF ISSUE ________ b. Participated in any vehicle racing, []Yes [] No parachuting, hang gliding, scuba diving or rodeos within the past 2 years, or is any such activity comtemplated? c. Flown within the past 3 years as a pilot, []Yes [] No student pilot, crew member or had any flying duties or is any such activity contemplated? d. Contemplate travel or residence in a []Yes [] No foreign county in the near future? (IF SO, WHERE) _________________________ - -------------------------------------------------------------------------------- LL-VUL REV. 10-96 Page 2 of 4 Pages - ------------------------------------------------------------------------------- 15 HEALTH HISTORY Please provide the name and complete address of the Answer the physician or medical center who would have the most current following and complete medical records for the Proposed Insured. questions regarding the Name of personal physician/medical center__________________ Proposed Insured. (IF NONE, SO STATE) Address____________________________________________________ Use Section 18 STREET CITY STATE ZIP or attach a separate sheet Reason last consulted ___________ Date ____________________ if necessary What treatment was given or medication prescribed? ________ to explain "yes" answers. Has the Proposed Insured: (IF YES, PLEASE EXPLAIN) NORTH CAROLINA 1. Ever been treated by a physician or other health care RESIDENTS DO NOT professional in the last ten years for any of the RESPOND TO following: Heart trouble, stroke, heart murmur, elevated QUESTION 15.5. blood pressure, lung or respiratory disorder, tumor, cancer, digestive disorder, diabetes, nervous or mental MAINE RESIDENTS, disorder? (EXPLAIN) []Yes [] No YOU MAY ANSWER 2. Consulted a physician or been examined or treated at a QUESTION 2. "NO" hospital or other medical facility in the last five IF YOU HAVE years? []Yes [] No TESTED POSITIVE 3. Ever used narcotics, barbiturates, amphetamines, FOR HIV AND cocaine, LSD, marijuana or hallucinogenic HAVE NOT drugs? (EXPLAIN) []Yes [] No DEVELOPED 4. Ever received counseling or treatment for the use SYMPTOMS OF THE of alcohol or drugs? (EXPLAIN) []Yes [] No DISEASE AIDS. 5. Ever been a member of any support group for the use of alcohol or drugs? (EXPLAIN) []Yes [] No Exact Height ____ ft.____in. Exact Weight________lbs. [] Gained [] Lost_________ pounds in past year. - -------------------------------------------------------------------------------- 16 SUITABILITY a. Annual income from occupation $___ INFORMATION b. Annual income from other sources $___ Indicate source(s)______ Questions a. c. Projected income for next (DIVIDENDS, RENTAL INCOME through e. 12 months INTEREST, ETC.) and the d. Estimated net worth Investment (excluding home) $___ Objectives/ e. Tax Bracket ____ Risk Tolerance section apply Investment Objectives Risk Tolerance to the --------------------- -------------- (MULTIPLE INVESTMENT Applicant OBJECTIVES MAY BE (Policy Owner) ____ Long Term Gain ___ Low Risk SELECTED AND RANKED if different ____ Short Term Gain ___ Medium Risk EQUALLY. FOR RISK from the ____ Income ___ Speculative TOLERANCE, PLEASE Proposed ____ Tax Advantaged ___ High Risk RANK 1 = HIGH) Insured. ____ Safety of Principal Has the Proposed Insured used a different name within the last five years? (IF YES, LIST NAMES) ___________________________ []Yes [] No Is the Proposed Insured a citizen of the United States? _________________________________ []Yes [] No If the Proposed Insured is a juvenile, are all brothers and sisters (if any) insured for an amount equal to or greater than this child? (IF NO, EXPLAIN)________________________________ []Yes [] No If the Proposed Insured is a juvenile, what is the total amount of life insurance in force on the parent(s)? $____________ - -------------------------------------------------------------------------------- 17 TELEPHONE Home Phone: ( )___________ Best time to call: [] a.m. [] p.m. INTERVIEW Business Phone: ( )_______ [] a.m. [] p.m. To expidite If there are not the phone numbers of the the Proposed Insured, who will be contacting? underwriting process, we ________________________________________ ____________________ may contact (NAME) (RELATIONSHIP) you for a personal (SHOW ANY UNUSUAL NAME PRONUNCIATION PHONETICALLY)____________ history interview. - -------------------------------------------------------------------------------- 18 SPECIAL INSTRUCTIONS - -------------------------------------------------------------------------------- 19 ENDORSEMENTS/ No change in the amount, plan, classification or benefits CORRECTIONS will be effective unless agreed to in writing by the owner. This space will not be used in MD, PA, WV or any other state if not allowed by Statute or Insurance Dept. Regs. Home Office Use Only - -------------------------------------------------------------------------------- LL-VUL REV. 10-96 Page 3 of 4 Pages - -------------------------------------------------------------------------------- 20 AGREEMENTS I AGREE AS FOLLOWS: 1. Any policy including any endorsements issued as a result NOTE FOR KENTUCKY of this application will, with this application and any AND OHIO RESIDENTS: supplemental applications, be the entire insurance Any person who, contract. with intent to 2. No agent, broker or medical examiner can: a) waive the defraud or knowing answers to any questions in this application; b) make or that he is change any insurance contract; or c) waive any rights or facilitating a rules of ALIC. fraud against an 3. EXCEPT AS SPECIFIED OTHERWISE IN A RECEIPT PROVIDED UPON insurer, submits A PAYMENT OF PREMIUM AT THE TIME OF APPLICATION, an application INSURANCE WILL NOT BE EFFECTIVE UNTIL ALL OF THE or files a claim FOLLOWING ARE MET: A) THE POLICY ISSUED BY ALIC IS containing a false DELIVERED TO AND ACCEPTED BY THE APPLICANT; B) THE FIRST or deceptive FULL PREMIUM IS PAID. statement is 4. ALIC may change this application by an appropriate guilty of notation in the space marked "Endorsements and insurance fraud. Corrections": a) to correct apparent errors or omissions; and b) to conform it with any policy rider that may be issued. No change will be made in the following without the applicant's written consent: a) amount of insurance; b) plan of insurance; c) classification of risks; or d) benefits. Acceptance of any policy issued under this application ratifies any amendments. 5. I UNDERSTAND THAT: A) THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY VARY WITH INVESTMENT EXPERIENCE, LOANS AND OTHER SPECIFIED CONDITIONS; B) POLICY VALUES NOT IN THE FIXED ACCOUNT WILL INCREASE OR DECREASE IN ACCORDANCE WITH THE EXPERIENCE OF THE SELECTED INVESTMENT OPTIONS OF THE SEPARATE ACCOUNT; C) THE AMOUNT OF THE BENEFIT PAYABLE ON SURRENDER IS NOT GUARANTEED, BUT IS DEPENDENT ON THE THEN SURRENDER VALUE; D) ILLUSTRATIONS OF BENEFITS, INCLUDING THE DEATH BENEFIT, ARE AVAILABLE UPON REQUEST; AND E) THIS POLICY MEETS MY INVESTMENT OBJECTIVES AND ANTICIPATED FINANCIAL NEEDS. - -------------------------------------------------------------------------------- 21 DISCLOSURES I hereby acknowledge receipt of the current prospectus, and any supplements, for this policy. - -------------------------------------------------------------------------------- 22 AUTHORIZATION I authorize any licensed physician, medical practitioner, This authoriza- hospital, clinic or other medically related facility tion or a photo- insurance company, Equifax or any information service or copy of it, shall financial institution, family member, or associate to remain valid for release to ALIC or any person or entity acting on its use by ALIC for behalf, any personal information which is on file and two (2) years relates to my/our health or mental condition, general from the date character driving records, use of alcohol and drugs, and below. hobbies of a hazardous nature. In addition, I authorize the Medical Information Bureau (MIB) to release to ALIC or its reinsurers, any personal information which is on file and relates to me/us. I also agree that I have received and read the "Notice of ALIC's Insurance Information Practices," MIB and Investigative Consumer Reports. I also understand that my authorized representative and I can receive a copy of this authorization if we so desire. - -------------------------------------------------------------------------------- 23 SUBSTITUTE W-9 I certify under penalty of perjury that: 1) the number CERTIFICATION shown on this form is my correct taxpayor identification number (or I am waiting for a number to be issued to me); and 2) I am not subject to backup withholding because: a) I am exempt from backup withholding, or b) I have not been notified by the Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or c) the IRS has notified me that I am no longer subject to backup withholding. You must cross out item 2 if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING. - -------------------------------------------------------------------------------- 24 SIGNATURES I represent to the best of my knowledge and belief that all statements and answers to this application are complete and true. Dated at (City, State) ____________On this Date____________ X ________________________ X ____________________________ Signature of Proposed Signature of Policy Owner Insured (Parent or if NOT Proposed Insured, Guardian if Juvenile) Parent or Guardian. (If a Corporation or Trust, show full name) X _________________________________________________________ Signature(s) and Title of Officer or Trustee(s) - -------------------------------------------------------------------------------- 25 REPRESENTATIVE'S/ Do you have any knowledge or reason to believe that AGENT'S replacement of existing insurance or annuity coverage may STATEMENT be involved? []Yes [] No Policy Delivery: I certify that: (1) the information provided by the owner - --------------- has been accurately recorded; (2) a current prospectus and Send to: []Owner all supplements were delivered; and (3) I have reasonable []Repre- grounds to recommend the purchase of the policy as suitable sentative or the owner. If not completed, policy will be ___________________________________________________________ mailed to owner. Signature of Registered Representative/Agent Medical Requirements __________________________________________________________ - -------------------- Representative/Agent Name (PLEASE PRINT) Code [] Representative to order ___________________________________________________________ [] Home Office to Agency or Broker/Dealer (PLEASE PRINT) Code order - -------------------------------------------------------------------------------- LL-VUL REV. 10-96 Page 4 of 4 Pages B/D Review EX-99.1.(11) 8 MEMORANDUM-EXCHANGES DESCRIPTION OF AMERITAS LIFE INSURANCE CORP'S (ALIC'S) METHOD OF COMPUTING EXCHANGE ADJUSTMENTS PURSUANT TO RULE 6e-3(T)(b)(13)(v)(B) UNDER THE INVESTMENT COMPANY ACT OF 1940 This document explains the method that ALIC will use to compute cash values and payments due when a flexible premium variable life insurance policy (the Policy) is exchanged for a flexible premium adjustable life insurance policy (the new policy) issued by ALIC or one of its affiliated companies. The policyowner may exchange the Policy while it is in force for a new policy on the life of the Insured, without new evidence of insurability, at any time within 24 months of the policy date shown on the schedule page of the Policy. To make the exchange, the policyowner must send the Policy, a completed application for exchange and any required payment to ALIC's Home Office. To make this exchange, no monthly deduction under the Policy can be unpaid beyond a grace period; any outstanding debt on the policy must be repaid or liquidated; any assignment must be released or continued on the new policy; and any amount required to pay the first premium on the new policy and any cost for exchange must be paid. The new policy will have the same policy date, issue age and risk class of the Insured as the Policy. The new policy will be a flexible premium adjustable life insurance policy issued by ALIC or its affiliates at the time of exchange. The policy provisions and applicable charges for the new policy and its riders will be the same as those which would have applied had the new policy been issued originally. The accumulation value of the new policy on the exchange date will equal the cash surrender value of the Policy on the valuation date immediately prior to the exchange date plus the accumulation value provided by any net premium credited to the new policy on the exchange date, less monthly deductions under the new policy. If any loan was liquidated (i.e. remained unpaid at the time of the exchange), the specified amount of the new policy will be reduced by the amount of such liquidated loan. The change will be effective on the valuation date next following the date all financial and contractual arrangements for the new policy have been completed and processed. No further adjustments are made in values and payments upon an exchange. EX-99.1.(12) 9 MEMORANDUM-ISSUE TRANSFER DESCRIPTION OF AMERITAS LIFE INSURANCE CORP.'S ISSUANCE, TRANSFER AND REDEMPTION PROCEDURES FOR POLICIES PURSUANT TO RULE 6e-3 (T)(b)(12)(ii) UNDER THE INVESTMENT COMPANY ACT OF 1940 Set forth below is the information called for under Rule 6e-3 (T) (b) (12) (ii) under the Investment Company Act of 1940 ("1940 Act"). That rule provides an exemption for separate accounts, their investment advisors, principal underwriters and sponsoring insurance company from Sections 22(d), 22(e), and 27(c)(1) of the 1940 Act, and Rule 22(c)-2 promulgated thereunder, for issuance, transfer and redemption procedures under flexible premium variable life insurance policies in the extent necessary to comply with Rule 6e-3(T), state administrative law or established administrative procedures of the life insurance company. In order to qualify for the exemption, procedures must be reasonable, fair and non-discriminatory and they must be disclosed in the registration statement filed by the separate account. ALIC's Separate Account LLVL (the "Account") is registered under the 1940 Act. Within the Account are investment Subaccounts, which as of September 12, 1995 are expected to be the Vanguard Variable Insurance Fund ("Vanguard Funds") Money Market, High-Grade Bond, Balanced, Equity Index, Equity Income, Growth and International Subaccounts; the Neuberger & Berman Advisers Management Trust ("Neuberger & Berman Funds") Limited Maturity Bond, Growth, Partners, and Balanced Subaccounts. Procedures apply equally to each Subaccount and for purposes of this description are defined in terms of the Account, except where a discussion of both the Account and its Subaccounts is necessary. Each Subaccount invests in shares of a corresponding portfolio of the Vanguard Funds and the Neuberger & Berman Funds. The investment experience of the Subaccounts of the Account depends on the market performance of the corresponding Fund portfolios. Although flexible premium variable life insurance policies funded through the Account may also provide for fixed benefits supported by ALIC's general account, except as otherwise explicitly stated herein, this description assumes that net premiums are allocated exclusively to the Account and that all transactions involve only the Subaccounts of the Account. I. PROCEDURES RELATING TO ISSUANCE AND PURCHASE OF THE POLICIES ------------------------------------------------------------ Set out below is a summary of the principal policy provisions and administrative procedures which might be deemed to constitute, either directly or indirectly, an "issuance or purchase" transaction. The summary shows that, because of the insurance nature of the policies, the procedures involved necessarily differ in certain significant respects from the purchase procedures for mutual funds and contractual plans. The chief differences revolve around the structure of the cost of insurance and the insurance underwriting (evaluation of risk) process. There are also certain policy provisions such as Guaranteed Death Benefit, reinstatement and loan repayment which do not result in the issuance of a policy but which require certain payments by the Policyowner and may involve a transfer of assets supporting the policy values into the Account. A. Cost of Insurance Rates, Guaranteed Death Benefit Premiums and ------------------------------------------------------------------ Underwriting Standards ---------------------- Costs of insurance rates, and Guaranteed Death Benefit Premiums for ALIC's policies will not be the same for all Policyowners. The chief reason is that the principle of pooling and distribution of mortality risks is based upon the assumption that each Policyowner pays a cost of insurance charge commensurate with the Insured's mortality risk which is actuarially determined based upon factors such as age, sex, health and occupation. In the context of life insurance, a uniform mortality charge (the "cost of insurance charge") for all insureds would discriminate unfairly in favor of those Insureds representing greater mortality risks to the disadvantage of 1 those representing lesser risks. Accordingly, although there will be a uniform "public offering price" for all Policyowners, because premiums are flexible and amounts allocated to the Account will be subject to the same deductions, there will be a different "price" for each actuarial category of policyholders because different cost of insurance rates will apply. The "price" will also vary based on the net amount at risk. While not all Insureds will be subject to the same cost of insurance rate, there will be a single cost of insurance rate for all persons of the same age, sex, risk, size of policy and smoking class and whose policies have been in effect for the same length of time. The Guaranteed Death Benefit premium as described below reflects the different cost of insurance rates for males and females, and varies by age. Current cost of insurance rates will be determined by ALIC based upon expectations as to future mortality experience. The cost of insurance rates are guaranteed to not exceed rates based upon the Commissioner's 1980 Standard Ordinary Smoker and Nonsmoker, Male and Female Mortality Tables. A table showing the maximum cost of insurance rates reflecting the actuarial risk class of the Insured will be part of the policy. The current cost of insurance charge will be included in the annual report. ALIC will require a minimum initial premium of at least 25% of the total first year monthly deductions including charges for riders, and any substandard risk adjustments to be received into ALIC's home office in good federal funds to put the policy in force. This premium is less than the Guaranteed Death Benefit Premium. The payment of the minimum initial premium will not guarantee that the policy remains in force. The annual Guaranteed Death Benefit Premium will vary by sex and policy size and reflects the initial specified amount for the policy and any riders. For policies issued on a Unisex basis, the costs of insurance rates are based upon a 80% male/20% female assumption and are guaranteed not to exceed the cost of insurance rates based upon the 1980 CSO-B Unisex Table. The annual Guaranteed Death Benefit premiums for the policy were calculated to never exceed the SEC guideline premium which is defined by using 5% interest, the standard guaranteed cost of insurance rates, the percent of premium loads, the per policy administrative charges, an annual mode, and the level death benefit option with any applicable tax corridor death benefits. Policyowners, with the help of the registered representative, may determine a planned periodic premium payment schedule that provides for a level premium payable at a fixed interval. This payment schedule may include the premiums required for the Guaranteed Death Benefit Provision. Factors considered in setting the planned periodic premium payment schedule and selecting the death benefit option include, but are not limited to, the Insured's age and risk classification; the Policyowner's economic circumstances including future obligations, retirement and tax sheltering needs; the Policyowner's judgment regarding market needs; the death benefit needs of the beneficiary; and the desire to qualify for the Guaranteed Death Benefit Provision. Payment of premiums in accordance with this schedule is not, however, mandatory and failure to do so will not of itself cause the policy to lapse. Instead, Policyowners may make premium payments in any amount at any frequency, subject only to the initial premium requirements described above and any minimum acceptable premium amount and maximum premium limitations including those set forth in the Internal Revenue Code. If at any time a premium is paid which would result in total premiums exceeding the current IRC maximum premium limitation, ALIC will accept only that portion of the premium which will make total premiums equal such maximum. Any portion of the premium in excess of such maximum will be returned to the Policyowner and no further premiums will be accepted until allowed by the then current maximum premium limitations set forth in the Internal Revenue Code. The policy will remain in force so long as the surrender value is sufficient to pay the monthly deductions imposed in connection with the policy or so long as the cumulative Guaranteed Death Benefit premiums are paid on the policy. Thus, without exercising the guaranteed death benefit 2 option, a premium, if any, that must be paid to keep the policy in force depends upon the net accumulation value of the policy which in turn depends on such factors as the investment experience of the Account and the cost of insurance charge reflecting the cost of insurance rate and the net amount at risk. The policies will be offered and sold pursuant to ALIC's established underwriting standards and in accordance with state insurance laws. State insurance laws prohibit unfair discrimination among Insureds but recognize that premiums and cost of insurance rates may be based upon factors such as age, sex, health and occupation. B. Application and Initial Premium Processing ------------------------------------------ Upon receipt of a completed application form from a prospective Policyowner, ALIC will follow certain insurance underwriting (i.e., evaluation of risk) procedures designed to determine whether the proposed Insured is insurable. In some cases, the process may involve such verification procedures as medical examinations and may require that further information be provided by the proposed Insured before a determination can be made. A policy cannot be issued, i.e., physically issued through ALIC's computerized issue system, until this underwriting procedure has been completed. The date on which the insurance coverage applied for on the proposed Insured begins is called the policy date. Interim insurance may be provided under the terms of the conditional receipt, described later in this section. The policy date represents the first day of the policy year and therefore determines the policy anniversary and monthly activity date. Suicide and contestable periods are measured from the policy date. The policy date and the issue date are normally the same date unless an earlier policy date is requested or the issue date is a later date as described herein. The issue date is the date that all financial, contractual, and administrative requirements have been completed and processed for the policy. When all required premiums and application amendments have been received by ALIC in its Home Office, the issue date will be the date the policy is mailed to the policyholder or sent to the agent for delivery to the policyholder. This will normally also be the policy date. When application amendments or additional premiums need to be obtained upon delivery of the policy, the issue date will be when the policy receipt, the application amendments and/or funds are received in ALIC's Home Office and the application amendments are reviewed. The issue date marks the date on which benefits begin to vary in accordance with the investment performance of the Subaccounts. It is shown on the confirmation notice. Any premiums submitted with the application will be held in ALIC's general account prior to the issue date. Amounts held in the general account are credited with interest at a rate determined by ALIC for the period from the date funds are received by ALIC (except in the case of insufficient funds) until the issue date, but in no event will interest be credited prior to the policy date. On the issue date, ALIC will allocate the initial net premiums to the Money Market subaccount corresponding to the Money Market portfolio of the Vanguard funds. After a 13-day period the monies will be allocated to the designated Subaccounts. If interim conditional receipt insurance on the proposed Insured is desired pending the issue of the policy, ALIC will require a payment at the time of application equal to the greater of $15.00 or one modal premium for the amount of life insurance applied for. Such interim insurance is conditional with time and amount limitations. These conditions are shown in the Conditional 3 Receipt section of the application as follows: 1. This interim insurance will be effective upon the death of a proposed Insured before the policy delivery when ALL of these conditions are met: a. The greater of $15.00 or one modal premium for the amount and plan of life insurance applied for is paid; and b. All medical examinations, tests, and related data required by ALIC's rules are completed for each proposed Insured within 60 days of the date of Part I of the Application. 2. The insurance for each proposed Insured which will be effective before policy delivery is limited to the smaller of: a. The combined amount in force and applied for with ALIC and its affiliated companies; b. $100,000; or c. $25,000 if the proposed Insured is under age 10 or over age 60 at his or her nearest birthday. ((a), (b) and (c) above include life insurance and accidental death benefits.) 3. If one or more conditions in Paragraph No. 1 on any proposed Insured are not completely met, then ALIC is liable only to return any premium paid for coverage on that proposed Insured. Any insurance in effect because of the Conditional Receipt will end at the earliest of: a. The date notice is mailed that the application is not accepted; or b. At the end of 60 days from the date of this Receipt. 4. "Effective Date" means the latest of these dates; a. The date of the Application in Part 1; b. The date all medical data or tests required by ALIC's rules, if any, are completed; c. The policy date asked for in the Application, or d. The date on which the proposed Insured is at least 4 days of age. The minimum initial specified amount at issue is $100,000 under ALIC's current rules. ALIC reserves the right to revise its rules from time to time to specify a different minimum initial specified amount for subsequently issued policies. C. Premium Processing ------------------ The net premiums are credited to the policy Account as of the valuation date next following the day that the premium payments accompanied by proper notice are received by ALIC with the possible exception of the first net premium which is credited on the issue date as described in the preceding section. "Proper notice", for purposes of this paragraph, means that the policy number and the manner in which the payment is to be allocated (premium payment vs. loan repayment) must be indicated. The valuation date is as of the close of trading of the New York Stock Exchange on each day on which the Exchange is open for trading. The net premium equals 4 the premium paid less a premium charge of up to 5% (currently 3.5%) to defray the expense of state premium taxes and the cost of deferring the tax deduction on certain policy acquisition costs. The policy does not have a premium charge or sales load except the 5% charge described herein. There is no sales load and there is no surrender charge. The prospective owner at the time the application is taken will indicate the percentage allocation of the net premiums to the Subaccounts of the Account or to the fixed account. All net premiums will be allocated in accordance with the Policyowner's proper written instructions. ALIC will permit the Policyowner to change the allocation of later net premiums without charge. "Proper", for purposes of this paragraph, means that the notice/instructions must include the policy number(s) to which the instructions apply. Any such change will apply to future net premiums received after ALIC receives the change. If the request for change in allocation is made incorrectly, net premiums will be allocated in accordance with the most recent instructions on ALIC's records until an allocation or correction is received from the Policyowner. If there is no allocation or the allocation is incorrect on the application, net premiums will be held in ALIC's general account until an allocation or correction is received from the Policyowner; the issue date will be after such correction is received. Any unscheduled premiums received will be allocated in accordance with the Policyowner's prior instructions for net premiums. The Policyowner at the time that an unscheduled premium is paid may specify the amount (not less than $25 per Subaccount or fixed account) or the percentages of the unscheduled premium payment to be allocated among the Subaccounts. Any special instructions for allocating unscheduled net premiums will be followed with no charge. The minimum percentage of each net premium (scheduled or unscheduled) that may be allocated to any Subaccount of the Account or the fixed account is 10%. All percentages must be expressed in whole numbers and must total 100%. D. Reinstatement ------------- During the Insured's life, the policy can be considered for reinstatement if it terminated because a grace period ended without sufficient payment being paid. Any reinstatement must be done within three years from the end of the grace period. (This period will be longer if required by state law.) The policy cannot be reinstated if it has been surrendered for its net cash surrender value, nor can it be reinstated after the maturity date. A written application for reinstatement must be made to ALIC. Reinstatement will be effected based upon the insured's underwriting classifications at the time of reinstatement. Reinstatement is subject to the following: a. Evidence of insurability of the Insured satisfactory to ALIC (including evidence of insurability of any person covered by a rider to reinstate the rider); b. Any policy debt will be reinstated with interest due and accrued; c. The policy cannot be reinstated if it has been surrendered for its net cash surrender value; d. The payment of a premium sufficient to pay premium charges on the premium paid and monthly and other policy charges for the next three policy months; and e. If the reinstatement occurs during the first three years, the owner may pay premiums in the amount necessary to meet the cumulative monthly requirement of the Guaranteed Death Benefit premium as of the date of reinstatement, as if the policy had not lapsed. 5 The effective date of the reinstatement will be the first monthly activity date on or next following the date the application for reinstatement is approved and the required payment received. ALIC will treat the amount paid upon reinstatement as a premium. It will deduct the appropriate percent of premium charge. The accumulation value of the reinstated policy will immediately upon reinstatement be equal to this net premium payment plus the accumulation value on the date of lapse, less the amounts stated above. If any policy debt was reinstated, that debt will be held in ALIC's general account. Accumulation value calculations will then proceed as described in the policy. E. Repayment of Loan ----------------- A loan made under the policy may be repaid at any time with an amount equal to the original loan plus loan interest. ALIC charges interest to policyholders at regular and reduced rates. After the later of age 55 or the tenth policy anniversary (the start date), the policyholder can borrow each year a limited amount of the accumulation value of the policy at a reduced interest rate. Interest will accrue on a daily basis at a rate of up to 4% per year. The amount available at the reduced rate is 10% of the accumulation value, as of the start date, times the number of years since the start date increased by the accrued interest charges on the reduced loan amount. Regular loans will accrue interest on a daily basis at a rate of up to 6% per year. If unpaid when due, interest will be added to the amount of the loan and bear interest at the same rate. When a policy loan is made or when loan interest is not paid when due, an amount of accumulation value sufficient to secure the policy debt is transferred out of the Account into ALIC's general account. The amount of the accumulation value attributable to outstanding policy debt will be credited with interest at an annual rate of 3.5%. ALIC will retain the difference between that rate and the loan interest rate, if any, to cover loan investment expenses, income taxes, if any, and processing costs. When a loan repayment is made, the accumulation value in the general account related to that payment will be transferred to the Subaccounts or the fixed account in the same proportion that net premiums are being allocated unless otherwise instructed. The 3.5% annual interest credited on outstanding policy debt will also be annually allocated to the Subaccounts in the same proportion that net premiums are being allocated. F. Correction of Misstatement of Age, and Sex ------------------------------------------ If ALIC discovers that the age or sex of the Insured or of any person insured by rider has been misstated, it will adjust the death benefits under the policy. The death benefit will be adjusted to the amount that would be purchased by the most recent cost of insurance deductions using the correct cost of insurance rate. II. TRANSFER AMONG SUBACCOUNTS -------------------------- The Account currently has 11 Subaccounts, each of which is invested in shares of a corresponding portfolio of the Vanguard Variable Insurance Fund and the Neuberger & Berman Advisers Management Trust which are registered under the 1940 Act as open-end diversified management investment companies. All 11 are available to the Policyowner of the policy. The Policyowner may transfer accumulation value amounts from one Subaccount to another. ALIC will make no charge for the first fifteen transfers each policy year; thereafter, a $10.00 transfer charge may be deducted from the amount transferred. ALIC will effectuate transfers and determine all values in connection with transfers on the later of the date designated in the request or on the valuation date next following receipt of the written request at ALIC's Home Office. All transfers included in the request are treated as one transfer transaction. Transfers may also be made from the Subaccounts to the Fixed Account. 6 Transfers of up to the greater of: 25% of the accumulation value of the fixed account; the amount of any transfer from the Fixed Account during the prior thirteen months; or $1,000 may be made from the Fixed Account to the various subaccounts during the 30-day period following the yearly anniversary of the policy. Each transfer must be for a minimum of $250 or the balance in the Subaccount or Fixed Account, if less. The minimum amount which can remain in a Subaccount or Fixed Account as a result of a transfer is $100. Any amount below this minimum must be included in the amount transferred. Transfers resulting from policy loans and the exercise of exchange privileges will not be subject to a transfer charge. In addition, such transfers will not be counted for purposes of the limitation of free transfers. The request for amounts to be transferred may be in terms of dollars, such as a request to transfer $5,000 from one Subaccount to another or to the Fixed Account, or may be in terms of a percentage reallocation among Subaccounts or the Fixed Account. In the later case, the percentages must be in whole numbers and meet the requirements for net premium reallocations. The Policy's transfer privilege is not intended to afford Policyowners a way to speculate on short-term movements in the market. Accordingly, in order to prevent excessive use of the transfer privilege that may potentially disrupt the management of the Account and increase transaction costs, the Account has established a policy of limiting excessive transfer activity to two substantive transfers from each Portfolio (at least 30 days apart) during any calendar year. A substantive transfer is a transfer from a Subaccount for the lesser of: i) 51% of the Accumulation Value or ii) $100,000. This restriction does not limit non-substantive transfers and does not apply to transfers from the Money Market portfolio. III. "REDEMPTION PROCEDURES": SURRENDER AND RELATED TRANSACTIONS ----------------------------------------------------------- Set out below is a summary of the principal policy provisions and administrative procedures which might be deemed to constitute, either directly or indirectly, a "redemption" transaction. The summary shows that, because of the insurance nature of the policies, the procedures involved necessarily differ in certain significant respects from the redemption procedures for mutual funds and contractual plans. A. Surrender and Partial Withdrawals --------------------------------- At any time before the earlier of the death of the Insured or the maturity date, the Policyowner, with the consent of any assignee, may surrender the policy or partially withdraw part of the values by sending a written request to ALIC. To surrender the policy under current procedures, the policy itself must also be returned to ALIC. The amount payable upon surrender of the policy is the accumulation value on the valuation date next following the date ALIC receives written request less any outstanding policy debt. This amount is the net cash surrender value. Surrenders will generally be paid by mailing a check to the Policyowner within 7 days of receipt of the written request and the policy. In lieu of payment of the net cash surrender value in a lump sum upon surrender of a policy, an election may be made to apply all or a portion of the proceeds under one of the fixed benefit payment options described in the policy. The fixed benefit payment options are subject to the restrictions and limitations set forth in the policy, and will be paid by ALIC. A partial withdrawal of accumulation values may be made for an amount of at least $500 subject to the following rules: 7 1. The net cash surrender value in all Subaccounts or the fixed account after partial withdrawal must be the greater of $1,000 or an amount sufficient to maintain the policy in force for the remainder of the policy year. 2. Only one partial withdrawal per policy year can be made. 3. A request for withdrawal must be on a form approved by ALIC. Partial withdrawals are irrevocable. A partial withdrawal charge guaranteed to be the lesser of $50 or 2% of the amount of the partial withdrawal will be deducted from the amount of each partial withdrawal. The current partial withdrawal charge is the lesser of $25 or 2% of the amount of the partial withdrawal. The amount of the partial withdrawal, including the charge, will be deducted from the policy's accumulation value on the date that the request is received. The owner may designate how to allocate the partial withdrawal among the Subaccounts or fixed account provided that the minimum amount remaining in a Subaccount as a result of such allocation is $100. If no allocation designation is received, the partial withdrawal will be allocated in the same proportion that the accumulation value in each bears to the total accumulation value in all of the Subaccounts and the fixed account on the date ALIC receives the request in its Home Office. Partial withdrawals affect policy values. The accumulation value will be reduced by the amount of the partial withdrawal. If Death Benefit Option A is in effect on the date of the partial withdrawal, the specified amount may also be reduced by the amount of the partial withdrawal. These reductions reduce the death benefits. If the request for a partial withdrawal would cause the specified amount to be reduced below ALIC's minimum specified amount, the request for the partial withdrawal will not be implemented and the owner will be so notified in writing. ALIC's minimums for the specified amount after decreases are currently $100,000 for the first 3 policy years and $75,000 after the first 3 policy years. These minimums may be revised from time to time by ALIC. NOTE: Payment may be postponed whenever: 1) the New York Stock Exchange is closed other than customary weekend and holiday closings, or trading on the New York Stock Exchange is restricted as determined by the Commission; 2) the Commission by order permits postponement for the protection of Policyowners; or 3) an emergency exists, as determined by the Commission, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Account's net assets. Surrenders or partial withdrawals from the fixed account may be deferred for up to six months from the date of written request. Payments under the policy of any amount paid by check may be postponed until such time as the check has cleared the owner's bank. B. Death Benefit Proceeds Claims and Maturity Benefit -------------------------------------------------- As long as the policy remains in force, ALIC will generally pay death benefit proceeds to the named beneficiary in accordance with the designated death benefit option within 7 days after receipt of due proof of the death of the Insured. (Payment may be postponed under certain circumstances as described in the preceding section.) The death benefit proceeds will equal: 1. The death benefit; plus 2. Any additional death benefit proceeds provided by riders; minus 3. Any outstanding policy debt; minus 8 4. Any overdue monthly deductions including the deduction for the month of death. A claim during the suicide or contestable period may be limited as provided in the policy. The death benefit will vary by the Death Benefit Option A or B in effect at the time of death. It will never be less than the current specified amount of the policy. Option A: Basic Coverage The death benefit will be the greater of: 1. The current specified amount; or 2. A percentage of the accumulation value, where the applicable percentage is determined from the then effective tax corridor table as shown in the policy. Option B: Basic Coverage Plus Cash Value The death benefit will be the greater of: 1. The current specified amount plus the accumulation value; or 2. A percentage of the accumulation value, where the applicable percentage is determined from the then effective tax corridor table as shown in the policy. The accumulation value used for determining the amount of death benefit will be as of the valuation date when the Insured died. ALIC's requirements for satisfactory proof of death include: 1. A certified copy of the death certificate; 2. A Claimant Statement; 3. The policy; and 4. Any other information which ALIC may reasonably require to establish the validity of the contract. In lieu of payment of the death benefit proceeds in a lump sum, the beneficiary may elect to apply all or any part of the proceeds under one of the fixed benefit payment options described in the policy. The fixed benefit payment options are subject to the restrictions and limitations set forth in the policy. These options will be paid by ALIC. The amount of the benefit payable at maturity is the accumulation value less any outstanding debt of the Policy on the maturity date. This benefit will only be paid if the Insured is living on the policy maturity date. The policy will mature on the policy anniversary nearest the Insured's 100th birthday. C. Policy Loans ------------ After the first policy anniversary, the owner may obtain a policy loan from ALIC. The policy is the only security required. The maximum loan amount is 100% of the net cash surrender value less any guaranteed charges and accrued expenses as of the date of the policy loan and after adjustment for loan interest and guaranteed policy charges for the remainder of the policy year. The available loan amount at any time is the maximum loan amount less any outstanding policy 9 debt. ALIC charges interest to policyholders at regular and reduced rates. After the later of age 55 or the tenth policy anniversary, the policyholder can borrow each year a limited amount of the accumulation value of the policy at a reduced interest rate. Interest payments are due on each anniversary date. If interest is not paid when due, it will be added to the policy debt and bear interest at the same rate as the loan. Interest will accrue on a daily basis at a rate of up to 4% per year. The amount available at the reduced rate is 10% of the accumulation value as of the later of age 55 or the 10th policy anniversary (the start date) times the number of years since the start date increased by the accrued interest charges on the reduced loan amount. Regular loans may accrue interest on a daily basis at a rate of up to 6% per year. When a policy loan is made, or when interest is not paid when due, an amount of accumulation value sufficient to secure the policy debt is transferred out of the Account or the fixed account and into ALIC's general account. The owner may specify how to allocate that accumulation value among the Subaccounts or the fixed account provided that the minimum amount remaining in a Subaccount or fixed account as a result of the allocation is $100. If no allocation is made, the accumulation value will be allocated among the Subaccounts or the fixed account in the same proportion that the policy's accumulation value in each Subaccount or the fixed account bears to the total accumulation value in all Subaccounts or the fixed account on the date of loan. The loan will generally be paid 7 days after receipt of a written request; payment may be postponed under the circumstances described earlier under III Paragraph A "Surrender and Partial Withdrawals". Accumulation value in the general account will be credited 3.5% interest annually. The interest earned will be allocated annually to the Subaccounts or the fixed account in the same manner as net premiums. If the policy debt exceeds the accumulation value, the owner must pay the excess. ALIC will send notice of the amount due. If this amount is not paid within 61 days after the notice is sent, the policy will terminate without value. ALIC will send the notice to the owner and to any assignee of record at the Home office. Any loan transaction may permanently affect the values of this policy. D. Policy Lapse ------------ Lapse will occur when (a) policy debt exceeds the accumulation value, (b) the net cash surrender value is insufficient to cover the monthly deduction, or (c) the pro rata portion of the Guaranteed Death Benefit Premium for the policy and its riders is not paid throughout the first three policy years, the net cash surrender value is insufficient to cover the monthly deductions, and a grace period expires without a sufficient payment. If the policy debt exceeds the accumulation value less any accrued expenses, the owner must pay an amount equal to all excess indebtedness within 61 days after ALIC mails notice in order to avoid lapse. If the net cash surrender value on a monthly activity date is not sufficient to cover the monthly deduction, and the Guaranteed Death Benefit provision is not in effect, a grace period of 61 days will be allowed for the payment of a premium sufficient to cover the monthly deductions. The grace period will begin on the day ALIC mails notices of the necessary premium to the owner and any assignee of record in its Home Office. If a sufficient payment is made during a grace period, it will be treated as a premium payment and the net premium so paid will be allocated among the Subaccounts and the fixed account in accordance with the Policyowner's current instructions and any monthly deductions due will be charged. If a sufficient payment is not made during a grace period, the policy will lapse. 10 If the insured dies after notice of payment due, but before the expiration of a grace period, any due and unpaid monthly deductions will be deducted from the death benefit proceeds. Reinstatement may be permitted under the conditions described earlier after policy lapse. 11 EX-99.2.(A)(B) 10 OPINION AND CONSENT OF NORMAN M. KRIVOSHA Norman Krivosha Ameritas Life Insurance Corp. Logo Executive Vice President Secretary and Corporate General Counsel ________________________________________________________________________________ One Ameritas Way/P.O. Box 81889/Lincoln, NE 68501-1889/(402)467-7176 April 3, 1998 Ameritas Life Insurance Corp. 5900 "O" Street P.O. Box 81889 Lincoln, Nebraska 68501 Gentlemen: With reference to the Post-Effective Amendment No. 4 to Registration Statement No. 33-86500 on Form S-6 filed by Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. Separate Account LLVL with the Securities & Exchange Commission covering flexible premium life insurance policies, I have examined such documents and such laws as I considered necessary and appropriate, and on the basis of such examination, it is my opinion that: 1. Ameritas Life Insurance Corp. is duly organized and validly existing under the laws of the State of Nebraska and has been duly authorized to issue individual flexible premium variable life policies by the Insurance Department of the State of Nebraska. 2. Ameritas Life Insurance Corp. Separate Account LLVL is a duly authorized and existing separate account established pursuant to the provisions of Section 44-402.01 of the Statutes of the State of Nebraska. 3. The flexible premium variable life policies, when issued as contemplated by said Form S-6 Registration Statement, will constitute legal, validly issued and binding obligations of Ameritas Life Insurance Corp. I hereby consent to the filing of this opinion as an exhibit to the Post-Effective Amendment No. 4 to said Form S-6 Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus contained in the Registration Statement. Sincerely, /s/ Norman Krivosha Norman Krivosha Executive Vice President, Secretary and Corporate General Counsel EX-99.7.(A)(B) 11 OPINION AND CONSENT OF THOMAS P. MCARDLE Ameritas Life Insurance Corp. Logo ________________________________________________________________________________ One Ameritas Way/P.O. Box 81889/Lincoln, NE 68501-1889 (402)467-1122/(800)745-6665/Facsimile:(402)467-7956 April 3, 1998 Ameritas Life Insurance Corp. 5900 "O" Street P.O. Box 81889 Lincoln, Nebraska 68501 Gentlemen: This opinion is furnished in connection with the registration by Ameritas Life Insurance Corp., of a flexible premium variable life insurance policy ("Contract") under the Securities Act of 1933. With reference to Post-Effective Amendment No. 4 to Registration Statement No. 33-86500 on Form S-6 describes the Contract. The form of Contract was prepared under my direction and I am familiar with the Registration Statement and Exhibits thereto. This contract was developed and filed under Securities and Exchange Commission Rule 6E-3(T), as interpreted at this time by the SEC staff. In my opinion: The illustrations of death benefits and cash values included in the section entitled "Illustrations of Death Benefits and Cash Values" in the Appendices of the prospectus, based on the assumptions stated in the illustrations, are consistent with the provisions of the Contract. The rate structure of the Contract has not been designed so as to make the relationship between premiums and benefits, as shown in the illustrations, appear more favorable to prospective purchasers of the Contract for male age 45, than to prospective purchasers of the Contract for other ages or for females. I hereby consent to the use of this opinion as an exhibit to the Post-Effective Amendment No. 4 to the Registration Statement and to the reference to my name under the heading "Experts" in the prospectus. Very truly yours, /s/ Thomas P. McArdle Thomas P. McArdle Assistant Vice President and Associate Actuary EX-99.8 12 CONCENT OF DELOITTE & TOUCHE LLP INDEPENDENT AUDITORS' CONSENT - ----------------------------- We consent to the use in this Post-Effective Amendment No. 4 to Registration Statement No. 33-86500 of Ameritas Life Insurance Corp. Separate Account LLVL of our reports dated February 2, 1998, on the financial statements of Ameritas Life Insurance Corp.and Ameritas Life Insurance Corp. Separate Account LLVL appearing in the Prospectus, which is a part of such Registration Statement, and to the reference to us under the heading "Experts" in such Prospectus. /s/Deloitte & Touche LLP Lincoln, Nebraska April 2, 1998 EX-99.9 13 WITHDRAWAL RIGHT Ameritas Variable Life Insurance Company Logo - -------------------------------------------------------------------------------- One Ameritas Way / P. O. Box 82550 / Lincoln, NE 68501-2550 JOHN D SPECIMEN Policy Number: 1109005440 PO BOX 81889 Social Security Number: ###-##-#### LINCOLN NE 68501-1889 Insured: John D Specimen RE: Notice of Cancellation Right Mr. Specimen: Thank you for selecting this Low-Load Variable Universal Life insurance policy which combines the guarantees of insurance with the opportunities of investment. We believe it will serve you well. This letter is sent to you in accordance with the laws administered by the United States Securities and Exchange Commission (SEC). Please read it carefully and retain with your important records. Low-Load Variable Universal Life is a variable universal life insurance policy in which you may direct your net premiums into one or more of the investment accounts ranging from the Fixed Account (managed by ALIC) to the various portfolios in ALIC's Separate Account LLVL managed or administered by Vanguard Variable Insurance Fund, Neuberger & Berman Advisors Management Trust or Berger Institutional Products Trust. If you choose one or more of these portfolios, your benefits depend on their investment experience. Under the requirements of the SEC and your policy, you have the right to return this policy for cancellation within (1) 10 days from the date of receipt of this policy, or (2) 10 days from the date of receipt of this notice, or (3) 45 days from the date you signed the application, whichever is later. The amount of the refund is the greater of the premiums paid or the premiums paid adjusted by investment gains or losses. Please review the prospectus for details of Low-Load Variable Universal Life expenses and your cancellation right, and also the attachments to this letter which provide further details on your right of cancellation. While we hope you are pleased with your ownership of this policy, if you should decide to exercise this right of cancellation, complete the enclosed form and return your policy within the time period outlined above. Please do not hesitate to contact our Individual Client Services Department (1-800-745-6665) with any questions you may have about the insurance coverage, investment options, expenses, or your rights as a policyholder. Again, thank you for your confidence in Ameritas Life Insurance Corp., Vanguard Variable Insurance Fund, Neuberger & Berman Advisors Management Trust, Berger Institutional Products Trust and Low-Load Variable Universal Life. Sincerely, /s/Kenneth C. Louis President Form 4055 (1-1) Ameritas Variable Life Insurance Company Logo - -------------------------------------------------------------------------------- One Ameritas Way / P. O. Box 82550 / Lincoln, NE 68501-2550 JOHN D SPECIMEN Policy Number: 1109005440 PO BOX 81889 Social Security Number: ###-##-#### LINCOLN NE 68501-1889 Insured: John D Specimen LOW-LOAD VARIABLE UNIVERSAL LIFE INSURANCE POLICY In determining whether or not to exercise your right to cancel, you should consider, among other things: the insurance and investment needs served by your policy, the projected cost of your policy and the deductions from the premiums before the payment is allocated to the various investments available in the policy. You have been given a prospectus which describes the deductions from each premium payment which is a current 3.5% premium charge (guaranteed maximum of 5%). This charge is used to pay state and federal taxes. Deductions from the accumulation value in your accounts include: A monthly administrative expense charge of $9.00 during the first year and $4.50 thereafter (could be increased to a maximum of $9.00 in the future). A monthly cost of insurance based on the current cost of insurance rates now in effect (could be increased in the future to the TABLE OF POLICY CHARGES shown in your policy). A current mortality and expense charge of 0.75% of the accumulation value (could be increased to a guaranteed maximum of 0.90% in the future). There is no surrender charge on this policy at any time. If you later decide to surrender the policy, the full accumulation value less any outstanding policy debt will be available to you. Form 4055 (1-2) Ameritas Variable Life Insurance Company Logo - -------------------------------------------------------------------------------- One Ameritas Way / P. O. Box 82550 / Lincoln, NE 68501-2550 JOHN D SPECIMEN Policy Number: 1109005440 PO BOX 81889 Social Security Number: ###-##-#### LINCOLN NE 68501-1889 Insured: John D Specimen ***INSTRUCTIONS*** PLEASE READ CAREFULLY RE: Request for Cancellation If, after reading the enclosed notice, you elect to return your policy for cancellation, please: 1. Sign and date the bottom portion of this form. 2. Mail this notice together with your policy to: Ameritas Life Insurance Corp. One Ameritas Way, P.O. Box 81889 Lincoln, Nebraska 68501-1889 3. Make certain that the postmark of the return envelope is on or before the last date permitted for cancellation as described in the attached letter. ***TO BE COMPLETED BY OWNER*** TO: Ameritas Life Insurance Corp. (ALIC) Pursuant to the terms of the notice previously furnished me by ALIC, I hereby return the policy numbered above (The "Policy") for cancellation and request a refund. The amount of the refund will be the greater of the premiums paid or the premiums paid adjusted by investment gains or losses. I hereby release ALIC from any and all claims arising out of or in connection with the sale or issuance of the policy under state insurance law and I hereby acknowledge that ALIC's sole liability with respect to the policy is the refund to me. - ------------------------------------ ----------------------------------- Date Signature of Policyowner Form 4055 (1-3) EX-99.10 14 ACTUARY OPINON IN SUPPORT OF EXEMPTIVE APPLICATION ACTUARIAL OPINION Date: November 15, 1994 Re: DAC Tax Charge for Policy Form 4055 Ameritas Life Insurance Corp. experiences an increased tax burden resulting from Section 848 of the Internal Revenue Code of 1986, which was enacted in 1990 to modify the federal income tax of life insurance companies. Section 848 requires life insurance companies to capitalize and amortize part of their general expenses for the current year. Under prior law these expenses were deductible in full from the current year's gross income. The amount of deductions that would have to be amortized rather than deducted in the year incurred is a percentage of the current year's net premiums received in connection with certain types of insurance contracts. From an economic perspective, taking into account the time value of money, the tax burden of the insurance company is increased as it is related to those contracts covered by Section 848. This increased burden has been referred to as the "DAC tax". The impact of this DAC tax can be compared to that of a state premium tax since the amount of general deductions that must be capitalized and amortized is measured by premiums paid and the increased federal tax burden results from the receipt of those premiums. Reasonableness of DAC Tax Charge - -------------------------------- Policy Form 4055 includes a percent of premium charge, guaranteed not to exceed 5.00%. The DAC tax charge, equal to 1.00% of each premium payment, is included in the percent of premium charge and will be deducted from each premium payment to cover the estimated cost of the DAC tax. This charge is within the range of the DAC tax charge of various leading insurance companies; the following table shows the DAC tax charge that is included in some variable universal life policy forms: Company DAC Tax Charge ------- -------------- Merrill Lynch 1.25% Provident Mutual 1.25% Prudential 1.25% John Hancock 1.25% New England 1.00% The 1.00% charge is reasonably related to the additional federal income tax burden which Ameritas will experience, taking into account the benefit of amortization permitted by Section 848 and the use of a 10 percent discount rate in computing the cost of the increased tax burden and the future deductions resulting from such amortization. Reasonableness of Cost of Capital - --------------------------------- Ameritas determines its cost of capital as the after tax rate of return it seeks to earn on its surplus. The following factors are generally considered in the determination of the cost of capital: 1. The risk-free rate of return that can be expected to be earned over the long-term, based on current market rates, inflation and expected future interest rate trends. 2. The premium needed to earn over the risk-free rate to compensate for the risk profile of the insurance business. 3. Information available about the rates of return earned by other life insurance companies. Considering these factors, it is reasonable to use a 10% discount rate, i.e. cost of capital, in the determination of the DAC tax charge. Appropriateness of the Factors Used to Determine the Cost of Capital - -------------------------------------------------------------------- Ameritas makes sure that its projected rates of return are adequate to support its anticipated growth. If the rate of return is too low, surplus will decrease or will not increase sufficiently to support anticipated growth. Ameritas seeks to maintain a ratio of surplus to assets that it establishes based on its judgment of the risks represented by various components of its assets and liabilities. Maintaining the ratio of surplus to assets is critical for the maintenance of competitive ratings from various rating agencies and competitive pricing on new and inforce business. Therefore, it is appropriate to consider the factors shown above in the determination of Ameritas' cost of capital. EX-27 15
6 1 LLVL VANGUARD MONEY MARKET YEAR DEC-31-1997 DEC-31-1997 7,218,269 7,218,269 0 0 0 0 0 0 0 0 0 0 7,218,269 1,274,986 0 0 0 0 0 7,218,269 245,562 0 0 33,383 212,179 0 0 212,179 0 0 0 0 33,061,438 27,118,155 0 5,943,283 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 16
6 2 LLVL VANGUARD EQUITY INDEX YEAR DEC-31-1997 DEC-31-1997 3,376,563 4,081,960 0 0 0 0 0 0 0 0 0 0 160,571 68,977 0 0 0 0 705,397 4,081,960 47,557 0 0 20,371 27,186 33,570 633,010 693,766 0 0 0 0 132,217 40,623 0 2,733,452 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 17
6 3 LLVL VANGUARD EQUITY INCOME YEAR DEC-31-1997 DEC-31-1997 1,321,458 1,524,779 0 0 0 0 0 0 0 0 0 0 81,200 21,723 0 0 0 0 203,321 1,524,779 24,444 0 0 5,918 18,526 22,916 181,981 223,423 0 0 0 0 71,066 11,589 0 1,207,619 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 18
6 4 LLVL - VANGUARD GROWTH YEAR DEC-31-1997 DEC-31-1997 2,919,979 3,211,554 0 0 0 0 0 0 0 0 0 0 148,715 39,921 0 0 0 0 291,575 3,211,554 24,821 0 0 13,622 11,199 70,741 269,256 351,196 0 0 0 0 135,647 26,853 0 2,505,348 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 19
6 5 LLVL - VANGUARD BALANCED YEAR DEC-31-1997 DEC-31-1997 1,955,975 2,037,790 0 0 0 0 0 0 0 0 0 0 119,859 26,357 0 0 0 0 81,815 2,037,790 62,554 0 0 8,857 53,697 86,534 73,173 213,404 0 0 0 0 103,264 9,762 0 1,642,172 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 20
6 6 LLVL - VANGUARD HIGH GRADE BOND YEAR DEC-31-1997 DEC-31-1997 480,683 493,830 0 0 0 0 0 0 0 0 0 0 46,139 10,403 0 0 0 0 13,147 493,830 17,945 0 0 2,094 15,851 0 12,105 27,956 0 0 0 0 48,976 13,240 0 385,329 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 21
6 7 LLVL - VANGUARD INTERNATIONAL YEAR DEC-31-1997 DEC-31-1997 2,125,629 2,050,498 0 0 0 0 0 0 0 0 0 0 159,525 45,478 0 0 0 0 (75,131) 2,050,498 24,884 0 0 10,213 14,671 19,354 (87,836) (53,811) 0 0 0 0 175,098 61,051 0 1,471,104 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 22
6 8 LLVL VANGUARD HIGH YIELD YEAR DEC-31-1997 DEC-31-1997 227,636 230,647 0 0 0 0 0 0 0 0 0 0 21,778 0 0 0 0 0 3,011 230,647 7,800 0 0 670 7,130 254 3,011 10,395 0 0 0 0 57,153 35,375 0 230,647 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 23
6 9 LLVL VANGUARD SMALL COMPANY GROWTH YEAR DEC-31-1997 DEC-31-1997 364,647 376,871 0 0 0 0 0 0 0 0 0 0 34,378 0 0 0 0 0 12,224 376,871 1,148 0 0 1,158 (10) 0 12,224 12,214 0 0 0 0 58,091 23,713 0 376,871 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 24
6 10 LLVL - NEUBERGER & BERMAN BALANCED YEAR DEC-31-1997 DEC-31-1997 166,271 185,980 0 0 0 0 0 0 0 0 0 0 10,448 5,554 0 0 0 0 19,709 185,980 2,227 0 0 1,062 1,165 5,717 16,398 23,280 0 0 0 0 7,946 3,052 0 97,556 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 25
6 11 LLVL - NEUBERGER & BERMAN GROWTH YEAR DEC-31-1997 DEC-31-1997 563,170 666,771 0 0 0 0 0 0 0 0 0 0 21,833 12,586 0 0 0 0 103,601 666,771 0 0 0 3,818 (3,818) 34,617 83,104 113,903 0 0 0 0 20,903 11,656 0 342,299 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 26
6 12 LLVL - NEUBERGER & BERMAN PARTNERS YEAR DEC-31-1997 DEC-31-1997 1,627,667 1,961,025 0 0 0 0 0 0 0 0 0 0 95,195 34,241 0 0 0 0 333,358 1,961,025 1,903 0 0 8,694 (6,791) 29,308 267,038 289,555 0 0 0 0 87,118 26,163 0 1,396,740 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 27
6 13 LLVL - NEUBERGER & BERMAN LIMITED MATURITY BOND YEAR DEC-31-1997 DEC-31-1997 59,021 60,591 0 0 0 0 0 0 0 0 0 0 4,291 1,844 0 0 0 0 1,570 60,591 1,514 0 0 289 1,225 0 1,122 2,347 0 0 0 0 7,782 5,335 0 34,689 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 28
6 14 LLVL - BERGER IPT 100 FUND YEAR DEC-31-1997 DEC-31-1997 21,607 19,791 0 0 0 0 0 0 0 0 0 0 1,781 0 0 0 0 0 (1,816) 19,791 442 0 0 54 388 693 (1,816) (735) 0 0 0 0 2,859 1,078 0 19,791 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27 29
6 15 LLVL - BERGER IPT SMALL COMPANY GROWTH YEAR DEC-31-1997 DEC-31-1997 203,772 207,664 0 0 0 0 0 0 0 0 0 0 17,219 0 0 0 0 0 3,892 207,664 0 0 0 431 (431) 0 3,892 3,461 0 0 0 0 38,913 21,693 0 207,664 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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