As filed with the Securities and Exchange Commission on September 17, 2021
Registration Nos.

 

333-255746
811-05563

 
 
 

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-6

 

   

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

X

   

Pre-Effective Amendment No. 2

 

X

Post-Effective Amendment No. 

 

O

 

and/or

 

   

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

 

X

   
   

Amendment No. 535

 

X

 

PACIFIC SELECT EXEC SEPARATE ACCOUNT OF
PACIFIC LIFE INSURANCE COMPANY
(Exact Name of Registrant)

 

PACIFIC LIFE INSURANCE COMPANY
(Name of Depositor)

700 Newport Center Drive
Newport Beach, California 92660
(Address of Depositor’s Principal Executive Offices) (Zip Code)

 

(949) 219-3943
(Depository’s Telephone Number, including Area Code)

 

Brandon J. Cage
Assistant Vice President
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
(Name and Address of Agent for Service)

 

Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the Registration Statement. The Registrant hereby agrees to amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall therefore become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


 

It is proposed that this filing will become effective (check appropriate box)

 

O immediately upon filing pursuant to paragraph (b) of Rule 485
O on pursuant to paragraph (b) of Rule 485
O 60 days after filing pursuant to paragraph (a)(1) of Rule 485
O on ________ pursuant to paragraph (a)(1) of Rule 485

 

If appropriate, check the following box:

 

O This post-effective amendment designates a new date for a previously filed post-effective amendment. Such effective date shall be ________.

 

Title of securities being registered: interests in the Separate Account under M Vision Pacific Life SVUL Flexible Premium Variable Life Insurance with Indexed Option(s) Policy.

 

Filing fee: None

 
 
 

 

 

 
 


 

M VISION PACIFIC LIFE SVUL

PROSPECTUS [     ], 2021

 

M Vision Pacific Life SVUL is a last survivor flexible premium variable universal life insurance with indexed option(s) policy issued by Pacific Life Insurance Company (“Pacific Life”) through the Pacific Select Exec Separate Account of Pacific Life. This product is offered and serviced through M Insurance Solutions, Inc.

 

·     Flexible premium means you can vary the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing costs of Policy benefits.

 

·     Variable means the Policy’s value depends on the performance of the Investment Options you choose.

 

·     Universal Life insurance means you can accumulate cash value and the Policy provides a Death Benefit to the Beneficiary you choose.

 

·     Last survivor means the Policy insures the lives of two people and provides a Death Benefit payable after both people have died.

 

This prospectus provides information that you should know before buying a Policy. Please read the prospectus carefully and keep it for future reference.

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the shareholder reports for portfolio companies available under your Policy, will no longer be sent by mail, unless you specifically request copies of the reports from Pacific Life. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

 

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from Pacific Life electronically by accessing the Policy Owner website at www.visionportal.mfinancialgroup.com.

 

You may elect to receive all future reports in paper free of charge. You can inform Pacific Life that you wish to continue receiving paper copies of your shareholder reports by calling (866) 345-5954 or by visiting www.FundReports.com. Your election to receive reports in paper will apply to all portfolio companies available under your Policy.

 

This Policy has a selection of Investment Options for you to choose from. The Variable Investment Options available under this Policy invest in portfolios of the following Funds:

 

DFA Investment Dimensions Group Inc.

MFS Variable Insurance Trust

Fidelity® Variable Insurance Products Funds

Pacific Select Fund

Goldman Sachs Variable Insurance Trust

T. Rowe Price Equity Series, Inc.

Legg Mason Partners Variable Income Trust

Van Eck VIP Trust

M Fund, Inc.

Vanguard Variable Insurance Fund

 

You will find a complete list of each Variable Investment Option in the YOUR INVESTMENT OPTIONS section. This Policy also offers the following Fixed Option and Indexed Fixed Options:

 

FIXED OPTION

INDEXED FIXED OPTIONS

Fixed Account

1 – Year Indexed Account

 

1 – Year High Cap Indexed Account

 

1 – Year No Cap Indexed Account

 

2 – Year Indexed Account

 

You should be aware that the Securities and Exchange Commission (SEC) has not approved or disapproved of the securities or passed upon the accuracy or adequacy of the disclosure in this prospectus. Any representation to the contrary is a criminal offense.

 

This Policy is not available in all states. This prospectus is not an offer in any state or jurisdiction where we are not legally permitted to offer the Policy. The Policy is described in detail in this prospectus and its Statement of Additional Information (SAI). Each Fund is described in its prospectus and in its SAI. No one has the right to describe the Policy or any Fund any differently than they have been described in these documents.

 

A life insurance policy may be appropriate if you are looking to provide a Death Benefit for family members or others or to help meet other long-term financial objectives. Discuss with your life insurance producer whether a variable life insurance policy, optional benefits and underlying Investment Options are appropriate for you, taking into consideration your age, income, net worth, tax status, insurance needs, financial objectives, investment goals, liquidity needs, time horizon, risk tolerance and relevant information. Together you can decide if a variable life insurance policy is right for you. Also, before you purchase this Policy, you may request a personalized illustration of your future benefits under the Policy based on your Age, Risk Class, the Death Benefit Option, Face Amount, planned premium, and any rider requested. The personalized illustrations are based on hypothetical rates of return for the Investment Options selected and are not a guarantee of investment returns or Accumulated Value.

 


 

This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal, state or local tax penalties. Pacific Life, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

 

2


 

YOUR GUIDE TO THIS PROSPECTUS

 

Benefits and Risks of Your Policy

4

Fee Tables

9

Terms Used In This Prospectus

13

Policy Basics

18

Issuing the Policy

18

Owners, the Insured, and Beneficiaries

18

Policy Date

19

Your Free Look Right

19

Timing of Payments, Forms and Requests

20

Statements and Reports We Will Send You

21

Telephone and Electronic Transactions

22

Understanding Policy Expenses and Cash Flow

23

Policy Benefits

24

The Death Benefit

24

The Total Face Amount

24

Changing the Face Amount

24

Death Benefit Options

25

Changing Your Death Benefit Option

26

Death Benefit Qualification Test

26

Examples of Death Benefit Calculations

26

When We Pay the Death Benefit

27

Optional Riders and Benefits

28

Things to Keep in Mind

40

How Premiums Work

41

Your Initial Premium

41

Planned Premium Payments

41

Paying Your Premium

41

Deductions From Your Premiums

42

Limits on the Premium Payments You Can Make

43

Allocating Your Premiums

43

Your Policy’s Accumulated Value

44

Calculating Your Policy’s Accumulated Value

44

Policy Charges

44

Monthly Deductions

45

Lapsing and Reinstatement

46

Your Investment Options

49

Variable Investment Options

49

Fixed Option

52

Indexed Fixed Options

53

Transferring Among Investment Options and Market-timing Restrictions

70

Transfer Services

72

Withdrawals, Surrenders and Loans

74

Making Withdrawals

74

Taking Out a Loan

74

Ways to Use Your Policy’s Loan and Withdrawal Features

76

Surrendering Your Policy

76

General Information About Your Policy

77

Variable Life Insurance and Your Taxes

79

About Pacific Life

83

Appendix A: State Law Variations

88

 

 

Where To Go For More Information

back cover

 

3


 

BENEFITS AND RISKS OF YOUR POLICY

 

 

This overview tells you some key things you should know about your Policy. It is designed as a summary only – please read the entire prospectus and your Policy for more detailed information, or contact M Insurance Solutions, Inc. at (833) 943-1608 or your life insurance producer for additional information about your Policy. This prospectus provides a description of the material rights and obligations under your Policy.  Your Policy (including any Riders and/or endorsements) represents the contractual agreement between you and us.

 

The Policy is offered for sale in all jurisdictions where we are authorized to do business and where the Policy is approved by the appropriate insurance department or regulatory authorities. Individual Policy features may not be available in all states or may vary by state. The state in which your Policy is issued governs whether or not certain features, Riders, charges and fees are allowed in your Policy. Any significant variations from the information appearing in this prospectus which are required due to individual state requirements are contained in your Policy (or provided by separate endorsement) and you can find a description of all material state variations in Appendix A in this prospectus. You can find other information about state specific features in your Policy.

 

Pacific Life is a variable life insurance policy provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.

 

 

 

 

Benefits of your Policy

 

Flexibility

 

The Policy is designed to be flexible to meet your specific life insurance needs. Within certain limits, you can:

 

·     choose the timing, amount and frequency of premium payments

 

·     change the Death Benefit Option

 

·     increase or decrease the Policy’s Total Face Amount

 

·     change the Beneficiary

 

·     change your investment selections.

 

Death Benefit

 

The Death Benefit will always be the greater of the Death Benefit under the Option you choose or the Minimum Death Benefit. The Minimum Death Benefit is no lower than the death benefit that we must pay to ensure that your Policy qualifies as life insurance.

 

Currently, you may choose one of two Death Benefit Options:

 

·     Option A – your Death Benefit will be the Total Face Amount of your Policy.

 

·     Option B – your Death Benefit will be the Total Face Amount of your Policy plus its Accumulated Value.

 

The Minimum Death Benefit is determined by the Cash Value Accumulation Test. We may limit premium payments to prevent your policy from being classified as a Modified Endowment Contract. We will notify you if we limit premium payments to prevent the Policy from becoming a Modified Endowment Contract and any excess premium will be returned to you.

 

Accumulated Value

 

Accumulated Value is the value of your Policy on any Business Day. It is not guaranteed – it depends on the performance of the Investment Options you have chosen, the timing and amount of premium payments you have made, Policy charges, and how much you have borrowed or withdrawn from the Policy.

 

You can access your Accumulated Value in several ways:

 

·     Withdrawals – you can withdraw part of your Policy’s Accumulated Value.

 

·     Standard Loans – you can take out a Standard Loan from us using your Policy’s Accumulated Value as security. You pay interest on the amount you borrow until the loan is repaid.

 

·     Surrender – you can surrender or cash in your Policy for its Net Cash Surrender Value while either Insured is alive.

 

4


 

Investment Options

 

You can choose to allocate your Net Premiums and Accumulated Value among a selection of Variable Investment Options, each of which invests in a corresponding portfolio of various underlying Funds. The Policy also offers a Fixed Option, which provides a guaranteed minimum rate of interest. You may also invest in the Indexed Fixed Options and may call M Insurance Solutions, Inc. at (833) 943-1608 or contact your life insurance producer for current rates (Participation Rate, Growth Cap, Indexed Threshold Rate) prior to investment.

 

You can transfer among the Fixed and Variable Investment Options during the life of your Policy without paying any current income tax. If you allocate your Net Premiums or Accumulated Value to the Indexed Fixed Options, you will not be able to transfer that Indexed Accumulated Value until the end of a Segment Term. At Segment Maturity you may only reallocate Segment Value to a new Segment or to the Fixed Account. A Segment is the portion of your Accumulated Value in an Indexed Fixed Option. We create a Segment when Accumulated Value is transferred from the Fixed Account to an Indexed Fixed Option.

 

Tax Benefits

 

Your Beneficiary generally will not have to pay federal income tax on the portion of any Death Benefit Proceeds that are payable as a lump sum at death. You will also generally not be taxed on any or all of your Policy’s Accumulated Value unless you receive a cash distribution. Some Riders and settlement options may affect how the Death Benefit Proceeds are paid. See POLICY BENEFITS-Optional Riders and Benefits for more information.

 

Risks of your Policy

 

Long-term Financial Planning

 

This Policy is designed to provide a Death Benefit for family members or others or to help meet other long-term financial objectives. It is not suitable as a short-term savings vehicle. It may not be the right kind of policy if you plan to withdraw money or surrender your Policy for short-term needs. Taking a withdrawal or surrendering your Policy may incur charges. See the FEE TABLES and your Policy for charges assessed when withdrawing from or surrendering your Policy.

 

Please discuss your insurance needs and financial objectives with your life insurance producer.

 

Last Survivor Policy

 

The Policy is a last survivor policy. This means that the Death Benefit will not be paid to your Beneficiary until after the second Insured under the Policy dies. This may be appropriate for two spouses who want to provide a Death Benefit for their children.

 

This may not be the right kind of Policy for someone who wants to provide a Death Benefit for his or her spouse. In that case, a policy that insures a single life may be more appropriate.

 

Premium Payments

 

Federal tax law puts limits on the premium payments you can make in relation to your Policy’s Death Benefit. We may refuse all or part of a premium payment you make, or remove all or part of a premium from your Policy and return it to you under certain circumstances, for example, if the amount of premium you paid would result in your Policy no longer qualifying as life insurance or becoming a Modified Endowment Contract under the Tax Code.

 

Lapse

 

Your Policy remains In Force as long as you have sufficient Net Accumulated Value to cover your Policy’s monthly deductions of Policy charges. Insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest may cause your Policy to lapse – which means you will no longer have any insurance Coverage. There are costs associated with reinstating a lapsed Policy.

 

There is no guarantee that your Policy will not lapse even if you pay your planned premium. You should consider a periodic review of your coverage with your life insurance producer.

 

Before your Policy lapses, there is a Grace Period. The Grace Period gives you 61 days to pay enough additional premium to keep your Policy In Force and to prevent your Policy from lapsing. The 61-day period begins on the date we send notice that your Policy’s Accumulated Value less any Standard Policy Debt is not enough to pay the total monthly charge.

 

Investment Performance

 

Each Variable Investment Option invests in a corresponding portfolio of an underlying Fund, as detailed in YOUR INVESTMENT OPTIONS– Variable Investment Options. The value of each portfolio fluctuates with the value of the investments it holds. Returns are not guaranteed. You bear the investment risk of any Variable Investment Option you choose.

 

See each Fund’s prospectus for more information on the underlying portfolios and their individual risks.

 

The value of the Segments in each of the Indexed Fixed Options is based on the way we credit interest to a Segment. We add interest using Segment Indexed Interest which, in part, is based on any positive change in an external index. There is no guarantee that Segment Indexed Interest will be greater than zero but it will never be negative. See YOUR INVESTMENT OPTIONS – Indexed Fixed Options for more information.

 

5


 

Withdrawals and Loans

 

Making a withdrawal or taking out a loan may:

 

·     change your Policy’s tax status

 

·     reduce your Policy’s Total Face Amount

 

·     reduce your Policy’s Death Benefit

 

·     reduce the Death Benefit Proceeds paid to your Beneficiary

 

·     make your Policy more susceptible to lapsing

 

·     limit your access to the Policy’s Accumulated Value

 

Be sure to plan carefully before using these Policy benefits.

 

Your Policy’s withdrawal feature is not available until your second Policy Anniversary.

 

Standard Loans are not available until after the Free Look Transfer Date, unless it’s part of a 1035 exchange where the existing policy loan is carried over to the new policy.

 

General Account

 

Unlike the assets in our Separate Account, the assets in our General Account are subject to liabilities arising from any of our other business. Our ability to pay General Account guarantees, including the Death Benefit, is backed by our financial strength and claims paying ability. We may be unable to meet our obligations with regard to the General Account guarantees.

 

Tax Consequences of Withdrawals, Surrenders and Loans

 

You may be subject to income tax if you take any withdrawals or surrender the Policy, or if your Policy lapses and you have not repaid any outstanding Standard Policy Debt.

 

If your Policy becomes a Modified Endowment Contract (MEC), distributions you receive beginning on the date the Policy becomes a MEC may be subject to tax and a 10% penalty.

 

There are other tax issues to consider when you own a life insurance policy. These are described in more detail in VARIABLE LIFE INSURANCE AND YOUR TAXES.

 

Indexed Interest Crediting Risk

 

The 1-Year Indexed Account, the 1-Year High Cap Indexed Account, the 1-Year No Cap Indexed Account, and the 2-Year Indexed Account have a guaranteed interest crediting rate of 0% (the Segment Guaranteed Interest). We also credit interest (the Segment Indexed Interest), if any at Segment Maturity to Accumulated Value in the Indexed Fixed Options that is based in part on any positive change in the Index, excluding dividends, and subject to a Participation Rate, Growth Cap, and/or Indexed Threshold Rate as applicable, which limit the amount that will be credited for a period even if the change in the Index is higher. If there is a negative change in the Index (excluding dividends) at Segment Maturity, there will be no negative adjustment based on the performance of the Index. If the underlying Index remains level or declines over a prolonged period of time and we have not credited Segment Indexed Interest, you may need to increase your premium payments to prevent the Policy from lapsing.

 

Monthly Indexed Fixed Option Charges are based on the Accumulated Value in the 1-Year High Cap Indexed Account and are deducted as part of the Policy’s Monthly Deductions. Deductions in excess of the Fixed Account Value and the Variable Account Value will be deducted on a proportionate basis based on the value of all Segments in all Indexed Accounts. Notwithstanding the 0% Segment Guaranteed Interest, the Indexed Account Value may be reduced as a result of Monthly Deductions when deductions are in excess of the Fixed Account Value and Variable Account Value.

 

Risks that We May Eliminate or Substitute the Index

 

There is no guarantee that the Index described in this prospectus will be available during the entire time you own your Policy. If the Index is discontinued or we are unable to utilize it, we may substitute a successor index of our choosing. If we do so, the performance of the new index would differ from the Index. This, in turn, may affect the Segment Indexed Interest you earn.

 

Risk that We May No Longer Offer the Indexed Fixed Options

 

There is no guarantee that we will offer the Indexed Accounts during the entire time you own your Policy. We may discontinue or suspend offering one (or more) of the Indexed Accounts at any time. If we discontinue or suspend an Indexed Account, you may transfer Indexed Accumulated Value to any other available Indexed Account or to the Fixed Account consistent with your Policy’s investment and transfer restrictions at Segment Maturity.

 

No Ownership Rights

 

An allocation to the Indexed Fixed Options is not equivalent to investing in the underlying stocks comprising the Index. You will have no ownership rights in the underlying stocks comprising the Index, such as voting rights, dividend payments, or other distributions.

 

6


 

Also, we are not affiliated with the Index or the underlying stocks comprising the Index. Consequently, the Index and the issuers of the underlying stocks comprising the Index have no involvement with the Policy.

 

No Additional Allocations to an Existing Indexed Account Segment

 

You may not make any additional allocations into an existing Segment of an Indexed Account once the Segment has been created. Any additional allocations to an Indexed Account will create a new Segment with its own Segment Term.

 

Deductions From an Existing Indexed Account Segment

 

Over a Segment Term, deductions from an existing Indexed Account Segment may be taken for Monthly Deductions, withdrawals, and Standard Policy Loans. Deductions from an Indexed Account Segment are not made until any Fixed Account Value and Variable Account Value have been reduced to zero. Any deductions from the Indexed Accounts will be taken on a proportionate basis based on the Value of all Segments in all Indexed Accounts.

 

Segment Maturity

 

At the end of a Segment Term, you may reallocate the Segment Value to a new Indexed Account Segment, or to the Fixed Account. If the Segment Value was reallocated to the Fixed Account, you may transfer from the Fixed Account to any Variable Investment Options subject to transfer limitations. See YOUR INVESTMENT OPTIONS – Transferring Among Investment Options and Market-timing Restrictions. Before the end of a Segment Term, please contact M Insurance Solutions, Inc. at (833) 943-1608 or contact your life insurance producer for the current rates (Participation Rate, Growth Cap, Indexed Threshold Rate, as applicable) that may apply to a new Segment. You can find Segment dates, current Segment activity, and additional information for all open, and recently matured Segments on your quarterly and annual Policy statements. Once a Segment is created, you cannot transfer Accumulated Value out of that Segment to any other Indexed Account or Fixed Option until the end of the Segment Term. Money may be transferred from a Segment for withdrawals and Standard Policy Loans, however, a Lockout Period will apply. If no reallocation instructions are provided, the Segment Maturity Value will be reallocated to a new Segment of the same Indexed Account.

 

Change in Growth Cap

 

We determine the Growth Cap for the 1-Year Indexed Account, the 1-Year High Cap Indexed Account, and the 2-Year Indexed Account. The Growth Cap sets the maximum index interest that can be credited, based on the performance of the Index, at the end of a Segment. We may increase or decrease the Growth Cap for the 1-Year Indexed Account, but it will never be less than the minimum of 2%. We may increase or decrease the Growth Cap for the 1-Year High Cap Indexed Account, but it will never be less than 3%. We may increase or decrease the Growth Cap for the 2-Year Indexed Account, but it will never be less than 4%. Once a Segment is created, the Growth Cap for that segment cannot be changed. You may contact us or ask your life insurance producer for information on the current Growth Caps for the 1-Year Indexed Account, the 1-Year High Cap Indexed Account, and the 2-Year Indexed Account. The 1-Year No Cap Indexed Account does not have a Growth Cap.

 

Change in Indexed Threshold Rate

 

We determine the Indexed Threshold Rate under the 1-Year No Cap Indexed Account. The Indexed Threshold Rate is the rate by which Index performance is reduced before any interest is credited at the end of a Segment. We may increase or decrease the Indexed Threshold Rate, but it will never be more than 10%. Once a Segment is created, the Indexed Threshold Rate for that Segment cannot be changed. You may contact us or ask your life insurance producer for information on the current Indexed Threshold Rate for the 1-Year No Cap Indexed Account. The 1-Year Indexed Account, the 1-Year High Cap Indexed Account, and the 2-Year Indexed Account do not have an Indexed Threshold Rate.

 

Change in Participation Rate

 

We determine the Participation Rate under each of the Indexed Fixed Options.  The Participation Rate determines what percentage of the positive increase in the Index will be used to calculate the Indexed Interest Rate. We may increase or decrease the Participation Rate but it will never be lower than 100% for the 1-Year Indexed Account, 100% for the 1-Year High Cap Indexed Account, 20% for the 1-Year No Cap Indexed Account, or 100% for the 2-Year Indexed Account. Once a Segment is created, the Participation Rate for that Segment cannot be changed. You may contact us or ask your life insurance producer for information on the current Participation Rates for the Indexed Fixed Options.

 

Costs of Managing Segment Indexed Interest

 

We manage our obligation to credit Segment Indexed Interest in part by purchasing call options on the Index and by prospectively adjusting the Participation Rate, and/or Growth Cap (or Indexed Threshold Rate for the 1-Year No Cap Indexed Account) on Segment Start Dates to reflect changes in the costs of purchasing such call options (the price of call options varies with market conditions).

 

In certain cases, we may reduce the Growth Cap, reduce the Participation Rate, or increase the Indexed Threshold Rate for a future Segment. If we do so, the amount of the Segment Indexed Interest which you may otherwise have received would be reduced. We will not reduce the Growth Cap below 2% for the 1-Year Indexed Account, 3% for the 1-Year High Cap Indexed Account, or 4% for the 2-Year Indexed Account. We will not reduce the Participation Rate below 100% for the 1-Year Indexed Account, below 100% for the 1-Year High Cap Indexed Account, below 100% for the 2-Year Indexed Account, or below 20% for the 1-Year No Cap Indexed

 

7


 

Account.  We will not increase the Indexed Threshold Rate above 10% for the 1-Year No Cap Indexed Account. See INDEXED FIXED OPTIONSExamples for examples of how the Segment Indexed Interest is calculated.

 

Risk that We May Defer Payment of Proceeds

 

We may defer surrenders, withdrawals, loans, and transfers from the Fixed Account or Indexed Fixed Options for up to six months.

 

Restrictions on Transfers to other Investment Options

 

Amounts allocated to Segments of the Indexed Fixed Options may not be transferred to any other Investment Option until the end of the Segment Term.

 

Effect of Deductions on Indexed Interest

 

Segment Indexed Interest is credited at the end of a Segment Term. Amounts deducted from the Indexed Accounts will receive a proportionate Segment Indexed Interest credit, at the end of the Segment Term. The interest credit is based on the average of all Segment monthly balances during the Segment Term. See INDEXED FIXED OPTIONS – Segment Value Changes for an example of how interest is credited when a deduction is made during a Segment Term.

 

Surrendering Your Policy

 

If you surrender your Policy, no Indexed Interest will be credited to any Segments that have not yet reached their Segment Maturity.

 

8


 

FEE TABLES

 

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Policy. Please read the entire prospectus, your Policy and the SAI for more detailed information regarding these fees and expenses.

 

Table 1 describes the fees and expenses that you will pay at the time you buy the Policy, surrender the Policy, or transfer Accumulated Value between Investment Options.

 

TABLE 1 – Transaction Fees

CHARGE

WHEN CHARGE IS DEDUCTED

AMOUNT DEDUCTED

Maximum basic premium load

Upon receipt of premium

12.00% of basic premium

Maximum General Account surplus premium load

Upon receipt of premium allocated to the General Account (Fixed Account and/or Indexed Options) that exceeds the Premium Band amount

20.00% of General Account surplus premium

Maximum internal premium load

Upon receipt of a replacement or conversion of a policy you have with us

12.00% of internal premium

ADMINISTRATIVE SERVICE FEES

Excess Transfer Charge1

Upon transfer of Accumulated Value between Investment Options

$25 per transfer in excess of 12 per Policy Year

 

1      We currently do not impose this charge.

 

 

Table 2 describes the fees and expenses that you will pay periodically during the time you own the Policy, not including Fund fees and expenses.

 

TABLE 2 – Periodic Charges Other Than Fund Operating Expenses

CHARGE

WHEN CHARGE IS DEDUCTED

AMOUNT DEDUCTED

Cost of Insurance1, 2

 

 

Minimum and Maximum guaranteed charge

Monthly Payment Date

$0.00001–$83.34 per $1,000 of Net Amount At Risk

Charge for a representative Insured

 

Maximum guaranteed charge during Policy Year 1 is $0.00057 per $1,000 of Net Amount At Risk for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

Minimum and Maximum current charge

 

$0.000001–$83.34 per $1,000 of Net Amount At Risk

Charge for a representative Insured

 

Current charge during Policy Year 1 is $0.00001 per $1,000 of Net Amount At Risk for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

Administrative charge1

 

 

Maximum charge

Monthly Payment Date

$10.00

Asset charge1

 

 

Maximum guaranteed and current charge

Monthly Payment Date

Maximum guaranteed charge is 0.24% annually (0.02% monthly) of unloaned Accumulated Value for Policy Years 1 through 20 and 0.42% annually (0.035% monthly) of unloaned Accumulated Value for Policy Year 21 and each Policy Year thereafter.

 

Current charge is 0.24% annually (0.02% monthly) of unloaned Accumulated Value for Policy Years 1 through 20 and 0.00% annually (0.00% monthly) of unloaned Accumulated Value for Policy Year 21 and each Policy Year thereafter.

 

Indexed Fixed Option charge1

Maximum guaranteed and current charge

Monthly Payment Date

Maximum guaranteed charge and the current charge is 0.80% annually (0.0666% monthly) of Accumulated Value allocated to the 1-Year High Cap Indexed Account)

 

9


 

TABLE 2 – Periodic Charges Other Than Fund Operating Expenses 

CHARGE

WHEN CHARGE IS DEDUCTED

AMOUNT DEDUCTED

Coverage charge1, 4, 7

 

 

Minimum and Maximum guaranteed charge

Monthly Payment Date, beginning on effective date of each Basic Life Coverage Layer

$0.05- $3.04 per $1,000 of Basic Life Coverage Layer

Charge for a representative Insured

 

Maximum guaranteed charge during Policy Year 1 is $0.33 per $1,000 of Basic Life Coverage Layer for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

Minimum and Maximum current charges

 

$0.03-$1.90 per $1,000 of Basic Life Coverage Layer

Charge for a representative Insured

 

Current charge during Policy Year 1 is $0.27 per $1,000 of Basic Life Coverage Layer for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

Standard Loan interest charge

 

 

Maximum guaranteed and current charge

Policy Anniversary

1.25% of Policy’s Standard Loan Account balance annually5

OPTIONAL RIDERS AND BENEFITS6

RIDERS PROVIDING FACE AMOUNT COVERAGE ON THE INSURED:

Annual Renewable Term Rider – Last Survivor

 

 

 

Cost of Insurance

 

 

 

Minimum and Maximum guaranteed charge

Monthly Payment Date

$0.00001-$83.34 per $1,000 of Net Amount At Risk

 

Charge for a representative Insured

 

Maximum guaranteed charge is $0.00057 per $1,000 of Net Amount At Risk at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

Minimum and Maximum current charges

 

$0.000001-$83.34 per $1,000 of Net Amount At Risk

 

Charge for a representative Insured

 

Current charge is $0.00001 per $1,000 of Net Amount At Risk at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

Coverage charge

 

 

 

Minimum and Maximum guaranteed charge

Monthly Payment Date

$0.07–$3.13 per $1,000 of Coverage Layer

 

Charge for a representative Insured

 

Maximum guaranteed charge is $0.40 per $1,000 of Coverage Layer at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

Minimum and Maximum current charges

 

$0.003–$0.19 per $1,000 of Coverage Layer

 

Charge for a representative Insured

 

Current charge is $0.027 per $1,000 of Coverage Layer at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

 

 

 

 

Estate Preservation Rider

 

 

 

Minimum and maximum guaranteed charge

 

Charge for a representative Insured

Monthly Payment Date

$0.01-$83.35 per $1,000 of Face Amount

 

Maximum guaranteed charge is $0.01376 per $1,000 of Coverage Layer at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

Minimum and maximum current charge

 

$0.01-$83.35 per $1,000 of Face Amount

 

Charge for a representative Insured

 

Current charge is $0.01376 per $1,000 of Coverage Layer at end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

 

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TABLE 2 – Periodic Charges Other Than Fund Operating Expenses

CHARGE

WHEN CHARGE IS DEDUCTED

AMOUNT DEDUCTED

RIDER PROVIDING ADDITIONAL CASH VALUE PROTECTION:

Flexible Duration No-Lapse Guarantee Rider

 

 

Minimum and Maximum guaranteed charge

Monthly Payment Date

 

$0.0000001–$100 per $1,000 of Net Amount of Risk

Charge for a representative Insured

 

Maximum guaranteed charge is $0.000002 per $1,000 of Net Amount At Risk at the end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

Minimum and Maximum current charge

 

$0.0000001–$11.00 per $1,000 of Net Amount of Risk

Charge for a representative Insured

 

Current charge is $0.000002 per $1,000 of Net Amount At Risk at the end of Policy Year 1 for a male standard non-smoker who is Age 56 at Policy issue and for a female standard non-smoker who is Age 53 at Policy issue3

 

RIDERS THAT PROVIDE ADDITIONAL BENEFITS:

Conversion Rider

 

 

Minimum and Maximum guaranteed charge

Not applicable

There is no charge deducted - the guaranteed maximum charge is $0.

Enhanced Policy Split Option Rider

 

 

Minimum and Maximum guaranteed charge

Not Applicable

There is no charge deducted – the guaranteed maximum charge is $0.

Policy Split Option Rider

 

 

Minimum and Maximum guaranteed charge

At rider exercise

$200

Minimum Indexed Benefit Rider

 

 

Minimum and maximum guaranteed charge

Not applicable

There is no charge deducted - the guaranteed maximum charge is $0

Terminal Illness Rider-Last Survivor

 

 

Minimum and Maximum guaranteed charge

 

At Rider exercise

There is no additional charge for this Rider. However, upon receiving a benefit payment there will be a reduction in Death Benefit and Policy values. See POLICY BENEFITS–Optional Riders and Benefits–Terminal Illness Rider-Last Survivor

 

1     This charge is reduced to zero on and after your Policy’s Monthly Deduction End Date.

2      Cost of insurance rates apply uniformly to all members of the same Class and vary based on Age, sex, and Risk Class of the Insureds. The cost of insurance charges shown in the table may not be typical of the charges you will pay. Your Policy Specifications will indicate the guaranteed cost of insurance charge applicable to your Policy, and more detailed information concerning your cost of insurance charges is available on request from your life insurance producer or us. Also, before you purchase the Policy, you may request personalized illustrations of your future benefits under the Policy based upon the Insureds’ Risk Class, the Death Benefit Option, Face Amount, planned premiums, and any Riders requested. Cost of insurance rates for your Policy will be stated in the Policy Specifications and calculated using the Net Amount At Risk.

3      Charges shown for the representative insured may not be typical of the charges you will pay.

4      The Coverage charge rate is based on the Age, sex, and Risk Class of the Insureds on the Policy Date or date Rider is effective. Each Coverage Layer will have a corresponding Coverage charge related to the amount of the increase, based on the Age and Risk Class of the Insureds at the time of the increase. Ask your life insurance producer for information regarding this charge for your Policy. The Coverage charge for your Policy will be stated in the Policy Specifications.

5      In addition to the Standard Loan interest charge, the Standard Loan Account Value that is used to secure Standard Policy Debt will be credited interest at a minimum of 1.00% to help offset the Standard Loan interest charge of 1.25%. Standard Loan interest on the Standard Loan Account and Standard Policy Debt accrues daily and any Standard Loan interest that has accrued is due on each Policy Anniversary. Any unpaid Standard Loan interest on each Policy Anniversary will be added to the Standard Loan Account. On each Policy Anniversary, we transfer the excess of the Standard Policy Debt over Standard Loan Account Value from the Investment Options (as an Account Deduction) to the Standard Loan Account. If the Standard Loan Account Value is greater than Standard Policy Debt, then such excess is transferred from the Standard Loan Account to the Variable Options or the Fixed Account on a proportionate basis according to your most recent Allocation Instructions.

6      Riders are described under POLICY BENEFITS – Optional Riders and Benefits. Rider charges are based on the Age and Risk Class of the person insured under the Rider on the effective date of the Rider. Ask your life insurance producer for information on optional Rider charges for your Policy. The charges for any optional benefit Riders you add to your Policy will be stated in the Policy Specifications.

7      A decrease in Face Amount will not decrease its Coverage charge because the Coverage charge is based on the Coverage Layer at issue and the charge is used to recover the expense of issuing the insurance coverage.

 

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Total annual Fund operating expenses

 

This table shows the minimum and maximum total annual operating expenses paid by the portfolios that you pay indirectly during the time you own the Policy. This table shows the range (minimum and maximum) of fees and expenses (including management fees, shareholder servicing or distribution (12b-1) fees, and other expenses) charged by any of the portfolios, expressed as an annual percentage of average daily net assets. The amounts are based on expenses paid in the year ended December 31, 2020, adjusted to reflect anticipated changes in fees and expenses, or, for new portfolios, are based on estimates for the current fiscal year.

 

Each Variable Account of the Separate Account purchases shares of the corresponding Fund portfolio at net asset value. The net asset value reflects the investment advisory fees and other expenses that are deducted from the assets of the portfolio. The advisory fees and other expenses are not fixed or specified under the terms of the Policy, and they may vary from year to year. These fees and expenses are described in each Fund’s prospectus.

 

 

 

Minimum

 

Maximum

Range of total annual portfolio operating expenses before any waivers or expense reimbursements

 

0.08%

 

2.20%

 

 

Minimum

 

Maximum

Range of total annual portfolio operating expenses after waivers or expense reimbursements

 

0.08%

 

1.13%

 

To help limit Fund expenses, Fund advisers have contractually agreed to reduce investment advisory fees or otherwise reimburse certain portfolios of their respective Funds which may reduce the portfolio’s expenses. The range of expenses in the first row above does not include the effect of any waiver and/or expense reimbursement arrangement. The range of expenses in the second row includes the effect of waiver and/or expense reimbursement arrangements that will remain in effect. There can be no assurance that Fund expense waivers or reimbursements will be extended beyond their current terms as outlined in each Fund prospectus, and they may not cover certain expenses such as extraordinary expenses. See each Fund’s prospectus for complete information regarding operating expenses of that Fund and any waivers in effect for each particular Fund.

 

Some Investment Options available to you are “fund of funds”. A fund of funds portfolio is a fund that invests in other funds in addition to other investments that the portfolio may make. Some funds of funds may have fees higher than other available Investment Options. The fees for the funds of funds Investment Options available under your Policy are in the range of total portfolio operating expenses disclosed above. For more information on these portfolios, please see the prospectuses for the Funds.

 

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TERMS USED IN THIS PROSPECTUS

 

In this prospectus, you or your mean the policyholder or Owner. Pacific Life refers to Pacific Life Insurance Company. We, us, or our refers to M Insurance Solutions, Inc. Fund, or, collectively, the Funds, refer to one of the funds providing underlying portfolios for the Variable Investment Options offered under the Policy. Policy means an M Vision Pacific Life SVUL variable universal life insurance policy, unless we state otherwise.

 

If you have any questions, please ask your life insurance producer or call M Insurance Solutions, Inc. at (833) 943-1608.

 

1 – Year High Cap Indexed Account – an account that is part of our General Account.  We credit interest on the indexed account, in part, based on any positive change in an Index. This account offers a guaranteed participation rate of 100%, a 15% guaranteed minimum growth cap, and a 0% guaranteed interest rate. This account is called “1 Year Indexed Account 6” in your Policy.

 

1 – Year Indexed Account – an account that is part of our General Account.  We credit interest on the indexed account, in part, based on any positive change in an Index. This account offers a guaranteed participation rate of 100%, a 2% guaranteed minimum growth cap, and a 0% guaranteed interest rate. This account is called “1 Year Indexed Account” in your Policy.

 

1 – Year No Cap Indexed Account – an account that is part of our General Account.  We credit interest on the indexed account, in part, based on any positive change in an Index. This account offers a guaranteed participation rate of 20%, has no growth cap but is subject to a threshold rate (guaranteed to be no more than 10%) that reduces the index growth rate added, and a 0% guaranteed interest rate. This account is called “1-Year Indexed Account 4” in your Policy.

 

2-Year Indexed Account – an account that is part of our General Account. We credit interest on the indexed account, in part, based on any positive change in an Index. This account offers a guaranteed participation rate of 100%, a 4% guaranteed minimum growth cap, and a 0% guaranteed interest rate.

 

(See INDEXED FIXED OPTIONS in this prospectus for a summary table of the differences between the various Indexed Accounts.)

 

Accounts – consist of the Fixed Account, the Variable Accounts, the Indexed Accounts, and the Standard Loan Account, each of which may be referred to as an Account.

 

Account Additions – will increase the Fixed Account Value, Variable Account Value, and/or the Indexed Account Value based on your Allocation Instructions.

 

Account Deductions – treated as a proportionate deduction from the Fixed and Variable Account Value until each have been reduced to zero.  Any remaining deductions will be deducted proportionately from each Segment Value across all segments in the Indexed Accounts. In lieu of the above, we make available other ways to make deductions from the Fixed Account, Variable Investment Options, or Indexed Accounts. Call us for any available deduction options.

 

Accumulated Value – the total amount of your Policy’s Variable Account Value, Fixed Account Value, Indexed Account Value and the Standard Loan Account Value, on any Business Day.

 

Age – the age of each Insured on his/her birthday nearest the Policy Date. We add one year to this Age on each Policy Anniversary.

 

Allocation Instructions – your instruction to us that identifies the Investment Option(s) to which Net Premium will be allocated. You may elect to change your Allocation Instructions for future premiums at any time by Written Request. A change will be effective as of the end of the Business Day on which we receive such Written Request.

 

Basic Face Amount – is the sum of the Face Amounts of all Basic Life Coverage Layers on the Insureds. The Face Amount of each initial Basic Life Coverage is shown in the Policy Specifications.

 

Basic Life Coverage – is insurance Coverage on the Insureds provided by this Policy as shown in the Policy Specifications and any related Supplemental Schedule of Coverage. Certain Riders may provide life insurance Coverage, but such amounts are not included in the Basic Life Coverage.

 

Basic Life Coverage Layer – is a layer of insurance coverage on the Insureds. There may be one or more Basic Life Coverage Layers created at issue. In addition, each increase in Basic Face Amount will create a new Basic Life Coverage Layer.  Each Basic Life Coverage Layer has its own Face Amount, Risk Class, Coverage Layer Date, and set of charges. Initial amounts will be shown in the Policy Specifications and any additional coverage layers added after issue will be show in the Supplemental Schedule of Coverage.

 

Beneficiary – the person, people, entity or entities you name to receive the Death Benefit Proceeds.

 

Business Day – any day that the New York Stock Exchange and our Life Insurance Division are open. It usually ends at 4:00 p.m. Eastern time. A Business Day is called a valuation day in your Policy.

 

Cash Surrender Value – the Policy’s Accumulated Value.

 

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Cash Value Accumulation Test – the Death Benefit Qualification Test available under the Policy, and defined in Section 7702(b) of the Tax Code.

 

Class – is used in determining Policy charges, interest credited, features of the Indexed Accounts, and depends on a number of factors, including but not limited to the Death Benefit, Basic Face Amount and Face Amount, Coverage Layer, Policy Date, Policy duration, premiums paid, source of premium, Policy ownership structure, underwriting type, the Age and Risk Class of the Insured(s), requested or scheduled additions or increases of Coverage Layers, and the presence of optional Riders and benefits.

 

Closing Value – the value of the Index as of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time. If no closing value is published for a given day, we will use the closing value for the next day for which closing value is published.

 

Code or Tax Code – is the U.S. Internal Revenue Code of 1986, as amended.

 

Coverage – insurance coverage on the Insured as provided by the Policy or other attached Riders.

 

Coverage Layer – is insurance coverage on the Insureds provided by this Policy or insurance Coverage on both of the Insureds under an optional Rider. Generally, increases in the Basic Face Amount under the Policy or additional life insurance coverage added by a Rider are referred to as a “Coverage Layer”.

 

Coverage Layer Date – is the effective date of a particular Coverage Layer and is the date used to determine Coverage Layer months, years and anniversaries. The Coverage Layer Date for each initial Coverage Layer is the Policy Date as shown in the Policy Specifications.

 

Cutoff Date – 4:00 p.m. Eastern time, two Business Days before the Segment Start Date.

 

Death Benefit – the amount which is payable on the date of the Survivor’s death.

 

Death Benefit Proceeds – the amount which is payable to the Beneficiary on the date of the Survivor’s death, adjusted as provided in the Policy.

 

Death Benefit Qualification Test – is the Cash Value Accumulation Test for this Policy. This test determines what the lowest Minimum Death Benefit should be in relation to a Policy’s Accumulated Value. The test under the Policy is defined in Section 7702 of the Tax Code.

 

Designated Amount – the amount you instruct us to allocate to an Indexed Fixed Option. We will only transfer the Designated Amount (or such lesser amount if Policy charges have been deducted, or if you have taken a withdrawal or Standard Loan) to an Indexed Fixed Option on a Segment Start Date. Any interest earned on the Designated Amount while it is allocated to the Fixed Account will not be transferred to an Indexed Fixed Option on a Segment Start Date.

 

Evidence of Insurability – is information, including medical information, satisfactory to us that is used to determine insurability and the Risk Class for each Insured, subject to our approval and issue limits.

 

Face Amount – the amount of insurance Coverage on the Insureds provided by Policy Coverage or rider Coverage, as shown in the Policy Specifications and any related Supplemental Schedule of Coverage. The Face Amount is subject to increase or decrease as provided elsewhere in the Policy.

 

Fixed Account – an account that is part of our General Account to which all or a portion of Net Premium payments and Accumulated Value may be allocated for accumulation at a fixed rate of interest declared by us.  This account is called “Fixed Account 1” in your Policy.

 

Fixed Account Value – the total amount of your Policy’s value allocated to the Fixed Account.

 

Fixed Options – Investment Options that are part of our General Account. Currently, the Fixed Option available as of the Policy Date is the Fixed Account. Net Premiums and Accumulated Value under the Policy may be allocated to the Fixed Account.

 

Free Look Right – your right to cancel (or refuse) your Policy and return it for a refund.

 

Free Look Transfer Date – the day we transfer Accumulated Value from the Fidelity® VIP Government Money Market Variable Account to the Investment Options you chose.

 

Fund –DFA Investment Dimensions Group Inc., Fidelity® Variable Insurance Products Funds, Goldman Sachs Variable Insurance Trust, Legg Mason Partners Variable Income Trust, M Fund, Inc., MFS Variable Insurance Trust, Pacific Select Fund, T. Rowe Price Equity Series, Inc, Van Eck VIP Trust, and The Vanguard Group, Inc.

 

General Account – includes all of our assets, except for those held in the Separate Account, or any of our other separate accounts.

 

Grace Period – a 61-day period, beginning on the date we send you, and anyone to whom you have assigned your Policy, notice that your Policy’s Accumulated Value less Standard Policy Debt is insufficient to pay the total monthly charge.  The Grace Period gives you 61 days in which to pay sufficient premium to keep your Policy In Force and prevent your Policy from lapsing.

 

Growth Cap – the maximum total interest rate for a Segment over the Segment Term, as described in the Indexed Fixed Options, including both Minimum Segment Guaranteed Interest Rate and the Segment Indexed Interest Rate.

 

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Illustration – a display of Policy benefits based upon the assumed Age and Risk Class of an Insured, Face Amount of the Policy, Death Benefit, premium payments, and historical or hypothetical gross rate(s) of return.

 

Index – The Standard & Poor’s 500® Composite Stock Price Index, excluding dividends (“S&P 500®”).

 

Index Growth Rate – a rate that represents the change in value (up or down) of an Index over a certain period. We use this rate to help determine what amount may be credited as interest to an Indexed Account.

 

Numerically, the Index Growth Rate is (b ÷ a) – 1, where:

 

a = the Closing Value of the Index as of the day before the beginning of the Segment Term; and

 

b = the Closing Value of the Index as of the day before the end of the Segment Term.

 

Indexed Account – an account that is part of our General Account. We credit interest, in part, on any positive change in an index. Currently, there are four Indexed Accounts – the 1-Year Indexed Account, the 1-Year High Cap Indexed Account, the 2-Year Indexed Account, and the 1-Year No Cap Indexed Account.

 

Indexed Account Value – the total amount of your Policy’s Accumulated Value allocated to the Indexed Accounts. The Indexed Account Value will not include Segment Indexed Interest for any Segments that have not reached Segment Maturity.

 

Indexed Fixed Option Value – the sum of the Segment Values for all Segments in the Indexed Fixed Options.

 

Indexed Fixed Options – Investment Options that are part of our General Account and that consist of one or more Indexed Accounts available under this Policy. The Indexed Accounts available as of the Policy Date are the 1-Year Indexed Account, 1-Year High Cap Indexed Account, 2-Year Indexed Account, and 1-Year No Cap Indexed Account.

 

Indexed Threshold Rate – a rate subtracted from the Index Growth Rate and is used to determine the Segment Indexed Interest Rate. The Indexed Threshold Rate is guaranteed not to exceed 10% and only applies to the 1-Year No-Cap Indexed Account.

 

In Force – means a Policy is in effect and provides a Death Benefit on the Survivor.

 

In Proper Form – is when we will process your requests once we receive all letters, forms or other necessary documents, completed to our satisfaction. In Proper Form may require, among other things, a notarized signature or some other proof of authenticity. We do not generally require such proof, but we may ask for proof if it appears that your signature has changed, if the signature does not appear to be yours, if we have not received a properly completed application or confirmation of an application, or for other reasons to protect you and us. Call us or contact your life insurance producer if you have questions about the proper form required for a request.

 

Insured – the person on whose life the Policy is issued. Collectively referred to as the Insureds.

 

Investment Option – consist of the Variable Options, any available Fixed Options, any available Indexed Fixed Options, or any additional investment options that may be added.

 

Lockout Period – a 12-month period of time during which you may not make any transfers into the Indexed Fixed Options. A Lockout Period begins any time a deduction is taken from the Indexed Fixed Options as a result of a Standard Loan or withdrawal. At Segment Maturity, the reallocation of Segment Maturity Value to an Indexed Account is allowed during this period.

 

Minimum Death Benefit – is equal to the Minimum Death Benefit Percentage multiplied by the cash surrender value as determined under applicable tax law. At no time will the Minimum Death Benefit be less than the minimum amount we determine to be required for this Policy to qualify as life insurance under the Code.

 

Minimum Death Benefit Percentage – is a factor used to determine the Minimum Death Benefit. The Minimum Death Benefit Percentages as of the Policy Date are shown in the Policy Specifications.

 

Minimum Segment Guaranteed Interest Rate – the minimum annual rate that is added to each Index Segment on a monthly basis (annual rate divided by 12).

 

Modified Endowment Contract – a type of life insurance policy as described in Section 7702A of the Tax Code, which receives less favorable tax treatment on distributions of cash value than conventional life insurance policies. Classification of a Policy as a Modified Endowment Contract is generally dependent on the amount of premium paid during the first seven Policy Years, or after a material change has been made to the Policy.

 

Monthly Deduction – an amount that is deducted monthly from your Policy’s Accumulated Value on the Monthly Payment Date until the Monthly Deduction End Date. See YOUR POLICY’S ACCUMULATED VALUE – Monthly Deductions in this Prospectus for more information.

 

Monthly Deduction End Date – is the date when Monthly Deductions end as shown in the Policy Specifications.

 

Monthly Payment Date – the day we deduct monthly charges from your Policy’s Accumulated Value. The first Monthly Payment Date is your Policy Date, and it is the same day each month thereafter.

 

Net Accumulated Value – the Accumulated Value less any Standard Policy Debt.

 

15


 

Net Amount At Risk – the difference between the Death Benefit payable if the Survivor dies and the Accumulated Value of your Policy. We use a Net Amount At Risk to calculate the Cost of Insurance Charge. For Cost of Insurance Charge purposes, the Net Amount At Risk is equal to the Death Benefit as of the most recent Monthly Payment Date divided by 1.0008295, reduced by the Accumulated Value on the Monthly Payment Date after any Indexed Fixed Option Charge, Coverage Charge, and Administrative Charges are deducted.

 

Net Cash Surrender Value – the Cash Surrender Value less any Standard Policy Debt.

 

Net Premium – premium paid less any premium load deducted.

 

Owner – the person named on the application who makes the decisions about the Policy and its benefits while it is In Force. Two or more Owners are called Joint Owners.

 

Participation Rate – the percentage of the Index Growth Rate used to calculate the Segment Indexed Interest Rate.

 

Policy Anniversary – the same day as your Policy Date every year after we issue your Policy.

 

Policy Date – the date upon which life insurance coverage under the Policy becomes effective. The Policy date is used to determine the Monthly Payment Date, Policy months, Policy Years, and Policy monthly, quarterly, semi-annual and annual anniversaries.

 

Policy Specifications – summarized information specific to your Policy at the time the Policy is issued. We will send you updated Policy Specification pages or supplemental schedules if you change your Policy’s Face Amount or any of the Policy’s other benefits.

 

Premium Band – the amount used to determine any surplus premium load that may apply for premium paid that is greater than the Premium Band amount.

 

Policy Year – starts on your Policy Date and each Policy Anniversary and ends on the day before the next Policy Anniversary.

 

Riders – provide extra benefits, some at additional cost. Any optional Rider which offers additional life insurance Coverage on both Insureds will have an initial Face Amount and any increase is also referred to as a “Coverage Layer”.

 

Risk Class – is determined during the underwriting process and is used to determine certain Policy charges. The Risk Class of each Insured is shown in the Policy Specifications. The Risk Class of each Insured for any additional coverage added after issue will be shown in the Supplemental Schedule of Coverage.

 

Segment – a portion of your Accumulated Value in an Indexed Fixed Option. We create a Segment when Accumulated Value is transferred from the Fixed Account to an Indexed Fixed Option.

 

Segment Guaranteed Interest – the interest we credit daily to each Segment in the 1-Year Indexed Account, 1-Year High Cap Indexed Account, the 2-Year Indexed Account, and 1-Year No Cap Indexed Account from the Segment Start Date to the Segment Maturity at an annual rate equal to 0% for the Indexed Fixed Options.

 

Segment Indexed Interest – additional interest may be credited to the Segment at the end of the Segment Term based on the performance of the Index.

 

Segment Indexed Interest Rate – this is the rate that will be applied to a Segment at the end of a certain period after adjustment for any Participation Rate, any Growth Cap limits, or any reduction by a Threshold Rate. The specific calculation for each Indexed Account is described below.

 

The Segment Indexed Interest Rate for the 1-Year Indexed Account, the 1-Year High Cap Indexed Account, and the 2-year Indexed Account reflects any growth in the Index, multiplied by the Participation Rate, subject to the Growth Cap, that exceeds the Minimum Segment Guaranteed Interest Rate. It is equal to [the lesser of (a × b) and c] - d, but not less than zero where:

 

a = Index Growth Rate

 

b = Participation Rate

 

c = Growth Cap

 

d = Minimum Segment Guaranteed Interest Rate

 

The Segment Indexed Interest Rate for the 1-Year No Cap Indexed Account reflects any growth in the Index less the Indexed Threshold Rate multiplied by the Participation Rate that exceeds the Minimum Segment Guaranteed Interest Rate. It is equal to [(a-b) x c] - d, but not less than zero where:

 

a = Index Growth Rate

 

b = Indexed Threshold Rate

 

c = Participation Rate

 

d = Minimum Segment Guaranteed Interest Rate

 

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Segment Maturity – the end of the Segment Term and the date we calculate any Segment Indexed Interest and credit it to the Segment.

 

Segment Maturity Value – the value of the Segment at Segment Maturity, including any Segment Indexed Interest.

 

Segment Start Dates – the dates on which transfers into the Indexed Fixed Options may occur, generally the 15th of each month as shown in your Policy Specifications. We use a Segment Start Date to determine Segment months and Segment years.

 

Segment Term – a one-year (two-year for the 2-Year Indexed Account) period beginning on the Segment Start Date and ending on the Segment Maturity date.

 

Segment Value – the amount transferred to an Indexed Fixed Option from the Fixed Account on the Segment Start Date. After the Segment Start Date, the Segment Value equals a + b - c + d where:

 

a = the Segment Value as of the previous day;

 

b = the Segment Guaranteed Interest since the previous day;

 

c = any Segment Deductions since the previous day; and

 

d = any Segment Indexed Interest credited only at Segment Maturity.

 

Separate Account – the Pacific Select Exec Separate Account, a separate account of ours registered as a unit investment trust under the Investment Company Act of 1940.

 

Standard Loan – a loan taken under the Policy and secured by the Policy Accumulated Value amount transferred to the Standard Loan Account.

 

Standard Loan Account – an account which holds amounts transferred from the Investment Options as collateral for Standard Loans.

 

Standard Loan Account Value – the portion of your Policy’s Accumulated Value set aside to secure Standard Policy Debt. The Standard Loan Account Value is equal to the Standard Loan Account plus any interest credited which will accrue daily. The daily interest is accrued at an annual effective rate for the number of actual days in the Policy year.

 

Standard Policy Debt – the amount necessary to repay any Standard Loan in full. It is equal to the Standard Loan Account plus any accrued loan interest charge.

 

Supplemental Schedule of Coverage – is the written notice we will provide you reflecting certain changes made to your Policy after the Policy Date.

 

Survivor – the living Insured after one of the Insureds dies. If the two Insureds die in close proximity such that it cannot be determined who died first, it shall be assumed that the younger Insured survived the older Insured.

 

Total Face Amount – the sum of all Basic Face Amounts and the Face Amounts of any riders providing last survivor life insurance coverage on the Insureds, unless specifically excluded. The Total Face Amount is used in determining the Death Benefit under this Policy and the initial Total Face Amount is shown on the cover of your Policy or subsequent Supplemental Schedule of Coverage.

 

Total Interest Credited – the sum of Segment Indexed Interest plus Segment Guaranteed Interest that we credit to a Segment within the Indexed Fixed Options.

 

Variable Account – a subaccount of the Separate Account which invests in shares of a corresponding portfolio of an underlying Fund.

 

Variable Account Value – the total amount of your Policy’s Accumulated Value allocated to the Variable Accounts.

 

Variable Investment Option (“Variable Option”) – a Variable Account available under this Policy that is part of the Separate Account.

 

When the Policy is In Force – This Policy is In Force as of the Policy Date, subject to your acceptance of the delivered Policy and payment of the initial premium. The Policy remains In Force until the earliest of any of the following: Policy surrender, Policy lapse, or the death of the Survivor.

 

Written Request – your signed request in writing, which may be required on a form we provide, and received by us at our administrative office In Proper Form, containing information we need to act on the request. Written Request includes an electronic request provided in a form acceptable to us.

 

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POLICY BASICS

 

M Vision Pacific Life SVUL is a last survivor flexible premium variable universal life insurance with indexed option(s) policy that insures the lives of two people and pays Death Benefit Proceeds after both people have died.

 

When you buy an M Vision Pacific Life SVUL life insurance Policy, you are entering into a contract with Pacific Life. Your contract with Pacific Life is made up of your application, your Policy, applications to change or reinstate the Policy, any amendments, Riders or endorsements to your Policy, and Policy Specifications.

 

Issuing the Policy

 

Your life insurance producer will assist you in completing your application for the Policy. Your life insurance producer’s broker-dealer firm has up to 7 business days to review the application before it is sent to us. When we approve your application, we will issue your Policy. If your application does not meet our underwriting and administrative requirements, we can reject it or ask you for more information. Your Policy will be sent to your life insurance producer for delivery to you. You will be asked to sign a policy delivery receipt. For Policy delivery status, check with your life insurance producer.

 

Our obligations to you under the Policy begin When the Policy is In Force.

 

If there are any outstanding contractual or administrative requirements that prevent your Policy from being placed In Force, your life insurance producer will review them with you no later than when the Policy is delivered. See HOW PREMIUMS WORK – Your Initial Premium for more information.

 

Your Policy will be In Force until one of the following happens:

 

·     the Survivor under the Policy dies,

 

·     the Grace Period expires and your Policy lapses, or

 

·     you surrender your Policy.

 

If your Policy is not In Force when the Survivor dies, we are not obligated to pay the Death Benefit Proceeds to your Beneficiary.

 

Owners, the Insured, and Beneficiaries

 

Owners

 

You can own a Policy by yourself or with someone else. You need the signatures of all Owners for all Policy transactions.

 

If one of the Joint Owners dies, the surviving Owner will hold all rights under the Policy. If the Owner or the last Joint Owner dies, his or her estate will own the Policy unless you have given us other instructions.

 

You can change the Owner of your Policy by completing a Change of Owner Form. Please contact us or your life insurance producer for a Change of Owner Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Owner Form. You should consult your life insurance producer or legal counsel about designating ownership interests.

 

The Insureds

 

This Policy insures the lives of two people who are at least Age 18 and no older than 90 at the time you apply for your Policy, and who have given us satisfactory evidence of insurability. The Policy pays Death Benefit Proceeds after the Survivor has died.

 

Each Insured is assigned an underwriting or insurance Risk Class which we use to calculate cost of insurance and other charges. Most insurance companies use similar risk classification criteria. We normally use the medical or paramedical underwriting method to assign underwriting or insurance Risk Classes, which may require a medical examination. We may, however, use other forms of underwriting if we think it is appropriate.

 

When we use a person’s Age in Policy calculations, we generally use his or her Age as of the nearest Policy Date, and we add one year to this Age on each Policy Anniversary. For example, when we talk about someone “reaching Age 100”, we are referring to the Policy Anniversary closest to that person’s 100th birthday, not to the day when he or she actually turns 100.

 

Beneficiaries

 

Here are some things you need to know about naming Beneficiaries:

 

·     You can name one or more primary Beneficiaries who each receive an equal share of the Death Benefit Proceeds, unless you tell us otherwise. If one primary Beneficiary dies, his or her share will pass to the surviving primary Beneficiaries in proportion to the share of the Death Benefit Proceeds they are entitled to receive, unless you tell us otherwise.

 

·     You can also name a contingent Beneficiary for each primary Beneficiary you name. The contingent Beneficiary will receive the Death Benefit Proceeds if the primary Beneficiary dies.

 

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·     You can choose to make your Beneficiary permanent (sometimes called irrevocable). You cannot change a permanent Beneficiary’s rights under the Policy without his or her permission.

 

If no Beneficiary is living when the Death Benefit Proceeds are payable, you, as the Policy Owner, will receive the Death Benefit Proceeds. If you are no longer living, the Death Benefit Proceeds will go to your estate.

 

You can change your Beneficiary at any time while either Insured is alive, and while the Policy is In Force. If you would like to change your Policy’s Beneficiary, please contact us or your life insurance producer for a Change of Beneficiary Form. Once we receive and record your request, the change will be effective as of the day you signed the Change of Beneficiary Form.

 

Policy Date

 

Your Policy Date

This is the date upon which life insurance coverage under the Policy becomes effective. It is also the beginning of your first Policy Year. Your Policy’s monthly, quarterly, semi-annual and annual anniversary dates are based on your Policy Date.

 

The Policy Date is set so that it never falls on the 29th, 30th or 31st of any month.

 

You or your life insurance producer may request that multiple applications have the same Policy Date and be placed In Force on a common date. For multilife or employer sponsored cases, please contact your life insurance producer for additional details.

 

Backdating your Policy

You can have your Policy backdated up to 6 months, as long as we approve it.

 

Backdating in some cases may lower your cost of insurance rates since these rates are based on the Age of the Insureds. Your first premium payment must cover the premium load(s) and monthly charges for the period between the backdated Policy Date and the day your Policy is issued.

 

Re-dating your Policy

Once your Policy is issued, you may request us to re-date your Policy. This means your Policy will have a new Policy Date. Re-dating will only be allowed back to the date money is received on your Policy, and can be the earlier of:

 

·     the date your Policy is delivered to you and you paid initial premium, or

 

·     the date we received the initial premium, if earlier than the delivery date.

 

If your delivery date is the 29th, 30th or 31st of any month, the Policy will be dated the 28th of that month.

 

If the Policy is re-dated, no Policy charges will be deducted for any period during which Coverage was not provided under the terms of the Policy and all Policy charges will be calculated from the new Policy Date. There will be no Coverage before the new Policy Date.

 

It may be disadvantageous to request that the Policy be re-dated. A new Policy Date may cause an Insured’s Age for insurance purposes to change and the cost of insurance rates to increase. It will also affect events based on time elapsed since Policy Date, such as suicide and contestable clause periods.

 

We will not re-date Policies that are issued with a temporary insurance premium. Policies with the Policy Date pre-determined under an employer or corporate sponsored plan may not be eligible to re-date.

 

Your Free Look Right

 

Your Policy provides a free look period once the Policy is delivered to you and you sign the Policy delivery receipt. During the free look period, you have the Free Look Right to cancel (or refuse) your Policy and return it with instructions to us or your life insurance producer for a refund. The amount refunded may be more or less than the premium payments you have made and the length of the free look period may vary, depending on the state where you signed your application and the type of policy you purchased.

 

You will find a complete description of the free look period that applies to your Policy on the Policy’s cover sheet or on a notice that accompanies it.  Generally, the free look period ends 10 days after you receive your Policy, but in some states, the free look is different. For state variations to the free look period, and for Policies issued in California to Policyowners or Insureds age 60 or older, see APPENDIX A: State Law Variations. Some states may also have a different free look period if you are replacing another life insurance policy. Please call us or your life insurance producer if you have questions about your Free Look Right.

 

We will allocate any premium payments we receive during the free look period in accordance with the requirements of the state in which your Policy was issued.  In states that require us to return all premiums paid, your initial Net Premium will be allocated to the Fidelity VIP Government Money Market Variable Account and will remain there during the entire free look period.  At the end of the free look period, your premiums will be allocated to the Investment Options you selected.  In states that do not require us to return all premiums paid, your initial Net Premium will be applied to the Investment Options you selected.

 

If your Policy was issued in a state that requires us to refund your premium, the amount of the refund is the greater of premium payments received during the Free-Look Period or the Policy’s Accumulated Value, plus any Policy charges and fees deducted, less

 

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Standard Policy Debt. If your Policy was issued in a state that does not require us to refund your premium, the amount we return to you will include:

 

·     any charges or taxes we have deducted from your premiums;

 

·     the Net Premiums allocated to the Fixed Account;

 

·     the Accumulated Value allocated to the Variable Investment Options; and

 

·     any monthly fees and charges we have deducted from your Policy’s Accumulated Value in the Variable Investment Options.

 

The amount of your refund may be more or less than the premium payments you have made, depending on the state in which your Policy was issued.  See APPENDIX A: State Law Variations for information on which states do or do not require refund of premiums paid.

 

Timing of Payments, Forms and Requests

 

Effective date

Once your Policy is In Force, the effective date of payments, forms and requests you send us is usually determined by the day and time we receive the item In Proper Form.

 

You may reach M Insurance Solutions, Inc. service representatives on any Business Day at (833) 943-1608 between the hours of 5 a.m. through 5 p.m. Pacific time.

 

Please send your forms and written requests or questions, and unless you receive premium notices via list bill, send premiums to:

 

M Insurance Solutions, Inc.
1125 NW Couch Street, Suite 900
Portland, Oregon 97209

 

Sending any application, premium payment, form, request or other correspondence to any other address will not be considered In Proper Form and will result in a processing delay. 

 

Premium payments, loan requests, transfer requests, loan payments or withdrawal or surrender requests that M Insurance Solutions, Inc. receives In Proper Form on a Business Day before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, will be effective as of the end of that day, unless the transaction is scheduled to occur on another Business Day. If we receive your payment or request at or after the time of the close of the New York Stock Exchange on a Business Day, your payment or request will be effective as of the end of the next Business Day. If a scheduled transaction falls on a day that is not a Business Day, M Insurance Solutions, Inc. will process it as of the end of the next Business Day.

 

Other forms, notices and requests are normally effective as of the next Business Day after M Insurance Solutions, Inc. receives them In Proper Form, unless the transaction is scheduled to occur on another Business Day. Change of Owner and Beneficiary Forms are effective as of the day you sign the change form, once M Insurance Solutions, Inc. receives them In Proper Form.

 

Electronic Information Consent

Subject to availability, you may authorize us to provide prospectuses, prospectus supplements, reports, annual statements, statements and immediate confirmations, tax forms, proxy solicitations, privacy notice and other notices and documentation in electronic format when available instead of receiving paper copies of these documents by U.S. mail. You may enroll in this service by accessing the Policy Owner website at www.visionportal.mfinancialgroup.com. Not all Policy documentation and notifications may be currently available in electronic format. You will continue to receive paper copies of any documents and notifications not available in electronic format by U.S. mail. In addition, you will continue to receive paper copies of annual statements if required by state or federal law. Documents will be available on our Internet website. As documents become available, we will notify you of this by sending you an e-mail message that will include instructions on how to retrieve the document. You must have ready access to a computer with Internet access, an active e-mail account to receive this information electronically, and the ability to read and retain it. You may access and print all documents provided through this service. 

 

If you plan on enrolling in this service, or are currently enrolled, please note that:

 

·     There is no charge for electronic delivery, although your Internet provider may charge for Internet access.

 

·     You should provide a current e-mail address and notify us promptly when your e-mail address changes.

 

·     You should update any e-mail filters that may prevent you from receiving e-mail notifications from us.

 

·     You may request a paper copy of the information at any time for no charge, even though you consented to electronic delivery, or if you decide to revoke your consent.

 

·     Electronic delivery will be cancelled if e-mails are returned undeliverable.

 

·     This consent will remain in effect until you revoke it.

 

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If you are currently enrolled in this service, please access the Policy Owner website at www.visionportal.mfinancialgroup.com, or call M Insurance Solutions, Inc. at (833) 943-1608 if you would like to revoke your consent, wish to receive a paper copy of the information above, or need to update your e-mail address. You may opt out of electronic delivery at any time. 

 

When we make payments and transfers

We will normally send the proceeds of withdrawals, loans, surrenders, exchanges and Death Benefit payments, and process transfer requests, within seven days after the effective date of the request In Proper Form. We may delay payments and transfers, or the calculation of payments and transfers based on the value in the Variable Investment Options under unusual circumstances, for example, if:

 

·     the New York Stock Exchange closes on a day other than a regular holiday or weekend

 

·     trading on the New York Stock Exchange is restricted

 

·     an emergency exists as determined by the SEC, as a result of which the sale of securities is not practicable, or it is not practicable to determine the value of a Variable Account’s assets, or

 

·     the SEC permits a delay for the protection of Policy Owners.

 

We may delay transfers and payments from the Fixed Account and the Indexed Fixed Options, including the proceeds from withdrawals, surrenders and loans, for up to six months. If we defer payment of surrenders, withdrawals or loans for more than 10 days after we receive your request, we will pay interest at the rate required by the state in which the Policy is delivered, but not less than an annual rate equal to the guaranteed rate payable on the Fixed Account.

 

Death Benefit Proceeds paid are subject to the conditions and adjustments as described in this section, in the GENERAL INFORMATION ABOUT YOUR POLICY section, and the WITHDRAWALS, SURRENDERS AND LOANS section in this Prospectus. Death Benefit Proceeds are paid as a lump sum check. We may make other options available in addition to the single check option. If required by state law, we will pay interest on the Death Benefit Proceeds from the date of death to the date the claim is paid at a rate not less than the rate payable for funds left on deposit that is in effect on the date of death, which will vary by state. If payment of any lump sum Death Benefit Proceeds is delayed more than 31 calendar days after we receive the requirements to pay the claim, we will pay additional interest, if required by state law, at a rate of 10% annually beginning with the 31st calendar day or a lessor percentage as required by applicable state law. Contact us, your life insurance producer, or refer to your Policy or Rider to determine if state specific differences apply. Also see APPENDIX A: State Law Variations – TIMING OF PAYMENTS, FORMS AND REQUESTS for states that require different rates.

 

Statements and Reports We Will Send You

 

We send the following statements and reports to policy owners:

 

·     a confirmation for certain financial transactions, usually including premium payments and transfers, loans, loan repayments, withdrawals and surrenders. Monthly deductions and scheduled transactions made under the dollar cost averaging, portfolio rebalancing and first year transfer services are reported on your quarterly Policy statement.

 

·     a quarterly Policy statement. The statement will tell you the Accumulated Value of your Policy by Investment Options, Cash Surrender Value, the amount of the Death Benefit, the Policy’s Face Amount, and any Standard Policy Debt. It will also include a summary of all transactions that have taken place since the last quarterly statement, as well as any other information required by law.

 

·     supplemental schedules of benefits and planned premiums. We will send these to you if you change your Policy’s Face Amount or change any of the Policy’s other benefits.

 

·     financial statements, at least annually or as required by law, of Pacific Select Fund, that include a listing of securities for each portfolio of the Pacific Select Fund. We will also send you financial statements that we receive from the other Funds.

 

If you identify an error on a confirmation, quarterly or annual statement, you must notify us in writing as soon as possible, preferably within 90 days from the date of the confirmation or statement, to ensure proper accounting to your Policy. When you write us, include your name, Policy number and description of the identified error.

 

Mail will be sent to you at the mailing address you have provided. If mail is returned to us as undeliverable multiple times, we will discontinue mailing to your last known address. We will, however, regularly attempt to locate your new mailing address, and will resume mailing your policy related materials to you upon confirmation of your new address. You can access documents online by visiting www.Pacificlife.com, or receive copies of documents from us upon request.

 

Prospectus and Fund Report Format Authorization

Subject to availability, you may request us to deliver prospectuses, statements, and other information (“Documents”) electronically. If you wish to receive Documents electronically, you may enroll in this service by accessing the Policy Owner website at  www.visionportal.mfinancialgroup.com. We do not charge for this service. 

 

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For electronic delivery, you must provide us with a current and active e-mail address and have Internet access to use this service. While we impose no additional charge for this service, there may be potential costs associated with electronic delivery, such as on-line charges. Documents will be available on our Internet website. You may access and print all Documents provided through this service. As Documents become available, we will notify you of this by sending you an e-mail message that will include instructions on how to retrieve the Document. You are responsible for any e-mail filters that may prevent you from receiving e-mail notifications and for notifying us promptly in the event that your e-mail address changes. You may revoke your consent for electronic delivery at any time, provided that we are properly notified, and we will then start providing you with a paper copy of all required Documents. We will provide you with paper copies at any time upon request. Such a request will not constitute revocation of your consent to receive required Documents electronically.

 

Telephone and Electronic Transactions

 

By electing this option on the application, you authorize us to accept telephone and electronic instructions for the following transactions:

 

·     transfers between Investment Options

 

·     transfers between the Fixed Account and Indexed Fixed Options

 

·     initiate the dollar cost averaging

 

·     rebalance Variable Investment Options

 

·     change future premium Allocation Instructions

 

·     initiate loans

 

If you do not authorize us to accept telephone or electronic instructions on your application, you can later instruct us to accept telephone or electronic instructions as long as you complete and file a Transaction Authorization Form with us.

 

Certain life insurance producers are able to give us instructions electronically if authorized by you. You may appoint anyone to give us instructions on your behalf by completing and filing a Transaction Authorization Form with us.

 

Here are some things you need to know about telephone and electronic transactions:

 

·     If your Policy is jointly owned, all Joint Owners must sign the Transaction Authorization Form. We will take instructions from any Owner or anyone you appoint.

 

·     We may use any reasonable method to confirm that your telephone or electronic instructions are genuine. For example, we may ask you to provide personal identification or we may record all or part of the telephone conversation. We may refuse any transaction request made by telephone or electronically.

 

·     A new Transaction Authorization Form will be required when a registered representative changes to a new Broker-Dealer.

 

We will send you a written confirmation of each telephone and electronic transaction.

 

Sometimes, you may not be able to make loans or transfers by telephone or electronically, for example, if our telephone lines or our website are busy because of unusual market activity or a significant economic or market change, or our telephone lines or the Internet are out of service during severe storms or other emergencies. In these cases, you can send your request to us in writing, or call us the next Business Day or when service has resumed.

 

When you authorize us to accept your telephone and electronic instructions, you agree that:

 

·     we can accept and act upon instructions you or anyone you appoint give us over the telephone or electronically.

 

·     neither we, any of our affiliates, the Pacific Select Fund, or any director, trustee, officer, employee or agent of ours or theirs will be liable for any loss, damages, cost or expenses that result from transactions processed because of a request by telephone or submitted electronically that we believe to be genuine, as long as we have followed our own procedures.

 

·     you bear the risk of any loss that arises from your right to make loans or transfers over the telephone or electronically.

 

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Understanding Policy Expenses and Cash Flow (including fees and charges of Fund portfolios)

 

The chart below illustrates how cash normally flows through a Policy.

 

Under a flexible premium life insurance policy, you have the flexibility to choose the amount and frequency of your premium payments. You must, however, pay enough premiums to cover the ongoing cost of Policy benefits.

 

Investment earnings will increase your Policy’s Accumulated Value, while investment losses will decrease it. The premium payments you will be required to make to keep your Policy In Force will be influenced by the investment results of the Investment Options you choose.

 

GRAPHIC

 

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POLICY BENEFITS

 

Your Policy provides three types of benefits:

 

1.  Death Benefits, based on the Policy’s Total Face Amount

 

2.  Cash Surrender benefits, based on the Policy’s Accumulated Value (See WITHDRAWALS, SURRENDERS AND LOANS – Surrendering Your Policy)

 

3.  Optional Riders and benefits

 

The Death Benefit

 

We will pay Death Benefit Proceeds to your Beneficiary after the Survivor dies while the Policy is still In Force. Your Beneficiary generally will not have to pay federal income tax on the portion of any Death Benefit Proceeds that are payable as a lump sum at death. Some Riders and settlement options may affect how the Death Benefit Proceeds are paid, see Optional Riders and Benefits for more details.

 

Your Policy’s Death Benefit depends on two choices you must make:

 

·     The Total Face Amount

 

·     The Death Benefit Option

 

The Policy’s Death Benefit is the higher of:

 

1.         The Death Benefit calculated under the Death Benefit Option in effect; or

 

2.         The Minimum Death Benefit.

 

Certain Riders may impact the Policy’s Death Benefit, see Optional Riders and Benefits.

 

The Total Face Amount

 

The Face Amount of your Policy and any Rider providing Coverage on the Insured is used to determine the Death Benefit as well as certain Policy charges, including the cost of insurance and Coverage charge.

 

Your Policy’s Face Amount is made up of one or more of the following types of Coverage:

 

1.         Basic Face Amount – the Face Amount under the Policy

 

2.         Face Amount under the Annual Renewable Term Rider-Last Survivor (ARTR-LS)

 

Your Policy must have a Basic Face Amount. You may also select ARTR-LS Coverage at Policy issue. This rider is described in Optional Riders and Benefits.

 

Each type of Face Amount you select creates a Coverage Layer. Your Policy’s initial amount of insurance Coverage, which you select in your application, is its initial Face Amount. The Policy’s Total Face Amount is the sum of the Face Amounts of all Coverage Layers. The Coverage Layers you select in your application are effective on the Policy Date. You will find your Policy’s Total Face Amount, in the Policy Specifications in your Policy. After Policy issue, any changes (increase or decrease) in Total Face Amount will be reflected in a Supplemental Schedule of Coverage.

 

If you request an increase in Face Amount, a new Coverage Layer will be created, with its own Coverage Layer Date and Policy charges.

 

Changing the Face Amount

 

You can increase or decrease your Policy’s Face Amount as long as we approve it.

 

·     You can change the Face Amount as long as either Insured is alive.

 

·     You must send us your Written Request while your Policy is In Force.

 

·     Unless you request otherwise, the change will become effective on the first Monthly Payment Date on or after we receive and approve your request.

 

·     Both Insureds or, if only one person is still living, the Survivor must also agree to the change in Face Amount, if you are not the Insured.

 

·     Changing the Total Face Amount can affect the Net Amount At Risk, which affects the cost of insurance charge. An increase in the Face Amount may increase the cost of insurance charge, while a decrease may decrease the charge.

 

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·     If your Policy’s Death Benefit is equal to the Minimum Death Benefit, and the Net Amount At Risk is more than three times the Death Benefit on the Policy Date, we may reduce the Death Benefit by requiring you to make a withdrawal from your Policy. If we require you to make a withdrawal, the withdrawal may be taxable. Please turn to WITHDRAWALS, SURRENDERS AND LOANS for information about making withdrawals.

 

·     We will refuse your request to make the Basic Face Amount less than $20,000.00, or, if applicable, Total Face Amount less than $100,000.

 

Requesting an Increase in Face Amount

You may request an increase in the Face Amount under the Policy or ARTR-LS rider. Each increase will create a new Coverage Layer.

 

Here are some additional things you should know about requesting an increase in the Face Amount under the Policy:

 

·     Both Insureds must be at least Age 18 and no older than 90 at the time of the increase.

 

·     You must give us satisfactory Evidence of Insurability for both Insureds.

 

·     Any increase you make to the Basic Face Amount must be a minimum of $20,000.

 

·     Increases to the ARTR-LS face amount may not result in the ARTR-LS exceeding 80% of the Total Face Amount.

 

·     Each increase you make to the Total Face Amount must be a minimum of $100,000.

 

·     Each increase in Face Amount may have an associated cost of insurance rate and Coverage charge.

 

·     We reserve the right to limit Face Amount increases to one per Policy Year and/or change the minimum increase amount, which will be applied uniformly to all members of the same Class.

 

Other Increases in Face Amount

The Policy’s Face Amount may increase under the Policy or the ARTR-LS Rider when you request a change in Death Benefit Option. In this case, we will increase the Face Amount of the most recently issued Coverage Layer. If there are Basic and ARTR-LS Coverage Layers with the same Coverage Layer Date, we will increase the ARTR-LS first then the Basic Face Amount.

 

Requesting a Decrease in Total Face Amount

You may request a decrease in the Policy’s Total Face Amount. A decrease in the Total Face Amount is subject to the following limits:

 

·     We do not allow decreases during the first two Policy Years

 

·     You may only request one decrease per Policy Year

 

·     The Policy’s Basic Face Amount must be at least $20,000 following a decrease. We can refuse your request if the change in Face Amount would mean that your Policy no longer qualifies as Life Insurance under the Code

 

·     Unless you have told us otherwise in writing, any request for a decrease will not take effect if the Policy would be classified as a Modified Endowment Contract under the Code.

 

Decreasing the Total Face Amount may affect your Policy’s tax status. To ensure your Policy continues to qualify as life insurance, we might be required to make distributions from the Accumulated Value, which may be taxable. For more information, please see VARIABLE LIFE INSURANCE AND YOUR TAXES.

 

We can refuse your request if the amount of any distributions would exceed the Net Cash Surrender Value under the Policy.

 

Processing of Decreases

Decreasing the Total Face Amount, whether as a result of your request or as a result of a withdrawal or change in Death Benefit Option, will reduce the Face Amount of the Coverage Layers.

 

We will apply any decrease in the Face Amount to the most recently issued Coverage Layer first, and then to the Initial Face Amount.

 

If more than one Coverage Layer has the same Coverage Layer Date, we will first reduce the Face Amount of any ARTR-LS Rider Coverage Layer first then the Basic Face Amount of any Policy Coverage Layer.

 

Death Benefit Options

The Policy currently offers two Death Benefit Options, Options A and B. The Death Benefit Option you choose will generally depend on which is more important to you: a larger Death Benefit or building the Accumulated Value of your Policy.

 

Here are some things you need to know about the Death Benefit:

 

·     You choose your Death Benefit Option on your Policy application.

 

·     If you do not choose a Death Benefit Option, we will assume you have chosen Option A.

 

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·     The Death Benefit will never be lower than the Total Face Amount of your Policy if you have chosen Option A or B.

 

·     You may change your Death Benefit Option subject to certain limits.

 

The Death Benefit Options are:

 

Option A – the Total Face Amount of your Policy.

 

Option B – the Total Face Amount of your Policy plus its Accumulated Value.

 

 

 

GRAPHIC

 

GRAPHIC

 

 

 

 

 

The Death Benefit changes as your Policy’s Accumulated Value changes. The better your Investment Options perform, the larger the Death Benefit will be.

 

 

 

The graphs are intended to show how the Death Benefit Options work and are not predictive of investment performance in your Policy.

 

Changing Your Death Benefit Option 

 

You can change your Death Benefit Option while your Policy is In Force, subject to the following:

 

·     You must send us your Written Request.

 

·     Beginning in Policy Year 3, you can change from one Death Benefit Option to the other (e,g. from Option A to Option B) and a change can only occur once in a Policy Year.

 

·     The change will become effective on the first Monthly Payment Date after we receive your request. If we receive your request on a Monthly Payment Date, we will process it that day.

 

·     We will not let you change the Death Benefit Option if doing so means the Basic Face Amount of your Policy will become less than $20,000.

 

·     Changing the Death Benefit Option can also affect the monthly cost of insurance charge since this charge varies with the Net Amount At Risk.

 

·     The new Death Benefit Option will be used in all future calculations.

 

We will not change your Death Benefit Option if it means your Policy will be treated as a Modified Endowment Contract, unless you have told us in writing that this would be acceptable to you. Modified Endowment Contracts are discussed in VARIABLE LIFE INSURANCE AND YOUR TAXES.

 

Changing your Death Benefit Option will increase or decrease your Total Face Amount under the Policy. The Total Face Amount of your Policy will change by the amount needed to make the Death Benefit under the new Death Benefit Option equal the Death Benefit under the old Death Benefit Option just before the change.

 

If the change is an increase in the Total Face Amount, we will process the increase as described in POLICY BENEFITS – Changing the Face Amount – Other Increases in Face Amount. If the change is a decrease in the Total Face Amount, we will process the decrease as described in POLICY BENEFITS – Changing the Face Amount – Processing of Decreases.

 

Death Benefit Qualification Test

 

This Policy is intended to qualify as life insurance under the Code based upon the Cash Value Accumulation Test. In order for your Policy to be qualified as Life Insurance under the Code, this Policy provides a Minimum Death Benefit that is not less than the amount required under the Code.

 

Examples of Death Benefit Calculations

 

The tables below compare the Death Benefits provided by the Policy’s available Death Benefit Options. The examples are intended only to show differences in Death Benefits and Net Amounts at Risk. Accumulated Value assumptions may not be realistic.

 

These examples show that each Death Benefit Option provides a different level of protection. Keep in mind that cost of insurance charges, which affect your Policy’s Accumulated Value, increase over time. The cost of insurance is charged at a rate based on the Net Amount At Risk. As the Net Amount At Risk increases, your cost of insurance increases. Accumulated Value also varies depending on the performance of the Investment Options in your Policy.

 

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The example below assumes the following:

 

·     the Insureds are a male non-smoker Age 56 and a female non-smoker Age 53 at the time the Policy was issued, and where the Survivor passes away at the beginning of the 20th Policy Year

 

·     Face Amount is $1,000,000

 

·     Accumulated Value at the date of death is $600,000

 

·     total premium paid into the Policy is $300,000

 

·     the Minimum Death Benefit under the Cash Value Accumulation Test is $852,000 (assuming 142% of the Accumulated Value).

 

 

 

 

Cash Value Accumulation Test
The Death Benefit is the larger
of these two amounts

 

 

Death
Benefit
Option

How it’s
calculated

 

Death Benefit
under the
Death Benefit Option

 

Minimum
Death Benefit

 

Net Amount At Risk
used for cost of
insurance charge

Option A

Total Face Amount

 

$1,000,000

 

$852,000

 

$399,171

Option B

Total Face Amount plus Accumulated Value

 

$1,600,000

 

$852,000

 

$998,674

 

If the Death Benefit equals the Minimum Death Benefit, any increase in Accumulated Value will cause an automatic increase in the Death Benefit.

 

Here’s the same example, but with an Accumulated Value of $1,400,000. Because Accumulated Value has increased, the Minimum Death Benefit is now:

 

·     $1,988,000 for the Cash Value Accumulation Test.

 

 

 

 

Cash Value Accumulation Test
The Death Benefit is the larger
of these two amounts

 

 

Death
Benefit
Option

How it’s
calculated

 

Death Benefit
under the
Death Benefit Option

 

Minimum
Death Benefit

 

Net Amount At Risk
used for cost of
insurance charge

Option A

Total Face Amount

 

$1,000,000

 

$1,988,000

 

$586,352

Option B

Total Face Amount plus Accumulated Value

 

$1,600,000

 

$1,988,000

 

$988,011

 

When We Pay the Death Benefit

 

We calculate the amount of the Death Benefit Proceeds effective the end of the day the Survivor dies. If the Survivor dies on a day that is not a Valuation Day, any portion of the Death Benefit Proceeds attributed to the Variable Accumulated Value is determined as of the next Valuation Day.

 

Your Policy’s Beneficiary must send us proof that both Insureds died while the Policy was In Force, along with payment instructions. If both Insureds die at the same time, or if it is not clear who dies first, we will assume the older Insured died first. Your Beneficiary can choose to receive the Death Benefit Proceeds in a lump sum or we may make other options available in addition to the single check option.

 

Death Benefit Proceeds equal the total of the Death Benefits provided by your Policy and any Riders you have added, minus any Standard Policy Debt, minus any overdue Policy charges. We will pay the Death Benefit Proceeds within 2 months after we receive proof that both Insureds died while the Policy was In Force.

 

If required by state law, we will pay interest on the Death Benefit Proceeds from the date of the Survivor’s death to the date the claim is paid at a rate not less than the rate payable for funds left on deposit that is in effect on the date of death which, will vary by state. See APPENDIX A: State Law Variations – TIMING OF PAYMENTS, FORMS AND REQUESTS.

 

It is important that we have a current address, social security number, telephone number and email address for each designated Beneficiary so that we can pay Death Benefit Proceeds promptly.  If we cannot pay the Death Benefit Proceeds to the designated Beneficiary within the dormancy period defined by a state’s Unclaimed Property laws or regulations, we will be required to pay the Death Benefit Proceeds to the applicable state. Once the Death Benefit Proceeds are paid to a state, any subsequent claim by a designated Beneficiary must be made with the applicable state. If a subsequent claim is made to the state, the state is obligated to pay the proceeds if proper documentation, as determined by the state, is presented.

 

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Optional Riders and Benefits

 

There are optional Riders that provide extra benefits, some at additional cost. Not all Riders are available in every state, and some Riders may only be added when you apply for your Policy. Ask your life insurance producer for more information about the Riders available with the Policy, or about other kinds of life insurance policies offered.

 

You should work with your life insurance producer to decide whether an optional benefit is appropriate for you.

 

Certain restrictions may apply and are described in the Rider or benefit. We will add any Rider charges to the monthly charge we deduct from your Policy’s Accumulated Value.

 

There are three types of riders available under the Policy

·     Riders providing Face Amount Coverage on the Insured

 

·     Riders that provide additional cash value protection

 

·     Riders that provide additional benefits

 

Riders that provide Face Amount Coverage on the Insureds (terms for these Riders are described below):

 

Annual Renewable Term Rider-Last Survivor (ARTR-LS)

 

Provides annual renewal term insurance on both Insureds.

 

Estate Preservation Rider

 

Provides a Death Benefit equal to the Rider Face Amount in the event that both Insureds under the Policy die during the first four Policy years.

 

Riders that provide additional cash value protection (terms for these Riders are described below):

 

Flexible Duration No-Lapse Guarantee Rider (FDNLG)

 

Guarantees that the Policy and any optional benefits you have selected will remain In Force as long as the Net No-Lapse Guarantee Value is greater than zero, even if the Policy’s Net Accumulated Value is not enough to cover the Monthly Deductions due.

 

Riders that provide additional benefits to you or your family:

 

Conversion Rider

 

Allows you to convert certain Eligible Coverages into a new Policy.

 

Enhanced Policy Split Option Rider

 

Splits the Policy into two individual policies without evidence of insurability if the Policy is equally split.

 

Policy Split Option Rider

 

Splits the Policy into two individual policies with evidence of insurability.

 

Minimum Indexed Benefit Rider

 

This rider may provide for an Indexed Termination Credit to the Policy when Accumulated Value is allocated to certain eligible Indexed Accounts and the eligible Indexed Account’s Segment Indexed Interest credited is less than the charges (Indexed Fixed Option Charge and a portion of the Policy asset charge) attributable to eligible Indexed Accounts. Currently, all Indexed Accounts are eligible Indexed Accounts. See the YOUR INVESTMENT OPTIONS - Indexed Fixed Options – Minimum Indexed Benefit Rider subsection for complete rider information.

 

Terminal Illness Rider-Last Survivor (Accelerated Death Benefit Rider for Terminal Illness-Last Survivor)

 

Provides the Policy Owner with prepayment of a portion of the Death Benefit (the “Terminal Illness Benefit” or “Benefit”) when we receive written proof that the Survivor has been certified by a Licensed Physician as having a medical condition that is reasonably expected to result in a life expectancy of 12 months or less.

 

More detailed information about the riders appears below.

 

·     Annual Renewable Term Rider-Last Survivor (ARTR-LS)

 

Provides term insurance on the Insureds and renews annually until the Policy terminates. The Rider is available for Insureds that are at least Age 18 and no older than 90 at the time of Rider issue.

 

Rider Terms

 

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Rider Coverage Layer – This is a layer of insurance coverage provided by this Rider. There may be one or more Rider Coverage layers. Any elective increase in the Rider Face Amount will create a new Rider Coverage Layer.

 

Rider Face Amount – This is the total Face Amount of all Rider Coverage Layers under this Rider.

 

How the Rider Works

 

The Rider is payable on the death of the Survivor and modifies the Death Benefit of the Policy to include the Rider Face Amount, so that the Death Benefit equals the greater of the Death Benefit as calculated under 1) the Death Benefit Option you choose on the Policy plus the Rider Face Amount, or 2) the Minimum Death Benefit under the Death Benefit Qualification Test. Annual increases under the Rider are scheduled at Rider issue. After Rider issue, you may also request unscheduled increases or decreases in Rider Face Amount, subject to certain limitations and satisfactory evidence of insurability. This Rider does not have Accumulated Value of its own and does not have any cash value. This Rider must be elected at Policy issue.

 

This rider has a Rider Coverage Charge and a Rider Cost of Insurance Charge. The Rider Coverage Charge is the sum of Coverage charges for each Rider Coverage Layer. The maximum monthly coverage charge for each Rider Coverage Layer will be shown on the Policy Specifications or in the Supplemental Schedule of Coverage for requested Rider Coverage Layers after issue. The Rider Cost of Insurance Charge is the sum of the Cost of Insurance Charge for each Rider Coverage Layer. See the FEE TABLES – OPTIONAL RIDERS AND BENEFITS section for more information on the costs associated with this Rider.

 

Increases or Decreases in Rider Face Amount

 

You may request an increase or decrease in the Rider Face Amount after Rider issue.

 

Increases. Each increase will be subject to satisfactory evidence of insurability and will have associated cost of insurance and Coverage charges. Any elected increase in Rider Face Amount will add a new Coverage Layer. Each Coverage Layer has its own Face Amount, Risk Class, Coverage Layer Date, and associated charges. Unless you request otherwise, the increase will become effective on the first Monthly Payment Date on or following the date we receive and approve your request. We may limit increases of Rider Face Amount to one per Policy year.

 

Decreases. Each decrease will be effective on the first Monthly Payment Date on or following the date the Written Request is received at our Life Insurance Division. A Coverage charge is assessed in order to recover the expense of issuing coverage on the Policy. A Rider Face Amount decrease will not decrease its Coverage charge because the Rider’s Coverage is based on the at coverage issue Face Amount of the Rider. If the Face Amount of this Rider is decreased, then the most recently added Coverage Layer will be decreased or eliminated in the following order:

 

·     the Face Amount of this Rider;

 

·     the Face Amount of any other Rider that contributes to the Total Face Amount, and

 

·     the Face Amount of Basic Life Coverage under the Policy.

 

Rider Termination

 

The Rider will terminate on the earliest of

 

·     your Written Request;

 

·     the date the Policy is no longer In Force;

 

·     the date the Rider Face Amount decreases to zero; or

 

·     the death of the Survivor.

 

Reinstatement

 

If the Policy lapses and is later reinstated, then this Rider will also be reinstated as long as this Rider was in effect on the date the Policy was no longer In Force.

 

Conversion

 

This Rider is not convertible.

 

·     Estate Preservation Rider

 

This Rider provides a Death Benefit equal to the Rider Face Amount in the event that both Insureds under the Policy die during the first four Policy years. This Rider is available on any Policy where both Insureds are at least Age 18 and no older than 75 and where neither Insured has a substandard Risk Class or is uninsurable. There is a monthly charge for this Rider that will be shown on your Policy Specifications. Certain Policies issued with a rated Risk Class may also be eligible. Ask us or your life insurance producer for more information regarding Rider eligibility. There is a monthly charge for this Rider that will be shown on your Policy Specifications and added to the Monthly Deduction under the Policy until the Rider terminates. See the FEE TABLES – OPTIONAL RIDERS AND BENEFITS section for more information on the costs associated with this Rider. This Rider must be elected at Policy Issue.

 

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If both Insureds die during the first four Policy Years, there is an additional death benefit paid equal to the Rider Face Amount. The Rider Face Amount is separate from the Total Face Amount of the Policy, but is based on the Face Amount of the Basic Life Coverage and any optional ARTR-LS. The Rider Face Amount for this Rider is shown in the Policy Specifications and cannot be increased.

 

This Rider death benefit is not guaranteed to offset any estate or other tax liability. The Rider Face Amount does not contribute to the Total Face Amount of the Policy. The Rider Face Amount does not comprise a Basic Coverage Layer under the Policy. This Rider cannot be renewed after the end of Policy Year four.

 

Rider Termination

 

This Rider will terminate on the earliest of

 

·     your Written Request;

 

·     on lapse or termination of the Policy;

 

·     upon the end of Policy Year four; or

 

·     upon the Survivor’s death.

 

Rider Reinstatement

 

If the Policy lapses and is later reinstated, this Rider will not be reinstated.

 

·     Flexible Duration No-Lapse Guarantee Rider (FDNLG)

 

This Rider provides a no-lapse guarantee that the Policy and any optional benefits you have selected will remain In Force as long as the Net No-Lapse Guarantee Value is greater than zero, even if the Policy’s Net Accumulated Value (Accumulated Value less any Standard Policy Debt) is not enough to cover the Monthly Deductions due. As long as the No-Lapse Guarantee under this Rider is in effect, the Policy will not enter the Grace Period and lapse. This Rider must be elected at Policy issue.

 

If you elect the FDNLG Rider, it will be in effect when we issue the Policy.  The Rider cannot be added after the Policy Issue Date.

 

Rider Eligibility

 

You are eligible to elect the Rider if:

 

·     the Insureds are at least Age 18 and no older than 90 at Policy issue.

 

·     you allocate your Policy’s Accumulated Value to the Fixed Account, the Indexed Fixed Options and/or one or more of the allowable Investment Options as described below.  The allowable Investment Options are evaluated periodically and are subject to change.  Following a change, you may be required to reallocate your Policy’s Accumulated Value to an allowable Investment Option in order to maintain the Rider.  If you allocate to any Investment Option that is not an allowable Investment Option, the Rider will terminate and will provide no further benefit.  You may contact us at any time for information on the Allowable Investment Options. See Investment Allocation Requirements – the Allowable Investment Options.

 

Investment Allocation Requirements–the Allowable Investment Options

 

At initial purchase and during the entire time that you own the Flexible Duration No Lapse Guarantee Rider, you must allocate your 100% of your Accumulated Value to the allowable Investment Options we make available for these Rider. Currently, all Investment Options available through this Policy are allowable Investment Options and may be used with this Rider with no restriction as to the amount that may be allocated to an Investment Option, unless such limitation is imposed by an underlying Fund. We reserve the right to add, remove or change allowable Investment Options at any time or to impose restrictions as to the amount that be allocated to an allowable Investment Option. We may make such a change due to a fund reorganization, fund substitution, to help protect our ability to provide the guarantees under these Riders, or otherwise. If such a change is required, we will provide you with reasonable notice (generally 90 calendar days) prior to the effective date of such change to allow you to reallocate your Accumulated Value to maintain your Rider benefits. If you do not reallocate your Accumulated Value your Rider will terminate. 

 

By adding this Rider, you agree to any future investment allocation requirements that we may impose for the entire period that you own the Rider. These requirements may limit the number of Investment Options that are otherwise available to you under your Policy. 

 

We will send you written notice in the event any transaction made by you will cause the Rider to terminate for failure to invest according to the investment allocation requirements. However, you will have at least 20 calendar days starting from the date of our written notice, to instruct us to take appropriate corrective action to continue the Rider. If you take appropriate corrective action and continue the Rider, the Rider benefits and features available immediately before the terminating event will remain in effect.

 

Asset allocation does not guarantee future results, ensure a profit, or protect against losses. The investment allocation requirements may reduce overall volatility in investment performance, may reduce investment returns, and may reduce the likelihood that

 

30


 

we will be required to make payments under the optional benefit Riders. The reduction in volatility permits us to more effectively provide the guarantees under the Policy.  Certain of the asset allocation portfolios that are allowable Investment Options, including the Pacific Select Fund asset allocation portfolios, may use futures and options to reduce the portfolios’ equity exposure during periods when market indicators suggest high market volatility.  This strategy is designed to reduce the risk of market losses from investing in equity securities.  However, this strategy may result in periods of underperformance, including periods when specified benchmark indexes are appreciating but market volatility is high.  As a result, your Accumulated Value may increase less than it would have without these defensive actions.

 

Rider Terms:

 

Net Basic Premium –equals the Basic Premium reduced by applicable fees and charges.

 

Basic Fund –receives Net Basic Premium, less any withdrawals or accelerated death benefit payments.

 

Excess Fund –receives Net Excess Premium, less any withdrawals or accelerated death benefit payments.

 

Excess Premium –equals the portion of each Premium Payment received in a Policy year in excess of the Basic Premium.

 

Excess Premium Load-an amount equal to the Excess Premium multiplied by the Excess Premium Load rate which is 0%. This load is not deducted from any premium made under the Policy and is used only as a factor for determining benefits under this Rider.

 

No-Lapse Premium Load-an amount equal to the Premium Payment multiplied by the No-Lapse Premium Load rate which is 5.90%. This load is not deducted from any premium made under the Policy and is used only as a factor for determining benefits under this Rider.

 

No Lapse Guarantee Value

 

The duration of the guarantee under the FDNLG rider can cover the lifetime of the Insured. The duration of the FDNLG Rider is determined by the No Lapse Guarantee Value. The guarantee is in effect as long as the Net No-Lapse Guarantee Value (No Lapse Guarantee Value less any Standard Policy Debt) is greater than zero.

 

The No-Lapse Guarantee Value is equal to the sum of the Basic Fund, the Excess Fund and the No-Lapse Guarantee Loan Account Value.  The Basic Fund contains the Net Basic Premium and is credited with an Accumulation Amount based upon a 3.5% annual rate which can range from a 2% to 6% annual rate, based on issue age and duration. The Excess Fund contains the Net Excess Premium and is credited with an Accumulation Amount based upon a 3.5% annual rate. The No-Lapse Guarantee Loan Account Value is equal to the Standard Loan Account Value on your Policy.

 

Note: The No-Lapse Guarantee Value is tracked only for the purpose of determining if the No Lapse Guarantee is in effect.  The values, including any Accumulation Amounts added to the No-Lapse Guarantee Value, is not added to the Policy’s Cash Value, and as such cannot be withdrawn or loaned against. Further, in the case of policies under Death Benefit Option B or those policies subject to the Minimum Death Benefit, the No Lapse Guarantee Value is not used in the determination of the Death Benefit under the policy.

 

Basic and Excess Fund under the Rider

 

The Basic and Excess Fund are an accumulation of policy premiums, withdrawals, and loans. While the Basic Fund may become negative, the Excess Fund will never be less than zero. Both the Basic Fund and the Excess Fund are increased and reduced as described below.

 

1.         Net Basic Premiums are added to the Basic Fund; Net Excess Premiums are added to the Excess Fund,

 

2.         No Lapse Deductions reduce the Excess Fund, and then the Basic Fund,

 

3.         Accumulation Amounts are added to the Basic Fund and Excess Fund,

 

4.         Any withdrawal of policy Accumulated Value will reduce the Excess Fund and then the Basic Fund, including any policy fees,

 

5.         Standard Loans will reduce the Excess Fund and then the Basic Fund, and

 

6.         Any Reinvestment Risk Amounts are added to the Basic Fund.

 

Net Premium is allocated to the Basic Fund and Excess Fund as follows:

 

·     Net Basic Premium is the higher of the premium up to the Annual Premium Threshold for the Policy Year, as described in the Rider Specifications, or the amount needed to bring any negative Basic Fund back to zero. This amount is reduced by the No-Lapse Premium Load and added to the Basic Fund.

 

·     Net Excess Premium is any premium in excess of the Basic Premium.  Excess Premium is reduced by the No-Lapse Premium Load and the Excess Premium Load and added to the Excess Fund. Please note, the No-Lapse Premium Load and the Excess Premium Load are only used to determine the benefits provided by this Rider – they are not assessed against any premium made under the Policy or against the Policy’s Accumulated Value.

 

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Example:

 

Assumptions:

 

·     Annual Premium Threshold for the current year is $10,000

 

·     Premium Received is $15,000

 

·     Basic fund is positive

 

·     No Lapse Premium Load is 12.00%

 

·     Excess Premium Load is 0%

 

The Net Basic Premium and Net Excess Premium are calculated as follows.

 

·     Basic Premium is $10,000 (lesser of $10,000 and $15,000).  Net Basic Premium of $8,800 [$10,000 × (1-12%)] will be added to the Basic Fund.

 

·     Excess Premium is $5,000.  Net Excess Premium of $4,400 [$5,000 × (1 – 12% - 0%)] will be added to the Excess Fund

 

Example:

 

Assumptions:

 

·     Annual Premium Threshold for the current year is $10,000

 

·     Premium Received is $15,000

 

·     Basic Fund is -$11,050.

 

·     No Lapse Premium Load is 12%

 

·     Excess Premium Load is 0%

 

The Net Basic Premium and Net Excess Premium are calculated as follows.

 

·     Basic Premium is $12,556.82.  The Net Basic Premium is $11,050 [$12,556.82 × (1-12%)], which, when added to the Basic Fund, brings the Basic Fund to zero.

 

·     Excess Premium is $2,150.  Net Excess Premium of $2,150 [$2,443.18 × (1 – 12% - 0%)] will be added to the Excess Fund

 

No-Lapse Deduction

 

The No-Lapse Deduction is an amount that is deducted first from the Excess Fund until the Excess Fund is reduced to zero and then from the Basic Fund.  The No-Lapse Monthly Deduction is the greater of the No-Lapse Monthly Charge Deduction or the Alternative No-Lapse Monthly Deduction, as described below.

 

No-Lapse Monthly Charge Deduction. The No-Lapse Monthly Charge Deduction is described in the Rider Specifications and includes the following:

 

·     The No-Lapse Coverage Charge

 

·     The No-Lapse Administrative Charge

 

·     Optional Benefit Charges, if any

 

·     Transactional policy fees and charges, if any

 

·     The No-Lapse Cost of Insurance Charge.

 

Alternative No-Lapse Monthly Deduction. The Alternative No-Lapse Monthly Deduction is also described in the Rider Specifications and includes:

 

·     Optional Benefit Charges, if any

 

·     Transactional policy fees and charges, if any

 

·     The Alternative No-Lapse Cost of Insurance Charge.

 

Example:

 

Assumptions:

 

·     Basic Fund before No-Lapse Deduction is $9,000

 

·     Excess Fund is $3,500

 

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·     No-Lapse Monthly Charge Deduction is $3,000

 

·     Alternative No-Lapse Monthly Deduction is $4,000.

 

Then the Basic and Excess Funds are reduced as follows:

 

·     The No-Lapse Deduction is $4,000 (the greater of $3,000 and $4,000)

 

·     Excess Fund will be reduced to $0

 

·     Basic Fund to $8,500.

 

No-Lapse Accumulation Amount

 

The No-Lapse Accumulation Amount is an amount that is added to the Basic Fund and the Excess Fund as follows.

 

·     The Basic Fund No-Lapse Accumulation Amount is added to the Basic Fund.  It is equal to the Basic Fund following premium payments, No-Lapse Deduction, withdrawals, loans and other Policy distributions; multiplied by the No-Lapse Accumulation Factor as shown in the Rider Specifications. If your Basic Fund is negative, the accumulation will further reduce your Basic Fund.  The No-Lapse Accumulation Factor for Policy Years 1 through 9 is 0.002870899 which is equivalent to an annual rate of 3.5% and 0.003514593 for Policy Year 10 and thereafter which is equivalent to an annual rate of 4.3%.

 

·     The Excess Fund No-Lapse Accumulation Amount is added to the Excess Fund. It is equal to the Excess Fund following premium payments, No-Lapse Deduction, withdrawals, loans and other Policy distributions; multiplied by the Excess Accumulation Factor as shown in the Rider Specifications. The Excess Fund Accumulation Factor for Policy Years 1 through 9 is 0.002870899 which is equivalent to an annual rate of 3.5% and 0.003514593 for Policy Year 10 and thereafter which is equivalent to an annual rate of 4.3%

 

Example:

 

Assumptions:

 

·     Policy is in year 5

 

·     Basic Fund is $8,500, after premiums and no-lapse deductions.

 

·     Excess Fund is $2,500, after premiums and no-lapse deductions

 

·     No Lapse Accumulation Factor is 0.002870899

 

·     Excess Fund Accumulation Factor is 0.002870899

 

Then the Basic and Excess Funds after the Accumulation Amounts are added are:

 

·     Basic Fund Accumulation Amount is $24.40, and the Basic Fund is $8,524.40

 

·     Excess Fund Accumulation Amount is $7.18, and the Excess Fund is $2,507.18.

 

Example:

 

Assumptions:

 

·     Policy is in year 5

 

·     Basic Fund is -$5,000, after premiums and no-lapse deductions.

 

·     Excess Fund is $0, after premiums and no-lapse deductions

 

·     No Lapse Accumulation Factor is 0.002870899

 

·     Excess Fund Accumulation Factor is 0.002870899

 

Then the Basic and Excess Funds after the Accumulation Amounts are added are:

 

·     Basic Fund Accumulation Amount is -$14.35, and the Basic Fund is -$5,014.35.

 

·     Excess Fund Accumulation Amount is $0, and the Excess Fund is $0.

 

Loan Effects on Rider

 

Standard Loans have an effect on the No Lapse Guarantee Value

 

·     Any new loan, including any loan interest that is added to the loan on an anniversary, will be added to the No-Lapse Guarantee Loan Account Value and will reduce the Excess Fund and then the Basic Fund.

 

·     Any loan repayment will be added to the Basic Fund only to the extent that the Basic Fund is negative. Otherwise, it will be added to the Excess Fund.

 

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Important considerations

 

The growth of your No-Lapse Guarantee Value depends on a number of factors including, but not limited to, the amount of premium you pay, the timing of your premium payments and any Policy changes.  Any modification you make to the originally planned timing of or amount of premium paid and any Policy changes will affect the duration of the No-Lapse Guarantee provided by the Rider.  Before making any change to the Policy, please request and review a current illustration.

 

If your Net No-Lapse Guarantee Value is equal to or less than zero, the benefits under this rider will not be in effect.  However, you can restore the no-lapse guarantee benefit by making a premium payment or a loan repayment in an amount sufficient to make your Net No-Lapse Guarantee Value positive.

 

Some examples of things you should consider:

 

1.         If you defer a payment, you will not receive the Accumulation Amount associated with that premium in the Basic and Excess Fund.  If such a deferral would cause your No Lapse Guarantee Value to be negative, you will have to make a sufficient payment to bring the Basic Fund to positive, including any negative Accumulation Amounts.

 

2.         If you take a Standard Loan your Basic Fund may be reduced.  A loan repayment may not recover the value deducted from the Basic Fund, but instead could be added to the Excess Fund.

 

3.         Any withdrawal will reduce the Excess and Basic Fund.  However, a subsequent premium payment to pay back the withdrawal will be affected both by the Annual Premium Threshold and the Basic and Excess fund accumulation amounts, plus associated No-Lapse and Excess Premium Loads.

 

4.         You have the ability to increase the duration of your FDNLG rider by paying higher premiums, subject to the Annual Premium Threshold.

 

Effect on Policy Values

 

There is a monthly charge for the FDNLG Rider.  The charge is deducted from your Policy’s Accumulated Value as a Monthly Deduction.  This charge does not reduce your No-Lapse Guarantee Value.  The Rider Charge is shown in the Policy Specifications and equals a monthly rate per dollar of Policy Net Amount at Risk (Rider Charge).

 

Example:

 

Assumptions:

 

·     Policy’s Net Amount at Risk is $80,000

 

·     Rider Charge Deduction is 0.0001

 

Then the Rider Charge associated with the FDNLG rider is $8 ($80,000 × 0.0001).

 

When the Policy is continued under the No-Lapse Guarantee, the Net Accumulated Value is less than or equal to zero.  As a result, the Policy has no Net Accumulated Value from which Monthly Deductions can be collected.  Any such uncollected amounts are accumulated without interest as the Net Accumulated Value becomes negative. Such uncollected amounts will be repaid from any additional premiums made or from any death benefit proceeds.

 

Rider Termination

 

The Rider will terminate on the earliest of:

 

·     Your Written Request;

 

·     Policy Surrender;

 

·     The date the Policy is no longer In Force,

 

·     Allocation into any Investment Option that is not an allowable Investment Option and no corrective action was taken, after written notice was provided, to comply with the requirements to continue the Rider;

 

·     Upon electing an increase in Face Amount;

 

·     The end of the Maximum No-Lapse Guarantee Period, as shown in the Policy Specifications; or

 

·     The date when the Net No-Lapse Guarantee Value and the Net Accumulated Value are both less than or equal to zero, so that the Policy will enter its Grace Period.  At the end of the Grace Period, the Policy will terminate and no further benefits will be provided by the Rider.

 

Reinstatement

 

This Rider may not be reinstated if it was terminated before the date the Policy was no longer In Force. Otherwise, this Rider will reinstate on the date that the Policy is reinstated.

 

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·    Conversion Rider

 

Allows you to convert any Eligible Coverages into a new Policy at any time during the conversion Policy Year, as shown in the Policy Specifications. This Rider is automatically added to the Policy. Some life insurance producers may have a financial incentive to offer you a new policy in place of the one you already own. You should only convert your policy if you determine, after comparing the features, fees, and risks of both policies, that it is preferable for you to purchase a new policy rather than own the existing policy. Call (833) 943-1608 if you have any questions about this Rider.

 

Rider Term:

 

Eligible Coverage - is Coverage under this Policy that qualifies for conversion, as shown in the Policy Specifications.

 

How the Rider Works:

 

You may request to have your new policy issued on any other permanent life insurance policy that we make available for conversions at the time of your conversion request.  We will issue your new policy at the same or similar Risk Class as this Policy and the Face Amount of the new policy will be equal to the current amount of Eligible Coverage for this Policy, subject to any minimum requirements for the new policy. However, if you have increased your Policy’s Face Amount, resulting in your Policy having one or more Coverage Layers with Risk Classes that differ from the Risk Class for the Policy’s original Face Amount, the new policy will be issued at the same or similar Risk Class of the Policy’s most recent Coverage Layer.

 

If you exercise this rider, we will not require any evidence of insurability for the conversion. However, if you elect riders on the new policy, you may have to provide evidence of insurability as needed for those riders.  Working with your life insurance producer, please read the new policy prospectus for complete information prior to requesting a conversion.

 

If you exercise this rider, we will issue the new policy you selected and Coverage under this Policy will terminate. If the new policies are variable universal life policies, we will waive the premium load on any amount of Cash Surrender Value transferred from this Policy to purchase the new policies. Any premium load will apply on the new policies for additional premium added at issue or after the initial premium paid from this Policy’s Cash Surrender Value. Any surrender charges applicable to the new policies will continue to apply under the terms of the new policies.

 

Rider Termination

 

The Rider will terminate on the earliest of:

 

·     your Written Request,

 

·     the death of one Insured, or

 

·     the date the Policy is no longer In Force.

 

·    Enhanced Policy Split Option Rider

 

Allows the Policy to be split into two individual policies, without evidence of insurability if the Policy is equally split. Any unequal split of the Policy or any request to increase the coverage for either of the new policies will require evidence of insurability. See VARIABLE LIFE INSURANCE AND YOUR TAXES - Optional Policy Benefits and Riders for additional information on the tax treatment of this Rider.

 

Rider Terms:

 

Exchange Date – The date the original policy terminates, which will be the next monthly payment date after we receive your Written Request and everything is in good order. The new policies will take effect on the Exchange Date.

 

Exchange Event – Is when either of the following federal estate tax law changes become effective by law:

 

·     Section 2056 of the Internal Revenue Code (“IRC”) as amended, or its successor, is nullified or amended to eliminate or reduce the Insureds’ federal estate tax marital deduction; or

 

·     Section 2001 of the IRC as amended, or its successor, is amended to reduce the maximum estate tax rate to no more than half the maximum rate in effect on the issue date of the policy.

 

Last Exchange Policy Year – The last Policy year during which you can request to exchange the Policy for two new single life policies. This Rider provides no benefit after this year or after it is terminated. The Last Exchange Policy Year is equal to:

 

·     Policy Year 3 if one of the Insureds’ issue age is from 70 to 79 and the other Insureds’ issue age is 79 or less, or

 

·     Policy Year 5 if both Insureds’ issue ages are under 70.

 

How the Rider Works

 

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This Rider will be included automatically with all policies where the older Insured is issue Age 79 or less, and where neither Insured has a substandard Risk Class or is uninsurable. There is no charge for this Rider.

 

You may request an exercise of this Rider beginning on the date of a qualifying Exchange Event that occurs before the end of the Last Exchange Policy Year.

 

You will have 365 days following such an Exchange Event to request the Exercise of this Rider.

 

The following requirements and conditions must be met to exercise this Rider:

 

·     At least one of the Exchange Events occurs,

 

·     Both Policy Insureds are living,

 

·     The Policy cannot be in a grace period,

 

·     The Insureds under the Policy cannot have a substandard Risk Class,

 

·     If Standard Policy Debt exceeds the Accumulated Value, you must repay the amount of the Standard Policy Debt in excess of the Accumulated Value, and

 

·     You must make the request to exercise this Rider in writing.

 

A federal estate tax law change could result in an increase in the federal estate tax liability at the first death of the two Insureds under the Policy.

 

New Policy Conditions

 

The exchange may be made to any single life policy of permanent life insurance that we make available, subject to the below conditions.

 

·     Each of the Policy Insureds will be the insured of one of the two new single life policies. 

 

·     The owner(s) of the two new single life policies is required to be the same as the owner(s) of this Policy.

 

·     The new policy on each Insured will be based on that Insured’s age as of the Exchange Date.

 

·     If the new policies are variable universal life policies, we will waive the premium load on any amount of Cash Surrender Value transferred from this Policy to purchase the new policies. Any premium load will apply on the new policies for additional premium added at issue or after the initial premium paid from this Policy’s Cash Surrender Value. Any surrender charges applicable to the new policies will continue to apply.

 

·     The face amount of each new policy will be an amount up to one-half of the Policy’s Face Amount in excess of the Standard Policy Debt on the Exchange Date, subject to any minimum requirement for the new policy. At the time of exchange, if the face amount on either of the new single life policies is less than the minimum allowed face amount for that product, we will issue that policy with the minimum allowable face amount for that product. Any request to increase the amount of face amount for either new policy or for  an unequal split of the Policy’s Face Amount less Standard Policy Debt will require evidence of insurability satisfactory to us.  After the split occurs, any increase in the face amount by request or to meet the minimum allowable face amount for the new policy, may require additional premium payments.

 

·     The Accumulated Value of the Policy will be equally split between the two new single life policies.

 

·     Any existing Standard Policy Debt must be paid off prior to the exchange. If there is sufficient Accumulated Value to cover the Standard Policy Debt, the Accumulated Value will be reduced by the Standard Policy Debt and the remaining Accumulated Value will be equally split between the two new single life policies. If the Standard Policy Debt exceeds the Accumulated Value, the amount of the Standard Policy Debt in excess of the Accumulated Value must be repaid prior to the policy exchange.

 

·     Any premiums and charges for the new policies will be based on our rates in effect on the Exchange Date for the new policies.

 

·     The Death Benefit Option of each new policy will be the same as the current Death Benefit Option on this Policy.

 

Rider Termination

 

This Rider is effective on the Policy Date unless otherwise stated. It will terminate on the earlier of:

 

·     Your Written Request,

 

·     The date of the first death of one of the Insureds,

 

·     On lapse or termination of the Policy,

 

·     Upon exercise of this Rider, or

 

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·     The end of the Last Exchange Policy Year.

 

If an Exchange Event occurs prior to or during the Last Exchange Policy Year, then you may provide us Written Request of an exchange no more than 365 days after the Exchange Event. We will process such request as if the Rider had not terminated even if we do not receive your Written Request until after the end of the Last Exchange Policy Year.

 

Reinstatement

 

If the Policy lapses and is later reinstated, this Rider will also be reinstated as long as this Rider was in effect on the date the Policy ceased to be In Force and is reinstated prior to or before the end of the Last Exchange Policy Year.

 

·     Policy Split Option Rider

 

Allows the Policy to be split into two new individual policies subject to satisfactory evidence of insurability on each Insured. The exchange may be made to any single life policy of permanent life insurance that we regularly issue at the time of exchange, subject to our approval. A $200 administrative fee will be deducted from the original Policy’s Accumulated Value on the effective date of the exchange. Although not anticipated, we reserve the right to charge for any state or federal taxes incurred upon exercise of this Rider. This Rider is automatically added to the Policy.  Some life insurance producers may have a financial incentive to offer you a new policy in place of the one you already own. You should only convert your policy if you determine, after comparing the features, fees, and risks of both policies, that it is preferable for you to purchase a new policy rather than own the existing policy. Call (833) 943-1608 if you have any questions about this Rider.

 

Rider Terms:

Exchange Conditions – To exercise this option, you must:

 

·     Ask for the exchange in writing on a form that we will provide to you;

 

·     Return the form and the original Policy to us; and

 

·     Provide satisfactory evidence of insurability on each Insured.

 

Exchange Date - The date all of the Exchange Conditions are met, the date this Policy terminates, and the policy date for the two new policies.

 

New Policy Considerations

 

·     The new policy on each Insured will be based on that Insured’s age as of the Exchange Date.

 

·     If the new policies are variable universal life policies, we will waive the premium load on any amount of Cash Surrender Value transferred from this Policy to purchase the new policies. Any premium load will apply on the new policies for additional premium added at issue or after the initial premium paid from this Policy’s Cash Surrender Value. Any surrender charges applicable to the new policies will continue to apply.

 

·     The Face Amount of each new policy may be for any amount you choose, provided that the sum of the Face Amounts of the new policies do not exceed the Policy’s Face Amount including any Face Amount provided by a term insurance rider.

 

·     You must provide us with your written consent if the Face Amounts of the new policies are not equal.

 

·     The Policy’s Accumulated Value, Standard Policy Debt and Cash Surrender Value are split in proportion to the Face Amount for each of the new policies.

 

Rider Termination

 

The Rider will terminate on the earliest of:

 

·     Your Written Request to end this Rider,

 

·     the date of the first death of the two Insureds,

 

·     on lapse or termination of the Policy, or

 

·     upon exercise of this Rider.

 

·     Terminal Illness Rider-Last Survivor

 

(This Rider is called “Accelerated Death Benefit Rider for Terminal Illness-Last Survivor” in your Policy.)

 

The Terminal Illness Rider-Last Survivor provides protection from the financial impacts of having a medical condition that is reasonably expected to result in a Survivor life expectancy of 12 months or less by providing acceleration of a portion of the Death Benefit. This Rider must be elected at Policy Issue.

 

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There is no additional cost for the rider. However, if you choose to exercise the Rider, at the time we pay the Rider Benefit, we will reduce your Policy’s Death Benefit by an amount greater than the Benefit payment itself, as described in the Rider. Other Policy values, including but not limited to, Accumulated Value and Total Face Amount will be reduced pro rata.

 

You may opt out of the Rider at any time after the Policy is issued. There is no charge for opting out of the Rider.

 

Rider Terms

 

Eligible Coverage – the portion of the Policy Face Amount that will qualify for determining the Terminal Illness Benefit under the Terminal Illness Rider-Last Survivor. Your Policy’s Eligible Coverage is listed in the Policy Specifications under the Terminal Illness Rider-Last Survivor. It does not include any insurance on the life of anyone other than the Insureds and any other rider on the Insureds.

 

Licensed Physician – a physician licensed and residing in the United States. The Licensed Physician cannot be you or an immediate family member.

 

Terminally Ill Individual – Survivor who has been certified in writing as having a medical condition that is reasonably expected to result in a life expectancy of 12 months or less.

 

Survivor -  the Insured remaining alive after the first death of the two Insureds named in the Policy.

 

Eligibility Conditions

 

To receive the Rider Benefits, you must satisfy the following conditions:

 

·     You must submit a Written Request while the Policy is In Force; we will provide you with a claim form within 15 days of your Written Request. Your completed claim form must contain proof that the Survivor is a Terminally Ill Individual;

 

·     Any assignee or any irrevocable Beneficiary under the Policy must provide written consent;

 

·     The Terminally Ill Individual’s illness must not be the result of attempted suicide or intentionally self-inflicted injury;

 

·     If your Policy is a last survivor policy, it will only be eligible for a Terminal Illness Benefit after the death of the first Insured and only if the Survivor is a Terminally Ill Individual.

 

The Terminal Illness Benefit will be payable when we receive written certification from a Licensed Physician that the Survivor is a Terminally Ill Individual and meets the conditions described in the Rider. We reserve the right to obtain an additional opinion of the Survivor’s conditions at our expense. If this opinion differs from that of the Survivor’s Licensed Physician, eligibility for benefits will be determined by a third Licensed Physician who is mutually acceptable to you and to us.

 

The Terminal Illness Benefit will not be payable if the law requires the Benefit to meet creditor claims or a government agency requires the benefit for application or maintenance of a government benefit or entitlement.

 

The Rider at Exercise

 

You may submit your Written Request for benefits under the Rider, including the amount of Terminal Illness Benefit requested, when the Survivor qualifies as a Terminally Ill Individual and meets the eligibility conditions.

 

When we make the benefit payment we will:

 

·     Limit the benefit to the lesser of 75% of the Eligible Coverage or $250,000;

 

·     Calculate the Terminal Illness Benefit Proceeds, as described below; and

 

·     Reduce Policy and Rider values.

 

Calculating the Benefit Under the Rider

 

The Terminal Illness Benefit Proceeds is the amount payable under the Rider. It is a one-time payment equal to the Terminal Illness Benefit multiplied by (a) and reduced by (b) and (c) where:

 

(a)         the Terminal Illness Reduction Factor;

 

(b)         Standard Policy Debt multiplied by the Acceleration Percentage; and

 

(c)          a processing charge, guaranteed not to exceed $100.

 

If the Survivor dies within 30 days of payment of the Terminal Illness Benefit Proceeds, we will refund the amounts defined in (a) and (c) above.

 

The Terminal Illness Reduction Factor is equal to (a) x (b) where:

 

(a)         equals 1; and

 

(b)         equals 1 plus the Accelerated Death Benefit Interest Rate.

 

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The Accelerated Death Benefit Interest Rate will not exceed the greater of:

 

·     the current yield on the 90-day Treasury Bill; or

 

·     the maximum fixed annual rate of 8% in arrears or a variable rate determined in accordance with the National Association of Insurance Commissioners Policy Loan Interest Rate Model.

 

We pay the Terminal Illness Benefit as a lump sum. It is guaranteed never to be less than $500 or 25% of your Policy’s Face Amount. We will pay the Terminal Illness Proceeds once per Policy.

 

If you send us Written Notice that the Survivor has died before we have paid the Terminal Illness Benefit, we will not make the payment. However, if we pay the Terminal Illness Benefit before we receive Written Notice of the Survivor’s death, the payment will be effective and we will reduce the Death Benefit Proceeds payable under the Policy.

 

We pay the benefits to you (or your designee) or to your estate while the Survivor is still living, unless the Policy has been otherwise assigned.

 

When you exercise the Rider, we will send you a statement demonstrating the effect of exercising the Rider on the Policy’s Accumulated Value, Death Benefit, Premium, Cost of Insurance Charges and Standard Policy Loans.

 

At the time of each benefit payment, we will:

 

·     Calculate the amount payable upon request under this Rider (the “Terminal Illness Benefit Proceeds”);

 

·     Reduce the Policy and Rider values as described in the Rider; and

 

·     Send you an endorsement to the Policy, which will include a statement of the effect of the benefit payment on the Policy’s Accumulated Value, Death Benefit, Premium, Cost of Insurance Charges and Standard Policy Loans.

 

If you request another transaction on the same day as a Terminal Illness Benefit is paid, we will process the Terminal Illness Benefit Proceeds after we have processed the other requested transactions.

 

Your Policy After Exercising the Rider

 

When you exercise the Rider and we make a benefit payment, Policy values will be reduced by an amount equal to the value below multiplied by the Acceleration Percentage:

 

·     the Total Face Amount; and

 

·     the Accumulated Value.

 

The Acceleration Percentage equals (a ÷ b) where:

 

a = the Terminal Illness Benefit; and

 

b = the Eligible Coverage on the date of each Benefit payment.

 

Your Policy’s Total Face Amount will be reduced by an amount equal to the Acceleration Percentage multiplied by the Total Face Amount prior to the benefit payment. The Face Amount of each Coverage Layer of the Policy or any term insurance Rider on the Survivor will be reduced according to the terms of the Policy and Rider.

 

The Policy’s Death Benefit and Accumulated Value will continue to be calculated in accordance with the terms of the Policy.

 

The Policy’s Investment Options values are reduced on the date of each benefit payment by an amount equal to the Acceleration Percentage multiplied by the Investment Option values prior to the benefit payment. The reduction to the values in each of the Investment Options will be treated as an Account Deduction.

 

We will reduce your Standard Policy Debt, Standard Loan Account and Standard Loan Account Value on the date of a benefit payment by an amount equal to their respective values prior to the benefit payment multiplied by the Acceleration Percentage.

 

Your Policy’s Cost of Insurance charges will be calculated according to the terms of the Policy, but will be based on the reduced Policy values following the benefit payment.

 

Your Policy’s Cash Surrender Value and Net Cash Surrender Value following the benefit payment will be calculated according to the terms of the Policy.

 

The Riders After Exercising the Terminal Illness Rider-Last Survivor

 

Generally, optional rider benefits under the Policy will remain In Force subject to their terms and conditions, unless otherwise stated. We will calculate charges for optional riders in accordance with the terms of each applicable rider. The charges may be affected by the reduction in benefits and policy values. In addition:

 

·     Face Amounts for any term insurance rider on the Survivor will be reduced as the Policy’s Total Face Amount is reduced;

 

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·     For any no-lapse guarantee rider using no lapse guarantee premiums, the no-lapse premium and no-lapse credit will each be reduced on the date of each benefit payment;

 

·     For any no-lapse guarantee rider using no-lapse guarantee value, the no-lapse guarantee value will be reduced on the date of each benefit payment.

 

Terminal Illness Benefit Accelerated Death Benefits may affect your eligibility for, or amount of, other benefits provided by federal, state or local government. Payments of Accelerated Death Benefits provided by the Rider are intended to qualify as Death Benefits under section 101(g) of the Tax Code.

 

You should consult with your personal tax advisor before requesting any accelerated Death Benefit payments.

 

Rider Termination

 

The Rider is effective on the Policy Date unless otherwise stated. It will terminate on the earlier of:

 

·     Your Written Request;

 

·     The date the Benefit under the Rider are paid;

 

·     When the Policy terminates; or

 

·     When you notify us of Survivor’s death.

 

If your Policy lapses and is reinstated, you may reinstate the Rider.

 

Payment of an Accelerated Death Benefit under this rider will reduce the Policy’s Death Benefit and other values under the Policy.  In most circumstances, the cost of insurance charges will also be reduced. In addition, premium limitations and Death Benefits required in order for the Policy to qualify as a life insurance policy or avoid being classified as a Modified Endowment Contract under the Tax Code will also be affected.

 

Things to Keep in Mind

 

We offer other variable life insurance policies which provide insurance protection on the life of an Insured. We also offer riders that provide Coverage on the Insured. Many life insurance policies and riders have some flexibility in structuring the Face Amount, the Death Benefit, and premium payments in targeting cash values based on your particular needs.

 

Providing Coverage on the Insureds using Rider Coverage will result in different Policy charges than Coverage under the Policy alone. In general, your Policy Coverage offers the advantage of lower overall guaranteed charges than the added Riders. If you add a Rider or Riders to your Policy, and if we apply maximum guaranteed charges, you may increase your risk of lapse even if all planned premiums are paid. Adding a Rider or Riders may also affect the amount of premium you can pay on your Policy and still have it qualify as life insurance.

 

Combining a Policy with an Annual Renewable Term Rider, may lower costs and may improve Accumulated Value accrual for the same amount of Death Benefit. However, your Policy has guaranteed maximum charges. Adding an Annual Renewable Term Rider will result in guaranteed maximum charges that are higher than for a single Policy with the same Face Amount.

 

We also offer the ability to have increases in Coverage by requesting an increase in Face Amount. A requested increase in Coverage can provide for a larger increase, but would be subject to full underwriting and could result in a different Risk Class than that originally underwritten. Policy charges will vary based on the amount and timing of increases.

 

Ultimately, individual needs and objectives vary, and they may change through time. It is important that you consider your goals and options carefully. You should discuss your insurance needs and financial objectives with your life insurance producer before purchasing any life insurance product or purchasing additional insurance benefits. You should also consider a periodic review of your Coverage with your life insurance producer.

 

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HOW PREMIUMS WORK

 

 

Your Policy gives you the flexibility to choose the amount and frequency of your premium payments within certain limits.

 

The amount, frequency, and period of time over which you make premium payments may affect whether your Policy will be classified as a Modified Endowment Contract, or no longer qualifies as life insurance for tax purposes. See VARIABLE LIFE INSURANCE AND YOUR TAXES for more information.

 

We deduct a premium load from each premium payment, and then allocate your Net Premium to the Investment Options you have chosen. See the Deductions From Your Premiums section below. However, if you have chosen the Indexed Fixed Options, your Net Premium will first be allocated to the Fixed Account and transferred from the Fixed Account to the Indexed Fixed Options on the Segment Start Date. The Accumulated Value transferred from the Fixed Account to the Indexed Fixed Options may be less than the Net Premium or the Accumulated Value you transferred to the Fixed Account because there may have been deductions from the Fixed Account, such as those due to Monthly Deductions, withdrawals or Standard Policy loans.

 

There is other information you should know about allocating all or part of a Net Premium to the Indexed Fixed Options. You can only allocate a Net Premium to the Indexed Fixed Options if your Policy is not in a Lockout Period. In addition, you must notify us of your allocation to the Indexed Fixed Options by the Cutoff Date (two Business Days before a Segment Start Date) of a particular Segment Start Date in order for Accumulated Value to be transferred from the Fixed Account to the Indexed Fixed Options on that Segment Start Date. See YOUR INVESTMENT OPTIONS – Indexed Fixed Options. Otherwise, your Accumulated Value will not be transferred to the Indexed Fixed Options on the Segment Start Date.

 

We do not count the allocation from the Fixed Account to the Indexed Fixed Options towards the number of transfers you may make in a Policy Year. In addition, we do not count such transfer towards the number of transfers you may make in a Policy Year without incurring an Excess Transfer Charge.

 

Your Initial Premium

 

We apply your first premium payment to the Policy on the later of the day we receive it or the day we receive all contractual and administrative requirements necessary for your Policy to be In Force. See HOW PREMIUMS WORK – Allocating Your Premiums for more information on when your first Net Premium is allocated to the Investment Options.

 

If you have outstanding contractual and administrative requirements, your life insurance producer will notify you of a delivery date when any outstanding requirements are due to us, not to exceed 45 days from the date we issue your Policy. If we do not receive your first premium payment and all contractual and administrative requirements on or before the delivery date, we can cancel the Policy and refund any premium payment you have made. We may extend the delivery date in some cases.

 

Planned Premium Payments

 

You can schedule the amount and frequency of your premium payments. We refer to scheduled premium payments as your planned premium. Here’s how it works:

 

·     You indicate whether you want to make premium payments annually, semi-annually, or quarterly. You can also choose monthly payments using our monthly Electronic Funds Transfer Plan, which is described below. If you want to change the scheduled premium payment amount or frequency, contact us in writing.

 

·     We send you a notice to remind you of your scheduled premium payment (except for monthly Electronic Funds Transfer Plan payments, which are paid automatically). If you own more than one Policy, you can request us to send one notice – called a list bill – that reminds you of your payments for all of your Policies. We require at least three participants for a list bill. You can choose to receive the list bill every month.

 

·     If you have any Standard Policy Debt, we will treat any payment you make during the life of your Policy as a loan repayment, not as a premium payment, unless you tell us otherwise in writing. When a payment, or any portion of it, exceeds your Standard Policy Debt, we will treat it as a premium payment.

 

You do not have to make the premium payments you have scheduled. However, not making a premium payment may have an impact on any financial objectives you may have set for your Policy’s Accumulated Value and Death Benefit, and could cause your Policy to lapse. Even if you pay all your premiums when they’re scheduled, your Policy could lapse if the Accumulated Value, less any Standard Policy Debt, is not enough to pay your monthly charges. Turn to YOUR POLICY’S ACCUMULATED VALUE for more information.

 

Paying Your Premium

 

Premium payments must be made in a form acceptable to us before we can process it. You may pay your premium:

 

·     by personal check, drawn on a U.S. bank

 

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·     by cashier’s check, if it originates in a U.S. bank

 

·     by money order in a single denomination of more than $10,000 for in force payments, if it originates in a U.S. bank

 

·     by third party payments, when there is a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

 

·     by temporary check with the ABA routing number and account number pre-printed on the check

 

·     wire transfers that originate in U.S. banks.

 

We will not accept premium payments in the following forms:

 

·     cash

 

·     credit card or check drawn against a credit card account

 

·     traveler’s checks

 

·     cashier’s check or money order drawn on a non-U.S. bank, even if the payment may be effected through a U.S. bank

 

·     money order in a single denomination of $10,000 or less

 

·     third party payments, if there is not a clear relationship between the payor (individual, corporation, trust, etc.) and the Insured and/or Owner

 

·     wire transfers that originate from foreign bank accounts.

 

If your Policy is subject to the Minimum Death Benefit, and you want to pay a premium that increases the Net Amount At Risk, you will need to provide us with satisfactory evidence of insurability before we can increase the Death Benefit regardless of which Death Benefit Option you have selected. In this event, your cost of insurance charges will also increase. Cost of insurance charges are based, among other things, upon your Policy’s Net Amount At Risk. For more information, see YOUR POLICY’S ACCUMULATED VALUE on how cost of insurance charges are calculated.

 

All unacceptable forms of premium payments will be returned to the payor along with a letter of explanation. We reserve the right to reject or accept any form of payment. If you make premium payments or loan repayments by Electronic Funds Transfer or by check other than a cashier’s check, your payment of any withdrawal proceeds and any refund during the free look period may be delayed until we receive confirmation in our administrative office that your payment has cleared.

 

Monthly Electronic Funds Transfer Plan

 

You can make monthly premium payments or loan payments using our Electronic Funds Transfer Plan. Here’s how it works:

 

·     You authorize us to withdraw a specified amount from your checking account, savings account or money market account each month.

 

·     If you do not specify a day for us to make the withdrawal, we will withdraw the payment on your Policy’s monthly anniversary.

 

·     If you make monthly payments by the Electronic Funds Transfer Plan, we will apply the payments as loan repayment unless you have requested that payments be applied as premium payments.  Loan payments made by the Electronic Funds Transfer Plan must be at least $50.

 

Deductions From Your Premiums

 

There are different premium types for this Policy. The premium type is used to determine the applicable premium load for each premium payment. The three premium load types are basic premium load, internal premium load, and General Account surplus premium load.

 

We deduct a maximum basic premium load of 12.00% from each premium payment you make excluding any internal premiums. Internal premiums are premiums made by a replacement or conversion of an existing policy you have with us. We deduct a maximum internal premium load of 12.00% from each internal premium.

 

The General Account surplus premium load is deducted from premiums paid (excluding internal premiums) that are greater than a certain amount (called the Premium Band in your Policy Specifications) and are allocated to the Fixed Account and/or Indexed Accounts as long as the Policy is In Force. The General Account surplus premium load is the General Account surplus premium load rate multiplied by total premiums made in excess of the Premium Band intended to be allocated to the Fixed Account and/or Indexed Accounts. The maximum General Account surplus premium load rate on a guaranteed basis is 20% of the premiums made in excess of the Premium Band. The Premium Band and the current General Account surplus premium load rate will vary by Policy, however, once the Policy is issued the applicable Premium Band and the current General Account surplus premium load rate will never change. Work with your life insurance producer prior to purchase to determine what Premium Band and General Account surplus premium load applies to you.

 

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Premium loads help pay for the cost of distributing our Policies, and are also used to pay state and local premium taxes, any other taxes that may be imposed, and to compensate us for certain costs or lost investment opportunities resulting from our amortization and delayed recognition of certain policy acquisition expenses for federal income tax purposes. These consequences are referred to as the deferred acquisition cost (“DAC tax”).

 

Like other Policy charges, we may profit from premium loads and may use these profits for any lawful purpose, such as the payment of distribution and administrative expenses. We will notify you in advance if we change our current load rates.

 

Limits on the Premium Payments You Can Make

 

We will not accept premium payments after your Policy’s Monthly Deduction End Date.

 

Federal tax law puts limits on the amount of premium payments you can make in relation to your Policy’s Death Benefit. These limits apply in the following situations:

 

·     If applying the premium in that Policy Year means your Policy will become a Modified Endowment Contract. You may direct us to accept premium payments or other instructions that will cause your Policy to be treated as a Modified Endowment Contract by signing a Modified Endowment Contract Election Form. You will find a detailed discussion of Modified Endowment Contracts in VARIABLE LIFE INSURANCE AND YOUR TAXES. You should speak to a qualified tax advisor for complete information regarding Modified Endowment Contracts.

 

·     If applying the premium payment to your Policy will increase the Net Amount At Risk. This will happen if your Policy’s Death Benefit is equal to the Minimum Death Benefit or would be equal to it once we applied your premium payment.

 

You will find more detailed information regarding these situations in the SAI.

 

Allocating Your Premiums

 

We generally allocate your Net Premiums to the Investment Options you have chosen on your application on the day we receive them. Please turn to YOUR INVESTMENT OPTIONS for more information about the Investment Options.

 

When we allocate your first premium depends on the state and replacement status. For policies that require us to return the premiums you have paid if you exercise your Free Look Right, we will hold your Net Premiums in the Fidelity® VIP Government Money Market Variable Account until the end of the applicable state free look period, and then transfer them to the Investment Options you have chosen.

 

If your Policy requires refunds to be based on Accumulated Value if you exercise your Free Look Right, we allocate Net Premiums to the Investment Options you have chosen on the day we receive them or your Policy Date, if later. If your Policy has outstanding contractual and/or administrative requirements necessary before it can be placed In Force, we will allocate any Net Premiums received to the Fidelity® VIP Government Money Market Variable Account until the requirements are satisfied and your Policy is placed In Force.

 

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YOUR POLICY’S ACCUMULATED VALUE

 

 

Accumulated Value is the value of your Policy on any Business Day. It is used as the basis for determining Policy benefits and charges.

 

We use it to calculate how much money is available to you for loans and withdrawals, and how much you will receive if you surrender your Policy. It also affects the amount of the Death Benefit if you choose a Death Benefit Option that’s calculated using Accumulated Value.

 

The Accumulated Value of your Policy is not guaranteed – it depends on the performance of the Investment Options you have chosen, the premium payments you have made, Policy charges and how much you have borrowed or withdrawn from the Policy.

 

If your Accumulated Value plus any Indexed Termination Credit less any Standard Policy Debt is insufficient to pay for Policy charges, your Policy will enter its Grace Period. We will send you a notice telling you the amount of premium to pay to keep your Policy In Force. The 61-day Grace Period starts on the notice date. If you do not pay sufficient premium during the Grace Period to restore your Policy’s Accumulated Value, your Policy will lapse.

 

Calculating Your Policy’s Accumulated Value

 

Your Policy’s Accumulated Value is the sum of the following:

 

·     Variable Account Value – the sum of the Accumulated Value in each Variable Account.

 

·     Fixed Account Value – the value allocated to the Fixed Account.

 

·     Indexed Account Value – is the sum of the Segment Values for all Segments in each Indexed Account.

 

·     Standard Loan Account Value – is equal to the Standard Loan Account plus any interest credited which will accrue daily.

 

The Accumulated Value in the Fixed and Variable Options is made up of the following:

 

·     Net Premiums that you allocate

 

·     Policy Charges that we deduct

 

·     Withdrawals that you request

 

·     Standard Loans that you request and that become part of the Standard Loan Account

 

·     Earnings on the Accounts.

 

Your Policy’s Accumulated Value is the total amount allocated to the Variable Investment Options, the Indexed Fixed Options and the Fixed Account, plus the amount in the Standard Loan Account. Please see WITHDRAWALS, SURRENDERS AND LOANS – Taking Out a Loan for information about Standard Loans and the Standard Loan Account.

 

The Variable Account Value is the sum of the value allocated to each of the Variable Accounts. For each Variable Account, we determine the value allocated to the Variable Investment Options on any Business Day by multiplying the number of accumulation units for each Variable Investment Option credited to your Policy on that day, by the Variable Investment Option’s unit value at the end of that day. The process we use to calculate unit values for the Variable Investment Options is described in YOUR INVESTMENT OPTIONS.

 

The Fixed Account Value is the sum of the value in the Fixed Account. We credit interest to this Account on a daily basis, at a rate not less than the guaranteed minimum of 1.00%. Please see YOUR INVESTMENT OPTIONS –Fixed Option for further details.

 

The Indexed Account Value is the sum of the Segment Values for all Segments in the Indexed Fixed Options. Each segment may receive Segment Indexed Interest credits at the Segment Maturity Date. Please see YOUR INVESTMENT OPTIONS – Indexed Fixed Option for further details.

 

When you request a Standard Policy Loan, an equivalent amount of money is processed as an Account Deduction and added to the Standard Loan Account. Please see WITHDRAWALS, SURRENDERS AND LOANS – Taking Out a Loan for information about Standard Loans and the Standard Loan Account.

 

Policy Charges

 

We take various charges from your Policy’s Accumulated Value to compensate us for the cost of the Policy benefits and for maintaining your Policy:

 

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1.         Monthly Deductions

 

2.         Certain Transaction Fees

 

3.         Administrative and Underwriting Service Fees

 

4.   Standard Loan Interest Charged against the Standard Loan Account

 

Transaction fees, administrative and underwriting service fees are shown in the FEE TABLES.

 

All Policy charges assessed under the policy will reduce the Accumulated Value as an Account Deduction.

 

Monthly Deductions

 

We deduct a monthly charge from your Policy’s Accumulated Value on each Monthly Payment Date until the Monthly Deduction End Date. If there is not enough Accumulated Value less Standard Policy Debt to pay the monthly charge, your Policy could lapse. For more information, see Lapsing and Reinstatement.

 

The Monthly Deduction is made up of six charges:

 

1.         cost of insurance charge,

 

2.         administrative charge,

 

3.         Coverage charge,

 

4.         Indexed Fixed Option Charge,

 

5.   asset charge, and

 

6.   charges for optional riders or benefits.

 

Your Policy and any Riders will provide a list of all guaranteed Policy charges as shown in the FEE TABLES. For any given charge, we may charge less than these amounts, but we will never charge more than these guaranteed amounts. Any lesser charge will apply uniformly to all members of the same Class.

 

We may profit from Policy charges and may use these profits for any lawful purpose such as the payment of distribution and administrative expenses.

 

There are no Monthly Deductions after the Monthly Deduction End Date.

 

Cost of Insurance Charge

This Cost of Insurance Charge is for providing you with life insurance protection. It is based upon the cost of insurance rates of each Coverage Layer and a Net Amount At Risk.

 

The Net Amount At Risk used for calculating cost of insurance charges is determined on the Monthly Payment Date as:

 

·     The Death Benefit under the policy divided by the Net Amount At Risk Factor of 1.0008295

 

·     Less the Accumulated Value after the Indexed Fixed Option Charge, Coverage Charge, and the Administration Charge are deducted.

 

If your policy has multiple Coverage Layers, the Net Amount at Risk is proportional to each Coverage Layer based upon the Face Amount of the Coverage Layer.

 

There are maximum or guaranteed cost of insurance rates associated with each Coverage Layer. These rates are shown in your Policy Specifications or in any Supplemental Schedule of Coverage that we provide.

 

The guaranteed rates include the insurance risks associated with insuring two people. They are calculated using 2017 Commissioners Standard Ordinary Mortality Tables. The cost of insurance rates take into consideration the Age, sex and smoker status of the Insured unless unisex rates are required.  Unisex Rates are used when required by the state in which the Policy is issued and when a Policy is owned by an employer in connection with employment-related or benefit programs.

 

 

How we calculate cost of insurance

 

 

We calculate cost of insurance by multiplying the current cost of insurance rate by a Net Amount At Risk at the beginning of each Policy month.

 

 

The Net Amount At Risk used in the cost of insurance calculation is the difference between a discounted Death Benefit that would be payable if the Insured died and the Accumulated Value of your Policy at the beginning of the Policy month before the monthly charge is due.

 

 

First, we calculate the total Net Amount At Risk for your Policy in two steps:

 

 

·     Step 1: we divide the Death Benefit that would be payable at the beginning of the Policy month by 1.0008295.

 

 

·     Step 2: we subtract your Policy’s Accumulated Value at the beginning of the Policy month from the amount we calculated in Step 1.

 

 

Next, we allocate the Net Amount At Risk in proportion to the Face Amount of all Coverage Layers, and each increase that’s In Force as of your Monthly Payment Date.

 

 

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We then multiply the amount of each allocated Net Amount At Risk by the cost of insurance rate for each Coverage Layer. The sum of these amounts is your cost of insurance charge.

 

 

Premiums, Net Premiums, Policy fees and charges, withdrawals, investment performance and fees and expenses of the underlying portfolios may affect your Net Amount At Risk, depending on the Death Benefit Option you choose or if your Death Benefit under the Policy is the Minimum Death Benefit.

 

 

Administrative charge

We deduct a charge not to exceed $10.00 a month to help cover the costs of administering and maintaining our Policies. We guarantee that this charge will not increase.

 

Coverage charge

We deduct a Coverage charge every month to help cover the costs of distributing our Policies.

 

Each Coverage Layer on the Insureds in the Policy has its own Coverage charge. The total amount of Coverage charges deducted monthly is the sum of the Coverage charges calculated for each Coverage Layer in effect.

 

The Coverage charge for each Coverage Layer is calculated based on the Face Amount, Insureds’ Age and Risk Class, and Death Benefit Option on the Coverage Layer effective date.

 

Your Policy Specifications and any Supplemental Schedule of Coverage provide the Policy’s guaranteed Coverage charges. We may charge less than our guaranteed rate.

 

 

A hypothetical example:

 

 

For a Policy that has a Policy Face Amount of $1,000,000, and a Coverage charge rate of 0.8813 per 1,000 of Face Amount, and a per Policy Coverage charge of $24.50:

 

 

The guaranteed monthly Coverage charge in year one is $88.13 ((1,000,000 ÷ 1,000) x 0.8813)

 

 

 

 

 

 

Indexed Fixed Option Charge

We assess an additional charge every month for amounts allocated to the 1-Year High Cap Indexed Account. The charge is added to the Monthly Deductions assessed against the Policy’s Accumulated Value. The charge is calculated by multiplying the current Indexed Fixed Option Charge rate, as shown in the FEE TABLES (guaranteed maximum annual rate of 0.80% (0.0666% monthly), by the value of the 1-Year High Cap Indexed Account after transactions and before monthly deductions on the Monthly Payment Date.

 

An example:

Assume the Indexed Fixed Option Charge rate is 0.25% per month.

For a Policy with $10,000 allocated to the 1-Year High Cap Indexed Account, the monthly Indexed Fixed Option Charge is:

($10,000 x 0.0666%) = $6.66

 

See YOUR INVESTMENT OPTIONS – Indexed Fixed Options – Segment Value Changes.

 

Asset charge

The asset charge is deducted monthly and is assessed against the Policy’s unloaned Accumulated Value. This charge allows us to offer the Investment Options available under this Policy. The current charge is 0.24% annually (0.02% monthly) of unloaned Accumulated Value for Policy Years 1 through 20 and 0.00% of unloaned Accumulated Value for Policy Year 21 and each Policy Year thereafter. The charge is guaranteed not to exceed 0.24% annually (0.02% monthly) of unloaned Accumulated Value for Policy Years 1 through 20 and 0.42% annually (0.035% monthly) of unloaned Accumulated Value for Policy Year 21 and each Policy Year thereafter.

 

An example

Assume a Policy is in year 5 with an Accumulated Value of $250,000, a Standard Loan Account of $25,000, and thus an unloaned Accumulated Value of $225,000.

The maximum monthly asset charge is: $225,000 x 0.02% = $45.00

 

Charges for optional riders

If you add any riders to your Policy, we add any charges for them to your monthly charge.

 

Lapsing and Reinstatement

There is no guarantee that your Policy will not lapse even if you pay your planned premium. Your Policy will lapse if there is not enough Accumulated Value, after subtracting any Standard Policy Debt, to cover the monthly charge on the day we make the deduction.

 

Your Policy’s Accumulated Value is affected by the following:

 

·     loans or withdrawals you make from your Policy

 

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·     certain Rider benefits paid from your Policy

 

·     not making planned premium payments

 

·     the performance of your Investment Options

 

·     charges under the Policy.

 

If your Policy’s Accumulated Value plus any Indexed Termination Credit (see Indexed Fixed Options – Minimum Indexed Benefit Rider) less Standard Policy Debt is not enough to pay the total monthly charge, your policy will enter its Grace Period. We deduct the amount that is available and send you, and anyone you have assigned your Policy to, a notice telling you the amount to pay to keep your Policy In Force. The minimum amount you must pay to keep your Policy In Force is equal to three times the monthly charge that was due on the Monthly Payment Date, less any Indexed Termination Credit, when there was not enough Accumulated Value to pay the charge, plus premium load. For more information regarding payment due to keep your Policy In Force, please contact our Life Insurance Division.

 

We will give you a Grace Period of 61 days from the date we send the notice to pay sufficient premium to keep your Policy In Force. Your Policy will remain In Force during the Grace Period.

 

If we do not receive your payment within the Grace Period, your Policy will lapse with no value. This means we will end your life insurance Coverage.

 

If you make the minimum payment

If we receive your payment within the Grace Period, we will allocate your Net Premium on the day it is received to the Investment Options you have chosen and deduct the monthly charge from your Investment Options as an Account Deduction at the next policy monthly payment date. A minimum of the Monthly Deduction due plus three times the Monthly Deduction due when the insufficiency occurred less any Indexed Termination Credit, plus any applicable premium load, must be paid.

 

If your Policy is in danger of lapsing and you have Standard Policy Debt, you may find that making the minimum payment would cause the total premiums paid to exceed the maximum amount for your Policy’s Face Amount under tax laws. In that situation, we will not accept the portion of your payment that would exceed the maximum amount. To stop your Policy from lapsing, you will have to repay a portion of your Standard Policy Debt.

 

Remember to tell us if your payment is a premium payment. Otherwise, we will treat it as a loan repayment.

 

How to avoid future lapsing

To stop your Policy from lapsing in the future, you may want to make larger or more frequent premium payments if tax laws permit it. Or if you have a Policy loan, you may want to repay a portion of it.

 

Paying Death Benefit Proceeds during the Grace Period

If the Survivor dies during the Grace Period, we will pay Death Benefit Proceeds (which include any Indexed Termination Credit) to your Beneficiary. See Indexed Fixed Options – Minimum Indexed Benefit Rider. We will reduce the payment by any unpaid monthly charges and any Standard Policy Debt.

 

Reinstating a lapsed Policy

If your Policy lapses, you have three years from the end of the Grace Period to apply for a reinstatement. We will consider your reinstatement request if you send us the following:

 

·     a written application

 

·     evidence satisfactory to us that each Insured is still insurable in the same Risk Class as when the Policy was issued

 

·     a Premium payment (less any Indexed Termination Credit) that is:

 

·     sufficient, after any premium load reduction, to cover all unpaid monthly charges and Standard Policy Loan interest that were due and unpaid during the Grace Period,

 

·     sufficient, after any premium load reduction, to keep your Policy In Force for three months after the date your Policy is reinstated, and

 

·     sufficient to cover any negative Accumulated Value if there was a Standard Policy Loan or other outstanding Standard Policy Debt at the time of lapse.

 

We will reinstate your Policy as of the first Monthly Payment Date on or after the day we approve the reinstatement. When we reinstate your Policy, its Accumulated Value will be the same as it was on the day your Policy lapsed less any Standard Policy Debt at the time of lapse. We will allocate the Accumulated Value according to your most recent premium Allocation Instructions.

 

At reinstatement:

 

·     Policy charges other than Cost of Insurance charges for Basic Life Coverage under this Policy will be calculated on their original schedule as if lapse had never occurred.

 

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·     Cost of Insurance Charges will be calculated using Cost of Insurance Rates that resume their original schedule as if lapse had never occurred, reflecting the Age of each Insured at reinstatement and policy duration measured from the original Policy Date.

 

Reinstating a lapsed Policy with Standard Policy Debt

 

If there was a Standard Loan at the time of lapse, upon reinstatement we will eliminate the loan by deducting any Standard Policy Debt from the Accumulated Value. Any negative Accumulated Value will be due in addition to sufficient premium at the time of reinstatement.

 

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YOUR INVESTMENT OPTIONS

 

This section tells you about the Investment Options available under your Policy and how they work.

 

We put your Net Premium in our General Account and Separate Account. We own the assets in our accounts and allocate your Net Premiums, less any charges, to the Investment Options you have chosen. Amounts allocated to any available Fixed Options or Indexed Fixed Options are held in our General Account. Amounts allocated to the Variable Investment Options are held in our Separate Account. You will find information about when we allocate Net Premiums to your Investment Options in HOW PREMIUMS WORK.

 

You choose your initial Investment Options on your application. If you choose more than one Investment Option, you must tell us the dollar amount or percentage you want to allocate to each Investment Option. You can change your premium Allocation Instructions at any time.

 

You can change your premium Allocation Instructions by writing. If we have your completed telephone and electronic authorization on file, you can call M Insurance Solutions, Inc. at (833) 943-1608 or submit a request electronically. Or you can ask your life insurance producer to contact M Insurance Solutions, Inc. You will find more information regarding telephone and electronic instructions in POLICY BASICS.

 

The Investment Options you choose, and how they perform, will affect your Policy’s Accumulated Value and may affect the Death Benefit. Please review the Investment Options carefully. You may ask your life insurance producer to help you choose the right ones for your goals and tolerance for risk. Any financial firm or representative you engage to provide advice and/or make transfers for you is not acting on our behalf. We are not responsible for any investment decisions or allocations you make, recommendations such financial representatives make or any allocations or specific transfers they choose to make on your behalf. Some broker-dealers may not allow or may limit the amount you may allocate to certain Investment Options. Work with your life insurance producer to help you choose the right Investment Options for your investment goals and risk tolerance. Make sure you understand any costs you may pay directly and indirectly on your Investment Options because they will affect the value of your Policy.

 

Variable Investment Options

 

We consider various factors when determining the Fund portfolios offered under this Policy. Such fund factors include some or all of the following: Fund reputation, asset class, investment objective, investment performance, manager and sub-adviser experience, brand recognition, portfolio share class, and portfolio expenses. We may also consider whether the underlying Fund makes fee payments for distribution and/or service (12b-1 fees), if a Fund affiliate makes fee payments for certain administrative support, or if the Fund is affiliated with us.

 

We do not recommend or endorse any particular Fund and we do not provide investment advice.

 

The following charts are summaries of the Fund portfolios. You will find detailed descriptions of the portfolios in each Fund prospectus. There’s no guarantee that a portfolio will achieve its investment objective. You should read each Fund prospectus carefully before investing. You can obtain a Fund prospectus by contacting your life insurance producer or by visiting www.PacificLife.com.

 

DFA INVESTMENT
DIMENSIONS GROUP INC.

INVESTMENT GOAL

PORTFOLIO MANAGER

DFA VA International Small Portfolio

Seeks to achieve long-term capital appreciation.

Dimensional Fund Advisors LP

DFA VA International Value Portfolio

Seeks to achieve long-term capital appreciation.

Dimensional Fund Advisors LP

DFA VA U.S. Large Value Portfolio

Seeks to achieve long-term capital appreciation.

Dimensional Fund Advisors LP

DFA VA U.S. Targeted Value Portfolio

Seeks to achieve long-term capital appreciation.

Dimensional Fund Advisors LP

 

FIDELITY® VARIABLE
INSURANCE PRODUCTS
FUNDS

INVESTMENT GOAL

PORTFOLIO MANAGER

Fidelity® VIP Government Money Market Portfolio Service Class

Seeks as high a level of current income as is consistent   with preservation of capital and liquidity.

Fidelity Management & Research Company LLC

 

49


 

FIDELITY® VARIABLE
INSURANCE PRODUCTS
FUNDS

INVESTMENT GOAL

PORTFOLIO MANAGER

Fidelity® VIP International Index Portfolio Service Class 2

Seeks to provide investment results that correspond to the total return of foreign developed and emerging stock markets.

Fidelity Management & Research Company LLC

 

GOLDMAN SACHS
VARIABLE INSURANCE
TRUST

INVESTMENT GOAL

PORTFOLIO MANAGER

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio – Institutional Shares

Seeks long-term growth of capital.

Goldman Sachs Asset Management, L.P.

 

LEGG MASON PARTNERS
VARIABLE INCOME
TRUST

INVESTMENT GOAL

PORTFOLIO MANAGER

Western Asset Variable Global High Yield Bond Portfolio Class I

Seeks to maximize total return.

Legg Mason Partners Fund Advisor, LLC

 

M FUND, INC.

INVESTMENT GOAL

PORTFOLIO MANAGER

M Capital Appreciation Fund

Seeks to provide maximum capital appreciation.

Frontier Capital Management Company, LLC

M International Equity Fund

Seeks to provide long-term capital appreciation.

Dimensional Fund Advisors, LP

M Large Cap Growth Fund

Seeks to provide long-term capital appreciation.

DSM Capital Partners LLC

M Large Cap Value Fund

Seeks to provide long-term capital appreciation.

Brandywine Global Investment Management, LLC

 

MFS VARIABLE
INSURANCE TRUST

INVESTMENT GOAL

PORTFOLIO MANAGER

MFS® New Discovery Series – Initial Class

Seeks capital appreciation.

Massachusetts Financial Services Company

 

PACIFIC SELECT FUND

INVESTMENT GOAL

PORTFOLIO MANAGER

Diversified Bond Portfolio Class P

Seeks to maximize total return consistent with prudent investment management.

Western Asset Management Company, LLC

Emerging Markets Portfolio Class P

Seeks long-term growth of capital.

Invesco Advisers, Inc.

Equity Index Portfolio
Class P

Seeks investment results that correspond to the total return of common stocks that are publicly traded in the U.S.

BlackRock Investment Management, LLC

ESG Diversified Portfolio
Class P

Seeks long-term growth of capital and low to moderate income, while giving consideration to certain environmental, social and governance (“ESG”) criteria.

Pacific Life Fund Advisors LLC

Floating Rate Income Portfolio Class P

Seeks a high level of current income.

Pacific Asset Management LLC

Hedged Equity Portfolio
Class P

Seeks to provide capital appreciation.

Pacific Life Fund Advisors LLC

 

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PACIFIC SELECT FUND

INVESTMENT GOAL

PORTFOLIO MANAGER

Inflation Managed Portfolio Class P

Seeks to maximize total return consistent with prudent investment management.

Pacific Investment Management Company LLC

International Large-Cap Portfolio Class P

Seeks long-term growth of capital.

MFS Investment Management

Large-Cap Growth Portfolio
Class P

Seeks long-term growth of capital; current income is of secondary importance.

BlackRock Investment Management, LLC

Managed Bond Portfolio
Class P

Seeks to maximize total return consistent with prudent investment management.

Pacific Investment Management Company LLC

Small-Cap Index Portfolio Class P

Seeks investment results that correspond to the total return of an index of small-capitalization companies.

BlackRock Investment Management, LLC

 

T. ROWE PRICE EQUITY
SERIES, INC.

INVESTMENT GOAL

PORTFOLIO MANAGER

T. Rowe Price Blue Chip
Growth Portfolio – I

Seeks to provide long-term capital growth. Income is a secondary objective.

T. Rowe Price Associates, Inc.

 

VANECK VIP TRUST

INVESTMENT GOAL

PORTFOLIO MANAGER

VanEck VIP Global Resources Fund Initial Class

Seeks long-term capital appreciation by investing primarily in global resource securities. Income is a secondary consideration.

Van Eck Associates Corporation.

 

VANGUARD VARIABLE INSURANCE FUND

INVESTMENT GOAL

PORTFOLIO MANAGER

Vanguard® VIF Mid-Cap
Index Portfolio

Seeks to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks.

The Vanguard Group, Inc.

Vanguard® VIF Real Estate Index Portfolio

Seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of a benchmark index that measures the performance of publicly traded equity REITs and other real estate-related investments.

The Vanguard Group, Inc.

Vanguard® VIF Total Bond Market Index Portfolio

Seeks to track the performance of a broad, market-weighted bond index.

The Vanguard Group, Inc.

Vanguard® VIF Total Stock Market Index Portfolio

Seeks to track the performance of a benchmark index that measures the investment return of the overall stock market.

The Vanguard Group, Inc.

 

The Investment Adviser

Dimensional Fund Advisors LP is the investment adviser of the Dimensional family of funds. Dimensional Fund Advisors Ltd. and DFA Australia Limited, each an affiliate of Dimensional Fund Advisors LP, serve as sub-advisors to the VA International Small Portfolio and the VA International Value Portfolio.

 

Fidelity Management & Research Company LLC is the investment adviser of the Fidelity® Variable Insurance Products Funds.

 

Goldman Sachs Asset Management, L.P. is the investment advisor of the Goldman Sachs Variable Insurance Trust.

 

Legg Mason Partners Fund Advisor, LLC is the investment manager of the Legg Mason Partners Variable Income Trust.

 

M Financial Investment Advisers Inc. (“MFIA”) is the investment adviser to M Fund, Inc., and has retained other firms to manage the M Fund portfolios. The MFIA and M Fund’s Board of Directors oversee the management of all of the M Fund portfolios.

 

Massachusetts Financial Services Company is the investment adviser of the MFS Variable Insurance Trust.

 

Pacific Life Fund Advisors LLC (PLFA), a subsidiary of Pacific Life Insurance Company, is the investment adviser for the Pacific Select Fund. PLFA and the Pacific Select Fund’s Board of Trustees oversee the management of all the Pacific Select Fund’s Portfolios. The sub-advisers for each portfolio are listed in the table above.

 

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T. Rowe Price Associates, Inc. is the investment manager of the T. Rowe Price Equity Series, Inc.

 

The Vanguard Group, Inc. is the investment adviser of the Vanguard Variable Insurance Funds listed above.

 

Van Eck Associates Corporation is the investment adviser of the VanEck VIP Trust.

 

We are not responsible for the operation of the underlying Funds or any of their portfolios. We also are not responsible for ensuring that the underlying Funds and their portfolios comply with any laws that apply.

 

Calculating unit values

When you choose a Variable Investment Option, we credit your Policy with accumulation units. The number of units we credit equals the amount we have allocated divided by the unit value of the Variable Account. Similarly, the number of accumulation units in your Policy will be reduced when you make a transfer, withdrawal, or loan from a Variable Investment Option, and when your monthly charges are deducted.

 

 

An example

 

 

You ask us to allocate $6,000 to an Investment Option on a Business Day. At the end of that day, the unit value of the Variable Account is $15. We will credit your Policy with 400 units ($6,000 divided by $15).

 

 

The value of an accumulation unit is the basis for all financial transactions relating to the Variable Investment Options. The value of an accumulation unit is not the same as the value of a share in the underlying portfolio. We calculate the unit value for each Variable Account once every Business Day, usually at or about 4:00 p.m. Eastern time.

 

Generally, for any transaction, we will use the next unit value calculated after we receive your Written Request. If we receive your Written Request before the time of the close of the New York Stock Exchange, which is usually 4:00 p.m. Eastern time, on a Business Day, we will use the unit value calculated as of the end of that Business Day. If we receive your request at or after the time of the close of the New York Stock Exchange on a Business Day, we will use the unit value calculated as of the end of the next Business Day. Unit values will not be calculated on days that the New York Stock Exchange, our Life Insurance Division, or an underlying Fund are closed which include weekends, New Year’s Day, Martin Luther King Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day (July 4th), Labor Day, Thanksgiving Day, and Christmas Day. An underlying Fund may be closed when other federal holidays are observed such as Columbus Day and Veterans Day.

 

If a scheduled transaction falls on a day that is not a Business Day, we will process it as of the end of the next Business Day. For your monthly charge, we will use the unit value calculated on your Monthly Payment Date. If your Monthly Payment Date does not fall on a Business Day, we will use the unit value calculated as of the end of the next Business Day. For information about timing of transactions, see POLICY BASICS.

 

The unit value calculation is based on the following:

 

·     the investment performance of the underlying portfolio

 

·     any dividends or distributions paid by the underlying portfolio

 

·     any charges for any taxes that are, or may become, associated with the operation of the Variable Account.

 

The unit value of a Variable Account will change with the value of its corresponding portfolio. Changes in the unit value of a Variable Account will not change the number of accumulation units credited to your Policy. For unit values please go to www.pacificlife.com.

 

Fees and expenses paid by the Funds

Each Fund pays advisory fees, any service and distribution (12b-1) fees, and other expenses. These fees and expenses are deducted from the assets of the Fund’s portfolios and may vary from year to year. They are not fixed and are not part of the terms of your Policy. You will find more about Fund fees and expenses in FEE TABLES and in each Fund’s prospectus. If you choose a Variable Investment Option, these fees and expenses affect you indirectly because they reduce portfolio returns. Each Fund is governed by its own Board of Trustees or Board of Directors.

 

Fixed Option

You can allocate Net Premium or Accumulated Value to the Fixed Account. See YOUR INVESTMENT OPTIONS – Transferring Among Investment Options and Market-timing Restrictions for information on the allocation rules.

 

The Fixed Account provides a guaranteed minimum annual rate of interest. The amounts allocated to the Fixed Account are held in our General Account. For more information about the General Account, see ABOUT PACIFIC LIFE.

 

Here are some things you need to know about the Fixed Account:

 

·     Accumulated Value allocated to the Fixed Account earns interest on a daily basis for each day during a Policy Year. Our minimum annual interest rate is 1.00%.

 

·     We may offer a higher annual interest rate on the Fixed Account. If we do, we will guarantee the higher rate until your next Policy Anniversary.

 

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·     There are no investment risks or direct charges. Policy charges still apply.

 

·     There are certain limitations on how many transfers may be made in a calendar year involving the Fixed Account and the Variable Investment Options. These limitations are described below, in YOUR INVESTMENT OPTIONS – Transferring Among Investment Options.

 

·     We reserve the right to limit aggregate allocations to the General Account (which includes the Fixed Account and the Indexed Fixed Options) during the most recent 12 months for all Pacific Life policies in which you have an ownership interest or to which payments are made by a single payor, to $1,000,000. Any allocations in excess of these limits will be allocated to your other Investment Options according to your most recent Allocation Instructions. If we do not have Allocation Instructions that include other available Investment Options, we will contact you to obtain updated Allocation Instructions. We may increase the limits at any time at our sole discretion. To find out if higher limits are in effect, ask your life insurance producer or contact M Insurance Solutions, Inc. at (833) 943-1608. Also see APPENDIX A: State Law Variations.

 

·     We have not registered the Fixed Account with the SEC. Disclosures regarding the Fixed Account, however, are subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus.

 

·     We may add, terminate, or suspend the Fixed Account or add additional Fixed Options at any time. We will notify you before any such changes occur.

 

Indexed Fixed Options

 

We have not registered the Indexed Fixed Options with the SEC. Disclosures regarding the Indexed Accounts, however, are subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus.

Pacific Life believes that the Policies are in substantial compliance with the applicable provisions of Section 989J(a)(1)-(3) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Indexed Accounts qualify for an exemption from registration under the federal securities laws because, as a Pacific Life General Account investment option, its value does not vary according to the performance of a separate account. In addition, the products in which the Indexed Accounts are offered satisfy standard non-forfeiture laws. Accordingly, the Company has a reasonable basis for concluding that the Indexed Accounts provide sufficient guarantees of principal and interest through the Company’s General Account to qualify under Section 3(a)(8).

 

The Indexed Accounts are held in our General Account. Currently, there are four Indexed Accounts, the 1-Year Indexed Account, 2-Year Indexed Account, the 1-Year High Cap Indexed Account, and the 1-Year No Cap Indexed Account.

 

Here is a summary comparing the Indexed Fixed Options

 

 

 

 

1-Year Indexed Account

2-Year Indexed

Account

1-Year High Cap
 Indexed Account

1-Year No Cap
 Indexed Account

Index

S&P 500® Index

S&P 500® Index

S&P 500® Index

S&P 500® Index

Segment Term

1 year

2 years

1 year

1 year

Maximum Indexed Fixed Option Charge Rate

N/A

N/A

0.0666%/month
(0.80% annually)

N/A

Guaranteed Minimum Participation Rate

100%

100%

100%

20%

Guaranteed Minimum Growth Cap

2%

4%

3%

N/A

Guaranteed Maximum Indexed Threshold Rate

N/A

N/A

N/A

10%

Minimum Segment Guaranteed Interest Rate

0%

0%

0%

0%

 

Allocations to the Indexed Accounts are made first to the Fixed Account and transferred to the Indexed Accounts on the next Segment Start Date. Any amounts allocated to the Fixed Account while pending transfer to the Indexed Accounts will earn interest on a daily basis and the interest accrued will remain in the Fixed Account unless otherwise requested. If you surrender your Policy before segment maturity, you will forfeit any Segment Indexed Interest. We reserve the right to add additional Indexed Accounts or to cease or suspend offering one or more of the Indexed Accounts at any time. If we cease or suspend offering an Indexed Account, we would not allow any new Segments to be created and for any existing Segments, the change would take affect at the end of a Segment Term. We will notify you of any change at your address on file with us.

 

We reserve the right to limit aggregate allocations to the General Account (which includes the Fixed Account and the Indexed Fixed Options) during the most recent 12 months for all Pacific Life policies in which you have an ownership interest or to which payments are made by a single payor, to $1,000,000. Any allocations in excess of these limits will be allocated to your other Investment Options according to your most recent Allocation Instructions. If we do not have Allocation Instructions that include other available Investment Options, we will contact you to obtain updated Allocation Instructions. We may increase the limits at any time at our sole

 

53


 

discretion. To find out if higher limits are in effect, ask your life insurance producer or contact M Insurance Solutions, Inc. at (833) 943-1608. Also see APPENDIX A: State Law Variations.

 

You may also allocate all or part of your Net Premium and your Accumulated Value to the Indexed Accounts if certain conditions are met. Currently, we do not limit the amount that you may allocate and/or transfer to the Indexed Fixed Options. However, we reserve the right to limit allocations and/or transfers to the Indexed Fixed Options to a certain percentage of your Accumulated Value. We will notify you of any limitation at your address on file with us. Accumulated Value in the Indexed Accounts is divided into Segments. We create a separate Segment for each allocation to an Indexed Account. Allocations to the Indexed Accounts are made first to the Fixed Account and transferred from the Fixed Account to an Indexed Account on the next Segment Start Date (currently the 15th of each month). Each Segment represents Accumulated Value transferred from the Fixed Account to the Indexed Accounts on a Segment Start Date.

 

Minimum Segment Guaranteed Interest Rate

 

The Minimum Segment Guaranteed Interest rate is the minimum annual rate that is added to each Index Segment at Segment Maturity. The rate is guaranteed to never be lower than 0%.

 

Growth Cap

 

Segment Indexed Interest is subject to a Growth Cap for the 1-Year Indexed Account, the 2-Year Indexed Account, and the 1-Year High Cap Indexed Account, which is the highest percentage that will be credited for a period (1 year or 2 years as applicable) even if the change in the S&P 500® Index is higher. The steps used to calculate the amount of interest credited and how the Growth Cap is used can be found in the Segment Maturity section below. The Growth Cap is subject to change at our discretion, but the Growth Cap percentage is guaranteed never to be lower than 2% for the 1-Year Indexed Account, 4% for the 2-Year Indexed Account, and 3% for the 1-Year High Cap Indexed Account. We will declare any change in the current Growth Cap at the start of a Segment Term; the current Growth Cap will remain in effect for that Segment Term. If you have an existing Segment, before the end of your Segment Term, please contact M Insurance Solutions, Inc. at (833) 943-1608 or contact your life insurance producer for the current Growth Cap that will apply to a new Segment. If you are allocating to a Segment for the first time, you can contact us or ask your life insurance producer for information on the current Growth Caps prior to investment. Once a Segment is created, you cannot transfer Accumulated Value out of that Segment to any other Indexed Account or Fixed Option until the end of the Segment Term. Money may be transferred from a Segment for withdrawals and Standard Policy Loans, however, a Lockout Period will apply. The 1-Year No Cap Indexed Account does not have a Growth Cap.

 

Indexed Threshold Rate

 

Segment Indexed Interest is subject to an Indexed Threshold Rate for the 1-Year No Cap Indexed Account. The Indexed Threshold Rate reduces the percentage that will be credited for a one-year period. At the end of a Segment Term, we determine the Index Growth Rate which reflects the performance of the underlying Index. The Index Growth Rate is then reduced by the Indexed Threshold Rate. A higher Indexed Threshold Rate may reduce the amount of interest credited at the end of a Segment Term and a lower Indexed Threshold Rate may increase the amount of interest credited at the end of a Segment Term. The steps used to calculate the amount of interest credited at the end of a term and how the Indexed Threshold Rate is used can be found in the Segment Maturity section below. The Indexed Threshold Rate is subject to change at our discretion, but the Indexed Threshold Rate is guaranteed never to be higher than 10%. We will declare any change in the current Indexed Threshold Rate at the start of a Segment Term; the current Indexed Threshold Rate will remain in effect for that Segment Term. If you have an existing Segment, before the end of your Segment Term, please contact M Insurance Solutions, Inc. at (833) 943-1608 or contact your life insurance producer for information on the current Indexed Threshold Rate that will apply to a new Segment. If you are allocating to a Segment for the first time, you can contact us or ask your life insurance producer for information on the current Indexed Threshold Rate prior to investment. Once a Segment is created, you cannot transfer Accumulated Value out of that Segment to any other Indexed Account or Fixed Option until the end of the Segment Term. Money may be transferred from a Segment for withdrawals and Standard Policy Loans, however, a Lockout Period will apply. The 1-Year Indexed Account, 2-year Indexed Account, and the 1-Year High Cap Indexed Account do not have an Indexed Threshold Rate.

 

Participation Rate

 

The Participation Rate is used to determine what percentage of the growth in the underlying Index will be used to determine the amount of interest credited at the end of a Segment Term. The steps used to calculate the amount of interest credited at the end of a term and how the Participation Rate is used can be found in the Segment Maturity section below. The Participation Rate is subject to change at our discretion, but the Participation Rate is guaranteed to never be lower than 100% for the 1-Year Indexed Account, 100% for the 2-Year Indexed Account, 100% for the 1-Year High Cap Indexed Account, and 20% for the 1-Year No Cap Indexed Account. If you have an existing Segment, before the end of your Segment Term, please call M Insurance Solutions, Inc. at (833) 943-1608 or contact your life insurance producer for information on the current Participation Rate that will apply to a new Segment. If you are allocating to a Segment for the first time, you can contact us or ask your life insurance producer for information on the current Participation Rates prior to investment. Once a Segment is created, you cannot transfer Accumulated Value out of that Segment to any other Indexed Account or Fixed Option until the end of the Segment Term. Money may be transferred from a Segment for

 

54


 

withdrawals and Standard Policy Loans, however, a Lockout Period will apply. All of the Indexed Accounts have a Participation Rate.

 

55


 

We credit interest on Accumulated Value in the Indexed Accounts at the end of a period (the Segment Maturity), based in part on any positive change in the S&P 500® Index, excluding dividends. This positive change, however, is limited by any applicable Growth Cap (as discussed above, the Growth Cap includes the Minimum Segment Guaranteed Interest Rate) or any applicable Indexed Threshold Rate (as discussed above, the Indexed Threshold Rate reduces the Index Growth Rate). Generally, a portion of the total return on investments in the securities that underlie the S&P 500® are investment dividends. However, allocations to the 1-Year Indexed Account, 2-Year Indexed Account, 1-Year High Cap Indexed Account, and 1-Year No Cap Indexed Account will not receive the portion of total returns attributable to dividends, so that the index’s performance will be less than that of the securities underlying the S&P 500® Index. We refer to the total interest we credit to a Segment as the Total Interest Credited. If you surrender your Policy before Segment Maturity, no interest will be paid and you will forfeit any interest we would have otherwise credited. If you take a partial withdrawal from a Segment, the withdrawal will reduce the average monthly Segment Balance but any interest due will still be paid. We determine the Segment balance each month (a Segment Month) and average these amounts for determining the interest that may be applied. See the “Here is an example of how a withdrawal from the Policy affects Segment Indexed Interest” table below for a partial withdrawal and average monthly Segment Balance example.

 

The following examples are not intended to serve as projections of future investment returns nor are they a reflection of how your Policy will actually perform.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

The “S&P 500 INDEX” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Pacific Life Insurance Company.  Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Pacific Life Insurance Company. It is not possible to invest directly in an index.  Pacific Life Insurance Company’s Product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”).  S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of Pacific Life Insurance Company’s Product(s) or any member of the public regarding the advisability of investing in securities generally or in Pacific Life Insurance Company’s Product(s) particularly or the ability of the S&P 500 INDEX to track general market performance.  Past performance of an index is not an indication or guarantee of future results. S&P Dow Jones Indices’ only relationship to Pacific Life Insurance Company with respect to the S&P 500 INDEX is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors.  The S&P 500 INDEX is determined, composed and calculated by S&P Dow Jones Indices without regard to Pacific Life Insurance Company or Pacific Life Insurance Company’s Product(s).  S&P Dow Jones Indices has no obligation to take the needs of Pacific Life Insurance Company or the owners of Pacific Life Insurance Company’s Product(s) into consideration in determining, composing or calculating the S&P 500 INDEX.  S&P Dow Jones Indices is not responsible for and have not participated in the determination of the prices, and amount of Pacific Life Insurance Company’s Product(s) or the timing of the issuance or sale of Pacific Life Insurance Company’s Product(s) or in the determination or calculation of the equation by which Pacific Life Insurance Company’s Product(s) is to be converted into cash, surrendered or redeemed, as the case may be.  S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of Pacific Life Insurance Company’s Product(s). There is no assurance that investment products based on the S&P 500 INDEX will accurately track index performance or provide positive investment returns.  S&P Dow Jones Indices LLC is not an investment or tax advisor.  A tax advisor should be consulted to evaluate the impact of any tax-exempt securities on portfolios and the tax consequences of making any particular investment decision. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.

 

 

 

S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO.  S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN.  S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY PACIFIC LIFE INSURANCE COMPANY, OWNERS OF PACIFIC LIFE INSURANCE COMPANY’S PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO.  WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBLITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE.  THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND PACIFIC LIFE INSURANCE COMPANY, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.

 

 

2

The Standard & Poor’s 500® Index (“S&P 500®”) is an unmanaged index that covers 500 industrial, utility, transportation, and financial companies of the U.S. markets.

 

56


 

Examples

 

Below is a hypothetical example that shows how we currently credit interest to a Segment in the 1-Year Indexed Account.

 

Assumptions:

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges are deducted from the Fixed Account and/or the Variable Accounts.

 

·     The rates for the Growth Cap and Participation Rate are hypothetical and for illustrative purposes only.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Year 1

 

Year 2

 

Year 3

 

Year 4

 

Year 5

Amount at Start of Segment

 

10,000.00

 

10,900.00

 

10,900.00

 

10,987.20

 

11,184.96

Average Segment Monthly Balance

 

10,000.00

 

10,900.00

 

10,900.00

 

10,987.20

 

11,184.96

Starting Index Value

 

1,000.00

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

Ending Index Value

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

 

1,148.56

Index Growth Rate1

 

20.00%

 

-12.50%

 

0.80%

 

1.80%

 

6.60%

Growth Cap

 

9.0%

 

9.0%

 

9.0%

 

9.0%

 

9.0%

Participation Rate

 

100%

 

100%

 

100%

 

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

 

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

Segment Indexed Interest Rate

 

9.00%

 

0.00%

 

0.80%

 

1.80%

 

6.60%

Segment Indexed Interest

 

900.00

 

0.00

 

87.20

 

197.26

 

738.19

Total Interest Credited over Term

 

900.00

 

0.00

 

87.20

 

197.26

 

738.19

Segment Maturity Value

 

10,900.00

 

10,900.00

 

10,987.20

 

11,184.96

 

11,923.15

Total Return over Period

 

19.23%

 

 

 

 

 

 

 

 

Annual Return over Period

 

3.58%

 

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

57


 

Below is a hypothetical example that shows how we currently credit interest to a Segment in the 2-Year Indexed Account.

 

Assumptions:

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges are deducted from the Fixed Account and/or the Variable Accounts.

 

·     The rates for the Growth Cap and Participation Rate are hypothetical and for illustrative purposes only.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Years 1 - 2

 

Years 3 - 4

 

Years 5 - 6

 

Years 7 - 8

 

Years 9 - 10

Amount at Start of Segment

 

10,000.00

 

11,800.00

 

11,800.00

 

12,744.00

 

13,126.32

Average Segment Monthly Balance

 

10,000.00

 

11,800.00

 

11,800.00

 

12,744.00

 

13,126.32

Starting Index Value

 

1,000.00

 

1,250.00

 

1,050.00

 

1,134.00

 

1,168.02

Ending Index Value

 

1,250.00

 

1,050.00

 

1,134.00

 

1,168.02

 

1,308.18

Index Growth Rate1

 

25.00%

 

-16.00%

 

8.00%

 

3.00%

 

12.00%

Growth Cap

 

18.00%

 

18.00%

 

18.00%

 

18.00%

 

18.00%

Participation Rate

 

100%

 

100%

 

100%

 

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

 

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

Segment Indexed Interest Rate

 

18.00%

 

0.00%

 

8.00%

 

3.00%

 

12.00%

Segment Indexed Interest

 

1,800.00

 

0.00

 

944.00

 

382.32

 

1,575.13

Total Interest Credited over Term

 

1,800.00

 

0.00

 

944.00

 

382.32

 

1,575.13

Segment Maturity Value

 

11,800.00

 

11,800.00

 

12,744.00

 

13,126.32

 

14,701.45

Total Return over Period

 

47.01%

 

 

 

 

 

 

 

 

Annual Return over Period

 

8.01%

 

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

58


 

Below is a hypothetical example that shows how we currently credit interest to a Segment in the 1-Year High Cap Indexed Account.

 

Assumptions:

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges, including the annual 0.80% (monthly 0.0666%) Indexed Fixed Option Charge, are deducted from the Fixed Account and/or the Variable Accounts.

 

·     The rates for the Growth Cap and Participation Rate are hypothetical and for illustrative purposes only.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

 

Year 1

 

Year 2

 

Year 3

 

Year 4

 

Year 5

Amount at Start of Segment

 

10,000.00

 

11,500.00

 

11,500.00

 

11,592.00

 

11,800.64

Average Segment Monthly Balance

 

10,000.00

 

11,500.00

 

11,500.00

 

11,592.00

 

11,800.64

Starting Index Value

 

1,000.00

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

Ending Index Value

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

 

1,148.56

Index Growth Rate1

 

20.00%

 

-12.50%

 

0.80%

 

1.80%

 

6.60%

Growth Cap

 

15%

 

15%

 

15%

 

15%

 

15%

Participation Rate

 

100%

 

100%

 

100%

 

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

 

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

Segment Indexed Interest Rate

 

15.00%

 

0.00%

 

0.80%

 

1.80%

 

6.60%

Segment Indexed Interest

 

1,500.00

 

0.00

 

92.00

 

208.64

 

778.82

Total Interest Credited over Term

 

1,500.00

 

0.00

 

92.00

 

208.64

 

778.82

Segment Maturity Value

 

11,500.00

 

11,500.00

 

11,592.00

 

11,800.64

 

12,579.47

Total Return over Period

 

25.79%

 

 

 

 

 

 

 

 

Annual Return over Period

 

4.70%

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

59


 

Below is a hypothetical example that shows how we currently credit interest to a Segment in the 1-Year No Cap Indexed Account.

 

Assumptions:

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges are deducted from the Fixed Account and/or the Variable Accounts.

 

·     The rates for the Indexed Threshold Rate and Participation Rate are hypothetical and for illustrative purposes only.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Year 1

 

Year 2

 

Year 3

 

Year 4

 

Year 5

Amount at Start of Segment

 

10,000.00

 

11,500.00

 

11,500.00

 

11,500.00

 

11,500.00

Average Segment Monthly Balance

 

10,000.00

 

11,500.00

 

11,500.00

 

11,500.00

 

11,500.00

Starting Index Value

 

1,000.00

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

Ending Index Value

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

 

1,148.56

Index Growth Rate1

 

20.00%

 

-12.50%

 

0.80%

 

1.80%

 

6.60%

Indexed Threshold Rate

 

5%

 

5%

 

5%

 

5%

 

5%

Participation Rate

 

100%

 

100%

 

100%

 

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

 

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

Segment Indexed Interest Rate

 

15.00%

 

0.00%

 

0.00%

 

0.00%

 

1.60%

Segment Indexed Interest

 

1,500.00

 

0.00

 

0.00

 

0.00

 

183.98

Total Interest Credited over Term

 

1,500.00

 

0.00

 

0.00

 

0.00

 

183.98

Segment Maturity Value

 

11,500.00

 

11,500.00

 

11,500.00

 

11,500.00

 

11,683.98

Total Return over Period

 

16.84%

 

 

 

 

 

 

 

 

Annual Return over Period

 

3.16%

 

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

60


 

Below is a hypothetical example that shows how we credit interest to a Segment in the 1-Year Indexed Account on a guaranteed basis. On a guaranteed basis refers to the fact that the Growth Cap is guaranteed to never be lower than 2%, and the Participation Rate is guaranteed to never be lower than 100%.

 

Assumptions:

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges are deducted from the Fixed Account and/or the Variable Accounts.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Year 1

 

Year 2

 

Year 3

Year 4

 

Year 5

Amount at Start of Segment

 

10,000.00

 

10,200.00

 

10,200.00

10,281.60

 

10,466.66

Average Segment Monthly Balance

 

10,000.00

 

10,200.00

 

10,200.00

10,281.60

 

10,466.66

Starting Index Value

 

1,000.00

 

1,200.00

 

1,050.00

1,058.40

 

1,077.45

Ending Index Value

 

1,200.00

 

1,050.00

 

1,058.40

1,077.45

 

1,148.56

Index Growth Rate1

 

20.00%

 

-12.50%

 

0.80%

1.80%

 

6.60%

Growth Cap

 

2%

 

2%

 

2%

2%

 

2%

Participation Rate

 

100%

 

100%

 

100%

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

0.00

 

0.00

Segment Indexed Interest Rate

 

2.00%

 

0.00%

 

0.80%

1.80%

 

2.00%

Segment Indexed Interest

 

200.00

 

0.00

 

81.60

185.06

 

209.33

Total Interest Credited over Term

 

200.00

 

0.00

 

81.60

185.06

 

209.33

Segment Maturity Value

 

10,200.00

 

10,200.00

 

10,281.60

10,466.66

 

10,675.99

Total Return over Period

 

6.76%

 

 

 

 

 

 

 

Annual Return over Period

 

1.32%

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

61


 

Below is a hypothetical example that shows how we credit interest to a Segment in the 2-Year Indexed Account on a guaranteed basis. On a guaranteed basis refers to the fact that the Growth Cap is guaranteed to never be lower than 4%, and the Participation Rate is guaranteed to never be lower than 100%.

 

Assumptions:

 

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges are deducted from the Fixed Account and/or the Variable Accounts.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Years 1 - 2

 

Years 2 - 3

 

Years 3 - 4

Years 4 - 5

 

Years 6 - 7

Amount at Start of Segment

 

10,000.00

 

10,400.00

 

10,400.00

10,816.00

 

11,140.48

Average Segment Monthly Balance

 

10,000.00

 

10,400.00

 

10,400.00

10,816.00

 

11,140.48

Starting Index Value

 

1,000.00

 

1,250.00

 

1,050.00

1,134.00

 

1,168.02

Ending Index Value

 

1,250.00

 

1,050.00

 

1,134.00

1,168.02

 

1,308.18

Index Growth Rate1

 

25.00%

 

-16.00%

 

8.00%

3.00%

 

12.00%

Growth Cap

 

4%

 

4%

 

4%

4%

 

4%

Participation Rate

 

100%

 

100%

 

100%

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

0.00

 

0.00

Segment Indexed Interest Rate

 

4.00%

 

0.00%

 

4.00%

3.00%

 

4.00%

Segment Indexed Interest

 

400.00

 

0.00

 

416.00

324.48

 

445.62

Total Interest Credited over Term

 

400.00

 

0.00

 

416.00

324.48

 

445.62

Segment Maturity Value

 

10,400.00

 

10,400.00

 

10,816.00

11,140.48

 

11,586.10

Total Return over Period

 

15.86%

 

 

 

 

 

 

 

Annual Return over Period

 

2.99%

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

 

62


 

Below is a hypothetical example that shows how we credit interest to a Segment in the 1-Year High Cap Indexed Account on a guaranteed basis. On a guaranteed basis refers to the fact that the Growth Cap is guaranteed to never be lower than 3%, and the Participation Rate is guaranteed to never be lower than 100%.

 

Assumptions:

 

·     The segment Accumulated Value is $10,000 at the start of the first segment.

 

·     All Policy charges, including the annual 0.80% (0.0666% monthly) Indexed Fixed Option Charge, are deducted from the Fixed Account and/or the Variable Accounts.

 

·     Accumulated Value is reallocated to a new Segment at Segment Maturity.

 

Segment

 

Year 1

 

Year 2

 

Year 3

 

Year 4

 

Year 5

Amount at Start of Segment

 

10,000.00

 

10,300.00

 

10,300.00

 

10,382.40

 

10,569.27

Average Segment Monthly Balance

 

10,000.00

 

10,300.00

 

10,300.00

 

10,382.40

 

10,569.27

Starting Index Value

 

1,000.00

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

Ending Index Value

 

1,200.00

 

1,050.00

 

1,058.40

 

1,077.45

 

1,148.56

Index Growth Rate1

 

20.00%

 

-12.50%

 

0.80%

 

1.80%

 

6.60%

Growth Cap

 

3%

 

3%

 

3%

 

3%

 

3%

Participation Rate2

 

100%

 

100%

 

100%

 

100%

 

100%

Minimum Segment Guaranteed Interest Rate

 

0%

 

0%

 

0%

 

0%

 

0%

Segment Guaranteed Interest

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

Segment Indexed Interest Rate

 

3.00%

 

0.00%

 

0.80%

 

1.80%

 

3.00%

Segment Indexed Interest

 

300.00

 

0.00

 

82.40

 

187.87

 

317.08

Total Interest Credited over Term

 

300.00

 

0.00

 

82.40

 

187.87

 

317.08

Segment Maturity Value

 

10,300.00

 

10,300.00

 

10,382.40

 

10,569.27

 

10,886.35

Total Return over Period

 

8.86%

 

 

 

 

 

 

 

 

Annual Return over Period

 

1.71%

 

 

 

 

 

 

 

 

1 The performance of the Index reflected in this example is not necessarily an indication or guarantee of how the Index will perform in the future.

2