File No. 333-263757

811-08311

As filed with the Securities and Exchange Commission on August 17, 2022

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-6

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

Pre-Effective Amendment No. 4

 

Post-Effective Amendment No.  

 

and/or

 

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

 

Amendment No. 37

(Check appropriate box or boxes)

 

AUL American Individual Variable Life Unit Trust

(Exact Name of Registrant)

 

AMERICAN UNITED LIFE INSURANCE COMPANY(R)

(Name of Depositor)

 

One American Square, Indianapolis, Indiana 46206-0368

(Address of Depositor’s Principal Executive Offices) (Zip Code)

 

Depositor’s Telephone Number: (877) 285-3862

 

Sean P. McGoff

Chief Compliance Officer of the Separate Accounts

 

American United Life Insurance Company

One American Square

Indianapolis, Indiana 46206-0368

(Name and Address of Agent for Service)

 

Copies to:

Corey F. Rose, Esq.
Dechert LLP
1900 K Street, NW
Washington, DC 20006

 

It is proposed that this filing will become effective as soon as practicable after the effective date of the Registration Statement.

 

The Registrant hereby amends 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 that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

PROSPECTUS FOR

 

AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST

FLEXIBLE PREMIUM VARIABLE ADJUSTABLE

UNIVERSAL LIFE INSURANCE POLICY

 

 

Products and financial services provided by:

 

American United Life Insurance Company®

a OneAmerica® company

P.O. Box 368, Indianapolis, Indiana 46206-0368

Telephone: (800) 537-6442

 

August 22, 2022

 

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT OF ADDITIONAL INFORMATION, THE PROSPECTUSES OF THE FUNDS, OR THE STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS.

 

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 Prospectus

 

AUL AMERICAN INDIVIDUAL VARIABLE LIFE UNIT TRUST

FLEXIBLE PREMIUM VARIABLE ADJUSTABLE UNIVERSAL LIFE INSURANCE

 

American United Life Insurance Company®

One American Square, P.O. Box 368

Indianapolis, Indiana 46206-0368

 

(800) 537-6442 — www.oneamerica.com

 

The Date of this Prospectus is August 22, 2022

 

This Prospectus describes a flexible premium variable adjustable universal life insurance policy (the “Policy” or the “Contract”) offered by American United Life Insurance Company® (“AUL” or “Us”) subject to approval in individual states. AUL designed the Policy to provide insurance protection on the Insured named in the Policy. The Policy also provides the Owner with the flexibility to vary the amount and timing of premium payments and to change the amount of Death Benefits payable under the Policy. This flexibility allows the Owner to provide for the Owner’s changing insurance needs under a single insurance Policy.

 

The Owner also has the opportunity to allocate Net Premiums and Account Value to one (1) or more Investment Accounts of the AUL American Individual Variable Life Unit Trust (the “Separate Account”) and to AUL’s General Account (the “Fixed Account”), within limits. This Prospectus generally describes only that portion of the Account Value allocated to the Separate Account. For a brief summary of the Fixed Account, see “Fixed Account.” AUL invests the assets of each Investment Account in a separate investment fund (each, a “Portfolio”).

 

The Prospectuses for the Portfolios contain more information, including the risks involved, and provide other information on the Portfolios.

 

The Securities and Exchange Commission (“SEC”) has not approved or disapproved these securities or passed upon the adequacy or accuracy of the Prospectus. Any representation to the contrary is a criminal offense. Additional information about certain investment products, including variable life insurance policies, has been prepared by the SEC’s staff and is available at Investor.gov.

 

If you are a new investor in the Policy, you may cancel your Policy within 10 days of receiving it without paying fees or penalties. This cancellation period may be longer depending on state law and whether the Policy was purchased to replace another life insurance policy. Upon cancellation, you will receive a full refund of the premium you paid with your application or the Account Value (defined below), whichever is greater. You should review this Prospectus, or consult with your investment professional, for additional information about the specific cancellation terms that apply.

 

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TABLE OF
CONTENTS

 

DEFINITIONS OF TERMS	7
IMPORTANT INFORMATION YOU SHOULD CONSIDER ABOUT THE POLICY	10
OVERVIEW OF THE POLICY	12
Purpose	12
Premiums	12
Policy Features	12
FEE TABLE	13
PRINCIPAL RISKS OF THE POLICY	15
Fluctuating Investment Performance	15
Unsuitable for Short-Term Investment	15
Policy Lapse	15
Limitations on Access to Cash Value	15
Decreasing Death Benefit	15
Consequences of Surrender	15
Account Values in the Fixed Account	15
Financial Strength and Claims Paying Ability Risk	15
Tax Consequences	15
Tax Treatment of Life Insurance Contracts	15
Risks Associated with the Portfolio Optimization Models	16
Cyber-Security and Business Interruption Risks	16
GENERAL INFORMATION ABOUT AUL, THE SEPARATE ACCOUNT AND THE PORTFOLIOS	17
American United Life Insurance Company®	17
Separate Account	17
The Portfolios	17
Voting Rights	17
Revenue AUL Receives	18
THE POLICY	20
General Information	20
Owner and Beneficiaries	20
Right to Examine Period	21
Material State Variations	21
Addition, Deletion or Substitution of Investments	21
Abusive Trading Practices	22

 

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BUYING THE POLICY	23
Applying for a Policy	23
Right to Examine Period	23
Premiums	23
Planned Premiums	24
Premium Payments to Prevent Lapse	24
Premium Allocations and Crediting	24
Transfer Privilege	25
FIXED ACCOUNT	26
Summary of the Fixed Account	26
Minimum Guaranteed and Current Interest Rates	26
Calculation of the Fixed Account Value	26
Transfers from the Fixed Account	26
Payment Deferral	26
ADDITIONAL INFORMATION ABOUT FEES	27
Premium Expense Charges	27
Monthly Deduction	27
Cost of Insurance Charge	27
Monthly Administrative Charge	27
Cost of Additional Benefits Provided by Riders	27
Asset-Based Charge	27
Face Amount Charge	27
Surrender Charge	27
Taxes	28
Special Uses	28
Commissions Paid to Broker-Dealers	28
Fund Expenses	28
Changes in Cost Factors	28
HOW THE OWNER’S ACCOUNT VALUES VARY	29
Determining the Account Value	29
DEATH BENEFIT AND CHANGES IN FACE AMOUNT	30
Amount of Death Benefit Proceeds	30
Death Benefit Payment Options	30
Death Benefit Options	30
Life Insurance Qualification Test	31
Face Amount and Death Benefit Option	31
Changes in Death Benefit Option	31

 

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Decrease in Face Amount	32
OTHER BENEFITS AVAILABLE UNDER THE POLICY	32
Optional Benefits Available Through Riders	33
Accelerated Death Benefit for Terminal Illness Rider	33
Accelerated Death Benefit for Chronic Illness Rider	33
Accounting Benefit Rider	35
Children’s Insurance Benefit Rider (CBR)	35
Overloan Protection Rider	35
Waiver of Monthly Deductions Disability Rider (WMDD)	37
Dollar Cost Averaging Program	37
Portfolio Rebalancing Program	38
Portfolio Optimization Program	38
CASH BENEFITS	41
Policy Loans	41
MAKING WITHDRAWALS: ACCESSING THE MONEY IN YOUR POLICY	42
Surrendering the Policy for Cash Surrender Value	42
Partial Surrenders	42
Partial Surrenders and the Death Benefit Options	42
Settlement Options	42
Minimum Amounts	43
HOW YOUR POLICY MAY LAPSE	44
Lapse	44
Guaranteed Death Benefit Provision	44
Reinstatement	45
OTHER POLICY PROVISIONS	45
Limits on Rights to Contest the Policy	45
Changes in the Policy or Benefits	45
When Proceeds Are Paid	46
Reports to Policy Owners	46
Assignment	46
Deferral of Payments	46
Annual Statement	46
Conformity with Laws	47
Computations	47
Conformity with Interstate Insurance Product Regulation Commission Standards	47
TAX CONSIDERATIONS	47
Tax Status of the Policy	47

 

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Tax Treatment of Policy Benefits	48
Estate and Generation Skipping Taxes	50
Life Insurance Purchased for Use in Split Dollar Arrangements	50
Taxation Under Section 403(b) Plans	50
Non-Individual Ownership of Contracts	50
Possible Charge for AUL’s Taxes	51
OTHER INFORMATION ABOUT THE POLICIES AND AUL	51
Policy Termination	51
Resolving Material Conflicts	51
Sale of the Policies	51
State Regulation	51
Additional Information	51
LEGAL PROCEEDINGS	52
Legal Matters	52
FINANCIAL STATEMENTS	52
APPENDIX A: PORTFOLIOS AVAILABLE UNDER THE POLICY	53

 

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DEFINITIONS OF TERMS

 

Account Value — The sum of Your values in the Fixed Account, the Variable Account, and the Loan Account.

 

Age — The Insured’s current Age as of the Policy Date.

 

Attained Age — The Insured’s Age increased by one (1) for each complete Policy Year.

 

Business Day — A day on which both the Home Office and the New York Stock Exchange are customarily open for business. Traditionally, in addition to federal holidays, the Home Office is not open for business on the day after Thanksgiving, but the Home Office may not be open for business on other days.

 

Cash Value — The Cash Value is the Account Value less any Surrender Charges.

 

Cash Surrender Value — The Cash Value reduced by any indebtedness, including outstanding loans and loan interest.

 

Death Benefit and Death Benefit Proceeds — This Policy has two (2) Death Benefit options. The Death Benefit Proceeds are the Death Benefit provided by the Death Benefit option in effect as of the end of the Valuation Period during which death occurs, less any outstanding lien, loan and loan interest, plus any benefits provided by rider.

 

Death Benefit Discount Factor — The factor used in determination of the Net Amount at Risk as described in the Policy Charges provisions. Death Benefit Discount Factor = (1 + Death Benefit Discount)(1/12). The Death Benefit Discount is shown on the Owner’s Policy Data Page.

 

Depositor — American United Life Insurance Company is the Depositor for Policies and is primarily responsible for the organization of the Registrant and the person, other than the trustee or custodian, who has continuing functions or responsibilities for the administration of the affairs of the Registrant.

 

Face Amount — The amount of insurance selected by the Owner on the Issue Date, or as subsequently changed.

 

Fixed Account — AUL’s General Account and is not part of or dependent upon the investment performance of the Variable Account.

 

Full Surrender — A withdrawal of the entire Cash Surrender Value.

 

General Account — All assets of AUL other than those allocated to the Separate Account or to any other separate account of AUL.

 

Grace Period — A period in which an Owner can make a premium payment in an amount sufficient to prevent the Policy from lapsing.

 

Home Office — AUL’s Home Office is a location designated by the Board of Directors. It is located at One American Square, P.O. Box 368, Indianapolis, Indiana 46206-0368.

 

Insured — The person the Owner names, whose life is covered by this Policy. The Insured may or may not be the Owner. If the Insured dies while the Owner’s Policy is in force, then the Death Benefit Proceeds become payable.

 

Investment Accounts — One (1) or more of the subdivisions of the Separate Account. Each Investment Account is invested in a different Portfolio.

 

Issue Date — The date the Policy is issued.  In most states this is a reference date used in determining the end of the Right to Examine period solely for the purpose of allocating the initial Net Premium.

 

Loan Account — A portion of the Account Value which is collateral for loan amounts.

 

Minimum Insurance Percentage — The minimum percentage of Account Value required to qualify the Policy as life insurance under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). A table of these percentages is on the Policy Data Page of the Owner’s Policy.

 

Modified Endowment Contract — A classification of policies determined under the Internal Revenue Code which affects the tax status of distributions from the Policy.

 

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Monthiversary — The same date of each month as the Policy Date. If the Policy Date is the 29th, 30th, or 31st of a calendar month, then for any calendar month that has fewer days, the Monthiversary will be the last day of such calendar month. If a Monthiversary falls on a day which is not a Valuation Date, the processing of the Monthiversary will be the next Valuation Date.

 

Monthly Deduction — A charge made against the Account Value every month which includes the Monthly Administrative Charge, Face Amount Charge, Asset-Based Charge, Cost of Insurance and cost for any riders.

 

Net Amount at Risk — The amount used to determine the Policy’s Cost of Insurance charge. Refer to the Policy Charges section of your Policy.

 

Net Premium — The total premium paid reduced by the Owner’s Premium Expense Charges.

 

Owner — The Owner named in the application for a Policy, unless changed.

 

Partial Surrender — A withdrawal of a portion of the Cash Surrender Value.

 

Planned Premium — The amount specified by the Owner, as shown on the Policy Data Page or subsequently changed. This is the amount AUL will bill the Owner or, in the case of AUL’s automatic payment plan, the amount AUL will deduct from the account selected by the Owner.

 

Policy Anniversary — The same date each year as the Policy Date.

 

Policy Data Page — The Policy Data Page in the Owner’s Policy, or the supplemental Policy Data Page most recently sent to the Owner by AUL.

 

Policy Date — The date from which Monthiversaries, Policy Years, and Policy Anniversaries are measured. Suicide and Incontestability periods are also measured from the Policy Date.

 

Policy Year — One (1) year from the Policy Date and from each Policy Anniversary thereafter.

 

Portfolio — A diversified, open-end management investment company in which the Separate Account invests.

 

Premium Mode — The frequency of the Planned Premium as shown on the Policy Data Page or as subsequently changed by the Owner.

 

Proper Notice — Notice and documents that are received at the Home Office in good order in a form acceptable to AUL.

 

Registrant — The separate account (as defined in section 2(a)(37) of the Investment Company Act [15 U.S.C. 80a-2(a)(37)]) that offers the Variable Life Insurance Contracts.

 

Right to Examine - The Owner’s right to cancel the Owner’s Policy during the Owner’s “Right To Examine” Period and receive a full refund of the premium paid with the Owner’s application or the Account Value, whichever is greater. This period expires ten (10) calendar days after the Owner receives the Owner’s Policy (or a longer period if required by law).

 

SAI — The Statement of Additional Information required by Part B of this form.

 

Securities Act — The Securities Act of 1933 [15 U.S.C. 77a et seq.].

 

Securities Exchange Act — The Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.].

 

Separate Account — AUL American Individual Variable Life Unit Trust. The Separate Account is segregated into several Investment Accounts each of which invests in a corresponding Portfolio.

 

Statutory Prospectus — A prospectus that satisfies the requirements of section 10(a) of the Securities Act [17 CFR 230.498A(a)(11)].

 

Summary Prospectus — The meaning provided by paragraph (a)(11) of Rule 498A under the Securities Act [17 CFR 230.498A(a)(11)].

 

Surrender Charge — A charge for early withdrawal.

 

Valuation Date — Each date on which the Investment Accounts are valued, which currently includes each Business Day that is also a day on which the New York Stock Exchange is open for trading.

 

Valuation Period — A Valuation Period begins at the close of a Valuation Date and ends at the close of the next succeeding Valuation Date.

 

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Variable Account — The portion of the Account Value of this Policy that is invested in one (1) or more Investment Accounts.

 

Variable Life Insurance Contract, Contract, or Policy — A life insurance contract that provides for death benefits and cash values that may vary with the investment experience of any separate account.  Unless the context otherwise requires, “Variable Life Insurance Contract,” “Contract,” or “Policy” refers to the flexible premium variable adjustable universal life insurance policy being offered pursuant to the registration statement prepared on this form.

 

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IMPORTANT INFORMATION YOU SHOULD CONSIDER ABOUT THE POLICY

 

 

10

 

 

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OVERVIEW OF THE POLICY

 

Purpose

 

AUL designed the Policy to provide long-term life insurance benefits and to potentially provide long-term accumulation of Cash Value. The Owner should evaluate the Policy in conjunction with other insurance policies that the Owner owns, as well as the need for insurance and the Policy’s long-term potential for growth. It may not be advantageous to replace existing insurance coverage with this Policy. This Policy may be appropriate for you if you have a long investment time horizon and the Policy’s terms and conditions are consistent with your financial goals. The Policy is not a short-term investment and is not appropriate for you if you need ready access to cash.

 

Premiums

 

The Owner will select a Premium payment plan for the Policy at the time of application. Subject to certain limits, the Owner may vary the frequency and amount of Premium payments, see Buying the Policy. A Premium payment may be restricted if such payment would cause an increase in Net Amount at Risk, result in a failure to meet the definition of life insurance, or cause the Policy to become a Modified Endowment Contract. Payment of insufficient Premium may cause the Policy to lapse.

 

The Initial Net Premium and any Net Premium received during the Right to Examine period are allocated to the money market account on the later of the Policy Date or the date we receive the Premium at AUL’s Home Office, if such later date is on or before the expiration of the Right to Examine period. If you cancel your Policy during the Right to Examine period, you will receive a full refund of the premium you paid with your application or the Account Value, whichever is greater. No Surrender Charge or contract fees or charges will be deducted from the amount refunded if the Policy is canceled during the Right to Examine period.

 

At the end of the Right to Examine period, we will transfer your Account Value to the Fixed Account or the Variable Account based on your premium allocation instructions. Subsequent Net Premiums are allocated as of the end of the Valuation Period during which we receive the Premium at AUL’s Home Office. You may change the allocation of subsequent Net Premiums at any time by Proper Notice, or by telephone if written authorization is on file with Us.

 

The amount allocated to the Fixed Account will earn interest rate not less than the guaranteed interest rate. For more information, see “Fixed Account.” The amount allocated to the Variable Account will then be allocated, based on your instructions, to one or more of the Investment Accounts, each of which invests in a designated Portfolio. Additional information about the Portfolios is available in Appendix A: Portfolios Available Under the Policy.

 

Policy Features

 

Death Benefit Upon the death of the Insured, we will pay your designated Beneficiary a Death Benefit. For more information, see Death Benefit and Changes in Face Amount.

 

Access to Policy Value through Surrenders You may request a Full Surrender of your Policy, and we will pay you the Cash Surrender Value. You may also request a Partial Surrender, which is a portion of the Cash Surrender Value, subject to certain restrictions. You may incur a Surrender Charge if you request a Full Surrender. Full or Partial Surrenders may result in tax consequences.

 

Loans You may take a loan on the Policy, which is subject to interest.

 

Guaranteed Death Benefit Provision If the Policy satisfies the Guaranteed Death Benefit Test described in How Your Policy May Lapse, the Policy will remain in force and will not begin the Grace Period even if the Cash Surrender Value is insufficient to pay the Monthly Deduction.

 

Transfers Generally, you may transfer funds among the Investment Accounts and the Fixed Account, subject to certain provisions. We also offer two automated transfer programs: Dollar Cost Averaging and Portfolio Rebalancing. The maximum number of transfers you may make in any Policy Year is 20. Only one of these transfer programs may be elected at any time.

 

Tax Treatment Variable life insurance policies have significant tax advantages under current tax law. Policy values accumulate on a tax-deferred basis until withdrawn, and transfers from one Investment Account to another or to the Fixed Account generate no current taxable gain or loss. There may be adverse tax consequences (i.e. a 10% penalty) in the event of a Surrender or withdrawal if the Owner is under the age of 59½.

 

Riders and Benefits Thereunder The Policy offers the following riders that provide additional benefits under the Policy:

 

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·        Accelerated Death Benefit for Chronic Illness Rider

·        Accelerated Death Benefit for Terminal Illness Rider

·        Accounting Benefit Rider

·        Children’s Insurance Benefit Rider

·        Overloan Protection Rider

·        Waiver of Monthly Deductions Disability Rider

   

 

Children’s Insurance Benefit Rider and Waiver of Monthly Deductions Disability Rider may be selected for additional charges. An additional charge or fee may apply upon exercising the benefit under Accelerated Death Benefit for Terminal Illness Rider, Accelerated Death Benefit Chronic Illness Rider, or Overloan Protection Rider. For more information, see Other Benefits Available Under the Policy.

 

Right to Cancel (Examination Right)

 

For a limited time, the Owner has the right to cancel the Owner’s Policy and receive a refund of Premium paid or the Account Value, whichever is greater. See “Right to Examine Policy.” AUL allocates Net Premiums to the Fixed Account and Investment Accounts on the later of the day the “Right to Examine” period expires, or the date AUL receives the premium at the Home Office. If the Owner exercises the Owner’s Right to Examine the Policy and cancels it by returning it to AUL, AUL will refund either the premiums paid or the Account Value, whichever is greater. See “Premium Allocations and Crediting.” The Policy may include the election to buy a reduced paid-up Policy if required by a state.

 

FEE TABLE

 

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering or making withdrawals from the Policy. Please refer to your Policy Data Page for information about the specific fees you will pay each year based on the options you have elected.

 

The first table describes the fees and expenses that you will pay at the time that you buy the Policy, surrender or make withdrawals from the Policy, transfer Cash Value between Investment Accounts, or, if applicable, elect to exercise the Overloan Protection Rider.

 

Transaction Fees

 

 

(1) Subject to state availability; for more information, see Material State Variations.

(2) At the time the rider is exercised any outstanding loan and interest will be paid off and the charge will be assessed on the remaining Account Value.

 

The next table describes the fees and expenses that the Owner will pay periodically during the time that the Owner owns the Policy, not including Portfolio fees and expenses.

 

Periodic Charges Other Than Annual Portfolio Expenses

 

 

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(1) This charge will vary based upon the individual characteristics of the Insured and therefore will vary between Policies and may vary from Monthiversary to Monthiversary. Representative charges shown in the table may not be representative of the charge that a particular Policy owner will pay. Policy owners can request an illustration of specific costs and/or see the Policy Specification Pages for information about specific charges of the Policy. The rates are based on the sex of the Insured, except that unisex rates are used where appropriate under applicable law and in Policies purchased by employers and employee organizations in connection with employment-related insurance or benefit programs.  The cost of insurance rate generally increases with the Attained Age of the Insured.

(2) This charge is not deducted for Face Amount when the Insured reaches the Attained Age of 121.

(3) The charge does not vary based on an individual’s characteristics.

(4) The charge varies based on an individual’s characteristics. Consult the Owner’s Policy for details regarding the actual charges the Owner will pay.

 

The next table shows the minimum and maximum total operating expenses charged by the Portfolio Companies that the Owner may pay periodically during the time that the Owner owns the Contract. A complete list of Portfolio Companies available under the Contract, including their annual expenses, may be found in Appendix A: Portfolios Available Under the Policy.

 

Annual Portfolio Company Operating Expenses		Minimum		Maximum
(expenses that are deducted from Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses)		0.11	%	0.90	%

 

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PRINCIPAL RISKS OF THE POLICY

 

Fluctuating Investment Performance Account Values in an Investment Account are not guaranteed and will increase and decrease in value according to investment performance of the Portfolio. If you put money into an Investment Account, you assume all the investment risk on that money. A comprehensive discussion of each Investment Account’s and Portfolio’s objective and risk is found in this prospectus and in each Portfolio’s prospectus, respectively. You should review these prospectuses before making your investment decision. Your choice of Investment Accounts and the performance of the Portfolios will impact the Policy’s Account Value and will impact how long the Policy remains in force, its tax status, and the amount of Premium you need to pay to keep the Policy in force.

 

Unsuitable for Short-Term Investment The Policy is not suitable as short-term savings investments and is not appropriate for an investor who needs ready access to cash.

 

Policy Lapse Insufficient premium payments, poor investment performance, withdrawals, and unpaid loans or loan interest may cause the Owner’s Policy to lapse, endangering insurance coverage. There is no guarantee that the Owner’s Policy will not lapse even if the Owner pays the Owner’s Planned Premium. If the Owner’s Policy is insufficiently funded in relation to the income stream expected from the Owner’s Policy, the Owner’s Policy can lapse prematurely and result in significant income tax liability to the Owner in the year in which the lapse occurs. For example, a Policy may lapse even if the Owner pays the Planned Premium if the Cash Surrender Value is less than the Monthly Deduction on the day the deduction is made. However, if the Policy satisfies the Guaranteed Death Benefit Test described in How Your Policy May Lapse, the Policy will remain in force. For more information, see How Your Policy May Lapse. If the Guaranteed Death Benefit Test is not satisfied at that time, the Owner will have 61 days from the start of the Grace Period, described below, to make a payment to bring the Policy back in good standing.  A notice will be sent to the client at the start of the Grace Period indicating an amount due.

 

Limitations on Access to Cash Value Surrender Charges on Full Surrenders may inhibit the Owner’s ability to access the Owner’s Cash Value. Furthermore, making a Partial Surrender or taking a loan may change the Owner’s Policy’s Total Face Amount and/or Death Benefit, reducing the Death Benefit Proceeds payable to the Owner’s beneficiary. A decrease in Face Amount may result in a proportional Surrender Charge. Partial surrenders and loans may make the Owner’s Policy more susceptible to lapse.

 

Decreasing Death Benefit Any outstanding Policy Loans and any amount that you have surrendered will reduce your Policy’s Death Benefit. Depending upon your choice of Death Benefit option, adverse performance of the Investment Accounts you choose may decrease your Policy’s Death Benefit.

 

Consequences of Surrender Surrender Charges are assessed if you request a Full Surrender of your Policy within the first ten (10) Policy Years. There is no Surrender Charge assessed for Partial Surrenders. Full or Partial Surrenders may result in tax consequences. Depending on the Death Benefit option selected, Partial Surrenders may reduce the Account Value or Death Benefit, and may increase the risk of lapse.

 

Account Values in the Fixed Account Premium Payments and Account Values allocated to the Fixed Account are held in AUL’s General Account. There are limitations on your right to transfer amounts from the Fixed Account and, due to these limitations, if you want to transfer the entire balance of the Fixed Account to one or more Investment Accounts, it may take several years to do so. Therefore, you should carefully consider whether the Fixed Account meets your investment needs.

 

Financial Strength and Claims Paying Ability Risk We issue other types of insurance policies and financial products as well. In addition to any amounts we are obligated to pay in excess of Account Value under the Policy, we also pay our obligations under these products from our assets in the General Account. Unlike assets held in the Separate Account, the assets of the General Account are subject to the general liabilities of AUL and, therefore, to AUL’s General Account creditors. In the event of an insolvency of receivership, payments we make from our General Account to satisfy claims under the Policy would generally receive the same priority as our other Owners’ obligations.

 

The General Account is not segregated or insulated from the claims of the insurance company’s creditors. Therefore, guarantees provided by the insurance company as to benefits promised in the prospectus are subject to the claims paying ability of the insurance company and are subject to the risk that the insurance company may not be able to cover or may default on its obligations under those guarantees.

 

Tax Consequences As noted in greater detail in the section headed Tax Considerations, the federal income tax treatment of life insurance is complex and current tax treatment of life insurance may change. There are other federal tax consequences such as estate, gift and generation skipping transfer taxes, as well as state and local income, estate and inheritance tax consequences. You should always consult a tax advisor about the application of federal and state tax rules to your individual situation. The following discussion highlights tax risks in general, summary terms.

 

Tax Treatment of Life Insurance Contracts AUL intends for the Policy to satisfy the definition of a life insurance policy under Section 7702 of the Internal Revenue Code.  Current federal tax law generally excludes all Death Benefits from the gross income of the beneficiary of a life insurance policy. In addition, you generally are not subject to taxation on any increase in your Account Value until it is withdrawn. Generally, you are taxed on surrender proceeds and the proceeds of any partial withdrawals only if those amounts, when added to all previous distributions, exceed the total premiums paid. Amounts received upon surrender or withdrawal in excess of premiums paid are treated as ordinary income. Under certain circumstances, the Internal Revenue Code will treat a Policy as a Modified Endowment Contract. Under current federal tax law, Death Benefit payments under Modified Endowment Contracts, like Death Benefit payments under other life insurance contracts, generally are excluded from the gross income of the beneficiary. Withdrawals and Policy loans, however, are treated differently. Amounts withdrawn and Policy loans are treated first as income, to the extent of any gain, and then as a return of premium. The income portion of the distribution is includible in your taxable income. AUL is not obligated to give the Owner notice, or to take corrective action , if a Policy is classified as a Modified Endowment Contract. AUL reserves the right to refund any premiums that may cause the Policy to become a Modified Endowment Contract. There are other federal tax consequences such as estate, gift and generation skipping transfer taxes, as well as state and local income, estate and inheritance tax consequences. In addition, there may be adverse tax consequences (including a 10% penalty) in the event of a Surrender or withdrawal if the Owner is under the age of 59½. For further discussion of the tax status of a Policy and the tax consequences of being treated as a

 

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life insurance contract or a Modified Endowment Contract, see Tax Considerations.

 

Risks Associated with the Portfolio Optimization Models As discussed below, Portfolio Optimization, a static asset allocation program, is offered at no additional charge for use within this variable life Policy. Although the Portfolio Optimization Models, described below, are designed to optimize returns given the various levels of risk, there is no assurance that a Model will not lose money or that investment results will not experience volatility. Additionally, although the Models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the Models are based, which could cause the Models to not perform as intended. Your Account Value will be rebalanced annually in order to maintain the target asset allocation percentages of the Model, which can cause the underlying Portfolios to incur transactional expenses which can adversely affect performance of the pertinent Portfolios and the Models. Models are rebalanced annually, and the Owner’s Account Value will be automatically allocated to the corresponding Portfolios.

 

Investment performance of the Owner’s Account Value could be better or worse by participating in a Portfolio Optimization Model than if the Owner has not participated. A Model may perform better or worse than any single Portfolio or asset class or other combinations of Portfolios or asset classes. Model performance is dependent upon the performance of the component Portfolios. The timing of the Owner’s investment and the rebalancing may affect performance. The Owner’s Account Value will fluctuate, and when redeemed, may be worth more or less than the original cost.

 

The Owner should consult with the Owner’s registered representative to assist the Owner in determining which Model is best suited to the Owner’s financial needs, investment time horizon, and is consistent with the Owner’s risk comfort level. The Owner should periodically review those factors to determine if the Owner needs to change Models to reflect changes in these factors. The Owner may change the Owner’s Model selection at any time with Proper Notice. The Owner’s registered representative can assist the Owner in completing the proper forms to enroll in Portfolio Optimization. Newly issued Contracts may require participation in the Program.

AUL is under no contractual obligation to continue this service and has the right to terminate or change the Program at any time. If AUL terminates the Program, you will remain invested in the same Portfolios until you select new Portfolios.

 

Cyber-Security and Business Interruption Risks We rely heavily on interconnected computer systems and digital data to conduct our variable products business. Because our business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is vulnerable to disruptions from utility outages, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions), and cyber-attacks. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, interference with or denial of service, attacks on websites and other operational disruption and unauthorized release of confidential customer information. Such systems failures and cyber-attacks affecting Us, any third-party administrator, the Portfolios, intermediaries and other affiliated or third-party service providers may adversely affect Us and your Account Value. For instance, systems failures and cyber-attacks may interfere with our processing of Policy transactions, including the processing of orders from our website or with the Portfolios, impact our ability to calculate your Account Value, cause the release and possible destruction of confidential customer or business information, impede order processing, subject Us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. Cyber security risks may also impact the issuers of securities in which the Portfolios invest, which may cause the funds underlying your Policy to lose Account Value. There can be no assurance that we or the Portfolios or our service providers will avoid losses affecting your Policy due to cyber-attacks or information security breaches in the future.

 

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GENERAL INFORMATION ABOUT AUL, THE SEPARATE ACCOUNT AND THE PORTFOLIOS

 

American United Life Insurance Company®

 

This Policy is issued by AUL whose principal office is at One American Square, Indianapolis, Indiana, 46282.

 

Separate Account

 

The Separate Account was established as a segregated investment account under Indiana law on July 10, 1997. It is used to support the Policies and may be used to support other variable life insurance contracts, and for other purposes permitted by law. The Separate Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the “1940 Act”). AUL has established other segregated Investment Accounts, some of which also are registered with the SEC.

 

The Separate Account is divided into Investment Accounts. The Investment Accounts available under the Policies invest in shares of the Portfolios. The Separate Account may include other Investment Accounts that are not available under the Policies and are not otherwise discussed in this Prospectus. The assets in the Separate Account are owned by AUL.

 

Income, gains and losses, realized or unrealized, of an Investment Account are credited to or charged against the Investment Account without regard to any other income, gains or losses of AUL. Applicable insurance law provides that assets equal to the reserves and other contract liabilities of the Separate Account are not chargeable with liabilities arising out of any other business of AUL. AUL is obligated to pay all benefits provided under the Policies.

 

The Portfolios

 

Each Investment Account of the Separate Account invests in shares of a corresponding Portfolio. A description of the Portfolios available under the Policy, including each Portfolio’s type, name, investment advisor and any sub-advisor, current expenses and performance is available under APPENDIX A: PORTFOLIOS AVAILABLE UNDER THE POLICY.

 

You can also find more detailed information about the Portfolios in the Portfolio prospectuses. You can obtain free copies of the Portfolio prospectuses by contacting Us at (800) 537-6442 or by visiting www.oneamerica.com/prospectuses. You should read the Portfolio prospectuses carefully. If You received a Summary Prospectus for a Portfolio, please follow the directions on the first page of the Summary Prospectus to obtain a copy of the Statutory Prospectus.

 

Voting Rights

 

AUL is the legal owner of the shares of the Portfolios held by the Investment Accounts of the Separate Account. In accordance with its view of present applicable law, AUL will exercise voting rights attributable to the shares of each Portfolio held in the Investment Accounts at regular and special meetings of the shareholders of the Portfolios on matters requiring shareholder voting under the 1940 Act. AUL will exercise these voting rights based on instructions received from persons having the voting interest in corresponding Investment Accounts of the Separate Account and consistent with any requirements imposed on AUL under contracts with any of the Portfolios, or under applicable law. However, if the 1940 Act or any regulations thereunder should be amended, or if the present interpretation thereof should change, and as a result AUL determines that it is permitted to vote the shares of the Portfolios in its own right, it may elect to do so.

 

The person having the voting interest under a Policy is the Owner. AUL or the pertinent Portfolio shall send to each Owner a Portfolio’s proxy materials and forms of instruction by means of which instructions may be given to AUL on how to exercise voting rights attributable to the Portfolio’s shares.

 

Unless otherwise required by applicable law, with respect to each of the Portfolios, the number of Portfolio shares as to which voting instructions may be given to AUL is determined by dividing the value of all of the accumulation units of the corresponding Investment Account attributable to a Policy on a particular date by the net asset value per share of that Portfolio as of the same date. Fractional votes will be counted. The number of votes as to which voting instructions may be given will be determined as of the date coincident with the date established by a Portfolio for determining shareholders eligible to vote at the meeting of the Portfolio. If required by the SEC, AUL reserves the right to determine in a different fashion the voting rights attributable to the shares of the Portfolio. Voting instructions may be cast in person or by proxy.

 

Voting rights attributable to the Policies for which no timely voting instructions are received will be voted by AUL in the same proportion as the voting instructions which are received in a timely manner for all Policies participating in that Investment Account. AUL will vote shares of a Portfolio, if any, that it owns beneficially in its own discretion, except that if a Portfolio offers its shares to any insurance company separate account that funds variable annuity and variable life contracts or if otherwise required by

 

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applicable law or contract, AUL will vote its own shares in the same proportion as the voting instructions that are received in a timely manner for Policies participating in the Investment Account. Due to proportionate voting, the vote of a small number of Owners can determine the outcome of a proposal.

 

Neither the Separate Account nor AUL is under any duty to inquire as to the instructions received or the authority of Owners or others to instruct the voting of shares of any of the Portfolios.

 

If required by state insurance officials, AUL may disregard Owner voting instructions if such instructions would require shares to be voted so as to cause a change in sub-classification or investment objectives of one or more of the Portfolios, or to approve or disapprove an investment advisory agreement. In addition, AUL may under certain circumstances disregard voting instructions that would require changes in the investment advisory contract or investment advisor of one or more of the Portfolios, provided that AUL reasonably disapproves of such changes in accordance with applicable federal regulations. If AUL ever disregards voting instructions, Owners will be advised of that action and of the reasons for such action in the next semiannual report. Finally, AUL reserves the right to modify the manner in which the weight to be given to pass-through voting instructions is calculated when such a change is necessary to comply with current federal regulations or the current interpretation thereof.

 

AUL has entered into agreements with the Distributors/Advisors of the Portfolios, under which AUL has agreed to render certain services and to provide information about these Portfolios to Owners who invest in the Investment Accounts that invest in these Portfolios. Under these agreements and for providing these services, AUL receives compensation from the Distributor/Advisor of these Portfolios, (or from the Portfolios if a 12b-1 plan has been approved) ranging from zero basis points until a certain level of Portfolio assets have been purchased to 50 basis points based on an annual service fee of average daily market value of shares owned by the Separate Account.

 

Revenue AUL Receives

 

Under the agreements referenced in the immediately preceding section, AUL has agreed to render certain services and to provide information about the Portfolios in the preceding section to its Owners and/or Participants who invest in the Investment Accounts that invest in these Portfolios. Further, under these agreements, AUL may directly or indirectly receive payments from the Portfolios, their advisers, subadvisers, distributors or affiliates thereof, in connection with these certain administrative, marketing and other services AUL provides and expenses AUL incurs. AUL generally receives these types of payments:

 

Rule 12b-1 Fees & Other Fees

 

Where available, share classes for the Portfolios that do not pay 12b-1 fees will be offered. If a share class that pays 12b-1 fees or includes revenue sharing by virtue of the agreements entered into between the Portfolios, AUL and OneAmerica Securities, Inc. (“OAS”) is offered, AUL and OAS will receive compensation from the Distributor/Advisor of the Portfolios, ranging from zero basis points until a certain level of Portfolio assets have been purchased to 50 basis points based on an annual service fee of average daily market value of shares owned by the Separate Account. OAS and AUL retain any such 12b-1 and any other fees they receive that are attributable to AUL’s variable insurance products.

 

Administrative, Marketing and Support Service Fees (“Support Fees”)

 

As noted above, an investment advisor, sub-advisor, administrator and/or distributor (or affiliates thereof) of the Portfolios may make payments to AUL. These payments may be derived, in whole or in part, from the advisory fee deducted from the Portfolio assets. Contract Owners and /or Participants, through their investment in the Investment Accounts which invest in the Portfolios, bear the costs of these advisory fees. The amount of the payments AUL receives is based on a percentage of the assets of the particular Portfolios attributable to the Policy and to certain other variable insurance products that AUL issues. These percentages differ and may be significant. Some advisors or sub-advisors pay AUL more than others.

 

Since not all Portfolios pay OAS the same amount of 12b-1 Fees or Support Fees, the amount of the fees received by OAS may be greater or smaller depending upon the manner in which you allocate the money that makes up your Account Value.

 

The investment advisors of the Portfolios are identified in the Summary. All of the investment advisors are registered with the SEC as investment advisors. The Portfolios offer their shares as investment vehicles to support variable contracts. The advisors or distributors to certain Portfolios may advise and distribute other investment companies that offer their shares directly to the public, some of which have names similar to the names of the Portfolios in which the Investment Accounts invest. These investment companies offered to the public should not be confused with the Portfolios in which the Investment Accounts invest. The Portfolios are described in their Prospectuses, which accompany this Prospectus.

 

The Owner should consult his or her registered representative who may provide information on the Portfolios, as not all of them may be suitable for an Owner’s investment needs. The Owner can lose money by investing in a Contract, and the underlying Portfolios could underperform other investments. Although the investment objectives and policies of certain Portfolios are similar to the investment objectives and policies of other portfolios that may be managed or sponsored by the same investment advisor, subadvisor, manager, or sponsor, AUL does not represent or assure that the investment results will be comparable to those of any other portfolio, even where the investment advisor, subadvisor, or manager is the same. Certain Portfolios available through the Contract have names similar to portfolios not available through the Contract.

 

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The performance of a Portfolio not available through the Contract does not indicate performance of a similarly named Portfolio available through the Contract. Differences in Portfolio size, actual investments held, Portfolio expenses, and other factors all contribute to differences in Portfolio performance. For all these reasons, you should expect investment results to differ.

 

Each Portfolio is registered with the SEC as an open-end management investment company under the 1940 Act, although the SEC does not supervise their management or investment practices and policies. The investment objectives of each of the Portfolios are described below.  For more information, see Appendix A: Portfolios Available Under The Policy.

 

THE PORTFOLIOS ARE DESCRIBED IN THEIR PROSPECTUSES. FOR MORE COMPLETE INFORMATION CONCERNING THE APPLICABLE PORTFOLIO AND ITS PORTFOLIOS, PLEASE SEE THE APPLICABLE PORTFOLIO’S PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.

 

AUL cannot guarantee that each Portfolio in which the Investment Accounts invest will always be available for the Policies; but, in the unlikely event that a Portfolio is not available, AUL will take reasonable steps to secure the availability of a comparable fund. Shares of each Portfolio are purchased and redeemed at net asset value, without a sales charge.

 

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THE POLICY

 

General Information

 

The investor should read the following summary of Prospectus information and diagram of the Policy in conjunction with the detailed information appearing elsewhere in this Prospectus. Unless otherwise indicated, the description of the Policy in this Prospectus assumes that the Policy is in force and that there are no outstanding loans or loan interest.

 

The Policy is similar in many ways to fixed-benefit life insurance. As with fixed-benefit life insurance, typically the Owner of a Policy pays premium payments for insurance coverage on the Insured. Also, like fixed-benefit life insurance, the Policy provides for accumulation of Net Premiums and a Cash Surrender Value that is payable if the Owner surrenders the Policy during the Insured’s lifetime. As with fixed-benefit life insurance, the Cash Surrender Value during the early Policy Years is likely to be lower than the premium payments paid.

 

However, the Policy differs from fixed-benefit life insurance in several important respects. Unlike fixed-benefit life insurance, the Death Benefit may, and the Account Value will, increase or decrease to reflect the investment performance of the Investment Accounts to which Account Value is allocated. Also, there is no guaranteed minimum Cash Surrender Value. If the Cash Surrender Value is insufficient to pay the Monthly Deduction, the Policy will lapse without value, after a Grace Period. Nonetheless, AUL guarantees to keep the Policy in force if the Policy satisfies the Guaranteed Death Benefit Test described in How Your Policy May Lapse.

 

We issue other types of insurance policies and financial products as well. In addition to any amounts we are obligated to pay in excess of Account Value under the Policy, we also pay our obligations under these products from our assets in the General Account. Unlike assets held in the Separate Account, the assets of the General Account are subject to the general liabilities of AUL and, therefore, to AUL’s General Account creditors. Therefore, guarantees provided by AUL as to benefits promised in this Prospectus (such as those that may be associated with the Death Benefit or Riders) are subject to the claims paying ability and financial strength of AUL and are subject to the risk that AUL may not be able to cover or may default on its obligations under those guarantees.

 

Owner and Beneficiaries

 

Owner

 

As the Owner of the Policy, the Owner may exercise all rights provided under the Policy while the Insured is living, subject to the interests of any assignee, irrevocable beneficiary, or irrevocable contingent beneficiary. The Insured is the Owner, unless a different Owner is named in the application. In accordance with the terms of the Policy, the Owner may in the application or by Proper Notice name a contingent Owner or a new Owner while the Insured is living. If the Owner dies before the Insured, any contingent Owner named in the application will be the new Owner. The Policy may be jointly owned by more than one Owner. The consent of all joint Owners is required for all transactions except when proper forms have been executed to allow one Owner to make changes. Unless a contingent Owner has been named, on the death of the last surviving Owner, ownership of the Policy passes to the estate of the last surviving Owner, which then will become the Owner. A change in Owner may have tax consequences. For more information, see Tax Considerations.

 

Beneficiaries

 

The beneficiary will receive the Death Benefit Proceeds of this Policy upon the Insured’s death. The primary beneficiary, or, if the primary beneficiary is not living, the contingent beneficiary, is the person entitled to receive the Death Benefit Proceeds under the Policy. If the Insured dies and there is no surviving beneficiary, the Owner (or the Owner’s estate if the Owner is the Insured) will be the beneficiary.

 

Selecting and Changing the Beneficiary

 

The Owner selects the beneficiary in the Owner’s application. The Owner may select more than one beneficiary. The Owner may later transfer ownership or change the beneficiary of this Policy by giving Proper Notice to Us. If a beneficiary or a contingent beneficiary is designated as irrevocable, then that beneficiary’s written consent must be obtained to change the beneficiary. Unless otherwise specified by the Owner, a change will take effect on the date the Proper Notice is signed by the Owner, subject to any payments made or actions taken by AUL before AUL receives the Proper Notice.

 

A new beneficiary designation revokes any prior designation. We are not responsible for the validity of any beneficiary designation. We are not obligated to pay Death Benefit Proceeds to any beneficiary(ies) that is (are) listed on or located in any countries appearing on any US Government sanctions list.

 

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Right to Examine Period

 

The Owner may cancel the Owner’s Policy for a refund of premium during the Owner’s “Right To Examine” Period. This period expires ten (10) calendar days after the Owner receives the Owner’s Policy (or a longer period if required by law). If the Policy replaces another life insurance policy, the Policy may be sent back to AUL or AUL representative within thirty (30) calendar days. If the Owner decides to cancel the Policy, the Owner must return it by mail or other delivery method to the Home Office or to the authorized AUL representative who sold it. Immediately after mailing or delivery of the Policy to AUL, the Policy will be deemed void from the beginning. Within seven (7) calendar days after AUL receives the returned Policy, AUL will refund either the premuims paid or the Account value, whichever is greater. If the Owner exercises the Owner’s Right to Examine the Policy and cancels it by returning it to AUL, AUL will refund either the premiums paid or the Account Value, whichever is greater.

 

Material State Variations

 

The terms and benefits of the Policy and Riders may vary based on the laws of the state in which the Policy is issued. State law variations may include but are not limited to, the duration of the Right to Examine period, availability of investment options and Riders, and changes to suicide and incontestability periods. State variations are subject to change without notice.

 

State		State Law Variations
California*		·                  Right to Examine — For Policies issued or delivered to a Senior Citizen, 60 years or older — 30 day period
		·                  Right to Examine — For all other Policies issued or delivered — 10 day period
		·                  Accelerated Death Benefit for Chronic Illness Rider — may not be available
		·                  Accelerated Death Benefit for Terminal Illness Rider — may not be available
Florida*		·                  Interest rate on Death Benefit — an annual rate equal to or greater than the Moody’s Corporate Bond Yield Average — Monthly Average Corporate, as of the date of claim, but not less than 8% will be used
		·                  Exchange for paid-up Policy is available
		·                  Minimum and Maximum Loan Amounts may vary
		·                  Interest rate on Full Surrender - an annual rate equal to or greater than the Moody’s Corporate Bond Yield Average — Monthly Average Corporate, as of the date of surrender, will be used unless payment is made within 30 days of receipt of the policy and Proper Notice
		·                  Accelerated Death Benefit for Chronic Illness Rider — administrative fee may vary
		·                  Accelerated Death Benefit for Terminal Illness Rider — administrative fee may vary
North Dakota*		·                  Suicide period — one year from the Policy Date

 

* The Policy is currently not offered in the state but may be offered in the future.

 

Addition, Deletion or Substitution of Investments

 

AUL reserves the right, subject to applicable law, to make additions to, deletions from, or substitutions for the shares that are held in the Separate Account or that the Separate Account may purchase. If the shares of a Portfolio are no longer available for investment or if, in AUL’s judgment, further investment in any Portfolio should become inappropriate in view of the purposes of the Separate Account, or for other reasons, AUL may redeem the shares, if any, of that Portfolio and substitute shares of another registered open-end management investment company. AUL will not substitute any shares attributable to a Policy’s interest in an Investment Account of the Separate Account without notice to the Owner.  Any substitution will comply with the requirements of the 1940 Act or any applicable rule, regulation, statement, exemptive or other relief, or guidance from the SEC or its staff.

 

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AUL also reserves the right to establish additional Investment Accounts of the Separate Account, each of which would invest in shares corresponding to a Portfolio or in shares of another investment company having a specified investment objective. Any new Investment Accounts may be made available to existing Owners on a basis to be determined by AUL. Subject to applicable law and any required SEC approval, AUL may, in AUL’s sole discretion, eliminate one or more Investment Accounts if marketing needs, tax considerations or investment conditions warrant.

 

If any of these substitutions or changes are made, AUL may, by appropriate endorsement, change the Policy to reflect the substitution or change.

 

If AUL deems it to be in the best interests of persons having voting rights under the Policies (subject to any approvals that may be required under applicable law), the Separate Account may be operated as a management investment company under the 1940 Act, it may be deregistered under that Act if registration is no longer required, or it may be combined with other AUL separate accounts.

 

Abusive Trading Practices

 

Late Trading

 

Some investors attempt to profit from trading in Portfolios after the close of the market, but before the Portfolio has actually been priced. Because the market has closed, these investors have actual knowledge of the price of the securities prior to its calculation.  They are, therefore, executing trades in the Portfolios with information that is not readily available to the market, thereby benefiting financially to the detriment of other shareholders.

 

AUL prohibits late trading in the Portfolios

 

The administrator of the Separate Accounts of AUL dates and time stamps all trades from whatever source and allows only those trades received prior to the close of the market to receive that day’s unit value.  All trades received after this point will receive the next day’s calculated unit value.

 

Market Timing

 

Some investors attempt to profit from various short-term or frequent trading strategies commonly known as market timing. Excessive purchases and redemptions disrupt underlying Portfolio management, hurt underlying Portfolio performance and drive underlying Portfolio expenses higher. These costs are borne by all Owners, including long-term investors who do not generate these costs.

 

AUL discourages market timing and excessive trading.

 

If the Owner intends to engage in such practices, the Owner should not invest in the Separate Account. AUL reserves the right to reject any request to purchase units which it reasonably determines to be in connection with market timing or excessive trading by an investor or by accounts of investors under common control (for example, related Contract Owners, or a financial advisor with discretionary trading authority for multiple accounts).

 

AUL does not always know and cannot always reasonably detect such trading

 

AUL’s policies and procedures only address market timing after the fact and are not prophylactic measures; they will only prevent market timing going forward once discovered. AUL has entered into agreements, pursuant to SEC Rule 22c-2, with all Portfolios offered under the Contract. The agreements require AUL to provide requested transaction detail to the Portfolios in order for the Portfolios to monitor market timing according to each Portfolio’s respective Policy. Once a possible abuse is flagged, AUL may restrict trading to the extent permitted under applicable laws and the Contract.

 

Generally, Owner’s trading history is reviewed to confirm if the trading activity is indeed abusive. This procedure is enforced against all Owners consistently.

 

If it is determined that the Owner’s trading activity violates any Portfolio’s trading policy, then the Owner shall be notified of restrictions on the Owner’s account. The Owner’s access to internet and interactive voice response trades are turned off and the Owner is limited to a specific number of trades per month, as determined by AUL or the respective Portfolios. AUL will not enter into any agreement with any individual, corporation, plan or other entity that would permit such activity for that entity while discouraging it for other Owners.

 

Some Portfolios may charge a redemption fee for short term-trading in their Portfolios. Furthermore, as stated above, the Portfolios monitor trading at the omnibus level and enforce their own policies and procedures based on their respective policies. AUL will cooperate and may share Participant-level trading information with the Portfolios to the extent necessary to assist in the enforcement of these policies. Please consult the Portfolios’ prospectuses for more details.

 

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BUYING THE POLICY

 

Applying for a Policy

 

AUL requires satisfactory evidence of the proposed Insured’s insurability, which may include a medical examination of the proposed Insured. The available Ages are 0 through 85. Age is determined based on the Insured’s Age as of the Policy Date.  Acceptance of an application depends on AUL’s underwriting rules, and AUL reserves the right to reject an application. Coverage under the Policy is effective as of the later of the date the initial premium is paid or the Issue Date except when the initial premium is paid at delivery of the Policy then coverage will begin on the Policy Date.

 

Right to Examine Period

 

The Owner may cancel the Owner’s Policy for a refund of premium during the Owner’s “Right To Examine” Period. This period expires ten (10) calendar days after the Owner receives the Owner’s Policy (or a longer period if required by law). If the Policy replaces another life insurance policy, the Policy may be sent back to AUL or AUL representative within thirty (30) calendar days. If the Owner decides to cancel the Policy, the Owner must notify the Home Office or the authorized AUL representative who sold it within the above timeframe.  Immediately after notification, the Policy will be deemed void from the beginning.  Within seven (7) calendar days after AUL deems the Policy is still within the “Right To Examine” period, AUL will refund the premium or the Account Value, whichever is greater. If the Owner exercises the Owner’s Right to Examine the Policy and cancels it by returning it to AUL, AUL will refund the premiums paid or the Account Value, whichever is greater.

 

Premiums

 

The minimum initial premium payment required depends on a number of factors, such as the Age, sex and risk class of the proposed Insured, the Face Amount, any supplemental and/or rider benefits and the Planned Premium payments the Owner proposes to make. Consult an AUL representative for information about the initial premium required for the coverage the Owner desires.  The initial premium is due on or before delivery of the Policy. There will be no coverage until this premium is paid or until the Issue Date, whichever is later except when the initial premium is paid at delivery of the policy then coverage will begin on the Policy Date.

 

The Owner may make other premium payments at any time and in any amount, subject to the limits described in this section. The actual amount of premium payments will affect the Account Value and the period of time the Policy remains in force.

 

Premium payments after the initial payment must be made to AUL’s Home Office. Each payment must be at least equal to $100 monthly unless on a monthly pre-authorized payment arrangement.

 

The Planned Premium is the amount for which AUL will bill the Owner or, in the case of AUL’s automatic premium plan (which deducts the Planned Premium from an account selected by the Owner), the amount for which AUL will charge the Owner’s account. The amount and Premium Mode of the Planned Premium are shown on the Policy Data Page in the Owner’s Policy. The Owner may change the amount and the Premium Mode of the Planned Premium by Proper Notice, at a maximum of once per year. AUL reserves the right to change the Planned Premium to comply with AUL’s rules for billing amount and frequency. If AUL approves the change of the Premium Mode, AUL will make the change and notify the Owner of the new premium payments and when they are due.

 

Unless otherwise indicated, premiums received in excess of Planned Premium will be applied as additional premium.

 

If the payment of any premium would cause an increase in the Net Amount at Risk because of the Minimum Insurance Percentage, AUL may require satisfactory evidence of insurability before accepting it. If AUL accepts the premium, AUL will allocate the Net Premium to the Owner’s Account Value on the date of AUL’s acceptance. If AUL does not accept the premium, AUL will refund it to the Owner.

 

If the payment of any premium would cause the Policy to become a Modified Endowment Contract, AUL will try to notify the Owner upon allocating the premium after the first Monthiversary after a premium payment. In the event that AUL notifies the Owner, consistent with the terms of the notice, the Owner may choose whether the Owner wants the premium refunded to him or her.

 

AUL reserves the right to refund any premiums that cause the Policy to become a Modified Endowment Contract. Additionally, upon request, AUL will refund the premium to the Owner no later than sixty (60) days after the end of the Policy Year in which AUL receives the premium.

 

If the payment of any premium would cause this Policy to fail to meet the federal tax definition of a life insurance contract in accordance with the Internal Revenue Code, AUL may make reasonable adjustments to the conditions or terms of this Policy if necessary to allow it to continue to qualify as life insurance. In order to ensure that this Policy qualifies as life insurance, the Guideline Premium Test or the Cash Value Accumulation Test will be applied to the Owner’s Policy. This Policy will be issued with the Cash Value Accumulation Test as the default test. The Owner cannot change the selection after the Policy Date. This provision is not a guarantee that the Policy will receive tax treatment as life insurance. Additionally, this provision does not guarantee that the tax treatment of life insurance will never change by future actions of any tax authority.

 

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Cash Value Accumulation Test

 

Under this test, the minimum Death Benefit must be maintained. AUL may modify the Minimum Insurance Percentage shown on the Owner’s Policy Data Page, retroactively if needed, to ensure or maintain qualification of the Owner’s Policy as a life insurance contract for federal income tax purposes, notwithstanding any other provision of this Policy to the contrary.

 

Guideline Premium Test

 

Under this test, if at any time the premiums received by AUL exceed the amount allowable for tax qualification, the excess amount may be removed from the Policy as of the date of its payment, together with interest and/or investment experience thereon from such date, and any appropriate adjustment in the Death Benefit shall be made as of such date. This excess amount shall be refunded within sixty (60) days after the end of the applicable Policy Year. If this excess amount is not refunded within sixty (60) days, the Total Face Amount under the Policy shall be increased retroactively so that at no time is the Death Benefit ever less than the amount needed to ensure or maintain tax qualification. However, AUL will not refuse to accept any premium necessary to continue coverage, even if the Contract will lose its tax qualification, but only if the premium would result in a zero Cash Value at the end of the Policy Year. Additionally, the minimum Death Benefit must be maintained.

 

Policy Changes Effect on Life Insurance Qualification Tests

 

Policy changes, such as a change in Death Benefit option, Face Amount, or certain other Policy changes, will frequently change the Policy’s limits under the selected Life Insurance Qualification Test. If any requested change would cause the Policy to fail to qualify as life insurance for tax purposes, AUL may refuse or limit the request.

 

Planned Premiums

 

When applying for a Policy, the Owner may select a plan for paying level premium payments quarterly, semi-annually or annually. If the Owner elects, AUL will also arrange for payment of Planned Premiums on a monthly basis under a pre-authorized payment arrangement. The Owner is not required to pay premium payments in accordance with these plans; rather, the Owner can pay more or less than planned, or skip a Planned Premium entirely. Each premium after the initial premium must be at least $100, unless on a monthly pre-authorized payment arrangement.  AUL may increase this minimum ninety (90) days after AUL sends the Owner a written notice of such increase. Subject to the limits described above, the Owner can change the amount and frequency of Planned Premiums whenever the Owner wants by sending Proper Notice to the Home Office, at a maximum of once per year. However, AUL reserves the right to limit the amount of a premium payment or the total premium payments paid. If the Planned Premium is not sufficient to satisfy the requirements of the Guaranteed Death Benefit Provision, then this Policy is not guaranteed to remain in force.

 

Premium Payments to Prevent Lapse

 

Failure to pay Planned Premiums will not necessarily cause a Policy to lapse. Conversely, paying all Planned Premiums will not guarantee that a Policy will not lapse. The conditions that will result in the Owner’s Policy lapsing will vary depending on whether the Guaranteed Death Benefit Test is satisfied. For more information, see How Your Policy May Lapse.

 

Grace Period

 

A Grace Period is a period in which an Owner can make a premium payment in an amount sufficient to prevent the Policy from lapsing. A Grace Period starts when the Cash Surrender Value on a Monthiversary is not sufficient to cover the Monthly Deduction and the Policy does not satisfy the Guaranteed Death Benefit Test. AUL will send notice of the Grace Period to the last known address of the Owner and any assignee. Such notice will inform the Owner of the amount of premiums that must be paid by the Owner during the Grace Period to prevent the Policy from lapsing. The Grace Period shall terminate no less than sixty-one (61) days after the Monthiversary. The Owner’s Policy will remain in force during the Grace Period.  If the Insured should die during the Grace Period, the Death Benefit Proceeds will still be payable to the beneficiary, although the amount paid will be equal to the Death Benefit immediately prior to the start of the Grace Period, plus any benefits provided by rider payable at the Insured’s death, less any outstanding lien, loan and loan interest, less the shortfall in total required premiums to maintain the Guaranteed Death Benefit Provision as of the start of the Grace Period. For more information, see “Amount of Death Benefit Proceeds.” If the Grace Period premium payment has not been paid before the Grace Period ends, the Owner’s Policy will lapse. It will have no value, and no benefits will be payable. For more information, see How Your Policy May Lapse.

 

A Grace Period also may begin if any outstanding loan and loan interest becomes excessive. For more information, see “Policy Loans.”

 

Premium Allocations and Crediting

 

On the Investment Option Election Form, the Owner specifies the percentage of a Net Premium to be allocated to the Investment Accounts and to the Fixed Account. The sum of the Owner’s allocations must equal 100 percent, with at least 1 percent of the Net Premium payment allocated to each account selected by the Owner. All Net Premium allocations must be in whole percentages. AUL reserves the right to limit the number of Investment Accounts to which premiums may be allocated. The Owner can change the allocation percentages at any time, subject to these rules, by sending Proper Notice to the Home Office by telephone if written authorization is on file with AUL, or by using the internet. The change will apply to the premium payments received with or after receipt of the Owner’s notice.

 

The initial Net Premium and any Net Premiums received during the “Right to Examine” period are generally allocated to the money market account until the end of the “Right to Examine” period.   On the later of the day the “Right to Examine” period expires or the date AUL receives the premium at AUL’s Home Office, the initial Net Premium and any Net Premiums received during the “Right to Examine” period are allocated to the Fixed Account and the Investment Accounts in accordance with the Owner’s allocation

 

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instructions selected in the application. Subsequent Net Premiums are allocated as of the end of the Valuation Period during which AUL receives the premium at the Home Office.

 

If the Owner exercises the Owner’s Right to Examine the Policy and cancels it by returning it to AUL, will refund either the premiums paid or the Account Value, whichever is greater. For purposes of determining the end of the “Right to Examine” period, solely as it applies to this transfer, AUL assumes that receipt of this Policy occurs five (5) calendar days after the Issue Date.

 

Premium payments requiring satisfactory evidence of insurability will not be credited to the Policy until underwriting has been completed and the premium payment has been accepted. If the additional premium payment is rejected, AUL will return the premium payment immediately, without any adjustment for investment experience.

 

Transfer Privilege

 

The Owner may transfer amounts between the Fixed Account and Investment Accounts or among Investment Accounts at any time after the “Right to Examine” period. There currently is no minimum transfer amount, although AUL reserves the right to require a $100 minimum transfer. A transfer must be at least for the minimum amount, or, if less, the entire amount in the account from which the Owner is transferring each time a transfer is made. If after the transfer the amount remaining in any account is less than $25, AUL has the right to transfer the entire amount. Any applicable transfer charge will be assessed. The charge will be deducted from the account(s) from which the transfer is made on a pro rata basis; and, if those remaining account values are not sufficient, from account values determined by AUL.

 

Transfers are made such that the Account Value on the date of transfer will not be affected by the transfer, except for the deduction of any transfer charge. AUL reserves the right to limit the number of transfers to twenty (20) per year, or to restrict transfers from being made on consecutive Valuation Dates.

 

AUL reserves the right to limit the size of transfers and remaining balances, to limit the number and frequency of transfers, and to discontinue telephone transfers.

 

Only one of the Transfer programs may be elected at any time. Transfers are limited to twenty (20) transfers during each Policy Year.

 

Telephone and Internet Transfers

 

Telephone transfers will be based upon instructions given by telephone, provided the appropriate election has been made at the time of application or proper authorization has been provided to AUL. Transfers initiated via AUL’s Internet site Account Services, www.oneamerica.com, will be processed as a result of authorization given by the user accessing the site. AUL reserves the right to suspend telephone or internet transfer privileges at any time, for any reason, if AUL deems such suspension to be in the best interests of Owners. AUL will employ reasonable procedures to confirm that instructions communicated by telephone or via the internet are genuine, and if AUL follows those procedures, AUL will not be liable for any losses due to unauthorized or fraudulent instructions. AUL may be liable for such losses if AUL does not follow those reasonable procedures. The procedures AUL will follow for telephone transfers include requiring some form of personal identification prior to acting on instructions received by telephone, providing written confirmation of the transaction, and making a tape recording of the instructions given by telephone.

 

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FIXED ACCOUNT

 

Summary of the Fixed Account

 

Because of exemptive and exclusionary provisions, interests in the Fixed Account have not been registered under the Securities Act of 1933, nor has the Fixed Account been registered as an investment company under the 1940 Act. Accordingly, neither the Fixed Account nor any interests therein are subject to the provisions of these Acts. The disclosure regarding the Fixed Account is, however, subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses.

 

The Owner may allocate some or all of the Net Premiums and transfer some or all of the Account Value from Variable Account to the Fixed Account, which is part of AUL’s General Account and pays interest at declared rates (subject to a minimum interest rate AUL guarantees to be 1 percent). AUL’s General Account supports AUL’s insurance and annuity obligations.

 

The portion of the Account Value allocated to the Fixed Account will be credited with rates of interest, as described below. Since the Fixed Account is part of AUL’s General Account, AUL benefits from investment gain and assumes the risk of investment loss on this amount. All assets in the General Account are subject to AUL’s general liabilities from business operations.

 

Minimum Guaranteed and Current Interest Rates

 

The Account Value in the Fixed Account earns interest at one or more interest rates determined by AUL at its discretion and declared in advance (“Current Rate”), which are guaranteed by AUL to be at least equal to a minimum effective annual rate of one (1) percent (“Guaranteed Rate”). AUL will determine a Current Rate from time to time and, generally, any Current Rate that exceeds the Guaranteed Rate will be effective for the Policies for a period of at least one year. AUL reserves the right to change the method of crediting from time to time, provided that such changes do not have the effect of reducing the Guaranteed Rate of interest. AUL bears the investment risk for Owner’s Fixed Account values and for paying interest at the Current Rate on amounts allocated to the Fixed Account. Although AUL bears the investment risk, investors continue to bear investment risk related to the Company’s claims-paying ability and financial strength.

 

Calculation of the Fixed Account Value

 

The Fixed Account value at any time is equal to amounts allocated or transferred to the Fixed Account, plus interest credited minus amounts deducted, transferred, or surrendered from the Fixed Account.

 

Transfers from the Fixed Account

 

The amount transferred from the Fixed Account in any Policy Year may not exceed the greater of 25 percent of the amount in the Fixed Account at the beginning of the Policy Year, or $5,000 less any Partial Surrenders made from the Fixed Account since the beginning of the Policy Year, unless the balance after the transfer is less than $25, in which case AUL reserves the right to transfer the entire amount.

 

Payment Deferral

 

AUL reserves the right to defer payment of any surrender, Partial Surrender, or transfer from the Fixed Account for up to six months from the date of receipt of the Proper Notice for the Partial Surrender or Full Surrender or transfer. In this case, interest on Fixed Account assets will continue to accrue at the then-current rates of interest.

 

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ADDITIONAL INFORMATION ABOUT FEES

 

Premium Expense Charges

 

AUL deducts a premium expense charge from each premium payment to compensate AUL for federal and state taxes including Premium taxes, distribution expenses, expenses related to the sale and issuance of the Policy, and to provide a margin for profit. The premium expense charge is currently 6 percent of each premium paid for the first ten (10) Policy Years and 2 percent thereafter.

 

Monthly Deduction

 

AUL will deduct Monthly Deductions on the Policy Date and on each Monthiversary. Monthly Deductions due on the Policy Date and any Monthiversaries prior to the Issue Date are deducted on the next Monthiversary. The Owner’s Policy Date is the date used to determine the Owner’s Monthiversary. The Monthly Deduction consists of (1) cost of insurance charge, (2) monthly administrative charge, (3) any charges for rider benefits, (4) Asset-Based charge, and (5) Face Amount charge as described below. The Monthly Deduction is deducted from the Variable Account (and each Investment Account) and Fixed Account pro rata on the basis of the portion of Account Value in each account.

 

Cost of Insurance Charge This charge compensates AUL for the expense of providing insurance coverage. The charge depends on a number of variables and therefore will vary between Policies and from Monthiversary to Monthiversary. The Policy contains guaranteed maximum cost of insurance rates that may not be increased. The guaranteed rates for substandard classes are based on multiples of or additives to the guaranteed rates. These rates are based on the Attained Age and underwriting class of the Insured.  They are also based on the sex of the Insured, except that unisex rates are used where appropriate under applicable law and in Policies purchased by employers and employee organizations in connection with employment-related insurance or benefit programs. The cost of insurance rate generally increases with the Attained Age of the Insured. For any Policy, the cost of insurance on a Monthiversary is calculated by multiplying the current cost of insurance rate for the Insured by the Net Amount at Risk for that Monthiversary. The Net Amount at Risk on a Monthiversary is the difference between the Death Benefit divided by the Death Benefit Discount Factor and the Account Value. For more information on guaranteed rates, please refer to your Policy Data Page. The maximum cost of insurance charge is $83.33 per $1,000 of Net Amount at Risk.

 

The cost of insurance charges for the Face Amount will be determined on each Monthiversary. AUL currently places Insureds in the following classes, based on underwriting: Preferred Tobacco User, Preferred Non-Tobacco User, Standard Tobacco User, Standard Non-Tobacco User and Select Non-Tobacco User. An Insured may be placed in a substandard risk class, which involves a higher mortality risk than the Standard Tobacco User or Standard Non-Tobacco User classes. Preferred Non-Tobacco, Preferred Tobacco, and Standard Tobacco User rates are available for Ages 18-85. Standard Non-Tobacco User rates are available for Ages 0-85. Select Non-Tobacco User rates are available for Ages 18-85. The guaranteed maximum cost of insurance rate is set forth on the Policy Data Page of the Owner’s Policy.

 

Monthly Administrative Charge The monthly administrative charge is a level monthly charge. The monthly charge is currently $15. This charge reimburses AUL for expenses incurred in the administration of the Policies and the Separate Account. Such expenses include but are not limited to: underwriting and issuing the Policy, confirmations, annual reports and account statements, maintenance of Policy records, maintenance of Separate Account records, administrative personnel costs, mailing costs, data processing costs, legal fees, accounting fees, filing fees, the costs of other services necessary for Owner servicing and all accounting, valuation, regulatory and updating requirements.

 

Cost of Additional Benefits Provided by Riders The cost of additional benefits provided by riders is deducted from the Account Value on the Monthiversary.

 

Asset-Based Charge AUL deducts this monthly charge from the Account Value pro rata based on the amounts in each Investment Account and Fixed Account. The current charge is at an annual rate of 0.20 percent of Account Value and is guaranteed not to increase for the duration of a Policy.

 

The charge covers cost that AUL assumes in expenses incurred in issuing and administering the Policies and the Separate Account that will exceed the amounts realized from the monthly administrative charges assessed against the Policies.

 

Face Amount Charge The Maximum Face Amount Charge is the rate of $3.52 per month per $1,000 of insurance coverage.  The charge covers the cost for expenses associated with sales and underwriting with a margin for profit and overall expenses. AUL reserves the right to use a current Face Amount Charge less than the Maximum Face Amount Charge.

 

Surrender Charge

 

During the first ten (10) Policy Years, a Surrender Charge will be deducted from the Account Value if the Policy is completely surrendered for cash. The Surrender Charge is assessed against the first year target premium and will not exceed $60 per $1,000 (6.00%) of Face Amount. Surrender Charges are assesed by withdrawing proportional value from the Account Value as of the date in which the Policy is surrendered. The Surrender Charge reimburses Us for expenses related to sales and distribution of the Policy, including commissions, marketing materials, and other promotional expenses. The Table of Surrender Charges is shown below. The Surrender Charges presented are calculated using the first year target premium of a $500,000 Face Amount policy. You may obtain more information about the Surrender Charges that apply to your Policy by requesting a personalized illustration from your registered representative.

 

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TABLE OF SURRENDER CHARGES:
Based on $500,000 Face Amount

As a Percentage of First Year Target Premium

 

Policy Year		Surrender Charge
1		$8,680.00 (100%)
2		$7,812.00 (90%)
3		$7,378.00 (85%)
4		$6,944.00 (80%)
5		$5,642.00 (65%)
6		$4,774.00 (55%)
7		$3,906.00 (45%)
8		$2,604.00 (30%)
9		$1,736.00 (20%)
10		$868.00 (10%)

 

Partial Surrenders are limited to the Cash Surrender Value of the Policy; therefore, there is no Surrender Charge assessed on Partial Surrenders. However, there may be federal and state income tax consequences to Partial Surrenders. If you surrender the Policy, you would be subject to income tax on the portion of the distribution that exceeds the investment in Policy. In addition, there may be adverse tax consequences (including a 10% penalty) in the event of a Surrender or withdrawal if the Owner is under the age of 59½. Any surrender in excess of Cash Surrender Value will constitute a complete surrender and the above Surrender Charge will apply.

 

Decreases in Face Amount will not reduce the Surrender Charge.

 

If a Face Amount decrease is requested, AUL will deduct a proportional Surrender Charge from the Account Value on the effective date of the decrease. A corresponding reduction will be made to subsequent Surrender Charges. Below is an illustration of such

proportional Surrender Charge deduction.

 

TABLE OF SURRENDER CHARGES:

Based on $500,000 Face Amount with $250,000

requested face decrease in year 5

 

Policy Year		Surrender Charge
1		$	8,680.00
2		$	7,812.00
3		$	7,378.00
4		$	6,944.00
5		$	2,821.00	*
6		$	2,387.00
7		$	1,953.00
8		$	1,302.00
9		$	868.00
10		$	434.00

 

*  $2,821.00 deducted from the account value due to the requested face reduction

 

Based on the example above, a requested Face Amount reduction of $250,000 would result in a Surrender Charge assessment of $2,821 that would be deducted from the Account Value.

 

Taxes

 

AUL does not currently assess a charge for any taxes other than state premium taxes incurred as a result of the establishment, maintenance, or operation of the Investment Accounts of the Separate Account. AUL reserves the right, however, to assess a charge for such taxes against the Investment Accounts if AUL determines that such taxes will be incurred.

 

Special Uses

 

AUL may agree to reduce or waive the Surrender Charge or the Monthly Deduction, or credit additional amounts under the Policies in situations where selling and/or maintenance costs associated with the Policies are reduced, such as the sale of several Policies to the same Owner(s), sales of large Policies, sales of Policies in connection with a group or sponsored arrangement or mass transactions over multiple Policies.

 

In addition, AUL may agree to reduce or waive some or all of these charges and/or credit additional amounts under the Policies for those Policies sold to persons who meet criteria established by AUL, who may include current and retired officers, directors and employees of AUL and AUL’s affiliates. AUL may also agree to waive minimum premium requirements for such persons.

 

AUL will only reduce or waive such charges or credit additional amounts on any Policies where expenses associated with the sale of the Policy and/or costs associated with administering and maintaining the Policy are reduced. AUL reserves the right to terminate waiver/reduced charge and crediting programs at any time, including those for previously issued Policies.

 

Commissions Paid to Broker-Dealers

 

Compensation to broker-dealers consists of a percentage of premiums paid during the first two Policy Years up to the Commissionable Target Premium (“FYC Target Compensation”). Any excess of target in the first Policy Year is paid excess FYC compensation. Renewal compensation is paid in Years 2+. Total premium-based compensation will not exceed a maximum of 130% of FYC Target Compensation, 4% Excess FYC Compensation in Years 1, and 4% Renewal Compensation in Years 2+.

 

Portfolio Expenses

 

Each Investment Account of the Separate Account purchases shares at the net asset value of the corresponding Portfolio. The net asset value reflects the investment advisory fee 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 are described in the Portfolios’ prospectuses.

 

Changes in Cost Factors

 

AUL bears the mortality, expense and experience risks of the Policy. AUL reserves the right to change the Premium Expense Charge, the Face Amount Charge, the Asset-Based Charge, the Cost of Insurance rates and Monthly Administrative Charges and any other variable charge up to the maximum guaranteed amounts stated in this Prospectus. Any changes will be based on changes in expected mortality, expenses, taxes, regulatory environment, investment earnings, or persistency.

 

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HOW THE OWNER’S ACCOUNT VALUES VARY

 

There is no minimum guaranteed Account Value, Cash Value or Cash Surrender Value. These values will vary with the investment performance of the Investment Accounts and/or the crediting of interest in the Fixed Account, and will depend on the allocation of Account Value. If the Cash Surrender Value on a Monthiversary is less than the amount of the Monthly Deduction to be deducted on that date and the Guaranteed Death Benefit Provision is not then in effect, the Policy will be in default and a Grace Period will begin. For more information, see “Premium Payments to Prevent Lapse.”

 

Determining the Account Value

 

On the Policy Date, the Account Value is equal to the initial Net Premium less the Monthly Deductions deducted as of the Policy Date. On each Valuation Day thereafter, the Account Value is the aggregate of the Variable Account value, the Fixed Account value, and the Loan Account value. Account Value may be significantly affected on days when the New York Stock Exchange is open for trading but AUL is closed for business, and the Owner will not have access to Cash Value on those days. The Account Value will vary to reflect the performance of the Investment Accounts to which amounts have been allocated, interest credited on amounts allocated to the Fixed Account, interest credited on amounts in the Loan Account, charges, transfers, Partial Surrenders, loans and loan repayments.

 

Variable Account Value When the Owner allocates an amount to an Investment Account, either by Net Premium payment allocation or by transfer, the Owner’s Policy is credited with accumulation units in that Investment Account. The number of accumulation units credited is determined by dividing the amount allocated to the Investment Account by the Investment Account’s accumulation unit value at the end of the Valuation Period during which the allocation is effected. The Variable Account value of the Policy equals the sum, for all Investment Accounts, of the accumulation units credited to an Investment Account multiplied by that Investment Account’s accumulation unit value.

 

The number of Investment Account accumulation units credited to the Owner’s Policy will increase when Net Premium payments are allocated to the Investment Account and when amounts are transferred to the Investment Account. The number of Investment Account accumulation units credited to a Policy will decrease when the allocated portion of the Monthly Deduction charge is taken from the Investment Account, a loan is made, an amount is transferred from the Investment Account, or a Partial Surrender is taken from the Investment Account.

 

Accumulation Unit Values An Investment Account’s accumulation unit value is determined on each Valuation Date and varies to reflect the investment experience of the underlying Portfolio. It may increase, decrease, or remain the same from Valuation Period to Valuation Period. For each Valuation Period after the date of establishment, the accumulation unit value is determined by multiplying the value of an accumulation unit for an Investment Account for the prior Valuation Period by the net investment factor for the Investment Account for the current Valuation Period.

 

Net Investment Factor The net investment factor is used to measure the investment performance of an Investment Account from one Valuation Period to the next. For any Investment Account, the net investment factor for a Valuation Period is determined by dividing (a) by (b), where:

 

(a) is equal to:

 

1.              the net asset value per share of the Portfolio held in the Investment Account determined at the end of the current Valuation Period; plus

 

2.              the per share amount of any dividend or capital gain distribution paid by the Portfolio during the Valuation Period; plus

 

3.              the per share credit or charge with respect to taxes, if any, paid or reserved for by AUL during the Valuation Period that are determined by AUL to be attributable to the operation of the Investment Account; and

 

(b) is equal to:

 

1.              the net asset value per share of the Portfolio held in the Investment Account determined at the end of the preceding Valuation Period; plus

 

2.              the per share credit or charge for any taxes reserved for the immediately preceding Valuation Period.

 

Fixed Account Value On any Valuation Date, the Fixed Account value of a Policy is the total of all Net Premium payments allocated to the Fixed Account, plus any amounts transferred to the Fixed Account, plus interest credited on such Net Premium payments and amounts transferred, less the amount of any transfers from the Fixed Account, less the amount of any Partial Surrenders taken from the Fixed Account, and less the pro rata portion of the Monthly Deduction charged against the Fixed Account.

 

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Loan Account Value On any Valuation Date, if there have been any Policy loans, the Loan Account value is equal to amounts transferred to the Loan Account from the Investment Accounts and from the Fixed Account as collateral for Policy loans and for due and unpaid loan interest, less amounts transferred from the Loan Account to the Investment Accounts and the Fixed Account as outstanding loans and loan interest are repaid, and plus interest credited to the Loan Account.

 

Cash Value and Cash Surrender Value

 

The Cash Value on a Valuation Date is the Account Value less any applicable Surrender Charges. The Cash Surrender Value on a Valuation Date is the Cash Value reduced by any outstanding liens, loans and loan interest. Cash Surrender Value is used to determine whether a Grace Period starts. For more information, see “Premium Payments to Prevent Lapse.” It is also the amount that is available upon Full Surrender of the Policy. For more information, see “Surrendering the Policy for Cash Surrender Value.”

 

DEATH BENEFIT AND CHANGES IN FACE AMOUNT

 

AUL will pay the Death Benefit Proceeds upon receipt at the Home Office of Proper Notice and due proof that the Insured died while this Policy was in force. Due proof of death will consist of (i) a certified copy of the death certificate of the Insured or other lawful evidence providing equivalent information and (ii) proof of the beneficiary’s interest in the Death Benefit Proceeds in a form acceptable to Us. AUL may require return of the Policy. The Death Benefit Proceeds may be paid in a lump sum, generally within seven (7) calendar days of receipt of satisfactory proof (see “When Proceeds Are Paid”), or in any other way agreeable to the Owner and AUL. Before the Insured dies, the Owner may choose how the proceeds are to be paid. If the Owner has not made a choice before the Insured dies, the beneficiary may choose how the proceeds are paid. The Death Benefit Proceeds will be paid to the beneficiary. For more information, see “Selecting and Changing the Beneficiary.” Coverage is effective on the later of the date the initial premium is paid or the Issue Date except when the Initial Premium is paid at delivery of the Policy then coverage will begin on the Policy Date.

 

Amount of Death Benefit Proceeds

 

The Death Benefit Proceeds are equal to the sum of the Death Benefit determined pursuant to the Death Benefit option in effect at the end of the Valuation Period during which death occurs, plus any rider benefits payable at the Insured’s death, minus any outstanding lien, loan and loan interest as of the date of death. If the date of death occurs during a Grace Period, the Death Benefit will still be payable to the beneficiary, although the amount will be equal to the Death Benefit determined pursuant to the Death Benefit option in effect at the end of business on the Business Day immediately prior to the start of the Grace Period, plus any benefits provided by rider payable at the Insured’s death, and less any outstanding lien, loan and loan interest as of the date of death and the shortfall in total required premiums to maintain the Guaranteed Death Benefit Provision as of the start of the Grace Period. Under certain circumstances, the amount of the Death Benefit may be further adjusted. For more information, see “Limits on Rights to Contest the Policy” and “Changes in the Policy or Benefits.”

 

Death Benefit Payment Options

 

The Death Benefit Proceeds may be paid in a lump sum, under a Settlement Option as set forth in the Settlement Options section, or in any other way agreeable to the Owner and Us. Before the Insured dies, You may choose how the Death Benefit Proceeds are to be paid. If You have not made a choice before the Insured dies, the beneficiary may choose how the Death Benefit Proceeds are paid.  We will include interest from the date of death to the payment date.  Interest will accrue:

 

1. At the rate or rates applicable to the Policy funds left on deposit, as of the date of death;

 

2. At the rate listed in Item 1 above, plus additional interest at a rate of 10% annually beginning with the date that is thirty-one (31) calendar days from the latest of items a, b, and c below to the date the claim is paid:

 

a. The date the due proof of death is received by Us;

b. The date We receive sufficient information to determine AUL’s liability, the extent of the liability, and the appropriate payee legally entitled to the proceeds; and

c. The date legal impediments to payment of proceeds that depend upon the action of parties other than Us are resolved and sufficient evidence of the same is provided by Us. Legal impediments to payment include, but are not limited to:

 

1. The establishment of guardianships and conservatorships;

 

2. The appointment and qualification of trustees, executors and administrators; and

 

3. The submission of information required to satisfy state and federal reporting requirements.

 

Death Benefit Options

 

The Owner may choose one of the following Death Benefit options:

 

Option 1 — The Death Benefit is equal to the greater of:

 

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1. The Face Amount in effect at the time of death; or

 

2. The Account Value multiplied by the appropriate percentage from the Table of Minimum Insurance Percentages on the Policy Data Page.

 

Option 2 — The Death Benefit is equal to the greater of:

 

1. The Face Amount in effect at the time of death plus the Account Value; or

 

2. The Account Value multiplied by the appropriate percentage from the Minimum Insurance Percentages (as described below). (Please note that the investment performance of the Investment Accounts you have chosen will impact the Account Value and therefore may affect the amount of Death Benefit Proceeds payable.)

 

Life Insurance Qualification Test

 

It is intended that this Policy be considered as life insurance for federal income tax purposes, notwithstanding any other provision of the Policy to the contrary, in order to comply with Section 7702 of the Internal Revenue Code of 1986, or any other equivalent section of the Code.

 

We may make any reasonable adjustments to the conditions or terms of this Policy if necessary, to allow it to continue to qualify as life insurance. This provision is not a guarantee that this Policy will receive tax treatment as life insurance. Additionally, it does not guarantee that the tax treatment of life insurance will never change by the future actions of any tax authority. In order to ensure that this Policy qualifies as life insurance, one of the tests described below will be applied to the Policy.

 

The default test is the Cash Value Accumulation Test. The test cannot be changed after the Policy Date. We reserve the right to limit the life insurance qualification tests available.

 

Cash Value Accumulation Test — Under this test, the minimum Death Benefit must be maintained. We may modify the Minimum Insurance Percentage shown on the Policy Data Page, retroactively if needed, to ensure or maintain qualification of this Policy as a life insurance contract for federal income tax purposes, notwithstanding any other provision of this Policy to the contrary.

 

Guideline Premium Test — Under this test, if at any time the premiums received exceed the amount allowable for tax qualification, the excess amount may be removed from the Policy as of the date of its payment, together with interest and/or investment experience thereon from such date, and any appropriate adjustment in the Death Benefit shall be made as of such date. This excess amount shall be refunded within 60 days after the end of the applicable Policy Year. If this excess amount is not refunded within 60 days, the Face Amount under the Policy shall be increased retroactively so that at no time is the Death Benefit ever less than the amount needed to ensure or maintain tax qualification. However, We will not refuse to accept any premium necessary to continue coverage but only if such premium would result in a zero Cash Value at the end of the Policy Year. Additionally, the minimum Death Benefit must be maintained.

 

Face Amount and Death Benefit Option

 

The Face Amount is set at the time the Policy is issued. The Owner may change the Face Amount from time to time, as discussed below. The Owner selects the Death Benefit option when the Owner applies for the Policy. The Owner also may change the Death Benefit option as discussed below. AUL reserves the right, however, to decline any change which might disqualify the Policy as life insurance under federal tax law. AUL’s acceptance of any of your changes does not imply there will be no effect on the qualification of your Policy as life insurance as a result of the changes.

 

Changes in Death Benefit Option

 

Beginning one (1) year after the Policy Date, as long as the Policy is not in the Grace Period, the Owner may request the following changes in the Death Benefit option on the Owner’s Policy by Proper Notice subject to the following rules.

 

If the Owner requests a change from Death Benefit option 1 to Death Benefit option 2, the Face Amount will be decreased by the amount of the Account Value on the date of change. Upon such decrease in the Face Amount, AUL will deduct a proportional Surrender Charge from the Account Value. The change will be effective on the Monthiversary following AUL’s receipt of Proper Notice.

 

If the Owner requests a change from Death Benefit option 2 to Death Benefit option 1, the Face Amount will be increased by the amount of the Account Value on the date of change. We may require satisfactory evidence of insurability. The change will be effective on the Monthiversary following AUL’s approval of the change.

 

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Changing a Death Benefit option does not change the Planned Premium, Guaranteed Death Benefit Provision, Face Amount Charges or the Surrender Charges.

 

Decrease in Face Amount

 

Beginning one (1) year after the Policy Date, as long as the Policy is not in the Grace Period, the Owner may request a decrease of the Face Amount by providing AUL Proper Notice. The amount of decrease must be at least $25,000. You may not make a decrease which reduces the Face Amount of the policy below $100,000.  A decrease of the Face Amount will be effective on the Monthiversary following AUL’s receipt of Proper Notice. The decrease will not cause a decrease in the Face Amount Charge.

 

On the effective date of the decrease, AUL will deduct a proportional Surrender Charge from the Account Value. A corresponding reduction will be made in subsequent Surrender Charges.

 

Other Benefits Available Under the Policy

 

In addition to the Death Benefit under the Policy, other standard and optional benefits may also be available to you. The following table summarizes information about those benefits. Information about the fees associated with each benefit included in the table may be found in the Fee Table. More information about each rider follows the table.

 

Name of Benefit		Purpose		Standard or Optional		Brief Description of Restrictions/Limitations
Accelerated Death Benefit for Terminal Illness Rider		Advances a portion of the Death Benefit upon Insured being diagnosed as terminally ill and has 12 months or less to live.		Standard		· The minimum accelerated death benefit amount is $5,000. · The maximum accelerated death benefit amount is equal to the lesser of 75% of the Death Benefit of the base Policy or $1,000,000. · Expires upon exercise of the Overloan Protection Rider or termination of the Policy. · This Rider may not be available to all investors. Please see Material State Variations for more details.
Accelerated Death Benefit for Chronic Illness Rider		Advances a portion of the Death Benefit upon Insured being diagnosed as Chronically Ill (as defined below).		Standard		· The maximum annual acceleration amount is subject to the Internal Revenue Service (“IRS”) per diem limitation as described below. · The overall maximum benefit at any time is limited as described below. · Expires upon exercise of the Overloan Protection Rider or termination of the Policy. · The rider is restricted to issue ages 0-65. Not allowed on substandard policies. · This Rider may not be available to all investors. Please see Material State Variations for more details.
Accounting Benefit Rider		Waives a percentage of the Surrender Charge in exchange for a separate compensation schedule with an extended chargeback period.		Optional		· The rider benefits are only available upon Full Surrender of the Policy. This benefit must be chosen at the time of application.
Children’s Insurance Benefit Rider		Provides level term insurance on each child of the Insured.		Optional		· The rider expires when the Insured reaches age 65.
Overloan Protection Rider		Provides option to continue Policy at a reduced Face Amount with no further reductions.		Standard		· May be exercised only if certain conditions are met: ·                  Policy must be in force for at least 15 Policy Years. ·                  Insured’s attained Age must be 65 or older. ·                  Partial Surrenders must equal or exceed premiums paid. ·                  The amount of the outstanding loan plus accrued loan interest must exceed the Minimum Loan Indebtedness Percentage shown on the Rider Data Page times the Cash Value, but be less than the Maximum Loan Indebtedness Percentage shown on the Rider Data Page after the deduction of the Overloan Protection Rider Charge from the Account Value. ·                  The Policy must not be a Modified Endowment Contract as defined in Section 7702A of the Internal Revenue Code of 1986, or thereafter changed, and exercising this Rider must not cause the Policy to become a Modified Endowment Contract. ·                  The Policy changes that result from exercising this rider must not lead to a Death Benefit that is not compliant with the Internal Revenue Code.

 

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Waiver of Monthly Deductions Disability Rider		Waives all Policy Charges if the Insured becomes totally disabled.		Optional		· A six-month waiting period applies. · Waiver period varies depending on when the disability occurs. · The rider is limited to issue ages 0-55.
Dollar Cost Averaging Program (“DCA Program”)		Enables systematic and automatic transfer of, on a monthly basis, specified dollar amounts from the Vanguard Money Market Portfolio to other Investment Accounts		Optional		· AUL reserves the right to impose a $25 transfer charge for each transfer effected under a DCA Program. · AUL also reserves the right to alter the terms or suspend or eliminate the availability of the Ongoing Dollar Cost Averaging Program at any time. · Owner can only enter one transfer program at a time.
Automatic Portfolio Rebalancing		Automatically rebalances a Policy to specified fund allocation percentages on a quarterly or annual basis.		Optional		· Owner can only enter one transfer program at a time.
Portfolio Optimization Program		An optional Program to allocate investments in Investment Accounts or other investment options according to a model selected by the Owner.		Optional		· If the Owner decides to subscribe to the Program and select one (1) of the Portfolio Optimization Models, the Owner’s initial premium payment (in the case of a new application) or Account Value, as applicable, will be allocated to the Investment Accounts according to the Model the Owner selects. Subsequent premium payments, if allowed under the Owner’s Contract, will also be allocated accordingly. · AUL is under no contractual obligation to continue this service and has the right to terminate the Program at any time. If AUL terminates the Program, you will remain invested in the same Portfolios until you select new Portfolios. · The Owner’s Account Value will be rebalanced among the Portfolios that comprise the Model annually in order to maintain the target asset allocation percentages of the Model.

 

Optional Benefits Available Through Riders

 

The following optional benefits are available and may be added to the Owner’s Policy at issue. In addition, the Children’s Insurance Benefit Rider can be added after issue. If applicable, monthly charges for these riders will be deducted from the Owner’s Account Value as part of the Monthly Deduction. Not all of these riders may be available in all states and may vary by state.

 

Accelerated Death Benefit for Terminal Illness Rider

 

This rider allows for a prepayment of a portion of the Policy’s Death Benefit while the Insured is still alive, if the Insured has been diagnosed as terminally ill, and has a life expectancy of twelve (12) months or less to live. The benefit payment will establish a lien on the Policy which is deducted from Policy proceeds at death or earlier termination. The minimum amount available is $5,000. The maximum benefit payable (in most states) is the lesser of $1,000,000 or 75 percent of the Death Benefit.

 

A one-time Administrative Fee may be charged when an Accelerated Death Benefit is paid under this rider.  This charge is associated with the Company’s administrative costs for processing an Accelerated Death Benefit payment for the Owner.  This charge is deducted from the Accelerated Death Benefit payable, and it is included in the lien that is created as a result of that payment.  The Administrative Fee will not be more than $250.00. For information on state variations to the rider, see “Material State Variations.”

 

Example: An Accelerated Death Benefit is requested on a $500,000 Face Amount Policy. The requested amount must be less than or equal to the maximum allowed of the lesser of $1,000,000 or 75% of the Death Benefit. At the time of the request, the Death Benefit option must be changed to Option 1, if it is not currently Option 1. A lien will be established for the requested amount and interest due. The Accelerated Death Benefit payment will be reduced for any Administrative Fee. The Cash Surrender Value and Death Benefit paid at time of death will be reduced by the amount of any outstanding lien.

 

Accelerated Death Benefit for Chronic Illness Rider

 

This rider allows for a prepayment of a portion of the Death Benefit while the Insured is still alive, if the Insured has been diagnosed as Chronically Ill as defined by the rider.  In general, the Insured is chronically ill if he or she is unable to perform 2 of 6 Activities of Daily Living (ADLs) (described below) for a period of at least 90 consecutive days or has a permanent severe cognitive impairment (described below).  The benefit payment will establish a lien on the Policy which is deducted from Policy proceeds at death or earlier termination.

 

Activities of Daily Living (ADL)  There are six basic functional abilities which measure the Insured’s ability for self care and ability to live independently without Substantial Assistance from another individual.  They are:

 

1. Bathing — The Insured’s ability to wash himself or herself by sponge bath, or in either a tub or shower, including the task of getting into or out of the tub or shower.

 

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2. Continence — The Insured’s ability to maintain control of bowel and bladder function.  Additionally, when unable to maintain control of bowel and bladder function, the ability to perform associated personal hygiene (including caring for a catheter or colostomy bag).

 

3. Dressing — The Insured’s ability to put on and take off all items of clothing and any necessary braces, fasteners or artificial limbs.

 

4. Eating — The Insured’s ability to feed oneself by getting food into the body from a receptacle, such as a plate, cup, or table, or by feeding tube or intravenously.

 

5. Toileting — The Insured’s ability to get to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

 

6. Transferring — The Insured’s ability to move into or out of a bed, chair or wheelchair.

 

Severe Cognitive Impairment A deterioration or loss of intellectual capacity that is:

 

(a) Comparable to (and includes) Alzheimer’s disease and similar forms of irreversible dementia; and

 

(b) measured by clinical evidence and standardized tests that reliably measure impairment in the following areas:

 

1. Short-term or long-term memory; or

 

2. Orientation to people, places or time; or

 

3. Deductive or abstract reasoning; or

 

4. Judgment as it relates to safety awareness; and

 

(c) clinical evidence and test measurement must be greater than moderate.

 

A one-time Administrative Fee may be charged when an Accelerated Death Benefit is paid under this rider.  This charge is associated with AUL’s administrative costs for processing an Accelerated Death Benefit payment for the Owner.  This charge is deducted from the Accelerated Death Benefit payable, and it is included in the lien that is created as a result of that payment.  The Administrative Fee will not be more than $250.00. For information on state variations to the rider, see “Material State Variations.”

 

Maximum Annual Acceleration Amount:  The annual maximum that may be paid is the IRS per diem limitation times 365, subject to the overall maximum available.  For 2022, the per diem limit is $390 per day, for an annual limit of $142,350.  The maximum annual amount is prorated for the number of days from the claim date to the end of the calendar year.

 

Overall Maximum Acceleration Amount:  The overall maximum benefit on a Policy at any time is equal to the policy’s Cash Value plus a percentage of the net amount at risk (Death Benefit minus Account Value) at the Insured’s Attained Age:

 

Attained Age		Percentage of NAR Available
69 and younger		25	%
70 and 79		50	%
80 and older		75	%

 

Elimination Period The period of time beginning on the date the Licensed Health Care Practitioner certifies that the Insured meets the definition of Chronic Illness before benefits can be paid.  The Elimination Period may be completed consecutively or intermittently, but it must be completed within a 12-month period. The Elimination Period is shown on the Schedule of Benefits page of the Policy.

 

On the Schedule of Benefits Page, the Elimination Period should show as 90 days.

 

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Example: An Accelerated Death Benefit is requested on a $500,000 Face Amount Policy. The requested amount will be limited by the maximum percentage of NAR defined above and the IRS per diem limitation. At the time of the request, the Death Benefit option must be changed to Option 1, if it is not currently Option 1. A lien will be established for the requested amount and interest due. The Accelerated Death Benefit payment will be reduced for any Administrative Fee. The Cash Surrender Value and Death Benefit paid at time of death will be reduced by the amount of any outstanding lien.

 

Accounting Benefit Rider

 

If the Owner fully surrenders his or her Policy while this rider is in effect during the Surrender Charge period, AUL will waive a portion of the Surrender Charges.

 

Policy Year		Surrender Charge Waiver Percentage
1		90	%
2		80	%
3		60	%
4		40	%
5		20	%
6		0	%
7		0	%
8		0	%
9		0	%
10		0	%

 

Example: Year 1 Surrender Charge is 100%. The Accounting Benefit Rider allows 90% to be waived, leaving 10% Surrender Charge (100% - 90%).

 

This rider is not available to natural person(s) or legal entities formed for the benefit of or on behalf of natural person(s).

 

Children’s Insurance Benefit Rider (CBR)

 

Insured’s Ages: 14 Days — 18 Years (Children’s Ages)

 

This rider provides level term insurance on each child of the Insured. At issue, each child must be at least 14 days old and less than 18 years of Age. Once CBR is in force, children born to the Insured are covered automatically after they are 14 days old. Notice of the birth of the child should be sent to AUL within sixty (60) days of the birth. Children are covered under CBR until they reach Attained Age 22, when they may purchase, without evidence of insurability, a separate Policy with up to five (5) times the expiring Face Amount of the rider’s coverage. When the youngest child reaches the maturity age, we will send a letter informing the client that the youngest child currently listed on the Policy record has reached maturity age, asking if they have other children to add, or would they prefer to terminate the rider.

 

Example: A number of units of CBR from 0-20 units may be purchased. Each unit equates to $1,000 of Death Benefit for each child. In the event a child dies before they reach Attained Age 22, units multiplied by $1,000 will be paid to the Insured or designated beneficiary.

 

Overloan Protection Rider

 

This rider, if certain conditions are met, provides the Owner the option to continue his/her Policy at a reduced Face Amount with no further Monthly Deductions.

 

Exercising this rider is subject to the following terms:

 

(1)              The Policy in force for at least, 15 Policy Years;

(2)              The Insured’s Attained Age must be 65 or Older;

(3)              Partial Surrenders equal or exceed Premiums paid to AUL with respect to the Policy,

(4)              The amount of the loan plus loan interest must exceed 80%, which is the current Minimum Loan Indebtedness Percentage shown on the Rider Specifications Page, multiplied by the Cash Value, but it must be less than 99.9% of the Cash Value after the deduction of the Overloan Protection Rider Charge from the Account Value;

(5)              The Policy must not be a Modified Endowment Contract as defined in Section 7702A of the Internal Revenue code of 1986, or thereafter changed, and exercising this rider must not cause the Policy to become a Modified Endowment Contract; and

 

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(6)                The Policy changes that result from exercising this rider must not lead to a Death Benefit that is not compliant with the Internal Revenue Code.

 

Further, the amount of the outstanding loan plus accrued loan interest must exceed 80%, which is the current Minimum Loan Indebtedness Percentage shown on the Rider Specifications Page of the Policy, multiplied by the Cash Value, but it must be less than 99.9% of the Cash Value after the deduction of the Overloan Protection Rider Charge from the Account Value. Once the rider is exercised, the Total Face Amount will be equal to the Account Value, after the deduction of the Overloan Protection Rider Charge, multiplied by the Minimum Insurance Percentage shown in the Minimum Insurance Percentages table in the Owner’s Policy.

 

There is no charge for this rider until it is exercised. Once exercised, there is a one-time charge. The Overloan Protection Rider Charge is equal to the Overloan Protection Rider Percentage, 98%, multiplied by the Account Value less any outstanding loan and loan interest at the time this Rider is exercised. There is no charge if the rider is never exercised.

 

In addition, once this rider is exercised, the Policy will become paid up life insurance and change in the following manner:

 

(1)              The Owner’s Death Benefit option must be Option 1. If any other Death Benefit option is in effect at the time the Overloan Protection Rider is exercised, the Death Benefit option will be changed to Option 1 at that time;

(2)              No further changes may be made to the Policy, which includes any decreases or increases of any kind;

(3)              No further premiums will be accepted;

(4)              Policy loans and Partial Surrenders will no longer be permitted;

(5)              No further Monthly Deductions will be deducted;

(6)              The outstanding Loan Account will remain and the interest charged against the Loan Account will be equal to the interest rate credited to the Loan Account;

(7)              AUL will accept loan repayments. The value of the Loan Account and the total indebtedness will be reduced by the loan repayment. In addition, the Fixed Account will be increased by the loan repayment;

(8)              Any Guaranteed Death Benefit Provision included in the Policy or by rider attached to the Policy will no longer apply;

(9)              Any additional rider requiring a Monthly Deduction will automatically be terminated;

(10)       The Accelerated Death Benefit Terminal Illness Rider and the Accelerated Death Benefit Chronic Illness Rider will expire.

(11)       When the Overloan Protection Rider is exercised, all values in the Variable Account will immediately be transferred to the Fixed Account and will continue to grow at the then- current Fixed Account interest rate. Transfer fees will not be applied to these transfers; and

(12)       Transfers from the Fixed Account to the Variable Account will no longer be permitted.

 

Example: Policyholder Attained Age:		70
Account Value:		100,000
Loan Amount:		85,000
Loan Interest:		5,000
Rider Charge:		(100,000 — 85,000 — 5,000) * 98% = 9,800
Remaining Account Value:		100,000 — 85,000 — 5,000 -9,800 = 200
Guaranteed Interest Rate:		1.0%

 

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Attained Age		Account Value		Death Benefit
70		200.00		273.33
71		202.00		271.96
72		204.02		270.68
73		206.06		269.49
74		208.12		268.41
75		210.20		267.43
76		212.30		266.55
77		214.43		265.77
78		216.57		265.08
79		218.74		264.49
80		220.92		264.00
81		223.13		263.62
82		225.37		263.35
83		227.62		263.19
84		229.89		263.17
85		232.19		263.27
86		234.52		263.53
87		236.86		263.95
88		239.23		264.53
89		241.62		265.29
90		244.04		266.22
91		246.48		267.29
92		248.94		268.48
93		251.43		269.76
94		253.95		271.05
95		256.49		272.27
96		259.05		273.35
97		261.64		273.84
98		264.26		273.56
99		266.90		272.24
100		269.57		269.57
101		272.27		272.27
102		274.99		274.99
103		277.74		277.74
104		280.52		280.52
105		283.32		283.32
106		286.15		286.15
107		289.02		289.02
108		291.91		291.91
109		294.82		294.82
110		297.77		297.77
111		300.75		300.75
112		303.76		303.76
113		306.80		306.80
114		309.86		309.86
115		312.96		312.96
116		316.09		316.09
117		319.25		319.25
118		322.45		322.45
119		325.67		325.67
120		328.93		328.93

 

Waiver of Monthly Deductions Disability Rider (WMDD)

 

This rider waives all Policy charges if the primary Insured becomes totally disabled.  Charges to be waived: Asset-Based Charge, COI, Face Amount Charges, Admin Charges, and any rider charges.  Monthly Deductions are waived for total disability following a six-month waiting period.  Monthly Deductions made during this waiting period are re-credited to the Account Value upon the actual waiver of the Monthly Deductions.  If disability occurs before Attained Age 60, Monthly Deductions are waived to Attained Age 121 as long as total disability continues.  If disability occurs between Attained Ages 60 — 65, Monthly Deductions are waived as long as Insured remains totally disabled, but not beyond Attained Age 65.

 

The monthly Rider charge will be deducted proportionally from the Fixed and Variable Accounts. The monthly charge is calculated by taking the rider cost factor from the Policy Data Page and multiplying by the current Monthly Deduction (excluding the cost for this Rider). At the time the Rider is exercised, the Policy’s Monthly Deductions will not be deducted from the Account Value, for as long as is specified by the Rider form.

 

Dollar Cost Averaging Program

 

The DCA Program, if elected, enables the Owner to transfer systematically and automatically, on a monthly basis, specified dollar amounts from the Vanguard Money Market Portfolio (“VMMP”) to other Investment Accounts. By allocating on a regularly scheduled basis, as opposed to allocating the total amount at one particular time, the Owner may be less susceptible to the impact of market fluctuations. However, participation in the DCA Program does not assure a Contract Owner of greater profits from the purchases under the Program, nor will it prevent or necessarily alleviate losses in a declining market.

 

The Owner specifies the fixed dollar amount to be transferred automatically from the VMMP. At the time that the Owner elects the DCA Program, the Account Value in the VMMP from which transfers will be made must be at least $2,000.

 

The Owner may elect this DCA Program at the time of application by completing the authorization on the application or at any time after the Policy is issued by properly completing and returning the election form. Transfers made under the DCA Program will commence on the Monthiversary following the election.

 

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Once elected, transfers from the VMMP will be processed until the value of the Investment Account is completely depleted or the Owner sends AUL Proper Notice instructing AUL to cancel the transfers.

 

Currently, transfers made under the DCA Program will not be subject to any transfer charge and will not count against the number of free transfers permitted in a Policy Year. AUL reserves the right to impose a $25 transfer charge for each transfer effected under a DCA

 

Program. Owners can only elect one transfer program at a time. AUL also reserves the right to alter the terms or suspend or eliminate the availability of the Ongoing DCA Program at any time.

 

Portfolio Rebalancing Program

 

The Owner may elect to have the accumulated balance of each Investment Account redistributed to equal a specified percentage of the Variable Account. This will be done on a quarterly or annual basis from the Monthiversary on which the Portfolio Rebalancing Program commences.

 

Program Commences

 

If elected, this plan automatically adjusts the Owner’s Investment Account mix to be consistent with the allocation most recently requested. The redistribution will not count toward the free transfers permitted each Policy Year. If the DCA Program has been elected, the Portfolio Rebalancing Program will not commence until the Monthiversary following the termination of the DCA Program.

 

The Owner may elect this Portfolio Rebalancing Program at the time of application by completing the authorization on the application or at any time after the Policy is issued by properly completing the election form and returning it to AUL. Modification of new money allocations will not, by itself, modify the Portfolio Rebalancing allocations.

 

Portfolio rebalancing will terminate when the Owner requests any transfer (which includes a loan transaction) or the day AUL receives Proper Notice instructing AUL to cancel the Portfolio Rebalancing Program. Portfolio Rebalancing is not available if the Owner chooses the Program, as annual rebalancing is independently a part of that Program.

 

Owners can only elect one transfer program at a time. AUL does not charge for this Portfolio Rebalancing Program. AUL reserves the right to alter the terms or suspend or eliminate the availability of Portfolio Rebalancing at any time.

 

Portfolio Optimization Program

 

The Program

 

Portfolio Optimization is an asset allocation program offered at no additional charge for use within this variable life Policy. Asset allocation refers to the manner in which investments are distributed among asset classes to help attain an investment goal.

 

For the Owner’s variable life Policy, Portfolio Optimization can help with decisions about how the Owner should allocate the Owner’s Account Value among available Investment Options, which will include Investment Accounts and may include other investment options, such as the Fixed Account (collectively, “Investment Options”). The theory behind Portfolio Optimization is that diversification among asset classes can help reduce volatility over the long term.

 

As part of the Program, several Portfolio Optimization Models have been developed. Mesirow Financial Investment Management, Inc., (“MFIM”), an independent entity unrelated to AUL, develops models for the Portfolio Optimization Program. There is an investment advisory relationship between MFIM and AUL, but there is no investment advisory relationship between MFIM and Owners of the Policy with respect to the Models. MFIM works on behalf of AUL, and not Owners, in developing the Models. Each of the models is based on different profiles of an investor’s willingness to accept investment risk. If the Owner decides to subscribe to the Program and select one (1) of the Portfolio Optimization Models, the Owner’s initial premium payment (in the case of a new application) or Account Value, as applicable, will be allocated to the Investment Accounts according to the Model the Owner selects. Subsequent premium payments, if allowed under the Owner’s Contract, will also be allocated accordingly.

 

On an annual basis, AUL will rebalance the Owner’s Account Value among the Portfolios that comprise the Model in order to maintain the target asset allocation percentages of the Model. If the Owner subscribes to Portfolio Optimization, the Owner’s Account Value will automatically be reallocated in accordance with the Model the Owner selects as it is rebalanced.

 

The Portfolio Optimization Models

 

AUL offers five (5) asset allocation Models, each comprised of a combination of Portfolios.  Portfolios are selected in a way intended to optimize potential returns for each Model, given a particular level of risk tolerance identified by the Owner.

 

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This process could, in some cases, result in the inclusion of an Portfolio in a Model based on its specific asset class exposure or other specific optimization factors, even where another Portfolio may have better historical performance.

 

MFIM has created five Portfolio Optimization Models composed of one or more of the Portfolios: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. The following is a description of the Portfolios that comprise each Model and the target asset allocation to each Portfolio in each Model. Your registered representative can provide additional information about the Portfolio Optimization Models and help you select which Model, if any, may be suitable for you. Please talk to him or her if you have any additional questions about the Models.

 

				Model Type
						Moderately				Moderately
Portfolio Name		Category		Conservative		Conservative		Moderate		Aggressive		Aggressive
Vanguard VIF Equity Index		Large Blend		4%		6%		8%		8%		10%
American Funds IS® Growth 1		Large Growth		4%		7%		9%		10%		11%
Vanguard VIF Equity Income		Large Value		4%		7%		9%		10%		12%
Vanguard VIF Mid-Cap Index		Mid-Cap Blend		2%		4%		6%		9%		12%
MFS® VIT New Discovery Init		Small Growth		0%		0%		2%		3%		3%
DFA VA US Targeted Value		Small Value		0%		2%		3%		4%		4%
Vanguard VIF Real Estate Index		Real Estate		0%		2%		4%		6%		8%
American Funds IS® Intl Gr And Inc 1		Foreign Large Blend		3%		6%		10%		13%		15%
Vanguard Total Intl Stock Idx Instl Sel		Foreign Large Blend		3%		6%		9%		12%		15%
Invesco VI Core Plus Bond I		Intermediate Core-Plus Bond		25%		19%		13%		9%		4%
Vanguard VIF Total Bond Mkt Idx		Intermediate Core-Plus Bond		24%		18%		13%		9%		4%
Vanguard VIF High Yield Bond		High Yield Bond		6%		5%		4%		2%		0%
DFA VIT Inflation-Protected Secs Instl		Inflation-Protected Bond		14%		11%		7%		5%		2%
Vanguard VIF Money Market		Money Market - Taxable		11%		7%		3%		0%		0%
Total				100%		100%		100%		100%		100%
Weighted Average Portfolio Expense				0.30%		0.30%		0.32%		0.33%		0.32%

 

Annual Rebalancing of the Portfolio Optimization Models

 

Your Account Value will be rebalanced annually by AUL in order to maintain the target asset allocation percentages of the Model. However, the target asset allocations of your Account Value in the Model you select will remain static.

 

When the Owner’s Portfolio Optimization Model is rebalanced, the Owner’s Account Value (and subsequent Premiums, if applicable) will be reallocated in accordance with any changes to the Model the Owner has selected. If a Portfolio offered in a Model merges with another fund or is substituted by AUL, the new or surviving Portfolio will be added to the Model, and AUL will allocate your Account Value to the new Portfolio. If a Portfolio offered in a model is liquidated, AUL will reinvest the portion of the proceeds of such liquidation attributable to you in the Vanguard VIF Money Market Portfolio unless you select a new Portfolio.

 

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Selecting a Portfolio Optimization Model

 

If the Owner chooses to subscribe to the Program, the Owner must determine which Portfolio Optimization Model is best for the Owner. Neither AUL nor MFIM will make this decision. The Owner should consult with his or her registered representative on this decision. The Owner’s registered representative can help the Owner determine which Model is best suited to his or her financial needs, investment time horizon, and willingness to accept investment risk. The Owner should periodically review these factors with his or her registered representative to determine if the Owner should change Models to keep up with changes in the Owner’s personal circumstances. The Owner’s registered representative can assist the Owner in completing the proper forms to subscribe to the Program or to change to a different Model. The Owner may, in consultation with his or her registered representative, utilize analytical tools made available by AUL, including an investor profile questionnaire, which asks questions intended to help the Owner or his or her registered representative assess his or her financial needs, investment time horizon, and willingness to accept investment risk. It is the Owner’s decision, in consultation with the Owner’s registered representative, to select a Model or to change to a different Model, and neither AUL nor MFIM bear any responsibility for this decision. The Owner may change to a different Model at any time with a proper written request or by telephone or electronic instructions provided a valid telephone/electronic authorization is on file with AUL.

 

Quarterly Reports

 

If the Owner selects a Portfolio Optimization Model, the Owner will be sent a quarterly report that provides information about the Portfolios within the Owner’s selected Model, in addition to or as part of the Owner’s usual quarterly statement.

 

Risks

 

Although the Models are designed to optimize returns given the various levels of risk, there is no assurance that a Model will not lose money or that investment results will not experience volatility. Investment performance of the Owner’s Account Value could be better or worse by participating in a Portfolio Optimization Model than if the Owner has not participated. A Model may perform better or worse than any single Portfolio or asset class or other combinations of Portfolios or asset classes. Model performance is dependent upon the performance of the component Portfolios. The timing of the Owner’s investment and the rebalancing may affect performance. The Owner’s Account Value will fluctuate, and when redeemed, may be worth more or less than the original cost.

 

A Portfolio Optimization Model may not perform as intended. Although the Models are intended to optimize returns given various levels of risk tolerance, portfolio, market and asset class performance may differ in the future from the historical performance and assumptions upon which the Models are based, which could cause the Models to be ineffective or less effective in reducing volatility.

 

Periodic rebalancing of the Portfolio Optimization Models can cause the underlying Portfolios to incur transactional expenses to raise cash for money flowing out of the Portfolios or to buy securities with money flowing into the Portfolios. These expenses can adversely affect performance of the pertinent Portfolios and the Models.

 

The Owner may change the Owner’s Model selection at any time with Proper Notice. The Owner should consult with the Owner’s registered representative to assist the Owner in determining which Model is best suited to the Owner’s financial needs, investment time horizon, and is consistent with the Owner’s risk comfort level. The Owner should periodically review those factors to determine if the Owner needs to change Models to reflect such changes. The Owner’s registered representative can assist the Owner in completing the proper forms to enroll in Portfolio Optimization. Newly issued Contracts may require participation in the Program.

 

AUL is under no contractual obligation to continue this service and has the right to terminate the Program at any time. If AUL terminates the Program, you will remain invested in the same Portfolios until you select new Portfolios.

 

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CASH BENEFITS

 

Policy Loans

 

Prior to the death of the Insured, the Owner may borrow against the Owner’s Policy by submitting Proper Notice to the Home Office at any time after the end of the “Right to Examine” period while the Policy is not in the Grace Period. The Policy is assigned to AUL as the sole security for the loan. An Owner may opt for a Policy loan to access the Account Value without incurring adverse tax consequences associated with a Partial Surrender because Policy loans generally would not be treated as taxable distributions unless your Policy is a Modified Endowment Contract, but if the Owner surrender the Policy, the Owner may be subject to income tax on the portion of the distribution that exceeds the investment in the Policy. The minimum amount of a new loan is $500. The maximum amount of a new loan is:

 

1. 90 percent of the Account Value; less

 

2. any loan interest due on the next Policy Anniversary; less

 

3. any applicable Surrender Charges; less

 

4. three months of Monthly Deductions; less

 

5. any existing loans and accrued loan interest.

 

The minimum and/or maximum loan amount may vary by state. Outstanding loans reduce the amount available for new loans. Policy loans will be processed as of the date the Owner’s Proper Notice is received. Loan proceeds generally will be sent to the Owner within seven (7) calendar days. For more information, see “When Proceeds Are Paid.”

 

Interest

 

AUL will charge interest on any outstanding loan at an annual rate of 4.75 percent for the first five (5) Policy Years and 4.25% thereafter. Interest is due and payable on each Policy Anniversary while a loan is outstanding. If interest is not paid when due, the amount of the interest is added to the loan and becomes part of the loan.

 

Loan Collateral

 

When a Policy loan is made, an amount sufficient to secure the loan is transferred out of the Investment Accounts and the Fixed Account and into the Policy’s Loan Account. Thus, a loan will have no immediate effect on the Account Value, but the Cash Surrender Value will be reduced immediately by the amount transferred to the Loan Account. The Owner can specify the Investment Accounts from which collateral will be transferred. If no allocation is specified, collateral will be transferred from each Investment Account and from the Fixed Account in the same proportion that the Account Value in each Investment Account and the Fixed Account bears to the total Account Value in those accounts on the date that the loan is made. Due and unpaid interest will be transferred each Policy Anniversary from each Investment Account and the Fixed Account to the Loan Account in the same proportion that each Investment Account Value and the Fixed Account bears to the total unloaned Account Value. The amount AUL transfers will be the amount by which the interest due exceeds the interest which has been credited on the Loan Account.

 

The Loan Account will be credited with interest daily at an effective annual rate of not less than 4.25 percent.  Any interest credited in excess of the minimum guaranteed rate is not guaranteed.

 

Loan Repayment; Effect if Not Repaid

 

The Owner may repay all or part of the Owner’s loan at any time while the Insured is living and the Policy is in force. Loan repayments must be sent to the Home Office and will be credited as of the date received. A loan repayment must be clearly marked as “loan repayment” or it will be credited as a premium, unless the premium would cause the Policy to fail to meet the federal tax definition of a life insurance contract in accordance with the Internal Revenue Code. Loan repayments, unlike premium payments, are not subject to premium expense charges. When a loan repayment is made, Account Value in the Loan Account in an amount equivalent to the repayment is transferred from the Loan Account to the Investment Accounts and the Fixed Account. Thus, a loan repayment will have no immediate effect on the Account Value, but the Cash Surrender Value will be increased immediately by the amount of the loan repayment. Loan repayment amounts will be transferred to the Investment Accounts and the Fixed Account according to the premium allocation instructions in effect at that time.

 

If the Death Benefit becomes payable while a loan is outstanding, any outstanding loan and loan interest will be deducted in calculating the Death Benefit Proceeds. See “Amount of Death Benefit Proceeds.”

 

If the Monthly Deduction exceeds the Cash Surrender Value on any Monthiversary when the Guaranteed Death Benefit Provision is not in force, the Policy will be in default. The Owner will be sent notice of the default. The Owner will have a Grace Period within which the Owner may submit a sufficient payment to avoid termination of coverage under the Policy. The notice will specify the amount that must be repaid to prevent termination. For more information, see “Premium Payments to Prevent Lapse.”

 

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